SHLS – Pelican Way Research

Nearly four months after TerraFlow Energy's Katy, Texas headquarters was reported open, investigators sent by Pelican Way Research found the site still under construction.

That gap sits at the center of a broader case against Shoals Technologies Group (SHLS): a legacy solar hardware business losing share to cheaper rivals, propped up in investor materials by partnership announcements the report says cannot be converted into revenue. The most serious allegation concerns Shoals' $600 million emerging-markets MOU, whose counterparty's reported founder pleaded guilty to felony forgery in 2012 and whose involvement in the venture was, according to the report, concealed from an insurer. Pelican Way Research, which holds a short position in Shoals, published the findings.

Ticker: SHLS (Shoals Technologies Group, Inc.)
Research Firm: Pelican Way Research
Report URL: https://img1.wsimg.com/blobby/go/6b78f767-7b40-4b8b-940d-a14d7514072f/downloads/db9ee214-46b8-4f0a-b328-110245d1c9fd/SHLS%20%20vFINAL.pdf?ref=shortreport.fyi
Report date: 2026-10-28
Position Disclosure: Report author states it is short the stock.

Thesis

Pelican Way Research argues Shoals' core solar hardware business is deteriorating while its headline growth partnerships rest on counterparties the firm says are compromised or unable to execute.

• Felon-Linked Counterparty: Shoals' May 2025 MOU with UGT Renewables/Sun Africa, potentially worth roughly $600 million in revenue, ties to reported founder Goran Rajsic, who pleaded guilty on January 18, 2012 to felony forgery by delivery and whose involvement was allegedly undisclosed on a 2025 insurer application; other owners separately sued Rajsic in January 2026 alleging he withheld tax distributions to force a supermajority handover.
• Vanishing Battery Plant: TerraFlow's 100,000-square-foot Katy, Texas headquarters was reported open on June 15, 2026, but an October 7, 2026 site visit by the report's investigators found construction still underway.
• Undercapitalized Partner: The TerraFlow MOU, signed August 3, 2026 for up to 5 GW of annual deployment, implies more than $250 million in annual Shoals revenue (about 43% of trailing-twelve-month sales), yet PitchBook data cited in the report show TerraFlow had raised only about $20.4 million in early-stage venture funding; its CEO and COO also hold the same titles at a separate company, Texas Fabrication.
• Customer Pullback: A high-level employee at a current Shoals customer said the customer's use of Shoals fell from roughly 65% to roughly 15% of projects over four years as rivals TE and Premier PV undercut it on cost; Shoals management acknowledged on its 4Q25 call that legacy eBOS margins were being pulled back from the 40% range.
• Revenue Concentration: Per Shoals' 2Q26 Form 10-Q, System Solutions made up about 74% of first-half 2026 revenue (roughly $225 million), while a single customer accounted for 18.9% of 2026 revenue and 33.3% of accounts receivable.
• Inventory Build: Inventory rose approximately 105% in six months, from $89.9 million at year-end 2025 to $184.7 million by June 30, 2026, even as trailing revenue grew only about 24%, pushing inventory to 31.4% of sales.
• Founder-Turned-Rival: Dean Solon sold about 24.5 million Shoals shares for roughly $600 million in March 2023 and later founded competitor Create Energy, which a former Shoals employee estimated is about 75% staffed by former Shoals employees and which announced a $78 million expansion expected to add over 1,000 jobs.
• Stale Partner Logo: Shoals' August investor presentation still featured Blue Ridge Power as a partner even though its parent, Pine Gate Renewables, wound Blue Ridge down in September 2025, laid off more than 500 employees, and later filed for Chapter 11.

Catalysts

• 2027 revenue timing: Management's guidance that TerraFlow-linked revenue "probably" begins in 2027, stated on the 2Q26 earnings call, means confirmation or slippage would validate or undercut the thesis.
• TerraFlow deployment progress: Any update on the TerraFlow MOU's up-to-5-GW annual deployment plan could show movement toward actual contracts versus continued silence.
• Insurer litigation developments: Developments in the UGT/Sun Africa insurer litigation over Rajsic's alleged undisclosed involvement, first reported in May 2026, could determine the MOU's survival.
• Ownership lawsuit outcomes: Rulings or settlement in the January 2026 Mainstream Energy Investments/Robert J. Berman Trust lawsuit against Rajsic and Abacus Energy may affect control and viability of the UGT/Sun Africa structure.
• Upcoming Shoals filings: Shoals' next quarterly filings and earnings calls should be monitored for System Solutions margins, inventory levels, and customer/AR concentration for continued deterioration.
• Saudi MOU disclosure: Any renewed disclosure, or continued silence, on the 2024 Saudi Arabia MOU with United Utilities Environmental Services could test whether announced partnerships are advancing.

Company Response

The report does not indicate that Pelican Way Research sought comment from Shoals, UGT Renewables, Sun Africa, TerraFlow, Rajsic, or Create Energy, and it does not describe any response from these parties to its findings.

Notable Details

• A former Shoals sales and account manager told the report he had never heard of TerraFlow and, when shown the deal's implied economics, said "yeah, that doesn't add up."
• The current Shoals customer source described the company's core product bluntly: "it's not a complex product. It's cable and connectors," adding that $500,000 to $1 million in project savings would outweigh paying a premium for Shoals.
• A podcast reportedly titled Jon Parrella's TerraFlow the "worlds largest flow battery company," yet the report says TerraFlow did not appear on Transpire Insight's list of the top 25 flow-battery companies.
• Shoals' 1Q23 investor presentation promoted its "eMobility Innovation Center" across numerous slides; by 1Q24, the report found no mention of it at all, a precedent the authors apply to the current data-center pivot.

"Shoals' Legacy Business Is In Bad Shape, So They Spun Up an MOU With a Felon"

This section heading from the report compresses its short thesis: a weakening core business paired with a headline growth deal tied to a controversial counterparty.

FAQs

What is the core allegation against SHLS in the short report?

The report's central claim is that Shoals' announced growth partnerships, particularly a roughly $600 million MOU with UGT Renewables/Sun Africa, cannot be relied upon because the counterparty's reported founder has a felony conviction and allegedly undisclosed control over the venture. It ties this to a broader argument that Shoals' legacy solar hardware business is losing share and margin.

What does Shoals Technologies Group actually make?

Shoals Technologies Group makes electrical balance-of-system (eBOS) products used in utility-scale solar projects, historically concentrated in its System Solutions segment. Per the company's 2Q26 Form 10-Q, that segment made up roughly 74% of first-half 2026 revenue.

What is Pelican Way Research's position in SHLS?

Pelican Way Research is the firm behind the report and discloses that it holds a short position in Shoals Technologies Group. The firm's findings combine litigation records, corporate filings, and a physical site visit to a key partner's facility.

Who is Goran Rajsic and why does he matter to Shoals investors?

Rajsic is reported to be the founder of UGT Renewables and Sun Africa, Shoals' counterparties in a May 2025 MOU covering up to 12 GW of solar projects. The report states he pleaded guilty on January 18, 2012 to felony forgery by delivery and alleges his involvement in the venture was not disclosed to the companies' insurer, and he is separately named in a January 2026 lawsuit by co-owners alleging he withheld tax distributions.

Why does TerraFlow's Katy, Texas facility matter to the Shoals story?

TerraFlow is Shoals' partner in an August 2026 MOU for up to 5 GW of annual battery storage deployment, a deal the report estimates could be worth more than $250 million a year to Shoals. An article dated June 15, 2026 said TerraFlow's headquarters was open, but a site visit by the report's investigators on October 7, 2026 reportedly found construction still underway.

Has Shoals' legacy solar business actually been weakening?

A high-level employee at a current Shoals customer told the report that the customer's use of Shoals products fell from roughly 65% to roughly 15% of its projects over four years due to cheaper competing solutions. Separately, Shoals management acknowledged on its 4Q25 earnings call that legacy eBOS margins were being pulled back from the 40% range for the foreseeable future.

What is Create Energy and why is it relevant to Shoals?

Create Energy is a solar-products and marketplace company founded by Dean Solon after he left Shoals' board in February 2022 and sold roughly $600 million of Shoals stock in March 2023. A former Shoals employee estimated the company is about 75% staffed by former Shoals employees and it recently announced a $78 million expansion projected to add more than 1,000 jobs.

What should SHLS investors watch for next?

Key near-term signals include whether Shoals confirms or walks back its 2027 revenue timeline for the TerraFlow partnership, developments in the insurer litigation and ownership lawsuit tied to UGT/Sun Africa, and upcoming quarterly filings showing whether inventory, margins, and customer concentration continue to deteriorate.

Disclaimer: This summary is not primary research and does not constitute investment advice. It is a brief overview of a detailed equity research report authored by the firm, organization, or source referenced in this article or at https://img1.wsimg.com/blobby/go/6b78f767-7b40-4b8b-940d-a14d7514072f/downloads/db9ee214-46b8-4f0a-b328-110245d1c9fd/SHLS%20%20vFINAL.pdf, which contains extensive evidence, regulatory filings, and analysis; readers are encouraged to review the full report there for a comprehensive understanding. The content provided in this publication is not authored or originated by us — we act solely as a distributor and do not endorse, verify, or take responsibility for the accuracy, completeness, or reliability of the information presented. This publication is for informational purposes only and should not be construed as legal, business, investment, or tax advice. Always conduct independent due diligence and consult qualified professionals before making any decisions based on the information contained herein. We disclaim all liability for any loss or damage arising from reliance on third-party content, and the views expressed are solely those of the respective source and do not necessarily reflect our own.