Polar Power, Inc. (NASDAQ: POLA) entered into an exchange agreement on September 25, 2026, with Arthur Sams, the Company’s Chief Executive Officer, Secretary, and Chairman of the board of directors. Under the terms of the agreement, Mr. Sams surrendered $614,700 in aggregate principal amount and accrued interest of promissory notes previously issued to him.
In exchange for this debt, the Company issued Mr. Sams 683 shares of Series A Convertible Preferred Stock. The Company also issued a warrant to Mr. Sams allowing him to purchase 382,276 shares of the Company’s common stock.
The Series A Convertible Preferred Stock has a stated value of $1,000 per share and is designated as Series A Convertible Preferred Stock. According to the Company’s certificate of designation, the Preferred Stock accrues a monthly dividend at a rate of 10% per annum. The Preferred Stock is convertible into Common Stock at a market conversion price equal to 90% of the lowest volume-weighted average price (VWAP) over the seven consecutive trading days immediately preceding the applicable conversion date, provided the price does not fall below a floor price.
The warrant to purchase Common Stock has an initial exercise price of $1.34 per share and is exercisable for a period of three years from the date of issuance. The Company stated that the debt-to-equity conversion strengthens its capital structure and is intended to support its efforts to regain and maintain compliance with applicable Nasdaq continued listing requirements. The conversion was approved by the Company’s Audit Committee, which consists entirely of independent board members.
