What changed in this filing

/stocks — the workspaceLOADING

Item 9A. Controls and Procedures

2024-04-01 compared with 2023-03-31 · 410 added, 520 removed, 1448 unchanged (39% of the section changed)

Controls and Procedures.

and Procedures.

of Disclosure Controls and Procedures

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likely to materially affect, our internal control over financial reporting.

Other Information

Disclosure Regarding Foreign Jurisdictions that Prevent Inspections.

Directors, Executive Officers and Corporate Governance.

Regarding Foreign Jurisdictions that Prevent Inspections.

Executive Officers and Corporate Governance.

Officers and Directors

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the Keller Graduate School of Management, Long Beach.

Masina served as our Chief Operating Officer from April 2018 until January 2022 and previously served as our Vice President Operations

from August 2009 to April 2018.

On January 10, 2022, Rajesh Masina notified us of his resignation

from the position of our Chief Operating Officer, effective January 21, 2022.

Masina’s resignation from the Company was not

a result of any disagreement with the Company on any matter related to its operations, policies or practices.

Albrecht has served as a member of our Board since May 2016 and serves as a member of each of our Audit Committee, Compensation Committee

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into analysis of financial statements, debt analysis, and risk oversight.

Gross has served as a member of our Board since December 2018 and serves as a member of each of our Audit Committee, Compensation

Committee and Nominating and Corporate Governance Committee.

Gross is a technology and energy internationally recognized expert whose

career spans over three decades.

He has been the managing partner of PMG Associates, a consulting and advisory firm since August 2019.

In addition, he sits on several boards of directors and boards of advisors for public, private and not-for-profit companies.

PMG Associates, Mr.

Gross served as the Vice President of Mission Critical Systems at Bloom Energy, a fuel cell power systems company

located in Sunnyvale, California.

Gross holds a master’s degree in Electrical Engineering from Polytechnic Institute of Bucharest

and an MBA from California State University at Dominguez Hills.

Gross is also a member of the Advisory Board of UCLA’s Institute

of Environment and Sustainability and a member of Southern Methodist University’s Data Center System Engineering Board of Advisors.

In nominating Mr.

Gross, our Board considered his significant engineering experience in the power systems industry, especially for data

center and telecommunications applications.

Our Board believes that Mr.

Gross will provide critical leadership as we expand our DC power

systems within the data and military markets.

nominating Mr.

Gross, our Board considered his Board and executive level leadership, his extensive energy industry expertise, and experience

with global publicly traded companies as key attributes in his selection.

Our Board believes that Mr.

Gross will provide critical leadership

as we expand our DC power systems within the data and military markets.

Gross served as a member of our Board since December 2018 and a member of each of our Audit Committee, Compensation Committee and

Nominating and Corporate Governance Committee.

On December 18, 2023, Peter Gross notified us of his resignation from the position Board

member of our Audit Committee, Compensation Committee and Nominating and Corporate Governance Committee, effective December 18, 2023.

Gross’ resignation from the Company was not a result of any disagreement with the Company on any matter related to its operations,

policies or practices.

Koster has served as a member of our Board since December 2019 and serves as a member of each of our Audit Committee and Nominating

and Corporate Governance Committee.

Koster has been in the field of public finance for over 28 years and is a managing director in

Debt Capital Markets for Hilltop Securities, LLC, where she assists municipalities and developers in accessing the capital markets to

Koster has been in the field of public finance for over 28 years and is a senior managing director

and regional manager for Hilltop Securities, LLC, where she assists municipalities and developers in accessing the capital markets to

fund critical infrastructure since February 2022.

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corporate governance program at the UCLA Anderson School of Management.

Koster holds the SIE, Series 7, and Series 79TO licenses

issued by the Financial Industry Regulatory Authority, Series 50, 52TO and Series 53 licenses issued by the Municipal Securities Rulemaking

Board and a Series 63 certificate issued by the North American Securities Administrators Association.

Koster holds the SIE, Series 7, Series 24 and Series 79TO

licenses issued by the Financial Industry Regulatory Authority, Series 50, 52TO and Series 53 licenses issued by the Municipal Securities

Rulemaking Board and a Series 63 certificate issued by the North American Securities Administrators Association.

nominating Ms.

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any of our directors or executive officers.

board of directors currently consists of four members:

Sams, Keith Albrecht, Peter Gross, and Katherine Koster.

Our directors

hold office until their successors have been elected and qualified or until the earlier of their resignation or removal.

board of directors currently consists of three members:

Sams, Keith Albrecht, and Katherine Koster.

Our directors hold office

until their successors have been elected and qualified or until the earlier of their resignation or removal.

certificate of incorporation and bylaws provide that the authorized number of directors may be changed only by resolution of the entire

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members of our Audit Committee are Messrs.

Albrecht and Gross and Ms.

Albrecht and Ms.

Albrecht is the chair of the Audit Committee.

member of the Audit Committee satisfies the heightened audit committee independence requirements under the Nasdaq Listing Rules and Rule

10A-3 of the Exchange Act.

Each member of

the Audit Committee satisfies the heightened audit committee independence requirements under the Nasdaq Listing Rules and Rule 10A-3

of the Exchange Act.

In addition, our board of directors has determined that Mr.

Albrecht qualifies as an audit committee financial

expert, as that term is defined under SEC rules, and possesses the requisite financial sophistication, as defined under the Nasdaq Listing

Our Audit Committee assists our board of directors in its oversight of our accounting and financial reporting process and the

audits of our financial statements.

Albrecht qualifies as an audit committee financial expert,

as that term is defined under SEC rules, and possesses the requisite financial sophistication, as defined under the Nasdaq Listing Rules.

Our Audit Committee assists our board of directors in its oversight of our accounting and financial reporting process and the audits

of our financial statements.

its charter, our Audit Committee is responsible for, among other things:

overseeing accounting and financial reporting process;

selecting, retaining and

replacing independent auditors and evaluating their qualifications, independence and performance;

reviewing and approving scope of the annual audit and

discussing with management

and independent auditors the results of annual audit and review of quarterly financial statements;

reviewing adequacy and

effectiveness of internal control policies and procedures;

approving retention of

independent auditors to perform any proposed permissible non-audit services;

overseeing internal audit

functions and annually reviewing audit committee charter and committee performance;

preparing the audit committee

report that the Securities and Exchange Commission requires in our annual proxy statement;

reviewing and evaluating

the performance of the Audit Committee, including compliance with its charter.

members of our Compensation Committee are Messrs.

Gross and Albrecht.

Gross is the chair of the Compensation Committee.

of our Compensation Committee is independent as defined under the Nasdaq Listing Rules and satisfies Nasdaq’s additional independence

standards for compensation committee members.

Gross and Albrecht are non-employee directors within the meaning of Rule 16b-3

under the Exchange Act and outside directors as defined by Section 162(m) of the Internal Revenue Code.

Our Compensation Committee assists

our Board in the discharge of its responsibilities relating to the compensation of our executive officers.

accounting and financial reporting process;

retaining and replacing independent auditors and evaluating their qualifications, independence and performance;

and approving scope of the annual audit and audit fees;

with management and independent auditors the results of annual audit and review of quarterly financial statements;

adequacy and effectiveness of internal control policies and procedures;

retention of independent auditors to perform any proposed permissible non-audit services;

internal audit functions and annually reviewing audit committee charter and committee performance;

the audit committee report that the Securities and Exchange Commission requires in our annual proxy statement;

and evaluating the performance of the Audit Committee, including compliance with its charter.

member of our Compensation Committee is Mr.

Albrecht is the chair of the Compensation Committee.

Each member of our Compensation

Committee is independent as defined under the Nasdaq Listing Rules and satisfies Nasdaq’s additional independence standards for

compensation committee members.

Albrecht is a non-employee director within the meaning of Rule 16b-3 under the Exchange Act and outside

directors as defined by Section 162(m) of the Internal Revenue Code.

Our Compensation Committee assists our Board in the discharge of

its responsibilities relating to the compensation of our executive officers.

its charter, our Compensation Committee is responsible for, among other things:

developing and maintaining an executive compensation

policy and monitor the results of that policy;

recommending to our board of directors for approval

compensation and benefit plans;

reviewing and approving

annually corporate and personal goals and objectives to serve as the basis for the CEO’s compensation, evaluating the CEO’s

performance in light of those goals and objectives and determining the CEO’s compensation based on that evaluation;

determining and approving the annual compensation for

other executive officers;

retaining or obtaining the advice of a compensation

consultant, outside legal counsel or other advisor;

approving any grants of

stock options, restricted stock, performance shares, stock appreciation rights, and other equity-based incentives to the extent provided

under our equity compensation plans;

reviewing and making recommendations

to our board of directors regarding the compensation of non-employee directors;

reviewing and evaluating

the performance of the Compensation Committee, including compliance with its charter.

and maintaining an executive compensation policy and monitor the results of that policy;

to our board of directors for approval compensation and benefit plans;

and approving annually corporate and personal goals and objectives to serve as the basis for the CEO’s compensation, evaluating

the CEO’s performance in light of those goals and objectives and determining the CEO’s compensation based on that evaluation;

and approving the annual compensation for other executive officers;

or obtaining the advice of a compensation consultant, outside legal counsel or other advisor;

any grants of stock options, restricted stock, performance shares, stock appreciation rights, and other equity-based incentives to

the extent provided under our equity compensation plans;

and making recommendations to our board of directors regarding the compensation of non-employee directors;

and evaluating the performance of the Compensation Committee, including compliance with its charter.

and Corporate Governance Committee

members of our Nominating and Corporate Governance Committee are Messrs.

Gross and Albrecht and Ms.

Gross is the chair of

the Nominating and Corporate Governance Committee.

Each member of our Nominating and Corporate Governance Committee is independent as

defined under the Nasdaq Listing Rules.

Under its charter, our Nominating and Corporate Governance Committee is responsible for, among

other things:

considering and reviewing periodically the desired

composition of our board of directors;

establishing any qualifications and standards for individual

identifying, evaluating and nominating candidates for

election to our board of directors;

ensuring that the members

of our board of directors satisfy SEC and Nasdaq independence and other requirements relating to membership on our board of directors

and committees;

making recommendations

to our board of directors regarding the size of the board of directors, the tenure and classifications of directors, and the composition

of the committees of the board of directors;

considering other corporate governance and related

matters as requested by our board of directors;

reviewing and evaluating

the performance of the Nominating and Corporate Governance Committee, including compliance with its charter.

Albrecht and Ms.

Albrecht is the chair of the Nominating

and Corporate Governance Committee.

Each member of our Nominating and Corporate Governance Committee is independent as defined under

the Nasdaq Listing Rules.

Under its charter, our Nominating and Corporate Governance Committee is responsible for, among other things:

and reviewing periodically the desired composition of our board of directors;

any qualifications and standards for individual directors;

evaluating and nominating candidates for election to our board of directors;

that the members of our board of directors satisfy SEC and Nasdaq independence and other requirements relating to membership on our

board of directors and committees;

recommendations to our board of directors regarding the size of the board of directors, the tenure and classifications of directors,

and the composition of the committees of the board of directors;

other corporate governance and related matters as requested by our board of directors;

and evaluating the performance of the Nominating and Corporate Governance Committee, including compliance with its charter.

Committee Interlocks and Insider Participation

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Executive Compensation.

2022, our Compensation Committee established an executive compensation plan for our President and Chief Executive Officer, Chief Financial

Officer and Chief Operating Officer, whom we refer to collectively as our “executive officers,” with the following objectives:

2023, our Compensation Committee established an executive compensation plan for our President and Chief Executive Officer, and Chief

Financial Officer, whom we refer to collectively as our “executive officers,” with the following objectives:

retain, motivate and reward our executive officers who are responsible for our success;

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without the approval of our stockholders, except in connection with certain changes to our capital structure.

policy If we are required as the result of misconduct to restate our financial results due to our material noncompliance with

If we are required as the result of misconduct to restate our financial results due to our material noncompliance with

any financial reporting requirements under the federal securities laws, our Chief Executive Officer and Chief Financial Officer may

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Set forth below is the list of the peer group of companies for 2023:

Espey Manufacturing – ESP (NYSE)

Power electronics design

and manufacturing company, products include power supplies, power converters, power distribution equipment.

Wireless Telecommunications– WTT (NYSE)

Designs and manufactures

radio frequency and microwave based products for wireless and advance telecommunications industry

Fuel Cell Energy – FCEL(Nasdaq)

Designs and manufactures

power generation systems for mobile and stationary power applications.

Manufacturing – ESP (NYSE)

electronics design and manufacturing company, products include power supplies, power converters, power distribution equipment.

Telecommunications– WTT (NYSE)

and manufactures radio frequency and microwave based products for wireless and advance telecommunications industry

Cell Energy – FCEL(Nasdaq)

and manufactures power generation systems for mobile and stationary power applications.

Compensation Committee reviews the appropriateness of the comparison group used for assessing the compensation of our executive officers

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For 2023, the Compensation Committee kept the same base

salary structure as in 2019.

In determining base salary, the Compensation Committee tabulated the average base salary for the executive

officers in the peer group of companies.

Compensation Committee determined on April 2, 2018 that, commencing April 1, 2018, the base salary of our President and Chief Executive

officer be set at approximately 70% of the average base salaries of the peer group of companies and that the base salaries for our Chief

Financial Officer and the Chief Operating Officer be set at approximately 60% of the average base salaries of the peer group of companies,

all of which is reflected in the table set forth below:

salary structure as in 2022, which has carried on since 2019.

In determining base salary, the Compensation Committee tabulated the average

base salary for the executive officers in the peer group of companies.

Compensation Committee determined that the base salary of our President and Chief Executive officer be set at approximately 70% of the

average base salaries of the peer group of companies and that the base salaries for our Chief Financial Officer be set at approximately

60% of the average base salaries of the peer group of companies, all of which is reflected in the table set forth below:

CEO (in $,000)

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executive officers” (dollar amounts in thousands):

Sams, our President, Chief Executive Officer,

Secretary and Chairman of the Board;

Rajesh Masina, our former Chief Operating Officer;

Luis Zavala, our Chief

Financial Officer.

Sams, our President, Chief Executive Officer, Secretary and Chairman of the Board;

Masina, our former Chief Operating Officer;

Zavala, our Chief Financial Officer.

Name and Principal

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Chief Executive Officer and Secretary

Rajesh Masina,

Former Chief Operating Officer

Chief Financial Officer

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of Polar (or the surviving entity) outstanding immediately after the transaction, or (iii) all or substantially all of our assets are

Executive Employment Agreement with Rajesh Masina, dated as of July 8, 2016, provided for at-will employment as our Vice President Operations

at an annual base salary is $120.

On April 2, 2018, we appointed Mr.

Masina as our Chief Operating Officer and increased his annual base

salary to $175 effective as of April 1, 2018.

Masina was eligible to receive an annual discretionary cash bonus to be paid based

upon performance criteria set by our Compensation Committee, as more fully described above, and was eligible to participate in all of

our employee benefit programs including our 2016 Plan.

January 12, 2022, Rajesh Masina notified the Company of his resignation, effective January 21, 2022.

Masina’s resignation from the Company was not a result of any disagreement with the Company on any matter related to its operations,

policies or practices.

Executive Employment Agreement with Luis Zavala, dated as of July 8, 2016, provides for at-will employment as our Vice President Finance

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benefit programs including our 2016 Plan.

The general terms of Mr.

Zavala’s Executive Employment Agreement are identical to the

Masina’s Executive Employment Agreement.

termination by Polar without cause, resignation by Mr.

Zavala for good reason or upon Mr.

Zavala’s disability, Mr.

Zavala is entitled

to receive (i) a lump sum cash payment equal to 50% of his then-current base salary, and (ii) continued health insurance coverage for

Zavala is terminated without cause or resigns for good reason within three months before or twelve months after a

change in control, Mr.

Masina is entitled to (a) a lump sum cash payment equal to 50% of his then-current base salary, and (b) continued

health insurance coverage for six months.

terms “for good reason,” “cause” and “change in control in Mr.

Zavala’s Executive Employment Agreement

are identical to the definitions contained in Mr.

Sams’ Amended and Restated Executive Employment Agreement.

Omnibus Incentive Plan

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of the SEC, this indemnification is against public policy as expressed in the Securities Act and is therefore unenforceable.

Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters.

following table sets forth information regarding beneficial ownership of our common stock as of March 31, 2023 by:

Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters.

following table sets forth information regarding beneficial ownership of our common stock as of April 1, 2024 by:

person, or group of affiliated persons, known by us to beneficially own more than 5% of our shares of common stock;

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or it possesses sole or shared voting or investment power of that security, including stock options and warrants that are exercisable

within 60 days of March 31, 2023.

within 60 days of April 1, 2024.

To our knowledge, except as indicated by footnote, and subject to community property laws where applicable,

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Shares of common stock underlying derivative securities, if any, that are currently exercisable or exercisable within

60 days after March 31, 2023 are deemed to be outstanding in calculating the percentage ownership of the applicable person or group but

60 days after April 1, 2024 are deemed to be outstanding in calculating the percentage ownership of the applicable person or group but

are not deemed to be outstanding as to any other person or group.

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Gardena, California 90248.

Name and Address of Beneficial Owner (1)

Title of Class

Amount and Nature of

Beneficial Ownership

and Address of Beneficial Owner (1)

and Nature of

Luis Zavala (3)

Keith Albrecht (4)

Peter Gross (5)

Katherine Koster

All directors and executive officers as a group (5 persons) (6)

Sams Albrecht and Gross, and Ms.

All directors and executive

officers as a group (4 persons) (5)

Associates, Inc.

Sams Albrecht, and Ms.

Koster are directors of Polar.

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10,000 shares of common stock issuable upon exercise of options.

represents 10,000 shares of common stock issuable upon exercise of options.

90,000 shares issuable upon exercise of options.

on information provided in a Schedule 13G filed on January 4, 2024.

Bard Associates,

The address of the principal office of the Reporting Persons is 135 South LaSalle Street,

Suite 3700, Chicago, IL 60603.

Compensation Plan Information

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Options, Warrants

Weighted-Average

Exercise Price of

Exercise Price

Remaining Available

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Equity Compensation Plans Approved by Security Holders:

Certain Relationships and Related Transactions, and Director Independence.

Certain Relationships and Related Transactions, and

Director Independence.

following is a summary of transactions since January 1, 2018 to which we have been a participant, in which:

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Sams, our President, Chief Executive Officer and Secretary;

Masina, our former Chief Operating Officer;

and Luis Zavala, our Chief Financial Officer;

providing for, without limitation, certain

payments upon termination and change in control.

See “Executive Compensation–Employment Agreements” in this Annual

Report on Form 10-K for a further discussion of these agreements.

Luis Zavala, our Chief Financial Officer;

providing for, without limitation, certain payments upon termination and change in control.

See “Executive Compensation–Employment Agreements” in this Annual Report on Form 10-K for a further discussion of these

Indemnification

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the related person in connection with approval of the related person transaction.

Principal Accounting Fees and Expenses.

Accounting Fees and Expenses.

following table presents fees for professional audit services rendered by Weinberg & Company, P.A.

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its next meeting for ratification.

Exhibits, Financial Statement Schedules.

Financial Statement Schedules.

Financial Statements

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is made to the exhibits listed on the Index to Exhibits immediately preceding the signature page of this report.

Form 10-K Summary.

10-K Summary.

TO FINANCIAL STATEMENTS

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then ended, in conformity with accounting principles generally accepted in the United States of America.

accompanying financial statements have been prepared assuming that the Company will continue as a going concern.

As discussed in Note

1 to the financial statements, during the year ended December 31, 2023, the Company incurred a net loss and utilized cash in operations.

These conditions raise substantial doubt about the Company’s ability to continue as a going concern.

Management’s plans to

alleviate these conditions are also described in Note 1.

The financial statements do not include any adjustments that might result from

the outcome of this uncertainty.

financial statements are the responsibility of the Company’s management.

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Audit Matters

critical audit matters communicated below are matters arising from the current period audit of the consolidated financial statements

critical audit matters communicated below are matters arising from the current period audit of the financial statements

that were communicated or required to be communicated to the audit committee and that (1) relates to accounts or disclosures that are

material to the consolidated financial statements and (2) involved our especially challenging, subjective, or complex judgments.

communication of critical audit matters does not alter in any way our opinion on the consolidated financial statements, taken as a whole,

material to the financial statements and (2) involved our especially challenging, subjective, or complex judgments.

communication of critical audit matters does not alter in any way our opinion on the financial statements, taken as a whole,

and we are not, by communicating the critical audit matters below, providing separate opinions on the critical audit matters or on the

accounts or disclosures to which they relate.

As discussed in Note 1 to the financial statements, the Company’s inventories are stated at the lower of cost or net realizable

value, with cost determined on first-in, first-out (“FIFO”) basis.

As of December 31, 2022, the Company held inventories of

$15.46 million.

In determining net realizable value, management considers historical usage, forecasted demand in relation to inventory

on hand, market conditions, and other factors.

identified the evaluation of management’s estimate of the net realizable value of certain inventory as a critical audit

matter, because of the significant judgments made by management in estimating future demand and market conditions which are used to

arrive at the net realizable value.

This required a high degree of auditor judgment and increased auditor effort in auditing such

of December 31, 2023, the Company’s inventories totaled $16.5 million.

As explained in Note 1 to the financial statements, inventories

are stated at the lower of cost or net realizable value, with cost determined on a first-in, first-out (“FIFO”) basis.

Company assesses inventory at each reporting date in order to assert that it is recorded at net realizable value.

In determining net

realizable value, management considers historical usage, forecasted demand in relation to inventory on hand, market conditions, and other

identified management’s assessment of net realizable value of inventory as a critical audit matter because the determination of

excess and obsolete inventory and lower of cost or net realizable value is judgmental and considers a number of factors that are affected

by market and economic conditions, such as estimating future customer demand, and industry supply and demand.

This required a high degree

of auditor judgment and increased auditor effort in auditing such assessments.

primary procedures we performed to address this critical audit matter included:

We evaluated management’s

product demand forecast for reasonableness considering historical sales by product, and whether they were consistent with the historical

evaluated the reasonableness of assumptions used by management in forming the forecasted

inventory usage and future salability, and whether they were consistent with the historical

data and evidence obtained in other areas of the audit.

We developed an independent

expectation of the net realizable value of inventory using historic inventory activity and compared our independent expectation to

the amount recorded in the financial statements.

of the Company’s Ability to Continue as a Going Concern

accompanying financial statements have been prepared assuming that the Company will continue as a going concern.

As disclosed in

Note 1 to the financial statements, for the year ended December 31, 2022, the Company recorded a net loss of $5.6 million, used cash

in operations of $6.5 million, and at December 31, 2022, had an accumulated deficit of $19.1 million.

Management evaluated the

Company’s liquidity within one year after the date of issuance of the consolidated financial statements to determine if there

is substantial doubt about the Company’s ability to continue as a going concern.

Management has concluded that, based on its

current plans and projections, the Company will be able to satisfy its liquidity requirements for more than one year from when these

financial statements were issued.

In the preparation of the liquidity assessment, management applied judgment to estimate the

projected cash flows of the Company, including the following:

(i) projected cash outflows, (ii) projected cash inflows, and (iii)

excess availability levels under the Company’s existing line of credit financing.

identified management’s evaluation of the Company’s ability to continue as a going concern and related disclosures as a critical

audit matter due to the significant judgments and assumptions used by management in preparing the Company’s forecasted cash flows

and the risk of bias in management’s judgments and assumptions in estimating these cash flows.

Auditing these judgments and assumptions

required a high degree of auditor judgment and increased auditor effort required to address these matters.

developed an independent expectation of the net realizable value of inventory using historic inventory activity and compared our

independent expectation to the amount recorded in the financial statements.

Concern Analysis

described in Note 1 to the financial statements, for the year ended December 31, 2023, the Company recorded a net loss of $6.5 million,

used cash in operations of $3.4 million, and at December 31, 2023, had an accumulated deficit of $25.7 million.

The conditions described

in Note 1 raise substantial doubt regarding the Company’s ability to continue as a going concern for a period of at least one year

from the date of issuance of the financial statements.

identified the going concern analysis and evaluation of the related disclosures as a critical audit matter because of the significant

judgements and assumptions made by management in developing its cash flow forecast and the risk of bias in management’s judgments

and assumptions in estimating these cash flows.

There was a high degree of auditor judgement and subjectivity in performing our procedures

to evaluate the reasonableness of the cash flow forecast.

primary procedures we performed to address this critical audit matter included:

obtained management’s cash flow forecasts covering the going concern

assessment period to March 2024 and evaluated the reasonableness of the cash flow forecast by comparing it to historical operating results.

performed sensitivity analyses on the projected revenue and operating margins

used in the Company’s cash flow projections to evaluate the impact on the conclusions reached by management.

evaluated the adequacy of management’s disclosure in the financial

statements regarding the Company’s liquidity by comparing to other audit evidence obtained to determine whether such information

is consistent with the Company’s liquidity disclosure

obtained management’s cash flow forecast and evaluated the reasonableness of the cash

flow forecast by comparing it to historical operating results, considering management’s

ability to accurately forecast and perform sensitivity analysis on revenue, cash expenditures and

performed sensitivity analyses on the projected revenue and operating margins used in the Company’s cash flow forecast to

evaluate the impact on the conclusions reached by management.

assessed the appropriateness and sufficiency of the disclosures included within the financial statements relating to liquidity and

going concern and compared to other audit evidence obtained to determine whether such information is consistent with the

Company’s disclosures.

have served as the Company’s auditor since 2016.

Weinberg & Company, P.A .

/s/ Weinberg & Company, P.A .

Angeles, California

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Accounts receivable

Employee retention credit receivable

Inventories, net

Prepaid expenses

Employee retention credit receivable

Income taxes receivable

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Accrued liabilities and other current liabilities

Current portion of operating lease liabilities

Current portion of notes payable

Line of credit

Notes payable-related party

Notes payable, current portion

Notes payable

Current portion of operating lease liabilities

Total current liabilities

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thousands, except share and per share data)

Cost of Sales

Cost of Sales (includes inventory write-downs of $ 450 and $ nil , respectively)

Operating Expenses

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Interest expense and finance costs

Gain on forgiveness of PPP loan payable

Other income (expenses), net

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Balances, December 31, 2021

Shares of common stock issued with warrants for cash

Common stock issued upon exercise of warrants

Balances, December 31, 2021

Stock-based compensation

Balances, December 31, 2022

Shares of common stock issued for cash, net of offering costs

Shares of common stock issued upon cashless exercise of warrants

Balances, December 31, 2023

accompanying notes are an integral part of these financial statements.

OF CASH FLOWS

Cash flows from operating activities:

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Stock-based compensation

Gain from forgiveness of PPP loan payable

Inventory write-down

Changes in operating assets and liabilities

Accounts receivable

Employee retention credit receivable

Prepaid expenses

Income taxes receivable

Decrease in operating lease right-of-use asset

Decrease in right-of-use asset

Accounts payable

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Accrued expenses and other current liabilities

Decrease in lease liability

Operating lease liability

Net cash used in operating activities

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Cash flows from financing activities:

Proceeds from sale of common stock, net of offering costs

Proceeds from exercise of warrants

Net proceeds from sale of common stock

Proceeds from notes payable-related party

Repayment of notes payable

Proceeds from advances from credit facility

Proceeds from line of credit

Net cash provided by financing activities

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Cash and cash equivalents, end of period

Noncash investing and financing activities:

Initial recognition of right-of-use asset and lease liabilities

accompanying notes are an integral part of these financial statements.

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emissions for telecommunications, defense, automotive, nano-grid, EV charging and industrial markets.

Going Concern

accompanying financial statements have been prepared under the assumption that the Company will continue as a going concern.

year ended December 31, 2022, the Company recorded a net loss of $ 5,584

In accordance

with Accounting Standards Codification (“ASC”) 205-40, Going Concern , the Company’s management has evaluated

whether there are conditions and events, considered in the aggregate, that raise substantial doubt about the Company’s ability

to continue as a going concern within one year after the date the accompanying financial statements were issued.

For the year ended December

31, 2023, the Company recorded a net loss of $ 6,548

and used cash in operations of $ 3,430 .

The Company’s management evaluated whether there are conditions or events considered in the aggregate, that

raise substantial doubt about the Company’s ability to continue as a going concern within one year after the date the financial

statements are issued.

Notwithstanding the net loss for 2022, management

concluded that the Company will have adequate cash flow from operations and available line of credit in 2023 so that it is probable that

the Company will be able to fund its current operating plan and satisfy its liquidity requirements within one year from the date the Company’s

2022 financial statements are issued.

As of December 31, 2022, the Company had a cash balance of $ 211 , with borrowing

capacity of $ 1,137 , stockholders’ equity of $ 18,181 and a working capital of $ 17,367 .

The Company has taken action to improve its

margins, and is continuing to build a strong back log, and expects to continue investing in product development and sales and marketing

These factors raise substantial doubt about the Company’s ability to continue as a going concern within one year of the date that

the financial statements are issued.

The financial statements do not include any adjustments that might be necessary if the Company is

unable to continue as a going concern.

of December 31, 2023, the Company had a cash balance of $ 549 ,

with borrowing capacity of $ 376 ,

and a working capital of $ 11,775 .

Historically,

the Company has financed its operations through public and private sales of common stock, issuance of term loans and credit lines from

financial institutions, and cash generated from operations.

As we seek additional sources of financing, there can be no assurance that

such financing would be available to us on favorable terms or at all.

Our ability to obtain additional financing in the debt and equity

capital markets is subject to several factors, including market and economic conditions, our performance and investor sentiment with

respect to us and our industry.

The Company has taken action to improve its margins, and is continuing to build a strong backlog, and

expects to continue investing in product development and sales and marketing activities.

The long-term continuation of the Company’s

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to meet long-term liquidity needs or ability to continue operations.

global outbreak of the novel coronavirus (Covid-19) in early 2020 led to disruptions in general economic activities throughout the world

as businesses and governments implemented broad actions to mitigate this public health crisis.

The Company’s financial results

for the twelve months ended December 31, 2022 have been affected by COVID-19 including, among others, a decrease in the Company’s

sales and delays in sourcing of raw materials from suppliers.

The Company’s business is directly dependent upon, and correlates

closely with, the marketing levels and ongoing business activities of its existing customers and suppliers.

The extent to which COVID-19

may impact the Company’s business activities and capital raising efforts will depend on future developments, which are uncertain

and cannot be predicted.

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

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.

aftermath of the pandemic has had a significant negative impact on our overall operations including revenues, productivity, gross margins

and liquidity.

The pandemic has resulted in labor shortages, disruptions in the chain of supply, and higher material costs.

that Covid-19 will be an ongoing challenge for years to come and to adapt will require us to further globalize our vendors, engineering,

and customers.

The Company’s business is directly dependent upon, and correlates closely with, the marketing levels and ongoing

business activities of its existing customers and suppliers.

The extent to which COVID-19 may impact the Company’s business activities

and capital raising efforts will depend on future developments, which are uncertain and cannot be predicted.

continuing impact of higher inflation, the actions by the Federal Reserve to address inflation, most notably sustained increases in interest

rates, and rising energy prices create uncertainty about the future economic environment which will continue to evolve and, we believe,

has impacted the Company’s business in 2023 and may continue to impact its business in 2024.

The implications of higher government

deficits and debt, tighter monetary policy, and potentially higher long-term interest rates may drive a higher cost of capital for the

business and an increase in the Company’s operating expenses.

preparation of financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported

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Material estimates relate to the assumptions made in determining

reserves for uncollectible receivables, inventory net realizable value, impairment analysis of long-term assets, valuation allowance

on deferred tax assets, accruals for potential liabilities and warrant reserves, assumptions made in valuing equity instruments issued

for services, and assumptions used in the determination of the Company’s liquidity.

Actual results may differ from those estimates.

estimates for credit loss reserves for accounts receivable, assumptions used in valuing inventories at net realizable value, impairment testing of recorded long-term assets, the realizability of deferred tax assets and the related valuation allowance, accruals for warranty reserves, accruals for potential liabilities, assumptions made in valuing stock instruments issued for services, and assumptions used in the determination of the Company’s liquidity.

Actual results may differ from those

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

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United States

South Pacific Islands

Other Asia Pacific

Australia and South Pacific Islands

Europe and Middle East

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Dollar equivalent of $ 16 and $ 23 , respectively, was held in an account at a financial institution located in Romania.

receivables are recorded at net realizable value consisting of the carrying amount less an allowance for uncollectible accounts, as needed.

The Company uses the allowance method to account for uncollectible trade receivable balances.

Under the allowance method, if needed,

an estimate of uncollectible customer balances is made based upon specific account balances that are considered uncollectible.

used to establish an allowance include the credit quality and payment history of the customer.

The Company did not deem it necessary

to provide an allowance for doubtful accounts as of December 31, 2022 and 2021.

receivables are recorded at their estimated collectible amounts consisting of the carrying amount less an allowance for credit losses,

The Company maintains an allowance for doubtful accounts for balances that appear to have specific collection issues and estimates

an allowance for expected credit losses.

Factors used to establish an allowance include the credit quality and payment history of the

The Company did not deem it necessary to provide an allowance for doubtful accounts as of December 31, 2023 and 2022.

are stated at the lower of cost or net realizable value, with cost determined on a first-in, first-out (“FIFO”) basis.

Company records adjustments to its inventory based on an estimated forecast of the inventory demand, taking into consideration, among

others, inventory turnover, inventory quantities on hand, unfilled customer order quantities, forecasted demand, current prices, competitive

pricing, and trends and performance of similar products.

If the estimated net realizable value is determined to be less than the recorded

cost of the inventory, the difference is recognized as a loss in the period in which it occurs.

Once inventory has been written down,

it creates a new cost basis for inventory that may not be subsequently written up.

For the year ended December 31, 2022, there were no

write-downs of inventory.

The Company records adjustments to its inventory based on an estimated forecast of the inventory demand, taking into consideration,

among others, inventory turnover, inventory quantities on hand, unfilled customer order quantities, forecasted demand, current

prices, competitive pricing, and trends and performance of similar products.

If the estimated net realizable value is determined to

be less than the recorded cost of the inventory, the difference is recognized as a loss in the period in which it occurs.

inventory has been written down, it creates a new cost basis for inventory that may not be subsequently written up.

ended December 31, 2023, the Company recorded a write down of inventory of $ 450 ,

which is included in cost of sales.

For the year ended December 31, 2022, there was no write down of inventory recorded.

of December 31, 2023 and 2022, inventories consisted of the following (in thousands):

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OF ESTIMATED USEFUL LIFE OF PROPERTY PLANT AND EQUIPMENT

Production tooling, jigs, fixtures

Shop equipment and machinery

Leasehold improvements

Shorter of the lease term

or estimated useful life

Office equipment

tooling, jigs, fixtures

equipment and machinery

of the lease term or estimated useful life

regularly reviews property, equipment and other long-lived assets for possible impairment.

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of December 31, 2023, or December 31, 2022.

Company accounts for its leases in accordance with the guidance of ASC 842, Leases .

The Company determines whether a contract

is, or contains, a lease at inception.

Right-of-use assets represent the Company’s right to use an underlying asset during the

lease term, and lease liabilities represent the Company’s obligation to make lease payments arising from the lease.

assets and lease liabilities are recognized at lease commencement based upon the estimated present value of unpaid lease payments over

the lease term.

The Company uses its incremental borrowing rate based on the information available at lease commencement in determining

the present value of unpaid lease payments.

Company accounts for its leases in accordance with ASC 842, Leases .

The Company determines whether a contract is, or

contains, a lease at inception.

Operating lease right-of-use (“ROU”) assets and liabilities are recognized at the

lease commencement date based on the present value of lease payments over the lease term.

ROU assets represent the

Company’s right to use an underlying asset during the lease term, and lease liabilities represent the Company’s

obligation to make lease payments arising from the lease.

Generally, the implicit rate of interest in arrangements is not readily

determinable and the Company utilizes its incremental borrowing rate in determining the present value of lease payments.

The Company’s

incremental borrowing rate is a hypothetical collateralized borrowing rate based on its understanding of what its credit rating would

Company periodically issues stock-based compensation to officers, directors, and consultants for services rendered.

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prices in active markets for identical assets or liabilities.

other than the quoted prices in active markets, that is observable either directly or indirectly.

other than the quoted prices in active markets, that are observable either directly or indirectly.

inputs based on the Company’s assumptions.

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approximate their fair values due to the fact that the interest rates on these obligations are based on prevailing market interest rates.

Company operates in one segment for the manufacture and distribution of its products.

In accordance with the “Segment Reporting”

Topic of the ASC, the Company’s chief operating decision maker has been identified as the Chief Executive Officer and President,

who reviews operating results to make decisions about allocating resources and assessing performance for the entire Company.

guidance, which is based on a management approach to segment reporting, establishes requirements to report selected segment information

quarterly and to report annually entity-wide disclosures about products and services, major customers, and the countries in which the

entity holds material assets and reports revenue.

All material operating units qualify for aggregation under “Segment Reporting”

due to their similar customer base and similarities in:

economic characteristics;

nature of products and services;

and procurement, manufacturing

and distribution processes.

Since the Company operates in one segment, all financial information required by “Segment Reporting”

can be found in the accompanying financial statements.

ASC 280, Segment Reporting , operating segments are defined as components of an enterprise where discrete financial information

is available that is evaluated regularly by the chief operating decision maker (“CODM”), in deciding how to allocate resources and in

assessing performance.

The Company’s operating segment consists of one component, and the Company’s Chief Executive Officer, who is also

the CODM, makes decisions and manages the Company’s operations as a single operating segment.

Concentrations

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one being a Tier-1 telecommunications customer in the U.S.

and one being a telecommunications customer outside the U.S In 2022, 66 % and

23 %, respectively, of our revenue was generated from the Company’s two largest customers, one being a Tier-1 telecommunications

customer in the U.S.

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

In 2021, 67 %

of revenue was generated from the Company’s largest customer, a Tier-1 telecommunications customer in the U.S.

In 2022 and 2021,

sales to telecommunications customers accounted for 96 % and 89 % of total revenue, respectively.

In 2022 and 2021, sales to international

customers accounted for 25 % and 8 % of total revenue, respectively.

At December 31, 2022, the Company’s largest receivable account represented 90 % of the Company’s total accounts

At December 31, 2021, 74 % and 15 % of the Company’s accounts receivable was from the Company’s two largest receivable

There was no other customer that accounted for more than 10% of the Company’s accounts receivable as of the years ended

December 31, 2022 and 2021.

In 2023 and 2022, sales to telecommunications customers

accounted for 95 % and 96 % of total revenue, respectively.

In 2023 and 2022, sales to international customers accounted for 21 % and 25 %

of total revenue, respectively.

At December 31, 2023, the Company’s two largest receivable accounts represented 69 % and 16 % of the Company’s

total accounts receivable.

At December 31, 2022, the Company’s largest receivable account represented 90 % of the Company’s

total accounts receivable.

There was no other customer that accounted for more than 10% of the Company’s accounts receivable as

of the years ended December 31, 2023 and 2022.

On December 31, 2023, the three largest accounts payable accounts to the Company’s vendors represented 30 %, 10 %, and

5 %, respectively.

On December 31, 2021, the three largest accounts payable accounts to the Company’s largest vendors represented

On December 31, 2022, the three largest accounts payable accounts to the Company’s vendors represented 51 %, 3 %,

and 3 %, respectively.

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adjustment to retained earnings as of the beginning of the first reporting period in which the guidance is effective.

The standard is

effective for interim and annual reporting periods beginning after December 15, 2023.

The adoption of ASU 2016-13 is not expected to

have a material impact on the Company’s financial position, results of operations, and cash flows.

August 2021, the FASB issued ASU No.

2021-06 (“ASU 2021-06”) “Debt—Debt with Conversion and Other Options (Subtopic

470-20) and Derivatives and Hedging—Contracts in Entity’s Own Equity (Subtopic 815-40).” ASU 2021-06 reduces the number

of accounting models for convertible debt instruments by eliminating the cash conversion and beneficial conversion models.

a convertible debt instrument will be accounted for as a single liability measured at its amortized cost as long as no other features

require bifurcation and recognition as derivatives.

By removing those separation models, the effective interest rate of convertible debt

instruments will be closer to the coupon interest rate.

Further, the diluted net income per share calculation for convertible instruments

will require the Company to use the if-converted method.

For contracts in an entity’s own equity, the type of contracts primarily

affected by this update are freestanding and embedded features that are accounted for as derivatives under the current guidance due to

a failure to meet the settlement conditions of the derivative scope exception.

This update simplifies the related settlement assessment

by removing the requirements to (i) consider whether the contract would be settled in registered shares, (ii) consider whether collateral

is required to be posted, and (iii) assess shareholder rights.

ASU 2021-06 is effective January 1, 2024, for the Company and the provisions

of this update can be adopted using either the modified retrospective method or a fully retrospective method.

Early adoption is permitted,

but no earlier than January 1, 2022, including interim periods within that year.

Effective January 1, 2022, the Company early adopted

ASU 2021-06 and that adoption did not have an impact on its financial statements and the related disclosures.

Company’s management does not believe that there are other recently issued but not yet effective authoritative guidance, if currently

adopted, would have a material impact on the Company’s financial statement presentation or disclosures.

As a smaller reporting company, ASU 2016-13 became effective for the Company beginning January 1, 2023.

The Company adopted ASU 2016-03 effective January 1, 2023, and there was no material impact on the Company’s financial position, results of operations and cash flows.

November 2023, the FASB issued ASU 2023-07, Segment Reporting (Topic 280):

Improvements to Reportable Segment Disclosure , which

is intended to improve reportable segment disclosure requirements, primarily through enhanced disclosures about significant segment expense

categories that are regularly provided to the chief operating decision maker and included in each reported measure of a segment’s profit

The update also requires all annual disclosures about a reportable segment’s profit or loss and assets to be provided in interim

periods and for entities with a single reportable segment to provide all the disclosures required by ASC 280, Segment Reporting ,

including the significant segment expense disclosures.

This standard will be effective for the Company on January 1, 2024 and interim

periods beginning in fiscal year 2025, with early adoption permitted.

The updates required by this standard should be applied retrospectively

to all periods presented in the financial statements.

The Company does not expect this standard to have a material impact on its results

of operations, financial position or cash flows.

December 2023, the Financial Accounting Standards Board (“FASB”) issued ASU 2023-09, Income Taxes (Topic 740):

to Income Tax Disclosures.

ASU 2023-09 requires that public business entities on an annual basis (1) disclose specific categories in

the rate reconciliation and (2) provide additional information for reconciling items that meet a quantitative threshold (if the effect

of those reconciling items is equal to or greater than 5 percent of the amount computed by multiplying pretax income or loss by the applicable

statutory income tax rate).

ASU 2023-99 is effective for annual reporting periods beginning after December 15, 2024, with early adoption

The Company does not expect that the guidance will have a material impact on our financial statements or notes

to our financial statements.

2 – PROPERTY AND EQUIPMENT

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years then ended.

3 – NOTES PAYABLE, RELATED PARTY

the year ended December 31, 2023, the Company’s Chief Executive Officer extended three loans to the Company for aggregate

principal amount of $ 257

pursuant to terms of the note agreements.

The notes have relatively similar terms, are unsecured, accrue interest at 1 %

per annum, are due

over a period of 12 months with payments becoming due between 5 to 7 months after issuances of the notes , and no prepayment

As of December 31, 2023, the outstanding balance of the loans is $ 257 ,

with $ 180 due in May 2024, and $ 25 due in October 2024.

4 – NOTES PAYABLE

payable consist of the following (in thousands):

OF NOTES PAYABLE

SCHEDULE OF NOTES PAYABLE

Total Notes Payable

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Notes Payable, Noncurrent portion

Company has entered into several financing agreements for the purchase of equipment in prior years.

Company entered into several financing agreements for the purchase of equipment in prior years.

The terms of these financing arrangements

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OF ANNUAL FUTURE PRINCIPAL PAYMENTS

Years ending December 31:

Year ending December 31:

5 – LINE OF CREDIT

September 30, 2020, the Company entered into a Loan and Security Agreement (the “Loan Agreement”) with Pinnacle Bank (“Pinnacle”).

At December 31, 2022, the outstanding balance under the line of credit was $ 1,884 and the Company had availability under the line of

credit in the amount of $ 1,137 .

The Loan Agreement initially expired on September 30, 2022, and

on November 3, 2022, the Loan Agreement was amended to expire on September 30, 2024 .

Loan Agreement, as amended, provides for a revolving credit facility under which Pinnacle may make advances to the Company, subject to

certain limitations and adjustments, of up to (a) 85% of the aggregate net face amount of the Company’s accounts receivable and

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

of the Company or (ii) $2,500.

In no event shall the aggregate amount of the outstanding advances under the revolving credit facility

be greater than $ 4,000 .

Interest accrues on the daily balance at a rate of 1.25 % above the prime rate, but in no event less than 3.75 %

Interest on the portion of the daily balance consisting of advances against inventory accrues interest at a rate of 2.25 %

above the prime rate, but in no event less than 4.75 % per annum.

may terminate the Loan Agreement, as amended, at any time upon sixty days prior written notice and immediately upon the occurrence of

an event of default.

Under the Loan Agreement, the Company granted Pinnacle a security interest in all presently existing and thereafter

acquired or arising assets of the Company.

The Loan Agreement, as amended, provides for a revolving credit facility under which Pinnacle may make advances to the Company up to

subject to certain limitations and adjustments, of up to (a)

85% of the aggregate net face amount of the Company’s accounts receivable and other contract rights and receivables, plus (b) the

lesser of (i) 40% of the aggregate eligible inventory value of eligible inventory or (ii) $4.0 million, plus (c) up to $146 collateralized

by certain equipment.

Loan Agreement expires on September

December 31, 2022, the outstanding balance under the line of credit was $ 1,884 .

During 2023, the Company advanced an aggregate of $ 2,354

under the facility.

At December 31, 2023, the

outstanding balance under the line of credit was $ 4,238

and the Company had availability under the line

of credit in the amount of $ 376 .

Borrowings based on receivables bears an interest on the daily balance at a rate of 1.25 % above the prime rate, but in no

event less than 3.75 % per annum ( 9.75 % at December 31, 2023 and 8.75 % at December 31, 2022).

Interest on the portion of the daily balance

consisting of advances against inventory accrues interest at a rate of 2.25 % above the prime rate, but in no event less than 4.75 % per

annum ( 10.75 % at December 31, 2023 and 9.75 % at December 31, 2022).

2023, amendments to the Loan Agreement included, among other, extending the 90-day period on AT&T accounts receivable to 120 days, raising

the concentration percentage applicable to certain Tier-1 telecommunication customers from 50% to 75% in the definition of eligible accounts

receivable, and increasing the aggregate advance limit under the credit facility from $ 6,000 to $ 7,500 , for a fee of $23

(1.5% of the $1.5 million increase) .

may terminate the Loan Agreement at any time upon ninety days prior written notice and immediately upon the occurrence of an event of

Under the Loan Agreement, the Company granted Pinnacle a security interest in all presently existing and thereafter acquired

or arising assets of the Company.

The Loan Agreement also contains a financial covenant requiring the Company to attain an effective

tangible net worth, as defined, which the Company attained as of December 31, 2023.

Loan Agreement obligates the Company to pay Pinnacle a yearly facility fee in an amount equal to 1.125 % of the sum of the advance limit.

5 – PPP LOAN PAYABLE

May 4, 2020, the Company entered into a loan (the “PPP Loan”) with Citibank, N.A.

in an aggregate principal amount of $ 1,715 ,

pursuant to the Paycheck Protection Program (the “PPP”) under the Coronavirus Aid, Relief, and Economic Security Act (“CARES

PPP Loan matures two years from the disbursement date and bears interest at a rate of 1 % per annum.

The Company applied ASC 470, Debt,

to account for the PPP Loan.

The PPP loan and accrued interest were forgivable after December 31, 2020, as long as the borrower used

the loan proceeds for qualifying expenses, including payroll, benefits, rent and utilities, and maintains its payroll levels.

believes the entire loan amount has been used for qualifying expenses.

Company filed its application for a full loan forgiveness to Citibank in July 2021.

On September 28, 2021, the Company received notice

from Citibank indicating that the SBA approved the forgiveness of the PPP loan payable in the amount of $ 1,715 .

Accordingly, for the

year ended December 31, 2021, the Company recognized the forgiveness of the PPP loan as “Gain on forgiveness of PPP loan payable”

in the accompanying statements of operations.

Loan Agreement obligates the Company to pay Pinnacle a yearly facility fee in an amount equal to 1.125 %

of the sum of the advance limit.

The Loan Agreement contains certain affirmative and negative covenants, all of which the Company was in compliance

with at December 31, 2023.

6 – OPERATING LEASES

Company has two operating lease agreements for its warehouse and office spaces both with remaining lease terms at December 31, 2022,

under a year.

Leases with an initial term of 12 months or less are not recorded on the balance sheet.

The Company accounts for the lease

and non-lease components of its leases as a single lease component.

Rent expense is recognized on a straight-line basis over the lease

The Company also has another storage facility on a twelve-month lease term.

Leases with an initial term of 12 months or less are

not recorded on the balance sheet.

lease right-of-use (“ROU”) assets and liabilities are recognized at the lease commencement date based on the present value

of lease payments over the lease term.

ROU assets represent the Company’s right to use an underlying asset for the lease term and

lease liabilities represent the Company’s obligation to make lease payments arising from the lease.

Generally, the implicit rate

of interest in arrangements is not readily determinable and the Company utilizes its incremental borrowing rate in determining the present

value of lease payments.

The Company’s incremental borrowing rate is a hypothetical collateralized borrowing rate based on its

understanding of what its credit rating would be.

The operating lease ROU asset includes any lease payments made and excludes lease incentives.

The components of rent expense and supplemental cash flow information related to leases for the period are as follows:

At December 31, 2022, the Company has two operating leases for its warehouse and office facilities that expired in 2023 and were both

extended for three-year terms.

The first lease expired February 28, 2023 and was extended beginning March 1, 2023 to February 28, 2026.

The second lease expired August 31, 2023, and was extended beginning September 1, 2023 to August 31, 2026.

The aggregate monthly lease

payments range from $ 89 (year one), to $ 111 (year two), to $ 125 (year three), with an aggregate commitment of $ 3,896 .

The lease amendments

to the two operating leases were considered new lease agreements and as a result, the Company recognized operating lease right-of-use

assets and related operating lease liabilities of approximately $ 3,578 upon commencement of the new terms.

Company also has a third lease on a month-to-month basis and is charged $ 25 per month.

components of rent expense and supplemental cash flow information related to leases for the period are as follows:

OF RENT EXPENSE AND SUPPLEMENTAL CASH FLOW INFORMATION

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Operating lease cost

Operating lease cost (of which $ 98 is included in general and administration and $ 601 is included in cost of sales in the Company’s statement of operations as of December 31, 2022, and $ 98 is included in general and administration and $ 601 is included in cost of sales in the Company’s statement of operations as of December 31, 2021)

Operating lease cost (of which $ 145

is included in general and administration and $ 978

is included in cost of sales in the Company’s statement of operations for the year ended December 31, 2023, and $ 98

is included in general and administration and $ 601

is included in cost of sales in the Company’s statement of operations for the year ended December 31, 2022)

Other Information

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Operating leases (in thousands)

Long-term right-of-use assets

Long-term right-of-use assets, net of accumulated amortization of $ 760 and $ 2,577 , respectively

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of the Company’s lease liabilities are as follows:

OF MATURITIES OF LEASE LIABILITIES

SCHEDULE OF MATURITIES OF LEASE LIABILITIES

Year Ending (in thousands)

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7 – STOCKHOLDERS’ EQUITY

Issuance of common

stock during 2022 for services

of common stock during 2023 in underwritten Public Offering of Common Stock

December 5, 2023, the Company issued and sold 4,600,000 shares of common stock in an underwritten public offering.

The Company received

at the closing of the offering net proceeds of approximately $ 1,556 after deducting underwriting discounts and commissions and other

offering expenses paid by the Company.

The Company is using the net proceeds from the Offering for general corporate purposes.

of common stock during 2023 upon exchange of warrants

November 9, 2023, warrants to purchase an aggregate of 24,122 shares

of the Company’s common stock, originally issued July 7, 2020, were exchanged on

a cashless basis for 12,062 shares

of Common Stock in accordance to a warrant exchange agreement.

Upon issuance of such shares

and cancellation of the warrants, the Company no longer has any warrants outstanding as of December 31, 2023.

of common stock during 2022 for services

August 2022, the Company issued an aggregate of 161,347 shares of common stock to its officers, employees and consultants as part of

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which was recorded as stock-based compensation expense of $ 515 during 2022.

Underwritten Public

Offering of Common Stock

February 10, 2021, and the Company issued and sold 750,000 shares of common stock in an underwritten public offering.

The Company received

at the closing of the offering net proceeds of approximately $ 12,466 after deducting underwriting discounts and commissions and other

offering expenses payable by the Company.

The Company is using the net proceeds from the Offering for general corporate purposes.

Issuance of common

stock upon exercise of warrants

the year ended December 31, 2021, warrants to purchase an aggregate of 225,878 shares of common stock were exercised, and the Company

received net proceeds of $ 707 upon such exercise.

In addition, warrants exercisable into 120,000 shares of common stock were converted

under a cashless exercise option into 61,644 shares of the Company’s common stock.

Company’s board of directors is authorized to issue up to 5,000,000 shares of preferred stock in one or more series and to fix

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Exercisable, December 31, 2023

year ended December 31, 2021, warrants to purchase 225,878 shares of common stock were exercised at $ 3.13 exercise price per share or

total net proceeds to the Company of $ 707 upon exercise.

Also during 2021, warrants exercisable into 120,000 shares of the Company’s

common stock were exercised under a cashless exercise option into 61,644 shares of the Company’s common stock.

was no intrinsic value of the outstanding and exercisable warrants at December 31, 2022 .

November 9, 2023, warrants to purchase an aggregate of 24,122 shares of the Company’s common stock, originally issued July 7, 2020,

were exchanged on a cashless basis for 12,062

shares of Common Stock

in accordance to a warrant exchange agreement.

Upon issuance of such shares and cancellation of the warrants, the Company no longer has

any warrants outstanding as of December 31, 2023.

10 – INCOME TAXES

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State tax, net of federal benefit

Carryback net operating loss

Change in valuation allowances

Valuation allowance

Effective income tax rate

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Inventory valuation

Accrued liabilities and other reserves

Accrued liabilities

Operating lease liability

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taxable income.

At December 31, 2022 and 2021, the Company had income taxes receivable

of $ 787 related to the NOL carrybacks.

At December 31, 2023 and 2022, the Company had income taxes receivable of $ 787 related to NOL carrybacks.

December 31, 2023, the Company had available Federal and state NOLs carryforwards to reduce future taxable income of approximately $ 17.9

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the balance of $ 2,000 is presented as employee retention credit receivable in the accompanying balance sheet.

12 – DISTRIBUTION AGREEMENT WITH A RELATED ENTITY

March 1, 2014, the Company entered into a subcontractor installer agreement with Smartgen Solutions, Inc.

(“Smartgen”), a

related entity that is engaged in business of equipment rental and provider of maintenance, repair and installation services to mobile

telecommunications towers in California.

Under the terms of the agreement, Smartgen has been appointed as a non-exclusive, authorized

service provider for the installation, repair and service of the Company’s products in Southern California.

The agreement has a

term of three years from the date of execution and automatically renews for additional one-year periods if not terminated.

the years ended December 31, 2022 and 2021, Smartgen performed $ 88 and $ 129 in field services, respectively, the cost of which is included

in cost of goods sold.

January 2, 2023, we provided written notice to Smartgen to terminate all agreements between the two companies.

The termination was effective

January 31, 2023.

12 – COMMITMENTS AND CONTINGENCIES .

5 unchanged sentences

What changed 10-K

Item 9A. Controls and Procedures