What changed in this filing

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Item 2. Management’s Discussion and Analysis

2026-08-14 compared with 2026-05-15 · 368 added, 283 removed, 268 unchanged (71% of the section changed)

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and Analysis of Financial Condition and Results of Operations

References to the “Company,” “our,”

“us” or “we” refer to Zeo Energy Corp.

The following discussion and analysis of the Company’s financial

condition and results of operations should be read in conjunction with the unaudited condensed consolidated financial statements and the

notes thereto contained elsewhere in this Quarterly Report on Form 10-Q (this “Quarterly Report”).

Certain information contained

in the discussion and analysis set forth below includes forward-looking statements that involve risks and uncertainties.

Unless the context requires otherwise, references herein to the “Company,”

“our,” “us” or “we” refer to Zeo Energy Corp.

and its consolidated subsidiaries.

The following discussion

and analysis of the Company’s financial condition and results of operations should be read in conjunction with the unaudited condensed

consolidated financial statements and the notes thereto contained elsewhere in this Quarterly Report on Form 10-Q (this “Quarterly

Certain information contained in the discussion and analysis set forth below includes forward-looking statements that

involve risks and uncertainties.

Cautionary Note Regarding Forward-Looking Statements

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In some cases, you can identify forward-looking statements by terminology such as “may,” “should,”

“could,” “would,” “expect,” “plan,” “anticipate,” “believe,”

“estimate,” “aim,” “goal” and “continue,” or the derivatives of such terms or other similar

expressions about the future.

Such statements include, but are not limited to, our expectations regarding revenue generation, our ability

to obtain financing when needed, or ability to source and financing our growth and expansion, including via acquisitions, and all other

statements other than statements of historical fact included in this Form 10-Q.

Factors that might cause or contribute to such a discrepancy

include, but are not limited to, the risk factors detailed in our SEC filings.

Except as expressly required by applicable securities

law, we disclaim any intention or obligation to update or revise any forward-looking statements whether as a result of new information,

future events or otherwise.

Our company and personnel are passionate about delivering cost savings

and increased independence and reliability to energy consumers.

Our mission is to expedite the country’s transition to renewable

energy by offering our customers an affordable and sustainable means of achieving energy independence.

We are a vertically integrated

company offering energy solutions and services that include sale, design, procurement, installation, and maintenance of residential solar

energy systems.

Many of our solar energy system customers also purchase other energy efficient-related equipment or services or roofing

services from us.

“could,” “would,” “expect,” “plan,” “anticipate,” “believe,” “estimate,”

“aim,” “goal” and “continue,” or the derivatives of such terms or other similar expressions about

Such statements include, but are not limited to, our expectations regarding revenue generation, our ability to obtain financing

when needed, or ability to source and financing our growth and expansion, including via acquisitions, and all other statements other than

statements of historical fact included in this Form 10-Q.

Factors that might cause or contribute to such a discrepancy include, but are

not limited to, the risk factors detailed in our SEC filings.

Except as expressly required by applicable securities law, we disclaim any

intention or obligation to update or revise any forward-looking statements whether as a result of new information, future events or otherwise.

Our company and personnel are passionate about

delivering cost savings and increased independence and reliability to energy consumers.

Our mission is to expedite the country’s

transition to renewable energy by offering our customers an affordable and sustainable means of achieving energy independence.

a vertically integrated company offering energy solutions and services that include sale, design, procurement, installation, and maintenance

of residential solar energy systems.

Many of our solar energy system customers also purchase other energy efficient-related equipment

or services or roofing services from us.

The majority of our customers are located in Florida, Texas, Ohio, Illinois, and Virginia.

We have an expanding base

of customers in California, Colorado, Minnesota, Utah, and Pennsylvania.

Sunergy was created on October 1, 2021 through the Contribution

of Sun First Energy, LLC, a rapidly growing solar sales management company, and Sunergy Solar, LLC, a large solar installation company

have an expanding base of customers in California, Colorado, Minnesota, Utah, and Pennsylvania.

Sunergy was created on October 1, 2021

through the contribution of Sun First Energy, LLC, a solar sales management company, and Sunergy Solar, LLC, a solar installation company

based in Florida, to Sunergy Renewables, LLC.

Through our Heliogen segment, acquired in August

2025, we are also developing concentrated solar power and long-duration energy generation and storage technology solutions for commercial

and industrial applications.

We believe that we have built (and continue to

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We have focused to date on a simple, capital light

business strategy utilizing, as of March 31, 2026, approximately 260 sales agents and approximately 10 independent sales dealers to produce

business strategy utilizing, as of June 30, 2026, approximately 260 sales agents and approximately 10 independent sales dealers to produce

our sales pipeline.

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Recent Developments

White Lion Financing Transaction

On January 27, 2026, we entered into the White

Lion Purchase Agreement with White Lion.

We also entered into a Registration Rights Agreement (“RRA”) with White Lion on January

Pursuant to the White Lion Purchase Agreement, the Company has the right, but not the obligation, to require White Lion to purchase,

from time to time, up to $30.0 million in aggregate gross purchase price of newly issued shares of our Class A Common Stock, subject to

certain limitations and conditions set forth in the White Lion Purchase Agreement.

Subject to the satisfaction of certain customary conditions,

the Company’s right to sell shares to White Lion commenced on the date of the execution of White Lion Purchase Agreement and extends

until White Lion Commitment Period.

During the White Lion Commitment Period, subject

to the terms and conditions of the White Lion Purchase Agreement, the Company may notify White Lion when the Company exercises its right

to sell shares of its Class A Common Stock.

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

Purchase Agreement), where the Company can require White Lion to purchase up to a number of shares of Class A Common Stock equal to the

20% of Average Daily Trading Volume (as such term is defined in the White Lion Purchase Agreement).

The Company may also deliver an Accelerated

Purchase Notice (as such term is defined in the White Lion Purchase Agreement), where the Company may require White Lion to purchase up

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

White Lion may waive such limits under

any notice at its discretion and purchase additional shares.

The price to be paid by White Lion for any shares

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

For shares being

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

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

For shares being issued

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

the date that the notice is delivered.

No purchase notice shall result in White Lion

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

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

to a purchase notice.

The Company may deliver purchase notices under

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

contained in the White Lion Purchase Agreement.

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

to be used for working capital and general corporate purposes.

The White Lion Purchase Agreement may be terminated

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

Shares (as defined below).

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

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

In consideration for the commitments of White

Lion, as described above, the Company is contractually committed to issue to White Lion the Commitment Shares.

The Commitment Shares are

deemed fully earned and non-refundable as of the execution date of the White Lion Purchase Agreement;

however, if the White Lion Purchase

Agreement is terminated by the Company as a result of a material breach by White Lion, the Company may pursue all remedies available at

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

Concurrently with the White Lion Purchase Agreement,

the Company entered into the RRA with White Lion.

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

and indemnification obligations of the parties.

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

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

to limitations agreed upon by the contracting parties.

White Horse Energy Transaction

On January 30, 2026, Sunergy, a subsidiary of

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

million under the same terms as the original note.

White Lion Convertible Note

On June 9, 2026, we entered into a Note Purchase Agreement (the “Note

Purchase Agreement”) with White Lion Capital LLC (“White Lion”), pursuant to which we 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, we 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.

We 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 us and White Lion, subject to customary closing conditions.

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 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) we complete 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 our outstanding Class A common stock immediately prior to the first closing (the “Conversion Cap”)

unless stockholder approval is obtained.

We were obligated to seek stockholder approval for issuances above the Conversion Cap within

60 days of June 9, 2026.

At our 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 payable.

We 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.

We are 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, we entered into a Registration

Rights Agreement with White Lion, pursuant to which we 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.

We 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, 2026.

Nasdaq Listing Rule Notice

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.

On April 23, 2026, we 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, we no longer meet 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 requirement.

If we evidence a closing bid price of at least $1 per share for a minimum of 10 consecutive business days during the 180-day compliance

period, we will automatically regain compliance.

In the event we do not regain compliance with the $1 bid price requirement by October

14, 2026, we may be eligible for consideration of a second 180-day compliance period if the continued listing requirement for market value

of publicly held shares and all other initial listing standards for Nasdaq’s Capital Market is met, other than the minimum bid price

In addition, we would also be required to notify Nasdaq of our intent to cure the minimum bid price deficiency.

Key Operating and Financial Metrics and Outlook

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Adjusted EBITDA and Adjusted

EBITDA margin are non-GAAP measures, as they are not financial measures calculated in accordance with GAAP and should not be considered

as substitutes for net (loss) income or net (loss) income margin, respectively, calculated in accordance with GAAP.

See “Non-GAAP

Financial Measures ” for additional information on non-GAAP financial measures and a reconciliation of these non-GAAP measures

to the most comparable GAAP measures.

EBITDA margin are “non-GAAP” measures, as they are not financial measures calculated in accordance with accounting principles

generally accepted in the United States of America (“GAAP”) and should not be considered as substitutes for net (loss) income

or net (loss) income margin, respectively, calculated in accordance with GAAP.

See “Non-GAAP Financial Measures ” below

for additional information on non-GAAP financial measures and a reconciliation of these non-GAAP measures to the most comparable GAAP

The following table sets forth these metrics for

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Three Months Ended

Six Months Ended

Contribution profit

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to allocate resources going forward.

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

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

See “— Non-GAAP Financial Measures ” for a reconciliation of Gross Profit

to Contribution Profit and Contribution Margin.

Adjusted EBITDA and Adjusted EBITDA Margin

We define Adjusted EBITDA, a non-GAAP financial

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

net, and stock compensation, as adjusted to exclude merger transaction related expenses.

Adjusted EBITDA margin reflects our Adjusted

EBITDA as a percentage of revenues.

See “— Non-GAAP Financial Measures ” for a reconciliation of GAAP net loss

to Adjusted EBITDA and Adjusted EBITDA Margin.

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

gain (loss) on change in fair value of derivative liability, gain (loss) on change in fair value of warrant liabilities, stock-based compensation,

and transaction-related expenses.

Adjusted EBITDA margin reflects our Adjusted EBITDA as a percentage of revenues.

Non-GAAP Financial Measures ” for a reconciliation of GAAP net loss to Adjusted EBITDA and Adjusted EBITDA Margin.

Key Factors that May Influence Future Results

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Our future revenue growth is, in part, dependent on our ability to expand our product offerings and services in the select residential

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

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

We primarily generate revenue from our product offerings

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additional states based on markets underserved by national sales and installation providers that also have favorable incentives and net

metering policies.

We believe that our entry into new markets will continue to facilitate revenue growth and customer diversification.

metering policies, and where homeowners have favorable financing options.

We believe that our entry into new markets will continue to

facilitate revenue growth and customer diversification.

Expansion of New Products and Services .

In 2026, we continued our roofing replacements to facilitate our solar installations and to repair rooftops on homes in Florida damaged

by severe weather.

We plan to expand our roofing business in all markets we enter in the future.

Roofing facilitates a faster processing

time for our solar installations in cases where the customer is in need of a roof replacement prior to installing a solar system.

to provide more financing options for our prospective residential solar energy customers, we have programs in place that allow our customers

to choose a leasing option to finance their systems from a third party.

In 2026, we continued our roofing replacements to facilitate our solar installations and to repair rooftops.

We will continue to provide

roofing services in all markets in which we install solar systems.

Roofing facilitates a faster processing time for our solar installations

in cases where the customer is in need of a roof replacement prior to installing a solar system.

In addition, to provide more financing

options for our prospective residential solar energy customers, we have programs in place that allow our customers to choose a leasing

option to finance their systems from a third party.

Following the acquisition of Heliogen in August

2025, the Company has been working to integrate Heliogen’s concentrated solar power and energy storage technology into its clean-energy

platform to complement its existing solar operations, create operational synergies, and broaden market reach.

The Company continues to

pursue engineering services agreements to support long-duration energy storage projects.

2025, we have been working to integrate Heliogen’s concentrated solar power and energy storage technology into our clean-energy

platform to complement our existing solar operations, create operational synergies, and broaden market reach.

We continue to pursue engineering

services agreements to support long-duration energy storage projects.

Adding New Customers and Expansion of Sales

with Existing Customers .

We intend to increase our in-house sales force and external sales dealers in order to target new customers

in the Southern U.S.

regional residential markets.

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

sales dealers, which incentivizes the acquisition of new customers.

We intend to increase external sales dealers in order to target new customers in the markets we serve.

provide competitive compensation packages to our in-house sales teams and external sales dealers, which incentivizes the acquisition of

new customers.

We are seeing an increase in

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The majority of homeowners have opted to enter into a lease contract with a third-party

operator as means of financing the installation of a solar system.

The lease contract provides a lower monthly cost to the homeowner than

a conventional loan product in a higher interest rate environment.

We do not have information that allows us to quantify the adverse effects

attributable to increased interest rates.

operator as a means of financing the installation of a solar system.

The lease contract provides a lower monthly cost to the homeowner

than a conventional loan product in a higher interest rate environment.

We do not have information that allows us to quantify the adverse

effects attributable to increased interest rates.

Managing our Supply Chain .

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recorded net of these financing fees (and/or dealer fees).

The volume of sales and installations of rooftop

solar systems, our primary product, increase from April to September when a majority of our sales teams are most active in our areas of

In addition to sales of solar systems, “adders” or accessories to a sale may include roofing, energy efficient appliances,

upgraded insulation and/or energy storage systems.

All adders consisted of less than 10% of the total revenues, net for the three months

ended March 31, 2026 and 2025.

The volume of sales and installations of rooftop solar systems, our

primary product, increases from April to September when a majority of our sales teams are most active in our areas of service.

to sales of solar systems, “adders” or accessories to a sale may include roofing, energy efficient appliances, smart home

security systems, upgraded insulation and/or energy storage systems.

Adders represented less than 10% of total net revenues for each of

the six months ended June 30, 2026 and 2025.

Our revenue is affected by changes in the volume,

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Less than 5% of our

sales were paid in cash by the customer in each of the three months ended March 31, 2026 and 2025.

Our revenue growth is dependent on

our ability to compete effectively in the marketplace by remaining cost competitive, developing and introducing new sales teams within

existing and new territories, scaling our installation teams to keep up with demand and maintaining a strong internal operations team

to process orders while working with building departments and utilities to permit and interconnect our customers to the utility grid.

Revenues improved during the three months ended

March 31, 2026 compared to the three months ended March 31, 2025, driven by increased solar system installation activity.

consumer financing rates continue to present headwinds for the residential solar industry broadly, the Company has managed these pressures

through expanded sales efforts and continued growth in its installation volume.

sales were paid in cash by the customer in each of the six months ended June 30, 2026 and 2025.

Our revenue growth is dependent on our

ability to compete effectively in the marketplace by remaining cost competitive, developing and introducing new sales teams within existing

and new territories, scaling our installation teams to keep up with demand and maintaining a strong internal operations team to process

orders while working with building departments and utilities to permit and interconnect our customers to the utility grid.

Revenues improved during the six months ended

June 30, 2026 compared to the six months ended June 30, 2025, driven by increased solar system installation activity.

While higher consumer

financing rates continue to present headwinds for the residential solar industry broadly, the Company has managed these pressures through

expanded sales efforts and continued growth in its installation volume.

Cost of Revenues

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labor and permitting costs.

Cost of revenues increased during three months

ended March 31, 2026 in association with the increase in revenues.

Cost of revenues increased during the six months

ended June 30, 2026 in association with the increase in revenues.

Net revenues less cost of revenues may vary from

period-to-period and is primarily affected by our average selling prices, financing or dealer fees, fluctuations in equipment costs and

our ability to effectively and timely deploy our field installation teams to project sites once permitting departments have approved

the design and engineering of systems on customer sites.

our ability to effectively and timely deploy our field installation teams to project sites once permitting departments have approved the

design and engineering of systems on customer sites.

Operating Expenses

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Other Income (Expense)

Other income (expense) primarily consists of change

in fair value of warrant liabilities and interest expense and fees under our equipment and vehicle term loans.

It also includes interest

income on our cash and note receivable balances.

Other income (expense) primarily consists of changes

in fair value of our warrant liabilities and the embedded derivative liability related to the Convertible Note, interest expense on the

Convertible Note (including amortization of the debt discount) and under our equipment and vehicle term loans, and interest income on

our cash and note receivable balances.

Results of Operations

Three Months Ended March 31, 2026 Compared

to Three Months Ended March 31, 2025

Three Months Ended June 30, 2026 Compared

to Three Months Ended June 30, 2025

The following table sets forth a summary of our

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Three Months Ended

$ (1,932,467 )

Operating expenses

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Loss from operations

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 before income taxes

$ (2,653,184 )

$ (2,866,458 )

Net revenues decreased by approximately $1.9 million

from $18.1 million for the three months ended June 30, 2025 to $16.2 million for the three months ended June 30, 2026.

The decrease in

revenue was primarily driven by a decrease in related party revenue from Solar Leasing I, LLC (“SLI”), partially offset by

an increase in revenue from unrelated third-party customers.

There were no revenues generated from the Heliogen segment during the three

months ended June 30, 2026 or 2025.

Cost of Revenues

Cost of revenues increased by $1.2 million from $7.3 million for the

three months ended June 30, 2025 to $8.5 million for the three months ended June 30, 2026, primarily driven by an increase in labor costs

in the markets in which we operate and an increase in the cost of materials to conform to domestic content requirements of our customers

during the current period.

As a percentage of net revenues, cost of revenues increased from 40.2% for the three months ended June 30,

2025 to 52.9% for the three months ended June 30, 2026, reflecting a compression in gross margin year-over-year primarily driven by higher

material costs, offset by some improvements to labor and other costs.

Depreciation and Amortization

Depreciation and amortization decreased by $3.0 million, from $3.2

million for the three months ended June 30, 2025 to $0.2 million for the three months ended June 30, 2026.

The decrease was primarily

related to $2.9 million in amortization of the customer-related intangible asset acquired in connection with the Lumio asset acquisition,

which was fully amortized during 2025.

Sales and Marketing

Sales and marketing expenses decreased by $1.2 million from $5.6 million

for the three months ended June 30, 2025 to $4.4 million for the three months ended June 30, 2026.

The decrease was primarily driven by

lower sales commissions, reflecting both the decrease in installation revenues and changes to the Company’s commission structure,

as well as lower payroll and lead generation costs following the elimination of the inside sales team early in the second quarter of 2026.

General and Administrative Expenses

General and administrative expenses increased

by $1.1 million from $4.9 million for the three months ended June 30, 2025 to $5.9 million for the three months ended June 30, 2026.

increase was primarily driven by increased bad debt expense and professional fees, offset by decreased stock-based compensation expense

and transaction-related expenses compared to the prior period.

Other Income (Expense)

Other income (expense), net increased by $0.3

million from other expense, net of $12,952 for the three months ended June 30, 2025 to other income, net of $0.3 million for the three

months ended June 30, 2026.

The increase was primarily a result of a gain on change in fair value of derivative liability and warrant

liabilities during the three months ended June 30, 2026, compared to a loss on change in fair value of warrant liabilities during the

three months ended June 30, 2025.

Six Months Ended June 30, 2026 Compared

to Six Months Ended June 30, 2025

The following table sets forth a summary of our

condensed consolidated statements of operations for the periods presented:

Six Months Ended

Operating expenses

Cost of revenues

Depreciation and amortization

Sales and marketing

General and administrative

Total operating expenses

Loss from operations

(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 before taxes

Net loss before income taxes

$ (7,436,624 )

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Net revenues increased by approximately $2.5 million

from $8.8 million for the three months ended March 31, 2025 to $13.2 million for the three months ended March 31, 2026.

The increase in

revenue was primarily driven by growth in solar system installations during the current period, partially offset by a decrease in related

party revenue from Solar Leasing I, LLC (“SLI”).

There were no revenues generated from the Heliogen segment during the three

months ended March 31, 2026 and 2025.

from $26.9 million for the six months ended June 30, 2025 to $29.4 million for the six months ended June 30, 2026.

The increase in revenue

was primarily driven by growth in solar system installations during the current period, partially offset by a decrease in related party

revenue from SLI.

There were no revenues generated from the Heliogen segment during the six months ended June 30, 2026 and 2025.

Cost of Revenues

Cost of revenues increased by $4.0 million from

$4.8 million for the three months ended March 31, 2025 to $7.6 million for the three months ended March 31, 2026, primarily driven by

the increase in solar system installation activity during the current period.

$12.1 million for the six months ended June 30, 2025 to $16.1 million for the six months ended June 30, 2026, primarily driven by the

increase in solar system installation activity during the current period.

As a percentage of net revenues, cost of revenues increased

slightly from 54.5% for the three months ended March 31, 2025 to 57.5% for the three months ended March 31, 2026, reflecting a compression

in gross margin year-over-year.

from 44.9% for the six months ended June 30, 2025 to 54.9% for the six months ended June 30, 2026, reflecting a compression in gross margin

year-over-year primarily driven by higher material costs, offset by some improvements to labor and other costs.

Depreciation and Amortization

Depreciation and amortization decreased by $3.8

million, from $4.9 million for the three months ended March 31, 2025 to $1.1 million for the three months ended March 31, 2026.

was primarily related to $4.6 million in amortization of the customer-related intangible asset acquired in connection with the Lumio asset

acquisition, which was fully amortized during 2025.

This was offset by the $0.8 million of accelerated depreciation associated with the

abandonment of software during the three months ended March 31, 2026.

Depreciation and amortization decreased by $6.7 million, from $8.1

million for the six months ended June 30, 2025 to $1.3 million for the six months ended June 30, 2026.

The decrease was primarily related

to $7.6 million in amortization of the customer-related intangible asset acquired in connection with the Lumio asset acquisition, which

was fully amortized during 2025.

This was partially offset by $0.8 million of accelerated depreciation associated with the abandonment

of internally developed software during the six months ended June 30, 2026.

Sales and Marketing

Sales and marketing expenses decreased by $0.4

million from $3.1 million for the three months ended March 31, 2025 to $3.0 million for the three months ended March 31, 2026.

was primarily driven by lower stock-based compensation expense, offset by higher sales commissions, consistent with the increase in installation

revenues during the period.

million from $7.8 million for the six months ended June 30, 2025 to $7.4 million for the six months ended June 30, 2026.

was primarily driven by lower sales commissions, reflecting changes to the Company’s commission structure, as well as lower payroll

and lead generation costs following the elimination of the inside sales team early in the second quarter of 2026, notwithstanding the

increase in installation revenues during the period.

General and Administrative Expenses

General and administrative expenses decreased

by $3.2 million from $9.5 million for the three months ended March 31, 2025 to $6.3 million for the three months ended March 31, 2026.

The decrease was primarily driven by significant reductions in bad debt expense and stock-based compensation expense compared to the prior

by $3.1 million from $15.3 million for the six months ended June 30, 2025 to $12.2 million for the six months ended June 30, 2026.

decrease was primarily driven by decreased bad debt expense, stock-based compensation expense and transaction-related expenses compared

to the prior period, offset by increased professional fees during the current period.

Other Income (Expense)

Other income (expense), net decreased by $0.7

million from other income, net of $0.7 million for the three months ended March 31, 2025 to other expense, net of $18,316 for the three

months ended March 31, 2026.

The decrease was primarily a result of a significant gain on change in fair value of warrant liabilities

for the three months ended March 31, 2025 and a loss on change in fair value of warrant liabilities for the three months ended March 31,

Other income, net decreased by $0.4 million from

$0.7 million for the six months ended June 30, 2025 to $0.3 million for the six months ended June 30, 2026.

The decrease was primarily

a result of a significant gain on change in fair value of warrant liabilities during the six months ended June 30, 2025, compared to a

loss on change in fair value of warrant liabilities during the six months ended June 30, 2026, partially offset by a gain on change in

fair value of derivative liability recognized during the current period.

Liquidity and Capital Resources

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Our primary short-term requirements for liquidity and capital are to fund general working capital and capital expenses, including through

our common stock purchase agreement with White Lion Capital LLC (the “White Lion ELOC”).

Our principal long-term working capital

uses include ensuring revenue growth, expanding our sales and marketing efforts and potential acquisitions.

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

cash and cash equivalents balance were $1.7 million and $6.1 million, respectively.

our common stock purchase agreement with White Lion (the “White Lion ELOC”).

Our principal long-term working capital uses

include ensuring revenue growth, expanding our sales and marketing efforts and potential acquisitions.

In June 2026, we issued a convertible promissory note to White Lion

in the principal amount of $1.7 million for net proceeds of approximately $1.4 million, and up to $6 million of additional gross proceeds

may be funded at one or more additional closings, although any additional closing requires the mutual written agreement of us and White

See Note 8—Debt to the condensed consolidated financial statements.

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

cash and cash equivalents balances were $2.5 million and $6.1 million, respectively.

The Company maintains its cash in checking, savings,

and money market accounts.

Our future capital requirements depend on many factors, including our

revenue growth rate, the timing and extent of our spending to support further sales and marketing, the degree to which we are successful

in launching new business initiatives, the costs associated with these initiatives, the growth of our business generally and our access

to third party financing.

We have operational plans to increase revenue and move towards the

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

Our operational plan includes an increase in the

number of sales agents to increase revenue and improved efficiency in our operations through centralization of field offices and labor

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

We are also working internally and with third parties to address short-term

cash needs, including through the use of the White Lion ELOC, which provides us with the right to sell up to $30.0 million in shares of

our Class A common stock, 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 Capital LLC (i.e., once White Lion Capital liquidates

their holdings in the open market).

We believe we also have 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, we will become eligible to utilize

a universal shelf registration statement to raise funding for our company.

We currently believe that our existing cash and working capital balances,

anticipated future cash flows from operations, borrowings under our debt agreements, and access to equity capital markets (including the

White Lion ELOC) will be sufficient to meet our currently contemplated business needs for the next twelve months.

In the event we pursue

and complete significant transactions or acquisitions in the future, additional funds will be required to meet our strategic needs, which

will require us to raise additional funds in the debt or equity markets.

While our plan and expectation is to raise additional capital in 2026,

and while we are routinely active in discussions and planning for financing, there can be no assurance that we will be successful in such

pursuits, and our fundraising efforts are subject to a variety of uncertainties.

Moreover, even if we are able to raise additional capital,

other than the While Lion ELOC, we do not know with precision what the terms of any such financing would be.

Any future sale of our equity

securities would dilute the ownership and control of your shares and could be at prices below prices at which investors acquired our shares

or at which our shares currently trade.

The sale of convertible debt securities or additional equity securities could result in additional

dilution to our shareholders.

Also, the incurrence of indebtedness would result in increased debt service obligations and could result

in operating and financing covenants that would restrict our operations and liquidity and ability to pay dividends.

Our inability to raise

capital, coupled with our inability to generate adequate cash from operations, could require us to significantly modify our operational

plans, and any failure to raise additional funds on favorable terms when needed could have a material adverse effect on our business,

liquidity and financial condition.

Our future capital requirements depend on many

factors, including our revenue growth rate, the timing and extent of our spending to support further sales and marketing, the degree to

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

generally and our access to third party financing.

We have operational plans to increase revenue

and move towards the goal of profitable operations in the foreseeable future, which plans are expected to improve cash flows.

Our operational

plan includes an increase in the number of sales agents to increase revenue and improved efficiency in our operations through centralization

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

We are also working internally and with third

parties to address short-term cash needs, including through the use of the White Lion ELOC, which provides us with the right to sell up

to $30.0 million in shares of our Class A common stock, 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 this limitation resets once White Lion liquidates

its holdings in the open market.

The amount we can raise under the White Lion ELOC in any period is practically limited by the trading

volume and market price of our Class A common stock and the number of shares registered for resale;

based on the shares currently registered

and recent market prices, we estimate that approximately $6.5 million is currently accessible under the facility.

We believe we also have

other opportunities to raise capital, such as through revenue generating initiatives, private placements, public offerings or repricing

of outstanding warrants.

In addition, we may utilize a universal shelf registration statement to gain access to funding for our company.

We currently believe that our existing cash and

working capital balances, anticipated future cash flows from operations, borrowings under our debt agreements, and access to equity capital

markets (including the White Lion ELOC) will be sufficient to meet our currently contemplated business needs for the next twelve months.

In the event we pursue and complete significant transactions or acquisitions in the future, additional funds will be required to meet

our strategic needs, which will require us to raise additional funds in the debt or equity markets.

While our plan and expectation is to raise additional

capital in 2026, and while we are routinely active in discussions and planning for financing, there can be no assurance that we will be

successful in such pursuits, and our fundraising efforts are subject to a variety of uncertainties.

Moreover, even if we are able to raise

additional capital, other than the White Lion ELOC, we do not know with precision what the terms of any such financing would be.

sale of our equity securities would dilute the ownership and control of your shares and could be at prices below prices at which investors

acquired our shares or at which our shares currently trade.

The sale of convertible debt securities or additional equity securities could

result in additional dilution to our shareholders.

Also, the incurrence of indebtedness would result in increased debt service obligations

and could result in operating and financing covenants that would restrict our operations and liquidity and ability to pay dividends.

inability to raise capital, coupled with our inability to generate adequate cash from operations, could require us to significantly modify

our operational plans, and any failure to raise additional funds on favorable terms when needed could have a material adverse effect on

our business, liquidity and financial condition.

The following table summarizes our cash flows

for the periods presented:

For the Three Months Ended

For the Six Months Ended

Net cash used in operating activities

$ (1,314,288 )

$ (4,549,934 )

Net cash used in investing activities

Net cash used in financing activities

Net cash provided by (used in) financing activities

Cash Flows from Operating Activities

Net cash used in operating activities was approximately

$0.9 million during the three months ended March 31, 2026 compared to approximately $2.3 million during the three months ended March 31,

The $1.4 million improvement in operating cash flows was driven primarily by favorable working capital changes, including a $1.3

million increase in accounts payable and a $3.8 million increase in accrued expenses and other current liabilities – related parties,

and a $0.2 million decrease in prepaid expenses and other current assets.

These improvements were partially offset by a $2.4 million increase

in accounts receivable, a $0.7 million decrease in contract liabilities, and a $0.5 million decrease in accrued expenses and other current

Non-cash charges also decreased significantly year-over-year, with depreciation and amortization of $1.1 million, stock-based

compensation of $0.7 million, and provision for credit losses of $0.2 million in the current period, compared to $4.9 million, $2.2 million,

and $3.5 million, respectively, in the prior year period, reflecting the significant reduction in operating activity from the prior year

In addition to the previously mentioned changes in operating cash flows, the Heliogen segment that was acquired in the quarter

ended September 30, 2025, incurred a net loss of $0.9 million for the three months ended March 31, 2026 that is included in net loss compared

to no impact on net loss for the three months ended March 31, 2025.

$1.3 million during the six months ended June 30, 2026 compared to approximately $4.5 million during the six months ended June 30, 2025.

The $3.2 million improvement in operating cash flows was driven primarily by the lower net loss in the current period and favorable working

capital changes, including a $3.7 million increase in customer advances – related party and a $1.0 million increase in accounts

These improvements were partially offset by a $2.0 million increase in accounts receivable, including accounts receivable

– related party, and a $1.1 million decrease in contract liabilities.

Non-cash charges also decreased significantly year-over-year,

with depreciation and amortization of $1.3 million, stock-based compensation of $1.3 million, and provision for credit losses of $0.5

million in the current period, compared to $8.1 million, $3.3 million, and $3.3 million, respectively, in the prior year period.

the Heliogen segment, which was acquired in the quarter ended September 30, 2025, incurred a net loss of $1.8 million for the six months

ended June 30, 2026 that is included in net loss, compared to no impact on net loss for the six months ended June 30, 2025.

Cash Flows from Investing Activities

Net cash used in investing activities was approximately

$3.4 million for the three months ended March 31, 2026 relating to the note receivable – related-party investment and purchases

of property and equipment.

Net cash used in investing activities was approximately $0.4 million for the three months ended March 31, 2025,

relating to purchases of property and equipment.

$3.6 million for the six months ended June 30, 2026, relating to a $3.2 million investment in the note receivable – related party

and $0.4 million of purchases of property and equipment.

Net cash used in investing activities was approximately $0.8 million for the

six months ended June 30, 2025, relating to purchases of property and equipment.

Cash Flows from Financing Activities

Net cash used in financing activities was approximately

$0.2 million for the three months ended March 31, 2026 relating to the payment of dividends to OpCo Class A preferred unit holders, repayments

of debt and finance leases, and tax withholding paid related to stock-based compensation, offset by net proceeds received in connection

with the White Lion RRA.

Net cash used in financing activities was approximately $0.1 million for the three months ended March 31, 2025,

relating to repayments of debt and finance leases.

Net cash provided by financing activities was

approximately $1.2 million for the six months ended June 30, 2026, consisting primarily of $1.4 million of net proceeds from the Convertible

Note, partially offset by dividends paid to OpCo Class A preferred unit holders, repayments of debt and finance lease liabilities, and

tax withholdings paid related to stock-based compensation.

Net cash used in financing activities was approximately $0.2 million for the

six months ended June 30, 2025, relating to repayments of debt and finance lease liabilities.

Current Indebtedness

As of March 31, 2026, the Company’s outstanding

indebtedness consisted of approximately $73,471 of vehicle loans.

The Company has historically funded its operations and growth through

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

As of June 30, 2026, our outstanding indebtedness

consisted of the Convertible Note in the principal amount of $1.7 million (with a net carrying amount of $0.5 million after unamortized

debt discount), vehicle loans of less than $0.1 million, and finance lease liabilities of $0.3 million.

See Note 8—Debt to

the condensed consolidated financial statements for additional information regarding the Convertible Note.

Non-GAAP Financial Measures

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to allocate resources going forward.

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

The following table provides a reconciliation of contribution profit

for the periods presented:

The following table provides a reconciliation

of contribution profit for the periods presented:

Three Months Ended

Six Months Ended

Cost of revenues

Total gross profit

Depreciation and amortization

1 unchanged sentence

Total contribution profit

$ (2,770,825 )

Contribution margin

2 unchanged sentences

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

gain (loss) on change in fair value of warrant liabilities, stock-based compensation, and non-recurring transaction-related expenses.

We utilize Adjusted EBITDA as an internal performance measure in the management of our operations because we believe the exclusion of

these non-cash and non-recurring charges allow for a more relevant comparison of our results of operations to other companies in our industry.

gain (loss) on change in fair value of derivative liability, gain (loss) on change in fair value of warrant liabilities, stock-based compensation,

and transaction-related expenses.

We utilize Adjusted EBITDA as an internal performance measure in the management of our operations because

we believe the exclusion of these items allows for a more relevant comparison of our results of operations to other companies in our industry.

Adjusted EBITDA should not be viewed as a substitute for net income (loss) calculated in accordance with GAAP, and other companies may

4 unchanged sentences

Three Months Ended

Six Months Ended

$ (2,749,966 )

$ (2,679,464 )

$ (7,441,277 )

$ (15,998,827 )

Interest expense

Gain on change in fair value of derivative liability

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

1 unchanged sentence

Stock-based compensation

Non-recurring transaction-related expenses

Transaction-related expenses

Depreciation and amortization

2 unchanged sentences

$ (4,957,061 )

$ (3,881,085 )

Net loss margin

2 unchanged sentences

For a description of our critical accounting policies

and estimates, refer to “Management’s Discussion and Analysis of Financial Condition and Results of Operations – Critical

Accounting Estimates” in our Annual Report on Form 10-K for the year ended December 31, 2025, filed with the SEC on April 1, 2026.

There have been no material changes to our critical accounting policies and estimates since our Annual Report on Form 10-K for the year

ended December 31, 2025.

and estimates, refer to “ Management’s Discussion and Analysis of Financial Condition and Results of Operations –

Critical Accounting Estimates ” in our Annual Report on Form 10-K for the year ended December 31, 2025, filed with the SEC on

April 1, 2026.

There have been no material changes to our critical accounting policies and estimates since our Annual Report on Form 10-K

for the year ended December 31, 2025, besides the following:

Embedded Derivative Liabilities

We evaluate the embedded features of our 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 met.

We apply significant

judgment to identify and evaluate complex terms and conditions for our 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.

The fair value of the bifurcated embedded derivative

liability related to the Convertible Note is estimated using a Monte Carlo simulation model.

The model requires significant judgment,

including assumptions regarding expected volatility of our Class A common stock, the risk-free interest rate, the expected timing of the

commencement and pace of conversion, and the simulated path of the conversion price, which is subject to the Floor Price and a pricing

ceiling and may vary with the market price of our Class A common stock.

Changes in these assumptions, particularly expected volatility

and the assumed timing of conversion, could materially affect the estimated fair value of the derivative liability and the related change

in fair value recognized in our condensed consolidated statements of operations.

As of June 30, 2026, the estimated fair value of the

embedded derivative liability was $699,100, and the change in fair value recognized for the three and six months ended June 30, 2026 was

a gain of $232,500.

See Note 8—Debt and Note 9—Fair Value Measurements for additional information.

Quantitative and Qualitative Disclosures

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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 2. Management’s Discussion and Analysis