ZEO 10-K & 10-Q changes, risk factors and insider trading

At the international level, the United Nations-sponsored Paris Paris Agreement requires member states, including the United States, to submit non-binding, individually-determined greenhouse gas reduction goals known as “Nationally Determined Contributions” every five years after 2020. Former President Joe Biden committed the United United States to a goal of reducing greenhouse gas emissions by 50 – 52% below 2005 levels by 2030, a target consistent with the Paris Paris Agreement’s goal of “net-zero” greenhouse gas emissions by 2050. In contrast to the stated goals of President Biden’s Biden’s administration, the administration of the newly-elected President Donald Trump, is less likely to create or support incentives to reduce greenhouse gas emissions. In January the newly-elected President Trump announced the United States will exit the Paris Agreement. As a result, support from the U.S. government for addressing climate change is likely to decrease, and as a result, consumer demand for clean energy may decrease. Additional international agreements or any legislation, regulation, or executive action within the U.S. addressing climate climate change, including any climate-related disclosure requirements and legislation or regulation.

We also compete with solar companies that are marketed to potential customers by dealers, and we may also face competition from new entrants into the market as a result of the passage of the Inflation Reduction Act of 2022 (the “IRA”) and its impacts and benefits to the solar industry. Some of these competitors specialize in the distributed solar energy market and some may provide energy at lower costs than we do. Some of our competitors offer or may offer similar services and products as we do, such as direct outright sales of solar energy systems. Many of our competitors also have significant brand name recognition, lower barriers to entry into the solar market, greater capital resources than we have and extensive knowledge of our target markets. In addition, some of our competitors have an established business of providing construction, electrical contracting, or roofing services.

The installation and ongoing operations and maintenance of solar energy systems and energy storage systems requires our employees or those of third-party contractors to work with complicated and potentially dangerous electrical systems and/or at potentially dangerous heights. The evaluation and modification of buildings as part of the installation process requires these individuals to work in locations that may contain potentially dangerous levels of asbestos, lead, mold or other materials known or believed to be hazardous to human health. We also maintain large fleets of vehicles that these employees use in the course of their work. There is substantial risk of serious illness, injury, or death if proper safety procedures are not followed. Our operations are subject to regulation under the U.S. Occupational Safety and Health Act (“OSHA”), Department of Transportation (“DOT”) regulations, and equivalent state laws. Changes to such regulatory requirements, or stricter interpretation or enforcement of existing laws or regulations, could result in increased costs. If we fail to comply with applicable workplace safety and health regulations, even if no work-related serious illness, injury, or death occurs, we may be subject to civil or criminal enforcement and be required to pay substantial penalties, incur significant capital expenditures, or suspend or limit operations. Any accidents, citations, violations, illnesses, injuries or failure to comply with industry best practices may subject us to adverse publicity, damage our reputation and competitive position and adversely affect our business. Because individuals hired by us or on our behalf to perform installation and ongoing operations and maintenance of our solar energy systems and energy storage systems, including our third-party contractors, are compensated on a per project basis, they are incentivized to work more quickly than installers compensated on an hourly basis. While we have not experienced a high level of injuries to date, this incentive structure may result in higher injury rates than others in the industry and could accordingly expose us to increased liability.

Manufacturers of the equipment we sell currently provide a manufacturer’s warranty for 25twenty-five years. If there is a covered failure of equipment, the manufacturer will pay for replacement replacement or repair. These warranties are subject to liability and other limits. If a customer seeks warranty protection and a warranty provider provider is unable or unwilling to perform its warranty obligations, whether as a result of its financial condition or otherwise, or if the term of the warranty obligation has expired or a liability limit has been reached, there may be a reduction or loss of protection for the affected assets and an increase in costs to the customer. Any widespread product failures or operating deficiencies may damage our market reputation and adversely impact our financial results.

For the twelveyear monthsended December 31, 2025, approximately 11% of our net revenues were generated in Florida, 32% in Ohio, and 32% in Virginia. For the year ended December 31, 2024, approximately approximately 53% of our salesnet revenues were made in Florida, and for the twelve months ended December 31, 2023, approximately 92% of our sales were madegenerated in Florida. This concentration of our customer base and operational infrastructure could lead to our business and results of operations being particularly susceptible to adverse economic, regulatory, political, weather and other conditions in this market and in other markets that may become similarly concentrated.

We have in the past and may in the future acquire one or more companies, project pipelines, projects, SRECs,solar renewable energy credits (“SRECs”), products, or technologies or enter into joint ventures or other strategic transactions. We may not realize the anticipated benefits of past or future investments, strategic transactions, or acquisitions, and these transactions involve numerous risks that are not within our control. These risks include the following, among others:

During 2024,2024 and 2025, the majority of our customers who who entered into leasing agreements have done so with third-party leasing companies such as Palmetto Solar, LLC d/b/a LightReach,LightReach (“Solar”), Sunnova Energy Corporation (“Sunnova”), Goodleap LLC or a third party leasing companiescompany established and managed by White Horse Energy. Thus far, such companies have had sufficient assets to finance the purchase of systems for each of our customers who have signed agreements for leased solar energy systems to be installed on their home and for whom the installation processes have been completed. However, no assurance can be given that this will continue, and if such companies decide not to continue to provide financing for leases due to general market conditions, changes in tax benefits associated with our solar systems, concerns about their or our business or prospects, or any other reason, or if they materially change the terms under which they are willing to pay us to install and service leased solar energy systems, and we cannot timely replace them, this could have an adverse effect on our business, financial condition and results of operations. Additionally, such companies may fail to pay or delay the payment of amounts owed to us for several reasons, including financial difficulties resulting from macroeconomic conditions, and extended delays or defaults in payment could adversely affect our business, results of operations, cash flows and financial condition. To mitigate the foregoing risks, we have identified additional leasing partners and are negotiating business arrangements with them to increase the number of leasing parties we have the ability to work with.

System leases represented 8% of our installations in 2023 and approximately 64% induring the twelve months year ended December 31, 2024.2025 and 2024, were approximately 98% and 64%, respectively. Approximately 44% of those leases are owned by Solar, and and if (i) Solar terminates their relationship with us, (ii) Solar does not have sufficient assets in the future to provide financing for customers wishing to lease their solar energy systems, (iii) we cannot enter into new arrangements with other third-party investors to provide financing for customers wishing to lease their solar energy systems, or (iv) we cannot maintain current or enter into new arrangements with other third party leasing companies, we may be unable to continue to increase the size of our residential lease program, which could have a material, adverse effect on our business, results of operations, cash flows, and financial condition in the future.

Our business dependsbenefits onfrom government policies that that promote and support solar energy and enhance the economic viability of owning or leasing solar energy systems.systems, energy storage, and certain other energy solutions. Certain U.S. federal, state and local governmental bodies provide incentives to owners, distributors, installers and manufacturers of solar energy systems to promote solar energy. These incentives include an investment tax credit and income tax credit offered by the federal government, as well as other tax credits, rebates and SRECs associated with solar energy generation. We rely on these incentives to lower our cost of capital and to attract investors, all of which enable us to lower the price we charge customers for our solar service offerings. These incentives have had a significant impact on the development of solar energy, but they could change at any time, as further described below. These incentives may may also expire on a particular date, in some cases end when the allocated funding is exhausted, or may be reduced, terminated or repealed without notice. The financial value of certain incentives may also decrease over time.

In December 2017, the Tax Cuts and Job Acts of of 2017 (the “Tax Act”) was enacted. As part of the Tax Act, the corporate income tax rate was reduced, and there there were other changes, including limiting or eliminating various other deductions, credits and tax preferences. The IRA implemented a corporate alternative minimum tax of 15% of financial statement income (subject to certain adjustments) for companies that report over $1 billion in profits to shareholdersstockholders; similar to existing law, business credits (including solar energy credits) are limited to 75% of income in excess of $25,000 (with no limit against the first $25,000). We cannot predict whether and to what extent the U.S. corporate income tax rate will change underin the Trump administration.future. The U.S. Congress is constantly considering changes to the tax code. Further limitations on, or elimination of, the tax benefits that support the financing of solar energy under current U.S. law could significantly and adversely impact our business.

The Trump administration is evaluating whether to seek reductions in the amount of federal tax credits available under the IRA. If this occurs, or if the federal government introduces other delays, reductions, or changes in policies that support the residential solar industry, including the tax credits available under the IRA, this could have an adverse effect on our business. Additionally, the above-described changes in the government’s trade policy, and possible changes in tax policy have contributed to investor and consumer uncertainty, and could contribute to a higher interest rate environment, which may further negatively impact our operations and financing costs. While it is difficult to predict specific outcomes at this time, we expect a period of regulatory and policy uncertainty in the near term.

Our business model also reliesbenefits on multiplefrom tax exemptions exemptions offered at the state and local levels. For example, some states have property tax exemptions that exempt the value of solar energy systems in determining values for calculation of local and state real and personal property taxes. State and local tax exemptions can have sunset dates, triggers for loss of the exemption, and can be changed by state legislatures and other regulators, and if solar energy systems were not exempt from such taxes, the property taxes payable by customers would be higher, which could offset any potential savings our solar service offerings could offer. Similarly, if state or local legislatures or tax administrators impose property taxes on third-party owners of solar energy systems, solar companies like us would be subject to higher costs.

In general, we relybenefit onfrom certain state and local local tax exemptions that apply in some jurisdictions to the sale of equipment, sale of power, or both. These state and local tax exemptions can expire, can be changed by state legislatures, or their application to us can be challenged by regulators, tax administrators, or court rulings. Any changes to, or efforts to overturn, federal and state laws, regulations or policies that are supportive of solar energy generation or that remove costs or other limitations on other types of energy generation that compete with solar energy projects could materially and adversely affect our business.

We are subject to a number of federal and state laws and regulations, including the federal Occupational Safety and Health Act and comparable state statues,statutes, establishing requirements to protect the health and safety of workers. The OSHA hazard communication standard, the US EPA community right-to-know regulations under under Title III of the federal Superfund Amendment and Reauthorization Act, and comparable state statutes, require maintenance of information information about hazardous materials used or produced in operations and provision of this information to employees, state and local government authorities, authorities, and citizens. Other OSHA standards regulate specific worker safety aspects of our operations. Substantial fines and penalties can be imposed, and orders or injunctions limiting or prohibiting certain operations may be issued, in connection with any failure to comply with these laws and regulations.

Certain stockholders in the Company, including certain of the selling securityholders,Company acquired, or may acquire, shares of our Class A Common Stock or Warrants at prices below the current trading price of our Class A Common Stock or Warrants, as applicable,Stock, and may experience a positive rate of return based on the current trading price.

For example, the Sponsor and the other Initial Shareholders can earn a positive rate of return on their investment if the trading price of Class A Common Stock is approximately $2.04 or more per share. Public stockholders may not be able to experience the same positive rates of return on securities they purchase due to the low price at which the Sponsor and the other Initial ShareholdersStockholders purchased shares of our Class A Common Stock and Warrants.

We are subject to the reporting requirements of the Exchange Act, the Sarbanes-Oxley Act, the Dodd-Frank Wall Street Reform and Consumer Protection Act of 2010, Nasdaq listing requirements and other applicable securities laws and regulations. The expenses incurred by public companies generally for reporting and corporate governance purposes are greater than those for private companies. For example, the Exchange Act requires, among other things, that we file annual, quarterly, and current reports with respect to our business, financial condition, and results of operations. Compliance with these rules and regulations will increase our legal and financial compliance costs, and increase demand on our systems, particularly after we are no longer an emerging growth company. In addition, as a public company, we may be subject to stockholder activism, which can lead to additional substantial costs, distract management, and impact the manner in which we operate our business in ways we cannot currently anticipate. As a result of disclosure of information in this Reporttherein and in filings required of a public company, our business and financial condition will become more visible, which may result in threatened or actual litigation, including by competitors. We expect these rules and regulations to increase our legal and financial compliance costs and to make some activities more difficult, time-consuming, and costly, although we are currently unable to estimate these costs with any degree of certainty.

We have identified material weaknesses in our internal controls over financial reporting. A material weakness is a deficiency, or combination of deficiencies, in internal controls over financial reporting such that there is a reasonable possibility that a material misstatement of our annual or interim financial statements will not be prevented or detected on a timely basis. Specifically, a material weakness exists in the Company’s internal control over financial reporting related to ineffective controls over period end financial disclosure and reporting processes, including not timely performing certain reconciliations and the completeness and accuracy of those reconciliations, and lack of effectiveness of controls over accurate accounting and financial reporting and reviewing the underlying financial statement elements, and recording incorrect journal entries that also did not have the sufficient review and approval.

Additionally, our management has considered and reviewed reviewed the errors which occurred in revenue and cost of goods soldrevenues cutoff, accounts payable, accrued liabilities, stock compensation, expense expense classification, prepaid expenses, operating lease cash flow classification and finance lease arrangements. ManagementOur management has determined that controls are not designed effectively in these areas. To mitigate future misstatements in these areas management will implement the following procedures at the end of each reporting period:

Zeo has Warrants outstanding to purchase up to an aggregate of 13,800,800approximately 13,800,000 shares of Class A Common Stock. Additionally, Zeo will issue shares of Class A Common Stock to to (i) the holders of Convertible OpCo Preferred Units upon the occurrence of a Convertible OpCo Preferred Unit Conversion and (ii) the Sellers upon the conversion of Seller OpCo Units (together with an equal number of shares of Seller Class V Common Stock) into Class A Common Stock. Further, Zeo may choose to seek third-party financing to provide additional working capital for Zeo’s business, in which event Zeo may issue additional shares of Class A Common Stock or other equity securities. Zeo may also issue additional shares of Class A Common Stock or other equity securities of equal or senior rank in the future for any reason or in connection with, among other things, future acquisitions, the redemption of outstanding Warrants or repayment of outstanding indebtedness, without stockholder approval, in a number of circumstances.

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. The majority of our customers are located in Florida, Texas, Arkansas, Missouri, Ohio, and Illinois, and we have an expanding base of customers in California, Colorado, Minnesota, Missouri, Ohio, Utah, and Virginia. Sunergy was created on October 1, 2021 through the Contribution of Sun First Energy, LLC, a rapidly growing solar sales management company, and Sunergy Solar, LLC, a large solar installation company based in Florida, to Sunergy Renewables, LLC.

We believe that continued government policy support of solar energy and increasing conventional utility costs provide the solar energy market with material headwinds for accelerating adoption in the United States, which currently lags other international markets, including Australia and Europe. The majority of our customers are located in Florida, Texas, Arkansas, Missouri, Ohio and Illinois and we have an expanding base of customers in California, Colorado, Minesota, Utah and Virginia. We plan to continue to enter new markets selectively where favorable net metering policies or cost incentives exist and we can implement efficient operations. Most of our sales were generated in Florida in 2023 and were largely split between Florida and Ohio in 2024. We have focused on improving our operational efficiency to meet the decrease in revenues we faced in 2024 Our core solar service offerings are paid for by customer purchases and financed through either third-party long-term lenders or third-party operators who offer leasing products that provide customers with simple, predictable pricing for solar energy that is insulated from rising retail electricity prices. Most of our customers finance their purchases with affordable loans or leases that require minimal or no upfront capital or down payment.

BusinessNote CombinationConversion

We define gross profit as revenue, net less cost of goods soldrevenues and depreciation and amortization related to cost of goods sold,revenues, and define gross margin, expressed as a percentage, as the the ratio of gross profit to revenue, net. See “— Non-GAAP Financial Measures” for a reconciliation of Gross Profit Profit and Gross Margin.

We define contribution profit as revenue, net less direct costs of revenue, commissions expense and depreciation and amortization, and define contribution margin, expressed as a percentage, as the ratio of contribution profit to revenue, net. Contribution profit and margin can be used to understand our financial performance and efficiency and allows investors to evaluate our pricing strategy and compare against competitors. Our management uses these metrics to make strategic decisions, identify areas for improvement, set targets for future performance and make informed decisions about how to allocate resources going forward. ContributionsContribution margin reflects our Contribution profit as a percentage of revenues. See “— Non-GAAP Financial Measures” for a reconciliation of Gross Profit to Contribution Profit and Contribution Margin.

Expansion of Residential Sales into New Markets. Our future revenue growth is, in part, dependent on our ability to expand our product offerings and services in the select residential markets where we operate. As of December 31, 2024, we have operationsoperate in eightFlorida, statesTexas, Arkansas, Missouri, Illinois, Virginia and service customers in 16 states.Ohio. We primarily generate revenue from our sales, product offerings and services in the residential housing market. To continue our growth, we intend to expand our presence in the residential market into additional states based on markets underserved by national sales and installation providers that also have favorable incentives and net metering policies. We believe that our entry into new markets will continue to facilitate revenue growth and customer diversification.

Expansion of New Products and Services. WeIn offer2025, we continued our roofing replacements to facilitate our solar installations and to repair rooftops on homes in Florida damaged by severe weather. We plan to expand our roofing business in all markets we enter in the future. Roofing facilitates a faster processing time for our solar installations in cases where the customer is in need of a roof replacement prior to installing a solar system. In addition, to provide more financing options for our prospective residential solar energy customers, we have partneredprograms within severalplace third-partythat operators which allowsallow our customers to choose a leasing option to finance their systems.systems Wefrom willa continuethird to work with financing partners to find products which best meet the needs of our customers and help them to reduce the cost of their energy consumption.party.

Adding New Customers and Expansion of Sales with Existing Customers. We intend to continue to growincrease our in-house sales force and external sales dealers.dealers Throughin 2024,order ourto in-housetarget new customers sales have been generated through a summer-sales effort. In 2025, we will introduce a year-round sales team with sales representatives who live in the marketsSouthern whereU.S. theyregional sell.residential Our efforts to increase sales will be focused on increasing the concentration of sales in the markets where we operate, improving operational efficiency.markets. We provide competitive compensation packages to our in-house sales teams and external external sales dealers, which incentivizes the acquisition of new customers.

Managing our Supply Chain. We rely on contract manufacturers and suppliers to produce our components. Our suppliers are generally meeting our materials needs and we are realizing a decrease in pricing for our solar components compared to the prior year. We do not anticipate continued decrease in pricing in the coming year.needs. Our ability to grow depends, in part, on the ability of our contract manufacturers and suppliers to provide high quality services and deliver components and finished products on time and at reasonable costs. In the event we are unable to mitigate the impact of delays and/or price increases in raw materials, electronic components and freight, it could delay the manufacturing and installation of our systems, which would adversely impact our cash flows and results of operations, including revenue and contribution margin.

Components of Condensed Consolidated Statements of Operations

Revenue,Net netRevenues

Our primary source of revenue is the sale of our residential solar systems. Our systems are fully functional at the time of installation and require an inspection prior to interconnection to the utility power grid. We sell our systems primarily direct to end user customers for use in their residences. When a customer uses a third-party operator (TPO) lease to finance their system, the TPO is the contracted customer with ZEO. Upon passing installation inspection, inspection, we satisfy our performance obligation and recognize revenue. ManyMost of the Company’s customers finance their obligations with third parties. Most finance arrangements are by way of a lease contract with thirda third-party operator. Some customers utilize debt parties.financing. In these situations, the finance company deducts their financing fees and remits the net amount to the Company. Revenue is recorded recorded net of these financing fees (and/or dealer fees). The volume of sales and installations of rooftop solar systems, our primary product, increase from April to September when a majority of our sales teams are most active in our areas of service. In addition to sales of solar systems, “adders” or accessories to a sale may include roofing, energy efficient appliances, upgraded insulation and/or energy storage systems. All adders consisted of less than 10% of the total revenue, net in each of the year ended December 31, 2024, and 2023.

Our revenue is affected by changes in the volumevolume, system size and average selling prices of our solutions and related accessories, supply and demand, sales incentives and fluctuating interest rates rates that increase or decrease the monthly payments for customers purchasing systems through third party financing. ApproximatelyLess than 5% of our sales were paid in cash by the customer in each of the yearyears ended December 31, 2024,2025 and 2023.2024. 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.

During 2024, costs of goods sold decreased in association with a reduction in revenues. Revenues declined during the year ended December 31, 2025 because of the effect of higher interest rates on the consumer financing rates. The increased cost of consumer lending has reduced the advantage provided by financed solar power relative to standard utility costs, which has negatively affected the demand for our products.

TheExcept as set forth below, the risks described under the heading “Risk Factors” in our Annual Report on Form 10-K for the year ended December 31, 2025 could materially and adversely affect our business, financial condition, results of operations, cash flows, future prospects, and the trading price of our Class A common stock. The risks and uncertainties described therein are not the only ones we face. Additional risks and uncertainties that we are unaware of or that we currently deem immaterial may also become important factors that adversely affect our business.

ReferencesUnless 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 Report”). Certain information contained in the discussion and analysis set forth below includes forward-looking statements that involve risks and uncertainties.

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. 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 contribution of Sun First Energy, LLC, a rapidly growing solar sales management company, and Sunergy Solar, LLC, a large solar installation company based in Florida, to Sunergy Renewables, LLC.

We have focused to date on a simple, capital light business strategy utilizing, as of MarchJune 31,30, 2026, approximately 260 sales agents and approximately 10 independent sales dealers to produce our sales pipeline. We engineer and design projects and process building permit applications on behalf of our customers to timely install their systems and assist their connections to the local utility power grid. Most of the equipment we install is drop-shipped to the installation site by our regional distributors, requiring minimal inventory to be held by the Company during any given period. We depend on our distributors to timely handle logistics and related requirements in moving equipment to the installation sites. In addition to our main offering of residential solar energy systems, we sell and install products such as roofing, insulation, energy efficient appliances and battery storage systems for the residential market.

White Lion FinancingConvertible TransactionNote

On April 23, 2026, the Companywe 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 Companywe no longer meetsmeet 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. requirement. If thewe Company evidencesevidence 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 Companywe will automatically regain compliance. In the event thewe Company doesdo not regain compliance with the $1 bid price requirement by October 14, 2026, the Companywe 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,Market is met, other than the minimum bid price requirement. In addition, the Companywe would also be required to notify Nasdaq of its our intent to cure the minimum bid price deficiency.

We regularly review a number of metrics, including the following key operating and financial metrics, to evaluate our business, measure our performance, identify trends in our business, prepare financial projections and make strategic decisions. We believe the operating and financial metrics presented below are useful in evaluating our operating performance, as they are similar to measures by our public competitors and are regularly used by security analysts, institutional investors and other interested parties in analyzing operating performance and prospects. Adjusted EBITDA and Adjusted 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 measures.

We define contribution profit as revenue, net less direct costs of revenue, commissions expense and depreciation and amortization, and define contribution margin, expressed as a percentage, as the ratio of contribution profit to revenue, net. Contribution profit and margin can be used to understand our financial performance and efficiency and allows investors to evaluate our pricing strategy and compare against competitors. Our management uses these metrics to make strategic decisions, identify areas for improvement, set targets for future performance and make informed decisions about how to allocate resources going forward. Contribution margin reflects our Contribution profit as a percentage of revenues. See “— Non-GAAP Financial Measures” for a reconciliation of Gross Profit to Contribution Profit and Contribution Margin.

We define Adjusted EBITDA, a non-GAAP financial measure, as earningsnet income (loss) before interest expense,and other income (expense), net, income tax expenseprovision (benefit), depreciation and amortization, other income gain (expensesloss), on change in fair value of derivative liability, gain (loss) on change in fair value of warrant liabilities, stock-based compensation, net, and stock compensation, as adjusted to exclude merger transaction relatedtransaction-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.

Expansion of Residential Sales into New Markets. Our future revenue growth is, in part, dependent on our ability to expand our product offerings and services in the select residential markets where we operate primarily in Florida, Texas, Ohio, Illinois, Virginia and Ohio.Virginia. We primarily generate revenue from our product offerings and services in the residential housing market. To continue our growth, we intend to expand our presence in the residential market into additional states based on markets underserved by national sales and installation providers that also have favorable incentives and net metering policies.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.rooftops. We planwill continue to expand our provide roofing businessservices in all markets in which we enterinstall insolar the future.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, thewe Company hashave been working to integrate Heliogen’s concentrated solar power and energy storage technology into itsour clean-energy platform to complement itsour existing solar operations, create operational synergies, and broaden market reach. TheWe Company continuescontinue 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 Southernmarkets U.S.we regional residential markets.serve. We provide competitive compensation packages to our in-house sales teams and external sales dealers, which incentivizes the acquisition of new customers.

Interest rates. Interest rates increased sharply in 2022 but have been relatively stable since. The majority of homeowners have opted to enter into a lease contract with a third-party operator as a means of financing the installation of a solar system. The lease contract provides a lower monthly cost to the homeowner than than a conventional loan product in a higher interest rate environment. We do not have information that allows us to quantify the adverse effects effects attributable to increased interest rates.

The volume of sales and installations of rooftop solar systems, our primary product, increaseincreases from April to September when a majority of our sales teams are most active in our areas of service. In addition to sales of solar systems, “adders” or accessories to a sale may include roofing, energy efficient appliances, smart home security systems, upgraded insulation and/or energy storage systems. AllAdders adders consisted ofrepresented less than 10% of the total revenues, net revenues for each of the threesix months ended MarchJune 31,30, 2026 and 2025.

Our revenue is affected by changes in the volume, system size and average selling prices of our solutions and related accessories, supply and demand, sales incentives and fluctuating interest rates that increase or decrease the monthly payments for customers purchasing systems through third party financing. Less than 5% of our sales were paid in cash by the customer in each of the threesix months ended MarchJune 31,30, 2026 and 2025. Our revenue growth is dependent on our our ability to compete effectively in the marketplace by remaining cost competitive, developing and introducing new sales teams within existing 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 threesix months ended MarchJune 31,30, 2026 compared to the threesix months ended MarchJune 31,30, 2025, driven by increased solar system installation activity. While higher consumer consumer financing rates continue to present headwinds for the residential solar industry broadly, the Company has managed these pressures through through expanded sales efforts and continued growth in its installation volume.

Cost of revenues increased during threethe six months ended MarchJune 31,30, 2026 in association with the increase in revenues.

Other income (expense) primarily consists of changechanges 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 fees under our equipment and vehicle term loans.loans, It also includesand interest income on our cash and note receivable balances.

Three Months Ended MarchJune 31,30, 2026 Compared to Three Months Ended MarchJune 31,30, 2025

Net revenues increaseddecreased by approximately $4.4$1.9 million from $8.8$18.1 million for the three months ended MarchJune 31,30, 2025 to $13.2$16.2 million for the three months ended MarchJune 31,30, 2026. The increasedecrease 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”)., 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 MarchJune 31,30, 2026 andor 2025.

Cost of revenues increased by $2.8$1.2 million from $7.3 million for the $4.8three months ended June 30, 2025 to $8.5 million for the three months ended MarchJune 31, 2025 to $7.6 million for the three months ended March 31,30, 2026, primarily driven by the an increase in solarlabor systemcosts in installationthe activitymarkets 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 slightly from 54.5%40.2% for the three months ended MarchJune 31, 30, 2025 to 57.5%52.9% for the three months ended MarchJune 31,30, 2026, reflecting a compression in gross margin year-over-year.year-over-year primarily driven by higher material costs, offset by some improvements to labor and other costs.

Depreciation and amortization decreased by $3.8 $3.0 million, from $4.9$3.2 million for the three months ended June 30, 2025 to $0.2 million for the three months ended MarchJune 31, 2025 to $1.1 million for the three months ended March 31,30, 2026. The decrease was primarily related to $4.6$2.9 million in amortization of the customer-related intangible asset acquired in connection with the Lumio asset acquisition, 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.

Sales and marketing expenses decreased by $0.1 $1.2 million from $3.1$5.6 million for the three months ended June 30, 2025 to $4.4 million for the three months ended MarchJune 31, 2025 to $3.0 million for the three months ended March 31,30, 2026. The decrease was primarily driven by lower stock-based compensation expense, offset by higher sales commissions, consistentreflecting withboth the increasedecrease in installation revenues duringand changes to the period.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 decreasedincreased by $3.2$1.1 million from $9.5$4.9 million for the three months ended MarchJune 31,30, 2025 to $6.3$5.9 million for the three months ended MarchJune 31,30, 2026. The The decreaseincrease was primarily driven by significant reductions inincreased 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), net decreasedincreased by $0.7$0.3 million from other income,expense, net of $0.7 million$12,952 for the three months ended MarchJune 31,30, 2025 to other expense,income, net of $18,316$0.3 million for the three months ended MarchJune 31,30, 2026. The decreaseincrease was primarily a result of a significant gain on change in fair value of derivative liability and warrant liabilities liabilities forduring the three months ended MarchJune 31,30, 20252026, andcompared to a loss on change in fair value of warrant liabilities forduring the three months ended MarchJune 31, 2026.30, 2025.

Our operations have historically been funded through a combination of revenue generation, proceeds from financing activities, and in 2025, net cash acquired in connection with the Heliogen acquisition. 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 uses include ensuring revenue growth, expanding our sales and marketing efforts and potential acquisitions.

As of MarchJune 31,30, 2026 and December 31, 2025, our cash and cash equivalents balancebalances were $1.7$2.5 million and $6.1 million, respectively. The Company maintains its cash in checking, savings, and money market accounts.

We have operational plans to increase revenue and move towards the goal of profitable operations in 2026,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 salesale, and this limitation resets once White Lion Capital LLC (i.e., once White Lion Capital liquidates theirits 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, in June 2026, we will become eligible tomay utilize a universal shelf registration statement to raisegain access to funding for our company.