10-K: TurnOnGreen, Inc. Reports Fiscal Year 2024 Results, Cites Revenue Growth and Strategic Shifts

TurnOnGreen, Inc. reports increased revenue and gross profit for fiscal year 2024, driven by growth in the defense sector and strategic focus on EV charging solutions.

Summary

• TurnOnGreen, Inc. reported a revenue increase of $711,000 for the fiscal year ended December 31, 2024, reaching $4.912 million compared to $4.201 million in 2023.
• Gross profit saw a significant rise of $1.227 million, totaling $2.122 million in 2024 versus $895,000 in the previous year.
• The company's net loss before income taxes decreased by $866,000, improving from a loss of $4.834 million in 2023 to $3.968 million in 2024.
• Operating expenses increased slightly by $43,000, totaling $5.666 million in 2024 compared to $5.569 million in 2023.
• A significant write-off of EV-related assets amounting to $763,000 was recorded in 2024 due to underperformance in the EV charging business.
• The company's backlog as of December 31, 2024, was approximately $6.1 million, compared to $4.2 million as of December 31, 2023.
• The company is focusing on its EV charging operating segment, which is expected to increase the complexity of its business.
• The company acknowledges a history of net losses and expresses substantial doubt about its ability to continue as a going concern without additional funding.
• The company is implementing measures to strengthen internal control over financial reporting to remediate identified material weaknesses.

Sentiment

Score: 4

Explanation: The document presents a mixed picture. While there's revenue growth and improved gross profit, significant losses, internal control weaknesses, and going concern doubts weigh heavily, resulting in a slightly negative sentiment.

Positives

• Revenue increased by $711,000 compared to the previous year.
• Gross profit increased by $1.227 million compared to the previous year.
• Net loss before income tax provision decreased by $866,000 compared to the previous year.
• The company is focused on maintaining customer retention and expanding within existing customer relationships.
• The company is pursuing strategic business acquisitions for growth.
• The company is implementing measures to strengthen internal control over financial reporting.

Negatives

• The company has a history of annual net losses and anticipates continuing losses.
• The company had cash of $0.0 million and negative working capital of $6.5 million as of December 31, 2024.
• The company identified material weaknesses in its internal control over financial reporting.
• The company wrote off $763,000 in EV-related assets due to underperformance in the EV charging business.
• The company expresses substantial doubt about its ability to continue as a going concern without additional funding.

Risks

• The company's business model will continue to evolve as it focuses on the EV charging operating segment, which will increase the complexity of its business.
• The company's growth strategy through acquisitions involves a significant degree of risk.
• The company depends upon a few major customers for most of its revenues, and the loss of any of these customers would significantly reduce its revenues.
• The company is heavily dependent on its senior management, and a loss of a member of its senior management team could adversely affect its existing operations and future development.
• The company's technology is generally unpatented, and others may seek to copy it.
• The company relies on charging station manufacturers and other partners, and a loss of any such partner or interruption in the partner's production could have a material adverse effect on its business.
• The company is dependent upon its and its contract manufacturers' ability to timely procure electronic components.
• The company depends on international operations for a substantial portion of its manufacturing components and products, which are subject to uncertainties associated with international business operations.
• The company faces intense industry competition, price erosion, and product obsolescence.
• Supply chain disruptions, component shortages, manufacturing interruptions or delays, or the failure to accurately forecast customer demand could adversely affect the company's ability to meet customer's demand.

Future Outlook

The company intends to finance its future development activities and its working capital needs largely through the sale of equity securities with some additional funding from other sources, including term notes until such time as funds provided by operations are sufficient to fund working capital requirements.

Industry Context

The document indicates that the company operates in the power solutions and EV charging solutions industries, which are characterized by intense competition, rapid technological change, and evolving government regulations.

Comparison to Industry Standards

• The document mentions competitors such as Bel Fuse, Artesyn Embedded Technologies, TDK-Lambda, Delta Electronics, Murata and Mean-Well Power Supplies in the power solutions industry, noting that many of these competitors have greater fiscal and marketing resources.
• In the EV charging market, the document identifies Tesla, ChargePoint, Blink Charging, EVGO, Electrify America, and Sema Connect as key competitors.

Legal Proceedings

• The Company is currently involved in litigation arising from matters in the ordinary course of business.
• In May 2023 the arbitrator entered a final award against the Company and in favor of Mr. Gordon in the amount of $1.1 million inclusive of interest, legal fees, administrative fees and expenses.

Related Party Transactions

• Hyperscale provides human resources, accounting and other services to the Company, which are included as allocations of these expenses.
• The Company recognized $28,000 and $14,000 in revenue in the years ended December 31, 2024, and 2023, respectively, from sales to another subsidiary of Hyperscale.
• Related party notes and advances payable were used for working capital purposes.

Stakeholder Impact

• Shareholders face the risk of dilution from potential equity offerings.
• Shareholders may experience volatility in the market price of the common stock.
• Customers may be affected by supply chain disruptions and potential delays in product delivery.
• Employees may be affected by the company's ability to attract and retain qualified personnel.
• Creditors face the risk of non-payment due to the company's financial condition and going concern doubts.

Next Steps

• The company intends to continue to try to offer additional types of products or services, including with respect to our EV charging products and services.
• The company intends to continue to aggressively market and sell our core power products through our existing domestic and international markets, with an emphasis on the North American market.
• The company intends to generate revenues by our eMobility charging services through various partnership and business models to reach new customers, in each case coordinated through our dedicated sales groups.
• The company aims to broaden its existing product and technology base, build on its long-standing industry relationships and enhance its ability to penetrate new markets through selective acquisitions of, or investments in, complementary businesses, products, services and technologies in the power system solutions and EV charging industries.
• The company is committed to the continuous improvement of our internal control over financial reporting.

Key Dates

Keywords

EV charging, power solutions, electric vehicles, financial results, TurnOnGreen, revenue, losses, internal control, risk factors, going concern