Polar Power, Inc. (NASDAQ: POLA) announced that its founder, President and Chief Executive Officer Arthur D. Sams has agreed to convert $614,700 of debt owed to him by the company into 683 Series A Convertible Preferred shares.

The transaction eliminates the debt from Polar Power's balance sheet and increases shareholders' equity. The company said the conversion represents a step toward addressing a shareholders' equity compliance issue with Nasdaq continued listing requirements.

"Converting this debt into equity reflects my confidence in Polar Power's future and my commitment to the Company's long-term success," Sams said in a statement.

In addition to the preferred shares, Polar Power is issuing Sams a warrant to purchase 382,276 shares of common stock at $1.34 per share.

The debt-to-equity conversion was approved by Polar Power's Audit Committee, which consists entirely of independent board members. The company is headquartered in Gardena, California.