Digital Power Corporation Reports Financial Results for the First Quarter Ended March 31, 2014

FREMONT, Calif., May 12, 2014

Digital Power's revenues for the first quarter ended March 31, 2014 were $2,037,000, a decrease of 6.9% from revenues of $2,189,000 for the same quarter ended March 31, 2013.  The Company recorded an operating loss of $155,000 for the quarter ended on March 31, 2014 compared to an operating profit of $14,000 for the quarter ended on March 31, 2013. In addition:

• The Company recorded a net loss of $158,000 for the quarter ended March 31, 2014 compared to a net profit of $107,000 for the quarter ended March 31, 2013 as a result of the operating loss in 2014 and other income in 2013 which was not recognized in 2014.
• Gross margin in the first quarter ended March 31, 2014 was 37.4% compared to 37.8% for the quarter ended March 31, 2013.
• Operating expenses were $917,000 for the quarter ended March 31, 2014 compared to $814,000 for the quarter ended March 31, 2013.  The increase in operating expenses was the result of headcount additions in the Company's direct sales force along with certain nonrecurring outside service and consulting costs.

Commenting on the results, President and CEO, Amos Kohn, stated: "We experienced a decrease in our defense revenue for the first quarter of 2014 versus the prior year as a result of a decline in the number of closed projects during the quarter which contributed most of the revenue variance from year to year. We have added additional direct sales management in the U.S. in the first quarter of 2014 which increased our operating expenses but which we believe necessary to expand our target market and to help accommodate our product expansion plan."

Mr. Kohn continued:

"We continue to pursue our strategic plan of developing complete customized power solutions and enhancing our standard product offering with innovative, high density and efficient power supplies at ever increasing power levels. The focus on a complete solution for power applications is well received by our major telecom, medical, military and industrial customers."

About Digital Power:

Digital Power Corporation is a solution-driven organization that designs, develops, manufactures and sells high-grade customized and flexible power system solutions for the most demanding applications in the medical, military, telecom and industrial markets. We are highly focused on high-grade and custom product designs for both the commercial and military/defense markets, where customers demand high density, high efficiency and ruggedized products to meet the harshest and/or military mission critical operating conditions. We are a California corporation originally formed in 1969, and our common stock trades on the NYSE Amex under the symbol "DPW". Digital Power's headquarters is located at 48430 Lakeview Blvd, Fremont, California, 94538.