SUNation Energy, Inc. 10-K

ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA INDEX TO CONSOLIDATED FINANCIAL STATEMENTS REPORT OF MANAGEMENT 41 REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM (PCAOB ID: 199 ) 42 REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM (PCAOB ID: 1195 ) 45 CONSOLIDATED BALANCE SHEETS 46 CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE LOSS 48 CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS’ EQUITY 49 CONSOLIDATED STATEMENTS OF CASH FLOWS 53 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS 55 ‎ 40 REPORT OF MANAGEM ENT The management of SUNation Energy, Inc. and its subsidiary companies is responsible for the integrity and objectivity of the financial statements and other financial information contained in the annual report. The financial statements and related information were prepared in accordance with accounting principles generally accepted in the United States of America and include amounts that are based on management’s informed judgments and estimates. In fulfilling its responsibilities for the integrity of financial information, management maintains accounting systems and related controls. These controls provide reasonable assurance, at appropriate costs, that assets are safeguarded against losses and that financial records are reliable for use in preparing financial statements. Management recognizes its responsibility for conducting the Company’s affairs according to the highest standards of personal and corporate conduct. The Audit and Finance Committee of the Board of Directors, comprised solely of independent, non-employee directors, meets with the independent auditors and management periodically to review accounting, auditing, financial reporting and internal control matters. The independent auditors have free access to this committee, without management present, to discuss the results of their audit work and their opinion on the adequacy of internal financial controls and the quality of financial reporting. /s/ Scott Maskin /s/ James Brennan Scott Maskin James Brennan Chief Executive Officer Chief Financial Officer ‎ 41 REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM To the Stockholders and Board of Directors of SUNation Energy, Inc. Opinion on the Financial Statements We have audited the accompanying consolidated balance sheet of SUNation Energy, Inc. (the “Company”) as of December 31, 2025, the related consolidated statements of operations, comprehensive income (if required), stockholders’ equity and cash flows for the year ended December 31, 2025 , and the related notes (collectively referred to as the “financial statements”). In our opinion, based on our audit, the financial statements present fairly, in all material respects, the financial position of the Company as of December 31, 2025 , and the results of its operations and its cash flows for the year ended December 31, 2025 , in conformity with accounting principles generally accepted in the United States of America. Explanatory Paragraph – Going Concern The accompanying consolidated financial statements have been prepared assuming that the Company will continue as a going concern. As more fully described in Note 15, the Company has incurred significant losses and needs to raise additional funds to meet its obligations and sustain its operations. These conditions raise substantial doubt about the Company's ability to continue as a going concern. Management's plans in regard to these matters are also described in Note 15. The consolidated financial statements do not include any adjustments that might result from the outcome of this uncertainty. Explanatory Paragraph – Retrospective Adjustment for Reverse Stock Splits As discussed in Note 1 to the consolidated financial statements, the Company effected a reverse stock split on April 21, 2025, which has been retrospectively applied to all periods presented. The financial statements for the years ended December 31, 2024, before the retrospective adjustment for the reverse stock split described in Note 1, were audited by other auditors whose report dated April 15, 2025 expressed an unmodified opinion on those statements. We audited the adjustments described in Note 1 that were applied to retrospectively recast the financial statements. In our opinion, such retrospective adjustments are appropriate and have been properly applied. We were not engaged to audit, review, or apply any procedures to the 2024 consolidated financial statements of the Company other than with respect to these retrospective adjustments for the reverse stock splits and, accordingly, we do not express an opinion or any other form of assurance on the 2024 consolidated financial statements taken as a whole. Basis for Opinion These financial statements are the responsibility of the Company's management. Our responsibility is to express an opinion on the Company's financial statements based on our audit. We are a public accounting firm registered with the Public Company Accounting Oversight Board (United States) ("PCAOB") and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB. We conducted our audit in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement, whether due to error or fraud. The Company is not required to have, nor were we engaged to perform, an audit of its internal control over financial reporting. As part of our audit we are required to obtain an understanding of internal control over financial reporting but not for the purpose of expressing an opinion on the effectiveness of the Company's internal control over financial reporting. Accordingly, we express no such opinion. Our audit included performing procedures to assess the risks of material misstatement of the financial statements, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the financial statements. Our audit also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the financial statements. We believe that our audit provides a reasonable basis for our opinion. Critical Audit Matters The critical audit matters communicated below are matters arising from the current period audit of the financial statements that were communicated or required to be communicated to the audit committee and that: (1) relate to accounts or disclosures that 42 are material to the financial statements and (2) involved our especially challenging, subjective, or complex judgments. The communication of critical audit matters does not alter in any way our opinion on the financial statements, taken as a whole, and we are not, by communicating the critical audit matters below, providing separate opinions on the critical audit matters or on the accounts or disclosures to which they relate. Critical Audit Matter - Goodwill Impairment At December 31, 2025, the Company’s goodwill totaled $17,443,869, allocated between the HEC ($6,727,231) and SUNation ($10,716,638) reporting units. As described in Notes 2 and 7 to the consolidated financial statements, management evaluates goodwill impairment at the reporting unit level annually or when events indicate possible impairment. A quantitative analysis was conducted as of September 30, 2025, using a combination of income and market approaches to estimate fair value, assisted by a third-party specialist. Management concluded that the fair values of both reporting units exceeded their carrying values and no impairment charge was recognized. The principal considerations for the CAM conclusion was that auditing the goodwill impairment assessment involved significant judgment due to the use of complex valuation models and subjective assumptions, including projected revenue growth, EBITDA margins, terminal growth, discount rates, and selection of comparable companies. These assumptions are sensitive to expectations of future market and economic conditions. How the Critical Audit Matter Was Addressed in Our Audit Our audit procedures related to the Company’s goodwill impairment evaluation included, among others:  Assessing the inputs to the valuation model for significance  Engaging our valuation specialist to assess the methodology used by management to estimate the fair value of the reporting units, as well as to assist in evaluating the discount rates, implied control discount and the selection of comparable market participants for reasonableness.  Testing the significant assumptions used by management, including comparing projected financial information to historical performance and external industry data.  Testing the completeness and accuracy of data used by management in the impairment analysis.  Testing the mathematical accuracy of managements fair value calculations.  Evaluating the sensitivity of management’s estimates to changes in significant assumptions.  Assessing the adequacy of the Company’s disclosures related to goodwill impairment Critical Audit Matter – Derivative Liabilities ‎ As described in Notes 2 and 11 to the consolidated financial statements, the Company entered into a securities purchase agreement in the first quarter of 2025 involving common stock, pre-funded warrants, and, contingent on shareholder approval, additional common stock or warrants and Series A and B warrants. The contingent forward contract for the second closing and the Series A and B warrants were accounted for as derivative liabilities at fair value, with changes in fair value recognized through earnings. Upon shareholder approval in the second quarter of 2025, the contingent forward contract was derecognized, and the Series B warrants were derecognized upon exercise. The fair value measurement of these instruments required significant management judgment, use of complex models, and involved unobservable inputs and the selection of comparable companies to estimate expected stock price volatility. The Company engaged a third-party specialist to assist with the fair value analysis. The principal considerations for the Critical Audit Matter conclusion is that auditing the accounting and valuation of these derivative liabilities involved complex evaluation of applicable accounting guidance (ASC 480 and ASC 815), involvement of our valuation specialists and assessment of management’s estimates including volatility, guideline public companies, and adjustment to stock price for dilutionary effective of the warrant issuances. How the Critical Audit Matter Was Addressed in Our Audit ‎  Assessing the reasonableness of management's position as it relates to the accounting for the registered direct raise transaction and the treatment of the contingent forward contract and underlying warrants.  Testing the exercise of the warrants and the shares issued in settlement of the series B warrants.  Determining the significant inputs to the warrant valuation model  Engaging valuation specialists to perform procedures over the discount rate utilized, the volatility, and reperformance of the Monte Carlo simulation. 43  Testing that the valuation model accurately reflects key terms of the agreements and assumptions regarding the approval dates, stock price reflecting market value, etc.  Recalculating the number of warrants to be issued under the alternative cashless exercise option.  Calculating the number of shares to be issued upon exercise per the terms of the agreements.  Recalculating the dilutive price per share  Recalculating the common stock, APIC and gain/loss impact upon settlement of the warrants and accurate presentation in the statement of equity, statement of operations and footnote disclosures. ‎ /s/ CBIZ CPAs P.C . CBIZ CPAs P.C. We have served as the Company’s auditor since 2025. Melville, NY ‎ March 20, 2026 ‎ 44 REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM To the Board of Directors and ‎ Stockholders of SUNation Energy, Inc. Opinion on the Consolidated Financial Statements We have audited, before the effects of the adjustments to retrospectively apply the impact of the April 2025 reverse stock split described in Note 1, the accompanying consolidated balance sheet of SUNation Energy, Inc. and subsidiaries (the Company) as of December 31, 2024, and the related consolidated statement of operations and comprehensive loss, changes in stockholders’ equity, and cash flows for the year ended December 31, 2024, and the related notes (collectively referred to as the consolidated financial statements). In our opinion, the 2024 consolidated financial statements, before the effects of the adjustments to retrospectively apply the impact of the April 2025 reverse stock split described in Note 1, present fairly, in all material respects, the financial position of the Company as of December 31, 2024, and the results of its operations and its cash flows for the year ended December 31, 2024, in conformity with accounting principles generally accepted in the United States of America. We were not engaged to audit, review, or apply any procedures to the adjustments to retrospectively apply the impact of the April 2025 reverse stock split described in Note 1 and, accordingly, we do not express an opinion or any other form of assurance about whether such adjustments are appropriate and have been properly applied. Those adjustments were audited by CBIZ CPAs P.C. The 2024 consolidated financial statements before the effects of the adjustments discussed in Note 1 are not presented herein. Substantial Doubt About the Company’s Ability to Continue as a Going Concern The accompanying consolidated financial statements have been prepared assuming that the Company will continue as a going concern. As discussed in Note 15 to the consolidated financial statements, the Company’s current financial position and the Company’s forecasted future cash flows for twelve months beyond the date of issuance of these financial statements indicate substantial doubt around the Company’s ability to continue as a going concern. Management's plans in regards to these matters are also described in Note 15. The financial statements do not include any adjustments that might result from the outcome of this uncertainty. Basis for Opinion The consolidated financial statements are the responsibility of the Company’s management. Our responsibility is to express an opinion on the Company’s consolidated financial statements based on our audit. We are a public accounting firm registered with the Public Company Accounting Oversight Board (United States) (PCAOB) and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB. We conducted our audit in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement, whether due to error or fraud. Our audit included performing procedures to assess the risks of material misstatement of the consolidated financial statements, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the financial statements. Our audit also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the consolidated financial statements. We believe that our audit provides a reasonable basis for our opinion. /s/ UHY LLP We served as the Company’s auditor from 2023 to 2025. Melville, New York April 15, 2025 ‎ 45 Click or tap here to enter text. SUNATION ENERGY, INC. CONSOLIDATED BALANCE SHEETS ASSETS December 31 December 31 2025 2024 CURRENT ASSETS: Cash and cash equivalents $ 7,182,344 $ 839,268 Restricted cash and cash equivalents — 312,080 Trade accounts receivable, less allowance for credit losses of $ 308,629 and $ 240,817 , respectively 4,239,483 4,881,094 Inventories 2,534,984 2,707,643 Prepaid income taxes 9,336 — Related party receivables 21,412 23,471 Prepaid expenses 1,273,762 1,587,464 Costs and estimated earnings in excess of billings 658,177 560,648 Other current assets 554,481 198,717 TOTAL CURRENT ASSETS 16,473,979 11,110,385 PROPERTY, PLANT AND EQUIPMENT, net 1,015,528 1,238,898 OTHER ASSETS: Goodwill 17,443,869 17,443,869 Right of use assets 3,315,411 3,686,747 Intangible assets, net 9,983,333 12,220,833 Other assets 12,000 12,000 TOTAL OTHER ASSETS 30,754,613 33,363,449 TOTAL ASSETS $ 48,244,120 $ 45,712,732 LIABILITIES AND STOCKHOLDERS' EQUITY CURRENT LIABILITIES: Accounts payable $ 7,395,318 $ 8,032,769 Accrued compensation and benefits 1,653,994 796,815 Operating lease liabilities 292,240 321,860 Accrued warranty 225,318 350,013 Other current liabilities 973,302 1,055,995 Accrued loss contingencies — 1,300,000 Income taxes payable — 5,071 Refundable customer deposits 1,073,284 1,870,173 Billings in excess of costs and estimated earnings 1,663,867 444,310 Contingent value rights — 312,080 Earnout consideration — 2,500,000 Current portion of loans payable 366,824 3,139,113 Current portion of loans payable - related party 1,763,424 6,951,563 Embedded derivative liability — 82,281 TOTAL CURRENT LIABILITIES 15,407,571 27,162,043 LONG TERM LIABILITIES: Loans payable and related interest 1,011,508 6,531,650 Loans payable and related interest - related party 3,457,864 — Operating lease liabilities 3,158,478 3,471,623 Accrued compensation and benefits 863,693 — TOTAL LONG-TERM LIABILITIES 8,491,543 10,003,273 COMMITMENTS AND CONTINGENCIES (Note 8) STOCKHOLDERS' EQUITY Series A Convertible preferred stock, par value $ 1.00 per share; 3,000,000 shares authorized; no shares issued and outstanding, respectively — — 46 Series B preferred stock, par value $ 1.00 per share; 3,000,000 shares authorized; no shares issued and outstanding, respectively — — Series C preferred stock, par value $ 1.00 per share; 35,000 shares authorized; no shares issued and outstanding, respectively — — Series D preferred stock, par value $ 1.00 per share; 3,000,000 shares authorized; 1 and no shares issued and outstanding, respectively — — Common stock, par value $ 0.05 per share; 1,000,000,000 shares authorized; — — 3,406,616 and 9,343 shares issued and outstanding, respectively (1) 170,331 467 Additional paid-in capital (1) 77,966,554 51,445,995 Accumulated deficit ( 53,791,879 ) ( 42,899,046 ) TOTAL STOCKHOLDERS' EQUITY (DEFICIT) 24,345,006 8,547,416 TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY $ 48,244,120 $ 45,712,732 (1) Prior period results have been adjusted to reflect the reverse stock split of the common stock at a ratio of 1-for-200 that became effective April 21, 2025. See Note 1, "Nature of Operations," for further details. The accompanying notes are an integral part of the consolidated financial statements. ‎ 47 ` SUNATION ENERGY, INC. CONSOLIDATED STATEMENTS OF OPERATIONS Year Ended December 31 2025 2024 Sales $ 71,905,527 $ 56,861,753 Cost of sales 44,361,314 36,435,509 Gross profit 27,544,213 20,426,244 Operating expenses: Selling, general and administrative expenses 26,979,750 27,054,166 Amortization expense 2,237,500 2,837,500 Fair value remeasurement of SUNation NY earnout consideration — ( 1,000,000 ) Goodwill impairment loss — 3,101,981 Intangible asset impairment loss — 750,000 Total operating expenses 29,217,250 32,743,647 Operating loss from continuing operations ( 1,673,037 ) ( 12,317,403 ) Other (expense) income: Investment and other income 106,625 144,529 Loss on sale of assets — ( 822 ) Fair value remeasurement of warrant liability ( 7,531,044 ) ( 974,823 ) Fair value remeasurement of embedded derivative liability — ( 65,617 ) Fair value remeasurement of contingent forward contract 899,080 — Fair value remeasurement of contingent value rights 36,079 522,257 Financing fees ( 1,294,090 ) — Interest expense ( 1,041,835 ) ( 3,087,450 ) Loss on debt extinguishment ( 343,471 ) ( 35,657 ) Other expense, net ( 9,168,656 ) ( 3,497,583 ) Net loss before income taxes ( 10,841,693 ) ( 15,814,986 ) Income tax expense 51,140 34,819 Net loss ( 10,892,833 ) ( 15,849,805 ) Less: Deemed dividend on extinguishment of Convertible Preferred Stock — ( 4,215,551 ) Less: Deemed dividend on modification of PIPE Warrants — ( 11,447,251 ) Less: Deemed contribution on exchange of equity instruments — 4,075,681 Net loss attributable to common shareholders $ ( 10,892,833 ) $ ( 27,436,926 ) Basic net loss per share (1) $ ( 4.38 ) $ ( 10,110.93 ) Diluted net loss per share (1) $ ( 4.38 ) $ ( 10,110.93 ) Weighted Average Basic Shares Outstanding (1) 2,489,224 2,714 Weighted Average Dilutive Shares Outstanding (1) 2,489,224 2,714 (1) Prior period results have been adjusted to reflect the reverse stock split of the common stock at a ratio of 1-for-200 that became effective April 21, 2025. See Note 1, "Nature of Operations," for further details. The accompanying notes are an integral part of the consolidated financial statements. ‎ 48 SUNATION ENERGY, INC. CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS' EQUITY Redeemable Convertible Series A Convertible Series B Series C Series D Additional Preferred Stock Preferred Stock Preferred Stock Preferred Stock Preferred Stock Common Stock Paid-in Accumulated Shares Amount Shares Amount Shares Amount Shares Amount Shares Amount Shares (1) Amount (1) Capital (1) Deficit Total BALANCE AT DECEMBER 31, 2023 — $ — 28,000 $ 28,000 — $ — — $ — — $ — 68 $ 3 $ 47,490,197 $ ( 27,081,411 ) $ 20,436,789 Net loss — — — — — — — — — — — — — ( 15,849,805 ) ( 15,849,805 ) Issuance of common stock under Employee Stock Purchase Plan — — — — — — — — — — 1 — 9,772 — 9,772 Issuance of common stock under Equity Incentive Plan — — — — — — — — — — 2 — — — — Issuance of common stock under registered direct offering, net of issuance costs — — — — — — — — — — 18 1 918,987 — 918,988 Issuance of Series B Preferred Stock — — — — 1 1 — — — — — — 14 — 15 Cancellation of Series B Preferred Stock — — — — ( 1 ) ( 1 ) — — — — — — — — ( 1 ) Issuance of common stock under PIPE Warrant exercise — — — — — — — — — — 83 4 324,786 — 324,790 Reclassification of Series A Preferred Stock to temporary equity 28,000 30,968,875 ( 28,000 ) ( 28,000 ) — — — — — — — — ( 30,940,875 ) — ( 30,968,875 ) 49 Deemed dividend on extinguishment of Convertible Preferred Stock — 751,125 — — — — — — — — — — ( 751,125 ) — ( 751,125 ) Reclassification of PIPE Warrants to liabilities — — — — — — — — — — — — ( 10,592,220 ) — ( 10,592,220 ) Conversion of Redeemable Convertible Preferred Stock to Common Stock ( 13,485 ) ( 15,277,055 ) — — — — — — — — 632 32 15,277,023 — 15,277,055 Conversion of Series A Convertible Preferred Stock to Common Stock — — ( 1,490 ) ( 1,490 ) — — — — — — 71 4 1,486 — — Reclassification of temporary equity to Series A Preferred Stock ( 14,515 ) ( 16,442,945 ) 14,515 14,515 — — — — — — — — — — 16,428,430 — 16,442,945 Reclassification of PIPE Warrants to equity — — — — — — — — — — — — — — 11,242,257 — 11,242,257 Exchange of Series A Preferred Stock and PIPE Warrants to Series C Preferred Stock — — ( 13,025 ) ( 13,025 ) — — 28,041 28,041 — — — — ( 15,016 ) — — Issuance costs on exchange of Series A Preferred Stock and PIPE Warrants to Series C Preferred Stock — — — — — — — — — — — — ( 156,524 ) — ( 156,524 ) Conversion of Series C Preferred Stock to Common Stock — — — — — — ( 28,041 ) ( 28,041 ) — — 6,229 311 27,730 — — 50 Issuance of Common Stock on At-the-Market sales, net of issuance costs — — — — — — — — — — 2,241 112 2,193,361 — 2,193,473 Cash in lieu payment on fractional shares under reverse stock split — — — — — — — — — — — — ( 3,022 ) — ( 3,022 ) Share based compensation — — — — — — — — — — — — 29,002 — 29,002 Other share retirements — — — — — — — — — — ( 2 ) — ( 38,268 ) 32,170 ( 6,098 ) BALANCE AT DECEMBER 31, 2024 — $ — — $ — — $ — — $ — — $ — 9,343 $ 467 $ 51,445,995 $ ( 42,899,046 ) 8,547,416 Net loss — — — — — — — — — — — — — ( 10,892,833 ) ( 10,892,833 ) Issuance of common stock under Equity Incentive Plan — — — — — — — — — — 6 — — — — Issuance of common stock under registered direct offering, net of issuance costs — — — — — — — — — — 31,564 1,578 8,697,706 — 8,699,284 Issuance of common stock under pre-funded warrant exercises — — — — — — — — — — 55,392 2,770 8,308 — 11,078 Issuance of common stock under Series B warrant exercises — — — — — — — — — — 3,260,870 163,044 16,499,663 — 16,662,707 Issuance of Series D Preferred Stock — — — — — — — — 1 1 — — ( 1 ) — — Cancellation of Series D Preferred Stock — — — — — — — — ( 1 ) ( 1 ) — — 1 — — 51 Issuance of common stock on At-the-Market sales, net of issuance costs — — — — — — — — — — 762 37 351,335 — 351,372 Issuance of common stock on settlement of loss contingencies — — — — — — — — — — 6,065 304 880,452 — 880,756 Effect of reverse stock splits — — — — — — — — — — 42,614 2,131 ( 2,131 ) — — Share based compensation — — — — — — — — — — — — 85,226 — 85,226 BALANCE AT DECEMBER 31, 2025 — $ — — $ — — $ — — $ — — $ — 3,406,616 $ 170,331 $ 77,966,554 $ ( 53,791,879 ) $ 24,345,006 (1) Prior period results have been adjusted to reflect the reverse stock split of the common stock at a ratio of 1-for-200 that became effective April 21, 2025. See Note 1, "Nature of Operations," for further details. The accompanying notes are an integral part of the consolidated financial statements. ‎ 52 SUNATION ENERGY, INC. CONSOLIDATED STATEMENTS OF CASH FLOWS Year Ended December 31 2025 2024 CASH FLOWS FROM OPERATING ACTIVITIES: Net loss $ ( 10,892,833 ) $ ( 15,849,805 ) Adjustments to reconcile net loss to net cash provided by (used in) operating activities: Depreciation and amortization 2,503,115 3,153,832 Share based compensation 85,226 29,002 Deferred taxes — ( 41,579 ) Goodwill impairment loss — 3,101,981 Intangible asset impairment loss — 750,000 Credit loss provision 67,812 146,732 Provision to write down inventories to net realizable value 135,838 99,449 Amortization of right of use asset 333,792 413,681 Fair value remeasurement of earnout consideration — ( 1,000,000 ) Fair value remeasurement of warrant liability 7,531,044 974,823 Fair value remeasurement of embedded derivative liability — 65,617 Fair value remeasurement of contingent forward contract ( 899,080 ) — Fair value remeasurement of contingent value rights ( 36,079 ) ( 522,257 ) Loss on extinguishment of debt 343,471 35,657 Gain on sale of assets — 822 Loss on lease termination 11,313 215,415 Interest and accretion expense 242,432 3,087,449 Changes in assets and liabilities: Trade and related party accounts receivables 575,858 5,969 Inventories, net 36,821 754,069 Prepaid income taxes ( 14,407 ) ( 302 ) Other assets ( 146,115 ) ( 635,892 ) Accounts payable 499,079 355,508 Accrued compensation and benefits 1,720,872 ( 563,333 ) Customer deposits ( 796,889 ) ( 242,190 ) Other accrued liabilities 289,264 1,016,428 Accrued interest ( 635,556 ) ( 1,653,762 ) Net cash provided by (used in) operating activities 954,978 ( 6,302,686 ) CASH FLOWS FROM INVESTING ACTIVITIES: Capital expenditures ( 48,594 ) ( 32,785 ) Proceeds from the sale of fixed assets — 6,118 Net cash used in investing activities ( 48,594 ) ( 26,667 ) CASH FLOWS FROM FINANCING ACTIVITIES: Proceeds from loans payable 64,744 1,604,000 Payments against loans payable ( 8,704,184 ) ( 1,595,364 ) Payments against related party loans payable ( 1,377,280 ) — Payments related to debt issuance costs ( 38,613 ) ( 24,150 ) Payments related to equity issuance costs ( 2,128,038 ) ( 501,414 ) Proceeds from the issuance of common stock and pre-funded warrants under registered direct offering 9,690,790 1,000,000 Proceeds from the issuance of common stock on the exercise of pre-funded warrants 11,078 — Proceeds from the issuance of Series A and Series B warrants 10,298,134 — Proceeds from the issuance of common stock under at-the-market offering 351,372 2,457,352 Proceeds from the issuance of Series B preferred stock — 15 Payments for the termination of Series A warrants ( 267,391 ) — Payments for contingent value rights distributions ( 276,000 ) ( 856,736 ) Proceeds from issuance of common stock, net of shares withheld — 9,775 Cash in lieu payment on fractional shares under reverse stock split — ( 3,022 ) Payment of contingent consideration related to acquisition ( 2,500,000 ) — Purchase of common stock — ( 6,098 ) Net cash provided by financing activities 5,124,612 2,084,358 53 NET INCREASE (DECREASE) IN CASH, CASH EQUIVALENTS AND RESTRICTED CASH 6,030,996 ( 4,244,995 ) CASH, CASH EQUIVALENTS AND RESTRICTED CASH AT BEGINNING OF YEAR 1,151,348 5,396,343 CASH, CASH EQUIVALENTS AND RESTRICTED CASH AT END OF YEAR $ 7,182,344 $ 1,151,348 SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION: Income taxes paid $ 65,547 $ 76,700 Interest paid 1,391,453 1,604,100 SUPPLEMENTAL DISCLOSURES OF NON-CASH ACTIVITIES: Loss on extinguishment of debt — ( 35,657 ) Issuance of common stock for the settlement of loss contingencies 880,756 — Deemed dividend on Convertible Preferred Stock and PIPE Warrants — 11,587,121 Conversion of redeemable convertible preferred stock to common stock — 15,277,055 The accompanying notes are an integral part of the consolidated financial statements. 54 SUNATION ENERGY, INC. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS Years Ended December 31, 2025 and 2024 NOTE 1 – NATURE OF OPERATIONS Description of Business SUNation Energy, Inc. (“SUNE”, “SUNation Energy”, “we” or the “Company”) is a Delaware corporation, whose shares of Common Stock are listing on the Nasdaq Stock Market under its trading symbol “SUNE”. The Company is a domestic operator and consolidator of residential solar, battery storage, and grid services solutions. Our strategy is focused on acquiring, integrating, and growing leading local and regional solar, storage, and energy services companies nationwide. Our current business units, Hawaii Energy Connection, LLC (“HEC”), and New York-based subsidiaries, the SUNation entities (collectively, “SUNation NY”) are engaged in the design, installation, and maintenance of solar energy systems across residential, commercial, and municipal sectors. Our team specializes in providing tailored solar solutions that meet the specific energy needs of each client, ensuring both efficiency and sustainability. In addition to our core solar services, we also offer energy storage systems to optimize energy use and increase reliability. Our New York business unit further integrates a broader range of services, including residential roofing solutions, to ensure seamless solar installations and long-term durability. Additionally, we provide community solar services that allow groups of individuals, businesses, or organizations to share the benefits of a single solar array, making renewable energy accessible to more people in the community. Reverse Stock Splits June 2024 Reverse Stock Split On January 3, 2024, the Company’s shareholders approved a reverse stock split of the Company’s common stock at a ratio within a range of 1-for-2 and 1-for-15 and granted the Company’s board of directors the discretion to determine the timing and ratio of the split within such range. On May 28, 2024, the Company’s board of directors determined to effect the reverse stock split of the common stock at a 1-for-15 ratio (the “June Reverse Stock Split”) and approved an amendment to the Fourth Amended and Restated Articles of Incorporation of the Company to effect the June Reverse Stock Split. Effective June 12, 2024, the Company amended its Fourth Amended and Restated Articles of Incorporation to implement the June Reverse Stock Split. The Company's common stock began trading on a split-adjusted basis when the market opened on June 12, 2024 (the "June Effective Date"). As a result of the June Reverse Stock Split, on the June Effective Date, every 15 shares of common stock then issued and outstanding automatically were combined into one share of common stock , with no change in par value per share. No fractional shares were outstanding following the June Reverse Stock Split, and any fractional shares that would have resulted from the June Reverse Stock Split were settled in cash. The number of shares of common stock outstanding was reduced from 108,546,773 to 7,235,731 , with 720.901 fractional shares paid out in cash totaling $ 1,132 . The total number of shares authorized for issuance was reduced to 7,500,000 in proportion to the June Reverse Stock Split ratio. ‎ October 2024 Reverse Stock Split On July 19, 2024, the Company’s shareholders approved a reverse stock split of the Company’s common stock at a ratio within a range of 1-for-2 and 1-for-200 and granted the Company’s board of directors the discretion to determine the timing and ratio of the split within such range. Additionally, the shareholders also approved an increase in authorized shares to 133,333,333 shares. On October 1, 2024, the Company’s board of directors determined to effect the reverse stock split of the common stock at a 1-for-50 ratio (the “October Reverse Stock Split”) and approved an amendment to the Fourth Amended and Restated Articles of Incorporation of the Company to effect the October Reverse Stock Split. 55 Effective October 17, 2024, the Company amended its Fourth Amended and Restated Articles of Incorporation to implement the October Reverse Stock Split. The Company's common stock began trading on a split-adjusted basis when the market opened on October 17, 2024 (the "October Effective Date"). As a result of the October Reverse Stock Split, on the October Effective Date, every 50 shares of common stock then issued and outstanding automatically were combined into one share of common stock , with no change in par value per share. No fractional shares were outstanding following the Reverse Stock Split, and any fractional shares that would have resulted from the October Reverse Stock Split were settled in cash. The number of shares of common stock outstanding was reduced from 67,260,696 to 1,344,841 , with 372.92 fractional shares payable in cash totaling $ 1,891 . The total number of shares authorized for issuance was reduced from 133,333,333 to 2,666,667 in proportion to the October Reverse Stock Split ratio. The number of shares authorized for issuance was later increased to 25,000,000 as a result of the Reincorporation. Effective as of the same time as the June 2024 Reverse Stock Split and October 2024 Reverse Stock Split (collectively known as the “Reverse Stock Splits”), the number of shares of common stock available for issuance under the Company's equity compensation plans were automatically reduced in proportion to the Reverse Stock Splits ratio. Upon effectiveness, the Reverse Stock Splits also resulted in reductions in the number of shares of common stock issuable upon exercise or vesting of equity awards in proportion to the Reverse Stock Splits ratios and caused a proportionate increase in exercise price or share-based performance criteria, if any, applicable to such awards. April 2025 Reverse Stock Split On April 3, 2025, the Company’s shareholders approved a reverse stock split of the Company’s common stock at a ratio within a range of 1-for-2 and 1-for-200 and granted the Company’s board of directors the discretion to determine the timing and ratio of the split within such range. Additionally, the shareholders also approved an increase in authorized shares to 1,000,000,000 shares. On April 9, 2025, the Company’s board of directors determined to effect the reverse stock split of the common stock at a 1-for-200 ratio (the “April Reverse Stock Split”) and approved an amendment (“April Reverse Stock Split Amendment”) to its Certificate of Incorporation to effect the April Reverse Stock Split. On April 16, 2025, the Company amended its Certificate of Incorporation to implement the April Reverse Stock Split. The Company's common stock began trading on a split-adjusted basis when the market opened on April 21, 2025 (the "April Effective Date"). As a result of the April Reverse Stock Split on the April Effective Date, every 200 shares of common stock then issued and outstanding automatically were combined into one share of common stock , with no change in par value per share. No fractional shares were outstanding following the April Reverse Stock Split, and any fractional shares that would have resulted from the April Reverse Stock Split were rounded up to the nearest whole share. The number of shares of common stock outstanding was reduced from 672,799,910 to 3,406,614 . The effects of the Reverse Stock Splits have been reflected the consolidated financial statements for all periods presented. Impact of the Reverse Stock Splits The impact of the Reverse Stock Splits was applied retroactively for all periods presented in accordance with applicable guidance. Therefore, prior period amounts are different than those previously reported. The following table illustrates changes in common stock (in number of shares and dollar amount) and additional paid-in-capital, as previously reported prior to, and as adjusted subsequent to, the impact of the Reverse Stock Splits retroactively adjusted for the periods presented: 56 December 31, 2023 December 31, 2024 As Previously Reported Impact of Reverse Stock Split As Adjusted As Previously Reported Impact of Reverse Stock Split As Adjusted Common Stock shares 13,663 ( 13,595 ) 68 1,868,638 ( 1,859,295 ) 9,343 Common Stock amount $ 683 $ ( 680 ) $ 3 $ 93,432 $ ( 92,965 ) $ 467 Additional Paid-in-Capital $ 47,489,517 $ 680 $ 47,490,197 $ 51,353,030 $ 92,965 $ 51,445,995 The following table illustrates changes in loss per share and weighted average shares outstanding, as previously reported prior to, and as adjusted subsequent to, the impact of the Reverse Stock Splits retroactively adjusted for the periods presented: Year Ended December 31, 2024 As Previously Reported Impact of Reverse Stock Split As Adjusted Weighted average shares outstanding - basic and diluted 542,454 ( 539,740 ) 2,714 Loss per share from continuing operations - basic and diluted $ ( 50.58 ) $ ( 10,060.35 ) $ ( 10,110.93 ) NOTE 2 – SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES Basis of Presentation The accompanying consolidated financial statements have been prepared in conformity with accounting principles generally accepted in the United States of America (“GAAP”) and the rules and regulations of the Securities and Exchange Commission (“SEC”) and include the accounts of the Company and its wholly owned operating subsidiaries. Any reference in these notes to applicable guidance is meant to refer to the authoritative GAAP as found in the Accounting Standards Codification (“ASC”) and Accounting Standards Update (“ASU”) of the Financial Accounting Standards Board (“FASB”). Principles of Consolidation The consolidated financial statements include the accounts of the Company and its subsidiaries. All intercompany transactions and accounts have been eliminated. Use of Estimates The presentation of financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. The Company uses estimates based on the best information available in recording transactions and balances resulting from operations. Actual results could materially differ from those estimates. The Company’s estimates consist principally of allowances for credit losses, revenue recognition on commercial projects based on percentage of completion, asset impairment evaluations, accruals for compensation plans, lower of cost or net realizable value inventory adjustments, fair value measurements (warrant liabilities, contingent value rights, contingent consideration, and debt instruments, including embedded derivative liabilities), provisions for income taxes and deferred taxes, depreciable lives of fixed assets, and amortizable lives of intangible assets. Cash and Cash Equivalents For purposes of the consolidated statements of cash flows, the Company considers all highly liquid investments with a maturity of three months or less at the time of purchase to be cash equivalents. The Company may invest in short-term money market funds that are not considered to be bank deposits and are not insured or guaranteed by the Federal Deposit Insurance Company (“FDIC”) or other government agency. These money market funds seek to preserve the value of the investment at $ 1.00 per share; however, it is possible to lose money investing in these funds. 57 Accounts Receivable, Net Accounts receivable are recorded at their net realizable value and are not collateralized. Accounts receivable includes amounts earned less payments received and allowances for credit losses. Management continually monitors and adjusts its allowances associated with the Company’s receivables to address any credit risks associated with the accounts receivable and periodically writes off receivables when collection is not considered probable. The Company does not charge interest on past due accounts. When uncertainty exists as to the collection of receivables, the Company records an allowance for credit losses and a corresponding charge to credit loss expense. The provision for credit losses is recorded within selling, general and administrative expenses. The following table presents the changes in the allowance for credit losses for the years ended December 31, 2025 and 2024: Year Ended December 31 2025 2024 Beginning balance $ 240,817 $ 94,085 Provision for credit losses 69,587 153,088 Write off of uncollectible amounts ( 1,775 ) ( 6,356 ) Recoveries — — Ending balance $ 308,629 $ 240,817 Inventories, Net Inventories, which consist primarily of materials and supplies used in the installation of solar systems, are stated at the lower of cost or net realizable value, with costs computed on a weighted average cost basis. The Company periodically reviews its inventories for excess and obsolete items and adjusts carrying costs to estimated net realizable values when they are determined to be less than cost. The inventory reserve was $ 362,277 and $ 226,439 at December 31, 2025 and 2024, respectively. Property, Plant and Equipment Property, plant and equipment are recorded at cost. Depreciation is computed using the straight-line method. Depreciation included in cost of sales and selling, general and administrative expenses was $ 265,615 and $ 316,332 for 2025 and 2024, respectively. Maintenance and repairs are charged to operations and additions or improvements are capitalized. Items of property sold, retired or otherwise disposed of are removed from the asset and accumulated depreciation accounts and any gains or losses on disposal are reflected in the statements of operations. Goodwill and Other Intangible Assets Goodwill represents the amount by which the purchase prices (including liabilities assumed) of acquired businesses exceed the estimated fair value of the net tangible assets and separately identifiable intangible assets of these businesses. Definite lived intangible assets, consisting primarily of trade names, technology, and backlog are amortized on a straight-line basis over the estimated useful life of the asset. Goodwill is not amortized but is tested at least annually for impairment. The Company reassesses the value of our reporting units and related goodwill balances annually on October 1 and at other times if events have occurred or circumstances exist that indicate the carrying amount of goodwill may not be recoverable. The Company recognized an impairment loss of $ 3,101,981 related to the goodwill of its HEC segment during the year ended December 31, 2024. See Note 7, Goodwill and Intangible Assets for further information. Recoverability of Long-Lived Assets and Intangible Assets The Company reviews its long-lived assets and definite lived intangible assets for impairment whenever events or changes in circumstances indicate that the carrying amounts of the assets may not be fully recoverable. If indicators of impairment exist, management identifies the asset group that includes the potentially impaired long-lived asset, at the lowest level at which there are separate, identifiable cash flows. If the fair value, determined as the total of the expected undiscounted future net cash flows for the asset group is less than the carrying amount of the asset, a loss is recognized for the difference between the fair value and carrying amount of the asset. The Company recognized a loss of $ 750,000 related to the technology intangible asset within the HEC segment during the year ended December 31, 2024. See Note 7, Goodwill and Intangible Assets for further information. 58 Mezzanine Equity The Company has issued various financial instruments, including preferred stock. Instruments containing redemption rights that are either within the control of the holder or subject to redemption upon the occurrence of uncertain events not solely within the Company’s control are classified as redeemable or mezzanine equity. The purpose of this classification is to convey that such a security may not be permanently part of equity and could result in a demand for cash, securities or other assets of the entity in the future. See Note 11, Equity, for further discussion regarding the reclassification of the Company’s Convertible Preferred Stock from permanent equity to mezzanine equity during the first quarter of 2024 and the reclassification from mezzanine equity to permanent equity in the third quarter of 2024. Warrants The Company accounts for warrants as either equity-classified or liability-classified instruments based on an assessment of the warrant’s specific terms and applicable authoritative guidance, ASC 480 “Distinguishing Liabilities from Equity” and ASC 815, “Derivatives and Hedging.” Management’s assessment considers whether the warrants are freestanding financial instruments pursuant to ASC 480, whether they meet the definition of a liability pursuant to ASC 480, and whether the warrants meet all of the requirements for equity classification under ASC 815. See Note 11, Equity, for further discussion regarding the reclassification of the Company’s PIPE Warrants from equity to liabilities during the first quarter of 2024 and the reclassification from liabilities to equity in the third quarter of 2024. For issued or modified warrants that do not meet all the criteria for equity classification, such warrants are required to be recorded as a liability initially at their fair value on the date of issuance, and subsequently remeasured to fair value on each balance sheet date thereafter. Changes in the estimated fair value of liability-classified warrants are recognized in other income (expense) in the consolidated statements of operations in the period of change. Derivative Liabilities The Company evaluates its contracts to determine if those contracts qualify as derivatives under ASC 815. For derivative financial instruments that are accounted for as liabilities, including the Company’s contingent forward contract, the derivative instrument is initially recorded at its fair value and is then subsequently remeasured to fair value on each balance sheet date thereafter. Any changes in fair value are recorded in other income (expense) in the consolidated statements of operations in the period of change. Revenue Recognition Revenue is recognized when there is a transfer of control of promised goods or services to customers in an amount that reflects the consideration that the Company expects to be entitled to in exchange for those goods or services. The Company sells solar power systems under construction and development agreements to residential and commercial customers. The completed system is sold as a single performance obligation. For residential contracts, revenue is recognized at the point-in-time when the systems are placed into service. Any advance payments received in the form of customer deposits are recorded as contract liabilities. Commercial contracts are generally completed within three to twelve months from commencement of construction. Construction on large projects may be completed within eighteen to twenty-four months , depending on the size and location of the project. Revenue from commercial contracts are recognized under a percentage of completion method, measured by the percentage of hours incurred to date against estimated total hours budgeted for each contract. Because of inherent uncertainties in estimating costs, it is at least reasonably possible that the estimates used will change within the near future. Contract costs include all direct material, labor costs and those indirect costs related to contract performance, such as indirect labor and other supplies. Selling, general and administrative costs are charged to expense as incurred. Provisions for estimated losses on uncompleted contracts are made in the period in which such losses are determined. Changes in job performance, job conditions and estimated profitability may result in revisions to costs and revenues which are recognized in which the revisions are determined. Changes in estimated job profitability resulting from job performance, job conditions, contract penalty provisions, claims, change orders, and settlements, are accounted for as changes in estimates in the current period. Gross Excise Tax The State of Hawaii imposes a gross receipts tax on all business operations done in Hawaii. The Company records the tax revenue and expense on a gross basis. Gross excise tax revenue was $ 1,002,557 and $ 744,570 and gross excise tax expense was $ 1,004,490 and $ 763,370 for the years ended December 31, 2025 and 2024, respectively. 59 Cost of Sales Cost of sales consist of direct and indirect material and labor costs for solar energy system installations as well as warranty costs, permitting fees, financing fees and overhead including costs related to procurement, warehousing and inventory management. Employee Retirement Benefits The Company has an Employee Savings Plan (401(k)) and matches a percentage of employee contributions up to six percent of compensation. Employer contributions to the plan in 2025 and 2024 were $ 331,715 and $ 303,878 , respectively. Share Based Compensation The Company accounts for share-based compensation awards on a fair value basis. The estimated grant date fair value of each stock-based award is recognized in the statement of operations over the requisite service period (generally the vesting period). The Company recognizes forfeitures as they occur. Warranty SUNation NY warrants its products for various periods against defects in material or installation workmanship. The manufacturers of the solar panels and the inverters provide a warranty period of generally 25 years and 10 years, respectively. SUNation NY will assist its customers in the event that the manufacturers' warranty needs to be used to replace a defective solar panel or inverter. SUNation NY provides for warranty up to the lifetime of the system on the installation of a system and all equipment and incidental supplies other than solar panels and inverters that are recovered under the manufacturers' warranty. SUNation NY provides extended workmanship warranties to the customer for up to 25 years for the service of inverters, which is reimbursed by the manufacturer. The Company estimates its warranty obligations upon installation, an expense included in cost of sales, based on management’s best estimate of the probable cost to be incurred in honoring its warranty commitment. Advertising Advertising costs are expensed as they are incurred. Advertising expense was $ 847,779 and $ 746,805 for the years ended December 31, 2025 and 2024, respectively. Segment Information Operating segments are defined as components of an enterprise for which separate financial information is available and evaluated regularly by the chief operating decision maker, or decision-making group, in deciding the method to allocate resources and assess performance. Our chief operating decision maker (“CODM”) is a committee comprised of our chief executive officer, chief operating officer and chief financial officer. Based on the financial information presented to and reviewed by our CODM in deciding how to allocate resources and in assessing performance, we have determined we have two operating and reportable segments. See Note 13, Segment Information, for further discussion. Reclassification Certain prior period amounts within operating activities in the statement of cash flows have been reclassified to conform to the current period presentation. These reclassifications had no effect on previously reported net loss, total assets, total liabilities, or stockholders’ equity. Concentrations of Risk Financial instruments which potentially subject the Company to concentrations of credit risk consist primarily of cash and accounts receivable. The associated risk of concentration for cash is mitigated by banking with institutions with high credit ratings. At certain times amounts on deposit exceed FDIC insurance limits. The Company has limited credit risk in accounts receivable as most contracts are paid through outside customer financing. The Company is not dependent on any single customer and the loss of any customer would not adversely impact the Company’s operating results or financial position. The Company depends on a limited number of suppliers for its solar panels and other system components. During the years ended December 31, 2025 and 2024, the top five suppliers collectively accounted for approximately 47 % and 40 % of the Company’s 60 total accounts payables, respectively. There were no customers greater than 10 % of revenue or accounts receivable during the years ended December 31, 2025 and 2024. Net Loss Per Share Basic net loss attributable to common shareholders per common share is based on the weighted average number of common shares outstanding during each year. Diluted net loss attributable to common shareholders per common share adjusts for the dilutive effect of potential common shares outstanding. The Company had $ 11,587,121 in deemed dividends during the year ended December 31, 2024, which decreases the numerator in the net loss per share calculation. The Company’s only potential additional common shares outstanding are common shares that would result from the conversion of the convertible preferred shares, warrants, convertible debt and shares associated with the long-term incentive compensation plans, which resulted in no dilutive effect for the year ended December 31, 2025. The Company calculates the dilutive effect of outstanding options, warrants and unvested shares using the treasury stock method and the dilutive effect of outstanding preferred shares using the if-converted method. There were no options or deferred stock awards excluded from the calculation of diluted earnings per share because there were no outstanding options or deferred stock awards as of both December 31, 2025 and 2024. Restricted stock units totaling 3 and 9 would have been excluded from the calculation of diluted earnings per share for the years ended December 31, 2025 and 2024, respectively, even if there had not been a net loss in those periods, because the exercise price was greater than the average market price of common stock during the period. Accounting Standards Issued In October 2023, the FASB issued ASU 2023-06, “Disclosure Improvements: Codification Amendments in Response to the SEC’s Disclosure Update and Simplification Initiative,” which is intended to clarify or improve disclosure and presentation requirements of a variety of topics. Many of the amendments will allow users to more easily compare entities subject to the SEC’s existing disclosures with those entities that were not previously subject to the requirements and align the requirements in the FASB accounting standard codification with the SEC’s regulations. The amendments in ASU 2023-06 will become effective on the date the related disclosures are removed from Regulation S-X or Regulation S-K by the SEC, and will no longer be effective if the SEC has not removed the applicable disclosure requirement by June 30, 2027. Early adoption is prohibited. The Company is currently evaluating this ASU and the impact it may have on its consolidated financial statements. In November 2024, the FASB issued ASU 2024-03, “Income Statement - Reporting Comprehensive Income - Expense Disaggregation Disclosures (Subtopic 220-40): Disaggregation of Income Statement Expenses”, which requires disclosure in the notes to the financial statements of specified information about certain costs and expenses. The amendments are effective for fiscal years beginning after December 15, 2026, and for interim periods within fiscal years beginning after December 15, 2027. Early adoption is permitted. The amendments should be applied either prospectively to financial statements issued for reporting periods after the effective date of this ASU or retrospectively to any or all prior periods presented in the financial statements. The Company is currently evaluating this ASU and the impact it may have on its consolidated financial statements. In November 2024, the FASB issued ASU 2024-04, “Debt with Conversion and Other Options,” which clarifies the requirements for determining whether certain settlements of convertible debt instruments should be accounted for as an induced conversion. This ASU is effective for annual periods beginning after December 15, 2025, and interim reporting periods within those annual report periods. Early adoption is permitted for all entities that have adopted the amendments in ASU Update 2020-06. Adoption can be on a prospective or retrospective basis. The Company is currently evaluating this ASU and the impact it may have on its consolidated financial statements. In July 2025, the FASB issued ASU 2025-05, “Financial Instruments – Credit Losses (Topic 326): Measurement of Credit Losses for Accounts Receivable and Contract Assets”. ASU 2025-05 provides a practical expedient that all entities can use when estimating expected credit losses for current accounts receivable and current contract assets arising from transactions accounted for under ASC 606, “Revenue from Contracts with Customers” . Under this practical expedient, an entity is allowed to assume that the current conditions it has applied in determining credit loss allowances for current accounts receivable and current contract assets remain unchanged for the remaining life of those assets. ASU 2025-05 is effective for fiscal years beginning after December 15, 2025, and interim reporting periods in those years. Entities that elect the practical expedient and, if applicable, make the accounting policy election are required to apply the amendments prospectively. The Company is currently evaluating this ASU and the impact it may have on its consolidated financial statements. In September 2025, the FASB issued ASU 2025-06, “Intangibles – Goodwill and Other – Internal-Use Software (Subtopic 350-40): Targeted Improvements to the Accounting for Internal-Use Software”, which removes all references to software development project stages and requires that an entity capitalize software costs when both (1) management has authorized and committed to funding the software project and (2) it is probable that the project will be completed and the software will be used to perform the function intended (referred to as the “probable-to-complete recognition threshold”). The ASU is effective for 61 fiscal years beginning after December 15, 2027, and interim periods within those fiscal years. Early adoption is permitted. The Company is currently evaluating this ASU and the impact it may have on its consolidated financial statements. In December 2025, the FASB issued ASU 2025-11, “Interim Reporting (Topic 270): Narrow-Scope Improvements”, which clarifies interim disclosure requirements by improving the navigability of the required interim disclosures and clarifying when that guidance is applicable. The standard is effective for interim reporting periods within annual reporting periods beginning after December 15, 2027. Early adoption is permitted. The Company is currently evaluating this ASU and the impact it may have on its consolidated financial statements. Accounting Standards Adopted In December 2023, the FASB issued ASU 2023-09, “Income Taxes (Topic 740): Improvements to Income Tax Disclosures,” which expands disclosures in an entity’s income tax rate reconciliation table and regarding cash taxes paid both in the U.S. and foreign jurisdictions. This ASU is effective for fiscal periods beginning after December 15, 2024, with early adoption permitted. The Company adopted this ASU effective January 1, 2025 and applied the new disclosure requirements prospectively as of the adoption date. See further information within Note 12, Income Taxes. NOTE 3 – REVENUE RECOGNITION Disaggregation of revenue Revenues are recognized when control of the promised goods or services is transferred to our customers, in an amount that best reflects the consideration we expect to receive in exchange for those goods or services. The following table disaggregates revenue based on type for the years ended December 31, 2025 and 2024: Revenue by Type SUNation NY HEC 2025 2024 2025 2024 Residential contracts $ 40,215,497 $ 30,715,255 $ 20,993,980 $ 15,984,618 Commercial contracts 6,894,923 6,700,469 189,694 429,259 Service revenue 2,489,891 2,317,638 1,121,542 714,514 $ 49,600,311 $ 39,733,362 $ 22,305,216 $ 17,128,391 The following table disaggregates revenue based on the timing of satisfaction of the performance obligations for the years ended December 31, 2025 and 2024: SUNation NY HEC 2025 2024 2025 2024 Performance obligations satisfied at a point in time $ 42,705,388 $ 33,032,893 $ 22,115,522 $ 16,699,132 Performance obligations satisfied over time 6,894,923 6,700,469 189,694 429,259 $ 49,600,311 $ 39,733,362 $ 22,305,216 $ 17,128,391 Contract Balances Contract assets represent costs and earnings in excess of amounts billed and direct costs, including commissions, financing and permitting fees paid prior to recording revenue. Contract liabilities represent amounts billed to clients in excess of revenue recognized to date and billings in excess of costs and earnings. Retainage on commercial revenue contracts is included within accounts receivable and totaled $ 455,660 and $ 189,880 at December 31, 2025 and 2024, respectively. Contract assets were $ 658,177 , $ 560,648 and $ 57,241 at December 31, 2025, 2024, and 2023, respectively. Contract liabilities were $ 2,737,151 , $ 2,314,483 and $ 2,552,452 at December 31, 2025, 2024, and 2023, respectively. During 2024, $ 2,552,452 within contract liabilities as of December 31, 2023 was recognized within revenue. During 2025, $ 2,186,702 within contract liabilities as of December 31, 2024 has been recognized within revenue. 62 NOTE 4 – CONTRACTS IN PROGRESS Billings in excess of costs and estimated earnings as of December 31, 2025 and 2024 are as follows: Year Ended December 31 2025 2024 Billings to date $ 3,828,333 $ 3,055,354 Costs incurred on uncompleted contracts 1,001,817 1,120,213 Estimated earnings 1,162,649 1,490,831 Cost plus estimated earnings 2,164,466 2,611,044 Billings in excess of costs plus estimated earnings on uncompleted contracts $ 1,663,867 $ 444,310 Costs and estimated earnings in excess of billings as of December 31, 2025 and 2024 are as follows: Year Ended December 31 2025 2024 Costs incurred on uncompleted contracts $ 3,283,890 $ 1,233,151 Estimated earnings 3,817,017 1,219,234 7,100,907 2,452,385 Billings to date 6,442,730 1,891,737 Costs and estimated earnings in excess of billings on uncompleted contracts $ 658,177 $ 560,648 NOTE 5 – LEASES The Company recognizes assets and liabilities for the rights and obligations created by leases that extend more than twelve months from the date of the balance sheet. Right of use (“ ROU”) assets represent our right to use an underlying asset for the lease term, while lease liabilities represent our obligation to make lease payments arising from the lease. Lease ROU assets and liabilities are recognized at the commencement date of a lease based on the present value of lease payments over the lease term. Because the rate implicit in each individual lease is not readily determinable, the Company uses its incremental borrowing rate to determine the present value of the lease payments. In 2022, the Company entered into operating leases for two office locations, including one in Hawaii in April 2022 and one in New York in November 2022 upon the acquisition of SUNation NY. In 2022, the Company had also entered into an operating lease for its corporate offices in Minnesota that commenced on January 1, 2023. In March 2023, the Company entered into an operating lease for an additional office location in Florida. Effective September 30, 2024, the Company entered into a lease termination agreement with our Minnesota office landlord, pursuant to which the Company paid a termination fee totaling $ 189,000 to be paid at $ 13,500 per month for a period of fourteen (14) months from entry into the lease termination, as well as the Company waiving its right to its original security deposit provided at entry into the original lease in the amount of $ 35,434 . The lease termination resulted is a decrease to the Company’s operating lease right of use assets totaling $ 415,674 and operating lease liabilities totaling $ 424,694 , which along with the termination fee and write off the security deposit resulted in a loss on the termination of the lease totaling $ 215,415 recorded in operating expenses in the consolidated statements of operations for the year ended December 31, 2024. There is no remaining liability as December 31, 2025. During the third quarter of 2025, the Company terminated its Florida office operating lease and incurred $ 12,873 in additional expense related to a termination fee, forfeiture of the security deposit, and other fees. The lease termination resulted in a decrease to the Company’s operating lease right of use assets totaling $ 37,544 and operating lease liabilities totaling $ 39,104 , which along with the additional expenses, resulted in a loss on the termination of the lease totaling $ 11,313 , recorded in operating expenses in the consolidated statements of operations for the year ended December 31, 2025. 63 These remaining leases have remaining lease terms of 6 to 10 years. One lease includes a 3 % rent adjustment on each anniversary of the lease and the other includes a fixed annual rent adjustment of $ 6,840 . As of December 31, 2025, total ROU assets and operating lease liabilities were $ 3,315,411 and $ 3,450,718 , respectively. All operating lease expense is recognized on a straight-line basis over the lease term. In the years ended December 31, 2025 and 2024, the Company recognized $ 566,745 and $ 696,141 in lease expense, respectively. Information related to the Company’s ROU assets and related lease liabilities were as follows: Year Ended December 31 2025 2024 Cash paid for operating leases $ 536,614 $ 651,531 As of December 31 2025 2024 Weighted-average remaining lease term 8.7 years 9.4 years Weighted-average discount rate 6.9 % 6.8 % Maturities of lease liabilities as of December 31, 2025 were as follows: 2026 $ 506,547 2027 515,801 2028 525,127 2029 534,527 2030 544,004 Thereafter 1,972,009 Total lease payments 4,598,015 Less imputed interest ( 1,147,297 ) Total operating lease liabilities $ 3,450,718 NOTE 6 - PROPERTY, PLANT AND EQUIPMENT Property, plant and equipment and the estimated useful lives are as follows: Estimated December 31 useful life 2025 2024 Leasehold improvements 3 - 12 years 741,650 741,650 Machinery and equipment 3 - 15 years 1,266,853 1,229,921 Furniture and fixtures 3 - 10 years 71,601 66,289 2,080,104 2,037,860 Less accumulated depreciation ( 1,064,576 ) ( 798,962 ) $ 1,015,528 $ 1,238,898 NOTE 7 – GOODWILL AND INTANGIBLE ASSETS The Company reassesses the value of our reporting units and related goodwill balances annually on October 1 and at other times if events have occurred or circumstances exist that indicate the carrying amount of goodwill may not be recoverable. On July 4, 2025, the President signed H.R. 1, the “One Big Beautiful Bill Act,” or “OBBBA”, into law, which accelerates the phase-outs and terminations of various eligible tax credits enacted as part of the Inflation Reduction Act and places restrictions on continued receipt of tax credits by specified foreign entities and foreign influenced entities. The OBBBA terminates several consumer-facing tax credits, including the Residential Clean Energy Credit (Section 25D) and the Energy Efficient Home 64 Improvement Credit (Section 25C), effective at the end of 2025. The Section 25D credit previously allowed homeowners to claim a 30% credit for installing rooftop solar panels and related equipment. The OBBBA also has an accelerated phaseout of the Clean Electricity Investment Tax Credit (Section 48E) and the Clean Electricity Production Tax Credit (45Y). In this accelerated phase out, projects must begin construction by July 4, 2026, or be placed in service by December 31, 2027, to qualify for these credits. The Company performed a quantitative assessment related to the recoverability of our goodwill for our two reporting units as a result of the material decline in our forecasted revenues and operating results. The Company estimated the fair value of the reporting units using an equally weighted combination of an income approach and market approach. Under the income approach, the Company discounted the estimated future cash flows of each reporting unit using a rate of return commensurate with the reporting unit’s risk. Under the market approach, the Company utilized the Guideline Public Company Method based on market revenue multiples of comparable publicly traded companies. The Company concluded that the fair values of the SUNation NY and HEC reporting units exceeded its carrying value as of September 30, 2025 and October 1, 2025 and no impairment charge was necessary. As a result of the implications of the OBBBA as noted above, the Company performed an impairment test on the tradenames and trademarks intangible assets associated with both the HEC and SUNation NY reporting units as of September 30, 2025. The Company performed the analysis under ASC 360 and no impairment charge was realized. At December 31, 2024, we performed an interim quantitative assessment related to the recoverability of our goodwill for our two reporting units as a result of a material decline in our stock price and forecasted revenues and operating results. The Company estimated the fair value of the reporting units using an equally weighted combination of an income approach and market approach. Under the income approach, the Company discounted the estimated future cash flows of each reporting unit using a rate of return commensurate with the reporting unit’s risk. Under the market approach, the Company utilized the Guideline Public Company Method based on market revenue multiples of comparable publicly traded companies. The Company concluded that the fair value of the HEC reporting unit did not exceed its carrying value as of December 31, 2024 and recorded an impairment loss of $ 3,101,981 in its consolidated statement of operations. The changes in the carrying amount of goodwill for the years ended December 31, 2025 and 2024 by reporting unit are as follows: HEC SUNation NY Total January 1, 2024 $ 9,829,212 $ 10,716,638 $ 20,545,850 Goodwill impairment loss ( 3,101,981 ) — ( 3,101,981 ) December 31, 2024 $ 6,727,231 $ 10,716,638 $ 17,443,869 December 31, 2025 $ 6,727,231 $ 10,716,638 $ 17,443,869 Gross goodwill 9,829,212 10,716,638 20,545,850 Accumulated impairment loss ( 3,101,981 ) — ( 3,101,981 ) Balance at December 31, 2025 $ 6,727,231 $ 10,716,638 $ 17,443,869 During the year ended December 31, 2024, the Company performed an impairment test for the asset group associated with the developed technology intangible asset. The test included comparing the sum of the estimated undiscounted future cash flow attributable to this asset and its carrying amounts, and recognizing an impairment for the amount to which the carrying amount exceeds the fair value of the asset. The Company recognized an impairment charge of $ 750,000 on its developed technology intangible asset as the Company determined in the fourth quarter of 2024 as this asset is no longer relevant for the Company’s continued and future operations. ‎ The Company’s policy is to remove intangible assets once they are fully amortized. The Company’s identifiable intangible assets with finite lives are being amortized over their estimated useful lives and were as follows: December 31, 2025 Estimated Useful Life Gross Carrying Amount Accumulated Amortization Impairment Loss Net Tradenames & trademarks 8 years $ 17,900,000 $ ( 7,916,667 ) $ — $ 9,983,333 Developed technology 4 years 2,400,000 ( 1,650,000 ) ( 750,000 ) — 65 $ 20,300,000 $ ( 9,566,667 ) $ ( 750,000 ) $ 9,983,333 December 31, 2024 Estimated Useful Life Gross Carrying Amount Accumulated Amortization Impairment Loss Net Tradenames & trademarks 3 - 8 years $ 17,900,000 $ ( 5,679,167 ) $ — $ 12,220,833 Developed technology 4 years 2,400,000 ( 1,650,000 ) ( 750,000 ) — $ 20,300,000 $ ( 7,329,167 ) $ ( 750,000 ) $ 12,220,833 Amortization expense on these identifiable intangible assets was $ 2,237,500 and $ 2,837,500 in 2025 and 2024, respectively. The weighted average remaining useful life at December 31, 2025 was 4.5 years. The estimated future amortization expense for identifiable intangible assets during the next five fiscal years is as follows: Year Ending December 31: 2026 $ 2,237,500 2027 2,237,500 2028 2,237,500 2029 2,237,500 2030 1,033,333 Total $ 9,983,333 NOTE 8 – COMMITMENTS AND CONTINGENCIES Revolving Line of Credit On April 14, 2025, the Company entered into a Secured Revolving Line of Credit Agreement (the “Revolving Credit Agreement”) with MBB Energy, LLC (“MBB”), an affiliate of the Company, as lender, providing for a $ 1.0 million revolving credit facility (the “Revolver”). The Revolver matures on April 14, 2026 , unless earlier terminated or extended pursuant to its terms. Borrowings, if any, under the Revolver will bear interest at a fixed annual rate of 8 %, payable monthly in arrears on the first day of each calendar month. The Revolving Credit Agreement includes customary affirmative and negative covenants, as well as standard events of default, which, if triggered, may permit the lender to accelerate all outstanding obligations under the facility. The Company may repay outstanding borrowings at any time without penalty. As of December 31, 2025, no amounts have been drawn on the Revolver. As of December 31, 2025, the Company was in compliance with all covenants and other requirements of the Revolving Credit Agreement. See Note 16, Subsequent Events, for drawdowns made under this facility in January 2026. Loan Payable Pineapple Energy LLC had a loan in an original amount of $ 7,500,000 payable to Hercules Capital, Inc. (“Hercules”) under a loan and security agreement (the “Term Loan Agreement”). This loan accrues interest at 10 %, payable-in-kind (“PIK”) and was initially due and payable on December 10, 2023. There are no financial covenants associated with this loan. This loan was used to acquire fixed assets, inventory, and intangible assets of Sungevity in an asset acquisition in December 2020. As the transaction did not involve the exchange of monetary consideration, the assets were valued at the Company’s most reliable indication of fair value, which was debt issued in consideration for the assets. Accordingly, Pineapple Energy assessed the fair market value of the debt instrument at $ 4,768,000 at the asset acquisition date (a non-recurring Level 3 fair value input). The Company initially accreted the value of the debt over its life at a discount rate of approximately 25 %. On December 16, 2021, the Term Loan Agreement was amended, whereby the maturity date was extended to December 31, 2024, subject to various prepayment criteria. In addition, the amendment provided that $ 4,500,000 plus all accrued and unpaid interest and expenses were to be repaid upon closing of the merger and receipt of the PIPE funds, with the remaining principal to be paid upon the loan maturity date. The amendment represented a modification to the loan agreement with the existing 66 lender as both the original loan agreement and the amendment allow for immediate prepayment and the Company passed the cash flow test. On May 31, 2023, the Term Loan Agreement was further amended (the “Second Amendment”), primarily for the purpose of obtaining consent for the senior financing from Decathlon Specialty Finance, LLC (the “Decathlon Financing”), the proceeds of which were partially applied to repay $ 1,500,000 of the principal amount of the Hercules Term Loan. At the time of the Second Amendment and prior to the repayment, the aggregate remaining balance of the Term Loan, including principal and interest, was $ 3,375,742 . The Second Amendment also extended t he maturity date of the Term Loan to June 2, 2027 and set the interest rate at ten percent ( 10.0 %) payable monthly and removing the PIK interest. The aggregate remaining principal balance of $ 1,875,742 along with interest is payable in equal monthly installments of principal and interest beginning on July 3, 2023 and continuing on the first business day of each month thereafter. The Second Amendment represented a modification under ASC 470-50 as the original loan agreement and the amended agreement are not substantially different. On July 22, 2024, the Term Loan Agreement was further amended (the “Third Amendment”), primarily for the purpose of obtaining consent for the bridge loan financing from Conduit Capital U.S. Holdings LLC and MBB Energy, LLC. The Third Amendment represented a modification under ASC 470-50 as the original loan agreement and the amended agreement were not substantially different. The Company also entered into a Joinder and Amendment to Subordination Agreement (the “Joinder Agreement”) with Decathlon, Hercules Capital, Inc., Conduit and MBB. Pursuant thereto, Conduit and MBB became parties to the Subordination Agreement dated June 21, 2023, among the Company, Decathlon, and Hercules Capital, Inc. In accordance with the Joinder Agreement, Conduit and MBB agreed to subordinate their respective security interests in the Company’s assets, to the first priority security interest of Decathlon and the second security priority interest of Hercules. On September 20, 2024, the Term Loan Agreement was further amended (the “Fourth Amendment”), whereby Hercules waived the October 2024 amortization payment. The Company made payment of monthly interest on October 1, 2024 and resumed making monthly payment of principal on November 1, 2024 pursuant to the loan agreement. The Fourth Amendment represented a modification as both the original loan agreement and the amendment are not substantially different. At December 31, 2024, the combined loan and accrued interest balance was $ 680,513 . A new effective interest rate of approximately 48.6 % was established during the second quarter of 2023 based on the carrying value of the revised cash flows. As of March 3, 2025, the combined loan and accrued interest balance, net of unamortized debt discount and debt issuance costs, was $ 682,955 and the aggregate remaining balance of the Term Loan, including principal and interest, was $ 1,230,555 ; however, the parties to the Term Loan Agreement agreed to a reduced aggregate repayment amount of $ 1,138,263 , if voluntarily repaid early in full. On March 3, 2025, the Company repaid the remaining balance of this loan in full using a portion of the proceeds from the first tranche of the securities offering which occurred on February 27, 2025 (see Note 11, Equity, for further details). As a result of this complete repayment, the Term Loan Agreement has been terminated (together with other agreements and instruments related thereto), and no further monthly or other payments or remuneration of any kind shall be paid or be payable following the termination of this Term Loan Agreement, and no early termination penalties or prepayment premium were incurred by the Company in connection with the termination of this Loan Agreement. The Company recorded a loss on extinguishment of debt of $ 455,308 in connection with the repayment of the loan, which represents the difference between (a) the reduced aggregate repayment amount and (b) the carrying amount of the loan at the repayment date, which included the outstanding principal and interest balance, less unamortized debt discount and debt issuance costs. Interest and accretion expense was $ 100,450 and $ 721,061 for the years ended December 31, 2025 and 2024 respectively. The loan was collateralized by all of Pineapple Energy LLC’s personal property and assets. Decathlon Fixed Loan On June 1, 2023, the Company entered into a Revenue Loan and Security Agreement (the “Loan Agreement”) with Decathlon Specialty Finance, LLC (“Decathlon”). The Loan Agreement provides for a loan facility for the Company in the maximum amount of $ 7.5 million with a maturity date of June 1, 2027 (the “Decathlon Fixed Loan”), with the full amount being advanced to the Company upon execution of the Loan Agreement. The Decathlon Fixed Loan contains customary conditions, representations and warranties, affirmative and negative covenants, mandatory prepayment provisions and events of default. The advances are secured by all present and hereafter acquired property of the Company. At issuance of the Loan Agreement, the Company concluded that the potential acceleration of amounts outstanding under the Loan Agreement upon an event of default included a substantial premium and met the requirement to be bifurcated and recorded as a derivative liability at fair value at inception and at the end of each quarterly reporting period. As of December 31, 67 2024, the fair value of this embedded derivative liability was estimated to be $ 24,800 and was recorded within current liabilities. The Decathlon Fixed Loan was repayable in fixed monthly payments, which generally aggregate to $ 960,000 that was paid in 2023, $ 2,220,000 payable in 2024, $ 2,580,000 payable in 2025, $ 2,760,000 payable in 2026 and $ 3,480,000 payable in 2027 to the maturity date. All outstanding advances and interest under the Loan Agreement were scheduled to be due at maturity on June 1, 2027 (unless accelerated upon a change of control or the occurrence of other events of default) . Interest accrued on the amounts advanced pursuant to the Loan Agreement at such rate as is necessary to generate an amount equal to the Minimum Interest, which was defined in the Loan Agreement as the following multiple of the advanced amount depending on the period during which all amounts due under the Loan Agreement were paid: (i) 0.25 times if on or before 12 months after the Effective Date (as defined in the Loan Agreement); (ii) 0.35 times if after 12 months and on or before 24 months after the Effective Date; (iii) 0.50 times if after 24 months and on or before 36 months after the Effective Date; and 0.60 times if after 36 months after the Effective Date. The Company could at its option prepay the advance(s) and accrued but unpaid interest from time to time without penalty or premium (other than payment of the Minimum Interest (as defined in the Loan Agreement)). The Company incurred an aggregate of $ 348,065 in debt issuance costs that were recorded as a discount and were amortized using the effective interest method over the life of the Decathlon Fixed Loan using an effective interest rate of 21 %. At December 31, 2024, the combined loan and accrued interest balance was $ 6,586,325 , and the unamortized debt issuance costs balance was $ 173,193 . As of March 3, 2025, the combined loan and accrued interest balance, net of unamortized debt issuance costs, was $ 6,435,999 and the aggregate balance, together with accrued principal and interest, remaining under the Loan Agreement was $ 6,740,516 ; however, the parties to the Loan Agreement agreed to a reduced aggregate repayment amount of $ 6,229,875 if voluntarily repaid early in full. On March 3, 2025, the Company repaid the remaining balance of this loan in full using a portion of the proceeds from the first tranche of the securities offering which occurred on February 27, 2025 (see Note 11, Equity, for further details). As a result of this complete repayment, the Decathlon Loan Agreement has been terminated (together with other agreements and instruments related thereto), and no further monthly or other payments or remuneration of any kind shall be paid or be payable following the termination of this Loan Agreement, and no early termination penalties or prepayment premium were incurred by the Company in connection with the termination of this Loan Agreement. The Company recorded a gain on extinguishment of debt of $ 230,924 in connection with the repayment of the loan, which represents the difference between (a) the reduced aggregate repayment amount and (b) the carrying amount of the loan at the repayment date, which included the outstanding principal and interest balance, plus the fair value of the embedded derivative liability, and less unamortized debt issuance costs. The Company recorded interest expense of $ 232,866 and $ 1,505,063 for the years ended December 31, 2025 and 2024, respectively. SUNation NY Long-Term Note and Earnout In connection with the SUNation NY acquisition, on November 9, 2022, the Company issued a $ 5,486,000 Long-Term Promissory Note (the “Long-Term Note”). The Long-Term Note was unsecured and matured on November 9, 2025. It carried an annual interest rate of 4 % until the first anniversary of issuance, then 8 % thereafter until the Long-Term Note was paid in full. Interest was due annually on each December 31 st . The Company was unable to make the second and third interest payments totaling $ 250,703 and $ 460,194 due on December 31, 2023 and 2024, respectively. The Company was required to make a principal payment of $ 2,740,000 on November 9, 2024. The Company was not permitted to make any payments under the Long-Term Note unless Decathlon had provided prior written consent to such payment pursuant to the Loan Agreement. Pursuant to that certain subordination letter dated May 31, 2023, each holder of the Long-Term Note had subordinated all payments under the Long-Term Note to the obligations owed to Decathlon under the Loan Agreement (the “Decathlon Obligations”) and had agreed that, until the Decathlon Obligations have been paid in full, any payment under the Long-Term Note was subject to Decathlon’s prior written consent. As the debt was part of the SUNation NY purchase price allocation, the Company assessed the fair market value of the debt instrument at $ 4,830,533 at the asset acquisition date (a non-recurring Level 3 fair value input). The Company accretes the value of the debt over its life at a discount rate of approximately 11.2 %. The Long-Term Note may be prepaid at the Company’s option at any time without penalty. On March 13, 2025, the Company paid the previously unpaid interest totaling $ 710,897 , after the Decathlon debt was paid in full. As noted above, the Company paid the Decathlon debt in full on March 3, 2025 and no longer had to receive written consent to make these payments. On April 10, 2025 the Long-Term Note was amended and restated as follows: The principal amount of $ 5,486,000 previously due and payable under the original Long-Term Note, together with all accrued and unpaid interest owing thereunder, shall be due and payable on May 1, 2028 (the “Maturity Date”), and such amended note (“Amended Long-Term Note”) is now a senior secured instrument. The total balance of the Amended Long-Term Note on April 10, 2025 was $ 5,605,436 and interest accrues 68 at 8 % per annum. Principal and interest payments under the Amended Long-Term Note shall be payable monthly on the first day of each month commencing with June 1, 2025 for thirty-six ( 36 ) consecutive months thereafter pursuant to the terms thereunder. The Amended Long-Term Note represented a modification under ASC 470-50 as the original loan agreement and amended loan agreement are not substantially different. The Company applied modification accounting to the amendment of the Long-Term Note and recorded $ 38,613 of debt issuance costs as part of the discount on the Amended Long-Term Note. The Amended Long-Term Note includes optional and mandatory prepayment provisions, including required partial or full repayment in connection with specified capital raises. The Amended Long-Term Note is a senior secured instrument pursuant to a pledge agreement and includes customary default provisions and acceleration clauses. The balance of the Long-Term Note, net of discount, recorded at December 31, 2025 and 2024 was $ 5,221,288 and $ 6,076,978 , respectively. Interest and accretion expense related to the notes totaled $ 533,879 and $ 577,262 for the years ended December 31, 2025 and 2024, respectively. On April 10, 2025, the Company agreed to amend the terms of the unearned 2024 earnout by entering into the Senior Secured Contingent Note Instrument (“Contingent Note”). Pursuant to the terms of the Contingent Note, the unearned 2024 earnout was rescheduled and shall be based on the earnout terms set forth therein pursuant to the financial conditions and terms covering each of fiscal years 2024 and 2025 and, if attained, shall be payable in fiscal year 2026, which payment is further conditioned on the continued employment of the holders at the time of such earnout payment trigger date. The maximum amount due under the earnout liability is $ 2,500,000 payable to the holders in the form of the Contingent Note, issuable on the earnout payment trigger date. Interest accrues on the Contingent Note commencing the month after issuance at a rate of 8 % per annum, payable in arears, and repayments of principal are due in 24 equal monthly installments commencing the month after issuance. The earnout liability is accounted for under ASC 710 as a deferred compensation arrangement and is accreted to $ 2,303,182 over the requisite service period as it is probable the financial conditions will be attained. The earnout liability represents the present value of the expected future cash flows as of the eligibility date of May 5, 2026. The balance of the earnout liability at December 31, 2025 was $ 1,535,454 . Compensation expense related to the earnout liability during 2025 totaled $ 1,535,454 , and is recorded in selling, general and administrative expenses. As noted in Note 14, Fair Value Measurements, the Company had a remaining earnout consideration accrual balance of $ 2,500,000 at December 31, 2024 related to the SUNation NY acquisition earned 2023 earnout. During 2025, the Company paid the balance to satisfy the outstanding liability of the earned 2023 earnout in full. Conduit Capital Bridge Loan On July 22, 2024, the Company obtained bridge loan financing for working capital purposes from Conduit Capital U.S. Holdings LLC (“Conduit”), an unaffiliated lender (the “Original Conduit Note”). On such date, Conduit loaned the principal sum of $ 500,000 to the Company on an original issue (“OID”) basis of 20 % and accordingly, Conduit advanced $ 400,000 to the Company (the “Initial Conduit Loan”). The loans due to Conduit accrued interest on the unpaid principal amount, without deduction for the OID, at an annual rate of 20 %; provided that payment in full on the Conduit Maturity Date (as defined below) would satisfy the interest accrual on the loans from initial issuance to the Conduit Maturity Date. All such loans were secured by a pledge of all of the Company’s assets. As a condition to such loan(s), the Company agreed to cause the nomination of a designee of Conduit for election to its Board of Directors. The loans due to Conduit will become due on July 21, 2025 (the “Conduit Maturity Date”). In accordance with the terms of the loan agreements with Conduit, if the Company consummates one or more equity offerings prior to the Conduit Maturity Date in which it derives aggregate gross proceeds of at least $ 3.15 million, it will be required to repay the unpaid principal balance of the Initial Conduit Loan, including the OID, simultaneous with the closing(s) of such offering(s). Further, if the Company consummates one or more equity offerings prior to the Conduit Maturity Date in which it derives aggregate gross proceeds of at least $ 4.4 million, the Company will be required to repay the entire unpaid principal amount of all loans due to Conduit, including the OID, simultaneous with the closing(s) of such offering(s). At issuance of the Original Conduit Note, the Company concluded that the potential acceleration of amounts outstanding under the loan agreements with Conduit upon an event of default or if the Company consummates one or more equity offerings meeting certain criteria (as noted above) included a substantial premium and met the requirement to be bifurcated and recorded as a derivative liability at fair value at inception and revalued at the end of each quarterly reporting period. The Company determined the initial fair value of this embedded derivative liability to be $ 8,080 and recorded a corresponding debt discount. As of December 31, 2024, the fair value of this embedded derivative liability was estimated to be $ 28,360 and was recorded within current liabilities. For the year ended December 31, 2024, the Company recorded a loss of $ 19,776 from the change in 69 fair value of the derivative liability, which is included in Other (expense) income, net in the consolidated statements of operations. The Company incurred $ 18,150 in debt issuance costs in connection with the Initial Conduit Loan that were recorded as a discount and initially amortized using the effective interest method over the life of the Initial Conduit Loan along with the OID of $ 100,000 and initial fair value of the embedded derivative liability using an effective interest rate of approximately 29.1% . On September 9, 2024, the Company and Conduit entered into an Amended and Restated Convertible Secured Note (the “First Amended Conduit Note”) which amended the Original Conduit Note, which provided for an additional principal advance of $ 120,000 (the “Second Conduit Advance”). The First Amended Conduit Note also provides that Conduit may convert all or any portion of the Second Conduit Advance and all accrued but unpaid interest thereon into a number of shares (the “Conduit Note Conversion Shares”) of the Company’s common stock calculated as the total dollar amount to be converted divided by $ 22.50 ($ 0.45 prior to the Reverse Stock Splits) (the “Conversion Price”). The Company analyzed the changes made in the First Amended Conduit Note under ASC 470-50 to determine if extinguishment accounting was applicable. Under ASC 470-50-40-10, a modification or an exchange that adds or eliminates a substantive conversion option as of the conversion date is always considered substantial and requires extinguishment accounting. Since the First Amended Conduit Note added a substantive conversion option, extinguishment accounting is applicable. In accordance with the extinguishment accounting guidance, the Company recorded a loss on extinguishment of $ 35,657 which represents the difference between (a) the fair value of the modified loans due to Conduit less the net cash proceeds received from the Second Conduit Advance and (b) the carrying amount of the loans due to Conduit immediately prior to the Second Conduit Advance. On September 23, 2024, the Company and Conduit entered into a further amended and restated convertible secured credit note (the “Second Amended Conduit Note”), which amends and restates the First Amended Conduit Note. Under the terms of the Second Amended Conduit Note, Conduit loaned an additional principal sum of $ 380,000 to the Company (the “Third Conduit Advance”) on an OID basis of 20 %. Additionally, pursuant to the Second Amended Conduit Note, Conduit was granted a demand registration right, which is in addition to the piggyback registration rights set forth in the First Amended Conduit Note, which registration rights are inclusive of all convertible shares issuable for the Second Conduit Advance and Third Conduit Advance, if converted; however, all out of pocket costs and expenses incurred in connection with this demand registration right shall borne by Conduit. The Third Conduit Advance, together with all accrued but unpaid interest thereon, are convertible into shares of common stock at the Conversion Price. The Second Amended Conduit Note represented a modification under ASC 470-50 as the First Amended Conduit Note and the Second Amended Conduit Note are not substantially different. A new effective interest rate of approximately 22.9 % was established following the Third Conduit Advance based on the carrying value of the revised cash flows. Notwithstanding anything to the contrary as set forth in the Conduit Note or any tranche or amendment related thereto, in no event shall the OID, together with interest payable under the Conduit Note or such other documents related thereto, exceed an aggregate of twenty percent on the then outstanding principal sum, except in the event of a default, which shall include an additional 5 % on the then outstanding principal sum. At December 31, 2024, the loan balance was $ 1,000,000 , and the unamortized debt issuance costs balance was $ 119,389 . As of February 28, 2025, the loan balance, net of unamortized debt issuance costs, was $ 913,924 , and the aggregate loan balance was $ 1,000,000 . On February 28, 2025, the Company paid the $ 1,000,000 total loan balance to Conduit as the Company had gross proceeds from equity offerings in excess of $ 4.4 million (see Note 11, Equity, for further details) . As a result of this complete repayment, the Conduit note has been terminated and no further principal, interest or accrual thereunder remain following the repayment and related termination of the Conduit loan agreement(s). The Company recorded a loss on extinguishment of debt of $ 57,716 in connection with the repayment of the loan, which represents the difference between (a) the aggregate repayment amount and (b) the carrying amount of the loan at the repayment date, which included the outstanding principal balance, plus the fair value of the embedded derivative liability, and less unamortized debt issuance costs. The Company recorded interest and accretion expense of $ 33,312 and $ 73,689 for the years ended December 31, 2025 and 2024, respectively. MBB Energy Bridge Loan On July 22, 2024, the Company obtained bridge loan financing for working capital purposes from MBB, an affiliate of the Company (the “Original MBB Note”). On such date, MBB loaned the principal sum of $ 500,000 to the Company on an OID basis of 20 % and accordingly, MBB advanced the sum of $ 400,000 to the Company (the “Initial MBB Loan”). The loans due to MBB accrued interest on the unpaid principal amount, without deduction for the OID, at an annual rate of 20 %; provided that payment in full on the MBB Maturity Date (as defined below) satisfied the interest accrual on the loans from initial 70 issuance to the Conduit Maturity Date. All such loans were secured by a pledge of all of the Company’s assets. MBB has granted Conduit the exclusive right to enforce MBB’s loans on MBB’s behalf. The loans due to MBB will become due on July 21, 2025 (the “MBB Maturity Date”). In accordance with the terms of the loan agreements with MBB, if the Company consummates one or more equity offerings prior to the MBB Maturity Date in which it derives aggregate gross proceeds of at least $ 3.15 million, it will be required to repay the unpaid principal balance of the Initial MBB Loan, including the OID, simultaneous with the closing(s) of such offering(s). Further, if the Company consummates one or more equity offerings prior to the MBB Maturity Date in which the Company derives aggregate gross proceeds of at least $ 4.4 million, the Company will be required to repay the entire unpaid principal amount of all loans due to MBB, including the OID, simultaneous with the closing(s) of such offering(s). At issuance of the Original MBB Note, the Company concluded that the potential acceleration of amounts outstanding under the loan agreements with MBB upon an event of default or if the Company consummates one or more equity offerings meeting certain criteria (as noted above) included a substantial premium and met the requirement to be bifurcated and recorded as a derivative liability at fair value at inception and at the end of each quarterly reporting period. The Company determined the initial fair value of this embedded derivative liability to be $ 8,080 and recorded a corresponding debt discount. As of December 31, 2024, the fair value of this embedded derivative liability was estimated to be $ 29,121 and was recorded within current liabilities. For the year ended December 31, 2024, the Company recorded a loss of $ 21,041 from the change in fair value of the derivative liability, which is included in “Other (expense) income, net" in the consolidated statements of operations and comprehensive loss. The OID of $ 100,000 was recorded as a discount and initially amortized using the effective interest method over the life of the Initial MBB Loan along with the initial fair value of the embedded derivative liability using an effective interest rate of approximately 24.3% . On August 16, 2024, MBB provided an additional principal advance of $ 500,000 (the “Second MBB Advance”). The Second MBB Advance represented a modification under ASC 470-50. A new effective interest rate of approximately 24.1 % was established following the Second MBB Advance based on the carrying value of the revised cash flows. Notwithstanding anything to the contrary as set forth in the MBB Note or any tranche or amendment related thereto, in no event could the OID, together with interest payable under the MBB Note or such other documents related thereto, exceed an aggregate of twenty percent on the then outstanding principal sum, except in the event of a default, which shall include an additional 5 % on the then outstanding principal sum. At December 31, 2024, the loan balance was $ 1,000,000 , and the unamortized debt issuance costs balance was $ 125,391 . As of February 28, 2025, the loan balance, net of unamortized debt issuance costs, was $ 909,509 , and the aggregate loan balance was $ 1,000,000 . On February 28, 2025, the Company repaid the $ 1,000,000 total loan balance to MBB as the Company had gross proceeds from equity offerings in excess of $ 4.4 million (see Note 11, Equity, for further details). As a result of this complete repayment, the MBB note has been terminated and no further principal, interest or accrual thereunder remain following the repayment and related termination of the MBB loan agreement(s). The Company recorded a loss on extinguishment of debt of $ 61,370 in connection with the repayment of the loan, which represents the difference between (a) the aggregate repayment amount and (b) the carrying amount of the loan at the repayment date, which included the outstanding principal balance, plus the fair value of the embedded derivative liability, and less unamortized debt issuance costs. The Company recorded interest and accretion expense of $ 34,900 and $ 82,689 for the years ended December 31, 2025 and 2024, respectively. Equipment Loans The Company obtains various equipment loan agreements through SUNation NY. These loans are secured by machinery and equipment and expire at various dates through August 2029 with interest rates ranging from 4.5 to 9.7 % per annum. The balance for the equipment loans recorded at December 31, 2025 and 2024 was $ 175,370 and $ 238,266 , respectively. Interest expense was $ 16,885 and $ 24,332 for the years ended December 31, 2025 and 2024, respectively. Promissory Note Through the SUNation NY Acquisition, the Company acquired a promissory note with a former shareholder and member of SUNation NY through a buyout agreement. The promissory note includes monthly payments of principal and interest at an annual rate of 3.25 %. The promissory note matures on March 1, 2031. 71 On January 30, 2026, the Company settled the outstanding debt for $ 800,000 . See further discussion within Note 16, Subsequent Events. The balance for the promissory note recorded at December 31, 2025 and 2024 was $ 1,154,059 and $ 1,409,313 , respectively. Interest expense was $ 42,023 and $ 50,174 for the years ended December 31, 2025 and 2024, respectively. Future Minimum Principal Payments Future minimum principal payments under the aforementioned loans and notes for the next five years as of December 31, 2025 are as follows: 2026 $ 2,130,248 2027 2,523,020 2028 1,638,534 2029 306,040 2030 46,014 Thereafter — Total $ 6,643,856 The above table does not reflect the debt payoff that took place subsequent to year end. See Note 16, Subsequent Events, for further discussion. Other Contingencies In the ordinary course of business, the Company is exposed to legal actions and claims and incurs costs to defend against these actions and claims. Company management is not aware of any outstanding or pending legal actions or claims that could materially affect the Company’s financial position or results of operations. At December 31, 2024, the Company accrued $ 1,300,000 for loss contingencies related to certain prior securities issuances. During 2025, the Company settled this obligation by issuing 6,068 shares ( 1,213,656 shares prior to the April Reverse Stock Split) of common stock and payment of $ 398,529 in cash. There was no remaining accrual balance at December 31, 2025. NOTE 9 – RELATED PARTY TRANSACTIONS Related party receivables The Company has provided advances to employees resulting in a balance as of December 31, 2025 and 2024 of $ 21,412 and $ 23,471 , respectively. Leases The Company leases its offices in Hawaii from a company owned by the prior owner of HEC, of whom is still an employee. The Company leased its New York office from a company owned by the prior owners of SUNation NY, one of whom is an officer and another the Chief Executive Officer and director of the Company, until September 12, 2024, when the building and related lease was sold to a third-party. See further information regarding these leases within Note 5, Leases. Debt As of December 31, 2025, the Company only has outstanding related party debt under the SUNation NY Long-Term Note and the Revolving Credit Agreement. The MBB Note was paid in full during the first quarter of 2025. See further information regarding this debt within Note 8, Commitments and Contingencies. 72 NOTE 10 – SHARE BASED COMPENSATION 2022 Equity Incentive Plan On January 24, 2022 the board of directors adopted, and on March 16, 2022 the Company’s shareholders approved, the Company’s 2022 Equity Incentive Plan (the “2022 Plan”), which became effective on March 28, 2022. The 2022 Plan authorizes incentive awards to officers, key employees, non-employee directors, and consultants in the form of options (incentive and non-qualified), stock appreciation rights, restricted stock awards, stock unit awards, and other stock-based awards. Following amendments approved on December 7, 2022 and July 19, 2024, the 2022 Plan authorizes the issuance of up to 67 shares of common stock ( 10,000,000 prior to the Reverse Stock Splits). At December 31, 2025, 4 shares had been issued under the 2022 Plan, 3 shares were subject to currently outstanding unvested restricted stock units (“RSUs”), and 60 shares were available for future awards. RSUs granted to employees generally vest over three years , with one-third vesting each year and RSUs granted to non-employee directors vest over one year . Restricted Stock Units The following table summarizes the changes in the number of restricted stock units under the 2022 Equity Incentive Plan and inducement awards over the period from December 31, 2023 to December 31, 2025: Weighted Average Grant Date Shares Fair Value Outstanding – January 1, 2024 13 $ 330,346.15 Granted 4 88,500.00 Vested ( 3 ) 326,000.00 Forfeited ( 5 ) 204,600.00 Outstanding – December 31, 2024 9 246,833.33 Granted — — Vested ( 6 ) 170,647.50 Forfeited — — Outstanding – December 31, 2025 3 170,500.00 All RSUs and weighted average grant date fair value per share values have been adjusted to reflect the impact of the Reverse Stock Splits of the common stock at ratios of 1-for-200 that became effective on April 21, 2025, 1-for-50 that became effective on October 17, 2024 and 1-for-15 that became effective on June 12, 2024. See Note 1, "Nature of Operations," for further details. Compensation Expense Share-based compensation expense is recognized based on the fair value of awards granted over the vesting period of the award. Share-based compensation expense recognized for 2025 and 2024 was $ 85,226 and $ 29,002 respectively. Unrecognized compensation expense related to outstanding RSUs was $ 11,467 at December 31, 2025 and is expected to be recognized over a weighted-average period of 0.6 years. Share-based compensation expense is recorded as a part of selling, general and administrative expenses. Employee Stock Purchase Plan On December 7, 2022, the Company’s shareholders approved an Employee Stock Purchase Plan (“ESPP”), pursuant to which eligible employees are able to acquire shares of common stock at a purchase price determined by the board of directors or compensation committee prior to the start of each six-month plan phase, which price may not be less than 85 % of the fair market value of the lower of the value on the first day or the last day of the phase, or the value on the last day of the phase . The ESPP is considered compensatory under current Internal Revenue Service rules. At December 31, 2025, 2 shares remained available for purchase under the ESPP. 73 NOTE 11 – EQUITY Series A Preferred Stock In June 2021, the Company entered into a stock purchase agreement to issue Series A Preferred Stock. The Company’s outstanding Series A Preferred Stock contained anti-dilution provisions that would increase the number of shares issuable upon conversion, and lower the conversion price of the Series A Preferred Stock if the Company issues equity securities at a price less than the current conversion price of the Series A Preferred Stock at the time of such issuance. In February 2024, the Company entered into a Limited Waiver and Amendment (“Waiver”) and the investors agreed to a floor of $ 105.00 ($ 0.14 prior to the Reverse Stock Splits) with respect to the adjustment set forth for the conversion price and to waive future anti-dilution protection with respect to 50 % of the shares of Preferred Stock held by such purchasers as of the date of the Waiver. The Company determined that the Waiver resulted in an extinguishment of the Series A Preferred Stock. As a result, the Series A Preferred Stock was revalued immediately after the Waiver in February 2024. The difference between the previous carrying amount and the fair value of $ 751,125 was recognized as a deemed dividend in the three months ended March 31, 2024 that reduced additional paid-in-capital (“APIC”) and income available to common shareholders in calculating earnings per share. In addition, management evaluated the Series A Preferred Stock after the modifications and determined that they should be reclassified to mezzanine equity under ASC 480-10-S99 as a result of the Company not having sufficient authorized and unissued shares to settle a conversion to Common Stock. On July 19, 2024, the shareholders of the Company approved an amendment to the Company’s Fourth Amended and Restated Articles of Incorporation (the “Articles of Incorporation”) to increase the number of authorized shares of common stock and as a result the Company had sufficient authorized and unissued shares to settle a conversion to common stock. Accordingly, the Series A Preferred Stock was reclassified to permanent equity at the date of the event that caused the reclassification. See description of Series C Preferred Stock issued in exchange for the then outstanding Series A Preferred Stock and PIPE Warrants. On September 9, 2024, as a result of the issuance of the First Amended Conduit Note (see Note 8, “Commitments and Contingencies,” for further details), the adjustment provisions in the Series A Preferred Stock were triggered and caused certain adjustments in the currently effective conversion price of the Series A Preferred Stock. The Company recognized the effect of the down round feature triggered on September 9, 2024 as the difference between: (1) the fair value of the Series A Preferred Stock using the pre-trigger conversion price, and (2) the fair value of the Series A Preferred Stock using the reduced conversion price. The value of the effect of the down round feature of $ 3,464,426 was recognized as a deemed dividend in the year ended December 31, 2024 that reduced APIC and income available to common shareholders in calculating earnings per share. Warrants In September 2021, the Company entered into transactions with holders of its outstanding Series A Preferred Stock to issue PIPE Warrants to purchase the Company's common stock. The Company’s outstanding PIPE Warrants have anti-dilution provisions that would increase the number of shares issuable upon exercise and lower the exercise price of the PIPE Warrants if the Company issues equity securities at a price less than the current exercise price of the PIPE Warrants at the time of such issuance. Pursuant to the Waiver, investors agreed to a floor of $ 22.50 ($ 0.14 prior to the Reverse Stock Splits) with respect to the anti-dilution adjustments in the warrants and extend the term of the warrants until March 28, 2029. The PIPE Warrants were valued immediately before and immediately after the modifications to calculate the $ 10.6 million incremental value of the modified PIPE Warrants. The Company considered this incremental value to be a deemed dividend that reduced income available to common shareholders in calculating earnings per share. Management evaluated the warrants after the modifications made in February 2024 and determined that they should be reclassified from equity to liability based on the guidance in ASC 815-40 and the Company failing to have enough authorized and unissued shares available to settle an exercise of the contract. In accordance with ASC 815-40, the carrying value of the warrants were adjusted to fair value through an adjustment in stockholders’ equity immediately prior to the reclassification. Subsequent to the reclassification, management remeasured the warrant liability to fair value and recorded the change in fair value to other income (expense) in the consolidated statement of operations. On July 19, 2024, the shareholders of the Company approved an amendment to the Articles of Incorporation to increase the number of authorized shares of common stock and as a result the Company had sufficient authorized and unissued shares to settle an exercise of the contract. Accordingly, management determined that the warrants should be reclassified to equity. In 74 accordance with the guidance in ASC 815-40-35-10, management remeasured the warrant liability to fair value immediately before the reclassification and recorded the change in fair value to other income (expense) in the consolidated statement of operations. On September 9, 2024, as a result of the issuance of the First Amended Conduit Note (see Note 9, “Commitments and Contingencies,” for further details), the adjustment provisions in the warrants were triggered and caused certain adjustments in the currently effective exercise price of the warrants and a proportional increase in the amount of shares of common stock issuable under the warrants. The Company recognized the effect of the down round feature triggered on September 9, 2024 as the difference between: (1) the fair value of the warrants using the pre-trigger conversion price, and (2) the fair value of the warrants using the reduced conversion price. The value of the effect of the down round feature of $ 875,737 was recognized as a deemed dividend in the year ended December 31, 2024 that reduced income available to common shareholders in calculating earnings per share. On September 9, 2024, the Company entered into a Securities Exchange Agreement with the holders of the Series A Preferred Stock and PIPE Warrants to cancel and retire all of the Series A Preferred Stock and PIPE Warrants in exchange for shares of Series C Convertible Preferred Stock of the Company (the “Series C Preferred Stock”). The Company determined that the exchange of the Series A Preferred Stock and warrants for the Series C Preferred Stock resulted in the extinguishment of the Series A Preferred Stock and warrants. As a result, the difference between the carrying amount of the Series A Preferred Stock and warrants and the fair value of the Series C Preferred Stock of $ 4,075,681 was recognized as a deemed contribution in the year ended December 31, 2024 that increased APIC and income available to common shareholders in calculating earnings per share. Series C Preferred Stock On September 9, 2024, the Company’s board of directors authorized the issuance of up to 35,000 shares of Series C Preferred Stock. As a result of the exchange noted above, the Company issued 28,041 shares of Series C Preferred Stock. Each share of Series C Preferred Stock is convertible, at any time after issuance and at the option of the holder subject to certain beneficial ownership limitations, into a number of shares of common stock determined by dividing the Stated Value of such share by the Conversion Price. The Stated Value per share of Series C Preferred Stock is $ 1,000.00 and the Conversion Price per share of Series C Preferred Stock is $ 22.50 ($ 0.45 prior to the October Reverse Stock Split). The Series C Preferred Stock does not contain any of the price resets set forth in the Series A Preferred Stock, except in the case of stock splits, recapitalizations and similar transactions by the Company. During 2024, all 28,041 shares of Series C Preferred Stock were converted into 1,246,262 shares of common stock. As of December 31, 2024, there were no shares of Series C Preferred Stock outstanding. Series B Preferred Stock On May 13, 2024, the Company entered into a Subscription and Investment Representation Agreement pursuant to which the Company agreed to issue and sell one share of the Company’s Series B Preferred Stock, par value $ 1.00 per share (“Series B Preferred Stock”), for $ 15 . The sale closed on May 14, 2024. On May 13, 2024, the Company filed a certificate of designation (the “Certificate of Designation”) with the Secretary of State of Minnesota, effective as of May 13, 2024, designating the rights, preferences, privileges and restrictions of the share of the Series B Preferred Stock. The Certificate of Designation provides that the share of Series B Preferred Stock has 5,000,000,000 votes and will vote together with the outstanding shares of the Company’s common stock as a single class exclusively with respect to (i) any proposal to amend the Company’s Articles to effect a reverse stock split of the Company’s common stock (the “Reverse Stock Split Proposal”) and (ii) any proposal to adopt an amendment to the Articles, or any other proposal to otherwise approve or ratify, to increase the authorized number of shares of common stock, either by increasing the total number of authorized shares or by effecting a reverse stock split without a corresponding decrease in the number of authorized shares (the “Authorized Shares Increase Proposal”). The Series B Preferred Stock will also be entitled to vote in the election of directors, but will only have one vote to cast with respect to each director nominee. Under the Certificate of Designation, the outstanding share of Series B Preferred Stock will be cancelled in whole, but not in part, at any time (i) if such cancellation is ordered by the Company’s board of directors in its sole discretion or (ii) automatically upon the approval by the Company’s shareholders of the Reverse Stock Split Proposal and Authorized Shares Increase Proposal at any meeting of shareholders. The holder of the share of Series B Preferred Stock was not entitled to any consideration upon such cancellation. The shareholders approved the Reverse Stock Split Proposal and Authorized Shares Increase Proposal on July 19, 2024 and, as a result, the share of Series B Preferred Stock was automatically cancelled at that time. 75 Registered Direct Offering On February 5, 2024, the Company entered into a securities purchase agreement with certain institutional investors for the sale by the Company of 18 shares ( 2,702,703 prior to the Reverse Stock Splits) of the Company’s common stock in a registered direct offering. The purchasers in this offering purchased, and the Company sold, the shares at a purchase price per share of $ 55,500.00 ($ 0.37 prior to the Reverse Stock Splits). The sale closed on February 7, 2024 for aggregate gross proceeds of $ 1.0 million, before deducting the placement agent fees and related offering expenses. At the Market Offering On October 21, 2024, the Company entered into an At the Market (“ATM”) Offering Agreement (the “Sales Agreement”) with Roth Capital Partners, LLC (the “Sales Agent”). The Company has authorized the sale, at its discretion, of common stock shares in an aggregate offering amount up to $ 10,000,000 under the Sales Agreement pursuant to the Company’s effective Registration Statement on Form S-3 (File No. 333-267066), as supplemented by a prospectus supplement. During 2024, the Company sold an aggregate of 2,241 shares ( 448,216 shares prior to the April Reverse Stock Split) of common stock for gross proceeds of $ 2,457,354 under the ATM facility, before deducting the placement agent fees and related offering expenses. During 2025, the Company sold an aggregate of 762 shares ( 152,250 shares prior to the April Reverse Stock Split) of common stock, respectively, for gross proceeds of $ 362,269 under the ATM facility, before deducting the related offering expenses. On August 11, 2025, the Company provided written notice of termination of the Sales Agreement to the Sales Agent pursuant to the terms thereunder. On August 18, 2025, the Company entered into a Sales Agreement (the “ Needham Sales Agreement”) with Needham & Company, LLC (“Needham” or the “Needham Sales Agent”) with respect to an offering and sale, at any time and from time to time, of the Company’s common stock (the “Shares”) in an aggregate offering amount up to $ 30,000,000 under the Needham Sales Agreement. Sales of the Shares, if any, will solely be made in “at the market offerings”. On November 4, 2025, the Company provided formal written notice to Needham of the termination of the Sales Agreement entered into with Needham. No sales or offering of shares were made thereunder since entry into this Sales Agreement. Series D Preferred Stock On February 26, 2025, the Company entered into a consent and waiver agreement to the loan agreement with Conduit. In accordance therewith, the Company issued one share of Series D Preferred Stock to Conduit as further collateral security for the Conduit Loan. The Series D Preferred Stock was issued in accordance with a Certificate of Designation of Preferences, Rights, and Limitations filed with the State of Delaware on February 27, 2025. In connection with the issuance of the share of Series D Preferred Stock, Conduit granted an irrevocable proxy to the Company to vote such share on an as-converted basis as a single class with the holders of the Company’s common stock. Upon full payment of the Conduit Loan and following the April 2025 special meeting of shareholders, the Series D Preferred Stock share was returned to the Company and was cancelled. February 2025 Offering On February 27, 2025, the Company entered into a securities purchase agreement (the “Purchase Agreement”) with certain institutional investors in a registered direct offering (the “Offering”) for a multi tranche offering in which Roth Capital Partners LLC (“Roth”) acted as the placement agent pursuant to the terms of a Placement Agent Agreement (“PAA”) of same date. The first tranche closing involved the purchase and sale of an aggregate of $ 15 million in securities in a first closing consisting of (i) 9,825 shares ( 1,965,000 shares prior to the April Reverse Stock Split) of common stock, and (ii) pre-funded warrants to purchase up to 55,392 shares ( 11,078,480 shares prior to the April Reverse Stock Split) of common stock (the “Pre-Funded Warrants), and, subject to shareholder approval, an aggregate of $ 5 million in securities in a second closing consisting of (x) 21,739 shares ( 4,347,826 shares prior to the April Reverse Stock Split) of common stock or Pre-Funded Warrants, (y) series A warrants to purchase up to 86,957 shares ( 17,391,306 shares prior to the April Reverse Stock Split) of common stock (the “Series A Warrants”), and (z) series B warrants to purchase up to 86,957 shares ( 17,391,306 shares prior to the April Reverse Stock Split) of common stock (the “Series B Warrants”) at a purchase price of $ 230.00 per share ($ 1.15 prior to the April Reverse Stock Split) and accompanying warrants or $ 229.80 per Pre-Funded Warrant ($ 1.1490 prior to the April Reverse Stock Split) and accompanying warrants. The Series A Warrants had an exercise price of $ 345.00 per share ($ 1.725 per share prior to the April Reverse Stock Split) subject to standard adjustments for dividends, splits and similar events; a one-time adjustment on the date of issuance (as described in the warrants), subject to a floor price described therein; and also subject to adjustment upon a Dilutive Issuance (as described in the warrants), subject to a floor price described therein. The Series B Warrants had an exercise price of $ 575.00 per share ($ 2.875 per share prior to the April Reverse Stock Split) subject to standard adjustments for dividends, splits and similar events; a one-time adjustment on the date of issuance (as described in the warrants), all of which were subject to a floor price described therein; and also subject to adjustment upon a Dilutive Issuance 76 (as described in the warrants), subject to a floor price described therein. The Series B Warrants could also be exercised on an alternative cashless basis pursuant to which the holder may exchange each warrant for 3 shares of common stock. The Series A Warrants and Series B Warrants were issuable at the second tranche closing and were exercisable immediately after issuance and carried a term of exercise equal to five years from the date of issuance. The first tranche closing of the Offering occurred on February 27, 2025. The Company determined that the second closing of the Offering represents a firm commitment and a contingent forward contract to issue and sell additional shares of common stock or Pre-Funded Warrants and the Series A Warrants and Series B Warrants conditioned following receipt of approval by the Company’s stockholders for the issuance of the Series A Warrants, Series B Warrants and the shares of common stock underlying such warrants. The Company determined that the contingent forward contract is a freestanding financial instrument that does not meet the requirements for equity classification due to certain settlement provisions that fail the indexation guidance in ASC 815-40 and meets the definition of a derivative. As a result, the contingent forward contract was recorded as a liability initially at its fair value on the date of issuance and will be subsequently remeasured to fair value on each balance sheet date until the underlying instruments are issued and sold in the second tranche closing of the Offering. The Company determined the initial fair value of the contingent forward contract to be $ 5,515,525 . The shares of common stock and Pre-Funded Warrants issued and sold in the first closing of the Offering were classified as a component of permanent equity and recorded at the issuance date using a relative fair value allocation method of the remaining proceeds of the Offering after recording the contingent forward contract at its fair value on the date of issuance. The Pre-Funded Warrants were equity classified because they were freestanding financial instruments that were legally detachable and separately exercisable from the equity instruments, were immediately exercisable, did not embody an obligation for the Company to repurchase its shares, and permitted the holders to receive a fixed number of shares of common stock upon exercise. In addition, such Pre-Funded Warrants did not provide any guarantee of value or return. As of March 31, 2025, all 55,392 Pre-Funded Warrants ( 11,078,480 prior to the April Reverse Stock Split) issued and sold in the first closing of the Offering had been exercised in exchange for the issuance of 55,392 shares ( 11,078,480 shares prior to the April Reverse Stock Split) of the Company's common stock. On April 3, 2025, the Company received the necessary approval by the Company’s stockholders in a specially called stockholder meeting to approve the issuance of the Series A warrants, Series B warrants and the shares of common stock underlying such warrants, in addition to other matters. On April 7, 2025, the Company closed the second tranche of its previously announced securities purchase agreement, dated February 27, 2025, with certain institutional investors for the purchase and sale of 21,720 shares ( 4,347,826 shares prior to the April 2025 Reverse Stock Split) of the Company’s common stock (or common stock equivalents in lieu thereof), Series A warrants to purchase up to an aggregate 86,957 shares ( 17,391,306 shares prior to the April 2025 Reverse Stock Split) of the Company’s common stock and Series B warrants to purchase up to an aggregate 86,957 shares ( 17,391,306 shares prior to the April 2025 Reverse Stock Split) of the Company’s common stock at an effective purchase price of $ 230.00 per share ($ 1.15 per share prior to the April 2025 Reverse Stock Split) (or common stock equivalents in lieu thereof) and associated warrants in a registered direct offering, which was priced at-the-market under applicable Nasdaq rules, for the second tranche gross proceeds of $ 5,000,000 . Together with the approximately $ 15,000,000 in gross proceeds from the previously announced first tranche closing completed on February 27, 2025, the Company raised approximately $ 20.0 million in aggregate gross proceeds from the offering before deducting placement agent fees and other offering expenses payable by the Company. The Company derecognized the contingent forward contract liability representing the firm commitment for the second closing on April 7, 2025, the date of the second closing. The Company determined the fair value of the contingent forward contract liability to be $ 4,399,054 immediately prior to the second closing. During 2025, the Company recorded a gain of $ 899,080 from the change in fair value of the contingent forward contract, which is included in Other (expense) income, net in the consolidated statements of operations. The Series A warrants and Series B warrants did not meet the requirements for equity classification due to certain settlement provisions that fail the indexation guidance in ASC 815-40. As a result, the Series A warrants and Series B warrants were recorded as a liability initially at fair value on the date of issuance and were subsequently remeasured to fair value at each balance sheet date until exercised. During the second quarter for 2025, the Series B warrants to purchase the Company’s common stock were fully exercised in exchange for the issuance of 3,260,870 shares ( 652,173,983 shares prior to the April Reverse Stock Split) of the Company’s common stock and are no longer outstanding. The Company determined the fair value of the Series B warrants to be $ 8,637,203 immediately prior to exercise and recorded a loss of $ 8,025,504 from the change in fair value of the Series B warrants, which is included in Other (expense) income, net in the consolidated statements of operations. 77 On June 26, 2025, the Company and holders of Series A warrants to purchase the Company’s common stock, mutually agreed to terminate and cancel the Series A warrants for an aggregate payment of to the Series A warrant holders of $ 267,391 . The Company determined the fair value of the Series A warrants to be $ 761,851 immediately prior to exercise and recorded a gain of $ 494,460 from the change in fair value of the Series A warrants, which is included in “Other (expense) income, net” in the condensed consolidated statements of operations. The shares of common stock issued and sold in the second closing and upon exercise of the Series B warrants are classified as a component of permanent equity and recorded at the issuance date fair value. Pursuant to the PAA between the Company and Roth, the Company engaged Roth to act as the Company’s exclusive placement agent in connection with the Offering. The Company agreed to pay the placement agent a cash fee of 7.5 % of the gross proceeds the Company receives under the Purchase Agreement. As of December 31, 2025, the Company had incurred an aggregate of $ 2,128,038 in placement agent fees and related offering expenses, of which $ 1,136,532 were allocated to the contingent forward contract and Series A and Series B warrants and expensed in Financing Fees, and $ 991,506 were allocated to the shares of common stock and Pre-Funded Warrants issued and sold in the first closing of the Offering and recorded as a reduction to APIC in stockholders’ equity. NOTE 12 - INCOME TAXES Income tax expense from continuing operations consists of the following: Year Ended December 31 2025 2024 Current year income taxes : State 51,140 76,398 51,140 76,398 Deferred income taxes: Federal $ — $ ( 41,579 ) — ( 41,579 ) Income tax expense $ 51,140 $ 34,819 The Company has elected to prospectively adopt the guidance in ASU No, 2023-09, Income Taxes (Topic 740): Improvements to Income Taxes Disclosures. The reconciliation of the federal statutory income tax rate to the Company's provision for income taxes for the year ended December 31, 2025 in accordance with the guidance in ASU No. 2023-09 is as follows: Year Ended December 31, 2025 $ % U.S. Federal Statutory Tax Rate $ ( 2,276,756 ) 21.0 % State and Local Income Taxes, Net of Federal Income Tax Effect (1) 40,400 ( 0.4 ) Nontaxable or Nondeductible Items: Financing Fees 238,672 ( 2.2 ) Fair value remeasurement of warrant liability 1,581,519 ( 14.6 ) Fair value remeasurement of contingent forward contract ( 188,807 ) 1.7 Other 40,815 ( 0.4 ) Changes in Valuation Allowances 618,100 ( 5.7 ) Changes in Unrecognized Tax Benefits ( 2,803 ) 0.1 Other Adjustments — — $ 51,140 ( 0.5 %) 78 (1) State taxes in New York made up the majority (greater than 50 %) of the tax effect in this category. The reconciliation of the federal statutory income tax rate to the Company’s provision for income taxes for the year ended December 31, 2024 in accordance with the guidance prior to the adoption of ASU 2023-09 is as follows: Year Ended December 31 2024 Tax at U.S. statutory rate 21.0 % State income taxes, net of federal benefit ( 3.8 ) Other nondeductible items ( 4.3 ) Change in valuation allowance ( 8.1 ) Other ( 5.0 ) Effective tax rate ( 0.2 %) The income taxes paid for the year ended December 31, 2025 consisted of the following: State and Local Income Taxes California $ 9,109 Massachusetts 4,200 New York 51,400 Other States 838 $ 65,547 79 Deferred tax assets and liabilities as of December 31 related to the following: 2025 2024 Deferred tax assets: Allowance for doubtful accounts $ 80,686 $ 62,747 Inventory 112,518 98,271 Accrued and prepaid expenses 458,227 287,495 Lease liability 902,131 988,437 Domestic net operating loss carry-forward 6,701,417 6,018,361 Other stock compensation 52,924 72,613 Intangible assets 224,436 — Foreign net operating loss carry-forwards and credits 1,910,507 1,910,507 Federal and state credits 372,642 369,839 Business interest limitation carryforward 1,993,748 1,696,118 Other 26,110 15,961 Gross deferred tax assets 12,835,346 11,520,349 Valuation allowance ( 11,882,160 ) ( 10,248,132 ) Net deferred tax assets 953,186 1,272,217 Deferred tax liabilities Depreciation ( 86,429 ) ( 109,390 ) Intangible assets — ( 202,202 ) Lease right-of-use asset ( 866,757 ) ( 960,625 ) Net deferred tax liability ( 953,186 ) ( 1,272,217 ) Total net deferred tax liability $ — $ — The Company assesses available positive and negative evidence to estimate if sufficient future taxable income will be generated to use the existing deferred tax assets. A significant piece of objective negative evidence evaluated was the cumulative loss incurred over the three -year period ended December 31, 2025. This objective evidence limits the ability to consider other subjective evidence such as the projections for future growth. On the basis of this evaluation, as of December 31, 2025, a valuation allowance of $ 11,882,160 has been recorded to reflect the portion of the deferred tax asset that is more likely to not be realized. The valuation allowance increased by $ 1,634,028 from December 31, 2024 to December 31, 2025. The Company continues to reassess the ability to realize the valuation allowance and if future evidence allows for a partial or full release of the valuation allowance, a tax benefit will be recorded accordingly. As of December 31, 2025, the Company had had gross federal, state and foreign net operating loss carryforwards of $ 27,821,873 , $ 17,897,782 and $ 7,642,027 , respectively. The federal net operating loss carryforwards have carryforward periods of twenty years, or that are indefinite, and begin to expire in 2029. The state net operating loss carryforwards have carryforward periods of 12 - 20 years, or that are indefinite and begin to expire in 2027. The foreign net operating loss carryforwards are indefinite. Section 382 of the Internal Revenue Code limits the utilization of U.S. net operating loss carryforwards and other tax attributes following a change of ownership or failure of continuity of business. Based on our analysis under Section 382, we believe that certain tax attributes will be subject to a limitation and will not be available for future periods. Management will continue to evaluate the limitation under Section 382 and does not expect a material impact because of the valuation allowance against the net deferred tax assets. At December 31, 2025, the Company has an estimated federal research and development credit carryforward of approximately $ 220,000 and a state research and development credit carryforward of approximately $ 193,000 . The utilization of these credits may be limited under the provisions of Section 383 of the Internal Revenue Code and similar state statutes. Section 383 governs the utilization of tax attribute carryforwards such as the research and development credit in the event of a change in 80 control of the Company, such as that which occurred as of March 28, 2022. Credits not used to reduce taxes are available to be carried forward. The Company assesses uncertain tax positions in accordance with ASC 740. Under this method, the Company must recognize the tax benefit from an uncertain tax position only if it is more likely than not that the tax position will be sustained on examination by the taxing authorities, based on the technical merits of the position. The tax benefits recognized in the financial statements from these uncertain tax positions are measured based on the largest benefit that has a greater than fifty percent likelihood of being realized upon ultimate resolution. The Company’s practice is to recognize interest and penalties related to income tax matters in income tax expense. Changes in the Company’s uncertain tax positions are summarized as follows: 2025 2024 Uncertain tax positions – January 1 $ 35,468 $ 43,028 Expiration of statute of limitations ( 2,803 ) ( 7,560 ) Uncertain tax positions – December 31 $ 32,665 $ 35,468 Included in the balance of uncertain tax positions at December 31, 2025 are $ 32,665 of tax benefits that if recognized would affect the tax rate. The Company’s income tax liability accounts included accruals for interest and penalties of $ 0 at December 31, 2025. The Company’s 2025 income tax expense decreased by $ 0 due to net decreases for accrued interest and penalties. The Company is subject to taxation by the United States, foreign and state and local jurisdictions. In general, the Company’s tax years 2019 through 2025 remain open to assessment. On July 4, 2025, the “One Big Beautiful Bill Act” was enacted into law. The legislation includes several changes to federal tax law including permanent extension of certain expiring Tax Cuts and Jobs Act provisions and modifications to US taxation of foreign activity. Certain provisions were effective for 2025, while others will be effective for tax years beginning after December 31, 2025. The Company has evaluated the impact of the legislation and incorporated the applicable tax provisions into its consolidated financial statements for the current reporting period. NOTE 13 – SEGMENT INFORMATION The Company’s segment structure reflects how management makes financial decisions and allocates resources. The Company manages its operations based on the combined results of the residential and commercial businesses with a geographical focus. The SUNation NY segment provides solar power, battery storage, and related services to customers in New York. The Hawaii Energy Connection (“HEC”) segment provides the same products and services to residential and commercial customers in Hawaii. The Company’s CODM is represented by a committee that includes the Company’s CEO, CFO, and COO. The CODM regularly reviews discrete financial information for SUNation NY and HEC in deciding how to allocate resources and in assessing performance. Corporate and other represents the unallocated corporate business activities and corporate shared services, which support the Company’s operating segments, along with operating and other expenses related to legacy CSI assets. The CODM committee evaluates performance for both reportable segments based on segment revenue, gross profit, and operating (loss) income before income taxes. When using these metrics, the CODM committee considers forecast-to-actual variances on a quarterly basis when making decisions about the allocation of operating and capital resources to each segment. The CODM committee also uses these metrics for evaluating pricing strategy to assess the performance of each segment by comparing the results of each segment with one another and in determining the compensation of certain employees. The Company had no customers that comprised more than 10% of the Company's consolidated revenues during either of the years ended December 31, 2025 and 2024. Summarized financial information for the Company’s reportable segments are presented and reconciled to consolidated financial information in the following tables, including a reconciliation of segment earnings to income before income taxes. This reconciliation also represents the significant expense categories reviewed by the CODM. 81 Year ended December 31, 2025 Corporate and SUNation NY HEC Other Total Sales $ 49,600,311 $ 22,305,216 $ — $ 71,905,527 Cost of sales 29,433,948 14,927,366 — 44,361,314 Gross profit 20,166,363 7,377,850 — 27,544,213 Operating expenses: Selling, general and administrative expenses 16,237,256 4,766,477 5,976,017 26,979,750 Amortization expense 812,500 1,425,000 — 2,237,500 Total operating expenses 17,049,756 6,191,477 5,976,017 29,217,250 Operating (loss) income 3,116,607 1,186,373 ( 5,976,017 ) ( 1,673,037 ) Other income (expenses): Investment and other income 29,335 13,044 64,246 106,625 Fair value remeasurement of warrant liability — — ( 7,531,044 ) ( 7,531,044 ) Fair value remeasurement of contingent forward contract 899,080 899,080 Fair value remeasurement of contingent value rights — — 36,079 36,079 Financing fees ( 1,294,090 ) ( 1,294,090 ) Interest expense ( 58,908 ) — ( 982,927 ) ( 1,041,835 ) Loss on debt extinguishment — — ( 343,471 ) ( 343,471 ) Other expense, net ( 29,573 ) 13,044 ( 9,152,127 ) ( 9,168,656 ) Operating loss from continuing operations before income taxes $ 3,087,034 $ 1,199,417 $ ( 15,128,144 ) $ ( 10,841,693 ) Depreciation and amortization $ 995,472 $ 1,507,643 $ — $ 2,503,115 Capital expenditures $ — $ 48,594 $ — $ 48,594 Assets $ 27,437,628 $ 18,199,530 $ 2,606,962 $ 48,244,120 82 Year ended December 31, 2024 Corporate and SUNation NY HEC Other Total Sales $ 39,733,362 $ 17,128,391 $ — $ 56,861,753 Cost of sales 24,639,695 11,795,814 — 36,435,509 Gross profit 15,093,667 5,332,577 — 20,426,244 Operating expenses: Selling, general and administrative expenses 15,265,443 4,530,879 7,257,844 27,054,166 Amortization expense 812,500 2,025,000 — 2,837,500 Fair value remeasurement of SUNation earnout consideration — — ( 1,000,000 ) ( 1,000,000 ) Goodwill impairment loss — 3,101,981 — 3,101,981 Intangible asset impairment loss — 750,000 — 750,000 Total operating expenses 16,077,943 10,407,860 6,257,844 32,743,647 Operating (loss) income ( 984,276 ) ( 5,075,283 ) ( 6,257,844 ) ( 12,317,403 ) Other income (expenses): Investment and other income 25,920 17,742 100,867 144,529 (Loss) gain on sale of assets — 6,118 ( 6,940 ) ( 822 ) Fair value remeasurement of warrant liability — — ( 974,823 ) ( 974,823 ) Fair value remeasurement of embedded derivative liability — — ( 65,617 ) ( 65,617 ) Fair value remeasurement of contingent value rights — — 522,257 522,257 Interest expense ( 74,507 ) — ( 3,012,943 ) ( 3,087,450 ) Loss on debt extinguishment — — ( 35,657 ) ( 35,657 ) Other expense, net ( 48,587 ) 23,860 ( 3,472,856 ) ( 3,497,583 ) Operating loss from continuing operations before income taxes $ ( 1,032,863 ) $ ( 5,051,423 ) $ ( 9,730,700 ) $ ( 15,814,986 ) Depreciation and amortization $ 1,031,418 $ 2,120,364 $ 2,050 $ 3,153,832 Capital expenditures $ 24,155 $ 8,630 $ — $ 32,785 Assets $ 26,127,816 $ 18,150,306 $ 1,434,610 $ 45,712,732 NOTE 14 – FAIR VALUE MEASUREMENTS Fair value is defined as the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. Assets and liabilities measured at fair value are classified using the following hierarchy, which is based upon the transparency of inputs to the valuation as of the measurement date: Level 1 – Observable inputs that reflect unadjusted quoted prices for identical assets or liabilities in active markets that the Company has the ability to access at the measurement date. Level 2 – Observable inputs such as quoted prices for similar instruments and quoted prices in markets that are not active, and inputs that are directly observable or can be corroborated by observable market data. The types of assets and liabilities included in Level 2 are typically either comparable to actively traded securities or contracts, such as treasury securities with pricing interpolated from recent trades of similar securities, or priced with models using highly observable inputs, such as commodity options priced using observable forward prices and volatilities. 83 Level 3 – Significant inputs to pricing that have little or no observability as of the reporting date. The types of assets and liabilities included in Level 3 are those with inputs requiring significant management judgment or estimation, such as the complex and subjective models and forecasts used to determine the fair value of financial instruments. Financial assets and liabilities measured at fair value on a recurring basis as of December 31, 2025 and 2024 are summarized below. December 31, 2025 Level 1 Level 2 Level 3 Total Fair Value Cash equivalents: Money Market funds $ 665,582 $ — $ — $ 665,582 Total $ 665,582 $ — $ — $ 665,582 December 31, 2024 Level 1 Level 2 Level 3 Total Fair Value Cash equivalents: Money Market funds $ 368,138 $ — $ — $ 368,138 Subtotal 368,138 — — 368,138 Liabilities: Contingent value rights — — ( 312,080 ) ( 312,080 ) Embedded derivative liability — — ( 82,281 ) ( 82,281 ) Earnout consideration — ( 2,500,000 ) — ( 2,500,000 ) Subtotal — ( 2,500,000 ) ( 394,361 ) ( 2,894,361 ) Total $ 368,138 $ ( 2,500,000 ) $ ( 394,361 ) $ ( 2,526,223 ) The following tables present reconciliations of recurring fair value remeasurements that use significant unobservable inputs (Level 3): Year Ended December 31, 2025 Contingent value rights Warrant liability Embedded derivative liability Contingent forward contract Total December 31, 2024 $ ( 312,080 ) $ — $ ( 82,281 ) $ — $ ( 394,361 ) Additions — ( 9,399,054 ) — ( 5,515,525 ) ( 14,914,579 ) Extinguishment of debt — — 82,281 — 82,281 Warrant exercise — 16,662,707 — — 16,662,707 Distribution 276,001 — — — 276,001 Fair value adjustments 36,079 ( 7,531,044 ) — 899,080 ( 6,595,885 ) Settlement — 267,391 — 4,616,445 4,883,836 December 31, 2025 $ — $ — $ — $ — $ — 84 Year Ended December 31, 2024 Contingent value rights Warrant liability Embedded derivative liability Earnout consideration Total December 31, 2023 $ ( 1,691,072 ) $ — $ — $ ( 3,500,000 ) $ ( 5,191,072 ) Reclassification from equity — ( 10,592,220 ) — — ( 10,592,220 ) Additions — — ( 16,664 ) — ( 16,664 ) Warrant exercise — 324,789 — — 324,789 Distribution 856,735 — — — 856,735 Fair value adjustments 522,257 ( 974,823 ) ( 65,617 ) 1,000,000 481,817 Reclassification to Level 2 — — — 2,500,000 2,500,000 Reclassification to equity — 11,242,254 — — 11,242,254 December 31, 2024 $ ( 312,080 ) $ — $ ( 82,281 ) $ — $ ( 394,361 ) The estimated fair value of the Contingent Value Rights (“CVR”) as of December 31, 2025 and 2024 was $ 0 and $ 312,080 , respectively, as noted above. The Company recorded a $ 36,079 gain on the fair value remeasurement of the CVRs in 2025 and a $ 522,257 gain on the fair value remeasurement of the CVRs in 2024. The Company paid $ 276,001 and $ 856,736 in CVR distributions during 2025 and 2024, respectively. The estimated fair value of the contingent forward contract was $ 0 as of December 31, 2025. The estimated fair value was considered a Level 3 measurement and the fair value of the contingent forward contract is determined using a Monte Carlo simulation. As a result of the fair value remeasurement, the Company recorded a remeasurement gain of $ 899,080 in 2025. See Note 11, Equity, for further information. The estimated fair value of earnout consideration related to the acquisition of SUNation NY as of December 31, 2024 was $ 2,500,000 , respectively. The Company paid $ 2,500,000 against the earnout consideration during 2025 related to the first earnout period. The estimated fair value was considered a Level 2 measurement at December 31, 2024 because the earnout amounts had been established and there was no longer a reliance on unobservable inputs. As a result of the fair value remeasurement, the Company recorded a remeasurement gain of $ 1,000,000 during the year ended December 31, 2024. As noted in Note 11, the PIPE Warrants were classified as a liability during the first quarter of 2024, resulting in a $ 10,592,202 reclassification from equity. During the third quarter of 2024, the PIPE Warrants met equity classification requirements upon the shareholder approval of an increase in authorized outstanding shares and reclassified the fair value liability totaling $ 11,242,254 back to equity. As discussed in Note 11, Equity, during the second quarter of 2025, the Company issued Series A and Series B warrants. The estimated fair value is considered a Level 3 measurement and the fair value of the warrant liability is determined using a Monte Carlo simulation to model future movement of the stock price. As a result of the fair value remeasurement, the Company recorded a remeasurement loss of $ 7,531,044 and $ 974,823 during the years ended December 31, 2025 and 2024, respectively. The estimated fair value of the embedded derivative liability was $ 82,281 as of December 31, 2024. As noted in Note 8, Commitments and Contingencies, the Company repaid the debt associated with the embedded derivative liabilities and the embedded derivative balance was included within the debt extinguishment. The estimated fair value is considered a Level 3 measurement and the fair value of the embedded derivative liability is determined based on a comparison of the present value of cash flows with and without the embedded derivative. This analysis includes management estimates of the likelihood of events of prepayment and default on the Decathlon, MBB and Conduit loans. The fair value remeasurement related to the SUNation NY earnout was recorded within operating expenses. The other fair value remeasurements noted above were recorded within other income (expense) in the consolidated statements of operations. We record transfers between levels of the fair value hierarchy, if necessary, at the end of the reporting period. There were no transfers between levels during the year ended December 31, 2025. 85 NOTE 15 – GOING CONCERN The Company’s financial statements as of December 31, 2025 have been prepared in accordance with GAAP applicable to a going concern, which contemplates the realization of assets and liquidation of liabilities in the normal course of business. Based on the Company’s current financial position and the Company’s forecasted future cash flows for twelve months beyond the date of issuance of these financial statements, substantial doubt exists around the Company’s ability to continue as a going concern for a reasonable period of time . As noted in Note 11, Equity, and Note 8, Commitments and Contingencies, the Company raised capital and satisfied certain outstanding debt obligations during 2025, however there remains uncertainty related to our future cash flows as it relies on the ability to generate enough cash flow from its operating segments to cover the Company’s corporate overhead costs. In order to continue as a going concern, the Company will need additional capital resources. Management plans to raise capital through sources that may include public or private equity offerings, debt financings and/or strategic alliances. However, management cannot provide any assurances that the Company will be successful in accomplishing any of its plans. These financial statements do not include any adjustments related to the recoverability and classification of assets or the amounts and classification of liabilities that might be necessary should the Company be unable to continue as a going concern . NOTE 16 – SUBSEQUENT EVENTS The Company has evaluated subsequent events through the date of this filing. As discussed in Note 8, Commitments and Contingencies, the Company acquired a promissory note with a former shareholder and member of SUNation NY. On January 30, 2026, the Company reached agreement to eliminate this promissory note. Prior to reaching this settlement, the promissory note carried remaining principal balance of approximately $ 1.1 million. To eliminate the long-term promissory note, significantly reduce this remaining multi-year obligation and improve financial flexibility, the Company negotiated a one-time lump-sum settlement payment of $ 800,000 , which payment was made on January 30, 2026. In connection with the elimination of the long-term promissory note, the Company utilized its existing $ 1 million Revolver with MBB. Prior to drawing on this facility in January 2026, no amounts had been drawn on the Revolver. 86 ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE None.