DEF: SolarMax Schedules 2025 Annual Meeting Amid Going Concern Warning

Sentiment:

Definitive Proxy Statement 14 October 2025 6:01 AM

📋All filings for Solarmax Technology, INC

SolarMax Technology, Inc. announced its 2025 Annual Meeting of Stockholders to be held virtually on November 10, 2025, to vote on director elections and auditor ratification, while revealing a going concern warning from its former auditor.

Delay expectedThe payment of $1,712,770 in deferred salary and cash bonuses owed to CEO David Hsu, initially due earlier, has been extended, with the first payment now due on June 30, 2025.The $675,000 payment to Mr. Hsu for transferred restricted shares, initially due by December 15, 2019, has been extended multiple times and is now being paid in twelve monthly installments commencing June 30, 2025.The initial four-year term of EB-5 notes in the principal amount of $55.5 million had expired prior to December 31, 2023, and are on extension until limited partners meet applicable immigrant investor visa requirements.The principal amount plus accrued interest of unsecured loans from SMXP totaling $1,358,658, initially due on October 10, 2024, was extended to October 10, 2025.

Worse than expectedThe previous independent registered public accounting firm, Marcum LLP, included an explanatory paragraph in its audit reports for both 2023 and 2024 regarding the company's ability to continue as a going concern. This indicates significant financial uncertainty.The company has substantial deferred compensation owed to its CEO, David Hsu, totaling $1,712,770 as of December 31, 2024, with payment dates repeatedly extended.A $675,000 payment to the CEO for transferred restricted shares, initially due in December 2019, is now being paid in monthly installments starting June 30, 2025, indicating prolonged liquidity issues.Significant related party loans (EB-5 notes and SMXP loans) have had their initial terms expire and have been extended, suggesting ongoing financial reliance on these sources and potential repayment challenges.

Summary

The 2025 Annual Meeting of Stockholders for SolarMax Technology, Inc. will be held virtually on Monday, November 10, 2025, at 5:00 P.M. Pacific time.
Stockholders will vote on the election of five director nominees, each for a one-year term expiring at the 2026 annual meeting.
The meeting will also include a vote to ratify the appointment of CBIZ CPAs P.C. as the company's independent registered public accounting firm for the year ending December 31, 2025.
The Board of Directors unanimously recommends a vote FOR all director candidates and FOR the auditor ratification.
The record date for determining stockholders entitled to vote is October 6, 2025, with 54,302,950 shares of Common Stock outstanding.
Marcum LLP, the former independent registered public accounting firm, resigned effective April 29, 2025, and CBIZ CPAs P.C. was engaged on May 5, 2025, following CBIZ's acquisition of Marcum's attest business.
Marcum's audit reports for the years ended December 31, 2024, and 2023, included an explanatory paragraph regarding the company's ability to continue as a going concern.
The company owes CEO David Hsu $1,712,770 in deferred salary and cash bonuses as of December 31, 2024, with payments extended to commence on June 30, 2025.
A $675,000 payment to CEO David Hsu for transferred restricted shares, initially due in December 2019, is now being paid in twelve monthly installments starting June 30, 2025.
Outstanding related party loans from CEF and CEF II total $11.0 million as of March 15, 2025, with initial four-year terms expired and on extension.

Sentiment

Score: 3

Explanation: The filing is a routine proxy statement, but it reveals significant underlying financial concerns, including a going concern explanatory paragraph from the former auditor, substantial deferred payments to the CEO, and extended maturities on related-party loans. While governance structures are in place, the financial health indicators are concerning.

Positives

The company is fulfilling its corporate governance obligations by holding its annual meeting and seeking stockholder approval for key matters.
The virtual meeting format offers ready access and cost savings for stockholders and the company.
The Board has established and maintains independent audit, compensation, and nominating and corporate governance committees, aligning with Nasdaq Listing Rules.
A clawback policy for executive officers has been adopted, enhancing corporate accountability.
The company has implemented a Code of Ethics and an Insider Trading Policy, promoting ethical conduct and compliance.

Negatives

The former independent registered public accounting firm, Marcum LLP, included an explanatory paragraph in its audit reports for both 2023 and 2024 regarding the company's ability to continue as a going concern.
Two current directors, Jinxi Lin and Dr. Wen-Ching (Stephen) Yang, have indicated they do not desire to stand for re-election, leading to board turnover.
The company has significant deferred salary and cash bonuses owed to CEO David Hsu, totaling $1,712,770 as of December 31, 2024, with the payment commencement date extended to June 30, 2025.
A $675,000 payment to CEO David Hsu for transferred restricted shares, initially due in December 2019, has been extended multiple times and is now being paid in twelve monthly installments starting June 30, 2025.
Significant related party loans from Clean Energy Funding (CEF) and Clean Energy Funding II (CEF II), totaling $11.0 million as of March 15, 2025, have had their initial four-year terms expire and are currently on extension.
Unsecured related party loans from SMXP, totaling $1,358,658, had their principal and accrued interest due date extended from October 10, 2024, to October 10, 2025.
Past legal actions were commenced by six limited partners against CEF, SolarMax, and others, seeking cash payment of $3.0 million, although these actions were settled.
One continuing director is located in China, which may present difficulties for U.S. investors in enforcing legal rights or judgments due to the lack of reciprocal treaties.

Risks

Going Concern Uncertainty: The explanatory paragraph in the audit reports for 2023 and 2024 indicates substantial doubt about the company's ability to continue as a going concern, posing a significant risk to its long-term viability.
Liquidity and Debt Repayment Risk: The company faces challenges with significant deferred compensation owed to its CEO and extended maturities on substantial related-party loans (EB-5 notes and SMXP loans), which could strain its liquidity and ability to meet obligations.
Related Party Transaction Risks: Extensive reliance on related-party financing and transactions, including loans from entities managed by the CEO and former executives, raises concerns about potential conflicts of interest and terms that may not be at arm's length.
Legal and Regulatory Enforcement Risks: The presence of a director located in China may complicate the enforcement of U.S. legal rights and judgments for investors, particularly given the lack of reciprocal treaties between the PRC and the United States.
Shareholder Litigation Risk: Previous legal actions by EB-5 limited partners, even if settled, highlight the potential for future disputes and litigation related to loan repayments or other financial obligations.
Operational and Financial Reporting Risks: The change in independent auditors, while due to an acquisition, follows a period where the previous auditor raised going concern issues, suggesting ongoing scrutiny of the company's financial health and reporting practices.

Future Outlook

The filing primarily focuses on past performance and upcoming governance matters for the 2025 Annual Meeting. It does not provide explicit forward-looking statements or guidance on future financial performance, revenue, or strategic initiatives, beyond the standard election of directors and auditor ratification for the upcoming year.

Management Comments

We are pleased to utilize the virtual stockholder meeting technology to provide ready access and cost savings for our stockholders and the Company.
The Board unanimously recommends a vote FOR each of the Director candidates nominated by the Board, a vote FOR the ratification of the Company's independent registered public accounting firm, and a vote FOR approval of such other business as may be properly be submitted at the meeting by the Board.
Our board of directors believes that risk management is an important part of establishing, updating and executing on our business strategy.

Industry Context

The company operates in the solar energy industry, as indicated by its name 'SolarMax Technology, Inc.' and the CEO's background in photovoltaic panel manufacturing and solar energy. The mention of 'renewable sources' in a director's experience further confirms this. The EB-5 program context suggests a focus on job creation in the U.S. through commercial enterprises, which aligns with renewable energy projects. The filing does not provide specific industry trends or competitive analysis, but the company's existence and operations are within this sector.

Management Changes

Role	Previous Person	New Person	Effective Date	Reason
Director	Jinxi Lin	NA	November 10, 2025 (upon election of successors)	Does not desire to stand for re-election.
Director	Dr. Wen-Ching (Stephen) Yang	NA	November 10, 2025 (upon election of successors)	Does not desire to stand for re-election.
Director Nominee	NA	Steve Chen	November 10, 2025 (if elected)	Nominated for election to the Board.

Corporate Governance

Change Type	Description	Effective Date	Impact Assessment
Board Composition	The Board has set the number of directors to be elected at the Meeting at five, down from the current six, with two current directors not seeking re-election.	November 10, 2025 (upon election of successors)	Reduces board size, potentially streamlining decision-making, but also reduces overall board oversight capacity.
Auditor Appointment	CBIZ CPAs P.C. was appointed as the independent registered public accounting firm for 2025, following the resignation of Marcum LLP.	May 5, 2025	Change in auditor due to acquisition of attest business; continuity of staff from Marcum to CBIZ is noted, which may mitigate transition risks.
Clawback Policy	The board adopted a clawback policy covering executive officers for incentive-based compensation in the event of an accounting restatement due to material noncompliance.	October 2, 2023 (for compensation received while listed on Nasdaq)	Enhances corporate accountability and aligns with regulatory requirements, potentially improving investor confidence.
Risk Oversight	The Audit Committee has the responsibility to implement and oversee cybersecurity and information security policies and periodically review them and manage potential cybersecurity incidents.	Ongoing	Strengthens oversight of critical operational risks in the digital age.

Legal Proceedings

Six limited partners commenced an action against CEF, SolarMax, and others, including Mr. Hsu and Mr. Yuan, seeking cash payment of their capital contribution to CEF totaling $3.0 million and other relief, including a declaration that the $45.0 million note to CEF is due and payable. All six of these limited partners settled their actions, with one accepting a convertible note for $500,000.

Related Party Transactions

EB-5 Notes: Loans from Clean Energy Funding (CEF) and Clean Energy Funding II (CEF II) to U.S. subsidiaries, totaling $55.5 million. CEF and CEF II are related parties, with Inland Empire (general partner) owned by CEO David Hsu and former executive Ching Liu. Simon Yuan (director) resigned from Inland Empire in January 2024. Loans accrue interest at 3% per annum. Initial four-year terms expired, now on extension. As of March 15, 2025, $11.0 million in notes to CEF and CEF II were outstanding.
Convertible Notes: Issued to former limited partners of CEF in lieu of repayment, totaling $41.5 million as of March 15, 2025. These notes have a five-year term with 20% principal due annually. $16.5 million outstanding as of March 15, 2025.
Other Related Party Loan (SMXP): Unsecured loans from SMXP to the company for $944,077 and $414,581 (total $1,358,658) at 8% interest. David Hsu and Ching Liu are principal management of SMXP. Simon Yuan has a non-controlling interest. Principal and accrued interest due date extended to October 10, 2025.
Related Party Leases (Fallow Field, LLC): Lease for Diamond Bar office with Fallow Field, LLC, owned by Mr. Hsu, Ms. Liu, and a minority stockholder. Lease terminated effective March 31, 2024. Rental expense was $36,000 in 2024 and $100,000 in 2023.
Equity Transactions with Officers and Directors: Included grants of restricted shares and subsequent exchanges for options or cash payments involving David Hsu, Ching Liu, Simon Yuan, and Chung Jen Tsai. Notably, a deferred payment of $675,000 to Mr. Hsu for transferred restricted shares and $1,712,770 in deferred salary and cash bonuses owed to Mr. Hsu, with payments commencing June 30, 2025.

Stakeholder Impact

Shareholders: Will participate in key governance decisions (director elections, auditor ratification). The virtual meeting format enhances accessibility. However, the going concern warning and extensive related-party transactions, including deferred payments to the CEO, could raise significant concerns about financial stability and transparency.
Employees: Executive compensation details are provided, and the clawback policy affects executive officers. The company's precarious financial health, as indicated by the going concern warning, could impact job security and future compensation programs.
Creditors (EB-5 Limited Partners): Some limited partners have converted their loans to convertible notes, while others who have received green card approval may demand repayment, potentially impacting the company's liquidity. Past legal actions highlight potential for future disputes.
Management: The CEO has substantial deferred compensation and payments due, which could be a point of concern or motivation. The board changes and governance policies directly affect management's oversight and accountability.

Next Steps

Stockholders to vote on director nominees and auditor ratification at the Annual Meeting on November 10, 2025.
The company will file a Current Report on Form 8-K announcing the voting results of the Meeting.
Payment of deferred salary and bonuses to CEO David Hsu to commence in twelve equal monthly installments starting June 30, 2025.
Payment of $675,000 to CEO David Hsu for transferred restricted shares to commence in twelve monthly installments starting June 30, 2025.
The company will continue to operate with CBIZ CPAs P.C. as its independent registered public accounting firm for the year ending December 31, 2025.
The next annual meeting of stockholders will be held, with stockholder proposals due between July 13, 2026, and August 12, 2026.

Key Dates

Date	Description
February 2008	David Hsu and Simon Yuan founded SolarMax Technology, Inc.
January 3, 2012	Clean Energy Funding (CEF) entered into a loan agreement with a U.S. subsidiary for up to $45 million.
August 26, 2014	Clean Energy Funding II (CEF II) entered into a loan agreement with LED, a U.S. subsidiary, for up to $13 million.
October 7, 2016	Employment agreement with David Hsu commenced.
October 2016	Board of directors granted 3,810,949 restricted shares and adopted the 2016 Long-Term Incentive Plan.
November 2016	Stockholders approved the 2016 Long-Term Incentive Plan.
November 1, 2016	Lease for Diamond Bar, California office with Fallow Field, LLC commenced.
March 23, 2017	Employment agreement with Stephen Brown commenced.
May 2017	Stephen Brown became Chief Financial Officer; Simon Yuan resigned as CFO.
March 2019	Board and stockholders approved an increase in shares subject to the 2016 Long-Term Incentive Plan to 8,988,084.
December 2019	Initial due date for payments to Mr. Hsu and Ms. Liu for transferred restricted shares.
February 24, 2020	Ching Liu resigned as an officer and director.
July 6, 2020	Chung Jen Tsai resigned as a director.
November 2020	Dr. Lei Zhang became a director.
December 2020	Dr. Wen-Ching (Stephen) Yang became a director.
October 10, 2022	SMXP made unsecured loans to the company.
October 2, 2023	Effective date for clawback policy application if securities listed on Nasdaq.
December 31, 2023	Fiscal year end for which Marcum LLP issued an audit report with a going concern explanatory paragraph.
January 2024	Simon Yuan resigned from Inland Empire.
March 31, 2024	Lease with Fallow Field, LLC terminated.
July 2024	Dr. Lei Zhang became a tenured professor at the University of Alaska, Fairbanks.
August 2024	50% of certain options became exercisable.
December 31, 2024	Fiscal year end for which Marcum LLP issued an audit report with a going concern explanatory paragraph.
February 27, 2025	Initial due date for first monthly installment of deferred salary and bonus owed to Mr. Hsu.
March 15, 2025	Date as of which $41.5 million in convertible notes were issued to former limited partners of CEF, $22.0 million in principal payments made, $3.0 million purchased, leaving $16.5 million outstanding. Also, $11.0 million in notes to CEF and CEF II were outstanding.
March 31, 2025	Form 10-K for the year ended December 31, 2024, filed with the SEC.
April 29, 2025	Marcum LLP resigned as independent registered public accounting firm.
May 5, 2025	CBIZ CPAs P.C. engaged as independent registered public accounting firm.
June 30, 2025	Extended due date for first monthly installment of deferred salary and bonus owed to Mr. Hsu, and commencement of monthly installments for $675,000 payment to Mr. Hsu.
August 12, 2025	Remaining 50% of certain options held by Mr. Hsu become exercisable.
September 25, 2025	Board extended expiration date of certain outstanding options to August 28, 2028.
October 6, 2025	Record date for stockholders entitled to notice and vote at the annual meeting.
October 10, 2025	Extended due date for principal and accrued interest on SMXP loans.
October 14, 2025	Approximate mailing date of Notice of Annual Meeting, Proxy Statement, and Form 10-K for 2024.
November 9, 2025	Deadline for internet and telephone voting (11:59 p.m. Eastern Time).
November 10, 2025	Date of the 2025 Annual Meeting of Stockholders.
December 31, 2025	Year-end for which CBIZ CPAs P.C. is appointed as independent registered public accounting firm.
July 13, 2026	Earliest date for stockholder proposals for the next annual meeting (120 days prior to first anniversary of preceding year's annual meeting).
August 12, 2026	Latest date for stockholder proposals for the next annual meeting (90 days prior to first anniversary of preceding year's annual meeting).
August 28, 2028	Extended expiration date for outstanding options to purchase 1,620,879 shares.

Recommendation

sell

The filing, while a routine proxy statement, contains highly concerning information that suggests significant financial distress. The explicit 'going concern' explanatory paragraph from the former independent auditor for two consecutive years (2023 and 2024) is a major red flag, indicating substantial doubt about the company's ability to continue operations. Furthermore, the company's inability to pay its CEO a significant amount of deferred salary and bonuses, with payment dates repeatedly extended, points to severe liquidity issues. The reliance on related-party loans with expired and extended terms, and past legal actions from EB-5 investors, further underscore financial instability and potential governance risks. These factors collectively suggest a high risk of financial failure or significant dilution, making the stock a strong sell for any seasoned investor.

Keywords

SolarMax Technology, SEC Filing, Proxy Statement, DEF 14A, Annual Meeting, Director Election, Auditor Ratification, Corporate Governance, Executive Compensation, Related Party Transactions, EB-5 Loans, Going Concern, Solar Energy, Renewable Energy, Financial Reporting

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