Polar Power (POLA) 10-K 1 Apr 19 2018 FY Annual report Financial data

Document and Entity Information

Document and Entity Information - USD ($)	12 Months Ended
	Dec. 31, 2018	Apr. 01, 2019	Jun. 30, 2018
Document And Entity Information
Entity Registrant Name	Polar Power, Inc.
Entity Central Index Key	0001622345
Document Type	10-K
Trading Symbol	POLA
Document Period End Date	Dec. 31, 2018
Amendment Flag	false
Current Fiscal Year End Date	--12-31
Entity a Well-known Seasoned Issuer	No
Entity a Voluntary Filer	No
Entity's Reporting Status Current	Yes
Entity Filer Category	Non-accelerated Filer
Entity Emerging Growth Company	true
Entity Small Business	true
Entity Ex Transition Period	true
Entity Shell Company	false
Entity Public Float			$ 23,965,548
Entity Common Stock, Shares Outstanding		10,143,158
Document Fiscal Period Focus	FY
Document Fiscal Year Focus	2018

BALANCE SHEETS

BALANCE SHEETS - USD ($)	Dec. 31, 2018	Dec. 31, 2017
Current assets
Cash and cash equivalents (including restricted cash of $1,002,683 and $1,001,180 at December 31, 2018 and December 31, 2017, respectively)	$ 5,640,078	$ 14,201,163
Accounts receivable	7,726,919	3,058,266
Inventories, net	8,471,769	5,487,053
Prepaid expenses	468,666	236,670
Refundable income taxes	715,916	629,316
Total current assets	23,023,348	23,612,468
Other assets:
Property and equipment, net	2,122,757	824,076
Deposits	94,001	87,496
Total assets	25,240,106	24,524,040
Current liabilities
Accounts payable	1,066,415	757,753
Customer deposits	79,184	40,039
Accrued liabilities and other current liabilities	504,559	586,391
Current portion of notes payable	283,388	110,237
Total current liabilities	1,933,546	1,494,420
Notes payable, net of current portion	924,539	126,818
Total liabilities	2,858,085	1,621,238
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, 10,143,158 and, 10,143,158, shares issued and outstanding, respectively	1,014	1,014
Additional paid-in capital	19,578,426	19,250,955
Retained earnings	2,802,581	3,650,833
Total stockholders' equity	22,382,021	22,902,802
Total liabilities and stockholders' equity	$ 25,240,106	$ 24,524,040

BALANCE SHEETS (Parenthetical)

BALANCE SHEETS (Parenthetical) - USD ($)	Dec. 31, 2018	Dec. 31, 2017
Statement of Financial Position [Abstract]
Restricted cash	$ 1,002,683	$ 1,001,180
Preferred stock, par value (in dollars per share)	$ 0.0001	$ 0.0001
Preferred stock, authorized	5,000,000	5,000,000
Preferred stock, issued
Preferred stock, outstanding
Common stock, par value (in dollars per share)	$ 0.0001	$ 0.0001
Common stock, authorized	50,000,000	50,000,000
Common stock, issued	10,143,158	10,143,158
Common stock, outstanding	10,143,158	10,143,158

STATEMENTS OF OPERATIONS

STATEMENTS OF OPERATIONS - USD ($)	12 Months Ended
	Dec. 31, 2018	Dec. 31, 2017
Income Statement [Abstract]
Net Sales	$ 24,046,354	$ 14,418,726
Cost of Sales	16,614,574	9,657,558
Gross Profit	7,431,780	4,761,168
Operating Expenses
Sales and Marketing	2,579,457	1,348,455
Research and development	1,907,810	1,334,637
General and administrative	4,043,301	2,880,036
Total operating expenses	8,530,568	5,563,128
Loss from operations	(1,098,788)	(801,960)
Other income (expenses)
Interest expenses	(20,170)	(17,822)
Interest income	55,706	54,791
Other income (expenses)		7,575
Total other income (expense)	35,536	44,544
Loss before income taxes	(1,063,252)	(757,416)
Income tax benefit	215,000
Net Loss	$ (848,252)	$ (757,416)
Net Income (Loss) per share - basic and diluted (in dollars per share)	$ (0.08)	$ (0.07)
Weighted average shares outstanding, basic and diluted (in shares)	10,143,158	10,143,158

STATEMENTS OF STOCKHOLDERS' EQU

STATEMENTS OF STOCKHOLDERS' EQUITY - USD ($)	Common Stock [Member]	Additional paid-in capital [Member]	Retained Earnings [Member]	Total
Balance at beginning at Dec. 31, 2016	$ 1,014	$ 19,242,715	$ 4,408,249	$ 23,651,978
Balance at beginning (in shares) at Dec. 31, 2016	10,143,158
Increase (Decrease) in Stockholders' Equity [Roll Forward]
Fair value of vested stock options		8,240		8,240
Net loss			(757,416)	(757,416)
Balance at end at Dec. 31, 2017	$ 1,014	19,250,955	3,650,833	22,902,802
Balance at end (in shares) at Dec. 31, 2017	10,143,158
Increase (Decrease) in Stockholders' Equity [Roll Forward]
Fair value of vested stock options		327,471		327,471
Net loss			(848,252)	(848,252)
Balance at end at Dec. 31, 2018	$ 1,014	$ 19,578,426	$ 2,802,581	$ 22,382,021
Balance at end (in shares) at Dec. 31, 2018	10,143,158

STATEMENTS OF CASH FLOWS

STATEMENTS OF CASH FLOWS - USD ($)	12 Months Ended
	Dec. 31, 2018	Dec. 31, 2017
Cash flows from operating activities:
Net loss	$ (848,252)	$ (757,416)
Adjustments to reconcile net loss to net cash used in operating activities:
Fair value of vested stock options	327,471	8,240
Depreciation and amortization	385,583	255,631
Changes in operating assets and liabilities
Accounts receivable	(4,668,653)	1,345,680
Inventories	(2,984,716)	(647,462)
Prepaid expenses	(231,996)	(58,101)
Deposits	(6,505)	(20,700)
Refundable income taxes	(86,600)	(629,316)
Deferred tax assets		160,637
Accounts payable	308,662	98,398
Income taxes payable		(1,227,308)
Customer deposits	39,145	(31,915)
Accrued expenses and other current liabilities	(81,832)	(83,498)
Net cash used in operating activities	(7,847,693)	(1,587,130)
Cash flows from investing activities:
Acquisition of property and equipment	(574,990)	(342,121)
Net cash used in investing activities	(574,990)	(342,121)
Cash flows from financing activities:
Repayment of notes	(138,402)	(111,744)
Net cash used in financing activities	(138,402)	(111,744)
Decrease in cash and cash equivalents	(8,561,085)	(2,040,995)
Cash and cash equivalents, beginning of period	14,201,163	16,242,158
Cash and cash equivalents, end of period	5,640,078	14,201,163
Supplemental Cash Flow Information:
Interest paid	20,170	10,193
Taxes Paid		2,424,417
Supplemental non-cash investing and financing activities:
Assets acquired under notes payable	$ 1,109,275

ORGANIZATION AND SUMMARY OF SIG

ORGANIZATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES	12 Months Ended
	Dec. 31, 2018
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. Estimates The preparation of financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenue and expenses during the reporting period. Material estimates relate to the assumptions made in determining reserves for uncollectible receivables, inventory reserves and returns, impairment analysis of long term assets and deferred tax assets, income tax accruals, accruals for potential liabilities and assumptions made in valuing the fair market value of equity transactions. Actual results may differ from those estimates. Revenue During 2017, the Company recognized revenue from the sale of completed production units and parts when there is persuasive evidence that an arrangement exists, delivery of the product has occurred and title has passed, the selling price is both fixed and determinable, and collectability is reasonably assured, all of which occurs upon shipment of our product or delivery of the product to the destination specified by the customer. Once a product is delivered, the Company does not have a post-delivery obligation to provide additional services to the customer . On January 1, 2018, the Company adopted ASU 2014-09, Revenue from Contracts with Customers (Topic 606), (ASC 606). The underlying principle of ASC 606 is to recognize revenue to depict the transfer of goods or services to customers at the amount expected to be collected. ASC 606 creates a five-step model that requires entities to exercise judgment when considering the terms of contract(s), which includes (1) identifying the contract(s) or agreement(s) with a customer, (2) identifying the Company’s performance obligations in the contract or agreement, (3) determining the transaction price, (4) allocating the transaction price to the separate performance obligations, and (5) recognizing revenue as each performance obligation is satisfied. Under ASC 606, 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 the Company’s 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 implementation of ASC 606 had no impact on the Company’s financial statements and no cumulative effect adjustment was recognized. Disaggregation of Net Sales The following table shows the Company’s disaggregated net sales by product type: Years End December 31, 2018 2017 DC power systems $ 22,528,268 $ 13,798,841 Accessories 1,518,086 619,885 Total net sales $ 24,046,354 $ 14,418,726 The following table shows the Company’s disaggregated net sales by customer type: Years End December 31, 2018 2017 Telecom $ 21,552,950 $ 12,714,164 Government/Military 1,477,121 1,244,267 Marine 177,909 278,254 Other (backup DC power to various industries ) 838,374 182,041 Total net sales $ 24,046,354 $ 14,418,726 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 as of December 31, 2018 and 2017. Inventories Inventories consist of raw materials and finished goods and are stated at the lower of cost or market. Cost is determined principally on a first-in-first-out average cost basis. Inventory quantities on hand are reviewed regularly and write-downs for obsolete inventory is recorded based on an estimated forecast of the inventory item demand in the near future. As of December 31, 2018 and 2017, the Company has established inventory reserves of $330,000 and $330,000, respectively, for obsolete and slow-moving inventory. As of December 31, 2018 and 2017, the components of inventories were as follows: Years End December 31, 2018 2017 Raw materials $ 6,060,448 $ 2,716,392 Finished goods 2,741,321 3,100,661 8,801,769 5,817,053 Less: Inventory reserve (330,000 ) (330,000 ) Total Inventories, net $ 8,471,769 $ 5,487,053 Product Warranties The Company provides limited warranties for parts and labor at no cost to its customers within a specified time period after the sale. The warranty terms are typically from one to five years. Provisions for estimated expenses related to product warranties are made at the time products are sold. These estimates are established using historical information about the nature, frequency and average cost of warranty claim settlements as well as product manufacturing and recovery from suppliers. Management actively studies trends of warranty claims and takes action to improve product quality and minimize warranty costs. The Company estimates the actual historical warranty claims coupled with an analysis of unfulfilled claims to record a liability for specific warranty purposes. The Company’s product warranty obligations are included in other accrued liabilities in the balance sheets. As of December 31, 2018 and 2017, the Company had accrued a liability for warranty reserve of $175,000 and $175,000, respectively. Management believes that the warranty accrual is appropriate; however, actual claims incurred could differ from original estimates, requiring adjustments to the accrual. The product warranty accrual is included in current liabilities in the accompanying balance sheets. The following is a tabular reconciliation of the product warranty liability, excluding the deferred revenue related to the Company’s warranty coverage: Years End December 31, Changes in estimates for warranties 2018 2017 Balance at beginning of the period $ 175,000 $ 175,000 Payments (244,454 ) (364,163 ) Provision for warranties 244,454 364,163 Balance at end of the period $ 175,000 $ 175,000 Property and Equipment Property and equipment are stated at historical cost less accumulated depreciation and amortization. Depreciation and amortization of property and equipment is computed using the straight-line method over the estimated useful life. Maintenance and repairs that do not improve or extend the useful life of the respective assets are expensed. 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, 2018 or December 31, 2017. 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. Financial Assets and Liabilities Measured at Fair Value The Company uses various inputs in determining the fair value of its investments and measures these assets on a recurring basis. Financial assets recorded at fair value in the balance sheets are categorized by the level of objectivity associated with the inputs used to measure their fair value. Authoritative guidance provided by the Financial Accounting Standards Board (“FASB”) defines the following levels directly related to the amount of subjectivity associated with the inputs to fair valuation of these financial assets: Level 1 Quoted prices in active markets for identical assets or liabilities. Level 2 Inputs, other than the quoted prices in active markets, that is observable either directly or indirectly. Level 3 Unobservable inputs based on the Company’s assumptions. The carrying amounts of financial assets and liabilities, such as cash and cash equivalents, accounts receivable and accounts payable, approximate their fair values because of the short maturity of these instruments. The carrying values of the line of credit, notes payable approximate their fair values due to the fact that the interest rates on these obligations are based on prevailing market interest rates. Segments The Company operates in one segment for the manufacture and distribution of its products. In accordance with the “Segment Reporting” Topic of the ASC, the Company’s chief operating decision maker has been identified as the Chief Executive Officer and President, who reviews operating results to make decisions about allocating resources and assessing performance for the entire Company. Existing guidance, which is based on a management approach to segment reporting, establishes requirements to report selected segment information quarterly and to report annually entity-wide disclosures about products and services, major customers, and the countries in which the entity holds material assets and reports revenue. All material operating units qualify for aggregation under “Segment Reporting” due to their similar customer base and similarities in: economic characteristics; nature of products and services; and procurement, manufacturing and distribution processes. Since the Company operates in one segment, all financial information required by “Segment Reporting” can be found in the accompanying financial statements. Concentrations Cash. Cash denominated in Australian Dollar with a U.S. Dollar equivalent of $152,254 and $20,000 at December 31, 2018 and 2017, 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 $9,368 and nil at December 31, 2018 and 2017, respectively, was held in an account at a financial institution located in Romania. Revenues Accounts receivable Accounts payable Net Income (Loss) Per Share Basic net income (loss) per share is computed by dividing net income (loss) by the weighted average number of common shares outstanding for the period. Diluted earnings per share is computed by dividing the net income applicable to common stock holders by the weighted average number of common shares outstanding plus the number of additional common shares that would have been outstanding if all dilutive potential common shares had been issued using the treasury stock method. Potential common shares are excluded from the computation when their effect is antidilutive. The dilutive effect of potentially dilutive securities is reflected in diluted net income per share if the exercise prices were lower than the average fair market value of common shares during the reporting period. The following potentially dilutive shares were excluded from the shares used to calculate diluted earnings per share as their inclusion would be anti-dilutive: December 31, 2018 2017 Options 360,000 30,000 Warrants 115,000 115,000 Total 475,000 145,000 Recent Accounting Pronouncements In February 2016, the FASB issued Accounting Standards Update (ASU) No. 2016-02, Leases Other recent accounting pronouncements issued by the FASB, including its Emerging Issues Task Force, the American Institute of Certified Public Accountants, and the SEC did not or are not believed by management to have a material impact on the Company’s present or future consolidated financial statements.

RESTRICTED CASH

RESTRICTED CASH	12 Months Ended
	Dec. 31, 2018
Receivables [Abstract]
RESTRICTED CASH	NOTE 2 – RESTRICTED CASH As of December 31, 2018 and 2017, the Company’s cash balance included restricted cash of $1,002,683 and $1,001,180, respectively. The restricted cash serves as a collateral to the line of credit (see Note 5) opened with a bank in March 2017.

PROPERTY AND EQUIPMENT

PROPERTY AND EQUIPMENT	12 Months Ended
	Dec. 31, 2018
Property, Plant and Equipment [Abstract]
PROPERTY AND EQUIPMENT	NOTE 3 – PROPERTY AND EQUIPMENT Property and equipment consist of the following: December 31, 2018 December 31, 2017 Production tooling, jigs, fixtures $ 70,749 $ 70,749 Shop equipment and machinery 2,808,928 1,451,423 Vehicles 188,597 122,264 Leasehold improvements 276,901 42,173 Office equipment 134,995 114,454 Software 102,690 97,533 Total property and equipment, cost 3,582,860 1,898,596 Less: accumulated depreciation and amortization (1,460,103 ) (1,074,520 ) Property and equipment, net $ 2,122,757 $ 824,076 Depreciation and amortization expense on property and equipment for the years ended December 31, 2018 and 2017 was $385,583 and $255,631, respectively. During the years ended December 31, 2018 and 2017, $349,750 and $224,535, respectively, of the depreciation expense were included in the balance of cost of sales for the years then ended.

NOTES PAYABLE

NOTES PAYABLE	12 Months Ended
	Dec. 31, 2018
Payables and Accruals [Abstract]
NOTES PAYABLE	NOTE 4 – NOTES PAYABLE Notes payable consist of the following: December 31, 2018 December 31, 2017 Total Equipment Notes Payable $ 1,207,927 $ 237,055 Current Portion 283,388 110,237 Notes Payable, Long term $ 924,539 $ 126,818 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. As of December 31, 2017, the balance of notes payable was $237,055. During 2018, the Company acquired additional equipment under financing agreements for a total of $1,109,275 with terms of 5 years, interest rate of 5% per annum, and secured by the purchased equipment. During 2018, the Company also made repayments on the notes payable totalling about $138,000. As of December 31, 2018, the balance of notes payable was $1,207,927. The aggregate monthly payments of principal and interest of the outstanding notes payable as of December 31, 2018 is approximately $29,000 are due through 2023. Annual future principal payments under the outstanding note agreements as of December 31, 2018 are as follows: Years ending December 31: 2019 292,800 2020 263,193 2021 228,528 2022 234,092 2023 189,314 Total $ 1,207,927

LINE OF CREDIT

LINE OF CREDIT	12 Months Ended
	Dec. 31, 2018
Debt Disclosure [Abstract]
LINE OF CREDIT	NOTE 5 – LINE OF CREDIT On March 21, 2017, the Company entered into a Credit Agreement and related documents with Citibank, N.A. for a revolving credit facility for an aggregate amount of up to $1,000,000. The credit facility will expire at such time the parties mutually agree to terminate the credit facility or at the election of the lender. Interest accrues on the principal amount of revolving loans outstanding under the credit facility at a rate equal to the greater of (i) the prime rate of interest as published by Citibank, or (ii) the one-month London Interbank Offered Rate plus 2%. Amounts outstanding from time to time under the credit facility are due and payable monthly in an amount equal to the greater of 2% of the outstanding principal balance or $100, plus accrued interest. Upon the termination of the credit facility, any amounts owed under the credit facility will be payable by the Company in 48 equal consecutive monthly installments of principal, together with accrued monthly interest and any other charges beginning the first calendar month after the date of cancellation. The credit facility is also subject to an annual finance charge of $2,500, which amount has been waived for the first year. The credit facility is secured by a Certificate of Deposit (restricted cash) account opened by the Company with Citibank in the amount of $1,000,000 (see Note 2). The Company’s credit facility contains negative covenants prohibiting it from (i) creating or permitting to exist any liens, security interests or other encumbrances on the Company’s assets, (ii) engaging in any business activities substantially different than those in which the Company is presently engaged, (iii) ceasing operations, liquidating, merging, transferring, acquiring or consolidating with any other entity, changing its name, dissolving or transferring or selling collateral out of the ordinary course of business, or (iv) paying dividends on the Company’s capital stock (other than dividends payable in stock). As of December 31, 2018, the Company had not borrowed any funds under the credit facility and had borrowing availability of $1,000,000.

STOCKHOLDERS' EQUITY

STOCKHOLDERS' EQUITY	12 Months Ended
	Dec. 31, 2018
Stockholders' Equity Note [Abstract]
STOCKHOLDERS' EQUITY	NOTE 6 – STOCKHOLDERS’ EQUITY Common Stock The Company is authorized to issue up to a total of 50,000,000 shares of common stock, $0.0001 par value per share. Holders of common stock are entitled to one vote for each share held on all matters submitted to a vote of shareholders. Holders of common stock do not have cumulative voting rights. Further, holders of common stock have no preemptive, conversion, redemption or subscription rights and there are no sinking fund provisions applicable to the Company’s common stock. Upon the liquidation, dissolution or winding-up of the Company, holders of common stock are entitled to share ratably in all assets remaining after payment of all liabilities and the liquidation preferences of any outstanding shares of preferred stock. Subject to preferences that may be applicable to any outstanding shares of preferred stock, holders of common stock are entitled to receive dividends, if any, as may be declared from time to time by the Company’s board of directors, out of the Company’s assets which are legally available. 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.

STOCK OPTIONS

STOCK OPTIONS	12 Months Ended
	Dec. 31, 2018
Stock Options
STOCK OPTIONS	NOTE 7 – STOCK OPTIONS Number of Options Weighted Average Exercise Price Outstanding, December 31, 2016 - $ Granted 30,000 4.84 Exercised — — Outstanding, December 31, 2017 30,000 $ 4.84 Granted 330,000 5.32 Exercised — — Outstanding, December 31, 2018 360,000 $ 5.28 Exercisable, December 31, 2018 — — 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. In December 2017, the Company granted to members of its board of directors, options to purchase an aggregate of 30,000 shares of the Company’s common stock that expire ten years from the date of grant, and vesting 1 year from issuance date. The fair value of each option award was estimated on the date of grant using the Black-Scholes option pricing model based on the following assumptions: (i) volatility rate of 57.71%, (ii) discount rate of 2.42%, (iii) zero expected dividend yield, and (iv) expected life of 6 years, which is the average of the term of the options and their vesting periods. The total fair value of the option grants at their grant date was approximately $98,000. In April 2018, the Company granted options to purchase an aggregate of 330,000 shares of the Company’s common stock to three of its executive officers, with exercise prices ranging from $5.09 to $5.60 per share, that expire ten years from the date of grant, and with one-third of the total options granted vesting on each of the first, second, and third anniversaries of the grant date. The fair value of each of the option award was estimated on the date of grant using the Black-Scholes option pricing model based on the following assumptions: (i) volatility rate of 57.71%, (ii) discount rate of 2.42%, (iii) zero expected dividend yield, and (iv) expected life of 6.5 years, which is the average of the term of the options and their vesting periods. The total fair value of these options at their grant dates was approximately $948,000. During the year ended December 31, 2018, the Company expensed total stock-based compensation related to the vested options of $327,471, and the remaining unamortized cost of the outstanding options at December 31, 2018 was approximately $710,000. This cost will be amortized on a straight-line basis over the weighted average remaining vesting period of 3 years. There was no intrinsic value of the outstanding and exercisable options at December 31, 2018.

WARRANTS

WARRANTS	12 Months Ended
	Dec. 31, 2018
Warrants
WARRANTS	NOTE 8 – WARRANTS The following table summarizes warrant activity: Number of Warrants Weighted Average Exercise Price Outstanding, December 31, 2016 115,000 $ 8.75 Issued — — Exercised — — Outstanding, December 31, 2017 115,000 $ 8.75 Issued — — Exercised — — Outstanding and exercisable, December 31, 2018 115,000 $ 8.75 In connection with the Company’s underwritten initial public offering in December 2016, the Company issued warrants to the underwriters to purchase up to 115,000 shares of its common stock with an exercise price of $8.75 per share, which warrants expire five years from the date of issuance. There was no intrinsic value of the outstanding and exercisable warrants at December 31, 2018.

DISTRIBUTION AGREEMENT WITH A R

DISTRIBUTION AGREEMENT WITH A RELATED ENTITY	12 Months Ended
	Dec. 31, 2018
Distribution Agreement With Related Entity
DISTRIBUTION AGREEMENT WITH A RELATED ENTITY	NOTE 9 – DISTRIBUTION AGREEMENT WITH A RELATED ENTITY On March 1, 2014, the Company entered into a subcontractor installer agreement with Smartgen, 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, 2018 and 2017, Smartgen performed $174,290 and $186,392, respectfully, in field services.

INCOME TAXES

INCOME TAXES	12 Months Ended
	Dec. 31, 2018
Income Tax Disclosure [Abstract]
INCOME TAXES	NOTE 10 – INCOME TAXES During 2018, the Company had no current tax liabilities, however, the Company was able to recover $215,000 of taxes previously paid from utilization of its net operating loss carry forwards. The Company has no provision for income taxes during the year ended December 31, 2017. Years Ended December 31, 2018 2017 Current Federal $ — $ — State — — Deferred Federal 195,000 — State 20,000 — Income tax benefit $ 215,000 $ — The reconciliation of the effective income tax rate to the federal statutory rate is as follows: Years Ended December 31, 2018 2017 Federal income tax rate (21 )% (34 )% State tax, net of federal benefit (8 )% (8 )% Change in accrued liabilities 2 % 9 % Change in valuation allowances 27 % 33 % Effective income tax rate — % — % Deferred income taxes reflect the net tax effects of temporary differences between the carrying amounts of assets and liabilities for financial statement purposes and the amounts used for income tax purposes. Significant components of the Company’s deferred tax assets and liabilities at December 31, 2018 and 2017 are as follows: December 31, 2018 December 31, 2017 Deferred tax assets: Inventory reserves $ 210,283 $ 221,053 Accrued liabilities 120,251 138,160 Net operating loss carryover 326,515 — Deferred tax liability: Accumulated depreciation (86,562 ) (145,935 ) Net deferred tax assets 570,487 213,278 Valuation allowance (570,487 ) (213,278 ) Net deferred tax assets, net of valuation allowances $ — $ — Effective January 1, 2007, the Company adopted 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 the date of adoption, and as of December 31, 2018 and 2017, 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 2010. The Company’s policy is to record interest and penalties on uncertain tax provisions as income tax expense. As of December 31, 2018 and 2017, the Company had no accrued interest or penalties related to uncertain tax positions. Additionally, tax years 2010 through 2018 remain open to examination by the major taxing jurisdictions to which the Company is subject. 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 the net deferred tax assets of approximately $570,000 during 2018, do not meet the requirements to be realized, and as such, the Company has provided a full valuation allowance against them. As of December 31, 2018 and 2017, the Company had refundable (federal and state) income taxes in the accompanying balance sheet, which consisted of refunds of income taxes paid during the first half of 2017, and carry back claims of income taxes in two consecutive prior years. At December 31, 2017, balance of the Company’s refundable income taxes was $629,316. During 2018, the Company received the $128,400 refundable state income taxes. The Company also calculated additional refundable income taxes based on the results of its operations during the year ended December 31, 2018 of $215,000. As such, balance of refundable income taxes at December 31, 2018 was $715,916. Subsequently in March 2019, the Company received the refundable federal income taxes for 2017 of approximately $500,000.

COMMITMENT AND CONTINGENCIES

COMMITMENT AND CONTINGENCIES	12 Months Ended
	Dec. 31, 2018
Commitments and Contingencies Disclosure [Abstract]
COMMITMENT AND CONTINGENCIES	NOTE 11 – COMMITMENT AND CONTINGENCIES Leases The Company entered into a non-cancellable operating lease of a manufacturing facility located in Gardena, CA, which commenced on January 1, 2015 with initial term of 4 years. The base rent of the facility at the commencement date was $29,648 per month, which annually increased by 3%. In March 2019, the lease was amended to extend the lease term for another 4 years through February 2023 (“extension agreement”). The base rent of the extension agreement lease will be $31,652 in the first year, $34,457 the second, $35,835 the third, and 37,261 in the fourth year. The extension agreement is a “Net Lease” requiring the Company to pay real property taxes associated to this facility. On July 20, 2017, the Company entered into a three-month lease agreement of a warehouse facility located in Gardena, CA with a monthly rent of $10,200. The agreement renews on a month-to-month basis and may be terminated upon providing 30-day written notice. Commencing in October 2017, the Company is under a month-to-month lease term under this lease agreement. The Company entered into a non-cancellable operating lease of a manufacturing facility located in 400 W. Gardena Blvd., Gardena, CA commencing July 1, 2018 and ending on September 30, 2023. Possession of the property was delayed to August 21, 2018 due to the landlord requiring more time to vacate the property. The base rent of the facility at the commencement date is $22,838 per month, which annually increases by 3%. Rent expense for the years ended December 31, 2018 and 2017 was $388,766 and $377,443, respectively. The future minimum annual rental payments required under the non-cancelable operating leases described above as of January 1, 2019 are as follows: Years ending December 31, 2019 $ 657,314 2020 699,291 2021 724,405 2022 750,354 2023 254,457 Total $ 3,085,821 Legal Proceedings 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.

ORGANIZATION AND SUMMARY OF S_2

ORGANIZATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Policies)	12 Months Ended
	Dec. 31, 2018
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.
Estimates	Estimates The preparation of financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenue and expenses during the reporting period. Material estimates relate to the assumptions made in determining reserves for uncollectible receivables, inventory reserves and returns, impairment analysis of long term assets and deferred tax assets, income tax accruals, accruals for potential liabilities and assumptions made in valuing the fair market value of equity transactions. Actual results may differ from those estimates.
Revenue	Revenue During 2017, the Company recognized revenue from the sale of completed production units and parts when there is persuasive evidence that an arrangement exists, delivery of the product has occurred and title has passed, the selling price is both fixed and determinable, and collectability is reasonably assured, all of which occurs upon shipment of our product or delivery of the product to the destination specified by the customer. Once a product is delivered, the Company does not have a post-delivery obligation to provide additional services to the customer . On January 1, 2018, the Company adopted ASU 2014-09, Revenue from Contracts with Customers (Topic 606), (ASC 606). The underlying principle of ASC 606 is to recognize revenue to depict the transfer of goods or services to customers at the amount expected to be collected. ASC 606 creates a five-step model that requires entities to exercise judgment when considering the terms of contract(s), which includes (1) identifying the contract(s) or agreement(s) with a customer, (2) identifying the Company’s performance obligations in the contract or agreement, (3) determining the transaction price, (4) allocating the transaction price to the separate performance obligations, and (5) recognizing revenue as each performance obligation is satisfied. Under ASC 606, 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 the Company’s 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 implementation of ASC 606 had no impact on the Company’s financial statements and no cumulative effect adjustment was recognized. Disaggregation of Net Sales The following table shows the Company’s disaggregated net sales by product type: Years End December 31, 2018 2017 DC power systems $ 22,528,268 $ 13,798,841 Accessories 1,518,086 619,885 Total net sales $ 24,046,354 $ 14,418,726 The following table shows the Company’s disaggregated net sales by customer type: Years End December 31, 2018 2017 Telecom $ 21,552,950 $ 12,714,164 Government/Military 1,477,121 1,244,267 Marine 177,909 278,254 Other (backup DC power to various industries ) 838,374 182,041 Total net sales $ 24,046,354 $ 14,418,726
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 as of December 31, 2018 and 2017.
Inventories	Inventories Inventories consist of raw materials and finished goods and are stated at the lower of cost or market. Cost is determined principally on a first-in-first-out average cost basis. Inventory quantities on hand are reviewed regularly and write-downs for obsolete inventory is recorded based on an estimated forecast of the inventory item demand in the near future. As of December 31, 2018 and 2017, the Company has established inventory reserves of $330,000 and $330,000, respectively, for obsolete and slow-moving inventory. As of December 31, 2018 and 2017, the components of inventories were as follows: Years End December 31, 2018 2017 Raw materials $ 6,060,448 $ 2,716,392 Finished goods 2,741,321 3,100,661 8,801,769 5,817,053 Less: Inventory reserve (330,000 ) (330,000 ) Total Inventories, net $ 8,471,769 $ 5,487,053
Product Warranties	Product Warranties The Company provides limited warranties for parts and labor at no cost to its customers within a specified time period after the sale. The warranty terms are typically from one to five years. Provisions for estimated expenses related to product warranties are made at the time products are sold. These estimates are established using historical information about the nature, frequency and average cost of warranty claim settlements as well as product manufacturing and recovery from suppliers. Management actively studies trends of warranty claims and takes action to improve product quality and minimize warranty costs. The Company estimates the actual historical warranty claims coupled with an analysis of unfulfilled claims to record a liability for specific warranty purposes. The Company’s product warranty obligations are included in other accrued liabilities in the balance sheets. As of December 31, 2018 and 2017, the Company had accrued a liability for warranty reserve of $175,000 and $175,000, respectively. Management believes that the warranty accrual is appropriate; however, actual claims incurred could differ from original estimates, requiring adjustments to the accrual. The product warranty accrual is included in current liabilities in the accompanying balance sheets. The following is a tabular reconciliation of the product warranty liability, excluding the deferred revenue related to the Company’s warranty coverage: Years End December 31, Changes in estimates for warranties 2018 2017 Balance at beginning of the period $ 175,000 $ 175,000 Payments (244,454 ) (364,163 ) Provision for warranties 244,454 364,163 Balance at end of the period $ 175,000 $ 175,000
Property and Equipment	Property and Equipment Property and equipment are stated at historical cost less accumulated depreciation and amortization. Depreciation and amortization of property and equipment is computed using the straight-line method over the estimated useful life. Maintenance and repairs that do not improve or extend the useful life of the respective assets are expensed. 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, 2018 or December 31, 2017.
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.
Financial Assets and Liabilities Measured at Fair Value	Financial Assets and Liabilities Measured at Fair Value The Company uses various inputs in determining the fair value of its investments and measures these assets on a recurring basis. Financial assets recorded at fair value in the balance sheets are categorized by the level of objectivity associated with the inputs used to measure their fair value. Authoritative guidance provided by the Financial Accounting Standards Board (“FASB”) defines the following levels directly related to the amount of subjectivity associated with the inputs to fair valuation of these financial assets: Level 1 Quoted prices in active markets for identical assets or liabilities. Level 2 Inputs, other than the quoted prices in active markets, that is observable either directly or indirectly. Level 3 Unobservable inputs based on the Company’s assumptions. The carrying amounts of financial assets and liabilities, such as cash and cash equivalents, accounts receivable and accounts payable, approximate their fair values because of the short maturity of these instruments. The carrying values of the line of credit, notes payable approximate their fair values due to the fact that the interest rates on these obligations are based on prevailing market interest rates.
Segments	Segments The Company operates in one segment for the manufacture and distribution of its products. In accordance with the “Segment Reporting” Topic of the ASC, the Company’s chief operating decision maker has been identified as the Chief Executive Officer and President, who reviews operating results to make decisions about allocating resources and assessing performance for the entire Company. Existing guidance, which is based on a management approach to segment reporting, establishes requirements to report selected segment information quarterly and to report annually entity-wide disclosures about products and services, major customers, and the countries in which the entity holds material assets and reports revenue. All material operating units qualify for aggregation under “Segment Reporting” due to their similar customer base and similarities in: economic characteristics; nature of products and services; and procurement, manufacturing and distribution processes. Since the Company operates in one segment, all financial information required by “Segment Reporting” can be found in the accompanying financial statements.
Concentrations	Concentrations Cash. Cash denominated in Australian Dollar with a U.S. Dollar equivalent of $152,254 and $20,000 at December 31, 2018 and 2017, 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 $9,368 and nil at December 31, 2018 and 2017, respectively, was held in an account at a financial institution located in Romania. Revenues Accounts receivable Accounts payable
Net Income (Loss) Per Share	Net Income (Loss) Per Share Basic net income (loss) per share is computed by dividing net income (loss) by the weighted average number of common shares outstanding for the period. Diluted earnings per share is computed by dividing the net income applicable to common stock holders by the weighted average number of common shares outstanding plus the number of additional common shares that would have been outstanding if all dilutive potential common shares had been issued using the treasury stock method. Potential common shares are excluded from the computation when their effect is antidilutive. The dilutive effect of potentially dilutive securities is reflected in diluted net income per share if the exercise prices were lower than the average fair market value of common shares during the reporting period. The following potentially dilutive shares were excluded from the shares used to calculate diluted earnings per share as their inclusion would be anti-dilutive: December 31, 2018 2017 Options 360,000 30,000 Warrants 115,000 115,000 Total 475,000 145,000
Recent Accounting Pronouncements	Recent Accounting Pronouncements In February 2016, the FASB issued Accounting Standards Update (ASU) No. 2016-02, Leases Other recent accounting pronouncements issued by the FASB, including its Emerging Issues Task Force, the American Institute of Certified Public Accountants, and the SEC did not or are not believed by management to have a material impact on the Company’s present or future consolidated financial statements.

ORGANIZATION AND SUMMARY OF S_3

ORGANIZATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Tables)	12 Months Ended
	Dec. 31, 2018
Organization, Consolidation and Presentation of Financial Statements [Abstract]
Disaggregation of Net Sales	Disaggregation of Net Sales The following table shows the Company’s disaggregated net sales by product type: Years End December 31, 2018 2017 DC power systems $ 22,528,268 $ 13,798,841 Accessories 1,518,086 619,885 Total net sales $ 24,046,354 $ 14,418,726 The following table shows the Company’s disaggregated net sales by customer type: Years End December 31, 2018 2017 Telecom $ 21,552,950 $ 12,714,164 Government/Military 1,477,121 1,244,267 Marine 177,909 278,254 Other (backup DC power to various industries ) 838,374 182,041 Total net sales $ 24,046,354 $ 14,418,726
Schedule of components of inventory	As of December 31, 2018 and 2017, the components of inventories were as follows: Years End December 31, 2018 2017 Raw materials $ 6,060,448 $ 2,716,392 Finished goods 2,741,321 3,100,661 8,801,769 5,817,053 Less: Inventory reserve (330,000 ) (330,000 ) Total Inventories, net $ 8,471,769 $ 5,487,053
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, Changes in estimates for warranties 2018 2017 Balance at beginning of the period $ 175,000 $ 175,000 Payments (244,454 ) (364,163 ) Provision for warranties 244,454 364,163 Balance at end of the period $ 175,000 $ 175,000
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 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, 2018 2017 Options 360,000 30,000 Warrants 115,000 115,000 Total 475,000 145,000

PROPERTY AND EQUIPMENT (Tables)

PROPERTY AND EQUIPMENT (Tables)	12 Months Ended
	Dec. 31, 2018
Property, Plant and Equipment [Abstract]
Schedule of property and equipment	Property and equipment consist of the following: December 31, 2018 December 31, 2017 Production tooling, jigs, fixtures $ 70,749 $ 70,749 Shop equipment and machinery 2,808,928 1,451,423 Vehicles 188,597 122,264 Leasehold improvements 276,901 42,173 Office equipment 134,995 114,454 Software 102,690 97,533 Total property and equipment, cost 3,582,860 1,898,596 Less: accumulated depreciation and amortization (1,460,103 ) (1,074,520 ) Property and equipment, net $ 2,122,757 $ 824,076

NOTES PAYABLE (Tables)

NOTES PAYABLE (Tables)	12 Months Ended
	Dec. 31, 2018
Payables and Accruals [Abstract]
Schedule of notes payable	Notes payable consist of the following: December 31, 2018 December 31, 2017 Total Equipment Notes Payable $ 1,207,927 $ 237,055 Current Portion 283,388 110,237 Notes Payable, Long term $ 924,539 $ 126,818
Schedule of annual future principal payments	Annual future principal payments under the outstanding note agreements as of December 31, 2018 are as follows: Years ending December 31: 2019 292,800 2020 263,193 2021 228,528 2022 234,092 2023 189,314 Total $ 1,207,927

STOCK OPTIONS (Tables)

STOCK OPTIONS (Tables)	12 Months Ended
	Dec. 31, 2018
Stock Options
Schedule of stock option	The following table summarizes stock option activity: Number of Options Weighted Average Exercise Price Outstanding, December 31, 2016 - $ Granted 30,000 4.84 Exercised — — Outstanding, December 31, 2017 30,000 $ 4.84 Granted 330,000 5.32 Exercised — — Outstanding, December 31, 2018 360,000 $ 5.28 Exercisable, December 31, 2018 — —

WARRANTS (Tables)

WARRANTS (Tables)	12 Months Ended
	Dec. 31, 2018
Warrants
Schedule of warrant activity	The following table summarizes warrant activity: Number of Warrants Weighted Average Exercise Price Outstanding, December 31, 2016 115,000 $ 8.75 Issued — — Exercised — — Outstanding, December 31, 2017 115,000 $ 8.75 Issued — — Exercised — — Outstanding and exercisable, December 31, 2018 115,000 $ 8.75

INCOME TAXES (Tables)

INCOME TAXES (Tables)	12 Months Ended
	Dec. 31, 2018
Income Tax Disclosure [Abstract]
Schedule of provision for income taxes	During 2018, the Company had no current tax liabilities, however, the Company was able to recover $215,000 of taxes previously paid from utilization of its net operating loss carry forwards. The Company has no provision for income taxes during the year ended December 31, 2017. Years Ended December 31, 2018 2017 Current Federal $ — $ — State — — Deferred Federal 195,000 — State 20,000 — Income tax benefit $ 215,000 $ —
Schedule of effective income tax rate	The reconciliation of the effective income tax rate to the federal statutory rate is as follows: Years Ended December 31, 2018 2017 Federal income tax rate (21 )% (34 )% State tax, net of federal benefit (8 )% (8 )% Change in accrued liabilities 2 % 9 % Change in valuation allowances 27 % 33 % Effective income tax rate — % — %
Schedule of deferred tax assets and liabilities	Significant components of the Company’s deferred tax assets and liabilities at December 31, 2018 and 2017 are as follows: December 31, 2018 December 31, 2017 Deferred tax assets: Inventory reserves $ 210,283 $ 221,053 Accrued liabilities 120,251 138,160 Net operating loss carryover 326,515 — Deferred tax liability: Accumulated depreciation (86,562 ) (145,935 ) Net deferred tax assets 570,487 213,278 Valuation allowance (570,487 ) (213,278 ) Net deferred tax assets, net of valuation allowances $ — $ —

COMMITMENT AND CONTINGENCIES (T

COMMITMENT AND CONTINGENCIES (Tables)	12 Months Ended
	Dec. 31, 2018
Commitments and Contingencies Disclosure [Abstract]
Schedule of future minimum annual rental payments of operating leases	The future minimum annual rental payments required under the non-cancelable operating leases described above as of January 1, 2019 are as follows: Years ending December 31, 2019 $ 657,314 2020 699,291 2021 724,405 2022 750,354 2023 254,457 Total $ 3,085,821

ORGANIZATION AND SUMMARY OF S_4

ORGANIZATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Details) - USD ($)	12 Months Ended
	Dec. 31, 2018	Dec. 31, 2017
Total net sales	$ 24,046,354	$ 14,418,726
DC power systems [Member]
Total net sales	22,528,268	13,798,841
Accessories [Member]
Total net sales	$ 1,518,086	$ 619,885

ORGANIZATION AND SUMMARY OF S_5

ORGANIZATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Details 1) - USD ($)	12 Months Ended
	Dec. 31, 2018	Dec. 31, 2017
Total net sales	$ 24,046,354	$ 14,418,726
Telecom [Member]
Total net sales	21,552,950	12,714,164
Government/Military [Member]
Total net sales	1,477,121	1,244,267
Marine [Member]
Total net sales	177,909	278,254
Other (backup dc power to various industries) [Member]
Total net sales	$ 838,374	$ 182,041

ORGANIZATION AND SUMMARY OF S_6

ORGANIZATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Details 2) - USD ($)	Dec. 31, 2018	Dec. 31, 2017
Organization, Consolidation and Presentation of Financial Statements [Abstract]
Raw materials	$ 6,060,448	$ 2,716,392
Finished goods	2,741,321	3,100,661
Total Inventories, gross	8,801,769	5,817,053
Less: Inventory reserve	(330,000)	(330,000)
Total Inventories, net	$ 8,471,769	$ 5,487,053

ORGANIZATION AND SUMMARY OF S_7

ORGANIZATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Details 3) - USD ($)	12 Months Ended
	Dec. 31, 2018	Dec. 31, 2017
Movement in Standard Product Warranty Accrual [Roll Forward]
Balance at beginning of the period	$ 175,000	$ 175,000
Payments	(244,454)	(364,163)
Provision for warranties	244,454	364,163
Balance at end of the period	$ 175,000	$ 175,000

ORGANIZATION AND SUMMARY OF S_8

ORGANIZATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Details 4)	12 Months Ended
	Dec. 31, 2018
Production Tooling, Jigs, Fixtures [Member] | Minimum [Member]
Estimated life	3 years
Production Tooling, Jigs, Fixtures [Member] | Maximum [Member]
Estimated life	5 years
Shop Equipment And Machinery [Member]
Estimated life	5 years
Vehicles [Member] | Minimum [Member]
Estimated life	3 years
Vehicles [Member] | Maximum [Member]
Estimated life	5 years
Office Equipment [Member]
Estimated life	5 years
SoftwareMember
Estimated life	5 years

ORGANIZATION AND SUMMARY OF S_9

ORGANIZATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Details 5) - shares	Dec. 31, 2018	Dec. 31, 2017	Dec. 31, 2016
Organization, Consolidation and Presentation of Financial Statements [Abstract]
Options	360,000	30,000
Warrants	115,000	115,000	115,000
Total	475,000	145,000

ORGANIZATION AND SUMMARY OF _10

ORGANIZATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Details Narrative) - USD ($)	12 Months Ended
	Dec. 31, 2018	Dec. 31, 2017	Dec. 31, 2016
Inventory reserves	$ 330,000	$ 330,000
Warranty reserve	$ 175,000	$ 175,000	$ 175,000
Cash equivalents of maturity date	90 days
Largest Vendors One [Member] | Accounts Payable [Member]
Concentration risk	71.00%	75.00%
Largest Vendors Two [Member] | Accounts Payable [Member]
Concentration risk	3.00%	3.00%
Largest Vendors Three [Member] | Accounts Payable [Member]
Concentration risk	3.00%	3.00%
Sales Backlog [Member] | Customer One [Member]
Concentration risk	90.00%	6.00%
Sales Backlog [Member] | Customer Two [Member]
Concentration risk	88.00%	2.00%
Revenue[Member] | Customer One [Member]
Concentration risk	53.00%
Revenue[Member] | Customer Two [Member]
Concentration risk	22.00%	15.00%
Revenue[Member] | Largest Vendors One [Member]
Concentration risk		71.00%
Accounts Receivable [Member] | Customer One [Member]
Concentration risk	45.00%	59.00%
Accounts Receivable [Member] | Customer Two [Member]
Concentration risk	42.00%	30.00%
Minimum [Member]
Warrant term	1 year
Maximum [Member]
Warrant term	5 years
AUSTRALIA
Cash	$ 152,254	$ 20,000
Romania, New Lei
Cash	$ 9,368

RESTRICTED CASH (Details Narrat

RESTRICTED CASH (Details Narrative) - USD ($)	Dec. 31, 2018	Dec. 31, 2017
Receivables [Abstract]
Restricted cash	$ 1,002,683	$ 1,001,180

PROPERTY AND EQUIPMENT (Details

PROPERTY AND EQUIPMENT (Details) - USD ($)	Dec. 31, 2018	Dec. 31, 2017
Total property and equipment, cost	$ 3,582,860	$ 1,898,596
Less: accumulated depreciation and amortization	(1,460,103)	(1,074,520)
Property and equipment, net	2,122,757	824,076
Production Tooling, Jigs, Fixtures [Member]
Total property and equipment, cost	70,749	70,749
Shop Equipment And Machinery [Member]
Total property and equipment, cost	2,808,928	1,451,423
Vehicles [Member]
Total property and equipment, cost	188,597	122,264
Leasehold Improvements [Member]
Total property and equipment, cost	276,901	42,173
Office Equipment [Member]
Total property and equipment, cost	134,995	114,454
Software [Member]
Total property and equipment, cost	$ 102,690	$ 97,533

PROPERTY AND EQUIPMENT (Detai_2

PROPERTY AND EQUIPMENT (Details Narrative) - USD ($)	12 Months Ended
	Dec. 31, 2018	Dec. 31, 2017
Depreciation and amortization expense	$ 385,583	$ 255,631
Cost of Sales [Member]
Depreciation expense	$ 349,750	$ 224,535

NOTES PAYABLE (Details)

NOTES PAYABLE (Details) - USD ($)	Dec. 31, 2018	Dec. 31, 2017
Payables and Accruals [Abstract]
Total Equipment Notes Payable	$ 1,207,927	$ 237,055
Less Current Portion	283,388	110,237
Notes Payable, Long term	$ 924,539	$ 126,818

NOTES PAYABLE (Details 1)

NOTES PAYABLE (Details 1)	Dec. 31, 2018USD ($)
Years ending December 31:
2019	$ 292,800
2020	263,193
2021	228,528
2022	234,092
2023	189,314
Total	$ 1,207,927

NOTES PAYABLE (Details Narrativ

NOTES PAYABLE (Details Narrative) - USD ($)	12 Months Ended
	Dec. 31, 2018	Dec. 31, 2017
Notes payable	$ 924,539	$ 126,818
Equipment purchased	(574,990)	(342,121)
Repayments of notes payable	(138,402)	(111,744)
Equipment [Member] | Several Financing Agreements [Member]
Notes payable	1,207,927	$ 237,055
Debt term		5 years
Interest rate		5.00%
Description of collateral		Secured by the purchased equipment.
Equipment purchased		$ (1,109,275)
Monthly payments of principal and interest	$ 29,000
Frequency of payment	Monthly
Due date	Dec. 31, 2023
Repayments of notes payable	$ (138,000)
Minimum [Member] | Equipment [Member] | Several Financing Agreements [Member]
Debt term		2 years
Interest rate		1.90%
Maximum [Member] | Equipment [Member] | Several Financing Agreements [Member]
Debt term		5 years
Interest rate		6.90%

LINE OF CREDIT (Details Narrati

LINE OF CREDIT (Details Narrative) - Citibank, N.A. [Member] - Revolving Credit Facility [Member] - Credit Agreement [Member] - USD ($)	Mar. 21, 2017	Dec. 31, 2018
Maximum borrowing capacity	$ 1,000,000
Description of expiration	Expire at such time the parties mutually agree to terminate the credit facility or at the election of the lender.
Description of interest rate	Interest accrues on the principal amount of revolving loans outstanding under the credit facility at a rate equal to the greater of (i) the prime rate of interest as published by Citibank, or (ii) the one-month London Interbank Offered Rate plus 2%.
Description of payments	Amounts outstanding from time to time under the credit facility are due and payable monthly in an amount equal to the greater of 2% of the outstanding principal balance or $100, plus accrued interest.
Annual finance charge	$ 2,500
Description of collateral	Certificate of Deposit (restricted cash) account opened by the Company with Citibank in the amount of $1,000,000.
Description covenant terms	i) creating or permitting to exist any liens, security interests or other encumbrances on the Company’s assets, (ii) engaging in any business activities substantially different than those in which the Company is presently engaged, (iii) ceasing operations, liquidating, merging, transferring, acquiring or consolidating with any other entity, changing its name, dissolving or transferring or selling collateral out of the ordinary course of business, or (iv) paying dividends on the Company’s capital stock (other than dividends payable in stock).
Remaining borrowing capacity		$ 1,000,000

STOCKHOLDERS' EQUITY (Details N

STOCKHOLDERS' EQUITY (Details Narrative) - $ / shares	Dec. 31, 2018	Dec. 31, 2017
Stockholders' Equity Note [Abstract]
Common stock, par value (in dollars per share)	$ 0.0001	$ 0.0001
Common stock, authorized	50,000,000	50,000,000
Preferred stock, authorized	5,000,000	5,000,000

STOCK OPTIONS (Details)

STOCK OPTIONS (Details) - $ / shares	1 Months Ended		12 Months Ended
	Apr. 30, 2018	Dec. 31, 2017	Dec. 31, 2018	Dec. 31, 2017
Share-based Compensation Arrangement by Share-based Payment Award, Options, Outstanding [Roll Forward]
Beginning balance			30,000
End balance		30,000	360,000	30,000
Polar Power 2016 Omnibus Incentive Plan [Member]
Share-based Compensation Arrangement by Share-based Payment Award, Options, Outstanding [Roll Forward]
Beginning balance			30,000
Granted	330,000	30,000	330,000	30,000
Exercised
End balance		30,000	360,000	30,000
Exercisable
Share-based Compensation Arrangement by Share-based Payment Award, Options, Outstanding, Weighted Average Exercise Price [Roll Forward]
Beginning balance			$ 4.84
Granted			5.32	4.84
Exercised
End balance		$ 4.84	5.28	$ 4.84
Exercisable

STOCK OPTIONS (Details Narrativ

STOCK OPTIONS (Details Narrative) - USD ($)	1 Months Ended		12 Months Ended
	Apr. 30, 2018	Dec. 31, 2017	Dec. 31, 2018	Dec. 31, 2017	Dec. 31, 2016	Jul. 08, 2016
Total stock-based compensation			$ 327,471
Unamortized compensation cost period			3 years
Polar Power 2016 Omnibus Incentive Plan [Member]
Number of shares authorized						1,754,385
Maximum number of shares available for issuance						350,877
Number of shares granted	330,000	30,000	330,000	30,000
Exercise prices		$ 4.84	$ 5.28	$ 4.84
Expiration period	10 years	10 years
Volatility rate	57.71%	57.71%
Discount rate	2.42%	2.42%
Expected dividend yield	0.00%	0.00%
Expected life	6 years 6 months	6 years
Total fair value of the option grants	$ 948,000	$ 98,000
Unamortized compensation cost			$ 710,000
Polar Power 2016 Omnibus Incentive Plan [Member] | Minimum [Member]
Exercise prices	$ 5.09
Polar Power 2016 Omnibus Incentive Plan [Member] | Maximum [Member]
Exercise prices	$ 5.60

WARRANTS (Details)

WARRANTS (Details) - $ / shares	12 Months Ended
	Dec. 31, 2018	Dec. 31, 2017
Number of Warrants [Roll Forward]
Outstanding at beginning	115,000	115,000
Issued
Exercised
Outstanding at end	115,000	115,000
Weighted Average Exercise Price [Roll Forward]
Outstanding at beginning	$ 8.75	$ 8.75
Issued
Exercised
Outstanding at end	$ 8.75	$ 8.75

DISTRIBUTION AGREEMENT WITH A_2

DISTRIBUTION AGREEMENT WITH A RELATED ENTITY (Details Narrative) - USD ($)	12 Months Ended
	Dec. 31, 2018	Dec. 31, 2017
Smartgen Solutions, Inc. ("Smartgen") [Member] | Subcontractor Installer Agreement [Member]
Due to related party	$ 174,290	$ 186,392

INCOME TAXES (Details)

INCOME TAXES (Details) - USD ($)	12 Months Ended
	Dec. 31, 2018	Dec. 31, 2017
Current
Federal
State
Deferred
Federal	195,000
State	20,000
Income tax benefit	$ 215,000

INCOME TAXES (Details 1)

INCOME TAXES (Details 1)	12 Months Ended
	Dec. 31, 2018	Dec. 31, 2017
Income Tax Disclosure [Abstract]
Federal income tax rate	(21.00%)	(34.00%)
State tax, net of federal benefit	(8.00%)	(8.00%)
Change in accrued liabilities	2.00%	9.00%
Change in valuation allowances	27.00%	33.00%
Effective income tax rate

INCOME TAXES (Details 2)

INCOME TAXES (Details 2) - USD ($)	Dec. 31, 2018	Dec. 31, 2017
Deferred tax assets:
Inventory reserves	$ 210,283	$ 221,053
Accrued liabilities	120,251	138,160
Net operating loss carryover	326,515
Deferred tax liability
Accumulated depreciation	(86,562)	(145,935)
Net deferred tax assets	570,487	213,278
Valuation allowance	(570,487)	(213,278)
Net deferred tax assets, net of valuation allowances

INCOME TAXES (Details Narrative

INCOME TAXES (Details Narrative) - USD ($)	1 Months Ended	12 Months Ended
	Mar. 31, 2019	Dec. 31, 2018	Dec. 31, 2017
Income Tax Disclosure [Abstract]
Deferred tax assets		$ 570,487	$ 213,278
Refundable income taxes		715,916	$ 629,316
Refundable income taxes	$ 500,000	128,400
Additional refundable income taxes		215,000
Recover of income tax		$ 215,000

COMMITMENT AND CONTINGENCIES (D

COMMITMENT AND CONTINGENCIES (Details)	Dec. 31, 2018USD ($)
Years ending December 31
2019	$ 657,314
2020	699,291
2021	724,405
2022	750,354
2023	254,457
Total	$ 3,085,821

COMMITMENT AND CONTINGENCIES _2

COMMITMENT AND CONTINGENCIES (Details Narrative) - USD ($)	12 Months Ended
	Dec. 31, 2018	Dec. 31, 2017
Rent expense	$ 388,766	$ 377,443
Commitment description	In March 2019, the lease was amended to extend the lease term for another 4 years through February 2023 (“extension agreement”). The base rent of the extension agreement lease will be $31,652 in the first year, $34,457 the second, $35,835 the third, and 37,261 in the fourth year.
Non-Cancellable Operating Lease One[Member] | Manufacturing Facility (Gardena, CA) [Member]
Lease term	4 years
Lease expiration date	Sep. 30, 2023
Monthly base rent	$ 22,838
Percentage of annula increase in base rent	3.00%
Non-Cancellable Operating Lease [Member] | Manufacturing Facility (Gardena, CA) [Member]
Monthly base rent	$ 29,648
Percentage of annula increase in base rent	3.00%
Non-Cancellable Operating Lease [Member] | Warehouse Facility (Gardena, CA) [Member]
Monthly base rent	$ 10,200