NeoVolta(NEOV) - 2025 Q3 - Quarterly Report

PART I. FINANCIAL INFORMATION Financial Statements The company's unaudited financial statements for the period ended March 31, 2025, show significant asset and liability growth, substantial revenue increase, a widened net loss, and negative operating cash flow offset by financing activities Balance Sheet Summary (Unaudited) | Balance Sheet Items | March 31, 2025 | June 30, 2024 | | :--- | :--- | :--- | | Assets | | | | Cash and cash equivalents | $535,966 | $986,427 | | Accounts receivable, net | $2,356,468 | $1,805,980 | | Inventory, net | $2,279,725 | $1,787,308 | | Total current assets | $5,711,691 | $4,656,530 | | Liabilities | | | | Short-term notes payable | $1,420,116 | $– | | Payable to line of credit lender | $383,538 | $– | | Total liabilities | $1,885,240 | $61,100 | | Total stockholders' equity | $3,826,451 | $4,595,430 | Statement of Operations - Three Months Ended March 31 (Unaudited) | Metric | 2025 | 2024 | | :--- | :--- | :--- | | Revenues | $2,014,105 | $283,900 | | Gross profit | $514,508 | $166,145 | | General and administrative | $1,857,531 | $756,118 | | Loss from operations | ($1,370,970) | ($600,365) | | Net loss | ($1,449,331) | ($589,473) | | Net loss per share | ($0.04) | ($0.02) | Statement of Operations - Nine Months Ended March 31 (Unaudited) | Metric | 2025 | 2024 | | :--- | :--- | :--- | | Revenues | $3,675,922 | $2,065,858 | | Gross profit | $931,266 | $493,190 | | General and administrative | $4,136,167 | $2,085,976 | | Loss from operations | ($3,283,789) | ($1,603,178) | | Net loss | ($3,384,962) | ($1,574,232) | | Net loss per share | ($0.10) | ($0.05) | Cash Flow Summary - Nine Months Ended March 31 (Unaudited) | Cash Flow Activity | 2025 | 2024 | | :--- | :--- | :--- | | Net cash used in operating activities | ($3,501,515) | ($988,827) | | Net cash provided by financing activities | $3,051,054 | $– | | Net decrease in cash | ($450,461) | ($988,827) | | Cash at end of period | $535,966 | $1,013,962 | - The company designs, sells, and manufactures Energy Storage Systems (ESS) for residential and commercial sites, primarily selling through wholesale customers[30] - Significant customer concentration exists. For the three months ended March 31, 2025, two dealers represented approximately 48% and 15% of revenues. For the nine-month period, three dealers represented 26%, 24%, and 15% of revenues[34] - In September 2024, the company secured a line of credit for up to $5,000,000. As of March 31, 2025, net borrowings were $383,538. Additionally, the company initiated short-term borrowings from a commercial accounts receivable lender, with an outstanding balance of $1,420,116 as of March 31, 2025[43][45] - In February 2025, the company closed a private equity offering, issuing 543,500 shares of common stock at $2.00 per share for gross proceeds of $1,087,000[46] Management's Discussion and Analysis of Financial Condition and Results of Operations Management attributes significant revenue growth to new sales channels and CEO hiring, but increased G&A expenses led to a wider net loss, with liquidity bolstered by recent financing and a new tariff risk identified Quarterly Performance Comparison (Three Months Ended March 31) | Metric | 2025 | 2024 | Change Driver | | :--- | :--- | :--- | :--- | | Revenues | $2,014,105 | $283,900 | Impact of opening new sales channels. | | G&A Expense | $1,857,531 | $756,118 | Engagement of new CEO and other employees, leading to higher cash and stock compensation. | | Net Loss | ($1,449,331) | ($589,473) | Increased operating expenses outpaced gross profit growth. | Year-to-Date Performance Comparison (Nine Months Ended March 31) | Metric | 2025 | 2024 | Change Driver | | :--- | :--- | :--- | :--- | | Revenues | $3,675,922 | $2,065,858 | Impact of opening new sales channels. | | G&A Expense | $4,136,167 | $2,085,976 | Engagement of new CEO and other employees, leading to higher cash and stock compensation. | | Net Loss | ($3,384,962) | ($1,574,232) | Increased operating expenses outpaced gross profit growth. | - Net cash used in operating activities increased to $3.5 million for the nine months ended March 31, 2025, from $0.99 million in the prior year, due to a higher net loss and increased working capital needs, including inventory stockpiling[85] - Financing activities provided $3.05 million in cash, sourced from a private equity offering ($1.09M), borrowings under a new line of credit and other short-term debt, and proceeds from warrant exercises ($160.4K)[86] - The company has stockpiled its main components (batteries and inverters) from China in anticipation of significant tariff increases implemented by the new Trump Administration in April 2025. This mitigates the short-term impact, but prolonged tariffs could adversely affect sales and profitability[89][90] Quantitative and Qualitative Disclosures About Market Risk As a "smaller reporting company," NeoVolta is exempt from providing quantitative and qualitative disclosures about market risk - The company is exempt from this disclosure requirement because it qualifies as a "smaller reporting company" under Exchange Act Rule 12b-2[93] Controls and Procedures Management concluded that disclosure controls were ineffective as of March 31, 2025, due to a material weakness from lack of segregation of duties, with no material changes to internal controls during the quarter - The CEO and CFO concluded that the company's disclosure controls and procedures were not effective as of March 31, 2025[95] - The ineffectiveness is due to a material weakness stemming from a lack of segregation of duties, which is challenging to remediate given the company's size and resource constraints[95] - There were no changes in internal controls over financial reporting during the quarter that materially affected, or are reasonably likely to materially affect, these controls[97] PART II. OTHER INFORMATION Legal Proceedings The company is not currently a party to any material legal proceedings and is unaware of any such proceedings being contemplated against it - As of the report date, the company is not involved in any material legal proceedings[99] Risk Factors No material changes to risk factors were reported, except for a new risk concerning significant tariff increases on key components from China, which could adversely affect sales and profitability despite inventory stockpiling - A new risk factor has been added regarding significant tariff increases on goods imported from China, which applies to the company's main raw material components: batteries and inverters[101] - The company has mitigated the short-term risk by stockpiling inventory but acknowledges that if a trade agreement is not reached, it may have to either absorb the costs or pass them to customers, both of which could materially and adversely affect sales and/or profitability[101][102] Unregistered Sales of Equity Securities and Use of Proceeds On February 28, 2025, the company completed a private equity offering, issuing 543,500 common shares at $2.00 each for gross proceeds of $1,087,000, designated for working capital and general corporate purposes - The company closed a private placement on February 28, 2025, raising $1,087,000 in gross proceeds by selling 543,500 shares at $2.00 per share[103] - The sale was made to accredited investors under an exemption from registration pursuant to Section 4(a)(2) of the Securities Act and/or Rule 506 of Regulation D[103] Defaults Upon Senior Securities The company reports no defaults upon its senior securities - None reported[104] Mine Safety Disclosures This item is not applicable to the company - Not applicable[105] Other Information During the reported quarter, none of the company's directors or executive officers adopted or terminated a Rule 10b5-1 or non-Rule 10b5-1 trading arrangement - No director or executive officer has adopted or terminated a Rule 10b5-1 trading plan or other non-Rule 10b5-1 trading arrangement during the period[106] Exhibits This section lists all exhibits filed with the Form 10-Q, including corporate governance documents, recent agreements, and required certifications by the Principal Executive and Financial Officers - The report includes a list of filed exhibits, such as amended corporate articles, bylaws, employment agreements, and required SOX 302 and 906 certifications[107]