UNITED STATES
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Washington, D.C. 20549
FORM
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ZEO ENERGY CORP.
Quarterly Report on Form 10-Q
Period Ended September 30, 2025
TABLE OF CONTENTS
i
PART I
FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS.
ZEO ENERGY CORP.
UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
1
ZEO ENERGY CORP.
CONDENSED CONSOLIDATED BALANCE SHEETS
| September 30, | December 31, | |||||||
| 2025 | 2024 | |||||||
| ASSETS | (Unaudited) | |||||||
| Current Assets | ||||||||
| Cash and cash equivalents | $ | $ | ||||||
| Accounts receivable, net | ||||||||
| Accounts receivable – related parties | ||||||||
| Inventories | ||||||||
| Contract assets | ||||||||
| Contract assets – related parties | ||||||||
| Prepaid expenses and other current assets | ||||||||
| Total Current Assets | ||||||||
| Other assets | ||||||||
| Interest receivable – related parties | ||||||||
| Deferred tax asset, net | ||||||||
| Property and equipment, net | ||||||||
| Operating lease right-of-use assets | ||||||||
| Finance lease right-of-use assets | ||||||||
| Related party note receivable | ||||||||
| Intangibles, net | ||||||||
| Goodwill | ||||||||
| TOTAL ASSETS | $ | $ | ||||||
| LIABILITIES, REDEEMABLE NON-CONTROLLING INTERESTS AND STOCKHOLDERS’ DEFICIT | ||||||||
| Current Liabilities | ||||||||
| Accounts payable | $ | $ | ||||||
| Accrued expenses and other current liabilities | ||||||||
| Accrued expenses and other current liabilities – related parties | ||||||||
| Contract liabilities | ||||||||
| Contract liabilities – related parties | ||||||||
| Current portion of operating lease obligations | ||||||||
| Current portion of finance lease obligations | ||||||||
| Current portion of long-term debt | ||||||||
| Convertible promissory note, net | ||||||||
| Total Current Liabilities | ||||||||
| Operating lease obligations, net of current portion | ||||||||
| Finance lease obligations, net of current portion | ||||||||
| Long-term debt, net of current portion | ||||||||
| Warrant liabilities | ||||||||
| TOTAL LIABILITIES | ||||||||
| Redeemable Non-Controlling Interests | ||||||||
| Class A convertible preferred units, | ||||||||
| Class B units, | ||||||||
| Stockholders’ Deficit | ||||||||
| Class V common stock, $ | ||||||||
| Class A common stock, $ | ||||||||
| Additional paid-in capital | ||||||||
| Accumulated other comprehensive loss | ( | ) | ||||||
| Accumulated deficit | ( | ) | ( | ) | ||||
| TOTAL STOCKHOLDERS’ DEFICIT | ( | ) | ( | ) | ||||
| TOTAL LIABILITIES, REDEEMABLE NON-CONTROLLING INTERESTS AND STOCKHOLDERS’ DEFICIT | $ | $ | ||||||
The accompanying notes are an integral part of these condensed consolidated financial statements.
2
ZEO ENERGY CORP.
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(UNAUDITED)
Three Months Ended September 30, | Nine Months Ended September 30, | |||||||||||||||
| 2025 | 2024 | 2025 | 2024 | |||||||||||||
| Revenues | ||||||||||||||||
| Revenue, net | $ | $ | $ | $ | ||||||||||||
| Related party revenue, net | ||||||||||||||||
| Total Net Revenues | ||||||||||||||||
| Operating Expenses | ||||||||||||||||
| Cost of revenues | ||||||||||||||||
| Depreciation and amortization | ||||||||||||||||
| Sales and marketing | ||||||||||||||||
| General and administrative | ||||||||||||||||
| Total Operating Expenses | ||||||||||||||||
| LOSS FROM OPERATIONS | ( | ) | ( | ) | ( | ) | ( | ) | ||||||||
| Other Income (Expense) | ||||||||||||||||
| Other income | ||||||||||||||||
| Interest expense | ( | ) | ( | ) | ( | ) | ( | ) | ||||||||
| Gain on change in fair value of warrant liabilities | ||||||||||||||||
| Total Other Income | ||||||||||||||||
| NET LOSS FROM OPERATIONS BEFORE INCOME TAXES | ( | ) | ( | ) | ( | ) | ( | ) | ||||||||
| Income tax benefit (provision) | ( | ) | ( | ) | ||||||||||||
| NET LOSS | $ | ( | ) | $ | ( | ) | $ | ( | ) | $ | ( | ) | ||||
| Less: net loss attributable to Sunergy Renewables LLC prior to the business combination | ( | ) | ||||||||||||||
| NET LOSS SUBSEQUENT TO THE BUSINESS COMBINATION | ( | ) | ( | ) | ( | ) | ( | ) | ||||||||
| Less: Net income (loss) attributable to redeemable non-controlling interests | ( | ) | ( | ) | ( | ) | ||||||||||
| NET LOSS ATTRIBUTABLE TO CLASS A COMMON STOCKHOLDERS | $ | ( | ) | $ | ( | ) | $ | ( | ) | $ | ( | ) | ||||
| LOSS PER CLASS A COMMON SHARE – BASIC AND DILUTED | $ | ( | ) | $ | ( | ) | $ | ( | ) | $ | ( | ) | ||||
| WEIGHTED-AVERAGE CLASS A COMMON SHARES OUTSTANDING – BASIC AND DILUTED | ||||||||||||||||
| COMPREHENSIVE LOSS | ||||||||||||||||
| Foreign currency translation adjustments | ||||||||||||||||
| NET COMPREHENSIVE LOSS | $ | ( | ) | $ | ( | ) | $ | ( | ) | $ | ( | ) | ||||
The accompanying notes are an integral part of these condensed consolidated financial statements.
3
ZEO ENERGY CORP.
CONDENSED CONSOLIDATED STATEMENTS
OF CHANGES IN REDEEMABLE
NON-CONTROLLING INTERESTS AND STOCKHOLDERS’ DEFICIT
FOR THE THREE AND NINE MONTHS ENDED SEPTEMBER 30, 2025
(UNAUDITED)
| Redeemable Non-Controlling 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 | $ | $ | $ | $ | $ | $ | $ | ( | ) | $ | ( | ) | ||||||||||||||||||||||||||||||||||||
| Stock-based compensation | - | - | - | - | ||||||||||||||||||||||||||||||||||||||||||||
| Class A common stock issued to employees for services | - | - | - | |||||||||||||||||||||||||||||||||||||||||||||
| Reverse recapitalization related deferred taxes and adjustments | - | - | - | - | ( | ) | ( | ) | ||||||||||||||||||||||||||||||||||||||||
| Class A common stock issued in exchange for OpCo class B units and corresponding class V common stock | - | ( | ) | ( | ) | ( | ) | ( | ) | |||||||||||||||||||||||||||||||||||||||
| Subsequent measurement of redeemable non-controlling interests | - | - | ( | ) | - | - | ||||||||||||||||||||||||||||||||||||||||||
| Net income (loss) | - | - | ( | ) | - | - | ( | ) | ( | ) | ||||||||||||||||||||||||||||||||||||||
| Balance, March 31, 2025 | $ | $ | $ | $ | $ | $ | $ | ( | ) | $ | ( | ) | ||||||||||||||||||||||||||||||||||||
| Stock-based compensation | - | - | - | |||||||||||||||||||||||||||||||||||||||||||||
| Class A common stock issued upon vesting of restricted stock awards | - | - | ( | ) | ||||||||||||||||||||||||||||||||||||||||||||
| Class A common stock issued in exchange for OpCo class B units and corresponding class V common stock | - | ( | ) | ( | ) | ( | ) | ( | ) | |||||||||||||||||||||||||||||||||||||||
| Subsequent measurement of redeemable non-controlling interests | - | - | - | ( | ) | ( | ) | |||||||||||||||||||||||||||||||||||||||||
| Net income (loss) | - | ( | ) | - | - | ( | ) | ( | ) | |||||||||||||||||||||||||||||||||||||||
| Balance, June 30, 2025 | $ | $ | $ | $ | $ | $ | $ | ( | ) | $ | ( | ) | ||||||||||||||||||||||||||||||||||||
| Stock-based compensation | - | - | - | - | ||||||||||||||||||||||||||||||||||||||||||||
| Class A common stock issued upon vesting of restricted stock awards | - | - | - | ( | ) | |||||||||||||||||||||||||||||||||||||||||||
| Tax withholding paid related to stock-based compensation | - | - | - | - | ( | ) | ( | ) | ||||||||||||||||||||||||||||||||||||||||
| Class A common stock issued in exchange for OpCo class B units and corresponding class V common stock | - | ( | ) | ( | ) | ( | ) | ( | ) | |||||||||||||||||||||||||||||||||||||||
| Class A common stock issued in the acquisition of Heliogen, Inc. | - | - | - | |||||||||||||||||||||||||||||||||||||||||||||
Class A common stock issued in settlement of accrued advisory fees | - | - | - | |||||||||||||||||||||||||||||||||||||||||||||
| Dividends paid to preferred unit holders | - | ( | ) | - | - | - | ||||||||||||||||||||||||||||||||||||||||||
| Foreign currency translation | - | - | - | - | ( | ) | ( | ) | ||||||||||||||||||||||||||||||||||||||||
| Subsequent measurement of redeemable non-controlling interests | - | - | ( | ) | - | - | ||||||||||||||||||||||||||||||||||||||||||
| Net income (loss) | - | - | - | - | ( | ) | ( | ) | ||||||||||||||||||||||||||||||||||||||||
| Balance, September 30, 2025 | $ | $ | $ | $ | $ | $ | ( | ) | $ | ( | ) | $ | ( | ) | ||||||||||||||||||||||||||||||||||
The accompanying notes are an integral part of these condensed consolidated financial statements.
4
ZEO ENERGY CORP.
CONDENSED CONSOLIDATED STATEMENTS
OF CHANGES IN REDEEMABLE
NON-CONTROLLING INTERESTS AND STOCKHOLDERS’ DEFICIT
FOR THE THREE AND NINE MONTHS ENDED SEPTEMBER 30, 2024
(UNAUDITED)
| Redeemable Non-Controlling Interests | Total | |||||||||||||||||||||||||||||||||||||||||||||||||||
| Class A Convertible Preferred Units | Class B Units | Common Units | Class
V Common Stock | Class
A Common Stock | Additional Paid-in | Accumulated | Stockholders’ Equity | |||||||||||||||||||||||||||||||||||||||||||||
| Units | Amount | Units | Amount | Units | Amount | Shares | Amount | Shares | Amount | Capital | Deficit | (Deficit) | ||||||||||||||||||||||||||||||||||||||||
| Balance, December 31, 2023 | $ | $ | $ | $ | $ | $ | $ | ( | ) | $ | ||||||||||||||||||||||||||||||||||||||||||
| Retroactive application of Business Combination | - | - | ( | ) | ( | ) | - | - | - | |||||||||||||||||||||||||||||||||||||||||||
| Balance, December 31, 2023 | - | - | - | - | ( | ) | ||||||||||||||||||||||||||||||||||||||||||||||
| Stockholder distributions | - | - | - | - | - | ( | ) | ( | ) | |||||||||||||||||||||||||||||||||||||||||||
| Net loss prior to the Business Combination | - | - | - | - | - | ( | ) | ( | ) | |||||||||||||||||||||||||||||||||||||||||||
| Effects of Business Combination | - | |||||||||||||||||||||||||||||||||||||||||||||||||||
| Issuance of Class A Shares to third party advisors | - | - | - | - | - | |||||||||||||||||||||||||||||||||||||||||||||||
| Issuance of Class A Shares to backstop investor | - | - | - | - | - | |||||||||||||||||||||||||||||||||||||||||||||||
| Reverse Recapitalization | - | - | ( | ) | - | ( | ) | |||||||||||||||||||||||||||||||||||||||||||||
| Transaction costs | - | - | - | - | - | ( | ) | - | ( | ) | ||||||||||||||||||||||||||||||||||||||||||
| Establishment of redeemable noncontrolling interests | - | - | - | - | ( | ) | - | ( | ) | |||||||||||||||||||||||||||||||||||||||||||
| Activities subsequent to business combination | - | |||||||||||||||||||||||||||||||||||||||||||||||||||
| Stock-based compensation | - | - | - | - | - | |||||||||||||||||||||||||||||||||||||||||||||||
| Subsequent measurement of redeemable non-controlling interests | - | - | - | - | - | ( | ) | ( | ) | ( | ) | |||||||||||||||||||||||||||||||||||||||||
| Net income (loss) | - | - | ( | ) | - | - | - | ( | ) | ( | ) | |||||||||||||||||||||||||||||||||||||||||
| Balance, March 31, 2024 | $ | $ | $ | $ | $ | $ | $ | ( | ) | $ | ( | ) | ||||||||||||||||||||||||||||||||||||||||
| Stock-based compensation | - | - | - | - | - | - | ||||||||||||||||||||||||||||||||||||||||||||||
| Subsequent measurement of redeemable non-controlling interests | - | - | ( | ) | - | - | - | |||||||||||||||||||||||||||||||||||||||||||||
| Net income (loss) | - | - | ( | ) | - | - | - | ( | ) | ( | ) | |||||||||||||||||||||||||||||||||||||||||
| Balance, June 30, 2024 | - | ( | ) | ( | ) | |||||||||||||||||||||||||||||||||||||||||||||||
| Stock-based compensation | - | - | - | - | - | - | ||||||||||||||||||||||||||||||||||||||||||||||
| Class A common stock issued for services | - | - | - | - | - | |||||||||||||||||||||||||||||||||||||||||||||||
| Reverse recapitalization related deferred taxes and adjustments | - | - | - | - | - | - | ||||||||||||||||||||||||||||||||||||||||||||||
| Subsequent measurement of redeemable non-controlling interests | - | - | ( | ) | - | - | - | |||||||||||||||||||||||||||||||||||||||||||||
| Net income (loss) | - | - | ( | ) | - | - | - | ( | ) | ( | ) | |||||||||||||||||||||||||||||||||||||||||
| Balance, September 30, 2024 | $ | $ | - | $ | $ | $ | $ | $ | ( | ) | $ | ( | ) | |||||||||||||||||||||||||||||||||||||||
The accompanying notes are an integral part of these condensed consolidated financial statements.
5
ZEO ENERGY CORP.
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(UNAUDITED)
| Nine Months Ended September 30, | ||||||||
| 2025 | 2024 | |||||||
| CASH FLOWS FROM OPERATING ACTIVITIES | ||||||||
| Net loss | $ | ( | ) | $ | ( | ) | ||
| Adjustment to reconcile net loss to net cash used in operating activities | ||||||||
| Depreciation and amortization | ||||||||
| Amortization of debt discount | ||||||||
| Gain on change in fair value of warrant liabilities | ( | ) | ( | ) | ||||
| Gain on disposal of fixed assets | ( | ) | ||||||
| Stock-based compensation | ||||||||
| Class A common stock issued to employees for services | ||||||||
| Provision for credit losses | ||||||||
| Non-cash operating lease expense | ||||||||
| Changes in operating assets and liabilities: | ||||||||
| Accounts receivable | ( | ) | ( | ) | ||||
| Accounts receivable – related parties | ( | ) | ( | ) | ||||
| Inventories | ( | ) | ( | ) | ||||
| Contract assets | ( | ) | ||||||
| Contract assets – related parties | ( | ) | ||||||
| Prepaids and other current assets | ( | ) | ||||||
| Other assets | ( | ) | ( | ) | ||||
| Interest receivable – related parties | ( | ) | ||||||
| Accounts payable | ( | ) | ||||||
| Accrued expenses and other current liabilities | ( | ) | ( | ) | ||||
| Accrued expenses and other current liabilities – related parties | ( | ) | ( | ) | ||||
| Contract liabilities | ( | ) | ||||||
| Contract liabilities – related parties | ( | ) | ( | ) | ||||
| Operating lease payments | ( | ) | ( | ) | ||||
| Net cash used in operating activities | ( | ) | ( | ) | ||||
| CASH FLOWS FROM INVESTING ACTIVITIES | ||||||||
| Purchases of property and equipment | ( | ) | ( | ) | ||||
| Cash acquired in the acquisition of Heliogen | ||||||||
| Net cash provided by (used in) investing activities | ( | ) | ||||||
| CASH FLOWS FROM FINANCING ACTIVITIES | ||||||||
| Proceeds from the issuance of convertible preferred stock, net of transaction costs | ||||||||
| Repayments of debt | ( | ) | ( | ) | ||||
| Repayments of finance lease liabilities | ( | ) | ( | ) | ||||
| Dividends paid to OpCo class A preferred unit holders | ( | ) | ||||||
| Tax withholdings paid related to stock-based compensation | ( | ) | ||||||
| Distributions to members | ( | ) | ||||||
| Net cash (used in) provided by financing activities | ( | ) | ||||||
| Effect on foreign exchange on cash | ( | ) | ||||||
| NET CHANGE IN CASH AND CASH EQUIVALENTS | ( | ) | ( | ) | ||||
| Cash and cash equivalents, beginning of period | ||||||||
| Cash and cash equivalents, end of the period | $ | $ | ||||||
| SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION | ||||||||
| Cash paid for interest | $ | $ | ||||||
| Cash paid for income taxes | $ | $ | ||||||
| NON-CASH INVESTING AND FINANCING ACTIVITIES | ||||||||
| Net loss attributable to redeemable non-controlling interest | $ | $ | ||||||
| OpCo class A preferred dividends | $ | $ | ||||||
| Subsequent measurement of redeemable non-controlling interest | $ | $ | ||||||
| Class A common stock issued upon vesting of restricted stock awards | $ | $ | ||||||
| Class A common stock issued in exchange for class V common stock | $ | $ | ||||||
| Fair value of class A common stock issued in exchange for OpCo class B units | $ | $ | ||||||
| Reverse recapitalization related deferred taxes and adjustments | $ | ( | ) | $ | ||||
| Operating lease right-of-use asset and liability measurement | $ | $ | ||||||
| Deferred equity issuance costs | $ | $ | ||||||
| Issuance of class A common stock to vendors | $ | $ | ||||||
| Issuance of class A common stock to backstop investors | $ | $ | ||||||
| Accounts payable settled for loan payable | $ | $ | ||||||
| Net assets acquired in the acquisition of Heliogen | $ | $ | ||||||
| Class A common stock issued in the acquisition of Heliogen | $ | $ | ||||||
| Class A common stock issued in settlement of accrued advisory fees | $ | $ | ||||||
The accompanying notes are an integral part of these condensed consolidated financial statements.
6
Zeo Energy Corp.
Notes to the Condensed Consolidated Financial Statements
SEPTEMBER 30, 2025
(UNAUDITED)
NOTE 1—BASIS OF PRESENTATION AND OTHER INFORMATION
The accompanying unaudited condensed consolidated financial statements of Zeo Energy Corp. (the “Company” or “Zeo”) have been prepared in accordance with accounting principles generally accepted in the United States of America (“GAAP”) for interim financial information and with the instructions to Form 10-Q of Regulation S-X. They do not include all the information and footnotes required by GAAP for complete financial statements. The December 31, 2024 consolidated balance sheet data was derived from audited financial statements but do not include all disclosures required by GAAP. The interim unaudited condensed consolidated financial statements should be read in conjunction with those consolidated financial statements included in the Form 10-K, as filed with the Securities and Exchange Commission on May 28, 2025. In the opinion of management, all adjustments considered necessary for a fair presentation of the financial statements, consisting solely of normal recurring adjustments, have been made. Operating results for the nine months ended September 30, 2025 are not necessarily indicative of the results that may be expected for the year ending December 31, 2025.
Reclassifications
Certain prior period amounts have been reclassified in the condensed consolidated financial statements and accompanying notes to conform to the current period presentation. These reclassifications included changes within contract assets, prepaid expenses and other current assets, and other assets on the consolidated balance sheets. The reclassifications had no impact on previously reported net loss, total assets, total liabilities, stockholders’ deficit, or total cash flows from operations.
Recently Adopted Accounting Pronouncements
In August 2023, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) 2023-05, “Business Combinations—Joint Venture Formations (Subtopic 805-60): Recognition and Initial Measurement,” which requires a newly-formed joint venture to apply a new basis of accounting to its contributed net assets, resulting in the joint venture initially measuring its contributed net assets at fair value on the formation date. ASU 2023-05 is effective for all joint venture formations with a formation date on or after January 1, 2025, with early adoption permitted. These amendments are to be applied prospectively, with retrospective application permitted for joint ventures formed before the effective date. The adoption of ASU 2023-05 did not have a material impact on the Company’s condensed consolidated financial statements.
Recently Issued Accounting Pronouncements Not Yet Adopted
In December 2023, the FASB issued ASU 2023-09, “Income Taxes (Topic 740): Improvements to Income Tax Disclosures,” which enhances the transparency and decision usefulness of income tax disclosures by requiring; (1) consistent categories and greater disaggregation of information in the rate reconciliation and (2) income taxes paid disaggregated by jurisdiction. It also includes certain other amendments to improve the effectiveness of income tax disclosures. ASU 2023-09 is effective for fiscal years beginning after December 15, 2024, with early adoption permitted. These amendments are to be applied prospectively, with retrospective application permitted. The Company is currently evaluating the impact this standard will have on its condensed consolidated financial statements.
In November 2024, the FASB issued ASU 2024-03, “Income Statement – Reporting Comprehensive Income – Expense Disaggregation Disclosures (Subtopic 220-40): Disaggregation of Income Statement Expenses,” which requires the disaggregated disclosure of specific expense categories, including purchases of inventory, employee compensation, depreciation, and amortization included in each relevant expense caption presented on the statement of operations. The standard also requires disclosure of qualitative description of the amounts remaining in relevant expense captions that are not separately disaggregated quantitatively, as well as the total amount of selling expenses and an entity’s definition of selling expenses. ASU 2024-03 is effective for annual periods beginning after December 15, 2026, and interim periods beginning after December 15, 2027. The Company is currently evaluating the impact this standard will have on its condensed consolidated financial statements.
7
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 Company is currently evaluating the impact this standard 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 all references to project stages throughout ASC 350-40 and clarifies the threshold entities apply to begin capitalizing costs. Under the new standard, cost capitalization should only commence when an entity has committed to funding a software project and it is probable the project will be completed and the software will be used for its intended function. 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 this standard 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
As of September 30, 2025, the Company had cash
and cash equivalents of $
The Company’s condensed consolidated financial statements have been prepared on a going concern basis, which contemplates the realization of assets and the satisfaction of liabilities in the normal course of business.
NOTE 3—BUSINESS COMBINATIONS
Heliogen Acquisition
On May 28, 2025, the Company entered into a plan of merger and reorganization agreement with Heliogen, Inc. (“Heliogen”), a renewable-energy technology company that provides solutions for delivering low-carbon energy production by combining commercially proven solar technologies with thermal systems and storage expertise. The transaction was completed on August 8, 2025, under which Heliogen became a wholly owned subsidiary of the Company.
The acquisition of Heliogen aligns with the Company’s strategy to expand its clean-energy platform beyond residential markets into large-scale commercial and industrial energy generation and storage. Additionally, Heliogen is expected to complement the Company’s existing solar operations, create operational synergies, and broaden market reach.
The total consideration transferred consisted
entirely of the Company’s class A common stock, issued to Heliogen shareholders at an exchange ratio of
The Company accounted for the acquisition using the acquisition method of accounting in accordance with ASC Topic 805, “Business Combinations,” and allocated the purchase price to the assets acquired and liabilities assumed based on their estimated fair values at the acquisition date, with the excess of purchase price over the estimated fair value of the net assets acquired recorded as goodwill. Goodwill is not deductible for tax purposes.
8
The purchase price was allocated as follows:
| Preliminary Allocation | ||||
| Purchase consideration at fair value: | ||||
| Class A common stock | $ | |||
| Assets acquired and liabilities assumed at fair value | ||||
| Cash | $ | |||
| Accounts receivable | ||||
| Prepaid expenses and other current assets | ||||
| Other assets | ||||
| Operating lease right-of-use assets | ||||
| Goodwill | ||||
| Accounts payable | ( | ) | ||
| Accrued expenses | ( | ) | ||
| Operating lease liabilities | ( | ) | ||
| Net assets acquired | $ | |||
From the date of acquisition, Heliogen contributed
revenues of $
Pro Forma Information
The following unaudited pro forma results presented below include the effects of the Heliogen acquisition as if it had been consummated as of January 1, 2024, with adjustments to give effect to pro forma events that are directly attributable to the acquisition.
| Three Months Ended September 30, | Nine Months Ended September 30, | |||||||||||||||
| 2025 | 2024 | 2025 | 2024 | |||||||||||||
| Net revenues | $ | $ | $ | $ | ||||||||||||
| Net loss | ( | ) | ( | ) | ( | ) | ( | ) | ||||||||
| Net loss attributable to class A common stockholders | ( | ) | ( | ) | ( | ) | ( | ) | ||||||||
| Loss per share attributable to common stockholders – basic and diluted | $ | ( | ) | $ | ( | ) | $ | ( | ) | $ | ( | ) | ||||
These unaudited pro forma results are presented for informational purposes only and are not necessarily indicative of what the actual results of operations would have been if the acquisitions had occurred at the beginning of the period presented, nor are they indicative of future results of operations.
NOTE 4—DISAGGREGATION OF REVENUES AND SEGMENT REPORTING
The Company’s revenues are disaggregated based on revenue type, including (i) solar system installations, and (ii) roofing installations.
The Company’s net revenues for the three and nine months ended September 30, 2025 and 2024 are disaggregated as follows:
| Three Months Ended September 30, | Nine Months Ended September 30, | |||||||||||||||
| 2025 | 2024 | 2025 | 2024 | |||||||||||||
| Solar system installations, net | $ | $ | $ | $ | ||||||||||||
| Roofing installations | ||||||||||||||||
| Total net revenues | $ | $ | $ | $ | ||||||||||||
9
For the nine months ended September 30, 2025
and 2024, the Company had three and two customers, respectively, who exceeded 10% of revenue recognized. Their aggregate revenue recognized
was $
Segment information for the three and nine months ended September 30, 2025 and 2024 are as follows:
| Three Months Ended September 30, | Nine Months Ended September 30, | |||||||||||||||
| 2025 | 2024 | 2025 | 2024 | |||||||||||||
| Net revenues | $ | $ | $ | $ | ||||||||||||
| Less: cost of revenues (exclusive of depreciation and amortization shown below): | ||||||||||||||||
| Direct labor | ||||||||||||||||
| Materials | ||||||||||||||||
| Other | ( | ) | ||||||||||||||
| Cost of revenues (exclusive of depreciation and amortization): | ||||||||||||||||
| Less: depreciation and amortization related to cost of revenues | ||||||||||||||||
| Total gross profit | $ | $ | $ | $ | ||||||||||||
| Depreciation and amortization | ||||||||||||||||
| Commissions expense | ||||||||||||||||
| Sales and marketing (exclusive of commissions expense above) | ||||||||||||||||
| General and administrative | ||||||||||||||||
| Other income, net | ( | ) | ( | ) | ( | ) | ( | ) | ||||||||
| Interest expense | ||||||||||||||||
| Gain on change in fair value of warrant liabilities | ( | ) | ( | ) | ( | ) | ( | ) | ||||||||
| Total net loss before income taxes | ( | ) | ( | ) | ( | ) | ( | ) | ||||||||
| Income tax benefit (provision) | ( | ) | ( | ) | ||||||||||||
| Net loss | $ | ( | ) | $ | ( | ) | $ | ( | ) | $ | ( | ) | ||||
The Company has
NOTE 5—PROPERTY AND EQUIPMENT
Property and equipment as of September 30, 2025 and December 31, 2024 consisted of the following:
| September 30, | December 31, | |||||||
| 2025 | 2024 | |||||||
| Internally-developed software | $ | $ | ||||||
| Office furniture and equipment | ||||||||
| Transportation equipment | ||||||||
| Leasehold improvements | ||||||||
| Total property and equipment | ||||||||
| Less: accumulated depreciation | ( | ) | ( | ) | ||||
| Total property and equipment, net | $ | $ | ||||||
10
Depreciation expense for the three months ended
September 30, 2025 and 2024 was $
NOTE 6—INTANGIBLE ASSETS
Intangible assets as of September 30, 2025 and December 31, 2024 consisted of the following:
| September 30, | December 31, | |||||||
| 2025 | 2024 | |||||||
| Trade names | $ | $ | ||||||
| Customer lists | ||||||||
| Non-compete | ||||||||
| Order backlog | ||||||||
| Total intangible assets | ||||||||
| Less: accumulated amortization | ( | ) | ( | ) | ||||
| Total intangible assets, net | $ | $ | ||||||
Amortization expense for the three months ended
September 30, 2025 and 2024 was $
NOTE 7—ACCRUED EXPENSES AND OTHER CURRENT LIABILITIES
Accrued expenses and other current liabilities as of September 30, 2025 and December 31, 2024 consisted of the following:
| September 30, 2025 | December 31, 2024 | |||||||
| Accrued payroll liabilities | $ | $ | ||||||
| Accrued commissions | ||||||||
| Accrued interest | ||||||||
| Accrued taxes | ||||||||
| Accrued credit cards | ||||||||
| Accrued transaction costs | ||||||||
| Other accrued liabilities | ||||||||
| Total accrued expenses and other current liabilities | $ | $ | ||||||
Accrued expenses and other current liabilities – related parties as of September 30, 2025 and December 31, 2024 consisted of the following:
| September 30, 2025 | December 31, 2024 | |||||||
| Customer advances | $ | $ | ||||||
| Total accrued expenses and other current liabilities – related parties | $ | $ | ||||||
NOTE 8—LEASES
Operating Leases
In June 2025, the Company entered into a lease
agreement for office space located in Richmond, Virginia. The lease commenced on June 1, 2025 and is for a term of three years. Under
the terms of the lease, the Company will lease the premises at the monthly rate of $
11
In July 2025, the Company entered into a lease
agreement for office space located in Sardinia, Ohio. The lease commenced on July 1, 2025 and is for a term of two years. Under the terms
of the lease, the Company will lease the premises at the monthly rate of $
In August 2025, in connection with the acquisition
of Heliogen, the Company entered into a lease agreement for office space located in Houston, Texas. The lease commenced on August 8,
2025 and is for a term of 13 months. Under the terms of the lease, the Company will lease the premises at the monthly rate of $
The following was included in the condensed consolidated balance sheets at September 30, 2025 and December 31, 2024:
| September 30, 2025 | December 31, 2024 | |||||||
| Operating lease right-of-use assets | $ | $ | ||||||
| Operating lease liabilities, current portion | ||||||||
| Operating lease liabilities, long-term | ||||||||
| Total operating lease liabilities | $ | $ | ||||||
| Weighted-average remaining lease term (years) | ||||||||
| Weighted-average discount rate | % | % | ||||||
The Company records operating lease costs in
general and administrative expenses in the condensed consolidated statements of operations. Operating lease costs for the three months
ended September 30, 2025 and 2024 was $
As of September 30, 2025, maturities of operating lease liabilities were as follows:
| Year Ending December 31, | Amount | |||
| 2025 (remaining) | $ | |||
| 2026 | ||||
| 2027 | ||||
| 2028 | ||||
| Total | ||||
| Less: imputed interest | ( | ) | ||
| Total operating lease liabilities | $ | |||
Finance Leases
As of September 30, 2025, maturities of finance lease liabilities were as follows:
| Year Ending December 31, | Amount | |||
| 2025 (remaining) | $ | |||
| 2026 | ||||
| 2027 | ||||
| 2028 | ||||
| Total | ||||
| Less: imputed interest | ( | ) | ||
| Total finance lease liabilities | $ | |||
12
As of September 30, 2025, the weighted-average
remaining lease term for all finance leases is
NOTE 9—DEBT
Vehicle Loans
The Company has financing arrangements for many
of the vehicles in its fleet. The financing includes direct loans for each vehicle being financed. Payments of debt obligations are based
on equal monthly payments for 60 months and include interest rates ranging from
As of September 30, 2025, estimated future minimum principal payments of vehicle loans were as follows:
| Year Ending December 31, | Amount | |||
| 2025 (remaining) | $ | |||
| 2026 | ||||
| 2027 | ||||
| 2028 | ||||
| Total | ||||
| Less: current portion | ( | ) | ||
| Total long-term debt | $ | |||
Loan Payable
On July 1, 2025, the Company converted $
Convertible Note Payable
On December 24, 2024, the Company, issued a Promissory
Note (the “Promissory Note”) to LHX Intermediate LLC (“LHX”), pursuant to which the Company could borrow up to
an aggregate principal amount of $
13
No interest shall be charged or accrue on the
balance outstanding on the loan. The Loan will be repaid in full (the “Repayment”) by issuing to LHX or its designee a specified
number of the Company’s shares of Class A common stock (“Class A Common Stock”) equal to the quotient of (i) the outstanding
and unpaid amount of the Loan, divided by (ii) $
In connection with the Promissory Note, on December
24, 2024, LHX entered into a voting agreement with the Company and certain stockholders of the Company (the “LHX Voting Agreement”),
pursuant to which such stockholders agreed to vote (or cause to be voted), in person or by proxy, all the shares of Class A Common Stock
and Class V common stock owned by such stockholders (i) in favor of the nomination and appointment of LHX’s designee to the board
of directors of the Company (ii) in favor of the issuance by the Company to LHX of shares of Class A Common Stock in connection with
an option that may be granted to LHX to purchase up to
NOTE 10—FAIR VALUE MEASUREMENTS
Recurring Fair Value Measurements
The fair value of financial instruments measured on a recurring basis as of September 30, 2025 consisted of the following:
| Fair Value Measurements as of September 30, 2025 | ||||||||||||||||
| Description | Level 1 | Level 2 | Level 3 | Total | ||||||||||||
| Warrant liabilities | $ | $ | $ | $ | ||||||||||||
The following table provides a roll-forward of changes for financial instruments measured at fair value on a recurring basis for the nine months ended September 30, 2025:
| Amount | ||||
| Warrant Liabilities | ||||
| Balance as of December 31, 2024 | $ | |||
| Gain on change in fair value of warrant liabilities | ( | ) | ||
| Extinguishment of warrant liabilities upon settlement | ||||
| Balance as of September 30, 2025 | $ | |||
NOTE 11—REDEEMABLE NON-CONTROLLING INTERESTS AND EQUITY
The table below reflects share information about the Company’s capital stock as of September 30, 2025:
| Par Value | Authorized | Issued | Treasury Stock | Outstanding | ||||||||||||||||
| Class A common stock | $ | |||||||||||||||||||
| Class V common stock | $ | |||||||||||||||||||
| Class A convertible preferred units | $ | |||||||||||||||||||
| Class B units | $ | |||||||||||||||||||
| Total shares | ||||||||||||||||||||
14
Class A Common Stock
During the nine months ended September 30, 2025,
On March 13, 2025,
On March 31, 2025, an aggregate of
On August 5, 2025,
On August 8, 2025, in connection with acquisition
of Heliogen, the Company issued the Heliogen shareholders
On August 11, 2025, the Company issued
Redeemable Non-Controlling Interests
During the nine months ended September 30, 2025,
During the nine months ended September 30, 2025,
there was
As of September 30, 2025, the prior investors
of Sunergy own
15
The financial results of OpCo, LLC are consolidated with the Company with the redeemable non-controlling interests’ share of the Company’s net loss separately allocated.
NOTE 12—STOCK-BASED COMPENSATION
2024 Omnibus Incentive Plan
On March 6, 2024, the shareholders of ESGEN approved
the Zeo Energy Corp. 2024 Omnibus Incentive Equity Plan (the “Incentive Plan”), which became effective upon the Closing.
The purpose of the Incentive Plan is to provide a means through which the Company and the other members of the Company and its subsidiaries (the “Company Group”) may attract and retain key personnel and to provide a means whereby directors, officers, employees, consultants and advisors of the Company and the other members of the Company Group can acquire and maintain an equity interest in the Company, or be paid incentive compensation measured by reference to the value of common stock, thereby strengthening their commitment to the welfare of the Company Group and aligning their interests with those of the Company’s stockholders.
March 2024 Grant
On March 13, 2024, the Company entered into an executive employment agreement with the Company’s CEO. In addition to the CEO’s annual salary and cash bonus, the CEO became eligible to receive certain grants of vested shares under the Incentive Plan as follows:
| ● | ||
| ● | ||
| ● |
The Company determined the grant date fair value
per share was $
Further, if, within three (
16
The per unit fair value and derived service period for each tranche of performance based executive shares is included in the valuation of performance-based equity bonus awards as of March 13, 2024, as follows:
| Fair Value Summary | Tranche 1 | Tranche 2 | Tranche 3 | |||||||||
| Tranche per unit fair value | $ | $ | $ | |||||||||
| Stock price on valuation date | $ | $ | $ | |||||||||
| Derived service period | ||||||||||||
During the three and nine months ended September
30, 2025, the Company recognized $
February 2025 Grants
On February 5, 2025, the Company granted an aggregate
of
| ● | One-third (1/3) on the date that is six months following the grant date; | |
| ● | One-third (1/3) on the date that is 18 months following the grant date; and | |
| ● | One-third (1/3) on the date that is 30 months following the grant date. |
On February 5, 2025, the Company granted an aggregate
of
| ● | One-third (1/3) on the date that is 12 months following the grant date; | |
| ● | One-third (1/3) on the date that is 24 months following the grant date; and | |
| ● | One-third (1/3) on the date that is 36 months following the grant date. |
The Company determined the grant date fair value
per share was $
During the three and nine months ended September
30, 2025, the Company recognized $
July 2025 Grants
On July 5, 2025, the Company granted an aggregate
of
| ● | One-third (1/3) on the date that is 12 months following the grant date; | |
| ● | One-third (1/3) on the date that is 24 months following the grant date; and | |
| ● | One-third (1/3) on the date that is 36 months following the grant date. |
The Company determined the grant date fair value
per share was $
During the three and nine months ended September
30, 2025, the Company recognized $
17
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 entirely (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). Grants under the Management Incentive Plan will be made after ESGEN Closing.
Although Sun Managers is the legal issuer of
the awards, all compensatory payments made by Sun Managers to individuals providing services to or for the benefit of the Company or
its subsidiaries (including equity interests in Sun Managers) are treated as compensation paid by the Company under ASC Topic 718, “Compensation
– Stock Compensation.” In accordance with the OpCo A&R LLCA, the Company allocates
On March 31, 2025, Sun Managers LLC granted an
aggregate of
On August 4, 2025, Sun Managers LLC granted an
aggregate of
On August 13, 2025, Sun Managers LLC granted
an aggregate of
On September 17, 2025, Sun Managers LLC granted
an aggregate of
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
The managers become eligible to receive certain grants of vested shares under the Seasonal Manager Stock Compensation Plan as follows:
| ● | ||
| ● | The remaining |
18
On March 31, 2025, Sun Managers LLC granted an
aggregate of
| ● | One-half (1/2) immediately on the grant date; and | |
| ● | One-half (1/2) on the date that is 12 months following the grant date. |
During the three and nine months ended September
30, 2025, the Company recognized $
NOTE 13—RELATED PARTY TRANSACTIONS
Some of the Company’s customers financed their obligations with
a related party, Solar Leasing, whose CEO is also the CEO of the Company. These arrangements are similar to those with other third-party
lenders. As such, Solar Leasing deducts their financing fees and remits the net amount to the Company. For the three months ended September
30, 2025 and 2024, the Company recognized $
During the year ended December 31, 2024, Solar
Leasing performed a fair-market-value assessment of its lease assets. As a result, Solar Leasing paid a discretionary rebate to the Company
of $
In conjunction with the consummation of the ESGEN
Business Combination on March 13, 2014, Zeo entered into a TRA with Opco and certain Opco members (the “TRA Holders”). Pursuant
to the TRA, Zeo Energy Corp. is required to pay the TRA Holders
19
NOTE 14—NET LOSS PER SHARE
Basic loss per share is calculated by dividing
the net loss by the weighted-average number of class A common shares outstanding during each period. Diluted loss per share is calculated
by adjusting the weighted-average number of class A common shares outstanding for the dilutive effect, if any, of common share equivalents.
Common share equivalents whose effect would be antidilutive are not included in diluted loss per share. The Company uses the treasury
stock method to determine the dilutive effect, which assumes that all class A common share equivalents have been exercised at the beginning
of the period and that the funds obtained from those exercises were used to repurchase class A common shares at the average closing market
price during the period. As of September 30, 2025 and 2024, there were
The following table presents the computation of the basic and diluted income per share of class A common stock for the three months and nine months ended September 30, 2025 and 2024:
| Three Months Ended September 30, | Nine Months Ended September 30, | |||||||||||||||
| 2025 | 2024 | 2025 | 2024 | |||||||||||||
| Numerator | ||||||||||||||||
| Net loss attributable to class A common stockholders | $ | ( | ) | $ | ( | ) | $ | ( | ) | $ | ( | ) | ||||
| Denominator | ||||||||||||||||
| Weighted-average class A common shares outstanding – basic and diluted | ||||||||||||||||
| Loss per class A common share – basic and diluted | $ | ( | ) | $ | ( | ) | $ | ( | ) | $ | ( | ) | ||||
NOTE 15—INCOME TAXES
The Company has calculated the provision for
income taxes during the interim reporting period by applying an estimate of the Annual Effective Tax Rate (AETR) for the full fiscal
year to “ordinary” income or loss (pretax income or loss excluding unusual or infrequently occurring discrete items) for
the reporting period. Our effective tax rate (ETR) from continuing operations was a
The components of the deferred income tax assets and liabilities were as follows:
| September 30, 2025 | December 31, 2024 | |||||||
| Other Asset assets: | ||||||||
| Deferred tax assets | $ | $ | ||||||
| Valuation allowance | ( | ) | ||||||
| Net deferred tax asset | $ | $ | ||||||
| Deferred tax liabilities | ( | ) | ||||||
| Net deferred tax assets and liabilities | $ | $ | ||||||
NOTE 16—SUBSEQUENT EVENTS
On October 30, 2025, the Company issued
Effective on October 31, 2025, the Company’s board of directors and audit committee, approved the dismissal of Grant Thornton LLP, the Company’s independent registered public accounting firm, and approved the appointment of Tanner LLC as the Company’s independent registered public accounting firm.
On November 5, 2025, the Company granted an aggregate
of
On November 6,
20
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations
References to the “Company,” “our,” “us” or “we” refer to Zeo Energy Corp. The following discussion and analysis of the Company’s financial condition and results of operations should be read in conjunction with the unaudited condensed consolidated financial statements and the notes thereto contained elsewhere in this Quarterly Report on Form 10-Q (this “Quarterly Report”). Certain information contained in the discussion and analysis set forth below includes forward-looking statements that involve risks and uncertainties.
Cautionary Note Regarding Forward-Looking Statements
This Quarterly Report on Form 10-Q includes forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended (the “Securities Act”), and Section 21E of the Securities Exchange Act of 1934, as amended (the “Exchange Act”). We have based these forward-looking statements on our current expectations and projections about future events. These forward-looking statements are subject to known and unknown risks, uncertainties and assumptions about us that may cause our actual results, levels of activity, performance or achievements to be materially different from any future results, levels of activity, performance or achievements expressed or implied by such forward-looking statements. In some cases, you can identify forward-looking statements by terminology such as “may,” “should,” “could,” “would,” “expect,” “plan,” “anticipate,” “believe,” “estimate,” and “continue,” or the negative of such terms or other similar expressions. Such statements include, but are not limited to, possible business combinations and the financing thereof, and related matters, as well as all other statements other than statements of historical fact included in this Form 10-Q. Factors that might cause or contribute to such a discrepancy include, but are not limited to, those described in our other SEC filings. Except as expressly required by applicable securities law, we disclaim any intention or obligation to update or revise any forward-looking statements whether as a result of new information, future events or otherwise.
Overview
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, 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 we have built (and continue to build) the infrastructure and capabilities necessary to rapidly acquire and serve customers in a low-cost and scalable manner. Today, our scalable regional operating platform provides us with a number of advantages, including the marketing of our solar service offerings through multiple channels, including our diverse sales partner network and direct-to-consumer vertically integrated sales and installation operations. We believe that this multi-channel model supports rapid sales and installation growth, allowing us to achieve capital-efficient growth in the regional markets we serve.
Since our founding, we have continued to invest in a platform of services and tools to enable large scale operations for us and our partner network, which includes sales partners, installation partners and other strategic partners. The platform includes processes and software, as well as the capacity for the fulfillment and acquisition of marketing leads. We believe our platform empowers our in-house sales team and external sales dealers to profitably serve our regional and underpenetrated markets and helps us compete effectively against larger, more established industry players without making significant investment in technology and infrastructure.
21
We have focused to date on a simple, capital light business strategy utilizing, as of September 30, 2025, approximately 280 sales agents and approximately 12 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.
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.
Recent Developments
On July 1, 2025, the Company converted $2,547,877 of outstanding accounts payable with a vendor into a loan payable with the same vendor. The loan bears interest at an annual rate of 18% (1.5% monthly) and provides for scheduled principal payments beginning in July 2025, with maturity on August 22, 2025. The transaction reduced the Company’s accounts payable and established a formal financing arrangement under the stated terms. The loan, including accrued interest, was repaid during the period.
Heliogen Acquisition
On May 28, 2025, we entered into a plan of merger and reorganization agreement with Heliogen, a renewable-energy technology company that provides solutions for delivering low-carbon energy production by combining commercially proven solar technologies with thermal systems and storage expertise. The transaction was completed on August 8, 2025, under which Heliogen became a wholly owned subsidiary of the Company.
The total consideration transferred consisted entirely of our class A common stock, issued to Heliogen shareholders at an exchange ratio of 0.9591 shares of our class A common stock for each share of Heliogen common stock, resulting in the issuance of 6,217,612 class A common shares. No contingent consideration was included. In connection with the merger, all outstanding Heliogen SPAC warrants and RSUs were automatically accelerated and fully vested and were settled in the same equity consideration, net of applicable tax withholding. All stock options and commercial warrants were out-of-the-money and canceled with no value.
We accounted for the Heliogen acquisition using the acquisition method of accounting in accordance with ASC Topic 805, “Business Combinations,” and allocated the purchase price to the assets acquired and liabilities assumed based on their estimated fair values at the acquisition date, with the excess of purchase price over the estimated fair value of the net assets acquired recorded as goodwill.
Key Operating and Financial Metrics and Outlook
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 GAAP and should not be considered as substitutes for net (loss) income or net (loss) income margin, respectively, calculated in accordance with GAAP. See “Non-GAAP Financial Measures” for additional information on non-GAAP financial measures and a reconciliation of these non-GAAP measures to the most comparable GAAP measures.
22
The following table sets forth these metrics for the periods presented:
| Three Months Ended September 30, | Nine Months Ended September 30, | |||||||||||||||
| 2025 | 2024 | 2025 | 2024 | |||||||||||||
| Net revenues | $ | 23,896,448 | $ | 19,657,905 | $ | 50,782,073 | $ | 54,596,333 | ||||||||
| Gross profit | 13,707,389 | 9,587,229 | 28,085,826 | 23,176,906 | ||||||||||||
| Gross margin | 57.4 | % | 48.8 | % | 55.3 | % | 42.5 | % | ||||||||
| Contribution profit | 7,627,568 | 4,477,319 | 7,593,178 | 9,714,754 | ||||||||||||
| Contribution margin | 31.9 | % | 22.8 | % | 15.0 | % | 17.8 | % | ||||||||
| Loss from operations | (1,980,509 | ) | (2,982,851 | ) | (18,345,413 | ) | (9,694,269 | ) | ||||||||
| Net loss | (1,869,472 | ) | (2,872,424 | ) | (17,868,299 | ) | (8,736,845 | ) | ||||||||
| Adjusted EBITDA | 1,956,127 | (241,712 | ) | (1,924,958 | ) | 89,270 | ||||||||||
| Adjusted EBITDA margin | 8.2 | % | (1.2 | )% | (3.8 | )% | 0.2 | % | ||||||||
Gross Profit and Gross Margin
We define gross profit as revenue, net less cost of goods sold and depreciation and amortization related to cost of goods sold, and define gross margin, expressed as a percentage, as the ratio of gross profit to revenue, net. See “— Non-GAAP Financial Measures” for a reconciliation of Gross Profit and Gross Margin.
Contribution Profit and Contribution 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. 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.
Adjusted EBITDA and Adjusted EBITDA Margin
We define Adjusted EBITDA, a non-GAAP financial measure, as earnings (loss) before interest expense, income tax expense (benefit), depreciation and amortization, other income (expenses), net, and stock compensation, as adjusted to exclude merger transaction related expenses. Adjusted EBITDA margin reflects our Adjusted EBITDA as a percentage of revenues. See “— Non-GAAP Financial Measures” for a reconciliation of GAAP net loss to Adjusted EBITDA and Adjusted EBITDA Margin.
Key Factors that May Influence Future Results of Operations
Our financial results of operations may not be comparable from period to period due to several factors. Key factors affecting the results of our operations are summarized below.
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 in Florida, Texas, Arkansas, Missouri, Illinois, Virginia and Ohio. 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. We believe that our entry into new markets will continue to facilitate revenue growth and customer diversification.
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Expansion of New Products and Services. In 2025, 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 programs in place that allow our customers to choose a leasing option to finance their systems from a third party.
The acquisition of Heliogen aligns with our strategy to expand our clean-energy platform beyond residential markets into large-scale commercial and industrial energy generation and storage. Additionally, Heliogen is expected to complement our existing solar operations, create operational synergies, and broaden market reach. With the acquisition of Heliogen, we intend to enter into agreements to provide engineering services to support long-duration energy storage projects.
Adding New Customers and Expansion of Sales with Existing Customers. We intend to increase our in-house sales force and external sales dealers in order to target new customers in the Southern U.S. regional residential markets. We provide competitive compensation packages to our in-house sales teams and external sales dealers, which incentivizes the acquisition of new customers.
Inflation. We are seeing an increase in the costs of labor and components as the result of higher inflation rates. In particular, we are experiencing an increase in raw material costs and supply chain constraints, and trade tariffs imposed on certain products from China. We also see an increase in materials used to achieve the required minimum domestic content to maximize incentive tax credits. These increases in material and labor costs may continue to put pressure on our operating margins. We do not have information that allows us to quantify the specific amount of cost increases attributable to inflationary pressures.
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 means of financing the installation of a solar system. The lease contract provides a lower monthly cost to the homeowner than a conventional loan product in a higher interest rate environment. We do not have information that allows us to quantify the adverse effects attributable to increased interest rates.
Managing our Supply Chain. We rely on contract manufacturers and suppliers to produce our components. Our suppliers are generally meeting our materials 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 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
Net Revenues
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. Upon installation inspection, we satisfy our performance obligation and recognize revenue. Most of the Company’s customers finance their obligations with third parties. Most finance arrangements are by way of a lease contract with a third-party operator. Some customers utilize debt financing. In these situations, the finance company deducts their financing fees and remits the net amount to the Company. Revenue is 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 revenues, net in the nine months ended September 30, 2025 and 2024.
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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 nine months ended September 30, 2025 and 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.
Revenues declined during the nine months ended September 30, 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.
Cost of Revenues
Cost of revenues consists primarily of product costs (including solar panels, inverters, metal racking, connectors, shingles, wiring, warranty costs and logistics costs), installation labor and permitting costs.
Cost of revenues decreased during the nine months ended September 30, 2025 in association with a reduction in revenues.
Net revenues less cost of revenues may vary from period-to-period and is primarily affected by our average selling prices, financing or dealer fees, fluctuations in equipment costs and our ability to effectively and timely deploy our field installation teams to project sites once permitting departments have approved the design and engineering of systems on customer sites.
Operating Expenses
Operating expenses consist of sales and marketing and general and administrative expenses. Personnel-related costs are the most significant component of each of these expense categories and include salaries, benefits and payroll taxes.
Sales and marketing expenses consist primarily of personnel-related expenses including sales commissions, as well as advertising, travel, trade shows, marketing, and other indirect costs. We expect to continue to make the necessary investments to enable us to execute our strategy to increase our market penetration geographically and enter into new markets by expanding our base sales teams, installers and strategic sales dealer and partner network.
General and administrative expenses consist primarily of personnel-related expenses for our non-direct labor operations, executive, finance, human resources, information technology, software, facilities costs and fees for professional services. Fees for professional services consist primarily of outside legal, accounting and information technology consulting costs.
Depreciation and amortization consist primarily of depreciation of our vehicles, furniture and fixtures, software and amortization of our acquired intangibles.
Other income (expenses), net
Other income (expenses), net primarily consists of change in fair value of warrant liabilities and interest expense and fees under our equipment and vehicle term loans. It also includes interest income on our cash balances, and accrued interest
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Results of Operations
Three Months Ended September 30, 2025 Compared to Three Months Ended September 30, 2024
The following table sets forth a summary of our condensed consolidated statements of operations for the periods presented:
| Three Months ended September 30, | Change | |||||||||||||||
| 2025 | 2024 | $ | % | |||||||||||||
| Net revenues | $ | 23,896,448 | $ | 19,657,905 | $ | 4,238,543 | 21.6 | % | ||||||||
| Costs and expenses: | ||||||||||||||||
| Cost of revenues | 10,053,666 | 9,787,350 | 266,316 | 2.7 | % | |||||||||||
| Depreciation and amortization | 249,447 | 499,876 | (250,429 | ) | (50.1 | )% | ||||||||||
| Sales and marketing | 9,588,385 | 5,202,525 | 4,385,860 | 84.3 | % | |||||||||||
| General and administrative | 5,985,459 | 7,151,005 | (1,165,546 | ) | (16.3 | )% | ||||||||||
| Total operating expenses | 25,876,957 | 22,640,756 | 3,236,201 | 14.3 | % | |||||||||||
| Loss from operations | (1,980,509 | ) | (2,982,851 | ) | (1,002,342 | ) | (33.6 | )% | ||||||||
| Other income (expense): | ||||||||||||||||
| Other income, net | 165,308 | 137,508 | 27,800 | 20.2 | % | |||||||||||
| Interest expense | (129,719 | ) | (209,227 | ) | (79,508 | ) | (38.0 | )% | ||||||||
| Gain on change in fair value of warrant liabilities | 124,200 | 138,000 | (13,800 | ) | (10.0 | )% | ||||||||||
| Total other income | 159,789 | 66,281 | 93,508 | 141.1 | % | |||||||||||
| Net loss before taxes | $ | (1,820,720 | ) | $ | (2,916,570 | ) | $ | (1,095,850 | ) | (37.6 | )% | |||||
Net Revenues
Net revenues increased by approximately $4.2 million from $19.7 million for the three months ended September 30, 2024 to $23.9 million for the three months ended September 30, 2025. The primary reason for the increase is due to increased installations during the current period and a new pricing agreement with Solar Leasing entered into during the fourth quarter of 2024. During the three months ended September 30, 2025, there were no revenues generated from Heliogen.
Cost of Revenues
Cost of revenues increased by $0.3 million from $9.8 million for the three months ended September 30, 2024 to $10.1 million for the three months ended September 30, 2025. The increase was a result of the increase in installation revenues. As a percentage of revenue, cost of revenues declined from 49.8% for the three months ended September 30, 2024 to 42.1% for the three months ended September 30, 2025. This decline was driven by an increase in the average selling price of our contracts to our customers compared to the prior year as a result of a new pricing agreement with Solar Leasing entered into during the fourth quarter of 2024.
Depreciation and Amortization
Depreciation and amortization decreased by $0.3 million, from $0.5 million for the three months ended September 30, 2024 to $0.2 million for the three months ended September 30, 2025. The decrease was primarily due to less amortization of intangible assets during the current period.
General and Administrative Expenses
General and administrative expenses decreased by $1.2 million from $7.2 million for the three months ended September 30, 2024 to $6.0 million for the three months ended September 30, 2025. The decrease was primarily due to decreased stock-based compensation expenses and bad debt expense offset by increased payroll costs associated with additional staffing, higher professional fees associated with being a public company, and new costs as a result of the acquisition of Heliogen.
Sales and Marketing
Sales and marketing expenses increased by $4.4 million from $5.2 million for the three months ended September 30, 2024 to $9.6 million for the three months ended September 30, 2025. The increase was primarily a result of increased stock-based compensation expense and efforts to expand our selling process to include year-round sales through digital lead generation.
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Other Income (Expense), net
Other income (expense), net increased by $0.1 million from $0.1 million for the three months ended September 30, 2024 to $0.2 million for the three months ended September 30, 2025. The increase was primarily due to increased other income, offset by less interest expense during the current period.
Nine Months Ended September 30, 2025 Compared to Nine Months Ended September 30, 2024
The following table sets forth a summary of our condensed consolidated statements of operations for the periods presented:
| Nine Months ended September 30, | Change | |||||||||||||||
| 2025 | 2024 | $ | % | |||||||||||||
| Net revenues | $ | 50,782,073 | $ | 54,596,333 | $ | (3,814,260 | ) | (7.0 | )% | |||||||
| Costs and expenses: | ||||||||||||||||
| Cost of revenues | 22,127,832 | 30,805,155 | (8,677,323 | ) | (28.2 | )% | ||||||||||
| Depreciation and amortization | 8,325,628 | 1,413,074 | 6,912,554 | 489.2 | % | |||||||||||
| Sales and marketing | 17,354,517 | 16,178,375 | 1,176,142 | 7.3 | % | |||||||||||
| General and administrative | 21,319,509 | 15,893,998 | 5,425,511 | 34.1 | % | |||||||||||
| Total operating expenses | 69,127,486 | 64,290,602 | 4,836,884 | 7.5 | % | |||||||||||
| Loss from operations | (18,345,413 | ) | (9,694,269 | ) | 8,651,144 | 89.2 | % | |||||||||
| Other income (expense): | ||||||||||||||||
| Other income, net | 300,999 | 188,329 | 112,670 | 59.8 | % | |||||||||||
| Interest expense | (130,007 | ) | (294,257 | ) | (164,250 | ) | (55.8 | )% | ||||||||
| Gain on change in fair value of warrant liabilities | 691,380 | 828,000 | (136,620 | ) | (16.5 | )% | ||||||||||
| Total other income | 862,372 | 722,072 | 140,300 | 19.4 | % | |||||||||||
| Net loss before taxes | $ | (17,483,041 | ) | $ | (8,972,197 | ) | $ | 8,510,844 | 94.9 | % | ||||||
Net Revenues
Net revenues decreased by approximately $3.8 million from $54.6 million for the nine months ended September 30, 2024 to $50.8 million for the nine months ended September 30, 2025. The primary reason for the decrease in revenue was a decrease in installations during the current period, offset by a new pricing agreement with Solar Leasing entered into during the fourth quarter of 2024. The comparative period also benefited from deferred revenue at the end of 2023, that was recognized in the first quarter of 2024. During the nine months ended September 30, 2025, there were no revenues generated from Heliogen.
Cost of Revenues
Cost of revenues decreased by $8.7 million from $30.8 million for the nine months ended September 30, 2024 to $22.1 million for the nine months ended September 30, 2025. The decrease was primarily a result of the decrease in installation revenues. As a percentage of revenue, cost of revenues improved from 56.4% for the nine months ended September 30, 2024 to 43.6% for the nine months ended September 30, 2025. This decline was driven by an increase in the average selling price of our contracts to our customers compared to the prior year as a result of a new pricing agreement with Solar Leasing entered into during the fourth quarter of 2024 and another third-party pricing agreement entered into during the second quarter of 2024.
Depreciation and Amortization
Depreciation and amortization increased by $6.9 million, from $1.4 million for the nine months ended September 30, 2024 to $8.3 million for the nine months ended September 30, 2025. The increase was primarily due to an increase in the amortization of the cost of acquired contracts from the Lumio Asset Purchase Agreement.
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General and Administrative Expenses
General and administrative expenses increased by $5.4 million from $15.9 million for the nine months ended September 30, 2024 to $21.3 million for the nine months ended September 30, 2025. The increase was primarily due to an increase in payroll costs associated with additional staffing, increased bad debt expense, higher professional fees associated with being a public company, and new costs as a result of the acquisition of Heliogen offset by decreased stock-based compensation expense.
Sales and Marketing
Sales and marketing expenses increased by $1.2 million from $16.2 million for the nine months ended September 30, 2024 to $17.4 million for the nine months ended September 30, 2025. The increase was primarily a result of increased stock-based compensation expense and efforts to expand our selling process to include year-round sales through digital lead generation.
Other Income, net
Other income, net increased by $0.2 million from $0.7 million for the nine months ended September 30, 2024 to $0.9 million for the nine months ended September 30, 2025. The increase was primarily due to increased other income and less interest expense during the current period.
Liquidity and Capital Resources
Our primary source of funding to support operations have historically been from cash flows from operations and financing activities. Our primary short-term requirements for liquidity and capital are to fund general working capital and capital expenses. Our principal long-term working capital uses include ensuring revenue growth, expanding our sales and marketing efforts and potential acquisitions.
As of September 30, 2025 and December 31, 2024, our cash and cash equivalents balance were $3,915,900 and $5,634,115, respectively. The Company maintains its cash in checking, savings, and money market accounts.
Our future capital requirements depend on many factors, including our revenue growth rate, the timing and extent of our spending to support further sales and marketing, the degree to which we are successful in launching new business initiatives and the cost associated with these initiatives, and the growth of our business generally.
We currently believe that our existing cash and working capital balances, anticipated future cash flows from operations and financing activities will be sufficient to meet our currently contemplated business needs for the next twelve months. In the event we pursue and complete significant transactions or acquisitions in the future, additional funds may be required to meet our strategic needs, which may require us to raise additional funds in the debt or equity markets. If we are unable to raise additional capital on acceptable terms when needed, our business, results of operations and financial condition would be materially and adversely affected.
Cash Flows
The following table summarizes our cash flows for the periods presented:
| For the Nine Months Ended September 30, | ||||||||||||
| 2025 | 2024 | Change | ||||||||||
| Net cash used in operating activities | $ | (11,132,921 | ) | $ | (12,189,535 | ) | $ | (1,056,614 | ) | |||
| Net cash provided by (used in) investing activities | 13,548,606 | (285,067 | ) | 13,833,673 | ||||||||
| Net cash provided by (used in) financing activities | (4,129,005 | ) | 8,782,358 | (12,911,363 | ) | |||||||
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Cash Flows from Operating Activities
Net cash used in operating activities was approximately $11.1 million during the nine months ended September 30, 2025 compared to a net cash used in operating activities of approximately $12.2 million during nine months ended September 30, 2024. The $1.1 million decrease in cash used was primarily driven by positive cash flows from accounts receivable ($4.7 million), prepaids and other current assets ($1.7 million), accounts payable ($2.9 million), contract liabilities ($4.5 million), and contract liabilities – related parties ($1.2 million) offset by negative cash flows from a change in contract assets ($5.7 million), contract assets – related parties ($3.6 million), accrued expenses and other current liabilities – related parties ($1.4 million), increase in net loss ($9.1 million) and less stock compensation expense ($0.8 million), offset by increases in non-cash expenses for depreciation and amortization ($6.9 million) and the provision for credit losses ($0.3 million).
Cash Flows from Investing Activities
Net cash provided by investing activities was approximately $13.5 million for the nine months ended September 30, 2025, relating to the cash acquired in the acquisition of Heliogen, offset by purchases of property and equipment. Net cash used in investing activities for the nine months ended September 30, 2024 was approximately $0.3 million, relating to purchases of property and equipment.
Cash Flows from Financing Activities
Net cash used in financing activities was approximately $4.1 million for the nine months ended September 30, 2025, primarily relating to the payment of dividends to OpCo class A preferred unit holders and repayments of debt and finance leases. Net cash provided by financing activities was approximately $8.8 million for the nine months ended September 30, 2024, primarily relating to net cash acquired from the issuance of convertible preferred stock of $9.2 million offset by repayments of debt and finance leases, and distributions of stockholders.
Current Indebtedness
The Company has utilized internally generated positive cashflow to grow the business. Other than approximately $2.5 million convertible note, the Company has only approximately $0.1 million of debt on service trucks and vehicles.
Non-GAAP Financial Measures
The non-GAAP financial measures in this Quarterly Report have not been calculated in accordance with GAAP and should be considered in addition to results prepared in accordance with GAAP and should not be considered as a substitute for, or superior to, GAAP results. In addition, Adjusted EBITDA and Adjusted EBITDA Margin should not be construed as indicators of our operating performance, liquidity or cash flows generated by operating, investing and financing activities, as there may be significant factors or trends that they fail to address. We caution investors that non-GAAP financial information, by its nature, departs from traditional accounting conventions. Therefore, its use can make it difficult to compare our current results with our results from other reporting periods and with the results of other companies.
Our management uses these non-GAAP financial measures, in conjunction with GAAP financial measures, as an integral part of managing our business and to, among other things: (i) monitor and evaluate the performance of our business operations and financial performance; (ii) facilitate internal comparisons of the historical operating performance of our business operations; (iii) facilitate external comparisons of the results of our overall business to the historical operating performance of other companies that may have different capital structures and debt levels; (iv) review and assess the operating performance of our management team; (v) analyze and evaluate financial and strategic planning decisions regarding future operating investments; and (vi) plan for and prepare future annual operating budgets and determine appropriate levels of operating investments. We believe that the use of these non-GAAP financial measures provides an additional tool for investors to use in evaluating ongoing operating results and trends, and in comparing our financial results with other companies in our industry, many of which present similar non-GAAP financial measures to investors.
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Contribution Profit and Contribution 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. Contributions margin reflects our Contribution profit as a percentage of revenues.
The following table provides a reconciliation of gross profit to contribution profit for the periods presented:
| Three Months Ended September 30, | Nine Months Ended September 30, | |||||||||||||||
| 2025 | 2024 | 2025 | 2024 | |||||||||||||
| Net revenues | $ | 23,896,448 | $ | 19,657,905 | $ | 50,782,073 | $ | 54,596,333 | ||||||||
| Cost of revenues (exclusive of depreciation and amortization): | 10,053,666 | 9,787,350 | 22,127,832 | 30,805,155 | ||||||||||||
| Less: depreciation and amortization related to cost of revenues | 135,393 | 283,326 | 568,415 | 614,272 | ||||||||||||
| Total gross profit | $ | 13,707,389 | $ | 9,587,229 | $ | 28,085,826 | $ | 23,176,906 | ||||||||
| Adjustments: | ||||||||||||||||
| Depreciation and amortization | 114,054 | 216,550 | 7,757,213 | 798,802 | ||||||||||||
| Commissions expense | 5,965,767 | 4,893,360 | 12,735,435 | 12,663,350 | ||||||||||||
| Total Contribution profit | $ | 7,627,568 | $ | 4,477,319 | $ | 7,593,178 | $ | 9,714,754 | ||||||||
| Gross margin | 57.4 | % | 48.8 | % | 55.3 | % | 42.5 | % | ||||||||
| Contribution margin | 31.9 | % | 22.8 | % | 15.0 | % | 17.8 | % | ||||||||
Adjusted EBITDA
We define Adjusted EBITDA, a non-GAAP financial measure, as net income (loss) before interest and other income (expenses), net, income tax expense, depreciation and amortization, as adjusted to exclude merger and acquisition expenses (“M&A expenses”). We utilize Adjusted EBITDA as an internal performance measure in the management of our operations because we believe the exclusion of these non-cash and non-recurring charges allow for a more relevant comparison of our results of operations to other companies in our industry. Adjusted EBITDA should not be viewed as a substitute for net (loss) income calculated in accordance with GAAP, and other companies may define Adjusted EBITDA differently. Adjusted EBITDA margin reflects our Adjusted EBITDA as a percentage of revenues. The following table provides a reconciliation of net (loss) income to Adjusted EBITDA for the periods presented:
| Three Months Ended September 30, | Nine Months Ended September 30, | |||||||||||||||
| 2025 | 2024 | 2025 | 2024 | |||||||||||||
| Net loss | $ | (1,869,472 | ) | $ | (2,872,424 | ) | $ | (17,868,299 | ) | $ | (8,736,845 | ) | ||||
| Adjustments: | ||||||||||||||||
| Other income, net | (165,308 | ) | (137,508 | ) | (300,999 | ) | (188,329 | ) | ||||||||
| Interest expense | 129,719 | 209,227 | 130,007 | 294,257 | ||||||||||||
| Gain on change in fair value of warrant liabilities | (124,200 | ) | (138,000 | ) | (691,380 | ) | (828,000 | ) | ||||||||
| Income tax provision (benefit) | 48,752 | (44,146 | ) | 385,258 | (235,352 | ) | ||||||||||
| Stock-based compensation | 2,733,674 | 1,503,129 | 6,069,014 | 7,101,818 | ||||||||||||
| Acquisition-related expenses | 953,515 | 738,134 | 2,025,813 | 1,268,647 | ||||||||||||
| Depreciation and amortization | 249,447 | 499,876 | 8,325,628 | 1,413,074 | ||||||||||||
| Adjusted EBITDA | $ | 1,956,127 | $ | (241,712 | ) | $ | (1,924,958 | ) | $ | 89,270 | ||||||
| Net loss margin | (7.8 | )% | (14.6 | )% | (35.2 | )% | (16.0 | )% | ||||||||
| Adjusted EBITDA margin | 8.2 | % | (1.2 | )% | (3.8 | )% | 0.2 | % | ||||||||
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Critical Accounting Estimates
For a description of our critical accounting policies and estimates, refer to “Management’s Discussion and Analysis of Financial Condition and Results of Operations – Critical Accounting Estimates” in our Annual Report on Form 10-K for the year ended December 31, 2024, filed with the SEC on May 28, 2025. There have been no material changes to our critical accounting policies and estimates since our Annual Report on Form 10-K for the year ended December 31, 2024.
Item 3. Quantitative and Qualitative Disclosures about Market Risk
As a smaller reporting company, we are not required to provide the information required by this Item.
Item 4. Controls and Procedures
Evaluation of Disclosure Controls and Procedures
Under the supervision and with the participation of management, including our principal executive officer and principal financial officer, we conducted an evaluation of the effectiveness of our disclosure controls and procedures as of September 30, 2025, as such term is defined in Rules 13a-15(e) and 15d-15(e) of the Securities Exchange Act of 1934 (the “Exchange Act”). As a result of this evaluation, our principal executive officer and principal financial officer have concluded that there were material weaknesses in the Company’s internal control over financial reporting, related to ineffective controls over information and communication and 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. The Company’s management also did not design and maintain effective controls over the calculation of earnings per share and the classification of the reinvestment of interest and dividend income in the statement of cash flows. These material weaknesses in internal control over financial reporting have been disclosed in the company’s quarterly reports on Form 10-Q for 2024 and 2025 and annual report on Form 10-K for the year ended December 31, 2024. We are still in the process of remediating, our disclosure controls and procedures continued not to be effective as of September 30, 2025. Notwithstanding the identified material weaknesses, management, including our principal executive officer and principal financial officer, believes the condensed consolidated financial statements included in this report fairly represent, in all material respects, our financial condition, results of operations and cash flows as of and for the periods presented in accordance with GAAP.
Disclosure controls and procedures are designed to ensure that information required to be disclosed by us in the reports that we file or submit under the Exchange Act is recorded, processed, summarized, and reported within the time periods specified in the SEC rules and forms, and that such information is accumulated and communicated to our management, including our principal executive officer and principal financial officer, as appropriate to allow timely decisions regarding required disclosure.
Changes in Internal Control over Financial Reporting
There were no changes in our internal control over financial reporting (as defined in Rules 13a-15(f) and 15d-15(f) under the Exchange Act) during the period covered by this report that have materially affected or are reasonably likely to materially affect, our internal control over financial reporting. Please refer to our Annual Report on Form 10-K for the year ended December 31, 2024, filed with the SEC on May 28, 2025.
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PART II - OTHER INFORMATION
Item 1. Legal Proceedings.
None.
Item 1A. Risk Factors.
The risks described under the heading “Risk Factors” in our Annual Report on Form 10-K for the year ended December 31, 2024 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.
You should carefully read and consider such risks, together with all of the other information in our Annual Report on Form 10-K for the year ended December 31, 2024, in this Quarterly Report on Form 10-Q (including the disclosures in the section titled “Management’s Discussion and Analysis of Financial Condition and Results of Operations” and in our interim condensed consolidated financial statements and related notes), and in the other documents that we file with the SEC.
Except for the additional risk factors set forth below, there have been no material changes from the risk factors previously disclosed under the heading “Risk Factors” in our Annual Report on Form 10-K for the year ended December 31, 2024.
If we are unable to effectively manage Heliogen’s business, our reputation and operating results may be harmed.
Following the Mergers, we are required to integrate the products and businesses of Heliogen into the operations of the Company. We may be unable to successfully integrate these into our business operations. If we are unable to do so for any reason, our reputation and operating results may be harmed and we would be unable to realize the business-related benefits of the transaction.
Item 2. Unregistered Sale of Equity Securities, Use of Proceeds, and Issuer Purchases of Equity Securities.
On August 11, 2025, the Company issued 677,711 shares of Zeo class A common stock to settle accrued buyside advisory fees from the Heliogen acquisition as previously disclosed in its Current Report on Form 8-K filed with the SEC on August 19, 2025.
Item 3. Defaults Upon Senior Securities.
None.
Item 4. Mine Safety Disclosures.
Not Applicable.
Item 5. Other Information.
During the quarterly period ended September 30,
2025, none of our directors or officers (as defined in Rule 16a-1(f) promulgated under the Exchange Act)
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Item 6. Exhibits.
The following exhibits are filed as part of, or incorporated by reference into, this Form 10-Q.
| * | Filed herewith. |
| ** | Furnished herewith. |
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SIGNATURES
Pursuant to the requirements of Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.
| ZEO Energy Corp. | ||
| Date: November 14, 2025 | /s/ Timothy Bridgewater | |
| Name: | Timothy Bridgewater | |
| Title: | Chief Executive Officer | |
| Date: November 14, 2025 | /s/ Cannon Holbrook | |
| Name: | Cannon Holbrook | |
| Title: | Chief Financial Officer | |
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