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Item 8. Financial Statements and Supplementary Data

2024-07-26 compared with 2023-04-11 · 1138 added, 819 removed, 273 unchanged (88% of the section changed)

FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA.

TO CONSOLIDATED FINANCIAL STATEMENTS

Financial Statements for the Years Ended December 31, 2023 and 2022

Report of Independent Registered Public Accounting Firm ( Marcum LLP , Saddle Brook, NJ :

PCAOB ID# 688 )

Report of Independent Registered Public Accounting Firm (BDO USA, LLP, New York, NY:

PCAOB ID# 243 )

Consolidated Statements of Operations

Consolidated Balance Sheets

Consolidated Statements of Cash Flows

Consolidated Statements of Stockholders’ Equity

Notes to the Consolidated Financial Statements

of Independent Registered Public Accounting Firm

and Board of Directors

Power Solutions, Inc.

Lee, New Jersey

Opinion on the Financial Statements

We have audited the accompanying consolidated balance

sheet of Pioneer Power Solutions, Inc.

(the “Company”) as of December 31, 2022, the related consolidated statements of operations,

stockholders’ equity, and cash flows for the year ended December 31, 2022, and the related notes (collectively referred to as the

“financial statements”).

In our opinion, the financial statements present fairly, in all material respects, the financial

position of the Company as of December 31, 2022, and the results of its operations and its cash flows for the year ended December 31,

2022, in conformity with accounting principles generally accepted in the United States of America.

Basis for Opinion

These financial statements are the responsibility

of the Company’s management.

Our responsibility is to express an opinion on the Company’s financial statements based on our audit.

are a public accounting firm registered with the Public Company Accounting Oversight Board (United States) (“PCAOB”) and are

required to be independent with respect to the Company in accordance with the U.S.

federal securities laws and the applicable rules and

regulations of the Securities and Exchange Commission and the PCAOB.

We conducted our audit in accordance with the standards

of the PCAOB.

Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements

are free of material misstatement, whether due to error or fraud.

The Company is not required to have, nor were we engaged to perform,

an audit of its internal control over financial reporting.

As part of our audit we are required to obtain an understanding of internal

control over financial reporting but not for the purpose of expressing an opinion on the effectiveness of the Company’s internal control

over financial reporting.

Accordingly, we express no such opinion.

Our audit included performing procedures to assess

the risks of material misstatement of the financial statements, whether due to error or fraud, and performing procedures that respond

to those risks.

Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the financial statements.

Our audit also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating

the overall presentation of the financial statements.

We believe that our audit provides a reasonable basis for our opinion.

Critical Audit Matters

Critical audit matters are matters arising from the

current period audit of the financial statements that were communicated or required to be communicated to the audit committee and that:

(1) relate to accounts or disclosures that are material to the financial statements and (2) involved our especially challenging, subjective,

or complex judgments.

We determined that there are no critical audit matters.

/s/ Marcum llp

We have served as the Company’s auditor since 2022.

Saddle Brook, New Jersey

April 11, 2023

Report of Independent Registered Public Accounting Firm (PCAOB ID# 688 )

Statements of Operations

Balance Sheets

Statements of Cash Flows

Statements of Changes in Stockholders’ Equity

to the Consolidated Financial Statements

OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

and Board of Directors

the Shareholders and Board of Directors of

Power Solutions, Inc.

Lee, New Jersey

on the Consolidated Financial Statements

have audited the accompanying consolidated balance sheet of Pioneer Power Solutions, Inc.

(the “Company”) as of December

31, 2021, the related consolidated statements of operations, stockholders’ equity, and cash flows for the year then ended, and

the related notes (collectively referred to as the “consolidated financial statements”).

In our opinion, the consolidated

financial statements present fairly, in all material respects, the financial position of the Company at December 31, 2021, and the results

of its operations and its cash flows for the year ended December 31, 2021, in conformity with accounting principles generally accepted

in the United States of America.

have audited the accompanying consolidated balance sheets of Pioneer Power Solutions, Inc.

and subsidiaries (the “Company”)

as of December 31, 2023 and 2022, the related consolidated statements of operations, changes in stockholders’ equity and cash flows

for each of the two years in the period ended December 31, 2023, and the related notes (collectively referred to as the “consolidated

financial statements”).

In our opinion, the consolidated financial statements present fairly, in all material respects, the financial

position of the Company as of December 31, 2023 and 2022, and the results of its operations and its cash flows for each of the two years

in the period ended December 31, 2023, in conformity with accounting principles generally accepted in the United States of America.

of Previously Issued Consolidated Financial Statements

discussed in Note 2 to the consolidated financial statements, the Company has restated its consolidated financial statements for the

year ended December 31, 2022 to correct misstatements.

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

Our responsibility is to express an opinion

on the Company’s consolidated financial statements based on our audits.

We are a public accounting firm registered with the Public

Company Accounting Oversight Board (United States) (“PCAOB”) and are required to be independent with respect to the Company

in accordance with the U.S.

federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission

and the PCAOB.

Our responsibility is to express an opinion on

the Company’s consolidated financial statements based on our audits.

We are a public accounting firm registered with the Public Company

Accounting Oversight Board (United States) (“PCAOB”) and are required to be independent with respect to the Company in accordance

with the U.S.

federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.

conducted our audits in accordance with the standards of the PCAOB.

Those standards require that we plan and perform the audit to obtain

reasonable assurance about whether the consolidated financial statements are free of material misstatement, whether due to error

Those standards require that we plan and perform the audits to obtain

reasonable assurance about whether the consolidated financial statements are free of material misstatement, whether due to error or fraud.

The Company is not required to have, nor were we engaged to perform, an audit of its internal control over financial reporting.

As part of our audits we are required to obtain an understanding of internal control over financial reporting but not for the purpose

of expressing an opinion on the effectiveness of the Company’s internal control over financial reporting.

Accordingly, we express

no such opinion.

of our audits we are required to obtain an understanding of internal control over financial reporting but not for the purpose of expressing

an opinion on the effectiveness of the Company’s internal control over financial reporting.

Accordingly, we express no such opinion.

audits included performing procedures to assess the risks of material misstatement of the consolidated financial statements, whether

5 unchanged sentences

We believe that our audits provide a reasonable basis for our opinion.

We served as the Company’s auditor from 2014 to 2022.

York, New York

Audit Matters

audit matters are matters arising from the current period audit of the consolidated financial statements that were communicated or required

to be communicated to the audit committee and that:

(1) relate to accounts or disclosures that are material to the consolidated financial

statements and (2) involved our especially challenging, subjective, or complex judgments.

We determined that there are no critical audit

have served as the Company’s auditor since 2022.

Saddle Brook, NJ

July 26, 2024

POWER SOLUTIONS, INC.

1 unchanged sentence

thousands, except per share data)

2022 (Restated)

Cost of goods sold

1 unchanged sentence

Selling, general and administrative

Research and development

Total operating expenses

1 unchanged sentence

Interest income

Other expense (income), net

Loss before taxes

Income tax expense (benefit)

Other (income) expense, net

Loss before income taxes

Income tax expense

Loss per share:

4 unchanged sentences

thousands, except share amounts)

2022 (Restated)

Current assets

Restricted cash

Notes receivable and accrued interest

Accounts receivable, net

Accounts receivable, net of allowance for credit losses of $ 97 and $ 788 as of December 31, 2023 and 2022, respectively

Prepaid expenses and other current assets

3 unchanged sentences

Financing lease right-of-use assets

Deferred financing costs

LIABILITIES AND STOCKHOLDERS’ EQUITY

22 unchanged sentences

Statements of Cash Flows

2022 (Restated)

Operating activities

Amortization of right-of-use finance leases

Amortization of imputed interest

Interest expense from PPP Loan

Gain on forgiveness of PPP Loan

Adjustments to reconcile net loss to net cash used in operating activities:

Amortization of right-of-use financing leases

Amortization of right-of-use operating leases

Amortization of imputed interest

Change in receivable reserves

Proceeds from insurance receivable

Stock-based compensation

9 unchanged sentences

Collection of notes receivable

Net cash provided by/ (used in) investing activities

Net cash (used in)/ provided by investing activities

Financing activities

2 unchanged sentences

Payment to affiliates

Dividend paid to shareholders

Payment of deferred financing costs

Principal repayments of financing leases

Net cash (used in)/ provided by financing activities

(Decrease) increase in cash and restricted cash

Cash, and restricted cash, beginning of year

Cash, and restricted cash, end of period

Net cash used in financing activities

Decrease in cash

Cash, beginning of period

Cash, end of period

Supplemental cash flow information:

3 unchanged sentences

Acquisition of right-of-use assets and lease liabilities

Surrender and retirement of common stock

accompanying notes are an integral part of these consolidated financial statements.

POWER SOLUTIONS, INC.

Statements of Stockholders’ Equity

(Amounts in thousands,

except share amounts)

Total stockholders’

Statements of Changes in Stockholders’ Equity

in thousands, except share amounts)

compre-hensive

stockholders’

Balance - January 1, 2022

Stock-based compensation

Dividend to shareholders

Exercise of stock options

Issuance of common stock, net of transaction costs

Balance - December 31, 2021

Balance - January 1, 2022

Balance - December 31, 2022 (Restated)

Balance - January 1, 2023 (Restated)

Stock-based compensation

Exercise of stock options

Issuance of common stock, net of transaction costs

Surrender and retirement of common stock

Balance - December 31, 2023

4 unchanged sentences

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, 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.

The Company is headquartered in Fort Lee, New Jersey and operates from three

(3) additional locations in the U.S.

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

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

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

equipment and mobile electric vehicle (“EV”) charging solutions.

The Company’s products and services are sold to a

broad range of customers in the utility, industrial and commercial markets.

The Company’s 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.

The Company is headquartered in Fort Lee, New Jersey and operates from three ( 3 ) additional locations in the United

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

September 24, 2013, the Company completed an underwritten public offering of 1,265,000 shares of its common stock at a gross sales price

of $ 7.00 per share, resulting in net proceeds to the Company of approximately $ 7.9 million, after deducting underwriting discounts and

commissions and other offering expenses.

In connection with the public offering, the Company’s common stock began trading on the

Nasdaq Capital Market under the symbol PPSI.

of $ 7.00 per share, resulting in net proceeds to the Company of approximately $ 7,900 , after deducting underwriting discounts and commissions

and other offering expenses.

In connection with the public offering, the Company’s common stock began trading on the Nasdaq Capital

Market under the symbol PPSI.

determining operating and reportable segments in accordance with Financial Accounting Standards Board (“FASB”) Accounting

Standards Codification (“ASC”) 280, Segment Reporting (“ASC 280”), the Company concluded that it has two reportable

segments, which are also our operating segments:

Transmission & Distribution Solutions (“T&D Solutions”) and Critical

segments, which are also its operating segments:

Electrical Infrastructure Equipment (“Electrical Infrastructure”) and Critical

Power Solutions (“Critical Power”).

Financial information about the Company’s segments is presented in Note 13 -

Business Segment, Geographic and Customer Information.

of Transformer Business Units

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”).

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 Company.

On December 15, 2022, the Company received in excess of $ 6.2

million as a final payment of all unpaid principal and interest paying the Seller Notes in full (see Note 7 - Notes Receivable).

transaction was consummated on August 16, 2019.

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 segment.

Termination of CleanSpark Agreement

On 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.

CleanSpark 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.

Financial information about the Company’s segments is presented in Note 13 - Business

Segment, Geographic and Customer Information.

of Presentation

accompanying audited consolidated financial statements of the Company have been prepared pursuant to the rules of the SEC and

reflect the accounts of the Company as of December 31, 2022 and 2021.

Certain information and footnote disclosures, normally included in

annual financial statements prepared in accordance with accounting principles generally accepted in the United States (“U.S.

We believe that the disclosures made are

adequate to make the information presented not misleading to the reader.

In the opinion of management, all adjustments, consisting

only of normal recurring adjustments, necessary to fairly state the financial position, results of operations and cash flows with

respect to the audited consolidated financial statements have been included.

audited consolidated financial statements include the accounts of Pioneer and its wholly-owned subsidiaries.

All significant intercompany

accounts and transactions have been eliminated in consolidation.

The accompanying financial statements have been prepared on a basis, which contemplates the realization of assets and the satisfaction

Company’s consolidated financial statements are prepared in accordance with accounting principles generally accepted in the United

States (“U.S.

The Company believes that the disclosures made are adequate to make the information presented not misleading

to the reader.

In the opinion of management, all adjustments, consisting only of normal recurring adjustments, necessary to fairly state

the financial position, results of operations and cash flows with respect to the consolidated financial statements have been included.

consolidated financial statements include the accounts of Pioneer and its wholly-owned subsidiaries.

All significant intercompany accounts

and transactions have been eliminated in consolidation.

accompanying consolidated financial statements have been prepared on a basis, which contemplates the realization of assets and the satisfaction

of liabilities in the normal course of business.

As shown in the accompanying financial statements as of the year ended December 31, 2022,

the Company had $10.3 million of cash on hand and working capital of $14.1 million.

The cash on hand was generated primarily from the

sale of common stock under the ATM Program during the year ended December 31, 2021 and payment of all unpaid principal and interest from

the Seller Notes during the year ended December 31, 2022.

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

Transaction, proceeds from the sale of the CleanSpark Common Stock and warrants to purchase CleanSpark Common Stock, proceeds from insurance,

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, debt repayment, capital improvements

and acquisitions.

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

We expect our

As shown in the accompanying consolidated financial statements, as of the year ended

December 31, 2023, the Company had $ 3,582 of cash on hand and working capital of $ 9,421 .

The cash on hand was generated primarily from

the sale of common stock under the ATM Program (as defined below), payment of all unpaid principal and interest from the two subordinated

promissory notes the Company received in connection with the sale of the transformer business units in August 2019 (the “Equity

Transaction”) for an aggregate principal amount of $ 7,500 (the “Seller Notes”) during the year ended December 31, 2022,

and cash flows from operating activities.

On October 20, 2020, the Company entered into an At the Market Sale Agreement with H.C.

& Co., LLC (“Wainwright”), pursuant to which the Company may offer and sell our shares of common stock from time to time

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

Since October 20, 2020, and through December

31, 2023, the Company sold an aggregate of 916,059 shares of common stock for aggregate gross proceeds of approximately $ 8,904 , before

any sales agent fees and expenses payable by the Company under the ATM Program.

During the year ended December 31, 2023, the Company

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 the Company under the ATM Program.

Company has historically met its cash needs through a combination of cash flows from operating activities and bank borrowings, the completion

of the Equity Transaction, 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, the Company’s

cash requirements were generally for operating activities, debt repayment, capital improvements and acquisitions.

The Company expects

to meet its cash needs with the working capital and cash flows from the Company’s operating activities.

The Company expects its

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

The Company expects that its

current cash balance is sufficient to fund operations for the next twelve months.

June 1, 2021, the board of directors of the Company declared a special cash dividend of $ 0.12 per common share, payable to shareholders

of record as of June 22, 2021, to be paid on July 7, 2021.

The cash dividends were paid in July of 2021 and equaled $ 0.12 per share on

the $ 0.001 par value common stock resulting in an aggregate distribution of approximately $ 1.0 million representing a capital repayment

paid from additional paid-in capital (“APIC”).

On November 10, 2021, we sold 888,500 shares of common stock under the ATM Program, for total gross proceeds of approximately $ 9.0 million,

at an average price of $ 10.1288 per share.

We incurred approximately $ 273 of costs related to the common shares issued (including a placement

fee of 3.0 % , or approximately $ 270 , to Wainwright), resulting in net proceeds of approximately $ 8.7 million.

On December 13, 2021, we

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

333-249569), 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 $ 8.6 million 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 year

current cash balance is sufficient to fund operations from the date our consolidated financial statements are issued.

December 13, 2021, the Company filed a prospectus supplement to a prospectus which forms a part of its registration statement on Form

S-3 (File No.

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, the Company 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, the Company 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 8, 2023.

As of December 31, 2023, $ 75,000 of common stock remained available for issuance under the New ATM Prospectus.

of the filing date of this Form 10-K, we became subject to the limitations of General Instruction I.B.6 of Form S-3, which limits

the amount of funds we can raise through primary public offerings of securities in any twelve-calendar month period using a

registration statement on Form S-3 to one-third of the aggregate market value of our common stock held by non-affiliates.

we will be limited in the amount of proceeds we are able to raise by selling our common stock using Form S-3, including under the

New ATM Prospectus, until such time as our public float held by non-affiliates exceeds $ 75,000 .

and Uncertainties

continuing impacts of the rising interest rates, inflation, changes in foreign currency 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 extent of geopolitical

disruption and its impact 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 year ended December 31, 2023, the Company was able to operate substantially

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

could negatively affect its sales, marketing, and client service efforts, delay and lengthen its sales cycles, decrease its employees’,

clients’, or partners’ productivity, or create operational or other challenges, any of which could harm its business and

results of operations.

dollar amounts (except share and per share data) presented are stated in thousands of dollars, unless otherwise noted.

Amounts may not

foot due to rounding.

RESTATEMENT OF PREVIOUSLY ISSUED CONSOLIDATED FINANCIAL STATEMENTS

In connection with the preparation of our consolidated

financial statements for the years ended December 31, 2023 and 2022, the Company identified errors related to revenue and cost recognition

in its previously issued (i) consolidated financial statements as of and for the year ended December 31, 2022 included in its Annual Report

on Form 10-K for the year ended December 31, 2022 (the “Annual Period”) and (ii) unaudited condensed consolidated financial

statements for the quarters ended March 31, 2022 through September 30, 2023 included in its Quarterly Reports on Form 10-Q for the periods

ended March 31, 2022, June 30, 2022, September 30, 2022, March 31, 2023, June 30, 2023 and September 30, 2023 (the “Interim Periods”,

which, together with the Annual Period, the “Affected Periods”).

During 2022 and 2023, the Company recognized revenues

associated with customer contracts with performance obligations satisfied over time (“Over Time Contracts”) using labor hours

as the measure of progress.

The Company’s underlying estimates of total labor hours required to complete Over Time Contracts were

materially different from the actual labor hours required, which was determined to represent an error since the information underlying

the estimate was known or knowable as of the balance sheet date and, as a result, the percentage of completion used to recognize revenue

in the Affected Periods is materially different from the percentage of completion using actual labor hours incurred.

As a result, the

Company has restated revenues during the Affected Periods to adjust the percentage of completion based upon the actual labor hours incurred

to complete each Over Time Contract (the “Revenues Adjustment”).

Additionally, the Company has determined that costs

from Over Time Contracts should be recognized as incurred and, as a result, the Company has recorded an adjustment to its consolidated

financial statements during the Affected Periods (together with the Revenues Adjustment, the “Restatement Adjustments”),

as the Company was previously incorrectly deferring costs incurred to a future period.

The Company evaluated the materiality of these misstatements

both qualitatively and quantitatively in accordance with Staff Accounting Bulletin (“SAB”) No.

99, Materiality , and

108, Considering the Effects of Prior Year Misstatements in Current Year Financial Statements , and determined the effect

of correcting these misstatements was material to the Affected Periods.

As a result of the material misstatements, the Company has restated

its consolidated financial statements for the Affected Periods in accordance with ASC 250, Accounting Changes and Error Corrections (the

“Restated Consolidated Financial Statements”).

A reconciliation from the amounts

previously reported for the Affected Periods to the restated amounts in the Restated Consolidated Financial Statements is provided

for the impacted financial statement line items below for:

(i) the consolidated balance sheet as of December 31, 2022; (ii) the

consolidated statement of operations for the year ended December 31, 2022; (iii) the consolidated statement of changes in

stockholders’ equity for the year ended December 31, 2022; and (iv) the consolidated statement of cash flows for the year

ended December 31, 2022.

As of December 31, 2022, $ 8.6 million of common stock remained available for issuance under the ATM Program.

the year ended December 31, 2021, the Company executed a cash collateral security agreement with a commercial bank, which agreement required

us to pledge cash collateral as security for all unpaid reimbursement obligations owing to the commercial bank for an irrevocable standby

letter of credit in the amount of $ 1.8 million.

During the first quarter of 2022, the Company amended its agreement with the commercial

bank to decrease the required amount of cash collateral by $ 1.3 million.

On May 6, 2022, the Company received notice that the cash collateral

security agreement it had executed with the commercial bank was cancelled.

Upon cancellation of the cash collateral security agreement,

any unpaid reimbursement obligations owing to the commercial bank were also cancelled.

On May 11, 2022, the commercial bank released

and transferred the remaining cash collateral of $ 505 to the Company.

The Company had no restricted cash on the consolidated balance

sheets at December 31, 2022.

Company accounts for restricted cash under the guidance of ASU No.

2016-18, Statement of Cash Flows - Restricted Cash (Topic 230), which

requires the statement of cash flows to explain the change during the period in the total of cash, cash equivalents, and restricted cash

and that restricted cash be included with cash and cash equivalents when reconciling the beginning-of-period and end-of-period total

amounts shown on the statement of cash flows.

following table provides a reconciliation of cash and restricted cash reported within the consolidated balance sheets that sum to the

total of the same such amounts shown in the consolidated statement of cash flows:

OF RECONCILIATION OF CASH AND RESTRICTED CASH

Restricted cash

Total cash and restricted cash as shown in the statement of cash flows

Risks and Uncertainties

The worldwide spread of the novel coronavirus (“COVID-19”),

including the emergence of variants and subvariants, 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

until economic activity normalizes.

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

size and duration of the impact on its revenue and its results of operations.

The extent of the impact of these macroeconomic factors

on the Company’s operational and financial performance will depend on a variety of factors, including the duration and spread of

COVID-19 and its variants and the duration 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 the COVID-19 pandemic and take steps deemed appropriate to limit the impact on its business.

During the year

ended December 31, 2022, the Company was able to operate substantially at capacity.

Similarly, the economic uncertainty caused by the

COVID-19 pandemic has made and may continue to make it difficult for the Company to forecast revenue and operating results and to make

decisions regarding operational cost structures and investments.

The Company has committed, and the Company plans to continue to commit,

resources to grow its business, employee base, and technology development, and such investments may not yield anticipated returns, particularly

if worldwide business activity continues to be impacted by the COVID-19 pandemic.

The duration and extent of the impact from the COVID-19

pandemic depend on future developments that cannot be accurately predicted at this time, and if the Company is not able to respond to

and manage the impact of such events effectively, its business may be harmed.

There can be no assurance that precautionary measures,

whether adopted by the Company or imposed by others, will be effective, and such measures could negatively affect its sales, marketing,

and client service efforts, delay and lengthen its sales cycles, decrease its employees’, clients’, or partners’ productivity,

or create operational or other challenges, any of which could harm its business and results of operations.

See Note 2 – Summary of Significant Accounting

Policies for details of risks and uncertainties surrounding recent bank failures.

Reclassification

following items have been reclassified in the 2021 financial statements to conform to current year presentation:

repayments of financing leases and the reduction in operating leases have been reclassified in the audited consolidated statements of

cash flows and presented in the applicable cash flow activity for the year ended December 31, 2021.

The inventories footnote contains

a reclassification of the provision for excess and obsolete inventory and reductions to net realizable value to the applicable inventory

classification at December 31, 2021.

The payment of deferred payroll taxes during the year ended December 31, 2021 was reclassified to now be included

in cash used in operating activities.

All dollar amounts (except share and per share data) presented are stated in thousands of dollars, unless otherwise noted.

not foot due to rounding.

The amounts labeled “Restatement Adjustments” represent the effects of the Restatement

SCHEDULE OF RESTATEMENT

The following table presents the effects of the Restatement

Adjustments on the Company’s consolidated balance sheet as of December 31, 2022:

December 31, 2022

As Previously

Current assets

Accounts receivable, net

Inventories, net

Total current assets

LIABILITIES AND STOCKHOLDERS’ EQUITY

Current liabilities

Deferred revenue

Total current liabilities

Total liabilities

Stockholders’ equity

Accumulated deficit

Total stockholders’ equity

Total liabilities and stockholders’ equity

The following table presents the effects of the Restatement

Adjustments on the Company’s consolidated statement of operations for the year ended December 31, 2022:

For the Year Ended

December 31, 2022

As Previously

Cost of goods sold

Loss from operations

Loss before taxes

Loss per share - basic and diluted

The following table presents the effects of the Restatement

Adjustments on the Company’s consolidated statement of changes in stockholders’ equity for the year ended December 31, 2022:

As Previously

Balance - January 1, 2022

Balance - December 31, 2022

The following table presents the effects of the Restatement

Adjustments on the Company’s consolidated statement of cash flows for the year ended December 31, 2022:

December 31, 2022

As Previously

Cash flows from operating activities:

Changes in operating assets and liabilities:

Accounts receivable

Deferred revenue

Net cash used in operating activities

The remainder of the notes to the Company’s

consolidated financial statements have been updated and restated, as applicable, to reflect the impact of the Restatement Adjustments

described above.

See Note 4 - Restatement of Previously Issued Unaudited

Interim Condensed Consolidated Financial Statements for details of the effect of the Restatement Adjustments on the Interim Periods.

SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

preparation of consolidated financial statements requires management to make estimates and assumptions that affect the reported amounts

of assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting

Actual results could differ from those estimates.

of Consolidation

consolidated financial statements include the accounts of the Company and its wholly-owned subsidiaries.

All significant intercompany

accounts and transactions have been eliminated in consolidation.

preparation of financial statements in accordance with U.S.

GAAP requires management to make estimates and assumptions that affect

the reported amounts of assets and liabilities and disclosures of contingent assets and liabilities at the date of the financial

statements and the reported amounts of revenues and expenses during the reporting period.

The financial statements include estimates

based on currently available information and management’s judgment as to the outcome of future conditions and circumstances.

Significant estimates in these financial statements include measurement of revenue for contracts accounted for over time, allowance

for doubtful accounts receivable, inventory provision, useful lives and impairment of long-lived assets and income tax

in the status of certain facts or circumstances could result in material changes to the estimates used in the preparation of the financial

statements and actual results could differ from the estimates and assumptions.

Use of Estimates

The preparation of consolidated financial statements

in accordance with U.S.

GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities

and disclosures of contingent assets and liabilities at the date of the consolidated financial statements and the reported amounts of

revenues and expenses during the reporting periods.

The consolidated financial statements include estimates based on currently available

information and management’s judgment as to the outcome of future conditions and circumstances.

Significant estimates in these consolidated

financial statements include, but are not limited to, measurement of revenue for contracts accounted for over time, accounts receivable

reserves, inventory valuation, useful lives and impairment of long-lived assets, stock-based compensation and the valuation allowance

related to the Company’s deferred tax assets.

Changes in the status of certain facts or circumstances could result in material changes

to the estimates used in the preparation of the consolidated financial statements and actual results could differ from the estimates and

is recognized when (1) a contract with a customer exists, (2) performance obligations promised in a contract are identified based on

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to which the Company will be entitled in exchange for transferring products or services to the customer, (4) the transaction price is

allocated to the performance obligations in the contract and (5) the Company satisfies performance obligations.

allocated to the performance obligations in the contract and (5) the Company satisfies its performance obligation.

The Company satisfies

performance obligations either over time or at a point in time.

Revenue is recognized at the time the related performance obligation

is satisfied by transferring a promised product or service to a customer.

Revenue from the sale of our electric power systems is recognized

either over time or at a point in time and substantially all of our revenue from the sale of power generation equipment is recognized

at a point in time.

Revenues are recognized at the point in time that the customer obtains control of the good, which is when it has

taken title to the products and has assumed the risks and rewards of ownership specified in the purchase order or sales agreement.

sales of highly customized electrical power systems are recognized over time when such equipment has no alternative use and the Company

has an enforceable right to payment for performance completed to date.

Revenue for such agreements is recognized under the input method

based on either cost or direct labor hours incurred relative to the estimated cost or direct labor hours expected to be consumed to complete

Under the cost-to-cost method of revenue recognition, a single estimated profit margin is used to recognize profit for each

performance obligation over its period of performance.

Recognition of profit on a contract requires estimates of the total cost at completion

and transaction price and the measurement of progress towards completion.

Due to the nature of many of our contracts, developing the

estimated total cost at completion and total transaction price often requires judgment.

Factors that must be considered in estimating

the cost of the work to be completed include the nature and complexity of the work to be performed, subcontractor performance and the

risk and impact of delayed performance.

When adjustments in estimated total costs at completion or in estimated total transaction price

are determined, the related impact on income is recognized using the cumulative catch-up method, which recognizes in the current period

the cumulative effect of such adjustments for all prior periods.

Any anticipated losses on these contracts are fully recognized in the

period in which the losses become evident.

Service revenues include maintenance contracts that are recognized over time based on the

contract term and repair services, which are recognized as services are delivered.

its performance obligations and, therefore, recognizes revenue, either over time or at a point in time, which is when the customer has

obtained control of the good or service.

Revenue from the sale of the Company’s electric power systems under its Electrical Infrastructure

segment is recognized either over time or at a point in time and substantially all of the Company’s revenue from the sale of power

generation equipment under its Critical Power segment is recognized at a point in time.

Certain sales of highly customized electrical

equipment under the Company’s Electrical Infrastructure segment are recognized over time when such equipment has no alternative

use and the Company has an enforceable right to payment for performance completed to date.

The Company’s measure of progress for

such contracts is evaluated under the input method based on direct labor hours incurred relative to the estimated total direct labor

hours required in order to complete the project.

Any anticipated losses on contracts are fully recognized in

the period in which the losses become evident.

Service revenues include maintenance contracts that are recognized over time based on

the contract term and repair services that are recognized as services are delivered.

Contract Estimates

Revenue from over time contracts is recognized proportionally

over the term of the contract using an input method based on the proportion of labor hours incurred as compared to the total estimated

labor hours for the fixed-fee contract performance obligations, which the Company considers the best available indicator of the pattern

and timing in which contract performance obligations are fulfilled and control transfers to the customer.

This percentage is multiplied

by the contracted dollar amount of the project to determine the amount of revenue to recognize in an accounting period.

There are situations where the number of hours to

complete projects may exceed the original estimate as a result of an increase in project scope or unforeseen events.

The related impact

on income is recognized using the cumulative catch-up method, which the Company recognizes in the current period.

Recognition of revenue on a contract requires estimates of the total labor

hours at completion and the measurement of progress towards completion.

Due to the long-term nature of many of the Company’s contracts,

developing the estimated total labor hours at completion often requires judgment.

Factors that must be considered in estimating the total

labor hours to be completed include the nature and complexity of the work to be performed and the risk and impact of delayed performance.

At the outset of each contract, the Company gauges its complexity and perceived

risks and establish an estimated total number of labor hours at completion in line with these expectations.

The Company follows a standard

contract review process in which the Company reviews the progress and performance on its ongoing contracts at least quarterly.

of Goods Sold

of goods sold for the T&D Solutions and Critical Power segments primarily includes charges for materials, direct labor and related

benefits, freight (inbound and outbound), direct supplies and tools, purchasing and receiving costs, inspection costs, internal transfer

costs, warehousing costs and utilities related to production facilities and, where appropriate, an allocation of overhead.

Cost of goods

sold also includes indirect labor and infrastructure cost related to the provision of field services.

Company’s financial instruments consist primarily of cash, restricted cash, receivables, payables and debt instruments.

carrying values of these financial instruments approximate their respective fair values as they are either short-term in nature or

carry interest rates which are periodically adjusted to market rates.

Unless otherwise indicated, the carrying value of these

financial instruments approximates their fair market value.

of goods sold primarily includes charges for materials, direct labor and related benefits, freight (inbound and outbound), direct supplies

and tools, purchasing and receiving costs, inspection costs, internal transfer costs, warehousing costs and utilities related to production

facilities and, where appropriate, an allocation of overhead.

Cost of goods sold also includes indirect labor and infrastructure cost

related to the provision of field services.

Value of Financial Instruments

value is defined as the amount that would be received for selling an asset or paid to transfer a liability in an orderly transaction

between market participants at the measurement date and is measured using inputs in one of the following three categories:

1 measurements are based on unadjusted quoted prices in active markets for identical assets or liabilities that the Company has the ability

Valuation of these items does not entail a significant amount of judgment.

2 measurements are based on quoted prices for similar assets or liabilities in active markets, quoted prices for identical or similar

assets or liabilities in markets that are not active or market data other than quoted prices that are observable for the assets or liabilities.

3 measurements are based on unobservable data that are supported by little or no market activity and are significant to the fair value

of the assets or liabilities.

Company’s financial instruments consist primarily of cash, accounts receivable, accounts payable and accrued liabilities.

values of these financial instruments approximate their respective fair values due to the relatively short period of time between their

origination and their expected realization or payment.

Concentrations

Company manages its accounts receivable credit risk by performing credit evaluations and monitoring amounts due from the Company’s

The Company had certain customers whose revenue individually represented 10% or more of the Company’s total revenue,

or whose accounts receivable balances individually represented 10% or more of the Company’s total accounts receivable, as follows:

December 31, 2022, three customers represented approximately 57 %,

The Company manages its accounts receivable credit

risk by performing credit evaluations and monitoring amounts due from the Company’s customers.

The Company had certain customers

whose revenue individually represented 10% or more of the Company’s total revenue, or whose accounts receivable balances individually

represented 10% or more of the Company’s total accounts receivable, as follows:

At December 31, 2023, one customer represented approximately

of the Company’s accounts receivable.

At December 31, 2021, two customers represented approximately 32 %

At December 31, 2022, three customers represented approximately 52 %,

of the Company’s accounts receivable.

the year ended December 31, 2022, one customer represented approximately 45 % of the Company’s revenue.

For the year ended December

31, 2021, two customers represented approximately 22 % and 19 % of the Company’s revenue.

and Cash Equivalents

and cash equivalents comprise cash on hand, demand deposits and investments with an original maturity at the date of purchase of three

months or less.

Financial instruments that potentially subject the Company to concentration of credit risk consist principally of cash

Accounts at each institution are insured by the Federal Deposit Insurance Corporation (“FDIC”) up to $ 250 .

December 31, 2022 and 2021, the Company had balances of $ 10.0 million and $ 9.7 million in excess of the FDIC insured limits, respectively.

The Company reduces exposure to credit risk by maintaining cash deposits with major financial institutions.

The Company has not experienced

any losses on these accounts to date.

While the Company does not anticipate any losses, liquidity issues,

or capital resource constraints arising from the recent bank failures, it cannot predict at this time to what extent it or its collaborators,

For the year ended December 31, 2023, two

customers represented approximately 42 %

of the Company’s revenue.

For the year ended December 31, 2022, two customers represented approximately 43 %

and 10 % of the Company’s revenue.

As of December 31, 2023, one of the Company’s

suppliers represented 18 % of the Company’s accounts payable.

As of December 31, 2022, three of the Company’s suppliers represented

38 % of the Company’s accounts payable.

Cash and Cash Equivalents

The Company considers all highly liquid investments

purchased with an original maturity of three months or less to be cash equivalents in the consolidated financial statements.

31, 2023 and 2022, the Company did not have any cash equivalents.

The Company has cash on deposits in several financial institutions which

may be in excess of Federal Deposit Insurance Corporation (“FDIC”) insurance limits.

As of December 31, 2023 and 2022, the

Company had balances of $ 3,332 and $ 10,046 in excess of the FDIC insured limits, respectively.

The Company reduces exposure to credit

risk by maintaining cash deposits with major financial institutions.

The Company has not experienced losses in such accounts and periodically

evaluates the creditworthiness of its financial institutions.

While the Company does not anticipate any losses, liquidity issues, or capital

resource constraints arising from the bank failures during 2023, it cannot predict at this time to what extent it or its collaborators,

employees, suppliers, and/or vendors could be negatively impacted by such bank failures and other macroeconomic and geopolitical events.

cash consists of a cash collateral security agreement with a commercial bank which required the Company to pledge cash collateral as

security for all unpaid reimbursement obligations owing to the commercial bank for an irrevocable standby letter of credit.

Company accounts for trade receivables at original invoice amount less an estimate made for doubtful receivables based on a review of

all outstanding amounts on a monthly basis.

Management determines the allowance for doubtful accounts by regularly evaluating individual

customer receivables and considering a customer’s financial condition, credit history and current economic conditions.

writes off trade receivables when they are deemed uncollectible.

The Company records recoveries of trade receivables previously written

off when it receives them.

Management considers the Company’s allowance for doubtful accounts to appropriately measure the uncertainty

in certain accounts receivable.

The allowance for doubtful accounts was $ 0 and $ 140 as of December 31, 2022 and 2021, respectively.

and amortization for property and equipment, and finite life intangible assets, is computed and included in cost of goods sold and in

selling and administrative expense, as appropriate.

Long-lived assets, consisting primarily of property and equipment, are stated at

cost less accumulated depreciation.

Property and equipment are depreciated using the straight line method, based on the estimated useful

lives of the assets (buildings - 25 years, machinery and equipment - 5 to 15 years, computer hardware and software - 3 to 5 years, furniture

& fixtures 5 to 7 years, leasehold improvements – term of lease).

Depreciation commences in the year the assets are ready for

their intended use.

Historically,

finite life intangible assets have consisted primarily of customer relationships in multiple categories that are specific to the businesses

acquired and for which estimated useful lives were determined based on actual historical customer attrition rates.

These finite life

intangible assets were amortized by the Company over periods ranging from four to ten years.

assets and finite life intangible assets are reviewed for impairment whenever events or circumstances have occurred that indicate the

remaining useful life of the asset may warrant revision or that the remaining balance of the asset may not be recoverable.

Upon indications

of impairment, or in the normal course of annual testing, assets and liabilities are grouped at the lowest level for which identifiable

cash flows are largely independent of the cash flows of other assets and liabilities.

The measurement of possible impairment is generally

estimated by the ability to recover the balance of an asset group from its expected future operating cash flows on an undiscounted basis.

If such assets are considered to be impaired, the impairment to be recognized is measured by the amount by which the carrying amount

of the asset exceeds the fair value thereof.

Determining asset groups and underlying cash flows requires the use of significant judgment.

The Company reduces its credit risk by placing its cash and cash equivalents with major financial institutions.

Accounts Receivable

On January 1, 2023, the Company adopted ASU 2016-13,

“Financial Instruments - Credit Losses (Topic 326), Measurement of Credit Losses on Financial Instruments,” using a modified

retrospective approach.

The standard amends several aspects of the measurement of credit losses related to certain financial instruments,

including the replacement of the existing incurred credit loss model and other models with the current expected credit losses model.

cumulative effect of adoption did not result in an adjustment to the allowance for credit loss, and accordingly, the Company’s accumulated

deficit as of January 1, 2023.

The Company accounts for trade receivables at original invoice amount less

an estimate made for expected credit losses.

The Company’s allowance for expected credit losses on accounts receivable reflects

management’s estimate of credit losses over the remaining expected life of such assets, measured primarily using historical experience,

as well as current conditions and forecasts that affect the collectability of the reported amount.

There was $ 97 and $ 788 of reserves

for expected credit losses as of December 31, 2023 and 2022, respectively.

Long-Lived Assets

Depreciation and amortization for property and equipment

is computed and included in cost of goods sold and in selling and administrative expense, as appropriate.

Long-lived assets, consisting

primarily of property and equipment, are stated at cost less accumulated depreciation.

Property and equipment are depreciated using the

straight-line method, based on the estimated useful lives of the assets (buildings - 25 years, machinery and equipment - 5 to 15 years,

computer hardware and software - 3 to 5 years, furniture & fixtures 5 to 7 years, leasehold improvements – term of lease).

commences in the year the assets are ready for their intended use.

The Company reviews all long-lived assets such as

property and equipment whenever events or changes in circumstances indicate that the carrying value of the asset may not be recoverable.

Recoverability of the assets that are held and used is measured by a comparison of the carrying amount of an asset to the estimated future

cash flows expected to be generated by the asset or asset group.

Impairment is measured by the amount by which the carrying value of the

asset(s) exceed the fair value.

There were no triggering events that would indicate impairment of long-lived assets at December 31, 2023

The Company leases offices, facilities and equipment

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as short-term lease expense.

The discount rate used to calculate present value is the Company’s incremental borrowing rate based on the

lease term and the economic environment of the applicable country or region.

The discount rate used to calculate present value is the Company’s incremental borrowing rate based

on the lease term and the economic environment of the applicable country or region.

Certain leases contain renewal options or options

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while the variable portion is recorded as variable lease expense.

The Company’s leases typically do not contain material residual value

guarantees or restrictive covenants.

Company accounts for income taxes under the asset and liability method, based on the income tax laws and rates in the countries in which

operations are conducted and income is earned.

For the year ended December 31, 2022 and 2021, the Company operated solely

in the United States.

This approach requires the recognition of deferred tax assets and liabilities for the

expected future tax consequences of temporary differences between the carrying amounts and the tax basis of assets and liabilities.

the provision for income taxes requires significant judgment and expertise in federal, international and state income tax laws, regulations

and strategies, including the determination of deferred tax assets and liabilities and, if necessary, any valuation allowances that may

be required for deferred tax assets.

The Company records a valuation allowance to reduce its deferred tax assets to the amount that is

more likely than not to be realized.

The Company believes that the deferred asset, net recorded as of December 31, 2022 and 2021 is realizable

through future reversals of existing taxable temporary differences.

If the Company was to subsequently determine that it would be able

to realize deferred tax assets in the future in excess of its net recorded amount, an adjustment to deferred tax assets would increase

net income for the period in which such determination was made.

The Company will continue to assess the adequacy of the valuation allowance

on a quarterly basis.

The Company’s tax filings are subject to audit by various taxing authorities.

objective of accounting for income taxes is to recognize the amount of taxes payable or refundable for the current year and deferred

tax liabilities and assets for the future tax consequences or events that have been recognized in the Company’s financial statements

or tax returns.

The Company recognizes the tax benefit from an uncertain tax position only if it is more likely than not that the tax

position will be sustained on examination by the taxing authorities, based on the technical merits of the position (see “Unrecognized

Tax Benefits” below).

tax related interest and penalties are grouped with interest expense on the consolidated statement of operations.

The Company accounts for unrecognized tax benefits in accordance with FASB ASC “Income Taxes” (“ASC 740”).

740 prescribes a recognition threshold that a tax position is required to meet before being recognized in the financial statements and

provides guidance on de-recognition, measurement, classification, interest and penalties, accounting in interim periods, disclosure and

transition issues.

ASC 740 contains a two-step approach to recognizing and measuring uncertain tax positions.

The first step is to evaluate

the tax position for recognition by determining if the weight of available evidence indicates that it is more likely than not that the

position will be sustained upon ultimate settlement with a taxing authority, including resolution of related appeals or litigation processes,

The second step is to measure the tax benefit as the largest amount that is more than 50% likely of being realized upon ultimate

Additionally,

ASC 740 requires the Company to accrue interest and related penalties, if applicable, on all tax positions for which reserves have been

established consistent with jurisdictional tax laws.

The Company’s policy is to recognize interest and penalties related to income

tax matters as interest expense.

See Note 12 - Income Taxes.

The Company’s leases typically do not contain material residual

value guarantees or restrictive covenants.

Deferred Financing Costs

Certain legal, accounting and other third-party fees

that are directly associated with equity financings are capitalized as deferred financing costs and included as a non-current asset on

the balance sheet until such financings are consummated.

After consummation of the equity financing, these costs will be recorded in the

stockholders’ equity section of the consolidated balance sheets as a reduction of additional paid-in capital generated as a result

of the offering, to the extent there are sufficient proceeds.

Should the equity financing no longer be considered probable of being consummated,

all deferred financing costs would be charged to operating expenses in the consolidated statements of operations.

The Company accounts for income taxes under the asset

and liability method, based on the income tax laws and rates in the countries in which operations are conducted and income is earned.

For the year ended December 31, 2023 and 2022, the Company operated solely in the United States.

This approach requires the recognition

of deferred tax assets and liabilities for the expected future tax consequences of temporary differences between the carrying amounts

and the tax basis of assets and liabilities.

Developing the provision for income taxes requires significant judgment and expertise in

federal, international and state income tax laws, regulations and strategies, including the determination of deferred tax assets and liabilities

and, if necessary, any valuation allowances that may be required for deferred tax assets.

The Company records a valuation allowance to

reduce its deferred tax assets to the amount that is more likely than not to be realized.

The Company believes that the deferred asset,

net recorded as of December 31, 2023 and 2022 is realizable through future reversals of existing taxable temporary differences.

Company was to subsequently determine that it would be able to realize deferred tax assets in the future in excess of its net recorded

amount, an adjustment to deferred tax assets would increase net income for the period in which such determination was made.

will continue to assess the adequacy of the valuation allowance on a quarterly basis.

The Company’s tax filings are subject to audit

by various taxing authorities.

The objective of accounting for income taxes is to

recognize the amount of taxes payable or refundable for the current year and deferred tax liabilities and assets for the future tax consequences

or events that have been recognized in the Company’s consolidated financial statements or tax returns.

The Company recognizes the

tax benefit from an uncertain tax position only if it is more likely than not that the tax position will be sustained on examination by

the taxing authorities, based on the technical merits of the position (see “Unrecognized Tax Benefits” below).

Income tax related interest and penalties are grouped

with interest expense on the consolidated statement of operations.

Unrecognized Tax Benefits

The Company accounts for unrecognized tax benefits

in accordance with FASB ASC “Income Taxes” (“ASC 740”).

ASC 740 prescribes a recognition threshold that a tax

position is required to meet before being recognized in the consolidated financial statements and provides guidance on de-recognition,

measurement, classification, interest and penalties, accounting in interim periods, disclosure and transition issues.

ASC 740 contains

a two-step approach to recognizing and measuring uncertain tax positions.

The first step is to evaluate the tax position for recognition

by determining if the weight of available evidence indicates that it is more likely than not that the position will be sustained upon

ultimate settlement with a taxing authority, including resolution of related appeals or litigation processes, if any.

The second step

is to measure the tax benefit as the largest amount that is more than 50% likely of being realized upon ultimate settlement.

Additionally, ASC 740 requires the Company to accrue

interest and related penalties, if applicable, on all tax positions for which reserves have been established consistent with jurisdictional

The Company’s policy is to recognize interest and penalties related to income tax matters as interest expense.

Share-Based Payments

The Company measures the cost of services received

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used for options is the estimated period of time that options granted are expected to be outstanding.

The expected term used for warrants

is the contractual life.

The Company utilizes the “simplified” method to develop an estimate of the expected term of “plain

vanilla” option grants.

The Company does not currently have a sufficient trading history to support its historical volatility calculations.

Accordingly, the Company is utilizing an expected volatility figure based on a review of the historical volatility of comparable entities

The Company utilizes the “simplified”

method under ASC 718 to develop an estimate of the expected term of “plain vanilla” option grants.

The Company does not currently

have a sufficient trading history to fully support its historical volatility calculations.

Accordingly, the Company is utilizing an expected

volatility figure based on a review of the historical volatility on a blended basis of its own stock as well as of comparable entities

over a period of time equivalent to the expected life of the instrument being valued.

2 unchanged sentences

Treasury zero-coupon bonds with a remaining term consistent with the expected term of the instrument being

Inventories are stated at the lower of cost or net realizable value using a weighted average cost method and includes the cost of materials,

labor and manufacturing overhead.

The Company uses estimates in determining the level of reserves required to state inventory at the lower

of cost or net realizable value.

The Company estimates are based on market activity levels, production requirements, the physical condition

of products and technological innovation.

Changes in any of these factors may result in adjustments to the carrying value of inventory.

See Note 5 - Inventories.

Loss Per Share

loss per share is computed by dividing the income loss for the period by the weighted average number of common shares outstanding

during the period.

Diluted loss per share is computed by dividing the loss for the period by the weighted average

number of common and common equivalent shares outstanding during the period.

(See Note 14 - Basic and Diluted Net Loss Per

Accounting Pronouncements

The Company did not adopt any new material accounting pronouncements during the year ended December 31, 2022.

There have been no recent

accounting pronouncements not yet adopted by the Company which would have a material impact on the Company’s financial statements.

of Credit Losses on Financial Instrument .

In June 2016, the FASB issued amended guidance to ASU No.

2016-13, Financial Instruments

- Credit Losses (Topic 326):

Measurement of Credit Losses on Financial Instruments that changes the impairment model for most financial

assets and certain other instruments.

For trade and other receivables, held-to-maturity debt securities, loans and other instruments,

entities will be required to use a new forward-looking “expected loss” model that will replace today’s “incurred

loss” model and generally will result in the earlier recognition of allowances for losses.

For available-for-sale debt securities

with unrealized losses, entities will measure credit losses in a manner similar to current practice, except that the losses will be recognized

as an allowance.

This amended guidance for small reporting companies is effective for fiscal years beginning after December 15, 2022,

including interim periods within those fiscal years.

Entities will apply the standard’s provisions as a cumulative-effect adjustment

to retained earnings as of the beginning of the first effective reporting period.

The Company does not expect that the amended guidance

will have a material effect on our consolidated financial statements and related disclosures.

of our products and services

principal products and services include electric power systems, distributed energy resources, power generation equipment and mobile EV

charging solutions.

T&D Solutions business provides electric power systems and distributed energy resources that help customers effectively and efficiently

protect, control, transfer, monitor and manage their electric energy requirements.

Critical Power business provides customers with our suite of mobile e-Boost electric vehicle charging solutions and power generation

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.

principal source of revenue is derived from sales of products and fees for services.

We measure revenue based upon the consideration

specified in the customer arrangement, and revenue is recognized when the performance obligations in the customer arrangement are satisfied.

A performance obligation is a promise in a contract to transfer a distinct product or service to the customer.

The transaction price

of a contract is allocated to each distinct performance obligation and recognized as revenue when or as, the customer receives the benefit

of the performance obligation.

Customers typically receive the benefit of our products when the risk of loss or control for the product

transfers to the customer and for services as they are performed.

Under ASC 606, revenue is recognized when a customer obtains control

of promised products or services in an amount that reflects the consideration we expect to receive in exchange for those products or

To achieve this core principal, the Company applies the following five steps:

Inventory is stated at the lower of cost or net realizable

value using a weighted average cost method and includes the cost of materials, labor and manufacturing overhead.

The Company uses estimates

in determining the level of reserves required to state inventory at the lower of cost or net realizable value.

The Company estimates are

based on market activity levels, production requirements, the physical condition of products and technological innovation.

any of these factors may result in adjustments to the carrying value of inventory.

Income (Loss) Per Share

Basic income (loss) per share is computed by dividing

the income or loss for the period by the weighted average number of vested common shares outstanding during the period.

Diluted income

(loss) per share is computed by dividing the income or loss for the period by the weighted average number of vested common shares outstanding,

plus the number of additional common shares that would have been outstanding if the common share equivalents had been issued (computed

using the treasury stock or if converted method), if dilutive.

Research and Development

Research and development include expenses incurred

by the Company’s Critical Power segment related to developing the Company’s mobile e-Boost EV charging solutions.

and development expenses are charged to operations as incurred.

Recently Issued Accounting Pronouncements

There have been no recent accounting pronouncements

not yet adopted by the Company which would have a material impact on the Company’s consolidated financial statements.

Accounting Standards Update (“ASU”) 2023-03,

“Presentation of Financial Statements (Topic 205), Income Statement - Reporting Comprehensive Income (Topic 220), Distinguishing

Liabilities from Equity (Topic 480), Equity (Topic 505), and Compensation - Stock Compensation (Topic 718):

Amendments to SEC Paragraphs

Pursuant to SEC Staff Accounting Bulletin No.

120, SEC Staff Announcement at the March 24, 2022 Emerging Issues Task Force (“EITF”)

Meeting, and Staff Accounting Bulletin Topic 6.B, Accounting Series Release 280 - General Revision of Regulation S-X:

Income or Loss Applicable

to Common Stock.” ASU 2023-03 amends the ASC for SEC updates pursuant to SEC Staff Accounting Bulletin No.

SEC Staff Announcement

at the March 24, 2022 EITF Meeting;

and Staff Accounting Bulletin Topic 6.B, Accounting Series Release 280 - General Revision of Regulation

Income or Loss Applicable to Common Stock.

These updates were immediately effective and did not have a significant impact on the

Company’s consolidated financial statements.

RESTATEMENT OF PREVIOUSLY ISSUED UNAUDITED INTERIM

CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

The following tables present the effects of the Restatement

Adjustments described in Note 2 - Restatement of Previously Issued Consolidated Financial

Statements on the Company’s unaudited interim condensed consolidated financial statements for the periods indicated.

OF INTERIM RESTATEMENT ADJUSTMENTS

The following tables present the effects of the Restatement

Adjustments on the Company’s unaudited interim condensed consolidated balance sheets as of the dates indicated:

March 31, 2022

As Previously

Current assets

Inventories, net

Total current assets

LIABILITIES AND STOCKHOLDERS’ EQUITY

Current liabilities

Deferred revenue

Total current liabilities

Total liabilities

Stockholders’ equity

Accumulated deficit

Total stockholders’ equity

Total liabilities and stockholders’ equity

June 30, 2022

As Previously

Current assets

Inventories, net

Total current assets

LIABILITIES AND STOCKHOLDERS’ EQUITY

Current liabilities

Deferred revenue

Total current liabilities

Total liabilities

Stockholders’ equity

Accumulated deficit

Total stockholders’ equity

Total liabilities and stockholders’ equity

September 30, 2022

As Previously

Current assets

Inventories, net

Total current assets

LIABILITIES AND STOCKHOLDERS’ EQUITY

Current liabilities

Deferred revenue

Total current liabilities

Total liabilities

Stockholders’ equity

Accumulated deficit

Total stockholders’ equity

Total liabilities and stockholders’ equity

March 31, 2023

As Previously

Current assets

Accounts receivable, net

Inventories, net

Total current assets

LIABILITIES AND STOCKHOLDERS’ EQUITY

Current liabilities

Deferred revenue

Total current liabilities

Total liabilities

Stockholders’ equity

Accumulated deficit

Total stockholders’ equity

Total liabilities and stockholders’ equity

June 30, 2023

As Previously

Current assets

Accounts receivable, net

Inventories, net

Total current assets

LIABILITIES AND STOCKHOLDERS’ EQUITY

Current liabilities

Deferred revenue

Total current liabilities

Total liabilities

Stockholders’ equity

Accumulated deficit

Total stockholders’ equity

Total liabilities and stockholders’ equity

September 30, 2023

As Previously

Current assets

Accounts receivable, net

Inventories, net

Total current assets

LIABILITIES AND STOCKHOLDERS’ EQUITY

Current liabilities

Deferred revenue

Total current liabilities

Total liabilities

Stockholders’ equity

Accumulated deficit

Total stockholders’ equity

Total liabilities and stockholders’ equity

The following tables present the effects of the Restatement

Adjustments on the Company’s unaudited interim condensed consolidated statements of operations for the periods indicated:

For the Three Months Ended

March 31, 2022

As Previously

Cost of goods sold

Gross profit (loss)

Loss from operations

Loss before taxes

Loss per share - basic and diluted

For the Three Months Ended

For the Six Months Ended

June 30, 2022

As Previously

Cost of goods sold

Gross profit (loss)

Loss from operations

Loss before taxes

Net (loss) income

Earnings (loss) per share - basic and diluted

For the Three Months Ended

For the Nine Months Ended

September 30, 2022

As Previously

Cost of goods sold

Total operating expenses

(Loss) income from operations

(Loss) income before taxes

Net (loss) income

Earnings (loss) per share - basic:

Weighted average common shares outstanding - diluted

Earnings (loss) per share - diluted

For the Three Months Ended

March 31, 2023

As Previously

Cost of goods sold

Income from operations

Income before taxes

Earnings per share - basic and diluted

For the Three Months Ended

For the Six Months Ended

June 30, 2023

As Previously

Cost of goods sold

(Loss) income from operations

(Loss) income before taxes

Net (loss) income

Earnings (loss) per share - basic:

Weighted average common shares outstanding - diluted

Earnings (loss) per share - diluted

For the Three Months Ended

For the Nine Months Ended

September 30, 2023

As Previously

Cost of goods sold

Gross profit (loss)

Income (loss) from operations

Income (loss) before taxes

Net income (loss)

Earnings (loss) per share - basic and diluted

The following tables present the effects of the Restatement

Adjustments on the Company’s unaudited interim condensed consolidated statements of changes in stockholders’ equity for the

periods indicated:

As Previously

Balance - January 1, 2022

Balance - March 31, 2022

Balance - January 1, 2022

Balance - June 30, 2022

Balance - January 1, 2022

Balance - September 30, 2022

As Previously

Balance - January 1, 2023

Balance - March 31, 2023

Balance - January 1, 2023

Net (loss) income

Balance - June 30, 2023

Balance - January 1, 2023

Balance - September 30, 2023

The following tables present the effects of the Restatement

Adjustments on the Company’s unaudited interim condensed consolidated statements of cash flows for the periods indicated:

March 31, 2022

As Previously

Cash flows from operating activities:

Changes in operating assets and liabilities:

Deferred revenue

Net cash provided by operating activities

June 30, 2022

As Previously

Cash flows from operating activities:

Changes in operating assets and liabilities:

Deferred revenue

Net cash used in operating activities

September 30, 2022

As Previously

Cash flows from operating activities:

Changes in operating assets and liabilities:

Deferred revenue

Net cash used in operating activities

March 31, 2023

As Previously

Cash flows from operating activities:

Changes in operating assets and liabilities:

Accounts receivable

Deferred revenue

Net cash provided by operating activities

June 30, 2023

As Previously

Cash flows from operating activities:

Net (loss) income

Changes in operating assets and liabilities:

Accounts receivable

Deferred revenue

Net cash provided by operating activities

September 30, 2023

As Previously

Cash flows from operating activities:

Changes in operating assets and liabilities:

Accounts receivable

Deferred revenue

Net cash used in operating activities

Nature of the Company’s products and services

The Company’s principal products and services

include electric power systems and equipment, distributed energy resources, power generation equipment and mobile EV charging solutions.

The Company’s Electrical Infrastructure business

provides electric power systems and equipment and distributed energy resources that help customers effectively and efficiently protect,

control, transfer, monitor and manage their electric energy needs.

The Company’s Critical Power business provides

customers with power generation equipment and the Company’s suite of mobile e-Boost electric vehicle charging solutions.

Power generation systems represent considerable investments

that require proper maintenance and service in order to operate reliably during a time of emergency.

The Company’s power maintenance

programs provide preventative maintenance, repair and support service for the Company’s customers’ power generation systems.

The timing of revenue recognition, customer

billings and cash collections results in accounts receivable, contract assets and deferred revenue at the end of each reporting

Contract assets include unbilled amounts typically resulting from revenue recognized exceeding amounts billed to customers

for contracts utilizing an input method based on the proportion of labor hours incurred as compared to the total estimated labor

hours for the fixed-fee contract performance obligations.

The Company bills customers as work progresses in accordance with

agreed-upon contractual terms, either at periodic intervals, upon achievement of contractual milestones or upon deliveries.

The Company’s principal source of revenue is derived from sales of products and fees for services.

measures revenue based upon the consideration specified in the customer arrangement, and revenue is recognized when the performance obligations

in the customer arrangement are satisfied.

Changes in deferred revenue are generally as a result of the Company’s normal operating

cycle and the effect of cumulative catch-up adjustments arising from a change in the measure of progress or a contract modification identified

at each reporting period.

A performance obligation

is a promise in a contract to transfer a distinct product or service to the customer.

The transaction price of a contract is allocated

to each distinct performance obligation and recognized as revenue when or as the customer receives the benefit of the performance obligation.

Customers typically receive the benefit of the Company’s products when the risk of loss or control for the product transfers to

the customer and for services as they are performed.

Under ASC 606, revenue is recognized when a customer obtains control of promised

products or services in an amount that reflects the consideration the Company expects to receive in exchange for those products or services.

To achieve this core principle, the Company applies the following five steps:

1) Identify the contract with a customer

contract with a customer exists when (i) the Company enters into an enforceable contract with a customer that defines each party’s

rights regarding the products or services to be transferred and identifies the payment terms related to these products or services, (ii)

the contract has commercial substance and, (iii) the Company determines that collection of substantially all consideration for products

or services that are transferred is probable based on the customer’s intent and ability to pay the promised consideration.

Company applies judgment in determining the customer’s ability and intention to pay, which is based on a variety of factors including

the customer’s historical payment experience or, in the case of a new customer, published credit and financial information pertaining

to the customer.

A contract with a customer exists when (i) the Company

enters into an enforceable contract with a customer that defines each party’s rights regarding the products or services to be transferred

and identifies the payment terms related to these products or services, (ii) the contract has commercial substance and, (iii) the Company

determines that collection of substantially all consideration for products or services that are transferred is probable based on the customer’s

intent and ability to pay the promised consideration.

The Company applies judgment in determining the customer’s ability and intention

to pay, which is based on a variety of factors including the customer’s historical payment experience or, in the case of a new customer,

published credit and financial information pertaining to the customer.

2) Identify the performance obligations in the contract

obligations promised in a contract are identified based on the products or services that will be transferred to the customer that are

both capable of being distinct, whereby the customer can benefit from the product or service either on its own or together with other

resources that are readily available from third parties or from the Company, and are distinct in the context of the contract, whereby

the transfer of the products or services is separately identifiable from other promises in the contract.

To the extent a contract includes

multiple promised products or services, the Company must apply judgment to determine whether promised products or services are capable

of being distinct and distinct in the context of the contract.

If these criteria are not met the promised products or services are accounted

for as a combined performance obligation.

Performance obligations promised in a contract are

identified based on the products or services that will be transferred to the customer that are both capable of being distinct, whereby

the customer can benefit from the product or service either on its own or together with other resources that are readily available from

third parties or from the Company, and are distinct in the context of the contract, whereby the transfer of the products or services is

separately identifiable from other promises in the contract.

To the extent a contract includes multiple promised products or services,

the Company must apply judgment to determine whether promised products or services are capable of being distinct and distinct in the context

of the contract.

If these criteria are not met the promised products or services are accounted for as a combined performance obligation.

3) Determine the transaction price

transaction price is determined based on the consideration to which the Company will be entitled in exchange for transferring products

or services to the customer.

The transaction price is determined based on the consideration

to which the Company will be entitled in exchange for transferring products or services to the customer.

The customer payments are generally

due in 30 days.

4) Allocate the transaction price to performance

obligations in the contract

If the contract contains a single performance obligation,

the entire transaction price is allocated to the single performance obligation.

Contracts that contain multiple performance obligations

require an allocation of the transaction price to each performance obligation based on a relative standalone selling price basis.

Company determines standalone selling price based on the price at which the performance obligation is sold separately.

If the standalone

selling price is not observable through past transactions, the Company estimates the standalone selling price taking into account available

information such as market conditions and internally approved pricing guidelines related to the performance obligations.

5) Recognize revenue when or as the Company satisfies

a performance obligation

The Company satisfies performance obligations either

over time or at a point in time.

Revenue is recognized at the time the related performance obligation is satisfied by transferring a promised

product or service to a customer.

The Company satisfies its performance obligations

and, therefore, recognizes revenue, either over time or at a point in time, which is when the customer has obtained control of the good

Revenue from the sale of the Company’s electric power systems under its Electrical Infrastructure segment is recognized

either over time ($ 23,758 and $ 8,049 (as restated) of revenue in 2023 and 2022, respectively) or at a point in time ($ 6,619 and $ 8,221

of revenue in 2023 and 2022, respectively) and substantially all of the Company’s revenue from the sale of power generation equipment

under its Critical Power segment is recognized at a point in time.

Certain sales of highly customized electrical equipment under the Company’s

Electrical Infrastructure segment are recognized over time when such equipment has no alternative use and the Company has an enforceable

right to payment for performance completed to date.

The Company’s measure of progress for such contracts is evaluated under the

input method based on direct labor hours incurred relative to the estimated total direct labor hours required in order to complete the

When adjustments in estimated total labor hours at completion are determined, the related impact on income is recognized using

the cumulative catch-up method, which the Company recognizes in the current period.

During the year ended December 31, 2023, the

Company recognized $ 24,101

of equipment revenue over time.

During the year ended December 31, 2022, the Company recognized approximately $ 8,049

of equipment revenue over time.

Additionally, the Company recognized $ 9,614

of revenue at a point in time from the sale of its products during the year ended December 31, 2023 and 2022, respectively.

Service revenues include maintenance contracts that

are recognized over time based on the contract term and repair services which are recognized as services are delivered.

The Company recognized

$ 7,778 and $ 7,389 of service revenue during the year ended December 31, 2023 and 2022, respectively.

The Company bills customers as work

progresses in accordance with agreed-upon contractual terms, either at periodic intervals, upon achievement of contractual milestones

or upon deliveries.

Progress payments are paid by the customer over the duration of the contract.

Amounts billed and due from customers,

as well as the value of unbilled account receivables, are generally classified within current assets in the consolidated balance sheets.

The customer payments are generally due in 30 days.

Allocate the transaction price to performance obligations

in the contract

the contract contains a single performance obligation, the entire transaction price is allocated to the single performance obligation.

Contracts that contain multiple performance obligations require an allocation of the transaction price to each performance obligation

based on a relative standalone selling price basis.

The Company determines standalone selling price

based on the price at which the performance obligation is sold separately.

If the standalone selling price is not observable through

past transactions, the Company estimates the standalone selling price taking into account available information such as market conditions

and internally approved pricing guidelines related to the performance obligations.

Recognize revenue when or as the Company satisfies a performance

Company satisfies performance obligations either over time or at a point in time.

Revenue is recognized at the time the related performance

obligation is satisfied by transferring a promised product or service to a customer.

from the sale of our electric power systems is recognized either over time or at a point in time and substantially all of our revenue

from the sale of power generation equipment is recognized at a point in time.

Revenues are recognized at the point in time that the customer

obtains control of the good, which is when it has taken title to the products and has assumed the risks and rewards of ownership specified

in the purchase order or sales agreement.

Certain sales of highly customized electrical power systems are recognized over time when such

equipment has no alternative use and the Company has an enforceable right to payment for performance completed to date.

Revenue for such

agreements is recognized under the input method based on either cost or direct labor hours incurred relative to the estimated cost or

direct labor hours expected to be consumed to complete the project.

Under the cost-to-cost method of revenue recognition, a single estimated

profit margin is used to recognize profit for each performance obligation over its period of performance.

Recognition of profit on a

contract requires estimates of the total cost at completion and transaction price and the measurement of progress towards completion.

Due to the nature of many of our contracts, developing the estimated total cost at completion and total transaction price often requires

Factors that must be considered in estimating the cost of the work to be completed include the nature and complexity of the

work to be performed, subcontractor performance and the risk and impact of delayed performance.

When adjustments in estimated total costs

at completion or in estimated total transaction price are determined, the related impact on income is recognized using the cumulative

catch-up method, which recognizes in the current period the cumulative effect of such adjustments for all prior periods.

Any anticipated

losses on these contracts are fully recognized in the period in which the losses become evident.

the year ended December 31, 2022, the Company recognized $ 4.5 million of revenue over time and incurred costs of $ 3.7 million.

the year ended December 31, 2021, the Company recognized $ 3.5 million of revenue over time and incurred costs of $ 3.1 million.

Additionally,

the Company recognized $ 15.8 million and 7.9 million of revenue at a point in time from the sale of our products during the year ended

December 31, 2022 and 2021, respectively.

revenues include maintenance contracts that are recognized over time based on the contract term and repair services which are recognized

as services are delivered.

The Company recognized $ 7.4 million and $ 6.9 million of service revenue during the year ended December 31,

2022 and 2021, respectively.

the year ended December 31, 2022, the Company recognized approximately $ 2.2 million of revenue that was recognized as deferred revenue

at December 31, 2021, as compared to $ 714 of revenue during the year ended December 31, 2021 that was recognized as deferred revenue

at December 31, 2020.

was no revenue recognized during the year ended December 31, 2022 and 2021 from performance obligations satisfied in prior periods.

of a product requires that the buyer obtain permission in writing from the Company.

When the buyer requests authorization to return material

for reasons of their own, the buyer will be charged for placing the returned goods in saleable condition, restocking charges and for

any outgoing and incoming transportation paid by the Company.

The Company warrants title to the products, and also warrants the products

on date of shipment to the buyer, to be of the kind and quality described in the contract, merchantable, and free of defects in workmanship

and material.

Returns and warranties during the years ended December 31, 2022 and 2021 were insignificant.

following table presents our revenues disaggregated by revenue discipline:

Under certain contracts, the Company may be entitled to invoice the customer and receive payments in advance of performing

the related contract work.

In those instances, the Company recognizes a liability for advance billings in excess of revenue recognized,

which is referred to as deferred revenue.

Payments received from customers in advance of revenue recognition are not considered a significant

financing component because they are utilized to pay for contract costs within a one-year period or are requested by the Company to ensure

the customers meet their payment obligations.

The change in deferred revenue as of December

31, 2023 was driven primarily by ordinary course contract activity and as a result of cumulative catch-up adjustments related to

changes in measure of progress for over-time contracts.

As of January 1, 2022, the Company had a deferred revenue balance of $ 2,423 .

For the years ended December 31, 2023 and 2022, the Company recognized revenue of $ 9,046

(as restated) respectively, related to amounts that were included in deferred revenue as of December 31, 2022 and 2021,

respectively, resulting primarily from the progress made on the various active contracts during the respective reporting

Unbilled receivables include amounts for work performed for which the Company has an unconditional right to receive

payment and that are not subject to the completion of any other specific task, other than the billing itself.

The Company manages its accounts receivable credit

risk by performing credit evaluations and monitoring amounts due from the Company’s customers.

The Company had certain customers

whose revenue individually represented 10% or more of the Company’s total revenue, or whose accounts receivable balances individually

represented 10% or more of the Company’s total accounts receivable.

Return of a product requires that the buyer obtain

permission in writing from the Company.

When the buyer requests authorization to return material for reasons of their own, the buyer will

be charged for placing the returned goods in saleable condition, restocking charges and for any outgoing and incoming transportation paid

by the Company.

The Company warrants title to the products, and also warrants the products on date of shipment to the buyer, to be of

the kind and quality described in the contract, merchantable, and free of defects in workmanship and material.

Returns and warranties

during the years ended December 31, 2023 and 2022 were insignificant.

The following table presents the Company’s revenues disaggregated

by revenue discipline:

OF REVENUE DISAGGREGATED

Year Ended December 31,

Total revenue

Note 13 - Business Segment, Geographic and Customer Information.

OTHER EXPENSE (INCOME)

expense (income) in the consolidated statements of operations reports certain gains and losses associated with activities not directly

related to our core operations.

For the year ended December 31, 2022, other expense was $ 67 , as compared to other income of $ 1.3 million

during the year ended December 31, 2021.

For the year ended December 31, 2021, included in other income was a gain of $ 1.4 million for

the extinguishment and forgiveness of the PPP Loan.

components of inventories are summarized below:

The components of inventories are summarized below:

OF INVENTORIES

3 unchanged sentences

PROPERTY AND EQUIPMENT, NET

and equipment are summarized below:

SCHEDULE OF PROPERTY AND EQUIPMENT

Property and equipment are summarized below:

OF PROPERTY AND EQUIPMENT

Machinery, vehicles and equipment

6 unchanged sentences

Total property and equipment, net

expense was $ 228 and $ 153 for the period ended December 31, 2022 and 2021, respectively.

NOTES RECEIVABLE, NET

connection with the sale of the transformer business units in August 2019 (the “Equity Transaction”), amongst other consideration,

we received two subordinated promissory notes 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”), subject to certain adjustments.

The Seller Notes accrue interest at

a rate of 4.0 % per annum, with a final payment of all unpaid principal and interest becoming fully due and payable at December 31, 2022.

The Company determined the fair value of the Seller Notes based on market conditions and prevailing interest rates.

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

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 Company.

On December 15, 2022, the Company received in excess of $ 6.2 million

as a final payment of all unpaid principal and interest paying the Seller Notes in full.

Depreciation expense was $ 397 and $ 228 for the period

ended December 31, 2023 and 2022, respectively.

ACCOUNTS PAYABLE AND ACCRUED LIABILITIES

components of accounts payable and accrued liabilities are summarized below:

OF ACCOUNTS PAYABLE AND ACCRUED LIABILITIES

The components of accounts payable and accrued liabilities

are summarized below:

SCHEDULE OF ACCOUNTS PAYABLE AND ACCRUED LIABILITIES

Accounts payable

1 unchanged sentence

Total accounts payable and accrued liabilities

liabilities primarily consist of accrued sales commissions, accrued compensation and benefits, accrued sales and use taxes and accrued

Accrued liabilities primarily consist of accrued legal

settlement costs, accrued sales commissions, accrued compensation and benefits, accrued sales and use taxes and accrued insurance.

of December 31, 2023, accrued legal settlement costs were $ 5,000 , compared to no accrued legal settlement costs at December 31, 2022.

See Note 8 for details.

At December 31, 2023 and 2022, accrued sales commissions were $ 442 and $ 278 , respectively.

Accrued compensation and benefits

at December 31, 2022 and 2021 were $ 213 and $ 270 , respectively.

Accrued sales and use taxes at December 31, 2022 and 2021 were $ 258 and

$ 50 , respectively, and there was $ 559 of accrued insurance at December 31, 2022 compared to $ 481 at December 31, 2021.

The remainder

of accrued liabilities are comprised of several insignificant accruals in connection with normal business operations.

Accrued compensation

and benefits at December 31, 2023 and 2022 were $ 294 and $ 213 , respectively.

Accrued sales and use taxes at December 31, 2023 and 2022

were $ 67 and $ 258 , respectively, and there was $ 795 of accrued insurance at December 31, 2023 compared to $ 559 at December 31, 2022.

remainder of accrued liabilities are comprised of several insignificant accruals in connection with normal business operations.

COMMITMENTS AND CONTINGENCIES

Company leases certain offices, facilities and equipment under operating and financing leases.

Our leases have remaining terms ranging

from less than 1 year to 5 years some of which contain options to extend up to 5 years.

The Company leases certain offices, facilities and

equipment under operating and financing leases.

The Company’s leases have remaining terms ranging from less than 1 year to 5 years

some of which contain options to extend up to 5 years.

As of December 31, 2023 and 2022, assets recorded under finance leases were $ 638

and $ 1,261 , respectively, and accumulated amortization associated with finance leases were $ 235 and $ 534 , respectively.

As of December 31, 2023 and 2022, assets recorded

under finance leases were $ 1.3 million and $ 1.6 million, respectively, and accumulated amortization associated with finance leases were

$ 534 and $ 1.1 million, respectively.

of December 31, 2022 and 2021, assets recorded under operating leases were $ 2.2 million and $ 3.9 million, respectively, and accumulated

amortization associated with operating leases were $ 798 and $ 2.3 million, respectively.

During the fourth quarter of 2022, the Company

executed an extension of its operating lease for the corporate management and sales office in Fort Lee, New Jersey.

After adjusting for

a weighted average discount rate, the Company recognized a right-of-use asset and lease liability of approximately $ 275 within the consolidated

balance sheets.

components of the lease expense were as follows:

OF LEASE EXPENSES

under operating leases were $ 2,248 and $ 2,248 , respectively, and accumulated amortization associated with operating leases were $ 1,488

and $ 798 , respectively.

During the fourth quarter of 2022, the Company executed an extension of its operating lease for the corporate

management and sales office in Fort Lee, New Jersey.

After adjusting for a weighted average discount rate, the Company recognized a right-of-use

asset and lease liability of approximately $ 275 within the consolidated balance sheets.

The components of the lease expense were as follows:

SCHEDULE OF LEASE EXPENSES

Operating lease cost

Finance lease cost

Financing lease cost

Amortization of right-of-use asset

Interest on lease liabilities

Total finance lease cost

information related to leases was as follows:

cash flows information:

OF CASH FLOWS INFORMATION

Total financing lease cost

Other information related to leases was as follows:

Supplemental cash flows information:

SCHEDULE OF CASH FLOWS INFORMATION

Cash paid for amounts included in the measurement of lease liabilities

Operating cash flow payments for operating leases

Operating cash flow payments for finance leases

Financing cash flow payments for finance leases

Operating cash flow payments for financing leases

Financing cash flow payments for financing leases

Right-of-use assets obtained in exchange for lease obligations

Operating lease liabilities arising from obtaining right of use assets

Capitalized lease obligations

Financing lease obligations

Weighted average remaining lease term:

Operating leases

Finance leases

Financing leases

Weighted average discount rate:

Operating leases

Finance leases

minimum lease payments under non-cancellable leases as of December 31, 2022 were as follows:

OF FUTURE MINIMUM LEASE PAYMENTS

Financing leases

Future minimum lease payments under non-cancellable leases as of December

31, 2023 were as follows:

SCHEDULE OF FUTURE MINIMUM LEASE PAYMENTS

Total future minimum lease payments

1 unchanged sentence

Total future minimum lease payments

as of December 31, 2022:

OF LEASE REPORTED

Reported as of December 31, 2023:

SCHEDULE OF LEASE REPORTED

Right-of-use assets

Accounts payable and accrued liabilities

Other long-term liabilities

of the date hereof, we are not aware of or a party to any legal proceedings to which we or any of our subsidiaries is a party or to which

any of our property is subject, nor are we aware of any such threatened or pending litigation or any such proceedings known to be contemplated

by governmental authorities that we believe could have a material adverse effect on our business, financial condition or operating results.

are not aware of any material proceedings in which any of our directors, officers or affiliates or any registered or beneficial shareholder

of more than 5 % of our common stock is an adverse party or has a material interest adverse to our interest.

Current portion of lease liabilities

Lease liabilities, non-current portion

Litigation and Claims

From time to time, the Company is a defendant or plaintiff

in various legal actions that arise in the normal course of business.

Liabilities for loss contingencies arising from claims, assessments,

litigation, fines and penalties and other sources are recorded when it is probable that a liability has been incurred and the amount of

the assessment can be reasonably estimated.

On June 15, 2023, Terrence and Kay Mimick (the “Plaintiffs”)

filed a complaint in the U.S.

District Court, District of Nebraska naming the Company, its wholly-owned subsidiary, Pioneer Critical Power,

Inc., and an individual acting in his capacity as an employee of the Company, collectively as defendants.

Plaintiffs filed an amended

complaint on July 7, 2023, alleging negligent driving, negligent entrustment, and negligent hiring, training and supervision, as a result

of a car accident that occurred on September 9, 2019, and seeking special damages related to the injuries allegedly sustained by Plaintiffs.

The amended complaint also named Titan Energy Systems, Inc.

as a defendant instead of Pioneer Critical Power, Inc.

On July 27, 2023, the

defendants filed an Answer to Plaintiff’s Amended Complaint.

On October 6, 2023, a mediation was held, but the parties did not reach

a settlement.

In June 2024 another mediation was held and the parties reached a settlement for all of the Plaintiffs’ claims.

As of December 31, 2023, the Company recognized a liability of $ 5,000 related to this matter, which was included within accounts payable

and accrued liabilities, with a corresponding insurance receivable of $ 5,000 related to the loss recovery, which was deemed to be probable

and included within prepaid expenses and other current assets on the consolidated balance sheet.

The Company is not aware of any material proceedings

in which any of its directors, officers or affiliates or any registered or beneficial shareholder of more than 5 % of the Company’s

common stock is an adverse party or has a material interest adverse to the Company’s interest.

NOTES RECEIVABLE, NET

In connection with the Equity Transaction, amongst

other consideration, the Company received the Seller Notes for a total aggregate principal amount of $ 7,500 , subject to certain adjustments.

The Seller Notes accrue interest at a rate of 4.0 % per annum, with a final payment of all unpaid principal and interest becoming fully

due and payable at December 31, 2022.

The Company determined the fair value of the Seller Notes based on market conditions and prevailing

interest rates.

During the fourth quarter of 2019, the Company and Pioneer Transformers L.P.

(the “US Buyer”) and Pioneer

Acquireco ULC (the “Canadian Buyer,” and together with the US Buyer, the “Buyer”), pursuant to that certain Stock

Purchase Agreement dated June 28, 2019, completed the net working capital adjustment, which resulted in the Company paying the Buyer $ 1,800

in cash and reducing the principal amount of the $ 5,000 Seller Note to $ 3,200 .

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 Company.

On December 15, 2022, the Company received in excess of $ 6,200 as a final payment of all unpaid principal and interest paying the Seller

Notes in full.

STOCKHOLDERS’ EQUITY

Company had 9,644,545 and 9,640,545 shares of common stock, $ 0.001 par value per share, outstanding as of December 31, 2022 and December

31, 2021, respectively.

board of directors is authorized, subject to any limitations prescribed by law, without further vote or action by the shareholders, to

issue from time to time up to 5,000,000 shares of preferred stock, $ 0.001 par value, in one or more series.

Each such series of preferred

stock shall have such number of shares, designations, preferences, voting powers, qualifications, and special or relative rights or privileges

as shall be determined by the board of directors, which may include, among others, dividend rights, voting rights, liquidation preferences,

conversion rights and preemptive rights.

The Company had 9,930,022 and 9,644,545 shares of

common stock, $ 0.001 par value per share, outstanding as of December 31, 2023, and December 31, 2022, respectively.

Preferred Stock

The board of directors is authorized, subject to any

limitations prescribed by law, without further vote or action by the shareholders, to issue from time to time up to 5,000,000 shares of

preferred stock, $ 0.001 par value, in one or more series.

Each such series of preferred stock shall have such number of shares, designations,

preferences, voting powers, qualifications, and special or relative rights or privileges as shall be determined by the board of directors,

which may include, among others, dividend rights, voting rights, liquidation preferences, conversion rights and preemptive rights.

STOCK-BASED COMPENSATION

May 11, 2011, the board of directors of the Company adopted the Pioneer Power Solutions, Inc.

2011 Long-Term Incentive Plan (the “2011

Plan”) which was subsequently approved by stockholders of the Company on May 31, 2011.

The 2011 Plan replaced and superseded the

The Company’s outside directors and employees, including the Company’s principal executive officer, principal

financial officer and other named executive officers, and certain contractors were all eligible to participate in the 2011 Plan.

The 2011 Plan allowed for the granting of incentive stock options, nonqualified stock options, stock appreciation rights, restricted

stock, restricted stock units, performance awards, dividend equivalent rights, and other awards, which were granted singly, in combination,

or in tandem, and upon such terms as determined by the Board or a committee of the Board that was designated to administer the Plan.

Subject to certain adjustments, the maximum number of shares of the Company’s common stock that were available to be delivered

pursuant to awards under the 2011 Plan was 700,000 shares.

As of December 31, 2022, there were no shares available for future grants

under the Company’s 2011 Long-Term Incentive Plan.

The Company’s 2011 Long-Term Incentive Plan expired during the second

quarter of 2021.

October 13, 2021, our board of directors adopted the 2021 Long-Term Incentive Plan (the “2021 Plan”), subject to stockholder

approval, which was obtained on November 11, 2021.

Our outside directors and our employees, including the principal executive officer,

principal financial officer and other named executive officers, and certain contractors are all eligible to participate in the 2021 Plan.

The 2021 Plan allows for the granting of incentive stock options, non-qualified stock options, stock appreciation rights, restricted

stock, restricted stock units, performance awards, dividend equivalent rights, and other awards, which may be granted singly, in combination,

or in tandem, and upon such terms as are determined by the Board or a committee of the board that is designated to administer the 2021

Subject to certain adjustments, the maximum number of shares of the Company’s common stock that may be delivered pursuant

to awards under the 2021 Plan is 900,000 shares.

As of December 31, 2022, there were 498,000 shares available for future grants under

the Company’s 2021 Plan.

The 2021 Plan was initially administered by our board of directors, but it has been administered by the

compensation committee following the creation of such committee in the first quarter of 2022.

compensation expense recorded for the year ended December 31, 2022 and 2021 was approximately $ 1.0 million and $ 186 , respectively.

of the stock-based compensation expense is included in selling, general and administrative expenses in the accompanying consolidated

statements of operations.

At December 31, 2022, the Company had total stock-based compensation expense remaining to be recognized in

the consolidated statements of operations of approximately $ 735 , which will be recognized over a weighted average period of 1.3 years.

fair value of the stock options granted was measured using the Black-Scholes valuation model with the following assumptions:

OF STOCK OPTION GRANTED MEASURED USING BLACK SCHOLES VALUATION

Stock-Based Compensation

On May 11, 2011, the board of directors of the Company

adopted the Pioneer Power Solutions, Inc.

2011 Long-Term Incentive Plan (the “2011 Plan”) which was subsequently approved

by stockholders of the Company on May 31, 2011.

The 2011 Plan replaced and superseded the 2009 Plan.

The Company’s outside directors

and employees, including the Company’s principal executive officer, principal financial officer and other named executive officers,

and certain contractors were all eligible to participate in the 2011 Plan.

The 2011 Plan allowed for the granting of incentive stock options,

nonqualified stock options, stock appreciation rights, restricted stock, restricted stock units, performance awards, dividend equivalent

rights, and other awards, which were granted singly, in combination, or in tandem, and upon such terms as determined by the Board or a

committee of the Board that was designated to administer the Plan.

Subject to certain adjustments, the maximum number of shares of the

Company’s common stock that were available to be delivered pursuant to awards under the 2011 Plan was 700,000 shares.

As of December

31, 2023, there were no shares available for future grants under the Company’s 2011 Long-Term Incentive Plan.

The Company’s

2011 Long-Term Incentive Plan expired during the second quarter of 2021.

On October 13, 2021, the Company’s board of

directors adopted the 2021 Long-Term Incentive Plan (the “2021 Plan”), subject to stockholder approval, which was obtained

on November 11, 2021.

The 2021 Plan supplemented the 2011 Plan, which expired on May 11, 2021, and which replaced and superseded the 2009

Plan, as noted above.

The Company’s outside directors and its employees, including the principal executive officer, principal financial

officer and other named executive officers, and certain contractors are all eligible to participate in the 2021 Plan.

The 2021 Plan allows

for the granting of incentive stock options, non-qualified stock options, stock appreciation rights, restricted stock, restricted stock

units, performance awards, dividend equivalent rights, and other awards, which may be granted singly, in combination, or in tandem, and

upon such terms as are determined by the Board or a committee of the board that is designated to administer the 2021 Plan.

certain adjustments, the maximum number of shares of the Company’s common stock that may be delivered pursuant to awards under the

2021 Plan is 900,000 shares plus any increase by any Prior Plan Awards (as defined in the 2021 Plan) eligible for reuse, of which one

hundred percent ( 100 %) may be delivered pursuant to incentive stock options.

As of December 31, 2023, there were 347,500 shares available

for future grants under the Company’s 2021 Plan.

The 2021 Plan was initially administered by the Company’s board of directors,

but it has been administered by the compensation committee following the creation of such committee in the first quarter of 2022.

The fair value of the stock options granted

was measured using the Black-Scholes valuation model with the following assumptions:

SCHEDULE OF STOCK OPTION GRANTED MEASURED USING BLACK SCHOLES VALUATION

Year Ended December 31,

Expected volatility

Expected life in years

Expected term (years)

Risk-free interest rate

Expected dividend yield

A summary of stock option activity for the year ended December 31, 2022 is presented below:

3.5 % - 4.4 %

Expected volatility

110.0 % - 112.1 %

Expected dividends

A summary of stock option activity for the

year ended December 31, 2023 is presented below:

SUMMARY OF STOCK OPTION ACTIVITY

5 unchanged sentences

Outstanding as of January 1, 2023

Forfeited/Expired

Outstanding as of December 31, 2023

Exercisable as of December 31, 2023

value is the difference between the market value of the stock at December 31, 2022 and the exercise price which is aggregated for all

options outstanding and exercisable.

A summary of the weighted-average grant-date fair value of options, total intrinsic value of options

exercised, and cash receipts from options exercised is shown below:

OF WEIGHTED AVERAGE GRANT DATE FAIR VALUE OF OPTIONS

A summary of the weighted-average grant-date fair

value of options, total intrinsic value of options exercised, and cash receipts from options exercised is shown below:

SCHEDULE OF WEIGHTED AVERAGE GRANT DATE FAIR VALUE OF OPTIONS

Year Ended December 31,

Weighted-average fair value of options granted (per share)

Intrinsic value (loss) gain of options exercised

Intrinsic value gain (loss) of options exercised

Cash receipts from exercise of options

following table presents information related to stock options as of December 31, 2022:

OF INFORMATION RELATED TO OPTIONS OUTSTANDING AND EXERCISABLE

The following table presents information related to

stock options as of December 31, 2023:

SCHEDULE OF INFORMATION RELATED TO OPTIONS OUTSTANDING AND EXERCISABLE

Options outstanding

3 unchanged sentences

Exercise price

April 25, 2022, the Company awarded 375,000

shares of restricted stock units (“RSU”)

to the Company’s Chief Financial Officer with the following vesting terms:

units on May 1, 2022, which are included in the

calculation of basic EPS as of the vesting date, (ii) an additional 125,000

units on May 1, 2023, and (iii) the remaining

units on May 1, 2024, provided that the executive

has remained continuously employed by the Company through each applicable vesting date.

The vested RSUs will be converted into shares

of the Company’s common stock no later than March 15 of the calendar year following the calendar year in which such RSUs vested.

The fair value of the RSU award at the date of grant was $ 1.6

million, which will be recognized over the vesting

Subsequent to December 31, 2022, the Company issued 125,000 of common stock to the holder in connection with the RSUs that vested

on May 1, 2022.

summary of RSU activity during the year ended December 31, 2022 is as follows:

OF RESTRICTED STOCK UNITS

A summary of restricted stock unit (“RSU”)

activity during the year ended December 31, 2023 is as follows:

SCHEDULE OF RESTRICTED STOCK UNITS

Weighted-average

6 unchanged sentences

Unvested restricted stock units as of December 31, 2023

components of loss before income taxes are summarized below:

During the year ended December 31, 2023, the Company

issued 10,000 shares of its common stock for consulting services with a fair value of $ 65 .

During the year ended December 31, 2023, the Company

issued 100,000 shares of common stock to its Chief Executive Officer (“CEO”) in connection with the vesting of 100,000 RSUs

on May 11, 2023.

The fair value of the RSUs on the date of grant was $ 575 , which was recognized immediately.

During the year ended December 31, 2023, the Company

issued 250,000 shares of common stock to its Chief Financial Officer (“CFO”) in connection with the vesting of 125,000 RSUs

on May 1, 2022, and 125,000 RSUs on May 1, 2023.

During the year ended December 31, 2023, the CEO and

CFO each individually agreed to surrender shares of common stock to the Company, totaling an aggregate of 117,082 shares with a fair value

of $ 720 in connection with income and payroll tax obligations paid by the Company in connection with the vesting of the above mentioned

The shares were cancelled and retired by the Company.

Stock based compensation expense recorded for the

years ended December 31, 2023 and 2022 was approximately $ 1,471 and $ 1,002 , respectively.

At December 31, 2023, there was $ 413 of stock-based

compensation expense remaining to be recognized in the consolidated statements of operations over a weighted average remaining period

of 1.1 years.

The components of loss before income taxes

are summarized below:

OF LOSS BEFORE INCOME TAXES

2 unchanged sentences

Loss before income taxes

components of the income tax provision were as follows :

The components of the income tax provision were as

OF INCOME TAX PROVISION

1 unchanged sentence

Total income tax provision

reconciliation from the statutory U.S.

income tax rate and the Company’s effective income tax rate, as computed on loss before

taxes, is as follows:

A reconciliation from the statutory U.S.

rate and the Company’s effective income tax rate, as computed on loss before taxes, is as follows:

OF INCOME TAX RATE RECONCILIATION

5 unchanged sentences

Valuation allowance

Company’s provision for income taxes reflects an effective tax rate on loss before income taxes of ( 0.2 )%

in 2022, as compared to 0.7 %

The consistency in the Company’s effective tax rate during the year ended December 31, 2022 primarily reflects the increase in state income

taxes, valuation allowance and net operating losses.

net deferred income tax asset (liability) was comprised of the following:

The Company’s provision for income taxes reflects an effective tax

rate on loss before income taxes of 0.0 % in 2023, as compared to ( 0.1 )% in 2022.

The consistency in the Company’s effective

tax rate during 2023 primarily reflects the increase in state taxes, the increase in the valuation allowance and increase in net operating

The net deferred income tax asset (liability) was comprised of the following:

OF DEFERRED INCOME TAX ASSETS LIABILITY

3 unchanged sentences

Net deferred income tax asset

tax effect of temporary differences between GAAP accounting and federal income tax accounting creating deferred income tax assets and

liabilities were as follows:

The tax effect of temporary differences between GAAP

accounting and federal income tax accounting creating deferred income tax assets and liabilities were as follows:

OF ACCOUNTING CREATING DEFERRED INCOME TAX

7 unchanged sentences

Deferred asset, net

The composition of the Company’s foreign tax credits (FTC) carryforward as of December 31, 2022 is as follows:

SCHEDULE OF FOREIGN TAX CREDITS CARRYFORWARD

Tax year-ended

December 31, 2017

December 31, 2027

December 31, 2016

December 31, 2026

December 31, 2015

December 31, 2025

December 31, 2014

December 31, 2024

December 31, 2013

December 31, 2023

assessment of the amount of value assigned to our deferred tax assets under the applicable accounting rules is judgmental.

We are required

to consider all available positive and negative evidence in evaluating the likelihood that we will be able to realize the benefit of

our deferred tax assets in the future.

Such evidence includes scheduled reversals of deferred tax liabilities, projected future taxable

income, tax planning strategies and the results of recent operations.

Since this evaluation requires consideration of events that may

occur some years into the future, there is an element of judgment involved.

Realization of our deferred tax assets is dependent on generating

sufficient taxable income in future periods.

We do not believe that it is more likely than not that future taxable income will be sufficient

to allow us to recover any of the value assigned to our deferred tax assets.

Accordingly, we have provided for a valuation allowance

of the Company’s foreign tax credits as we do not anticipate generating sufficient foreign source income.

In addition, we have

provided for a full valuation allowance on the domestic deferred tax assets as the combined effect of future domestic source income and

the future reversals of future tax assets and liabilities will likely be insufficient to realize the full benefits of the assets.

of December 31, 2022, the Company has a net operating loss carryforward of $ 14.3 million.

The Company has $ 10.9 million of deferred tax

assets on which it is taking a full valuation allowance.

The total valuation allowance recorded is $ 10.9 million, representing an increase

of $ 766 from December 31, 2021.

The Company has approximately $ 4.3 million of foreign tax credits for which it has provided a full valuation

allowance and $ 39 of research and development credits which expire in 2032.

The Company has interest expense subject to a tax deduction limitation under IRC 163(j).

The new calculation arising from the 2017 tax

reform requires an adjusted taxable income to be calculated by, among other things, adding back to taxable income any depreciation, amortization,

or depletion deductions for the taxable years beginning after December 31, 2017, and before January 1, 2022, as well as removing any GILTI

When calculating the adjusted taxable income for this purpose, the Company did not have sufficient taxable income in previous

years to deduct interest expense exceeding the limitation, therefore creating a carryover of business interest expense to future years.

For the quarter ended December 31, 2022, $ 467 of interest expense disallowed from prior years has been utilized to offset current interest

income reported.

The amount available for carryover to future periods of IRC 163(j) as of December 31, 2022 is $ 3.1 million.

This carryover

is available indefinitely.

believes that an adequate provision has been made for any adjustments that may result from tax examinations.

However, the outcome of

tax audits cannot be predicted with certainty.

If any issues addressed in the Company’s tax audits are resolved in a manner not

consistent with management’s expectations, the Company could be required to adjust its provision for income taxes in the period

such resolution occurs.

tax years subject to examination by major tax jurisdiction include the years 2019 and forward by the U.S.

Internal Revenue Service and

most state jurisdictions, and the years 2019 and forward for the Canadian jurisdiction.

As of December 31, 2023, the Company has $ 4,233 in

foreign tax credits (“FTCs”) carryforward.

These FTCs begin to expire in December 2024.

The assessment of the amount of value assigned to

the Company’s deferred tax assets under the applicable accounting rules is judgmental.

The Company is required to consider all available

positive and negative evidence in evaluating the likelihood that the Company will be able to realize the benefit of its deferred tax assets

in the future.

Such evidence includes scheduled reversals of deferred tax liabilities, projected future taxable income, tax planning strategies

and the results of recent operations.

Since this evaluation requires consideration of events that may occur some years into the future,

there is an element of judgment involved.

Realization of the Company’s deferred tax assets is dependent on generating sufficient

taxable income in future periods.

The Company does not believe that it is more likely than not that future taxable income will be sufficient

to allow the Company to recover any of the value assigned to the Company’s deferred tax assets.

Accordingly, the Company has provided

for a valuation allowance of the Company’s FTCs as the Company does not anticipate generating sufficient foreign source income.

In addition, the Company has provided for a full valuation allowance on the domestic deferred tax assets as the combined effect of future

domestic source income and the future reversals of future tax assets and liabilities will likely be insufficient to realize the full benefits

of the assets.

The Company has federal net operating loss (“NOLs”)

carryforwards of approximately $ 18,228 as of December 31, 2023.

The Federal NOLs were generated in the taxable years ending after December

As a result, the NOLs are eligible to be carried forward indefinitely, but generally may only offset up to 80 % of federal taxable

income earned in a taxable year.

The Company’s net operating losses may be subject

to annual Section 382 limitations due to ownership changes that could impact the future realization.

As of December 31, 2023, the Company

has not experienced an ownership change within the meaning of Sec.

382(g) and will continue to monitor its cumulative ownership changes

for purposes of Sec.

The Company has $ 12,467

of deferred tax assets on which it is taking a full valuation allowance.

The total valuation allowance recorded is $ 12,378 ,

representing an increase of $ 1,013

from December 31, 2022.

The Company has approximately $ 4,233

of FTCs for which it has provided a full valuation allowance and $ 39

of research and development credits which expire in 2032.

The Company has interest expense subject to a tax

deduction limitation under IRC 163(j).

The new calculation arising from the 2017 tax reform requires an adjusted taxable income to be

calculated by, among other things, adding back to taxable income any depreciation, amortization, or depletion deductions for the taxable

years beginning after December 31, 2017, and before January 1, 2022, as well as removing any GILTI inclusions.

When calculating the adjusted

taxable income for this purpose, The Company did not have sufficient taxable income in previous years to deduct interest expense exceeding

the limitation, therefore creating a carryover of business interest expense to future years.

For the year ended December 31, 2023, the

company was able to utilize their business interest income to support interest expense deductions, resulting in an interest expense deduction

of $231 from prior year carryforwards.

The amount available for carryover to future periods of IRC 163(j) as of December 31, 2023 is $ 2,897 .

This carryover is available indefinitely.

Management believes that an adequate provision has

been made for any adjustments that may result from tax examinations.

However, the outcome of tax audits cannot be predicted with certainty.

If any issues addressed in the Company’s tax audits are resolved in a manner not consistent with management’s expectations,

the Company could be required to adjust its provision for income taxes in the period such resolution occurs.

The tax years subject to examination by major tax

jurisdiction include the years 2020 and forward by the U.S.

Internal Revenue Service and most state jurisdictions.

BUSINESS SEGMENT, GEOGRAPHIC AND CUSTOMER INFORMATION

Company follows ASC 280 - Segment Reporting in determining its reportable segments.

The Company considered the way its management

team, most notably its chief operating decision maker, makes operating decisions and assesses performance and considered which

components of the Company’s enterprise have discrete financial information available.

As the Company makes decisions using a

manufactured products vs.

distributed products and services group focus, its analysis resulted in two reportable segments:

Solutions and Critical Power.

The Critical Power reportable segment is the Company’s Titan Energy Systems, Inc.

The Company follows ASC 280 - Segment Reporting

in determining its reportable segments.

The Company considered the way its management team, most notably its chief operating

decision maker, makes operating decisions and assesses performance and considered which components of the Company’s enterprise

have discrete financial information available.

In determining operating and reportable segments in accordance with Financial

Accounting Standards Board Accounting Standards Codification 280, Segment Reporting, the Company concluded that it has two

reportable segments, which are also its operating segments:

Electrical Infrastructure and Critical Power.

The Critical Power

reportable segment is the Company’s Titan Energy Systems, Inc.

business unit.

The T&D Solutions reportable segment is the Company’s Pioneer Custom Electrical Products Corp.

The Electrical Infrastructure reportable segment

is the Company’s Pioneer Custom Electrical Products Corp.

business unit.

T&D Solutions segment is involved in the design, manufacture and distribution of switchgear used primarily by large industrial and

commercial operations to manage their electrical power distribution needs.

The Critical Power segment provides power generation equipment

and aftermarket field-services primarily to help customers ensure smooth, uninterrupted power to operations during times of emergency.

following tables present information about segment income (loss):

The Electrical Infrastructure segment is involved

in the design, manufacture and sale of electrical distribution and control equipment used primarily by large industrial and commercial

operations to manage their electrical power distribution needs.

The Critical Power segment is involved in the sale and service of power

generation equipment and provides mobile high-capacity charging solutions, as well as aftermarket field-services, in order to help customers

secure mobile fast-charging where fixed charging infrastructure does not exist.

The following tables present information about segment income (loss):

OF SEGMENT INCOME LOSS

T&D Solutions

Power Systems

Electrical Infrastructure

Critical Power Solutions

Depreciation and amortization

T&D Solutions

Electrical Infrastructure

Critical Power Solutions

2 unchanged sentences

Operating income (loss)

T&D Solutions

Electrical Infrastructure

Critical Power Solutions

1 unchanged sentence

Operating income (loss)

following table presents information which reconciles segment assets to consolidated total assets:

T&D Solutions

The following table presents information which reconciles

segment assets to consolidated total assets:

Electrical Infrastructure

Critical Power Solutions

assets consisted primarily of cash on hand.

are attributable to countries based on the location of the Company’s customers:

Revenues are attributable to countries based on the location of the Company’s

OF ATTRIBUTABLE TO COUNTIES BASED ON THE LOCATION

United States

to Enchanted Rock Electric, LLC accounted for approximately 45 %

of the Company’s total sales during the year ended December 31, 2022.

The Company had no sales to Enchanted Rock Electric, LLC

during the year ended December 31, 2021.

distribution of the Company’s property and equipment by geographic location is approximately as follows:

Approximately 42 %

of the Company’s sales during the year ended December 31, 2023 were made to Enchanted Rock Electric, LLC and Sequel Electrical

Supply, LLC, respectively.

Approximately 43 % and 10 % of the Company’s sales during the year ended December 31, 2022 were made to

Enchanted Rock Electric, LLC and Southern California Gas Company, respectively.

The distribution of the Company’s property and equipment by geographic

location is approximately as follows:

OF PROPERTY AND EQUIPMENT BY GEOGRAPHIC LOCATION

2 unchanged sentences

BASIC AND DILUTED LOSS PER COMMON SHARE

and diluted loss per common share is calculated based on the weighted average number of shares outstanding during the period.

The Company’s

employee and director equity awards, as well as incremental shares issuable upon exercise of warrants, are not considered in the calculations

if the effect would be anti-dilutive.

The following table sets forth the computation of basic and diluted loss per share (in thousands,

except per share data):

Basic and diluted loss per common share is

calculated based on the weighted average number of vested shares outstanding during the period.

The Company’s employee and director

equity awards, as well as incremental shares issuable upon exercise of warrants, are not considered in the calculations if the effect

would be anti-dilutive.

The following table sets forth the computation of basic and diluted loss per share (in thousands, except

per share data):

OF BASIC AND DILUTED LOSS PER SHARE

1 unchanged sentence

Effect of dilutive securities - equity based compensation plans

Denominator for diluted net loss per common share

Weighted average diluted shares outstanding

Net loss per common share:

of December 31, 2022 and 2021, diluted loss per share excludes potentially dilutive common shares related to (i) 670,667

shares underlying stock options, respectively, and (ii) 250,000

As of December 31, 2023 and 2022, basic and

diluted loss per share excludes potentially dilutive common shares related to 332,500

shares underlying stock options, respectively, and 125,000

shares underlying nonvested RSUs, respectively, as their effect was anti-dilutive.

CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE.

Subsequent to December 31, 2023, the Company sold

919,557 shares of common stock under the ATM program (See liquidity section in Note 1 - Business Organization, Nature of Operations,

Risks and Uncertainties) for total gross proceeds of approximately $ 4,986 , at an average gross price of $ 5.5970 per share.

On May 1, 2024, the third tranche of RSUs under Mr.

Michalec’s RSU

Award vested and, as a result, 125,000 shares of common stock were subsequently issued to Mr.

On June 7, 2024, Mr.

Michalec surrendered 57,541 shares of common stock issued to him upon settlement of his vested RSUs to satisfy tax withholding

The shares were cancelled and retired by the Company.

CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING

AND FINANCIAL DISCLOSURE.

Not applicable.

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 8. Financial Statements and Supplementary Data