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 $94.1 million through March 31, 2024 and a net loss of $5.6 million for the nine months ended March 31, 2024. 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. Our operations have relied on our ability to successfully maintain and draw on our credit facilities. The Company notified Gibraltar Business Capital (“GBC”) of a certain event of default with respect to the Company’s anticipated failure to maintain the EBITDA covenant for the trailing three (3) month period ended April 30, 2024 (“Default”). On May 8, 2024, the Company received a waiver (the “Waiver”) to the Loan and Security Agreement dated July 28, 2023, as amended (the “Agreement”) with GBC, which waived the Default, subject to satisfaction of the following conditions: (i) receipt of a counterpart of the Waiver duly executed by the Company; (ii) receipt of the waiver fee; iii) receipt of the representations and warranties from the Company that after giving effect to the Waiver, the representations and warranties contained in the Agreement, the Waiver and the other Loan Documents (as defined in the Agreement) shall be true and correct; and (iv) after giving effect to the Waiver, no additional event of default shall have occurred and be continuing on and as of the effective date of the Waiver. Our ability to draw funds from the GBC Credit Facility is subject to certain restrictions, covenants and borrowing base limitations. In addition, the Company’s operations have been impacted by delays in new orders of its energy storage solutions due to corresponding deferrals of new forklift purchases mainly caused by lower capital spending in the market sector that we serve and interest rate variability affecting selected large customer fleets which have impacted its ability to meet projected revenue targets and generate cash from operations. Further, these events have placed pressure on the Company’s 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.

The Company’s ability to continue as a going concern is dependent upon its ability to meet order projections, ship open sales orders, further improve its margins, reduce operating costs and raise additional capital, if needed, on a timely basis until such time as revenues and related cash flows are sufficient to fund its operations. As of May 6, 2024, the Company had a cash balance of $1.7 million, funding available under our GBC Credit Facility under which up to $3.2 million is currently available, subject to borrowing base limitations, and funds available under our 2023 Subordinated LOC of up to $2.0 million. In light of the recent Default under the GBC Credit Facility, the Company is working with GBC to modify the financial covenants in the Agreement to prevent future defaults. However, there is no guarantee that the Company will be able to modify the terms in a manner that is favorable to it. If the Company is unable to modify the terms or otherwise meet the conditions provided in the Agreement, the funds may not be available to the Company.

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 and planned operating cost savings.

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 new product development, which may have a material adverse effect on future cash flows and results of operations and the Company’s ability to continue operating as a going concern.