POLA 10-K & 10-Q changes, risk factors and insider trading

The Company’s 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 year ended December 31, 31, 2024,2025, the Company recorded a net loss of $4,677$9,133 and used cash in operationsoperating activities of $536.$1,061. These factors raise substantial doubt about the Company’s ability to continue as a going concern within one year of the date that the financial statements are issued. The Infinancial addition,statements do not include any adjustments that might be necessary if the Company’s independentCompany registeredis public accounting firm, in their report on the Company’s December 31, 2024, audited financial statements, raised substantial doubt about the Company’s abilityunable to continue as a going concern.

OurFurthermore, the Company’s ability to secure other financing is uncertain. The Company’s ability to continue as a going concern is dependent upon ourits ability to obtain additional financing, grow sales,and drivediversify furtherits operatingrevenue, efficiencies,improve operational efficiency, reduce overhead and expenditures,fixed costs, and ultimately,to create a profitable operationsoperation. OurIts ability to obtain additional financing in the debt and equity capital markets markets is subject to several factors, including market and economic conditions, ourits performance and investor sentiment with respect to usthe Company and ourits industry. The Company has taken action to improvediversify itssales margins,to reduceconsume inventoryexisting andinventory, increase higher margin aftermarket parts reducerevenue, overheadto expenses.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.

The impacts of war and other geopolitical events, including but not limited to Russia’s invasion of Ukraine and the Hamas-Israelmilitary conflictconflicts between U.S., Israel, and theIran, resulting war, are difficult to predict. The resulting geopolitical uncertainty are likely to have a significant impact on the European Union, the United Kingdom and other countries, including the U.S. The threat that these military operations may expand beyond Ukraine, Israel, and the Gaza Strip may have a negative impact as well. Significant increases in the price of oil and natural gas have occurred and are likely to continue putting additional inflationary pressures on central banks, including Federal Reserve System (the “FRB”). It is possible that interest rate hikes by the FRB will continue to occur in 2025, but the amount, timing, and frequency of such increases are not fully known at this time. As a result of these conflicts, the threat of cyberattacks has increased which could affect banks in the U.S. and their customers. Additionally, the United States and European nations have imposed very significant financial sanctions on the Russian Federation, including targeted sanctions on Russian banks and wealthy individuals as well as halting certification of the Nord Stream 2 gas pipeline. They have denied Russian banks access the Society for Worldwide Interbank Financial Telecommunications or SWIFT which is expected to slow international international trade and make such transactions costlier to accomplish which could also negatively affect banks in the U.S. and their customers. In response to the Russian military actions, many businesses headquartered in the Eurozone and the United States have stopped doing business with with Russia, which may negatively affect the profitability of those companies. The international turmoil has already had and may continue to to have a negative impact on the stock market generally and, in turn, on our stock price.

The continuation or escalation of events like the war in Russia-Ukraine war or the Hamas-Israel U.S.-Israel-Iran conflict may also disrupt business operations of our suppliers and/or customers, causing supply chain constraints or delayed spending by our customers. The full impact of the such events are not known at this time, but they could have a material adverse impact on our business, financial condition, results of operations, and stock price.

We have incurred significant losses losses in the past. For the years ended December 31, 20242025 and 2023,2024, we incurred net losses of approximately $4.1$9.1 million and $6.5$4.6 million, respectively. respectively. For the year ended December 31, 2025, we realized a gross loss of approximately $3.1 million, and for the year ended December 31, 2024, we realized a gross profit of approximately $1.9 million, and for the year ended December 31, 2023, we realized a gross profit of approximately $0.7$1.3 million. We may incur net and gross losses in the future. We expect to rely on cash on hand, cash, if any, generated from our operations, borrowing availability under our line of credit and proceeds from our future financing financing activities, if any, to fund all of the cash requirements of our business. Additional losses may hamper our operations and impede us from expanding our business.

We cannot provide assurance that products and services that we have recently developed or that we develop in the future will achieve market acceptance. If our new products and services fail to achieve market acceptance, or if we fail to develop new or enhanced products and services s that achieve market acceptance, our growth prospects, operating results and competitive position could be adversely affected.

We have established relationships with third-party engine suppliers and other key suppliers from which we source components for our power systems. We purchase standard configurations of engines for our DC power systems and are substantially dependent on timely supply from our key engine suppliers, Yanmar Engines Company, PerkinsToyota Corporation, and Engine Distributors Inc. (for Ford engines). Engines from Yanmar Engines CompanyCompany, Ltd,Toyota Corporation, and ToyotaEngine Corporation.Distributors EnginesInc. from(for Yanmar,Ford Perkins, and Toyotaengines) represented approximately 70%, 7%, 88%, 3%, and 1%18% of our total engines sold as a component of our DC power systems during 2024,2025, respectively, and represented approximately 62%,88%, 26%,1%, and less than 2%7% of our total engines sold as components of our DC power systems during 2023,2024, respectively. We also use engines from fromPerkins, Isuzu, Kubota and, to a lesser extent, Volvo Penta. In March 2023, we received EPA certification on our 4Y Toyota engine, which is a larger engine model for used on our 20 to 30 kW DC power systems. We do not have any long-term contracts or commitments with any of these thesesuppliers or other key suppliers from which we source components for our power systems. We currently have past due accounts with many of our key suppliers. If any of these engine suppliers or key component suppliers were to fail to provide emissions certifiedqualified engines or components in a timely manner or fail to supply engines or components that meet our quality, quantity or cost requirements, or were to discontinue manufacturing any engines or components we source from them or discontinue providing any of these engines or components to us, or the supply chain is interrupted or delayed as a result of a pandemic or unprecedented event, or if suppliers decide stop supplying engines or components due to past due accounts if we do not bring these accounts event,current or negotiate a payment plan in a timely manner, and we were unable to obtain substitute sources in a timely manner or on terms acceptable to us, our ability to manufacture our products could be materially adversely affected.

Our common common stock is listed on Nasdaq. Nasdaq has several quantitative and qualitative requirements companies must comply with to maintain this listing, including a $1.00 minimum bid price per share (the “Bid Price Rule”). On November 24, 2023, we received a deficiency letter letter from the Listing Qualifications Department of The Nasdaq Stock Market (“Nasdaq”) indicating that our common stock is subject to potential delisting from the Nasdaq because for a period of 30 consecutive business days, the bid price of our common stock has closed below the minimum $1.00 per share requirement for continued inclusion under Nasdaq Marketplace Rule 5550(a)(2) (the “Bid Price Rule”). The Nasdaq deficiency letter has no immediate effect on the listing of our common stock, and our common stock continues to trade on The Nasdaq Capital Market under the symbol “POLA” at this time.

On November 18, 2024, the Company effected a 1:7 Reverse Stock Split of its shares of common stock. On December 23, 2024, the Company Company received a letter from Nasdaq informing the Company that the Company regained compliance with the Bid Price Rule and that the Company is therefore in compliance with the Nasdaq’s listing requirements. Accordingly,Our thecommon hearingstock was cancelled and the Company’s securities continuecontinues to be listed and tradedtrade on theThe Nasdaq Capital Market.Market On December 27, 2024, under the Companysymbol issued“POLA” aat pressthis release announcing that it regained compliance with the Bid Price Rule.time.

While we have been back in compliance with Nasdaq Listing Rules 5550(a)(2) and 5605,Rules, there can be no assurance that we will continue to be in compliance with Nasdaq Listing Rule 5550(a)(2), Rule 5605 or other Nasdaq listing rules.Rules. If the stock is delisted, we may trade on the over-the-counter market, or even in the pink sheets, which would significantly decrease the liquidity of an investment in our common stock.

Under our 2016 Omnibus Stock Incentive Plan, as amended, or 2016 Plan, we may grant equity awards covering up to 250,627 shares of our common stock. As of December 31, 2024, 2025, we had granted options to purchase an aggregate of 20,002 shares of common stockstock, among which 7,144 options had terminated, and issued 23,04925,729 shares of common stock as stock-based compensation to officers, employees and consultants under the 2016 Plan. Sales of shares issued upon exercise of options or granted under our 2016 Plan may result in material dilution to our existing stockholders, which could cause our share price to fall.

During the years ended December 31, 20242025 and 2023,2024, 88% and 95%,88%, respectively, of our total net sales were within the telecommunications market. In 2025, our largest customer, being a Tier-1 telecommunications in the U.S., represented 65% of our total net sales. In 2024, our two largest largest customers represented 48% and 14% of our total net sales, respectively, one being a Tier-1 telecommunications customer in the U.S. and one being a telecommunications customer outside the U.S. In 2023, our two largest customers represented 50% and 18% of our total net sales, respectively, one being a Tier-1 telecommunications customer in the U.S. and one being a telecommunications customer outsidein thePuerto U.S. Rico. 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 20242025 and 2023, 2024, sales to international customers accounted for 13%7% and 21%13% of total revenue, respectively. Sales to military customers during 20242025 and 2023 2024 accounted for 8% and 3%8% of total revenues, respectively. During 2024 and 2023, salesSales to customers in the marine market accounted for 1% of total net sales during 2025, and 3% in 2024. Sales to customers in other markets accountedrepresented for 4% and 2%3% of total revenue,net respectively.sales in 2025, and 1% in 2024.

InDuring 2024 Mayand 2023,2025, we announcedworked plans to expand our mobile offerings byon upgrading our mobile CHAdeMO EV chargers to the universal combined charging system standard to reach the 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 second half of 2024, we have 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.

We expect that opportunities in the bad-grid (i.e., areas where wireless towers are connected to an electrical grid that loses power for more than eight hours), and off-grid (i.e., areas where wireless towers are not connected to an electrical grid) applications, which include include telecommunications towers, commercial and residential backup power, electric vehicle charging, “mini-grid” and various other power applications, will help to expand the market for our natural gas/LPG (propane) product lines domestically and internationally. internationally. In 2024.2024, Wewe demonstrateddeveloped a microgrid product that can provide 24/7 electric power to a commercial facility. This project was funded by UNHCR a United Nations organization. The product included DC generator, battery storage, AC inverter, solar charge controller and remote monitoring in a single container which can be delivered to any remote location to provide power. We believe this product in its current configuration can serve mid-level micro grid needs in residential and commercial areas. We plan to develop new configurations of DC power system, battery storage and solar products to optimize the match between our solutions and various application needs.

We also recognize revenue from the rental of equipment. Our rental revenues have not been significant to date and have accounted for less than one percent $nil of total revenues for the years ended December 31, 20242025 and 2023.2024.

During 2024, 2025, sales to our customers in the U.S. were $12,108,$6,219, or 87%93% of total net sales, as compared to 79%$12,108, or 87% in 2023.2024. During 2024,2025, sales to our largestinternational customer represented 48%were $415, or 7% of our total net sales, as compared to 50% in 2023. Our international sales were $1,862, or 13% of total net sales in 2024,2024. We asbelieve comparedeconomic and geopolitical factors have influenced our customers’ buying decisions, particularly international customers, delaying pushing orders to $3,216, or 21%, during 2023.2026.

Our sales backlog as of December 31, 2024,2025, was $1,306,$4,306, with 53%82% of that amount being attributable to our largest U.S. telecommunications customer, 3% attributed to other telecommunications customers, 36%17% attributed to customers in the military markets, and 9%1% to customers in marine market, and 1% in other markets. The Company expects to complete shipment of these orders within the next six to twelve months.

We plan to continue to market our products globally and expand our customer base in all market segments. We plan to continually improve our inventory turns to generate cash flow from operations combined with austerity measures on non-essentials overhead to manage cash flow while sales improves. During 2024, we successfully reduced overhead expenses by $996 to improve cash generated through operations. We plan to continue take proactive steps to manage our operations and mitigate the financial impacts of higher costs, supply chain issues, and geopolitical factors. We have $12.9 million in inventory and completed updating our manufacturing facilities to accommodate three to four times the annual revenue of 2024. However, the full impact on our financial and operating performance of these factors will depend significantly on the duration and severity of these factors, the actions taken to mitigate their impact, disruption to our supply chain, and the pace with which our clients return to more normalized purchasing behavior, among others factors beyond our knowledge or control. See “Risk Factors” commencing on page 1718 of this Annual Report on Form 10-K for additional considerations.

During 2024, 2025, revenue from telecommunications customers accounted for 88% of total net sales, as compared to 95%88% of total net sales during 2023. 2024. Our two largest customerscustomer represented 48% and 14%65% of our total net sales in 2024,2025, as compared to 50%our two largest customers that accounted for 48% and 18%14% in 2023.2024, respectively. Our largest customer in each year was a Tier-1 telecommunications customer in the U.S., and our second largest customer in each year2024 was a telecommunications customer outsidein thePuerto U.S.Rico. There was no other revenue from customers in excess of 10% of total net sales in either period.

During 2024 2025 and 2023,2024, sales to international customers accounted for 13%7% and 21%13% of total revenue, respectively. Sales to military customers during during2025 and 2024 andaccounted 2023 accounted for 8% and 3%8% of total revenues, respectively. Sales to customers in the marine market accounted for 1% of total revenues in 2025, and 3% in 2024. Customers in other markets during 20242025 and 20232024 accounted for 4%2% and 2%1% of total revenue, revenue, respectively. Most of our sales were of our DC base powers systems during the two years.

Cost of Sales. Cost of sales decreased by $1,942$3,196 or 13%,25%, to $9,460 during 2025, compared to $12,656 during 2024, compared to $14,598 during 2023.2024. Cost of sales as a percentage of net sales sales decreasedincreased from 95.5% in 2023 to 90.6% in 2024 to 150.1% in 2025 primarily as a result of aan decreaseincrease in factory overhead absorption as compared to the same period in 2023. We believe we can achieve significant reductions in the cost of sales in 2025 as a percentage of net sales as volumes in production increase.2024. Cost of sales includes inventory write-downs of $1,967 in 2025, and $900 in 2024, and $450 in 2023, to adjust inventory to net realizable value.

Gross Profit.Profit (Loss). We recognized a gross profitloss of $1,314$3,156 during 2024,2025, as compared to a gross profit of $695$1,314 during 2023,2024, which represents ana increasedecrease in gross profit of $619$4,470 or 89%.340%. Gross profitloss as a percentage of net sales increasedwas to 9.4%(50.1)% in 2024,2025, as compared to 4.5% in 2023. The increase in gross profit as a percentage of net sales of 9.4% in 2024. The gross loss during 20242025 was primarily becausea result of improvedan labor efficienciesincrease in manufacturingfactory resultingoverhead fromabsorption higherand production volumesunderutilization primarily duringof the secondfactory, andas thirdwell quartersadjustments ofto 2024.inventory net realizable value.

Net Loss. As a result of the factors identified above, we generated a net loss of $9,133, or ($3.59) per basic and diluted share, for 2025, as compared to net loss of $4,677, or ($1.86) per basic and diluted share, for 2024, asrepresenting comparedan to net loss of $6,548, or ($3.45) per basic and diluted share, for 2023, a decreaseincreased loss of $1,871.$4,456.

The Company’s 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 year ended December 31, 31, 2024,2025, the Company recorded a net loss of $4,677$9,133 and used cash in operationsoperating activities of $536.$1,061. These factors raise substantial doubt about the Company’s ability to continue as a going concern within one year of the date that the financial statements are issued. The Infinancial addition,statements do not include any adjustments that might be necessary if the Company’s independentCompany registeredis public accounting firm, in their report on the Company’s December 31, 2024, audited financial statements, raised substantial doubt about the Company’s abilityunable to continue as a going concern.

OurFurthermore, the Company’s ability to secure other financing is uncertain. The Company’s ability to continue as a going concern is dependent upon ourits ability to obtain additional financing, drivegrow furtherand operatingdiversify efficiencies,our revenue, improve operational efficiency, reduce expenditures,overhead and fixed costs, and ultimately, to create a profitable operationsoperation. OurIts ability to obtain additional financing in the debt and equity capital markets is subject to several factors, including market and economic conditions, ourits performance and investor sentiment with respect to usthe Company and ourits industry. The Company has taken action to improvediversify its margins, and is continuingsales to buildconsume aexisting stronginventory, backincrease log,higher andmargin expectsaftermarket parts revenue, to continuefund investing in product development and sales and marketing activities.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 affect the Company’s business prospects, ability to meet long-term liquidity needs or ability to continue operations.

During the year ended December 31, 2024,2025, we funded our operations primarily from cash on hand. As of December 31, 2024,2025, we had working capital of $7,037,$(262), as compared to working capital of $11,775$7,037 at December 31, 2023.2024. This $4,738$7,299 decrease in working capital is primarily attributable to a $51$298 decrease in cash and cash equivalents resulting from net cash of $536$1,061 used in operating activities, net cash used in investing activities of $19 for the acquisition of new property and equipment,$nil, and net cash from financing activities of $504$763 which includes net proceeds of $559 $757 from oursale creditof facility.the Company’s common shares, net proceeds of $437 from a commercial loan, and proceeds of $330 from borrowings from a related party.

On December 31, 2025, and December 31, 2024, and December 31, 2023, our net trade receivables totaled $2,153$330 and $1,676,$2,153, respectively. On December 31, 2024,2025, $196 (59%) represented the largest open customer account balance, while $1,771 (82%) represented the largest open customer account balance, while $1,156 (69%) and $264 (16%) represented the two largest open customer account balances on December 31, 2023.2024.

Our available capital resources on December 31, 2024,2025, consisted primarily of $498$200 in cash and cash equivalents, as compared to $549$498 as of December 31, 2023.2024. We expect our future capital resources will consist primarily of cash on hand, cash generated by operations, drawdowns on our credit facility with Pinnacle Bank and future debt or equity financings,financing, if any.

Net cash used in operating activities activities for 20242025 was $536,$1,061, as compared to $3,430$536 for the same period in 2023.2024. This decrease in net cash used in 20242025 was primarily due to a net loss of $4,677,$9,133, a decrease in proceeds from ERC receivable of $2,000, and a decrease in refundable income taxes of $787, and a decrease in accounts payable of $1,354.$787.

Net cash used in investing activities for 2025 totaled $nil as compared to $19 for 2024, a decrease of $19. Net cash used in investing activities forin 2024 totaled $19, as compared to $194 for 2023, a decrease of $175. Net cash used in investing activities was primarily due to acquisitions of property and equipment.

Net cash provided by financing activities totaled $504$763 for 2024,2025, as compared to $3,962$504 provided by financing activities during 2023,2024, an decreaseincrease of $2,894.$259. This cash provided provided was primarily borrowingsproceeds from notes payable and shares sold under the lineATM of credit with Pinnacle.facility.

As of December 31, 2024,2025, we had a backlog of $1,306.$4,306. 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 December 31, 20242025 was comprised of the following elements: 56%82% in purchases of DC power systems by telecommunications customers incustomers, the U.S., 35%17% in purchases in military markets, and 9%2% in purchases by customers in the marine and other markets. We believe the majority of our backlog will be shipped within the next six to twelve months. However, there can be no assurance that we will be successful in fulfilling such orders and commitments in a timely manner or that we will ultimately recognize as revenue the amounts reflected in our backlog.

We have incurred significant losses in the past. For the years ended December 31, 2025 and 2024, we incurred net losses of approximately $9.1 million and $4.6 million, respectively. For the threethree- monthsand endedsix-months Marchend 31,June 30, 2026, we realized aincurred net losslosses of approximately$1,831, $178.and $2,009, respectively. We may incur net and gross losses in the future. We expect to rely on cash on hand, cash, if any, generated from our operations, borrowing availability under our line of credit and proceeds from our future financing activities, if any, to fund all of the cash requirements of our business. Additional losses may hamper our operations and impede us from expanding our business.

We face inventory risk and may be required to write-off additional inventory in the future.

We have established relationships with third-party engine suppliers and other key suppliers from which we source components for our power systems. We purchase standard configurations of engines for our DC power systems and are substantially dependent on timely supply from our key engine suppliers, Yanmar Engines Company,Company (“Yanmar), Toyota Corporation,Corporation (“Toyota”), and Engine Distributors Inc. (for “Ford” engines). Engines from Yanmar EnginesYanmar, Company, Toyota Corporation,Toyota, and Engine Distributors Inc. (for Ford engines) represented approximately 74%,100%, 2%,nil%, and 21%nil% of our total total engines sold as a component of our DC power systems during the three months ended MarchJune 31,30, 2026, respectively, and represented approximately approximately67%, 88%, nil%,11%, and 13%22% of our total engines sold as components of our DC power systems during the three months ended MarchJune 30, 2025, respectively. 31,Engines from Yanmar, Toyota, and Ford represented approximately 80%, 1%, and 16% of our total engines sold as a component of our DC power systems during the six months ended June 30, 2026, respectively, and represented approximately 77%, 6%, and 12% of our total engines sold as components of our DC power systems during the three months ended June 30, 2025, respectively. We also use engines from Perkins, Isuzu, Kubota and, to a lesser extent, Volvo Penta. We do not have any long-term contracts or commitments with any of these suppliers or other key suppliers from which we source components for our power systems. We currently have past due accounts with many of our key suppliers. If any of these engine suppliers or key component suppliers were to fail to provide qualified engines or components in a timely manner or fail to supply engines or components that meet our quality, quantity or cost requirements, or were to discontinue manufacturing any engines or components we source from them or discontinue providing any of these engines or components to us, or the supply chain is interrupted or delayed as a result of a pandemic or unprecedented event, or if suppliers decide stop supplying engines or components due to past due accounts if we do not bring these accounts current or negotiate a payment plan in a timely manner, and we were unable to obtain substitute sources in a timely manner or on terms acceptable to us, our ability to manufacture our products could be materially adversely affected.

In addition to our sales to customers within the U.S., we may become increasingly dependent on sales to customers outside the U.S. as we pursue expanding our business with customers worldwide. During the three months ended MarchJune 31,30, 2026 and 2025, our sales to international customers accounted for 5%26% and 18%,3%, respectively, of total revenue. During the six months ended June 30, 2026 and 2025, our sales to international customers accounted for 12% and 9%, respectively, of total revenue. We continue to expect that a significant portion of our future revenues will be from international sales to customers in less developed or developing countries. As a result, the occurrence of any international, political, economic, or geographic event including changes in trade policy, tariffs, and/or export/import laws and regulations could result in a significant increase in the cost of materials used in our production and/or a significant decline in revenue.

Security vulnerabilities may arise from our hardware, software, employees, contractors or policies we have deployed Security vulnerabilities may arise from our hardware, software, employees, contractors or policies we have deployed, which may result in external parties gaining access to our networks, data centers, cloud data centers, corporate computers, manufacturing systems, and/or access to accounts we have at our suppliers, vendors, and customers. External parties may gain access to our data or our customers’ data, or attack the networks causing denial of service or attempt to hold our data or systems in ransom. The vulnerability could be caused by inadequate account security practices such as failure to timely remove employee access when terminated. To mitigate these security issues, we have implemented measures throughout our organization, including firewalls, backups, encryption, employee information technology policies and user account policies. However, there can be no assurance these measures will be sufficient to avoid cyberattacks. If any of these types of security breaches were to occur and we were unable to protect sensitive data, our relationships with our business partners and customers could be materially damaged, our reputation could be materially harmed, and we could be exposed to a risk of litigation and possible significant liability.

Our operating results have fluctuated significantly from quarter-to-quarter, period-to-period and year-to-year during our operating history and are likely to continue to fluctuate in the future due to a variety of factors, many of which are outside of our control. Certain factors that may affect our operating results include, without limitation, those set forth under “Management’s Discussion and Analysis of Financial Condition and Results of Operations — Critical Accounting Policies” in ourthis most recently filed AnnualQuarterly Report on Form 10-K.10-Q.

Due to these factors and the other risks discussed in ourthis most recently filed AnnualQuarterly Report on Form 10-K,10-Q, you should not rely on quarter-to-quarter, period-to-period period-to-period or year-to-year comparisons of our results of operations as an indication of our future performance. Quarterly, period and annual comparisons of our operating results are not necessarily meaningful or indicative of future performance. As a result, it is likely that, from time to time, our results of operations or our revenue backlog could fall below historical levels or the expectations of public market analysts and investors, which could cause the trading price of our common stock to decline significantly.

The trading price of our shares of common stock is volatile and could be subject to wide fluctuations in response to various factors, some some of which are beyond our control, including limited trading volume. In addition to the factors discussed in the “Risk Factors” section and elsewhere in this Quarterly Report on Form 10-Q and in our most recently filed Annual Report on Form 10-K,10-Q, these factors include, without limitation:

Under our 2016 Omnibus Stock Incentive Plan, as amended, or 2016 Plan, we may grant equity awards covering up to 250,627 shares of our common stock. As of MarchJune 31,30, 2026, we had granted options to purchase an aggregate of 20,002 shares of common stock, among which 7,144 options had terminated, and issued 25,729 shares of common stock as stock-based compensation to officers, employees and consultants under the 2016 Plan. Sales of shares issued upon exercise of options or granted under our 2016 Plan may result in material dilution to our existing stockholders, which could cause our share price to fall.

During the threesix months ended MarchJune 31,30, 2026 and March 31, 2025, 96%93% and 82%,88%, respectively, of our total net sales were within the telecommunications market. 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 threesix months ended MarchJune 31,30, 2026 and 2025, sales to international customers accounted for 5%12 and 18% 9% of total net sales, respectively. Salesrespectively; sales to military customers during three months ended March 31, 2026 and 2025 accounted for 3% and 17%10% of total net sales, respectively. During three months ended March 31, 2026respectively; and 2025, sales to other customers in the marine and other markets accounted for 1% 2% and 1% of total net sales, respectively.

InWe Mayare 2023, we announced plans to expandexpanding 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 mobile electric vehicle charger is just an initial model and based on power and fuel needs will result in various additional configurations.

The impact of inflation and rapidly changing prices has not impacted our operations during the three and six months ended MarchJune 31,30, 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.

Critical Accounting Policies and Estimates

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.

Three Months Ended MarchJune 31,30, 2026 Compared to the Three Months Ended MarchJune 31,30, 2025

InterestNet andSales. FinanceNet Costs.sales Interestdecreased expense$1,689, or 62%, to $1,019 for the three months ended MarchJune 31,30, 2026 was $202,2026, as compared to $164$2,708 duringfor the same period in 2025. The interestdecrease expensein sales was primarily fromattributed anto interesta onshortage amountof borrowedcomponents fromin the production of our lineDC ofpower credit with Pinnacle Bank (“Pinnacle”).systems.

Net Loss. As a result of the factors identified above, we reported net loss of $178,$1,831, or $(0.050.49) per basic and diluted share, for the three months ended MarchJune 31,30, 2026, as compared to net loss of $1,265,$271, or $(0.500.11) per basic and diluted share, for the same period in 2025.

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 MarchJune 31,30, 2026, the Company recorded a net loss of $178$1,831, and $2,009, respectively, and used cash in operations of $2,191. $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.

During the threesix months ended MarchJune 31,30, 2026, we funded our operations primarily from cash on hand. As of MarchJune 31,30, 2026, we had working capital capital of $2,106,$695, as compared to working capital deficit of $(262$262) at December 31, 2025. This $2,368$957 increase in working capital was is primarily attributable to $173$17 decrease in cash and cash equivalents resulting from net cash of $2,191$2,171 used in operating activities, and net cash of $nil used in investing activities, and net cash of $2,018$2,154 from financing activities.

On MarchJune 31,30, 2026 and December 31, 2025, our net trade receivables totaled $1,511$566 and $330, respectively. On MarchJune 31,30, 2026, $1,252$294 (83%52%), and $119 (21%) represented the two largest open customer account balance,balances, while $196 (59%) and $58 (18%) represented the two largest open customer account balances on December 31, 2025.

Our available capital resources on MarchJune 31,30, 2026 consisted primarily of $27$183 in cash and cash equivalents, as compared to $68$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.

Effective September 30, 2020, the Company entered into athe 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, of up to $7,500, subject to certain limitations and adjustments. The Loan Agreement contains certain affirmative and negative covenants.

Borrowings based on receivables bearbears 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 MarchJune 31,30, 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 March 31,June 30, 2026 and 9.0% at December 31, 2025).

At June March30, 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$6,000. On March 10, 2026, the Company and Pinnacle executed a Notice of Additionalthe Defaults and Forbearance Agreement (the “Forbearance Agreement”),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 existingSpecified defaultsExisting Defaults for the period commencing March 10, 20262026, (the “Effective Date”),Date, to July 31, 20262026, (the “Forbearance Termination Date”),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 advancesAdvances 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 expectsexpected to stay in compliance and pay the full obligation to Pinnacle by July 31, 2026, thereit iswas no guarantee that the Company will be ableunable to do so. IfThe Company is in discussions with Pinnacle with the purpose to secure an extension on the Forbearance Agreement, and if the Company is unable to complysecure witha thepayment Loan Agreement,extension or pay the full obligation within time satisfactory to Pinnacle by the July 31, 2026,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.

The balance of the loan agreement at December 31, 2025 was $4,036. During 2026, the Company repaid a net of $332$1,306 to reduce the Loan. At June March 31,30, 2026, the outstanding balance under the line of credit was $3,704$2,730 which includes interest, fees and financing costs (see below), and $1,498$566 of the Company’s accounts receivable is held as collateral under the credit facility.

The total interest expense, fees, and financing costs incurred under the Loan Agreement duringfor the threethree-month monthsperiods ended MarchJune 31,30, 2026 and 2025 were $125$139 and $160,$168, respectively,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.