What changed in this filing

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Item 1A. Risk Factors

2023-03-31 compared with 2022-03-31 · 78 added, 79 removed, 771 unchanged (17% of the section changed)

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If any of these

known or unknown risks or uncertainties actually occurs with material adverse effects on Polar Power, our business, financial condition,

results of operations and/or liquidity could be seriously harmed.

In that event, the market price for our common stock will likely decline,

and you may lose all or part of your investment.

known or unknown risks or uncertainties actually occurs with material adverse effects on us, our business, financial condition, results

of operations and/or liquidity could be seriously harmed.

In that event, the market price for our common stock will likely decline, and

you may lose all or part of your investment.

Related to Our Business and Industry

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COVID-19 pandemic has had a widespread and detrimental effect on the global economy, particularly in the U.S., and actions over the past

twelve months by public health and governmental authorities, businesses, other organizations and individuals to address the outbreak,

including travel bans and restrictions, quarantines, shelter in place, stay at home or total lock-down orders and business limitations

and shutdowns have materially negatively impacted, and could further materially adversely affect, our business, financial condition,

results of operations and cash flows.

The ultimate impact of the COVID-19 pandemic on our business and results of operations remains

unknown and will depend on future developments, which are highly uncertain and cannot be predicted with confidence, including the duration

and potential resurgence of the COVID-19 pandemic, repeat or cyclical outbreaks and any additional preventative and protective actions

that governments, or we or our customers, may direct, which may result in an extended period of continued business disruption and reduced

Any resulting financial impact cannot be reasonably estimated at this time, but we expect it will continue to have a material

impact on our business, financial condition and results of operations.

three years by public health and governmental authorities, businesses, other organizations and individuals to address the outbreak, including

travel bans and restrictions, quarantines, shelter in place, stay at home or total lock-down orders and business limitations and shutdowns

have materially negatively impacted, and could further materially adversely affect, our business, financial condition, results of operations

and cash flows.

The ultimate impact of the COVID-19 pandemic on our business and results of operations remains unknown and will depend

on future developments, which are highly uncertain and cannot be predicted with confidence, including the duration and potential resurgence

of the COVID-19 pandemic, repeat or cyclical outbreaks and any additional preventative and protective actions that governments, or we

or our customers, may direct, which may result in an extended period of continued business disruption and reduced operations.

Any resulting

financial impact cannot be reasonably estimated at this time, but we expect it will continue to have a material impact on our business,

financial condition and results of operations.

repercussions of the COVID-19 global pandemic has had and is likely to continue to have, a material and substantial adverse impact on

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to employee work locations, cancellation of certain marketing events and the implementation of a cost reduction program to reduce overhead.

During portions of 2021 we also implemented limited remote work policies for many employees, and the resources available to such employees

may not enable them to maintain the same level of productivity and efficiency.

Our increased reliance on remote access to our information

systems also increases our exposures to potential cybersecurity breaches.

We cannot provide any assurance that these actions, or any

other mitigating actions we may take, will help mitigate the impact of the COVID-19 pandemic on us.

During 2022, we kept following limited remote work policies for many employees, and the resources available to such employees may not

enable them to maintain the same level of productivity and efficiency.

Our increased reliance on remote access to our information systems

also increases our exposures to potential cybersecurity breaches.

We cannot provide any assurance that these actions, or any other mitigating

actions we may take, will help mitigate the impact of the COVID-19 pandemic on us.

we cannot provide any assurance that our assumptions used to estimate our liquidity requirements will remain accurate due to the unprecedented

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adversely affected even after the COVID-19 pandemic has materially subsided.

Terrorist attacks

and threats of war may impact all aspects of our operations, revenues, costs and stock price in unpredictable ways.

recent special military actions of the Russian Federation and its invasion of Ukraine and 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.

attacks and threats of war may impact all aspects of our operations, revenues, costs and stock price in unpredictable ways.

special military actions of the Russian Federation and its invasion of Ukraine and the resulting geopolitical uncertainty are likely

to continue to have a significant impact on the European Union, the United Kingdom and other countries, including the U.S.

that these military operations may expand beyond Ukraine 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 expected that interest rate hikes already announced by the FRB will occur in

2022, but the amount, timing, and frequency of such increases are not fully known at this time.

The Russian Federation has also

threatened increased cyberattacks as part of its recent actions which could affect the Bank and its customers.

Additionally, the

United States and European nations have imposed very significant financial sanctions on the Russian Republic, 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 trade

and make such transactions costlier to accomplish which could also negatively affect the Bank and its customers.

In response to

the Russian military actions, many businesses headquartered in the Eurozone and the United States have stopped doing business with Russia,

which may negatively affect the profitability of those companies.

The international turmoil has already had and may continue to

have a negative impact on the stock market generally and, in turn, on our stock price.

The full impact of the recent actions by the Russian

Federation regarding Ukraine 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.

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 expected that interest rate hikes already announced by the FRB will occur in 2023, but

the amount, timing, and frequency of such increases are not fully known at this time.

The Russian Federation has also threatened increased

cyberattacks as part of its actions which could affect us and our customers.

Additionally, the United States and European nations have

imposed very significant financial sanctions on the Russian Republic, 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 has slowed international trade and made such transactions costlier to accomplish which could

also negatively affect us and our customers.

In response to the Russian military actions, many businesses headquartered in the Eurozone

and the United States stopped doing business with Russia, which may negatively affect the profitability of those companies.

The international

turmoil has already had and may continue to have a negative impact on the stock market generally and, in turn, on our stock price.

full impact of the actions by the Russian Federation regarding Ukraine 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.

have incurred significant losses in the past and we may incur losses in the future, which may hamper our operations and impede us from

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have incurred significant losses in the past.

For the years ended December 31, 2021 and 2020, we incurred consolidated net losses of

For the years ended December 31, 2022 and 2021, we incurred net losses of

approximately $5.6 million and $1.4 million, respectively.

For the year ended December 31, 2022, we incurred a gross profit of approximately

$3.4 million, and for the year ended December 31, 2020, we incurred a gross loss of approximately $5.6 million.

$2.3 million, and for the year ended December 31, 2021, we incurred a gross profit of approximately $3.4 million.

We may incur net and

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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 and Toyota Corporation.

Engines from Yanmar and Toyota represented approximately 84%

and 6% of our total engines sold as a component of our DC power systems during 2021, respectively, and represented approximately 66%

and 18% of our total engines sold as components of our DC power systems during the same period in 2020, respectively.

We also use engines

from Isuzu, Perkins, Kubota and, to a lesser extent, Volvo Penta.

In December 2019, we received our certificate of conformity from the

EPA with respect to our small spark-ignition Toyota engines which will be used in our new LPG / natural gas generators.

The new Toyota

engine serves as our primary engine in our new LPG products which were launched in 2020.

In January 2022, we applied for 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 suppliers.

If any of these engine suppliers were to fail to provide emissions certified engines in a

timely manner or fail to supply engines that meet our quality, quantity or cost requirements, or were to discontinue manufacturing any

engines we source from them or discontinue providing any of these engines to us, or the supply chain is interrupted or delayed as a result

of the COVID-19 pandemic or unprecedented event, 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 key engine suppliers, Yanmar Engines Company, Perkins Engines Company Ltd, and Toyota Corporation.

Engines from Yanmar, Perkins,

and Toyota represented approximately 54%, 37%, less than 1% of our total engines sold as a component of our DC power systems during 2022,

respectively, and represented approximately 84%, 3%, and 6% of our total engines sold as components of our DC power systems during the

same period in 2021, respectively.

We also use engines from Isuzu, Kubota and, to a lesser extent, Volvo Penta.

In December 2019, we

received our certificate of conformity from the EPA with respect to our small spark-ignition Toyota engines which will be used in our

new LPG / natural gas generators.

The new Toyota engine serves as our primary engine in our new LPG products which were launched in 2020.

In January 2022, we applied for 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 suppliers.

If any of these engine suppliers

were to fail to provide emissions certified engines in a timely manner or fail to supply engines that meet our quality, quantity or cost

requirements, or were to discontinue manufacturing any engines we source from them or discontinue providing any of these engines to us,

or the supply chain is interrupted or delayed as a result of the COVID-19 pandemic or unprecedented event, 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

increases in some of the key components in our DC power systems could materially and adversely affect our operating results and cash

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or potential acquirers to obtain control of our board of directors or initiate actions that are opposed by the then-current board of

directors and could also delay or impede a merger, tender offer or proxy contest involving Polar Power, Inc.

These provisions could also

discourage proxy contests and make it more difficult for you and other stockholders to elect directors of your choosing or cause us to

take other corporate actions you desire.

Any delay or prevention of a change of control transaction or changes in our board of directors

could cause the market price of our common stock to decline.

directors and could also delay or impede a merger, tender offer or proxy contest involving us.

These provisions could also discourage

proxy contests and make it more difficult for you and other stockholders to elect directors of your choosing or cause us to take other

corporate actions you desire.

Any delay or prevention of a change of control transaction or changes in our board of directors could cause

the market price of our common stock to decline.

certificate of incorporation designates the Court of Chancery of the State of Delaware as the sole and exclusive forum for certain types

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would result in increased fixed payment obligations and could also result in certain restrictive covenants, such as limitations on our

ability to incur additional debt and other operating restrictions that could adversely impact our ability to conduct our business.

failure to obtain adequate funds may cause us to curtail certain operational activities, including sales and marketing, in order to reduce

costs and sustain the business, and would have a material adverse effect on our business and financial condition.

ability to incur additional debt and other operating restrictions that could adversely impact our

ability to conduct our business.

A failure to obtain adequate funds may cause us to curtail certain operational activities, including

sales and marketing, in order to reduce costs and sustain the business, and would have a material adverse effect on our business and

financial condition.

our 2016 Omnibus Stock Incentive Plan, as amended, or 2016 Plan, we may grant equity awards covering up to 1,754,385 shares of our common

As of December 31, 2021, we had granted options to purchase an aggregate of 140,000 shares of common stock under the 2016 Plan.

We have registered 1,754,385 shares of common stock available for issuance under our 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

As of December 31, 2022, we had granted options to purchase an aggregate of 140,000 shares

of common stock and issued 161,347 shares of common stock as stock-based compensation to officers, employees and consultants under the

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.

issuance of shares of preferred stock could adversely affect the market value of our common stock, dilute the voting power of common

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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 1A. Risk Factors