false FY 0001622345

 2024-06-28

 2025-03-31

 2024-10-01

 us-gaap: RelatedPartyMember

 us-gaap: RelatedPartyMember

 2024-11-18
 2024-11-18

 POLA:InternationalSalesMember

 POLA:InternationalSalesMember

 country: AU

 country: AU

 POLA:RONMember

 POLA:RONMember

 POLA:LargestCustomerOneMember

 POLA:LargestCustomerTwoMember

 POLA:LargestCustomerOneMember

 POLA:LargestCustomerTwoMember

 us-gaap: RevenueFromRightsConcentrationRiskMember

 us-gaap: RevenueFromRightsConcentrationRiskMember

 POLA:SalesToInternationalCustomersMember
 us-gaap: RevenueFromRightsConcentrationRiskMember

 POLA:SalesToInternationalCustomersMember
 us-gaap: RevenueFromRightsConcentrationRiskMember

 POLA:LargestReceivableAccountsMember
 us-gaap: AccountsReceivableMember

 POLA:LargestReceivableAccountsOneMember
 us-gaap: AccountsReceivableMember

 POLA:LargestReceivableAccountsTwoMember
 us-gaap: AccountsReceivableMember

 POLA:LargestVendorsOneMember
 us-gaap: SupplierConcentrationRiskMember

 POLA:LargestVendorsTwoMember

 POLA:LargestVendorsThreeMember

 POLA:LargestVendorsOneMember
 us-gaap: SupplierConcentrationRiskMember

 POLA:LargestVendorsTwoMember

 POLA:LargestVendorsThreeMember

 POLA:DCPowerSystemsMember

 POLA:DCPowerSystemsMember

 POLA:EngineeringAndTechSupportServicesMember

 POLA:EngineeringAndTechSupportServicesMember

 POLA:AccessoriesMember

 POLA:AccessoriesMember

 POLA:TelecommunicationsMember

 POLA:TelecommunicationsMember

 POLA:GovernmentAndMilitaryMember

 POLA:GovernmentAndMilitaryMember

 POLA:MarineMember

 POLA:MarineMember

 POLA:OtherMember

 POLA:OtherMember

 country: US

 country: US

 country: CA

 country: CA

 srt: NorthAmericaMember

 srt: NorthAmericaMember

 POLA:AustraliaSouthPacificIslandsMember

 POLA:AustraliaSouthPacificIslandsMember

 srt: AsiaPacificMember

 srt: AsiaPacificMember

 POLA:EuropeAndMiddleEastMember

 POLA:EuropeAndMiddleEastMember

 country: GB

 country: GB

 srt: AfricaMember

 srt: AfricaMember

 us-gaap: PropertyPlantAndEquipmentMember

 us-gaap: PropertyPlantAndEquipmentMember

 us-gaap: VehiclesMember

 us-gaap: VehiclesMember

 us-gaap: LeaseholdImprovementsMember

 POLA:ComputerSoftwareAndOfficeEquipmentMember

 us-gaap: MachineryAndEquipmentMember

 us-gaap: MachineryAndEquipmentMember

 us-gaap: VehiclesMember

 us-gaap: VehiclesMember

 us-gaap: LeaseholdImprovementsMember

 POLA:ComputerSoftwareAndOfficeEquipmentMember

 us-gaap: RelatedPartyMember

 srt: ChiefExecutiveOfficerMember
 POLA:NoteAgreementMember

 srt: ChiefExecutiveOfficerMember
 POLA:NoteAgreementMember
 POLA:April2025Member

 srt: ChiefExecutiveOfficerMember
 POLA:NoteAgreementMember
 POLA:August2025Member

 srt: ChiefExecutiveOfficerMember
 POLA:NoteAgreementMember
 POLA:October2024Member

 2020-09-30

 2020-09-30
 2020-09-30

 POLA:StandardInterestRateMember
 POLA:AbovePrimeRateMember

 POLA:StandardInterestRateMember

 POLA:StandardInterestRateMember

 POLA:StandardInterestRateMember

 POLA:InventoryInterestRateMember
 POLA:AbovePrimeRateMember

 POLA:InventoryInterestRateMember

 POLA:InventoryInterestRateMember

 POLA:InventoryInterestRateMember

 POLA:FifthModificationLoanMember

 POLA:FifthModificationLoanMember

 POLA:FifthModificationLoanMember

 srt: WarehouseMember

 POLA:OfficeFacilitiesMember

 POLA:WarehouseAndOfficeFacilitiesMember

 POLA:WarehouseAndOfficeFacilitiesMember

 POLA:LeaseThreeMember

 us-gaap: GeneralAndAdministrativeExpenseMember

 us-gaap: CostOfSalesMember

 us-gaap: GeneralAndAdministrativeExpenseMember

 us-gaap: CostOfSalesMember

 POLA:BoardOfDirectorsMember

 POLA:UnderwrittenPublicOfferingMember

 2023-12-05
 2023-12-05

 us-gaap: WarrantMember
 POLA:WarrantExchangeAgreementMember

 2023-11-09

 POLA:WarrantExchangeAgreementMember
 us-gaap: WarrantMember

 2020-07-07
 2020-07-07

 POLA:TwoThousandSixteenOmnibusIncentivePlanMember

 2016-07-08

 POLA:DecemberTwoThosandTwentySevenMember

 POLA:DecemberTwoThosandTwentySevenMember

 POLA:AprilTwoThousandTwentyEightMember

 POLA:AprilTwoThousandTwentyEightMember

 2020-07-07

 2023-11-09

 us-gaap: DomesticCountryMember

 us-gaap: DomesticCountryMember

 2021-12-31

 2024-05-31

 POLA:Segment

 UNITED
STATES

 SECURITIES
AND EXCHANGE COMMISSION

 Washington,
D.C. 20549

 FORM

 (Mark
One)

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

 For
the fiscal year ended December 31, 2024

 OR

 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)

 E. Gardena Blvd., Gardena, California

 90248

 (Address of principal executive
 offices)

 ( Zip Code)

 Registrant's
telephone number, including area code: (310) 830-9153

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

 Title
 of each class

 Trading
 Symbol

 Name
 of exchange on which registered

 Common Stock, $0.0001 par
 value

 POLA

 The
 Nasdaq Stock Market LLC

 (Nasdaq
 Capital Market)

 Securities
registered pursuant to Section 12(g) of the Act: None

by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act. Yes No

by check mark if the registrant is not required to file reports pursuant to Section 13 or Section 15(d) of the Act. Yes No

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

by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule
405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant
was required to submit such files). Yes No

by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting
company, or an emerging growth company. See the definitions of "large accelerated filer," "accelerated filer,"
"smaller reporting company," and "emerging growth company" in Rule 12b-2 of the Exchange Act.

 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.

by check mark whether the registrant has filed a report on and attestation to its management's assessment of the effectiveness
of its internal control over financial reporting under Section 404(b) of the Sarbanes-Oxley Act (15 U.S.C. 7262(b)) by the registered
public accounting firm that prepared or issued its audit report.

 If
securities are registered pursuant to Section 12(b) of the Act, indicate by check mark whether the financial statements of the registrant
included in the filing reflect the correction of an error to previously issued financial statements.

by check mark whether any of those error corrections are restatements that required a recovery analysis of incentive-based compensation
received by any of the registrant's executive officers during the relevant recovery period pursuant to §240.10D-1(b).

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

 The
aggregate market value of the registrant's voting common equity held by non-affiliates as of the last business day of the registrant's
most recently completed second quarter was $ 4,752,158.

 The
number of shares outstanding of the Registrant's common stock, $ 0.0001 par value, as of March 31, 2025 was 2,511,532.

 DOCUMENTS
INCORPORATED BY REFERENCE

 None

 Table of
Contents

 Page

 Item 1.

 Business

 Item 1A.

 Risk Factors

 Item 1B.

 Unresolved Staff Comments.

 Item 1C.

 Cybersecurity.

 Item 2.

 Properties.

 Item 3.

 Legal Proceedings.

 Item 4.

 Mine Safety Disclosures.

 Item 5.

 Market for Registrant's Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities.

 Item 6.

 [RESERVED].

 Item 7.

 Management Discussion and Analysis of Financial Condition and Results of Operations.

 Item 7A.

 Quantitative and Qualitative Disclosures About Market Risk.

 Item 8.

 Financial Statements and Supplementary Data.

 Item 9.

 Changes and Disagreements with Accountants on Accounting and Finance Disclosure.

 Item 9A.

 Controls and Procedures.

 Item 9B.

 Other Information.

 Item 9C.

 Disclosure Regarding Foreign Jurisdictions that Prevent Inspections.

 Item 10.

 Directors, Executive Officers and Corporate Governance.

 Item 11.

 Executive Compensation.

 Item 12.

 Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters.

 Item 13.

 Certain Relationships and Related Transactions, and Director Independence.

 Item 14.

 Principal Accountant Fees and Expenses.

 Item 15.

 Exhibits, Financial Statement Schedules.

 Item 16.

 Form 10-K Summary.

 Index to Consolidated Financial Statements

 i

 FORWARD LOOKING AND CAUTIONARY STATEMENTS

 All statements included or
incorporated by reference in this Annual Report on Form 10-K, 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,
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 Item 1A of this Annual Report on Form 10-K. These forward-looking statements speak only as of the date of this Annual Report on Form
10-K. 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 Annual Report
on Form 10-K 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 Annual Report on Form 10-K are presented
in thousands, except share and per share data and where otherwise noted. Share and 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.

 ii

 Item 1.

 Business

 Overview

 We design, manufacture, and sell
DC power generators, renewable energy and cooling systems for applications primarily in the telecommunications market and, to a lesser
extent, in other markets, including military, electric vehicle, marine and industrial. We are continuously diversifying our customer base
and are selling our products into non-telecommunication markets and applications at an increasing rate. The changes in customer diversity
are reported in the financial section.

 Within the various markets we
service, our DC power systems provide reliable and low-cost DC power to service applications that do not have access to the utility grid
(i.e., prime power and mobile applications) or have critical power needs and cannot be without power in the event of utility grid failure
(i.e., back-up power applications) or charge batteries of various chemistries to be used in electric vehicle or renewable storage applications.

 We believe it's more
efficient to build power systems around the DC generator because it's more efficient to integrate with battery storage and
solar photovoltaics which also operate on DC. Many applications in communications, water pumping, lighting, electric vehicle and
vessel propulsion, security systems operate on DC power only. Many micro-grids and renewable energy storage systems use battery
storage and therefore are DC based and use inverters to convert the DC to AC.

 Serving these various markets,
we offer the following configurations of our DC power systems, with output power ranging from 5 kW to 50 kW:

 Base power systems. These stationary systems integrate a DC generator with automated controls and remote monitoring, contained in an environmentally regulated enclosure.

 Hybrid power systems. These systems integrate
 lithium-ion batteries (or other advanced battery chemistries) storage and our standard DC
 power systems to provide power in both bad and off-grid applications.

 DC solar hybrid power systems. These stationary systems incorporate photovoltaic and other sources of renewable energy into our DC hybrid power systems.

 Mobile power systems. These are very light weight and compact power systems used for EV charging, robotics, communications, security.

 Our DC power systems are available
in diesel, natural gas, LPG / propane and renewable fuel formats, with diesel, natural gas and propane gas being the predominant formats.

 We were incorporated in 1979 in
the State of Washington as Polar Products, Inc., and in 1991 we reincorporated in the State of California under the name Polar Power,
Inc. In December 2016, Polar Power, Inc. reincorporated in the State of Delaware. Our internet website address is

 Recent Developments

24, 2023, the Company received a deficiency letter from the Listing Qualifications Department of The Nasdaq Stock Market ("Nasdaq")
indicating that the Company's common stock is subject to potential delisting from the Nasdaq because for a period of 30 consecutive
business days, the bid price of the Company's common stock has closed below the minimum $1.00 per share requirement for continued
inclusion under Nasdaq Marketplace Rule 5550(a)(2) (the "Bid Price Rule"). The Nasdaq deficiency notice indicated that, in
accordance with Nasdaq Marketplace Rule 5810(c)(3)(A), the Company will be provided 180 calendar days, or until May 22, 2024, to regain
compliance. If the Company failed to regain compliance with the Bid Price Rule before May 22, 2024 but met all of the other applicable
standards for initial listing on The Nasdaq Capital Market with the exception of the minimum bid price, then the Company may be eligible
to have an additional 180 calendar days, or until November 18, 2024, to regain compliance with the Bid Price Rule. The Company did not
regain compliance with the Bid Price Rule by the end of the initial compliance period but met all of the other applicable listing standards
and requested an extension to regain compliance. On May 30, 2024, the Company received a letter from Nasdaq notifying the Company that,
it had been granted an additional 180 days, or until November 18, 2024, to regain compliance with the minimum bid price requirement for
continued listing on the Nasdaq Capital Market.

18, 2024, the Company filed a Certificate of Amendment to Certificate of Incorporation with the Secretary of State of Delaware to effect
a 1:7 Reverse Stock Split of its shares of common stock, either issued and outstanding or held by the Company as treasury stock, effective
as of 4:05 p.m. (Delaware time) on November 18, 2024. The number of authorized shares of common stock under the certificate of incorporation
remains unchanged at 50,000,000 shares. The common stock began trading on a reverse stock split-adjusted basis on The Nasdaq Capital Market
November 19, 2024. The trading symbol for the common stock remains "POLA." The new CUSIP number for the common stock following
the Reverse Stock Split is 73102V204.

19, 2024, the Company received a new letter from Nasdaq notifying the Company that, as a result of the Company's failure to regain
compliance with the Bid Price Rule by November 18, 2024, Nasdaq determined to delist the Company's common stock from the Nasdaq
Capital Market. On November 26, 2024, the Company submitted a hearing request to a hearing panel to appeal Nasdaq's determination,
and the hearing request stayed the suspension of the Company's common stock. The hearing was scheduled to occur on January 23, 2025.

 On December 23, 2024, the Company
received a letter from Nasdaq informing the Company that the Company regained compliance with the Bid Price Rule and that the Company
was therefore in compliance with the Nasdaq's listing requirements. Accordingly, the hearing was cancelled and the Company's
securities continue to be listed and traded on the Nasdaq Capital Market.

 On December 27, 2024, the Company
issued a press release announcing that it regained compliance with the Bid Price Rule.

 On December 18, 2023, Peter Gross,
a member of the Board of Directors of the Company, resigned as a member of the Board of Directors of the Company (the "Board").
Mr. Gross, an independent director, served as a member of the audit committee, chair of the compensation committee and chair of the nominating
and corporate governance committee of the Board at the time of his resignation.

 On January 5, 2024, the Company
received a notification letter from Nasdaq that due to Mr. Gross' resignation, the Company is no longer in compliance with Nasdaq
Listing Rule 5605. Pursuant to Nasdaq Listing Rule 5605(c)(4), the Company is entitled to a cure period to regain compliance (i) until
the earlier of the Company's next annual shareholders' meeting or December 18, 2024; or (ii) if the next annual shareholders'
meeting is held before June 17, 2024, then the Company must evidence compliance no later than June 17, 2024.

 On July 25, 2024, the Company's
remaining members of the Board appointed and ratified Mr. Michael G. Field, to serve as a member of the Board, and to assume the position
of Mr. Gross as a member of the audit committee, chair of the compensation committee and chair of the nominating and corporate governance
committee of the Board. On July 30, 2024, the Company issued a press release announcing the appointment of Mr. Field, filling the vacant
board seat, and bringing the number of independent directors to three which brings the Company in compliance with Nasdaq Listing Rule
5605.

 Recent Business Events

 The COVID-19 pandemic and
recovery, inflation, the impacts of war and other recent geopolitical events have negatively impacted business and industries all
over the world. Delays and slowdown in customer programs have had a significant negative impact on our overall
operations including revenues, productivity, gross margins, and liquidity. They have resulted in disruptions in the
 supply chain and higher material costs.

 Delays in international
projects has impacted our export markets temporarily, however, we continue to focus on our diversification strategy to expand our
market share in the long term. During 2024 and 2023, sales to customers in international markets represented 13% and 21% of our
total net sales, respectively. Between 2022 and 2024, we received purchase orders for DC power generators totaling $7.3 million from
telecommunications customers in the South Pacific Islands for off-grid applications. We completed shipping these orders in 2024.
These orders are part of a growing program to develop broadband services in the South Pacific region.

 During 2024, 48% of our total
net sales were derived from our largest customer, compared to 50% in 2023. During 2024, 8% of our total net sales were derived from customers
in the military market, as compared to 3% in 2023. We believe the increase in our military contracts resulted from geopolitical uncertainties
primarily tied to the military actions of the Russian Federation and its invasion of Ukraine and conflicts between Israel and Hamas.

 The implementation of 5G networks
by Tier-1 telecommunication customers in the U.S. has also resulted in approximately
50% of our net sales during 2024 for our DC power systems while 54% of our sales backlog as of December
31, 2024 are purchase orders of DC power systems which provide backup power for 5G networks for our largest telecom customers in the U.S.

 Our sales backlog as of December
31, 2024, was $1,306, with 53% of that amount being attributable to our largest U.S. telecommunications customer, 3% to other telecommunications
customers in the U.S., 35% represented purchases from customers in the military markets, and 9% from marine and other markets. The political
turmoil during elections and the financial market losses of our largest customer caused a significant drop in purchases during the second
half of the year. We believe customer decision to reduce in-house excess inventory accumulated during Covid-19 was a temporary correction
that was needed in the long term.

 For the three-year period prior
to the pandemic, we experienced high double-digit sales growth. We made strategic investments in plant and equipment to grow production
capacity to $50 million annual revenue. However, the unanticipated drop in sales in the years following the pandemic caused a disproportionate
distribution of fixed and semi-fixed overhead costs across much lower revenues. In 2024, our net sales to our largest customer were $876
in the first quarter, $1,851 in the second quarter, $2,727 in the third quarter, and $1,769 in the fourth quarter. We believe our customer
inventories have reached normal levels after the significant increases during pandemic years, which is anticipated to bring our bookings
closer to customer demand during first half of year 2025.

 The Company's financial
statements have been prepared under the assumption that the Company will continue as a going concern. For the year ended December 31,
2024, the Company recorded a net loss of $4,677 and used cash in operations of $536. These factors raise substantial doubt about the Company's
ability to continue as a going concern within one year of the date that the financial statements are issued. In addition, the Company's
independent registered public accounting firm, in their report on the Company's December 31, 2024, audited financial statements,
raised substantial doubt about the Company's ability to continue as a going concern.

 Our ability to continue as a
going concern is dependent upon our ability to obtain additional financing, grow and diversify our revenue, improve operational
efficiency, reduce overhead and fixed costs, to create a profitable operations. Our ability to obtain additional financing in the
debt and equity capital markets is subject to several factors, including market and economic conditions, our performance and
investor sentiment with respect to us and our industry. The Company has taken action to diversify its sales and reduce inventory 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.

 Markets

 Our sales are primarily
within the telecommunications market and, to a lesser extent, in military, electric vehicle charging, marine and industrial markets.
We are investing into international markets, non-telecom markets to diversify our sales globally.

 Telecommunications

 We provide power generation
equipment for the telecommunications markets. Our equipment provides backup power to grid connected tower sites during power outages
resulting from severe weather like hurricanes, wildfires, and floods. Most telecommunications towers are equipped with battery
backup for short term power outages. Our DC power generators are installed to address longer-term disruptions in power. We also
deliver DC generators that provide prime power for off-grid telecommunications tower sites installed in remote and rural areas where
reliability of the power grid is intermittent or not available. Since 2012, the telecommunications market is our largest
market segment and contributed over 88% and 95% of our annual revenues in 2024 and 2023, respectively.

 Since 2012, we developed products
 with key features like high fuel efficiency, light weight and compact design
when compared to our competitors' products. These features allow our telecommunications customers to install equipment requiring
a smaller footprint on building roof tops and compact commercial sites while also requiring less fuel storage due to the fuel efficiency
of our products. In the past nine years, we have gained approval and certifications from four top Tier-1 telecommunications operators
in the U.S. market. With over 90% of the world's telecommunication towers located in non-U.S. territories, we began to establish
international offices in 2017 and currently have presence in Poland, Romania, Australia, and South Africa
to provide long term growth.

 In the U.S. market, over 95% of
the telecommunications towers are connected to a power grid, thereby only requiring backup power generation in equipment in case of an
emergency loss of power, while in the emerging markets of Africa and Asia, a significant percentage of telecommunications towers are off-grid and bad grid with frequent power interruptions requiring fuel-efficient prime power equipment to provide power by charging the batteries. Most prime power
sites integrate with solar and storage batteries to utilize renewable solar energy during the day while generators and batteries
provide power during nights and/or on cloudy days. In the U.S., telecommunications companies are requiring generators
to provide backup power at existing sites, while in the international market telecommunications companies are adding
new sites to provide coverage in rural and remote areas.

 The advent of 5G technology has
resulted in a digital revolution within both the commercial and consumer sectors leading to an exponential increase in data usage. We
believe that the need for backup power equipment in the telecommunications services industry which consists of digital infrastructure
(such as fiber, telecommunications towers, active networks and data centers), operators (such as mobile and fixed broadband, data centers
and cloud computing) and applications (such as broadband connections, telephones, video streaming and e-commerce), holds promising growth
opportunities as 5G use expands in the near and long term.

 Wireless network capabilities
continue to expand far beyond smart phones and mobile devices. The 5G mobile network is converging connectivity, intelligent edge and
Internet of Things (IoT) technologies resulting in an increase in telecommunications tower sites in both the U.S. and abroad. The 5G network
delivers broadband-like services such as high-definition streaming video to a cell phone. Businesses benefit from using 5G for data monitoring
and cloud-native 5G networks to compute and store data locally. All of these applications dramatically scale up data usage which requires
an increase in infrastructure and an increase in power and backup generators.

 The pervasiveness of 5G, including
reliance by users on, among other things, local weather, traffic conditions, self-driving vehicles, wearable health monitoring devices
that automatically informs doctors, stores automatically ordering items sold on virtual carts, farmers automated irrigation system with
tracking sensors, will require robust backup equipment at telecommunications sites. We believe higher data usage will require higher reliability
backup systems that are fuel efficient and are located in proximity to the point of use. In urban environments, roof-top space, weight
of the equipment and the amount of fuel storage are critical factors in the selection of backup equipment. As one of the leading providers
of DC power generation equipment, we have demonstrated these benefits to telecommunications providers for decades and we are therefore
encouraged with the prospect of infrastructure expansion in this space that requires fuel efficient and lower emission power generation
equipment.

 Military

 Since 1979, we have been developing
and marketing products to the U.S. military and large defense contractors in the U.S. and international markets. The need for light weight
and compact DC power generation systems are vital for military operations and commonly used to charge storage batteries, provide backup
emergency power, or provide startup power for aircrafts or weapon systems. During the past decade, digitization of the military accelerated
exponentially to support modern information, communication, and weapon systems. The need to process information rapidly has led to digitization
of command, control, communications, computers and intelligence across both combat support and service support. This expansion in data
transfer and storage has led to an increase in energy needs, which requires efficient power generation equipment that can charge batteries
or directly power these systems.

 A digitized battlefield includes
sensors, information processing, data distribution, electronic countermeasures, all requiring with few exceptions, DC power. Our DC generators
designed for military applications provide:

 enhanced mobility, reliability and maintainability;

 improved fuel efficiency;

 reduced system size and weight;

 reduced infrared and acoustic signatures;

 increased survivability in rugged combat operations; and

 reduced total cost of ownership.

 In 2016, the military began the
Advanced Medium Mobile Power Sources, or AMMPS, a U.S. Department of Defense program to develop and deliver 5 kW-50 kW output ranging
generators in either a skid, trailer mounted, or microgrid configurations to replace legacy standalone AC generators. The new generation
of mobile power generators combined with solar and wind power can function as sustainable sources of DC and AC power in remote areas.
The new generation of AMMPS power systems are required to provide 21% higher fuel efficiency, lower noise, weight, 90% reliability and
be capable of performing in extreme environments. During 2020, we directly and jointly partnered with defense contractors, provided DC
hybrid power systems, with integrated controls providing higher fuel efficiency than legacy AC generators currently in use.

 Improvements in sensors, navigation
and communication technologies have led to increased integration of situational awareness systems that allow all combat assets to communicate
and coordinate both defensive and offensive efforts during combat. In earlier combat vehicle designs, these surveillance systems were
powered by the main auxiliary vehicle battery, which required the vehicle's main engine to continue operating to power auxiliary
battery systems. A decade ago, we began delivering compact 3 kW – 15 kW DC power systems for communication and reconnaissance systems
thereby improving fuel efficiency of the combat and vehicles when deployed. During the decade we have delivered several configurations
of these auxiliary power units to the military, which vary in function from battery charging to supplying power to weapon systems.

 We are working on our next-generation
higher output power DC power system and plan to introduce a configuration of this product to the residential and commercial microgrid
market in emerging markets. We believe a 50 kW standalone DC power system, powered by natural gas or LPG would be ideal for rural communities
in emerging markets such as Africa and Asia. The capacity of 50 kW is sufficiently large enough to power a small rural hospital, dairy
farm and a cluster of houses in a small village. The ease of connecting our DC power system with solar, battery packs or any other source
of energy like wind can introduce a sustainable cost-effective solution in emerging markets.

 The 50 kW generator can also provide
roadside emergency charging services for electric vehicles.

 Electric Vehicle Charging

 According to Precedence Research,
a market research company, the global electric vehicle market size accounted for USD 255.54 billion in 2023 and is expected to reach USD
2,108.80 billion by 2033, growing at a compound annual growth rate (CAGR) of 23.4% during the forecast period 2024 to 2033. The primary
growth factors driven by significant number of government incentives such as tax rebates, subsidies, and grants. This increase will require
a significant increase in charging stations globally to support the cumulative growth of electric vehicles. During 2023, the global electric
vehicle charging station market size reached USD 34.59 billion and has a forecasted CAGR of 29.1% for the period of 2023 to 2032.

 A 2018 article by McKinsey &
Company entitled " The potential impact of electric vehicles on global energy systems " stated that although a modest
increase in electric vehicle sales of 5% will not lead to a shortage in electricity since most new capacity can be delivered by renewables
like solar, wind, and gas-powered generation. This modest increase in sales may have a significant impact on peak loads, especially in
concentration points of electric vehicle charging and during the evening peak times when most electric vehicle users connect their vehicles
for charging. The report claims unmanaged peak load increases due to electric vehicle charging will require increases in costly sub-station
upgrades. We believe that the more cost-effective option will be investing into battery storage at the utility level to manage the peak
loads or flexible electricity costs for electric vehicle charging to discourage peak load charging.

 Regardless of how the peak charging
issue is resolved, most homes have not been designed to allow for fast charging of electric vehicles. To address this issue,
we are in the process of upgrading our CHAdeMO chargers to CCS natural gas-powered electric vehicle charger and combined heat and power
generators. Our electric vehicle chargers, being independent of the grid, are designed to fast charge connected electric vehicles at home
while providing backup power during power outages. In addition, the heat generated while charging is captured and delivered to heat the
home, heat water for laundry, or heat the pool.

 Our CHAdeMO style electric vehicle
charger was initially designed in 2009 as a diesel-fueled mobile charger for EV manufacturers to aid in testing their vehicles in the
field. We have supplied these mobile chargers to five of the leading automakers in the USA. We are presently improving this product using
heavy duty 60,000-hour Toyota natural gas or propane engine. This product targets residential customers that own or are expected to own
electric vehicles.

 With the anticipated stress on
utility grids due to an increase in the number of electric vehicles that require charging, combined with the fact that most homes are
unable to provide fast charging, we believe that an independent natural gas-powered electric vehicle charger would be ideal and cost effective.
Currently, many electric vehicle owners exceed the base power usage at home resulting in peak hour usage penalties which diminishes anticipated
cost savings of using electric vehicles. Our residential natural gas-powered EV charger eliminates these costs while also providing backup
power in case of emergencies.

 The benefits of fast charging
with a natural gas generator, as opposed to using the electric grid, includes avoids peak rate charges, a reduced carbon footprint and
the opportunity to provide heating and air conditioning, through combined heat and power or CHP systems that utilize waste heat from the
generator/charger which we believe is a compelling market opportunity for our new product.

 Residential and Commercial
Power – Mini-Grid

 Increased use of electricity worldwide
is directly related to humanity's improvement in the quality of life. Increased global urbanization has resulted in many governments
investing in power plants and providing infrastructure to satisfy the growing demand for electricity. Similar needs of the rural populations
have been largely ignored worldwide due to the isolation, low density and population spread over vast areas resulting in an increased
cost of infrastructure. Even in rural areas where the infrastructure was built to deliver electricity, frequent blackout and infrastructure
failures are commonplace and often not repaired for long periods.

 According to recent World Bank
data, approximately 733 million, 9%, of the world's population still lack electricity compared to 25% in 1994. While 42% of the
world's population still lives in rural areas, about 12% of those living in rural areas lack electricity. Approximately 69% of the
population living without electricity are in sub-Saharan Africa while approximately 29% are located in South Asia and 2% in other areas.

 During the past decade, developments
in renewable energy and battery storage have provided an alternate method to resolve this energy inequity between rural and urban populations
worldwide. However, due to weather and costs of such systems and technologies are still at an early stage of mass adoption. We envision
a hybrid system with natural gas or LPG integrated with a solar and battery system to generate power during peaks and valleys of demand
that we believe would be more cost effective and reliable than the current systems in place. These "Mini-Grid" hybrid systems
would generate between 5kW – 25kW of power on 24/7 basis and provide electricity for a small housing unit, commercial facility or
a school building.

 Our Mini-Grid system uses
natural gas or LPG as primary fuel source, the same fuel as cooking fuel in rural and remote regions worldwide. For decades, many
governments have been allocating resources to eliminate solid fuels like wood, solid waste as cooking fuels from rural and remote
communities. Significant progress has been made by providing economic subsidies for use of natural gas or LPG as cooking fuel to
reduce pollution. In 2017, we established offices in emerging markets like Poland, Australia, Romania and South Africa to develop
strategic alliances with distributors to promote our residential solutions to communities living in bad-grid and off-grid areas.

 Our Competitive Strengths

 We have over a 45-year history
and have developed a reputation as a proven supplier of reliable and advanced proprietary technology products to customers within the
telecommunications, military, commercial, industrial and marine markets. We have invested significant capital and engineering expertise
to develop power generation systems that are environmentally friendly and fuel-efficient. We further believe our success will be based
on the following key competitive strengths:

 Proprietary Technologies. Our decades of research and development has led to the development of DC power systems with output ranging from 5 kW – 50 kW. Our DC power systems integrates our proprietary DC alternator with electronic controls to monitor and control the power being outputted to the equipment, which is then coupled to an engine assembly and cooling systems. Our DC power system output voltage can be configured between 12 V – 800 VDC to match the precise application needs (such as telecom equipment, robotic propulsion drives, electric drives for marine vessels, electric vehicle chargers, etc.). Over the past decades we have developed proprietary charge algorithms for most commercially available batteries and match charge algorithms to battery model or chemistry prior to initiating a charge cycle. Unlike AC power systems, our DC power systems are directly connected to the battery source and therefore optimized for efficiently and safely charging a particular battery chemistry. AC power systems are indirectly connected to commercially available battery chargers that convert the AC output to DC voltage making it less efficient, higher in cost, and require considerably more space.

 Engineering Expertise. Over the past four decades we have strategically constructed a product portfolio that focuses on improving energy efficiency by developing DC power output-based equipment where all major components and technologies are developed in-house, and proprietary manufacturing processes created in-house to ensure product reliability and long life. Our leading competitors approached the need for DC equipment in the telecom, military, and industrial markets by modifying legacy AC generators with conversion equipment resulting in significantly lower efficiency when compared to DC power systems. Being one of the first companies to develop DC generators for telecommunications, we developed proprietary components ranging from alternators, control systems and charging algorithms for various battery chemistries. We have focused on providing the lowest cost of ownership with demonstrated long life of our equipment during the past thirty years. Lowest cost of ownership is complemented with the best fuel economy, best in class weather resistance provided by aluminum enclosures and customized algorithms matching battery chemistries and operational profiles.

 Manufacturing Competitiveness. We believe that our vertical integration approach to manufacturing lowers our production costs and improves our overall operational efficiency. In addition, vertically integrated manufacturing of our proprietary technologies such as DC alternators, charge controls and battery management systems, provides us with a greater control and protection over our intellectual property. We believe our modular approach to manufacturing provides us with the lowest manufacturing costs for our proprietary technologies while giving us the ability to deliver customized solutions to our Tier-1 wireless telecommunications customers.

 Strong Customer Base. Our customer base consists of
 large telecommunications companies, military sub-contractors and industrial companies. Tier-1 telecommunications customers have
 represented 62% to 91% of our aggregated sales for the past five years. Initial demand of our products by telecommunications
 customers was primarily based on the need to provide backup power during electricity outages and for off grid remote locations.
 While our competitors provided and continue to provide legacy AC generators with DC conversion devices, we elected to invest
 significant time and capital in the research and development of products with a lowest cost of ownership. Certification of our
 products by Tier-1 telecommunications customers was time intensive and takes upwards of three years of field trials to receive final
 product acceptance. This thorough approach to vendor selection reduces the number of vendors selected by our telecommunications
 customers and has dramatically reduced the number of competitors in the U.S. markets. Currently, a significant percentage of our
 U.S. sales are to national Tier-1 telecommunications providers with multiple facilities. Since 2021, we increased our efforts to
 diversify our sales efforts to include Tier-2 telecommunications customers, off-grid remote area products and residential charging.
 In the international markets, our customers are regional Tier-1 telecommunications providers. We have established offices in
 emerging markets and currently have presence in Australia, Poland, Romania, and South Africa. Our sales team directly markets to
 Tier-1 telecommunications companies in their regions.

 Experienced Management Team. Our Chief Executive Officer and key engineers combined have over 100 years of engineering and production experience in the design and manufacturing of power systems. Our engineers have equipment design experience, as well as hands-on skills to build prototypes. A key factor demonstrating our management's abilities and our engineering aptitude can be found in our successful track record over the last 40 years of executing research, design and engineering contracts.

 Business Strategy

 For the past three decades we
have been promoting the use of DC power systems where DC power is the primary power in use. The telecommunications tower application is
the largest user of DC power, in both grid and off-grid connected sites. Furthermore, we believe that the growth in wireless telecommunications
infrastructure in the U.S. and international markets has led to a rapid rise in the need for DC backup power systems.

 With over 40 years of experience
and reputation within the DC power systems market, we are working to increase awareness, availability and affordability of more efficient
DC-based products as a backup power and charging sources within the telecommunications industry. Because of the increased power outages
during emergencies and natural disasters, existing and new wireless installations need to be upgraded to provide reliable operations during
times of emergency. The primary elements of our business strategy include:

 Further develop U.S. mobile telecommunications market. We continue to invest capital into our sales and marketing efforts to demonstrate our DC power systems to the top Tier-1 wireless telecommunications providers and more than 500 small wireless and cable operators in the U.S. Our goal is to further diversify our customer base. We believe the rapid expansion of 5G will result in an increase in demand for back-up power generators and that our new LPG / natural gas DC power systems will allow us to better compete on an economic basis with our competitors that provide AC power systems.

 Expand global sales to bad-grid or off-grid markets. The increase in telecommunications subscriber base in rural and remote areas in emerging countries has increased the deployment of telecommunications sites in off-grid and bad-grid areas. During 2024, approximately 78% of our DC power systems sales were to U.S. telecommunications customers, which in 2023 represented less than 25% of the total global telecommunications market according to an industry report by Grand View Research Inc. We believe that the lack of a stable electric infrastructure in rural regions of many developing nations provides significant opportunity for our products in both off-grid and bad-grid location.

 Further develop our new LPG and natural gas DC power systems. With the increased growth in off-grid and bad-grid telecommunications sites, emissions generated by telecommunications towers is beginning to be a major contributor of pollution and greenhouse gases. Since 2019, we have developed lower emission LPG and natural gas DC power generators for use in rural off-grid and bad-grid sites. We initiated this development by partnering with world's largest natural gas engine manufacturer, Toyota Engines, located in Japan. Subsequently, we integrated engine control systems utilizing control technology from Bosch, located in Germany, and concluded by receiving certification from the EPA in December 2019 to sell our new product in all 50 states in the U.S. Upon certification, we began marketing this low emission natural gas solution to telecommunications customers worldwide and in the midst of the COVID-19 pandemic we secured several orders for natural gas configured backup and prime power applications. During 2020, we began shipments of our DC natural gas generators to several domestic and international Tier-1 telecommunications customers. In 2024, we began to expand our sales and service network for our natural gas generators, targeting Tier-1 telecommunications customers in emerging nations with solar hybrid natural gas generators for off-grid markets.

 Expand renewable solar energy product offerings. Developing regions like Africa, Southeast Asia and Latin America lack an electric utility infrastructure to support the installation of grid connected telecommunications towers in remote areas. Due to these challenges, telecommunications companies are installing hybrid power generation systems that consist of solar panels, batteries and fossil fuel powered generators. Installing fuel inefficient generators combined with solar and batteries without any integration is proving to be cost prohibitive. Several local government programs to subsidize the adoption of solar and battery storage along with generators in off-grid telecommunications towers have failed due to lack of quality components and integration. We believe our hybrid systems using natural gas fuel powered generators integrated with solar and battery storage offer an ideal solution for this market.

 Our Technologies

 Starting in 1979, Polar began
manufacturing and exporting solar PV vaccine refrigerator/freezers as part of the WHO Cold Chain projects. We developed solar refrigeration
and air conditioning systems that operated directly with DC batteries, along with solar photovoltaic charge controls. Our DC power and
refrigeration technologies drew the attention of various military projects. We manufactured packaged remote home power systems for Arizona
Public Service who in turn provided them to remote customers. The use of remote home power systems drew our attention to the need for
DC generator sets.

 In the early 1990's, we
began introducing DC generators to provide backup and prime power for off-grid and bad-grid applications. Our initial products were predominantly
designed for military applications and used as auxiliary power for vehicles, battlefield tanks and radar sites. In the late 1990s, we
introduced our DC power systems for commercial applications like mobile telecommunications towers, solar refrigerators and oil field applications.

 We introduced our 6200 PMHH alternator,
which combines the attributes of homopolar alternator technology with a permanent magnet. When mounted on an engine and operated at either
a fixed or variable speed, the model 6200 PMHH generates a precise amount of regulated voltage and current. The DC output can then be
used to power electronics or charge batteries.

 We developed our own proprietary
DC alternator to improve system efficiency, reduce costs and lower weight. Our design replaced a conventional 4-pole, three-phase designs
with a light weight, low cost 12-pole incorporating either 6 or 3 phases. Another unique aspect of the design of our DC alternators is
the elimination of bearings, internal wiring connections, and an exciter (i.e., a device which supplies the magnetizing current to generate
working flux) to provide a longer life cycle than conventional motor designs in the marketplace.

 In 2006, we introduced our next
generation 8000 Series alternators designed for higher power and voltage applications, which features our proprietary 32-pole permanent
magnet alternator technology. The 8000 Series offers high efficiency at a lower cost while integrating our proprietary digital control
system, Supra Controller, that manages and optimizes alternator output. Our Supra Controller networks all components via
CAN bus communications and software and has the ability to control, analyze, monitor, record and communicate all key system parameters
to ensure efficiency, safety and reliability of the overall system. The ability to remotely monitor and calibrate each system parameter,
receive system alarms and auto-reset the system when a fault is corrected are the key differentiating factors of our DC power systems.

 In telecommunications tower backup
applications, backup generators are used to provide power during grid outages or to charge batteries to provide longer run times during
emergencies. Due to battery costs and availability issues, many telecommunications providers are known to use various types of chemistries
or capacities as storage sources. During the past decade, we have successfully integrated various battery chemistry charge algorithms
into our Supra Controller software.

 In 2011, we added charge algorithms
for various lithium battery chemistries and integrated our proprietary battery management system, or BMS, with our Supra Controller
software. In 2013, we further expanded the integration of storage and renewable energy such as solar and wind into our Supra Controller
software resulting in the shipment of twenty off-grid telecommunications tower power systems to Australia.

 In 2017 and 2018, we demonstrated
our DC hybrid power systems to telecommunications providers in Southeast Asia and Africa. We believe that the integration of renewable
energy and storage batteries are ideal for off-grid remote locations in rural areas worldwide. During 2024, we plan to continue our research
and development efforts to further enhance these integrations for remote telecommunications towers in Southeast Asia and Africa.

 In 2018, we developed our next
generation BMS that enhances our current technology to more accurately measure, monitor, control and integrate battery performance data
with our Supra Controller. In addition, we enhanced the user interface to allow us the ability to update or develop new charging
algorithms in the field which can be remotely programmed or uploaded.

 In 2018, we introduced our Toyota
natural gas / propane engine across our product line. The Toyota product is a more advanced engine used in heat pump applications. We
have negotiated a supply agreement with Toyota for the engine and with Bosch for the ignition control. In December 2019, we received our
certificate of conformity from the EPA. These new generators provide power outputs between 5 kW to 15 kW and incorporate a 60,000- to
90,000-hour life engine with our proprietary control system. We are presently marketing these stationary generators within the telecommunications,
commercial and residential markets.

 In 2021, we began development
of a higher power natural gas-powered DC backup power system utilizing larger engines and improved emission control systems. The implementation
of 5G networks by Tier-1 telecommunication customers currently have significantly higher power requirements at cell sites than the previous
4G networks. In addition, use of 5G technology in IoT, video streaming, and data analytics applications requires cell sites to be operational
100% of the time which, in turn, increases the demand for reliable and fuel-efficient power generation backup systems. We believe increased
power usage of 5G networks and higher fuel prices enhances market opportunities for our fuel-efficient DC power systems as compared to
lower efficiency AC power systems.

 In March 2022, we received our
EPA certification on our 4Y Toyota engine, which is a larger engine model for used on our 20 to 30 kW DC power systems. We believe being
an approved supplier for the three largest Tier-1 telecommunication providers in the U.S. provides us with additional growth opportunities
during the current rapid 5G expansion in the largest urban centers in the U.S.

 In June 2024, we introduced MCS2020
a remote monitoring technology for our DC generators where we can remotely monitor generator performance, diagnose failures, monitor maintenance
records and dispatch local technicians to maintain or repair. This proprietary technology also allows us to integrate other systems such
as solar, wind, batteries, and additional DC generators into a single platform allowing operator to use the most efficient platform based
on demand and environmental conditions. The MCS2020 allows us to connect multiple generators to a single platform where systems can be
removed for refueling and maintenance without disrupting operations.

 Products and Services

 DC Base Power Systems

 Our DC base power systems are
designed for use in prime power and backup power applications. All of our DC power systems are designed to last 20 years or more in backup
applications and meet all UL2200 standards. To maximize operational life, we incorporate (over and above our competition) the following:

 all aluminum, powder coated, enclosure with stainless hardware, which is lightweight and corrosion resistant;

 105 C rated signal wire, tinned copper strands;

 stainless steel braided covering hoses for fuel and coolant lines;

 Class 220 C magnet wire for alternator windings;

 watertight connectors in place of terminal strips and other non-sealed connectors; and

 our proprietary Supra Controller modules that are environmentally sealed.

 We believe that the number one
reliability issue with a generator set is the failure to start. To improve the reliability of our generators, we remove the engine's
starting battery and replace it with a super capacitor. The super capacitor has a 15- to 20-year service life, greater cold cranking amps
and withstands greater temperature extremes than conventional starting batteries.

 To reduce maintenance and help
ensure that there is always adequate oil, we increase the engine's oil capacity to provide for a 4,300-hour (natural gas / propane)
or 1,500-hour (diesel) maintenance interval. Standard oil intervals for typical generators range from 200 to 500 hours.

 DC Hybrid Power Systems

 In most off-grid or bad-grid
telecommunications tower outdoor applications where DC loads and battery charging is required, generator fuel cost can account for more
than 60% of the total operating costs. DC Hybrid systems typically include a DC generator and energy storage system to optimize operations.

 In a remote prime power site fuel efficiency, maintenance cost and long life, are the competitive differentiators.
Since 2018, we invested in testing and certifying LPG/NG engine manufactured by Toyota which provides over 90,000-hour life which is about
four times longer than a non-Toyota equivalent diesel engine. In addition, this product has maintenance cycle every 4,500 hours where
equivalent engines require maintenance every 200 to 500 hours.

 Our Hybrid Systems include battery
packs of varying chemistries; however, the market predominantly uses lithium batteries commonly used in electric vehicles. The ability
to charge batteries at full power improves fuel efficiency, where charged batteries can then provide continuous or intermittent power
without the need to power up the generator.

 In 2024 we introduced a remote
monitoring system MCS2020 that integrates our Supra controller, engine controller, battery management system and other ancillary components
to optimize the fuel efficiency of the complete system. Remote off-grid and bad-grid used in continuous high load conditions also have
redundant systems which allows operator to take primary system offline during maintenance and repairs. The MCS2020 control system provides
ability to remotely monitor efficiency of each system, diagnose failures, optimize output where multiple redundant systems are available.

 DC Solar Hybrid Power Systems

 Our DC solar hybrid power system
combines our DC hybrid power system with solar photovoltaic modules and a custom engineered multi power point tracking charge controller.
In most off-grid or bad-grid outdoor applications, such as telecommunications towers in rural or suburban areas, the fuel costs of operating
a generator can account for more than half of the total operating costs. We believe that incorporating renewable energy sources, such
as solar, with our DC hybrid power systems is ideal solution for numerous off-grid and bad-grid applications worldwide. Our DC solar hybrid
power systems incorporate the following features:

 Hybrid power panel. We produce distribution panel assemblies that make use of punched and plated buss bars to make the heavy current connections between appliances. The industry standard is using labor intensive hand crimped wires and lugs which are accomplished in the field.

 Photovoltaic Arrays. Our telecommunications customers request photovoltaic array structures to withstand winds of 150 mph and 200 mph exceeding the industry standard of 120 mph.

 Shelter. We provide an all-weather light-weight aluminum walk-in shelter that is easy to transport by truck or helicopter.

 Lightning protection. We provide the highest degree of lightning protection through the use of air-coil type inductors designed by us.

 Air-Conditioning. We provide DC air-conditioning if required in very hot weather environments. We also provide cooling systems using ambient air.

 Our environmentally friendly solar
hybrid power systems based on a combination of solar with LPG and propane power sources offer significant cost savings in capital expenditures
and operating expenditures when compared to similar products offered by our competitors. Our solar hybrid power systems have been specifically
designed to run in residential applications and provide power outputs between 5 kW to 22 kW and incorporate a 30,000- to 90,000-hour life
engine with our proprietary control system. Our natural gas generators when integrated with battery storage and solar are ideal microgrids
for off-grid and bad grid residential and commercial applications.

 Service and Support

 Global Network Management Tools

 We offer global network management
services through our telematics tool, which consists of our Supra Controller technology integrated with monitoring system MCS2020.
This hardware is integrated into each DC power system and collects critical data from the equipment and transmits this data back to the
customer and our service department.

 Our MCS2020 capabilities and
services include:

 automated and continuous remote monitoring with auto alerts and notifications that can be transmitted via email or text messaging;

 maintenance management, which provides ability to schedule preventative maintenance based on actual equipment usage; and

 real-time, bi-directional communication capability for remote upgrades, testing and troubleshooting.

 Our telematics tools also provide
information to our customers on specific equipment utilization that provides the abilities to determine the functional status of the equipment
and proactively schedule maintenance. We believe these tools assist in reducing equipment downtime, thereby reducing the overall cost
of ownership. In addition, we plan to use these tools to monitor and provide accurate billing for our rental equipment deployed at customer
facilities.

 Aftermarket and Service Parts

 We offer extensive aftermarket
and service parts programs. We maintain an extensive inventory of aftermarket parts and sell parts directly to customers or through our
qualified network of service providers. In addition, we require our regional service providers to maintain sufficient quantities of aftermarket
parts in their inventory to ensure minimum downtime upon product failure.

 We maintain accurate records of
bill of materials for each serial number shipped and service our products well beyond their recommended lives. In the marketplace, our
products are known for their long life and durability.

 Product and Warranty Support

 We utilize a nationwide network
of dealers and service providers to perform installation and warranty services for our customers. Through our dealers we offer product
commissioning as an added service to all our customers and require the purchase of such services as a condition for acceptance of any
warranty claims in the future. We offer installation of the equipment, preliminary testing, integration of equipment with other assets
located at the site and introductory maintenance and safety training. We offer various levels of fee-based services to support our products
in the field. In addition, we have trained product and application engineers that deliver high quality, responsive lifetime technical
support to all our customers worldwide.

 We further support our customers
by using qualified regional independent service providers to perform warranty and aftermarket service and repair on our products. Our
regional service providers are factory trained and certified prior to being authorized to repair or service our equipment. We generally
reimburse regional service providers for the warranty services they perform on our systems.

 Sales and Marketing

 Our sales strategy focuses on
using our direct sales force to market our DC backup power products to telecommunications providers in the U.S. We use local regional
sales managers in the U.S. market to demonstrate our products to Tier-1 telecommunications providers. Our products are purchased by regional
centers operated by our telecommunications customers, thereby expanding our overall market into regions we may not have covered previously.

 The telecommunication market is our largest market generating 88% of annual sales of which a significant portion
represents U.S. Tier-1 telecom operator. With over 75% of the telecommunications market outside U.S. we have concentrated our efforts
in developing markets outside U.S. as long term strategy. Despite the lack of reliable electricity grid in international markets like
Africa and Asia, telecom operators continue to build infrastructure using hybrid systems.

 We established regional offices in Australia, Romania, South Africa and Poland to address global markets. During
the past 3 years we have had some significant successes in international marketplace however capital constraints of customers have limited
the scale of the deployment. Our DC Generators, Hybrid Generators are marketed directly to end customers, however the aftermarket parts
in some regions are sold through dealers. Our primary sales are generated through product demonstrations
and short-term rentals to demonstrate the capabilities of our products and value proposition to large mobile network providers worldwide.
We believe this strategy of demonstrating our products and technologies to prospective customers expedites the sales process for our DC
power systems.

 Distribution and Service

 We service our products through
various service partners that provide initial product installation and maintenance services. The promotion of our natural gas powered
Mini-Grid product, targeting off-grid and bad grid rural areas, will be undertaken by certified independent dealers. We believe expansion
of our dealer network will also provide additional opportunities for our DC power systems in the U.S. and other countries.

 We utilize a combination of factory
trained technicians and independent service providers to provide installation, maintenance, service and training at customer locations
throughout the U.S.

 In the international markets,
we utilize local service partners to perform installation and service on our equipment. We have hired trained personnel in Australia,
Romania, and South Africa to assist in regional training of technicians and also in product demonstrations.

 Competition

 Within the telecommunications
power generation market, we compete with a few manufacturers of AC and DC generators that offer generators with an output power of 5 kW
to 50 kW. In the U.S. market, our competitors are global manufacturers of AC generators designed primarily for the residential and industrial
off-grid power markets. Internationally, our competitors include regional manufacturers of both AC and DC generators.

 In the U.S. market, our competitors
are large volume manufacturers of AC generators with a primary focus on emergency power backup generation for the residential marketplace.
These AC generators are constructed using steel enclosures and are therefore heavier and can rust more easily in outdoor applications
as compared to our products which generally have a smaller footprint and are constructed using aluminum enclosures. Due to the inherent
design of AC motors, their units are approximately 40% larger in size than our DC generators. To monetize on our positives, we targeted
telecommunications markets where generators are used to provide backup power during power outages. Due to the lighter weight and smaller
size of our products as compared to AC products, we specifically target customers with the telecommunications towers located on roof-tops
in urban areas. We believe that the smaller size, lighter weight and higher fuel efficiency of our products are performance parameters
that offset the lower price alternative of AC generators. In addition, we believe that our recently introduced long-life (90,000 hours),
natural gas-powered DC generator product line significantly increases our competitive advantage in densely populated urban markets.

 Micro-grids and electric vehicle
charging in remote areas that lack utility grids is developing as a new market for our products. During the past two years we have been
successful in delivering initial test and evaluation units to these customers demonstrating fuel efficiency and low maintenance. As part
of our diversification strategy, we believe these new products can be significant percentage of our sales during the next twelve months.
These products combined with battery storage deliver intermittent or continuous power to small housing units or provide charging infrastructure
for electric vehicles in remote locations where connection to grid is not cost effective.

 Increased digitization of our
lives has resulted in the need for more power usage in both residential and commercial applications. In the telecommunications tower market,
the majority of the outdoor power needs are DC power since most components are DC powered. Historically, AC generator companies have utilized
conversion technologies to convert AC output to DC output. This conversion results in an approximately 40% loss in energy. Meanwhile,
our DC generators supply DC power directly to the telecommunications tower systems increasing the system's overall efficiency. These
efficiencies are further enhanced in off-grid and bad-grid applications where more power is being used from the generators due to the
lack of grid power.

 Below are our primary competitors
across these applications:

 DC Power: 3Tech Corporate
Limited, Ascot Industrial srl, Ausonia srl, and Controllis.

 AC Power: Generac Power
Systems, Inc., Kohler Co., Onan, FG Wilson and many other companies.

 Manufacturing and Assembly

 A significant percentage of our
business comes from multinational global corporations seeking configured product solutions ready to be field deployed with a minimum installation
time. Our manufacturing process begins with our direct sales force and engineering team defining customer application needs and concludes
with the production of a custom configured product solution. We believe our ability to have total control over the sales and manufacturing
process is a key competitive differentiator in the markets we serve.

 By implementing vertical integration
throughout our manufacturing process, we believe that we reduce overall manufacturing costs, thereby increasing profitability and market
competitiveness. Our production processes encompass all aspects of production of our DC power systems, which includes alternators, aluminum
enclosures, engine configurations, control electronics, cooling systems, wiring harnesses, exhaust systems and final assembly. Manufacturing
of our proprietary technologies requires proprietary automated equipment that ensures total control and agility in our production processes.
Over the past decade, we have made significant investments in highly specialized manufacturing tooling, jigs and fixtures that allow us
to manufacture products at lower cost while maintaining the highest quality.

 Our production assembly lines
are designed to be flexible, and we utilize advanced manufacturing planning software to predict, monitor and control demand levels and
product mix to provide the shortest delivery time to our customers. We utilize 3-D CAD software to product design and document assembly
instructions throughout our production process. All our products are 100% tested to customer specific application requirements prior to
shipment.

 Throughout our operations we utilize
computerized ERP software that integrates all our processes from lead generation to product shipment and aftermarket support. Our focus
on safety, quality and on-time delivery is supported by employee training and information systems that monitor process and product quality
and communicate trends and findings to senior management on a real-time basis.

 Design Engineering/Research and Development

 Our research and development efforts
are market driven and are focused on the development of new technologies and product improvements, as well as reducing costs and improving
product quality and reliability. The primary focus of our research and development activities is the development of lighter-weight, more
compact and lower cost DC power generation systems for our Tier-1 wireless provider customers in the U.S. and international markets. Over
the years, we have expended significant resources in enhancing our system controls like our Supra Controller and BMS.

 A significant part of our research
and development effort has focused on the development of control software that integrates engine controls, power management and battery
algorithms to fully optimize fuel consumption in both prime power and backup power generation applications. We use a high level of integration
with a single control and communication module, our Supra Controller, rather than competitive system designs with a number of independent
control modules controlling a single function. Our integrated approach ensures software compatibility, reduces complexity in wiring, increases
reliability and reduces cost. We maintain an in-house design, prototyping, testing and application engineering capabilities including
expertise in 3-D solid modeling and finite element analysis, computer-based modeling and testing, rapid prototyping, design verification
testing and document publication, which includes manufacturing assembly instructions, supplier drawings and product manuals. In addition,
we utilize third party testing laboratories to certify our products' compliance with current applicable UL standards.

 Our research and development
efforts are key to meeting customer demand and changing power requirements. In 2024, we invested significant engineering resources
in development of remote monitoring MCS2020 to remotely monitor and optimize efficiency of our systems and integrate them with other
systems such as solar, wind, energy storage systems. During the year significant work was performed to develop electric vehicle
charging system for remote locations and roadside assistance. This system is in its final stage of development and upon completion
will be marketed to regions that lack electric infrastructure. In 2025, we plan to gradually increase our team of engineers and
continue investing into new product development as part of our strategy to diversify our product lines.

 Intellectual Property

 We possess a broad intellectual
property portfolio comprised of electronics, software, engines, alternators, thermal systems and production techniques. We rely on trademark,
copyright and trade secret laws to protect our intellectual property. Currently, we rely on common law rights to protect our "Polar
Power, Inc." trade name. We protect our trade secrets and other proprietary information by requiring confidentiality agreements
from our employees, consultants and third parties that have access to such information. Despite these efforts, there can be no assurance
that others will not gain access to our trade secrets, or that we can meaningfully protect our technology. In addition, effective trademark,
copyright and trade secret protection may be unavailable or limited in certain foreign countries.

 We consider our manufacturing
process to be a trade secret and have non-disclosure agreements with our employees to protect the trade secrets held by us. However, such
methods may not afford complete protection, and there can be no assurance that others will not independently develop similar know-how
or obtain access to our know-how and manufacturing concepts. We may register patents and trademarks in future to protect our intellectual
property rights and enhance our competitive position.

 Suppliers

 We attempt to mitigate the adverse
effect of component shortages in our business through detail material planning and by qualifying multiple vendor sources for key components
and outside processes. We conduct supplier audits of all major suppliers for initial qualification and to ensure reliability, quality,
and sustainability of critical components. To meet our customer demands, we forecast the supply of our long lead time items such as engines,
castings and electronic components through use of sales forecasting tools and ERP system.

 Our suppliers are extensively
surveyed and audited; and field or process generated non-conformities communicated with our Suppliers to continuously improve quality.
To improve our costs and deliveries, our ERP system invites for all qualified suppliers to participate in relevant bids to ensure best
proposals are selected.

 We actively source the global
supply chain for key components to avoid or reduce the risk of having parts shortages that may cause interruptions to our operations or
our ability to service customers. We have also experienced price increases on certain materials and freight services. Although we believe
we can mitigate a portion of material price increases by passing through some cost increases to our customers, we believe a fair portion
can be mitigated through increases in efficiency.

 Quality Control

 Our quality control is established
to maintain the highest level of quality in the manufacturing of our DC power systems, spare parts, and services. The foundation of our
quality control was initially set in the early 1980s, much of which was required by our customers at the time, including NASA and Hughes
Aircraft. In the late 1980s, we implemented the MIL-I-45208A quality control system monitored by U.S. Department of Defense, to meet prime
source requirements for a contract we received from the U.S. Army Picatinny Arsenal to design and manufacture an advanced battery and
monitoring system for a security device used in nuclear munitions depots around the world. We are currently in the process of obtaining
an ISO 9000 certification.

 Certifications

 Our DC generator systems comply
with UL2200 safety standards. Our products also comply with applicable regulatory emission standards of the Environmental Protection Agency,
and the California Air Quality Management District.

 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. Our standard warranty on new products is
two years from the date of delivery to the customer. We offer a limited extended warranty of up to five years on our certified DC power
systems based on application and usage. Our warranties are of an assurance-type and come standard with all of our products to cover repair
or replacement should a product not perform as expected. Under our standard warranty, 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.

 Information Systems

 We utilize integrated information
systems (i.e., ERP) that link our lead management, sales planning, order entry, purchasing, engineering, production control, manufacturing,
inventory and accounting systems. During the past five years we have made significant investments to upgrade and customize our information
systems to improve productivity and our ability to accurately forecast inventory and manpower requirements. We plan to invest additional
capital in software and information systems to integrate aftermarket sales and service with our ERP system to improve post sales customer
experience with our products and services.

 Government Regulations and Environmental Matters

 Our business operations are subject
to certain federal, state, local and foreign laws and regulations. For example, our products, services and technologies are subject to
regulations relating to building codes, public safety, electrical connections, security protocols, and local and state licensing requirements.
The regulations to which we are subject may change, additional regulations may be imposed, or existing regulations may be applied in a
manner that creates special requirements for the implementation and operation of our products or services that may significantly impact
or even eliminate some of our revenues or markets. In addition, we may incur material costs or liabilities in complying with any such
regulations. Furthermore, some of our customers must comply with numerous laws and regulations, which may affect their willingness and
ability to purchase our products, services and technologies.

 The modification of existing laws
and regulations or interpretations thereof or the adoption of future laws and regulations could adversely affect our business, cause us
to modify or alter our methods of operations and increase our costs and the price of our products, services and technology. In addition,
we cannot provide any assurance that we will be able, for financial or other reasons, to comply with all applicable laws and regulations.
If we fail to comply with these laws and regulations, we could become subject to substantial penalties or restrictions that could materially
and adversely affect our business.

 Human Capital

 Our experienced employees
and management team are our most valuable resources, and we are committed to attracting, motivating, and retaining top professionals
to service our customers. As of March 31, 2025, we had 82 full time employees, which included 75 employees in the U.S. and 5
employees outside the U.S. During 2024, we had a relatively low turnover rate, some of which is related to uncertain employment
market and economic conditions. None of our employees are represented by labor unions. We consider our relationships with our
employees to be generally satisfactory. In addition, from time to time, we utilize outside consultants or contractors for specific
assignments.

 We believe our success is directly
related to the satisfaction, growth, and development of our employees. We strive to offer a work environment where employee unique characteristics
and opinions are valued and one that provides our employees the opportunities to use and augment their professional skills. To achieve
our human capital goals, we intend to remain focused on providing our personnel with career development opportunities to expand our business
within their areas of expertise and continue to provide our personnel with personal and professional growth. In addition to salaries,
we also provide a 401(k)-retirement plan, healthcare and insurance benefits, health savings accounts, paid time off, and various services
and tools to support our employees' health and wellness. Our leaders, managers, and eligible employees are provided an opportunity
to participate in our stock option plans. We emphasize a number of measures and objectives in managing our human capital assets, including,
among others, employee safety and wellness, talent acquisition and retention, employee engagement, development, and training, diversity
and inclusion, and compensation and pay equity.

 Employee Engagement, Development,
and Training. We provide all employees with the opportunity to share their opinions and feedback on our culture which helps enhance
the employee experience, promote employee retention, drive change, and leverage the overall success of our organization. We provide all
employees a wide range of professional development experiences, both formal and informal, at all stages in their careers.

 Diversity and Inclusion and
Ethical Business Practices. We are committed to fostering work environments that value and promote diversity and inclusion, including
our Diversity and Inclusion Program which focuses on initiatives to increase the diversity of our workforce and promote an environment
of trust where employees feel safe to express their opinions and perspectives without fear of repercussion. This commitment includes providing
equal access to, and participation in, equal employment opportunities, programs, and services without regard to race, religion, color,
national origin, disability, sex, sexual orientation, gender identity, stereotypes or assumptions based thereon. We pride ourselves in
the development and fair treatment of our workforce, including healthcare and benefit programs for our employees, equal employment hiring
practices and policies, anti-harassment, workforce safety, and anti-retaliation policies. We welcome and celebrate our teams' differences,
experiences, and beliefs, and we are investing in a more engaged, diverse, and inclusive workforce.

 We foster a strong corporate culture
that promotes high standards of ethics and compliance for our businesses, including policies that set forth principles to guide employee,
officer, director, and vendor conduct, such as our Code of Business Conduct and Ethics. We maintain a whistleblower policy and anonymous
hotline for the confidential reporting of any suspected policy violations or unethical business conduct on the part of our businesses,
employees, officers, directors, or vendors and provide training and education to our global workforce with respect to our Code of Business
Conduct and Ethics and anti-corruption and anti-bribery policies.

 Facilities

 Our principal offices are located
in Gardena, California, where we lease a 40,000 square foot facility that includes our corporate staff offices, our manufacturing facility,
and our research and development center. We also lease a 29,000 square foot facility as our second manufacturing facility and a 20,000
square foot warehouse facility across the street from our corporate offices. We believe that our current facilities are sufficient to
accommodate our anticipated production volumes for the next twelve months. If required, additional office and manufacturing space is available
within less than three miles from our present location.

 Item 1A.

 Risk Factors

 Before deciding to purchase,
hold or sell our common stock, you should carefully consider the risks described below in addition to the other information contained
in this Annual Report on Form 10-K and in our other filings with the Securities and Exchange Commission, or the SEC, including subsequent
reports on Forms 10-Q and 8-K. The risks and uncertainties described below are not the only ones we face. Additional risks and uncertainties
not presently known to us or that we currently deem immaterial may also affect our business. If any of these known or unknown risks or
uncertainties actually occurs with material adverse effects on us, our business, financial condition, results of operations and/or liquidity
could be seriously harmed. In that event, the market price for our common stock will likely decline, and you may lose all or part of your
investment.

 Risks Related to Our Business and Industry

 The Company's financial
statements have been prepared under the assumption that the Company will continue as a going concern. For the year ended December 31,
2024, the Company recorded a net loss of $4,677 and used cash in operations of $536. These factors raise substantial doubt about the Company's
ability to continue as a going concern within one year of the date that the financial statements are issued. In addition, the Company's
independent registered public accounting firm, in their report on the Company's December 31, 2024, audited financial statements,
raised substantial doubt about the Company's ability to continue as a going concern.

 Our ability to continue as a
going concern is dependent upon our ability to obtain additional financing, grow sales, drive further operating efficiencies, reduce
expenditures, and ultimately, create profitable operations Our ability to obtain additional financing in the debt and equity capital
markets is subject to several factors, including market and economic conditions, our performance and investor sentiment with respect
to us and our industry. The Company has taken action to improve its margins, reduce inventory and
reduce overhead expenses. 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.

 The COVID-19 pandemic and recovery had a significant
negative impact on our business, sales, results of operations and financial condition in 2020 to 2022, but to a lesser extent in 2023
and 2024.

 The COVID-19 pandemic and recovery
has had a widespread and detrimental effect on the global economy, particularly in the U.S. since 2020, but to a lesser extent in 2023
and 2024. The repercussions of COVID-19 and recovery is likely to continue to have, a material and substantial adverse impact on our results
of operations, including a decrease in our sales and delays in sourcing raw materials from suppliers.

 In addition, the COVID-19 pandemic
and recovery adversely affected the economies and financial markets of many countries, which may affect our level of indebtedness, our
need to generate sufficient cash flows to service our indebtedness and our ability to comply with the covenants contained in the agreements
that govern our indebtedness. In the event of a sustained market deterioration and continued declines in net sales, and other repercussions
of the COVID-19 pandemic and recovery, we may need additional liquidity. The need for additional liquidity may also be affected by the
federal government's potential failure to raise the debt ceiling or correct a prolonged banking or financial crisis. Such disruptions
may impact the broader capital markets, and in turn, may impact our ability to access those markets. We cannot provide any assurance that
we will be able to obtain additional sources of financing or liquidity on acceptable terms, or at all.

 The ultimate impact of the COVID-19
pandemic and recovery on our business and results of operations remains unknown and will depend on future developments, which are highly
uncertain and cannot be predicted with confidence, including the duration and potential resurgence of COVID-19, repeat or cyclical outbreaks
and any additional preventative and protective actions that governments, or we, or our customers, or our suppliers may direct, which may
result in an extended period of continued business disruption and reduced operations. Any resulting financial impact cannot be reasonably
estimated at this time, but we expect it will continue to have a material impact on our business, financial condition and results of operations.

 Rising inflation in the economies in which we
operate may adversely affect our operating margins and our results of operation.

 In general, we believe that
our results of operations are not dependent on moderate changes in the inflation rate. Historically, we have been able to manage the
impacts of more significant changes in inflation rates through our customer relationships, customer agreements that may provide for
price increases and continued focus on improvements of operational productivity. However, the current inflationary environment, we
believe, has impacted the Company's business in 2023, to a lesser extent in 2024, and may continue to impact its business in
2025, including as a result of increased energy costs, increase materials costs due to higher tariffs on key components which may
not be able to pass to customers as well as increasing wages in the labor markets in which we compete. Inflation could continue to
pressure our margins in future periods. Adverse economic conditions resulting from inflationary pressures, U.S. Federal Reserve
actions, geopolitical issues or otherwise are difficult to predict and may have a material adverse impact on our business, results
of operations and financial condition.

 Terrorist attacks and threats of war may impact
all aspects of our operations, revenues, costs and stock price in unpredictable ways.

 The impacts of war and
other geopolitical events, including but not limited to Russia's invasion of Ukraine and the Hamas-Israel conflict and the resulting war,
are difficult to predict. The resulting geopolitical uncertainty are likely to have a significant impact on the European Union, the United
Kingdom and other countries, including the U.S. The threat that these military operations may expand beyond Ukraine, Israel, and the Gaza
Strip may have a negative impact as well. Significant increases in the price of oil and natural gas have occurred and are likely to continue
putting additional inflationary pressures on central banks, including Federal Reserve System (the "FRB"). It is possible that
interest rate hikes by the FRB will continue to occur in 2025, but the amount, timing, and frequency of such increases are not fully known
at this time. As a result of these conflicts, the threat of cyberattacks has increased which could affect banks in the U.S. and their
customers. Additionally, the United States and European nations have imposed very significant financial sanctions on the Russian Federation,
including targeted sanctions on Russian banks and wealthy individuals as well as halting certification of the Nord Stream 2 gas pipeline.
They have denied Russian banks access the Society for Worldwide Interbank Financial Telecommunications or SWIFT which is expected to slow
international trade and make such transactions costlier to accomplish which could also negatively affect banks in the U.S. and their customers.
In response to the Russian military actions, many businesses headquartered in the Eurozone and the United States have stopped doing business
with Russia, which may negatively affect the profitability of those companies. The international turmoil has already had and may continue
to have a negative impact on the stock market generally and, in turn, on our stock price.

 The continuation or escalation
of events like the war in Russia-Ukraine war or the Hamas-Israel conflict may also disrupt business operations of
our suppliers and/or customers, causing supply chain constraints or delayed spending by our customers. The full impact of the such events
are not known at this time, but they could have a material adverse impact on our business, financial condition, results of operations,
and stock price.

 We have incurred significant losses in the past
and we may incur losses in the future, which may hamper our operations and impede us from expanding our business.

 We have incurred significant losses
in the past. For the years ended December 31, 2024 and 2023, we incurred net losses of approximately $4.1 million and $6.5 million, respectively.
For the year ended December 31, 2024, we realized a gross profit of approximately $1.9 million, and for the year ended December 31, 2023,
we realized a gross profit of approximately $0.7 million. We may incur net and gross losses in the future. We expect to rely on cash on
hand, cash, if any, generated from our operations, borrowing availability under our line of credit and proceeds from our future financing
activities, if any, to fund all of the cash requirements of our business. Additional losses may hamper our operations and impede us from
expanding our business.

 We are dependent on, and derive substantially
all of our revenue from, sales of our DC base power systems to one customer within the U.S. telecommunications market. Our efforts to
expand our customer base, our product portfolio or markets within which we operate may not succeed and may reduce our revenue growth rate.

 We derive substantially all
our revenues from sales of our DC base power systems to one Tier-1 customer within the telecommunications market. The
volume of sales to them may vary significantly from year to year. Any factor adversely affecting sales of these power systems to
this customer or to other customers within this market, including market acceptance, product competition, performance and
reliability, reputation, price competition and economic and market conditions, could adversely affect our business and results of
operations.

 In addition, any unfavorable change
in our business relationship with our Tier-1 telecommunications wireless carrier customers, or delays in customer implementation and deployment
of our products, could have a material adverse effect on our results of operation and financial condition. Our plans to invest in the
development of electric vehicle chargers, residential and commercial power products and higher capacity DC hybrid solar systems may not
result in an anticipated growth in sales and may reduce our revenue growth rate.

 Many of our DC power systems involve long design
and sales cycles, which could have an adverse impact on our results of operations and financial performance.

 The design and sales cycle for
our DC power systems, from initial contact with our potential customer to the shipments of our product, may be lengthy. Customers generally
consider a wide range of factors before making a purchase decision. Prior to purchasing our products, many of our customers often require
a significant technical review, tests and evaluations over long periods of time (i.e., three to twenty-four months), assessments of competitive
products and approval at a number of management levels within their organization. During the time our customers are evaluating our products,
we may incur substantial sales and service, engineering and research and development expenses to customize our products to meet customer's
application needs. We may also expend significant management efforts, increase manufacturing capacity, order long-lead-time components
or purchase significant amounts of components and other inventory prior to receiving an order. Even after this evaluation process, a potential
customer may not purchase our products.

 The product development time before
a customer agrees to purchase our DC power systems can be considerable. Our process for developing an integrated solution may require
use of significant engineering resources, including design, prototyping, modeling, testing and application engineering. The length of
this cycle is influenced by many factors, including the difficulty of the technical specification and complexity of the design and the
customer's procurement processes. A significant period may elapse between our investment of time and resources in designing and
developing a product for a customer and receipt of revenue from sales of that product. The length of this process, combined with unanticipated
delays in the development cycles and the effects of the COVID-19 pandemic and recovery on our ability to demonstrate our products to current
and potential customers could materially affect our results of operations and financial conditions.

 We do not have long-term commitments for significant
revenues with most of our customers and may be unable to retain existing customers, attract new customers or replace departing customers
with new customers that can provide comparable revenues and profits.

 Because we generally do not obtain
firm, long-term volume purchase commitments from our customers, most of our sales are derived from individual purchase orders. We remain
dependent upon securing new purchase orders in the future in order to sustain and grow our revenues. Accordingly, there is no assurance
that our revenues and business will grow in the future. Our failure to maintain and expand our customer relationships could materially
and adversely affect our business and results of operations.

 The current high concentration of our sales
within the telecommunications market could result in a significant reduction in sales and negatively affect our profitability if demand
for our DC power systems declines within this market before we are able to make significant inroads with our diversification of markets
and customers.

 Currently, we are predominately
focused on the manufacturing, marketing and sales of DC power systems to telecommunications companies. We may be unable to shift our business
focus away from these activities to other potential markets for our products. Accordingly, the emergence of new competing DC power products
or lower-cost alternative technologies within the telecommunications market may reduce the demand for our products. A downturn in the
demand for our DC power systems within this market could materially and adversely affect our sales and results of operations.

 We face inventory risk and may be required to
write-off additional inventory in the future.

 We value inventories at the lower
of cost or net realizable value. If the estimated net realizable value is determined to be less than the recorded cost of the inventory,
a provision is made to reduce the carrying amount of the inventory item to the lower net realizable value determination. Determination
of the net realizable value may be complex, and therefore, requires management to make assumptions and to apply a high degree of judgment.
In order for management to make the appropriate determination of net realizable value, the following items are commonly considered: inventory
turnover statistics, inventory quantities on hand in our facilities, unfilled customer order quantities, forecasted consumer demand, current
prices, competitive pricing, seasonality factors, consumer trends and performance of similar products or accessories. Subsequent changes
in facts or circumstances do not result in the reversal of previously recorded write-downs.

 If our estimates regarding net
realizable value are inaccurate, including our estimates regarding our inventory, or changes in customer demand for our products in an
unforeseen manner, we may experience additional write-downs of our inventory.

 The unavailability or shortage, or increase
in the cost, of raw materials and components could have an adverse effect on our sales and profitability.

 Our operations require raw materials,
such as aluminum, copper, engines, electronics, and permanent magnets. Commodities such as aluminum and copper are known to have significant
price volatility based on global economic conditions. An increase in global economic outlook may result in significant price increases
in the cost of our raw materials. In addition, we use Neodymium permanent magnets in our alternators, for which there are a limited number
of global suppliers that can meet our standards. Increase in manufacturing of electric vehicles worldwide can have an adverse effect on
the cost or supply of these magnets. At our current production volumes, we are unable to secure large quantities of these commodities
at fixed prices; however, we do have multiple sources of supply for our raw materials to meet our near term forecasted needs. Various
factors could reduce the availability of raw materials and components and shortages may occur from time to time in the future. An increase
in lead times for the supply of raw materials due to a global increase in demand for commodities or other reasons may significantly increase
the timing of receipt of such materials and/or increase the material costs of our products. For example, if production was interrupted due to unavailability
or shortage of raw materials and we were not able to find alternate third-party suppliers or re-engineer our products to accommodate different
components or materials, we could experience disruptions in manufacturing and operations including product shortages, higher freight costs
and re-engineering costs. If our supply of raw materials or components are disrupted or our lead times extended, our business,
results of operations or financial condition could be materially adversely affected.

 The markets within which we compete are highly
competitive. Many of our competitors have greater financial and other resources than we do and one or more of these competitors could
use their greater financial and other resources to gain market share at our expense.

 If our business continues to develop
as expected, we anticipate that we will grow our revenues in the near future. If, due to capital constraints or otherwise, we are unable
to fulfill our existing backlog in a timely manner and/or procure and timely fulfill our anticipated future backlog, our customers and
potential customers may decide to use competing DC power systems or continue the use of AC power systems. If we are unable to fulfill
the demand for products and services in a timely manner, our customers and potential customers may choose to purchase products from our
competitors. Some of our larger competitors may be willing to reduce prices and accept lower margins in order to compete with us. In addition,
we could face new competition from large international or domestic companies with established industrial brands and distribution networks
that enter our end markets. Demand for our products may also be affected by our ability to respond to changes in design and functionality,
to respond to downward pricing pressure, and to provide shorter lead times for our products than our competitors. If we are unable to
respond successfully to these competitive pressures, we could lose market share, which could have an adverse impact on our results. We
cannot assure that we will be able to compete successfully in our markets or compete effectively against current and new competitors as
our industry continues to evolve.

 Rapid technological changes may prevent us from
remaining current with our technological resources and maintaining competitive product and service offerings.

 The markets in which we and our
customers operate are characterized by rapid technological change, especially within the telecommunications market. Significant technological
changes could render our existing and potential new products, services and technology obsolete. Our future success will depend, in large
part, upon our ability to:

 effectively identify and develop leading energy efficient technologies;

 continue to develop our technical expertise;

 enhance our current products and services with new, improved and competitive technology; and

 respond to technological changes in a cost-effective and timely manner.

 If we are unable to successfully
respond to technological change or if we do not respond to it in a cost-effective and timely manner, then our business will be materially
and adversely affected. We cannot assure you that we will be successful in responding to changing technology. In addition, technologies
developed by others may render our products, services and technology uncompetitive or obsolete. Even if we do successfully respond to
technological advances, the integration of new technology may require substantial time and expense, and we cannot assure you that we will
succeed in adapting our products, services and technology in a timely and cost-effective manner.

 If we are unable to continue to develop new
and enhanced products and services that achieve market acceptance in a timely manner, our competitive position and operating results could
be harmed.

 Our future success will depend
on our ability to continue to develop new and enhanced DC power systems and related products and services that achieve market acceptance
in a timely and cost-effective manner. The markets in which we and our customers operate are characterized by frequent introductions of
new and enhanced products and services, evolving industry standards and regulatory requirements, government incentives and changes in
customer needs. The successful development and market acceptance of our products and services depends on a number of factors, including:

 the impact of a global crisis such as the COVID-19 pandemic on the global markets;

 the changing requirements and preferences of the potential customers in our markets;

 the accurate prediction of market requirements, including regulatory issues;

 the timely completion and introduction of new products and services to avoid obsolescence;

 the quality, price and performance of new products and services;

 the availability, quality, price and performance of competing products and services;

 our customer service and support capabilities and responsiveness;

 the successful development of our relationships with existing and potential customers; and

 changes in industry standards.

 We may experience financial or
technical difficulties or limitations that could prevent us from introducing new or enhanced products or services. Furthermore, any of
these new or enhanced products and services could contain problems that are discovered after they are introduced. We may need to significantly
modify the design of these products and services to correct problems. Rapidly changing industry standards and customer preferences and
requirements may impede market acceptance of our products and services.

 Development and enhancement of
our products and services will require significant additional investment and could strain our management, financial and operational resources.
The lack of market acceptance of our products or services or our inability to generate sufficient revenues from this development or enhancement
to offset their development costs could have a material adverse effect on our business. In addition, we may experience delays or other
problems in releasing new products and services and enhancements, and any such delays or problems may cause customers to forego purchases
of our products and services and to purchase those of our competitors.

 We cannot provide assurance that
products and services that we have recently developed or that we develop in the future will achieve market acceptance. If our new products
and services fail to achieve market acceptance, or if we fail to develop new or enhanced products and services s that achieve market acceptance,
our growth prospects, operating results and competitive position could be adversely affected.

 Natural disasters and other events beyond our
control could materially adversely affect us.

 Natural disasters or other catastrophic
events, including the COVID-19 pandemic and recovery, may cause damage or disruption to our operations, international commerce and the
global economy, and thus could have a strong negative effect on us. Our business operations are subject to interruption by natural disasters,
fire, power shortages, pandemics and other events beyond our control. Although we maintain crisis management and disaster response plans,
such events could make it difficult or impossible for us to deliver our services to our customers and could decrease demand for our services.

 We are dependent on relationships with our key
material suppliers, and the partial or complete loss of one of these key suppliers, or the failure to find replacement suppliers or manufacturers
in a timely manner, could adversely affect our business.

 We have established relationships
with third-party engine suppliers and other key suppliers from which we source components for our power systems. We purchase standard
configurations of engines for our DC power systems and are substantially dependent on timely supply from our key engine suppliers, Yanmar
Engines Company, Perkins Engines Company Ltd, and Toyota Corporation. Engines from Yanmar, Perkins, and Toyota represented approximately
88%, 3%, and 1% of our total engines sold as a component of our DC power systems during 2024, respectively, and represented approximately
62%, 26%, and less than 2% of our total engines sold as components of our DC power systems during 2023, respectively. We also use engines
from Isuzu, Kubota and, to a lesser extent, Volvo Penta. In March 2023, we received EPA certification on our 4Y Toyota engine, which is
a larger engine model for used on our 20 to 30 kW DC power systems. We do not have any long-term contracts or commitments with any of
these suppliers. If any of these engine suppliers were to fail to provide emissions certified engines in a timely manner or fail to supply
engines that meet our quality, quantity or cost requirements, or were to discontinue manufacturing any engines we source from them or
discontinue providing any of these engines to us, or the supply chain is interrupted or delayed as a result of a pandemic or unprecedented
event, and we were unable to obtain substitute sources in a timely manner or on terms acceptable to us, our ability to manufacture our
products could be materially adversely affected.

 Price increases in some of the key components
in our DC power systems could materially and adversely affect our operating results and cash flows.

 The prices of some of the key
components of our DC power systems are subject to fluctuation due to market forces beyond our control, including changes in the costs
of raw materials incorporated into these components. Such price increases occur from time to time due to spot shortages of commodities,
increases in labor costs or longer-term shortages due to market forces. In particular, the prices of engines can fluctuate frequently
and often significantly. We do not have any long-term contracts or commitments with our two key engine suppliers. Substantial increases
in the prices of raw materials used in components which we source from our suppliers may result in increased prices charged by our suppliers.
If we incur price increases from our suppliers for key components in our DC power systems, our production costs will increase. Given competitive
market conditions, we may not be able to pass all or any of those cost increases on to our customers in the form of higher sales prices.
To the extent our competitors do not suffer comparable component cost increases, we may have even greater difficulty passing along price
increases and our competitive position may be harmed. As a result, increases in costs of key components may adversely affect our margins
and otherwise adversely affect our operating results and cash flows.

 A portion of our key components are sourced
in foreign countries, exposing us to additional risks that may not exist in the U.S.

 A portion of our key components,
such as engines, magnets and cooling systems, are purchased from suppliers located overseas, primarily in Asia. Our international sourcing
subjects us to a number of potential risks in addition to the risks associated with third-party sourcing generally. These risks include:

 inflation or changes in political and economic conditions;

 unstable regulatory environments;

 changes in import and export duties;

 currency rate fluctuations;

 trade restrictions;

 labor unrest;

 logistical and communications challenges; and

 other restraints and burdensome taxes.

 These factors may have an adverse
effect on our ability to source our purchased components overseas. In particular, if the U.S. dollar were to depreciate significantly
against the currencies in which we purchase raw materials from foreign suppliers, our cost of goods sold could increase materially, which
would adversely affect our results of operations.

 The unavailability or shortage, or increase
in the cost, of raw materials and components could have an adverse effect on our sales and profitability.

 Our operations require raw materials,
such as aluminum, copper and permanent magnets. Commodities such as aluminum and copper are known to have significant price volatility
based on global economic conditions. An increase in global economic outlook may result in significant price increases in the cost of our
raw materials. In addition, we use Neodymium permanent magnets in our alternators, for which there are a limited number of global suppliers
that can meet our standards. Increase in manufacturing of electric vehicles worldwide can have an adverse effect on the cost or supply
of these magnets. At our current production volumes, we are unable to secure large quantities of these commodities at fixed prices; however,
we do have multiple sources of supply for our raw materials to meet our near term forecasted needs. Various factors could reduce the availability
of raw materials and components and shortages may occur from time to time in the future. An increase in lead times for the supply of raw
materials due to a global increase in demand for commodities outlined may significantly increase material costs of our products. If production
was interrupted due to unavailability or shortage of raw materials and we were not able to find alternate third-party suppliers or re-engineer
our products to accommodate different components or materials, we could experience disruptions in manufacturing and operations including
product shortages, higher freight costs and re-engineering costs. If our supply of raw materials or components is disrupted or our lead
times extended, our business, results of operations or financial condition could be materially adversely affected.

 We manufacture and assemble a majority of our
products at two facilities. Any prolonged disruption in the operations of this facility would result in a decline in our sales and profitability.

 We manufacture and assemble our
DC power systems at our two production facilities located in Gardena, California. Any prolonged disruption in the operations of our manufacturing
and assembly facilities, whether due to the COVID-19 pandemic and recovery, equipment or information technology infrastructure failure,
labor difficulties, destruction of or damage to one or both of these facilities as a result of an earthquake, fire, flood, other catastrophes,
and other operational problems would result in a decline in our sales and profitability. In the event of a business interruption at our
facilities, we may be unable to shift manufacturing and assembly capabilities to alternate locations, accept materials from suppliers
or meet customer shipment needs, among other severe consequences. Such an event could have a material and adverse impact on our financial
condition and results of our operations.

 Our business operations are subject to substantial
government regulation.

 Our business operations are subject
to certain federal, state, local and foreign laws and regulations. For example, our products, services and technologies are subject to
regulations relating to building codes, public safety, electrical connections, security protocols, and local and state licensing requirements.
The regulations to which we are subject may change, additional regulations may be imposed, or existing regulations may be applied in a
manner that creates special requirements for the implementation and operation of our products or services that may significantly impact
or even eliminate some of our revenues or markets. In addition, we may incur material costs or liabilities in complying with any such
regulations. Furthermore, some of our customers must comply with numerous laws and regulations, which may affect their willingness and
ability to purchase our products, services and technologies.

 The modification of existing laws
and regulations or interpretations thereof or the adoption of future laws and regulations could adversely affect our business, cause us
to modify or alter our methods of operations and increase our costs and the price of our products, services and technology. In addition,
we cannot provide any assurance that we will be able, for financial or other reasons, to comply with all applicable laws and regulations.
If we fail to comply with these laws and regulations, we could become subject to substantial penalties or restrictions that could materially
and adversely affect our business.

 Certain of our products are used in critical
communications networks which may subject us to significant liability claims.

 Because certain of our products
for customers in the telecommunications industry are used in critical communications networks, we may be subject to significant liability
claims if our products do not work properly. We warrant to our customers that our products will operate in accordance with our product
specifications. If our products fail to conform to these specifications, our customers could require us to remedy the failure or could
assert claims for damages. The provisions in our agreements with customers that are intended to limit our exposure to liability claims
may not preclude all potential claims. In addition, any insurance policies we have may not adequately limit our exposure with respect
to such claims. Liability claims could require us to spend significant time and money in litigation or to pay significant damages. Any
such claims, whether or not successful, would be costly and time-consuming to defend, and could divert management's attention and
seriously damage our reputation and our business.

 We could be adversely affected by our failure
to comply with the laws applicable to our foreign activities, including the U.S. Foreign Corrupt Practices Act and other similar worldwide
anti-bribery laws.

 The U.S. Foreign Corrupt Practices
Act, or the FCPA, and similar anti-bribery laws in other jurisdictions prohibit U.S.-based companies and their intermediaries from making
improper payments to non-U.S. officials for the purpose of obtaining or retaining business. We may pursue opportunities in certain parts
of the world that experience government corruption, and in certain circumstances, compliance with anti-bribery laws may conflict with
local customs and practices. Our policies mandate compliance with all applicable anti-bribery laws. Further, we require our partners,
subcontractors, agents and others who work for us or on our behalf to comply with the FCPA and other anti-bribery laws. Although we have
policies and procedures, and have conducted training, designed to ensure that we, our employees, our agents and others who work with us
in foreign countries comply with the FCPA and other anti-bribery laws, there is no assurance that such policies, procedures or training
will protect us against liability under the FCPA or other laws for actions taken by our agents, employees and intermediaries. If we are
found to be liable for FCPA violations (either due to our own acts or inadvertence, or due to the acts or inadvertence of others), we
could suffer from severe criminal or civil penalties or other sanctions, which could have a material adverse effect on our reputation,
business, results of operations or cash flows. In addition, detecting, investigating and resolving actual or alleged FCPA violations is
expensive and could consume significant time and attention of our senior management.

 We are exposed to risks related to our international
sales, and the failure to manage these risks could harm our business. If we fail to expand our business into international markets, our
revenues and results of operations may be adversely affected.

 In addition to our sales to
customers within the U.S., we may become increasingly dependent on sales to customers outside the U.S. as we pursue expanding our
business with customers worldwide. During 2024, and 2023, our sales to international customers accounted for 13% and 21%,
respectively, of total revenue. We continue to expect that a significant portion of our future revenues will be from international
sales to customers in less developed or developing countries. As a result, the occurrence of any international, political, economic,
or geographic event including changes in trade policy, tariffs, and/or export/import laws and regulations could result in a
significant increase in the cost of materials used in our production and/or a significant decline in revenue.

 During the first quarter of 2025, the U.S. government imposed tariffs on many products imported from China, Canada, and Mexico. It has
communicated to levy tariffs on additional countries in April 2025. Many of the countries on which tariffs have been levied have imposed
retaliatory tariffs or threatened to impose tariffs on goods they import from the U.S. While we obtain most of our raw materials from
domestic sources, many of our suppliers source materials from various countries and may pass tariffs they pay on to us. As of the date
of this report, we have not been materially affected by tariffs, but it is difficult to determine the impact of these tariffs on our business
for the rest of 2025 and beyond.

 There are significant
risks associated with conducting operations internationally, requiring significant financial commitments to support such operations. These
operations present a number of challenges including oversight of daily operating practices in each location, handling employee benefits
and employee behavior. In addition, compliance with complex foreign and U.S. laws and regulations that apply to our international operations
increases our cost of doing business in international jurisdictions. These numerous and sometimes conflicting laws and regulations include
internal control and disclosure rules, data privacy and filtering requirements, anti-corruption laws, such as the FCPA, and other local
laws prohibiting corrupt payments to governmental officials, and anti-competition regulations, among others.

 Violations of these laws and regulations
could result in fines and penalties, criminal sanctions against us, our officers, or our employees, prohibitions on the conduct of our
business and on our ability to offer our products and services in one or more countries, and could also materially affect our brand, our
international expansion efforts, our ability to attract and retain employees, our business, and our operating results. Although we have
implemented policies and procedures designed to ensure compliance with these laws and regulations, there can be no assurance that our
employees, contractors, or agents will not violate our policies.

 Some of the risks and challenges
of conducting business internationally include:

 the impact of a global crisis such as the COVID-19 pandemic on the global markets and the power generation market within the international telecommunications markets;

 requirements or preferences for domestic products or solutions, which could reduce demand for our products;

 unexpected changes in regulatory requirements;

 imposition of tariffs and other barriers and restrictions;

 restrictions on the import or export of critical technology;

 management communication and integration problems resulting from cultural and geographic dispersion;

 the burden of complying with a variety of laws and regulations in various countries;

 difficulties in enforcing contracts;

 the uncertainty of protection for intellectual property rights in some countries;

 application of the income tax laws and regulations of multiple jurisdictions, including relatively low-rate and relatively high-rate jurisdictions, to our sales and other transactions, which results in additional complexity and uncertainty;

 tariffs and trade barriers, export regulations and other regulatory and contractual limitations on our ability to sell products;

 greater risk of a failure of foreign employees to comply with both U.S. and foreign laws, including export and antitrust regulations, the FCPA and any trade regulations ensuring fair trade practices;

 heightened risk of unfair or corrupt business practices in certain geographies and of improper or fraudulent sales arrangements that may impact financial results and result in restatements of, or irregularities in, financial statements;

 potentially adverse tax consequences, including multiple and possibly overlapping tax structures;

 general economic and geopolitical conditions, including war and acts of terrorism;

 lack of the availability of qualified third-party financing; and

 currency exchange controls.

 While these factors and the impacts
of these factors are difficult to predict, any one or more of them could adversely affect our business, financial condition and results
of operations in the future.

 Cyberattacks through security vulnerabilities
could lead to disruption of business, reduced revenue, increased costs, liability claims, or harm to our reputation or competitive position.

 Security vulnerabilities may arise
from our hardware, software, employees, contractors or policies we have deployed, which may result in external parties gaining access
to our networks, data centers, cloud data centers, corporate computers, manufacturing systems, and/or access to accounts we have at our
suppliers, vendors, and customers. External parties may gain access to our data or our customers' data, or attack the networks causing
denial of service or attempt to hold our data or systems in ransom. The vulnerability could be caused by inadequate account security practices
such as failure to timely remove employee access when terminated. To mitigate these security issues, we have implemented measures throughout
our organization, including firewalls, backups, encryption, employee information technology policies and user account policies. However,
there can be no assurance these measures will be sufficient to avoid cyberattacks. If any of these types of security breaches were to
occur and we were unable to protect sensitive data, our relationships with our business partners and customers could be materially damaged,
our reputation could be materially harmed, and we could be exposed to a risk of litigation and possible significant liability.

 Further, if we fail to adequately
maintain our information technology infrastructure, we may have outages and data loss. Excessive outages may affect our ability to timely
and efficiently deliver products to customers or develop new products. Such disruptions and data loss may adversely impact our ability
to fulfill orders and interrupt other processes. Delayed sales or lost customers resulting from these disruptions could adversely affect
our financial results, stock price and reputation.

 The State of California enacted
the California Consumer Privacy Act of 2018, or CCPA, effective on January 1, 2020. Our and our business partners' or contractors'
failure to fully comply with the CCPA and other laws could lead to significant fines and require onerous corrective action. In addition,
data security breaches experienced by us or our business partners or contractors could result in the loss of trade secrets or other intellectual
property, public disclosure of sensitive commercial data, and the exposure of personally identifiable information (including sensitive
personal information) of our employees, customers, suppliers, contractors and others.

 Unauthorized use or disclosure
of, or access to, any personal information maintained by us or on our behalf, whether through breach of our systems, breach of the systems
of our suppliers or vendors by an unauthorized party, or through employee or contractor error, theft or misuse, or otherwise, could harm
our business. If any such unauthorized use or disclosure of, or access to, such personal information was to occur, our operations could
be seriously disrupted, and we could be subject to demands, claims and litigation by private parties, and investigations, related actions,
and penalties by regulatory authorities. In addition, we could incur significant costs in notifying affected persons and entities and
otherwise complying with the multitude of foreign, federal, state and local laws and regulations relating to the unauthorized access to,
or use or disclosure of, personal information. Finally, any perceived or actual unauthorized access to, or use or disclosure of, such
information could harm our reputation, substantially impair our ability to attract and retain customers and have an adverse impact on
our business, financial condition and results of operations.

 Risks Related to Our Intellectual Property

 If we fail to adequately protect our intellectual
property rights, we could lose important proprietary technology, which could materially and adversely affect our business.

 Our success and ability to compete
depends, in substantial part, upon our ability to develop and protect our proprietary technology and intellectual property rights to distinguish
our products, services and technology from those of our competitors. The unauthorized use of our intellectual property rights and proprietary
technology by others could materially harm our business.

 Historically, we have relied primarily
on a combination of trademark, copyright and trade secret laws, along with non-competition and confidentiality agreements, contractual
provisions, licensing arrangements and proprietary software and manufacturing processes, to establish and protect our intellectual property
rights. Although we hold several unregistered copyrights in our business, we believe that the success of our business depends more upon
our proprietary technology, information, processes and know-how than on patents or trademark registrations. In addition, much of our proprietary
information and technology may not be patentable; if we decided to apply for patents and/or trademarks in the future, we might not be
successful in obtaining any such future patents or in registering any marks.

 Despite our efforts to protect
our intellectual property rights, existing laws afford only limited protection, and our actions may be inadequate to protect our rights
or to prevent others from claiming violations of their proprietary rights. Unauthorized third parties may attempt to copy, reverse engineer
or otherwise obtain, use or exploit aspects of our products and services, develop similar technology independently, or otherwise obtain
and use information that we regard as proprietary. We cannot assure you that our competitors will not independently develop technology
similar or superior to our technology or design around our intellectual property. In addition, the laws of some foreign countries may
not protect our proprietary rights as fully or in the same manner as the laws of the U.S.

 We may need to resort to litigation
to enforce our intellectual property rights, to protect our trade secrets, and to determine the validity and scope of other companies'
proprietary rights in the future. However, litigation could result in significant costs and in the diversion of management and financial
resources. We cannot assure you that any such litigation will be successful or that we will prevail over counterclaims against us. Our
failure to protect any of our important intellectual property rights or any litigation that we resort to in order to enforce those rights
could materially and adversely affect our business.

 If we face claims of intellectual property infringement
by third parties, we could encounter expensive litigation, be liable for significant damages or incur restrictions on our ability to sell
our products and services.

 Although we are not aware of any
present infringement of our products, services or technology on the intellectual property rights of others, we cannot be certain that
our products, services and technologies do not or in the future will not infringe on the valid intellectual property rights held by third
parties. In addition, we cannot assure you that third parties will not claim that we have infringed their intellectual property rights.

 In recent years, there has been
a significant amount of litigation in the U.S. involving patents and other intellectual property rights. In the future, we may be a party
to litigation as a result of an alleged infringement of others' intellectual property. Successful infringement claims against us
could result in substantial monetary liability, require us to enter into royalty or licensing arrangements, or otherwise materially disrupt
the conduct of our business. In addition, even if we prevail on these claims, this litigation could be time-consuming and expensive to
defend or settle and could result in the diversion of our time and attention and of operational resources, which could materially and
adversely affect our business. Any potential intellectual property litigation also could force us to do one or more of the following:

 stop selling, incorporating or using our products and services that use the infringed intellectual property;

 obtain from the owner of the infringed intellectual property right a license to sell or use the relevant technology, which license may not be available on commercially reasonable terms, or at all; or

 redesign the products and services that use the technology.

 If we are forced to take any
of these actions, our business may be seriously harmed. Although we carry general liability insurance, our insurance may not cover potential
claims of this type or may not be adequate to indemnify us for all liability that may be imposed.

 Risks Related to Our Common Stock

 Our operating results can fluctuate significantly
from period to period, which makes our operating results difficult to predict and can cause our operating results in any particular period
to be less than comparable periods and expectations from time to time.

 Our operating results have fluctuated
significantly from quarter-to-quarter, period-to-period and year-to-year during our operating history and are likely to continue to fluctuate
in the future due to a variety of factors, many of which are outside of our control. Certain factors that may affect our operating results
include, without limitation, those set forth under "Management's Discussion and Analysis of Financial Condition and Results
of Operations — Critical Accounting Policies" in this Annual Report on Form 10-K.

 Because we have little or no control
over many of these factors, our operating results are difficult to predict. Any adverse change in any of these factors could negatively
affect our business and results of operations.

 Our revenues, net income and other
operating results are heavily dependent upon the size and timing of customer orders and projects, and the timing of the completion of
those projects. The timing of our receipt of large individual orders, and of project completion, is difficult for us to predict. Because
our operating expenses are based on anticipated revenues over the mid- and long-term and because a high percentage of our operating expenses
are relatively fixed, a shortfall or delay in recognizing revenues can cause our operating results to vary significantly from quarter-to-quarter
and can result in significant operating losses or declines in profit margins in any particular quarter. If our revenues fall below our
expectations in any particular quarter, we may not be able, or it may not be prudent for us, to reduce our expenses rapidly in response
to the revenue shortfall, which can result in us suffering significant operating losses or declines in profit margins in that quarter.

 Due to these factors and the other
risks discussed in this Annual Report on Form 10-K, you should not rely on quarter-to-quarter, period-to-period or year-to-year comparisons
of our results of operations as an indication of our future performance. Quarterly, period and annual comparisons of our operating results
are not necessarily meaningful or indicative of future performance. As a result, it is likely that, from time to time, our results of
operations or our revenue backlog could fall below historical levels or the expectations of public market analysts and investors, which
could cause the trading price of our common stock to decline significantly.

 Our Chairman, President and Chief Executive
Officer owns a significant percentage of our common stock and will exercise significant influence over matters requiring stockholder approval,
regardless of the wishes of other stockholders.

 Our Chairman, President, Chief
Executive Officer and Secretary, Arthur D. Sams, beneficially owns approximately 32% of our outstanding shares of common stock. Mr. Sams
therefore has significant influence over management and significant control over matters requiring stockholder approval, including the
annual election of directors and significant corporate transactions, such as a merger or other sale of our company or our assets, for
the foreseeable future. This concentrated control may limit stockholders' ability to influence corporate matters and, as a result,
we may take actions that our stockholders do not view as beneficial. As a result, the market price of our common stock could be adversely
affected.

 The price of our shares of common stock is volatile,
and you could lose all or part of your investment.

 The trading price of our shares
of common stock is volatile and could be subject to wide fluctuations in response to various factors, some of which are beyond our control,
including limited trading volume. In addition to the factors discussed in the "Risk Factors" section and elsewhere in this
Annual Report on Form 10-K, these factors include, without limitation:

 competition from existing technologies and products or new technologies and products that may emerge;

 the loss of significant customers, including AT&T and Verizon Wireless;

 actual or anticipated variations in our quarterly operating results;

 failure to meet the estimates and projections of the investment community or that we may otherwise provide to the public;

 our cash position;

 announcement or expectation of additional financing efforts;

 issuances of debt or equity securities;

 our inability to successfully enter new markets or develop additional products;

 actual or anticipated fluctuations in our competitors' operating results or changes in their respective growth rates;

 sales of our shares of common stock by us, or our stockholders in the future;

 trading volume of our shares of common stock on The Nasdaq Capital Market;

 market conditions in our industry;

 overall performance of the equity markets and general political and economic conditions;

 introduction of new products or services by us or our competitors;

 additions or departures of key management, scientific or other personnel;

 publication of research reports about us or our industry or positive or negative recommendations or withdrawal of research coverage by securities or industry analysts;

 changes in the market valuation of similar companies;

 disputes or other developments related to intellectual property and other proprietary rights;

 changes in accounting practices;

 significant lawsuits, including stockholder litigation; and

 other events or factors, many of which are beyond our control.

 Furthermore, the public equity
markets have experienced extreme price and volume fluctuations that have affected and continue to affect the market prices of equity securities
of many companies. These fluctuations often have been unrelated or disproportionate to the operating performance of those companies. These
broad market and industry fluctuations, as well as general economic, political and market conditions such as recessions, interest rate
changes or international currency fluctuations, may negatively impact the market price of our shares of common stock.

 A decline in the price of our common stock could
affect our ability to raise further working capital, which could adversely impact our ability to continue operations.

 A prolonged decline in the price
of our common stock could result in a reduction in the liquidity of our common stock and a reduction in our ability to raise capital.
We may attempt to acquire a significant portion of the funds we need in order to conduct our planned operations through the sale of equity
securities; thus, a decline in the price of our common stock could be detrimental to our liquidity and our operations because the decline
may adversely affect investors' desire to invest in our securities. If we are unable to raise the funds we require for all of our
planned operations, we may be forced to reallocate funds from other planned uses and may suffer a significant negative effect on our business
plan and operations, including our ability to develop new products or services and continue our current operations. As a result, our business
may suffer, and we may be forced to reduce or discontinue operations. We also might not be able to meet our financial obligations if we
cannot raise enough funds through the sale of our common stock and we may be forced to reduce or discontinue operations.

 We do not anticipate paying cash dividends,
and accordingly, stockholders must rely on stock appreciation for any return on their investment.

 We have never declared or paid
cash dividends on our capital stock. We intend to retain a significant portion of our future earnings, if any, to finance the operations,
development and growth of our business. Any future determination to declare dividends will be made at the discretion of our board of directors,
subject to applicable laws, and will depend on number of factors, including our financial condition, results of operations, capital requirements,
contractual restrictions, general business conditions and other factors that our board of directors may deem relevant. As a result, only
appreciation of the price of our common stock, which may never occur, will provide a return to stockholders.

 Our failure to satisfy certain listing requirements may result in
our common stock being delisted from the Nasdaq Capital Market, which may make it more difficult for our shareholders to sell shares of
our common stock.

 Our common
stock is listed on Nasdaq. Nasdaq has several quantitative and qualitative requirements companies must comply with to maintain this listing,
including a $1.00 minimum bid price per share (the "Bid Price Rule"). On November 24, 2023, we received a deficiency letter
from the Listing Qualifications Department of The Nasdaq Stock Market ("Nasdaq") indicating that our common stock is subject
to potential delisting from the Nasdaq because for a period of 30 consecutive business days, the bid price of our common stock has closed
below the minimum $1.00 per share requirement for continued inclusion under Nasdaq Marketplace Rule 5550(a)(2) (the "Bid Price Rule").
The Nasdaq deficiency letter has no immediate effect on the listing of our common stock, and our common stock continues to trade on The
Nasdaq Capital Market under the symbol "POLA" at this time.

 The Nasdaq
notice indicated that, in accordance with Nasdaq Marketplace Rule 5810(c)(3)(A), we will be provided 180 calendar days, or until May 22,
2024, to regain compliance. On May 17, 2024, we submitted a request for an extension of time to meet compliance, and on May 30, 2024, we
received a Nasdaq extension letter granting us until November 18, 2024 to meet compliance.

11, 2024, we held our annual meeting of stockholders. At the meeting, our stockholders approved an amendment to our Certificate of Incorporation,
in substantially the form attached to the proxy statement as Appendix A to allow the Board of Directors to effect, in its discretion prior
to December 31, 2024, a reverse stock split of all of our issued and outstanding common stock, par value $0.0001 per share, at a specific
ratio, ranging from one-for-three (1:3) to one-for-twenty (1:20), with the timing and ratio to be determined by the Board if effected.
On November 11, 2024, our Board approved a reverse stock split at a ratio of one-for-seven (1:7) (the "Reverse Stock Split").
On November 18, 2024, the Company effected a 1:7 Reverse Stock Split of its shares of common stock.

19, 2024, the Company received a new letter from Nasdaq notifying the Company that, as a result of the Company's failure to regain
compliance with the Bid Price Rule by November 18, 2024, Nasdaq determined to delist the Company's common stock from the Nasdaq
Capital Market. On November 26, 2024, the Company submitted a hearing request to a hearing panel to appeal Nasdaq's determination,
and the hearing request stayed the suspension of the Company's common stock. The hearing was scheduled to occur on January 23, 2025.

 On December 23, 2024, the Company
received a letter from Nasdaq informing the Company that the Company regained compliance with the Bid Price Rule and that the Company
is therefore in compliance with the Nasdaq's listing requirements. Accordingly, the hearing was cancelled and the Company's
securities continue to be listed and traded on the Nasdaq Capital Market. On December 27, 2024, the Company issued a press release announcing
that it regained compliance with the Bid Price Rule.

 On December
18, 2023, Peter Gross, a member of the Board of Directors of the Company, resigned as a member of the Board of Directors of the Company.
Mr. Gross, an independent director, served as a member of the audit committee, chair of the compensation committee and chair of the nominating
and corporate governance committee of the Board at the time of his resignation. On January 5, 2024, the Company received a notification
letter from Nasdaq that due to Mr. Gross' resignation, the Company is no longer in compliance with Nasdaq Listing Rule 5605. Pursuant
to Nasdaq Listing Rule 5605(c)(4), the Company is entitled to a cure period to regain compliance (i) until the earlier of the Company's
next annual shareholders' meeting or December 18, 2024; or (ii) if the next annual shareholders' meeting is held before June
17, 2024, then the Company must evidence compliance no later than June 17, 2024.

 Effective
July 25, 2024, we appointed Michael Field as a new member of the Board of Directors of the Company and appointed him, as an independent
director, to serve as a member of the audit committee, chair of the compensation committee and chair of the nominating and corporate governance
committee of the Board. By admitting Michael Field to the Board of Directors, we are back in compliance with Nasdaq Listing Rule 5605
effective July 25, 2024.

 While
we have been back in compliance with Nasdaq Listing Rules 5550(a)(2) and 5605, there can be no assurance that we will continue to be in
compliance with Nasdaq Listing Rule 5550(a)(2), Rule 5605 or other Nasdaq listing rules. If the stock is delisted, we may trade on the
over-the-counter market, or even in the pink sheets, which would significantly decrease the liquidity of an investment in our common stock.

 If securities or industry analysts do not publish
research or reports or publish inaccurate or unfavorable research or reports about our business, our share price and trading volume could
decline.

 The trading market for our shares
of common stock depends, in part, on the research and reports that securities or industry analysts publish about us or our business. We
do not have any control over these analysts. If no securities or industry analysts undertake coverage of our company, the trading price
for our shares of common stock may be negatively impacted. If we obtain securities or industry analyst coverage and if one or more of
the analysts who covers us downgrades our shares of common stock, changes their opinion of our shares or publishes inaccurate or unfavorable
research about our business, our share price would likely decline. If one or more of these analysts ceases coverage of us or fails to
publish reports on us regularly, demand for our shares of common stock could decrease and we could lose visibility in the financial markets,
which could cause our share price and trading volume to decline.

 We are not subject to the provisions of Section
203 of the Delaware General Corporation Law, which could negatively affect your investment.

 We elected in our certificate
of incorporation, as amended (the "certificate of incorporation") to not be subject to the provisions of Section 203 of the
Delaware General Corporation Law, or Section 203. In general, Section 203 prohibits a publicly held Delaware corporation from engaging
in a "business combination" with an "interested stockholder" for a period of three years after the date of the
transaction in which the person became an interested stockholder, unless the business combination is approved in a prescribed manner.
A "business combination" includes a merger, asset sale or other transaction resulting in a financial benefit to the interested
stockholder. An "interested stockholder" is a person who, together with affiliates and associates, owns (or, in certain cases,
within three years prior, did own) 15% or more of the corporation's voting stock. Our decision not to be subject to Section 203
will allow, for example, Arthur D. Sams, our Chairman, President, Chief Executive Officer and Secretary (who beneficially owns approximately
32% of our common stock) to transfer shares in excess of 15% of our voting stock to a third-party free of the restrictions imposed by
Section 203. This may make us more vulnerable to takeovers that are completed without the approval of our board of directors and/or without
giving us the ability to prohibit or delay such takeovers as effectively.

 Some provisions of our charter documents and
Delaware law may have anti-takeover effects that could discourage an acquisition of us by others, even if an acquisition would be beneficial
to our stockholders, and may prevent attempts by our stockholders to replace or remove our current management.

 Provisions in our certificate
of incorporation and bylaws, as well as provisions of Delaware law, could make it more difficult for a third party to acquire us or increase
the cost of acquiring us, even if doing so would benefit our stockholders. These provisions include:

 a requirement that special meetings of stockholders be called only by the board of directors, the president or the chief executive officer;

 advance notice requirements for stockholder proposals and nominations for election to our board of directors; and

 the authority of the board of directors to issue preferred stock on terms determined by the board of directors without stockholder approval and which preferred stock may include rights superior to the rights of the holders of common stock.

 These anti-takeover provisions
and other provisions in our certificate of incorporation and bylaws could make it more difficult for stockholders or potential acquirers
to obtain control of our board of directors or initiate actions that are opposed by the then-current board of directors and could also
delay or impede a merger, tender offer or proxy contest involving us. These provisions could also discourage proxy contests and make it
more difficult for you and other stockholders to elect directors of your choosing or cause us to take other corporate actions you desire.
Any delay or prevention of a change of control transaction or changes in our board of directors could cause the market price of our common
stock to decline.

 Our certificate of incorporation designates
the Court of Chancery of the State of Delaware as the sole and exclusive forum for certain types of actions and proceedings that may be
initiated by our stockholders, which could limit our stockholders' ability to obtain a favorable judicial forum for disputes with
us or our directors, officers or other employees.

 Our certificate of incorporation
provides that, unless we consent in writing to the selection of an alternative forum, the Court of Chancery of the State of Delaware shall
be the sole and exclusive forum for (i) any derivative action or proceeding brought on our behalf, (ii) any action asserting a claim of
breach of a fiduciary duty owed by any of our directors, officers or other employees to us or our stockholders, (iii) any action asserting
a claim arising pursuant to any provision of the Delaware General Corporation Law, our certificate of incorporation or our bylaws, or
(iv) any action asserting a claim against us governed by the internal affairs doctrine.

 For the avoidance of doubt, the
exclusive forum provision described above does not apply to any claims arising under the Securities Act or the Exchange Act. Section 27
of the Exchange Act creates exclusive federal jurisdiction over all suits brought to enforce any duty or liability created by the Exchange
Act or the rules and regulations thereunder, and Section 22 of the Securities Act creates concurrent jurisdiction for federal and state
courts over all suits brought to enforce any duty or liability created by the Securities Act or the rules and regulations thereunder.

 The choice of forum provision
in our bylaws may limit our stockholders' ability to bring a claim in a judicial forum that they find favorable for disputes with
us or our directors, officers, employees or agents, which may discourage such lawsuits against us and our directors, officers, employees
and agents even though an action, if successful, might benefit our stockholders. The applicable courts may also reach different judgments
or results than would other courts, including courts where a stockholder considering an action may be located or would otherwise choose
to bring the action, and such judgments or results may be more favorable to us than to our stockholders. With respect to the provision
making the Delaware Court of Chancery the sole and exclusive forum for certain types of actions, stockholders who do bring a claim in
the Delaware Court of Chancery could face additional litigation costs in pursuing any such claim, particularly if they do not reside in
or near Delaware. Finally, if a court were to find this provision of our bylaws inapplicable to, or unenforceable in respect of, one or
more of the specified types of actions or proceedings, we may incur additional costs associated with resolving such matters in other jurisdictions,
which could have a material adverse effect on us.

 If we fail to maintain an effective system of
internal control over financial reporting, we may not be able to accurately report our financial results or prevent fraud. As a result,
stockholders could lose confidence in our financial and other public reporting, which would harm our business and the trading price of
our common stock.

 Effective internal controls over
financial reporting are necessary for us to provide reliable financial reports and, together with adequate disclosure controls and procedures,
are designed to prevent fraud. Any failure to implement required new or improved controls, or difficulties encountered in their implementation
could cause us to fail to meet our reporting obligations. In addition, any testing by us conducted in connection with Section 404 of the
Sarbanes-Oxley Act, or any subsequent testing by our independent registered public accounting firm, may reveal deficiencies in our internal
controls over financial reporting that are deemed to be material weaknesses or that may require prospective or retroactive changes to
our financial statements or identify other areas for further attention or improvement. Inferior internal controls could also cause investors
to lose confidence in our reported financial information, which could have a negative effect on the trading price of our common stock.

 We are required to disclose changes
made in our internal controls and procedures on a quarterly basis and our management is required to assess the effectiveness of these
controls annually. However, for as long as we are a "non-accelerated filer" under SEC rules, our independent registered public
accounting firm will not be required to attest to the effectiveness of our internal controls over financial reporting pursuant to Section
404. An independent assessment of the effectiveness of our internal controls could detect problems that our management's assessment
might not. Undetected material weaknesses in our internal controls could lead to financial statement restatements and require us to incur
the expense of remediation.

 We incur significant costs as a result of operating
as a public company and our management expects to devote substantial time to public company compliance programs.

 As a public company, we incur
significant legal, accounting and other expenses due to our compliance with regulations and disclosure obligations applicable to us, including
compliance with the Sarbanes-Oxley Act as well as rules implemented by the SEC and Nasdaq. The SEC and other regulators have continued
to adopt new rules and regulations and make additional changes to existing regulations that require our compliance. In July 2010, the
Dodd-Frank Wall Street Reform and Consumer Protection Act, or the Dodd-Frank Act, was enacted. There are significant corporate governance
and executive compensation related provisions in the Dodd-Frank Act that have required the SEC to adopt additional rules and regulations
in these areas. Stockholder activism, the current political environment, and the current high level of government intervention and regulatory
reform may lead to substantial new regulations and disclosure obligations, which may lead to additional compliance costs and impact, in
ways we cannot currently anticipate, the manner in which we operate our business. Our management and other personnel devote a substantial
amount of time to these compliance programs and monitoring of public company reporting obligations and, as a result of the new corporate
governance and executive compensation related rules, regulations, and guidelines prompted by the Dodd-Frank Act and further regulations
and disclosure obligations expected in the future, we will likely need to devote additional time and costs to comply with such compliance
programs and rules. These rules and regulations cause us to incur significant legal and financial compliance costs and make some activities
more time-consuming and costly.

 To comply with the requirements
of being a public company, we may need to undertake various activities, including implementing new internal controls and procedures and
hiring new accounting or internal audit staff. The Sarbanes-Oxley Act requires that we maintain effective disclosure controls and procedures
and internal control over financial reporting. We are continuing to develop and refine our disclosure controls and other procedures that
are designed to ensure that information required to be disclosed by us in the reports that we file with the SEC is recorded, processed,
summarized and reported within the time periods specified in SEC rules and forms, and that information required to be disclosed in reports
under the Exchange Act, is accumulated and communicated to our principal executive and financial officers. Our current controls and any
new controls that we develop may become inadequate and weaknesses in our internal control over financial reporting may be discovered in
the future.

 Any failure to develop or maintain
effective controls could adversely affect the results of periodic management evaluations and annual independent registered public accounting
firm attestation reports regarding the effectiveness of our internal control over financial reporting which we may be required to include
in our periodic reports we will file with the SEC under Section 404 of the Sarbanes-Oxley Act, harm our operating results, cause us to
fail to meet our reporting obligations, or result in a restatement of our prior period financial statements. In the event that we are
not able to demonstrate compliance with the Sarbanes-Oxley Act, that our internal control over financial reporting is perceived as inadequate
or that we are unable to produce timely or accurate financial statements, investors may lose confidence in our operating results and the
price of our common stock could decline. In addition, if we are unable to continue to meet these requirements, we may not be able to remain
listed on the Nasdaq Capital Market.

 We are not currently required
to comply with the SEC rules that implement Section 404 of the Sarbanes-Oxley Act, and are therefore not yet required to make a formal
assessment of the effectiveness of our internal control over financial reporting for that purpose. However, we are required to comply
with certain of these rules, which require management to certify financial and other information in our quarterly and annual reports and
provide an annual management report on the effectiveness of our internal control over financial reporting commencing with our next annual
report. This assessment will need to include the disclosure of any material weaknesses in our internal control over financial reporting
identified by our management or our independent registered public accounting firm. We are just beginning the costly and challenging process
of compiling the system and processing documentation needed to comply with such requirements. We may not be able to complete our evaluation,
testing and any required remediation in a timely fashion. During the evaluation and testing process, if we identify one or more material
weaknesses in our internal control over financial reporting, we will be unable to assert that our internal control over financial reporting
is effective.

 Raising additional capital, including through
future sales and issuances of our common stock, the exercise of warrants or the exercise of rights to purchase common stock pursuant to
our equity incentive plan could result in additional dilution of the percentage ownership of our stockholders, could cause our share price
to fall and could restrict our operations.

 We expect that significant additional
capital will be needed in the future to continue our planned operations, including any potential acquisitions, purchasing of capital equipment,
hiring new personnel, and continuing activities as an operating public company. To the extent we seek additional capital through a combination
of public and private equity offerings and debt financings, our stockholders may experience substantial dilution. To the extent that we
raise additional capital through the sale of equity or convertible debt securities, the ownership interest of our existing stockholders
may be diluted, and the terms may include liquidation or other preferences that adversely affect the rights of our stockholders. Debt
and receivables financings may be coupled with an equity component, such as warrants to purchase shares of our common stock, which could
also result in dilution of our existing stockholders' ownership. The incurrence of indebtedness would result in increased fixed
payment obligations and could also result in certain restrictive covenants, such as limitations on our ability to incur additional debt
and other operating restrictions that could adversely impact our ability to conduct our business. A failure to obtain adequate funds may
cause us to curtail certain operational activities, including sales and marketing, in order to reduce costs and sustain the business,
and would have a material adverse effect on our business and financial condition.

 Under our 2016 Omnibus Stock Incentive
Plan, as amended, or 2016 Plan, we may grant equity awards covering up to 250,627 shares of our common stock. As of December 31, 2024,
we had granted options to purchase an aggregate of 20,002 shares of common stock and issued 23,049 shares of common stock as stock-based
compensation to officers, employees and consultants under the 2016 Plan. Sales of shares issued upon exercise of options or granted under
our 2016 Plan may result in material dilution to our existing stockholders, which could cause our share price to fall.

 Our issuance of shares of preferred stock could
adversely affect the market value of our common stock, dilute the voting power of common stockholders and delay or prevent a change of
control.

 Our board of directors has the
authority to cause us to issue, without any further vote or action by the stockholders, up to 5,000,000 shares of preferred stock in one
or more series, to designate the number of shares constituting any series, and to fix the rights, preferences, privileges and restrictions
thereof, including dividend rights, voting rights, rights and terms of redemption, redemption price or prices and liquidation preferences
of such series.

 The issuance of shares of preferred
stock with dividend or conversion rights, liquidation preferences or other economic terms favorable to the holders of preferred stock
could adversely affect the market price for our common stock by making an investment in the common stock less attractive. For example,
investors in the common stock may not wish to purchase common stock at a price above the conversion price of a series of convertible preferred
stock because the holders of the preferred stock would effectively be entitled to purchase common stock at the lower conversion price
causing economic dilution to the holders of common stock.

 Further, the issuance of shares
of preferred stock with voting rights may adversely affect the voting power of the holders of our other classes of voting stock either
by diluting the voting power of our other classes of voting stock if they vote together as a single class, or by giving the holders of
any such preferred stock the right to block an action on which they have a separate class vote even if the action were approved by the
holders of our other classes of voting stock. The issuance of shares of preferred stock may also have the effect of delaying, deferring
or preventing a change in control of our company without further action by the stockholders, even where stockholders are offered a premium
for their shares.

 Item 1B.

 Unresolved Staff Comments.

 None.

 Item 1C.

 Cybersecurity.

 It is crucial for our business
to have precise equipment and open lines of communication. A data breach can disrupt both of these factors, which can result in significant
disruptions across of our operations. While we have no t had a material cybersecurity incident impact our operations, we face various cyber
and other security threats, including attempts to gain unauthorized access to sensitive information and networks; employee threats; virtual
and cyber threats to our directors, officers, and employees; threats to the security of our facilities and infrastructure; and threats
from terrorist acts or other acts of aggression. Our customers and vendors face similar threats. We utilize internal and external independent
controls to monitor and mitigate the risk of these threats, including an outside independent Cybersecurity and Information Technology
consultant. We also have a training system in place for our employees.

 The impact of potential cybersecurity
threats is difficult to predict, but one or more of them could result in the loss of information or capabilities, harm to individuals
or property, damage to our reputation, loss of business, regulatory actions, and potential liability, any of which could have a material
adverse effect on our financial position, results of operations and/or cash flows. These threats could lead to losses of sensitive information
or capabilities, harm to personnel, infrastructure, or products, and/or damage to our reputation as well as our vendor's ability
to perform on our contracts.

 Effective incident response involves
every part of our organization, including IT teams, legal, technical support, human resources, corporate communications, and business
operations. Our Board of Directors and executive management oversee all business, property and affairs of the Company, including cybersecurity
risks. Our management keep the members of the Board informed of our business through discussions at Board meetings.

 Item 2.

 Properties.

 Our principal offices are located
in Gardena, California, where we lease a 40,000 square feet facility that includes our corporate staff offices, our manufacturing facility,
and our research and development center. We also lease a 29,000 square foot manufacturing facility and a 20,000 square foot storage facility
near our principal offices. We believe that our current facilities are sufficient to accommodate our anticipated production volumes for
the next twelve months. If required, additional office and manufacturing space is available within less than three miles from our present
location.

 Item 3.

 Legal Proceedings.

 From time to time, we may be involved
in general commercial disputes arising in the ordinary course of our business. We are not currently involved in legal proceedings that
could reasonably be expected to have material adverse effect on our business, prospects, financial condition or results of our operation.

 Item 4.

 Mine Safety Disclosures.

 Not applicable.

 Item 5.

 Market for Registrant's Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities.

 Market Information

 Shares of our common stock trade
on The Nasdaq Capital Market under the symbol "POLA."

 As
of March 31, 2025, we had 2,511,532 shares of common stock outstanding held of record by approximately 22 stockholders. These holders
of record include depositories that hold shares of stock for brokerage firms which, in turn, hold shares of stock for numerous beneficial
owners.

 Recent Sales of Unregistered Securities

 None.

 Item 6.

 [RESERVED].

 Item 7.

 Management Discussion and Analysis of Financial Condition and Results of Operations.

 You should read the following
discussion and analysis of our financial condition and results of operations together with our financial statements and the related notes
and other financial information included elsewhere in this Annual Report on Form 10-K. In addition to historical information, this discussion
and analysis contains forward-looking statements that involve risks, uncertainties, and assumptions. Our actual results may differ materially
from those discussed below. Factors that could cause or contribute to such differences include, but are not limited to, those identified
below, and those discussed in the section titled "Risk Factors" and elsewhere in this Annual Report on Form 10-K. Our historical
results are not necessarily indicative of the results to be expected for any future period, and results for any interim period are not
necessarily indicative of the results to be expected for the full year.

 Overview

 We design, manufacture, and sell
DC power generators, renewable energy and cooling systems for applications primarily in the telecommunications market and, to a lesser
extent, in other markets, including military, electric vehicle charging, marine and industrial. We are continuously diversifying our customer
base and are selling our products into non-telecommunication markets and applications at an increasing rate.

 Within the various markets we
service, our DC power systems provide reliable and low-cost DC power to service applications that do not have access to the utility grid
(i.e., prime power applications) or have critical power needs and cannot be without power in the event of utility grid failure (i.e.,
back-up power applications).

 Serving these various markets,
we offer the following three configurations of our DC power systems, with output power ranging from 5 kW to 50 kW:

 DC base power systems. These stationary systems integrate a DC generator and automated controls with remote monitoring, which are typically contained within an environmentally regulated enclosure.

 DC hybrid power systems. These systems incorporate lithium-ion batteries (or other advanced battery chemistries) with our proprietary battery management system into our standard DC power systems.

 DC solar hybrid power systems. These stationary systems incorporate photovoltaic and other sources of renewable energy into our DC hybrid power system.

 Mobile power systems. These stationary
 systems incorporate photovoltaic and other sources of renewable energy into our DC hybrid power system.

 Our DC power systems are available
in diesel, natural gas, LPG / propane and renewable formats, with diesel, natural gas and propane gas being the predominate formats.

 During the years ended December
31, 2024 and 2023, 88% and 95%, respectively, of our total net sales were within the telecommunications market. In 2024, our two largest
customers represented 48% and 14% of our total net sales, respectively, one being a Tier-1 telecommunications customer in the U.S. and
one being a telecommunications customer outside the U.S. In 2023, our two largest customers represented 50% and 18% of our total net sales,
respectively, one being a Tier-1 telecommunications customer in the U.S. and one being a telecommunications customer outside the U.S.
There was no other revenue from customers in excess of 10% of total net sales in either period. During those periods, the majority of
our sales were of our DC base powers systems. During 2024 and 2023, sales to international customers accounted for 13% and 21% of total
revenue, respectively. Sales to military customers during 2024 and 2023 accounted for 8% and 3% of total revenues, respectively. During
2024 and 2023, sales to the marine and other markets accounted for 4% and 2% of total revenue, respectively.

 We launched our prime power DC
generators incorporating the Toyota 1KS engines optimized for propane, natural gas, and extremely long operational life. We believe that
with the increasing installation restrictions on small diesel engines along with their limited availability due to stringent EPA regulations
will force a change to natural gas and propane (LPG) generators. LPG and natural gas are lower in cost than diesel fuel in many areas
throughout the world. Our new LPG and natural gas generators will provide strong opportunities for growth and diversification in line
with our long-term plan.

 At the international level, we
have several telecommunications customers in the south pacific region purchasing our DC generators to develop the telecommunications infrastructure
in this region. We believe the implementation and ongoing development of 5G networks along with programs to develop the telecommunications
infrastructure in rural and underdeveloped countries will continue to fuel our growth in the telecommunications market over the next five
to ten years.

 In May 2023, we announced plans
to expand our mobile offerings by upgrading our mobile CHAdeMO EV chargers to the universal combined charging system standard to reach
the mobile EV charging market. Mobile EV chargers are used for emergency roadside service providing a fast-charging solution for EVs that
have run out of charge before reaching a stationary charging facility. During second half of 2024, we have successfully tested our demonstrator model on several platforms and made appropriate
improvements and changes. We believe this configuration of remote mobile electric vehicle charger is just an initial model and based on
power and fuel needs will result in various additional configurations.

 We also continue to market our
DC generators for the military, advanced mobility and marine markets as part of our ongoing customer diversification strategy. The military's
increasing use of robotics, drones, and computerization in the field is driving the demand for battery charging with DC generators. Military
sales are advantageous because of their long-term contracts and they tend to cover the cost of product development.

 We expect that opportunities
in the bad-grid (i.e., areas where wireless towers are connected to an electrical grid that loses power for more than eight hours),
and off-grid (i.e., areas where wireless towers are not connected to an electrical grid) applications, which include
telecommunications towers, commercial and residential backup power, electric vehicle charging, "mini-grid" and various
other power applications, will help to expand the market for our natural gas/LPG (propane) product lines domestically and
internationally. In 2024. We demonstrated a microgrid product that can provide 24/7 electric power to a commercial facility. This
project was funded by UNHCR a United Nations organization. The product included DC generator, battery storage, AC inverter, solar
charge controller and remote monitoring in a single container which can be delivered to any remote location to provide power. We
believe this product in its current configuration can serve mid-level micro grid needs in residential and commercial areas. We plan
to develop new configurations of DC power system, battery storage and solar products to optimize the match between our solutions and
various application needs.

 Critical Accounting Policies

 We believe that the following
critical accounting policies, among others, affect our more significant judgment and estimates used in the preparation of our financial
statements:

 Revenue Recognition. We
recognize revenue in accordance with Financial Accounting Standards Board 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.

 We also recognize revenue from
the rental of equipment. Our 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, 2024 and 2023.

 Warranty Costs. We provide
limited warranties for parts and labor at no cost to our customers within a specified time period after the sale. Our standard warranty
on new products is two years from the date of delivery to the customer. We offer a limited extended warranty of up to five years on our
certified DC power systems based on application and usage. Our warranties are of an assurance-type and come standard with all of our products
to cover repair or replacement should product not perform as expected. Provisions for estimated expenses related to product warranties
are made at the time products are sold. These estimates are established using historical information about the nature, frequency and average
cost of warranty claim settlements as well as product manufacturing and recovery from suppliers. Management actively studies trends of
warranty claims and takes action to improve product quality and minimize warranty costs. We estimate the actual historical warranty claims
coupled with an analysis of unfulfilled claims to record a liability for specific warranty purposes.

 Inventory. Inventories
are stated at the lower of cost or net realizable value, with cost determined on a first-in, first-out ("FIFO") basis. We
record adjustments to our 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 subsequently written up.

 Effects of Inflation

 The impact of inflation and changing
prices during 2024 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 2025 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.

 Impact of Recent Accounting
Pronouncements

 See "Note 1 – Organization
and Summary of Significant Accounting Policies – Recent Accounting Pronouncements" of the Notes to Financial Statements commencing
on page F-7 of this Annual Report on Form 10-K for management's discussion as to the impact of recent accounting pronouncements.

 Financial Performance Summary – Year Ended
December 31, 2024

 Our net sales for the year ended
December 31, 2024, were $13,970, as compared to $15,293 for the year ended December 31, 2023. We reported a net loss of $4,677 for 2024,
as compared to net loss of $6,548 for 2023. Cost of sales includes inventory write-downs of $900 in 2024, and $450 in 2023, to adjust inventory to net realizable value.

 During 2024, we saw
significant volatility in revenue primarily from our largest customer which greatly affected overall performance. We believe the drop in sales is attributed to excess inventory at customer warehouse collected during COVID-19 and
customer concerted effort to reduce inventory. We believe the excess inventory has largely been reduced and anticipate normalization in
purchases during second half of 2025. We reached
profitability in the second and third quarters of the year with gross margins at 39% and 29%, respectively. We experienced net
losses and negative margins in the first and fourth quarter. We believe economic and geopolitical factors continue to influence our
customers' buying patterns.

 During 2024, sales to our
customers in the U.S. were $12,108, or 87% of total net sales, as compared to 79% in 2023. During 2024, our largest customer
represented 48% of our total net sales, as compared to 50% in 2023. Our international sales were $1,862, or 13% of total net sales
in 2024, as compared to $3,216, or 21%, during 2023.

 Our sales backlog as of December
31, 2024, was $1,306, with 53% of that amount being attributable to our largest U.S. telecommunications customer, 3% attributed to other
telecommunications customers, 36% to customers in the military markets, and 9% to customers in marine and other markets. The Company expects
to complete shipment of these orders within the next six to twelve months.

 We plan to continue to market
our products globally and expand our customer base in all market segments. We plan to continually improve our inventory turns to generate cash flow from operations combined with austerity measures on non-essentials
overhead to manage cash flow while sales improves. During 2024, we successfully reduced overhead expenses by $996 to improve cash generated
through operations. We plan to continue take proactive steps to manage our operations and mitigate the financial impacts
of higher costs, supply chain issues, and geopolitical factors. We have $12.9 million in inventory and completed updating our manufacturing facilities to accommodate three to four
times the annual revenue of 2024. However, the full impact on our financial and operating performance of these factors will depend significantly
on the duration and severity of these factors, the actions taken to mitigate their impact, disruption to our supply chain, and the pace
with which our clients return to more normalized purchasing behavior, among others factors beyond our knowledge or control. See "Risk
Factors" commencing on page 17 of this Annual Report on Form 10-K for additional considerations.

 Results of Operations

 The tables presented below, which
compare our results of operations from one period to another, present the results for each period, the change in those results from one
period to another in both dollars and percentage change, and the results for each period as a percentage of net revenues. The columns
present the following:

 The first two data columns in each table show the absolute results for each period presented.

 The columns entitled "Dollar Variance" and "Percentage Variance" shows the change in results, both in dollars and percentages. These two columns show favorable changes as a positive and unfavorable changes as negative. For example, when our net revenues increase from one period to the next, that change is shown as a positive number in both columns. Conversely, when expenses increase from one period to the next, that change is shown as a negative in both columns.

 The last two columns in each table show the results for each period as a percentage of net revenues.

 Comparison of the Years
Ended December 31, 2024 and 2023 (in thousands)

 Year Ended December 31,

 Dollar Variance

 Percentage Variance

 Results as a Percentage of Net Revenues for the Year Ended December 31,

 Favorable

 Favorable

 2024

 2023

 (Unfavorable)

 (Unfavorable)

 2024

 2023

 Net sales

 $

 $

 $
 (1,323
)

 (9
)%

 100.0
 %

 100.0
 %

 Cost of sales (includes inventory write-downs of $900 and $450, respectively)

 12,656

 14,598

 1,942

 %

 90.6
 %

 95.5
 %

 Gross profit

 1,314

 %

 9.4
 %

 4.5
 %

 Sales and marketing expenses

 1,010

 1,172

 %

 7.2
 %

 7.7
 %

 Research and development expenses

 1,222

 %

 5.5
 %

 8.0
 %

 General and administrative expenses

 3,908

 4,291

 %

 28.0
 %

 28.1
 %

 Total operating expenses

 5,689

 6,685

 %

 40.7
 %

 43.7
 %

 Loss from operations

 (4,375
)

 (5,990
)

 1,615

 (27
)%

 (31.3
)%

 (39.2
)%

 Interest and finance costs

 (649
)

 (559
)

 (90
)

 %

 (4.6
)%

 (3.7
)%

 Other income (expense), net

 34600
 %

 2.5
 %

 0.0
 %

 Loss before income taxes

 (4,677
)

 (6,548
)

 1,871

 (29
)%

 (33.5
)%

 (42.8
)%

 Income tax

 —

 —

 —

 —

 —

 —

 $
 (4,677
)

 $
 (6,548
)

 $
 1,871

 (29
)%

 (33.5
)%

 (42.8
)%

 Net Sales. Net sales decreased
by $1,323, or 9%, to $13,970 for the year ended December 31, 2024, as compared to $15,293 for the year ended December 31, 2023. The decrease
in net sales is primarily due to a decrease in deliveries of our DC power generators to our largest telecommunications customer in the
U.S.

 During 2024, revenue from telecommunications
customers accounted for 88% of total net sales, as compared to 95% of total net sales during 2023. Our two largest customers represented
48% and 14% of our total net sales in 2024, as compared to 50% and 18% in 2023. Our largest customer in each year was a Tier-1 telecommunications
customer in the U.S., and our second largest customer in each year was a telecommunications customer outside the U.S. There was no other
revenue from customers in excess of 10% of total net sales in either period.

 During 2024 and 2023, sales to
international customers accounted for 13% and 21% of total revenue, respectively. Sales to military customers during 2024 and 2023 accounted
for 8% and 3% of total revenues, respectively. Sales to marine and other markets during 2024 and 2023 accounted for 4% and 2% of total
revenue, respectively. Most of our sales were of our DC base powers systems during the two years.

 Cost of Sales. Cost
of sales decreased by $1,942 or 13%, to $12,656 during 2024, compared to $14,598 during 2023. Cost of sales as a percentage of net
sales decreased from 95.5% in 2023 to 90.6% in 2024 primarily as a result of a decrease in factory overhead absorption as compared
to the same period in 2023. We believe we can achieve significant reductions in the cost of sales in 2025 as a percentage of net
sales as volumes in production increase. Cost of sales includes inventory write-downs of $900 in 2024, and $450
in 2023, to adjust inventory to net realizable value.

 Gross Profit. We recognized
a gross profit of $1,314 during 2024, as compared to a gross profit of $695 during 2023, which represents an increase in gross profit
of $619 or 89%. Gross profit as a percentage of net sales increased to 9.4% in 2024, as compared to 4.5% in 2023. The increase in
gross profit during 2024 was primarily because of improved labor efficiencies in manufacturing resulting from higher production volumes
primarily during the second and third quarters of 2024.

 Sales and Marketing Expenses.
Sales and marketing expenses decreased $162 to $1,010 during 2024, as compared to $1,172 during 2023. The decrease was attributable to
a slight decrease in sales support staff during 2024 as compared the same period in 2023. We plan to increase our sales force and increase
our marketing and tradeshow activities in 2025 to support our diversification strategy and expand our customer base in all market segments.

 Research and Development Expenses.
 During 2024, research and development expenses decreased by $451 to $771, as compared to $1,222 during 2023. The decrease in 2024
is attributed to a decrease in engineering staff during 2024 as compared to 2023. Our research and development efforts during 2024 primarily
focused on product customization on new customers orders, our mobile EV chargers, and solar hybrid power systems. We continue to search
for qualified engineers to join our engineering team and to support our customer diversification efforts.

 General and Administrative
Expenses. Our general and administrative expenses decreased by $383 to $3,908 during 2024, as compared to $4,291 during 2023. The
decrease in general and administrative expenses during 2024 was primarily due a decrease in the number of general and administrative staff
during 2024, as compared to 2023.

 Interest and Finance Costs.
 Our interest expense was $649 in 2024, as compared to $559 in 2023. Our interest expense is primarily from borrowings from our credit
facility.

 Net Loss. As a result
of the factors identified above, we generated a net loss of $4,677, or ($1.86) per basic and diluted share, for 2024, as compared to net
loss of $6,548, or ($3.45) per basic and diluted share, for 2023, a decrease loss of $1,871.

 Liquidity, Capital Resources and Going Concern

 The Company's financial
statements have been prepared under the assumption that the Company will continue as a going concern. For the year ended December 31,
2024, the Company recorded a net loss of $4,677 and used cash in operations of $536. These factors raise substantial doubt about the Company's
ability to continue as a going concern within one year of the date that the financial statements are issued. In addition, the Company's
independent registered public accounting firm, in their report on the Company's December 31, 2024, audited financial statements,
raised substantial doubt about the Company's ability to continue as a going concern.

 Our ability to continue as a going
concern is dependent upon our ability to obtain additional financing, drive further operating efficiencies, reduce expenditures, and ultimately,
create profitable operations Our ability to obtain additional financing in the debt and equity capital markets is subject to several factors,
including market and economic conditions, our performance and investor sentiment with respect to us and our industry. The Company has
taken action to improve its margins, and is continuing to build a strong back log, and expects to continue investing in product development
and sales and marketing activities. 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.

 Sources of Liquidity

 During the year ended December
31, 2024, we funded our operations primarily from cash on hand. As of December 31, 2024, we had working capital of $7,037, as compared
to working capital of $11,775 at December 31, 2023. This $4,738 decrease in working capital is primarily attributable to a $51 decrease
in cash and cash equivalents resulting from net cash of $536 used in operating activities, net cash used in investing activities of $19
for the acquisition of new property and equipment, and net cash from financing activities of $504 which includes net proceeds of $559
from our credit facility.

 On December 31, 2024, and December
31, 2023, our net trade receivables totaled $2,153 and $1,676, respectively. On December 31, 2024, $1,771 (82%) represented the largest
open customer account balance, while $1,156 (69%) and $264 (16%) represented the two largest open customer account balances on December
31, 2023.

 At December 31, 2021, we recognized
$2,000 related to the ERC for salaries and benefits expenses incurred during 2021 resulting in a refundable tax credit. The ERC assist
business owners and their employees by providing an incentive to keep workers on the payroll and eligible businesses received a tax credit
for a percentage of each eligible employee's wage. In May 2024, the Company received $2,000 of the ERC receivable.

 Our available capital resources
on December 31, 2024, consisted primarily of $498 in cash and cash equivalents, as compared to $549 as of December 31, 2023. We expect
our future capital resources will consist primarily of cash on hand, cash generated by operations, drawdowns on our credit facility with
Pinnacle Bank and future debt or equity financings, if any.

 Credit Facility

 Effective September 30, 2020,
we entered into a Loan and Security Agreement, or Loan Agreement, with Pinnacle. The Loan Agreement was amended by the First Modification
to Loan and Security Agreement on October 7, 2020. The Loan Agreement's initial term ended on September 30, 2022. On November 3,
2022, we executed the Second Modification to Loan and Security Agreement with Pinnacle for a two-year term with an expiration date of
September 30, 2024. On September 23, 2024, the Loan and Security Agreement with Pinnacle was renewed for two years and expires September
30, 2026.

 The Loan Agreement, provides for
a revolving credit facility under which Pinnacle may, in its sole discretion upon our request, make advances to us in an amount, subject
to certain limitations and adjustments, of up to (a) 85% of the aggregate net face amount of our 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 of our inventory or (ii)
$2,500. The aggregate amount of the outstanding advances under the revolving credit facility were initially limited to $4,000. On May
25, 2023, we executed the Fourth Modification to the Loan Agreement to amend the amount of available advances under the Loan Agreement
such that the aggregate amount of the outstanding advances under the revolving credit facility may not be greater than $6,000 and raised
the concentration percentage applicable to certain Tier-1 telecommunication customers from 50% to 75% in the definition of eligible accounts.

 On September 5, 2023, the Company
entered into a Fifth Modification to the Loan Agreement under which the parties (a) agreed to amend the amount of available advances under
the Loan Agreement such that the aggregate amount of the outstanding advances under the revolving credit facility may not be greater than
seven and a half million dollars ($7.5 million), (b) extended the standard of eligibility applicable to certain Tier-1 telecommunication
customers from ninety (90) days to one hundred twenty (120) days of invoice date in the definition of eligible accounts, (c) increased
the inventory advance rate from 35% to 40% of the aggregate eligible inventory value of eligible inventory, and (d) raised the inventory
advance limit from two million dollars ($2.0 million) to four million dollars ($4.0 million).

 Interest accrues on the daily
balance at a rate of 1.25% above the prime rate, or the Standard Interest Rate, but in no event will the Standard Interest Rate be less
than 3.75% per annum. Interest on the portion of the daily balance consisting of advances against inventory accrues interest at a rate
of 2.25% above the prime rate per annum, or the Inventory Interest Rate, but in no event will the Inventory Interest Rate be less than
4.75% per annum. The Loan Agreement also contains a financial covenant requiring us to attain an effective tangible net worth, defined
as our total assets, excluding all intangible assets, less our total liabilities plus loans to us from our officers, stockholders or employees
that have been subordinated to our obligations to Pinnacle, greater than $6,000 as determined by Pinnacle as of the end of each fiscal
quarter.

 We have an outstanding
balance of $4,797 under the Loan Agreement at December 31, 2024. During 2024, we advanced a net of $559 under the Loan Agreement. As
of December 31, 2024, we had availability under the Loan Agreement of $654 and we believe that we are in compliance with the terms
and conditions of the Loan Agreement.

 Cash Flow

 The following table sets forth
the significant sources and uses of cash for the periods set forth below (in thousands):

 Year Ended
 December 31,

 2024

 2023

 Net Cash Provided By (Used In):

 Operating Activities

 $
 (536
)

 $
 (3,430
)

 Investing Activities

 $
 (19
)

 $
 (194
)

 Financing Activities

 $

 $
 3,962

 Net increase (decrease) in cash

 $
 (51
)

 $

 Operating Activities

 Net cash used in operating activities
for 2024 was $536, as compared to $3,430 for the same period in 2023. This decrease in net cash used in 2024 was primarily due to a net
loss of $4,677, a decrease in ERC receivable of $2,000, a decrease in refundable income taxes of $787, and a decrease in accounts payable
of $1,354.

 Investing Activities

 Net cash used in investing activities
for 2024 totaled $19, as compared to $194 for 2023, a decrease of $175. Net cash used in investing activities was primarily due to acquisitions
of property and equipment.

 Financing Activities

 Net cash provided by financing
activities totaled $504 for 2024, as compared to $3,962 provided by financing activities during 2023, an decrease of $2,894. This cash
provided was primarily borrowings from the line of credit with Pinnacle.

 Backlog

 As of December 31, 2024, we had
a backlog of $1,306. The amount of backlog represents revenue that we anticipate recognizing in the future, as evidenced by purchase orders
and other purchase commitments received from customers, but on which work has not yet been initiated or with respect to which work is
currently in progress. Backlog at December 31, 2024 was comprised of the following elements: 56% in purchases of DC power systems by telecommunications
customers in the U.S., 35% in purchases in military markets, and 9% in purchases by customers in the marine and other markets. We believe
the majority of our backlog will be shipped within the next six to twelve months. However, there can be no assurance that we will be successful
in fulfilling such orders and commitments in a timely manner or that we will ultimately recognize as revenue the amounts reflected in
our backlog.

 Item 7A.

 Quantitative and Qualitative Disclosures About Market Risk.

 Not applicable.

 Item 8.

 Financial Statements and Supplementary Data.

 Reference is made to the financial
statements, which begin at page F-1 of this Annual Report on Form 10-K.

 Item 9.

 Changes in and Disagreements with Accountants on Accounting and Finance Disclosure.

 None.

 Item 9A.

 Controls and Procedures.

 Evaluation of Disclosure
Controls and Procedures

 Our management, with the participation
of our principal executive officer and our principal financial officer, evaluated, as of the end of the period covered by this Annual
Report on Form 10-K, the effectiveness of our disclosure controls and procedures (as defined in Rules 13a-15(e) and 15d-15(e) under the
Exchange Act). Based on that evaluation, our principal executive officer and principal financial officer have concluded that as of December
31, 2024, our disclosure controls and procedures were effective at the reasonable assurance level. Management recognizes that any controls
and procedures, no matter how well designed and operated, can provide only reasonable assurance of achieving their objectives and our
management necessarily applies its judgment in evaluating the cost-benefit relationship of possible controls and procedures.

 Management's Report
on Internal Control Over Financial Reporting

 Management is responsible for
establishing and maintaining adequate internal control over financial reporting as such term is defined in Rule 13a-15(f) under the Exchange
Act. Internal control over financial reporting is a process designed under the supervision and with the participation of our management,
including our Chief Executive Officer and Chief Financial Officer, to provide reasonable assurance regarding the reliability of financial
reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles.
Our internal control over financial reporting includes those policies and procedures that (i) pertain to the maintenance of records that,
in reasonable detail, accurately and fairly reflect the transactions and dispositions of our assets; (ii) provide reasonable assurance
transactions are recorded as necessary to permit preparation of financial statements in accordance with generally accepted accounting
principles, (b) our receipts and expenditures are being made only in accordance with authorizations of our management and directors; and
(c) regarding the prevention or timely detection of the unauthorized acquisition, use or disposition of assets that could have a material
effect on our financial statements.

 Because of its inherent limitations,
internal control over financial reporting may not prevent or detect misstatements. Also, projections of any evaluation of effectiveness
to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of
compliance with the policies or procedures may deteriorate.

 As of December 31, 2024, our management
conducted an evaluation of the effectiveness of our internal control over financial reporting using the criteria set forth by the Committee
of Sponsoring Organizations of the Treadway Commission in Internal Control - Integrated Framework (2013). Based on this evaluation, our
management concluded that, as of December 31, 2024, our internal control over financial reporting was effective.

 This Annual Report on Form 10-K
does not include an attestation report of our registered public accounting firm regarding internal control over financial reporting. Management's
report was not subject to attestation by our registered public accounting firm pursuant to rules of the Securities and Exchange Commission
that permit us to provide only management's report in this Annual Report on Form 10-K.

 Changes in Internal Control
over Financial Reporting

 There were no changes in our internal
control over financial reporting identified in connection with the evaluation required by Rule 13a-15(d) and 15d-15(d) of the Exchange
Act that occurred during the quarter ended December 31, 2024 that have materially affected, or are reasonably likely to materially affect,
our internal control over financial reporting.

 Item 9B.

 Other Information

 None.

 Item 9C.

 Disclosure Regarding Foreign Jurisdictions that Prevent Inspections.

 Not applicable.

 Item 10.

 Directors, Executive Officers and Corporate Governance.

 Executive Officers and Directors

 The following table sets forth
the names, ages and positions of our executive officer and directors as of the date of this Annual Report on Form 10-K.

 Name

 Age

 Positions Held

 Executive Officers

 Arthur D. Sams

 Chairman of the Board, President, Chief Executive Officer and Secretary

 Luis Zavala

 Chief Financial Officer

 Non-Employee Directors

 Keith Albrecht

 Katherine Koster

 Michael Field

 Executive Officers and Employee Director

 Arthur D. Sams has served
as our President, Chief Executive Officer and Chairman of our Board since August 1991 and as our Secretary since October 2016. Under his
leadership, we have grown to be a leading brand name in the design and manufacturing of DC power systems for the telecommunications, military,
automotive, marine and industrial markets. He specializes in the design of thermodynamics and power generation systems. During his early
career, he gained vast industry experience while working as a machinist, engineer, project manager, chief technical officer and consultant
for various Fortune 500 companies and the U.S. Department of Defense and the U.S. Department of Energy. Mr. Sams studied at California
State Polytechnic University Pomona and the University California at Irvine with a dual major in biology and engineering.

 Our Board
considered his board and executive level leadership, broad international exposure, and extensive global experience in engineering and
manufacturing as key attributes in his selection. The Board believes that through his experience in product development and international
operations over the past three decades he can provide our company with particular insight into global opportunities and new markets for
our current and planned future product lines.

 Luis Zavala has served
as our Chief Financial Officer since April 2018 and previously served as our Vice President Finance from August 2009 to April 2018 and
as our Acting Chief Financial Officer from March 2016 to March 2018. Prior to that, Mr. Zavala served as the President of Sky Limited
Enterprises, a general contractor, from June 2006 to August 2009. Prior thereto, Mr. Zavala worked as Director of Finance for Legacy Long
Distance International, a telecommunications operator service provider company, from March 2001 to May 2006. Mr. Zavala also has over
30 years of experience managing accounting and finance departments in various industries, including banking and telecommunications. Mr.
Zavala has a Bachelor of Arts degree in Business Administration from the California State University, Northridge and an MBA from the Keller
Graduate School of Management, Long Beach.

 Non-Employee Directors

 Keith Albrecht has served
as a member of our Board since May 2016 and serves as a member of each of our Audit Committee, Compensation Committee and Nominating and
Corporate Governance Committee. Mr. Albrecht has extensive experience as a commercial real estate appraiser for commercial banks and local
governments. Mr. Albrecht was an appraiser for commercial buildings for the County of Orange, California, from 1996 to 2007, where he
was responsible for the assessment of property values of shopping malls, office buildings, hotels and apartment buildings. Prior thereto,
Mr. Albrecht was an appraiser for Security Pacific and Bank of America, from 1985 to 1996. Mr. Albrecht is currently retired and invests
in startups and small cap companies.

 Our Board considered Mr. Albrecht's
Board and executive level leadership, high level financial expertise, and extensive expertise in risk management, and believes Mr. Albrecht
can provide our Company particular insight into analysis of financial statements, debt analysis, and risk oversight.

 Katherine Koster has served
as a member of our Board since December 2019 and serves as a member of each of our Audit Committee and Nominating and Corporate Governance
Committee. Ms. Koster retired from over 30-years career in Investment Banking/Public Finance in May of 2024. Prior to May 2024, she was
Senior Managing Director and Regional Manager for Hilltop Securities, LLC, where she assisted municipalities and developers in accessing
the capital markets to fund critical infrastructure since February 2022. Ms. Koster was a managing director of public finance at D.A.
Davidson from February 2021 to February 2022 and with Piper Sandler Companies from June 2008 to February 2021. Ms. Koster holds a Bachelor
of Arts Degree in Theater/Business Administration from Pepperdine University and has completed the "Women in Governance: Preparing
for Board Membership" corporate governance program at the UCLA Anderson School of Management. Ms. Koster holds the SIE, Series 7,
Series 24 and Series 79TO licenses issued by the Financial Industry Regulatory Authority, Series 50, 52TO and Series 53 licenses issued
by the Municipal Securities Rulemaking Board and a Series 63 certificate issued by the North American Securities Administrators Association.

 Our Board considered Ms. Koster's
board and executive level leadership, extensive experience with capital markets, and high-level financial expertise and believes that
Ms. Koster's investment banking experience and her high level of financial literacy and expertise and experience in capital raising
activities will provide strategic insight to financial decisions for future Company initiatives.

 Michael G. Field has served
as a member of our Board since July 2024 and serves as a member of each of our Audit Committee, Compensation Committee and Nominating
and Corporate Governance Committee. Mr. Field has been the President and Chief Executive Officer of The Raymond Corporation ("Raymond"),
a company providing intralogistics solutions, since June 2014. From May 2010 to June 2014, he was Raymond's president of operations
and engineering division. From January 2009 to April 2010, he was the executive vice president of operations and engineering. From January
2004 to December 2008, he was the vice president of engineering. Mr. Field is also a Board member of Industrial Truck Association. Mr.
Field received his Bachelor of Science in mechanical engineering from Rochester Institute of Technology in 1986, his Master of Science
in manufactured systems engineering and his MBA in international operations management, both from Boston University in 1995.

 Our Board considered Mr. Field's
board and executive level leadership, his extensive engineering expertise, and experience with global business operations and believes
that Mr. Field will provide critical leadership as we expand our product and customer diversification strategies worldwide.

 Election of Officers; Family Relationships

 Our executive officers are appointed
by, and serve at the discretion of, our board of directors. There are no family relationships among any of our directors or executive
officers.

 Board Composition

 Our Board currently consists of
four members: Arthur D. Sams, Keith Albrecht, Michael G. Field, and Katherine Koster. Our directors hold office until their successors
have been elected and qualified or until the earlier of their resignation or removal.

 Our certificate of incorporation
and bylaws provide that the authorized number of directors may be changed only by resolution of the entire Board. Our certificate of incorporation
and bylaws also provide that any vacancy on our Board, including a vacancy resulting from an expansion of our Board, may be filled only
by vote of a majority of our directors then in office, although less than a quorum or by a sole remaining director.

 We recognize the value of diversity
on the Board. Our priority in selection of board members is identification of members who will further the interests of our stockholders
through his or her established record of professional accomplishment, the ability to contribute positively to the collaborative culture
among board members, knowledge of our business and understanding of the competitive landscape.

 Independence of our Board of Directors and Board
Committees

 Rule 5605 of the Nasdaq Listing
Rules requires a majority of a listed company's board of directors to be comprised of "independent directors," as defined
in such rule, subject to specified exceptions. In addition, the Nasdaq Listing Rules require that, subject to specified exceptions: each
member of a listed company's audit, compensation and nominating committees be independent as defined under the Nasdaq Listing Rules;
audit committee members also satisfy independence criteria set forth in Rule 10A-3 under the Exchange Act; and compensation committee
members also satisfy an additional independence test for compensation committee members under the Nasdaq Listing Rules.

 Our Board has evaluated the independence
of its members based upon the rules of the Nasdaq Stock Market and the Securities and Exchange Commission. Applying these standards, our
Board determined that none of the directors, other than Mr. Sams, have a relationship that would interfere with the exercise of independent
judgment in carrying out the responsibilities of a director and that each of those directors is "independent" as that term
is defined under Rule 5605(a)(2) of the Nasdaq Listing Rules. Mr. Sams is not considered independent because he is an officer of Polar.
As such, a majority of our Board is comprised of "independent directors" as defined under the Nasdaq Listing Rules.

 Role of Board in Risk Oversight Process

 One of the key functions of our
Board is informed oversight of our risk management process. Our Board does not have a standing risk management committee, but rather administers
this oversight function directly through the Board as a whole, as well as through its standing committees that address risks inherent
in their respective areas of oversight. In particular, our Board is responsible for monitoring and assessing strategic risk exposure.
Our Audit Committee is responsible for reviewing and discussing our major financial risk exposures and the steps our management has taken
to monitor and control these exposures, including guidelines and policies with respect to risk assessment and risk management. Our Audit
Committee also monitors compliance with legal and regulatory requirements and reviews related party transactions, in addition to oversight
of the performance of our external audit function. Our Board monitors the effectiveness of our corporate governance guidelines. Our Compensation
Committee assesses and monitors whether any of our compensation policies and programs has the potential to encourage excessive risk-taking.
The Board believes its leadership structure is consistent with and supports the administration of its risk oversight function.

 Board Committees and Meetings

 Our business, property and affairs
are managed under the direction of our Board. Our directors are kept informed of our business through discussions with our executive officers,
by reviewing materials provided to them and by participating in meetings of our Board and its committees. During 2024, our Board held
three meetings. All directors attended 100% of the aggregate of the meetings of our Board and of the committees on which they served or
that were held during the period they were directors or committee members, except for Michael Field that missed one committee meeting.

 During 2024, members of the Board
and its committees consulted informally with management from time to time and also acted by written consent seven times without a meeting.

 It is our policy to invite and
encourage our directors to attend our annual meetings of stockholders. One director attended our 2024 annual meeting of stockholders.

 Our Board has established standing
committees in connection with the discharge of its responsibilities. These committees include an Audit Committee, a Compensation Committee
and a Nominating and Corporate Governance Committee. Each charter is available at our website at  The composition
and responsibilities of each committee are described below. Members serve on committees until their resignation or until otherwise determined
by our Board. Each of these committees has adopted a written charter that satisfies the applicable standards of the Securities and Exchange
Commission and the Nasdaq Listing Rules, which we have posted on the investor relations section of our website.

 Audit Committee

 The members of our Audit Committee
are Mr. Albrecht, Mr. Field and Ms. Koster. Mr. Albrecht is the chair of the Audit Committee. Each member of the Audit Committee satisfies
the heightened audit committee independence requirements under the Nasdaq Listing Rules and Rule 10A-3 of the Exchange Act. During 2024,
our Audit Committee held four meetings. In addition, our Board has determined that Mr. Albrecht qualifies as an audit committee financial
expert, as that term is defined under Securities and Exchange Commission rules, and possesses the requisite financial sophistication,
as defined under the Nasdaq Listing Rules. Our Audit Committee assists our Board in its oversight of our accounting and financial reporting
process and the audits of our financial statements.

 Under its charter, our Audit Committee
is responsible for, among other things:

 overseeing accounting and financial reporting process;

 selecting, retaining and replacing independent auditors and evaluating their qualifications, independence and performance;

 reviewing and approving scope of the annual audit and audit fees;

 discussing with management and independent auditors the results of annual audit and review of quarterly financial statements;

 reviewing adequacy and effectiveness of internal control policies and procedures;

 approving retention of independent auditors to perform any proposed permissible non-audit services;

 overseeing internal audit functions and annually reviewing audit committee charter and committee performance;

 preparing the audit committee report that the Securities and Exchange Commission requires in our annual proxy statement; and

 reviewing and evaluating the performance of the Audit Committee, including compliance with its charter.

 Compensation Committee

 The members of our Compensation
Committee are Messrs. Field and Albrecht. Mr. Field is the chair of the Compensation Committee. Each member of our Compensation Committee
is independent as defined under the Nasdaq Listing Rules and satisfies Nasdaq's additional independence standards for compensation
committee members. Messrs. Field and Albrecht are non-employee directors within the meaning of Rule 16b-3 under the Exchange Act and outside
directors as defined by Section 162(m) of the Internal Revenue Code. Our Compensation Committee assists our Board in the discharge of
its responsibilities relating to the compensation of our executive officers.

 Under its charter, our Compensation
Committee is responsible for, among other things:

 developing and maintaining an executive compensation policy and monitor the results of that policy;

 recommending to our board of directors for approval compensation and benefit plans;

 reviewing and approving annually corporate and personal goals and objectives to serve as the basis for the CEO's compensation, evaluating the CEO's performance in light of those goals and objectives and determining the CEO's compensation based on that evaluation;

 determining and approving the annual compensation for other executive officers;

 retaining or obtaining the advice of a compensation consultant, outside legal counsel or other advisor;

 approving any grants of stock options, restricted stock, performance shares, stock appreciation rights, and other equity-based incentives to the extent provided under our equity compensation plans;

 reviewing and making recommendations to our board of directors regarding the compensation of non-employee directors; and

 reviewing and evaluating the performance of the Compensation Committee, including compliance with its charter.

 Nominating and Corporate
Governance Committee

 The members of our Nominating
and Corporate Governance Committee are Mr. Field, Mr. Albrecht and Ms. Koster. Mr. Field is the chair of the Nominating and Corporate
Governance Committee. Each member of our Nominating and Corporate Governance Committee is independent as defined under the Nasdaq Listing
Rules.

 Under its charter, our Nominating
and Corporate Governance Committee is responsible for, among other things:

 considering and reviewing periodically the desired composition of our board of directors;

 establishing any qualifications and standards for individual directors;

 identifying, evaluating and nominating candidates for election to our board of directors;

 ensuring that the members of our board of directors satisfy SEC and Nasdaq independence and other requirements relating to membership on our board of directors and committees;

 making recommendations to our board of directors regarding the size of the board of directors, the tenure and classifications of directors, and the composition of the committees of the board of directors;

 considering other corporate governance and related matters as requested by our board of directors; and

 reviewing and evaluating the performance of the Nominating and Corporate Governance Committee, including compliance with its charter.

 Compensation Committee Interlocks and Insider Participation

 Since July 2016, all officer compensation
and bonuses for executive officers has been determined by our Compensation Committee which is comprised of two independent directors.

 None of our executive officers
serves, or in the past has served, as a member of our Board or Compensation Committee, or other committee serving an equivalent function,
of any entity that has one or more executive officers serving as members of our Board or our Compensation Committee. None of the members
of our Compensation Committee is or has been an officer or employee of Polar.

 Code of Business Conduct and Ethics

 We have adopted a written code
of business conduct and ethics that applies to our directors, officers and employees, including our principal executive officer, principal
financial officer, principal accounting officer or controller, or persons performing similar functions. A copy of the code is available
on the investor relations section of our website, which is located at  If we make any substantive amendments to,
or grant any waivers from, the code of business conduct and ethics for any officer or director, we will disclose the nature of such amendment
or waiver on our website or in a current report on Form 8-K.

 Family Relationships

 There
are no family relationships among any of our directors or executive officers.

 Legal Proceedings

 No director
or executive officer has been involved in any legal proceeding during the past ten years that is material to an evaluation of his or her
ability or integrity.

 Insider Trading Policy

 We are committed to promoting
high standards of ethical business conduct and compliance with applicable laws, rules and regulations. As part of this commitment, we
have adopted an Insider Trading Policy to govern the purchase, sale, and/or other dispositions of our securities by our directors, officers
and employees, as well as by the Company itself, that we believe is reasonably designed to promote compliance with insider trading laws,
rules and regulations, and the exchange listing standards applicable to us. A copy of our Insider Trading Policy was filed as Exhibit
19.1 to this report.

 Section 16(a) Beneficial Ownership Reporting
Compliance

 Section 16(a) of the Exchange
Act requires directors and certain officers of the Company, as well as persons who own more than 10% of a registered class of the Company's
equity securities, to file reports with the SEC.

 Based upon a review of filings
with the SEC and written representations from our directors, officers, and other persons who own more than 10% of a registered class of
the our shares that no other reports were required, the Company believes that all of them compiled with the reporting requirements of
Section 16(a) of the Exchange Act during 2024, except Mr. Michel Field, due to his late filing of Forms 3 and 4.

 Item 11.

 Executive Compensation.

 For 2024, our Compensation Committee
established an executive compensation plan for our President and Chief Executive Officer, and Chief Financial Officer, whom we refer to
collectively as our "executive officers," with the following objectives:

 attract, retain, motivate and reward our executive officers who are responsible for our success;

 align and strengthen the mutual interests of our executive officers, our company and our stockholders;

 deliver compensation that reflects our financial and operational performance, while at the same time providing the opportunity for our executive officers to earn above-targeted total compensation for exceptional individual and company performance; and

 provide total compensation to each executive officer that is internally equitable, competitive and influenced by company and individual performance.

 During 2024, compensation of
our executive officers was comprised of base salary, non-equity incentives in the form of cash bonuses, and long-term equity incentives.
The cash bonus amounts paid to our executive officers during 2024, as set forth below in "– Summary Compensation Table,"
were approved by our Compensation Committee and were based on a variety of factors regarding our performance during 2024.

 Compensation Philosophy

 Our compensation philosophy and
objectives are as follows:

 to align the interests of our executive officers with those of our stockholders and incent our executive officers to attain our short- and long-term financial and business goals;

 to ensure that our executive compensation structure and total compensation is fair, reasonable and competitive in the marketplace so that we can attract and retain highly qualified personnel in key positions; and

 to provide an executive compensation structure and total compensation that are internally equitable based upon each executive officer's role and responsibilities.

 Our Compensation Committee seeks
to make executive compensation decisions that embody this philosophy and that are directed towards attaining these objectives.

 In implementing our compensation
philosophy and objectives, our Compensation Committee reviews and analyzes each executive position, including the importance and scope
of the role and how the position compares to other Polar executive officers. With respect to setting base salaries, our Compensation Committee
also compares these positions to similar positions at a number of publicly traded companies listed on the New York Stock Exchange and
Nasdaq that are engaged in the power manufacturing and design industry.

 We believe that structuring our
executive officer compensation program to align the interests of our executive officers with our interests and those of our stockholders,
and properly incenting our executive officers to attain our short- and long-term business goals, best serves the interests of our stockholders
and creates stockholder value. We believe this occurs through motivating our executive officers to attain our short- and long-term business
goals and retaining these executive officers by providing compensation opportunities that are competitive in the marketplace.

 Compensation Governance Practices

 Listed below are some key examples
of our compensation governance practices that are intended to align the interests of our executive officers with our stockholders, incent
the attainment of short- and long-term business objectives and retain highly qualified executive officers:

 Pay for performance. A substantial portion of our compensation is tied to meeting specified company and individual objectives. We structure total compensation with significant annual cash incentives and a long-term equity component, thereby making a substantial portion of each executive officer's targeted total compensation dependent upon company and individual performance as well as the performance of our stock price.

 Retention through long-term equity awards. We employ long-term equity awards through grants of options that vest in the future. These equity awards are designed to aid in our retention of key personnel in important positions and align the interests of our executive officers with those of our stockholders.

 Long vesting periods. Our equity awards to our executive officers generally vest in annual installments over a three-year period.

 Linkage of annual cash incentive compensation plan to our performance. Our annual cash incentive compensation plan links a majority of targeted and potential payouts to our financial performance.

 Prohibition on hedging and pledging common stock Our executive officers, together with all our employees, are prohibited from engaging in hedging, pledging or similar transactions with respect to our common stock.

 No perquisites. Our executive officers are not provided with any perquisites or special benefits other than benefits such as healthcare, vacation and sick days available to other full-time employees of Polar.

 Change in control. All executive officers' unvested equity grants accelerate upon any change in control of Polar.

 No option re-pricing. Our 2016 Plan does not permit options or stock appreciation rights to be repriced to a lower exercise price without the approval of our stockholders, except in connection with certain changes to our capital structure.

 Clawback policy. If we are required as the result of misconduct to restate our financial results due to our material noncompliance with any financial reporting requirements under the federal securities laws, our Chief Executive Officer and Chief Financial Officer may be legally required to reimburse us for any bonus or incentive-based or equity-based compensation they receive.

 Role of our Compensation Committee

 Our Compensation Committee, with
input from our management and one or more independent compensation consultants, establishes, updates and administers our executive compensation
program. Our Compensation Committee establishes our compensation philosophy and objectives; oversees the design and administration of
our executive compensation program; establishes the elements and mix of total compensation; sets the parameters and specific target metrics
of our performance-based incentive compensation plan; and determines the target compensation of our executive officers. Our Compensation
Committee has the authority to retain independent counsel, advisors and other experts to assist it in the compensation-setting process
and receives adequate funding to engage those service providers.

 Role of Management

 Our Chief Executive Officer and
other executive officers attend Compensation Committee meetings as requested by the Compensation Committee. These individuals are not
present during executive sessions of Compensation Committee meetings except at the invitation of the Compensation Committee.

 Comparable Company Analysis

 Our Compensation Committee sets
base salary compensation of our executive officers using compensation market data as a reference to assist it in understanding the competitive
pay positioning of total compensation and each element of compensation. For 2024, the target for base salary compensation for our executive
officers remained the same as in 2023 and was based on data collected from our peer group of companies. The peer group of companies selected
and used for compensation comparisons is comprised of Nasdaq or NYSE traded power manufacturing and design companies with revenues below
$100 million. The overall composition of the peer group reflects companies of similar complexity and size to us. As such, we believe that
these peer group of companies are reflective of our market for executive talent. Set forth below is the list of the peer group of companies
for 2024:

 Company Name

 Description

 Espey Mfg. & Electronics Corp. – ESP (NYSE)

 Power electronics design and manufacturing company, products include power supplies, power converters, power distribution equipment.

 Beam Global – BEEM (Nasdaq)

 Designs and manufactures renewably energized products for electric vehicle charging infrastructure,
energy storage, energy security, disaster preparedness, street lighting, telecommunications, and energy infrastructure.

 The Compensation Committee reviews
the appropriateness of the comparison group used for assessing the compensation of our executive officers on an annual basis. The data
used from our peer group was collected directly from filings made by the peer group of companies with the SEC.

 Elements of Total Compensation

 During 2024, our executive officers'
compensation program included three major elements:

 Base Salary

 Non-Equity Incentives

 Long-term Equity Incentives.

 Base Salary

 Our Compensation Committee reviews
the base salary levels for our executive officers annually and makes such adjustments as it deems appropriate after taking into account
the officer's level and scope of responsibility and experience, company and individual performance, competitive market data, and
internal pay equity considerations.

 Outlined below is the base salary
data of the peer group of companies outlined above. For 2024, the Compensation Committee kept the same base salary structure as in 2023,
which has carried on since 2019. In determining base salary, the Compensation Committee tabulated the average base salary for the executive
officers in the peer group of companies.

 The Compensation Committee determined
that the base salary of our President and Chief Executive officer be set at approximately 70% of the average base salaries of the peer
group of companies and that the base salaries for our Chief Financial Officer be set at approximately 60% of the average base salaries
of the peer group of companies, all of which is reflected in the table set forth below:

 Executive

 Min

 Max

 Average

 2024

 Avg.

 CEO (in $,000)

 %

 CFO/COO (in$,000)

 %

 Non-Equity Incentives

 Annual non-equity incentive compensation
for our executive officers consists of cash awards. Participants are eligible for annual cash incentive compensation based upon our attainment
of pre-established financial and business performance goals. The Compensation Committee believes that these goals will best incent our
executive officers to attain our short- and long-term financial and other business goals.

 For 2024, the Compensation Committee
determined that each executive officer could earn up to 100% of such executive officer's base salary based upon the attainment by
us of the five financial and other business performance goals set forth below. The minimum and maximum payout for each performance goal
(measured as a percentage of base salary) are set forth immediately below. The specific pre-established performance goals are set forth
in the table following the table set forth immediately below. Participants are eligible to receive awards at each level of participation
(i.e., Minimum Level, Target Level and Maximum Level) to the extent Polar achieves such level. In the event our performance falls short
of a specific performance level, participants will not be eligible to receive an award at that level. In addition, executive officers
had to achieve a minimum of two performance elements in order to qualify for an award in the level. For example, if at conclusion of 2024
the total revenues were $36 million and none of the additional elements qualified, then the executive officer would not be eligible for
a performance award of 25% of base salary as outlined in the table below.

 Company Performance Element

 Minimum
 Level

 Target
 Level

 Maximum
 Level

 Revenue

 %

 %

 %

 Gross Margin

 %

 %

 %

 EBITDA

 %

 %

 %

 Customer Concentration

 %

 %

 %

 International Sales

 %

 %

 %

 Total

 %

 %

 %

 Company Performance Element

 Minimum
 Level

 Target
 Level

 Maximum
 Level

 2024
 Actual

 Revenue ($ million)

 $

 $

 $

 $
 13.9

 Gross Margin (% of revenue)

 %

 %

 %

 9.4
 %

 EBITDA (% of revenue)

 %

 %

 %

 (26.6
)%

 Customer Concentration (% of total sales)

 %

 %

 %

 %

 International Sales (% of total sales)

 %

 %

 %

 %

 Long-term Equity Incentives

 Long-term equity incentive compensation
for our executive officers, generally consists of awards of stock options under our 2016 Plan. We believe that these equity awards offer
a balanced and competitive equity compensation arrangement for our executive officers.

 The Compensation Committee approves
equity awards for our executive officers in connection with the annual review of their individual performance and overall compensation.
The annual awards are typically made near the end of the first quarter of the following year. Each award is designed primarily as a retention
tool, typically requiring the executive to remain with Polar for at least one year to receive the benefit of one-third of the award on
partial vesting and at least three years to receive the full benefit of the award on full vesting. We believe our equity incentive compensation
aligns the interests of our executive officers with those of our stockholders and provides each executive officer with a significant incentive
to manage Polar from the perspective of an owner with an equity stake in the business by tying significant portions of the recipients'
compensation to the market price of our common stock.

 In making long-term equity incentive
awards, our Compensation Committee sets a target value for the award for each executive officer based on its judgment about the factors
used in setting executive officer total compensation described under "Compensation Philosophy" above as well as our Compensation
Committee's judgment regarding the desired mix of base salary, annual non-equity incentives and long-term equity incentives. Our
Compensation Committee also considers outstanding vested and unvested equity awards to executive officers, the stock ownership levels
of executive officers and the potential dilutive effect on our stockholders.

 Summary Compensation Table

 The table and discussion below
present compensation information for our following executive officers, which we refer to as our "named executive officers"
(dollar amounts in thousands):

 Arthur D. Sams, our President, Chief Executive Officer, Secretary and Chairman of the Board; and

 Luis Zavala, our Chief Financial Officer.

 Name
and Principal Position

 Year

 Salary
 ($)

 Option Awards
 ($)

 Stock Compensation ($)

 Total
 ($)

 Arthur D. Sams, President,

 2024

 —

 —

 Chief Executive Officer and Secretary

 2023

 —

 —

 Luis Zavala,

 2024

 —

 —

 Chief Financial Officer

 2023

 —

 —

 Employment Agreements

 Arthur D. Sams

 Our Amended and Restated Executive
Employment Agreement with Arthur D. Sams, dated as of July 8, 2016, provides for at-will employment of Mr. Sams as our President and Chief
Executive Officer, at an annual base salary of $200. On April 2, 2018, we increased Mr. Sams' annual base salary to $275 effective
as of April 1, 2018. Mr. Sams is eligible to receive an annual discretionary cash bonus to be paid based upon performance criteria set
by our Compensation Committee, as more fully described above, and is eligible to participate in all of our employee benefit programs including
our 2016 Plan.

 Upon termination by Polar without
cause or resignation by Mr. Sams for good reason, Mr. Sams is entitled to receive (i) a lump sum cash payment equal to 200% of his then-current
base salary, (ii) a lump sum cash payment equal to 200% of the amount of average incentive bonus paid to Mr. Sams during the two calendar
years preceding the termination, and (iii) continued health insurance coverage for eighteen months. If Mr. Sams is terminated without
cause or resigns for good reason within three months before or twelve months after a change in control, Mr. Sams is entitled to (a) a
lump sum cash payment equal to 200% of his then-current base salary, (b) a lump sum cash payment equal to 200% of the amount of average
incentive bonus paid to Mr. Sams during the two calendar years preceding the termination, and (c) continued health insurance coverage
for eighteen months. If Mr. Sams becomes disabled, Mr. Sams is entitled to receive a lump sum cash payment equal to 100% of his then-current
base salary and continued health coverage for twelve months.

 The term "for good reason"
is defined in the Amended and Restated Executive Employment Agreement as (i) the assignment to Mr. Sams of any duties or responsibilities
that result in the material diminution of Mr. Sams' authority, duties or responsibility, (ii) a material reduction by Polar in Mr.
Sams' annual base salary, except to the extent the base salaries of all other executive officers of Polar are accordingly reduced,
(iii) a relocation of Mr. Sams' place of work, or Polar's principal executive offices if Mr. Sams' principal office
is at these offices, to a location that increases Mr. Sams' daily one-way commute by more than fifty miles, or (iv) any material
breach by Polar of any material provision of the Amended and Restated Executive Employment Agreement.

 The term "cause" is
defined in the Amended and Restated Executive Employment Agreement as (i) Mr. Sams' indictment or conviction of any felony or of
any crime involving dishonesty, (ii) Mr. Sams' participation in any fraud or other act of willful misconduct against Polar, (iii)
Mr. Sams' refusal to comply with any lawful directive of Polar, (iv) Mr. Sams' material breach of his fiduciary, statutory,
contractual, or common law duties to Polar, or (v) conduct by Mr. Sams which, in the good faith and reasonable determination of our board
of directors, demonstrates gross unfitness to serve; provided, however, that in the event that any of the foregoing events is reasonably
capable of being cured, Polar shall, within twenty days after the discovery of the event, provide written notice to Mr. Sams describing
the nature of the event and Mr. Sams shall thereafter have ten business days to cure the event.

 A "change in control"
of Polar is deemed to have occurred if, in a single transaction or series of related transactions (i) any person (as the term is used
in Section 13(d) and 14(d) of the Exchange Act), or persons acting as a group, other than a trustee or fiduciary holding securities under
an employee benefit program, is or becomes a "beneficial owner" (as defined in Rule 13-3 under the Exchange Act), directly
or indirectly of securities of Polar representing a majority of the combined voting power of Polar, (ii) there is a merger, consolidation
or other business combination transaction of Polar with or into another corporation, entity or person, other than a transaction in which
the holders of at least a majority of the shares of voting capital stock of Polar outstanding immediately prior to the transaction continue
to hold (either by the shares remaining outstanding or by their being converted into shares of voting capital stock of the surviving entity)
a majority of the total voting power represented by the shares of voting capital stock of Polar (or the surviving entity) outstanding
immediately after the transaction, or (iii) all or substantially all of our assets are sold.

 Luis Zavala

 Our Executive Employment Agreement
with Luis Zavala, dated as of July 8, 2016, provides for at-will employment as our Vice President Finance at an annual base salary of
$120. On April 2, 2018, we appointed Mr. Zavala as our Chief Financial Officer and increased his annual base salary to $175 effective
as of April 1, 2018. On November 1, 2024, we increased Mr. Zavala's base salary to $200. Mr. Zavala is eligible to receive an annual
discretionary cash bonus to be paid based upon performance criteria set by our Compensation Committee, as more fully described above,
and is eligible to participate in all of our employee benefit programs including our 2016 Plan.

 Upon termination by Polar without
cause, resignation by Mr. Zavala for good reason or upon Mr. Zavala's disability, Mr. Zavala is entitled to receive (i) a lump sum
cash payment equal to 50% of his then-current base salary, and (ii) continued health insurance coverage for six months. If Mr. Zavala
is terminated without cause or resigns for good reason within three months before or twelve months after a change in control, Mr. Zavala
is entitled to (a) a lump sum cash payment equal to 50% of his then-current base salary, and (b) continued health insurance coverage for
six months.

 The terms "for good reason,"
"cause" and "change in control in Mr. Zavala's Executive Employment Agreement are identical to the definitions
contained in Mr. Sams' Amended and Restated Executive Employment Agreement.

 2016 Omnibus Incentive Plan

 On July 8, 2016 our board of directors
and stockholders adopted the 2016 Plan. The material terms of the 2016 Plan, as amended, are summarized below.

 Summary of the Material
Terms of the 2016 Plan

 Purpose. We established
the 2016 Plan to attract, retain and motivate our employees, officers and directors, to promote the success of our business by linking
the personal interests of our employees, officers, consultants, advisors and directors to those of our stockholders and to encourage stock
ownership on the part of management. The 2016 Plan is intended to permit the grant of stock options (both incentive stock options, or
ISOs and non-qualified stock options, or NQSOs or, collectively, Options), stock appreciation rights, or SARS, restricted stock awards,
or Restricted Stock Awards, restricted stock units, or RSUs, incentive awards, or Incentive Awards, other stock-based awards, or Stock
Based Awards, dividend equivalents, or Dividend Equivalents, and cash awards, or Cash Awards.

 Administration. The 2016
Plan is administered by our Compensation Committee. Our Compensation Committee may act through subcommittees or, with respect to awards
granted to individuals who are not subject to the reporting and other provisions of Section 16 of the Exchange Act and who are not members
of our board of directors or the board of directors of our Affiliates (as defined by the 2016 Plan), delegate to one or more officers
all or part of its duties with respect to such awards. Our Compensation Committee may, at its discretion, accelerate the time at which
any award may be exercised, become transferable or nonforfeitable or become earned and settled including without limitation (i) in the
event of the participant's death, disability, retirement or involuntary termination of employment or service (including a voluntary
termination of employment or service for good reason) or (ii) in connection with a Change in Control (as defined in the 2016 Plan).

 Authorized Shares. Under
the 2016 Plan, we may issue a maximum aggregate of 250,627 shares of common stock, all of which may be issued pursuant to Options, SARs,
Restricted Stock Awards, RSUs, Incentive Awards, Stock-Based Awards or Dividend Equivalents. Each share issued in connection with an award
will reduce the number of shares available under the 2016 Plan by one, and each share covered under a SAR will reduce the number of shares
available under the 2016 Plan by one, even though the share is not actually issued upon settlement of the SAR. Shares relating to awards
that are terminated by expiration, forfeiture, cancellation or otherwise without issuance of shares of common stock, settled in cash in
lieu of shares, or exchanged prior to the issuance of shares for awards not involving shares, will again be available for issuance under
the 2016 Plan. Shares not issued as a result of net settlement of an award, tendered or withheld to pay the exercise price, purchase price
or withholding taxes of an award or shares purchased on the open market with the proceeds of the exercise price of an award will not again
be available for issuance under the 2016 Plan.

 Award Limits. In any calendar
year, no participant may be granted awards that relate to more than 50,125 shares of our common stock. For these purposes, an Option and
its corresponding SAR will be counted as a single award. For any Cash Awards that are intended to constitute annual incentive awards,
the maximum amount payable to any one participant with respect to any 12-month period is $5,000. Award limits that are expressed as a
number of shares are subject to the adjustment provisions of the 2016 Plan as described below.

 A non-employee director may not
be granted awards during any single calendar year that, taken together with any cash fees paid to such non-employee director during such
calendar year in respect of the non-employee director's service as a member of the board during such year, exceeds $500 in total
value (calculating the value of any such awards based on the grant date fair value of such awards for financial accounting purposes).
Notwithstanding the foregoing, the board may make exceptions to the foregoing limit (up to twice such limit) for a non-executive chair
of the board or, in extraordinary circumstances, for other individual non-employee directors, as the board may determine, provided that
the non-employee director, receiving such awards may not participate in the decision to make such awards.

 Written Agreements. All
awards granted under the 2016 Plan will be governed by separate written agreements between the participants and us. The written agreements
will specify the terms of the particular awards.

 Transferability. Generally,
an award is non-transferable except by will or the laws of descent and distribution, and during the lifetime of the participant to whom
the award is granted, the award may only be exercised by, or payable to, the participant. However, the Compensation Committee may provide
that awards, other than ISOs or a Corresponding SAR (as defined in the 2016 Plan) that is related to an ISO, may be transferred by a participant
to immediate family members or trust or other entities on behalf of the Participant and/or family members for charitable donations. Any
such transfer will be permitted only if (i) the participant does not receive any consideration for the transfer and (ii) the Compensation
Committee expressly approves the transfer. The holder of the transferred award will be bound by the same terms and conditions that governed
the award during the period that it was held by the participant, except that such transferee may only transfer the award by will or the
laws of descent and distribution.

 Maximum Award Period. No
award shall be exercisable or become vested or payable more than ten years after the date of grant.

 Compliance With Applicable
Law. No award shall be exercisable, vested or payable except in compliance with all applicable federal and state laws and regulations
(including, without limitation, tax and securities laws), any listing agreement with any stock exchange to which we are a party, and the
rules of all domestic stock exchanges on which our shares may be listed.

 Payment. The exercise or
purchase price of an award, and any taxes required to be withheld with respect to an award, may be paid in cash or, if the written agreement
so provides, the Compensation Committee may allow a participant to pay all or part of the exercise or purchase price, and any required
withholding taxes, by tendering shares of common stock, through a broker-assisted cashless exercise, by means of "net exercise"
procedure, or any other specified medium of payment.

 Stockholder Rights. No
participant shall have any rights as our stockholder as a result of issuance of an award until the award is settled by the issuance of
common stock (other than a Restricted Stock Award or RSUs for which certain stockholder rights may be granted).

 Forfeiture Provisions. Awards
do not confer upon any individual any right to continue in our employ or service or in the employ or service of our Affiliates. All rights
to any award that a participant has will be immediately forfeited if the participant is discharged from employment or service for "Cause"
(as defined in the 2016 Plan).

 Types of awards

 Options. Both ISOs and
NQSOs may be granted under the 2016 Plan. Our Compensation Committee will determine the eligible individuals to whom grants of Options
will be made, the number of shares subject to each option, the exercise price per share, the time or times at which the option may be
exercised, whether any performance or other conditions must be satisfied before a participant may exercise an option, the method of payment
by the participant, the method of delivery of shares to a participant, whether the Option is an ISO or a NQSO, and all other terms and
conditions of the award. However, the exercise price of an Option may not be less than the fair market value of a share of common stock
on the date the Option is granted. No participant may be granted ISOs that are first exercisable in any calendar year for shares of common
stock having an aggregate fair value (determined on the date of grant) that exceeds $100,000. With respect to an ISO granted to a participant
who is a Ten Percent Shareholder (as defined in the 2016 Plan), the exercise price per share may not be less than 110% of the fair market
value of the common stock on the date the Option is granted. At the Compensation Committee's discretion, an Option may be granted
with or without a Corresponding SAR (as defined below).

 SARs. A SAR entitles the
participant to receive, upon exercise, the excess of the fair market value on that date of each share of common stock subject to the exercised
portion of the SAR over the fair market value of each such share on the date of the grant of the SAR. A SAR can be granted alone or in
tandem with an Option. A SAR granted in tandem with an Option is called a Corresponding SAR and entitles the participant to exercise the
Option or the SAR, at which time the other tandem award expires with respect to the number of shares being exercised. The Compensation
Committee is authorized to determine the eligible individuals to whom grants of SARs will be made, the number of shares of common stock
covered by the grant, the time or times at which a SAR may be exercised and all other terms and conditions of the SAR. However, no participant
may be granted Corresponding SARs that are related to ISOs which are first exercisable in any calendar year for shares of common stock
having an aggregate fair market value (determined on the date of grant) that exceeds $100,000.

 Restricted Stock Awards and
RSUs. A Restricted Stock Award is the grant or sale of shares of common stock, which may be subject to forfeiture for a period of
time or subject to certain conditions. A RSU entitles the participant to receive, upon vesting, shares of our common stock. We will deliver
to the participant one share of common stock for each RSU that becomes earned and payable. With regard to Restricted Stock Awards, the
Compensation Committee is authorized to determine the eligible individuals to whom grants will be made, the number of shares subject to
such grants, the purchase price, if any, to be paid for each share subject to the award of restricted stock, the time or times at which
the restrictions will terminate, and all other terms and conditions of the restricted stock. With regard to RSUs, the Compensation Committee
is authorized to determine the eligible individuals to whom grants will be made, the number of shares subject to such grants and the vesting
conditions entitling a participant to settlement of the RSUs.

 Incentive Awards. An Incentive
Award entitles the participant to receive cash or common stock when certain conditions are met. The Compensation Committee has the authority
to determine the eligible individuals to whom grants will be made and all other terms and conditions of the Incentive Award.

 Stock-Based Awards. Stock-Based
Awards may be denominated or payable in, valued by reference to or otherwise based on shares of common stock, including awards convertible
or exchangeable into shares of common stock (or the cash value thereof) and common stock purchase rights and awards valued by reference
to the fair market value of the common stock. The Compensation Committee has the authority to determine the eligible individuals to whom
grants will be made and all other terms and conditions of Stock-Based Awards. However, the purchase price for the common stock under any
Stock-Based Award in the nature of a purchase right may not be less than the fair market value of a share of common stock as of the date
the award is granted. Cash awards, as an element of or supplement to any other award under the 2016 Plan, may also be granted.

 Our Compensation Committee is
authorized under the 2016 Plan to grant shares of common stock as a bonus, or to grant shares of common stock or other awards in lieu
of any of our obligations or of our affiliates to pay cash or to deliver other property under the 2016 Plan or under any other of our
plans or compensatory arrangements or any of our affiliates.

 Dividend Equivalents. Our
Compensation Committee may also grant Dividend Equivalents under the 2016 Plan. A Dividend Equivalent is an award that entitles the participant
to receive cash, shares of common stock, other awards or other property equal in value to all or a specified portion of dividends paid
with respect to shares of our common stock. The Compensation Committee is authorized to determine the eligible individuals to whom grants
will be made and all other terms and conditions of the Dividend Equivalents. However, no Dividend Equivalents may be awarded with an Option,
SAR or Stock-Based Award in the nature of purchase rights.

 Cash Awards. Cash Awards
will also be authorized under the 2016 Plan. Cash Awards may be granted as an element of or a supplement to any other award under the
2016 Plan or as a stand-alone Cash Award. The Compensation Committee will determine the terms and conditions of any such Cash Awards.

 Performance Criteria. Our
Compensation Committee has the discretion to establish objectively determinable performance conditions for when awards will become vested,
exercisable and payable. These performance conditions may be based on one or any combination of metrics related to our financial, market
or business performance. The form of the performance conditions also may be measured on a company, affiliate, division, business unit
or geographic basis, individually, alternatively or in any combination, subset or component thereof. Performance goals may reflect absolute
entity performance or a relative comparison of entity performance to the performance of a peer group of entities or other external measure
of the selected performance conditions. Profits, earnings and revenues used for any performance condition measurement may exclude any
extraordinary or nonrecurring items. The performance conditions may, but need not, be based upon an increase or positive result under
the aforementioned business criteria and could include, for example and not by way of limitation, maintaining the status quo or limiting
the economic losses (measured, in each case, by reference to the specific business criteria). An award that is intended to become exercisable,
vested or payable on the achievement of performance conditions means that the award will not become exercisable, vested or payable solely
on mere continued employment or service. However, such an award, in addition to performance conditions, may be subject to continued employment
or service by the participant. The performance conditions may include any or any combination of the following: (a) revenue, (b) earnings
before interest, taxes, depreciation and amortization, or EBITDA, (c) cash earnings (earnings before amortization of intangibles), (d)
operating income, (e) pre-or after-tax income, (f) earnings per share, (g) net cash flow, (h) net cash flow per share, (i) net earnings,
(j) return on equity, (k) return on total capital, (l) return on sales, (m) return on net assets employed, (n) return on assets or net
assets, (o) share price performance, (p) total stockholder return, (q) improvement in or attainment of expense levels, (r) improvement
in or attainment of working capital levels, (s) net sales, (t) revenue growth or product revenue growth, (u) operating income (before
or after taxes), (v) pre-or after-tax income (before or after allocation of corporate overhead and bonus), (w) earnings per share; (x)
return on equity, (y) appreciation in and/or maintenance of the price of the shares of common stock, (z) market share, (aa) gross profits,
(bb) comparisons with various stock market indices; (cc) reductions in cost, (dd) cash flow or cash flow per share (before or after dividends),
(ee) return on capital (including return on total capital or return on invested capital), (ff) cash flow return on investments; (gg) improvement
in or attainment of expense levels or working capital levels, (hh) stockholder equity and/or (ii) other criteria selected by the Compensation
Committee.

 Our Compensation Committee has
the discretion to select one or more periods of time over which the attainment of one or more of the foregoing performance conditions
will be measured for the purpose of determining when an award will become vested, exercisable or payable. The Compensation Committee has
the authority to adjust goals and awards in the manner set forth in the 2016 Plan.

 Change in Control. In the
event of a "Change in Control" (as defined in the 2016 Plan) and, with respect to awards that are subject to Section 409A
of the Internal Revenue Code of 1986, as amended, or the Code, and such awards, 409A Awards, only to the extent permitted by Section 409A
of the Code, our Compensation Committee in its discretion may, on a participant-by-participant basis (a) accelerate the vesting of all
unvested and unexercised Options, SARs or Stock-Based Awards in the nature of purchase rights and/or terminate such awards, without any
payment therefore, immediately prior to the date of any such transaction after giving the participant at least seven days written notice
of such actions; (b) fully vest and/or accelerate settlement of any awards; (c) terminate any outstanding Options, SARs or Stock-Based
Awards in the nature of purchase rights after giving the participant notice and a chance to exercise such awards (to the extent then exercisable
or exercisable upon the change in control); (d) cancel any portion of an outstanding award that remains unexercised or is subject to restriction
or forfeiture in exchange for a cash payment to the participant of the value of the award; or (e) require that the award be assumed by
the successor corporation or replaced with interests of an equal value in the successor corporation.

 Amendment and Termination.
The 2016 Plan will expire 10 years after its effective date, unless terminated earlier by our board of directors. Any award that is outstanding
as of the date the 2016 Plan expires will continue in force according to the terms set out in the award agreement. Our board of directors
may terminate, amend or modify the 2016 Plan at any time. However, stockholder approval may be required for certain types of amendments
under applicable law or regulatory authority. Except as may be provided in an award agreement or the 2016 Plan, no amendment to the 2016
Plan may adversely affect the terms and conditions of any existing award in any material way without the participant's consent.

 An amendment will be contingent
on approval of our stockholders, to the extent required by law, by the rules of any stock exchange on which our securities are then traded
or if the amendment would (i) increase the benefits accruing to participants under the 2016 Plan, including without limitation, any amendment
to the 2016 Plan or any agreement to permit a re-pricing or decrease in the exercise price of any outstanding awards, (ii) increase the
aggregate number of shares of common stock that may be issued under the 2016 Plan, or (iii) modify the requirements as to eligibility
for participation in the 2016 Plan.

 Material U.S. federal income
tax consequences of awards under the 2016 Plan

 The following discussion summarizes
the principal federal income tax consequences associated with awards under the 2016 Plan. The discussion is based on laws, regulations,
rulings and court decisions currently in effect, all of which are subject to change.

 ISOs. A participant will
not recognize taxable income on the grant or exercise of an ISO (although the excess of the fair market value of the common stock over
the exercise price will be included for alternative minimum tax purposes). A participant will recognize taxable income when he or she
disposes of the shares of common stock acquired under the ISO. If the disposition occurs more than two years after the grant of the ISO
and more than one year after its exercise, the participant will recognize long-term capital gain (or loss) to the extent the amount realized
from the disposition exceeds (or is less than) the participant's tax basis in the shares of common stock. A participant's
tax basis in the common stock generally will be the amount the participant paid for the stock. If common stock acquired under an ISO is
disposed of before the expiration of the ISO holding period described above, the participant will recognize as ordinary income in the
year of the disposition the excess of the fair market value of the common stock on the date of exercise of the ISO over the exercise price.
Any additional gain will be treated as long-term or short-term capital gain, depending on the length of time the participant held the
shares. Special rules apply if a participant pays the exercise price by delivery of common stock. We will not be entitled to a federal
income tax deduction with respect to the grant or exercise of an ISO. However, in the event a participant disposes of common stock acquired
under an ISO before the expiration of the ISO holding period described above, we generally will be entitled to a federal income tax deduction
equal to the amount of ordinary income the participant recognizes.

 NQSOs. A participant will
not recognize any taxable income on the grant of a NQSO. On the exercise of a NQSO, the participant will recognize as ordinary income
the excess of the fair market value of the common stock acquired over the exercise price. A participant's tax basis in the common
stock is the amount paid plus any amounts included in income on exercise. Special rules apply if a participant pays the exercise price
by delivery of common stock. The exercise of a NQSO generally will entitle us to claim a federal income tax deduction equal to the amount
of ordinary income the participant recognizes.

 SARs. A participant will
not recognize any taxable income at the time SARs are granted. The participant at the time of receipt will recognize as ordinary income
the amount of cash and the fair market value of the common stock that he or she receives. We generally will be entitled to a federal income
tax deduction equal to the amount of ordinary income the participant recognizes.

 Restricted Stock Awards and
RSUs. With regard to Restricted Stock Awards, a participant will recognize ordinary income on account of a Restricted Stock Award
on the first day that the shares are either transferable or not subject to a substantial risk of forfeiture. The ordinary income recognized
will equal the excess of the fair market value of the common stock on such date over the price, if any, paid for the stock. However, even
if the shares under a Restricted Stock Award are both nontransferable and subject to a substantial risk of forfeiture, the participant
may make a special "83(b) election" to recognize income, and have his or her tax consequences determined, as of the date the
Restricted Stock Award is made. The participant's tax basis in the shares received will equal the income recognized plus the price,
if any, paid for the Restricted Stock Award. We generally will be entitled to a federal income tax deduction equal to the ordinary income
the participant recognizes. With regard to RSUs, the participant will not recognize any taxable income at the time RSUs are granted. When
the terms and conditions to which the RSUs are subject have been satisfied and the RSUs are paid, the participant will recognize as ordinary
income the fair market value of the common stock he or she receives. We generally will be entitled to a federal income tax deduction equal
to the ordinary income the participant recognizes.

 Incentive Awards. A participant
will not recognize any taxable income at the time an Incentive Award is granted. When the terms and conditions to which an Incentive Award
is subject have been satisfied and the award is paid, the participant will recognize as ordinary income the amount of cash and the fair
market value of the common stock he or she receives. We generally will be entitled to a federal income tax deduction equal to the amount
of ordinary income the participant recognizes.

 Stock-Based Awards. A participant
will recognize ordinary income on receipt of cash or shares of common stock paid with respect to a Stock-Based Award. We generally will
be entitled to a federal tax deduction equal to the amount of ordinary income the participant recognizes.

 Dividend Equivalents. A
participant will recognize as ordinary income the amount of cash and the fair market value of any common stock he or she receives on payment
of the Dividend Equivalents. To the extent the Dividend Equivalents are paid in the form of other awards, the participant will recognize
income as otherwise described herein.

 Limitation on Deductions. The
deduction for a publicly-held corporation for otherwise deductible compensation to a "covered employee" generally is limited
to $1,000,000 per year. An individual is a covered employee if he or she is the chief executive officer or one of the three highest compensated
officers for the year (other than the chief executive officer or chief financial officer) or was a covered employee for any preceding
year beginning after December 31, 2016.

 Other Tax Rules. The 2016
Plan is designed to enable our Compensation Committee to structure awards that will not be subject to Section 409A of the Code, which
imposes certain restrictions and requirements on deferred compensation. However, our Compensation Committee may grant awards that are
subject to Section 409A of the Code. In that case, the terms of such 409A Award will be (a) subject to the deferral election requirements
of Section 409A of the Code; and (b) may only be paid upon a separation from service, a set time, death, disability, a change in control
or an unforeseeable emergency, each within the meanings of Section 409A of the Code. Our Compensation Committee shall not have the authority
to accelerate or defer a 409A Award other than as permitted by Section 409A of the Code. Moreover, any payment on a separation from service
of a "Specified Employee" (as defined in the 2016 Plan) will not be made until six months following the participant's
separation from service (or upon the participant's death, if earlier) as required by Section 409A of the Code.

 Non-Employee Director Compensation

 Our non-employee directors received
a quarterly cash retainer of $7,500 during 2024. Mr. Field has the option, solely during the first year of service, to choose between
receiving a cash payment in the amount of $7,500 per quarter or receiving 2,679 shares of the Company's common stock, to be issued
pursuant to the Company's 2016 Plan. In addition, we reimburse all non-employee directors for travel and other necessary business
expenses incurred in the performance of director services and extend coverage to them under our directors' and officers' indemnity
insurance policies.

 Indemnification of Directors and Officers

 Section 145 of the Delaware General
Corporation Law, or the DGCL, provides that a corporation may indemnify directors and officers as well as other employees and individuals
against expenses (including attorneys' fees), judgments, fines and amounts paid in settlement actually and reasonably incurred by
such person in connection with any threatened, pending or completed actions, suits or proceedings in which such person is made a party
by reason of such person being or having been a director, officer, employee or agent to the corporation. The DGCL provides that Section
145 is not exclusive of other rights to which those seeking indemnification may be entitled under any bylaw, agreement, vote of stockholders
or disinterested directors or otherwise. Sections of our certificate of incorporation and our bylaws provide for indemnification by us
of our directors, officers, employees and agents to the fullest extent permitted by the DGCL.

 Article X of our certification
of incorporation eliminates the liability of a director or stockholder for monetary damages for breach of fiduciary duty as a director,
except to the extent such exemption from liability or limitation thereof is not permitted under Delaware law. Under Section 102(b)(7)
of the DGCL, a director shall not be exempt from liability for monetary damages for any liabilities arising (i) from any breach of the
director's duty of loyalty to the corporation or its stockholders, (ii) from acts or omissions not in good faith or which involve
intentional misconduct or a knowing violation of law, (iii) under Section 174 of the DGCL, or (iv) for any transaction from which the
director derived an improper personal benefit.

 We have entered into agreements
to indemnify our directors and officers as determined by our board of directors. These agreements provide for indemnification of related
expenses including attorneys' fees, judgments, fines and settlement amounts incurred by any of these individuals in any action or
proceeding. We believe that these indemnification agreements are necessary to attract and retain qualified persons as directors and officers.
We also maintain directors' and officers' liability insurance.

 The limitation of liability and
indemnification provisions in our certificate of incorporation and our bylaws may discourage stockholders from bringing a lawsuit against
our directors for breach of their fiduciary duty. They may also reduce the likelihood of derivative litigation against our directors and
officers, even though an action, if successful, might benefit us and other stockholders. Furthermore, a stockholder's investment
may be adversely affected to the extent that we pay the costs of settlement and damage awards against directors and officers as required
by these indemnification provisions.

 Insofar as indemnification for
liabilities arising under the Securities Act may be permitted to our directors, officers and controlling persons under the foregoing provisions
of our certificate of incorporation or our bylaws, or otherwise, we have been informed that in the opinion of the SEC, this indemnification
is against public policy as expressed in the Securities Act and is therefore unenforceable.

 Item 12.

 Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters.

 The following table sets forth
information regarding beneficial ownership of our common stock as of March 31, 2025 by:

 each person, or group of affiliated persons, known by us to beneficially own more than 5% of our shares of common stock;

 each of our directors;

 each of our named executive officers; and

 all of our directors and executive officers as a group.

 The table is based on information
provided to us by our directors, executive officers and principal stockholders. Beneficial ownership is determined in accordance with
the rules of the SEC, and generally means that a person has beneficial ownership of a security if he, she or it possesses sole or shared
voting or investment power of that security, including stock options and warrants that are exercisable within 60 days of March 31, 2025.
To our knowledge, except as indicated by footnote, and subject to community property laws where applicable, the persons named in the table
below have sole voting and investment power with respect to all shares of common stock shown as beneficially owned by them. Shares of
common stock underlying derivative securities, if any, that are currently exercisable or exercisable within 60 days after March 31, 2025
are deemed to be outstanding in calculating the percentage ownership of the applicable person or group but are not deemed to be outstanding
as to any other person or group. Percentage of beneficial ownership is based on 2,511,532 shares of common stock outstanding as of the
date of the table.

 Unless otherwise indicated, the
address of each beneficial owner listed in the table below is c/o Polar Power, Inc., 249 E. Gardena Boulevard, Gardena, California 90248.

 Name and Address of Beneficial Owner (1)

 Title of Class

 Amount and Nature of
 Beneficial Ownership

 Percent
 of Class

 Arthur D. Sams (2)

 806,229

 32.0
 %

 Luis Zavala (3)

 12,592

 *

 Keith Albrecht (4)

 1,429

 *

 Katherine Koster

 —

 —

 Michael Field

 2,679

 *

 All directors and executive officers as a group (5 persons) (5)

 822,929

 32.6
 %

 Bard Associates, Inc. (6)

 430,232

 17.1
 %

 *

 Less than 1%.

 (1)

 Messrs. Sams, Albrecht, Field, and Ms. Koster are directors of Polar. Messrs. Sams and Zavala are named executive officers of Polar.

 (2)

 Includes 7,143 shares of common stock issuable upon exercise of options.

 (3)

 Includes 4,286 shares of common stock issuable upon exercise of options.

 (4)

 Includes 1,429 shares of common stock issuable upon exercise of options.

 (5)

 Includes 12,858 shares issuable upon exercise of options.

 (6)

 Based on information provided in a Schedule 13G filed on November 6, 2024. Bard Associates, Inc. The address of the principal office of the Reporting Persons is 135 South LaSalle Street, Suite 3700, Chicago, IL 60603.

 Equity Compensation Plan Information

 The following table provides information
about our common stock that may be issued upon the exercise of options, warrants and rights under all our existing equity compensation
plans as of December 31, 2024.

 Plan Category

 Number of
 Securities to

 be Issued Upon Exercise of

 Outstanding
 Options, Warrants
 or Rights

 Weighted-
 Average
 Exercise Price
 of Outstanding Options, Warrants and
 Rights

 Number of
 Securities
 Remaining Available
 for Future

 Issuance
 Under Equity
 Compensation Plans

 Equity Compensation Plans Approved by Security Holders:

 2016 Plan

 20,002

 $
 36.56

 207,576

 Item 13.

 Certain Relationships and Related Transactions, and Director Independence.

 The following is a summary of
transactions since January 1, 2018 to which we have been a participant, in which:

 the amount involved exceeded or will exceed $120 (in thousands); and

 any of our directors (and director nominees), executive officers, or holders of more than 5% of our voting securities, or immediate family member or affiliate of such persons, had or will have a direct or indirect material interest, other than compensation and other arrangements that are described under "Executive Compensation" above, or that were approved by our Compensation Committee.

 All of the related person transactions
described below have been approved by a majority of the independent and disinterested members of our board of directors. We believe that
each of the transactions described below were on terms no less favorable to us than terms we would have obtained from unaffiliated third
parties.

 It is our intention to ensure
that all future transactions, if any, between us and related persons are approved by our audit committee or a majority of the independent
and disinterested members of our board of directors (except for compensation arrangements, which are approved by our compensation committee),
and are on terms no less favorable to us than those that we could obtain from unaffiliated third parties. See "Policies and Procedures
for Related Person Transactions" below.

 Employment Agreements

 We have entered into amended employment
agreement with each of Arthur D. Sams, our President, Chief Executive Officer and Secretary; and Luis Zavala, our Chief Financial Officer;
providing for, without limitation, certain payments upon termination and change in control. See "Executive Compensation–Employment
Agreements" in this Annual Report on Form 10-K for a further discussion of these agreements.

 Indemnification of Officers and Directors

 Our certificate of incorporation
and our bylaws provide that we will indemnify our directors and officers with respect to certain liabilities, expenses and other accounts
imposed upon them because of having been a director or officer, except in the case of willful misconduct or a knowing violation of criminal
law. In addition, we have entered into indemnification agreements with each of our directors and executive officers.

 Policies and Procedures for Related Person Transactions

 Our board of directors has adopted
a written policy with respect to related person transactions. This policy governs the review, approval or ratification of covered related
person transactions. The Audit Committee of our board of directors manages this policy.

 For purposes of the policy, a
"related person transaction" is a transaction, arrangement or relationship (or any series of similar transactions, arrangements
or relationships) in which we were, are or will be a participant, and the amount involved exceeds the applicable dollar threshold set
forth under Item 404 of Regulation S-K and in which any related person had, has or will have a direct or indirect material interest. As
defined in Item 404 of Regulation S-K, "related person" generally includes our directors (and director nominees), executive
officers, holders of more than 5% of our voting securities, and immediate family members or affiliates of such persons.

 The policy generally provides
that we may enter into a related person transaction only if:

 the Audit Committee pre-approves such transaction in accordance with the guidelines set forth in the policy,

 the transaction is on terms comparable to those that could be obtained in arm's length dealings with an unrelated third party and the Audit Committee (or the chairperson of the Audit Committee) approves or ratifies such transaction in accordance with the guidelines set forth in the policy,

 the transaction is approved by the disinterested members of the board of directors, or

 the transaction involves compensation approved by the Compensation Committee of the board of directors.

 In the event a related person
transaction is not pre-approved by the Audit Committee and our management determines to recommend such related person transaction to the
Audit Committee, such transaction must be reviewed by the Audit Committee. After review, the Audit Committee will approve or disapprove
such transaction. If our Chief Executive Officer, in consultation with our Audit Committee, determines that it is not practicable or desirable
for us to wait until the next Audit Committee meeting, the chairperson of the Audit Committee will possess delegated authority to act
on behalf of the Audit Committee. The Audit Committee (or the chairperson of the Audit Committee) may approve only those related person
transactions that are in, or not inconsistent with, our best interests and the best interests of our stockholders, as the Audit Committee
(or the chairperson of the Audit Committee) determines in good faith. All approvals made by chairperson of the Audit Committee will be
ratified by the full Audit Committee at the next regularly scheduled meeting or within 120 days from approval by chairperson.

 Our Audit Committee has determined
that the following transactions, even if the amount exceeds the applicable dollar threshold set forth under Item 404 of Regulation S-K
in the aggregate, will be deemed to be pre-approved by the Audit Committee:

 any employment of certain named executive officers that would be publicly disclosed;

 director compensation that would be publicly disclosed;

 transactions with other companies where the related person's only relationship is as a director or owner of less than ten percent of such company (other than a general partnership), if the aggregate amount involved does not exceed the greater of $200 (in thousands) or five percent of that company's consolidated gross revenues

 transactions where all stockholders receive proportional benefits;

 transactions involving competitive bids;

 transactions with a related person involving the rendering of services at rates or charges fixed in conformity with law or governmental authority; and

 transactions with a related person involving services as a bank depositary of funds, transfer agent, registrar, trustee under a trust indenture or similar services.

 In addition, the Audit Committee
will review the policy at least annually and recommend amendments to the policy to the board of directors from time to time.

 The policy provides that all related
person transactions will be disclosed to the Audit Committee, and all material related person transactions will be disclosed to the board
of directors. Additionally, all related person transactions requiring public disclosure will be properly disclosed, as applicable, on
our various public filings.

 The Audit Committee will review
all relevant information available to it about the related person transaction. The policy will provide that the Audit Committee may approve
or ratify the related person transaction only if the Audit Committee determines that, under all of the circumstances, the transaction
is in, or is not inconsistent with, our best interests and the best interests of our stockholders. The policy will also provide that the
Audit Committee may, in its sole discretion, impose such conditions as it deems appropriate on us or the related person in connection
with approval of the related person transaction.

 Item 14.

 Principal Accounting Fees and Expenses.

 The following table presents fees
for professional audit services rendered by Weinberg & Company, P.A. for 2024 and 2023 (in thousands).

 2024

 2023

 Audit Fees

 $

 $

 Audit-Related Fees

 Tax Fees

 Total

 $

 $

 Audit Fees. Consist of
amounts billed for professional services rendered for the audit of our annual consolidated financial statements included in this Annual
Report on Form 10-K.

 Audit-Related Fees. Audit-Related
Fees consist of fees billed for professional services that are reasonably related to the performance of the audit or review of our consolidated
financial statements but are not reported under "Audit Fees."

 Tax Fees. Tax Fees consist
of fees for professional services for tax compliance activities, including the preparation of federal and state tax returns and related
compliance matters.

 All Other Fees. Consists
of amounts billed for services other than those noted above.

 Our Audit Committee considered
all non-audit services provided by Weinberg & Company, P.A. and determined that the provision of such services was compatible with
maintaining such firm's audit independence.

 Audit Committee Pre-Approval Policy

 Our Audit Committee is responsible
for approving all audit, audit-related, tax and other services. The Audit Committee pre-approves all auditing services and permitted non-audit
services, including all fees and terms to be performed for us by our independent auditor at the beginning of the fiscal year. Non-audit
services are reviewed and pre-approved by project at the beginning of the fiscal year. Any additional non-audit services contemplated
by us after the beginning of the fiscal year are submitted to the Chairman of our Audit Committee for pre- approval prior to engaging
our independent auditor for such services. These interim pre-approvals are reviewed with the full Audit Committee at its next meeting
for ratification.

 PART
IV

 Item 15.

 Exhibits, Financial Statement Schedules.

 (a)(1) Financial Statements

 Reference is made to the financial
statements listed on and attached following the Index to Financial Statements contained on page F-1 of this report.

 (a)(2) Financial Statement Schedules

 None.

 (a)(3) Exhibits

 Reference is made to the exhibits
listed on the Index to Exhibits immediately preceding the signature page of this report.

 Item 16.

 Form 10-K Summary.

 None.

 INDEX TO FINANCIAL STATEMENTS

 Report of Independent Registered Public Accounting Firm (PCAOB Firm ID: 572)

 Balance Sheets as at December 31, 2024 and 2023

 Statements of Operations for the Years Ended December 31, 2024 and 2023

 Statements of Stockholders' Equity for the Years Ended December 31, 2024 and 2023

 Statements of Cash Flows for the Years Ended December 31, 2024 and 2023

 Notes to Financial Statements

 F- 1

 REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING
FIRM

 To the Stockholders and the Board of Directors of
Polar Power, Inc.

 Gardena, California

 Opinion on the Financial Statements

 We have audited the accompanying balance sheets of
Polar Power, Inc. (the "Company") as of December 31, 2024 and 2023, the related statements of operations, stockholders'
equity, and cash flows for the years then ended, and the related notes (collectively referred to as the "financial statements").
In our opinion, the financial statements present fairly, in all material respects, the financial position of the Company as of December
31, 2024 and 2023, and the results of its operations and its cash flows for the years then ended, in conformity with accounting principles
generally accepted in the United States of America.

 The accompanying financial statements have been prepared
assuming that the Company will continue as a going concern. As discussed in Note 1 to the financial statements, during the year ended
December 31, 2024, the Company incurred a net loss and incurred negative operating cash flows. These conditions raise substantial doubt
about the Company's ability to continue as a going concern. Management's plans in regard to these matters are also described
in Note 1. The financial statements do not include any adjustments that might result from the outcome of this uncertainty.

 Basis for Opinion

 These financial statements are the responsibility
of the Company's management. Our responsibility is to express an opinion on the Company's financial statements based on our
audits. We are a public accounting firm registered with the Public Company Accounting Oversight Board (United States) ("PCAOB")
and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable
rules and regulations of the Securities and Exchange Commission and the PCAOB.

 We conducted our audits in accordance with the standards
of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements
are free of material misstatement, whether due to error or fraud. The Company is not required to have, nor were we engaged to perform,
an audit of its internal control over financial reporting. As part of our audits we are required to obtain an understanding of internal
control over financial reporting but not for the purpose of expressing an opinion on the effectiveness of the Company's internal
control over financial reporting. Accordingly, we express no such opinion.

 Our audits included performing procedures to assess
the risks of material misstatement of the financial statements, whether due to error or fraud, and performing procedures that respond
to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the financial statements.
Our audits also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating
the overall presentation of the financial statements. We believe that our audits provide a reasonable basis for our opinion.

 Critical Audit Matter

 The critical audit matter communicated below is
a matter arising from the current period audit of the financial statements that was communicated or required to be communicated to
the audit committee and that (1) relates to accounts or disclosures that are material to the financial statements and (2) involved
our especially challenging, subjective, or complex judgments. The communication of the critical audit matter does not alter in any
way our opinion on the financial statements, taken as a whole, and we are not, by communicating the critical audit matter below,
providing a separate opinion on the critical audit matter or on the accounts or disclosures to which it relates.

 Inventory Valuation

 As of December 31, 2024, the Company's inventories
totaled $12.9 million. As explained in Note 1 to the financial statements, 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 assesses inventory at each reporting date
in order to assert that it is recorded at net realizable value. In determining net realizable value, management considers historical usage,
forecasted demand in relation to inventory on hand, market conditions, and other factors.

 We identified management's assessment of net
realizable value of inventory as a critical audit matter because the determination of excess and obsolete inventory and lower of cost
or net realizable value is judgmental and considers a number of factors that are affected by market and economic conditions, such as estimating
future customer demand, and industry supply and demand. This required a high degree of auditor judgment and increased auditor effort in
auditing such assessments.

 The primary procedures we performed to address this
critical audit matter included:

 We evaluated the reasonableness of assumptions used by management in forming the forecasted inventory usage and future salability, and whether they were consistent with the historical data and evidence obtained in other areas of the audit.

 We developed an independent expectation of the net realizable value of inventory using historic inventory activity and compared our independent expectation to the amount recorded in the financial statements.

 We have served as the Company's auditor since
2016.

 /s/ Weinberg & Company, P.A.

 Los Angeles, California

 F- 2

 BALANCE SHEETS

 (in thousands, except share and per share data)

31, 2024

31, 2023

 ASSETS

 Current assets

 Cash and cash equivalents

 $

 $

 Accounts receivable

 2,153

 1,676

 Inventories

 12,893

 16,522

 Prepaid expenses

 Employee retention credit receivable

 —

 2,000

 Income taxes receivable

 —

 Total current assets

 15,597

 21,989

 Other assets:

 Operating lease right-of-use assets, net

 1,645

 2,818

 Property and equipment, net

 Deposits

 Total assets

 $
 17,546

 $
 25,259

 LIABILITIES AND STOCKHOLDERS' EQUITY

 Current liabilities

 Accounts payable

 $

 $
 1,762

 Customer deposits

 1,618

 Accrued liabilities and other current liabilities

 1,100

 1,151

 Line of credit

 4,797

 4,238

 Notes payable-related party

 Notes payable

 —

 Current portion of operating lease liabilities

 1,382

 1,124

 Total current liabilities

 8,560

 10,214

 Operating lease liabilities, net of current portion

 1,856

 Total liabilities

 9,034

 12,070

 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, 2,511,350 shares issued and 2,508,853 shares outstanding on December 31, 2024 and 2023

 Additional paid-in capital

 Accumulated deficit

 ( 30,336
)

 ( 25,659
)

 Treasury Stock, at cost ( 2,497 shares)

 ( 40
)

 ( 40
)

 Total stockholders' equity

 8,512

 13,189

 Total liabilities and stockholders' equity

 $
 17,546

 $
 25,259

 The accompanying notes are an integral part of these
financial statements.

 F- 3

 STATEMENTS OF OPERATIONS

 (in thousands, except share and per share data)

 2024

 2023

 Years
Ended December 31,

 2024

 2023

 Net sales

 $

 $

 Cost of Sales (includes inventory write-downs of $ 900
 and $ 450, respectively)

 12,656

 14,598

 Gross profit

 1,314

 Operating Expenses

 Sales and marketing

 1,010

 1,172

 Research and development

 1,222

 General and administrative

 3,908

 4,291

 Total operating expenses

 5,689

 6,685

 Loss from operations

 ( 4,375
)

 ( 5,990
)

 Other income (expenses)

 Interest expense and finance costs

 ( 649
)

 ( 559
)

 Interest Income

 —

 Other income (expenses), net

 Total other income (expenses), net

 ( 302
)

 ( 558
)

 Net Loss

 $
)

 $
)

 Net loss per share, basic and diluted

 $
 ( 1.86
)

 $
 ( 3.45
)

 Weighted average shares outstanding, basic and diluted

 2,508,853

 1,898,800

 The accompanying notes are an integral part of these
financial statements.

 F- 4

 STATEMENTS OF STOCKHOLDERS' EQUITY

 (in thousands, except share data)

 Amount

 capital

 Deficit)

 Stock

 Equity

 Common Stock,

 Additional paid-in

 (Accumulated

 Treasury

 Total Stockholders'

 Amount

 capital

 Deficit)

 Stock

 Equity

 Balances, December 31, 2022

 1,852,484

 $

 $
 37,331

 $
 ( 19,111
)

 $
 ( 40
)

 $
 18,182

 Shares of common stock issued for cash, net of offering costs

 657,143

 1,555

 —

 —

 1,555

 Shares of common stock issued upon cashless exercise of warrants

 1,723

 —

 —

 —

 —

 —

 —

 —

 —

)

 —

)

 Balances, December 31, 2023

 2,511,350

 $

 $

 $
 ( 25,659
)

 $
 ( 40
)

 $
 13,189

 Balances

 2,511,350

 $

 $

 $
 ( 25,659
)

 $
 ( 40
)

 $
 13,189

 —

 —

 —

)

 —

)

 Balances, December 31, 2024

 2,511,350

 $

 $

 $
 ( 30,336
)

 $
 ( 40
)

 $
 8,512

 Balances

 2,511,350

 $

 $

 $
 ( 30,336
)

 $
 ( 40
)

 $
 8,512

 The accompanying notes are an integral part of these
financial statements.

 F- 5

 STATEMENTS OF CASH FLOWS

 (in thousands)

 2024

 2023

 Years Ended
 December 31,

 2024

 2023

 Cash flows from operating activities:

 $
)

 $
)

 Adjustments to reconcile net loss to net cash used in operating activities:

 Depreciation and amortization

 Inventory write-down

 Changes in operating assets and liabilities

 Accounts receivable

 ( 477
)

 Inventories

 2,729

 ( 1,512
)

 Prepaid expenses

 2,174

 Employee retention credit receivable

 2,000

 —

 Income taxes receivable

 —

 Operating lease right-of-use asset

 1,173

 1,000

 Deposits

 —

 ( 15
)

 Accounts payable

 ( 1,354
)

 1,532

 Customer deposits

 ( 1,011
)

 ( 508
)

 Accrued expenses and other current liabilities

 ( 51
)

 ( 80
)

 Operating lease liability

 ( 1,124
)

 ( 864
)

 Net cash used in operating activities

 ( 536
)

 ( 3,430
)

 Cash flows from investing activities:

 Acquisition of property and equipment

 ( 19
)

 ( 194
)

 Net cash used in investing activities

 ( 19
)

 ( 194
)

 Cash flows from financing activities:

 Net proceeds from sale of common stock

 —

 1,556

 Proceeds from notes payable-related party

 Repayment of notes payable

 ( 64
)

 ( 205
)

 Advances from credit facility, net

 2,354

 Net cash provided by financing activities

 3,962

 Increase (decrease) in cash and cash equivalents

 ( 51
)

 Cash and cash equivalents, beginning of period

 Cash and cash equivalents, end of period

 $

 $

 Noncash investing and financing activities:

 Initial recognition of right-of-use asset and lease liabilities

 $
 —

 3,578

 The accompanying notes are an integral part of these
financial statements.

 F- 6

 NOTES TO FINANCIAL STATEMENTS

 FOR THE YEARS ENDED DECEMBER 31, 2024 AND 2023

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

 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.

 The accompanying financial statements
have been prepared under the assumption that the Company will continue as a going concern. In accordance with Accounting Standards Codification
("ASC") 205-40, Going Concern, the Company's management has evaluated whether there are conditions and 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 accompanying financial statements were issued. For the year ended December 31, 2024, the Company recorded a net
loss of $ 4,677 and used cash in operating activities of $ 536. These factors raise substantial doubt about the Company's ability
to continue as a going concern within one year of the date that the financial statements are issued. The financial statements do not include
any adjustments that might be necessary if the Company is unable to continue as a going concern.

 As of December 31, 2024, the Company
had a cash balance of $ 498, with borrowing capacity of $ 654, and a working capital of $ 7,037. Historically, the Company has financed its
operations through public and private sales of common stock, issuance of term loans and credit lines from financial institutions, and
cash generated from operations. As we seek additional sources of financing, there can be no assurance that such financing would be available
to us on favorable terms or at all. Our ability to obtain additional financing in the debt and equity capital markets is subject to several
factors, including market and economic conditions, our performance and investor sentiment with respect to us and our industry. The Company
has taken action to improve its margins, and is continuing to build a strong backlog, and expects to continue investing in product development
and sales and marketing activities. The long-term continuation of the Company's business plan is dependent upon the generation of
sufficient revenues from its products to offset expenses. 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.

 Reverse stock split

 On November 18, 2024, the Company filed a Certificate
of Amendment to Certificate of Incorporation with the Secretary of State of Delaware to effect a 1:7 reverse stock split of the shares
of the Company's common stock either issued and outstanding or held by the Company as treasury stock. The amendment was authorized
by the Company's stockholders on November 11, 2024, and was effective on November 18, 2024. No fractional shares were issued in
connection with the reverse stock split, with all fractional shares being rounded up to the next whole share. All share and per share
amounts and information presented herein have been retroactively adjusted to reflect the reverse stock split for all periods presented.

 Inflation

 The continuing
impact of higher inflation, the actions by the Federal Reserve to address inflation, most notably sustained increases in interest rates,
and rising energy prices create uncertainty about the future economic environment which will continue to evolve and, we believe, has impacted
the Company's business in 2024 and may continue to impact its business in 2025. The implications of higher government deficits and
debt, tighter monetary policy, and potentially higher long-term interest rates may drive a higher cost of capital for the business and
an increase in the Company's operating expenses.

 F- 7

 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, 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 ("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, 2024 and 2023. 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.

 F- 8

 Disaggregation of Net Sales

 The following table shows the
Company's disaggregated net sales by product type (in thousands):

 SCHEDULE OF DISAGGREGATED NET SALES

 2024

 2023

 2024

 2023

 DC power systems

 $
 12,577

 $
 14,408

 Engineering & Tech Support Services

 Accessories

 1,009

 Total net sales

 $

 $

 The following table shows the
Company's disaggregated net sales by customer type (in thousands):

 2024

 2023

 2024

 2023

 Telecom

 $
 12,300

 $
 14,516

 Government/Military

 1,145

 Marine

 Other (backup DC power to various industries)

 Total net sales

 $

 $

 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

 2024

 2023

 2024

 2023

 United States

 $
 12,108

 $
 12,078

 Canada

 Other N. America

 —

 Australia and South Pacific Islands

 1,359

 2,822

 Asia

 Europe and Middle East

 United Kingdom

 —

 S. Africa

 Total net sales

 $

 $

 For the years ended December 31,
2024 and 2023, international sales totaled $ 1,862 and $ 3,215, respectively.

 F- 9

 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, 2024 and
2023, the Company had accrued a liability for warranty reserve of $ 600 and $ 600, respectively, which are included in other accrued liabilities
in the accompanying balance sheets. Management believes that the warranty accrual is appropriate; however, actual claims incurred could
differ from original estimates, requiring adjustments to the accrual.

 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

 2024

 2023

 Years End December 31,

 2024

 2023

 Changes in estimates for warranties

 Balance at beginning of the period

 $

 $

 Payments

 ( 214
)

 ( 469
)

 Provision for warranties

 Balance at end of the period

 $

 $

 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.

 F- 10

 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, 2024 and 2023,
cash denominated in Australian Dollar with a U.S. Dollar equivalent of $ 2 and $ 7, respectively, was held in an account at a financial
institution located in Australia. At December 31, 2024 and 2023, cash denominated in Romanian Leu with a U.S. Dollar equivalent of $ 12
and $ 16, respectively, was held in an account at a financial institution located in Romania.

 Accounts Receivable

 Trade receivables are recorded
at their estimated collectible amounts consisting of the carrying amount less an allowance for credit losses, as needed. The Company maintains
an allowance for doubtful accounts for balances that appear to have specific collection issues and estimates an allowance for expected
credit losses. 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, 2024 and 2023.

 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 $ 900 for the year ended December 31, 2024, and recorded a write down of
inventory of $ 450 for the year ended December 31, 2023.

 As of December 31, 2024 and 2023,
inventories consisted of the following (in thousands):

 SCHEDULE OF INVENTORIES NET

 2024

 2023

 At December 31,

 2024

 2023

 Raw materials

 $
 11,902

 $
 14,313

 Finished goods

 2,209

 Inventories

 $
 12,893

 $
 16,522

 F- 11

 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 and shop equipment and machinery and fixtures

 3 - 5 years

 Vehicles

 3 - 5 years

 Leasehold improvements

 Shorter of the lease term or estimated useful life

 Computer software and office equipment

 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, 2024, or
December 31, 2023.

 Leases

 The Company accounts for its leases
in accordance with ASC 842, Leases. The Company determines whether a contract is, or contains, a lease at inception. 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 during 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.

 Share-Based Compensation

 The Company periodically issues
share-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

 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.

 F- 12

 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, 2024 and 2023, research and development expenditures totaled $ 771 and $ 1,222,
respectively.

 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.

 For
the years ended December 31, 2024 and 2023, options to purchase 20,002 shares and 20,002 shares, respectively, of the Company's
common stock were excluded from the shares used to calculate diluted earnings per share as their inclusion would be anti-dilutive.

 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 are 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

 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.

 F- 13

 Concentrations

 Revenues. For the year
ended December 31, 2024, 48 % and 14 %, respectively, of our revenue was generated from the Company's two largest customers, one being
a Tier-1 telecommunications customer in the U.S. and one being a telecommunications customer in Puerto Rico. In 2023, 50 % and 18 %, respectively,
of our revenue was generated from the Company's two largest customers, one being a Tier-1 telecommunications customer in the U.S.
and one being a telecommunications customer outside the U.S. In 2024 and 2023, sales to telecommunications customers accounted for 88 %
and 95 % of total revenue, respectively. In 2024 and 2023, sales to international customers accounted for 13 % and 21 % of total revenue,
respectively.

 Accounts receivable. At
December 31, 2024, the Company's largest receivable account represented 82 % of the Company's total accounts receivable. At
December 31, 2023, the Company's two largest receivable accounts represented 69 % and 16 % of the Company's total accounts receivable.
There was no other customer that accounted for more than 10% of the Company's accounts receivable as of the years ended December
31, 2024 and 2023.

 Accounts payable. On December
31, 2024, the three largest accounts payable accounts to the Company's vendors represented 18 %, 13 %, and 8 %, respectively. On December
31, 2023, the three largest accounts payable accounts to the Company's vendors represented 30 %, 10 %, and 5 %, respectively.

 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. As a smaller reporting company,
ASU 2016-13 became effective for the Company beginning January 1, 2023. The Company adopted ASU 2016-03 effective January 1, 2023, and
there was no material impact on the Company's financial position, results of operations and cash flows.

 In November 2023, the FASB
issued ASU 2023-07, Segment Reporting (Topic 280): Improvements to Reportable Segment Disclosure, which is intended to
improve reportable segment disclosure requirements, primarily through enhanced disclosures about significant segment expense
categories that are regularly provided to the chief operating decision maker and included in each reported measure of a
segment's profit or loss. The update also requires all annual disclosures about a reportable segment's profit or loss
and assets to be provided in interim periods and for entities with a single reportable segment to provide all the disclosures
required by ASC 280, Segment Reporting, including the significant segment expense disclosures. The updates required by this
standard should be applied retrospectively to all periods presented in the financial statements. As of December 31, 2024, the
Company has adopted ASU 2023-07. The adoption of this standard did not have a material impact on the Company's financial
statements but has resulted in additional disclosures within the footnotes to our financial statements (See Note
10).

 In December 2023, the Financial
Accounting Standards Board ("FASB") issued ASU 2023-09, Income Taxes (Topic 740): Improvements to Income Tax Disclosures.
ASU 2023-09 requires that public business entities on an annual basis (1) disclose specific categories in the rate reconciliation and
(2) provide additional information for reconciling items that meet a quantitative threshold (if the effect of those reconciling items
is equal to or greater than 5 percent of the amount computed by multiplying pretax income or loss by the applicable statutory income tax
rate). ASU 2023-99 is effective for annual reporting periods beginning after December 15, 2024, with early adoption permitted. The Company
does not expect that the guidance will have a material impact on our financial statements or notes to our financial statements.

 In November 2024, the Financial
Accounting Standards Board (FASB) issued ASU No. 2024-03, Income Statement—Reporting Comprehensive Income—Expense Disaggregation
Disclosures (Subtopic 220-40): Disaggregation of Income Statement Expenses which includes amendments that require disclosure in the
notes to financial statements of specified information about certain costs and expenses, including purchases of inventory; employee compensation;
and depreciation, amortization and depletion expenses for each caption on the income statement where such expenses are included. The amendments
are effective for the Company's annual periods beginning January 1, 2027, with early adoption permitted, and should be applied either
prospectively or retrospectively. The Company is in the process of evaluating this ASU to determine its impact on the Company's
disclosures.

 The Company's management
has evaluated all other recently issued, but not yet effective, accounting standards and guidance that have been issued or proposed by
the FASB or other standards-setting bodies through the filing date of these financial statements and does not believe the future adoption
of any such pronouncements will have a material effect on the Company's financial position and results of operations.

 F- 14

 NOTE 2 – PROPERTY AND EQUIPMENT

 Property and equipment consist
of the following (in thousands):

 SCHEDULE OF PROPERTY AND EQUIPMENT

31, 2024

31, 2023

 Production and shop equipment and machinery and fixtures

 $
 3,654

 $
 3,636

 Vehicles

 Leasehold improvements

 Computer software and office equipment

 Total property and equipment, cost

 4,512

 4,494

 Less: accumulated depreciation and amortization

 ( 4,316
)

 ( 4,150
)

 Property and equipment, net

 $

 $

 Depreciation and amortization
expense on property and equipment for the years ended December 31, 2024 and 2023 was $ 167 and $ 387 respectively. During the years ended
December 31, 2024 and 2023, $ 160 and $ 374, respectively, of depreciation expense was included in cost of sales for the years then ended.

 NOTE 3 – NOTES PAYABLE, RELATED PARTY

 During 2023, the Company's
Chief Executive Officer made three loans to the Company for aggregate principal amount of $ 260 pursuant to terms of the note agreements.
The notes have relatively similar terms, are unsecured, and accrue interest at 3.5 % per annum. As of December 31, 2024, the aggregate
outstanding balance of the loans including accrued interest is $ 266, with $ 165 due in April 2025, $ 73 due in August 2025, and $ 28 due
in October 2025.

 NOTE 4 – NOTES PAYABLE

 In prior years, the Company entered
into several financing agreements for the purchase of equipment. The terms of these financing arrangements were for a term of 2 years
to 5 years, with interest rates ranging from 1.9 % to 6.9 % per annum, secured by the purchased equipment, and maturing between September
2023 and July 2024. At December 31, 2022, the balance of these notes totaled $ 268. During 202 3,
note principal of $ 205 was repaid, and at December 31, 2023, the balance of the notes totaled $ 64. The notes were paid off in full during
2024.

 NOTE
5 – LINE OF CREDIT

 Effective
September 30, 2020, the Company entered into a Loan and Security Agreement (the "Loan Agreement") with Pinnacle Bank ("Pinnacle").
The Loan Agreement, as amended, provides for a revolving credit facility under which Pinnacle may make advances to the Company up to
$ 7,500, 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) 40% of the aggregate eligible inventory value of eligible
inventory or (ii) $4.0 million, plus (c) up to $146 collateralized by certain equipment. Before the Loan Agreement was set to expire in September 2024, the Company
and Pinnacle executed an amendment to extend the term of the Loan Agreement until September 30,
2026.

 During
2023, the Company advanced an aggregate net amount of $ 2,354 under
the facility. At December 31, 2023, the outstanding balance under the line of credit was $ 4,238.
During 2024, the Company advanced an aggregate net amount of $ 559
under the facility. At December 31, 2024, the outstanding balance under the line of credit was $ 4,797
and the Company had availability under the line of credit in the amount of $ 654.

 Borrowings
based on receivables bears an interest on the daily balance at a rate of 1.25 % above the prime rate, but in no event less than 3.75 %
per annum ( 9.75 % at December 31, 2024 and 9.75 % at December 31, 2023). Interest on the portion of the daily balance consisting of advances
against inventory accrues interest at a rate of 2.25 % above the prime rate, but in no event less than 4.75 % per annum ( 10.75 % at December
31, 2024 and 10.75 % at December 31, 2023).

 F- 15

 During
2023, amendments to the Loan Agreement included, among other, extending the 90-day period on AT&T accounts receivable to 120 days,
raising the concentration percentage applicable to certain Tier-1 telecommunication customers from 50% to 75% in the definition of eligible
accounts receivable, and increasing the aggregate advance limit under the credit facility from $ 6,000 to $ 7,500, for a fee of $23 (1.5%
of the $1.5 million increase).

 Pinnacle may terminate the Loan
Agreement at any time upon ninety 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, 2024.

 The Loan Agreement obligates the
Company to pay Pinnacle a yearly facility fee in an amount equal to 1.125 % of the sum of the advance limit. The Loan Agreement contains
certain affirmative and negative covenants, all of which the Company was in compliance with at December 31, 2024.

 Total interest expense, fees,
and financing costs incurred under the Loan Agreement during the years ended December 31, 2024 and 2023 was $ 733 and $ 657, respectively, of which $ 95 and $ 110 were included in the balance of general and administrative
expenses during 2024 and 2023, respectively, and $ 638 and $ 547 were included in the balance of interest expense and finance costs during
2024 and 2023, respectively, in the accompanying statements of operations.

 NOTE 6 – OPERATING LEASES

 At December 31, 2024, the Company
has two operating leases for its warehouse and office facilities. The first lease expired February 28, 2023 and was extended beginning
March 1, 2023 to February 28, 2026. The second lease expired August 31, 2023, and was extended beginning September 1, 2023 to August 31,
2026. The aggregate monthly lease payments range from $ 89 (year one), to $ 111 (year two), to $ 125 (year three), with an aggregate commitment
of $ 3,896. The lease amendments to the two operating leases were considered new lease agreements and as a result, the Company recognized
operating lease right-of-use assets and related operating lease liabilities of approximately $ 3,578 upon commencement of the new terms.

 The Company also has a third lease
on a month-to-month basis and is charged $ 25 per month.

 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

 2024

 2023

 Lease Cost (in thousands)

 Operating lease cost

 $
 1,250

 $
 1,123

 Operating lease cost (of which $ 124 is included in general and administration and $ 1,126 is included in cost of sales in the Company's statement of operations for the year ended December 31, 2024, and $ 145 is included in general and administration and $ 978 is included in cost of sales in the Company's statement of operations for the year ended December 31, 2023)

 $
 1,250

 $
 1,123

 Other Information

 Weighted average remaining lease term – operating leases (in years)

 1.4

 2.4

 Average discount rate – operating leases

 6.13
 %

 5.13
 %

 The supplemental balance sheet
information related to leases for the period is as follows:

 SCHEDULE OF SUPPLEMENTAL BALANCE SHEET INFORMATION

 At

December 31, 2024

 At

31, 2023

 Operating leases (in thousands)

 Long-term right-of-use assets, net of accumulated amortization of $ 1,931 and $ 760, respectively

 $
 1,645

 $
 2,818

 Current portion of operating lease liabilities

 $
 1,382

 $
 1,124

 Noncurrent portion of operating lease liabilities

 1,856

 Total operating lease liabilities

 $
 1,856

 $
 2,980

 F- 16

 Maturities of the Company's
lease liabilities are as follows:

 SCHEDULE OF MATURITIES OF LEASE LIABILITIES

 Year Ending (in thousands)

 Operating Leases

 2025

 $
 1,446

 2026

 Total lease payments

 1,942

 Less: Imputed interest/present value discount

 ( 86
)

 Present value of lease liabilities

 $
 1,856

 Rent expense for the years
ended December 31, 2024 and 2023 was $ 1,618 and $ 1,423, respectively (including short-term and other rentals).

 NOTE 7 – STOCKHOLDERS' EQUITY

 Preferred Stock

 The Company's board of directors
is authorized to issue up to 5,000,000 shares of preferred stock in one or more series and to fix the rights, preferences, privileges,
qualifications, limitations and restrictions thereof, including dividend rights and rates, conversion rights, voting rights, terms of
redemption, redemption prices, liquidation preferences and the number of shares constituting any series or the designation of such series,
without any vote or action by the Company's stockholders. Any preferred stock to be issued could rank prior to the Company's
common stock with respect to dividend rights and rights on liquidation. The Company's board of directors, without stockholder approval,
may issue preferred stock with voting and conversion rights which could adversely affect the voting power of holders of common stock and
discourage, delay or prevent a change in control of the Company. At December 31, 2024 and 2023, no shares of preferred stock were issued.

 Common Stock

 Issuance of common stock during 2023 in underwritten Public Offering of Common Stock

 On December 5, 2023, the Company
issued and sold 657,143 shares of common stock in an underwritten public offering. The Company received at the closing of the offering
net proceeds of approximately $ 1,556 after deducting underwriting discounts and commissions and other offering expenses paid by the Company.
The Company is using the net proceeds from the Offering for general corporate purposes.

 Issuance of common stock during 2023 upon exchange of warrants

 On November 9, 2023, warrants
to purchase an aggregate of 3,446 shares of the Company's common stock, originally issued
July 7, 2020, were exchanged on a cashless basis for 1,723 shares of Common Stock in accordance to a warrant exchange agreement.
 Upon issuance of such shares and cancellation of the warrants, the Company no longer has any warrants
outstanding as of December 31, 2024.

 Treasury Stock

 At December 31, 2024 and 2023,
the Company had 2,497 shares of common stock held as treasury stock at a cost of $ 40.

 F- 17

 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, 2022

 20,002

 $
 36.56

 Granted

 —

 —

 Exercised

 —

 —

 Cancelled

 —

 —

 Outstanding, December 31, 2023

 20,002

 $
 36.56

 Granted

 —

 —

 Exercised

 —

 —

 Outstanding and exercisable, December 31, 2024

 20,002

 $
 36.56

 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 250,627 shares of common stock as incentives to employees and consultants to the Company with awards limited to a maximum of 50,125
shares to any one participant in any calendar year.

 At December 31, 2024 and 2023,
the Company had total outstanding options of 20,002, which are fully vested, exercise prices ranging from $ 33.88 to $ 39.20, and with 4,287
option shares set to expire in December 2027 and the remaining 15,715 option shares set to expire in April 2028.

 There was no intrinsic value of
the outstanding options at December 31, 2024.

 NOTE 9 – STOCK WARRANTS

 The following table summarizes
warrant activity:

 SCHEDULE OF WARRANTS OUTSTANDING

 Number of
 Warrants

 Weighted Average
 Exercise Price

 Outstanding, December 31, 2022

 3,446

 $
 21.91

 Issued

 —

 —

 Exercised

 ( 3,446
)

 2.80

 Outstanding, December 31, 2023

 —

 $
 —

 Issued

 —

 —

 Exercised

 —

 —

 Outstanding, December 31, 2024

 —

 $
 —

 Exercisable, December 31, 2024

 —

 $
 —

 On
November 9, 2023, warrants to purchase an aggregate of 3,446 shares of the Company's common stock, originally issued July 7, 2020,
were exchanged on a cashless basis for 1,723 shares of Common Stock in accordance to a warrant exchange agreement. Upon issuance of such
shares and cancellation of the warrants, the Company no longer has any warrants outstanding as of December 31, 2024.

 F- 18

 NOTE 10. SEGMENT INFORMATION

 The Company operates and manages
its business as one reportable and operating segment. The Company designs, manufactures, and sells DC power systems for applications that
do not have access to the utility grid (i.e., prime power and mobile applications) or have critical power needs and cannot be without
power in the event of utility grid failure (i.e., back-up power applications). The measure of segment assets is reported on the balance
sheet as total assets. In addition, the Company generates revenue primarily from the sale of its DC power systems, and to
a lesser extent from the sale of parts and services to support its DC power systems. The Company manages the business activities on a
consolidated basis.

 The Company's CODM reviews
financial information presented on a consolidated basis and decides how to allocate resources based on net income (loss). Consolidated
net income (loss) is used for evaluating financial performance and in establishing management's compensation.

 Significant segment expenses include
research and development, salaries, insurance, and stock-based compensation. Operating expenses include all remaining costs necessary
to operate our business, which primarily include external professional services and other administrative expenses. The following
table presents the significant segment expenses and other segment items regularly reviewed by our CODM:

 SCHEDULE OF SIGNIFICANT SEGMENT EXPENSES AND OTHER SEGMENT

 2024

 2023

 Years
ended December 31,

 2024

 2023

 Revenue

 $

 $

 Cost of goods sold

 ( 12,656
)

 ( 14,598
)

 Compensation

 ( 2,385
)

 ( 3,200
)

 Consulting and professional fees

 ( 1,148
)

 ( 973
)

 Other cost and expenses, net

 ( 2,156
)

 ( 2,512
)

 Other expenses, net

 ( 302
)

 ( 558
)

 $
)

 $
)

 NOTE 11 – 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

 2024

 2023

 2024

 2023

 Federal income tax rate

 ( 21
)%

 ( 21
)%

 State tax, net of federal benefit

 ( 7
)%

 ( 7
)%

 Valuation allowance

 %

 %

 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, 2024 and 2023 are as follows (in thousands):

 SCHEDULE OF DEFERRED TAX ASSETS AND LIABILITIES

31, 2024

31, 2023

 Deferred tax assets:

 Inventory valuation

 $
 1,300

 $

 Accrued liabilities

 Capitalized R&D

 -

 Operating lease liability

 Net operating loss carryforwards

 6,233

 5,065

 Gross deferred tax assets

 8,759

 7,132

 Valuation allowance

 ( 8,250
)

 ( 6,737
)

 Total deferred tax assets

 Deferred tax liabilities:

 Operating lease right-of-use asset, net

 ( 461
)

 ( 395
)

 Depreciation

 ( 48
)

 -

 Total deferred tax liabilities

 ( 509
)

 ( 395
)

 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 (such as 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, 2023, the Company had income taxes receivable of $ 787 related to NOL carrybacks. During 2024, the Company received $ 787 in income
tax refunds, and on December 31, 2024 had $ nil income tax receivables.

 At December 31, 2024, the Company had available Federal and state
NOLs carryforwards to reduce future taxable income of approximately $ 20.0 million and $ 27.9 million, respectively. The Federal NOL can
be carried forward indefinitely but can only offset 80 % of taxable income in future years. The state carryforward expires in 2041 through
2044.

 F- 19

 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, 2024 and 2023,
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 2019.

 The Company's policy is
to record interest and penalties on uncertain tax provisions as income tax expense. As of December 31, 2024 and 2023, the Company had
 no accrued interest or penalties related to uncertain tax positions. Additionally, tax years 2019 through 2024 remain open to examination
by the major taxing jurisdictions to which the Company is subject.

 NOTE 12 - 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 %
of qualified wages, plus the cost to continue providing health benefits to our employees, subject to a $ 7
cap per employee per quarter. Due to revenue declines we experienced, we qualified for approximately $ 2,000
of ERC during 2021. As of December 31, 2023, the ERC receivable was $ 2,000.
In May 2024, the Company received the $ 2,000 ERC receivable.

 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, 2024 with respect to such matters. See also Notes 6 and 11.

 F- 20

 INDEX TO EXHIBITS

 Where Located

 Exhibit

 Description*

 Form

 File

 Exhibit

 Filing

 Date

 Filed

 Herewith

 3.1

 Certificate of Incorporation

 3.1

 3/10/2017

 3.2

 Certificate of Amendment to Certificate of Incorporation

 3.1

 11/21/2024

 3.3

 Bylaws

 3.2

 3/10/2017

 4.1

 Description of Securities Registered Pursuant to Section 12 of the Securities Exchange Act of 1934

 X

 10.1

 Polar Power, Inc. 2016 Omnibus Incentive Plan and forms of agreements thereunder#

 S-1

 10.1

 9/9/2016

 10.2

 Amended and Restated Executive Employment Agreement dated July 8, 2016 between the Registrant and Arthur D. Sams#

 S-1

 10.2

 9/9/2016

 10.3

 Amended and Restated Executive Employment Agreement dated July 8, 2016 between the Registrant and Luis Zavala#

 S-1

 10.4

 9/9/2016

 10.4

 Form of Indemnification Agreement between the Registrant and each of its Executive Officers and Directors#

 S-1

 10.5

 11/18/2016

 10.5

 Lease Agreement dated November 7, 2014 between the Registrant and Two Bros L.P.

 S-1

 10.8

 9/9/2016

 10.6

 First Amendment to Lease Agreement dated February 5, 2019 between the Registrant and Two Bros L.P.

 10.9

 3/31/2023

 10.7

 Second Amendment to Lease Agreement dated January 31, 2023 between the Registrant and Two Bros L.P.

 10.10

 3/31/2023

 10.8

 Amendment No. 1 to Polar Power, Inc. 2016 Omnibus Incentive Plan

 10.10

 4/1/2019

 10.9

 Securities Purchase Agreement dated July 2, 2020 between Polar Power, Inc. and each purchaser identified on the signature pages thereto

 10.1

 7/8/2020

 10.10

 Registration Rights Agreement dated July 2, 2020 between Polar Power, Inc. and each purchaser identified on the signature pages thereto

 10.2

 7/8/2020

 10.11

 Loan and Security Agreement dated August 31, 2020 between Pinnacle Bank and Polar Power, Inc.

 10.1

 10/9/2020

 10.12

 First Modification to Loan and Security Agreement dated October 7, 2020 by and between Polar Power, Inc. and Pinnacle Bank

 10.2

 10/9/2020

 10.13

 Second Modification to Loan and Security Agreement dated November 3, 2022 by and between Polar Power, Inc. and Pinnacle Bank

 10.1

 11/14/2022

 10.14

 Third Modification to Loan and Security Agreement dated April 13, 2023 by and between Polar Power, Inc. and Pinnacle Bank

 10.1

 5/26/2023

 10.15

 Fourth Modification to Loan and Security Agreement dated May 25, 2023 by and between Polar Power, Inc. and Pinnacle Bank

 10.2

 5/26/2023

 10.16

 Fifth Modification to Loan and Security Agreement dated September 5, 2023 by and between Polar Power, Inc. and Pinnacle Bank

 10.1

 9/11/2023

 10.17

 Offer Letter between Polar Power, Inc. and Michael G. Field, dated July 24, 2024

 10.1

 7/30/2024

 14.1

 Code of Ethics

 14.1

 3/10/2017

 19.1

 Insider Trading Policy

 X

 21.1

 Subsidiaries of the Registrant

 21.1

 3/10/2017

 23.1

 Consent of Independent Registered Public Accounting Firm

 X

 31.1

 Certification Required by Rule 13a-14(a) of the Securities Exchange Act of 1934, as amended, as Adopted Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002

 X

 31.2

 Certification Required by Rule 13a-14(a) of the Securities Exchange Act of 1934, as amended, as Adopted Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002

 X

 32.1

 Certification of Chief Executive Officer and Chief Financial Officer Pursuant to 18 U.S.C. Section 1350, as Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002

 X

 97.1

 Clawback Policy

 97.1

 4/1/2024

 101.INS

 X

 101.SCH

 X

 101.CAL

 X

 101.DEF

 X

 101.LAB

 X

 101.PRE

 X

 (#)

 A contract, compensatory plan or arrangement to which a director or executive officer is a party or in which one or more directors or executive officers are eligible to participate.

 (*)

 Certain of the agreements filed as exhibits contain representations and warranties made by the parties thereto. The assertions embodied in such representations and warranties are not necessarily assertions of fact, but a mechanism for the parties to allocate risk. Accordingly, investors should not rely on the representations and warranties as characterizations of the actual state of facts or for any other purpose at the time they were made or otherwise.

 SIGNATURES

 Pursuant to the requirements of
Section 13 or 15(d) of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the
undersigned, thereunto duly authorized on this 31st day of March 2025.

 By:

 /s/ Arthur D. Sams

 Arthur D. Sams

 President, Chief Executive Officer and Secretary

 Pursuant to the requirements of
the Securities Exchange Act of 1934, this report has been signed by the following persons on behalf of the registrant and in the capacities
indicated on the dates indicated.

 Signature

 Title

 Date

 /s/ Arthur D. Sams

 Chief Executive Officer, President, Secretary and

 Arthur D. Sams

 Chairman of the Board of Directors
 (principal executive officer)

 /s/ Luis Zavala

 Chief Financial Officer

 Luis Zavala

 (principal financial and accounting officer)

 /s/ Keith Albrecht

 Keith Albrecht

 /s/ Katherine Koster

 Katherine Koster

 /s/ Michael Field

 Michael Field