What changed in this filing

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Item 7. Management’s Discussion and Analysis

2026-04-01 compared with 2025-05-28 · 412 added, 449 removed, 222 unchanged (80% of the section changed)

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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, Missouri, Ohio, 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.

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

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and battery storage systems for the residential market.

We believe that continued government policy support

of solar energy and increasing conventional utility costs provide the solar energy market with material headwinds for accelerating adoption

in the United States, which currently lags other international markets, including Australia and Europe.

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,

Minesota, Utah and Virginia.

We plan to continue to enter new markets selectively where favorable net metering policies or cost incentives

exist and we can implement efficient operations.

Most of our sales were generated in Florida in 2023 and were largely split between Florida

and Ohio in 2024.

We have focused on improving our operational efficiency to meet the decrease in revenues we faced in 2024

Our core solar service offerings are paid for

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Recent Developments

On October 25, 2024, the Company closed an Asset

Purchase Agreement with Lumio Holdings, Inc., a Delaware corporation, and Lumio HX, Inc., a Delaware corporation, pursuant to which, subject

to the terms and conditions set forth in the Asset Purchase Agreement, the Company agreed to acquire certain assets of the Sellers on

an as-is, where-is basis, including uninstalled residential solar energy contracts, certain inventory, intellectual property and intellectual

property rights, equipment, records, goodwill and other intangible assets, free and clear of any liens other than certain specified liabilities

of the Sellers that are being assumed for a total purchase price of (i) $4 million in cash and (ii) 6,206,897 shares of the Company’s

Class A Common Stock, par value $0.0001, to be paid to LHX Intermediate, LLC, a Delaware limited liability company.

The Asset Purchase

Agreement contains customary representations, warranties and covenants of the parties for a transaction involving the acquisition of assets

from a debtor in bankruptcy, including the condition that the bankruptcy court enter an order authorizing and approving the Transaction.

Business Combination

On March 13, 2024, we consummated the Business

Combination with ESGEN Acquisition Corp.

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

each issued and outstanding ESGEN Class B ordinary share was converted into one ESGEN Class A ordinary;

and (ii) ESGEN was domesticated

into the State of Delaware so as to become a Delaware corporation.

In connection with the Closing, we changed our name from “ESGEN

Acquisition Corporation” to “Zeo Energy Corp.”

Following the Domestication, each then-outstanding

ESGEN Class A ordinary share was converted into one share of Class A common stock, and each then-outstanding ESGEN Public Warrant converted

automatically into a Warrant, exercisable for one share of Zeo Class A Common Stock.

Additionally, each outstanding unit of ESGEN was

cancelled and separated into one share of Class A Common Stock and one-half of one Warrant.

In accordance with the terms of the Business Combination

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

or its subsidiaries or securities (including debt securities) convertible into or exchangeable for, or that otherwise conferred on the

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

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

liability interests of Sunergy (the “Sunergy Company Interests”) in accordance with the governing documents of Sunergy or

the Sunergy Convertible Interests.

At the Closing, ESGEN contributed to OpCo (1)

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

prior to the Closing (after giving effect to the exercise of redemption rights by ESGEN stockholders)), and (2) a number of newly issued

shares of Class V common stock, which are non-economic, voting shares of Zeo, equal to the number of Seller OpCo Units (as defined in

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

Manager Units”) which equaled the total number of shares of Class A Common Stock issued and outstanding immediately after the Closing

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

the Closing (the transactions described above in this paragraph, the “ESGEN Contribution”).

Immediately following the ESGEN

Contribution, (x) the Sellers contributed to OpCo the Sunergy Company Interests and (y) in exchange therefor, OpCo transferred to the

Sellers the Seller OpCo Units and the Seller Class V Shares.

Prior to the Closing, Sellers transferred 24.167%

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

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

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

In connection

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

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

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

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

Such Class B Units may be subject

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

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

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

Grants under the Management Incentive Plan

will be made after Closing.

Common Stock and Class V Common Stock.

In connection with entering into the Business

Combination Agreement, ESGEN and the Sponsor entered the Sponsor Subscription Agreement, pursuant to which, among other things, the Sponsor

agreed to purchase an aggregate of 1,000,000 Convertible OpCo Preferred Units convertible into Exchangeable OpCo units (and be issued

an equal number of shares of Class V Common Stock) concurrently with the Closing at a cash purchase price of $10.00 per unit and up to

an additional 500,000 Convertible OpCo Preferred Units (together with the concurrent issuance of an equal number of shares of Zeo Class

V Common Stock) during the six months after Closing if called for by Zeo.

Prior to the Closing, ESGEN informed the Sponsor that it wished

to call for the additional 500,000 Convertible OpCo Preferred Units at the Closing and, as a result, a total of 1,500,000 Convertible

OpCo Preferred Units and an equal number of shares of Class V Common Stock were issued to Sponsor in return for aggregate consideration

of $15,000,000.

Accounting for the Business Combination

Following the Business Combination, we are organized

in an “Up-C” structure, such that Sunergy and the subsidiaries of Sunergy hold and operate substantially all of the assets

and businesses of the registrant, and the registrant is a publicly listed holding company that holds a certain amount of equity interests

in OpCo, which holds all of the equity interests in Sunergy.

The Class A Common Stock and public warrants are traded on Nasdaq under the

ticker symbols “ZEO” and “ZEOWW,” respectively.

The Business Combination was accounted for as

a reverse recapitalization with ESGEN being treated as the acquired company since there was no change in control in accordance with the

guidance for common control transactions in ASC 805-50.

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

continuation of the financial statements of Sunergy with the business combination treated as the equivalent of Sunergy issuing stock for

the net assets of ESGEN, accompanied by a recapitalization.

The net assets of ESGEN were stated at historical cost, with no goodwill or

other intangible assets recorded.

Operations prior to the Business Combination were those of Sunergy.

Sunergy was determined to be the accounting acquirer

based on evaluation of the following facts and circumstances.

Based upon the evaluation of the OpCo A&R

LLC Agreement, the Sellers contributed their interests of Sunergy into OpCo.

OpCo’s members did not have substantive kickout or

participating rights and therefore OpCo is a VIE.

Consideration of OpCo as a VIE was necessary to determine the accounting treatment between

ESGEN and Sunergy.

Upon evaluation, ESGEN Acquisition Corp.

is considered to be the primary beneficiary through its membership interest

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

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

As such, ESGEN will consolidate OpCo and is considered to the accounting acquirer;

however, further consideration of whether

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

method of accounting is required under ASC 805.

While Sunergy did not control or have common ownership

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

consummation of the transaction to determine if a change in control occurred by evaluating whether Sunergy was under common control prior

to and subsequent to the consummation of the transaction.

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

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

EITF Issue 02-5 “Definition of ‘Common Control’ in Relation to FASB Statement No.

141” indicates that common control

would exist if a group of stockholders holds more than 50 percent of the voting ownership of each entity, and contemporaneous written

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

Prior to the Business Combination, Sunergy

was majority owned by five entities (the “ Primary Sellers ”), who entered into a Voting Agreement, dated September

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

The consummation of the Business Combination

with ESGEN occurred within the term of the Voting Agreement.

Prior to the Business Combination and the contributions

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

Immediately following the Business Combination,

the Sellers now own 83.8% of the equity of the Company.

The Voting Agreement constitutes contemporaneous

written evidence of an agreement to vote a majority of the Primary Sellers’ shares of the Company in concert.

Accordingly, the Primary

Sellers retain majority control through the voting of their units in conjunction with the Voting Agreement immediately prior to the Business

Combination and their shares following the Business Combination and, therefore, there was no change of control before or after the Business

This conclusion was appropriate even though there was no relationship or common ownership or control between Sunergy and

ESGEN prior to the Business Combination.

Accordingly, the Business Combination should be accounted for in accordance with the guidance

for common control transactions in ASC 805-50.

Additional factors that were considered include

the following:

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

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

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

For common control transactions that include the

transfer of a business, the reporting entity is required to account for the transaction in accordance with the procedural guidance in

In essence, the Business Combination will be treated as a reverse recapitalization with ESGEN being treated as the acquired

company since there was no change in control.

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

of the financial statements of Sunergy with the business combination treated as the equivalent of Sunergy issuing equity for the net assets

of ESGEN, accompanied by a recapitalization.

Public Company Costs

Following the Business Combination, we have ongoing

reporting and other compliance requirements relating to our Exchange Act registration and Nasdaq listing.

We expect to see an increase

in general and administrative, compared to historical results, to support the legal and accounting requirements of the combined publicly

traded company.

We also expect to incur substantial additional expenses for, among other things, directors’ and officers’

liability insurance, director fees, internal control compliance, and additional costs for investor relations, accounting, audit, legal

and other functions.

Heliogen Acquisition

On May 28, 2025, we entered into a plan of merger

and reorganization agreement with 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 total consideration transferred consisted

entirely of our Class A common stock, issued to Heliogen shareholders at an exchange ratio of 0.9591 shares of our Class A common stock

for each share of Heliogen common stock, resulting in the issuance of 6,217,612 Class A common shares.

No contingent consideration was

In connection with the merger, all outstanding Heliogen SPAC warrants and 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.

We accounted for the Heliogen acquisition using

the acquisition method of accounting in accordance with ASC 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.

Note Conversion

On October 30, 2025, the outstanding balance of

the Promissory Note totaling $2.5 million was converted into 1,851,851 shares of the Company’s Class A common stock.

Upon conversion,

the remaining unamortized debt discount was recognized and the carrying value of the Promissory Note was reclassified to equity.

remained outstanding under the Promissory Note as of December 31, 2025.

White Lion Transaction

On January 27, 2026, we entered into the White Lion Purchase Agreement

with White Lion.

We also entered into the RRA with White Lion on January 27, 2026.

Pursuant to the White Lion Purchase Agreement, the

Company has the right, but not the obligation, to require White Lion to purchase, from time to time, up to $30.0 million in aggregate

gross purchase price of newly issued shares of our Class A Common Stock, subject to certain limitations and conditions set forth in the

White Lion Purchase Agreement.

Subject to the satisfaction of certain customary conditions, the Company’s right to sell shares to

White Lion commenced on the date of the execution of White Lion Purchase Agreement and extends until White Lion Commitment Period.

During the White Lion Commitment Period, subject to the terms and conditions

of the White Lion Purchase Agreement, the Company may notify White Lion when the Company exercises its right to sell shares of its Class

A Common Stock.

The Company may deliver a Rapid Purchase Notice (as such term is defined in the White Lion Purchase Agreement), where

the Company can require White Lion to purchase up to a number of shares of Class A Common Stock equal to the 20% of Average Daily Trading

Volume (as such term is defined in the White Lion Purchase Agreement).

The Company may also deliver an Accelerated Purchase Notice (as

such term is defined in the White Lion Purchase Agreement), where the Company may require White Lion to purchase up to a number of shares

of Class A Common Stock equal to 20% of the Average Daily Trading Volume.

White Lion may waive such limits under any notice at its discretion

and purchase additional shares.

The price to be paid by White Lion for any shares

that the Company requires White Lion to purchase will depend on the type of purchase notice that the Company delivers.

For shares being

issued pursuant to Accelerated Purchase Notice, the purchase price per share will be equal to the lowest traded price of Class A Common

Stock during one (1) hour period following the White Lion’s written consent of the acceptance of the notice.

For shares being issued

pursuant to a Rapid Purchase Notice, the purchase price per share will be equal to the average of the three (3) lowest traded prices on

the date that the notice is delivered.

No purchase notice shall result in White Lion

beneficially owning (as calculated pursuant to Section 13(d) of the Exchange Act and Rule 13d-3 thereunder) more than 4.99% of the number

of shares of the Class A Common Stock outstanding immediately prior to the issuance of shares of Class A Common Stock issuable pursuant

to a purchase notice.

The Company may deliver purchase notices under

the White Lion Purchase Agreement, subject to market conditions, and in light of our capital needs, from time to time and under the limitations

contained in the White Lion Purchase Agreement.

Any proceeds that the Company receives under the White Lion Purchase Agreement are expected

to be used for working capital and general corporate purposes.

The White Lion Purchase Agreement may be terminated

by the Company at any time and for any reason, in its sole discretion, subject to the Company having delivered the applicable Commitment

Shares (as defined below).

The White Lion Purchase Agreement will also terminate automatically upon the earlier of the expiration of the

White Lion Commitment Period or the occurrence of certain bankruptcy or insolvency-related events involving the Company.

In consideration for the commitments of White Lion, as described above,

the Company is contractually committed to issue to White Lion the Commitment Shares.

The Commitment Shares are deemed fully earned and

non-refundable as of the execution date of the White Lion Purchase Agreement;

however, if the White Lion Purchase Agreement is terminated

by the Company as a result of a material breach by White Lion, the Company may pursue all remedies available at law or in equity, including

reimbursement or recovery of such Commitment Shares, to the extent permitted by applicable law.

Concurrently with the White Lion Purchase Agreement,

the Company entered into the RRA with White Lion.

The Purchase Agreement and the RRA contain customary representations, warranties, conditions

and indemnification obligations of the parties.

The representations, warranties and covenants contained in such agreements were made only

for purposes of such agreements and as of specific dates, were solely for the benefit of the parties to such agreements and may be subject

to limitations agreed upon by the contracting parties.

White Horse Energy Transaction

On January 30, 2026, Sunergy, a subsidiary of

the Company, increased the subordinated loan in the form of a note receivable with White Horse Energy, LLC from $3.0 million to $6.15

million under the same terms as the original note.

Key Operating and Financial Metrics and Outlook

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the periods presented:

Year Ended December 31,

(In thousands, except percentages)

Contribution profit

Contribution margin

(Loss) income from operations

Net (loss) income

Loss from operations

(20,532,132 )

(10,804,760 )

(19,629,633 )

Adjusted EBITDA

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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.

of revenues and depreciation and amortization related to cost of revenues, 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.

Contribution Profit and Contribution Margin

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to allocate resources going forward.

Contributions margin reflects our Contribution profit as a percentage of revenues.

Contribution margin reflects our Contribution profit as a percentage of revenues.

Non-GAAP Financial Measures ” for a reconciliation of Gross Profit to Contribution Profit and Contribution Margin.

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Key factors affecting the results of our operations are summarized below.

Tariffs and 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, which may continue to put pressure on our operating margins and increase our costs.

Increased tariffs will likely result in an increase in the cost of our raw materials which are sourced both domestically and abroad.

do not have information that allows us to quantify the specific amount of cost increases attributable to inflation or tariffs.

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.

As of December 31, 2024, we have operations in eight states and service customers in 16 states.

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.

markets where we operate in Florida, Texas, Arkansas, Missouri, Illinois, Virginia and Ohio.

We primarily generate revenue from our 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 .

We offer roofing replacements to facilitate our solar installations and to repair rooftops on homes in Florida damaged by severe weather.

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 partnered with several third-party operators which

allows our customers to choose a leasing option to finance their systems.

We will continue to work with financing partners to find products

which best meet the needs of our customers and help them to reduce the cost of their energy consumption.

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.

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.

The acquisition of Heliogen aligns with our strategy

to expand our clean-energy platform beyond residential markets into large-scale commercial and industrial energy generation and storage.

Additionally, Heliogen is expected to complement our existing solar operations, create operational synergies, and broaden market reach.

With the acquisition of Heliogen, we intend to enter into agreements to provide engineering services to support long-duration energy storage

Adding New Customers and Expansion of Sales

with Existing Customers .

We intend to continue to grow our in-house sales force and external sales dealers.

Through 2024, our in-house

sales have been generated through a summer-sales effort.

In 2025, we will introduce a year-round sales team with sales representatives

who live in the markets where they sell.

Our efforts to increase sales will be focused on increasing the concentration of sales in the

markets where we operate, improving operational efficiency.

We provide competitive compensation packages to our in-house sales teams and

external sales dealers, which incentivizes the acquisition of new 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.

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 rate increases

for both short-term and long-term debt have stabilized but remain high.

Historically, most of our customers have financed the purchase

of their solar systems.

Higher interest rates have resulted in higher monthly costs to customers, which has the effect of slowing the

financing-related sales of solar systems in the areas in which we sell and operate.

We do not have information that allows us to quantify

the adverse effects attributable to increased interest rates.

Lease financing products have become popular with our customers as the third-party

operators can offer a monthly payment lower than a loan product.

The company will continue to offer both loan and lease financing products

to our customers.

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 .

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manufacturers and suppliers to produce our components.

Our suppliers are generally meeting our materials needs and we are realizing a

decrease in pricing for our solar components compared to the prior year.

We do not anticipate continued decrease in pricing in the coming

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 manufacturing and installation of our systems,

which would adversely impact our cash flows and results of operations, including revenue and contribution margin.

Components of Condensed Consolidated Statements

of Operations

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.

Components of Consolidated Statements of Operations

Our primary source of revenue is the sale of our

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We sell our systems primarily direct to end user customers for use in their residences.

When a customer uses

a third-party operator (TPO) lease to finance their system, the TPO is the contracted customer with ZEO.

Upon installation inspection,

we satisfy our performance obligation and recognize revenue.

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

Upon passing 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

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 each of the year ended December 31, 2024, and 2023.

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

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 revenues, net in the years ended

December 31, 2025 and 2024.

Our revenue is affected by changes in the volume,

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.

Approximately 5% of our

sales were paid in cash by the customer in each of the year ended December 31, 2024, and 2023.

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 years ended December 31, 2025 and 2024.

Our revenue growth is dependent on our

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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

Revenues declined during the year ended December

31, 2025 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.

Cost of Revenues

Cost of revenues consists primarily of product

costs (including solar panels, inverters, metal racking, connectors, shingles, wiring, warranty costs and logistics costs), installation

labor, vehicle costs, and permitting costs.

During 2024, costs 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.

labor and permitting costs.

Cost of revenues decreased during the year ended

December 31, 2025 in association with a reduction in revenues.

Net revenues less cost of revenues 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

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and include salaries, benefits and payroll taxes.

In the future, the Company intends to provide more benefits to its employees, including

an employee stock purchase plan, which will increase operating expenses.

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

of personnel-related expenses including sales commissions, as well as advertising, travel, trade shows, marketing, and other indirect

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.

General and administrative expenses consist primarily

of personnel-related expenses for our executive, finance, human resources, information technology, operations support and software, facilities

costs and fees for professional services.

Fees for professional services consist primarily of outside legal, accounting and information

technology consulting costs.

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.

of depreciation of our vehicles, furniture and fixtures, 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 income.

It also includes interest income on our cash balances, and accrued

interest on tariffs previously paid and approved for a refund.

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

Year Ended December 31, 2025 Compared to

Year Ended December 31, 2023

the Year Ended December 31, 2024

The following table sets forth a summary of our

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$ (3,894,145 )

$ (36,446,918 )

Costs and expenses:

Cost of goods sold (exclusive of depreciation and amortization)

(21,415,155 )

Cost of revenues

Depreciation and amortization

Sales and marketing

(10,736,986 )

General and administrative

Total operating expenses

(20,447,819 )

(Loss) income from operations

Loss from operations

(20,532,132 )

(10,804,760 )

Other income (expense), net:

Other income (expense), net

Change in fair value of warrant liabilities

Other income (expense):

Interest expense

Total other income (expense), net

Net (loss) income before taxes

Gain on disposal of property and equipment

Gain on change in fair value of warrant liabilities

Total other income (expense)

Net loss before taxes

$ (19,365,984 )

$ (10,836,148 )

Revenue, net decreased by approximately $36.4

million, from $109.7 million for the year ended December 31, 2023 to $73.2 million for the year ended December 31, 2024.

was primarily due to the effect of higher interest rates on consumer financing.

The increased cost of consumer lending reduced the advantage

provided by financed solar power relative to standard utility costs, which negatively affected the demand for our products.

The more difficult

selling environment resulted in a decrease in sales from our sales force and dealer network.

Cost of Goods Sold

Cost of goods sold decreased by $21.4 million,

$ (8,529,836 )

Net revenues decreased by approximately $3.9 million

from $73.2 million for the year ended December 31, 2024 to $69.3 million for the year ended December 31, 2025.

The decrease was due to

the decrease in revenue.

As a percentage of revenue, the cost of goods sold was 52.4% for the year ended December 31, 2024, which was

consistent with the year ended December 31, 2023.

The primary reason for

the decrease in revenue was a decrease in installations during the current period, offset by a new pricing agreement with Solar Leasing

I, LLC (“SLI”), a related-party entity that provides lease financing of the Company’s customers (see Note 16—Related

Party Transactions in the consolidated financial statements), entered into during the fourth quarter of 2024.

The comparative period

also benefited from deferred revenue at the end of 2023, that was recognized in the first quarter of 2024.

During the year ended December

31, 2025, there were no revenues generated from Heliogen.

Cost of Revenues

Cost of revenues decreased by $7.0 million from $38.1 million for the

year ended December 31, 2024 to $31.1 million for the year ended December 31, 2025, primarily driven by the decline in installation revenues

over the same period.

As a percentage of net revenues, cost of revenues improved from 52.0% for the year ended December 31, 2024 to 44.8%

for the year ended December 31, 2025.

The improvement in gross margin reflects lower per-installation costs in 2025 compared to 2024,

as the first half of 2024 included elevated costs associated with a higher volume of lower-margin installations that originated from contracts

entered into in 2023.

Depreciation and Amortization

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The increase was

due to an increase in the amortization of the cost of acquired contracts from the Lumio Asset Purchase Agreement.

primarily due to an increase in the amortization of the cost of acquired contracts from the Lumio Asset Purchase Agreement.

Sales and Marketing

Sales and marketing expenses decreased by $10.7

Sales and marketing expenses increased by $3.1

million from $19.6 million for the year ended December 31, 2024 to $22.7 million for the year ended December 31, 2025.

The decrease was

primarily due to a result of a reduction in commissions earned due to the decrease in revenue.

The increase was

primarily a result of increased stock-based compensation expense, sales commissions, and efforts to expand our selling process to include

year-round sales through digital lead generation.

General and Administrative Expenses

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by $6.0 million from $21.6 million for the year ended December 31, 2024 to $27.5 million for the year ended December 31, 2025.

was primarily due to $7.8 million of stock compensation expense in 2024 of which there was none in 2023.

Other income (expense), net

Other income (expense), net increased from $294,258

of other expense to $31,388 of income primarily due to a decrease in losses on the disposition of assets, a gain on fair value of warrant

liabilities and an increase in interest income partly offset by an increase in interest expense.

was primarily due to an increase in payroll costs associated with additional staffing, increased bad debt expense, higher professional

fees associated with being a public company, and new costs as a result of the acquisition of Heliogen offset by decreased stock-based

compensation expense.

Other Income (Expense)

Other income, net increased by $1.2 million from

other expense, net of $31,388 for the year ended December 31, 2024 to other income, net of $1.2 million for the year ended December 31,

The increase was primarily a result of increased gain on change in fair value of warrant liabilities, other income, and less interest

expense during the current period.

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 December 31, 2024 and 2023, our cash and

cash equivalents balance was approximately $5.6 million and $8.0 million, respectively.

The Company maintains its cash in checking and

savings accounts.

Our operations have historically been funded through

a combination of cash on hand, proceeds from financing activities, and in 2025, net cash acquired in connection with the Heliogen acquisition

(see Note 6—Business Combinations in the consolidated financial statements).

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 December 31, 2025 and December 31, 2024,

our cash and cash equivalents balance were $6.1 million and $5.6 million, respectively.

The Company maintains its cash in checking, savings,

and money market accounts.

Our future capital requirements depend on many

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which we are successful in launching new business initiatives and the cost associated with these initiatives, and the growth of our business

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.

In December of 2024, we entered

into a the Promissory Note for $2.4 million to help fund the creation of a year-round sales team.

While we believe that our cash and cash equivalents

will be sufficient to meet our currently contemplated business needs for the next twelve months, we cannot assure you that this will be

If additional financing is required by us from outside sources, we may not be able to raise it on terms acceptable to us or

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.

We currently believe that our existing cash and

working capital balances, anticipated future cash flows from operations and borrowings under our debt agreements will be sufficient to

meet our currently contemplated business needs for the next twelve months.

In the event we pursue and complete significant transactions

or acquisitions in the future, additional funds may be required to meet our strategic needs, which may require us to raise additional

funds in the debt or equity markets.

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.

The following table summarizes our cash flows

for the periods presented:

Year ended December 31,

Net cash (used in) provided by operating activities

For the Years Ended

Net cash used in operating activities

$ (8,691,421 )

$ (8,716,717 )

Net cash (used in) investing activities

Net cash provided by (used in) investing activities

Net cash provided by (used in) financing activities

(17,870,390 )

Cash Flows from Operating Activities

Net cash used in operating activities was approximately

$8.7 million during the year ended December 31, 2024 compared to a net cash provided by operating activities of approximately $12.0 million

during year ended December 31, 2023.

The decrease was primarily due to an increase in accounts receivable.

Accounts receivable increased

as our customers transitioned to financing their systems through lease arrangements.

Revenues associated with lease arrangements were

64% of sales in 2024 compared to 21% in 2023.

In loan arrangements, 100% of the cash is received shortly after installation.

Loan arrangements

provide for a holdback of 20% of the cash due until the customer has received permission to operate from the utility, which delays full

payment of products by 90-120 days past installation.

$8.7 million during the year ended December 31, 2025 compared to net cash used in operating activities of approximately $8.7 million during

the year ended December 31, 2024.

Despite an increase in net loss of $9.8 million, cash used in operations remained consistent year-over-year

primarily due to higher non-cash charges including $8.6 million of depreciation and amortization, $6.4 million of stock-based compensation,

and $3.4 million of provision for credit losses.

Working capital was positively impacted by a $2.8 million increase in accounts payable

and a $1.1 million increase in contract liabilities.

These were partially offset by a $2.2 million increase in accounts receivable, a

$1.1 million increase in prepaid expenses and other current assets, a $1.5 million increase in contract assets, a $2.0 million decrease

in accrued expenses and other current liabilities, and a $3.3 million decrease in accrued expenses and other current liabilities –

related parties.

Cash Flows from Investing Activities

Net cash used in investing activities was approximately

$7.4 million for the year ended December 31, 2024.

The company used $4.0 million for the Lumio asset purchase, $3.0 million to issue debt

to a related party, and $0.4 million to purchase property and equipment.

Net cash used in investing activities for the year ended December

31, 2023 was approximately $1.0 million, relating to purchases of vehicles.

Net cash provided by investing activities was

approximately $13.4 million for the year ended December 31, 2025, relating to the cash acquired in the acquisition of Heliogen, offset

by purchases of property and equipment.

Net cash used in investing activities for the year ended December 31, 2024 was approximately $7.4

million, relating to the asset acquisition of Lumio, note receivable – related-party investment, and purchase of property and equipment.

Cash Flows from Financing Activities

Net cash provided by financing activities was

approximately $13.7 million for the year ended December 31, 2024, primarily relating to $9.2 million in net proceeds from the issuance

of convertible preferred stock at the time of the Business Combination, $2.7 million from a private placement to finance the Lumio asset

purchase and $2.4 million from a convertible promissory note with a related party, offset by principal payments on debt and dividends

paid on convertible preferred stock.

Net cash used in financing activities for the year ended December 31, 2023 was approximately $5.2

million, primarily relating to distributions to members.

Net cash used in financing activities was approximately

$4.2 million for the year ended December 31, 2025, primarily relating to the payment of dividends to OpCo Class A preferred unit holders

and repayments of debt and finance leases.

Net cash provided by financing activities was approximately $13.7 million for the year ended

December 31, 2024, primarily relating to net cash acquired from the issuance of convertible preferred stock of $9.2 million and the private

placement issuance of Class A common stock offset by repayments of debt and finance leases, and distributions of stockholders.

Current Indebtedness

The Company has approximately $3.6 million in

trade-credit with solar equipment distributors, approximately $0.8 million of debt on service trucks and vehicles valued at approximately

$1.3 million, net of depreciation and $2.4 million in a convertible promissory note with a related party.

As of December 31, 2025, the Company’s outstanding

indebtedness consisted of approximately $79,112 of vehicle loans.

The Company has historically funded its operations and growth through

a combination of cash on hand, proceeds from financing activities, and in 2025, net cash acquired in connection with the Heliogen acquisition.

Non-GAAP Financial Measures

The non-GAAP financial measures below 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.

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.

Our management uses these non-GAAP financial measures,

23 unchanged sentences

to allocate resources going forward.

Contributions margin reflects our Contribution profit as a percentage of revenues.

Contribution 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:

Year ended December 31,

Total revenue

$ 109,691,001

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

Depreciation and amortization related to Cost of goods sold

Cost of revenues (exclusive of depreciation and amortization):

depreciation and amortization related to cost of revenues

Total gross profit

Depreciation and amortization

Commissions expense

Contribution Profit

Total contribution profit

Contribution margin

1 unchanged sentence

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.

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:

Year ended December 31,

Net (loss) income

measure, as net income (loss) before interest and other income (expenses), net, income tax expense, depreciation and amortization, gain

on change in fair value of warrant liabilities, stock-based compensation, and 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:

$ (19,629,633 )

Other income, net

Change in fair value of warrant liabilities

$ (9,872,358 )

Interest expense

Income tax benefit

Stock compensation

Gain on disposal of property and equipment

Gain on change in fair value of warrant liabilities

Income tax provision (benefit)

Stock-based compensation

Acquisition-related expenses

Depreciation and amortization

Adjusted EBITDA

Net (loss) income margin

$ (3,340,851 )

Net loss margin

Adjusted EBITDA margin

2 unchanged sentences

with GAAP requires us to establish accounting policies and make estimates and assumptions that affect our reported amounts of assets and

liabilities at the date of the condensed consolidated financial statements.

These financial statements include some estimates and assumptions

that are based on informed judgments and estimates of management.

We evaluate our policies and estimates on an on-going basis and discuss

the development, selection and disclosure of critical accounting policies with those charged with governance.

Predicting future events

is inherently an imprecise activity and as such requires the use of judgment.

Our condensed consolidated financial statements may differ

based upon different estimates and assumptions.

liabilities at the date of the consolidated financial statements.

These financial statements include some estimates and assumptions that

are based on informed judgments and estimates of management.

We evaluate our policies and estimates on an on-going basis and discuss the

development, selection and disclosure of critical accounting policies with those charged with governance.

Predicting future events is

inherently an imprecise activity and as such requires the use of judgment.

Our consolidated financial statements may differ based upon

different estimates and assumptions.

We discuss our significant accounting policies

in Note 3, Summary of Significant Accounting Policies, to our condensed consolidated financial statements.

in Note 3—Summary of Significant Accounting Policies , to our consolidated financial statements.

Our significant accounting

9 unchanged sentences

financial statements due to the estimation process and business judgment involved in their application:

Valuation of Business Combinations

The Company recognizes and measures the assets

acquired and liabilities assumed in a business combination based on their estimated fair values at the acquisition date.

Any excess or

surplus of the purchase consideration when compared to the fair value of the net tangible assets acquired, if any, is recorded as goodwill

or gain from a bargain purchase.

The fair value of assets and liabilities as of the acquisition date are often estimated using a combination

of approaches, including the income approach, which requires us to project future cash flows and apply an appropriate discount rate;

the market approach which uses market data and adjusts for entity-specific differences.

We use all available information to make these

fair value determinations and engage third-party consultants for valuation assistance.

The estimates used in determining fair values are

based on assumptions believed to be reasonable, but which are inherently uncertain.

Accordingly, actual results may differ materially

from the projected results used to determine fair value.

Goodwill is recognized and initially measured

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

for the net identifiable assets acquired.

Goodwill is not amortized but is tested for impairment

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

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

Allowance for Credit Losses

Accounts receivable are recorded at the invoiced

amount, net of an allowance for current expected credit losses.

In accordance with ASC 326, “ Financial Instruments—Credit

Losses ,” the Company estimates expected credit losses on accounts receivable using an aging analysis that incorporates historical

loss experience, customer creditworthiness, prevailing economic conditions, and reasonable and supportable forward-looking information.

The Company also provides an allowance for customers determined to be insolvent.

Accounts receivable balances are written off when they

are determined to be uncollectible.

Business Combinations

The Company accounts for business combinations

under the acquisition method of accounting in accordance with ASC 805, “ Business Combinations .” The Company allocates

the purchase price of an acquisition to the tangible and intangible assets acquired, liabilities assumed, and any NCI based on their estimated

fair values at the acquisition date.

The Company recognizes the amount by which the purchase price of an acquired entity exceeds the net

of the fair values assigned to the assets acquired and liabilities assumed as goodwill.

In determining the fair values of assets acquired

and liabilities assumed, the Company uses various recognized valuation methods, including the income, cost, and market approaches, in

accordance with ASC 820, “ Fair Value Measurement.

” The Company makes assumptions within certain valuation techniques,

including discount rates, royalty rates, and the amount and timing of future cash flows.

The Company initially performs these valuations

based on preliminary estimates and assumptions by management or, where appropriate, independent valuation specialists under the Company’s

The Company may revise these estimates and assumptions as additional information becomes available during the measurement

period, which may extend up to one year from the acquisition date.

Acquisition-related expenses are recognized separately from business

combinations and are expensed as incurred.

Intangible Assets

Acquired identifiable intangible assets are recorded

at fair value at the acquisition date and are amortized on a straight-line basis over their estimated useful lives.

Estimated useful lives

are determined based on the period over which the assets are expected to contribute to future cash flows.

The Company has no intangible

assets with indefinite lives.

In accordance with ASC 350, “ Intangibles—Goodwill

and Other ,” goodwill is not amortized but is tested for impairment annually on December 31, or more frequently if events or

circumstances indicate that goodwill may be impaired.

When assessing the recoverability of goodwill,

the Company may first perform a qualitative assessment to determine whether it is more likely than not that the fair value of a reporting

unit is less than its carrying amount.

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

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

reporting unit with its carrying value.

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

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

exceeds the fair value of the reporting unit.

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

was no goodwill impairment recorded for the year ended December 31, 2024, and 2023.

Intangible assets subject to amortization

Intangible assets include tradename, customer

lists and non-compete agreements.

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

are subject to annual impairment consideration.

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

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

Intangible assets are reviewed for impairment

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

Conditions that

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

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

of an asset or group of assets may not be recoverable.

The Company evaluates the recoverability of intangible assets by comparing their

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

If such intangible assets are

considered to be impaired, the impairment recognized is measured as the amount by which the carrying amount of the intangible assets exceeds

the fair value of the assets.

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

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

No impairment charges

were recorded for the year ended December 31, 2024, and 2023.

The qualitative assessment considers factors including the current operating environment, industry

and market conditions, cost factors, overall financial performance, and other relevant events.

If the Company bypasses the qualitative

assessment, or concludes that it is more likely than not that the fair value of a reporting unit is less than its carrying amount, the

Company performs a quantitative assessment by comparing the estimated fair value of the reporting unit with its carrying amount.

estimates the fair value of its reporting units based on the present value of estimated future cash flows.

Considerable management judgment

is required in evaluating operating and macroeconomic conditions and estimating future cash flows, including assumptions related to growth

rates and discount rates.

If the carrying amount of a reporting unit exceeds

its estimated fair value, an impairment loss is recognized for the amount of the excess, limited to the total amount of goodwill allocated

to the reporting unit.

Long-Lived Assets

The Company reviews the carrying value of long-lived

assets, including property and equipment, ROU assets, and definite-lived intangible assets, for impairment in accordance with ASC 360,

“ Property, Plant, and Equipment, ” whenever events or changes in circumstances indicate that the carrying amount of

an asset or asset group may not be recoverable.

Such events or circumstances may include significant decreases in the market price of

an asset, significant changes in the extent or manner in which an asset is used or in its physical condition, significant adverse changes

in legal factors or in the business climate, a history or forecast of operating or cash flow losses, significant disposal activity, a

significant decline in revenue, or other indicators that the carrying value of an asset may not be recoverable.

If indicators of impairment

are present, the Company evaluates recoverability by comparing the carrying amount of the asset or asset group to the estimated undiscounted

future cash flows expected to result from the use and eventual disposition of the asset or asset group.

If the carrying amount exceeds

the estimated undiscounted future cash flows, an impairment loss is recognized for the amount by which the carrying amount exceeds the

asset’s fair value.

The Company accounts for income taxes in accordance

with ASC 740, “ Income Taxes .” Zeo is subject to U.S.

federal, state, and local income taxes.

OpCo is treated as a partnership

federal income tax purposes and generally does not pay U.S.

federal income taxes.

Instead, the OpCo unitholders, including Zeo,

are liable for U.S.

federal income taxes on their respective shares of OpCo’s taxable income.

OpCo may be subject to certain state

and local income or franchise taxes in jurisdictions that tax entities classified as partnerships.

Under the asset and liability method,

deferred tax assets and liabilities are recognized for the future tax consequences attributable to temporary differences between the financial

statement carrying amounts of assets and liabilities and their respective tax bases.

Deferred tax assets and liabilities are measured

using enacted tax rates expected to apply to taxable income in the periods in which those temporary differences are expected to be recovered

The effect of changes in tax rates on deferred tax assets and liabilities is recognized in the period that includes the enactment

The Company evaluates the realizability of deferred

tax assets and records a valuation allowance when, based on the weight of available evidence, it is more likely than not that some or

all of the deferred tax assets will not be realized.

The Company recognizes the tax benefit of uncertain

tax positions only when it is more likely than not that the position will be sustained upon examination by taxing authorities, including

resolution of any related appeals or litigation.

The tax benefit recognized is measured as the largest amount that has a greater than

50 percent likelihood of being realized upon ultimate settlement.

Interest and penalties related to unrecognized tax benefits are recognized

as a component of income tax expense.

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

What changed 10-K

Item 7. Management’s Discussion and Analysis