PIONEER POWER SOLUTIONS, INC.

(in thousands, except for share and per share amounts)

1. BUSINESS ORGANIZATION, NATURE OF OPERATIONS, RISKS AND UNCERTAINTIES

Pioneer Power Solutions, Inc. and its wholly owned subsidiary (referred to herein as the “Company” or “Pioneer”) design, manufacture, service and integrate distributed energy resources, power generation equipment and mobile electric vehicle (“EV”) charging solutions. Our products and services are sold to a broad range of customers in the utility, industrial and commercial markets. Our customers include, but are not limited to, federal and state government entities, package delivery businesses, school bus fleet operations, EV charging infrastructure developers and owners, and distributed energy developers. We are headquartered in Fort Lee, New Jersey and operate from two (2) additional locations in the United States for manufacturing, service and maintenance, engineering, and sales and administration.

Segments

In determining operating and reportable segments in accordance with Financial Accounting Standards Board (“FASB”) Accounting Standards Codification (“ASC”) 280, Segment Reporting (“ASC 280”), the Company concluded that it hasone reportable segment: Critical Power Solutions (“Critical Power”). Financial information about the Company’s segment is presented in Note 13 - Business Segment, Geographic and Customer Information.

Basis of Presentation

The Company’s consolidated financial statements are prepared in accordance with accounting principles generally accepted in the United States (“U.S. GAAP”). The Company believes that the disclosures made are adequate to make the information presented not misleading to the reader. In the opinion of management, all adjustments, consisting only of normal recurring adjustments, necessary to fairly state the financial position, results of operations and cash flows with respect to the consolidated financial statements have been included.

These consolidated financial statements include the accounts of Pioneer and its wholly owned subsidiary. All significant intercompany accounts and transactions have been eliminated in consolidation.

Risks and Uncertainties

The continuing impacts of the rising interest rates, inflation, changes in foreign currency exchange rates and geopolitical developments, such as the ongoing conflict between Russia and Ukraine, and the ongoing conflict in the Middle East, have resulted, and may continue to result, in a global slowdown of economic activity, which may decrease demand for a broad variety of goods and services, including those provided by the Company’s clients, while also disrupting supply channels, sales channels and advertising and marketing activities for an unknown period of time. Additionally, recent changes to U.S. policy implemented by the U.S. Congress, the Trump administration or any new administration have impacted and may in the future impact, among other things, the U.S. and global economy, international trade relations, unemployment, immigration, healthcare, taxation, the U.S. regulatory environment, inflation and other areas. As a result of the current uncertainty in economic activity, the Company is unable to predict the potential size and duration of the impact on its revenue and its results of operations, if any. The extent of the potential impact of these macroeconomic factors on the Company’s operational and financial performance will depend on a variety of factors, including the extent of geopolitical disruption and its impact on the Company’s clients, partners, industry, and employees, all of which are uncertain at this time and cannot be accurately predicted. The Company continues to monitor the effects of these macroeconomic factors and intends to take steps deemed appropriate to limit the impact on its business.

There can be no assurance that precautionary measures, whether adopted by the Company or imposed by others, will be effective, and such measures could negatively affect its sales, marketing, and client service efforts, delay and lengthen its sales cycles, decrease its employees’, clients’, or partners’ productivity, or create operational or other challenges, any of which could harm its business and results of operations.

Rounding

All dollar amounts (except share and per share data) presented are stated in thousands of dollars, unless otherwise noted.

2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Use of Estimates

The preparation of consolidated financial statements in accordance with U.S. GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosures of contingent assets and liabilities at the date of the consolidated financial statements and the reported amounts of revenues and expenses during the reporting periods. The consolidated financial statements include estimates based on currently available information and management’s judgment as to the outcome of future conditions and circumstances. Significant estimates in these consolidated financial statements include, but are not limited to, measurement of revenue for contracts accounted for over time, revenue recognition of and the net investment in sales-type leases, allowance for expected credit losses, inventory valuation, useful lives and impairment of long-lived assets, equity-method investment, consideration to buyer, stock-based compensation and the valuation allowance related to the Company’s deferred tax assets. Changes in the status of certain facts or circumstances could result in material changes to the estimates used in the preparation of the consolidated financial statements and actual results could differ from the estimates and assumptions.

Revenue Recognition from Contracts with Customers

Revenue is recognized when (1) a contract with a customer exists, (2) performance obligations promised in a contract are identified based on the products or services that will be transferred to the customer, (3) the transaction price is determined based on the consideration to which the Company will be entitled in exchange for transferring products or services to the customer, (4) the transaction price is allocated to the performance obligations in the contract and (5) the Company satisfies its performance obligation. The Company satisfies its performance obligations and, therefore, recognizes revenue, either over time or at a point in time, which is when the customer has obtained control of the good or service.

The Company’s principal source of revenue from contracts with customers is derived from sales of products and fees for services. The Company measures revenue based upon the consideration specified in the customer arrangement, and revenue is recognized when the performance obligations in the customer arrangement are satisfied. Changes in deferred revenue are generally as a result of the Company’s normal operating cycle and the effect of cumulative catch-up adjustments arising from a change in the measure of progress or a contract modification identified at each reporting period.

A performance obligation is a promise in a contract to transfer a distinct product or service to the customer. The transaction price of a contract is allocated to each distinct performance obligation and recognized as revenue when or as the customer receives the benefit of the performance obligation. Customers typically receive the benefit of the Company’s products when the risk of loss or control for the product transfers to the customer and for services as they are performed. Under ASC 606, revenue is recognized when a customer obtains control of promised products or services in an amount that reflects the consideration the Company expects to receive in exchange for those products or services. To achieve this core principle, the Company applies the following five steps:

1)Identify the contract with a customer

A contract with a customer exists when (i) the Company enters into an enforceable contract with a customer that defines each party’s rights regarding the products or services to be transferred and identifies the payment terms related to these products or services, (ii) the contract has commercial substance and, (iii) the Company determines that collection of substantially all consideration for products or services that are transferred is probable based on the customer’s intent and ability to pay the promised consideration. The Company applies judgment in determining the customer’s ability and intention to pay, which is based on a variety of factors including the customer’s historical payment experience or, in the case of a new customer, published credit and financial information pertaining to the customer.

2)Identify the performance obligations in the contract

Performance obligations promised in a contract are identified based on the products or services that will be transferred to the customer that are both capable of being distinct, whereby the customer can benefit from the product or service either on its own or together with other resources that are readily available from third parties or from the Company, and are distinct in the context of the contract, whereby the transfer of the products or services is separately identifiable from other promises in the contract. To the extent a contract includes multiple promised products or services, the Company must apply judgment to determine whether promised products or services are capable of being distinct and distinct in the context of the contract. If these criteria are not met the promised products or services are accounted for as a combined performance obligation.

3)Determine the transaction price

The transaction price is determined based on the consideration to which the Company will be entitled in exchange for transferring products or services to the customer. The customer payments are generally due in 30 days.

4)Allocate the transaction price to performance obligations in the contract

If the contract contains a single performance obligation, the entire transaction price is allocated to the single performance obligation. Contracts that contain multiple performance obligations require an allocation of the transaction price to each performance obligation based on a relative standalone selling price basis. The Company determines standalone selling price based on the price at which the performance obligation is sold separately. If the standalone selling price is not observable through past transactions, the Company estimates the standalone selling price taking into account available information such as market conditions and internally approved pricing guidelines related to the performance obligations.

5)Recognize revenue when or as the Company satisfies a performance obligation

The Company satisfies performance obligations either over time or at a point in time. Revenue is recognized at the time the related performance obligation is satisfied by transferring a promised product or service to a customer.

Shipping and handling costs incurred after control of a product has transferred to the customer are treated as fulfillment costs and, therefore, are not accounted for as separate performance obligations.

Certain sales of highly customized electrical equipment under the Company’s Electrical Infrastructure segment (included in discontinued operations; see Note 11 – Discontinued Operations for details) were recognized over time when such equipment had no alternative use and the Company had an enforceable right to payment for performance completed to date. The Company’s measure of progress for such contracts was evaluated under the input method based on direct labor hours incurred relative to the estimated total direct labor hours required in order to complete the project. Any anticipated losses on contracts were fully recognized in the period in which the losses become evident. Service revenues include maintenance contracts that are recognized over time based on the contract term and repair services that are recognized as services are delivered.

Contract Estimates (discontinued operations)

Revenue from over time contracts for the Company’s Electrical Infrastructure segment (included in discontinued operations; see Note 11 – Discontinued Operations for details) was recognized proportionally over the term of the contract using an input method based on the proportion of labor hours incurred as compared to the total estimated labor hours for the fixed-fee contract performance obligations, which the Company considered the best available indicator of the pattern and timing in which contract performance obligations were fulfilled and control transferred to the customer. This percentage was multiplied by the contracted dollar amount of the project to determine the amount of revenue to recognize in an accounting period.

There were situations where the number of hours to complete projects may have exceeded the original estimate as a result of an increase in project scope or unforeseen events. The related impact on income was recognized using the cumulative catch-up method in an accounting period.

Recognition of revenue on a contract requires estimates of the total labor hours at completion and the measurement of progress towards completion. Due to the long-term nature of many of the Company’s contracts, developing the estimated total labor hours at completion often requires judgment. Factors that must be considered in estimating the total labor hours to be completed include the nature and complexity of the work to be performed and the risk and impact of delayed performance.

At the outset of each contract, the Company gauges its complexity and perceived risks and establish an estimated total number of labor hours at completion in line with these expectations. The Company follows a standard contract review process in which the Company reviews the progress and performance on its ongoing contracts at least quarterly.

Bill and Hold Arrangements

From time to time, the Company enters into bill and hold arrangements, whereby the Company sells mobile EV charging equipment and the equipment is warehoused at a Company or third party location pursuant to directions received from the Company’s customer. Even though the equipment is not physically in the customer’s possession, a sale is recognized at the point in time when the customer obtains control of the product. Control is transferred to the customer in a bill and hold arrangement when: customer acceptance specifications have been met, legal title has transferred, the customer has a present obligation to pay for the product and the risk and rewards of ownership have transferred to the customer.

Additionally, all the following bill and hold criteria must be met in order for control to be transferred to the customer: the reason for the bill and hold arrangement is substantive, the customer has requested the product be warehoused, the product has been identified as separately belonging to the customer, the product is currently ready for physical transfer to the customer, and the Company does not have the ability to use the product or direct it to another customer.

Cost of Goods Sold

Cost of goods sold primarily includes charges for materials, direct labor and related benefits, freight (inbound and outbound), direct supplies and tools, depreciation and amortization, purchasing and receiving costs, inspection costs, internal transfer costs, warehousing costs and utilities related to production facilities and, where appropriate, an allocation of overhead. Cost of goods sold also includes indirect labor and infrastructure cost related to the provision of field services.

Fair Value of Financial Instruments

Fair value is defined as the amount that would be received for selling an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date and is measured using inputs in one of the following three categories:

Level 1 measurements are based on unadjusted quoted prices in active markets for identical assets or liabilities that the Company has the ability to access. Valuation of these items does not entail a significant amount of judgment.

Level 2 measurements are based on quoted prices for similar assets or liabilities in active markets, quoted prices for identical or similar assets or liabilities in markets that are not active or market data other than quoted prices that are observable for the assets or liabilities.

Level 3 measurements are based on unobservable data that are supported by little or no market activity and are significant to the fair value of the assets or liabilities.

The Company’s financial instruments consist primarily of cash, accounts receivable, the net investment in sales-type leases, accounts payable and accrued liabilities. The carrying values of cash, accounts receivable, accounts payable and accrued liabilities approximate their respective fair values due to the relatively short period of time between their origination and their expected realization or payment.

Non-Recurring Fair Value Measurements

Certain financial and nonfinancial assets and liabilities are measured at fair value on a nonrecurring basis and are subject to fair value adjustments in certain circumstances, such as when there is evidence of impairment.

The Company’s net investment in sales-type leases is initially recorded at the estimated fair value of the underlying assets as of the respective lease commencement dates. Fair value is estimated using a cost-plus-margin approach, corroborated by the contractual pricing established in negotiations with the lessee. After initial recognition, the net investment is subsequently measured at amortized cost using the effective interest method. The fair value measurement at commencement is classified within Level 3 of the fair value hierarchy, as the inputs to the valuation are unobservable, including:

As of December 31, 2025, the Company’s sales-type lease portfolio consisted of nine units leased to a single lessee under two agreements with original terms of ten years. Five units commenced during the second quarter of 2025, with an aggregate fair value at the measurement date of approximately $1,410. Four units commenced during the fourth quarter of 2025, with an aggregate fair value at the measurement date of approximately $1,460. The rates implicit in the leases range from approximately 2.2% to 5.9% per annum. As of December 31, 2025, the aggregate carrying amount of the net investment in sales-type leases was $2,843, of which $268 was attributable to sales-type lease arrangements in accounts receivable and $2,576 was included in lease receivable on the consolidated balance sheet. There is no active secondary market for these instruments.

The Company estimates that the carrying value of the net investment in sales-type leases approximates fair value as of December 31, 2025, as all leases were originated during the year ended December 31, 2025, and limited time has elapsed between the respective commencement dates and the reporting date, during which period there have been no significant changes in the credit profile of the lessee or in prevailing market conditions that would cause a material divergence between the carrying amount and fair value.

See Note 3 – Revenues for the components of the net investment in sales-type leases and the maturity analysis of lease receivables.

Concentrations

The Company manages its accounts receivable credit risk by performing credit evaluations and monitoring amounts due from the Company’s customers. The Company had certain customers whose revenue individually represented 10% or more of the Company’s total revenue, or whose accounts receivable balances individually represented 10% or more of the Company’s total accounts receivable, as follows:

As of December 31, 2025, one customer represented approximately 25% of the Company’s total accounts receivable. As of December 31, 2024, one customer represented approximately 72% of the Company’s total accounts receivable.

For the year ended December 31, 2025, two customers represented approximately 24% and 13% of the Company’s revenue. For the year ended December 31, 2024, two customers represented approximately 22% and 13% of the Company’s revenue.

As of December 31, 2025, one customer represented 100% of the Company’s lease receivable balance.

As of December 31, 2025, one of the Company’s vendors represented approximately 10% of the Company’s accounts payable. As of December 31, 2024, one of the Company’s vendors represented approximately 25% of the Company’s accounts payable.

Cash and Cash Equivalents

The Company considers all highly liquid investments purchased with an original maturity of three months or less to be cash equivalents in the consolidated financial statements. As of December 31, 2025, and 2024, the Company did not have any cash equivalents. The Company has cash on deposits in one financial institution which may be in excess of Federal Deposit Insurance Corporation (“FDIC”) insurance limits. As of December 31, 2025, and 2024, the Company had balances of $14,709 and $41,372 in excess of the FDIC insured limits, respectively. The Company reduces exposure to credit risk by maintaining cash deposits with major financial institutions. The Company has not experienced losses in such accounts and periodically evaluates the creditworthiness of its financial institutions. The Company reduces its credit risk by placing its cash and cash equivalents with major financial institutions.

Accounts Receivable

The Company accounts for trade receivables at original invoice amount less an estimate made for expected credit losses. The Company’s allowance for expected credit losses on accounts receivable reflects management’s estimate of credit losses over the remaining expected life of such assets, measured primarily using historical experience, as well as current conditions and forecasts that affect the collectability of the reported amount. There was $23 of reserves for expected credit losses as of December 31, 2025, as compared to $13 of reserves for expected credit losses as of December 31, 2024.

The Company’s operating lease receivables are not within the scope of ASC 326. The Company assesses the collectability of operating lease payments in accordance with ASC 842. At lease commencement and on an ongoing basis, the Company evaluates whether it is probable that the Company will collect the lease payments due over the lease term. If collectability is not considered probable, lease income recognition is constrained to the lesser of the straight-line lease income or lease payments received. As of December 31, 2025, no reserve has been established against operating lease receivables as all amounts are considered collectible based on the Company’s assessment of lessee payment history and creditworthiness.

As of December 31, 2025, accounts receivable included $268 of amounts due under sales-type lease arrangements and $2,865 from contracts with customers within the scope of ASC 606. As of December 31, 2024, and January 1, 2024, the Company had no sales-type lease arrangements, and the entire accounts receivable balance of $7,826 and $9,010, respectively, was attributable to contracts with customers within the scope of ASC 606.

Long-Lived Assets

Depreciation and amortization for property and equipment is computed and included in cost of goods sold and in selling and administrative expense, as appropriate. Long-lived assets, consisting primarily of property and equipment, are stated at cost less accumulated depreciation. Property and equipment are depreciated using the straight-line method, based on the estimated useful lives of the assets (buildings -25 years, machinery and equipment -5 to 15 years, computer hardware and software -3 to 5 years, furniture & fixtures -5 to 7 years, leasehold improvements –term of lease). Depreciation commences in the year the assets are ready for their intended use.

The Company reviews all long-lived assets such as property and equipment whenever events or changes in circumstances indicate that the carrying value of the asset may not be recoverable. Recoverability of the assets that are held and used is measured by a comparison of the carrying amount of an asset to the estimated future cash flows expected to be generated by the asset or asset group. Impairment is measured by the amount by which the carrying value of the asset(s) exceed the fair value. There were no triggering events that would indicate impairment of long-lived assets as of December 31, 2025, and 2024.

Held for Sale and Discontinued Operations

The Company classifies assets and liabilities to be sold (disposal group) as held for sale in the period when all of the applicable criteria are met, including: (i) management commits to a plan to sell, (ii) the disposal group is available to sell in its present condition, (iii) there is an active program to locate a buyer, (iv) the disposal group is being actively marketed at a reasonable price in relation to its fair value, (v) significant changes to the plan to sell are unlikely, and (vi) the sale of the disposal group is generally probable of being completed within one year. Management performs an assessment at least quarterly or when events or changes in business circumstances indicate that a change in classification may be necessary.

Assets and liabilities held for sale are presented separately within the consolidated balance sheets with any adjustments necessary to measure the disposal group at the lower of its carrying value or fair value less costs to sell. Depreciation of property and equipment and amortization of right-of-use assets are not recorded while these assets are classified as held for sale. For each period the disposal group remains classified as held for sale, its recoverability is reassessed and any necessary adjustments are made to its carrying value.

The Company reports the results of operations of a business as discontinued operations if a disposal represents a strategic shift that will have a major effect on its operations and financial results. The results of discontinued operations are reported as income or loss from discontinued operations, net of tax in the consolidated statements of operations for the current and prior periods commencing in the period in which the held for sale criteria are met. Income or loss from discontinued operations, net of tax includes direct costs attributable to the divested business and excludes any cost allocations associated with any shared or corporate functions unless otherwise dedicated to the divested business. Income or loss from discontinued operations, net of tax will include any gain or loss recognized upon disposition or from adjustment of the carrying amount to fair value less costs to sell while classified as held for sale.

Transactions between the businesses held for sale and businesses held for use that are expected to continue after the disposal are not eliminated in order to appropriately reflect the continuing operations as well as the activity to be disposed of.

Equity-Method Investments

The Company accounts for investments in LLCs in which the Company has more than virtually no influence, but does not control, under the equity method of accounting. Under the equity method of accounting, the Company’s initial investment in Pioneer Investment LLC was recorded at fair value in accordance with ASC 810-10-40-5 as its equity method investment arose from a deconsolidation event. See Note 11- Discontinued Operations and Note 12 – Equity Method Investment.

The carrying amount is adjusted for the Company’s share of the earnings or losses, and dividends received from the investee. When the Company’s share of losses in an investee equals or exceeds the carrying value of the investment plus any advances, no further losses are recognized unless the Company has guaranteed obligations of the investee or is otherwise committed to provide further financial support for the investee.

The Company periodically assesses if impairment indicators exist at equity method investments. When an impairment indicator is observed, any excess of the carrying amount over its estimated fair value is recognized as impairment expense when the loss in value is deemed other-than-temporary and included in income or loss from equity method investments in the consolidated statements of operations.

In relation to the Company’s investment in the Pioneer Investment LLC, the Company elected to recognize its proportional share of the income or loss from the equity method investment on a financial reporting lag of one fiscal quarter due to the timing and availability of financial information.

Leases

Lessee Accounting

The Company leases offices, facilities and equipment under operating and financing leases. The Company determines whether an arrangement is, or contains, a lease at contract inception. An arrangement contains a lease if the Company has the right to direct the use of and obtain substantially all of the economic benefits of an identified asset. Right-of-use assets and lease liabilities are recognized at lease commencement based on the present value of lease payments over the lease term. Leases with an initial term of 12 months or less are not recognized on the balance sheet and are recorded as short-term lease expense. The discount rate used to calculate present value is the Company’s incremental borrowing rate based on the lease term and the economic environment of the applicable country or region.

Certain leases contain renewal options or options to terminate prior to lease expiration, which are included in the measurement of right-of-use assets and lease liabilities when it is reasonably certain they will be exercised. The Company has elected to account for lease and non-lease components as a single lease component for its offices and manufacturing facilities. Some lease arrangements include payments that are adjusted periodically based on actual charges incurred for common area maintenance, utilities, taxes and insurance, or changes in an index or rate referenced in the lease. The fixed portion of these payments is included in the measurement of right-of-use assets and lease liabilities at lease commencement, while the variable portion is recorded as variable lease expense. The Company’s leases typically do not contain material residual value guarantees or restrictive covenants.

Lessor Accounting

The Company determines whether an arrangement is or contains a lease at inception. The Company leases generators and mobile EV charging equipment to certain of its customers. As a lessor, when a lease meets certain criteria indicating that the Company has effectively transferred control of the underlying asset to the customer, the lease is classified as a sales-type lease. When a lease does not meet the criteria for a sales-type lease but meets the criteria of a direct financing lease, the lease is classified as a direct financing lease. When none of the required criteria for sales-type lease or direct-financing lease are met, the lease is classified as an operating lease.

Sales-type leases are recognized as a net investment in the lease on the consolidated balance sheets. The net investment comprises the lease receivable including any unguaranteed residual value of the underlying asset. For sales-type leases, product revenue is generally recognized upon lease commencement. The discounted unguaranteed residual value of the underlying leased assets is not material to the net investment in the lease balance. The Company monitors the performance of customers who leased equipment and are subject to ongoing payments. No allowance has been recorded for the receivables under the leasing arrangements.

The determination of whether the Company’s contracts contain leases generally does not require significant assumptions or judgments. However, the Company exercises judgment in estimating the fair value of the underlying assets at lease commencement. Fair value is estimated using a cost-plus-margin approach, corroborated by the contractual pricing established in negotiations with the lessee. Refer to the Fair Value of Financial Instruments note for further discussion of the inputs and assumptions used in estimating fair value at lease commencement.

Leasing revenues do not include material amounts of variable payments. Lessees do not provide residual value guarantees on rented equipment.

Income Taxes

The Company accounts for income taxes under the asset and liability method, based on the income tax laws and rates in the countries in which operations are conducted and income is earned. For the year ended December 31, 2025, and 2024, the Company operated primarily in the United States. This approach requires the recognition of deferred tax assets and liabilities for the expected future tax consequences of temporary differences between the carrying amounts and the tax basis of assets and liabilities. Developing the provision for income taxes requires significant judgment and expertise in federal, international and state income tax laws, regulations and strategies, including the determination of deferred tax assets and liabilities and, if necessary, any valuation allowances that may be required for deferred tax assets. The Company records a valuation allowance to reduce its deferred tax assets to the amount that is more likely than not to be realized. Accordingly, as of December 31, 2025, and 2024, the Company recorded a full valuation allowance against its deferred tax assets for both periods, resulting in a net deferred tax asset of zero. If the Company was to subsequently determine that it would be able to realize deferred tax assets in the future, an adjustment to the valuation allowance would increase net income for the period in which such determination was made. The Company will continue to assess the adequacy of the valuation allowance on a quarterly basis. The Company’s tax filings are subject to audit by various taxing authorities.

The objective of accounting for income taxes is to recognize the amount of taxes payable or refundable for the current year and deferred tax liabilities and assets for the future tax consequences or events that have been recognized in the Company’s consolidated financial statements or tax returns. The Company recognizes the tax benefit from an uncertain tax position only if it is more likely than not that the tax position will be sustained on examination by the taxing authorities, based on the technical merits of the position (see “Unrecognized Tax Benefits” below).

Income tax related interest and penalties are grouped with interest expense on the consolidated statement of operations.

Unrecognized Tax Benefits

The Company accounts for unrecognized tax benefits in accordance with FASB ASC “Income Taxes” (“ASC 740”). ASC 740 prescribes a recognition threshold that a tax position is required to meet before being recognized in the consolidated financial statements and provides guidance on de-recognition, measurement, classification, interest and penalties, accounting in interim periods, disclosure and transition issues. ASC 740 contains a two-step approach to recognizing and measuring uncertain tax positions. The first step is to evaluate the tax position for recognition by determining if the weight of available evidence indicates that it is more likely than not that the position will be sustained upon ultimate settlement with a taxing authority, including resolution of related appeals or litigation processes, if any. The second step is to measure the tax benefit as the largest amount that is more than 50% likely of being realized upon ultimate settlement.

Additionally, ASC 740 requires the Company to accrue interest and related penalties, if applicable, on all tax positions for which reserves have been established consistent with jurisdictional tax laws.

Advertising and Promotional Costs

We expense advertising and promotional costs as incurred. Total advertising and promotional expenses were $437 and $311 for the years ended December 31, 2025, and 2024, respectively.

Share-Based Payments

The Company measures the cost of services received in exchange for an award of equity instruments based on the fair value of the award. The fair value of the award is measured on the grant date. The fair value amount is then recognized over the period during which services are required to be provided in exchange for the award, usually the vesting period, using the straight-line attribution approach. Upon the exercise of an award, the Company issues new shares of common stock out of its authorized shares.

The Company computes the fair value of stock options granted using the Black-Scholes option pricing model. Award forfeitures are accounted for at the time of occurrence. The expected term used for options is the estimated period of time that options granted are expected to be outstanding. The Company utilizes the “simplified” method under ASC 718 to develop an estimate of the expected term of “plain vanilla” option grants. The Company does not currently have a sufficient trading history to fully support its historical volatility calculations. Accordingly, the Company is utilizing an expected volatility figure based on a review of the historical volatility on a blended basis of its own stock as well as of comparable entities over a period of time equivalent to the expected life of the instrument being valued. The risk-free interest rate was determined from the implied yields from U.S. Treasury zero-coupon bonds with a remaining term consistent with the expected term of the instrument being valued.

Inventory

Inventory is stated at the lower of cost or net realizable value using a weighted average cost method and includes the cost of materials, labor and manufacturing overhead. The Company uses estimates in determining the level of reserves required to state inventory at the lower of cost or net realizable value. The Company estimates are based on market activity levels, production requirements, the physical condition of products and technological innovation. Changes in any of these factors may result in adjustments to the carrying value of inventory.

Income (Loss) Per Share

Basic income (loss) per share is computed by dividing the income or loss for the period by the weighted average number of vested common shares outstanding during the period. Diluted income (loss) per share is computed by dividing the income or loss for the period by the weighted average number of vested common shares outstanding, plus the number of additional common shares that would have been outstanding if the common share equivalents had been issued (computed using the treasury stock or if converted method), if dilutive.

Research and Development

Research and development include expenses incurred by the Company’s Critical Power segment related to developing the Company’s mobile e-Boost electric vehicle charging solutions. Research and development expenses are charged to operations as incurred. During the years ended December 31, 2025, and 2024, the Company incurred $875 and $1,050, respectively, of research and development expenses.

Recently Issued Accounting Pronouncements

In December 2023, the FASB issued ASU 2023-09 “Income Taxes (Topic 740): Improvements to Income Tax Disclosures” related to improvements to income tax disclosures. The amendments in this update require enhanced jurisdictional and other disaggregated disclosures for the effective tax rate reconciliation and income taxes paid. The amendments in this update were adopted for the year ended December 31, 2025 on a retrospective basis and were effective for fiscal years beginning after December 15, 2024. These updates did not have a significant impact on the Company’s consolidated financial statements.

In November 2024, the FASB issued ASU 2024-03 “Disaggregation of Income Statement Expenses”, which requires public business entities to disclose additional information about specific expense categories in the notes to financial statements at interim and annual reporting periods. The amendments in ASU 2024-03 are effective for annual reporting periods beginning after December 15, 2026, and interim reporting periods beginning after December 15, 2027. Early adoption is permitted. The Company is currently assessing the impact that adoption of this new accounting guidance will have on its consolidated financial statements and footnote disclosures.

In September 2025, the FASB issued ASU 2025-06, “Intangibles—Goodwill and Other—Internal-Use Software (Subtopic 350-40): Targeted Improvements to the Accounting for Internal-Use Software.” This ASU modernizes the accounting guidance for internal-use software by eliminating the previous project-stage model and replacing it with a “probable-to-complete” threshold. It also relocates and supersedes the guidance for website development costs (previously in Subtopic 350-50) into Subtopic 350-40, and requires entities to apply the presentation and disclosure requirements in Subtopic 360-10 to capitalized internal-use software costs regardless of how those costs are presented in the financial statements. The amendments are effective for all entities for annual reporting periods beginning after December 15, 2027, and interim reporting periods within those fiscal years, with early adoption permitted (provided the entity’s financial statements for that interim or annual period have not yet been issued or made available for issuance). The Company is currently assessing the impact that adoption of this new accounting guidance will have on its consolidated financial statements and footnote disclosures.

In December 2025, the FASB issued ASU 2025-11, “Interim Reporting (Topic 270): Narrow-Scope Improvements.” This ASU clarifies and reorganizes interim reporting disclosure requirements by introducing a disclosure principle that requires entities to disclose significant events and changes in circumstances that occur during interim periods. The amendments are intended to improve the consistency, usefulness, and understandability of interim financial reporting by focusing disclosures on matters that are material to an understanding of the entity’s financial position, cash flows, and results of operations. The amendments in this ASU are effective for interim reporting periods within annual reporting periods beginning after December 15, 2027. Early adoption is permitted. The Company is currently evaluating the impact that adoption of this ASU will have on its consolidated financial statements and related disclosures.

3. REVENUES

Nature of the Company’s products and services

The Company’s principal products and services include electric power systems and equipment, distributed energy resources, power generation equipment and mobile electric vehicle charging solutions. The Company’s principal products and services are primarily sold in the United States. See Note 13 – Business Segment, Geographic and Customer Information, for additional information.

Products

The Company’s Electrical Infrastructure business (included in discontinued operations; see Note 11 – Discontinued Operations for details) provided electric power systems and equipment and distributed energy resources that helped customers effectively and efficiently protect, control, transfer, monitor and manage their electric energy needs.

The Company’s Critical Power business provides customers with power generation equipment and the Company’s suite of mobile e-Boost electric vehicle charging solutions.

Services

Power generation systems represent considerable investments that require proper maintenance and service in order to operate reliably during a time of emergency. The Company’s power maintenance programs provide preventative maintenance, repair and support service for the Company’s customers’ power generation systems.

The timing of revenue recognition, customer billings and cash collections results in accounts receivable and deferred revenue at the end of each reporting period. Contract assets include unbilled amounts typically resulting from revenue recognized exceeding amounts billed to customers for contracts utilizing an input method based on the proportion of labor hours incurred as compared to the total estimated labor hours for the fixed-fee contract performance obligations. The Company bills customers as work progresses in accordance with agreed-upon contractual terms, either at periodic intervals, upon achievement of contractual milestones or upon deliveries.

Revenue Recognition

During the years ended December 31, 2025, and 2024, the Company recognized $221 and $558 of equipment revenue over time, respectively, from its Critical Power segment. Additionally, the Company recognized $13,693 and $11,704 of revenue at a point in time from the sale of its products, which is typically recognized upon delivery, from its Critical Power segment during the years ended December 31, 2025, and 2024, respectively.

Service revenues include maintenance contracts that are recognized over time based on the contract term and repair services which are recognized as services are delivered. The Company recognized $9,442 and $8,690 of service revenue during the years ended December 31, 2025, and 2024, respectively. Under its continuing operations, the Company recognizes revenue as services are provided. Amounts billed and due from customers, as well as the value of unbilled account receivables, are generally classified within current assets in the consolidated balance sheets. The customer payments are generally due in 30 days.

Under certain contracts, the Company may be entitled to invoice the customer and receive payments in advance of performing the related contract work. In those instances, the Company recognizes a liability for advance billings in excess of revenue recognized, which is referred to as deferred revenue. Payments received from customers in advance of revenue recognition are not considered a significant financing component because they are utilized to pay for contract costs within a one-year period or are requested by the Company to ensure the customers meet their payment obligations.

The change in deferred revenue as of December 31, 2025, was driven primarily by ordinary course contract activity. As of January 1, 2024, the Company had a deferred revenue balance of $307. For the years ended December 31, 2025, and 2024, the Company recognized revenue of $603 and $162, respectively, related to amounts that were included in deferred revenue as of December 31, 2024, and 2023, respectively, resulting primarily from the progress made on the various active contracts during the respective reporting periods. As of December 31, 2025, the Company had $791 related to contract liabilities where performance obligations have not yet been satisfied, which has been included within deferred revenue on the consolidated balance sheet.

Unbilled receivables include amounts for work performed for which the Company has an unconditional right to receive payment and that are not subject to the completion of any other specific task, other than the billing itself.

Concentration of Risk

For the year ended December 31, 2025, the Company derived 24% and 13% of its revenue from two customers. For the year ended December 31, 2024, the Company derived 22% and 13% of its revenue from two customers. As of December 31, 2025, one customer’s outstanding receivable balance equaled 25% of the total outstanding receivable balance. As of December 31, 2024, one customer’s outstanding receivable balance equaled 72% of the total outstanding receivable balance.

As of December 31, 2025, one customer represented 100% of the Company’s lease receivable balance.

Return of a product requires that the buyer obtain permission in writing from the Company. When the buyer requests authorization to return material for reasons of their own, the buyer will be charged for placing the returned goods in saleable condition, restocking charges and for any outgoing and incoming transportation paid by the Company. The Company warrants title to the products, and also warrants the products on date of shipment to the buyer, to be of the kind and quality described in the contract, merchantable, and free of defects in workmanship and material. Returns and warranties during the year ended December 31, 2025, were $653. Returns and warranties during the year ended December 31, 2024, were $295.

Disaggregated Revenue

The following table presents the Company’s revenues disaggregated by revenue discipline:

The following table presents future sales-type lease payments to be received as of December 31, 2025:

Lease Revenues

The Company’s sales-type lease portfolio as of December 31, 2025 consisted of nine mobile EV charging and power generation units leased to a single customer under two separate agreements, each with original terms of ten years. The leases do not contain renewal or early termination options.

There wereno leasing revenues arising from variable lease payments during the years ended December 31, 2025, and 2024.

The following table presents future undiscounted operating lease payments to be received as of December 31, 2025:

The net investment in sales-type leases consisted entirely of lease receivables of $2,843 as of December 31, 2025. There were no unguaranteed residual assets or deferred selling profit included in the net investment as of December 31, 2025. Lessees do not provide residual value guarantees on leased equipment. The Company manages residual value risk by monitoring technological developments and anticipated market demand for its mobile EV charging and power generation equipment. The Company evaluates its net investment in sales-type leases for credit losses in accordance with ASC 326, considering the creditworthiness of its lessees, historical payment experience, current economic conditions, and reasonable and supportable forecasts.

As of December 31, 2025, one customer represented 100% of the Company’s lease receivable balance. Based on its assessment, including consideration of the lessee’s financial condition and payment history, the Company determined that no material allowance for credit losses was necessary as of December 31, 2025.

4. INVENTORIES

The components of inventories are summarized below:

Raw materials primarily consist of generators, electrical equipment, and components and parts used in the assembly and service of the Company’s mobile EV charging solutions and power generation equipment.

5. PROPERTY AND EQUIPMENT, NET

Property and equipment are summarized below:

Depreciation expense was $1,027 and $716 for the years ended December 31, 2025, and 2024, respectively.

6. ACCOUNTS PAYABLE AND ACCRUED LIABILITIES

The components of accounts payable and accrued liabilities are summarized below:

Accrued liabilities primarily consist of accrued insurance, accrued compensation and benefits, and accrued warranty costs. As of December 31, 2025, and 2024, accrued insurance was $495 and $462, respectively. Accrued compensation and benefits as of December 31, 2025, and 2024 were $392 and $453, respectively. Accrued warranty costs as of December 31, 2025, and 2024, were $249 and $117, respectively. The remainder of accrued liabilities are comprised of several insignificant accruals in connection with normal business operations.

7. COMMITMENTS AND CONTINGENCIES

Leases

The Company leases certain offices, facilities and equipment under operating and financing leases. The Company’s leases have remaining terms ranging from less than 1 year to 5 years, some of which contain options to extend up to 3 years. As of December 31, 2025, and 2024, assets recorded under finance leases were $643 and $455, respectively, and accumulated amortization associated with finance leases were $311 and $234, respectively.

As of December 31, 2025, and 2024, assets recorded under operating leases were $1,273 and $995, respectively, and accumulated amortization associated with operating leases were $129 and $465, respectively.

During the year ended December 31, 2025, the Company executed a third amendment to its operating lease for its corporate offices in Fort Lee, New Jersey, extending the lease term through January 2029. The Company accounted for the lease extension as a modification in which the modified lease classification remained an operating lease. The related right-of-use asset and lease liability were remeasured as a result of the lease modification, for which the Company recorded an increase of approximately $265 in right-of-use assets and $265 in lease liabilities.

Additionally, during the year ended December 31, 2025, the Company executed a first amendment to its operating lease for its facility in Champlin, Minnesota, extending the lease term through March 2031. The Company accounted for the lease extension as a modification in which the modified lease classification remained an operating lease. The related right-of-use asset and lease liability were remeasured as a result of the lease modification, for which the Company recorded an increase of approximately $577 in right-of-use assets and $577 in lease liabilities. The components of the lease expense were as follows:

Other information related to leases was as follows:

Supplemental cash flows information:

Weighted average remaining lease term:

Weighted average discount rate:

Future minimum lease payments under non-cancellable leases as of December 31, 2025, were as follows:

Reported as of December 31, 2025:

Litigation and Claims

From time to time, we may become involved in lawsuits, investigations and claims that arise in the ordinary course of business. As of the date hereof, we are not aware of or a party to any legal proceedings to which we or our subsidiary is a party or to which any of our property is subject, nor are we aware of any such threatened or pending litigation or any such proceedings known to be contemplated by governmental authorities that we believe could have a material adverse effect on our business, financial condition or operating results.

We can give no assurance that any lawsuits or claims brought in the future will not have an adverse effect on our financial condition, liquidity or operating results.

8. STOCKHOLDERS’ EQUITY

Common Stock

The Company had 11,095,266 and 11,120,266 shares of common stock, $0.001 par value per share, outstanding as of December 31, 2025, and 2024, respectively.

On November 12, 2024, the board of directors declared a one-time special cash dividend of $1.50 per share, or $16,665 in the aggregate, to shareholders of record as of December 17, 2024. The dividend was paid on January 7, 2025.

Preferred Stock

The board of directors is authorized, subject to any limitations prescribed by law, without further vote or action by the shareholders, to issue from time to time up to 5,000,000 shares of preferred stock, $0.001 par value, in one or more series. Each such series of preferred stock shall have such number of shares, designations, preferences, voting powers, qualifications, and special or relative rights or privileges as shall be determined by the board of directors, which may include, among others, dividend rights, voting rights, liquidation preferences, conversion rights and preemptive rights.

9. STOCK-BASED COMPENSATION

Stock-Based Compensation

On October 13, 2021, the Company’s board of directors adopted the 2021 Long-Term Incentive Plan (the “2021 Plan”), subject to stockholder approval, which was obtained on November 11, 2021. The 2021 Plan supplemented the 2011 Long-Term Incentive Plan (“2011 Plan”), which expired on May 11, 2021, and which replaced and superseded the 2009 Equity Incentive Plan (“2009 Plan”), as noted above. The Company’s outside directors and its employees, including the principal executive officer, principal financial officer and other named executive officers, and certain contractors are all eligible to participate in the 2021 Plan. The 2021 Plan allows for the granting of incentive stock options, non-qualified stock options, stock appreciation rights, restricted stock, restricted stock units, performance awards, dividend equivalent rights, and other awards, which may be granted singly, in combination, or in tandem, and upon such terms as are determined by the Board or a committee of the board that is designated to administer the 2021 Plan. Subject to certain adjustments, the maximum number of shares of the Company’s common stock that may be delivered pursuant to awards under the 2021 Plan is 900,000 shares plus any increase by any Prior Plan Awards (as defined in the 2021 Plan) eligible for reuse (700,000 shares) as of December 31, 2025, of which one hundred percent (100%) may be delivered pursuant to incentive stock options. As of December 31, 2025, there were 306,663 shares available for future grants under the Company’s 2021 Plan. The 2021 Plan was initially administered by the Company’s board of directors, but it has been administered by the compensation committee following the creation of such committee in the first quarter of 2022.

The fair value of the stock options granted was measured using the Black-Scholes valuation model with the following assumptions:

A summary of stock option activity for the year ended December 31, 2025, is presented below:

A summary of the weighted-average grant-date fair value of options, total intrinsic value of options exercised, and cash receipts from options exercised is shown below:

The following table presents information related to stock options as of December 31, 2025:

A summary of restricted stock unit (“RSU”) activity during the year ended December 31, 2025, and 2024, is as follows:

During the years ended December 31, 2025, and 2024, RSUs vested with an aggregate vest date fair value of $0 and $780, respectively.

2025

During the year ended December 31, 2025, the CFO agreed to surrender shares of common stock to the Company, totaling an aggregate of 25,000 shares on May 2, 2025, with a fair value of $148 in connection with income and payroll tax obligations paid by the Company in connection with the exercising of options and vesting of RSUs. The shares were cancelled and retired by the Company.

Stock based compensation expense recorded for the years ended December 31, 2025, and 2024, was approximately $35 and $1,055, respectively. As of December 31, 2025, there was $23 of stock-based compensation expense remaining to be recognized in the consolidated statements of operations over a weighted average remaining period of 0.6 years.

2024

During the year ended December 31, 2024, the Company issued 10,000 shares of its common stock for consulting services with a fair value of $59.

During the year ended December 31, 2024, the Company issued 175,000 shares of common stock to its Chief Financial Officer (“CFO”) in connection with the vesting of 125,000 RSUs on May 1, 2024, and 50,000 RSUs on December 5, 2024.

During the year ended December 31, 2024, the CFO agreed to surrender shares of common stock to the Company, totaling an aggregate of 62,281 shares (57,541 shares on June 7, 2024, with a fair value of $220 and 4,740 shares on October 22, 2024, with a fair value of $29) in connection with income and payroll tax obligations paid by the Company in connection with the exercising of options and vesting of RSUs. The shares were cancelled and retired by the Company.

On November 12, 2024, the board of directors declared a one-time special cash dividend of $1.50 per share to shareholders of record as of December 17, 2024. All stock options that were outstanding as of the record date were modified to reduce the exercise price pursuant to the nondiscretionary anti-dilution provisions in the Company’s 2021 Plan. There was no incremental compensation expense related to the modification.

10. INCOME TAXES

The components of loss before income taxes related to continuing operations are summarized below:

The components of the income tax expense (benefit) related to continuing operations were as follows**:**

A reconciliation from the statutory U.S. income tax rate and the Company’s effective income tax rate for continuing operations, as computed on loss before taxes, is as follows:

The Company’s provision for income taxes reflects an effective tax rate on loss before income taxes of(1.2)% in 2025, as compared to 29.7% in 2024. The decrease in the Company’s effective tax rate during 2025 primarily reflects the increase in valuation allowance and net operating losses.

On July 4, 2025, the President signed into law the One Big Beautiful Bill Act (“OBBBA”), which makes several significant changes to U.S. federal income tax law. Key provisions include:

The Company has recognized the effects of the OBBBA provisions in its financial results to the extent they are applicable to the year ended December 31, 2025.

The net deferred income tax asset (liability) was comprised of the following:

The tax effect of temporary differences between GAAP accounting and federal income tax accounting creating deferred income tax assets and liabilities were as follows:

As of December 31, 2025, The Company had $8,238 of deferred tax assets on which it is taking a $7,452 valuation allowance. The total valuation allowance of $7,452 as of December 31, 2025, represents an increase of $1,445 from December 31, 2024.

A valuation allowance is established when it is determined that it is more likely than not that the deferred tax assets will not be realized. In evaluating the need for a valuation allowance, management assessed all available positive and negative evidence, including historical operating results, cumulative losses, projections of future taxable income, and sources of taxable income such as future reversals of existing taxable temporary differences and tax-planning strategies. Significant judgment is required in assessing the weight of both positive and negative evidence, particularly in determining the likelihood and timing of future taxable income.

Considering the significant judgment required in assessing the likelihood, timing, and magnitude of future taxable income, and given the relative weight and persuasiveness of the available evidence, management concluded that the negative evidence continues to outweigh the positive evidence. As a result, the Company has determined that the continuation of a full valuation allowance remains appropriate as of December 31, 2025. This includes a full valuation allowance for the Company’s foreign tax credits (“FTCs”) as the Company does not anticipate generating any foreign source income to realize this benefit. As of December 31, 2025, the remaining balance of the Company’s FTCs was $3,446. If not utilized, the FTCs will expire between 2026 and 2027.

The Company has federal and state net operating loss (“NOLs”) carryforwards of approximately $7,267 and $21,227, respectively, as of December 31, 2025. The federal NOLs were generated in taxable years ending after December 31, 2017, and therefore may be carried forward indefinitely. However, the utilization of such federal NOLs is generally limited to 80% of federal taxable income in any taxable year. Certain state NOLs are subject to annual limitations under applicable tax law. If not utilized, a portion of these losses will expire in varying amounts between 2028 and 2046.

Internal Revenue Code Section 382 imposes an annual limitation on the utilization of net operating loss (NOL) carryforwards and certain other tax attributes following a change in ownership. An ownership change generally occurs if the percentage of stock owned by 5-percent shareholders increases by more than 50 percentage points during a rolling three-year period. As of December 31, 2025, the Company determined that no ownership change occurred during the year under Section 382. Therefore, there is no annual limitation imposed on the utilization of the Company’s federal NOL carryforwards. The Company has also evaluated the implications of Section 382 limitations at the state level. Given that state conformity to federal Section 382 provisions varies significantly, additional state-specific considerations may apply. The Company will continue to monitor any future ownership changes, legislative updates, or interpretive guidance related to Section 382, as such changes could impact the Company’s ability to realize these deferred tax assets.

The following table summarizes the Company’s state losses by jurisdiction, as well as the expiration date:

Cash paid for income taxes, net of refunds, were as follows:

The Company has determined there are no uncertain tax positions requiring recognition or disclosure, including positions related to the sale of PCEP. The Company regularly assesses the adequacy of its provisions for income tax contingencies in accordance with ASC 740-10. As a result, the Company may adjust the reserves for unrecognized tax benefits for the impact of new facts and developments, such as changes to interpretations of relevant tax law, assessments from taxing authorities, settlements with taxing authorities, and lapses of statutes of limitations. Management has concluded that the current reserves are appropriate. The Company continues to monitor and evaluate uncertain tax positions that may arise from future developments in tax law interpretations, regulations, or audit outcomes. The Company’s tax returns remain subject to examination by the U.S. Internal Revenue Service and most state jurisdictions include the years 2022 and forward.

11. DISCONTINUED OPERATIONS

Sale of Electrical Infrastructure Segment

On October 29, 2024, the Company entered into an Equity Contribution and Purchase Agreement (the “Equity Purchase Agreement”), by and among the Company, PCEP, Voltaris Power LLC (the “Buyer”) and Pioneer Investment LLC (“Investment”). Pursuant to the terms of the Equity Purchase Agreement, the Company agreed to:

The Equity Transaction included total consideration of (i) $48,000 in cash, subject to adjustment pursuant to the terms of the Equity Purchase Agreement, and (ii) $2,000 in equity pursuant to Investment’s issuance of the Rollover Units to the Company. Following the execution of the Equity Purchase Agreement, the Equity Transaction was consummated on October 29, 2024 (the “Closing Date”). PCEP represented the entirety of the Company’s Electrical Infrastructure segment. As of December 31, 2024, the Company recorded a consideration due to the Buyer of $3,347 related to a net working capital adjustment.

On April 16, 2025, the Company and the Buyer finalized the net working capital adjustment and as a result, the Company recorded a $1,147 reduction in the consideration due to the Buyer, which is included as a component of discontinued operations during the year ended December 31, 2025. During the year ended December 31, 2025, the Company paid the remaining $2,200 consideration to the Buyer.

The results of operations of PCEP, as well as the gains realized on the sale of $449 and $35,044, respectively, have been presented under the caption “Income from discontinued operations, net of tax” in the consolidated statements of operations for the years ended December 31, 2025, and 2024.

Summarized Held for Sale and Discontinued Operation Financial Information

The income tax (benefit/expense) associated with discontinued operations primarily reflects the tax effects of the 2024 disposal gains along with the utilization of previously unrecognized tax attributes and valuation allowance reversals. The previous valuation allowance established on these deferred tax assets was reversed when the Company entered into a definitive sale agreement in 2024. The closing of the transaction provided certainty related to the amounts realized and the resulting gain for tax purposes allowed the Company to utilize the deferred tax assets. The determination whether it was more likely than not that the deferred tax assets were not going to be realized was no longer applicable.

Income tax expense associated with discontinued operations totaled $702 in 2025, and $5,497 in 2024, reflecting tax disposal gains, offset by utilization of tax attributes and related valuation allowance reversals.

The following table summarizes the results from discontinued operations, net of tax included in the consolidated statements of operations for the years ended December 31, 2025, and 2024:

The cash flows related to the discontinued operations have not been segregated and are included in the consolidated statements of cash flows.

Furthermore, the below table illustrates certain cash flows from discontinued operations:

Continuing Involvement

As a result of the Company’s investment in Rollover Units of Investment, which is accounted for as an equity method investment (see Note 2 - Summary of Significant Accounting Policies – Equity-Method Investment), the Company determined that it has continuing involvement with the discontinued operation, which is expected to continue for as long as the Company retains its investment in Rollover Units. There are no revenues or expenses presented in continuing operations after the disposal transaction that before the disposal transaction were eliminated in the Company’s consolidated financial statements as intra-entity transactions. Prior to the disposal transaction, the Company owned 100% of the discontinued operation, PCEP.

In connection with the Equity Transaction, the Company and the Buyer entered into a Transition Services Agreement (“TSA”), pursuant to which the Company agreed to provide the Buyer with certain transition services, including treasury and cash management support, payroll, benefits and human resources administration, technology and ERP transition support, infrastructure and desktop services, communications and data transfer, product hosting services, and knowledge transfer (collectively, the “Transition Services”), for various service periods ranging from 30 days to 12 months following the Closing Date. In addition, the Buyer agreed to provide the Company with the services of one human resources employee in California through October 31, 2025. Either party could terminate individual services upon 30 days’ prior written notice, subject to certain exceptions for payroll and benefits-related services.

Fees for the Transition Services are based on reimbursable costs incurred by the Company. The Company records amounts billed for reimbursable Transition Services in prepaid expenses and other current assets and records the related costs in selling, general and administrative expenses. The Buyer provided human resources services to the Company at no cost. As of December 31, 2025, and 2024, amounts due from the Buyer related to reimbursable Transition Services of $14 and $171, respectively, were included in prepaid expenses and other current assets. The TSA has since been completed, and no further obligations remain as of December 31, 2025.

12. EQUITY-METHOD INVESTMENT

As disclosed in Note 11 – Discontinued Operations, on October 29, 2024, the Company deconsolidated its subsidiary, PCEP. As part of the transaction, the Company retained an equity interest of approximately 6% in Pioneer Investment LLC via the issuance of Rollover Units. The Company estimated the fair value of the retained equity interest on the date of deconsolidation, which was determined to be $2,000 based on the Company’s proportionate share of Investment, which was calculated using the market approach based on the Equity Transaction. During the year ended December 31, 2025, the Company recorded a loss from equity method investee of $601, which is included in other expense on the consolidated statement of operations.

During the year ended December 31, 2025, the Company received a cash dividend of $981 from the equity method investee which has been recorded as a reduction in the investment account. The Company applies the cumulative earnings approach to classify distributions received from equity method investments in its consolidated statements of cash flows. Under this method, distributions received from equity method investees are included in the Company’s consolidated statements of cash flows as operating activities, unless the cumulative distributions exceed the Company’s share of cumulative equity in the investee’s net earnings. In such cases, the excess distributions are considered returns of investment and are classified as investing activities. As of December 31, 2025, the Company’s cumulative distributions were $981, and the Company did not have cumulative equity in the investee’s net earnings. As such, the cash distribution received during the year ended December 31, 2025, was classified as investing activity in the consolidated statements of cash flows.

13. BUSINESS SEGMENT, GEOGRAPHIC AND CUSTOMER INFORMATION

The CEO, as the Chief Operating Decision Maker (“CODM”), organizes the Company, manages resource allocations and measures performance of the Company’s single operating segment, Critical Power Solutions. The Critical Power Solutions reportable segment is the Company’s Titan Energy Systems, Inc. business unit. The Critical Power Solutions segment provides mobile high capacity charging equipment, power generation equipment and aftermarket field-services in order to help customers secure fast vehicle charging where fixed charging infrastructure does not exist, and additionally to ensure smooth, uninterrupted power to operations during times of emergency.

The CODM assesses the Company’s performance and decides how to allocate resources based on consolidated net income (loss) in the consolidated statements of operations, which is assessed to be the segment measure of profit or loss. This measure is used to monitor actual results to evaluate the performance of the segment versus the forecasted targets. The segment assets are equal to total assets presented in the consolidated balance sheets.

The significant expenses that are regularly provided to the CODM, which include costs of goods sold, selling, general and administrative expenses and research and development expenses, are disclosed in the consolidated statements of operations as a part of the consolidated net income (loss). Other segment items regularly provided to the CODM include interest income, net and other income (expense), each of which is disclosed as a separate line item in the consolidated statements of operations.

On October 29, 2024, the Company sold its Electrical Infrastructure segment to the Buyer. Prior to the sale of the Electrical Infrastructure segment, the Company’s CODM assessed performance and allocated resources amongst its two reportable segments. See Note 11- Discontinued Operations for additional information.

Revenues are attributable to countries based on the location of the Company’s customers:

Approximately 24% and 13% of the Company’s revenues during the year ended December 31, 2025, were made to Eneridge, Inc. and SparkCharge, respectively. Approximately 22% and 13% of the Company’s revenues during the year ended December 31, 2024, were made to INF Associates, LLC and British Columbia Hydro and Power Authority, respectively.

The distribution of the Company’s property and equipment by geographic location is approximately as follows:

**14. BASIC AND DILUTED (LOSS) EARNINGS PER SHARE **

Basic (loss) earnings per share data for each period presented is computed using the weighted average number of shares of common stock outstanding during each such period. Diluted (loss) earnings per share data is computed using the weighted average number of common and dilutive common equivalent shares outstanding during each period. Dilutive common equivalent shares consist of shares that would be issued upon the exercise of stock options and vesting of restricted stock units, computed using the treasury stock method.

A reconciliation of basic and diluted (loss) earnings per share is as follows (in thousands, except per share data):

The following securities were excluded from the calculation of diluted earnings per share because their inclusion would have been anti-dilutive:

15. SUBSEQUENT EVENTS

The Company has evaluated subsequent events through the date the financial statements were issued. Based on this review, the Company concluded that no events occurred during the period subsequent to the balance sheet date that would require recognition in or disclosure within the accompanying consolidated financial statements.