Financial Performance - Total revenues for the three months ended September 30, 2024, were $6,331,606, a decrease from $14,273,607 in the same period of 2023, representing a decline of approximately 55.7%[14] - Gross profit for the three months ended September 30, 2024, was $1,257,339, compared to $4,048,351 for the same period in 2023, indicating a decrease of about 68.9%[14] - Operating loss for the three months ended September 30, 2024, was $(10,027,306), compared to an operating income of $920,449 in the same period of 2023[14] - Net loss for the three months ended September 30, 2024, was $(9,622,730), compared to a net income of $1,465,363 for the same period in 2023[15] - The company reported a comprehensive loss of $(9,449,481) for the three months ended September 30, 2024, compared to a comprehensive income of $1,422,833 for the same period in 2023[15] - Net income loss for the nine months ended September 30, 2024, was $(31,058,741), compared to a net income of $349,883 for the same period in 2023[21] - Total revenues for the nine months ended September 30, 2024, were $16,549,981, down 60.5% from $41,895,547 in 2023[99] - Sales from solar energy and battery storage systems for the three months ended September 30, 2024, were $5,131,970, a decrease of 61.5% compared to $13,325,437 in 2023[99] Assets and Liabilities - Total current assets increased to $24,169,234 as of September 30, 2024, from $19,921,585 as of December 31, 2023, reflecting an increase of approximately 21.2%[11] - Total liabilities decreased to $53,983,195 as of September 30, 2024, from $64,543,029 as of December 31, 2023, representing a reduction of about 16.4%[12] - Cash and cash equivalents decreased to $871,415 as of September 30, 2024, from $2,539,312 as of December 31, 2023, a decline of approximately 65.7%[11] - Total stockholders' deficit improved to $(10,937,624) as of September 30, 2024, from $(15,887,828) as of December 31, 2023[13] - The accumulated deficit increased to $(99,682,710) as of September 30, 2024, compared to $(68,708,872) at the end of September 2023[20] - The company has a working capital deficit of approximately $13.6 million and an accumulated deficit of approximately $99.7 million as of September 30, 2024[36] Cash Flow and Investments - Cash used in operating activities for the nine months ended September 30, 2024, was $(7,818,595), a significant increase from $(389,194) in the same period of 2023[21] - The company reported a net cash used in investing activities of $(7,691,905) for the period[22] - The net cash provided by financing activities was $13,855,534, primarily from the initial public offering which generated net proceeds of approximately $18.6 million[22][28] - As of September 30, 2024, the company had a cash balance of $1,151,868, down from $4,191,670 at the beginning of the year[23] Goodwill and Impairments - The company experienced a goodwill impairment of $7,463,775 during the reporting period[21] - The company recognized a goodwill impairment charge of $7.5 million related to its China segment due to the absence of revenue generation since 2022[26] - The company recognized a goodwill impairment loss of $7.5 million for the nine months ended September 30, 2024, due to economic downturns in China, with no impairment loss recognized for the same period in 2023[53] Stock and Compensation - Total stock-based compensation for the period was $18,536,184, reflecting an increase in expenses related to stock options and restricted stock[21] - The company recognized a compensation cost of $18.5 million related to performance-based stock options due to the completion of its initial public offering[191] - The number of outstanding stock options as of September 30, 2024, was 6,197,741, with a weighted average exercise price of $4.93[189] Revenue Recognition - Revenue is recognized based on the transfer of control over products or services, with EPC services revenue recognized over time as performance obligations are satisfied[78][79] - The Company uses cost-based input methods for revenue recognition, reflecting actual costs incurred relative to total estimated costs for contract completion[81] - For solar energy and battery storage system sales, revenue is recognized over time as the Company fulfills its performance obligations[88] - The Company recognizes revenue from LED product sales upon delivery, with payment generally due upon delivery or within 30 days[93][94] Market and Operational Challenges - The implementation of NEM 3.0 resulted in a 75% reduction in export rates, negatively affecting the return on investment for solar customers[207] - Approximately 25% of the residential solar system design and installation team was laid off in January 2024 due to decreased demand following NEM 3.0[208] - The company has significant doubt about its ability to continue as a going concern due to recurring operating losses and negative cash flows[35][38] Segment Information - The company operates in two segments: U.S. and PRC, with separate financial information evaluated by the executive team for resource allocation[111] - The U.S. segment reported a loss of $23,645,850 for the nine months ended September 30, 2024, compared to a loss of $488,464 in the same period of 2023[193] Tax and Compliance - The effective income tax rate for the nine months ended September 30, 2024, was 0.2%, significantly lower than 29.8% for the same period in 2023[194] - The company faces noncompliance with Nasdaq listing standards, including a minimum market value of $50 million and a minimum bid price of $1 per share[209]
SolarMax Technology(SMXT) - 2024 Q3 - Quarterly Report