Polar Power, Inc. Quarterly report [Sections 13 or 15(d)]

Quarterly report [Sections 13 or 15(d)]

OPERATING LEASES

OPERATING LEASES

6 Months Ended

Jun. 30, 2025

NOTE 5 – OPERATING LEASES

The Company has two operating lease agreements for its warehouse and office facilities. The first lease expired February 28, 2024, and was extended beginning March 1, 2024 to February 28, 2026. The second lease expired August 31, 2024, and was extended beginning September 1, 2024 to August 31, 2026. The aggregate monthly lease payments range from $89 (year one), to $111 (year two), to $125 (year three), with an aggregate commitment of $3,896. The lease amendments to the two operating leases were considered new lease agreements and as a result, the Company recognized operating lease right-of-use assets and related operating lease liabilities of approximately $3,578 upon commencement of the new terms in 2024.

The Company also has a third lease on a month-to-month basis and is charged $25 per month.

The components of rent expense and supplemental cash flow information related to leases for the period are as follows:

	Six Months Ended June 30, 2025			Six Months Ended June 30, 2024
Lease Cost

Operating lease cost	$	704		$	597
Operating lease cost (of which $92 is included in general and administration and $612 is included in cost of sales in the Company’s statement of operations for the six months ended June 30, 2025, and $78 and $519 for the same period in 2024, respectively)	$	704		$	597

Other Information
Weighted average remaining lease term – operating leases (in years)		0.9			1.9
Average discount rate – operating leases		6.13	%		6.13	%

The supplemental balance sheet information related to leases for the period is as follows:

	At June 30, 2025		At June 30, 2024
Operating leases
Long-term operating right-of-use assets, net of accumulated amortization of $2,540 and $1,338, respectively	$	1,037	$	2,239

Short-term operating lease liabilities	$	1,116	$	1,260
Long-term operating lease liabilities		76		1,193
Total operating lease liabilities	$	1,192	$	2,453

Maturities of the Company’s lease liabilities are as follows (in thousands):

Year Ending	Operating Leases
2025 (remaining 6 months)		742
2026		496
Total lease payments		1,238
Less: Imputed interest/present value discount		(46	)
Present value of lease liabilities	$	1,192

Rent expense for the three months ended June 30, 2025 and 2024 was $325 and $399, respectively. Rent expense for the six months ended June 30, 2025 and 2024 was $649 and $799, respectively.