Digital Power Corporation Reports Financial Results for the Fourth Quarter and the Year Ended December 31, 2013

FREMONT, Calif., March 28, 2014

Digital Power's revenues for the year ended December 31, 2013 were $8,770,000, an increase of 2% from revenue of $8,589,000 for the year ended December 31, 2012. We recorded an operating loss of $317,000 for the year ended December 31, 2013 compared to an operating loss of $94,000 for comparable 2012 period.  Net loss for the year ended December 31, 2013 was $632,000, an increase of 92%, or $303,000, over the loss of $329,000 for the year ended December 31, 2012. Gross margin in 2013 was 36%, a decrease from 40% reported in 2012.

Digital Power reported revenues of $2,267,000 for the fourth quarter ended December 31, 2013, an increase of 31% from revenue of $1,728,000 in the comparable quarter in 2012. We recorded an operating loss of $173,000 for the fourth quarter of 2013, compared to an operating loss of $438,000 for the fourth quarter of 2012. Digital Power reported a net loss of $361,000 for the fourth quarter of 2013, compared to a net loss of $415,000 for the fourth quarter of 2012.

Commenting on the results, President and CEO Amos Kohn stated: "During the fourth quarter and year ended December 31, 2013, we generated revenues from the sale of customized product solutions for the military, medical and telecom industries. This was part of our strategy to increase our efforts to provide fully customized power solutions, while continuing to engage with customers who buy our high-end standard and modified-standard product lines. Although our bottom line results were disappointing with respect to 2013, a majority of the increase in our net loss over 2012 was the result of an increase in non-cash related impairment charges associated with our 2011 investment in an affiliated company.  Operating expenses were slightly lower in 2013 versus 2012, but we did experience a decline in gross margins related to product mix and incremental warranty expenses associated with certain foreign contracts."

Mr. Kohn continued: "We expanded our presence in certain market segments, as we were awarded several new fully customized design projects to supply power solutions for defense battlefield uses and scenarios and expanded our medical product capabilities to include patient-contact medical surgical instruments. In addition, we continue to develop and sell power rectifier systems to international naval fleets. We will continue to focus on solution-driven applications for our major vertical markets, including the telecom, medical, military, and industrial market segments. In addition, we plan to expand our capabilities by accelerating our development and release of even more advanced power products."

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. Website: www.digipwr.com.