UNITED
STATES
SECURITIES
AND EXCHANGE COMMISSION
WASHINGTON,
D.C. 20549
FORM
10-K
(Mark
One)
☒ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For
the fiscal year ended: December 31, 2025
or
☐TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For
the transition period from to
Commission
file number: 001-35212
PIONEER
POWER SOLUTIONS, INC.
(Exact
name of registrant as specified in its charter)
400
Kelby Street, 12th Floor
Fort
Lee, New Jersey07024
(Address
of principal executive offices) (Zip code)
Registrant’s
telephone number, including area code: (212)867-0700
Securities
registered pursuant to Section 12(b) of the Act:
Title of each class Trading symbol(s) Name of each exchange on which registered
Common Stock, par value $0.001 per share PPSI Nasdaq Capital Market
Securities
registered pursuant to Section 12(g) of the Act: None
Indicate
by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act. Yes ☐ No ☒
Indicate
by check mark if the registrant is not required to file reports pursuant to Section 13 or Section 15(d) of the Act. Yes ☐ No ☒
Indicate
by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange
Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2)
has been subject to such filing requirements for the past 90 days. Yes ☒ No ☐
Indicate
by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule
405 of Regulation S-T during the preceding 12 months (or for such shorter period that the registrant was required to submit such files).
Yes ☒ No ☐
Indicate
by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting
company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,”
“smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.
Large accelerated filer ☐ Accelerated filer ☐
Non-accelerated filer ☒ Smaller reporting company ☒
Emerging growth company ☐
If
an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying
with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐
Indicate
by check mark whether the registrant has filed a report on and attestation to its management’s assessment of the effectiveness
of its internal control over financial reporting under Section 404(b) of the Sarbanes-Oxley Act (15 U.S.C. 7262(b)) by the registered
public accounting firm that prepared or issued its audit report. ☐
If
securities are registered pursuant to Section 12(b) of the Act, indicate by check mark whether the financial statements of the registrant
included in the filing reflect the correction of an error to previously issued financial statements. ☐
Indicate
by check mark whether any of those error corrections are restatements that required a recovery analysis of incentive-based compensation
received by any of the registrant’s executive officers during the relevant recovery period pursuant to §240.10D-1(b). ☐
Indicate
by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Act). Yes ☐ No ☒
As
of June 30, 2025, the last business day of the registrant’s most recently completed second fiscal quarter, the aggregate market
value of the voting and non-voting common equity held by non-affiliates of the registrant based on the price at which the common equity
was last sold on the Nasdaq Capital Market on such date, was approximately $23,678 (in thousands). For purposes of this computation only,
all officers, directors and 10% or greater stockholders of the registrant are deemed to be affiliates.
As
of April 7, 2026, 11,096,266 shares of the
registrant’s common stock were outstanding.
PIONEER
POWER SOLUTIONS, INC.
Form
10-K
For
the Fiscal Year Ended December 31, 2025
TABLE
OF CONTENTS
Page
Special Note Regarding Forward-Looking Statements 1
PART I
Item 1. Business 2
Item 1A. Risk Factors 6
Item 1B. Unresolved Staff Comments 16
Item 1C. Cybersecurity 16
Item 2. Properties 17
Item 3. Legal Proceedings 17
Item 4. Mine Safety Disclosures 17
PART II
Item 6. [Reserved] 18
Item 7A. Quantitative and Qualitative Disclosures About Market Risk 24
Item 8. Consolidated Financial Statements and Supplementary Data 25
Item 9A. Controls and Procedures 55
Item 9B. Other Information 56
Item 9C. Disclosure Regarding Foreign Jurisdictions that Prevent Inspections 56
PART III
Item 10. Directors, Executive Officers and Corporate Governance 57
Item 11. Executive Compensation 61
Item 14. Principal Accountant Fees and Services 68
PART IV
Item 15. Exhibits and Financial Statement Schedules 69
SPECIAL
NOTE REGARDING FORWARD-LOOKING STATEMENTS
This
Annual Report on Form 10-K 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:
● Our ability to realize revenue reported in our backlog.
● The liquidity and trading volume of our common stock.
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 “Item 1A. Risk Factors” in this Annual Report on
Form 10-K for a discussion of the foregoing and other risks that relate to our business and investing in shares of our common stock.
PART
I
ITEM
1. BUSINESS.
Overview
Pioneer
Power Solutions, Inc. and its wholly owned subsidiary (referred to herein as the “Company,” “Pioneer,” “Pioneer
Power,” “we,” “our” and “us”) design, manufacture, integrate, service, and sell distributed
energy resources, on site and mobile power generation equipment and a platform of 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, Federal and State government entities, package delivery businesses, school bus fleet operators, EV charging
infrastructure developers and owners, and distributed energy developers. We are headquartered in Fort Lee, New Jersey and operate from
two (2) additional locations in the United States for manufacturing, service and maintenance, engineering, and sales and administration.
U.S.
dollars are reported in thousands, except for share and per share amounts (unless otherwise noted).
Description
of Business Segment
In
October 2024, we sold our Pioneer Custom Electrical Products Corp. (“PCEP”) business unit to a buyer (the “PCEP Sale”)
as a result of a strategic change to the operations of our business.
Following
the PCEP Sale, we currently have one reportable segment - Critical Power Solutions (“Critical Power”).
Our
Critical Power business designs, manufactures and sells mobile EV charging solutions under our e-Boost suite of products, in addition
to distributing new power generation equipment, refurbishing and reselling used power generation equipment, and performing service and
maintenance on our customers’ existing equipment. Many of these systems are used to maintain reliable, primary, peak shaving or
emergency standby power at facilities where it is required or where the potential consequences of a power outage make it necessary, such
as at major national retailers, hospitals, data centers, communications facilities, factories, military sites, office complexes and other
critical operations.
In
December of 2025, the Company launched two new product platforms:
Summary
of Critical Power Segment Product Offerings
Product Category Solutions
● Uninterruptible Power Supply (“UPS”) systems.
● UPS systems from major manufacturers.
Power
generation systems represent considerable investments that require proper maintenance and service in order to operate reliably during
a time of emergency. Our power maintenance programs provide preventative maintenance, repair and support service for our customers’
power generation systems. To support our customers in managing their critical infrastructure, we maintain inventories of repair parts,
a fleet of service vehicles and a staff of certified field service technicians in the Midwest and Florida. To complete our geographic
coverage, we maintain a network of field service partners located in other regions, enabling us to provide quick-response, 24/7 service
capabilities that can effectively repair and maintain any make and model of back-up power equipment. Our field service organization services
more than 5,900 generators owned by more than 850 customers located throughout the United States and its territories, including for multi-site,
multi-state customers.
We
recognize discrete revenue streams from service contracts, sales, installation, maintenance and repair services, and we offer service
contracts to all owners of power generation and related equipment, whether or not the equipment was originally sold by us. Our service
agreements have terms ranging from one to five years in duration, providing the Company with a recurring revenue stream.
Business
Strategy
We
believe we have established a stable platform from which to develop and grow our business lines, revenue, profitability and shareholder
value. We are focused on internal growth through operating efficiencies, new product development, customer focus and broadening and deepening
our market penetration.
We
intend to build our revenue and net income through internal growth initiatives. Accomplishing these financial goals will be dependent
on a number of factors, including our ability to execute the following strategies and actions:
Within
our Critical Power business, we are actively marketing our preventive maintenance services to new national accounts including: major
national retailers, telecommunications companies, data centers, banks, hospitals and health care facilities, educational institutions
and property management companies. Since November 2021, we have been aggressively marketing our e-Boost mobile EV charging products to
electric bus and truck manufacturers, fleet management companies, municipalities and EV infrastructure providers.
Our
Industry
The
market for Electrical Infrastructure equipment and Critical Power solutions is very fragmented due to the range of equipment types, electrical
and mechanical properties, technological standards and service parameters required by different categories of end users for their specific
applications. Many orders are custom-engineered and tend to be time-sensitive since other critical work is frequently being coordinated
around the customer’s electrical equipment installation. The vast majority of North American demand for the types of solutions
we provide is satisfied by thousands of producers and service companies in the United States.
We
believe that several of the key industry trends supporting future growth in our industry are as follows:
Customers
A
substantial portion of the products and services we offer are sold directly to customers by our marketing and sales personnel operating
from our office locations in the United States. Our direct sales force and authorized representatives market our products and services
to end users and third parties, such as original equipment manufacturers and their dealers, state and local governments, fleet management
companies, school bus operators and various intermediary selling groups.
For
the year ended December 31, 2025, 99% of our sales were to U.S. customers and 1% were to Canadian customers, compared to 87% of our sales
were to U.S. customers and 13% were to Canadian customers for the year ended December 31, 2024. This was largely driven by companies
involved in distributed generation, regulated and non-regulated utilities, and the industrial and wholesale sectors. During the years
ended December 31, 2025, and 2024, we sold our electrical equipment and services to over 879 individual customers, and our 20 largest
customers represented approximately 71% and 74% of our consolidated revenue, respectively.
Approximately
24% and 13% of our sales during the year ended December 31, 2025, were made to Eneridge, Inc. and SparkCharge, respectively. Approximately
22% and 13% of our sales during the year ended December 31, 2024, were made to INF Associates, LLC and British Columbia Hydro and Power
Authority, respectively. Most of our sales to customers were made pursuant to specific contract terms and conditions for each project.
Revenue
Backlog
Revenue
backlog, which consists of purchase orders and contracts from customers that we believe to be firm, reflects the amount of revenue that
we expect to realize in the future upon the satisfaction of customer orders for our products or services that are not yet complete or
for which work has not yet begun. Our revenue backlog as of December 31, 2025, was approximately $12,617, as compared to $19,762 as of
December 31, 2024. The decrease in our revenue backlog was primarily attributable to the fulfillment of orders for our mobile EV charging
solutions that were included in backlog as of December 31, 2024 and recognized as revenue during the year ended December 31, 2025, without
comparable new orders from our mobile EV charging solutions entering backlog as of December 31, 2025.
Competition
We
experience intense competition from generator manufacturers and from distributors and servicers of such equipment. The number and size
of our competitors varies considerably by product line and service category, with many of our competitors tending to be small, highly
specialized or focused on a certain geographic market area or customer. A representative list of our direct competitors includes Xos
Inc., Energy Vault, Inc., HM Cragg Co., and Interstate Power Systems, Inc.
Raw
Materials and Suppliers
The
principal materials purchased by us are certain electrical and engine components such as generators, transfer switches, electric vehicle
chargers and related parts from a variety of suppliers. These components are available from and supplied by numerous sources at competitive
prices. Unanticipated increases in component prices or disruptions in supply could increase production costs and adversely affect our
profitability. Our largest suppliers during the year ended December 31, 2025, included Taylor Power Systems, Inc., Gillette Generators
Inc. and Winco, Inc.
Research
and Development
Because
the industries in which we compete are characterized by rapid technological advances, our ability to compete successfully depends heavily
upon our ability to ensure a continual and timely flow of competitive products, services and technologies to the marketplace. We continue
to develop new technologies to enhance existing products and services, and to expand the range of our offerings through research and
development (“R&D”), licensing of intellectual property and acquisition of third-party businesses and technology. During
the years ended December 31, 2025, and 2024, we incurred $875 and $1,050, respectively, of R&D costs related to our mobile EV charging
solutions, e-Boost.
Employees
As
of December 31, 2025, we had 58 full-time employees.
Environmental
We
are subject to numerous environmental laws and regulations concerning, among other areas, air emissions, discharges into waterways and
the generation, handling, storing, transportation, treatment and disposal of waste materials. These laws and regulations are constantly
changing and it is impossible to predict with accuracy the effect they may have on us in the future. Like many other industrial enterprises,
our manufacturing operations entail the risk of noncompliance, which may result in fines, penalties and remediation costs, and there
can be no assurance that such costs will be insignificant. To our knowledge, we are in substantial compliance with all federal, state,
provincial and local environmental protection provisions, and believe that the future compliance cost should not have a material adverse
effect on our capital expenditures, net income or competitive position. However, legal and regulatory requirements in these areas have
been increasing and there can be no assurance that significant costs and liabilities will not be incurred in the future due to regulatory
noncompliance.
Corporate
History
We
were originally formed in the State of Nevada in 2008. On November 30, 2009, we merged with and into Pioneer Power Solutions, Inc., a
Delaware corporation, for the sole purpose of changing our state of incorporation from Nevada to Delaware and changing our name to “Pioneer
Power Solutions, Inc”. On September 24, 2013, we completed an underwritten public offering, and our common stock began trading
on the Nasdaq Capital Market under the symbol “PPSI”.
Available
Information
Our
corporate website is located at www.pioneerpowersolutions.com. On the investor relations section of our website, we make available, free
of charge, our Annual Reports on Form 10-K, Quarterly Reports on Form 10-Q, Current Reports on Form 8-K, and amendments to those reports
as soon as reasonably practicable after we electronically file them with or furnish them to the Securities and Exchange Commission (“SEC”).
The SEC maintains an Internet site that contains reports, proxy and information statements and other information regarding issuers, such
as us, that file electronically with the SEC at www.sec.gov.
Additionally,
we provide notifications of news or announcements regarding our financial performance, including SEC filings, investor events and press
and earnings releases as part of the investor relations section of our website. The contents of and the information on or accessible
through our corporate website, including the investor relations portion of our website, are not a part of, and are not intended to be
incorporated into, this report or any other report or document we file with or furnish to the SEC, and any references to our website
are intended to be inactive textual references only.
ITEM
1A. RISK FACTORS
Investing
in our common stock involves a high degree of risk. Before investing in our common stock, you should carefully consider the following
risks, together with the financial and other information contained in this Annual Report on Form 10–K for the year ended December
31, 2025, and our other periodic filings with the SEC. Additional risks and uncertainties that we are unaware of may become important
factors that affect us. If any of the following events occur, our business, financial conditions and operating results may be materially
and adversely affected. In that event, the trading price of our common stock may decline, and you could lose all or part of your investment.
Summary
of Risk Factors
Below
is a summary of the principal factors that make an investment in our common stock speculative or risky. This summary does not address
all of the risks that we face. Additional discussion of the risks summarized in this risk factor summary, and other risks that we face,
can be found below under the heading “Risk Factors” and should be carefully considered, together with other information in
this Form 10-K and our other filings with the SEC, before making an investment decision regarding our common stock.
● Our industry is highly competitive;
● The departure or loss of key personnel could disrupt our business;
● We may not be able to fully realize the revenue value reported in our backlog;
● We are subject to pricing pressure from our larger customers;
● We may be unable to generate internal growth; and
Risks
Relating to Our Business and Industry
We
have identified material weaknesses in our internal control over financial reporting which could, if not remediated, adversely affect
our ability to report our financial condition and results of operations in a timely and accurate manner, which may adversely affect investor
confidence in our company and, as a result, the value of our common stock.
Section
404 of the Sarbanes-Oxley Act of 2002 requires that public companies evaluate and report on their systems of internal control over
financial reporting. As disclosed in Part II, Item 9A, Controls and Procedures of this Annual Report on Form 10-K, our management,
including our Chief Executive Officer and our Chief Financial Officer, has determined that we have two material weaknesses in our
internal control over financial reporting as of December 31, 2025, a material weakness related to the lack of sufficient accounting
personnel with the requisite skills, knowledge and expertise which negatively impacted the Company’s ability to maintain
appropriate segregation of duties and effective controls, as well as a material weakness around information technology general controls related to user access and privileged access within systems supporting the Company’s accounting and financial
reporting processes which allowed certain individuals to have elevated access to systems inconsistent with such individuals’ business
needs. As a result of these material weaknesses,
the Company’s management, under the supervision of the Audit Committee and with participation of the Company’s Chief
Executive Officer and Chief Financial Officer, concluded that the Company’s internal control over financial reporting was not
effective as of December 31, 2025.
Although
we are working to remedy the material weaknesses and ineffectiveness of the Company’s internal control over financial reporting
and disclosure controls and procedures, there can be no assurance as to when the remediation plan will be fully developed and
implemented or the outcome of such remediation efforts, or that in the future, additional material weaknesses will not exist,
reoccur or otherwise be discovered, a risk that is significantly increased in light of the complexity of our business. Until our
remediation plan is fully implemented, our management will continue to devote significant time, attention and financial resources to
these efforts. If we do not complete our remediation in a timely fashion, or at all, or if our remediation plan is inadequate, there
will continue to be an increased risk that our future consolidated financial statements could contain errors that will be
undetected. If we continue to have these existing material weaknesses, other material weaknesses or significant deficiencies in the
future, it could create a perception that our financial results do not fairly state our financial condition or results of
operations. See “Part II. Item 9A – Controls and Procedures.” These material weaknesses could adversely affect
our business, reputation, revenues, results of operations, financial condition, and liquidity. This could also adversely affect our
ability to timely file periodic reports under the Exchange Act, and limit our ability to access the capital markets through equity
or debt issuances. Additional impacts could include a decline in our stock price, suspension of trading or delisting of our common
stock by the Nasdaq Capital Market. Any of the foregoing could have an adverse effect on the value of our stock. For more
information relating to the Company’s internal control over financial reporting, the material weaknesses that existed as of
December 31, 2025, and the remediation activities undertaken by us, see Part II, Item 9A, Controls and Procedures of this Annual
Report on Form 10-K. See also “—Failure to establish and maintain effective internal control over financial reporting
may result in us not being able to accurately report our financial results, which could result in a loss of investor confidence and
adversely affect the market price of our common stock.”
Failure
to establish and maintain effective internal control over financial reporting may result in us not being able to accurately report our
financial results, which could result in a loss of investor confidence and adversely affect the market price of our common stock.
We
are responsible for establishing and maintaining adequate internal control over financial reporting, which is a process designed to provide
reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes
in accordance with U.S. GAAP (as defined below). Because we are continuing to implement remedial actions to strengthen our financial
control and management systems, our internal control over financial reporting may not prevent or detect misstatements. Also, projections
of any evaluation of effectiveness to future periods are subject to risk that controls may become inadequate because of changes in conditions,
or that the degree of compliance with the policies or procedures may deteriorate. A failure to prevent or detect errors or misstatements
may result in a decline in the price of our common stock and harm our ability to raise capital in the future.
If
our management is unable to certify the effectiveness of our internal controls or if material weaknesses or significant deficiencies
in our internal controls are identified, we could be subject to regulatory scrutiny and a loss of public confidence, which could
harm our business and cause a decline in the price of our common stock. As disclosed under “Item 9A. Controls and
Procedures” in this Annual Report on Form 10-K, in connection with preparing our financial statements for the year ended
December 31, 2025, management concluded that two material weaknesses existed in our internal control over financial reporting
related to the lack of sufficient accounting personnel with the requisite skills, knowledge and expertise which negatively impacted
the Company’s ability to maintain appropriate segregation of duties and effective controls, as well as a material weakness in
our information technology general controls related to user access and privileged access within systems supporting the Company’s accounting and financial
reporting processes which allowed certain individuals to have elevated access to systems inconsistent with such individuals’ business
needs. In addition, due to the same material weaknesses, we determined that our disclosure controls and
procedures were not effective as of December 31, 2025. See “—We have identified two material weaknesses in our
internal control over financial reporting which could, if not remediated, adversely affect our ability to report our financial
condition and results of operations in a timely and accurate manner, which may adversely affect investor confidence in our company
and, as a result, the value of our common stock.”
In
addition, if we do not maintain adequate financial and management personnel, processes and controls, we may not be able to accurately
report our financial performance on a timely basis, which could cause a decline in the price of our common stock and harm our ability
to raise capital. Failure to accurately report our financial performance on a timely basis could also jeopardize our listing on the Nasdaq
Capital Market. Delisting of our common stock on any exchange would reduce the liquidity of the market for our common stock, which would
reduce the price of, and increase the volatility of, our common stock.
We
do not expect that our disclosure controls and procedures and internal control over financial reporting will prevent all error or fraud.
A control system, no matter how well designed and implemented, can provide only reasonable, not absolute, assurance that the control
system’s objectives will be met. Further, the design of a control system must reflect the fact that there are resource constraints,
and the benefits of controls must be considered relative to their costs. Due to the inherent limitations in all control systems, no evaluation
of controls can provide absolute assurance that all control issues within an organization will be detected. The inherent limitations
include the realities that judgments in decision-making can be faulty and that breakdowns can occur because of simple errors or mistakes.
Controls can also be circumvented by individual acts of certain persons, by collusion of two or more people or by management override
of the controls. Due to the inherent limitations in a cost-effective control system, misstatements due to error or fraud may occur and
may not be detected in a timely manner or at all. See also “—General Risk Factors— There are inherent limitations
in all control systems, and misstatements due to error or fraud may occur and not be detected.” If we cannot provide reliable
financial reports or prevent fraud, our reputation and operating results could be materially adversely affected, which could also cause
investors to lose confidence in our reported financial information, which in turn could result in a reduction in the price of our common
stock.
In
addition, acquisitions can pose challenges in implementing the required processes, procedures and controls in the new operations. Companies
that are acquired by us may not have disclosure controls and procedures or internal control over financial reporting that are as thorough
or effective as those required by the securities laws that currently apply to us.
Our
operating results may vary significantly from quarter to quarter, which makes our operating results difficult to predict and can cause
our operating results in any particular period to be less than comparable quarters and expectations from time to time.
Our
quarterly results may fluctuate significantly from quarter to quarter due to a variety of factors, many of which are outside our control
and have the potential to materially and adversely affect our results. Factors that affect our operating results include the following:
● the timing and volume of work under new agreements;
● the spending patterns of customers;
● customer orders received;
● a change in the mix of our products having different margins;
● a change in the mix of our customers, contracts and business;
● increases in design and manufacturing costs;
● the length of our sales cycles;
● the rates at which customers renew their contracts with us;
● our ability to control costs, including operating expenses;
● losses experienced in our operations not otherwise covered by insurance;
● the ability and willingness of customers to pay amounts owed to us;
● costs related to the acquisition and integration of companies or assets;
● future accounting pronouncements and changes in accounting policies.
Accordingly,
our operating results in any particular quarter may not be indicative of the results that you can expect for any other quarter or for
an entire year.
Our
industry is highly competitive.
The
electrical equipment manufacturing industry is highly competitive and barriers to entry to manufacture similar systems to the ones the
Company sells is easily imitated. On the service side of the Company’s business, we already compete with many other companies offering
similar services. Many of these companies have a larger geographic footprint than Pioneer and substantially greater financial resources.
A
significant portion of our revenues have historically been and continue to be concentrated and derived from a few customers. Material
or significant loss of business from customers could have an adverse effect on our business, financial condition and operating results.
We
historically have depended, and expect to continue to depend on a small number of customers for a large portion of our business each
quarter, due to the scope of certain projects. Any change in the level of orders from customers could have a significant impact on our
results of operations, and a loss of business from customers could have an adverse effect on our business, financial condition and operating
results. Approximately 24% and 13% of our sales during the year ended December 31, 2025, were made to Eneridge, Inc. and SparkCharge,
respectively. As of December 31, 2025, one customer represented 100% of the Company’s lease receivable balance. The majority of
our sales to these customers and other customers in the past were made pursuant to contract terms and conditions for each project and
it is expected that future sales will similarly be made pursuant to the relevant contract terms and conditions for future projects. See
“Item 1. Business - Customers”.
Our
Critical Power business has historically generated operating losses and negative cash flows, which may result in the usage of our cash.
We
currently have one business unit (Critical Power), which has been unable to earn positive income and generate positive cash flow in its
recent history. With $14,959 of cash on hand as of December 31, 2025, any such losses will negatively impact our cash balance.
Our
operations have been curtailed following the PCEP Sale, and we have limited sources of revenue following such sale, which may negatively
impact the value and liquidity of our common stock.
The
PCEP Sale has reduced the size of our business operations, and our sources of revenue are limited to our Critical Power segment following
the closing of the PCEP Sale. Although our board of directors may use a portion of the proceeds from the PCEP Sale to support the business
operations remaining following the PCEP Sale, there can be no assurance that we will be successful at carrying out the operations of
our remaining businesses, or that we will be successful at generating revenue. A failure by us to secure additional sources of revenue
following the closing of the PCEP Sale could negatively impact the value and liquidity of our common stock.
The
departure or loss of key personnel could disrupt our business.
We
depend heavily on the continued efforts of Nathan J. Mazurek, our principal executive officer, and on other senior officers who are responsible
for the day-to-day management of our operating subsidiary. In addition, we rely on our current electrical and mechanical design engineers,
many of whom are important to our operations and would be difficult to replace. We cannot be certain that any of these individuals will
continue in their respective capacities for any particular period of time. The departure or loss of key personnel, or the inability to
hire and retain qualified employees, could negatively impact our ability to manage our business.
Fluctuations
in the price and supply of materials used to manufacture our products may reduce our profits.
The
principal materials purchased by us are certain electrical and engine components such as generators, transfer switches, electric
vehicle chargers and related parts from a variety of suppliers. These components are available from, and supplied by, numerous
sources at competitive prices. Unanticipated increases in component prices or disruptions in supply could increase production costs
and adversely affect our profitability. We cannot provide any assurances that we will not experience difficulties sourcing our
materials in the future.
We
may not be able to fully realize the revenue value reported in our backlog.
We
routinely have a backlog of work to be completed on contracts representing a significant portion of our annual sales. As of December
31, 2025, our order backlog was $12,617. Orders included in our backlog are represented by customer purchase orders and service contracts
that we believe to be firm. Backlog consists of customer orders that either (1) have not yet been started or (2) are in progress and
are not yet completed. In the latter case, the revenue value reported in backlog is the remaining value associated with work that has
not yet been billed and recognized as revenue. From time to time, customer orders are canceled that appeared to have a high certainty
of going forward at the time they were recorded as new business taken. In the event of a customer order cancellation, we may be reimbursed
for certain costs but typically have no contractual right to the total revenue reflected in our backlog. In addition to us being unable
to recover certain direct costs, canceled customer orders may also result in additional unrecoverable costs due to the resulting underutilization
of our assets.
We
are subject to pricing pressure from our larger customers.
We
face significant pricing pressures in our business segment from our larger customers. Because of their purchasing size, our larger customers
can influence market participants to compete on price terms. Such customers also use their buying power to negotiate lower prices. If
we are not able to offset pricing reductions resulting from these pressures by improved operating efficiencies and reduced expenditures,
those price reductions may have an adverse impact on our financial results.
Deterioration
in the credit quality of several major customers could have a material adverse effect on our operating results and financial condition.
Significant
assets included in our working capital are accounts receivable and lease receivable from customers. If customers responsible for a
significant amount of accounts receivable and lease receivable become insolvent or are otherwise unable to pay for products and
services, or become unwilling or unable to make payments in a timely manner, our operating results and financial condition could be
adversely affected. A significant deterioration in the economy could have an adverse effect on these accounts receivable and lease receivable, which
could result in longer payment cycles, increased collection costs and defaults in excess of management’s expectations.
Deterioration in the credit quality of our major customers could have a material adverse effect on our operating results and
financial condition.
We
rely on third parties for key elements of our business whose operations are outside our control.
We
rely on arrangements with third-party shippers and carriers such as independent shipping companies for timely delivery of our products
to our customers. As a result, we may be subject to carrier disruptions and increased costs due to factors that are beyond our control,
including labor strikes, inclement weather, natural disasters and rapidly increasing fuel costs. If the services of any of these third
parties become unsatisfactory, we may experience delays in meeting our customers’ product demands and we may not be able to find
a suitable replacement on a timely basis or on commercially reasonable terms. Any failure to deliver products to our customers in a timely
and accurate manner may damage our reputation and could cause us to lose customers.
We
also utilize third-party distributors to sell, install and service certain of our products. While we are selective in whom we choose
to represent us, it is difficult for us to ensure that our distributors consistently act in accordance with the standards we set for
them. To the extent any of our end-customers have negative experiences with any of our distributors or manufacturer’s representatives;
it could reflect poorly on us and damage our reputation, thereby negatively impacting our financial results.
Supply
chain and shipping disruptions may result in shipping delays, a significant increase in shipping costs, and could increase product costs
and result in lost sales and reputational damage, which may have a material adverse effect on our business, operating results and financial
condition.
Our
third-party manufacturers and suppliers have experienced, and expect to continue to experience, supply chain disruption and shipping
disruptions, including disruptions or delays in loading container cargo in ports of origin or off-loading cargo at ports of destination,
congestion in port terminal facilities, labor supply and shipping container shortages, inadequate equipment and persons to load, dock
and offload container vessels and for other reasons. These disruptions may impact our ability to receive materials and products from
our manufacturers and suppliers, to distribute our products to our customers in a cost-effective and timely manner and to meet customer
demand, all of which could have an adverse effect on our financial condition and results of operations. There can be no assurance that
further unforeseen events impacting the supply chain will not have a material adverse effect on us in the future. Additionally, the impacts
that supply chain disruptions have on our third-party manufacturers and suppliers are not within our control. It is not currently possible
to predict how long it will take for these supply chain disruptions to cease or ease. Prolonged supply chain disruptions that may impact
us or our manufacturers and suppliers could interrupt product manufacturing, increase raw material and product lead times, increase raw
material and product costs, impact our ability to meet customer demand and result in lost sales and reputational damage, all of which
could have a material adverse effect on our business, financial condition and results of operations.
Our
business may face cybersecurity risk generally associated with our information technology systems which could materially affect our business,
and our results of operations could be materially affected if our information technology systems (or third-party systems we rely on)
are interrupted, damaged by unforeseen events, or fail for any extended period of time.
We
rely on information systems (“IS”) in our business to obtain, rapidly process, analyze, manage and store data to among other
things:
● receive, process and ship orders on a timely basis; and
● manage the accurate billing and collections from our customers.
IS
risks have generally increased in recent years, and a cyberattack that bypasses our IS security systems causing an IS security breach
may lead to a material disruption of our business operations and/or the loss of business information resulting in a material effect on
our business.
In
addition, we develop products and provide services to our customers that are technology-based, and a cyberattack that bypasses the IS
security systems of our products or services causing a security breach and/or perceived security vulnerabilities in our products or services
could also cause significant reputational harm, and actual or perceived vulnerabilities may lead to claims against us by our customers.
Perceived or actual security vulnerabilities in our products or services, or the perceived or actual failure by us or our customers who
use our products to comply with applicable legal requirements, may not only cause us significant reputational harm, but may also lead
to claims against us by our customers and involve fines and penalties, costs for remediation, and settlement expenses.
Our
IS utilize certain third-party service organizations that manage a portion of our information systems, and our business may be materially
affected if these third-party service organizations are subject to an IS security breach. Risks associated with these and other IS security
breaches may include, among other things:
We
have various insurance policies, covering risks in amounts that we consider adequate. There can be no assurance that the insurance coverage
we maintain is sufficient or will be available in adequate amounts or at a reasonable cost. Successful claims for misappropriation or
release of confidential or personal data brought against us in excess of available insurance or fines or other penalties assessed or
any claim that results in significant adverse publicity against us could have a material adverse effect on our business and our reputation.
Our
business requires skilled labor, and we may be unable to attract and retain qualified employees.
Our
ability to maintain our productivity and profitability will be limited by our ability to employ, train and retain skilled personnel necessary
to meet our requirements. We may experience shortages of qualified personnel. We cannot be certain that we will be able to maintain an
adequate skilled labor force necessary to operate efficiently and to support our growth strategy or that our labor expenses will not
increase as a result of a shortage in the supply of skilled personnel. Labor shortages, increased labor costs or loss of our most skilled
workers could impair our ability to deliver on time to our customers (thereby creating a risk that we lose our customers to competition)
and would inhibit our ability to maintain our business or grow our revenues, and may adversely impact our profitability.
An
overall tightening and increasingly competitive labor market has been observed in the United States. A sustained labor shortage or increased
turnover rates within our employee base could lead to increased costs, such as increased wage rates to attract and retain employees,
and could negatively affect our ability to efficiently operate our manufacturing facilities and overall business. If we are unable to
hire and retain employees capable of performing at a high-level, or if mitigation measures we may take to respond to a decrease in labor
availability, such as overtime and third-party outsourcing, have unintended negative effects, our business could be adversely affected.
An overall labor shortage, lack of skilled labor, increased turnover or labor inflation could have a material adverse impact on our operations,
results of operations, liquidity or cash flows.
Demand for Edge AI infrastructure, data centers,
and distributed energy solutions may not develop as expected or increase demand for our solutions.
The projections regarding the anticipated expansion
of generative AI, Edge Computing and data center infrastructure and the global electricity demand from data centers are subject to significant
uncertainty and may not materialize within the expected timeframes, or at all. Factors such as slower adoption of AI or Edge Computing
technologies, improvements in data center energy efficiency, changes in regulatory or utility frameworks, or broader economic conditions
could reduce or delay infrastructure investment and related power demand. Our PRYMUS mobile microgrid platform is designed to provide
scalable onsite power solutions in 1 MW to 10 MW blocks with relatively rapid deployment timelines. However, our ability to generate revenue
from this platform depends in part on continued growth in demand for decentralized energy systems serving data centers and similar industrial
applications. If demand for such solutions develops more slowly than anticipated, if customers adopt alternative energy or infrastructure
solutions, or if centralized grid capacity expands more quickly than expected demand for our products and services could be materially
reduced. In addition, industry projections regarding the growth of the global microgrid market, including estimates of market size and
compound annual growth rates for certain capacity segments, are based on third-party data and assumptions that may prove inaccurate. If
the microgrid market does not grow as forecast, or if competing technologies or market developments reduce the need for distributed power
generation, our business, financial condition, and results of operations could be materially and adversely affected.
Risks
Relating to Our Organization
Delaware
law and our corporate charter and bylaws contain anti-takeover provisions that could delay or discourage takeover attempts that stockholders
may consider favorable.
Our
board of directors is authorized to issue shares of preferred stock in one or more series and to fix the voting powers, preferences and
other rights and limitations of the preferred stock. Accordingly, we may issue shares of preferred stock with a preference over our common
stock with respect to dividends or distributions on liquidation or dissolution, or that may otherwise adversely affect the voting or
other rights of the holders of common stock. Issuances of preferred stock, depending upon the rights, preferences and designations of
the preferred stock, may have the effect of delaying, deterring or preventing a change of control, even if that change of control might