PIONEER POWER SOLUTIONS, INC.

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

Organization and Operations

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

Segments

In determining operating and reportable segments in accordance with Financial Accounting Standards Board (“FASB”) Accounting Standards Codification (“ASC”) 280, Segment Reporting (“ASC 280”), the Company concluded that it hasone reportable segment: Critical Power Solutions (“Critical Power”), as defined in its Annual Report on Form 10-K for the year ended December 31, 2025, as filed with the Securities and Exchange Commission (the “SEC”) on April 8, 2026.

Basis of Presentation

The accompanying unaudited condensed consolidated financial statements of the Company have been prepared in accordance with accounting principles generally accepted in the United States of America (“U.S. GAAP”) for interim financial information and with the instructions to Form 10-Q and Article 8 of Regulation S-X. Accordingly, they do not include all of the information and disclosures required by U.S. GAAP for complete financial statements. The Company believes that the disclosures made are adequate to make the information presented not misleading to the reader. In the opinion of management, all adjustments, consisting only of normal recurring adjustments, necessary to fairly state the financial position, results of operations and cash flows with respect to the interim consolidated financial statements have been included. The results of operations for the interim period are not necessarily indicative of the results for the entire fiscal year. The year-end balance sheet data was derived from audited consolidated financial statements but this filing does not include all disclosures required by U.S. GAAP for a year-end balance sheet.

ASC 740-270 requires the use of an estimated annual effective tax rate to compute the tax provision during an interim period unless certain exceptions are met. Due to significant variability in projected ordinary income, the Company concluded that the estimated annual effective tax rate method was not reliable for interim reporting purposes. Accordingly, the Company calculated quarterly income tax expense using the discrete method based on actual year-to-date results.

These unaudited condensed interim consolidated financial statements include the accounts of Pioneer and Titan Energy Systems, Inc. (“Titan”), its wholly owned subsidiary. All significant intercompany accounts and transactions have been eliminated in consolidation.

These unaudited condensed consolidated financial statements should be read in conjunction with the audited consolidated financial statements and notes thereto of the Company and its subsidiary included in the Company’s Annual Report on Form 10-K for the year ended December 31, 2025.

Risks and Uncertainties

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

The Company continues to monitor the effects of these macroeconomic factors and intends to take steps deemed appropriate to limit the impact on its business.

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

Rounding

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

2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Since the Annual Report for the year ended December 31, 2025, there have been no material changes to the Company’s significant accounting policies, except as disclosed in this note.

Revenue Recognition

Lessor Arrangements

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

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

The lease terms are included in the Company’s contracts and the determination of whether the Company’s contracts contain leases generally does not require significant assumptions or judgments. Leasing revenues do not include material amounts of variable payments. Lessees do not provide residual value guarantees on rented equipment.

3. REVENUES

Nature of the Company’s products and services

The Company’s principal products and services include distributed energy resources, power generation equipment and mobile electric vehicle charging solutions.

Products

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

Services

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

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

Revenue Recognition

During the three months ended June 30, 2026, and 2025, the Company recognized $0 and $26 of equipment revenue over time, respectively, from its Critical Power segment. Additionally, the Company recognized $2,532 and $4,187 of revenue at a point in time from the sale of its products, which is typically recognized upon delivery, from its Critical Power segment during the three months ended June 30, 2026, and 2025, respectively.

During the six months ended June 30, 2026, and 2025, the Company recognized $79 and $177 of equipment revenue over time, respectively, from its Critical Power segment. Additionally, the Company recognized $4,046 and $7,808 of revenue at a point in time from the sale of its products, which is typically recognized upon delivery, from its Critical Power segment during the six months ended June 30, 2026, and 2025, respectively. Included within point in time revenue during the six months ended June 30, 2025, was $2,337 of revenue recognized pursuant to bill and hold arrangements. There wereno bill and hold arrangements during the six months ended June 30, 2026.

Service revenues include maintenance contracts that are recognized over time based on the contract term and repair services which are recognized as services are delivered. The Company recognized $2,182 and $2,289 of service revenue during the three months ended June 30, 2026, and 2025, respectively.

The Company recognized $4,599 and $4,734 of service revenue during the six months ended June 30, 2026, and 2025, respectively. The Company recognizes revenue as services are provided. Amounts billed and due from customers, as well as the value of unbilled account receivables, are generally classified within current assets in the unaudited condensed consolidated balance sheets.

The change in deferred revenue during the six months ended June 30, 2026, was driven primarily by ordinary course contract activity. As of January 1, 2026, the Company had a deferred revenue balance of $791.

For the three months ended June 30, 2026, and 2025, the Company recognized revenue of $22 and $231, respectively, related to amounts that were included in deferred revenue as of December 31, 2025, and 2024, respectively, resulting primarily from the progress made on the various active contracts during the respective reporting periods.

For the six months ended June 30, 2026, and 2025, the Company recognized revenue of $382 and $461, respectively, related to amounts that were included in deferred revenue as of December 31, 2025, and 2024, respectively, resulting primarily from the progress made on the various active contracts during the respective reporting periods.

As of June 30, 2026, the Company had $1,769 related to contract liabilities where performance obligations have not yet been satisfied, which has been included in the unaudited condensed consolidated balance sheet.

Concentration of Risk

During the three months ended June 30, 2026, the Company derived 14%,12% and 11% of its revenue from three customers. During the three months ended June 30, 2025, the Company derived 31% and 19% of its revenue from two customers.

During the six months ended June 30, 2026, the Company derived 13% and 11% of its revenue from two customers. During the six months ended June 30, 2025, the Company derived 34% and 13% of its revenue from two customers.

As of June 30, 2026, three customers’ outstanding receivable balance equaled 42% of the total outstanding receivable balance. As of December 31, 2025, one customer’s outstanding receivable balance equaled 25% of the total outstanding receivable balance.

As of June 30, 2026, and December 31, 2025, a single customer represented 100% of the Company’s lease receivable balance.

Return of a product requires that the buyer obtain permission in writing from the Company. When the buyer requests authorization to return material for reasons of their own, the buyer will be charged for placing the returned goods in saleable condition, restocking charges and for any outgoing and incoming transportation paid by the Company. The Company warrants title to the products, and also warrants the products on date of shipment to the buyer, to be of the kind and quality described in the contract, merchantable, and free of defects in workmanship and material. Returns and warranties during the three and six months ended June 30, 2026, were insignificant. Returns and warranties during the three and six months ended June 30, 2025, were $154 and $524, respectively.

Disaggregated Revenue

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

Lease Revenues

The Company’s sales-type lease portfolio as of June 30, 2026 consisted of nine mobile EV charging and power generation units leased to a single customer under two separate agreements, each with original terms of ten years. The leases do not contain renewal or early termination options.

There wereno leasing revenues arising from variable lease payments during the three and six months ended June 30, 2026, and 2025.

The following table presents future undiscounted operating lease payments to be received as of June 30, 2026:

As of June 30, 2026, and December 31, 2025, the lease receivable was $2,769 and $2,843, respectively. There wereno unguaranteed residual assets or deferred selling profit included in the net investment as of June 30, 2026, and December 31, 2025, respectively. Lessees do not provide residual value guarantees on leased equipment. The Company manages residual value risk by monitoring technological developments and anticipated market demand for its mobile EV charging and power generation equipment. The Company evaluates its net investment in sales-type leases for credit losses in accordance with ASC 326, considering the creditworthiness of its lessees, historical payment experience, current economic conditions, and reasonable and supportable forecasts.

As of June 30, 2026, and December 31, 2025, a single customer represented 100% of the Company’s lease receivable balance. Based on its assessment, including consideration of the lessee’s financial condition and payment history, the Company determined thatno allowance for credit losses was necessary as of June 30, 2026, and December 31, 2025.

4. INVENTORIES

The components of inventories are summarized below:

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

5. ACCOUNTS PAYABLE AND ACCRUED LIABILITIES

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

Accrued liabilities primarily consist of accrued insurance, accrued compensation and benefits and accrued warranty costs. As of June 30, 2026, and December 31, 2025, accrued insurance was $133 and $495, respectively. Accrued compensation and benefits as of June 30, 2026, and December 31, 2025, were $640 and $392, respectively. Accrued warranty costs as of June 30, 2026, and December 31, 2025, were $204 and $249, respectively. The remainder of accrued liabilities are comprised of several insignificant accruals in connection with normal business operations.

6. STOCK-BASED COMPENSATION

A summary of stock option activity during the six months ended June 30, 2026, is as follows:

Stock-based compensation expense recorded for the three and six months ended June 30, 2026, was approximately $1 and $11, respectively. Stock-based compensation expense recorded for the three and six months ended June 30, 2025, was approximately $2 and $15, respectively. As of June 30, 2026, there was $1 of stock-based compensation expense remaining to be recognized in the unaudited condensed consolidated statements of operations over a weighted average remaining period of 0.1 years.

7. EQUITY-METHOD INVESTMENT

On October 29, 2024, in connection with the sale of the Company’s former wholly owned subsidiary, Pioneer Custom Electrical Products Corp. (“PCEP”), to Voltaris Power, LLC (“Voltaris”), the Company retained an indirect equity interest in Voltaris through Rollover Common Units of Pioneer Investment LLC (the “Investment”). The Company accounts for the Investment under the equity method in accordance with ASC 323. The Company reports its share of investee results on a one-quarter lag; accordingly, the Company’s share of investee earnings or losses for the three and six months ended June 30, 2026, reflect investee results for the three and six months ended March 31, 2026, respectively.

On February 27, 2026, the Company exercised its preemptive rights and funded $226 in cash to subscribe for its pro-rata share of a new class of senior preferred interests (the “Preferred Interests”) in the Investment. During the three months ended June 30, 2026, the Company exercised its preemptive rights with respect to a second issuance of Preferred Interests and funded an additional $113 in cash. The Preferred Interests have senior distribution priority and a stated return threshold equal to the greater of a 20% Internal Rate of Return (“IRR”) (compounded quarterly) or 2.0x Multiple on Invested Capital (“MOIC”), are non-voting, and are redeemable at the issuer’s option. The Company’s pro-rata common unit ownership was unchanged during the three and six months ended June 30, 2026. The Company’s Preferred Interests subscriptions of $339 have been recorded as additional capital contributions to the Investment.

During the three months ended June 30, 2026, the Company recognized a loss from the Investment of $113 and, during the three months ended June 30, 2025, the Company recognized a gain from the Investment of $297, both of which are included in other expense or income in the unaudited condensed consolidated statements of operations.

During the six months ended June 30, 2026, the Company recognized a loss from the Investment of $757 and, during the six months ended June 30, 2025, the Company recognized a gain from the Investment of $240, both of which are included in other expense or income in the unaudited condensed consolidated statements of operations.

As of June 30, 2026 and December 31, 2025, the carrying value of the Investment was $0 and $418, respectively, and the Company has suspended further loss recognition in accordance with ASC 323-10-35-20.

8. BASIC AND DILUTED (LOSS) EARNINGS PER SHARE

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

In periods of net loss, diluted loss per share is computed using the same number of weighted-average shares as basic loss per share, as the inclusion of potentially dilutive securities would be anti-dilutive.

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

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

9. BUSINESS SEGMENT AND GEOGRAPHIC INFORMATION

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

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

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

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

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