Company Operations and Strategy - SUNation Energy completed a merger with Pineapple Energy LLC on March 28, 2022, and subsequently changed its name from Communications Systems, Inc. to SUNation Energy, Inc.[224] - The company divested its legacy operations by selling substantially all assets of JDL Technologies, Inc. and Ecessa Corporation on June 30, 2023, reporting these as discontinued operations[228]. - The company’s strategy focuses on acquiring and integrating local and regional solar, storage, and energy services companies nationwide[226]. - SUNation Energy offers tailored solar solutions, energy storage systems, and community solar services to enhance accessibility to renewable energy[227]. Financial Performance - Consolidated sales decreased 28.6% to $56,861,753 in 2024 from $79,632,709 in 2023, attributed to an overall industry contraction in the residential solar market[260]. - Consolidated gross profit decreased 26.2% to $20,426,244 in 2024, with a gross margin increase to 35.9% compared to 34.8% in 2023[262]. - Consolidated operating expenses decreased 6.9% to $32,743,647 in 2024, with selling, general and administrative expenses also decreasing by 6.9% to $27,054,166[263]. - Net loss from continuing operations attributable to shareholders in 2024 was $27,436,926, or ($50.58) per diluted share, compared to a net loss of $6,939,892, or ($521.89) per diluted share in 2023[265]. - SUNation sales decreased 24% to $39,733,362 in 2024, with residential contract sales down 22% due to a reduction in installed kilowatts[266]. - HEC sales decreased 37% to $17,128,391 in 2024, with residential contract sales down 36% due to a significant decrease in battery capacity installed[271]. - Consolidated other income decreased to an expense of $(4,385,777) in 2024, down from income of $646,149 in 2023[264]. Asset and Cash Flow Management - As of December 31, 2024, the Company had approximately $1,151,348 in cash, restricted cash, and cash equivalents, a decrease from $5,396,343 at December 31, 2023[274]. - The Company reported working capital of $(16,051,658) at December 31, 2024, compared to $(6,594,834) at the end of 2023, indicating a worsening liquidity position[276]. - Cash flow used in operating activities was approximately $6,302,686 in 2024, significantly higher than $667,177 used in 2023, primarily due to decreased operating profit and increased interest expense[277]. - Net cash provided by financing activities was $2,084,358 in 2024, compared to $2,760,236 used in 2023, driven by proceeds from stock issuances and borrowings[278]. - The Company raised $20.0 million in securities through a purchase agreement with institutional investors, but this was insufficient to cover all current and future obligations[281]. - Cash used in investing activities was $26,667 in 2024, a significant decrease from $3,567,278 provided in 2023, reflecting a shift in investment strategy[277]. - The Company’s current assets were approximately $11,110,385 against current liabilities of $27,162,043 at the end of 2024, highlighting a significant liquidity challenge[276]. Goodwill and Impairment - The company recorded a goodwill impairment loss of $3.1 million in the HEC segment, reducing the HEC goodwill balance to $6.7 million[255]. - The company performed an interim quantitative analysis and recorded an impairment loss of $3.1 million as of December 31, 2024, due to a material decline in stock price and forecasted revenues[255]. - The company’s goodwill impairment testing is conducted annually, with significant changes in business climate or performance potentially triggering more frequent assessments[250]. Market and Economic Conditions - As of January 3, 2025, the total market capitalization of bitcoin was approximately $1.95 trillion, with prices fluctuating between $38,000 and $108,000 per bitcoin in the preceding 12 months[232]. - The company approved a corporate treasury strategy in January 2025 to include bitcoin as a treasury reserve asset, potentially allocating a minority portion of excess cash for BTC purchases[230]. - The company believes bitcoin serves as a reliable store of value and a potential inflation hedge amid global instability[233]. Share Structure and Corporate Governance - Following the June 2024 reverse stock split, the number of shares outstanding was reduced from 108,546,773 to 7,235,731, and the total number of authorized shares was reduced to 7,500,000[237]. - The October 2024 reverse stock split reduced the number of shares outstanding from 67,260,696 to 1,344,841, with authorized shares later increased to 25,000,000[241]. - The Long-Term Promissory Note was amended to extend the maturity date to May 1, 2028, with monthly principal and interest payments commencing June 1, 2025[279]. Going Concern and Future Outlook - The Company has substantial doubt about its ability to continue as a going concern due to forecasted cash flow uncertainties and reliance on operating segments to cover corporate overhead costs[280].
Pineapple Energy (PEGY) - 2024 Q4 - Annual Report