UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549

FORM 10-Q

(Mark one)

☒ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended September 30, 2024

☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from ____________ to ____________

Commission File Number: 001-40927

ZEO ENERGY CORP.

(Exact name of registrant as specified in its charter)

Delaware

98-1601409

(State or other jurisdiction

of incorporation or organization)

(IRS Employer

Identification No.)

7625 Little Rd, Suite 200A, New Port Richey, FL 34654

(Address of principal executive offices and Zip Code)

(727) 375-9375

(Registrant’s telephone number, including area code)

Not Applicable

(Former name or former address, if changed since last report)

Securities registered pursuant to Section 12(b) of the Act:

Title of each class	Trading Symbol(s)	Name of each exchange on which registered
Class A Common Stock, par value $0.0001 per share	ZEO	The Nasdaq Stock Market LLC
Warrants, each exercisable for one share of Class A Common Stock at a price of $11.50, subject to adjustment	ZEOWW	The Nasdaq Stock Market LLC

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes ☒ No ☐

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T(§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes ☒ No ☐

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.

Large accelerated filer	☐	Accelerated filer	☐
Non-accelerated filer	☒	Smaller reporting company	☒
Emerging growth company	☒

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act): Yes ☐ No ☒

As of January 23, 2025, the registrant had 14,031,845 shares of Class A common stock, par value $0.0001 outstanding, and 35,230,000 shares of Class V common stock, par value $0.0001, outstanding.

	Page
PART 1 – FINANCIAL INFORMATION	1
Item 1. Financial Statements (Unaudited)	1
Condensed Consolidated Balance Sheets as of September 30, 2024, and December 31, 2023 (as restated)	1
Condensed Consolidated Statements of Operations for the three and nine months ended September 30, 2024, and 2023 (as restated)	2
Condensed Consolidated Statements of Changes in Redeemable Noncontrolling Interests and Stockholders’ Equity for the three and nine months ended September 30, 2024	3
Condensed Consolidated Statements of Changes in Redeemable Noncontrolling Interests and Stockholders’ Equity for the three and nine months ended September 30, 2023 (as restated)	4
Condensed Consolidated Statements of Cash Flows for the nine months ended September 30, 2024, and 2023 (as restated)	5
Notes to Condensed Consolidated Financial Statements	6
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations	30
Item 3. Quantitative and Qualitative Disclosures about Market Risk	41
Item 4. Control and Procedures	41
PART II – OTHER INFORMATION	43
Item 1. Legal Proceedings	43
Item 1A. Risk Factors	43
Item 2. Unregistered Sales of Equity Securities and Use of Proceeds	43
Item 3. Defaults Upon Senior Securities	43
Item 4. Mine Safety Disclosures	43
Item 5. Other Information	43
Item 6. Exhibits	44
SIGNATURES	45

PART I – FINANCIAL INFORMATION

Item 1. Financial Statements

ZEO ENERGY CORP.

CONDENSED CONSOLIDATED BALANCE SHEETS

	As of September 30,			As of December 31,
	2024			2023
Assets	(unaudited)			(as restated – see note 3)
Current assets
Cash and cash equivalents	$	4,330,062		$	8,022,306
Accounts receivable, including $432,898 and $396,488 from related parties, net of allowance for credit losses of $3,145,168 and $862,580, as of September 30, 2024, and December 31, 2023, respectively		8,523,301			2,905,205
Inventories		482,251			350,353
Prepaid installation costs		1,072,090			4,915,064
Prepaid expenses and other current assets		1,178,432			40,403
Total current assets		15,586,136			16,233,331
Other assets		491,164			62,140
Property, equipment and other fixed assets, net		2,126,782			2,289,723
Right -of-use operating lease asset		1,402,462			1,135,668
Right-of-use finance lease asset		481,130			583,484
Intangibles, net		-			771,028
Goodwill		27,010,745			27,010,745
Total assets	$	47,098,419		$	48,086,119

Liabilities, mezzanine equity and stockholders’ equity
Current liabilities
Accounts payable	$	4,856,529		$	4,699,855
Accrued expenses and other current liabilities, including $430,685 and $2,415,966 with related parties at September 30, 2024, and December 31, 2023, respectively		3,556,893			4,646,365
Current portion of long-term debt		291,036			294,398
Current portion of obligations under operating leases		576,890			539,599
Current portion of obligations under finance leases		127,341			118,416
Contract liabilities, including $0 and $1,160,848 with related parties as of September 30, 2024, and December 31, 2023, respectively		601,681			5,223,518
Total current liabilities		10,010,370			15,522,151
Obligations under operating leases, non-current		909,468			636,414
Obligations under finance leases, non-current		382,618			479,271
Other liabilities		1,000,000			-
Warrant liabilities		690,000			-
Long-term debt		567,563			825,764
Total liabilities		13,560,019			17,463,600
Commitments and contingencies (Note 16)

Redeemable noncontrolling interests
Convertible preferred units		15,862,110			-
Class B Units		57,003,700			-

Stockholders’ (deficit) equity
Class V common stock		3,523			3,373
Class A common stock		518			-
Additional paid-in capital		3,875,899			31,152,491
Accumulated deficit		(43,207,350	)		(533,345	)
Total stockholders’ (deficit) equity		(39,327,410	)		30,622,519
Total liabilities, redeemable noncontrolling interests and stockholders’ (deficit) equity	$	47,098,419		$	48,086,119

The accompanying notes are an integral part of these condensed consolidated financial statements.

ZEO ENERGY CORP.

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

(UNAUDITED)

	Three Months Ended September 30,						Nine Months Ended September 30,
	2024			2023			2024			2023
				(as restated - see note 3)						(as restated - see note 3)
Revenue, net of financing fees of $4,106,370 and $14,941,988 for the three months ended September 30, 2024, and 2023, respectively, and $9,627,453 and $33,726,283 for the nine months ended September 30, 2024, and 2023, respectively	$	17,329,201		$	37,894,166		$	36,457,234		$	86,705,020
Related party revenue, net of financing fees of $783,650 and $0 for the three months ended September 30, 2024, and 2023, respectively, and $7,767,491 and $0 for the nine months ended September 30, 2024, and 2023, respectively		2,328,704			-			18,139,099			-
Total revenue		19,657,905			37,894,166			54,596,333			86,705,020
Operating costs and expenses:
Cost of goods sold (exclusive of depreciation and amortization shown below)		9,787,350			20,473,087			30,805,155			49,245,721
Depreciation and amortization		499,876			521,289			1,413,074			1,431,482
Sales and marketing		5,202,525			8,595,645			16,178,375			19,813,979
General and administrative		7,151,005			4,302,853			15,893,998			9,716,058
Total operating expenses		22,640,756			33,892,874			64,290,602			80,207,240
(Loss) income from operations		(2,982,851	)		4,001,292			(9,694,269	)		6,497,780
Other income (expenses), net:
Other income, net		137,508			9,151			188,329			6,982
Change in fair value of warrant liabilities		138,000			-			828,000			-
Interest expense		(209,227	)		(10,396	)		(294,257	)		(62,920	)
Total other income (expense), net		66,281			(1,245	)		722,072			(55,938	)
Net (loss) income before taxes		(2,916,570	)		4,000,047			(8,972,197	)		6,441,842
Income tax benefit		44,146			-			235,352			-
Net (loss) income		(2,872,424	)		4,000,047			(8,736,845	)		6,441,842
Less: Net loss attributable to Sunergy Renewables, LLC prior to the Business Combination		-			4,000,047			(523,681	)		6,441,842
Net loss subsequent to the Business Combination		(2,872,424	)		-			(8,213,164	)		-
Less: Net loss attributable to redeemable non-controlling interests		(2,448,162	)		-			(5,979,621	)		-
Net loss attributable to Class A common stock	$	(424,262	)	$	-		$	(2,233,543	)	$	-

Basic and diluted net loss per common share	$	(0.08	)	$	-		$	(0.60	)	$	-
Weighted average units outstanding, basic and diluted		5,053,942			-			3,696,721			-

The accompanying notes are an integral part of these condensed consolidated financial statements.

ZEO ENERGY CORP.

CONDENSED CONSOLIDATED STATEMENTS OF CHANGES IN REDEEMABLE
NONCONTROLLING INTERESTS AND STOCKHOLDERS’ EQUITY

FOR THE NINE MONTHS ENDED SEPTEMBER 30, 2024

(UNAUDITED)

	Redeemable noncontrolling interests																									Total
	Class A Convertible Preferred Units				Class B		Common Units						Class V Common Stock				Class A Common Stock				Additional Paid-in		Accumulated			Stockholders’ Equity
	Units		Amount		Units		Units			Amount			Shares		Amount		Shares		Amount		Capital		Deficit			(Deficit)
Balance, December 31, 2023		-	$	-	$	-		1,000,000		$	31,155,864			-	$	-		-	$	-	$	-	$	(533,345	)	$	30,622,519
Retroactive application of Business Combination (Note 1)		-		-		-		(1,000,000	)		(31,155,864	)		33,730,000		3,373		-		-		31,152,491		-			-
Balance, December 31, 2023		-		-		-		-			-			33,730,000		3,373		-		-		31,152,491		(533,345	)		30,622,519
Stockholder distributions		-		-		-		-			-			-		-		-		-		-		(90,000	)		(90,000	)
Net loss prior to the Business Combination								-			-			-		-		-		-		-		(523,681	)		(523,681	)
Effects of Business Combination