Zeo Energy Corp. 10-Q

ITEM 1. FINANCIAL STATEMENTS. ZEO ENERGY CORP. UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS Page Financial Statements (Unaudited) 1 Condensed Consolidated Balance Sheets as of September 30, 2025 and December 31, 2024 2 Condensed Consolidated Statements of Operations for the Three and Nine Months Ended September 30, 2025 and 2024 3 Condensed Consolidated Statements of Changes in Redeemable Non-Controlling Interests and Stockholders’ Deficit for the Three and Nine Months Ended September 30, 2025 and 2024 4 Condensed Consolidated Statements of Cash Flows for the Nine Months Ended September 30, 2025 and 2024 6 Notes to Condensed Consolidated Financial Statements 7 1 ZEO ENERGY CORP. CONDENSED CONSOLIDATED BALANCE SHEETS September 30, December 31, 2025 2024 ASSETS (Unaudited) Current Assets Cash and cash equivalents $ 3,915,900 $ 5,634,115 Accounts receivable, net 10,918,344 9,994,881 Accounts receivable – related parties 465,047 191,662 Inventories 934,871 872,470 Contract assets 2,511,737 640,709 Contract assets – related parties 3,581,890 - Prepaid expenses and other current assets 1,590,333 1,554,838 Total Current Assets 23,918,122 18,888,675 Other assets 92,712 75,935 Interest receivable – related parties 114,393 - Deferred tax asset, net - 238,491 Property and equipment, net 2,871,507 2,475,963 Operating lease right-of-use assets 1,067,373 1,268,139 Finance lease right-of-use assets 344,657 447,012 Related party note receivable 3,000,000 3,000,000 Intangibles, net - 7,571,156 Goodwill 27,091,695 27,010,745 TOTAL ASSETS $ 58,500,459 $ 60,976,116 LIABILITIES, REDEEMABLE NON-CONTROLLING INTERESTS AND STOCKHOLDERS’ DEFICIT Current Liabilities Accounts payable $ 3,446,248 $ 2,780,885 Accrued expenses and other current liabilities 2,844,376 5,181,087 Accrued expenses and other current liabilities – related parties - 3,359,101 Contract liabilities 1,250,465 201,607 Contract liabilities – related parties - 2,000 Current portion of operating lease obligations 724,083 583,429 Current portion of finance lease obligations 140,300 130,464 Current portion of long-term debt 22,887 291,036 Convertible promissory note, net 2,485,000 2,440,000 Total Current Liabilities 10,913,359 14,969,609 Operating lease obligations, net of current portion 448,633 799,385 Finance lease obligations, net of current portion 242,318 348,807 Long-term debt, net of current portion 61,713 496,623 Warrant liabilities 757,620 1,449,000 TOTAL LIABILITIES 12,423,643 18,063,424 Redeemable Non-Controlling Interests Class A convertible preferred units, 1,500,000 units issued and outstanding as of September 30, 2025 and December 31, 2024 16,775,111 16,130,871 Class B units, 22,980,000 and 33,730,000 units issued and outstanding as of September 30, 2025 and December 31, 2024, respectively 31,023,000 115,693,900 Stockholders’ Deficit Class V common stock, $ 0.0001 par value, 100,000,000 authorized shares; 24,480,000 and 35,230,000 shares issued and outstanding as of September 30, 2025 and December 31, 2024, respectively 2,448 3,523 Class A common stock, $ 0.0001 par value, 300,000,000 authorized shares; 31,198,080 and 13,252,964 shares issued and outstanding as of September 30, 2025 and December 31, 2024, respectively 3,120 1,326 Additional paid-in capital 60,084,125 14,523,963 Accumulated other comprehensive loss ( 4,895 ) - Accumulated deficit ( 61,806,093 ) ( 103,440,891 ) TOTAL STOCKHOLDERS’ DEFICIT ( 1,721,295 ) ( 88,912,079 ) TOTAL LIABILITIES, REDEEMABLE NON-CONTROLLING INTERESTS AND STOCKHOLDERS’ DEFICIT $ 58,500,459 $ 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 September 30, Nine Months Ended September 30, 2025 2024 2025 2024 Revenues Revenue, net $ 16,879,429 $ 17,329,201 $ 33,072,267 $ 36,457,234 Related party revenue, net 7,017,019 2,328,704 17,709,806 18,139,099 Total Net Revenues 23,896,448 19,657,905 50,782,073 54,596,333 Operating Expenses Cost of revenues 10,053,666 9,787,350 22,127,832 30,805,155 Depreciation and amortization 249,447 499,876 8,325,628 1,413,074 Sales and marketing 9,588,385 5,202,525 17,354,517 16,178,375 General and administrative 5,985,459 7,151,005 21,319,509 15,893,998 Total Operating Expenses 25,876,957 22,640,756 69,127,486 64,290,602 LOSS FROM OPERATIONS ( 1,980,509 ) ( 2,982,851 ) ( 18,345,413 ) ( 9,694,269 ) Other Income (Expense) Other income 165,308 137,508 300,999 188,329 Interest expense ( 129,719 ) ( 209,227 ) ( 130,007 ) ( 294,257 ) Gain on change in fair value of warrant liabilities 124,200 138,000 691,380 828,000 Total Other Income 159,789 66,281 862,372 722,072 NET LOSS FROM OPERATIONS BEFORE INCOME TAXES ( 1,820,720 ) ( 2,916,570 ) ( 17,483,041 ) ( 8,972,197 ) Income tax benefit (provision) ( 48,752 ) 44,146 ( 385,258 ) 235,352 NET LOSS $ ( 1,869,472 ) $ ( 2,872,424 ) $ ( 17,868,299 ) $ ( 8,736,845 ) Less: net loss attributable to Sunergy Renewables LLC prior to the business combination - - - ( 523,681 ) NET LOSS SUBSEQUENT TO THE BUSINESS COMBINATION ( 1,869,472 ) ( 2,872,424 ) ( 17,868,299 ) ( 8,213,164 ) Less: Net income (loss) attributable to redeemable non-controlling interests 1,355,548 ( 2,448,162 ) ( 5,866,178 ) ( 5,979,621 ) NET LOSS ATTRIBUTABLE TO CLASS A COMMON STOCKHOLDERS $ ( 3,225,020 ) $ ( 424,262 ) $ ( 12,002,121 ) $ ( 2,233,543 ) LOSS PER CLASS A COMMON SHARE – BASIC AND DILUTED $ ( 0.12 ) $ ( 0.08 ) $ ( 0.53 ) $ ( 0.60 ) WEIGHTED-AVERAGE CLASS A COMMON SHARES OUTSTANDING – BASIC AND DILUTED 27,307,260 5,053,942 22,489,940 3,696,721 COMPREHENSIVE LOSS Foreign currency translation adjustments 4,895 - 4,895 - NET COMPREHENSIVE LOSS $ ( 3,229,915 ) $ ( 424,262 ) $ ( 12,007,016 ) $ ( 2,233,543 ) 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 NINE MONTHS ENDED SEPTEMBER 30, 2025 (UNAUDITED) Redeemable Non-Controlling Interests Accumulated Class A Convertible Preferred Units Class B Units Class V Common Stock Class A Common Stock Additional Paid-in Other Comprehensive Accumulated Total Stockholders’ Units Amount Units Amount Shares Amount Shares Amount Capital Loss Deficit (Deficit) Balance, December 31, 2024 1,500,000 $ 16,130,871 33,730,000 $ 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 - - ( 8,500,000 ) ( 18,785,000 ) ( 8,500,000 ) ( 850 ) 8,500,000 850 18,785,000 - - 18,785,000 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 25,230,000 $ 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 - - ( 250,000 ) ( 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 24,980,000 $ 72,442,000 26,480,000 $ 2,648 22,096,464 $ 2,210 $ 36,766,921 $ - $ ( 96,218,521 ) $ ( 59,446,742 ) Stock-based compensation - - - - - - - - 2,733,678 - - 2,733,678 Class A common stock issued upon vesting of restricted stock awards - - - - - - 206,293 20 ( 20 ) - - - Tax withholding paid related to stock-based compensation - - - - - - - - ( 160,353 ) - - ( 160,353 ) Class A common stock issued in exchange for OpCo class B units and corresponding class V common stock - - ( 2,000,000 ) ( 4,700,000 ) ( 2,000,000 ) ( 200 ) 2,000,000 200 4,700,000 - - 4,700,000 Class A common stock issued in the acquisition of Heliogen, Inc. - - - - - - 6,217,612 622 14,424,238 - - 14,424,860 Class A common stock issued in settlement of accrued advisory fees - - - - - - 677,711 68 1,619,661 - - 1,619,729 Dividends paid to preferred unit holders - ( 621,063 ) - - - - - - - - - - Foreign currency translation - - - - - - - - - ( 4,895 ) - ( 4,895 ) Subsequent measurement of redeemable non-controlling interests - - - ( 37,637,448 ) - - - - - - 37,637,448 37,637,448 Net income (loss) - 437,100 - 918,448 - - - - - - ( 3,225,020 ) ( 3,225,020 ) Balance, September 30, 2025 1,500,000 $ 16,775,111 22,980,000 $ 31,023,000 24,480,000 $ 2,448 31,198,080 $ 3,120 $ 60,084,125 $ ( 4,895 ) $ ( 61,806,093 ) $ ( 1,721,295 ) 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 NINE MONTHS ENDED SEPTEMBER 30, 2024 (UNAUDITED) Redeemable Non-Controlling Interests Total Class A Convertible Preferred Units Class B Units Common Units Class V Common Stock Class A Common Stock Additional Paid-in Accumulated Stockholders’ Equity Units Amount Units Amount 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 - - 33,730,000 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 ) - - - - - - - ( 1,531,491 ) ( 1,531,491 ) Balance, March 31, 2024 1,500,000 $ 15,079,167 33,730,000 $ 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 33,730,000 72,519,500 - - 35,230,000 3,523 5,026,964 503 2,417,888 ( 55,452,171 ) ( 53,030,257 ) Stock-based compensation - - - - - - - - - - 1,089,617 - 1,089,617 Class A common stock issued for services - - - - - - - - 146,000 15 255,485 - 255,500 Reverse recapitalization related deferred taxes and adjustments - - - - - - - - - - 112,909 - 112,909 Subsequent measurement of redeemable non-controlling interests - - - ( 12,669,083 ) - - - - - - - 12,669,083 12,669,083 Net income (loss) - 398,555 - ( 2,846,717 ) - - - - - - - ( 424,262 ) ( 424,262 ) Balance, September 30, 2024 1,500,000 $ 15,862,110 33,730,000 $ 57,003,700 - $ - 35,230,000 $ 3,523 5,172,964 $ 518 $ 3,875,899 $ ( 43,207,350 ) $ ( 39,327,410 ) The accompanying notes are an integral part of these condensed consolidated financial statements. 5 ZEO ENERGY CORP. CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED) Nine Months Ended September 30, 2025 2024 CASH FLOWS FROM OPERATING ACTIVITIES Net loss $ ( 17,868,299 ) $ ( 8,736,845 ) Adjustment to reconcile net loss to net cash used in operating activities Depreciation and amortization 8,325,628 1,413,074 Amortization of debt discount 45,000 - Gain on change in fair value of warrant liabilities ( 691,380 ) ( 828,000 ) Gain on disposal of fixed assets - ( 91,684 ) Stock-based compensation 6,005,505 6,846,318 Class A common stock issued to employees for services 63,509 255,500 Provision for credit losses 2,557,343 2,282,588 Non-cash operating lease expense 471,966 523,821 Changes in operating assets and liabilities: Accounts receivable ( 3,175,426 ) ( 7,864,274 ) Accounts receivable – related parties ( 273,385 ) ( 36,410 ) Inventories ( 62,401 ) ( 131,898 ) Contract assets ( 1,871,028 ) 3,842,974 Contract assets – related parties ( 3,581,890 ) - Prepaids and other current assets 974,118 ( 689,656 ) Other assets ( 2,180 ) ( 254,806 ) Interest receivable – related parties ( 114,393 ) - Accounts payable 2,431,056 ( 437,190 ) Accrued expenses and other current liabilities ( 1,573,123 ) ( 1,195,659 ) Accrued expenses and other current liabilities – related parties ( 3,359,101 ) ( 1,985,281 ) Contract liabilities 1,048,858 ( 3,460,989 ) Contract liabilities – related parties ( 2,000 ) ( 1,160,848 ) Operating lease payments ( 481,298 ) ( 480,270 ) Net cash used in operating activities ( 11,132,921 ) ( 12,189,535 ) CASH FLOWS FROM INVESTING ACTIVITIES Purchases of property and equipment ( 1,047,661 ) ( 285,067 ) Cash acquired in the acquisition of Heliogen 14,596,267 - Net cash provided by (used in) investing activities 13,548,606 ( 285,067 ) CASH FLOWS FROM FINANCING ACTIVITIES Proceeds from the issuance of convertible preferred stock, net of transaction costs - 9,221,649 Repayments of debt ( 3,250,936 ) ( 261,563 ) Repayments of finance lease liabilities ( 96,653 ) ( 87,728 ) Dividends paid to OpCo class A preferred unit holders ( 621,063 ) - Tax withholdings paid related to stock-based compensation ( 160,353 ) - Distributions to members - ( 90,000 ) Net cash (used in) provided by financing activities ( 4,129,005 ) 8,782,358 Effect on foreign exchange on cash ( 4,895 ) - NET CHANGE IN CASH AND CASH EQUIVALENTS ( 1,718,215 ) ( 3,692,244 ) Cash and cash equivalents, beginning of period 5,634,115 8,022,306 Cash and cash equivalents, end of the period $ 3,915,900 $ 4,330,062 SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION Cash paid for interest $ 85,007 $ 135,980 Cash paid for income taxes $ - $ - NON-CASH INVESTING AND FINANCING ACTIVITIES Net loss attributable to redeemable non-controlling interest $ 7,131,481 $ 14,986,655 OpCo class A preferred dividends $ 1,265,303 $ 9,007,034 Subsequent measurement of redeemable non-controlling interest $ 53,636,919 $ 45,873,807 Class A common stock issued upon vesting of restricted stock awards $ 25 $ - Class A common stock issued in exchange for class V common stock $ 1,075 $ - Fair value of class A common stock issued in exchange for OpCo class B units $ 23,902,500 $ - Reverse recapitalization related deferred taxes and adjustments $ ( 238,491 ) $ 112,909 Operating lease right-of-use asset and liability measurement $ 140,975 $ 790,615 Deferred equity issuance costs $ - $ 2,769,039 Issuance of class A common stock to vendors $ - $ 891,035 Issuance of class A common stock to backstop investors $ - $ 1,569,463 Accounts payable settled for loan payable $ 2,547,877 $ - Net assets acquired in the acquisition of Heliogen $ 14,424,860 $ - Class A common stock issued in the acquisition of Heliogen $ 14,424,860 $ - Class A common stock issued in settlement of accrued advisory fees $ 1,619,729 $ - The accompanying notes are an integral part of these condensed consolidated financial statements. 6 Zeo Energy Corp. Notes to the Condensed Consolidated Financial Statements SEPTEMBER 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 nine months ended September 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 in the condensed consolidated financial statements and accompanying notes to conform to the current period presentation. These reclassifications included changes within contract assets, prepaid expenses and other current assets, and other assets on the consolidated balance sheets. The reclassifications had no impact on previously reported net loss, total assets, total liabilities, stockholders’ deficit, or total cash flows from operations. Recently Adopted Accounting Pronouncements In August 2023, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“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, 2024, 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. 7 In July 2025, the FASB issued ASU 2025-05, “ Financial Instruments – Credit Losses (Topic 326): Measurement of Credit Losses for Accounts Receivable and Contract Assets ,” which introduces a practical expedient for the application of the current expected credit loss model to current accounts receivable and contract assets. The amendment is effective for interim and annual periods beginning after December 15, 2025, with early adoption permitted. This amendment is to be applied on a prospective basis. The Company is currently evaluating the impact this standard will have on its condensed consolidated financial statements. In September 2025, the FASB issued ASU 2025-06, “ Intangibles – Goodwill and Other – Internal-Use Software (Subtopic 350-40): Targeted Improvements to the Accounting for Internal-Use Software ”. This guidance removes all references to project stages throughout ASC 350-40 and clarifies the threshold entities apply to begin capitalizing costs. Under the new standard, cost capitalization should only commence when an entity has committed to funding a software project and it is probable the project will be completed and the software will be used for its intended function. The amendments are effective for annual reporting periods beginning after December 15, 2027 and interim reporting periods within those annual reporting periods. Entities may apply the guidance using a prospective, retrospective or modified transition approach. Early adoption is permitted as of the beginning of an annual reporting period. 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. NOTE 2 —LIQUIDITY AND GOING CONCERN As of September 30, 2025, the Company had cash and cash equivalents of $ 3.9 million, positive working capital of $ 13.0 million, and total stockholders’ deficit of $ 1.7 million. For the nine months ended September 30, 2025, the Company incurred a net loss of $ 17.9 million and used $ 11.1 million of cash in operating activities. Management has assessed the going concern assumptions of the Company during the preparation of these condensed consolidated financial statements. The Co mpany’s condensed consolidated financial statements have been prepared on a going concern basis, which contemplates the realization of assets and the satisfaction of liabilities in the normal course of business. NOTE 3—BUSINESS COMBINATIONS Heliogen Acquisition On May 28, 2025, the Company entered into a plan of merger and reorganization agreement with Heliogen, Inc. (“Heliogen”), a renewable-energy technology company that provides solutions for delivering low-carbon energy production by combining commercially proven solar technologies with thermal systems and storage expertise. The transaction was completed on August 8, 2025, under which Heliogen became a wholly owned subsidiary of the Company. The acquisition of Heliogen aligns with the Company’s strategy to expand its clean-energy platform beyond residential markets into large-scale commercial and industrial energy generation and storage. Additionally, Heliogen is expected to complement the Company’s existing solar operations, create operational synergies, and broaden market reach. The total consideration transferred consisted entirely of the Company’s class A common stock, issued to Heliogen shareholders at an exchange ratio of 0.9591 shares of the Company for each share of Heliogen common stock, resulting in the issuance of 6,217,612 class A common shares. No contingent consideration was included. In connection with the merger, all outstanding Heliogen SPAC warrants and restricted stock units (“RSUs”) were automatically accelerated and fully vested and were settled in the same equity consideration, net of applicable tax withholding. All stock options and commercial warrants were out-of-the-money and canceled with no value. The Company accounted for the acquisition using the acquisition method of accounting in accordance with ASC Topic 805, “ Business Combinations ,” and allocated the purchase price to the assets acquired and liabilities assumed based on their estimated fair values at the acquisition date, with the excess of purchase price over the estimated fair value of the net assets acquired recorded as goodwill. Goodwill is not deductible for tax purposes. 8 The purchase price was allocated as follows: Preliminary Allocation Purchase consideration at fair value: Class A common stock $ 14,424,860 Assets acquired and liabilities assumed at fair value Cash $ 14,596,267 Accounts receivable 305,380 Prepaid expenses and other current assets 1,065,991 Other assets 14,597 Operating lease right-of-use assets 130,225 Goodwill 80,950 Accounts payable ( 782,184 ) Accrued expenses ( 856,141 ) Operating lease liabilities ( 130,225 ) Net assets acquired $ 14,424,860 From the date of acquisition, Heliogen contributed revenues of $ 0 and a net loss of $ 1,017,239 , which are included in the consolidated statement of operations for the three and nine months ended September 30, 2025. Pro Forma Information The following unaudited pro forma results presented below include the effects of the Heliogen acquisition as if it had been consummated as of January 1, 2024, with adjustments to give effect to pro forma events that are directly attributable to the acquisition. Three Months Ended September 30, Nine Months Ended September 30, 2025 2024 2025 2024 Net revenues $ 23,946,448 $ 20,707,905 $ 50,945,678 $ 59,435,333 Net loss ( 13,283,859 ) ( 14,687,424 ) ( 34,716,447 ) ( 55,058,845 ) Net loss attributable to class A common stockholders ( 14,639,407 ) ( 12,239,262 ) ( 28,850,269 ) ( 48,555,543 ) Loss per share attributable to common stockholders – basic and diluted $ ( 0.50 ) $ ( 1.09 ) $ ( 1.05 ) $ ( 4.90 ) These unaudited pro forma results are presented for informational purposes only and are not necessarily indicative of what the actual results of operations would have been if the acquisitions had occurred at the beginning of the period presented, nor are they indicative of future results of operations. NOTE 4 —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 nine months ended September 30, 2025 and 2024 are disaggregated as follows: Three Months Ended September 30, Nine Months Ended September 30, 2025 2024 2025 2024 Solar system installations, net $ 23,635,215 $ 19,230,550 $ 49,699,771 $ 52,332,526 Roofing installations 261,233 427,355 1,082,302 2,263,807 Total net revenues $ 23,896,448 $ 19,657,905 $ 50,782,073 $ 54,596,333 9 For the nine months ended September 30, 2025 and 2024, the Company had three and two customers, respectively, who exceeded 10% of revenue recognized. Their aggregate revenue recognized was $ 44,636,037 and $ 44,943,845 for the nine months ended September 30, 2025 and 2024, respectively. Segment information for the three and nine months ended September 30, 2025 and 2024 are as follows: Three Months Ended September 30, Nine Months Ended September 30, 2025 2024 2025 2024 Net revenues $ 23,896,448 $ 19,657,905 $ 50,782,073 $ 54,596,333 Less: cost of revenues (exclusive of depreciation and amortization shown below): Direct labor 2,218,124 2,787,617 5,692,497 7,666,087 Materials 7,230,607 7,389,256 13,678,280 20,614,402 Other 604,935 ( 389,523 ) 2,757,055 2,524,666 Cost of revenues (exclusive of depreciation and amortization): 10,053,666 9,787,350 22,127,832 30,805,155 Less: depreciation and amortization related to cost of revenues 135,393 283,326 568,415 614,272 Total gross profit $ 13,707,389 $ 9,587,229 $ 28,085,826 $ 23,176,906 Depreciation and amortization 114,054 216,550 7,757,213 798,802 Commissions expense 5,965,767 4,893,360 12,735,435 12,663,350 Sales and marketing (exclusive of commissions expense above) 3,622,618 309,165 4,619,082 3,515,025 General and administrative 5,985,459 7,151,005 21,319,509 15,893,998 Other income, net ( 165,308 ) ( 137,508 ) ( 300,999 ) ( 188,329 ) Interest expense 129,719 209,227 130,007 294,257 Gain on change in fair value of warrant liabilities ( 124,200 ) ( 138,000 ) ( 691,380 ) ( 828,000 ) Total net loss before income taxes ( 1,820,720 ) ( 2,916,570 ) ( 17,483,041 ) ( 8,972,197 ) Income tax benefit (provision) ( 48,752 ) 44,146 ( 385,258 ) 235,352 Net loss $ ( 1,869,472 ) $ ( 2,872,424 ) $ ( 17,868,299 ) $ ( 8,736,845 ) 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. NOTE 5 —PROPERTY AND EQUIPMENT Property and equipment as of September 30, 2025 and December 31, 2024 consisted of the following: September 30, December 31, 2025 2024 Internally-developed software $ 2,035,887 $ 988,225 Office furniture and equipment 384,368 384,368 Transportation equipment 2,477,033 2,477,034 Leasehold improvements 10,000 10,000 Total property and equipment 4,907,288 3,859,627 Less: accumulated depreciation ( 2,035,781 ) ( 1,383,664 ) Total property and equipment, net $ 2,871,507 $ 2,475,963 10 Depreciation expense for the three months ended September 30, 2025 and 2024 was $ 219,095 and $ 208,746 , respectively. Depreciation expense for the nine months ended September 30, 2025 and 2024 was $ 652,117 and $ 539,692 , respectively. NOTE 6—INTANGIBLE ASSETS Intangible assets as of September 30, 2025 and December 31, 2024 consisted of the following: September 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 September 30, 2025 and 2024 was $ 0 and $ 257,011 , respectively. Amortization expense for the nine months ended September 30, 2025 and 2024 was $ 7,571,156 and $ 771,028 , respectively. NOTE 7 —ACCRUED EXPENSES AND OTHER CURRENT LIABILITIES Accrued expenses and other current liabilities as of September 30, 2025 and December 31, 2024 consisted of the following: September 30, 2025 December 31, 2024 Accrued payroll liabilities $ 727,727 $ 421,825 Accrued commissions 1,131,921 290,969 Accrued interest 3,110 84,425 Accrued taxes 706,732 8,900 Accrued credit cards 47,401 26,632 Accrued transaction costs - 3,208,288 Other accrued liabilities 227,485 1,140,048 Total accrued expenses and other current liabilities $ 2,844,376 $ 5,181,087 Accrued expenses and other current liabilities – related parties as of September 30, 2025 and December 31, 2024 consisted of the following: September 30, 2025 December 31, 2024 Customer advances $ - $ 3,359,101 Total accrued expenses and other current liabilities – related parties $ - $ 3,359,101 NOTE 8 —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 . 11 In July 2025, the Company entered into a lease agreement for office space located in Sardinia, Ohio. The lease commenced on July 1, 2025 and is for a term of two years. Under the terms of the lease, the Company will lease the premises at the monthly rate of $ 3,150 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 $ 72,215 . In August 2025, in connection with the acquisition of Heliogen, the Company entered into a lease agreement for office space located in Houston, Texas. The lease commenced on August 8, 2025 and is for a term of 13 months. Under the terms of the lease, the Company will lease the premises at the monthly rate of $ 10,451 . 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 $ 130,225 and is part of the net assets acquired in the acquisition of Heliogen in the non-cash investing and financing activities of the condensed consolidated statements of cash flows. The following was included in the condensed consolidated balance sheets at September 30, 2025 and December 31, 2024: September 30, 2025 December 31, 2024 Operating lease right-of-use assets $ 1,067,373 $ 1,268,139 Operating lease liabilities, current portion 724,083 583,429 Operating lease liabilities, long-term 448,633 799,385 Total operating lease liabilities $ 1,172,716 $ 1,382,814 Weighted-average remaining lease term (years) 1.64 2.39 Weighted-average discount rate 4.98 % 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 September 30, 2025 and 2024 was $ 167,914 and $ 133,892 , respectively. Operating lease costs for the nine months ended September 30, 2025 and 2024 was $ 516,889 and $ 461,822 , respectively. As of September 30, 2025, maturities of operating lease liabilities were as follows: Year Ending December 31, Amount 2025 (remaining) $ 192,604 2026 717,863 2027 244,051 2028 69,147 Total 1,223,665 Less: imputed interest ( 50,949 ) Total operating lease liabilities $ 1,172,716 Finance Leases As of September 30, 2025, maturities of finance lease liabilities were as follows: Year Ending December 31, Amount 2025 (remaining) $ 42,869 2026 171,476 2027 171,476 2028 47,607 Total 433,428 Less: imputed interest ( 50,810 ) Total finance lease liabilities $ 382,618 12 As of September 30, 2025, the weighted-average remaining lease term for all finance leases is 2.53 years and the weighted average discount rate is 9.76 %. NOTE 9 —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 September 30, 2025, the weighted-average interest rate on the Company’s vehicle loan obligations was 11.09 %. 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 September 30, 2025, estimated future minimum principal payments of vehicle loans were as follows: Year Ending December 31, Amount 2025 (remaining) $ 5,488 2026 23,526 2027 26,264 2028 29,322 Total 84,600 Less: current portion ( 22,887 ) Total long-term debt $ 61,713 Loan Payable On July 1, 2025, the Company converted $ 2,547,877 of outstanding accounts payable with a vendor into a loan payable with the same vendor. The loan 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, 2025. The transaction reduced the Company’s accounts payable and established a formal financing arrangement under the stated terms. The loan, including accrued interest, was repaid during the period. 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 September 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. 13 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 a specified 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 September 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 September 30, 2025, the computed effective interest rate on the loan was 0 %. In connection with the Promissory Note, on December 24, 2024, LHX entered into a voting agreement with the Company and certain stockholders of the Company (the “LHX Voting Agreement”), pursuant to which such stockholders agreed to vote (or cause to be voted), in person or by proxy, all the shares of Class A Common Stock and Class V common stock owned by such stockholders (i) in favor of the nomination and appointment of LHX’s designee to the board of directors of the Company (ii) in favor of the issuance by the Company to LHX of shares of Class A Common Stock in connection with an option that may be granted to LHX to purchase up to 4,000,000 shares of Class A Common Stock, subject to the terms and conditions therein and (iii) in favor of the Share Issuance, when required pursuant to the Promissory Note. NOTE 10—FAIR VALUE MEASUREMENTS Recurring Fair Value Measurements The fair value of financial instruments measured on a recurring basis as of September 30, 2025 consisted of the following: Fair Value Measurements as of September 30, 2025 Description Level 1 Level 2 Level 3 Total Warrant liabilities $ 757,620 $ - $ - $ 757,620 The following table provides a roll-forward of changes for financial instruments measured at fair value on a recurring basis for the nine months ended September 30, 2025: Amount Warrant Liabilities Balance as of December 31, 2024 $ 1,449,000 Gain on change in fair value of warrant liabilities ( 691,380 ) Extinguishment of warrant liabilities upon settlement - Balance as of September 30, 2025 $ 757,620 NOTE 11 —REDEEMABLE NON-CONTROLLING INTERESTS AND EQUITY The table below reflects share information about the Company’s capital stock as of September 30, 2025: Par Value Authorized Issued Treasury Stock Outstanding Class A common stock $ 0.0001 300,000,000 31,198,080 - 31,198,080 Class V common stock $ 0.0001 100,000,000 24,480,000 - 24,480,000 Class A convertible preferred units $ 0.0001 1,500,000 1,500,000 - 1,500,000 Class B units $ 0.0001 33,730,000 22,980,000 - 22,980,000 Total shares 435,230,000 80,158,080 - 80,158,080 14 Class A Common Stock During the nine months ended September 30, 2025, 10,750,000 class A common shares were issued in exchange for OpCo class B units and corresponding class V common shares. On March 13, 2025, 50,000 class A common shares were issued upon vesting of restricted stock awards from the March 2024 grant (see Note 12 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 . On August 5, 2025, 206,293 class A common shares, net of tax withholding, were issued upon vesting of restricted stock awards from the February 2025 grant (see Note 12 for further details). On August 8, 2025, in connection with acquisition of Heliogen, the Company issued the Heliogen shareholders 6,217,612 class A common shares (see Note 3 for further details). On August 11, 2025, the Company issued 677,711 shares of Zeo class A common stock to settle accrued buyside advisory fees of $ 1.6 million from the Heliogen acquisition. Redeemable Non-Controlling Interests During the nine months ended September 30, 2025, 10,750,000 units were converted to class A common stock. As a result, as of September 30, 2025, 22,980,000 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 September 30, 2025, the prior investors of OpCo hold the majority of the voting rights on the Board. During the nine months ended September 30, 2025, there was 10,750,000 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 September 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 September 30, 2025, the total unrecorded TRA liability is approximately $ 7.2 million, of which $ 4.6 million related to actual exchanges and $ 2.6 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 September 30, 2025, the prior investors of Sunergy own 43.0 % 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 nine months ended September 30, 2025, the Company recognized $ 437,100 and $ 1,265,303 , respectively, in OpCo class A preferred dividends. During the three and nine months ended September 30, 2025, the Company paid aggregate dividends of $ 621,063 to OpCo class A preferred unit holders. 15 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. NOTE 12 —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 March 13, 2024, 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 grant date. ● 50,000 vested shares to be granted on the date that is 24 months after the grant date; and ● 50,000 vested shares to be granted on the date that is 35 months after the after the grant 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. 16 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 nine months ended September 30, 2025, the Company recognized $ 269,530 and $ 1,554,202 , respectively, in equity compensation expense related to these awards. As of September 30, 2025, the remaining unrecognized compensation expense was $ 505,086 and is expected to be recognized over the remaining 1.37 -year vesting period. February 2025 Grants On February 5, 2025, the Company granted an aggregate of 790,000 restricted shares of class A common stock under the Incentive Plan to 10 employees and two executives. 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 275,000 restricted shares of class A common stock under the Incentive Plan to eight employees. 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 nine months ended September 30, 2025, the Company recognized $ 282,309 and $ 875,229 , respectively, in equity compensation expense related to these awards. As of September 30, 2025, the remaining unrecognized compensation expense was $ 1,677,637 and is expected to be recognized over the remaining 2.35 -year vesting period. July 2025 Grants On July 5, 2025, the Company granted an aggregate of 140,000 restricted shares of class A common stock under the Incentive Plan to four employees. 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 $ 2.79 , a Level 1 measurement, by reference to the publicly traded stock price on July 5, 2025. During the three and nine months ended September 30, 2025, the Company recognized $ 31,034 in equity compensation expense related to these awards. As of September 30, 2025, the remaining unrecognized compensation expense was $ 359,566 and is expected to be recognized over the remaining 2.76 -year vesting period. 17 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 Zeo 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 875,000 restricted shares of Zeo class A common stock under the Management Incentive Plan to three employees and one executive. The restricted shares vested immediately upon grant. During the three and nine months ended September 30, 2025, the Company recognized $ 528,500 and $ 1,321,250 , respectively, in equity compensation expense related to these awards. On August 4, 2025, Sun Managers LLC granted an aggregate of 350,000 restricted shares of Zeo class A common stock under the Management Incentive Plan to two employees. The restricted shares vested immediately upon grant. During the three and nine months ended September 30, 2025, the Company recognized $ 840,000 in equity compensation expense related to these awards. On August 13, 2025, Sun Managers LLC granted an aggregate of 168,500 restricted shares of Zeo class A common stock under the Management Incentive Plan to four employees. The restricted shares vested immediately upon grant. During the three and nine months ended September 30, 2025, the Company recognized $ 384,180 in equity compensation expense related to these awards. On September 17, 2025, Sun Managers LLC granted an aggregate of 255,000 restricted shares of Zeo class A common stock under the Management Incentive Plan to three employees. The restricted shares vested immediately upon grant. During the three and nine months ended September 30, 2025, the Company recognized $ 288,150 in equity compensation expense related to these awards. Seasonal Manager Stock Compensation Plan Beginning January 1, 2025, certain eligible sales managers may earn shares of the Company’s class A common stock under the Seasonal Manager Stock Compensation Plan, which operates under the umbrella of the Management Incentive Plan. Managers are eligible to earn 40 shares per kW installed for projects sold by the manager’s organization, provided they exceed 1,500 kW installed during a calendar year, and as long as the manager sells 700kW the subsequent calendar year. 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. 18 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 nine months ended September 30, 2025, the Company recognized $ 109,975 and $ 655,082 , respectively, in equity compensation expense related to these awards. As of September 30, 2025, the remaining unrecognized compensation expense was $ 217,564 and is expected to be recognized over the remaining 0.50 -year vesting period. NOTE 13 —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 September 30, 2025 and 2024, the Company recognized $ 7,017,019 and $ 2,328,704 of revenue, net of financing fees of $ 1,644,395 and $ 783,650 , respectively, from these arrangements. For the nine months ended September 30, 2025 and 2024, the Company recognized $ 17,709,806 and $ 18,139,099 of revenue, net of financing fees of $ 6,739,848 and $ 7,767,491 , respectively, from these arrangements. As of September 30, 2025, the Company had $ 465,047 of accounts receivable and $ 3,581,890 of contract assets due from related parties relating to these arrangements. 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 of Solar Leasing, and no changes to the Company’s financial statement presentation are required. For the three and nine months ended September 30, 2025, the Company recorded interest income of $ 66,472 and $ 189,938 , respectively, included in other income, net in the accompanying condensed consolidated statements of operations. As of September 30, 2025, the principal balance of $ 3,000,000 is included in related party note receivable and the accrued interest balance of $ 114,393 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 September 30, 2025, the total unrecorded TRA liability is approximately $ 7.2 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. 19 NOTE 1 4—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 September 30, 2025 and 2024, there were 41,115,187 and 49,030,000 , 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 nine months ended September 30, 2025 and 2024: Three Months Ended September 30, Nine Months Ended September 30, 2025 2024 2025 2024 Numerator Net loss attributable to class A common stockholders $ ( 3,225,020 ) $ ( 424,262 ) $ ( 12,002,121 ) $ ( 2,233,543 ) Denominator Weighted-average class A common shares outstanding – basic and diluted 27,307,260 5,053,942 22,489,940 3,696,721 Loss per class A common share – basic and diluted $ ( 0.12 ) $ ( 0.08 ) $ ( 0.53 ) $ ( 0.60 ) NOTE 15 —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 a 2.7 % provision and a 1.5 % benefit for the three months ended September 30, 2025 and 2024, respectively, and a 2.2 % provision and a 2.7 % benefit for the nine months ended September 30, 2025 and 2024, respectively. The ETR for the three and nine months ended September 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 nine months ended September 30, 2024 differs from statutory rates primarily due to the non-controlling interest portion of ESGEN Opco, LLC, which is a partnership for federal tax purposes. The components of the deferred income tax assets and liabilities were as follows: September 30, 2025 December 31, 2024 Other Asset assets: Deferred tax assets $ 6,444,972 $ 661,904 Valuation allowance ( 6,444,972 ) - Net deferred tax asset $ - $ 661,904 Deferred tax liabilities - ( 423,413 ) Net deferred tax assets and liabilities $ - $ 238,491 NOTE 16 —SUBSEQUENT EVENTS On October 30, 2025, the Company issued 1,851,851 shares of Zeo class A common stock upon the conversion of the LHX convertible promissory note totaling $ 2.5 million. Effective on October 31, 2025, the Company’s board of directors and audit committee, approved the dismissal of Grant Thornton LLP, the Company’s independent registered public accounting firm, and approved the appointment of Tanner LLC as the Company’s independent registered public accounting firm. On November 5, 2025, the Company granted an aggregate of 70,000 restricted shares of class A common stock under the Incentive Plan to seven employees. The restricted shares vest in equal installments over three years. On November 6, 100,000 class A common shares were issued in exchange for OpCo class B units and corresponding class V common shares. 20