What Changed
Polar Power, Inc. filed an S-1 registration statement with the SEC on August 24, 2026, signaling intent to go public. The filing size is 712 KB, typical for a small-cap industrial manufacturer preparing for retail investor access. For holders of pre-IPO equity or employees with unvested stock options, the lockup period and valuation multiples in this filing determine liquidity timing and exit value.
The Numbers That Matter
| Metric | Pre-IPO Private Valuation | Post-IPO Public Market Range | Spread |
|---|---|---|---|
| Equity access | Illiquid, 409A valuation | Tradable at market price | Lockup: 90 to 180 days |
| Tax treatment on options exercised | AMT on spread at exercise | Capital gains on sale post-lockup | 23.8% federal on gains |
| Dilution risk from offering | N/A | 15% to 25% dilution typical | Depends on shares issued |
| Valuation multiple (industrial) | 2x to 4x revenue private | 1.5x to 3x revenue public | Compression common |
The filing does not yet disclose offer price, share count, or lockup terms. Those typically arrive in an amended S-1 within 30 to 60 days. For employees holding ISOs or NSOs, the exercise decision hinges on the final IPO price and your AMT capacity in 2026.
What This Means for Your Portfolio
If you hold 50,000 options with a $2 strike price and the IPO prices at $10 per share, your paper gain is $400,000 pre-tax. Exercise before the IPO triggers AMT on the $400,000 spread at 28%, or $112,000 in 2026 tax liability. Exercise post-IPO and sell immediately results in ordinary income treatment on the same $400,000, taxed at 37% federal plus 13.3% California state if applicable, totaling $201,200. The AMT path saves $89,200 but requires cash on hand to cover the exercise cost and the AMT bill before liquidity arrives.
Scenario Analysis
| Position Size (Options) | Strike Price | IPO Price | Pre-Tax Gain | AMT Path (28%) | Ordinary Income Path (37% + 13.3% CA) | Savings from AMT Exercise |
|---|---|---|---|---|---|---|
| 25,000 shares | $2.00 | $10.00 | $200,000 | $56,000 | $100,600 | $44,600 |
| 50,000 shares | $2.00 | $10.00 | $400,000 | $112,000 | $201,200 | $89,200 |
| 100,000 shares | $2.00 | $10.00 | $800,000 | $224,000 | $402,400 | $178,400 |
These figures assume California residency and full exercise before IPO pricing. If you lack the cash to exercise and cover AMT, the ordinary income path becomes the default. For a $1M option position, the tax difference is $178,400. A bridge loan or margin facility can help cover both exercise cost and AMT liability if your credit profile supports it.
The Lockup Window
Lockup periods for employees typically run 90 to 180 days post-IPO. The S-1 amendment will specify this. During lockup, you hold equity with a public market price but no ability to sell. If the stock trades down 20% during lockup, your $400,000 pre-tax gain drops to $320,000 at sale. That is $80,000 in unrealized loss you cannot hedge. The AMT exercise path frontloads tax liability but starts your capital gains holding period on IPO day, not sale day. If you hold through lockup expiration and one additional year, you convert the post-lockup gain to long-term capital gains at 23.8%, not ordinary income at 50.3% all-in.
| Scenario | IPO Price | Price at Lockup End | Price 1 Year Post-Lockup | Tax on Full Gain (Ordinary) | Tax on Full Gain (LTCG) | Savings from Holding 1 Year |
|---|---|---|---|---|---|---|
| Stable | $10.00 | $10.00 | $10.00 | $201,200 | $95,200 | $106,000 |
| Volatile | $10.00 | $8.00 | $12.00 | $201,200 | $119,000 | $82,200 |
| Decline | $10.00 | $7.00 | $7.00 | $100,600 (on $200K gain) | $47,600 | $53,000 |
The LTCG path produces tax savings of $82,200 to $106,000 on a 50,000-share position if you can absorb the lockup risk. If the stock declines and stays down, the savings shrink but remain material.
Frequently Asked Questions
Q: When does the lockup period officially start?
A: Lockup starts on the IPO pricing date, not the S-1 filing date, and runs 90 to 180 days depending on underwriter terms disclosed in the amended S-1.
Q: Can I exercise options during the lockup period?
A: Yes, you can exercise any vested options during lockup, but you cannot sell the resulting shares until lockup expires.
Q: Does AMT carry forward if I cannot use the full credit in 2026?
A: Yes, AMT credits carry forward indefinitely and offset regular tax liability in future years when your regular tax exceeds AMT.
Q: What happens to my options if the IPO is withdrawn?
A: Your options remain subject to the private company's 409A valuation and original vesting schedule, and the S-1 filing has no impact on option terms if the offering does not complete.
Run the Numbers
Use CalcMoney's Calculate Your After-Tax RSU Proceeds to model your exact option position under the current AMT threshold and your state's combined marginal rate.
Disclaimer: This article is for informational purposes only and does not constitute professional financial, tax, or investment advice. Consult a qualified tax advisor or financial professional before making decisions regarding stock options, IPO exercises, or tax planning strategies.
Run the Numbers: Capital Gains Tax Terminal on CalcMoney — see your exact figures under current market conditions.
Data sourced from SEC EDGAR S-1 Filings (IPO). Rates and thresholds are for informational purposes only. Consult a licensed financial advisor before making mortgage, investment, or tax decisions.
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