What changed in this filing

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Item 1. Financial Statements

2025-06-16 compared with 2025-01-23 · 1437 added, 1260 removed, 303 unchanged (90% of the section changed)

Financial Statements

CONSOLIDATED BALANCE SHEETS

September 30,

(as restated – see note 3)

ZEO ENERGY CORP.

CONDENSED CONSOLIDATED BALANCE SHEETS

Current assets

Cash and cash equivalents

Accounts receivable, including $ 432,898 and $ 396,488 from related parties, net of allowance for credit losses of $ 3,145,168 and $ 862,580 , as of September 30, 2024, and December 31, 2023, respectively

Prepaid installation costs

Accounts receivable, including $ 286,103 and $ 191,662 from related parties, net of allowance for credit losses of $ 4,703,905 and $ 1,165,336 , as of March 31, 2025, and December 31, 2024, respectively

Contract asset, including $ 545,805 and $ 0 from related parties

Prepaid expenses and other current assets

Total current assets

Other assets, including $ 37,656 and $ 0 from related parties

Property, equipment and other fixed assets, net

2 unchanged sentences

Intangibles, net

Liabilities, mezzanine equity and stockholders’ equity

Related party note receivable

Liabilities, mezzanine equity and stockholders’ deficit

Current liabilities

Accounts payable

Accrued expenses and other current liabilities, including $ 430,685 and $ 2,415,966 with related parties at September 30, 2024, and December 31, 2023, respectively

Accrued expenses and other current liabilities, including $ 2,320,129 and $ 3,359,101 with related parties at March 31, 2025, and December 31, 2024, respectively

Current portion of long-term debt

1 unchanged sentence

Current portion of obligations under finance leases

Contract liabilities, including $ 0 and $ 1,160,848 with related parties as of September 30, 2024, and December 31, 2023, respectively

Contract liabilities, including $0 and $ 2,000 with related parties as of March 31, 2025, and December 31, 2024, respectively

Total current liabilities

1 unchanged sentence

Obligations under finance leases, non-current

Other liabilities

Warrant liabilities

3 unchanged sentences

Redeemable noncontrolling interests

Convertible preferred units

Convertible preferred units, 1,500,000 units issued and outstanding as of March 31, 2025 and December 31, 2024

Class B Units

Stockholders’ (deficit) equity

Class V common stock

Class A common stock

Stockholders’ deficit

Class V common stock, $ 0.0001 par value, 100,000,000 authorized shares;

26,730,000 and 35,230,000 shares issued and outstanding as of March 31, 2025, and December 31, 2024, respectively

Class A common stock, $ 0.0001 par value, 300,000,000 authorized shares;

21,796,464 and 13,252,964 shares issued and outstanding as of March 31, 2025, and December 31, 2024, respectively

Additional paid-in capital

1 unchanged sentence

( 39,568,892 )

Total stockholders’ (deficit) equity

( 103,440,891 )

Total liabilities, redeemable noncontrolling interests and stockholders’ (deficit) equity

accompanying notes are an integral part of these condensed consolidated financial statements.

CONSOLIDATED STATEMENTS OF OPERATIONS

Total stockholders’ deficit

( 23,077,815 )

( 88,912,079 )

Total liabilities, redeemable noncontrolling interests and stockholders’ deficit

The accompanying notes are an integral part

of these condensed consolidated financial statements.

ZEO ENERGY CORP.

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

Three Months Ended

September 30,

Nine Months Ended

September 30,

(as restated - see note 3)

Revenue, net of financing fees of $ 4,106,370 and $ 14,941,988 for the three months ended September 30, 2024, and 2023, respectively, and $ 9,627,453 and $ 33,726,283 for the nine months ended September 30, 2024, and 2023, respectively

Related party revenue, net of financing fees of $ 783,650 and $ 0 for the three months ended September 30, 2024, and 2023, respectively, and $ 7,767,491 and $ 0 for the nine months ended September 30, 2024, and 2023, respectively

Related party revenue, net

Total revenue

16 unchanged sentences

( 4,221,770 )

Income tax benefit

Income tax (expense) benefit

Net (loss) income

1 unchanged sentence

( 4,107,102 )

Net loss attributable to Sunergy Renewables, LLC prior to the Business Combination

Net loss attributable to Sunergy Renewables, LLC prior to the ESGEN Business Combination

Net loss subsequent to the Business Combination

9 unchanged sentences

Weighted average units outstanding, basic and diluted

accompanying notes are an integral part of these condensed consolidated financial statements.

CONDENSED CONSOLIDATED STATEMENTS OF CHANGES

IN REDEEMABLE

NONCONTROLLING INTERESTS AND STOCKHOLDERS’ EQUITY

FOR THE NINE MONTHS ENDED SEPTEMBER 30,

The accompanying notes are an integral part

of these condensed consolidated financial statements.

ZEO ENERGY CORP.

CONDENSED CONSOLIDATED STATEMENTS

OF CHANGES IN REDEEMABLE

NONCONTROLLING INTERESTS AND STOCKHOLDERS’ DEFICIT

FOR THE THREE MONTHS ENDED MARCH

Redeemable noncontrolling interests

4 unchanged sentences

( 103,440,891

Retroactive application of Business Combination (Note 1)

Stock-based compensation

Reverse recapitalization related deferred taxes and adjustments

Conversion of Class V common stock to Class A common stock

Subsequent measurement of redeemable noncontrolling interests

Net income (loss)

Balance, March 31, 2025

The accompanying notes are an integral part

of these condensed consolidated financial statements.

ZEO ENERGY CORP.

CONDENSED CONSOLIDATED STATEMENTS

OF CHANGES IN REDEEMABLE

NONCONTROLLING INTERESTS AND STOCKHOLDERS’ EQUITY

FOR THE THREE MONTHS ENDED MARCH

noncontrolling interests

A Convertible

Preferred Units

Stockholders’

Balance, December 31, 2023

$ ( 533,345 )

Retroactive application of Business Combination

( 1,000,000 )

( 31,155,864 )

Balance, December 31, 2023

26 unchanged sentences

( 173,047,938 )

Stock-based compensation

Subsequent measurement of redeemable noncontrolling interests

( 117,877,583 )

Net income (loss)

( 1,863,917 )

Balance, June 30, 2024

( 55,452,171 )

( 53,030,257 )

Stock-based compensation

Class A common stock issued for services

Reverse recapitalization related deferred taxes and adjustments

Subsequent measurement of redeemable noncontrolling interests

( 12,669,083 )

Net income (loss)

( 2,846,717 )

Balance, September 30, 2024

$ ( 43,207,350 )

$ ( 39,327,410 )

accompanying notes are an integral part of these condensed consolidated financial statements.

CONDENSED CONSOLIDATED STATEMENTS OF CHANGES

IN REDEEMABLE

NONCONTROLLING INTERESTS AND STOCKHOLDERS’ EQUITY

FOR THE NINE MONTHS ENDED SEPTEMBER 30,

Redeemable noncontrolling interests

Preferred Units

Stockholders’

Balance, December 31, 2022

Retroactive application of Business Combination (Note 1)

( 1,000,000 )

( 31,155,864 )

Balance, December 31, 2022

Stockholder distributions

Net income prior to the Business

Combination (as restated – see note 3)

Balance, March 31, 2023, as restated

Stockholder distributions

Net income prior to the Business

Combination (as restated – see note 3)

Balance, June 30, 2023, as restated

Stockholder distributions

( 2,761,876 )

Net income prior to the Business

Combination (as restated – see note 3)

Balance, September 30, 2023, as restated

accompanying notes are an integral part of these condensed consolidated financial statements.

CONSOLIDATED STATEMENTS OF CASH FLOWS

Nine Months Ended

September 30,

(as restated – see note 3)

The accompanying notes are an integral part

of these condensed consolidated financial statements.

ZEO ENERGY CORP.

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

Three Months Ended

Cash Flows from Operating Activities

Net (loss) income

$ ( 13,319,363 )

Adjustment to reconcile net (loss) income to cash (used in) provided by operating activities

$ ( 4,107,102 )

Adjustment to reconcile net loss to cash used in operating activities

Depreciation and amortization

Gain on disposal of fixed assets

Change in fair value of warrant liabilities

Provision for credit losses

Noncash operating lease expense

Noncash finance lease expense

Stock based compensation expense

Non-cash operating lease expense

Stock-based compensation

Changes in operating assets and liabilities:

1 unchanged sentence

( 2,297,517 )

( 7,186,538 )

Accounts receivable due from related parties

Prepaid installation costs

( 2,692,841 )

Contract assets

Prepaids and other current assets

Due from related party

( 1,420,528 )

Other assets from related parties

Accounts payable

3 unchanged sentences

( 1,038,972 )

( 2,148,960 )

Contract liabilities

3 unchanged sentences

Operating lease payments

Net cash (used in) provided by operating activities

Net cash used in operating activities

( 2,263,438 )

( 10,151,989 )

Cash flows from Investing Activities

2 unchanged sentences

Cash flows from Financing Activities

Proceeds from the issuance of debt

Repayments of finance lease liabilities

2 unchanged sentences

Distributions to members

( 3,289,518 )

Net cash provided by (used in) financing activities

( 3,426,866 )

Net (decrease) increase in cash and cash equivalents

Net cash (used in) provided by financing activities

Net decrease in cash and cash equivalents

( 2,740,012 )

3 unchanged sentences

Cash paid for interest

Cash paid for income taxes

Noncash finance lease expense

Non-cash transactions

Right-of-use assets obtained in exchange for operating lease liabilities

Right-of-use assets obtained in exchange for finance lease liabilities

Deferred equity issuance costs

1 unchanged sentence

Issuance of Class A common stock to backstop investors

Issuance of Class A common stock for services

Preferred dividends

accompanying notes are an integral part of these condensed consolidated financial statements.

to the Condensed Consolidated Financial Statements

ORGANIZATION AND BUSINESS OPERATION

(formerly known as ESGEN Acquisition Corporation or “ESGEN”), collectively with its subsidiaries (the “Company”

or “Zeo”) is in the business of marketing, sales and installation, warranty coverage and maintenance of solar panel technology

to individual households within the United States.

As part of this, the Company may also provide roofing repairs and construction.

was a blank check company originally incorporated on April 19, 2021 as a Cayman Islands exempted company for the purpose of effecting

a merger, share exchange, asset acquisition, share purchase, reorganization or similar business combination with one or more businesses.

On October 22, 2021, ESGEN consummated an initial public offering, after which its securities began trading on the Nasdaq Stock Market

LLC (“Nasdaq”).

2024 (the “Closing Date”), the Company 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 equity holders 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

Upon the Domestication,

each then-outstanding ESGEN Class A Ordinary Share was cancelled and converted into one share of Class A common stock of the Company,

par value $0.0001 per share (“Zeo Class A Common Stock”), and each then-outstanding ESGEN Public Warrant was assumed and

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 converted into one share of Zeo Class A Common Stock and one-half of one warrant of the Company.

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 stockholders), and (2) a number of newly issued shares of Class V common stock of the registrant, par value $ 0.0001 per share,

which generally have only voting rights (the “Zeo Class V Common Stock”), equal to the number of Seller OpCo Units (as defined

in the Business Combination Agreement) (the “Seller Class V Shares”).

In exchange, OpCo issued to ESGEN (i) a number of Class

A common units of OpCo (the “Manager OpCo Units”) which equaled the number of total 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.

to the Condensed Consolidated Financial Statements

Prior to the Closing, the 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.

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 amended and restated limited liability company agreement in its entirely (the

“OpCo A&R LLC Agreement”)) 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 OpCo preferred units (and be issued an

equal number of shares of Zeo Class V Common Stock) (“Convertible OpCo Preferred Units”) 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 nine months after Closing if called for by Zeo (the “Sponsor

PIPE Investment”).

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 were issued to Sponsor in

return for aggregate consideration of $ 15,000,000 .

for the Business Combination

Combination was accounted for as a reverse recapitalization with ESGEN being treated as the acquired company since there was no change

in control in accordance with the guidance for common control transactions in Accounting Standards Codification (“ASC”) 805-50,

Business Combinations – Related Issues (“ASC 805-50”).

Accordingly, the financial statements of the combined

entity will represent a continuation of the financial statements of Sunergy with the Business Combination treated as the equivalent of

Sunergy issuing stock for the net assets of ESGEN, accompanied by a recapitalization.

The net assets of ESGEN were stated at historical

cost, with no goodwill or other intangible assets recorded.

Operations prior to the Business Combination were those of Sunergy.

The accompanying notes are an integral part

of these condensed consolidated financial statements.

Zeo Energy Corp.

Notes to the Condensed Consolidated Financial

March 31, 2025

NOTE 1 - ORGANIZATION AND BUSINESS OPERATION

Zeo Energy Corp.

(formerly known as ESGEN Acquisition Corporation or

“ESGEN”), collectively with its subsidiaries (the “Company” or “Zeo”) is in the business of marketing,

sales and installation, and maintenance of solar panel technology to individual households within the United States.

As part of this,

the Company may also provide roofing repairs and construction.

Zeo Energy Corp.

was a blank check company originally incorporated

on April 19, 2021 as a Cayman Islands exempted company for the purpose of effecting a merger, share exchange, asset acquisition, share

purchase, reorganization or similar business combination with one or more businesses.

On October 22, 2021, ESGEN consummated an initial

public offering, after which its securities began trading on the Nasdaq Stock Market LLC (“Nasdaq”).

ESGEN Business Combination

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

its previously announced business combination (the “ESGEN Closing”), pursuant to that certain Business Combination Agreement,

dated as of April 19, 2023 (as amended on January 24, 2024, the “ESGEN 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 equity holders 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 “ESGEN Business Combination”).

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

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

Upon the Domestication, each then-outstanding ESGEN Class A Ordinary

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

A Common Stock”), and each then-outstanding ESGEN Public Warrant was assumed and 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 converted into one

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

In accordance with the terms of the ESGEN 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 ESGEN 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 ESGEN 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 ESGEN Closing (after giving effect to the exercise of redemption rights by ESGEN stockholders), and (2)

a number of newly issued shares of Class V common stock of the registrant, par value $ 0.0001 per share, which generally have only voting

rights (the “Zeo Class V Common Stock”), equal to the number of Seller OpCo Units (as defined in the ESGEN Business Combination

Agreement) (the “Seller Class V Shares”).

In exchange, OpCo issued to ESGEN (i) a number of Class A common units of OpCo (the

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

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

in the ESGEN Business Combination Agreement) issued and outstanding immediately after the ESGEN 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 ESGEN Closing, the Sellers transferred 24.167 % of their

Sunergy Company Interests (which were thereafter exchanged for Seller OpCo Units and Seller Class V Shares at the ESGEN 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 ESGEN 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 amended and restated limited liability company agreement in

its entirely (the “OpCo A&R LLC Agreement”)) 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 ESGEN Closing.

As of the ESGEN Closing Date, upon consummation of the ESGEN 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

In connection with entering into the ESGEN 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 OpCo preferred units (and be issued an equal number of shares of Zeo Class V Common Stock)

(“Convertible OpCo Preferred Units”) concurrently with the ESGEN 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 nine months after ESGEN Closing if called for by Zeo (the “Sponsor PIPE Investment”).

the ESGEN 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 were issued to Sponsor in return for aggregate consideration

of $ 15,000,000 .

Accounting for the ESGEN Business Combination

The ESGEN Business Combination was accounted for as a reverse recapitalization

with ESGEN being treated as the acquired company since there was no change in control in accordance with the guidance for common control

transactions in Accounting Standards Codification (“ASC”) 805-50, Business Combinations – Related Issues (“ASC

Accordingly, the financial statements of the combined entity will represent a continuation of the financial statements

of Sunergy with the ESGEN Business Combination treated as the equivalent of Sunergy issuing stock for the net assets of ESGEN, accompanied

by a recapitalization.

The net assets of ESGEN were stated at historical cost, with no goodwill or other intangible assets recorded.

prior to the ESGEN Business Combination were those of Sunergy.

Sunergy was determined to be the accounting acquirer based on evaluation

of the following facts and circumstances:

the evaluation of the OpCo A&R LLC Agreement, OpCo is considered to be a Variable Interest Entity (“VIE”) and ESGEN is

considered to be the primary beneficiary through its membership interest and manager powers conferred to it through the Class A Units.

For VIEs, the accounting acquirer is always considered to be the primary beneficiary.

As such, Zeo will consolidate OpCo and will be

considered the accounting acquirer;

however, further consideration of whether the entities are under common control was required in order

to determine whether there is an ultimate change in control and the acquisition method of accounting is required under ASC 805.

While Sunergy

did not control or have common ownership of ESGEN prior to the consummation of the Business Combination, the Company evaluated the ownership

of the new entity subsequent to the consummation of the transaction to determine if common control existed.

If the business combination

is between entities under common control, then the acquisition method of accounting is not applicable and the guidance in ASC 805-50

regarding common control should be applied instead.

The Financial Accounting Standards Board (“FASB”) ASC does not include

a definition of common control.

In practice, entities with a common parent entity, as determined under ASC 810, Consolidation ,

are generally considered to be under common control.

Emerging Issues Task force (“EITF”) Issue 02-5, “Definition of

‘Common Control’ in Relation to FASB Statement No.

141 (“EITF Issue 02-5”)”, which was never finalized

or codified, has also been applied in practice to determine when entities are under common control.

EITF Issue 02-5 indicates that common

control would exist in any of the following situations:

● An individual (including trusts in which the individual is the beneficial owner) or entity holds more than 50 percent of the voting ownership of each entity.

● Immediate family members hold more than 50 percent of the voting ownership interest of each entity, and there is no evidence that those family members would vote their shares in any way other than in concert.

Immediate family members include a married couple and their children, but not the married couple’s grandchildren.

Based upon the evaluation of the OpCo A&R LLC Agreement, OpCo is

considered to be a Variable Interest Entity (“VIE”) and ESGEN is considered to be the primary beneficiary through its membership

interest and manager powers conferred to it through the Class A Units.

For VIEs, the accounting acquirer is always considered to be the

primary beneficiary.

As such, Zeo will consolidate OpCo and will be considered the accounting acquirer;

however, further consideration

of whether the entities are under common control was required in order to determine whether there is an ultimate change in control and

the acquisition method of accounting is required under ASC 805.

While Sunergy did not control or have common ownership of ESGEN prior

to the consummation of the ESGEN Business Combination, the Company evaluated the ownership of the new entity subsequent to the consummation

of the transaction to determine if common control existed.

If the business combination is between entities under common control, then

the acquisition method of accounting is not applicable and the guidance in ASC 805-50 regarding common control should be applied instead.

The Financial Accounting Standards Board (“FASB”) ASC does not include a definition of common control.

In practice, entities

with a common parent entity, as determined under ASC 810, Consolidation , are generally considered to be under common control.

Issues Task force (“EITF”) Issue 02-5, “Definition of ‘Common Control’ in Relation to FASB Statement No.

141 (“EITF Issue 02-5”)”, which was never finalized or codified, has also been applied in practice to determine when

entities are under common control.

EITF Issue 02-5 indicates that common control would exist in any of the following situations:

individual (including trusts in which the individual is the beneficial owner) or entity holds more than 50 percent of the voting ownership

of each entity.

● Immediate family

members hold more than 50 percent of the voting ownership interest of each entity, and there is no evidence that those family members

would vote their shares in any way other than in concert.

Immediate family members include a married couple and their children, but not

the married couple’s grandchildren.

Entities might be owned in varying combinations among living siblings and their children.

Those situations require careful consideration of the substance of the ownership and voting relationships.

● Group of stockholders holds more than 50 percent of the voting ownership of each entity, and contemporaneous written evidence of an agreement to vote a majority of the entities’ shares in concert exists.

to the Condensed Consolidated Financial Statements

Business Combination and the contributions to Sun Managers, Sunergy was majority owned by 5 entities (the “Primary Sellers”):

● Southern Crown Holdings, LLC (wholly owned by Anton Hruby) — 230,000 Common Units ( 23 %)

● LAMADD LLC (wholly owned by Gianluca Guy) — 230,000 Common Units ( 23 %)

● JKae Holdings, LLC (wholly owned by Kalen Larsen) — 215,000 Common Units ( 21.5 %)

● Clarke Capital, LLC (wholly owned by Brandon Bridgewater) — 215,000 Common Units ( 21.5 %)

● White Horse Energy, LC (wholly owned by Timothy Bridgewater) — 90,000 Common Units ( 9 %)

above parties entered into a Voting Agreement, dated September 7, 2023.

The term of the Voting Agreement is for five years from the date

of the Voting Agreement.

The consummation of the Business Combination with ESGEN occurred within the term of the Voting Agreement.

Business Combination and the contributions to Sun Managers, the Primary Sellers had 98 % ownership in Sunergy.

Immediately following the

Business Combination, the Primary Sellers owned 83.8 % of the Common Stock of the registrant through their Zeo Class V Common Stock that

have voting interests.

The Voting Agreement constitutes contemporaneous written evidence of an agreement to vote a majority of the Primary

Sellers’ shares of the registrant in concert.

Accordingly, the Primary Sellers retain majority control through the voting of their

units in conjunction with the Voting Agreement immediately prior to the Business Combination and their shares following the Business

Combination and, therefore, there is no change of control before or after the Business Combination.

This conclusion is appropriate even

though there was no relationship or common ownership or control between Sunergy and ESGEN prior to the Business Combination.

the Business Combination should be accounted for in accordance with the guidance for common control transactions in ASC 805-50.

factors that were considered include the following:

the Business Combination, the Board has been comprised of one individual designated by ESGEN

and five individuals designated by Sunergy.

the Business Combination, management of the Company has been the existing management at Sunergy

immediately prior to the Business Combination.

The individual that was serving as the chief

executive officer and chief financial officer of Sunergy’s management team immediately

prior to the Business Combination continues substantially unchanged upon completion of the

Business Combination.

control transactions that include the transfer of a business, the reporting entity is required to account for the transaction in accordance

with the procedural guidance in ASC 805-50.

The C Corporation (ESGEN) is considered to be a substantive entity, the LLC (OpCo) is a business

and VIE, and the C Corporation is considered to be the accounting acquirer since it is the primary beneficiary of the LLC.

In a transaction

that is a combination of entities under common control, the acquirer (ESGEN) should recognize the acquired entity (OpCo and Sunergy)

on the same basis as the entities’ common parent.

LIQUIDITY AND GOING CONCERN

As of September 30, 2024, the Company had approximately $ 5.6 million

situations require careful consideration of the substance of the ownership and voting relationships.

Group of stockholders holds more than 50 percent of the voting ownership of each entity, and contemporaneous written evidence of an agreement

to vote a majority of the entities’ shares in concert exists.

Prior to the ESGEN Business Combination and the contributions

to Sun Managers, Sunergy was majority owned by 5 entities (the “Primary Sellers”):

Crown Holdings, LLC (wholly owned by Anton Hruby) — 230,000 Common Units ( 23 %)

LLC (wholly owned by Gianluca Guy) — 230,000 Common Units ( 23 %)

Holdings, LLC (wholly owned by Kalen Larsen) — 215,000 Common Units ( 21.5 %)

Capital, LLC (wholly owned by Brandon Bridgewater) — 215,000 Common Units ( 21.5 %)

Horse Energy, LC (wholly owned by Timothy Bridgewater) — 90,000 Common Units ( 9 %)

Each of the above parties entered into a Voting Agreement, each dated

September 7, 2023 (the “Voting Agreement”).

The term of the Voting Agreement is for five years from the date of the Voting

The consummation of the ESGEN Business Combination occurred within the term of the Voting Agreement.

Prior to the ESGEN Business Combination and the contributions

to Sun Managers, the Primary Sellers had 98 % ownership in Sunergy.

Immediately following the ESGEN Business Combination, the Primary Sellers

owned 83.8 % of the Common Stock of the registrant through their Zeo Class V Common Stock that have voting interests.

The Voting Agreement

constitutes contemporaneous written evidence of an agreement to vote a majority of the Primary Sellers’ shares of the registrant

Accordingly, the Primary Sellers retain majority control through the voting of their units in conjunction with the Voting

Agreement immediately prior to the ESGEN Business Combination and their shares following the ESGEN Business Combination and, therefore,

there is no change of control before or after the ESGEN Business Combination.

This conclusion is appropriate even though there was no

relationship or common ownership or control between Sunergy and ESGEN prior to the ESGEN Business Combination.

Accordingly, the ESGEN

Business Combination should be accounted for in accordance with the guidance for common control transactions in ASC 805-50.

Additional factors that were considered include the following:

Since the ESGEN Business Combination, the Board has been comprised of one individual designated by ESGEN and five individuals designated by Sunergy.

Since the ESGEN Business Combination, management of the Company has been the existing management at Sunergy immediately prior to the ESGEN Business Combination.

The individual that was serving as the chief executive officer and chief financial officer of Sunergy’s management team immediately prior to the ESGEN Business Combination continues substantially unchanged upon completion of the ESGEN Business Combination.

For common control transactions that include the transfer of

a business, the reporting entity is required to account for the transaction in accordance with the procedural guidance in ASC 805-50.

The C Corporation (ESGEN) is considered to be a substantive entity, the LLC (OpCo) is a business and VIE, and the C Corporation is considered

to be the accounting acquirer since it is the primary beneficiary of the LLC.

In a transaction that is a combination of entities under

common control, the acquirer (ESGEN) should recognize the acquired entity (OpCo and Sunergy) on the same basis as the entities’

common parent.

NOTE 2 - LIQUIDITY AND GOING CONCERN

As of March 31, 2025, the Company had approximately $ 3.5 million

of working capital including $ 2.9 million of cash and cash equivalents.

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during the preparation of these condensed consolidated financial statements.

The Company’s

condensed consolidated financial statements have been prepared on a going concern basis, which contemplates the realization of assets

and the satisfaction of liabilities in the normal course of business.

Historically, the Company’s primary source of funding to

support operations has been cash flows from operations.

SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

of Presentation and principles of Consolidation

The Company’s condensed consolidated financial statements

have been prepared on a going concern basis, which contemplates the realization of assets and the satisfaction of liabilities in the normal

course of business.

Historically, the Company’s primary source of funding to support operations has been cash flows from operations.

NOTE 3 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Basis of Presentation and principles of Consolidation

The accompanying interim unaudited condensed consolidated financial

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These statements should

be read in conjunction with Sunergy’s audited financial statements for the fiscal year ended December 31, 2023 as included with

the Company’s Form 8-K/A filed with the SEC on January 23, 2025.

The results reported in these unaudited condensed consolidated

financial statements are not necessarily indicative of results for the full fiscal year.

to the Condensed Consolidated Financial Statements

Our condensed consolidated financial statements include the accounts

of Zeo Energy Corp., the accounts of Sunergy Renewables, LLC, Sun First Energy, LLC, Sunergy Solar LLC and Sunergy Roofing and Construction,

Inc., all wholly owned subsidiaries, and ESGEN Opco, a variable interest entity (“VIE”) for which the Company is the primary

All intercompany balances and transactions have been eliminated in consolidation.

The December 31, 2023 balances reported

herein are derived from the condensed consolidated financial statements of Sunergy as included with the Company’s Current Report

on Form 8-K/A Amendment No.

3, filed with the SEC on January 23, 2025.

to Previously Reported Financial Statements

13, 2024, the audit committee of the board of directors of Zeo Energy Corp.

(the “Company”), after discussion with the management

of the Company, concluded that (i) the Company’s previously issued financial statements for the fiscal years ended December 31,

2023 and 2022 included in the Company’s Form 8-K as filed with SEC on March 20, 2024 and as amended on March 25, 2024 and August

19, 2024 (the “8-K”), (ii) the Company’s unaudited condensed consolidated interim financial statements for the three

months ended March 31, 2024 included in the Quarterly Report on Form 10-Q/A as filed with the SEC on August 19, 2024 (the “Q1 10-Q”),

(iii) the Company’s unaudited condensed consolidated interim financial statements for three and six months ended June 30, 2024

included in the Quarterly Report on Form 10-Q as filed with the SEC on August 19, 2024 (the “Q2 10-Q” and the Q3 2023 financial

statements as filed in the Esgen Acquisition Corporation Form S-4 amendment No.4 (S4/A) with the Securities and Exchange Commission (“SEC”)

on February 7, 2024, and together with the Q1 10-Q, the “10-Qs”) and (iv) the financial statements noted in items (i) through

(iii) above included in the Company’s Registration Statement on Form S-1, as amended (the “S-1”), which was declared

effective by the SEC on October 1, 2024, should no longer be relied upon due to the misstatement described below.

preparation of the Company’s unaudited condensed consolidated interim financial statements for the three and nine months ended

September 30, 2024, the Company’s management identified the following misstatements, to the Company’s financial statements:

the three and nine months ended September 30, 2023, cost of goods sold (exclusive of depreciation

and amortization) included selling expenses related to commissions earned by the sales team

and third party dealers related to obtaining sales orders and contracts.

The Company has

further determined that selling expenses should not be included in the cost of goods sold

(exclusive of depreciation and amortization) but instead in sales and marketing expense as

they do not relate to the direct delivery of the product or service but rather to the acquiring

of the customer and sale of the product or service.

This misstatement has no impact on total

operating expenses, (loss) income from operations or net (loss) income.

Additionally, this

misstatement has no impact on the balance sheets, statements of changes in redeemable noncontrolling

interests and stockholders’ equity or statements of cash flows.

of September 30, 2023 and December 31, 2023, finance lease assets and liabilities were included

in property, equipment and other fixed assets, net and in the current portion of long-term

debt and long-term debt.

The Company has further determined that the vehicles should be recorded

as right-of-use finance lease assets and finance lease liabilities.

Adjustments have been

made to depreciation and amortization expense and interest expense on the statement of operations

as well as adjustments to reflect the presentation of finance leases in the statement of

to the Condensed Consolidated Financial Statements

the nine months ended September 30, 2023, adjustments have been made to reflect the correct

presentation of operating leases within the statement of cash flows.

This has no impact on

total operating cash flows.

For the three and nine months ended September 30, 2023, due to the

nature of the underlying costs, reclassifications of expenses have been made between cost of goods sold (exclusive of depreciation and

amortization), sales and marketing and general and administrative.

This misstatement has no impact on total operating expenses, (loss)

income from operations or net (loss) income.

Additionally, this misstatement has no impact on the balance sheets, statements of changes

in redeemable noncontrolling interests and stockholders’ equity or statements of cash flows.

This Note discloses the nature of the restatement adjustments and discloses

the cumulative effects of these adjustments included in the Original S-4.

The effects of the misstatements have been corrected in all

impacted tables and footnotes throughout these unaudited condensed consolidated interim financial statements.

to the condensed consolidated statement of operations for the three months ended September 30, 2023

of goods sold (exclusive of depreciation and amortization shown below)

$ ( 8,477,406 )

and amortization

and marketing

and administrative

operating expenses

(Loss) Income

from operations

other income (expense), net

to the condensed consolidated statement of operations for the nine months ended September 30, 2023

of goods sold (exclusive of depreciation and amortization shown below)

$ ( 18,958,478 )

and amortization

and marketing

and administrative

operating expenses

(Loss) Income

from operations

other income (expense), net

to the Condensed Consolidated Financial Statements

Impact to the condensed consolidated statement of changes in redeemable

noncontrolling interests and members’ equity for the three and nine months ended September 30, 2023

Retained earnings

Net income prior to the business combination

Balance, March 31, 2023

Net income prior to the business combination

Balance, June 30, 2023

Net income prior to the business combination

Balance, September 30, 2023

Total Stockholders’ Equity

Net income prior to the business combination

Balance, March 31, 2023

Net income prior to the business combination

Balance, June 30, 2023

Net income prior to the business combination

Balance, September 30, 2023

to the condensed consolidated statement of cash flows for the nine months ended September 30, 2023

Cash Flows from Operating

Adjustment to reconcile net

loss to cash used in operating activities:

Depreciation and amortization

Non-cash operating lease

Non-cash finance lease expense

Changes in operating assets

and liabilities:

Operating lease

$ ( 399,611 )

$ ( 389,890 )

used in operating activities

from Investing Activities

Purchase of property,

plant and equipment

$ ( 907,563 )

$ ( 161,768 )

cash provided by investing activities

$ ( 907,563 )

$ ( 161,768 )

from Financing Activities

Issuance of debt

$ ( 745,793 )

Repayments of finance lease

provided by financing activities

$ ( 2,624,251 )

$ ( 802,615 )

$ ( 3,426,866 )

Right-of-use assets obtained

in exchange for operating lease liabilities

Right-of-use assets obtained

in exchange for finance lease liabilities

The preparation

of the Company’s unaudited condensed consolidated financial statements in conformity with US GAAP requires it to make estimates

and assumptions that affect the reported amounts of assets and liabilities and the disclosure of contingent assets and liabilities as

of the date of the financial statements and the reported amounts of revenues and expenses for the reporting period.

Some of the more

significant estimates include fair value of warrant liabilities, redemption value of non-controlling interest, subsequent realizability

of intangible assets, useful lives of depreciation and amortization and collectability of accounts receivable.

Due to the uncertainty

involved in making estimates, actual results could differ from those estimates which could have a material effect on the financial condition

and results of operations in future periods.

bases its estimates and assumptions on historical experience and other factors, including the current economic environment and on various

other judgements that it believes to be reasonable under the circumstances.

The Company adjusts such estimates and assumptions when facts

and circumstances dictate.

Changes in those estimates resulting from continuing changes in the economic environment could have a material

effect on the financial condition and results of future operations in future periods.

Operating segments

are defined as components of an enterprise for which separate discrete financial information is evaluated regularly by our chief executive

officer, who is the chief operating decision maker (“CODM”), in deciding how to allocate resources and assess performance.

The CODM reviews financial information presented on a consolidated basis for the purposes of allocating resources and evaluating financial

Accordingly, the Company operates and manages its business as one operating and reportable segment.

to the Condensed Consolidated Financial Statements

and Cash Equivalents

considers all highly liquid investments purchased with original maturities of three months or less from the purchase date to be cash

The Company maintains its cash in checking and savings accounts.

Income generated from cash held in savings accounts is

recorded as interest income.

The carrying value of the Company’s savings accounts is included in cash and cash equivalents and

approximates the fair value.

receivable, net of allowance for credit losses

be read in conjunction with Zeo’s audited financial statements for the fiscal year ended December 31, 2024 as included with the

Company’s Form 10-K filed with the SEC on May 27, 2025.

The results reported in these unaudited condensed consolidated financial

statements are not necessarily indicative of results for the full fiscal year.

Reclassification

Certain amounts from prior period financial statements

have been reclassified to align with the presentation used in the current condensed consolidated financial statements for comparative

These reclassifications had no effect on the Company’s previously reported results of operations.

An adjustment

has been made to the condensed consolidated statements of cash flows for the three months ended March 31, 2024, to match this current

year’s presentation of noncash financing lease expense.

This change in classification does not affect previously reported cash

flows from operating activities in the condensed consolidated statements of cash flows.

Use of Estimates

The preparation of the Company’s consolidated financial statements

in conformity with US GAAP requires it to make estimates and assumptions that affect the reported amounts of assets and liabilities

and the disclosure of contingent assets and liabilities as of the date of the financial statements and the reported amounts of revenues

and expenses for the reporting period.

Some of the more significant estimates include fair value of preferred shares, fair value of assets

acquired and liabilities assumed in asset acquisitions, share-based compensation, fair value of warrant liabilities, redemption value

of non-controlling interest, realizability of deferred tax assets, subsequent realizability of intangible assets, depreciation and amortization

periods and collectability of accounts receivable.

Due to the uncertainty involved in making estimates, actual results could differ from

those estimates which could have a material effect on the financial condition and results of operations in future periods.

Company bases its estimates and assumptions on historical experience and other factors, including

the current economic environment and on various other judgements that it believes to be reasonable

under the circumstances.

The Company adjusts such estimates and assumptions when facts and

circumstances dictate.

Changes in those estimates resulting from continuing changes in the

economic environment could have a material effect on the financial condition and results

of operations in future periods.

Segment Information

Operating segments are defined as components of an enterprise for which

separate discrete financial information is evaluated regularly by the chief operating decision maker (“CODM”), in deciding

how to allocate resources and assess performance.

The CODM reviews financial information presented on a consolidated basis for the purposes

of allocating resources and evaluating financial performance.

Accordingly, the Company operates and manages its business as one operating

and reportable segment.

(See Note 19)

Cash and Cash Equivalents

The Company considers all highly liquid investments purchased with

original maturities of three months or less from the purchase date to be cash equivalents.

The Company maintains its cash in checking

and savings accounts.

Income generated from cash held in savings accounts is recorded as interest income.

The carrying value of the Company’s

savings accounts is included in cash and cash equivalents and approximates the fair value.

Accounts receivable, net of allowance for credit losses

Accounts receivable is presented at the invoiced receivable amounts,

3 unchanged sentences

including the aging of the receivables.

This analysis resulted in an allowance for credit losses as of September 30, 2024, and December

31, 2023 of $ 3,145,168 and $ 862,580 , respectively.

The Company had no write-offs and no recoveries for each of the three and nine months

ended September 30, 2024 and 2023, respectively.

The majority of our customers finance their purchase and installation of solar panels

through various financing companies, who then remit payment to Sunergy typically within 3 days after installation.

The Company is not

deemed a borrower with these financing agreements and as a result is not subject to any of the terms of the financing transaction between

the financing company and the customer.

The majority of our customers lease or finance their purchase and installation of solar panels

through various financing companies.

The financing companies remit payment to the Company typically within 3 weeks after installation.

The Company is not deemed a borrower with these financing agreements and as a result is not subject to any of the terms of the financing

transaction between the financing company and the customer.

The following represents a roll forward of the allowance for credit

losses as of March 31, 2025 and December 31, 2024:

Allowance for credit losses, beginning of the period

Provision for credit losses

( 2,525,100 )

Allowance for credit losses, as of the end of the period

Significant judgement is involved in determination of the collectability

2 unchanged sentences

the allowance for credit losses.

In September 2024, based on a reassessment of creditworthiness of customers,

historical collections experience, forward looking information and other information including the aging of the receivables, the Company

revised its estimate of allowance for credit losses.

This change in estimate has been accounted for prospectively in accordance

with ASC 250 , Accounting Changes and Error Corrections .

In accordance with its policy, the Company reviews the estimated

allowance for credit losses on an ongoing basis.

This review indicated that the estimated allowance for credit losses in the Company’s

consolidated financial statements should be increased.

As a result, effective September 30, 2024, the Company recorded a change in estimate

to increase the three and nine months provision for credit losses by $ 1,820,365 , increase net loss by $ 1,820,365 for the three and nine

months ended September 30, 2024, and increase basic and diluted net loss per common share by $ 0.30 and $ 0.49 for the three and nine months

ended September 30, 2024.

installation costs

Prepaid installation

costs include costs incurred prior to completion of installations of solar systems.

Such costs include the cost of engineering, permits,

governmental fees, and other related solar installation costs.

These costs are charged to Cost of goods sold when each installation is

expenses and other current assets

Prepaid expenses

and other current assets consist of employee advances, advanced sales commissions, prepaid insurance, and other current assets.

Concentration

of credit risk

Financial instruments

that potentially subject the Company to concentrations of credit risk consist of cash and cash equivalents and trade accounts receivable.

The Company maintains its cash and cash equivalent balances in highly rated financial institutions, which at times may exceed federally

insured limits.

The amounts over these insured limits as of September 30, 2024, and December 31, 2023 were $ 4,080,061 and $ 6,979,011 ,

respectively.

The Company mitigates this concentration of credit risk by monitoring the credit worthiness of the financial institutions.

No losses have been incurred to date on any deposits.

performs periodic credit evaluations of its customers’ financial condition and also monitors the financial condition of the financial

counterparties that finance customer transactions and generally does not require collateral.

No one customer or financing counterparty

exceeded 10% of accounts receivable as of September 30, 2024, and December 31, 2023.

are primarily comprised of solar panels and other related items necessary for installations and service needs.

Inventories are accounted

for on a first-in-first-out basis and are measured at the lower of cost or net realizable value, where cost is determined using a weighted-average

When evidence exists that the net realizable value of inventory is lower than its cost, the difference is recognized as

cost of goods sold in the condensed consolidated statements of operations.

As of September 30, 2024, and December 31, 2023, inventory

was $ 482,251 and $ 350,353 , respectively.

equipment and other fixed assets

Property, equipment

and other fixed assets are carried at cost less accumulated depreciation and includes expenditures that substantially increase the useful

lives of existing property and equipment.

Maintenance, repairs, and minor renovations are charged to expense as incurred.

When property

and equipment is retired or otherwise disposed of, the related costs and accumulated depreciation are removed from their respective accounts,

and any difference between the sale proceeds and the carrying amount of the asset is recognized as a gain or loss on disposal in the

condensed consolidated Statements of Operations.

to the Condensed Consolidated Financial Statements

Software that

is developed for internal use and is accounted for pursuant to ASC 350-40 , Intangibles, Goodwill and Other-Internal-Use Software .

Qualifying costs incurred to develop internal-use software are capitalized when (i) the preliminary project stage is completed, (ii)

management has authorized further funding for the completion of the project and (iii) it is probable that the project will be completed

and perform as intended.

These capitalized costs include compensation for employees who develop internal-use software and external costs

related to development of internal use software.

Capitalization of these costs ceases once the project is substantially complete and

the software is ready for its intended purpose.

Internally developed software is amortized using the straight-line method over an estimated

All other expenditures, including those incurred in order to maintain an intangible asset’s current level of performance,

are expensed as incurred.

When these assets are retired or disposed of, the cost and accumulated amortization thereon are removed, and

any resulting gain or losses are included in the condensed consolidated statements of operations.

is computed using the straight-line method over the estimated useful lives of the assets, which is five years, across all asset classes.

The estimated

useful lives and depreciation methods are reviewed at each year-end, with the effect of any changes in estimates accounted for prospectively.

All depreciation expense is included with depreciation and amortization in the condensed consolidated statements of operations.

of long-lived assets

reviews each asset or asset group for impairment whenever events or circumstances indicate that the carrying value of an asset or asset

group may not be recoverable, and at least annually.

No impairment provisions were recorded by the Company during the three and nine

months ended September 30, 2024, and 2023.

accounts for an acquisition as a business combination if the assets acquired and liabilities assumed in the transaction constitute a

business in accordance with ASC Topic 805.

Such acquisitions are accounted using the acquisition method by recognizing the identifiable

tangible and intangible assets acquired and liabilities assumed, and any non-controlling interest in the acquired business, measured

at their acquisition date fair values.

Where the set

of assets acquired and liabilities assumed doesn’t constitute a business, it is accounted for as an asset acquisition where the

individual assets and liabilities are recorded at their respective relative fair values corresponding to the consideration transferred.

recognized and initially measured as any excess of the acquisition-date consideration transferred in a business combination over the

acquisition-date amounts recognized for the net identifiable assets acquired.

Goodwill is not amortized but is tested for impairment

annually, or more frequently if an event occurs or circumstances change that would more likely than not result in an impairment of goodwill.

First, the Company assesses qualitative factors to determine whether or not it is more likely than not that the fair value of a reporting

unit is less than its carrying amount.

If the Company concludes that it is more likely than not that the fair value of a reporting unit

is less than its carrying amount, the Company conducts a quantitative goodwill impairment test comparing the fair value of the applicable

reporting unit with its carrying value.

If the carrying amount of the reporting unit exceeds the fair value of the reporting unit, the

Company recognizes an impairment loss in the condensed consolidated statements of operations for the amount by which the carrying amount

exceeds the fair value of the reporting unit.

The Company performs its annual goodwill impairment test at December 31 of each year.

There was no goodwill impairment for the three and nine months ended September 30, 2024, and 2023.

assets subject to amortization

assets include tradenames, customer lists and non-compete agreements.

Amounts are subject to amortization on a straight-line basis over

the estimated period of benefit and are subject to annual impairment consideration.

Costs incurred to renew or extend the term of a recognized

intangible asset, such as the acquired tradename, are capitalized as part of the intangible asset and amortized over its revised estimated

assets are reviewed for impairment whenever events or changes in circumstances indicate the carrying amount of the intangible assets

may not be recoverable.

Conditions that would necessitate an impairment assessment include a significant decline in the observable market

value of an asset, a significant change in the extent or manner in which an asset is used, or any other significant adverse change that

would indicate that the carrying amount of an asset or group of assets may not be recoverable.

The Company evaluates the recoverability

of intangible assets by comparing their carrying amounts to future net undiscounted cash flows expected to be generated by the intangible

If such intangible assets are considered to be impaired, the impairment recognized is measured as the amount by which the carrying

amount of the intangible assets exceeds the fair value of the assets.

The Company determines fair value based on discounted cash flows

using a discount rate commensurate with the risk inherent in the Company’s current business model for the specific intangible asset

being valued.

No impairment charges were recorded for the three and nine months ended September 30, 2024, and 2023.

to the Condensed Consolidated Financial Statements

evaluates the contracts it entered into to determine whether such contracts contain leases at inception.

A contract contains a lease

if the contract conveys the right to control the use of identified property, plant or equipment for a period of time in exchange for

consideration.

At commencement, contracts containing a lease are further evaluated for classification as an operating or finance lease

where the Company is a lessee.

When the arrangements include lease and non-lease components, the Company accounts for them as a single

lease component.

which substantially all the benefits and risks incidental to ownership remain with the lessor is classified by the lessee as an operating

Operating leases are included in the line items right-of-use (“ROU”) asset, lease liabilities, current, and non-current

lease liabilities in the condensed consolidated balance sheet.

ROU assets represent the Company’s right to use an underlying asset

for the lease term and lease liabilities represent its obligation to make lease payments arising from the lease.

For operating leases,

the Company measures its lease liabilities based on the present value of the total lease payments not yet paid.

These payments are then

discounted based on the more readily determinable of the rate implicit in the lease or its incremental borrowing rate, which is the estimated

rate the Company would be required to pay for a collateralized borrowing equal to the total lease payments over the term of the lease.

The Company uses its incremental borrowing rate based on the information available at lease commencement date in determining the present

value of lease payments.

The Company measures ROU assets based on the corresponding lease liability adjusted for payments made to the

lessor at or before the commencement date, and initial direct costs it incurs under the lease.

The Company begins recognizing lease expense

when the lessor makes the underlying asset available to the Company.

Lease expenses for lease payments are recognized on a straight-line

basis over the lease term.

with a lease term of less than one year (short-term leases), the Company has elected not to recognize a lease liability or ROU asset

on its consolidated balance sheet.

Instead, it recognizes the lease payments as expenses on a straight-line basis over the lease term.

Short-term lease costs are immaterial to its condensed consolidated statements of operations and cash flows.

transfer substantially all of the benefits and risks incidental to the ownership of assets are accounted for as finance leases as if

there was an acquisition of an asset and incurrence of an obligation at the inception of the lease.

Lease cost for finance leases where

the Company is the lessee includes the amortization of the ROU asset, which is amortized on a straight-line basis and recorded to depreciation

and amortization and interest expense on the finance lease liability, which is calculated using the effective interest method and recorded

to interest expense on the accompanying condensed consolidated statements of operations.

Finance lease ROU assets are amortized over

the shorter of their estimated useful lives or the terms of the respective leases.

If the Company is reasonably certain to exercise the

option to purchase the underlying asset at the end of lease term, the finance lease ROU assets are amortized to the end of useful life

of the assets on a straight-line basis.

evaluates all of its financial instruments, including issued share purchase warrants, to determine if such instruments are derivatives

or contain features that qualify as embedded derivatives, pursuant to ASC 815-40, Derivatives and Hedging (“ASC 815-40”).

The classification of derivative instruments, including whether such instruments should be recorded as liabilities or as equity, is reassessed

at the end of each reporting period.

The Company accounts for the Public Warrants (as defined in Note 12) (the “Warrants”)

in accordance with the guidance contained in ASC 815-40 under which the Warrants do not meet the criteria for equity treatment and must

be recorded as liabilities.

Accordingly, the Company classifies the Warrants as liabilities at their fair value and adjusts the Warrants

to fair value at each reporting period.

This liability is subject to re-measurement at each balance sheet date until exercised, and any

change in fair value is recognized in the condensed consolidated statements of operations.

The Warrants for periods where no observable

traded price was available are valued using a binomial lattice model.

The quoted market price is utilized as the fair value as of each

relevant date.

to the Condensed Consolidated Financial Statements

for Probable Loss Contingencies

the normal course of business, the Company is involved in various claims and legal proceedings.

A liability is recorded for such matters

when it is probable that a loss has been incurred and the amounts can be reasonably estimated.

When only a range of possible loss can

be established, the most probable amount in the range is accrued.

If no amount within this range is a better estimate than any other

amount within the range, the minimum amount in the range is accrued.

Legal costs associated with loss contingencies are expensed as incurred.

Company accounts for its revenue in accordance with ASC 606, Revenue from Contracts with Customers (“ASC 606”).

Company applies judgment in the determination of performance obligations in accordance with ASC 606.

Performance obligations in a contract

are identified based on the services that will be transferred to the customer that are both capable of being distinct, whereby the customer

can benefit from the service either on its own or together with other resources that are readily available from third parties or from

the Company, and are distinct in the context of the contract, whereby the transfer of the services is separately identifiable from other

promises in the contract.

In addition, a single performance obligation may comprise a series of distinct goods or services that are substantially

the same and that have the same pattern of transfer to the customer.

This principle is achieved through applying the following five-step

1 - Identification of the contract, or contracts, with a client.

2 - Identification of the performance obligations in the contract.

3 - Determination of the transaction price.

4 - Allocation of the transaction price to the performance obligations in the contract

5 - Recognition of revenue when, or as, the Company satisfies a performance obligation.

Company recognizes and records revenue from its operations upon completion of installation for both solar system installations and roofing

installations.

In connection with the sales and installation, a signed contract between the Company and the purchaser defines the duties

and obligations of each party.

The contract is specific as to the duties and responsibilities which govern the accounting for these transactions.

Once the Company’s performance obligations are met with installation completed, according to the signed contract, the Company’s

obligations are completed, and title is transferred to the buyer.

The Company believes its performance obligation is completed once the

installation of the solar panels is completed, which is prior to the customer receiving permission to operate the solar panels from the

local utility company.

The Company records sales revenue at this point in time in its accounting records.

Many of the Company’s

customers finance their obligations with third parties.

In these situations, the finance company deducts their financing fees and remits

the net amount to the Company.

Revenue recorded is equal to the contract amount signed by the purchaser, net of the financing fees.

Company incurs several costs associated with the installation prior to its completion.

In accordance with ASC 340, Other Assets and

Deferred Costs, installation-related costs are recorded as prepaid expenses and other current assets and in turn are expensed when

installation is completed.

Thus, revenue recognition is in turn matched with the installation equipment costs and expense associated

with the completion of each project.

the three months ended

September 30,

the nine months ended

September 30,

Solar systems installations, gross

$ 115,213,716

Financing fees

( 4,890,020 )

( 14,941,988 )

( 17,394,944 )

Contract assets

Contract assets costs include prepaid installation costs incurred prior

to completion of installations of solar systems and accrued revenues for which the invoicing criteria have not been met.

Contact assets

include the cost of engineering, permits, governmental fees, other related solar installation costs and accrued revenues of $ 577,398 and

$ 64,202 as of March 31, 2025 and December 31, 2024, respectively.

These costs are charged to Cost of goods sold when each installation

is completed.

The following table summarizes the change in contract assets:

Contract asset, beginning of the period

Cost of goods sold recognized during the period

( 4,915,064 )

Additions to contract assets prior to completion of performance obligation

Contract assets, as of the end of the period

Prepaid expenses and other current assets

Prepaid expenses and other current assets consist of employee

advances, advanced sales commissions, prepaid insurance, and other current assets.

Note receivable

The Company records notes receivable when it extends credit or financing

to related parties or third parties.

The Company evaluates notes receivable for collectability at each reporting period under the current

expected credit loss (CECL) model, in accordance with ASC 326, Financial Instruments - Credit Losses (“ASC 326”).

necessary, an allowance for doubtful accounts is recorded to reflect potential losses.

As of December 31, 2024, we evaluated the need

for an allowance for credit loss using the guidelines set forth in ASC 326, and have determined this note is fully collectible and, therefore,

we have not recorded an allowance against the note receivable balance.

Concentration of credit risk

Financial instruments that potentially subject the Company to

concentrations of credit risk consist of cash and cash equivalents and trade accounts receivable.

The Company maintains its cash and cash

equivalent balances in highly rated financial institutions, which at times may exceed federally insured limits.

The amounts over these

insured limits as of March 31, 2025, and December 31, 2024 were $ 2,644,103 and $ 5,384,115 , respectively.

The Company mitigates this concentration

of credit risk by monitoring the credit worthiness of the financial institutions.

No losses have been incurred to date on any deposits.

The Company performs periodic credit evaluations of its customers’

financial condition and also monitors the financial condition of the financial counterparties that finance customer transactions and generally

does not require collateral.

For customers who finance their systems through a lease product, the Third Party Operator (TPO) of the lease

product is the contracted customer with the Company.

Where the Company has a concentration of credit risk, it is with these TPO customers.

At March 31, 2025, the Company had one customer who exceeded 10% of accounts receivable.

Their balances were $ 2,481,952 .

At December 31,

2024, the Company had two customers who exceeded 10% of accounts receivable.

Their balances were $ 3,192,077 and $ 2,306,096 .

For the three

months ended March 31, 2025 and 2024, the Company had four and two customers, respectively, who exceeded 10% of revenue recognized.

revenue recognized was $ 2,125,281 , $ 1,318,939 , $ 2,021,499 and $ 1,810,484 for the three months ended March 31, 2025 and $ 12,022,995 and

$ 2,549,042 for the three months ended March 31, 2024, respectively.

Advertising and Marketing

The Company charges the costs of advertising to expense as incurred.

For the three months ended March 31, 2025 and 2024, the Company incurred $ 54,686 and $ 45,268 , respectively, of advertising and marketing

Inventories are primarily comprised of solar panels and other related

items necessary for installations and service needs.

Inventories are accounted for on a first-in-first-out basis and are measured at the

lower of cost or net realizable value, where cost is determined using a weighted-average cost method.

When evidence exists that the net

realizable value of inventory is lower than its cost, the difference is recognized as cost of goods sold in the condensed consolidated

statements of operations in the period identified.

As of March 31, 2025 and December 31, 2024, inventory was $ 847,395 and $ 872,470 , respectively.

Property, equipment and other fixed assets, net

Property, equipment and other fixed assets are carried at cost less

accumulated depreciation and includes expenditures that substantially increase the useful lives of existing property and equipment.

repairs, and minor renovations are charged to expense as incurred.

When property and equipment is retired or otherwise disposed of, the

related costs and accumulated depreciation are removed from their respective accounts, and any difference between the sale proceeds and

the carrying amount of the asset is recognized as a gain or loss on disposal in the condensed consolidated Statements of Operations.

Software that is developed for internal use and is accounted for accordance

with ASC 350 , Intangibles, Goodwill and Other-Internal-Use Software .

Qualifying costs incurred to develop internal-use software

are capitalized when (i) the preliminary project stage is completed, (ii) management has authorized further funding for the completion

of the project and (iii) it is probable that the project will be completed and perform as intended.

These capitalized costs include compensation

for employees who develop internal-use software and external costs related to development of internal-use software.

Capitalization of

these costs ceases once the project is substantially complete and the software is ready for its intended purpose.

Internally developed

software is amortized using the straight-line method over an estimated useful life.

All other expenditures, including those incurred to

maintain an internal-use software’s current level of performance, are expensed as incurred.

When these assets are retired or disposed

of, the cost and accumulated amortization thereon are removed, and any resulting gain or losses are included in the condense consolidated

statements of operations.

Depreciation is computed using the straight-line method over

the estimated useful lives of the assets, which is five years , across all asset classes.

The estimated useful lives and depreciation methods are reviewed

at each year-end, with the effect of any changes in estimates accounted for prospectively.

All depreciation expense is included with depreciation

and amortization in the condensed consolidated statements of operations.

Impairment of long-lived assets

Management reviews each asset or asset group for impairment whenever

events or circumstances indicate that the carrying value of an asset or asset group may not be recoverable, and at least annually.

impairment charges were recorded by the Company during the three months ended March 31, 2025, and 2024.

Business Combinations

The Company accounts for an acquisition as a business combination if

the assets acquired and liabilities assumed in the transaction constitute a business in accordance with ASC Topic 805.

Such acquisitions

are accounted using the acquisition method by recognizing the identifiable tangible and intangible assets acquired and liabilities assumed,

and any non-controlling interest in the acquired business, measured at their acquisition date fair values.

Where the set of assets acquired and liabilities assumed doesn’t

constitute a business, it is accounted for as an asset acquisition and the individual assets and liabilities are recorded at their respective

relative fair values corresponding to the consideration transferred.

Goodwill is recognized and initially measured as any excess of the

acquisition-date consideration transferred in a business combination over the acquisition-date amounts recognized for the net identifiable

assets acquired.

Goodwill is not amortized but is tested for impairment annually, or more frequently if an event occurs or circumstances

change that would more likely than not result in an impairment of goodwill.

First, the Company assesses qualitative factors to determine

whether or not it is more likely than not that the fair value of a reporting unit is less than its carrying amount.

If the Company concludes

that it is more likely than not that the fair value of a reporting unit is less than its carrying amount, the Company conducts a quantitative

goodwill impairment test comparing the fair value of the applicable reporting unit with its carrying value.

If the carrying amount of

the reporting unit exceeds the fair value of the reporting unit, the Company recognizes an impairment loss in the condensed consolidated

statements of operations for the amount by which the carrying amount exceeds the fair value of the reporting unit.

The Company performs

its annual goodwill impairment test at December 31 of each year.

There was no goodwill impairment for the three months ended March

31, 2025, and 2024.

Intangible assets subject to amortization

Intangible assets include tradenames, customer lists, order backlog

and non-compete agreements.

Amounts are subject to amortization on a straight-line basis over the estimated period of benefit and are

subject to annual impairment consideration.

Costs incurred to renew or extend the term of a recognized intangible asset, such as the acquired

tradename, are capitalized as part of the intangible asset and amortized over its revised estimated useful life.

Intangible assets are reviewed for impairment whenever events

or changes in circumstances indicate the carrying amount of the intangible assets may not be recoverable.

Conditions that would necessitate

an impairment assessment include a significant decline in the observable market value of an asset, a significant change in the extent

or manner in which an asset is used, or any other significant adverse change that would indicate that the carrying amount of an asset

or group of assets may not be recoverable.

The Company evaluates the recoverability of intangible assets by comparing their carrying amounts

to future net undiscounted cash flows expected to be generated by the intangible assets.

If such intangible assets are considered to be

impaired, the impairment recognized is measured as the amount by which the carrying amount of the intangible assets exceeds the fair value

of the assets.

The Company determines fair value based on discounted cash flows using a discount rate commensurate with the risk inherent

in the Company’s current business model for the specific intangible asset being valued.

No impairment charges were recorded for

the three months ended March 31, 2025, and 2024.

The Company evaluates the contracts it enters into to determine whether

such contracts contain leases at inception.

A contract contains a lease if the contract conveys the right to control the use of identified

property, plant or equipment for a period of time in exchange for consideration.

At commencement, contracts containing a lease are further

evaluated for classification as an operating or finance lease where the Company is a lessee.

When the arrangements include lease and non-lease

components, the Company accounts for them as a single lease component.

Operating Leases

A lease for which substantially all the benefits and risks incidental

to ownership remain with the lessor is classified by the lessee as an operating lease.

Operating leases are included in the line items

right-of-use (“ROU”) operating lease asset, current portion of obligations under operating leases, and obligations under operating

leases, non-current in the condensed consolidated balance sheets.

ROU assets represent the Company’s right to use an underlying

asset for the lease term and obligations under lease represents its obligation to make lease payments arising from the lease.

For operating

leases, the Company measures its lease obligations based on the present value of the total lease payments not yet paid.

These payments

are then discounted based on the more readily determinable of the rate implicit in the lease or the Company’s incremental borrowing

rate, which is the estimated rate the Company would be required to pay for a collateralized borrowing equal to the total lease payments

over the term of the lease.

The Company uses its incremental borrowing rate based on the information available at lease commencement date

in determining the present value of lease payments.

The Company measures ROU assets based on the corresponding lease obligation adjusted

for payments made to the lessor at or before the commencement date, and initial direct costs it incurs under the lease.

The Company begins

recognizing lease expense when the lessor makes the underlying asset available to the Company.

Lease expenses for lease payments is recognized

on a straight-line basis over the lease term.

For leases with a lease term of less than one year (short-term

leases), the Company has elected not to recognize an obligation or ROU asset on its condensed consolidated balance sheet.

recognizes the lease payments as expenses on a straight-line basis over the lease term.

Short-term lease costs are immaterial to its condensed

consolidated statements of operations and cash flows.

Finance leases

Leases that transfer substantially all of the benefits and risks incidental

to the ownership of assets are accounted for as finance leases as if there was an acquisition of an asset and incurrence of an obligation

at the inception of the lease.

Lease cost for finance leases where the Company is the lessee includes the amortization of the ROU asset,

which is amortized on a straight-line basis and recorded to depreciation and amortization and interest expense on the finance lease obligation,

which is calculated using the effective interest method and recorded to interest expense on the accompanying condensed consolidated statements

of operations.

Finance lease ROU assets are amortized over the shorter of their estimated useful lives or the terms of the respective

If the Company is reasonably certain to exercise the option to purchase the underlying asset at the end of lease term, the finance

lease ROU assets are amortized to the end of useful life of the assets on a straight-line basis.

Warrant Liabilities

The Company evaluates all of its financial instruments, including issued

share purchase warrants, to determine if such instruments are derivatives or contain features that qualify as embedded derivatives, pursuant

to ASC 815-40, Derivatives and Hedging (“ASC 815-40”).

The classification of derivative instruments, including whether

such instruments should be recorded as liabilities or as equity, is reassessed at the end of each reporting period.

The Company accounts

for the Public Warrants (as defined in Note 12) in accordance with the guidance contained in ASC 815-40 under which the Warrants do not

meet the criteria for equity treatment and must be recorded as liabilities.

Accordingly, the Company classifies the Warrants as liabilities

at their fair value and adjusts the Warrants to fair value at each reporting period.

This liability is subject to re-measurement at each

balance sheet date until exercised, and any change in fair value is recognized in the condensed consolidated statements of operations.

The quoted market price is utilized as the fair value as of each relevant date.

Revenue Recognition

The Company accounts for revenue in accordance with ASC 606, Revenue

from Contracts with Customers (“ASC 606”).

The Company applies judgment in the determination of performance obligations

in accordance with ASC 606.

Performance obligations in a contract are identified based on the services that will be transferred to the

customer that are both capable of being distinct, whereby the customer can benefit from the service either on its own or together with

other resources that are readily available from third parties or from the Company, and are distinct in the context of the contract, whereby

the transfer of the services is separately identifiable from other promises in the contract.

In addition, a single performance obligation

may comprise a series of distinct goods or services that are substantially the same and that have the same pattern of transfer to the

This principle is achieved through applying the following five-step approach:

Step 1 - Identification of the contract, or contracts, with a customer.

Step 2 - Identification of the performance obligations in the contract.

Step 3 - Determination of the transaction price.

Step 4 - Allocation of the transaction price to the performance obligations in the contract

Step 5 - Recognition of revenue when, or as, the Company satisfies a performance obligation.

The Company recognizes and records revenue from its operations upon

completion of installation for both solar system installations and roofing installations.

In connection with the sales and installation,

a signed contract between the Company and the purchaser defines the duties and obligations of each party.

The contract is specific as

to the duties and responsibilities which govern the accounting for these transactions.

Once the Company’s performance obligations

are met with installation completed, according to the signed contract, the Company’s obligations are completed, and title is transferred

to the buyer.

The Company believes its performance obligation is completed once the installation of the solar panels is completed, which

is prior to the customer receiving permission to operate the solar panels from the local utility company.

The Company records sales revenue

at this point in time.

Many of the Company’s customers finance their obligations with third parties.

In these situations, the finance

company deducts their financing fees and remits the net amount to the Company.

Revenue recorded is equal to the contract amount signed

by the purchaser, net of the financing fees.

The Company incurs several costs associated with the installation prior to its completion.

In accordance with ASC 340, Other Assets and Deferred Costs, installation-related costs are recorded as prepaid expenses and other

current assets and in turn are expensed when installation is completed.

Thus, revenue recognition is in turn matched with the installation

equipment costs and expense associated with the completion of each project.

Three months ended

Solar systems installations, net

Roofing installations

to the Condensed Consolidated Financial Statements

Company receives both customer lender advances and, when the customer does not utilize third-party financing, customer advances.

amounts are listed on the balance sheet as contract liabilities and are considered a liability of the Company until the installation

is completed.

When an installation is delayed, the lender may withdraw their lender advances until the project installation is completed.

The contract liabilities amounts are expected to be recognized as revenue within a few months of the Company’s receipt of the funds.

Total net revenues

Contract liabilities

The Company receives both customer advances and may receive lender

advances from third-party financing company's on behalf of customers.

These amounts are recorded on the condensed consolidated balance

sheets as contract liabilities and are considered a liability of the Company until the installation is completed.

When the permission

to turn on (“PTO”) the solar panels from the local municipality is significantly delayed, the lender may withdraw their previous

payments for a customer account until the PTO is completed.

The contract liabilities amounts are expected to be recognized as revenue

within a twelve months of the Company’s receipt of the funds.

The following table summarizes the change in contract liabilities:

liabilities, beginning of the period

recognized from amounts included in contract liabilities at the beginning of the period

( 5,223,518 )

Contract liabilities, beginning of the period

Revenue recognized from amounts included in contract liabilities at the beginning of the period

( 5,223,518 )

received prior to completion of performance obligation

liabilities, as of the end of the period

acquisition costs

Company pays sales commissions to sales representatives based on a percentage of the sales contracts entered into by the customer and

Payment is made to the sales representative once installation is completed.

Such costs are included as sales and marketing

on the condensed consolidated statements of operations.

Since sales commission payments are subject to completion of the installation,

payment is made commensurate with the recognition of revenue from the sale, and therefore the full expense is incurred as the Company

does not have any remaining performance obligations.

Company reports both basic and diluted earnings per share.

Basic earnings per share is calculated based on the weighted average number

of shares of Class A Common Stock outstanding and excludes the dilutive effect of warrants, stock options, and other types of convertible

Diluted earnings per share is calculated based on the weighted average number of shares of Class A Common Stock outstanding

and the dilutive effect of warrants and other types of participating securities are included in the calculation.

Dilutive securities

are excluded from the diluted earnings per share calculation if their effect is anti-dilutive, such as in periods where a net loss has

been reported.

to the Business Combination, the membership structure of Sunergy Renewable, LLC included membership units.

In conjunction with the closing

of the Business Combination, the Company effectuated a recapitalization whereby all membership units were converted to common units of

ESGEN OpCo, LLC, and Zeo Energy Corp.

implemented a revised class structure including Class A Common Stock having one vote per share

and economic rights and Class V Common Stock having one vote per share and no economic rights.

The Company has determined that the calculation

of loss per unit for periods prior to the Business Combination would not be meaningful to the users of these consolidated financial statements.

As a result, loss per share information has not been presented for periods prior to the Business Combination.

recognizes an expense for stock-based compensation awards based on the estimated fair value of the award on the date of grant.

has elected to account for restricted stock awards with market conditions using a graded vesting method.

This method recognizes the compensation

cost in the condensed consolidated statements of operations over the requisite service period for each separately vesting tranche of

The Company has elected to recognize forfeitures as they occur rather than estimate expected forfeitures.

value of Financial Instruments

value is the price that would be received to sell an asset, or the amount paid to transfer a liability in an orderly transaction between

market participants at the measurement date.

There is a fair value hierarchy that prioritizes the inputs used to measure fair value.

The hierarchy gives the highest priority to quoted prices in active markets for identical assets or liabilities (Level 1 measurement)

and the lowest priority to unobservable inputs (Level 3 measurement).

We classify fair value balances based on the observability of those

Cash received prior to completion of performance obligation

Contract liabilities, end of the period

Contract acquisition costs

The Company pays sales commissions to sales representatives based on

a percentage of the value of sales contracts entered into by the customer and the Company.

Payment is made to the sales representative

once installation is completed.

Such costs are included as sales and marketing on the condensed consolidated statements of operations.

Since sales commission payments are subject to completion of the installation, payment is made commensurate with the recognition of revenue

from the sale, and therefore the full expense is incurred as the Company does not have any remaining performance obligations.

Costs to obtain a contract are not considered to be incremental or

material, and project duration generally does not span more than one year.

Accordingly, the Company applies a practical expedient for

these types of costs and as such, they are expensed in the period incurred.

Earnings per share

The Company reports both basic and diluted earnings per share.

earnings per share is calculated based on the weighted average number of shares of Class A Common Stock outstanding and excludes the dilutive

effect of warrants, stock options, and other types of convertible securities.

Diluted earnings per share is calculated based on the weighted

average number of shares of Class A Common Stock outstanding and the dilutive effect of warrants and other types of participating securities

are included in the calculation.

Dilutive securities are excluded from the diluted earnings per share calculation if their effect is anti-dilutive,

such as in periods where a net loss is reported.

Prior to the ESGEN Business Combination, the membership structure of

Sunergy Renewables, LLC included membership units.

In conjunction with the closing of the ESGEN Business Combination, the Company effectuated

a recapitalization whereby all membership units were converted to common units of ESGEN OpCo, LLC, and Zeo Energy Corp.

implemented a

revised class structure including Class A Common Stock having one vote per share and economic rights and Class V Common Stock having one

vote per share and no economic rights.

Stock-based Compensation

The Company recognizes an expense for stock-based

compensation awards based on the estimated fair value of the award on the date of grant.

The Company has elected to account for restricted

stock awards with market conditions using a graded vesting method.

This method recognizes the compensation cost in the condensed consolidated

statements of operations over the requisite service period for each separately vesting tranche of awards.

The Company has elected to recognize

forfeitures as they occur rather than estimate expected forfeitures.

Fair value of Financial Instruments

Fair value is the price that would be received to sell an asset, or

the amount paid to transfer a liability in an orderly transaction between market participants at the measurement date.

There is a fair

value hierarchy that prioritizes the inputs used to measure fair value.

The hierarchy gives the highest priority to quoted prices in active

markets for identical assets or liabilities (Level 1 measurement) and the lowest priority to unobservable inputs (Level 3 measurement).

We classify fair value balances based on the observability of those inputs.

The three levels of the fair value hierarchy are as follows:

— Inputs based on unadjusted quoted market prices in active markets for identical assets or liabilities that the Company has the

ability to access at the measurement date.

— Observable inputs other than quoted prices included in Level 1, such as quoted prices for similar assets or liabilities

in active markets or quoted prices for identical or similar instruments in markets that are not active or for which all significant inputs

are observable or can be corroborated by observable market data.

— Inputs reflect management’s best estimate of what market participants would use in pricing the asset or liability at the

measurement date.

The inputs are both unobservable for the asset and liability in the market and significant to the overall fair value

some circumstances, the inputs used to measure fair value might be categorized within different levels of the fair value hierarchy.

those instances, the fair value measurement is categorized in its entirety in the fair value hierarchy based on the lowest level input

that is significant to the fair value measurement.

The Company establishes the fair value of its assets and liabilities using the price

that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the

measurement date and establishes a fair value hierarchy based on the inputs used to measure fair value.

The recorded amounts of certain

financial instruments, including cash and cash equivalents, accounts receivable, accrued expenses, advanced funding, accounts payable,

and debt approximate fair value due to their relatively short maturities.

to the Condensed Consolidated Financial Statements

Noncontrolling Interests

Noncontrolling

interests represent the portion of ESGEN OpCo, LLC that Zeo Energy Corp.

Level 1 — Inputs based on unadjusted quoted market prices

in active markets for identical assets or liabilities that the Company has the ability to access at the measurement date.

Level 2 — Observable inputs other than quoted prices included

in Level 1, such as quoted prices for similar assets or liabilities in active markets or quoted prices for identical or similar instruments

in markets that are not active or for which all significant inputs are observable or can be corroborated by observable market data.

Level 3 — Inputs reflect management’s best estimate

of what market participants would use in pricing the asset or liability at the measurement date.

The inputs are both unobservable for

the asset and liability in the market and significant to the overall fair value measurement.

In some circumstances, the inputs used to measure fair value might

be categorized within different levels of the fair value hierarchy.

In those instances, the fair value measurement is categorized in its

entirety in the fair value hierarchy based on the lowest level input that is significant to the fair value measurement.

The recorded amounts

of certain financial instruments, including cash and cash equivalents, accounts receivable, accrued expenses, advanced funding, accounts

payable, and debt approximate fair value due to their relatively short maturities.

Redeemable Noncontrolling Interests

Noncontrolling interests represent the portion of OpCo that Zeo Energy

controls and consolidates but does not own.

The noncontrolling

interests were created as a result of the Business Combination and represent 33,730,000 common units issued by Zeo Energy Corp.

prior investors.

As of the Close of the Business Combination, Zeo Energy Corp.

held a 13.0 % interest in ESGEN OpCo, LLC with the remaining

87.0 % interest held by ESGEN OpCo, LLC’s prior investors.

The prior investors’ interests in ESGEN OpCo, LLC represent a redeemable

noncontrolling interest.

At its discretion, the members have the right to exchange their common units in ESGEN OpCo, LLC (along with

the cancellation of the paired shares of Zeo Energy Corp.

or the Class V Common Stock) for either shares of Class A Common Stock on a

one-to-one basis or cash proceeds of equal value at the time of redemption.

Any redemption of ESGEN OpCo, LLC Common Units in cash must

be funded through a private or public offering of Class A Common Stock and is subject to the Company’s Board’s approval.

As of September 30, 2024, the prior investors of ESGEN OpCo, LLC hold the majority of the voting rights on the Board.

the redeemable noncontrolling interests are redeemable upon the occurrence of an event that is not solely within the Company’s

control, the Company classifies redeemable noncontrolling interests as temporary equity.

The redeemable noncontrolling interests in common

units were initially measured at the ESGEN OpCo, LLC prior investors’ share in the net assets of the Company upon consummation

of the Business Combination.

Subsequent remeasurements of the Company’s redeemable noncontrolling interests are recorded as a deemed

dividend each reporting period, which reduces retained earnings, if any, or additional paid-in capital of Zeo Energy Corp.

Remeasurements

of the Company’s redeemable noncontrolling interests are based on the fair value of our Class A Common Stock.

Convertible Preferred Units

Company records redeemable convertible preferred units at fair value on the dates of issuance, unless an exception applies, net of issuance

The redeemable convertible preferred units have been classified outside of stockholders’ (deficit) equity as temporary equity

on the accompanying condensed consolidated balance sheets because the shares contain certain redemption features that are not solely

within the control of the Company.

The noncontrolling interests were created as a result of the ESGEN Business Combination

and represent 33,730,000 common units issued by Zeo Energy Corp.

to the prior investors.

As of the close of the ESGEN Business Combination,

Zeo Energy Corp.

held a 13.0 % interest in OpCo with the remaining 87.0 % interest held by OpCo’s prior investors.

At December 31,

2024, Zeo Energy Corp.

held a 28.2 % interest in ESGEN OpCo, LLC with the remaining 71.8 % interest held by OpCo’s prior investors.

During the three months ended March 31, 2025, 8,500,000 units were converted to Class A common stock.

As a result, as of March 31, 2025,

25,230,000 units are outstanding.

The prior investors’ interests in OpCo represent a redeemable noncontrolling interest.

discretion, the members have the right to exchange their common units in OpCo (along with the cancellation of the paired shares of Zeo

or the Class V Common Stock) for either shares of Class A Common Stock on a one-to-one basis or cash proceeds of equal value

at the time of redemption.

Any redemption of OpCo common units in cash must be funded through a private or public offering of Class A

Common Stock and is subject to the Company’s Board’s approval.

As of March 31, 2025, the prior investors of OpCo hold the

majority of the voting rights on the Board.

As the redeemable noncontrolling interests are redeemable upon the

occurrence of an event that is not solely within the Company’s control, the Company classifies redeemable noncontrolling interests

as temporary equity.

The redeemable noncontrolling interests in common units were initially measured at the OpCo prior investors’

share in the net assets of the Company upon consummation of the ESGEN Business Combination.

Subsequent remeasurements of the Company’s

redeemable noncontrolling interests are recorded as a deemed dividend each reporting period, which reduces retained earnings, if any,

or additional paid-in capital of Zeo Energy Corp.

Remeasurements of the Company’s redeemable noncontrolling interests are based

on the fair value of our Class A Common Stock.

Redeemable Convertible Preferred Units

The Company records redeemable convertible preferred units at fair

value on the dates of issuance, net of issuance costs.

The redeemable convertible preferred units have been classified outside of stockholders’

(deficit) equity as temporary equity on the accompanying condensed consolidated balance sheets because the shares contain certain redemption

features that are not solely within the control of the Company.

See Note 10 – Redeemable Noncontrolling Interests and Equity.

Because the Class A convertible

preferred units are held by the Sponsor at the OpCo level, the preferred units are presented as a noncontrolling interests on the condensed

consolidated balance sheets.

is a corporation and thus is subject to United States (“U.S.”) federal, state and local income taxes.

OpCo, LLC is a partnership for U.S.

federal income tax purposes and therefore does not pay United States federal income tax.

the ESGEN OpCo, LLC unitholders, including Zeo Energy Corp., are liable for U.S.

federal income tax on their respective shares of ESGEN

OpCo, LLC’s taxable income.

ESGEN OpCo, LLC is liable for income taxes in those states which tax entities classified as partnerships

the redeemable convertible preferred units are held by the Sponsor at the OpCo level, the preferred units are presented as a noncontrolling

interests on the condensed consolidated balance sheets.

Zeo Energy Corp.

is a corporation and thus is subject to United States

(“U.S.”) federal, state and local income taxes.

OpCo is a partnership for U.S.

federal income tax purposes and therefore does

federal income tax.

Instead, the OpCo unitholders, including Zeo Energy Corp., are liable for U.S.

federal income tax on

their respective shares of OpCo’s taxable income.

OpCo is liable for income taxes in those states which tax entities classified

as partnerships for U.S.

federal income tax purposes.

use the asset and liability method of accounting for income taxes for the Company.

Under the asset and liability method, deferred tax

assets and liabilities are recognized for the future tax consequences attributable to differences between the financial statement carrying

amounts of existing assets and liabilities and their respective tax bases and net operating loss (“NOL”) and tax credit carry

Deferred tax assets and liabilities are measured using enacted income tax rates expected to apply to taxable income in the

years in which those differences are expected to be recovered or settled.

The effect on deferred tax assets and liabilities of a change

in income tax rates is recognized in the results of operations in the period that includes the enactment date.

The realizability of deferred

tax assets is evaluated quarterly based on a “more likely than not” standard and, to the extent this threshold is not met,

a valuation allowance is recorded.

ASC 740 prescribes

a recognition threshold and a measurement attribute for the financial statement recognition and measurement of tax positions taken or

expected to be taken in a tax return.

For those benefits to be recognized, a tax position must be more likely than not to be sustained

upon examination by taxing authorities.

The Company recognizes accrued interest and penalties related to unrecognized tax benefits as

income tax expense.

Management has evaluated the Company’s tax positions, including its previous status as a pass-through entity

for federal and state tax purposes, and has determined that the Company has taken no uncertain tax positions that require adjustment

to the condensed consolidated financial statements.

The Company’s reserve related to uncertain tax positions was zero as of September

30, 2024 and December 31, 2023.

There were no unrecognized tax benefits and no amounts accrued for interest and penalties as of September

30, 2024 and December 31, 2023.

The Company is currently not aware of any issues under review that could result in significant payments,

accruals or material deviation from its position.

and penalties associated with tax positions are recorded in the period assessed as general and administrative expenses.

years for U.S.

federal and state income tax purposes are 2019 and forward.

has calculated the provision for income taxes during the interim reporting period by applying an estimate of the Annual Effective Tax

Rate (AETR) for the full fiscal year to “ordinary” income or loss (pretax income or loss excluding unusual or infrequently

occurring discrete items) for the reporting period.

Our effective tax rate (ETR) from continuing operations was 1.5 % and 0 % for the three

months ended September 30, 2024 and September 30, 2023, respectively, and 2.7 % and 0 % for the nine months ended September 30, 2024 and

September 30, 2023, respectively.

The ETR for the three and nine months ended September 30, 2024 differs from statutory rates primarily

due to the non-controlling interest portion of ESGEN OpCo, LLC, which is a partnership for federal tax purposes.

to the Condensed Consolidated Financial Statements

Receivable Agreement

In conjunction with the consummation of the Transactions, Zeo Energy

Corp entered into a Tax Receivable Agreement (the “TRA”) with ESGEN Opco, LLC and certain ESGEN Opco, LLC members (the “TRA

We use the asset and liability method of accounting for income taxes

for the Company.

Under the asset and liability method, deferred tax assets and liabilities are recognized for the future tax consequences

attributable to differences between the financial statement carrying amounts of existing assets and liabilities and their respective tax

bases and net operating loss (“NOL”) and tax credit carry forwards.

Deferred tax assets and liabilities are measured using

enacted income tax rates expected to apply to taxable income in the years in which those differences are expected to be recovered or settled.

The effect on deferred tax assets and liabilities of a change in income tax rates is recognized in the results of operations in the period

that includes the enactment date.

The realizability of deferred tax assets is evaluated quarterly based on a “more likely than not”

standard and, to the extent this threshold is not met, a valuation allowance is recorded.

ASC 740 prescribes a recognition threshold and a measurement attribute

for the financial statement recognition and measurement of tax positions taken or expected to be taken in a tax return.

For those benefits

to be recognized, a tax position must be more likely than not to be sustained upon examination by taxing authorities.

The Company recognizes

accrued interest and penalties related to unrecognized tax benefits as income tax expense.

Management has evaluated the Company’s

tax positions, including its previous status as a pass-through entity for federal and state tax purposes, and has determined that the

Company has taken no uncertain tax positions that require adjustment to the condensed consolidated financial statements.

The Company’s

reserve related to uncertain tax positions was zero as of March 31, 2025 and December 31, 2024.

There were no unrecognized tax benefits

and no amounts accrued for interest and penalties as of March 31, 2025 and December 31, 2024.

The Company is currently not aware of any

issues under review that could result in significant payments, accruals or material deviation from its position.

Interest and penalties associated with tax positions are recorded in

the period assessed as general and administrative expenses.

The open tax years for U.S.

federal and state income tax purposes are 2021

Tax Receivable Agreement

In conjunction with the consummation of the ESGEN Business Combination,

Zeo Energy Corp entered into a Tax Receivable Agreement (the “TRA”) with Opco and certain Opco members (the “TRA Holders”).

Pursuant to the TRA, Zeo Energy Corp.

is required to pay the TRA Holders 85 % of the net cash savings, if any, in U.S.

federal, state and local income and franchise tax (computed using simplifying assumptions to address the impact of state and local taxes)

that the Company actually realizes (or is deemed to realize in certain circumstances) in periods after the Business Combination as a result

of, as applicable to each such TRA Holder, (i) certain increases in tax basis that occur as a result of the acquisition (or deemed acquisition

federal, state and

local income and franchise tax (computed using simplifying assumptions to address the impact of state and local taxes) that the Company

actually realizes (or is deemed to realize in certain circumstances) in periods after the ESGEN Business Combination as a result of, as

applicable to each such TRA Holder, (i) certain increases in tax basis that occur as a result of the acquisition (or deemed acquisition

federal income tax purposes) of all or a portion of such TRA Holder’s Exchangeable OpCo Units pursuant to the exercise

of the OpCo Exchange Rights or a Mandatory Exchange and (ii) imputed interest deemed to be paid by the Company as a result of, and additional

tax basis arising from, any payments it makes under the Tax Receivable Agreement.

All such payments to the TRA Holders are the obligations

of Zeo Energy Corp., and not that of ESGEN Opco, LLC.

As of September 30, 2024, there have been no exchanges of ESGEN Opco, LLC units

for Class A Common Stock of Zeo Energy Corp.

and, accordingly, no TRA liabilities currently exist.

Future exchanges will result in incremental

tax attributes and potential cash tax savings for Zeo Energy Corp.

The associated liability for the Tax Receivable Agreement will be recorded

as a decrease to additional paid-in capital in the consolidated statement of stockholders’ equity.

As of September 31, 2024,

the Company has concluded, based on applicable accounting standards, that it was more likely than not that its deferred tax assets subject

to the TRA would not be realized;

therefore, the Company has not recorded a liability related to the tax savings it may realize from utilization

of such deferred tax assets.

As of September 30,2024, the total unrecorded TRA liability is approximately $ 48.8 million.

In accordance

with ASC Topic 450, Contingencies, any changes to an existing TRA liability, including changes to the fair value measurement or to re-establish

a TRA liability related to prior year exchanges, will be recorded as tax receivable agreement in other income (expense), net in the condensed

consolidated statement of operations.

Similarly, if utilization of the deferred tax assets subject to the TRA becomes more likely than

not in the future, the Company will record a liability related to the TRA which will be recorded through the condensed consolidated statement

of operations.

tax basis arising from, any payments it makes under the TRA.

All such payments to the TRA Holders are the obligations of Zeo Energy Corp.,

and not that of Opco.

As of March 31, 2025, there was 8,500,000 exchanges of Opco units for Class A Common Stock of Zeo Energy Corp.

under the TRA are not considered probable as of March 31, 2025..

Future exchanges will result in incremental tax attributes and potential

cash tax savings for Zeo Energy Corp.

The associated liability for the TRA will be recorded as a decrease to additional paid-in capital

in the condensed consolidated statement of changes in stockholders’ deficit.

As of March 31, 2025, the total unrecorded TRA

liability is approximately $ 8.3 million, of which $ 3.5 million related to actual exchanges and $ 4.8 million related to hypothetical sale.

In accordance with ASC Topic 450, Contingencies, any changes to an existing TRA liability, including changes to the fair value measurement

or to re-establish a TRA liability related to prior year exchanges, will be recorded as tax receivable agreement in other income (expense),

net in the condensed consolidated statement of operations.

Similarly, if utilization of the deferred tax assets subject to the TRA becomes

more likely than not in the future, the Company will record a liability related to the TRA which will be recorded in the condensed consolidated

statement of operations.

See Note 13 – Related Party Transactions.

Accounting Pronouncements

Issued Accounting Pronouncements Not Yet Adopted

November 2023, the FASB issued ASU No.

2023-07, Segment Reporting-Improvements to Reportable Segment Disclosures (Topic 280) (“ASU

2023-07”), which requires an enhanced disclosure of segments on an annual and interim basis, including the title of the chief operating

decision maker, significant segment expenses, and the composition of other segment items for each segment’s reported profit.

2023-07 is effective for fiscal years beginning after December 15, 2023, and interim periods within fiscal years beginning after December

Early adoption is permitted, and adoption of ASU 2023-07 should be applied retrospectively to all prior periods presented in

the financial statements.

The Company is currently evaluating the impact of this standard.

December 2023, the FASB issued ASU No.

2023-09, Income Taxes (Topic 740) - Improvements to income tax disclosures (“ASU 2023-09”),

expanding the disclosures requirement for income taxes primarily by requiring more detailed disclosure for income taxes paid and the

effective tax rate reconciliation.

ASU 2023-09 is effective for annual periods beginning after December 15, 2025.

Early adoption is permitted,

and adoption of ASU 2023-09 can be applied prospectively or retrospectively.

New Accounting Pronouncements

Recently Adopted Accounting Pronouncements

In November 2023, the FASB issued ASU No.

2023-07, Segment Reporting-Improvements

to Reportable Segment Disclosures (Topic 280) (“ASU 2023-07”), which requires an enhanced disclosure of segments on an annual

and interim basis, including the title of the chief operating decision maker, significant segment expenses, and the composition of other

segment items for each segment’s reported profit or loss.

ASU 2023-07 is effective for fiscal years beginning after December 15,

2023, and interim periods within fiscal years beginning after December 15, 2024.

The adoption of ASU 2023-07 did not have a

material impact on the condensed consolidated financial statements.

Refer to Note 17, Segment Reporting.

Recently Issued Accounting Pronouncements Not Yet Adopted

In December 2023, the FASB issued ASU No.

2023-09, Income Taxes (Topic

740) - Improvements to income tax disclosures (“ASU 2023-09”), expanding the disclosures requirement for income taxes primarily

by requiring more detailed disclosure for income taxes paid and the effective tax rate reconciliation.

ASU 2023-09 is effective for annual

periods beginning after December 15, 2024.

Early adoption is permitted, and adoption of ASU 2023-09 can be applied prospectively or retrospectively.

The Company is currently evaluating the impact of this standard.

4 - REVERSE RECAPITALIZATION

discussed in Note 1, “Organization and Business Operation”, the Business Combination was consummated on March 13, 2024, which,

for accounting purposes, was treated as the equivalent of Zeo issuing stock for the net assets of ESGEN, accompanied by recapitalization.

Under this method of accounting, ESGEN was treated as the acquired company for financial accounting and reporting purposes under GAAP.

closing of the Business Combination, the Company received gross proceeds of $ 17.7 million from the Business Combination, offset by total

transaction costs and other fees totaling $ 7.4 million.

The following table reconciles the elements of the Business Combination to the

consolidated statements of cash flows and the consolidated statement of changes in stockholders’ deficit for the period ended September

In November 2024, the FASB issued ASU 2024-03, " Income

Statement - Reporting Comprehensive Income - Expense Disaggregation Disclosures (Subtopic 220-40):Disaggregation of Income Statement Expenses "

("ASU 2024-03").

The standard requires additional disclosure of certain costs and expenses within the notes to the financial

The provisions of the standard are effective for annual reporting periods beginning after December 15, 2026, and interim reporting

periods beginning after December 15, 2027, with early adoption permitted.

This accounting standards update may be applied either prospectively

or retrospectively.

The Company is currently evaluating the impact this standard will have on its condensed consolidated financial statements.

NOTE 4 - REVERSE RECAPITALIZATION

As discussed in Note 1, “Organization and Business Operation”,

the ESGEN Business Combination was consummated on March 13, 2024, which, for accounting purposes, was treated as the equivalent of Zeo

issuing stock for the net assets of ESGEN, accompanied by recapitalization.

Under this method of accounting, ESGEN was treated as the

acquired company for financial accounting and reporting purposes under US GAAP.

Transaction Proceeds

Upon closing of the ESGEN Business Combination, the Company received

gross proceeds of $ 17.7 million from the ESGEN Business Combination, offset by total transaction costs and other fees totaling $ 7.4 million.

The following table reconciles the elements of the ESGEN Business Combination to the condensed consolidated statements of cash flows and

the condensed consolidated statements of changes in stockholders’ deficit for the period ended March 31, 2024:

Cash-trust and cash, net of redemptions

transaction costs, promissory note and

professional fees, paid

transaction costs, promissory note and professional fees, paid

( 7,350,088 )

Proceeds from Sponsor

PIPE Investment

Net proceeds from the Business Combination

Proceeds from Sponsor PIPE Investment

Net proceeds from the ESGEN Business Combination

liabilities assumed

( 12,861,808 )

Reverse recapitalization,

Reverse recapitalization, net

$ ( 2,497,805 )

to the Condensed Consolidated Financial Statements

of shares of Common Stock issued immediately following the consummation of the Business Combination was:

V Common Stock

A Common Stock

ESGEN Class A common stock, outstanding

prior to the Business Combination

The number of shares of Common Stock issued immediately following the

consummation of the ESGEN Business Combination was:

Class V Common Stock

Class A Common Stock

ESGEN Class A common stock, outstanding prior to the ESGEN Business Combination

Forfeiture of Class A founder shares

3 unchanged sentences

Class A common stock of ESGEN

ESGEN Class B common

stock, outstanding prior to the Business Combination

Business Combination shares

ESGEN Class B common stock, outstanding prior to the ESGEN Business Combination

ESGEN Business Combination shares

Sunergy Shares

2 unchanged sentences

Shares issued to sponsor

Stock immediately after the Business Combination

and private placement warrants

13,800,000 Public Warrants issued at the time of ESGEN’s initial public offering remained outstanding and became warrants for the

Company and the 14,040,000 Private Placement Warrants were forfeited.

to the closing of the Business Combination, certain ESGEN public stockholders exercised their right to redeem certain of their outstanding

shares for cash, resulting in the redemption of 1,159,976 shares of ESGEN Class A common stock for an aggregate payment from the Trust

of $ 13,336,056 .

5 - PROPERTY, EQUIPMENT, AND OTHER FIXED ASSETS

equipment and other fixed assets, net consisted of the following:

September 30,

Common Stock immediately after the ESGEN Business Combination

Public and private placement warrants

The 13,800,000 Public Warrants issued at the time of ESGEN’s

initial public offering remained outstanding and became warrants for the Company and the 14,040,000 private placement warrants were forfeited.

Prior to the closing of the ESGEN Business Combination, certain ESGEN

public stockholders exercised their right to redeem certain of their outstanding shares for cash, resulting in the redemption of 1,159,976

shares of ESGEN Class A common stock for an aggregate payment from the Trust of $ 13,336,056 .

NOTE 5 - PROPERTY, EQUIPMENT, AND OTHER FIXED ASSETS

Property, equipment and other fixed assets, net consisted of

the following:

Internally-developed software

4 unchanged sentences

( 1,602,922 )

expense related to the Company’s property and equipment was $ 208,747 and $ 52,397 for the three months ended September 30, 2024,

and 2023, respectively, and $ 539,692 and $ 325,395 for the nine months ended September 30, 2024, and 2023, respectively, which are included

in depreciation and amortization expense on the accompanying condensed consolidated statements of operations.

to the Condensed Consolidated Financial Statements

INTANGIBLE ASSETS

The following

is a summary of the Company’s intangible assets, net as of September 30, 2024, and December 31, 2023:

Weighted September 30, 2024

( 1,383,664 )

Depreciation expense related to the Company’s property

and equipment was $ 219,258 and $ 168,403 for the three months ended March 31, 2025, and 2024, respectively, which are included in depreciation

and amortization expense on the accompanying condensed consolidated statements of operations.

NOTE 6 - INTANGIBLE ASSETS

The following is a summary of the Company’s intangible

assets, net as of March 31, 2025 and December 31, 2024:

Weighted March 31, 2025

Average Useful

4 unchanged sentences

Non-compete - 224,000 224,000 -

Order backlog 0.6 10,808,821 7,870,017 2,938,804

$ 14,613,721 11,674,917 $ 2,938,804

6 unchanged sentences

Non-compete - 224,000 224,000 -

Order backlog 0.6 10,808,821 3,237,665 7,571,156

$ 14,613,721 7,042,565 $ 7,571,156

periodically reviews the estimated useful lives of its identifiable intangible assets, taking into consideration any events or circumstances

that might result in either a diminished fair value or revised useful life.

Management has determined there have been no indicators of

impairment or change in useful life for the three and nine months ended September 30, 2024, and 2023.

Amortization expense relating to

the Company’s intangible assets was $ 257,011 and $ 392,158 for the three months ended September 30, 2024, and 2023, respectively,

and $ 771,028 and $ 1,041,325 for the nine months ended September 30, 2024, and 2023, respectively, which were included in depreciation

and amortization expenses on the accompanying condensed consolidated statements of operations.

7 - ACCRUED EXPENSES AND OTHER CURRENT LIABILITIES

The following

table summarizes accrued expenses and other current liabilities:

The Company periodically reviews the estimated useful lives of

its identifiable intangible assets, taking into consideration any events or circumstances that might result in either a diminished fair

value or revised useful life.

Management has determined there have been no indicators of impairment or change in useful life for the three

months ended March 31, 2025, and 2024.

Amortization expense relating to the Company’s intangible assets was $ 4,632,352 and $ 257,008

for the three months ended March 31, 2025, and 2024, respectively, which is included in depreciation and amortization expenses on the

accompanying condensed consolidated statements of operations.

As of March 31, 2025, all of the intangible asset for order backlog

will be amortized in 2025.

NOTE 7 - ACCRUED EXPENSES AND OTHER CURRENT LIABILITIES

The following table summarizes accrued expenses and other current

Accrued payroll

3 unchanged sentences

Transaction costs

Taxes payable

Professional fees

Accrued Other

Company leases both office space and warehouse space for its operations.

NOTE 8 - LEASES

The Company leases both office space and warehouse space for its operations.

Lease maturities vary from 2 to 5 years.

These leases are

viewed and recorded as operating leases and as such periodic payments (monthly) are expensed according to the period for which payment

lease costs recorded in general and administrative expenses in the condensed consolidated statements of operations were $ 133,892 and

$ 163,475 for the three months ended September 30, 2024, and 2023, respectively and $ 461,822 and $ 436,205 for the nine months ended September

30, 2024, and 2023, respectively.

also leases multiple vehicles for its operations.

The leases on vehicles generally have a 5 -year term and are recorded as finance leases.

to the Condensed Consolidated Financial Statements

These leases are recorded as operating leases and as such periodic payments (monthly) are

expensed according to the period for which payment is made.

Operating lease costs recorded in general and administrative expenses

in the condensed consolidated statements of operations were $ 196,574 and $ 163,965 for the three months ended March 31, 2025, and 2024,

respectively.

The Company also leases multiple vehicles for its operations.

on vehicles generally have a 5 -year term and are recorded as finance leases.

Finance lease costs recorded in depreciation and amortization in the

consolidated statements of operations were $ 34,118 for the three months ended September 30, 2024, and 2023.

Finance lease costs recorded

in depreciation and amortization in the consolidated statements of operations were $ 102,354 and $ 64,762 for the nine months ended September

30, 2024, and 2023, respectively.

Finance lease costs recorded in interest expense in the consolidated statements of operations were $ 12,672

and $ 15,460 for the three months ended September 30, 2024, and 2023, respectively.

Finance lease costs recorded in interest expense in

the consolidated statements of operations were $ 40,167 and $ 29,718 for the nine months ended September 30, 2024, and 2023, respectively.

The following amounts were recorded in the Company’s balance

sheet relating to its operating and finance lease and other supplemental information:

September 30,

2024 December 31,

Operating lease ROU assets $ 1,402,462 $ 1,135,668

Finance lease ROU assets 481,130 583,484

Current operating lease liabilities 576,890 539,599

Current finance lease liabilities 127,341 118,416

Non-current operating lease liabilities 909,468 636,414

Non-current finance lease liabilities 382,618 479,271

Total lease liabilities $ 1,996,317 $ 1,773,700

condensed consolidated statements of operations were $ 34,119 and $ 34,118 for the three months ended March 31, 2025, and 2024, respectively.

Finance lease costs recorded in interest expense in the condensed consolidated statements of operations were $ 11,174 and $ 14,332 for the

three months ended March 31, 2025, and 2024, respectively.

The following amounts were recorded in the Company’s condensed

consolidated balance sheets relating to its operating and finance lease and other supplemental information:

Other supplemental information:

5 unchanged sentences

Finance leases 9.76 % 9.76 %

The following tables present the maturity analysis of operating and

finance lease liabilities as of September 30, 2024:

The following tables present the maturity of operating and finance

lease liabilities as of December 31, 2024:

Operating leases

Operating Leases

Total lease payments

1 unchanged sentence

Present value of lease liabilities

to the Condensed Consolidated Financial Statements

Finance leases

3 unchanged sentences

Present value of lease liabilities

Company has deposited security payments related to the facility leases of $ 80,794 included in the accompanying condensed consolidated

balance sheets as other assets.

Company has financing arrangements for many of the vehicles in its fleet.

The financing includes direct loans for each vehicle being

The Company entered into new vehicle financing arrangements totaling $0 and $ 281,575 for the three months ended September 30,

2024, and 2023, respectively, and $ 0 and $ 744,933 for the nine months ended September 30, 2024, and 2023.

Payments of debt obligations

are based on level monthly payments for 60 months and include interest rates ranging from 4.94 % - 11.09 %.

As of September 30, 2024,

the weighted average interest rate on the Company’s short debt obligations was 6.75 %.

The combined amounts of these financial obligations

are included in the condensed consolidated balance sheets as current portion of long-term debt and Long-term debt.

The company does not

have debt covenants associated with these arrangements.

The following

table presents the maturity analysis of the long-term debt as of September 30, 2024:

The Company has deposited security payments related to the facility

leases of $ 75,135 included in the accompanying condensed consolidated balance sheets as other assets.

NOTE 9 - DEBT

Vehicle Loans

The Company has financing arrangements for many of the vehicles in

The financing includes direct loans for each vehicle being financed.

The Company entered into new vehicle financing arrangements

totaling $0 and $ 311,029 for the three months ended March 31, 2025, and 2024, respectively.

Payments of debt obligations are based on

equal monthly payments for 60 months and include interest rates ranging from 4.94 % - 11.09 %.

As of March 31, 2025, the weighted average

interest rate on the Company’s short debt obligations was 6.75 %.

The combined amounts of these financial obligations are included

in the condensed consolidated balance sheets as current portion of long-term debt and Long-term debt.

The Company does not have debt covenants

associated with these arrangements.

The following table presents the maturity analysis of the long-term

debt as of March 31, 2025:

Less current portion

Long-term debt

10 – REDEEMABLE NONCONTROLLING INTERESTS AND EQUITY

condensed consolidated statements of changes in stockholders’ equity reflect the reverse recapitalization and Business

Combination as described in Note 1 – Organization and Business Operation and Note 4 – Reverse Recapitalization.

Sunergy was deemed to be the accounting acquirer in the Business Combination, all periods prior to the consummation of the Business

Combination reflect the balances and activity of Sunergy Renewables, LLC.

The condensed consolidated balances as of December 31,

2023 from the financial statements of Sunergy Renewables, LLC as of that date and membership unit activity in the consolidated

statements of change in stockholders’ equity, prior to the consummation of the Business Combination have not been

retroactively adjusted.

consummation of the Business Combination, the Company’s capital stock consisted of (i) 3,257,436 shares of Class A Common Stock

held by the Sponsor, (ii) 1,026,960 shares of Class A Common Stock issued to public stockholders, net of redemptions as well as certain

service providers, (iii) 742,568 shares of Class A Common Stock issued to Sunergy Renewables, LLC initial Stockholders other than Sponsor,

(iv) 32,230,000 shares of Class V Common Stock issued to Sun Managers and other prior investors of Sunergy;

and (v) 1,500,000 shares

of Series A Preferred Stock and 1,500,000 shares of Class V Common Stock issued to Sponsor investors pursuant to the Sponsor PIPE Investment.

to the Condensed Consolidated Financial Statements

described in Note 1- Organization and Business Operation, pursuant to the Sponsor Subscription Agreement, at the Closing, a total of

1,500,000 Convertible OpCo Preferred Units (including an equal number of shares of the Company’s Class V Common Stock) were issued

to the Sponsor in return for aggregate consideration of $ 15,000,000 .

with the execution of the Business Combination Agreement, on April 19, 2023, the Sponsor, ESGEN’s independent directors at the

time of its initial public offering (“IPO”) and one or more client accounts of Westwood Group Holdings, Inc.

(successor to

Salient Capital Advisors, LLC) (the “Westwood Client Accounts” and, together with the Sponsor and certain independent directors

of ESGEN, the “Initial Shareholders”), entered into an amendment to that certain Letter Agreement, dated as of October 22,

2021 (the “Letter Agreement”) (and as further amended on January 24, 2024, the “Letter Agreement Amendment”),

pursuant to which, among other things, (i) the Initial Shareholders agreed not to transfer his, her or its ESGEN Class B ordinary shares

(or the Class A Common Stock) prior to the earlier of (a) six months after the Closing or (b) subsequent to the Closing (A) if the last

sale price of the Zeo 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 (B) the date on which Zeo completes a liquidation, merger, share exchange or other

similar transaction that results in all of Zeo’s stockholders having the right to exchange their Zeo Class A Common Stock for cash,

securities or other property;

and (ii) the Initial Shareholders and Sponsor agreed to forfeit an additional 500,000 shares of Zeo Class

A Common Stock if, within two years of Closing, the Convertible OpCo Preferred Units are redeemed or converted (with such shares subject

to a lock-up for two years after Closing).

March 13, 2024, concurrently with the Closing, the Sellers entered into the Lock-Up Agreement, pursuant to which each

of the Sellers agreed not to transfer its Exchangeable OpCo Units, as defined below, and corresponding shares of Zeo Class V

Common Stock received in connection with the Business Combination until the earlier of (i) six months after the Closing and (ii) subsequent

to the Closing, (a) satisfaction of the Early Lock-Up Termination or (b) the date on which Zeo completes

a PubCo Sale (as defined in the Lock-Up Agreement).

concurrent with the Closing, on March 13, 2024, the Sellers, the Initial Shareholders, Piper (the “New PubCo Holders”) and

Zeo entered into the Amended and Restated Registration Rights Agreement (the “A&R Registration Rights Agreement”), pursuant

to which, among other things, Zeo will provide the stockholders certain registration rights with respect to certain shares of Class

A Common Stock held by them or otherwise issuable to them pursuant to the Business Combination Agreement, the OpCo A&R LLC Agreement

(as defined below) or the Company’s certificate of incorporation filed on March 13, 2024 (the “Zeo Charter”).

table below reflects share information about the Company’s capital stock as of September 30, 2024.

Notes payable

On December 24, 2024 (the “Issue Date”), the Company, issued

a Promissory Note (the “Promissory Note”) to LHX Intermediate LLC (“LHX”), pursuant to which the Company could

borrow up to an aggregate principal amount of $ 4,000,000 (the “Loan”).

Subject to the terms and conditions set forth in the

Promissory Note, the Loan shall be provided to the Company in three tranches:

(i) $ 2,500,000 upon execution of the Promissory Note (the

“Initial Advance”), (ii) $ 750,000 if the Company achieves the Tranche 2 Milestone within 60 days from the Initial Advance

(the “Tranche 2 Advance”) and (iii) $ 750,000 if the Company achieves the Tranche 3 Milestone within 60 days from the Tranche

“Tranche 2 Milestone” means the submission by the Company to the applicable regulatory bodies at least 340 permits

to install solar energy systems sold through the Company’s year-round sales program.

“Tranche 3 Milestone” means the

completion by the Company of the installation of at least 296 solar energy systems sold through the Company’s year-round sales program.” LHX

may also waive any milestone described above and advance the applicable amounts to the Company.

As of March 31, 2025, $ 2.5 million has

been advanced and the balance of $ 2.5 million, net of debt discount is included in Convertible Promissory Note on the accompanying condensed

consolidated balance sheet.

On April 15, 2025, the Promissory Note was amended with the result that the Tranche 2 Advance would be delivered

if a Tranche 2 Milestone is met within 120 days of the Initial Advance, and the Tranche 3 Advance would be delivered if a Tranche 3 Milestone

is met within 120 days of the Tranche 2 Advance.

No interest shall be charged or accrue on the balance outstanding on

The Loan will be repaid in full (the “Repayment”) by issuing to LHX or its designee of a number of the Company’s

shares of Class A common stock (“Class A Common Stock”) equal to the quotient of (i) the outstanding and unpaid amount of

the Loan, divided by (ii) $ 1.35 (the “Share Issuance”).

The Repayment shall take place immediately following the later of:

(x) the day falling on the first anniversary of the Issue Date (or the immediately previous business day) and (y) the date on which the

stockholders of the Company approve the Share Issuance.

Due to this provision, the Company considered whether the embedded conversion

option qualifies for derivative accounting under ASC 815-15 “Derivatives and Hedging.” As the note is

not convertible until maturity, no derivative liability was recognized as of March 31, 2025.

Based on the Company’s stock

price on the date the note was entered into, the computed effective interest rate on the loan was 58.0 %.

Based on the Company's stock

price at March 31, 2025, the computed effective interest rate on the loan was 11.9 %.

In connection with the Promissory Note, on December 24, 2024, LHX entered

into a voting agreement with the Company and certain stockholders of the Company (the “LHX Voting Agreement”), pursuant to

which such stockholders agreed to vote (or cause to be voted), in person or by proxy, all the shares of Class A Common Stock and Class

V common stock owned by such stockholders (i) in favor of the nomination and appointment of LHX’s designee to the board of directors

of the Company (ii) in favor of the issuance by the Company to LHX of shares of Class A Common Stock in connection with an option that

may be granted to LHX to purchase up to 4,000,000 shares of Class A Common Stock, subject to the terms and conditions therein and (iii)

in favor of the Share Issuance, when required pursuant to the Promissory Note.

NOTE 10 - REDEEMABLE NONCONTROLLING INTERESTS AND EQUITY

ESGEN Business Combination

The condensed consolidated statements of changes in stockholders’

deficit reflect the reverse recapitalization and ESGEN Business Combination as described in Note 1 – Organization and Business Operation

and Note 4 – Reverse Recapitalization.

As Sunergy was deemed to be the accounting acquirer in the ESGEN Business Combination, all

periods prior to the consummation of the ESGEN Business Combination reflect the balances and activity of Sunergy Renewables, LLC.

condensed consolidated balances as of December 31, 2023 from the financial statements of Sunergy Renewables, LLC as of that date and membership

unit activity in the condensed consolidated statements of change in stockholders’ equity, prior to the consummation of the ESGEN

Business Combination have not been retroactively adjusted.

Upon consummation of the ESGEN Business Combination, the Company’s

capital stock consisted of (i) 3,257,436 shares of Class A Common Stock held by the Sponsor, (ii) 1,026,960 shares of Class A Common Stock

issued to public stockholders, net of redemptions as well as certain service providers, (iii) 742,568 shares of Class A Common Stock issued

to Sunergy Renewables, LLC initial Stockholders other than Sponsor, (iv) 32,230,000 shares of Class V Common Stock issued to Sun Managers

and other prior investors of Sunergy;

and (v) 1,500,000 shares of Series A Preferred Stock and 1,500,000 shares of Class V Common Stock

issued to Sponsor investors pursuant to the Sponsor PIPE Investment.

Private Placement

As described in Note 1- Organization and Business Operation, pursuant

to the Sponsor Subscription Agreement, at the Closing, a total of 1,500,000 Convertible OpCo Preferred Units (including an equal number

of shares of the Company’s Class V Common Stock) were issued to the Sponsor in return for aggregate consideration of $ 15,000,000 .

Lock-Up Agreements

Concurrently with the execution of the ESGEN Business Combination Agreement,

on April 19, 2023, the Sponsor, ESGEN’s independent directors at the time of its initial public offering (“IPO”) and

one or more client accounts of Westwood Group Holdings, Inc.

(successor to Salient Capital Advisors, LLC) (the “Westwood Client

Accounts” and, together with the Sponsor and certain independent directors of ESGEN, the “Initial Shareholders”), entered

into an amendment to that certain Letter Agreement, dated as of October 22, 2021 (the “Letter Agreement”) (and

as further amended on January 24, 2024, the “Letter Agreement Amendment”), pursuant to which, among other things, (i) the

Initial Shareholders agreed not to transfer his, her or its ESGEN Class B ordinary shares (or the Class A Common Stock) prior to the earlier

of (a) six months after the Closing or (b) subsequent to the Closing (A) if the last sale price of the Zeo 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 (B) the date on which Zeo completes a liquidation, merger, share exchange or other similar transaction that results in all of Zeo’s

stockholders having the right to exchange their Zeo Class A Common Stock for cash, securities or other property;

and (ii) the Initial

Shareholders and Sponsor agreed to forfeit an additional 500,000 shares of Zeo Class A Common Stock if, within two years of Closing, the

Convertible OpCo Preferred Units are redeemed or converted (with such shares subject to a lock-up for two years after Closing).

On March 13, 2024, concurrently with the Closing, the Sellers entered

into the Lock-Up Agreement, pursuant to which each of the Sellers agreed not to transfer its Exchangeable OpCo Units,

as defined below, and corresponding shares of Zeo Class V Common Stock received in connection with the ESGEN Business Combination

until the earlier of (i) six months after the Closing and (ii) subsequent to the Closing, (a) satisfaction of the Early Lock-Up Termination or

(b) the date on which Zeo completes a PubCo Sale (as defined in the Lock-Up Agreement).

Registration Rights

Also concurrent with the Closing, on March 13, 2024, the Sellers, the

Initial Shareholders, Piper (the “New PubCo Holders”) and Zeo entered into the Amended and Restated Registration Rights Agreement

(the “A&R Registration Rights Agreement”), pursuant to which, among other things, Zeo will provide the stockholders

certain registration rights with respect to certain shares of Class A Common Stock held by them or otherwise issuable to them pursuant

to the ESGEN Business Combination Agreement, the OpCo A&R LLC Agreement (as defined below) or the Company’s certificate of incorporation

filed on March 13, 2024 (the “Zeo Charter”).

The table below reflects share information about the Company’s

capital stock as of March 31, 2025.

Treasury Stock

Class A Common Stock

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Class A convertible preferred units

A Common Stock

holder of Class A Common Stock is entitled to one vote for each share of Class A Common Stock held of record in person or by proxy on

all matters which stockholders generally are entitled to vote, except that, in each case, to the fullest extent permitted by law,

each holder has no voting power with respect to, and will not be entitled to vote on, any amendment to its Certificate of Incorporation

(including any certificate of designations relating to any series of Preferred Stock) that relates solely to the terms of any outstanding

Preferred Stock if the holders of such Preferred Stock are entitled to vote as a separate class thereon (including any certificate of

designations relating to any series of Preferred Stock) or under the General Corporation Law of the State of Delaware (the “ DGCL ”).

The holders of the outstanding shares of Class A Common Stock shall be entitled to vote separately upon any amendment to its Certificate

of Incorporation (including by merger, consolidation, reorganization or similar event) that would alter or change the powers, preferences

or special rights of such class of Common Stock in a manner that is disproportionately adverse as compared to the Class V Common Stock.

Except as otherwise required in its Certificate of Incorporation or by applicable law, the holders of Common Stock will vote together

as a single class on all matters (or, if any holders of Preferred Stock are entitled to vote together with the holders of Common Stock,

as a single class with the holders of Preferred Stock).

to the Condensed Consolidated Financial Statements

A Common Stockholders have rights to the economics of the Company and to receive dividend distributions, subject to applicable laws and

the rights and preferences of holders of Series A Preferred Stock or any other series of stock having preference over or participation

rights with Class A Common Stock.

In the event of liquidation, dissolution or winding up of the affairs of Company, Class A Common Stock

has rights to assets and funds of the Company available for distribution after making provisions for preferential and other amounts to

the holders of Series A Preferred Stock or any other series of stock having preference over or participation rights with Class A Common

V Common Stock

holder of Class V Common Stock is entitled to one vote for each share of Class V Common Stock held of record in person or by proxy on

all matters which stockholders generally are entitled to vote, except that, in each case, to the fullest extent permitted by law,

each holder has no voting power with respect to, and will not be entitled to vote on, any amendment to its Certificate of Incorporation

(including any certificate of designations relating to any series of Preferred Stock) that relates solely to the terms of any outstanding

Preferred Stock if the holders of such Preferred Stock are entitled to vote as a separate class thereon (including any certificate of

designations relating to any series of Preferred Stock) or under the DGCL.

The holders of the outstanding shares of Class V Common Stock

are entitled to vote separately upon any amendment to its Certificate of Incorporation (including by merger, consolidation, reorganization

The table below reflects share information about the Company’s

capital stock as of December 31, 2024.

Class A Common Stock

Class V Common Stock

Class A convertible preferred units

Class A Common Stock

Each holder of Class A Common Stock is entitled to one vote for

each share of Class A Common Stock held of record in person or by proxy on all matters which stockholders generally are entitled to vote,

except that, in each case, to the fullest extent permitted by law, each holder has no voting power with respect to, and will not be entitled

to vote on, any amendment to its Certificate of Incorporation (including any certificate of designations relating to any series of Preferred

Stock) that relates solely to the terms of any outstanding Preferred Stock if the holders of such Preferred Stock are entitled to vote

as a separate class thereon (including any certificate of designations relating to any series of Preferred Stock) or under the General

Corporation Law of the State of Delaware (the “ DGCL ”).

The holders of the outstanding shares of Class A Common Stock

shall be entitled to vote separately upon any amendment to its Certificate of Incorporation (including by merger, consolidation, reorganization

or similar event) that would alter or change the powers, preferences or special rights of such class of Common Stock in a manner that

is disproportionately adverse as compared to the Class A Common Stock.

is disproportionately adverse as compared to the Class V Common Stock.

Except as otherwise required in its Certificate of Incorporation

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Stock are entitled to vote together with the holders of Common Stock, as a single class with the holders of Preferred Stock).

V Common Stockholders do not have rights to the economics of the Company nor to receive dividend distributions, and would not be entitled

to receive, with respect to such shares, any assets of the Corporation, in the event of any voluntary or involuntary liquidation, dissolution

or winding up of the affairs of the Corporation.

A Convertible Preferred Units (Mezzanine Equity)

Class A Common Stockholders have rights to the economics of the

Company and to receive dividend distributions, subject to applicable laws and the rights and preferences of holders of Series A Preferred

Stock or any other series of stock having preference over or participation rights with Class A Common Stock.

In the event of liquidation,

dissolution or winding up of the affairs of Company, Class A Common Stock has rights to assets and funds of the Company available for

distribution after making provisions for preferential and other amounts to the holders of Series A Preferred Stock or any other series

of stock having preference over or participation rights with Class A Common Stock.

Class V Common Stock

Each holder of Class V Common Stock is entitled to one vote for each

share of Class V Common Stock held of record in person or by proxy on all matters which stockholders generally are entitled to vote, except

that, in each case, to the fullest extent permitted by law, each holder has no voting power with respect to, and will not be entitled

to vote on, any amendment to its Certificate of Incorporation (including any certificate of designations relating to any series of Preferred

Stock) that relates solely to the terms of any outstanding Preferred Stock if the holders of such Preferred Stock are entitled to vote

as a separate class thereon (including any certificate of designations relating to any series of Preferred Stock) or under the DGCL.

holders of the outstanding shares of Class V Common Stock are entitled to vote separately upon any amendment to its Certificate of Incorporation

(including by merger, consolidation, reorganization or similar event) that would alter or change the powers, preferences or special rights

of such class of Common Stock in a manner that is disproportionately adverse as compared to the Class A Common Stock.

Except as otherwise

required in its Certificate of Incorporation or by applicable law, the holders of Common Stock will vote together as a single class on

all matters (or, if any holders of Preferred Stock are entitled to vote together with the holders of Common Stock, as a single class with

the holders of Preferred Stock).

Class V Common Stockholders do not have rights to the economics of

the Company nor to receive dividend distributions, and would not be entitled to receive, with respect to such shares, any assets of the

Corporation, in the event of any voluntary or involuntary liquidation, dissolution or winding up of the affairs of the Corporation.

On March 31, 2025, 8,500,000 shares of Class V Common Stock were converted

into 8,500,000 Class A Common Stock.

Class A Convertible Preferred Units (Mezzanine Equity)

The Class A Convertible Preferred Unitholders have no voting rights

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The Sponsor must elect to convert all, but not less than all, of the outstanding Class A Convertible Preferred Units.

Class A Convertible Preferred Unit that is outstanding on the Maturity Date will be converted into such number of Class B Units (a “ Maturity

Date Conversion ”) as is determined by dividing the Class A Convertible Preferred Unit Original Issue Price plus the aggregate

accumulated and unpaid Class A Convertible Preferred Unit Accruing Dividends with respect to such Class A Convertible Preferred Units,

if any, through and until the Maturity Date, by the Market Price (the “ Maturity Date Conversion Price ”).

Price ” shall mean the average of the daily VWAP of the Class A Common Stock during the five (5) Trading Days prior to the Maturity

The “ VWAP ” means, for any Trading Day, the per share daily volume weighted average price of the Class A Common

Stock for such Trading Day on the principal trading exchange or market for the Common Stock (the “ Principal Market ”)

from 9:30 a.m.

Eastern Time through 4:00 p.m.

Eastern Time (the “ Measurement Period ”) or, if such price is not available,

“ VWAP ” shall mean the market value per share of Class A Common Stock on such Trading Day as determined, using a volume-weighted

average method, by an independent investment banking firm or other similar party chosen by the Company.

A “ Trading Day ”

means any days during the course of which the Principal Market on which the Class A Common Stock is listed or admitted to trading is

open for the exchange of securities.

to the Condensed Consolidated Financial Statements

If, after the Class A Convertible

Preferred Unit Original Issue Date, the Company (i) makes a distribution on its Class B Units in securities (including Class B Units),

(ii) subdivides or splits its outstanding Class B Units into a greater number of Class B Units, (iii) combines or reclassifies its Class

B Units into a smaller number of Class B Units or (iv) issues by reclassification of its Class B Units any securities (including any reclassification

in connection with a merger, consolidation or business combination in which the Company is the surviving person), then the Conversion

Price in effect at the time of the record date for such distribution or of the effective date of such subdivision, split,

combination, or reclassification shall be proportionately adjusted so that the Conversion of the Class A Convertible Preferred Units after

such time shall entitle the Sponsor to receive the aggregate number of Class B Units that such holder would have been entitled to receive

if the Class A Convertible Preferred Units had been converted into Class B Units immediately prior to such record date or effective date,

as the case may be.

An adjustment made pursuant to the applicable section of the OpCo A&R LLC Agreement shall become effective

immediately after the record date in the case of a distribution and shall become effective immediately after the effective date in the

case of a subdivision, combination, reclassification (including any reclassification in connection with a merger, consolidation or business

combination in which the Company is the surviving person) or split.

Such adjustment shall be made successively whenever any event described

above shall occur.

The Company and the ESGEN OpCo, LLC, as the case may be, agree that it will act in good faith to make any adjustment(s)

required by the applicable sections of the OpCo A&R LLC Agreement equitably and in such a manner as to afford the Sponsor the

benefits of the provisions hereof, and will not intentionally take any action to deprive such holders of the express benefit hereof.

Each Class A Convertible Preferred Unit that is outstanding on

the Maturity Date will be converted into such number of Class B Units (a “ Maturity Date Conversion ”) as is determined

by dividing the Class A Convertible Preferred Unit Original Issue Price plus the aggregate accumulated and unpaid Class A Convertible

Preferred Unit Accruing Dividends with respect to such Class A Convertible Preferred Units, if any, through and until the Maturity Date,

by the Market Price (the “ Maturity Date Conversion Price ”).

The “ Market Price ” shall mean the average

of the daily VWAP of the Class A Common Stock during the five (5) Trading Days prior to the Maturity Date.

means, for any Trading Day, the per share daily volume weighted average price of the Class A Common Stock for such Trading Day on the

principal trading exchange or market for the Common Stock (the “ Principal Market ”) from 9:30 a.m.

Eastern Time through

Eastern Time (the “ Measurement Period ”) or, if such price is not available, “ VWAP ” shall

mean the market value per share of Class A Common Stock on such Trading Day as determined, using a volume-weighted average method, by

an independent investment banking firm or other similar party chosen by the Company.

A “ Trading Day ” means any days

during the course of which the Principal Market on which the Class A Common Stock is listed or admitted to trading is open for the exchange

of securities.

If, after the Class A Convertible Preferred Unit Original Issue

Date, the Company (i) makes a distribution on its Class B Units in securities (including Class B Units), (ii) subdivides or splits its

outstanding Class B Units into a greater number of Class B Units, (iii) combines or reclassifies its Class B Units into a smaller number

of Class B Units or (iv) issues by reclassification of its Class B Units any securities (including any reclassification in connection

with a merger, consolidation or business combination in which the Company is the surviving person), then the Conversion Price in effect

at the time of the record date for such distribution or of the effective date of such subdivision, split, combination, or reclassification

shall be proportionately adjusted so that the Conversion of the Class A Convertible Preferred Units after such time shall entitle the

Sponsor to receive the aggregate number of Class B Units that such holder would have been entitled to receive if the Class A Convertible

Preferred Units had been converted into Class B Units immediately prior to such record date or effective date, as the case may be.

adjustment made pursuant to the applicable section of the OpCo A&R LLC Agreement shall become effective immediately after the

record date in the case of a distribution and shall become effective immediately after the effective date in the case of a subdivision,

combination, reclassification (including any reclassification in connection with a merger, consolidation or business combination in which

the Company is the surviving person) or split.

Such adjustment shall be made successively whenever any event described above shall occur.

The Company and the ESGEN OpCo, LLC, as the case may be, agree that it will act in good faith to make any adjustment(s) required by the

applicable sections of the OpCo A&R LLC Agreement equitably and in such a manner as to afford the Sponsor the benefits of the

provisions hereof, and will not intentionally take any action to deprive such holders of the express benefit hereof.

The Class A Convertible Preferred Units are redeemable in whole but

3 unchanged sentences

Option Redemption.

the occurrence of a Liquidating Event (as defined in the OpCo A&R LLC Agreement), the Preferred Units will be entitled to distributions

the satisfaction of all of the Company’s debts and liabilities to creditors, and the

satisfaction of all of the Company’s Liabilities to Members in satisfaction of liabilities

for previously declared distributions, the Sponsor is entitled to an amount equal to the

then-remaining Required Return with respect to each Preferred Unit then outstanding (the

“Liquidation Redemption”).

Upon the occurrence of a Liquidating Event (as defined in the OpCo

A&R LLC Agreement), the Preferred Units will be entitled to distributions as follows:

● Following the satisfaction of all of the Company’s debts and liabilities to creditors, and the satisfaction of all of the Company’s Liabilities to Members in satisfaction of liabilities for previously declared distributions, the Sponsor is entitled to an amount equal to the then-remaining Required Return with respect to each Preferred Unit then outstanding (the “Liquidation Redemption”).

● The Sponsor does not participate in further distributions following the receipt of the Required Return (i.e., the Preferred Units are non-participating instruments).Upon any liquidation or deemed liquidation event, the holders of Class A Convertible Preferred Units will be entitled to receive out of the available proceeds, before any distribution is made to holders of Common Stock or any other junior securities, an amount per share equal to the greater of (i) 100 % of the Accrued Value (as defined in the Certificate of Designation) or (ii) such amount per share as would have been payable had all shares of Series A Preferred Stock been converted into Class A Common Stock immediately prior to the liquidation event.

Noncontrolling Interests

of September 30, 2024, the prior investors of Sunergy own 87.03 % of the common units of the Company.

The OpCo A&R LLC Agreement provides

among other things, a holder of corresponding economic, non-voting Class B units of OpCo (the “Exchangeable OpCo Units”)

has the right to cause OpCo to redeem one or more of such Exchangeable OpCo Units, together with the cancellation of an equal number

of shares of such holder’s Zeo Class V Common Stock, for shares of Zeo Class A Common Stock on a one-for-one basis, or, at the

election of Zeo (as manager of OpCo), cash, in each case, subject to certain restrictions set forth in the OpCo A&R LLC Agreement

and the Charter.

The OpCo A&R LLC Agreement also provides for mandatory OpCo Unit Redemptions in certain limited circumstances, including

in connection with certain changes of control.

Subject to certain conditions, the Class A Convertible OpCo Preferred Units are redeemable

by Zeo and following the first anniversary of the Closing may be converted by the Sponsor into Exchangeable OpCo Units (and then would

be immediately exchanged on a one-for-one basis, together with an equal number of accompanying shares of Zeo Class V Common Stock, for

shares Zeo Class A Common Stock).

The Convertible OpCo Preferred Units have accruing distributions of 10 % per annum and the Sponsor as

holder thereof has certain consent rights over the taking of certain actions of OpCo and its subsidiaries.

financial results of OpCo, LLC are consolidated with the Company with the redeemable noncontrolling interests’ share of our net loss

separately allocated.

to the Condensed Consolidated Financial Statements

11- STOCK-BASED COMPENSATION

Redeemable Noncontrolling Interests

As of March 31, 2025, the prior investors of Sunergy own 71.8 %

of the common units of the Company.

The OpCo A&R LLC Agreement provides among other things, a holder of corresponding economic, non-voting

Class B units of OpCo (the “Exchangeable OpCo Units”) has the right to cause OpCo to redeem one or more of such Exchangeable

OpCo Units, together with the cancellation of an equal number of shares of such holder’s Zeo Class V Common Stock, for shares of

Zeo Class A Common Stock on a one-for-one basis, or, at the election of Zeo (as manager of OpCo), cash, in each case, subject to certain

restrictions set forth in the OpCo A&R LLC Agreement and the Charter.

The OpCo A&R LLC Agreement also provides for mandatory OpCo

Unit Redemptions in certain limited circumstances, including in connection with certain changes of control.

Subject to certain conditions,

the Class A Convertible OpCo Preferred Units are redeemable by Zeo and following the first anniversary of the Closing may be converted

by the Sponsor into Exchangeable OpCo Units (and then would be immediately exchanged on a one-for-one basis, together with an equal number

of accompanying shares of Zeo Class V Common Stock, for shares Zeo Class A Common Stock).

The Convertible OpCo Preferred Units have accruing

distributions of 10 % per annum and the Sponsor as holder thereof has certain consent rights over the taking of certain actions of OpCo

and its subsidiaries.

The financial results of OpCo, LLC are consolidated with the

Company with the redeemable noncontrolling interests’ share of our net loss separately allocated.

NOTE 11 - STOCK-BASED COMPENSATION

2024 Omnibus Incentive Plan

March 6, 2024, the shareholders of ESGEN approved the Zeo Energy Corp.

2024 Omnibus Incentive Equity Plan (the “Incentive Plan”),

which became effective upon the Closing.

3,220,400 of the outstanding shares of Class A Common Stock of the Company (the “Plan

Share Reserve”) shall be available for Awards under the Plan.

Each Award granted under the Plan will reduce the Plan Share Reserve

by the number of shares of Common Stock underlying the Award.

Notwithstanding the foregoing, the Plan Share Reserve shall be automatically

increased on the first day of the 2025 fiscal year through the 2029 fiscal year by a number of shares of Common Stock equal to the lesser

of (i) the positive difference, if any, between 2 % of the then-outstanding shares of Common Stock on the last day of the immediately

preceding fiscal year, and (ii) a lower number of shares of Common Stock as may be determined by the Board.

The purpose of the Zeo Energy Corp.

2024 Omnibus Incentive Equity Plan

is to provide a means through which the Company and the other members of the Company and its subsidiaries (the “Company Group”)

may attract and retain key personnel and to provide a means whereby directors, officers, employees, consultants and advisors of the Company

and the other members of the Company Group can acquire and maintain an equity interest in the Company, or be paid incentive compensation

measured by reference to the value of Common Stock, thereby strengthening their commitment to the welfare of the Company Group and aligning

their interests with those of the Company’s stockholders.

the Closing Date the Company entered into an Executive Employment Agreement with the Company’s CEO.

In addition to the CEO’s annual

salary and cash bonus, the CEO became eligible to receive certain grants of vested shares under the Incentive Plan as follows:

On March 6, 2024, the shareholders of ESGEN approved the Zeo Energy

2024 Omnibus Incentive Equity Plan (the “Incentive Plan”), which became effective upon the Closing.

3,220,400 of the

outstanding shares of Class A Common Stock of the Company (the “Plan Share Reserve”) shall be available for awards under the

Incentive Plan.

Each Award granted under the Plan will reduce the Plan Share Reserve by the number of shares of Common Stock underlying

Notwithstanding the foregoing, the Plan Share Reserve shall be automatically increased on the first day of the 2025 fiscal

year through the 2029 fiscal year by a number of shares of Common Stock equal to the lesser of (i) the positive difference, if any, between

2 % of the then-outstanding shares of Common Stock on the last day of the immediately preceding fiscal year, and (ii) a lower number of

shares of Common Stock as may be determined by the Board.

The purpose of the Incentive Plan is to provide a means through which

the Company and the other members of the Company and its subsidiaries (the “Company Group”) may attract and retain key

personnel and to provide a means whereby directors, officers, employees, consultants and advisors of the Company and the other members

of the Company Group can acquire and maintain an equity interest in the Company, or be paid incentive compensation measured by reference

to the value of Common Stock, thereby strengthening their commitment to the welfare of the Company Group and aligning their interests

with those of the Company’s stockholders.

March 2024 Grant

On the Closing Date the Company entered into an Executive Employment

Agreement with the Company’s CEO.

In addition to the CEO’s annual salary and cash bonus, the CEO became eligible to receive

certain grants of vested shares under the Incentive Plan as follows:

● 50,000 vested shares to be granted on the date that is 12 months after the Closing Date.

1 unchanged sentence

● 50,000 vested shares to be granted on the date that is 35 months after the after the Closing Date.

Company determined the grant date fair value per share was $ 6.97 , a Level 2 measurement, by reference to the publicly traded stock price

on March 13, 2024.

if, within three (3) years of the effective date of the Closing, (i) the volume-weighted average price of shares of the publicly traded

stock of the Company exceeds $ 7.50 for 20 or more days of any consecutive 30-day period, then the CEO will be granted vested equity from

the Incentive Plan equal to 1 % of the total issued and outstanding capital stock of the Company, (ii) the volume-weighted average price

of shares of the publicly traded stock of the Company exceeds $ 12.50 for 20 or more days of any consecutive 30-day period, then the CEO

will be granted additional vested equity from the Incentive Plan equal to 1 % of the total issued and outstanding capital stock of the

Company, (iii) and the volume-weighted average price of shares of the publicly traded stock of the Company exceeds $ 15.00 for 20 or more

days of any consecutive 30-day period, then the CEO will be granted additional vested equity from the Incentive Plan equal to 1 % of the

total issued and outstanding capital stock of the Company.

per unit fair value and derived service period for each Tranche of Performance Based Executive Shares is included in the Valuation of

Performance-based Equity Bonus Awards as of March 13, 2024, as follows:

Tranche 1 hurdle price

Tranche 2 hurdle price

Tranche 3 hurdle price

Risk-free rate

The Company determined the grant date fair value per share was $ 6.97 ,

a Level 1 measurement, by reference to the publicly traded stock price on March 13, 2024.

Further, if, within three ( 3 ) years of the effective date of the Closing,

(i) the volume-weighted average price of shares of the publicly traded stock of the Company exceeds $ 7.50 for 20 or more days of any consecutive

30 -day period, then the CEO will be granted vested equity from the Incentive Plan equal to 1 % of the total issued and outstanding capital

stock of the Company, (ii) the volume-weighted average price of shares of the publicly traded stock of the Company exceeds $ 12.50 for

20 or more days of any consecutive 30 -day period, then the CEO will be granted additional vested equity from the Incentive Plan equal

to 1 % of the total issued and outstanding capital stock of the Company, (iii) and the volume-weighted average price of shares of the publicly

traded stock of the Company exceeds $ 15.00 for 20 or more days of any consecutive 30 -day period, then the CEO will be granted additional

vested equity from the Incentive Plan equal to 1 % of the total issued and outstanding capital stock of the Company.

The per unit fair value and derived service period for each Tranche

of Performance Based Executive Shares is included in the Valuation of Performance-based Equity Bonus Awards as of March 13, 2024, as follows:

Fair Value Summary Tranche 1 Tranche 2 Tranche 3

Fair Value Summary

Tranche 1 Tranche 2 Tranche 3

Tranche per unit fair value $ 5.96 $ 4.53 $ 3.82

1 unchanged sentence

Derived service period 0.35 years 1.19 years 1.47 years

During the three and nine months ended September 30, 2024, $ 1,503,130

and $ 7,101,818 , respectively, of equity compensation expense was recognized for these awards, as well as 375,000 and 120,707 awards issued

to salespeople and vendors, respectively, at the close of the Business Combination based on the fair value of the stock on that date.

As of September 30, 2024, an unrecognized compensation expense of $ 2,793,933 was determined and is expected to be recognized over the

remaining 2.5 years.

12 - WARRANT LIABILITIES

During the three months ended March 31, 2025, the Company recognized

$ 718,674 in equity compensation expense related to these awards.

As of March 31, 2025, the remaining unrecognized compensation expense

was $ 1,340,614 under the Incentive Plan and is expected to be recognized over the remaining 1.9 -year vesting period.

February 2025 Grants

On February 5, 2025, the Company granted an aggregate of 740,000 restricted

shares of Class A Common Stock under the Incentive Plan to 11 employees/consultants.

The restricted shares vest in three equal installments

One-third (1/3) on the date that is six months following the grant date;

One-third (1/3) on the date that is 18 months following the grant date;

One-third (1/3) on the date that is 30 months following the grant date.

On February 5, 2025, the Company granted an aggregate of 250,000 restricted

shares of Class A Common Stock under the Incentive Plan to seven employees/consultants.

The restricted shares vest in three equal installments

One-third (1/3) on the date that is 12 months following the grant date;

One-third (1/3) on the date that is 24 months following the grant date;

One-third (1/3) on the date that is 36 months following the grant date.

The Company determined the grant date fair value per share was $ 2.57 ,

a Level 1 measurement, by reference to the publicly traded stock price on February 5, 2025.

During the three months ended March 31, 2025, the Company recognized

$ 189,499 in equity compensation expense related to these awards.

As of March 31, 2025, the remaining unrecognized compensation expense

was $ 2,354,801 and is expected to be recognized over the remaining 2.9 -year vesting period.

Sun Managers, LLC Management Incentive Plan

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

amended and restated limited liability company agreement in its entirely (the “OpCo A&R LLC Agreement”)) 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 ESGEN Closing.

Although Sun Managers is the legal issuer of the awards, all compensatory

payments made by Sun Managers to individuals providing services to or for the benefit of the Company or its subsidiaries (including equity

interests in Sun Managers) are treated as compensation paid by the Company under ASC 718 .

In accordance with the OpCo A&R LLCA,

the Company allocates 100 % of all related expense and deduction items to Sun Managers.

These compensatory payments are accounted for as

capital contributions from Sun Managers to the Company, with no new equity units issued in return.

On March 31, 2025, Sun Managers LLC granted an aggregate of 525,000

restricted shares of Zeo Class A Common Stock under the Management Incentive Plan to four employees/consultants.

The restricted shares

vested immediately upon grant.

During the three months ended March 31, 2025, the Company recognized $ 792,750 in equity compensation expense

related to these awards.

Seasonal Manager Stock Compensation Plan

Beginning January 1, 2025, certain eligible sales managers may earn

shares of the Company’s Class A Common Stock under the Seasonal Manager Stock Compensation Plan, which operates under the umbrella

of the Management Incentive Plan.

Managers are eligible to earn 40 shares per kW installed for Projects sold by the manager’s organization,

provided they exceed 1,500 kW installed during a calendar year, and as long as the manager sells 700kW the subsequent calendar year.

number of shares awarded may be reduced if the average price for Zeo stock during the quarter in which an Installations are completed

exceeds $ 5 per share, the number of shares granted per kW will be correspondingly decreased.

The managers become eligible to receive certain grants of vested shares

under the Seasonal Manager Stock Compensation Plan as follows:

● 50 % of the shares for which Manager becomes eligible during a calendar year will be granted in Q1 (prior to the end of March) of the following calendar year (the “Tranche 1 Grant”) if Manager remains eligible at the time of the grant.

● The remaining 50 % of the shares for which Manager becomes eligible during a calendar year are granted in the Q1 of the second year following the calendar year in which eligibility is earned (the “Tranche 2 Grant”) if Manager remains eligible at the time of the grant.

On March 31, 2025, Sun Managers LLC granted an aggregate of 577,910

restricted shares of Zeo Class A Common Stock under the Management Incentive Plan to 10 sales managers.

The restricted shares vest in

two equal installments as follows.

One-half (1/2) immediately on the grant date;

One-half (1/2) on the date that is 12 months following the grant date.

During the three months ended March 31, 2025, the Company recognized

$ 436,323 in equity compensation expense related to these awards.

As of March 31, 2025, the remaining unrecognized compensation expense

of $ 436,323 and is expected to be recognized over the remaining one-year vesting period.

NOTE 12 - WARRANT LIABILITIES

As part of ESGEN’s IPO, as defined in Note 11, ESGEN issued warrants

3 unchanged sentences

private sale of warrants where each warrant allows the holder to purchase one share of the Company’s Class A Common Stock at $ 11.50

Upon the closing of the Business Combination the 14,040,000 Private Warrants were forfeited.

As of September 30, 2024, there

are 13,800,000 Public Warrants and no Private Placement warrants outstanding.

to the Condensed Consolidated Financial Statements

warrants expire on the fifth anniversary of the Business Combination or earlier upon redemption or liquidation and are exercisable commencing

30 days after the Business Combination, provided that the Company has an effective registration statement under the Securities Act covering

the shares of common stock issuable upon exercise of the warrants and a current prospectus relating to them is available (or the Company

permits holders to exercise their warrants on a cashless basis under the circumstances specified in the warrant agreement) and registered,

qualified or exempt from registration under the securities, or blue sky, laws of the state of residence of the holder.

warrants become exercisable, the Company may redeem the outstanding warrants:

per share (the “Private Warrants”)(together with the Public warrants, the “Warrants”).

Upon the closing of the

ESGEN Business Combination the 14,040,000 Private Warrants were forfeited.

As of March 31, 2025 and December 31, 2024, there are 13,800,000

Public Warrants and no private placement warrants outstanding.

These warrants expire on the fifth anniversary of the ESGEN Business

Combination or earlier upon redemption or liquidation and are exercisable commencing 30 days after the ESGEN Business Combination, provided

that the Company has an effective registration statement under the Securities Act covering the shares of common stock issuable upon exercise

of the warrants and a current prospectus relating to them is available (or the Company permits holders to exercise their warrants on a

cashless basis under the circumstances specified in the warrant agreement) and registered, qualified or exempt from registration under

the securities, or blue sky, laws of the state of residence of the holder.

Once the warrants become exercisable, the Company may redeem the outstanding

whole and not in part;

● at a price of $ 0.01 per warrant;

not less than 30 days’ prior written notice of redemption given after the warrants

become exercisable to each warrant holder;

a price of $ 0.01 per warrant;

not less than 30 days’ prior written notice of redemption given after the warrants become exercisable to each warrant holder;

● if, and only if, the reported last sale price of the Class A Common Stock equals or exceeds $ 18.00 per share (as adjusted for stock splits, stock dividends, reorganizations, recapitalizations and the like) for any 20 trading days within a 30 -trading day period commencing once the warrants become exercisable and ending three business days before the Company sends the notice of redemption to the warrant holders.

Public Warrants are recognized as derivative liabilities in accordance with ASC 815, Derivatives and Hedging (“ASC 815”).

Accordingly, the Company recognized the warrant instruments as liabilities at fair value as of the Closing Date, with an offsetting entry

to additional paid-in capital and adjusts the carrying value of the instruments to fair value through other income (expense) on the condensed

consolidated statements of operations at each reporting period until they are exercised.

As of September 30, 2024, the Public Warrants

are presented as warrant liabilities on the accompanying condensed consolidated balance sheets.

13 - RELATED PARTY TRANSACTIONS

is one operating lease with a related party.

Operating lease cost relating to this lease was $ 80 and $ 7,466 for each of the three months

ended September 30, 2024, and 2023, respectively, and $ 15,009 and $ 22,395 for each of the nine months ended September 30, 2024 and 2023.

As of September 30, 2024, and December 31, 2023, the related party operating lease ROU asset was $ 0 and $ 75,378 , respectively, and the

related party operating lease liability was $ 0 and $ 58,134 , respectively.

The Public Warrants are recognized as derivative liabilities

in accordance with ASC 815, Derivatives and Hedging (“ASC 815”).

Accordingly, the Company recognized the warrant instruments

as liabilities at fair value as of the Closing Date, with an offsetting entry to additional paid-in capital and adjusts the carrying value

of the instruments to fair value through other income (expense) on the condensed consolidated statements of operations at each reporting

period until they are exercised.

As of March 31, 2025 and December 31, 2024, the Public Warrants are presented as warrant liabilities

on the accompanying condensed consolidated balance sheets.

NOTE 13 - RELATED PARTY TRANSACTIONS

There was one operating lease with a related party, which expired by

December 31, 2024 and was not renewed.

Operating lease cost relating to this lease was $ 0 and $ 7,464 for the three month ended March 31,

2025 and 2024, respectively.

In 2023, some of the Company’s customers financed their obligations

with a related party, Solar Leasing, whose CEO is also the CEO of the Company.

These arrangements are similar to those with the Company’s

third-party lenders.

These arrangements are similar to those with other third-party

As such, Solar Leasing deducts their financing fees and remits the net amount to the Company.

For the three months

ended September 30, 2024, and 2023, the Company recognized $ 2,328,704 and $ 0 of revenue, net of financing fees of $ 783,650 and $ 0 , respectively,

and $ 7,767,491 and $ 0 for the nine months ended September 30, 2024 and 2023, respectively, from these arrangements.

As of September 30,

2024, and December 31, 2023, the Company had $ 432,898 and $ 396,488 of accounts receivable, $ 430,685 and $ 2,415,966 of accrued expenses

and $ 0 and $ 1,160,848 of contract liabilities due to related parties relating to these arrangements, respectively.

For the three months ended March

31, 2025, and 2024, the Company recognized $ 2,567,304 and $ 8,812,769 of revenue, net of financing fees of $ 974,833 and $ 3,856,219 , respectively,

from these arrangements.

As of March 31, 2025, and December 31, 2024, the Company had $ 286,103 and $ 191,662 of accounts receivable, $ 545,805

and $0 of contract assets, $ 2,320,129 and $ 3,359,101 of accrued expenses and $0 and $ 2,000 of contract liabilities due to related parties

relating to these arrangements, respectively.

On December 24, 2024, the Company entered into a Promissory Note with

LHX (See Note 10).

LHX owns 14.1 % of the Company’s Class A Common Stock.

During the year ended December 31, 2024, Solar Leasing performed a

fair-market-value assessment of its lease assets.

As a result, Solar Leasing paid a discretionary rebate to the Company of $ 3,000,000

based on the excess of fair-market-value over the carrying value of its assets, primarily to optimize certain tax positions for its owners.

The Company agreed to transfer the received rebate to White Horse Energy, LC (“White Horse Energy”), a entity wholly owned

by the Company’s CEO, in the form of convertible debt.

Additionally, the Company guarantees the outstanding indebtedness of Solar

Leasing (approximately $ 10 million) which results in the Company having a variable interest in Solar Leasing.

The Company determined it

was not the primary beneficiary as defined in ASC 810-10-25-38A.

Although the Company’s CEO, wholly owns White Horse Energy, the

Company does not have any control over White Horse Energy or Solar Leasing, nor any obligation to absorb losses from Solar leasing.

on the Company’s reassessment, the flow of funds resulting from the discretionary rebate does not transfer control or economic exposure

to the Company in a manner that would require consolidation under ASC 810-10.

White Horse Energy remains the primary beneficiary, and

no changes to the Company’s financial statement presentation are required.

For the three months ended March 31, 2025, the Company

recorded interest income of $ 37,656 included in other income, net in the accompanying condensed consolidated statements of operations.

As of March 31, 2025, the balance of $ 3,037,656 is included in note receivable – related party in the accompanying condensed consolidated

balance sheet.

As described in Note 3, Zeo Energy Corp.

1 unchanged sentence

the TRA Holders.

As of September 30, 2024, the Company has not recorded a liability related to the tax savings it may realize from utilization

As of March 31, 2025, the Company has not recorded a liability related to the tax savings it may realize from utilization

of such deferred tax assets.

As of September 30,2024, the total unrecorded TRA liability is approximately $ 48.8 million.

As of March 31, 2025, the total unrecorded TRA liability is approximately $ 48.8 million.

If utilization

of the deferred tax assets subject to the TRA becomes more likely than not in the future, the Company will record a liability related

to the TRA which will be recognized as expense within its consolidated statements of operations.

14 – FAIR VALUE MEASUREMENTS

Measured at Fair Value on a Recurring Basis:

Company accounts for certain liabilities at fair value on a recurring basis and classifies these liabilities within the fair value hierarchy

(Level 1, Level 2, or Level 3).

subject to fair value measurements are as follows:

to the TRA which will be recognized as expense within its condensed consolidated statements of operations.

NOTE 14 - FAIR VALUE MEASUREMENTS

Items Measured at Fair Value on a Recurring Basis:

The Company accounts for certain liabilities at fair value on a recurring

basis and classifies these liabilities within the fair value hierarchy (Level 1, Level 2, or Level 3).

Liabilities subject to fair value measurements are as follows:

March 31, 2025

Warrant liabilities

to the Condensed Consolidated Financial Statements

Company’s Public Warrants are traded on the Nasdaq.

As such, the Warrant valuation is based on unadjusted quoted prices in active

markets for identical assets or liabilities that the Company has the ability to access.

The fair value of the Warrant liabilities is

classified within Level 1 of the fair value hierarchy.

There were no warrant liabilities as of December 31, 2023.

15 – NET LOSS PER SHARE

net loss p er share of Class A common stock is computed by dividing net

loss attributable to Class A common stockholders from March 13, 2024, or the Closing Date, to September 30, 2024, by the weighted-average

number of shares of Class A common stock outstanding for the same periods.

net loss per share is the same as basic net loss per share as the inclusion of potentially issuable shares that would be anti-dilutive.

to the Business Combination, the membership structure of Sunergy Renewables, LLC included membership units.

In conjunction with the closing

of the Business Combination, the Company effectuated a recapitalization whereby all membership units were converted to common units of

OpCo and the Company implemented a revised class structure including Class A Common Stock having one vote per share and economic rights,

and Class V Common Stock having one vote per share and no economic rights.

Shares of the Company’s Class V Common Stock do not

participate in the earnings or losses of the Company and are therefore not participating securities.

The Company has determined that

the calculation of loss per unit for periods prior to the Business Combination would not be meaningful to the users of these consolidated

financial statements.

Therefore, net loss per share information has not been presented for periods prior to the Business Combination

on March 13, 2024.

The basic and diluted net income per share for the nine months ended September 30, 2024 represents only the period

of March 13, 2024 to September 30 2024.

following table presents the computation of the basic and diluted income per share of Class A Common Stock for the period of March 13,

2024 (the Closing Date) to September 30, 2024:

December 31, 2024

Warrant liabilities

The Company’s Public Warrants are traded on the Nasdaq.

the Warrant valuation is based on unadjusted quoted prices in active markets for identical assets or liabilities that the Company has

the ability to access.

The fair value of the Warrant liabilities is classified within Level 1 of the fair value hierarchy.

NOTE 15 - NET LOSS PER SHARE

Basic net loss per share of Class A common stock is computed

by dividing net loss attributable to Class A common stockholders from March 13, 2024, or the Closing Date, to December 31, 2024, by the

weighted-average number of shares of Class A common stock outstanding for the same periods.

Diluted net loss per share is the same as basic net loss per

share as the inclusion of potentially issuable shares that would be anti-dilutive.

Prior to the ESGEN Business Combination, the membership structure

of Sunergy Renewables, LLC included membership units.

In conjunction with the closing of the ESGEN Business Combination, the Company effectuated

a recapitalization whereby all membership units were converted to common units of OpCo and the Company implemented a revised class structure

including Class A Common Stock having one vote per share and economic rights, and Class V Common Stock having one vote per share and no

economic rights.

Shares of the Company’s Class V Common Stock do not participate in the earnings or losses of the Company and are

therefore not participating securities.

The basic and diluted net income per share for the year ended December 31, 2024 represents only

the period of March 13, 2024 to December 31, 2024.

The following table presents the computation of the basic and

diluted income per share of Class A Common Stock for the three months ended March 31, 2025 and the period of March 13, 2024 (the

Closing Date) to December 31, 2024:

Three months ended

Nine months ended

September 30,

The period of March 13, 2024 to

March 31, 2025

March 31, 2024

Net income attributable to Class A common shareholders

3 unchanged sentences

Net income per share of Class A common stock - basic and diluted

following table presents potentially dilutive securities, as of the end of the period, excluded from the computation of diluted net earnings

per share of Class A Common Stock.

The following table presents potentially dilutive securities,

as of the end of the period, excluded from the computation of diluted net earnings per share of Class A Common Stock.

Three months ended

The period of March 13, 2024 to

March 31, 2024

Series A Preferred Stock (2)

Convertible promissory notes (3)

(1) Represents number of instruments outstanding at the end of the period that were evaluated under the treasury stock method for potentially dilutive effects and were determined to be anti-dilutive.

(2) Represents number of Preferred Units outstanding at the end of the period that were excluded using the if-converted method.

to the Condensed Consolidated Financial Statements

16 - COMMITMENTS AND CONTINGENCIES

and Uncertainties - Weather Conditions

significant portion of the Company’s business is conducted in the state of Florida.

During recent years, there have been several

hurricanes that impacted our marketing, sales and installation activities.

Future hurricane storms can have an adverse impact of our

sales installations.

and Warranties

Company typically warrants solar energy systems sold to customers for periods of one to ten years against defects in design and workmanship,

and that installations will remain watertight.

manufacturers’ warranties on the solar energy system components, which are typically passed through to the customers, typically

have product warranty periods of 10 to 20 years and a limited performance warranty period of 25 years.

As of September 30, 2024, and

2023, the Company did not record a warranty reserve as the historical costs incurred that the Company is required to pay have not been

significant or indicative of the Company performing warranty work in the future.

The Company, at its discretion, may provide certain

reimbursements to customers if certain solar equipment is not operating as intended during future periods.

the normal course of business, the Company may become involved in various lawsuits and legal proceedings.

While the ultimate results

of these matters cannot be predicted with certainty, management does not expect them to have a material adverse effect on the financial

position or results of operations of the Company.

17 - SUBSEQUENT EVENTS

October 25, 2024, the Company closed an Asset Purchase Agreement (the “Asset Purchase Agreement”) with Lumio Holdings, Inc.,

a Delaware corporation (“Lumio”), and Lumio HX, Inc., a Delaware corporation (together with Lumio, the “Sellers”)

(who are currently in bankruptcy), pursuant to which, subject to the terms and conditions set forth in the Asset Purchase Agreement,

the Company agreed to acquire certain assets of the Sellers on an as-is, where-is basis, including uninstalled residential solar energy

contracts, certain inventory, intellectual property and intellectual property rights, equipment, records, goodwill and other intangible

assets (collectively, the “Assets”), free and clear of any liens other than certain specified liabilities of the Sellers

that are being assumed (collectively, the “Liabilities” and such acquisition of the Assets and assumption of the Liabilities

together, the “Transaction”) for a total purchase price of (i) $ 4 million in cash and (ii) 6,206,897 shares of the Company’s

Class A Common Stock, par value $ 0.0001 , to be paid to LHX Intermediate, LLC, a Delaware limited liability company (“LHX”).

The Asset Purchase Agreement contains customary representations, warranties and covenants of the parties for a transaction involving

the acquisition of assets from a debtor in bankruptcy, including the condition that the bankruptcy court enter an order authorizing and

approving the Transaction.

(3) Represents number of shares that would be issued to settle the convertible promissory note as of the end of the period

NOTE 16 – INCOME TAX

The Company has calculated the provision for income taxes during the

interim reporting period by applying an estimate of the Annual Effective Tax Rate (AETR) for the full fiscal year to “ordinary”

income or loss (pretax income or loss excluding unusual or infrequently occurring discrete items) for the reporting period.

Our effective

tax rate (ETR) from continuing operations was 3.9 % expense on loss for the three months ended March 31, 2025, and 2.7 % percent expense

on loss for the three months ended March 31, 2024.

The ETR for the three months ended March 31, 2025 differs from statutory rates primarily

due to the non-controlling interest portion of ESGEN Opco, LLC, which is a partnership for federal tax purposes and a change in valuation

During the first quarter of 2025, the Company exchanged corporate stock for additional ownership interests in ESGEN Opco, LLC.

This greatly increased the investment in partnership deferred tax asset.

Additionally, the Company determined that the deferred tax assets

are not more likely than not to be realized based on all available evidence as of the current quarter and recorded a valuation allowance

on deferred tax assets.

The ETR for the three months ended March 31, 2024 differs from statutory rates primarily due to the non-controlling

interest portion of ESGEN Opco, LLC, which is a partnership for federal tax purposes.

The components of the deferred income tax assets

and liabilities were as follows:

Other Asset assets:

Deferred tax assets

Valuation allowance

( 5,914,920 )

Net deferred tax asset

Deferred tax liabilities

Net deferred tax assets and liabilities

NOTE 17 - COMMITMENTS AND CONTINGENCIES

Risks and Uncertainties - Weather Conditions

A significant portion of the Company’s business is conducted

in the state of Florida.

During recent years, there have been several hurricanes that impacted our marketing, sales and installation activities.

Future hurricane storms can have an adverse impact of our sales installations.

Workmanship and Warranties

The Company typically warrants solar energy systems sold to customers

for periods of one to ten years against defects in design and workmanship, and that installations will remain watertight.

The manufacturers’ warranties on the solar energy system components,

which are typically passed through to the customers, typically have product warranty periods of 10 to 20 years and a limited performance

warranty period of 25 years.

As of March 31, 2025, and December 31, 2024, the Company did not record a warranty reserve as the historical

costs incurred that the Company is required to pay have not been significant or indicative of the Company performing warranty work in

The Company, at its discretion, may provide certain reimbursements to customers if certain solar equipment is not operating

as intended during future periods.

In the normal course of business, the Company may become involved in

various lawsuits and legal proceedings.

While the ultimate results of these matters cannot be predicted with certainty, management does

not expect them to have a material adverse effect on the financial position or results of operations of the Company.

Accrual for Probable Loss Contingencies

In the normal course of business, the Company is involved in various

claims and legal proceedings.

A liability is recorded for such matters when it is probable that a loss has been incurred and the amounts

can be reasonably estimated.

When only a range of possible loss can be established, the most probable amount in the range is accrued.

If no amount within this range is a better estimate than any other amount within the range, the minimum amount in the range is accrued.

Legal costs associated with loss contingencies are expensed as incurred.

NOTE 18 - SEGMENT REPORTING

The Company has one operating segment and one

reportable segment, the business of sales and installation of solar panel technology to individual households within the United States.

The Company’s chief operating decision-maker (“CODM”) is the chief executive officer.

The CODM reviews and evaluates

consolidated net income (loss) for purposes of evaluating financial performance, making operating decisions, allocating resources, and

planning and forecasting for future periods.

All the Company’s long-lived assets and

revenues are maintained in the U.S.

Refer to Note 3 for further information on revenues.

The following presents the significant financial

information with respect to the Company’s reportable segment for the three months ended March 31, 2025 and 2024:

Three months ended March 31,

Total revenue

Cost of goods sold (exclusive of depreciation and amortization shown below):

Depreciation and amortization related to Cost of goods sold

Depreciation and amortization

Commissions expense

Sales and marketing (exclusive of Commissions expense above)

General and administrative

Other income, net

Change in fair value of warrant liabilities

Interest expense

Net loss before taxes

( 12,795,863 )

( 4,221,770 )

Income tax (expense) benefit

( 13,319,363 )

( 4,107,102 )

NOTE 19 - SUBSEQUENT EVENTS

On April 15, 2025, the Promissory Note, as described in Note 9, was

amended with the result that the Tranche 2 Advance would be delivered if a Tranche 2 Milestone is met within 120 days of the Initial Advance,

and the Tranche 3 Advance would be delivered if a Tranche 3 Milestone is met within 120 days of the Tranche 2 Advance.

On April 17, 2025, the Company received a notice (the “Notice”)

from Nasdaq notifying the Company that it is not in compliance with the periodic filing requirements for continued listing set forth

in Nasdaq Listing Rule 5250(c)(1) because the Company’s Annual Report on Form 10-K for the year ended December 31, 2024

(“Fiscal Year 2024 10-K”) was not filed with the Securities and Exchange Commission (the “SEC”) by the required

due date of March 31, 2025.

This Notice received from Nasdaq has no immediate effect on the listing or trading of the Company’s

Nasdaq has provided the Company with 60 calendar days, until Sunday, June 16, 2025, to submit a plan to regain compliance.

Nasdaq accepts the Company’s plan, then Nasdaq may grant the Company an exception until October 13, 2025 to regain compliance with

the Nasdaq Listing Rules.

On May 28, 2025, the Company entered into an Agreement and Plan of

Merger and Reorganization (the “Merger Agreement”) by and among Heliogen, Inc., a Delaware corporation (“Heliogen”),

Zeo Energy, Hyperion Merger Corp., a Delaware corporation and a direct, wholly-owned subsidiary of Zeo Energy (“Merger Sub I”)

and Hyperion Acquisition LLC, a Delaware limited liability company and a direct, wholly-owned subsidiary of Zeo Energy (“Merger

Sub II” and, together with Merger Sub I, the “Merger Subs”).

Pursuant to the Merger Agreement, and upon the terms and

subject to the satisfaction or waiver of the conditions therein:

(i) in accordance with the General Corporation Law of the State of Delaware

(“DGCL”), at the effective time of the First Merger (the “Effective Time”), Merger Sub I will merge with and into

Heliogen (the “First Merger”), with Heliogen surviving the First Merger (Heliogen, as the surviving entity of the First Merger,

the “First Surviving Corporation”) and immediately following the First Merger, the First Surviving Corporation will be a direct,

wholly owned subsidiary of Zeo Energy;

and (ii) in accordance with the DGCL and Delaware Limited Liability Company Act, immediately after

the Effective Time, the First Surviving Corporation will merge with and into Merger Sub II (the “Second Merger” and, together

with the First Merger, the “Mergers”), with Merger Sub II surviving the Second Merger (Merger Sub II, as the surviving entity

of the Second Merger, the “Surviving Company”).

The Merger Agreement and the consummation of the transactions contemplated

thereby have been approved by each of the board of directors of Heliogen (“Heliogen’s Board of Directors”) and the board

of directors of Zeo Energy, and Heliogen’s Board of Directors has resolved to recommend to the stockholders of Heliogen to approve

the transactions contemplated by the Merger Agreement, including the Mergers, and adopt the Merger Agreement, subject to its terms and

Consideration to Heliogen Stockholders .

Subject to the terms

and conditions of the Merger Agreement, at the Effective Time, by virtue of the First Merger, each issued and outstanding share of common

stock, par value $ 0.0001 per share, of Heliogen (“Heliogen Common Stock”) (other than shares of Heliogen Common Stock held

by Zeo Energy, Heliogen or their respective subsidiaries immediately prior to the Effective Time) will be cancelled and automatically

converted into the right to receive (i) a number of shares of class A common stock, par value $ 0.0001 per share, of Zeo Energy (“Zeo

Energy Class A Common Stock”) equal to the Exchange Ratio (as defined below), without interest (the “Share Merger Consideration”),

and (ii) if applicable, an amount in cash, rounded to the nearest cent, in lieu of any fractional share interest in Zeo Energy Class A

Common Stock to which such holder otherwise would have been entitled (the “Fractional Share Consideration” and together with

the Share Merger Consideration, the “Merger Consideration”), subject to any required tax withholding.

As set forth in the Merger Agreement, the “Exchange Ratio”

is the quotient obtained by dividing (i) the quotient of (A) the Total Merger Consideration divided by (B) the fully diluted share count

of Heliogen Common Stock outstanding (including shares underlying outstanding shares of Heliogen’s preferred stock (if any), In-the-Money

Options (as defined below), Heliogen’s restricted stock units (“RSUs”), and the Commercial Warrants (as defined below)

but excluding shares underlying SPAC Warrants (as defined below)) (the “Fully-Diluted Shares,” which as of May 16, 2025 was

equal to 6,616,949 ), by (ii) $ 1.5859 (the “Parent Stock Price”);

and the “Total Merger Consideration” is $ 10.0

million, less (x) 50 % of any amount by which Heliogen’s Net Cash at the closing of the First Merger (the “Closing”)

is less than $ 13.0 million (the “Net Cash Collar Floor”), or plus (y) 50 % of any amount by which Heliogen’s Net Cash

at the Closing is more than $ 16.0 million (the “Net Cash Collar Ceiling”);

and “Net Cash” is the cash and cash

equivalents and other current assts of Heliogen and its subsidiaries as of the Closing, less certain specified liabilities of Heliogen

and its subsidiaries as of the Closing, including unpaid transaction expenses.

The shares of Zeo Energy Class A Common Stock to be issued in connection

with the Mergers will be listed on the Nasdaq Stock Market LLC (“Nasdaq”).

The Mergers, taken together, are intended to constitute

a single integrated transaction that qualifies as a reorganization for U.S.

federal income tax purposes.

Under the terms of the Merger

Agreement, the completion of the Mergers is subject to certain customary closing conditions, including, among others:

(i) the approval

of the Mergers and adoption of the Merger Agreement by the affirmative vote of the holders of a majority of the outstanding shares of

Heliogen Common Stock entitled to vote thereon;

(ii) the approval for listing on Nasdaq of the Zeo Energy Class A Common Stock to be issued

in the Mergers;

(iii) the effectiveness of a registration statement on Form S-4 (the “ Registration Statement ”)

to be filed by Zeo Energy with the Securities and Exchange Commission (the “ SEC ”)

registering the Zeo Energy Class A Common Stock to be issued in connection with the Mergers;

(iv) the accuracy of the parties’ respective

representations and warranties in the Merger Agreement, subject to specified materiality qualifications;

(v) compliance by the parties

with their respective covenants in the Merger Agreement in all material respects;

(vi) the absence of any law or order restraining, enjoining

or otherwise prohibiting the consummation of the Mergers;

and (vii) the receipt by each party of opinions of counsel to the effect that

the Mergers, taken together, will constitute a single integrated transaction that qualifies as a reorganization for U.S.

federal income

tax purposes.

Zeo Energy has the following additional conditions to its obligations to consummate the Closing:

(A) the absence of a material

adverse effect with respect to Heliogen and its subsidiaries on or after the date of the Merger Agreement that is continuing as of immediately

prior to the Closing;

and (B) the effective amendment of that certain Rights Agreement, dated April 16, 2023 by and between Heliogen and

Continental Stock Transfer and Trust Company, as amended on April 16, 2024, December 17, 2024 and April 14, 2025 (the “ Rights

Agreement ”);

and (C) Heliogen’s Net Cash at the Closing being equal to or greater than

$ 10.0 million.

On June 8, 2025, Sunnova, one of the Company’s financing partners,

voluntarily filed for protection under Chapter 11 of the U.S.

Bankruptcy Code in the United States Bankruptcy Court.

As of the date of

this report, Sunnova owes the Company an outstanding amount of $ 3,113,019 related to completed customer projects.

is actively monitoring the proceedings and has recorded a full reserve against this receivable.

On June 9, 2025, Mosaic, one of the Company’s financing partners,

voluntarily filed for protection under Chapter 11 of the U.S.

Bankruptcy Code in the United States Bankruptcy Court.

As of the date of

this report, Mosaic owes the Company an outstanding amount of $ 734,140 related to completed customer projects.

The Company is actively

monitoring the proceedings, and no impairment has been recorded related to this receivable as of the balance sheet date, as management

believes the amount remains collectible.

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-Q

Item 1. Financial Statements