What changed in this filing

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Item 7. Management’s Discussion and Analysis

2025-01-29 compared with 2023-09-21 · 486 added, 274 removed, 114 unchanged (87% of the section changed)

7 - MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

following discussion gives effects to the restatement of our consolidated financial statements for the fiscal years ended June 30, 2023,

and 2022, discussed in Note 15 – Restatement of Previously Issued Financial Statements to the consolidated financial statements

of this Annual Report, and should be read together with our consolidated financial statements, the accompanying notes, and other information

included in this Annual Report.

discussion should be read in conjunction with the Consolidated Financial Statements and Notes thereto contained in this Annual Report

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cause our actual results to differ materially from the forward-looking statements.

accompanying Management’s Discussion and Analysis of Financial Condition and Results of Operations gives effect to the restatement

adjustments made to the previously reported consolidated financial statements for the fiscal years ended June 30, 2023, and 2022.

additional information and a detailed discussion of the restatement, see Note15 – Restatement of Previously Issued Financial Statements

in the notes to our consolidated financial statements included in this Annual Report.

design, develop, manufacture, and sell a portfolio of advanced lithium-ion energy storage solutions for electrification of a range of

industrial and commercial sectors which include material handling, airport ground support equipment (“GSE”), and stationary

energy storage.

We believe our mobile and stationary energy storage solutions provide our customers a reliable, high performing, cost

effective, and more environmentally friendly alternative as compared to traditional lead acid and propane-based solutions.

and scalable design allows different configurations of lithium-ion battery packs to be paired with our proprietary wireless battery management

system to provide the level of energy storage required and “state of the art” real time monitoring of pack performance.

believe that the increasing demand for lithium-ion battery packs and more environmentally friendly energy storage solutions in the material

handling sector should continue to drive our revenue growth.

long-term strategy is to meet the rapidly growing demand for lithium-ion energy solutions and to be the supplier of choice, targeting

large companies having energy storage needs.

We have established selling relationships with large fleets of forklifts and GSEs.

to reach this goal by investing in research and development to expand our product mix, by expanding our sales and marketing efforts,

improving our customer support efforts and continuing our efforts to improve production capacity and efficiencies.

Our research and development

efforts will continue to focus on providing adaptable, reliable and cost-effective energy storage solutions for our customers.

filed three new patents on advanced technology related to lithium-ion battery packs.

The technology behind these pending patents is

industrial and commercial sectors which include material handling, airport ground support equipment (“GSE”).

We believe our

mobile energy storage solutions provide our customers a reliable, high performing, cost effective, and more environmentally friendly

alternative as compared to traditional lead acid and propane-based solutions.

Our modular and scalable design allows different configurations

of lithium-ion energy storage solutions to be paired with our proprietary wireless battery management system to provide the level of energy storage

required and “state of the art” real time monitoring of pack performance.

We believe that the increasing demand for lithium-ion

energy storage solutions and more environmentally friendly energy storage solutions in the material handling sector should continue to drive our

revenue growth.

long-term strategy is to meet the rapidly growing demand for lithium-ion energy solutions and to be the supplier of choice,

targeting large companies having energy storage needs.

We have established selling relationships with customers with large fleets of

forklifts and GSEs.

We intend to reach this goal by investing in research and development to expand our product mix, by expanding

our sales and marketing efforts, improving our customer support efforts and improving production efficiencies.

Our research and development efforts will continue to focus on providing adaptable, reliable and cost-effective

energy storage solutions for our customers.

We have filed three new patents on advanced technology related to lithium-ion energy storage solutions.

The technology behind these pending patents is designed to:

battery life by optimizing the charging cycle,

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artificial intelligence to predictively balance the cells for optimal performance.

largest sector of penetration thus far has been the material handling sector which we believe is a multi-billion-dollar addressable market.

We believe the sector will provide us with an opportunity to grow our business as we enhance our product mix and service levels and grow

our sales to large fleets of forklifts and GSEs.

Applications of our modular packs for other industrial and commercial uses, such as

solar energy storage, are providing additional current growth and further opportunities.

We intend to continue to expand our supply chain

and customer partnerships and seek further partnerships and/or acquisitions that provide synergy to meeting our growth and “building

scale” objectives.

following table summarizes the new orders, shipments, and backlog activities for the last six (6) fiscal quarters:

Our largest sector of penetration thus far has been the material handling

sector which we believe is a multi-billion-dollar addressable market.

We believe the sector will provide us with an opportunity to grow

our business as we enhance our product mix and service levels and grow our sales to large fleets of forklifts and GSEs.

Applications of

our modular packs for other industrial and commercial uses, such as mobile energy storage systems, are providing additional current growth

and further opportunities.

We intend to continue to expand our supply chain and customer partnerships and seek further partnerships and/or

acquisitions that provide synergy to meeting our growth and “building scale” objectives.

following table summarizes the new orders, shipments, and backlog activities for the following fiscal quarters:

Fiscal Quarter Ended

Beginning Backlog

Ending Backlog

March 31, 2023

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that outstanding customer orders will be fulfilled as expected and that our backlog will result in future revenues.

September 8, 2023, our order backlog was approximately $27.2 million.

of the disruptions from the COVID-19 pandemic over the past several years have largely abated.

During the pandemic, we, like others

in the industry, experienced supply chain challenges such as delays of purchased components and the shortage of components.

We have addressed these supply chain challenges with improved vendor selection, and improved supply chain internal practices.

However, we have experienced shipment delays of battery packs for some forklift models that have experienced production delays.

have seen recent improvements in shipment timing.

The price increases during the pandemic for steel and domestic freight have

lessened but still remain higher than pre-pandemic.

Price recovery of increased pandemic-related costs have now begun to be realized

in shipments during the latter part of Fiscal 2023.

However, there can be no assurance that our price increases, inventory levels or

any future steps we take will be sufficient to offset the rising procurement costs and manage sourcing of raw materials and

component parts effectively.

Lead times for forklifts and GSE Equipment have been extended for certain model lines of major OEMs.

These extended

lead times have resulted in some shipment deferrals and delays in receiving anticipated orders.

Not all product lines are impacted but

the impact has required additional selling efforts to maintain our sales trajectory.

expansion to accelerate gross margin

current high-profile “proven customer relationships” to respond to growing demand

of large fleets for lithium-ion value proposition.

new market that can leverage our technology and manufacturing capabilities.

features of our popular “SkyBMS” (telemetry) which provides customized fleet

management, and real time reports.

our manufacturing and service capacities to ensure customer satisfaction from increased deliveries,

on our leadership position with new offerings.

we are “agnostic to the type of lithium chemistry,” ensure our research to support

other chemistries as they may become available.

Ensure we have leadership with our core technology,

without dependence on purchasing critical technology.

can be no assurance that these initiatives and efforts will be successful.

of December 31, 2024, our order backlog was approximately $17.5 million.

have recently experienced some delays in new orders of our energy storage solutions due to corresponding deferrals of new forklift purchases

mainly caused by lower capital spending in the market sector that we serve and interest rate variability affecting selected large customer

While we have had very few cancellations of existing purchase orders, some customers have revised their order terms to fiscal 2025.

Causal rationale for delays is speculative and not definitive, but some customer feedback indicates concerns

over the economy and the uncertainty of interest rates, as well as broader geopolitical uncertainty.

The impact of order deferrals has required additional selling strategies to support

our targeted sales trajectory.

have seen improvements in our sourcing and purchasing activity, reflecting our efforts to expand and optimize our vendor strategy.

Additional improvements include more secondary sources to minimize stock-outs, lower costs from increasing sources, and controlled

delivery times, as reflected in our current inventory levels.

With strategic supply chain and profitability improvement initiatives,

lower costs and higher volume purchasing, we are targeting gross margin improvement to continue.

We are highly focused on expanding

sales and marketing initiatives to secure new customer relationships and support continued migration to lithium of current

We recently have added our second tier one OEM private label battery program to supplement our strong OEM relationships

and approvals.

This collaboration marks a a significant milestone for our S-Series line, which now includes products with the UL

Type EE certification, which provides added safety and durability capabilities.

We are also working with our distribution network to

expand customer acquisition with direct-to-customer initiatives.

We also announced a new partnership aimed at enhancing the recycling process for end-of-life lithium-ion batteries

with the largest critical battery components recycling company in the U.S.

This collaboration represents a significant step forward in

our ongoing commitment to environmental responsibility.

Management Update

On November 20, 2024, Ronald F.

Dutt, our chairman and Chief Executive Officer, notified the Company’s Board of

Directors of his intention to retire from his positions upon the appointment of a new Chief Executive Officer.

The Board has commenced a search for a new

Chief Executive Officer and Mr.

Dutt will remain with the Company through the search and transition period.

of 2024 Financing Activities

At-The-Market

On October 16, 2020, we filed a shelf registration on Form S-3 for up to

$50 million to support our ability to raise capital to support our business growth.

In connection with the shelf registration statement,

in December 2020, we entered into a Sales Agreement with H.C.

Wainwright & Co., LLC enabling us to sell shares of our common stock

in an “At-The-Market” offering from time to time.

On May 27, 2021, we filed an amendment to the prospectus supplement dated

December 21, 2020, allowing us to sell up to $20 million of shares under the At-The-Market offering program (“ATM Offering”).

In Fiscal 2021 we sold an aggregate of 978,782 shares of common stock at an average price of $12.93 per share for gross proceeds of approximately

$12.7 million in the ATM Offering, prior to deducting commissions and other offering related expenses.

In Fiscal 2022, we sold an additional

190,782 shares of common stock at average price of $8.70 per share for gross proceeds of approximately $1.7 million in the ATM Offering,

prior to deducting commissions and other offering related expenses.

In Fiscal 2023, we sold an additional 355,309 shares of common stock

at average price of $4.54 per share for gross proceeds of approximately $1.6 million in the ATM Offering, prior to deducting commissions

and other offering related expenses.

As of June 30, 2023, approximately $4.1 million remained available under the ATM Offering for future

sales of our common stock.

Gibraltar Credit Facility

On July 28, 2023, we entered into

a certain Loan and Security Agreement (the “Agreement”) with Gibraltar Business Capital, LLC, a Delaware limited liability

company (“GBC”).

The Agreement provides us with a senior secured revolving loan facility (the “GBC Credit Facility”)

for up to $15 million (the “Revolving Loan Commitment”).

The revolving amount available under the GBC Credit Facility is equal

to the lesser of the Revolving Loan Commitment and the borrowing base amount (as defined in the Agreement).

The GBC Credit Facility is

evidenced by a revolving note, which matures on July 28, 2025 (the “Maturity Date”), unless extended, modified or renewed

(the “Revolving Note”).

Provided that there is no event of default, the Maturity Date can automatically be extended for one

(1) year period upon payment of a renewal fee for each such extension in the amount of three-quarters of one percent (0.75%) of the Revolving

Loan Commitment, which fee will be due and payable on or before the applicable Maturity Date.

In addition, subject to conditions and terms

set forth in the Agreement, the we may request an increase in the Revolving Loan Commitment from time to time upon not less than 30 days’

notice to GBC which increase may be made at the sole discretion of GBC, as long as:

(a) the requested increase is in a minimum amount

of $1.0 million, and (b) the total increases do not exceed $5.0 million and no more than five (5) increases are made.

Outstanding principal

under the GBC Credit Facility accrues interest at Secured Overnight Financing Rate (“SOFR”, as defined in the Agreement) plus five and one half of one percent (5.50%) per

annum with such interest payment is due monthly on the last day of the month.

In the event of default, the amounts due under the Agreement

bears interest at a rate per annum equal to three percent (3.0%) above the rate that is otherwise applicable to such amounts.

GBC a non-refundable closing fee for the GBC Credit Facility of $112,500 upon the execution of the Agreement.

In addition, the

Company is required to pay a monthly unused line fee equal to one-half of one percent (0.50%) per annum on the difference between the

Revolving Loan Commitment and the average outstanding principal balance of the revolving loan(s) for such month.

The obligations under

the GBC Credit Facility may be prepaid in whole or in part at any time upon an exit fee of (a) two percent (2.00%) of the Revolving Loan

Commitment if the obligations are paid in full during the first year after the closing date, or (b) one percent (1.00%) of the Revolving

Loan Commitment if the obligations are paid in full one year after the closing date, provided, that, the

exit fee will be waived if such prepayment occurs in connection with the refinancing of the obligations with Bank of America, N.A., as

Termination of Silicon Valley

In connection with the entry into the Agreement (as described above) and the

repayment in full of the principal amount outstanding under SVB Credit Facility together with total accrued and unpaid interest and related

fees with a portion of the funds from the GBC Credit Facility on July 28, 2023, we terminated the Loan and Security Agreement, dated as

of November 9, 2020, as amended , by and among SVB and

Credit Facility

July 28, 2023, we entered into a Loan and Security Agreement (the “Agreement”) with GBC.

The Agreement provides us with a

senior secured revolving loan facility for up to $15.0 million (the “Revolving Loan Commitment”).

The revolving amount available

under the GBC Credit Facility is equal to the lesser of the Revolving Loan Commitment and the borrowing base amount (as defined in the

The GBC Credit Facility is evidenced by a revolving note, which matures on July 28, 2025 (the “Maturity Date”),

unless extended, modified or renewed (the “Revolving Note”).

Provided that there is no event of default, the Maturity Date

can automatically be extended for one (1) year period upon payment of a renewal fee for each such extension in the amount of three-quarters

of one percent (0.75%) of the Revolving Loan Commitment, which fee will be due and payable on or before the applicable Maturity Date.

addition, subject to conditions and terms set forth in the Agreement, we may request an increase in the Revolving Loan Commitment from

time to time upon not less than 30 days’ notice to GBC which increase may be made at the sole discretion of GBC, as long as:

the requested increase is in a minimum amount of $1,000,000, and (b) the total increases do not exceed $5,000,000 and no more than five

(5) increases are made.

Outstanding principal under the GBC Credit Facility accrues interest at Secured Overnight Financing Rate (“SOFR”,

as defined in the Agreement) plus five and one half of one percent (5.50%) per annum with such interest payment due monthly on the last

day of the month.

In the event of default, the amounts due under the Agreement bear interest at a rate per annum equal to three percent

(3.0%) above the rate that is otherwise applicable to such amounts.

We paid GBC a non-refundable closing fee for the GBC Credit Facility

of $112,500 upon the execution of the Agreement.

In addition, we are required to pay a monthly unused line fee equal to one-half of one

percent (0.50%) per annum on the difference between the Revolving Loan Commitment and the average outstanding principal balance of the

revolving loan(s) for such month.

The obligations under the GBC Credit Facility may be prepaid in whole or in part at any time upon an

exit fee of (a) two percent (2.00%) of the Revolving Loan Commitment if the obligations are paid in full during the first year after

the closing date, or (b) one percent (1.00%) of the Revolving Loan Commitment if the obligations are paid in full one year after the

closing date, provided, that, the exit fee will be waived if such prepayment occurs in connection with the refinancing of the obligations

with Bank of America, N.A., as lender.

November 2, 2023, we entered into the First Amendment to Loan and Security Agreement (the “First Amendment”) with Gibraltar

Business Capital, LLC (“GBC”), which amended certain definition of the Subordinated Debt referenced in the Loan and Security

Agreement dated July 28, 2023 as Subordinated Debt owed by Borrower to Cleveland Capital L.P.

pursuant to that certain Subordinated Unsecured

Promissory Note, dated as of November 1, 2023, in the aggregate principal amount of $2,000,000.

January 30, 2024, we entered into the Second Amendment to Loan and Security Agreement (the “Second Amendment”) with GBC,

which amended certain terms of the Loan and Security Agreement dated July 28, 2023, including but not limited to, (i) increasing the

commitment amount from $15 million to $16 million, (ii) adding an additional non-refundable closing fee in the amount of $7,500 in cash

for the increase in the commitment amount to $16 million, (iii) amending the definition of “Eligible Accounts;” and (iv)

amending the EBITDA Minimum financial covenant.

In consideration for the Second Amendment, we agreed to pay GBC a non-refundable amendment

fee of $10,000 in cash, in addition to the $7,500 non-refundable closing fee paid.

loans and other obligations under the GBC Credit Facility are secured by substantially all of our tangible and intangible assets (including,

without limitation, intellectual property) pursuant to the terms of the Agreement and the Intellectual Property Security Agreement entered

into by GBC and us on July 28, 2023.

During the year ended June 30, 2024, we had multiple drawdowns under the GBC Credit Facility totaling

$65.8 million, inclusive of the full repayment of the SVB Credit Facility and made multiple repayments totaling $52.0 million.

June 30, 2024, the outstanding balance under the GBC Credit Facility was approximately $13.8 million.

April 2024, we notified GBC of a certain event of default with respect to our anticipated failure to maintain the EBITDA covenant

for the trailing three (3) month period ended April 30, 2024, (the “Default”).

On May 8, 2024, we received a waiver of

the Default from GBC (the “Waiver”), subject to satisfaction of the following conditions:

(i) receipt of a counterpart

of the Waiver duly executed by us;

(ii) receipt of a fee of $20,000;

(iii) receipt of the representations and warranties

from us that after giving effect to the Waiver, the representations and warranties contained in the Agreement, the Waiver and the

other Loan Documents shall be true and correct;

and (iv) after giving effect to the Waiver, no additional event of default shall

have occurred and be continuing on and as of the effective date of the Waiver.

May 31, 2024, we entered into the Third Amendment to Loan and Security Agreement (the “Third Amendment”) with GBC which

amended certain terms of the Loan and Security Agreement dated July 28, 2023, including but not limited to amending the EBITDA

Minimum financial covenant.

In consideration for the Third Amendment, we agreed to pay GBC a non-refundable amendment fee of $50,000

the Agreement, upon an occurrence of an event of default, GBC may, at its option, declare its commitments to us to be terminated and

all obligations to be immediately due and payable, all without demand, notice or further action of any kind required on the part of

GBC, and/or exercise other remedies available to it among other things including its rights as a secured party.

On August 30, 2024,

GBC agreed to waive our non-compliance with, and the effects of our non-compliance under, various representations, financial

covenants and non-financial covenants relating to our financial restatements (the “August Waiver”).

On January 17, 2025, GBC agreed to waive our non-compliance with, and the effects of our non-compliance under, various

representations, financial covenants and non-financial covenants relating to our financial restatements and our failure to maintain the

EBITDA Minimum for certain financial periods (the “January Waiver”).

As a result of the August Waiver and January Waiver, the Company expects that its revolving credit facility remains available subject to meeting certain lending criteria

under the Loan Agreement.

January 22, 2025, we entered into Amendment No.

4 to Loan and Security Agreement (the “Fourth Amendment”) with GBC which

amended certain terms of the Loan and Security Agreement dated July 28, 2023, as amended, relating to the EBITDA Minimum financial

covenant of the Company.

In consideration for the Fourth Amendment, the Company agreed to pay GBC a non-refundable amendment fee of $50,000 in

cash, as follows:

(i) $25,000 shall be due and payable on March 1, 2025, and (ii) $25,000 shall be due and payable on

April 1, 2025.

rely on our credit facility with GBC to meet our anticipated capital resources and to fund our operations.

The availability of the

GBC Credit Facility is subject to satisfaction of certain affirmative covenants and financial covenants including maintaining

minimum tangible net worth, and certain limitations on dispositions of assets.

The Agreement also contains usual and customary

events of default (with customary grace periods, as applicable) and provides that, upon the occurrence of an event of default,

payment of all amounts payable under the GBC Credit Facility may be accelerated and/or GBC’s commitment may be terminated by

GBC without any action by GBC.

Due to our inability to satisfy certain financial covenants and other covenants under the agreement

with GBC in the past, we have had to obtain waivers from GBC.

In the event we are unable to comply with terms of the Agreement or to

obtain waivers from GBC for failure to comply, then funds will be unavailable to us under the GBC Credit Facility and our

operations, financial condition and business will be materially and adversely affected.

and Related Information

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Accounting Pronouncements

Company did not adopt any new accounting pronouncements during the year ended June 30, 2024.

Issued Accounting Pronouncements

has considered all recent accounting pronouncements issued since the last audit of the Company’s consolidated financial statements.

and believes that these recent pronouncements will not have a material effect on the Company’s condensed consolidated financial

In December 2023, the FASB issued Accounting Standards Update 2023-09, Income Taxes (Topic 740), Improvements to Income Tax Disclosures ,

which requires more detailed income tax disclosures.

The guidance requires entities to disclose disaggregated information about their

effective tax rate reconciliation as well as expanded information on income taxes paid by jurisdiction.

The disclosure requirements will

be applied on a prospective basis, with the option to apply them retrospectively.

The standard is effective for our fiscal year ending

June 30, 2026, with early adoption permitted.

The Company is evaluating the disclosure requirements related to the new standard.

In November 2023, the FASB

issued ASU 2023-07, “ Segment Reporting (Topic 280):

Improvements to Reportable Segment Disclosures ” (“ASU 2023-07”),

which expands annual and interim disclosure requirements for reportable segments, primarily through enhanced disclosures about significant

segment expenses.

The standard is effective annually for our fiscal year ending June 30, 2025 and interim periods thereafter.

Early adoption

is permitted.

The Company is evaluating the disclosure requirements related to the new standard.

Accounting Policies and Estimates

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believe the following critical accounting policies and estimates affect the preparation of our financial statements:

receivable are carried at their estimated collectible amounts.

The Company has not experienced issues related to the collection of

its accounts receivable and has not recorded an allowance for doubtful accounts during the fiscal years ended June 30, 2023 and

consist primarily of battery management systems and the related subcomponents and are stated at the lower of cost (first-in, first-out)

or net realizable value.

The Company evaluates inventories to determine if write-downs are necessary due to obsolescence or if the inventory

levels are in excess of anticipated demand at market value based on consideration of historical sales and product development plans.

The Company recorded an adjustment related to obsolete inventory in the amount of approximately $354,000 and $111,000 during the year

ended June 30, 2023 and 2022, respectively.

Company recognizes revenue in accordance to the Accounting Standards Codification (“ASC”) Topic 606, Revenue from Contracts

Accounts receivable are

carried at their estimated collectible amounts.

We have not experienced significant issues related to the collection of our accounts

As of June 30, 2024, we had an allowance for credit losses of $55,000.

We did not record an

allowance for credit losses during the years ended June 30, 2023 and 2022.

consist primarily of battery management systems and the related subcomponents and are stated at the lower of cost (first-in,

first-out) or net realizable value.

We evaluate inventories to determine if write-downs are necessary due to obsolescence or if the

inventory levels are in excess of anticipated demand at market value based on consideration of historical sales and product

development plans.

We recorded an adjustment related to obsolete inventory in the amount of approximately $490,00, $690,000 and

$665,000 during the years ended June 30, 2024, 2023 and 2022, respectively.

recognize revenue in accordance to the Accounting Standards Codification (“ASC”) Topic 606, Revenue from Contracts

with Customers (“ASC 606”) for all contracts.

The Company derives its revenue from the sale of products to customers.

Company sells its products primarily through a distribution network of equipment dealers, OEMs and battery distributors in primarily

North America.

The Company recognizes revenue for the products when all significant risks and rewards have been transferred to the customer,

there is no continuing managerial involvement associated with ownership of the goods sold is retained, no effective control over the

goods sold is retained, the amount of revenue can be measured reliably, it is probable that the economic benefits associated with the

transactions will flow to the Company and the costs incurred or to be incurred with respect to the transaction can be measured reliably.

revenue is recognized as a distinct single performance obligation which represents the point in time that our customer receives delivery

of the products.

We derive our revenue from the sale of products to

We sell our products primarily through a distribution network of equipment dealers, OEMs and battery

distributors in primarily North America.

We recognize revenue for the products when all significant risks and rewards have

been transferred to the customer, there is no continuing managerial involvement associated with ownership of the goods sold is

retained, no effective control over the goods sold is retained, the amount of revenue can be measured reliably, it is probable that

the economic benefits associated with the transactions will flow to us and the costs incurred or to be incurred with

respect to the transaction can be measured reliably.

revenue is recognized as a distinct single performance obligation which represents the point in time that a customer receives delivery

of our products.

Our customers do have a right to return product, but our returns have historically been minimal.

The Company evaluates its exposure

to product warranty obligations based on historical experience.

Our products, primarily lift equipment packs, are warrantied for five

years unless modified by a separate agreement.

As of June 30, 2023 and 2022, the Company carried warranty liability of approximately $1,600,000

and $1,012,000, respectively, which is included in accrued expenses on the Company’s consolidated balance sheets.

to the provisions of the Financial Accounting Standards Board (“FASB”) Accounting Standards Codification (“ASC”)

718-10, Compensation-Stock Compensation , which establishes accounting for equity instruments exchanged for employee

service, we utilize the Black-Scholes option pricing model to estimate the fair value of employee stock option awards at the date of

grant, which requires the input of highly subjective assumptions, including expected volatility and expected life.

Changes in these inputs

and assumptions can materially affect the measure of estimated fair value of our share-based compensation.

These assumptions are subjective

and generally require significant analysis and judgment to develop.

When estimating fair value, some of the assumptions will be based

on, or determined from, external data and other assumptions may be derived from our historical experience with stock-based payment arrangements.

The appropriate weight to place on historical experience is a matter of judgment, based on relevant facts and circumstances.

evaluate our exposure to product warranty obligations based on historical experience.

Our products, primarily lift equipment packs,

are warrantied for five years unless modified by a separate agreement.

As of June 30, 2024, 2023 and 2022, we carried warranty

liability of approximately $3,018,000, $1,600,000 and $1,012,000, respectively, which is included in accrued expenses on our

consolidated balance sheets.

to the provisions of the Financial Accounting Standards Board (“FASB”) ASC Topic No.

718-10, Compensation-Stock Compensation ,

which establishes accounting for equity instruments exchanged for employee service, we utilize the Black-Scholes option pricing model

to estimate the fair value of employee stock option awards at the date of grant, which requires the input of highly subjective assumptions,

including expected volatility and expected life.

Changes in these inputs and assumptions can materially affect the measure of estimated

fair value of our share-based compensation.

These assumptions are subjective and generally require significant analysis and judgment

When estimating fair value, some of the assumptions will be based on, or determined from, external data and other assumptions

may be derived from our historical experience with stock-based payment arrangements.

The appropriate weight to place on historical experience

is a matter of judgment, based on relevant facts and circumstances.

stock or equity instruments such as warrants issued for services to non-employees are valued at their estimated fair value at the measurement

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paid-in-capital.

Adopted Accounting Pronouncements

Company did not adopt any new accounting pronouncements for the year ended June 30, 2023.

of Operations

of Results of Operations of the Fiscal Years Ended June 30, 2023 and 2022

of Results of Operations of the Fiscal Years Ended June 30, 2024 and 2023 (restated)

following discussion should be read in conjunction with our financial statements and the related notes that appear elsewhere in this

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Operating loss

(15,357,000 )

Other income (expense):

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$ (7,743,000 )

our product focus has been on lift equipment, reflecting a mix of walkie pallet jacks and higher capacity packs for Class 1, 2, and 3

Over the past two years, we expanded our product offering into adjacent applications, including airport GSE, stationary energy

storage and other solutions for industrial and commercial applications.

The launch of larger packs over the past two years has shifted

our portfolio mix to include packs with higher selling prices as compared to our historical mix.

We believe that we are well positioned

to address the needs of many segments within the material handling sector in light of our modular and scalable battery pack design coupled

with our proprietary battery management system that can be coupled with our telemetry based “SkyBMS” product offering.

sell our products through several different channels including OEMs, lift equipment dealers and battery distributors as well as directly

to end users, primarily in North America.

our product focus has been on material handling equipment, reflecting a

mix of walkie pallet jacks and higher capacity packs for Class 1, 2, and 3 forklifts.

Over the past two years, we expanded our product

offering into adjacent applications, including airport GSE.

The launch of larger packs over the past two years has shifted our portfolio

mix to include packs with higher average selling prices as compared to our historical mix.

We believe that we are well positioned to address

the needs of many segments within the material handling sector in light of our modular and scalable energy storage solution design coupled with our

proprietary battery management system that can be coupled with our telemetry based “SkyBMS” product offering.

sell our products through several different channels including OEMs, lift equipment dealers and battery distributors as well as

directly to end users, primarily in North America.

The channels sell principally to large company, national accounts.

We sell certain battery

packs directly to other accounts including industrial equipment manufacturers and end users.

for Fiscal 2023 increased $24,004,000 or 57%, to $66,337,000, compared to $42,333,000 for Fiscal 2022.

increase in revenues was due to sales of energy storage solutions with higher average selling prices and a higher volume of units sold,

driven by significant increases in GSE sales.

The increase in revenues included both greater sales to existing and new Material Handling

customers as well as an increase in GSE sales.

Additionally, we further diversified our sales channels, and saw considerable volume and

price improvement in GSE sales as domestic airlines resumed operations with a reinvigorated focus on sustainably scaling their own operations

with our environmentally friendly and cost-effective solutions.

of sales for Fiscal 2023 increased $14,203,000 or 41%, to $49,237,000, compared to $35,034,000 for Fiscal 2022.

increase in cost of sales was directly associated with higher sales of energy storage solutions, partially offset by lower average cost

of sales per unit achieved during the current year as a result of our gross margin improvement initiatives, including design enhancements

to lower cost, improve serviceability, simplify bill of materials and supply chain initiatives to improve inventory turns and create

part commonality across multiple product line.

Cost of sales as a percentage of revenues for Fiscal 2023 was 74%, a decrease of

9 percentage points, compared to 83% for the Fiscal 2022.

profit for Fiscal 2023 increased $9,801,000 or 134%, to $17,100,000, compared to $7,299,000 for the Fiscal 2022.

gross profit margin (gross profit expressed as a percentage of revenues) increased to 26% for Fiscal 2023 compared to 17% for

Gross profit improved by 9 percentage points as a result of a higher volume of

units sold with a higher selling price and lower cost of sales as a result of the gross margin improvement initiatives as noted

certain energy storage solutions directly to other accounts including industrial equipment manufacturers and end users.

for fiscal 2024 decreased $5,664,000 or 9%, to $60,824,000, compared to

$66,488,000 for fiscal 2023.

The decrease in revenues was primarily in GSE reflecting a delay in shipments to a large customer.

Handling revenue also declined year-over-year as our OEM customers experienced double digit declines in sales.

In both cases the decrease

in sales volume was partially offset by shifts to higher priced products as well as certain pricing increases.

of sales for fiscal 2024 decreased $7,007,000, or 14%, to $43,591,000,

compared to $50,598,000 for fiscal 2023.

The decrease in cost of sales was directly associated with lower sales of energy storage solutions,

partially offset by lower average cost of sales per unit achieved during the current year as a result of our gross margin improvement

initiatives, including design enhancements to lower cost, improve serviceability, simplify bill of materials and supply chain initiatives

to improve inventory turns and create part commonality across multiple product line.

Cost of sales as a percentage of revenues for fiscal

2024 was 72%, a decrease of four percentage points, compared to 76% for fiscal 2023.

profit for fiscal 2024 increased $1,343,000 or 8%, to $17,233,000, compared

to $15,890,000 for fiscal 2023.

The increase in profitability reflects sales of higher margin products and the impact of cost savings

initiatives more than offsetting the effect of the decline in GSE unit sales.

Gross profit margin (gross profit expressed as a percentage

of revenues) increased to 28% for fiscal 2024 compared to 24% for fiscal 2023.

The 400 basis point improvement in gross profit margin

reflects the shift to higher margin products and the effect of cost control and reduction initiatives.

and Administrative

and administrative expenses for fiscal 2024 increased $1,312,000 or 7%, to $18,932,000, compared to $17,620,000 for fiscal 2023.

increase was primarily attributable to increases in personnel expenses related to new hires and temporary labor, severance expenses incurred,

and recruiting costs, and increases in depreciation expense, outbound shipping costs, insurance premiums, travel expenses, marketing

expenses, and facilities related costs, partially offset by decreases in commissions, bad debt expenses, consulting fees, public relations

expenses, and stock-based compensation.

expenses consist primarily of salaries and personnel-related expenses, sales force commissions, consulting fees, facilities-related expenses,

outbound shipping costs, insurance premiums, marketing expenses, travel expenses, public relations expenses and bad debt expenses.

increase in selling and administrative expense was primarily attributable to increases in stock-based compensation, new hires in sales,

sales force commissions, professional service fees and depreciation, which were partially offset by reductions in bonus expenses and

insurance premiums.

and Development

and development expenses for Fiscal 2023 decreased $2,251,000 or 32%, to $4,890,000, compared to $7,141,000 for Fiscal 2022.

expenses consisted primarily of materials, supplies, salaries and personnel related expenses, product testing, consulting, and other

expenses associated with revisions to existing product designs and new product development.

The decrease in research and development

expenses was primarily due to lower staff related expenses and expenses related to development of new products.

expense for Fiscal 2023 increased $1,087,000 or 431%, to $1,339,000, compared to $252,000 for Fiscal 2022.

increase in interest expense was due to higher average balances outstanding of our SVB Credit

Facility and higher interest rates, as well as recording of approximately $482,000 of debt issuance costs amortization

related to our existing lines of credit.

loss during Fiscal 2023 decreased $8,868,000 or 57%, to $6,741,000 compared to $15,609,000 for Fiscal 2022.

lower net loss for Fiscal 2023 was primarily attributable to increased gross profit, partially offset by increased operating

expenses and higher interest expense.

and development expenses for fiscal 2024 increased $234,000 or 5%, to $4,916,000,

compared to $4,682,000 for fiscal 2023.

Such expenses consist primarily of materials, supplies, salaries and personnel-related expenses,

product testing, consulting and other expenses associated with revisions to existing product designs and new product development.

increase in research and development expenses was primarily attributable to increased payroll and related benefits and stock-based compensation,

which were partially offset by reductions in materials and testing related to development of new products, equipment rentals and bonuses.

expense for fiscal 2024 increased $379,000 or 28%, to $1,718,000, compared

to $1,339,000 for fiscal 2023.

The increase in interest expense was due to higher average balances outstanding on our GBC Credit Facility

and higher interest rates, as well as the amortization of approximately $230,000 of debt issuance costs related to our existing lines

loss during fiscal 2024 increased $590,000 or 8%, to $8,333,000 compared

to $7,743,000 for fiscal 2023.

The higher net loss for fiscal 2024 was primarily attributable to the increase in gross profit being more

than offset by greater sales and marketing personnel expenses and commissions as well as the increase in interest expense due to higher

levels of borrowing at higher interest rates during the year.

EBITDA is a non-GAAP financial measure.

Adjusted EBITDA is calculated taking net income and adding back the expenses related to interest,

income taxes, depreciation, amortization, and stock-based compensation, each of which has been calculated in accordance with GAAP.

EBITDA was a loss of approximately $3,705,000 for the Fiscal 2023 compared to a loss of $14,071,000 for the Fiscal 2022.

Adjusted EBITDA is calculated taking

net loss and adding back the expenses related to interest, income taxes, depreciation, amortization and stock-based compensation, each

of which has been calculated in accordance with GAAP.

Adjusted EBITDA was a loss of approximately $3,999,000 for fiscal 2024 compared

to a loss of $4,707,000 for fiscal 2023.

believes that Adjusted EBITDA, when viewed with our results under GAAP and the accompanying reconciliations, provides useful information

5 unchanged sentences

the operating performance of our company and our management team.

Adjusted EBITDA is a non-GAAP financial measure, it should not be construed as superior to or a substitute for Net income (loss) (as

determined in accordance with GAAP) for the purpose of analyzing our operating performance or financial position.

Adjusted EBITDA is a non-GAAP financial measure, it should not be construed as superior to or a substitute for net loss, as determined

in accordance with GAAP, for the purpose of analyzing our operating performance or financial position.

reconciliation of our net loss to Adjusted EBITDA is included in the table below.

Year ended June 30,

$ (8,333,000 )

$ (7,743,000 )

Add/Subtract:

Interest, net

Income tax provision

Depreciation and amortization

Add/Subtract:

Stock-based compensation

Adjusted EBITDA

$ (3,999,000 )

$ (4,707,000 )

of Results of Operations of the Fiscal Years Ended June 30, 2023 (restated) and 2022 (restated)

following discussion should be read in conjunction with our financial statements and the related notes that appear elsewhere in this

Annual Report.

following table represents our statement of operations for the fiscal years ended June 30, 2023 (“fiscal 2023”) and June

30, 2022 (“fiscal 2022”), as restated

Year ended June 30, 2023

Year ended June 30, 2022

% of Revenues

Cost of sales

Operating expenses:

Selling and administrative

Research and development

Total operating expenses

Operating loss

(16,221,000 )

Other income (expense):

Interest expense

$ (7,743,000 )

$ (16,473,000 )

for fiscal 2023 increased $24,155,000 or 57%, to $66,488,000, compared

to $42,333,000 for fiscal 2022.

The increase in revenues was due to sales of energy storage solutions with higher average selling

prices and a higher volume of units sold, driven by significant increases in GSE sales.

The increase in revenues included both greater

sales to existing and new material handling customers as well as an increase in GSE sales.

Additionally, we further diversified our sales

channels and saw considerable volume improvement in GSE sales as domestic airlines resumed operations with a reinvigorated focus on sustainably

scaling their own operations with our environmentally friendly and cost-effective solutions.

of sales for fiscal 2023 increased $13,872,000 or 38%, to $50,598,000,

compared to $36,726,000 for fiscal 2022.

The increase in cost of sales was directly associated with higher sales of energy storage

solutions, partially offset by lower average cost of sales per unit achieved during the current year as a result of our gross margin improvement

initiatives, including design enhancements to lower cost, improve serviceability, simplify bill of materials and supply chain initiatives

to improve inventory turns and create part commonality across multiple product line.

Cost of sales as a percentage of revenues for

fiscal 2023 was 76%, a decrease of 11 percentage points, compared to 87% for fiscal 2022.

profit for fiscal 2023 increased $10,283,000 or 183%, to $15,890,000, compared

to $5,607,000 for fiscal 2022.

The gross profit margin (gross profit expressed as a percentage of revenues) increased to 24% for

fiscal 2023 compared to 13% for fiscal 2022.

Gross profit improved by 11 percentage points as a result of a higher volume of units

sold with a higher selling price and lower cost of sales as a result of the gross margin improvement initiatives as noted above.

and Administrative

and administrative expenses for fiscal 2023 increased $2,105,000 or 14%,

to $17,620,000, compared to $15,515,000 for fiscal 2022.

The increase was primarily attributable to increases in personnel expenses related

to new hires and temporary labor, severance expenses incurred, sales force commissions, bonus expenses, depreciation, insurance premiums,

travel expenses and marketing expenses, which were partially offset by decreases in third-party agent commissions and stock-based compensation.

and Development

and development expenses for fiscal 2023 decreased $1,631,000 or 26%, to $4,682,000, compared to $6,313,000 for fiscal 2022.

expenses consisted primarily of materials, supplies, salaries and personnel related expenses, product testing, consulting fees and

other expenses associated with revisions to existing product designs and for new product development.

The decrease in research and

development expenses was primarily due to lower staff-related expenses and expenses related to development of new

expense for fiscal 2023 increased $1,087,000 or 431%, to $1,339,000, compared

to $252,000 for fiscal 2022.

The increase in interest expense was due to higher average balances outstanding of our SVB Credit

Facility and higher interest rates, as well as recording of approximately $482,000 of debt issuance costs amortization related to

our existing lines of credit.

loss during fiscal 2023 decreased $8,730,000 or 53%, to $7,743,000 compared

to $16,473,000 for fiscal 2022.

The lower net loss for fiscal 2023 was primarily attributable to increased gross profit, partially

offset by increased operating expenses and higher interest expense.

EBITDA was a loss of approximately $4,707,000 during fiscal 2023 compared

to a loss of $14,935,000 during fiscal 2022.

As adjusted EBITDA is a non-GAAP financial measure, it should not be construed as superior

to or a substitute for net income (loss) (as determined in accordance with GAAP) for the purpose of analyzing our operating performance

or financial position.

reconciliation of our adjusted EBITDA to net loss is included in the table below.

Years Ended June 30,

Year ended June 30,

$ (7,743,000 )

$ (16,473,000 )

Add/Subtract:

Interest, net

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(15,646,000 )

Add/Subtract:

Stock-based compensation

3 unchanged sentences

and Capital Resources

As of June 30, 2023, we

had a cash balance of $2.4 million and an accumulated deficit of $88.6 million.

For the year ended June 30, 2023, we had negative

cash from operations of $3.6 million.

Historically our business has not generated sufficient cash to fund our operations.

based on our existing backlog and customer orders, we anticipate increased revenues, together with the planned improvements in our gross

margin, will move us closer to profitability.

Our planned gross margin improvement tasks include, but are not limited to, a plan to drive

bill of material costs down while increasing price of our products for new orders.

We have received new orders in Fiscal 2023, of approximately $59.9 million and believe through conversations with our customers that our anticipation of

continued increase of new orders is reasonable.

We believe that our existing cash, together with $4.0 million that currently

remains available under our $15.0 million revolving line of credit with Gibraltar Business Capital

(“GBC Credit Facility”), and $4.0 million available under the subordinated line of credit (“Subordinated LOC”)

as of September 8 , 2023, will be sufficient to meet our anticipated capital resources to fund planned operations for the next twelve

See “Future Liquidity Needs” below.

fiscal 2024, we generated negative cash flows from operations of $4.8

As of June 30, 2024, we had an accumulated deficit of $99.7 million.

To date, our business has not generated sufficient

cash to fund our operations.

However, given our existing backlog, we anticipate that revenue growth coupled with improvement in our gross

margin and lower operating expenses will move us closer to profitability and improve our cash flow.

Our gross margin improvement plan

includes, but is not limited to, efforts to reduce product costs while increasing the price of our products for new orders.

new orders during fiscal 2024 of approximately $50.3 million.

of June 30, 2024, we had an existing cash balance of $0.6 million, $2.2 million remaining available under our $16.0 million GBC

Credit Facility subject to borrowing base limitations, and $2.0 million was available from Cleveland Capital under our 2023

Subordinated LOC.

However, if the Company were to experience an event of default, as defined by the loan agreements,

as amended, such additional funds may not be made available.

April 2024 we notified GBC of a certain event of default with respect to our failure to maintain the EBITDA covenant for the

trailing three (3) month period ended April 30, 2024, (the “Default”).

On May 8, 2024, we received a waiver, which

waived the Default, subject to satisfaction of certain conditions, which have been met.

May 31, 2024, we entered into the Third Amendment to Loan and Security Agreement (the “Third Amendment”) with GBC which amended

certain terms of the Loan and Security Agreement dated July 28, 2023, including but not limited to amending the EBITDA Minimum financial

In consideration for the Third Amendment, we agreed to pay GBC a non-refundable amendment fee of $50,000 in cash (See

Note 8 – Notes Payable).

August 30, 2024, GBC agreed to waive our non-compliance with, and the effects of our non-compliance under, various representations,

financial covenants and non-financial covenants relating to our financial restatements (the “August Waiver”).

On January 17, 2025, GBC agreed to waive our non-compliance with, and the effects of our non-compliance under, various

representations, financial covenants and non-financial covenants relating to our financial restatements and our failure to maintain the

EBITDA Minimum for certain financial periods (the “January Waiver”).

As a result of the August Waiver and January Waiver, we expect that our revolving credit facility remains available subject to meeting certain

lending criteria under the Loan Agreement.

On January 22, 2025, we entered into Amendment No.

4 to Loan and Security Agreement (the “Fourth Amendment”)

with GBC which amended certain terms of the Loan and Security Agreement dated July 28, 2023, as amended, relating

to the EBITDA Minimum financial covenant of the Company.

In consideration for the Fourth Amendment, we agreed to pay GBC a non-refundable

amendment fee of $50,000 in cash, as follows:

(i) $25,000 shall be due and payable on March 1, 2025, and (ii) $25,000 shall be due and payable on

April 1, 2025.

of December 31, 2024, we believe that our existing cash, together with $6.3 million that currently remains available under our $16.0

million revolving line of credit with Gibraltar Business Capital (“GBC Credit Facility”), subject to borrowing base limitations,

and $1.0 million available under the subordinated line of credit (“Subordinated LOC”), will be not be sufficient to meet

our anticipated capital resources to fund planned operations for the next twelve (12) months.

See “Future Liquidity Needs”

below and Liquidity and Financial Condition in

Note 3 – Summary of Significant Accounting Policies to the audited consolidated financial

statements for additional information.

Year ended June 30,

2 unchanged sentences

$ (3,574,000 )

$ (23,893,000 )

Net cash used in investing activities

2 unchanged sentences

$ (1,736,000 )

Net cash used in operating activities was $3,574,000 for Fiscal 2023, compared

to net cash used in operating activities of $23,893,000 for Fiscal 2022.

The primary usages of cash

for the Fiscal 2023 were the net loss of $6,741,000 and increases in inventory, office lease payable, customer deposits, and other assets,

that were partially offset by non-cash operating costs, and increases in accounts payable and accrued expenses.

The primary usages of

cash for the Fiscal 2022 were the net loss of $15,609,000, increases in accounts receivable, inventory, and other assets, and decreases

in accounts payable, accrued expenses and office lease payable, that were partially offset by increases in customer deposits, deferred

revenue and non-cash operating costs.

Net cash used in investing activities for Fiscal 2023 was $1,024,000 and

consisted primarily of the costs of purchase of furniture and office equipment, warehouse equipment and other related costs.

Net cash used in investing activities for Fiscal 2022 was $797,000 and

consisted primarily of the costs of purchases of furniture and office equipment, computer software, warehouse equipment and other related

Net cash provided by financing activities was $6,492,000 for Fiscal 2023, which primarily consisted of $5,023,000

in net borrowings under the SVB Credit Facility, and $1,556,000 in net proceeds from sales of common stock under our

ATM offering.

cash provided by financing activities was $20,462,000 for Fiscal 2022, and primarily consisted of $13,971,000 in net proceeds from the

issuance of common stock in a registered offering completed in September 2021, $4,889,000 in net borrowings under the SVB Credit Facility,

and $1,602,000 in net proceeds from sales of common stock under our ATM Offering.

$ (4,228,000 )

cash used in operating activities was $4,798,000 during fiscal 2024, compared

to net cash used in operating activities of $3,574,000 and $23,893,000 during fiscal 2023 and 2022, respectively.

The primary uses of

cash during fiscal 2024 were the net loss of $8,333,000 and increases in inventory and accounts receivable, that were partially offset

by non-cash operating costs and an increase in accounts payable and accrued expenses combined.

primary uses of cash during fiscal 2023 were the net loss of $7,743,000,

as restated and increases in inventory, as restated, office lease payable, customer deposits and other assets, that were partially offset

by non-cash operating costs and an increase in accounts payable and accrued expenses combined.

primary uses of cash during fiscal 2022 were the net loss of $16,473,000,

as restated, increases in accounts receivable, inventory, as restated, and other assets, and decreases in accounts payable, accrued expenses

and deferred revenue, that were partially offset by increases in customer deposits, deferred revenue and non-cash operating costs.

cash used in investing activities during fiscal 2024 was $853,000, primarily due to purchases of furniture and office equipment, warehouse

equipment and other related costs.

cash used in investing activities during fiscal 2023 was $1,024,000, primarily due to purchases of furniture and office equipment, warehouse

equipment and other related costs.

cash used in investing activities during fiscal 2022 was $797,000, primarily due to purchases of furniture and office equipment, computer

software, warehouse equipment and other related costs.

cash provided by financing activities during fiscal 2024 was $3,915,000, primarily due to $3,922,000 in net borrowings under the GBC

Credit Facility and SVB Credit Facility.

cash provided by financing activities during fiscal 2023 was $6,492,000, primarily due to $5,023,000 in net borrowings under the SVB

Credit Facility, and $1,556,000 in net proceeds from sales of common stock under our ATM offering.

cash provided by financing activities during fiscal 2022 was $20,462,000, primarily due to $13,971,000 in net proceeds from the issuance

of common stock in a registered offering completed in September 2021, $4,889,000 in net borrowings under the SVB Credit Facility and

$1,602,000 in net proceeds from sales of common stock under our ATM Offering.

Liquidity Needs

have evaluated our expected cash requirements over the next twelve (12) months, which include, but are not limited to, investments

in additional sales and marketing and research and development, capital expenditures, and working capital requirements.

September 8, 2023, we believe that our existing cash of $1.8 million, cash from our future operations, funding available under our

$15.0 million GBC Credit Facility, under which $4.0 million is currently available, funds available under our Subordinated LOC of up

to $4.0 million, along with the forecasted improvement in the gross margin will enable us to fund our planned operations for at

least the next twelve (12) months.

As of September 8, 2023, $4.1 million remained available under our existing ATM Offering that

may be utilized subject to the volume of trading of our shares, the price of our stock, market conditions, and effectiveness of the

registration statement.

In addition, to support our operations and anticipated growth, we intend to continue to explore alternatives

to secure additional capital from a variety of current and new sources including, but not limited to, sales of our equity

We also continue to execute our cost reduction, sourcing, and pricing recovery initiatives in efforts to increase our

gross margin and improve cash flow from operations.

Although management believes that our existing cash and the additional

funding sources currently available to us under the lines of credit are sufficient to fund planned operations for the next twelve (12)

months, this is dependent our ability to successfully maintain and draw on our credit facilities.

Our ability to draw funds from the GBC

Credit Facility are subject to certain restrictions and covenants.

In addition, should there be any delays in the receipts of key component

parts, due in part to supply chain disruptions, our ability to fulfill the backlog of sales orders will be negatively impacted resulting

in lower availability of cash resources from operations.

In that event, we may be required to raise additional funds by issuing equity

or convertible debt securities.

If such funds are not available when required, management will be required to curtail investments in additional

sales and marketing and product development, which may have a material adverse effect on future cash flows and results of operations.

In addition, any unforeseen factors in the general economy beyond management’s control could potentially have negative impact on

the planned gross margin improvement plan.

the event we are required to obtain additional funds, there is no guarantee that additional funds will be available on a timely basis

or on acceptable terms.

To the extent that we raise additional funds by issuing equity or convertible debt securities, our stockholders

may experience additional dilution and such financing may involve restrictive covenants.

in additional sales and marketing and research and development, capital expenditures, and working capital requirements and have

determined that our existing cash resources are not sufficient to meet our anticipated needs during the next twelve (12) months,

from the filing of this annual report.

See Liquidity and Financial Condition in

Note 3 – Summary of Significant Accounting Policies to the audited consolidated financial statements for additional information.

of December 31, 2024, we had a cash balance of $1.0 million, funding available under our GBC Credit Facility under which up to $6.3

million is currently available, subject to borrowing base limitations, and funds available under our 2023 Subordinated LOC under

which $1.0 million is currently available.

Our operations have relied on our ability to successfully maintain and draw on our credit

ability to draw funds from the GBC Credit Facility is subject to certain restrictions, covenants and borrowing base limitations.

light of the recent Default under the GBC Credit Facility, the financial covenants in the Agreement were modified to help prevent

future defaults.

If we are unable to meet the conditions provided in the loan documents, the funds may not be available to us.

addition, our operations have been impacted by delays in new orders of its energy storage solutions due to corresponding deferrals

of new forklift purchases mainly caused by lower capital spending in the market sector that we serve and interest rate variability

affecting selected large customer fleets which have impacted its ability to meet projected revenue targets and generate cash from

Further, these events have placed pressure on our cash resources and raise substantial doubt about our ability to

continue as a going concern for the next twelve months following the filing date of this Annual Report on Form 10-K.

should there be any delays in the receipts of key component parts, due in part to supply change disruptions, our ability to fulfill the

backlog of sales orders will be negatively impacted resulting in lower availability of cash resources from operations.

In that event,

we may be required to raise additional funds by issuing equity or convertible debt securities.

If such funds are not available when required,

management will be required to curtail investments in new product development, which may have a material adverse effect on future cash

flows and results of operations and our ability to continue operating as a going concern.

See Liquidity and Financial Condition in

Note 3 – Summary of Significant Accounting Policies to the audited consolidated financial statements for additional information.

the event we are required to obtain additional funds, there is no guarantee that additional funds will be available on a timely

basis or on acceptable terms.

Our failure to timely file our fiscal 2024 annual report on form 10-K and subsequent fiscal 2025

interim quarterly reports on Form 10-Q means that we currently are ineligible to use a registration statement on Form S-3.

not be eligible to use a registration statement on Form S-3 again until we have timely filed all materials and reports required to

be filed pursuant to Section 13, 14 or 15(d) of the Securities Exchange Act of 1934 for a period of at least twelve (12) calendar

months immediately preceding the filing of a new registration statement on Form S-3.

The inability to use a Form S-3 registration

statement will limit our ability to raise capital through sales of our securities in a timely and cost-efficient manner.

extent that we raise additional funds by issuing equity, equity-linked or convertible debt securities, our stockholders may

experience additional dilution and such financing may involve restrictive covenants.

7A - QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

5 unchanged sentences

Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.

What changed 10-K

Item 7. Management’s Discussion and Analysis