Company: NEOV
Filing Date: 2025-09-29
Form Type: 10-K
Source: 0001683168-25-007304
Chunk: 393

Company: NeoVolta Inc.
Filing Date: 2025-09-29
Form: 10-K
Item: Item 6
Chunk 393
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, on essentially the same terms, through February 28, 2025. Prior to expiration of the extended sublease, the
Company relocated its corporate and manufacturing office space to another facility in the same vicinity under a 13 month sublease agreement
with the sublandlord, at a base rental of $18,638 per month. We are accounting for the lease agreement as an operating lease under ASU
2016-02, Leases (Topic 842). Accordingly, the Company has capitalized the present value of the future lease obligations and is
amortizing the related right-of-use asset on a straight-line basis each month over the term of the lease.

As indicated in Note 1, the
Company sells its proprietary ESS units through wholesale dealers, primarily in California. In that regard, the Company has entered into
agreements with several wholesale dealers operating in California and other states under which the Company has incentivized the dealers
to achieve quarterly sales above targeted levels by agreeing to grant them shares of the Company’s common stock for exceeding such
quarterly sales targets, subject to defined maximums, as determined annually on a calendar year basis.

We are dependent on our two
main component vendors for our suppliers of batteries, inverters and other raw materials and the inability of these single-source suppliers
to deliver necessary components of our products according to our schedule and at prices, quality levels and volumes acceptable to us,
or our inability to efficiently manage these components, could have a material adverse effect on our financial condition and operating
results. Beginning in April 2025, the Trump Administration implemented a significant increase in tariff rates on all goods imported from
China, although it was temporarily suspended for 90 days in April 2025 and the suspension has recently been extended to early November
2025. Prior to the tariff escalation in April 2025, we had anticipated the likelihood of facing such a tariff increase and began stockpiling
our inventory of these two components. As a result, we do not anticipate having to purchase a significant level of such components at
post-tariff prices for the next several months.

From time to time in the ordinary
course of our business, the Company may be involved in legal proceedings, the outcomes of which may not be determinable. The Company is
not involved in any legal proceedings at this time. The results of litigation are inherently unpredictable. Any claims against us, whether
meritorious or not, could be time consuming, result in costly litigation, require significant amounts of