PIONEER POWER SOLUTIONS, INC.

Previous wording

The following discussion and analysis of our financial condition and results of operations should be read in conjunction with the accompanying unaudited condensed consolidated financial statements and related notes included elsewhere in this Quarterly Report on Form 10-Q and with our Annual Report on Form 10-K for the year ended December 31, 2024, which was filed with the Securities and Exchange Commission on April 14, 2025.

Current wording

The following discussion and analysis of our financial condition and results of operations should be read in conjunction with the accompanying unaudited condensed interim consolidated financial statements and related notes included elsewhere in this Quarterly Report on Form 10-Q and with our Annual Report on Form 10-K for the year ended December 31, 2025, which was filed with the Securities and Exchange Commission on April 8, 2026.

Previous wording

We design, manufacture, integrate, service and sell distributed energy resources, on site power generation equipment and mobile 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 business’, school bus fleet operators, 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, sales and administration.

Current wording

We design, manufacture, integrate, service and sell distributed energy resources, on-site power generation equipment and mobile 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.

Previous wording

In October 2024, we sold our Pioneer Custom Electrical Products Corp. (“PCEP”) business unit to a buyer (the “PCEP Sale”) as a result of a strategic change to the operations of our business. Following the PCEP Sale, we currently have one reportable segment - Critical Power Solutions (“Critical Power”).

Current wording

We currently have one reportable segment - Critical Power Solutions (“Critical Power”).

Previous wording

Our unaudited condensed consolidated financial statements have been prepared in accordance with U.S. GAAP. The preparation of our unaudited condensed consolidated financial statements requires us to make estimates and assumptions that affect the amounts and disclosures in the unaudited condensed consolidated financial statements. Our estimates are based on our historical experience, knowledge of current events and actions we may undertake in the future, and on various other factors that we believe are reasonable under the circumstances. Our critical accounting policies and estimates are described in “Management’s Discussion and Analysis of Financial Condition and Results of Operations - Critical Accounting Policies” in our Annual Report on Form 10-K filed with the Securities and Exchange Commission (the “SEC”) on April 14, 2025. There were no material changes to our critical accounting estimates during the three and nine months ended September 30, 2025.

Current wording

Our unaudited condensed consolidated financial statements have been prepared in accordance with U.S. GAAP. The preparation of our unaudited condensed consolidated financial statements requires us to make estimates and assumptions that affect the amounts and disclosures in the unaudited condensed consolidated financial statements. Our estimates are based on our historical experience, knowledge of current events and actions we may undertake in the future, and on various other factors that we believe are reasonable under the circumstances. Our critical accounting policies and estimates are described in “Management’s Discussion and Analysis of Financial Condition and Results of Operations - Critical Accounting Policies” in our Annual Report on Form 10-K filed with the Securities and Exchange Commission (the “SEC”) on April 8, 2026. There were no material changes to our critical accounting estimates during the three months ended March 31, 2026.

Previous wording

Selected financial and operating data for our reportable business segment for the most recent reporting period is summarized below. This information, as well as the selected financial data provided in “Note 11 - Business Segment and Geographic Information” and in our unaudited condensed consolidated financial statements and related notes included in this Quarterly Report on Form 10-Q, should be referred to when reading our discussion and analysis of results of operations below.

Current wording

Selected financial and operating data for our reportable business segment for the most recent reporting period as compared to the comparable period in the prior year is summarized below. This information, as well as the selected financial data provided in “Note 9 - Business Segment and Geographic Information” and in our unaudited condensed consolidated financial statements and related notes included in this Quarterly Report on Form 10-Q, should be referred to when reading our discussion and analysis of results of operations below.

Previous wording

Our summary of operating results during the three and nine months ended September 30, 2025, and 2024 are as follows:

Current wording

Our summary of operating results during the three months ended March 31, 2026, and 2025, are as follows:

Previous wording

Our revenue backlog as of September 30, 2025, from our Critical Power business was $15,362, a decrease of $8,676, or 36.1%, when compared to $24,038 as of September 30, 2024.

Current wording

Our revenue backlog as of March 31, 2026, from our Critical Power business was $13,949, a decrease of $9,282, or 40.0%, when compared to $23,231 as of March 31, 2025.

Previous wording

For the nine months ended September 30, 2025, our revenue from our Critical Power segment increased by $8,872, or 67.6% to $21,998, up from $13,126 during the nine months ended September 30, 2024, primarily due to an increase in sales and rentals of our suite of mobile EV charging solutions, e-Boost, in addition to an increase in service sales during the nine months ended September 30, 2025.

Current wording

For the three months ended March 31, 2026, our revenue decreased by $2,474, or 36.7% to $4,266, down from $6,740 during the three months ended March 31, 2025, primarily due to a decrease in sales and rentals of our suite of mobile EV charging solutions, e-Boost.

Previous wording

Selling, General and Administrative Expense. For the three months ended September 30, 2025, consolidated selling, general and administrative expense decreased by approximately $4, or 0.2%, to $1,976, as compared to $1,980 during the three months ended September 30, 2024. As a percentage of our consolidated revenue, selling, general and administrative expense decreased to 28.7% during the three months ended September 30, 2025, as compared to 30.9% during the three months ended September 30, 2024, primarily due to the increase in total revenue during the three-month period ended September 30, 2025.

Current wording

Selling, General and Administrative Expense. For the three months ended March 31, 2026, consolidated selling, general and administrative expense increased by approximately $32, or 1.3%, to $2,446, as compared to $2,414 during the three months ended March 31, 2025. As a percentage of our consolidated revenue, selling, general and administrative expense increased to 57.3% during the three months ended March 31, 2026, as compared to 35.8% during the three months ended March 31, 2025, primarily due to the decrease in total revenue during the three-month period ended March 31, 2026.

Previous wording

R&D Expenses. Research and development expenses in our Critical Power segment consists of costs incurred in performing research and development activities, including salaries, benefits, overhead costs, contract services and other related costs. During the three months ended September 30, 2025, we incurred $111 of R&D expenses related to developing our mobile e-Boost EV charging solutions as compared to $256 during the three months ended September 30, 2024. During the nine months ended September 30, 2025, we incurred $726 of R&D expenses related to developing our mobile e-Boost EV charging solutions as compared to $705 during the nine months ended September 30, 2024.

Current wording

R&D Expenses. Research and development expenses consist of costs incurred in performing research and development activities, including salaries, benefits, overhead costs, contract services and other related costs. During the three months ended March 31, 2026, we incurred $156 of R&D expenses related to developing our mobile EV charging and power generation equipment as compared to $80 during the three months ended March 31, 2025.

Previous wording

For the three months ended September 30, 2025, we had interest income of approximately $184, as compared to interest expense of approximately $24 during the three months ended September 30, 2024.

Current wording

Interest Income. For the three months ended March 31, 2026, we had interest income of approximately $156, as compared to interest income of approximately $247 during the three months ended March 31, 2025. We generated the majority of our interest income from our cash on hand during the three-month periods ended March 31, 2026, and 2025.

Previous wording

Other Income (Expense). Other income (expense) in the consolidated statements of operations reports certain gains and losses associated with activities not directly related to our core operations.

Current wording

Other Income (Expense). Other income (expense) in the unaudited condensed consolidated statements of operations reports certain gains and losses associated with activities not directly related to our core operations.

Previous wording

For the three-month period ended September 30, 2025, other non-operating expense was $438, as compared to $0 during the three-month period ended September 30, 2024, primarily due to the loss on our equity method investment.

Current wording

For the three-month period ended March 31, 2026, other non-operating expense was $644, as compared to non-operating income of $23 during the three-month period ended March 31, 2025, primarily due to the loss on our equity method investment.

Previous wording

Provision for Income Taxes. For the nine months ended September 30, 2025, we recorded a return-to-provision (RTP) adjustment of $69, resulting in an effective tax rate (ETR) of (1.4)% for the nine-month period. We recorded no income tax provision or RTP for the same periods in 2024.

Current wording

Provision for Income Taxes. For the three months ended March 31, 2026 and 2025, the Company recorded no income tax provision, resulting in an effective tax rate (ETR) of 0%.

Previous wording

We generated a net loss from continuing operations of $1,770 and $5,074, respectively, during the three and nine months ended September 30, 2025, as compared to $738 and $4,108 respectively, during the three and nine months ended September 30, 2024.

Current wording

We generated a net loss from continuing operations of $2,508 during the three months ended March 31, 2026, as compared to $2,076 during the three months ended March 31, 2025.

Previous wording

Our net loss from continuing operations per basic and diluted share during the three months ended September 30, 2025, was $0.16, compared to a net loss from continuing operations per basic and diluted share of $0.07 during the three months ended September 30, 2024.

Current wording

Our net loss from continuing operations per basic and diluted share during the three months ended March 31, 2026, was $0.23, compared to a net loss from continuing operations per basic and diluted share of $0.19 during the three months ended March 31, 2025.

Previous wording

The $467 of income recognized during the nine months ended September 30, 2025, was primarily due to finalizing the net working capital adjustment with the buyer of the PCEP Sale, net of tax.

Current wording

Income from discontinued operations, net of tax was $0 during the three months ended March 31, 2026, as compared to $1,147 during the three months ended March 31, 2025. The $1,147 of income recognized during the three months ended March 31, 2025, was due to finalizing the net working capital adjustment with the buyer of the Company’s former wholly owned subsidiary, Pioneer Custom Electrical Products Corp. (“PCEP”) to Voltaris Power, LLC (the “PCEP Sale”).

Previous wording

General. As of September 30, 2025, we had $17,336 of cash on hand generated primarily from the PCEP Sale. On October 29, 2024, we closed on the PCEP Sale for gross cash proceeds of $48,000 and $2,000 in equity. On January 7, 2025, we paid a one-time special cash dividend of an aggregate of $16,665. As of December 31, 2024, we recorded a consideration due to the buyer of the PCEP Sale of $3,347 related to a net working capital adjustment. On April 16, 2025, we and the buyer from the PCEP Sale finalized the net working capital adjustment and as a result, we recorded a $1,147 adjustment to the consideration due to the buyer of the PCEP Sale during the three months ended March 31, 2025. During the nine months ended September 30, 2025, we paid the $2,200 consideration to the buyer of the PCEP Sale.

Current wording

General. As of March 31, 2026, we had $13,583 of cash on hand generated primarily from the PCEP Sale. On October 29, 2024, we closed on the PCEP Sale for gross cash proceeds of $48,000 and $2,000 in equity. On January 7, 2025, we paid a one-time special cash dividend of an aggregate of $16,665. As of December 31, 2024, the Company recorded a consideration due to the buyer of the PCEP Sale of $3,347 related to a net working capital adjustment. On April 16, 2025, we and the buyer from the PCEP Sale finalized the net working capital adjustment and as a result, we recorded a $1,147 adjustment to the consideration due to the buyer of the PCEP Sale. During the year ended December 31, 2025, we paid the $2,200 consideration to the buyer of the PCEP Sale.

Previous wording

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 between Israel and Hamas, 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 our clients, while also disrupting supply channels, sales channels and advertising and marketing activities for an unknown period of time. Additionally, the shutdown of the U.S. federal government, 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, tariff policies and regulations, 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, we are unable to predict the potential size and duration of the impact on our revenue and our results of operations, if any. The extent of the potential impact of these macroeconomic factors on our operational and financial performance will depend on a variety of factors, including the extent of geopolitical disruption and its impact on our clients, partners, industry, and employees, all of which are uncertain at this time and cannot be accurately predicted. We continue to monitor the effects of these macroeconomic factors and intend to take steps deemed appropriate to limit the impact on our business. During the three and nine months ended September 30, 2025, we were able to operate substantially at capacity.

Current wording

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 our clients, while also disrupting supply channels, sales channels and advertising and marketing activities for an unknown period of time. Additionally, the shutdown of the U.S. federal government, 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, tariff policies and regulations, 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, we are unable to predict the potential size and duration of the impact on our revenue and our results of operations, if any. The extent of the potential impact of these macroeconomic factors on our operational and financial performance will depend on a variety of factors, including the extent of geopolitical disruption and its impact on our clients, partners, industry, and employees, all of which are uncertain at this time and cannot be accurately predicted. We continue to monitor the effects of these macroeconomic factors and intend to take steps deemed appropriate to limit the impact on our business. During the three months ended March 31, 2026, we were able to operate substantially at capacity.

Previous wording

Cash Used in Operating Activities. Cash used in our operating activities was $4,780 during the nine months ended September 30, 2025, as compared to cash used in our operating activities of $4,118 during the nine months ended September 30, 2024. The increase in cash used in operating activities is primarily due to working capital fluctuations and the payment of federal and state income taxes.

Current wording

Cash Used in/ Provided by Operating Activities. Cash used in our operating activities was $887 during the three months ended March 31, 2026, as compared to cash provided by our operating activities of $1,502 during the three months ended March 31, 2025. The increase in cash used in operating activities is primarily due to the increase in net loss during the three months ended March 31, 2026, as compared to the three months ended March 31, 2025, in addition to working capital fluctuations.

Previous wording

Cash Used in Investing Activities. Cash used in investing activities during the nine months ended September 30, 2025, was $2,751, as compared to cash used in our investing activities of $1,277, during the nine months ended September 30, 2024. The increase in cash used in investing activities is primarily due to the payment of the $2,200 consideration to the buyer of the PCEP Sale during the nine months ended September 30, 2025. During the nine-month periods ended September 30, 2025, and 2024, additions to our property and equipment were $1,532 and $1,277, respectively.

Current wording

Cash Used in Investing Activities. Cash used in investing activities during the three months ended March 31, 2026, was $459, as compared to cash used in our investing activities of $595 during the three months ended March 31, 2025. During the three-month periods ended March 31, 2026, and 2025, additions to our property and equipment were $233 and $595, respectively. During the three months ended March 31, 2026, we invested $226 in our equity-method investment.

Previous wording

Cash Used in/ Provided by Financing Activities. Cash used in our financing activities was $16,755 during the nine months ended September 30, 2025, as compared to cash provided by our financing activities of $4,893 during the nine months ended September 30, 2024. The increase in cash used in financing activities is primarily due to the payment of a one-time special cash dividend.

Current wording

Cash Used in Financing Activities. Cash used in our financing activities was $30 during the three months ended March 31, 2026, as compared to cash used in our financing activities of $16,689 during the three months ended March 31, 2025. The decrease in cash used in financing activities is primarily due to the payment of a one-time special cash dividend during the three months ended March 31, 2025.

Previous wording

Working Capital. As of September 30, 2025, we had working capital of $22,766, including $17,336 of cash on hand, compared to working capital of $26,679, including $41,622 of cash on hand as of December 31, 2024.

Current wording

Working Capital. As of March 31, 2026, we had working capital of $18,657, including $13,583 of cash on hand, compared to working capital of $20,659, including $14,959 of cash on hand as of December 31, 2025.

Previous wording

Assessment of Liquidity. As of September 30, 2025, we had $17,336 of cash on hand generated primarily from the PCEP Sale. We have historically met our cash needs through a combination of cash flows from operating activities and bank borrowings, the completion of the sale of the transformer business units in August 2019, the completion of the PCEP Sale in October 2024 and the sale of common stock. Historically, our cash requirements were generally for operating activities, debt repayment, capital improvements and acquisitions.

Current wording

Assessment of Liquidity. As of March 31, 2026, we had $13,583 of cash on hand generated primarily from the PCEP Sale. We have historically met our cash needs through a combination of cash flows from operating activities and bank borrowings, the completion of the sale of our wholly owned business units and the sale of common stock. Historically, our cash requirements were generally for operating activities, debt repayment, capital improvements and acquisitions.

Previous wording

We believe that our future operating results will continue to be subject to quarterly variations based upon a wide variety of factors, including the cyclical nature of the electrical equipment industry and the markets for our products and services. Our operating results could also be impacted by changing customer requirements and exposure to fluctuations in prices of important raw supplies, such as copper, steel and aluminum. We have various insurance policies, including cybersecurity, covering risks in amounts that we consider adequate. In addition to these measures, we attempt to recover other cost increases through improvements to our manufacturing efficiency and through increases in prices where competitively feasible. Lastly, other economic conditions we cannot foresee may affect customer demand. In addition, the consequences of the ongoing geopolitical conflicts, such as the ongoing conflict between Russia and Ukraine and the ongoing conflict between Israel and Hamas, including related sanctions and countermeasures, and the effects of rising global inflation, are difficult to predict, and could adversely impact geopolitical and macroeconomic conditions, the global economy, and contribute to increased market volatility, which may in turn adversely affect our business and operations. Additionally, the shutdown of the U.S. federal government, 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, tariff policies and regulations, international trade relations, unemployment, immigration, healthcare, taxation, the U.S. regulatory environment, inflation and other areas. We predominately sell to customers in the industrial production and commercial construction markets. Accordingly, changes in the condition of any of our customers may have a greater impact than if our sales were more evenly distributed between different end markets. For a further discussion of factors that may affect future operating results see the sections entitled “Special Note Regarding Forward-Looking Statements” in this Quarterly Report on Form 10-Q and “Part I - Item 1A. Risk Factors” in our Annual Report on Form 10-K.

Current wording

We believe that our future operating results will continue to be subject to quarterly variations based upon a wide variety of factors, including the cyclical nature of the electrical equipment industry and the markets for our products and services. Our operating results could also be impacted by changing customer requirements and exposure to fluctuations in prices of important raw supplies, such as copper, steel and aluminum. We have various insurance policies, including cybersecurity, covering risks in amounts that we consider adequate. In addition to these measures, we attempt to recover other cost increases through improvements to our manufacturing efficiency and through increases in prices where competitively feasible. Lastly, other economic conditions we cannot foresee may affect customer demand. In addition, the consequences of the ongoing geopolitical conflicts, such as the ongoing conflict between Russia and Ukraine, and the ongoing conflict in the Middle East, including related sanctions and countermeasures, and the effects of rising global inflation, are difficult to predict, and could adversely impact geopolitical and macroeconomic conditions, the global economy, and contribute to increased market volatility, which may in turn adversely affect our business and operations. 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. Although we cannot predict the impact, if any, of these changes to our business, they could adversely affect our business. We predominately sell to customers in the industrial production markets. Accordingly, changes in the condition of any of our customers may have a greater impact than if our sales were more evenly distributed between different end markets. For a further discussion of factors that may affect future operating results see the sections entitled “Special Note Regarding Forward-Looking Statements” in this Quarterly Report on Form 10-Q and “Part I - Item 1A. Risk Factors” in our Annual Report on Form 10-K.