What changed in this filing

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Item 7. Management’s Discussion and Analysis

2026-04-06 compared with 2025-03-31 · 276 added, 218 removed, 179 unchanged (73% of the section changed)

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dollars, unless otherwise noted.

We have determined that we have two operating segments, the United States and China.

However, we have one reporting segment for financial reporting purposes which is the operation in the United States.

See Note 22 of Notes to Consolidated Financial Statements.

Prior to January 1, 2024, we considered our operations in China as a reporting segment.

However, because our operation in China had no revenues since 2022, we no longer consider our operation in China as a reporting segment.

We are an integrated solar and renewable energy company.

A solar energy system retains the direct current (DC) electricity from the sun and converts it to alternating current (AC) electricity that can be used to power residential homes and commercial businesses.

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, 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 in California.

We also generate revenue from financing the sale of its 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.

In 2015, we commenced operations in the PRC.

We did has not generate any revenue from our China segment in 2022, 2023, 2024 and 2025 to the date of this annual report, and the China segment does not have any projects or agreements as of the date of this annual report.

All of our revenues for the years ended December 31, 2024, 2023 and 2022 were 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 from $50.5 million for the year ended December 31, 2023 to $18.4 million for the year ended December 31, 2024 by marketing commercial 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 or in pricing any project we may negotiate.

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 or positive cash flow from any commercial projects or that we will be successful in developing our commercial business as planned.

Initial Public Offering

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 the Underwriting Agreement with Kingswood, a division of Kingswood Capital Partners, LLC, 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 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.

Recent Sale of Common Stock

On March 19, 2025, we issued to an accredited investor 561,798 shares of common stock at $0.89 per share, reflecting a 25% discount from the market price of the common stock, for a total purchase price of $500,000.

No broker was involved in the sale.

The issuance of the shares was exempt from registration pursuant to Section 4(a)(2) of the Securities Act as a transaction not involving a public offering.

The proceeds from the sale are being used for working capital.

Elimination of Forfeiture Provisions of Options upon Initial Public Offering

During the years 2015 to 2019, we granted stock options to employees and consultants, of which options to purchase 5,898,137 shares were outstanding at the date of our initial public offering.

Under the terms of the options, the options became non-forfeitable upon our completion of an initial public offering, which occurred on February 12, 2024, the effective date of the registration statement relating to our initial public offering.

Under GAAP, upon the termination of the forfeiture provisions, the value of the options is treated as a compensation expense in the period in which the options become non-forfeitable.

Using the Black Scholes valuation method, the fair value of the options at the time of our initial public offering was approximately $17.2 million, which is stock-based compensation that does not reflect a cash expense, of which approximately $1.3 million is included in cost of revenues and $15.9 million is included in general and administrative expense.

The $17.2 million stock-based compensation expense, which is not deductible for federal and state income tax purposes and is a non-cash expense, represents the major portion of our $35.0 million loss for the year ended December 31, 2024.

Impairment of China Segment Goodwill

During the quarter ended September 30, 2024, we performed a goodwill impairment assessment with respect to our China segment considering various factors and based primarily on the continued economic downturn in China that directly impacts our ability to generate new businesses in the foreseeable future and the absence of any agreements or negotiations for agreements at September 30, 2024, We recognized an impairment charge for the entire balance of the goodwill of $7.5 million.

We can give no assurance as to our ability to generate revenue from our China operations, and, if we are not able to generate revenue from our China segment, we may discontinue this segment.

Effects of NEM 3.0

Net metering is a billing mechanism that credits solar energy system owners for the electricity that they add to the electricity grid.

If the owner of a solar system generates more electricity than it consumes, the excess electricity is sold back to the grid.

The California Public Utilities Commission has adopted the current net metering regulations, known as NEM 3.0, which became effective in April 2023.

NEM 3.0 features a 75% reduction in export rates (the value of excess electricity pushed onto the grid by solar systems) from the rate set forth in the previous net metering regulations, NEM 2.0, thereby reducing the overall savings and increasing the payback period of home solar installations.

The changes under NEM 3.0, which are likely to result in reduced benefits for most residential solar users, could alter the return on investment for solar customers.

In January 2024, we laid off a portion of our employees associated with the design and installation of residential solar systems in response to a slowdown in demand after NEM 3.0 took effect in April 2023.

The layoff represented approximately 25% of our residential solar system design and installation team.

Approximately half of the employees who were laid off had been hired in late 2022 to help install our growing backlog of residential solar systems under contract in anticipation of NEM 3.0, and the contracts representing that backlog were completed during 2023.

We may need to revise our pricing metrics to reflect the change resulting from NEM 3.0 in order for the purchase of a solar system to be economically attractive to the customer, which may result in lower prices and reduced margins.

Although we anticipate the near-term impact of NEM 3.0 on residential solar contracts will be offset by commercial solar contracts for which we use third-party subcontractors to complete the installations, we cannot assure you that our overall business will not be impacted by the effects of NEM 3.0.

Our decrease in revenue for solar sales in the year ended December 31, 2024 from the year ended December 31, 2023 reflects both a surge in 2023 revenue in anticipation of the effectiveness of NEM 3.0 in April 2023 and a sharp decline in 2024 revenue resulting from the effectiveness of NEM 3.0.

Inflation and Supply Chain Issues

Prior to mid-to-late 2021, our business was not impacted by inflation or supply chain issues.

With the recent inflationary pressures combined with the world-wide supply chain issues, our business is subject to the inflationary pressure and we were subject to supply chain issues that were affecting many domestic and foreign companies, and we expect that the inflationary pressures will continue to affect our ability to sell our products, the price at which can sell products in both the United States and China and our gross margin in both the United States and China.

Commencement of BESS Systems Business

Since the third quarter of 2025, our primary business has been negotiating contracts and performing EPC services for solar-based BESS commercial systems.

As of December 31, 2025, we had commenced EPC services on a 430 MWh battery storage project in Texas pursuant to an agreement dated July 31, 2025 with Longfellow.

During the year ended December 31, 2025, we generated revenue of $60.2 million, representing 66.1% of our revenue, from our EPC services pursuant to this contract.

All of this revenue was generated during the second half of 2025.

On December 31, 2025, we entered into three EPC agreements for large scale BESS systems, two in Puerto Rico and one in Corpus Christi, Texas.

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.

As of the date of this annual report we have not completed the construction of our first BESS systems and we have not commenced work for the three projects for which we signed contracts on December 31, 2025.

These contracts are fixed price contracts, and we may not be able to recoup any increase in prices which we may incur.

Further, we cannot assure you that we will generate a gross profit on these contracts and if we do not generate a significant gross profit on these contracts, we may not be able to operate profitably.

Further, until we have demonstrated that we are able to construct a BESS system on time and on budget, we may have difficulty in securing contracts for these systems.

Impact of Tariffs and Trade Policy

Recent changes in U.S.

trade policy have resulted in the implementation or threatened implementation of tariffs on certain imported goods, particularly those manufactured in China and other countries.

These tariffs have increased the cost of certain raw materials and components used in our products.

While we have taken steps to mitigate the impact, including working with suppliers and adjusting our pricing strategy, the tariffs are expected to result in higher input costs for our operations for the remainder of 2025.

For the year ended December 31, 2025, the tariffs did not have material effects on our cost of revenue.

To the extent that the United States government imposes tariffs on products imported from China or any other foreign country and we are not able to obtain comparable products at a lower cost from domestic suppliers, our costs of these products may increase, and, depending on the tariff, such increase may be substantial.

Such increases may impact both our ability to sell our systems and the price we are able to charge for systems which we sell, which could impair our margins.

We continue to monitor developments in international trade policy and may further seek to adjust our supply chain and sourcing strategies in response to evolving conditions.

Regulatory Changes, Inflation and Supply Chain Issues

The federal residential solar tax credit, officially known as the Residential Clean Energy Credit, expired on December 31, 2025.

This means that homeowners who had solar energy systems installed and placed into service by this date will qualify for a 30% federal tax credit on the cost of the system.

After December 31, 2025, there will be no federal tax credit available for new residential solar installations.

This represents a significant change from the previous plan laid out in the Inflation Reduction Act, which would have seen the credit gradually phase out until it expired in 2034.

This change in the tax law may significantly reduce the incentive of residential users to install solar systems.

With the recent inflationary pressures combined with the world-wide supply chain issues, which have been impacted from the recent tariffs, our business is subject to the inflationary pressure and we were subject to supply chain issues that are affecting many domestic and foreign companies, and we expect that the inflationary pressures will continue to affect our ability to sell our products, the price at which can sell products and our gross margin.

To the extent that we are not able to raise our prices or to the extent that we cannot accurately project our costs when we set our prices, our gross margin and the results of our operations will be impacted.

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We currently are able to obtain the raw material we request, although the prices pay are increasing as a result of the inflationary pressures.

The inflationary pressures that are affecting us are not unique to our industry, and relate to the cost of raw materials, labor costs generally and the price at which we can sell our products.

The inflationary pressures, including the inflationary pressures resulting from the tariff policy of the United States and the effect of the war on Iran, which commencing on February 28, 2026, including Iran’s response to the actions taken against it by the United States and Israel, that are affecting us are not unique to our industry, and relate to the cost of raw materials, labor costs generally and the price at which we can sell our products.

Because solar energy can be seen as a way to provide a homeowner with relief from the increasing utility prices for electricity, the market for solar systems generally, and our business specifically, has enabled us to sell solar systems.

Thus, the effects of inflation may also affect the marketability of our solar systems to residential users which are also impacted by the effects of NEM 3.0.

Further, to the extent tariffs imposed by the United States and counter-tariffs imposed by other countries affects the cost of components, including aluminum, and the supply chain, our prices will increase and we may not be able to pass on any significant portion of the cost increase to our customers, particularly in view of increased competition.

Our cost of revenue per watt of solar systems, which makes up approximately 80% of our costs, increased approximately 31.0% during the year ended December 31, 2024 compared to the same period in 2023.

We have increased the price of solar system installations to offset the increase in cost in 2024, 2023 and during the first half of 2022.

Although we do not have any data as to the effect of higher utility costs on purchases of solar systems, it has been our experience during the years ended December 31, 2023 and 2022 that, as inflationary pressures are increasing the cost of electricity generally, our domestic business grew as homeowners are seeking alternatives to what they see as high utility bills, although, as discussed above, the effects of NEM 3.0 have resulted in a significant decline in U.S.

revenues for solar systems.

As a result, we have been able to increase our prices, which reduced the effect of increased cost of raw materials and the general increase in overhead costs.

Our gross margin from United States operations decreased from 20.6% for the year ended December 31, 2023 to 10.1% for the year ended December 31, 2024.

The effect of increased costs on our margin was reduced because we were able to increase prices;

although our gross margin was affected by both the $1.3 million of stock-based compensation described above under “Elimination of Forfeiture Provisions of Options upon Initial Public Offering” and the 63% decrease in revenues which was not accompanied by a comparable decrease in cost of revenues.

Competitive factors limit the amount we can increase our prices, but our price increases reduced what would otherwise have been a greater decline in gross margin for the year ended December 31, 2024.

If our prices are too high, the residential customer may not see the value of installing a solar system.

We are seeking to reduce the effect of increased prices in raw materials by purchasing in greater quantities.

However, to the extent inflation continues or increases, we may not be able to raise prices sufficiently to prevent a further significant decline in our gross margins and the results of our operations.

Compensation costs per employee, excluding stock-based compensation, for sales, marketing and administrative personnel in our United States segment decreased approximately 27% for the year ended December 31, 2024 compared to the same period in 2023.

The increase in 2023 and the decrease in 2024 reflected resulted from increased staffing in response to an increased demand for solar energy projects in anticipation of the implementation of California’s NEM 3.0 and the decrease reflected the lay-off of a portion of our employees resulting from a slowdown after we had completed installation of the increased 2023 backlog resulting from NEM 3.

The increase in 2023 also reflected the increased cost of retaining and attracting talent, and such costs may continue to increase as labor costs in California continue to increase as a result of the inflationary pressures.

In addition, to the extent that inflationary pressure affects our cost of revenue and general overhead, we may face the choice of raising prices to try and maintain our margins or reduce or maintain our price structure to meet competition which would resulting in a lower gross margin and a drop in operating income.

Supply chain issues have caused us to periodically stock up on components such as solar panels and battery systems to ensure an adequate supply to meet expected demand, putting pressure on our cash flow.

Thus, the effects of inflation may also affect the marketability of our solar systems to residential users which are also impacted by the effects of NEM 3.0 and the elimination of the federal residential tax credit at December 31, 2025.

Compensation costs per employee, excluding stock-based compensation, for operations, sales, marketing and administrative personnel decreased approximately 6.9% for the year ended December 31, 2025 compared to the same period in 2024.

The decrease in 2025 reflected the lay-off of a portion of our employees resulting from a slowdown in our residential solar business after we had completed installation of the increased 2023 backlog resulting orders placed in 2023 in advance of NEM 3.0 becoming effective in April 2023, as discussed below under “Effects of NEM 3.0.” We experienced an increase in residential solar sales in 2023 and our income for 2023 reflected the increased cost of retaining and attracting talent, and such costs may continue to increase as labor costs in California continue to increase as a result of the inflationary pressures.

In addition, to the extent that inflationary pressure affects our cost of revenue and general overhead, we may face the choice of raising prices to try and maintain our margins or reduce or maintain our price structure to meet competition which would result in a lower gross margin and a drop in operating income.

Supply chain issues have caused us to periodically stock up on components such as solar panels and battery systems to provide an adequate supply to meet expected demand, putting pressure on our cash flow.

We do not believe that the supply chain issues that affected our operations in prior periods are currently affecting us.

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We believe that our available cash and cash equivalents and short-term investments will enable us in dealing with the effects of inflation on our business.

Effects of NEM 3.0

Net metering is a billing mechanism that credits solar energy system owners for the electricity that they add to the electricity grid.

If the owner of a solar system generates more electricity than it consumes, the excess electricity is sold back to the grid.

The California Public Utilities Commission has adopted the current net metering regulations, known as NEM 3.0, which became effective in April 2023.

The changes under NEM 3.0, which are likely to result in reduced benefits for most residential solar users, could alter the return on investment for solar customers.

The layoff represented approximately 25% of our residential solar system design and installation team.

Elimination of Forfeiture Provisions of Options and Stock Grants

During the years 2015 to 2019, we granted restricted stock and stock options to employees and consultants, of which 264,650 shares of restricted stock and stock options to purchase 5,898,137 shares were outstanding at the date of our initial public offering.

Under the terms of the restricted stock grant and stock options, the restricted stock and options became vested and non-forfeitable upon the completion of our initial public offering, which occurred on February 12, 2024, the effective date of the registration statement relating to our initial public offering.

Under GAAP, upon the completion of the initial public offering, the value of the restricted stock and the incentive stock options is treated as compensation expense in the period in which the restricted stock and stock options become non-forfeitable and are deemed to have met the performance-based indicator (i.e., the completion of the initial public offering).

Using the Black Scholes valuation method, the fair value of the incentive stock options at the time of the Company’s initial public offering was approximately $18.5 million, which is stock-based compensation that does not reflect a cash expense, of which approximately $1.3 million is included in cost of revenues and $15.9 million is included in general and administrative expense in the year ended December 31, 2024.

Defaults on Convertible Notes

From April 2023 through December 31, 2025, we did not pay annual principal installment payments and related quarterly interest payments when due which resulted in an event of default on convertible notes.

The aggregate principal balance at December 31, 2025 of the notes in default was $14.3 million.

The default provisions of the notes provide that if an event of default occurs the outstanding principal amount of this note, plus accrued but unpaid interest and other amounts owing in respect thereof through the date of acceleration, shall become, at the holder’s election, immediately due and payable in cash, and commencing five days after occurrence of any Event of Default that results in the eventual acceleration of the note, the interest rate on the note shall accrue at an interest rate of 12% per annum.

Further, if an event of default occurs, the noteholders, together, have rights to foreclose on the collateral securing the notes.

Since there is an event of default, the holders of all of these notes have the current right to accelerate payment on the full principal amount of the notes, in which event all of these notes with interest at 12% per annum may become due.

We cannot assure you that we will be able to pay the notes plus interest if the notes are accelerated.

We are an integrated solar and renewable energy company.

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 and sales of LED systems and services to government and commercial users.

Since the third quarter of 2025, our principal business was EPC services in connection with the construction of BESS systems.

On July 31, 2025, we entered into an EPC agreement with Longfellow, to develop a BESS facility.

Based on the contract terms, the contract is expected to generate revenues of approximately $120.1 million and interest income of $7.2 million from a financing component related to milestone payments that extend beyond the project completion date.

Longfellow will own and operate the facility, which will be located in Pecos County, Texas and is expected to have a storage capacity of 430 megawatt-hours.

Completion of the BESS facility is targeted for June 2026, although we cannot assure you that this completion date will be met.

To the extent that our costs for the project increase as a result of tariffs, the war with Iran, supply chain issues or other factors, any change in the price of the project would be subject to the approval of Longfellow.

To the extent that we cannot adjust our prices to reflect such additional costs, our gross margin on the project will be impacted.

We have committed to make a $5.0 million capital contribution to Longfellow, in which we have an 8% equity interest.

Our capital contribution in the amount of $5.0 million was due no later than December 31, 2025, but has not been paid to date.

As of the date of the annual report, we have only provided EPC services.

On December 31, 2025, we entered into three EPC agreements for large scale BESS systems, two in Puerto Rico and one in Corpus Christi, Texas.

Pursuant to an EPC agreement with Naguabo BESS LLC, a Texas limited liability company (“Naguabo”), we will develop a BESS facility in Ceiba Municipality, Puerto Rico.

The contract is expected to generate revenues of approximately $122.3 million.

Naguabo will own and operate the facility, which is expected to have a storage capacity of 320 megawatt-hours.

We will have a 9% membership interest in Naguabo.

Pursuant to an EPC agreement with Yabucoa BESS LLC, a Texas limited liability company (“Yabucoa”), we will develop a BESS facility in Humacao Municipality, Puerto Rico.

The contract is expected to generate revenues of approximately $35.9 million.

Yabucoa will own and operate the facility, which is expected to have a storage capacity of 80 megawatt-hours.

We will have a 9% membership interest in Yabucoa.

Pursuant to an EPC agreement with Navboot Holdco, LLC, a Delaware limited liability company (“Navboot”), we will develop a BESS facility in Corpus Christi, Texas.

The contract is expected to generate revenues of approximately $258.1 million.

Navboot will own and operate the facility, which is expected to have a storage capacity of 600 megawatt-hours.

In February 2025, we entered into a contract with a California homebuilder pursuant to which we have the right to design and install solar energy systems in a new home project consisting of a proposed 146 new residential homes at a fixed price.

Any installations will be made pursuant to contracts with the home owners, and we will pay the homebuilder a commission on the transaction.

In the fourth quarter of 2023, we began to work with several independent dealers which form our dealer network.

Our dealer network is comprised of independent licensed sales companies that sell our products pursuant to non-exclusive agreement.

The dealers sell our products as well as products sold by our competitors.

The dealer handles the sales process, and once the sales agreement with the customer is signed, we install the solar system pursuant to an installation agreement with customer.

The dealers earn a commission which is included in cost of revenue.

Although we had nominal sales through the dealer network prior to 2024, during the years ended December 31, 2025 and 2024, approximately 47% and 21%, respectively, of our revenues from residential solar and battery contracts, and 11% and 22% of our total revenues were generated through the dealer network program.

We believe that our participation in the dealer network enhances our ability to attract residential customers.

Results of Operations

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Years Ended December 31,

Large-scale EPC contracts

Solar energy sales

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Cost of revenue:

Large-scale EPC contracts

Solar energy sales

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Years Ended December 31, 2025 and 2024

The following table set forth information relating to our revenue and gross profit results for the years ended December 31, 2024 and 2023 (dollars in thousands), all of which related to our United States segment:

The following table set forth information relating to our revenue and gross profit results for the years ended December 31, 2025 and 2024 (dollars in thousands):

Years Ended December 31,

Solar energy sales

Large-scale EPC contracts

Solar energy residential sales

Total revenues

Cost of revenue:

Large-scale EPC contracts

Solar energy sales

Total cost of revenues

Revenues for the year ended December 31, 2024 were $23.0 million, a decrease of $31.2 million or 57.5% from $54.1 million in the year ended December 31, 2023, all of which was generated by the United States segment.

The decrease resulted from a $32.6 million decrease in solar energy and battery sales, offset with a $1.7 million increase in LED sales.

Our revenue from solar systems decreased from $50.5 million for the year ended December 31, 2023 to $17.9 million for the year ended December 31, 2024, a 64.6% decrease.

As a result of the change in the net metering regulations in April 2023 from NEM 2.0 to NEM 3.0, the revenue for 2023 reflected a significant surge in the consumer demand for solar energy systems generating a backlog of orders which were mostly filled in 2023.

The dramatic decrease in revenue in the year ended December 31, 2024 also reflects, in addition to the effects of the implementation of NEM 3.0, the continued decrease in consumer demand for solar energy systems due to higher interest rates leading to higher borrowing costs as well as the ongoing economic inflation, the effect of which diminishes the appeal of solar as a cost-saving investment for the consumers, which are also experienced by the entire solar industry.

The decrease in the solar energy and battery sales in the United States segment in the year ended December 31, 2024 reflects a 60.2% decrease in the number of systems completed and a 70.2% decrease in the wattages deployed.

Revenues for the year ended December 31, 2025 were $91.0 million, an increase of $68.0 million or 295.8% from $23.0 million in the year ended December 31, 2024.

The increase resulted from revenue of $60.2 million from the Longfellow Contract to develop a BESS facility in Pecos County, Texas, a $5.4 million increase in residential solar energy and battery sales, and a $2.5 million increase in LED sales, offset with a $58,000 decrease in financing revenue.

We did not have any revenue from large-scale EPC contracts prior to the third quarter of 2025.

Our revenue from residential and commercial solar energy and battery sales increased from $17.9 million for the year ended December 31, 2024 to $23.3 million for the year ended December 31, 2025, a 30.3% increase.

Our revenues for the year ended December 31, 2024 were negatively impacted by unusually frequent and heavy rains in California in the early part of 2024, which affected our ability to complete the installation of solar systems, which we did not experience in 2025, and coupled with our ability to increase solar revenue from our dealer network program which resulted in the increase in sales of both the residential and commercial solar energy systems and batteries.

The increase in the solar energy and battery sales in the year ended December 31, 2025 reflects a 9.4% increase in the number of systems completed and a 13.6% increase in the wattages deployed.

The number of completed systems and the wattages deployed in the year ended December 31, 2024 reflects incremental business resulting from customers signing solar contracts for solar systems prior to the April 2023 effectiveness of NEM 3.0 deadline in California.

During the years ended December 31, 2025 and 2024, our battery only sales were $1.8 million and $1.1 million, respectively.

Battery sales refer to the sale of batteries sold other than as a part of a solar system.

We expect the revenue from our residential sales to continue to decrease in 2025, but we are seeking to offset a significant portion of the decrease with commercial sales and, commencing in the second quarter of 2024, sales to residential customers through third party leasing companies which can offer favorable terms to customers when compared with third party financing during a time of higher interest rates.

During the years ended December 31, 2024 and 2023, we did not generate any revenue in the China segment because there are no projects under construction and no agreements for such projects.

Because we currently do not have any projects under contract for our China segment, we have neither revenue nor cost of revenue for our China segment for the years ended December 31, 2024 and 2023.

As a result of the continued economic issues in China which impacts the spending by Chinese government and state-owned companies like SPIC, we do not expect to sign a new contract with SPIC in 2025.

Battery sales refer to the sale of batteries sold other than as a part of a solar system and are included in solar energy residential sales.

As a result of the continued relatively high interest rate environment and the expiration of the federal residential solar tax credit on December 31, 2025, we expect the revenue from our residential sales to grow modestly in 2026 through our continued expansion of the dealer network program.

Based on the terms of the Longfellow Contract, the contract is expected to generate revenues and financing income of approximately $127.3 million for us, and we expect to complete the work during 2026.

During the year ended December 31, 2025, we recognized $60.2 million in revenues related to this project.

On December 31, 2025, we entered into three EPC agreements for large scale BESS systems, two in Puerto Rico and one in Corpus Christi, Texas.

Based on the terms of the agreements, these three EPC agreements are expected to generate revenue of $122.3 million, $35.9 million, and $258.1 million, respectively.

As of the date of this annual report, we had not completed the Longfellow project, and we had not commenced the EPC services for the other three BESS projects.

Our LED revenue increased by $2.5 million, or 51.8%, to $7.2 million for the year ended December 31, 2025 from $4.7 million for the year ended December 31, 2024, primarily resulting from the increase in the number of LED projects.

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The revenue trend from our LED business therefore tends to fluctuate period to period.

We have not originated any loans to our solar customers since early 2020.

We have not originated any loans to our solar customers since early 2022, and our loans in 2021 were modest.

As a result, our finance revenue for the years ended December 31, 2025 and 2024 was $282,000 and $340,000, respectively, from our portfolio of solar loans.

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Cost of revenue and gross profit

During the year ended December 31, 2024, we recognized a one-time non-cash stock-based compensation expense of approximately $1.3 million in cost of revenue as a result of performance options vesting upon our initial public offering on February 12, 2024 as described above under “Elimination of Forfeiture Provisions of Options upon Initial Public Offering.” Excluding this one-time stock-based compensation expense cost of revenue for our United States segment decreased 54.9% from $43.0 million in the year ended December 31, 2023 to $19.4 million in the year ended December 31, 2024, primarily as a result of the decrease in revenue, although the decrease in cost of revenue was not as great as the decrease in revenue as discussed above.

Gross margin decreased to 10.1% for the year ended December 31, 2024 from 20.6% in the year ended December 31, 2023, primarily as result of the decreased sales in the current period while some labor components of the cost remain fixed which adversely impacted the gross margin.

Our cost of revenue for the year ended December 31, 2025 was $86.8 million, an increase of $66.1 million or 319.7% from $20.7 million for the year ended December 31, 2024.

The increase in cost of revenue was primarily driven by the Longfellow contract.

Excluding this one-time stock-based compensation expense cost of revenue increased 346.6% from $19.4 million in the year ended December 31, 2024 to $86.7 million in the year ended December 31, 2025, primarily driven by the corresponding increase in sale revenue related to the new EPC contract entered into in July 2025 with Longfellow.

The overall gross margin decreased to 4.6% for the year ended December 31, 2025 from 10.1% in the year ended December 31, 2024.

Excluding the effect of one-time stock-based compensation expense of $78,000 in the third quarter of 2025 and $1.3 million in the first quarter of 2024, our overall gross margin for the year ended December 31, 2025 would be 4.7% compared to 15.6% in the year ended December 31, 2024.

The reduction in gross margin in 2025 was largely due to the costs recognized related to the new EPC contract with Longfellow, in addition to higher unit costs in our solar business.

Our revenue recognition for Longfellow contract requires us to recognize revenue, but not profit, on uninstalled materials.

The revenue on uninstalled materials was recognized by us when the control was transferred equal to the cost of the uninstalled materials.

This decrease in gross margin was partially offset by an increase in the gross margin for our LED operation due to higher volume of higher margin LED products.

We have no cost of revenue with respect to interest income on customer loans.

Our China segment had no revenue and no cost of revenue for the years ended December 31, 2024 and 2023.

Excluding the one-time stock-based compensation expense, our overall gross margin for the year ended December 31, 2024 would be 15.6% compared to 20.6% in the year ended December 31, 2023.

Our China operations had no revenue and no cost of revenue for the years ended December 31, 2025 and 2024.

Operating expenses

Sales and marketing expenses for the year ended December 31, 2024 decreased for our United States segment to $517,000, a decrease of $641,000, or 55.3%, from $1.2 million in the comparable period of 2023, as a result of decreased sales in 2024.

Sales and marketing expenses in the United States were 2.2% of revenue for the year ended December 31, 2024 compared to 2.1% for the year ended December 31, 2023.

Our sales and marketing expenses in the United States may fluctuate from time to time based on the types of marketing and promotion initiatives we deploy.

Due to the nature of our EPC business in our China segment, the EPC contracts for solar farm projects are generally obtained through customer relationship with just a few corporate customers, with substantially all revenues for our China segment since the second half of 2019 being generated by agreements with SPIC.

Accordingly, our China segment did not incur sales and marketing expenses for the years ended December 31, 2024 and 2023.

During the year ended December 31, 2024, our United States operations recognized a one-time stock-based compensation expense of approximately $18.5 million in general and administrative expense as a result of performance options vesting of 5,898,137 option shares and 264,650 restricted shares granted to two former consultants, upon our initial public offering in February 2024.

Excluding the stock-based compensation expense, general and administrative expenses for the United States segment for the year ended December 31, 2024 increased by $14,000 to $8.8 million compared to $8.8 million for the year ended December 31, 2023.

General and administrative expenses were 16.2% of revenue for the year ended December 31, 2023, compared to 113.4% for the year ended December 31, 2024, due to the one-time stock compensation expense in 2024 as discussed above under “Elimination of Forfeiture Provisions of Options upon Initial Public Offering,” and additional expenses associated with being a public reporting company.

Excluding the one-time stock-compensation expense in 2024, general and administrative expenses were 38.3% of revenue in 2024.

We expect a modest increase in general and administrative expenses in 2025 as a result of the cost of compliance and other regulatory costs associated with being a public reporting company for the entire year.

All of our corporate overhead, other than overhead directly related to the China segment, is allocated to the United States segment.

General and administrative expenses relating to the China segment were $1,365,000 in the year ended December 31, 2024, as compared with $718,000 in the year ended December 31, 2023, an increase of $647,000 primarily as a result of the increase in the bad debt reserve related to the SPIC receivable based on the result of the initial arbitration meetings during 2024.

During the year ended December 31, 2023, we had a $1.1 million recovery of previously reserved receivable on one of our projects for SPIC as a result of the settlement of a legal proceeding.

The decrease in general and administrative expenses in the China segment in 2024 reflects the additional reduction in personnel as a result of the lack of new businesses during the year which we expect to continue in 2025.

During the year ended December 31, 2024, as a result of the continued headwinds facing China's economy after the pandemic and the economic indicators seem to indicate further future contraction, all of which will have a direct impact on our ability to generate new businesses in our China segment in the foreseeable future, accordingly, we recognized a $7.5 million impairment loss related to all of the goodwill that originated in our 2015 acquisitions of Chengdu ZHTH and ZHPV.

Sales and marketing expenses for the year ended December 31, 2025 decreased to $367,000, a decrease of $150,000, or 29.1%, from $517,000 in the comparable period of 2024.

Sales and marketing expenses were 0.4% of revenue for the year ended December 31, 2025 compared to 2.2% for the year ended December 31, 2024.

Our sales and marketing expenses may fluctuate from time to time based on the types of marketing and promotion initiatives we deploy.

We expect to continue to be selective in our sales and marketing spends for 2026.

Our China operations did not incur sales and marketing expenses for the years ended December 31, 2025 and 2024.

General and administration expenses for the year ended December 31, 2025 decreased $16.6 million or 63.8%, to $9.5 million compared to $26.1 million for the year ended December 31, 2024, representing 10.4% of revenue for the year ended December 31, 2025 compared to 113.4% of revenue for the year ended December 31, 2024.

The decrease in the year ended December 31, 2025 is principally attributed to the $17.3 million stock compensation expense recognized in the year ended December 31, 2024 as a result of performance options vesting upon our initial public offering in the first quarter of 2024.

Our general increase, excluding the stock compensation expense, in general and administrative expenses in 2025 reflects the cost of compliance and other regulatory costs associated with being a public reporting company which is expected to continue in 2026.

The decrease in the percentage of both sales and marketing and general and administrative expenses as a percentage of revenue in 2025 reflects revenue of approximately $60.2 million from the Longfellow Contract, on which revenue commenced in the third quarter 2025.

General and administrative expenses relating to our China operations were $594,000 in the year ended December 31, 2025, as compared with $1,365,000 in the year ended December 31, 2024.

During the year ended December 31, 2024, we had a $1.1 million recovery of previously reserved receivable on one of our projects for SPIC as a result of an arbitration ruling in our favor.

Excluding the effect of the $1.1 million recovery in 2024, the increase in general and administrative expenses in the China operations in 2025 is due to the legal and travel related costs incurred in connection with the SPIC lawsuits and related arbitration.

Impairment of China Goodwill

During the year ended December 31, 2024 we performed a goodwill impairment assessment with respect to our China operations considering various factors and based primarily on the continued economic downturn in China that directly impacts our ability to generate new businesses in the foreseeable future and the absence of any agreements or negotiations for agreements at December 31, 2024.

We recognized an impairment charge for the entire balance of the goodwill of $7.5 million for the year ended December 31, 2024.

We do not have any contracts to perform services in China and we are not engaged in discussions with respect to any new contracts and we are not engaged in any marketing activities in China.

We are not generating any revenue and we have no prospects for revenue from China.

However, we continue to incur expenses, primarily relating to our back office expenses which results in general and administrative expenses for our China operations.

We can give no assurance as to our ability to generate revenue from our China operations.

Income (loss) from operations

As a result of the factors described above, our loss from operations for the United States segment was $24.3 million for the year ended December 31, 2024, compared to income from operations of $1.2 million in the year ended December 31, 2023, reflecting the one-time stock compensation expense of $18.5 million associated with the vesting of stock options and restricted stock upon our initial public offering completed in February 2024.

Our loss from operations for the China segment was $8.8 million for the year ended December 31, 2024, compared to a loss from operations of $718,000 in the year ended December 31, 2023, principally as a result of the recognition of impairment loss associated with goodwill of $7.5 million.

The consolidated loss from operations was $33.1 million for the year ended December 31, 2024 compared to a consolidated income from operations of $484,000 for the year ended December 31, 2023.

As a result of the factors described above, our loss from operations was $5.7 million for the year ended December 31, 2025, compared to loss from operations of $24.3 million in the year ended December 31, 2024, reflecting the one-time stock compensation expense of $18.5 million associated with the vesting of stock options and restricted stock upon our initial public offering completed in February 2024.

Our loss from operations for the China operations was $594,000 for the year ended December 31, 2025, compared to a loss from operations of $8.8 million in the year ended December 31, 2024, principally as a result of the recognition of impairment loss associated with goodwill of $7.5 million.

The consolidated loss from operations was $6.3 million for the year ended December 31, 2025 compared to a consolidated loss from operations of $33.1 million for the year ended December 31, 2024.

Equity in income (loss) from unconsolidated entities

Equity in income from unconsolidated entities relates to our China segment and comprises the equity in income from three unconsolidated project companies in which we have a non-controlling 30% interest.

Equity in income from unconsolidated entities comprises the equity in income from three unconsolidated project companies in which we have a non-controlling 30% interest.

The equity in income reported for the year ended December 31, 2025 was $254,000 compared to $635,000 in the year ended December 31, 2024, a decrease of $381,000 or 60.1%.

The decrease in 2024 correlates with the lower power production in the Guizhou region in China, which can vary from year to year depending on the weather.

Gain on debt extinguishment

Gain on debt extinguishment for the year ended December 31, 2024 was $303,000.

During the year ended December 31, 2024, we exchanged $6.0 million of secured EB-5 notes payable to related party to 4% convertible notes in the same principal amount, resulting in gain on debt extinguishment of $147,000, and settled $500,000 principal amount of 4% convertible note for a gain of approximately $142,000.

The gain on debt extinguishment for the year ended December 31, 2023 was $27,000, representing the gain on exchange of $500,000 principal amount of EB-5 notes for a convertible note in the same principal note.

The decline in revenue and income from these Chinese unconsolidated entities in 2025 resulted from insufficient sunlight, cloudy skies and frequent rain in the Guizhou region leading to a decline in the power production relative to the prior period.

Loss on debt extinguishment

Loss on debt extinguishment for the year ended December 31, 2025 was $977,000, of which $990,000 resulted from the issuance of common stock at a 25% discount from market in satisfaction of our promissory notes in the principal amount of $2.9 million, offset by a $13,000 gain on debt extinguishment for the exchange of a $500,000 secured EB-5 note payable to a related party for a 4% convertible note in the same principal amount.

During the year ended December 31, 2024, we issued 4% secured convertible notes in the principal amount of $6.0 million in exchange for $6.0 million of secured 3% EB-5 notes payable to related parties, resulting in gain on debt extinguishment of $147,000, and we settled $500,000 principal amount of 4% convertible note for a gain of approximately $142,000.

When the secured EB-5 notes are exchanged, the limited partners of the related party are not related parties.

Interest expense, net

Interest expense, net, for the year ended December 31, 2024 was $1.1 million, a decrease of $443,000, or 29.4%, from the year ended December 31, 2023.

Our interest expense in the year ended December 31, 2024 primarily includes interest at 3% on two loans from related parties in the United States with a total principal balance of $11.0 million at December 31, 2024, interest at 4% on convertible notes issued to former limited partners of CEF in transactions in which the former limited partners of CEF accepted a 4% convertible note issued by SolarMax and the subsidiary that borrowed the funds from CEF with an aggregate principal balance of $16.6 million at December 31, 2024, interest at 8% on promissory notes issued to SMX Property (a related party) due in October 2025 with a principal balance of $1.4 million at December 31, 2024, interest at 8% on a promissory note issued to an unrelated individual due on June 30, 2025 with a principal balance of $2.0 million at December 31, 2024, and interest at 12% on a promissory note issued to an unrelated investment company due on June 30, 2025 with a principal balance of $900,000 at December 31, 2024.

Interest expense, net, for the year ended December 31, 2025 was $827,000, an increase of $238,000, or 22.4%, from the year ended December 31, 2024.

Our interest expense in the year ended December 31, 2025 primarily includes interest at 3% on two loans from related parties in the United States with a total principal balance of $10.5 million at December 31, 2025 and interest at 4% on convertible notes issued to former limited partners of CEF in transactions in which the former limited partners of CEF accepted a 4% convertible note issued by SolarMax and the subsidiary that borrowed the funds from CEF with an aggregate principal balance of $15.2 million at December 31, 2025.

The convertible notes issued to the former limited partners of CEF were issued as payment of the former limited partner’s capital account in CEF and replace debt of an equal amount that had been due to CEF.

The notes are secured by the same collateral as the notes to CEF.

Our interest income for the year ended December 31, 2024 includes interest earned on promissory notes receivable at 8.0% in the United States segment due June 30, 2025 with a principal balance of $5.7 million at December 31, 2024, and interest earned on a promissory notes receivable at 5% in the China segment due June 30, 2025 with a principal balance of RMB 4,653,000 ($638,000) at December 31, 2024.

Other income (expenses), net

During the year ended December 31, 2024, other expense, net was $145,000 consisting primarily of a $332,000 of foreign currency transaction losses for our United States segment intercompany receivable denominated in the Chinese currency, a $30,000 loss associated with the write-off of legal settlement receivable as a result of the debtor's bankruptcy, offset by cash distributions declared of $198,000 from our zero basis equity investments in Alliance joint venture entities in the United States segment and a gain on disposal of property in the amount of $21,000.

During the year ended December 31, 2023, other expense was $499,000, consisting primarily of $308,000 cash distributions declared from zero basis equity investments in Alliance entities in the United States segment, $264,000 of gain on insurance settlement related the fire claim at the Riverside headquarters for the United States segment, $266,000 of expense related to the foreign currency transaction for our United States segment intercompany receivable denominated in the Chinese currency, $114,000 of additional payment on one of the SPIC projects representing interest on the amount previously owed on the project in the China segment, and $54,000 of income related to a vendor invoice on the project due to the poor product quality in the China segment.

At December 31, 2025, we are in default on $14.3 million of the principal amount of convertible notes, and the holders of these notes have the right to accelerate payment, which would result in an increase in the interest expense to 12% per annum.

Our interest expense reflects interest at the stated interest rate of 4%.

In the event that any or all of the noteholders on which we have defaulted exercise their acceleration option to call the notes and trigger the default rate, we would be required to pay interest at 12% for almost all of the time the notes were in default.

Such additional interest will be reflected as interest expense in the quarter in which payment of the notes is accelerated.

Our interest income for the years ended December 31, 2025 and 2024 includes interest earned on a 8% promissory note due December 31, 2025 which was issued by Webao, and a 5% promissory note due December 31, 2025 which was issued by Qingdao.

For the years ended December 31, 2025 and 2024, interest income on the Webao note was $385,000 and $464,000, respectively.

The Webao note was paid in full in December 2025.

For the years ended December 31, 2025 and 2024, interest income on the Qingdao note was $41,000 and $30,000, respectively.

The Qingdao note is reflected as held maturity debt investments on the Consolidated Financial Statements.

The unpaid principal and accrued interest on this note were repaid in full on February 19, 2026.

Other income (expense), net

During the year ended December 31, 2025, other income, net was $386,000 consisting primarily of a $198,000 of foreign currency transaction gains for intercompany receivable denominated in RMB, a loss on disposal of property in the amount of $65,000 and an elimination gain related to foreign currency of $249,000.

During the year ended December 31, 2024, other expense was $145,000, consisting primarily of a $332,000 of foreign currency transaction losses for intercompany receivable denominated in RMB, a $30,000 loss associated with the write-off of legal settlement receivable as a result of the debtor's bankruptcy, offset be cash distributions declared of $198,000 from zero basis equity investments in unconsolidated joint venture entities in the United States, and a gain on disposal of property in the amount of $21,000.

Income tax benefit (provision)

For the years ended December 31, 2024 and 2023, our United States segment reported an income tax expense of $6,000 and $6,000, respectively, attributable to state minimum tax liabilities.

For the China segment, income tax expense of approximately $1.7 million and $70,000 were reported for the years ended December 31, 2024 and 2023, respectively, arising from an increase in the valuation allowance against deferred tax assets as of December 31, 2024 and current tax expense for the year ended December 31, 2023.

For the years ended December 31, 2025 and 2024, we reported an income tax expense of $68,000 and $6,000, respectively, attributable to the Texas franchise tax and other state minimum tax liabilities.

For our China operations, income tax benefit of approximately $1.1 million and income tax expense of approximately $1.7 million were reported for the years ended December 31, 2025 and 2024, respectively, arising from an increase in the valuation allowance against deferred tax assets as of December 31, 2025 and current tax expense for the year ended December 31, 2024.

Net income (loss)

As a result of the foregoing, we had consolidated net loss of $35.0 million, or $(0.79) per share (basic and diluted), for the year ended December 31, 2024, compared with a consolidated net income of $0.4 million, or $0.01 per share (basic and diluted), for the year ended December 31, 2023.

As a result of the foregoing, we had consolidated net loss of $6.3 million, or $(0.13) per share (basic and diluted), for the year ended December 31, 2025, compared with a consolidated net loss of $35.0 million, or $(0.79) per share (basic and diluted), for the year ended December 31, 2024.

Currency translation adjustment

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Liquidity and Capital Resources

The following tables show consolidated cash flows information for the years ended December 31, 2024 and 2023 (dollars in thousands):

The following tables show consolidated cash flow information for the years ended December 31, 2025 and 2024 (dollars in thousands):

Years Ended December 31,

Consolidated cash flows data:

Consolidated cash flow data:

Net cash provided by (used in) operating activities

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Operating Activities

Net cash used in operating activities for the year ended December 31, 2024 was $9.1 million, compared to net cash provided by operating activities for the year ended December 31, 2023 of $4.1 million.

The cash used in operations for the year ended December 31, 2024, resulting from our net loss of $35.0 million, increases in non-cash expense from increases of $18.5 million in stock-based compensation expenses and an increase of $7.5 million in China goodwill impairment loss, and an increase of $5.8 million in cash used for our operating assets and liabilities.

Net cash provided by operations for the year ended December 31, 2023 of $4.1 million resulted primarily from net income of $435,000, increased by a $4.2 million decrease in cash from contract assets, $1.4 million decrease in cash from other receivables and current assets, with an offset from $1.5 million increase in cash from accounts receivable, $3.8 million increase in cash from customer loans receivable, $2.0 million increase in cash from inventories, $27,000 increase in cash from other assets, $1.2 million increase in cash from accounts payable, $1.4 million decrease in cash from operating lease liabilities, $4.0 million increase in cash from contract liabilities, $2.7 million decrease in cash from accrued expenses and other payables, and $1.4 million decrease in cash from other liabilities.

We expect the fluctuations of working capital over time to vary based on the construction status and the related contractual billings of the projects in progress.

Non-cash adjustments changes:

$18.5 million increase in stock-based compensation expense

$7.5 million increase in goodwill impairment loss

$1.9 million increase in deferred income taxes.

$473,000 decrease in expenses associated with loss provisions for bad debts, loan losses, inventories, warranty, customer care and production guaranty.

$276,000 net decrease from the reduction in gain on debt extinguishment.

Net cash provided by operating activities for the year ended December 31, 2025 was $498,000, compared to net cash used in operating activities for the year ended December 31, 2024 of $9.1 million.

The cash provided by operations for the year ended December 31, 2025, resulting from a decrease in our net loss of $28.6 million, decreases in non-cash expense of $27.0 million primarily from decreases of $7.5 million in China goodwill impairment loss and $18.0 million from stock-based compensation, and an increase of $8.0 million in cash used for our operating assets and liabilities.

Net cash used in operations for the year ended December 31, 2024 of $9.1 million.

The cash used in operations for the year ended December 31, 2024, resulting from our net loss of $35.0 million, increases in non-cash expense from $18.5 million in stock-based compensation expenses and $7.5 million in China goodwill impairment loss, and an increase of $5.8 million in cash used for our operating assets and liabilities.

Non-cash adjustments changes from 2024 to 2025 :

$18.0 million decrease in stock-based compensation expense

$7.5 million decrease in goodwill impairment loss

$3.2 million decrease in deferred income taxes.

$990,000 increase from the loss on debt extinguishment relate to promissory note payables exchanged for common stock

$381,000 net increase resulting from equity in income from our equity investments.

$73,000 decrease from the gain on early termination of leases

$2,000 net increase in depreciation and amortization expense which includes loan and debt discounts amortization.

$289,000 net increase from the reduction in gain on debt extinguishment related to the exchange of convertible notes

$37,000 net decrease in depreciation and amortization expense which includes loan and debt discounts amortization.

$29,000 decrease in expenses associated with loss provisions for bad debts, loan losses, inventories, warranty, customer care and production guaranty.

Changes in operating assets and liabilities:

$4.1 million decrease in net cash from contract assets related to projects for which the performance obligations have not been satisfied under the revenue recognition standard which became effective January 1, 2019.

$4.0 million increase in net cash from contract liabilities related to projects for which the performance obligations have not been satisfied under the revenue recognition standard which became effective January 1, 2019.

$2.0 million decrease in net cash inflow from inventories.

$1.8 million decrease in net cash inflow from customer loans receivable.

$1.9 million decrease in cash inflows from accounts payable.

$771,000 million decrease in cash from accrued expenses and other payables and other liabilities.

$786,000 increase in net cash inflow from accounts receivable, other receivables and current assets

$75,000 decrease in net cash from operating lease liabilities.

$45.7 million decrease in cash from a net increase contract assets related to projects for which the performance obligations have not been satisfied under our revenue recognition policies.

$57.6 million increase in cash from an increase accounts payable.

$8.5 million decrease in cash from a net increase in accounts receivable, SPIC receivable, and other receivables and current assets.

$6.2 million increase in cash from a net increase in accrued expenses and other payables and other liabilities.

$826,000 decrease in cash from an increase in inventories.

$720,000 increase in cash from a decrease in customer loans receivable.

$124,000 decrease in cash from a decrease operating lease liabilities.

Investing Activities

Net cash used by investing activities for the year ended December 31, 2024 was approximately $6.3 million, consisting of $7.7 million of short-term investment in three promissory notes (of which $638,000 relates to the China segment), offset by $1.3 million repayments received on the promissory notes, and $21,000 of cash proceeds received from disposal of property and equipment.

Net cash used by investing activities for the year ended December 31, 2023 was $7,000, consisting of cash received of $21,000 related to the disposal of property and equipment, offset by $28,000 used in the purchase of property and equipment.

Net cash provided by investing activities for the year ended December 31, 2025 was approximately $5.8 million, related to repayments received on promissory notes which were short-term investments made in 2024.

Net cash used by investing activities for the year ended December 31, 2024 was $6.3 million, consisting of $7.7 million of short-term investment in promissory notes, offset by $1.3 million repayments received on the promissory notes, and $21,000 of cash proceeds related to the disposal of property and equipment.

Financing Activities

Net cash provided by financing activities for the year ended December 31, 2024 was $13.3 million, consisting of $18.6 million of net cash proceeds from the initial public offering completed in March 2024, $900,000 loan proceeds from a new short-term borrowing, offset by $5.5 million principal payments on convertible notes in the United States segment, and $276,000 payment on legal settlement with former EB-5 noteholders in the United States segment.

Net cash used by financing activities for the year ended December 31, 2023 was $5.3 million, consisting of $4.8 million principal payments on convertible notes in the United States segment, $276,000 payment on legal settlement with former EB-5 noteholders in the United States segment, $49,000 payments on other borrowings and equipment leases in the United States segment, and $6.8 million payment to Uonone, offset by $6.6 million of proceeds from Uonone, related to legal settlement received by SolarMax on Uonone’s behalf in the China segment.

Net cash provided by financing activities for the year ended December 31, 2025 was $1.1 million, consisting of $4.8 million of proceeds from sale of common stock, offset by $3.3 million principal payments on convertible notes, and $346,000 payment on legal settlement with former EB-5 noteholders.

Net cash provided by financing activities for the year ended December 31, 2024 was $13.3 million, consisting of $18.6 million of net cash proceeds from the initial public offering completed in March 2024, $900,000 loan proceeds from a new short-term borrowing, offset by $5.5 million principal payments on convertible, and $276,000 payment on legal settlement with former EB-5 noteholders.

Cash and Cash Equivalents and Restricted Cash

The following table sets forth, our cash and cash equivalents and restricted cash held by our United States and China segments at December 31, 2024 and December 31, 2023 (dollars in thousands):

The following table sets forth, our cash and cash equivalents and restricted cash held by our United States and China operations at December 31, 2025 and 2024 (dollars in thousands):

United States

Uninsured cash

China Segment

Uninsured cash

Total cash and cash equivalents & restricted cash

Total cash and cash equivalents and restricted cash

Cash and cash equivalents

Restricted cash

We currently do not plan to repatriate any cash or earnings from any of our non-United States operations because we intend to utilize such funds to expand our China operations.

We currently do not plan to repatriate any cash or earnings from any of our non-United States operations because we intend to utilize such funds to purchase inventory in China for delivery to the United States.

Therefore, we do not accrue any China exit taxes related to the repatriation.

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We do not believe that this restriction will impair our operations since we do not anticipate that we will use the cash generated from our PRC operations in those operations and we do not plan to repatriate such funds to the United States.

We invested $7,000,000 from the proceeds of our initial public offering in an 8% promissory note issued by Webao Limited, a Hong Kong based social media company.

The initial maturity was June 1, 2024 and it was extended at the request of the maker to December 31, 2024 and subsequently extended to June 30, 2025.

Our China segment invested RMB 5,000,000, or approximately $688,000, in a 5% note due June 25, 2024 issued by Qingdao Xiaohuangbei Technology Co., Ltd., a PRC-based company.

The initial maturity was June 25, 2024 and it was extended at the request of the maker initially to December 25, 2024 and subsequently extended to June 30, 2025.

We invested $7.0 million from the proceeds of our initial public offering in an 8% promissory note issued by Webao, and RMB 5,000,000, or approximately $688,000, in a 5% note due June 25, 2024 issued by Qingdao, a PRC-based company.

As of December 31, 2025, Webao had repaid the $7.0 million.

The initial June 30, 2024 maturity date of the Qingdao note was extended at the request of Qingdao initially to December 25, 2024 and further subsequently extended to June 30, 2025.

All of the extensions were at the request of the respective makers of the notes.

As of December 31, 2025, we had received payments of RMB 1,344,475, or approximately $186,000, on account of the Qingdao note with the remaining unpaid principal and interest paid in full on February 19, 2026.

These notes are shown on our balance sheet as short-term investments.

Maintaining any significant portion of our cash in non-financial institutions, particularly companies in Hong Kong and China, which do not have any of the protections provided United States banks, is subject to adverse conditions in the financial or credit markets, which could impact access to our invested cash and could adversely impact our operating liquidity and financial performance.

Contemporaneously with the execution of our lease with 3080 Landlord and the termination of our former lease with SMXP, a related party, in 2022, we issued two two-year 8% notes to SMXP.

Both notes provide for quarterly payments of interest during the term with the principal being initially due in October 2024 and the notes were extended and are now due on October 10, 2025.

One note, in the principal amount of $414,581, was issued to pay past due rent under our former lease with SMXP for the period June 1, 2022 to October 12, 2022.

The second note, for $944,077 was issued in respect of a loan from SMXP to finance our security deposit ($809,209) and one month’s rent under our lease with 3080 Landlord.

In June 2024, our United States LED subsidiary signed a short-term promissory note maturing in June 2025 with an unrelated investment company to borrow $900,000 at a fixed interest rate of 12% for working capital purposes.

Maintaining any significant portion of our cash in non-financial institutions, particularly companies in Hong Kong and China, which do not have any of the protections provided by United States banks, is subject to adverse conditions in the Chinese financial and credit markets, which could impact access to our invested cash and could adversely impact our operating liquidity and financial performance.

Borrowings and Stock Issuances

At December 31, 2025, our current liabilities included secured convertible notes in the principal amount of $14.7 million and secured notes to related parties of $5.5 million.

Because the holders of the $14.3 million principal amount of notes that are in default have the right to accelerate payment at any time, the full principal amount of these notes is included in current liabilities.

Contemporaneously with the execution of our lease with 3080 Landlord and the termination of our former lease with SMXP, a related party, we issued two two-year 8% notes to SMXP in the aggregate principal amount of $1,358,658.

These notes provide for quarterly payments of interest during the term with the principal being initially due at maturity.

The initial maturity date in October 2024 was extended to October 10, 2025.

The notes were paid during quarter ended September 30, 2025.

On June 10, 2024, we borrowed $900,000 from an unrelated investment company and issued our one-year 12% promissory note in the principal amount of $900,000.

The note was paid during quarter ended September 30, 2025.

During the year ended December 31, 2025, we issued 9,635,712 shares of common stock, at a discount of 25% from the market price on the date of the investment, which prices ranged from $0.70 to $0.90, with an average purchase price of $0.79.

Two of the investors were the beneficial owners of the investment company that made a $900,000 loan to us and made an additional $100,000 investment and assigned the investment company’s interest in the note and the additional investment to the beneficial owners.

Under the Nasdaq regulations, we may not be able to raise any significant funding from the sale of common stock at a discount from market in the near future without stockholder approval.

On January 3, 2012, CEF entered into a loan agreement with SREP, one of our United States subsidiaries, pursuant to which CEF advanced $45.0 million.

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The notes are secured by the same assets that secured the notes issued to CEF and CEF II.

As of March 15, 2025, we had issued convertible notes in the principal amount of $41.5 million to former limited partners of CEF, of which principal payments of $22.0 million had been made on the anniversary of the respective dates of issuance, and convertible notes in the principal amount of $3.0 million had been purchased by us for $2.1 million, leaving convertible notes in the principal amount of $16.5 million outstanding.

The convertible notes are issued by the Company and the applicable subsidiary – SREP for loans from CEF and LED from loans from CEF II.

As of March 15, 2026, we had issued convertible notes in the principal amount of $43.5 million to former limited partners of CEF and CEF II, of which principal payments of $25.0 million had been made on the anniversary of the respective dates of issuance, and convertible notes in the principal amount of $3.0 million had been purchased by us for $2.1 million, leaving convertible notes in the principal amount of $15.6 million outstanding.

As of March 15, 2026, notes to CEF and CEF II in the aggregate principal amount of $9.0 million were outstanding.

Convertible Notes

We have issued 4% secured subordinated convertible notes to former limited partners of CEF and CEF II, pursuant to exchange agreements with the limited partners.

The limited partners accepted the notes in lieu of cash payments of their capital contribution which resulted in a reduction of SREP’s and LED's notes to CEF and CEF II, respectively, in the same amount, reducing the outstanding EB-5 loan balance.

Payment of the notes is secured by a security interest in SREP’s and LED's accounts and inventory, which are the same assets as secure the original note to CEF and CEF II.

The convertible notes are payable in equal installments on the first, second, third, fourth and fifth anniversaries of the date of issuance.

The convertible notes made prior to, or on or about the date of, our initial public offering are convertible into common stock at a conversion price of $3,20, which is 80% of our initial public offering price of $4.00 per share.

The convertible notes made after our initial public offering are convertible into common stock at a conversion price equal to 80% of the average closing price of our common stock for the ten trading days preceding the date of the exchange agreement with the limited partner which conversion prices range from $0.65 to $9.07, with an average conversion price of $1.58.

The convertible notes may be converted into common stock at the first, second, third, fourth and fifth anniversaries of the date of issuance, but not earlier than six months from the date of our initial public offering or for convertible notes issued after the initial public offering, six months after the issuance of the notes.

All convertible notes issued contained redemption put features that allow the holders of the convertible notes the right to receive, for each conversion share that would have been issuable upon conversion immediately prior to the occurrence of an effective change in control event defined as a fundamental transaction, the number of shares of common stock of the successor or acquiring corporation or of ours, if it is the surviving corporation, and any additional consideration receivable as a result of such fundamental transaction by a holder of the number of shares of common stock for which these convertible notes are convertible immediately prior to such fundamental transaction.

We evaluated the redemption put feature contained in the convertible notes under the guidance of ASC 815 and concluded that the requirements for contingent exercise provisions as well as the settlement provision for scope exception in ASC 815-10-15-74 has been meet.

Accordingly, the redemption put features contained in the convertible notes were not bifurcated and accounted for as freestanding derivative instruments.

During the year ended December 31, 2025, we issued convertible notes in the aggregate principal amount of $500,000 pursuant to exchange agreements which resulted in a reduction of EB-5 notes in the principal amount of $500,000 and recognized a gain on debt extinguishment of $13,000.

During the year ended December 31, 2024, we issued convertible notes in the aggregate principal amount of $6.0 million pursuant to exchange agreements which resulted in a reduction of EB-5 note in the principal amount of $6.0 million and recognized a gain on debt extinguishment of $303,000.

Default Event and Remedies Upon Event of Default

From April 2023 through December 31, 2025, we did not pay annual principal installment payments and related quarterly interest payments within 30 days of the anniversary dates, causing a default event on convertible notes in the aggregate principal amount of $14.3 million, at December 31, 2025.

The notes provide that, commencing five days after occurrence of any Event of Default that results in the eventual acceleration of the note, the interest rate on the note shall accrue at an interest rate equal to the lesser of 12% per annum or the maximum rate permitted under applicable law.

Further, if any Event of Default occurs, the outstanding principal amount of the note plus accrued but unpaid interest and other amounts owing in respect thereof through the date of acceleration shall become, at the noteholder's election, immediately due and payable in cash, and the noteholder together shall have rights to foreclose on the collateral Since the noteholders have not taken steps to accelerate payment, which triggers the 12% default interest rate, we have accrued interest on the notes at 4%.

As of December 31, 2025, one noteholder has given notice for acceleration, for which we have accrued the interest at the 12% default rate, and the note and accrued interest was paid in full in January 2026.

Other Debt Obligations

We have a loan for $2.0 million from an unrelated party bearing interest rate at 6% per annum which becomes due at June 30, 2025.

We had an unsecured loan for $2.0 million from an unrelated party bearing interest rate at 6% per annum which became due at June 30, 2025.

This loan had been extended periodically since the original maturity date of April 30, 2021.

On July 31, 2025 this loan was exchanged for 2,702,703 shares of common stock in a private placement offering at a discounted per share price of $0.74 per share.

In connection with this exchange, we recognized a loss on debt extinguishment of approximately $676,000 in July 2025 based on the fair value of our common stock relative to the discount sale price of the common stock.

The issuance of the shares is part of the equity financing during the year ended December 31, 2025, described above in the fourth paragraph under “Borrowings and Stock Issuances.”

We had an unsecured loan for $900,000 from an unrelated investment company bearing interest rate at 12% per annum which became due on August 10, 2024 and had since been extended to June 30, 2025.

On April 16, 2025, the $900,000 unsecured promissory note was assigned by the original creditor to two unrelated individuals, who then exchanged the promissory note for a total of 1,046,512 shares of our common stock at a purchase price of $0.86 per share, representing a discount of 25% of the fair value of the share.

In connection with the exchange, we recognized a loss from debt extinguishment of $313,953 based on the fair value of the common stock relative to the sale price of the shares.

Notes Payable to SMX Property, LLC, a related party

On October 10, 2022, SMX Property, LLC, a related party and the former owner of our Riverside headquarters, made unsecured loans to us of $944,077 and $414,581, for which we issued its 8% promissory notes due October 10, 2025, with interest payable quarterly.

The $944,077 loan was used to pay the security deposit and lease obligations for one month owed to the new owner of our headquarters building under the new lease agreement.

On September 2, 2025, this loan was repaid.

The $414,581 loan was used to pay lease obligations owing to SMX Property by us for rent on our headquarters from June 1, 2022 to October 12, 2022.

On July 22, 2025, this loan was repaid.

Our chief executive officer and our former executive vice president who is a 5% stockholder and is the principal management of SMX Property.

One other director has a non-controlling interest in SMX Property and is not part of its management.

Contractual Obligations

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For the year ending December 31,

Bank and Other

Unsecured Loans

Related Party

Notes Payable -

Related Party

Convertible Notes

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For the year ending December 31,

On January 28, 2026, we entered into an amendment to the lease for our facilities at 3080 12th Street, Riverside, California.

The amendment extends the expiration date of the lease from December 31, 2026 to December 31, 2033.

The annual base rent during the term, as extended is $1,855,566 for 2026 and it increases annually until $2,282,112 for 2033.

We will also pay certain operating expenses in the same manner as with the prior lease.

The amendment provides for certain construction expenses, a portion of which are payable by the landlord and a portion of which are payable by us.

Employment Agreements

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The agreements provide for an annual salary with an increase of not less than 3% and an annual bonus in restricted stock and cash equal to a specified percentage of consolidated revenues for each year.

Hsu’s annual salary for 2023 was $716,431, and his salary for 2024 is at the annual rate of $737,924.

Hsu’s annual salary for 2024 was at the annual rate of $737,924, and his annual salary for 2025 is at the annual rate of $760,065.

We also owe Mr.

Hsu $675,000 as the cash payment in connection with his exchange of 1,348,213 restricted shares of common stock for options to purchase 1,428,432 shares of common stock at $5.01 per share and a cash payment of $675,000, which was initially payable by December 15, 2019 and has been extended and is now due commencing on June 30, 2025 in twelve equal monthly installments.

Hsu $675,000 as the cash payment in connection with his exchange of 1,348,213 restricted shares of common stock for options to purchase 1,428,432 shares of common stock at $5.01 per share and a cash payment of $675,000, which was initially payable by December 15, 2019 and has been extended and is now due commencing on December 31, 2025 in twelve equal monthly installments.

In addition, at December 31, 2025, we owed Mr.

Hsu $1,833,378, representing deferred salary from 2019, 2020, 2021, 2022, 2023, and 2024 and cash bonuses deferred from 2017 and 2018.

Hsu waived his bonus for 2019, 2020, 2021, 2022, and 2023 as part of the suspension of incentive programs for key employees, and he agreed that the $1,833,378 deferred salary and bonus be paid in twelve equal monthly installments with the first payment becoming due on June 30, 2025.

Hsu $1,818,282, representing deferred salary from 2019 through 2024 and cash bonuses deferred from 2017 and 2018.

Hsu waived his bonus for 2019 through 2025 as part of the suspension of incentive programs for key employees, and he agreed that the $1,818,282 deferred salary and $675,000 bonus be paid in twelve equal monthly installments with the first payment having become due on December 31, 2025.

As of March 15, 2026, Mr.

Hsu has been paid $415,547 under this agreement.

Cash Requirements

In March 2025, we received $500,000 from the sale of 561,798 shares of common stock, which we are using for working capital.

We require substantial funds for our business, and we believe that the cash and cash equivalents and short-term investment, together with cash generated by our operations should enable us to meet our cash requirements for at least the twelve months from the date of this report although such funds may not be adequate if the holders of the $14.3 million convertible notes on which we are in default demand acceleration.

During the year ended December 31, 2025, we raised a total of approximately $7.7 million from the sale of common stock at a 25% discount from market, of which $4.8 million in cash was received and the balance represented the issuance of common stock in satisfaction of our notes in the aggregate principal amount of $2.9 million.

Under the Nasdaq regulations, we may not be able to raise any significant funding from the sale of common stock at a discount from market in the near future without stockholder approval.

However, we cannot assure you that we will not require additional funds to meet our commitments or that funds will be available on reasonable terms, if at all.

We have significant debt obligations which mature or may mature during the next year.

We have extended our loan obligation to an unrelated third party for $2.0 million to June 30, 2025 and, with respect to the loans made under the EB-5 program, as described above, we are seeking to refinance the loans through the issuance of secured subordinated convertible notes to the limited partners of the lenders.

With respect to the loans made by CEF and CEF II under the EB-5 program, as described above, we are seeking to refinance the loans through the issuance of secured subordinated convertible notes to the limited partners of the lenders.

The proposed convertible notes would have a conversion price of 80% of the market price at the date of issuance of the convertible note.

However, in view of both our defaults on other convertible notes in the principal amount of $14.3 million and our low stock price and the notice from Nasdaq that we are not in compliance with the $1.00 minimum stock price requirement, they may not accept our convertible notes and may require payment or notes with terms more favorable to them.

We also have obligations to Mr.

Hsu described above, approximately $2.5 million of which will be paid in twelve equal monthly installments with the first payment becoming due on June 30, 2025.

Hsu described above, approximately $2.5 million of which will be paid in twelve equal monthly installments with the first payment becoming due on December 31, 2025.

We cannot assure you that we will be able to negotiate extensions to our loans or refinancing of our EB-5 debt.

The willingness of the limited partners of CEF and CEF II to accept convertible notes rather than a cash payment of their investment in the limited partnership may be affected by their perception of our performance and the performance of our common stock as well as their perception that they could get a more favorable result with litigation.

The willingness of the limited partners of CEF and CEF II to accept convertible notes rather than a cash payment of their investment in the limited partnership may be affected by their perception of our performance and the performance of our common stock, including our low stock price and the possibility of our being delisted from Nasdaq, as well as their perception that they could get a more favorable result with litigation.

We cannot assure you that such financing will be available on acceptable, if any terms, which would impair our ability to develop our business.

Our financial statements for the year ended December 31, 2024 have a going concern paragraph.

Further, we have short-term investments of approximately $7.7 million which are past due.

To the extent that we are not able to obtain the proceeds of these loans in a timely manner, our operations may be impaired.

The low price of our common stock may make it difficult for us to issue convertible notes that are convertible at a discount from the market price of our common stock and if we are unable to raise necessary financing or otherwise restructure our current debt obligation we may not be able to continue in business.

Our financial statements for the year ended December 31, 2025 and 2024 have a going concern paragraph.

Critical Accounting Estimates and Policies

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Basis of Presentation and Summary of Significant Accounting Policies.”

Impairment assessment of goodwill

Nature of Estimates Required

We assess the carrying value of our long-lived assets and related intangibles for impairment at least annually and also whenever events or changes in circumstances indicate that the carrying value of the long-lived asset, or group of assets, may not be recoverable.

Recoverability of long-lived assets is measured by comparing the carrying amount of the long-lived assets to the respective estimated future undiscounted cash flows.

The estimated future undiscounted cash flows are calculated utilizing the lowest level of identifiable cash flows that are largely independent of the cash flows of other assets and liabilities.

If our analysis indicates that the carrying value of the long-lived assets is not recoverable on an undiscounted cash flow basis, it recognizes an impairment charge for the amount by which the carrying value exceeds the fair value of the long-lived asset.

Key Assumptions and Approach Used

Goodwill is tested for impairment at least annually based on certain qualitative factors to determine if it is more likely than not that the fair value of a reporting unit is less than its carrying amount.

When assessing goodwill for impairment, we consider the enterprise value and if necessary, the discounted cash flow model, which involves assumptions and estimates, including our future financial performance, weighted-average cost of capital and interpretation of currently enacted tax laws.

Circumstances that could indicate impairment and require us to perform a quantitative impairment test include a significant decline in the financial results, a significant decline in the enterprise value relative to our net book value, an unanticipated change in competition or the market share and a significant change in the strategic plans.

In 2024, we incurred a $7.5 million goodwill impairment representing an impairment charge of the entire balance of our goodwill associated with our China segment, representing all of our goodwill.

As of December 31, 2024, we have no goodwill.

Because of the COVID restrictions, we were not able to complete negotiation for new projects with SPIC and with one other potential customer.

In China, in order for us both to generate business and collect receivables, we need to have face-to-face meetings with the representatives of SPIC or any other potential customers rather than remote meetings such as Zoom.

These negotiations were initially deferred from late 2021 until 2022 and further deferred to 2023 as a result of COVID restrictions.

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

We are now engaged in negotiations with respect to new projects for our China segment.

In addition, our negotiations were impacted by a temporary spike in panel prices in China, which began to moderate in 2022.

Despite the interruption of COVID in China, we believe that the macroeconomic conditions for the solar market in China continues to be strong.

China remains the number one market in the world for photovoltaic systems, which includes the solar farms of the type that our China segment designs and builds for third parties.

As COVID restrictions eased in late 2022, discussions, negotiations, design work and permitting on potential projects resumed in the first quarter of 2023, although, as of the date of this report, we have not entered into any agreements.

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.

Effect if Different Assumptions Used

Under different assumptions, there could be a likelihood that the fair value of our China segment is less than its carrying value and would require an impairment.

Allowance for credit and loan losses

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Specifically, we estimate loss reserve based on the aging of the financial asset balances and the financial condition of customers and provide for specific allowance amounts for those customers that have a higher probability of default.

With respect to our China segment, we review China’s current and future economic conditions along with its political landscape, and how these factors may affect our receivable from SPIC, a state-owned entity.

With respect to our China operations, we review China’s current and future economic conditions along with its political landscape, and how these factors may affect our receivable from SPIC, a state-owned entity.

We regularly monitor collection status of these financial assets through account reconciliation, payment tracking, customer’s financial condition and macroeconomics conditions.

At December 31, 2024, we had an outstanding receivable from SPIC of approximately $6.8 million which relates to projects completed prior to 2022 and reflect a reserve for bad debt on this account receivable in connection with an arbitration proceeding.

Legal Proceedings.” Although we believe the receivable will be collected, and we had anticipated collection during 2024, we can give no assurance as to when or whether we will collect the full amount, and China’s reduced tax revenue and other sources of funds may affect the ability or willingness of SPIC to pay us.

Effect if Different Assumptions Used

We believe that assumptions not based on the use of historical collection experience, current and forecasted economic, political (China segment) and business conditions, and a review of the status of each customer’s financial asset account would be contra to the requirements of ASU 2016-13 and a departure from GAAP.

We believe that assumptions not based on the use of historical collection experience, current and forecasted economic, political (China operations) and business conditions, and a review of the status of each customer’s financial asset account would be contra to the requirements of ASU 2016-13 and a departure from GAAP.

Nature of Estimates Required

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We take certain tax positions we believe are in accordance with the applicable tax laws.

However, these tax positions are subject to interpretation by the Internal Revenue Service, state tax authorities and the courts.

However, these tax positions are subject to interpretation by the Internal Revenue Service, state tax authorities, foreign tax authorities and the courts.

We determine uncertain tax positions in accordance with the authoritative guidance.

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Not applicable

Financial Statements and Supplementary Data

The financial statements start on Page F-1

Changes in and Disagreements with Accountants on Accounting and Financial Disclosures

Not applicable

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 7. Management’s Discussion and Analysis