PIONEER POWER SOLUTIONS INC

Management’s Conclusions Regarding Effectiveness of Disclosure Controls and Procedures

We conducted an evaluation of the effectiveness of our “disclosure controls and procedures”, as defined by Rules 13a-15(e) and 15d-15(e) of the Exchange Act, as of December 31, 2024, the end of the period covered by this Annual Report on Form 10-K. The disclosure controls and procedures evaluation was done in conjunction with an independent consultant and consulting firm and under the supervision and with the participation of management, including our chief executive officer and chief financial officer. There are inherent limitations to the effectiveness of any system of disclosure controls and procedures. As of December 31, 2024, based on the evaluation of these disclosure controls and procedures, and in light of the material weakness found in our internal controls over financial reporting, our chief executive officer and chief financial officer have concluded that our disclosure controls and procedures were not effective. In light of this determination, our management has performed additional analyses, reconciliations, and other post-closing procedures and has concluded that, notwithstanding the material weakness in our internal control over financial reporting, the consolidated financial statements for the periods covered by and included in this Annual Report on Form 10-K fairly state, in all material respects, our financial position, results of operations and cash flows for the periods presented in conformity with U.S. GAAP.

Management’s Annual Report on Internal Control over Financial Reporting

Management is responsible for establishing and maintaining adequate internal control over financial reporting, as defined in Rules 13a-15(f) and 15d-15(f) under the Exchange Act. Our internal control over financial reporting is designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of consolidated financial statements for external reporting purposes in accordance with generally accepted accounting principles.

Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Also, projections of any evaluation of effectiveness of internal control over financial reporting to future periods are subject to the risk that controls may become inadequate because of changes in conditions or that the degree of compliance with the policies or procedures may deteriorate over time.

Management, including our chief executive officer and our chief financial officer, assessed the effectiveness of our internal control over financial reporting as of December 31, 2024. In making this assessment, management used the criteria set forth by the Committee of Sponsoring Organizations of the Treadway Commission in Internal Control - Integrated Framework (2013). A material weakness is a deficiency, or a combination of deficiencies, in internal control over financial reporting, such that there is a reasonable possibility that a material misstatement of our annual or interim consolidated financial statements will not be prevented or detected on a timely basis. In our assessment of the effectiveness of internal control over financial reporting as of December 31, 2024, we determined that the Company’s internal control over financial reporting was not effective as of December 31, 2024, due to the lack of sufficient accounting personnel and, as a result, the Company is unable to maintain proper segregation of duties.

Management’s Plan to Remediate the Material Weakness

The Company is implementing enhancements to its internal controls to remediate the identified material weakness in its internal control over financial reporting. Specifically, the Company:

Additionally, the Company plans to hire additional accounting and finance personnel with the requisite skills, knowledge and expertise to address identified control deficiencies.

The Company is committed to maintaining a strong internal control environment and believes these remediation efforts will represent significant improvements in its controls over the control environment. These steps will take time to be fully implemented and confirmed to be effective and sustainable. Additional controls may also be required over time. While the Company believes that these efforts will improve its internal control over financial reporting, the Company will not be able to conclude whether the steps the Company is taking will remediate the material weakness in internal control over financial reporting until a sufficient period of time has passed to allow management to test the design and operational effectiveness of the new and enhanced controls. Until the remediation steps set forth above are fully implemented and tested, the material weakness described above will continue to exist.

This annual report does not include an attestation report of our registered public accounting firm regarding internal control over financial reporting, as permitted by the rules of the SEC.

Changes in Internal Control over Financial Reporting

During the year ended December 31, 2023, the Company identified material weaknesses in our internal control over financial reporting related to the Electrical Infrastructure segment. The material weaknesses were due to deficiencies in the segment’s revenue recognition of over-time contracts and associated costs, recognition of costs incurred by contract, and lack of an inventory automated tracking system.

On October 29, 2024, the Company sold its Electrical Infrastructure segment to Mill Point Capital. As a result of the sale, the deficiencies that contributed to the material weaknesses identified during the year ended December 31, 2023 were eliminated, and the Company’s controls were modified in order to consider the Company’s remaining business. Accordingly, management’s assessment of the effectiveness of the Company’s internal control over financial reporting as of December 31, 2024 considered the controls in place as of such date.

Other than described above, there have been no changes in our internal control over financial reporting that occurred during the three months ended December 31, 2024, that have materially affected, or that are reasonably likely to materially affect, our internal control over financial reporting.