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Item 7. Management’s Discussion and Analysis

2024-03-25 compared with 2023-03-31 · 409 added, 63 removed, 11 unchanged (98% of the section changed)

MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS.

The following discussion and analysis should be read in conjunction with the financial statements and related notes included in “Item 8.

Financial Statements and Supplementary Data” of this Annual Report on Form 10-K (this “Report”).

This discussion contains forward-looking statements reflecting our current expectations, estimates and assumptions concerning events and financial trends that may affect our future operating results or financial position.

Actual results and the timing of events may differ materially from those contained in these forward-looking statements due to a number of factors, including those discussed in the sections entitled “Risk Factors” and “Forward-Looking Statements” appearing elsewhere in this Report.

We were incorporated as a Cayman Islands exempted company on April 19, 2021 for the purpose of effecting a merger, share exchange, asset acquisition, share purchase, reorganization or similar business combination with one or more businesses or entities (the “Business Combination”).

We have not selected any Business Combination target and we have not, nor has anyone on our behalf, initiated any substantive discussions, directly or indirectly, with any Business Combination target.

We will not be limited to a particular industry or geographic region in our identification and acquisition of a target company.

Our sponsor is ESGEN LLC, a Delaware limited liability company.

The registration statement for our initial public offering was declared effective on October 19, 2021.

On October 22, 2021, we consummated our initial public offering of 27,600,000 units (the “Units” and, with respect to the ordinary shares included in the Units being offered, the “Public Shares”) at $10.00 per Unit (which included the full exercise of the underwriters’ over-allotment option), and the sale of 14,040,000 warrants (the “Private Placement Warrants”) each exercisable to purchase one Class A ordinary share at $11.50 per share, at a price of $1.00 per Private Placement Warrant in a private placement to our sponsor that closed simultaneously with our initial public offering.

Transaction costs amounted to $16,138,202 consisting of $5,520,000 of underwriting commissions, $9,660,000 of deferred underwriting commissions and $958,202 of other cash offering costs.

Of this amount, $15,428,121 was charged to temporary equity and $710,081 was allocated to the warrants and expensed.

Following the closing of our initial public offering on October 22, 2021, $281,520,000 ($10.20 per Unit) from the net proceeds sold in our initial public offering, including proceeds of the sale of the Private Placement Warrants, was deposited in a trust account (“Trust Account”) and will only be invested in United States “government securities” within the meaning of Section 2(a)(16) of the Investment Company Act having a maturity of 185 days or less or in money market funds meeting certain conditions under Rule 2a-7 promulgated under the Investment Company Act which invest only in direct U.S.

MANAGEMENT’S DISCUSSION AND ANALYSIS

OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS.

As discussed elsewhere in this

Annual Report on Form 10-K for the year ended December 31, 2023 and below, Zeo became a publicly held entity in March 2024 upon the

completion of the Business Combination with ESGEN.

The following discussion and analysis is exclusively

attributable to the operations of ESGEN for the years ended December 31, 2023 and 2022, as well as certain activities up to

and including the effective date of the Business Combination, or March 13, 2024.

This discussion and analysis should be read in conjunction

with our financial statements for the years ended December 31, 2023 and 2022 and the related notes thereto, which have been

prepared in accordance with GAAP.

The preparation of these financial statements in conformity with GAAP requires management

to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities

at the date of the financial statements and the reported amounts of expenses during the reporting period.

Actual results could differ

from those estimates.

We were incorporated as a Cayman Islands exempted company on April

19, 2021 for the purpose of effecting a merger, share exchange, asset acquisition, share purchase, reorganization or similar business

combination with one or more businesses or entities (the “Business Combination”).

We will not be limited to a particular industry

or geographic region in our identification and acquisition of a target company.

Our sponsor is ESGEN LLC, a Delaware limited liability company (the

The registration statement for our initial public offering (“initial

public offering”, “IPO” or “Public Offering”) was declared effective on October 19, 2021.

On October 22,

2021, we consummated our initial public offering of 27,600,000 units (the “Units” and, with respect to the ordinary shares

included in the Units being offered, the “public shares”) at $10.00 per Unit (which included the full exercise of the underwriters’

over-allotment option), and the sale of 14,040,000 warrants (the “Private Placement Warrants”) each exercisable to purchase

one Class A ordinary share at $11.50 per share, at a price of $1.00 per Private Placement Warrant in a private placement to our Sponsor

that closed simultaneously with the initial public offering.

Following the closing of our initial public offering on October 22,

2021, $281,520,000 ($10.20 per Unit) from the net proceeds sold in our initial public offering, including proceeds of the sale of the

Private Placement Warrants, was deposited in a trust account (“Trust Account”) and, until October 16, 2023, was only invested

in United States “government securities” within the meaning of Section 2(a)(16) of the Investment Company Act having a maturity

of 185 days or less or in money market funds meeting certain conditions under Rule 2a-7 promulgated under the Investment Company Act which

invest only in direct U.S.

government treasury obligations.

We have until April 22, 2023, with the extension as described below, to consummate the initial Business Combination.

If we have not consummated the initial Business Combination within the Combination Period, we will:

(i) cease all operations except for the purpose of winding up;

(ii) as promptly as reasonably possible but not more than ten business days thereafter, redeem the public shares, at a per-share price, payable in cash, equal to the aggregate amount then on deposit in the Trust Account, including interest earned on the funds held in the Trust Account and not previously released to us to pay income taxes, if any (less up to $100,000 of interest to pay winding up and dissolution expenses) divided by the number of the then-outstanding public shares, which redemption will completely extinguish public shareholders’ rights as shareholders (including the right to receive further liquidation distributions, if any);

and (iii) as promptly as reasonably possible following such redemption, subject to the approval of our remaining shareholders and board of directors, liquidate and dissolve, subject in the case of clauses (ii) and (iii), to our obligations under Cayman Islands law to provide for claims of creditors and the requirements of other applicable law.

On January 18, 2023, our shareholders voted to amend our amended and restated memorandum and articles of association (the “Extension Proposal”) to extend from January 22, 2023 to April 22, 2023 (the “Extended Date”) the date (the “Termination Date”) by which we must mandatorily liquidate the company.

In connection with the vote to approve the Extension Proposal, the holders of 24,703,445 Class A ordinary shares of ESGEN properly exercised their right to redeem their shares for cash at a redemption price of approximately $10.35 per share, for an aggregate redemption amount of $255,875,757.

Additionally, in the event that we have not consummated an initial business combination by the Extended Date, the Board may extend the Termination Date up to six times, each by one additional month (for a total of up to six additional months to complete a business combination) (each, an “Additional Extension Date”), provided that we deposit into the Trust Account for each Additional Extension Date the lesser of (a) $140,000 or (b) $0.04 for each public share that is then-outstanding.

To mitigate the risk of being deemed to have been operating as an unregistered

investment company under the Investment Company Act, on October 16, 2023, we instructed the Trustee with respect to the Trust Account,

to liquidate the U.S.

government securities or money market funds held in the Trust Account and thereafter to hold all funds in the Trust

Account in demand deposits (i.e., in one or more bank accounts) until the earliest of ESGEN’s completion of an initial business

combination or July 22, 2024 (assuming the Sponsor deposits the required amount into the Trust Account for each New Additional Extension

Date and unless the Company’s shareholders approve one or more further Additional Extensions), as applicable.

Prior to shareholder approval of the First Extension Charter Amendment

(as defined below), we had 15 months from the closing of our initial public offering to consummate the initial Business Combination.

we have not consummated the initial Business Combination within the Combination Period, we will:

(i) cease all operations except for the

purpose of winding up;

(ii) as promptly as reasonably possible but not more than ten business days thereafter, redeem the public shares,

at a per-share price, payable in cash, equal to the aggregate amount then on deposit in the Trust Account, including interest earned on

the funds held in the Trust Account and not previously released to us to pay income taxes, if any (less up to $100,000 of interest or

dividends to pay winding up and dissolution expenses) divided by the number of the then-outstanding public shares, which redemption will

completely extinguish public shareholders’ rights as shareholders (including the right to receive further liquidation distributions,

and (iii) as promptly as reasonably possible following such redemption, subject to the approval of our remaining shareholders

and board of directors, liquidate and dissolve, subject in the case of clauses (ii) and (iii), to our obligations under Cayman Islands

law to provide for claims of creditors and the requirements of other applicable law.

On January 18, 2023, the Company held an extraordinary general meeting

of shareholders to consider and vote upon, among other things, a proposal to amend the Company’s amended and restated memorandum

and articles of association (the “First Extension Charter Amendment”) to (i) extend the date by which the Company must consummate

its initial Business Combination (the “Termination Date”) from January 22, 2023 to April 22, 2023 and (ii) in the event that

the Company has not consummated an initial Business Combination by April 22, 2023, to allow the Company, by resolution of the Company’s

board of directors (the “Board”) and, without any approval of the Company’s shareholders, upon five days’ advance

notice prior to each Additional Extension, to extend the Termination Date up to six times (with each such extension being upon five days’

advance notice), each by one additional month (for a total of up to six additional months to complete a business combination) (each, an

“Additional Extension” and such date, an “Additional Extension Date”), provided that the Sponsor or the Sponsor’s

affiliates or permitted designees will deposit into the Trust Account for each Additional Extension Date the lesser of (a) $140,000 or

(b) $0.04 for each public share that is then-outstanding, in exchange for one or more non-interest bearing, unsecured promissory notes

issued by the Company to the Sponsor or the Sponsor’s affiliates or permitted designees (the “Lenders” and each a “Lender”).

In connection with the vote to approve the First Extension Charter Amendment, the holders of 24,703,445 Class A ordinary shares properly

exercised their right to redeem their shares for cash at a redemption price of approximately $10.35 per share, for an aggregate redemption

amount of $255,875,758.

The Company currently has until July 22, 2024 (assuming the Sponsor deposits the required amount into the Trust

Account for each New Additional Extension Date and unless the Company’s shareholders approve one or more further Additional Extensions)

to complete an initial Business Combination.

On October 20, 2023, the Company held an extraordinary general meeting

(the “Meeting”) and approved (i) (a) the extension (such proposal, the “Extension Proposal”) of the time period

the Company has to complete an initial Business Combination from October 22, 2023 to January 22, 2024 (the “Charter Amendment”)

and (b) in the event that the Company has not consummated an initial Business Combination by January 22, 2024, to allow the Company, by

resolution of the Board and, without any approval of the Company’s shareholders, upon five days’ advance notice prior to each

Additional Extension, to complete six Additional Extensions, provided that the Sponsor or the Sponsor’s affiliates or permitted

designees will deposit into the Trust Account for each Additional Extension Date the lesser of (x) $35,000 or (y) $0.0175 for each public

share that is then-outstanding, in exchange for one or more non-interest bearing, unsecured promissory notes issued by a Lender, and (ii)

the amendment of the Company’s amended and restated memorandum and articles of association to change certain provisions which restrict

the Class B ordinary shares, par value $0.0001, of the Company (the “Class B ordinary shares”) from converting to Class A

ordinary shares, par value $0.0001 (the “Class A ordinary shares”) prior to the consummation of an initial Business Combination

(such proposal, the “Conversion Proposal”).

As of the date of filing this report, the Company has deposited the requisite

amounts into the Trust Account for each Additional Extension Date until March 22, 2024.

In connection with the vote to approve the above proposals, the holders

of 1,488,000 Class A ordinary shares of ESGEN properly exercised their right to redeem their shares for cash at a redemption price of

approximately $11.21 per share, for an aggregate redemption amount of $16,679,055.

In connection with the approval of the Extension Proposal at the Meeting

and the adoption of the Charter Amendment, the Sponsor contributed into the Trust Account $0.0525 per share for each Class A ordinary

share that was not redeemed at the Meeting, for an aggregate contribution of $73,949.

In connection with the approval of the Conversion Proposal at the Meeting

and the adoption of the Charter Amendment, the Sponsor converted all of its 5,619,077 Class B ordinary shares into Class A ordinary shares

(the “Sponsor Share Conversion”).

As a result of the Sponsor Share Conversion and redemptions made in connection with the

Extension Proposal and Conversion Proposal, 7,027,632 Class A ordinary shares remain outstanding.

Notwithstanding the Sponsor Share Conversion,

the Sponsor will be not entitled to receive any funds held in the Trust Account with respect to any Class A ordinary shares issued to

the Sponsor as a result of the Sponsor Share Conversion and no additional amounts will be deposited into the Trust Account in respect

of shares of Class A ordinary shares held by the Sponsor in connection with the extension of the Termination Date to the Extended Date

or any Additional Extension Dates.

On March 13, 2024 (the “Closing Date”),

the registrant consummated its previously announced business combination (the “Closing”), pursuant to that certain Business

Combination Agreement, dated as of April 19, 2023 (as amended on January 24, 2024, the “Business Combination Agreement”),

by and among Zeo Energy Corp., a Delaware corporation (f/k/a ESGEN Acquisition Corporation, a Cayman Islands exempted company), ESGEN

OpCo, LLC, a Delaware limited liability company(“OpCo”), Sunergy Renewables, LLC, a Nevada limited liability company (“Sunergy”),

the Sunergy equityholders set forth on the signature pages thereto or joined thereto (collectively, “Sellers” and each, a

“Seller”, and collectively with Sunergy, the “Sunergy Parties”), for limited purposes, ESGEN LLC, a Delaware limited

liability company (the “Sponsor”), and for limited purposes, Timothy Bridgewater, an individual, in his capacity as the Sellers

Representative (collectively, the “Business Combination”).

Prior to the Closing, (i) except as otherwise specified in the

Business Combination Agreement, each issued and outstanding Class B ordinary share of ESGEN was converted into one Class A ordinary share

of ESGEN (the “ESGEN Class A Ordinary Shares” and such conversion, the “ESGEN Share Conversion”);

and (ii) ESGEN

was domesticated into the State of Delaware so as to become a Delaware corporation (the “Domestication”).

In connection with

the Closing, the registrant changed its name from “ESGEN Acquisition Corporation” to “Zeo Energy Corp.”

Following, each then-outstanding ESGEN Class

A Ordinary Share was converted into one share of Class A common stock of the registrant, par value $0.0001 per share (“Zeo Class

A Common Stock”), and each then-outstanding ESGEN Public Warrant converted automatically into a warrant of the registrant, exercisable

for one share of Zeo Class A Common Stock.

Additionally, each outstanding unit of ESGEN was cancelled and separated into one share of

Zeo Class A Common Stock and one-half of one warrant of the registrant.

In accordance with the terms of the Business

Combination Agreement, Sunergy caused all holders of any options, warrants or rights to subscribe for or purchase any equity interests

of Sunergy or its subsidiaries or securities (including debt securities) convertible into or exchangeable for, or that otherwise confer

on the holder any right to acquire, any equity interests of Sunergy or any subsidiary thereof (collectively, the “Sunergy Convertible

Interests”) existing immediately prior to the Closing to either exchange or convert all such holder’s Sunergy Convertible

Interests into limited liability interests of Sunergy (the “Sunergy Company Interests”) in accordance with the governing

documents of Sunergy or the Sunergy Convertible Interests.

At the Closing, ESGEN contributed to OpCo (1)

all of its assets (excluding its interests in OpCo, but including the amount of cash in ESGEN’s Trust Account (the “Trust

Account”) as of immediately prior to the Closing (after giving effect to the exercise of redemption rights by ESGEN shareholders)),

and (2) a number of newly issued shares (the “Seller Class V Shares”) of Class V common stock of the registrant, par value

$0.0001 per share(“Zeo Class V Common Stock”), which are non-economic, voting shares of Zeo, equal to the number of Seller

OpCo Units (as defined in the Business Combination Agreement)and in exchange, OpCo issued to ESGEN (i) a number of Class A common units

of OpCo (the “Manager OpCo Units”) which equaled the total number of shares of the Zeo Class A Common Stock issued and outstanding

immediately after the Closing and (ii) a number of warrants to purchase Manager OpCo Units which equaled the number of SPAC Warrants

(as defined in the Business Combination Agreement) issued and outstanding immediately after the Closing (the transactions described above

in this paragraph, the “ESGEN Contribution”).

Immediately following the ESGEN Contribution, (x) the Sellers contributed to

OpCo the Sunergy Company Interests and (y) in exchange therefor, OpCo transferred to the Sellers the Seller OpCo Units and the Seller

Class V Shares.

Prior to the Closing, Sellers transferred 24.167%

of their Sunergy Company Interests (which were thereafter exchanged for Seller OpCo Units and Seller Class V Shares at the Closing, as

described above) pro rata to Sun Managers, LLC, a Delaware limited liability company (“Sun Managers”), in exchange for Class

A Units (as defined in the Sun Managers limited liability company agreement (the “SM LLCA”) in Sun Managers.

In connection

with such transfer, Sun Managers executed a joinder to, and became a “Seller” for purposes of, the Business Combination Agreement.

Sun Managers intends to grant Class B Units (as defined in the SM LLCA) in Sun Managers through the Sun Managers, LLC Management Incentive

Plan (the “Management Incentive Plan”) adopted by Sun Managers to certain eligible employees or service providers of OpCo,

Sunergy or their subsidiaries, in the discretion of Timothy Bridgewater, as manager of Sun Managers.

Such Class B Units may be subject

to a vesting schedule, and once such Class B Units become vested, there may be an exchange opportunity through which the grantees may

request (subject to the terms of the Management Incentive Plan and the OpCo A&R LLC Agreement (as defined below)) the exchange of

their Class B Units into Seller OpCo Units (together with an equal number of Seller Class V Shares), which may then be converted into

Zeo Class A Common Stock (subject to the terms of the Management Incentive Plan and the OpCo A&R LLC Agreement).

Grants under the

Management Incentive Plan will be made after Closing.

As of the Closing Date, upon consummation of the

Business Combination, the only outstanding shares of capital stock of the registrant were shares of Zeo Class A Common Stock and Zeo Class

V Common Stock.

In connection with entering into the Business

Combination Agreement, ESGEN and the Sponsor entered into a subscription agreement, dated April 19, 2023, which ESGEN, the Sponsor and

OpCo subsequently amended and restated on January 24, 2024 (the “Sponsor Subscription Agreement”), pursuant to which, among

other things, the Sponsor agreed to purchase an aggregate of 1,000,000 preferred units of OpCo(“Convertible OpCo Preferred Unitrs”)

convertible into Exchangeable OpCo Unites (as defined below) (and be issued an equal number of shares of Zeo Class V Common Stock) concurrently

with the Closing at a cash purchase price of $10.00 per unit and up to an additional 500,000 Convertible OpCo Preferred Units (together

with the concurrent issuance of an equal number of shares of Zeo Class V Common Stock) during the six months after Closing if called

Prior to the Closing, ESGEN informed the Sponsor that it wished to call for the additional 500,000 Convertible OpCo Preferred

Units at the Closing and, as a result, a total of 1,500,000 Convertible OpCo Preferred Units and an equal number of shares of Zeo Class

V Common Stock were issued to Sponsor pursuant to the Sponsor Subscription Agreement for aggregate consideration of $15,000,000.

On April 5, 2023, the Company issued an unsecured

promissory note (the “Note”) in the principal amount of up to $1,500,000 to the Sponsor, which may be drawn down by the Company

from time to time prior to the consummation of the Sunergy Business Combination.

The Note does not bear interest, matures on the date

of consummation of the Sunergy Business Combination and is subject to customary events of default.

As of December 31, 2023, there was

$1,238,449 outstanding under the Note.

On October 17, 2023, ESGEN issued an amended and restated promissory

note (the “October 2023 Promissory Note”) in the principal amount of up to $2,500,000 to the Sponsor.

The October 2023 Promissory

Note amends, restates, replaces and supersedes the Note dated April 5, 2023.

The October 2023 Promissory Note could be drawn down by ESGEN

from time to time prior to the consummation of ESGEN’s initial Business Combination.

The October 2023 Promissory Note did not bear

interest, matured on the date of consummation of the Business Combination and was subject to customary events of default.

2023 Promissory Note, as well as the promissory note issued on April 17, 2021 to the Sponsor (“April 2021 Promissory Note”),

was not repaid and was cancelled at the closing of the Business Combination.

On January 24, 2024, ESGEN issued a new promissory note (“January

2024 Promissory Note”) in the principal amount of up to $750,000 to the Sponsor.

The January 2024 Promissory Note could be drawn

down by ESGEN from time to time prior to the consummation of ESGEN’s initial Business Combination for specific uses as designated

The January 2024 Promissory Note did not bear interest, matured on the date of consummation of the Business Combination and was

subject to customary events of default.

The principal amount under the January 2024 Promissory Note was paid at the closing of the Business

Combination from the funds that ESGEN had available to it outside of its Trust Account.

On March 6, 2024, the Company and, following consummation of the Business

Combination, New PubCo held its extraordinary general meeting of shareholders (the “Meeting”) and adopted the following proposals.

To approve and adopt the Business Combination Agreement.

To approve an amendment to the Company’s

existing organizational documents to eliminate the requirement that the Company retain at least $5,000,001 of net tangible assets

following the redemption of Public Shares in connection with the Business Combination and to authorize ESGEN to redeem Public Shares

in amounts that would cause ESGEN’s net tangible assets to be less than $5,000,001.

To approve the domestication of the Company.

To approve and adopt the proposed charter and proposed

bylaws of New PubCo.

To approve the following material differences between

the Existing Organizational Documents and the Proposed Charter upon the Domestication.

Advisory Charter

Proposal 5A – the increase in the authorized share capital of ESGEN from $27,600 divided into 250,000,000 Class A ordinary shares,

25,000,000 Class B ordinary shares, and 1,000,000 preference shares, par value $0.0001 per share, to authorized capital stock of 410,000,000

shares, consisting of (i) 300,000,000 shares of Class A common stock, par value $0.0001 per share, of New PubCo (“New PubCo Class

A Common Stock”), (ii) 100,000,000 shares of Class V common stock, par value $0.0001 per share, of New PubCo (“New PubCo Class

V Common Stock” and, together with the New PubCo Class A Common Stock, the “New PubCo Common Stock”), and (iii) 10,000,000

shares of preferred stock, par value $0.0001 per share, of New PubCo.

Advisory Charter

Proposal 5B – To provide that the Proposed Charter may be amended by the affirmative vote of the holders of at least 66 2/3% of

the voting power of outstanding shares of New PubCo Common Stock entitled to vote at an election of directors, voting together as a single

class, in addition to the affirmative vote of any particular class that shall be entitled to vote separately upon any proposed amendment

to the Proposed Charter that would alter or change the powers, preferences or special rights of such class of New PubCo Common Stock in

a manner that is disproportionately adverse as compared to the other classes of New PubCo Common Stock.

Advisory Charter

Proposal 5C – To provide for (i) the filling of newly-created directorships or an vacancy on the New PubCo Board by a majority vote

of the remaining directors then in office, even if less than a quorum, and not by the stockholders and (ii) the removal of directors with

or without cause and only upon the affirmative vote of the holders of a majority in voting power of all the then outstanding shares of

stock entitled to vote generally in the election of directors, voting together as a single class.

Advisory Charter

Proposal 5D – To provide that, unless New PubCo consents in writing to the selection of an alternative forum, the Delaware Court

of Chancery and any appellate court thereof shall be the sole and exclusive forum for certain types of actions or proceedings under Delaware

statutory or common law.

Advisory Charter

Proposal 5E – To provide that each holder of record of New PubCo Class A Commo Stock and New PubCo Class V Common Stock shall be

entitled to one vote per share on all matters which stockholders generally are entitled to vote.

Advisory Charter

Proposal 5F – To provide that the Proposed Charter will not contain provisions related to blank check company status.

Advisory Charter

Proposal 5G – To provide that the stockholders of New PubCo may act by written consent for so long as the holders of shares of New

PubCo Class V Common Stock beneficially own, directly or indirectly, a majority of the total voting power of New PubCo Common Stock entitled

to vote generally in the election of directors of New PubCo:

To approve, for the purposes of complying with the

applicable provisions of Nasdaq Listing Rule 5635, the issuance of shares of New PubCo Class A Common Stock, New PubCo Class V Common

Stock and New PubCo Warrants.

To approve the 2024 Omnibus Incentive Equity Plan

of New PubCo.

To approve the election of six (6) directors who

will serve on the New PubCo Board upon consummation of the Business Combination until New PubCo’s next annual meeting of stockholders

and until their respective successors are duly elected and qualified, or until their earlier death, resignation, retirement or removal.

On March 11, 2024, the Company entered into a non-redemption agreement

(the “Non-Redemption Agreement”) with The K2 Principal Fund L.P.

(“K2”), pursuant to which K2 agreed (i) to purchase

at least 174,826 of the Company’s Class A ordinary shares, par value $0.0001 per share (the “Class A ordinary shares”),

in the open market from investors who had elected to redeem such shares in connection with the Company’s March 6, 2024 extraordinary

general meeting of shareholders and (ii) not to redeem and to validly rescind any redemption requests on such purchased Class A ordinary

In exchange for the foregoing commitments to purchase and not redeem

such Class A ordinary shares, the Company agreed to issue, for no consideration an aggregate of 225,174 shares of Class A common stock,

par value $0.0001 per share, of Zeo Energy Corp., a Delaware corporation and the successor to ESGEN following the transactions contemplated

by the Business Combination Agreement, at the consummation of the Business Combination.

RESULTS OF OPERATIONS

All of our activity from April 19, 2021 (inception) through December 31, 2022, was in preparation for our initial public offering, and since our initial public offering, our activity has been limited to the search for a prospective initial Business Combination.

We will not generate any operating revenues until the closing and completion of our initial Business Combination.

For the year ended December 31, 2022, we had a net income of $14,334,250, which consisted of a change in the fair value of warrant liabilities of $13,179,936, investment income on marketable securities held in Trust Account of $3,984,431, partially offset by a loss from operations of $2,830,117.

For the period from April 19, 2021 (inception) through December 31, 2021, we had a net income of $9,460,263, which consisted of change in fair value of warrant liabilities of $10,944,240, investment income on marketable securities held in Trust Account of $2,137, partially offset by a loss from operation including formation and operating costs and operating costs – related party of $776,033 and warrant issuance costs of $710,081.

All of our activity from April 19, 2021 (inception) through December

31, 2023, was in preparation for our initial public offering, and since our initial public offering, including the effectuation of the

Charter Amendment and the negotiation and entry into the Business Combination Agreement.

We will not generate any operating revenues until

the closing and completion of our initial Business Combination.

For the year ended December 31, 2023, we had a net loss of $3,001,194,

which consisted of a change in fair value of warrant liabilities of $317,376 and operating costs of $5,059,125, partially offset by interest

and investment income on marketable securities and cash held in Trust Account of $1,950,267 and recovery of deferred offering costs allocated

to warrants of $425,040.

For the year ended December 31, 2022, we had a net income of $14,334,250,

which consisted of a change in the fair value of warrant liabilities of $13,179,936, interest and investment income on marketable securities

and cash held in Trust Account of $3,984,431, partially offset by a loss from operations of $2,830,117.

Liquidity and Capital Resources

As of December 31, 2022, we had cash of $614,767 and owe $1,866,992 in accrued offering costs and expenses and an additional $315,539 payable to related parties.

Prior to the completion of our initial public offering, our liquidity needs had been satisfied through a capital contribution from the sponsor of $25,000 and a loan to us of up to $300,000 by our sponsor under an unsecured promissory note, which had an outstanding balance of $171,346 at December 31, 2022.

In addition, in order to finance transaction costs in connection with a Business Combination, our Sponsor, an affiliate of our Sponsor or certain of our officers and directors may, but are not obligated to, provide us Working Capital Loans.

As of December 31, 2022, there were no amounts outstanding under any Working Capital Loans.

Based on the foregoing, management believes that we will not have sufficient working capital and borrowing capacity to meet our needs through the earlier of the consummation of a Business Combination or one year from this filing.

Over this time period, we will be using these funds for paying existing accounts payable, identifying and evaluating prospective initial Business Combination candidates, performing due diligence on prospective target businesses, paying for travel expenditures, selecting the target business to merge with or acquire, and structuring, negotiating and consummating the Business Combination.

In connection with the company’s assessment of going concern considerations in accordance with ASC Subtopic 205-40, “Presentation of Financial Statements – Going Concern”, the company has until April 22, 2023 (as extended) to consummate a Business Combination.

If a Business Combination is not consummated by this date and an extension not obtained, there will be a mandatory liquidation and subsequent dissolution of the company.

Although the company intends to consummate a Business Combination on or before April 22, 2023 (as extended), it is uncertain whether the Company will be able to consummate a Business Combination by this time.

Management has determined that the mandatory liquidation, should a Business Combination not occur, and an extension is not obtained, as well as the potential for us to have insufficient funds available to operate our business prior to a Business Combination, and potential subsequent dissolution, raises substantial doubt about the Company’s ability to continue as a going concern.

It is uncertain whether the company will be able to consummate a Business Combination or obtain an extension by this time.

No adjustments have been made to the carrying amounts of assets or liabilities should the company be required to liquidate after April 22, 2023 (as extended).

As of December 31, 2023, we had cash of $60,518 and owe $5,669,349

in accounts payable and accrued expenses and an additional $2,122,937 payable to related parties.

Prior to the completion of our initial

public offering, our liquidity needs had been satisfied through a capital contribution from the Sponsor of $25,000 and a loan to us of

up to $300,000 by our Sponsor under an unsecured promissory note, which had an outstanding balance of $171,346 at December 31, 2023 and

The Sponsor has agreed to defer repayment of the loan until the close of the Business Combination.

On April 5, 2023, we issued the

Note in the principal amount of up to $1,500,000 to our Sponsor, which may be drawn down by us from time to time prior to the consummation

of the initial Business Combination.

As of December 31, 2023, there was $1,612,398 outstanding under the Note.

In addition, in order to finance transaction costs in connection with

a business combination, our Sponsor, an affiliate of our Sponsor or certain of our officers and directors may, but are not obligated to,

provide us Working Capital Loans.

As of December 31, 2023 and 2022, there were no amounts outstanding under any Working Capital Loans.

The Company anticipates that its cash will not be sufficient to allow

the Company to operate for at least the next 12 months from the issuance of the financial statements.

The Company has incurred and expects

to continue to incur significant costs in pursuit of its acquisition plans and the closing of the business combination described in Note

These conditions raise substantial doubt about the Company’s ability to continue as a going concern.

The Company will seek additional capital through other financing alternatives.

There can be no assurance that new financings or other transactions will be available to the Company on commercially acceptable terms,

Should the Company fail to raise additional cash from outside sources, this would have a material adverse impact on its operations.

The accompanying financial statements have been prepared assuming the

Company will continue to operate as a going concern, which contemplates the realization of assets and settlement of liabilities in the

normal course of business, and do not include any adjustments to reflect the possible future effects on the recoverability and classification

of assets or the amounts and classifications of liabilities that may result from uncertainty related to its ability to continue as a going

Contractual Obligations

Other than the below, we do not have any long-term debt obligations, capital lease obligations, operating lease obligations, purchase obligations or long-term liabilities.

Other than the below, we do not have any long-term debt obligations,

capital lease obligations, operating lease obligations, purchase obligations or long- term liabilities.

Underwriting Agreement

We granted the underwriters a 45-day option to purchase up to 3,600,000 additional Units to cover over-allotments, if any, at the IPO price less the underwriting commissions.

The underwriters exercised the full over-allotment at the consummation of our initial public offering on October 22, 2021.

The underwriters earned an underwriting commission of two percent (2%) of the gross proceeds of the IPO, or $5,520,000, which we paid in cash at closing of the offering.

Additionally, the underwriters are entitled to a deferred underwriting commission of 3.5% of the gross proceeds of our initial public offering upon the completion of our initial Business Combination.

The IPO underwriters were entitled to a deferred underwriters fee of

3.5% of the gross proceeds of our IPO upon the completion of our initial Business Combination.

In April 2023, the IPO underwriters waived

any right to receive such deferred underwriters fee and will therefore receive no additional underwriters fee in connection with the Closing.

Office Space, Secretarial and Administrative Services

Commencing on the date that our securities were first listed on the Nasdaq through the earlier of consummation of our initial Business Combination and the liquidation, we pay our sponsor a total of $10,000 per month for office space, utilities, secretarial support and administrative services (which is accrued in “Due to related party”).

As of December 31, 2022 and 2021, we had incurred $120,000 and $24,193, respectively, pursuant to this agreement, which was accrued in “Due to related party”.

Through the earlier of consummation of the initial Business Combination

or the liquidation, the Company incurs $10,000 per month for office space, utilities, secretarial support and administrative services

provided by the Sponsor.

For the year ended December 31, 2023 and 2022, the Company incurred $120,000, pursuant to this agreement.

amounts have been paid for these services.

As of December 31, 2023 and 2022, the Company has accrued and reported on the balance sheets

$264,193 and $144,193, respectively, pursuant to this agreement, and included in “Due to related party”.

Registration Rights

The holders of the Founder Shares, Private Placement Warrants and any warrants that may be issued upon conversion of Working Capital Loans (and any Class A ordinary shares issuable upon the exercise of the Private Placement Warrants and warrants that may be issued upon conversion of Working Capital Loans) are entitled to registration rights pursuant to a registration and shareholder rights agreement signed at the closing of our initial public offering.

The holders of these securities are entitled to make up to three demands, excluding short form demands, that we register such securities.

In addition, the holders have certain “piggy-back” registration rights with respect to registration statements filed subsequent to our completion of the initial Business Combination.

However, the registration and shareholder rights agreement provides that we will not permit any registration statement filed under the Securities Act of 1933, as amended (the “Securities Act”) to become effective until termination of the applicable lock-up period, which occurs (i) in the case of the Founder Shares, and (ii) in the case of the Private Placement Warrants and the respective Class A ordinary shares issuable upon exercise of the Private Placement Warrants, 30 days after the completion of the initial Business Combination.

We will bear the expenses incurred in connection with the filing of any such registration statements.

The holders of the Founder Shares, Private Placement Warrants and any warrants that may be issued upon conversion of Working Capital Loans (and any Class A ordinary shares issuable upon the exercise of the Working Capital Loans and warrants that may be issued upon conversion of Working Capital Loans) will be entitled to registration rights pursuant to a registration and expected shareholder rights agreement signed at the closing of our initial public offering.

The holders of these securities are entitled to make up to three demands, excluding short form demands, that the company register such securities.

In addition, the holders have certain “piggy-back” registration rights with respect to registration statements filed subsequent to the completion of its initial Business Combination.

However, the registration and shareholder rights agreement provides that we will not permit any registration statement filed under the Securities Act to become effective until termination of the applicable lockup period, which occurs (i) in the case of the Founder Shares, as described in the following paragraph, and (ii) in the case of the Private Placement Warrants and the respective Class A ordinary shares underlying such warrants, 30 days after the completion of the initial Business Combination.

We will bear the expenses incurred in connection with the filing of any such registration statements.

Except as described herein, the sponsor and its directors and executive officers have agreed not to transfer, assign or sell any of their Founder Shares until the earliest of (A) one year after the completion of the initial Business Combination or (B) subsequent to the initial Business Combination, (x) if the closing price of the Class A ordinary shares equals or exceeds $12.00 per share (as adjusted for share subdivisions, share capitalizations, reorganizations, recapitalizations and the like) for any 20 trading days within any 30-trading day period commencing at least 150 days after the initial Business Combination, or (y) the date on which we complete a liquidation, merger, share exchange or other similar transaction that results in all of the public shareholders having the right to exchange their ordinary shares for cash, securities or other property.

Any permitted transferees would be subject to the same restrictions and other agreements of the sponsor and its directors and executive officers with respect to any founder shares.

Any permitted transferees will be subject to the same restrictions and other agreements of the Sponsor with respect to any Founder Shares.

In addition, pursuant to the registration and shareholder rights agreement, the sponsor, upon and following consummation of an initial Business Combination, will be entitled to nominate three individuals for election to the board of directors, as long as the sponsor holds any securities covered by the registration and shareholder rights agreement.

The holders of the Founder Shares, Private Placement Warrants and any

warrants that may be issued upon conversion of Working Capital Loans (and any Class A ordinary shares issuable upon the exercise of the

Private Placement Warrants and warrants that may be issued upon conversion of Working Capital Loans) are entitled to registration rights

pursuant to a registration and shareholder rights agreement signed at the closing of our initial public offering (the “IPO Registration

Rights Agreement”).

The holders of these securities are entitled to make up to three demands, excluding short form demands, that

we register such securities.

In addition, the holders have certain “piggy-back” registration rights with respect to registration

statements filed subsequent to our completion of the initial Business Combination.

However, the registration and shareholder rights agreement

provides that we will not permit any registration statement filed under the Securities Act of 1933, as amended (the “Securities

Act”) to become effective until termination of the applicable lock-up period, which occurs (i) in the case of the Founder Shares,

and (ii) in the case of the Private Placement.

Warrants and the respective Class A ordinary shares issuable upon exercise of the Private

Placement Warrants, 30 days after the completion of the initial Business Combination.

We will bear the expenses incurred in connection

with the filing of any such registration statements.

The holders of the Founder Shares, Private Placement Warrants and any warrants that

may be issued upon conversion of Working Capital Loans (and any Class A ordinary shares issuable upon the exercise of the Working Capital

Loans and warrants that may be issued upon conversion of Working Capital Loans) will be entitled to registration rights pursuant to a

registration and expected shareholder rights agreement signed at the closing of our initial public offering.

The holders of these securities

are entitled to make up to three demands, excluding short form demands, that the company register such securities.

In addition, the holders have certain “piggy-back” registration

rights with respect to registration statements filed subsequent to the completion of its initial Business Combination.

However, the registration

and shareholder rights agreement provides that we will not permit any registration statement filed under the Securities Act to become

effective until termination of the applicable lockup period, which occurs (i) in the case of the Founder Shares, as described in the following

paragraph, and (ii) in the case of the Private Placement Warrants and the respective Class A ordinary shares underlying such warrants,

30 days after the completion of the initial Business Combination.

We will bear the expenses incurred in connection with the filing of

any such registration statements.

Except as described herein, the Sponsor and its directors and executive

officers have agreed not to transfer, assign or sell any of their Founder Shares until the earliest of (A) one year after the completion

of the initial Business Combination or (B) subsequent to the initial Business Combination, (x) if the closing price of the Class A ordinary

shares equals or exceeds $12.00 per share (as adjusted for share subdivisions, share capitalizations, reorganizations, recapitalizations

and the like) for any 20 trading days within any 30-trading day period commencing at least 150 days after the initial Business Combination,

or (y) the date on which we complete a liquidation, merger, share exchange or other similar transaction that results in all of the public

shareholders having the right to exchange their ordinary shares for cash, securities or other property.

Any permitted transferees would

be subject to the same restrictions and other agreements of the Sponsor and its directors and executive officers with respect to any founder

Any permitted transferees will be subject to the same restrictions and other agreements of the Sponsor with respect to any Founder

In addition, pursuant to the registration and shareholder rights agreement,

the Sponsor, upon and following consummation of an initial Business Combination, will be entitled to nominate three individuals for election

to the board of directors, as long as the Sponsor holds any securities covered by the registration and shareholder rights agreement.

A&R Registration Rights Agreement

The Amended Business Combination Agreement contemplates that, at the

Closing, Sunergy, Sunergy’s underlying equityholders and the Initial Shareholders (as defined below) (collectively, the “New

PubCo Holders”) and New PubCo will enter into an amended and restated IPO Registration Rights Agreement (the “A&R Registration

Rights Agreement”), pursuant to which, among other things, New PubCo and the Initial Shareholders will agree to amend and restate

the Registration and Shareholder Rights Agreement, dated as of October 22, 2021, entered into by them in connection with ESGEN’s

initial public offering.

Pursuant to the A&R Registration Rights Agreement, New PubCo will agree that, within 30 days following the

consummation of the Sunergy Business Combination, it will use its commercially reasonable efforts to file a resale shelf registration

statement on behalf of Sunergy, Sunergy’s underlying equityholders and the Initial Shareholders registering (i) New PubCo’s

private placement warrants, (ii) any outstanding shares of New PubCo Class A Common Stock held by the New PubCo Holders, (iii) any shares

of New PubCo Class A Common Stock issued or issuable upon exchange of an equivalent number of Class B units of OpCo and Class V common

stock of New PubCo, par value $0.0001 per share, issued to the Sellers pursuant to the Amended Business Combination Agreement, (iv) any

shares of New PubCo Class A Common Stock issued or to be issued to any of the New PubCo Holders in connection with the Sunergy Business

Combination and (v) any other equity security of New PubCo issued or issuable with respect to any of the foregoing by way of a stock dividend

or stock split or in connection of shares, recapitalization, merger, consolidation or reorganization (collectively, the “Registrable

Securities”);

provided, however, that as to any particular Registrable Securities, such securities shall cease to be Registrable

Securities when (A) a registration statement with respect to the sale of such Registrable Securities becomes effective under the Securities

Act and such Registrable Securities shall have been sold, transferred, disposed of or exchanged in accordance with such registration statement,

(B) such Registrable Securities shall have been otherwise transferred and such transferee is not entitled to the registration rights provided

in the A&R Registration Rights Agreement, (C) such Registrable Securities shall have ceased to be outstanding, or (D) such Registrable

Securities may be sold without registration pursuant to Rule 144 and Rule 145, as applicable, promulgated under the Securities Act (or

any successor rule promulgated thereto) (but with no volume or other restrictions or limitations).

Additionally, the A&R Registration Rights Agreement will also provide,

subject to certain underwriter cutbacks and suspension periods, (i) certain demand rights entitling the New PubCo Holders the right to

require New PubCo to effect an underwritten offering and (ii) certain piggyback rights entitling the New PubCo Holders the right to include

such New PubCo Holder’s Registrable Securities in any underwritten offering that New PubCo proposes to consummate for its own account

or for the account of its stockholders.

Concurrently with the execution of the Amended Business Combination

Agreement, the Sponsor, the independent directors of the board of directors of ESGEN and one or more client accounts of Westwood Group

Holdings, Inc.

(successor to Salient Capital Advisors, LLC) (collectively, the “Initial Shareholders”) entered into an amendment

(as amended, the “Amendment to the Letter Agreement”) to that certain Letter Agreement, dated as of October 22, 2021, by and

between the Initial Shareholders, pursuant to which, among other things, each of the Initial Shareholders agreed (i) not to transfer his,

her or its ESGEN Class B ordinary shares (or the ESGEN Class A Common Stock issuable in exchange for such ESGEN Class B ordinary shares

pursuant to the Amended Business Combination Agreement) prior to the earlier of (A) six months after the Closing or (B) subsequent to

the Closing (x) if the last sale price of the ESGEN Class A Common Stock quoted on Nasdaq is greater than or equal to $12 per share (as

adjusted for stock splits, stock dividends, reorganizations, recapitalizations and the like) for any 20 trading days within a 30-consecutive

trading day period commencing at least 90 days after Closing, or (y) the date on which ESGEN completes a liquidation, merger, share exchange

or other similar transaction that results in all of the Company’s shareholders having the right to exchange their ESGEN Class A

ordinary shares (including any shares of ESGEN Class A Common Stock issuable in exchange for such ESGEN Class A ordinary shares) for cash,

securities or other property and (ii) each Initial Shareholder agreed to waive any adjustment to the conversion ratio set forth in the

governing documents of ESGEN with respect to the ESGEN Class B ordinary shares prior to the earlier of the ESGEN Share Conversion or the

Critical Accounting Estimates

The preparation of these financial statements in conformity with US GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of expenses during the reporting period.

Actual results could differ from those estimates.

The preparation of these financial statements in conformity with GAAP

requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent

assets and liabilities at the date of the financial statements and the reported amounts of expenses during the reporting period.

results could differ from those estimates.

We have not identified any critical accounting estimates.

Recent Accounting Pronouncements

Refer to Note 2 in the financial statements for the recent accounting pronouncements.

Refer to Note 2 (“Significant Accounting Policies”) in

the financial statements for the recent accounting pronouncements.

Off-Balance Sheet Financing Arrangements

As of December 31, 2022, we did not have any off-balance sheet arrangements as defined in Item 303(a)(4)(ii) of Regulation S-K and did not have any commitments or contractual obligations.

As of December 31, 2023, we did not have any off-balance sheet arrangements

and did not have any commitments or contractual obligations.

Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.

What changed 10-K

Item 7. Management’s Discussion and Analysis