SolarMax Technology, Inc. — financial distress indicators
Financial-health summary
SolarMax Technology, Inc.'s reported numbers place it in the 'Very weak' financial-health band (distress score 100/100). The main indicators are liabilities exceed assets (negative equity), operating profit does not cover interest and market-implied default probability >20%. Independently, the Ohlson accounting model puts its 1-year failure probability at 95% and the market-implied (Merton) default probability is 69.1%. In its favour: revenue still growing (+296% yoy).
Stress by dimension
Share price — last 12 months
Indicators behind the score
Each red flag shows the evidence from the company’s own filings and the financial or legal principle behind it. Points add to the 0–100 score.
Total liabilities are 1.11× total assets.
Balance-sheet insolvency test: debts exceeding the fair value of assets is the statutory definition of 'insolvent' in 11 U.S.C. §101(32).
Interest coverage (EBIT / interest) is -3.90×.
When EBIT < interest, debt service is funded from cash reserves or new borrowing — the classic precursor to payment default and covenant breach.
Merton distance-to-default -0.50 σ → PD 69%.
Structural (Merton/KMV) model: equity is a call option on assets; low distance-to-default means assets are close to the default point.
Debt is 34% of assets while EBITDA is not positive.
With no operating earnings, repayment depends entirely on asset sales or fresh capital.
O-score 2.91 → model probability 95%.
Ohlson (1980) logit model of 1-year corporate failure; O > 0 (p > 50%) is the original failure cut-off.
Current ratio is 0.82.
Short-term obligations exceed short-term resources — the company relies on rolling over credit.
Cash covers ~17 months of free-cash-flow burn.
Funding needs within two years make the company dependent on capital-market access.
Recurring net losses.
Repeated losses are a core input in both Ohlson and Altman failure models.
Short-term debt is 7.0× cash on hand.
Maturity wall: debt due within a year must be refinanced, which is the most common proximate cause of filings.
Price is -64% from its 52-week high.
For financial firms a share-price run often precedes a deposit or funding run (confidence channel).
Share count up +21% in a year.
Large issuance usually funds operating losses rather than growth.
Revenue vs net income
Cash generation
Debt vs cash vs equity
✅ Mitigating factors
- Revenue still growing (+296% YoY).
- High insider/promoter ownership (31%) aligns management with survival.
📰 Recent news scan
- SolarMax Technology: Q2 Earnings SnapshotYahoo Finance · 2026-10-08
- SolarMax Technology Receives Nasdaq Notice Regarding Delayed Form 10-Q FilingYahoo Finance · 2026-08-21
- SolarMax Technology Announces Reverse Stock Split to Support Effort to Regain Compliance with Nasdaq’s Minimum Bid Price RequirementYahoo Finance · 2026-08-11
- Zacks Initiates Coverage of SolarMax With Neutral RecommendationYahoo Finance · 2026-06-25
- SolarMax Technology Reports First Quarter 2026 Financial ResultsYahoo Finance · 2026-05-18
⚖️ U.S. legal pathway — Title 11, U.S. Code
Which chapter would apply?
- Chapter 11 — reorganisation. Management usually stays in control as debtor-in-possession; the automatic stay (§362) halts collection; a plan must meet the best-interests test (§1129(a)(7)) and the absolute priority rule (§1129(b)) — creditors are paid before shareholders, who are frequently wiped out.
- Chapter 7 — liquidation. A trustee sells assets and distributes proceeds by statutory priority (§§507, 726).
- Subchapter V (“Chapter 5”) is a fast track for small-business debtors under a statutory debt cap, but SEC-reporting companies are excluded (§101(51D)) — so it rarely applies to listed companies.
What typically triggers a filing
- Payment default or covenant breach lenders will not waive; a debt maturity that cannot be refinanced.
- Auditor going-concern doubt (ASC 205-40 / PCAOB AS 2415) — often itself a default trigger in loan agreements.
- Creditors can force a case with an involuntary petition (§303) if debts are not paid as they come due.
- Delisting after sustained sub-$1 prices or equity deficits cuts off equity funding.
Transactions shortly before filing can be clawed back (preferences — 90 days, §547; fraudulent transfers — 2 years, §548).
Frequently asked questions
What do SolarMax Technology, Inc.'s financial-health indicators show?
As of 2026-10-08, SolarMax Technology, Inc.'s public financial data places it in the 'Very weak' band with a distress score of 100/100, driven by liabilities exceed assets (negative equity), operating profit does not cover interest and market-implied default probability >20%. This is a statistical screen of reported numbers — it does not mean the company is insolvent, has defaulted or will enter insolvency proceedings.
What is SolarMax Technology, Inc.'s financial distress score?
100/100 ('Very weak'). Ohlson O-score 2.91 (model 1-year failure probability 95%). Merton distance-to-default -0.5 σ (model default probability 69.1%).
What works in SolarMax Technology, Inc.'s favour?
Revenue still growing (+296% YoY). High insider/promoter ownership (31%) aligns management with survival.
How are shareholders treated if a company enters insolvency?
In a Chapter 11 reorganisation the absolute priority rule pays secured lenders, then unsecured creditors, before shareholders — so existing shares are usually cancelled or heavily diluted. In Chapter 7 the company is liquidated and shareholders rarely recover anything.
Other Energy, Oil & Gas companies with distress indicators
- Sky Quarry Inc. (SKYQ)Very weak 100/100
- Spruce Power Holding Corporation (SPRU)Very weak 100/100
- Vivakor, Inc. (VIVK)Very weak 100/100
- SUNation Energy Inc. (SUNE)Very weak 86/100
- Canadian Solar Inc. (CSIQ)Very weak 74/100
- SunPower Inc. (SPWR)Very weak 73/100
Methodology
Score = capped sum of rule-based red flags across seven dimensions (liquidity, solvency, profitability, cash flow, sales trend, market signal, news). Ohlson O-score (1980) gives an accounting-based 1-year failure probability; Merton distance-to-default (Bharath & Shumway 2008) gives a market-implied probability. Financial institutions use a capital-based rule set. Recalculated every trading day from the latest filings, prices and news.