UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q

(Mark One)

☒ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended September 30, 2025

☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from _____________ to _____________

Commission file number: 001-37960

POLAR POWER, INC.

(Exact name of registrant as specified in its charter)

Delaware

33-0479020

(State or other jurisdiction of

incorporation or organization)

(I.R.S. Employer

Identification Number)

249 E. Gardena Blvd., Gardena, California		90248
(Address of principal executive offices)		(Zip Code)

(310) 830-9153

(Registrant’s telephone number, including area code)

Not Applicable

(Former name, former address and former fiscal year, if changed since last report)

Securities registered pursuant to Section 12(b) of the Act:

Title of each class		Trading Symbol(s)		Name of each exchange on which registered
Common Stock, par value $0.0001 per share		POLA		The NASDAQ Stock Market, LLC

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes ☒ No ☐

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§232.05 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files). Yes ☒ No ☐

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, smaller reporting company or emerging growth company. See definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company” and “emerging growth company” in Rule 12b-2 of the Exchange Act. (Check one):

	Large Accelerated Filer ☐		Accelerated Filer ☐
	Non-Accelerated Filer ☒		Smaller Reporting Company ☒
			Emerging Growth Company ☐

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ☐ No ☒

The number of shares outstanding of the Registrant’s common stock, $0.0001 par value, as of November 19, 2025 was 2,658,676.

TABLE OF CONTENTS

PART I – FINANCIAL INFORMATION	1

ITEM 1. Condensed Financial Statements	1

ITEM 2. Management’s Discussion And Analysis Of Financial Condition And Results Of Operations	16

ITEM 3. Quantitative and Qualitative Disclosures About Market Risk	24

ITEM 4. Controls and Procedures	24

PART II – OTHER INFORMATION	25

ITEM 1. Legal Proceedings	25

ITEM 1A. Risk Factors	25

ITEM 2. Unregistered Sales of Equity Securities and Use of Proceeds	43

ITEM 3. Defaults Upon Senior Securities	43

ITEM 4. Mine Safety Disclosure	43

ITEM 5. Other Information	43

ITEM 6. Exhibits	43

FORWARD LOOKING AND CAUTIONARY STATEMENTS

All statements included or incorporated by reference in this Quarterly Report on Form 10-Q, other than statements or characterizations of historical fact, are forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended, or the Securities Act, and Section 21E of the Securities Exchange Act of 1934, as amended, or the Exchange Act. Examples of forward-looking statements include, but are not limited to, statements concerning projected net sales, costs and expenses and gross margins; our accounting estimates, assumptions and judgments; the demand for our products; the effect and consequences of the novel coronavirus, or COVID-19, pandemic on matters including U.S., local and foreign economies, wars and international conflicts including the current military actions involving the Russian Federation and Ukraine and the conflicts in middle-east, our business operations, the ability of financing and the health and productivity of our employees; the competitive nature of and anticipated growth in our industry; production capacity and goals; our ability to consummate acquisitions and integrate their operations successfully; and our prospective needs for additional capital. These forward-looking statements are based on our current expectations, estimates, approximations and projections about our industry and business, management’s beliefs, and certain assumptions made by us, all of which are subject to change. Forward-looking statements can often be identified by words such as “anticipates,” “expects,” “intends,” “plans,” “predicts,” “believes,” “seeks,” “estimates,” “may,” “will,” “should,” “would,” “could,” “potential,” “continue,” “ongoing,” similar expressions and variations or negatives of these words. These statements are not guarantees of future performance and are subject to risks, uncertainties and assumptions that are difficult to predict. Therefore, our actual results could differ materially and adversely from those expressed in any forward-looking statements as a result of various factors, some of which are listed under “Risk Factors” in Part II, Item 1A, and in “Management’s Discussion and Analysis of Financial Condition and Results of Operations” in Part I, Item 2 of this Quarterly Report on Form 10-Q. These forward-looking statements speak only as of the date of this Quarterly Report on Form 10-Q. We undertake no obligation to revise or update publicly any forward-looking statement for any reason, except as otherwise required by law.

References in this Quarterly Report on Form 10-Q to “Polar,” the “Company,” “we,” “us,” and “our” refer to Polar Power, Inc., a Delaware corporation, and its consolidated subsidiaries.

FINANCIAL PRESENTATION

All dollar amounts in this Quarterly Report on Form 10-Q are presented in thousands, except share and per share data and where otherwise noted. Share and per share data have been retroactively adjusted to reflect the decreased number of shares resulting from a 1 for 7 reverse stock split which took effect on November 18, 2024.

PART I – FINANCIAL INFORMATION

ITEM 1. Condensed Financial Statements

POLAR POWER, INC.

CONDENSED BALANCE SHEETS

(in thousands, except share and per share data)

	September 30, 2025			December 31, 2024
	(Unaudited)
ASSETS
Current assets
Cash and cash equivalents	$	4		$	498
Accounts receivable, net		856			2,153
Inventories, net		10,892			12,893
Prepaid expenses		70			53
Total current assets		11,822			15,597

Other assets:
Operating lease right-of-use assets		380			1,645
Property and equipment, net		144			196
Deposits		—			108

Total assets	$	12,346		$	17,546

LIABILITIES AND STOCKHOLDERS’ EQUITY
Current liabilities
Line of credit, over advanced (Note 4)		4,652			4,797
Accounts payable		1,507			408
Customer deposits		723			607
Accrued liabilities and other current liabilities		1,218			1,100
Notes payable-related party		507			266
Current portion of operating lease liabilities		840			1,382
Total current liabilities		9,447			8,560

Operating lease liabilities, net of current portion		—			474

Total liabilities		9,447			9,034

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, 2,514,029 shares issued and 2,511,532 shares outstanding on September 30, 2025, and 2,511,350 shares issued and 2,508,853 shares outstanding on December 31, 2024		—			2
Additional paid-in capital		38,896			38,886
Accumulated deficit		(35,957	)		(30,336	)
Treasury Stock, at cost (2,497 shares)		(40	)		(40	)
Total stockholders’ equity		2,899			8,512

Total liabilities and stockholders’ equity	$	12,346		$	17,546

See Accompanying Notes to the Condensed Financial Statements

POLAR POWER, INC.

UNAUDITED CONDENSED STATEMENTS OF OPERATIONS

(in thousands, except share and per share data)

	2025			2024			2025			2024
	Three Months Ended September 30,						Nine Months Ended September 30,
	2025			2024			2025			2024
Net Sales	$	1,273		$	4,914		$	5,704		$	11,348
Cost of Sales (includes inventory write-downs of $1,967 for the three and nine months ended September 30, 2025)		3,533			3,490			6,715			8,494
Gross profit (loss)		(2,260	)		1,424			(1,011	)		2,854

Operating Expenses
Sales and marketing		198			252			642			746
Research and development		157			172			463			586
General and administrative		807			960			2,518			3,001
Impairment of right-of-use assets and lease deposits		455			—			455			—
Total operating expenses		1,617			1,384			4,078			4,333

Income (loss) from operations		(3,877	)		40			(5,089	)		(1,479	)

Other income (expenses)
Interest expense and finance costs		(208	)		(153	)		(543	)		(496	)
Other Income		—			126			11			347
Total other income (expenses), net		(208	)		(27	)		(532	)		(149	)

Net income (loss)	$	(4,085	)	$	13		$	(5,621	)	$	(1,628	)

Net income (loss) per share – basic and diluted	$	(1.63	)	$	0.01		$	(2.24	)	$	(0.65	)
Weighted average shares outstanding, basic and diluted		2,511,532			2,508,802			2,511,103			2,508,802

See Accompanying Notes to the Condensed Financial Statements

POLAR POWER, INC.

UNAUDITED CONDENSED STATEMENTS OF STOCKHOLDERS’ EQUITY

(in thousands, except share data)

Three months Ended September 30, 2025

	Number		Amount		capital		Deficit)			Stock			Equity
	Common Stock				Additional paid-in		(Accumulated			Treasury			Total Stockholders’
	Number		Amount		capital		Deficit)			Stock			Equity
Balance, June 30, 2025 (unaudited)		2,514,029	$	—	$	38,896	$	(31,872	)	$	(40	)	$	6,984
Net loss		—		—		—		(4,085	)		—			(4,085	)
Balance, September 30, 2025 (unaudited)		2,514,029	$	—	$	38,896	$	(35,957	)	$	(40	)	$	2,899

Nine months ended September 30, 2025

	Common Stock					Additional paid-in		(Accumulated			Treasury			Total Stockholders’
	Number		Amount			capital		Deficit)			Stock			Equity
Balance, December 31, 2024		2,511,350	$	2		$	38,886	$	(30,336	)	$	(40	)	$	8,512
Adjustment of common stock for reverse stock split		—		(2	)		2		—			—			—
Issuance of common stock to director for accrued fees		2,679		—			8		—			—			8
Net loss		—		—			—		(5,621	)		—			(5,621	)
Balance, September 30, 2025 (unaudited)		2,514,029	$	—		$	38,896	$	(35,957	)	$	(40	)	$	2,899

Three months Ended September 30, 2024

	Common Stock				Additional paid-in		(Accumulated			Treasury			Total Stockholders’
	Number		Amount		capital		Deficit)			Stock			Equity
Balance, June 30, 2024 (unaudited)		2,511,350	$	2	$	38,886	$	(27,300	)	$	(40	)	$	11,548
Net income		—		—		—		13			—			13
Balance, September 30, 2024 (unaudited)		2,511,350	$	2	$	38,886	$	(27,287	)		(40	)	$	11,561

Nine months ended September 30, 2024

	Common Stock				Additional paid-in		(Accumulated			Treasury			Total Stockholders’
	Number		Amount		Capital		Deficit)			Stock			Equity
Balance, December 31, 2023		2,511,350	$	2	$	38,886	$	(25,659	)	$	(40	)	$	13,189
Balance		2,511,350	$	2	$	38,886	$	(25,659	)	$	(40	)	$	13,189
Net loss		—		—		—		(1,628	)		—			(1,628	)
Net income (loss)		—		—		—		(1,628	)		—			(1,628	)
Balance, September 30, 2024 (unaudited)		2,511,350	$	2	$	38,886	$	(27,287	)	$	(40	)	$	11,561
Balance		2,511,350	$	2	$	38,886	$	(27,287	)	$	(40	)	$	11,561

See Accompanying Notes to the Condensed Financial Statements

POLAR POWER, INC.

UNAUDITED CONDENSED STATEMENTS OF CASH FLOW

(in thousands)

	2025			2024
	Nine Months Ended September 30,
	2025			2024
Cash flows from operating activities:
Net loss	$	(5,621	)	$	(1,628	)
Adjustments to reconcile net loss to net cash used in operating activities:
Depreciation and amortization		51			146
Inventory write-down		1,967			—
Impairment of right-of-use assets and lease deposits		455			—
Changes in operating assets and liabilities
Accounts receivable		1,297			(1,273	)
Employee retention credit		—			2,000
Inventories		34			1,492
Prepaid expenses		(16	)		284
Income tax receivable		—			787
Operating lease right-of-use asset		920			874
Accounts payable		1,099			(1,416	)
Accrued interest added to notes payable-related party		8			—
Customer deposits		115			(868	)
Accrued expenses and other current liabilities		119			20
Operating lease liability		(1,017	)		(818	)
Net cash provided by (used in) operating activities		(589	)		(400	)

Cash flows from investing activities:
Acquisition of property and equipment		—			(18	)
Net cash used in investing activities		—			(18	)

Cash flows from financing activities:
Proceeds from advances from credit facility		-			423
Proceeds from notes payable-related party		240			8
Repayment of advances from credit facility		(145	)
Repayment of notes payable		—			(64	)
Net cash provided by financing activities		95			367

Increase in cash and cash equivalents		(494	)		(51	)
Cash and cash equivalents, beginning of period		498			549
Cash and cash equivalents, end of period	$	4		$	498
Supplemental Cash Flow Information:
Interest paid	$	606		$	598
Taxes Paid	$	—		$	—
Supplemental non-cash investing and financing activities:
Issuance of common stock to director for accrued fees	$	8		$	—

See Accompanying Notes to the Condensed Financial Statements

POLAR POWER, INC.

NOTES TO CONDENSED FINANCIAL STATEMENTS

FOR THE THREE AND NINE MONTHS ENDED SEPTEMBER 30, 2025 AND 2024

(In thousands, except for share and per share data and where otherwise noted)

(UNAUDITED)

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”, “we” or “us”). 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.

Going concern, Liquidity and recent events

The accompanying financial statements have been prepared under the assumption that the Company will continue as a going concern. For the nine months ended September 30, 2025, the Company recorded a net loss of $5,621 and used cash in operations of $589. Further, the Company was delinquent in its rent payments to its landlords for its office and warehouse facilities. These factors, and the factors below, raise substantial doubt about the Company’s ability to continue as a going concern within one year after the date that the financial statements are issued. In addition, our independent registered public accounting firm, in its audit report to the financial statements included in our Annual Report on Form 10-K for the year ended December 31, 2024, expressed substantial doubt about our ability to continue as a going concern. The financial statements do not include any adjustments related to the recoverability and classification of recorded asset amounts or the amounts and classification of liabilities that might be necessary should the Company be unable to continue as a going concern.

The Company manufactures and assembles its DC power systems at two production facilities located in Gardena, California. It is currently delinquent in rent payments to its landlords for office and warehouse facilities. The landlord for its headquarters and manufacturing facility at 249 E. Gardena Blvd., Gardena, California filed a summons for eviction on October 24, 2025. The Company is negotiating with this landlord on a payment plan for the delinquent rent, and expects to come to a mutually agreeable outcome, which, at this time, such amicable proposal provides that the Company shall agree to pay the delinquent rent by February 28, 2026, and the landlord shall, in consideration of such agreement, release and settle the claim for eviction. The landlord for the other facility for which the Company is delinquent on rent, has not served the Company any legal documents or assessed late fees for the delinquent rent. However, they may do so in the future. The Company is also negotiating with this landlord on a payment plan for the delinquent rent. While the Company is negotiating with both landlords in good faith on payment plans, there is no guarantee that it and the landlords could reach an agreement on a payment plan, or that even if they reached an agreement, they could raise sufficient capital to pay the delinquent rent. It is possible that we will be forced to vacate from any or all facilities, and if that happens, we might have difficulty locating a new headquarters, or new manufacturing or warehouse facilities that are adequate, in a timely manner. Our production could be significantly delayed, access to our inventory could be impaired, and our operations could halt for a significant period of time.

Effective September 30, 2020, the Company entered into an Agreement with Pinnacle which will expire on September 30, 2026. The Loan Agreement, as amended, provides for a revolving credit facility under which Pinnacle may, in its sole discretion upon the Company’s request, make advances to us up to $7,500, subject to certain limitations and adjustments. The Loan Agreement contains certain affirmative and negative covenants. At September 30, 2025, the Company was not in compliance with the affirmative covenant requiring all taxes including unsecured property taxes to be paid in full before becoming delinquent, of which the Company has a delinquent balance of $29. The Company was also not in compliance with the affirmative covenant requiring the Company to attain a minimum Effective Tangible Net Worth greater than $6,000, as the Company attained a Tangible Net Worth of $3,405 after recording an inventory write-down of $1,967 to adjust the book value of its inventory to its net realizable value, and $455 impairment of right-of-use asset and deposits. While the Company expects to regain compliance, there is no guarantee that the Company will be able to do so. Further, Pinnacle, as of October 21, 2025, pursuant to the terms of the Loan Agreement, lowered the valuation on certain of the Company’s inventory. As a result of the reduction in the valuation of certain of the Company’s inventory, the Company has an over-advance of $480 at October 21, 2025, and therefore, pursuant to the terms of the Loan Agreement, Pinnacle is permitted take certain actions, including the creation of reserves against amounts that would be available for borrowing or the reduction of its advance rates without declaring an event of default on the facilities, if it determines, in its good faith credit judgment that such reserves are necessary. We are in current discussions with Pinnacle and negotiating with them in good faith on these terms, and expect to come to a mutually agreeable outcome, which, at this time, we believe will provide that Pinnacle will accept certain amounts we expect to receive in purchase orders over the next few months ($325 by December 15, 2025), provided that if such purchase orders are not fulfilled, $325 will be due in December, regardless, and in each case the balance outstanding ($155) will be due by January 15, 2026. While the Company believes it has a good working relationship with Pinnacle, Pinnacle could seek other remedies against the Company pursuant to the Loan Agreement or terminate the Loan Agreement. If the Company is unable to comply with the Loan Agreement, or amendments if applicable, the Company may lose its financing with Pinnacle.

Furthermore, the Company’s ability to secure other financing is uncertain. The Company’s ability to continue as a going concern is dependent upon its ability to obtain additional financing, grow and diversify our revenue, improve operational efficiency, reduce overhead and fixed costs, and to create a profitable operation. Its ability to obtain additional financing in the debt and equity capital markets is subject to several factors, including market and economic conditions, its performance and investor sentiment with respect to the Company and its industry. The Company has taken action to diversify sales to consume existing inventory, increase higher margin aftermarket parts revenue, to fund operations. In the event that the Company does not generate sufficient cash flows from operations and is unable to obtain funding, the Company will be forced to delay, reduce, or eliminate some or all of its discretionary spending, which could adversely affect the Company’s business prospects, ability to meet long-term liquidity needs or ability to continue operations.

Impact of inflation

The impact of inflation and changing prices during the nine months ended September 30, 2025 has had modest effect on the financial condition or results of operations of the Company. In 2025, we anticipate increase in tariffs on imported products may impact our profitability. Many of the countries on which tariffs have been levied have imposed retaliatory tariffs which may impact our global sales. While we obtain most of our raw materials from domestic sources, many of our supplier’s source materials from various countries and the impact of tariff is currently unclear. In addition, some of our contracts are at a fixed price with certain provisions for price changes. Significant increases in prices may require us to negotiate new contracts. We are closely monitoring the impacts of increases and keeping our customers informed on our findings.

Basis of Presentation of Unaudited Financial Information

The unaudited condensed financial statements of the Company for the three and nine months ended September 30, 2025 and 2024 have been prepared in accordance with accounting principles generally accepted in the U.S. (“GAAP”) for interim financial information and pursuant to the requirements for reporting on Form 10-Q and Regulation S-K for scaled disclosures for smaller reporting companies. Accordingly, they do not include all the information and footnotes required by GAAP for complete financial statements. However, such information reflects all adjustments (consisting solely of normal recurring adjustments), which are, in the opinion of management, necessary for the fair presentation of the Company’s financial position and results of operations. Results shown for interim periods are not necessarily indicative of the results to be obtained for a full fiscal year. The balance sheet information as of December 31, 2024 was derived from the audited financial statements included in the Company’s financial statements as of and for the years ended December 31, 2024 and 2023 contained in the Company’s Annual Report on Form 10-K filed with the Securities and Exchange Commission, or the SEC, on March 31, 2025. These financial statements should be read in conjunction with that report.

Estimates

The preparation of financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenue and expenses during the reporting period. Material estimates relate to the assumptions made in determining estimates for credit loss reserves for accounts receivable, assumptions used in valuing inventories at net realizable value, impairment testing of recorded long-term assets, the realizability of deferred tax assets and the related valuation allowance, accruals for warranty reserves, accruals for potential liabilities, assumptions made in valuing stock 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 606, Revenue from Contracts with Customers (“ASC 606”). ASC 606 requires entities to recognize revenue through the application of a five-step model, which includes: identification of the contract; identification of the performance obligations; determination of the transaction price; allocation of the transaction price to the performance obligations; and recognition of revenue as the entity satisfies the performance obligations.

Substantially all of our revenue is derived from product sales. Product revenue is recognized when performance obligations under the terms of a contract are satisfied, which occurs for us upon shipment or delivery of products or services to our customers based on written sales terms, which is also when control is transferred. Revenue is measured as the amount of consideration we expect to receive in exchange for transferring the products or services to a customer. We determine whether delivery has occurred based on when title transfers and the risks and rewards of ownership have transferred to the customer, which usually occurs when we place the product with the customer’s carrier or deliver the product to a customer’s location. We regularly review our customers’ financial positions to ensure that collectability is reasonably assured.

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 were $nil for the three-month and nine months ended September 30, 2025 and 2024. 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:

SCHEDULE OF DISAGGREGATED NET SALES


	Three months ended September 30,
	2025 (Unaudited)		2024 (Unaudited)
DC power systems	$	898	$	4,340
Engineering & Tech Support Services		14		224
Accessories		361		350
Total net sales	$	1,273	$	4,914


	Nine months ended September 30,
	2025 (Unaudited)		2024 (Unaudited)
DC power systems	$	4,117	$	10,381
Engineering & Tech Support Services		147		349
Accessories		1,440		618
Total net sales	$	5,704	$	11,348

The following table shows the Company’s disaggregated net sales by customer type:


	Three months ended September 30,
	2025 (Unaudited)		2024 (Unaudited)
Telecom	$	1,172	$	4,467
Government/Military		—		371
Marine		—		43
Other (backup DC power to various industries)		1		33
Total net sales	$	1,273	$	4,914


	Nine months ended September 30,
	2025 (Unaudited)		2024 (Unaudited)
Telecommunications	$	510	$	10,170
Government/Military		208		993
Marine		4,654		94
Other (backup DC power to various industries)		332		91
Total net sales	$	5,704	$	11,348

The following tables shows the Company’s net sales by the respective geographical regions of our customers:

	2025		2024
	Three months ended
	September 30,
	2025		2024
	(Unaudited)		(Unaudited)
United States	$	1,267	$	4,444
Canada		—		1
South Pacific Islands		6		88
Japan		—		11
Europe and middle East		—		258
Africa		—		112
Total net sales	$	1,273	$	4,914

	2025		2024
	Nine months ended
	September 30,
	2025		2024
	(Unaudited)		(Unaudited)
United States	$	5,312	$	9,608
Canada		33		1
South Pacific Islands		33		1,309
Other Asia Pacific		28		28
Japan		3		31
Europe and Middle East		295		259
Africa		—		112
Total net sales	$	5,704	$	11,348

For the three-months ended September 30, 2025 and 2024, international sales totaled $6 and $470 respectively. For the nine-months ended September 30, 2025 and 2024, international sales totaled $392 and $1,740 respectively.

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.

The Company recorded a write-down of inventory of $1,967 for the three and nine-months ended September 30, 2025 as a result of the events discussed in Note 1, Going Concern, which may require the Company to liquidate some of its inventory below its carrying value.

As of September 30, 2025 and December 31, 2024, inventories consisted of the following:

SCHEDULE OF INVENTORIES NET

	September 30, 2025 (unaudited)		December 31, 2024

Raw materials	$	9,721	$	11,902
Finished goods		1,171		991
Total Inventories	$	10,892	$	12,893

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. As of September 30, 2025 and December 31, 2024, the Company had accrued a liability for warranty reserve of $600 and $600, respectively, which are included in other accrued liabilities in the accompanying condensed balance sheets. The following is a tabular reconciliation of the product warranty liability, excluding the deferred revenue related to the Company’s warranty coverage:

Changes in estimates for warranties	September 30, 2025 (unaudited)			December 31, 2024
Balance at beginning of the period	$	600		$	600
Payments		(55	)		(214	)
Provision for warranties		55			214
Balance at end of the period	$	600		$	600

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. Stock option grants to employees, which are generally time vested, are measured at the grant date fair value and depending on the conditions associated with the vesting of the award, compensation cost is recognized on a straight-line or graded basis over the vesting period. Recognition of compensation expense for non-employees is in the same period and manner as if the Company had paid cash for the services. The fair value of stock options granted is estimated using the Black-Scholes option-pricing model, which uses certain assumptions related to risk-free interest rates, expected volatility, expected life, and future dividends. The assumptions used in the Black-Scholes option pricing model could materially affect compensation expense recorded in future periods.

Income Taxes

During the three months and nine months ended September 30, 2025 and 2024, the Company did not record any provision for income taxes, as the Company incurred losses for income tax reporting during such periods.

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. The Company has recorded a full valuation allowance against its deferred tax assets as the Company currently believes it is more likely than not that the deferred tax assets will not be realized.

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 certain financial assets and liabilities, such as cash and cash equivalents, accounts receivable and accounts payable, approximate their fair values because of the short maturity of these instruments. The carrying values of the line of credit and notes payable approximate their fair values since the interest rates on these obligations are based on prevailing market interest rates.

Segments

Under ASC 280, Segment Reporting, operating segments are defined as components of an enterprise where discrete financial information is available that is evaluated regularly by the chief operating decision maker (“CODM”), in deciding how to allocate resources and in assessing performance. The Company’s operating segment consists of one component, and the Company’s Chief Executive Officer, who is also the CODM, makes decisions and manages the Company’s operations as a single operating segment.

Concentrations

Revenues. For the three months ended September 30, 2025 and 2024, sales to telecommunications customers accounted for 92% and 91% of total revenues, respectively. Sales to international customers accounted for less than 1% and 10% of total revenues, respectively. The Company’s largest customers during the three months ended September 30, 2025, generated 63% of total revenues, as compared to the three largest customers during the three months ended September 30, 2024, generating 46% and 18%, and 12% of total net revenues. There was no other revenue from customers in excess of 10% of revenues in either period.

For the nine months ended September 30, 2025 and 2024, sales to telecommunications customers accounted for

SEC Form 10-Q filed by Polar Power Inc.