Document and Entity Information
Document and Entity Information - USD ($) | 12 Months Ended | ||
Dec. 31, 2020 | Mar. 31, 2021 | Jun. 30, 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-K | ||
Document Period End Date | Dec. 31, 2020 | ||
Entity Well-known Seasoned Issuer | No | ||
Entity Voluntary Filer | No | ||
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 | ||
ICFR Auditor Attestation Flag | false | ||
Entity Shell Company | false | ||
Entity Public Float | $ 19,375,600 | ||
Entity Common Stock, Shares Outstanding | 12,788,203 | ||
Document Fiscal Period Focus | FY | ||
Document Fiscal Year Focus | 2020 |
Balance Sheets
Balance Sheets - USD ($) $ in Thousands | Dec. 31, 2020 | Dec. 31, 2019 |
Current assets | ||
Cash and cash equivalents | $ 1,646 | $ 2,840 |
Accounts receivable | 1,190 | 934 |
Inventories | 9,094 | 13,912 |
Prepaid expenses | 358 | 1,265 |
Income taxes receivable | 2,357 | 231 |
Total current assets | 14,645 | 19,182 |
Other assets: | ||
Operating lease right-of-use assets, net | 1,563 | 2,187 |
Property and equipment, net | 1,497 | 2,100 |
Deposits | 94 | 94 |
Total assets | 17,799 | 23,563 |
Current liabilities | ||
Accounts payable | 311 | 575 |
Customer deposits | 703 | 197 |
Accrued liabilities and other current liabilities | 1,142 | 1,031 |
Current portion of operating lease liabilities | 670 | 618 |
Current portion of notes payable | 267 | 328 |
Current portion of loan payable | 1,429 | |
Total current liabilities | 4,522 | 2,749 |
Notes payable, net of current portion | 510 | 778 |
Operating lease liabilities, net of current portion | 990 | 1,660 |
Loan payable, net of current portion | 286 | |
Total liabilities | 6,308 | 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, 11,768,158 shares issued and 11,750,681 shares outstanding on December 31, 2020 and 10,143,158 shares issued and 10,125,681 shares outstanding on December 31, 2019 | 1 | 1 |
Additional paid-in capital | 23,643 | 19,657 |
Accumulated deficit | (12,113) | (1,242) |
Treasury Stock, at cost (17,477 shares) | (40) | (40) |
Total stockholders' equity | 11,491 | 18,376 |
Total liabilities and stockholders' equity | $ 17,799 | $ 23,563 |
Balance Sheets (Parenthetical)
Balance Sheets (Parenthetical) - $ / shares | Dec. 31, 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 | 11,768,158 | 10,143,158 |
Common stock, shares outstanding | 11,750,681 | 10,125,681 |
Treasury stock, shares | 17,477 | 17,477 |
Statements of Operations
Statements of Operations - USD ($) | 12 Months Ended | |
Dec. 31, 2020 | Dec. 31, 2019 | |
Income Statement [Abstract] | ||
Net sales | $ 9,031,000 | $ 24,801,000 |
Cost of Sales (includes inventory write-downs of $3,400 and $270, respectively) | 14,654,000 | 19,882,000 |
Gross profit (loss) | (5,623,000) | 4,919,000 |
Operating Expenses | ||
Sales and marketing | 1,556,000 | 2,621,000 |
Research and development | 1,723,000 | 2,276,000 |
General and administrative | 4,062,000 | 4,004,000 |
Total operating expenses | 7,341,000 | 8,901,000 |
Loss from operations | (12,964,000) | (3,982,000) |
Other income (expenses) | ||
Interest expense and finance costs | (60,000) | (103,000) |
Other income | 14,000 | 40,000 |
Total other income (expenses) | (46,000) | (63,000) |
Loss before income taxes | (13,010,000) | (4,045,000) |
Benefit from income taxes | (2,139,000) | |
Net Loss | $ (10,871,000) | $ (4,045,000) |
Net loss per share, basic and diluted | $ (1.01) | $ (0.40) |
Weighted average shares outstanding, basic and diluted | 10,816,938 | 10,125,681 |
Statements of Operations (Paren
Statements of Operations (Parenthetical) - USD ($) $ in Thousands | 12 Months Ended | |
Dec. 31, 2020 | Dec. 31, 2019 | |
Income Statement [Abstract] | ||
Inventory write-downs | $ 3,400 | $ 270 |
Statements of Stockholders' Equ
Statements of Stockholders' Equity - 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 | 79 | 79 | |||
Treasury Stock | (40) | (40) | |||
Net loss | (4,045) | (4,045) | |||
Ending balance at Dec. 31, 2019 | $ 1 | 19,657 | (1,242) | (40) | 18,376 |
Ending balance, shares at Dec. 31, 2019 | 10,143,158 | ||||
Common stock and warrants issued for cash | 2,812 | 2,812 | |||
Common stock and warrants issued for cash, shares | 1,250,000 | ||||
Common shares issued upon exercise of warrants | 1,174 | 1,174 | |||
Common shares issued upon exercise of warrants, shares | 375,000 | ||||
Net loss | (10,871) | (10,871) | |||
Ending balance at Dec. 31, 2020 | $ 1 | $ 23,643 | $ (12,113) | $ (40) | $ 11,491 |
Ending balance, shares at Dec. 31, 2020 | 11,768,158 |
Statements of Cash Flows
Statements of Cash Flows - USD ($) $ in Thousands | 12 Months Ended | |
Dec. 31, 2020 | Dec. 31, 2019 | |
Cash flows from operating activities: | ||
Net loss | $ (10,871) | $ (4,045) |
Adjustments to reconcile net loss to net cash used in operating activities: | ||
Fair value of vested stock options | 79 | |
Depreciation and amortization | 622 | 628 |
Amortization of operating lease right-of-use assets | 624 | 661 |
Inventory write-down | 3,400 | 270 |
Changes in operating assets and liabilities | ||
Accounts receivable | (256) | 6,793 |
Inventories | 1,418 | (5,710) |
Prepaid expenses | 907 | (910) |
Income taxes receivable | (2,126) | 484 |
Accounts payable | (264) | (492) |
Customer deposits | 506 | 118 |
Accrued expenses and other current liabilities | 110 | 527 |
Decrease in lease liabilities | (618) | (570) |
Net cash used in operating activities | (6,548) | (2,167) |
Cash flows from investing activities: | ||
Acquisition of property and equipment | (19) | (338) |
Net cash used in investing activities | (19) | (338) |
Cash flows from financing activities: | ||
Proceeds from sale of common stock and warrants | 2,812 | |
Proceeds from exercise of warrants | 1,174 | |
Proceeds from loan payable | 1,715 | |
Repayment of notes payable | (328) | (255) |
Proceeds from advances from credit facility | 2,500 | |
Repayment of advances from credit facility | (2,500) | |
Purchase of treasury stock | (40) | |
Net cash provided by (used in) financing activities | 5,373 | (295) |
Decrease in cash and cash equivalents | (1,194) | (2,800) |
Cash and cash equivalents, beginning of period | 2,840 | 5,640 |
Cash and cash equivalents, end of period | 1,646 | 2,840 |
Supplemental Cash Flow Information: | ||
Interest paid | 52 | 52 |
Taxes Paid | ||
Supplemental non-cash investing and financing activities: | ||
Property and equipment acquired under notes payable | 153 | |
Recording of lease right-of-use assets and lease liabilities | 2,847 | |
Reclassification of prepaid expenses to property and equipment | $ 114 |
Organization and Summary of Sig
Organization and Summary of Significant Accounting Policies | 12 Months Ended |
Dec. 31, 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 1979 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. Liquidity The Company’s financial statements have been prepared on the going concern basis, which contemplates the realization of assets and the settlement of liabilities and commitments in the normal course of business. For the year ended December 31, 2020, the Company incurred a net loss of $10,871 and used cash in operating activities of $6,547. At December 31, 2020, the Company had cash on hand of $1,646 and working capital of $10,123. Subsequent to December 31, 2020, the Company sold an aggregate of 750,000 shares of its common stock for net proceeds of approximately $12,500 in an offering completed in January 2021. In addition, in January 2021, the Company issued an aggregate of 225,878 shares of common stock upon the exercise of warrants and received cash proceeds of $707. Notwithstanding the net loss for 2020, management believes that its current cash balance, plus net proceeds from issuance of common stock and exercise of warrants in January 2021, is sufficient to fund operations for at least one year from the date the Company’s 2020 financial statements are issued. The Company expects to continue to incur net losses and negative operating cash flows in the near-term. The Company may seek to raise additional debt and/or equity capital to fund future operations. 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. COVID-19 The Company is subject to risks and uncertainties of the COVID-19 pandemic that could adversely impact its business, including its sales, raw materials supply chain, liquidity and access to capital markets and business development activities. The Company has implemented additional health and safety precautions and protocols in response to the pandemic and government guidelines. During 2020, sales to the Company’s U.S. telecommunications customers, which represented 95% of the Company’s net sales for 2020, decreased 63% from 2019 as its customers postponed shipments and orders to prioritize expansion of 5G and cell site edge computing networks and as a result of the effects of COVID-19 pandemic on the business of the Company’s customers. As a result of the Company’s declining revenues during the COVID-19 pandemic, management implemented cost reduction programs to reduce overhead and lower operating expenses, while still keeping the business operational and ready to expand when needed. During 2020, the Company’s supply chain was not placed in jeopardy due to the COVID-19 outbreak. The extent of the impact of the COVID-19 pandemic has had and will continue to have on the Company’s business is highly uncertain and difficult to predict and quantify. The full extent to which the COVID-19 pandemic will directly or indirectly impact the Company’s business, results of operations and financial condition, will depend on future developments that are highly uncertain, including as a result of new information that may emerge concerning COVID-19 and the actions taken to contain or treat it, as well as the economic impact on local, regional, national and international markets. Estimates The preparation of financial statements in conformity with accounting principles generally accepted in the United States of America (“GAAP”) requires management to make certain estimates and assumptions that affect the reported amounts of assets, liabilities, revenues and expenses, and the disclosure of contingent assets and liabilities. On an ongoing basis, management reviews its estimates and if deemed appropriate, those estimates are adjusted. Significant estimates include those related to assumptions used in determining reserves for uncollectible receivables, assumptions used in valuing inventories at net realizable value, impairment analysis of long term assets, estimates of useful lives of property and equipment, assumptions used in valuing stock-based compensation, the valuation allowance for deferred tax assets, accruals for product warranties, accruals for potential liabilities, 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 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 deliver 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 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, 2020 and 2019. The Company’s rental contracts are fixed price contracts for fixed durations of time and include freight and delivery charges and are recognized on a straight-line basis over the rental period. Disaggregation of Net Sales The following table shows the Company’s disaggregated net sales by product type: Years Ended December 31, 2020 2019 DC power systems $ 8,659 $ 24,177 Engineering & Tech Support Services 226 281 Accessories 146 343 Total net sales $ 9,031 $ 24,801 The following table shows the Company’s disaggregated net sales by customer type: Years Ended December 31, 2020 2019 Telecom $ 8,640 $ 23,753 Government/Military 120 589 Marine 5 83 Other (backup DC power to various industries ) 266 376 Total net sales $ 9,031 $ 24,801 For the years ended December 31, 2020 and 2019, international sales totaled $1,522 and $230, respectively. For the year ended December 31, 2020, over 88% of our international sales were made to one customer in Japan. There were no sales made to this customer during 2019. 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. 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. As of December 31, 2020 and 2019, the Company had accrued a liability for warranty reserve of $600 and $375, 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: Years End December 31, 2020 2019 Changes in estimates for warranties Balance at beginning of the period $ 375 $ 175 Payments (634 ) (530 ) Provision for warranties 859 730 Balance at end of the period $ 600 $ 375 Shipping Costs Amounts billed to a customer in a sales transaction related to shipping and handling are reported as revenue. Costs incurred by the Company for shipping and handling are considered fulfillment costs and reported as cost of sales. Cash and cash equivalents The Company considers all highly liquid investments with an original maturity of 90 days or less when purchased to be cash equivalents. The carrying amounts reported in the Balance Sheets for cash and cash equivalents are valued at cost, which approximates their fair value. Accounts Receivable Trade receivables are recorded at net realizable value consisting of the carrying amount less an allowance for uncollectible accounts, as needed. The Company uses the allowance method to account for uncollectible trade receivable balances. Under the allowance method, if needed, an estimate of uncollectible customer balances is made based upon specific account balances that are considered uncollectible. Factors used to establish an allowance include the credit quality and payment history of the customer. The Company did not deem it necessary to provide an allowance for doubtful accounts as of December 31, 2020 and 2019. 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 subsequently written up. At December 31, 2020, as a result of the deterioration of the forecasted marketability of certain of the Company’s inventory, management determined that the inventory’s revenue-generating ability was diminished, and the net realizable value of this inventory had fallen below its historical carrying cost. Accordingly, for the year ended December 31, 2020, the Company recorded a write down of inventory of $3,400, which is included in cost of goods sold. At December 31, 2020, the balance of inventory reflects its new cost basis after the write down. For the year ended December 31, 2019, the Company recorded a write down of inventory of $270, which is included in cost of goods sold. At December 31, 2020 and 2019, inventory has been reduced by cumulative write-downs totaling $4,000 and $600, respectively. As of December 31, 2020 and 2019, inventories consisted of the following: Years Ended December 31, 2020 2019 Raw materials $ 5,527 $ 8,051 Finished goods 3,567 5,861 Inventories $ 9,094 $ 13,912 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: Estimated life Production tooling, jigs, fixtures 3-5 years Shop equipment and machinery 5 years Vehicles 3-5 years Leasehold improvements Shorter of the lease term or estimated useful life Office equipment 5 years Software 5 years Management regularly reviews property, equipment and other long-lived assets for possible impairment. This review occurs annually or more frequently if events or changes in circumstances indicate the carrying amount of the asset may not be recoverable. Based upon management’s annual assessment, there were no indicators of impairment of the Company’s property and equipment and other long-lived assets as of December 31, 2020 or December 31, 2019. Leases The Company accounts for its leases in accordance with the guidance of ASC 842, Leases Stock-Based Compensation The Company periodically issues stock-based compensation to officers, directors, and consultants for services rendered. Such issuances vest and expire according to terms established at the issuance date. Stock-based payments to employees, directors, and for acquiring goods and services from nonemployees, which include grants of employee stock options, are recognized in the financial statements based on their grant date fair values in accordance with ASC 718, Compensation-Stock Compensation Income Taxes The Company accounts for income taxes using the asset and liability method whereby deferred tax assets are recognized for deductible temporary differences, and deferred tax liabilities are recognized for taxable temporary differences. Temporary differences are the differences between the reported amounts of assets and liabilities and their tax bases. Deferred tax assets are reduced by a valuation allowance when, in the opinion of management, it is more likely than not that some portion or all of the deferred tax assets will not be realized before the Company is able to realize their benefits, or that future deductibility is uncertain. Tax benefits from an uncertain tax position are recognized only if it more likely than not that the tax position will be sustained on examination by the taxing authorities based on technical merits of the position. The tax benefits recognized in the financial statements from such a position are measured based on the largest benefit that has greater than 50 percent likelihood of being realized upon ultimate resolution. Deferred tax assets and liabilities are adjusted for the effects of changes in tax laws and rates on the date of enactment. Research and Development Costs Research and development costs are expensed as incurred and consist primarily of salaries and other expenses relating to the design, development, and testing of the Company’s products. For the years ended December 31, 2020 and 2019, research and development expenditures totaled $1,723 and $2,276, respectively. Net Loss Per Share Basic loss per share is computed by dividing net 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. Dilutive potential common shares include shares from unexercised warrants and options. Potential common share equivalents have been excluded where their inclusion would be anti-dilutive. The Company’s basic and diluted net loss per share is the same for all periods presented because all shares issuable upon exercise of warrants and options are anti-dilutive. The following potentially dilutive shares were excluded from the shares used to calculate diluted earnings per share as their inclusion would be anti-dilutive: December 31, 2020 2019 Options 140,000 140,000 Warrants 370,000 120,000 Total 510,000 260,000 Financial Assets and Liabilities Measured at Fair Value Accounting standards require certain assets and liabilities be reported at fair value in the financial statements and provide a framework for establishing that fair value. Fair value is defined as the price that would be received upon sale of an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. When determining fair value, the Company considers the principal or most advantageous market in which it transacts, and considers assumptions that market participants would use when pricing the asset or liability. The framework for determining fair value is based on a hierarchy that prioritizes the inputs and valuation techniques used to measure fair value: 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-term nature of these instruments. The carrying values of 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 Dollar with a U.S. Dollar equivalent of $10 and $16 at December 31, 2020 and 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 $28 and $4 at December 31, 2020 and 2019, respectively, was held in an account at a financial institution located in Romania. Revenues Accounts receivable Accounts payable Recent Accounting Pronouncements In June 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 will be effective for the Company beginning January 1, 2023, with early adoption permitted. 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 any other recently issued, but not yet effective, authoritative guidance, if currently adopted, would have a material impact on the Company’s financial statement presentation or disclosures. |
Property and Equipment
Property and Equipment | 12 Months Ended |
Dec. 31, 2020 | |
Property, Plant and Equipment [Abstract] | |
Property and Equipment | NOTE 2 – PROPERTY AND EQUIPMENT Property and equipment consist of the following: December 31, December 31, Shop equipment and machinery $ 3,286 $ 3,264 Production tooling, jigs, fixtures 71 71 Vehicles 180 188 Leasehold improvements 390 390 Office equipment 177 172 Software 103 103 Total property and equipment, cost 4,207 4,188 Less: accumulated depreciation and amortization (2,710 ) (2,088 ) Property and equipment, net $ 1,497 $ 2,100 Depreciation and amortization expense on property and equipment for the years ended December 31, 2020 and 2019 was $622 and $628 respectively. During the years ended December 31, 2020 and 2019, $595 and $586, respectively, of depreciation expense was included in cost of sales for the years then ended. |
Notes Payable
Notes Payable | 12 Months Ended |
Dec. 31, 2020 | |
Debt Disclosure [Abstract] | |
Notes Payable | NOTE 3 – NOTES PAYABLE Notes payable consist of the following: December 31, December 31, Total Notes Payable $ 777 $ 1,106 Less: Current Portion 267 328 Notes Payable, Noncurrent portion $ 510 $ 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. The aggregate monthly payments of principal and interest of the outstanding notes payable as of December 31, 2020 is approximately $20 and are due through 2024. As of December 31, 2019, the balance of notes payable was $1,106. During 2020, the Company paid down the notes payable by $328, and at December 31, 2020, the balance of notes payable was $777. Annual future principal payments under the outstanding note agreements as of December 31, 2020 are as follows: Years ending December 31: 2021 267 2022 232 2023 196 2024 82 Total $ 777 |
Line of Credit
Line of Credit | 12 Months Ended |
Dec. 31, 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”). During 2020, we advanced $2,500 from the revolving credit facility, which we also paid off during the year. As of December 31, 2020, there was no balance outstanding under the line of credit at December 31, 2020, and the Company had availability under the line of credit in the amount of $1,070. 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 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 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. (“Citibank”). On October 8, 2020, the Company terminated the Supplier Agreement with Citibank. Under the terms of the Supplier Agreement, the Company from time to time offered to sell to Citibank certain of the Company’s accounts receivable relating to invoiced sales made to AT&T. Once AT&T approved the invoice, AT&T sent payment instructions to Citibank. During the years ended December 31, 2020 and 2019, total of $2,621 and $13,229 of accounts receivables, respectively, was sold to Citibank by the Company, and the Company incurred fees of approximately $12 and $52, respectively. The sale price was 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. |
Loan Payable
Loan Payable | 12 Months Ended |
Dec. 31, 2020 | |
Debt Disclosure [Abstract] | |
Loan Payable | NOTE 5 – LOAN PAYABLE 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. |
Operating Leases
Operating Leases | 12 Months Ended |
Dec. 31, 2020 | |
Leases [Abstract] | |
Operating Leases | NOTE 6 – OPERATING LEASES The Company has two operating lease agreements for its warehouse and office spaces both with remaining lease terms at December 31, 2020, of 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 collateralized borrowing rate based on its understanding of what its credit rating would be. The operating lease ROU asset includes any lease payments made and excludes lease incentives. The components of rent expense and supplemental cash flow information related to leases for the period are as follows: Years Ended December 31, 2020 2019 Lease Cost Operating lease cost (of which $98 is included in general and administration and $601 is included in cost of sales in the Company’s statement of operations as of December 31, 2020, and $102 is included in general and administration and $597 is included in cost of sales in the Company’s statement of operations as of December 31, 2019) $ 699 $ 699 Other Information Weighted average remaining lease term – operating leases (in years) 2.4 3.4 Average discount rate – operating leases 3.75 % 3.75 % The supplemental balance sheet information related to leases for the period is as follows: At December 31, At December 31, Operating leases Long-term right-of-use assets, net of accumulated amortization of $1,265 and $154, respectively $ 1,563 $ 2,187 Current portion of operating lease liabilities $ 670 $ 618 Noncurrent portion of operating lease liabilities 990 1,660 Total operating lease liabilities $ 1,660 $ 2,278 Maturities of the Company’s lease liabilities are as follows: Year Ending Operating Leases 2021 721 2022 747 2023 272 Total lease payments 1,740 Less: Imputed interest/present value discount (80 ) Present value of lease liabilities $ 1,660 Rent expense for the twelve months ended December 31, 2020 and 2019 was $903 and $865, respectively (including short-term and other rentals). |
Stockholders' Equity
Stockholders' Equity | 12 Months Ended |
Dec. 31, 2020 | |
Equity [Abstract] | |
Stockholders' Equity | NOTE 7 – STOCKHOLDERS’ EQUITY Common Stock ● Issuance of common stock and warrants for cash 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 9). 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 $2,812. ● Issuance of common stock upon exercise of warrants During the year ended December 31, 2020, warrants to purchase an aggregate of 375,000 shares of common stock were exercised, and the Company received net proceeds of $1,174 upon such exercise. 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. Treasury Stock The Company entered into a 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. During the year ended December 31, 2019, the Company purchased of 17,477 shares and held them as treasury stock at cost of $40. On January 20, 2020, the Company terminated the Stock Repurchase Agreement. |
Stock Options
Stock Options | 12 Months Ended |
Dec. 31, 2020 | |
Share-based Payment Arrangement [Abstract] | |
Stock Options | NOTE 8 – STOCK OPTIONS The following table summarizes stock option activity: Number of Weighted Average Outstanding, December 31, 2018 360,000 $ 4.84 Granted — — Exercised — — Cancelled (220,000 ) 5.26 Outstanding, December 31, 2019 140,000 $ 5.22 Granted — — Exercised — — Outstanding and exercisable, December 31, 2020 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 to any one participant in any calendar year. At December 31, 2020 and 2019, the Company had total outstanding options of 140,000, which are fully vested, exercise prices ranging from $4.84 to $5.09, and with 30,000 option shares set to expire in December 2027 and the remaining 110,000 option shares set to expire in April 2028. On October 1, 2019, the Company’s three executive officers agreed to terminate their rights to 220,000 stock option shares that had not vested as of April 1, 2019. During the year ended December 31, 2019, the Company recorded stock-based compensation costs of $79 related to the vesting of these options. There was no unamortized cost compensation remaining as of December 31, 2019 As such, no further stock compensation expense was recorded during the year ended December 31, 2020. There was no intrinsic value of the outstanding options at December 31, 2020. |
Stock Warrants
Stock Warrants | 12 Months Ended |
Dec. 31, 2020 | |
Equity [Abstract] | |
Stock Warrants | NOTE 9 – STOCK WARRANTS The following table summarizes warrant activity: Number of Weighted Average Outstanding, December 31, 2018 120,000 $ 8.75 Issued — — Exercised — — Outstanding, December 31, 2019 120,000 $ 8.75 Issued 625,000 3.13 Exercised (375,000 ) 3.13 Outstanding, December 31, 2020 370,000 $ 4.95 Exercisable, December 31, 2020 370,000 $ 4.95 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 7). 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. During the year ended December 31, 2020, warrants to purchase 375,000 shares of common stock were exercised, and the Company received net proceeds of $1,174 upon such exercise. There was no intrinsic value of the outstanding and exercisable warrants at December 31, 2020. |
Income Taxes
Income Taxes | 12 Months Ended |
Dec. 31, 2020 | |
Income Tax Disclosure [Abstract] | |
Income Taxes | NOTE 10 – INCOME TAXES 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, NOLs arising in tax years beginning after December 31, 2017, and before January 1, 2021 (e.g., NOLs incurred in 2018, 2019, or 2020 by a calendar-year taxpayer) may be carried back to each of the five tax years preceding the tax year of such loss. Since the enactment of the Tax Cuts and Jobs Act of 2017 (TCJA), NOLs generally could not be carried back but could be carried forward indefinitely. Further, the TCJA limited NOL absorption to 80% of taxable income. The CARES Act temporarily removes the 80% limitation, reinstating it for tax years beginning after 2020. Based on the passage of Cares Act, the Company determined that the NOL carryback provision in the CARES Act would result in a cash benefit to us for the fiscal years 2017, 2018, and 2019. As a result, during the year ended December 31, 2020, an income tax benefit of $2,139 was recorded related to U.S. Federal loss carryforwards that became eligible for carryback. At December 31, 2020, we have recorded an income tax receivable of $1,702 for the benefit of carrying back the NOLs for 2018 to 2019 to the tax year ended September 30, 2016. We are forecasting an NOL for fiscal year 2020 and expect to carry it back to the short tax period ended December 31, 2016. As a result, we have also included the 2020 provisional amounts of $655 in income tax receivable at December 31, 2020. The benefit from income taxes for the years ended December 31, 2020 and 2019 consists of the following: Years Ended December 31, 2020 2019 Current Federal (2,139 ) - Current State - - Deferred Federal - - Deferred State - - Benefit from income taxes (2,139 ) - The reconciliation of the effective income tax rate to the federal statutory rate is as follows: Years Ended December 31, 2020 2019 Federal income tax rate (21 )% (21 ) State tax, net of federal benefit (7 )% (7 )% Carryback net operating loss — % 21 % Change in valuation allowances 12 % 7 % Effective income tax rate 16 % — % 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, 2020 and 2019 are as follows: December 31, December 31, Deferred tax assets: Inventory reserves $ 1,379 $ 396 Accrued liabilities and other reserves 169 208 Operating lease liability 465 635 Net operating loss carryforwards 2,281 734 Gross deferred tax assets 4,294 1,973 Valuation allowance (3,515 ) (1,266 ) Total deferred tax assets 779 707 Deferred tax liabilities: Operating lease right-of-use asset, net (436 ) (610 ) Depreciation (343 ) (97 ) Total deferred tax liabilities (779 ) (707 ) Net deferred tax asset (liability) $ — $ — At December 31, 2020, the Company had available Federal and state net operating loss carryforwards (“NOL”s) to reduce future taxable income of approximately $7,200,000 and $10,900,000, 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 2039 through 2040. 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, 2020 and 2019, 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 2016. The Company’s policy is to record interest and penalties on uncertain tax provisions as income tax expense. As of December 31, 2020 and 2019, the Company had no accrued interest or penalties related to uncertain tax positions. Additionally, tax years 2016 through 2020 remain open to examination by the major taxing jurisdictions to which the Company is subject. |
Distribution Agreement with a R
Distribution Agreement with a Related Entity | 12 Months Ended |
Dec. 31, 2020 | |
Distribution Agreement With Related Entity | |
Distribution Agreement with a Related Entity | NOTE 11 – DISTRIBUTION AGREEMENT WITH A RELATED ENTITY On March 1, 2014, the Company entered into a subcontractor installer agreement with Smartgen Solutions, Inc. (“Smartgen”), a related entity that is engaged in business of equipment rental and provider of maintenance, repair and installation services to mobile telecommunications towers in California. Under the terms of the agreement, Smartgen has been appointed as a non-exclusive, authorized service provider for the installation, repair and service of the Company’s products in Southern California. The agreement has a term of three years from the date of execution and automatically renews for additional one-year periods if not terminated. During the years ended December 31, 2020 and 2019, Smartgen performed $129 and $289 in field services, respectively, the cost of which is included in cost of goods sold. |
Commitment and Contingencies
Commitment and Contingencies | 12 Months Ended |
Dec. 31, 2020 | |
Commitments and Contingencies Disclosure [Abstract] | |
COMMITMENT AND CONTINGENCIES | NOTE 12 – COMMITMENTS AND CONTINGINCIES. 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, 2020 with respect to such matters. See also Notes 6 and 10. |
Subsequent Events
Subsequent Events | 12 Months Ended |
Dec. 31, 2020 | |
Subsequent Events [Abstract] | |
Subsequent Events | NOTE 13 – SUBSEQUENT EVENTS. Issuance of common stock upon exercise of warrants In January 2021, warrants to purchase 225,878 shares of common stock were exercised, and the Company received net proceeds of $707 upon such exercise. Also, in January 2021, warrants to purchase 120,000 shares of common stock were exercised under a cashless transaction resulting in the issuance of 61,644 shares of the Company’s common stock. Underwritten Offering of Common Stock On February 7, 2021, the Company entered into an underwriting agreement with ThinkEquity, a division of Fordham Financial Management, Inc., pursuant to which the Company agreed to sell to ThinkEquity an aggregate of 750,000 shares of the Company’s common stock, $0.0001 par value per share (the “Shares”), in a firm commitment underwritten public offering. All of the Shares were sold by the Company to the Underwriter on February 10, 2021, and the Company received at the closing of the offering net proceeds of approximately $12.5 million from the sale of the Shares after deducting underwriting discounts and commissions and other offering expenses payable by the Company. The Company expects to use the net proceeds from the Offering for general corporate purposes. |
Organization and Summary of S_2
Organization and Summary of Significant Accounting Policies (Policies) | 12 Months Ended |
Dec. 31, 2020 | |
Organization, Consolidation and Presentation of Financial Statements [Abstract] | |
The Company | The Company Polar Power, Inc. was incorporated in 1979 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. |
Liquidity | Liquidity The Company’s financial statements have been prepared on the going concern basis, which contemplates the realization of assets and the settlement of liabilities and commitments in the normal course of business. For the year ended December 31, 2020, the Company incurred a net loss of $10,871 and used cash in operating activities of $6,547. At December 31, 2020, the Company had cash on hand of $1,646 and working capital of $10,123. Subsequent to December 31, 2020, the Company sold an aggregate of 750,000 shares of its common stock for net proceeds of approximately $12,500 in an offering completed in January 2021. In addition, in January 2021, the Company issued an aggregate of 225,878 shares of common stock upon the exercise of warrants and received cash proceeds of $707. Notwithstanding the net loss for 2020, management believes that its current cash balance, plus net proceeds from issuance of common stock and exercise of warrants in January 2021, is sufficient to fund operations for at least one year from the date the Company’s 2020 financial statements are issued. The Company expects to continue to incur net losses and negative operating cash flows in the near-term. The Company may seek to raise additional debt and/or equity capital to fund future operations. 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. |
COVID-19 | COVID-19 The Company is subject to risks and uncertainties of the COVID-19 pandemic that could adversely impact its business, including its sales, raw materials supply chain, liquidity and access to capital markets and business development activities. The Company has implemented additional health and safety precautions and protocols in response to the pandemic and government guidelines. During 2020, sales to the Company’s U.S. telecommunications customers, which represented 95% of the Company’s net sales for 2020, decreased 63% from 2019 as its customers postponed shipments and orders to prioritize expansion of 5G and cell site edge computing networks and as a result of the effects of COVID-19 pandemic on the business of the Company’s customers. As a result of the Company’s declining revenues during the COVID-19 pandemic, management implemented cost reduction programs to reduce overhead and lower operating expenses, while still keeping the business operational and ready to expand when needed. During 2020, the Company’s supply chain was not placed in jeopardy due to the COVID-19 outbreak. The extent of the impact of the COVID-19 pandemic has had and will continue to have on the Company’s business is highly uncertain and difficult to predict and quantify. The full extent to which the COVID-19 pandemic will directly or indirectly impact the Company’s business, results of operations and financial condition, will depend on future developments that are highly uncertain, including as a result of new information that may emerge concerning COVID-19 and the actions taken to contain or treat it, as well as the economic impact on local, regional, national and international markets. |
Estimates | Estimates The preparation of financial statements in conformity with accounting principles generally accepted in the United States of America (“GAAP”) requires management to make certain estimates and assumptions that affect the reported amounts of assets, liabilities, revenues and expenses, and the disclosure of contingent assets and liabilities. On an ongoing basis, management reviews its estimates and if deemed appropriate, those estimates are adjusted. Significant estimates include those related to assumptions used in determining reserves for uncollectible receivables, assumptions used in valuing inventories at net realizable value, impairment analysis of long term assets, estimates of useful lives of property and equipment, assumptions used in valuing stock-based compensation, the valuation allowance for deferred tax assets, accruals for product warranties, accruals for potential liabilities, and assumptions used in the determination of the Company’s liquidity. Actual results may differ from those estimates. |
Revenue Recognition | Revenue Recognition The Company recognizes revenue in accordance with Accounting Standards Codification (“ASC”) 606, Revenue from Contracts with Customers 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 deliver 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 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, 2020 and 2019. The Company’s rental contracts are fixed price contracts for fixed durations of time and include freight and delivery charges and are recognized on a straight-line basis over the rental period. Disaggregation of Net Sales The following table shows the Company’s disaggregated net sales by product type: Years Ended December 31, 2020 2019 DC power systems $ 8,659 $ 24,177 Engineering & Tech Support Services 226 281 Accessories 146 343 Total net sales $ 9,031 $ 24,801 The following table shows the Company’s disaggregated net sales by customer type: Years Ended December 31, 2020 2019 Telecom $ 8,640 $ 23,753 Government/Military 120 589 Marine 5 83 Other (backup DC power to various industries ) 266 376 Total net sales $ 9,031 $ 24,801 For the years ended December 31, 2020 and 2019, international sales totaled $1,522 and $230, respectively. For the year ended December 31, 2020, over 88% of our international sales were made to one customer in Japan. There were no sales made to this customer during 2019. |
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. 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. 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. As of December 31, 2020 and 2019, the Company had accrued a liability for warranty reserve of $600 and $375, 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: Years End December 31, 2020 2019 Changes in estimates for warranties Balance at beginning of the period $ 375 $ 175 Payments (634 ) (530 ) Provision for warranties 859 730 Balance at end of the period $ 600 $ 375 |
Shipping Costs | Shipping Costs Amounts billed to a customer in a sales transaction related to shipping and handling are reported as revenue. Costs incurred by the Company for shipping and handling are considered fulfillment costs and reported as cost of sales. |
Cash and Cash Equivalents | Cash and cash equivalents The Company considers all highly liquid investments with an original maturity of 90 days or less when purchased to be cash equivalents. The carrying amounts reported in the Balance Sheets for cash and cash equivalents are valued at cost, which approximates their fair value. |
Accounts Receivable | Accounts Receivable Trade receivables are recorded at net realizable value consisting of the carrying amount less an allowance for uncollectible accounts, as needed. The Company uses the allowance method to account for uncollectible trade receivable balances. Under the allowance method, if needed, an estimate of uncollectible customer balances is made based upon specific account balances that are considered uncollectible. Factors used to establish an allowance include the credit quality and payment history of the customer. The Company did not deem it necessary to provide an allowance for doubtful accounts as of December 31, 2020 and 2019. |
Inventories | Inventories Inventories are stated at the lower of cost or net realizable value, with cost determined on a first-in, first-out (“FIFO”) basis. The Company records adjustments to its inventory based on an estimated forecast of the inventory demand, taking into consideration, among others, inventory turnover, inventory quantities on hand, unfilled customer order quantities, forecasted demand, current prices, competitive pricing, and trends and performance of similar products. If the estimated net realizable value is determined to be less than the recorded cost of the inventory, the difference is recognized as a loss in the period in which it occurs. Once inventory has been written down, it creates a new cost basis for inventory that may not subsequently written up. At December 31, 2020, as a result of the deterioration of the forecasted marketability of certain of the Company’s inventory, management determined that the inventory’s revenue-generating ability was diminished, and the net realizable value of this inventory had fallen below its historical carrying cost. Accordingly, for the year ended December 31, 2020, the Company recorded a write down of inventory of $3,400, which is included in cost of goods sold. At December 31, 2020, the balance of inventory reflects its new cost basis after the write down. For the year ended December 31, 2019, the Company recorded a write down of inventory of $270, which is included in cost of goods sold. At December 31, 2020 and 2019, inventory has been reduced by cumulative write-downs totaling $4,000 and $600, respectively. As of December 31, 2020 and 2019, inventories consisted of the following: Years Ended December 31, 2020 2019 Raw materials $ 5,527 $ 8,051 Finished goods 3,567 5,861 Inventories $ 9,094 $ 13,912 |
Property and Equipment | Property and Equipment Property and equipment are recorded at cost less accumulated depreciation and amortization. Additions, improvements, and major renewals or replacements that substantially extend the useful life of an asset are capitalized. Repairs and maintenance expenditures are expensed as incurred. Depreciation and amortization of property and equipment is computed using the straight-line method over the estimated useful life. Estimated useful lives of the principal classes of assets are as follows: Estimated life Production tooling, jigs, fixtures 3-5 years Shop equipment and machinery 5 years Vehicles 3-5 years Leasehold improvements Shorter of the lease term or estimated useful life Office equipment 5 years Software 5 years Management regularly reviews property, equipment and other long-lived assets for possible impairment. This review occurs annually or more frequently if events or changes in circumstances indicate the carrying amount of the asset may not be recoverable. Based upon management’s annual assessment, there were no indicators of impairment of the Company’s property and equipment and other long-lived assets as of December 31, 2020 or December 31, 2019. |
Leases | Leases The Company accounts for its leases in accordance with the guidance of ASC 842, Leases |
Stock-Based Compensation | Stock-Based Compensation The Company periodically issues stock-based compensation to officers, directors, and consultants for services rendered. Such issuances vest and expire according to terms established at the issuance date. Stock-based payments to employees, directors, and for acquiring goods and services from nonemployees, which include grants of employee stock options, are recognized in the financial statements based on their grant date fair values in accordance with ASC 718, Compensation-Stock Compensation |
Income Taxes | Income Taxes The Company accounts for income taxes using the asset and liability method whereby deferred tax assets are recognized for deductible temporary differences, and deferred tax liabilities are recognized for taxable temporary differences. Temporary differences are the differences between the reported amounts of assets and liabilities and their tax bases. Deferred tax assets are reduced by a valuation allowance when, in the opinion of management, it is more likely than not that some portion or all of the deferred tax assets will not be realized before the Company is able to realize their benefits, or that future deductibility is uncertain. Tax benefits from an uncertain tax position are recognized only if it more likely than not that the tax position will be sustained on examination by the taxing authorities based on technical merits of the position. The tax benefits recognized in the financial statements from such a position are measured based on the largest benefit that has greater than 50 percent likelihood of being realized upon ultimate resolution. Deferred tax assets and liabilities are adjusted for the effects of changes in tax laws and rates on the date of enactment. |
Research and Development Costs | Research and Development Costs Research and development costs are expensed as incurred and consist primarily of salaries and other expenses relating to the design, development, and testing of the Company’s products. For the years ended December 31, 2020 and 2019, research and development expenditures totaled $1,723 and $2,276, respectively. |
Net Loss Per Share | Net Loss Per Share Basic loss per share is computed by dividing net 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. Dilutive potential common shares include shares from unexercised warrants and options. Potential common share equivalents have been excluded where their inclusion would be anti-dilutive. The Company’s basic and diluted net loss per share is the same for all periods presented because all shares issuable upon exercise of warrants and options are anti-dilutive. The following potentially dilutive shares were excluded from the shares used to calculate diluted earnings per share as their inclusion would be anti-dilutive: December 31, 2020 2019 Options 140,000 140,000 Warrants 370,000 120,000 Total 510,000 260,000 |
Financial Assets and Liabilities Measured at Fair Value | Financial Assets and Liabilities Measured at Fair Value Accounting standards require certain assets and liabilities be reported at fair value in the financial statements and provide a framework for establishing that fair value. Fair value is defined as the price that would be received upon sale of an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. When determining fair value, the Company considers the principal or most advantageous market in which it transacts, and considers assumptions that market participants would use when pricing the asset or liability. The framework for determining fair value is based on a hierarchy that prioritizes the inputs and valuation techniques used to measure fair value: 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-term nature of these instruments. The carrying values of 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 Dollar with a U.S. Dollar equivalent of $10 and $16 at December 31, 2020 and 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 $28 and $4 at December 31, 2020 and 2019, respectively, was held in an account at a financial institution located in Romania. Revenues Accounts receivable Accounts payable |
Recent Accounting Pronouncements | Recent Accounting Pronouncements In June 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 will be effective for the Company beginning January 1, 2023, with early adoption permitted. 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 any other recently issued, but not yet effective, authoritative guidance, if currently adopted, would have a material impact on the Company’s financial statement presentation or disclosures. |
Organization and Summary of S_3
Organization and Summary of Significant Accounting Policies (Tables) | 12 Months Ended |
Dec. 31, 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: Years Ended December 31, 2020 2019 DC power systems $ 8,659 $ 24,177 Engineering & Tech Support Services 226 281 Accessories 146 343 Total net sales $ 9,031 $ 24,801 The following table shows the Company’s disaggregated net sales by customer type: Years Ended December 31, 2020 2019 Telecom $ 8,640 $ 23,753 Government/Military 120 589 Marine 5 83 Other (backup DC power to various industries ) 266 376 Total net sales $ 9,031 $ 24,801 |
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: Years End December 31, 2020 2019 Changes in estimates for warranties Balance at beginning of the period $ 375 $ 175 Payments (634 ) (530 ) Provision for warranties 859 730 Balance at end of the period $ 600 $ 375 |
Schedule of Components of Inventories | As of December 31, 2020 and 2019, inventories consisted of the following: Years Ended December 31, 2020 2019 Raw materials $ 5,527 $ 8,051 Finished goods 3,567 5,861 Inventories $ 9,094 $ 13,912 |
Schedule of Estimated Life | Estimated useful lives of the principal classes of assets are as follows: Estimated life Production tooling, jigs, fixtures 3-5 years Shop equipment and machinery 5 years Vehicles 3-5 years Leasehold improvements Shorter of the lease term or estimated useful life Office equipment 5 years Software 5 years |
Schedule of Diluted Earnings Per share | The following potentially dilutive shares were excluded from the shares used to calculate diluted earnings per share as their inclusion would be anti-dilutive: December 31, 2020 2019 Options 140,000 140,000 Warrants 370,000 120,000 Total 510,000 260,000 |
Property and Equipment (Tables)
Property and Equipment (Tables) | 12 Months Ended |
Dec. 31, 2020 | |
Property, Plant and Equipment [Abstract] | |
Schedule of Property and Equipment | Property and equipment consist of the following: December 31, December 31, Shop equipment and machinery $ 3,286 $ 3,264 Production tooling, jigs, fixtures 71 71 Vehicles 180 188 Leasehold improvements 390 390 Office equipment 177 172 Software 103 103 Total property and equipment, cost 4,207 4,188 Less: accumulated depreciation and amortization (2,710 ) (2,088 ) Property and equipment, net $ 1,497 $ 2,100 |
Notes Payable (Tables)
Notes Payable (Tables) | 12 Months Ended |
Dec. 31, 2020 | |
Debt Disclosure [Abstract] | |
Schedule of Notes Payable | Notes payable consist of the following: December 31, December 31, Total Notes Payable $ 777 $ 1,106 Less: Current Portion 267 328 Notes Payable, Noncurrent portion $ 510 $ 778 |
Schedule of Annual Future Principal Payments | Annual future principal payments under the outstanding note agreements as of December 31, 2020 are as follows: Years ending December 31: 2021 267 2022 232 2023 196 2024 82 Total $ 777 |
Operating Leases (Tables)
Operating Leases (Tables) | 12 Months Ended |
Dec. 31, 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: Years Ended December 31, 2020 2019 Lease Cost Operating lease cost (of which $98 is included in general and administration and $601 is included in cost of sales in the Company’s statement of operations as of December 31, 2020, and $102 is included in general and administration and $597 is included in cost of sales in the Company’s statement of operations as of December 31, 2019) $ 699 $ 699 Other Information Weighted average remaining lease term – operating leases (in years) 2.4 3.4 Average discount rate – operating leases 3.75 % 3.75 % |
Schedule of Supplemental Balance Sheet Information | The supplemental balance sheet information related to leases for the period is as follows: At December 31, At December 31, Operating leases Long-term right-of-use assets, net of accumulated amortization of $1,265 and $154, respectively $ 1,563 $ 2,187 Current portion of operating lease liabilities $ 670 $ 618 Noncurrent portion of operating lease liabilities 990 1,660 Total operating lease liabilities $ 1,660 $ 2,278 |
Schedule of Maturities of Lease Liabilities | Maturities of the Company’s lease liabilities are as follows: Year Ending Operating Leases 2021 721 2022 747 2023 272 Total lease payments 1,740 Less: Imputed interest/present value discount (80 ) Present value of lease liabilities $ 1,660 |
Stock Options (Tables)
Stock Options (Tables) | 12 Months Ended |
Dec. 31, 2020 | |
Share-based Payment Arrangement [Abstract] | |
Schedule of Stock Option Activity | The following table summarizes stock option activity: Number of Weighted Average Outstanding, December 31, 2018 360,000 $ 4.84 Granted — — Exercised — — Cancelled (220,000 ) 5.26 Outstanding, December 31, 2019 140,000 $ 5.22 Granted — — Exercised — — Outstanding and exercisable, December 31, 2020 140,000 $ 5.22 |
Stock Warrants (Tables)
Stock Warrants (Tables) | 12 Months Ended |
Dec. 31, 2020 | |
Equity [Abstract] | |
Schedule of Warrants Outstanding | The following table summarizes warrant activity: Number of Weighted Average Outstanding, December 31, 2018 120,000 $ 8.75 Issued — — Exercised — — Outstanding, December 31, 2019 120,000 $ 8.75 Issued 625,000 3.13 Exercised (375,000 ) 3.13 Outstanding, December 31, 2020 370,000 $ 4.95 Exercisable, December 31, 2020 370,000 $ 4.95 |
Income Taxes (Tables)
Income Taxes (Tables) | 12 Months Ended |
Dec. 31, 2020 | |
Income Tax Disclosure [Abstract] | |
Schedule of Income Tax Provision (Benefit) | The benefit from income taxes for the years ended December 31, 2020 and 2019 consists of the following: Years Ended December 31, 2020 2019 Current Federal (2,139 ) - Current State - - Deferred Federal - - Deferred State - - Benefit from income taxes (2,139 ) - |
Schedule of Effective Income Tax Rate to the Federal Statutory Rate | The benefit from income taxes for the years ended December 31, 2020 and 2019 consists of the following: Years Ended December 31, 2020 2019 Current Federal (2,139 ) - Current State - - Deferred Federal - - Deferred State - - Benefit from income taxes (2,139 ) - |
Schedule of Deferred Tax Assets and Liabilities | The reconciliation of the effective income tax rate to the federal statutory rate is as follows: Years Ended December 31, 2020 2019 Federal income tax rate (21 )% (21 ) State tax, net of federal benefit (7 )% (7 )% Carryback net operating loss — % 21 % Change in valuation allowances 12 % 7 % Effective income tax rate 16 % — % |
Organization and Summary of S_4
Organization and Summary of Significant Accounting Policies (Details Narrative) $ in Thousands | 1 Months Ended | 12 Months Ended | ||
Jan. 31, 2021USD ($)shares | Dec. 31, 2020USD ($)Segment | Dec. 31, 2019USD ($) | Dec. 31, 2018USD ($) | |
Net loss | $ (10,871) | $ (4,045) | ||
Cash used in operating activities | (6,548) | (2,167) | ||
Cash | 1,646 | |||
Working capital | 10,123 | |||
Proceeds from exercise of warrants | 1,174 | |||
Net sales | 9,031 | 24,801 | ||
Warranty reserve | 600 | 375 | $ 175 | |
Inventory write-downs | 3,400 | 270 | ||
Cumulative inventory write-downs | 4,000 | 600 | ||
Research and development costs | $ 1,723 | $ 2,276 | ||
Number of operating segment | Segment | 1 | |||
Largest Vendors One [Member] | Accounts Payable [Member] | ||||
Concentration risk | 10.00% | |||
Largest Vendors Two [Member] | Accounts Payable [Member] | ||||
Concentration risk | 9.00% | 10.00% | ||
Largest Vendors Three [Member] | Accounts Payable [Member] | ||||
Concentration risk | 8.00% | 10.00% | ||
Largest Vendors One [Member] | Accounts Payable [Member] | ||||
Concentration risk | 11.00% | |||
International Sales [Member] | ||||
Net sales | $ 1,522 | $ 230 | ||
Japan [Member] | Customer One [Member] | ||||
Concentration risk | 88.00% | |||
Australia [Member] | ||||
Cash | $ 10 | 16 | ||
Romania, New Leu [Member] | ||||
Cash | $ 28 | $ 4 | ||
Revenue [Member] | Sales to Telecommunications Customers [Member] | ||||
Concentration risk | 96.00% | 96.00% | ||
Revenue [Member] | Sales to Telecommunications Customers [Member] | Largest Customer One [Member] | ||||
Concentration risk | 52.00% | 68.00% | ||
Revenue [Member] | Sales to Telecommunications Customers [Member] | Largest Customer Two [Member] | ||||
Concentration risk | 15.00% | 17.00% | ||
Revenue [Member] | Sales to Telecommunications Customers [Member] | Largest Customer Three [Member] | ||||
Concentration risk | 14.00% | 6.00% | ||
Revenue [Member] | Sales to Telecommunications Customers [Member] | Unites States [Member] | ||||
Concentration risk | 95.00% | 63.00% | ||
Revenue [Member] | Sales to Telecommunications Customers [Member] | Internationsl Customers [Member] | ||||
Concentration risk | 17.00% | 1.00% | ||
Accounts Receivable [Member] | Largest Customer One [Member] | ||||
Concentration risk | 87.00% | 70.00% | ||
Accounts Receivable [Member] | Largest Customer Two [Member] | ||||
Concentration risk | 20.00% | |||
Common Stock [Member] | ||||
Net loss | ||||
Common Stock [Member] | Subsequent Event [Member] | ||||
Sale of common stock | shares | 750,000 | |||
Net proceeds from issuance of common stock | $ 12,500 | |||
Warrant to purchase shares of common stock | shares | 225,878 | |||
Proceeds from exercise of warrants | $ 707 |
Organization and Summary of S_5
Organization and Summary of Significant Accounting Policies - Schedule of Disaggregated Net Sales (Details) - USD ($) $ in Thousands | 12 Months Ended | |
Dec. 31, 2020 | Dec. 31, 2019 | |
Total net sales | $ 9,031 | $ 24,801 |
Telecom [Member] | ||
Total net sales | 8,640 | 23,753 |
Government/Military [Member] | ||
Total net sales | 120 | 589 |
Marine [Member] | ||
Total net sales | 5 | 83 |
Other (backup DC power to various industries) [Member] | ||
Total net sales | 266 | 376 |
DC Power Systems [Member] | ||
Total net sales | 8,659 | 24,177 |
Engineering & Tech Support Services [Member] | ||
Total net sales | 226 | 281 |
Accessories [Member] | ||
Total net sales | $ 146 | $ 343 |
Organization and Summary of S_6
Organization and Summary of Significant Accounting Policies - Schedule of Reconciliation of the Product Warranty Liability (Details) - USD ($) $ in Thousands | 12 Months Ended | |
Dec. 31, 2020 | Dec. 31, 2019 | |
Organization, Consolidation and Presentation of Financial Statements [Abstract] | ||
Balance at beginning of the period | $ 375 | $ 175 |
Payments | (634) | (530) |
Provision for warranties | 859 | 730 |
Balance at end of the period | $ 600 | $ 375 |
Organization and Summary of S_7
Organization and Summary of Significant Accounting Policies - Schedule of Components of Inventories (Details) - USD ($) $ in Thousands | Dec. 31, 2020 | Dec. 31, 2019 |
Organization, Consolidation and Presentation of Financial Statements [Abstract] | ||
Raw materials | $ 5,527 | $ 8,051 |
Finished goods | 3,567 | 5,861 |
Inventories | $ 9,094 | $ 13,912 |
Organization and Summary of S_8
Organization and Summary of Significant Accounting Policies (Details) | 12 Months Ended |
Dec. 31, 2020 | |
Shop Equipment And Machinery [Member] | |
Estimated life | 5 years |
Leasehold Improvements [Member] | |
Estimated useful life | Shorter of the lease term or estimated useful life |
Office Equipment [Member] | |
Estimated life | 5 years |
Software [Member] | |
Estimated life | 5 years |
Minimum [Member] | Production Tooling, Jigs, Fixtures [Member] | |
Estimated life | 3 years |
Minimum [Member] | Vehicles [Member] | |
Estimated life | 3 years |
Maximum [Member] | Production Tooling, Jigs, Fixtures [Member] | |
Estimated life | 5 years |
Maximum [Member] | Vehicles [Member] | |
Estimated life | 5 years |
Organization and Summary of S_9
Organization and Summary of Significant Accounting Policies - Schedule of Diluted Earnings Per share (Details) - shares | 12 Months Ended | |
Dec. 31, 2020 | Dec. 31, 2019 | |
Total | 510,000 | 260,000 |
Options [Member] | ||
Total | 140,000 | 140,000 |
Warrants [Member] | ||
Total | 370,000 | 120,000 |
Property and Equipment (Details
Property and Equipment (Details Narrative) - USD ($) $ in Thousands | 12 Months Ended | |
Dec. 31, 2020 | Dec. 31, 2019 | |
Property, Plant and Equipment [Abstract] | ||
Depreciation and amortization expense | $ 622 | $ 628 |
Depreciation expense | $ 595 | $ 586 |
Property and Equipment - Schedu
Property and Equipment - Schedule of Property and Equipment (Details) - USD ($) $ in Thousands | Dec. 31, 2020 | Dec. 31, 2019 |
Total property and equipment, cost | $ 4,207 | $ 4,188 |
Less: accumulated depreciation and amortization | (2,710) | (2,088) |
Property and equipment, net | 1,497 | 2,100 |
Shop Equipment and Machinery [Member] | ||
Total property and equipment, cost | 3,286 | 3,264 |
Production Tooling, Jigs, Fixtures [Member] | ||
Total property and equipment, cost | 71 | 71 |
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 | 177 | 172 |
Software [Member] | ||
Total property and equipment, cost | $ 103 | $ 103 |
Notes Payable (Details Narrativ
Notes Payable (Details Narrative) - USD ($) $ in Thousands | 12 Months Ended | |
Dec. 31, 2020 | Dec. 31, 2019 | |
Note payable | $ 777 | $ 1,106 |
Payment of notes payable | 328 | $ 255 |
Several Financing Agreements [Member] | Equipment [Member] | ||
Monthly payments | $ 20 | |
Debt maturity date description | Due through 2024. | |
Several Financing Agreements [Member] | Equipment [Member] | Minimum [Member] | ||
Debt term | 2 years | |
Interest rate | 1.90% | |
Several Financing Agreements [Member] | Equipment [Member] | 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 | Dec. 31, 2020 | Dec. 31, 2019 |
Payables and Accruals [Abstract] | ||
Total Notes Payable | $ 777 | $ 1,106 |
Less Current Portion | 267 | 328 |
Notes Payable, Noncurrent portion | $ 510 | $ 778 |
Notes Payable - Schedule of Ann
Notes Payable - Schedule of Annual Future Principal Payments (Details) $ in Thousands | Dec. 31, 2020USD ($) |
Payables and Accruals [Abstract] | |
2021 | $ 267 |
2022 | 232 |
2023 | 196 |
2024 | 82 |
Total | $ 777 |
Line of Credit (Details Narrati
Line of Credit (Details Narrative) - USD ($) $ in Thousands | Jun. 04, 2019 | Dec. 31, 2020 | Dec. 31, 2019 |
Proceeds from advanced on revolving credit facility | $ 2,500 | ||
Payment of revolving credit facility | 2,500 | ||
Loan and Security Agreement [Member] | Pinnacle Bank [Member] | |||
Proceeds from advanced on revolving credit facility | 2,500 | ||
Payment of revolving credit facility | 2,500 | ||
Line of credit outstanding balance | |||
Line of credit remaining borrowing capacity | $ 1,070 | ||
Line of credit facility, initial expiration date | Sep. 30, 2022 | ||
Line of credit facility, additional renewal term | 1 year | ||
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 | 13,229 | |
Incurred fees | $ 12 | $ 52 |
Loan Payable (Details Narrative
Loan Payable (Details Narrative) - Citibank, N.A [Member] - PPP Loan [Member] $ in Thousands | May 04, 2020USD ($) |
Principal amount | $ 1,715 |
Interest rate | 1.00% |
Operating Leases (Details Narra
Operating Leases (Details Narrative) - USD ($) $ in Thousands | 12 Months Ended | |
Dec. 31, 2020 | Dec. 31, 2019 | |
Rent expense | $ 903 | $ 865 |
Warehouse Operating Lease Agreements [Member] | ||
Lease term | 2 years 4 months 24 days | |
Office Space Operating Lease Agreements [Member] | ||
Lease term | 2 years 4 months 24 days |
Operating Leases - Schedule of
Operating Leases - Schedule of Rent Expense and Supplemental Cash Flow Information (Details) - USD ($) $ in Thousands | 12 Months Ended | |
Dec. 31, 2020 | Dec. 31, 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) | $ 699 | $ 699 |
Weighted average remaining lease term - operating leases (in years) | 2 years 4 months 24 days | 3 years 4 months 24 days |
Average discount rate - operating leases | 3.75% | 3.75% |
Operating Leases - Schedule o_2
Operating Leases - Schedule of Rent Expense and Supplemental Cash Flow Information (Details) (Parenthetical) - USD ($) $ in Thousands | 12 Months Ended | |
Dec. 31, 2020 | Dec. 31, 2019 | |
Operating lease cost | $ 699 | $ 699 |
General and Administration [Member] | ||
Operating lease cost | 98 | 102 |
Cost of Sales [Member] | ||
Operating lease cost | $ 601 | $ 597 |
Operating Leases - Schedule o_3
Operating Leases - Schedule of Supplemental Balance Sheet Information (Details) - USD ($) $ in Thousands | Dec. 31, 2020 | Dec. 31, 2019 |
Leases [Abstract] | ||
Long-term right-of-use assets, net of accumulated amortization of $1,265 and $154, respectively | $ 1,563 | $ 2,187 |
Current portion of operating lease liabilities | 670 | 618 |
Noncurrent portion of operating lease liabilities | 990 | 1,660 |
Total operating lease liabilities | $ 1,660 | $ 2,278 |
Operating Leases - Schedule o_4
Operating Leases - Schedule of Supplemental Balance Sheet Information (Details) (Parenthetical) - USD ($) $ in Thousands | Dec. 31, 2020 | Dec. 31, 2019 |
Leases [Abstract] | ||
Accumulated amortization of right-of-use assets | $ 1,265 | $ 154 |
Operating Leases - Schedule o_5
Operating Leases - Schedule of Maturities of Lease Liabilities (Details) - USD ($) $ in Thousands | Dec. 31, 2020 | Dec. 31, 2019 |
Leases [Abstract] | ||
2021 | $ 721 | |
2022 | 747 | |
2023 | 272 | |
Total lease payments | 1,740 | |
Less: Imputed interest/present value discount | (80) | |
Present value of lease liabilities | $ 1,660 | $ 2,278 |
Stockholders' Equity (Details N
Stockholders' Equity (Details Narrative) - USD ($) $ / shares in Units, $ in Thousands | Jul. 07, 2020 | Jul. 02, 2020 | Nov. 06, 2019 | Dec. 31, 2020 | Dec. 31, 2019 |
Issuance of common stock upon exercise of warrants | 375,000 | ||||
Net proceeds from warrants exercise | $ 1,174 | ||||
Preferred stock, authorized | 5,000,000 | 5,000,000 | |||
Treasury stock, shares | 17,477 | 17,477 | |||
Treasury stock, value | $ 40 | $ 40 | |||
Stock Repurchase Agreement [Member] | |||||
Repurchase of common stock value | $ 500 | ||||
Maximum [Member] | |||||
Preferred stock, authorized | 5,000,000 | ||||
Warrant [Member] | |||||
Issuance of common stock upon exercise of warrants | 375,000 | ||||
Net proceeds from warrants exercise | $ 1,174 | ||||
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 ($) $ / shares in Units, $ in Thousands | Oct. 02, 2019 | Dec. 31, 2020 | Dec. 31, 2019 | Jul. 08, 2016 |
Total outstanding options fully vested | 140,000 | 140,000 | ||
Stock-based compensation | $ 79 | |||
Unamortized compensation cost | ||||
Outstanding intrinsic value | ||||
Three Executive Officers [Member] | ||||
Terminate rights | 220,000 | |||
December 2027 [Member] | ||||
Option share to be expire | 30,000 | |||
April 2028 [Member] | ||||
Option share to be expire | 110,000 | |||
Minimum [Member] | ||||
Options exercise price | $ 4.84 | $ 4.84 | ||
Maximum [Member] | ||||
Options exercise price | $ 5.09 | $ 5.09 | ||
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) - $ / shares | 12 Months Ended | |
Dec. 31, 2020 | Dec. 31, 2019 | |
Share-based Payment Arrangement [Abstract] | ||
Number of Options, Outstanding, Beginning balance | 140,000 | 360,000 |
Number of Options, Granted | ||
Number of Options, Exercised | ||
Number of Options, Cancelled | (220,000) | |
Number of Options, Outstanding and exercisable Ending balance | 140,000 | 140,000 |
Weighted Average Exercise Price, Outstanding, Beginning balance | $ 5.22 | $ 4.84 |
Weighted Average Exercise Price, Granted | ||
Weighted Average Exercise Price, Exercised | ||
Weighted Average Exercise Price, Cancelled | 5.26 | |
Weighted Average Exercise Price, Outstanding and exercisable Ending balance | $ 5.22 | $ 5.22 |
Stock Warrants (Details Narrati
Stock Warrants (Details Narrative) - USD ($) $ / shares in Units, $ in Thousands | Jul. 07, 2020 | Jul. 02, 2020 | Dec. 31, 2020 | Dec. 31, 2019 |
Number of issued warrants exercisable | 625,000 | |||
Issuance of common stock upon exercise of warrants | 375,000 | |||
Net proceeds from warrants exercise | $ 1,174 | |||
Warrants intrinsic value | ||||
Warrant [Member] | ||||
Issuance of common stock upon exercise of warrants | 375,000 | |||
Net proceeds from warrants exercise | $ 1,174 | |||
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 | 12 Months Ended | |
Dec. 31, 2020 | Dec. 31, 2019 | |
Equity [Abstract] | ||
Number of Warrants, Outstanding, Beginning balance | 120,000 | 120,000 |
Number of Warrants, Granted | 625,000 | |
Number of Warrants, Exercised | (375,000) | |
Number of Warrants, Outstanding, Ending balance | 370,000 | 120,000 |
Number of Warrants, Exercisable, Ending balance | 370,000 | |
Weighted Average Exercise Price, Outstanding, Beginning balance | $ 8.75 | $ 8.75 |
Weighted Average Exercise Price, Granted | 3.13 | |
Weighted Average Exercise Price, Exercised | 3.13 | |
Weighted Average Exercise Price, Outstanding, Ending balance | 4.95 | $ 8.75 |
Weighted Average Exercise Price, Exercisable, Ending balance | $ 4.95 |
Income Taxes (Details Narrative
Income Taxes (Details Narrative) - USD ($) | 12 Months Ended | |
Dec. 31, 2020 | Dec. 31, 2019 | |
Tax credit carryforward description | The TCJA limited NOL absorption to 80% of taxable income. The CARES Act temporarily removes the 80% limitation, reinstating it for tax years beginning after 2020. | |
Offset of taxable income percentage | 80.00% | |
Income tax benefit | $ 2,139,000 | |
Federal [Member] | ||
Net operating losses carryforwards | 7,200,000 | |
State and Local Jurisdiction [Member] | ||
Net operating losses carryforwards | $ 10,900,000 | |
Tax credit carryforward description | The state carryforward expires in 2039 through 2040 | |
Tax Year 2018 [Member] | ||
Income tax receivable | $ 1,702,000 | |
Tax Year 2019 [Member] | ||
Income tax receivable | $ 655,000 |
IncomeTaxes - Schedule of Incom
IncomeTaxes - Schedule of Income Tax Provision (Benefit) (Details) - USD ($) | 12 Months Ended | |
Dec. 31, 2020 | Dec. 31, 2019 | |
Income Tax Disclosure [Abstract] | ||
Current Federal | $ (2,139,000) | |
Current State | ||
Deferred Federal | ||
Deferred State | ||
Benefit from income taxes | $ (2,139,000) |
IncomeTaxes - Schedule of Recon
IncomeTaxes - Schedule of Reconciliation Of The Effective Income Tax Rate (Details) | 12 Months Ended | |
Dec. 31, 2020 | Dec. 31, 2019 | |
Income Tax Disclosure [Abstract] | ||
Federal income tax rate | (21.00%) | (21.00%) |
State tax, net of federal benefit | (7.00%) | (7.00%) |
Carryback net operating loss | 21.00% | |
Change in valuation allowances | 12.00% | 7.00% |
Effective income tax rate | 16.00% |
IncomeTaxes - Schedule of Defer
IncomeTaxes - Schedule of Deferred Tax and Liabilities (Details) - USD ($) $ in Thousands | Dec. 31, 2020 | Dec. 31, 2019 |
Income Tax Disclosure [Abstract] | ||
Inventory reserves | $ 1,379 | $ 396 |
Accrued liabilities and other reserves | 169 | 208 |
Operating lease liability | 465 | 635 |
Net operating loss carryover | 2,281 | 734 |
Gross deferred tax assets | 4,294 | 1,973 |
Valuation allowance | (3,515) | (1,266) |
Total deferred tax assets | 779 | 707 |
Operating lease right-of-use asset, net | (436) | (610) |
Depreciation | (343) | (97) |
Total deferred tax liabilities | (779) | (707) |
Net deferred tax asset (liability) |
Distribution Agreement with a_2
Distribution Agreement with a Related Entity (Details Narrative) - USD ($) $ in Thousands | 12 Months Ended | |
Dec. 31, 2020 | Dec. 31, 2019 | |
Smartgen Solutions, Inc. [Member] | ||
Amount of performed filed services | $ 129 | $ 289 |
Subsequent Events (Details)
Subsequent Events (Details) - USD ($) $ / shares in Units, $ in Thousands | Feb. 07, 2021 | Jan. 31, 2021 | Dec. 31, 2020 | Dec. 31, 2019 |
Proceeds from exercise of warrants | $ 1,174 | |||
Common Stock [Member] | Subsequent Event [Member] | ||||
Warrant to purchase shares of common stock | 225,878 | |||
Proceeds from exercise of warrants | $ 707 | |||
Stock issued during the period | 61,644 | |||
Sale of common stock | 750,000 | |||
Net proceeds from issuance of common stock | $ 12,500 | |||
Common Stock [Member] | Subsequent Event [Member] | Cashless Transaction [Member] | ||||
Warrant to purchase shares of common stock | 120,000 | |||
Common Stock [Member] | Subsequent Event [Member] | Underwritten Public Offering [Member] | ||||
Sale of common stock | 750,000 | |||
Shares issued price per share | $ 0.0001 | |||
Net proceeds from issuance of common stock | $ 12,500 |