Polar Power Inc

Proposal Three asks stockholders to authorize Polar Power to issue common stock and securities convertible into or exercisable for common stock beyond Nasdaq’s 19.99% issuance cap in non-public financing transactions. The request covers multiple recent financings, including convertible notes, Series A convertible preferred stock, warrants and the Roth Principal Investments committed equity facility. Nasdaq Listing Rule 5635(d) requires approval because the potential issuances may equal or exceed 20% of outstanding shares or voting power at prices below the applicable Minimum Price. Management states that approval is necessary to unlock the full economic benefit of the financings and to support the Company’s restructuring and efforts to restore Nasdaq compliance. Without approval, issuances would remain limited by the Exchange Cap, potentially causing defaults, liquidated damages, renewed approval requirements or impaired access to capital. The Company warns that approval could substantially dilute existing stockholders because as many as 26,995,667 shares are registered for resale compared with 4,309,319 common shares outstanding at the record date. It also cautions that future resale overhang could pressure the market price and make later equity financing more difficult. The Company says beneficial-ownership blockers prevent investors from acquiring 20% or more of voting power or otherwise obtaining control, so separate Nasdaq change-of-control approval is not being sought. The Board unanimously recommends a vote FOR, emphasizing financing access, liquidity and Nasdaq compliance despite the substantial dilution risk.

Proposal Four asks stockholders to approve a Charter amendment giving the Board authority to effect a reverse stock split at any ratio from one-for-three to one-for-twenty before December 31, 2027. The Board, rather than stockholders at a later meeting, would choose the timing and specific ratio if it determines the transaction remains advisable. Management’s primary objective is to increase the per-share market price enough to satisfy Nasdaq’s minimum bid-price requirement and avoid delisting. The Company previously completed a one-for-seven reverse split in November 2024, and Nasdaq’s cumulative split limitations constrain the available ratio before November 18, 2026. The proposal would reduce outstanding shares while leaving the authorized share count unchanged, thereby increasing authorized but unissued capacity for financing, acquisitions, strategic relationships and equity compensation. Management acknowledges that this capacity could facilitate substantial future dilution and could potentially be used defensively against a takeover, although it says no anti-takeover transaction is planned. The Company also identifies risks that the split may fail to sustain a price above $1, reduce liquidity, create odd-lot trading costs or lower total market capitalization. Fractional shares would not be paid in cash; holders otherwise entitled to fractions would be rounded up to the next whole share. The Board unanimously recommends voting FOR because it believes a flexible ratio is necessary to preserve Nasdaq listing and provide corporate-finance flexibility, while reserving the right to abandon the split if it no longer serves stockholder interests.

Proposal Five is the Company’s non-binding say-on-pay vote on compensation paid to its named executive officers. The resolution asks stockholders to approve the overall compensation program rather than any individual salary, bonus or equity award. Management describes the program as intended to attract, retain, motivate and reward executives responsible for Company performance. The program includes base salary, annual cash incentives and long-term equity incentives, with stated goals of aligning executives with stockholders and encouraging achievement of financial and strategic objectives. For 2025, the Company’s named executive officers received salary compensation of $275,000 for Arthur D. Sams and $200,000 for Luis Zavala, with no reported option or stock awards during the year. The incentive framework used revenue, gross margin, EBITDA, customer concentration and international sales metrics, although the disclosed 2025 actual results were materially below the stated minimum or target thresholds. The Company also highlights governance features including long-term vesting, anti-hedging and anti-pledging rules, no option repricing without stockholder approval, change-in-control vesting and a clawback policy. The vote is advisory and therefore does not bind the Company, the Board or the Compensation Committee. The Board unanimously recommends voting FOR, asserting that the compensation philosophy and structure align executive rewards with Company and stockholder interests.

Proposal Six asks stockholders to express a non-binding preference for holding future say-on-pay votes every one, two or three years. The resolution does not approve or reject executive compensation and instead addresses the cadence of future advisory votes. The Company’s proxy card provides the three frequency choices plus abstention. The Board recommends a vote for every two years, and undirected proxies will be voted for that frequency. Under the stated voting standard, the option receiving the highest number of votes cast will become the stockholder-selected frequency. The Company does not provide an extensive independent rationale for the two-year recommendation beyond presenting it as the Board’s preferred cadence. A two-year cycle would provide more frequent feedback than a triennial vote while avoiding the annual administrative and potential short-term orientation associated with yearly votes. The selected frequency remains advisory and does not legally bind the Company or require the Board to follow it. The proposal is part of the Dodd-Frank Act’s recurring governance process for say-on-pay oversight. The Board unanimously recommends voting FOR the two-year option.

Proposal Seven asks stockholders to authorize the Chairman or proxy holders to adjourn, postpone or continue the Annual Meeting if there are insufficient votes to approve Proposal Three or Proposal Four. The authority would give management additional time to solicit proxies supporting the financing-related share issuance and reverse stock split. The proposal could be used even after proxies opposing those proposals have been received, because management could seek to persuade those stockholders to change their votes. An approved adjournment would delay the final vote rather than itself approve either underlying proposal. The Company states that the authority is intended to address an inadequate vote count at the meeting and preserve the opportunity to obtain the approvals needed for its financing and Nasdaq-related initiatives. The financing proposal is important to the Company’s ability to exceed the 19.99% issuance cap and access proceeds under recent financings. The reverse split proposal is intended to improve the Company’s per-share price and support continued Nasdaq listing. The required vote is a majority of the voting power present or represented and entitled to vote on the matter. The Board unanimously recommends voting FOR because additional solicitation may be necessary to secure approval of Proposals Three and Four.