Polar Power, Inc.
For the period ended Dec 31, 2025. Filed Apr 15, 2026.
View on SEC.govAbout this filing
A company's yearly report to the SEC, with audited financial statements. It is the fullest account a company gives of its business, its finances and the risks it sees.
FY2025 · Filed Apr 15, 2026
POLA$0.32-5.2%Stored close · as of Nov 6, 2026
What changed in Management’s Discussion and Analysis?
Read the current filingPrevious report: 10-K
Period ended 2024-12-31; filed 2025-03-31.
0001641172-25-001504
Item 7. Management Discussion and Analysis of Financial Condition and Results of OperationsCurrent report: 10-K
Period ended 2025-12-31; filed 2026-04-15.
0001493152-26-016671
Item 7. Management Discussion and Analysis of Financial Condition and Results of OperationsThe baseline is this issuer’s latest earlier reporting period of the same form that was filed before the current report. A previous 10-Q is a different quarter, not a year-over-year comparison. Amendments are excluded.
Compared 66 previous paragraphs and 74 current paragraphs.
32 unchanged; 27 reworded; 15 added; 7 removed; 0 previous and 0 current paragraphs rearranged.
Tables are not compared: 4 previous and 4 current tables excluded. Dates, whitespace, punctuation and numbering changes are ignored; changes to financial figures remain significant.
A changed paragraph is not evidence that risk increased or decreased. An unchanged paragraph does not establish that risk stayed the same.
Added paragraphs (15)
Current report
Net Sales. Net sales decreased by $7,666, or 55%, to $6,304 for the year ended December 31, 2025, as compared to $13,970 for the year ended December 31, 2024. Net sales to our largest customer decreased approximately 40% from 2024 sales, and international net sales decreased approximately 78% from 2024 sales. We believe customers delayed projects due to geopolitical factors and economic uncertainties. At December 31, 2025, we had accumulated $3,212 in new purchase orders from our U.S. Tier-1telecommunications customers for delivery in 2026 and $1,093 in new purchase orders from other customers.
Current report
*Impairment of right-to-use assets and lease deposits.*During 2025, we recorded an impairment charge of $455 of which $347 was related to our right-of-use asset and $108 was related to deposits for leases.
Current report
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. On February 23, 2026, the landlord stopped the actions for eviction and continued discussions with the Company to resolve the delinquent rents and expired lease agreement. The Company expects to be in the position to make significant payment towards the delinquent rents in the near term and/or provide a payment plan mutually agreeable to both parties. 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.
Current report
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 December 31, the Company was 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 an Effective Tangible Net Worth of approximately $755 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. On March 10, 2026, the Company and Pinnacle executed a Notice of Additional Defaults and Forbearance Agreement, in which Pinnacle agrees to forbear from exercising certain rights and remedies under the Loan Documents arising from the Specified Existing Defaults for the period commencing March 10, 2026, the Effective Date, to July 31, 2026, the Forbearance Termination Date, considering the Company 1) on or prior to the Effective Date, pays Pinnacle the amount of $250, 2) on or prior to the Effective Date, assigns to Pinnacle new Eligible Accounts in the aggregate amount of at least $185, with 85% of the Net Face Amount of such new Eligible Accounts to be applied to reduce the loan obligations, 3) within forty-five (45) days of the Effective Date, reduce the loan obligations by the aggregate amount of $225, which reduction can result from a cash payment or the assignment of sufficient new Eligible Accounts, with 85% of the Net Face Amount of such new Eligible Accounts to be applied towards such reduction amount, 4) does not create any new events of default, 5) pays in full all obligations to Pinnacle by the Termination Date. If the Company timely complies with all terms listed above, and so long as the Forbearance Termination Date has not occurred, Pinnacle agrees that it will re-commence making Advances to the Company in the amount equal to 42.5% of the Net Face Amount of the thereafter arising Eligible Accounts, with the remaining 42.5% of the Net Face Amount of such Eligible Accounts to be applied to reduce the then outstanding obligations. In March 2026, the Company paid $250 to Pinnacle Bank and timely complied with the requirements under the Forbearance Agreement and commenced taking advances at 42.5% of the Net Face Amount of Eligible Accounts on March 12, 2026. While the Company expects to stay in compliance and pay the full obligation to Pinnacle by July 31, 2026, there is no guarantee that the Company will be able to do so. If the Company is unable to comply with the Loan Agreement, or pay the full obligation to Pinnacle by the July 31, 2026, Pinnacle may immediately enforce its claims, rights, liens,…
Excerpt shortened here; the source contains the full paragraph.
Current report
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 (the “Offering”) through the Sales Agent, shares (the “Shares”) of the Company’s common stock, par value $0.0001 per share (the “Common Stock”), up to a maximum amount as set forth in the Sales Agreement, subject to the terms and conditions of the Sales Agreement. 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.
Current report
Under the Sales Agreement, the Sales Agent may sell the Shares in sales deemed to be an “at-the-market offering” as defined in Rule 415(a)(4) promulgated under the Securities Act of 1933, as amended (the “Securities Act”), including sales made directly on or through The Nasdaq Capital Market or any other existing trading market for the Common Stock, in negotiated transactions at market prices prevailing at the time of sale or at prices related to such prevailing market prices, and/or any other method permitted by law. The Company may instruct the Sales Agent not to sell the Shares if the sales cannot be effected at or above the price designated by the Company from time to time. The Company is not obligated to make any sales of the Shares under the Sales Agreement. The offering pursuant to the Sales Agreement will terminate upon the termination of the Sales Agreement as permitted therein. The Company may terminate the Sales Agreement in its sole discretion at any time by giving ten days’ prior notice to the Sales Agent. The Sales Agent may terminate the Sales Agreement under the circumstances specified in the Sales Agreement and in its sole discretion at any time by giving ten days’ prior notice to the Company.
Current report
The Company will pay the Sales Agent a fixed commission rate of 3.0% of the aggregate gross proceeds of the sales price of the Shares sold through the Sales Agent pursuant to the Sales Agreement and has agreed to provide the Sales Agent with customary indemnification and contribution rights. The Company also agreed to reimburse the Sales Agent the fees and expenses of the Sales Agent, including but not limited to the fees and expenses of the counsel to the Sales Agent, in an amount not to exceed $30,000. In addition, the Company will reimburse the Sales Agent for such fees and expenses incurred in connection with the Sales Agreement in an amount not to exceed (I) $10,000 per fiscal year, provided, however, that at such time as the Company files an additional prospectus or prospectus supplement to increase the aggregate amount of Shares which may be sold under the Sales Agreement in excess of the amount included in the initial prospectus supplement relating to the offering of the Shares, the annual reimbursement for costs, fees and expenses shall be revised from $10,000 to an amount not to exceed $5,000 on a quarterly basis for the first three quarters of each year, $7,500 for the fourth quarter of each year, and (II) $10,000 (on up to two occasions per calendar year in connection with any filing of any additional prospectus or prospectus supplement which relates to the Shares to be issued from time to time by the Company).
Current report
As of December 31, 2025, the Company has sold 166,127 shares of Common Stock in the ATM Offering at a weighted-average price of $4.70 per share, for net proceeds of $757, after deducting commissions to the sales agent and other ATM Offering related expenses of $23. On December 12, 2025, the Company filed a prospectus supplement to its registration statement on Form S-3 (File No. 333-276705) to increase the amount of shares of Common Stock that the Company may offer and sell under the Sales Agreement and applicable registration statement to an aggregate offering price of up to $2,500, which amount does not include the shares of Common Stock having an aggregate gross sales price of approximately $780 that were sold under the ATM Offering through December 11, 2025, in accordance with the limitations set forth in Instruction I.B.6 of Form S-3. During 2026 and as of April 15, 2026, the Company has sold 962,500 shares of Common Stock in the ATM Offering at a weighted-average price of $2.60 per share, for net proceeds of $2,425, after deducting commissions to the sales agent and other ATM Offering related expenses of $75.
Current report
On December 23 2025, the Company entered into a business loan and security agreement (the WWCM loan agreement) with World Wide Capital Management (WWCM), pursuant to which the Company borrowed net proceeds of $399, after deducting fees as outlined in the WWCM loan agreement. The loan amount is $500, with a loan origination fee of $20, providing for an advance amount of $480. The loan is to be paid in 48 weekly payments of $13 with the first six payments paid in advance and deducted from the initial funding. Net proceeds of $399 were received by the Company on December 26, 2025. The total repayment obligation to the Company is $640.
Current report
Effective September 30, 2020, the Company entered into an Loan 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.
Current report
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.
Current report
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.
Current report
At December 31 2025, the Company was 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 an Effective Tangible Net Worth of approximately $755 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. On March 10, 2026, the Company and Pinnacle executed a Notice of Additional Defaults and Forbearance Agreement, in which Pinnacle agrees to forbear from exercising certain rights and remedies under the Loan Documents arising from the Specified Existing Defaults for the period commencing March 10, 2026, the Effective Date, to July 31, 2026, the Forbearance Termination Date, considering the Company 1) on or prior to the Effective Date, pays Pinnacle the amount of $250, 2) on or prior to the Effective Date, assigns to Pinnacle new Eligible Accounts in the aggregate amount of at least $185, with 85% of the Net Face Amount of such new Eligible Accounts to be applied to reduce the loan obligations, 3) within forty-five (45) days of the Effective Date, reduce the loan obligations by the aggregate amount of $225, which reduction can result from a cash payment or the assignment of sufficient new Eligible Accounts, with 85% of the Net Face Amount of such new Eligible Accounts to be applied towards such reduction amount, 4) does not create any new events of default, 5) pays in full all obligations to Pinnacle by the Termination Date. If the Company timely complies with all terms listed above by the Forbearance Termination Date, Pinnacle agrees that it will re-commence making advances to the Company in the amount equal to 42.5% of the Net Face Amount of the thereafter arising Eligible Accounts, with the remaining 42.5% of the Net Face Amount of such Eligible Accounts to be applied to reduce the then outstanding obligations. In March 2026, the Company paid $250 to Pinnacle Bank and timely complied with the requirements under the Forbearance Agreement and commenced taking advances at 42.5% of the Net Face Amount of Eligible Accounts on March 12, 2026. While the Company expects to stay in compliance and pay the full obligation to Pinnacle by July 31, 2026, there is no guarantee that the Company will be able to do so. If the Company is unable to comply with the Forbearance Agreement, or pay the full obligation to Pinnacle by the July 31, 2026, Pinnacle may immediately enforce its claims, rights, liens, and security interests under the Forbearance Agreement, and the Loan Documents, including, but not limited to, taking possession of its collateral, or any portion thereof, and foreclosing upon its collateral, or any portion thereof, in accordance with the Loan Documents and applicable law.
Current report
During 2025, the Company repaid a net of $761 to the Loan Agreement. At December 31, 2025, the outstanding balance under the line of credit was $4,036, which includes interest, fees and financing costs (see below), and the Company had an over advance balance under the line of credit in the amount of $495.
Current report
The total interest expense, fees, and financing costs incurred under the Loan Agreement during 2025 and 2024 were $746 and $733, respectively. Of these amounts, $106 in 2025 and $99 in 2024 were recorded under general and administrative expenses, while $640 in 2025 and $634 in 2024 were recorded under interest expense and finance costs in the accompanying statements of operations.
Removed paragraphs (7)
Previous report
During 2024, we saw significant volatility in revenue primarily from our largest customer which greatly affected overall performance. We believe the drop in sales is attributed to excess inventory at customer warehouse collected during COVID-19 and customer concerted effort to reduce inventory. We believe the excess inventory has largely been reduced and anticipate normalization in purchases during second half of 2025. We reached profitability in the second and third quarters of the year with gross margins at 39% and 29%, respectively. We experienced net losses and negative margins in the first and fourth quarter. We believe economic and geopolitical factors continue to influence our customers’ buying patterns.
Previous report
Net Sales. Net sales decreased by $1,323, or 9%, to $13,970 for the year ended December 31, 2024, as compared to $15,293 for the year ended December 31, 2023. The decrease in net sales is primarily due to a decrease in deliveries of our DC power generators to our largest telecommunications customer in the U.S.
Previous report
At December 31, 2021, we recognized $2,000 related to the ERC for salaries and benefits expenses incurred during 2021 resulting in a refundable tax credit. The ERC assist business owners and their employees by providing an incentive to keep workers on the payroll and eligible businesses received a tax credit for a percentage of each eligible employee’s wage. In May 2024, the Company received $2,000 of the ERC receivable.
Previous report
Effective September 30, 2020, we entered into a Loan and Security Agreement, or Loan Agreement, with Pinnacle. The Loan Agreement was amended by the First Modification to Loan and Security Agreement on October 7, 2020. The Loan Agreement’s initial term ended on September 30, 2022. On November 3, 2022, we executed the Second Modification to Loan and Security Agreement with Pinnacle for a two-year term with an expiration date of September 30, 2024. On September 23, 2024, the Loan and Security Agreement with Pinnacle was renewed for two years and expires September 30, 2026.
Previous report
The Loan Agreement, provides for a revolving credit facility under which Pinnacle may, in its sole discretion upon our request, make advances to us in an amount, subject to certain limitations and adjustments, of up to (a) 85% of the aggregate net face amount of our accounts receivable and other contract rights and receivables, plus (b) the lesser of (i) 35% of the lower of cost or wholesale market value of certain of our inventory or (ii) $2,500. The aggregate amount of the outstanding advances under the revolving credit facility were initially limited to $4,000. On May 25, 2023, we executed the Fourth Modification to the Loan Agreement to amend the amount of available advances under the Loan Agreement such that the aggregate amount of the outstanding advances under the revolving credit facility may not be greater than $6,000 and raised the concentration percentage applicable to certain Tier-1 telecommunication customers from 50% to 75% in the definition of eligible accounts.
Previous report
On September 5, 2023, the Company entered into a Fifth Modification to the Loan Agreement under which the parties (a) agreed to amend the amount of available advances under the Loan Agreement such that the aggregate amount of the outstanding advances under the revolving credit facility may not be greater than seven and a half million dollars ($7.5 million), (b) extended the standard of eligibility applicable to certain Tier-1 telecommunication customers from ninety (90) days to one hundred twenty (120) days of invoice date in the definition of eligible accounts, (c) increased the inventory advance rate from 35% to 40% of the aggregate eligible inventory value of eligible inventory, and (d) raised the inventory advance limit from two million dollars ($2.0 million) to four million dollars ($4.0 million).
Previous report
We have an outstanding balance of $4,797 under the Loan Agreement at December 31, 2024. During 2024, we advanced a net of $559 under the Loan Agreement. As of December 31, 2024, we had availability under the Loan Agreement of $654 and we believe that we are in compliance with the terms and conditions of the Loan Agreement.
Reworded paragraphs (27)
Previous wording
During the years ended December 31, 2024 and 2023, 88% and 95%, respectively, of our total net sales were within the telecommunications market. In 2024, our two largest customers represented 48% and 14% of our total net sales, respectively, one being a Tier-1 telecommunications customer in the U.S. and one being a telecommunications customer outside the U.S. In 2023, our two largest customers represented 50% and 18% of our total net sales, respectively, one being a Tier-1 telecommunications customer in the U.S. and one being a telecommunications customer outside the U.S. There was no other revenue from customers in excess of 10% of total net sales in either period. During those periods, the majority of our sales were of our DC base powers systems. During 2024 and 2023, sales to international customers accounted for 13% and 21% of total revenue, respectively. Sales to military customers during 2024 and 2023 accounted for 8% and 3% of total revenues, respectively. During 2024 and 2023, sales to the marine and other markets accounted for 4% and 2% of total revenue, respectively.
Current wording
During the years ended December 31, 2025 and 2024, 88% and 88%, respectively, of our total net sales were within the telecommunications market. In 2025, our largest customer, being a Tier-1 telecommunications in the U.S., represented 65% of our total net sales. In 2024, our two largest customers represented 48% and 14% of our total net sales, respectively, one being a Tier-1 telecommunications customer in the U.S. and one being a telecommunications customer in Puerto Rico. There was no other revenue from customers in excess of 10% of total net sales in either period. During those periods, the majority of our sales were of our DC base powers systems. During 2025 and 2024, sales to international customers accounted for 7% and 13% of total revenue, respectively. Sales to military customers during 2025 and 2024 accounted for 8% and 8% of total revenues, respectively. Sales to customers in the marine market accounted for 1% of total net sales during 2025, and 3% in 2024. Sales to customers in other markets represented 3% of total net sales in 2025, and 1% in 2024.
Previous wording
In May 2023, we announced plans to expand our mobile offerings by upgrading our mobile CHAdeMO EV chargers to the universal combined charging system standard to reach the mobile EV charging market. Mobile EV chargers are used for emergency roadside service providing a fast-charging solution for EVs that have run out of charge before reaching a stationary charging facility. During second half of 2024, we have successfully tested our demonstrator model on several platforms and made appropriate improvements and changes. We believe this configuration of remote mobile electric vehicle charger is just an initial model and based on power and fuel needs will result in various additional configurations.
Current wording
During 2024 and 2025, we worked on upgrading our mobile CHAdeMO EV chargers to the universal combined charging system standard to reach the mobile EV charging market. Mobile EV chargers are used for emergency roadside service providing a fast-charging solution for EVs that have run out of charge before reaching a stationary charging facility. During second half of 2024, we have successfully tested our demonstrator model on several platforms and made appropriate improvements and changes. We believe this configuration of remote mobile electric vehicle charger is just an initial model and based on power and fuel needs will result in various additional configurations.
Previous wording
We expect that opportunities in the bad-grid (i.e., areas where wireless towers are connected to an electrical grid that loses power for more than eight hours), and off-grid (i.e., areas where wireless towers are not connected to an electrical grid) applications, which include telecommunications towers, commercial and residential backup power, electric vehicle charging, “mini-grid” and various other power applications, will help to expand the market for our natural gas/LPG (propane) product lines domestically and internationally. In 2024. We demonstrated a microgrid product that can provide 24/7 electric power to a commercial facility. This project was funded by UNHCR a United Nations organization. The product included DC generator, battery storage, AC inverter, solar charge controller and remote monitoring in a single container which can be delivered to any remote location to provide power. We believe this product in its current configuration can serve mid-level micro grid needs in residential and commercial areas. We plan to develop new configurations of DC power system, battery storage and solar products to optimize the match between our solutions and various application needs.
Current wording
We expect that opportunities in the bad-grid (i.e., areas where wireless towers are connected to an electrical grid that loses power for more than eight hours), and off-grid (i.e., areas where wireless towers are not connected to an electrical grid) applications, which include telecommunications towers, commercial and residential backup power, electric vehicle charging, “mini-grid” and various other power applications, will help to expand the market for our natural gas/LPG (propane) product lines domestically and internationally. In 2024, we developed a microgrid product that can provide 24/7 electric power to a commercial facility. This project was funded by UNHCR a United Nations organization. The product included DC generator, battery storage, AC inverter, solar charge controller and remote monitoring in a single container which can be delivered to any remote location to provide power. We believe this product in its current configuration can serve mid-level micro grid needs in residential and commercial areas. We plan to develop new configurations of DC power system, battery storage and solar products to optimize the match between our solutions and various application needs.
Previous wording
We also recognize revenue from the rental of equipment. Our rental revenues have not been significant to date and have accounted for less than one percent of total revenues for the years ended December 31, 2024 and 2023.
Current wording
We also recognize revenue from the rental of equipment. Our rental revenues have not been significant to date and have accounted for $nil of total revenues for the years ended December 31, 2025 and 2024.
Previous wording
Our net sales for the year ended December 31, 2024, were $13,970, as compared to $15,293 for the year ended December 31, 2023. We reported a net loss of $4,677 for 2024, as compared to net loss of $6,548 for 2023. Cost of sales includes inventory write-downs of $900 in 2024, and $450 in 2023, to adjust inventory to net realizable value.
Current wording
Our net sales for the year ended December 31, 2025, were $6,304, as compared to $13,970 for the year ended December 31, 2024. We reported a net loss of $9,133 for 2025, as compared to net loss of $4,677 for 2024. Cost of sales includes inventory write-downs of $1,967 in 2025, and $900 in 2024, to adjust inventory to net realizable value.
Previous wording
During 2024, sales to our customers in the U.S. were $12,108, or 87% of total net sales, as compared to 79% in 2023. During 2024, our largest customer represented 48% of our total net sales, as compared to 50% in 2023. Our international sales were $1,862, or 13% of total net sales in 2024, as compared to $3,216, or 21%, during 2023.
Current wording
During 2025, sales to our customers in the U.S. were $6,219, or 93% of total net sales, as compared to $12,108, or 87% in 2024. During 2025, sales to our international customer were $415, or 7% of our total net sales, as compared to $1,862, or 13% of total net sales in 2024. We believe economic and geopolitical factors have influenced our customers’ buying decisions, particularly international customers, delaying pushing orders to 2026.
Previous wording
Our sales backlog as of December 31, 2024, was $1,306, with 53% of that amount being attributable to our largest U.S. telecommunications customer, 3% attributed to other telecommunications customers, 36% to customers in the military markets, and 9% to customers in marine and other markets. The Company expects to complete shipment of these orders within the next six to twelve months.
Current wording
Our sales backlog as of December 31, 2025, was $4,306, with 82% of that amount being attributable to our telecommunications customers, 17% attributed to customers in military markets, 1% to customers in marine market, and 1% in other markets. The Company expects to complete shipment of these orders within the next six to twelve months.
Previous wording
We plan to continue to market our products globally and expand our customer base in all market segments. We plan to continually improve our inventory turns to generate cash flow from operations combined with austerity measures on non-essentials overhead to manage cash flow while sales improves. During 2024, we successfully reduced overhead expenses by $996 to improve cash generated through operations. We plan to continue take proactive steps to manage our operations and mitigate the financial impacts of higher costs, supply chain issues, and geopolitical factors. We have $12.9 million in inventory and completed updating our manufacturing facilities to accommodate three to four times the annual revenue of 2024. However, the full impact on our financial and operating performance of these factors will depend significantly on the duration and severity of these factors, the actions taken to mitigate their impact, disruption to our supply chain, and the pace with which our clients return to more normalized purchasing behavior, among others factors beyond our knowledge or control. See “Risk Factors” commencing on page 17 of this Annual Report on Form 10-K for additional considerations.
Current wording
We plan to continue to market our products globally and expand our customer base in all market segments. We plan to continually improve our inventory turns to generate cash flow from operations combined with austerity measures on non-essentials overhead to manage cash flow while sales improves. We plan to continue take proactive steps to manage our operations and mitigate the financial impacts of higher costs, supply chain issues, and geopolitical factors. However, the full impact on our financial and operating performance of these factors will depend significantly on the duration and severity of these factors, the actions taken to mitigate their impact, disruption to our supply chain, and the pace with which our clients return to more normalized purchasing behavior, among others factors beyond our knowledge or control. See “Risk Factors” commencing on page 18 of this Annual Report on Form 10-K for additional considerations.
Previous wording
During 2024, revenue from telecommunications customers accounted for 88% of total net sales, as compared to 95% of total net sales during 2023. Our two largest customers represented 48% and 14% of our total net sales in 2024, as compared to 50% and 18% in 2023. Our largest customer in each year was a Tier-1 telecommunications customer in the U.S., and our second largest customer in each year was a telecommunications customer outside the U.S. There was no other revenue from customers in excess of 10% of total net sales in either period.
Current wording
During 2025, revenue from telecommunications customers accounted for 88% of total net sales, as compared to 88% of total net sales during 2024. Our largest customer represented 65% of our total net sales in 2025, as compared to our two largest customers that accounted for 48% and 14% in 2024, respectively. Our largest customer in each year was a Tier-1 telecommunications customer in the U.S., and our second largest customer in 2024 was a telecommunications customer in Puerto Rico. There was no other revenue from customers in excess of 10% of total net sales in either period.
Previous wording
During 2024 and 2023, sales to international customers accounted for 13% and 21% of total revenue, respectively. Sales to military customers during 2024 and 2023 accounted for 8% and 3% of total revenues, respectively. Sales to marine and other markets during 2024 and 2023 accounted for 4% and 2% of total revenue, respectively. Most of our sales were of our DC base powers systems during the two years.
Current wording
During 2025 and 2024, sales to international customers accounted for 7% and 13% of total revenue, respectively. Sales to military customers during 2025 and 2024 accounted for 8% and 8% of total revenues, respectively. Sales to customers in the marine market accounted for 1% of total revenues in 2025, and 3% in 2024. Customers in other markets during 2025 and 2024 accounted for 2% and 1% of total revenue, respectively. Most of our sales were of our DC base powers systems during the two years.
Previous wording
Cost of Sales. Cost of sales decreased by $1,942 or 13%, to $12,656 during 2024, compared to $14,598 during 2023. Cost of sales as a percentage of net sales decreased from 95.5% in 2023 to 90.6% in 2024 primarily as a result of a decrease in factory overhead absorption as compared to the same period in 2023. We believe we can achieve significant reductions in the cost of sales in 2025 as a percentage of net sales as volumes in production increase. Cost of sales includes inventory write-downs of $900 in 2024, and $450 in 2023, to adjust inventory to net realizable value.
Current wording
Cost of Sales. Cost of sales decreased by $3,196 or 25%, to $9,460 during 2025, compared to $12,656 during 2024. Cost of sales as a percentage of net sales increased from 90.6% in 2024 to 150.1% in 2025 primarily as a result of an increase in factory overhead absorption as compared to the same period in 2024. Cost of sales includes inventory write-downs of $1,967 in 2025, and $900 in 2024, to adjust inventory to net realizable value.
Previous wording
Gross Profit. We recognized a gross profit of $1,314 during 2024, as compared to a gross profit of $695 during 2023, which represents an increase in gross profit of $619 or 89%. Gross profit as a percentage of net sales increased to 9.4% in 2024, as compared to 4.5% in 2023. The increase in gross profit during 2024 was primarily because of improved labor efficiencies in manufacturing resulting from higher production volumes primarily during the second and third quarters of 2024.
Current wording
Gross Profit (Loss). We recognized a gross loss of $3,156 during 2025, as compared to a gross profit of $1,314 during 2024, which represents a decrease in gross profit of $4,470 or 340%. Gross loss as a percentage of net sales was (50.1)% in 2025, as compared to gross profit as a percentage of net sales of 9.4% in 2024. The gross loss during 2025 was primarily a result of an increase in factory overhead absorption and underutilization of the factory, as well adjustments to inventory net realizable value.
Previous wording
Sales and MarketingExpenses. Sales and marketing expenses decreased $162 to $1,010 during 2024, as compared to $1,172 during 2023. The decrease was attributable to a slight decrease in sales support staff during 2024 as compared the same period in 2023. We plan to increase our sales force and increase our marketing and tradeshow activities in 2025 to support our diversification strategy and expand our customer base in all market segments.
Current wording
Sales and MarketingExpenses. Sales and marketing expenses decreased $203 to $807 during 2025, as compared to $1,010 during 2024. The decrease was attributable to a slight decrease in sales support staff during 2025 as compared the same period in 2024. We plan to increase our sales force and increase our marketing and tradeshow activities in 2026 to support our diversification strategy and expand our customer base in all market segments.
Previous wording
*Research and Development Expenses.*During 2024, research and development expenses decreased by $451 to $771, as compared to $1,222 during 2023. The decrease in 2024 is attributed to a decrease in engineering staff during 2024 as compared to 2023. Our research and development efforts during 2024 primarily focused on product customization on new customers orders, our mobile EV chargers, and solar hybrid power systems. We continue to search for qualified engineers to join our engineering team and to support our customer diversification efforts.
Current wording
*Research and Development Expenses.*During 2025, research and development expenses decreased by $125 to $646, as compared to $771 during 2024. The decrease in 2025 is attributed to a decrease in engineering staff during 2025 as compared to 2024. Our research and development efforts during 2025 primarily focused on product customization on new customers orders, our mobile EV chargers, and solar hybrid power systems. We continue to search for qualified engineers to join our engineering team and to support our customer diversification efforts.
Previous wording
General and Administrative Expenses. Our general and administrative expenses decreased by $383 to $3,908 during 2024, as compared to $4,291 during 2023. The decrease in general and administrative expenses during 2024 was primarily due a decrease in the number of general and administrative staff during 2024, as compared to 2023.
Current wording
General and Administrative Expenses. Our general and administrative expenses decreased by $549 to $3,359 during 2025, as compared to $3,908 during 2024. The decrease in general and administrative expenses during 2025 was primarily due a decrease in the number of general and administrative staff during 2025, as compared to 2024.
Previous wording
*Interest and Finance Costs.*Our interest expense was $649 in 2024, as compared to $559 in 2023. Our interest expense is primarily from borrowings from our credit facility.
Current wording
*Interest and Finance Costs.*Our interest expense was $720 in 2025, as compared to $649 in 2024. Our interest expense is primarily from borrowings from our credit facility.
Previous wording
*Net Loss.*As a result of the factors identified above, we generated a net loss of $4,677, or ($1.86) per basic and diluted share, for 2024, as compared to net loss of $6,548, or ($3.45) per basic and diluted share, for 2023, a decrease loss of $1,871.
Current wording
*Net Loss.*As a result of the factors identified above, we generated a net loss of $9,133, or ($3.59) per basic and diluted share, for 2025, as compared to net loss of $4,677, or ($1.86) per basic and diluted share, for 2024, representing an increased loss of $4,456.
Previous wording
The Company’s financial statements have been prepared under the assumption that the Company will continue as a going concern. For the year ended December 31, 2024, the Company recorded a net loss of $4,677 and used cash in operations of $536. These factors raise substantial doubt about the Company’s ability to continue as a going concern within one year of the date that the financial statements are issued. In addition, the Company’s independent registered public accounting firm, in their report on the Company’s December 31, 2024, audited financial statements, raised substantial doubt about the Company’s ability to continue as a going concern.
Current wording
The accompanying financial statements have been prepared under the assumption that the Company will continue as a going concern. In accordance with Accounting Standards Codification (“ASC”) 205-40,Going Concern, the Company’s management has evaluated whether there are conditions and events, considered in the aggregate, that raise substantial doubt about the Company’s ability to continue as a going concern within one year after the date the accompanying financial statements were issued. For the year ended December 31, 2025, the Company recorded a net loss of $9,133 and used cash in operating activities of $1,061. These factors raise substantial doubt about the Company’s ability to continue as a going concern within one year of the date that the financial statements are issued. The financial statements do not include any adjustments that might be necessary if the Company is unable to continue as a going concern.
Previous wording
Our ability to continue as a going concern is dependent upon our ability to obtain additional financing, drive further operating efficiencies, reduce expenditures, and ultimately, create profitable operations Our ability to obtain additional financing in the debt and equity capital markets is subject to several factors, including market and economic conditions, our performance and investor sentiment with respect to us and our industry. The Company has taken action to improve its margins, and is continuing to build a strong back log, and expects to continue investing in product development and sales and marketing activities. 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.
Current wording
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.
Previous wording
During the year ended December 31, 2024, we funded our operations primarily from cash on hand. As of December 31, 2024, we had working capital of $7,037, as compared to working capital of $11,775 at December 31, 2023. This $4,738 decrease in working capital is primarily attributable to a $51 decrease in cash and cash equivalents resulting from net cash of $536 used in operating activities, net cash used in investing activities of $19 for the acquisition of new property and equipment, and net cash from financing activities of $504 which includes net proceeds of $559 from our credit facility.
Current wording
During the year ended December 31, 2025, we funded our operations primarily from cash on hand. As of December 31, 2025, we had working capital of $(262), as compared to working capital of $7,037 at December 31, 2024. This $7,299 decrease in working capital is primarily attributable to a $298 decrease in cash and cash equivalents resulting from net cash of $1,061 used in operating activities, net cash used in investing activities of $nil, and net cash from financing activities of $763 which includes net proceeds of $757 from sale of the Company’s common shares, net proceeds of $437 from a commercial loan, and proceeds of $330 from borrowings from a related party.
Previous wording
On December 31, 2024, and December 31, 2023, our net trade receivables totaled $2,153 and $1,676, respectively. On December 31, 2024, $1,771 (82%) represented the largest open customer account balance, while $1,156 (69%) and $264 (16%) represented the two largest open customer account balances on December 31, 2023.
Current wording
On December 31, 2025, and December 31, 2024, our net trade receivables totaled $330 and $2,153, respectively. On December 31, 2025, $196 (59%) represented the largest open customer account balance, while $1,771 (82%) represented the largest open customer account balances on December 31, 2024.
Previous wording
Our available capital resources on December 31, 2024, consisted primarily of $498 in cash and cash equivalents, as compared to $549 as of December 31, 2023. We expect our future capital resources will consist primarily of cash on hand, cash generated by operations, drawdowns on our credit facility with Pinnacle Bank and future debt or equity financings, if any.
Current wording
Our available capital resources on December 31, 2025, consisted primarily of $200 in cash and cash equivalents, as compared to $498 as of December 31, 2024. We expect our future capital resources will consist primarily of cash on hand, cash generated by operations, drawdowns on our credit facility with Pinnacle Bank and future debt or equity financing, if any.
Previous wording
Interest accrues on the daily balance at a rate of 1.25% above the prime rate, or the Standard Interest Rate, but in no event will the Standard Interest Rate be less than 3.75% per annum. 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 per annum, or the Inventory Interest Rate, but in no event will the Inventory Interest Rate be less than 4.75% per annum. The Loan Agreement also contains a financial covenant requiring us to attain an effective tangible net worth, defined as our total assets, excluding all intangible assets, less our total liabilities plus loans to us from our officers, stockholders or employees that have been subordinated to our obligations to Pinnacle, greater than $6,000 as determined by Pinnacle as of the end of each fiscal quarter.
Current wording
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 (8.0% at December 31, 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 (9.0% at December 31, 2025 and 9.75% at December 31, 2024).
Previous wording
Net cash used in operating activities for 2024 was $536, as compared to $3,430 for the same period in 2023. This decrease in net cash used in 2024 was primarily due to a net loss of $4,677, a decrease in ERC receivable of $2,000, a decrease in refundable income taxes of $787, and a decrease in accounts payable of $1,354.
Current wording
Net cash used in operating activities for 2025 was $1,061, as compared to $536 for the same period in 2024. This decrease in net cash used in 2025 was primarily due to a net loss of $9,133, a decrease in proceeds from ERC receivable of $2,000, and a decrease in refundable income taxes of $787.
Previous wording
Net cash used in investing activities for 2024 totaled $19, as compared to $194 for 2023, a decrease of $175. Net cash used in investing activities was primarily due to acquisitions of property and equipment.
Current wording
Net cash used in investing activities for 2025 totaled $nil as compared to $19 for 2024, a decrease of $19. Net cash used in investing activities in 2024 was primarily due to acquisitions of property and equipment.
Previous wording
Net cash provided by financing activities totaled $504 for 2024, as compared to $3,962 provided by financing activities during 2023, an decrease of $2,894. This cash provided was primarily borrowings from the line of credit with Pinnacle.
Current wording
Net cash provided by financing activities totaled $763 for 2025, as compared to $504 provided by financing activities during 2024, an increase of $259. This cash provided was primarily proceeds from notes payable and shares sold under the ATM facility.
Previous wording
As of December 31, 2024, we had a backlog of $1,306. The amount of backlog represents revenue that we anticipate recognizing in the future, as evidenced by purchase orders and other purchase commitments received from customers, but on which work has not yet been initiated or with respect to which work is currently in progress. Backlog at December 31, 2024 was comprised of the following elements: 56% in purchases of DC power systems by telecommunications customers in the U.S., 35% in purchases in military markets, and 9% in purchases by customers in the marine and other markets. We believe the majority of our backlog will be shipped within the next six to twelve months. However, there can be no assurance that we will be successful in fulfilling such orders and commitments in a timely manner or that we will ultimately recognize as revenue the amounts reflected in our backlog.
Current wording
As of December 31, 2025, we had a backlog of $4,306. The amount of backlog represents revenue that we anticipate recognizing in the future, as evidenced by purchase orders and other purchase commitments received from customers, but on which work has not yet been initiated or with respect to which work is currently in progress. Backlog at December 31, 2025 was comprised of the following elements: 82% in purchases of DC power systems by telecommunications customers, 17% in purchases in military markets, and 2% in purchases by customers in the marine and other markets. We believe the majority of our backlog will be shipped within the next six to twelve months. However, there can be no assurance that we will be successful in fulfilling such orders and commitments in a timely manner or that we will ultimately recognize as revenue the amounts reflected in our backlog.