Zeo Energy Corp. 10-Q

UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 FORM 10-Q (Mark one) ☒ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the quarterly period ended June 30, 2025 or ☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the transition period from ____________ to ____________ Commission File Number: 001-40927 ZEO ENERGY CORP. (Exact name of registrant as specified in its charter) Delaware 98-1601409 (State or other jurisdiction of incorporation or organization) (IRS Employer Identification No.) 7625 Little Rd , Suite 200A , New Port Richey , FL 34654 (Address of principal executive offices and Zip Code) (727) 375-9375 (Registrant’s telephone number, including area code) Not Applicable (Former name or former address, if changed since last report) Securities registered pursuant to Section 12(b) of the Act: Title of each class Trading Symbol(s) Name of each exchange on which registered Class A Common Stock, par value $0.0001 per share ZEO The Nasdaq Stock Market LLC Warrants, each exercisable for one share of Class A Common Stock at a price of $11.50, subject to adjustment ZEOWW The Nasdaq Stock Market LLC Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes ☒ No ☐ Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T(§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes ☒ No ☐ Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act. Large accelerated filer ☐ Accelerated filer ☐ Non-accelerated filer ☒ Smaller reporting company ☒ Emerging growth company ☒ If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐ Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act): Yes ☐ No ☒ As of August 12, 2025, the registrant had 28,352,032 shares of Class A common stock, par value $0.0001 outstanding, and 26,480,000 shares of Class V common stock, par value $0.0001, outstanding. ZEO ENERGY CORP. Quarterly Report on Form 10-Q Period Ended June 30, 2025 TABLE OF CONTENTS Page PART I – FINANCIAL INFORMATION 1 Item 1. Financial Statements 1 Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations 19 Item 3. Quantitative and Qualitative Disclosures about Market Risk 29 Item 4. Control and Procedures 29 PART II – OTHER INFORMATION 30 Item 1. Legal Proceedings 30 Item 1A. Risk Factors 30 Item 2. Unregistered Sales of Equity Securities and Use of Proceeds 31 Item 3. Defaults Upon Senior Securities 31 Item 4. Mine Safety Disclosures 31 Item 5. Other Information 31 Item 6. Exhibits 32 SIGNATURES 33 i PART I FINANCIAL INFORMATION ITEM 1. FINANCIAL STATEMENTS. ZEO ENERGY CORP. UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS Page Financial Statements (Unaudited) Condensed Consolidated Balance Sheets as of June 30, 2025 and December 31, 2024 2 Condensed Consolidated Statements of Operations for the Three and Six Months Ended June 30, 2025 and 2024 3 Condensed Consolidated Statements of Changes in Redeemable Non-Controlling Interests and Stockholders’ Deficit for the Three and Six Months Ended June 30, 2025 and 2024 4 Condensed Consolidated Statements of Cash Flows for the Three and Six Months Ended June 30, 2025 and 2024 6 Notes to Condensed Consolidated Financial Statements 7 1 ZEO ENERGY CORP. CONDENSED CONSOLIDATED BALANCE SHEETS June 30, December 31, 2025 2024 ASSETS (Unaudited) Current Assets Cash and cash equivalents $ 68,691 $ 5,634,115 Accounts receivable, net 5,413,133 9,994,881 Accounts receivable – related parties 58,150 191,662 Inventories 917,735 872,470 Contract assets 73,379 64,202 Contract assets – related parties 2,705,295 - Prepaid expenses and other current assets 1,579,713 2,131,345 Total Current Assets 10,816,096 18,888,675 Other assets 1,081,132 314,426 Other assets – related parties 75,786 - Property and equipment, net 2,849,966 2,475,963 Operating lease right-of-use assets 1,018,136 1,268,139 Finance lease right-of-use assets 378,775 447,012 Related party note receivable 3,000,000 3,000,000 Intangibles, net - 7,571,156 Goodwill 27,010,745 27,010,745 TOTAL ASSETS $ 46,230,636 $ 60,976,116 LIABILITIES, REDEEMABLE NON-CONTROLLING INTERESTS AND STOCKHOLDERS’ DEFICIT Current Liabilities Accounts payable $ 5,050,372 $ 2,780,885 Accrued expenses and other current liabilities 4,116,182 5,181,087 Accrued expenses and other current liabilities – related parties 1,358,427 3,359,101 Contract liabilities 204,543 201,607 Contract liabilities – related parties - 2,000 Current portion of operating lease obligations 567,625 583,429 Current portion of finance lease obligations 136,942 130,464 Current portion of long-term debt 305,362 291,036 Convertible promissory note, net 2,470,000 2,440,000 Total Current Liabilities 14,209,453 14,969,609 Operating lease obligations, net of current portion 568,870 799,385 Finance lease obligations, net of current portion 278,678 348,807 Long-term debt, net of current portion 337,483 496,623 Warrant liabilities 881,820 1,449,000 TOTAL LIABILITIES 16,276,304 18,063,424 Redeemable Non-Controlling Interests Convertible preferred units, 1,500,000 units issued and outstanding as of June 30, 2025 and December 31, 2024 16,959,074 16,130,871 Class B Units 72,442,000 115,693,900 Stockholders’ Deficit Class V common stock, $ 0.0001 par value, 100,000,000 authorized shares; 26,480,000 and 35,230,000 shares issued and outstanding as of June 30, 2025 and December 31, 2024, respectively 2,648 3,523 Class A common stock, $ 0.0001 par value, 300,000,000 authorized shares; 22,096,464 and 13,252,964 shares issued and outstanding as of June 30, 2025 and December 31, 2024, respectively 2,210 1,326 Additional paid-in capital 36,766,921 14,523,963 Accumulated deficit ( 96,218,521 ) ( 103,440,891 ) TOTAL STOCKHOLDERS’ DEFICIT ( 59,446,742 ) ( 88,912,079 ) TOTAL LIABILITIES, REDEEMABLE NON-CONTROLLING INTERESTS AND STOCKHOLDERS’ DEFICIT $ 46,230,636 $ 60,976,116 The accompanying notes are an integral part of these condensed consolidated financial statements. 2 ZEO ENERGY CORP. CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS (UNAUDITED) Three Months Ended June 30, Six Months Ended June 30, 2025 2024 2025 2024 Revenues Revenue, net $ 9,976,447 $ 7,798,646 $ 16,192,838 $ 19,128,033 Related party revenue, net 8,125,483 6,997,626 10,692,787 15,810,395 Total Revenues 18,101,930 14,796,272 26,885,625 34,938,428 Operating Expenses Cost of revenues 7,284,487 7,059,839 12,074,166 21,017,805 Depreciation and amortization 3,175,452 453,669 8,076,181 913,198 Sales and marketing 5,629,040 4,422,063 7,766,132 10,975,850 General and administrative 4,866,457 5,523,571 15,334,050 8,742,993 Total Operating Expenses 20,955,436 17,459,142 43,250,529 41,649,846 LOSS FROM OPERATIONS ( 2,853,506 ) ( 2,662,870 ) ( 16,364,904 ) ( 6,711,418 ) Other Income (Expense) Other income 53,328 50,821 135,691 50,821 Interest expense 29,989 ( 49,808 ) ( 288 ) ( 85,030 ) Gain (loss) on change in fair value of warrant liabilities ( 96,269 ) 828,000 567,180 690,000 Total Other Income (Expense) ( 12,952 ) 829,013 702,583 655,791 NET LOSS FROM OPERATIONS BEFORE INCOME TAXES ( 2,866,458 ) ( 1,833,857 ) ( 15,662,321 ) ( 6,055,627 ) Income tax benefit (provision) 186,994 76,538 ( 336,506 ) 191,206 NET LOSS $ ( 2,679,464 ) $ ( 1,757,319 ) $ ( 15,998,827 ) $ ( 5,864,421 ) Less: net loss attributable to Sunergy Renewables LLC prior to the business combination - - - ( 523,681 ) NET LOSS SUBSEQUENT TO THE BUSINESS COMBINATION ( 2,679,464 ) ( 1,757,319 ) ( 15,998,827 ) ( 5,340,740 ) Less: Net loss attributable to redeemable non-controlling interests ( 263,628 ) ( 1,479,529 ) ( 7,221,726 ) ( 3,531,459 ) NET LOSS ATTRIBUTABLE TO CLASS A COMMON STOCKHOLDERS $ ( 2,415,836 ) $ ( 277,790 ) $ ( 8,777,101 ) $ ( 1,809,281 ) LOSS PER CLASS A COMMON SHARE – BASIC AND DILUTED $ ( 0.11 ) $ ( 0.06 ) $ ( 0.44 ) $ ( 0.60 ) WEIGHTED-AVERAGE CLASS A COMMON SHARES OUTSTANDING – BASIC AND DILUTED 22,096,464 5,026,964 19,983,013 3,010,654 The accompanying notes are an integral part of these condensed consolidated financial statements. 3 ZEO ENERGY CORP. CONDENSED CONSOLIDATED STATEMENTS OF CHANGES IN REDEEMABLE NON-CONTROLLING INTERESTS AND STOCKHOLDERS’ DEFICIT FOR THE THREE AND SIX MONTHS ENDED JUNE 30, 2025 (UNAUDITED) Redeemable Non-Controlling Interests Total Class A Convertible Preferred Units Class B Class V Common Stock Class A Common Stock Additional Paid-in Accumulated Stockholders’ Equity Units Amount Units Shares Amount Shares Amount Capital Deficit (Deficit) Balance, December 31, 2024 1,500,000 $ 16,130,871 $ 115,693,900 35,230,000 $ 3,523 13,252,964 $ 1,326 $ 14,523,963 $ ( 103,440,891 ) $ ( 88,912,079 ) Stock-based compensation - - - - - - - 2,137,247 - 2,137,247 Class A common stock issued to employees for services - - - - - 43,500 4 63,505 - 63,509 Reverse recapitalization related deferred taxes and adjustments - - - - - - - ( 238,491 ) - ( 238,491 ) Class A common stock issued in exchange for OpCo class B units and corresponding class V common stock - - ( 18,785,000 ) ( 8,500,000 ) ( 850 ) 8,500,000 850 18,750,000 - 18,750,000 Subsequent measurement of redeemable non-controlling interests - - ( 51,448,264 ) - - - - - 51,448,264 51,448,264 Net income (loss) - 405,237 ( 7,363,336 ) - - - - - ( 6,361,265 ) ( 6,361,265 ) Balance, March 31, 2025 1,500,000 16,536,108 38,097,300 26,730,000 2,673 21,796,464 2,180 35,271,224 ( 58,353,892 ) ( 23,077,815 ) Stock-based compensation - - - - - - - 1,078,202 - 1,078,202 Class A common stock issued upon vesting of restricted stock awards - - - - - 50,000 5 ( 5 ) - - Class A common stock issued in exchange for OpCo class B units and corresponding class V common stock - - ( 417,500 ) ( 250,000 ) ( 25 ) 250,000 25 417,500 - 417,500 Subsequent measurement of redeemable non-controlling interests - - 35,448,793 - - - - - ( 35,448,793 ) ( 35,448,793 ) Net income (loss) - 422,966 ( 686,593 ) - - - - - ( 2,415,836 ) ( 2,415,836 ) Balance, June 30, 2025 1,500,000 16,959,074 72,442,000 26,480,000 2,648 22,096,464 2,210 36,766,921 ( 96,218,521 ) ( 59,446,742 ) The accompanying notes are an integral part of these condensed consolidated financial statements. 4 ZEO ENERGY CORP. CONDENSED CONSOLIDATED STATEMENTS OF CHANGES IN REDEEMABLE NON-CONTROLLING INTERESTS AND STOCKHOLDERS’ DEFICIT FOR THE THREE AND SIX MONTHS ENDED JUNE 30, 2024 (UNAUDITED) Redeemable Non-Controlling Interests Total Class A Convertible Preferred Units Class B Common Units Class V Common Stock Class A Common Stock Additional Paid-in Accumulated Stockholders’ Equity Units Amount Units Units Amount Shares Amount Shares Amount Capital Deficit (Deficit) Balance, December 31, 2023 - $ - $ - 1,000,000 $ 31,155,864 - $ - - $ - $ - $ ( 533,345 ) $ 30,622,519 Retroactive application of Business Combination - - - ( 1,000,000 ) ( 31,155,864 ) 33,730,000 3,373 - - 31,152,491 - - Balance, December 31, 2023 - - - - - 33,730,000 3,373 - - 31,152,491 ( 533,345 ) 30,622,519 Stockholder distributions - - - - - - - - - - ( 90,000 ) ( 90,000 ) Net loss prior to the Business Combination - - - - - - - ( 523,681 ) ( 523,681 ) Effects of Business Combination Issuance of Class A Shares to third party advisors - - - - - - - 178,207 18 891,017 - 891,035 Issuance of Class A Shares to backstop investor - - - - - - - 225,174 23 1,569,440 - 1,569,463 Reverse Recapitalization 1,500,000 6,855,076 - - - 1,500,000 150 4,248,583 425 ( 1,677,860 ) - ( 1,677,285 ) Transaction costs - - - - - - - - - ( 2,890,061 ) - ( 2,890,061 ) Establishment of redeemable noncontrolling interests - - 26,116,548 - - - - - - ( 26,116,548 ) - ( 26,116,548 ) Activities subsequent to business combination Stock-based compensation - - - - - - - 375,000 37 3,118,547 - 3,118,584 Subsequent measurement of redeemable non-controlling interests - - 176,420,473 - - - - - - ( 6,047,026 ) ( 170,373,447 ) ( 176,420,473 ) Net income (loss) - 8,224,091 ( 10,276,021 ) - - - - - - - ( 1,531,429 ) ( 1,531,491 ) Balance, March 31, 2024 1,500,000 15,079,167 192,261,000 - - 35,230,000 3,523 5,026,964 503 - ( 173,051,964 ) ( 173,047,938 ) Stock-based compensation - - - - - - - - - 2,417,888 - 2,417,888 Subsequent measurement of redeemable non-controlling interests - - ( 117,877,583 ) - - - - - - - 117,877,583 117,877,583 Net income (loss) - 384,388 ( 1,863,917 ) - - - - - - - ( 277,790 ) ( 277,790 ) Balance, June 30, 2024 1,500,000 15,463,555 72,519,500 - - 35,230,000 3,523 5,026,964 503 2,417,888 ( 55,452,171 ) ( 53,030,257 ) The accompanying notes are an integral part of these condensed consolidated financial statements. 5 ZEO ENERGY CORP. CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED) Six Months Ended June 30, 2025 2024 CASH FLOWS FROM OPERATING ACTIVITIES Net loss $ ( 15,998,827 ) $ ( 5,864,421 ) Adjustment to reconcile net loss to cash used in operating activities Depreciation and amortization 8,076,181 913,198 Gain on change in fair value of warrant liabilities ( 567,180 ) ( 690,000 ) Stock-based compensation 3,271,831 5,598,689 Class A common stock issued to employees for services 63,509 - Provision for credit losses 3,270,881 250,000 Non-cash operating lease expense 318,763 307,221 Changes in operating assets and liabilities: Accounts receivable 1,310,867 ( 4,452,021 ) Accounts receivable – related parties 133,512 ( 422,724 ) Inventories ( 45,265 ) ( 86,506 ) Contract assets ( 9,177 ) 3,767,859 Contract assets – related parties ( 2,705,295 ) - Prepaids and other current assets 495,250 ( 922,679 ) Other assets ( 1,005,197 ) ( 201,381 ) Other assets – related parties ( 75,786 ) - Accounts payable 2,269,487 ( 2,459,688 ) Accrued expenses and other current liabilities ( 1,038,671 ) ( 1,347,027 ) Accrued expenses and other current liabilities – related parties ( 2,000,674 ) ( 1,631,439 ) Contract liabilities 2,936 ( 3,637,081 ) Contract liabilities – related parties ( 2,000 ) ( 1,150,948 ) Operating lease payments ( 315,079 ) ( 322,802 ) Net cash used in operating activities ( 4,549,934 ) ( 12,351,750 ) CASH FLOWS FROM INVESTING ACTIVITIES Purchases of property and equipment ( 807,025 ) ( 330,829 ) Net cash used in investing activities ( 807,025 ) ( 330,829 ) CASH FLOWS FROM FINANCING ACTIVITIES Proceeds from the issuance of convertible preferred stock, net of transaction costs - 10,277,275 Repayments of debt ( 144,814 ) ( 127,107 ) Repayments of finance lease liabilities ( 63,651 ) ( 57,775 ) Distributions to members - ( 90,000 ) Net cash (used in) provided by financing activities ( 208,465 ) 10,002,393 NET CHANGE IN CASH AND CASH EQUIVALENTS ( 5,565,424 ) ( 2,680,186 ) Cash and cash equivalents, beginning of period 5,364,115 8,022,306 Cash and cash equivalents, end of the period $ 68,691 $ 5,342,120 SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION Cash paid for interest $ 49,672 $ 60,238 Cash paid for income taxes $ - $ - NON-CASH INVESTING AND FINANCING ACTIVITIES Net loss attributable to redeemable non-controlling interest $ 8,049,929 $ 12,139,938 OpCo class A preferred dividends $ 828,203 $ 8,608,479 Subsequent measurement of redeemable non-controlling interest $ 15,999,471 $ ( 58,542,890 ) Class A common stock issued upon vesting of restricted stock awards $ 5 $ - Class A common stock issued in exchange for class V common stock $ 875 $ - Fair value of class A common stock issued in exchange for OpCo class B units $ 19,202,500 $ - Reverse recapitalization related deferred taxes and adjustments $ 238,491 $ - Operating lease right-of-use asset and liability measurement $ 68,760 $ - Deferred equity issuance costs $ - $ 3,269,039 Issuance of class A common stock to vendors $ - $ 891,035 Issuance of class A common stock to backstop investors $ - $ 1,569,463 The accompanying notes are an integral part of these condensed consolidated financial statements. 6 Zeo Energy Corp. Notes to the Condensed Consolidated Financial Statements June 30, 2025 (UNAUDITED) NOTE 1 —BASIS OF PRESENTATION AND OTHER INFORMATION The accompanying unaudited condensed consolidated financial statements of Zeo Energy Corp. (the “Company” or “Zeo”) have been prepared in accordance with accounting principles generally accepted in the United States of America (“GAAP”) for interim financial information and with the instructions to Form 10-Q of Regulation S-X. They do not include all the information and footnotes required by GAAP for complete financial statements. The December 31, 2024 consolidated balance sheet data was derived from audited financial statements but do not include all disclosures required by GAAP. The interim unaudited condensed consolidated financial statements should be read in conjunction with those consolidated financial statements included in the Form 10-K, as filed with the Securities and Exchange Commission on May 28, 2025. In the opinion of management, all adjustments considered necessary for a fair presentation of the financial statements, consisting solely of normal recurring adjustments, have been made. Operating results for the six months ended June 30, 2025 are not necessarily indicative of the results that may be expected for the year ending December 31, 2025. Reclassifications Certain prior period amounts have been reclassified and separately presented in the condensed consolidated financial statements and accompanying notes to conform to the current period financial statement presentation. Recently Adopted Accounting Pronouncements In August 2023, the FASB issued ASU 2023-05, “ Business Combinations—Joint Venture Formations (Subtopic 805-60): Recognition and Initial Measurement ,” which requires a newly-formed joint venture to apply a new basis of accounting to its contributed net assets, resulting in the joint venture initially measuring its contributed net assets at fair value on the formation date. ASU 2023-05 is effective for all joint venture formations with a formation date on or after January 1, 2025, with early adoption permitted. These amendments are to be applied prospectively, with retrospective application permitted for joint ventures formed before the effective date. The adoption of ASU 2023-05 did not have a material impact on the Company’s condensed consolidated financial statements. Recently Issued Accounting Pronouncements Not Yet Adopted In December 2023, the FASB issued ASU 2023-09, “ Income Taxes (Topic 740): Improvements to Income Tax Disclosures ,” which enhances the transparency and decision usefulness of income tax disclosures by requiring; (1) consistent categories and greater disaggregation of information in the rate reconciliation and (2) income taxes paid disaggregated by jurisdiction. It also includes certain other amendments to improve the effectiveness of income tax disclosures. ASU 2023-09 is effective for fiscal years beginning after December 15, 2025, with early adoption permitted. These amendments are to be applied prospectively, with retrospective application permitted. The Company is currently evaluating the impact this standard will have on its condensed consolidated financial statements. 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 ,” which requires the disaggregated disclosure of specific expense categories, including purchases of inventory, employee compensation, depreciation, and amortization included in each relevant expense caption presented on the statement of operations. The standard also requires disclosure of qualitative description of the amounts remaining in relevant expense captions that are not separately disaggregated quantitatively, as well as the total amount of selling expenses and an entity’s definition of selling expenses. ASU 2024-03 is effective for annual periods beginning after December 15, 2026, and interim periods beginning after December 15, 2027. The Company is currently evaluating the impact this standard will have on its condensed consolidated financial statements. The Company currently believes there are no other issued and not yet effective accounting standards that are materially relevant to its condensed consolidated financial statements. 7 NOTE 2 —DISAGGREGATION OF REVENUES AND SEGMENT REPORTING The Company’s revenues are disaggregated based on revenue type, including (i) solar system installations, and (ii) roofing installations. The Company’s net revenues for the three and six months ended June 30, 2025 and 2024 are disaggregated as follows: Three Months Ended June 30, Six Months Ended June 30, 2025 2024 2025 2024 Solar system installations, net $ 18,514,216 $ 14,058,201 $ 26,064,556 $ 33,101,976 Roofing installations 412,286 738,071 821,069 1,676,357 Total net revenues $ 18,101,930 $ 14,796,272 $ 26,885,625 $ 34,938,428 For the six months ended June 30, 2025 and 2024, the Company had two and one customers, respectively, who exceeded 10% of revenue recognized. Their revenue recognized was $ 10,655,287 and $ 7,967,595 for the six months ended June 30, 2025 and $ 12,022,740 for the six months ended June 30, 2024, respectively. Segment information for the three and six months ended June 30, 2025 and 2024 are as follows: Three Months Ended June 30, Six Months Ended June 30, 2025 2024 2025 2024 Total revenues $ 18,101,930 $ 14,796,272 $ 26,885,625 $ 34,938,428 Less: cost of goods sold (exclusive of depreciation and amortization shown below): Direct labor 1,754,911 1,990,155 3,474,373 4,878,470 Materials 4,223,111 3,802,560 6,447,673 13,225,146 Other 1,306,465 1,267,124 2,152,120 2,914,188 Cost of goods sold (exclusive of depreciation and amortization): 7,284,487 7,059,839 12,074,166 21,017,805 Less: depreciation and amortization related to cost of goods sold 213,764 162,543 433,022 330,946 Total gross profit $ 10,603,679 $ 7,573,890 $ 14,378,437 $ 13,589,677 Depreciation and amortization 3,175,452 291,126 8,076,181 582,252 Commissions expense 4,905,556 4,117,399 6,769,668 7,769,990 Sales and marketing (exclusive of commissions expense above) 723,484 304,664 996,464 3,205,860 General and administrative 4,792,749 5,523,571 15,260,342 8,742,993 Other income, net 53,328 50,821 135,691 50,821 Gain (loss) on change in fair value of warrant liabilities 29,989 ( 49,808 ) ( 288 ) ( 85,030 ) Interest expense ( 96,269 ) 828,000 567,180 690,000 Total net loss before income taxes ( 2,866,458 ) ( 1,833,857 ) ( 15,662,321 ) ( 6,055,627 ) Income tax provision 186,994 76,538 ( 336,506 ) 191,206 Net loss $ ( 2,679,464 ) $ ( 1,757,319 ) $ ( 15,998,827 ) $ ( 5,864,421 ) 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. 8 NOTE 3 —PROPERTY AND EQUIPMENT Property and equipment as of June 30, 2025 and December 31, 2024 consisted of the following: June 30, December 31, 2025 2024 Internally-developed software $ 1,795,250 $ 988,225 Office furniture and equipment 384,368 384,368 Transportation equipment 2,477,034 2,477,034 Leasehold improvements 10,000 10,000 Total property and equipment 4,666,652 3,859,627 Less: accumulated depreciation ( 1,816,686 ) ( 1,383,664 ) Total property and equipment, net $ 2,849,966 $ 2,475,963 Depreciation expense for the three months ended June 30, 2025 and 2024 was $ 213,764 and $ 162,542 , respectively. Depreciation expense for the six months ended June 30, 2025 and 2024 was $ 433,022 and $ 330,946 , respectively. NOTE 4 —INTANGIBLE ASSETS Intangible assets as of June 30, 2025 and December 31, 2024 consisted of the following: June 30, December 31, 2025 2024 Trade names $ 3,084,100 $ 3,084,100 Customer lists 496,800 496,800 Non-compete 224,000 224,000 Order backlog 10,808,821 10,808,821 Total intangible assets 14,613,721 14,613,721 Less: accumulated amortization ( 14,613,721 ) ( 7,042,565 ) Total intangible assets, net $ - $ 7,571,156 Amortization expense for the three months ended June 30, 2025 and 2024 was $ 2,938,804 and $ 257,009 , respectively. Amortization expense for the six months ended June 30, 2025 and 2024 was $ 7,571,156 and $ 514,017 , respectively. NOTE 5 —ACCRUED EXPENSES AND OTHER CURRENT LIABILITIES Accrued expenses and other current liabilities as of June 30, 2025 and December 31, 2024 consisted of the following: June 30, 2025 December 31, 2024 Accrued payroll liabilities $ 307,489 $ 421,825 Accrued commissions 474,711 290,969 Accrued interest 3,378 84,425 Accrued transaction costs 2,519,039 3,208,288 Accrued taxes 345,406 - Accrued professional fees 280,000 383,114 Other accrued liabilities 186,159 792,466 Total accrued expenses and other current liabilities $ 4,116,182 $ 5,181,087 9 Accrued expenses and other current liabilities – related parties as of June 30, 2025 and December 31, 2024 consisted of the following: June 30, 2025 December 31, 2024 Accrued dealer fees $ 1,358,427 $ 3,359,101 Total accrued expenses and other current liabilities – related parties $ 1,358,427 $ 3,359,101 NOTE 6 —LEASES Operating Leases In June 2025, the Company entered into a lease agreement for office space located in Richmond, Virginia. The lease commenced on June 1, 2025 and is for a term of three years. Under the terms of the lease, the Company. will lease the premises at the monthly rate of $ 1,995 for the first year, with scheduled annual increases. The lease agreement contains customary events of default, representations, warranties, and covenants. The measurement of the right-of-use asset and liability associated with this operating lease was $ 68,760 . The following was included in the condensed consolidated balance sheets at June 30, 2025 and December 31, 2024: June 30, 2025 December 31, 2024 Operating lease right-of-use assets $ 1,018,136 $ 1,268,139 Operating lease liabilities, current portion 567,625 583,429 Operating lease liabilities, long-term 568,870 799,385 Total operating lease liabilities $ 1,136,495 $ 1,382,814 Weighted-average remaining lease term (years) 2.11 2.39 Weighted-average discount rate 5.04 % 4.97 % The Company records operating lease costs in general and administrative expenses in the condensed consolidated statements of operations. Operating lease costs for the three months ended June 30, 2025 and 2024 was $ 152,401 and $ 163,965 , respectively. Operating lease costs for the six months ended June 30, 2025 and 2024 was $ 348,975 and $ 327,930 , respectively. As of June 30, 2025, maturities of operating lease liabilities were as follows: Year Ending December 31, Amount 2025 (remaining) $ 304,900 2026 596,457 2027 225,151 2028 69,147 Total 1,195,655 Less: imputed interest ( 59,160 ) Total operating lease liabilities $ 1,136,495 10 Finance Leases As of June 30, 2025, maturities of finance lease liabilities were as follows: Year Ending December 31, Amount 2025 (remaining) $ 85,738 2026 171,476 2027 171,476 2028 47,607 Total 476,297 Less: current portion ( 60,677 ) Total finance lease liabilities $ 415,620 As of June 30, 2025, the weighted-average remaining lease term for all finance leases is 2.78 years and the weighted average discount rate is 9.76 %. NOTE 7 —DEBT Vehicle Loans The Company has financing arrangements for many of the vehicles in its fleet. The financing includes direct loans for each vehicle being financed. Payments of debt obligations are based on equal monthly payments for 60 months and include interest rates ranging from 4.94 % to 11.09 %. As of June 30, 2025, the weighted-average interest rate on the Company’s vehicle loan obligations was 7.63 %. 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. As of June 30, 2025, estimated future minimum principal payments of vehicle loans were as follows: Year Ending December 31, Amount 2025 (remaining) $ 149,992 2026 299,253 2027 136,062 2028 57,538 Total 642,845 Less: current portion ( 305,362 ) Total long-term debt $ 337,483 Convertible Note Payable On December 24, 2024, 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 2 Advance. “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 June 30, 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. 11 No interest shall be charged or accrue on the balance outstanding on the loan. 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 Topic 815-15 “ Derivatives and Hedging .” As the note is not convertible until maturity, no derivative liability was recognized as of June 30, 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 58.5 %. Based on the Company’s stock price at June 30, 2025, the computed effective interest rate on the loan was 114.8 %. 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 8 —FAIR VALUE MEASUREMENTS Recurring Fair Value Measurements The fair value of financial instruments measured on a recurring basis as of June 30, 2025 consisted of the following: Fair Value Measurements as of June 30, 2025 Description Level 1 Level 2 Level 3 Total Warrant liabilities $ 881,820 $ - $ - $ 881,820 The following table provides a roll-forward of changes for financial instruments measured at fair value on a recurring basis for the six months ended June 30, 2025: Amount Warrant Liabilities Balance as of December 31, 2024 $ 1,449,000 Gain on change in fair value of warrant liabilities ( 567,180 ) Extinguishment of warrant liabilities upon settlement - Balance as of June 30, 2025 $ 881,820 NOTE 9 —REDEEMABLE NON-CONTROLLING INTERESTS AND EQUITY The table below reflects share information about the Company’s capital stock as of June 30, 2025: Par Value Authorized Issued Treasury Stock Outstanding Class A common stock $ 0.0001 300,000,000 22,096,464 - 22,096,464 Class V common stock $ 0.0001 100,000,000 26,480,000 - 26,480,000 Class A convertible preferred units $ 0.0001 1,500,000 1,500,000 - 1,500,000 Total shares 401,500,000 50,076,464 - 50,076,464 12 Class A Common Stock During the six months ended June 30, 2025, 8,750,000 class A common shares were issued in exchange for OpCo class B units and corresponding class V common shares. During the six months ended June 30, 2025, 50,000 class A common shares were issued upon vesting of restricted stock awards from the March 2024 grant (see Note 10 for further details). On March 31, 2025, an aggregate of 43,500 class A common shares were issued to employees for services valued at $ 63,509 . Redeemable Non-Controlling Interests During the six months ended June 30, 2025, 8,750,000 units were converted to class A common stock. As a result, as of June 30, 2025, 24,980,000 units are outstanding. The prior investors’ interests in OpCo represent a redeemable noncontrolling interest. At its discretion, the members have the right to exchange their common units in OpCo (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 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 June 30, 2025, the prior investors of OpCo hold the majority of the voting rights on the Board. During the six months ended June 30, 2025, there was 8,750,000 exchanges of Opco units for class A common stock of Zeo. Payments under the Tax Receivable Agreement (the “TRA”) are not considered probable as of June 30, 2025. Future exchanges will result in incremental tax attributes and potential cash tax savings for Zeo. 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 June 30, 2025, the total unrecorded TRA liability is approximately $ 18.9 million, of which $ 3.6 million related to actual exchanges and $ 15.2 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. As of June 30, 2025, the prior investors of Sunergy own 53.1 % 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. During the three and six months ended June 30, 2025, the Company recognized $ 422,966 and $ 828,203 , respectively, in OpCo class A preferred dividends. The financial results of OpCo, LLC are consolidated with the Company with the redeemable non-controlling interests’ share of the Company’s net loss separately allocated. 13 NOTE 10 —STOCK-BASED COMPENSATION 2024 Omnibus Incentive Plan On 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 Incentive 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 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. ● 50,000 vested shares to be granted on the date that is 24 months after the Closing Date.; and ● 50,000 vested shares to be granted on the date that is 35 months after the after the Closing Date. 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 Tranche per unit fair value $ 5.96 $ 4.53 $ 3.82 Stock price on valuation date $ 6.97 $ 6.97 $ 6.97 Derived service period 0.35 years 1.19 years 1.47 years During the three and six months ended June 30, 2025, the Company recognized $ 565,998 and $ 1,284,672 , respectively, in equity compensation expense related to these awards. As of June 30, 2025, the remaining unrecognized compensation expense was $ 774,616 under the Incentive Plan and is expected to be recognized over the remaining 1.6 -year vesting period. 14 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 as follows. ● 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; and ● 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 as follows. ● 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; and ● 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 and six months ended June 30, 2025, the Company recognized $ 403,421 and $ 592,920 , respectively, in equity compensation expense related to these awards. As of June 30, 2025, the remaining unrecognized compensation expense was $ 1,951,380 and is expected to be recognized over the remaining 2.6 -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 Topic 718, “ Compensation – Stock Compensation .” 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 and six months ended June 30, 2025, the Company recognized $ 0 and $ 792,750 , respectively, in equity compensation expense related to these awards. 15 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. The 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; and ● One-half (1/2) on the date that is 12 months following the grant date. During the three and six months ended June 30, 2025, the Company recognized $ 108,784 and $ 545,107 , respectively, in equity compensation expense related to these awards. As of June 30, 2025, the remaining unrecognized compensation expense of $ 327,539 and is expected to be recognized over the remaining 0.75 -year vesting period. NOTE 11 —RELATED PARTY TRANSACTIONS 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 other third-party lenders. As such, Solar Leasing deducts their financing fees and remits the net amount to the Company. For the three months ended June 30, 2025 and 2024, the Company recognized $ 8,125,483 and $ 6,997,626 of revenue, net of financing fees of $ 4,120,620 and $ 2,813,564 , respectively, from these arrangements. For the six months ended June 30, 2025 and 2024, the Company recognized $ 10,692,787 and $ 15,810,395 of revenue, net of financing fees of $ 5,095,453 and $ 6,669,783 , respectively, from these arrangements. As of June 30, 2025, the Company had $ 58,150 of accounts receivable, $ 2,705,295 of contract assets, and $ 1,358,427 of accrued expenses and other current liabilities due to related parties relating to these arrangements. 16 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”), an 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 under ASC Topic 810, “ Consolidation .” 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. Based 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. White Horse Energy remains the primary beneficiary, and no changes to the Company’s financial statement presentation are required. For the three and six months ended June 30, 2025, the Company recorded interest income of $ 38,130 and $ 75,786 , respectively, included in other income, net in the accompanying condensed consolidated statements of operations. As of June 30, 2025, the principal balance of $ 3,000,000 is included in related party note receivable and the accrued interest balance of $ 75,786 is included in other assets – related parties in the accompanying condensed consolidated balance sheet. In conjunction with the consummation of the ESGEN Business Combination on March 13, 2014, Zeo entered into a 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 ESGEN Business Combination. As of June 30, 2025, the total unrecorded TRA liability is approximately $ 18.9 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 condensed consolidated statements of operations. NOTE 12 —NET LOSS PER SHARE Basic loss per share is calculated by dividing the net loss by the weighted-average number of class A common shares outstanding during each period. Diluted loss per share is calculated by adjusting the weighted-average number of class A common shares outstanding for the dilutive effect, if any, of common share equivalents. Common share equivalents whose effect would be antidilutive are not included in diluted loss per share. The Company uses the treasury stock method to determine the dilutive effect, which assumes that all class A common share equivalents have been exercised at the beginning of the period and that the funds obtained from those exercises were used to repurchase class A common shares at the average closing market price during the period. As of June 30, 2025 and 2024, there were 43,221,852 and 49,180,000 , respectively, potential common share equivalents from convertible OpCo class A preferred units, exchangeable OpCo class B units, convertible notes, warrants, and restricted stock awards excluded from the diluted loss per share calculations as their effect is anti-dilutive. The following table presents the computation of the basic and diluted income per share of class A common stock for the three months and six months ended June 30, 2025 and 2024: Three Months Ended June 30, Six Months Ended June 30, 2025 2024 2025 2024 Numerator Net loss attributable to class A common stockholders $ ( 2,415,836 ) $ ( 277,790 ) $ ( 8,777,101 ) $ ( 1,809,281 ) Denominator Weighted-average class A common shares outstanding – basic and diluted 22,096,464 5,026,964 19,983,013 3,010,654 Loss per class A common share – basic and diluted $ ( 0.11 ) $ ( 0.06 ) $ ( 0.44 ) $ ( 0.60 ) 17 NOTE 13 —INCOME TAXES 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 8.5 % benefit on loss for the three months ended June 30, 2025, and 3.8 % percent benefit on loss for the three months ended June 30, 2024 and 2.2 % expense on loss and 3.1 % benefit on loss for the six months ended June 30, 2025 and June 30, 2024, respectively. The ETR for the three and six months ended June 30, 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 allowance. 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 and six months ended June 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. The components of the deferred income tax assets and liabilities were as follows: June 30, 2025 December 31, 2024 Other Asset assets: Deferred tax assets $ 4,698,955 $ 661,904 Valuation allowance ( 4,698,955 ) - Net deferred tax asset $ - $ 661,904 Deferred tax liabilities - ( 423,413 ) Net deferred tax assets and liabilities $ - $ 238,491 NOTE 14 —SUBSEQUENT EVENTS On July 1, 2025, the Company converted approximately $ 2.55 million of outstanding accounts payable with a vendor into a note payable with the same vendor. The note bears interest at an annual rate of 18 % ( 1.5 % monthly) and provides for scheduled principal payments beginning in July 2025, with maturity on August 22, 2024. The transaction reduced the Company’s accounts payable and established a formal financing arrangement under the stated terms. On July 4, 2025, the One Big Beautiful Bill Act of 2025 (“OBBBA”), which includes a broad range of tax reform provisions, was signed into law in the United States and we continue to assess its impact. We currently do not expect the OBBBA to have a material impact on our estimated annual effective tax rate in 2025. 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 the Company (“Merger Sub I”) and Hyperion Acquisition LLC, a Delaware limited liability company and a direct, wholly-owned subsidiary of the Company (“Merger Sub II” and, together with Merger Sub I, the “Merger Subs”). On August 8, 2025, Merger Sub I merged 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”) with the First Surviving Corporation becoming a direct, wholly owned subsidiary of the Company, and immediately following the First Merger, the First Surviving Corporation merged with and into Merger Sub II, with Merger Sub II surviving the Second Merger and becoming a direct, wholly owned subsidiary of the Company. 18 Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations (as restated) References to the “Company,” “our,” “us” or “we” refer to Zeo Energy Corp. The following discussion and analysis of the Company’s financial condition and results of operations should be read in conjunction with the unaudited condensed consolidated financial statements and the notes thereto contained elsewhere in this Quarterly Report on Form 10-Q (this “Quarterly Report”). Certain information contained in the discussion and analysis set forth below includes forward-looking statements that involve risks and uncertainties. Cautionary Note Regarding Forward-Looking Statements This Quarterly Report on Form 10-Q includes forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended (the “Securities Act”), and Section 21E of the Securities Exchange Act of 1934, as amended (the “Exchange Act”). We have based these forward-looking statements on our current expectations and projections about future events. These forward-looking statements are subject to known and unknown risks, uncertainties and assumptions about us that may cause our actual results, levels of activity, performance or achievements to be materially different from any future results, levels of activity, performance or achievements expressed or implied by such forward-looking statements. In some cases, you can identify forward-looking statements by terminology such as “may,” “should,” “could,” “would,” “expect,” “plan,” “anticipate,” “believe,” “estimate,” and “continue,” or the negative of such terms or other similar expressions. Such statements include, but are not limited to, possible business combinations and the financing thereof, and related matters, as well as all other statements other than statements of historical fact included in this Form 10-Q. Factors that might cause or contribute to such a discrepancy include, but are not limited to, those described in our other SEC filings. Except as expressly required by applicable securities law, we disclaim any intention or obligation to update or revise any forward-looking statements whether as a result of new information, future events or otherwise. Overview Our company and personnel are passionate about delivering cost savings and increased independence and reliability to energy consumers. Our mission is to expedite the country’s transition to renewable energy by offering our customers an affordable and sustainable means of achieving energy independence. We are a vertically integrated company offering energy solutions and services that include sale, design, procurement, installation, and maintenance of residential solar energy systems. Many of our solar energy system customers also purchase other energy efficient-related equipment or services or roofing services from us. The majority of our customers are located in Florida, Texas, Arkansas, Missouri, Ohio, and Illinois, and we have an expanding base of customers in California, Colorado, Minnesota, Utah, and Virginia. Sunergy was created on October 1, 2021 through the Contribution of Sun First Energy, LLC, a rapidly growing solar sales management company, and Sunergy Solar, LLC, a large solar installation company based in Florida, to Sunergy Renewables, LLC. We believe that we have built (and continue to build) the infrastructure and capabilities necessary to rapidly acquire and serve customers in a low-cost and scalable manner. Today, our scalable regional operating platform provides us with a number of advantages, including the marketing of our solar service offerings through multiple channels, including our diverse sales partner network and direct-to-consumer vertically integrated sales and installation operations. We believe that this multi-channel model supports rapid sales and installation growth, allowing us to achieve capital-efficient growth in the regional markets we serve. Since our founding, we have continued to invest in a platform of services and tools to enable large scale operations for us and our partner network, which includes sales partners, installation partners and other strategic partners. The platform includes processes and software, as well as the capacity for the fulfillment and acquisition of marketing leads. We believe our platform empowers our in-house sales team and external sales dealers to profitably serve our regional and underpenetrated markets and helps us compete effectively against larger, more established industry players without making significant investment in technology and infrastructure. 19 We have focused to date on a simple, capital light business strategy utilizing, as of June 30, 2025, approximately 280 sales agents and approximately 12 independent sales dealers to produce our sales pipeline. We engineer and design projects and process building permit applications on behalf of our customers to timely install their systems and assist their connections to the local utility power grid. Most of the equipment we install is drop-shipped to the installation site by our regional distributors, requiring minimal inventory to be held by the Company during any given period. We depend on our distributors to timely handle logistics and related requirements in moving equipment to the installation sites. In addition to our main offering of residential solar energy systems, we sell and install products such as roofing, insulation, energy efficient appliances and battery storage systems for the residential market. Our core solar service offerings are paid for by customer purchases and financed through either third-party long-term lenders or third-party operators who offer leasing products that provide customers with simple, predictable pricing for solar energy that is insulated from rising retail electricity prices. Most of our customers finance their purchases with affordable loans or leases that require minimal or no upfront capital or down payment. Recent Developments On July 1, 2025, the Company converted approximately $2.55 million of outstanding accounts payable with a vendor into a note payable with the same vendor. The note bears interest at an annual rate of 18% (1.5% monthly) and provides for scheduled principal payments beginning in July 2025, with maturity on August 22, 2024. The transaction reduced the Company’s accounts payable and established a formal financing arrangement under the stated terms. Heliogen Acquisition 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”). On August 8, 2025, Merger Sub I merged 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”) with the First Surviving Corporation becoming a direct, wholly owned subsidiary of Zeo Energy, and immediately following the First Merger, the First Surviving Corporation merged 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 and becoming a direct, wholly owned subsidiary of Zeo Energy. Consideration to Heliogen Stockholders . Pursuant to the Merger Agreement, at the effective time of the First Merger (the “Effective Time”) on August 8, 2025, each share of common stock of Heliogen (the “Heliogen Common Stock”) (other than Heliogen Common Stock held by Zeo Energy, Heliogen or their respective subsidiaries immediately prior to the Effective Time) was canceled and was automatically converted into the right to receive (i) a number of shares of 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 Class A Common Stock to which such holder otherwise would have been entitled (together with the Share Merger Consideration, the “Merger Consideration”), subject to any required tax withholding. Pursuant to the Merger Agreement, the Exchange Ratio is 0.9591 shares of Class A Common Stock for each share of Heliogen Common Stock (the “Exchange Ratio”). The Mergers, taken together, constitute a single integrated transaction that qualifies as a reorganization for U.S. federal income tax purposes. The shares of Class A Common Stock issued in connection with the Mergers are listed on the Nasdaq Stock Market LLC. The issuance of shares of Class A Common Stock in connection with the Mergers was registered under the Securities Act, pursuant to (i) Zeo Energy’s registration statement on Form S-4 (File No. 333-288489) filed with the U.S. Securities and Exchange Commission (the “SEC”) on July 2, 2025 and declared effective on July 11, 2025 (the “Registration Statement”). The Registration Statement contains additional information about the Mergers, including information concerning the interests of directors, executive officers and affiliates of Heliogen and Zeo Energy in the Mergers. 20 Treatment of Heliogen RSUs Pursuant to the Merger Agreement, at the Effective Time, each restricted stock unit (“ RSU ”) relating to shares of Heliogen Common Stock (whether vested or unvested) was automatically accelerated and fully vested and cancelled and each holder thereof became entitled to receive the Merger Consideration in respect of each share of Heliogen Common Stock covered by such RSU, without interest and subject to any required tax withholding. Treatment of Heliogen Options Pursuant to the Merger Agreement, each outstanding option to purchase Heliogen Common Stock (the “ Heliogen Options ”) automatically accelerated such that all Heliogen Options were fully vested as of immediately prior to the Effective Time. All Heliogen Options had an exercise price per share equal to or greater than the Per Share Purchase Price and therefore were cancelled without payment of consideration. There were no Heliogen Options “in the money.” Treatment of Heliogen Warrants As of immediately prior to the Effective Time, Heliogen had outstanding certain “ Commercial Warrants ” and “ SPAC Warrants ”. Commercial Warrants refer to the warrants to purchase shares of Heliogen Common Stock with an exercise price of $0.35 per share of Heliogen Common Stock. SPAC Warrants refer to certain redeemable warrants exercisable to purchase one share of Heliogen Common Stock at an exercise price of $402.50 per share. Immediately prior to the Effective Time, each outstanding Commercial Warrant was accelerated to be fully vested in accordance with its terms. At the Effective Time, to the extent such Commercial Warrant was unexercised as of the Effective Time, each outstanding Commercial Warrant was automatically cancelled without any payment of consideration (including Merger Consideration) therefore, and each outstanding and unexercised SPAC Warrant automatically ceased to represent a SPAC Warrant and became a right to purchase and receive, in lieu of shares of Heliogen Common Stock, the portion of the Merger Consideration that such holder would have received if such holder had exercised such SPAC Warrant immediately prior to the Effective Time, subject to the terms and conditions of that certain warrant agreement. Key Operating and Financial Metrics and Outlook We regularly review a number of metrics, including the following key operating and financial metrics, to evaluate our business, measure our performance, identify trends in our business, prepare financial projections and make strategic decisions. We believe the operating and financial metrics presented below are useful in evaluating our operating performance, as they are similar to measures by our public competitors and are regularly used by security analysts, institutional investors and other interested parties in analyzing operating performance and prospects. Adjusted EBITDA and Adjusted EBITDA margin are non-GAAP measures, as they are not financial measures calculated in accordance with GAAP and should not be considered as substitutes for net (loss) income or net (loss) income margin, respectively, calculated in accordance with GAAP. See “Non-GAAP Financial Measures ” for additional information on non-GAAP financial measures and a reconciliation of these non-GAAP measures to the most comparable GAAP measures. The following table sets forth these metrics for the periods presented: Three Months Ended June 30, Six Months Ended June 30, 2025 2024 2025 2024 Revenue, net $ 18,101,930 $ 14,796,272 $ 26,885,625 $ 34,938,428 Gross profit 10,603,679 7,573,890 14,378,437 13,589,677 Gross margin 58.6 % 51.2 % 53.5 % 38.9 % Contribution profit 2,741,929 3,165,365 (34,390 ) 5,237,435 Contribution margin 15.1 % 21.4 % (0.1 )% 15.0 % Loss from operations (2,853,506 ) (2,662,870 ) (16,364,904 ) (6,711,418 ) Net loss (2,679,464 ) (1,757,319 ) (15,998,827 ) (5,864,421 ) Adjusted EBITDA 1,400,148 775,737 (4,953,383 ) (199,531 ) Adjusted EBITDA margin 7.7 % 5.2 % (18.4 )% (0.6 )% Gross Profit and Gross Margin We define gross profit as revenue, net less cost of goods sold and depreciation and amortization related to cost of goods sold, and define gross margin, expressed as a percentage, as the ratio of gross profit to revenue, net. See “— Non-GAAP Financial Measures ” for a reconciliation of Gross Profit and Gross Margin. 21 Contribution Profit and Contribution Margin We define contribution profit as revenue, net less direct costs of revenue, commissions expense and depreciation and amortization, and define contribution margin, expressed as a percentage, as the ratio of contribution profit to revenue, net. Contribution profit and margin can be used to understand our financial performance and efficiency and allows investors to evaluate our pricing strategy and compare against competitors. Our management uses these metrics to make strategic decisions, identify areas for improvement, set targets for future performance and make informed decisions about how to allocate resources going forward. Contributions margin reflects our Contribution profit as a percentage of revenues. See “— Non-GAAP Financial Measures ” for a reconciliation of Gross Profit to Contribution Profit and Contribution Margin. Adjusted EBITDA and Adjusted EBITDA Margin We define Adjusted EBITDA, a non-GAAP financial measure, as earnings (loss) before interest expense, income tax expense (benefit), depreciation and amortization, other income (expenses), net, and stock compensation, as adjusted to exclude merger transaction related expenses. Adjusted EBITDA margin reflects our Adjusted EBITDA as a percentage of revenues. See “— Non-GAAP Financial Measures ” for a reconciliation of GAAP net loss to Adjusted EBITDA and Adjusted EBITDA Margin. Key Factors that May Influence Future Results of Operations Our financial results of operations may not be comparable from period to period due to several factors. Key factors affecting the results of our operations are summarized below. Expansion of Residential Sales into New Markets . Our future revenue growth is, in part, dependent on our ability to expand our product offerings and services in the select residential markets where we operate in Florida, Texas, Arkansas, Missouri, Illinois, Virginia and Ohio. We primarily generate revenue from our sales, product offerings and services in the residential housing market. To continue our growth, we intend to expand our presence in the residential market into additional states based on markets underserved by national sales and installation providers that also have favorable incentives and net metering policies. We believe that our entry into new markets will continue to facilitate revenue growth and customer diversification. Expansion of New Products and Services . In 2025, we continued our roofing replacements to facilitate our solar installations and to repair rooftops on homes in Florida damaged by severe weather. We plan to expand our roofing business in all markets we enter in the future. Roofing facilitates a faster processing time for our solar installations in cases where the customer is in need of a roof replacement prior to installing a solar system. In addition, to provide more financing options for our prospective residential solar energy customers, we have programs in place that allow our customers to choose a leasing option to finance their systems from a third party. Adding New Customers and Expansion of Sales with Existing Customers . We intend to increase our in-house sales force and external sales dealers in order to target new customers in the Southern U.S. regional residential markets. We provide competitive compensation packages to our in-house sales teams and external sales dealers, which incentivizes the acquisition of new customers. Inflation. We are seeing an increase in the costs of labor and components as the result of higher inflation rates. In particular, we are experiencing an increase in raw material costs and supply chain constraints, and trade tariffs imposed on certain products from China. We also see an increase in materials used to achieve the required minimum domestic content to maximize incentive tax credits. These increases in material and labor costs may continue to put pressure on our operating margins. We do not have information that allows us to quantify the specific amount of cost increases attributable to inflationary pressures. Interest rates. Interest rates increased sharply in 2022 but have been relatively stable since. The majority of homeowners have opted to enter into a lease contract with a third-party operator as means of financing the installation of a solar system. The lease contract provides a lower monthly cost to the homeowner than a conventional loan product in a higher interest rate environment. We do not have information that allows us to quantify the adverse effects attributable to increased interest rates. Managing our Supply Chain . We rely on contract manufacturers and suppliers to produce our components. Our suppliers are generally meeting our materials needs. Our ability to grow depends, in part, on the ability of our contract manufacturers and suppliers to provide high quality services and deliver components and finished products on time and at reasonable costs. In the event we are unable to mitigate the impact of delays and/or price increases in raw materials, electronic components and freight, it could delay the installation of our systems, which would adversely impact our cash flows and results of operations, including revenue and contribution margin. 22 Components of Condensed Consolidated Statements of Operations Revenue, net Our primary source of revenue is the sale of our residential solar systems. Our systems are fully functional at the time of installation and require an inspection prior to interconnection to the utility power grid. We sell our systems primarily direct to end user customers for use in their residences. Upon installation inspection, we satisfy our performance obligation and recognize revenue. Most of the Company’s customers finance their obligations with third parties. Most finance arrangements are by way of a lease contract with a third-party operator. Some customers utilize debt financing. In these situations, the finance company deducts their financing fees and remits the net amount to the Company. Revenue is recorded net of these financing fees (and/or dealer fees). The volume of sales and installations of rooftop solar systems, our primary product, increase from April to September when a majority of our sales teams are most active in our areas of service. In addition to sales of solar systems, “adders” or accessories to a sale may include roofing, energy efficient appliances, upgraded insulation and/or energy storage systems. All adders consisted of less than 10% of the total revenue, net in the six months ended June 30, 2025 and 2024. Our revenue is affected by changes in the volume, system size and average selling prices of our solutions and related accessories, supply and demand, sales incentives and fluctuating interest rates that increase or decrease the monthly payments for customers purchasing systems through third party financing. Less than 5% of our sales were paid in cash by the customer in each of the six months ended June 30, 2025 and 2024. Our revenue growth is dependent on our ability to compete effectively in the marketplace by remaining cost competitive, developing and introducing new sales teams within existing and new territories, scaling our installation teams to keep up with demand and maintaining a strong internal operations team to process orders while working with building departments and utilities to permit and interconnect our customers to the utility grid. Cost of Goods Sold Cost of goods sold consists primarily of product costs (including solar panels, inverters, metal racking, connectors, shingles, wiring, warranty costs and logistics costs), installation labor and permitting costs. Cost of goods sold decreased in association with a reduction in revenues. Revenues declined because of the effect of higher interest rates on the consumer financing rates. The increased cost of consumer lending has reduced the advantage provided by financed solar power relative to standard utility costs, which has negatively affected the demand for our products. Revenue, net less cost of goods sold may vary from period-to-period and is primarily affected by our average selling prices, financing or dealer fees, fluctuations in equipment costs and our ability to effectively and timely deploy our field installation teams to project sites once permitting departments have approved the design and engineering of systems on customer sites. Operating Expenses Operating expenses consist of sales and marketing and general and administrative expenses. Personnel-related costs are the most significant component of each of these expense categories and include salaries, benefits and payroll taxes. Sales and marketing expenses consist primarily of personnel-related expenses including sales commissions, as well as advertising, travel, trade shows, marketing, customer support and other indirect costs. We expect to continue to make the necessary investments to enable us to execute our strategy to increase our market penetration geographically and enter into new markets by expanding our base sales teams, installers and strategic sales dealer and partner network. 23 General and administrative expenses consist primarily of personnel-related expenses for our non-direct labor operations, executive, finance, human resources, information technology, software, facilities costs and fees for professional services. Fees for professional services consist primarily of outside legal, accounting and information technology consulting costs. Depreciation and amortization consist primarily of depreciation of our vehicles, furniture and fixtures, internally developed software and amortization of our acquired intangibles. Other income (expenses), net Other income (expenses), net primarily consists of change in fair value of warrant liabilities and interest expense and fees under our equipment and vehicle term loans. It also includes interest income on our cash balances, and accrued interest Results of Operations Three Months Ended June 30, 2025 Compared to Three Months Ended June 30, 2024 The following table sets forth a summary of our condensed consolidated statements of operations for the periods presented: Three Months ended June 30, Change 2025 2024 $ % Revenue, net $ 18,101,930 $ 14,796,272 $ 3,305,658 22.3 % Costs and expenses: Cost of goods sold (exclusive of depreciation and amortization) 7,284,487 7,059,839 224,648 3.2 % Depreciation and amortization 3,175,452 453,669 2,721,783 599.9 % Sales and marketing 5,629,040 4,422,063 1,206,977 27.3 % General and administrative 4,866,457 5,523,571 (657,114 ) (11.6 )% Total operating expenses 20,955,436 17,459,142 3,496,294 20.0 % Loss from operations (2,853,506 ) (2,662,870 ) (190,636 ) 7.2 % Other income (expense), net: Other income, net 53,328 50,821 2,507 4.9 % Interest expense 29,989 (49,808 ) 79,797 160.2 % Gain (loss) on change in fair value of warrant liabilities (96,269 ) 828,000 (924,269 ) (111.6 )% Total other income (expense), net (12,957 ) 829,013 (841,965 ) (101.6 )% Net loss before taxes $ (2,866,458 ) $ (1,833,857 ) $ (1,032,601 ) (56.3 )% Revenue, net Revenue, net increased by approximately $3.3 million. The primary reason for the increase is due to an increase in revenues with our related-party third-party operator. Cost of Goods Sold Cost of goods sold increased by $0.2 million. The increase was a result of the increase in revenues. As a percentage of revenue, cost of goods sold declined from 47.7% for the three months ended June 30, 2024 to 40.2% for the three months ended June 30, 2025. This decline was driven by an increase in the average selling price of our contracts to our customers compared to the prior year. 24 Depreciation and amortization Depreciation and amortization increased by $2.7 million, from $0.5 million for the three months ended June 30, 2024 to $3.2 million for the three months ended June 30, 2025. The increase was primarily due to an increase in the amortization of the cost of acquired contracts from the Lumio Asset Purchase Agreement. General and Administrative expenses General and administrative expenses decreased by $0.7 million from $5.5 million for the three months ended June 30, 2024 to $4.8 million for the three months ended June 30, 2025. The decrease was primarily due to a $1.5 million decrease in stock compensation expenses and $0.6 million decrease in bade debt expense offset by a $0.9 million increase in payroll related expenses and $0.5m increase in expenses related to being a public company, software, and other miscellaneous expenses. Sales and Marketing Sales and marketing expenses increased by $1.2 million. The increase was a result of a efforts to expand our selling process to include year-round sales through digital lead generation. Other income (expense), net Other income (expense), net decreased from other income of $829,013 for the three months ended June 30, 2024 to other expense of $12,952 for the three months ended June 30, 2025. The decrease was primarily due to a gain on fair value of warrant liabilities in the prior period. Six Months Ended June 30, 2025 Compared to Three Months Ended June 30, 2024 The following table sets forth a summary of our condensed consolidated statements of operations for the periods presented: Six Months ended June 30, Change 2025 2024 $ % Revenue, net $ 26,885,625 $ 34,938,428 $ (8,052,803 ) (23.0 )% Costs and expenses: Cost of goods sold (exclusive of depreciation and amortization) 12,074,166 21,017,805 (8,943,639 ) (42.2 )% Depreciation and amortization 8,076,181 913,198 7,162,983 784.4 % Sales and marketing 7,766,132 10,975,850 (3,209,718 ) (29.2 )% General and administrative 15,334,050 8,742,993 6,591,057 75.4 % Total operating expenses 43,250,529 41,649,846 1,600,683 3.8 % Loss from operations (16,364,904 ) (6,711,418 ) (9,653,486 ) (143.8 )% Other income (expense), net: Other income, net 135,691 50,821 84,870 167.0 % Interest expense (288 ) (85,030 ) 84,742 99.7 % Gain (loss) on change in fair value of warrant liabilities 567,180 690,000 (122,820 ) (17.8 )% Total other income, net 702,583 655,791 46,792 7.1 % Net loss before taxes $ (15,662,321 ) $ (6,055,627 ) $ (9,606,694 ) (158.6 )% Revenue, net Revenue, net decreased by approximately $8.0 million. The primary reason for the decrease in revenue was a decrease in deferred revenue recognized in first quarter of 2025 compared to the first quarter of 2024. The first quarter of 2024 benefited from systems which were installed at the end of 2023 but for which revenue was not able to be recognized in 2024. 25 Cost of Goods Sold Cost of goods sold decreased by $8.9 million. The decrease was a result of the decrease in revenue as noted above. As a percentage of revenue, cost of goods sold improved from 60.2% for the six months ended June 30, 2024 to 45.2% for the six months ended June 30, 2025. This improvement was driven primarily by the impact of the costs associated with the deferred revenue in 2023 being deferred to 2024. There were no similar costs in 2025. Depreciation and amortization Depreciation and amortization increased by $7.2 million, from $0.9 million for the six months ended June 30, 2024 to $8.1 million for the six months ended June 30, 2025. The increase was primarily due to an increase in the amortization of the cost of acquired contracts from the Lumio Asset Purchase Agreement. General and Administrative expenses General and administrative expenses increased by $6.6 million from $8.7 million for the six months ended June 30, 2024 to $15.3 million for the six months ended June 30, 2025. The increase was primarily due to an increase in payroll costs associated with additional staffing, including stock compensation and higher professional fees associated with being a public company. The Company also recorded an additional reserve for bad debt of $3.2 million related to finance partners who have filed for bankruptcy and have discontinued making payments. Sales and Marketing Sales and marketing expenses decreased by $3.2 million from $11.0 million for the six months ended June 30, 2024 to $7.8 million for the six months ended June 30, 2025. The decrease was primarily a result of a $2.5 million reduction in stock compensation expense and less commissions earned due to the decrease in revenue. Other income, net Other income, net increased by $46,792 from $655,791 for the six months ended June 30, 2024 to $702,583 for the six months ended June 30, 2025. The increase was primarily due to a decrease in the gain on fair value of warrant liabilities, a decrease in interest expense, and a decrease in the gain on the disposition of assets. Liquidity and Capital Resources Our primary source of funding to support operations have historically been from cash flows from operations. Our primary short-term requirements for liquidity and capital are to fund general working capital and capital expenses. Our principal long-term working capital uses include ensuring revenue growth, expanding our sales and marketing efforts and potential acquisitions. As of June 30, 2025 and December 31, 2024, our cash and cash equivalents balance were $68,691 and $5,634,115, respectively. The Company maintains its cash in checking and savings accounts. Our future capital requirements depend on many factors, including our revenue growth rate, the timing and extent of our spending to support further sales and marketing, the degree to which we are successful in launching new business initiatives and the cost associated with these initiatives, and the growth of our business generally. In order to finance these opportunities and associated costs, it is possible that we will need to raise additional capital through either debt or equity financing if the proceeds realized from the Business Combination are insufficient to support our business needs. We believe that the proceeds realized through the Heliogen business combination will be sufficient to meet our currently contemplated business needs for the next twelve months. If additional financing is required by us from outside sources, we may not be able to raise it on terms acceptable to us or at all. If we are unable to raise additional capital on acceptable terms when needed, our business, results of operations and financial condition would be materially and adversely affected. 26 Cash Flows The following table summarizes our cash flows for the periods presented: For the Six Months Ended June 30, 2025 2024 Change Net cash used in operating activities $ (4,549,934 ) $ (12,351,750 ) $ 7,801,816 Net cash used in investing activities (807,025 ) (330,829 ) (476,196 ) Net cash (used in) provided by financing activities (208,465 ) 10,002,393 (10,210,858 ) Cash flows from operating activities Net cash used in operating activities was approximately $4.5 million during the six months ended June 30, 2025 compared to a net cash used in operating activities of approximately $12.4 million during six months ended June 30, 2024. The $7.8 million decrease in cash used was primarily driven 1) a $10.2 million increase in cash flows associated with a) positive cash flows from accounts receivable ($5.8 million), prepaids and other current assets ($1.4 million), accounts payable ($4.7 million), and contract liabilities ($4.8 million) offset by b) negative cash flows from a change in contract assets ($6.5 million) and 2) a $2.3 million use of cash from net income resulting form a) increase in net loss ($10.3 million) and less stock compensation expense ($2.3 million) offset by b) increases in non-cash expenses for depreciation and amortization ($7.2 million) and the provision for credit losses ($3.0 million). Cash flows from investing activities Net cash used in investing activities was approximately $0.8 million for the six months ended June 30, 2025, relating to purchases of property and equipment. Net cash used in investing activities for the six months ended June 30, 2024 was approximately $0.3 million, relating to purchases of property and equipment. Cash flows used in financing activities Net cash used in financing activities was approximately $0.2 million for the six months ended June 30, 2025, primarily relating to the repayment of debt and finance leases. Net cash provided by financing activities for the six months ended June 30, 2024 was approximately $10.0 million for the six months ended June 30, 2024, primarily relating to cash acquired from the business combination of $10.4 million offset by repayments of debt and finance leases, and distributions of stockholders. Current Indebtedness The Company has utilized internally generated positive cashflow to grow the business. Other than approximately $2.5 million in trade-credit with solar equipment distributors, Sunergy has only approximately $0.6 million of debt on service trucks and vehicles valued at approximately $1.3 million, net of depreciation. Non-GAAP Financial Measures The non-GAAP financial measures in this Quarterly Report have not been calculated in accordance with GAAP and should be considered in addition to results prepared in accordance with GAAP and should not be considered as a substitute for, or superior to, GAAP results. In addition, Adjusted EBITDA and Adjusted EBITDA Margin should not be construed as indicators of our operating performance, liquidity or cash flows generated by operating, investing and financing activities, as there may be significant factors or trends that they fail to address. We caution investors that non-GAAP financial information, by its nature, departs from traditional accounting conventions. Therefore, its use can make it difficult to compare our current results with our results from other reporting periods and with the results of other companies. 27 Our management uses these non-GAAP financial measures, in conjunction with GAAP financial measures, as an integral part of managing our business and to, among other things: (i) monitor and evaluate the performance of our business operations and financial performance; (ii) facilitate internal comparisons of the historical operating performance of our business operations; (iii) facilitate external comparisons of the results of our overall business to the historical operating performance of other companies that may have different capital structures and debt levels; (iv) review and assess the operating performance of our management team; (v) analyze and evaluate financial and strategic planning decisions regarding future operating investments; and (vi) plan for and prepare future annual operating budgets and determine appropriate levels of operating investments. We believe that the use of these non-GAAP financial measures provides an additional tool for investors to use in evaluating ongoing operating results and trends, and in comparing our financial results with other companies in our industry, many of which present similar non-GAAP financial measures to investors. Contribution Profit and Contribution Margin We define contribution profit as revenue, net less direct costs of revenue, commissions expense and depreciation and amortization, and define contribution margin, expressed as a percentage, as the ratio of contribution profit to revenue, net. Contribution profit and margin can be used to understand our financial performance and efficiency and allows investors to evaluate our pricing strategy and compare against competitors. Our management uses these metrics to make strategic decisions, identify areas for improvement, set targets for future performance and make informed decisions about how to allocate resources going forward. Contributions margin reflects our Contribution profit as a percentage of revenues. The following table provides a reconciliation of gross profit to contribution profit for the periods presented: Three Months Ended June 30, Six Months Ended June 30, 2025 2024 2025 2024 Total revenues $ 18,101,930 $ 14,796,272 $ 26,885,625 $ 34,938,428 Cost of goods sold (exclusive of depreciation and amortization): 7,284,487 7,059,839 12,074,166 21,017,805 Less: depreciation and amortization related to cost of goods sold 213,764 162,543 433,022 330,946 Total gross profit $ 10,603,679 $ 7,573,890 $ 14,378,437 $ 13,589,677 Adjustments: Depreciation and amortization 2,956,194 291,126 7,643,159 582,252 Commissions expense 4,905,556 4,117,399 6,769,668 7,769,990 Total Contribution profit $ 2,741,929 $ 3,165,365 $ (34,390 ) $ 5,237,435 Gross margin 58.6 % 51.2 % 53.5 % 38.9 % Contribution margin 15.1 % 21.4 % (0.1 )% 15.0 % 28 Adjusted EBITDA We define Adjusted EBITDA, a non-GAAP financial measure, as net income (loss) before interest and other income (expenses), net, income tax expense, depreciation and amortization, as adjusted to exclude merger and acquisition expenses (“ M&A expenses ”). We utilize Adjusted EBITDA as an internal performance measure in the management of our operations because we believe the exclusion of these non-cash and non-recurring charges allow for a more relevant comparison of our results of operations to other companies in our industry. Adjusted EBITDA should not be viewed as a substitute for net (loss) income calculated in accordance with GAAP, and other companies may define Adjusted EBITDA differently. Adjusted EBITDA margin reflects our Adjusted EBITDA as a percentage of revenues. The following table provides a reconciliation of net (loss) income to Adjusted EBITDA for the periods presented: Three Months Ended June 30, Six Months Ended June 30, 2025 2024 2025 2024 Total net loss $ (2,679,464 ) $ (1,757,319 ) $ (15,998,827 ) $ (5,864,421 ) Adjustments: Other income, net (53,328 ) (50,821 ) (135,691 ) (50,821 ) Interest expense (29,989 ) 49,808 288 85,030 Change in fair value of warrant liabilities 96,269 (828,000 ) (567,180 ) (690,000 ) Income tax provision (186,994 ) (76,538 ) 336,506 (191,206 ) Stock-based compensation 1,078,202 2,984,938 3,335,340 5,598,689 Depreciation and amortization 3,175,452 453,669 8,076,181 913,198 Adjusted EBITDA $ 1,400,148 $ 775,737 $ (4,953,383 ) $ (199,531 ) Net loss margin (14.8 )% (11.9 )% (59.5 )% (16.8 )% Adjusted EBITDA margin 7.7 % 5.2 % (18.4 )% (0.6 )% Critical Accounting Estimates For a description of our critical accounting policies and estimates, refer to “Management’s Discussion and Analysis of Financial Condition and Results of Operations – Critical Accounting Estimates” in our Annual Report on Form 10-K for the year ended December 31, 2024, filed with the SEC on May 28, 2025. There have been no material changes to our critical accounting policies and estimates since our Annual Report on Form 10-K for the year ended December 31, 2024. Item 3. Quantitative and Qualitative Disclosures about Market Risk As a smaller reporting company, we are not required to provide the information required by this Item. Item 4. Controls and Procedures Evaluation of Disclosure Controls and Procedures Under the supervision and with the participation of management, including our principal executive officer and principal financial officer, we conducted an evaluation of the effectiveness of our disclosure controls and procedures as of June 30, 2025, as such term is defined in Rules 13a-15(e) and 15d-15(e) of the Securities Exchange Act of 1934 (the “Exchange Act”). As a result of this evaluation, our principal executive officer and principal financial officer have concluded that, because of material weaknesses described in Item 9A “Controls and Procedures” of our Annual Report, which we are still in the process of remediating, our disclosure controls and procedures were not effective as of June 30, 2025. Notwithstanding the identified material weaknesses, management, including our principal executive officer and principal financial officer, believes the condensed consolidated financial statements included in this report fairly represent, in all material respects, our financial condition, results of operations and cash flows as of and for the periods presented in accordance with GAAP. Disclosure controls and procedures are designed to ensure that information required to be disclosed by us in the reports that we file or submit under the Exchange Act is recorded, processed, summarized, and reported within the time periods specified in the SEC rules and forms, and that such information is accumulated and communicated to our management, including our principal executive officer and principal financial officer, as appropriate to allow timely decisions regarding required disclosure. Changes in Internal Control over Financial Reporting There were no changes in our internal control over financial reporting (as defined in Rules 13a-15(f) and 15d-15(f) under the Exchange Act) during the period covered by this report that have materially affected or are reasonably likely to materially affect, our internal control over financial reporting. Please refer to our Annual Report on Form 10-K for the year ended December 31, 2024, filed with the SEC on May 28, 2025. 29 PART II - OTHER INFORMATION Item 1. Legal Proceedings. None. Item 1A. Risk Factors. The risks described under the heading “Risk Factors” in our Annual Report on Form 10-K for the year ended December 31, 2024 could materially and adversely affect our business, financial condition, results of operations, cash flows, future prospects, and the trading price of our Class A common stock. The risks and uncertainties described therein are not the only ones we face. Additional risks and uncertainties that we are unaware of or that we currently deem immaterial may also become important factors that adversely affect our business. You should carefully read and consider such risks, together with all of the other information in our Annual Report on Form 10-K for the year ended December 31, 2024, in this Quarterly Report on Form 10-Q (including the disclosures in the section titled “Management’s Discussion and Analysis of Financial Condition and Results of Operations” and in our interim condensed consolidated financial statements and related notes), and in the other documents that we file with the SEC. Except for the additional risk factors set forth below, there have been no material changes from the risk factors previously disclosed under the heading “Risk Factors” in our Annual Report on Form 10-K for the year ended December 31, 2024. We have incurred, and may continue to incur, substantial costs in connection with the Mergers, which could adversely affect our financial condition and results of operations. We incurred a number of non-recurring costs associated with negotiating and completing the Mergers. These fees and costs were substantial and, in many cases, were borne entirely by us. A substantial majority of these non-recurring expenses consisted of transaction costs related to the Mergers, including, among others, fees paid to financial, legal, accounting and other advisors. We continue to assess the magnitude of these costs and may incur additional unanticipated expenses related to post-closing matters. The costs described above, as well as any such additional unanticipated costs and expenses, could have an adverse effect on our financial condition and operating results. 30 If we are unable to effectively manage Heliogen’s business, our reputation and operating results may be harmed. Following the Mergers, we are required to integrate the products and businesses of Heliogen into the operations of the Company. We may be unable to successfully integrate these into our business operations. If we are unable to do so for any reason, our reputation and operating results may be harmed and we would be unable to realize the business-related benefits of the transaction. Item 2. Unregistered Sale of Equity Securities, Use of Proceeds, and Issuer Purchases of Equity Securities. None. Item 3. Defaults Upon Senior Securities. None. Item 4. Mine Safety Disclosures. Not Applicable. Item 5. Other Information. During the quarterly period ended June 30, 2025, none of our directors or officers (as defined in Rule 16a-1(f) promulgated under the Exchange Act) adopted or terminated any “Rule 10b5-1 trading arrangement” or any “non-Rule 10b5-1 trading arrangement,” as each term is defined in Item 408 of Regulation S-K. 31 Item 6. Exhibits. The following exhibits are filed as part of, or incorporated by reference into, this Form 10-Q. Exhibit Incorporated by Reference Number Description Form Exhibit Filing Date 2.1 Agreement and Plan of Merger and Reorganization, dated as of May 28, 2025, by and among Zeo Energy Corp., Heliogen, Inc., Hyperion Merger Corp. and Hyperion Acquisition LLC 8-K 2.1 May 29, 2025 3.1 Certificate of Incorporation of Zeo Energy Corp. 8-K 3.1 March 20, 2024 3.2 Bylaws of Zeo Energy Corp. 8-K 3.2 March 20, 2024 10.1 Form of Voting and Support Agreement. 8-K 10.1 May 29, 2025 31.1* Certification of Principal Executive Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002 31.2* Certification of Principal Financial Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002 32.1** Certification of Principal Executive Officer pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 32.2** Certification of Principal Financial Officer pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 101.INS Inline XBRL Instance Document 101.SCH Inline XBRL Taxonomy Extension Schema Document. 101.CAL Inline XBRL Taxonomy Extension Calculation Linkbase Document. 101.DEF Inline XBRL Taxonomy Extension Definition Linkbase Document. 101.LAB Inline XBRL Taxonomy Extension Label Linkbase Document. 101.PRE Inline XBRL Taxonomy Extension Presentation Linkbase Document. 104 Cover Page Interactive Data File (formatted as Inline XBRL and contained in Exhibit 101). * Filed herewith. ** Furnished herewith. 32 SIGNATURES Pursuant to the requirements of Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized. ZEO Energy Corp. Date: August 12, 2025 /s/ Timothy Bridgewater Name: Timothy Bridgewater Title: Chief Executive Officer Date: August 12, 2025 /s/ Cannon Holbrook Name: Cannon Holbrook Title: Chief Financial Officer 33