Document and Entity Information
Document and Entity Information - shares | 9 Months Ended | |
Sep. 30, 2020 | Nov. 16, 2020 | |
Cover [Abstract] | ||
Entity Registrant Name | Polar Power, Inc. | |
Entity Central Index Key | 0001622345 | |
Amendment Flag | false | |
Current Fiscal Year End Date | --12-31 | |
Document Type | 10-Q | |
Document Period End Date | Sep. 30, 2020 | |
Entity Current Reporting Status | Yes | |
Entity Interactive Data Current | Yes | |
Entity Filer Category | Non-accelerated Filer | |
Entity Small Business Flag | true | |
Entity Emerging Growth Company | true | |
Entity Ex Transition Period | true | |
Entity Shell Company | false | |
Entity Common Stock, Shares Outstanding | 11,650,681 | |
Document Fiscal Period Focus | Q3 | |
Document Fiscal Year Focus | 2020 |
Condensed Balance Sheets
Condensed Balance Sheets - USD ($) $ in Thousands | Sep. 30, 2020 | Dec. 31, 2019 |
Current assets | ||
Cash and cash equivalents | $ 2,071 | $ 2,840 |
Accounts receivable | 1,776 | 934 |
Inventories, net | 11,380 | 13,912 |
Prepaid expenses | 334 | 1,265 |
Income tax receivable | 1,715 | 231 |
Total current assets | 17,276 | 19,182 |
Other assets: | ||
Operating lease right-of-use assets, net | 1,721 | 2,187 |
Property and equipment, net | 1,634 | 2,100 |
Deposits | 98 | 94 |
Deferred tax assets | 655 | |
Total assets | 21,384 | 23,563 |
Current liabilities | ||
Accounts payable | 319 | 575 |
Customer deposits | 689 | 197 |
Accrued expenses and other current liabilities | 912 | 1,031 |
Current portion of operating lease liabilities | 657 | 618 |
Current portion of notes payable | 290 | 328 |
Line of Credit | 245 | |
Total current liabilities | 3,112 | 2,749 |
Notes payable, net of current portion | 569 | 778 |
Operating lease liabilities, net of current portion | 1,162 | 1,660 |
PPP Loan | 1,715 | |
Total liabilities | 6,558 | 5,187 |
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, 11,668,158 shares issued and 11,650,681 shares outstanding on September 30, 2020 and 10,143,158 shares issued and 10,125,681 shares outstanding on December 31, 2019 | 1 | 1 |
Additional paid-in capital | 23,330 | 19,657 |
Accumulated deficit | (8,465) | (1,242) |
Treasury Stock, at cost (17,477 shares) | (40) | (40) |
Total stockholders' equity | 14,826 | 18,376 |
Total liabilities and stockholders' equity | $ 21,384 | $ 23,563 |
Condensed Balance Sheets (Paren
Condensed Balance Sheets (Parenthetical) - $ / shares | Sep. 30, 2020 | Dec. 31, 2019 |
Statement of Financial Position [Abstract] | ||
Preferred stock, par value | $ 0.0001 | $ 0.0001 |
Preferred stock, shares authorized | 5,000,000 | 5,000,000 |
Preferred stock, shares issued | ||
Preferred stock, shares outstanding | ||
Common stock, par value | $ 0.0001 | $ 0.0001 |
Common stock, shares authorized | 50,000,000 | 50,000,000 |
Common stock, shares issued | 11,668,158 | 10,143,158 |
Common stock, shares outstanding | 11,650,681 | 10,125,681 |
Treasury stock, shares | 17,477 | 17,477 |
Condensed Statements of Operati
Condensed Statements of Operations (Unaudited) - USD ($) $ in Thousands | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2020 | Sep. 30, 2019 | Sep. 30, 2020 | Sep. 30, 2019 | |
Income Statement [Abstract] | ||||
Net Sales | $ 2,501 | $ 6,939 | $ 6,488 | $ 23,922 |
Cost of Sales | 2,800 | 4,707 | 7,658 | 16,336 |
Increase in inventory reserve | 2,400 | 2,400 | ||
Gross profit (loss) | (2,699) | 2,232 | (3,570) | 7,586 |
Operating Expenses | ||||
Sales and marketing | 445 | 707 | 1,296 | 2,033 |
Research and development | 489 | 546 | 1,309 | 1,650 |
General and administrative | 1,080 | 936 | 3,154 | 3,209 |
Total operating expenses | 2,014 | 2,189 | 5,759 | 6,892 |
Income (loss) from operations | (4,713) | 43 | (9,329) | 694 |
Other income (expenses) | ||||
Interest expense and finance costs | (11) | (14) | (46) | (34) |
Other income (expense), net | 1 | 19 | 14 | 26 |
Total other income (expenses), net | (10) | 5 | (32) | (8) |
Income (loss) before income taxes | (4,723) | 48 | (9,361) | 686 |
Income tax benefit | ||||
Current | (1,484) | |||
Deferred | (655) | |||
Total income tax benefit | (2,139) | |||
Net income (loss) | $ (4,723) | $ 48 | $ (7,222) | $ 686 |
Net income (loss) per share - basic and diluted | $ (0.42) | $ 0 | $ (0.68) | $ 0.07 |
Weighted average shares outstanding, basic and diluted | 11,315,984 | 10,143,158 | 10,659,308 | 10,143,158 |
Condensed Statements of Stockho
Condensed Statements of Stockholders' Equity (Unaudited) - USD ($) $ in Thousands | Common Stock [Member] | Additional Paid-in Capital [Member] | Retained Earnings (Accumulated Deficit) [Member] | Treasury Stock [Member] | Total |
Beginning balance at Dec. 31, 2018 | $ 1 | $ 19,578 | $ 2,803 | $ 22,382 | |
Beginning balance, shares at Dec. 31, 2018 | 10,143,158 | ||||
Fair value of vested stock options | 237 | 237 | |||
Net income (loss) | 685 | 686 | |||
Ending balance at Sep. 30, 2019 | $ 1 | 19,815 | 3,488 | 23,304 | |
Ending balance, shares at Sep. 30, 2019 | 10,143,158 | ||||
Beginning balance at Jun. 30, 2019 | $ 1 | 19,736 | 3,440 | 23,177 | |
Beginning balance, shares at Jun. 30, 2019 | 10,143,158 | ||||
Fair value of vested stock options | 79 | 79 | |||
Net income (loss) | 48 | 48 | |||
Ending balance at Sep. 30, 2019 | $ 1 | 19,815 | 3,488 | 23,304 | |
Ending balance, shares at Sep. 30, 2019 | 10,143,158 | ||||
Beginning balance at Dec. 31, 2019 | $ 1 | 19,657 | (1,242) | $ (40) | 18,376 |
Beginning balance, shares at Dec. 31, 2019 | 10,143,158 | ||||
Common shares issued with warrants for cash | 2,812 | 2,812 | |||
Common shares issued with warrants for cash, shares | 1,250,000 | ||||
Common shares issued upon exercise of warrants | 861 | 861 | |||
Common shares issued upon exercise of warrants, shares | 275,000 | ||||
Net income (loss) | (7,222) | (7,222) | |||
Ending balance at Sep. 30, 2020 | $ 1 | 23,330 | (8,464) | (40) | 14,826 |
Ending balance, shares at Sep. 30, 2020 | 11,668,158 | ||||
Beginning balance at Jun. 30, 2020 | $ 1 | 19,657 | (3,741) | (40) | 15,877 |
Beginning balance, shares at Jun. 30, 2020 | 10,143,158 | ||||
Common shares issued with warrants for cash | 2,812 | 2,812 | |||
Common shares issued with warrants for cash, shares | 1,250,000 | ||||
Common shares issued upon exercise of warrants | 861 | 861 | |||
Common shares issued upon exercise of warrants, shares | 275,000 | ||||
Net income (loss) | (4,723) | (4,723) | |||
Ending balance at Sep. 30, 2020 | $ 1 | $ 23,330 | $ (8,464) | $ (40) | $ 14,826 |
Ending balance, shares at Sep. 30, 2020 | 11,668,158 |
Condensed Statements of Cash Fl
Condensed Statements of Cash Flow (Unaudited) - USD ($) $ in Thousands | 9 Months Ended | |
Sep. 30, 2020 | Sep. 30, 2019 | |
Cash flows from operating activities: | ||
Net income (loss) | $ (7,222) | $ 686 |
Adjustments to reconcile net income (loss) to net cash provided by (used in) operating activities: | ||
Fair value of vested stock options | 237 | |
Depreciation and amortization | 469 | 459 |
Increase in inventory reserve | 2,400 | |
Deferred tax assets | (655) | |
Amortization of operating lease right-of-use asset | 466 | 391 |
Changes in operating assets and liabilities | ||
Accounts receivable | (842) | 2,689 |
Inventories | 132 | (5,671) |
Prepaid expenses | 930 | (819) |
Deposits | (4) | |
Income tax receivable | (1,484) | 484 |
Accounts payable | (255) | (210) |
Customer deposits | 491 | 149 |
Accrued expenses and other current liabilities | (120) | 468 |
Decrease in lease liability | (458) | (352) |
Net cash used in operating activities | (6,152) | (1,489) |
Cash flows from investing activities: | ||
Acquisition of property and equipment | (311) | |
Proceeds from sale of property and equipment | (3) | |
Net cash used in investing activities | (3) | (311) |
Cash flows from financing activities: | ||
Proceeds from PPP Loan | 1,715 | |
Advances from line of credit | 245 | |
Proceeds from sales of common shares and warrants | 2,812 | |
Proceeds from exercise of warrants | 861 | |
Repayment of notes | (247) | (174) |
Net cash provided by (used in) financing activities | 5,386 | (174) |
Decrease in cash and cash equivalents | (769) | (1,974) |
Cash and cash equivalents, beginning of period | 2,840 | 5,640 |
Cash and cash equivalents, end of period | 2,071 | 3,666 |
Supplemental non-cash investing and financing activities: | ||
Assets acquired through issuance of notes payable | 153 | |
Initial recognition of operating lease right-of-use assets and operating lease obligations upon adoption of ASC Topic 842 | 2,847 | |
Reclassification of prepaid expenses to property and equipment | $ 114 |
Organization and Summary of Sig
Organization and Summary of Significant Accounting Policies | 9 Months Ended |
Sep. 30, 2020 | |
Organization, Consolidation and Presentation of Financial Statements [Abstract] | |
Organization and Summary of Significant Accounting Policies | NOTE 1 – ORGANIZATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES The Company Polar Power, Inc. was incorporated in the State of Washington as Polar Products, Inc. and in 1991 reincorporated in the State of California under the name Polar Power, Inc. In December 2016, Polar Power, Inc. reincorporated in the State of Delaware (the “Company”). The Company designs, manufactures and sells direct current, or DC, power systems to supply reliable and low-cost energy to off-grid, bad-grid and backup power applications. The Company’s products integrate DC generator and proprietary automated controls, lithium batteries and solar systems to provide low operating cost and lower emissions alternative power needs in telecommunications, defense, automotive and industrial markets. Going Concern The Company’s financial statements have been prepared on the going concern basis, which presumes the Company will continue realization of its assets and settlement of its liabilities in the normal course of operations. The application of the going concern basis is dependent upon the Company achieving profitable operations to generate sufficient cash flows to fund continued operations, or, in the absence of adequate cash flows from operations, obtaining additional financing. The Company has reported losses from operations for the three and nine months ended September 30, 2020, the years ended December 31, 2019 and 2018 and used cash in operating activities during the nine months ended September 30, 2020. Its U.S. telecommunications customers, which represented 95% of the Company’s net sales as of December 31, 2019, and 99% and 97% for the three and nine months ended September 30, 2020, respectively, have postponed shipments and orders to prioritize expansion of 5G and cell site edge computing networks. In March 2020, the World Health Organization declared the coronavirus of 2019 (“COVID-19”) a global pandemic. This contagious disease pandemic, which has continued to spread, and any related adverse public health developments, has adversely affected workforces, economies, and financial markets globally, and has resulted in an economic downturn. It is not possible for the Company to predict the duration or magnitude of the adverse results of the pandemic and its effects on the Company’s business or ability to raise funds. These factors raise substantial doubt regarding the Company’s ability to continue as a going concern within one year from the issue date of the Company’s financial statements. In addition, the Company’s independent registered public accounting firm, in its report on the Company’s December 31, 2019 financial statements, has expressed substantial doubt about the Company’s ability to continue as a going concern. The financial statements do not include any adjustments that might result from the outcome of this uncertainty. At September 30, 2020, the Company had cash on hand in the amount of $2,071. During the nine months ended September 30, 2020, the Company received proceeds of $1,715 pursuant to the Paycheck Protection Program (see Note 5), proceeds of $2,812 from the issuance of common stock (See Note 6), and proceeds of $861 from the exercise of warrants (See Note 8). The Company’s management estimates, as of the date of this Quarterly Report on Form 10-Q, that the current funds on hand will be sufficient to continue operations through March 31, 2021. The continuation of the Company as a going concern is dependent upon its ability to obtain necessary debt or equity financing to continue operations until it begins generating positive cash flow. No assurance can be given that any future financing will be available or, if available, that it will be on terms that are satisfactory to the Company. Even if the Company is able to obtain additional financing, it may contain undue restrictions on its operations, in the case of debt financing or cause substantial dilution for its stockholders, in case or equity financing. Management continues to review operations in order to identify additional strategies designed to generate cash flow, improve the Company’s financial position, and enable the timely discharge of the Company’s obligations. If management is unable to identify sources of additional cash flow in the short term, it may be required to further reduce or limit operations. Impact of COVID-19 The Company continues to monitor the rapidly evolving situation and guidance from international and domestic authorities, including federal, state and local public health authorities and it may need to make changes to its business based on their recommendations. COVID-19, has had and is likely to continue to have, a material and substantial adverse impact on the Company’s results of operations including, among others, a decrease in the Company’s sales, delays in sourcing of raw materials from suppliers which, in turn, has raised liquidity concerns. In addition, the Company’s inventory reserve increased during the first nine months of 2020 due to current uncertainties regarding specific product shipments. The Company’s business is directly dependent upon, and correlates closely with, the marketing levels and ongoing business activities of its existing customers and suppliers. In the event of a continued widespread economic downturn caused by COVID-19, the Company will likely experience a further reduction in current projects, longer sales and collection cycles, deferral or delay of purchase commitments for our DC power systems, a reduction in its manufacturing functionality, higher than normal inventory levels, a reduction in the availability of qualified labor, and increased price competition, all of which could substantially adversely affect its net revenues and its ability to remain a going concern. In the event the Company remains a going concern, the impacts of COVID-19 on its business, sources of revenues and the general economy, are currently not fully known. The Company is conducting business as usual with some modifications to employee work locations, and cancellation of certain marketing events, among other modifications. As a result of the Company’s declining revenues during the COVID-19 pandemic, the Company’s management team implemented a cost reduction program to reduce overhead. The Company lowered operation expenses, while still keeping the business operational and ready to expand when needed. The Company will continue to actively monitor the situation and may take further actions that may alter its business operations as may be required by federal, state or local authorities or that the Company determines are in the best interests of its employees, customers, partners, suppliers and stockholders. It is not clear what the potential effects any such alterations or modifications may have on the Company’s business, including the effects on its customers and prospects, although the Company does anticipate it to negatively impact its financial results during fiscal year 2020 and perhaps beyond. During November 2020, two leaders in the pharmaceutical industry released news of achieving over 90% effectiveness on their COVID-19 vaccines. We remain hopeful that this is the beginning of taking control over the COVID-19 pandemic and seeing economic conditions gradually improve in 2021. Control over COVID-19 will improve our ability to travel for purpose of training our sales staff and customers, commissioning of generators, and promoting the rollout of our new products to enhance our efforts for customer diversification. We expect to see significant improvements to labor and manufacturing efficiencies and a reduction in delays in the supply chain. In addition, we believe our investments during the last two years in facilities, state-of-the-art manufacturing equipment, and training of our staff place us in good position to achieve significant improvements in our financial position as opportunities arise and the negative impact of COVID-19 is reduced. Basis of Presentation of Unaudited Financial Information The unaudited condensed financial statements of the Company for the three and nine months ended September 30, 2020 and 2019 have been prepared in accordance with accounting principles generally accepted in the United States of America (“GAAP”) for interim financial information and pursuant to the requirements for reporting on Form 10-Q and Regulation S-K for scaled disclosures for smaller reporting companies. Accordingly, they do not include all the information and footnotes required by GAAP for complete financial statements. However, such information reflects all adjustments (consisting solely of normal recurring adjustments), which are, in the opinion of management, necessary for the fair presentation of the Company’s financial position and results of operations. Results shown for interim periods are not necessarily indicative of the results to be obtained for a full fiscal year. The balance sheet information as of December 31, 2019 was derived from the audited financial statements included in the Company’s financial statements as of and for the years ended December 31, 2019 and 2018 contained in the Company’s Annual Report on Form 10-K filed with the Securities and Exchange Commission, or the SEC, on May 14, 2020. These financial statements should be read in conjunction with that report. Estimates The preparation of financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenue and expenses during the reporting period. Material estimates relate to the assumptions made in determining reserves for uncollectible receivables, inventory reserves and returns, impairment analysis of long-term assets, valuation allowance on deferred tax assets, income tax accruals, accruals for potential liabilities and warrant reserves and assumptions made in valuing equity instruments issued for services. 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. The underlying principle of ASC 606 is to recognize revenue to depict the transfer of goods or services to customers at the amount expected to be collected. ASC 606 creates a five-step model that requires entities to exercise judgment when considering the terms of contract(s), which includes (1) identifying the contract(s) or agreement(s) with a customer, (2) identifying our performance obligations in the contract or agreement, (3) determining the transaction price, (4) allocating the transaction price to the separate performance obligations, and (5) recognizing revenue as each performance obligation is satisfied. Under ASC 606, revenue is recognized when performance obligations under the terms of a contract are satisfied, which occurs for us upon shipment or delivery of products or services to our customers based on written sales terms, which is also when control is transferred. Revenue is measured as the amount of consideration we expect to receive in exchange for transferring the products or services to a customer. We determine whether delivery has occurred based on when title transfers and the risks and rewards of ownership have transferred to the customer, which usually occurs when we place the product with the customer’s carrier or deliver the product to a customer’s location. We regularly review our customers’ financial positions to ensure that collectability is reasonably assured. We recognize revenues from rental equipment on a straight-line basis over the rental period. Our rental contracts are fixed price contracts for fixed durations of time and include freight and delivery charges. Our rental revenues have not been significant to date and accounted for less than one percent of our total revenues for the three and nine months Ended September 30, 2020 and 2019. Disaggregation of Net Sales The following table shows the Company’s disaggregated net sales by product type: Three months ended 2020 (Unaudited) 2019 (Unaudited) DC power systems $ 2,414 $ 6,776 Accessories 87 163 Total net sales $ 2,501 $ 6,939 Nine months ended 2020 (Unaudited) 2019 (Unaudited) DC power systems $ 6,200 $ 23,379 Accessories 288 543 Total net sales $ 6,488 $ 23,922 The following table shows the Company’s disaggregated net sales by customer type: Three months ended 2020 (Unaudited) 2019 (Unaudited) Telecom $ 2,491 $ 6,753 Government/Military 2 40 Marine 1 — Other (backup DC power to various industries ) 7 146 Total net sales $ 2,501 $ 6,939 Nine months ended 2020 (Unaudited) 2019 (Unaudited) Telecom $ 6,294 $ 22,497 Government/Military 9 588 Marine 5 61 Other (backup DC power to various industries ) 180 776 Total net sales $ 6,488 $ 23,922 Inventories Inventories consist of raw materials and finished goods and are stated 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 and customer inventories, 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. As of December 31, 2019, the Company established inventory reserves of $600 for obsolete and slow-moving inventory. During the three and nine months ended September 30, 2020, due to lower than expected demand and sales of our products, we increased our inventory reserve by $2,400 to reduce the remaining inventory of our products to its estimated net realizable value of $11,380 as of September 30, 2020. If actual future demand or market conditions are less favorable than those projected by management, additional inventory write-downs may be required. As of September 30, 2020 and December 31, 2019, the components of inventories were as follows: September 30, 2020 (unaudited) December 31, 2019 Raw materials $ 9,482 $ 8,651 Finished goods 4,898 5,861 14,380 14,512 Less: Inventory reserve (3,000 ) (600 ) Total Inventories, net $ 11,380 $ 13,912 Product Warranties The Company provides limited warranties for parts and labor at no cost to its customers within a specified time period after the sale. The warranty terms are typically from one to five years. The Company’s warranties are of an assurance-type and come standard with all Company products to cover repair or replacement should product not perform as expected. Provisions for estimated expenses related to product warranties are made at the time products are sold. These estimates are established using historical information about the nature, frequency and average cost of warranty claim settlements as well as product manufacturing and recovery from suppliers. Management actively studies trends of warranty claims and takes action to improve product quality and minimize warranty costs. The Company estimates the actual historical warranty claims coupled with an analysis of unfulfilled claims to record a liability for specific warranty purposes. The Company’s product warranty obligations are included in other accrued liabilities in the balance sheets. As of September 30, 2020 and December 31, 2019, the Company had accrued a liability for warranty reserve of $375 and $375, respectively. Management believes that the warranty accrual is appropriate; however, actual claims incurred could differ from original estimates, requiring adjustments to the accrual. The product warranty accrual is included in current liabilities in the accompanying balance sheets. The following is a tabular reconciliation of the product warranty liability, excluding the deferred revenue related to the Company’s warranty coverage: Changes in estimates for warranties September 30, 2020 (unaudited) December 31, 2019 Balance at beginning of the period $ 375 $ 175 Payments (408 ) (530 ) Provision for warranties 408 730 Balance at end of the period $ 375 $ 375 Financial Assets and Liabilities Measured at Fair Value The Company uses various inputs in determining the fair value of its investments and measures these assets on a recurring basis. Financial assets recorded at fair value in the balance sheets are categorized by the level of objectivity associated with the inputs used to measure their fair value. Authoritative guidance provided by the Financial Accounting Standards Board (“FASB”) defines the following levels directly related to the amount of subjectivity associated with the inputs to fair valuation of these financial assets: Level 1 Quoted prices in active markets for identical assets or liabilities. Level 2 Inputs, other than the quoted prices in active markets, that is observable either directly or indirectly. Level 3 Unobservable inputs based on the Company’s assumptions. The carrying amounts of financial assets and liabilities, such as cash and cash equivalents, accounts receivable and accounts payable, approximate their fair values because of the short maturity of these instruments. The carrying values of the line of credit, notes payable approximate their fair values due to the fact that the interest rates on these obligations are based on prevailing market interest rates. Segments The Company operates in one segment for the manufacture and distribution of its products. In accordance with the “Segment Reporting” Topic of the ASC, the Company’s chief operating decision maker has been identified as the Chief Executive Officer and President, who reviews operating results to make decisions about allocating resources and assessing performance for the entire Company. Existing guidance, which is based on a management approach to segment reporting, establishes requirements to report selected segment information quarterly and to report annually entity-wide disclosures about products and services, major customers, and the countries in which the entity holds material assets and reports revenue. All material operating units qualify for aggregation under “Segment Reporting” due to their similar customer base and similarities in: economic characteristics; nature of products and services; and procurement, manufacturing and distribution processes. Since the Company operates in one segment, all financial information required by “Segment Reporting” can be found in the accompanying financial statements. Concentrations Cash Cash denominated in Australian Dollars with a U.S. Dollar equivalent of $11 and $17 at September 30, 2020 and December 31, 2019, respectively, was held in an account at a financial institution located in Australia. Cash denominated in Romanian Leu with a U.S. Dollar equivalent of $29 and $4 at September 30, 2020 and December 31, 2019, respectively, was held in an account at a financial institution located in Romania. Revenues. For the nine months Ended September 30, 2020, sales to the Company’s two largest customers accounted for 57% and 13% of total revenues, one being a Tier-1 telecommunications wireless carrier. For the same period in 2019, the Company’s two largest customers accounted for 84% and 24% of total revenues, both beingTier-1 telecommunications wireless carriers. For the nine months ended September 30, 2020 and September 30, 2019, sales to telecommunications customers accounted for 96% and 96% of total revenues, respectively. Accounts receivable Accounts payable Net Income (Loss) Per Share Basic net income (loss) per share is computed by dividing net income (loss) by the weighted average number of common shares outstanding for the period. Diluted earnings per share is computed by dividing the net income applicable to common stockholders by the weighted average number of common shares outstanding plus the number of additional common shares that would have been outstanding if all dilutive potential common shares had been issued using the treasury stock method. Potential common shares are excluded from the computation when their effect is antidilutive. The dilutive effect of potentially dilutive securities is reflected in diluted net income per share if the exercise prices were lower than the average fair market value of common shares during the reporting period. The following potentially dilutive shares were excluded from the shares used to calculate diluted earnings per share as their inclusion would be anti-dilutive: September 30, 2020 (Unaudited) September 30, 2019 Options 140,000 360,000 Warrants 465,000 115,000 Total 605,000 475,000 Recent Accounting Pronouncements In September 2016, the FASB issued ASU No. 2016-13, Credit Losses - Measurement of Credit Losses on Financial Instruments (“ASC 326”). The standard significantly changes how entities will measure credit losses for most financial assets, including accounts and notes receivables. The standard will replace today’s “incurred loss” approach with an “expected loss” model, under which companies will recognize allowances based on expected rather than incurred losses. Entities will apply the standard’s provisions as a cumulative-effect adjustment to retained earnings as of the beginning of the first reporting period in which the guidance is effective. The standard is effective for interim and annual reporting periods beginning after December 15, 2022. The adoption of ASU 2016-13 is not expected to have a material impact on the Company’s financial position, results of operations, and cash flows. The Company’s management does not believe that there are other recently issued but not yet effective authoritative guidance, if currently adopted, would have a material impact on the Company’s financial statement presentation or disclosures. |
Property and Equipment
Property and Equipment | 9 Months Ended |
Sep. 30, 2020 | |
Property, Plant and Equipment [Abstract] | |
Property and Equipment | NOTE 2 – PROPERTY AND EQUIPMENT Property and equipment consist of the following: September 30, 2020 (Unaudited) December 31, 2019 Production tooling, jigs, fixtures $ 71 $ 71 Shop equipment and machinery 3,275 3,264 Vehicles 180 188 Leasehold improvements 390 390 Office equipment 172 172 Software 103 103 Total property and equipment, cost 4,191 4,188 Less: accumulated depreciation and amortization (2,557 ) (2,088 ) Property and equipment, net $ 1,634 $ 2,100 Depreciation and amortization expense on property and equipment for the three months ended September 30, 2020 and 2019 was $156 and $164, respectively. During the three months ended September 30, 2020 and 2019, $148 and $153, respectively, of the depreciation expense was included in the balance of cost of sales. Depreciation and amortization expense on property and equipment for the nine months ended September 30, 2020 and 2019 was $469 and $459, respectively. During the nine months ended September 30, 2020 and 2019, $450 and $428, respectively, of the depreciation expense was included in the balance of cost of sales. |
Notes Payable
Notes Payable | 9 Months Ended |
Sep. 30, 2020 | |
Debt Disclosure [Abstract] | |
Notes Payable | NOTE 3 – NOTES PAYABLE Notes payable consist of the following: September 30, 2020 December 31, (Unaudited) 2019 Total Equipment Notes Payable $ 859 $ 1,106 Less Current Portion 290 328 Notes Payable, long term $ 569 $ 778 The Company has entered into several financing agreements for the purchase of equipment. The terms of these financing arrangements are for a term of 2 years to 5 years, with interest rates ranging from 1.9% to 6.9% per annum, secured by the purchased equipment. Aggregate monthly payments of principal and interest of approximately $29 are due through 2023. |
Line of Credit
Line of Credit | 9 Months Ended |
Sep. 30, 2020 | |
Debt Disclosure [Abstract] | |
Line of Credit | NOTE 4 – LINE OF CREDIT Credit Facility Effective September 30, 2020, the Company entered into a Loan and Security Agreement (the “Loan Agreement”) with Pinnacle Bank (“Pinnacle”). The balance outstanding under the line of credit at September 30, 2020 was $245. There was no balance outstanding under the line of credit at December 31, 2019. As of September 30, 2020, the Company had availability under the line of credit in the amount of $2,560. The Loan Agreement provides for a revolving credit facility under which Pinnacle may make advances to the Company, subject to certain limitations and adjustments, of up to (a) 85% of the aggregate net face amount of the Company’s accounts receivable and other contract rights and receivables, plus (b) the lesser of (i) 35% of the lower of cost or wholesale market value of certain inventory of the Company or (ii) $2,500. In no event shall the aggregate amount of the outstanding advances under the revolving credit facility be greater than $4,000. Interest accrues on the daily balance at a rate of 1.25% above the prime rate (the “Standard Interest Rate”), but in no event shall 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 (the “Inventory Interest Rate”), but in no event shall the Inventory Interest Rate be less than 4.75% per annum. The Loan Agreement also contains a financial covenant requiring the Company to attain an effective tangible net worth, defined as its total assets, excluding all intangible assets, less its total liabilities plus loans to the Company from our officers, stockholders or employees that have been subordinated to the Company’s obligations to Pinnacle, greater than $6,000 as determined by Pinnacle as of the end of each fiscal quarter. The Loan Agreement’s initial term ends on September 30, 2022 and is renewed thereafter for additional one-year terms. Either party may terminate the Loan Agreement on the last day of the initial term or subsequent renewal term by giving the other party at least sixty days prior written notice. In addition, Pinnacle may terminate the Loan Agreement at any time upon sixty days prior written notice and immediately upon the occurrence of an event of default. 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 plus the original principal balance of any term loans and advances other than under the revolving credit facility. Under the Loan Agreement, the Company also agreed to grant Pinnacle a security interest in all presently existing and thereafter acquired or arising assets of the Company. The Loan Agreement also contains customary representations, warranties and covenants, and other terms and conditions. Supplier Agreement Effective June 4, 2019, the Company executed a Supplier Agreement with Citibank, N.A. Under the terms of the Supplier Agreement, the Company may from time to time offer to sell to Citibank certain of the Company’s accounts receivable relating to invoiced sales made to AT&T. Once AT&T approves the invoice, AT&T sends payment instructions to Citibank. The sale price is equal to the face amount of the receivable less the applicable discount charge calculated by multiplying the face amount of the receivable by (i) the annual discount rate (which is equal to the 90-day London Inter-bank Offered Rate plus 1.00%) and (ii) the discount acceptance period (which is equal the number of days in the payment terms less the number of days necessary to approve the invoice) divided by 360. On October 8, 2020, the Company terminated the Supplier Agreement with Citibank, N.A. During the period ended September 30, 2020, a total of $2,621 of accounts receivables had been sold to Citibank by the Company, and the Company incurred fees of approximately $12 during the nine-month period then ended. |
PPP Loan
PPP Loan | 9 Months Ended |
Sep. 30, 2020 | |
Debt Disclosure [Abstract] | |
PPP Loan | NOTE 5- PPP LOAN On May 4, 2020, the Company entered into a loan with Citibank, N.A. in an aggregate principal amount of $1,715 (the “PPP Loan”), pursuant to the Paycheck Protection Program (the “PPP”) under the CARES Act. The PPP Loan is evidenced by a promissory note dated May 4, 2020. The PPP Loan matures two years from the disbursement date and bears interest at a rate of 1% per annum, with the first nine months of interest deferred. Principal and interest are payable monthly commencing nine months after the disbursement date and may be prepaid by the Company at any time prior to maturity with no prepayment penalties. The Company applied ASC 470, Debt Under the terms of the CARES Act, recipients of PPP loans can apply for and be granted forgiveness for all or a portion of loans granted under the PPP. The PPP Loan is subject to forgiveness to the extent proceeds are used for payroll costs, including payments required to continue group health care benefits, and certain rent, utility, and mortgage interest expenses (collectively, “Qualifying Expenses”), pursuant to the terms and limitations of the PPP. The Company intends to use a significant majority of the PPP Loan amount for Qualifying Expenses and expects the full amount of the PPP Loan to be forgiven. However, no assurance can be given that the Company will obtain forgiveness of the PPP Loan in whole or in part. |
Stockholders' Equity
Stockholders' Equity | 9 Months Ended |
Sep. 30, 2020 | |
Equity [Abstract] | |
Stockholders' Equity | NOTE 6 – STOCKHOLDERS’ EQUITY Issuance of common stock with warrants On July 2, 2020, the Company entered into a securities purchase agreement with certain institutional investors for the sale in a private placement of 1,250,000 shares of the Company’s common stock, at a purchase price of $2.25 per share. Additionally, each investor received a warrant exercisable into 50% of the shares purchased by an investor (see Note 8). The closing of the private placement took place on July 7, 2020, and aggregate net proceeds from the sale of the shares of common stock and warrants was approximately $2,629. Treasury Stock The Company entered into a Rule 10b-18 Stock Repurchase Agreement on November 6, 2019 authorizing ThinkEquity, a division of Fordham Financial Management, Inc., to repurchase up to $500 of the Company’s common stock par value $0.0001. As of December 31, 2019, the Company purchased 17,477 shares and held them as treasury stock at cost of $40. There were no purchases during 2020 and on January 20, 2020, the Company terminated the Stock Repurchase Agreement. As of September 30, 2020 and December 31, 2019, funds of $155 were due back from ThinkEquity and are included in the prepaid expenses as of those dates. |
Stock Options
Stock Options | 9 Months Ended |
Sep. 30, 2020 | |
Share-based Payment Arrangement [Abstract] | |
Stock Options | NOTE 7 – STOCK OPTIONS The following table summarizes stock option activity: Number of Weighted Average Options Price Outstanding, December 31, 2019 140,000 $ 5.22 Granted — — Exercised — — Outstanding, September 30, 2020 (unaudited) 140,000 $ 5.22 Exercisable, September 30, 2020 (unaudited) 140,000 $ 5.22 Effective July 8, 2016 the Company’s board of directors approved the Polar Power 2016 Omnibus Incentive Plan (the “2016 Plan”), authorizing the issuance of up to 1,754,385 shares of common stock as incentives to employees and consultants to the Company with awards limited to a maximum of 350,877 shares in any calendar year. During the nine months ended September 30, 2020 and 2019, the Company expensed total stock-based compensation related to the vested options of nil and $237, respectively, related to the vesting of these options. As of September 30, 2020, there was no unamortized cost compensation costs remaining. There was no intrinsic value of the outstanding options at September 30, 2020. |
Stock Warrants
Stock Warrants | 9 Months Ended |
Sep. 30, 2020 | |
Equity [Abstract] | |
Stock Warrants | NOTE 8 – STOCK WARRANTS At September 30, 2020, warrant shares outstanding were as follows: Number of Weighted Outstanding December 31, 2019 115,000 $ 8.75 Issued 625,000 3.13 Exercised (275,000 ) (3.13 ) Outstanding, September 30, 2020 (unaudited) 465,000 $ 4.52 Exercisable, September 30, 2020 (unaudited) 465,000 $ 4.52 On July 7, 2020, the Company issued warrants exercisable into 625,000 shares of the Company’s common stock in conjunction with the sales by the Company in a private placement of 1,250,000 shares of the Company’s common stock (see Note 6). The warrants have an exercise price of $3.13 per share, are exercisable beginning on July 7, 2020 and have a term of five years. On September 24, 2020, the warrants to purchase 275,000 shares of common stock were exercised, and the Company received net proceeds of $861 upon such exercise. The outstanding and exercisable warrants at September 30, 2020 had intrinsic value of approximately $10. |
Distribution Agreement with a R
Distribution Agreement with a Related Entity | 9 Months Ended |
Sep. 30, 2020 | |
Distribution Agreement With Related Entity | |
Distribution Agreement with a Related Entity | NOTE 9 – DISTRIBUTION AGREEMENT WITH A RELATED ENTITY On March 1, 2014, the Company entered into a subcontractor installer agreement with Smartgen Solutions, Inc. (“Smartgen”), a related entity that is engaged in business of equipment rental and provider of maintenance, repair and installation services to mobile telecommunications towers in California. Under the terms of the agreement, Smartgen has been appointed as a non-exclusive, authorized service provider for the installation, repair and service of the Company’s products in Southern California. The agreement has a term of three years from the date of execution and automatically renews for additional one-year periods if not terminated. During the three months ended September 30, 2020 and 2019, Smartgen performed $33 and $54 in field services, respectively. Smartgen performed $193 and $227 in field services for the nine months ended September 30, 2020 and 2019, respectively. Smartgen had no purchases from the Company during the three months and the nine months ended September 30, 2020 and 2019, respectively. |
Income Taxes
Income Taxes | 9 Months Ended |
Sep. 30, 2020 | |
Income Tax Disclosure [Abstract] | |
Income Taxes | NOTE 10 – INCOME TAXES On March 27, 2020, the Coronavirus Aid, Relief and Economic Security Act (the “CARES Act”) was enacted by the United States Congress. The CARES Act allows, among other provisions, for net operating losses (NOL’s) arising in tax years beginning after December 31, 2017 and before January 1, 2021 may be carried back to each of the five preceding taxable years to generate a refund of previously paid income taxes. During the nine month period ended September 30, 2020, the Company has recorded an income tax benefit of $2,139 related to the carryback of NOLs. At September 30, 2020, the Company has recorded an income tax receivable of $1,715 and $655 related to the carryback of NOLs. |
Leases
Leases | 9 Months Ended |
Sep. 30, 2020 | |
Leases [Abstract] | |
Leases | NOTE 11 - LEASES The Company has two operating lease agreements for its warehouse and office spaces with one have a remaining lease term of 2.9 years and the other 2.4 years. The Company also has another storage facility on a twelve-month lease term. Leases with an initial term of 12 months or less are not recorded on the balance sheet. The Company accounts for the lease and non-lease components of its leases as a single lease component. Rent expense is recognized on a straight-line basis over the lease term. Operating lease right-of-use (“ROU”) assets and liabilities are recognized at commencement date based on the present value of lease payments over the lease term. ROU assets represent our right to use an underlying asset for the lease term and lease liabilities represent our obligation to make lease payments arising from the lease. Generally, the implicit rate of interest in arrangements is not readily determinable and the Company utilizes its incremental borrowing rate in determining the present value of lease payments. The Company’s incremental borrowing rate is a hypothetical rate based on its understanding of what its credit rating would be. The operating lease ROU asset includes any lease payments made and excludes lease incentives. The components of rent expense and supplemental cash flow information related to leases for the period are as follows: Nine Months September 30, 2020 Nine Months September 30, 2019 Lease Cost Operating lease cost (of which $74 is included in general and administration and $451 is included in cost of sales in the Company’s statement of operations for the nine months ended September 30, 2020, and for the same period in 2019, respectively) $ 525 $ 525 Other Information Weighted average remaining lease term – operating leases (in years) 2.7 3.7 Average discount rate – operating leases 3.75 % 3.75 % The supplemental balance sheet information related to leases for the period is as follows: At At Operating leases Long-term right-of-use assets, net of amortization of $89 and $155, respectively $ 1,721 $ 2,187 Short-term operating lease liabilities $ 657 $ 618 Long-term operating lease liabilities 1,162 1,660 Total operating lease liabilities $ 1,819 $ 2,278 Maturities of the Company’s lease liabilities are as follows (in thousands): Year Ending Operating Leases 2020 168 2021 721 2022 747 2023 272 Total lease payments 1,908 Less: Imputed interest/present value discount (89 ) Present value of lease liabilities $ 1,819 Rent expense for the nine months ended September 30, 2020 and 2019 was $604 and $602, respectively. |
Organization and Summary of S_2
Organization and Summary of Significant Accounting Policies (Policies) | 9 Months Ended |
Sep. 30, 2020 | |
Organization, Consolidation and Presentation of Financial Statements [Abstract] | |
The Company | The Company Polar Power, Inc. was incorporated in the State of Washington as Polar Products, Inc. and in 1991 reincorporated in the State of California under the name Polar Power, Inc. In December 2016, Polar Power, Inc. reincorporated in the State of Delaware (the “Company”). The Company designs, manufactures and sells direct current, or DC, power systems to supply reliable and low-cost energy to off-grid, bad-grid and backup power applications. The Company’s products integrate DC generator and proprietary automated controls, lithium batteries and solar systems to provide low operating cost and lower emissions alternative power needs in telecommunications, defense, automotive and industrial markets. |
Going Concern | Going Concern The Company’s financial statements have been prepared on the going concern basis, which presumes the Company will continue realization of its assets and settlement of its liabilities in the normal course of operations. The application of the going concern basis is dependent upon the Company achieving profitable operations to generate sufficient cash flows to fund continued operations, or, in the absence of adequate cash flows from operations, obtaining additional financing. The Company has reported losses from operations for the three and nine months ended September 30, 2020, the years ended December 31, 2019 and 2018 and used cash in operating activities during the nine months ended September 30, 2020. Its U.S. telecommunications customers, which represented 95% of the Company’s net sales as of December 31, 2019, and 99% and 97% for the three and nine months ended September 30, 2020, respectively, have postponed shipments and orders to prioritize expansion of 5G and cell site edge computing networks. In March 2020, the World Health Organization declared the coronavirus of 2019 (“COVID-19”) a global pandemic. This contagious disease pandemic, which has continued to spread, and any related adverse public health developments, has adversely affected workforces, economies, and financial markets globally, and has resulted in an economic downturn. It is not possible for the Company to predict the duration or magnitude of the adverse results of the pandemic and its effects on the Company’s business or ability to raise funds. These factors raise substantial doubt regarding the Company’s ability to continue as a going concern within one year from the issue date of the Company’s financial statements. In addition, the Company’s independent registered public accounting firm, in its report on the Company’s December 31, 2019 financial statements, has expressed substantial doubt about the Company’s ability to continue as a going concern. The financial statements do not include any adjustments that might result from the outcome of this uncertainty. At September 30, 2020, the Company had cash on hand in the amount of $2,071. During the nine months ended September 30, 2020, the Company received proceeds of $1,715 pursuant to the Paycheck Protection Program (see Note 5), proceeds of $2,812 from the issuance of common stock (See Note 6), and proceeds of $861 from the exercise of warrants (See Note 8). The Company’s management estimates, as of the date of this Quarterly Report on Form 10-Q, that the current funds on hand will be sufficient to continue operations through March 31, 2021. The continuation of the Company as a going concern is dependent upon its ability to obtain necessary debt or equity financing to continue operations until it begins generating positive cash flow. No assurance can be given that any future financing will be available or, if available, that it will be on terms that are satisfactory to the Company. Even if the Company is able to obtain additional financing, it may contain undue restrictions on its operations, in the case of debt financing or cause substantial dilution for its stockholders, in case or equity financing. Management continues to review operations in order to identify additional strategies designed to generate cash flow, improve the Company’s financial position, and enable the timely discharge of the Company’s obligations. If management is unable to identify sources of additional cash flow in the short term, it may be required to further reduce or limit operations. |
Impact of COVID-19 | Impact of COVID-19 The Company continues to monitor the rapidly evolving situation and guidance from international and domestic authorities, including federal, state and local public health authorities and it may need to make changes to its business based on their recommendations. COVID-19, has had and is likely to continue to have, a material and substantial adverse impact on the Company’s results of operations including, among others, a decrease in the Company’s sales, delays in sourcing of raw materials from suppliers which, in turn, has raised liquidity concerns. In addition, the Company’s inventory reserve increased during the first nine months of 2020 due to current uncertainties regarding specific product shipments. The Company’s business is directly dependent upon, and correlates closely with, the marketing levels and ongoing business activities of its existing customers and suppliers. In the event of a continued widespread economic downturn caused by COVID-19, the Company will likely experience a further reduction in current projects, longer sales and collection cycles, deferral or delay of purchase commitments for our DC power systems, a reduction in its manufacturing functionality, higher than normal inventory levels, a reduction in the availability of qualified labor, and increased price competition, all of which could substantially adversely affect its net revenues and its ability to remain a going concern. In the event the Company remains a going concern, the impacts of COVID-19 on its business, sources of revenues and the general economy, are currently not fully known. The Company is conducting business as usual with some modifications to employee work locations, and cancellation of certain marketing events, among other modifications. As a result of the Company’s declining revenues during the COVID-19 pandemic, the Company’s management team implemented a cost reduction program to reduce overhead. The Company lowered operation expenses, while still keeping the business operational and ready to expand when needed. The Company will continue to actively monitor the situation and may take further actions that may alter its business operations as may be required by federal, state or local authorities or that the Company determines are in the best interests of its employees, customers, partners, suppliers and stockholders. It is not clear what the potential effects any such alterations or modifications may have on the Company’s business, including the effects on its customers and prospects, although the Company does anticipate it to negatively impact its financial results during fiscal year 2020 and perhaps beyond. During November 2020, two leaders in the pharmaceutical industry released news of achieving over 90% effectiveness on their COVID-19 vaccines. We remain hopeful that this is the beginning of taking control over the COVID-19 pandemic and seeing economic conditions gradually improve in 2021. Control over COVID-19 will improve our ability to travel for purpose of training our sales staff and customers, commissioning of generators, and promoting the rollout of our new products to enhance our efforts for customer diversification. We expect to see significant improvements to labor and manufacturing efficiencies and a reduction in delays in the supply chain. In addition, we believe our investments during the last two years in facilities, state-of-the-art manufacturing equipment, and training of our staff place us in good position to achieve significant improvements in our financial position as opportunities arise and the negative impact of COVID-19 is reduced. |
Basis of Presentation of Unaudited Financial Information | Basis of Presentation of Unaudited Financial Information The unaudited condensed financial statements of the Company for the three and nine months ended September 30, 2020 and 2019 have been prepared in accordance with accounting principles generally accepted in the United States of America (“GAAP”) for interim financial information and pursuant to the requirements for reporting on Form 10-Q and Regulation S-K for scaled disclosures for smaller reporting companies. Accordingly, they do not include all the information and footnotes required by GAAP for complete financial statements. However, such information reflects all adjustments (consisting solely of normal recurring adjustments), which are, in the opinion of management, necessary for the fair presentation of the Company’s financial position and results of operations. Results shown for interim periods are not necessarily indicative of the results to be obtained for a full fiscal year. The balance sheet information as of December 31, 2019 was derived from the audited financial statements included in the Company’s financial statements as of and for the years ended December 31, 2019 and 2018 contained in the Company’s Annual Report on Form 10-K filed with the Securities and Exchange Commission, or the SEC, on May 14, 2020. These financial statements should be read in conjunction with that report. |
Estimates | Estimates The preparation of financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenue and expenses during the reporting period. Material estimates relate to the assumptions made in determining reserves for uncollectible receivables, inventory reserves and returns, impairment analysis of long-term assets, valuation allowance on deferred tax assets, income tax accruals, accruals for potential liabilities and warrant reserves and assumptions made in valuing equity instruments issued for services. Actual results may differ from those estimates. |
Revenue Recognition | Revenue Recognition The Company recognizes revenue in accordance with Accounting Standards Codification (“ASC”) 606, Revenue from Contracts with Customers. The underlying principle of ASC 606 is to recognize revenue to depict the transfer of goods or services to customers at the amount expected to be collected. ASC 606 creates a five-step model that requires entities to exercise judgment when considering the terms of contract(s), which includes (1) identifying the contract(s) or agreement(s) with a customer, (2) identifying our performance obligations in the contract or agreement, (3) determining the transaction price, (4) allocating the transaction price to the separate performance obligations, and (5) recognizing revenue as each performance obligation is satisfied. Under ASC 606, revenue is recognized when performance obligations under the terms of a contract are satisfied, which occurs for us upon shipment or delivery of products or services to our customers based on written sales terms, which is also when control is transferred. Revenue is measured as the amount of consideration we expect to receive in exchange for transferring the products or services to a customer. We determine whether delivery has occurred based on when title transfers and the risks and rewards of ownership have transferred to the customer, which usually occurs when we place the product with the customer’s carrier or deliver the product to a customer’s location. We regularly review our customers’ financial positions to ensure that collectability is reasonably assured. We recognize revenues from rental equipment on a straight-line basis over the rental period. Our rental contracts are fixed price contracts for fixed durations of time and include freight and delivery charges. Our rental revenues have not been significant to date and accounted for less than one percent of our total revenues for the three and nine months Ended September 30, 2020 and 2019. Disaggregation of Net Sales The following table shows the Company’s disaggregated net sales by product type: Three months ended 2020 (Unaudited) 2019 (Unaudited) DC power systems $ 2,414 $ 6,776 Accessories 87 163 Total net sales $ 2,501 $ 6,939 Nine months ended 2020 (Unaudited) 2019 (Unaudited) DC power systems $ 6,200 $ 23,379 Accessories 288 543 Total net sales $ 6,488 $ 23,922 The following table shows the Company’s disaggregated net sales by customer type: Three months ended 2020 (Unaudited) 2019 (Unaudited) Telecom $ 2,491 $ 6,753 Government/Military 2 40 Marine 1 — Other (backup DC power to various industries ) 7 146 Total net sales $ 2,501 $ 6,939 Nine months ended 2020 (Unaudited) 2019 (Unaudited) Telecom $ 6,294 $ 22,497 Government/Military 9 588 Marine 5 61 Other (backup DC power to various industries ) 180 776 Total net sales $ 6,488 $ 23,922 |
Inventories | Inventories Inventories consist of raw materials and finished goods and are stated 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 and customer inventories, 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. As of December 31, 2019, the Company established inventory reserves of $600 for obsolete and slow-moving inventory. During the three and nine months ended September 30, 2020, due to lower than expected demand and sales of our products, we increased our inventory reserve by $2,400 to reduce the remaining inventory of our products to its estimated net realizable value of $11,380 as of September 30, 2020. If actual future demand or market conditions are less favorable than those projected by management, additional inventory write-downs may be required. As of September 30, 2020 and December 31, 2019, the components of inventories were as follows: September 30, 2020 (unaudited) December 31, 2019 Raw materials $ 9,482 $ 8,651 Finished goods 4,898 5,861 14,380 14,512 Less: Inventory reserve (3,000 ) (600 ) Total Inventories, net $ 11,380 $ 13,912 |
Product Warranties | Product Warranties The Company provides limited warranties for parts and labor at no cost to its customers within a specified time period after the sale. The warranty terms are typically from one to five years. The Company’s warranties are of an assurance-type and come standard with all Company products to cover repair or replacement should product not perform as expected. Provisions for estimated expenses related to product warranties are made at the time products are sold. These estimates are established using historical information about the nature, frequency and average cost of warranty claim settlements as well as product manufacturing and recovery from suppliers. Management actively studies trends of warranty claims and takes action to improve product quality and minimize warranty costs. The Company estimates the actual historical warranty claims coupled with an analysis of unfulfilled claims to record a liability for specific warranty purposes. The Company’s product warranty obligations are included in other accrued liabilities in the balance sheets. As of September 30, 2020 and December 31, 2019, the Company had accrued a liability for warranty reserve of $375 and $375, respectively. Management believes that the warranty accrual is appropriate; however, actual claims incurred could differ from original estimates, requiring adjustments to the accrual. The product warranty accrual is included in current liabilities in the accompanying balance sheets. The following is a tabular reconciliation of the product warranty liability, excluding the deferred revenue related to the Company’s warranty coverage: Changes in estimates for warranties September 30, 2020 (unaudited) December 31, 2019 Balance at beginning of the period $ 375 $ 175 Payments (408 ) (530 ) Provision for warranties 408 730 Balance at end of the period $ 375 $ 375 |
Financial Assets and Liabilities Measured at Fair Value | Financial Assets and Liabilities Measured at Fair Value The Company uses various inputs in determining the fair value of its investments and measures these assets on a recurring basis. Financial assets recorded at fair value in the balance sheets are categorized by the level of objectivity associated with the inputs used to measure their fair value. Authoritative guidance provided by the Financial Accounting Standards Board (“FASB”) defines the following levels directly related to the amount of subjectivity associated with the inputs to fair valuation of these financial assets: Level 1 Quoted prices in active markets for identical assets or liabilities. Level 2 Inputs, other than the quoted prices in active markets, that is observable either directly or indirectly. Level 3 Unobservable inputs based on the Company’s assumptions. The carrying amounts of financial assets and liabilities, such as cash and cash equivalents, accounts receivable and accounts payable, approximate their fair values because of the short maturity of these instruments. The carrying values of the line of credit, notes payable approximate their fair values due to the fact that the interest rates on these obligations are based on prevailing market interest rates. |
Segments | Segments The Company operates in one segment for the manufacture and distribution of its products. In accordance with the “Segment Reporting” Topic of the ASC, the Company’s chief operating decision maker has been identified as the Chief Executive Officer and President, who reviews operating results to make decisions about allocating resources and assessing performance for the entire Company. Existing guidance, which is based on a management approach to segment reporting, establishes requirements to report selected segment information quarterly and to report annually entity-wide disclosures about products and services, major customers, and the countries in which the entity holds material assets and reports revenue. All material operating units qualify for aggregation under “Segment Reporting” due to their similar customer base and similarities in: economic characteristics; nature of products and services; and procurement, manufacturing and distribution processes. Since the Company operates in one segment, all financial information required by “Segment Reporting” can be found in the accompanying financial statements. |
Concentrations | Concentrations Cash Cash denominated in Australian Dollars with a U.S. Dollar equivalent of $11 and $17 at September 30, 2020 and December 31, 2019, respectively, was held in an account at a financial institution located in Australia. Cash denominated in Romanian Leu with a U.S. Dollar equivalent of $29 and $4 at September 30, 2020 and December 31, 2019, respectively, was held in an account at a financial institution located in Romania. Revenues. For the nine months Ended September 30, 2020, sales to the Company’s two largest customers accounted for 57% and 13% of total revenues, one being a Tier-1 telecommunications wireless carrier. For the same period in 2019, the Company’s two largest customers accounted for 84% and 24% of total revenues, both beingTier-1 telecommunications wireless carriers. For the nine months ended September 30, 2020 and September 30, 2019, sales to telecommunications customers accounted for 96% and 96% of total revenues, respectively. Accounts receivable Accounts payable |
Net Income (Loss) Per Share | Net Income (Loss) Per Share Basic net income (loss) per share is computed by dividing net income (loss) by the weighted average number of common shares outstanding for the period. Diluted earnings per share is computed by dividing the net income applicable to common stockholders by the weighted average number of common shares outstanding plus the number of additional common shares that would have been outstanding if all dilutive potential common shares had been issued using the treasury stock method. Potential common shares are excluded from the computation when their effect is antidilutive. The dilutive effect of potentially dilutive securities is reflected in diluted net income per share if the exercise prices were lower than the average fair market value of common shares during the reporting period. The following potentially dilutive shares were excluded from the shares used to calculate diluted earnings per share as their inclusion would be anti-dilutive: September 30, 2020 (Unaudited) September 30, 2019 Options 140,000 360,000 Warrants 465,000 115,000 Total 605,000 475,000 |
Recent Accounting Pronouncements | Recent Accounting Pronouncements In September 2016, the FASB issued ASU No. 2016-13, Credit Losses - Measurement of Credit Losses on Financial Instruments (“ASC 326”). The standard significantly changes how entities will measure credit losses for most financial assets, including accounts and notes receivables. The standard will replace today’s “incurred loss” approach with an “expected loss” model, under which companies will recognize allowances based on expected rather than incurred losses. Entities will apply the standard’s provisions as a cumulative-effect adjustment to retained earnings as of the beginning of the first reporting period in which the guidance is effective. The standard is effective for interim and annual reporting periods beginning after December 15, 2022. The adoption of ASU 2016-13 is not expected to have a material impact on the Company’s financial position, results of operations, and cash flows. The Company’s management does not believe that there are other recently issued but not yet effective authoritative guidance, if currently adopted, would have a material impact on the Company’s financial statement presentation or disclosures. |
Organization and Summary of S_3
Organization and Summary of Significant Accounting Policies (Tables) | 9 Months Ended |
Sep. 30, 2020 | |
Organization, Consolidation and Presentation of Financial Statements [Abstract] | |
Schedule of Disaggregated Net Sales | The following table shows the Company’s disaggregated net sales by product type: Three months ended 2020 (Unaudited) 2019 (Unaudited) DC power systems $ 2,414 $ 6,776 Accessories 87 163 Total net sales $ 2,501 $ 6,939 Nine months ended 2020 (Unaudited) 2019 (Unaudited) DC power systems $ 6,200 $ 23,379 Accessories 288 543 Total net sales $ 6,488 $ 23,922 The following table shows the Company’s disaggregated net sales by customer type: Three months ended 2020 (Unaudited) 2019 (Unaudited) Telecom $ 2,491 $ 6,753 Government/Military 2 40 Marine 1 — Other (backup DC power to various industries ) 7 146 Total net sales $ 2,501 $ 6,939 Nine months ended 2020 (Unaudited) 2019 (Unaudited) Telecom $ 6,294 $ 22,497 Government/Military 9 588 Marine 5 61 Other (backup DC power to various industries ) 180 776 Total net sales $ 6,488 $ 23,922 |
Schedule of Components of Inventories | As of September 30, 2020 and December 31, 2019, the components of inventories were as follows: September 30, 2020 (unaudited) December 31, 2019 Raw materials $ 9,482 $ 8,651 Finished goods 4,898 5,861 14,380 14,512 Less: Inventory reserve (3,000 ) (600 ) Total Inventories, net $ 11,380 $ 13,912 |
Schedule of Reconciliation of the Product Warranty Liability | The following is a tabular reconciliation of the product warranty liability, excluding the deferred revenue related to the Company’s warranty coverage: Changes in estimates for warranties September 30, 2020 (unaudited) December 31, 2019 Balance at beginning of the period $ 375 $ 175 Payments (408 ) (530 ) Provision for warranties 408 730 Balance at end of the period $ 375 $ 375 |
Schedule of Diluted Earnings Per share | The following potentially dilutive shares were excluded from the shares used to calculate diluted earnings per share as their inclusion would be anti-dilutive: September 30, 2020 (Unaudited) September 30, 2019 Options 140,000 360,000 Warrants 465,000 115,000 Total 605,000 475,000 |
Property and Equipment (Tables)
Property and Equipment (Tables) | 9 Months Ended |
Sep. 30, 2020 | |
Property, Plant and Equipment [Abstract] | |
Schedule of Property and Equipment | Property and equipment consist of the following: September 30, 2020 (Unaudited) December 31, 2019 Production tooling, jigs, fixtures $ 71 $ 71 Shop equipment and machinery 3,275 3,264 Vehicles 180 188 Leasehold improvements 390 390 Office equipment 172 172 Software 103 103 Total property and equipment, cost 4,191 4,188 Less: accumulated depreciation and amortization (2,557 ) (2,088 ) Property and equipment, net $ 1,634 $ 2,100 |
Notes Payable (Tables)
Notes Payable (Tables) | 9 Months Ended |
Sep. 30, 2020 | |
Debt Disclosure [Abstract] | |
Schedule of Notes Payable | Notes payable consist of the following: September 30, 2020 December 31, (Unaudited) 2019 Total Equipment Notes Payable $ 859 $ 1,106 Less Current Portion 290 328 Notes Payable, long term $ 569 $ 778 |
Stock Options (Tables)
Stock Options (Tables) | 9 Months Ended |
Sep. 30, 2020 | |
Share-based Payment Arrangement [Abstract] | |
Schedule of Stock Option Activity | The following table summarizes stock option activity: Number of Weighted Average Options Price Outstanding, December 31, 2019 140,000 $ 5.22 Granted — — Exercised — — Outstanding, September 30, 2020 (unaudited) 140,000 $ 5.22 Exercisable, September 30, 2020 (unaudited) 140,000 $ 5.22 |
Stock Warrants (Tables)
Stock Warrants (Tables) | 9 Months Ended |
Sep. 30, 2020 | |
Equity [Abstract] | |
Schedule of Warrants Outstanding | At September 30, 2020, warrant shares outstanding were as follows: Number of Weighted Outstanding December 31, 2019 115,000 $ 8.75 Issued 625,000 3.13 Exercised (275,000 ) (3.13 ) Outstanding, September 30, 2020 (unaudited) 465,000 $ 4.52 Exercisable, September 30, 2020 (unaudited) 465,000 $ 4.52 |
Leases (Tables)
Leases (Tables) | 9 Months Ended |
Sep. 30, 2020 | |
Leases [Abstract] | |
Schedule of Rent Expense and Supplemental Cash Flow Information | The components of rent expense and supplemental cash flow information related to leases for the period are as follows: Nine Months September 30, 2020 Nine Months September 30, 2019 Lease Cost Operating lease cost (of which $74 is included in general and administration and $451 is included in cost of sales in the Company’s statement of operations for the nine months ended September 30, 2020, and for the same period in 2019, respectively) $ 525 $ 525 Other Information Weighted average remaining lease term – operating leases (in years) 2.7 3.7 Average discount rate – operating leases 3.75 % 3.75 % |
Schedule of Supplemental Balance Sheet Information | The supplemental balance sheet information related to leases for the period is as follows: At At Operating leases Long-term right-of-use assets, net of amortization of $89 and $155, respectively $ 1,721 $ 2,187 Short-term operating lease liabilities $ 657 $ 618 Long-term operating lease liabilities 1,162 1,660 Total operating lease liabilities $ 1,819 $ 2,278 |
Schedule of Maturities of Lease Liabilities | Maturities of the Company’s lease liabilities are as follows (in thousands): Year Ending Operating Leases 2020 168 2021 721 2022 747 2023 272 Total lease payments 1,908 Less: Imputed interest/present value discount (89 ) Present value of lease liabilities $ 1,819 |
Organization and Summary of S_4
Organization and Summary of Significant Accounting Policies (Details Narrative) - USD ($) $ in Thousands | Sep. 24, 2020 | Sep. 30, 2020 | Sep. 30, 2019 | Sep. 30, 2020 | Sep. 30, 2019 | Dec. 31, 2019 | Dec. 31, 2018 |
Net sales | 99.00% | 97.00% | 95.00% | ||||
Cash | $ 2,071 | $ 2,071 | |||||
Proceeds from Paycheck Protection Program loan | 1,715 | ||||||
Proceeds from sales of common shares and warrants | 2,812 | ||||||
Proceeds from exercise of warrants | $ 861 | 861 | |||||
Inventory reserves | $ 600 | ||||||
Excess inventory | 2,400 | 2,400 | |||||
Inventories, net | 11,380 | 11,380 | 13,912 | ||||
Warranty reserve | $ 375 | $ 375 | $ 375 | $ 175 | |||
Largest Vendor [Member] | Accounts Payable [Member] | |||||||
Concentration risk | 14.00% | ||||||
Largest Vendors One [Member] | Accounts Payable [Member] | |||||||
Concentration risk | 11.00% | ||||||
Largest Vendors Two [Member] | Accounts Payable [Member] | |||||||
Concentration risk | 10.00% | 10.00% | |||||
Largest Vendors One [Member] | Accounts Payable [Member] | |||||||
Concentration risk | 11.00% | ||||||
Revenue [Member] | Sales to Telecommunications Customers [Member] | |||||||
Concentration risk | 99.00% | 97.00% | 96.00% | 96.00% | |||
Revenue [Member] | Sales to Telecommunications Customers [Member] | Largest Customer One [Member] | |||||||
Concentration risk | 41.00% | 84.00% | 57.00% | 84.00% | |||
Revenue [Member] | Sales to Telecommunications Customers [Member] | Largest Customer Two [Member] | |||||||
Concentration risk | 27.00% | 7.50% | 13.00% | 24.00% | |||
Accounts Receivable [Member] | Largest Customer One [Member] | |||||||
Concentration risk | 58.00% | 70.00% | |||||
Accounts Receivable [Member] | Largest Customer Two [Member] | |||||||
Concentration risk | 29.00% | 20.00% | |||||
Australia [Member] | |||||||
Cash | $ 11 | $ 11 | $ 17 | ||||
Romania, New Leu [Member] | |||||||
Cash | $ 29 | $ 29 | $ 4 |
Organization and Summary of S_5
Organization and Summary of Significant Accounting Policies - Schedule of Disaggregated Net Sales (Details) - USD ($) $ in Thousands | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2020 | Sep. 30, 2019 | Sep. 30, 2020 | Sep. 30, 2019 | |
Total net sales | $ 2,501 | $ 6,939 | $ 6,488 | $ 23,922 |
Telecom [Member] | ||||
Total net sales | 2,491 | 6,753 | 6,294 | 22,497 |
Government/Military [Member] | ||||
Total net sales | 2 | 40 | 9 | 588 |
Marine [Member] | ||||
Total net sales | 1 | 5 | 61 | |
Other (backup DC power to various industries) [Member] | ||||
Total net sales | 7 | 146 | 180 | 776 |
DC Power Systems [Member] | ||||
Total net sales | 2,414 | 6,776 | 6,200 | 23,379 |
Accessories [Member] | ||||
Total net sales | $ 87 | $ 163 | $ 288 | $ 543 |
Organization and Summary of S_6
Organization and Summary of Significant Accounting Policies - Schedule of Components of Inventories (Details) - USD ($) $ in Thousands | Sep. 30, 2020 | Dec. 31, 2019 |
Organization, Consolidation and Presentation of Financial Statements [Abstract] | ||
Raw materials | $ 9,482 | $ 8,651 |
Finished goods | 4,898 | 5,861 |
Total Inventories, gross | 14,380 | 14,512 |
Less: Inventory reserve | (3,000) | (600) |
Total Inventories, net | $ 11,380 | $ 13,912 |
Organization and Summary of S_7
Organization and Summary of Significant Accounting Policies - Schedule of Reconciliation of the Product Warranty Liability (Details) - USD ($) $ in Thousands | 9 Months Ended | 12 Months Ended |
Sep. 30, 2020 | Dec. 31, 2019 | |
Organization, Consolidation and Presentation of Financial Statements [Abstract] | ||
Balance at beginning of the period | $ 375 | $ 175 |
Payments | (408) | (530) |
Provision for warranties | 408 | 730 |
Balance at end of the period | $ 375 | $ 375 |
Organization and Summary of S_8
Organization and Summary of Significant Accounting Policies - Schedule of Diluted Earnings Per share (Details) - shares | 9 Months Ended | |
Sep. 30, 2020 | Sep. 30, 2019 | |
Total | 605,000 | 475,000 |
Options [Member] | ||
Total | 140,000 | 360,000 |
Warrants [Member] | ||
Total | 465,000 | 115,000 |
Property and Equipment (Details
Property and Equipment (Details Narrative) - USD ($) $ in Thousands | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2020 | Sep. 30, 2019 | Sep. 30, 2020 | Sep. 30, 2019 | |
Property, Plant and Equipment [Abstract] | ||||
Depreciation and amortization expense | $ 156 | $ 164 | $ 469 | $ 459 |
Depreciation expense | $ 148 | $ 153 | $ 450 | $ 428 |
Property and Equipment - Schedu
Property and Equipment - Schedule of Property and Equipment (Details) - USD ($) $ in Thousands | Sep. 30, 2020 | Dec. 31, 2019 |
Total property and equipment, cost | $ 4,191 | $ 4,188 |
Less: accumulated depreciation and amortization | (2,557) | (2,088) |
Property and equipment, net | 1,634 | 2,100 |
Production Tooling, Jigs, Fixtures [Member] | ||
Total property and equipment, cost | 71 | 71 |
Shop Equipment and Machinery [Member] | ||
Total property and equipment, cost | 3,275 | 3,264 |
Vehicles [Member] | ||
Total property and equipment, cost | 180 | 188 |
Leasehold Improvements [Member] | ||
Total property and equipment, cost | 390 | 390 |
Office Equipment [Member] | ||
Total property and equipment, cost | 172 | 172 |
Software [Member] | ||
Total property and equipment, cost | $ 103 | $ 103 |
Notes Payable (Details Narrativ
Notes Payable (Details Narrative) - Several Financing Agreements [Member] - Equipment [Member] $ in Thousands | 9 Months Ended |
Sep. 30, 2020USD ($) | |
Monthly payments | $ 29 |
Debt maturity date description | Due through 2023. |
Minimum [Member] | |
Debt term | 2 years |
Interest rate | 1.90% |
Maximum [Member] | |
Debt term | 5 years |
Interest rate | 6.90% |
Notes Payable - Schedule of Not
Notes Payable - Schedule of Notes Payable (Details) - USD ($) $ in Thousands | Sep. 30, 2020 | Dec. 31, 2019 |
Payables and Accruals [Abstract] | ||
Total Equipment Notes Payable | $ 859 | $ 1,106 |
Less Current Portion | 290 | 328 |
Notes Payable, long term | $ 569 | $ 778 |
Line of Credit (Details Narrati
Line of Credit (Details Narrative) - USD ($) $ in Thousands | Jun. 04, 2019 | Sep. 30, 2020 | Dec. 31, 2019 |
Loan and Security Agreement [Member] | Pinnacle Bank [Member] | |||
Line of credit outstanding balance | $ 245 | ||
Line of credit remaining borrowing capacity | $ 2,560 | ||
Line of credit facility, description | The Loan Agreement provides for a revolving credit facility under which Pinnacle may make advances to the Company, subject to certain limitations and adjustments, of up to (a) 85% of the aggregate net face amount of the Company’s accounts receivable and other contract rights and receivables, plus (b) the lesser of (i) 35% of the lower of cost or wholesale market value of certain inventory of the Company or (ii) $2,500. | ||
Line of credit facility, maximum borrowing capacity | $ 4,000 | ||
Line of credit facility, interest rate description | Interest accrues on the daily balance at a rate of 1.25% above the prime rate (the “Standard Interest Rate”), but in no event shall 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 (the “Inventory Interest Rate”), but in no event shall the Inventory Interest Rate be less than 4.75% per annum. | ||
Line of credit facility,fee percentage | 1.125% | ||
Loan and Security Agreement [Member] | Pinnacle Bank [Member] | Minimum [Member] | |||
Obligation to pay | $ 6,000 | ||
Loan and Security Agreement [Member] | Pinnacle Bank [Member] | Standard Interest Rate [Member] | |||
Line of credit facility, interest rate during period | 1.25% | ||
Loan and Security Agreement [Member] | Pinnacle Bank [Member] | Standard Interest Rate [Member] | Maximum [Member] | |||
Line of credit facility, interest rate during period | 3.75% | ||
Loan and Security Agreement [Member] | Pinnacle Bank [Member] | Inventory Interest Rate [Member] | |||
Line of credit facility, interest rate during period | 2.25% | ||
Loan and Security Agreement [Member] | Pinnacle Bank [Member] | Inventory Interest Rate [Member] | Maximum [Member] | |||
Line of credit facility, interest rate during period | 4.75% | ||
Supplier Agreement [Member] | |||
Description covenant terms | (i) the annual discount rate (which is equal to the 90-day London Inter-bank Offered Rate plus 1.00%) and (ii) the discount acceptance period (which is equal the number of days in the payment terms less the number of days necessary to approve the invoice) divided by 360. | ||
Supplier Agreement [Member] | Citibank, N.A [Member] | |||
Accounts receivables sold to Citibank | $ 2,621 | ||
Incurred fees | $ 12 |
PPP Loan (Details Narrative)
PPP Loan (Details Narrative) - Citibank, N.A [Member] - PPP Loan [Member] $ in Thousands | May 04, 2020USD ($) |
Principal amount | $ 1,715 |
Interest rate | 1.00% |
Stockholders' Equity (Details N
Stockholders' Equity (Details Narrative) - USD ($) $ / shares in Units, $ in Thousands | Jul. 07, 2020 | Jul. 02, 2020 | Nov. 06, 2019 | Sep. 30, 2020 | Sep. 30, 2019 | Dec. 31, 2019 |
Net proceeds from sale of shares of common stock and warrants | $ 2,812 | |||||
Common stock, par value | $ 0.0001 | $ 0.0001 | ||||
Treasury stock, shares | 17,477 | 17,477 | ||||
Treasury stock, value | $ 40 | $ 40 | ||||
Company funds value | $ 155 | $ 155 | ||||
Stock Repurchase Agreement [Member] | ||||||
Repurchase of common stock value | $ 500 | |||||
Common stock, par value | $ 0.0001 | |||||
Private Placement [Member] | ||||||
Sale of stock, purchase price | $ 2.25 | |||||
Private Placement [Member] | Common Stock [Member] | ||||||
Number of shares sold in private placement | 1,250,000 | 1,250,000 | ||||
Each investor received percentage of warrant exercisable on shares purchased | 50.00% | |||||
Net proceeds from sale of shares of common stock and warrants | $ 2,812 |
Stock Options (Details Narrativ
Stock Options (Details Narrative) - USD ($) $ in Thousands | 9 Months Ended | ||
Sep. 30, 2020 | Sep. 30, 2019 | Jul. 08, 2016 | |
Stock-based compensation | $ 237 | ||
Unamortized compensation cost | |||
Outstanding intrinsic value | |||
Polar Power 2016 Omnibus Incentive Plan [Member] | |||
Number of shares authorized | 1,754,385 | ||
Maximum number of shares available for issuance | 350,877 |
Stock Options - Schedule of Sto
Stock Options - Schedule of Stock Option Activity (Details) | 9 Months Ended |
Sep. 30, 2020$ / sharesshares | |
Share-based Payment Arrangement [Abstract] | |
Number of Options, Outstanding, Beginning balance | shares | 140,000 |
Number of Options, Granted | shares | |
Number of Options, Exercised | shares | |
Number of Options, Outstanding, Ending balance | shares | 140,000 |
Number of Options, Exercisable, Ending balance | shares | 140,000 |
Weighted Average Exercise Price, Outstanding, Beginning balance | $ / shares | $ 5.22 |
Weighted Average Exercise Price, Granted | $ / shares | |
Weighted Average Exercise Price, Exercised | $ / shares | |
Weighted Average Exercise Price, Outstanding, Ending balance | $ / shares | 5.22 |
Weighted Average Exercise Price, Exercisable, Ending balance | $ / shares | $ 5.22 |
Stock Warrants (Details Narrati
Stock Warrants (Details Narrative) - USD ($) $ / shares in Units, $ in Thousands | Sep. 24, 2020 | Jul. 07, 2020 | Jul. 02, 2020 | Sep. 30, 2020 | Sep. 30, 2019 |
Number of issued warrants exercisable | 625,000 | ||||
Warrants to purchase | 275,000 | 275,000 | |||
Warrants intrinsic value | $ 10 | ||||
Net proceeds from warrants exercise | $ 861 | $ 861 | |||
Private Placement [Member] | |||||
Warrants exercise price | $ 3.13 | ||||
Warrants term | 5 years | ||||
Private Placement [Member] | Warrant [Member] | |||||
Number of issued warrants exercisable | 625,000 | ||||
Private Placement [Member] | Common Stock [Member] | |||||
Number of shares sold in private placement | 1,250,000 | 1,250,000 |
Stock Warrants - Schedule of Wa
Stock Warrants - Schedule of Warrants Outstanding (Details) - $ / shares | Sep. 24, 2020 | Sep. 30, 2020 |
Equity [Abstract] | ||
Number of Warrants, Outstanding, Beginning balance | 115,000 | |
Number of Warrants, Granted | 625,000 | |
Number of Warrants, Exercised | (275,000) | (275,000) |
Number of Warrants, Outstanding, Ending balance | 465,000 | |
Number of Warrants, Exercisable, Ending balance | 465,000 | |
Weighted Average Exercise Price, Outstanding, Beginning balance | $ 8.75 | |
Weighted Average Exercise Price, Granted | 3.13 | |
Weighted Average Exercise Price, Exercised | (3.13) | |
Weighted Average Exercise Price, Outstanding, Ending balance | 4.52 | |
Weighted Average Exercise Price, Exercisable, Ending balance | $ 4.52 |
Distribution Agreement with a_2
Distribution Agreement with a Related Entity (Details Narrative) - USD ($) $ in Thousands | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2020 | Sep. 30, 2019 | Sep. 30, 2020 | Sep. 30, 2019 | |
Revenue | $ 2,501 | $ 6,939 | $ 6,488 | $ 23,922 |
Smartgen Solutions, Inc. [Member] | ||||
Amount of performed filed services | 33 | 54 | 193 | 227 |
Revenue |
Income Taxes (Details Narrative
Income Taxes (Details Narrative) - USD ($) $ in Thousands | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2020 | Sep. 30, 2019 | Sep. 30, 2020 | Sep. 30, 2019 | |
Income Tax Disclosure [Abstract] | ||||
Income tax benefit | $ (2,139) | |||
Income tax receivable | 1,715 | 1,715 | ||
Net operating losses carryforwards | $ 655 | $ 655 |
Leases (Details Narrative)
Leases (Details Narrative) - USD ($) $ in Thousands | 9 Months Ended | |
Sep. 30, 2020 | Sep. 30, 2019 | |
Rent expense | $ 604 | $ 602 |
Warehouse Operating Lease Agreements [Member] | ||
Lease term | 2 years 10 months 25 days | |
Office Space Operating Lease Agreements [Member] | ||
Lease term | 2 years 4 months 24 days |
Leases - Schedule of Rent Expen
Leases - Schedule of Rent Expense and Supplemental Cash Flow Information (Details) - USD ($) $ in Thousands | 9 Months Ended | |
Sep. 30, 2020 | Sep. 30, 2019 | |
Leases [Abstract] | ||
Operating lease cost (of which $74 is included in general and administration and $451 is included in cost of sales in the Company's statement of operations for the nine months ended September 30, 2020, and for the same period in 2019, respectively) | $ 525 | $ 525 |
Weighted average remaining lease term - operating leases (in years) | 2 years 8 months 12 days | 3 years 8 months 12 days |
Average discount rate - operating leases | 3.75% | 3.75% |
Leases - Schedule of Rent Exp_2
Leases - Schedule of Rent Expense and Supplemental Cash Flow Information (Details) (Parenthetical) - USD ($) $ in Thousands | 9 Months Ended | |
Sep. 30, 2020 | Sep. 30, 2019 | |
Operating lease cost | $ 525 | $ 525 |
General and Administration [Member] | ||
Operating lease cost | 74 | 74 |
Cost of Sales [Member] | ||
Operating lease cost | $ 451 | $ 451 |
Leases - Schedule of Supplement
Leases - Schedule of Supplemental Balance Sheet Information (Details) - USD ($) $ in Thousands | Sep. 30, 2020 | Dec. 31, 2019 |
Leases [Abstract] | ||
Long-term right-of-use assets, net of amortization of $89 and $155, respectively | $ 1,721 | $ 2,187 |
Short-term operating lease liabilities | 657 | 618 |
Long-term operating lease liabilities | 1,162 | 1,660 |
Total operating lease liabilities | $ 1,819 | $ 2,278 |
Leases - Schedule of Suppleme_2
Leases - Schedule of Supplemental Balance Sheet Information (Details) (Parenthetical) - USD ($) $ in Thousands | Sep. 30, 2020 | Dec. 31, 2019 |
Leases [Abstract] | ||
Amortization of right-of-use assets | $ 89 | $ 155 |
Leases - Schedule of Maturities
Leases - Schedule of Maturities of Lease Liabilities (Details) - USD ($) $ in Thousands | Sep. 30, 2020 | Dec. 31, 2019 |
Leases [Abstract] | ||
2020 | $ 168 | |
2021 | 721 | |
2022 | 747 | |
2023 | 272 | |
Total lease payments | 1,908 | |
Less: Imputed interest/present value discount | (89) | |
Present value of lease liabilities | $ 1,819 | $ 2,278 |