What changed in this filing

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Item 1A. Risk Factors

2024-04-01 compared with 2023-04-14 · 152 added, 109 removed, 305 unchanged (46% of the section changed)

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Actual events and results may differ materially from those expressed or forecasted in forward-looking statements due to a number of factors, including those factors discussed below.

Risks Related to the Company’s Common Stock

Our failure to maintain compliance with the Nasdaq Stock Market’s continued listing requirements could result in the delisting of our common stock , which could negatively affect the market price of our common stock, our liquidity and our ability to raise capital .

Our common stock is currently listed on The Nasdaq Capital Market.

In order to maintain this listing, we must satisfy minimum financial and other requirements.

On October 27, 2023, we received a notice from the Listing Qualifications Department of the Nasdaq Stock Market informing us that because the closing bid price for our common stock listed on Nasdaq was below $1.00 per share for the last 31 consecutive business days, we did not comply with the minimum closing bid price requirement for continued listing on The Nasdaq Capital Market under Nasdaq Marketplace Rule 5550(a)(2) (the "Minimum Bid Rule").

In accordance with Nasdaq’s Listing Rules, we have a period of 180 calendar days, or until April 24, 2024, to regain compliance with the Minimum Bid Rule.

Additionally, on February 27, 2024, the Staff issued another notice (the “February Notice”) notifying us that our common stock had a closing bid price of $0.10 or less for 10 consecutive trading days (February 12, 2024 to February 26, 2024).

Accordingly, the Company is subject to the provisions contemplated under Nasdaq Listing Rule 5810(c)(3)(A)(iii) (the “Low Priced Stock Rule”).

As a result, the Staff had determined to delist the Company’s securities from Nasdaq effective as of the opening of business on March 7, 2024, unless the Company requested an appeal before the Nasdaq Hearings Panel (the “Panel”) of the Staff’s determination by March 5, 2024.

The Company requested a hearing before the Panel to appeal the February Notice, and Nasdaq has scheduled the hearing for April 30, 2024.

Accordingly, the delisting action has been stayed, pending a final written decision by the Panel.

There can be no assurances that the Company will be able to regain compliance with the Minimum Bid Rule at all or by the deadline, or that any related extension request will be granted.

Further, there can be no assurances that the hearing related to the Low Priced Stock Rule will occur, that a favorable decision will be obtained if the hearing is held, that the Panel will grant any request for an extension period within which to regain compliance, or that the Company will be able meet the continued listing requirements during any compliance period or in the future.

If the Company is unable to regain or maintain compliance with these Nasdaq requirements, its common stock will be delisted from Nasdaq.

While on January 3, 2024 the Company’s shareholders approved a reverse stock split of the outstanding shares of the Company’s common stock at a ratio within a range of 1-for-2 to 1-for-15, as determined by our board of directors, the board has not implemented a reverse stock split pursuant to that approval, and has determined that, based on recent stock prices of the Company’s common stock, the maximum ratio under that approved range of 1-for-15 would not be sufficient to cause the stock price to increase or be maintained at a level that would satisfy the Minimum Bid Rule.

As a result, the board has called a special meeting of shareholders to request, among other matters, that its shareholders approve a reverse stock split of the outstanding shares of the Company’s common stock at a ratio within a range of 1-for-25 and 1-for-200, as determined by the board.

However, there can be no assurance that shareholders will approve that reverse stock split or that any reverse stock split that is effected will increase, or maintain, the bid price per share of our common stock sufficiently to satisfy the Minimum Bid Rule or the Low Priced Stock Rule.

The perception among investors that we are at a heightened risk of delisting could negatively affect the market price and trading volume of our common stock.

If our common stock is delisted from Nasdaq, the delisting could:

substantially decrease trading in our common stock;

adversely affect the market liquidity of our common stock as a result of the loss of market efficiencies associated with Nasdaq and the loss of federal preemption of state securities laws;

adversely affect our ability to issue additional securities or obtain additional financing in the future on acceptable terms, if at all;

result in the potential loss of confidence by investors, suppliers, partners and employees and fewer business development opportunities;

and result in limited analyst interest.

Additionally, the market price of our common stock may decline further, and shareholders may lose some or all of their investment.

Future sales of Company shares could cause the Company’s stock price to decline.

If shareholders of the Company, sell, or indicate an intention to sell, substantial amounts of the Company’s common stock in the public market, the trading price of the common stock of the Company could decline.

Upon conversion of the Convertible Preferred Stock and exercise of the common stock PIPE Warrants or the issuance of the earnout consideration from the merger, the number of shares outstanding of the Company’s common stock could increase substantially.

Dilution and potential dilution, the availability of a large number of shares for sale, and the possibility of additional issuances and sales of the Company’s common stock may negatively affect both the trading price and liquidity of the Company’s common stock.

Our management concluded that our disclosure controls and procedures and our internal control over financial reporting were not effective as of December 31, 2023 due to material weaknesses in internal control over financial reporting.

If we are unable to remediate these material weaknesses and maintain an effective system of disclosure controls and procedures and internal control over financial reporting, we may not be able to accurately report our financial results in a timely manner, which may adversely affect investor confidence in us and materially and adversely affect our business and financial results.

The process of designing and implementing and maintaining effective internal controls for newly acquired businesses has required and is expected to continue to require significant resources of the Company.

We have concluded that we have material weaknesses in our internal controls due to our limited accounting and finance resources which resulted in inappropriate preparation, review and maintenance of documentation critical to the design and consistent execution of internal controls.

Due to limited staffing,it can be challenging to properly prepare, review and maintain appropriate documentation critical to the process.

Due to limited staffing, it can be challenging to properly prepare, review and maintain appropriate documentation critical to the process.

If the Company continues to have material weaknesses in our internal controls or is unable to establish or maintain appropriate internal financial controls and procedures, it could cause the Company to fail to meet its reporting obligations on a timely basis, result in material misstatements in its consolidated financial statements, and harm its operating results.

In addition, the process for designing and implementing and maintaining an effective internal control environment for the Company may divert management’s attention from revenue generating or other important business activities.

If the Company fails to design and implement and maintain effective internal controls over financial reporting for newly acquired businesses in the required timeframe, it may be subject to sanctions or investigations by regulatory authorities, including the SEC and Nasdaq.

Furthermore, if the Company is unable to conclude that its internal controls over financial reporting are effective, it could lose investor confidence in the accuracy and completeness of its financial reports, the market price of the Company’s securities could decline, and it could be subject to sanctions or investigations by regulatory authorities.

Failure to implement or maintain effective internal control over financial reporting and disclosure controls and procedures required of public companies could also restrict the Company’s future access to the capital markets.

The price of the Company’s common stock may be volatile and may decline in value.

The market price for the Company’s common stock has been highly volatile, and the market from time to time has experienced significant price and volume fluctuations that are unrelated to the operating performance of public companies.

The trading volume and prices of the common stock have been volatile and may continue to be volatile and could fluctuate widely due to factors both within and beyond the Company’s control.

During 2024 through March 15, 2024, the sale price of common stock ranged from $0.05 to $0.63 per share, and our daily trading volume ranged from 8,000 to approximately 49.5 million shares.

This volatility may, in part, be the result of broad market and industry factors.

Future fluctuations in the trading price or liquidity of the Company’s common stock may harm the value of the investment of the Company’s shareholders in the Company’s common stock.

Factors that may have a significant impact on the market price and marketability of the Company’s common stock include, among others:

 public reaction to the Company’s press releases, announcements and filings with the SEC;

 the Company’s operating and financial performance;

 fluctuations in broader securities market prices and volumes, particularly among securities of technology and solar companies;

 changes in market valuations of similar companies;

 departures of key personnel;

 commencement of or involvement in litigation;

 variations in the Company’s quarterly results of operations or those of other technology and solar companies;

 changes in general economic conditions, financial markets or the technology and solar industries;

 announcements by the Company or its competitors of significant acquisitions or other transactions;

 changes in accounting standards, policies, guidance, interpretations or principles;

 speculation in the press or investment community;

 actions by the Company’s shareholders, particularly relating to the Company’s common stock;

 the failure of securities analysts to cover the Company’s common stock or changes in their recommendations and estimates of its financial performance;

 future sales of the Company’s common stock;

 the delisting of the Company’s common stock or halting or suspension of trading in its common stock by the Nasdaq Stock Market;

 economic and other external factors, such as the COVID-19 pandemic;

 general market conditions.

The Company may issue additional common stock resulting in stock ownership dilution.

As of March 15, 2024, we had 64,927,119 shares of common stock outstanding.

There are an additional 911,404 shares reserved for issuance upon the settlement of outstanding restricted stock units, 271,090 shares available for grant under the 2022 Equity Incentive Plan, and 415,005 shares available for issuance under the 2022 Employee Stock Purchase Plan.

Accordingly, our shareholders may experience future dilution, which may be substantial .

Additionally, in the PIPE offering, we issued shares of our Convertible Preferred Stock that were initially convertible into 2,352,936 shares of our common stock and we issued PIPE Warrants that were initially exercisable for 2,352,936 shares of our common stock, each case at an initial price of $13.60 per share, which is subject to adjustment .

After the November 9, 2022 and February 5, 2024 PIPE resets and subsequent conversions through March 15, 2024 , the 20,597.14 of remaining preferred shares with a stated amount of $0.14 were convertible into 147,122,398 shares of common stock at a conversion price of $0.14, and there were outstanding warrants to purchase 235,539,698 shares of common stock with a weighted average of $0.14 per share exercise price.

If the Convertible Preferred Stock or PIPE Warrants are further converted or exercised into shares of our common stock, our shareholders will experience additional dilution.

The Convertible Preferred Stock contains anti-dilution provisions that provide for a significant reset of the conversion price in connection with multiple events, including if we issue securities at a price below the current conversion price.

The PIPE Warrants contain anti-dilution provisions that provide for a significant reset of the exercise price in connection with multiple events, including if we issue securities at a price below the current exercise price, and in such instance the number of shares of common stock increases.

At our stock price as of March 15, 2024, if we were to trigger these anti-dilution provisions, including through the sale of securities for purposes of a capital raising transaction, a substantial number of additional shares of our common stock may become issuable, which would further materially dilute the ownership interests of our shareholders.

For illustrative purposes only, if we were to sell shares of common stock that reset the conversion price of the Convertible Preferred Stock to $0.07, the closing price of our common stock on the Nasdaq Stock Market as of March 15, 2024, the Convertible Preferred Stock would be convertible into an additional 147,122,401 shares of common stock and the exercise price of the PIPE Warrants would reduce to $0.07 and the PIPE Warrants would become exercisable for an additional 221,603,161 shares of common stock.

In addition, we may raise additional capital through the sale of equity or convertible debt securities, which would further dilute the ownership interests of our shareholders.

Anti-takeover provisions in the Company’s organizational documents and agreements may discourage or prevent a change in control, even if a sale of the Company could be beneficial to the Company’s shareholders, which could cause its stock price to decline and prevent attempts by the Company’s shareholders to replace or remove its current management.

Several provisions of the Company’s governing documents, in addition to provisions of Minnesota law, could make it difficult for the Company’s shareholders to change the composition of the Company’s board of directors following the merger, preventing them from changing the composition of management.

In addition, several provisions of our articles and bylaws may discourage, delay or prevent a merger or acquisition that our shareholders may consider favorable.

These provisions include:

 Shares of common stock and preferred stock are available for issuance without shareholder approval.

The existence of unissued and unreserved common stock and preferred stock may enable the board of directors to issue shares to persons friendly to current management or to issue preferred stock with terms that could render more difficult or discourage a third-party attempt to obtain control of the Company by means of a merger, tender offer, proxy contest or otherwise, thereby protecting the continuity of its management.

 Shares of the Company’s common stock do not have cumulative voting rights in the election of directors, so our shareholders holding a majority of the shares of common stock outstanding are able to elect all of the Company’s directors.

 Special meetings of the shareholders may be called only by the board of directors, the chairman of the board of directors or the chief executive officer.

 The board of directors may adopt, alter, amend or repeal some provisions of the bylaws of the Company without shareholder approval.

 Unless otherwise provided by law, any newly created directorship or any vacancy occurring on the board of directors for any cause may be filled by the affirmative vote of a majority of the remaining members of the board of directors even if such majority is less than a quorum, and any director so elected shall hold office until the expiration of the term of office of the director whom he or she has replaced or until his or her successor is elected and qualified.

 The affirmative vote of the holders of at least 80% of the voting power of the then outstanding shares of the Company’s capital stock entitled to vote generally in the election of directors, voting together as a single class, is required to amend or repeal certain provisions of our articles and bylaws relating to advance notice of nominations for election and advance notice of shareholder proposals .

 Shareholders must follow advance notice procedures to submit nominations of candidates for election to the Board of Directors at an annual or special meeting of our shareholders and must follow advance notice procedures to submit other proposals for business to be brought before an annual meeting of our shareholders.

These anti-takeover provisions could substantially impede the ability of our shareholders to benefit from a change in control and, as a result, could materially adversely affect the market price of our common stock and the ability of our shareholders to realize any potential change-in-control premium.

The Company’s board of directors is authorized to issue and designate shares of preferred stock without shareholder approval.

The Company’s articles of incorporation authorize the board of directors, without the approval of the Company shareholders, to issue up to 3,000,000 shares of preferred stock, subject to limitations prescribed by applicable law, rules and regulations and the provisions of the articles of incorporation, as shares of preferred stock in series, to establish from time to time the number of shares to be included in each such series and to fix the designation, powers, preferences and rights of the shares of each such series and the qualifications, limitations or restrictions thereof.

The powers, preferences and rights of these series of preferred stock may be senior to or on parity with our common stock, which may reduce its value.

Risks Relating to the Company’s Business

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This growth may place a strain on the Company’s management, operational and financial infrastructure.

The Company’s growth requires management to devote a significant amount of time and effort to maintain and expand its relationships with customers and third parties, attract new customers, arrange financing for its growth and manage its expansion into additional markets.

The Company’s growth requires management to devote a significant amount of time and effort to maintain and expand

its relationships with customers and third parties, attract new customers, arrange financing for its growth and manage its expansion into additional markets.

In addition, the Company’s current and planned operations, personnel, information technology and other systems and procedures might be inadequate to support future growth and may require it to make additional unanticipated investments in its infrastructure.

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Further, there is substantial doubt about the Company’s ability to continue as a going concern, which conditions may adversely affect the Company’s stock price and its ability to raise capital.

Based on the Company’s current financial position, including the approximately $4.5 million of cash, restricted cash, cash equivalents and investments that are restricted under the Company’s contingent value rights (“CVR”) agreement and cannot be used by the Company for its own working capital needs and $1.3 million of cash that can only be used to support SUNation’s operations, the Company’s forecasted future cash flows for twelve months beyond the date of issuance of the financial statements in this report indicate that the Company will not have sufficient cash to repay the $5.0 million secured short-term note that is due on August 9, 2023 (the “Short-Term Note”) .

Based on the Company’s current financial position, including the approximately $1.8 million of cash, restricted cash, cash equivalents and investments that are restricted under the Company’s contingent value rights (“CVR”) agreement and cannot be used by the Company for its own working capital needs , the Company’s forecasted future cash flows for twelve months beyond the date of issuance of the financial statements in this report indicate that the Company will not have sufficient cash to make the first earnout payment in the second quarter of 2024 under the SUNation Transaction Agreement or the first principal payment of the long-term note that is due on November 9, 2024 .

As a result, the Company requires a dditional funding and seeks to raise capital through sources that may include public or private equity offerings, debt financings and/or strategic alliances.

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Further, certain transactions could trigger a reset of the exercise price of the Company’s outstanding Series A preferred stock (the “ Convertible Preferred Stock”) and outstanding warrants (the “PIPE Warrants”) issued to investors in the March 28, 2022 private investment in public equity (“PIPE”) offering, which would lead to a corresponding increase in the number of shares of common stock issuable upon exercise of the PIPE Warrants, further diluting the Company’s shareholders.

On February 5, 2024, the Company entered into a Securities Purchase Agreement (the “Purchase Agreement”) with certain institutional investors (the “Purchasers”) for the sale by the Company of 2,702,703 shares of the Company’s common stock in a registered direct offering (the “Offering”).

The Purchasers in this offering agreed to purchase, and the Company has agreed to sell, the Shares at a purchase price per share of $0.37 per share.

The aggregate gross proceeds for the sale of the Shares were approximately $1.0 million, before deducting the placement agent fees and related offering expenses.

Following the Offering, the share price of the Company’s stock price fell due to the dilutive effects of the newly issued shares.

If the Company was to undertake another similar offering, its share price could be reduced further.

In addition, the fact that there is substantial doubt about the Company’s ability to continue as a going concern and that the Company is operating under these conditions may adversely affect the Company’s stock price and its ability to raise capital.

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There are a limited number of suppliers of solar energy system components, instruments and technologies.

Any need to transition to a new supplier may result in additional costs and delays in originating solar installation agreements and deploying its related solar energy systems, which in turn may result in additional costs and delays in its acquisition of such solar installation agreements and related solar energy systems.

Any need to transition to a new supplier may result in additional costs and delays in

originating solar installation agreements and deploying its related solar energy systems, which in turn may result in additional costs and delays in its acquisition of such solar installation agreements and related solar energy systems.

These issues could have a material adverse effect on the Company’s business, financial condition and results of operations.

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 natural disasters or other weather or meteorological conditions.

For these or other reasons, past performance of Pineapple, HEC, E-Gear, or SUNation should not be relied upon as indications of the Company’s future performance.

The Company may have difficulty integrating the businesses from the SUNation transaction with its existing operations or otherwise obtaining the strategic benefits of the acquisition, and it may be adversely impacted by negative covenants under the Short-Term Note.

The impact of the SUNation acquisition on the Company’s business, operating results and financial condition is uncertain.

The Company may have difficulty assimilating the businesses and their products, services, technologies and personnel into the Company’s existing operations.

These difficulties could disrupt the Company’s ongoing business, distract its management and workforce, increase the Company’s expenses and materially adversely affect the Company’s operating results and financial condition.

The acquisition involves other potential risks, including:

 the failure to successfully integrate personnel, departments and systems, including IT and accounting systems, technologies, books and records, and procedures;

 the need for additional investments post-acquisition that could be greater than anticipated;

 the assumption of liabilities of SUNation that could be greater than anticipated;

 incorrect estimates made in the accounting for acquisitions, incurrence of non-recurring charges, and write-off of significant amounts of goodwill or other assets that could adversely affect the Company’s operating results;

 unforeseen difficulties related to entering geographic regions or industries in which it does not have prior experience;

 the potential loss of key employees or existing customers or adverse effects on existing business relationships with suppliers and customers.

Additionally, the Company cannot ensure that the expected benefits of SUNation acquisition will be realized or will be realized within the time frames it expects.

Unforeseen issues could arise which adversely affect the anticipated returns or which are otherwise not recoverable through indemnification or as an adjustment to the purchase price.

The price the Company paid for SUNation may exceed the value it realizes, the Company cannot provide assurance that it will obtain the expected revenues, anticipated synergies and strategic benefits of the SUNation acquisition within the time it expects or at all.

In connection with the SUNation acquisition, the Company incurred additional indebtedness with the issuance of the Short-Term N ote and the Long-Term Note.

While the Short-Term Note remains outstanding, the Company is subject to certain negative covenants with respect to the operation of SUNation, including limits on distributions, the incurrence of indebtedness, imposition of liens, and sales of assets outside the ordinary course of business.

Further, although the Company looks to expand further through the acquisition of regional residential solar companies and energy technology solution providers, there can be no assurance that the Company will be able to find appropriate candidates for acquisitions, reach agreement to acquire them, have sufficient capital or funding to acquire them, or obtain any required shareholder or regulatory approvals needed, despite the effort and management attention invested.

For these or other reasons, past performance should not be relied upon as indications of the Company’s future performance.

We may not realize the anticipated benefits of past or future investments, strategic transactions, or acquisitions, and integration of these acquisitions may disrupt our business and our management.

We have in the past and may in the future, acquire companies, projects, products, or technologies or enter into joint ventures or other strategic transactions.

We may not realize the anticipated benefits of past or future investments, strategic transactions, or acquisitions, and these transactions involve numerous risks that are not within our control.

These risks include the following, among others:

 Failure to satisfy the required conditions and otherwise complete a planned acquisition, joint venture or other strategic transaction on a timely basis or at all;

 Legal or regulatory proceedings, if any, relating to a planned acquisition, joint venture or other strategic transaction and the outcome of such legal proceedings;

 Difficulty in assimilating the operations, systems, and personnel of the acquired company;

 Difficulty in effectively integrating the acquired technologies or products with our current products and technologies;

 Difficulty in maintaining controls, procedures and policies during the transition and integration;

 Disruption of our ongoing business and distraction of our management and employees from other opportunities and challenges due to integration issues;

 Difficulty integrating the acquired company’s accounting, management information and other administrative systems;

 Inability to retain key technical and managerial personnel of the acquired business;

 Inability to retain key customers, vendors and other business partners of the acquired business;

 Inability to achieve the financial and strategic goals for the acquired and combined businesses;

 Incurring acquisition-related costs or amortization costs for acquired intangible assets that could impact our results of operations;

 Significant post-acquisition investments which may lower the actual benefits realized through the acquisition;

 Potential failure of the due diligence processes to identify significant issues with product quality, legal, and financial liabilities, among other things;

 Moderating and anticipating the impacts of inherent or emerging seasonality in acquired customer agreements;

 Potential inability to assert that internal controls over financial reporting are effective;

 Potential inability to obtain, or obtain in a timely manner, approvals from governmental authorities, which could delay or prevent such acquisitions.

Our failure to address these risks, or other problems encountered in connection with our past or future investments, strategic transactions, or acquisitions, could cause us to fail to realize the anticipated benefits of these acquisitions or investments, cause us to incur unanticipated liabilities, and harm our business generally.

Future acquisitions could also result in dilutive issuances of our equity securities, the incurrence of debt, contingent liabilities, amortization expenses, incremental expenses or the write-off of goodwill, any of which could harm our financial condition or results of operations, and the trading price of our common stock could decline.

If the Company is unable to make acquisitions on economically acceptable terms, its future growth would be limited, and any acquisitions it may make could reduce, rather than increase, its cash flows.

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Any product liability claim that the Company faces could be expensive to defend and may divert management’s attention.

The successful assertion of product liability claims against the Company could result in potentially significant monetary damages, potential increases in

insurance expenses, penalties or fines, subject it to adverse publicity, damage its reputation and competitive position and adversely affect sales of solar energy systems.

The successful assertion of product liability claims against the Company could result in potentially significant monetary damages, potential increases in insurance expenses, penalties or fines, subject it to adverse publicity, damage its reputation and competitive position and adversely affect sales of solar energy systems.

In addition, product liability claims, injuries, defects or other problems experienced by other companies in the residential solar industry could lead to unfavorable market conditions to the industry as a whole and may have an adverse effect on the Company’s ability to expand its portfolio of solar installation agreements, thus affecting its business, financial condition and results of operations.

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The Company depends on its experienced management team and the loss of one or more key executives could have a negative impact on its business.

The Company may be unable to replace key members of its management team and key employees if it loses their services.

The Company may be unable to replace key members of its management team and key employees if it loses their

Integrating new employees into the Company’s team could prove disruptive to the Company’s operations, require substantial resources and management attention and ultimately prove unsuccessful.

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Third parties, including the Company’s competitors, may own patents or other intellectual property rights that cover aspects of the Company’s technology or business methods.

These parties may claim the Company has misappropriated, misused, violated or

infringed third-party intellectual property rights.

These parties may claim the Company has misappropriated, misused, violated or infringed third-party intellectual property rights.

Any claim that the Company has violated a third party’s intellectual property rights, whether with or without merit, could be time-consuming, expensive to settle or litigate and could divert its management’s attention and other resources, all of which could adversely affect its business, results of operations, financial condition and cash flows.

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Any failure, breach or unauthorized access to the Company’s or third-party systems could result in the loss of confidential, sensitive or proprietary information, interruptions in its service or production or otherwise its ability to conduct business operations, and could result in potential reductions in revenue and profits, damage to its reputation or liability.

Given that the Company receives, stores and uses personal information of its customers, including names, addresses, e-mail addresses, credit information, credit card and financial account information and other housing and energy use information, this risk is amplified.

Given that the Company receives, stores and

uses personal information of its customers, including names, addresses, e-mail addresses, credit information, credit card and financial account information and other housing and energy use information, this risk is amplified.

There can be no assurance that the Company’s protective measures will prevent or timely detect security breaches that could have a significant impact on its business, reputation, operating results and financial condition.

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The declining cost of solar energy system components and the raw materials necessary to manufacture them has been a key driver in the price of solar energy systems, the prices charged for electricity and customer adoption of solar energy.

Solar energy system component and raw material prices may not continue to decline at the same rate as they have over the past several years or at all.

Solar energy system

component and raw material prices may not continue to decline at the same rate as they have over the past several years or at all.

In addition, growth in the solar industry and the resulting increase in demand for solar energy system components and the raw materials necessary to manufacture them may also put upward pressure on prices.

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The Company’s failure to adapt to changing market conditions and to compete successfully with existing or new competitors will limit its growth and will have a material adverse effect on its business, financial condition and results of operations.

Developments in technology or improvements in distributed solar energy generation and related technologies or components may materially adversely affect demand for the Company’s offerings.

Significant developments in technology, such as advances in distributed solar power generation, energy storage solutions such as batteries, energy storage management systems, the widespread use or adoption of fuel cells for residential or commercial properties or improvements in other forms of distributed or centralized power production may materially and adversely affect demand for the Company’s offerings and otherwise affect its business.

Developments in technology or improvements in distributed solar energy generation and related technologies or components may have a material adverse effect on demand for the Company’s offerings.

improvements in other forms of distributed or centralized power production may materially and adversely affect demand for the Company’s offerings and otherwise affect its business.

Future technological advancements may result in reduced prices to consumers or more efficient solar energy systems than those available today, either of which may result in current customer dissatisfaction.

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The Company currently is not regulated as an electric public utility in the U.S.

under applicable national, state or other local regulatory regimes where it conducts business, and is not currently subject to the various federal, state and local standards, restrictions and

regulatory requirements applicable to centralized public utilities.

under applicable national, state or other local regulatory regimes where it conducts business, and is not currently subject to the various federal, state and local standards, restrictions and regulatory requirements applicable to centralized public utilities.

Any federal, state or local law or regulations that cause the Company to be treated as an electric utility or to otherwise be subject to a similar regulatory regime of commission-approved operating tariffs, rate limitations and related mandatory provisions, could place significant restrictions on its ability to operate its business and execute its business plan by prohibiting, restricting or otherwise regulating its sale of electricity.

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Net metering programs have been subject to legislative and regulatory scrutiny in certain states and territories.

These jurisdictions, by statute, regulation, administrative order or a combination thereof, have recently adopted or are considering new restrictions and additional changes to net metering programs either on a state-wide basis or within specific utility territories.

These jurisdictions, by statute, regulation, administrative order or a combination thereof, have recently adopted or are considering new restrictions and

additional changes to net metering programs either on a state-wide basis or within specific utility territories.

Many of these measures were introduced and supported by centralized electric utilities.

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federal, state and local governments established various incentives and financial mechanisms to reduce the cost of solar energy and to accelerate the adoption of solar energy.

These incentives come in various forms, including rebates, tax credits and other financial incentives such as payments for renewable energy credits associated

with renewable energy generation, exclusion of solar energy systems from property tax assessments or other taxes and system performance payments.

These incentives come in various forms, including rebates, tax credits and other financial incentives such as payments for renewable energy credits associated with renewable energy generation, exclusion of solar energy systems from property tax assessments or other taxes and system performance payments.

However, these programs may expire on a particular date, end when the allocated funding is exhausted or be reduced or terminated as solar energy adoption rates increase.

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Any such accidents, citations, violations, injuries or failure to comply with industry best practices may subject the Company to adverse publicity, damage its reputation and competitive position and adversely affect its business.

Risks Related to the Company’s Common Stock

Future sales of Company shares could cause the Company’s stock price to decline.

If the Company fails to put in place appropriate and effective internal control over financial reporting, it may suffer harm to its reputation and investor confidence levels.

If the Company is unable to establish or maintain appropriate internal financial controls and procedures, it could cause the Company to fail to meet its reporting obligations on a timely basis, result in material misstatements in its consolidated financial statements, and harm its operating results.

In connection with the implementation of the necessary procedures and practices related to internal control over financial reporting, the Company may identify deficiencies and may encounter problems or delays in completing the remediation of any deficiencies.

The existence of deficiencies in internal control over financial reporting may require management to devote significant time and incur significant expense to remediate any such deficiencies.

The price of the Company’s common stock may be volatile and may decline in value.

The trading volume and prices of the common stock have been volatile and may continue to be volatile and could fluctuate widely due to factors both within and beyond the Company’s control.

During 2022, the sale price of common stock following the merger transaction ranged from $0.76 to $7.60 per share, and our daily trading volume ranged from 2,400 to approximately 135.5 million shares.

This volatility may, in part, be the result of broad market and industry factors.

Future fluctuations in the trading price or liquidity of the Company’s common stock may harm the value of the investment of the Company’s shareholders in the Company’s common stock.

Factors that may have a significant impact on the market price and marketability of the Company’s common stock include, among others:

 public reaction to the Company’s press releases, announcements and filings with the SEC;

 the Company’s operating and financial performance;

 fluctuations in broader securities market prices and volumes, particularly among securities of technology and solar companies;

 changes in market valuations of similar companies;

 departures of key personnel;

 commencement of or involvement in litigation;

 variations in the Company’s quarterly results of operations or those of other technology and solar companies;

 changes in general economic conditions, financial markets or the technology and solar industries;

 announcements by the Company or its competitors of significant acquisitions or other transactions;

 changes in accounting standards, policies, guidance, interpretations or principles;

 speculation in the press or investment community;

 actions by the Company’s shareholders, particularly relating to the Company’s common stock;

 the failure of securities analysts to cover the Company’s common stock or changes in their recommendations and estimates of its financial performance;

 future sales of the Company’s common stock;

 the delisting of the Company’s common stock or halting or suspension of trading in its common stock by the Nasdaq Stock Market;

 economic and other external factors, such as the COVID-19 pandemic;

 general market conditions.

The Company may issue additional common stock resulting in stock ownership dilution.

As of March 31, 2023, we had 9,948,836 shares of common stock outstanding.

Pursuant to the merger agreement, we may be obligated to issue up to an additional 2,500,000 shares as earnout consideration and additional shares in connection with the Convertible Note Financing (as defined in the merger agreement).

Additionally, there are an additional 1,250,000 shares reserved for our 2022 Equity Incentive Plan and an additional 200,000 shares for our 2022 Employee Stock Purchase Plan.

Accordingly, our shareholders may experience future dilution, which may be substantial .

After the November 9, 2022 PIPE reset and subsequent conversions through March 31, 2023 , the number of remaining preferred shares with a stated amount of $4.00 were convertible into 7,000,000 shares of common stock at a conversion price of $4.00, and there were outstanding warrants to purchase 1,176,371 shares of common stock with a $13.60 per share exercise price and warrants to purchase 4,000,000 shares of common stock with a $4.00 exercise price.

If the Convertible Preferred Stock or PIPE Warrants are further converted or exercised into shares of our common stock, our shareholders will experience additional dilution.

At our stock price as of March 31, 2023, if we were to trigger these anti-dilution provisions, including through the sale of securities for purposes of a capital raising transaction, a substantial number of additional shares of our common stock may become issuable, which would further materially dilute the ownership interests of our shareholders.

For illustrative purposes only, if we were to sell shares of common stock that reset the conversion price of the Convertible Preferred Stock to $1.59, the closing price of our common stock on the Nasdaq Stock Market as of March 31, 2023, the Convertible Preferred Stock would be convertible into an additional 10,610,063 shares of common stock and the exercise price of the PIPE Warrants would reduce to $1.59 and the PIPE Warrants would become exercisable for an additional 14,949,316 shares of common stock.

In addition, we may raise additional capital through the sale of equity or convertible debt securities, which would further dilute the ownership interests of our shareholders.

In addition, several provisions of our articles and bylaws may discourage, delay or prevent a merger or acquisition that our shareholders may consider favorable.

These provisions include:

 Shares of common stock and preferred stock are available for issuance without shareholder approval.

 Special meetings of the shareholders may be called only by the board of directors, the chairman of the board of directors or the chief executive officer.

 The board of directors may adopt, alter, amend or repeal some provisions of the bylaws of the Company without shareholder approval.

The Company board of directors is authorized to issue and designate shares of preferred stock without shareholder approval.

The powers, preferences and rights of these series of preferred stock may be senior to or on parity with our common stock, which may reduce its value.

The Company’s inability to comply with the continued listing requirements of the Nasdaq Stock Market could result in its common stock being delisted, which could affect its market price and liquidity and reduce the Company’s ability to raise capital.

The Company is required to meet certain qualitative and quantitative requirements to maintain the listing of its common stock on the Nasdaq Stock Market.

If the Company does not maintain compliance with the continued listing requirements for the Nasdaq Stock Market within specified periods and subject to permitted extensions, its common stock may be recommended for delisting (subject to any appeal the Company may file).

No assurance can be provided that the Company will continue to comply with these continued listing requirements.

If the Company’s common stock were delisted, it could be more difficult to buy or sell its common stock and to obtain accurate quotations, and the price of its stock could suffer a material decline.

Delisting would also impair the Company’s ability to raise capital.

UNRESOLVED STAFF COMMENTS

Our business is subject to consumer protection laws.

Such laws and regulatory enforcement policies and priorities are subject to change, which may negatively impact our business.

We must comply with various international, federal, state, and local regulatory regimes, including those applicable to consumer credit transactions, leases, and marketing activities.

These laws and regulations are subject to change and modification by statute, administrative rules and orders, and judicial interpretation.

As a result of infrequent or sparse interpretations, ambiguities in these laws and regulations may create uncertainty with respect to what type of conduct is permitted or restricted under such laws and regulations.

Regulators, such as the Federal Trade Commission and the Consumer Financial Protection Board, as well as state attorney generals and agencies, also can initiate inquiries into market participants, which can lead to investigations and, ultimately, enforcement actions.

As a result, we are subject to a constantly evolving consumer protection and consumer finance regulatory environment that is difficult to predict and may affect our business.

The laws to which we may be subject to include federal and state laws that prohibit unfair, deceptive or abusive business acts or practices (such as the Federal Trade Commission Act and the Dodd-Frank Act), regulate lease and loan disclosures and terms and conditions (such as the Truth-in-Lending Act and the Consumer Leasing Act), and provide additional protections for certain customers in the military (such as the Servicemembers Civil Relief Act).

Our business is or may also be subject to federal and state laws that regulate consumer credit report information, data privacy, debt collection, electronic fund transfers, service contracts, home improvement contracting and marketing activities (such as telemarketing, door-to-door sales, and e-mails).

While we have developed policies and procedures designed to assist in compliance with these laws and regulations, no assurance is given that our compliance policies and procedures will be effective.

Failure to comply with these laws and with regulatory requirements applicable to our business could subject us to damages, revocation of licenses, class action lawsuits, administrative enforcement actions, civil and criminal liability, settlements, limits on offering certain products and services, changes in business practices, increased compliance costs, indemnification obligations to our capital providers, loan repurchase obligations and reputational damage that may harm our business, results of operations and financial condition.

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 1A. Risk Factors