Document and Entity Information
Document and Entity Information - shares | 9 Months Ended | |
Sep. 30, 2019 | Nov. 14, 2019 | |
Document and Entity Information [Abstract] | ||
Entity Registrant Name | Polar Power, Inc. | |
Entity Central Index Key | 0001622345 | |
Amendment Flag | false | |
Current Fiscal Year End Date | --12-31 | |
Document Type | 10-Q | |
Document Period End Date | Sep. 30, 2019 | |
Document Fiscal Period Focus | Q3 | |
Document Fiscal Year Focus | 2019 | |
Entity Filer Category | Non-accelerated Filer | |
Entity Current Reporting Status | Yes | |
Entity Small Business | true | |
Entity Shell Company | false | |
Entity Emerging Growth Company | true | |
Entity Ex Transition Period | true | |
Entity Interactive Data Current | Yes | |
Entity Common Stock, Shares Outstanding | 10,143,158 | |
Entity Incorporation State Country Code | DE | |
Entity File Number | 001-37960 |
Condensed Balance Sheets
Condensed Balance Sheets - USD ($) | Sep. 30, 2019 | Dec. 31, 2018 |
Current assets | ||
Cash and cash equivalents (including restricted cash of $1,002,683 at December 31, 2018) | $ 3,666,475 | $ 5,640,078 |
Accounts receivable | 5,038,302 | 7,726,919 |
Inventories, net | 14,142,895 | 8,471,769 |
Prepaid expenses | 1,174,216 | 468,666 |
Refundable income taxes | 231,444 | 715,916 |
Total current assets | 24,253,332 | 23,023,348 |
Operating lease right-of-use assets, net | 2,339,353 | |
Property and equipment, net | 2,242,210 | 2,122,757 |
Deposits | 94,001 | 94,001 |
Total assets | 28,928,896 | 25,240,106 |
Current liabilities | ||
Accounts payable | 856,656 | 1,066,415 |
Customer deposits | 228,268 | 79,184 |
Accrued expenses and other current liabilities | 942,292 | 504,559 |
Current portion of operating lease liabilities | 589,696 | |
Current portion of notes payable | 329,490 | 283,388 |
Total current liabilities | 2,946,402 | 1,933,546 |
Operating lease liabilities, net of current portion | 1,818,927 | |
Notes payable, net of current portion | 858,983 | 924,539 |
Total liabilities | 5,624,312 | 2,858,085 |
Commitments and Contingencies | ||
Stockholders' Equity | ||
Preferred stock, $0.0001 par value, 5,000,000 shares authorized, no shares issued and outstanding | ||
Common stock, $0.0001 par value, 50,000,000 shares authorized, 10,143,158 shares issued and outstanding | 1,014 | 1,014 |
Additional paid-in capital | 19,815,258 | 19,578,426 |
Retained earnings | 3,488,312 | 2,802,581 |
Total stockholders' equity | 23,304,584 | 22,382,021 |
Total liabilities and stockholders' equity | $ 28,928,896 | $ 25,240,106 |
Condensed Balance Sheets (Paren
Condensed Balance Sheets (Parenthetical) - USD ($) | Sep. 30, 2019 | Dec. 31, 2018 |
Statement of Financial Position [Abstract] | ||
Restricted cash | $ 1,002,683 | |
Preferred stock, par value (in dollars per share) | $ 0.0001 | $ 0.0001 |
Preferred stock, authorized | 5,000,000 | 5,000,000 |
Preferred stock, issued | ||
Preferred stock, outstanding | ||
Common stock, par value (in dollars per share) | $ 0.0001 | $ 0.0001 |
Common stock, authorized | 50,000,000 | 50,000,000 |
Common stock, issued | 10,143,158 | 10,143,158 |
Common stock, outstanding | 10,143,158 | 10,143,158 |
Condensed Statements of Operati
Condensed Statements of Operations (Unaudited) - USD ($) | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2019 | Sep. 30, 2018 | Sep. 30, 2019 | Sep. 30, 2018 | |
Income Statement [Abstract] | ||||
Net Sales | $ 6,939,318 | $ 5,061,158 | $ 23,922,651 | $ 15,748,845 |
Cost of Sales | 4,707,412 | 3,530,847 | 16,336,576 | 10,672,707 |
Gross Profit | 2,231,906 | 1,530,311 | 7,586,075 | 5,076,138 |
Operating Expenses | ||||
Sales and marketing | 707,171 | 717,983 | 2,032,643 | 1,968,152 |
Research and development | 546,144 | 571,300 | 1,649,794 | 1,371,981 |
General and administrative | 935,352 | 1,004,984 | 3,209,596 | 2,589,018 |
Total operating expenses | 2,188,667 | 2,294,267 | 6,892,033 | 5,929,151 |
Income (loss) from operations | 43,239 | (763,956) | 694,042 | (853,013) |
Other (expenses) income | ||||
Interest expense | (13,676) | (2,777) | (34,389) | (8,181) |
Other income (expense) | 18,678 | 9,616 | 26,078 | 8,716 |
Total other (expenses) income, net | 5,002 | 6,839 | (8,311) | 535 |
Net income (loss) | $ 48,241 | $ (757,117) | $ 685,731 | $ (852,478) |
Net income (loss) per share - basic and diluted (in dollars per share) | $ 0 | $ (0.07) | $ 0.07 | $ (0.08) |
Weighted average shares outstanding, basic and diluted | 10,143,158 | 10,143,158 | 10,143,158 | 10,143,158 |
Condensed Statements of Stockho
Condensed Statements of Stockholders' Equity (Unaudited) - USD ($) | Common Stock | Additional paid-in capital | Retained Earnings | Total |
Balance at beginning at Dec. 31, 2017 | $ 1,014 | $ 19,250,955 | $ 3,650,833 | $ 22,902,802 |
Balance at beginning (in shares) at Dec. 31, 2017 | 10,143,158 | |||
Fair value of vested stock options | 232,047 | 232,047 | ||
Net income (loss) | (852,478) | (852,478) | ||
Balance at end at Sep. 30, 2018 | $ 1,014 | 19,483,002 | 2,798,355 | 22,282,371 |
Balance at end (in shares) at Sep. 30, 2018 | 10,143,158 | |||
Balance at beginning at Jun. 30, 2018 | $ 1,014 | 19,379,338 | 3,555,472 | 22,935,824 |
Balance at beginning (in shares) at Jun. 30, 2018 | 10,143,158 | |||
Fair value of vested stock options | 103,664 | 103,664 | ||
Net income (loss) | (757,117) | (757,117) | ||
Balance at end at Sep. 30, 2018 | $ 1,014 | 19,483,002 | 2,798,355 | 22,282,371 |
Balance at end (in shares) at Sep. 30, 2018 | 10,143,158 | |||
Balance at beginning at Dec. 31, 2018 | $ 1,014 | 19,578,426 | 2,802,581 | 22,382,021 |
Balance at beginning (in shares) at Dec. 31, 2018 | 10,143,158 | |||
Fair value of vested stock options | 236,832 | 236,832 | ||
Net income (loss) | 685,731 | 685,731 | ||
Balance at end at Sep. 30, 2019 | $ 1,014 | 19,815,258 | 3,488,312 | 23,304,584 |
Balance at end (in shares) at Sep. 30, 2019 | 10,143,158 | |||
Balance at beginning at Jun. 30, 2019 | $ 1,014 | 19,736,314 | 3,440,071 | 23,177,399 |
Balance at beginning (in shares) at Jun. 30, 2019 | 10,143,158 | |||
Fair value of vested stock options | 78,944 | 78,944 | ||
Net income (loss) | 48,241 | 48,241 | ||
Balance at end at Sep. 30, 2019 | $ 1,014 | $ 19,815,258 | $ 3,488,312 | $ 23,304,584 |
Balance at end (in shares) at Sep. 30, 2019 | 10,143,158 |
Condensed Statements of Cash Fl
Condensed Statements of Cash Flow (Unaudited) - USD ($) | 9 Months Ended | |
Sep. 30, 2019 | Sep. 30, 2018 | |
Cash flows from operating activities: | ||
Net income (loss) | $ 685,731 | $ (852,478) |
Adjustments to reconcile net income (loss) to net cash used in operating activities: | ||
Fair value of vested stock options | 236,832 | 232,047 |
Depreciation and amortization | 459,110 | 269,726 |
Amortization of operating lease right-of-use asset | 390,713 | |
Changes in operating assets and liabilities | ||
Accounts receivable | 2,688,617 | (692,891) |
Inventories | (5,671,126) | (1,926,562) |
Prepaid expenses | (819,437) | (599,382) |
Deposits | (24,205) | |
Refundable income taxes | 484,472 | |
Accounts payable | (209,759) | 31,795 |
Customer deposits | 149,084 | 162,285 |
Accrued expenses and other current liabilities | 468,042 | 97,324 |
Decrease in lease liability | (351,752) | |
Net cash used in operating activities | (1,489,473) | (3,302,341) |
Cash flows from investing activities: | ||
Acquisition of property and equipment | (311,369) | (208,998) |
Net cash used in investing activities | (311,369) | (208,998) |
Cash flows from financing activities: | ||
Repayment of notes | (172,761) | (82,369) |
Net cash used in financing activities | (172,761) | (82,369) |
Decrease in cash and cash equivalents | (1,973,603) | (3,593,708) |
Cash and cash equivalents, beginning of period | 5,640,078 | 14,201,163 |
Cash and cash equivalents, end of period | 3,666,475 | 10,607,455 |
SUPPLEMENTAL NON-CASH INVESTING AND FINANCING ACTIVITIES: | ||
Assets acquired through issuance of notes payable | 153,307 | 662,750 |
Initial recognition of operating lease right-of-use assets and operating lease obligations upon adoption of ASC Topic 842 | 2,847,495 | |
Reclassification of prepaid expenses to property and equipment | $ 113,887 |
Organization and Summary of Sig
Organization and Summary of Significant Accounting Policies | 9 Months Ended |
Sep. 30, 2019 | |
Organization, Consolidation and Presentation of Financial Statements [Abstract] | |
ORGANIZATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES | NOTE 1 – ORGANIZATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES The Company Polar Power, Inc. was incorporated in the State of Washington as Polar Products, Inc. and in 1991 reincorporated in the State of California under the name Polar Power, Inc. In December 2016, Polar Power, Inc. reincorporated in the State of Delaware (the "Company"). The Company designs, manufactures and sells direct current, or DC, power systems to supply reliable and low-cost energy to off-grid, bad-grid and backup power applications. The Company's products integrate DC generator and proprietary automated controls, lithium batteries and solar systems to provide low operating cost and lower emissions alternative power needs in telecommunications, defense, automotive and industrial markets. Basis of Presentation of Unaudited Financial Information The unaudited condensed financial statements of the Company for the three and nine months ended September 30, 2019 and 2018 have been prepared in accordance with accounting principles generally accepted in the United States of America ("GAAP") for interim financial information and pursuant to the requirements for reporting on Form 10-Q and Regulation S-K for scaled disclosures for smaller reporting companies. Accordingly, they do not include all the information and footnotes required by GAAP for complete financial statements. However, such information reflects all adjustments (consisting solely of normal recurring adjustments), which are, in the opinion of management, necessary for the fair presentation of the Company's financial position and results of operations. Results shown for interim periods are not necessarily indicative of the results to be obtained for a full fiscal year. The balance sheet information as of December 31, 2018 was derived from the audited financial statements included in the Company's financial statements as of and for the years ended December 31, 2018 and 2017 contained in the Company's Annual Report on Form 10-K filed with the Securities and Exchange Commission ("SEC") on April 1, 2019. These financial statements should be read in conjunction with that report. Estimates The preparation of financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenue and expenses during the reporting period. Material estimates relate to the assumptions made in determining reserves for uncollectible receivables, inventory reserves and returns, impairment analysis of long-term assets and deferred tax assets, income tax accruals, accruals for potential liabilities and assumptions made in valuing the fair market value of equity transactions. Actual results may differ from those estimates. Revenue Recognition The Company recognizes revenue in accordance with ASU 2014-09, Revenue from Contracts with Customers (Topic 606), (ASC 606). The underlying principle of ASC 606 is to recognize revenue to depict the transfer of goods or services to customers at the amount expected to be collected. ASC 606 creates a five-step model that requires entities to exercise judgment when considering the terms of contract(s), which includes (1) identifying the contract(s) or agreement(s) with a customer, (2) identifying our performance obligations in the contract or agreement, (3) determining the transaction price, (4) allocating the transaction price to the separate performance obligations, and (5) recognizing revenue as each performance obligation is satisfied. Under ASC 606, revenue is recognized when performance obligations under the terms of a contract are satisfied, which occurs for us upon shipment or delivery of products or services to our customers based on written sales terms, which is also when control is transferred. Revenue is measured as the amount of consideration we expect to receive in exchange for transferring the products or services to a customer. We determine whether delivery has occurred based on when title transfers and the risks and rewards of ownership have transferred to the customer, which usually occurs when we place the product with the customer's carrier or deliver the product to a customer's location. We regularly review our customers' financial positions to ensure that collectability is reasonably assured. We recognize revenues from rental equipment on a straight-line basis over the rental period. Our rental contracts are fixed price contracts for fixed durations of time and include freight and delivery charges. Our rental revenues have not been significant to date and accounted for less than one percent of our total revenues for the three and nine months ended September 30, 2019 and 2018. Disaggregation of Net Sales The following table shows the Company's disaggregated net sales by product type: Three months ended 2019 (Unaudited) 2018 (Unaudited) DC power systems $ 6,713,525 $ 4,958,670 Engineering & Tech Support Services 63,011 39,445 Accessories 162,782 63,043 Total net sales $ 6,939,318 $ 5,061,158 Nine months ended 2019 (Unaudited) 2018 (Unaudited) DC power systems $ 23,146,223 $ 15,288,835 Engineering & Tech Support Services 232,998 69,667 Accessories 543,430 390,343 Total net sales $ 23,922,651 $ 15,748,845 The following table shows the Company's disaggregated net sales by customer type: Three months ended 2019 (Unaudited) 2018 (Unaudited) Telecom $ 6,753,226 $ 4,246,099 Government/Military 39,822 659,912 Marine — 32,016 Other (backup DC power to various industries ) 146,270 123,131 Total net sales $ 6,939,318 $ 5,061,158 Nine months ended 2019 (Unaudited) 2018 (Unaudited) Telecom $ 22,497,099 $ 14,054,886 Government/Military 588,482 1,257,292 Marine 60,642 87,010 Other (backup DC power to various industries ) 776,428 349,657 Total net sales $ 23,922,651 $ 15,748,845 Accounts Receivable Trade receivables are recorded at net realizable value consisting of the carrying amount less an allowance for uncollectible accounts, as needed. The Company uses the allowance method to account for uncollectible trade receivable balances. Under the allowance method, if needed, an estimate of uncollectible customer balances is made based upon specific account balances that are considered uncollectible. Factors used to establish an allowance include the credit quality and payment history of the customer. The Company did not deem it necessary to provide an allowance for doubtful accounts as of September 30, 2019 and December 31, 2018. Inventories Inventories consist of raw materials and finished goods and are stated at the lower of cost or market. Cost is determined principally on a first-in-first-out average cost basis. Inventory quantities on hand are reviewed regularly and write-downs for obsolete inventory are recorded based on an estimated forecast of the inventory item demand in the near future. As of September 30, 2019 and December 31, 2018, the Company has established inventory reserves of $330,000 for obsolete and slow-moving inventory. As of September 30, 2019 and December 31, 2018, the components of inventories were as follows: September 30, 2019 (Unaudited) December 31, 2018 Raw materials $ 9,654,350 $ 6,060,448 Finished goods 4,818,545 2,741,321 14,472,895 8,801,769 Less: Inventory reserve (330,000 ) (330,000 ) Total Inventories, net $ 14,802,895 $ 8,471,769 Leases Prior to January 1, 2019, the Company accounted for leases under ASC 840, Accounting for Leases Leases, Product Warranties The Company provides limited warranties for parts and labor at no cost to its customers within a specified time period after the sale. The warranty terms are typically from one to five years. The Company's warranties are of an assurance-type and come standard with all Company products to cover repair or replacement should product not perform as expected. Provisions for estimated expenses related to product warranties are made at the time products are sold. These estimates are established using historical information about the nature, frequency and average cost of warranty claim settlements as well as product manufacturing and recovery from suppliers. Management actively studies trends of warranty claims and takes action to improve product quality and minimize warranty costs. The Company estimates the actual historical warranty claims coupled with an analysis of unfulfilled claims to record a liability for specific warranty purposes. The Company's product warranty obligations are included in other accrued liabilities in the balance sheets. As of September 30, 2019 and December 31, 2018, the Company had accrued a liability for warranty reserve of $175,000 and $175,000, respectively. Management believes that the warranty accrual is appropriate; however, actual claims incurred could differ from original estimates, requiring adjustments to the accrual. The Company does not provide any service warranties to its customers that require to be accounted for as a separate performance obligation. The following is a tabular reconciliation of the product warranty liability: Changes in estimates for warranties September 30, 2019 (Unaudited) December 31, 2018 Balance at beginning of the period $ 175,000 $ 175,000 Payments (381,301 ) (364,163 ) Provision for warranties 381,301 364,163 Balance at end of the period $ 175,000 $ 175,000 Income Taxes The Company accounts for income taxes using the asset and liability method whereby deferred tax assets are recognized for deductible temporary differences, and deferred tax liabilities are recognized for taxable temporary differences. Temporary differences are the differences between the reported amounts of assets and liabilities and their tax bases. Deferred tax assets are reduced by a valuation allowance when, in the opinion of management, it is more likely than not that some portion or all of the deferred tax assets will not be realized before the Company is able to realize their benefits, or that future deductibility is uncertain. As of September 30, 2019, the Company has sufficient net operating loss carryforwards to offset any taxable income during the period. Tax benefits from an uncertain tax position are recognized only if it more likely than not that the tax position will be sustained on examination by the taxing authorities based on technical merits of the position. The tax benefits recognized in the financial statements from such a position are measured based on the largest benefit that has greater than 50 percent likelihood of being realized upon ultimate resolution. Deferred tax assets and liabilities are adjusted for the effects of changes in tax laws and rates on the date of enactment. Financial Assets and Liabilities Measured at Fair Value The Company uses various inputs in determining the fair value of its investments and measures these assets on a recurring basis. Financial assets recorded at fair value in the balance sheets are categorized by the level of objectivity associated with the inputs used to measure their fair value. Authoritative guidance provided by the Financial Accounting Standards Board defines the following levels directly related to the amount of subjectivity associated with the inputs to fair valuation of these financial assets: Level 1 Quoted prices in active markets for identical assets or liabilities. Level 2 Inputs, other than the quoted prices in active markets, that is observable either directly or indirectly. Level 3 Unobservable inputs based on the Company's assumptions. The carrying amounts of financial assets and liabilities, such as cash and cash equivalents, accounts receivable and accounts payable, approximate their fair values because of the short maturity of these instruments. The carrying values of the line of credit, notes payable approximate their fair values due to the fact that the interest rates on these obligations are based on prevailing market interest rates. Segments The Company operates in one segment for the manufacture and distribution of its products. In accordance with the "Segment Reporting" Topic of the ASC, the Company's chief operating decision maker has been identified as the Chief Executive Officer and President, who reviews operating results to make decisions about allocating resources and assessing performance for the entire Company. Existing guidance, which is based on a management approach to segment reporting, establishes requirements to report selected segment information quarterly and to report annually entity-wide disclosures about products and services, major customers, and the countries in which the entity holds material assets and reports revenue. All material operating units qualify for aggregation under "Segment Reporting" due to their similar customer base and similarities in: economic characteristics; nature of products and services; and procurement, manufacturing and distribution processes. Since the Company operates in one segment, all financial information required by "Segment Reporting" can be found in the accompanying financial statements. Concentrations Cash. Cash denominated in Australian Dollars with a U.S. Dollar equivalent of $15,257 and $152,254 at September 30, 2019 and December 31, 2018, respectively, was held in an account at a financial institution located in Australia. Cash denominated in Romanian Leu with a U.S. Dollar equivalent of $5,120 and $9,368 at September 30, 2019 and December 31, 2018, respectively, was held in an account at a financial institution located in Romania Revenues. For the nine months ended September 30, 2019, sales to the Company's two largest customers, which are Tier-1 telecommunications wireless carriers, accounted for 68% and 19% of total revenues, respectively. For the same period in 2018, the Company's three largest customers, which are Tier-1 telecommunications wireless carriers, accounted for 61%, 13% and 12% of total revenues, respectively. For the nine months ended September 30, 2019 and September 30, 2018, sales to telecommunications customers accounted for 97% and 89% of total revenues, respectively. Accounts receivable Accounts payable Purchases Net Income (Loss) Per Share Basic net income (loss) per share is computed by dividing net income (loss) by the weighted average number of common shares outstanding for the period. Diluted earnings per share is computed by dividing the net income applicable to common stockholders by the weighted average number of common shares outstanding plus the number of additional common shares that would have been outstanding if all dilutive potential common shares had been issued using the treasury stock method. Potential common shares are excluded from the computation when their effect is antidilutive. The dilutive effect of potentially dilutive securities is reflected in diluted net income per share if the exercise prices were lower than the average fair market value of common shares during the reporting period. The following potentially dilutive shares were excluded from the shares used to calculate diluted earnings per share as their inclusion would be anti-dilutive: September 30, 2019 (Unaudited) September 30, 2018 Options 360,000 360,000 Warrants 115,000 115,000 Total 475,000 475,000 Recent Accounting Pronouncements The Company's management does not believe that there are any recently issued, but not yet effective, authoritative guidance, if currently adopted, would have a material impact on the Company's financial statement presentation or disclosures. |
Restricted Cash
Restricted Cash | 9 Months Ended |
Sep. 30, 2019 | |
Receivables [Abstract] | |
RESTRICTED CASH | NOTE 2 – RESTRICTED CASH As of December 31, 2018, the Company's cash balance included restricted cash of $1,002,683. In March 2019, the Company closed the credit facility securing the restricted cash account, and as such, no cash balance was restricted as of September 30, 2019. The restricted cash served as a collateral for the line of credit (see Note 5) opened with a bank in March 2017 and closed in March 2019. |
Property and Equipment
Property and Equipment | 9 Months Ended |
Sep. 30, 2019 | |
Property, Plant and Equipment [Abstract] | |
PROPERTY AND EQUIPMENT | NOTE 3 – PROPERTY AND EQUIPMENT Property and equipment consist of the following: September 30, 2019 (Unaudited) December 31, 2018 Production tooling, jigs, fixtures $ 70,749 $ 70,749 Shop equipment and machinery 3,237,191 2,808,928 Vehicles 188,597 188,597 Leasehold improvements 390,004 276,901 Office equipment 172,192 134,995 Software 102,690 102,690 Total property and equipment, cost 4,161,423 3,582,860 Less: accumulated depreciation and amortization (1,919,213 ) (1,460,103 ) Property and equipment, net $ 2,242,210 $ 2,122,757 Depreciation and amortization expense on property and equipment for the three months ended September 30, 2019 and September 30, 2018 was $163,889 and $114,779, respectively. During the three months ended September 30, 2019 and September 30, 2018, $152,757 and $105,882, respectively, of the depreciation expense was included in the balance of cost of sales. Depreciation and amortization expense on property and equipment for the nine months ended September 30, 2019 and September 30, 2018 was $459,110 and $269,726, respectively. During the nine months ended September 30, 2019 and September 30, 2018, $428,290 and $243,285, respectively, of the depreciation expense was included in the balance of cost of sales. |
Notes Payable
Notes Payable | 9 Months Ended |
Sep. 30, 2019 | |
Payables and Accruals [Abstract] | |
NOTES PAYABLE | NOTE 4 – NOTES PAYABLE Notes payable consist of the following: September 30, 2019 December 31, (Unaudited) 2018 Total Equipment Notes Payable $ 1,188,473 $ 1,207,927 Less Current Portion 329,490 283,388 Notes Payable, long term $ 858,983 $ 924,539 The Company has entered into several financing agreements for the purchase of equipment. The terms of these financing arrangements are for a term of 2 years to 5 years, with interest rates ranging from 1.9% to 6.9% per annum, secured by the purchased equipment. Aggregate monthly payments of principal and interest of approximately $29,000 are due through 2023. |
Financing Agreements
Financing Agreements | 9 Months Ended |
Sep. 30, 2019 | |
Debt Disclosure [Abstract] | |
FINANCING AGREEMENTS | NOTE 5 –FINANCING AGREEMENTS Line of Credit On March 21, 2017, the Company entered into a Credit Agreement and related documents with Citibank, N.A. for a revolving credit facility in the aggregate amount of up to $1,000,000. The credit facility was secured by a Certificate of Deposit (restricted cash) account opened by the Company with Citibank in the amount of $1,000,000 (see Note 2). On March 20, 2019, the Company terminated the credit facility and transferred the balance of the Certificate of Deposit that secured the credit facility to its liquid cash account. As of March 20, 2019, the Company had not borrowed any funds under the credit facility. Supplier Agreement Effective June 4, 2019, the Company executed a Supplier Agreement with Citibank, N.A. Under the terms of the Supplier Agreement, the Company may from time to time offer to sell to Citibank, without recourse, certain of the Company's accounts receivable relating to invoiced sales made to AT&T. Once AT&T approves the invoice, AT&T sends payment instructions to Citibank. The sale price is equal to the face amount of the receivable less the applicable discount charge calculated by multiplying the face amount of the receivable by (i) the annual discount rate (which is equal to the 90-day London Inter-bank Offered Rate plus 1.00%) and (ii) the discount acceptance period (which is equal the number of days in the payment terms less the number of days necessary to approve the invoice) divided by 360. Citibank may change the pricing terms at any time in its sole discretion upon at least thirty days prior written notice to the Company. In addition, either party may terminate the Supplier Agreement upon thirty business days prior written notice to the other party, provided that either party may terminate the agreement upon five business days prior written notice if the other party is in breach of, or fails to perform any of its material obligations under the Supplier Agreement. For the three and nine months ended September 30, 2019, a total of $4,113,621 and $9,367,112, respectively, of accounts receivables were sold to Citibank by the Company, and the Company incurred fees of approximately $20,000 and $42,000, respectively, during the periods then ended. |
Stock Options
Stock Options | 9 Months Ended |
Sep. 30, 2019 | |
Stock Options [Abstract] | |
STOCK OPTIONS | NOTE 6 – STOCK OPTIONS The following table summarizes stock option activity: Number of Weighted Average Options Price Outstanding, December 31, 2018 360,000 $ 5.28 Granted — — Exercised — — Outstanding, September 30, 2019 (unaudited) 360,000 $ 5.28 Exercisable, September 30, 2019 (unaudited) 140,000 $ 5.28 Effective July 8, 2016 the Company's board of directors approved the Polar Power 2016 Omnibus Incentive Plan (the "2016 Plan"), authorizing the issuance of up to 1,754,385 shares of common stock as incentives to employees and consultants to the Company with awards limited to a maximum of 350,877 shares in any calendar year. During the nine months ended September 30, 2019, the Company expensed total stock-based compensation related to the vested options of $236,832, and the remaining unamortized cost of the outstanding options at September 30, 2019 was approximately $474,000. This cost will be amortized on a straight-line basis over the weighted average remaining vesting period of 2 years. There was no intrinsic value of the outstanding and exercisable options at September 30, 2019. |
Warrants
Warrants | 9 Months Ended |
Sep. 30, 2019 | |
Warrants [Abstract] | |
WARRANTS | NOTE 7 – WARRANTS At September 30, 2019, warrant shares outstanding were as follows: Number of Warrants Weighted Average Exercise Price Outstanding September 30, 2018 115,000 $ 8.75 Issued — — Exercised — — Outstanding, September 30, 2019 (unaudited) 115,000 $ 8.75 Exercisable, September 30, 2019 (unaudited) 115,000 $ 8.75 In connection with the Company's underwritten initial public offering in December 2016, the Company issued warrants to the underwriters to purchase up to 115,000 shares of its common stock with an exercise price of $8.75 per share, which warrants expire five years from the date of issuance. There was no intrinsic value of the outstanding and exercisable warrants at September 30, 2019. |
Distribution Agreement With a R
Distribution Agreement With a Related Entity | 9 Months Ended |
Sep. 30, 2019 | |
Distribution Agreement With Related Entity [Abstract] | |
DISTRIBUTION AGREEMENT WITH A RELATED ENTITY | NOTE 8 – DISTRIBUTION AGREEMENT WITH A RELATED ENTITY On March 1, 2014, the Company entered into a subcontractor installer agreement with Smartgen Solutions, Inc. ("Smartgen"), a related entity that is engaged in business of equipment rental and provider of maintenance, repair and installation services to mobile telecommunications towers in California. Under the terms of the agreement, Smartgen has been appointed as a non-exclusive, authorized service provider for the installation, repair and service of the Company's products in Southern California. The agreement has a term of three years from the date of execution and automatically renews for additional one-year periods if not terminated. During the three months ended September 30, 2019 and 2018, Smartgen performed $54,270 and $26,550 in field services, respectively. Smartgen performed $227,030 and $71,820 in field services for the nine months ended September 30, 2019 and 2018, respectively. Smartgen had no purchases from the Company during the three months and the nine months ended September 30, 2019 and September 30, 2018, respectively. |
Lease Obligations
Lease Obligations | 9 Months Ended |
Sep. 30, 2019 | |
Commitments and Contingencies Disclosure [Abstract] | |
LEASE OBLIGATIONS | NOTE 9 – LEASE OBLIGATIONS The Company has operating lease agreements for two office spaces both with remaining lease terms of 4 years. The Company also has another storage facility on a twelve-month lease term. Leases with an initial term of 12 months or less are not recorded on the balance sheet. The Company accounts for the lease and non-lease components of its leases as a single lease component. Rent expense is recognized on a straight-line basis over the lease term. Operating lease right-of-use ("ROU") assets and liabilities are recognized at commencement date based on the present value of lease payments over the lease term. ROU assets represent our right to use an underlying asset for the lease term and lease liabilities represent our obligation to make lease payments arising from the lease. Generally, the implicit rate of interest in arrangements is not readily determinable and the Company utilizes its incremental borrowing rate in determining the present value of lease payments. The Company's incremental borrowing rate is a hypothetical rate based on its understanding of what its credit rating would be. The operating lease ROU asset includes any lease payments made and excludes lease incentives. The components of rent expense and supplemental cash flow information related to leases for the period are as follows: Nine Months Ended September 30, Lease Cost Operating lease cost (of which $446,674 is included in general and administration and $77,927 is included in cost of sales in the Company's unaudited condensed statement of operations) $ 524,601 Other Information Cash paid for amounts included in the measurement of lease liabilities for the first quarter 2019 $ — Weighted average remaining lease term – operating leases (in years) 3.7 Average discount rate – operating leases 3.75 % The supplemental balance sheet information related to leases for the period is as follows: At September 30, Operating leases Long-term right-of-use assets $ 2,339,353 Short-term operating lease liabilities $ 589,696 Long-term operating lease liabilities 1,818,927 Total operating lease liabilities $ 2,408,623 Maturities of the Company's lease liabilities are as follows (in thousands): Year Ending Operating Leases 2019 (remaining 3 months) $ 153,765 2020 692,977 2021 720,922 2022 746,752 2023 272,057 Total lease payments 2,586,473 Less: Imputed interest/present value discount (177,849 ) Present value of lease liabilities $ 2,408,624 Rent expense for the three months ended September 30, 2019 and 2018 was $203,395 and $158,734, respectively (including short-term and other rentals). Rent expense for the nine months ended September 30, 2019 and 2018 was $601,772 and 414,317, respectively (including short-term and other rentals). |
Organization and Summary of S_2
Organization and Summary of Significant Accounting Policies (Policies) | 9 Months Ended |
Sep. 30, 2019 | |
Organization, Consolidation and Presentation of Financial Statements [Abstract] | |
The Company | The Company Polar Power, Inc. was incorporated in the State of Washington as Polar Products, Inc. and in 1991 reincorporated in the State of California under the name Polar Power, Inc. In December 2016, Polar Power, Inc. reincorporated in the State of Delaware (the “Company”). The Company designs, manufactures and sells direct current, or DC, power systems to supply reliable and low-cost energy to off-grid, bad-grid and backup power applications. The Company’s products integrate DC generator and proprietary automated controls, lithium batteries and solar systems to provide low operating cost and lower emissions alternative power needs in telecommunications, defense, automotive and industrial markets. |
Basis of Presentation of Unaudited Financial Information | Basis of Presentation of Unaudited Financial Information The unaudited condensed financial statements of the Company for the three and nine months ended September 30, 2019 and 2018 have been prepared in accordance with accounting principles generally accepted in the United States of America ("GAAP") for interim financial information and pursuant to the requirements for reporting on Form 10-Q and Regulation S-K for scaled disclosures for smaller reporting companies. Accordingly, they do not include all the information and footnotes required by GAAP for complete financial statements. However, such information reflects all adjustments (consisting solely of normal recurring adjustments), which are, in the opinion of management, necessary for the fair presentation of the Company's financial position and results of operations. Results shown for interim periods are not necessarily indicative of the results to be obtained for a full fiscal year. The balance sheet information as of December 31, 2018 was derived from the audited financial statements included in the Company's financial statements as of and for the years ended December 31, 2018 and 2017 contained in the Company's Annual Report on Form 10-K filed with the Securities and Exchange Commission ("SEC") on April 1, 2019. These financial statements should be read in conjunction with that report. |
Estimates | Estimates The preparation of financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenue and expenses during the reporting period. Material estimates relate to the assumptions made in determining reserves for uncollectible receivables, inventory reserves and returns, impairment analysis of long-term assets and deferred tax assets, income tax accruals, accruals for potential liabilities and assumptions made in valuing the fair market value of equity transactions. Actual results may differ from those estimates. |
Revenue Recognition | Revenue Recognition The Company recognizes revenue in accordance with ASU 2014-09, Revenue from Contracts with Customers (Topic 606), (ASC 606). The underlying principle of ASC 606 is to recognize revenue to depict the transfer of goods or services to customers at the amount expected to be collected. ASC 606 creates a five-step model that requires entities to exercise judgment when considering the terms of contract(s), which includes (1) identifying the contract(s) or agreement(s) with a customer, (2) identifying our performance obligations in the contract or agreement, (3) determining the transaction price, (4) allocating the transaction price to the separate performance obligations, and (5) recognizing revenue as each performance obligation is satisfied. Under ASC 606, revenue is recognized when performance obligations under the terms of a contract are satisfied, which occurs for us upon shipment or delivery of products or services to our customers based on written sales terms, which is also when control is transferred. Revenue is measured as the amount of consideration we expect to receive in exchange for transferring the products or services to a customer. We determine whether delivery has occurred based on when title transfers and the risks and rewards of ownership have transferred to the customer, which usually occurs when we place the product with the customer's carrier or deliver the product to a customer's location. We regularly review our customers' financial positions to ensure that collectability is reasonably assured. We recognize revenues from rental equipment on a straight-line basis over the rental period. Our rental contracts are fixed price contracts for fixed durations of time and include freight and delivery charges. Our rental revenues have not been significant to date and accounted for less than one percent of our total revenues for the three and nine months ended September 30, 2019 and 2018. Disaggregation of Net Sales The following table shows the Company's disaggregated net sales by product type: Three months ended 2019 (Unaudited) 2018 (Unaudited) DC power systems $ 6,713,525 $ 4,958,670 Engineering & Tech Support Services 63,011 39,445 Accessories 162,782 63,043 Total net sales $ 6,939,318 $ 5,061,158 Nine months ended 2019 (Unaudited) 2018 (Unaudited) DC power systems $ 23,146,223 $ 15,288,835 Engineering & Tech Support Services 232,998 69,667 Accessories 543,430 390,343 Total net sales $ 23,922,651 $ 15,748,845 The following table shows the Company's disaggregated net sales by customer type: Three months ended 2019 (Unaudited) 2018 (Unaudited) Telecom $ 6,753,226 $ 4,246,099 Government/Military 39,822 659,912 Marine — 32,016 Other (backup DC power to various industries ) 146,270 123,131 Total net sales $ 6,939,318 $ 5,061,158 Nine months ended 2019 (Unaudited) 2018 (Unaudited) Telecom $ 22,497,099 $ 14,054,886 Government/Military 588,482 1,257,292 Marine 60,642 87,010 Other (backup DC power to various industries ) 776,428 349,657 Total net sales $ 23,922,651 $ 15,748,845 |
Accounts Receivable | Accounts Receivable Trade receivables are recorded at net realizable value consisting of the carrying amount less an allowance for uncollectible accounts, as needed. The Company uses the allowance method to account for uncollectible trade receivable balances. Under the allowance method, if needed, an estimate of uncollectible customer balances is made based upon specific account balances that are considered uncollectible. Factors used to establish an allowance include the credit quality and payment history of the customer. The Company did not deem it necessary to provide an allowance for doubtful accounts as of September 30, 2019 and December 31, 2018. |
Inventories | Inventories Inventories consist of raw materials and finished goods and are stated at the lower of cost or market. Cost is determined principally on a first-in-first-out average cost basis. Inventory quantities on hand are reviewed regularly and write-downs for obsolete inventory are recorded based on an estimated forecast of the inventory item demand in the near future. As of September 30, 2019 and December 31, 2018, the Company has established inventory reserves of $330,000 for obsolete and slow-moving inventory. As of September 30, 2019 and December 31, 2018, the components of inventories were as follows: September 30, 2019 (Unaudited) December 31, 2018 Raw materials $ 9,654,350 $ 6,060,448 Finished goods 4,818,545 2,741,321 14,472,895 8,801,769 Less: Inventory reserve (330,000 ) (330,000 ) Total Inventories, net $ 14,802,895 $ 8,471,769 |
Leases | Leases Prior to January 1, 2019, the Company accounted for leases under ASC 840, Accounting for Leases Leases, |
Product Warranties | Product Warranties The Company provides limited warranties for parts and labor at no cost to its customers within a specified time period after the sale. The warranty terms are typically from one to five years. The Company's warranties are of an assurance-type and come standard with all Company products to cover repair or replacement should product not perform as expected. Provisions for estimated expenses related to product warranties are made at the time products are sold. These estimates are established using historical information about the nature, frequency and average cost of warranty claim settlements as well as product manufacturing and recovery from suppliers. Management actively studies trends of warranty claims and takes action to improve product quality and minimize warranty costs. The Company estimates the actual historical warranty claims coupled with an analysis of unfulfilled claims to record a liability for specific warranty purposes. The Company's product warranty obligations are included in other accrued liabilities in the balance sheets. As of September 30, 2019 and December 31, 2018, the Company had accrued a liability for warranty reserve of $175,000 and $175,000, respectively. Management believes that the warranty accrual is appropriate; however, actual claims incurred could differ from original estimates, requiring adjustments to the accrual. The Company does not provide any service warranties to its customers that require to be accounted for as a separate performance obligation. The following is a tabular reconciliation of the product warranty liability: Changes in estimates for warranties September 30, 2019 (Unaudited) December 31, 2018 Balance at beginning of the period $ 175,000 $ 175,000 Payments (381,301 ) (364,163 ) Provision for warranties 381,301 364,163 Balance at end of the period $ 175,000 $ 175,000 |
Income Taxes | Income Taxes The Company accounts for income taxes using the asset and liability method whereby deferred tax assets are recognized for deductible temporary differences, and deferred tax liabilities are recognized for taxable temporary differences. Temporary differences are the differences between the reported amounts of assets and liabilities and their tax bases. Deferred tax assets are reduced by a valuation allowance when, in the opinion of management, it is more likely than not that some portion or all of the deferred tax assets will not be realized before the Company is able to realize their benefits, or that future deductibility is uncertain. As of September 30, 2019, the Company has sufficient net operating loss carryforwards to offset any taxable income during the period. Tax benefits from an uncertain tax position are recognized only if it more likely than not that the tax position will be sustained on examination by the taxing authorities based on technical merits of the position. The tax benefits recognized in the financial statements from such a position are measured based on the largest benefit that has greater than 50 percent likelihood of being realized upon ultimate resolution. Deferred tax assets and liabilities are adjusted for the effects of changes in tax laws and rates on the date of enactment. |
Financial Assets and Liabilities Measured at Fair Value | Financial Assets and Liabilities Measured at Fair Value The Company uses various inputs in determining the fair value of its investments and measures these assets on a recurring basis. Financial assets recorded at fair value in the balance sheets are categorized by the level of objectivity associated with the inputs used to measure their fair value. Authoritative guidance provided by the Financial Accounting Standards Board defines the following levels directly related to the amount of subjectivity associated with the inputs to fair valuation of these financial assets: Level 1 Quoted prices in active markets for identical assets or liabilities. Level 2 Inputs, other than the quoted prices in active markets, that is observable either directly or indirectly. Level 3 Unobservable inputs based on the Company's assumptions. The carrying amounts of financial assets and liabilities, such as cash and cash equivalents, accounts receivable and accounts payable, approximate their fair values because of the short maturity of these instruments. The carrying values of the line of credit, notes payable approximate their fair values due to the fact that the interest rates on these obligations are based on prevailing market interest rates. |
Segments | Segments The Company operates in one segment for the manufacture and distribution of its products. In accordance with the “Segment Reporting” Topic of the ASC, the Company’s chief operating decision maker has been identified as the Chief Executive Officer and President, who reviews operating results to make decisions about allocating resources and assessing performance for the entire Company. Existing guidance, which is based on a management approach to segment reporting, establishes requirements to report selected segment information quarterly and to report annually entity-wide disclosures about products and services, major customers, and the countries in which the entity holds material assets and reports revenue. All material operating units qualify for aggregation under “Segment Reporting” due to their similar customer base and similarities in: economic characteristics; nature of products and services; and procurement, manufacturing and distribution processes. Since the Company operates in one segment, all financial information required by “Segment Reporting” can be found in the accompanying financial statements. |
Concentrations | Concentrations Cash. Cash denominated in Australian Dollars with a U.S. Dollar equivalent of $15,257 and $152,254 at September 30, 2019 and December 31, 2018, respectively, was held in an account at a financial institution located in Australia. Cash denominated in Romanian Leu with a U.S. Dollar equivalent of $5,120 and $9,368 at September 30, 2019 and December 31, 2018, respectively, was held in an account at a financial institution located in Romania Revenues. For the nine months ended September 30, 2019, sales to the Company's two largest customers, which are Tier-1 telecommunications wireless carriers, accounted for 68% and 19% of total revenues, respectively. For the same period in 2018, the Company's three largest customers, which are Tier-1 telecommunications wireless carriers, accounted for 61%, 13% and 12% of total revenues, respectively. For the nine months ended September 30, 2019 and September 30, 2018, sales to telecommunications customers accounted for 97% and 89% of total revenues, respectively. Accounts receivable Accounts payable Purchases |
Net Income (Loss) Per Share | Net Income (Loss) Per Share Basic net income (loss) per share is computed by dividing net income (loss) by the weighted average number of common shares outstanding for the period. Diluted earnings per share is computed by dividing the net income applicable to common stockholders by the weighted average number of common shares outstanding plus the number of additional common shares that would have been outstanding if all dilutive potential common shares had been issued using the treasury stock method. Potential common shares are excluded from the computation when their effect is antidilutive. The dilutive effect of potentially dilutive securities is reflected in diluted net income per share if the exercise prices were lower than the average fair market value of common shares during the reporting period. The following potentially dilutive shares were excluded from the shares used to calculate diluted earnings per share as their inclusion would be anti-dilutive: September 30, 2019 (Unaudited) September 30, 2018 Options 360,000 360,000 Warrants 115,000 115,000 Total 475,000 475,000 |
Recent Accounting Pronouncements | Recent Accounting Pronouncements The Company’s management does not believe that there are any recently issued, but not yet effective, authoritative guidance, if currently adopted, would have a material impact on the Company’s financial statement presentation or disclosures. |
Organization and Summary of S_3
Organization and Summary of Significant Accounting Policies (Tables) | 9 Months Ended |
Sep. 30, 2019 | |
Organization, Consolidation and Presentation of Financial Statements [Abstract] | |
Schedule of disaggregated net sales | Three months ended 2019 (Unaudited) 2018 (Unaudited) DC power systems $ 6,713,525 $ 4,958,670 Engineering & Tech Support Services 63,011 39,445 Accessories 162,782 63,043 Total net sales $ 6,939,318 $ 5,061,158 Nine months ended 2019 (Unaudited) 2018 (Unaudited) DC power systems $ 23,146,223 $ 15,288,835 Engineering & Tech Support Services 232,998 69,667 Accessories 543,430 390,343 Total net sales $ 23,922,651 $ 15,748,845 Three months ended 2019 (Unaudited) 2018 (Unaudited) Telecom $ 6,753,226 $ 4,246,099 Government/Military 39,822 659,912 Marine — 32,016 Other (backup DC power to various industries ) 146,270 123,131 Total net sales $ 6,939,318 $ 5,061,158 Nine months ended 2019 (Unaudited) 2018 (Unaudited) Telecom $ 22,497,099 $ 14,054,886 Government/Military 588,482 1,257,292 Marine 60,642 87,010 Other (backup DC power to various industries ) 776,428 349,657 Total net sales $ 23,922,651 $ 15,748,845 |
Schedule of components of inventory | September 30, 2019 (Unaudited) December 31, 2018 Raw materials $ 9,654,350 $ 6,060,448 Finished goods 4,818,545 2,741,321 14,472,895 8,801,769 Less: Inventory reserve (330,000 ) (330,000 ) Total Inventories, net $ 14,802,895 $ 8,471,769 |
Schedule of reconciliation of the product warranty liability | Changes in estimates for warranties September 30, 2019 (Unaudited) December 31, 2018 Balance at beginning of the period $ 175,000 $ 175,000 Payments (381,301 ) (364,163 ) Provision for warranties 381,301 364,163 Balance at end of the period $ 175,000 $ 175,000 |
Schedule of potentially dilutive shares were excluded from the shares used to calculate diluted earnings per share as their inclusion would be anti-dilutive | September 30, 2019 (Unaudited) September 30, 2018 Options 360,000 360,000 Warrants 115,000 115,000 Total 475,000 475,000 |
Property and Equipment (Tables)
Property and Equipment (Tables) | 9 Months Ended |
Sep. 30, 2019 | |
Property, Plant and Equipment [Abstract] | |
Schedule of property and equipment | September 30, 2019 (Unaudited) December 31, 2018 Production tooling, jigs, fixtures $ 70,749 $ 70,749 Shop equipment and machinery 3,237,191 2,808,928 Vehicles 188,597 188,597 Leasehold improvements 390,004 276,901 Office equipment 172,192 134,995 Software 102,690 102,690 Total property and equipment, cost 4,161,423 3,582,860 Less: accumulated depreciation and amortization (1,919,213 ) (1,460,103 ) Property and equipment, net $ 2,242,210 $ 2,122,757 |
Notes Payable (Tables)
Notes Payable (Tables) | 9 Months Ended |
Sep. 30, 2019 | |
Payables and Accruals [Abstract] | |
Schedule of notes payable | September 30, 2019 December 31, (Unaudited) 2018 Total Equipment Notes Payable $ 1,188,473 $ 1,207,927 Less Current Portion 329,490 283,388 Notes Payable, long term $ 858,983 $ 924,539 |
Stock Options (Tables)
Stock Options (Tables) | 9 Months Ended |
Sep. 30, 2019 | |
Stock Options [Abstract] | |
Schedule of stock options | Number of Weighted Average Options Price Outstanding, December 31, 2018 360,000 $ 5.28 Granted — — Exercised — — Outstanding, September 30, 2019 (unaudited) 360,000 $ 5.28 Exercisable, September 30, 2019 (unaudited) 140,000 $ 5.28 |
Warrants (Tables)
Warrants (Tables) | 9 Months Ended |
Sep. 30, 2019 | |
Warrants [Abstract] | |
Schedule of warrant shares outstanding | Number of Warrants Weighted Average Exercise Price Outstanding September 30, 2018 115,000 $ 8.75 Issued — — Exercised — — Outstanding, September 30, 2019 (unaudited) 115,000 $ 8.75 Exercisable, September 30, 2019 (unaudited) 115,000 $ 8.75 |
Lease Obligations (Tables)
Lease Obligations (Tables) | 9 Months Ended |
Sep. 30, 2019 | |
Commitments and Contingencies Disclosure [Abstract] | |
Schedule of rent expense and supplemental cash flow information related to leases | Nine Months Ended September 30, Lease Cost Operating lease cost (of which $446,674 is included in general and administration and $77,927 is included in cost of sales in the Company's unaudited condensed statement of operations) $ 524,601 Other Information Cash paid for amounts included in the measurement of lease liabilities for the first quarter 2019 $ — Weighted average remaining lease term – operating leases (in years) 3.7 Average discount rate – operating leases 3.75 % |
Schedule of Suplemental balance sheet information related to leases | At September 30, Operating leases Long-term right-of-use assets $ 2,339,353 Short-term operating lease liabilities $ 589,696 Long-term operating lease liabilities 1,818,927 Total operating lease liabilities $ 2,408,623 |
Schedule of maturities of lease liabilities | Year Ending Operating Leases 2019 (remaining 3 months) $ 153,765 2020 692,977 2021 720,922 2022 746,752 2023 272,057 Total lease payments 2,586,473 Less: Imputed interest/present value discount (177,849 ) Present value of lease liabilities $ 2,408,624 |
Organization and Summary of S_4
Organization and Summary of Significant Accounting Policies (Details) - USD ($) | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2019 | Sep. 30, 2018 | Sep. 30, 2019 | Sep. 30, 2018 | |
Total net sales | $ 6,939,318 | $ 5,061,158 | $ 23,922,651 | $ 15,748,845 |
DC power systems [Member] | ||||
Total net sales | 6,713,525 | 4,958,670 | 23,146,223 | 15,288,835 |
Engineering & Tech Support Services [Member] | ||||
Total net sales | 63,011 | 39,445 | 232,998 | 69,667 |
Accessories [Member] | ||||
Total net sales | 162,782 | 63,043 | 543,430 | 390,343 |
Telecom [Member] | ||||
Total net sales | 6,753,226 | 4,246,099 | 22,497,099 | 14,054,886 |
Government/Military [Member] | ||||
Total net sales | 39,822 | 659,912 | 588,482 | 1,257,292 |
Marine [Member] | ||||
Total net sales | 32,016 | 60,642 | 87,010 | |
Other (backup DC power to various industries) [Member] | ||||
Total net sales | $ 146,270 | $ 123,131 | $ 776,428 | $ 349,657 |
Organization and Summary of S_5
Organization and Summary of Significant Accounting Policies (Details 1) - USD ($) | Sep. 30, 2019 | Dec. 31, 2018 |
Organization, Consolidation and Presentation of Financial Statements [Abstract] | ||
Raw materials | $ 9,654,350 | $ 6,060,448 |
Finished goods | 4,818,545 | 2,741,321 |
Total Inventories, gross | 14,472,895 | 8,801,769 |
Less: Inventory reserve | (330,000) | (330,000) |
Total Inventories, net | $ 14,142,895 | $ 8,471,769 |
Organization and Summary of S_6
Organization and Summary of Significant Accounting Policies (Details 2) - USD ($) | 9 Months Ended | 12 Months Ended |
Sep. 30, 2019 | Dec. 31, 2018 | |
Reconciliation of the product warranty liability | ||
Balance at beginning of the period | $ 175,000 | $ 175,000 |
Payments | (381,301) | (364,163) |
Provision for warranties | 381,301 | 364,163 |
Balance at end of the period | $ 175,000 | $ 175,000 |
Organization and Summary of S_7
Organization and Summary of Significant Accounting Policies (Details 3) - shares | 9 Months Ended | |
Sep. 30, 2019 | Sep. 30, 2018 | |
Organization, Consolidation and Presentation of Financial Statements [Abstract] | ||
Options | 360,000 | 360,000 |
Warrants | 115,000 | 115,000 |
Total | 475,000 | 475,000 |
Organization and Summary of S_8
Organization and Summary of Significant Accounting Policies (Details Textual) - USD ($) | 3 Months Ended | 9 Months Ended | 12 Months Ended | ||||
Sep. 30, 2019 | Sep. 30, 2018 | Sep. 30, 2019 | Sep. 30, 2018 | Dec. 31, 2018 | Jan. 02, 2019 | Dec. 31, 2017 | |
Organization and Summary of Significant Accounting Policies (Textual) | |||||||
Inventory reserves | $ 330,000 | $ 330,000 | $ 330,000 | ||||
Operating lease right-of-use assets | 2,339,353 | 2,339,353 | |||||
Operating lease liabilities | 2,408,623 | 2,408,623 | |||||
Warranty reserve | 175,000 | 175,000 | 175,000 | $ 175,000 | |||
Accounting Standards Update 2016-02 [Member] | |||||||
Organization and Summary of Significant Accounting Policies (Textual) | |||||||
Operating lease right-of-use assets | $ 2,847,495 | ||||||
Operating lease liabilities | $ 2,847,495 | ||||||
Australian Dollars [Member] | |||||||
Organization and Summary of Significant Accounting Policies (Textual) | |||||||
Cash | 15,257 | 15,257 | 152,254 | ||||
Romanian Leu [Member] | |||||||
Organization and Summary of Significant Accounting Policies (Textual) | |||||||
Cash | $ 5,120 | $ 5,120 | $ 9,368 | ||||
Vendor One [Member] | Accounts Payable [Member] | |||||||
Organization and Summary of Significant Accounting Policies (Textual) | |||||||
Concentration risk | 35.00% | 71.00% | |||||
Vendor Two [Member] | Accounts Payable [Member] | |||||||
Organization and Summary of Significant Accounting Policies (Textual) | |||||||
Concentration risk | 10.00% | 3.00% | |||||
Vendor Three [Member] | Accounts Payable [Member] | |||||||
Organization and Summary of Significant Accounting Policies (Textual) | |||||||
Concentration risk | 7.00% | 3.00% | |||||
Accounts Receivable [Member] | Customer One [Member] | |||||||
Organization and Summary of Significant Accounting Policies (Textual) | |||||||
Concentration risk | 78.00% | 45.00% | |||||
Accounts Receivable [Member] | Customer Two [Member] | |||||||
Organization and Summary of Significant Accounting Policies (Textual) | |||||||
Concentration risk | 6.00% | 42.00% | |||||
Purchases [Member] | Yanmar [Member] | |||||||
Organization and Summary of Significant Accounting Policies (Textual) | |||||||
Concentration risk | 53.00% | 48.00% | 44.00% | 76.00% | |||
Revenues [Member] | Customer One [Member] | Tier-1 telecommunications wireless carriers [Member] | |||||||
Organization and Summary of Significant Accounting Policies (Textual) | |||||||
Concentration risk | 84.00% | 39.00% | 68.00% | 61.00% | |||
Revenues [Member] | Customer One [Member] | Sales to Telecommunications Customers [Member] | |||||||
Organization and Summary of Significant Accounting Policies (Textual) | |||||||
Concentration risk | 97.00% | 84.00% | 97.00% | 89.00% | |||
Revenues [Member] | Customer Two [Member] | Tier-1 telecommunications wireless carriers [Member] | |||||||
Organization and Summary of Significant Accounting Policies (Textual) | |||||||
Concentration risk | 7.50% | 37.00% | 19.00% | 13.00% | |||
Revenues [Member] | Customer Three [Member] | Tier-1 telecommunications wireless carriers [Member] | |||||||
Organization and Summary of Significant Accounting Policies (Textual) | |||||||
Concentration risk | 12.00% | ||||||
Minimum [Member] | |||||||
Organization and Summary of Significant Accounting Policies (Textual) | |||||||
Warranty term | 1 year | ||||||
Maximum [Member] | |||||||
Organization and Summary of Significant Accounting Policies (Textual) | |||||||
Warranty term | 5 years |
Restricted Cash (Details)
Restricted Cash (Details) - USD ($) | Sep. 30, 2019 | Dec. 31, 2018 |
Restricted Cash (Textual) | ||
Restricted cash | $ 1,002,683 |
Property and Equipment (Details
Property and Equipment (Details) - USD ($) | Sep. 30, 2019 | Dec. 31, 2018 |
Total property and equipment, cost | $ 4,161,423 | $ 3,582,860 |
Less: accumulated depreciation and amortization | (1,919,213) | (1,460,103) |
Property and equipment, net | 2,242,210 | 2,122,757 |
Production Tooling, Jigs, Fixtures [Member] | ||
Total property and equipment, cost | 70,749 | 70,749 |
Shop Equipment And Machinery [Member] | ||
Total property and equipment, cost | 3,237,191 | 2,808,928 |
Vehicles [Member] | ||
Total property and equipment, cost | 188,597 | 188,597 |
Leasehold Improvements [Member] | ||
Total property and equipment, cost | 390,004 | 276,901 |
Office Equipment [Member] | ||
Total property and equipment, cost | 172,192 | 134,995 |
Software [Member] | ||
Total property and equipment, cost | $ 102,690 | $ 102,690 |
Property and Equipment (Detai_2
Property and Equipment (Details Textual) - USD ($) | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2019 | Sep. 30, 2018 | Sep. 30, 2019 | Sep. 30, 2018 | |
Property and Equipment (Textual) | ||||
Depreciation and amortization expense | $ 163,889 | $ 114,779 | $ 459,110 | $ 269,726 |
Cost of Sales [Member] | ||||
Property and Equipment (Textual) | ||||
Depreciation expense | $ 152,757 | $ 105,882 | $ 428,290 | $ 243,285 |
Notes Payable (Details)
Notes Payable (Details) - USD ($) | Sep. 30, 2019 | Dec. 31, 2018 |
Payables and Accruals [Abstract] | ||
Total Equipment Notes Payable | $ 1,188,473 | $ 1,207,927 |
Less Current Portion | 329,490 | 283,388 |
Notes Payable, long term | $ 858,983 | $ 924,539 |
Notes Payable (Details Textual)
Notes Payable (Details Textual) - Equipment [Member] - Several Financing Agreements [Member] | 9 Months Ended |
Sep. 30, 2019USD ($) | |
Notes Payable (Textual) | |
Description of collateral | Secured by the purchased equipment. |
Monthly payments of principal and interest | $ 29,000 |
Frequency of payment | Monthly |
Due date | Dec. 31, 2023 |
Maximum [Member] | |
Notes Payable (Textual) | |
Debt term | 5 years |
Interest rate | 6.90% |
Minimum [Member] | |
Notes Payable (Textual) | |
Debt term | 2 years |
Interest rate | 1.90% |
Financing Agreements (Details)
Financing Agreements (Details) - Citibank, N.A. [Member] - Revolving Credit Facility [Member] - Credit Agreement [Member] - USD ($) | Mar. 21, 2017 | Sep. 30, 2019 | Sep. 30, 2019 |
Financing Agreements (Textual) | |||
Credit Facility agreegate amount | $ 1,000,000 | ||
Credit facility, description | Certificate of Deposit (restricted cash) account opened by the Company with Citibank in the amount of $1,000,000. | ||
Accounts receivables sold to Citibank | $ 4,113,621 | $ 9,367,112 | |
Incurred fees | $ 20,000 | $ 42,000 |
Stock Options (Details)
Stock Options (Details) - Polar Power 2016 Omnibus Incentive Plan [Member] | 9 Months Ended |
Sep. 30, 2019$ / sharesshares | |
Number of Options | |
Beginning balance | shares | 360,000 |
Granted | shares | |
Exercised | shares | |
End balance | shares | 360,000 |
Exercisable | shares | 140,000 |
Weighted Average Exercise Price | |
Beginning balance | $ / shares | $ 5.28 |
Granted | $ / shares | |
Exercised | $ / shares | |
End balance | $ / shares | 5.28 |
Exercisable | $ / shares | $ 5.28 |
Stock Options (Details Textual)
Stock Options (Details Textual) - USD ($) | 9 Months Ended | |
Sep. 30, 2019 | Jul. 08, 2016 | |
Stock Options (Textual) | ||
Total stock-based compensation | $ 236,832 | |
Unamortized compensation cost | $ 474,000 | |
Unamortized compensation cost period | 2 years | |
Polar Power 2016 Omnibus Incentive Plan [Member] | ||
Stock Options (Textual) | ||
Number of shares authorized | 1,754,385 | |
Maximum number of shares available for issuance | 350,877 |
Warrants (Details)
Warrants (Details) | 9 Months Ended |
Sep. 30, 2019$ / sharesshares | |
Warrants [Abstract] | |
Outstanding at beginning | shares | 115,000 |
Issued | shares | |
Exercised | shares | |
Outstanding at end | shares | 115,000 |
Exercisable at end | shares | 115,000 |
Outstanding at beginning | $ / shares | $ 8.75 |
Issued | $ / shares | |
Exercised | $ / shares | |
Outstanding at end | $ / shares | 8.75 |
Exercisable at end | $ / shares | $ 8.75 |
Warrants (Details Textual)
Warrants (Details Textual) - Initial public offering in December 2016 [Member] | 9 Months Ended |
Sep. 30, 2019$ / sharesshares | |
Warrants (Textual) | |
Warrants to underwriters to purchase shares of common stock | shares | 115,000 |
Warrants to underwriters to purchase shares of common stock with exercise price | $ / shares | $ 8.75 |
Warrants expiry term | 5 years |
Distribution Agreement With a_2
Distribution Agreement With a Related Entity (Details) - Smartgen Solutions, Inc. ("Smartgen") [Member] - Subcontractor Installer Agreement [Member] - USD ($) | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2019 | Sep. 30, 2018 | Sep. 30, 2019 | Sep. 30, 2018 | |
Distribution Agreement With a Related Entity (Textual) | ||||
Amount of performed filed services | $ 54,270 | $ 26,550 | $ 227,030 | $ 71,820 |
Agreement term | 3 years |
Lease Obligations (Details)
Lease Obligations (Details) | 9 Months Ended |
Sep. 30, 2019USD ($) | |
Lease Cost | |
Operating lease cost (of which $446,674 is included in general and administration and $77,927 is included in cost of sales in the Company's unaudited condensed statement of operations) | $ 524,601 |
Other Information | |
Cash paid for amounts included in the measurement of lease liabilities | |
Weighted average remaining lease term - operating leases (in years) | 3 years 8 months 12 days |
Average discount rate - operating leases | 3.75% |
Lease Obligations (Details 1)
Lease Obligations (Details 1) - USD ($) | Sep. 30, 2019 | Dec. 31, 2018 |
Operating leases | ||
Operating lease right-of-use assets, net | $ 2,339,353 | |
Short-term operating lease liabilities | 589,696 | |
Operating lease liabilities, net of current portion | 1,818,927 | |
Total operating lease liabilities | $ 2,408,623 |
Lease Obligations (Details 2)
Lease Obligations (Details 2) - USD ($) | Sep. 30, 2019 | Dec. 31, 2018 |
Commitments and Contingencies Disclosure [Abstract] | ||
2019 (remaining 3 months) | $ 153,765 | |
2020 | 692,977 | |
2021 | 720,922 | |
2022 | 746,752 | |
2023 | 272,057 | |
Total lease payments | 2,586,473 | |
Less: Imputed interest/present value discount | (177,849) | |
Present value of lease liabilities | $ 2,408,623 |
Lease Obligations (Details Text
Lease Obligations (Details Textual) - USD ($) | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2019 | Sep. 30, 2018 | Sep. 30, 2019 | Sep. 30, 2018 | |
Lease Obligations (Textual) | ||||
Rent expense | $ 203,395 | $ 158,734 | $ 601,772 | $ 414,317 |
Description of operating lease agreements | The Company has operating lease agreements for two office spaces both with remaining lease terms of 4 years. The Company also has another storage facility on a twelve-month lease term. Leases with an initial term of 12 months or less are not recorded on the balance sheet. | |||
Operating lease cost | $ 524,601 | |||
General and administration [Member] | ||||
Lease Obligations (Textual) | ||||
Operating lease cost | 446,674 | |||
Cost of sales [Member] | ||||
Lease Obligations (Textual) | ||||
Operating lease cost | $ 77,927 |