SolarMax Technology(SMXT) - 2025 Q3 - Quarterly Report

Financial Performance - Total revenues for the three months ended September 30, 2025, were $30,602,588, a significant increase from $6,331,606 in the same period of 2024, representing a growth of approximately 384%[18] - Gross profit for the nine months ended September 30, 2025, was $2,979,840, compared to $1,381,015 for the same period in 2024, indicating a year-over-year increase of about 116%[20] - Net loss for the three months ended September 30, 2025, was $(2,258,104), compared to a net loss of $(9,622,730) for the same period in 2024, showing an improvement of approximately 77%[23] - Operating income (loss) for the nine months ended September 30, 2025, was $(5,032,430), a reduction in loss compared to $(31,307,614) for the same period in 2024, indicating a 84% improvement[20] - For the nine months ended September 30, 2025, the net income (loss) was $(5,453,123), compared to a net loss of $(31,058,741) for the same period in 2024, indicating an improvement in financial performance[32] Assets and Liabilities - Total current assets as of September 30, 2025, reached $42,058,853, up from $20,949,859 as of December 31, 2024, reflecting a growth of approximately 100%[16] - Total liabilities increased to $70,442,570 as of September 30, 2025, compared to $53,708,833 as of December 31, 2024, marking an increase of about 31%[16] - Total stockholders' deficit improved to $(11,779,570) as of September 30, 2025, from $(15,078,942) as of December 31, 2024, indicating a reduction in deficit of about 22%[16] - The company reported a working capital deficit of approximately $15.4 million and an accumulated deficit of approximately $109.0 million as of September 30, 2025[49] Cash Flow and Liquidity - Cash and cash equivalents increased to $5,720,283 as of September 30, 2025, from $786,333 as of December 31, 2024, representing a growth of approximately 627%[16] - Cash provided by operating activities for the nine months ended September 30, 2025, was $3,016,939, a notable recovery from $(7,818,595) in the prior year[32] - The total cash, cash equivalents, and restricted cash at the end of the period was $5,999,739, up from $1,151,868 at the end of September 2024[32] - The company has a principal source of liquidity consisting of approximately $5.7 million in cash and cash equivalents as of September 30, 2025[50] Revenue Sources - Revenue from the EPC services contract accounted for approximately 54% of total revenues for the nine months ended September 30, 2025, and 78% for the three months ended September 30, 2025[38] - The company has not generated any revenue from its China segment since 2021, with all revenue for the nine months ended September 30, 2025, coming from the U.S. segment[39] - Sales from solar energy and battery storage systems on a non-installment basis reached $26,587,233 for the three months ended September 30, 2025, compared to $3,493,895 in 2024, marking a growth of about 661%[138] Debt and Financing - The company is seeking to exchange approximately $16.5 million of debt due in the next twelve months for five-year convertible notes[50] - The company raised approximately $7.2 million from the sale of common stock at a 25% discount from market during the nine months ended September 30, 2025[50] - The company recognized a loss from debt extinguishment of $675,676 in July 2025 related to the cancellation of a $2 million unsecured promissory note, which was exchanged for 2,702,703 shares at $0.74 per share, a 25% discount[169] Customer and Supplier Concentration - One major customer, Longfellow, contributed $24.1 million, or 54.2% of total revenues for the nine months ended September 30, 2025, indicating significant customer concentration risk[194] - One supplier accounted for $23.2 million, or 46.2% of total purchases during the nine months ended September 30, 2025, highlighting reliance on key suppliers[195] Inventory and Receivables - The net inventory as of September 30, 2025, is $1,611,965, an increase from $1,302,568 as of December 31, 2024, showing a growth of approximately 23.7%[158] - The total inventories gross increased to $2,255,903 as of September 30, 2025, from $1,944,865 at the end of 2024, an increase of approximately 16%[158] - The allowance for credit losses for accounts receivable increased to $56,555 for the nine months ended September 30, 2025, compared to $52,442 in 2024, indicating a rise in credit risk management[142] Operational Expenses - The company reported total operating expenses of $11,284,645 for the nine months ended September 30, 2025, down from $32,688,629 in the same period of 2024, a decrease of about 65%[20] - Advertising and marketing costs for the three months ended September 30, 2025, were approximately $146,000, compared to $140,000 for the same period in 2024[118] Tax and Regulatory Matters - The Company accounts for income taxes under ASC Topic 740, recognizing deferred tax assets and liabilities based on future tax consequences[119] - The Company has recorded a full valuation allowance against its deferred tax assets related to U.S. operations, indicating they are unlikely to be realized[120] Management and Governance - The annual salary for the CEO is $760,062 for 2025, reflecting a 3% increase from the previous year[209]