PIONEER POWER SOLUTIONS, INC. 10-Q

Item 1. FINANCIAL STATEMENTS PIONEER POWER SOLUTIONS, INC. Condensed Consolidated Statements of Operations (In thousands, except for share and per share amounts) (Unaudited) 2025 2024 2025 2024 For the Three Months Ended For the Six Months Ended June 30, June 30, 2025 2024 2025 2024 Revenues $ 8,370 $ 3,395 $ 15,110 $ 6,710 Cost of goods sold 7,056 2,754 13,648 5,534 Gross profit 1,314 641 1,462 1,176 Operating expenses Selling, general and administrative 2,488 2,138 4,903 4,188 Research and development 534 238 614 449 Total operating expenses 3,022 2,376 5,517 4,637 Operating loss from continuing operations ( 1,708 ) ( 1,735 ) ( 4,055 ) ( 3,461 ) Interest income, net 183 20 431 51 Other income, net 297 - 320 40 Loss before income taxes ( 1,228 ) ( 1,715 ) ( 3,304 ) ( 3,370 ) Income tax benefit - - - - Net loss from continuing operations ( 1,228 ) ( 1,715 ) ( 3,304 ) ( 3,370 ) (Loss) income from discontinued operations, net of income taxes ( 100 ) ( 568 ) 1,047 52 Net loss $ ( 1,328 ) $ ( 2,283 ) $ ( 2,257 ) $ ( 3,318 ) Basic (loss) earnings per share: Loss from continuing operations $ ( 0.11 ) $ ( 0.16 ) $ ( 0.30 ) $ ( 0.32 ) (Loss) earnings from discontinued operations ( 0.01 ) ( 0.05 ) 0.09 - Basic loss per share $ ( 0.12 ) $ ( 0.21 ) $ ( 0.21 ) $ ( 0.32 ) Diluted (loss) earnings per share: Loss from continuing operations $ ( 0.11 ) $ ( 0.16 ) $ ( 0.30 ) $ ( 0.32 ) (Loss) earnings from discontinued operations ( 0.01 ) ( 0.05 ) 0.09 - Diluted loss per share $ ( 0.12 ) $ ( 0.21 ) $ ( 0.21 ) $ ( 0.32 ) Weighted average common shares outstanding: Basic 11,104,058 10,920,125 11,112,117 10,518,659 Diluted 11,104,058 10,920,125 11,188,734 10,788,293 The accompanying notes are an integral part of these unaudited condensed consolidated financial statements. 1 PIONEER POWER SOLUTIONS, INC. Condensed Consolidated Balance Sheets (In thousands, except for share amounts) (Unaudited) June 30, December 31, 2025 2024 ASSETS Current assets Cash $ 17,999 $ 41,622 Accounts receivable, net of allowance for credit losses of $ 21 and $ 13 as of June 30, 2025, and December 31, 2024, respectively 4,884 7,826 Inventories 5,783 6,068 Prepaid expenses and other current assets 658 1,141 Total current assets 29,324 56,657 Property and equipment, net 5,371 6,503 Operating lease right-of-use assets 413 530 Financing lease right-of-use assets 413 221 Investments 2,240 2,000 Lease receivable and other assets 1,354 40 Total assets $ 39,115 $ 65,951 LIABILITIES AND STOCKHOLDERS’ EQUITY Current liabilities Accounts payable and accrued liabilities $ 4,056 $ 4,543 Current portion of operating lease liabilities 178 244 Current portion of financing lease liabilities 144 109 Deferred revenue 923 991 Consideration due to buyer - 3,347 Income taxes payable 107 4,079 Dividend payable - 16,665 Total current liabilities 5,408 29,978 Operating lease liabilities, non-current portion 248 301 Financing lease liabilities, non-current portion 279 121 Other long-term liabilities 141 122 Total liabilities 6,076 30,522 Stockholders’ equity Preferred stock, $ 0.001 par value, 5,000,000 shares authorized; none issued - - Common stock, $ 0.001 par value, 30,000,000 shares authorized; 11,095,266 and 11,120,266 shares issued and outstanding on June 30, 2025, and December 31, 2024, respectively 11 11 Additional paid-in capital 35,285 35,418 Accumulated deficit ( 2,257 ) - Total stockholders’ equity 33,039 35,429 Total liabilities and stockholders’ equity $ 39,115 $ 65,951 The accompanying notes are an integral part of these unaudited condensed consolidated financial statements. 2 PIONEER POWER SOLUTIONS, INC. Condensed Consolidated Statements of Cash Flows (In thousands) (Unaudited) 2025 2024 For the Six Months Ended June 30, 2025 2024 Operating activities Net loss $ ( 2,257 ) $ ( 3,318 ) Adjustments to reconcile net loss to net cash used in operating activities: Depreciation 526 286 Amortization of right-of-use financing leases 56 63 Amortization of right-of-use operating leases 117 361 Change in allowance for credit losses 107 53 Stock-based compensation 15 321 Income attributable to equity method investee ( 240 ) - Loss on disposal of property and equipment 29 - Selling profit on sales-type lease ( 749 ) - Gain on change in consideration due to buyer ( 1,147 ) - Changes in current operating assets and liabilities: Accounts receivable, net 2,787 2,833 Inventories 705 ( 5,078 ) Prepaid expenses and other assets 826 ( 422 ) Accounts payable, accrued liabilities and other liabilities ( 598 ) ( 110 ) Income taxes ( 3,972 ) ( 5 ) Deferred revenue ( 68 ) 4,011 Operating lease liabilities ( 100 ) ( 374 ) Net cash used in operating activities ( 3,963 ) ( 1,379 ) Investing activities Purchase of property and equipment ( 740 ) ( 614 ) Payment of consideration payable ( 2,200 ) - Net cash used in investing activities ( 2,940 ) ( 614 ) Financing activities Net proceeds from issuance of common stock - 4,986 Payment of cash dividend ( 16,665 ) - Principal repayments of financing leases ( 55 ) ( 63 ) Net cash (used in)/ provided by financing activities ( 16,720 ) 4,923 (Decrease)/ increase in cash ( 23,623 ) 2,930 Cash Cash, beginning of year 41,622 3,582 Cash, end of year $ 17,999 $ 6,512 Supplemental cash flow information: Interest paid $ 8 $ 18 Income taxes paid, net of refunds 3,924 - Non-cash investing and financing activities: Surrender and retirement of common stock 148 224 Transfer from property and equipment to inventory ( 420 ) - Sales-type lease origination 1,410 - Derecognition of assets in exchange for net investment in sales-type lease ( 661 ) - Property and equipment obtained in exchange for accounts payable 111 - Finance lease ROU assets obtained in exchange for finance lease liabilities 248 - The accompanying notes are an integral part of these unaudited condensed consolidated financial statements. 3 PIONEER POWER SOLUTIONS, INC. Condensed Consolidated Statements of Changes in Stockholders’ Equity (In thousands, except for share amounts) (Unaudited) Shares Amount capital deficit equity Additional Total Common Stock paid-in Accumulated stockholders’ Shares Amount capital deficit equity Balance - March 31, 2024 10,821,860 $ 11 $ 38,712 $ ( 20,664 ) $ 18,059 Net loss - - - ( 2,283 ) ( 2,283 ) Stock-based compensation 125,000 - 96 - 96 Surrender and retirement of common stock ( 57,541 ) - ( 224 ) - ( 224 ) Issuance of common stock, net of transaction costs 27,719 - 140 - 140 Balance - June 30, 2024 10,917,038 $ 11 $ 38,724 $ ( 22,947 ) $ 15,788 Balance - March 31, 2025 11,120,266 $ 11 $ 35,431 $ ( 929 ) $ 34,513 Net loss - - - ( 1,328 ) ( 1,328 ) Stock-based compensation - - 2 - 2 Surrender and retirement of common stock ( 25,000 ) - ( 148 ) - ( 148 ) Balance - June 30, 2025 11,095,266 $ 11 $ 35,285 $ ( 2,257 ) $ 33,039 Additional Total Common Stock paid-in Accumulated stockholders’ Shares Amount capital deficit equity Balance - January 1, 2024 9,930,022 $ 10 $ 33,837 $ ( 19,629 ) $ 14,218 Balance 9,930,022 $ 10 $ 33,837 $ ( 19,629 ) $ 14,218 Net loss - - - ( 3,318 ) ( 3,318 ) Stock-based compensation 125,000 - 321 - 321 Surrender and retirement of common stock ( 57,541 ) - ( 224 ) - ( 224 ) Issuance of common stock, net of transaction costs 919,557 1 4,790 - 4,791 Balance - June 30, 2024 10,917,038 $ 11 $ 38,724 $ ( 22,947 ) $ 15,788 Balance 10,917,038 $ 11 $ 38,724 $ ( 22,947 ) $ 15,788 Balance - January 1, 2025 11,120,266 $ 11 $ 35,418 $ - $ 35,429 Balance 11,120,266 $ 11 $ 35,418 $ - $ 35,429 Net loss - - - ( 2,257 ) ( 2,257 ) Stock-based compensation - - 15 - 15 Surrender and retirement of common stock ( 25,000 ) - ( 148 ) - ( 148 ) Balance - June 30, 2025 11,095,266 $ 11 $ 35,285 $ ( 2,257 ) $ 33,039 Balance 11,095,266 $ 11 $ 35,285 $ ( 2,257 ) $ 33,039 The accompanying notes are an integral part of these unaudited condensed consolidated financial statements. 4 PIONEER POWER SOLUTIONS, INC. Notes to Unaudited Condensed Consolidated Financial Statements for the Quarterly Period Ended June 30, 2025 (In thousands, except for share and per share amounts) 1. BUSINESS ORGANIZATION, NATURE OF OPERATIONS, RISKS AND UNCERTAINTIES Organization and Operations Pioneer Power Solutions, Inc. and its wholly owned subsidiary (referred to herein as the “Company” or “Pioneer”) design, manufacture, service and integrate distributed energy resources, power generation equipment and mobile electric vehicle (“EV”) charging solutions. Pioneer’s products and services are sold to a broad range of customers in the utility, industrial and commercial markets. Pioneer’s customers include, but are not limited to, federal and state government entities, package delivery business’, school bus fleet operations, EV charging infrastructure developers and owners, and distributed energy developers. Pioneer is headquartered in Fort Lee, New Jersey and operates from two (2) additional locations in the United States for manufacturing, service and maintenance, engineering, sales and administration. Segments In 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 one reportable segment: Critical Power Solutions (“Critical Power”), as defined in its Annual Report on Form 10-K for the year ended December 31, 2024, as filed with the Securities and Exchange Commission (the “SEC”) on April 14, 2025. Basis of Presentation The accompanying unaudited condensed consolidated financial statements of the Company have been prepared in accordance with accounting principles generally accepted in the United States of America (“U.S. GAAP”) for interim financial information and with the instructions to Form 10-Q and Article 8 of Regulation S-X. Accordingly, they do not include all of the information and disclosures required by U.S. GAAP for complete financial statements. 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 interim consolidated financial statements have been included. The results of operations for the interim period are not necessarily indicative of the results for the entire fiscal year. The year-end balance sheet data was derived from audited consolidated financial statements but this filing does not include all disclosures required by U.S. GAAP for a year-end balance sheet. ASC 740-270 requires the use of an estimated annual effective tax rate to compute the tax provision during an interim period unless certain exceptions are met. The Company is currently in the process of estimating its annual effective tax rate for the year ending December 31, 2025, and, as such, the annual effective tax rate is unknown. These unaudited condensed interim consolidated financial statements include the accounts of Pioneer and Titan Energy Systems, Inc. (“Titan”), its wholly owned subsidiary. All significant intercompany accounts and transactions have been eliminated in consolidation. These unaudited condensed consolidated financial statements should be read in conjunction with the audited consolidated financial statements and notes thereto of the Company and its subsidiary included in the Company’s Annual Report on Form 10-K for the year ended December 31, 2024. Liquidity The accompanying unaudited condensed consolidated financial statements have been prepared on a going concern basis, which contemplates the realization of assets and the satisfaction of liabilities in the normal course of business. As shown in the accompanying unaudited condensed consolidated financial statements, as of June 30, 2025, the Company had $ 17,999 of cash on hand and working capital of $ 23,916 . The cash on hand was generated primarily from the sale (the “PCEP Sale”) of the Company’s former wholly owned subsidiary, Pioneer Custom Electrical Products Corp. (“PCEP”). On October 29, 2024, the Company closed on the PCEP sale for gross cash proceeds of $ 48,000 and $ 2,000 in equity. As of December 31, 2024, the Company recorded a consideration due to the buyer of the PCEP Sale of $ 3,347 related to a net working capital adjustment. On April 16, 2025, the Company and the buyer of the PCEP Sale finalized the net working capital adjustment and as a result, the Company recorded a $ 1,147 adjustment to the consideration due to the buyer of the PCEP Sale during the three months ended March 31, 2025. On April 16, 2025, the Company paid the $ 2,200 consideration payable due to the buyer of the PCEP Sale. See Note 8 – Discontinued Operations for details. 5 The Company has historically met its 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, the completion of the sale of the PCEP business unit in October 2024, and the sale of common stock. 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 from the date our unaudited condensed consolidated financial statements are issued. Risks and Uncertainties The 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. 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, tariff policies and regulations, 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, 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. 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. Rounding All 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. 2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES Since the Annual Report for the year ended December 31, 2024, there have been no material changes to the Company’s significant accounting policies, except as disclosed in this note. Recent Accounting Pronouncements In December 2023, the FASB issued ASU 2023-09, Income Taxes (Topic 740) - Improvements to Income Tax Disclosures, which requires enhanced income tax disclosures that reflect how operations and related tax risks, as well as how tax planning and operational opportunities, affect the tax rate and prospects for future cash flows. This standard is effective for the Company’s annual reporting beginning January 1, 2025 with early adoption permitted. The Company is currently assessing the impact that adoption of this new accounting guidance will have on its consolidated financial statements and footnote disclosures. In November 2024, the FASB issued ASU 2024-03, “Income Statement - Reporting Comprehensive Income Expense Disaggregation Disclosures (Subtopic 220- 40)”, and in January 2025, the FASB issued ASU 2025-01, “Income Statement - Reporting Comprehensive Income - Expense Disaggregation Disclosures (Subtopic 220-40): Clarifying the Effective Date”. This standard requires public companies to disclose additional information about specific expense categories in the notes to financial statements at interim and annual reporting periods. The new standard, as clarified by ASU 2025-01, is effective for annual reporting periods beginning after December 15, 2026, and interim reporting periods beginning after December 15, 2027, with early adoption permitted. The Company is currently assessing the impact that adoption of this new accounting guidance will have on its consolidated financial statements and footnote disclosures. In May 2025, the FASB issued ASU 2025-04, “Compensation—Stock Compensation (Topic 718) and Revenue from Contracts with Customers (Topic 606): Scope Application of Profits Interest and Share-Based Customer Payments”. This ASU provides clarification on how to account for share-based payments made to customers, including updated guidance on performance conditions and forfeiture estimation. It also removes the reference to the ASC 606 constraint guidance for recognizing such awards. The amendments are effective for fiscal years beginning after December 15, 2026, including interim periods within those fiscal years, with early adoption permitted. The Company is currently assessing the impact that adoption of this new accounting guidance will have on its consolidated financial statements and footnote disclosures. 6 Revenue Recognition Bill and Hold Arrangements From time to time, the Company enters into bill and hold arrangements, whereby the Company sells mobile EV charging equipment and the equipment is warehoused at a Company or third party location pursuant to directions received from the Company’s customer. Even though the equipment is not physically in the customer’s possession, a sale is recognized at the point in time when the customer obtains control of the product. Control is transferred to the customer in a bill and hold arrangement when: customer acceptance specifications have been met, legal title has transferred, the customer has a present obligation to pay for the product and the risk and rewards of ownership have transferred to the customer. Additionally, all the following bill and hold criteria must be met in order for control to be transferred to the customer: the reason for the bill and hold arrangement is substantive, the customer has requested the product be warehoused, the product has been identified as separately belonging to the customer, the product is currently ready for physical transfer to the customer, and the Company does not have the ability to use the product or direct it to another customer. Lessor Arrangements The Company determines whether an arrangement is or contains a lease at inception. The Company leases generators and mobile electric vehicle charging equipment to certain of its customers. As a lessor, when a lease meets certain criteria indicating that the Company has effectively transferred control of the underlying asset to the customer, the lease is classified as a sales-type lease. When a lease does not meet the criteria for a sales-type lease but meets the criteria of a direct financing lease, the lease is classified as a direct financing lease. When none of the required criteria for sales-type lease or direct-financing lease are met, the lease is classified as an operating lease. Sales-type leases are recognized as a net investment in the lease on the unaudited consolidated balance sheets. The net investment comprises the lease receivable including any unguaranteed residual value of the underlying asset. For sales-type leases, product revenue is generally recognized upon lease commencement. The discounted unguaranteed residual value of the underlying leased assets is not material to the net investment in the lease balance. The Company monitors the performance of customers who leased equipment and are subject to ongoing payments. No allowance has been recorded for the receivables under the leasing arrangements. The lease terms are included in the Company’s contracts and the determination of whether the Company’s contracts contain leases generally does not require significant assumptions or judgments. Leasing revenues do not include material amounts of variable payments. Lessees do not provide residual value guarantees on rented equipment. 7 3. REVENUES Nature of the Company’s products and services The Company’s principal products and services include distributed energy resources, power generation equipment and mobile electric vehicle charging solutions. Products The Company’s Electrical Infrastructure business (included in discontinued operations; see Note 8 – Discontinued Operations for details) provided electric power systems and equipment and distributed energy resources that helped 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. Services 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 period. 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. Revenue Recognition During the three months ended June 30, 2025, and 2024, the Company recognized $ 26 and $ 0 of equipment revenue over time, respectively, from its Critical Power segment. Additionally, the Company recognized $ 4,187 and $ 838 of revenue at a point in time from the sale of its products, which is typically recognized upon delivery, from its Critical Power segment during the three months ended June 30, 2025, and 2024, respectively. There were no bill and hold arrangements during the three months ended June 30, 2025, and 2024. During the six months ended June 30, 2025, and 2024, the Company recognized $ 177 and $ 45 of equipment revenue over time, respectively, from its Critical Power segment. Additionally, the Company recognized $ 7,808 and $ 1,902 of revenue at a point in time from the sale of its products, which is typically recognized upon delivery, from its Critical Power segment during the six months ended June 30, 2025, and 2024, respectively. Included within point in time revenue during the six months ended June 30, 2025, was $ 2,337 of revenue recognized pursuant to bill and hold arrangements. There were no bill and hold arrangements during the six months ended June 30, 2024. 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 $ 2,289 and $ 2,174 of service revenue during the three months ended June 30, 2025, and 2024, 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 $ 4,734 and $ 4,055 of service revenue during the six months ended June 30, 2025, and 2024, respectively. Under its continuing operations, the Company recognizes revenue as services are provided. Amounts billed and due from customers, as well as the value of unbilled account receivables, are generally classified within current assets in the unaudited condensed consolidated balance sheets. The change in deferred revenue as of June 30, 2025, was driven primarily by ordinary course contract activity. As of January 1, 2024, the Company had a deferred revenue balance of $ 307 . 8 For the three months ended June 30, 2025, and 2024, the Company recognized revenue of $ 231 and $ 10 , respectively, related to amounts that were included in deferred revenue as of December 31, 2024, and 2023, respectively, resulting primarily from the progress made on the various active contracts during the respective reporting periods. For the six months ended June 30, 2025, and 2024, the Company recognized revenue of $ 461 and $ 100 , respectively, related to amounts that were included in deferred revenue as of December 31, 2024, and 2023, respectively, resulting primarily from the progress made on the various active contracts during the respective reporting periods. As of June 30, 2025, the Company had $ 923 related to contract liabilities where performance obligations have not yet been satisfied, which has been included within deferred revenue in the unaudited condensed consolidated balance sheet. Concentration of Risk For the three months ended June 30, 2025, the Company derived 31 % and 19 % of its revenue from two customers. For the three months ended June 30, 2024, the Company derived 14 % and 13 % of its revenue from two customers. For the six months ended June 30, 2025, the Company derived 34 % and 13 % of its revenue from two customers. For the six months ended June 30, 2024, the Company derived 14 %, 12 % and 10 % of its revenue from three customers. As of June 30, 2025, one customer’s outstanding receivable balance equaled 53 % of the total outstanding receivable balance. As of December 31, 2024, one customer’s outstanding receivable balance equaled 72 % of the total outstanding receivable balance. As of June 30, 2025, one customer represented 100 % of the Company’s lease receivable balance. 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 three and six months ended June 30, 2025, were $ 154 and $ 524 , respectively. Returns and warranties during the three and six months ended June 30, 2024, were insignificant. Disaggregated Revenue The following table presents the Company’s revenues disaggregated by revenue discipline: SCHEDULE OF REVENUE DISAGGREGATED 2025 2024 2025 2024 For the Three Months Ended For the Six Months Ended June 30, June 30, 2025 2024 2025 2024 Revenues - ASC 606 Products $ 4,213 $ 838 $ 7,985 $ 1,947 Services 2,289 2,174 4,734 4,055 Total revenues - ASC 606 $ 6,502 $ 3,012 12,719 6,002 Revenues - ASC 842 Sales-type lease revenue 1,410 - 1,410 - Fixed lease revenue 458 383 981 708 Total revenues - ASC 842 1,868 383 2,391 708 Total revenue $ 8,370 $ 3,395 $ 15,110 $ 6,710 9 Lease Revenues There were no leasing revenues arising from variable lease payments during the three and six-month periods ended June 30, 2025, and 2024. The following table presents future operating lease payments to be received as of June 30, 2025: SCHEDULE OF FUTURE OPERATING LEASE PAYMENTS TO BE RECEIVED For the Years Ending December 31, Total 2025 $ 153 2026 226 2027 200 2028 200 2029 142 Total $ 921 Leases receivable relating to sales-type lease arrangements are presented on the Company’s unaudited condensed consolidated balance sheets as follows: SCHEDULE OF SALES TYPE LEASE ARRANGEMENTS 2025 2024 June 30, 2025 2024 Reported as: Accounts receivable $ 100 $ - Lease receivable and other assets 1,310 - Net investment in sales-type leases $ 1,410 $ - 4. INVENTORIES The components of inventories are summarized below: SCHEDULE OF INVENTORIES June 30, December 31, 2025 2024 Raw materials $ 4,235 $ 4,899 Work in process 1,548 1,169 Total inventories $ 5,783 $ 6,068 10 5. ACCOUNTS PAYABLE AND ACCRUED LIABILITIES The components of accounts payable and accrued liabilities are summarized below: SCHEDULE OF ACCOUNTS PAYABLE AND ACCRUED LIABILITIES June 30, December 31, 2025 2024 Accounts payable $ 3,255 $ 3,054 Accrued liabilities 801 1,489 Total accounts payable and accrued liabilities $ 4,056 $ 4,543 Accrued liabilities primarily consist of accrued insurance, accrued compensation and benefits and accrued warranty costs. As of June 30, 2025, and December 31, 2024, accrued insurance was $ 106 and $ 462 , respectively. Accrued compensation and benefits as of June 30, 2025, and December 31, 2024, were $ 197 and $ 453 , respectively. Accrued warranty costs as of June 30, 2025, and December 31, 2024, were $ 212 and $ 117 , respectively. The remainder of accrued liabilities are comprised of several insignificant accruals in connection with normal business operations. 6. STOCK-BASED COMPENSATION Stock-Based Compensation A summary of stock option activity during the six months ended June 30, 2025, is as follows: SUMMARY OF STOCK OPTION ACTIVITY Stock Options Weighted average exercise price Weighted average remaining contractual term Aggregate intrinsic value Outstanding as of January 1, 2025 561,476 $ 4.22 Granted - - Exercised - - Forfeited/expired ( 10,642 ) 6.56 Outstanding as of June 30, 2025 550,834 4.18 4.80 $ 199 Exercisable as of June 30, 2025 539,164 4.15 4.72 199 Stock-based compensation expense recorded for the three and six months ended June 30, 2025, was approximately $ 2 and $ 15 , respectively. Stock-based compensation expense recorded for the three and six months ended June 30, 2024, was approximately $ 96 and $ 321 , respectively. As of June 30, 2025, there was $ 43 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. 11 7. INCOME TAXES For the three and six months ended June 30, 2025, the Company recorded no provision for income taxes, resulting in an effective tax rate (ETR) of 0 %, compared to the U.S. federal statutory rate of 21 %. The difference between the Company’s ETR and the statutory rate was primarily driven by the following significant reconciling items: (i) Full valuation allowance on federal, state, and foreign deferred tax assets: As the Company continues to project that it is not more likely than not that deferred tax assets will be realized, no tax benefit was recognized on current quarter losses or deductible temporary differences; (ii) Non-deductible permanent items, including meals & entertainment, officer compensation under IRC §162(m), and penalties, which increased the statutory rate differential; (iii) Absence of discrete benefits from foreign tax credit (FTC) utilization or R&D credit return-to-provision (RTP) adjustments in the current period; (iv) No tax rate changes or deferred remeasurement items were recorded in the quarter. As a result, despite incurring a pre-tax loss in the quarter, the Company recorded no tax benefit. The Company also notes that the prior year December 31, 2024 effective tax rate was 29.75 %, primarily due to a discrete gain on the sale of a subsidiary that generated taxable income and allowed the Company to utilize previously reserved capital loss and net operating loss carryforwards, resulting in a partial release of the valuation allowance. No such income or attribute utilization occurred in the current period. Additionally, due to earnings volatility and the non-reliability of full-year forecasted income, management concluded it was not practicable to estimate a reliable annual effective tax rate. As such, the Company applied the discrete method under ASC 740-270-30-18 to calculate the interim income tax provision. The Company will continue to apply the discrete method until reliable forecast data becomes available to support a forecast-based ETR. On July 4, 2025, the President signed into law the “Make Rural America and Main Street Grow Again Act” (commonly referred to as the One Big Beautiful Bill Act), which makes several significant changes to U.S. federal income tax law. Key provisions include: ● Extension of 100% bonus depreciation under Internal Revenue Code (“IRC”) Section 168(k) for qualified property placed in service before January 1, 2030, including a provision effective retroactively to property acquired after January 19, 2025. ● Temporary expensing of domestic research and experimental expenditures under new IRC Section 174A, applicable for tax years beginning after December 31, 2024, with acceleration options for expenditures incurred between January 1, 2022 and December 31, 2024. ● Modification to the business interest expense limitation under IRC Section 163(j), reinstating EBITDA-based adjustable taxable income (ATI) for tax years beginning after December 31, 2024. Because the law was enacted after the end of the second quarter, its effects are considered a nonrecognized subsequent event and do not reflect any adjustments related to the enacted provisions. Certain provisions of the legislation are effective retroactively to earlier periods in 2025. These may result in catch up adjustments in the third quarter to the income tax accounts. The Company is currently assessing the impact of these retroactive provisions, including any related remeasurement of deferred tax assets, liabilities, and valuation allowance considerations. The Company maintains a valuation allowance on its deferred tax assets and does not expect a material near-term tax benefit from legislation due to its current net operating loss position. 12 8. DISCONTINUED OPERATIONS Sale of Electrical Infrastructure Segment On October 29, 2024, the Company entered into an Equity Contribution and Purchase Agreement (the “Equity Purchase Agreement”), by and among the Company, PCEP, Voltaris Power LLC (the “Buyer”) and Pioneer Investment LLC (“Investment”). Pursuant to the terms of the Equity Purchase Agreement, the Company 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 the Company; and (ii) sell 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”). The 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 the Company. As of December 31, 2024, the Company recorded a consideration due to the Buyer of $ 3,347 related to a net working capital adjustment. On April 16, 2025, the Company and the Buyer finalized the net working capital adjustment and as a result, the Company recorded a $ 1,147 reduction in the consideration due to the Buyer, which is included as a component of discontinued operations during the six months ended June 30, 2025. During the three months ended June 30, 2025, the Company paid the $ 2,200 consideration to the Buyer. The Company previously determined that the Electrical Infrastructure business qualified for discontinued operations and as such, the financial results of the Electrical Infrastructure business are reflected as discontinued operations in the unaudited condensed consolidated statements of operations for the three and six months ended June 30, 2025. Discontinued Operation Financial Information The following table summarizes the results from discontinued operations, net of tax, included in the unaudited condensed consolidated statements of operations for the three and six months ended June 30, 2025, and 2024: SCHEDULE OF DISCONTINUED OPERATION FINANCIAL INFORMATION 2025 2024 2025 2024 For the Three Months Ended For the Six Months Ended June 30, June 30, 2025 2024 2025 2024 Revenues $ - $ 2,945 $ - $ 8,220 Cost of goods sold - 2,933 - 7,015 Gross profit - 12 - 1,205 Operating expenses Selling, general and administrative - 577 - 1,150 Total operating expenses - 577 - 1,150 Operating (loss) income from discontinued operations - ( 565 ) - 55 Interest expense - 3 - 3 Loss (gain) on sale of business, net of taxes 100 - ( 1,047 ) - Other expense - - - - Net (loss) income from discontinued operations $ ( 100 ) $ ( 568 ) $ 1,047 $ 52 13 9. EQUITY-METHOD INVESTMENT As disclosed in Note 8 – Discontinued Operations, on October 29, 2024, the Company deconsolidated its subsidiary, PCEP. As part of the transaction, the Company retained an equity interest in Pioneer Investment LLC via the issuance of Rollover Units. During the three and six months ended June 30, 2025, the Company recorded income from equity method investee of $ 297 and $ 240 , respectively, which is included in other income on the unaudited condensed consolidated statement of operations. 10. BASIC AND DILUTED (LOSS) EARNINGS PER SHARE Basic (loss) earnings per share data for each period presented is computed using the weighted average number of shares of common stock outstanding during each such period. Diluted (loss) earnings per share data is computed using the weighted average number of common and dilutive common equivalent shares outstanding during each period. Dilutive common equivalent shares consist of shares that would be issued upon the exercise of stock options and vesting of restricted stock units, computed using the treasury stock method. A reconciliation of basic and diluted (loss) earnings per share is as follows (in thousands, except per share data): SCHEDULE OF BASIC AND DILUTED LOSS PER SHARE 2025 2024 2025 2024 For the Three Months Ended For the Six Months Ended June 30, June 30, 2025 2024 2025 2024 Numerator: Loss from continuing operations $ ( 1,228 ) $ ( 1,715 ) $ ( 3,304 ) $ ( 3,370 ) (Loss) income from discontinued operations, net of income taxes ( 100 ) ( 568 ) 1,047 52 Net loss $ ( 1,328 ) $ ( 2,283 ) $ ( 2,257 ) $ ( 3,318 ) Denominator: Weighted average common shares outstanding - basic 11,104,058 10,920,125 11,112,117 10,518,659 Effect of dilutive securities: Stock options - - 76,617 205,484 Restricted stock units - - - 64,150 Weighted average common shares outstanding - diluted 11,104,058 10,920,125 11,188,734 10,788,293 Basic (loss) earnings per share: Loss per share from continuing operations $ ( 0.11 ) $ ( 0.16 ) $ ( 0.30 ) $ ( 0.32 ) (Loss) earnings per share from discontinued operations ( 0.01 ) ( 0.05 ) 0.09 - Basic loss per share $ ( 0.12 ) $ ( 0.21 ) $ ( 0.21 ) $ ( 0.32 ) Diluted (loss) earnings per share: Loss per share from continuing operations $ ( 0.11 ) $ ( 0.16 ) $ ( 0.30 ) $ ( 0.32 ) (Loss) earnings per share from discontinued operations ( 0.01 ) ( 0.05 ) 0.09 - Diluted loss per share $ ( 0.12 ) $ ( 0.21 ) $ ( 0.21 ) $ ( 0.32 ) The following securities were excluded from the calculation of diluted earnings per share because their inclusion would have been anti-dilutive: SCHEDULE OF ANTIDILUTIVE SECURITIES EXCLUDED FROM COMPUTATION OF EARNINGS PER SHARE 2025 2024 2025 2024 For the Three Months Ended For the Six Months Ended June 30, June 30, 2025 2024 2025 2024 Stock options 550,834 654,313 384,166 269,500 Total 550,834 654,313 384,166 269,500 14 11. BUSINESS SEGMENT AND GEOGRAPHIC INFORMATION The Chief Executive Officer of the company (the “CEO”), as the Chief Operating Decision Maker (“CODM”), organizes the Company, manages resource allocations, and measures performance of the Company’s single operating segment, Critical Power Solutions. The Critical Power Solutions reportable segment is the Company’s Titan business unit. The Critical Power Solutions segment provides mobile high-capacity charging equipment, power generation equipment and aftermarket field-services in order to help customers secure fast vehicle charging where fixed charging infrastructure does not exist, and additionally to ensure smooth, uninterrupted power to operations during times of emergency. The CODM assesses the Company’s performance and decides how to allocate resources based on consolidated net income (loss) in the unaudited condensed consolidated statements of operations, which is assessed to be the segment measure of profit or loss. This measure is used to monitor actual results to evaluate the performance of the segment versus the forecasted targets. The segment assets are equal to the assets presented in the unaudited condensed consolidated balance sheets. The significant expenses that are regularly provided to the CODM, which include costs of goods sold, selling, general and administrative expenses and research and development expenses, are disclosed in the unaudited condensed consolidated statements of operations as a part of the consolidated net income (loss). The other segment item that is regularly provided to the CODM includes other income (expense) which is disclosed as a separate line item in the unaudited condensed consolidated statements of operations. Other income and (expenses) consist of interest income and interest (expense), which are disclosed as separate line items in the unaudited condensed consolidated statements of operations. On October 29, 2024, the Company sold its Electrical Infrastructure segment to Mill Point Capital. Prior to the sale of the Electrical Infrastructure segment, the Company’s CODM assessed performance and allocated resources amongst its two reportable segments. See Note 8 - Discontinued Operations for additional information. Revenues are attributable to countries based on the location of the Company’s customers: SCHEDULE OF ATTRIBUTABLE TO COUNTIES BASED ON THE LOCATION For the Three Months Ended For the Six Months Ended June 30, June 30, 2025 2024 2025 2024 Revenues United States $ 8,255 $ 3,395 $ 14,881 $ 6,710 Canada 115 - 229 - Total $ 8,370 $ 3,395 $ 15,110 $ 6,710 Approximately 31 % and 19 % of the Company’s revenues during the three months ended June 30, 2025, were made to two customers. Approximately 14 % and 13 % of the Company’s revenues during the three months ended June 30, 2024, were made to two customers. Approximately 34 % and 13 % of the Company’s revenues during the six months ended June 30, 2025, were made to two customers. Approximately 14 %, 12 % and 10 % of the Company’s revenues during the six months ended June 30, 2024, were made to three customers. The distribution of the Company’s property and equipment by geographic location is approximately as follows: SCHEDULE OF PROPERTY AND EQUIPMENT BY GEOGRAPHIC LOCATION June 30, December 31, 2025 2024 Property and equipment United States $ 5,371 $ 6,503 15