Pineapple Energy (PEGY) - 2025 Q2 - Quarterly Report

Part I. Financial Information This section presents the unaudited condensed consolidated financial statements and management's analysis of financial condition and operations Item 1. Financial Statements (Unaudited) This section presents the unaudited condensed consolidated financial statements, including balance sheets, statements of operations, changes in equity, and cash flows, along with detailed notes explaining the company's business, accounting policies, revenue recognition, intangible assets, commitments, related party transactions, equity, income taxes, segment information, fair value measurements, and going concern status Condensed Consolidated Balance Sheets This section provides a snapshot of the company's assets, liabilities, and equity at specific reporting dates Balance Sheet Summary | Metric | June 30, 2025 | December 31, 2024 | | :----------------------------------- | :-------------- | :------------------ | | Assets | | | | Total Current Assets | $10,951,412 | $11,110,385 | | Property, Plant and Equipment, net | $1,107,372 | $1,238,898 | | Goodwill | $17,443,869 | $17,443,869 | | Intangible assets, net | $11,102,083 | $12,220,833 | | Total Assets | $44,129,850 | $45,712,732 | | Liabilities & Equity | | | | Total Current Liabilities | $12,801,792 | $27,162,043 | | Total Long-Term Liabilities | $9,226,016 | $10,003,273 | | Total Stockholders' Equity | $22,102,042 | $8,547,416 | - Total Current Liabilities significantly decreased from $27,162,043 at December 31, 2024, to $12,801,792 at June 30, 2025, primarily due to reductions in current portions of loans payable and earnout consideration[10] - Total Stockholders' Equity increased substantially from $8,547,416 at December 31, 2024, to $22,102,042 at June 30, 2025[11] Condensed Consolidated Statements of Operations This section details the company's revenues, expenses, and net loss over specific reporting periods Consolidated Statements of Operations Summary | Metric | Three Months Ended June 30, 2025 | Three Months Ended June 30, 2024 | Six Months Ended June 30, 2025 | Six Months Ended June 30, 2024 | | :------------------------------------------------- | :------------------------------- | :------------------------------- | :----------------------------- | :----------------------------- | | Sales | $13,064,254 | $13,549,420 | $25,700,892 | $26,768,617 | | Gross profit | $4,839,517 | $4,792,354 | $9,270,842 | $9,597,802 | | Operating loss | $(2,163,587) | $(2,025,944) | $(4,330,935) | $(4,208,898) | | Net loss | $(9,607,415) | $(6,934,015) | $(13,103,847) | $(5,731,364) | | Basic net loss per share | $(3.14) | $(11,022.91) | $(8.42) | $(38,216.49) | | Diluted net loss per share | $(3.14) | $(11,022.91) | $(8.42) | $(38,216.49) | - Net loss increased by $2,673,400 (38.6%) for the three months ended June 30, 2025, compared to the same period in 2024, primarily due to a significant increase in fair value remeasurement loss on warrant liability and financing fees[14][218] - Basic and diluted net loss per share improved significantly from $(11,022.91) to $(3.14) for the three months ended June 30, 2025, largely due to an increase in weighted average shares outstanding following reverse stock splits[14][44] Condensed Consolidated Statements of Changes in Redeemable Convertible Preferred Stock and Stockholders' Equity (Deficit) This section outlines changes in the company's equity, including stock issuances, warrant exercises, and reverse stock splits - Total Stockholders' Equity increased from $8,547,416 at December 31, 2024, to $22,102,042 at June 30, 2025, driven by significant issuances of common stock under registered direct offerings and Series B warrant exercises[16] Common Stock and Additional Paid-in Capital Changes (Six Months Ended June 30, 2025) | Activity | Common Stock Shares | Common Stock Amount | Additional Paid-in Capital | | :------------------------------------------ | :-------------------- | :------------------ | :------------------------- | | Balance at December 31, 2024 | 9,343 | $467 | $51,445,995 | | Issuance of common stock (registered direct offering) | 31,564 | $1,578 | $8,697,706 | | Issuance of common stock (pre-funded warrant exercises) | 55,392 | $2,770 | $8,308 | | Issuance of common stock (Series B warrant exercises) | 3,260,870 | $163,044 | $16,499,663 | | Issuance of common stock (At-the-Market sales) | 762 | $37 | $351,335 | | Issuance of common stock (settlement of loss contingencies) | 6,065 | $304 | $880,452 | | Effect of reverse stock splits | 42,614 | $2,131 | $(2,131) | | Share based compensation | — | — | $53,276 | | Balance at June 30, 2025 | 3,406,614 | $170,331 | $77,934,604 | Condensed Consolidated Statements of Cash Flows This section summarizes the company's cash inflows and outflows from operating, investing, and financing activities Cash Flow Summary (Six Months Ended June 30) | Cash Flow Activity | 2025 | 2024 | | :----------------------------------- | :------------- | :------------- | | Net cash used in operating activities | $(3,533,533) | $(3,425,726) | | Net cash used in investing activities | $(8,817) | $(11,461) | | Net cash provided by financing activities | $5,864,389 | $172,899 | | Net increase (decrease) in cash, cash equivalents and restricted cash | $2,322,039 | $(3,264,288) | | Cash, cash equivalents and restricted cash at end of period | $3,473,387 | $2,132,055 | - Net cash provided by financing activities increased significantly to $5,864,389 in the first six months of 2025, up from $172,899 in 2024, primarily due to proceeds from common stock issuances and warrant exercises[23][24] - The company experienced a net increase in cash, cash equivalents, and restricted cash of $2,322,039 in the first six months of 2025, a reversal from a decrease of $3,264,288 in the same period of 2024[24] Notes to Condensed Consolidated Financial Statements This section provides detailed explanations and disclosures supporting the condensed consolidated financial statements NOTE 1 – NATURE OF OPERATIONS This note describes the company's business, its Nasdaq listing, and the impact of recent reverse stock splits - SUNation Energy, Inc. (SUNE) is a Delaware corporation listed on Nasdaq, focused on powering the energy transition through residential solar, battery storage, and grid services, primarily through its Hawaii Energy Connection (HEC) and SUNation (New York) business units[26][27][28] - The company executed three reverse stock splits: 1-for-15 (June 2024), 1-for-50 (October 2024), and 1-for-200 (April 2025), retroactively adjusting all prior period financial statements[29][33][37][41] Impact of Reverse Stock Splits on Common Stock and Additional Paid-in Capital | Metric | June 30, 2024 (As Previously Reported) | June 30, 2024 (Impact of Reverse Stock Split) | June 30, 2024 (As Adjusted) | | :----------------------- | :------------------------------------- | :------------------------------------ | :-------------------------- | | Common Stock shares | 7,243,258 | (7,242,531) | 727 | | Common Stock amount | $362,163 | $(362,127) | $36 | | Additional Paid-in Capital | $21,520,759 | $362,127 | $21,882,886 | | Metric | December 31, 2024 (As Previously Reported) | December 31, 2024 (Impact of Reverse Stock Split) | December 31, 2024 (As Adjusted) | | :----------------------- | :------------------------------------- | :------------------------------------ | :-------------------------- | | Common Stock shares | 1,868,638 | (1,859,295) | 9,343 | | Common Stock amount | $93,432 | $(92,965) | $467 | | Additional Paid-in Capital | $51,353,030 | $92,965 | $51,445,995 | NOTE 2 – SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES This note outlines the key accounting principles, revenue recognition methods, and new accounting standards adopted by the company - The financial statements are prepared in conformity with GAAP, with certain information condensed or omitted for interim reporting, and include the accounts of the Company and its wholly-owned subsidiaries[45][46][47] - The Company classifies warrants as equity or liability based on specific terms and authoritative guidance, remeasuring liability-classified warrants to fair value at each balance sheet date with changes recognized in other income (expense)[57][58][59] - Revenue from residential contracts is recognized at the point-in-time when systems are placed into service, while commercial contracts use the percentage of completion method based on hours incurred[61][62] - New accounting standards issued by FASB, including ASU 2023-06, ASU 2023-09, ASU 2024-03, ASU 2024-04, and ASU 2025-05, are currently being evaluated for their potential impact on the consolidated financial statements[70][71][72][73][74][75] NOTE 3 – REVENUE RECOGNITION This note details the company's revenue breakdown by segment and contract type for residential, commercial, and service activities Revenue by Type (Three Months Ended June 30) | Revenue Type | SUNation 2025 | SUNation 2024 | HEC 2025 | HEC 2024 | | :------------------- | :------------ | :------------ | :------- | :------- | | Residential contracts | $8,016,690 | $8,484,744 | $2,727,495 | $3,665,952 | | Commercial contracts | $1,261,992 | $492,202 | $139,319 | $(13,143) | | Service revenue | $542,167 | $754,701 | $376,591 | $164,964 | | Total | $9,820,849 | $9,731,647 | $3,243,405 | $3,817,773 | Revenue by Type (Six Months Ended June 30) | Revenue Type | SUNation 2025 | SUNation 2024 | HEC 2025 | HEC 2024 | | :------------------- | :------------ | :------------ | :------- | :------- | | Residential contracts | $15,912,812 | $16,616,452 | $5,466,295 | $6,893,831 | | Commercial contracts | $2,537,880 | $1,489,395 | $139,319 | $(13,143) | | Service revenue | $914,711 | $1,378,770 | $729,875 | $403,312 | | Total | $19,365,403 | $19,484,617 | $6,335,489 | $7,284,000 | - SUNation's commercial contract revenue increased significantly by 156% (three months) and 70% (six months) YoY, while residential contract revenue decreased by 6% and 4% respectively[76][77][220][232] - HEC's residential contract sales decreased by 26% (three months) and 21% (six months) YoY, partly due to the end of the Battery Bonus program in Hawaii, while service revenue increased by 128% and 81% respectively[76][77][223][235] NOTE 4 – CONTRACTS IN PROGRESS This note presents the financial status of uncompleted contracts, including billings, costs, and estimated earnings Billings in Excess of Costs and Estimated Earnings | Metric | June 30, 2025 | December 31, 2024 | | :------------------------------------------------- | :-------------- | :------------------ | | Billings to date | $647,062 | $3,055,354 | | Costs incurred on uncompleted contracts | $121,498 | $1,120,213 | | Estimated earnings | $104,090 | $1,490,831 | | Costs plus estimated earnings | $225,588 | $2,611,044 | | Billings in excess of costs plus estimated earnings | $421,474 | $444,310 | Costs and Estimated Earnings in Excess of Billings | Metric | June 30, 2025 | December 31, 2024 | | :------------------------------------------------- | :-------------- | :------------------ | | Costs incurred on uncompleted contracts | $2,895,293 | $1,233,151 | | Estimated earnings | $2,802,369 | $1,219,234 | | Total costs and estimated earnings | $5,697,662 | $2,452,385 | | Billings to date | $5,093,585 | $1,891,737 | | Costs and estimated earnings in excess of billings | $604,077 | $560,648 | NOTE 5 – INTANGIBLE ASSETS This note provides details on the company's identifiable intangible assets, their net values, and estimated future amortization expenses Identifiable Intangible Assets (Net) | Asset Type | June 30, 2025 (Net) | December 31, 2024 (Net) | | :-------------------- | :------------------ | :-------------------- | | Tradenames & trademarks | $11,102,083 | $12,220,833 | | Developed technology | $0 | $0 | | Total | $11,102,083 | $12,220,833 | - Amortization expense for identifiable intangible assets decreased to $559,375 for the three months ended June 30, 2025, from $709,375 in the prior year, and to $1,118,750 for the six months ended June 30, 2025, from $1,418,750 in the prior year, primarily due to the write-down of the technology intangible asset at HEC[81][217][229] Estimated Future Amortization Expense | Period | Amount | | :------------- | :------------- | | Q3 - Q4 2025 | $1,118,750 | | 2026 | $2,237,500 | | 2027 | $2,237,500 | | 2028 | $2,237,500 | | 2029 | $2,237,500 | | Thereafter | $1,033,333 | | Total | $11,102,083 | NOTE 6 – COMMITMENTS AND CONTINGENCIES This note discloses the company's various debt agreements, credit lines, and settlements of loss contingencies - The Company entered into a $1.0 million Secured Revolving Line of Credit Agreement with MBB Energy, LLC (an affiliate) on April 14, 2025, maturing April 14, 2026, with an 8% annual interest rate; no amounts were drawn as of June 30, 2025[83][84][85] - The Hercules Term Loan Agreement was fully repaid on March 3, 2025, resulting in a loss on extinguishment of debt of $455,308[91] - The Decathlon Fixed Loan was fully repaid on March 3, 2025, resulting in a gain on extinguishment of debt of $230,924[97] - The SUNation Long-Term Promissory Note was amended on April 10, 2025, extending its maturity to May 1, 2028, and becoming a senior secured instrument with monthly principal and interest payments[101] - The unearned 2024 SUNation earnout was rescheduled into a Senior Secured Contingent Note Instrument on April 10, 2025, with a balance of $512,821 at June 30, 2025, and related compensation expense of $512,821 for the three and six months ended June 30, 2025[103][104][105] - The Conduit Capital Bridge Loan and MBB Energy Bridge Loan were both fully repaid on February 28, 2025, resulting in losses on extinguishment of debt of $57,716 and $61,370, respectively[114][123] - The Company settled $1,300,000 in accrued loss contingencies related to prior securities issuances during the first six months of 2025 by issuing common stock and cash, with no remaining balance at June 30, 2025[128] NOTE 7 – RELATED PARTY TRANSACTIONS This note outlines transactions and balances with related parties, including advances to employees and lease agreements Related Party Receivables | Metric | June 30, 2025 | December 31, 2024 | | :---------------------- | :-------------- | :------------------ | | Advances to employees | $23,039 | $23,471 | - The Company leases its Hawaii offices from a company owned by a prior HEC owner and had leased its New York office from a company owned by prior SUNation owners until September 12, 2024[130] - As of June 30, 2025, outstanding related party debt includes the SUNation Long-Term Note and the Revolving Credit Agreement; the MBB Note was paid in full in Q1 2025[131] NOTE 8 – SHARE-BASED COMPENSATION This note details the company's equity incentive plan, RSU activity, and share-based compensation expense - The 2022 Equity Incentive Plan authorizes up to 67 shares of common stock for incentive awards; as of June 30, 2025, 4 shares were issued, 3 RSUs were outstanding, and 60 shares were available for future grants[132] Changes in Restricted Stock Units (RSUs) Outstanding (Six Months Ended June 30, 2025) | Metric | RSUs | Weighted Average Grant Date Fair Value Per Share | | :-------------------------- | :--- | :--------------------------------------------- | | Outstanding – Dec 31, 2024 | 9 | $246,833.33 | | Shares Issued | (4) | $150,221.25 | | Outstanding – Jun 30, 2025 | 5 | $288,900.00 | - Share-based compensation expense was $22,461 for the three months ended June 30, 2025 (vs. $(11,583) in 2024) and $53,276 for the six months ended June 30, 2025 (vs. $185,723 in 2024)[136] NOTE 9 – EQUITY This note describes significant changes in the company's equity, including preferred stock reclassifications, warrant activities, and stock offerings - The Series A Preferred Stock was reclassified to mezzanine equity and its waiver resulted in a $751,125 deemed dividend in Q1 2024[139][140] - PIPE Warrants were reclassified from equity to liability in February 2024 due to insufficient authorized shares, resulting in a $10.6 million deemed dividend[142][143] - All 28,041 shares of Series C Preferred Stock, issued in September 2024, were converted into 6,229 shares of common stock during 2024 and are no longer outstanding[145] - The February 2025 Offering raised $20.0 million in gross proceeds across two tranches, involving common stock, pre-funded warrants, Series A warrants, and Series B warrants[149][154] - The contingent forward contract related to the second tranche of the February 2025 Offering was initially recorded as a $5,515,525 liability and derecognized on April 7, 2025, resulting in a remeasurement gain of $899,080 for the six months ended June 30, 2025[151][152][155] - Series B warrants were fully exercised in Q2 2025, resulting in the issuance of 3,260,870 common shares and a remeasurement loss of $8,025,504. Series A warrants were terminated on June 26, 2025, for a payment of $267,391, resulting in a gain of $494,460[157][158][159] NOTE 10 – INCOME TAXES This note explains the company's effective income tax rate and the potential impact of recent tax law changes Effective Income Tax Rate | Period | 2025 | 2024 | | :-------------------------------- | :--- | :--- | | Three Months Ended June 30 | (0.1%) | 0.1% | | Six Months Ended June 30 | (0.2%) | 0.0% | - The effective tax rate differs from the federal rate of 21% due to state income taxes and changes in valuation allowances related to deferred tax assets[162] - The 'One Big Beautiful Bill Act,' signed into law on July 4, 2025, includes tax law changes (e.g., restoration of immediate R&D expensing, 100% bonus depreciation) that the Company is currently evaluating for impact on its financial statements[163] NOTE 11 – SEGMENT INFORMATION This note provides financial information for the company's two reportable segments: SUNation and Hawaii Energy Connection - The Company operates two reportable segments: SUNation (New York and Florida) and Hawaii Energy Connection (HEC) (Hawaii), providing solar power, battery storage, and related services[164] - Management determined in 2024 that the two operating segments no longer met aggregation criteria due to changes in economic forecasts and integration plans, leading to distinct reportable segments[165] Segment Sales (Three Months Ended June 30) | Segment | 2025 Sales | 2024 Sales | | :-------- | :----------- | :----------- | | SUNation | $9,820,849 | $9,731,647 | | HEC | $3,243,405 | $3,817,773 | | Total | $13,064,254 | $13,549,420 | Segment Sales (Six Months Ended June 30) | Segment | 2025 Sales | 2024 Sales | | :-------- | :----------- | :----------- | | SUNation | $19,365,403 | $19,484,617 | | HEC | $6,335,489 | $7,284,000 | | Total | $25,700,892 | $26,768,617 | NOTE 12 – FAIR VALUE MEASUREMENTS This note details the company's fair value measurements for financial instruments, including cash equivalents and contingent value rights - The Company uses a three-level valuation hierarchy for fair value measurements, with Level 3 inputs requiring significant management judgment[171][172][173] Fair Value Measurements (June 30, 2025) | Financial Instrument | Level 1 | Level 2 | Level 3 | Total Fair Value | | :--------------------- | :-------- | :-------- | :-------- | :--------------- | | Cash equivalents | $1,535,022 | — | — | $1,535,022 | | Contingent value rights | — | — | $(286,630) | $(286,630) | | Total | $1,535,022 | — | $(286,630) | $1,248,392 | Fair Value Measurements (December 31, 2024) | Financial Instrument | Level 1 | Level 2 | Level 3 | Total Fair Value | | :--------------------- | :-------- | :-------- | :-------- | :--------------- | | Cash equivalents | $368,138 | — | — | $368,138 | | Contingent value rights | — | — | $(312,080) | $(312,080) | | Embedded derivative liability | — | — | $(82,281) | $(82,281) | | Earnout consideration | — | $(2,500,000) | — | $(2,500,000) | | Total | $368,138 | $(2,500,000) | $(394,361) | $(2,526,223) | - The Company recorded a remeasurement loss of $7,531,044 for the three and six months ended June 30, 2025, on warrant liability, which was settled as of June 30, 2025[187] NOTE 13 – GOING CONCERN This note addresses the substantial doubt about the company's ability to continue as a going concern and management's plans to raise capital - Substantial doubt exists about the Company's ability to continue as a going concern due to its current financial position, including restricted cash and reliance on future cash flows from operating segments to cover corporate overhead[190] - Management plans to raise additional capital through public or private equity offerings, debt financings, and/or strategic alliances, but cannot provide assurances of success[191] NOTE 14 – SUBSEQUENT EVENTS This note confirms the evaluation of events occurring after the balance sheet date, with no material disclosures required - The Company has evaluated subsequent events through the filing date and does not believe there are any material subsequent events requiring further disclosure beyond those already provided in the financial statement footnotes[192] Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations This section provides management's perspective on the Company's financial condition and results of operations, including an overview of the business, the impact of reverse stock splits, detailed analysis of operating results by segment and period, liquidity and capital resources, and critical accounting estimates. It highlights a net loss increase, significant financing activities, and ongoing concerns about the Company's ability to continue as a going concern Forward-Looking Statements This section highlights the inherent risks and uncertainties associated with the company's forward-looking statements - The report contains forward-looking statements subject to significant risks and uncertainties, including stock price volatility, dilution from additional stock issuance, anti-takeover provisions, dependence on solar installation agreements, and the need for additional capital[194] - Key risks include potential delisting from Nasdaq, claims for monetary damages, reliance on limited suppliers, impacts of tariffs and trade restrictions, changes in solar energy regulations (e.g., One Big Beautiful Bill Act), and the ability to manage growth and acquisitions[194] Overview This section provides a general description of SUNation Energy's business, strategy, and operating segments - SUNation Energy, Inc. (SUNE) is a Delaware corporation listed on Nasdaq, focused on residential solar, battery storage, and grid services, with a strategy to acquire, integrate, and grow local and regional energy services companies nationwide[197][198] - Current business units, Hawaii Energy Connection (HEC) and SUNation (New York), specialize in designing, installing, and maintaining solar energy systems for residential, commercial, and municipal sectors, also offering energy storage and residential roofing solutions[199] Reverse Stock Splits This section explains the company's recent reverse stock splits and their retroactive impact on financial reporting - The Company implemented three reverse stock splits: 1-for-15 (June 12, 2024), 1-for-50 (October 17, 2024), and 1-for-200 (April 21, 2025), which retroactively adjusted all financial periods presented[203][207][211][213] - The April 2025 reverse stock split reduced outstanding common stock from 672,799,910 to 3,406,614 shares, with fractional shares rounded up[212] Results of Operations This section analyzes the company's consolidated financial performance for the three and six months ended June 30, 2025 and 2024 Comparison of the Three Months Ended June 30, 2025 and 2024 This section compares the company's sales, gross profit, operating loss, and net loss for the three-month periods Consolidated Results (Three Months Ended June 30) | Metric | 2025 Amount | 2024 Amount | Change ($) | Change (%) | | :------------------------------------------------- | :------------ | :------------ | :--------- | :--------- | | Sales | $13,064,254 | $13,549,420 | $(485,166) | -3.6% | | Gross profit | $4,839,517 | $4,792,354 | $47,163 | 1.0% | | Operating loss | $(2,163,587) | $(2,025,944) | $(137,643) | 6.8% | | Other expense, net | $(7,429,592) | $(4,914,704) | $(2,514,888) | 51.2% | | Net loss | $(9,607,415) | $(6,934,015) | $(2,673,400) | 38.6% | - Consolidated sales decreased by 3.6% YoY, driven by a 12% decline in residential contract revenue, partially offset by a 193% increase in commercial revenue[215] - Consolidated gross margin improved to 37% in Q2 2025 from 35% in Q2 2024, primarily due to improved residential margins[216] - Consolidated other expense increased by $2,514,888, mainly due to a $4,263,473 increase in fair value remeasurement loss on warrant liability and $559,939 in financing fees, partially offset by decreases in embedded derivative liability remeasurement loss and interest expense[218] Comparison of the Six Months Ended June 30, 2025 and 2024 This section compares the company's sales, gross profit, operating loss, and net loss for the six-month periods Consolidated Results (Six Months Ended June 30) | Metric | 2025 Amount | 2024 Amount | Change ($) | Change (%) | | :------------------------------------------------- | :------------ | :------------ | :--------- | :--------- | | Sales | $25,700,892 | $26,768,617 | $(1,067,725) | -4.0% | | Gross profit | $9,270,842 | $9,597,802 | $(326,960) | -3.4% | | Operating loss | $(4,330,935) | $(4,208,898) | $(122,037) | 2.9% | | Other expense, net | $(8,744,061) | $(1,522,937) | $(7,221,124) | 474.2% | | Net loss | $(13,103,847) | $(5,731,364) | $(7,372,483) | 128.6% | - Consolidated sales decreased by 4.0% YoY, primarily due to declines in residential contract and service revenue, partially offset by increased commercial contract revenue[227] - Consolidated other expense increased significantly by $7,221,124, mainly driven by a $7,992,066 increase in fair value remeasurement on warrant liability, a $343,471 loss on debt extinguishment, and $1,136,532 in financing fees[230] - Net loss increased by 128.6% to $13,103,847 for the first six months of 2025, compared to $5,731,364 in the prior year[231] Liquidity and Capital Resources This section discusses the company's cash position, working capital, and financing activities, noting ongoing going concern doubts Liquidity Metrics | Metric | June 30, 2025 | December 31, 2024 | | :------------------------------------------------- | :-------------- | :------------------ | | Cash, restricted cash and cash equivalents | $3,473,387 | $1,151,348 (beginning of period) | | Working capital deficit | $(1,850,380) | $(16,051,658) | | Net cash used in operating activities (six months) | $(3,533,533) | $(3,425,726) | | Net cash provided by financing activities (six months) | $5,864,389 | $172,899 | - The Company's working capital deficit significantly improved from $(16,051,658) at December 31, 2024, to $(1,850,380) at June 30, 2025[240] - Net cash provided by financing activities increased substantially in the first six months of 2025 to $5,864,389, driven by $17,871,964 in net proceeds from common stock issuances and $351,372 from at-the-market offerings, partially offset by debt and contingent consideration payments[243] - Despite recent capital raises and debt repayments, substantial doubt remains about the Company's ability to continue as a going concern, as future cash flows rely on operating segments covering corporate overhead costs[245] Contingent Value Rights and Impact on Cash This section explains the contingent value rights liability and its restriction on the company's cash usage - The CVR liability was estimated at $286,630 as of June 30, 2025, representing the fair value of legacy CSI assets to be distributed to CVR holders[248] - Funds restricted under the CVR agreement ($286,630) cannot be used for the SUNation Energy business's working capital needs[239][248] Critical Accounting Estimates This section confirms no changes to the company's critical accounting estimates from its prior annual report - There have been no changes to the Company's critical accounting estimates as described in its Annual Report on Form 10-K for the year ended December 31, 2024[249] Recently Issued Accounting Pronouncements This section refers to Note 2 for details on new accounting standards and their potential financial statement impact - Information on recently issued accounting standards and their estimated effect on the Company's condensed consolidated financial statements is described in Note 2, Summary of Significant Accounting Policies[250] Item 3. Quantitative and Qualitative Disclosures about Market Risk This section states that there are no applicable quantitative and qualitative disclosures about market risk for the Company - The Company states that this item is not applicable[251] Item 4. Controls and Procedures This section details the evaluation of the Company's disclosure controls and procedures, identifying material weaknesses in internal control over financial reporting due to limited accounting and finance resources. It outlines a remediation plan, including implementing a new ERP system, and acknowledges the inherent limitations of control systems Evaluation of Disclosure Controls and Procedures This section details management's conclusion on the effectiveness of the company's disclosure controls and procedures - Management concluded that the Company's disclosure controls and procedures were not effective as of June 30, 2025, due to material weaknesses in internal control over financial reporting[254] Material Weakness in Internal Control over Financial Reporting This section identifies material weaknesses in the company's internal control over financial reporting due to resource limitations - Material weaknesses were identified due to limited accounting and finance resources, leading to inappropriate preparation, review, and maintenance of critical documentation and information for internal controls[256] - These weaknesses could result in a reasonable possibility of material misstatement in annual or interim financial statements not being prevented or detected timely[256] Remediation Plan This section outlines the company's strategy to address and remediate identified material weaknesses in internal controls - The Company is formalizing a remediation plan to address limited resources, including implementing a new Enterprise Resource Planning (ERP) system to enhance control environment, segregation of duties, user permissions, and automated processes[257] - Remediation efforts are ongoing and require validation and testing; additional analyses and procedures will be performed until weaknesses are fully remediated[257] Inherent Limitations on Control Systems This section acknowledges the intrinsic limitations of any control system, preventing absolute assurance against all potential issues - Control systems have inherent limitations, meaning absolute assurance against all control issues, fraud, or misstatements cannot be provided due to faulty judgments, simple errors, circumvention by individuals or collusion, or management override[258] Changes in Internal Controls over Financial Reporting This section reports on any changes in internal control over financial reporting during the period - No changes in internal control over financial reporting occurred during the three months ended June 30, 2025, that materially affected or are reasonably likely to materially affect internal control over financial reporting[259] - As reported in the Annual Report on Form 10-K for 2024, the Company's internal control over financial reporting was concluded to be ineffective[259] Part II. Other Information This section covers legal proceedings, risk factors, equity sales, defaults, mine safety, and other miscellaneous disclosures Item 1. Legal Proceedings This section states that there are no updates to the legal proceedings previously reported in the Company's annual report on Form 10-K - There are no updates to the legal proceedings previously reported in the Company's annual report on Form 10-K filed on April 15, 2025[261] Item 1A. Risk Factors This section updates the risk factors, highlighting new or changed risks related to regulatory changes in the solar energy sector, potential Nasdaq delisting, and the need for substantial additional financing. It emphasizes the impact of the 'One Big Beautiful Bill Act' on tax credits and the ongoing challenges in securing capital for operations and growth - The 'One Big Beautiful Bill Act,' signed into law on July 4, 2025, accelerates phase-outs and terminations of various tax credits from the Inflation Reduction Act, potentially reducing demand for solar energy systems and harming the business[264] - The Company's shares are subject to potential delisting from the Nasdaq Capital Market if listing requirements are not maintained, although the Company was found in compliance with the Minimum Bid Price and Public Interest Concern rules as of June 10, 2025[265][269] - The Company requires substantial additional financing for working capital and growth, with the 'One Big Beautiful Bill Act' adding complexity to operating and finance costs and impacting the availability of tax credits for residential customers[272] - Inability to secure financing on acceptable terms could materially adversely impact the business, liquidity, financial condition, and growth prospects, potentially leading to delays in installations or business expansion[274][276] - Litigation, including claims for breach of contract or contractual defaults, may be costly and time-consuming, diverting management's attention and potentially resulting in significant monetary damages or injunctive relief[277][278] Item 2. Unregistered Sales of Equity Securities and Use of Proceeds This section states that there are no applicable disclosures regarding unregistered sales of equity securities and use of proceeds - This item is not applicable[281] Item 3. Defaults Upon Senior Securities This section states that there are no applicable disclosures regarding defaults upon senior securities - This item is not applicable[281] Item 4. Mine Safety Disclosures This section states that there are no applicable disclosures regarding mine safety - This item is not applicable[281] Item 5. Other Information This section confirms that no directors or officers adopted, modified, or terminated any Rule 10b5-1 trading arrangements or non-Rule 10b5-1 trading arrangements during the three months ended June 30, 2025 - No directors or officers adopted, modified, or terminated any Rule 10b5-1 trading arrangements or non-Rule 10b5-1 trading arrangements during the three months ended June 30, 2025[281] Item 6. Exhibits This section lists the exhibits filed with the Form 10-Q, including certifications (31.1, 31.2, 32) and Inline XBRL documents (101.INS, 101.SCH, 101.CAL, 101.DEF, 101.LAB, 101.PRE, 104) - The exhibits include certifications (31.1, 31.2, 32) and various Inline XBRL documents (101.INS, 101.SCH, 101.CAL, 101.DEF, 101.LAB, 101.PRE, 104)[282] SIGNATURES CERTIFICATIONS This section contains the required signatures and certifications for the financial report