Polar Power, Inc.
For the period ended Jun 30, 2026. Filed Aug 18, 2026.
View on SEC.govAbout this filing
A company's report for each of its first three quarters. The financial statements are not audited. It shows how the business has moved since the last annual report, and what management says changed.
Jun 30, 2026 · Filed Aug 18, 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-Q
Period ended 2026-03-31; filed 2026-05-20.
0001493152-26-024680
ITEM 2. Management’s Discussion And Analysis Of Financial Condition And Results Of OperationsCurrent report: 10-Q
Period ended 2026-06-30; filed 2026-08-18.
0001493152-26-039040
ITEM 2. Management’s 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 64 previous paragraphs and 93 current paragraphs.
33 unchanged; 25 reworded; 33 added; 6 removed; 0 previous and 2 current paragraphs rearranged.
Tables are not compared: 4 previous and 5 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 (33)
Current report
Our sales backlog as of June 30, 2026 was $3,668, of which our telecommunications customers accounted for 77%, customers in the military market accounted for 22%, and customers in other markets accounted for 1%.
Current report
Critical Accounting Policies and Estimates
Current report
Our net sales for the three months ended June 30, 2026 were $1,019, which represents a 62% decrease in net sales as compared to $2,708 for the three months ended June 30, 2025. Our net sales for the six months ended June 30, 2026 were $2,747, which represents a 38% decrease in net sales as compared to $4,431 for the same period in 2025.
Current report
We experienced delays sourcing components and third-party services which affected our production during the three months period ending June 30, 2026.
Current report
*Net Sales.*Net sales decreased $1,689, or 62%, to $1,019 for the three months ended June 30, 2026, as compared to $2,708 for the same period in 2025. The decrease in sales was primarily attributed to a shortage of components in the production of our DC power systems.
Current report
For the three months ended June 30, 2026, sales to our largest telecommunication customers in the U.S. accounted for 29%, 14%, 12%, and 11% of our total net sales. For the same period in 2025, 69% of our total net sales were generated from our largest U.S. telecommunications customer. There was no other revenue from customers in excess of 10% of total net sales in either period.
Current report
*Sales and Marketing Expenses.*During the three months ended June 30, 2026, sales and marketing expenses decreased by $58, or 32%, to $126, as compared to $184 during the same period in 2025. The decrease was attributable to a decrease in sales support staff and travel related expenses during the quarter as compared to the same period in 2025.
Current report
General and Administrative Expenses. General and administrative expenses increased by $370, or 52%, to 1,080 during the three months ended June 30, 2026, as compared to $710 during same period in 2025. The increase in general and administrative expenses during the three months ended June 30, 2026 was primarily due to an increase in consulting services.
Current report
Six Months Ended June 30, 2026 Compared to the Six Months Ended June 30, 2025
Current report
*Net Sales.*Net sales decreased $1,684, or 38%, to $2,747 for the six months ended June 30, 2026, as compared to $4,431 for the same period in 2025. The decrease in sales was primarily attributed to a decrease in shipments of our DC power systems during the three months ended June 30, 2026, due to parts shortages affecting production on our DC power systems.
Current report
Our international sales represented 12% of our net sales for the six months ended June 30, 2026, as compared to 9% in international sales in the same period in 2025. Sales to customers in the military market represented 3% of our to net sales for the six months ended June 30, 2026, compared to 10% in the same period in 2025.
Current report
Cost of Sales. Cost of sales during the six months ended June 30, 2026 decreased by $1,235, or 39%, to $1,948, as compared to $3,183 during the same period in 2025. Cost of sales as a percentage of net sales during the six months ended June 30, 2026 decreased to 70.9%, as compared to 71.8% in the same period in 2025.
Current report
*Gross Profit.*Gross profit during the six months ended June 30, 2026 decreased by $449, or 36%, to gross profit of $799, as compared to gross profit of $1,248 during the same period in 2025. Our gross profit as a percentage of net sales was 29.1% for the six months ended June 30, 2026, as compared to 28.2% in the same period in 2025.
Current report
*Research and Development Expenses.*During the six months ended June 30, 2026, research and development expenses decreased by $8, or 3%, to $297, as compared to $305 during the same period in 2025. The decrease was primarily due to a decrease in research and development support staff and consulting services during the six months ended June 30, 2026, as compared to the same period in 2025. We plan to recruit additional engineers during the second half of 2026 to support growth and our customer diversification efforts.
Current report
General and Administrative Expenses. General and administrative expenses increased by $152, or 9.0%, to $1,863 during the six months ended June 30, 2026, as compared to $1,711 during same period in 2025. The increase in general and administrative expenses during the six months ended June 30, 2026 was primarily due to an increase in consulting services primarily during the second quarter of 2026.
Current report
*Net Loss.*For the six months ended June 30, 2026, we incurred net loss of $2,009, or $(0.56) per basic and diluted share, as compared to net loss of $1,536, or $(0.61) per basic and diluted share for the six months ended June 30, 2025.
Current report
On July 31, 2026, Pinnacle Bank provided to the Company a Notice of Additional Events and Defaults and Modifications to Forbearance Agreement and Loan Documents, the “Forbearance Modification Agreement”, for the purpose of granting a time extension to the Forbearance Agreement executed on March 10, 2026. The Forbearance Modification Agreement would extend the July 31, 2026 deadline for the Company to repay the full balance on the credit facility to August 31, 2026, with an automatic extension to September 30, 2026, if the Company complies to certain payment plan and the terms and conditions on the Forbearance Modification Agreement. The agreement has not been signed by either party as of this date of this report.
Current report
The total interest expense, fees, and financing costs incurred under the Loan Agreement for the six-month periods ended June 30, 2026 and 2025 were $271 and $329, respectively. Of these amounts, $14 in 2026 and $1 in 2025 were recorded under general and administrative expenses, while $257 in 2026 and $327 in 2025 were recorded under interest expense and finance costs in the accompanying statements of operations.
Current report
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 its headquarters and warehouse facilities. The landlord for its headquarters 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 landlord for the other warehouse for which the Company is delinquent on rent, has not served the Company any legal documents. However, they may do so in the future.
Current report
On May 11, 2026, the Company entered into a Settlement Agreement with the landlord for each of its headquarters facility and its warehouse facility that became effective as of May 7, 2026. The Settlement Agreement addressed the matter of delinquent rents and an expired lease. Regarding the Company’s headquarters facility, the Company agreed to make immediate payment of $400 towards past due rents, and the landlord agreed to cease eviction procedures. The landlord also agreed to extend the property lease commencing June 1, 2026, to April 1, 2027, and reduce the monthly rent from $84 to $55. Regarding the warehouse facility, the Company agreed to vacate the facility by August 31, 2026 and leave the premises in the condition required by the relevant lease agreement; in exchange, the landlord agreed to waive rents for the months of June, July, and August 2026. Each landlord reserved the right to charge for any waived rents or continue with eviction action should the Company fail to meet the requirements listed in the Settlement Agreement. The Company also may have to pay liquidated damages if it fails to vacate the properties in the event either or both landlords decide to exercise their rights for eviction.
Current report
As of May 19, 2026, the Company had not made a payment per the Settlement Agreement, and on May 19, 2026, the landlord for the Company’s headquarters facility evicted the Company from that facility.
Current report
On May 22, 2026, the Company entered into a new settlement agreement under which the Company paid the landlords a combined $755 and regained access to its headquarters facility. The new settlement agreement provides for a schedule of monthly payments through April 2027 in exchange for the landlord’s agreement not to seek to evict us from the headquarters facility through June 30, 2027, and the Company continued its agreement to vacate the warehouse facility by August 31, 2026 in exchange for a waiver of June, July and August 2026 rents. If the Company fails to satisfy the conditions of the new settlement agreement, the landlords may resume eviction proceedings and the Company may be liable for liquidated damages and previously waived rents. The Company made timely rent payments in July and August 2026 and is in compliance with the new settlement agreement.
Current report
As of June 30, 2026, the Company was delinquent in $654 of rent to its headquarters landlord and other leases which are included in accounts payable.
Current report
Nasdaq
Current report
On May 1, 2026, the Company received a letter from the Nasdaq staff notifying it that the Company was not in compliance with the $2.5 million minimum stockholders’ equity requirement for continued listing under Nasdaq Listing Rule 5550(b)(1), based on the approximately $0.1 million of stockholders’ equity reported in our Annual Report on Form 10-K for the year ended December 31, 2025. The Company’s Common Stock continues to trade on the Nasdaq Capital Market under the symbol “POLA.” On June 29, 2026, the Company received a letter from the Staff granted us an extension of time to regain compliance with the Rule. The terms of the extension are as follows: on or before October 28, 2026, it must opt for one of the two following alternatives to evidence compliance with the Rule: (A) the Company must furnish to the SEC and Nasdaq a publicly available report (e.g., a Form 8-K or Form 6-K) including: (1) a disclosure of Staff’s deficiency letter and the specific deficiency(ies) cited; (2) a description of the completed transaction or event that enabled the Company to satisfy the stockholders’ equity requirement for continued listing; (3) an affirmative statement that, as of the date of the report, it believes it has regained compliance with the stockholders’ equity requirement based upon the specific transaction or event referenced in Step 2; and (4) a disclosure stating that Nasdaq will continue to monitor the Company’s ongoing compliance with the stockholders’ equity requirement and, if at the time of its next periodic report the Company does not evidence compliance, that it may be subject to delisting, or (B) the Company must furnish to the SEC and Nasdaq a publicly available report including: (1) steps 1 & 2 set forth above; (2) a balance sheet no older than 60 days with pro forma adjustments for any significant transactions or event occurring on or before the report date. The pro forma balance sheet must evidence compliance with the stockholders’ equity requirement; and (3) a disclosure that the Company believes it also satisfies the stockholders’ equity requirement as of the report date and that Nasdaq will continue to monitor the Company’s ongoing compliance with the stockholders’ equity requirement and, if at the time of its next periodic report the Company does not evidence compliance, that it may be subject to delisting.
Current report
On May 14, 2026, Keith Albrecht and Katherine Koster, two of the Company’s independent directors, resigned as members of the Board of the Company, effective May 19, 2026. On May 18, 2026, Keith Albrecht rescinded his resignation as a director, and the Board approved the rescinding of Keith Albrecht’s resignation, effective immediately.
Current report
Convertible Notes
Current report
On May 21, 2026, the Company entered into a Securities Purchase Agreement (the “CFI SPA”) with CFI Capital LLC (“CFI”). Pursuant to the CFI SPA, on May 21, 2026 (the “Issue Date”), the Company issued to CFI a 6% convertible redeemable note in the aggregate principal amount of $600 (the “CFI Note”). The purchase price of the CFI Note was $546, and the Company received net proceeds of $500, after deducting $10 to cover CFI’s legal fees and a $36 payment to Craft Capital Management, LLC (“Craft”) as a broker/placement agent fee. The CFI Note has an interest rate of 6% per annum, and the maturity date is 12 months from the Issue Date. The CFI SPA and CFI Note also contain other customary terms and conditions.
Current report
On or following six months from the Issue Date, CFI has the right to convert the outstanding and unpaid principal amount and interest into the Company’s shares of common stock, $0.0001 par value per share (the “Common Stock”). The conversion price equals 80% of the lowest daily VWAP of the Company’s Common Stock for the last 10 trading days prior to conversion; provided, that if the Company is delisted from NASDAQ, then the conversion discount shall increase to 65% of the lowest trading price and the lookback shall be for the last 20 trading days. The Company granted to CFI piggy-back registration rights for the shares of Common Stock issuable upon conversion of the CFI Note. The Company has instructed its transfer agent to reserve 1,206,434 shares of Common Stock for the conversion.
Current report
On May 21, 2026, the Company entered into a Securities Purchase Agreement (the “Monroe SPA”) with Monroe Street Capital Partners, LP (“Monroe”). Pursuant to the Monroe SPA, on May 21, 2026 (the “Issue Date”), the Company issued to Monroe a 6% convertible redeemable note in the aggregate principal amount of $370 (the “Monroe Note”). The purchase price of the Monroe Note was $340, and the Company received net proceeds of $307, after deducting $12 to cover Monroe’s legal fees and a $20 payment to Craft. The Monroe Note has an interest rate of 6% per annum, and the maturity date is 12 months from the Issue Date. The Monroe SPA and Monroe Note also contain other customary terms and conditions.
Current report
On or following six months from the Issue Date, Monroe has the right to convert the outstanding and unpaid principal amount and interest into the Company’s shares of Common Stock. The conversion price equals to 80% of the lowest daily VWAP of the Company’s Common Stock for the last 10 trading days prior to conversion; provided, that if the Company is delisted from NASDAQ, then the conversion discount shall increase to 65% of the lowest trading price and the lookback shall be for the last 20 trading days. The Company granted to Monroe piggy-back registration rights for the shares of Common Stock issuable upon conversion of the Monroe Note. The Company has instructed its transfer agent to reserve 1,000,000 shares of Common Stock for the conversion.
Current report
Our sales backlog as of June 30, 2026 was $3,668, of which our telecommunications customers accounted for 77%, customers in the military market accounted for 22%, and customers in other markets accounted for 1%. We believe the majority of our backlog will be shipped within the next three months.
Removed paragraphs (6)
Previous report
None.
Previous report
Critical Accounting Policies
Previous report
Our net sales for the three months ended March 31, 2026 were $1,728, compared to $1,723 for the three months ended March 31, 2025. We reported a net loss of $178 for the three months ended March 31, 2026, as compared to a net loss of $1,265 for the same period in 2025. Cost reductions in operating expenses helped improve the net loss from 2025 to 2026.
Previous report
We believe revenue during the quarter ended March 31, 2026 continued to be impacted by excess inventory at our customer’s warehouse in addition to economic and geopolitical factors influencing our customers’ buying decisions.
Previous report
General and Administrative Expenses. General and administrative expenses were $783 for the three months ended March 31, 2026, as compared to $1,001 for the same period in 2025. The 22% decrease in general and administrative expenses resulted from consolidating administrative tasks to improve efficiency.
Previous report
As of March 31, 2026, we had a backlog of $3,744. 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 March 31, 2026 was comprised of the following elements: 82% in purchases of DC power systems by telecommunications customers, and 18% in purchases by customers in the military markets. We believe the majority of our backlog will be shipped within the next six months.
Reworded paragraphs (25)
Previous wording
During the three months ended March 31, 2026 and March 31, 2025, 96% and 82%, respectively, of our total net sales were within the telecommunications market. During the first quarter of 2026, our largest customer, a Tier-1 telecommunications customer in the U.S., represented 72% of our total net sales. During the same period in 2025, our two largest customers represented 71% and 17% of our total net sales, respectively, one being a Tier-1 telecommunications customer in the U.S. and one being a customer in the military market in the U.K. 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 three months ended March 31, 2026 and 2025, sales to international customers accounted for 5% and 18% of total net sales, respectively. Sales to military customers during three months ended March 31, 2026 and 2025 accounted for 3% and 17% of total net sales, respectively. During three months ended March 31, 2026 and 2025, sales to customers in the marine and other markets accounted for 1% and 1% of total net sales, respectively.
Current wording
During the three months ended June 30, 2026 and 2025, 88% and 92%, respectively, of our total net sales were within the telecommunications market. During the three months ended June 30, 2026 and 2025, sales to international customers accounted for 26 and 3% of total net sales, respectively; sales to military customers accounted for 3% and 6% of total net sales, respectively; and sales to other customers accounted for 3% and 2% of total net sales, respectively.
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. 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
We are expanding 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 the second half of 2024, we 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
The impact of inflation and rapidly changing prices has not impacted our operations during the three months ended March 31, 2026. Rapid changes in the global economy may cause significant spikes in inflation which may have an impact in our financial condition during 2026 and beyond. Very small portion of our sales is a result of fixed contracts thereby resulting in negligible impact on our gross profits.
Current wording
The impact of inflation and rapidly changing prices has not impacted our operations during the threeand six months ended June 30, 2026. Rapid changes in the global economy may cause significant spikes in inflation which may have an impact in our financial condition during 2026 and beyond. Very small portion of our sales is a result of fixed contracts thereby resulting in negligible impact on our gross profits.
Previous wording
During 2026, we plan to hire sales and marketing staff to continue to market our products globally and expand our customer base in all market segments. We also plan to continue to be proactive in managing our operations and mitigate the financial impacts of higher costs, supply chain issues, and geopolitical factors.
Current wording
During the second half of 2026, we plan to increase our inventory of key components used in the productions of our power systems. We also lan to hire sales and marketing staff to continue to market our products globally and expand our customer base in all market segments. We also plan to continue to be proactive in managing our operations and mitigate the financial impacts of higher costs, supply chain issues, and geopolitical factors.
Previous wording
Net sales to telecommunications customers in the U.S. accounted for 96% of our total net sales for the three months ended March 31, 2026, as compared to 82% for the same period in 2025. Our international sales represented 5% of our net sales in the three months ended March 31, 2026, as compared to 18% in international sales in the same period in 2025.
Current wording
Net sales to customers in the U.S. accounted for 88% of our total net sales for the three months ended June 30, 2026, as compared to 92% for the same period in 2025. Our international sales represented 26% of our net sales for the three months ended June 30, 2026, as compared to 3% in international sales in the same period in 2025.
Previous wording
Cost of Sales. Cost of sales during the three months ended March 31, 2026 decreased by $810, or 58%, to $593, as compared to $1,403 during the same period in 2025. Cost of sales as a percentage of net sales during the three months ended March 31, 2026 decreased to 34.3% as compared to 81.4% in the same period in 2025. The decrease in cost of sales was primary attributable to a $450 adjustment to warranty reserve and decrease in factory overhead absorption in three months ended March 31, 2026 as compared to the same period in 2025.
Current wording
Cost of Sales. Cost of sales during the three months ended June 30, 2026 decreased by $422, or 24%, to $1,356, as compared to $1,778 during the same period in 2025. Cost of sales as a percentage of net sales during the three months ended June 30, 2026 increased to 133.1% as compared to 65.7% in the same period in 2025 primarily as a result of an increase in factory overhead absorption as compared to the same period in 2025.
Previous wording
*Gross Profit.*We had a gross profit of $1,135 for the three months ended March 31, 2026, which is an increase of $815, or 255%, as compared to gross profit of $320 during the same period in 2025. The increase in gross profit for the three months ended March 31, 2026, was primarily a result of a $450 adjustment to warranty reserve and a decrease in factory overhead absorption during the three months ended March 31, 2026. Our gross profit as a percentage of net sales was 65.7% for the quarter ended March 31, 2026, as compared to a gross profit as a percentage of net sales of 18.6% in the same period in 2025.
Current wording
*Gross Profit (Loss).*We had a gross loss of $337 for the three months ended June 30, 2026, which is a decrease of $1,267 or 136%, as compared to gross profit of $930 during the same period in 2025. The decrease in gross profit for the three months ended June 30, 2026 was primarily a result of diminished revenue, which was insufficient to absorb fixed factory overhead costs compared with the same period in 2025. Our gross loss as a percentage of net sales was (33.1)% for the quarter ended June 30, 2026, as compared to a gross profit as a percentage of net sales of 34.3% in the same period in 2025.
Previous wording
*Research and Development Expenses.*During the three months ended March 31, 2026, research and development expenses increased by $9 or 6%, to $169, as compared to $160 during the same period in 2025. The decrease in research and development expenses resulted from a decrease in new product development activity during the same period in 2026. We plan to recruit additional engineers during 2026 to support new product developments and our customer diversification efforts.
Current wording
*Research and Development Expenses.*During the three months ended June 30, 2026, research and development expenses decreased by $18, or 12%, to $128, as compared to $146 during the same period in 2025. The decrease was primarily due to a decrease in research and development support staff and consulting services during the three months ended June 30, 2026 as compared to the same period in 2025. We plan to recruit additional engineers during 2026 to support new product developments and our customer diversification efforts.
Previous wording
Interest and Finance Costs. Interest expense for the three months ended March 31, 2026 was $202, as compared to $164 during the same period in 2025. The interest expense was primarily from an interest on amount borrowed from our line of credit with Pinnacle Bank (“Pinnacle”).
Current wording
Interest and Finance Costs. Interest expense for the three months ended June 30, 2026 was $447, as compared to $171 during the same period in 2025. The interest expense is primarily from an interest on amount borrowed from our line of credit with Pinnacle Bank.
Previous wording
*Net Loss.*As a result of the factors identified above, we reported net loss of $178, or $(0.05) per basic and diluted share, for the three months ended March 31, 2026, as compared to net loss of $1,265, or $(0.50) per basic and diluted share, for the same period in 2025.
Current wording
*Net Loss.*As a result of the factors identified above, we reported net loss of $1,831, or $(0.49) per basic and diluted share, for the three months ended June 30, 2026, as compared to net loss of $271, or $(0.11) per basic and diluted share, for the same period in 2025.
Previous wording
*Net Sales.*Net sales increased $5 to $1,728 for the three months ended March 31, 2026, as compared to $1,723 for the same period in 2025. During the three months ended March 31, 2026, our largest customer accounted for 72% of our total net sales. During the same period in 2025, our two largest customers accounted for 71% and 17% of our total net sales, respectively. There was no other revenue from customers in excess of 10% of total net sales in either period.
Current wording
For the six months ended June 30, 2026, sales to our largest telecommunication customer accounted for 56% of our total net sales. For the six months ended June 30, 2025, sales to our largest telecommunication customer accounted for 70% of our total net sales. There was no other revenue from customers in excess of 10% of total net sales in either period.
Previous wording
*Sales and Marketing Expenses.*During the three months ended March 31, 2026, sales and marketing expenses decreased by $101, or 39%, to $159, as compared to $260 during the same period in 2025. The decrease was attributable to a decrease in marketing expenditures during three months ended March 31, 2026 as compared to the same period in 2025. 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.
Current wording
*Sales and Marketing Expenses.*During the six months ended June 30, 2026, sales and marketing expenses decreased by $158, or 36%, to $285, as compared to $443 during the same period in 2025. The decrease was attributable to a decrease in sales support staff and travel related expenses. We plan to expand our marketing efforts by adding staff and product demonstrations to support our diversification strategy and expand our customer base in all market segments.
Previous 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 three months ended March 31, 2026, the Company recorded a net loss of $178 and used cash in operations of $2,191. In addition, our independent registered public accounting firm, in its audit report to the financial statements included in our Annual Report on Form 10-K for the year ended December 31, 2025, expressed substantial doubt about our ability to continue as a going concern. The financial statements do not include any adjustments related to the recoverability and classification of recorded asset amounts or the amounts and classification of liabilities that might be necessary should the Company be unable 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 three and six months ended June 30, 2026, the Company recorded a net loss of $1,831, and $2,009, respectively, and used cash in operations of $2,171. In addition, our independent registered public accounting firm, in its audit report to the financial statements included in our Annual Report on Form 10-K for the year ended December 31, 2025, expressed substantial doubt about our ability to continue as a going concern. The financial statements do not include any adjustments related to the recoverability and classification of recorded asset amounts or the amounts and classification of liabilities that might be necessary should the Company be unable to continue as a going concern.
Previous wording
During the three months ended March 31, 2026, we funded our operations primarily from cash on hand. As of March 31, 2026, we had working capital of $2,106, as compared to working capital deficit of $(262) at December 31, 2025. This $2,368 increase in working capital was primarily attributable to $173 decrease in cash and cash equivalents resulting from net cash of $2,191 used in operating activities, net cash of $nil used in investing activities, and net cash of $2,018 from financing activities.
Current wording
During the six months ended June 30, 2026, we funded our operations primarily from cash on hand. As of June 30, 2026, we had working capital of $695, as compared to working capital deficit of ($262) at December 31, 2025. This $957 increase in working capital is primarily attributable to $17 decrease in cash and cash equivalents resulting from net cash of $2,171 used in operating activities, and net cash of $nil used in investing activities, and net cash of $2,154 from financing activities.
Previous wording
On March 31, 2026 and December 31, 2025, our net trade receivables totaled $1,511 and $330, respectively. On March 31, 2026, $1,252 (83%) represented the largest open customer account balance, while $196 (59%) and $58 (18%) represented the two largest open customer account balances on December 31, 2025.
Current wording
On June 30, 2026 and December 31, 2025, our net trade receivables totaled $566 and $330, respectively. On June 30, 2026, $294 (52%), and $119 (21%) represented the two largest open customer account balances, while$196 (59%) and $58 (18%) represented the two largest open customer account balances on December 31, 2025.
Previous wording
Our available capital resources on March 31, 2026 consisted primarily of $27 in cash and cash equivalents, as compared to $68 as of December 31, 2025. We expect our future capital resources will consist primarily of cash on hand, cash generated by operations, if any, drawdowns on our credit facility with Pinnacle and future debt or equity financings, if any.
Current wording
Our available capital resources on June 30, 2026 consisted primarily of $183 in cash and cash equivalents, as compared to $200 as of December 31, 2025. We expect our future capital resources will consist primarily of cash on hand, cash generated by operations, if any, drawdowns on our credit facility with Pinnacle Bank and future debt or equity financings, if any.
Previous wording
Effective September 30, 2020, the Company entered into a Loan and Security Agreement (the “Loan Agreement”) with Pinnacle. The Loan Agreement, as amended, provides for a revolving credit facility under which Pinnacle may, in its sole discretion upon our request, make advances to the Company up to $7,500, subject to certain limitations and adjustments. The Loan Agreement contains certain affirmative and negative covenants.
Current wording
Effective September 30, 2020, the Company entered into the Loan Agreement with Pinnacle. The Loan Agreement, as amended, provides for a revolving credit facility under which Pinnacle may, in its sole discretion upon our request, make advances to the Company up to $7,500, subject to certain limitations and adjustments, of up to $7,500, subject to certain limitations and adjustments. The Loan Agreement contains certain affirmative and negative covenants.
Previous wording
Borrowings based on receivables bear 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 March 31, 2026 and 8.0% at December 31, 2025). 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 March 31, 2026 and 9.0% at December 31, 2025).
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 June 30, 2026 and 8.0% at December 31, 2025). 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 June 30, 2026 and 9.0% at December 31, 2025).
Previous wording
At March 31, 2026, and 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 $6,000On March 10, 2026, the Company and Pinnacle executed a Notice of Additional Defaults and Forbearance Agreement (the “Forbearance Agreement”), in which Pinnacle agrees to forbear from exercising certain rights and remedies under the Loan Agreement and related documents (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 (as defined by the Forbearance Agreement) in the aggregate amount of at least $185, with 85% of the Net Face Amount (as defined by the Forbearance Agreement) 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 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, 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 wording
At June 30, 2026, and 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. On March 10, 2026, the Company and Pinnacle executed the 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 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 expected to stay in compliance and pay the full obligation to Pinnacle by July 31, 2026, it was unable to do so. The Company is in discussions with Pinnacle with the purpose to secure an extension on the Forbearance Agreement, and if the Company is unable to secure a payment extension or pay the full obligation within time satisfactory to Pinnacle, 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.
Previous wording
The balance of the loan agreement at December 31, 2025 was $4,036. During 2026, the Company repaid a net of $332 to reduce the Loan. At March 31, 2026, the outstanding balance under the line of credit was $3,704 which includes interest, fees and financing costs (see below), and $1,498 of the Company’s accounts receivable is held as collateral under the credit facility.
Current wording
The balance of the loan agreement at December 31, 2025 was $4,036. During 2026, the Company repaid a net of $1,306 to reduce the Loan. At June 30, 2026, the outstanding balance under the line of credit was $2,730 which includes interest, fees and financing costs (see below), and $566 of the Company’s accounts receivable is held as collateral under the credit facility.
Previous wording
The total interest expense, fees, and financing costs incurred under the Loan Agreement during the three months ended March 31, 2026 and 2025 were $125 and $160, respectively, and were recorded under interest expense and finance costs in the accompanying statements of operations.
Current wording
The total interest expense, fees, and financing costs incurred under the Loan Agreement for the three-month periods ended June 30, 2026 and 2025 were $139 and $168, respectively. Of these amounts, $7 in 2026 and $1 in 2025 were recorded under general and administrative expenses, while $132 in 2026 and $167 in 2025 were recorded under interest expense and finance costs in the accompanying statements of operations.
Previous wording
The following table sets forth the significant sources and uses of cash for the three-month periods set forth below:
Current wording
The following table sets forth the significant sources and uses of cash for the six-month periods set forth below:
Previous wording
Net cash used in operating activities for the three months ended March 31, 2026 was $2,191 as compared to net cash used in operating activities of $584 for the same period in 2025. This increase in net cash used in the three months ended March 31, 2026 was primarily due to a net loss of $178, an increase in accounts receivable of $1,181, and an increase in accounts payable of $111.
Current wording
Net cash used in operating activities for the six months ended June 30, 2026 was $2,171 as compared to net cash used by operating activities of $988 for the same period in 2025. This change in net cash used in the six months ended June 30, 2026 was primarily due to a net loss of $2,009, an increase in in accounts receivable of $236, and a decrease in accounts payable of $41.
Previous wording
We did not have any investing activities for the three months ended March 31, 2026 and March 31, 2025.
Current wording
We did not have any investing activities for the three and six months ended June 30, 2026, and June 30, 2025.
Previous wording
Net cash provided by financing activities totaled $2,018 for the three months ended March 31, 2026, as compared to $154 provided by financing activities during the same period in 2025. This cash provided during 2026 was primarily proceeds from shares sold under the ATM facility.
Current wording
Net cash provided by financing activities totaled $2,154 for the six months ended June 30, 2026, as compared to $665 provided by financing activities during the same period in 2025. This cash provided was primarily net proceeds of $2,424 from shares sold under the ATM facility, convertible notes payable of $1,136, coupled with repayment of advances from the credit facility of $1,306.
Rearranged current paragraphs (2)
Current report — wording carried from elsewhere
During the six months ended June 30, 2026 and 2025, 93% and 88%, respectively, of our total net sales were within the telecommunications market. During the six months ended June 30, 2026 and 2025, sales to international customers accounted for 12 and 9% of total net sales, respectively; sales to military customers accounted for 3% and 10% of total net sales, respectively; and sales to other customers accounted for 2% and 1% of total net sales, respectively.
Current report — wording carried from elsewhere
Interest and Finance Costs. Interest expense for the six months ended June 30, 2026 was $650, as compared to $335 during the same period in 2025. The interest expense is primarily from an interest on amount borrowed from our line of credit with Pinnacle Bank.