What changed in this filing

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Item 1. Business

2023-04-11 compared with 2022-03-31 · 245 added, 362 removed, 44 unchanged (93% of the section changed)

Power Solutions, Inc.

and its wholly owned subsidiaries (referred to herein as the “Company,” “Pioneer,”

“Pioneer Power,” “we,” “our” and “us”) design, manufacture, integrate, refurbish,

service, distribute and sell electric power systems, distributed energy resources, used and new power generation equipment and

mobile electric vehicle (“EV”) charging solutions.

Our products and services are sold to a broad range of customers

in the utility, industrial and commercial markets.

Our customers include, but are not limited to, electric, gas and water utilities,

data center developers and owners, EV charging infrastructure developers and owners, and distributed energy developers.

is headquartered in Fort Lee, New Jersey and operates from three (3) additional locations in the U.S.

for manufacturing, service

and maintenance, engineering, and sales and administration.

intend to grow our business through continued internal product development and expansion of our engineering, sales and marketing

and its wholly owned subsidiaries (referred to herein as the “Company,” “Pioneer,” “Pioneer

Power,” “we,” “our” and “us”) design, manufacture, integrate, refurbish, service, distribute

and sell electric power systems, distributed energy resources, power generation equipment and mobile electric vehicle (“EV”)

charging solutions.

Our products and services are sold to a broad range of customers in the utility, industrial and commercial markets.

Our customers include, but are not limited to, electric, gas and water utilities, data center developers and owners, EV charging infrastructure

developers and owners, and distributed energy developers.

We are headquartered in Fort Lee, New Jersey and operate from three (3) additional

locations in the U.S.

for manufacturing, service and maintenance, engineering, and sales and administration.

intend to grow our business through continued internal investments in product development and expansion of our manufacturing, engineering,

sales and marketing personnel.

of Business Segments

2 unchanged sentences

(“Critical Power”).

T&D Solutions business provides equipment solutions, including e-Bloc, that help

customers effectively and efficiently protect, control, transfer, monitor and manage

their electric energy requirements.

These solutions are marketed principally through

our Pioneer Custom Electrical Products Corp.

T&D Solutions business provides equipment solutions that help customers effectively and efficiently protect, control, transfer,

monitor and manage their electric energy requirements.

These solutions are marketed principally through our Pioneer Custom Electrical

Products Corp.

(“PCEP”) brand name.

Critical Power business provides customers with our suite of mobile E-BOOST© EV

charging solutions, new and refurbished power generation equipment and all forms of service

and maintenance on our customers’ power generation equipment.

These products and

services are marketed by our operations headquartered in Minnesota, currently doing business

under both the Titan Energy Systems Inc.

(“Titan”) and Pioneer Critical Power

Disposition of Business Units

Sale of Pioneer Critical Power, Inc.

On January 22, 2019, Pioneer Critical Power,

Inc., a Delaware corporation (“PCPI”), a wholly-owned subsidiary of the Company within the T&D Solutions segment,

CleanSpark and CleanSpark Acquisition, Inc., a Delaware corporation (“Merger Sub”), entered into an Agreement and Plan

of Merger (the “Merger Agreement”), pursuant to which, among other things, Merger Sub merged with and into PCPI, with

PCPI becoming a wholly-owned subsidiary of the CleanSpark and the surviving company of the merger (the “Merger”).

At the effective date of the Merger, all

of the issued and outstanding shares of common stock of PCPI, par value $0.01 per share, were converted into the right to receive

(i) 175,000 shares of common stock, par value $0.001 per share (“CleanSpark Common Stock”), of CleanSpark, (ii) a five-year

warrant to purchase 50,000 shares of CleanSpark Common Stock at an exercise price of $16.00 per share, and (iii) a five-year warrant

to purchase 50,000 shares of CleanSpark Common Stock at an exercise price of $20.00 per share.

The share quantities and exercise

prices of warrants reflect the 10:1 reverse stock split completed by CleanSpark in December 2019.

During the year ended December 31, 2020,

the Company sold all of the CleanSpark Common Stock and warrants to purchase CleanSpark Common Stock it received in connection

with the Merger Agreement and recorded proceeds of $2.4 million.

The gain from the sale was partially offset by a mark to market

adjustment of $1.4 million resulting in a net gain of $968 to other (income) expense in the accompanying statements of operations.

Warrants at fair value were previously recorded at inception as long term within other assets.

In connection with the Merger Agreement,

the Company, CleanSpark and PCPI entered into an Indemnity Agreement (the “Indemnity Agreement”), dated January 22,

2019, pursuant to which the Company agreed to assume the liabilities and obligations related to the claims made by Myers Powers

Products, Inc.

in the then-pending case titled Myers Power Products, Inc.

Pioneer Power Solutions, Inc., Pioneer Custom Electrical

Products, Corp., et al.

, Los Angeles County Superior Court Case No.

BC606546 (the “Myers Power Case”) as they may

relate to PCPI or CleanSpark after the closing of the Merger.

In connection with entry into the Merger

Agreement, the Company and CleanSpark entered into a Contract Manufacturing Agreement (the “Contract Manufacturing Agreement”),

dated as of January 22, 2019, pursuant to which the Company will manufacture paralleling switchgear, automatic transfer switches

and related control and circuit protective equipment (collectively, “Products”) exclusively for purchase by CleanSpark.

CleanSpark will purchase the Products via purchase orders issued to the Company at any time and from time to time.

The price for

the Products payable by CleanSpark to the Company will be negotiated on a case by case basis.

The Contract Manufacturing Agreement

had a term of 18 months and expired during the third quarter of 2020.

In connection with entry into the Merger

Agreement, the Company and CleanSpark entered into a Non-Competition and Non-Solicitation Agreement (the “Non-Compete Agreement”),

dated January 22, 2019, pursuant to which the Company agreed not to, among other things, own, manage, operate, finance, control,

advise, render services to or guarantee the obligations of any person or entity that engages in or plans to engage in the design,

manufacture, distribution and service of paralleling switchgear, automatic transfer switches, and related products (the “Restricted

The Company agreed not to engage in the Restricted Business within any state or county within the United States

in which CleanSpark or the surviving company of the Merger conducts such Restricted Business for a period of four (4) years from

the date of the Non-Compete Agreement.

In addition, the Company also agreed, for

a period of four (4) years from the date of the Non-Compete Agreement, not to, among other things, directly or indirectly (i) solicit,

induce, or attempt to induce customers, suppliers, licensees, licensors, franchisees, consultants of the Restricted Business as

conducted by the Company, CleanSpark or the surviving company to cease doing business with the surviving company or CleanSpark

or (ii) solicit, recruit, or encourage any of the surviving company’s or CleanSpark’s employees, or independent contractors

to discontinue their employment or engagement with the surviving company or CleanSpark.

The Merger resulted in the deconsolidation

of PCPI and a gain of $4.2 million in the first quarter of 2019.

The fair value of the investment in the CleanSpark Common Stock

was determined using quoted market prices, and the fair value of the investment in the warrants was established using a Black Scholes

Sale of Transformer Business Units

On June 28, 2019, the Company entered into

a Stock Purchase Agreement (the “Stock Purchase Agreement”), by and among the Company, Electrogroup Canada, Inc., a

wholly owned subsidiary of the Company (“Electrogroup”), Jefferson Electric, Inc., a wholly owned subsidiary of the

Company (“Jefferson”), JE Mexican Holdings, Inc., a wholly owned subsidiary of the Company (“JE Mexico,”

and together with Electrogroup and Jefferson, the “Disposed Companies”), Nathan Mazurek (Chief Executive Officer of

the Company), Pioneer Transformers L.P.

(the “US Buyer”) and Pioneer Acquireco ULC (the “Canadian Buyer,”

and together with the US Buyer, the “Buyer”).

Pursuant to the terms of the Stock Purchase Agreement, the Company agreed

to sell (i) all of the issued and outstanding equity interests of Electrogroup to the Canadian Buyer and (ii) all of the issued

and outstanding equity interests of Jefferson and JE Mexico to the US Buyer (the “Equity Transaction”), for a purchase

price of $68.0 million.

Included in the purchase price, the Company received two subordinated promissory notes, issued by the Buyer,

in the aggregate principal amount of $5.0 million and $2.5 million, for a total aggregate principal amount of $7.5 million (the

“Seller Notes”).

During the fourth quarter of 2019, the Company and the Buyer, pursuant to the Stock Purchase Agreement,

completed the net working capital adjustment, which resulted in the Company paying the Buyer $1.8 million in cash and reducing

the principal amount of the $5.0 million Seller Note to $3.2 million.

During the second quarter of 2020, the Company recognized

an additional reduction to the principal amount of the Seller Note of $194 for a valid claim paid by the Buyer on behalf of the

Including the reduction to the principal amount for the valid claim, the Company has revalued the Seller Notes for an

appropriate imputed interest rate, resulting in a change to the value of the Seller Notes at December 31, 2021 of $428, for a carrying

value of $5.8 million, which is included within notes receivable (see Note 8 - Notes Receivable).

The transaction was consummated on August

Pioneer sold to the Buyer all of the assets and liabilities associated with its liquid-filled transformer and dry-type

transformer manufacturing businesses within the Company’s T&D Solutions segment.

Pioneer Power retained its switchgear

manufacturing business within the T&D Solutions segment, as well as all of the operations associated with its Critical Power

Critical Power business provides customers with our suite of mobile e-Boost© EV charging solutions, power generation equipment

and all forms of service and maintenance on our customers’ power generation equipment.

These products and services are marketed

by our operations headquartered in Minnesota, currently doing business under both the Titan Energy Systems Inc.

and Pioneer Critical Power brand names.

Solutions Segment

design, manufacture, integrate and sell a wide range of distribution and transmission equipment, including e-Bloc, and our emphasis

is to provide custom engineered power solutions, including EV charging solutions, which we estimate currently represents all of

our T&D revenue.

We believe that demand for our solutions is driven primarily by new installations, customer growth and the

global transition to renewable energy.

distinguish ourselves by producing a wide range of engineered-to-order equipment, sold either directly to end users, engineering,

procurement and construction (“EPC”) firms or through electrical distributors.

We serve customers in a variety of

industries including, but not limited to, utilities, EV charging infrastructure and data center developers and owners, distributed

We design, manufacture, integrate and sell a wide range of distribution and transmission equipment.

Our focus since approximately 2020

has been to address the Distributed Generation (“DG”) and Electric Vehicle Charging Infrastructure (“EVCI”) markets.

We primarily compete in these markets with our E-Bloc product.

E-Bloc combines an automatic transfer switch, circuit protection and special

programmable controls into an integrated, compact outdoor system.

We believe that demand for our solutions is driven primarily by new

installations, customer growth and the global transition to lower carbon emissions.

addition, we distinguish ourselves by producing a wide range of highly engineered power solutions, sold either directly to end users,

engineering, procurement and construction (“EPC”) firms, or through electrical distributors.

We serve customers in a variety

of industries including, but not limited to, utilities, EV charging infrastructure, data center developers and owners, distributed

energy resource developers, EPC contractors and renewable energy developers and producers.

focus has been on expanding the sales of our e-Bloc power solutions, and as a result, in December 2021, we received a $12 million order for use by one of the largest mass merchandisers retailers in the world.

This order was secured through one of our

distributed energy resource developers and is expected to ship during 2022.

focus, nevertheless, has been on expanding the sales of our E-Bloc power solution, and as a result, in December 2021, we received a $12

million order for use by one of the largest mass merchandise retailers in the world.

This order was secured through one of our distributed

energy resource developers and was approximately 75% completed in 2022.

The balance of the contract is expected to be completed and recognized

in the first quarter of 2023.

of T&D Solutions Segment Offerings

Power Centers (“IPC”):

indoor and outdoor power systems integrating any combinations of the following, but not

switchgear, controls, engine generator sets, energy storage, fuel cells, solar power and EV charging solutions

marketed and or internally designated as “e-Bloc” power solutions.

indoor and outdoor power systems integrating any combinations of the following, but not limited

switchgear, controls, engine generator sets, energy storage, fuel cells, solar power and EV charging solutions marketed and

internally designated as “E-Bloc” power solutions.

Protective Equipment

and medium voltage switchgear, switchboards and automatic transfer switches.

design, manufacture and integrate these offerings at our facility in Southern California.

Low and medium voltage switchgear, switchboards and automatic transfer switches.

engineer, manufacture and integrate these offerings at our facility in Southern California.

Power Segment

Critical Power business designs, manufactures and sells mobile EV charging solutions under our e-Boost suite of products, in addition

to refurbishing and reselling used power generation equipment, distributing new power generation equipment and performing service

and maintenance on our customers’ existing power generation equipment.

Many of these systems are used to maintain reliable,

primary, peak shaving or emergency standby power at facilities where it is required or where the potential consequences of

a power outage make it necessary, such as at major national retailers, hospitals, data centers, communications facilities, factories,

military sites, office complexes and other critical operations.

to refurbishing and reselling used power generation equipment, distributing new power generation equipment and performing service and

maintenance on our customers’ existing power generation equipment.

Many of these systems are used to maintain reliable, primary,

peak shaving or emergency standby power at facilities where it is required or where the potential consequences of a power outage make

it necessary, such as at major national retailers, hospitals, data centers, communications facilities, factories, military sites, office

complexes and other critical operations.

of Critical Power Segment Offerings

E-BOOST Products

(Generator on a Truck) is a truck-mounted option that brings on-demand, high-capacity

charging to EV truck and car owners at any convenient location.

E-BOOST Mobile is a trailer-mounted solution that provides multiple options for towing and can be available at specific

businesses, large sports and cultural events and can be relocated with minimal effort on short notice.

e-Boost G.O.A.T.

(Generator on a Truck) is a truck-mounted option that brings on-demand, high-capacity charging to EV truck and car

owners at any convenient location.

e-Boost Mobile is a trailer-mounted solution that provides multiple options for towing and can be available at specific businesses,

large sports and cultural events and can be relocated with minimal effort on short notice.

e-Boost Pod is a stationary EV charging solution with customizable higher capacity that can also service other power needs especially

in emergency situations, such as a power outage, serving as a back-up power source with convenient power connectors and outlets

available on board.

▪ Engine-generator

power generation equipment with up to 2 MW of power output per genset, sourced

from several manufacturers and available for install by our expert, licensed technicians.

in emergency situations, such as a power outage, serving as a back-up power source with convenient power connectors and outlets available

Engine-generator sets:

power generation equipment with up to 2 MW of power output per genset, sourced from several manufacturers

and available for install by our expert, licensed technicians.

Available individually or in multi-unit paralleled configurations.

Fuel options include liquid propane, natural gas, diesel

Fuel options include liquid propane, natural gas, diesel and bi-fuel.

Uninterruptible Power Supply (UPS) systems.

preventative maintenance, and 24/7 repair and support services provided for all makes

and models of power generation equipment under one to five year contracts.

Scheduled preventative maintenance, and 24/7 repair and support services provided for all makes and models of power generation equipment

under one to five year contracts.

Regional service and maintenance:

1 unchanged sentence

National service and maintenance:

provided by our technicians and a network of field service providers throughout the

United States for multi-site, multi-state power generation equipment owners.

provided by our technicians and a network of field service providers throughout the United States

for multi-site, multi-state power generation equipment owners.

UPS systems from major manufacturers.

generation systems represent considerable investments that require proper maintenance and service in order to operate reliably

during a time of emergency.

Our power maintenance programs provide preventative maintenance, repair and support service

for our customers’ power generation systems.

To support our customers in managing their critical infrastructure, we

maintain inventories of repair parts, a fleet of service vehicles and a staff of certified field service technicians

in the Midwest and Florida.

To complete our geographic coverage, we maintain a network of field service partners located

in other regions, enabling us to provide quick-response, 24/7 service capability that can effectively service and maintain any

make and model of back-up power equipment in any city of the United States.

Our field service organization services more than

3,000 generators owned by more than 900 customers located throughout the United States and its territories, including for multi-site,

generation systems represent considerable investments that require proper maintenance and service in order to operate reliably during

a time of emergency.

Our power maintenance programs provide preventative maintenance, repair and support service for our customers’

power generation systems.

To support our customers in managing their critical infrastructure, we maintain inventories of repair parts,

a fleet of service vehicles and a staff of certified field service technicians in the Midwest and Florida.

To complete our geographic

coverage, we maintain a network of field service partners located in other regions, enabling us to provide quick-response, 24/7 service

capability that can effectively service and maintain any make and model of back-up power equipment.

Our field service organization services

more than 2,700 generators owned by more than 900 customers located throughout the United States and its territories, including for multi-site,

multi-state customers.

recognize discrete revenue streams from service contracts, sales, installation, maintenance and repair services, and we offer

service contracts to all owners of power generation and related equipment, whether or not the equipment was originally sold by

Our service agreements have terms ranging from one to five years in duration, providing the Company with a recurring

revenue stream.

believe we have established a stable platform from which to develop and grow our business lines, revenues, net income and shareholder

We are focused on internal growth through operating efficiencies, new product development, customer focus and our continued

migration towards more highly-engineered products and specialized services.

We intend to significantly increase the percentage

of our sales derived from engineered-to-order products and differentiated services and believe this can be accomplished by targeting

market segments such as EV charging infrastructure, microgrid developers, national and regional retailers, telecom towers, farming

and agriculture, data centers and independent power producers, which have growth characteristics exceeding the norm in our industry.

intend to build our revenue and net income at rates exceeding industry norms through internal growth initiatives and complementary

acquisitions.

Accomplishing these financial goals will be dependent on a number of factors including our ability to execute the

following strategies and actions:

● Establishing

recognize discrete revenue streams from service contracts, sales, installation, maintenance and repair services, and we offer service

contracts to all owners of power generation and related equipment, whether or not the equipment was originally sold by us.

agreements have terms ranging from one to five years in duration, providing the Company with a recurring revenue stream.

believe we have established a stable platform from which to develop and grow our business lines, revenues, profitability and shareholder

We are focused on internal growth through operating efficiencies, new product development, customer focus and our continued migration

towards more highly-engineered products and specialized services.

We intend to significantly increase the percentage of our sales derived

from engineered-to-order products and differentiated services and believe this can be accomplished by targeting market segments such

as EV charging infrastructure, microgrid developers, national and regional retailers, water treatment facilities, data centers and independent

power producers which have growth characteristics exceeding the norm in our industry.

intend to build our revenue and net income at rates exceeding industry norms through internal growth initiatives.

Accomplishing these

financial goals will be dependent on a number of factors including our ability to execute the following strategies and actions:

a scalable organizational infrastructure to support our expected growth;

in our capabilities to provide progressively more advanced equipment and service solutions;

● Continuously

applying our manufacturing and service resources to their highest and best uses;

2 unchanged sentences

Solutions Segment

intend to accomplish our growth objectives within our T&D Solutions business by emphasizing our capabilities in EV charging

and original equipment manufacturers (“OEMs”) equipment solutions and continuing to invest in marketing and engineering

resources and product development to increase our pipeline of recurring order customers that demand custom solutions for their

intend to accomplish our growth objectives within our T&D Solutions business by emphasizing our capabilities in EV charging infrastructure

and original equipment manufacturers (“OEMs”) equipment solutions and continuing to invest in marketing and engineering resources to increase our pipeline of recurring order customers that demand custom solutions for their power needs.

Power Segment

our Critical Power business, we intend to increase the number of national account customers we have by leveraging our scalable,

nationwide network of partners which allows us to service and maintain standby power systems anywhere in the United States.

are actively marketing our preventive maintenance services to new national accounts including:

major national retailers, telecommunications

companies, data centers, banks, hospitals and health care facilities, educational institutions and property management companies.

Additionally, we are actively marketing our recently introduced suite of mobile E-BOOST products, launched in November 2021, and

our new and used power generation equipment intended to ensure access to uninterrupted power during times of emergency.

market for T&D equipment and Critical Power solutions is very fragmented due to the range of equipment types, electrical and

mechanical properties, technological standards and service parameters required by different categories of end users for their

specific applications.

Many orders are custom-engineered and tend to be time-sensitive since other critical work is frequently

being coordinated around the customer’s electrical equipment installation.

The vast majority of North American demand for

the types of solutions we provide is satisfied by thousands of producers and service companies in the U.S.

our Critical Power business, we are actively marketing our preventive maintenance services to new national accounts including:

national retailers, telecommunications companies, data centers, banks, hospitals and health care facilities, educational institutions

and property management companies.

Since November 2021, we have been aggressively marketing our e-Boost mobile EV charging

products to electric bus and truck manufacturers, fleet management companies, municipalities and EV infrastructure providers.

market for T&D equipment and Critical Power solutions is very fragmented due to the range of equipment types, electrical and mechanical

properties, technological standards and service parameters required by different categories of end users for their specific applications.

Many orders are custom-engineered and tend to be time-sensitive since other critical work is frequently being coordinated around the

customer’s electrical equipment installation.

The vast majority of North American demand for the types of solutions we provide

is satisfied by thousands of producers and service companies in the U.S.

believe several of the key industry trends supporting future growth in our industry are as follows:

and Overburdened North American Power Grid — The aging and overburdened

North American power grid is expected to require significant capital expenditures to

upgrade the existing infrastructure over the next several years to maintain adequate

levels of reliability and efficiency.

Significant capital investment will be required

to relieve congestion, meet growing demand, achieve targets for efficiency, emissions

and use of renewable sources, and to replace components of the U.S.

power grid operating

at, near or past their planned service lives.

Long-Term Demand for Electricity and Reliable Power — The Department of

Energy’s Energy Information Administration, or EIA, forecasts that total electricity

use in the U.S.

and Overburdened North American Power Grid — The aging and overburdened North American power grid is expected to require

significant capital expenditures to upgrade the existing infrastructure over the next several years to maintain adequate levels of

reliability and efficiency.

Significant capital investment will be required to relieve congestion, meet growing demand, achieve targets

for efficiency, emissions and use of renewable sources, and to replace components of the U.S.

power grid operating at, near or past

their planned service lives.

Long-Term Demand for Electricity and Reliable Power — The Department of Energy’s Energy Information Administration,

or EIA, forecasts that total electricity use in the U.S.

will increase by approximately 28% from 2011 to 2040.

This increase is

driven by anticipated population growth, economic expansion, increasing dependence on

computing power throughout the economy and the increased use of electrical devices in

In order to meet growing demand for electricity in North America, substantial

investment in increased electrical grid capacity and efficiency will be required, as

well as the addition of specialized equipment to help ensure the reliability and quality

of electricity for critical applications.

In response to these challenges, there is an

increasing trend among commercial and industrial companies to invest in on-site power

sources, both for standby purposes in the event of a catastrophic power outage, or to

reduce the amount of electricity they draw from the utility grid during peak periods.

Expanding Electric Vehicle (EV) and Charging Infrastructure Market — A

report from Allied Market Research in 2020 projected that the global electric vehicle

market will reach $803 billion by the year 2027, registering a compound annual growth

rate (CAGR) of 22.6%.

North America is estimated to reach $194 billion by 2027, at a

significant CAGR of 27.5%.

In 2010, only about 17,000 electric vehicles were on the world’s

By 2019, that number had swelled to 7.2 million and is increasing rapidly according

to the International Energy Agency (IEA).

Furthermore, in order for EV’s to grow

at such a rapid pace, it is necessary that infrastructure be built to allow for such

In 2019, there were about 7.3 million chargers worldwide compared to an insignificant

amount ten years ago, and the EV infrastructure has become a global priority as major

governments and corporations have committed to spending billions of dollars towards building

EV charging infrastructure.

In order to meet the rapidly growing demand for EV’s

and the infrastructure supporting it, substantial investment in grid connectivity and

enhancement will be required.

the year ended December 31, 2021, 100% of our sales were to U.S.

customers, represented in large part by companies involved in

distributed generation, regulated and non-regulated utilities and industrial and wholesale business.

During the year ended December

31, 2021, we sold our electrical equipment and services to over 900 individual customers and our twenty largest customers

represented approximately 68% of our consolidated revenue.

the year ended December 31, 2020, 100% of our sales were to U.S.

customers, represented in large part by companies involved in

distributed generation, regulated and non-regulated utilities and industrial and wholesale business.

During the year ended December

31, 2020, we sold our electrical equipment and services to over 900 individual customers and our twenty largest customers

represented approximately 74% of our consolidated revenue.

This increase is driven

by anticipated population growth, economic expansion, increasing dependence on computing power throughout the economy and the increased

use of electrical devices in the home.

In order to meet growing demand for electricity in North America, substantial investment in

increased electrical grid capacity and efficiency will be required, as well as the addition of specialized equipment to help ensure

the reliability and quality of electricity for critical applications.

In response to these challenges, there is an increasing trend

among commercial and industrial companies to invest in on-site power sources, both for standby purposes in the event of a catastrophic

power outage, or to reduce the amount of electricity they draw from the utility grid during peak periods.

Expanding Electric Vehicle (EV) and Charging Infrastructure Market — A report from Allied Market Research in 2020 projected

that the global electric vehicle market will reach $803 billion by the year 2027, registering a compound annual growth rate (CAGR)

North America is estimated to reach $194 billion by 2027, at a significant CAGR of 27.5%.

In 2010, only about 17,000 electric

vehicles were on the world’s roads.

By 2019, that number had swelled to 7.2 million and is increasing rapidly according to

the International Energy Agency (IEA).

Furthermore, in order for EV’s to grow at such a rapid pace, it is necessary that infrastructure

be built to allow for such growth.

In 2019, there were about 7.3 million chargers worldwide compared to an insignificant amount ten

years ago, and the EV infrastructure has become a global priority as major governments and corporations have committed to spending

billions of dollars towards building EV charging infrastructure.

In order to meet the rapidly growing demand for EV’s and the

infrastructure supporting it, substantial investment in grid connectivity and enhancement will be required.

For the years ended December 31, 2022 and 2021, 100% of our sales were to U.S.

customers, represented in large part by companies involved

in distributed generation, regulated and non-regulated utilities and industrial and wholesale business.

During the years ended December

31, 2022 and 2021, we sold our electrical equipment and services to over 900 individual customers and our twenty largest customers represented

approximately 78% and 68% of our consolidated revenue, respectively.

Approximately

22% and 34% of our sales in the year ended December 31, 2021 and 2020, respectively, were made to CleanSpark Inc.

The majority of our

sales to CleanSpark Inc.

were made pursuant to the Contract Manufacturing Agreement that was made in January 2019.

As previously reported,

on January 22, 2019, we entered into a Contract Manufacturing Agreement, dated as of January 22, 2019 (the “Contract Manufacturing

Agreement”), by and among us and CleanSpark.

45% of our sales during the year ended December 31, 2022 were made to Enchanted Rock Electric, LLC and we did not sell any equipment

to Enchanted Rock Electric, LLC during the year ended December 31, 2021.

The majority of our sales to Enchanted Rock Electric, LLC were

made pursuant to contract terms and conditions for each project.

Approximately 22% of our sales during the year ended December 31, 2021 were made to CleanSpark Inc (“CleanSpark”).

of our sales to CleanSpark were made pursuant to the Contract Manufacturing Agreement we entered into with CleanSpark in January 2019

(the “Contract Manufacturing Agreement”).

Pursuant to the terms of the Contract Manufacturing Agreement, the Company manufactured

parallel switchgears, automatic transfer switches and related products (collectively, “Products”) exclusively for purchase

parallel switchgear, automatic transfer switches and related products (collectively, “Products”) exclusively for purchase

by CleanSpark.

The Contract Manufacturing Agreement had a term of 18 months and expired on the 18-month anniversary of the execution

of the Contract Manufacturing Agreement.

Additionally, approximately 19% of our sales in the year ended December 31, 2021 were made

to a large international container shipping company in Hawaii.

In connection with the expiry of the Contract

Manufacturing Agreement, we entered into a Distribution Agreement with CleanSpark (the “Distribution Agreement”), dated

as of May 31, 2021, pursuant to which CleanSpark will serve as our exclusive distributor of the Products within any geographic

region in which CleanSpark conducts its business (the “Sales Channel”).

We will serve as CleanSpark’s sole source

of the Products, and of any similar goods or products that would reasonably be deemed as interchangeable with such Products for

sale within the Sales Channel.

CleanSpark will purchase the Products via written purchase orders to us.

The price for the Products

sold under the Distribution Agreement will be determined on a job-by-job basis, provided that CleanSpark shall pay us 97% of the

contract sales price of the Products to all end-use customers.

The Distribution Agreement terminates on December 31, 2023 and may

be extended by mutual agreement of us and CleanSpark.

While the loss of a significant number

of customers would have a material adverse effect on our business, we do not believe that the loss of any specific customer would

have a material adverse effect on our business.

The Contract Manufacturing Agreement had a term of 18 months and expired on the 18-month anniversary of the execution of

the Contract Manufacturing Agreement.

connection with the expiry of the Contract Manufacturing Agreement, we entered into a Distribution Agreement with CleanSpark (the “Distribution

Agreement”), dated as of May 31, 2021, pursuant to which CleanSpark served as our exclusive distributor of the Products within

any geographic region in which CleanSpark conducts its business.

June 3, 2022, the Company and CleanSpark entered into a termination agreement (the “Termination Agreement”) to terminate

the Distribution Agreement.

Pursuant to the Termination Agreement, the Company agreed to, amongst others, (i) release CleanSpark from

further liabilities due under the Distribution Agreement, including for certain future amounts due under the Distribution Agreement and

certain accounts payable invoices, (ii) assume the responsibility of billing and collecting payment from Enchanted Rock Electric, LLC,

a third party and mutual client of both the Company and CleanSpark for all open sales orders amounts under its outstanding agreements

for Products that have or will be manufactured by the Company, and (iii) return portions of certain deposits advanced to the Company

pursuant to the Distribution Agreement.

additionally transferred the services and maintenance agreements and associated rights and liabilities it had related to switchgear products

manufactured by the Company, and the Company assumed all liability and responsibility for all claims of the Products including, but not

limited to, all repairs, defects, and warranty liability of the Products that were previously manufactured by the Company and then distributed

or sold by CleanSpark .

Additionally,

approximately 19% of our sales during the year ended December 31, 2021 were made to a large international container shipping company

Sales and Distribution

substantial portion of the products we offer are sold directly to customers by our marketing and sales personnel operating from

our office locations in the U.S.

Following the sale of the transformer business units, we no longer have office locations or employees

Our direct sales force, as well as our authorized manufacturers’ representatives, markets to end users and to

third parties, such as OEMs, EPC firms, electrical wholesalers, energy developers and value added integrators.

reflects the amount of revenue we expect to realize upon the shipment of customer orders for our products that are not yet complete

or for which work has not yet begun.

Our sales backlog as of December 31, 2021 was approximately $22.8 million, as compared to

$12.7 million as of December 31, 2020.

During the year ended December 31, 2021, the Company experienced a surge in orders for

its e-Bloc power system of almost $13 million.

This was the primary driver of the 80% increase in the Company’s

year over year ending backlog.

Orders included in our sales backlog are represented by customer purchase orders and contracts

that we believe to be firm.

experience intense competition from a large number of electrical equipment manufacturers and from distributors and servicers of

such equipment.

The number and size of our competitors varies considerably by product line and service category, with many of

our competitors tending to be small, highly specialized or focused on a certain geographic market area or customer.

However, several

of our competitors have substantially greater financial and technical resources than us, including some of the world’s largest

electrical products and industrial equipment manufacturing companies.

A representative list of our direct competitors in our T&D

Solutions segment includes Crown Electric Engineering and Manufacturing, LLC, Industrial Electric Machinery, LLC, Myers Power

Products, Inc.

substantial portion of the products we offer are sold directly to customers by our marketing and sales personnel operating from our office

locations in the U.S.

Our direct sales force, as well as our authorized manufacturers’ representatives, market to end users and to third parties, such

as OEMs, EPC firms, electrical wholesalers, energy developers and value added integrators.

reflects the amount of revenue we expect to realize upon the shipment of customer orders for our products that are not yet complete or

for which work has not yet begun or been completed.

Our sales backlog as of December 31, 2022 was approximately $37.2 million, as compared

to $22.8 million as of December 31, 2021.

During the year ended December 31, 2022, the Company experienced a surge in orders for its

E-Bloc power system which was the primary driver for the increase in the Company’s year over year ending backlog.

Orders included

in our sales backlog are represented by customer purchase orders and contracts that we believe to be firm.

experience intense competition from a large number of electrical equipment manufacturers and from distributors and servicers of such

The number and size of our competitors varies considerably by product line and service category, with many of our competitors

tending to be small, highly specialized or focused on a certain geographic market area or customer.

However, several of our competitors

have substantially greater financial and technical resources than us, including some of the world’s largest electrical products

and industrial equipment manufacturing companies.

A representative list of our direct competitors in our T&D Solutions segment includes

Crown Electric Engineering and Manufacturing, LLC, Industrial Electric Machinery, LLC, RESA Power, LLC, Eaton Corporation, Switchgear

Power Systems, LLC, Myers Power Products, Inc.

and Powell Industries, Inc.

believe that we compete primarily on the basis of technical support and application expertise, engineering, manufacturing and

service capabilities, equipment rating, quality, scheduling and price.

In all our businesses, our objective is to focus our efforts

on more specialized, challenging and complex applications.

Accordingly, a critical element to the success of our business is responsiveness

and flexibility in providing custom-engineered solutions to satisfy customer needs.

As a result of our long-time presence in the

industry, we possess a number of special designs and libraries of programming code for our equipment that were engineered and

developed specifically for our customers.

We believe these factors give us a competitive advantage and that they are a major contributor

to our frequency of repeat customer orders and the longevity of our customer relationships.

believe that we compete primarily on the basis of technical support and application expertise, engineering, manufacturing and service

capabilities, equipment rating, quality, scheduling and price.

In all our businesses, our objective is to focus our efforts on more specialized,

challenging and complex applications.

Accordingly, a critical element to the success of our business is responsiveness and flexibility

in providing custom-engineered solutions to satisfy customer needs.

As a result of our long-time presence in the industry, we possess

a number of special designs and libraries of programming code for our equipment that were engineered and developed specifically for our

We believe these factors give us a competitive advantage and that they are a major contributor to our frequency of repeat

customer orders and the longevity of our customer relationships.

Materials and Suppliers

The principal raw materials purchased by

us are steel, copper, sensors, circuit breakers, meters and relays.

We also purchase certain electrical components such as switches,

fuses, protectors and circuit breakers from a variety of suppliers.

These raw materials and components are available from and supplied

by numerous sources at competitive prices.

Unanticipated increases in raw material prices or disruptions in supply could increase

production costs and adversely affect our profitability.

During the year ended December 31, 2021, we experienced an increase in

raw material costs as a result of disruptions to our supply chain.

These disruptions were initially generated by the recovery from

the coronavirus pandemic that had caused many suppliers and sub-suppliers to temporarily reduce or close down excess facilities.

principal raw materials purchased by us are steel, copper, sensors, circuit breakers, meters, cassettes and relays.

We also purchase

certain electrical components such as switches, fuses, protectors and circuit breakers from a variety of suppliers.

These raw materials

and components are available from and supplied by numerous sources at competitive prices.

Unanticipated increases in raw material prices

or disruptions in supply could increase production costs and adversely affect our profitability.

During the year ended December 31, 2022,

we experienced an increase in raw material costs as a result of disruptions to our supply chain.

These disruptions were initially generated

by the recovery from the coronavirus pandemic that had caused many suppliers and sub-suppliers to temporarily reduce or close down excess

The restart of the world economy created initial pressures on the said facilities reaching their pre-pandemic capacity.

More recently,

geopolitical conflicts have further pressured material costs such as aluminum and nickel.

These supply pressures have, and continue

to, make it more difficult for us to secure all the material we need in a timely manner in order to meet our obligations and forecasts

regarding our customers’ orders.

recently, geopolitical conflicts have further pressured material costs such as aluminum and nickel.

These supply pressures have, and

continue to, make it more difficult for us to secure all the material we need in a timely manner in order to meet our obligations and

forecasts regarding our customers’ orders.

Our largest suppliers during the year ended December 31, 2022 included Industrial Connections

1 unchanged sentence

of December 31, 2022, we had 99 employees consisting of 32 salaried staff and 67 hourly workers.

Certain of our employees

located at our manufacturing facility in Santa Fe Springs, California are covered by a collective bargaining agreement with Local

Union 1710 of the International Brotherhood of Electrical Workers, AFL-CIO that expires in June 2024.

Certain of our employees located at

our manufacturing facility in Santa Fe Springs, California are covered by a collective bargaining agreement with Local Union 1710 of

the International Brotherhood of Electrical Workers, AFL-CIO that expires in June 2024.

Environmental

are subject to numerous environmental laws and regulations concerning, among other areas, air emissions, discharges into waterways

and the generation, handling, storing, transportation, treatment and disposal of waste materials.

These laws and regulations are

constantly changing and it is impossible to predict with accuracy the effect they may have on us in the future.

Like many other

industrial enterprises, our manufacturing operations entail the risk of noncompliance, which may result in fines, penalties and

remediation costs, and there can be no assurance that such costs will be insignificant.

To our knowledge, we are in substantial

compliance with all federal, state, provincial and local environmental protection provisions, and believe that the future compliance

cost should not have a material adverse effect on our capital expenditures, net income or competitive position.

However, legal

and regulatory requirements in these areas have been increasing and there can be no assurance that significant costs and liabilities

will not be incurred in the future due to regulatory noncompliance.

are subject to numerous environmental laws and regulations concerning, among other areas, air emissions, discharges into waterways and

the generation, handling, storing, transportation, treatment and disposal of waste materials.

These laws and regulations are constantly

changing and it is impossible to predict with accuracy the effect they may have on us in the future.

Like many other industrial enterprises,

our manufacturing operations entail the risk of noncompliance, which may result in fines, penalties and remediation costs, and there

can be no assurance that such costs will be insignificant.

To our knowledge, we are in substantial compliance with all federal, state,

provincial and local environmental protection provisions, and believe that the future compliance cost should not have a material adverse

effect on our capital expenditures, net income or competitive position.

However, legal and regulatory requirements in these areas have

been increasing and there can be no assurance that significant costs and liabilities will not be incurred in the future due to regulatory

noncompliance.

were originally formed in the State of Nevada in 2008.

On November 30, 2009, we merged with and into Pioneer Power Solutions,

Inc., a Delaware corporation, for the sole purpose of changing our state of incorporation from Nevada to Delaware and changing

our name to “Pioneer Power Solutions, Inc.” On September 24, 2013, we completed an underwritten public offering

and our common stock began trading on the Nasdaq Capital Market under the symbol “PPSI”.

On November 30, 2009, we merged with and into Pioneer Power Solutions, Inc., a

Delaware corporation, for the sole purpose of changing our state of incorporation from Nevada to Delaware and changing our name to “Pioneer

Power Solutions, Inc.” On September 24, 2013, we completed an underwritten public offering and our common stock began trading on

the Nasdaq Capital Market under the symbol “PPSI”.

corporate website is located at www.pioneerpowersolutions.com.

On the investor relations section of our website, we make

available, free of charge, our Annual Reports on Form 10-K, Quarterly Reports on Form 10-Q, Current Reports on Form 8-K, and amendments

to those reports as soon as reasonably practicable after we electronically file them with or furnish them to the SEC.

maintains an Internet site that contains reports, proxy and information statements and other information regarding issuers, such

as us, that file electronically with the SEC at www.sec.gov.

We webcast our earnings calls and certain

events we participate in with members of the investment community on our investor relations website.

Additionally, we provide notifications

of news or announcements regarding our financial performance, including SEC filings, investor events and press and earnings releases

as part of the investor relations section of our website.

The contents of and the information on or accessible through our corporate

website, including the investor relations portion of our website, are not a part of, and are not intended to be incorporated into,

this report or any other report or document we file with or furnish to the SEC, and any references to our website are intended

to be an inactive textual references only.

On the investor relations section of our website, we make available, free

of charge, our Annual Reports on Form 10-K, Quarterly Reports on Form 10-Q, Current Reports on Form 8-K, and amendments to those reports

as soon as reasonably practicable after we electronically file them with or furnish them to the Securities and Exchange Commissions (“SEC”).

The SEC maintains an Internet site

that contains reports, proxy and information statements and other information regarding issuers, such as us, that file electronically

with the SEC at www.sec.gov.

Additionally,

we provide notifications of news or announcements regarding our financial performance, including SEC filings, investor events and press

and earnings releases as part of the investor relations section of our website.

The contents of and the information on or accessible

through our corporate website, including the investor relations portion of our website, are not a part of, and are not intended to be

incorporated into, this report or any other report or document we file with or furnish to the SEC, and any references to our website

are intended to be an inactive textual references only.

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 1. Business