What changed in this filing

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Item 1. Financial Statements

2026-05-15 compared with 2025-11-14 · 603 added, 801 removed, 266 unchanged (84% of the section changed)

1 unchanged sentence

ZEO ENERGY CORP.

UNAUDITED CONDENSED CONSOLIDATED FINANCIAL

UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

Financial Statements (Unaudited)

Consolidated Balance Sheets as of September 30, 2025 and December 31, 2024

Consolidated Statements of Operations for the Three and Nine Months Ended September 30, 2025 and 2024

Consolidated Statements of Changes in Redeemable Non-Controlling Interests and Stockholders’ Deficit for the Three and Nine

Months Ended September 30, 2025 and 2024

Consolidated Statements of Cash Flows for the Nine Months Ended September 30, 2025 and 2024

to Condensed Consolidated Financial Statements

Condensed Consolidated Balance Sheets as of March 31, 2026 and December 31, 2025

Condensed Consolidated Statements of Operations for the Three Months Ended March 31, 2026 and 2025

Condensed Consolidated Statements of Changes in Redeemable Non-Controlling Interests and Stockholders’ Equity for the Three Months Ended March 31, 2026 and 2025

Condensed Consolidated Statements of Cash Flows for the Three Months Ended March 31, 2026 and 2025

Notes to Condensed Consolidated Financial Statements

ZEO ENERGY CORP.

CONDENSED CONSOLIDATED BALANCE SHEETS

September 30,

Current Assets

Cash and cash equivalents

Accounts receivable, net

Accounts receivable, net of allowance of $ 4,978,233 and $ 4,777,550 , respectively

Accounts receivable – related parties

Contract assets

Contract assets – related parties

Prepaid expenses and other current assets

Total Current Assets

Interest receivable – related parties

Deferred tax asset, net

Property and equipment, net

1 unchanged sentence

Finance lease right-of-use assets

Related party note receivable

Intangibles, net

LIABILITIES, REDEEMABLE NON-CONTROLLING

INTERESTS AND STOCKHOLDERS’ DEFICIT

Note receivable – related party

LIABILITIES, REDEEMABLE NONCONTROLLING INTERESTS AND STOCKHOLDERS’ EQUITY

Current Liabilities

1 unchanged sentence

Accrued expenses and other current liabilities

Accrued expenses and other current liabilities – related

Accrued expenses and other current liabilities – related parties

Contract liabilities

Contract liabilities – related parties

Current portion of operating lease obligations

1 unchanged sentence

Current portion of long-term debt

Convertible promissory note, net

Total Current Liabilities

4 unchanged sentences

TOTAL LIABILITIES

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

Class B units, 22,980,000 and 33,730,000 units issued and outstanding as of September 30, 2025 and December 31, 2024, respectively

Stockholders’ Deficit

Redeemable Noncontrolling Interests

Class A convertible preferred units, 1,500,000 units issued and outstanding as of March 31, 2026 and December 31, 2025

Class B units, 21,380,000 and 22,880,000 units issued and outstanding as of March 31, 2026 and December 31, 2025, respectively

Stockholders’ Equity

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

22,880,000 and 24,380,000 shares issued and outstanding as of March 31, 2026 and December 31, 2025, respectively

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

35,139,912 and 33,180,843 shares issued and outstanding as of March 31, 2026 and December 31, 2025, respectively

Additional paid-in capital

3 unchanged sentences

( 58,064,985 )

TOTAL STOCKHOLDERS’ DEFICIT

( 1,721,295 )

( 88,912,079 )

TOTAL LIABILITIES, REDEEMABLE NON-CONTROLLING

INTERESTS AND STOCKHOLDERS’ DEFICIT

TOTAL STOCKHOLDERS’ EQUITY

TOTAL LIABILITIES, REDEEMABLE NONCONTROLLING INTERESTS AND STOCKHOLDERS’ EQUITY

The accompanying notes are an integral part

2 unchanged sentences

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

Three Months Ended

Related party revenue, net

9 unchanged sentences

( 13,511,398 )

( 18,345,413 )

( 9,694,269 )

Other Income (Expense)

Interest expense

Gain on change in fair value of warrant

Total Other Income

Gain (loss) on change in fair value of warrant liabilities

Total Other Income (Expense)

NET LOSS FROM OPERATIONS BEFORE INCOME TAXES

1 unchanged sentence

( 12,795,863 )

( 17,483,041 )

( 8,972,197 )

Income tax benefit (provision)

1 unchanged sentence

$ ( 13,319,363 )

$ ( 17,868,299 )

$ ( 8,736,845 )

net loss attributable to Sunergy

Renewables LLC prior to the business combination

NET LOSS SUBSEQUENT TO THE BUSINESS COMBINATION

( 1,869,472 )

( 2,872,424 )

( 17,868,299 )

( 8,213,164 )

Net income (loss) attributable

to redeemable non-controlling interests

( 2,448,162 )

Net loss attributable to redeemable noncontrolling interests

( 1,178,637 )

3 unchanged sentences

$ ( 6,361,265 )

$ ( 12,002,121 )

$ ( 2,233,543 )

LOSS PER CLASS A COMMON SHARE – BASIC

WEIGHTED-AVERAGE CLASS A COMMON SHARES OUTSTANDING

– BASIC AND DILUTED

LOSS PER CLASS A COMMON SHARE – BASIC AND DILUTED

WEIGHTED-AVERAGE CLASS A COMMON SHARES OUTSTANDING – BASIC AND DILUTED

COMPREHENSIVE LOSS

3 unchanged sentences

$ ( 6,361,265 )

$ ( 12,007,016 )

$ ( 2,233,543 )

The accompanying notes are an integral part

3 unchanged sentences

OF CHANGES IN REDEEMABLE

NON-CONTROLLING INTERESTS AND STOCKHOLDERS’ DEFICIT

FOR THE THREE AND NINE MONTHS ENDED

SEPTEMBER 30, 2025

Non-Controlling Interests

A Convertible Preferred Units

NONCONTROLLING INTERESTS AND STOCKHOLDERS’ EQUITY (DEFICIT)

FOR THE THREE MONTHS ENDED MARCH

Noncontrolling Interests

A Convertible

Preferred Units

Comprehensive

Stockholders’

December 31, 2024

Total Stockholders’

Balance, December

$ 115,693,900

1 unchanged sentence

$ ( 88,912,079 )

A common stock issued to employees for services

recapitalization related deferred taxes and adjustments

A common stock issued in exchange for OpCo class B units and corresponding class V common stock

Stock-based compensation

Class A common stock issued

to employees for services

Reverse recapitalization

related deferred taxes and adjustments

Class A common stock issued

in exchange for OpCo Class B units and corresponding Class V common stock

( 8,500,000 )

1 unchanged sentence

( 8,500,000 )

measurement of redeemable non-controlling interests

Subsequent measurement of

redeemable noncontrolling interests

( 51,448,264 )

6 unchanged sentences

$ ( 23,077,815 )

A common stock issued upon vesting of restricted stock awards

A common stock issued in exchange for OpCo class B units and corresponding class V common stock

measurement of redeemable non-controlling interests

( 35,448,793 )

income (loss)

( 2,415,836 )

June 30, 2025

$ ( 96,218,521 )

$ ( 59,446,742 )

A common stock issued upon vesting of restricted stock awards

withholding paid related to stock-based compensation

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 )

A common stock issued in the acquisition of Heliogen, Inc.

A common stock issued in settlement of accrued advisory fees

paid to preferred unit holders

currency translation

measurement of redeemable non-controlling interests

( 37,637,448 )

income (loss)

( 3,225,020 )

September 30, 2025

$ ( 61,806,093 )

$ ( 1,721,295 )

The accompanying notes are an integral part

of these condensed consolidated financial statements.

ZEO ENERGY CORP.

1 unchanged sentence

OF CHANGES IN REDEEMABLE

NON-CONTROLLING INTERESTS AND STOCKHOLDERS’ DEFICIT

FOR THE THREE AND NINE MONTHS ENDED

SEPTEMBER 30, 2024

Non-Controlling Interests

A Convertible Preferred Units

NONCONTROLLING INTERESTS AND STOCKHOLDERS’ EQUITY

FOR THE THREE MONTHS ENDED MARCH

Noncontrolling Interests

A Convertible

Preferred Units

Comprehensive

Stockholders’

1 unchanged sentence

$ ( 58,064,985 )

application of Business Combination

( 1,000,000 )

( 31,155,864 )

December 31, 2023

distributions

loss prior to the Business Combination

of Business Combination

of Class A Shares to third party advisors

of Class A Shares to backstop investor

Recapitalization

( 1,677,860 )

( 1,677,285 )

( 2,890,061 )

Establishment

of redeemable noncontrolling interests

( 26,116,548 )

subsequent to business combination

measurement of redeemable non-controlling interests

A common stock issued upon vesting of restricted stock awards

withholding paid related to stock-based compensation

A common stock issued to employees for services

A common stock issued in exchange for OpCo Class B units and corresponding Class V common stock

( 1,500,000 )

A common stock issued in connection with a committed equity facility, net of offering costs

A common stock issued for a commitment fee

paid to preferred unit holders

currency translation

measurement of redeemable noncontrolling interests

( 10,183,045 )

5 unchanged sentences

$ ( 51,394,614 )

$ ( 173,051,964 )

$ ( 173,047,938 )

measurement of redeemable non-controlling interests

( 117,877,583 )

income (loss)

( 1,863,917 )

June 30, 2024

( 55,452,171 )

( 53,030,257 )

A common stock issued for services

recapitalization related deferred taxes and adjustments

measurement of redeemable non-controlling interests

( 12,669,083 )

income (loss)

( 2,846,717 )

September 30, 2024

$ ( 43,207,350 )

$ ( 39,327,410 )

The accompanying notes are an integral part

2 unchanged sentences

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

Nine Months Ended

September 30,

Three Months Ended

CASH FLOWS FROM OPERATING ACTIVITIES

4 unchanged sentences

Amortization of debt discount

Gain on change in fair value of warrant liabilities

Gain on disposal of fixed assets

(Gain) loss on change in fair value of warrant liabilities

Stock-based compensation

5 unchanged sentences

( 2,402,703 )

( 7,864,274 )

Accounts receivable – related parties

Contract assets

( 1,871,028 )

Contract assets – related parties

( 3,581,890 )

Prepaids and other current assets

3 unchanged sentences

( 1,465,223 )

( 1,195,659 )

Accrued expenses and other current liabilities – related parties

( 1,038,972 )

( 1,985,281 )

Contract liabilities

( 3,460,989 )

Contract liabilities – related parties

( 1,160,848 )

Operating lease payments

1 unchanged sentence

( 2,263,438 )

( 12,189,535 )

CASH FLOWS FROM INVESTING ACTIVITIES

Purchases of property and equipment

Investment in note receivable – related party

( 3,150,000 )

Cash acquired in the acquisition of Heliogen

Net cash provided by (used in) investing activities

CASH FLOWS FROM FINANCING ACTIVITIES

Proceeds from the issuance of convertible preferred stock, net of transaction

Repayments of debt

Net cash used in investing activities

( 3,355,342 )

CASH FLOWS FROM FINANCING ACTIVITIES

Net proceeds from Class A common stock issued in connection with a committed equity facility

Repayments of finance lease liabilities

Repayments of debt

Dividends paid to OpCo Class A preferred unit holders

Tax withholdings paid related to stock-based compensation

Distributions to members

Net cash (used in) provided by financing activities

( 4,129,005 )

Effect on foreign exchange on cash

Net cash used in financing activities

Effect of foreign exchange on cash

NET CHANGE IN CASH AND CASH EQUIVALENTS

7 unchanged sentences

NON-CASH INVESTING AND FINANCING ACTIVITIES

Net loss attributable to redeemable non-controlling interest

Net loss attributable to redeemable noncontrolling interest

OpCo Class A preferred dividends

Subsequent measurement of redeemable non-controlling interest

Subsequent measurement of redeemable noncontrolling interest

Class A common stock issued upon vesting of restricted stock awards

1 unchanged sentence

Fair value of Class A common stock issued in exchange for OpCo Class B units

Class A common stock issued for commitment fee

Reverse recapitalization related deferred taxes and adjustments

$ ( 238,491 )

Operating lease right-of-use asset and liability measurement

Deferred equity issuance costs

Issuance of class A common stock to vendors

Issuance of class A common stock to backstop investors

Accounts payable settled for loan payable

Net assets acquired in the acquisition of Heliogen

Class A common stock issued in the acquisition of Heliogen

Class A common stock issued in settlement of accrued advisory fees

The accompanying notes are an integral part

6 unchanged sentences

(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.

principles generally accepted in the United States of America (“U.S.

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 U.S.

GAAP for complete

financial statements.

The December 31, 2025 consolidated balance sheet data was derived from audited financial statements but do not include

all disclosures required by U.S.

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 April

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 three months ended March 31, 2026 are not necessarily

indicative of the results that may be expected for the year ending December 31, 2026.

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.

Certain prior period amounts have been reclassified to conform to the

current period presentation of the condensed consolidated financial statements.

These reclassifications had no impact on previously reported

net loss, total assets, total liabilities, stockholders’ equity, or cash flows from operating activities.

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.

In November 2024, the FASB issued ASU 2024-04,

“ Debt—Debt with Conversion and Other Options ,” which clarifies the requirements for determining whether certain

settlements of convertible debt instruments should be accounted for as an induced conversion.

The new guidance is effective for reporting

annual periods beginning after December 15, 2025 and can be applied either prospectively or retrospectively.

Early adoption is permitted.

The adoption of ASU 2024-04 did not have a material impact on the Company’s condensed consolidated financial statements.

In July 2025, the Financial Accounting Standards

Board (“FASB”) issued Accounting Standards Update (“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 adoption of ASU 2025-05 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,

1 unchanged sentence

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 Income Statement Expenses ,” which requires 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.

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

The amendment is effective for interim and annual periods beginning after December 15, 2025, with early adoption permitted.

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.

The standard also requires a 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 ASU 2024-03 will have on its condensed consolidated financial statements.

In May 2025, the FASB issued ASU 2025-03, “ Business

Combinations (Topic 805) and Consolidation (Topic 810):

Determining the Accounting Acquirer in the Acquisition of a Variable Interest

Entity ,” which requires entities to consider existing factors in ASC 805 when identifying the accounting acquirer in a transaction

effected primarily by exchanging equity interests in which the legal acquiree is a variable interest entity that meets the definition

of a business.

ASU 2025-03 is effective for fiscal years beginning after December 15, 2026, with early adoption permitted.

is currently evaluating the impact ASU 2025-03 will have on its condensed consolidated financial statements.

In September 2025, the FASB issued ASU 2025-06,

2 unchanged sentences

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

The amendments are effective for annual reporting periods beginning after December 15, 2027 and interim reporting periods within

those annual reporting periods.

” This guidance removes 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 purpose.

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.

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.

Early adoption

is permitted as of the beginning of an annual reporting period.

The Company is currently evaluating the impact ASU 2025-06 will have on

its condensed consolidated financial statements.

In December 2025, the FASB issued ASU 2025-11,

“ Interim Reporting (Topic 270):

Narrow-Scope Improvements .” ASU 2025-11 clarifies and improves existing interim reporting

guidance by consolidating disclosure requirements within Topic 270 and introducing a disclosure principle requiring entities to disclose

events and changes occurring after the most recent annual reporting period that are expected to have a material effect on the entity’s

financial condition or results of operations.

The ASU does not introduce significant changes to recognition or measurement guidance.

amendments in ASU 2025-11 are effective for interim reporting periods within fiscal years beginning after December 15, 2027, with early

adoption permitted.

ASU 2025-11 allows for either a prospective or retrospective approach on adoption.

The Company is currently evaluating

the impact ASU 2025-11 will have on its condensed consolidated financial statements.

The Company currently believes there are no other

1 unchanged sentence

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

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.

3—BUSINESS COMBINATIONS

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

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

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

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.

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.

The purchase price was allocated as follows:

Preliminary Allocation

Purchase consideration at fair value:

Class A common stock

Assets acquired and liabilities assumed at fair value

Accounts receivable

Prepaid expenses and other current assets

Operating lease right-of-use assets

Accounts payable

Accrued expenses

Operating lease liabilities

Net assets acquired

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

Nine Months Ended

( 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

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.

AND GOING CONCERN ASSESSMENT

As of March 31, 2026, the Company had cash and cash equivalents of

$ 1.7 million, positive working capital of $ 7.9 million, and total stockholders’ equity of $ 13.7 million.

For the three months ended

March 31, 2026, the Company incurred a net loss of $ 4.7 million and $ 0.9 million of cash used in operating activities.

Management has

assessed the going concern assumptions of the Company during the preparation of these condensed consolidated financial statements.

The Company has operational plans to increase revenue and move towards

the goal of profitable operations in 2026, which plans are expected to improve cash flows.

The operational plan includes an increase in

the number of sales agents to increase revenue and improved efficiency in the operations of the Company through centralization of field

offices and labor and productivity improvement in the corporate operations through the implementation of a new CRM software.

The Company is also working internally and with third parties to address

short-term cash needs through the use of the common stock purchase agreement with White Lion Capital LLC (the “White Lion ELOC”),

which provides the Company the right to sell up to $ 30.0 million in shares of Class A common stock, subject to market liquidity and contractual

The White Lion ELOC is limited to selling shares equal to 4.99 % of the outstanding shares at the time of sale and resets

once White Lion Capital LLC liquidates their holdings in the open market (see Note 10—Redeemable Noncontrolling Interests and

Equity for additional information).

The Company also has other opportunities to raise capital, such as through revenue generating

initiatives, private placements, public offerings or repricing of outstanding warrants.

In addition, in June 2026 the Company will become

eligible to utilize a universal shelf registration statement to raise funding for the Company.

The Company’s condensed consolidated financial statements have

been prepared on a going concern basis, which contemplates the generation of revenue, access to capital markets or other funding sources, realization of assets and the

satisfaction of liabilities in the normal course of business.

3 —DISAGGREGATION OF REVENUES AND SEGMENT REPORTING

Disaggregation of Revenues

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:

based on revenue type, including (i) solar system installations, (ii) roofing installations, and (iii) energy storage solutions.

The Company’s net revenues for the three months ended March 31,

2026 and 2025 are disaggregated as follows:

Three Months Ended

Nine Months Ended

Solar system installations, net

Roofing installations

Energy storage solutions

Total net revenues

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

Nine Months Ended

cost of revenues (exclusive of depreciation and amortization

shown below):

Cost of revenues (exclusive of depreciation and amortization):

depreciation and amortization related

to cost of revenues

Total gross profit

For the three months ended March 31, 2026 and 2025, the Company had

two and four customers, respectively, that accounted for more than 10% of revenue.

Aggregate revenue from these customers was $ 7,973,865

and $ 7,276,203 for the three months ended March 31, 2026 and 2025, respectively.

Segment Reporting

The Company operates in two operating and reportable

(1) Sunergy, which includes the design, procurement, installation, and servicing of residential solar photovoltaic systems and

related roofing services;

and (2) Heliogen, which includes concentrated solar power and long-duration energy generation and storage technology

solutions for commercial and industrial applications.

The Chief Operating Decision Maker (“CODM”)

evaluates segment performance and allocates resources based on the operating results of each reportable segment, including revenues, cost

of revenues, operating expenses, and net loss.

Prior to the acquisition of Heliogen on August

8, 2025, the Company operated as a single operating and reportable segment consisting of its solar installation and related services operations.

Corporate public company costs and other activities

that are not allocated to Heliogen are included within the Sunergy segment.

Segment information for the three months ended

March 31, 2026 and 2025 is as follows:

Three Months Ended March 31, 2026

Operating expenses

Cost of revenues (1)

Depreciation and amortization

Commissions expense

Sales and marketing (exclusive of commissions expense above)

Sales and marketing (2)

General and administrative

Other income, net

Total operating expenses

Loss from operations

( 3,821,834 )

( 4,765,124 )

Other income (expense)

Interest expense

Gain on change in fair value of warrant

Total net loss before income taxes

Loss on change in fair value of warrant liabilities

Total other income (expense)

Net loss before income taxes

( 3,849,007 )

( 4,783,440 )

Income tax provision

$ ( 3,756,878 )

$ ( 934,433 )

Income tax benefit (provision)

$ ( 4,691,311 )

Three Months Ended March 31, 2026

Total cost of revenues

and marketing

Commissions expense

Other sales and marketing

Total sales and marketing

Three Months Ended March 31, 2025

Operating expenses

Cost of revenues (1)

Depreciation and amortization

Sales and marketing (2)

General and administrative

Total operating expenses

Loss from operations

( 13,511,398 )

Other income (expense)

Interest expense

Loss on change in fair value of warrant liabilities

Total other income (expense)

Net loss before income taxes

( 12,795,863 )

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.

( 12,795,863 )

Income tax provision

$ ( 13,319,363 )

Three Months Ended March 31, 2025

Total cost of revenues

and marketing

Commissions expense

Other sales and marketing

Total sales and marketing

NOTE 4 —PREPAID

EXPENSES AND OTHER CURRENT ASSETS

Prepaid expenses and other current assets as of

March 31, 2026 and December 31, 2025 consisted of the following:

Prepaid expenses

Deferred installation and material costs

Receivable related to Lumio asset purchase

Tax receivables

Employee receivables and advances on sales commissions

Other current assets

Total prepaid expenses and other current assets

NOTE 5 —PROPERTY

AND EQUIPMENT

Property and equipment as of September 30, 2025

and December 31, 2024 consisted of the following:

September 30,

Property and equipment as of March 31, 2026 and

December 31, 2025 consisted of the following:

Internally-developed software

Office furniture and equipment

Transportation equipment

Leasehold improvements

5 unchanged sentences

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

Intangible assets as of September 30, 2025 and

December 31, 2024 consisted of the following:

September 30,

Customer lists

Order backlog

Total intangible assets

accumulated amortization

( 14,613,721 )

( 7,042,565 )

Total intangible assets, net

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.

March 31, 2026 and 2025 was $ 1,047,410 and $ 219,259 , respectively.

During the three months ended March 31, 2026,

the Company committed to a plan to abandon certain internally-developed software that had been placed into service.

In accordance with

ASC 350-40, the Company reassessed the remaining useful life of the software and accelerated the amortization to reflect the shortened

period of expected use.

As a result, the Company recognized additional depreciation expense of $ 833,014 during the three months ended

March 31, 2026, which reduced the net carrying value of the internally-developed software to zero.

The gross cost of $ 1,286,879 and related

accumulated depreciation were removed from the condensed consolidated balance sheet upon retirement of the asset.

NOTE 6 —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,

Accrued expenses and other current liabilities as of March 31, 2026

and December 31, 2025 consisted of the following:

Accrued payroll liabilities

Accrued commissions

Accrued interest

Accrued taxes

Accrued credit cards

Accrued transaction costs

Other accrued liabilities

1 unchanged sentence

Accrued expenses and other current liabilities

– related parties as of September 30, 2025 and December 31, 2024 consisted of the following:

September 30,

– related parties as of March 31, 2026 and December 31, 2025 consisted of the following:

Customer advances

Total accrued expenses and other current liabilities –

related parties

Total accrued expenses and other current liabilities – related parties

NOTE 7 —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.

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 .

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,

Operating leases as of March 31, 2026 and December

31, 2025 consisted of the following:

2026 December 31,

5 unchanged sentences

Weighted-average discount rate 4.96 % 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:

The components of operating lease expense consist

of the following for the three months ended March 31, 2026 and 2025:

Fixed operating lease expense

Short-term and variable operating lease expense

Total net operating lease expense

For the three months ended March 31, 2026 and

2025, cash paid for amounts included in the measurement of operating lease liabilities totaled $ 192,763 and $ 180,784 , respectively.

As of March 31, 2026, future minimum lease payments

under operating lease liabilities were as follows:

Year Ending December 31,

3 unchanged sentences

Finance Leases

As of September 30, 2025, maturities of finance

lease liabilities were as follows:

Finance leases ROU assets and liabilities as of

March 31, 2026 and December 31, 2025 consisted of the following:

2026 December 31,

Finance lease right-of-use assets $ 276,421 $ 310,539

Finance lease liabilities, current portion 145,767 142,095

Finance lease liabilities, long-term 171,017 208,865

Total finance lease liabilities $ 316,784 $ 350,960

Weighted-average remaining lease term (years) 2.03 2.28

Weighted-average discount rate 9.76 % 9.76 %

Finance lease costs included in depreciation and

amortization in the condensed consolidated statements of operations were $ 34,118 and $ 34,119 for the three months ended March 31, 2026

and 2025, respectively.

Interest expense related to finance leases was $ 8,717 and $ 11,174 for the three months ended March 31, 2026 and

2025, respectively.

For the three months ended March 31, 2026 and 2025, cash paid for amounts included in the measurement of finance lease

liabilities and interest expense totaled $ 42,893 and $ 42,870 , respectively.

As of March 31, 2026, future minimum lease payments

under finance leases were as follows:

Year Ending December 31,

2 unchanged sentences

Total finance lease liabilities

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 %.

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,

2025 (remaining)

current portion

Total long-term debt

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.

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.

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.

Company’s stock price on the date the note was entered into, the computed effective interest rate on the loan was 58.5 %.

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.

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

Warrant liabilities

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:

Warrant Liabilities

Balance as of December 31, 2024

Gain on change in fair value of warrant liabilities

Extinguishment of warrant liabilities upon settlement

Balance as of September 30, 2025

NOTE 8 —RELATED

PARTY TRANSACTIONS

Solar Leasing Arrangements

Certain customers of the Company finance their

solar energy system purchases through Solar Leasing I, LLC (“SLI”).

These arrangements are substantially similar to those

with unrelated third-party financing providers.

For the three months ended March 31, 2026 and 2025, the Company recognized

related party revenue of $ 1,029,423 and $ 2,567,304 , respectively.

As of March 31, 2026 and December 31, 2025, the Company had accounts

receivable of $ 765,757 and $ 611,807 , respectively, due from SLI related to these arrangements.

In August 2024, the Company entered into a guarantee

of SLI’s obligations under a Business Loan Agreement between SLI and a bank for borrowings up to $ 10 million.

The loan is also personally

guaranteed by the Company’s CEO, who serves as the manager of SLI through White Horse Energy, LLC (“White Horse”).

of March 31, 2026 and December 31, 2025, the outstanding balance under the loan was $ 9,937,246 and $ 9,976,752 , respectively.

Note Receivable

During 2025, SLI performed a fair-market-value

assessment of certain lease assets.

As a result of this assessment, SLI paid a discretionary rebate of $ 3,150,000 to the Company based

on the excess of fair value over the carrying value of the assets.

The Company subsequently transferred the rebate proceeds as a subordinated

loan, recorded as a note receivable from White Horse.

On January 30, 2026, 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.

For the three months ended March 31, 2026 and 2025, the Company recognized

interest income of $ 39,584 and $ 37,656 , respectively, related to the note receivable, which is included in other income in the condensed

consolidated statements of operations.

As of March 31, 2026, the outstanding principal balance of the loan was $ 6,150,000 with accrued

interest of $ 193,069 .

As of December 31, 2025, the outstanding principal balance of the loan was $ 3,000,000 with accrued interest of $ 153,485 .

The outstanding principal and accrued interest balances are included in note receivable – related parties in the condensed consolidated

balance sheets.

Tax Receivable Agreement

In connection with the consummation of the Sunergy

business combination on March 13, 2024, the Company entered into a TRA with OpCo and certain OpCo members (the “TRA Holders”).

Pursuant to the TRA, the Company 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 taxes that the Company actually realizes, or is deemed to realize in certain circumstances, as a result of increases

in tax basis and certain other tax attributes arising from the Sunergy business combination and related transactions.

As of March 31, 2026, the Company had not recorded

a liability related to the TRA because realization of the related tax benefits was not considered more likely than not.

The estimated

unrecorded TRA liability was approximately $ 4.6 million as of March 31, 2026 and $ 5.7 million as of December 31, 2025.

If realization

of the related tax benefits becomes more likely than not in future periods, the Company will record a liability related to the TRA with

a corresponding charge to expense in the condensed consolidated statements of operations.

NOTE 9 —COMMITMENTS

AND CONTINGENCIES

From time to time, the Company may be involved in various claims, lawsuits,

and legal proceedings arising in the ordinary course of business.

The Company records a liability for loss contingencies when it is probable

that a loss has been incurred and the amount of the loss can be reasonably estimated in accordance with ASC 450.

On July 3, 2025, the Company filed a civil complaint

in the California Superior Court, Riverside County, in an action captioned Zeo Energy Corp.

SolWerks, Inc.

and SolKraft, Inc., Case

CVME2507379 .

The complaint asserts a claim for breach of contract and nonpayment of no less than $ 955,914 for residential solar

installation services performed between 2020 and 2024.

The Company is the successor-in-interest to Lift Energy Construction, Inc.

Lumio HX, Inc., having acquired all rights under the parties’ Master Installation Agreement and related accounts receivable pursuant

to a November 1, 2024 bankruptcy sales order.

The parties are currently engaged in discovery and the defendants have asserted no counterclaims

at this time.

The Company anticipates recovery from SolKraft;

however, it is too early to assess the likely outcome or range of potential

recovery as of March 31, 2026.

As of March 31, 2026 and December 31, 2025, the Company was not aware

of any pending or threatened legal proceedings against the Company that it believes would have a material adverse effect on the Company’s

consolidated financial position, results of operations, or cash flows.

Legal costs associated with loss contingencies are expensed as

NOTE 10 —REDEEMABLE

NON-CONTROLLING INTERESTS AND EQUITY

The table below reflects share information about

the Company’s capital stock as of September 30, 2025:

Treasury Stock

NONCONTROLLING INTERESTS AND EQUITY

The table below reflects share information about the Company’s

capital stock as of March 31, 2026:

Class A common stock

Class V common stock

Preferred stock

Class A convertible preferred units

Class A units

Class B units

Class A common stock, Class V common stock, and

preferred stock represent capital stock of Zeo.

Class A convertible preferred units, Class A units, and Class B units represent limited

liability company interests of OpCo.

Class A convertible preferred units are held by the Sponsor and are classified as redeemable noncontrolling

interests on the condensed consolidated balance sheet.

Class B units are exchangeable for shares of Class A common stock on a one-for-one

basis, together with cancellation of an equal number of shares of Class V common stock, and are classified as redeemable noncontrolling

interests on the condensed consolidated balance sheet.

Class A units are held by Zeo as managing member of OpCo and are eliminated in

consolidation.

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.

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.

During the three months ended March 31, 2026,

1,500,000 shares of Class A common stock were issued in exchange for OpCo Class B units and the cancellation of corresponding shares of

Class V common stock.

During the three months ended March 31, 2026,

31,793 shares of Class A common stock were issued to an employee for services valued at $ 31,315 .

On January 27, 2026, the Company entered into the White Lion ELOC with

White Lion Capital LLC (“White Lion”), pursuant to which the Company has the right, but not the obligation, to sell to White

Lion up to $ 30.0 million in aggregate gross purchase price of newly issued shares of Class A common stock, subject to certain limitations

and conditions, over a period ending on the earlier of January 27, 2029 or the purchase of the full commitment amount.

The Company’s

ability to issue shares under the White Lion ELOC is subject to certain limitations, including Nasdaq stockholder approval requirements

and beneficial ownership limitations under the agreement.

As a result, the actual amount available under the facility may be significantly

less than the stated $ 30.0 million commitment amount depending on the Company’s stock price and shares available for issuance.

Specifically,

the White Lion ELOC is limited to selling shares equal to 4.99 % of the outstanding shares at the time of sale and resets once White Lion

Capital LLC liquidates their holdings in the open market.

In consideration for the commitment, the Company agreed to issue 66,225 shares

of Class A common stock to White Lion with a fair value of $ 100,000 .

Concurrently, the Company entered into a Registration Rights Agreement

with White Lion.

During the three months ended March 31, 2026, the Company sold 241,000 shares of Class A common stock under the White

Lion ELOC for gross proceeds of $ 272,020 .

Offering costs of $ 258,565 , including registration and legal costs associated with the facility,

were offset against the proceeds, resulting in net proceeds of $ 13,455 .

On March 13, 2026, 46,175 shares of Class A common

stock, net of tax withholding, were issued upon vesting of restricted stock awards granted in March 2024.

See Note 11—Stock-Based

Compensation for additional information.

On February 5, 2026, 73,876 shares of Class A

common stock, net of tax withholding, were issued upon vesting of restricted stock awards granted in February 2025.

See Note 11—Stock-Based

Compensation for additional information.

Redeemable Noncontrolling Interests

During the three months ended March 31, 2026,

1,500,000 OpCo units were exchanged for shares of the Company’s Class A common stock.

As a result, as of March 31, 2026, 21,380,000

OpCo units remained outstanding.

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

OpCo units may exchange their units, together with the cancellation of a corresponding number of shares of Class V common stock, for shares

of the Company’s Class A common stock on a one-for-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

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.

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.

of OpCo units for cash must be funded through a private or public offering of Class A common stock and is subject to approval by the Company’s

Board of Directors.

Future exchanges of OpCo units may generate incremental tax attributes and related cash tax savings for the Company.

Pursuant to the TRA, the Company is generally required to pay the TRA holders 85 % of the net cash tax savings realized as a result of

increases in tax basis and certain other tax attributes arising from such exchanges.

See Note 8—Related Party Transactions

for additional information regarding the TRA.

As of March 31, 2026 and December 31, 2025, the

noncontrolling interest holders owned approximately 37.8 % and 40.8 %, respectively, of the outstanding OpCo common units.

The OpCo amended and restated agreement provides,

among other things, for the issuance of corresponding economic, non-voting Class B units of OpCo.

Holders of exchangeable OpCo units may

cause OpCo to redeem one or more units, together with the cancellation of a corresponding number of shares of the Company’s Class

V common stock, for shares of the Company’s Class A common stock on a one-for-one basis, subject to certain restrictions.

certain circumstances, the Company may be required to redeem OpCo units.

Subject to certain conditions, the Class A convertible preferred

OpCo units may be redeemed by the Company following the first anniversary of closing and converted by the Sponsor into exchangeable OpCo

units, which may then be exchanged for Class A common stock.

The Class A convertible preferred units accrue

distributions at a rate of 10 % per annum.

During the three months ended March 31, 2026, the Company recognized $ 432,398 of preferred unit

distributions and paid cash distributions of $ 160,153 to holders of the Class A preferred units.

The financial results of OpCo are consolidated

with those of the Company, with the redeemable noncontrolling interests’ share of net loss presented separately in the condensed

consolidated financial statements.

NOTE 11 —STOCK-BASED

1 unchanged sentence

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;

● 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.

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.

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;

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;

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;

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.

Sun Managers, LLC Management Incentive

the Zeo 2024 Omnibus Incentive Equity Plan (the “Incentive Plan”), which became effective upon the closing of the Sunergy

business combination.

A total of 3,220,400 shares of Class A common stock were initially reserved for issuance under the Incentive Plan

(the “Plan Share Reserve”).

Each award granted under the Incentive Plan reduces the Plan Share Reserve by the number of shares

underlying the award.

The Plan Share Reserve automatically increases

on the first day of each fiscal year beginning in 2025 through 2029 by a number of shares equal to the lesser of (i) 2 % of the outstanding

shares of common stock on the last day of the immediately preceding fiscal year or (ii) a lesser number of shares determined by the Board

of Directors.

The purpose of the Incentive Plan is to enable the Company and its subsidiaries to attract and retain key personnel and

to align the interests of directors, officers, employees, consultants, and advisors with those of the Company’s stockholders through

equity-based compensation.

The following table summarizes restricted stock

unit activity under the Incentive Plan for the three months ended March 31, 2026:

Outstanding at December 31, 2025

Outstanding at March 31, 2026

The following table summarizes equity compensation

expense and remaining unrecognized compensation cost for grants outstanding under the Incentive Plan during the three months ended March

31, 2026 and 2025:

Stock-Based Compensation Expense

Three Months Ended

March 31, Unrecognized Weighted-

Grant Date 2026 2025 Expense Life

March 13, 2024 $ 87,359 $ 718,674 $ 329,886 0.87

February 5, 2025 177,648 189,499 1,160,229 1.85

July 5, 2025 19,492 –

November 5, 2025 8,974 –

Total $ 293,473 $ 908,173 $ 1,763,639 1.06

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.

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”))

Plan and the OpCo amended and restated limited liability company agreement in its entirety (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

1 unchanged sentence

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.

Although Sun Managers is the legal issuer of the

awards, all compensatory payments made by Sun Managers to individuals providing services to or for the benefit of the Company or its subsidiaries

(including equity interests in Sun Managers) are treated as compensation paid by the Company under ASC 718.

In accordance with the OpCo

A&R LLC Agreement, 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, 2026, Sun Managers granted an aggregate

of 527,953 restricted shares of Zeo Class A common stock under the Management Incentive Plan to five employees.

The restricted shares

vested immediately upon grant.

During the three months ended March 31, 2026, the Company recognized $ 303,045 in equity compensation expense

related to these awards.

Seasonal Manager Stock Compensation Plan

3 unchanged sentences

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.

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 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

2 unchanged sentences

● The remaining 50 % of the shares for which Manager becomes eligible during a calendar year are granted in the Q1 of the second year following the calendar year in which eligibility is earned (the “Tranche 2 Grant”) if Manager remains eligible at the time of the grant.

On March 31, 2025, Sun Managers LLC granted an

aggregate of 577,910 restricted shares of Zeo class A common stock under the Management Incentive Plan to 10 sales managers.

The restricted

shares vest in two equal installments as follows.

One-half (1/2) immediately

on the grant date;

One-half (1/2) on the date

that is 12 months following the grant date.

During the three 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

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.

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”).

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.

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:

On March 31, 2026, Sun Managers granted an aggregate

of 355,264 restricted shares of Zeo Class A common stock under the Management Incentive Plan to six sales managers.

The restricted shares

vest in two equal installments as follows.

One-half (1/2) immediately on the grant date;

One-half (1/2) 12 months following the grant date.

The following table summarizes equity compensation

expense and remaining unrecognized compensation cost for grants outstanding under the Seasonal Manager Compensation Plan during the three

months ended March 31, 2026 and 2025:

Stock-Based Compensation Expense

Three Months Ended

Nine Months Ended

Net loss attributable to

class A common stockholders

$ ( 3,225,020 )

$ ( 424,262 )

$ ( 12,002,121 )

$ ( 2,233,543 )

Weighted-average class A common shares

outstanding – basic and diluted

Loss per class A common share –

basic and diluted

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

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.

March 31, Unrecognized Weighted-

Grant Date 2026 2025 Expense Life

March 31, 2025 $ ( 35,426 ) $ 436,323 $ –

March 31, 2026 101,961 –

Total $ 66,535 $ 436,323 $ 101,961 1.00

The negative compensation expense for the three

months ended March 31, 2026 reflects the forfeiture and recapture of previously recognized compensation cost resulting from the termination

of three sales managers prior to vesting.

12 —FAIR VALUE MEASUREMENTS

The carrying amounts of the Company’s financial

instruments, including cash and cash equivalents, accounts receivable, inventories, prepaid expenses and other current assets, accounts

payable, accrued expenses, and contract assets and liabilities, approximate fair value due to the short-term nature of these instruments.

The carrying amounts of lease liabilities and

notes payable also approximate fair value as these instruments bear interest rates that are consistent with current market rates for similar

Recurring Fair Value Measurements

The Company measures certain financial instruments

at fair value on a recurring basis.

As of March 31, 2026, the Company’s financial instruments measured at fair value on a recurring

basis consist of warrant liabilities.

The fair value of financial instruments measured

at fair value on a recurring basis as of March 31, 2026 consisted of the following:

Fair Value Measurements as of

March 31, 2026

Warrant liabilities

The following table presents changes in the Company’s

warrant liabilities measured at fair value on a recurring basis:

Warrant Liabilities

Balance as of December 31, 2025

Loss on change in fair value of warrant liabilities

Extinguishment of warrant liabilities upon settlement

Balance as of March 31, 2026

NOTE 13 —INCOME

The Company accounts for income taxes in accordance

with ASC 740, which requires the recognition of deferred tax assets and liabilities for the expected future tax consequences of events

that have been included in the condensed consolidated financial statements.

Deferred tax assets and liabilities are determined based on

differences between the financial statement carrying amounts and the tax bases of existing assets and liabilities and are measured using

enacted tax rates expected to apply in the years in which those temporary differences are expected to reverse.

The Company’s effective tax rate was a 2.3 %

benefit and ( 3.9 )% provision for the three months ended March 31, 2026 and 2025, respectively.

The effective tax rate differs from the

federal statutory tax rate primarily due to the noncontrolling interest ownership in OpCo, which is treated as a partnership for

federal income tax purposes, as well as changes in the valuation allowance on deferred tax assets.

The Company evaluated the realizability of its

deferred tax assets based on all available positive and negative evidence.

Based on this evaluation, the Company determined that it is

not more likely than not that certain deferred tax assets will be realized and therefore recorded a valuation allowance against those

deferred tax assets as of March 31, 2026 and December 31, 2025.

Due to the Company’s Up-C organizational

structure, a portion of the Company’s earnings is attributable to noncontrolling interests in OpCo, which is treated as a partnership

federal income tax purposes.

Accordingly, income attributable to these noncontrolling interests is generally not subject to corporate-level

income taxes, which reduces the Company’s overall effective tax rate.

The components of the deferred income tax assets

and liabilities were as follows:

September 30,

Other Asset assets:

Deferred tax assets:

Net operating losses and tax credit carry-forward

Accrued stock compensation

Section 743(b)

Investment in Sunergy

Total deferred tax assets

Valuation allowance

( 10,561,618 )

Net deferred tax asset

Deferred tax liabilities

Net deferred tax assets and liabilities

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.

( 11,398,158 )

Net deferred tax assets

LOSS PER SHARE

Basic net loss per share is calculated by dividing

net loss attributable to Class A common stockholders by the weighted-average number of Class A common shares outstanding during the period.

Diluted net loss per share is calculated by adjusting the weighted-average number of Class A common shares outstanding for the potentially

dilutive effect of securities that could be converted into or settled in shares of Class A common stock.

Potentially dilutive securities

include exchangeable OpCo units and other instruments that may be settled in shares of Class A common stock.

The Company applies the treasury stock method

to restricted stock awards and warrants, which assumes that all Class A common share equivalents have been exercised at the beginning

of the period and that the proceeds from those exercises are assumed to be used to repurchase Class A common shares at the average closing

market price during the period.

The Company applies the if-converted method to securities that are convertible into Class A common shares.

For the three months ended March 31, 2026 and

2025, the Company reported a net loss.

Accordingly, all potentially dilutive securities were excluded from the calculation of diluted

net loss per share because their effect would be anti-dilutive, and diluted net loss per share equals basic net loss per share.

March 31, 2026 and 2025, 37,495,002 and 43,221,852 potential common share equivalents, respectively, consisting of convertible OpCo Class

A Preferred Units, exchangeable OpCo Class B units, convertible notes, warrants, and restricted stock awards, were excluded from the calculation

of diluted net loss per share because their effect would be anti-dilutive.

The following table presents the computation of

the basic and diluted loss per share of Class A common stock for the three months ended March 31, 2026 and 2025:

Three Months Ended

Net loss attributable to Class A common stockholders

$ ( 3,512,674 )

$ ( 6,361,265 )

Weighted-average Class A common shares outstanding – basic and diluted

Loss per Class A common share – basic and diluted

NOTE 15 —SUBSEQUENT

On April 23, 2026, the Company received a letter

from the Listing Qualifications Staff of The Nasdaq Stock Market LLC (“Nasdaq”) indicating that, based upon the closing bid

price of the Company’s Class A common stock for the last 30 consecutive business days, the Company no longer meets Nasdaq Listing

Rule 5550(a)(2), which requires listed companies to maintain a minimum bid price of at least $ 1 per share.

Nasdaq Listing Rule 5810(c)(3)(A)

provides a compliance period of 180 calendar days, or until October 20, 2026, in which to regain compliance with the minimum bid price

If the Company evidences a closing bid price of at least $ 1 per share for a minimum of 10 consecutive business days during

the 180-day compliance period, the Company will automatically regain compliance.

In the event the Company does not regain compliance with

the $ 1 bid price requirement by October 14, 2026, the Company may be eligible for consideration of a second 180 -day compliance period

if it meets the continued listing requirement for market value of publicly held shares and all other initial listing standards for Nasdaq’s

Capital Market, other than the minimum bid price requirement.

In addition, the Company would also be required to notify Nasdaq of its

intent to cure the minimum bid price deficiency.

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

What changed 10-Q

Item 1. Financial Statements