Polar Power(POLA) - 2024 Q2 - Quarterly Report

Financial Performance - Net sales for the three months ended June 30, 2024, were $4,660,000, a decrease of 16.6% compared to $5,587,000 for the same period in 2023[6] - The company reported a net income of $501,000 for the three months ended June 30, 2024, compared to a net loss of $436,000 for the same period in 2023[6] - For the six months ended June 30, 2024, total net sales were $6,434, down 34.0% from $9,777 in the same period of 2023[23] - The net loss for the six months ended June 30, 2024, was $1,641, compared to a net loss of $1,549 for the same period in 2023[14] Gross Profit and Expenses - Gross profit for the three months ended June 30, 2024, was $1,832,000, representing a gross margin of 39.2%, compared to $1,475,000 and a gross margin of 26.4% for the same period in 2023[6] - Operating expenses for the three months ended June 30, 2024, were $1,372,000, a decrease from $1,785,000 for the same period in 2023[6] - The company recorded a depreciation and amortization expense of $121 for the three months ended June 30, 2024, compared to $226 in the same period of 2023[11] - Depreciation and amortization expense for the six months ended June 30, 2024, was $121, compared to $226 for the same period in 2023, indicating a decrease of approximately 46.5%[42] Assets and Liabilities - Total current assets decreased to $19,592,000 as of June 30, 2024, down from $21,989,000 as of December 31, 2023[5] - Total liabilities decreased to $10,632,000 as of June 30, 2024, compared to $12,070,000 as of December 31, 2023[5] - The company had cash and cash equivalents of $1,119,000 as of June 30, 2024, compared to $549,000 as of December 31, 2023[5] - As of June 30, 2024, total inventories decreased to $15,776 from $16,522 as of December 31, 2023, representing a decline of approximately 4.5%[27] - The total property and equipment net value decreased to $241 as of June 30, 2024, from $344 as of December 31, 2023, reflecting a decline of approximately 30%[41] Cash Flow and Working Capital - The company’s cash flows from operating activities provided $190 for the three months ended June 30, 2024, compared to cash used of $2,804 in the same period of 2023[11] - The company had a working capital of $10,153 as of June 30, 2024[15] - Cash and cash equivalents at the end of the period were $1,119, an increase from $292 at the end of June 30, 2023[15] Customer and Sales Information - For the three months ended June 30, 2024, sales to telecommunications customers accounted for 95% of total revenues, down from 97% in the same period of 2023[33] - The company's three largest customers generated 40%, 27%, and 22% of total revenues for the three months ended June 30, 2024, compared to 49% and 26% from the two largest customers in the same period of 2023[33] - International sales for the three months ended June 30, 2024, totaled $1,170, down from $1,641 in the same period of 2023[26] Concerns and Future Outlook - The company expressed substantial doubt about its ability to continue as a going concern due to ongoing net losses and reliance on revenue generation[14] - The company anticipates continued growth in demand for its products despite ongoing economic uncertainties[4] Credit and Loans - The outstanding balance under the line of credit increased to $4,683 as of June 30, 2024, from $4,238 at December 31, 2023, representing an increase of approximately 10.5%[47] - The company has a revolving credit facility with a limit of $7,500, with $643 available under the line of credit as of June 30, 2024[46] - The company’s Chief Executive Officer extended loans to the company totaling $260, with an outstanding balance of $258 as of June 30, 2024[43] Employee and Lease Information - The company recognized operating lease right-of-use assets and related liabilities of approximately $3,578 upon the commencement of new lease terms in 2023[53] - The total operating lease liabilities as of June 30, 2024, amounted to $2,453, compared to $2,244 as of June 30, 2023[55] - For the six months ended June 30, 2024, the operating lease cost was $597, compared to $499 for the same period in 2023, reflecting an increase of approximately 19.7%[54] - Rent expense for the six months ended June 30, 2024, was $799, compared to $649 for the same period in 2023, indicating an increase of approximately 23.1%[54] Employee Retention Credits - The company reported an increase in employee retention credit of $2,000 for the three months ended June 30, 2024[11] - The company qualified for approximately $2,000 of employee retention credits (ERC) during the year ended December 31, 2021, which was presented as ERC receivable in the balance sheets[57] - The company received $2,000 of the ERC receivable in May 2024[57] Stock Options and Warrants - As of June 30, 2024, the company had 140,000 outstanding stock options with an exercise price of $5.22, all of which are fully vested[50] - The company exchanged warrants for 12,062 shares of common stock on November 9, 2023, resulting in no outstanding warrants as of December 31, 2023[52] Lease Agreements - The company has two operating lease agreements with an aggregate commitment of $3,896, with monthly payments increasing from $89 in year one to $125 in year three[53] - The weighted average remaining lease term for operating leases is 1.9 years, with an average discount rate of 6.13%[54]