What changed in this filing

/stocks — the workspaceLOADING

Item 2. Management’s Discussion and Analysis

2023-11-14 compared with 2023-08-14 · 273 added, 219 removed, 144 unchanged (77% of the section changed)

44 unchanged sentences

associated with litigation and claims, which could impact our financial results and condition.

foregoing does not represent an exhaustive list of matters that may be covered by the forward-looking

statements contained herein or risk factors that we are faced with that may cause our actual

results to differ from those anticipated in our forward-looking statements.

Moreover, new

risks regularly emerge, and it is not possible for us to predict or articulate all risks

we face, nor can we assess the impact of all risks on our business or the extent to which

any risk, or combination of risks, may cause actual results to differ from those contained

in any forward-looking statements.

Except to the extent required by applicable laws or rules,

we undertake no obligation to publicly update or revise any forward-looking statement, whether

as a result of new information, future events or otherwise.

You should review carefully the

risks and uncertainties described under the heading “Part II - Item 1A.

Risk Factors”

in this Quarterly Report on Form 10-Q and “Part I - Item 1A.

Risk Factors” in

our Annual Report on Form 10-K for the year ended December 31, 2022 for a discussion of the

foregoing and other risks that relate to our business and investing in shares of our common

foregoing does not represent an exhaustive list of matters that may be covered by the forward-looking statements contained herein or

risk factors that we are faced with that may cause our actual results to differ from those anticipated in our forward-looking statements.

Moreover, new risks regularly emerge, and it is not possible for us to predict or articulate all risks we face, nor can we assess the

impact of all risks on our business or the extent to which any risk, or combination of risks, may cause actual results to differ from

those contained in any forward-looking statements.

Except to the extent required by applicable laws or rules, we undertake no obligation

to publicly update or revise any forward-looking statement, whether as a result of new information, future events or otherwise.

review carefully the risks and uncertainties described under the heading “Part II - Item 1A.

Risk Factors” in this Quarterly

Report on Form 10-Q and “Part I - Item 1A.

Risk Factors” in our Annual Report on Form 10-K for the year ended December 31,

2022 for a discussion of the foregoing and other risks that relate to our business and investing in shares of our common stock.

design, manufacture, integrate, refurbish, service, distribute and sell electric power systems, distributed energy resources, power generation

32 unchanged sentences

filed with the SEC on April 11, 2023.

There were no material changes to our accounting policies during the six months ended June 30,

There were no material changes to our accounting policies during the nine months ended September

OF OPERATIONS

of the Three and Six Months Results

of the Three and Nine Months Results

financial and operating data for our reportable business segments for the most recent reporting period is summarized below.

3 unchanged sentences

our discussion and analysis of results of operations below.

summary of operating results during the three and six months ended June 30, 2023 and 2022 are as follows:

Power Solutions

summary of operating results during the three and nine months ended September 30, 2023 and 2022 are as follows:

Three Months Ended

Nine Months Ended

September 30,

T&D Solutions

Critical Power Solutions

Cost of goods sold

Power Solutions

general and administrative expenses

and amortization expense

operating expenses

Operating loss from continuing

Loss before income taxes

T&D Solutions

Critical Power Solutions

Selling, general and administrative expenses

Depreciation and amortization expense

Total operating expenses

Operating income (loss) from continuing operations

Interest income

Other (income) expense

Income (loss) before income taxes

Income tax expense

Net income (loss)

backlog is based on firm orders from our customers expected to be delivered in the future, most of which is expected to occur during

3 unchanged sentences

or for which work has not yet begun.

At June 30, 2023, backlog from our E-Bloc power systems solutions was approximately $15,300, or

46% of the total backlog.

As of September 30, 2023, backlog from our E-Bloc power systems and related equipment was approximately

$13,771, or 41% of the total backlog.

following table represents the progression of our backlog, by reporting segment, as of the end of the last five quarters:

September 30,

T&D Solutions

Power Solutions

order backlog

Critical Power Solutions

Total order backlog

following table represents our revenues by reporting segment and major product category for the periods indicated (in thousands, except

percentages):

Three Months Ended

Nine Months Ended

September 30,

T&D Solutions

Power Systems

Critical Power Solutions

the three months ended June 30, 2023, our consolidated revenue increased by $7,267, or 149.4%, to $12,130, up from $4,863 during the

three months ended June 30, 2022, primarily due to an increase in sales of our power systems from our T&D Solutions segment and an

increase in sales of our equipment from our Critical Power Solutions segment.

the six months ended June 30, 2023, our consolidated revenue increased by $9,413, or 83.9%, to $20,638, up from $11,225 during the three

months ended June 30, 2022, primarily due to an increase in sales of our power systems from our T&D Solutions segment and an increase

in service sales from our Critical Power Solutions segment.

During the three months ended June 30, 2023, revenue from our power systems product lines increased by $6,681, or 262.7%,

as compared to the three months ended June 30, 2022, primarily due to increased sales of our E-Bloc power systems and automatic transfer

switches, in addition to an increase in sales of our medium and low voltage power systems.

the six months ended June 30, 2023, revenue from our power systems product lines increased by $8,719, or 139.1%, as compared to the six

months ended June 30, 2022, primarily due to increased sales of our E-Bloc power systems and automatic transfer switches, in addition

to an increase in sales of our medium and low voltage power systems.

For the three months ended June 30, 2023, revenue for our Critical Power segment increased by $586, or 25.2%, as compared

to the three months ended June 30, 2022, primarily due to an increase in sales of our new and refurbished generation equipment.

the six months ended June 30, 2023, revenue for our Critical Power segment increased by $694, or 14.0%, as compared to the six months

ended June 30, 2022, primarily due to an increase in sales of our new and refurbished generation equipment and the cyclicality of our

preventative maintenance schedules.

Profit (Loss) and Margin

Total revenue

the three months ended September 30, 2023, our consolidated revenue increased by $6,192, or 99.1%, to $12,443, up from $6,251 during

the three months ended September 30, 2022, primarily due to an increase in sales of our power systems from our T&D Solutions segment

and an increase in sales of our equipment from our Critical Power Solutions segment during the three months ended September 30, 2023.

the nine months ended September 30, 2023, our consolidated revenue increased by $15,604, or 89.3%, to $33,080, up from $17,476 during

the nine months ended September 30, 2022, primarily due to an increase in sales of our power systems from our T&D Solutions segment

and an increase in equipment and service sales from our Critical Power Solutions segment during the nine months ended September 30, 2023.

During the three months ended September 30, 2023, revenue from our power systems product lines increased by $5,802, or

153.8%, as compared to the three months ended September 30, 2022, primarily due to increased sales of our E-Bloc power systems and medium

and low voltage equipment during the three months ended September 30, 2023.

the nine months ended September 30, 2023, revenue from our power systems product lines increased by $14,530, or 144.9%, as compared to

the nine months ended September 30, 2022, primarily due to increased sales of our E-Bloc power systems and automatic transfer switches,

in addition to an increase in sales of our medium and low voltage equipment during the nine months ended September 30, 2023.

For the three months ended September 30, 2023, revenue for our Critical Power segment increased by $315, or 12.7%, as

compared to the three months ended September 30, 2022, primarily due to an increase in sales of our new and refurbished generation

equipment during the three months ended September 30, 2023.

the nine months ended September 30, 2023, revenue for our Critical Power segment increased by $1,009, or 13.6%, as compared to the nine

months ended September 30, 2022, primarily due to an increase in sales of our new and refurbished generation equipment and the cyclicality

of our preventative maintenance schedules during the nine months ended September 30, 2023.

Profit and Margin

following table represents our gross profit by reporting segment for the periods indicated (in thousands, except percentages):

Three Months Ended

Nine Months Ended

September 30,

T&D Solutions

profit (loss)

Gross margin %

Critical Power Solutions

Gross margin %

Consolidated gross profit

Consolidated gross margin %

the three months ended June 30, 2023, our consolidated gross margin increased to 22.3% of revenues, as compared to 1.3% during the three

months ended June 30, 2022.

the six months ended June 30, 2023, our consolidated gross margin increased to 23.9% of revenues, as compared to 8.8% during the three

months ended June 30, 2022.

For the three months ended June 30, 2023, our gross margin percentage increased by 31.1%, from (7.0)% to 24.1%, as compared

to the three months ended June 30, 2022.

The increase was primarily due to the significant increase in sales our E-Bloc solution and

medium and low voltage power systems, a favorable sales mix and improved productivity from our manufacturing facility.

the six months ended June 30, 2023, our gross margin percentage increased by 21.1%, from 3.9% to 25.0%, as compared to the six months

ended June 30, 2022.

The increase was also primarily due to the significant increase in sales our E-Bloc solution and medium and low

voltage power systems, a favorable sales mix and improved productivity from our manufacturing facility.

the three months ended September 30, 2023, our consolidated gross margin increased to 29.8% of revenues, as compared to 13.8% during

the three months ended September 30, 2022.

the nine months ended September 30, 2023, our consolidated gross margin increased to 26.1% of revenues, as compared to 10.6% during the

nine months ended September 30, 2022.

For the three months ended September 30, 2023, our gross margin percentage increased by 21.1%, from 12.8% to 33.9%,

as compared to the three months ended September 30, 2022.

The increase was primarily due to the significant increase in sales our

E-Bloc power systems and medium and low voltage equipment, a reduction in input costs and improved productivity from our

manufacturing facility during the three months ended September 30, 2023.

the nine months ended September 30, 2023, our gross margin percentage increased by 21.3%, from 7.2% to 28.5%, as compared to the nine

months ended September 30, 2022.

The increase was also primarily due to the significant growth in sales our E-Bloc power systems and

medium and low voltage equipment, reduced input costs and improved productivity from our manufacturing facility during the nine months ended September 30, 2023.

Power Solutions .

For the three months ended June 30, 2023, our gross margin increased by 6.3%, to 16.7%, from 10.4% for the three

months ended June 30, 2022.

The increase was predominately due to a favorable sales mix and the acceptance of price increases from our

the six months ended June 30, 2023, our gross margin increased by 5.9%, to 20.8%, from 14.9% for the six months ended June 30, 2022.

The increase was also predominately due to a favorable sales mix and the acceptance of price increases from our customers.

For the three months ended September 30, 2023, our gross margin increased by 0.4%, to 15.7%, from 15.3% for the

three months ended September 30, 2022.

the nine months ended September 30, 2023, our gross margin increased by 4.0%, to 19.1%, from 15.1% for the nine months ended September

The increase was also primarily due to a favorable sales mix and the acceptance of price increases from our customers.

following table represents our operating expenses by reportable segment for the periods indicated (in thousands, except percentages):

Three Months Ended

Nine Months Ended

September 30,

T&D Solutions

general and administrative expense

and amortization expense

operating expense

Selling, general and administrative expense

Depreciation and amortization expense

Segment operating expense

Critical Power Solutions

general and administrative expense

and amortization expense

operating expense

Unallocated Corporate Overhead

general and administrative expense

and amortization expense

operating expense

general and administrative expense

and amortization expense

operating expense

Selling, general and administrative expense

Depreciation and amortization expense

Segment operating expense

Unallocated Corporate Overhead Expenses

Selling, general and administrative expense

Depreciation and amortization expense

Segment operating expense

Selling, general and administrative expense

Depreciation and amortization expense

Consolidated operating expense

General and Administrative Expense .

For the three months ended June 30, 2023, consolidated selling, general and administrative expense,

before depreciation and amortization, increased by approximately $502, or 19.6%, to $3,059, due to an increase in payroll related costs,

including stock-based compensation, professional fees and product development costs related to our e-Boost initiative, as compared to

$2,557 during the three months ended June 30, 2022.

For the three months ended September 30, 2023, consolidated selling, general and administrative

expense, before depreciation and amortization, increased by approximately $453, or 19.9%, to $2,726, as compared to $2,273 during the

three months ended September 30, 2022, primarily due to an increase in payroll related costs, including stock-based compensation, third

party commissions and product development costs related to our e-Boost initiative.

As a percentage of our consolidated revenue, selling,

general and administrative expense, before depreciation and amortization, decreased to 21.9% during the three months ended September

30, 2023, as compared to 36.4% in the three months ended September 30, 2022.

the nine months ended September 30, 2023, consolidated selling, general and administrative expense, before depreciation and amortization,

increased by approximately $1,266, or 19.3%, to $7,816, as compared to $6,550 during the nine months ended September 30, 2022, primarily

due to an increase in payroll related costs, including stock-based compensation, travel related costs, third party commissions and product

development costs related to our e-Boost initiative.

As a percentage of our consolidated revenue, selling, general and administrative

expense, before depreciation and amortization, decreased to 25.2% during the three months ended June 30, 2023, as compared to 52.6% in

the three months ended June 30, 2022.

the six months ended June 30, 2023, consolidated selling, general and administrative expense, before depreciation and amortization, increased

by approximately $813, or 19.0%, to $5,090, due to an increase in payroll related costs, including stock-based compensation, professional

fees and product development costs related to our e-Boost initiative, as compared to $4,277 during the six months ended June 30, 2022.

As a percentage of our consolidated revenue, selling, general and administrative expense, before depreciation and amortization, decreased

to 24.7% during the six months ended June 30, 2023, as compared to 38.1% during the six months ended June 30, 2022.

expense, before depreciation and amortization, decreased to 23.6% during the nine months ended September 30, 2023, as compared to 37.5%

in the nine months ended September 30, 2022.

and Amortization Expense.

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of right-of-use assets related to our finance leases, and excludes amounts included in cost of sales.

For the three months ended June

30, 2023, consolidated depreciation and amortization expense increased by $2, or 7.1%, as compared to the three months ended June 30,

the six months ended June 30, 2023, consolidated depreciation and amortization expense increased by $102, or 188.9%, as compared to the

six months ended June 30, 2022, primarily due to an increase in depreciation as a result of placing certain e-Boost assets into service.

From Operations

For the three months ended September

30, 2023, consolidated depreciation and amortization expense remained the same at $32, as compared to the three months ended September

the nine months ended September 30, 2023, consolidated depreciation and amortization expense increased by $102, or 118.6%, as compared

to the nine months ended September 30, 2022, primarily due to an increase in depreciation as a result of placing certain e-Boost assets

into service.

(Loss) From Operations

following table represents our operating income (loss) by reportable segment for the periods indicated (in thousands, except percentages):

Three Months Ended

Nine Months Ended

September 30,

T&D Solutions

Critical Power Solutions

corporate overhead expenses

from operations

Operating income from our T&D Solutions segment increased by $2,250, or 509.0%, during the three months ended June

30, 2023, as compared to the three months ended June 30, 2022, primarily due to the significant increase in sales our E-Bloc solution

and medium and low voltage power systems, a favorable sales mix and improved productivity from our manufacturing facility during the

three months ended June 30, 2023.

income from our T&D Solutions segment increased by $3,403, or 964.0%, during the six months ended June 30, 2023, as compared to the

six months ended June 30, 2022, primarily due an increase in sales of our power systems equipment, a favorable sales mix and improved

productivity from our manufacturing facility the six months ended June 30, 2023.

Unallocated corporate overhead expenses

Income (loss) from operations

Operating income from our T&D Solutions segment increased by $2,507 during the three months ended September 30, 2023,

as compared to the three months ended September 30, 2022, primarily due to an increase in sales of our power systems equipment, reduced

input costs and improved productivity from our manufacturing facility during the three months ended September 30, 2023.

income from our T&D Solutions segment increased by $5,912 during the nine months ended September 30, 2023, as compared to the nine

months ended September 30, 2022, primarily due to the significant increase in revenue, reduced input costs and improved productivity

from our manufacturing facility during the nine months ended September 30, 2023.

Power Solutions .

Operating loss for the Critical Power segment decreased by $251, or 33.2% during the three months ended June 30,

2023, primarily due to a favorable sales mix and the acceptance of price increases from our customers during the three months ended June

loss for the Critical Power segment increased by $32, or 3.5% during the six months ended June 30, 2023, as compared to the six months

ended June 30, 2022, primarily due to an increase in payroll related costs in addition to professional fees and depreciation expense

related to our e-Boost initiative.

Operating loss from our Critical Power segment decreased by $144, or 18.8%, during the three months ended September

30, 2023, primarily due to a favorable sales mix and the acceptance of price increases from our customers during the three months ended

September 30, 2023.

loss from our Critical Power segment decreased by $112, or 6.7%, during the nine months ended September 30, 2023, as compared to the

nine months ended September 30, 2022, primarily due to a favorable sales mix and the acceptance of price increases from our customers

during the nine months ended September 30, 2023.

Corporate Expense .

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tax compliance, legal, stock-based compensation, public reporting costs and costs not specifically allocated to reportable business segments.

the three months ended June 30, 2023, our unallocated corporate overhead expense increased by $357, or 27.0%, as compared to the three

months ended June 30, 2022, primarily due to an increase in payroll related costs, including stock-based compensation, and professional

the three six ended June 30, 2023, our unallocated corporate overhead expense increased by $348, or 16.7%, as compared to the six months

ended June 30, 2022, primarily due to an increase in payroll related costs, including stock-based compensation, and professional fees.

the three months ended September 30, 2023, our unallocated corporate overhead expense increased by $254, or 29.9%, as compared to the

three months ended September 30, 2022, primarily due to an increase in payroll related costs, including stock-based compensation, professional

fees and costs related to investor relations.

the nine months ended September 30, 2023, our unallocated corporate overhead expense increased by $604, or 20.6%, as compared to the

nine months ended September 30, 2022, primarily due to an increase in payroll related costs, including stock-based compensation, professional

fees and costs related to investor relations.

Non-Operating

(Income) Expense

For the three and six months ended June 30, 2023, we had interest income of approximately $79 and $132, respectively, as

compared to interest income of approximately $104 and $206, respectively, during the three and six months ended June 30, 2022.

the majority of our interest income from our cash on hand.

During the six months ended June 30, 2022, we generated the majority of our

interest income from the Seller Notes we received from the sale of the transformer business units and our cash on hand.

Other expense in the consolidated statements of operations reports certain gains and losses associated with activities not

directly related to our core operations.

the three and six months ended June 30, 2023, other non-operating expense was $20 and $7, respectively, as compared to other non-operating

expense of $117 and $129, respectively, during the three and six months ended June 30, 2022.

For the three and nine months ended September 30, 2023, we had interest income of approximately $60 and $192, respectively,

as compared to interest income of approximately $116 and $322 during the three and nine months ended September 30, 2022, respectively.

We generated the majority of our interest income from our cash on hand during the nine months ended September 30, 2023.

During the nine

months ended September 30, 2022, we generated the majority of our interest income from the Seller Notes we received from the sale of

the transformer business units, which were paid off during the year ended December 31, 2022, in addition to our cash on hand.

(Income) Expense .

Other (income) expense in the consolidated statements of operations reports certain gains and losses associated

with activities not directly related to our core operations.

the three and nine months ended September 30, 2023, other non-operating income was $11 and $4, respectively, as compared to other non-operating

income of $17 and other non-operating expense of $112 during the three and nine months ended September 30, 2022, respectively.

for Income Taxes .

Our effective income tax rate for the three months ended June 30, 2023 and 2022 was 0.0%.

provision reflects an effective tax rate on income before taxes of 0.0% for the six months ended June 30, 2023, as compared to (0.2)%

for the six months ended June 30, 2022, as set forth below:

Loss before income

Our effective income tax rate for the three months ended September 30, 2023 and 2022 was 0.0%.

provision reflects an effective tax rate on income before taxes of 0.0% for the nine months ended September 30, 2023, as compared to

(0.2)% for the nine months ended September 30, 2022, as set forth below:

Three Months Ended

Nine Months Ended

September 30,

Income (loss) before income taxes

Income tax expense

income tax rate %

Loss per Share

generated a net loss of $319 during the three months ended June 30, 2023, as compared to a net loss of $2,535 during the three months

ended June 30, 2022.

net loss per basic and diluted share for the three months ended June 30, 2023 was $0.03, as compared to a net loss per basic and diluted

share of $0.26 for the three months ended June 30, 2022.

generated a net loss of $197 during the six months ended June 30, 2023, as compared to a net loss of $3,268 during the six months ended

June 30, 2022.

net loss per basic and diluted share for the six months ended June 30, 2023 was $0.02, as compared to a net loss per basic and diluted

share of $0.34 for the six months ended June 30, 2022.

Effective income tax rate %

Income (Loss) per Share

generated net income of $1,024 during the three months ended September 30, 2023, as compared to a net loss of $1,311 during the three

months ended September 30, 2022.

net income per basic and diluted share for the three months ended September 30, 2023 was $0.10, as compared to a net loss per basic and

diluted share of $0.13 for the three months ended September 30, 2022.

generated net income of $827 during the nine months ended September 30, 2023, as compared to a net loss of $4,586 during the nine months

ended September 30, 2022.

net income per basic and diluted share for the nine months ended September 30, 2023 was $0.08, as compared to a net loss per basic and

diluted share of $0.47 for the nine months ended September 30, 2022.

AND CAPITAL RESOURCES

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Wainwright & Co., LLC (“Wainwright”),

pursuant to which we may offer and sell our shares of common stock, preferred stock, warrants and/or units of up to $25,000 from time

to time through Wainwright, acting as sales agent or principal (the “ATM Program”).

As of June 30, 2023, we had $9,624 of

cash on hand generated primarily from the sale of common stock under the ATM Program during the year ended December 31, 2021, payment

of all unpaid principal and interest from the Seller Notes during the year ended December 31, 2022 and cash flows from operating activities.

We have met our cash needs through a combination of cash flows from operating activities and bank borrowings, proceeds from the sale

of the CleanSpark Common Stock and warrants to purchase CleanSpark Common Stock, the sale of common stock under the ATM Program, funding

from the Payroll Protection Program and collecting all unpaid principal and interest from the Seller Notes.

Our cash requirements historically

were generally for operating activities, capital improvements and acquisitions.

December 13, 2021, we filed a prospectus supplement, which forms a part of our registration statement on Form S-3 (File No.

that was declared effective by the SEC on October 27, 2020, in connection with the offer and sale of up to an aggregate offering amount

of $8,600 of common stock that may be issued and sold under the ATM Program.

We did not sell any shares of common stock under the ATM

Program during the three and six months ended June 30, 2023.

As of June 30, 2023, $8,600 of common stock remained available for issuance

under the ATM Program.

pursuant to which we may offer and sell our shares of common stock from time to time through Wainwright, acting as sales agent or principal

(the “ATM Program”).

As of September 30, 2023, we had $7,581 of cash on hand generated primarily from the sale of common

stock under the ATM Program, payment of all unpaid principal and interest from the Seller Notes during the year ended December 31, 2022,

and cash flows from operating activities.

Since October 20, 2020, and through September 30, 2023, we sold an aggregate of 916,059 shares

of common stock for an aggregate gross proceeds of approximately $8,904, before any sales agent fees and expenses payable by us under

the ATM Program.

During the three and nine months ended September 30, 2023, we sold an aggregate of 27,559 shares of common stock for

an aggregate consideration of approximately $184, before any sales agent fees and expenses payable by us.

December 13, 2021, we filed a prospectus supplement to the prospectus which forms a part of our registration statement on Form S-3 (File

333-249569) (the “Prior Shelf Registration Statement”), that was declared effective by the SEC on October 27, 2020 (the

“Prior ATM Prospectus”), in connection with the offer and sale of up to an aggregate offering amount of $8,600 of common

stock that may be issued and sold under the ATM Program.

Prior to the expiration of the Prior Shelf Registration Statement at the end

of its three-year term, we sold an aggregate of 27,559 shares of common stock for an aggregate consideration of approximately $184, before

any sales agent fees and expenses payable by us, under the Prior ATM Prospectus.

On August 30, 2023, we filed a new registration statement

on Form S-3 (File No.

333-274266) to replace the Prior Shelf Registration Statement, including a base prospectus which covers the offering,

issuance and sale of up to $150,000 of common stock, preferred stock, warrants and/or units;

and a sales agreement prospectus covering

the offering, issuance and sale of up to a maximum aggregate offering price of $75,000 of common stock that may be issued and sold under

the ATM Program (the “New ATM Prospectus”).

The new registration statement was declared effective by the SEC on September

As of September 30, 2023, $75,000 of common stock remained available for issuance under the New ATM Prospectus.

World Health Organization determined that COVID-19 no longer fit the definition of a public health emergency and the U.S.

4 unchanged sentences

The continuing impacts of the COVID-19 endemic, as well as rising interest rates, inflation, changes in foreign currency

exchange rates and geopolitical developments (including the war in Ukraine) have resulted, and may continue to result, in a global slowdown

of economic activity, which may decrease demand for a broad variety of goods and services, including those provided by the Company’s

clients, while also disrupting supply channels, sales channels and advertising and marketing activities for an unknown period of time.

As a result of the current uncertainty in economic activity, the Company is unable to predict the potential size and duration of the

impact on its revenue and its results of operations, if any.

The extent of the potential impact of these macroeconomic factors on the

Company’s operational and financial performance will depend on a variety of factors, including the continuing impacts of the COVID-19

endemic and the extent of geopolitical disruption and their respective impacts on the Company’s clients, partners, industry, and

employees, all of which are uncertain at this time and cannot be accurately predicted.

The Company continues to monitor the effects of

these macroeconomic factors and intends to take steps deemed appropriate to limit the impact on its business.

During the six months ended

June 30, 2023, the Company was able to operate substantially at capacity.

exchange rates and geopolitical developments, such as the ongoing conflict between Russia and Ukraine, and the ongoing

conflict between Israel and Hamas, have resulted, and may continue to result, in a global slowdown of economic activity, which

may decrease demand for a broad variety of goods and services, including those provided by the Company’s clients, while also disrupting

supply channels, sales channels and advertising and marketing activities for an unknown period of time.

As a result of the current uncertainty

in economic activity, the Company is unable to predict the potential size and duration of the impact on its revenue and its results of

operations, if any.

The extent of the potential impact of these macroeconomic factors on the Company’s operational and financial

performance will depend on a variety of factors, including the continuing impacts of the COVID-19 endemic and the extent of geopolitical

disruption and their respective impacts on the Company’s clients, partners, industry, and employees, all of which are uncertain

at this time and cannot be accurately predicted.

The Company continues to monitor the effects of these macroeconomic factors and intends

to take steps deemed appropriate to limit the impact on its business.

During the nine months ended September 30, 2023, the Company was

able to operate substantially at capacity.

can be no assurance that precautionary measures, whether adopted by the Company or imposed by others, will be effective, and such measures

2 unchanged sentences

results of operations.

Provided by / (Used in) Operating Activities .

Cash provided by our operating activities was $366 during the six months ended June

30, 2023, as compared to cash used in operating activities of $1,621 during the six months ended June 30, 2022.

increase in cash provided by operating activities is primarily due to the decrease in our net loss and working capital fluctuations.

Used in Operating Activities .

Cash used in our operating activities was $228 during the nine months ended September 30, 2023, as

compared to $3,936 during the nine months ended September 30, 2022.

The decrease in cash used in

operating activities is primarily due to the decrease in our net loss and working capital fluctuations.

Used in Investing Activities.

Cash used in investing activities during the six months ended June 30, 2023 was $810, as compared to

$174 during the six months ended June 30, 2022.

Additions to property and equipment during the six months ended June 30, 2023 were $810,

as compared to $174 of additions during the six months ended June 30, 2022.

Cash used in our investing activities during the nine months ended September 30, 2023 was $2,345, as

compared to $391 during the nine months ended September 30, 2022.

Additions to property and equipment during the nine months ended September

30, 2023 were $2,345, as compared to $391 of additions during the nine months ended September 30, 2022.

Used in Financing Activities.

Cash used in our financing activities was $228 during the six months ended June 30, 2023, as compared

to $119 during the six months ended June 30, 2022.

The primary use of cash in financing activities for the six months ended June 30,

2023 and 2022 was repayments of financing leases.

As of June 30, 2023, we had working capital of $14,363, including $9,624 of cash on hand, compared to working capital of

$14,074, including $10,296 of cash on hand at December 31, 2022.

Cash used in our financing activities was $142 during the nine months ended September 30, 2023, as

compared to $162 during the nine months ended September 30, 2022.

The primary use of cash in financing activities for the nine months

ended September 30, 2023 and 2022 was repayments of financing leases.

As of September 30, 2023, we had working capital of $13,702, including $7,581 of cash on hand, compared to working capital

of $14,074, including $10,296 of cash on hand at December 31, 2022.

of Liquidity .

At June 30, 2023, we had $9,624 of cash on hand generated primarily from the sale of common stock under the ATM Program

during the year ended December 31, 2021, payment of all unpaid principal and interest from the Seller Notes during the year ended December

31, 2022 and cash flows from operating activities.

We have met our cash needs through a combination of cash flows from operating activities

and bank borrowings, proceeds from the sale of the CleanSpark Common Stock and warrants to purchase CleanSpark Common Stock, sale of

common stock under the ATM Program, funding from the Payroll Protection Program and collecting all unpaid principal and interest from

the Seller Notes.

Our cash requirements historically were generally for operating activities, capital improvements and acquisitions.

expect to meet our cash needs with our working capital and cash flows from our operating activities.

We expect our cash requirements

to be generally for operating activities, capital improvements and product development.

At September 30, 2023, we had $7,581 of cash on hand generated primarily from the sale of common stock under the

ATM Program, payment of all unpaid principal and interest from the Seller Notes during the year ended December 31, 2022 and cash

flows from operating activities.

We have historically met our cash needs through a combination of cash flows from operating

activities and bank borrowings, proceeds from the sale of the CleanSpark Common Stock and warrants to purchase CleanSpark Common

Stock, sale of common stock under the ATM Program and collecting all unpaid principal

and interest from the Seller Notes.

Historically, our cash requirements were generally for operating activities, debt repayment,

capital improvements and acquisitions.

expect to meet our cash needs with our working capital and cash flows from operating activities.

We expect our cash requirements to be

generally for operating activities, capital improvements and product development.

We expect that product development and promotional

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We expect that our cash balance is sufficient to fund operations for the next twelve months.

of June 30, 2023, we had no off-balance sheet transactions, arrangements, obligations (including contingent obligations), or other relationships

with unconsolidated entities or other persons that had, or that may have, a material effect on our financial condition, changes in financial

condition, revenues or expenses, results of operations, liquidity, capital expenditures or capital resources.

Company had $810 of additions to property and equipment during the six months ended June 30, 2023, as compared to $174 of additions to

property and equipment during the six months ended June 30, 2022.

of September 30, 2023, we had no off-balance sheet transactions, arrangements, obligations (including contingent obligations), or other

relationships with unconsolidated entities or other persons that had, or that may have, a material effect on our financial condition,

changes in financial condition, revenues or expenses, results of operations, liquidity, capital expenditures or capital resources.

Company had $2,345 of additions to property and equipment during the nine months ended September 30, 2023, as compared to $391 of additions

to property and equipment during the nine months ended September 30, 2022.

Trends, Events, Uncertainties and Factors That May Affect Future Operations

believe that our future operating results will continue to be subject to quarterly variations based upon a wide variety of factors, including

the cyclical nature of the electrical equipment industry and the markets for our products and services.

Our operating results could also

be impacted by changing customer requirements and exposure to fluctuations in prices of important raw supplies, such as copper, steel

and aluminum.

We have various insurance policies, including cybersecurity, covering risks in amounts that we consider adequate.

to these measures, we attempt to recover other cost increases through improvements to our manufacturing efficiency and through increases

in prices where competitively feasible.

Lastly, other economic conditions we cannot foresee may affect customer demand.

The continuing

impacts of the COVID-19 endemic are currently indeterminable, and has affected and may continue to affect the global economy.

the consequences of the ongoing conflict between Russia and Ukraine, including related sanctions and countermeasures, and the effects

of rising global inflation, are difficult to predict, and could adversely impact geopolitical and macroeconomic conditions, the global

economy, and contribute to increased market volatility, which may in turn adversely affect our business and operations.

We predominately

sell to customers in the industrial production and commercial construction markets.

Accordingly, changes in the condition of any of our

customers may have a greater impact than if our sales were more evenly distributed between different end markets.

For a further discussion

of factors that may affect future operating results see the sections entitled “Special Note Regarding Forward-Looking Statements”

in this Quarterly Report on Form 10-Q and “Part I - Item 1A.

believe that our future operating results will continue to be subject to quarterly variations based upon a wide variety of factors,

including the cyclical nature of the electrical equipment industry and the markets for our products and services.

Our operating

results could also be impacted by changing customer requirements and exposure to fluctuations in prices of important raw supplies,

such as copper, steel and aluminum.

We have various insurance policies, including cybersecurity, covering risks in amounts that we

consider adequate.

In addition to these measures, we attempt to recover other cost increases through improvements to our

manufacturing efficiency and through increases in prices where competitively feasible.

Lastly, other economic conditions we cannot

foresee may affect customer demand.

The continuing impacts of the COVID-19 endemic are currently indeterminable, and has affected

and may continue to affect the global economy.

In addition, the consequences of the ongoing geopolitical conflicts, such as the

ongoing conflict between Russia and Ukraine and the ongoing conflict between Israel and Hamas, including related sanctions and

countermeasures, and the effects of rising global inflation, are difficult to predict, and could adversely impact geopolitical and

macroeconomic conditions, the global economy, and contribute to increased market volatility, which may in turn adversely affect our

business and operations.

We predominately sell to customers in the industrial production and commercial construction markets.

Accordingly, changes in the condition of any of our customers may have a greater impact than if our sales were more evenly

distributed between different end markets.

For a further discussion of factors that may affect future operating results see the

sections entitled “Special Note Regarding Forward-Looking Statements” in this Quarterly Report on Form 10-Q and

“Part I - Item 1A.

Risk Factors” in our Annual Report on Form 10-K.

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What changed 10-Q

Item 2. Management’s Discussion and Analysis