What changed in this filing

/stocks — the workspaceLOADING

Item 5. Market for Registrant’s Common Equity

2023-03-31 compared with 2022-03-31 · 176 added, 189 removed, 224 unchanged (62% of the section changed)

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We are selling our products into non-telecommunication markets and applications at an increasing rate.

the telecommunications market, our DC power systems provide reliable and low-cost DC power to service applications that do not have access

to the utility grid (i.e., prime power applications) or have critical power needs and cannot be without power in the event of utility

grid failure (i.e., back-up power applications).

the various markets we service, our DC power systems provide reliable and low-cost DC power to service applications that do not have

access to the utility grid (i.e., prime power applications) or have critical power needs and cannot be without power in the event of

utility grid failure (i.e., back-up power applications).

the years ended December 31, 2022 and 2021, 96% and 89%, respectively, of our total net sales were within the telecommunications market.

In 2021, we had 67% of our total net sales derived from our largest customer, which is a Tier-1 telecommunications customer in the U.S.

In 2020, our three largest customers represented 52%, 15%, and 14% of our total net sales, respectively, two being telecommunications

customers in the U.S.

In 2022, our two largest customers represented 66% and 23% 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.

There was no other revenue from customers in excess

In 2021, we had 67% of our total net sales derived

from our largest customer, which is a Tier-1 telecommunications customer in the U.S There was no other revenue from customers in excess

of 10% of total net sales in either period.

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2022 and 2021, sales to international customers accounted for 25% and 8% of total revenue, respectively.

sales are growing and adding to our customer diversification.

During the years ended December 31, 2021 and 2020, military customers accounted

for 6% and 1% of total net sales, respectively.

The military’s increasing use of robotics, drones, and digitization in the field

is driving the demand for battery charging with DC generators.

We believe increased sales to military customers provides us long-term

visibility on product demand while helping us understand future commercial uses of our technologies.

Historically we have always worked

closely with military to jointly develop next generation of technologies and product configurations which later result in commercial

Military sales are advantageous because of their long-term contracts, and they provide funding to cover the cost of product development.

Sales to military customers

during 2022 and 2021 accounted for 1% and 6% of total revenues, respectively.

During 2022 and 2021, sales to other markets accounted

for 3% and 5% of total revenue, respectively.

Mobility applications require power to charge batteries and appliances within a vehicle.

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in weight, and operate with greater efficiency than AC power systems, making our product ideal for these applications.

Our advance mobility

sales for 2021 and 2020, represented 7% and 2% of total net sales, of which 66% and 79% are included in net sales to military customers,

respectively.

Our backlog as of December 31, 2021 includes $3.2 million in orders for DC power systems from a single customer in United

States for use to charge stored batteries within a commercial vehicle while providing energy to operate appliances installed in the vehicle.

have supplied our DC generators to many automotive manufactures in support of their remote field testing of electric vehicles.

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we have sold a limited number of our DC power systems that are undergoing field trials.

expect that opportunities in the bad-grid (i.e., areas where wireless towers are connected to an electrical grid that loses power more

than eight hours), and off-grid (i.e., areas where wireless towers are not connected to an electrical grid) applications, which 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.

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 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.

We plan to develop new configurations of DC power system, battery storage and solar products to optimize the match between our solutions

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base power systems .

These systems integrate a DC generator and automated controls with remote monitoring, which are typically

contained within an environmentally regulated enclosure.

These stationary systems integrate a DC generator and automated controls with remote monitoring, which

are typically contained within an environmentally regulated enclosure.

hybrid power systems .

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solar hybrid power systems .

These systems incorporate photovoltaic and other sources of renewable energy into our DC hybrid

power system.

These stationary systems incorporate photovoltaic and other sources of renewable energy into

our DC hybrid power system.

power systems .

These stationary systems incorporate photovoltaic and other sources

of renewable energy into our DC hybrid power system.

DC power systems are available in diesel, natural gas, LPG / propane and renewable formats, with diesel, natural gas and propane gas

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is reasonably assured.

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 of total revenues for the years ended December 31, 2022 and 2021.

We provide limited warranties for parts and labor at no cost to our customers within a specified time period after the sale.

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Compensation.

We periodically issue stock-based compensation to officers, directors, and consultants for services rendered.

issuances vest and expire according to terms established at the issuance date.

Stock-based payments to employees, directors, and for

acquiring goods and services from nonemployees, which include grants of employee stock options, are recognized in the financial statements

based on their grant date fair values in accordance with ASC 718, Compensation-Stock Compensation .

Stock option grants to employees,

which are generally time vested, are measured at the grant date fair value and depending on the conditions associated with the vesting

of the award, compensation cost is recognized on a straight-line or graded basis over the vesting period.

Recognition of compensation

expense for non-employees is in the same period and manner as if we had paid cash for the services.

The fair value of stock options granted

is estimated using the Black-Scholes option-pricing model, which uses certain assumptions related to risk-free interest rates, expected

volatility, expected life, and future dividends.

The assumptions used in the Black-Scholes option pricing model could materially affect

compensation expense recorded in future periods.

We periodically issue stock-based compensation to officers, directors, employees, and consultants for services rendered.

Such issuances vest and expire according to terms established at the issuance date.

payments to officers, directors, employees, and for acquiring goods and services from nonemployees, which include grants of employee

stock options, are recognized in the financial statements based on their grant date fair values in accordance with ASC 718, Compensation-Stock

Compensation .

Stock option grants to officers, directors, employees, and consultants, which are generally time vested, are measured

at the grant date fair value and depending on the conditions associated with the vesting of the award, compensation cost is recognized

on a straight-line or graded basis over the vesting period.

Recognition of compensation expense for non-employees is in the same period

and manner as if we had paid cash for the services.

The fair value of stock options granted is estimated using the Black-Scholes option-pricing

model, which uses certain assumptions related to risk-free interest rates, expected volatility, expected life, and future dividends.

The assumptions used in the Black-Scholes option pricing model could materially affect compensation expense recorded in future periods.

impact of inflation and changing prices during 2022 has not been significant on the financial condition or results of operations of our

Recent geopolitical factors and rapid changes in the global economy may cause significant

spikes in inflation which may have an impact in our financial condition during 2022 and beyond.

Because some of our contracts are at

a fixed price, we face the risk that cost overruns or inflation may exceed, erode or eliminate our expected profit margin, or cause us

to record a loss on certain projects.

We are taking actions to manage the potential impacts of these matters and we will continue to

assess the actual and expected impacts and the need for further action.

Rapid changes in the global economy may cause significant spikes in inflation which may

have an impact in our financial condition during 2023 and beyond.

Because some of our contracts are at a fixed price, we face the risk

that cost overruns or inflation may exceed, erode or eliminate our expected profit margin, or cause us to record a loss on certain projects.

We are taking actions to manage the potential impacts of these matters and we will continue to assess the actual and expected impacts

and the need for further action.

of Recent Accounting Pronouncements

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a net loss of $5,584 for 2022, as compared to net loss of $1,414 for 2021.

We believe this increase in revenues is primarily due to

our Tier-1 telecommunications customers increasing their investments in back-up power generators primarily to support expansion of their

5G network infrastructure.

We also believe a reduction of COVID-19 safety restrictions and increasing vaccinations have improved our

customers’ ability to deploy new systems.

2021, our international sales were $1,278, as compared to $1,522 during 2020.

Our revenues during these periods are primarily due to our

telecommunications customers increasing their investments in back-up power generators primarily to support expansion of their network

infrastructure.

shortages caused by COVID-19 and supply chain constraints that affected timely delivery of raw materials required to complete our DC

power systems resulted in approximately $3,500 of expected shipments to be postponed from 2022 to the first half of 2023.

2022, our international sales increased 211% to $3,983, as compared to $1,279 during 2021.

The increase in international sales is primarily

due to a new telecommunications customer in the South Pacific Islands.

sales backlog as of December 31, 2022, was $12,001, with 47% of that amount being attributable to our largest U.S.

telecommunications

customer, 27 % represented purchase orders for advanced mobility applications, and 1 % represented

purchase orders to customer in other markets.

The recent increase in our backlog is as a result of U.S.

Tier-1 wireless carriers increasing

their orders of our DC backup power systems.

September 2021, we received notice from Citibank that our request for forgiveness of the Paycheck Protection Program (PPP) loan was approved.

Our PPP loan was forgiven and we recognized a non-cash gain of $1.7 million within Other income (expense) on the statement of operations

for the year ended December 31, 2021.

customer, 16% represented purchases from other telecommunications customers in the U.S., 32 % represented

purchases from telecommunications customers outside the U.S., 1 % represented purchase from customers in the marine industry, 1%

represented purchases from customers in the military markets, and 3% represented purchases from customer in other markets.

plan to continue to expand our customer base in all market segments.

We also anticipate that our sales will increase as the global economy

recovers from the impact of the COVID-19 pandemic.

However, the full impact on our financial and operating performance of the COVID-19

pandemic along with recent geopolitical factors and increasing inflation concerns 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 16 of this Annual Report on Form 10-K for additional considerations.

We also anticipate that our sales will increase as we overcome supply

chain and labor issues.

We plan to continue to take proactive steps to manage our operations and mitigate the financial impacts of higher

costs and supply chain issues.

However, the full impact on our financial and operating performance of the COVID-19 pandemic along with

geopolitical factors and increasing inflation concerns 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 16 of this Annual Report

on Form 10-K for additional considerations.

of Operations

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Cost of sales

Gross profit (loss)

Sales and marketing expenses

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Loss before income taxes

Income tax benefit

Net sales increased by $7,865, or 87%, to $16,896 for the year ended December 31, 2021, as compared to $9,031 for the year

ended December 31, 2020.

The increase was primarily due to an increase in sales of our DC power systems to U.S.

Net sales decreased by $840, or 5%, to $16,056 for the year ended December 31, 2022, as compared to $16,896 for the year ended

December 31, 2021.

During 2022 we experienced labor shortages caused by COVID-19 and delays in receiving key components as a result of

supply chain constraints.

revenue from telecommunications customers, accounted for 96% of total net sales during 2022 and 89% of total net sales during 2021.

largest customers during 2022 represented 66% and 23% of our total net sales, respectively, one being a U.S.

Tier-1 telecommunications

Tier-1 telecommunications customers accounted for 70% of our total net sales during 2021, as compared to 62% of total

net sales in 2020.

revenue from telecommunications customers, U.S.

and international, accounted for 89% of total net sales during 2021 and 96% of total

net sales during 2020.

Our largest customer during 2021 is in the telecommunications industry and accounted for 67% of total net sales

for 2021, as compared to our three largest customers in 2020, also customers in the telecommunications industry, each accounting for

52%, 15%, and 14 of total net sales.

There was no other revenue from customers in excess of 10% of total net sales in either period.

Net sales to international customers in 2021 and 2020, represented 8% and 17% of total net sales, respectively.

believe the increase in revenues during 2021 is primarily due to our Tier-1 telecommunications customers increasing their investments

in back-up power generators primarily to support expansion of their 5G network infrastructure.

We also believe a reduction of COVID-19

safety restrictions and increasing vaccinations have improved our customers’ ability to deploy new systems.

Cost of sales decreased by $1,203, or 8%, to $13,451 during 2021, compared to $14,654 during 2020.

customer and one being a telecommunications customer outside the U.S.

In 2021, our largest customer, a Tier-1 telecommunications customer

in the U.S., represented 67% of our total net sales.

There was no other revenue from customers in excess of 10% of total net sales in

either period.

2022 and 2021, sales to international customers accounted for 25% and 8% of total revenue, respectively.

Sales to military customers

during 2022 and 2021 accounted for 1% and 6% of total revenues, respectively.

Sales to other markets during 2022 and 2021 accounted for

3% and 5% of total revenue, respectively.

Most of our sales were of our DC base powers systems during the two years.

Cost of sales increased by $480, or 4%, to $13,931 during 2022, compared to $13,451 during 2021.

Cost of sales as a percentage

of net sales decreased from 162.2% in 2020 to 79.6% in 2021 as a result of improved labor efficiencies and increased absorption of manufacturing

overhead resulting from higher volume in net sales in 2021.

We were able to capitalize on inherent manufacturing efficiencies resulting

from larger production volumes to meet delivery commitments.

In 2020, an inventory reserve of $3,400 has been recorded in cost of

of net sales increased from 79.6% in 2021 to 86.8% in 2022 as a result of a decrease in factory overhead absorption due to under-utilization

of the production capacity as a result of labor shortages and supply chain constraints.

We believe we will achieve significant reductions

in the cost of sales as a percentage of net sales as supply chain constraints decrease and production increases to normal levels.

cost of sales for 2021 includes a $1,300 credit to salaries and benefits expense related to the Employee Retention Credit (“ERC”),

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to keep workers on the payroll and eligible businesses received a tax credit for a percentage of each eligible employee’s wage.

Profit (Loss) .

We recognized a gross profit of $3,445 during 2021, as compared to a gross loss of $5,623 during 2020, which represents

an increase in gross profit of $9,068 or 161%.

Gross profit as a percentage of net sales increased to 20.4% in 2021, as compared to (62.2)%

The increase in gross profit as a percentage of net sales during 2021 was primarily due an 87% increase in net sales in 2021

while keeping cost of sales relatively flat to 2020 levels resulting from improved labor efficiencies and increased absorption of manufacturing

In addition, gross profit includes a $1,300 credit to salaries and benefits expense related to the ERC as explained

in cost of sales.

We recognized a gross profit of $2,125 during 2022, as compared to a gross profit of $3,445 during 2021, which represents

a decrease in gross profit of $1,320 or 38%.

Gross profit as a percentage of net sales decreased to 13.2% in 2022, as compared to 20.4%

The decrease in gross profit during 2022 was primarily attributable to a decrease in factory

overhead absorption resulting from lower sales primarily during the third quarter of 2022.

and Marketing Expenses.

Sales and marketing expenses decreased $17 to $1,471 during 2022, as compared to $1,488 during 2021.

decrease was attributable to a slight decrease in fringe benefits expense during 2021 as compared the same period in 2020.

The reduction

in fringe benefits provided for an increase in marketing and tradeshow activities for our DC power systems as part of our ongoing strategy

to expand our customer base.

decrease was attributable to a slight decrease in sales support staff during 2022 as compared the same period in 2021.

We plan to increase

our sales force and increase our marketing and tradeshow activities in 2023 to support our diversification strategy and expand our customer

base in all market segments.

and Development Expenses.

During 2021, research and development expenses increased by $263 to $1,986, as compared to $1,723 during

The increase in 2021 is attributed to an increase in engineering staff and increased investments in several research and development

projects, including customized designs for advanced mobility power applications and for our natural gas/LPG product lines of generators

and hybrid power systems which included our new 20 to 30 kW generator based on a larger Toyota engine.

During 2022, research and development expenses decreased by $526 to $1,460, as compared to $1,986 during

The decrease in 2022 is attributed to a decrease in engineering staff during 2022 as compared to 2021.

Our research and development

efforts during 2022 focused on developing our new 27 kW D.C.

power system, our new 4Y Toyota engine control system, and on product design

and customization for our international customers.

We plan to recruit additional engineers during 2023 to support new product developments

and our customer diversification efforts.

and Administrative Expenses .

Our general and administrative expenses decreased by $993 to $3,069 during 2021, as compared to $4,062

The decrease was primarily due to a decrease in in legal and consulting fees in 2021 when compared to 2020.

incurred $248 in legal and brokerage fees related to a private placement equity raise and $77 in loan origination expenses related to

our credit facility with Pinnacle Bank.

general and administrative expenses for 2021 includes a $700 credit to salaries and benefits expense related to the ERC, a refundable

Our general and administrative expenses increased by $1,658 to $4,727 during 2022, as compared to $3,069

The increase was primarily due to $515 in stock-based compensation to officers, employees and consultants, an increase of

$168 in legal and consulting fees, and smaller increases to insurance, rent, and utilities.

general and administrative expenses for 2021 include a $700 credit to salaries and benefits expense related to the ERC, a refundable

tax credit recorded in accounts receivable.

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In 2022, our equipment financing expense decreased

by $14, bank fees related to our line of credit with Pinnacle Bank increased by $25, and bank fees from the Citibank Supplier Agreement

decreased by $11 in 2021 as a result of closing this account mid-year.

by $11, bank fees related to our line of credit with Pinnacle Bank increased by $9.

from PPP Loan Forgiveness .

In September 2021, we recognized a non-cash gain of $1,715

within Other income (expense) on the consolidated statement of operations on the forgiveness of our PPP loan.

In September 2021, we recognized a non-cash gain of $1,715 within

Other income (expense) on the consolidated statement of operations on the forgiveness of our PPP loan.

Income (Expense), Net.

During 2021, other income was $29, as compared to $14 during 2020, an increase of $15.

The increase was primarily

During 2022, other income was $7, as compared to $29 during 2021, an decrease of $22.

The decrease was primarily

attributable to refunds of general liability insurance paid during 2021.

Tax Benefit .

During 2021, we did not recognize any benefit from income taxes.

In 2020, we recognized a benefit from income taxes

of $2,139 attributable to refundable federal and state income taxes.

As a result of the factors identified above, we generated a net loss of $1,414 for 2021, as compared to net loss of $10,871

for 2020, a decrease loss of $9,457.

The decrease in net loss is primarily attributed to an increase in net sales of our of DC power

systems to US telecommunications customers and lower cost of sales as a percentage of total net sales resulting from improved labor efficiencies

and increased absorption of manufacturing overhead in 2021.

As a result of the factors identified above, we generated a net loss of $5,584, or ($0.43) per basic and diluted share, for

2022, as compared to net loss of $1,414, or ($0.11) per basic and diluted share, for 2021, an increase loss of $4,170.

The increase in

net loss is primarily attributed to a decrease in net sales of $840 due to labor shortages and supply chain constraints during 2022,

an increase in operating expenses of $1,115, coupled with the gain from forgiveness of the PPP loan in 2021.

and Capital Resources

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These funds were also used to increase our engineering

staff and inventory to support research and development projects and the launch of our new line of LPG / natural gas generators.

December 31, 2021, we had working capital of $21,760, as compared to working capital of $10,123 at December 31, 2020.

This $11,637 increase

in working capital is primarily attributable to a $3,455 increase in cash and cash equivalents resulting from net cash of $9,380 used

in operating activities, net cash used in investing activities of $71 from the acquisition of new property and equipment, and net cash

from financing activities of $12,906 which includes net proceeds of $12,466 from closing an underwritten public offering of 750,000

shares of common stock in February 2021.

In addition, we received net proceeds of $707 from the exercise of certain of our common stock

and production staff and inventory to support higher production.

As of December 31, 2022, we had working capital of $17,367, as compared

to working capital of $21,760 at December 31, 2021.

This $4,393 decrease in working capital is primarily attributable to a $4,890 decrease

in cash and cash equivalents resulting from net cash of $6,507 used in operating activities, net cash used in investing activities of

$25 for the acquisition of new property and equipment, and net cash from financing activities of $1,642 which includes net proceeds of

$1,884 from our credit facility and $242 in repayments of equipment financing.

December 31, 2022, and December 31, 2021, our net trade receivables totaled $2,230 and $4,243, respectively.

On December 31, 2022, $2,006

(74%) and $624 (15%) represented the two largest open customer account balances, while $1,041 (87%) and $53 (5%) represented the two

largest open customer account balances on December 31, 2020.

December 31, 2021, we recognized $2,000 related to the ERC for salaries and benefits expenses incurred during 2021 resulting

in a refundable tax credit.

The ERC assist business owners and their employees by providing an incentive to keep workers on the payroll

and eligible businesses received a tax credit for a percentage of each eligible employee’s wage.

(90%) represented the largest open customer account balance, while $3,131 (74%) and $624 (15%) represented the two largest open customer

account balances on December 31, 2021.

December 31, 2021, we recognized $2,000 related to the ERC for salaries and benefits expenses incurred during 2021 resulting in a refundable

The ERC assist business owners and their employees by providing an incentive to keep workers on the payroll and eligible

businesses received a tax credit for a percentage of each eligible employee’s wage.

As of December 31, 2022, the ERC is still being

processed by the IRS.

available capital resources on December 31, 2022, consisted primarily of $211 in cash and cash equivalents, as compared to $5,101 as

of December 31, 2021.

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.

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, funds from the ERC, and future debt or equity financings, if any.

September 30, 2020, we entered into a Loan and Security Agreement, or Loan Agreement, with Pinnacle.

The Loan Agreement provides for

a revolving credit facility under which Pinnacle may, in its sole discretion upon our request, make advances to us in an amount, subject

to certain limitations and adjustments, of up to (a) 85% of the aggregate net face amount of our accounts receivable and other contract

rights and receivables, plus (b) the lesser of (i) 35% of the lower of cost or wholesale market value of certain of our inventory or

In no event will the aggregate amount of the outstanding advances under the revolving credit facility be greater than $4,000.

The Loan Agreement was amended by

the First Modification to Loan and Security Agreement on October 7, 2020.

The Loan Agreement’s initial term ended on September

On November 3, 2022, we executed the Second Modification to Loan and Security Agreement with Pinnacle for a two-year term with

an expiration date of September 30, 2024.

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 us in an amount, subject to certain limitations and adjustments, of up

to (a) 85% of the aggregate net face amount of our accounts receivable and other contract rights and receivables, plus (b) the lesser

of (i) 35% of the lower of cost or wholesale market value of certain of our inventory or (ii) $2,500.

In no event will the aggregate

amount of the outstanding advances under the revolving credit facility be greater than $4,000.

accrues on the daily balance at a rate of 1.25% above the prime rate, or the Standard Interest Rate, but in no event will the Standard

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of the end of each fiscal quarter.

did not have an outstanding balance under the Loan Agreement at December 31, 2021, and 2020.

have an outstanding balance of $1,884 under the Loan Agreement at December 31, 2022.

As of December 31, 2022, we had availability

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noticed from Citibank indicating that the SBA rendered final decision approving loan forgiveness in the amount of $1,715.

we recognized a non-cash gain of $1,715 within Other income (expense) on the statement

of operations.

we recognized a non-cash gain of $1,715 within Other income (expense) on the statement of operations.

following table sets forth the significant sources and uses of cash for the periods set forth below (in thousands):

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cash used in operating activities for 2022 was $6,507, as compared to $9,380 for the same period in 2021.

This increase in net cash

used in 2021 was primarily due to a net loss of $1,414, an increase in accounts receivable of $3,053, recognition of employee

retention credit receivable of $2,000, an increase in prepaid expenses of $3,648 primarily for Toyota engines, a gain on the

forgiveness of PPP loan payable of $1,715, offset with a decrease in income tax receivable of $1,570.

December 31, 2021, we recognized $2.0 million related to the ERC for salaries and benefits expenses incurred during 2021

resulting in a refundable tax credit.

Of this amount, cost of sales was reduced by $1.3 million as a result of the ERC, and general &

administrative expenses was reduced by $0.7 million as a result of the ERC.

The ERC assist business owners and their employees by providing

an incentive to keep workers on the payroll and eligible businesses received a tax credit for a percentage of each eligible employee’s

This increase in net cash used

in 2022 was primarily due to a net loss of $5,584, a decrease in accounts receivable of $2,013, a decrease in prepaid expenses of $1,377,

an increase in inventories of $6,443, and an increase in customer deposits of $1,229.

December 31, 2021, we recognized $2.0 million related to the ERC for salaries and benefits expenses incurred during 2021 resulting in

a refundable tax credit.

Of this amount, cost of sales was reduced by $1.3 million as a result of the ERC, and general & administrative

expenses was reduced by $0.7 million as a result of the ERC.

The ERC assist business owners and their employees by providing an incentive

to keep workers on the payroll and eligible businesses received a tax credit for a percentage of each eligible employee’s wage.

cash used in investing activities for 2022 totaled $25, as compared to $71 for 2021, an increase of $46.

The net cash used in investing

activities in 2020 was attributable to a slight increase in new manufacturing equipment.

cash provided by financing activities totaled $12,906 for 2021, as compared to $5,373 provided by financing activities during 2020, an

increase of $7,533.

This increase was primarily due to the issuance and sale of 750,000 shares of our common stock in a firm commitment

activities in 2022 was attributable to in new manufacturing equipment.

cash provided by financing activities totaled $1,642 for 2022, as compared to $12,906 provided by financing activities during 2021, a

decrease of $11,264.

This decrease was primarily due to the issuance and sale of 750,000 shares of our common stock in a firm commitment

underwritten public offering on February 10, 2021.

We received net proceeds of approximately $12,466 from the sale of the shares

after deducting underwriting discounts and commissions and other offering expenses payable by us.

In addition, we received net proceeds

of $707 from the exercise of common stock warrants issued in our July 2020 private placement.

We received net proceeds of approximately $12,466 from the sale of the shares after

deducting underwriting discounts and commissions and other offering expenses payable by us.

During 2022, we received $1,884 in proceeds

from advances from our credit facility at Pinnacle Bank and repaid $242 on our equipment financing notes payable..

of December 31, 2022, we had a backlog of $12,001.

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.

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, 2022, was comprised of the following elements:

72% in purchases of DC power systems by telecommunications customers in the U.S., 27% in purchases by our advanced mobility customer

for commercial vehicles, and 1% in purchases customers in other markets.

Due to overall shortage of commodities worldwide caused by COVID,

our largest customers have placed orders with delivery dates up to nine months in the future.

We believe this provides us better control

on operational efficiencies and inventory management.

We believe the majority of our backlog will be shipped within the next 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.

purchases of DC power systems by telecommunications customers in the U.S., 32% in purchases by telecommunications customers outside the

U.S., 1% in purchases by customers in the marine industry, 1% in purchases in military markets, and 3% in purchases by customers in other

Due to overall shortage of commodities worldwide caused by COVID, our largest customers have placed orders with delivery dates

up to nine months in the future.

We believe this provides us better control on operational efficiencies and inventory management.

believe the majority of our backlog will be shipped within the next 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.

Quantitative and Qualitative Disclosures About Market Risk.

3 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 5. Market for Registrant’s Common Equity