What changed in this filing

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Item 1. Business

2025-03-31 compared with 2024-04-16 · 124 added, 121 removed, 609 unchanged (29% of the section changed)

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The solar business is based on the ability of the users of solar energy systems to save on energy costs and reduce their carbon imprint as compared with power purchased from the local electricity utility company.

We were founded in 2008 to engage in the solar business in the United States.

We operate in two segments – the United States segment and the China segment.

Our United States operations primarily consist of the sale and installation of photovoltaic and battery backup systems for residential and commercial customers, and sales of LED systems and services to government and commercial users.

Prior to 2020, we also financed the purchase of solar equipment from us.

We were founded in 2008 to engage in the solar business in the United States, where our business is primarily conducted.

Our primary business consists of the sale and installation of photovoltaic and battery backup systems for residential and commercial customers sales of LED systems and services to government and commercial users.

We also generate revenue from financing the sale of our photovoltaic and battery backup systems.

Since early 2020, because we did not have the capital to support such operations, we suspended making loans to our solar customers, and we are not currently financing the purchase of solar systems and we do not anticipate engaging in such activities in the near future, if at all.

Our finance revenue reflects revenue earned on our current portfolio, with no new loans having been added since early 2020.

Our United States operations generated revenue of $54.1 million for the year ended December 31, 2023, consisting of solar and battery revenue of $50.5 million, LED revenue of $3.1 million and finance revenue of $0.6 million.

Our United States operations generated revenue of $45.5 million for the year ended December 31, 2022, consisting of solar and battery revenue of $40.6 million, LED revenue of $3.3 million and finance revenue of $0.8 million.

We commenced operations in China following the completion of two acquisitions on April 28, 2015.

We acquired the ownership of Chengdu Zhonghong Tianhao Technology Co., Ltd., (“Chengdu ZHTH”), through a share exchange agreement among us, one of our PRC subsidiaries and the equity owners of Chengdu ZHTH (together with its subsidiaries thereunder, “ZHTH”).

We acquired the ownership of Jiangsu Zhonghong Photovoltaic Electric Co., Ltd., or ZHPV, through a share exchange agreement, as subsequently amended, between us and the holders of the stock of Accumulate Investment Co.

Ltd., (“Accumulate”).

Accumulate owns ZHPV through a Hong Kong subsidiary.

Our business in China is conducted through our subsidiaries, primarily ZHTH and ZHPV, and their subsidiaries.

Our China operations consist primarily of identifying and procuring solar farm projects for resale to third parties and performing engineering, procurement and construction services,, which are referred to as EPC services, primarily for solar farm projects.

Our China operations did not generate any revenue for the years ended December 31, 2023 and December 31, 2022.

Our China segment last generated revenue for the year ended December 31, 2021, substantially all of which was generated in the second quarter of the year.

In 2015, we commenced operations in the PRC with the acquisition of two subsidiaries –Chengdu Zhonghong Tianhao Technology Co., Ltd.

("Chengdu ZHTH”), which is a subsidiary of SolarMax Technology (Shanghai) Co.

(together with its subsidiaries thereunder, "ZHTH”), and Jiangsu Zhonghong Photovoltaic Electric Co., Ltd.

We did has not generate any revenue from our China segment subsequent to 2021, and the China segment does not have any projects or agreements as of the date of this report.

All of our revenue the year ended December 31, 2022, 2023 and 2024 was generated by our United States segment, and our cost of revenue related to our United States segment.

We are seeking to offset our decline in residential solar sales in California for the year ended December 31, 2024 as compared with the 2023 by marketing sales of larger systems to commercial users both in California and in other states;

however, we cannot assure you that we will be successful in marketing to commercial users.

As of the date of this annual report, we do not have any contracts for major commercial solar projects.

Although we have non-binding memoranda of understanding, letter of intent or term sheets with respect to four proposed projects, all of which are subject to the negotiation of definitive agreements, and some of the projects require the identification of a financing source to provide the full financing for the project.

We cannot assure you that any of these projects or any other projects will be completed, that we will generate a gross profit from any commercial projects or that we will be successful in developing our commercial business as planned if at all.

Prior to 2022, ZHTH was engaged in project development.

ZHPV’s core business was to provide engineering, procurement and construction (“EPC”) services.

In order to build a solar farm in China it is first necessary to obtain a permit, which covers a specific location.

ZHTH and ZHPV establish special subsidiaries to own and acquire a permit for a solar farm.

We refer to these subsidiaries as project subsidiaries.

When a buyer of a project is identified, we sell to the buyer the equity in the project subsidiary that holds the permit for that specific solar farm project, and the buyer of the project engages ZHPV for the EPC work.

The purchase price for the project subsidiary is an amount approximating the project subsidiary’s net assets.

Accordingly, we do not generate a material gain or loss from the sale of the project subsidiaries and our revenue is primarily generated by our EPC services.

The sale of the equity in the project subsidiaries is part of the normal course of our operations in China.

Because Chinese government regulations prohibit the sale of the permit relating to a solar farm, it is necessary for us to sell the equity in the project subsidiary to effectuate the transfer of the ownership of the solar farm and the permit to the buyer.

From mid 2019 to 2021, our China segment was dependent upon one customer, SPIC, a state-owned enterprise.

We have not generated any revenue from our China segment since mid-2021.

At December 31, 2024, we had an outstanding receivable from SPIC of approximately $6.8 million which relates to projects completed prior to 2022.

Although we believe the receivable will be substantially collected, we can give no assurance as to when or whether we will collect the full amount.

At December 31, 2024, we increased our bad debt reserve relating to this receivable as a result of initial arbitration meetings during 2024.

Further, as a result of a decrease in China’s tax revenue and other sources of funds, we cannot assure you that SPIC will pay the amount due to us or enter into any future agreements with us.

Although we intend to seek to negotiate contracts with SPIC and other Chinese entities, our ability to obtain contracts may be dependent upon China’s priorities, our status as a United States company and trade relations between the United States and China may affect our ability to generate business for SPIC or other Chinese companies and we cannot assure you that we will be able to negotiate any such contracts, in which event it may be necessary for us to discontinue our Chinese segment.

Initial Public Offering

On February 27, 2024, we sold 4,500,000 shares of common stock, at a price of $4.00 per share in our initial public offering.

The gross proceeds of the offering were $18 million, prior to deducting the underwriting discounts, commissions and offering expenses payable by the Company.

In addition, we granted the underwriters a 45-day option to purchase an additional 675,000 shares of common stock at the initial public offering price, less underwriting discounts and commissions, to cover over-allotments.

On March 5, 2024, the underwriters purchased 539,950 shares of common stock upon the partial exercise of the over-allotment option.

Net proceeds received by us from our initial public offering, including the partial exercise of the over-allotment option, were approximately $18.6 million.

We also issued to Kingswood, a division of Kingswood Capital Partners, LLC, the representative of the underwriters, and its designees warrants to purchase 403,196 shares.

On March 13, 2024, these warrants were fully exercised on a cashless basis.

Based on the formula for cashless exercise, we issued a total of 207,311 shares of common stock, and, as result of the exercise, no warrants remained outstanding.

Effects of COVID-19 Pandemic

The United States Center for Disease Control announced that the COVID-19 public health emergency ended in May 2023, with the result that the COVID restrictions in the United States are no longer in effect and restrictions have been terminated worldwide.

We believe our United States operations are not, and have not since mid-2022 been, materially affected by COVID.

However, the effects of China’s zero tolerance policy with respect to COVID-19, which is no longer in effect, has impaired our ability to negotiate both new contracts with and payment schedules with State Power Investment Corporation Guizhou Jinyuan Weining Energy Co., Ltd.

(“SPIC”), a state-owned entity which has been the only customer for our China segment since 2020, with the result that we have no pending agreement with SPIC and we are continuing to negotiate payment of outstanding receivables from SPIC.

In March 2024, we issued 5,039,950 shares of common stock in our initial public offering at a public offering price of $4.00 per share less a 6% underwriting discount pursuant to an underwriting agreement (the “Underwriting Agreement”) with Kingswood, a division of Kingswood Capital Partners, LLC (the “Representative”), as representative of the underwriters.

The shares issued include the partial exercise of the underwriters’ overallotment option.

Pursuant to the Underwriting Agreement, we paid the Representative a 1% non-accountable expense allowance and reimbursed the Representative for certain accountable expenses of $175,000.

The aggregate gross proceeds from the offering was approximately $20.2 million, prior to deducting the underwriting discounts, commissions and offering expenses payable by us.

Net proceeds from our initial public offering of approximately $18.6 million reflects the gross proceeds net of underwriting discounts, the non-accountable expense allowance, accountable expenses of the underwriters that were paid by the Company and other expenses that were deducted from gross proceeds at the closing.

Pursuant to the Underwriting Agreement, we issued to the Representative warrants (the “Representative’s Warrants”) to purchase 403,196 shares of common stock at an exercise price of $4.80 per share, the Representative’s Warrants were fully exercised on a cashless basis.

Based on the formula for cashless exercise, the Company issued a total of 207,311 shares of common stock, and, as a result of the exercise, no Representative’s Warrants remained outstanding.

The net proceeds of $18.6 million from our public offering were used as follows:

approximately $800,000 to make payments due to our former executive vice president and $100,000 million to a former employee pursuant to our agreements with them;

$7.0 million invested in an 8% promissory note issued by a Hong Kong based social media company;

and RMB 5,000,000, or approximately $688,000, in a 5% note issued by a PRC-based company;

and the balance used for working capital, which included $5.5 million principal payments on convertible notes and $276,000 payment on legal settlement with former EB-5 noteholders.

Our Corporate Structure

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Our wholly-owned subsidiaries outside the United States are Accumulate Investment Co.

(BVI), a British Virgin Islands corporation (“Accumulate’), SolarMax Technology Holdings (Hong Kong) Limited, a Hong Kong corporation (“SolarMax Hong Kong”), Golden SolarMax Finance Co., Ltd, a Chinese corporation (“Golden SolarMax”) and SolarMax Technology Holdings (Cayman) Limited, a Cayman Islands corporation (“SolarMax Cayman”).

(BVI), a British Virgin Islands corporation ("Accumulate’), SolarMax Technology Holdings (Hong Kong) Limited, a Hong Kong corporation ("SolarMax Hong Kong”), Golden SolarMax Finance Co., Ltd, a Chinese corporation ("Golden SolarMax”) which was liquidated in June 2024, and SolarMax Technology Holdings (Cayman) Limited, a Cayman Islands corporation ("SolarMax Cayman”).

Accumulate has one wholly-owned subsidiary, Accumulate Investment Hong Kong, a Hong Kong corporation, which has one wholly-owned subsidiary, ZHPV.

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SolarMax Shanghai is a wholly foreign-owned entity, which is referred to as a WFOE.

SolarMax Shanghai currently has subsidiaries that are not significant, but forms subsidiaries which acquire permits for solar farms with a view to selling the project subsidiaries pursuant to the terms of agreements with the ultimate buyer, which during 2020 and 2021 was SPIC.

SolarMax Shanghai currently no significant subsidiaries.

We refer to SolarMax Shanghai and its subsidiaries collectively as ZHTH.

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or subsidiaries of SolarMax Shanghai.

United States Segment

Our principal executive offices are located at 3080 12 th Street, Riverside, California 92507.

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Solar Energy Systems

The photovoltaic market in the United States was the second largest in the world in 2021, with an installed capacity of more than 97 GW that accounted for approximately 11% of the world’s total installed capacity, The United States photovoltaic market has been projected to grow at a compound annual growth rate of 17% between 2021 and 2025.

Renewable energy accounted for 13% of the United States electricity generation, with solar being the fastest-growing source of renewable energy.

The United States market is projected to reach $125 million by 2030.

California is the leading state in the United States for installed solar capacity, with 32% of total U.S.

installations.

California state law set California’s renewable electricity procurement goal at 50% by 2050.

The photovoltaic market in the United States has experienced significant growth with the help of the Inflation Reduction Act, with solar accounting for approximately 16% of the country’s electricity generation.

Solar remains the fastest-growing renewable energy source in the U.S., with projections estimating that total installed solar capacity will exceed 250 GW by 2030, contributing substantially to the nation’s clean energy goals.

solar market is expected to be valued at over $125 billion by 2030 as investment in large-scale utility projects and distributed generation continues to expand.

However, the market for solar energy may be affected by federal and state regulations and policies, including state regulations such as California’s NEM 3.0, which has resulted in reduced solar energy sales since its introduction in 2024, and any federal policies that favor petroleum-based energy and nuclear energy at the expense of renewable energy such as solar and wind.

California remains the leading state for installed solar capacity, currently accounting for more than 26% of the net generation for solar installations in the United States for 2024 based on United States Energy Information Administration statistics.

The state has set ambitious renewable energy targets, with legislation requiring 100% clean electricity by 2045, far surpassing its previous 50% renewable energy goal by 2050.

We design, install and sell high performance photovoltaic solar energy systems and battery systems, and we have installations at more than 12,000 homes and businesses.

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We currently install solar systems only in California.

Although we are negotiating for the installation of commercial in other states, as of the date of this annual report we do not have any contracts for these commercial installations and we cannot assure you that we will be successful in marketing commercial installations or that we will be able to price any such installations at a price at which we can generate a profit.

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1 https://www.theverge.com/news/628369/solar-wind-beat-coal-us-ember-report

https://seia.org/research-resources/us-solar-market-insight/

Senate Bill (SB) 1020—the Clean Energy, Jobs, and Affordability Act of 2022

We provide and install both grid-tied and off-grid systems.

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At this stage, the customer has not made any commitment to purchase a system from us.

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1 IHS Markit;

International Energy Agency;

mordorintelligence.com;

Wikipedia, Solar power by country, April 2023;

National Renewable Energy Laboratory;

BNEF (https://about.bnef,com);

Bloomberg (https://www.bloomberg.com);

https://www.energy.ca.gov/rules-and-regulations/energy-suppliers-reporting/clean-energy-and-pollution-reduction-act-sb-350.

At the design stage, we analyze the information obtained during the feasibility stage to design a proposed solar energy solution, based on the customer’s stated energy needs, financial means and the specifics of the building location.

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Battery systems are available from a number of suppliers, including Tesla, Enphase and LG.

One supplier, Consolidated Electrical Distributors, accounted for 10% or more of the purchases for our United States operations.

This supplier accounted for purchases of approximately $4.9 million, or 12% of our purchases, for the year ended December 31, 2023, and $5.2 million, or 18% of our purchases, for the year ended December 31, 2022.

Two suppliers accounted for 10% or more of our purchases for the years ended December 31, 2024 and 2023.

Consolidated Electrical Distributors accounted for purchases of approximately $4.0 million, or 12% of our purchases, for the year ended December 31, 2024, and $4.9 million, or 12% of our purchases, for the year ended December 31, 2023.

CDH Trading, Inc., accounted for 10% or more of our purchases of approximately $4.0 million, or 12% of our purchases, for the year ended December 31, 2024.

We did not make any purchases from this supplier for the year ended December 31, 2023.

Warranty Obligations;

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Because our obligations are not contingent upon external factors, such as sunlight, changes in weather patterns, forest fires, or increases in air pollution, these factors could affect the amount of solar power that is generated and could increase our exposure under the production guarantee.

The contract also provides that the purchasers of these systems shall not be entitled to reimbursement for shortfalls caused by overshadowing, shading or other interference not attributable to the design of the system and the accompanying equipment.

The contract also provides that the purchasers of these systems are not entitled to reimbursement for shortfalls caused by overshadowing, shading or other interference not attributable to the design of the system and the accompanying equipment.

Our only production guarantees are pursuant to agreements with our customers.

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We have not leased systems for our account after 2014.

Instead, leases are made with a third-party leasing company.

Our customers may lease systems pursuant to third-party leasing companies selected by the customer.

During the years ended December 31, 2023 and 2022, revenues from leasing companies with which we had an agreement did not account for any significant percentage of our revenues.

Power Purchase Agreements

Prior to 2015, we entered into solar power purchase agreements with some commercial customers, and many of these agreements remain in effect.

Pursuant to these agreements, we were responsible for the design, permitting, financing and installation of a solar energy system on a customer’s property after which we sell the power generated by the system to the customer at an agreed upon rate.

We entered into solar power purchase agreements in our United States segment with some commercial customers, and many of these agreements remain in effect.

Pursuant to these agreements, we are responsible for the design, permitting, financing and installation of a solar energy system on a customer’s property after which we sell the power generated by the system to the customer at an agreed upon rate.

To the extent that the system does not generate sufficient power to meet its obligations, we may have to purchase power from a local utility company, which will be a cost of revenues.

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We have generated nominal revenue from power purchase agreements.

From 2015 until March 2019, we did not offer power purchase agreements.

Since the inception of our business in 2008, we have experienced different levels of seasonality for our residential sales, small commercial and large commercial projects.

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We believe that the higher volume of sales in the summer months results from typically higher electrical bills in the summer, when electricity use is highest, which we think heightens consumers’ awareness of the opportunity to reduce their energy costs in the future through the use of solar energy.

However, our increased revenues in 2023 and significant reduction in revenues in 2024 was affected by the introduction of NEM 3.0 rather than seasonality.

We have historically experienced a slight increase for small commercial projects during the summer season.

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We have generally not experienced any significant seasonal fluctuations for our large commercial projects in the United States.

We suspect that customers committing to large commercial purchases or leases of solar energy systems have generally made more studied decisions and are therefore less sensitive to seasonal variations or immediate market conditions.

We believe that customers committing to large commercial purchases or leases of solar energy systems have generally made more studied decisions and are therefore less sensitive to seasonal variations or immediate market conditions.

The negotiation period for larger projects may range from a couple of months to a year or more.

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Because we believe the high cost of buying and installing solar energy systems remains a major barrier for a typical residential customer, we had developed financing programs to enable customers who meet our credit standards to finance the purchase of our solar energy systems through SolarMax Financial.

Since early 2020, because we did not have the capital to support such operations, we suspended making loans to our solar customers but may resume lending if we have sufficient funds, including from the proceeds of our initial public offering.

Our finance revenue currently reflects revenue earned on our current portfolio, with no new loans having been added since early 2020.

We have no present plans to re-commence financing operations.

Since early 2020, because we did not have the capital to support such operations, we suspended making loans to our solar customers, and we have no present plans to re-commence financing operations.

Our finance revenue reflects revenue earned on our current portfolio, with no new loans having been added since early 2020.

The following table sets forth customer loan receivables at December 31, 2024 and December 31, 2023:

Customer loan receivable, gross

Customer loans receivable, gross

unamortized loan discounts

Less, allowance for loan losses

Allowance for loan losses

Customer loans receivable, net

Less, current portion, net

Customer loans receivable, long-term

Current portion

Non-current portion

Financing Program

We have financing programs with third-party financing companies, the most significant of which is a home improvement financing program agreement executed on October 12, 2021, with GoodLeap, LLC (“GoodLeap” formerly known as LoanPal, LLC), pursuant to which GoodLeap provides financing to our customers who meet GoodLeap’s credit criteria.

We sell the systems to our customers, and GoodLeap pays us the purchase price, less a program fee.

The financing agreement is between the customer and GoodLeap, and we are not a party to the agreement.

We have financing programs with third-party financing companies, the most significant of which is a home improvement financing program agreement executed on February 28, 2019, with Dividend, a division of Fifth Third Bank (“Dividend”), pursuant to which Dividend provides financing to our customers who meet Dividend’s credit criteria.

We sell the systems to our customers, and Dividend pays us the purchase price, less a program fee.

The financing agreement is between the customer and Dividend, and we are not a party to the finance agreement.

We provide LED products that help commercial customers save money by lowering electricity costs through the advanced technology of LED light bulbs.

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Some commercial projects require us to engage a third-party vendor to help install the LED lighting systems for our clients while other projects customers choose to be responsible for the installation of the system.

We have an in-house sales and marketing staff of 30, of which 25 market solar and battery backup projects and five market LED products and systems.

We have an in-house sales and marketing staff of 21, of whom 16 market solar and battery backup projects and five market LED products and systems.

While we use a variety of marketing and advertising tools, we believe that word of mouth is one of our most effective marketing strategies.

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As we expand the breadth of our operations, we plan to hire additional professionals and general sales personnel to market our systems to a larger number of prospective customers.

Our marketing effort includes our ability to offer financing in connection with purchases of our systems.

We do not have a separate marketing staff for our financing activities.

Solar energy systems in general compete with both the local or regional providers of electricity as well as a number of independent companies that offer to provide electricity at prices that are lower than the regional utility company.

Our marketing effort includes our ability to offer financing in connection with purchases of our systems through third-party equipment leasing companies.

Solar energy systems in general compete with both the local and regional providers of electricity as well as a number of independent companies that offer to provide electricity at prices that are lower than the regional utility company.

Our primary competition is with the local utility companies that supply power to our potential customers.

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Because California has much sun and little rain, solar power companies seek to market in California rather than in states with less sun and more rain.

We cannot estimate the effects of the recent increased rain and flooding in Southern California on our business and the solar market in general.

We cannot estimate the effects of the recent increased wildfires, rain and flooding in Southern California on our business and the solar market in general.

We believe that the number of new solar energy installation companies that have entered the industry in California has increased significantly since 2008 when we commenced business, and the increased competition is reflected in lower margins as we may have to reduce our prices to generate business.

We expect additional companies to enter the business in the future, considering that the entry barrier in this industry is relatively low and the government incentives currently remain high.

We expect additional companies to enter the business in the future, considering that the entry barrier in this industry is relatively low and the government incentives currently remain high although we cannot give assurance that changes in government policy will not negatively impact our business and the solar industry in general.

In seeking to generate business from commercial customers for major projects, we will compete with both national and regional companies that offer solar systems.

We believe that competition is primarily based on price and, if financing is required, the availability and terms of financing, and, to a lesser extent, the ability to schedule installation to meet the customer’s schedule.

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Local utility companies work with all solar companies to connect their systems to the grid.

Title 24 of the California Code of Regulations governs energy savings and efficiency standards for new and remodeled construction for indoor and outdoor lighting requirements.

Title 24 of the California Code of Regulations governs energy savings and efficiency standards for new and remodelled construction for indoor and outdoor lighting requirements.

Construction Licenses and Permits

As a company performing general contractor and design work, we must take steps such that we obtain and timely renew appropriate general contractor and other required licenses.

In connection with each installation, we are required to obtain building permits and comply with local ordinances and building codes for each project.

In connection with each installation, we are required to obtain building permits and comply with all applicable local ordinances and building codes.

Our operations are also subject to generally applicable laws and regulations relating to discharge of materials into the environment and protection of the environment.

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Because net metering can enable the solar system owner to further reduce the cost of electricity by selling excess electricity to the utility company, any elimination or reduction of this benefit would reduce the cost savings from solar energy.

The recent changes in California’s net metering payments may have reduce the market for residential solar installations to the extent that the installation of the homeowner’s decision to install a solar system is based on the benefits of the net metering structure, which has been modified to reduce the benefits to the homeowner.

The recent changes in California’s net metering payments may have reduced the market for residential solar installations to the extent that the installation of the homeowner’s decision to install a solar system is based on the benefits of the net metering structure, which has been modified to reduce the benefits to the homeowner.

We cannot assure you that net metering will not be eliminated or the benefits significantly reduced for future solar systems, which may dampen the market for solar energy.

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We do not have any intellectual property that is material to our business.

Artificial Intelligence

Our business does not use and is not dependent upon artificial intelligence.

Operations in China

The photovoltaic market in China was the largest in the world in 2021, reaching a cumulative total installed capacity of 253 GW in 2020, which accounted for more than one-third of the world’s cumulative total installed capacity.

China’s photovoltaic market has been projected to grow at a compound annual growth rate of 14.1% between 2021 and 2025.

The ground-market segment (i.e., solar farm installations) is expected to dominate the market during this forecast period.

China’s photovoltaic market has been projected to grow at a compound annual growth rate of 14.1% between 2021 and 2025.The ground-market segment (i.e., solar farm installations) is expected to dominate the market during this forecast period.

The China market is projected to reach $137 billion by 2030.

The growth is driven by increasing government support and the continued decline in the cost of solar energy generation.

We commenced operations in China following the acquisition on April 28, 2015, of the ownership of Chengdu ZHTH, which is currently a subsidiary of ZHTH, and ZHPV, through share exchange agreements with the equity owners of these companies.

Our business in China is conducted through ZHTH and ZHPV and their subsidiaries.

Unlike systems that we sell in the United States, which are installations for residential and small business users, the projects in China are generally solar farms, which are constructed on large land areas where multiple ground-mount solar tracking towers are installed.

Our business in China has been conducted through ZHTH and ZHPV and their subsidiaries.

Unlike systems that we sell in the United States, which are installations for residential and small business users, the projects in China have generally been solar farms, which are constructed on large land areas where multiple ground-mount solar tracking towers are installed.

While a typical residential or small business installation in the United States generally generates between 6.5KW and 0.2MW of power, the solar farms can generate in the range of 30MW to more than 100MW of power.

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ZHTH was primarily engaged in the business of identifying and procuring solar system projects for resale to third party developers and related services in China.

ZHPV’s core business is to provide EPC services.

ZHPV’s core business has been to provide EPC services.

We have not generated any revenue from our China segment during 2022, 2023 and 2024.

We do not have any contracts for any projects in China and we are not engaged in any negotiations with respect to new projects.

We cannot assure you that we will generate any revenue from China or that we will not discontinue our China segment.

The description of regulations relating to our business in China generally apply if and to the extent that we are engaged in business in China.

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We have not generated any revenue from AMD since 2019.

Since the second half of 2019, our business in China consisted of EPC services pursuant to agreements with SPIC.

Substantially all of our China revenues for the years ended December 31, 2021 and December 31, 2020 were generated from projects for SPIC.

Substantially all of our China revenues for 2021 and 2020 were generated from projects for SPIC.

During 2022, 2023 and 2024 through the date of this annual report, we did not generate revenues in the China segment.

Based on the effective light resource and available land use, we are focusing on provinces with large tracts of available land and solar resources sufficient for the development of solar farms.

We look to work with local entities on the project development.

As part of this process, we need to discuss the potential development with local government agencies, which may involve discussions with several departments.

The local government agencies publish the availability of permits for solar farms, and we need to obtain the permit for the solar farm from the applicable government agency.

We may also find the buyer who will own the solar farm.

If we find a buyer to operate the solar farm, we transfer the equity of the project subsidiary related to the solar farm to the buyer.

If we identify the buyer, we seek to both obtain the contract to perform the EPC work as well as to operate and maintain the project after completion.

For our contracts with SPIC, SolarMax and SPIC jointly selected the location of the project and the project subsidiary is formed pursuant to a co-development agreement.

We do not operate any solar farms as an owner, and we have no present plans to operate solar farms for our own account.

To the extent that, in the future, we propose to construct and operate a solar farm for our own account, any decision would be subject to obtaining sufficient financing to enable us to construct and operate the project and complying with government regulations relating to the ownership of a solar farm.

For the EPC services in the PRC, we generally provide a one-year quality warranty on our EPC services from the date of completion of the EPC work.

For the EPC services in the PRC, we generally provided a one-year quality warranty on our EPC services from the date of completion of the EPC work.

See “Business– Agreements with SPIC.”

ZHPV holds a construction enterprise qualification certificate for Level III of general contractor for power engineering constructor issued on December 18, 2022, which permits ZHPV to conduct business as a contractor in power engineering construction.

The qualification certificate expires on June 30, 2024.

The qualification certificate expires on May 9, 2025.

If we are to engage in business in China, we will need to have this permit renewed.

The certificate is granted by the local government and enables ZHPV to perform its services throughout China.

We engage local licensed engineering firms to perform the initial design work through a bidding process.

When the engineering firm completes its design proposal, we obtain owner approval prior to procurement and construction.

Following the acquisition of Chengdu ZHTH, the business of Chengdu ZHTH was assumed and developed by its parent company SolarMax Shanghai.

Chengdu ZHTH has since ceased to be active and we are in the process of deregistering Chengdu ZHTH with local authorities in China.

We refer to SolarMax Shanghai and its subsidiaries collectively as ZHTH.

We engaged local licensed engineering firms to perform the initial design work through a bidding process.

When the engineering firm completes its design proposal, we obtained owner approval prior to procurement and construction.

Seasonal weather patterns affect our PRC subsidiaries’ construction of large-scale solar projects.

Northern provinces often experience below zero temperatures along with snowstorms which could cause a closure of transportation options along with frozen ground which needs to be cleared for solar equipment, all of which can cause slowdowns in construction and increase our cost.

Our EPC contracts to date have been in the southern provinces where cold weather does not have the same effect although the southern provinces may be subject to other adverse weather conditions.

Effective on May 12, 2016, in connection with the execution of the amendment to the share exchange agreement for the acquisition of ZHPV, ZHPV entered into a debt settlement agreement with Uonone Group Co., Ltd., one of the former owners of ZHPV.

Our EPC contracts were in the southern provinces where cold weather does not have the same effect although the southern provinces may be subject to other adverse weather conditions.

In connection with our acquisition of ZHPV, ZHPV entered into a debt settlement agreement with Uonone Group Co., Ltd.

(“Uonone”), one of the former owners of ZHPV.

Pursuant to the debt settlement agreement, ZHPV and Uonone agreed to settle a list of pending business transactions entered by them during the period from December 31, 2012 to December 31, 2015.

As of December 31, 2023, the Uonone Group has repaid all amounts agreed to under the debt settlement agreement except for a RMB 3.0 million contingent receivable, which does not arise until and unless we become obligated under a contingent liability.

We have not become obligated under the contingent liability.

As of December 31, 2023, Uonone has repaid all amounts agreed to under the debt settlement agreement except for a RMB 3.0 million contingent receivable, which does not arise until and unless we become obligated under a contingent liability.

The contingent liability is a potential obligation of ZHPV which existed at the time of our acquisition of ZHPV and related to the estimated costs of a project ZHPV had completed, and we cannot estimate whether or when ZHPV may have any obligation under the contract.

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Additionally, under the debt settlement agreement, to the extent ZHPV receives settlement proceeds on matters that relate to events prior to the acquisition, ZHPV shall repay to Uonone the amount received less taxes, fees and expenses in connection with such settlement.

As of December 31, 2022, the payable balance due to Uonone Group related to the legal settlement received by ZHPV was $2.1 million.

During the year ended December 31, 2023, we received additional legal settlement proceeds of $6.6 million and paid Uonone and expenses on behalf of Uonone $6.9 million.

There were no additional proceeds received or payments made during the year ended December 31, 2024.

Agreements with SPIC

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Substantially all of our China revenue for the year ended December 31, 2021 of $7.8 million and for the year ended December 31, 2020, of $96.1 million, was generated from four contracts with SPIC, and included revenue from SPIC and revenue from the sale of power by the project subsidiaries for the projects prior to the transfer of control to SPIC.

As of December 31, 2023, we had a receivable from SPIC in the amount of $7.7 million, which we expect to collect during 2024.

Although we are negotiating with SPIC for additional projects, we cannot give any assurance that we will be successful in our negotiations or that any agreements we enter into with SPIC will be profitable to us.

As of December 31, 2024, we had a net receivable from SPIC in the amount of RMB 24,685,000 ($6.8 million at December 31, 2024), which is net of a reserve of RMB 4.7 million (approximately $659,000) based on an initial arbitration hearing.

Legal Proceedings.

Although we expect to collect this receivable during 2025, we had previously anticipated that we would collect the receivable in 2024.

Although we are negotiating with SPIC for additional projects, we cannot give any assurance that we will be successful in our negotiations or that, if we enter into any agreements with SPIC, such agreements will be profitable to us.

The COVID-19 restrictions and the residual effects of the COVID-19 restrictions impaired our ability to obtain payment of the receivable from SPIC and to negotiate contracts with SPIC.

Further, China is currently experiencing a decline in tax revenue and other sources of funds, which may affect both SPIC’s payment of the money it owes us and its willingness or ability to enter into new agreements with us.

Source of Supply

Our PRC subsidiaries purchase the equipment for the project from local suppliers pursuant to a bidding process.

The construction team will remain on site to perform the EPC services, using local licensed subcontractor as needed.

The EPC services include continuing negotiations with local government and utility companies to resolve any issues that may occur on-site until the project is fully connected to the grid.

Our PRC subsidiaries purchased the equipment for the project from local suppliers pursuant to a bidding process.

The construction team remained on site to perform the EPC services, using local licensed subcontractors as needed.

The EPC services included continuing negotiations with local government and utility companies to resolve any issues that may occur on-site until the project is fully connected to the grid.

Solar panels and other components are available from a number of suppliers.

We did not make any purchases during the year ended December 31, 2022 or the year ended December 31, 2023.

Within the solar farm industry in China, our China segment faces increasing competition from other project developers and EPC companies.

We did not make any purchases during the years ended December 31, 2024 and 2023 because we did not have any new projects during these periods and through the date of this annual report.

Within the solar farm industry in China, if we recommence operations in China, we would face increasing competition from other project developers and EPC companies.

The solar energy industry is very competitive, consisting of state-owned enterprises and a large number of private companies.

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We believe the number of new solar farm installation companies entering the industry in China has increased significantly since 2015 when we commenced business through our PRC subsidiaries in China.

This increased competition has caused some price erosion, which has affected our margins and could result in further reductions in our margins as our PRC subsidiaries may reduce prices to generate new business and could impair their ability to enter into EPC agreements with non-related parties.

This increased competition has caused some price erosion, which affected our margins and, if we negotiate contract in the future, could result in further reductions in our margins as our PRC subsidiaries may reduce prices to generate new business and could impair their ability to enter into EPC agreements with non-related parties.

As the interest in solar farms in China increases, there is increased competition for permits, and the government entities that issue the permits may prefer Chinese companies over companies that are owned by a United State company.

Since our only customer in China since 2019 was SPIC, our PRC subsidiaries are dependent upon SPIC’s policies in engaging contractors for the development of solar farm projects.

Further trade relations between China and the United States may affect our ability to generate business in China.

Since our only customer in China since 2019 was SPIC, if we seek additional contracts with SPIC, our PRC subsidiaries would be dependent upon SPIC’s policies in engaging contractors for the development of solar farm projects.

Since SPIC is state-owned enterprise, our procurement policies may be subject to government policies which may favor a Chinese company rather than a subsidiary of a United States company.

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On March 27, 2011, the NDRC promulgated the revised Guideline Catalogue for Industrial Restructuring which categorizes the solar power industry as an encouraged item.

This Guideline Catalogue was revised on February 16, 2013 (effective on May 1, 2013) and on October 30, 2019 (effective on January 1, 2020).

This Guideline Catalogue was revised on February 16, 2013 (effective on May 1, 2013), on October 30, 2019 (effective on January 1, 2020), and on December 27, 2023 (effective on February 1, 2024).

The solar power industry is still categorized as an encouraged item.

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Under the most recent catalog, which was amended in 2017 and effective on July 28, 2017, the construction and operation of new energy power stations (including solar power, wind power, etc.) is classified as an "encouraged foreign investment.” Foreign-invested enterprises in the encouraged foreign investment industry might be entitled to certain preferential treatment, such as exemption from tariffs on equipment imported for their operations, after obtaining approval from the PRC government authorities.

March 15, 2019, the National People’s Congress adopted the Foreign Investment Law, or new FIL which became effective on January 1, 2020, and replaced the previous fragmented foreign investment regime:

On March 15, 2019, the National People’s Congress adopted the Foreign Investment Law, or new FIL which became effective on January 1, 2020, and replaced the previous fragmented foreign investment regime:

three separate foreign investment laws previously enacted, which are the Wholly Foreign-Owned Enterprises Law, the Chinese-Foreign Equity Joint Ventures Law, and the Chinese-Foreign Contractual Joint Ventures Law.

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According to the Encouraged Catalogue amended on June 30, 2019 and subsequently amended on October 26, 2022, which became effective on January 1, 2023, the construction and operation of new energy power stations (including solar power, wind power, etc.) is within the scope of industries that encourage foreign investment.

The Work Safety Law of the PRC, which became effective on November 1, 2002 and was amended on August 31, 2014, is the principal law governing the supervision and administration of work safety for solar power projects.

The Work Safety Law of the PRC, which became effective on November 1, 2002 and was amended on August 31, 2014 and June 10, 2021 is the principal law governing the supervision and administration of work safety for solar power projects.

In accordance with the Measures for the Supervision and the Administration of Work Safety of Electricity Industry promulgated by the NDRC, which became effective on March 1, 2015, power plants are responsible for maintaining their safety operations in accordance with the relevant laws, regulations, rules and standards regarding the work safety.

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On March 16, 2007, the National People’s Congress of China enacted a new PRC Enterprise Income Tax Law, which became effective on January 1, 2008 and was later amended on February 24, 2017 and December 29, 2018.

On December 6, 2007, the State Council promulgated the Implementation Rules to the PRC Enterprise Income Tax Law, or the Implementation Rules, which also became effective on January 1, 2008.

On December 6, 2007, the State Council promulgated the Implementation Rules to the PRC Enterprise Income Tax Law, or the Implementation Rules, which also became effective on January 1, 2008 and was later amended on April 23, 2019 and December 6, 2024 .

On December 26, 2007, the State Council issued the Notice on Implementation of Enterprise Income Tax Transition Preferential Policy under the PRC Enterprise Income Tax Law, or the Transition Preferential Policy Circular, which became effective simultaneously with the PRC Enterprise Income Tax Law.

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The principal regulations governing dividend distributions of wholly foreign-owned enterprises include:

the Company Law (2023 Revision) which will take effect on July 1, 2024;

the Company Law (2023 Revision) became effective on July 1, 2024;

the Foreign Investment Law

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If our employees fail to pay and we fail to withhold their income taxes, we may face sanctions imposed by tax authorities or other PRC government authorities.

On March 31, 2024, we had 79 employees in the United States, of which five were executives, 30 were in sales and marketing, 32 were in operations and installation and 12 were in accounting and administrative, and we had eight employees in China, of which two were executives, and six were in accounting and administrative.

On March 15, 2025, we had 76 employees in the United States, of which five were executives, 21 were in sales and marketing, 39 were in operations and installation and eleven were in accounting and administrative, and we had six employees in China, of which one was an executive, and five were in accounting and administrative.

None of our employees are represented by a labor union.

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We have agreements with a professional employer organization, Insperity PEO Services, L.P., under which the professional employer organization administers our human resources, payroll and employee benefits functions for our United States employees, who are co-employed by us or one of our subsidiaries and Insperity.

On July 1, 2021, we began a 401(k) plan through Insperity PEO Services, L.P.

We have a 401(k) plan through Insperity PEO Services, L.P.

Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.

What changed 10-K

Item 1. Business