Company: NEOV
Filing Date: 2025-05-09
Form Type: 10-Q
Source: 0001683168-25-003355
Chunk: 11

Company: NeoVolta Inc.
Filing Date: 2025-05-09
Form: 10-Q
Item: Part I, Item 8
Chunk 11
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 842, Leases. Effective December 31, 2024, the parties mutually agreed to a short-term extension of the sublease
agreement, 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 one year sublease agreement with the sublandlord,
at a base rental of $15,532 per month.

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

We are dependent on our two
main component vendors in China 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. However, we anticipated the likelihood of facing such a tariff increase and have been 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 management time and result in
diversion of significant resources. We are not able to estimate an aggregate amount or range of reasonably possible losses for those legal
matters for which losses are not probable and estimable.

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ITEM 2.MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS