Polar Power, Inc.
For the period ended Jun 30, 2025. Filed Aug 14, 2025.
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, 2025 · Filed Aug 14, 2025
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 2025-03-31; filed 2025-05-15.
0001641172-25-010887
ITEM 2. Management’s Discussion And Analysis Of Financial Condition And Results Of OperationsCurrent report: 10-Q
Period ended 2025-06-30; filed 2025-08-14.
0001641172-25-023986
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 61 previous paragraphs and 80 current paragraphs.
30 unchanged; 21 reworded; 26 added; 9 removed; 1 previous and 3 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 (26)
Current report
During the six months ended June 30, 2025 and 2024, 88% and 89%, respectively, of our total net sales were within the telecommunications market. During the six months ended June 30, 2025 and 2024, sales to international customers accounted for 9% and 20% of total net sales, respectively; sales to military customers accounted for 10% and 10% of total net sales, respectively; and sales to other customers accounted for 2% and 1% of total net sales, respectively.
Current report
Our sales backlog as of June 30, 2025 was $1,203, of which our telecommunications customers accounted for 95%, customers in the marine market accounted for 2%, customers in other markets accounted for 3%.
Current report
Critical Accounting Policies and Estimates
Current report
*Net Sales.*Net sales decreased $1,952, or 42%, to $2,708 for the three months ended June 30, 2025, as compared to $4,660 for the same period in 2024. The decrease in sales was primarily attributed to a decrease in sales of our DC generators to our telecommunications customers. We believe our largest customer continued to have excess inventory of our systems purchased in prior periods. We also believe economic and geopolitical factors had an influence in our customers’ buying decisions.
Current report
For the three months ended June 30, 2025, sales to our largest telecommunication customer in the U.S. accounted for 69% of our total net sales. For the same period in 2024, 40% of our total net sales were generated from our largest U.S. telecommunications customer, our second largest customer being a telecommunications customer in Puerto Rico represented 27% of our total net sales, and our third largest customer being a telecommunications customer in the south pacific region represented 22% of our total net sales. 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, 2025, sales and marketing expenses decreased by $80, or 30%, to $184, as compared to $264 during the same period in 2024. 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 2024.
Current report
Six Months Ended June 30, 2025 Compared to the Six Months Ended June 30, 2024
Current report
*Net Sales.*Net sales decreased $2,003, or 31%, to $4,431 for the six months ended June 30, 2025, as compared to $6,434 for the same period in 2024. The decrease in sales was primarily attributed to a decrease in sales of our DC generators to our telecommunications customers. We believe our largest customer continued to have excess inventory of our systems purchased in prior periods. We also believe economic and geopolitical factors have had an influence in our customers’ buying decisions.
Current report
For the six months ended June 30, 2025, sales to our largest telecommunication customer in the U.S. accounted for 70% of our total net sales. For the six months ended June 30, 2025, sales to our largest telecommunication customer in the U.S. accounted for 42% of our total net sales, our second largest customer being a telecommunications customer in Puerto Rico represented 20% of our total net sales, and our third largest customer being a telecommunications customer in the Solomon Islands represented 16% of our total net sales. There was no other revenue from customers in excess of 10% of total net sales in either period.
Current report
Net sales to customers in the U.S. accounted for 91% of our total net sales for the six months ended June 30, 2025, as compared to 80% for the same period in 2024. Our international sales represented 9% of our net sales for the six months ended June 30, 2025, as compared to 20% in international sales in the same period in 2024.
Current report
*Gross Profit.*Gross profit during the six months ended June 30, 2025 decreased by $181, or 13%, to gross profit of $1,248, as compared to gross profit of $1,429 during the same period in 2024. Our gross profit as a percentage of net sales was 28.2% for the six months ended June 30, 2025, as compared to 22.2% in the same period in 2024.
Current report
General and Administrative Expenses. General and administrative expenses decreased by $329, or 16%, to $1,711 during the six months ended June 30, 2025, as compared to $2,040 during same period in 2024. The decrease in general and administrative expenses during the six months ended June 30, 2025 was primarily due to a decrease in general and administrative staff.
Current report
*Net Loss.*For the six months ended June 30, 2025, we incurred net loss of $1,536, or $(0.61) per basic and diluted share, as compared to net loss of $1,641, or $(0.65) per basic and diluted share for the six months ended June 30, 2024.
Current report
Going concern
Current report
The accompanying financial statements have been prepared under the assumption that the Company will continue as a going concern. For the six months ended June 30, 2025, we recorded a net loss of $1,536 and used cash in operations of $988. This factor raises substantial doubt about our ability to continue as a going concern within one year after the date that the financial statements are issued. 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, 2024, 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 report
Our ability to continue as a going concern is dependent upon our ability to obtain additional financing, grow and diversify our revenue, improve operational efficiency, reduce overhead and fixed costs, and to create a profitable operation. Our ability to obtain additional financing in the debt and equity capital markets is subject to several factors, including market and economic conditions, our performance and investor sentiment with respect to us and our industry. The Company has taken action to diversify sales to consume existing inventory, increase higher margin aftermarket parts revenue, to fund operations. In the event that the Company does not generate sufficient cash flows from operations and is unable to obtain funding, the Company will be forced to delay, reduce, or eliminate some or all of its discretionary spending, which could adversely affect the Company’s business prospects, ability to meet long-term liquidity needs or ability to continue operations.
Current report
Effective September 30, 2020, we entered into a Loan and Security Agreement (the “Loan Agreement”) with Pinnacle Bank (“Pinnacle”). Before the Loan Agreement was set to expire in September 2024, the Company and Pinnacle executed an amendment to extend the term of the Loan Agreement until September 30, 2026.
Current report
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 (a) 85% of the aggregate net face amount of the Company’s accounts receivable and other contract rights and receivables, plus (b) the lesser of (i) 40% of the aggregate eligible inventory value of eligible inventory or (ii) $4.0 million, plus (c) up to $146 collateralized by certain equipment. Additionally, the inventory advances limit shall decrease as the Company’s effective Tangible Net Worth diminishes at ranges provided in the Loan Agreement. Such inventory advances limit can be as high as $2.0 million with a Net Tangible Worth of $10.0 million, to as low as $0 with a Net Tangible Worth of $6.0 million. Any such decrease in the inventory advances limit shall take effect on the first day of the month following the Borrower’s delivery of its quarterly financial statements, as required by the Affirmative Covenants of the Loan Agreement. As of June 30, 2025, the Company’s Net Tangible Worth is approximately $7.4 million.
Current report
Pursuant to the Loan Agreement, as amended, the standards of eligible accounts receivable include AT&T accounts receivable up to 120 days of invoice date, and eligible accounts receivable with other customers have up to 90 days of invoice date. Customer accounts with eligible accounts receivable cannot exceed a concentration percentage which is a customer’s total obligations to the Company as a percentage of eligible accounts receivable from all customers. The concentration percentage applicable to certain Tier-1 telecommunications customers is 75% of all eligible accounts receivable, and the concentration percentage applicable to all other customer is 25% of all eligible accounts.
Current report
Pinnacle may terminate the Loan Agreement at any time upon ninety days prior written notice and immediately upon the occurrence of an event of default. Under the Loan Agreement, the Company granted Pinnacle a security interest in all presently existing and thereafter acquired or arising assets of the Company.
Current report
At December 31, 2024, the outstanding balance under the line of credit was $4,797 and the Company had availability under the line of credit in the amount of $654. During the six months ended June 30, 2025, the Company advanced an aggregate of $505 under the credit facility. At June 30, 2025, the outstanding balance under the line of credit was $5,302 and the Company had an amount of $66 available under the line of credit.
Current report
The Loan Agreement obligates the Company to pay Pinnacle a yearly facility fee in an amount equal to 1.125% of the sum of the advance limit. The Loan Agreement contains certain affirmative and negative covenants, all of which the Company was in compliance with at June 30, 2025.
Current report
The total interest expense, fees, and financing costs incurred under the Loan Agreement for the three-month periods ended June 30, 2025 and 2024 were $168 and $179, respectively. Of these amounts, $1 in 2025 and $1 in 2024 were recorded under general and administrative expenses, while $167 in 2025 and $177 in 2024 were recorded under interest expense and finance costs in the accompanying statements of operations.
Current report
The total interest expense, fees, and financing costs incurred under the Loan Agreement for the six-month periods ended June 30, 2025 and 2024 were $329 and $340, respectively. Of these amounts, $1 in 2025 and $2 in 2024 were recorded under general and administrative expenses, while $327 in 2025 and $338 in 2024 were recorded under interest expense and finance costs in the accompanying statements of operations.
Current report
Net cash used in investing activities for the six months ended June 30, 2025 was $nil, as compared to net cash used in investing activities of $18 for the same period in 2024. Net cash used in investing activities was primarily due to acquisitions of property and equipment.
Current report
Our sales backlog as of June 30, 2025 was $1,203, of which our telecommunications customers accounted for 95%, customers in the marine market accounted for 2%, and customers in other markets accounted for 3%. We believe the majority of our backlog will be shipped within the next three months.
Removed paragraphs (9)
Previous report
None.
Previous report
Critical Accounting Policies
Previous report
*Net Sales.*Net sales decreased $52, or 3%, to $1,723 for the three months ended March 31, 2025, as compared to $1,775 for the same period in 2024. During the three months ended March 31, 2025, our two largest customers accounted for 71% and 17% of our total net sales, respectively. During the same period in 2024, our two largest customers accounted for 49% and 25% of our total net sales, respectively. There was no other revenue from customers in excess of 10% of total net sales in either period. For three months ended March 31, 2025, our aftermarket parts revenues reached 28% of our total revenues compared to 6.8% revenues for three months ended March 31, 2024. We believe this increase in aftermarket parts revenue is attributed to large aging population of our products under service at telecom sites.
Previous report
Effective September 30, 2020, we entered into a Loan and Security Agreement, or Loan Agreement, with Pinnacle. The Loan Agreement was amended by the First Modification to Loan and Security Agreement on October 7, 2020. The Loan Agreement’s initial term ended on September 30, 2022. On November 3, 2022, we executed the Second Modification to Loan and Security Agreement with Pinnacle for a two-year term with an expiration date of September 30, 2024. On September 23, 2024, the Loan and Security Agreement with Pinnacle was renewed for two years and expires September 30, 2026.
Previous report
The Loan Agreement, provides for a revolving credit facility under which Pinnacle may, in its sole discretion upon our request, make advances to us in an amount, subject to certain limitations and adjustments, of up to (a) 85% of the aggregate net face amount of our accounts receivable and other contract rights and receivables, plus (b) the lesser of (i) 35% of the lower of cost or wholesale market value of certain of our inventory or (ii) $2,500. The aggregate amount of the outstanding advances under the revolving credit facility were initially limited to $4,000. On May 25, 2023, we executed the Fourth Modification to the Loan Agreement to amend the amount of available advances under the Loan Agreement such that the aggregate amount of the outstanding advances under the revolving credit facility may not be greater than $6,000 and raised the concentration percentage applicable to certain Tier-1 telecommunication customers from 50% to 75% in the definition of eligible accounts.
Previous report
On September 5, 2023, the Company entered into a Fifth Modification to the Loan Agreement under which the parties (a) agreed to amend the amount of available advances under the Loan Agreement such that the aggregate amount of the outstanding advances under the revolving credit facility may not be greater than seven and a half million dollars ($7.5 million), (b) extended the standard of eligibility applicable to certain Tier-1 telecommunication customers from ninety (90) days to one hundred twenty (120) days of invoice date in the definition of eligible accounts, (c) increased the inventory advance rate from 35% to 40% of the aggregate eligible inventory value of eligible inventory, and (d) raised the inventory advance limit from two million dollars ($2.0 million) to four million dollars ($4.0 million).
Previous report
We had an outstanding balance of $4,797 under the Loan Agreement at December 31, 2024. During the quarter ended March 31, 2025, we paid a net of $9 under the Loan Agreement. As of March 31, 2025, the outstanding balance under the line of credit was $4,788 and we had availability under the Loan Agreement of $33 and we believe that we are in compliance with the terms and conditions of the Loan Agreement.
Previous report
We did not have any investing activities for the three months ended March 31, 2025 and March 31, 2024.
Previous report
As of March 31, 2025, we had a backlog of $2,238. 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, 2025, was comprised of the following elements: 86% in purchases of DC power systems by telecommunications customers in the U.S., 7% in purchases by customers in the military markets, and 8% in purchases by customers in other markets. We believe the majority of our backlog will be shipped within the next six months.
Reworded paragraphs (21)
Previous wording
During the three months ended March 31, 2025 and March 31, 2024, 82% and 71%, respectively, of our total net sales were within the telecommunications market. During the first quarter of 2025, our two largest customers represented 71% and 17% of our total net sales, respectively, one being a Tier-1 telecommunications customer and one being a customer in the military market in the U.K. During the same period in 2024, our two largest customers represented 49% and 25% of our total net sales, respectively, one being a Tier-1 telecommunications customer in the U.S. and one being a customer in the U.S. military market. 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, 2025 and 2024, sales to international customers accounted for 18% and 6% of total net sales, respectively. Sales to military customers during three months ended March 31, 2025 and 2024 accounted for 17% and 26% of total net sales, respectively. During three months ended March 31, 2025 and 2024, sales to marine customers and customers in other markets accounted for 1% and 3% of total net sales, respectively.
Current wording
During the three months ended June 30, 2025 and 2024, 92% and 95%, respectively, of our total net sales were within the telecommunications market. During the three months ended June 30, 2025 and 2024, sales to international customers accounted for 3% and 25% of total net sales, respectively; sales to military customers accounted for 6% and 3% of total net sales, respectively; and sales to other customers accounted for 2% 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. 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.
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, 2025. Rapid changes in the global economy may cause significant spikes in inflation which may have an impact in our financial condition during 2025 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, 2025. Rapid changes in the global economy may cause significant spikes in inflation which may have an impact in our financial condition during 2025 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
Our net sales for the three months ended March 31, 2025 were $1,723, which represents a 3% decrease in net sales as compared to $1,775 for the three months ended March 31, 2024. We reported a net loss of $1,265 for the three months ended March 31, 2025, as compared to a net loss of $2,142 for the same period in 2024. Cost reductions in operating expenses helped improve the net loss from 2024 to 2025.
Current wording
Our net sales for the three months ended June 30, 2025 were $2,708, which represents a 42% decrease in net sales as compared to $4,660 for the three months ended June 30, 2024. Our net sales for the six months ended June 30, 2025 were $4,431, which represents a 31% decrease in net sales as compared to $6,434 for the same period in 2024.
Previous wording
We believe revenue during the quarter ended March 31, 2025 continued to be impacted by excess inventory at our customer’s warehouse in addition to economic and geopolitical factors influencing our customers’ buying decisions.
Current wording
We believe revenue during the three and six months ended June 30, 2025 continued to be impacted by excess inventory at our largest customer’s warehouse. In addition, we believe economic and geopolitical factors have influenced our customers’ buying decisions.
Previous wording
During 2025, 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 2025, 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.
Previous wording
Net sales to telecommunications customers in the U.S. accounted for 82% of our total net sales for the three months ended March 31, 2025, as compared to 65% for the same period in 2024. Our international sales represented 18% of our net sales in the three months ended March 31, 2025, as compared to 6% in international sales in the same period in 2024.
Current wording
Net sales to customers in the U.S. accounted for 97% of our total net sales for the three months ended June 30, 2025, as compared to 75% for the same period in 2024. Our international sales represented 3% of our net sales for the three months ended June 30, 2025, as compared to 25% in international sales in the same period in 2024.
Previous wording
Cost of Sales. Cost of sales during the three months ended March 31, 2025 decreased by $774, or 36%, to $1,403, as compared to $2,177 during the same period in 2024. Cost of sales as a percentage of net sales during the three months ended March 31, 2025 decreased to 81.4% as compared to 122.6% in the same period in 2024. The decrease in cost of sales was primary attributable to a decrease in factory overhead absorption in three months ended March 31, 2025 as compared to the same period in 2024. We also experienced a 63% decrease in field services related to warranty and generator commissioning expenses.
Current wording
Cost of Sales. Cost of sales during the three months ended June 30, 2025 decreased by $1,050, or 37%, to $1,778, as compared to $2,828 during the same period in 2024. Cost of sales as a percentage of net sales during the three months ended June 30, 2025 increased to 65.7% as compared to 60.7% in the same period in 2024 primarily as a result of an increase in factory overhead absorption as compared to the same period in 2024.
Previous wording
*Gross Profit (Loss).*We had a gross profit of $320 for the three months ended March 31, 2025, which is an increase of $722, or 180%, as compared to gross loss of $402 during the same period in 2024. The increase in gross profit for the three months ended March 31, 2025, was primarily a result of a decrease in factory overhead absorption and reduced spending on field support services during the three months ended March 31, 2025.
Current wording
*Gross Profit.*We had a gross profit of $930 for the three months ended June 30, 2025, which is a decrease of $902 or 49%, as compared to gross profit of $1,832 during the same period in 2024. The decrease in gross profit for the three months ended June 30, 2025 was primarily a result of a slight increase in factory overhead absorption as compared to the same period in 2024. Our gross profit as a percentage of net sales was 34.3% for the quarter ended June 30, 2025, as compared to a gross profit as a percentage of net sales of 39.3% in the same period in 2024.
Previous wording
*Research and Development Expenses.*During the three months ended March 31, 2025, research and development expenses decreased by $60 or 27%, to $160, as compared to $220 during the same period in 2024. The decrease in research and development expenses resulted from a decrease in new product development activity during the period ended March 31, 2025. We plan to recruit additional engineers during 2025 to support new product developments and our customer diversification efforts.
Current wording
*Research and Development Expenses.*During the three months ended June 30, 2025, research and development expenses decreased by $49, or 25%, to $146, as compared to $195 during the same period in 2024. The decrease was primarily due to a decrease in research and development support staff and consulting services during the three months ended June 30, 2025 as compared to the same period in 2024. We plan to recruit additional engineers during 2025 to support new product developments and our customer diversification efforts.
Previous wording
General and Administrative Expenses. General and administrative expenses were $1,001 for the three months ended March 31, 2025, as compared to $1,126 for the same period in 2024. The 10% decrease in general and administrative expenses resulted from consolidating administrative tasks to improve efficiencies.
Current wording
General and Administrative Expenses. General and administrative expenses decreased by $203, or 24%, to $710 during the three months ended June 30, 2025, as compared to $913 during same period in 2024. The decrease in general and administrative expenses during the three months ended June 30, 2025 was primarily due to a decrease in the number of general and administrative staff.
Previous wording
Interest and Finance Costs. Interest expense for the three months ended March 31, 2025 was $164, as compared to $163 during the same period in 2024. The interest expense is primarily from an interest on amount borrowed from our line of credit with Pinnacle Bank.
Current wording
Interest and Finance Costs. Interest expense for the three months ended June 30, 2025 was $171, as compared to $179 during the same period in 2024. 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 $1,265, or $(0.50) per basic and diluted share, for the three months ended March 31, 2025, as compared to net loss of $2,142, or $(0.85) per basic and diluted share, for the same period in 2024.
Current wording
*Net Profit (Loss).*As a result of the factors identified above, we reported net loss of $271, or $(0.11) per basic and diluted share, for the three months ended June 30, 2025, as compared to net profit of $501, or $0.20 per basic and diluted share, for the same period in 2024.
Previous wording
*Sales and Marketing Expenses.*During the three months ended March 31, 2025, sales and marketing expenses increased by $29, or 13%, to $260, as compared to $231 during the same period in 2024. The increase was attributable to a 47% increase in marketing expenditures including tradeshow participation during three months ended March 31,2025 as compared to the same period in 2024. We plan to increase our sales force and increase our marketing and tradeshow activities in 2025 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, 2025, sales and marketing expenses decreased by $51, or 10%, to $443, as compared to $494 during the same period in 2024. 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
During the three months ended March 31, 2025, we funded our operations primarily from cash on hand. As of March 31, 2025, we had working capital of $5,823, as compared to working capital of $7,037 at December 31, 2024. This $1,214 decrease in working capital is primarily attributable to $430 decrease in cash and cash equivalents resulting from net cash of $584 used in operating activities, net cash of $nil used in investing activities, and net cash of $154 from financing activities.
Current wording
During the six months ended June 30, 2025, we funded our operations primarily from cash on hand. As of June 30, 2025, we had working capital of $5,755, as compared to working capital of $7,037 at December 31, 2024. This $1,282 decrease in working capital is primarily attributable to $323 decrease in cash and cash equivalents resulting from net cash of $988 used in operating activities, and net cash of $nil used in investing activities, and net cash of $665 from financing activities.
Previous wording
On March 31, 2025 and December 31, 2024, our net trade receivables totalled $1,687 and $2,153, respectively. On March 31, 2025, $1,249 (74%) and $319 (19%) represented the two largest open customer account balances, while$1,771 (82%) represented the largest open customer account balances on December 31, 2024.
Current wording
On June 30, 2025 and December 31, 2024, our net trade receivables totaled $2,031 and $2,153, respectively. On June 30, 2025, $1,720 (85%), and $120 (6%) represented the two largest open customer account balances, while$1,771 (82%) represented the largest open customer account balances on December 31, 2024.
Previous wording
Our available capital resources on March 31, 2025 consisted primarily of $68 in cash and cash equivalents, as compared to $498 as of December 31, 2024. 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.
Current wording
Our available capital resources on June 30, 2025 consisted primarily of $175 in cash and cash equivalents, as compared to $498 as of December 31, 2024. 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
Interest accrues on the daily balance at a rate of 1.25% above the prime rate, or the Standard Interest Rate, but in no event will the Standard Interest Rate be less than 3.75% per annum. 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 per annum, or the Inventory Interest Rate, but in no event will the Inventory Interest Rate be less than 4.75% per annum. The Loan Agreement also contains a financial covenant requiring us to attain an effective tangible net worth, defined as our total assets, excluding all intangible assets, less our total liabilities plus loans to us from our officers, stockholders or employees that have been subordinated to our obligations to Pinnacle, greater than $6,000 as determined by Pinnacle as of the end of each fiscal quarter.
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 (9.75% at June 30, 2025 and 9.75% at December 31, 2024). 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 (10.75% at June 30, 2025 and 10.75% at December 31, 2024).
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, 2025 was $584 as compared to net cash used in operating activities of $989 for the same period in 2024. This decrease in net cash used in the three months ended March 31, 2025 was primarily due to a net loss of $1,265, a decrease in accounts receivable of $466, an increase in accounts payable of $301, an increase in customer deposits of $153, and an increase in cash purchases of inventory of $241.
Current wording
Net cash used in operating activities for the six months ended June 30, 2025 was $988 as compared to net cash provided by operating activities of $190 for the same period in 2024. This change in net cash used in the six months ended June 30, 2025 was primarily due to a net loss of $1,536, a decrease in accounts receivable of $122, and an increase in accounts payable of $450.
Previous wording
Net cash provided by financing activities totalled $162 for the three months ended March 31, 2025, as compared to $154 provided by financing activities during the same period in 2024. This cash provided was primarily net borrowings from the line of credit with Pinnacle Bank coupled with a notes payable of $163 issued by a related party.
Current wording
Net cash provided by financing activities totaled $665 for the six months ended June 30, 2025, as compared to $398 provided by financing activities during the same period in 2024. This cash provided was primarily net borrowings of $505 from the line of credit with Pinnacle Bank coupled with a notes payable of $163 issued by a related party.
Rearranged current paragraphs (3)
Current report — wording carried from elsewhere
Cost of Sales. Cost of sales during the six months ended June 30, 2025 decreased by $1,822, or 36%, to $3,183, as compared to $5,005 during the same period in 2024. Cost of sales as a percentage of net sales during the six months ended June 30, 2025 decreased to 71.8%, as compared to 77.8% in the same period in 2024.
Current report — wording carried from elsewhere
*Research and Development Expenses.*During the six months ended June 30, 2025, research and development expenses decreased by $110, or 27%, to $305, as compared to $415 during the same period in 2024. The decrease was primarily due to a decrease in research and development support staff and consulting services during the six months ended June 30, 2025, as compared to the same period in 2024. We plan to recruit additional engineers during the second half of 2025 to support growth and our customer diversification efforts.
Current report — wording carried from elsewhere
Interest and Finance Costs. Interest expense for the six months ended June 30, 2025 was $335, as compared to $342 during the same period in 2024. The interest expense is primarily from an interest on amount borrowed from our line of credit with Pinnacle Bank.
Rearranged previous paragraphs (1)
Previous report — wording carried elsewhere
Our gross profit as a percentage of net sales was 18.6% for the quarter ended March 31, 2025, as compared to a gross loss as a percentage of net sales of 22.6% in the same period in 2024.