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What changed in NeoVolta Inc.'s 10-K — 2022 vs 2023

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Paragraph-level year-over-year comparison of NeoVolta Inc.'s 2022 and 2023 10-K annual filings, covering the Business, Risk Factors, Legal Proceedings, Cybersecurity, MD&A and Market Risk sections. Every new, removed and edited paragraph is highlighted side-by-side so you can see exactly what management changed in the 2023 report.

+187 added−174 removedSource: 10-K (2023-09-22) vs 10-K (2022-09-27)

Top changes in NeoVolta Inc.'s 2023 10-K

187 paragraphs added · 174 removed · 126 edited across 5 sections

Item 1. Business

Business — how the company describes what it does

50 edited+24 added−10 removed37 unchanged
Biggest changeTo date, most of these utility-specific storage incentives are in the Northeast. We anticipate more of these programs being put in place in the future. Utilities can also impact battery storage adoption on the cost side of the equation. In certain circumstances, when state utilities change their billing profiles, the market for ESS becomes more (or less) attractive.
Biggest changeUtilities can also impact battery storage adoption on the cost side of the equation. In certain circumstances, when state utilities change their billing profiles, the market for ESS becomes more (or less) attractive. For example, Hawaii’s attachment rate rose to 80% after the state began transitioning away from net energy metering (NEM) and reduced compensation for grid exports. Resiliency .
NeoVolta’s San Diego-based direct customer support is available throughout the install and for any ongoing service, as well as through our remote system monitoring. This one-on-one philosophy has generated great customer loyalty and install success and we intend to invest the resources necessary to keep this partnership culture a priority. Superior Product .
NeoVolta’s San Diego-based direct customer support is available throughout the install and for any ongoing service, as well as through our remote system monitoring. This one-on-one philosophy has generated great customer loyalty and install success and we intend to invest the resources necessary to keep this partnership culture a priority. 6 Superior Product .
Our NV14 is also capable of multi-tasking by recharging via solar photovoltaic power while also supplying power. 3 We believe our NV14 is unique among its competitors in that the cabinet is rated for indoor/outdoor installation (NEMA Type 3R) allowing for more installation configurations and the ability to fit more residential customer use cases.
Our NV14 is also capable of multi-tasking by recharging via solar photovoltaic power while also supplying power. We believe our NV14 is unique among its competitors in that the cabinet is rated for indoor/outdoor installation (NEMA Type 3R) allowing for more installation configurations and the ability to fit more residential customer use cases.
Utilities are addressing this matter in some cases through Public Safety Power Shut Off (PSPS) events (when power is purposefully turned off in the case of high winds with very dry vegetation conditions that increase wildfire risks). The direct result of this was seen in California after the PSPS events of late 2019 (below) Consumer Perception .
Utilities are addressing this matter in some cases through Public Safety Power Shut Off (PSPS) events (when power is purposefully turned off in the case of high winds with very dry vegetation conditions that increase wildfire risks). The direct result of this was seen in California after the PSPS events of late 2019. Consumer Perception .
Inability to secure reliable product delivery, fire risk, and recalls have harmed reputations of our competitors. 7 Installer Service . NeoVolta considers its installer relationships to be the key to our growth. The relative newness of the industry requires a great deal of education and support to ensure quality and efficient installations.
Inability to secure reliable product delivery, fire risk, and recalls have harmed reputations of our competitors. Installer Service . NeoVolta considers its installer relationships to be the key to our growth. The relative newness of the industry requires a great deal of education and support to ensure quality and efficient installations.
The regulatory drivers regarding ESS come in the form of an increasing number of mandates and incentives. On the mandate side, in August of 2021, California became the first state in the country to require builders to install solar and battery storage on new commercial buildings and high-rise multifamily buildings.
Market Drivers Regulatory . The regulatory drivers regarding ESS come in the form of an increasing number of mandates and incentives. On the mandate side, in August of 2021, California became the first state in the country to require builders to install solar and battery storage on new commercial buildings and high-rise multifamily buildings.
ITEM 1. BUSINESS Overview We are a designer, manufacturer, and seller of high-end Energy Storage Systems (or ESS), primarily our NeoVolta NV14 and NV 24, which can store and use energy via batteries and an inverter at residential or commercial sites.
ITEM 1. BUSINESS Overview We are a designer, manufacturer, and seller of high-end Energy Storage Systems (or ESS), primarily our NeoVolta NV14, NV14-K, and NV 24, which can store and use energy via batteries and an inverter at residential or commercial sites.
It can be easily programmed by our certified installers to customer-specific use profiles, including for “rate arbitrage,” (graph below) which allows charging from the grid during the lowest rate periods (A) if the utility company allows this activity.
It can be easily programmed by our certified installers to customer-specific use profiles, including for “rate arbitrage,” (graph below) which allows charging from the grid during the lowest rate periods if the utility company allows this activity.
Because we are purely dedicated to energy solar systems, virtually all of our current resources and efforts go into further developing our flagship NV14 and NV 24 products, while focusing on specific industry needs for our next generation of products.
Because we are purely dedicated to energy solar systems, virtually all of our current resources and efforts go into further developing our flagship NV14, NV14-K, and NV 24 products, while focusing on specific industry needs for our next generation of products.
The growth of the ESS market comes from a combination of retrofits to existing solar installations and more widespread adoption of storage as part of new solar installations. 5 According to Wood Mackenzie’s U.S.
The growth of the ESS market comes from a combination of retrofits to existing solar installations and more widespread adoption of storage as part of new solar installations. According to Wood Mackenzie’s U.S.
This will become even more beneficial with the enactment of The Inflation Reduction Act, increasing the credit to 30% for all ESS. Many states are also putting incentive systems in place. Beyond states taking steps to encourage greater adoption of energy storage technologies, some utilities are now also offering incentives to home and business owners who install storage.
This has become even more beneficial with the enactment of The Inflation Reduction Act, increasing the credit to 30% for all ESS. Many states are also putting incentive systems in place. Beyond states taking steps to encourage greater adoption of energy storage technologies, some utilities are now also offering incentives to home and business owners who install storage.
California, via the California Public Utilities Commission (CPUC), and Hawaii appear to be leading the United States when it comes to new ESS regulations. In the past 16-months, CPUC adopted Common Smart Inverter Profile (CSIP), solar rapid shutdown, and several fire standards both inside garages and outside on residential dwellings.
California, via the California Public Utilities Commission (CPUC), and Hawaii appear to be leading the United States when it comes to new ESS regulations. In the past 36-months, CPUC adopted Common Smart Inverter Profile (CSIP), solar rapid shutdown, and several fire standards both inside garages and outside on residential dwellings.
We believe recent back-order times for competitive products have been as long as 9-months in 2021. Smaller installers rely on quick sales to install to payment to keep their business going, and the lack of availability of competitive products is often the reason they are introduced to NeoVolta.
We believe recent back-order times for competitive products have been as long as 9-months in recent years. Smaller installers rely on quick sales to install to payment to keep their business going, and the lack of availability of competitive products is often the reason they are introduced to NeoVolta.
Once recharged, the batteries will discharge once solar photovoltaic begins to wane or when the customer needs more power than available from solar photovoltaic (B).
Once recharged, the batteries will discharge once solar photovoltaic begins to wane or when the customer needs more power than available from solar photovoltaic.
Our NV14 ESS contains a 7,680 W hybrid 120V / 240V and 208V inverter and a 14.4 kWh battery system power. The NV14 is energy efficient, has a variety of operating options, and uses Lithium Iron Phosphate (LiFe (PO4)) batteries.
Our NV14 ESS contains a 7,680 W hybrid 120V / 240V and 208V 3-phase inverter and a 14.4 kWh battery system power. The NV14 is energy efficient, has a variety of operating options, and uses Lithium Iron Phosphate (LiFe (PO4)) batteries.
Energy Storage Monitor, released in December 2020, the residential storage segment posted its best quarter ever in the third quarter of 2020, during the height of the coronavirus pandemic with 52 megawatts and 119 megawatt-hours of new storage installed. The U.S. market is expected to reach 7.5 gigawatts in 2025, which amounts to six-fold growth from 2020.
Energy Storage Monitor, released in December 2020, the residential storage segment posted its best quarter ever in the third quarter of 2020, during the height of the coronavirus pandemic with 52 megawatts and 119 megawatt-hours of new storage installed. The U.S. market is expected to reach 7.5 gigawatts in 2025, which amounts to sixfold growth from 2020.
We were founded to identify new ways to leverage emerging technologies with the dynamic changes that are taking place in the energy delivery space. We primarily market and sell our products directly to our certified solar installers and solar equipment distributors. In the future, we intend to pursue residential developers, commercial developers, and other commercial opportunities.
We were founded to identify new ways to leverage emerging technologies with the dynamic changes that are taking place in the energy delivery space. We primarily market and sell our products directly to our certified solar installers and solar equipment distributors. In the future, we intend to expand multiple opportunities with residential developers, commercial developers, and other commercial opportunities.
Since December 2021, NeoVolta has been delivering on orders in under two weeks, very often the same day. We achieve this by maintaining a high level of inventory relative to projected sales, component consolidation prior to shipment, and a small lot, recurring freight strategy, which we believe allows for more flexibility in getting through the supply chain.
Since December 2021, NeoVolta has been delivering on orders in under one week, very often the same day. We achieve this by maintaining a high level of inventory relative to projected sales, component consolidation prior to shipment, and a small lot, recurring freight strategy, which we believe allows for more flexibility in getting through the supply chain.
Key Product Advantages : · Residential / Commercial: System adapts to either application without the need for any additional equipment (transformers) · Outdoor or Indoor installations: NEMA 3R rated · Higher power than most competitive options (7,680 W inverter) · Compatible with AC, DC or both AC and DC power · UL certified to have no thermal runaway and no thermal risk (UL 9540A) · Compatible with generators · Capable of adding additional battery storage capacity without need for additional inverter Our NV14 inverter can also accept 208 Volt 3-phase commercial power by simply making a settings change.
Key Product Advantages : · Residential / Commercial: System adapts to either application without the need for any additional equipment (transformers) · Outdoor or Indoor installations: NEMA 3R rated · Higher power than most competitive options (7,680 W inverter) · Compatible with AC, DC or both AC and DC power · UL certified to have no thermal runaway and no thermal risk (UL 9540A) · Higher 6,000 cycle batteries · Compatible with generators · Can support off grid · Capable of adding additional battery storage capacity without need for additional inverter Our NV14 inverter can also accept 208 Volt 3-phase commercial power by simply making a settings change.
We have been successful in consistently growing both our installer base and our number of installs through these means, but recognize that to succeed in the national marketplace, we will need to bring on a team of sales and marketing professionals to reach our goals.
We have been successful in consistently growing both our installer base and our number of installs through these means, but recognize that to succeed in the national marketplace, we will need to bring on a team of sales and marketing professionals to reach our goals. We have plans to start to build out this team relatively soon.
These customers sought us out to create an energy storage system for their unique needs specifically because others would not or could not accept the challenge. NeoVolta was and continues to be open to customizing our products for energy storage contracts should they meet our volume, profitability, and system requirements.
In that regard, various stakeholders have sought us out to create an energy storage system for their unique needs specifically because others would not or could not accept the challenge. NeoVolta was and continues to be open to customizing our products for energy storage contracts should they meet our volume, profitability, and system requirements.
In the past two years, California regulators have implemented major requirements, including CSIP and CPUC “rapid shutdown,” garage safety, non-ferrous cabinet, and more are being planned. We have a track record of understanding, adapting, and deploying our products in this ever-changing world.
Regulatory Environment Regulators are quickly getting involved in the ESS space. In the past three years, California regulators have implemented major requirements, including CSIP and CPUC “rapid shutdown,” garage safety, non-ferrous cabinet, and more are being planned. We have a track record of understanding, adapting, and deploying our products in this ever-changing world.
NeoVolta’s other certifications include: · Underwriters Laboratories (UL) 9540, 9540A, 1973, 1741SA, 1642, and 1699B Arc Fault Circuit Protection Type · UL 9540A Battery Energy Storage System (ANSI/CAN/UL 9540:2020) · Institute of Electrical and Electronics Engineers (IEEE) 1547 (2003 standard) · International Electrotechnical Commission (IEC) 62897 · Electrical Codes: National Fire Codes (NEC) 2017 · California Public Utilities Commission (CPUC) Rule 21 Interconnection · Hawaii Electric Companies Source Requirement Document Version 1.1 (SRD-UL-1741-SA-V1.1) · CSA Group C22.2 No. 107.1:2001 Ed. 3 · Federal Communications Commission (FCC) 15 Class B · National Electrical Manufacturers Association (NEMA) Type 3R · California Energy Commission (CEC) off-grid and on-grid R-F38 · California Energy Commission (CEC) on-grid R-F58 NeoVolta has established a track record for quickly understanding and meeting regulatory hurdles.
NeoVolta’s other certifications include: · Underwriters Laboratories (UL) 9540, 9540A, 1973, 1741SA, 1642, and 1699B Arc Fault Circuit Protection Type UL 1741 third edition (including UL 1741 Supplemental SB) · UL 9540A Battery Energy Storage System (ANSI/CAN/UL 9540:2020) · Institute of Electrical and Electronics Engineers (IEEE) 1547 (2018 standard) · International Electrotechnical Commission (IEC) 62897 · Electrical Codes: National Fire Protection Association’s NFPA 70 National Fire Codes (NEC) 2023 · California Public Utilities Commission (CPUC) Rule 21 Interconnection · Hawaii Electric Companies Source Requirement Document Version 1.1 (SRD-UL-1741-SA-V1.1) · CSA Group C22.2 No. 107.1:2001 Ed. 3 · Federal Communications Commission (FCC) 15 Class B · National Electrical Manufacturers Association (NEMA) Type 3R · California Energy Commission (CEC): Grid Support Utility, Utility Interactive, Energy Storage System NV14 and NV24 NeoVolta has established a track record for quickly understanding and meeting regulatory hurdles.
This feature allows small businesses to back up vital systems such as refrigeration, servers, alarm systems, entry and exit security features, vaults, emergency lighting, etc. Some States are beginning to require these capabilities as an emergency capability due to frequent grid outages.
This feature allows small businesses to back up vital systems such as refrigeration, servers, alarm systems, entry and exit security features, vaults, emergency lighting, etc. Some States are beginning to require these capabilities as an emergency capability due to frequent grid outages. IP & Product Development We currently have three issued US utility patents.
Most competitive systems require an additional inverter for any additional storage. New ESS fire code regulations have been significant and are ongoing, especially in California. ESSs can no longer be installed inside the living areas of a home.
This enables customers to achieve a 67% increase in storage for a fraction of the typical cost of adding more storage. Most competitive systems require an additional inverter for any additional storage. New ESS fire code regulations have been significant and are ongoing, especially in California. ESSs can no longer be installed inside the living areas of a home.
Our Products - NeoVolta NV14 and NV24 The NV14 is a complete ESS with 7,680-Watt 120V / 240V hybrid inverter (one of the largest in the industry) which is also capable of 208V 3-phase commercial power with a 14.4 kWh lithium iron phosphate (LiFe (PO4)) battery system.
In January 2021, we moved to a larger production facility in Poway, California to facilitate growth. 2 Our Products - NeoVolta NV14, NV14-K, and NV24 The NV14 is a complete ESS with 7,680-Watt 120V / 240V hybrid inverter (one of the largest in the industry) which is also capable of 208V 3-phase commercial power with a 14.4 kWh lithium iron phosphate (LiFe (PO4)) battery system.
In January 2021, CPUC adopted solar “rapid shutdown” requirements, which means emergency responders needed to be able to quickly terminate all with a switch or lever within a few feet of the Main Service Panel (MSP). NeoVolta already met this challenge with outside AC solar installations, and quickly met the requirements for indoor installations and DC solar.
In January 2021, CPUC adopted solar “rapid shutdown” requirements, which means emergency responders needed to be able to quickly terminate all with a switch or lever within a few feet of the Main Service Panel (MSP).
The batteries we utilize are capable of 6,000 cycles at a Depth of Discharge (DoD) of 90% and have a high thermal range (heat and cold tolerances). Our NV14 ESS integrates all components and is NEMA Type 3R rated (indoor/outdoor). Our NV24 provides additional energy storage capacity raising the NV14 from 14.4 KW to 24.0 KW.
The batteries we utilize are capable of 6,000 cycles at a Depth of Discharge (DoD) of 90% and have a high thermal range (heat and cold tolerances). Our NV14 ESS integrates all components and is NEMA Type 3R rated (indoor/outdoor).
In addition to competitors in the ESS space, we compete with companies in power generation equipment and other engine powered products industries. We face competition from a variety of large diversified industrial companies as well as smaller generator manufacturers, along with mobile equipment, engine powered tools, solar inverter, battery storage and grid services providers, both domestic and internationally.
We face competition from a variety of large diversified industrial companies as well as smaller generator manufacturers, along with mobile equipment, engine powered tools, solar inverter, battery storage and grid services providers, both domestic and internationally.
Our remote management system is included with the product and allows NeoVolta 24/7 system health monitoring, malfunction diagnosis, and the ability to push firmware and software updates. This allows NeoVolta, installers, and their customers, insight into system health 24/7. Remote monitoring and programming is accomplished using AWS Key Management encryption and cloud storage ensuring customer privacy and security.
Our remote management system is included with the product and allows NeoVolta 24/7 system health monitoring, malfunction diagnosis, and the ability to push firmware and software updates. This allows NeoVolta, installers, and their customers, insight into system health 24/7.
We have plans to start to build out this team utilizing the proceeds from our recent offering. 6 Non-Residential / Commercial Growth : Our all-in-one system was engineered with the intent to be easily configurable to the needs of the client and easily serviced and updated for our installers.
Non-Residential / Commercial Growth : Our all-in-one system was engineered with the intent to be easily configurable to the needs of the client and easily serviced and updated for our installers.
The NV14 is designed to primarily charge from solar but can be programmed to charge from other sources of power (solar, wind turbine, generator, and grid).
Once discharged, the batteries will be idle until excess solar photovoltaic is available and will subsequently begin to recharge. The NV14 is designed to primarily charge from solar but can be programmed to charge from other sources of power (solar, wind turbine, generator, and grid).
Growth Strategy Our growth strategy is focused on expanding our core business of distributing our products on a recurring basis to small and medium sized installers and to continue expanding the application of our product into various commercial applications through development partnerships.
These factors are obviously less measurable than the more objective drivers above but are an additive factor in the market. 5 Growth Strategy Our growth strategy is focused on expanding our core business of distributing our products on a recurring basis to small and medium sized installers and to continue expanding the application of our product into various commercial applications through development partnerships.
Department of Energy’s National Renewable Energy Laboratory (NREL) and Clean Energy Group (CEG) found that when the value of resilience is considered - preventing power outages - several more integrated solar-plus-storage projects are economically viable.
Energy dependence has been a growing concern in the last few years as weather patterns have become more erratic. New findings from the U.S. Department of Energy’s National Renewable Energy Laboratory (NREL) and Clean Energy Group (CEG) found that when the value of resilience is considered - preventing power outages - several more integrated solar-plus-storage projects are economically viable.
This is all incorporated in one National Electrical Manufacturer Association (NEMA) Type 3R rated indoor/outdoor cabinet system with all United Laboratories (UL) compliant electrical certifications, and fire code requirements. The NV14 is capable of storing and using inverted (AC) photovoltaic, non-inverted (DC) photovoltaic, or both AC and DC photovoltaic solar sources.
The NV14-K is a variant of the NV14 built to EOS Linx specifications. This is all incorporated in one National Electrical Manufacturer Association (NEMA) Type 3R rated indoor/outdoor cabinet system with all United Laboratories (UL) compliant electrical certifications, and fire code requirements.
Despite any measures taken to protect our intellectual property, unauthorized parties may attempt to copy aspects of our products or to obtain and use information that we regard as proprietary.
Despite any measures taken to protect our intellectual property, unauthorized parties may attempt to copy aspects of our products or to obtain and use information that we regard as proprietary. Our business is affected by our ability to protect against misappropriation and infringement of our intellectual property, including our trademarks, service marks, patents, domain names, copyrights and other proprietary rights.
In May 2019, the NV14 was approved throughout San Diego County and City areas by San Diego Gas & Electric (SDG&E) for connection to its grid system and customer installations began. In June 2019, we moved our contracted manufacturing to a facility in Poway, California. In June 2019, we began marketing to San Diego based solar installers.
Since our headquarters are located in San Diego County, a county with more than 160,000 solar customers, we chose San Diego for our initial rollout. In May 2019, the NV14 was approved throughout San Diego County and City areas by San Diego Gas & Electric (SDG&E) for connection to its grid system and customer installations began.
It can also accept utility grid AC power as a charging source for the integrated 14.4 kWh battery system. The NV14 system will charge the batteries with excess solar photovoltaic (AC, DC or both AC and DC) power during daylight conditions - a unique functionality in the ESS industry.
The NV14 is capable of storing and using inverted (AC) photovoltaic, non-inverted (DC) photovoltaic, or both AC and DC photovoltaic solar sources. It can also accept utility grid AC power as a charging source for the integrated 14.4 kWh battery system.
In early 2020, we expanded our certified installer network to the greater Los Angeles, San Francisco, and Sacramento areas, and, importantly, out of California to Arizona, Nevada, and Georgia. In January 2021, we moved to a larger production facility in Poway, California to facilitate growth.
In June 2019, we moved our contracted manufacturing to a facility in Poway, California. In June 2019, we began marketing to San Diego based solar installers. In early 2020, we expanded our certified installer network to the greater Los Angeles, San Francisco, and Sacramento areas.
According to Berkeley Lab’s Tracking the Sun dataset, there are over 3 million solar systems installed in the US and only 6.8% of those have energy solar installed. This marketplace scenario presents small installer customers almost 3 million households to revisit for a storage retrofit especially when their 10-15 year old inverter experiences end of life.
According to Berkeley Lab’s Tracking the Sun dataset, there are over 3 million solar systems installed in the US and only 6.8% of those have energy solar installed.
Our batteries were UL 9540 certified at the cell and modular level in July 2021 certifying that they will not catch on fire and exhibit no thermal runaway characteristics. 4 We are aware of additional regulatory requirements being planned in various jurisdictions for 2022 and 2023.
Lithium Ion, a very popular chemistry in the ESS industry, has demonstrated fire and thermal runaway characteristics in certain circumstances. Our batteries were UL 9540 certified at the cell and modular level in July 2021 certifying that they will not catch on fire and exhibit no thermal runaway characteristics.
The inverter will invert DC battery power into AC power during periods of darkness or higher use periods. Once discharged, the batteries will be idle until excess solar photovoltaic is available and will subsequently begin to recharge.
The NV14 system will charge the batteries with excess solar photovoltaic (AC, DC or both AC and DC) power during daylight conditions - a unique functionality in the ESS industry. The inverter will invert DC battery power into AC power during periods of darkness or higher use periods.
We believe NeoVolta is well positioned to face new regulatory requirements due to our battery chemistry and our product being developed in California - where regulatory standards in energy are generally set. In fact, most states default their own regulations to California’s standards for energy solar systems. Employees As of June 30, 2022, we have five full-time employees.
We believe NeoVolta is well positioned to face new regulatory requirements due to our battery chemistry and our product being developed in California - where regulatory standards in energy are generally set. In November 2022, the CPUC passed Net Energy Metering 3 (“NEM3”) with a phase in date of April 14, 2023.
It is a subset of what the Solar Energy Industries Association (SEIA) refers to as the $17 billion U.S. residential solar PV market. Wood Mackenzie forecasts that there will be 3 million installations in 2021 growing to 4 million in 2023.
ESS Market . This is a relatively new market as solar attached storage systems have only become viable in the last decade. It is a subset of what the Solar Energy Industries Association (SEIA) refers to as the $17 billion U.S. residential solar PV market.
Competition We compete with several large competitors already successfully selling in the ESS space. Notable competitors include Tesla, LG Chem, Sonnen, and SMA America, among others. Some of our competitors have significantly greater financial, product development, manufacturing, marketing resources, and name recognition.
Some of our competitors have significantly greater financial, product development, manufacturing, marketing resources, and name recognition. In addition to competitors in the ESS space, we compete with companies in power generation equipment and other engine powered products industries.
Our NV24 has additional battery capability that raises NV14 energy storage from 14.4 KW to 24.0 KW. As the NV24 has add-on battery capacity, additional inverters are not required. This enables customers to achieve a 67% increase in storage for a fraction of the typical cost of adding more storage.
Remote monitoring and programming is accomplished using AWS Key Management encryption and cloud storage ensuring customer privacy and security. 3 Our NV24 has additional battery capability that raises NV14 energy storage from 14.4 KW to 24.0 KW. As the NV24 has add-on battery capacity, additional inverters are not required.
We believe that our 100% commitment to ESS and our relatively small size allow us to navigate this nascent industry more nimbly, and we have been able to develop distinct competitive advantages despite our relative resources. ESS Market . This is a relatively new market as solar attached storage systems have only become viable in the last decade.
This marketplace scenario presents small installer customers almost 3 million households to revisit for a storage retrofit especially when their 10-15 year old inverter experiences end of life. 4 We believe that our 100% commitment to ESS and our relatively small size allow us to navigate this nascent industry more nimbly, and we have been able to develop distinct competitive advantages despite our relative resources.
Our CEO manages all Company strategy, sales and R&D, our CFO manages all finance and administration. The balance of the staff manages supply chain, technical support and marketing/sales support. We also contract for hire with four outside consultants and contractors on an ongoing basis. Also, specific contracts for non-recurring R&D.
Our CEO manages all Company strategy, sales and R&D, our CFO manages all finance and administration. Our manufacturing operations are performed by the four new employees that we recently hired from our former contract operator, as noted above. The balance of the staff manages supply chain, technical support and marketing/sales support.
By March 2019, we completed all certifications and were granted approval by the California Energy Commission (CEC) for off-grid and on-grid installation. Since our headquarters are located in San Diego County, a county with more than 160,000 solar customers, we chose San Diego for our initial rollout.
History We completed the initial design work and completed testing and certification of our first offering, the NeoVolta NV14, in August 2018. In September 2018, we completed our first production prototype. By March 2019, we completed all certifications and were granted approval by the California Energy Commission (CEC) for off-grid and on-grid installation.
In 2021, we increased our national distribution, which we conduct through certified wholesale dealers, and now have installs in Utah, Florida, Puerto Rico, Oklahoma, Texas, Colorado, Wyoming, Tennessee, and Missouri.
At present, we have installs in the following 14 States and Territories: California, Nevada, Arizona, Utah, Colorado, Wyoming, Texas, Oklahoma, Missouri, Tennessee, Alabama, Georgia, Florida, and Puerto Rico.
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Our newest update of the NV14 ESS allows for commercial 208V 3-phase installations adding significantly to our potential customer base. 2 History We completed the initial design work and completed testing and certification of our first offering, the NeoVolta NV14, in August 2018. In September 2018, we completed our first production prototype.
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Our NV14-K variant is specifically designed for inclusion into EOS Linx Electric Vehicle charging and advertising products named “Aurora Charge Station.” Our NV24 provides additional energy storage capacity raising the NV14 from 14.4 KW to 24.0 KW. Our newest update of the NV14 ESS allows for commercial 208V 3-phase installations adding significantly to our potential customer base.
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Lithium Ion, a very popular chemistry in the ESS industry, has demonstrated fire and thermal runaway characteristics in certain circumstances.
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Wood Mackenzie forecasts that there will be 3 million installations in 2021 growing to 4 million in 2023.
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The Q3 2021 US Energy Storage Monitor estimates that the U.S. residential market will surpass $1 billion in 2022; a 14% share of the estimated $7 billion total US Energy Storage market. The report added that Q2 surpassed Q1 2021 to become the second-largest quarter for storage deployment on record in MWh terms. Market Drivers Regulatory .
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To date, most of these utility-specific storage incentives are in the Northeast. We anticipate more of these programs being put in place in the future. In November 2022, the California Public Energy Commission (CPUC) passed Net Energy Metering 3 (NEM3) with phase in date of April 14, 2023.
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For example, Hawaii’s attachment rate rose to 80% after the state began transitioning away from net energy metering (NEM) and reduced compensation for grid exports. Resiliency . Energy dependence has been a growing concern in the last few years as weather patterns have become more erratic. New findings from the U.S.
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NEM3 significantly reduces the value to “excess” solar that a customer sends to the Utility during the day. Under NEM2, customer typically achieved a pay back period of 5-6 years. Under NEM3, solar pay back is 10-12 years depending on the Utility.
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These factors are obviously less measurable than the more objective drivers above but are an additive factor in the market.
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As a result, most solar installers focused on installing as much solar as possible prior to the April 14, 2023 deadline. This resulted in a delay of battery and ESS installations since adding these capabilities do not affect NEM status, however, the impact of the temporary market distortion has been largely reversed since that date.
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IP & Product Development We currently have one issued utility patent (US Patent No. 10,998,730) that is directed to NeoVolta’s solar power inverter system. This patent expires on November 25, 2039. A continuing utility application was also filed directed to the ‘730 patent, which is currently pending.
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Sungage Financial and GoodLeap finance NeoVolta installations with or without solar. We are working to add additional financing and leasing options.
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Furthermore, another U.S. patent application was filed directed to supply circuitry that is implemented as part of NeoVolta’s solar power inverter system (the “supply circuitry patent application”), which is also currently pending. A Patent Cooperation Treaty (PCT) application has also been filed claiming priority to the supply circuitry patent application, which is also pending.
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We have previously announced partnerships with PMP Energy, EOS Linx, and American Development Partners. We continue to explore other than residential opportunities that NeoVolta is uniquely suited for. Competition We compete with several large competitors already successfully selling in the ESS space. Notable competitors include Tesla, LG Chem, Sonnen, Enphase, SunPower, and SMA America, among others.
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The PCT application affords NeoVolta the opportunity to file a foreign application in any PCT-member country by the deadline of August 12, 2023. We also intend to further broaden our product portfolio to pursue new and diverse markets. We believe investment in our operations and engineering teams in the first quarter will accelerate these improvements.
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US Patent No. 10,998,730 B1 is directed to NeoVolta’s solar power inverter system. US Patent No. 11,502,618 B2 relates to NeoVolta’s generators. US Patent No. 11,605,952 B1. which is an expansion of our first Patent, relates to NeoVolta’s solar power inverter system. We will continue to expand our Patent portfolio when appropriate.
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Our business is affected by our ability to protect against misappropriation and infringement of our intellectual property, including our trademarks, service marks, patents, domain names, copyrights and other proprietary rights. 8 Regulatory Environment Regulators are quickly getting involved in the ESS space.
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NeoVolta already met this challenge with outside AC solar installations, and quickly met the requirements for indoor installations and DC solar. 7 In June 2022, California adopted several requirements for inside garage installations and disallowed any installs inside residential living spaces to include most basements.
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Our intent is to hire up to three executive level leaders early in the new fiscal year to head up sales & marketing, operations and product development and build out their teams. 9
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These changes affect where a system can be installed and may prevent installation in colder climates.
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NEM3 significantly reduces the value to “excess” solar that a customer sends to the Utility during the day. Under NEM2, customer typically achieved a pay back period of 5-6 years. Under NEM3, solar pay back is 10-12 years depending on the Utility.
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As a result, most solar installers focused on installing as much solar as possible prior to the April 14, 2023 deadline. This resulted in a delay of battery and ESS installations since adding these capabilities do not affect NEM status. The full impact of NEM3 to both the solar and ESS industry will not be known for several months.
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Manufacturing All of NeoVolta’s products are manufactured in-house at our Poway, CA facility. We manufacture our products in an efficient build-to-order model, keeping very little finished-goods inventory. We sublease and share our facility with our former contract manufacturer under a physical arrangement.
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Pursuant to an amendment to our supply agreement with our former contract manufacturer in April 2023, we took over direct responsibility for the manufacturing process surrounding our ESS units from our contract manufacturer on June 1, 2023.
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Accordingly, we now issue customer build orders to our two new employees that we hired from our former contract manufacturer, they pull the raw materials from the warehouse, assemble the final units and prepare them for shipment or pick-up. Our timeline from order to delivery is usually less than two weeks.
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The end-product is then picked up or shipped from our docks, signed off by our installer and logged into our system when installed for system monitoring. We run multiple quality checks throughout the process and have systems to track components and end-units from Asia to San Diego to the end-user’s location.
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We record all component serial numbers, all torque settings, and annotates all required item numbers and functionality prior to packaging. 8 Recent Assembly Inventory Purchase In April 2023, we closed the bulk purchase of raw materials inventory from our contract manufacturer by making a cash payment to that company in the net amount of $1.3 million, after considering credits for prepayments and other items of approximately $0.1 million.
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This transaction was completed pursuant to an amendment of our Master Supply Agreement with our contract manufacturer. In addition to the purchase of the raw materials inventory from our contract manufacturer, this amendment provided for the eventual assumption by us of full responsibility from our contract manufacturer for the manufacturing of our proprietary Energy Storage Systems (“ESS”) units.
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Pursuant to the amendment, we assumed such responsibility for the manufacturing process surrounding our ESS units from our contract manufacturer on June 1, 2023. In conjunction with assuming this responsibility, we hired the two employees of our contract manufacturer who previously performed contract manufacturing services for us. We plan to hire three additional “assemblers” in the near future.
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All of our manufacturing certifications are listed under NeoVolta. This amended agreement had no effect on our present Sublease Agreement with our contract manufacturer, pertaining to our existing manufacturing location in Poway, CA (see “Item 2 – Properties”). Employees As of June 30, 2023, we have seven full-time employees.

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Item 1A. Risk Factors

Risk Factors — what could go wrong, per management

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Biggest changeFor so long as we remain an emerging growth company, we will not be required to: · have an auditor report on our internal control over financial reporting pursuant to the Sarbanes-Oxley Act of 2002; · comply with any requirement that may be adopted by the Public Company Accounting Oversight Board regarding mandatory audit firm rotation or a supplement to the auditor’s report providing additional information about the audit and the financial statements (auditor discussion and analysis); · submit certain executive compensation matters to shareholders advisory votes pursuant to the “say on frequency” and “say on pay” provisions (requiring a non-binding shareholder vote to approve compensation of certain executive officers) and the “say on golden parachute” provisions (requiring a non-binding shareholder vote to approve golden parachute arrangements for certain executive officers in connection with mergers and certain other business combinations) of the Dodd-Frank Wall Street Reform and Consumer Protection Act of 2010; and · include detailed compensation discussion and analysis in our filings under the Securities Exchange Act of 1934, as amended, and instead may provide a reduced level of disclosure concerning executive compensation.
Biggest changeWe are an emerging growth company until the earliest of: · the last day of the fiscal year during which we have total annual gross revenues of $1 billion or more; · the last day of the fiscal year following the fifth anniversary of our initial public offering; · the date on which we have, during the previous 3-year period, issued more than $1 billion in non-convertible debt; or · the date on which we are deemed a “large accelerated issuer” as defined under the federal securities laws. 17 For so long as we remain an emerging growth company, we will not be required to: · have an auditor report on our internal control over financial reporting pursuant to the Sarbanes-Oxley Act of 2002; · comply with any requirement that may be adopted by the Public Company Accounting Oversight Board regarding mandatory audit firm rotation or a supplement to the auditor’s report providing additional information about the audit and the financial statements (auditor discussion and analysis); · submit certain executive compensation matters to shareholders advisory votes pursuant to the “say on frequency” and “say on pay” provisions (requiring a non-binding shareholder vote to approve compensation of certain executive officers) and the “say on golden parachute” provisions (requiring a non-binding shareholder vote to approve golden parachute arrangements for certain executive officers in connection with mergers and certain other business combinations) of the Dodd-Frank Wall Street Reform and Consumer Protection Act of 2010; and · include detailed compensation discussion and analysis in our filings under the Securities Exchange Act of 1934, as amended, and instead may provide a reduced level of disclosure concerning executive compensation.
Investors should evaluate an investment in us in light of the uncertainties encountered by developing companies in a competitive environment. There can be no assurance that our efforts will be successful or that we will ultimately be able to attain profitability. We have a history of net losses and we are uncertain about our future profitability.
Investors should evaluate an investment in us in light of the uncertainties encountered by developing companies in a competitive environment. There can be no assurance that our efforts will be successful or that we will ultimately be able to attain profitability. 9 We have a history of net losses and we are uncertain about our future profitability.
Although the length and impact of the ongoing military conflict is highly unpredictable, the conflict in Ukraine could lead to market disruptions, including significant volatility in commodity prices, credit and capital markets, as well as supply chain interruptions. We are continuing to monitor the situation in Ukraine and globally and assessing its potential impact on our business.
Although the length and impact of the ongoing military conflict is highly unpredictable, the conflict in Ukraine could lead to further market disruptions, including significant volatility in commodity prices, credit and capital markets, as well as supply chain interruptions. We are continuing to monitor the situation in Ukraine and globally and assessing its potential impact on our business.
In the future, we may issue our authorized but previously unissued equity securities, resulting in the dilution of the ownership interests of our present stockholders. 18 We intend to seek to raise additional funds, finance acquisitions or develop strategic relationships by issuing equity or convertible debt securities, which would reduce the percentage ownership of our existing stockholders.
In the future, we may issue our authorized but previously unissued equity securities, resulting in the dilution of the ownership interests of our present stockholders. We intend to seek to raise additional funds, finance acquisitions or develop strategic relationships by issuing equity or convertible debt securities, which would reduce the percentage ownership of our existing stockholders.
Although our securities recently became listed on Nasdaq, there can be no assurance that we will be able to comply with the continued listing standards of Nasdaq, a failure of which could result in a de-listing of our common stock .
Although our securities became listed on Nasdaq in August 2022, there can be no assurance that we will be able to comply with the continued listing standards of Nasdaq, a failure of which could result in a de-listing of our common stock .
The loss of any single or limited source supplier or the disruption in the supply of components from these suppliers could lead to significant product design changes and delays in product deliveries to our customers, which could hurt our relationships with our customers and result in negative publicity, damage to our brand and a material and adverse effect on our business, prospects, financial condition and operating results.
The loss of any single or limited source supplier or the disruption in the supply of components from these suppliers could lead to significant product design changes and delays in product deliveries to our customers, which could hurt our relationships with our customers and result in negative publicity, damage to our brand and a material and adverse effect on our business, prospects, financial condition and operating results. 10 Changes in our supply chain may result in increased cost.
The Sarbanes-Oxley Act and rules subsequently implemented by the SEC have required changes in corporate governance practices of public companies. As a public company, we expect these rules and regulations to increase our compliance costs in 2022 and beyond and to make certain activities more time consuming and costly.
The Sarbanes-Oxley Act and rules subsequently implemented by the SEC have required changes in corporate governance practices of public companies. As a recent Nasdaq listed public company, we expect these rules and regulations to increase our compliance costs and to make certain activities more time consuming and costly.
Upon the expiration of the lock-up agreements, all such shares will be eligible for resale in the public market, subject to applicable securities laws, including the Securities Act.
Upon the expiration of the lock-up agreements, all such shares became eligible for resale in the public market, subject to applicable securities laws, including the Securities Act.
Changes in our supply chain may result in increased cost. If we are unsuccessful in our efforts to control and reduce supplier costs, our operating results will suffer. There is no assurance that our suppliers will ultimately be able to meet our cost, quality and volume needs, or do so at the times needed.
If we are unsuccessful in our efforts to control and reduce supplier costs, our operating results will suffer. There is no assurance that our suppliers will ultimately be able to meet our cost, quality and volume needs, or do so at the times needed.
In the event of a delisting, we would expect to take actions to restore our compliance with the listing requirements, but we can provide no assurance that any such action taken by us would allow our securities to become listed again, stabilize the market price or improve the liquidity of our securities, prevent our securities from dropping below the minimum bid price requirement, or prevent future non-compliance with the listing requirements. 19 The price of our common stock and Warrants may be volatile.
In the event of a delisting, we would expect to take actions to restore our compliance with the listing requirements, but we can provide no assurance that any such action taken by us would allow our securities to become listed again, stabilize the market price or improve the liquidity of our securities, prevent our securities from dropping below the minimum bid price requirement, or prevent future non-compliance with the listing requirements.
These risks include: · an increase in the cost, or decrease in the available supply, of materials used; · disruption in the supply of cells due to quality issues or recalls by manufacturers; · tariffs on the materials we source in China, which make up a significant amount of the materials we require; · fluctuations in the value of the Chinese Renminbi against the U.S. dollar as our purchases for energy storage products will be denominated in Chinese Renminbi.
These risks include: · an increase in the cost, or decrease in the available supply, of materials used; · disruption in the supply of cells due to quality issues or recalls by manufacturers; · tariffs on the materials we source in China, which make up a significant amount of the materials we require; · fluctuations in the value of the Chinese Renminbi against the U.S. dollar as our purchases for energy storage products are denominated in Chinese Renminbi.; and · potential increases in global shipping costs.
U.S. and global markets are experiencing volatility and disruption following the escalation of geopolitical tensions and the start of the military conflict between Russia and Ukraine. On February 24, 2022, a full-scale military invasion of Ukraine by Russian troops was reported.
U.S. and global markets are experiencing volatility and disruption following the escalation of geopolitical tensions and the start of the military conflict between Russia and Ukraine. On February 24, 2022, a full-scale military invasion of Ukraine by Russian troops was reported and the conflict is continuing at an intense level.
The market price of our common stock and Warrants is highly volatile and could fluctuate widely in price in response to various factors, many of which are beyond our control, including the following: · changes in our industry; · competitive pricing pressures; · our ability to obtain working capital financing; · additions or departures of key personnel; · conversions from preferred stock to common stock; · sales of our common and preferred stock; · our ability to execute our business plan; · operating results that fall below expectations; · loss of any strategic relationship; · regulatory developments; and · economic and other external factors.
The market price of our common stock and Warrants is highly volatile and could fluctuate widely in price in response to various factors, many of which are beyond our control, including the following: · changes in our industry; · competitive pricing pressures; · our ability to obtain working capital financing; · additions or departures of key personnel; · conversions from preferred stock to common stock; · sales of our common and preferred stock; · our ability to execute our business plan; · operating results that fall below expectations; · loss of any strategic relationship; · regulatory developments; and · economic and other external factors. 19 In addition, the securities markets have from time to time experienced significant price and volume fluctuations that are unrelated to the operating performance of particular companies.
As an “emerging growth company” under the JOBS Act, we are permitted to, and intend to, rely on exemptions from certain disclosure requirements.
As an “emerging growth company” under the Jumpstart Our Business Startups Act, or JOBS Act, we are permitted to, and intend to, rely on exemptions from certain disclosure requirements. As an “emerging growth company” under the JOBS Act, we are permitted to, and intend to, rely on exemptions from certain disclosure requirements.
Our business could be negatively impacted if we fail to adequately protect our intellectual property rights. We consider our intellectual property rights to be important assets, and seek to protect them through a combination of patent, trademark, copyright and trade secret laws, as well as licensing and confidentiality agreements.
We consider our intellectual property rights to be important assets, and seek to protect them through a combination of patent, trademark, copyright and trade secret laws, as well as licensing and confidentiality agreements.
We have incurred significant net losses since our inception. For the years ended June 30, 2022 and 2021, we have incurred net losses of $5.8 million and $7.6 million, respectively. As of June 30, 2022, we had an accumulated deficit of $15.8 million.
We have incurred significant net losses since our inception. For the years ended June 30, 2023 and 2022, we have incurred net losses of $2.6 million and $5.8 million, respectively. As of June 30, 2023, we had an accumulated deficit of $18.4 million.
If we were to encounter a significant disruption due to COVID-19 at one or more of our locations or suppliers, we may not be able to satisfy customer demand for a period of time. 11 Furthermore, the impact of COVID-19 on the economy, demand for our products and impacts to our operations, including the measures taken by governmental authorities to address it, may precipitate or exacerbate other risks and/or uncertainties, including specifically many of the risk factors set forth herein, which may have a significant impact on our operating results and financial condition, although we are unable to predict the extent or nature of these impacts at this time.
Furthermore, the impact of COVID-19 on the economy, demand for our products and impacts to our operations, including the measures taken by governmental authorities to address it, may precipitate or exacerbate other risks and/or uncertainties, including specifically many of the risk factors set forth herein, which may have a significant impact on our operating results and financial condition, although we are unable to predict the extent or nature of these impacts at this time.
We also expect more regulatory burden as customers adopt this new technology. There is no assurance that our energy storage systems will be successful in the respective markets in which they compete.
The worldwide energy storage market is in its infancy, and we expect it will become more competitive in the future. We also expect more regulatory burden as customers adopt this new technology. There is no assurance that our energy storage systems will be successful in the respective markets in which they compete.
Any significant delay or other complication in the production of our products or the development, manufacture, and production ramp of our future products, including complications associated with expanding our production capacity and supply chain or obtaining or maintaining regulatory approvals, and/or coronavirus impacts, could materially damage our brand, business, prospects, financial condition and operating results. 10 We may be unable to meet our growing energy storage production plans and delivery plans, any of which could harm our business and prospects.
Any significant delay or other complication in the production of our products or the development, manufacture, and production ramp of our future products, including complications associated with expanding our production capacity and supply chain or obtaining or maintaining regulatory approvals, and/or coronavirus impacts, could materially damage our brand, business, prospects, financial condition and operating results.
While we are unaware of any present dispute concerning this agreement or our other agreements that concern ownership of or use of intellectual property rights , future disputes may arise concerning this or other agreements we have entered into that concern ownership of or use of intellectual property rights.
While we are unaware of any present dispute concerning this agreement or our other agreements that concern ownership of or use of intellectual property rights, future disputes may arise concerning this or other agreements we have entered into that concern ownership of or use of intellectual property rights. 14 Our business could be negatively impacted if we fail to adequately protect our intellectual property rights.
In the year ended June 30, 2022, two such dealers represented approximately 20% each of the Company’s revenues whereas in the year ended June 30, 2021, four such dealers represented approximately 18%, 15%, 13% and 10% of the Company’s revenues. As of June 30, 2022, one dealer represented 33% of the Company’s accounts receivable.
In the year ended June 30, 2023, three such dealers represented approximately 25%, 15% and 13% of the Company’s revenues whereas in the year ended June 30, 2022, two such dealers represented approximately 20% each of the Company’s revenues. As of June 30, 2023, four such dealers represented approximately 94% of the Company’s accounts receivable.
We do not anticipate paying dividends on our common stock, and investors may lose the entire amount of their investment. Cash dividends have never been declared or paid on our common stock, and we do not anticipate such a declaration or payment for the foreseeable future. We expect to use future earnings, if any, to fund business growth.
Cash dividends have never been declared or paid on our common stock, and we do not anticipate such a declaration or payment for the foreseeable future. We expect to use future earnings, if any, to fund business growth. Therefore, stockholders will not receive any funds absent a sale of their shares of common stock.
These rights, preferences and privileges could negatively affect the rights of holders of our common stock, and the right to convert such preferred stock into shares of our common stock at a rate or price that would have a dilutive effect on the outstanding shares of our common stock.
These rights, preferences and privileges could negatively affect the rights of holders of our common stock, and the right to convert such preferred stock into shares of our common stock at a rate or price that would have a dilutive effect on the outstanding shares of our common stock. 18 We do not anticipate paying dividends on our common stock, and investors may lose the entire amount of their investment.
As of the closing of our recent underwritten public offering, our executive officers and directors currently hold or have the right to acquire, in the aggregate, up to approximately 13.9% of our outstanding common stock.
Our executive officers and directors currently hold or have the right to acquire, in the aggregate, up to approximately 15.0 % of our outstanding common stock.
The issuance of additional preferred stock, while providing desirable flexibility in connection with possible financings and acquisitions and other corporate purposes, could make it more difficult for a third party to acquire a majority of the voting power of our outstanding voting securities, which could deprive our holders of common stock of a premium that they might otherwise realize in connection with a proposed acquisition of our company. 17 As an “emerging growth company” under the Jumpstart Our Business Startups Act, or JOBS Act, we are permitted to, and intend to, rely on exemptions from certain disclosure requirements.
The issuance of additional preferred stock, while providing desirable flexibility in connection with possible financings and acquisitions and other corporate purposes, could make it more difficult for a third party to acquire a majority of the voting power of our outstanding voting securities, which could deprive our holders of common stock of a premium that they might otherwise realize in connection with a proposed acquisition of our company.
If we fail to sell our products to one or more of these top customers in any particular period, or if a large customer purchases fewer of our products, defers orders or fails to place additional orders with us, or if we fail to develop additional major customers, our revenue could decline, and our results of operations could be adversely affected.
If we fail to sell our products to one or more of these top customers in any particular period, or if a large customer purchases fewer of our products, defers orders or fails to place additional orders with us, or if we fail to develop additional major customers, our revenue could decline, and our results of operations could be adversely affected. 11 If we fail to scale our business operations and otherwise manage future growth and adapt to new conditions effectively as we grow our company, we may not be able to produce, market, sell and service our products successfully.
Any attempts to increase prices in response to increased material costs could result in cancellations of energy storage orders and therefore materially and adversely affect our brand, image, business, prospects and operating results.
Any attempts to increase prices in response to increased material costs could result in cancellations of energy storage orders and therefore materially and adversely affect our brand, image, business, prospects and operating results. 12 Recent increases in mortgage interest rates may result in a decrease in demand by homeowners for our residential energy storage systems.
Our products and services are subject to substantial regulations, which are evolving, and unfavorable changes or failure by us to comply with these regulations could substantially harm our business and operating results.
Reduction in various federal and state rebate and incentive programs could also adversely affect product adoption. 13 Our products and services are subject to substantial regulations, which are evolving, and unfavorable changes or failure by us to comply with these regulations could substantially harm our business and operating results.
While we expect in the future to better understand our manufacturing costs, there is no guarantee we will be able to achieve sufficient cost savings to reach our gross margin and profitability goals.
While we expect in the future to better understand and control our manufacturing costs, there is no guarantee we will be able to achieve sufficient cost savings to reach our gross margin and profitability goals. We may also incur substantial costs or cost overruns in utilizing and increasing the production capability of our energy storage system facilities.
These stockholders may have interests, with respect to their common stock, that are different from our other stockholders and the concentration of voting power among one or more of these stockholders may have an adverse effect on the price of our common stock. 16 In addition, this concentration of ownership might adversely affect the market price of our common stock by: (1) delaying, deferring or preventing a change of control of our company; (2) impeding a merger, consolidation, takeover or other business combination involving our company; or (3) discouraging a potential acquirer from making a tender offer or otherwise attempting to obtain control of our company.
In addition, this concentration of ownership might adversely affect the market price of our common stock by: (1) delaying, deferring or preventing a change of control of our company; (2) impeding a merger, consolidation, takeover or other business combination involving our company; or (3) discouraging a potential acquirer from making a tender offer or otherwise attempting to obtain control of our company. 16 Future sales of shares by existing stockholders could cause our stock price to decline.
Upon expiration of each of these lock-up periods or upon the ability to sell shares pursuant to Rule 144, the trading price of our common stock could be adversely impacted if these stockholders sell, or indicate an intention to sell, substantial amounts of our common stock in the public market.
Upon ability to sell shares pursuant to Rule 144, the trading price of our common stock could be adversely impacted if these stockholders sell, or indicate an intention to sell, substantial amounts of our common stock in the public market. Nevada law and provisions in our articles of incorporation and bylaws could make a takeover proposal more difficult.
Decreases in the retail prices of electricity from utilities or other renewable energy sources could make our products less attractive to customers. Reduction in various federal and state rebate and incentive programs could also adversely affect product adoption.
Decreases in the retail prices of electricity from utilities or other renewable energy sources could make our products less attractive to customers.
In the event that we were required to take one or more such actions, our business, prospects, operating results and financial condition could be materially adversely affected.
In the event that we were required to take one or more such actions, our business, prospects, operating results and financial condition could be materially adversely affected. In addition, any litigation or claims, whether or not valid, could result in substantial costs, negative publicity and diversion of resources and management attention.
Therefore, stockholders will not receive any funds absent a sale of their shares of common stock. If we do not pay dividends, our common stock may be less valuable because a return on your investment will only occur if our stock price appreciates.
If we do not pay dividends, our common stock may be less valuable because a return on your investment will only occur if our stock price appreciates. We cannot assure stockholders of a positive return on their investment when they sell their shares, nor can we assure that stockholders will not lose the entire amount of their investment.
The extent and duration of the military action, sanctions and resulting market disruptions are impossible to predict, but could be substantial.
The extent and duration of the military action, sanctions and resulting market disruptions are impossible to predict, but could be substantial. Any such disruptions may also magnify the impact of other risks described in this registration statement.
Our future operating results depend to a large extent on our ability to manage our expansion and growth successfully.
Any failure to manage our growth effectively could materially and adversely affect our business, prospects, operating results and financial condition. Our future operating results depend to a large extent on our ability to manage our expansion and growth successfully.
Certain of our stockholders holding an aggregate of 13,907,867 shares and our officers and directors, have agreed not to offer, sell, dispose of or hedge such shares of our common stock, subject to specified limited exceptions, during the period continuing through the date that is 180 days after the date of our IPO, or January 23, 2023.
Certain of our stockholders holding an aggregate of 13,907,867 shares at the time of our July 2022 public offering and our officers and directors, agreed not to offer, sell, dispose of or hedge such shares of our common stock through January 23, 2023.
We may also incur substantial costs or cost overruns in utilizing and increasing the production capability of our energy storage system facilities. 12 If we are unable to achieve production cost targets on our products pursuant to our plans, we may not be able to meet our gross margin and other financial targets.
If we are unable to achieve production cost targets on our products pursuant to our plans, we may not be able to meet our gross margin and other financial targets.
To date, we have not experienced any issues with our supply chain, but delays through international ports have been experienced in the industry.
Thus far, the impact of COVID-19 on the global economy and our customers has not affected us materially. To date, we have not experienced any issues with our supply chain, but delays through international ports have been experienced in the industry.
In addition, any litigation or claims, whether or not valid, could result in substantial costs, negative publicity and diversion of resources and management attention. 14 In August 2021, we entered into an exclusive supply agreement with our Asian supplier pertaining to our NV7600 product. This agreement contains provisions that address the ownership and use of intellectual property rights.
In August 2021, we entered into an exclusive long term supply agreement with our Asian supplier pertaining to our inverter component. This agreement contains provisions that address the ownership and use of intellectual property rights.
The duration and scope of the impacts of the COVID-19 pandemic are uncertain and may continue to adversely affect our operations, supply chain, distribution, and demand for our products. The impact of COVID-19 on the global economy and our customers has thus far not affected us materially.
The duration and scope of the impacts of the COVID-19 pandemic are uncertain and may continue to adversely affect our operations, supply chain, distribution, and demand for our products. While the global designation of COVID-19 as a pandemic has recently ended, the Company is assessing any potential factors that may continue to impact its business.
Although we believe we have designed our products for safety, product liability claims, even those without merit, could harm our business, prospects, operating results and financial condition. Our risks in this area are particularly pronounced given that we have only recently begun to deliver energy storage products.
Our risks in this area are particularly pronounced given that we have only recently begun to deliver energy storage products. Moreover, a product liability claim could generate substantial negative publicity about our products and business and could have material adverse effect on our brand, business, prospects and operating results.
As of June 30, 2021, three such dealers represented an aggregate of 54% of our accounts receivable. Our limited customer base and concentration could expose us to the risk of substantial losses if a single dominant customer stops purchasing, or significantly reduces orders for, our products.
Our limited customer base and concentration could expose us to the risk of substantial losses if a single dominant customer stops purchasing, or significantly reduces orders for, our products. Our ability to maintain close relationships with these top customers is essential to the growth and profitability of our business.
Our plans call for achieving and sustaining significant increases in energy storage systems production and deliveries.
We may be unable to meet our growing energy storage production plans and delivery plans, any of which could harm our business and prospects. Our plans call for achieving and sustaining significant increases in energy storage systems production and deliveries.
Any such disruptions may also magnify the impact of other risks described in this registration statement. 13 We may become subject to product liability claims, which could harm our financial condition and liquidity if we are not able to successfully defend or insure against such claims.
We may become subject to product liability claims, which could harm our financial condition and liquidity if we are not able to successfully defend or insure against such claims. Although we believe we have designed our products for safety, product liability claims, even those without merit, could harm our business, prospects, operating results and financial condition.
We cannot assure stockholders of a positive return on their investment when they sell their shares, nor can we assure that stockholders will not lose the entire amount of their investment. The Warrants we issued in our July 2022 offering are speculative in nature, and the trading market for our Warrants are volatile, sporadic and limited.
The Warrants we issued in our July 2022 offering are speculative in nature, and the trading market for our Warrants are volatile, sporadic and limited.
We currently face competition from new and established domestic and international competitors and expect to face competition from others in the future, including competition from companies with new technology. The worldwide energy storage market is in its infancy, and we expect it will become more competitive in the future.
The markets in which we operate are in their infancy and highly competitive, and we may not be successful in competing in these industries as the industry further develops. We currently face competition from new and established domestic and international competitors and expect to face competition from others in the future, including competition from companies with new technology.
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Our ability to maintain close relationships with these top customers is essential to the growth and profitability of our business.
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If we were to encounter a significant disruption due to COVID-19 at one or more of our locations or suppliers, we may not be able to satisfy customer demand for a period of time.
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If we fail to scale our business operations and otherwise manage future growth and adapt to new conditions effectively as we grow our company, we may not be able to produce, market, sell and service our products successfully. Any failure to manage our growth effectively could materially and adversely affect our business, prospects, operating results and financial condition.
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Sales volume in our homeowner channel is partially dependent on the construction of new homes and the sale of existing homes in our residential markets. Many customers of our installation partners rely on mortgage loans from banks and other lenders in order to finance a substantial portion of the purchase price for their home, including any related improvements.
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Already in 2021, we have experienced five percent inflation in our cost of goods sold because of currency valuations; and · increases in global shipping costs have gone up 70 percent in 2021 due to shipping container shortages and delays at both shipping and receiving ports due to COVID and lack of appropriate workforce.
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Increased mortgage interest rates may lead to lower demand for new homes and a reduced number of homes available for solar origination through our homeowner channel. Additionally, increased interest rates may result in fewer secondary home sales, a reduction in the number of customers refinancing their mortgages and uncertainty about the economy.
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Moreover, a product liability claim could generate substantial negative publicity about our products and business and could have material adverse effect on our brand, business, prospects and operating results. The markets in which we operate are in their infancy and highly competitive, and we may not be successful in competing in these industries as the industry further develops.
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In particular, the California Public Energy Commission (“CPUC”) passed Net Energy Metering 3 (“NEM3”) in November 2022 with a phase in date of April 14, 2023. NEM3 significantly reduces the value to “excess” solar that a customer sends to the Utility during the day. Under NEM2, customer typically achieved a pay back period of 5-6 years.
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Future sales of shares by existing stockholders could cause our stock price to decline.
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Under NEM3, solar pay back is 10-12 years depending on the Utility. As a result, most solar installers focused on installing as much solar as possible prior to the April 14, 2023 deadline. This resulted in a delay of battery and ESS installations since adding these capabilities do not affect NEM status.
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Nevada law and provisions in our articles of incorporation and bylaws could make a takeover proposal more difficult.
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The full impact of NEM3 to both the solar and ESS industry will not be known for several months. Our business and operations would suffer in the event of third-party computer system failures, cyber-attacks on third-party systems or deficiency in our cyber security.
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We are an emerging growth company until the earliest of: · the last day of the fiscal year during which we have total annual gross revenues of $1 billion or more; · the last day of the fiscal year following the fifth anniversary of our initial public offering; · the date on which we have, during the previous 3-year period, issued more than $1 billion in non-convertible debt; or · the date on which we are deemed a “large accelerated issuer” as defined under the federal securities laws.
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We rely on information technology (“IT”) systems, including third-party “cloud based” service providers, to keep financial records, maintain product support data, and corporate records, to communicate with staff and external parties and to operate other critical functions. This includes critical systems such as email, other communication tools, electronic document repositories and archives.
Removed
In addition, the securities markets have from time to time experienced significant price and volume fluctuations that are unrelated to the operating performance of particular companies. These market fluctuations may also materially and adversely affect the market price of our common stock and Warrants. ITEM 1B. UNRESOLVED STAFF COMMENTS None.
Added
If any of these third-party information technology providers are compromised due to computer viruses, unauthorized access, malware, natural disasters, fire, terrorism, war and telecommunication failures, electrical failures, cyber-attacks or cyber-intrusions over the internet, then sensitive emails or documents could be exposed or deleted.
Added
Similarly, we could incur business disruption if our access to the internet is compromised, and we are unable to connect with third-party IT providers.
Added
The risk of a security breach or disruption, particularly through cyber-attacks or cyber intrusion, including by computer hackers, foreign governments and cyber terrorists, has generally increased as the number, intensity and sophistication of attempted attacks and intrusions from around the world have increased.
Added
To the extent that any disruption or security breach results in a loss of or damage to our data or applications, or inappropriate disclosure of confidential or proprietary information, we could incur liability and delay of our product development and support efforts.
Added
These stockholders may have interests, with respect to their common stock, that are different from our other stockholders and the concentration of voting power among one or more of these stockholders may have an adverse effect on the price of our common stock.
Added
Additionally, we may become subject to an evolving set of compliance regulations pertaining to environmental, social and governance (“ESG”) matters as well as cybersecurity standards that are promulgated by Nasdaq or other regulatory bodies.
Added
The price of our common stock and Warrants may be volatile.
Added
These market fluctuations may also materially and adversely affect the market price of our common stock and Warrants. Negative research about our business published by analysts or journalists could cause our stock price to decline. A lack of regularly published research about our business could cause trading volume or our stock price to decline.
Added
The trading market for our common stock depends in part on the research and reports that analysts and journalists publish about us or our business. If analysts or journalists publish inaccurate or unfavorable research about our business, our stock price would likely decline.
Added
If we fail to meet the expectations of analysts for our operating results, or if the analysts who covers us downgrade our stock, our stock price would likely decline.
Added
If one or more of these analysts ceases coverage of us or fails to publish reports on us regularly, demand for our stock could decrease, which could cause our stock price and trading volume to decline.
Added
Claims for indemnification by our directors and officers may reduce our available funds to satisfy successful third-party claims against us and may reduce the amount of money available to us.
Added
Our articles of incorporation and bylaws contain provisions that eliminate, to the maximum extent permitted by the corporation law of the State of Nevada, the personal liability of our directors and executive officers for monetary damages for breach of their fiduciary duties as a director or officer.
Added
Our articles of incorporation and bylaws also provide that we will indemnify our directors and executive officers and may indemnify our employees and other agents to the fullest extent permitted by the corporation law of the State of Nevada.
Added
Any claims for indemnification made by our directors or officers could impact our cash resources and our ability to fund the business. Shareholder activism could cause material disruption to our business. Publicly traded companies have increasingly become subject to campaigns by activist investors advocating corporate actions such as actions related to environment, social and governance (ESG) matters, among other issues.
Added
Responding to proxy contests and other actions by such activist investors or others in the future could be costly and time-consuming, disrupt our operations and divert the attention of our Board of Directors and senior management from the pursuit of our business strategies, which could adversely affect our results of operations and financial condition. ITEM 1B. UNRESOLVED STAFF COMMENTS None.

Item 2. Properties

Properties — owned and leased real estate

2 edited+2 added−4 removed0 unchanged
Biggest changeWe believe this facility will accommodate our growth for at least three years. The facility was secured under a sublease agreement with our contract manufacturer. Under the terms of the sublease agreement, we are required to make rental payments of $10,350 per month during the initial one-year term of the agreement.
Biggest changeWe believe this facility will accommodate our growth for at least three years. The facility was secured under a sublease agreement with our former contract manufacturer. Under the terms of the sublease agreement, we are currently required to make rental payments of $10,750 per month, including our share of operating expenses.
ITEM 2. PROPERTIES Commencing January 2021, NeoVolta moved into a new dedicated headquarters and manufacturing facility in Poway, California, just north of San Diego. This state-of-the-art, energy-efficient facility has ample square footage, shipping and receiving space, and office spaces to support the company’s growth by providing double the production capability and increases shipping efficiency from that of our previous facility.
ITEM 2. PROPERTIES Commencing January 2021, we moved into a new dedicated headquarters and manufacturing facility in Poway, California, just north of San Diego. This state-of-the-art, energy-efficient facility has ample square footage, shipping and receiving space, and office spaces to support the company’s growth by providing double the production capability and increases shipping efficiency from that of our previous facility.
Removed
The sublease agreement is renewable upon mutual agreement of both parties for up to four additional years at a modest increase in the monthly rent, however, we are under no obligation to renew it. All of NeoVolta’s products are manufactured in-house at our Poway, CA facility. We manufacture our products in an efficient build-to-order model, keeping very little finished-goods inventory.
Added
We entered into the sublease agreement with our former contract manufacturer, effective January 1, 2021, for an initial term of 12 months. The sublease is renewable for additional terms of 12 months upon mutual agreement of both parties, provided thirty days’ notice is given for each subsequent term, at a modest increase in the monthly rent, through February 28, 2025.
Removed
We sublease and share our facility with our contract manufacturer, ConnectPV, creating a seamless transition from sub-components to finished goods that are ready for shipping in a short amount of time. We issue build orders to ConnectPV, they pull raw materials from the warehouse, assemble the final units and prepare them for shipment or pick-up.
Added
However, we are under no obligation to renew it. We do not own any real property.
Removed
Our timeline from order to delivery is usually less than two-weeks. 20 The end-product is then picked up or shipped from our docks, signed off by our installer and logged into our system when installed for system monitoring.
Removed
We run multiple quality checks throughout the process and have systems to track components and end-units from Asia to San Diego to the end-user’s location. Our manufacturing partner records all component serial numbers, all torque settings, and annotates all required item numbers and functionality prior to packaging. We do not own any real property.

Item 5. Market for Registrant's Common Equity

Market for Common Equity — stock, dividends, buybacks

1 edited+2 added−10 removed3 unchanged
Biggest changeFrom October 2019 to July 27, 2022, our common stock was quoted on the OTCQB Marketplace (the “OTCQB”) under the symbol “NEOV.” Holders As of September 27, 2022, there were approximately 120 holders of record of our common stock.
Biggest changeFrom October 2019 to July 27, 2022, our common stock was quoted on the OTCQB Marketplace (the “OTCQB”) under the symbol “NEOV.” Holders As of September 22, 2023, there were approximately 28 holders of record of our common stock.
Removed
Recent Sales of Unregistered Securities In October 2021, we completed a private placement of convertible notes in aggregate principal amount of $1,068,000 to accredited investors. In conjunction with the public offering we completed in August 2022, all holders of the convertible notes converted their debt into a total of 267,000 shares of common stock at the stated conversion rate.
Added
Recent Sales of Unregistered Securities In the three months ended March 31, 2023, we also issued a total of 9,759 shares of common stock to two of our independent installers as payment for reaching certain volume thresholds pursuant to their distribution agreements.
Removed
The securities were issued in reliance on the exemption from registration provided by Section 4(a)(2) of the Securities Act or Regulation D promulgated thereunder. In December 2021, we issued 104,165 shares of our common stock to four advisors as compensation for advisory board services provided to the Company.
Added
The securities were issued in reliance on the exemption from registration provided by Section 4(a)(2) of the Securities Act. Purchases of Equity Securities by the Issuer and Affiliated Purchasers We did not repurchase any of our equity securities during the year ended June 30, 2023. ITEM 6. [RESERVED]
Removed
The securities were issued in reliance on the exemption from registration provided by Section 4(a)(2) of the Securities Act or Regulation D promulgated thereunder. In March 2022, we issued 1,000,000 of previously earned shares of our common stock to Canmore International as payment for reaching certain milestones under a compensation contract.
Removed
At that time, we also issued 75,000 shares earned by a director and an attorney, and 8,568 shares to PMP Energy as payment for reaching certain volume thresholds pursuant to a distribution agreement.
Removed
The securities were issued in reliance on the exemption from registration provided by Section 4(a)(2) of the Securities Act. 22 Use of Proceeds from Registered Offering On August 1, 2022, we completed our public offering of our common stock and Warrants, and on August 5, 2022, the underwriters of the offering exercise the over-allotment option in connection with such offering.
Removed
Pursuant to the offering, we issued and sold 1,121,250 shares of our common stock and 1,121,250 Warrants to purchase our common stock at a price to the public of $4.00 per share.
Removed
All of the shares of common stock, Warrants and shares of common stock underlying the Warrants were registered under the Securities Act pursuant to a registration statement on Form S-1 (Registration No. 333-264275), which was declared effective by the SEC on July 27, 2022.
Removed
We received net proceeds of approximately $3,855,000, after deducting underwriting discounts and commissions and offering expenses borne by us of approximately $630,000. None of the expenses incurred by us were direct or indirect payments to any of (i) our directors or officers or their associates, (ii) persons owning 10% or more of our common stock, or (iii) our affiliates.
Removed
There has been no material change in the planned use of proceeds from our offering as described in our final prospectus filed with the SEC on July 29, 2022 pursuant to Rule 424(b)(4). Maxim Group, LLC acted as sole book-running manager for the offering.
Removed
The offering commenced on July 27, 2022 and did not terminate before all securities registered in the registration statement were sold.

Item 7. Management's Discussion & Analysis

Management's Discussion & Analysis (MD&A) — revenue / margin commentary

26 edited+10 added−16 removed16 unchanged
Biggest changeUnderwritten Public Offering In early August 2022, we completed an underwritten public offering of our equity securities in the form of Units with each Unit consisting of one share of common stock and one warrant (the “Warrants”) to purchase one share of common stock at an exercise price of $4.00 per share.
Biggest changeSuch notes were ultimately converted into common stock in conjunction with the closing of our public offering in August 2022. 22 We completed an underwritten public offering of our equity securities in the form of Units in early August 2022.
We were founded to identify new ways to leverage emerging technologies with the dynamic changes that are taking place in the energy delivery space. We primarily market and sell our products directly to our certified solar installers and solar equipment distributors. We also are also pursuing agreements with residential developers, commercial developers, and other commercial opportunities.
We were founded to identify new ways to leverage emerging technologies with the dynamic changes that are taking place in the energy delivery space. We primarily market and sell our products directly to our certified solar installers and solar equipment distributors. We are also pursuing agreements with residential developers, commercial developers, and other commercial opportunities.
We encourage you to review the “Cautionary Note Regarding Forward-Looking Statements” and “Risk Factors” sections in this report. Overview We are a designer, manufacturer, and seller of high-end Energy Storage Systems (or ESS), primarily our NeoVolta NV14 and NV 24, which can store and use energy via batteries and an inverter at residential or commercial sites.
We encourage you to review the “Cautionary Note Regarding Forward-Looking Statements” and “Risk Factors” sections in this report. Overview We are a designer, manufacturer, and seller of high-end Energy Storage Systems (or ESS), primarily our NeoVolta NV14, NV14-K, and NV 24, which can store and use energy via batteries and an inverter at residential or commercial sites.
We will remain an emerging growth company until the earliest of (i) the last day of our first fiscal year (a) following the fifth anniversary of the completion of our August 2022 offering, (b) in which we have total annual gross revenues of at least $1.07 billion or (c) in which we are deemed to be a large accelerated filer, which means the market value of our common stock that is held by non-affiliates exceeds $700.0 million as of the prior June 30th and (ii) the date on which we have issued more than $1.0 billion in non-convertible debt securities during the prior three-year period.
We will remain an emerging growth company until the earliest of (i) the last day of our first fiscal year (a) following the fifth anniversary of the completion of our August 2022 offering, (b) in which we have total annual gross revenues of at least $1.235 billion or (c) in which we are deemed to be a large accelerated filer, which means the market value of our common stock that is held by non-affiliates exceeds $700.0 million as of the prior June 30th and (ii) the date on which we have issued more than $1.0 billion in non-convertible debt securities during the prior three-year period.
The preparation of these consolidated financial statements requires us to make estimates and assumptions that affect the reported amounts of assets and liabilities and the disclosure of contingent assets and liabilities at the date of the financial statements, as well as the reported expenses incurred during the reporting periods.
The preparation of these financial statements requires us to make estimates and assumptions that affect the reported amounts of assets and liabilities and the disclosure of contingent assets and liabilities at the date of the financial statements, as well as the reported expenses incurred during the reporting periods.
ITEM 7. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS The following discussion should be read in conjunction with the consolidated financial statements and notes thereto included elsewhere in this report.
ITEM 7. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS The following discussion should be read in conjunction with the financial statements and notes thereto included elsewhere in this report.
Actual results may differ from these estimates under different assumptions or conditions. 26 We believe that certain accounting policies, particularly those related to the recognition of revenues arising from the sales of our ESS products to customers of our business, affect our more significant judgments and estimates used in the preparation of our financial statements.
Actual results may differ from these estimates under different assumptions or conditions. 23 We believe that certain accounting policies, particularly those related to the recognition of revenues arising from the sales of our ESS products to customers of our business, affect our more significant judgments and estimates used in the preparation of our financial statements.
Recent Developments As a result of the continued spread of the COVID-19 coronavirus since early 2020, economic uncertainties have arisen which could impact business operations, supply chains, energy demand, and commodity prices that are beyond our control.
Other Developments As a result of the continued spread of the COVID-19 coronavirus since early 2020, economic uncertainties have arisen which could impact business operations, supply chains, energy demand, and commodity prices that are beyond our control.
Because we are purely dedicated to energy solar systems, virtually of our current resources and efforts go into further developing our flagship NV14 and NV 24 products, while focusing on specific industry needs for our next generation of products.
Because we are purely dedicated to energy solar systems, virtually all of our current resources and efforts go into further developing our flagship NV14, NV14-K, and NV 24 products, while focusing on specific industry needs for our next generation of products.
Business and Summary of Significant Accounting Policies” of the notes to our financial statements for the fiscal year ended June 30, 2022, set forth below under, “Index to Financial Statements”, for a further description of our critical accounting policies and estimates.
Business and Summary of Significant Accounting Policies” of the notes to our financial statements for the fiscal year ended June 30, 2023, set forth below under, “Index to Financial Statements”, for a further description of our critical accounting policies and estimates.
The gross proceeds of the offering, including the underwriters’ exercise of the overallotment option, were $4,485,000 and the net proceeds, after deduction of underwriting discounts and other offering costs, were approximately $3,855,000.
The gross proceeds of the offering, including the underwriters’ exercise of the overallotment option, were $4,485,000 and the net proceeds, after deduction of underwriting discounts and other offering costs, were approximately $3,780,000.
The gross proceeds of the offering were $4,485,000 and the net proceeds, after deduction of underwriting discounts and other offering costs, were approximately $3,855,000. We are planning to use the proceeds of this public offering to increase our current production capacity, expand our product portfolio, enlarge our product marketing and sales efforts, and for other general corporate purposes.
The gross proceeds of the offering were $4,485,000 and the net proceeds, after deduction of underwriting discounts and other offering costs, were approximately $3,780,000. We are using the proceeds of this public offering to increase our current production capacity, expand our product portfolio, enlarge our product marketing and sales efforts, and for other general corporate purposes.
Results of Operations Comparison of the Years Ended June 30, 2022 and 2021 Revenues - Revenues from contracts with customers for the year ended June 30, 2022 were $4,473,514 compared to $4,823,510 for the year ended June 30, 2021.
Results of Operations Comparison of the Years Ended June 30, 2023 and 2022 Revenues - Revenues from contracts with customers for the year ended June 30, 2023 were $3,455,813 compared to $4,473,514 for the year ended June 30, 2022.
In conjunction with the public offering, all holders of the Company’s 2018 convertible notes in the total amount of $53,716 converted their debt into a total of 9,404,867 shares of common stock at the stated conversion rate, and all holders of the Company’s 2021 convertible notes in the total amount of $1,068,000 converted their debt into a total of 267,000 shares of common stock at the stated conversion rate.
In conjunction with the public offering, all holders of our 2018 convertible notes in the total amount of $59,251, including accrued interest, converted their debt into a total of 9,404,867 shares of common stock at the stated conversion rate, and all holders of our 2021 convertible notes in the total amount of $1,120,035, including accrued interest, converted their debt into a total of 267,000 shares of common stock at the stated conversion rate.
Research and Development Expense - Research and development expenses for year ended June 30, 2022 were $68,503 compared to $42,801 for year ended June 30, 2021. Such fluctuation was due to a modest increase in the level of the Company’s product development efforts.
Research and Development Expense - Research and development expenses for year ended June 30, 2023 were $29,936 compared to $68,503 for year ended June 30, 2022. Such fluctuation was due to a modest decrease in the level of our product development efforts.
General and Administrative Expense - General and administrative expenses for the year ended June 30, 2022 were $6,353,920 compared to $8,255,865 for the year ended June 30, 2021.
General and Administrative Expense - General and administrative expenses for the year ended June 30, 2023 were $3,293,758 compared to $6,353,920 for the year ended June 30, 2022.
Net cash provided by financing activities in the year ended June 30, 2022 was $1,068,000, compared to zero in the year ended June 30, 2021. This fluctuation was entirely attributable to the issuance of short-term convertible notes to a group of accredited investors in October 2021 in the amount of $1,068,000.
Our net cash provided by financing activities in the year ended June 30, 2022 resulted from the issuance of our convertible notes payable to a group of accredited investors in October 2021 in the amount of $1,068,000.
Between the initial closing of the offering and the underwriters’ exercise of the overallotment option, we sold a total of 1,121,250 Units in the offering at an offering price to the public of $4.00 per Unit.
Each Unit consisted of one share of common stock and one warrant to purchase one share of common stock at an exercise price of $4.00 per share. We sold a total of 1,121,250 Units in the offering at an offering price to the public of $4.00 per Unit.
Such decrease was primarily due to the reduction in the expense recorded for the fair value of incentive shares of common stock earned by the Company’s executive officers under their Board approved contracts, largely resulting from a lesser number of shares being earned in the year ended June 30, 2022 compared to the year ended June 30, 2021.
Such decrease was primarily due to the reduction in the expense recorded for the fair value of incentive shares of common stock earned by our executive officers under their new employment contracts, effective in March 2022.
We believe we are unique in the marketplace due to our low cost, our innovative battery chemistry, our product versatility and our commitment to installer service. Because of these factors, we believe NeoVolta is uniquely equipped to establish itself as a major player in the energy storage market.
We believe we are unique in the marketplace due to our low cost, our innovative battery chemistry, our product versatility and our commitment to installer service.
The cost of goods sold in both periods reflected the cost of procuring and assembling the component parts of the energy storage systems that were sold in each fiscal year and resulted in gross profits on such sales of approximately 15% and 13%, respectively, with the comparative increase largely due to differences with regard to the impact of temporary tariffs on materials we source from China.
The cost of goods sold in both periods reflected the cost of procuring and assembling the component parts of the energy storage systems that were sold in each fiscal year and resulted in gross profits on such sales of approximately 20% and 15%, respectively, with such increase largely being due to transitional factors related to the recent assumption of manufacturing operations from our contract operator which are not expected to be recurring in the future.
In May 2019, we completed a public offering of shares of our common stock pursuant to Regulation A of the Securities Act (the “IPO”). The IPO was for a total of 3,500,000 shares of our common stock at an offering price of $1.00 per share.
The IPO was for a total of 3,500,000 shares of our common stock at an offering price of $1.00 per share. We used the proceeds of the IPO to ramp up production, marketing, and sales of our NV14 product line.
We anticipate that demand for our products will continue to increase and that we will have sufficient cash to operate for at least the next 12 months, after taking into consideration the additional equity offering completed in August 2022, as noted above.
However, we anticipate that demand for our products will ultimately increase over time and that we will have sufficient cash to operate for at least the next 12 months.
Net Loss - Net loss for the year ended June 30, 2022 was $5,804,834 compared to $7,645,872 for the year ended June 30, 2021, representing the aggregate of the various revenue and expense categories indicated above.
Net Loss - Net loss for the year ended June 30, 2023 was $2,639,833 compared to $5,804,834 for the year ended June 30, 2022, representing the aggregate of the various revenue and expense categories indicated above. We have not recognized any income tax benefit for these net losses due to the uncertainty of our ultimate realization.
Cost of Goods Sold - Cost of goods sold for the year ended June 30, 2022 were $3,806,381 compared to $4,175,795 for the year ended June 30, 2021.
Business - Regulatory Environment” for a discussion of the new utility regulations). Cost of Goods Sold - Cost of goods sold for the year ended June 30, 2023 were $2,767,818 compared to $3,806,381 for the year ended June 30, 2022.
Net cash used in operating activities in the year ended June 30, 2022 was $1,163,296, compared to $883,623 in the year ended June 30, 2021, largely due to a somewhat higher net cash operating loss in the current fiscal year period. Financing activities .
Liquidity and Capital Resources Operating activities . Net cash used in operating activities in the year ended June 30, 2023 was $2,108,001, compared to $1,163,296 in the year ended June 30, 2022, reflecting a significant increase in net working capital requirements for operations of approximately $800,000 in the current fiscal year period. Financing activities .
Removed
We used the proceeds of the IPO to ramp up production, marketing, and sales of our NV14 product line.
Added
Because of these factors, we believe NeoVolta is uniquely equipped to establish itself as a major player in the energy storage market. 21 In May 2019, we completed a public offering of shares of our common stock pursuant to Regulation A of the Securities Act (the “IPO”).
Removed
The shares of common stock and the Warrants comprising the Units were immediately separated at closing of the offering and each is now independently listed on the NASDAQ Capital Market under the symbols “NEOV” and “NEOVW,” respectively.
Added
Such decrease was primarily due to the pendency of the April 2023 effective date of new utility regulations in the State of California that we believe caused an economic disincentive for residential utility customers to acquire our energy storage systems prior to the effective date of those regulations (see “Item 1.
Removed
Each Warrant became exercisable on the date of issuance and will expire five years from the date of issuance. 24 Between the initial closing of the offering and the underwriters’ exercise of the overallotment option, we sold a total of 1,121,250 Units in the offering at an offering price to the public of $4.00 per Unit.
Added
Interest Expense - Interest expense for the year ended June 30, 2023 was $4,134 compared to $49,544 for the year ended June 30, 2022. This decrease resulted from the conversion of our 2018 and 2021 convertible notes in conjunction with the closing of our public equity offering in August 2022.
Removed
We are planning to use the proceeds of this public offering to increase our current production capacity, expand our product portfolio, enlarge our product marketing and sales efforts, and for other general corporate purposes.
Added
Net cash provided by financing activities in the year ended June 30, 2023 was $3,780,405, compared to $1,068,000 in the year ended June 30, 2022.
Removed
In conjunction with the public offering, all holders of the Company’s 2018 convertible notes in the total amount of $53,716 converted their debt into a total of 9,404,867 shares of common stock at the stated conversion rate, and all holders of the Company’s 2021 convertible notes in the total amount of $1,068,000 converted their debt into a total of 267,000 shares of common stock at the stated conversion rate (see Note 3 “Equity” of the notes to our financial statements for the fiscal year ended June 30, 2022, set forth below under, “Index to Financial Statements”).
Added
As further discussed below, our net cash provided by financing activities in the year ended June 30, 2023 was entirely attributable to the successful completion of an underwritten public offering of our equity securities in early August 2022.
Removed
As a result of the closing of the public offering and the conversion of both sets of convertible notes, the Company has a total of 32,770,368 shares of common stock outstanding and has fully eliminated its convertible debt.
Added
As a result of the simultaneous conversion of both sets of convertible notes, we fully eliminated our convertible debt. As of June 30, 2023, we had a cash balance of $2.0 million and net working capital of approximately $6.5 million. Currently, we are not generating a break-even level of net operating cash flow from our net sales.
Removed
Such decrease partially reflected the negative impact of the COVID-19 pandemic on sales of our assembled energy storage systems as well as timing differences in receiving installation orders from our major wholesale dealers and installers operating in California and other states in the two quarters ended June 30, 2022.
Added
Recent Assembly Inventory Purchase In April 2023, we closed the bulk purchase of raw materials inventory from our contract manufacturer by making a cash payment to that company in the net amount of approximately $1.3 million. This transaction was completed pursuant to an amendment of our Master Supply Agreement with our contract manufacturer.
Removed
We expect research and development expense to increase in the future as we improve and expand upon our product portfolio.
Added
In addition to the purchase of the raw materials inventory from our contract manufacturer, this amendment provided for the eventual assumption by us of full responsibility from our contract manufacturer for the manufacturing of our proprietary Energy Storage Systems (“ESS”) units.
Removed
Interest Expense - Interest expense for the year ended June 30, 2022 was $49,544 compared to $24,521 for the year ended June 30, 2021, reflecting an increase resulting from the interest expense accrued on new convertible notes issued in October 2021, partially offset by discontinuing the amortization of a previously recorded debt discount to interest expense, which was associated with convertible notes issued in May 2018, due to the adoption of a new accounting principle on July 1, 2021.
Added
Pursuant to the amendment, we assumed such responsibility for the manufacturing process surrounding our ESS units from our contract manufacturer on June 1, 2023. In conjunction with assuming this responsibility, we hired the two employees of our contract manufacturer who previously performed contract manufacturing services for us. We plan to hire three additional “assemblers” in the second half of 2023.
Removed
Gain on Forgiveness of Debt - Gain on forgiveness of debt for the year ended June 30, 2022 was zero compared to $29,600 for the year ended June 30, 2021, reflecting the forgiveness of a U.S. government sponsored loan that was received in May 2020 and was subsequently forgiven in full in February 2021.
Added
All of our manufacturing certifications are listed under NeoVolta. This amended agreement had no effect on our present Sublease Agreement with our contract manufacturer, pertaining to our existing manufacturing location in Poway, CA (see “Item 2 – Properties”).
Removed
The Company has not recognized any income tax benefit for these net losses due to the uncertainty of its ultimate realization. 25 Liquidity and Capital Resources Operating activities .
Removed
As of June 30, 2022, we had a cash balance of $0.3 million and net working capital of $2.7 million.
Removed
However, in early August 2022, we completed an underwritten public offering of our equity securities in the form of Units with each Unit consisting of one share of common stock and one warrant to purchase one share of common stock at an exercise price of $4.00 per share.
Removed
The gross proceeds of the offering, including the underwriters’ exercise of the overallotment option, were $4,485,000 and the net proceeds, after deduction of underwriting discounts and other offering costs, were approximately $3,855,000.
Removed
As a result of the closing of the public offering and the conversion of both sets of convertible notes, the Company has a total of 32,770,368 shares of common stock outstanding and has fully eliminated its convertible debt.
Removed
Currently, we are generating a roughly break-even level of net operating cash flow, excluding the higher corporate overhead expenses related to our recently completed public offering, from our net sales. However, we have not sustained such performance on a consistent basis for an extended period of time.

Other NEOVW 10-K year-over-year comparisons