POLAR POWER, INC., 10-Q filed on 11/14/2018
Quarterly Report
v3.10.0.1
Document and Entity Information - shares
9 Months Ended
Sep. 30, 2018
Nov. 14, 2018
Document And Entity Information    
Entity Registrant Name Polar Power, Inc.  
Entity Central Index Key 0001622345  
Document Type 10-Q  
Trading Symbol POLA  
Document Period End Date Sep. 30, 2018  
Amendment Flag false  
Current Fiscal Year End Date --12-31  
Entity's Reporting Status Current Yes  
Entity Filer Category Non-accelerated Filer  
Entity Emerging Growth Company true  
Entity Small Business true  
Entity Ex Transition Period true  
Entity Common Stock, Shares Outstanding   10,143,158
Document Fiscal Period Focus Q3  
Document Fiscal Year Focus 2018  
v3.10.0.1
CONDENSED BALANCE SHEETS (Unaudited) - USD ($)
Sep. 30, 2018
Dec. 31, 2017
Current assets    
Cash and cash equivalents (including restricted cash of $1,002,304 and $1,001,180 at September 30, 2018 and December 31, 2017, respectively) $ 10,607,455 $ 14,201,163
Accounts receivable 3,751,157 3,058,266
Inventories, net 7,413,615 5,487,053
Prepaid expenses 836,052 236,670
Refundable income taxes 629,316 629,316
Total current assets 23,237,595 23,612,468
Other assets:    
Property and equipment, net 1,426,098 824,076
Deposits 111,701 87,496
Total assets 24,775,394 24,524,040
Current liabilities    
Accounts payable 789,548 757,753
Customer deposits 202,324 40,039
Accrued expenses and other current liabilities 683,715 586,391
Current portion of notes payable 196,323 110,237
Total current liabilities 1,871,910 1,494,420
Notes payable, net of current portion 621,113 126,818
Total liabilities 2,493,023 1,621,238
Stockholders' Equity    
Preferred stock, $0.0001 par value, 5,000,000 shares authorized, no shares issued and outstanding
Common stock, $0.0001 par value, 50,000,000 shares authorized, 10,143,158 shares issued and outstanding 1,014 1,014
Additional paid-in capital 19,483,002 19,250,955
Retained earnings 2,798,355 3,650,833
Total stockholders' equity 22,282,371 22,902,802
Total liabilities and stockholders' equity $ 24,775,394 $ 24,524,040
v3.10.0.1
CONDENSED BALANCE SHEETS (Unaudited) (Parenthetical) - USD ($)
Sep. 30, 2018
Dec. 31, 2017
Statement of Financial Position [Abstract]    
Restricted cash $ 1,002,304 $ 1,001,180
Preferred stock, par value (in dollars per share) $ 0.0001 $ 0.0001
Preferred stock, authorized 5,000,000 5,000,000
Preferred stock, issued 0 0
Preferred stock, outstanding 0 0
Common stock, par value (in dollars per share) $ 0.0001 $ 0.0001
Common stock, authorized 50,000,000 50,000,000
Common stock, issued 10,143,158 10,143,158
Common stock, outstanding 10,143,158 10,143,158
v3.10.0.1
CONDENSED STATEMENTS OF OPERATIONS (Unaudited) - USD ($)
3 Months Ended 9 Months Ended
Sep. 30, 2018
Sep. 30, 2017
Sep. 30, 2018
Sep. 30, 2017
Income Statement [Abstract]        
Net Sales $ 5,061,158 $ 3,030,026 $ 15,748,845 $ 10,438,761
Cost of Sales 3,530,847 2,201,083 10,672,707 6,925,464
Gross Profit 1,530,311 828,943 5,076,138 3,513,297
Operating Expenses        
Sales and Marketing 717,983 395,793 1,968,152 861,230
Research and development 571,300 480,405 1,371,981 947,427
General and administrative 996,087 633,776 2,562,577 1,988,831
Depreciation and amortization 8,897 7,621 26,441 23,029
Total operating expenses 2,294,267 1,517,595 5,929,151 3,820,517
Loss from operations (763,956) (688,652) (853,013) (307,220)
Other (expenses) income        
Interest expense (2,777) (4,463) (8,181) (14,656)
Other income (expenses), net 9,616 18,531 8,716 42,605
Total other (expenses) income, net 6,839 14,068 535 27,949
Loss before income taxes (757,117) (674,584) (852,478) (279,271)
Income tax provision 264,681 113,118
Net Loss $ (757,117) $ (409,903) $ (852,478) $ (166,153)
Net Loss per share - basic and diluted (in dollars per share) $ (0.07) $ (0.04) $ (0.08) $ (0.02)
Weighted average shares outstanding, basic and diluted (in shares) 10,143,158 10,143,158 10,143,158 10,143,158
v3.10.0.1
CONDENSED STATEMENT OF STOCKHOLDERS' EQUITY - 9 months ended Sep. 30, 2018 - USD ($)
Common Stock
Additional Paid-In Capital
Accumulated Deficit
Total
Balance at beginning at Dec. 31, 2017 $ 1,014 $ 19,250,955 $ 3,650,833 $ 22,902,802
Balance at beginning (in shares) at Dec. 31, 2017 10,143,158      
Increase (Decrease) in Stockholders' Equity [Roll Forward]        
Fair value of vested stock options 232,047 232,047
Net loss (852,478) (852,478)
Balance at end at Sep. 30, 2018 $ 1,014 $ 19,483,002 $ 2,798,355 $ 22,282,371
Balance at end (in shares) at Sep. 30, 2018 10,143,158      
v3.10.0.1
CONDENSED STATEMENTS OF CASH FLOWS (Unaudited) - USD ($)
9 Months Ended
Sep. 30, 2018
Sep. 30, 2017
Cash flows from operating activities:    
Net Loss $ (852,478) $ (166,153)
Adjustments to reconcile net loss to net cash used in provided by operating activities:    
Fair value of vested stock options 232,047
Depreciation and amortization 269,726 185,759
Changes in operating assets and liabilities    
Accounts receivable (692,891) 2,425,017
Inventories (1,926,562) (436,735)
Prepaid expenses (599,382) (153,257)
Deposits (24,205) (10,500)
Refundable income taxes (1,257,585)
Deferred tax assets (52,641)
Accounts payable 31,795 (388,244)
Income taxes payable (1,227,308)
Customer deposits 162,285 (1,843)
Accrued expenses and other current liabilities 97,324 (111,988)
Net cash used in operating activities (3,302,341) (1,195,479)
Cash flows from investing activities:    
Acquisition of property and equipment (208,998) (182,397)
Net cash used in investing activities (208,998) (182,397)
Cash flows from financing activities:    
Repayment of notes (82,369) (85,254)
Net cash used in financing activities (82,369) (85,254)
Decrease in cash and cash equivalents (3,593,708) (1,463,130)
Cash and cash equivalents, beginning of period 14,201,163 16,242,158
Cash and cash equivalents, end of period 10,607,455 14,779,028
Supplemental Cash Flow Information:    
Taxes Paid 2,424,417
Interest Paid 8,181 10,193
Supplemental non-cash investing and financing activities:    
Assets acquired through issuance of notes payable $ 662,750
v3.10.0.1
ORGANIZATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
9 Months Ended
Sep. 30, 2018
Organization, Consolidation and Presentation of Financial Statements [Abstract]  
ORGANIZATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

NOTE 1 – ORGANIZATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

 

The Company

 

Polar Power, Inc. was incorporated in the State of Washington as Polar Products, Inc. and in 1991 reincorporated in the State of California under the name Polar Power, Inc. In December 2016, Polar Power, Inc. reincorporated in the State of Delaware (the “Company”). The Company designs, manufactures and sells direct current, or DC, power systems to supply reliable and low-cost energy to off-grid, bad-grid and backup power applications. The Company’s products integrate DC generator and proprietary automated controls, lithium batteries and solar systems to provide low operating cost and lower emissions alternative power needs in telecommunications, defense, automotive and industrial markets.

 

Basis of Presentation of Unaudited Financial Information

 

The accompanying unaudited condensed financial statements of the Company have been prepared in accordance with accounting principles generally accepted in the United States of America (“GAAP”) for interim financial information and pursuant to the requirements for reporting on Form 10-Q and Regulation S-K for scaled disclosures for smaller reporting companies. Accordingly, they do not include all the information and footnotes required by GAAP for complete financial statements. However, such information reflects all adjustments (consisting solely of normal recurring adjustments), which are, in the opinion of management, necessary for the fair presentation of the Company’s financial position and results of operations. Results shown for interim periods are not necessarily indicative of the results to be obtained for a full fiscal year. The balance sheet information as of December 31, 2017 was derived from the audited financial statements included in the Company’s financial statements as of and for the years ended December 31, 2017 and 2016 contained in the Company’s Annual Report on Form 10-K filed with the Securities and Exchange Commission (“SEC”) on April 2, 2018. These financial statements should be read in conjunction with that report.

 

Estimates

 

The preparation of financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenue and expenses during the reporting period. Material estimates relate to the assumptions made in determining reserves for uncollectible receivables, inventory reserves and returns, impairment analysis of long term assets and deferred tax assets, income tax accruals, accruals for potential liabilities and assumptions made in valuing the fair market value of equity transactions. Actual results may differ from those estimates.

 

Revenue Recognition

 

In May 2014, the FASB issued ASU 2014-09, Revenue from Contracts with Customers (Topic 606), (ASC 606).  The underlying principle of ASC 606 is to recognize revenue to depict the transfer of goods or services to customers at the amount expected to be collected.   ASC 606  creates a five-step model that requires entities to exercise judgment when considering the terms of contract(s), which includes (1) identifying the contract(s) or agreement(s) with a customer, (2) identifying our performance obligations in the contract or agreement, (3) determining the transaction price, (4) allocating the transaction price to the separate performance obligations, and (5) recognizing revenue as each performance obligation is satisfied.    

 

Under ASC 606, revenue is recognized when performance obligations under the terms of a contract are satisfied, which occurs for the Company upon shipment or delivery of products or services to our customers based on written sales terms, which is also when control is transferred.  Revenue is measured as the amount of consideration we expect to receive in exchange for transferring the products or services to a customer.

 

The Company adopted the guidance of ASC 606 on January 1, 2018.  The implementation of ASC 606 had no impact on the condensed consolidated financial statements and no cumulative effect adjustment was recognized.

 

Accounts Receivable

 

Trade receivables are recorded at net realizable value consisting of the carrying amount less an allowance for uncollectible accounts, as needed. The Company uses the allowance method to account for uncollectible trade receivable balances. Under the allowance method, if needed, an estimate of uncollectible customer balances is made based upon specific account balances that are considered uncollectible. Factors used to establish an allowance include the credit quality and payment history of the customer. The Company did not deem it necessary to provide an allowance for doubtful accounts as of as of September 30, 2018 and December 31, 2017. 

 

Inventories

 

Inventories consist of raw materials and finished goods and are stated at the lower of cost or market. Cost is determined principally on a first-in-first-out average cost basis. Inventory quantities on hand are reviewed regularly and write-downs for obsolete inventory are recorded based on an estimated forecast of the inventory item demand in the near future. As of September 30, 2018 and December 31, 2017, the Company has established inventory reserves of $330,000 for obsolete and slow-moving inventory. As of September 30, 2018 and December 31, 2017, the components of inventories were as follows:

 

   

September 30,

2018

(unaudited)

    December 31,
2017
 
                 
Raw materials   $ 5,025,755     $ 2,716,392  
Finished goods     2,717,860       3,100,661  
      7,743,615       5,817,053  
Less: Inventory reserve     (330,000 )     (330,000 )
Total Inventories, net   $ 7,413,615     $ 5,487,053  

 

Product Warranties

 

The Company provides limited warranties for parts and labor at no cost to its customers within a specified time period after the sale. The warranty terms are typically from one to five years. Provisions for estimated expenses related to product warranties are made at the time products are sold. These estimates are established using historical information about the nature, frequency and average cost of warranty claim settlements as well as product manufacturing and recovery from suppliers. Management actively studies trends of warranty claims and takes action to improve product quality and minimize warranty costs. The Company estimates the actual historical warranty claims coupled with an analysis of unfulfilled claims to record a liability for specific warranty purposes. The Company’s product warranty obligations are included in other accrued liabilities in the balance sheets. As of September 30, 2018 and December 31, 2017, the Company had accrued a liability for warranty reserve of $175,000 and $175,000, respectively. Management believes that the warranty accrual is appropriate; however, actual claims incurred could differ from original estimates, requiring adjustments to the accrual. The product warranty accrual is included in current liabilities in the accompanying balance sheets.

 

The following is a tabular reconciliation of the product warranty liability, excluding the deferred revenue related to the Company’s warranty coverage:

 

Changes in estimates for warranties  

September 30,

2018

(unaudited)

    December 31, 2017  
Balance at beginning of the period   $ 175,000     $ 175,000  
Payments     (145,867 )     (364,463 )
Provision for warranties     145,867       364,163  
Balance at end of the period   $ 175,000     $ 175,000  

 

Income Taxes

 

The Company accounts for income taxes using the asset and liability method whereby deferred tax assets are recognized for deductible temporary differences, and deferred tax liabilities are recognized for taxable temporary differences. Temporary differences are the differences between the reported amounts of assets and liabilities and their tax bases. Deferred tax assets are reduced by a valuation allowance when, in the opinion of management, it is more likely than not that some portion or all of the deferred tax assets will not be realized before the Company is able to realize their benefits, or that future deductibility is uncertain. 

 

Tax benefits from an uncertain tax position are recognized only if it more likely than not that the tax position will be sustained on examination by the taxing authorities based on technical merits of the position. The tax benefits recognized in the financial statements from such a position are measured based on the largest benefit that has greater than 50 percent likelihood of being realized upon ultimate resolution. Deferred tax assets and liabilities are adjusted for the effects of changes in tax laws and rates on the date of enactment.

 

Segments

 

The Company operates in one segment for the manufacture and distribution of its products. In accordance with the “Segment Reporting” Topic of the ASC, the Company’s chief operating decision maker has been identified as the Chief Executive Officer and President, who reviews operating results to make decisions about allocating resources and assessing performance for the entire Company. Existing guidance, which is based on a management approach to segment reporting, establishes requirements to report selected segment information quarterly and to report annually entity-wide disclosures about products and services, major customers, and the countries in which the entity holds material assets and reports revenue. All material operating units qualify for aggregation under “Segment Reporting” due to their similar customer base and similarities in: economic characteristics; nature of products and services; and procurement, manufacturing and distribution processes. Since the Company operates in one segment, all financial information required by “Segment Reporting” can be found in the accompanying consolidated financial statements.

 

Concentrations

 

Cash. The Company maintains cash balances at several banks, with the majority held at one bank. At times, the amount on deposit exceeds the federally insured limits. Management believes that the financial institutions that hold the Company’s cash are financially sound and, accordingly, minimal credit risk exists.

 

Net Sales. The Company’s net sales are primarily generated from two Tier-1 wireless telecommunications carrier customers in the U.S. For the three months ended September 30, 2018, net sales from our Tier-1 wireless telecommunications carrier customers accounted for 39% (AT&T), 37% (T-Mobile), and 4% (Verizon Wireless) of the Company’s net sales, as compared 9% (AT&T), 1% (T-Mobile), and 74% (Verizon Wireless) of net sales for the three months ended September 30, 2017. For the nine months ended September 30, 2018, AT&T, T-Mobile, and Verizon Wireless represented 61%, 12%, and 13% of net sales, respectively. For the nine months ended September 30, 2017, AT&T, T-Mobile, and Verizon Wireless represented 3.1%, 0.2%, and 82.1% of the Company’s net sales, respectively.

 

Accounts receivable. At September 30, 2018, 31% of the Company’s accounts receivable were from AT&T, 50% from T-Mobile, and 5% from Verizon Wireless. At December 31, 2017, 59% of the Company’s accounts receivable were from AT&T, 0% from T-Mobile, and 30% from Verizon Wireless.

 

Accounts payable. At September 30, 2018, and December 31, 2017 the Company’s largest vendor represented 72% and 75% of accounts payable, respectively.

 

Purchases. The Company has established relationships with third party engine suppliers and other key suppliers from which the Company sources components for its power systems. The Company is substantially dependent on one key engine supplier, Yanmar Engines Company with purchases from Yanmar representing 48% and 19% of the Company’s total raw materials used in cost of sales for the three months ended September 30, 2018 and 2017, respectively, and 76% and 19% for the nine months ended September 30, 2018 and 2017, respectively. 

 

Net Income (Loss) Per Share

 

Basic net income (loss) per share is computed by dividing net income (loss) by the weighted average number of common shares outstanding for the period. Diluted earnings per share is computed by dividing the net income applicable to common stock holders by the weighted average number of common shares outstanding plus the number of additional common shares that would have been outstanding if all dilutive potential common shares had been issued using the treasury stock method. Potential common shares are excluded from the computation when their effect is antidilutive. The dilutive effect of potentially dilutive securities is reflected in diluted net income per share if the exercise prices were lower than the average fair market value of common shares during the reporting period.

 

The following potentially dilutive shares were excluded from the shares used to calculate diluted earnings per share as their inclusion would be anti-dilutive:

 

     

September 30, 

2018

(Unaudited)

   

September 30,

2017
(Unaudited)

 
Options       360,000        
Warrants       115,000       115,000  
Total       475,000       115,000  

 

Recent Accounting Pronouncements      

 

In February 2016, the FASB issued Accounting Standards Update (ASU) No. 2016-02, Leases. ASU 2016-02 requires a lessee to record a right of use asset and a corresponding lease liability on the balance sheet for all leases with terms longer than 12 months. ASU 2016-02 is effective for all interim and annual reporting periods beginning after December 15, 2018. Early adoption is permitted. A modified retrospective transition approach is required for lessees for capital and operating leases existing at, or entered into after, the beginning of the earliest comparative period presented in the financial statements, with certain practical expedients available. The Company is currently evaluating the expected impact that the standard could have on its financial statements and related disclosures.

 

Other recent accounting pronouncements issued by the FASB, including its Emerging Issues Task Force, the American Institute of Certified Public Accountants, and the SEC did not or are not believed by management to have a material impact on the Company’s present or future consolidated financial statements.

v3.10.0.1
RESTRICTED CASH
9 Months Ended
Sep. 30, 2018
Receivables [Abstract]  
RESTRICTED CASH

NOTE 2 – RESTRICTED CASH

 

As of September 30, 2018 and December 31, 2017, the Company’s cash balance included restricted cash of $1,002,304 and $1,001,180, respectively. The restricted cash serves as a collateral to the line of credit (see Note 5).

v3.10.0.1
PROPERTY AND EQUIPMENT
9 Months Ended
Sep. 30, 2018
Property, Plant and Equipment [Abstract]  
PROPERTY AND EQUIPMENT

NOTE 3 – PROPERTY AND EQUIPMENT

 

Property and equipment consists of the following:

 

   

September 30, 

2018 

(Unaudited) 

   

December 31, 

2017

 
Production tooling, jigs, fixtures   $ 70,749     $ 70,749  
Shop equipment and machinery     2,268,078       1,451,423  
Vehicles     127,495       122,264  
Leasehold improvements     72,161       42,173  
Office equipment     129,171       114,454  
Software     105,690       97,533  
Total property and equipment, cost     2,770,344       1,898,596  
Less: accumulated depreciation and amortization     (1,344,246 )     (1,074,520 )
Property and equipment, net   $ 1,426,098     $ 824,076  

 

Depreciation and amortization expense on property and equipment for the three months ended September 30, 2018 and September 30, 2017 was $114,779 and $65,679, respectively, and allocated between cost of sales and operating expenses. During the three months ended September 30, 2018 and September 30, 2017, $105,882 and $58,058, respectively, of depreciation expense was included in the balance of cost of sales.

 

Depreciation and amortization expense on property and equipment for the nine months ended September 30, 2018 and September 30, 2017 was $269,726 and $185,759, respectively, and allocated between cost of sales and operating expenses. During the nine months ended September 30, 2018 and September 30, 2017, $243,285 and $162,730, respectively, of depreciation expense was included in the balance of cost of sales.

v3.10.0.1
NOTES PAYABLE
9 Months Ended
Sep. 30, 2018
Payables and Accruals [Abstract]  
NOTES PAYABLE

NOTE 4 – NOTES PAYABLE

 

Notes payable consist of the following:

 

   

September 30,

2018

    December 31,  
    (Unaudited)     2017  
Total Equipment Notes Payable   $ 817,436     $ 237,055  
Less Current Portion     (196,323 )     (110,237 )
Notes Payable, Long term   $ 621,113     $ 126,818  

 

As of December 31, 2017, the Company’s notes payable related to several financing agreements for the purchase of equipment, with terms ranging from 2 years to 5 years, with interest rates ranging from 1.9% to 6.9% per annum, and secured by the purchased equipment.

 

During the nine months ended September 30, 2018, the Company acquired additional equipment under financing agreements for total principal amount of approximately $660,000, with term of 5 years, interest rate of 5% per annum, and also secured by the purchased equipment.

 

As of September 30, 2018, the balance of notes payable was $817,436. The aggregate monthly payments of principal and interest of the outstanding notes payable as of September 30, 2018 is approximately $23,000 and due through 2023.

v3.10.0.1
LINE OF CREDIT
9 Months Ended
Sep. 30, 2018
Debt Disclosure [Abstract]  
LINE OF CREDIT

NOTE 5 – LINE OF CREDIT

 

On March 21, 2017, the Company entered into a Credit Agreement and related documents with Citibank, N.A. for a revolving credit facility in an aggregate amount of up to $1,000,000. The credit facility will expire at such time the parties mutually agree to terminate the credit facility or at the election of the lender. Interest accrues on the principal amount of revolving loans outstanding under the credit facility at a rate equal to the greater of (i) the prime rate of interest as published by Citibank, or (ii) the one-month London Interbank Offered Rate plus 2%. Amounts outstanding from time to time under the credit facility are due and payable monthly in an amount equal to the greater of 2% of the outstanding principal balance or $100, plus accrued interest. Upon the termination of the credit facility, any amounts owed under the credit facility will be payable by the Company in 48 equal consecutive monthly installments of principal, together with accrued monthly interest and any other charges beginning the first calendar month after the date of cancellation. The credit facility is also subject to an annual finance charge of $2,500, which amount was waived for the first year. The credit facility is secured by a Certificate of Deposit (restricted cash) account opened by the Company with Citibank in the amount of $1,000,000 (see Note 2).

 

The Company’s credit facility contains negative covenants prohibiting it from (i) creating or permitting to exist any liens, security interests or other encumbrances on the Company’s assets, (ii) engaging in any business activities substantially different than those in which the Company is presently engaged, (iii) ceasing operations, liquidating, merging, transferring, acquiring or consolidating with any other entity, changing its name, dissolving or transferring or selling collateral out of the ordinary course of business, or (iv) paying dividends on the Company’s capital stock (other than dividends payable in stock). The Company was in compliance with all covenants at September 30, 2018.

 

As of September 30, 2018 and December 31, 2017, the Company had not borrowed any funds under the credit facility and thus had borrowing availability of $1,000,000.

v3.10.0.1
STOCK OPTIONS
9 Months Ended
Sep. 30, 2018
Stock Options  
STOCK OPTIONS

NOTE 6 – STOCK OPTIONS

 

 The following table summarizes stock option activity:

 

      Number of     Weighted Average  
      Options     Exercise Price  
Outstanding, December 31, 2017       30,000     $ 4.84  
Granted       330,000       5.32  
Exercised              
Outstanding, September 30, 2018       360,000     $ 5.28  
Exercisable, September 30, 2018              

 

Effective July 8, 2016 the Company’s board of directors approved the Polar Power 2016 Omnibus Incentive Plan (the “2016 Plan”), authorizing the issuance of up to 1,754,385 shares of common stock as incentives to employees and consultants to the Company with awards limited to a maximum of 350,877 shares to any one participant in any calendar year.

 

During the nine months ended September 30, 2018, the Company granted options to purchase an aggregate of 330,000 shares of the Company’s common stock to three of its executive officers, with exercise prices ranging from $5.09 to $5.60 per share, that expire ten years from the date of grant, and with one-third of the total options granted vesting on each of the first, second, and third anniversaries of the grant date. The fair value of each of the option award was estimated on the date of grant using the Black-Scholes option pricing model based on the following assumptions: (i) volatility rate of 57.71%, (ii) discount rate of 2.42%, (iii) zero expected dividend yield, and (iv) expected life of 6.5 years, which is the average of the term of the options and their vesting periods. The total fair value of these options at their grant dates was approximately $948,000.

 

During the nine months ended September 30, 2018, the Company expensed total stock-based compensation related to the vested options of $232,047, and the remaining unamortized cost of the outstanding options at September 30, 2018 was approximately $781,617. This cost will be amortized on a straight-line basis over the weighted average remaining vesting period of 3 years. At September 30, 2018, the 360,000 outstanding stock options had an intrinsic value of approximately $298,000.

v3.10.0.1
WARRANTS
9 Months Ended
Sep. 30, 2018
Warrants  
WARRANTS

NOTE 7 – WARRANTS

 

At September 30, 2018, warrant shares outstanding were as follows:

 

     

Number of

Warrants

   

Weighted

Average

Exercise

Price

 
Outstanding December 31, 2017       115,000     $ 8.75  
Issued              
Exercised              
Outstanding, September 30, 2018       115,000     $ 8.75  

 

In connection with the Company’s underwritten initial public offering in December 2016, the Company issued warrants to the underwriters to purchase up to 115,000 shares of its common stock with an exercise price of $8.75 per share, which warrants expire five years from the date of issuance.

 

There was no intrinsic value of the outstanding and exercisable warrants at September 30, 2018.

v3.10.0.1
DISTRIBUTION AGREEMENT WITH A RELATED ENTITY
9 Months Ended
Sep. 30, 2018
Distribution Agreement With Related Entity  
DISTRIBUTION AGREEMENT WITH A RELATED ENTITY

NOTE 8 – DISTRIBUTION AGREEMENT WITH A RELATED ENTITY

 

On March 1, 2014, the Company entered into a subcontractor installer agreement with Smartgen Solutions, Inc. (“Smartgen”), a related entity that is engaged in business of equipment rental and provider of maintenance, repair and installation services to mobile telecommunications towers in California. Under the terms of the agreement, Smartgen has been appointed as a non-exclusive, authorized service provider for the installation, repair and service of the Company’s products in Southern California. The agreement has a term of three years from the date of execution and automatically renews for additional one year periods if not terminated.

 

During the three months ended September 30, 2018 and 2017, Smartgen performed $26,550 and $31,005 in field services, respectively. Smartgen performed $71,820 and $127,887 in field services for the nine months ended September 30, 2018 and 2017, respectively.

 

Smartgen had no purchases from the Company during the three and nine months ended September 30, 2018. Smartgen had $0 and $1,136 in purchases of goods, parts and services from the Company during the three and nine months ended September 30, 2017, respectively.

v3.10.0.1
COMMITMENT AND CONTINGENCIES
9 Months Ended
Sep. 30, 2018
Commitments and Contingencies Disclosure [Abstract]  
COMMITMENT AND CONTINGENCIES

NOTE 9 – COMMITMENT AND CONTINGENCIES

 

Leases

 

The Company entered into a non-cancellable operating lease of a manufacturing facility located in 249 E. Gardena Blvd., Gardena, CA commencing January 1, 2015 and ending on February 28, 2019. The base rent of the facility at the commencement date was $29,648 per month, which annually increases by 3%. Rent expense for the three months ended September 30, 2018 and 2017 was $97,192 and $94,361, respectively. Rent for the nine months ended September 30, 2018 and 2017 was $291,575 and $283,082, respectively.

 

During the three months ended September 30, 2018, the Company entered into a non-cancellable operating lease of a manufacturing facility located in 400 W. Gardena Blvd., Gardena, CA commencing July 1, 2018 and ending on September 30, 2023. Possession of the property was delayed to August 21, 2018 due to the landlord requiring more time to vacate the property. The base rent of the facility at the commencement date is $22,838 per month, which annually increases by 3%. Rent expense for the three months ended September 30, 2018 was $8,104. 

Legal Proceedings

 

From time to time, the Company may be involved in general commercial disputes arising in the ordinary course of our business. The Company is not currently involved in legal proceedings that could reasonably be expected to have material adverse effect on its business, prospects, financial condition or results of operations.

v3.10.0.1
ORGANIZATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Policies)
9 Months Ended
Sep. 30, 2018
Organization, Consolidation and Presentation of Financial Statements [Abstract]  
Basis of Presentation of Unaudited Financial Information

Basis of Presentation of Unaudited Financial Information

 

The accompanying unaudited condensed financial statements of the Company have been prepared in accordance with accounting principles generally accepted in the United States of America (“GAAP”) for interim financial information and pursuant to the requirements for reporting on Form 10-Q and Regulation S-K for scaled disclosures for smaller reporting companies. Accordingly, they do not include all the information and footnotes required by GAAP for complete financial statements. However, such information reflects all adjustments (consisting solely of normal recurring adjustments), which are, in the opinion of management, necessary for the fair presentation of the Company’s financial position and results of operations. Results shown for interim periods are not necessarily indicative of the results to be obtained for a full fiscal year. The balance sheet information as of December 31, 2017 was derived from the audited financial statements included in the Company’s financial statements as of and for the years ended December 31, 2017 and 2016 contained in the Company’s Annual Report on Form 10-K filed with the Securities and Exchange Commission (“SEC”) on April 2, 2018. These financial statements should be read in conjunction with that report.

Estimates

Estimates

 

The preparation of financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenue and expenses during the reporting period. Material estimates relate to the assumptions made in determining reserves for uncollectible receivables, inventory reserves and returns, impairment analysis of long term assets and deferred tax assets, income tax accruals, accruals for potential liabilities and assumptions made in valuing the fair market value of equity transactions. Actual results may differ from those estimates.

Revenue Recognition

Revenue Recognition

 

In May 2014, the FASB issued ASU 2014-09, Revenue from Contracts with Customers (Topic 606), (ASC 606).  The underlying principle of ASC 606 is to recognize revenue to depict the transfer of goods or services to customers at the amount expected to be collected.   ASC 606  creates a five-step model that requires entities to exercise judgment when considering the terms of contract(s), which includes (1) identifying the contract(s) or agreement(s) with a customer, (2) identifying our performance obligations in the contract or agreement, (3) determining the transaction price, (4) allocating the transaction price to the separate performance obligations, and (5) recognizing revenue as each performance obligation is satisfied.    

 

Under ASC 606, revenue is recognized when performance obligations under the terms of a contract are satisfied, which occurs for the Company upon shipment or delivery of products or services to our customers based on written sales terms, which is also when control is transferred.  Revenue is measured as the amount of consideration we expect to receive in exchange for transferring the products or services to a customer.

 

The Company adopted the guidance of ASC 606 on January 1, 2018.  The implementation of ASC 606 had no impact on the condensed consolidated financial statements and no cumulative effect adjustment was recognized.

 

Accounts Receivable

Accounts Receivable

 

Trade receivables are recorded at net realizable value consisting of the carrying amount less an allowance for uncollectible accounts, as needed. The Company uses the allowance method to account for uncollectible trade receivable balances. Under the allowance method, if needed, an estimate of uncollectible customer balances is made based upon specific account balances that are considered uncollectible. Factors used to establish an allowance include the credit quality and payment history of the customer. The Company did not deem it necessary to provide an allowance for doubtful accounts as of as of September 30, 2018 and December 31, 2017. 

Inventories

Inventories

 

Inventories consist of raw materials and finished goods and are stated at the lower of cost or market. Cost is determined principally on a first-in-first-out average cost basis. Inventory quantities on hand are reviewed regularly and write-downs for obsolete inventory are recorded based on an estimated forecast of the inventory item demand in the near future. As of September 30, 2018 and December 31, 2017, the Company has established inventory reserves of $330,000 for obsolete and slow-moving inventory. As of September 30, 2018 and December 31, 2017, the components of inventories were as follows:

 

   

September 30,

2018

(unaudited)

    December 31,
2017
 
                 
Raw materials   $ 5,025,755     $ 2,716,392  
Finished goods     2,717,860       3,100,661  
      7,743,615       5,817,053  
Less: Inventory reserve     (330,000 )     (330,000 )
Total Inventories, net   $ 7,413,615     $ 5,487,053  
Product Warranties

Product Warranties

 

The Company provides limited warranties for parts and labor at no cost to its customers within a specified time period after the sale. The warranty terms are typically from one to five years. Provisions for estimated expenses related to product warranties are made at the time products are sold. These estimates are established using historical information about the nature, frequency and average cost of warranty claim settlements as well as product manufacturing and recovery from suppliers. Management actively studies trends of warranty claims and takes action to improve product quality and minimize warranty costs. The Company estimates the actual historical warranty claims coupled with an analysis of unfulfilled claims to record a liability for specific warranty purposes. The Company’s product warranty obligations are included in other accrued liabilities in the balance sheets. As of September 30, 2018 and December 31, 2017, the Company had accrued a liability for warranty reserve of $175,000 and $175,000, respectively. Management believes that the warranty accrual is appropriate; however, actual claims incurred could differ from original estimates, requiring adjustments to the accrual. The product warranty accrual is included in current liabilities in the accompanying balance sheets.

 

The following is a tabular reconciliation of the product warranty liability, excluding the deferred revenue related to the Company’s warranty coverage:

 

Changes in estimates for warranties  

September 30,

2018

(unaudited)

    December 31, 2017  
Balance at beginning of the period   $ 175,000     $ 175,000  
Payments     (145,867 )     (364,463 )
Provision for warranties     145,867       364,163  
Balance at end of the period   $ 175,000     $ 175,000  
Income Taxes

Income Taxes

 

The Company accounts for income taxes using the asset and liability method whereby deferred tax assets are recognized for deductible temporary differences, and deferred tax liabilities are recognized for taxable temporary differences. Temporary differences are the differences between the reported amounts of assets and liabilities and their tax bases. Deferred tax assets are reduced by a valuation allowance when, in the opinion of management, it is more likely than not that some portion or all of the deferred tax assets will not be realized before the Company is able to realize their benefits, or that future deductibility is uncertain. 

 

Tax benefits from an uncertain tax position are recognized only if it more likely than not that the tax position will be sustained on examination by the taxing authorities based on technical merits of the position. The tax benefits recognized in the financial statements from such a position are measured based on the largest benefit that has greater than 50 percent likelihood of being realized upon ultimate resolution. Deferred tax assets and liabilities are adjusted for the effects of changes in tax laws and rates on the date of enactment.

Segments

Segments

 

The Company operates in one segment for the manufacture and distribution of its products. In accordance with the “Segment Reporting” Topic of the ASC, the Company’s chief operating decision maker has been identified as the Chief Executive Officer and President, who reviews operating results to make decisions about allocating resources and assessing performance for the entire Company. Existing guidance, which is based on a management approach to segment reporting, establishes requirements to report selected segment information quarterly and to report annually entity-wide disclosures about products and services, major customers, and the countries in which the entity holds material assets and reports revenue. All material operating units qualify for aggregation under “Segment Reporting” due to their similar customer base and similarities in: economic characteristics; nature of products and services; and procurement, manufacturing and distribution processes. Since the Company operates in one segment, all financial information required by “Segment Reporting” can be found in the accompanying consolidated financial statements.

Concentrations

Concentrations

 

Cash. The Company maintains cash balances at several banks, with the majority held at one bank. At times, the amount on deposit exceeds the federally insured limits. Management believes that the financial institutions that hold the Company’s cash are financially sound and, accordingly, minimal credit risk exists.

 

Net Sales. The Company’s net sales are primarily generated from two Tier-1 wireless telecommunications carrier customers in the U.S. For the three months ended September 30, 2018, net sales from our Tier-1 wireless telecommunications carrier customers accounted for 39% (AT&T), 37% (T-Mobile), and 4% (Verizon Wireless) of the Company’s net sales, as compared 9% (AT&T), 1% (T-Mobile), and 74% (Verizon Wireless) of net sales for the three months ended September 30, 2017. For the nine months ended September 30, 2018, AT&T, T-Mobile, and Verizon Wireless represented 61%, 12%, and 13% of net sales, respectively. For the nine months ended September 30, 2017, AT&T, T-Mobile, and Verizon Wireless represented 3.1%, 0.2%, and 82.1% of the Company’s net sales, respectively.

 

Accounts receivable. At September 30, 2018, 31% of the Company’s accounts receivable were from AT&T, 50% from T-Mobile, and 5% from Verizon Wireless. At December 31, 2017, 59% of the Company’s accounts receivable were from AT&T, 0% from T-Mobile, and 30% from Verizon Wireless.

 

Accounts payable. At September 30, 2018, and December 31, 2017 the Company’s largest vendor represented 72% and 75% of accounts payable, respectively.

 

Purchases. The Company has established relationships with third party engine suppliers and other key suppliers from which the Company sources components for its power systems. The Company is substantially dependent on one key engine supplier, Yanmar Engines Company with purchases from Yanmar representing 48% and 19% of the Company’s total raw materials used in cost of sales for the three months ended September 30, 2018 and 2017, respectively, and 76% and 19% for the nine months ended September 30, 2018 and 2017, respectively.

Net Income (Loss) Per Share

Net Income (Loss) Per Share

 

Basic net income (loss) per share is computed by dividing net income (loss) by the weighted average number of common shares outstanding for the period. Diluted earnings per share is computed by dividing the net income applicable to common stock holders by the weighted average number of common shares outstanding plus the number of additional common shares that would have been outstanding if all dilutive potential common shares had been issued using the treasury stock method. Potential common shares are excluded from the computation when their effect is antidilutive. The dilutive effect of potentially dilutive securities is reflected in diluted net income per share if the exercise prices were lower than the average fair market value of common shares during the reporting period.

 

The following potentially dilutive shares were excluded from the shares used to calculate diluted earnings per share as their inclusion would be anti-dilutive:

 

     

September 30, 

2018

(Unaudited)

   

September 30,

2017
(Unaudited)

 
Options       360,000        
Warrants       115,000       115,000  
Total       475,000       115,000  
Recent Accounting Pronouncements

Recent Accounting Pronouncements      

 

In February 2016, the FASB issued Accounting Standards Update (ASU) No. 2016-02, Leases. ASU 2016-02 requires a lessee to record a right of use asset and a corresponding lease liability on the balance sheet for all leases with terms longer than 12 months. ASU 2016-02 is effective for all interim and annual reporting periods beginning after December 15, 2018. Early adoption is permitted. A modified retrospective transition approach is required for lessees for capital and operating leases existing at, or entered into after, the beginning of the earliest comparative period presented in the financial statements, with certain practical expedients available. The Company is currently evaluating the expected impact that the standard could have on its financial statements and related disclosures.

 

Other recent accounting pronouncements issued by the FASB, including its Emerging Issues Task Force, the American Institute of Certified Public Accountants, and the SEC did not or are not believed by management to have a material impact on the Company’s present or future consolidated financial statements.

v3.10.0.1
ORGANIZATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Tables)
9 Months Ended
Sep. 30, 2018
Organization, Consolidation and Presentation of Financial Statements [Abstract]  
Schedule of components of inventory

As of September 30, 2018 and December 31, 2017, the components of inventories were as follows:

 

   

September 30,

2018

(unaudited)

    December 31,
2017
 
                 
Raw materials   $ 5,025,755     $ 2,716,392  
Finished goods     2,717,860       3,100,661  
      7,743,615       5,817,053  
Less: Inventory reserve     (330,000 )     (330,000 )
Total Inventories, net   $ 7,413,615     $ 5,487,053  
Schedule of reconciliation of the product warranty liability

The following is a tabular reconciliation of the product warranty liability, excluding the deferred revenue related to the Company’s warranty coverage:

 

Changes in estimates for warranties  

September 30,

2018

(unaudited)

    December 31, 2017  
Balance at beginning of the period   $ 175,000     $ 175,000  
Payments     (145,867 )     (364,463 )
Provision for warranties     145,867       364,163  
Balance at end of the period   $ 175,000     $ 175,000  
Schedule of anti-dilutive

The following potentially dilutive shares were excluded from the shares used to calculate diluted earnings per share as their inclusion would be anti-dilutive:

 

     

September 30, 

2018

(Unaudited)

   

September 30,

2017
(Unaudited)

 
Options       360,000        
Warrants       115,000       115,000  
Total       475,000       115,000  
v3.10.0.1
PROPERTY AND EQUIPMENT (Tables)
9 Months Ended
Sep. 30, 2018
Property, Plant and Equipment [Abstract]  
Schedule of property and equipment

Property and equipment consists of the following:

 

   

September 30, 

2018 

(Unaudited) 

   

December 31, 

2017

 
Production tooling, jigs, fixtures   $ 70,749     $ 70,749  
Shop equipment and machinery     2,268,078       1,451,423  
Vehicles     127,495       122,264  
Leasehold improvements     72,161       42,173  
Office equipment     129,171       114,454  
Software     105,690       97,533  
Total property and equipment, cost     2,770,344       1,898,596  
Less: accumulated depreciation and amortization     (1,344,246 )     (1,074,520 )
Property and equipment, net   $ 1,426,098     $ 824,076  
v3.10.0.1
NOTES PAYABLE (Tables)
9 Months Ended
Sep. 30, 2018
Payables and Accruals [Abstract]  
Schedule of notes payable

Notes payable consist of the following:

 

   

September 30,

2018

    December 31,  
    (Unaudited)     2017  
Total Equipment Notes Payable   $ 817,436     $ 237,055  
Less Current Portion     (196,323 )     (110,237 )
Notes Payable, Long term   $ 621,113     $ 126,818  
v3.10.0.1
STOCK OPTIONS (Tables)
9 Months Ended
Sep. 30, 2018
Stock Options  
Schedule of stock option

 The following table summarizes stock option activity:

 

      Number of     Weighted Average  
      Options     Exercise Price  
Outstanding, December 31, 2017       30,000     $ 4.84  
Granted       330,000       5.32  
Exercised              
Outstanding, September 30, 2018       360,000     $ 5.28  
Exercisable, September 30, 2018              
v3.10.0.1
WARRANTS (Tables)
9 Months Ended
Sep. 30, 2018
Warrants  
Schedule of warrant activity

At September 30, 2018, warrant shares outstanding were as follows:

 

     

Number of

Warrants

   

Weighted

Average

Exercise

Price

 
Outstanding December 31, 2017       115,000     $ 8.75  
Issued              
Exercised              
Outstanding, September 30, 2018       115,000     $ 8.75  
v3.10.0.1
ORGANIZATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Details) - USD ($)
Sep. 30, 2018
Dec. 31, 2017
Organization, Consolidation and Presentation of Financial Statements [Abstract]    
Raw materials $ 5,025,755 $ 2,716,392
Finished goods 2,717,860 3,100,661
Total Inventories, gross 7,743,615 5,817,053
Less: Inventory reserve (330,000) (330,000)
Total Inventories, net $ 7,413,615 $ 5,487,053
v3.10.0.1
ORGANIZATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Details 1) - USD ($)
9 Months Ended 12 Months Ended
Sep. 30, 2018
Dec. 31, 2017
Movement in Standard Product Warranty Accrual [Roll Forward]    
Balance at beginning of the period $ 175,000 $ 175,000
Payments (145,867) (364,463)
Provision for warranties 145,867 364,163
Balance at end of the period $ 175,000 $ 175,000
v3.10.0.1
ORGANIZATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Details 2) - shares
Sep. 30, 2018
Dec. 31, 2017
Organization, Consolidation and Presentation of Financial Statements [Abstract]    
Options 360,000
Warrants 115,000 115,000
Total 475,000 115,000
v3.10.0.1
ORGANIZATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Details Narrative) - USD ($)
3 Months Ended 9 Months Ended 12 Months Ended
Sep. 30, 2018
Sep. 30, 2017
Sep. 30, 2018
Sep. 30, 2017
Dec. 31, 2017
Dec. 31, 2016
Allowance for doubtful accounts $ 0   $ 0   $ 0  
Inventory reserves 330,000   330,000   330,000  
Warranty reserve $ 175,000   $ 175,000   $ 175,000 $ 175,000
Maximum [Member]            
Warrant term     5 years      
Minimum [Member]            
Warrant term     1 year      
AT&T [Member] | Revenue[Member]            
Concentration risk 39.00% 9.00% 61.00% 3.10%    
AT&T [Member] | Accounts Receivable [Member]            
Concentration risk     31.00%   59.00%  
T-Mobile [Member] | Revenue[Member]            
Concentration risk 37.00% 1.00% 12.00% 0.20%    
T-Mobile [Member] | Accounts Receivable [Member]            
Concentration risk     50.00%   0.00%  
Verizon Wireless [Member] | Revenue[Member]            
Concentration risk 4.00% 74.00% 13.00% 82.10%    
Verizon Wireless [Member] | Accounts Receivable [Member]            
Concentration risk     5.00%   30.00%  
Largest Vendors [Member] | Accounts Payable [Member]            
Concentration risk     72.00%   75.00%  
Yanmar Engines Company [Member] | Cost of Sales [Member]            
Concentration risk 48.00% 24.00% 76.00% 25.00%    
Military contractors [Member] | Sales Backlog [Member]            
Concentration risk     32.00%      
v3.10.0.1
RESTRICTED CASH (Details Narrative) - USD ($)
Sep. 30, 2018
Dec. 31, 2017
Receivables [Abstract]    
Restricted cash $ 1,002,304 $ 1,001,180
v3.10.0.1
PROPERTY AND EQUIPMENT (Details) - USD ($)
Sep. 30, 2018
Dec. 31, 2017
Total property and equipment, cost $ 2,770,344 $ 1,898,596
Less: accumulated depreciation and amortization (1,344,246) (1,074,520)
Property and equipment, net 1,426,098 824,076
Office Equipment [Member]    
Total property and equipment, cost 129,171 114,454
Production Tooling, Jigs, Fixtures [Member]    
Total property and equipment, cost 70,749 70,749
Shop Equipment And Machinery [Member]    
Total property and equipment, cost 2,268,078 1,451,423
Vehicles [Member]    
Total property and equipment, cost 127,495 122,264
Leasehold Improvements [Member]    
Total property and equipment, cost 72,161 42,173
Software [Member]    
Total property and equipment, cost $ 105,690 $ 97,533
v3.10.0.1
PROPERTY AND EQUIPMENT (Details Narrative) - USD ($)
3 Months Ended 9 Months Ended
Sep. 30, 2018
Sep. 30, 2017
Sep. 30, 2018
Sep. 30, 2017
Depreciation and amortization expense $ 114,779 $ 65,679 $ 269,726 $ 185,759
Cost of Sales [Member]        
Depreciation expense $ 105,882 $ 58,058 $ 243,285 $ 162,730
v3.10.0.1
NOTES PAYABLE (Details) - USD ($)
Sep. 30, 2018
Dec. 31, 2017
Payables and Accruals [Abstract]    
Total Equipment Notes Payable $ 817,436 $ 237,055
Less Current Portion (196,323) (110,237)
Notes Payable, Long term $ 621,113 $ 126,818
v3.10.0.1
NOTES PAYABLE (Details Narrative) - USD ($)
9 Months Ended 12 Months Ended
Sep. 30, 2018
Sep. 30, 2017
Dec. 31, 2017
Notes payable $ 621,113   $ 126,818
Equipment purchased 208,998 $ 182,397  
Equipment [Member] | Several Financing Agreements [Member]      
Notes payable $ 817,436    
Debt term 5 years    
Interest rate 5.00%    
Description of collateral Secured by the purchased equipment.   Secured by the purchased equipment.
Equipment purchased $ 660,000    
Monthly payments of principal and interest $ 23,000    
Frequency of payment Monthly    
Due date Dec. 31, 2023    
Minimum [Member] | Equipment [Member] | Several Financing Agreements [Member]      
Debt term     2 years
Interest rate     1.90%
Maximum [Member] | Equipment [Member] | Several Financing Agreements [Member]      
Debt term     5 years
Interest rate     6.90%
v3.10.0.1
LINE OF CREDIT (Details Narrative) - Citibank, N.A. [Member] - Revolving Credit Facility [Member] - Credit Agreement [Member] - USD ($)
Mar. 21, 2017
Sep. 30, 2018
Dec. 31, 2017
Maximum borrowing capacity $ 1,000,000    
Description of expiration <p><font style="font: 10pt Times New Roman, Times, Serif">Expire at such time the parties mutually agree to terminate the credit facility or at the election of the lender.</font></p>    
Description of interest rate <p><font style="font: 10pt Times New Roman, Times, Serif">Interest accrues on the principal amount of revolving loans outstanding under the credit facility at a rate equal to the greater of (i) the prime rate of interest as published by Citibank, or (ii) the one-month London Interbank Offered Rate plus 2%.</font></p>    
Description of payments <p><font style="font: 10pt Times New Roman, Times, Serif">Amounts outstanding from time to time under the credit facility are due and payable monthly in an amount equal to the greater of 2% of the outstanding principal balance or $100, plus accrued interest.</font></p>    
Annual finance charge $ 2,500    
Description of collateral <p><font style="font: 10pt Times New Roman, Times, Serif">Certificate of Deposit (restricted cash) account opened by the Company with Citibank in the amount of $1,000,000.</font></p>    
Description covenant terms <p style="text-align: justify"><font style="font: 10pt Times New Roman, Times, Serif">(i) creating or permitting to exist any liens, security interests or other encumbrances on the Company’s assets, (ii) engaging in any business activities substantially different than those in which the Company is presently engaged, (iii) ceasing operations, liquidating, merging, transferring, acquiring or consolidating with any other entity, changing its name, dissolving or transferring or selling collateral out of the ordinary course of business, or (iv) paying dividends on the Company’s capital stock (other than dividends payable in stock). The Company was in compliance with all covenants at June 30, 2018.</font></p> <p></p>    
Remaining borrowing capacity   $ 0 $ 1,000,000
v3.10.0.1
STOCK OPTIONS (Details)
9 Months Ended
Sep. 30, 2018
$ / shares
shares
Share-based Compensation Arrangement by Share-based Payment Award, Options, Outstanding [Roll Forward]  
Beginning balance
End balance 360,000
Polar Power 2016 Omnibus Incentive Plan [Member]  
Share-based Compensation Arrangement by Share-based Payment Award, Options, Outstanding [Roll Forward]  
Beginning balance 30,000
Issued 330,000
Exercised
End balance 360,000
Share-based Compensation Arrangement by Share-based Payment Award, Options, Outstanding, Weighted Average Exercise Price [Roll Forward]  
Beginning balance | $ / shares $ 4.84
Issued | $ / shares 5.32
Exercised | $ / shares
End balance | $ / shares $ 5.28
v3.10.0.1
STOCK OPTIONS (Details Narrative) - Polar Power 2016 Omnibus Incentive Plan [Member] - USD ($)
9 Months Ended
Sep. 30, 2018
Jul. 08, 2016
Number of shares authorized   1,754,385
Maximum number of shares available for issuance   350,877
Number of shares granted 330,000  
Expiration period 10 years  
Vesting period 1 year  
Volatility rate 57.71%  
Discount rate 2.42%  
Expected dividend yield 0.00%  
Expected life 6 years 6 months  
Total fair value of the option grants $ 948,000  
Total stock-based compensation 232,047  
Unamortized compensation cost $ 781,617  
Unamortized compensation cost period 3 years  
Intrinsic value outstanding stock options $ 298,000  
Option outstanding 360,000  
Minimum [Member]    
Exercise prices $ 5.09  
Maximum [Member]    
Exercise prices $ 5.60  
v3.10.0.1
WARRANTS (Details)
9 Months Ended
Sep. 30, 2018
$ / shares
shares
Number of Warrants [Roll Forward]  
Outstanding at beginning | shares 115,000
Issued | shares
Exercised | shares
Outstanding at end | shares 115,000
Weighted Average Exercise Price [Roll Forward]  
Outstanding at beginning | $ / shares $ 8.75
Issued | $ / shares
Exercised | $ / shares
Outstanding at end | $ / shares $ 8.75
v3.10.0.1
WARRANTS (Details Narrative) - Warrant [Member]
1 Months Ended
Dec. 31, 2016
$ / shares
shares
Common stock purchases | shares 115,000
Exercise price | $ / shares $ 8.75
Warrant term 5 years
v3.10.0.1
DISTRIBUTION AGREEMENT WITH A RELATED ENTITY (Details Narrative) - Smartgen Solutions, Inc. ("Smartgen") [Member] - Subcontractor Installer Agreement [Member] - USD ($)
3 Months Ended 9 Months Ended
Sep. 30, 2018
Sep. 30, 2017
Sep. 30, 2018
Sep. 30, 2017
Due to related party $ 26,550 $ 31,005 $ 71,820 $ 127,887
Due from related party $ 0   $ 1,136  
v3.10.0.1
COMMITMENT AND CONTINGENCIES (Details Narrative) - USD ($)
3 Months Ended 9 Months Ended 12 Months Ended
Sep. 30, 2018
Sep. 30, 2017
Sep. 30, 2018
Sep. 30, 2017
Dec. 31, 2017
Rent expense $ 8,104        
Revenue 5,061,158 $ 3,030,026 $ 15,748,845 $ 10,438,761  
Non-Cancellable Operating Lease [Member] | Manufacturing Facility (Gardena, CA) [Member]          
Lease expiration date     Feb. 28, 2019    
Monthly base rent     $ 29,648    
Percentage of annula increase in base rent     3.00%    
Rent expense $ 97,192 $ 94,361 $ 291,575 $ 283,082  
Non-Cancellable Operating Lease One[Member] | Manufacturing Facility (Gardena, CA) [Member]          
Lease expiration date     Jun. 30, 2023    
Monthly base rent     $ 22,838    
Percentage of annula increase in base rent     3.00%    
Verizon Wireless [Member] | Revenue[Member]          
Concentration risk 4.00% 74.00% 13.00% 82.10%  
Verizon Wireless [Member] | Accounts Receivable [Member]          
Concentration risk     5.00%   30.00%
AT&T [Member] | Revenue[Member]          
Concentration risk 39.00% 9.00% 61.00% 3.10%  
AT&T [Member] | Accounts Receivable [Member]          
Concentration risk     31.00%   59.00%