What changed in this filing

/stocks — the workspaceLOADING

Item 2. Management’s Discussion and Analysis

2024-09-10 compared with 2023-11-14 · 213 added, 289 removed, 128 unchanged (80% of the section changed)

MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS.

following discussion and analysis of our financial condition and results of operations should be read in conjunction with the accompanying

consolidated interim financial statements and related notes included elsewhere in this Quarterly Report on Form 10-Q and with our Annual

Report on Form 10-K for the year ended December 31, 2022, which was filed with the Securities and Exchange Commission on April 11, 2023.

following discussion and analysis of our financial condition and results of operations should be read in conjunction with the

accompanying unaudited consolidated interim financial statements and related notes included elsewhere in this Quarterly Report on

Form 10-Q and with our Annual Report on Form 10-K for the year ended December 31, 2023, which was filed with the Securities and

Exchange Commission on July 26, 2024.

the context requires otherwise, references in this Quarterly Report on Form 10-Q to the “Company,” “Pioneer,”

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cause such differences include, but are not limited to:

economic conditions and their effect on demand for electrical equipment, particularly in the commercial construction market, but

also in the power generation, industrial production, data center, oil and gas, marine and infrastructure industries.

effects of fluctuations in sales on our business, revenues, expenses, net income (loss), income (loss) per share, margins and profitability.

of our competitors are better established and have significantly greater resources and may subsidize their competitive offerings

with other products and services, which may make it difficult for us to attract and retain customers.

economic conditions and their effect on demand for electrical equipment, particularly in

the commercial construction market, but also in the power generation, industrial production

and infrastructure industries.

effects of fluctuations in sales on our business, revenues, expenses, net income (loss),

income (loss) per share, margins and profitability.

of our competitors are better established and have significantly greater resources and may

subsidize their competitive offerings with other products and services, which may make it

difficult for us to attract and retain customers.

potential loss or departure of key personnel, including Nathan J.

Mazurek, our chairman, president and chief executive officer.

ability to generate internal growth, maintain market acceptance of our existing products and gain acceptance for our new products.

Mazurek, our chairman,

president and chief executive officer.

ability to generate internal growth, maintain market acceptance of our existing products

and gain acceptance for our new products.

● Unanticipated

increases in raw material prices or disruptions in supply could increase production costs and adversely affect our profitability.

increases in raw material prices or disruptions in supply could increase production costs

and adversely affect our profitability.

ability to realize revenue reported in our backlog.

margin risk due to competitive pricing and operating efficiencies, supply chain risk, material, labor or overhead cost increases,

interest rate risk and commodity risk.

ability to remediate the material weaknesses identified in our internal control over financial

reporting in our Annual Report on Form 10-K for the year ended December 31, 2023, or inability

to otherwise maintain an effective system of internal control.

effect that the restatement of the prior financial statements could have on investor confidence

in us and raise reputational risk.

margin risk due to competitive pricing and operating efficiencies, supply chain risk, material,

labor or overhead cost increases, interest rate risk and commodity risk.

or labor disputes with our employees may adversely affect our ability to conduct our business.

impact of geopolitical activity on the economy, changes in government regulations such as income taxes, climate control initiatives,

the timing or strength of an economic recovery in our markets and our ability to access capital markets.

impact of geopolitical activity on the economy, changes in government regulations such as

income taxes, climate control initiatives, the timing or strength of an economic recovery

in our markets and our ability to access capital markets.

weaknesses in internal controls.

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liquidity and trading volume of our common stock.

business could be adversely affected by an outbreak of disease, epidemic or pandemic, such as the global coronavirus pandemic, or

similar public threat, or fear of such an event.

business could be adversely affected by an outbreak of disease, epidemic or pandemic, such

as the global coronavirus pandemic, or similar public threat, or fear of such an event.

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

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We are headquartered

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

for manufacturing, service and maintenance, engineering,

and sales and administration.

in Fort Lee, New Jersey and operate from three (3) additional locations in the United States for manufacturing, service and maintenance,

engineering, and sales and administration.

of Business Segments

have two reportable segments:

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

Electrical Infrastructure Equipment (“Electrical Infrastructure”) and Critical Power Solutions

(“Critical Power”).

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

monitor and manage their electric energy requirements.

Electrical Infrastructure business provides equipment solutions that allow customers to effectively

and efficiently protect, control, transfer, monitor and manage their electric energy usage

and requirements.

These solutions are marketed principally through our Pioneer Custom Electrical

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(“PCEP”) brand name.

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

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

These products and services are marketed

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

Critical Power business provides customers with our suite of mobile e-Boost© EV charging

solutions, power generation equipment and all forms of preventative maintenance, repairs,

remote monitoring and other equipment service on our customers’ equipment.

These products

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

under our Pioneer eMobility (“e-Boost”), Titan Energy Systems Inc.

and Pioneer Critical Power brand names.

Accounting Policies and Estimates

financial statements have been prepared in accordance with U.S.

The preparation of our financial statements requires us to make

estimates and assumptions that affect the amounts and disclosures in the financial statements.

Our estimates are based on our historical

experience, knowledge of current events and actions we may undertake in the future, and on various other factors that we believe are

reasonable under the circumstances.

Our critical accounting policies and estimates are described in “Management’s Discussion

and Analysis of Financial Condition and Results of Operations - Critical Accounting Policies” in our Annual Report on Form 10-K

filed with the SEC on April 11, 2023.

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

Accounting Estimates

consolidated financial statements have been prepared in accordance with U.S.

The preparation of our consolidated financial

statements requires us to make estimates and assumptions that affect the amounts and disclosures in the consolidated financial

Our estimates are based on our historical experience, knowledge of current events and actions we may undertake in the

future, and on various other factors that we believe are reasonable under the circumstances.

Our critical accounting policies and

estimates are described in “Management’s Discussion and Analysis of Financial Condition and Results of Operations -

Critical Accounting Policies” in our Annual Report on Form 10-K filed with the Securities and Exchange Commission (the “SEC”) on July 26, 2024.

There were no material

changes to our accounting policies during the three months ended March 31, 2024.

OF OPERATIONS

of the Three and Nine Months Results

of the Three Months Results

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

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our discussion and analysis of results of operations below.

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

summary of operating results during the three months ended March 31, 2024, and 2023 are as follows:

Three Months Ended

Nine Months Ended

September 30,

T&D Solutions

2023 (As Restated)

Electrical Infrastructure

Critical Power Solutions

Cost of goods sold

T&D Solutions

Electrical Infrastructure

Critical Power Solutions

Selling, general and administrative expenses

Depreciation and amortization expense

Selling, general and administrative

Depreciation and amortization

Research and development

Total operating expenses

Operating income (loss) from continuing operations

Operating (loss) income from continuing operations

Interest income

Other (income) expense

Income (loss) before income taxes

(Loss) income before income taxes

Income tax expense

Net income (loss)

Net (loss) income

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

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or for which work has not yet begun.

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

As of March 31, 2024, backlog from our E-Bloc power systems and related equipment was approximately

$11,347, or 25% of the total backlog.

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September 30,

T&D Solutions

(As Restated)

Electrical Infrastructure

Critical Power Solutions

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Three Months Ended

Nine Months Ended

September 30,

T&D Solutions

Power Systems

(As Restated)

Electrical Infrastructure

Critical Power Solutions

Total revenue

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

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

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

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

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

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

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

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

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

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

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

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

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

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

equipment during the three months ended September 30, 2023.

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

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

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

the three months ended March 31, 2024, our consolidated revenue decreased by $965, or 10.1%, to $8,590, down from $9,555 during the three

months ended March 31, 2023, primarily due to a decrease in sales of equipment from our Electrical Infrastructure segment during the

three months ended March 31, 2024.

Infrastructure .

During the three months ended March 31, 2024, revenue from equipment sales decreased by $1,534, or 22.5%, to

$5,275, down from $6,809 during the three months ended March 31, 2023, primarily due to a decrease in revenue recognized over time

from our equipment sales during the three months ended March 31, 2024.

For the three months ended March 31, 2024, revenue for our Critical Power segment increased by $569, or 20.7%, to $3,315, up from $2,746 during the three months ended March 31, 2023, primarily due to an increase in sales of our e-Boost equipment from our Pioneer eMobility business

during the three months ended March 31, 2024.

Profit and Margin

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Three Months Ended

Nine Months Ended

September 30,

T&D Solutions

(As Restated)

Electrical Infrastructure

Gross margin %

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Consolidated gross margin %

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

the three months ended September 30, 2022.

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

nine months ended September 30, 2022.

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

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

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

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

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

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

months ended September 30, 2022.

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

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

the three months ended March 31, 2024, our consolidated gross margin decreased to 20.1% of revenues, as compared to 29.6% during the

three months ended March 31, 2023.

Infrastructure.

For the three months ended March 31, 2024, our gross margin percentage decreased by 8.9%, from 31.5% to 22.6%, as

compared to the three months ended March 31, 2023.

The decrease was primarily due to the decrease in sales our E-Bloc power systems and

medium and low voltage equipment.

Power Solutions .

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

three months ended September 30, 2022.

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

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

For the three months ended March 31, 2024, our gross margin decreased by 9.0%, from 25.1% to 16.1%, for the

three months ended March 31, 2023.

The decrease was primarily due to an unfavorable sales mix.

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

Three Months Ended

Nine Months Ended

September 30,

T&D Solutions

Selling, general and administrative expense

Depreciation and amortization expense

Electrical Infrastructure

Selling, general and administrative

Depreciation and amortization

Segment operating expense

Critical Power Solutions

Selling, general and administrative expense

Depreciation and amortization expense

Selling, general and administrative

Depreciation and amortization

Research and development

Segment operating expense

Unallocated Corporate Overhead Expenses

Selling, general and administrative expense

Depreciation and amortization expense

Selling, general and administrative

Depreciation and amortization

Segment operating expense

Selling, general and administrative expense

Depreciation and amortization expense

Selling, general and administrative

Depreciation and amortization

Research and development

Consolidated operating expense

General and Administrative Expense .

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

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

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

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

As a percentage of our consolidated revenue, selling,

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

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

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

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

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

development costs related to our e-Boost initiative.

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

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

in the nine months ended September 30, 2022.

For the three months ended March 31, 2024, consolidated selling, general and administrative expense,

before depreciation and amortization, increased by approximately $574, or 28.2%, to $2,607, as compared to $2,033 during the three months

ended March 31, 2023, primarily due to an increase in payroll related costs, including stock-based compensation.

As a percentage of our

consolidated revenue, selling, general and administrative expense, before depreciation and amortization, increased to 30.3% during the

three months ended March 31, 2024, as compared to 21.3% in the three months ended March 31, 2023.

and Amortization Expense.

Depreciation and amortization expense consists primarily of depreciation of fixed assets and amortization

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

For the three months ended September

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

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

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

into service.

(Loss) From Operations

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

Depreciation and amortization expense consists primarily of depreciation of fixed assets and

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

For the three

months ended March 31, 2024, consolidated depreciation and amortization expense decreased by $109, or 87.2%, to $16, as compared to

$125 during the three months ended March 31, 2023.

Income from Operations

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

Three Months Ended

Nine Months Ended

September 30,

T&D Solutions

(As Restated)

Electrical Infrastructure

Critical Power Solutions

Unallocated corporate overhead expenses

Income (loss) from operations

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

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

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

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

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

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

(Loss) income from operations

Infrastructure .

Operating income from our Electrical Infrastructure segment decreased by $1,243 during the three months ended March

31, 2024, as compared to the three months ended March 31, 2023, primarily due to a decrease in sales of our electrical infrastructure

equipment and an increase in selling, general and administrative expense.

Power Solutions .

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

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

September 30, 2023.

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

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

during the nine months ended September 30, 2023.

Operating loss from our Critical Power segment increased by $123 during the three months ended March 31, 2024,

as compared to the three months ended March 31, 2023, primarily due to an unfavorable sales mix in the service business.

Corporate Expense .

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

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

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

fees and costs related to investor relations.

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

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

the three months ended March 31, 2024, our unallocated corporate overhead expense increased by $415, or 55.3%, as compared to the three

months ended March 31, 2023, primarily due to an increase in payroll related costs, including stock-based compensation, professional

fees and costs related to investor relations.

Non-Operating

(Income) Expense

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

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

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

During the nine

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

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

(Income) Expense .

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

with activities not directly related to our core operations.

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

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

For the three months ended March 31, 2024, we had interest income of approximately $31, as compared to interest income of

approximately $54 during the three months ended March 31, 2023.

We generated the majority of our interest income from our cash on hand

during the three months ended March 31, 2024, and 2023.

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

directly related to our core operations.

the three months ended March 31, 2024, other non-operating income was $40, as compared to other non-operating income of $13 during the

three months ended March 31, 2023.

for Income Taxes .

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

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

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

Three Months Ended

Nine Months Ended

September 30,

Income (loss) before income taxes

Income tax expense

Effective income tax rate %

Income (Loss) per Share

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

months ended September 30, 2022.

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

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

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

ended September 30, 2022.

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

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

Our effective income tax rate for the three months ended March 31, 2024, and 2023 was 0.0%.

(Loss) Income per Share

generated a net loss of $1,035 during the three months ended March 31, 2024, as compared to a net income of $742 during the three

months ended March 31, 2023.

net loss per basic and diluted share for the three months ended March 31, 2024, was $0.10, as compared to net income per basic and diluted

share of $0.07 for the three months ended March 31, 2023.

AND CAPITAL RESOURCES

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(the “ATM Program”).

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

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

and cash flows from operating activities.

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

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

the ATM Program.

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

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

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

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

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

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

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

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

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

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

on Form S-3 (File No.

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

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

and a sales agreement prospectus covering

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

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

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

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

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

announced that the declaration of a public health emergency associated with COVID-19 expired on May 11, 2023.

However, COVID-19 has remained

and is expected to continue to remain as a serious endemic threat for an indefinite future period and may continue to adversely affect

the global economy.

The continuing impacts of the COVID-19 endemic, as well as 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 continuing impacts of the COVID-19 endemic and the extent of geopolitical

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

at this time and cannot be accurately predicted.

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

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

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

able to operate substantially at capacity.

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

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

As of March 31, 2024, we had $6,227 of cash on hand generated primarily from the sale of common stock

under the ATM Program.

Since October 20, 2020, and through March 31, 2024, we sold an aggregate of 1,807,897 shares of common stock for aggregate gross proceeds

of approximately $13,901, before any sales agent fees and expenses payable by us under the ATM Program.

During the three months ended

March 31, 2024, we sold an aggregate of 891,838 shares of common stock for an aggregate consideration of approximately $4,997, before

any sales agent fees and expenses payable by us.

As of March 31, 2024, $70,003 of common stock remained available for issuance under the ATM Program.

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 our 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, we are unable to predict the potential size and

duration of the impact on our revenue and our results of operations, if any.

The extent of the potential impact of these macroeconomic

factors on our operational and financial performance will depend on a variety of factors, including the extent of geopolitical disruption

and its impact on our clients, partners, industry, and employees, all of which are uncertain at this time and cannot be accurately predicted.

We continue to monitor the effects of these macroeconomic factors and intends to take steps deemed appropriate to limit the impact on

our business.

During the three months ended March 31, 2024, we were able to operate substantially at capacity.

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

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

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

results of operations.

Used in Operating Activities .

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

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

The decrease in cash used in

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

(Used in)/ Provided by Operating Activities .

Cash used in our operating activities was $1,950 during the three months ended March

31, 2024, as compared to cash provided by $1,525 during the three months ended March 31, 2023.

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

Used in Investing Activities.

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

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

Additions to property and equipment during the nine months ended September

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

Used in Financing Activities.

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

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

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

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

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

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

Cash used in our investing activities during the three months ended March 31, 2024, was $213, as compared

to $194 during the three months ended March 31, 2023.

Additions to property and equipment during the three months ended March 31, 2024,

were $213, as compared to $194 of additions during the three months ended March 31, 2023.

Provided by/ (Used in) Financing Activities.

Cash provided by our financing activities was $4,808 during the three months ended March

31, 2024, as compared to cash used in our financing activities of $71 during the three months ended March 31, 2023.

The increase in cash

provided by financing activities is primarily due to the sale of common stock under the ATM Program.

As of March 31, 2024, we had working capital of $13,508, including $6,227 of cash on hand, compared to working capital of

$9,421, including $3,582 of cash on hand as of December 31, 2023.

of Liquidity .

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

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

flows from operating activities.

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

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

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

and interest from the Seller Notes.

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

capital improvements and acquisitions.

As of March 31, 2024, we had $6,227 of cash on hand generated primarily from the sale of common stock under the

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

borrowings, the completion of the sale of the transformer business units in August 2019, sale of common stock

under the ATM Program and collecting all unpaid principal and interest from the Seller Notes.

Historically, our cash requirements

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

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

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activities related to our new initiatives will continue in the near future and we expect to continue to incur costs related to such activities.

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

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

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

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

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

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

We expect that our cash balance is sufficient to fund operations for the next twelve months from the date our unaudited consolidated

financial statements are issued.

of March 31, 2024, we had no off-balance sheet transactions, arrangements, obligations (including contingent obligations), or other relationships

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

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

Company had $213 of additions to property and equipment during the three months ended March 31, 2024, as compared to $194 of additions

to property and equipment during the three months ended March 31, 2023.

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

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

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

Our operating

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

such as copper, steel and aluminum.

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

consider adequate.

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

manufacturing efficiency and through increases in prices where competitively feasible.

Lastly, other economic conditions we cannot

foresee may affect customer demand.

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

and may continue to affect the global economy.

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

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

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

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

business and operations.

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

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

distributed between different end markets.

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

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

“Part I - Item 1A.

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

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

Our operating results could also

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

and aluminum.

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

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

in prices where competitively feasible.

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

the consequences of the ongoing geopolitical conflicts, such as the ongoing conflict between Russia and Ukraine and the ongoing conflict

between Israel and Hamas, including related sanctions and countermeasures, and the effects of rising global inflation, are difficult

to predict, and could adversely impact geopolitical and macroeconomic conditions, the global economy, and contribute to increased market

volatility, which may in turn adversely affect our business and operations.

We predominately sell to customers in the industrial production

and commercial construction markets.

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

our sales were more evenly distributed between different end markets.

For a further discussion of factors that may affect future operating

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

and “Part I - Item 1A.

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

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What changed 10-Q

Item 2. Management’s Discussion and Analysis