PIONEER POWER SOLUTIONS, INC.

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 8, 2026. There were no material changes to our critical accounting estimates during the three months ended March 31, 2026.

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 six months ended June 30, 2026.

Previous wording

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

Current wording

Our summary of operating results during the three and six months ended June 30, 2026, and 2025, is as follows:

Previous 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.

Current wording

Our revenue backlog as of June 30, 2026, from our Critical Power business was $18,353, an increase of $468, or 2.6%, when compared to $17,885 as of June 30, 2025.

Previous 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.

Current wording

For the three months ended June 30, 2026, our revenue decreased by $3,351, or 40.0% to $5,019, down from $8,370 during the three months ended June 30, 2025, primarily due to a decrease in sales and rentals of our suite of mobile EV charging solutions, e-Boost.

Previous wording

For the three months ended March 31, 2026, our gross margin increased to 13.6% of revenues, as compared to 2.2% during the three months ended March 31, 2025, primarily driven by improved operating efficiencies associated with the sale of our mobile EV charging solutions, e-Boost.

Current wording

For the three months ended June 30, 2026, our gross margin increased to 19.6% of revenues, as compared to 15.7% during the three months ended June 30, 2025, primarily driven by improved operating efficiencies associated with the sale of our mobile EV charging solutions, e-Boost.

Previous 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.

Current wording

Selling, General and Administrative Expense. For the three months ended June 30, 2026, selling, general and administrative expense increased by approximately $340, or 13.7%, to $2,828, as compared to $2,488 during the three months ended June 30, 2025, primarily due to an increase in payroll related costs and professional fees. As a percentage of our revenue, selling, general and administrative expense increased to 56.3% during the three months ended June 30, 2026, as compared to 29.7% during the three months ended June 30, 2025, primarily due to the decrease in total revenue during the three-month period ended June 30, 2026.

Previous 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.

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 June 30, 2026, we incurred $161 of R&D expenses related to developing our mobile EV charging and power generation equipment as compared to $534 during the three months ended June 30, 2025.

Previous wording

During the three months ended March 31, 2026, our operating loss from continuing operations decreased by approximately $326, or 13.9%, to $2,020, as compared to $2,346 during the three months ended March 31, 2025, primarily due to the increase in our gross profit.

Current wording

During the six months ended June 30, 2026, our operating loss from continuing operations decreased by approximately $29, or 0.7%, to $4,026, as compared to $4,055 during the six months ended June 30, 2025, primarily due to the increase in our gross profit.

Previous 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.

Current wording

Interest Income. For the three months ended June 30, 2026, we had interest income of approximately $51, as compared to interest income of approximately $183 during the three months ended June 30, 2025.

Previous 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.

Current wording

Other (Expense) Income. Other (expense) income 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 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.

Current wording

For the three-month period ended June 30, 2026, other non-operating expense was $105, as compared to other non-operating income of $297 during the three-month period ended June 30, 2025, primarily due to the loss and gain on our equity method investment during the three months ended June 30, 2026 and 2025, respectively.

Previous 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%.

Current wording

Provision for Income Taxes. For the three and six months ended June 30, 2026, and 2025, the Company recorded no income tax provision, resulting in an effective tax rate (ETR) of 0%.

Previous 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”).

Current wording

Income from discontinued operations, net of tax was $0 during the six months ended June 30, 2026, as compared to income from discontinued operations, net of tax of $1,047, during the six months ended June 30, 2025. The $1,047 of income recognized during the six months ended June 30, 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 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.

Current wording

General. As of June 30, 2026, we had cash on hand of $10,668 and working capital of $17,129. 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 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.

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, 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 six months ended June 30, 2026, we were able to operate substantially at capacity.

Previous 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.

Current wording

Cash Used in Operating Activities. Cash used in our operating activities was $3,626 during the six months ended June 30, 2026, as compared to cash used in our operating activities of $3,963 during the six months ended June 30, 2025.

Previous 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.

Current wording

Cash Used in Investing Activities. Cash used in investing activities during the six months ended June 30, 2026, was $604, as compared to cash used in our investing activities of $2,940, during the six months ended June 30, 2025. The decrease 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 six months ended June 30, 2025, while there was no similar payment during the six months ended June 30, 2026. During the six-month periods ended June 30, 2026, and 2025, additions to our property and equipment were $309 and $740, respectively.

Previous 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.

Current wording

Cash Used in Financing Activities. Cash used in our financing activities was $61 during the six months ended June 30, 2026, as compared to cash used in our financing activities of $16,720 during the six months ended June 30, 2025. The decrease in cash used in financing activities is primarily due to the payment of a one-time special cash dividend during the six months ended June 30, 2025.

Previous 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.

Current wording

Working Capital. As of June 30, 2026, we had working capital of $17,129, including $10,668 of cash on hand, as 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 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.

Current wording

Assessment of Liquidity. As of June 30, 2026, we had $10,668 of cash on hand and working capital of $17,129. 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.