What changed in this filing

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Item 7. Management’s Discussion and Analysis

2025-04-15 compared with 2024-07-26 · 189 added, 310 removed, 91 unchanged (85% of the section changed)

2 unchanged sentences

financial statements and related notes appearing elsewhere in this annual report on Form 10-K.

In addition to historical financial information, the following

discussion contains forward-looking statements that reflect our plans, estimates and beliefs.

Our actual results could differ materially

from those discussed in the forward-looking statements.

Factors that could cause or contribute to these differences include those discussed

below and elsewhere in this prospectus, particularly in the sections entitled “Risk Factors” and “Cautionary Note Regarding

Forward-Looking Statements.”

The discussion in this section has

been impacted by the restatement described in the Explanatory Note at the beginning of this Comprehensive Form 10-K and in Note 2 and

Note 4 of the consolidated financial statements of this Comprehensive Form 10-K.

Certain of the financial and other information provided

in this Management’s Discussion and Analysis of our financial condition and results of operations has been updated to reflect the

restatement adjustments.

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

equipment and mobile EV charging solutions.

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

and commercial markets.

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

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

We are headquartered in Fort Lee, New Jersey

and operate from three (3) additional locations in the United States for manufacturing, service and maintenance, engineering, and sales

and administration.

In addition to historical financial information,

the following discussion contains forward-looking statements that reflect our plans, estimates and beliefs.

Our actual results could

differ materially from those discussed in the forward-looking statements.

Factors that could cause or contribute to these differences

include those discussed below and elsewhere in this prospectus, particularly in the sections entitled “Risk Factors” and

“Cautionary Note Regarding Forward-Looking Statements.”

design, manufacture, integrate, service and sell distributed energy resources, on site power generation equipment and mobile EV

charging solutions.

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

Our customers include, but are not limited to, Federal and State government entities, package delivery business’,

school bus fleet operators, EV charging infrastructure developers and owners, and distributed energy developers.

headquartered in Fort Lee, New Jersey and operate from two (2) additional locations in the United States for manufacturing, service

and maintenance, engineering, and sales and administration.

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

sales and marketing personnel.

operations are divided into two reportable segments:

Electrical Infrastructure segment and Critical Power segment.

Our 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 PCEP brand name.

Our 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 service on our customers’ equipment.

These products and services

are marketed by our operations headquartered in Minnesota, currently doing business under the Titan, Pioneer eMobility and Pioneer Critical

Power brand names.

the sale of our PCEP business unit in October 2024, described below under “Recent Developments”, we currently have one

reportable segment:

Critical Power.

Our 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

service on our customers’ equipment.

These products and services are marketed by our operations headquartered in Minnesota,

currently doing business under the Titan, Pioneer eMobility and Pioneer Critical Power brand names.

dollars are reported in thousands, except for

share and per share amounts (unless otherwise noted).

October 29, 2024, we entered into an Equity Contribution and Purchase Agreement (the “Equity Purchase Agreement”), by and

among us, PCEP, Voltaris Power LLC (the “Buyer”) and Pioneer Investment LLC (“Investment”).

Pursuant to the terms

of the Equity Purchase Agreement, we agreed to:

(i) contribute

4% of all of the issued and outstanding equity interests of PCEP to Investment (the “Rollover

Interests”) in exchange for Investment issuing $2,000 of common units (representing

approximately 6% of Investment’s issued and outstanding common units on the Closing

Date (as defined below)) (the “Rollover Units”) to us;

all of the issued and outstanding equity interests of PCEP other than the Rollover Interests

to the Buyer ((i) and (ii) being, the “Equity Transaction”).

Equity Transaction included total consideration of (i) $48,000 in cash, subject to adjustment pursuant to the terms of the Equity Purchase

Agreement, and (ii) $2,000 in equity pursuant to Investment’s issuance of the Rollover Units to us.

The Equity Transaction contains

customary terms and conditions and are subject to working capital adjustments.

Following the execution of the Equity Purchase Agreement,

the Equity Transaction was consummated on October 29, 2024 (the “Closing Date”).

PCEP represented the entirety of our Electrical

Infrastructure segment.

The PCEP Sale was a result of a strategic change to the operations of our business.

Accounting Estimates

The preparation of financial statements and related disclosures are in

conformity with U.S.

These accounting principles require us to make estimates and judgments that can affect the reported amounts

of assets and liabilities as of the date of the financial statements, as well as the reported amounts of revenue and expense during the

periods presented.

We believe that the estimates and judgments upon which we rely are reasonable based upon information available to us

at the time that we make these estimates and judgments.

To the extent that there are material differences between these estimates and

actual results, our financial results will be affected.

The accounting policies that reflect our more significant estimates and judgments

and which we believe are the most critical to aid in fully understanding and evaluating our reported financial results are described below.

We consider an accounting estimate to be critical

(i) the accounting estimate requires us to make assumptions about matters that were highly uncertain at the time the accounting estimate

was made, and (ii) changes in the estimate that are reasonably likely to occur from period to period or use of different estimates that

we reasonably could have used in the current period, would have a material impact on our financial condition or results of operations.

Management has identified certain critical

accounting estimates which are outlined below.

In addition, there are other items within our consolidated financial statements that

require estimation but are not deemed critical, as defined above.

Changes in estimates used in these and other items could have a

material impact on our financial statements.

Our significant accounting policies are more fully

described in Note 3 – Summary of Significant Accounting Policies, in our financial statements included elsewhere in this Annual

Revenue Recognition

A significant portion of our business is derived from

design and production contracts.

Revenue for these 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 we consider 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 our 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 our 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, we gauge its complexity and perceived risks and establish an estimated total number of labor hours at completion in

line with these expectations.

We follow a standard contract review process in which we review the progress and performance on our ongoing

contracts at least quarterly.

preparation of consolidated financial statements and related disclosures are in conformity

These accounting principles require us to make estimates and judgments that can affect the reported amounts of assets

and liabilities as of the date of the financial statements, as well as the reported amounts of revenue and expense during the periods

We believe that the estimates and judgments upon which we rely are reasonable based upon information available to us at the

time that we make these estimates and judgments.

To the extent that there are material differences between these estimates and actual

results, our financial results will be affected.

consider an accounting estimate to be critical if:

(i) the accounting estimate requires us to make assumptions about matters that were

highly uncertain at the time the accounting estimate was made, and (ii) changes in the estimate that are reasonably likely to occur from

period to period or use of different estimates that we reasonably could have used in the current period, would have a material impact

on our financial condition or results of operations.

As of December 31, 2024, no critical accounting estimates have been identified.

In addition, there are

other items within our consolidated financial statements that require estimation but are not deemed critical, as defined above.

in estimates used in these and other items could have a material impact on our consolidated financial statements.

significant accounting policies are more fully described in Note 3 – Summary of Significant Accounting Policies, in our consolidated

financial statements included elsewhere in this Annual Report.

OF OPERATIONS

of 2023 Operating Results

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

of December 31, 2024, and 2023 Operating Results

financial and operating data for our reportable business segment for the most recent two years is summarized below.

This information,

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Annual Report on Form 10-K, should be referred to when reading our discussion and analysis of results of operations below.

of operating results during the years ended 2023 and 2022 are as follows:

Year Ended December 31,

2022 (Restated)

Electrical Infrastructure

of operating results during the years ended December 31, 2024, and 2023 are as follows (in thousands):

For the Years Ended

Critical Power Solutions

Cost of goods sold

Electrical Infrastructure

Critical Power Solutions

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Interest income

Other (income) expense

Other income, net

Loss before income taxes

Income tax expense

Income tax benefit

Net loss from continuing operations

Income from discontinued operations, net of income taxes

Net income (loss)

Revenue backlog, which consists of purchase orders and contracts from customers that we believe to be firm, reflects the amount of revenue

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Backlog may vary significantly from reporting period to reporting period due to the timing of customer

As of December 31, 2023, backlog from our E-Bloc power systems and related equipment was approximately $12,706, or 28.1%

of the total backlog.

revenue backlog at December 31, 2023 was $45,165, an increase of $6,887, or 18.0%, when compared to $38,278 at December 31, 2022.

the year ended December 31, 2023, we experienced a surge in orders and contracts for our mobile EV charging solutions, e-Boost, which was the primary driver for the increase in our revenue backlog.

The following table

represents the progression of our backlog, by reporting segment, for the periods ended as indicated:

2022 (Restated)

Electrical Infrastructure

Critical Power Solutions

Total order backlog

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

percentages):

2022 (Restated)

Electrical Infrastructure

revenue backlog as of December 31, 2024, from our Critical Power business was $19,762, an increase of $3,094, or 18.6%, when compared

to $16,668 as of December 31, 2023.

The following table represents the progression of our backlog as of December 31, 2024 and 2023 (in thousands):

Critical Power

Order backlog

Discountinued operation

order backlog

following table represents our revenues by major product category for the periods indicated (in thousands, except percentages):

For the Years Ended

Critical Power Solutions

Total revenue

the year ended December 31, 2023, our consolidated revenue increased by $15,615, or 60.3% to $41,493, up from $25,878 during the year

ended December 31, 2022, primarily due to an increase in sales of our power systems from our Electrical Infrastructure segment and an

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

Infrastructure .

During the year ended December 31, 2023, revenue from our equipment sales increased by $14,042 or 86.4%, as compared

to the year ended December 31, 2022, primarily due to increased sales of our E-Bloc power systems and related equipment, as well as medium

and low voltage circuit protective equipment.

For the year ended December 31, 2023, revenue for our Critical Power segment increased by $1,508, or 15.7%, as compared to

the year ended December 31, 2022, primarily due to an increase in sales of our new and refurbished generation equipment.

the year ended December 31, 2024, our revenue from our Critical Power segment increased by $11,763, or 105.8% to $22,879, up from $11,116

during the year ended December 31, 2023, primarily due to an increase in shipments and rentals of our suite of mobile EV charging equipment,

Profit and Margin

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

2022 (Restated)

Electrical Infrastructure

Gross margin %

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

For the Years

Critical Power Solutions

Gross margin %

Consolidated gross profit

Consolidated gross margin %

the year ended December 31, 2023, our gross margin percentage was 20.1% of revenues, compared to 10.9% during the year ended December

Infrastructure.

For the year ended December 31, 2023, our gross margin increased by 12.7%, to 20.2%, from 7.5% for the year ended

December 31, 2022.

The increase was primarily due to the significant increase in sales of our E-Bloc power systems and related equipment

and medium and low voltage circuit protective equipment and improved productivity from our manufacturing

For the year ended December 31, 2023, our gross margin increased by 3.3%, to 20.0%, from 16.7% for the year ended December

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

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

Year Ended December 31,

Electrical Infrastructure

Selling, general and administrative

Depreciation and amortization

Segment operating expense

Critical Power Solutions

Selling, general and administrative

Depreciation and amortization

Research and development

Segment operating expense

Unallocated Corporate Overhead Expenses

Selling, general and administrative

Depreciation and amortization

Segment operating expense

the year ended December 31, 2024, our gross margin from our Critical Power segment increased to 24.1% of revenues, as compared to 20.0%

during the year ended December 31, 2023.

The increase was predominately due to the increase in sales of our e-Boost equipment from our

Pioneer eMobility business.

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

For the Years Ended

Selling, general and administrative

Depreciation and amortization

Research and development

Consolidated operating expense

General and Administrative Expense .

For the year ended December 31, 2023, consolidated selling, general and administrative expense,

before depreciation and amortization, increased by $1,451, or 17.2%, to $9,896, as compared to $8,445 during the year ended December

As a percentage of our consolidated revenue, selling, general and administrative expense decreased to 24.4% in the year ended

December 31, 2023, as compared to 33.4% in the year ended December 31, 2022.

selling, general and administrative expense in our Electrical Infrastructure segment increased by $510, or 42.6%, during the year ended

December 31, 2023, as compared to the year ended December 31, 2022, primarily due to an increase in payroll related costs and third party

commissions expense.

selling, general and administrative expense in our Critical Power segment increased by $215, or 6.2%, during the year ended December

31, 2023, as compared to the year ended December 31, 2022, primarily due to an increase in payroll related costs and business travel

related costs.

selling, general and administrative expense in our unallocated corporate overhead expenses increased by $726, or 19.2%, during the year

ended December 31, 2023, as compared to the year ended December 31, 2022, primarily due to an increase in payroll related costs, including

stock-based compensation, professional fees and business travel related costs.

and Amortization Expenses .

Depreciation and amortization expense included in selling, general and administrative expense in our consolidated

statement of operations have been disclosed as a separate component of operating expense in the tables above.

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 year ended December 31, 2023, consolidated depreciation and amortization

expense included in selling, general and administrative expense increased by $32, or 16.8%, as compared to the year ended December 31,

Total operating expense

Selling, General and Administrative Expense .

For the year ended December 31, 2024, consolidated selling, general and administrative expense increased by approximately $1,337, or 16.0%,

to $9,712, as compared to $8,375 during the year ended December 31, 2023, primarily due to an increase in payroll related expense.

a percentage of our consolidated revenue, selling, general and administrative expense decreased to 42.4% in the year ended December 31,

2024, as compared to 75.3% in the year ended December 31, 2023 primarily due to the increase in total revenue during the year ended December

Research and development expenses in our Critical Power segment consists of costs incurred in performing research and development

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During the year ended

December 31, 2023, we incurred $885 of R&D expenses related to developing our mobile e-Boost EV charging solutions.

There were no

R&D expenses incurred during 2022.

Income (Loss)

following table represents our operating income (loss) by reportable segment for the periods indicated:

2022 (Restated)

Electrical Infrastructure

Critical Power Solutions

Unallocated corporate overhead expenses

Loss from operations

Infrastructure .

Operating income from our Electrical Infrastructure segment was $4,380 during the year ended December 31, 2023,

as compared to essentially no operating income during the year ended December 31, 2022.

The increase is primarily due to the large increase in

sales of our power systems equipment and related equipment, reduced input costs and improved productivity from our manufacturing

facility during the year ended December 31, 2023.

Operating loss from our Critical Power segment increased by $512, or 25.6%, during the year ended December 31, 2023, primarily

due to an increase in payroll related costs and consulting, marketing and promotion fees related to our e-Boost initiative.

Corporate Expense .

Our general corporate expenses consist primarily of executive management, corporate accounting and human resources

personnel, corporate office expenses, financing and corporate development activities, payroll and benefits administration, treasury,

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

the year ended December 31, 2023, our unallocated corporate overhead expense increased by $709, or 18.6%, as compared to the year ended

December 31, 2022, primarily due to an increase in payroll related costs, including stock-based compensation, professional fees and business

travel related costs.

December 31, 2024, we incurred $1,050 of R&D expenses related to developing our mobile e-Boost EV charging solutions as compared

to $885 for the year ended December 31, 2023.

from Discontinued Operations

from discontinued operations, net of tax was $35,204 during the year ended December 31, 2024, as compared to $4,381 during the year ended

December 31, 2023.

The increase is primarily due to the gain on the sale of our Electrical Infrastructure segment.

Income (Loss) from Continuing Operations

following table represents our operating loss for the periods indicated (in thousands):

For the Years Ended

Operating loss from continuing operations

the year ended December 31, 2024, our operating loss from continuing operations decreased by approximately $1,787, or 25.4%, to $5,248, as compared to

$7,035 during the year ended December 31, 2023, primarily due to an increase in sales and rentals of our e-Boost equipment from our Pioneer

eMobility business in addition to an increase in service sales.

Non-Operating

(Income) Expense

Income from Continuing Operations

For the year ended December 31, 2024, we had interest income of approximately $431, as compared to interest income of approximately

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

ended December 31, 2023, as compared to generating the majority of our interest income from the two subordinated promissory notes (the

“Seller Notes”) we received from the Equity Transaction, and our cash on hand, during the year ended December 31, 2022.

(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.

ended December 31, 2024.

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

directly related to our core operations.

the year ended December 31, 2024, other non-operating income was $50, as compared to other non-operating expense of $524 during the year

ended December 31, 2023.

Included in other non-operating income during the year ended December 31, 2023, is a settlement gain of $525

related to a legal matter.

Included in other non-operating income during the year ended December 31, 2023, was a settlement gain of $525

related to a legal matter and no such gain was recognized during the year ended December 31, 2024.

for Income Taxes .

Our provision reflects an effective tax rate on loss before taxes of 0.0% for the year ended December

31, 2023, as compared to (0.1)% for the year ended December 31, 2022, as set forth below:

2022 (Restated)

Our provision for income taxes reflects an effective tax rate on loss before taxes of 29.7% for the year ended

December 31, 2024, as compared to 0.0% for the year ended December 31, 2023, as set forth below (in thousands):

For the Years

Loss before income taxes

Income tax expense

Income tax income

Effective income tax rate

Net Loss per Share

generated a net loss of $1,898 for the year ended December 31, 2023, as compared to a net loss of $5,419 during the year ended December

net loss per basic and diluted share for the year ended December 31, 2023 was $0.19, compared to a net loss per basic and diluted share

of $0.56 for the year ended December 31, 2022.

Quarterly Discussion and Analysis

The Company has restated the

unaudited condensed consolidated financial statements for the quarterly periods ended March 31, 2022 through September 30, 2023,

originally included in its Quarterly Reports on Form 10-Q for the periods ended March 31, 2023, June 30, 2023 and September 30, 2023

(“Affected Periods”).

During 2022 and 2023, we recognized

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

using labor hours as the measure of progress.

Our 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, 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, we 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.

Additionally, we determined that costs

from Over Time Contracts should be recognized as incurred and, as a result, we recorded an adjustment during the Affected Periods as the Company was previously incorrectly deferring costs incurred to a future period.

The restatements of such unaudited

condensed consolidated quarterly financial statements are provided in Note 4, “Restatement of Previously Issued Unaudited Interim

Condensed Consolidated Financial Statements.” The above discussion should be read in conjunction with our accompanying restated

unaudited condensed interim consolidated financial statements disclosed in Part II, Item 8.

Financial Statements and Supplementary

Data, Note 4, “Restatement of Previously Issued Unaudited Interim Condensed Consolidated Financial Statements” of this Comprehensive

Loss per Share from Continuing Operations

generated a net loss from continuing operations of $4,767 for the year ended December 31, 2024, as compared to $6,279 during the year

ended December 31, 2023.

net loss from continuing operations per basic and diluted share for the year ended December 31, 2024, was $0.31, compared to a net loss

from continuing operations per basic and diluted share of $0.63 for the year ended December 31, 2023.

AND CAPITAL RESOURCES

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(the “ATM Program”).

At December 31, 2023, we had $3,582 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 December 31, 2023, we 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 us under the ATM

During the year ended December 31, 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 under the ATM Program.

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.

On August 30, 2023, we filed a new registration statement on Form S-3 (File

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.

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.

Since October 20, 2020, and through December 31, 2024, we sold an aggregate of 1,835,616 shares of common

stock for aggregate gross proceeds of approximately $14,051, before any sales agent fees and expenses payable by us under the ATM Program.

During the year ended December 31, 2024, we sold an aggregate of 919,557 shares of common stock for an aggregate consideration of approximately

$5,147, before any sales agent fees and expenses payable by us under the ATM Program.

As of December 31, 2024, $69,853 of common stock

remained available for issuance under the ATM Program.

As of December 31, 2024, we had $41,622 of cash on hand generated from the PCEP

Sale and the sale of common stock under the ATM Program.

On October 29, 2024, we closed on the PCEP Sale for gross cash proceeds of $48,000.

continuing impacts of the rising interest rates, inflation, changes in foreign currency exchange rates and geopolitical developments,

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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 year ended December 31, 2023, we were able to operate substantially at capacity.

Additionally, recent changes to U.S.

policy implemented by the U.S.

Congress, the Trump administration or any

new administration have impacted and may in the future impact, among other things, the U.S.

and global economy, international trade relations,

unemployment, immigration, healthcare, taxation, the U.S.

regulatory environment, inflation and other areas.

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 intend to take steps deemed appropriate to limit the impact on our business.

During the year ended December

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

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results of operations.

Cash Used in Operating Activities .

Cash used in our operating activities was $3,894 during the year ended December 31, 2023,

as compared to cash used in our operating activities of $5,772 during the year ended December 31, 2022.

decrease in cash used in operating activities is primarily due to working capital fluctuations and the significant reduction to net loss of $3,521 during

the year ended December 31, 2023.

Used in/Provided by Investing Activities.

Cash used in investing activities during the year ended December 31, 2023 was $2,497, as

compared to cash provided by our investing activities of $4,722 during the year ended December 31, 2022.

The decrease in cash provided

by investing activities is primarily due to collecting all unpaid principal and interest from the Seller Notes during the year ended

December 31, 2022.

During the year ended December 31, 2023 and 2022, additions to our property and equipment were $2,497 and $1,512,

respectively.

Used in Financing Activities.

Cash used in our financing activities was $323 during the year ended December 31, 2023, as compared

to $353 during the year ended December 31, 2022.

The primary use of cash in financing activities for the year ended December 31, 2023

and 2022 was repayments of financing leases.

cash flows related to the discontinued operations have not been segregated and are included in the consolidated statements of cash

Used in Operating Activities .

Cash used in our operating activities was $6,212 during the year ended December 31, 2024, as compared

to cash used in our operating activities of $3,895 during the year ended December 31, 2023.

The increase in cash used in operating activities

is primarily due to working capital fluctuations.

Provided by/ Used in Investing Activities.

Cash provided by investing activities during the year ended December 31, 2024, was $38,876,

as compared to cash used in our investing activities of $2,496 during the year ended December 31, 2023.

The increase in cash provided

by investing activities is primarily due to the PCEP Sale during the year ended December 31, 2024.

During the years ended December 31,

2024 and 2023, additions to our property and equipment were $3,759 and $2,496, respectively.

Provided by/ Used in Financing Activities.

Cash provided by our financing activities was $5,376 during the year ended December 31,

2024, as compared to cash used in our financing activities $323 during the year ended December 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 December 31, 2024, we had working capital of $26,679, including $41,622 of cash, compared to working capital of $9,421,

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

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

of Liquidity .

At December 31, 2023, we had $3,582 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, 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

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

As of December 31, 2024, we had $41,622 of cash on hand generated primarily from the PCEP Sale and the sale of

common stock under the ATM Program.

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 and the sale of common

stock under the ATM Program.

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.

24 unchanged sentences

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 “Risk Factors” and “Special Note Regarding Forward-Looking Statements.”

Balance Sheet Transactions and Related Matters

have no off-balance sheet transactions, arrangements, obligations (including contingent obligations), or other relationships with unconsolidated

entities or other persons that have, or 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.

Additionally, recent changes to U.S.

policy implemented by

Congress, the Trump administration or any new administration have impacted and may in the future impact, among other things,

and global economy, international trade relations, unemployment, immigration, healthcare, taxation, the U.S.

regulatory environment,

inflation and other areas.

Although we cannot predict the impact, if any, of these changes to our business, they could adversely affect

our business.

We predominately sell to customers in the industrial production 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

For a further discussion of factors that may affect future operating results see the sections entitled “Risk Factors”

and “Special Note Regarding Forward-Looking Statements.”

Accounting Pronouncements

3 unchanged sentences

have been no recent accounting pronouncements not yet adopted by us which would have a material impact on our consolidated financial

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

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 S-X:

Income or Loss Applicable to Common Stock.

These updates were immediately effective

and did not have a significant impact on our consolidated financial statements.

QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK.

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 7. Management’s Discussion and Analysis