What changed in this filing

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Item 1. Financial Statements

2026-08-14 compared with 2026-05-15 · 666 added, 340 removed, 529 unchanged (66% of the section changed)

2 unchanged sentences

UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

Financial Statements (Unaudited)

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

Statements (Unaudited)

Consolidated Balance Sheets as of June 30, 2026 and December 31, 2025

Consolidated Statements of Operations and Comprehensive Loss for the Three and Six Months Ended June 30, 2026 and

Consolidated Statements of Changes in Redeemable Non-Controlling Interests and Stockholders’ Equity for the Three and Six Months

Ended June 30, 2026 and 2025

Consolidated Statements of Cash Flows for the Six Months Ended June 30, 2026 and 2025

to Condensed Consolidated Financial Statements

ZEO ENERGY CORP.

3 unchanged sentences

Accounts receivable, net of allowance of $ 2,010,535 and $ 4,777,550 , respectively

Accounts receivable – related parties

Accounts receivable – related party

Contract assets

9 unchanged sentences

Accrued expenses and other current liabilities

Accrued expenses and other current liabilities – related parties

Customer advances – related party

Contract liabilities

6 unchanged sentences

Long-term debt, net of current portion

Convertible note, net

Derivative liability

Warrant liabilities

1 unchanged sentence

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

Class A convertible preferred units, 1,500,000 units issued and outstanding as of June 30, 2026 and December 31, 2025

Class B units, 21,380,000 and 22,880,000 units issued and outstanding as of June 30, 2026 and December 31, 2025, respectively

Stockholders’ Equity

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

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

22,880,000 and 24,380,000 shares issued and outstanding as of June 30, 2026 and December 31, 2025, respectively

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

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

35,399,972 and 33,180,843 shares issued and outstanding as of June 30, 2026 and December 31, 2025, respectively

Additional paid-in capital

Accumulated other comprehensive loss

Accumulated other comprehensive income (loss)

Accumulated deficit

6 unchanged sentences

ZEO ENERGY CORP.

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

CONDENSED CONSOLIDATED STATEMENTS OF

OPERATIONS AND COMPREHENSIVE LOSS

Three Months Ended

Six Months Ended

Related party revenue, net

9 unchanged sentences

( 2,853,506 )

( 7,754,079 )

( 16,364,904 )

Other Income (Expense)

Interest expense

Gain on change in fair value of derivative liability

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

Total Other Income (Expense)

NET LOSS FROM OPERATIONS BEFORE INCOME TAXES

NET LOSS BEFORE INCOME TAXES

( 2,653,184 )

( 2,866,458 )

( 7,436,624 )

( 15,662,321 )

Income tax benefit (provision)

1 unchanged sentence

$ ( 2,679,464 )

Net loss attributable to redeemable noncontrolling interests

$ ( 7,441,277 )

$ ( 15,998,827 )

Net loss attributable to redeemable non-controlling interests

( 1,593,373 )

( 7,221,726 )

NET LOSS ATTRIBUTABLE TO CLASS A COMMON STOCKHOLDERS

1 unchanged sentence

$ ( 2,415,836 )

LOSS PER CLASS A COMMON SHARE – BASIC AND DILUTED

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

COMPREHENSIVE LOSS

$ ( 5,847,904 )

$ ( 8,777,101 )

LOSS PER CLASS A COMMON SHARE

BASIC AND DILUTED

WEIGHTED-AVERAGE CLASS A COMMON SHARES OUTSTANDING

COMPREHENSIVE INCOME

Foreign currency translation adjustments

2 unchanged sentences

$ ( 2,415,836 )

$ ( 5,827,111 )

$ ( 8,777,101 )

The accompanying notes are an integral part

3 unchanged sentences

OF CHANGES IN REDEEMABLE

NONCONTROLLING INTERESTS AND STOCKHOLDERS’ EQUITY (DEFICIT)

FOR THE THREE MONTHS ENDED MARCH

Noncontrolling Interests

A Convertible

NONCONTROLLING INTERESTS AND STOCKHOLDERS’ EQUITY

FOR THE THREE AND SIX MONTHS ENDED

JUNE 30, 2026

Redeemable Noncontrolling Interests

Class A Convertible

Preferred Units

Class B Units

Comprehensive

Total Stockholders’

Stockholders’

Balance, December 31, 2025

$ ( 58,064,985 )

Stock-based compensation

Class A common stock issued upon vesting of restricted stock awards

Tax withholding paid related to stock-based compensation

Class A common stock issued to employees for services

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

( 1,500,000 )

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

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

Class A common stock issued for a commitment fee

Dividends paid to preferred unit holders

Foreign currency translation

Subsequent measurement of redeemable noncontrolling interests

( 10,183,045 )

Net income loss

( 1,611,035 )

( 3,512,674 )

Subsequent measurement of

redeemable noncontrolling interests

( 3,512,674 )

income (loss)

Balance, March 31, 2026

$ ( 51,394,614 )

Stock-based compensation

Class A common stock issued upon vesting of restricted stock awards

Tax withholding paid related to stock-based compensation

Foreign currency translation

Subsequent measurement of redeemable noncontrolling interests

( 2,707,549 )

March 31, 2025

( 2,335,230 )

Balance, June 30, 2026

$ ( 56,437,393 )

ZEO ENERGY CORP.

1 unchanged sentence

OF CHANGES IN REDEEMABLE

NONCONTROLLING INTERESTS AND STOCKHOLDERS’ EQUITY

FOR THE THREE MONTHS ENDED MARCH

Noncontrolling Interests

A Convertible

NONCONTROLLING INTERESTS AND STOCKHOLDERS’ EQUITY (DEFICIT)

FOR THE THREE AND SIX MONTHS ENDED

JUNE 30, 2025

Redeemable Noncontrolling Interests

Class A Convertible

Preferred Units

Class B Units

Comprehensive

Stockholders’

December 31, 2025

Total Stockholders’

Balance, December 31, 2024

$ 115,693,900

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

$ ( 103,440,891 )

$ ( 88,912,079 )

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

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 )

income (loss)

( 8,500,000 )

Subsequent measurement of redeemable noncontrolling interests

( 6,361,265 )

March 31, 2026

Balance, March 31, 2025

$ ( 58,353,892 )

$ ( 23,077,815 )

Stock-based compensation

Class A common stock issued upon vesting of restricted stock awards

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

Subsequent measurement of redeemable noncontrolling interests

( 35,448,793 )

( 2,415,836 )

Balance, June 30, 2025

$ ( 96,218,521 )

$ ( 59,446,742 )

The accompanying notes are an integral part

2 unchanged sentences

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

Three Months Ended

Six Months Ended

CASH FLOWS FROM OPERATING ACTIVITIES

4 unchanged sentences

Amortization of debt discount

Interest added to note receivable – related party

Gain on change in fair value of derivative liability

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

6 unchanged sentences

( 2,327,874 )

Accounts receivable – related parties

Accounts receivable – related party

Contract assets

Contract assets – related party

( 2,705,295 )

Prepaids and other current assets

Interest receivable – related parties

( 1,005,197 )

Accounts payable

1 unchanged sentence

( 1,038,671 )

Accrued expenses and other current liabilities – related parties

Customer advances – related party

( 2,000,674 )

Contract liabilities

Contract liabilities – related parties

( 1,057,360 )

Contract liabilities – related party

Operating lease payments

1 unchanged sentence

( 1,314,288 )

( 4,549,934 )

CASH FLOWS FROM INVESTING ACTIVITIES

6 unchanged sentences

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

Net proceeds from convertible note

Debt issuance costs paid

Repayments of finance lease liabilities

2 unchanged sentences

Tax withholdings paid related to stock-based compensation

Net cash used in financing activities

Net cash provided by (used in) financing activities

Effect of foreign exchange on cash

16 unchanged sentences

Reverse recapitalization related deferred taxes and adjustments

Fair value of derivative liability recognized upon issuance of convertible note

Original issue discount on convertible note

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

The accompanying notes are an integral part

3 unchanged sentences

OF PRESENTATION AND OTHER INFORMATION

Zeo Energy Corp.

(together with its consolidated

subsidiaries, the “Company” or “Zeo”) is a diversified clean energy company providing residential, commercial,

industrial, and utility-scale solutions that seek to reduce costs and carbon emissions.

As further described in Note 3, Zeo, based in

Florida, operates Sunergy Renewables, LLC and its subsidiaries (collectively, “Sunergy”), a residential solar, distributed

energy, and efficiency solutions business.

It also operates Heliogen, Inc.

and its subsidiaries (“Heliogen”), a long-duration

energy generation and storage business focused on delivering renewable power for energy-intensive applications such as data centers and

industrial facilities.

The accompanying unaudited condensed consolidated

financial statements of Zeo Energy Corp.

(the “Company” or “Zeo”) have been prepared in accordance with accounting

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

GAAP”) for interim financial information and with the

instructions to Form 10-Q of Regulation S-X.

financial statements of the Company have been prepared in accordance with accounting principles generally accepted in the United States

of America (“U.S.

GAAP”) for interim financial information and with the instructions to Form 10-Q and Rule 10-01 of Regulation

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.

GAAP for complete financial statements.

The December 31, 2025

consolidated balance sheet data was derived from audited financial statements but does not include all disclosures required by U.S.

The interim unaudited condensed consolidated financial statements should be read in conjunction with the consolidated financial statements

included in the Company’s Annual Report on Form 10-K for the year ended December 31, 2025, as filed with the Securities and Exchange

Commission on April 1, 2026.

In the opinion of management, all adjustments considered necessary for a fair presentation of the financial

statements, consisting solely of normal recurring adjustments, have been made.

Operating results for the six months ended June 30, 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 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.

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.

Embedded Derivative Liabilities

The Company evaluates the embedded features of

its financial instruments, including convertible notes payable, in accordance with ASC 480, “ Distinguishing Liabilities from

Equity ,” and ASC 815, “ Derivatives and Hedging .” Certain conversion options and redemption features are required

to be bifurcated from their host instrument and accounted for separately as derivative financial instruments when certain criteria are

The Company applies significant judgment to identify and evaluate complex terms and conditions for its financial instruments to determine

whether such instruments are derivatives or contain features that qualify as embedded derivatives.

Bifurcated embedded derivatives are

recognized at fair value, with changes in fair value recognized in the condensed consolidated statements of operations each period.

Recently Adopted Accounting Pronouncements

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.

In November 2024, the Financial Accounting Standards

Board (“FASB”) issued Accounting Standards Update (“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 annual reporting 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.

The adoption of ASU 2024-04 did not

have a material impact on the Company’s 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 adoption of ASU 2025-05 did not have a material impact on the Company’s condensed

consolidated financial statements.

Recently Issued Accounting Pronouncements

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

In May 2025, the FASB issued ASU 2025-04, “ Compensation—Stock

Compensation (ASC Topic 718) and Revenue from Contracts with Customers (ASC Topic 606) ,” which clarifies the accounting for

share-based payments granted to customers, including classification of performance conditions, treatment of forfeitures, and application

of the variable consideration constraint.

The guidance will first be effective in annual disclosures for the year ending December 31,

2027, and may be applied prospectively or retrospectively.

Early adoption is permitted.

The Company is currently evaluating the impact

ASU 2025-04 will have on its condensed consolidated financial statements.

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

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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

As of June 30, 2026, the Company had cash and

cash equivalents of $ 2.5 million, positive working capital of $ 7.1 million, and total stockholders’ equity of $ 9.3 million.

the six months ended June 30, 2026, the Company incurred a net loss of $ 7.4 million and used $ 1.3 million of cash in operating activities.

Management has assessed the going concern assumptions of the Company during the preparation of these condensed consolidated financial

The Company has operational plans to increase

revenue and move towards the goal of positive cash flow from operations in the foreseeable future.

The operational plan includes increasing

the number of sales agents to increase revenue and improving 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.

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 (the “White Lion ELOC”)

with White Lion Capital LLC (“White Lion”), which provides the Company the right to sell up to $ 30.0 million in shares of

Class A common stock to White Lion, subject to market liquidity and contractual limitations.

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 liquidates its holdings in the open market

(see Note 12—Redeemable Noncontrolling Interests and Equity for additional information).

The amount the Company can raise

under the White Lion ELOC in any period is practically limited by the trading volume and market price of the Company’s Class A common

stock and the number of shares registered for resale;

based on the shares currently registered and recent market prices, the Company estimates

that approximately $ 6.5 million is currently accessible under the facility.

In addition, under the Note Purchase Agreement with White

Lion described in Note 8—Debt , up to $ 6.0 million of additional gross proceeds may be funded at one or more additional closings,

although any additional closing requires the mutual written agreement of the Company and White Lion.

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, the Company may utilize a universal shelf registration statement to gain access to funding.

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

2 unchanged sentences

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:

The Company’s net revenues for the three

and six months ended June 30, 2026 and 2025 are disaggregated as follows:

Three Months Ended

Six Months Ended

Solar system installations, net

Roofing installations

Energy storage solutions

Total net revenues

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.

For the three months ended June 30, 2026 and 2025,

the Company had one and two customers, respectively, that accounted for more than 10% of total net revenues.

Aggregate revenue from these

customers was $ 13,366,980 and $ 13,459,112 for the three months ended June 30, 2026 and 2025, respectively.

For the six months ended June 30, 2026 and 2025,

the Company had two customers that accounted for more than 10% of total net revenues.

Aggregate revenue from these customers was $ 22,881,768

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

and $ 19,628,750 for the six months ended June 30, 2026 and 2025, respectively.

Segment Reporting

4 unchanged sentences

solutions for commercial and industrial applications.

The Company’s Chief Executive Officer is

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.

The 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

2 unchanged sentences

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

Segment information for the three months ended June 30, 2026 and 2025

is as follows:

Three Months Ended

June 30, 2026

Operating expenses

9 unchanged sentences

Interest expense

Loss on change in fair value of warrant liabilities

Gain on change in fair value of derivative liability

Gain on change in fair value of warrant liabilities

Total other income (expense)

6 unchanged sentences

$ ( 2,749,966 )

Three Months Ended March 31, 2026

Three Months Ended

June 30, 2026

(1) Cost of revenues

Total cost of revenues

and marketing

(2) Sales and marketing

Commissions expense

1 unchanged sentence

Total sales and marketing

Three Months Ended March 31, 2025

Three Months Ended

June 30, 2025

Operating expenses

5 unchanged sentences

Loss from operations

Other income (expense)

Interest expense

Loss on change in fair value of warrant liabilities

Total other income (expense)

Net loss before income taxes

Income tax provision

Three Months Ended

June 30, 2025

(1) Cost of revenues

Total cost of revenues

(2) Sales and marketing

Commissions expense

Other sales and marketing

Total sales and marketing

Segment information for the six months ended June

30, 2026 and 2025 is as follows:

Six Months Ended

June 30, 2026

Operating expenses

Cost of revenues (1)

Depreciation and amortization

Sales and marketing (2)

General and administrative

Total operating expenses

Loss from operations

( 5,891,477 )

( 1,862,602 )

( 7,754,079 )

Other income (expense)

Interest expense

Gain on change in fair value of derivative liability

Loss on change in fair value of warrant liabilities

3 unchanged sentences

( 1,812,216 )

( 7,436,624 )

Income tax provision

1 unchanged sentence

$ ( 1,810,539 )

Three Months Ended March 31, 2025

$ ( 7,441,277 )

Six Months Ended

June 30, 2026

(1) Cost of revenues

Total cost of revenues

and marketing

(2) Sales and marketing

Commissions expense

1 unchanged sentence

Total sales and marketing

Six Months Ended

June 30, 2025

Operating expenses

Cost of revenues (1)

Depreciation and amortization

Sales and marketing (2)

General and administrative

Total operating expenses

Loss from operations

( 16,364,904 )

Other income (expense)

Interest expense

Gain on change in fair value of warrant liabilities

Total other income (expense)

Net loss before income taxes

( 15,662,321 )

Income tax provision

$ ( 15,998,827 )

Six Months Ended

June 30, 2025

(1) Cost of revenues

Total cost of revenues

(2) Sales and marketing

Commissions expense

Other sales and marketing

Total sales and marketing

NOTE 4 —PREPAID

1 unchanged sentence

Prepaid expenses and other current assets as of

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

June 30, 2026 and December 31, 2025 consisted of the following:

Prepaid expenses

7 unchanged sentences

AND EQUIPMENT

Property and equipment as of March 31, 2026 and

Property and equipment as of June 30, 2026 and

December 31, 2025 consisted of the following:

8 unchanged sentences

Depreciation expense for the three months ended

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.

June 30, 2026 and 2025 was $ 214,053 and $ 213,764 , respectively.

Depreciation expense for the six months ended June 30, 2026 and 2025 was

$ 1,261,463 and $ 433,022 , respectively.

During the six months ended June 30, 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 depreciation to reflect the shortened period

of expected use.

As a result, the Company recognized additional depreciation expense of $ 833,014 during the six months ended June 30,

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 abandonment of the asset.

NOTE 6 —ACCRUED

EXPENSES AND OTHER CURRENT LIABILITIES

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

and December 31, 2025 consisted of the following:

Accrued expenses and other current liabilities

as of June 30, 2026 and December 31, 2025 consisted of the following:

Accrued payroll liabilities

2 unchanged sentences

Accrued credit cards

Accrued interest

Other accrued liabilities

Total accrued expenses and other current liabilities

Accrued expenses and other current liabilities

– 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

NOTE 7 —LEASES

Operating Leases

Operating leases as of March 31, 2026 and December

31, 2025 consisted of the following:

2026 December 31,

Operating lease right-of-use (“ROU”)

assets and liabilities as of June 30, 2026 and December 31, 2025 consisted of the following:

June 30, December 31,

Operating lease right-of-use assets $ 603,128 $ 897,476

5 unchanged sentences

The components of operating lease expense consist

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

of the following for the three and six months ended June 30, 2026 and 2025:

Three Months Ended

Six Months Ended

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

Total operating lease expense

For the three months ended June 30, 2026 and 2025,

cash paid for amounts included in the measurement of operating lease liabilities totaled $ 196,975 and $ 164,507 , respectively.

As of March 31, 2026, future minimum lease payments

under operating lease liabilities were as follows:

six months ended June 30, 2026 and 2025, cash paid for amounts included in the measurement of operating lease liabilities totaled $ 389,738

and $ 345,291 , respectively.

As of June 30, 2026, maturities of operating lease

liabilities were as follows:

Year Ending December 31,

3 unchanged sentences

Finance Leases

Finance leases ROU assets and liabilities as of

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

2026 December 31,

Finance lease ROU assets and liabilities as of

June 30, 2026 and December 31, 2025 consisted of the following:

June 30, December 31,

Finance lease right-of-use assets $ 242,302 $ 310,539

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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

For the three months ended June 30, 2026 and 2025,

finance lease costs included in depreciation and amortization in the condensed consolidated statements of operations were $ 34,118 and

$ 34,118 , respectively, and interest expense related to finance leases was $ 7,832 and $ 10,396 , respectively.

For the three months ended

June 30, 2026 and 2025, cash paid for amounts included in the measurement of finance lease liabilities and interest expense totaled $ 42,893

and $ 42,869 , 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:

For the six months ended June 30, 2026 and 2025,

finance lease costs included in depreciation and amortization in the condensed consolidated statements of operations were $ 68,236 and

$ 68,237 , respectively, and interest expense related to finance leases was $ 16,549 and $ 21,570 , respectively.

For the six months ended

June 30, 2026 and 2025, cash paid for amounts included in the measurement of finance lease liabilities and interest expense totaled $ 85,786

and $ 85,739 , respectively.

As of June 30, 2026, maturities of finance lease

liabilities were as follows:

Year Ending December 31,

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Total finance lease liabilities

White Lion Convertible Note

On June 9, 2026, the Company entered into a Note

Purchase Agreement (the “Note Purchase Agreement”) with White Lion, pursuant to which the Company agreed to issue, and White

Lion agreed to purchase, at one or more closings, unsecured convertible promissory notes in an aggregate funded amount of up to $ 7,500,000

(each a “Convertible Note”).

At the first closing on June 9, 2026, the Company issued to White Lion a Convertible Note in

the principal amount of $ 1,670,000 , reflecting an original issue discount of $ 170,000 , for gross proceeds of $ 1,500,000 .

The Company incurred

$ 57,132 of debt issuance costs, resulting in net proceeds of $ 1,442,868 .

Additional closings for up to $ 6,000,000 of gross proceeds may

occur at any time prior to June 9, 2027 upon the mutual written agreement of the Company and White Lion, subject to customary closing

The Convertible Note matures on June 9, 2028 and

accrues interest at 5 % per annum.

The Convertible Note is convertible, in whole or in part, into shares of Class A common stock at the

option of White Lion at a conversion price per share equal to the greater of (i) $ 0.50 (the “Floor Price”) and (ii) the lesser

of (A) the Nasdaq Minimum Price (as defined under The Nasdaq Stock Market LLC (“Nasdaq”) rules, $ 0.80 as of the issuance date)

and (B) 95 % of the lowest daily volume-weighted average price of the Class A common stock during the five trading days ending on the latest

complete trading day prior to conversion.

The conversion price is subject to customary adjustments for stock splits and similar events

and to adjustment upon certain dilutive issuances below the then-effective conversion price.

The Floor Price will no longer apply if (i)

the Company completes a subsequent equity raise with a party other than White Lion at a price below $ 0.50 , (ii) the average of the daily

volume-weighted average prices of the Class A common stock for thirty consecutive trading days is less than $ 0.50 , or (iii) an event of

default occurs.

Conversions are subject to a beneficial ownership

limitation of 4.99 % (or, at White Lion’s election, 9.99 %) and, pursuant to applicable Nasdaq rules, shares issuable upon conversion

may not exceed 19.99 % of the Company’s outstanding Class A common stock immediately prior to the first closing (the “Conversion

Cap”) unless stockholder approval is obtained.

The Company was obligated to seek stockholder approval for issuances above the Conversion

Cap within 60 days of June 9, 2026.

At the Company’s annual meeting of stockholders held on August 7, 2026, stockholders approved

the issuance of shares of Class A common stock in excess of the Conversion Cap in accordance with Nasdaq Listing Rule 5635(d).

The Convertible

Note is subject to customary events of default;

upon an event of default, subject to applicable cure periods, the principal amount would

automatically increase to 120 % of the then-outstanding principal, plus accrued and unpaid interest, and would become immediately due and

The Company may prepay the Convertible Note at any time, in whole or in part, without premium or penalty, upon at least five

business days ’ written notice, during which period White Lion may exercise its conversion rights.

The Company is also subject to

a “most favored nation” provision in favor of White Lion and restrictions on entering into variable rate transactions and

equity lines of credit with parties other than White Lion without White Lion’s consent.

In addition, White Lion has the right to

require that up to 20% of the proceeds from sales under the White Lion ELOC, warrant exercises, or other securities issuances be applied

to repay the Convertible Note.

Concurrently with the Note Purchase Agreement,

the Company entered into a registration rights agreement (the “Registration Rights Agreement”) with White Lion, pursuant to

which the Company agreed to file, within 30 days following the first closing, a registration statement covering the resale by White Lion

of the shares issuable upon conversion, and which contains customary damages provisions for failure to file or to have the registration

statement declared effective within the specified periods.

The Company did not file the registration statement within the 30-day period.

White Lion subsequently waived this covenant with the expectation that the registration statement will be filed no later than August 31,

The Company evaluated the Convertible Note and

its embedded features in accordance with ASC 480 and ASC 815.

The Company determined that the Convertible Note is not within the scope

of ASC 480 and that certain embedded features, specifically (i) the conversion option, whose conversion price varies with the market price

of the Class A common stock and is subject to the Floor Price, the Nasdaq Minimum Price ceiling, and potential removal of the Floor Price,

(ii) the contingent default provision, under which the principal amount would increase to 120 % of the then-outstanding principal plus

accrued and unpaid interest and become immediately due and payable, and (iii) the contingent put right arising upon certain fundamental

transactions, are required to be bifurcated from the debt host.

These features meet the definition of a derivative and do not qualify

for a derivative accounting scope exception.

Consequently, these embedded features were bifurcated from the debt host as a single compound

embedded derivative liability.

See Note 9—Fair Value Measurements for additional information.

The initial fair value of the derivative liability

was determined using a Monte Carlo simulation valuation model, considering various potential outcomes and scenarios.

The model used the

following assumptions:

(i) dividend yield of 0 %;

(ii) expected volatility of 154.69 %;

(iii) risk-free interest rate of 4.13 %;

(iv) simulated

term of 2.0 years;

(v) closing price of the Class A common stock of $ 0.80 per share;

and (vi) an assumed conversion start at the expected

effectiveness date of the resale registration statement, with conversions thereafter at the maximum pace permitted by the beneficial ownership

and conversion caps and estimated market absorption.

The initial fair value of the embedded derivative liability was $ 931,600 .

issue discount of $ 170,000 , debt issuance costs of $ 57,132 , and the allocated fair value of the embedded derivative liability resulted

in a total debt discount of $ 1,158,732 at issuance.

The debt discount is amortized to interest expense

over the term of the Convertible Note using the effective interest method.

The bifurcated embedded derivative liability is remeasured

at fair value each reporting period, with changes in fair value recognized in the condensed consolidated statements of operations.

For the three and six months ended June 30, 2026,

the Company recognized $ 22,618 of interest expense on the Convertible Note, consisting of $ 17,814 of debt discount amortization and $ 4,804

of accrued interest at the stated rate.

As of June 30, 2026, the principal amount outstanding was $ 1,670,000 , the unamortized debt discount

was $ 1,140,918 , and the net carrying amount of the debt host was $ 529,082 .

No conversions occurred during the period.

9 —FAIR VALUE MEASUREMENTS

The carrying amounts of the Company’s financial

instruments, including cash and cash equivalents, accounts receivable, 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, note

receivable – related party, and notes payable also approximate fair value as these instruments bear interest rates that are consistent

with current market rates for similar instruments.

The Convertible Note is carried at amortized cost, net of unamortized debt discount,

as described in Note 8—Debt .

Recurring Fair Value Measurements

The Company measures certain financial instruments

at fair value on a recurring basis.

As of June 30, 2026, the Company’s financial instruments measured at fair value on a recurring

basis consist of the derivative liability and warrant liabilities.

The fair value of financial instruments measured

at fair value on a recurring basis as of June 30, 2026 consisted of the following:

Fair Value Measurements as of

June 30, 2026

Derivative liability

Warrant liabilities

The following table presents changes in the Company’s

Level 3 derivative liability measured at fair value on a recurring basis:

Derivative Liability

Balance as of December 31, 2025

Initial fair value of embedded derivative liability upon issuance of convertible note

Gain on change in fair value of derivative liability

Balance as of June 30, 2026

The fair value of the derivative liability as

of June 30, 2026 was determined using a Monte Carlo simulation valuation model with the following assumptions:

(i) dividend yield of 0 %;

(ii) expected volatility of 152.10 %;

(iii) risk-free interest rate of 4.14 %;

(iv) remaining simulated term of 1.95 years;

price of the Class A common stock of $ 0.66 per share;

and (vi) an assumed conversion start at the expected effectiveness date of the resale

registration statement, with conversions thereafter at the maximum pace permitted by the beneficial ownership and conversion caps and

estimated market absorption.

See Note 8—Debt for additional information.

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

Balance as of June 30, 2026

NOTE 10 —RELATED

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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.

solar energy system purchases through Solar Leasing I, LLC (“SLI”), a related party managed by the Company’s CEO.

arrangements are substantially similar to those with unrelated third-party financing providers.

For the three months ended June 30, 2026 and 2025,

the Company recognized related party revenue of $ 621,919 and $ 8,125,483 , respectively.

For the six months ended June 30, 2026 and 2025,

the Company recognized related party revenue of $ 1,651,342 and $ 10,692,787 , respectively.

As of June 30, 2026 and December 31, 2025, the

Company had accounts receivable of $ 286,638 and $ 611,807 , respectively, due from SLI related to these arrangements.

In August 2024, the Company entered into a guarantee

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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.

of June 30, 2026 and December 31, 2025, the outstanding balance under the loan was $ 9,876,532 and $ 9,976,752 , respectively.

As of June 30, 2026 and December 31, 2025, the

Company had received customer advances of $ 3,779,066 and $ 49,269 , respectively, from SLI for installations not yet completed, which are

included in customer advances – related party in the condensed consolidated balance sheets.

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.

During 2025, SLI paid a discretionary rebate to the Company following

a fair-market-value assessment of certain lease assets.

The Company subsequently transferred the rebate proceeds as a subordinated loan,

recorded as a note receivable from White Horse, with an outstanding principal balance of $ 3,000,000 as of December 31, 2025.

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

subordinated loan to White Horse from $ 3,000,000 to $ 6,150,000 under the same terms as the original note.

For the three months ended June 30, 2026 and 2025, the Company recognized

interest income of $ 40,080 and $ 38,130 , 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.

consolidated statements of operations and comprehensive loss.

For the six months ended June 30, 2026 and 2025, the Company recognized

interest income of $ 79,664 and $ 75,786 , respectively.

As of June 30, 2026, the outstanding principal balance of the note receivable was

$ 6,150,000 with accrued interest of $ 233,149 .

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

of $ 153,485 .

The outstanding principal and accrued interest balances are included in “note receivable – related party”

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

business combination on March 13, 2024, the Company entered into a tax receivable agreement (the “TRA”) with ESGEN OpCo, LLC

(“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 June 30, 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.

unrecorded TRA liability was approximately $ 4.6 million as of June 30, 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 11 —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.

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

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

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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

NONCONTROLLING INTERESTS AND EQUITY

It is too early to assess the likely outcome or range of potential recovery as of June 30, 2026, and no amounts have been

recognized related to this matter.

As of June 30, 2026 and December 31, 2025, the

Company was not aware of any other 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 incurred.

12 —REDEEMABLE NONCONTROLLING INTERESTS AND EQUITY

The table below reflects share information about the Company’s

capital stock as of March 31, 2026:

capital stock as of June 30, 2026:

Class A common stock

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Class A Common Stock

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,

During the six months ended June 30, 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 six months ended June 30, 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.

On January 27, 2026, the Company entered into

the White Lion ELOC with 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 .

liquidates its 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

During the six months ended June 30, 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 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 13—Stock-Based

Compensation for additional information.

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

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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.

On June 11, 2026, 260,060 shares of Class A common

stock, net of tax withholding, were issued upon vesting of restricted stock awards granted in June 2026.

See Note 13—Stock-Based

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Redeemable Noncontrolling Interests

During the three months ended March 31, 2026,

During the six months ended June 30, 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.

As a result, as of June 30, 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.

Holders of 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

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for additional information regarding the TRA.

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

As of June 30, 2026 and December 31, 2025, the

noncontrolling interest holders owned approximately 37.7 % and 40.8 %, respectively, of the outstanding OpCo common units.

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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.

dividends at a rate of 10 % per annum.

During the six months ended June 30, 2026, the Company recognized $ 877,979 of preferred unit dividends

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 13 —STOCK-BASED

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The following table summarizes restricted stock

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

awards activity under the Incentive Plan for the six months ended June 30, 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:

Outstanding at June 30, 2026

On April 1, 2026, the Company granted an aggregate

of 75,000 restricted shares of Class A common stock under the Incentive Plan to one employee.

The restricted shares vest in three equal

installments as follows:

One-third (1/3) 12 months following the grant date;

One-third (1/3) 24 months following the grant date;

One-third (1/3) 36 months following the grant date

On April 1, 2026, the Company granted an aggregate

of 510,000 restricted shares of Class A common stock under the Incentive Plan to ten employees of Heliogen.

The restricted shares vest

in three equal installments as follows:

One-third (1/3) approximately four months following the grant date;

One-third (1/3) approximately 16 months following the grant date;

One-third (1/3) approximately 28 months following the grant date

On May 26, 2026, the Company granted an aggregate

of 100,000 restricted shares of Class A common stock under the Incentive Plan to two executives.

The restricted shares vest in two equal

installments as follows:

One-half (1/2) approximately two months following the grant date;

One-half (1/2) approximately 14 months following the grant date;

On June 11, 2026, the Company granted an aggregate

of 283,358 restricted shares of Class A common stock under the Incentive Plan to three executives and three directors.

The restricted

shares vested immediately upon grant.

The following table summarizes stock-based compensation

expense and remaining unrecognized stock-based compensation expense for grants outstanding under the Incentive Plan during the six months

ended June 30, 2026 and 2025:

Stock-Based Compensation Expense

Three Months Ended

March 31, Unrecognized Weighted-

Six Months Ended

June 30, Unrecognized Weighted-

Grant Date 2026 2025 Expense Life

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November 5, 2025 7,918 –

April 1, 2026 75,129 –

May 26, 2026 22,304 –

June 11, 2026 226,119 –

Total $ 902,280 $ 1,877,592 $ 1,709,709 0.94

During the three months ended June 30, 2026 and

2025, the Company recognized $ 608,807 and $ 969,419 , respectively, in stock-based compensation expense related to these awards.

Sun Managers, LLC Management Incentive Plan

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into Zeo Class A common Stock (subject to the terms of the Management Incentive Plan and the OpCo A&R LLC Agreement).

the Management Incentive Plan will be made after ESGEN Closing.

Although Sun Managers is the legal issuer of the

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On March 31, 2025, Sun Managers granted an aggregate

of 525,000 restricted shares of Zeo Class A common stock under the Management Incentive Plan to three employees and one executive.

restricted shares vested immediately upon grant and the Company recognized $ 792,750 in stock-based compensation expense related to these

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.

vested immediately upon grant and the Company recognized $ 303,045 in stock-based compensation expense related to these awards.

Seasonal Manager Stock Compensation Plan

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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 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 700 kW

in the subsequent calendar year.

If the average price of Zeo stock during the quarter in which installations are completed exceeds $ 5

per share, the number of shares granted per kW is correspondingly decreased.

The managers become eligible to receive certain

8 unchanged sentences

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:

The following table summarizes stock-based compensation

expense and remaining unrecognized stock-based compensation expense for grants outstanding under the Seasonal Manager Compensation Plan

during the six months ended June 30, 2026 and 2025:

Stock-Based Compensation Expense

Three Months Ended

March 31, Unrecognized Weighted-

Six Months Ended

June 30, Unrecognized Weighted-

Grant Date 2026 2025 Expense Life

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Total $ 91,956 $ 545,107 $ 76,540 0.75

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

During the three months ended June 30, 2026 and

2025, the Company recognized $ 25,421 and $ 108,784 , respectively, in stock-based compensation expense related to these awards.

The negative compensation expense for the six

months ended June 30, 2026 related to the awards granted on March 31, 2025 reflects the reversal of previously recognized stock-based

compensation expense for awards forfeited upon the termination of three sales managers prior to vesting.

NOTE 14 —INCOME

5 unchanged sentences

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’s effective tax rate was a provision

of ( 3.2 )% and a benefit of 8.5 % for the three months ended June 30, 2026 and 2025, respectively, and a provision of ( 0.1 )% and ( 2.2 )%

for the six months ended June 30, 2026 and 2025, respectively.

The effective tax rate differs from the U.S.

federal statutory tax rate

primarily due to the noncontrolling interest ownership in OpCo, which is treated as a partnership for U.S.

federal income tax purposes,

as well as changes in the valuation allowance on deferred tax assets.

The Company evaluated the realizability of its

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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:

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

tax assets as of June 30, 2026 and December 31, 2025.

The components of deferred tax assets were as

Deferred tax assets:

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Potentially dilutive securities

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

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

The Company applies the treasury stock method

2 unchanged sentences

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 Company applies the if-converted method to securities that are convertible or exchangeable into Class

A common shares.

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:

the basic loss per share of Class A common stock for the three and six months ended June 30, 2026 and 2025:

Three Months Ended

Six Months Ended

Net loss attributable to Class A common stockholders

1 unchanged sentence

$ ( 2,415,836 )

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

Loss per Class A common share – basic and diluted

$ ( 5,847,904 )

$ ( 8,777,101 )

Weighted-average Class A common shares outstanding – basic

Loss per Class A common share – basic

The following table presents the reconciliation

of net loss attributable to Class A common stockholders to net loss used in computing diluted net loss per share of Class A common stock

for the three and six months ended June 30, 2026 and 2025:

Three Months Ended

Six Months Ended

Net loss attributable to Class A common stockholders

$ ( 2,335,230 )

$ ( 2,415,836 )

$ ( 5,847,904 )

$ ( 8,777,101 )

Net loss adjustments attributable to Class A common stockholders

Adjusted net loss attributable to Class A common stockholders

$ ( 2,545,112 )

$ ( 2,415,836 )

$ ( 6,057,786 )

$ ( 8,777,101 )

Weighted-average Class A common shares outstanding – basic

Effect of dilutive securities

Weighted-average Class A common shares outstanding – diluted

Loss per Class A common share – diluted

For the three and six months ended June 30, 2026,

the Convertible Note issued in June 2026 (See Note 8—Debt for additional information) was dilutive under the if-converted

The net loss adjustment of $ 209,882 reflects the reversal of the $ 232,500 gain on the change in fair value of the related bifurcated

embedded derivative, partially offset by the add-back of $ 22,618 of interest expense recognized from amortization of debt discount and

accrued interest on the note.

The remaining potentially dilutive securities were anti-dilutive.

As of June 30, 2026, 38,125,002 potential common

share equivalents, consisting of convertible OpCo Class A Preferred Units, exchangeable OpCo Class B units, warrants, and restricted stock

awards, were excluded from the calculation of diluted net loss per share because their effect would be anti-dilutive.

As of June 30, 2025,

43,221,852 potential common share equivalents, consisting of convertible OpCo Class A Preferred Units, exchangeable OpCo Class B units,

convertible debt, warrants, and restricted stock awards, were excluded on the same basis.

NOTE 16 —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.

The Company has evaluated subsequent events through

the date these condensed consolidated financial statements were issued.

At the Company’s annual meeting of stockholders

held on August 7, 2026, stockholders approved, in accordance with Nasdaq Listing Rule 5635(d), the potential issuance of shares of Class

A common stock upon conversion of the Convertible Note in excess of the Conversion Cap.

See Note 8—Debt for additional information.

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