SolarMax Technology, Inc.
For the period ended Jun 30, 2026. Filed Oct 8, 2026.
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A company's report for each of its first three quarters. The financial statements are not audited. It shows how the business has moved since the last annual report, and what management says changed.
Jun 30, 2026 · Filed Oct 8, 2026
SMXT$3.80+0.3%Stored close · as of Nov 6, 2026
What changed in Management’s Discussion and Analysis?
Read the current filingPrevious report: 10-Q
Period ended 2026-03-31; filed 2026-05-15.
0001640334-26-000909
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of OperationsCurrent report: 10-Q
Period ended 2026-06-30; filed 2026-10-08.
0001640334-26-001640
Item 2. Management's Discussion and Analysis of Financial Condition and Results of OperationsThe baseline is this issuer’s latest earlier reporting period of the same form that was filed before the current report. A previous 10-Q is a different quarter, not a year-over-year comparison. Amendments are excluded.
Compared 119 previous paragraphs and 141 current paragraphs.
68 unchanged; 43 reworded; 25 added; 7 removed; 1 previous and 5 current paragraphs rearranged.
Tables are not compared: 8 previous and 8 current tables excluded. Dates, whitespace, punctuation and numbering changes are ignored; changes to financial figures remain significant.
A changed paragraph is not evidence that risk increased or decreased. An unchanged paragraph does not establish that risk stayed the same.
Added paragraphs (25)
Current report
Reverse Stock Split
Current report
On August 4, 2026, the Company amended its Amended and Restated Articles of Incorporation by filing a Certificate of Change with the Secretary of State of Nevada to effect a one-for-12 reverse stock split of the common stock, which became effective on August 13, 2026 and to effect a proportionate reduction of its authorized common stock from 297,225,000 shares to 24,768,750 shares, which is 1/12 of the number of previously authorized shares.
Current report
As a result of the reverse split, the number of outstanding shares of common stock was reduced from 56,906,572 shares to 4,742,167 shares of common stock. The ownership percentage of each stockholder will remain unchanged other than as a result of fractional shares. Proportional adjustments are made to both the number of shares of common stock issuable upon exercise of outstanding options or the conversion of outstanding convertible notes, as well as to the applicable exercise or conversion price.
Current report
The reverse split supported the Company’s effort to regain compliance with the minimum bid price requirement for maintaining the listing of its common stock on the Nasdaq Capital Market. On March 3, 2026, the Company received a notice from Nasdaq that the Company does not meet Nasdaq’s continued listing requirement that the Company maintain a minimum bid price of $1.00 per share. The Nasdaq rules provide that the Company has a compliance period of 180 calendar days to regain compliance. This period expired on August 31, 2026. The closing bid price of the Company’s common stock was at least $1.00 per share for ten consecutive business days prior to August 31, 2026.
Current report
Share and per share information in this Form 10-Q has been retroactively revised to reflect the reverse stock split as if it had occurred on January 1, 2025.
Current report
Nasdaq Notice
Current report
On June 22, 2026, the Company received a notice from Nasdaq that the Company does not meet the continued listing requirement that the Company maintain a minimum market value of listed securities of $35.0 million. The Nasdaq rule provides that the Company has a compliance period of 180 calendar days to regain compliance. This period expires on December 21, 2026. Nasdaq calculates the market value of listed securities by multiplying the most recent total shares outstanding by the closing bid price of the common stock. In the event the Company does not regain compliance with this rule prior to the expiration of the compliance period, it will receive written notification that its securities are subject to delisting. The reverse split does not address the minimum market value of listed securities. In the event that the Company does not meet the minimum market value of listed securities, the common stock will be delisted from Nasdaq and it will be traded on the Over-the Counter Market. If the Company’s common stock is traded on the over-the-counter market, as an OTC traded stock, it will be less attractive to investors than a Nasdaq listed security, which means it will be more difficult for the Company to raise money. Many brokerage firms prefer not to deal with OTC traded securities. As a result, it is likely to be more difficult for the Company to enter into major EPC projects, and it may affect the willingness of Companies who have entered into EPC contracts with the Company to proceed with the projects.
Current report
In June 2026, we entered into a transformer sale agreement with Longfellow Solar I LLC (“LF Solar”) for the supply, delivery, testing and commissioning of two main power transformers for a solar project owned by LF Solar, and received the initial deposit payment of $602,402. The fixed contract value for equipment and services is approximately $6.0 million, excluding shipping, customs duties, tariffs and other import-related costs. The transformers are custom-manufactured equipment with delivery expected during 2027.
Current report
In June 2026, we entered into an amended purchase agreement with D Volt Co., a Texas corporation to purchase equipment and services for approximately $5.3 million. At the execution of the agreement, we paid the initial deposit payment of $602,402. The agreement requires milestone payments through manufacturing, testing, shipment, and commissioning. Title and risk of loss transfer upon delivery to our designated carrier in Shanghai, China.
Current report
Three and Six Months Ended June 30, 2026 and 2025
Current report
China legal judgment
Current report
Our expenses in China for the three and six months ended June 30, 2026 reflected a charge of approximately $4.3 million related to farmland occupation tax litigation in the PRC for four photovoltaic projects completed in 2020 and 2021. The charge resulted from three adverse court judgments issued in June and August 2026 that determined that our subsidiary is responsible for the additional farmland occupation taxes.
Current report
We recorded the charge of $4.3 million because, as of June 30, 2026, management determined, based on court rulings in June and August 2026, that a loss was probable and reasonably estimable based on the judgments and other information available at that date. See Part II, Item 1. Legal Proceedings for discussion of the litigation.
Current report
For the three and six months ended June 30, 2025, our loss on debt extinguishment was $314,000 and relates to the exchange of the $900,000 unsecured loan to shares of our common stock because the purchase price for the shares is less than its fair market value
Current report
For our China operations, an income tax benefit of approximately $29,000 and $106,000 was reported for the three months ended June 30, 2026 and 2025, respectively. For our China operations, an income tax benefit of approximately $52,000 and $176,000 was reported for the six months ended June 30, 2026 and 2025, respectively. The decrease in our income tax benefit for the six months ended June 30, 2026, compared with the corresponding period in 2025, was primarily attributable to a valuation allowance true-up recorded in the prior-year period, with no comparable adjustment in the current-year period. The change in our effective income tax rate also reflects changes in pretax book income (loss) between the periods.
Current report
Revenue Recognition on Large-scale EPC Contracts
Current report
A significant portion of our revenue is generated from large-scale EPC contracts. Revenue recognition for these contracts requires management to make significant estimates and judgments regarding the transaction price, the identification and combination of performance obligations, the estimated costs to complete the contracts and the measure of progress toward completion.
Current report
For large-scale EPC contracts that qualify for cost-to-cost input method under ASC 606, the percentage of completion is determined based on costs incurred to date relative to total estimated costs at completion. Revenue recognized in the reporting period is based on the resulting measure of progress and the estimated transaction price for the performance obligation.
Current report
The most significant judgment involved in recognizing revenue under the cost-to-cost method is the estimate of total costs required to complete the performance obligation. These estimates include expected equipment and material costs, subcontractor costs, labor costs, construction costs, engineering costs, commissioning costs, tariffs and other costs necessary to complete the project. We update our estimates of costs to complete throughout the construction period based on actual costs incurred, vendor and subcontractor information, project status, expected changes in scope, schedule and other available information.
Current report
Because revenue is recognized based on the estimated percentage of completion, changes in estimated costs to complete can have a significant effect on the amount of revenue and gross profit recognized in the current period. An increase in estimated costs to complete generally reduces the percentage of completion and expected gross profit and may result in a cumulative catch-up adjustment to revenue and gross profit. Conversely, a reduction in estimated costs to complete may increase the amount of revenue and gross profit recognized in the current period.
Current report
Our estimates are particularly sensitive for fixed-price EPC contracts because we generally bear the risk that actual costs may exceed the amounts contemplated in the contract price. The Longfellow Contract expressly provides that the turnkey work is a fixed-price obligation, subject to specified contractual adjustments and change orders.
Current report
In addition to estimated costs to complete, management is required to exercise judgment in evaluating potential changes in the transaction price, including approved and unapproved change orders, claims, liquidated damages, performance incentives and other contractual adjustments. Such amounts are included in the transaction price only when the applicable requirements of ASC 606 have been satisfied.
Current report
We also evaluate whether contractual payment terms contain a significant financing component. The determination of the financing component affects both the amount and timing of revenue and interest income that we recognize. Changes in the estimated timing of project completion, commercial operation or receipt of deferred payments, or changes in the applicable interest rate, could affect the amount of revenue and interest income recognized in future periods.
Current report
As of June 30, 2026, we had recognized an adjustment to the contractual consideration for the Longfellow Contract to reflect the significant financing component. The amount attributable to financing is not included in EPC revenue and is recognized as interest income over the applicable financing period.
Current report
We believe that the estimates and judgments described above are reasonable based on information available at the reporting date. However, because of the long-term nature and complexity of EPC projects, actual results may differ from management's estimates. Material changes in estimated costs, contract revenue or other assumptions could result in significant changes in revenue, gross profit and net income in the period in which the estimates are revised.
Removed paragraphs (7)
Previous report
For our China operations, an income tax benefit of approximately $23,000 and $70,000 was reported for the three months ended March 31, 2026 and 2025, respectively, arising from a decrease in the valuation allowance against deferred tax assets and a decrease in deferred tax liabilities as of March 31, 2026.
Previous report
Nature of Estimates Required
Previous report
Key Assumptions and Approach Used
Previous report
Effect if Different Assumptions Used
Previous report
Nature of Estimates Required
Previous report
Key Assumptions and Approach Used
Previous report
Effect if Different Assumptions Used
Reworded paragraphs (43)
Previous wording
Recent changes in U.S. trade policy have resulted in the implementation or threatened implementation of tariffs on certain imported goods, particularly those manufactured in China and other countries. These tariffs have increased the cost of certain raw materials and components used in our products. While we have taken steps to mitigate the impact, including working with suppliers and adjusting our pricing strategy, the tariffs are expected to result in higher input costs for our operations for the remainder of 2026. For the three months ended March 31, 2026, the tariffs did not have material effects on our cost of revenue.
Current wording
Recent changes in U.S. trade policy have resulted in the implementation or threatened implementation of tariffs on certain imported goods, particularly those manufactured in China and other countries. These tariffs have increased the cost of certain raw materials and components used in our products. While we have taken steps to mitigate the impact, including working with suppliers and adjusting our pricing strategy, the tariffs are expected to result in higher input costs for our operations for the remainder of 2026. For the six months ended June 30, 2026, the tariffs did not have material effects on our cost of revenue.
Previous wording
Compensation costs per employee, excluding stock-based compensation, for sales, marketing and administrative personnel in our United States operations decreased approximately 4% for the three months ended March 31, 2026 compared to the same period in 2025. The decrease in 2026 reflected the lay-off of a portion of our employees resulting from a slowdown after we had completed installation of the increased 2023 backlog resulting orders placed in 2023 in advance of NEM 3.0 becoming effective in April 2023, as discussed below under “Effects of NEM 3.0.” The increase in 2023 also reflected the increased cost of retaining and attracting talent, and such costs may continue to increase as labor costs in California continue to increase as a result of the inflationary pressures. In addition, to the extent that inflationary pressure affects our cost of revenue and general overhead, we may face the choice of raising prices to try and maintain our margins or reduce or maintain our price structure to meet competition which would result in a lower gross margin and a drop in operating income. Supply chain issues have caused us to periodically stock up on components such as solar panels and battery systems to ensure an adequate supply to meet expected demand, putting pressure on our cash flow. We do not believe that the supply chain issues that affected our operations in prior periods are currently affecting us. We cannot assure you that such delays and increased costs will not affect our business in the future.
Current wording
Compensation costs per employee, excluding stock-based compensation, for sales, marketing and administrative personnel in our United States operations decreased approximately 6.7% for the six months ended June 30, 2026 compared to the same period in 2025. The decrease in 2026 reflected the lay-off of a portion of our employees resulting from a slowdown after we had completed installation of the increased 2023 backlog resulting orders placed in 2023 in advance of NEM 3.0 becoming effective in April 2023, as discussed below under “Effects of NEM 3.0.” The increase in 2023 also reflected the increased cost of retaining and attracting talent, and such costs may continue to increase as labor costs in California continue to increase as a result of the inflationary pressures. In addition, to the extent that inflationary pressure affects our cost of revenue and general overhead, we may face the choice of raising prices to try and maintain our margins or reduce or maintain our price structure to meet competition which would result in a lower gross margin and a drop in operating income. Supply chain issues have caused us to periodically stock up on components such as solar panels and battery systems to ensure an adequate supply to meet expected demand, putting pressure on our cash flow. We do not believe that the supply chain issues that affected our operations in prior periods are currently affecting us. We cannot assure you that such delays and increased costs will not affect our business in the future.
Previous wording
Since the third quarter of 2025, our principal business was EPC services in connection with the construction of BESS systems. On July 31, 2025, we entered into an EPC agreement with Longfellow, to develop a BESS facility. Based on the contract terms, the contract is expected to generate revenues of approximately $120.1 million and interest income of $7.2 million from a financing component related to milestone payments that extend beyond the project completion date. Longfellow will own and operate the facility, which will be located in Pecos County, Texas and is expected to have a storage capacity of 430 megawatt-hours. Completion of the BESS facility is expected to be completed by December 2027 as a result of various design changes, although we cannot assure you that this completion date will be met. These design changes, which are being finalized, may affect the price of the project and our costs. To the extent that our costs for the project increase as a result of tariffs, the war with Iran, supply chain issues or other factors, any change in the price of the project would be subject to the approval of Longfellow. To the extent that we cannot adjust our prices to reflect such additional costs, our gross margin on the project will be impacted. We have committed to make a $5.0 million capital contribution to Longfellow, in which we have an 8% equity interest. Our capital contribution for this equity interest is $5.0, which was due no later than December 31, 2025. Longfellow agreed to defer our payment obligation, but has not agreed to a specific date by which we must make payment to obtain our equity interest. Our cash flow from the project and the timing of our work on the project is affected by the timing of payments from Longfellow, which is affected by Longfellow’s funding for the project. Accounts receivable from Longfellow were $9.4 million at both March 31, 2026 and December 31, 2025.
Current wording
Since the third quarter of 2025, our principal business was EPC services in connection with the construction of BESS systems. On July 31, 2025, we entered into the Longfellow Contract to develop a BESS facility. Based on the contract terms, the contract is expected to generate revenues of approximately $120.1 million and interest income of $7.2 million from a financing component related to milestone payments that extend beyond the project completion date. Longfellow will own and operate the facility, which will be located in Pecos County, Texas and is expected to have a storage capacity of 430 megawatt-hours. Due to a change order being discussed but still not approved, the BESS facility is expected to be completed by March 2028, although we cannot assure you that this completion date will be met or that the costs will not be greater than we anticipate. The change order, which is being finalized, may affect the price of the project and our costs. To the extent that our costs for the project increase as a result of tariffs, the war with Iran, supply chain issues or other factors, any change in the price of the project would be subject to the approval of Longfellow. To the extent that we cannot adjust our prices to reflect such additional costs, our gross margin on the project will be impacted. We have committed to make a $5.0 million capital contribution to Longfellow, in which we have an 8% equity interest. Our capital contribution for this equity interest is $5.0 million, which was due no later than December 31, 2025. Longfellow agreed to defer our payment obligation, but has not agreed to a specific date by which we must make payment to obtain our equity interest. Our cash flow from the project and the timing of our work on the project is affected by the timing of payments from Longfellow, which is affected by Longfellow’s funding for the project. Accounts receivable from Longfellow were $9.4 million at both June 30, 2026 and December 31, 2025.
Previous wording
On December 31, 2025, we entered into three EPC agreements for large scale BESS systems, two in Puerto Rico and one in Corpus Christi, Texas. Pursuant to an EPC agreement with Naguabo BESS LLC, a Texas limited liability company (“Naguabo”), we will develop a BESS facility in Ceiba Municipality, Puerto Rico. The contract is expected to generate revenues of approximately $122.3 million. Naguabo will own and operate the facility, which is expected to have a storage capacity of 320 megawatt-hours. We are to have a 9% membership interest in Naguabo. Pursuant to an EPC agreement with Yabucoa BESS LLC, a Texas limited liability company (“Yabucoa”), we will develop a BESS facility in Humacao Municipality, Puerto Rico. The contract is expected to generate revenues of approximately $35.9 million. Yabucoa will own and operate the facility, which is expected to have a storage capacity of 80 megawatt-hours. We are to have a 9% membership interest in Yabucoa. Pursuant to an EPC agreement with Navboot Holdco, LLC, a Delaware limited liability company (“Navboot”), we will develop a BESS facility in Corpus Christi, Texas. The contract is expected to generate revenues of approximately $258.1 million. Navboot will own and operate the facility, which is expected to have a storage capacity of 600 megawatt-hours. Cash flow from long-term EPC projects is dependent upon the timing of payments from project owners which may be affected by the owners’ debt and equity financing for the project.
Current wording
On December 31, 2025, we entered into three EPC contracts for large-scale BESS systems, two in Puerto Rico and one in Corpus Christi, Texas. Pursuant to an EPC contract with Naguabo BESS LLC, a Texas limited liability company (“Naguabo”), we will develop a BESS facility in Ceiba Municipality, Puerto Rico. The contract is expected to generate revenues of approximately $122.3 million. Naguabo will own and operate the facility, which is expected to have a storage capacity of 320 megawatt-hours. We are to have a 9% membership interest in Naguabo. Pursuant to an EPC contract with Yabucoa BESS LLC, a Texas limited liability company (“Yabucoa”), we will develop a BESS facility in Humacao Municipality, Puerto Rico. The contract is expected to generate revenues of approximately $35.9 million. Yabucoa will own and operate the facility, which is expected to have a storage capacity of 80 megawatt-hours. We are to have a 9% membership interest in Yabucoa. Pursuant to an EPC contract with Navboot Holdco, LLC, a Delaware limited liability company (“Navboot”), we will develop a BESS facility in Corpus Christi, Texas. The contract is expected to generate revenues of approximately $258.1 million. Navboot will own and operate the facility, which is expected to have a storage capacity of 600 megawatt-hours. Cash flow from long-term EPC projects is dependent upon the timing of payments from project owners which may be affected by the owners’ debt and equity financing for the project. We have not commenced work on any of these projects and we cannot assure you as to whether or when we will begin to perform these services.
Previous wording
In the fourth quarter of 2023, we began to work with several independent dealers which form our dealer network. Our dealer network is comprised of independent licensed sales companies that sell our products pursuant to non-exclusive agreement. The dealers sell our products as well as products sold by our competitors. The dealer handles the sales process, and once the sales agreement with the customer is signed, we install the solar system pursuant to an installation agreement with customer. The dealers earn a commission which is included in cost of revenue. Our increase in revenues from solar systems in the first quarter of 2026 over the first quarter of 2025 results from sales through our dealer network.
Current wording
In the fourth quarter of 2023, we began to work with several independent dealers which form our dealer network. Our dealer network is comprised of independent licensed sales companies that sell our products pursuant to non-exclusive agreement. The dealers sell our products as well as products sold by our competitors. The dealer handles the sales process, and once the sales agreement with the customer is signed, we install the solar system pursuant to an installation agreement with customer. The dealers earn a commission which is included in cost of revenue. Our increase in revenues from solar systems for the six months ended June 30, 2026 over the comparable period in 2025 was primarily from sales through our dealer network.
Previous wording
In 2024 and 2025, the California Public Utilities Commission (CPUC) launched a $280 million statewide initiative called the Self-Generation Incentive Program (“SGIP”) to help California’s low-income utility customers install battery storage and solar panel systems. We began participating in SGIP as an installer in 2025. In February 2026, SGIP administrators temporarily paused payments to installers and in May 2026 resumed the payments with a ruling to impose strict cost documentation requirements and review. As a result, we experienced a delay in collecting receivables on SGIP installations during the three months ended March 31, 2026. In the three months ended March 31, 2025, revenues from SGIP projects were approximately $2.9 million, or 49% of our solar energy sales and 41% of our total revenues. In the three months ended March 31, 2026, revenues from SGIP installations were approximately $6.5 million, or 80% of solar energy sales and 44% of our total revenues. At March 31, 2026, SGIP installations account for approximately $2.3 million of our accounts receivable. Our sales for the SGIP were made primarily through our dealer network.
Current wording
In 2024 and 2025, the California Public Utilities Commission (CPUC) launched a $280 million statewide initiative called the Self-Generation Incentive Program (“SGIP”) to help California’s low-income utility customers install battery storage and solar panel systems. We began participating in SGIP as an installer in 2025. In February 2026, SGIP administrators temporarily paused payments to installers and in May 2026 resumed the payments with a ruling to impose strict cost documentation requirements and review. As a result, we experienced a delay in collecting receivables on SGIP installations during the six months ended June 30, 2026. In the six months ended June 30, 2026, revenues from SGIP projects were approximately $7.1 million, or 47.7% of our solar energy sales and 28.4% of our total revenues. At June 30, 2026, receivables from SGIP installations accounted for approximately $6.7 million, or 37.2%, of our accounts receivable. Our sales for the SGIP were made primarily through our dealer network.
Previous wording
During the three months ended March 31, 2026 and 2025, approximately 74% and 67%, respectively, of our revenues from residential solar and battery contracts, and 40% and 55% of our total revenues were generated through the dealer network program. We believe that our participation in the dealer network enhances our ability to attract residential customers.
Current wording
During the six months ended June 30, 2026 and 2025, approximately 75% and 58%, respectively, of our revenues from residential solar and battery contracts, and 45% and 48% of our total revenues were generated through the dealer network program. We believe that our participation in the dealer network enhances our ability to attract residential customers.
Previous wording
The following tables set forth information relating to our operating results for the three months ended March 31, 2026 and 2025 (dollars in thousands) and as a percentage of revenue:
Current wording
The following tables set forth information relating to our operating results for the three and six months ended June 30, 2026 and 2025 (dollars in thousands) and as a percentage of revenue:
Previous wording
The following table set forth information relating to our revenue and gross profit results for the three months ended March 31, 2026 and 2025 (dollars in thousands):
Current wording
The following table set forth information relating to our revenue and gross profit results for the three and six months ended June 30, 2026 and 2025 (dollars in thousands):
Previous wording
Revenues for the three months ended March 31, 2026 were $14.8 million, an increase of $7.9 million or 114.1% from $6.9 million in the three months ended March 31, 2025. The increase resulted from revenue of $5.2 million from the large-scale EPC contract with Longfellow to develop a battery energy storage system (“BESS”) facility in Texas, a $2.3 million increase in solar energy and battery sales, a $424,000 increase in LED sales, offset by a $18,000 decrease in financing revenue. We did not have any large-scale EPC sales prior to the third quarter of 2025. Our revenue from residential and commercial solar energy and battery sales increased from $5.8 million for the three months ended March 31, 2025 to $8.1 million for the three months ended March 31, 2026, a 39.6% increase, primarily as a result of the sale growth from the dealer network program. The increase in the solar energy and battery sales in the three months ended March 31, 2026 reflects a 30.4% increase in the number of systems completed and a 25.5% increase in the wattages deployed. During the three months ended March 31, 2026 and 2025, our battery only sales were $178,000 and $328,000, respectively. Battery sales refer to the sale of batteries sold other than as a part of a solar system.
Current wording
Revenues for the three months ended June 30, 2026 were $10.2 million, an increase of $3.4 million or 48.8% from $6.9 million in the three months ended June 30, 2025. The increase resulted from revenue of $809,000 from the Longfellow Contract to develop a battery energy storage system (“BESS”) facility in Texas, a $1.4 million increase in solar energy and battery sales, a $1.2 million increase in LED sales, offset by a $44,000 decrease in financing revenue. We did not have any large-scale EPC sales prior to the third quarter of 2025. Our revenue from residential and commercial solar energy and battery sales increased from $5.9 million for the three months ended June 30, 2025 to $7.3 million for the three months ended June 30, 2026, a 23.5% increase, primarily as a result of the sales growth related to the SGIP program for low income residential homeowners that began in the latter half of 2025. The increase in the solar energy and battery sales in the three months ended June 30, 2026 reflects a 13.7% increase in the number of systems completed and a 53.8% increase in the wattages deployed. During the three months ended June 30, 2026 and 2025, our battery only sales were $181,000 and $864,000, respectively. Battery sales refer to the sale of batteries sold other than as a part of a solar system.
Previous wording
As a result of the continued relatively high interest rate environment and the expiration of the federal residential solar tax credit on December 31, 2025, we expect the revenue growth from our residential sales to level off in 2026 compared to the prior period. We are also looking to offset the potential residential sales decrease with commercial sales and sales of large-scale EPC projects. On July 31, 2025, we entered into an EPC contract with Longfellow to develop a battery energy storage system (“BESS”) facility. Based on terms of the agreement, the contract is expected to generate revenues and finance income of approximately $127.3 million for us and we expect to complete the work by December 2027. During the three months ended March 31, 2026, we recognized $5.2 million in revenues related to this project. Total revenue recognized on the Longfellow contract from the project inception through March 31, 2026 was $65.4 million, and we expect to recognize approximately $54.6 million of revenue on Longfellow for the remainder of 2026 and 2027.
Current wording
As a result of the continued relatively high interest rate environment and the expiration of the federal residential solar tax credit on December 31, 2025, we expect the revenue growth from our residential sales to level off in 2026 compared to the prior period. However, given the launch of the SGIP program for qualifying low-income households that began in June 2025, we were able to offset a significant portion of the decline of revenue growth from our residential sales in 2026 with residential sales that participated in the SGIP program, though we expect this will level off in 2026. We are also looking to offset the potential residential sales decrease with commercial sales and sales of large-scale EPC projects. On July 31, 2025, we entered into an EPC contract with Longfellow to develop a BESS facility. Based on terms of the agreement, the contract is expected to generate revenues and finance income of approximately $127.3 million for us and we expect to complete the work by March 2028. During the three months ended June 30, 2026, we recognized $809,000 in revenues related to this project. Total revenue recognized on the Longfellow Contract from the project inception through June 30, 2026 was $66.2 million, and we expect to recognize approximately $54.0 million of revenue on Longfellow for the remainder of 2026 and 2027.
Previous wording
Our LED revenue increased by $424,000 or 40.0% to $1.5 million for the three months ended March 31, 2026 from $1.1 million for the three months ended March 31, 2025, primarily resulting from the increase in the number of LED projects with a higher average sales price. LED revenues include LED product sales and LED consulting revenues which are expected to continue to fluctuate based on the number of LED projects awarded which is based on the bidding process and specific customer purchase requirements and timing. Revenue from our LED business fluctuates period to period.
Current wording
Our LED revenue increased by $1.2 million or 133.3% to $2.1 million for the three months ended June 30, 2026 from $911,000 for the three months ended June 30, 2025, and increased $1.6 million or 83.1% to $3.6 million for the six months ended June 30, 2026 from $2.0 million for the six months ended June 30, 2025, primarily resulting from the increase in the number of LED projects with a higher average sales price. LED revenues include LED product sales and LED consulting revenues which are expected to continue to fluctuate based on the number of LED projects awarded which is based on the bidding process and specific customer purchase requirements and timing. Revenue from our LED business fluctuates period to period.
Previous wording
We have not originated any loans to our solar customers since 2022. As a result, our finance revenue for the three months ended March 31, 2026 and 2025 was $54,000 and $72,000, respectively, from our portfolio of solar loans. Finance revenue decreases as loans in our portfolio are paid since we are not making any new loans.
Current wording
We have not originated any loans to our solar customers since 2022. As a result, our finance revenue for the three months ended June 30, 2026 and 2025 was $37,000 and $81,000, respectively, and for the six months ended June 30, 2026 and 2025 was $90,000 and $153,000, respectively, from our portfolio of solar loans. Finance revenue decreases as loans in our portfolio are paid since we are not making any new loans.
Previous wording
Our cost of revenue for the three months ended March 31, 2026 was $11.8 million, an increase of $6.3 million, or 113.9% from $5.5 million for the three months ended March 31, 2025. The increase in cost of revenue was largely driven by the EPC revenue from EPC services pursuant to the Longfellow contract. The remaining increase in cost of revenue was the result of the increased sales in the residential and commercial solar energy systems and LED sales.
Current wording
Our cost of revenue for the three months ended June 30, 2026 was $7.8 million, an increase of $1.6 million, or 24.7% from $6.3 million for the three months ended June 30, 2025. Our cost of revenue for the six months ended June 30, 2026 was $19.6 million, an increase of $7.8 million, or 66.4% from $11.8 million for the six months ended June 30, 2025. The increase in cost of revenue was largely driven by the EPC revenue from EPC services pursuant to the Longfellow Contract. The remaining increase in cost of revenue was the result of the increased sales in the residential and commercial solar energy systems and LED sales.
Previous wording
The overall gross margin was 20.5% for the three months ended March 31, 2026 which is at the consistent level as the gross margin in the three months ended March 31, 2025. During the three months ended March 31, 2026, our gross margin from the sale of residential and commercial solar energy systems as well as from our LED sales improved which offsets the decrease in the gross margin from the EPC contract. The current lower gross margin from the EPC contract was primarily due to the costs recognized related to the Longfellow project. We recognize revenue, but not profit, on uninstalled materials. The revenue on uninstalled materials is recognized by us when the control is transferred equal to the cost of the uninstalled materials. This decrease in gross margin on the Longfellow contract was partially offset by an increase in the gross margin from our sales of solar energy systems as well as from LED sales. We have no cost of revenue with respect to interest income on customer loans.
Current wording
The overall gross margin increased to 23.6% for the three months ended June 30, 2026 from 8.8% for the three months ended June 30, 2025, and increased to 21.8% for the six months ended June 30, 2026 from 14.7% in the six months ended June 30, 2025. During the three months ended June 30, 2026, our gross margin from the sale of residential and commercial solar energy systems as well as from our LED sales improved which offsets the decrease in the gross margin related to the Longfellow Contract. The current lower gross margin from the Longfellow Contract was primarily due to the costs recognized related to the Longfellow project. We recognize revenue, but not profit, on uninstalled materials. The revenue on uninstalled materials is recognized by us when the control is transferred equal to the cost of the uninstalled materials. This decrease in gross margin on the Longfellow Contract was partially offset by an increase in the gross margin from our sales of solar energy systems as well as from LED sales. We have no cost of revenue with respect to interest income on customer loans.
Previous wording
Sales and marketing expenses for the three months ended March 31, 2026 decreased to $43,000, a decrease of $36,000 or 46.0% from $79,000 in the comparable period of 2025. Sales and marketing expenses were 0.3% of revenue for the three months ended March 31, 2026 compared to 1.1% for the three months ended March 31, 2025. Our sales and marketing expenses fluctuate based on the types of marketing and promotion initiatives we deploy. Our dealer network enables us to reduce our sales and marketing costs. We expect to continue to be selective in our sales and marketing expenses for the remainder of 2026.
Current wording
Sales and marketing expenses for the three months ended June 30, 2026 decreased to $50,000, a decrease of $21,000 or 29.9% from $71,000 in the comparable period of 2025. Sales and marketing expenses were 0.5% of revenue for the three months ended June 30, 2026 compared to 1.0% for the three months ended June 30, 2025. Sales and marketing expenses for the six months ended June 30, 2026 decreased to $92,000, a decrease of $58,000 or 38.4% from $150,000 in the comparable period of 2025. Sales and marketing expenses were 0.4% of revenue for the six months ended June 30, 2026 compared to 1.1% for the six months ended June 30, 2025. Our sales and marketing expenses fluctuate based on the types of marketing and promotion initiatives we deploy. Our dealer network enables us to reduce our sales and marketing costs. We expect to continue to be selective in our sales and marketing expenses for the remainder of 2026.
Previous wording
General and administration expenses for the United States operations for the three months ended March 31, 2026 increased $239,000 or 10.0%, to $2.6 million compared to $2.4 million for the three months ended March 31, 2025, representing 17.8% of revenue for the three months ended March 31, 2026 compared to 34.7% of revenue for the three months ended March 31, 2025. The increase during the three months ended March 31, 2026 is attributed to the increase in rent expense associated with our lease amendment for our Riverside office beginning on January 1, 2026, and the additional expense related to our investor relations advertising campaign. Our general increase, in general and administrative expenses in 2026 reflects the cost of compliance and other regulatory costs associated with being a public reporting company which is expected to continue for us. The decrease in the percentage of both sales and marketing and general and administrative expenses as a percentage of revenue in the three months ended March 31, 2026 reflects revenue of approximately $5.2 million from the Longfellow EPC contract.
Current wording
General and administration expenses for the United States operations for the three months ended June 30, 2026 increased $170,000 or 8.0%, to $2.3 million compared to $2.1 million for the three months ended June 30, 2025, representing 22.5% of revenue for the three months ended June 30, 2026 compared to 31.0% of revenue for the three months ended June 30, 2025. General and administration expenses for the United States operations for the six months ended June 30, 2026 increased $409,000 or 9.0%, to $4.9 million compared to $4.5 million for the six months ended June 30, 2025, representing 19.7% of revenue for the six months ended June 30, 2026 compared to 32.9% of revenue for the six months ended June 30, 2025. The increase during the six months ended June 30, 2026 is attributed to the increase in rent expense associated with our lease amendment for our Riverside office beginning on January 1, 2026, and the additional expense related to our investor relations advertising campaign. Our general increase, in general and administrative expenses in 2026 reflects the cost of compliance and other regulatory costs associated with being a public reporting company which is expected to continue for us. The decrease in the percentage of both sales and marketing and general and administrative expenses as a percentage of revenue in the six months ended June 30, 2026 reflects revenue of approximately $6.0 million from the Longfellow Contract.
Previous wording
General and administrative expenses relating to the China operations were $267,000 in the three months ended March 31, 2026 compared to $95,000 in the three months ended March 31, 2025, an increase of $173,000 or 182%. Such increase during the three months ended March 31, 2026 is attributed to the court costs and legal fees associated with the ongoing litigation with SPIC to enforce the collection of the remaining receivable from SPIC.
Current wording
General and administrative expenses relating to the China operations were $253,000 in the three months ended June 30, 2026 compared to $166,000 in the three months ended June 30, 2025, an increase of $86,000 or 51.9%. General and administrative expenses relating to the China operations were $520,000 in the six months ended June 30, 2026 compared to $261,000 in the six months ended June 30, 2025, an increase of 259,000 or 99.2%. Such increase during the three and six months ended June 30, 2026 is attributed to the court costs, travel costs, and legal fees associated with the ongoing litigation with SPIC to enforce the collection of the remaining receivable from SPIC.
Previous wording
As a result of the factors described above, our income from operations in the United States was $363,000 for the three months ended March 31, 2026, compared to a loss from operations of $1.1 million in the three months ended March 31, 2025, which is primarily attributed to the increase in our revenues and the related gross profit. Our loss from operations for our China operations was $267,000 for the three months ended March 31, 2026, compared to a loss from operations of $95,000 in the three months ended March 31, 2025.
Current wording
As a result of the factors described above, our income from operations in the United States was $58,000 for the three months ended June 30, 2026, compared to a loss from operations of $1.6 million in the three months ended June 30, 2025, and income from operations of $422,000 for the six months ended June 30, 2026, compared to loss from operations of $2.7 million in the six months ended June 30, 2025, which is primarily attributed to the increase in our revenues and the related gross profit. Our loss from operations for our China operations was $4.5 million for the three months ended June 30, 2026, compared to a loss from operations of $166,000 in the three months ended June 30, 2025. Our loss from operations for our China operations was $4.8 million for the six months ended June 30, 2026, compared to a loss from operations of 261,000 in the six months ended June 30, 2025.
Previous wording
Equity in income (loss) from unconsolidated entities relates to our China operations and comprises the equity in income (loss) from three unconsolidated project companies in which we have a non-controlling 30% interest. The equity in income (loss) for the three months ended March 31, 2026 was a loss of $240,000 compared to a loss of $14,000 in the three months ended March 31, 2025. The decline in revenue and in income in the current period was attributed to the interruption caused by the major overhaul of the local power grid resulting in the inability for the power generated to be calculated for the electricity generation.
Current wording
Equity in income (loss) from unconsolidated entities relates to our China operations and comprises the equity in income (loss) from three unconsolidated project companies in which we have a non-controlling 30% interest. The equity in income (loss) for the three months ended June 30, 2026 was a loss of $42,000 compared to an income of $144,000 in the three months ended June 30, 2025. The equity in income (loss) for the six months ended June 30, 2026 was a loss of $282,000 compared to an income of $130,000 in the six months ended June 30, 2025. The change from income in the three and six months ended June 30, 2025 to a loss in the same periods in 2026 results from lower revenue of the unconsolidated entities attributable to a change in electricity rate from a fixed rate to a variable rate.
Previous wording
For the three months ended March 31, 2026, our gain on debt extinguishment was $40,000 related to the exchange of $1.5 million of secured EB-5 notes payable to a related party for 4% convertible notes in the same principal amount. No EB-5 notes were exchanged during the three months ended March 31, 2025.
Current wording
For the three months ended June 30, 2026, our gain on debt extinguishment was $13,000 related to the exchange of $500,000 of secured EB-5 notes payable to a related party for 4% convertible notes in the same principal amount. For the six months ended June 30, 2026, our gain on debt extinguishment was $54,000 related to the exchange of $2.0 million of secured EB-5 notes payable to a related party for 4% convertible notes in the same principal amount.
Previous wording
Interest expense, net, for the three months ended March 31, 2026 was $287,000, a decrease of $38,000, or 15.2%, from the three months ended March 31, 2025. Total interest income declined $109,000 as a result of the payoff of held to maturity debt investments, whereas the total interest expense declined by $71,000. The overall decline in interest expense corresponds to the decline in the two related party EB-5 loan balances as well as the decline in the convertible note balances as scheduled annual principal payments were made. Our interest expense in the three months ended March 31, 2026 primarily includes interest at 3% on two EB-5 loans from related parties in the United States with a total principal balance of $9.0 million at March 31, 2026, interest at 4% on convertible notes issued to former limited partners of CEF and CEF II in transactions in which former limited partners of CEF and CEF II accepted 4% convertible notes issued by SolarMax and the subsidiary that borrowed the funds from CEF with an aggregate principal balance of $15.6 million at March 31, 2026. The convertible notes issued to the former limited partners of CEF were issued as payment of the former limited partner’s capital account in CEF and were issued in connection with cancellation of debt to CEF of an equal amount. The convertible notes are secured by the same collateral as the notes to CEF. Interest was recognized at the stated interest rate of 4%. Because the Company is in default in the payment of principal and interest on convertible notes in the principal amount of $13.7 million at March 31, 2026, if the holders of the notes exercise their rights to demand prepayment, interest at 12% per annum will be due. See the paragraph Event of Default on Convertible Notes in Note 14 to Consolidated Financial Statements.
Current wording
Interest expense, net, for the three months ended June 30, 2026 was $240,000, an increase of $104,000, or 76.8%, from the three months ended June 30, 2025. Interest expense, net, for the six months ended June 30, 2026 was $527,000, an increase of $142,000, or 36.9%, from the six months ended June 30, 2025. For the three months ended June 30, 2026, total interest income declined $218,000 as a result of the payoff of held to maturity debt investments, whereas the total interest expense decreased by $114,000. For the six months ended June 30, 2026, total interest income declined $327,000 as a result of the payoff of held to maturity debt investments, whereas the total interest expense decreased by $185,000. The overall decline in interest expense corresponds to the decline in the two related party EB-5 loan balances as well as the decline in the convertible note balances as scheduled annual principal payments were made. Our interest expense in the six months ended June 30, 2026 primarily includes interest at 3% on two EB-5 loans from related parties in the United States with a total principal balance of $8.5 million at June 30, 2026, interest at 4% on convertible notes issued to former limited partners of CEF and CEF II in transactions in which former limited partners of CEF and CEF II accepted 4% convertible notes issued by SolarMax and the subsidiary that borrowed the funds from CEF with an aggregate principal balance of $16.1 million at June 30, 2026. The convertible notes issued to the former limited partners of CEF were issued as payment of the former limited partner’s capital account in CEF and were issued in connection with cancellation of debt to CEF of an equal amount. The convertible notes are secured by the same collateral as the notes to CEF. Interest was recognized at the stated interest rate of 4%. Because the Company is in default in the payment of principal and interest on convertible notes in the principal amount of $13.7 million at June 30, 2026, if the holders of the notes exercise their rights to demand prepayment, interest at 12% per annum will be due. See the paragraph Event of Default on Convertible Notes in Note 14 to Consolidated Financial Statements.
Previous wording
During the three months ended March 31, 2026, other income was $77,000 consisting primarily of foreign currency transaction gains for our United States operations intercompany receivable denominated in RMB. During the three months ended March 31, 2025, other income was $59,000 consisting primarily of $97,000 of foreign currency transaction gains for our United States operations intercompany receivable denominated in RMB.
Current wording
During the three months ended June 30, 2026, other income was $46,000 consisting primarily of foreign currency transaction gains for our United States operations intercompany receivable denominated in RMB. During the three months ended June 30, 2025, other income was $70,000 consisting primarily of $131,000 of foreign currency transaction gains for our United States operations intercompany receivable denominated in RMB, offset with a loss on a solar asset disposal in the United States segment of $65,000.
Previous wording
For the three months ended March 31, 2026 and 2025, our United States operations reported an income tax expense of $16,728 and $6,000, respectively, attributable to the Texas franchise tax and other minimum state tax liabilities.
Current wording
For the three months ended June 30, 2026 and 2025, our United States operations reported an income tax expense of $2,000 and $0, respectively, attributable to the Texas franchise tax and other minimum state tax liabilities.
Previous wording
As a result of the foregoing, we had a consolidated net loss of $0.3 million, or $(0.01) per share (basic and diluted), for the three months ended March 31, 2026, compared with a consolidated net loss of $1.3 million, or $(0.03) per share (basic and diluted), for the three months ended March 31, 2025.
Current wording
As a result of the foregoing, we had a consolidated net loss of $4.7 million, or $(0.98) per share (basic and diluted), for the three months ended June 30, 2026, compared with a consolidated net loss of $1.9 million, or $(0.50) per share (basic and diluted), for the three months ended June 30, 2025.
Previous wording
As a result of foreign currency translations, we reported net foreign currency translation gains (losses) of $13,000 and $1,000 for the three months ended March 31, 2026 and 2025, respectively.
Current wording
As a result of foreign currency translations, we reported net foreign currency translation gains (losses) of $(34,000) and $3,000 for the three months ended June 30, 2026 and 2025, respectively, and $(22,000) and $3,000 for the six months ended June 30, 2026 and 2025, respectively.
Previous wording
The following tables show consolidated cash flow information for the three months ended March 31, 2026 and 2025 (dollars in thousands):
Current wording
The following tables show consolidated cash flow information for the six months ended June 30, 2026 and 2025 (dollars in thousands):
Previous wording
Net cash used in operating activities for the three months ended March 31, 2026 was $4.2 million, compared to net cash used in operating activities for the three months ended March 31, 2025 of $601,000. The cash used by operations for the three months ended March 31, 2026, resulting from our net loss of $307,000, increases in non-cash expense of $36,000, and a net decrease of $4.6 million in cash from our operating assets and liabilities. During the three months ended March 31, 2026, our operating assets and liabilities used $4.4 million in cash, compared to $195,000 of cash used in the three months ended March 31, 2025.
Current wording
Net cash used in operating activities for the six months ended June 30, 2026 was $5.2 million, compared to net cash used in operating activities for the six months ended June 30, 2025 of $380,000. The cash used by operations for the six months ended June 30, 2026, resulting from our net loss of $5.0 million, non-cash expense of $974,000, and $1.2 million of cash used in our operating assets and liabilities.
Previous wording
Net cash used by operations for the three months ended March 31, 2025 of $601,000 resulted from net loss of $1.3 million, non-cash expense of $500,000, and $195,000 of cash used in our operating assets and liabilities.
Current wording
Net cash used by operations for the six months ended June 30, 2025 of $380,000 resulted from net loss of $3.2 million, non-cash expense of $983,000, and $1.8 million of cash provided by our operating assets and liabilities.
Previous wording
Non-cash adjustments changes for the three months ended March 31, 2026 primarily reflected:
Current wording
Non-cash adjustments changes for the six months ended June 30, 2026 primarily reflected:
Previous wording
Changes in operating assets and liabilities for the three months ended March 31, 2026:
Current wording
Changes in operating assets and liabilities for the six months ended June 30, 2026:
Previous wording
Net cash provided by investment activities for the three months ended March 31, 2026 was $548,000 consisting of debt repayments received on our held to maturity debt investments. Net cash used by investing activities for the three months ended March 31, 2025 was approximately $93,000, consisting of debt repayments received on our held to maturity debt investments.
Current wording
Net cash used by investment activities for the six months ended June 30, 2026 was $469,000 consisting of short-term advances of $2.4 million, proceeds from repayment of principal on short-term advances of $1.4 million, and debt repayments received on our held to maturity debt investments. Net cash used by investing activities for the six months ended June 30, 2025 was approximately $138,000, consisting of debt repayments received on our held to maturity debt investments.
Previous wording
Net cash used in financing activities for the three months ended March 31, 2026 was $8,000, consisting of $1.1 million of cash proceeds from the issuance of shares of common stock in private offerings, offset by $1.1 million principal payments on convertible notes, and $4,000 payment on equipment leases.
Current wording
Net cash used in financing activities for the six months ended June 30, 2026 was $11,000, consisting of $1.1 million of cash proceeds from the issuance of shares of common stock in private offerings, offset by $1.1 million principal payments on convertible notes, and $7,000 payment on equipment leases.
Previous wording
Net cash provided by financing activities for the three months ended March 31, 2025 was $377,000, consisting of $500,000 of cash proceeds from the issuance of shares of common stock in private offerings, offset by $50,000 principal payments on convertible notes, $69,000 payment of accrued legal settlement, and $4,400 payment on equipment leases.
Current wording
Net cash provided by financing activities for the six months ended June 30, 2025 was $1.6 million, consisting of $2.0 million of cash proceeds from the issuance of shares of common stock in private offerings, offset by $250,000 principal payments on convertible notes, $138,000 payment of accrued legal settlement, and $9,000 payment on equipment leases.
Previous wording
We invested $7.0 million from the proceeds of our initial public offering in an 8% promissory note issued by Webao Limited, a Hong Kong based social media company. The initial maturity was June 1, 2024 and it was extended to December 31, 2024 and further extended to December 31, 2025. The note was paid during 2025. We invested RMB 5.0 million, or approximately $688,000, in a 5% note due June 25, 2024 issued by Qingdao Xiaohuangbei Technology Co., Ltd. (“Qingdao”), a PRC-based company. The initial maturity date was extended initially to December 25, 2024 and further subsequently extended to December 31, 2025. All of the extensions were at the request of the respective makers of the notes. The note was paid in December 2025 and January 2026.
Current wording
We invested RMB 5.0 million, or approximately $688,000, in a 5% note due June 25, 2024 issued by Qingdao Xiaohuangbei Technology Co., Ltd. (“Qingdao”), a PRC-based company. The initial maturity date was extended initially to December 25, 2024 and further subsequently extended to December 31, 2025. All of the extensions were at the request of the respective makers of the notes. The note was paid in December 2025 and January 2026.
Previous wording
At March 31, 2026, our current liabilities included secured convertible notes in the principal amount of $14.1 million and secured notes to related parties of $4.0 million.
Current wording
At June 30, 2026, our current liabilities included secured convertible notes in the principal amount of $14.2 million and secured notes to related parties of $6.5 million.
Previous wording
During the three months ended March 31, 2026, we issued 2,000,000 shares of common stock, at a discount of 25% from the market price on the date of the investment, at a price of $0.55. Under the Nasdaq regulations, we may not be able to raise any significant funding from the sale of common stock at a discount from market in the near future without stockholder approval.
Current wording
In January 2026, we issued 166,667 shares of common stock, at a discount of 25% from the market price on the date of the investment, at a price of $6.576. Under the Nasdaq regulations, we may not be able to raise any significant funding from the sale of common stock at a discount from market in the near future without stockholder approval.
Previous wording
As the loans matured and the limited partners requested return of their capital contribution, we offered the limited partners, in lieu of the payment by the limited partnership, a convertible note with a term of five years, with 20% of the principal amount being due on each of the first, second, third, fourth and fifth anniversaries of the date of issuance. The notes are secured by the same assets that secured the notes issued to CEF. As of March 31, 2026, we had issued convertible notes in the principal amount of $43.5 million to former limited partners of CEF and CEF II, of which principal payments of $25.0 million had been made on the anniversary of the respective dates of issuance, and convertible notes in the principal amount of $3.0 million had been purchased by us for $2.1 million, leaving convertible notes in the principal amount of $15.6 million outstanding at March 31, 2026. As of March 31, 2026, notes to CEF and CEF II in the aggregate principal amount of $9.0 million were outstanding and convertible notes in the principal amount of $15.6 million were outstanding. The Company is in default in the payment of principal and interest on convertible notes in the principal amount of $13.7 million at March 31, 2026, and the holders of these notes have the right to demand prepayment and exercise their rights with respect to the collateral. See the paragraph Event of Default on Convertible Notes in Note 14 of Notes to Consolidated Financial Statements.
Current wording
As the loans matured and the limited partners requested return of their capital contribution, we offered the limited partners, in lieu of the payment by the limited partnership, a convertible note with a term of five years, with 20% of the principal amount being due on each of the first, second, third, fourth and fifth anniversaries of the date of issuance. The notes are secured by the same assets that secured the notes issued to CEF. As of June 30, 2026, we had issued convertible notes in the principal amount of $44.0 million to former limited partners of CEF and CEF II, of which principal payments of $25.0 million had been made on the anniversary of the respective dates of issuance, and convertible notes in the principal amount of $3.0 million had been purchased by us for $2.1 million, leaving convertible notes in the principal amount of $16.1 million outstanding at June 30, 2026. As of June 30, 2026, notes to CEF and CEF II in the aggregate principal amount of $8.5 million were outstanding and convertible notes in the principal amount of $16.1 million were outstanding. The Company is in default in the payment of principal and interest on convertible notes in the principal amount of $13.7 million at June 30, 2026, and the holders of these notes have the right to demand prepayment and exercise their rights with respect to the collateral. See the paragraph Event of Default on Convertible Notes in Note 14 of Notes to Consolidated Financial Statements.
Previous wording
We have issued 4% secured subordinated convertible notes to former limited partners of CEF and CEF II, pursuant to exchange agreements with the limited partners. The limited partners accepted the notes in lieu of cash payments of their capital contribution which resulted in a reduction of SREP’s and LED’s notes to CEF and CEF II, respectively, in the same amount, reducing the outstanding EB-5 loan balance. Payment of the notes is secured by a security interest in SREP’s and LED’s accounts and inventory, which are the same assets as secure the original note to CEF and CEF II. The convertible notes are payable in equal installments on the first, second, third, fourth and fifth anniversaries of the date of issuance. The convertible notes made prior to, or on or about the date of, our initial public offering are convertible into common stock at a conversion price of $3.20, which is 80% of our initial public offering price of $4.00 per share. The convertible notes made after our initial public offering are convertible into common stock at a conversion price equal to 80% of the average closing price of our common stock for the ten trading days preceding the date of the exchange agreement with the limited partner which conversion prices range from $0.65 to $9.07, with an average conversion price of $1.58. The convertible notes may be converted into common stock at the first, second, third, fourth and fifth anniversaries of the date of issuance, but not earlier than six months from the date of our initial public offering or for convertible notes issued after the initial public offering, six months after the issuance of the notes.
Current wording
We have issued 4% secured subordinated convertible notes to former limited partners of CEF and CEF II, pursuant to exchange agreements with the limited partners. The limited partners accepted the notes in lieu of cash payments of their capital contribution which resulted in a reduction of SREP’s and LED’s notes to CEF and CEF II, respectively, in the same amount, reducing the outstanding EB-5 loan balance. Payment of the notes is secured by a security interest in SREP’s and LED’s accounts and inventory, which are the same assets as secure the original note to CEF and CEF II. The convertible notes are payable in equal installments on the first, second, third, fourth and fifth anniversaries of the date of issuance. The convertible notes made prior to, or on or about the date of, our initial public offering are convertible into common stock at a conversion price of $38.40, which is 80% of our initial public offering price of $48.00 per share. The convertible notes made after our initial public offering are convertible into common stock at a conversion price equal to 80% of the average closing price of our common stock for the ten trading days preceding the date of the exchange agreement with the limited partner which conversion prices range from $6.06 to $108.84, with an average conversion price of $39.54. The convertible notes may be converted into common stock at the first, second, third, fourth and fifth anniversaries of the date of issuance, but not earlier than six months from the date of our initial public offering or for convertible notes issued after the initial public offering, six months after the issuance of the notes.
Previous wording
During the three months ended March 31, 2026, we recognized a gain on debt of extinguishment in the amount of approximately $40,000, relating to the issuance of convertible note in the principal amount of $1.5 million to former limited partners of CEF I and II in exchange for a $1.5 million reduction of the note from CEF I and II. No gain or loss on debt extinguishment was recognized for the three months ended March 31, 2025 as there was no issuance of convertible notes in exchange for a reduction of the note from CEF I and II.
Current wording
During the three months ended June 30, 2026, the Company recognized a gain on debt of extinguishment in the amount of approximately $13,000, relating to the issuance of convertible note in the principal amount of $500,000 to former limited partners of CEF I and II in exchange for a $500,000 reduction of the note from CEF I and II. No gain or loss on debt extinguishment was recognized for the three months ended June 30, 2025 as there was no issuance of convertible notes in exchange for a reduction of the note from CEF I and II.
Showing the first 40 of 43 pairs. Open the source sections for the rest.
Rearranged current paragraphs (5)
Current report — wording carried from elsewhere
Revenues for the six months ended June 30, 2026 were $25.1 million, an increase of $11.3 million or 81.6% from $13.8 million in the six months ended June 30, 2025. The increase resulted from revenue of $6.0 million from the large-scale EPC contract with Longfellow to develop a BESS facility in Texas, a $3.7 million increase in solar energy and battery sales, a $1.6 million increase in LED sales, offset by a $63,000 decrease in financing revenue. We did not have any large-scale EPC sales prior to the third quarter of 2025. Our revenue from residential and commercial solar energy and battery sales increased from $11.7 million for the six months ended June 30, 2025 to $15.4 million for the six months ended June 30, 2026, a 31.5% increase, primarily as a result of the sales growth related to the SGIP program for low income residential homeowners that began in the latter half of 2025. The increase in the solar energy and battery sales in the six months ended June 30, 2026 reflects a 29.8% increase in the number of systems completed and a 38.5% increase in the wattages deployed. During the six months ended June 30, 2026 and 2025, our battery only sales were $359,000 and $1.2 million, respectively. Battery sales refer to the sale of batteries sold other than as a part of a solar system.
Current report — wording carried from elsewhere
During the six months ended June 30, 2026, other income was $123,000 consisting primarily of foreign currency transaction gains for our United States operations intercompany receivable denominated in RMB. During the six months ended June 30, 2025, other income was $129,000 consisting primarily of $228,000 of foreign currency transaction gains for our United States operations intercompany receivable denominated in RMB, offset with a loss on a solar asset disposal in the United States segment of $65,000 and a foreign currency elimination adjustment of $37,000.
Current report — wording carried from elsewhere
For the six months ended June 30, 2026 and 2025, our United States operations reported an income tax expense of $19,000 and $6,000, respectively, attributable to the Texas franchise tax and other minimum state tax liabilities.
Current report — wording carried from elsewhere
As a result of the foregoing, we had a consolidated net loss of $5.0 million, or $(1.05) per share (basic and diluted), for the six months ended June 30, 2026, compared with a consolidated net loss of $3.2 million, or $(0.85) per share (basic and diluted), for the six months ended June 30, 2025.
Current report — wording carried from elsewhere
During six months ended June 30, 2026, the Company recognized a gain on debt of extinguishment in the amount of approximately $54,000, relating to the issuance of convertible note in the principal amount of $2.0 million to former limited partners of CEF I and II in exchange for a $2.0 million reduction of the note from CEF I and II. No gain or loss on debt extinguishment was recognized for the six months ended June 30, 2025 as there was no issuance of convertible notes in exchange for a reduction of the note from CEF I and II.
Rearranged previous paragraphs (1)
Previous report — wording carried elsewhere
Three Months Ended March 31, 2026*** and 2025***