Zeo Energy Corp. 10-Q

ITEM 1. FINANCIAL STATEMENTS. ZEO ENERGY CORP. UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS Page Financial Statements (Unaudited) 1 Condensed Consolidated Balance Sheets as of June 30, 2026 and December 31, 2025 2 Condensed Consolidated Statements of Operations and Comprehensive Loss for the Three and Six Months Ended June 30, 2026 and 2025 3 Condensed Consolidated Statements of Changes in Redeemable Non-Controlling Interests and Stockholders’ Equity for the Three and Six Months Ended June 30, 2026 and 2025 4 Condensed Consolidated Statements of Cash Flows for the Six Months Ended June 30, 2026 and 2025 6 Notes to Condensed Consolidated Financial Statements 7 1 ZEO ENERGY CORP. CONDENSED CONSOLIDATED BALANCE SHEETS June 30, December 31, 2026 2025 (Unaudited) ASSETS Current Assets Cash and cash equivalents $ 2,451,981 $ 6,137,939 Accounts receivable, net of allowance of $ 2,010,535 and $ 4,777,550 , respectively 10,015,739 8,158,909 Accounts receivable – related party 286,638 611,807 Inventories 820,547 852,179 Contract assets 2,000,117 2,598,623 Prepaid expenses and other current assets 4,042,046 4,192,590 Total Current Assets 19,617,068 22,552,047 Other assets 61,277 92,712 Property and equipment, net 1,975,341 2,830,490 Operating lease right-of-use assets 603,128 897,476 Finance lease right-of-use assets 242,302 310,539 Note receivable – related party 6,383,149 3,153,485 Goodwill 27,091,695 27,091,695 TOTAL ASSETS $ 55,973,960 $ 56,928,444 LIABILITIES, REDEEMABLE NONCONTROLLING INTERESTS AND STOCKHOLDERS’ EQUITY Current Liabilities Accounts payable $ 4,721,355 $ 3,769,078 Accrued expenses and other current liabilities 3,148,309 2,421,237 Customer advances – related party 3,779,066 49,269 Contract liabilities 244,033 1,301,393 Current portion of operating lease obligations 495,687 684,819 Current portion of finance lease obligations 149,534 142,095 Current portion of long-term debt 24,858 23,526 Total Current Liabilities 12,562,842 8,391,417 Operating lease obligations, net of current portion 166,944 304,295 Finance lease obligations, net of current portion 132,189 208,865 Long-term debt, net of current portion 42,815 55,586 Convertible note, net 529,082 – Derivative liability 699,100 – Warrant liabilities 532,680 491,280 TOTAL LIABILITIES 14,665,652 9,451,443 Redeemable Noncontrolling Interests Class A convertible preferred units, 1,500,000 units issued and outstanding as of June 30, 2026 and December 31, 2025 17,925,295 17,207,469 Class B units, 21,380,000 and 22,880,000 units issued and outstanding as of June 30, 2026 and December 31, 2025, respectively 14,119,352 24,939,200 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 June 30, 2026 and December 31, 2025, respectively 2,288 2,438 Class A common stock, $ 0.0001 par value, 300,000,000 authorized shares; 35,399,972 and 33,180,843 shares issued and outstanding as of June 30, 2026 and December 31, 2025, respectively 3,540 3,318 Additional paid-in capital 65,679,328 63,394,456 Accumulated other comprehensive income (loss) 15,898 ( 4,895 ) Accumulated deficit ( 56,437,393 ) ( 58,064,985 ) TOTAL STOCKHOLDERS’ EQUITY 9,263,661 5,330,332 TOTAL LIABILITIES, REDEEMABLE NONCONTROLLING INTERESTS AND STOCKHOLDERS’ EQUITY $ 55,973,960 $ 56,928,444 The accompanying notes are an integral part of these condensed consolidated financial statements. 2 ZEO ENERGY CORP. CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE LOSS (UNAUDITED) Three Months Ended June 30, Six Months Ended June 30, 2026 2025 2026 2025 Revenues Revenue, net $ 15,547,544 $ 9,976,447 $ 27,703,065 $ 16,192,838 Related party revenue, net 621,919 8,125,483 1,651,342 10,692,787 Total Net Revenues 16,169,463 18,101,930 29,354,407 26,885,625 Operating Expenses Cost of revenues 8,545,576 7,284,487 16,125,622 12,074,166 Depreciation and amortization 248,171 3,175,452 1,329,699 8,076,181 Sales and marketing 4,416,419 5,629,040 7,428,189 7,766,132 General and administrative 5,948,252 4,866,457 12,224,976 15,334,050 Total Operating Expenses 19,158,418 20,955,436 37,108,486 43,250,529 LOSS FROM OPERATIONS ( 2,988,955 ) ( 2,853,506 ) ( 7,754,079 ) ( 16,364,904 ) Other Income (Expense) Other income 101,200 53,328 169,637 135,691 Interest expense ( 32,429 ) 29,989 ( 43,282 ) ( 288 ) Gain on change in fair value of derivative liability 232,500 – 232,500 – Gain (loss) on change in fair value of warrant liabilities 34,500 ( 96,269 ) ( 41,400 ) 567,180 Total Other Income (Expense) 335,771 ( 12,952 ) 317,455 702,583 NET LOSS BEFORE INCOME TAXES ( 2,653,184 ) ( 2,866,458 ) ( 7,436,624 ) ( 15,662,321 ) Income tax benefit (provision) ( 96,782 ) 186,994 ( 4,653 ) ( 336,506 ) NET LOSS $ ( 2,749,966 ) $ ( 2,679,464 ) $ ( 7,441,277 ) $ ( 15,998,827 ) Less: Net loss attributable to redeemable non-controlling interests ( 414,736 ) ( 263,628 ) ( 1,593,373 ) ( 7,221,726 ) NET LOSS ATTRIBUTABLE TO CLASS A COMMON STOCKHOLDERS $ ( 2,335,230 ) $ ( 2,415,836 ) $ ( 5,847,904 ) $ ( 8,777,101 ) LOSS PER CLASS A COMMON SHARE BASIC AND DILUTED $ ( 0.07 ) $ ( 0.11 ) $ ( 0.17 ) $ ( 0.44 ) WEIGHTED-AVERAGE CLASS A COMMON SHARES OUTSTANDING BASIC 35,194,815 22,096,464 34,296,809 19,983,013 DILUTED 35,837,664 22,096,464 34,618,233 19,983,013 COMPREHENSIVE INCOME Foreign currency translation adjustments 7,647 – 20,793 – NET COMPREHENSIVE LOSS $ ( 2,327,583 ) $ ( 2,415,836 ) $ ( 5,827,111 ) $ ( 8,777,101 ) The accompanying notes are an integral part of these condensed consolidated financial statements. 3 ZEO ENERGY CORP. CONDENSED CONSOLIDATED STATEMENTS OF CHANGES IN REDEEMABLE NONCONTROLLING INTERESTS AND STOCKHOLDERS’ EQUITY FOR THE THREE AND SIX MONTHS ENDED JUNE 30, 2026 (UNAUDITED) Redeemable Noncontrolling Interests Accumulated Class A Convertible Preferred Units Class B Units Class V Common Stock Class A Common Stock Additional Paid-in Other Comprehensive Accumulated Total Stockholders’ Units Amount Units Amount Shares Amount Shares Amount Capital Loss Deficit Equity Balance, December 31, 2025 1,500,000 $ 17,207,469 22,880,000 $ 24,939,200 24,380,000 $ 2,438 33,180,843 $ 3,318 $ 63,394,456 $ ( 4,895 ) $ ( 58,064,985 ) $ 5,330,332 Stock-based compensation – – – – – – – – 663,053 – – 663,053 Class A common stock issued upon vesting of restricted stock awards – – – – – – 120,051 12 ( 12 ) – – – Tax withholding paid related to stock-based compensation – – – – – – – – ( 11,609 ) – – ( 11,609 ) Class A common stock issued to employees for services – – – – – – 31,793 3 31,312 – – 31,315 Class A common stock issued in exchange for OpCo Class B units and corresponding Class V common stock – – ( 1,500,000 ) ( 873,000 ) ( 1,500,000 ) ( 150 ) 1,500,000 150 873,000 – – 873,000 Class A common stock issued in connection with a committed equity facility, net of offering costs – – – – – – 241,000 24 13,431 – – 13,455 Class A common stock issued for a commitment fee – – – – – – 66,225 7 99,993 – – 100,000 Dividends paid to preferred unit holders – ( 160,153 ) – – – – – – – – – – Foreign currency translation – – – – – – – – – 13,146 – 13,146 Subsequent measurement of redeemable noncontrolling interests – – – ( 10,183,045 ) – – – – – – 10,183,045 10,183,045 Net income loss – 432,398 – ( 1,611,035 ) – – – – – – ( 3,512,674 ) ( 3,512,674 ) Balance, March 31, 2026 1,500,000 $ 17,479,714 21,380,000 $ 12,272,120 22,880,000 $ 2,288 35,139,912 $ 3,514 $ 65,063,624 $ 8,251 $ ( 51,394,614 ) $ 13,683,063 Stock-based compensation – – – – – – – – 634,228 – – 634,228 Class A common stock issued upon vesting of restricted stock awards – – – – – – 260,060 26 ( 26 ) – – – Tax withholding paid related to stock-based compensation – – – – – – – – ( 18,498 ) – – ( 18,498 ) Foreign currency translation – – – – – – – – – 7,647 – 7,647 Subsequent measurement of redeemable noncontrolling interests – – – 2,707,549 – – – – – – ( 2,707,549 ) ( 2,707,549 ) Net loss – 445,581 – ( 860,317 ) – – – – – – ( 2,335,230 ) ( 2,335,230 ) Balance, June 30, 2026 1,500,000 $ 17,925,295 21,380,000 $ 14,119,352 22,880,000 $ 2,288 35,399,972 $ 3,540 $ 65,679,328 $ 15,898 $ ( 56,437,393 ) $ 9,263,661 4 ZEO ENERGY CORP. CONDENSED CONSOLIDATED STATEMENTS OF CHANGES IN REDEEMABLE NONCONTROLLING INTERESTS AND STOCKHOLDERS’ EQUITY (DEFICIT) FOR THE THREE AND SIX MONTHS ENDED JUNE 30, 2025 (UNAUDITED) Redeemable Noncontrolling Interests Accumulated Class A Convertible Preferred Units Class B Units Class V Common Stock Class A Common Stock Additional Paid-in Other Comprehensive Accumulated Total Stockholders’ Units Amount Units Amount Shares Amount Shares Amount Capital Loss Deficit (Deficit) Balance, December 31, 2024 1,500,000 $ 16,130,871 33,730,000 $ 115,693,900 35,230,000 $ 3,523 13,252,964 $ 1,326 $ 14,523,963 $ – $ ( 103,440,891 ) $ ( 88,912,079 ) Stock-based compensation – – – – – – – – 2,137,247 – – 2,137,247 Class A common stock issued to employees for services – – – – – – 43,500 4 63,505 – – 63,509 Reverse recapitalization related deferred taxes and adjustments – – – – – – – – ( 238,491 ) – – ( 238,491 ) Class A common stock issued in exchange for OpCo Class B units and corresponding Class V common stock – – ( 8,500,000 ) ( 18,785,000 ) ( 8,500,000 ) ( 850 ) 8,500,000 850 18,785,000 – – 18,785,000 Subsequent measurement of redeemable noncontrolling interests – – – ( 51,448,264 ) – – – – – – 51,448,264 51,448,264 Net loss – 405,237 – ( 7,363,336 ) – – – – – – ( 6,361,265 ) ( 6,361,265 ) Balance, March 31, 2025 1,500,000 $ 16,536,108 25,230,000 $ 38,097,300 26,730,000 $ 2,673 21,796,464 $ 2,180 $ 35,271,224 $ – $ ( 58,353,892 ) $ ( 23,077,815 ) Stock-based compensation – – – – – – – – 1,078,202 – – 1,078,202 Class A common stock issued upon vesting of restricted stock awards – – – – – – 50,000 5 ( 5 ) – – – Class A common stock issued in exchange for OpCo Class B units and corresponding Class V common stock – – – ( 417,500 ) ( 250,000 ) ( 25 ) 250,000 25 417,500 – – 417,500 Subsequent measurement of redeemable noncontrolling interests – – – 35,448,793 – – – – – – ( 35,448,793 ) ( 35,448,793 ) Net loss – 422,966 – ( 686,593 ) – – – – – – ( 2,415,836 ) ( 2,415,836 ) Balance, June 30, 2025 1,500,000 $ 16,959,074 25,230,000 $ 72,442,000 26,480,000 $ 2,648 22,096,464 $ 2,210 $ 36,766,921 $ – $ ( 96,218,521 ) $ ( 59,446,742 ) The accompanying notes are an integral part of these condensed consolidated financial statements. 5 ZEO ENERGY CORP. CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED) Six Months Ended June 30, 2026 2025 CASH FLOWS FROM OPERATING ACTIVITIES Net loss $ ( 7,441,277 ) $ ( 15,998,827 ) Adjustment to reconcile net loss to net cash used in operating activities Depreciation and amortization 1,329,699 8,076,181 Amortization of debt discount 17,814 – Interest added to note receivable – related party ( 79,664 ) ( 75,786 ) Gain on change in fair value of derivative liability ( 232,500 ) – (Gain) loss on change in fair value of warrant liabilities 41,400 ( 567,180 ) Stock-based compensation 1,297,281 3,271,831 Class A common stock issued to employees for services 31,315 63,509 Provision for credit losses 471,044 3,270,881 Non-cash operating lease expense 336,073 318,763 Changes in operating assets and liabilities: Accounts receivable ( 2,327,874 ) 1,310,867 Accounts receivable – related party 325,169 133,512 Inventories 31,632 ( 45,265 ) Contract assets 598,506 ( 9,177 ) Contract assets – related party – ( 2,705,295 ) Prepaids and other current assets 141,094 495,250 Other assets 31,435 ( 1,005,197 ) Accounts payable 972,687 2,269,487 Accrued expenses and other current liabilities 837,649 ( 1,038,671 ) Customer advances – related party 3,729,797 ( 2,000,674 ) Contract liabilities ( 1,057,360 ) 2,936 Contract liabilities – related party – ( 2,000 ) Operating lease payments ( 368,208 ) ( 315,079 ) Net cash used in operating activities ( 1,314,288 ) ( 4,549,934 ) CASH FLOWS FROM INVESTING ACTIVITIES Purchases of property and equipment ( 406,315 ) ( 807,025 ) Investment in note receivable – related party ( 3,150,000 ) – Net cash used in investing activities ( 3,556,315 ) ( 807,025 ) CASH FLOWS FROM FINANCING ACTIVITIES Net proceeds from Class A common stock issued in connection with a committed equity facility 13,455 – Net proceeds from convertible note 1,500,000 – Debt issuance costs paid ( 57,132 ) – Repayments of finance lease liabilities ( 69,237 ) ( 63,651 ) Repayments of debt ( 11,439 ) ( 144,814 ) Dividends paid to OpCo Class A preferred unit holders ( 160,153 ) – Tax withholdings paid related to stock-based compensation ( 30,107 ) – Net cash provided by (used in) financing activities 1,185,387 ( 208,465 ) Effect of foreign exchange on cash ( 742 ) – NET CHANGE IN CASH AND CASH EQUIVALENTS ( 3,685,958 ) ( 5,565,424 ) Cash and cash equivalents, beginning of period 6,137,939 5,634,115 Cash and cash equivalents, end of the period $ 2,451,981 $ 68,691 SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION Cash paid for interest $ 20,664 $ 49,672 Cash paid for income taxes $ – $ – NON-CASH INVESTING AND FINANCING ACTIVITIES Net loss attributable to redeemable noncontrolling interest $ 2,471,352 $ 8,049,929 OpCo Class A preferred dividends $ 877,979 $ 828,203 Subsequent measurement of redeemable noncontrolling interest $ 7,475,496 $ 15,999,471 Class A common stock issued upon vesting of restricted stock awards $ 38 $ 5 Class A common stock issued in exchange for Class V common stock $ 150 $ 875 Fair value of Class A common stock issued in exchange for OpCo Class B units $ 873,000 $ 19,202,500 Class A common stock issued for commitment fee $ 100,000 $ – Reverse recapitalization related deferred taxes and adjustments $ – $ 238,491 Fair value of derivative liability recognized upon issuance of convertible note $ 931,600 $ – Original issue discount on convertible note $ 170,000 $ – Right-of-use assets obtained in exchange for new operating lease liabilities $ 41,725 $ 68,760 The accompanying notes are an integral part of these condensed consolidated financial statements. 6 Zeo Energy Corp. Notes to the CONDENSED Consolidated Financial Statements June 30, 2026 (UNAUDITED) NOTE 1 —BASIS 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 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 S-X. They do not include all the information and footnotes required by U.S. GAAP for complete financial statements. The December 31, 2025 consolidated balance sheet data was derived from audited financial statements but does not include all disclosures required by U.S. GAAP. 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. 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 met. 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 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 FASB issued ASU 2025-05, “ Financial Instruments—Credit Losses (Topic 326): Measurement of Credit Losses for Accounts Receivable and Contract Assets ,” which introduces a practical expedient for the application of the current expected credit loss model to current accounts receivable and contract assets. The amendment is effective for interim and annual periods beginning after December 15, 2025, with early adoption permitted. This amendment is to be applied on a prospective basis. The adoption of ASU 2025-05 did not have a material impact on the Company’s condensed consolidated financial statements. Recently Issued Accounting Pronouncements Not Yet Adopted In November 2024, the FASB issued ASU 2024-03, “ Income Statement—Reporting Comprehensive Income—Expense Disaggregation Disclosures (Subtopic 220-40): Disaggregation of Income Statement Expenses ,” which requires disaggregated disclosure of specific expense categories, including purchases of inventory, employee compensation, depreciation, and amortization included in each relevant expense caption presented on the statement of operations. The standard also requires a qualitative description of the amounts remaining in relevant expense captions that are not separately disaggregated quantitatively, as well as the total amount of selling expenses and an entity’s definition of selling expenses. ASU 2024-03 is effective for annual periods beginning after December 15, 2026, and interim periods beginning after December 15, 2027. The Company is currently evaluating the impact ASU 2024-03 will have on its condensed consolidated financial statements. 7 In May 2025, the FASB issued ASU 2025-03, “ Business Combinations (Topic 805) and Consolidation (Topic 810): Determining the Accounting Acquirer in the Acquisition of a Variable Interest Entity ,” which requires entities to consider existing factors in ASC 805 when identifying the accounting acquirer in a transaction effected primarily by exchanging equity interests in which the legal acquiree is a variable interest entity that meets the definition of a business. ASU 2025-03 is effective for fiscal years beginning after December 15, 2026, with early adoption permitted. The Company 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, “ Intangibles—Goodwill and Other—Internal-Use Software (Subtopic 350-40): Targeted Improvements to the Accounting for Internal-Use Software. ” This guidance removes references to project stages throughout ASC 350-40 and clarifies the threshold entities apply to begin capitalizing costs. Under the new standard, cost capitalization should only commence when an entity has committed to funding a software project and it is probable the project will be completed and the software will be used for its intended purpose. The amendments are effective for annual reporting periods beginning after December 15, 2027, and interim reporting periods within those annual reporting periods. Entities may apply the guidance using a prospective, retrospective or modified transition approach. Early adoption is permitted as of the beginning of an annual reporting period. The Company is currently evaluating the impact ASU 2025-06 will have on its condensed consolidated financial statements. In December 2025, the FASB issued ASU 2025-11, “ Interim Reporting (Topic 270): Narrow-Scope Improvements .” ASU 2025-11 clarifies and improves existing interim reporting guidance by consolidating disclosure requirements within Topic 270 and introducing a disclosure principle requiring entities to disclose events and changes occurring after the most recent annual reporting period that are expected to have a material effect on the entity’s financial condition or results of operations. The ASU does not introduce significant changes to recognition or measurement guidance. The amendments in ASU 2025-11 are effective for interim reporting periods within fiscal years beginning after December 15, 2027, with early adoption permitted. ASU 2025-11 allows for either a prospective or retrospective approach on adoption. The Company is currently evaluating the impact ASU 2025-11 will have on its condensed consolidated financial statements. The Company currently believes there are no other issued and not yet effective accounting standards that are materially relevant to its condensed consolidated financial statements. NOTE 2 —LIQUIDITY AND GOING CONCERN ASSESSMENT 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. For 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 statements. 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 (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. 8 NOTE 3 —DISAGGREGATION OF REVENUES AND SEGMENT REPORTING Disaggregation of Revenues The Company’s revenues are disaggregated based on revenue type, including (i) solar system installations, (ii) roofing installations, and (iii) energy storage solutions. The Company’s net revenues for the three and six months ended June 30, 2026 and 2025 are disaggregated as follows: Three Months Ended June 30, Six Months Ended June 30, 2026 2025 2026 2025 Solar system installations, net $ 16,036,932 $ 17,689,644 $ 29,081,956 $ 26,064,556 Roofing installations 132,531 412,286 272,451 821,069 Total net revenues $ 16,169,463 $ 18,101,930 $ 29,354,407 $ 26,885,625 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 $ 19,628,750 for the six months ended June 30, 2026 and 2025, respectively. Segment Reporting The Company operates in two operating and reportable segments: (1) Sunergy, which includes the design, procurement, installation, and servicing of residential solar photovoltaic systems and related roofing services; and (2) Heliogen, which includes concentrated solar power and long-duration energy generation and storage technology solutions for commercial and industrial applications. The Company’s Chief Executive Officer is the Chief Operating Decision Maker (“CODM”). 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 8, 2025, the Company operated as a single operating and reportable segment consisting of its solar installation and related services operations. Corporate public company costs and other activities that are not allocated to Heliogen are included within the Sunergy segment. 9 Segment information for the three months ended June 30, 2026 and 2025 is as follows: Three Months Ended June 30, 2026 Sunergy Heliogen Total Net revenues $ 16,169,463 $ – $ 16,169,463 Operating expenses Cost of revenues (1) 8,545,576 – 8,545,576 Depreciation and amortization 248,171 – 248,171 Sales and marketing (2) 4,416,419 – 4,416,419 General and administrative 5,028,940 919,312 5,948,252 Total operating expenses 18,239,106 919,312 19,158,418 Loss from operations ( 2,069,643 ) ( 919,312 ) ( 2,988,955 ) Other income (expense) Other income 59,671 41,529 101,200 Interest expense ( 32,429 ) – ( 32,429 ) Gain on change in fair value of derivative liability 232,500 – 232,500 Gain on change in fair value of warrant liabilities 34,500 – 34,500 Total other income (expense) 294,242 41,529 335,771 Net loss before income taxes ( 1,775,401 ) ( 877,783 ) ( 2,653,184 ) Income tax provision ( 98,459 ) 1,677 ( 96,782 ) Net loss $ ( 1,873,860 ) $ ( 876,106 ) $ ( 2,749,966 ) Three Months Ended June 30, 2026 Sunergy Heliogen Total (1) Cost of revenues Direct labor $ 1,929,522 $ – $ 1,929,522 Materials 5,662,267 – 5,662,267 Other 953,787 – 953,787 Total cost of revenues $ 8,545,576 $ – $ 8,545,576 (2) Sales and marketing Commissions expense $ 3,967,266 $ – $ 3,967,266 Other sales and marketing 449,153 – 449,153 Total sales and marketing $ 4,416,419 $ – $ 4,416,419 Three Months Ended June 30, 2025 Sunergy Heliogen Total Net revenues $ 18,101,930 $ – $ 18,101,930 Operating expenses Cost of revenues (1) 7,284,487 – 7,284,487 Depreciation and amortization 3,175,452 – 3,175,452 Sales and marketing (2) 5,629,040 – 5,629,040 General and administrative 4,866,457 – 4,866,457 Total operating expenses 20,955,436 – 20,955,436 Loss from operations ( 2,853,506 ) – ( 2,853,506 ) Other income (expense) Other income 53,328 – 53,328 Interest expense 29,989 – 29,989 Loss on change in fair value of warrant liabilities ( 96,269 ) – ( 96,269 ) Total other income (expense) ( 12,952 ) – ( 12,952 ) Net loss before income taxes ( 2,866,458 ) – ( 2,866,458 ) Income tax provision 186,994 – 186,994 Net loss $ ( 2,679,464 ) $ – $ ( 2,679,464 ) 10 Three Months Ended June 30, 2025 Sunergy Heliogen Total (1) Cost of revenues Direct labor $ 1,754,911 $ – $ 1,754,911 Materials 4,223,111 – 4,223,111 Other 1,306,465 – 1,306,465 Total cost of revenues $ 7,284,487 $ – $ 7,284,487 (2) Sales and marketing Commissions expense $ 4,905,556 $ – $ 4,905,556 Other sales and marketing 723,484 – 723,484 Total sales and marketing $ 5,629,040 $ – $ 5,629,040 Segment information for the six months ended June 30, 2026 and 2025 is as follows: Six Months Ended June 30, 2026 Sunergy Heliogen Total Net revenues $ 29,354,407 $ – $ 29,354,407 Operating expenses Cost of revenues (1) 16,125,622 – 16,125,622 Depreciation and amortization 1,329,699 – 1,329,699 Sales and marketing (2) 7,425,588 2,601 7,428,189 General and administrative 10,364,975 1,860,001 12,224,976 Total operating expenses 35,245,884 1,862,602 37,108,486 Loss from operations ( 5,891,477 ) ( 1,862,602 ) ( 7,754,079 ) Other income (expense) Other income 119,251 50,386 169,637 Interest expense ( 43,282 ) – ( 43,282 ) Gain on change in fair value of derivative liability 232,500 – 232,500 Loss on change in fair value of warrant liabilities ( 41,400 ) – ( 41,400 ) Total other income (expense) 267,069 50,386 317,455 Net loss before income taxes ( 5,624,408 ) ( 1,812,216 ) ( 7,436,624 ) Income tax provision ( 6,330 ) 1,677 ( 4,653 ) Net loss $ ( 5,630,738 ) $ ( 1,810,539 ) $ ( 7,441,277 ) Six Months Ended June 30, 2026 Sunergy Heliogen Total (1) Cost of revenues Direct labor $ 3,998,943 $ – $ 3,998,943 Materials 10,522,812 – 10,522,812 Other 1,603,867 – 1,603,867 Total cost of revenues $ 16,125,622 $ – $ 16,125,622 (2) Sales and marketing Commissions expense $ 6,245,906 $ 2,601 $ 6,248,507 Other sales and marketing 1,179,682 – 1,179,682 Total sales and marketing $ 7,425,588 $ 2,601 $ 7,428,189 11 Six Months Ended June 30, 2025 Sunergy Heliogen Total Net revenues $ 26,885,625 $ – $ 26,885,625 Operating expenses Cost of revenues (1) 12,074,166 – 12,074,166 Depreciation and amortization 8,076,181 – 8,076,181 Sales and marketing (2) 7,766,132 – 7,766,132 General and administrative 15,334,050 – 15,334,050 Total operating expenses 43,250,529 – 43,250,529 Loss from operations ( 16,364,904 ) – ( 16,364,904 ) Other income (expense) Other income 135,691 – 135,691 Interest expense ( 288 ) – ( 288 ) Gain on change in fair value of warrant liabilities 567,180 – 567,180 Total other income (expense) 702,583 – 702,583 Net loss before income taxes ( 15,662,321 ) – ( 15,662,321 ) Income tax provision ( 336,506 ) – ( 336,506 ) Net loss $ ( 15,998,827 ) $ – $ ( 15,998,827 ) Six Months Ended June 30, 2025 Sunergy Heliogen Total (1) Cost of revenues Direct labor $ 3,474,373 $ – $ 3,474,373 Materials 6,447,673 – 6,447,673 Other 2,152,120 – 2,152,120 Total cost of revenues $ 12,074,166 $ – $ 12,074,166 (2) Sales and marketing Commissions expense $ 6,769,668 $ – $ 6,769,668 Other sales and marketing 996,464 – 996,464 Total sales and marketing $ 7,766,132 $ – $ 7,766,132 12 NOTE 4 —PREPAID EXPENSES AND OTHER CURRENT ASSETS Prepaid expenses and other current assets as of June 30, 2026 and December 31, 2025 consisted of the following: June 30, December 31, 2026 2025 Prepaid expenses $ 425,728 $ 539,844 Deferred installation and material costs 1,621,972 1,770,057 Receivable related to Lumio asset purchase 1,004,489 1,004,489 Tax receivables 298,612 307,542 Employee receivables and advances on sales commissions 257,960 105,928 Other current assets 433,285 464,730 Total prepaid expenses and other current assets $ 4,042,046 $ 4,192,590 NOTE 5 —PROPERTY AND EQUIPMENT Property and equipment as of June 30, 2026 and December 31, 2025 consisted of the following: June 30, December 31, 2026 2025 Internally-developed software $ 1,326,016 $ 2,211,626 Office furniture and equipment 384,368 384,368 Vehicles 2,482,078 2,477,033 Leasehold improvements 10,000 10,000 Total property and equipment 4,202,462 5,083,027 Less: accumulated depreciation ( 2,227,121 ) ( 2,252,537 ) Total property and equipment, net $ 1,975,341 $ 2,830,490 Depreciation expense for the three months ended 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 June 30, 2026 and December 31, 2025 consisted of the following: June 30, December 31, 2026 2025 Accrued payroll liabilities $ 573,831 $ 506,829 Accrued commissions 1,267,532 998,964 Accrued taxes 390,112 414,490 Accrued credit cards 238,326 250,055 Accrued interest 4,804 – Other accrued liabilities 673,704 250,899 Total accrued expenses and other current liabilities $ 3,148,309 $ 2,421,237 13 NOTE 7 —LEASES Operating Leases 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, 2026 2025 Operating lease right-of-use assets $ 603,128 $ 897,476 Operating lease liabilities, current portion 495,687 684,819 Operating lease liabilities, long-term 166,944 304,295 Total operating lease liabilities $ 662,631 $ 989,114 Weighted-average remaining lease term (years) 1.29 1.58 Weighted-average discount rate 5.17 % 4.97 % The components of operating lease expense consist of the following for the three and six months ended June 30, 2026 and 2025: Three Months Ended June 30, Six Months Ended June 30, 2026 2025 2026 2025 Fixed operating lease expense $ 180,686 $ 152,401 $ 357,603 $ 348,975 Short-term and variable operating lease expense 145,683 55,460 430,539 67,449 Total operating lease expense $ 326,369 $ 207,861 $ 788,142 $ 416,424 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. For the 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, Amount 2026 (remaining) $ 343,007 2027 266,743 2028 76,773 Total 686,523 Less: imputed interest ( 23,892 ) Total operating lease liabilities $ 662,631 14 Finance Leases Finance lease ROU assets and liabilities as of June 30, 2026 and December 31, 2025 consisted of the following: June 30, December 31, 2026 2025 Finance lease right-of-use assets $ 242,302 $ 310,539 Finance lease liabilities, current portion 149,534 142,095 Finance lease liabilities, long-term 132,189 208,865 Total finance lease liabilities $ 281,723 $ 350,960 Weighted-average remaining lease term (years) 1.78 2.28 Weighted-average discount rate 9.76 % 9.76 % 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. 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, Amount 2026 (remaining) $ 85,785 2027 171,570 2028 52,603 Total 309,958 Less: imputed interest ( 28,235 ) Total finance lease liabilities $ 281,723 NOTE 8 —DEBT 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 conditions. 15 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 payable. 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, 2026. 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 . The original 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. 16 NOTE 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 Description Level 1 Level 2 Level 3 Total Derivative liability $ – $ – $ 699,100 $ 699,100 Warrant liabilities 532,680 – – 532,680 Total $ 532,680 $ – $ 699,100 $ 1,231,780 The following table presents changes in the Company’s Level 3 derivative liability measured at fair value on a recurring basis: Amount Derivative Liability Balance as of December 31, 2025 $ – Initial fair value of embedded derivative liability upon issuance of convertible note 931,600 Gain on change in fair value of derivative liability ( 232,500 ) Balance as of June 30, 2026 $ 699,100 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; (v) closing 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. 17 The following table presents changes in the Company’s warrant liabilities measured at fair value on a recurring basis: Warrant Liabilities Amount Balance as of December 31, 2025 $ 491,280 Loss on change in fair value of warrant liabilities 41,400 Balance as of June 30, 2026 $ 532,680 NOTE 10 —RELATED PARTY TRANSACTIONS Solar Leasing Arrangements Certain customers of the Company finance their solar energy system purchases through Solar Leasing I, LLC (“SLI”), a related party managed by the Company’s CEO. These 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 of SLI’s obligations under a Business Loan Agreement between SLI and a bank for borrowings up to $ 10 million. The loan is also personally guaranteed by the Company’s CEO, who serves as the manager of SLI through White Horse Energy, LLC (“White Horse”). As 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 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 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 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. 18 Tax Receivable Agreement In connection with the consummation of the Sunergy 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 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 Litigation From time to time, the Company may be involved in various claims, lawsuits, and legal proceedings arising in the ordinary course of business. The Company records a liability for loss contingencies when it is probable that a loss has been incurred and the amount of the loss can be reasonably estimated in accordance with ASC 450. On July 3, 2025, the Company filed a civil complaint in the California Superior Court, Riverside County, in an action captioned Zeo Energy Corp. v. SolWerks, Inc. and SolKraft, Inc., Case No. CVME2507379 . The complaint asserts a claim for breach of contract and nonpayment of no less than $ 955,914 for residential solar installation services performed between 2020 and 2024. The Company is the successor-in-interest to Lift Energy Construction, Inc. and Lumio HX, Inc., having acquired all rights under the parties’ Master Installation Agreement and related accounts receivable pursuant to a November 1, 2024 bankruptcy sales order. The parties are currently engaged in discovery and the defendants have asserted no counterclaims at this time. 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. NOTE 12 —REDEEMABLE NONCONTROLLING INTERESTS AND EQUITY The table below reflects share information about the Company’s capital stock as of June 30, 2026: Par Value Authorized Issued Treasury Stock Outstanding Class A common stock $ 0.0001 300,000,000 35,399,972 – 35,399,972 Class V common stock $ 0.0001 100,000,000 22,880,000 – 22,880,000 Preferred stock $ 0.0001 10,000,000 – – – Class A convertible preferred units $ 0.0001 1,500,000 1,500,000 – 1,500,000 Class A units $ 0.0001 5,026,964 5,026,964 – 5,026,964 Class B units $ 0.0001 33,730,000 21,380,000 – 21,380,000 Total shares 450,256,964 86,186,936 – 86,186,936 19 Class A common stock, Class V common stock, and preferred stock represent capital stock of Zeo. Class A convertible preferred units, Class A units, and Class B units represent limited liability company interests of OpCo. Class A convertible preferred units are held by the Sponsor and are classified as redeemable noncontrolling interests on the condensed consolidated balance sheet. Class B units are exchangeable for shares of Class A common stock on a one-for-one basis, together with cancellation of an equal number of shares of Class V common stock, and are classified as redeemable noncontrolling interests on the condensed consolidated balance sheet. Class A units are held by Zeo as managing member of OpCo and are eliminated in consolidation. Class A Common Stock During the 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, 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 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 White Lion. 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 stock, net of tax withholding, were issued upon vesting of restricted stock awards granted in March 2024. See Note 13—Stock-Based Compensation for additional information. 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 Compensation for additional information. 20 Redeemable Noncontrolling Interests 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 June 30, 2026, 21,380,000 OpCo units remained outstanding. The prior investors’ interests in OpCo represent redeemable noncontrolling interests. 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 of OpCo units for cash must be funded through a private or public offering of Class A common stock and is subject to approval by the Company’s Board of Directors. Future exchanges of OpCo units may generate incremental tax attributes and related cash tax savings for the Company. Pursuant to the TRA, the Company is generally required to pay the TRA holders 85 % of the net cash tax savings realized as a result of increases in tax basis and certain other tax attributes arising from such exchanges. See Note 10—Related Party Transactions for additional information regarding the TRA. 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. The OpCo amended and restated agreement provides, among other things, for the issuance of corresponding economic, non-voting Class B units of OpCo. Holders of exchangeable OpCo units may cause OpCo to redeem one or more units, together with the cancellation of a corresponding number of shares of the Company’s Class V common stock, for shares of the Company’s Class A common stock on a one-for-one basis, subject to certain restrictions. Under certain circumstances, the Company may be required to redeem OpCo units. Subject to certain conditions, the Class A convertible preferred OpCo units may be redeemed by the Company following the first anniversary of closing and converted by the Sponsor into exchangeable OpCo units, which may then be exchanged for Class A common stock. The Class A convertible preferred units accrue 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 COMPENSATION 2024 Omnibus Incentive Plan On March 6, 2024, the shareholders of ESGEN approved the Zeo 2024 Omnibus Incentive Equity Plan (the “Incentive Plan”), which became effective upon the closing of the Sunergy business combination. A total of 3,220,400 shares of Class A common stock were initially reserved for issuance under the Incentive Plan (the “Plan Share Reserve”). Each award granted under the Incentive Plan reduces the Plan Share Reserve by the number of shares underlying the award. The Plan Share Reserve automatically increases on the first day of each fiscal year beginning in 2025 through 2029 by a number of shares equal to the lesser of (i) 2 % of the outstanding shares of common stock on the last day of the immediately preceding fiscal year or (ii) a lesser number of shares determined by the Board of Directors. The purpose of the Incentive Plan is to enable the Company and its subsidiaries to attract and retain key personnel and to align the interests of directors, officers, employees, consultants, and advisors with those of the Company’s stockholders through equity-based compensation. The following table summarizes restricted stock awards activity under the Incentive Plan for the six months ended June 30, 2026: Restricted Stock Awards Weighted- Average Grant Date Fair Value Outstanding at December 31, 2025 975,002 $ 2.97 Granted 968,358 0.69 Vested ( 413,358 ) ( 1.89 ) Forfeited ( 85,000 ) ( 2.28 ) Outstanding at June 30, 2026 1,445,002 $ 1.79 21 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; and ● 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; and ● 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; and 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 Six Months Ended June 30, Unrecognized Weighted- Average Remaining Grant Date 2026 2025 Expense Life March 13, 2024 $ 181,465 $ 1,284,672 $ 235,780 0.62 February 5, 2025 373,077 592,920 964,800 0.73 July 5, 2025 16,268 – 112,365 1.01 November 5, 2025 7,918 – 48,892 1.35 April 1, 2026 75,129 – 279,684 1.19 May 26, 2026 22,304 – 68,188 0.60 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. 22 Sun Managers, LLC Management Incentive Plan Sun Managers intends to grant Class B units (as defined in the SM LLCA) in Sun Managers through the Sun Managers, LLC Management Incentive Plan (the “Management Incentive Plan”) adopted by Sun Managers to certain eligible employees or service providers of OpCo, Sunergy or their subsidiaries, in the discretion of Timothy Bridgewater, as manager of Sun Managers. Such Class B units may be subject to a vesting schedule, and once such Class B units become vested, there may be an exchange opportunity through which the grantees may request (subject to the terms of the Management Incentive Plan and the OpCo amended and restated limited liability company agreement in its entirety (the “OpCo A&R LLC Agreement”)) the exchange of their Class B units into Seller OpCo Units (together with an equal number of Zeo Class V shares), which may then be converted into Zeo Class A common Stock (subject to the terms of the Management Incentive Plan and the OpCo A&R LLC Agreement). Although Sun Managers is the legal issuer of the awards, all compensatory payments made by Sun Managers to individuals providing services to or for the benefit of the Company or its subsidiaries (including equity interests in Sun Managers) are treated as compensation paid by the Company under ASC 718. In accordance with the OpCo A&R LLC Agreement, the Company allocates 100 % of all related expense and deduction items to Sun Managers. These compensatory payments are accounted for as capital contributions from Sun Managers to the Company, with no new equity units issued in return. On March 31, 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. The restricted shares vested immediately upon grant and the Company recognized $ 792,750 in stock-based compensation expense related to these awards. 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 and the Company recognized $ 303,045 in stock-based compensation expense related to these awards. Seasonal Manager Stock Compensation Plan Beginning January 1, 2025, certain eligible sales managers may earn shares of the Company’s Class A common stock under the Seasonal Manager Stock Compensation Plan, which operates under the umbrella of the Management Incentive Plan. Managers are eligible to earn 40 shares per kW installed for projects sold by the manager’s organization, provided they exceed 1,500 kW installed during a calendar year, and as long as the manager sells 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 grants of vested shares under the Seasonal Manager Stock Compensation Plan as follows: ● 50 % of the shares for which Manager becomes eligible during a calendar year will be granted in Q1 (prior to the end of March) of the following calendar year (the “Tranche 1 Grant”) if Manager remains eligible at the time of the grant. ● The remaining 50 % of the shares for which Manager becomes eligible during a calendar year are granted in the Q1 of the second year following the calendar year in which eligibility is earned (the “Tranche 2 Grant”) if Manager remains eligible at the time of the grant. On March 31, 2026, Sun Managers granted an aggregate of 355,264 restricted shares of Zeo Class A common stock under the Management Incentive Plan to six sales managers. The restricted shares vest in two equal installments as follows. ● One-half (1/2) immediately on the grant date; and ● One-half (1/2) 12 months following the grant date 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 Six Months Ended June 30, Unrecognized Weighted- Average Remaining Grant Date 2026 2025 Expense Life March 31, 2025 $ ( 35,426 ) $ 545,107 $ – – March 31, 2026 127,382 – 76,540 0.75 Total $ 91,956 $ 545,107 $ 76,540 0.75 23 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 TAXES The Company accounts for income taxes in accordance with ASC 740, which requires the recognition of deferred tax assets and liabilities for the expected future tax consequences of events that have been included in the condensed consolidated financial statements. Deferred tax assets and liabilities are determined based on differences between the financial statement carrying amounts and the tax bases of existing assets and liabilities and are measured using enacted tax rates expected to apply in the years in which those temporary differences are expected to reverse. The Company’s effective tax rate was a 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 deferred tax assets based on all available positive and negative evidence. Based on this evaluation, the Company determined that it is not more likely than not that 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 follows: June 30, December 31, 2026 2025 Deferred tax assets: Net operating losses and tax credit carry-forward $ 2,456,550 $ 986,740 Accrued stock compensation 421,417 386,841 Section 743(b) 3,954,455 4,196,394 Other 3,477 3,363 Investment in Sunergy 4,768,624 5,824,820 Total deferred tax assets 11,604,523 11,398,158 Valuation allowance ( 11,604,523 ) ( 11,398,158 ) Net deferred tax assets $ – $ – NOTE 15 —NET LOSS PER SHARE Basic net loss per share is calculated by dividing net loss attributable to Class A common stockholders by the weighted-average number of Class A common shares outstanding during the period. Diluted net loss per share is calculated by adjusting the weighted-average number of Class A common shares outstanding for the potentially dilutive effect of securities that could be converted into or settled in shares of Class A common stock. Potentially dilutive securities include exchangeable OpCo units, convertible debt, and other instruments that may be settled in shares of Class A common stock. The Company applies the treasury stock method to restricted stock awards and warrants, which assumes that all Class A common share equivalents have been exercised at the beginning of the period and that the proceeds from those exercises are assumed to be used to repurchase Class A common shares at the average closing market price during the period. The Company applies the if-converted method to securities that are convertible or exchangeable into Class A common shares. 24 The following table presents the computation of 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 June 30, Six Months Ended June 30, 2026 2025 2026 2025 Numerator Net loss attributable to Class A common stockholders $ ( 2,335,230 ) $ ( 2,415,836 ) $ ( 5,847,904 ) $ ( 8,777,101 ) Denominator Weighted-average Class A common shares outstanding – basic 35,194,815 22,096,464 34,296,809 19,983,013 Loss per Class A common share – basic $ ( 0.07 ) $ ( 0.11 ) $ ( 0.17 ) $ ( 0.44 ) 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 June 30, Six Months Ended June 30, 2026 2025 2026 2025 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 ( 209,882 ) – ( 209,882 ) – 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 35,194,815 22,096,464 34,296,809 19,983,013 Effect of dilutive securities 642,849 – 321,424 – Weighted-average Class A common shares outstanding – diluted 35,837,664 22,096,464 34,618,233 19,983,013 Loss per Class A common share – diluted $ ( 0.07 ) $ ( 0.11 ) $ ( 0.17 ) $ ( 0.44 ) 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 method. 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 EVENTS 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. 25