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The Company is not aware of any material proceedings in which any of its directors, officers or affiliates or any registered or beneficial shareholder of more than % of the Company’s common stock is an adverse party or has a material interest adverse to the Company’s interest.

ITEM 2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS.

The following discussion and analysis of our financial condition and results of operations should be read in conjunction with the accompanying unaudited consolidated interim financial statements and related notes included elsewhere in this Quarterly Report on Form 10-Q and with our Annual Report on Form 10-K for the year ended December 31, 2023, which was filed with the Securities and Exchange Commission on July 26, 2024.

Unless the context requires otherwise, references in this Quarterly Report on Form 10-Q to the “Company,” “Pioneer,” “we,” “our” and “us” refer to Pioneer Power Solutions, Inc. and its subsidiaries.

U.S. dollars are reported in thousands except for share and per share amounts.

Special Note Regarding Forward-Looking Statements

This Quarterly Report on Form 10-Q contains “forward-looking statements,” which include information relating to future events, future financial performance, financial projections, strategies, expectations, competitive environment and regulation. Words such as “may,” “should,” “could,” “would,” “predicts,” “potential,” “continue,” “expects,” “anticipates,” “future,” “intends,” “plans,” “believes,” “estimates,” and similar expressions, as well as statements in future tense, identify forward-looking statements. Forward-looking statements should not be read as a guarantee of future performance or results and may not be accurate indications of when such performance or results will be achieved. Forward-looking statements are based on information we have when those statements are made or management’s good faith belief as of that time with respect to future events, and are subject to risks and uncertainties that could cause actual performance or results to differ materially from those expressed in or suggested by the forward-looking statements. Important factors that could cause such differences include, but are not limited to:

The foregoing does not represent an exhaustive list of matters that may be covered by the forward-looking statements contained herein or risk factors that we are faced with that may cause our actual results to differ from those anticipated in our forward-looking statements. Moreover, new risks regularly emerge, and it is not possible for us to predict or articulate all risks we face, nor can we assess the impact of all risks on our business or the extent to which any risk, or combination of risks, may cause actual results to differ from those contained in any forward-looking statements. Except to the extent required by applicable laws or rules, we undertake no obligation to publicly update or revise any forward-looking statement, whether as a result of new information, future events or otherwise. You should review carefully the risks and uncertainties described under the heading “Part II - Item 1A. Risk Factors” in this Quarterly Report on Form 10-Q and “Part I - Item 1A. Risk Factors” in our Annual Report on Form 10-K for the year ended December 31, 2023, for a discussion of the foregoing and other risks that relate to our business and investing in shares of our common stock.

Business Overview

We design, manufacture, integrate, refurbish, service, distribute and sell electric power systems, distributed energy resources, power generation equipment and mobile electric vehicle (“EV”) charging solutions. Our products and services are sold to a broad range of customers in the utility, industrial and commercial markets. Our customers include, but are not limited to, electric, gas and water utilities, data center developers and owners, EV charging infrastructure developers and owners, and distributed energy developers. We are headquartered in Fort Lee, New Jersey and operate from three (3) additional locations in the United States for manufacturing, service and maintenance, engineering, and sales and administration.

Description of Business Segments

We have two reportable segments: Electrical Infrastructure Equipment (“Electrical Infrastructure”) and Critical Power Solutions (“Critical Power”).

Critical Accounting Estimates

Our consolidated financial statements have been prepared in accordance with U.S. GAAP. The preparation of our consolidated financial statements requires us to make estimates and assumptions that affect the amounts and disclosures in the consolidated financial statements. Our estimates are based on our historical experience, knowledge of current events and actions we may undertake in the future, and on various other factors that we believe are reasonable under the circumstances. Our critical accounting policies and estimates are described in “Management’s Discussion and Analysis of Financial Condition and Results of Operations - Critical Accounting Policies” in our Annual Report on Form 10-K filed with the Securities and Exchange Commission (the “SEC”) on July 26, 2024. There were no material changes to our accounting policies during the six months ended June 30, 2024.

RESULTS OF OPERATIONS

Overview of the Three and Six Months Results

Selected financial and operating data for our reportable business segments for the most recent reporting period is summarized below. This information, as well as the selected financial data provided in “Note 9 - Business Segment and Geographic Information” and in our unaudited Consolidated Financial Statements and related notes included in this Quarterly Report on Form 10-Q, should be referred to when reading our discussion and analysis of results of operations below.

Our summary of operating results during the three and six months ended June 30, 2024, and 2023 are as follows:

Backlog

Our backlog is based on firm orders from our customers expected to be delivered in the future, most of which is expected to occur during the next twelve months. Backlog may vary significantly from reporting period to reporting period due to the timing of customer commitments. Backlog reflects the amount of revenue we expect to realize upon the shipment of customer orders for our products that are not yet complete or for which work has not yet begun. As of June 30, 2024, backlog from our E-Bloc power systems and related equipment was approximately $12,523, or 19% of the total backlog.

The following table represents the progression of our backlog, by reporting segment, as of the end of the last five quarters:

Revenue

The following table represents our revenues by reporting segment and major product category for the periods indicated (in thousands, except percentages):

For the three months ended June 30, 2024, our consolidated revenue decreased by $5,942, or 48.4%, to $6,340, down from $12,282 during the three months ended June 30, 2023, primarily due to a decrease in sales of equipment from our Electrical Infrastructure segment during the three months ended June 30, 2024.

For the six months ended June 30, 2024, our consolidated revenue decreased by $6,908 or 31.6%, to $14,930, down from $21,838 during the six months ended June 30, 2023, primarily due to a decrease in sales of equipment from our Electrical Infrastructure segment during the six months ended June 30, 2024.

Electrical Infrastructure. During the three months ended June 30, 2024, revenue from our equipment sales decreased by $6,431, or 68.6%, to $2,945, down from $9,376 during the three months ended June 30, 2023, primarily due to a decrease in shipments and revenue recognized over time from our equipment sales during the three months ended June 30, 2024.

During the six months ended June 30, 2024, revenue from our equipment sales decreased by $7,965, or 49.2%, to $8,220, down from $16,185 during the six months ended June 30, 2023, primarily due to a decrease in revenue recognized over time from our equipment sales during the six months ended June 30, 2024.

Critical Power Solutions. For the three months ended June 30, 2024, revenue for our Critical Power segment increased by $489, or 16.8%, to $3,395, up from $2,906 during the three months ended June 30, 2023, primarily due to an increase in service sales during the three months ended June 30, 2024.

For the six months ended June 30, 2024, revenue for our Critical Power segment increased by $1,057, or 18.7%, to $6,710, up from $5,653 during the six months ended June 30, 2023, primarily due to an increase in sales of our e-Boost equipment from our Pioneer eMobility business in addition to an increase in service sales during the six months ended June 30, 2024.

Gross Profit and Margin

The following table represents our gross profit by reporting segment for the periods indicated (in thousands, except percentages):

For the three months ended June 30, 2024, our consolidated gross margin decreased to 10.3% of revenues, as compared to 31.6% during the three months ended June 30, 2023.

For the six months ended June 30, 2024, our consolidated gross margin decreased to 15.9% of revenues, as compared to 30.7% during the six months ended June 30, 2023.

Electrical Infrastructure. For the three months ended June 30, 2024, our gross margin percentage decreased by 35.8%, from 36.2% to 0.4%, as compared to the three months ended June 30, 2023. The decrease was primarily due to the decrease in sales of our power systems and switchgear equipment.

For the six months ended June 30, 2024, our gross margin percentage decreased by 19.5%, from 34.2% to 14.7%, as compared to the six months ended June 30, 2023. The decrease was primarily due to the decrease in sales of our E-Bloc power systems and medium and low voltage switchgear equipment.

Critical Power Solutions. For the three months ended June 30, 2024, our gross margin increased by 2.2%, from 16.7% to 18.9%, for the three months ended June 30, 2023. The increase was predominately due to the increase in sales of our equipment and service.

For the six months ended June 30, 2024, our gross margin decreased by 3.3%, from 20.8% to 17.5%, for the six months ended June 30, 2023. The decrease was primarily due to an unfavorable sales mix.

Operating Expenses

The following table represents our operating expenses by reportable segment for the periods indicated (in thousands, except percentages):

Selling, General and Administrative Expense. For the three months ended June 30, 2024, consolidated selling, general and administrative expense, before depreciation and amortization, decreased by approximately $370, or 12.1%, to $2,689, as compared to $3,059 during the three months ended June 30, 2023, primarily due to a decrease in stock-based compensation expense. As a percentage of our consolidated revenue, selling, general and administrative expense, before depreciation and amortization, increased to 42.4% during the three months ended June 30, 2024, as compared to 24.9% in the three months ended June 30, 2023.

For the six months ended June 30, 2024, consolidated selling, general and administrative expense, before depreciation and amortization, increased by approximately $205, or 4.0%, to $5,295, as compared to $5,090 during the six months ended June 30, 2023, primarily due to an increase in travel related costs. As a percentage of our consolidated revenue, selling, general and administrative expense, before depreciation and amortization, increased to 35.5% during the six months ended June 30, 2024, as compared to 23.3% in the six months ended June 30, 2023.

Depreciation and Amortization Expense. Depreciation and amortization expense consists primarily of depreciation of fixed assets and amortization of right-of-use assets related to our finance leases, and excludes amounts included in cost of sales. For the three months ended June 30, 2024, consolidated depreciation and amortization expense decreased by $4, or 13.3%, to $26, as compared to $30 during the three months ended June 30, 2023.

For the six months ended June 30, 2024, consolidated depreciation and amortization expense decreased by $113, or 72.4%, to $43, as compared to $156 during the six months ended June 30, 2023.

(Loss) Income from Operations

The following table represents our operating (loss) income by reportable segment for the periods indicated (in thousands, except percentages):

Electrical Infrastructure. Operating income from our Electrical Infrastructure segment decreased by $3,540 during the three months ended June 30, 2024, as compared to the three months ended June 30, 2023, primarily due to a decrease in sales of our electrical infrastructure equipment and an increase in selling, general and administrative expense.

Operating income from our Electrical Infrastructure segment decreased by $4,783 during the six months ended June 30, 2024, as compared to the six months ended June 30, 2023, primarily due to a decrease in sales of our electrical infrastructure equipment and an increase in selling, general and administrative expense.

Critical Power Solutions. Operating loss from our Critical Power segment increased by $105 during the three months ended June 30, 2024, as compared to the three months ended June 30, 2023, primarily due to an increase research and development costs related to our e-Boost equipment from Pioneer eMobility business and an unfavorable sales mix in the service business.

Operating loss from our Critical Power segment increased by $228 during the six months ended June 30, 2024, as compared to the six months ended June 30, 2023, primarily due to an increase research and development costs related to our e-Boost equipment from Pioneer eMobility business and an unfavorable sales mix in the service business.

General Corporate Expense. Our general corporate expenses consist primarily of executive management, corporate accounting and human resources personnel, corporate office expenses, financing and corporate development activities, payroll and benefits administration, treasury, tax compliance, legal, stock-based compensation, public reporting costs and costs not specifically allocated to reportable business segments.

During the three months ended June 30, 2024, our unallocated corporate overhead expense decreased by $556, or 33.1%, as compared to the three months ended June 30, 2023, primarily due to a decrease in stock-based compensation expense.

During the six months ended June 30, 2024, our unallocated corporate overhead expense decreased by $140, or 5.8%, as compared to the six months ended June 30, 2023, primarily due to a decrease in stock-based compensation expense.

Non-Operating (Income) Expense

Interest Income. For the three and six months ended June 30, 2024, we had interest income of approximately $17 and $48, respectively, as compared to interest income of approximately $79 and $132, respectively, during the three and six months ended June 30, 2023. We generated the majority of our interest income from our cash on hand during the six months ended June 30, 2024, and 2023.

Other Expense (Income). Other expense (income) in the consolidated statements of operations reports certain gains and losses associated with activities not directly related to our core operations.

For the three and six months ended June 30, 2024, other non-operating income was $0 and $40, respectively, as compared to other non-operating expense of $20 and $7, respectively, during the three and six months ended June 30, 2023.

Provision for Income Taxes. Our effective income tax rate for the three and six months ended June 30, 2024, and 2023 was 0.0%.

Net Loss (Income) per Share

We generated a net loss of $2,283 during the three months ended June 30, 2024, as compared to net income of $848 during the three months ended June 30, 2023.

Our net loss per basic and diluted share for the three months ended June 30, 2024, was $0.21, as compared to net income per basic share of $0.09 and net income per diluted share of $0.08 for the three months ended June 30, 2023.

We generated a net loss of $3,318 during the six months ended June 30, 2024, as compared to net income of $1,590 during the six months ended June 30, 2023.

Our net loss per basic and diluted share for the six months ended June 30, 2024, was $0.32, as compared to net income per basic share of $0.16 and net income per diluted share of $0.15 for the six months ended June 30, 2023.

LIQUIDITY AND CAPITAL RESOURCES

General. On October 20, 2020, we entered into an At the Market Sale Agreement with H.C. Wainwright & Co., LLC (“Wainwright”), pursuant to which we may offer and sell our shares of common stock from time to time through Wainwright, acting as sales agent or principal (the “ATM Program”). As of June 30, 2024, the Company had $6,512 of cash on hand generated primarily from the sale of common stock under the ATM Program. Since October 20, 2020, and through June 30, 2024, the Company sold an aggregate of 1,835,616 shares of common stock for aggregate gross proceeds of approximately $14,051, before any sales agent fees and expenses payable by us under the ATM Program. During the six months ended June 30, 2024, the Company sold an aggregate of 919,557 shares of common stock for an aggregate consideration of approximately $5,147, before any sales agent fees and expenses payable by the Company under the ATM Program. As of June 30, 2024, $69,853 of common stock remained available for issuance under the ATM Program.

The continuing impacts of the rising interest rates, inflation, changes in foreign currency exchange rates and geopolitical developments, such as the ongoing conflict between Russia and Ukraine, and the ongoing conflict between Israel and Hamas, have resulted, and may continue to result, in a global slowdown of economic activity, which may decrease demand for a broad variety of goods and services, including those provided by our clients, while also disrupting supply channels, sales channels and advertising and marketing activities for an unknown period of time. As a result of the current uncertainty in economic activity, we are unable to predict the potential size and duration of the impact on our revenue and our results of operations, if any. The extent of the potential impact of these macroeconomic factors on our operational and financial performance will depend on a variety of factors, including the extent of geopolitical disruption and its impact on our clients, partners, industry, and employees, all of which are uncertain at this time and cannot be accurately predicted. We continue to monitor the effects of these macroeconomic factors and intends to take steps deemed appropriate to limit the impact on our business. During the six months ended June 30, 2024, we were able to operate substantially at capacity.

There can be no assurance that precautionary measures, whether adopted by us or imposed by others, will be effective, and such measures could negatively affect our sales, marketing, and client service efforts, delay and lengthen our sales cycles, decrease our employees’, clients’, or partners’ productivity, or create operational or other challenges, any of which could harm our business and results of operations.

Cash (Used in)/ Provided by Operating Activities. Cash used in our operating activities was $1,379 during the six months ended June 30, 2024, as compared to cash provided by operating activities of $366 during the six months ended June 30, 2023. The increase in cash used in operating activities is primarily due to the increase in our net loss and working capital fluctuations.

Cash Used in Investing Activities. Cash used in investing activities during the six months ended June 30, 2024, was $614, as compared to $810 during the six months ended June 30, 2023. Additions to property and equipment during the six months ended June 30, 2024, were $614, as compared to $810 of additions during the six months ended June 30, 2023.

Cash Provided by/ (Used in) Financing Activities. Cash provided by our financing activities was $4,923 during the six months ended June 30, 2024, as compared to cash used in financing activities of $228 during the six months ended June 30, 2023. The increase in cash provided by financing activities is primarily due to the sale of common stock under the ATM Program.

Working Capital. As of June 30, 2024, we had working capital of $11,140, including $6,512 of cash on hand, compared to working capital of $9,421, including $3,582 of cash on hand as of December 31, 2023.

Assessment of Liquidity. As of June 30, 2024, we had $6,512 of cash on hand generated primarily from the sale of common stock under the ATM Program. We have historically met our cash needs through a combination of cash flows from operating activities and bank borrowings, the completion of the sale of the transformer business units in August 2019, sale of common stock under the ATM Program and collecting all unpaid principal and interest from the Seller Notes. Historically, our cash requirements were generally for operating activities, debt repayment, capital improvements and acquisitions.

We expect to meet our cash needs with our working capital and cash flows from operating activities. We expect our cash requirements to be generally for operating activities, capital improvements and product development. We expect that product development and promotional activities related to our new initiatives will continue in the near future and we expect to continue to incur costs related to such activities. We expect that our cash balance is sufficient to fund operations for the next twelve months from the date our unaudited consolidated financial statements are issued.

As of June 30, 2024, we had no off-balance sheet transactions, arrangements, obligations (including contingent obligations), or other relationships with unconsolidated entities or other persons that had, or that may have, a material effect on our financial condition, changes in financial condition, revenues or expenses, results of operations, liquidity, capital expenditures or capital resources.

Capital Expenditures

The Company had $614 of additions to property and equipment during the six months ended June 30, 2024, as compared to $810 of additions to property and equipment during the six months ended June 30, 2023.

Known Trends, Events, Uncertainties and Factors That May Affect Future Operations

We believe that our future operating results will continue to be subject to quarterly variations based upon a wide variety of factors, including the cyclical nature of the electrical equipment industry and the markets for our products and services. Our operating results could also be impacted by changing customer requirements and exposure to fluctuations in prices of important raw supplies, such as copper, steel and aluminum. We have various insurance policies, including cybersecurity, covering risks in amounts that we consider adequate. In addition to these measures, we attempt to recover other cost increases through improvements to our manufacturing efficiency and through increases in prices where competitively feasible. Lastly, other economic conditions we cannot foresee may affect customer demand. In addition, the consequences of the ongoing geopolitical conflicts, such as the ongoing conflict between Russia and Ukraine and the ongoing conflict between Israel and Hamas, including related sanctions and countermeasures, and the effects of rising global inflation, are difficult to predict, and could adversely impact geopolitical and macroeconomic conditions, the global economy, and contribute to increased market volatility, which may in turn adversely affect our business and operations. We predominately sell to customers in the industrial production and commercial construction markets. Accordingly, changes in the condition of any of our customers may have a greater impact than if our sales were more evenly distributed between different end markets. For a further discussion of factors that may affect future operating results see the sections entitled “Special Note Regarding Forward-Looking Statements” in this Quarterly Report on Form 10-Q and “Part I - Item 1A. Risk Factors” in our Annual Report on Form 10-K.

ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

Not applicable.

ITEM 4. CONTROLS AND PROCEDURES

Evaluation of Disclosure Controls and Procedures

Our management, with the participation of our Chief Executive Officer (“CEO”) and Chief Financial Officer (“CFO”), evaluated the effectiveness of our disclosure controls and procedures as defined in Rule 13a-15(e) and 15d-15(e) under the Securities Exchange Act of 1934, as amended (the “Exchange Act”), as of June 30, 2024. Our disclosure controls and procedures are designed to provide reasonable assurance that information we are required to disclose in the reports we file or submit under the Exchange Act is accumulated and communicated to our management, including our CEO and CFO, as appropriate to allow timely decisions regarding required disclosures, and is recorded, processed, summarized, and reported within the time periods specified in the SEC’s rules and forms. Based on this evaluation, and as a result of the material weaknesses described below, our CEO and CFO have concluded that our disclosure controls and procedures were not effective as of June 30, 2024. In light of this determination, our management has performed additional analyses, reconciliations, and other post-closing procedures and has concluded that, notwithstanding the material weakness in our internal control over financial reporting, the unaudited interim condensed consolidated financial statements for the periods covered by and included in this Quarterly Report on Form 10-Q fairly state, in all material respects, our financial position, results of operations and cash flows for the periods presented in conformity with U.S. GAAP.

Material Weaknesses in Internal Control over Financial Reporting

A material weakness, as defined in the standards established by Sarbanes-Oxley, is a deficiency, or a combination of deficiencies, in internal control over financial reporting such that there is a reasonable possibility that a material misstatement of our annual or interim consolidated financial statements will not be prevented or detected on a timely basis.

Internal control over financial reporting is a process designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements in accordance with U.S. GAAP. The following material weaknesses in our internal control over financial reporting were present as of December 31, 2023, and continued to exist as of June 30, 2024:

Management’s Plan to Remediate the Material Weaknesses

The Company is implementing enhancements to its internal controls to remediate the identified material weaknesses in its internal control over financial reporting. Specifically, the Company has:

Additionally, the Company plans to hire additional accounting and finance personnel with the requisite skills, knowledge and expertise to address identified control deficiencies.

The Company is committed to maintaining a strong internal control environment and believes these remediation efforts will represent significant improvements in its controls over the control environment. These steps will take time to be fully implemented and confirmed to be effective and sustainable. Additional controls may also be required over time. While the Company believes that these efforts will improve its internal control over financial reporting, the Company will not be able to conclude whether the steps the Company is taking will remediate the material weaknesses in internal control over financial reporting until a sufficient period of time has passed to allow management to test the design and operational effectiveness of the new and enhanced controls. Until the remediation steps set forth above are fully implemented and tested, the material weaknesses described above will continue to exist.

Changes in Internal Control over Financial Reporting

Other than described above, there have been no changes in our internal control over financial reporting that occurred during the three months ended June 30, 2024, that have materially affected, or that are reasonably likely to materially affect, our internal control over financial reporting.

PART II – OTHER INFORMATION

ITEM 1. LEGAL PROCEEDINGS

From time to time, we may become involved in lawsuits, investigations and claims that arise in the ordinary course of business.

On June 15, 2023, Terrence and Kay Mimick (the “Plaintiffs”) filed a complaint in the U.S. District Court, District of Nebraska naming the Company, its wholly-owned subsidiary, Pioneer Critical Power, Inc., and an individual acting in his capacity as an employee of the Company, collectively as defendants. Plaintiffs filed an amended complaint on July 7, 2023, alleging negligent driving, negligent entrustment, and negligent hiring, training and supervision, as a result of a car accident that occurred on September 9, 2019, and seeking special damages related to the injuries allegedly sustained by Plaintiffs. The amended complaint also named Titan Energy Systems, Inc. as a defendant instead of Pioneer Critical Power, Inc. On July 27, 2023, the defendants filed an Answer to Plaintiff’s Amended Complaint. On October 6, 2023, a mediation was held, but the parties did not reach a settlement. In June 2024, another mediation was held and the parties reached a settlement for all of the Plaintiffs’ claims. The case was dismissed with prejudice on July 23, 2024.

As of the date hereof, we are not aware of or a party to any other legal proceedings to which we or any of our subsidiaries is a party or to which any of our property is subject, nor are we aware of any such threatened or pending litigation or any such proceedings known to be contemplated by governmental authorities that we believe could have a material adverse effect on our business, financial condition or operating results.

We can give no assurance that any other lawsuits or claims brought in the future will not have an adverse effect on our financial condition, liquidity or operating results.

We are not aware of any material proceedings in which any of our directors, officers or affiliates or any registered or beneficial shareholder of more than 5% of our common stock is an adverse party or has a material interest adverse to our interest.

ITEM 1A. RISK FACTORS

A description of the risks associated with our business, financial condition and results of operations is set forth in “Item 1A. Risk Factors” of our annual report on Form 10-K for the fiscal year ended December 31, 2023, as filed with the Securities and Exchange Commission on July 26, 2024, and are supplemented with the following revised risk factors:

We may not meet the continued listing requirements of Nasdaq, which could result in a delisting of our common stock.

As previously disclosed, on April 18, 2024, we received a notice (the “10-K Notice”) from the Listing Qualifications staff of Nasdaq (the “Staff”) notifying us that as we had not yet filed our Annual Report on Form 10-K for the year ended December 31, 2023 (the “Form 10-K”), we no longer complied with Listing Rule 5250(c)(1) for continued listing on Nasdaq (the “Listing Rule”). On May 24, 2024, we received an additional notice from Nasdaq notifying us that as we had not yet filed our Form 10-Q for the quarter ended March 31, 2024 (the “Q1 10-Q”), and because we remained delinquent in filing the Form 10-K, we did not comply with the Listing Rule. On July 26, 2024, we filed the Form 10-K with the SEC and are now in compliance with such filing.

On August 21, 2024, we received a notice from Nasdaq notifying us that as we had not yet filed our Form 10-Q for the quarter ended June 30, 2024 (the “Q2 10-Q”, and together with the Q1 10-Q, the “Delinquent Filings”), we were not in compliance with the Listing Rule. We previously submitted a plan to Nasdaq (the “Plan”) on June 17, 2024, to regain compliance with respect to the Delinquent Filings and Nasdaq granted an exception until September 20, 2024, to file the Delinquent Filings. Pursuant to the notice we received on August 21, 2024, we were required to submit an update to the Plan to Nasdaq by September 5, 2024, to regain compliance. We submitted an update to the Plan to Nasdaq on September 5, 2024, and we filed the Q1 10-Q on September 10, 2024. On September 19, 2024, Nasdaq granted us an additional exception of up to a maximum of 180 calendar days from the prescribed filing due date of the Form 10-K to file the Q2 10-Q, or until October 14, 2024, to regain compliance. In the event we do not satisfy these terms, the Staff will provide written notification that our securities will be delisted. At that time, we may appeal the Staff’s determination to a hearings panel.

Although we expect to take actions intended to restore our compliance with the listing requirements, we can provide no assurance that any action taken by us would be successful.

If our common stock is delisted from the Nasdaq Capital Market, we expect that our common stock would begin trading on the over-the-counter markets. The delisting of our common stock could result in a reduction in our trading price and would substantially limit the liquidity of our common stock. In addition, delisting could materially adversely impact our ability to raise capital or pursue strategic restructuring, refinancing or other transactions. Delisting from the Nasdaq Capital Market could also have other negative results, including the potential loss of confidence by institutional investors.

We currently derive a significant portion of our revenues from two customers. Material or significant loss of business from these customers could have an adverse effect on our business, financial condition and operating results.

We depend on two customers for a large portion of our business, and any change in the level of orders from these customers could have a significant impact on our results of operations. Approximately 10% of our sales during the three months ended June 30, 2024, were made to one customer and approximately 16% of our sales during the six months ended June 30, 2024, were made to another customer. Loss of business from these customers could have an adverse effect on our business, financial condition and operating results. The majority of our sales to these customers were made pursuant to contract terms and conditions for each project.

ITEM 2. UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS

None.

ITEM 3. DEFAULTS UPON SENIOR SECURITIES

None.

ITEM 4. MINE SAFETY DISCLOSURES

Not applicable.

ITEM 5. OTHER INFORMATION

None.

ITEM 6. EXHIBITS

See the Exhibit Index following the signature page to this Quarterly Report on Form 10-Q for a list of exhibits filed or furnished with this report, which Exhibit Index is incorporated herein by reference.

INDEX TO EXHIBITS

* Filed herewith.

** Furnished herewith

SIGNATURES

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

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