Company: NEOV
Filing Date: 2025-09-29
Form Type: 10-K
Source: 0001683168-25-007304
Chunk: 129

Company: NeoVolta Inc.
Filing Date: 2025-09-29
Form: 10-K
Item: Item 1A
Chunk 129
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 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.

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.
Many of the factors that impact on our manufacturing costs are beyond our control, such as potential increases in the costs of our materials
and components, such as lithium iron phosphate, nickel and other components of our battery cells. If we are unable to continue to control
and reduce our manufacturing costs, our operating results, business and prospects will be harmed.

Increases in costs, disruption of supply
or shortage of materials, in particular for inverters and lithium iron phosphate cells, could harm our business.

We may experience increases
in the cost or a sustained interruption in the supply or shortage of materials. Any such increase, supply interruption or shortage could
materially and negatively impact on our business, prospects, financial condition and operating results. We use various materials in our
business, including inverters and lithium iron phosphate cells, from suppliers.

The prices for these materials
fluctuate, and their available supply may be unstable, depending on market conditions and global demand for these materials, including
as a result of increased production of energy storage products by our competitors, and could adversely affect our business and operating
results. For instance, we are exposed to multiple risks relating to inverters and lithium iron phosphate cells.

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.

Our business is dependent
on the continued supply of inverters and battery cells for the battery packs used in our energy storage products. Any disruption in the
supply of inverters or battery cells could disrupt production of our battery packs we require for our energy storage product. Substantial
increases in the prices for our materials or prices charged to us would increase our operating costs, and could reduce our margins if
we cannot recoup