Cover
Cover - USD ($) | 12 Months Ended | ||
Dec. 31, 2022 | Mar. 31, 2023 | Jun. 30, 2022 | |
Cover [Abstract] | |||
Document Type | 10-K | ||
Amendment Flag | false | ||
Document Annual Report | true | ||
Document Transition Report | false | ||
Document Period End Date | Dec. 31, 2022 | ||
Document Fiscal Period Focus | FY | ||
Document Fiscal Year Focus | 2022 | ||
Current Fiscal Year End Date | --12-31 | ||
Entity File Number | 001-37960 | ||
Entity Registrant Name | Polar Power, Inc. | ||
Entity Central Index Key | 0001622345 | ||
Entity Tax Identification Number | 33-0479020 | ||
Entity Incorporation, State or Country Code | DE | ||
Entity Address, Address Line One | 249 E. Gardena Blvd. | ||
Entity Address, City or Town | Gardena | ||
Entity Address, State or Province | CA | ||
Entity Address, Postal Zip Code | 90248 | ||
City Area Code | (310) | ||
Local Phone Number | 830-9153 | ||
Title of 12(b) Security | Common Stock, $0.0001 par value | ||
Trading Symbol | POLA | ||
Security Exchange Name | NASDAQ | ||
Entity Well-known Seasoned Issuer | No | ||
Entity Voluntary Filers | No | ||
Entity Current Reporting Status | Yes | ||
Entity Interactive Data Current | Yes | ||
Entity Filer Category | Non-accelerated Filer | ||
Entity Small Business | true | ||
Entity Emerging Growth Company | false | ||
Entity Shell Company | false | ||
Entity Public Float | $ 19,125,724 | ||
Entity Common Stock, Shares Outstanding | 12,949,550 | ||
ICFR Auditor Attestation Flag | false | ||
Auditor Firm ID | 572 | ||
Auditor Name | Weinberg & Company, P.A | ||
Auditor Location | Los Angeles, California |
Balance Sheets
Balance Sheets - USD ($) $ in Thousands | Dec. 31, 2022 | Dec. 31, 2021 |
Current assets | ||
Cash and cash equivalents | $ 211 | $ 5,101 |
Accounts receivable | 2,230 | 4,243 |
Employee retention credit receivable | 2,000 | 2,000 |
Inventories, net | 15,460 | 9,017 |
Prepaid expenses | 2,629 | 4,006 |
Income taxes receivable | 787 | 787 |
Total current assets | 23,317 | 25,154 |
Other assets: | ||
Operating lease right-of-use assets, net | 240 | 914 |
Property and equipment, net | 538 | 1,019 |
Deposits | 93 | 93 |
Total assets | 24,188 | 27,180 |
Current liabilities | ||
Accounts payable | 230 | 328 |
Customer deposits | 2,126 | 897 |
Accrued liabilities and other current liabilities | 1,231 | 1,206 |
Current portion of operating lease liabilities | 268 | 721 |
Current portion of notes payable | 211 | 242 |
Line of credit | 1,884 | |
Total current liabilities | 5,950 | 3,394 |
Notes payable, net of current portion | 57 | 268 |
Operating lease liabilities, net of current portion | 268 | |
Total liabilities | 6,007 | 3,930 |
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, 12,967,027 shares issued and 12,949,550 shares outstanding on December 31, 2022, and 12,805,680 shares issued and 12,788,203 shares outstanding on December 31, 2021 | 1 | 1 |
Additional paid-in capital | 37,331 | 36,816 |
Accumulated deficit | (19,111) | (13,527) |
Treasury Stock, at cost (17,477 shares) | (40) | (40) |
Total stockholders’ equity | 18,181 | 23,250 |
Total liabilities and stockholders’ equity | $ 24,188 | $ 27,180 |
Balance Sheets (Parenthetical)
Balance Sheets (Parenthetical) - $ / shares | Dec. 31, 2022 | Dec. 31, 2021 |
Statement of Financial Position [Abstract] | ||
Preferred stock, par value | $ 0.0001 | $ 0.0001 |
Preferred stock, shares authorized | 5,000,000 | 5,000,000 |
Preferred stock, shares issued | 0 | 0 |
Preferred stock, shares outstanding | 0 | 0 |
Common stock, par value | $ 0.0001 | $ 0.0001 |
Common stock, shares authorized | 50,000,000 | 50,000,000 |
Common stock, shares issued | 12,967,027 | 12,805,680 |
Common stock, shares outstanding | 12,949,550 | 12,788,203 |
Treasury stock, shares | 17,477 | 17,477 |
Statements of Operations
Statements of Operations - USD ($) $ in Thousands | 12 Months Ended | |
Dec. 31, 2022 | Dec. 31, 2021 | |
Income Statement [Abstract] | ||
Net sales | $ 16,056 | $ 16,896 |
Cost of Sales | 13,931 | 13,451 |
Gross profit | 2,125 | 3,445 |
Operating Expenses | ||
Sales and marketing | 1,471 | 1,488 |
Research and development | 1,460 | 1,986 |
General and administrative | 4,727 | 3,069 |
Total operating expenses | 7,658 | 6,543 |
Loss from operations | (5,533) | (3,098) |
Other income (expenses) | ||
Interest expense and finance costs | (58) | (60) |
Gain on forgiveness of PPP loan payable | 1,715 | |
Other income (expenses), net | 7 | 29 |
Total other income (expenses), net | (51) | 1,684 |
Net Loss | $ (5,584) | $ (1,414) |
Net loss per share, basic and diluted | $ (0.43) | $ (0.11) |
Weighted average shares outstanding, basic and diluted | 12,878,350 | 12,720,499 |
Statements of Stockholders' Equ
Statements of Stockholders' Equity - USD ($) $ in Thousands | Common Stock [Member] | Additional Paid-in Capital [Member] | Retained Earnings [Member] | Treasury Stock [Member] | Total |
Balance at Dec. 31, 2020 | $ 1 | $ 23,643 | $ (12,113) | $ (40) | $ 11,491 |
Balance, shares at Dec. 31, 2020 | 11,768,158 | ||||
Shares of common stock issued with warrants for cash | 12,466 | 12,466 | |||
Shares of common stock issued with warrants for cash, shares | 750,000 | ||||
Common stock issued upon exercise of warrants | 707 | 707 | |||
Common stock issued upon exercise of warrants, shares | 287,522 | ||||
Net loss | (1,414) | (1,414) | |||
Balance at Dec. 31, 2021 | $ 1 | 36,816 | (13,527) | (40) | 23,250 |
Balance, shares at Dec. 31, 2021 | 12,805,680 | ||||
Net loss | (5,584) | (5,584) | |||
Stock-based compensation | 515 | 515 | |||
Stock-based compensation, shares | 161,347 | ||||
Balance at Dec. 31, 2022 | $ 1 | $ 37,331 | $ (19,111) | $ (40) | $ 18,181 |
Balance, shares at Dec. 31, 2022 | 12,967,027 |
Statements of Cash Flow
Statements of Cash Flow - USD ($) $ in Thousands | 12 Months Ended | |
Dec. 31, 2022 | Dec. 31, 2021 | |
Cash flows from operating activities: | ||
Net loss | $ (5,584) | $ (1,414) |
Adjustments to reconcile net loss to net cash used in operating activities: | ||
Depreciation and amortization | 507 | 549 |
Stock-based compensation | 515 | |
Gain from forgiveness of PPP loan payable | (1,715) | |
Changes in operating assets and liabilities | ||
Accounts receivable | 2,013 | (3,052) |
Employee retention credit receivable | (2,000) | |
Inventories | (6,443) | 77 |
Prepaid expenses | 1,377 | (3,648) |
Income taxes receivable | 1,570 | |
Decrease in operating lease right-of-use asset | 674 | 649 |
Accounts payable | (98) | 16 |
Customer deposits | 1,229 | 194 |
Accrued expenses and other current liabilities | 25 | 65 |
Decrease in lease liability | (722) | (671) |
Net cash used in operating activities | (6,507) | (9,380) |
Cash flows from investing activities: | ||
Acquisition of property and equipment | (25) | (71) |
Net cash used in investing activities | (25) | (71) |
Cash flows from financing activities: | ||
Proceeds from sale of common stock, net of offering costs | 12,466 | |
Proceeds from exercise of warrants | 707 | |
Repayment of notes payable | (242) | (267) |
Proceeds from advances from credit facility | 1,884 | |
Net cash provided by financing activities | 1,642 | 12,906 |
Increase (decrease) in cash and cash equivalents | (4,890) | 3,455 |
Cash and cash equivalents, beginning of period | 5,101 | 1,646 |
Cash and cash equivalents, end of period | $ 211 | $ 5,101 |
ORGANIZATION AND SUMMARY OF SIG
ORGANIZATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES | 12 Months Ended |
Dec. 31, 2022 | |
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, electric vehicle (EV) charging, and nano-grid applications. The Company’s products integrate DC generator, proprietary electronic control systems, lithium batteries and solar photovoltaic (PV) technologies to provide low operating cost and emissions for telecommunications, defense, automotive, nano-grid, EV charging and industrial markets. Liquidity The accompanying financial statements have been prepared under the assumption that the Company will continue as a going concern. For the year ended December 31, 2022, the Company recorded a net loss of $ 5,584 and used cash in operations of $ 6,507 . The Company’s management evaluated whether there are conditions or events considered in the aggregate, that raise substantial doubt about the Company’s ability to continue as a going concern within one year after the date the financial statements are issued. Notwithstanding the net loss for 2022, management concluded that the Company will have adequate cash flow from operations and available line of credit in 2023 so that it is probable that the Company will be able to fund its current operating plan and satisfy its liquidity requirements within one year from the date the Company’s 2022 financial statements are issued. As of December 31, 2022, the Company had a cash balance of $ 211 1,137 18,181 17,367 COVID-19 The global outbreak of the novel coronavirus (Covid-19) in early 2020 led to disruptions in general economic activities throughout the world as businesses and governments implemented broad actions to mitigate this public health crisis. The Company’s financial results for the twelve months ended December 31, 2022 have been affected by COVID-19 including, among others, a decrease in the Company’s sales and delays in sourcing of raw materials from suppliers. The Company’s business is directly dependent upon, and correlates closely with, the marketing levels and ongoing business activities of its existing customers and suppliers. The extent to which COVID-19 may impact the Company’s business activities and capital raising efforts will depend on future developments, which are uncertain and cannot be predicted. Inflation The impact of inflation and changing prices during 2022 has not been significant on the financial condition or results of operations of our company. Rapid changes in the global economy may cause significant spikes in inflation which may have an impact in our financial condition during 2023 and beyond. Because some of our contracts are at a fixed price, we face the risk that cost overruns or inflation may exceed, erode or eliminate our expected profit margin, or cause us to record a loss on certain projects. We are taking actions to manage the potential impacts of these matters and we will continue to assess the actual and expected impacts and the need for further action. 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 net realizable value, impairment analysis of long-term assets, valuation allowance on deferred tax assets, accruals for potential liabilities and warrant reserves, assumptions made in valuing equity instruments issued for services, and assumptions used in the determination of the Company’s liquidity. Actual results may differ from those estimates. Revenue Recognition The Company recognizes revenue in accordance with Accounting Standards Codification (“ASC”) 606, Revenue from Contracts with Customers (“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 the Company’s 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. Substantially all of the Company’s revenue is derived from product sales. Product revenue is recognized when performance obligations under the terms of a contract are satisfied, which occurs for the Company upon shipment or delivery of products or services to its customers based on written sales terms, which is also when control is transferred. Revenue is measured as the amount of consideration the Company expects to receive in exchange for transferring the products or services to a customer. The Company determines 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 the Company places the product with the customer’s carrier or delivers the product to a customer’s location. The Company regularly reviews its customers’ financial positions to ensure that collectability is reasonably assured. The Company also recognizes revenues from engineering services, technical support, and sale of accessories that support the Company’s direct current, or DC, power systems. Revenue is recognized when transfer of control to the customer has been made and the Company’s performance obligation has been fulfilled. The Company’s revenue from engineering services, technical support services, and product accessories are clearly defined in each transaction with its customers and have not been significant to date. The Company also recognizes revenues from the rental of equipment. The Company’s rental revenues have not been significant to date and have accounted for less than one percent of total revenues for the years ended December 31, 2022 and 2021. The Company’s rental contracts are fixed price contracts for fixed durations of time and include freight and delivery charges and are recognized on a straight-line basis over the rental period. Disaggregation of Net Sales The following table shows the Company’s disaggregated net sales by product type (in thousands): SCHEDULE OF DISAGGREGATED NET SALES 2022 2021 Years Ended December 31, 2022 2021 DC power systems $ 15,219 $ 16,291 Engineering & Tech Support Services 589 390 Accessories 248 215 Total net sales $ 16,056 $ 16,896 The following table shows the Company’s disaggregated net sales by customer type (in thousands): 2022 2021 Years Ended December 31, 2022 2021 Telecom $ 15,357 $ 14,953 Government/Military 38 995 Marine 205 76 Other (backup DC power to various industries ) 456 872 Total net sales $ 16,056 $ 16,896 The following tables shows the Company’s net sales by the respective geographical regions of our customers (in thousands): SCHEDULE OF NET SALES BY GEOGRAPHICAL REGIONS 2022 2021 Years Ended December 31, 2022 2021 United States $ 12,073 $ 15,617 Canada 87 86 Mexico — 4 South Pacific Islands 3,678 — Japan 16 565 Other Asia Pacific 74 533 Europe and Middle East 128 91 Total net sales $ 16,056 $ 16,896 For the years ended December 31, 2022 and 2021, international sales totaled $ 3,983 1,279 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 Company’s standard warranty on new products is two years from the date of delivery to the customer. The Company offers a limited extended warranty of up to five years on its certified DC power systems based on application and usage. The Company’s warranties are of an assurance-type and come standard with all Company products to cover repair or replacement should the 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, which are included in accrued liabilities and other current liabilities in the accompanying balance sheets. As of December 31, 2022 and 2021, the Company had accrued a liability for warranty reserve of $ 600 600 The following is a tabular reconciliation of the product warranty liability, excluding the deferred revenue related to the Company’s warranty coverage (in thousands): SCHEDULE OF RECONCILIATION OF THE PRODUCT WARRANT LIABILITY 2022 2021 Years End December 31, 2022 2021 Changes in estimates for warranties Balance at beginning of the period $ 600 $ 600 Payments (508 ) (658 ) Provision for warranties 508 658 Balance at end of the period $ 600 $ 600 Shipping Costs Amounts billed to a customer in a sales transaction related to shipping and handling are reported as revenue. Costs incurred by the Company for shipping and handling are considered fulfillment costs and reported as cost of sales. Cash and cash equivalents The Company considers all highly liquid investments with an original maturity of 90 days or less when purchased to be cash equivalents. Cash primarily consists of bank demand deposits maintained by a major financial institution. The Company’s policy is to maintain its cash balances with financial institutions with high credit ratings and in accounts insured by the Federal Deposit Insurance Corporation (the “FDIC”). The Company may periodically have cash balances in financial institutions in excess of the FDIC insurance limit of $250,000 per account per institution. The Company has not experienced any losses to date resulting from this policy. At December 31, 2022 and 2021, cash denominated in Australian Dollar with a U.S. Dollar equivalent of $ 8 9 23 23 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 December 31, 2022 and 2021. Inventories Inventories are stated at the lower of cost or net realizable value, with cost determined on a first-in, first-out (“FIFO”) basis. The Company records adjustments to its inventory based on an estimated forecast of the inventory demand, taking into consideration, among others, inventory turnover, inventory quantities on hand, unfilled customer order quantities, forecasted demand, current prices, competitive pricing, and trends and performance of similar products. If the estimated net realizable value is determined to be less than the recorded cost of the inventory, the difference is recognized as a loss in the period in which it occurs. Once inventory has been written down, it creates a new cost basis for inventory that may not be subsequently written up. For the year ended December 31, 2022, there were no write-downs of inventory. As of December 31, 2022 and 2021, inventories consisted of the following (in thousands): SCHEDULE OF INVENTORIES NET 2022 2021 Years Ended December 31, 2022 2021 Raw materials $ 12,277 $ 6,607 Finished goods 3,183 2,410 Inventories $ 15,460 $ 9,017 Property and Equipment Property and equipment are recorded at cost less accumulated depreciation and amortization. Additions, improvements, and major renewals or replacements that substantially extend the useful life of an asset are capitalized. Repairs and maintenance expenditures are expensed as incurred. Depreciation and amortization of property and equipment is computed using the straight-line method over the estimated useful life. Estimated useful lives of the principal classes of assets are as follows: SCHEDULE OF ESTIMATED USEFUL LIFE OF PROPERTY PLANT AND EQUIPMENT Estimated life Production tooling, jigs, fixtures 3 5 years Shop equipment and machinery 5 years Vehicles 3 5 years Leasehold improvements Shorter of the lease term or estimated useful life Office equipment 5 years Software 5 years Management regularly reviews property, equipment and other long-lived assets for possible impairment. This review occurs annually or more frequently if events or changes in circumstances indicate the carrying amount of the asset may not be recoverable. Based upon management’s annual assessment, there were no indicators of impairment of the Company’s property and equipment and other long-lived assets as of December 31, 2022, or December 31, 2021. Leases The Company accounts for its leases in accordance with the guidance of ASC 842, Leases Stock-Based Compensation The Company periodically issues stock-based compensation to officers, directors, and consultants for services rendered. Such issuances vest and expire according to terms established at the issuance date. Stock-based payments to employees, directors, and for acquiring goods and services from nonemployees, which include grants of employee stock options, are recognized in the financial statements based on their grant date fair values in accordance with ASC 718, Compensation-Stock Compensation 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. 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. Research and Development Costs Research and development costs are expensed as incurred and consist primarily of salaries and other expenses relating to the design, development, and testing of the Company’s products. For the years ended December 31, 2022 and 2021, research and development expenditures totaled $ 1,460 1,986 Net Loss Per Share Basic net income (loss) per share is computed by dividing net income (loss) by the weighted average number of shares of common stock 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 shares of common stock outstanding plus the number of additional shares of common stock that would have been outstanding if all dilutive potential shares of common stock had been issued using the treasury stock method. Potential shares of common stock 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 shares of common stock 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: SCHEDULE OF DILUTED EARNINGS PER SHARE 2022 2021 December 31, 2022 2021 Options 140,000 140,000 Warrants 24,122 24,122 Total 164,122 164,122 Financial Assets and Liabilities Measured at Fair Value The Company uses various inputs in determining the fair value of its financial assets and liabilities. 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 (“FASB”) 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, accounts payable and accrued expenses, approximate their fair values because of the short maturity of these instruments. The carrying values of notes and loans 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 Revenues 66 23 67 96 89 25 8 Accounts receivable 90 74 15 Accounts payable 51 3 3 16 9 9 Recent Accounting Pronouncements In September 2016, the FASB issued ASU No. 2016-13, Credit Losses - Measurement of Credit Losses on Financial Instruments (“ASC 326”). The standard significantly changes how entities will measure credit losses for most financial assets, including accounts and notes receivables. The standard will replace today’s “incurred loss” approach with an “expected loss” model, under which companies will recognize allowances based on expected rather than incurred losses. Entities will apply the standard’s provisions as a cumulative-effect adjustment to retained earnings as of the beginning of the first reporting period in which the guidance is effective. The standard is effective for interim and annual reporting periods beginning after December 15, 2023. The adoption of ASU 2016-13 is not expected to have a material impact on the Company’s financial position, results of operations, and cash flows. In August 2021, the FASB issued ASU No. 2021-06 (“ASU 2021-06”) “Debt—Debt with Conversion and Other Options (Subtopic 470-20) and Derivatives and Hedging—Contracts in Entity’s Own Equity (Subtopic 815-40).” ASU 2021-06 reduces the number of accounting models for convertible debt instruments by eliminating the cash conversion and beneficial conversion models. As a result, a convertible debt instrument will be accounted for as a single liability measured at its amortized cost as long as no other features require bifurcation and recognition as derivatives. By removing those separation models, the effective interest rate of convertible debt instruments will be closer to the coupon interest rate. Further, the diluted net income per share calculation for convertible instruments will require the Company to use the if-converted method. For contracts in an entity’s own equity, the type of contracts primarily affected by this update are freestanding and embedded features that are accounted for as derivatives under the current guidance due to a failure to meet the settlement conditions of the derivative scope exception. This update simplifies the related settlement assessment by removing the requirements to (i) consider whether the contract would be settled in registered shares, (ii) consider whether collateral is required to be posted, and (iii) assess shareholder rights. ASU 2021-06 is effective January 1, 2024, for the Company and the provisions of this update can be adopted using either the modified retrospective method or a fully retrospective method. Early adoption is permitted, but no earlier than January 1, 2022, including interim periods within that year. Effective January 1, 2022, the Company early adopted ASU 2021-06 and that adoption did not have an impact on its financial statements and the related disclosures. The Company’s management does not believe that there are other 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. |
PROPERTY AND EQUIPMENT
PROPERTY AND EQUIPMENT | 12 Months Ended |
Dec. 31, 2022 | |
Property, Plant and Equipment [Abstract] | |
PROPERTY AND EQUIPMENT | NOTE 2 – PROPERTY AND EQUIPMENT Property and equipment consist of the following (in thousands): SCHEDULE OF PROPERTY AND EQUIPMENT December 31, 2022 December 31, 2021 Shop equipment and machinery $ 3,371 $ 3,350 Production tooling, jigs, fixtures 71 71 Vehicles 177 180 Leasehold improvements 390 390 Office equipment 185 181 Software 106 106 Total property and equipment, cost 4,300 4,278 Less: accumulated depreciation and amortization (3,762 ) (3,259 ) Property and equipment, net $ 538 $ 1,019 Depreciation and amortization expense on property and equipment for the years ended December 31, 2022 and 2021 was $ 507 549 489 530 |
NOTES PAYABLE
NOTES PAYABLE | 12 Months Ended |
Dec. 31, 2022 | |
Debt Disclosure [Abstract] | |
NOTES PAYABLE | NOTE 3 – NOTES PAYABLE Notes payable consist of the following (in thousands): SCHEDULE OF NOTES PAYABLE December 31, 2022 December 31, 2021 Total Notes Payable $ 268 $ 510 Less: Current Portion 211 242 Notes Payable, Noncurrent portion $ 57 $ 268 The Company has entered into several financing agreements for the purchase of equipment in prior years. The terms of these financing arrangements are for a term of 2 5 years 1.9 6.9 22 As of December 31, 2021, the balance of notes payable was $ 510 242 268 Annual future principal payments under the outstanding note agreements as of December 31, 2022 are as follows (in thousands): SCHEDULE OF ANNUAL FUTURE PRINCIPAL PAYMENTS Years ending December 31: 2023 $ 211 2024 57 Total $ 268 |
LINE OF CREDIT
LINE OF CREDIT | 12 Months Ended |
Dec. 31, 2022 | |
Debt Disclosure [Abstract] | |
LINE OF CREDIT | NOTE 4 – LINE OF CREDIT Effective September 30, 2020, the Company entered into a Loan and Security Agreement (the “Loan Agreement”) with Pinnacle Bank (“Pinnacle”). At December 31, 2022, the outstanding balance under the line of credit was $ 1,884 1,137 The Loan Agreement initially expired on September 30, 2022, and on November 3, 2022, the Loan Agreement was amended to expire on September 30, 2024 The Loan Agreement, as amended, provides for a revolving credit facility under which Pinnacle may make advances to the Company, subject to certain limitations and adjustments, of up to (a) 85% of the aggregate net face amount of the Company’s accounts receivable and other contract rights and receivables, plus (b) the lesser of (i) 35% of the lower of cost or wholesale market value of certain inventory of the Company or (ii) $2,500. 4,000 Interest accrues on the daily balance at a rate of 1.25 3.75 2.25 4.75 Pinnacle may terminate the Loan Agreement, as amended, at any time upon sixty days prior written notice and immediately upon the occurrence of an event of default. Under the Loan Agreement, the Company granted Pinnacle a security interest in all presently existing and thereafter acquired or arising assets of the Company. The Loan Agreement also contains a financial covenant requiring the Company to attain an effective tangible net worth, as defined, which the Company attained as of December 31, 2022. The Loan Agreement obligates the Company to pay Pinnacle a yearly facility fee in an amount equal to 1.125 |
PPP LOAN PAYABLE
PPP LOAN PAYABLE | 12 Months Ended |
Dec. 31, 2022 | |
Debt Disclosure [Abstract] | |
PPP LOAN PAYABLE | NOTE 5 – PPP LOAN PAYABLE On May 4, 2020, the Company entered into a loan (the “PPP Loan”) with Citibank, N.A. in an aggregate principal amount of $ 1,715 The PPP Loan matures two years from the disbursement date and bears interest at a rate of 1% The Company filed its application for a full loan forgiveness to Citibank in July 2021. On September 28, 2021, the Company received notice from Citibank indicating that the SBA approved the forgiveness of the PPP loan payable in the amount of $ 1,715 |
OPERATING LEASES
OPERATING LEASES | 12 Months Ended |
Dec. 31, 2022 | |
Operating Leases | |
OPERATING LEASES | NOTE 6 – OPERATING LEASES The Company has two operating lease agreements for its warehouse and office spaces both with remaining lease terms at December 31, 2022, under a year. 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. 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 right-of-use (“ROU”) assets and liabilities are recognized at the lease commencement date based on the present value of lease payments over the lease term. ROU assets represent the Company’s right to use an underlying asset for the lease term and lease liabilities represent the Company’s 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 collateralized borrowing 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: SCHEDULE OF RENT EXPENSE AND SUPPLEMENTAL CASH FLOW INFORMATION Years Ended December 31, 2022 2021 Lease Cost Operating lease cost $ 699 $ 699 Operating lease cost (of which $ 98 601 98 601 $ 699 $ 699 Other Information Weighted average remaining lease term – operating leases (in years) 0.4 1.4 Average discount rate – operating leases 3.75 % 3.75 % The supplemental balance sheet information related to leases for the period is as follows: SCHEDULE OF SUPPLEMENTAL BALANCE SHEET INFORMATION At December 31, 2022 At December 31, 2021 Operating leases (in thousands) Long-term right-of-use assets, net of accumulated amortization of $ 2,577 1,903 $ 240 $ 914 Current portion of operating lease liabilities $ 268 $ 721 Noncurrent portion of operating lease liabilities — 268 Total operating lease liabilities $ 268 $ 989 Maturities of the Company’s lease liabilities are as follows: SCHEDULE OF MATURITIES OF LEASE LIABILITIES Year Ending (in thousands) Operating Leases 2023 $ 280 Total lease payments 280 Less: Imputed interest/present value discount (12 ) Present value of lease liabilities $ 268 Rent expense for the twelve months ended December 31, 2022 and 2021 was $ 975 903 |
STOCKHOLDERS_ EQUITY
STOCKHOLDERS’ EQUITY | 12 Months Ended |
Dec. 31, 2022 | |
Equity [Abstract] | |
STOCKHOLDERS’ EQUITY | NOTE 7 – STOCKHOLDERS’ EQUITY Common Stock ● Issuance of common stock during 2022 for services In August 2022, the Company issued an aggregate of 161,347 515 515 ● Underwritten Public Offering of Common Stock On February 10, 2021, and the Company issued and sold 750,000 12,466 ● Issuance of common stock upon exercise of warrants During the year ended December 31, 2021, warrants to purchase an aggregate of 225,878 707 120,000 61,644 Preferred Stock The Company’s board of directors is authorized to issue up to 5,000,000 Treasury Stock At December 31, 2022 and 2021, the Company had 17,477 40 |
STOCK OPTIONS
STOCK OPTIONS | 12 Months Ended |
Dec. 31, 2022 | |
Share-Based Payment Arrangement [Abstract] | |
STOCK OPTIONS | NOTE 8 – STOCK OPTIONS The following table summarizes stock option activity: SCHEDULE OF STOCK OPTION ACTIVITY Number of Options Weighted Average Exercise Price Outstanding, December 31, 2020 140,000 $ 5.22 Granted — — Exercised — — Cancelled — — Outstanding, December 31, 2021 140,000 $ 5.22 Granted — — Exercised — — Outstanding and exercisable, December 31, 2022 140,000 $ 5.22 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 1,754,385 350,877 At December 31, 2022 and 2021, the Company had total outstanding options of 140,000 4.84 5.09 30,000 110,000 There was no |
STOCK WARRANTS
STOCK WARRANTS | 12 Months Ended |
Dec. 31, 2022 | |
Stock Warrants | |
STOCK WARRANTS | NOTE 9 – STOCK WARRANTS The following table summarizes warrant activity: SCHEDULE OF WARRANTS OUTSTANDING Number of Warrants Weighted Average Exercise Price Outstanding, December 31, 2020 370,000 $ 8.75 Issued — — Exercised (345,878 ) 4.07 Outstanding, December 31, 2021 24,122 $ 3.13 Issued — — Exercised — — Outstanding, December 31, 2022 24,122 $ 3.13 Exercisable, December 31, 2022 24,122 $ 3.13 During year ended December 31, 2021, warrants to purchase 225,878 3.13 707 120,000 61,644 There was no intrinsic value of the outstanding and exercisable warrants at December 31, 2022 |
INCOME TAXES
INCOME TAXES | 12 Months Ended |
Dec. 31, 2022 | |
Income Tax Disclosure [Abstract] | |
INCOME TAXES | NOTE 10 – INCOME TAXES The reconciliation of the effective income tax rate to the federal statutory rate is as follows: SCHEDULE OF EFFECTIVE INCOME TAX RATE TO THE FEDERAL STATUTORY RATE 2022 2021 Years Ended December 31, 2022 2021 Federal income tax rate (21 )% (21 )% State tax, net of federal benefit (7 )% (7 )% Carryback net operating loss — % — % Change in valuation allowances 28 % 28 % Effective income tax rate - % - % Deferred income taxes reflect the net tax effects of temporary differences between the carrying amounts of assets and liabilities for financial statement purposes and the amounts used for income tax purposes. Significant components of the Company’s deferred tax assets and liabilities at December 31, 2022 and 2021 are as follows (in thousands): SCHEDULE OF DEFERRED TAX ASSETS AND LIABILITIES December 31, 2022 December 31, 2021 Deferred tax assets: Inventory valuation $ 1,462 $ 1,373 Accrued liabilities and other reserves 254 257 Operating lease liability 75 277 Net operating loss carryforwards 3,262 3,158 Gross deferred tax assets 5,053 5,065 Valuation allowance (4,863 ) (4,701 ) Total deferred tax assets 190 364 Deferred tax liabilities: Operating lease right-of-use asset, net (67 ) (128 ) Depreciation (123 ) (236 ) Total deferred tax liabilities (190 ) (364 ) Net deferred tax asset (liability) $ — $ — On March 27, 2020, the Coronavirus Aid, Relief, and Economic Security Act (“CARES Act”) was enacted and signed into law in response to the COVID-19 pandemic. Under the CARES Act, net operating loss (“NOL”s) carryforwards arising in tax years beginning after December 31, 2017, and before January 1, 2021 (e.g., NOLs incurred in 2018, 2019, or 2020 by a calendar-year taxpayer) may be carried back to each of the five tax years preceding the tax year of such loss. Since the enactment of the Tax Cuts and Jobs Act of 2017 (TCJA), NOLs generally could not be carried back but could be carried forward indefinitely. Further, the TCJA limits NOL absorption to 80% of taxable income. At December 31, 2022 and 2021, the Company had income taxes receivable of $ 787 At December 31, 2022, the Company had available Federal and state NOLs carryforwards to reduce future taxable income of approximately $ 10.6 14.8 80 Authoritative guidance issued by the ASC Topic 740 – Income Taxes requires that a valuation allowance be established when it is more likely than not that all or a portion of deferred tax assets will not be realized. The Company considers all evidence available when determining whether deferred tax assets are more likely-than-not to be realized, including projected future taxable income, scheduled reversals of deferred tax liabilities, prudent tax planning strategies, and recent financial operations. The evaluation of this evidence requires significant judgement about the forecast of future taxable income is consistent with the plans and estimates we are using to manage the underlying business. Based on their evaluation, the Company determined that their net deferred tax assets do not meet the requirements to be realized, and as such, the Company has provided a full valuation allowance against them. The Company follows FASB guidelines that address the determination of whether tax benefits claimed or expected to be claimed on a tax return should be recorded in the financial statements. Under this guidance, the Company may recognize the tax benefit from an uncertain tax position only if it is more likely than not that the tax position will be sustained on examination by the taxing authorities, based on the technical merits of the position. The tax benefits recognized in the financial statements from such a position should be measured based on the largest benefit that has a greater than fifty percent likelihood of being realized upon ultimate settlement. This guidance also provides guidance on derecognition, classification, interest and penalties on income taxes, accounting in interim periods and requires increased disclosures. At December 31, 2022 and 2021, the Company did not have a liability for unrecognized tax benefits, and no adjustment was required at adoption. The Company files income tax returns in the U.S. federal jurisdiction and various states. The Company is subject to U.S. federal or state income tax examinations by tax authorities for tax years after 2017. The Company’s policy is to record interest and penalties on uncertain tax provisions as income tax expense. As of December 31, 2022 and 2021, the Company had no accrued interest or penalties related to uncertain tax positions. Additionally, tax years 2017 through 2022 remain open to examination by the major taxing jurisdictions to which the Company is subject. |
EMPLOYEE RETENTION CREDITS
EMPLOYEE RETENTION CREDITS | 12 Months Ended |
Dec. 31, 2022 | |
Employee Retention Credits | |
EMPLOYEE RETENTION CREDITS | NOTE 11 - EMPLOYEE RETENTION CREDITS The Consolidated Appropriations Act, passed in December 2021, expanded the employee retention credit (“ERC”) program through December 2021. The credits cover 70 7 2,000 1,300 700 2,000 |
DISTRIBUTION AGREEMENT WITH A R
DISTRIBUTION AGREEMENT WITH A RELATED ENTITY | 12 Months Ended |
Dec. 31, 2022 | |
Distribution Agreement With Related Entity | |
DISTRIBUTION AGREEMENT WITH A RELATED ENTITY | NOTE 12 – 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 years ended December 31, 2022 and 2021, Smartgen performed $ 88 129 On January 2, 2023, we provided written notice to Smartgen to terminate all agreements between the two companies. The termination was effective January 31, 2023. |
COMMITMENTS AND CONTINGENCIES
COMMITMENTS AND CONTINGENCIES | 12 Months Ended |
Dec. 31, 2022 | |
Commitments and Contingencies Disclosure [Abstract] | |
COMMITMENTS AND CONTINGENCIES | NOTE 13 – COMMITMENTS AND CONTINGENCIES From time to time, the Company may be involved in general commercial disputes arising in the ordinary course of our business. The Company is not currently involved in legal proceedings that could reasonably be expected to have material adverse effect on its business, prospects, financial condition or results of operations. In the opinion of management of the Company, adequate provision has been made in the Company’s financial statements at December 31, 2022 with respect to such matters. See also Notes 6 and 10. |
SUBSEQUENT EVENTS
SUBSEQUENT EVENTS | 12 Months Ended |
Dec. 31, 2022 | |
Subsequent Events [Abstract] | |
SUBSEQUENT EVENTS | NOTE 14 – SUBSEQUENT EVENTS In January 2015, the Company began leasing a manufacturing facility located in Gardena, CA, under a non-cancellable operating lease with initial term of 4 years through February 2019. In February 2019, the lease was amended to extend the lease term for another 4 years through February 2023 (“First Amendment to Lease”). On January 31, 2023, the lease was amended to extend the lease for another 3 years through February 2026 (“Second Amendment to Lease”). The base rent of the for Second Amendment to Lease will be $ 58,096 4,122 84,139 2.6 |
ORGANIZATION AND SUMMARY OF S_2
ORGANIZATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Policies) | 12 Months Ended |
Dec. 31, 2022 | |
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, electric vehicle (EV) charging, and nano-grid applications. The Company’s products integrate DC generator, proprietary electronic control systems, lithium batteries and solar photovoltaic (PV) technologies to provide low operating cost and emissions for telecommunications, defense, automotive, nano-grid, EV charging and industrial markets. |
Liquidity | Liquidity The accompanying financial statements have been prepared under the assumption that the Company will continue as a going concern. For the year ended December 31, 2022, the Company recorded a net loss of $ 5,584 and used cash in operations of $ 6,507 . The Company’s management evaluated whether there are conditions or events considered in the aggregate, that raise substantial doubt about the Company’s ability to continue as a going concern within one year after the date the financial statements are issued. Notwithstanding the net loss for 2022, management concluded that the Company will have adequate cash flow from operations and available line of credit in 2023 so that it is probable that the Company will be able to fund its current operating plan and satisfy its liquidity requirements within one year from the date the Company’s 2022 financial statements are issued. As of December 31, 2022, the Company had a cash balance of $ 211 1,137 18,181 17,367 |
COVID-19 | COVID-19 The global outbreak of the novel coronavirus (Covid-19) in early 2020 led to disruptions in general economic activities throughout the world as businesses and governments implemented broad actions to mitigate this public health crisis. The Company’s financial results for the twelve months ended December 31, 2022 have been affected by COVID-19 including, among others, a decrease in the Company’s sales and delays in sourcing of raw materials from suppliers. The Company’s business is directly dependent upon, and correlates closely with, the marketing levels and ongoing business activities of its existing customers and suppliers. The extent to which COVID-19 may impact the Company’s business activities and capital raising efforts will depend on future developments, which are uncertain and cannot be predicted. |
Inflation | Inflation The impact of inflation and changing prices during 2022 has not been significant on the financial condition or results of operations of our company. Rapid changes in the global economy may cause significant spikes in inflation which may have an impact in our financial condition during 2023 and beyond. Because some of our contracts are at a fixed price, we face the risk that cost overruns or inflation may exceed, erode or eliminate our expected profit margin, or cause us to record a loss on certain projects. We are taking actions to manage the potential impacts of these matters and we will continue to assess the actual and expected impacts and the need for further action. |
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 net realizable value, impairment analysis of long-term assets, valuation allowance on deferred tax assets, accruals for potential liabilities and warrant reserves, assumptions made in valuing equity instruments issued for services, and assumptions used in the determination of the Company’s liquidity. Actual results may differ from those estimates. |
Revenue Recognition | Revenue Recognition The Company recognizes revenue in accordance with Accounting Standards Codification (“ASC”) 606, Revenue from Contracts with Customers (“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 the Company’s 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. Substantially all of the Company’s revenue is derived from product sales. Product revenue is recognized when performance obligations under the terms of a contract are satisfied, which occurs for the Company upon shipment or delivery of products or services to its customers based on written sales terms, which is also when control is transferred. Revenue is measured as the amount of consideration the Company expects to receive in exchange for transferring the products or services to a customer. The Company determines 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 the Company places the product with the customer’s carrier or delivers the product to a customer’s location. The Company regularly reviews its customers’ financial positions to ensure that collectability is reasonably assured. The Company also recognizes revenues from engineering services, technical support, and sale of accessories that support the Company’s direct current, or DC, power systems. Revenue is recognized when transfer of control to the customer has been made and the Company’s performance obligation has been fulfilled. The Company’s revenue from engineering services, technical support services, and product accessories are clearly defined in each transaction with its customers and have not been significant to date. The Company also recognizes revenues from the rental of equipment. The Company’s rental revenues have not been significant to date and have accounted for less than one percent of total revenues for the years ended December 31, 2022 and 2021. The Company’s rental contracts are fixed price contracts for fixed durations of time and include freight and delivery charges and are recognized on a straight-line basis over the rental period. Disaggregation of Net Sales The following table shows the Company’s disaggregated net sales by product type (in thousands): SCHEDULE OF DISAGGREGATED NET SALES 2022 2021 Years Ended December 31, 2022 2021 DC power systems $ 15,219 $ 16,291 Engineering & Tech Support Services 589 390 Accessories 248 215 Total net sales $ 16,056 $ 16,896 The following table shows the Company’s disaggregated net sales by customer type (in thousands): 2022 2021 Years Ended December 31, 2022 2021 Telecom $ 15,357 $ 14,953 Government/Military 38 995 Marine 205 76 Other (backup DC power to various industries ) 456 872 Total net sales $ 16,056 $ 16,896 The following tables shows the Company’s net sales by the respective geographical regions of our customers (in thousands): SCHEDULE OF NET SALES BY GEOGRAPHICAL REGIONS 2022 2021 Years Ended December 31, 2022 2021 United States $ 12,073 $ 15,617 Canada 87 86 Mexico — 4 South Pacific Islands 3,678 — Japan 16 565 Other Asia Pacific 74 533 Europe and Middle East 128 91 Total net sales $ 16,056 $ 16,896 For the years ended December 31, 2022 and 2021, international sales totaled $ 3,983 1,279 |
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 Company’s standard warranty on new products is two years from the date of delivery to the customer. The Company offers a limited extended warranty of up to five years on its certified DC power systems based on application and usage. The Company’s warranties are of an assurance-type and come standard with all Company products to cover repair or replacement should the 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, which are included in accrued liabilities and other current liabilities in the accompanying balance sheets. As of December 31, 2022 and 2021, the Company had accrued a liability for warranty reserve of $ 600 600 The following is a tabular reconciliation of the product warranty liability, excluding the deferred revenue related to the Company’s warranty coverage (in thousands): SCHEDULE OF RECONCILIATION OF THE PRODUCT WARRANT LIABILITY 2022 2021 Years End December 31, 2022 2021 Changes in estimates for warranties Balance at beginning of the period $ 600 $ 600 Payments (508 ) (658 ) Provision for warranties 508 658 Balance at end of the period $ 600 $ 600 |
Shipping Costs | Shipping Costs Amounts billed to a customer in a sales transaction related to shipping and handling are reported as revenue. Costs incurred by the Company for shipping and handling are considered fulfillment costs and reported as cost of sales. |
Cash and cash equivalents | Cash and cash equivalents The Company considers all highly liquid investments with an original maturity of 90 days or less when purchased to be cash equivalents. Cash primarily consists of bank demand deposits maintained by a major financial institution. The Company’s policy is to maintain its cash balances with financial institutions with high credit ratings and in accounts insured by the Federal Deposit Insurance Corporation (the “FDIC”). The Company may periodically have cash balances in financial institutions in excess of the FDIC insurance limit of $250,000 per account per institution. The Company has not experienced any losses to date resulting from this policy. At December 31, 2022 and 2021, cash denominated in Australian Dollar with a U.S. Dollar equivalent of $ 8 9 23 23 |
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 December 31, 2022 and 2021. |
Inventories | Inventories Inventories are stated at the lower of cost or net realizable value, with cost determined on a first-in, first-out (“FIFO”) basis. The Company records adjustments to its inventory based on an estimated forecast of the inventory demand, taking into consideration, among others, inventory turnover, inventory quantities on hand, unfilled customer order quantities, forecasted demand, current prices, competitive pricing, and trends and performance of similar products. If the estimated net realizable value is determined to be less than the recorded cost of the inventory, the difference is recognized as a loss in the period in which it occurs. Once inventory has been written down, it creates a new cost basis for inventory that may not be subsequently written up. For the year ended December 31, 2022, there were no write-downs of inventory. As of December 31, 2022 and 2021, inventories consisted of the following (in thousands): SCHEDULE OF INVENTORIES NET 2022 2021 Years Ended December 31, 2022 2021 Raw materials $ 12,277 $ 6,607 Finished goods 3,183 2,410 Inventories $ 15,460 $ 9,017 |
Property and Equipment | Property and Equipment Property and equipment are recorded at cost less accumulated depreciation and amortization. Additions, improvements, and major renewals or replacements that substantially extend the useful life of an asset are capitalized. Repairs and maintenance expenditures are expensed as incurred. Depreciation and amortization of property and equipment is computed using the straight-line method over the estimated useful life. Estimated useful lives of the principal classes of assets are as follows: SCHEDULE OF ESTIMATED USEFUL LIFE OF PROPERTY PLANT AND EQUIPMENT Estimated life Production tooling, jigs, fixtures 3 5 years Shop equipment and machinery 5 years Vehicles 3 5 years Leasehold improvements Shorter of the lease term or estimated useful life Office equipment 5 years Software 5 years Management regularly reviews property, equipment and other long-lived assets for possible impairment. This review occurs annually or more frequently if events or changes in circumstances indicate the carrying amount of the asset may not be recoverable. Based upon management’s annual assessment, there were no indicators of impairment of the Company’s property and equipment and other long-lived assets as of December 31, 2022, or December 31, 2021. |
Leases | Leases The Company accounts for its leases in accordance with the guidance of ASC 842, Leases |
Stock-Based Compensation | Stock-Based Compensation The Company periodically issues stock-based compensation to officers, directors, and consultants for services rendered. Such issuances vest and expire according to terms established at the issuance date. Stock-based payments to employees, directors, and for acquiring goods and services from nonemployees, which include grants of employee stock options, are recognized in the financial statements based on their grant date fair values in accordance with ASC 718, Compensation-Stock Compensation |
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. 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. |
Research and Development Costs | Research and Development Costs Research and development costs are expensed as incurred and consist primarily of salaries and other expenses relating to the design, development, and testing of the Company’s products. For the years ended December 31, 2022 and 2021, research and development expenditures totaled $ 1,460 1,986 |
Net Loss Per Share | Net Loss Per Share Basic net income (loss) per share is computed by dividing net income (loss) by the weighted average number of shares of common stock 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 shares of common stock outstanding plus the number of additional shares of common stock that would have been outstanding if all dilutive potential shares of common stock had been issued using the treasury stock method. Potential shares of common stock 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 shares of common stock 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: SCHEDULE OF DILUTED EARNINGS PER SHARE 2022 2021 December 31, 2022 2021 Options 140,000 140,000 Warrants 24,122 24,122 Total 164,122 164,122 |
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 financial assets and liabilities. 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 (“FASB”) 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, accounts payable and accrued expenses, approximate their fair values because of the short maturity of these instruments. The carrying values of notes and loans 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 Revenues 66 23 67 96 89 25 8 Accounts receivable 90 74 15 Accounts payable 51 3 3 16 9 9 |
Recent Accounting Pronouncements | Recent Accounting Pronouncements In September 2016, the FASB issued ASU No. 2016-13, Credit Losses - Measurement of Credit Losses on Financial Instruments (“ASC 326”). The standard significantly changes how entities will measure credit losses for most financial assets, including accounts and notes receivables. The standard will replace today’s “incurred loss” approach with an “expected loss” model, under which companies will recognize allowances based on expected rather than incurred losses. Entities will apply the standard’s provisions as a cumulative-effect adjustment to retained earnings as of the beginning of the first reporting period in which the guidance is effective. The standard is effective for interim and annual reporting periods beginning after December 15, 2023. The adoption of ASU 2016-13 is not expected to have a material impact on the Company’s financial position, results of operations, and cash flows. In August 2021, the FASB issued ASU No. 2021-06 (“ASU 2021-06”) “Debt—Debt with Conversion and Other Options (Subtopic 470-20) and Derivatives and Hedging—Contracts in Entity’s Own Equity (Subtopic 815-40).” ASU 2021-06 reduces the number of accounting models for convertible debt instruments by eliminating the cash conversion and beneficial conversion models. As a result, a convertible debt instrument will be accounted for as a single liability measured at its amortized cost as long as no other features require bifurcation and recognition as derivatives. By removing those separation models, the effective interest rate of convertible debt instruments will be closer to the coupon interest rate. Further, the diluted net income per share calculation for convertible instruments will require the Company to use the if-converted method. For contracts in an entity’s own equity, the type of contracts primarily affected by this update are freestanding and embedded features that are accounted for as derivatives under the current guidance due to a failure to meet the settlement conditions of the derivative scope exception. This update simplifies the related settlement assessment by removing the requirements to (i) consider whether the contract would be settled in registered shares, (ii) consider whether collateral is required to be posted, and (iii) assess shareholder rights. ASU 2021-06 is effective January 1, 2024, for the Company and the provisions of this update can be adopted using either the modified retrospective method or a fully retrospective method. Early adoption is permitted, but no earlier than January 1, 2022, including interim periods within that year. Effective January 1, 2022, the Company early adopted ASU 2021-06 and that adoption did not have an impact on its financial statements and the related disclosures. The Company’s management does not believe that there are other 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) | 12 Months Ended |
Dec. 31, 2022 | |
Organization, Consolidation and Presentation of Financial Statements [Abstract] | |
SCHEDULE OF DISAGGREGATED NET SALES | The following table shows the Company’s disaggregated net sales by product type (in thousands): SCHEDULE OF DISAGGREGATED NET SALES 2022 2021 Years Ended December 31, 2022 2021 DC power systems $ 15,219 $ 16,291 Engineering & Tech Support Services 589 390 Accessories 248 215 Total net sales $ 16,056 $ 16,896 The following table shows the Company’s disaggregated net sales by customer type (in thousands): 2022 2021 Years Ended December 31, 2022 2021 Telecom $ 15,357 $ 14,953 Government/Military 38 995 Marine 205 76 Other (backup DC power to various industries ) 456 872 Total net sales $ 16,056 $ 16,896 |
SCHEDULE OF NET SALES BY GEOGRAPHICAL REGIONS | The following tables shows the Company’s net sales by the respective geographical regions of our customers (in thousands): SCHEDULE OF NET SALES BY GEOGRAPHICAL REGIONS 2022 2021 Years Ended December 31, 2022 2021 United States $ 12,073 $ 15,617 Canada 87 86 Mexico — 4 South Pacific Islands 3,678 — Japan 16 565 Other Asia Pacific 74 533 Europe and Middle East 128 91 Total net sales $ 16,056 $ 16,896 |
SCHEDULE OF RECONCILIATION OF THE PRODUCT WARRANT LIABILITY | The following is a tabular reconciliation of the product warranty liability, excluding the deferred revenue related to the Company’s warranty coverage (in thousands): SCHEDULE OF RECONCILIATION OF THE PRODUCT WARRANT LIABILITY 2022 2021 Years End December 31, 2022 2021 Changes in estimates for warranties Balance at beginning of the period $ 600 $ 600 Payments (508 ) (658 ) Provision for warranties 508 658 Balance at end of the period $ 600 $ 600 |
SCHEDULE OF INVENTORIES NET | As of December 31, 2022 and 2021, inventories consisted of the following (in thousands): SCHEDULE OF INVENTORIES NET 2022 2021 Years Ended December 31, 2022 2021 Raw materials $ 12,277 $ 6,607 Finished goods 3,183 2,410 Inventories $ 15,460 $ 9,017 |
SCHEDULE OF ESTIMATED USEFUL LIFE OF PROPERTY PLANT AND EQUIPMENT | SCHEDULE OF ESTIMATED USEFUL LIFE OF PROPERTY PLANT AND EQUIPMENT Estimated life Production tooling, jigs, fixtures 3 5 years Shop equipment and machinery 5 years Vehicles 3 5 years Leasehold improvements Shorter of the lease term or estimated useful life Office equipment 5 years Software 5 years |
SCHEDULE OF DILUTED EARNINGS PER SHARE | The following potentially dilutive shares were excluded from the shares used to calculate diluted earnings per share as their inclusion would be anti-dilutive: SCHEDULE OF DILUTED EARNINGS PER SHARE 2022 2021 December 31, 2022 2021 Options 140,000 140,000 Warrants 24,122 24,122 Total 164,122 164,122 |
PROPERTY AND EQUIPMENT (Tables)
PROPERTY AND EQUIPMENT (Tables) | 12 Months Ended |
Dec. 31, 2022 | |
Property, Plant and Equipment [Abstract] | |
SCHEDULE OF PROPERTY AND EQUIPMENT | Property and equipment consist of the following (in thousands): SCHEDULE OF PROPERTY AND EQUIPMENT December 31, 2022 December 31, 2021 Shop equipment and machinery $ 3,371 $ 3,350 Production tooling, jigs, fixtures 71 71 Vehicles 177 180 Leasehold improvements 390 390 Office equipment 185 181 Software 106 106 Total property and equipment, cost 4,300 4,278 Less: accumulated depreciation and amortization (3,762 ) (3,259 ) Property and equipment, net $ 538 $ 1,019 |
NOTES PAYABLE (Tables)
NOTES PAYABLE (Tables) | 12 Months Ended |
Dec. 31, 2022 | |
Debt Disclosure [Abstract] | |
SCHEDULE OF NOTES PAYABLE | Notes payable consist of the following (in thousands): SCHEDULE OF NOTES PAYABLE December 31, 2022 December 31, 2021 Total Notes Payable $ 268 $ 510 Less: Current Portion 211 242 Notes Payable, Noncurrent portion $ 57 $ 268 |
SCHEDULE OF ANNUAL FUTURE PRINCIPAL PAYMENTS | Annual future principal payments under the outstanding note agreements as of December 31, 2022 are as follows (in thousands): SCHEDULE OF ANNUAL FUTURE PRINCIPAL PAYMENTS Years ending December 31: 2023 $ 211 2024 57 Total $ 268 |
OPERATING LEASES (Tables)
OPERATING LEASES (Tables) | 12 Months Ended |
Dec. 31, 2022 | |
Operating Leases | |
SCHEDULE OF RENT EXPENSE AND SUPPLEMENTAL CASH FLOW INFORMATION | The components of rent expense and supplemental cash flow information related to leases for the period are as follows: SCHEDULE OF RENT EXPENSE AND SUPPLEMENTAL CASH FLOW INFORMATION Years Ended December 31, 2022 2021 Lease Cost Operating lease cost $ 699 $ 699 Operating lease cost (of which $ 98 601 98 601 $ 699 $ 699 Other Information Weighted average remaining lease term – operating leases (in years) 0.4 1.4 Average discount rate – operating leases 3.75 % 3.75 % |
SCHEDULE OF SUPPLEMENTAL BALANCE SHEET INFORMATION | The supplemental balance sheet information related to leases for the period is as follows: SCHEDULE OF SUPPLEMENTAL BALANCE SHEET INFORMATION At December 31, 2022 At December 31, 2021 Operating leases (in thousands) Long-term right-of-use assets, net of accumulated amortization of $ 2,577 1,903 $ 240 $ 914 Current portion of operating lease liabilities $ 268 $ 721 Noncurrent portion of operating lease liabilities — 268 Total operating lease liabilities $ 268 $ 989 |
SCHEDULE OF MATURITIES OF LEASE LIABILITIES | Maturities of the Company’s lease liabilities are as follows: SCHEDULE OF MATURITIES OF LEASE LIABILITIES Year Ending (in thousands) Operating Leases 2023 $ 280 Total lease payments 280 Less: Imputed interest/present value discount (12 ) Present value of lease liabilities $ 268 |
STOCK OPTIONS (Tables)
STOCK OPTIONS (Tables) | 12 Months Ended |
Dec. 31, 2022 | |
Share-Based Payment Arrangement [Abstract] | |
SCHEDULE OF STOCK OPTION ACTIVITY | The following table summarizes stock option activity: SCHEDULE OF STOCK OPTION ACTIVITY Number of Options Weighted Average Exercise Price Outstanding, December 31, 2020 140,000 $ 5.22 Granted — — Exercised — — Cancelled — — Outstanding, December 31, 2021 140,000 $ 5.22 Granted — — Exercised — — Outstanding and exercisable, December 31, 2022 140,000 $ 5.22 |
STOCK WARRANTS (Tables)
STOCK WARRANTS (Tables) | 12 Months Ended |
Dec. 31, 2022 | |
Stock Warrants | |
SCHEDULE OF WARRANTS OUTSTANDING | The following table summarizes warrant activity: SCHEDULE OF WARRANTS OUTSTANDING Number of Warrants Weighted Average Exercise Price Outstanding, December 31, 2020 370,000 $ 8.75 Issued — — Exercised (345,878 ) 4.07 Outstanding, December 31, 2021 24,122 $ 3.13 Issued — — Exercised — — Outstanding, December 31, 2022 24,122 $ 3.13 Exercisable, December 31, 2022 24,122 $ 3.13 |
INCOME TAXES (Tables)
INCOME TAXES (Tables) | 12 Months Ended |
Dec. 31, 2022 | |
Income Tax Disclosure [Abstract] | |
SCHEDULE OF EFFECTIVE INCOME TAX RATE TO THE FEDERAL STATUTORY RATE | The reconciliation of the effective income tax rate to the federal statutory rate is as follows: SCHEDULE OF EFFECTIVE INCOME TAX RATE TO THE FEDERAL STATUTORY RATE 2022 2021 Years Ended December 31, 2022 2021 Federal income tax rate (21 )% (21 )% State tax, net of federal benefit (7 )% (7 )% Carryback net operating loss — % — % Change in valuation allowances 28 % 28 % Effective income tax rate - % - % |
SCHEDULE OF EFFECTIVE INCOME TAX RATE TO THE FEDERAL STATUTORY RATE | The reconciliation of the effective income tax rate to the federal statutory rate is as follows: SCHEDULE OF EFFECTIVE INCOME TAX RATE TO THE FEDERAL STATUTORY RATE 2022 2021 Years Ended December 31, 2022 2021 Federal income tax rate (21 )% (21 )% State tax, net of federal benefit (7 )% (7 )% Carryback net operating loss — % — % Change in valuation allowances 28 % 28 % Effective income tax rate - % - % |
SCHEDULE OF DEFERRED TAX ASSETS AND LIABILITIES | SCHEDULE OF DEFERRED TAX ASSETS AND LIABILITIES December 31, 2022 December 31, 2021 Deferred tax assets: Inventory valuation $ 1,462 $ 1,373 Accrued liabilities and other reserves 254 257 Operating lease liability 75 277 Net operating loss carryforwards 3,262 3,158 Gross deferred tax assets 5,053 5,065 Valuation allowance (4,863 ) (4,701 ) Total deferred tax assets 190 364 Deferred tax liabilities: Operating lease right-of-use asset, net (67 ) (128 ) Depreciation (123 ) (236 ) Total deferred tax liabilities (190 ) (364 ) Net deferred tax asset (liability) $ — $ — |
SCHEDULE OF DISAGGREGATED NET S
SCHEDULE OF DISAGGREGATED NET SALES (Details) - USD ($) $ in Thousands | 12 Months Ended | |
Dec. 31, 2022 | Dec. 31, 2021 | |
Collaborative Arrangement and Arrangement Other than Collaborative [Line Items] | ||
Total net sales | $ 16,056 | $ 16,896 |
Telecom [Member] | ||
Collaborative Arrangement and Arrangement Other than Collaborative [Line Items] | ||
Total net sales | 15,357 | 14,953 |
Government/Military [Member] | ||
Collaborative Arrangement and Arrangement Other than Collaborative [Line Items] | ||
Total net sales | 38 | 995 |
Marine [Member] | ||
Collaborative Arrangement and Arrangement Other than Collaborative [Line Items] | ||
Total net sales | 205 | 76 |
Other [Member] | ||
Collaborative Arrangement and Arrangement Other than Collaborative [Line Items] | ||
Total net sales | 456 | 872 |
DC Power Systems [Member] | ||
Collaborative Arrangement and Arrangement Other than Collaborative [Line Items] | ||
Total net sales | 15,219 | 16,291 |
Engineering & Tech Support Services [Member] | ||
Collaborative Arrangement and Arrangement Other than Collaborative [Line Items] | ||
Total net sales | 589 | 390 |
Accessories [Member] | ||
Collaborative Arrangement and Arrangement Other than Collaborative [Line Items] | ||
Total net sales | $ 248 | $ 215 |
SCHEDULE OF NET SALES BY GEOGRA
SCHEDULE OF NET SALES BY GEOGRAPHICAL REGIONS (Details) - USD ($) $ in Thousands | 12 Months Ended | |
Dec. 31, 2022 | Dec. 31, 2021 | |
Total net sales | $ 16,056 | $ 16,896 |
UNITED STATES | ||
Total net sales | 12,073 | 15,617 |
CANADA | ||
Total net sales | 87 | 86 |
MEXICO | ||
Total net sales | 4 | |
South Pacific Islands [Member] | ||
Total net sales | 3,678 | |
JAPAN | ||
Total net sales | 16 | 565 |
Other Asia Pacific [Member] | ||
Total net sales | 74 | 533 |
Europeand Middle East [Member] | ||
Total net sales | $ 128 | $ 91 |
SCHEDULE OF RECONCILIATION OF T
SCHEDULE OF RECONCILIATION OF THE PRODUCT WARRANT LIABILITY (Details) - USD ($) $ in Thousands | 12 Months Ended | |
Dec. 31, 2022 | Dec. 31, 2021 | |
Organization, Consolidation and Presentation of Financial Statements [Abstract] | ||
Balance at beginning of the period | $ 600 | $ 600 |
Payments | (508) | (658) |
Provision for warranties | 508 | 658 |
Balance at end of the period | $ 600 | $ 600 |
SCHEDULE OF INVENTORIES NET (De
SCHEDULE OF INVENTORIES NET (Details) - USD ($) $ in Thousands | Dec. 31, 2022 | Dec. 31, 2021 |
Organization, Consolidation and Presentation of Financial Statements [Abstract] | ||
Raw materials | $ 12,277 | $ 6,607 |
Finished goods | 3,183 | 2,410 |
Inventories | $ 15,460 | $ 9,017 |
SCHEDULE OF ESTIMATED USEFUL LI
SCHEDULE OF ESTIMATED USEFUL LIFE OF PROPERTY PLANT AND EQUIPMENT (Details) | 12 Months Ended |
Dec. 31, 2022 | |
Furniture and Fixtures [Member] | Minimum [Member] | |
Property, Plant and Equipment [Line Items] | |
Estimated life | 3 years |
Furniture and Fixtures [Member] | Maximum [Member] | |
Property, Plant and Equipment [Line Items] | |
Estimated life | 5 years |
Machinery and Equipment [Member] | |
Property, Plant and Equipment [Line Items] | |
Estimated life | 5 years |
Vehicles [Member] | Minimum [Member] | |
Property, Plant and Equipment [Line Items] | |
Estimated life | 3 years |
Vehicles [Member] | Maximum [Member] | |
Property, Plant and Equipment [Line Items] | |
Estimated life | 5 years |
Leasehold Improvements [Member] | |
Property, Plant and Equipment [Line Items] | |
Estimated useful life | Shorter of the lease term or estimated useful life |
Office Equipment [Member] | |
Property, Plant and Equipment [Line Items] | |
Estimated life | 5 years |
Software Development [Member] | |
Property, Plant and Equipment [Line Items] | |
Estimated life | 5 years |
SCHEDULE OF DILUTED EARNINGS PE
SCHEDULE OF DILUTED EARNINGS PER SHARE (Details) - shares | 12 Months Ended | |
Dec. 31, 2022 | Dec. 31, 2021 | |
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items] | ||
Total | 164,122 | 164,122 |
Options [Member] | ||
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items] | ||
Total | 140,000 | 140,000 |
Warrants [Member] | ||
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items] | ||
Total | 24,122 | 24,122 |
ORGANIZATION AND SUMMARY OF S_4
ORGANIZATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Details Narrative) - USD ($) | 12 Months Ended | ||
Dec. 31, 2022 | Dec. 31, 2021 | Dec. 31, 2020 | |
Product Information [Line Items] | |||
Net Income (Loss) Attributable to Parent | $ 5,584,000 | $ 1,414,000 | |
Net Cash Provided by (Used in) Operating Activities | 6,507,000 | 9,380,000 | |
Cash | 211,000 | ||
Line of credit | 1,137,000 | ||
Stockholders' equity | 18,181,000 | 23,250,000 | $ 11,491,000 |
Working capital | 17,367 | ||
Net sales | 16,056,000 | 16,896,000 | |
Warranty reserve accrual | 600,000 | 600,000 | $ 600,000 |
Research and development cost | $ 1,460,000 | $ 1,986,000 | |
Sales to Telecommunications Customers [Member] | Revenue from Contract with Customer Benchmark [Member] | Revenue from Rights Concentration Risk [Member] | |||
Product Information [Line Items] | |||
Concentration risk | 96% | 89% | |
Largest Customer One [Member] | Accounts Receivable [Member] | Customer Concentration Risk [Member] | |||
Product Information [Line Items] | |||
Concentration risk | 90% | 74% | |
Largest Customer One [Member] | Sales to Telecommunications Customers [Member] | Revenue from Contract with Customer Benchmark [Member] | Customer Concentration Risk [Member] | |||
Product Information [Line Items] | |||
Concentration risk | 66% | 67% | |
Largest Customer Two [Member] | Accounts Receivable [Member] | Customer Concentration Risk [Member] | |||
Product Information [Line Items] | |||
Concentration risk | 15% | ||
Largest Customer Two [Member] | Accounts Payable [Member] | Customer Concentration Risk [Member] | |||
Product Information [Line Items] | |||
Concentration risk | 3% | 9% | |
Largest Customer Two [Member] | Sales to Telecommunications Customers [Member] | Revenue from Contract with Customer Benchmark [Member] | Customer Concentration Risk [Member] | |||
Product Information [Line Items] | |||
Concentration risk | 23% | ||
Largest Vendors One [Member] | Accounts Payable [Member] | Supplier Concentration Risk [Member] | |||
Product Information [Line Items] | |||
Concentration risk | 51% | 16% | |
Largest Customer Three [Member] | Accounts Receivable [Member] | Customer Concentration Risk [Member] | |||
Product Information [Line Items] | |||
Concentration risk | 3% | 9% | |
International Sales [Member] | |||
Product Information [Line Items] | |||
Net sales | $ 3,983,000 | $ 1,279,000 | |
AUSTRALIA | |||
Product Information [Line Items] | |||
Cash | 8,000 | 9,000 | |
RON [Member] | |||
Product Information [Line Items] | |||
Cash | $ 23,000 | $ 23,000 | |
Non-US [Member] | Sales to Telecommunications Customers [Member] | Revenue from Contract with Customer Benchmark [Member] | Revenue from Rights Concentration Risk [Member] | |||
Product Information [Line Items] | |||
Concentration risk | 25% | 8% |
SCHEDULE OF PROPERTY AND EQUIPM
SCHEDULE OF PROPERTY AND EQUIPMENT (Details) - USD ($) $ in Thousands | Dec. 31, 2022 | Dec. 31, 2021 |
Property, Plant and Equipment [Line Items] | ||
Total property and equipment, cost | $ 4,300 | $ 4,278 |
Less: accumulated depreciation and amortization | (3,762) | (3,259) |
Property and equipment, net | 538 | 1,019 |
Machinery and Equipment [Member] | ||
Property, Plant and Equipment [Line Items] | ||
Total property and equipment, cost | 3,371 | 3,350 |
Furniture and Fixtures [Member] | ||
Property, Plant and Equipment [Line Items] | ||
Total property and equipment, cost | 71 | 71 |
Vehicles [Member] | ||
Property, Plant and Equipment [Line Items] | ||
Total property and equipment, cost | 177 | 180 |
Leasehold Improvements [Member] | ||
Property, Plant and Equipment [Line Items] | ||
Total property and equipment, cost | 390 | 390 |
Office Equipment [Member] | ||
Property, Plant and Equipment [Line Items] | ||
Total property and equipment, cost | 185 | 181 |
Software Development [Member] | ||
Property, Plant and Equipment [Line Items] | ||
Total property and equipment, cost | $ 106 | $ 106 |
PROPERTY AND EQUIPMENT (Details
PROPERTY AND EQUIPMENT (Details Narrative) - USD ($) $ in Thousands | 12 Months Ended | |
Dec. 31, 2022 | Dec. 31, 2021 | |
Property, Plant and Equipment [Abstract] | ||
Depreciation and amortization expense | $ 507 | $ 549 |
Depreciation expenses | $ 489 | $ 530 |
SCHEDULE OF NOTES PAYABLE (Deta
SCHEDULE OF NOTES PAYABLE (Details) - USD ($) $ in Thousands | Dec. 31, 2022 | Dec. 31, 2021 |
Debt Disclosure [Abstract] | ||
Total Notes Payable | $ 268 | $ 510 |
Less: Current Portion | 211 | 242 |
Notes Payable, Noncurrent portion | $ 57 | $ 268 |
SCHEDULE OF ANNUAL FUTURE PRINC
SCHEDULE OF ANNUAL FUTURE PRINCIPAL PAYMENTS (Details) $ in Thousands | Dec. 31, 2022 USD ($) |
Debt Disclosure [Abstract] | |
2023 | $ 211 |
2024 | 57 |
Total | $ 268 |
NOTES PAYABLE (Details Narrativ
NOTES PAYABLE (Details Narrative) - USD ($) $ in Thousands | 12 Months Ended | |
Dec. 31, 2022 | Dec. 31, 2021 | |
Debt Instrument [Line Items] | ||
Notes Payable | $ 268 | $ 510 |
Repayment of notes payable | 242 | |
Equipment [Member] | Several Financing Agreements [Member] | ||
Debt Instrument [Line Items] | ||
Monthly payments | $ 22 | |
Minimum [Member] | Equipment [Member] | Several Financing Agreements [Member] | ||
Debt Instrument [Line Items] | ||
Debt term | 2 years | |
Interest rate | 1.90% | |
Maximum [Member] | Equipment [Member] | Several Financing Agreements [Member] | ||
Debt Instrument [Line Items] | ||
Debt term | 5 years | |
Interest rate | 6.90% |
LINE OF CREDIT (Details Narrati
LINE OF CREDIT (Details Narrative) - USD ($) $ in Thousands | 12 Months Ended | |
Dec. 31, 2022 | Dec. 31, 2021 | |
Debt Instrument [Line Items] | ||
Proceeds from advanced on revolving credit facility | $ 1,884 | |
Pinnacle Bank [Member] | Loan and Security Agreement [Member] | ||
Debt Instrument [Line Items] | ||
Proceeds from advanced on revolving credit facility | 1,884 | |
Line of credit remaining borrowing capacity | $ 1,137 | |
Line of credit facility, description | The Loan Agreement, as amended, provides for a revolving credit facility under which Pinnacle may make advances to the Company, subject to certain limitations and adjustments, of up to (a) 85% of the aggregate net face amount of the Company’s accounts receivable and other contract rights and receivables, plus (b) the lesser of (i) 35% of the lower of cost or wholesale market value of certain inventory of the Company or (ii) $2,500. | |
Line of credit | $ 4,000 | |
Line of credit facility, interest rate description | Interest accrues on the daily balance at a rate of 1.25% above the prime rate, but in no event less than 3.75% per annum. | |
Line of credit facility, fee percentage | 1.125% | |
Pinnacle Bank [Member] | Loan and Security Agreement [Member] | Standard Interest Rate [Member] | ||
Debt Instrument [Line Items] | ||
Line of credit facility, interest rate during period | 1.25% | |
Pinnacle Bank [Member] | Loan and Security Agreement [Member] | Standard Interest Rate [Member] | Maximum [Member] | ||
Debt Instrument [Line Items] | ||
Line of credit facility, interest rate during period | 3.75% | |
Pinnacle Bank [Member] | Loan and Security Agreement [Member] | Inventory Interest Rate [Member] | ||
Debt Instrument [Line Items] | ||
Line of credit facility, interest rate during period | 2.25% | |
Pinnacle Bank [Member] | Loan and Security Agreement [Member] | Inventory Interest Rate [Member] | Maximum [Member] | ||
Debt Instrument [Line Items] | ||
Line of credit facility, interest rate during period | 4.75% |
PPP LOAN PAYABLE (Details Narra
PPP LOAN PAYABLE (Details Narrative) - USD ($) $ in Thousands | 12 Months Ended | ||
Dec. 31, 2022 | Dec. 31, 2021 | May 04, 2020 | |
Line of Credit Facility [Line Items] | |||
Gain on forgiveness of PPP loan payable | $ 1,715 | ||
Citibank, N.A [Member] | PPP Loan [Member] | |||
Line of Credit Facility [Line Items] | |||
Debt Instrument, Face Amount | $ 1,715 | ||
Debt interest rate | 1% |
SCHEDULE OF RENT EXPENSE AND SU
SCHEDULE OF RENT EXPENSE AND SUPPLEMENTAL CASH FLOW INFORMATION (Details) - USD ($) $ in Thousands | 12 Months Ended | |
Dec. 31, 2022 | Dec. 31, 2021 | |
Operating Leases | ||
Operating lease cost | $ 699 | $ 699 |
Weighted average remaining lease term - operating leases (in years) | 4 months 24 days | 1 year 4 months 24 days |
Average discount rate - operating leases | 3.75% | 3.75% |
SCHEDULE OF RENT EXPENSE AND _2
SCHEDULE OF RENT EXPENSE AND SUPPLEMENTAL CASH FLOW INFORMATION (Details) (Parenthetical) - USD ($) $ in Thousands | 12 Months Ended | |
Dec. 31, 2022 | Dec. 31, 2021 | |
Operating lease cost | $ 699 | $ 699 |
General and Administrative Expense [Member] | ||
Operating lease cost | 98 | 98 |
Cost of Sales [Member] | ||
Operating lease cost | $ 601 | $ 601 |
SCHEDULE OF SUPPLEMENTAL BALANC
SCHEDULE OF SUPPLEMENTAL BALANCE SHEET INFORMATION (Details) - USD ($) $ in Thousands | Dec. 31, 2022 | Dec. 31, 2021 |
Operating Leases | ||
Long-term right-of-use assets, net of accumulated amortization of $2,577 and $1,903, respectively | $ 240 | $ 914 |
Current portion of operating lease liabilities | 268 | 721 |
Noncurrent portion of operating lease liabilities | 268 | |
Total operating lease liabilities | $ 268 | $ 989 |
SCHEDULE OF SUPPLEMENTAL BALA_2
SCHEDULE OF SUPPLEMENTAL BALANCE SHEET INFORMATION (Details) (Parenthetical) - USD ($) $ in Thousands | Dec. 31, 2022 | Dec. 31, 2021 |
Operating Leases | ||
Accumulated amortization of right-of-use assets | $ 2,577 | $ 1,903 |
SCHEDULE OF MATURITIES OF LEASE
SCHEDULE OF MATURITIES OF LEASE LIABILITIES (Details) - USD ($) $ in Thousands | Dec. 31, 2022 | Dec. 31, 2021 |
Operating Leases | ||
2023 | $ 280 | |
Total lease payments | 280 | |
Less: Imputed interest/present value discount | (12) | |
Present value of lease liabilities | $ 268 | $ 989 |
OPERATING LEASES (Details Narra
OPERATING LEASES (Details Narrative) - USD ($) $ in Thousands | 12 Months Ended | |
Dec. 31, 2022 | Dec. 31, 2021 | |
Operating Leases | ||
Rent expense | $ 975 | $ 903 |
STOCKHOLDERS_ EQUITY (Details N
STOCKHOLDERS’ EQUITY (Details Narrative) - USD ($) $ in Thousands | 1 Months Ended | 12 Months Ended | ||
Feb. 10, 2021 | Aug. 31, 2022 | Dec. 31, 2022 | Dec. 31, 2021 | |
Accumulated Other Comprehensive Income (Loss) [Line Items] | ||||
Proceeds from exercise of warrants | $ 707 | |||
Number of shares exercised | ||||
Preferred stock, authorized | 5,000,000 | 5,000,000 | ||
Treasury stock, shares | 17,477 | 17,477 | ||
Treasury stock at cost | $ 40 | $ 40 | ||
Maximum [Member] | ||||
Accumulated Other Comprehensive Income (Loss) [Line Items] | ||||
Preferred stock, authorized | 5,000,000 | |||
Common Stock [Member] | ||||
Accumulated Other Comprehensive Income (Loss) [Line Items] | ||||
Aggregate grant date fair value | $ 515 | |||
Stock-based compensation expense | $ 515 | |||
Common Stock [Member] | Underwritten Public Offering [Member] | ||||
Accumulated Other Comprehensive Income (Loss) [Line Items] | ||||
Number of shares issued in transaction | 750,000 | |||
Offering net proceeds | $ 12,466 | |||
Warrant [Member] | ||||
Accumulated Other Comprehensive Income (Loss) [Line Items] | ||||
Warrant to purchase shares of common stock | 225,878 | |||
Proceeds from exercise of warrants | $ 707 | |||
Number of shares exercised | 120,000 | |||
Stock issued during the period, cashless exercise option | 61,644 | |||
Officers Employees and Consultants [Member] | Employee Retention Program [Member] | 2016 Omnibus Incentive Plan [Member] | ||||
Accumulated Other Comprehensive Income (Loss) [Line Items] | ||||
Number of shares issued | 161,347 |
SCHEDULE OF STOCK OPTION ACTIVI
SCHEDULE OF STOCK OPTION ACTIVITY (Details) - $ / shares | 12 Months Ended | |
Dec. 31, 2022 | Dec. 31, 2021 | |
Share-Based Payment Arrangement [Abstract] | ||
Number of options, outstanding, beginning balance | 140,000 | 140,000 |
Weighted average exercise price, outstanding, beginning balance | $ 5.22 | $ 5.22 |
Number of options, granted | ||
Weighted average exercise price, granted | ||
Number of options, exercised | ||
Weighted average exercise price, exercised | ||
Number of options, cancelled | ||
Weighted average exercise price, cancelled | ||
Number of options, outstanding and exercisable, ending balance | 140,000 | 140,000 |
Weighted average exercise price, outstanding and exercisable, ending balance | $ 5.22 | $ 5.22 |
STOCK OPTIONS (Details Narrativ
STOCK OPTIONS (Details Narrative) - USD ($) | 12 Months Ended | ||
Dec. 31, 2022 | Dec. 31, 2021 | Jul. 08, 2016 | |
Share-Based Compensation Arrangement by Share-Based Payment Award [Line Items] | |||
Outstanding options | 140,000 | 140,000 | |
Intrinsic value outstanding | $ 0 | ||
December 2027 [Member] | |||
Share-Based Compensation Arrangement by Share-Based Payment Award [Line Items] | |||
Option share to be expire | 30,000 | 30,000 | |
April 2028 [Member] | |||
Share-Based Compensation Arrangement by Share-Based Payment Award [Line Items] | |||
Option share to be expire | 110,000 | 110,000 | |
Minimum [Member] | |||
Share-Based Compensation Arrangement by Share-Based Payment Award [Line Items] | |||
Exercise prices | $ 4.84 | $ 4.84 | |
Maximum [Member] | |||
Share-Based Compensation Arrangement by Share-Based Payment Award [Line Items] | |||
Exercise prices | $ 5.09 | $ 5.09 | |
Polar Power 2016 Omnibus Incentive Plan [Member] | |||
Share-Based Compensation Arrangement by Share-Based Payment Award [Line Items] | |||
Number of shares authorized | 1,754,385 | ||
Maximum number of shares available for issuance | 350,877 |
SCHEDULE OF WARRANTS OUTSTANDIN
SCHEDULE OF WARRANTS OUTSTANDING (Details) - $ / shares | 12 Months Ended | |
Dec. 31, 2022 | Dec. 31, 2021 | |
Stock Warrants | ||
Number of warrants, outstanding, beginning balance | 24,122 | 370,000 |
Weighted average exercise price, outstanding, beginning balance | $ 3.13 | $ 8.75 |
Number of warrants, issued | ||
Weighted average exercise price, issued | ||
Number of warrants, exercised | (345,878) | |
Weighted average exercise price, exercised | $ 4.07 | |
Number of warrants, outstanding, ending balance | 24,122 | 24,122 |
Weighted average exercise price, outstanding, ending balance | $ 3.13 | $ 3.13 |
Number of warrants, exercisable, ending balance | 24,122 | |
Weighted average exercise price, exercisable, ending balance | $ 3.13 |
STOCK WARRANTS (Details Narrati
STOCK WARRANTS (Details Narrative) - USD ($) $ / shares in Units, $ in Thousands | 12 Months Ended | |
Dec. 31, 2022 | Dec. 31, 2021 | |
Net proceeds from warrants exercise | $ 707 | |
Number of shares exercised | 345,878 | |
Warrant [Member] | ||
Warrants to purchase shares | 225,878 | |
Warrants exercise price | $ 3.13 | |
Net proceeds from warrants exercise | $ 707 | |
Number of shares exercised | 120,000 | |
Stock issued during the period, cashless exercise option | 61,644 |
SCHEDULE OF EFFECTIVE INCOME TA
SCHEDULE OF EFFECTIVE INCOME TAX RATE TO THE FEDERAL STATUTORY RATE (Details) | 12 Months Ended | |
Dec. 31, 2022 | Dec. 31, 2021 | |
Income Tax Disclosure [Abstract] | ||
Federal income tax rate | (21.00%) | (21.00%) |
State tax, net of federal benefit | (7.00%) | (7.00%) |
Carryback net operating loss | ||
Change in valuation allowances | 28% | 28% |
Effective income tax rate |
SCHEDULE OF DEFERRED TAX ASSETS
SCHEDULE OF DEFERRED TAX ASSETS AND LIABILITIES (Details) - USD ($) $ in Thousands | Dec. 31, 2022 | Dec. 31, 2021 |
Income Tax Disclosure [Abstract] | ||
Inventory valuation | $ 1,462 | $ 1,373 |
Accrued liabilities and other reserves | 254 | 257 |
Operating lease liability | 75 | 277 |
Net operating loss carryforwards | 3,262 | 3,158 |
Gross deferred tax assets | 5,053 | 5,065 |
Valuation allowance | (4,863) | (4,701) |
Total deferred tax assets | 190 | 364 |
Operating lease right-of-use asset, net | (67) | (128) |
Depreciation | (123) | (236) |
Total deferred tax liabilities | (190) | (364) |
Net deferred tax asset (liability) |
INCOME TAXES (Details Narrative
INCOME TAXES (Details Narrative) - USD ($) $ in Thousands | 12 Months Ended | |
Dec. 31, 2021 | Dec. 31, 2022 | |
Operating Loss Carryforwards [Line Items] | ||
Tax credit carryforward description | the TCJA limits NOL absorption to 80% of taxable income. At December 31, 2022 and 2021, the Company had income taxes receivable of $787 related to the NOL carrybacks. | |
Income taxes receivable | $ 787 | $ 787 |
Offset of taxable income percentage | 80% | |
Domestic Tax Authority [Member] | ||
Operating Loss Carryforwards [Line Items] | ||
Net operating loss carryforwards | $ 10,600 | |
State and Local Jurisdiction [Member] | ||
Operating Loss Carryforwards [Line Items] | ||
Net operating loss carryforwards | $ 14,800 |
EMPLOYEE RETENTION CREDITS (Det
EMPLOYEE RETENTION CREDITS (Details Narrative) - USD ($) $ / shares in Units, $ in Thousands | 12 Months Ended | |
Dec. 31, 2021 | Dec. 31, 2022 | |
Employee Retention Credits | ||
Employee retention credit wages percentage | 70% | |
Employee retention credit per shares | $ 7 | |
Expenses of employee retention credit | $ 2,000 | |
Employee retention credits cost of sales | 1,300 | |
Employee retention credits operating expenses | 700 | |
Employee retention credit receivable | $ 2,000 | $ 2,000 |
DISTRIBUTION AGREEMENT WITH A_2
DISTRIBUTION AGREEMENT WITH A RELATED ENTITY (Details Narrative) - USD ($) $ in Thousands | 12 Months Ended | |
Dec. 31, 2022 | Dec. 31, 2021 | |
Smartgen Solutions, Inc. [Member] | ||
Amount of performed filed services | $ 88 | $ 129 |
SUBSEQUENT EVENTS (Details Narr
SUBSEQUENT EVENTS (Details Narrative) - USD ($) | 12 Months Ended | ||
Jan. 31, 2023 | Dec. 31, 2022 | Dec. 31, 2021 | |
Subsequent Event [Line Items] | |||
Payments for rent | $ 975,000 | $ 903,000 | |
Subsequent Event [Member] | |||
Subsequent Event [Line Items] | |||
Lease payments | $ 2,600,000 | ||
Subsequent Event [Member] | First Year [Member] | |||
Subsequent Event [Line Items] | |||
Payments for rent | 58,096 | ||
Subsequent Event [Member] | Second Year [Member] | |||
Subsequent Event [Line Items] | |||
Payments for rent | 4,122 | ||
Subsequent Event [Member] | Third Year [Member] | |||
Subsequent Event [Line Items] | |||
Payments for rent | $ 84,139 |