Polar Power, Inc.

CONDENSED BALANCE SHEETS

(in thousands, except share and per share data)

UNAUDITED CONDENSED STATEMENTS OF OPERATIONS

(in thousands, except share and per share data)

UNAUDITED CONDENSED STATEMENTS OF STOCKHOLDERS’ EQUITY

(in thousands, except share data)

Three months Ended September 30, 2025

Nine months ended September 30, 2025

Three months Ended September 30, 2024

Nine months ended September 30, 2024

UNAUDITED CONDENSED STATEMENTS OF CASH FLOW

(in thousands)

NOTES TO CONDENSED FINANCIAL STATEMENTS

FOR THE THREE AND NINE MONTHS ENDED SEPTEMBER 30, 2025 AND 2024

(In thousands, except for share and per share data and where otherwise noted)

(UNAUDITED)

NOTE 1 –ORGANIZATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

The Company

Polar Power, Inc. was incorporated in the State of Washington as Polar Products, Inc. and in 1991 reincorporated in the State of California under the name Polar Power, Inc. In December 2016, Polar Power, Inc. reincorporated in the State of Delaware (the “Company”, “we” or “us”). The Company designs, manufactures and sells direct current, or DC, power systems to supply reliable and low-cost energy to off-grid, bad-grid and backup power, electric vehicle (“EV”) charging, and nano-grid applications. The Company’s products integrate DC generator, proprietary electronic control systems, lithium batteries and solar photovoltaic (“PV”) technologies to provide low operating cost and emissions for telecommunications, Defense, automotive, nano-grid, EV charging and industrial markets.

Going concern, Liquidity and recent events

The accompanying financial statements have been prepared under the assumption that the Company will continue as a going concern. For the nine months ended September 30, 2025, the Company recorded a net loss of $5,621 and used cash in operations of $589. Further, the Company was delinquent in its rent payments to its landlords for its office and warehouse facilities. These factors, and the factors below, raise substantial doubt about the Company’s ability to continue as a going concern within one year after the date that the financial statements are issued. In addition, our independent registered public accounting firm, in its audit report to the financial statements included in our Annual Report on Form 10-K for the year ended December 31, 2024, expressed substantial doubt about our ability to continue as a going concern. The financial statements do not include any adjustments related to the recoverability and classification of recorded asset amounts or the amounts and classification of liabilities that might be necessary should the Company be unable to continue as a going concern.

The Company manufactures and assembles its DC power systems at two production facilities located in Gardena, California. It is currently delinquent in rent payments to its landlords for office and warehouse facilities. The landlord for its headquarters and manufacturing facility at 249 E. Gardena Blvd., Gardena, California filed a summons for eviction on October 24, 2025. The Company is negotiating with this landlord on a payment plan for the delinquent rent, and expects to come to a mutually agreeable outcome, which, at this time, such amicable proposal provides that the Company shall agree to pay the delinquent rent by February 28, 2026, and the landlord shall, in consideration of such agreement, release and settle the claim for eviction. The landlord for the other facility for which the Company is delinquent on rent, has not served the Company any legal documents or assessed late fees for the delinquent rent. However, they may do so in the future. The Company is also negotiating with this landlord on a payment plan for the delinquent rent. While the Company is negotiating with both landlords in good faith on payment plans, there is no guarantee that it and the landlords could reach an agreement on a payment plan, or that even if they reached an agreement, they could raise sufficient capital to pay the delinquent rent. It is possible that we will be forced to vacate from any or all facilities, and if that happens, we might have difficulty locating a new headquarters, or new manufacturing or warehouse facilities that are adequate, in a timely manner. Our production could be significantly delayed, access to our inventory could be impaired, and our operations could halt for a significant period of time.

Effective September 30, 2020, the Company entered into an Agreement with Pinnacle which will expire on September 30, 2026. The Loan Agreement, as amended, provides for a revolving credit facility under which Pinnacle may, in its sole discretion upon the Company’s request, make advances to us up to $7,500, subject to certain limitations and adjustments. The Loan Agreement contains certain affirmative and negative covenants. At September 30, 2025, the Company was not in compliance with the affirmative covenant requiring all taxes including unsecured property taxes to be paid in full before becoming delinquent, of which the Company has a delinquent balance of $29. The Company was also not in compliance with the affirmative covenant requiring the Company to attain a minimum Effective Tangible Net Worth greater than $6,000, as the Company attained a Tangible Net Worth of $3,405 after recording an inventory write-down of $1,967 to adjust the book value of its inventory to its net realizable value, and $455 impairment of right-of-use asset and deposits. While the Company expects to regain compliance, there is no guarantee that the Company will be able to do so. Further, Pinnacle, as of October 21, 2025, pursuant to the terms of the Loan Agreement, lowered the valuation on certain of the Company’s inventory. As a result of the reduction in the valuation of certain of the Company’s inventory, the Company has an over-advance of $480 at October 21, 2025, and therefore, pursuant to the terms of the Loan Agreement, Pinnacle is permitted take certain actions, including the creation of reserves against amounts that would be available for borrowing or the reduction of its advance rates without declaring an event of default on the facilities, if it determines, in its good faith credit judgment that such reserves are necessary. We are in current discussions with Pinnacle and negotiating with them in good faith on these terms, and expect to come to a mutually agreeable outcome, which, at this time, we believe will provide that Pinnacle will accept certain amounts we expect to receive in purchase orders over the next few months ($325 by December 15, 2025), provided that if such purchase orders are not fulfilled, $325 will be due in December, regardless, and in each case the balance outstanding ($155) will be due by January 15, 2026. While the Company believes it has a good working relationship with Pinnacle, Pinnacle could seek other remedies against the Company pursuant to the Loan Agreement or terminate the Loan Agreement. If the Company is unable to comply with the Loan Agreement, or amendments if applicable, the Company may lose its financing with Pinnacle.

Furthermore, the Company’s ability to secure other financing is uncertain. The Company’s ability to continue as a going concern is dependent upon its ability to obtain additional financing, grow and diversify our revenue, improve operational efficiency, reduce overhead and fixed costs, and to create a profitable operation. Its ability to obtain additional financing in the debt and equity capital markets is subject to several factors, including market and economic conditions, its performance and investor sentiment with respect to the Company and its industry. The Company has taken action to diversify sales to consume existing inventory, increase higher margin aftermarket parts revenue, to fund operations. In the event that the Company does not generate sufficient cash flows from operations and is unable to obtain funding, the Company will be forced to delay, reduce, or eliminate some or all of its discretionary spending, which could adversely affect the Company’s business prospects, ability to meet long-term liquidity needs or ability to continue operations.

Impact of inflation

The impact of inflation and changing prices during the nine months ended September 30, 2025 has had modest effect on the financial condition or results of operations of the Company. In 2025, we anticipate increase in tariffs on imported products may impact our profitability. Many of the countries on which tariffs have been levied have imposed retaliatory tariffs which may impact our global sales. While we obtain most of our raw materials from domestic sources, many of our supplier’s source materials from various countries and the impact of tariff is currently unclear. In addition, some of our contracts are at a fixed price with certain provisions for price changes. Significant increases in prices may require us to negotiate new contracts. We are closely monitoring the impacts of increases and keeping our customers informed on our findings.

Basis of Presentation of Unaudited Financial Information

The unaudited condensed financial statements of the Company for the three and nine months ended September 30, 2025 and 2024 have been prepared in accordance with accounting principles generally accepted in the U.S. (“GAAP”) for interim financial information and pursuant to the requirements for reporting on Form 10-Q and Regulation S-K for scaled disclosures for smaller reporting companies. Accordingly, they do not include all the information and footnotes required by GAAP for complete financial statements. However, such information reflects all adjustments (consisting solely of normal recurring adjustments), which are, in the opinion of management, necessary for the fair presentation of the Company’s financial position and results of operations. Results shown for interim periods are not necessarily indicative of the results to be obtained for a full fiscal year. The balance sheet information as of December 31, 2024 was derived from the audited financial statements included in the Company’s financial statements as of and for the years ended December 31, 2024 and 2023 contained in the Company’s Annual Report on Form 10-K filed with the Securities and Exchange Commission, or the SEC, on March 31, 2025. These financial statements should be read in conjunction with that report.

Estimates

The preparation of financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenue and expenses during the reporting period. Material estimates relate to the assumptions made in determining estimates for credit loss reserves for accounts receivable, assumptions used in valuing inventories at net realizable value, impairment testing of recorded long-term assets, the realizability of deferred tax assets and the related valuation allowance, accruals for warranty reserves, accruals for potential liabilities, assumptions made in valuing stock instruments issued for services, and assumptions used in the determination of the Company’s liquidity. Actual results may differ from those estimates.

Revenue Recognition

The Company recognizes revenue in accordance with Accounting Standards Codification 606, Revenue from Contracts with Customers (“ASC 606”). ASC 606 requires entities to recognize revenue through the application of a five-step model, which includes: identification of the contract; identification of the performance obligations; determination of the transaction price; allocation of the transaction price to the performance obligations; and recognition of revenue as the entity satisfies the performance obligations.

Substantially all of our revenue is derived from product sales. Product revenue is recognized when performance obligations under the terms of a contract are satisfied, which occurs for us upon shipment or delivery of products or services to our customers based on written sales terms, which is also when control is transferred. Revenue is measured as the amount of consideration we expect to receive in exchange for transferring the products or services to a customer. We determine whether delivery has occurred based on when title transfers and the risks and rewards of ownership have transferred to the customer, which usually occurs when we place the product with the customer’s carrier or deliver the product to a customer’s location. We regularly review our customers’ financial positions to ensure that collectability is reasonably assured.

The Company also recognizes revenues from engineering services, technical support, and sale of accessories that support the Company’s direct current, or DC, power systems. Revenue is recognized when transfer of control to the customer has been made and the Company’s performance obligation has been fulfilled. The Company’s revenue from engineering services, technical support services, and product accessories are clearly defined in each transaction with its customers and have not been significant to date.

The Company also recognizes revenues from the rental of equipment. The Company’s rental revenues have not been significant to date and were $nil for the three-month and nine months ended September 30, 2025 and 2024. The Company’s rental contracts are fixed price contracts for fixed durations of time and include freight and delivery charges and are recognized on a straight-line basis over the rental period.

Disaggregation of Net Sales

The following table shows the Company’s disaggregated net sales by product type:

The following table shows the Company’s disaggregated net sales by customer type:

The following tables shows the Company’s net sales by the respective geographical regions of our customers:

For the three-months ended September 30, 2025 and 2024, international sales totaled $6 and $470 respectively. For the nine-months ended September 30, 2025 and 2024, international sales totaled $392 and $1,740 respectively.

Inventories

Inventories are stated at the lower of cost or net realizable value, with cost determined on a first-in, first-out (“FIFO”) basis. The Company records adjustments to its inventory based on an estimated forecast of the inventory demand, taking into consideration, among others, inventory turnover, inventory quantities on hand, unfilled customer order quantities, forecasted demand, current prices, competitive pricing, and trends and performance of similar products. If the estimated net realizable value is determined to be less than the recorded cost of the inventory, the difference is recognized as a loss in the period in which it occurs. Once inventory has been written down, it creates a new cost basis for inventory that may not be subsequently written up.

The Company recorded a write-down of inventory of $1,967 for the three and nine-months ended September 30, 2025 as a result of the events discussed in Note 1, Going Concern, which may require the Company to liquidate some of its inventory below its carrying value.

As of September 30, 2025 and December 31, 2024, inventories consisted of the following:

Product Warranties

The Company provides limited warranties for parts and labor at no cost to its customers within a specified time period after the sale. As of September 30, 2025 and December 31, 2024, the Company had accrued a liability for warranty reserve of $600 and $600, respectively, which are included in other accrued liabilities in the accompanying condensed balance sheets. The following is a tabular reconciliation of the product warranty liability, excluding the deferred revenue related to the Company’s warranty coverage:

Stock-Based Compensation

The Company periodically issues stock-based compensation to officers, directors, and consultants for services rendered. Such issuances vest and expire according to terms established at the issuance date.

Stock-based payments to employees, directors, and for acquiring goods and services from nonemployees, which include grants of employee stock options, are recognized in the financial statements based on their grant date fair values in accordance with ASC 718,Compensation-Stock Compensation. Stock option grants to employees, which are generally time vested, are measured at the grant date fair value and depending on the conditions associated with the vesting of the award, compensation cost is recognized on a straight-line or graded basis over the vesting period. Recognition of compensation expense for non-employees is in the same period and manner as if the Company had paid cash for the services. The fair value of stock options granted is estimated using the Black-Scholes option-pricing model, which uses certain assumptions related to risk-free interest rates, expected volatility, expected life, and future dividends. The assumptions used in the Black-Scholes option pricing model could materially affect compensation expense recorded in future periods.

Income Taxes

During the three months and nine months ended September 30, 2025 and 2024, the Company did not record any provision for income taxes, as the Company incurred losses for income tax reporting during such periods.

The Company accounts for income taxes using the asset and liability method whereby deferred tax assets are recognized for deductible temporary differences, and deferred tax liabilities are recognized for taxable temporary differences. The Company has recorded a full valuation allowance against its deferred tax assets as the Company currently believes it is more likely than not that the deferred tax assets will not be realized.

Financial Assets and Liabilities Measured at Fair Value

The Company uses various inputs in determining the fair value of its financial assets and liabilities. Financial assets recorded at fair value in the balance sheets are categorized by the level of objectivity associated with the inputs used to measure their fair value.

Authoritative guidance provided by the Financial Accounting Standards Board (“FASB”) defines the following levels directly related to the amount of subjectivity associated with the inputs to fair valuation of these financial assets:

The carrying amounts of certain financial assets and liabilities, such as cash and cash equivalents, accounts receivable and accounts payable, approximate their fair values because of the short maturity of these instruments. The carrying values of the line of credit and notes payable approximate their fair values since the interest rates on these obligations are based on prevailing market interest rates.

Segments

Under ASC 280,Segment Reporting, operating segments are defined as components of an enterprise where discrete financial information is available that is evaluated regularly by the chief operating decision maker (“CODM”), in deciding how to allocate resources and in assessing performance. The Company’s operating segment consists of one component, and the Company’s Chief Executive Officer, who is also the CODM, makes decisions and manages the Company’s operations as a single operating segment.

Concentrations

*Revenues.*For the three months ended September 30, 2025 and 2024, sales to telecommunications customers accounted for 92% and 91% of total revenues, respectively. Sales to international customers accounted for less than 1% and 10% of total revenues, respectively. The Company’s largest customers during the three months ended September 30, 2025, generated 63% of total revenues, as compared to the three largest customers during the three months ended September 30, 2024, generating 46% and 18%, and 12% of total net revenues. There was no other revenue from customers in excess of 10% of revenues in either period.

For the nine months ended September 30, 2025 and 2024, sales to telecommunications customers accounted for 89% and 90% of total revenues, respectively. For the nine months ended September 30, 2025 and 2024, sales to international customers accounted for 7% and 15% of total revenue, respectively. For the nine months ended September 30, 2025, the Company’s largest customer generated 68% of total revenues, as compared to the two largest customers during the same period in 2024 generating 44%, and 17% of total revenues. There was no other revenue from customers in excess of 10% of revenues in either period.

Accounts receivable. At September 30, 2025, the largest accounts receivable account from the Company’s customers represented 78% of the Company’s total accounts receivable. At December 31, 2024, the Company’s largest accounts receivable represented 82% of the Company’s total accounts receivable. There was no other customer that accounted for more than 10% of the Company’s accounts receivable as of September 30, 2025 or December 31, 2024.

Accounts payable. At September 30, 2025, accounts payable to the Company’s three largest vendors represented 18%,7% and 6%, of the Company’s accounts payable. On December 31, 2024, the three largest accounts payable accounts to the Company’s vendors represented 18%,13%, and 8%, respectively.

Net Income (Loss) Per Share

Basic net loss per share is computed by dividing net loss by the weighted average number of common shares outstanding for the period. Diluted earnings per share is computed by dividing the net income applicable to common stockholders by the weighted average number of common shares outstanding plus the number of additional common shares that would have been outstanding if all dilutive potential common shares had been issued using the treasury stock method. Potential common shares are excluded from the computation when their effect is antidilutive. The dilutive effect of potentially dilutive securities is reflected in diluted net income per share if the exercise prices were lower than the average fair market value of common shares during the reporting period.

The following potentially dilutive shares were excluded from the shares used to calculate diluted earnings per share as their inclusion would be anti-dilutive:

Recent Accounting Pronouncements

In November 2024, the Financial Accounting Standards Board (FASB) issued ASU No. 2024-03,Income Statement—Reporting Comprehensive Income—Expense Disaggregation Disclosures (Subtopic 220-40): Disaggregation of Income Statement Expenses which includes amendments that require disclosure in the notes to financial statements of specified information about certain costs and expenses, including purchases of inventory; employee compensation; and depreciation, amortization and depletion expenses for each caption on the income statement where such expenses are included. The amendments are effective for the Company’s annual periods beginning January 1, 2027, with early adoption permitted, and should be applied either prospectively or retrospectively. The Company is in the process of evaluating this ASU to determine its impact on the Company’s disclosures.

The Company’s management has evaluated all other recently issued, but not yet effective, accounting standards and guidance that have been issued or proposed by the FASB or other standards-setting bodies through the filing date of these financial statements and does not believe the future adoption of any such pronouncements will have a material effect on the Company’s financial position and results of operations.

NOTE 2 –PROPERTY AND EQUIPMENT

Property and equipment consist of the following:

Depreciation and amortization expense on property and equipment for the three months ended September 30, 2025 and 2024 was $17 and $25, respectively. During the three months ended September 30, 2025 and 2024, $16 and $23, respectively, of the depreciation expense was included in cost of sales.

Depreciation and amortization expense on property and equipment for the nine months ended September 30, 2025 and 2024 was $51 and $146, respectively. During the nine months ended September 30, 2025 and 2024, $49 and $140, respectively, of the depreciation expense was included in cost of sales.

NOTE 3 –NOTES PAYABLE, RELATED PARTY

During 2023, the Company’s Chief Executive Officer made loans to the Company for aggregate principal amount of $260 pursuant to terms of the note agreements. The notes have relatively similar terms, are unsecured, and accrue interest at 3.5% per annum. The outstanding balance under these loans was $266 as of December 31, 2024. During 2025, the Company’s Chief Executive Officer made additional loans to the Company in the aggregate amount of $230 with similar terms as the other loans. As of September 30, 2025, the aggregate outstanding balance of the loans including accrued interest is $507. Repayments on each loan are due in twelve equal monthly installments commencing one year after each loan start date. No repayments on any of the loans have been made as of September 30, 2025, and $274 are past due.

NOTE 4 –LINE OF CREDIT

Credit Facility

Effective September 30, 2020, the Company entered into a Loan and Security Agreement (the “Loan Agreement”) with Pinnacle Bank (“Pinnacle”), which will expire on September 30, 2026. The Loan Agreement, as amended, provides for a revolving credit facility under which Pinnacle may, in its sole discretion upon the Company’s request, make advances to us up to $7,500, subject to certain limitations and adjustments. The Loan Agreement contains certain affirmative and negative covenants. At September 30, 2025, the Company was not in compliance with the affirmative covenant requiring all taxes including unsecured property taxes to be paid in full before becoming delinquent, of which the Company has a delinquent balance of $29. The Company was also not in compliance with the affirmative covenant requiring the Company to attain a minimum Effective Tangible Net Worth greater than $6,000, as the Company attained a Tangible Net Worth of $3,405 after recording an inventory write-down of $1,967 to adjust the book value of its inventory to its net realizable value, and $455 impairment of right-of-use asset and lease deposits. While the Company expects to regain compliance, there is no guarantee that the Company will be able to do so. Further, Pinnacle, as of October 21, 2025, pursuant to the terms of the Loan Agreement, lowered the valuation on certain of the Company’s inventory. As a result of the reduction in the valuation of certain of the Company’s inventory, the Company has an over-advance of $480 at October 21, 2025, and therefore, pursuant to the terms of the Loan Agreement, Pinnacle is permitted take certain actions, including the creation of reserves against amounts that would be available for borrowing or the reduction of its advance rates without declaring an event of default on the facilities, if it determines, in its good faith credit judgment that such reserves are necessary. We are in current discussions with Pinnacle and negotiating with them in good faith on these terms, and expect to come to a mutually agreeable outcome, which, at this time, we believe will provide that Pinnacle will accept certain amounts we expect to receive in purchase orders over the next few months ($325 by December 15, 2025), provided that if such purchase orders are not fulfilled, $325 will be due in December, regardless, and in each case the balance outstanding ($155) will be due by January 15, 2026. While the Company believes it has a good working relationship with Pinnacle, Pinnacle could seek other remedies against the Company pursuant to the Loan Agreement or terminate the Loan Agreement. If the Company is unable to comply with the Loan Agreement, or amendments if applicable, the Company may lose its financing with Pinnacle.

Borrowings based on receivables bears an interest on the daily balance at a rate of 1.25% above the prime rate, but in no event less than 3.75% per annum (8.5% at September 30, 2025 and 8.75% at December 31, 2024). Interest on the portion of the daily balance consisting of advances against inventory accrues interest at a rate of 2.25% above the prime rate, but in no event less than 4.75% per annum (9.5% at September 30, 2025 and 9.75% at December 31, 2024).

Pursuant to the Loan Agreement, as amended, the standards of eligible accounts receivable include AT&T accounts receivable up to 120 days of invoice date, and eligible accounts receivable with other customers have up to 90 days of invoice date. Customer accounts with eligible accounts receivable cannot exceed a concentration percentage which is a customer’s total obligations to the Company as a percentage of eligible accounts receivable from all customers. The concentration percentage applicable to certain Tier-1 telecommunications customers is 75% of all eligible accounts receivable, and the concentration percentage applicable to all other customer is 25% of all eligible accounts.

Pinnacle may terminate the Loan Agreement at any time upon ninety days prior written notice and immediately upon the occurrence of an event of default. Under the Loan Agreement, the Company granted Pinnacle a security interest in all presently existing and thereafter acquired or arising assets of the Company.

At December 31, 2024, the outstanding balance under the line of credit was $4,797 and the Company had availability under the line of credit in the amount of $654. During the nine months ended September 30, 2025, the Company had a net repayment of $145 to the credit facility. At September 30, 2025, the outstanding balance under the line of credit was $4,652, which includes interest, fees and financing costs (see below).

The total interest expense, fees, and financing costs incurred under the Loan Agreement for the three-month periods ended September 30, 2025 and 2024 were $258 and $248, respectively. Of these amounts, $88 in 2025 and $99 in 2024 were recorded under general and administrative expenses, while $170 in 2025 and $149 in 2024 were recorded under interest expense and finance costs in the accompanying statements of operations.

The total interest expense, fees, and financing costs incurred under the Loan Agreement for the nine-month periods ended September 30, 2025 and 2024 were $497 and $588, respectively. Of these amounts, $90 in 2025 and $100 in 2024 were recorded under general and administrative expenses, while $407 in 2025 and $488 in 2024 were recorded under interest expense and finance costs in the accompanying statements of operations.

NOTE 5 –OPERATING LEASES

The Company has two operating lease agreements for its warehouse and office facilities. The first lease expired February 28, 2024, and was extended beginning March 1, 2024 to February 28, 2026. The second lease expired August 31, 2024, and was extended beginning September 1, 2024 to August 31, 2026. The aggregate monthly lease payments range from $89 (year one), to $111 (year two), to $125 (year three), with an aggregate commitment of $3,896. The lease amendments to the two operating leases were considered new lease agreements and as a result, the Company recognized operating lease right-of-use assets and related operating lease liabilities of approximately $3,578 upon commencement of the new terms in 2024.

The Company also has a third lease on a month-to-month basis and is charged $25 per month.

The components of rent expense and supplemental cash flow information related to leases for the period are as follows:

The supplemental balance sheet information related to leases for the period is as follows:

The Company manufactures and assembles its DC power systems at its two production facilities located in Gardena, California. The Company is currently delinquent in its rent payments to its landlords for its office and warehouse facilities. The landlord for its headquarters and manufacturing facility at 249 E. Gardena Blvd., Gardena, California filed a summons for eviction on October 24, 2025. The Company is negotiating with this landlord on a payment plan for the delinquent rent, and expect to come to a mutually agreeable outcome, which, at this time, such amicable proposal provides that the Company shall agree to pay the delinquent rent by February 28, 2026, and the landlord shall, in consideration of such agreement, release and settle the claim for eviction. The landlord for the other facility for which the Company is delinquent on rent, has not served it any legal documents or assessed late fees for the delinquent rent. However, they may do so in the future. The Company is also negotiating with this landlord on a payment plan for the delinquent rent. While the Company is negotiating with both landlords in good faith on payment plans, there is no guarantee that it and the landlords could reach an agreement on a payment plan, or that even if it reached an agreement, it could raise sufficient capital to pay the delinquent rent. It is possible that the Company will be forced to vacate from any or all facilities, and if that happens, it might have difficulty locating a new headquarters, or new manufacturing or warehouse facilities that are adequate, in a timely manner. Its production could be significantly delayed, access to its inventory could be impaired, and its operations could halt for a significant period of time.

Therefore, the Company determined that for the three and nine months ended September 30, 2025, the Company recorded total impairment charges of $455, which includes $347 related to right-of-use asset and $108 related to lease deposits. These charges were recorded in impairment of lease right-of-use assets and lease deposits in the Company’s Condensed Consolidated Statements of Income.

Maturities of the Company’s lease liabilities are as follows (in thousands):

Rent expense for the three months ended September 30, 2025 and 2024 was $325 and $399, respectively. Rent expense for the nine months ended September 30, 2025 and 2024 was $974 and $1,199, respectively. As of September 30, 2025, the Company was delinquent in $398 of past due rents.

NOTE 6 –STOCKHOLDERS’ EQUITY

Common Stock

In January 2025, the Company issued 2,679 shares of common stock valued at $8 to Michael Field, the Company’s independent director, as settlement for previously accrued fees for services.

NOTE 7 –STOCK OPTIONS

The following table summarizes stock options:

Effective July 8, 2016, the Company’s board of directors approved the Polar Power 2016 Omnibus Incentive Plan (the “2016 Plan”), authorizing the issuance of up to 250,627 shares of common stock as incentives to employees and consultants to the Company with awards limited to a maximum of 50,125 shares to any one participant in any calendar year.

At December 31, 2024, the Company had total outstanding options exercisable into 20,002 shares of the Company’s common stock. As of September 30, 2025,7,144 options had terminated, and 12,858 options are fully vested and exercisable. The options have exercise prices ranging from $33.88 to $39.20, and with 1,429 option shares set to expire in December 2027 and the remaining 11,429 option shares set to expire in April 2028.

The outstanding options hadno intrinsic value at September 30, 2025.

NOTE 8. SEGMENT INFORMATION

The Company operates and manages its business asone reportable and operating segment. The Company designs, manufactures, and sells DC power systems for applications that do not have access to the utility grid (i.e., prime power and mobile applications) or have critical power needs and cannot be without power in the event of utility grid failure (i.e., back-up power applications). The measure of segment assets is reported on the balance sheet as total assets. In addition, the Company generates revenue primarily from the sale of its DC power systems, and to a lesser extent from the sale of parts and services to support its DC power systems. The Company manages the business activities on a consolidated basis.

The Company’s chief operating decision maker (“CODM”), Arthur D. Sams, reviews financial information presented on a consolidated basis and decides how to allocate resources based on net income (loss). Consolidated net income (loss) is used for evaluating financial performance and in establishing management’s compensation.

Significant segment expenses include research and development, salaries, insurance, and stock-based compensation. Operating expenses include all remaining costs necessary to operate our business, which primarily include external professional services and other administrative expenses. The following table presents the significant segment expenses and other segment items regularly reviewed by our CODM:

NOTE 9. SUBSEQUENT EVENTS

On October 6, 2025, the Company entered into an ATM sales agreement (the “Sales Agreement”) with ThinkEquity LLC (the “Sales Agent”), pursuant to which the Company may offer and sell, from time to time through the Sales Agent, shares (the “Shares”) of the Company’s common stock, par value $0.0001 per share, up to a maximum amount as set forth in the Sales Agreement, subject to the terms and conditions of the Sales Agreement. On October 6, 2025, the Company filed a prospectus supplement to its registration statement on Form S-3 (File No. 333-276705) offering the Shares up to an aggregate offering price of up to $2,382.

As of November 19, 2025, the Company sold 147,144 Shares pursuant to the Sales Agreement at an average price per share of approximately $5.00 resulting in approximately $714 in net proceeds to the Company after deducting commissions.

In October 2025, the Company received a $674 contract from a military customer for the delivery of compact, lightweight DC generators designed for mobile applications.

In November 2025, the Company received a purchase order for $1,700 for fifty Mobile EV Chargers to be used in emergency roadside charging, EV dealership lots and EV car rental yards. These mobile EV chargers are independent of the grid and operate using a propane fueled Toyota engine driving a DC generator for direct EV charging. The Company is still in pre-production and these EV chargers are scheduled for delivery in 2026 over a 12-month period. Presently the Company has limited sales capability within this specialized market and its new customer performs as a distributor bringing the opportunity for volume sales well above the 50 units.

The Company also receive new orders from its telecommunications customers in the U.S. for approximately $850. As of November 19, 2025, the Company’s backlog was $5,283, of which 53% is from telecommunications customers,13% from military customers,1% from marine customers, and 33% from its customer for EV mobile chargers. The Company expects that the majority of these orders will ship to customers within the next twelve months.