Company: NEOV
Filing Date: 2025-09-29
Form Type: 10-K
Source: 0001683168-25-007304
Chunk: 32

Company: NeoVolta Inc.
Filing Date: 2025-09-29
Form: 10-K
Item: Item 1
Chunk 32
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 or the international supply chains for our product components, which are largely sourced from Asia.

Presently, our two main raw
material components, batteries and inverters, are imported from different suppliers in China and, until recently, were subject to fairly
low tariff rates that had been in effect for several years. Beginning in April 2025, the new 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.

In the event, however, that
such a mutual trade agreement is not reached between the parties within the next several months and we find it necessary to begin purchasing
a significant level of our inventory components from China at post-tariff prices, we would be faced with a decision as to whether we should
attempt to pass along such tariff increases to our customers through higher prices for our products or absorbing them internally, or some
combination of those two alternatives. Either circumstance would likely materially adversely affect our sales and/or our profitability.

Off-Balance Sheet Arrangements

We have no obligations, assets
or liabilities which would be considered off-balance sheet arrangements as defined in Item 303 of Regulation S-K.

Critical Accounting Policies

The financial statements have
been prepared in accordance with generally accepted accounting principles in the United States, or GAAP. 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. Our estimates are based on our limited historical experience and on various other factors that we believe are reasonable under
the circumstances, the results of which form the basis for making judgments about the carrying value of assets and liabilities that are
not readily apparent from other sources. Actual results may differ from these estimates under different assumptions or conditions.

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,
could potentially affect our judgments and estimates used