SolarMax Technology (SMXT) FY2025 10-K Risk Factors: 5 New, 45 Dropped

What the changes say

SolarMax faces mounting debt defaults, working capital deficits, and Nasdaq delisting warnings amidst new BESS project execution risks.

What changed since the prior 10-K

New

NewRisks Related to Our Business
We are in default on $14.3 million principal amount of our convertible notes, which may result in the acceleration of the notes, and we will require funds to pay the notes
We are in default on $14.3 million of convertible notes, risking immediate cash acceleration and foreclosure on SREP and LED subsidiary collateral.
NewRisks Related to Our Business
We cannot assure you that we will be able to operate our BESS systems business profitably
We entered four fixed-price BESS EPC contracts totaling zero completed projects, threatening profitability and future contract acquisition if we miss budgets.
NewRisks Related to Our Business
The effects of inflation and supply side issues with respect to polysilicon are described in the preceding risk factor
Residential solar system unit costs rose 20% while selling prices increased only 13%, compressing margins due to inflation and competitive limits.
NewRisks Related to our Common Stock
Because the price of our common stock on Nasdaq is less than $1.00 per share, we have received a notice from Nasdaq that we do not meet the continued listing requirement that our stock price maintain a minimum bid price of $1.00
We received a Nasdaq notice on March 3, 2026, for failing to maintain the $1.00 minimum bid price, giving us until August 31, 2026, to comply.
NewRisks Related to our Common Stock
The price of our common stock may be affected by a number of factors
Our common stock price is vulnerable to perceptions of our Nasdaq compliance, debt defaults, BESS profitability, and equity financing terms.

Dropped

DroppedRisks Related to Our Business
Our revenue declined significantly from 2023 to 2024, our cash flow from operations went from $4.0 million in 2023 to negative $9.4 million in 2024, and we cannot operate profitably unless we increase our revenue and reduce our expenses
DroppedRisks Related to Our Business
Although we are seeking to market sales of larger systems to commercial users both in California and in other states; we cannot assure you that we will be successful
Revenue drop from $54.1 million to $23.0 million and negative $9.4 million operating cash flow.
DroppedRisks Related to Our Business
We may have to manage the project after completing the construction
DroppedRisks Related to Our Business
We invested $7.7 million from the proceeds of our initial public offering in promissory notes issued by private companies in Hong Kong and China, and such notes were extended at the request of the maker and are outstanding on the date of this annual report
Commercial system sales expansion plans lack agreements and unproven U.S. execution.
DroppedRisks Related to Our Business
Our business is subject to the effects of inflation and has been subject to supply chain issues
Refinancing risk for EB-5 government program loans funding past projects.
DroppedRisks Related to Our Business
If we recommence business in China, our China segment requires significant funding in connection with project construction
DroppedRisks Related to Our Business
We may not be successful in developing our solar farm project business in China
DroppedRisks Related to Our Business
address any changes resulting from weather or climate conditions, earthquakes, unexpected construction difficulties, changes in the buyer’s specifications or other changes beyond our control
DroppedRisks Related to Our Business
Delays in construction of solar farms could increase our costs and impair our revenue stream from our China operations
$7.7 million IPO proceeds invested in Hong Kong and China promissory notes.
DroppedRisks Related to Doing Business in China
Changes in the PRC Government policies on solar power and industry conditions as well as changes in the trade relationship between the United States and China could affect our ability to generate business in China
DroppedRisks Related to Doing Business in China
The transfer of funds between our United States and China segments is subject to restriction
DroppedRisks Related to Doing Business in China
Because one customer in China has represented substantially all of our of our revenue from our China segment, we need to develop new clients if we are to generate revenue from our China segment
DroppedRisks Related to Doing Business in China
Our business in both the United States and China is dependent on the continuation of government benefits, and no assurance can be given that such benefits will be continued
DroppedRisks Related to Doing Business in China
California legislation has reduced the formula for paying the resident for selling us used power to the local utility, which affects the benefits to the residential homeowner and may affect their willingness to have solar systems installed which may affect our pricing, our sales and our gross margin
DroppedRisks Related to Doing Business in China
In China, we would compete with other companies for a limited number of available permits
DroppedRisks Related to Doing Business in China
Because of the cost of construction of the solar farms, we are likely to require financing in order to complete projects in China, and the inability to obtain such financing may impair our ability to generate contracts for solar farm projects in China
DroppedRisks Related to Doing Business in China
Because our business in China would involve the construction of large projects for a small number of customers; we do not have an ongoing revenue base and needs to obtain new customers
DroppedRisks Related to Doing Business in China
Because of the amount of land required for a solar farm, it may be difficult to obtain the necessary land use rights, which may increase the cost of the land
DroppedRisks Related to Doing Business in China
The economics of a solar farm are affected by the money that solar farm owners receive from utility companies
DroppedRisks Related to Doing Business in China
Changes in solar farm delivery schedules and order specifications may affect our revenue stream and gross margin
DroppedRisks Related to Doing Business in China
Our China revenues may be affected by weather conditions, including climate changes, in certain provinces of China
DroppedRisks Related to Doing Business in China
Subject us to remedies, administrative penalties and even criminal liabilities that may harm our business, including fines assessed for our current or historical operations, or demands or orders that we modify or even cease our business practices
DroppedRisks Related to Doing Business in China
Changes in the policies of the PRC government could have a significant impact on our operations in China and the profitability of our business
DroppedRisks Related to Doing Business in China
A slowdown or other adverse developments in the PRC economy may harm our customers and the demand for our products
DroppedRisks Related to Doing Business in China
Future inflation in China may inhibit the profitability of our business in China
DroppedRisks Related to Doing Business in China
The fluctuation of the RMB may have a material adverse effect on your investment
DroppedRisks Related to Doing Business in China
Restrictions on currency exchange may limit our ability to receive and use our revenue effectively
DroppedRisks Related to Doing Business in China
Our Chinese subsidiaries are subject to restrictions on making dividend and other payments to it
DroppedRisks Related to Doing Business in China
Because we must comply with the Foreign Corrupt Practices Act, we may face a competitive disadvantage in competing with Chinese companies that are not bound by those prohibitions
DroppedRisks Related to Doing Business in China
Uncertainties with respect to the PRC legal system could have a material adverse effect on us
General inflation and supply chain issues affecting business operations.
DroppedRisks Related to Doing Business in China
The PRC’s legal and judicial system may not adequately protect our business and operations and the rights of our investors
DroppedRisks Related to Doing Business in China
Substantial uncertainties exist with respect to the interpretation and implementation of the newly enacted PRC Foreign Investment Law and how it may impact the viability of our current corporate structure, corporate governance, business operations and financial results
DroppedRisks Related to Doing Business in China
Non-compliance with labor-related laws and regulations of the PRC may have an adverse impact on our financial condition and results of operation
DroppedRisks Related to Doing Business in China
PRC regulation of direct investment by offshore holding companies to PRC entities may delay or prevent us from making additional capital contributions to our PRC subsidiaries and affiliated entities, which could impair our liquidity and our ability to fund and expand our business
DroppedRisks Related to Doing Business in China
Under Chinese law, our Chinese subsidiaries are limited in their ability to pay dividends to us, which may impair our ability to pay dividends and to fund our United States segment in the future
DroppedRisks Related to Doing Business in China
A failure by the beneficial owners of our common stock who are PRC residents to comply with certain PRC foreign exchange regulations may restrict our ability to distribute profits, restrict our overseas and cross-border investment activities and subject us to liability under PRC law
DroppedRisks Related to Doing Business in China
Certain PRC regulations, including the M&A Rules and national security regulations, may require a complicated review and approval process which could make it more difficult for us to pursue growth through acquisitions in China
DroppedRisks Related to Doing Business in China
Under the new Enterprise Income Tax Law, we may be classified as a "resident enterprise” of China. Such classification could result in unfavorable tax consequences to us and our non-PRC stockholders
DroppedRisks Related to Doing Business in China
Because we require a license to engage in the EPC business in China, any changes in the certification or qualification requirements could impair our ability to operate in China
China segment funding requirements for SPIC or other project construction agreements.
DroppedRisks Related to Doing Business in China
If we import polysilicon into China from the United States or South Korea, our gross margin may be impaired
China solar farm development hurdles including buyer negotiation and permits.
DroppedRisks Related to Doing Business in China
We may fail to comply with laws and regulations regarding the development, construction and operation of solar power projects and photovoltaic production projects in China
Weather, earthquakes, and U.S.-company constraints impacting China project execution.
DroppedRisks Related to Doing Business in China
Failure to comply with PRC regulations regarding the registration of share options held by our employees who are "domestic individuals” may subject such employee or us to fines and legal or administrative sanctions
China solar farm construction delays increasing costs and impairing revenue streams.
DroppedRisks Related to Doing Business in China
We face uncertainties on the reporting and consequences of private equity financing transactions, private share exchange transactions and private transfer of shares, including private transfer of public shares, in our company by non-resident investors
DroppedRisks Related to Doing Business in China
Regulatory bodies of the United States may be limited in their ability to conduct investigations or inspections of our operations in China
DroppedRisks Related to our Common Stock
If our stock price falls, we may be delisted from Nasdaq which would have a material adverse effect on the price and market for our common stock, and you could lose all or part of your investment

Reworded

86% rewrittenRisks Related to Our Business
We did not generate any revenue for our Chinese segment since 2021 and we cannot assure you that we will not have to discontinue our Chinese operations
Updated to state we have zero agreements, negotiations, or marketing in China since 2021, and discontinuing operations remains possible.
77% rewrittenRisks Related to Our Business
We have a working capital deficit of $20.4 million at December 31, 2025 and require substantial funding for our operations
Working capital deficiency worsened to $20.4 million at December 31, 2025; BESS operations generated $60.2 million with $56.6 million in related payables.
Was: We have a working capital deficit of $13.7 million at December 31, 2024 and require funding for our operations
76% rewrittenRisks Related to Our Business
Because we provide a production guarantee for some solar systems in California, we may incur additional costs if the output of our systems does not meet the required minimums
Retained the California residential solar production guarantee risk where shortfalls below 95% require customer reimbursement regardless of weather.
68% rewrittenRisks Related to Our Business
We require significant funds to pay our other debt obligations, including obligations to management
Updated CEO deferred compensation repayment schedule to twelve monthly installments commencing December 31, 2025, and added default context.
Was: We require significant funds to pay our debt obligations, including obligations to management
57% rewrittenRisks Related to Our Business
require specific disclosures and the use of special contract forms
Added explicit warning that non-compliance with home improvement contract sales laws risks civil and criminal penalties.
51% rewrittenRisks Related to Our Business
We sustained losses since our organization, our financial statements have a going concern footnote and we cannot assure you that we can or will operate profitably
Net loss narrowed to $6.3 million for 2025 with a going concern footnote, compared to $35.0 million in 2024.
33% rewrittenRisks Related to Our Business
Our business would be impaired if we lose our licenses, if more stringent government regulations are enacted or if we fail to comply with the growing number of regulations pertaining to solar energy and consumer financing industries
Removed mention of SolarMax Financial and streamlined consumer credit regulation compliance references.
28% rewrittenRisks Related to Our Business
changes in customer demands for solar energy systems
Added historical note that 2021 was the last year of China revenue, occurring entirely in the second quarter.
28% rewrittenRisks Related to Our Business
Changes in net metering regulations in California is likely to result has resulted in a reduced level of benefits, which is impairing the market for residential solar products
Was: Changes in net metering regulations in California is likely to result in a reduced level of benefits, which is impairing the market for residential solar products
26% rewrittenRisks Related to Our Business
We may require significant capital both to acquire and to operate the business, and the capital requirements of the business may be greater than we anticipated. Our failure to obtain capital on reasonable terms may impair the value of the acquisition and may impair our continuing operations

All 53 risk factors

Headings as the filing states them, in filing order.

Risks Related to Our Business

01We sustained losses since our organization, our financial statements have a going concern footnote and we cannot assure you that we can or will operate profitably51% rewritten
02We have a working capital deficit of $20.4 million at December 31, 2025 and require substantial funding for our operations77% rewritten
03We are in default on $14.3 million principal amount of our convertible notes, which may result in the acceleration of the notes, and we will require funds to pay the notesNew
04We cannot assure you that we will be able to operate our BESS systems business profitablyNew
05We require significant funds to pay our other debt obligations, including obligations to management68% rewritten
06We did not generate any revenue for our Chinese segment since 2021 and we cannot assure you that we will not have to discontinue our Chinese operations86% rewritten
07Our failure to control our costs could impair our financial results
08Changes in utility regulations and pricing could impair the market for our products
09Our business may be affected by increases in the price of solar energy products, including price increases resulting from the United States’ trade and tariff policies and the war against Iran
10Changes in net metering regulations in California is likely to result has resulted in a reduced level of benefits, which is impairing the market for residential solar products28% rewritten
11We may be subject to cybersecurity risks
12We may be subject to liability if private information that we receive is not secure or if we violate privacy laws and regulations
13Pandemics and epidemics, natural disasters, war, terrorist activities, political unrest, the relationship between China and the United States and other outbreaks could disrupt our delivery and operations, which could materially and adversely affect our business, financial condition, and results of operations
14Our business would be impaired if we lose our licenses, if more stringent government regulations are enacted or if we fail to comply with the growing number of regulations pertaining to solar energy and consumer financing industries33% rewritten
15require specific disclosures and the use of special contract forms57% rewritten
16A material decrease in the retail price of electricity from the local utility company or from other sources would affect our ability to generate revenues
17Changes in regulations relating to fossil fuel can impact the market for renewable energy, including solar
18Solar energy and other forms of renewable energy compete with other forms of energy and the attractiveness of solar energy reflects the cost of electricity from the local grid
19Within the solar energy market, we face intense and increasing competition in the market of solar energy system providers, which exposes us to the risk of reduction of our market penetration and of our gross margin
20The results of our operations may vary significantly from quarter to quarter
21changes in customer demands for solar energy systems28% rewritten
22Because we are dependent on our chief executive officer, the loss of his services and our failure to hire additional qualified key personnel could harm our business
23In order to develop our business, we need to identify, hire and retain qualified sales, installation and other personnel
24Although our employees in the United States are co-employed by a professional employer organization, we may be liable for the failure of the organization to comply with our obligations under applicable law
25Since we act as a general contractor in the United States, we face typical risks of a construction company
26Compliance with occupational safety and health requirements and best practices can be costly, and noncompliance with such requirements may result in potentially significant monetary penalties, operational delays and adverse publicity
27The availability and price of silicon raw materials may affect our gross margins and profitability
28The effects of inflation and supply side issues with respect to polysilicon are described in the preceding risk factorNew
29Because we derive most of our residential solar system revenue from sales of our solar energy systems in California, we depend on the economic and regulatory climate and weather and other conditions in California
30Because we provide a production guarantee for some solar systems in California, we may incur additional costs if the output of our systems does not meet the required minimums76% rewritten
31Our warranty costs may exceed our warranty reserve
32Because of the rapid development of solar panels and other components for solar systems, we may be subject to inventory obsolescence
33If we seek to expand our business through acquisition, we may not be successful in identifying acquisition targets or integrating their businesses with our existing business
34If we identify an acquisition, we may face competition from other companies in the industry or from financial buyers in seeking to make the acquisition
35Any indemnification obligations of the seller under the purchase agreement may be inadequate to compensate us for any loss, damage or expense which we may sustain, including undisclosed claims or liabilities
36We may require significant capital both to acquire and to operate the business, and the capital requirements of the business may be greater than we anticipated. Our failure to obtain capital on reasonable terms may impair the value of the acquisition and may impair our continuing operations26% rewritten
37Our business is largely dependent upon government subsidies and incentives
38United States trade policy affects our ability to purchase domestic solar panel and pricing generally
39Two of our directors are located outside of the United States; therefore, investors may not be able to enforce federal securities laws or their other legal rights against those directors located outside the United States

Risks Related to our Common Stock

40An active, liquid and orderly trading market for our common stock may not be maintained, and our stock price is volatile
41Because the price of our common stock on Nasdaq is less than $1.00 per share, we have received a notice from Nasdaq that we do not meet the continued listing requirement that our stock price maintain a minimum bid price of $1.00New
42The price of our common stock may be affected by a number of factorsNew
43general economic conditions and slow or negative growth of our markets
44Our amended and restated articles of incorporation and amended and restated bylaws and our employment agreement with our chief executive officer, as well as Nevada law, contain provisions that could discourage acquisition bids or merger proposals, which may adversely affect the market price of our common stock
45providing that the board of directors is expressly authorized to adopt, or to alter or repeal our bylaws; and
46Provisions of our bylaws and Nevada law could deter a change of our management, which could discourage or delay offers to acquire us
47A portion of the compensation to our senior executive officers may not be deductible, which may increase our taxes
48Because our bylaws limit the court in which you may bring an action against us, you may have difficulty enforcing any rights which you may claim
49Because we do not intend to pay dividends on our common stock for the foreseeable future, your only opportunity to achieve a return on your investment is if the price of our common stock appreciates
50Future sales of our common stock in the public market could reduce our stock price, and any additional capital raised by us through the sale of equity or convertible securities may dilute your ownership in us
51We may issue preferred stock whose terms could adversely affect the voting power or value of our common stock
52For as long as we are an emerging growth company, we will not be required to comply with certain reporting requirements, including those relating to accounting standards and disclosure about our executive compensation, that apply to other public companies
53Because our directors and executive officers own or have the right to vote approximately 20.9% of our outstanding common stock, they may be able to elect all directors, approve all matters requiring stockholder approval and block any action which may be beneficial to stockholders

Other SolarMax Technology 10-Ks

FY2024 10-K risk factors
93 risks
SolarMax Technology faces heavy going concern doubts after a $35.0 million net loss and revenue drop to $23.0 million in 2024. Operations burned $9.4 million in cash, leaving a $13.7 million working capital deficit. Debt includes $11.0 million in EB-5 related party loans and $16.55 million in convertible notes. Heavy geographic concentration in California exposes the company to local net metering and utility regulatory changes.
Filed Mar 31, 2025

About this page

The headings are the filing's own. The one-line readings and the overview are automated and can be wrong: read Item 1A of the 10-K for the exact wording.