NOTE 2 – GOING CONCERN

The accompanying unaudited condensed consolidated financial statements have been prepared on a going concern basis, which contemplates the realization of assets and the satisfaction of liabilities in the normal course of business. The Company has incurred an accumulated deficit of $75,411,000 through December 31, 2021 and a net loss of $5,077,000 and $9,207,000 for the three and six months ended December 31, 2021, respectively. To date, the Company’s revenues and operating cash flows have not been sufficient to sustain its operations and the Company has relied on debt and equity financing to fund its operations. Delays in the receipt of key component parts due in part to supply chain disruptions as well as recent changes in the design of the product offering have impacted the Company’s ability to fulfill the backlog of sales orders as planned. These events have placed pressure on the Company’s margins and cash resources and raise substantial doubt about the Company’s ability to continue as a going concern for the next twelve months following the filing date of this Quarterly Report on Form 10-Q. As of December 31, 2021, the Company had a cash balance of $7,855,000 and may need to raise additional capital in the near future. The Company’s ability to continue as a going concern is dependent upon its ability to ship open sales orders, improve its margins, reduce operating costs and raise additional capital on a timely basis until such time as revenues and related cash flows are sufficient to fund its operations.

Management has undertaken steps to improve operations with the goal of sustaining its operations. These steps include actual and planned price increases for our energy storage solutions, a number of cost saving initiatives including product cost efficiencies from design changes and planned operating cost savings. In addition, $2.5 million currently remains available under the existing working capital line of credit.

The accompanying financial statements do not include any adjustments that would be necessary should the Company be unable to continue as a going concern and, therefore, be required to liquidate its assets and discharge its liabilities in other than the normal course of business and at amounts that may differ from those reflected in the accompanying condensed consolidated financial statements. There is no guarantee that additional funds will be available if needed on a timely basis or on acceptable terms. If such funds are not available when required, management will be required to curtail investments in additional sales and marketing and product development, which may have a material adverse effect on future cash flows and results of operations and the ability to continue operating as a going concern.