Financial Performance - Total revenue for 2024 was $73.2 million, a 33.2% decrease from $109.7 million in 2023, primarily due to higher interest rates affecting residential solar sales[7] - Adjusted EBITDA for 2024 was $2.0 million, down from $7.0 million in 2023, representing 2.7% of total revenue compared to 6.4% in the previous year[12][15] - The company achieved its sixth consecutive year of positive adjusted EBITDA despite a challenging market environment[6] - Gross profit for 2024 decreased to $34.4 million (47.0% of total revenue) from $49.8 million (45.4% of total revenue) in 2023, driven by lower sales but improved operational efficiencies[7] - In Q4 2024, total revenue was $18.6 million, an 18.9% decrease from $23.0 million in Q4 2023, again impacted by higher interest rates[12] - Q4 2024 adjusted EBITDA increased to $3.1 million (16.8% of total revenue) from approximately $(0.9) million in Q4 2023, primarily due to a significant change in depreciation and amortization[12][15] - The net loss for 2024 was $9.9 million compared to a net income of $4.8 million in 2023, largely due to stock compensation and increased operational costs[12] - Total revenue for the year ended December 31, 2024, was $73,244,083, a decrease of 33% compared to $109,691,001 in 2023[22] - Net loss for the year ended December 31, 2024, was $9,872,358, compared to a net income of $4,845,069 in 2023[22] Cash Flow and Assets - Cash and cash equivalents decreased to $5,634,115 as of December 31, 2024, from $8,022,306 in 2023, representing a decline of 29.5%[24] - Total assets increased to $60,976,116 as of December 31, 2024, up from $48,086,119 in 2023, reflecting a growth of 26.5%[20] - Total liabilities rose to $18,063,424 as of December 31, 2024, compared to $17,463,600 in 2023, indicating an increase of 3.4%[20] - Operating expenses for the year ended December 31, 2024, totaled $84,073,855, down from $104,551,674 in 2023, a reduction of 19.6%[22] - Cash flows from operating activities resulted in a net cash used of $8,716,717 for the year ended December 31, 2024, compared to a net cash provided of $11,977,134 in 2023[24] Revenue Sources and Transactions - The company reported a significant increase in related party revenue, which rose to $22,156,018 in 2024 from $15,464,852 in 2023, marking a growth of 43.5%[22] - The company incurred $4,836,538 in depreciation and amortization expenses for the year ended December 31, 2024, compared to $1,841,874 in 2023, an increase of 162%[22] - The company issued convertible preferred stock, generating net proceeds of $9,221,649 during the year ended December 31, 2024[24] - Non-cash transactions related to operating lease liabilities amounted to $837.76 million[25] - Deferred equity issuance costs totaled $2.769039 billion[25] - Class A common stock issued to vendors reached $891.035 million[25] - Class A common stock issued to backstop investors was $156.946 million[25] - Preferred dividends amounted to $9.275795 million[25] Future Outlook - The company secured $4.0 million in December 2024 to develop a year-round sales force and expand market presence, aiming for growth in the second half of 2025[6] - Management expressed optimism for 2025, highlighting opportunities for acquiring renewable energy assets to enhance growth and market share[3] - Zeo Energy completed the integration of Lumio's assets acquired in November 2024 as part of its market expansion strategy[6]

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 March 31, 2025 or ☐ 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 (St ...

Business Combination and Corporate Changes - Following the Business Combination on March 13, 2024, the company changed its name from "ESGEN Acquisition Corporation" to "Zeo Energy Corp."[361] - The Business Combination was accounted for as a reverse recapitalization, with Sunergy being treated as the accounting acquirer[367]. - The company retains majority control post-Business Combination, with the Primary Sellers owning 83.8% of the equity[372]. Financial Performance - Revenue decreased by approximately $36.4 million, from $109.7 million in 2023 to $73.2 million in 2024, a decline of 33.2%[400]. - Gross profit fell to $34.4 million in 2024, down from $49.8 million in 2023, with a gross margin of 47.0% compared to 45.4% in the previous year[378]. - Adjusted EBITDA decreased to $1.96 million in 2024, with an adjusted EBITDA margin of 2.7%, down from $6.98 million and 6.4% in 2023[378]. - Net loss increased to $9.87 million in 2024, compared to a net income of $4.85 million in 2023, representing a significant decline[378]. - Contribution profit for 2024 was $14.6 million, a decrease from $19.7 million in 2023, with a contribution margin of 19.9% compared to 18.0% in 2023[419]. Expenses and Cost Management - General and administrative expenses rose by $8.7 million to $21.6 million in 2024, primarily due to $7.8 million in stock compensation expenses[404]. - Sales and marketing expenses decreased by $10.7 million to $19.6 million in 2024, attributed to reduced commissions from lower revenue[403]. - Cost of goods sold decreased by $21.4 million, from $59.4 million in 2023 to $38.0 million in 2024, maintaining a cost of goods sold percentage of 52.4%[401]. Cash Flow and Capital Management - As of December 31, 2024, cash and cash equivalents were approximately $5.6 million, down from $8.0 million in 2023[407]. - Net cash used in operating activities was approximately $8.7 million in 2024, a decrease of $20.7 million compared to a net cash provided of approximately $12.0 million in 2023[412]. - Net cash used in investing activities was approximately $7.4 million in 2024, significantly higher than $1.0 million in 2023, primarily due to a $4.0 million asset purchase[413]. - The company cannot assure that its cash and cash equivalents will be sufficient for its business needs over the next twelve months, indicating potential future capital requirements[410]. Sales and Market Strategy - The company has approximately 290 sales agents and 22 independent sales dealers as of December 31, 2024, focusing on a capital-light business strategy[358]. - The majority of sales in 2023 were generated in Florida, with a significant split between Florida and Ohio in 2024, indicating a focus on operational efficiency due to revenue decreases[359]. - The company aims to expand into new markets with favorable net metering policies and cost incentives, enhancing its customer base[359]. - The company plans to expand its residential sales into new markets, currently operating in eight states and servicing customers in 16 states[384]. - The company intends to grow its in-house sales force and introduce a year-round sales team in 2025 to enhance operational efficiency[386]. Financing Activities - The company raised approximately $13.7 million in net cash from financing activities in 2024, primarily from the issuance of convertible preferred stock[414]. - The company has approximately $3.6 million in trade-credit with solar equipment distributors and $2.4 million in a convertible promissory note with a related party[415]. - The company entered into a promissory note for $2.4 million in December 2024 to fund the creation of a year-round sales team[409]. Revenue Composition - Revenues associated with lease arrangements accounted for 64% of sales in 2024, up from 21% in 2023[412]. - Total revenue for 2024 was $73.2 million, down from $109.7 million in 2023, resulting in a gross profit of $34.4 million compared to $49.8 million in 2023[419].

Business Acquisition and Strategy - The Company closed an Asset Purchase Agreement on October 25, 2024, acquiring assets for a total purchase price of $4 million in cash and 6,206,897 shares of Class A Common Stock[193]. - The Business Combination resulted in the Sellers owning 83.8% of the equity of the Company immediately following the transaction[206]. - The Business Combination was accounted for as a reverse recapitalization, treating ESGEN as the acquired company[202]. - The Company has focused on a capital-light business strategy, minimizing inventory by drop-shipping most equipment directly to installation sites[190]. - The company may need to raise additional capital through debt or equity financing if proceeds from the Business Combination are insufficient to support business needs[253]. Sales and Market Expansion - As of September 30, 2024, the Company utilized approximately 180 sales agents and 22 independent sales dealers to generate a growing sales pipeline[190]. - The Company plans to enter new markets selectively where solar penetration is below 7% of the addressable residential market, focusing on states with favorable net metering policies[191]. - The company plans to expand its roofing business, having sold over $2.5 million in roofing replacements in 2024 to facilitate solar installations[219]. - The company intends to double its in-house sales force and external sales dealers in 2024 to target new customers in the Southern U.S. regional residential markets[220]. - The company aims to expand its product offerings and services in residential markets across Florida, Texas, Arkansas, and Missouri to drive future revenue growth[218]. Financial Performance - Revenue, net for the three months ended September 30, 2024, decreased by approximately $18.2 million, or 48.1%, compared to the same period in 2023, primarily due to higher interest rates affecting consumer financing[235]. - Revenue decreased by approximately $32.1 million, or 37.0%, from $86.7 million for the nine months ended September 30, 2023, to $54.6 million for the same period in 2024[242]. - Gross profit for the three months ended September 30, 2024, was $9.6 million, with a gross margin of 48.8%, compared to a gross profit of $17.4 million and a gross margin of 45.8% in the same period of 2023[212]. - Adjusted EBITDA for the three months ended September 30, 2024, was $(980,000), with an adjusted EBITDA margin of (5.0)%, compared to $4.5 million and 11.9% in Q3 2023[212]. - Adjusted EBITDA for the nine months ended September 30, 2024, reflects a significant decline due to decreased revenue and increased operational costs[264]. Cost Management - Cost of goods sold decreased by $10.7 million, resulting in an improvement in the cost of goods sold as a percentage of revenue from 55.0% in Q3 2023 to 51.2% in Q3 2024[237]. - The cost of goods sold decreased by $18.4 million, or 37.4%, from $49.2 million in 2023 to $30.8 million in 2024, maintaining a consistent percentage of revenue at 57.2%[244]. - General and administrative expenses increased by 66.2% to $7.2 million in Q3 2024, compared to $4.3 million in Q3 2023, reflecting higher costs associated with being a publicly traded company[235]. - General and administrative expenses increased by $6.2 million, or 63.6%, from $9.7 million in 2023 to $15.9 million in 2024, primarily due to stock compensation and increased headcount[246]. - Sales and marketing expenses decreased by $3.6 million, or 18.3%, from $19.8 million in 2023 to $16.2 million in 2024, attributed to reduced costs from fewer sales personnel[247]. Operational Challenges - The company is experiencing increased costs due to inflation, particularly in labor and raw materials, which may pressure operating margins[221]. - Interest rate increases have negatively impacted customer financing, slowing sales of solar systems, as higher rates lead to increased monthly costs for customers[222]. - Net cash used in operating activities was approximately $12.2 million for the nine months ended September 30, 2024, compared to a net cash provided of approximately $5.8 million in 2023, a decrease of $17.9 million[256]. - Cash and cash equivalents decreased from approximately $8.0 million as of December 31, 2023, to approximately $4.3 million as of September 30, 2024[251]. Loss and Impairment - For the three months ended September 30, 2024, the company reported a net loss of $2,872,424, compared to a net income of $4,000,047 for the same period in 2023[266]. - For the nine months ended September 30, 2024, the company reported a net loss of $8,736,845, compared to a net income of $6,441,842 for the same period in 2023[266]. - The net loss income margin for the three months ended September 30, 2024, was (14.6)%, down from 10.6% in the same period last year[266]. - The company incurred interest expenses of $209,227 for the three months ended September 30, 2024, compared to $10,396 in the same period in 2023[266]. - Stock compensation expenses for the nine months ended September 30, 2024, totaled $7,101,818, indicating a significant increase compared to the previous year[266]. Accounting and Valuation - The company has not recorded any goodwill impairment for the three and nine months ended September 30, 2024, and 2023[271]. - No impairment charges were recorded for intangible assets for the three and nine months ended September 30, 2024, and 2023[273]. - The company evaluates its accounting policies and estimates on an ongoing basis, which may lead to material differences in reported financial results under different conditions[268]. - The company recognizes and measures assets acquired in business combinations based on their estimated fair values at the acquisition date, which involves significant judgment and estimation[269].

Financial Performance - Total revenue for Q2 2024 was $14.7 million, a 51% decrease from $30.1 million in Q2 2023, primarily due to higher interest rates affecting residential solar direct sales[6] - Gross profit for Q2 2024 decreased to $4.4 million (29.8% of total revenue) from $5.6 million (18.7% of total revenue) in Q2 2023, driven by decreased sales but improved operational efficiencies[6] - Net loss for Q2 2024 was $1.3 million (8.8% of total revenue), compared to net income of $0.8 million (2.7% of total revenue) in Q2 2023, largely due to stock compensation expenses[7] - Adjusted EBITDA for Q2 2024 was $0.7 million (4.6% of total revenue), down from approximately $1.3 million (4.4% of total revenue) in Q2 2023, reflecting decreased gross profit and increased stock compensation[7] - Total revenue for the first six months of 2024 was $34.6 million, a 29% decrease from $48.8 million in the same period of 2023, attributed to higher interest rates[4] - Gross profit for the first six months of 2024 decreased to $6.0 million (17.3% of total revenue) from $8.6 million (17.7% of total revenue) in the same period of 2023[4] - Net loss for the first six months of 2024 was $3.2 million (9.2% of total revenue), compared to net income of $2.4 million (4.9% of total revenue) in the same period of 2023[4] - Adjusted EBITDA for the first six months of 2024 was a loss of $0.1 million (0.3% of total revenue), down from $3.4 million (6.9% of total revenue) in the same period of 2023[5] - Net loss for 2024 was $3,181,873 compared to a net income of $2,400,187 in 2023[18] Operational Metrics - Total operating expenses for the six months ended June 30, 2024, were $16,907,397, a decrease from $29,250,949 in the prior year[17] - Net cash used in operating activities was $12,338,008, a significant decrease from $1,849,251 in the previous year[18] - Total depreciation and amortization for 2024 was $919,542, slightly down from $922,165 in 2023[18] - The company incurred transaction costs of $3,269,039, with no such costs reported in the previous year[18] - Preferred dividends for 2024 totaled $8,224,091, with no preferred dividends reported in 2023[18] - Cash paid for interest increased to $70,284 from $37,851 in 2023[18] Assets and Liabilities - Total current assets increased to $17,895,800 as of June 30, 2024, from $16,233,331 as of December 31, 2023[15] - Total liabilities decreased to $12,205,927 as of June 30, 2024, from $17,540,167 as of December 31, 2023[15] - Cash and cash equivalents decreased to $5,342,120 as of June 30, 2024, from $8,022,306 as of December 31, 2023[15] - Accounts receivable increased to $7,207,854 as of June 30, 2024, compared to $2,905,205 as of December 31, 2023[15] - The current portion of long-term debt increased slightly to $420,745 as of June 30, 2024, from $404,871 as of December 31, 2023[15] - Total stockholders' equity showed a significant decline to $(51,117,913) as of June 30, 2024, from $30,591,065 as of December 31, 2023[15] Cash Flow and Financing - Cash and cash equivalents at the end of the period were $5,342,120, up from $3,413,334 in 2023[18] - Proceeds from the issuance of convertible preferred stock amounted to $10,277,275, with no such transactions in 2023[18] - Net cash provided by financing activities was $9,988,651, compared to $79,986 in 2023[18] Strategic Initiatives - The company plans to reignite sales efforts and pursue strategic M&A opportunities as macroeconomic pressures ease[3] - Recent market launches in Ohio and Illinois have shown encouraging initial results, with plans for further expansion[2]

Business Overview - Zeo Energy Corp. is focused on accelerating the transition to renewable energy, providing residential solar energy systems and related services in Florida, Texas, Arkansas, and Missouri[143]. - The business combination with ESGEN resulted in the company changing its name to Zeo Energy Corp., with the transaction treated as a reverse recapitalization[151][159]. - Following the business combination, the primary sellers retained 83.8% ownership of the company, indicating no change in control[163]. - The management team remains unchanged post-business combination, ensuring continuity in leadership[165]. Market and Sales Strategy - As of June 30, 2024, the company has approximately 170 sales agents and 27 independent sales dealers, contributing to a growing sales pipeline[146]. - The company aims to expand selectively into new markets where favorable net metering policies exist[148]. - The company plans to double its in-house sales force and external sales dealers in 2024 to target new customers in the Southern U.S. regional residential markets[176]. - The company has launched a leasing program for residential solar energy systems, catering to homeowners in a higher interest rate environment[149]. - The solar energy market in the U.S. is expected to grow due to government policy support and rising conventional utility costs, with the company targeting markets with solar penetration below 7%[148]. Financial Performance - Revenue decreased by approximately $15.4 million, from $30.1 million in Q2 2023 to $14.7 million in Q2 2024, representing a decline of 51.1%[188]. - Revenue decreased by approximately $14.2 million, from $48.8 million for the six months ended June 30, 2023 to $34.6 million for the six months ended June 30, 2024, representing a decline of 29.2%[196]. - Adjusted EBITDA for Q2 2024 was $679,000, compared to $1.3 million in Q2 2023, with an adjusted EBITDA margin of 4.6%[170]. - Adjusted EBITDA for the six months ended June 30, 2024 was $(3.0) million, compared to $3.4 million for the same period in 2023, reflecting a significant decline in operational performance[212]. - The company reported a net loss of $3.3 million before taxes for the six months ended June 30, 2024, compared to a net income of $2.4 million for the same period in 2023, a decline of 236.8%[196]. Cost Management - Cost of goods sold decreased by $14.1 million, improving to 70% of revenue in 2024 from 81% in 2023, driven by lower material costs and labor efficiencies[190]. - Cost of goods sold decreased by $11.6 million, maintaining a consistent percentage of revenue at 80%[198]. - General and administrative expenses increased by $2.1 million, from $3.8 million in Q2 2023 to $5.9 million in Q2 2024, primarily due to $2.4 million in stock compensation recognized in 2024[192]. - General and administrative expenses increased by $4.4 million, from $5.2 million to $9.6 million, primarily due to a $2.9 million increase in stock compensation and increased headcount[198]. - Sales and marketing expenses decreased by $0.7 million, from $1.0 million to $0.3 million, due to reduced costs associated with fewer sales personnel[199]. Cash Flow and Liquidity - Net cash used in operating activities was approximately $12.3 million for the six months ended June 30, 2024, compared to a net cash provided of approximately $1.8 million for the same period in 2023, a decrease of $14.2 million[205]. - Net cash provided by financing activities was approximately $10.0 million for the six months ended June 30, 2024, primarily from the issuance of convertible preferred stock[207]. - As of June 30, 2024, the company's cash and cash equivalents were approximately $5.3 million, down from $8.0 million as of December 31, 2023[202]. Operational Challenges - Inflation and supply chain challenges are impacting operating margins and increasing costs, with raw material costs and labor rising due to higher inflation rates[176][178]. - Interest rate increases have resulted in higher monthly costs for customers, slowing financing-related sales of solar systems[177]. - The company expects to incur substantial additional expenses for compliance and reporting requirements following the business combination[168]. Other Financial Information - The Class A Common Stock and public warrants of Zeo Energy Corp. are traded on Nasdaq under the ticker symbols "ZEO" and "ZEOWW," respectively[158]. - The change in fair value of warrant liabilities contributed $690,000 to other income, net, improving from a net expense of $(41,712) to income of $669,534[200]. - No goodwill impairment was recorded for the three months ended June 30, 2024 and 2023[220]. - Intangible assets are subject to amortization on a straight-line basis over their estimated period of benefit[221]. - No impairment charges were recorded for intangible assets for the three months ended June 30, 2024 and 2023[222].

Business Strategy and Market Expansion - Zeo Energy Corp. aims to expedite the transition to renewable energy by providing affordable solar energy systems and related services across Florida, Texas, Arkansas, and Missouri[157]. - The company plans to enter new markets selectively where favorable net metering policies exist and solar penetration is below 7%[161]. - The company plans to expand its residential sales into new markets, targeting underserved areas in Florida, Texas, Arkansas, and Missouri[185]. - In 2024, the company sold over $1.3 million in roofing replacements to support solar installations, with plans to expand this business[186]. - The company intends to increase its in-house sales force and external sales dealers in 2024 to capture new customers in the Southern U.S. residential markets[187]. Financial Performance - Revenue for the three months ended March 31, 2024, was $19.49 million, a 4.0% increase from $18.73 million in the same period of 2023[181]. - Gross profit decreased to $1.84 million with a gross margin of 9.5%, down from $3.49 million and 18.6% respectively in the prior year[181]. - Adjusted EBITDA was $(1.15) million, reflecting an adjusted EBITDA margin of (5.9)%, compared to $2.05 million and 10.9% in the previous year[181]. - The company reported a net loss of $1.7 million for the three months ended March 31, 2024, compared to a net income of approximately $1.6 million in the same period of 2023[222]. - Adjusted EBITDA for the three months ended March 31, 2024, was $(1.15) million, a decrease from $2.05 million in the same period of 2023[222]. - The Adjusted EBITDA margin for the three months ended March 31, 2024, was (5.9)%, compared to 10.9% in the same period of 2023[224]. Cost and Expenses - Cost of goods sold increased by 16.0% to $17.18 million, resulting in a cost of goods sold percentage of 88.2%, up from 79.1% in the prior year[201][203]. - General and administrative expenses surged by 151.5% to $3.34 million, primarily due to investments in customer support and technology[201][206]. - The company is facing inflationary pressures, with increased costs of labor and materials impacting operating margins[188]. Cash Flow and Financing - As of March 31, 2024, cash and cash equivalents were approximately $7.7 million, down from $8.0 million at the end of 2023[210]. - Net cash used in operating activities was approximately $10.2 million for the three months ended March 31, 2024, a decrease of $11.7 million compared to a net cash provided of approximately $1.6 million in the same period of 2023[215]. - Net cash used in investing activities was approximately $0.2 million for the three months ended March 31, 2024, primarily related to purchases of property and equipment of $0.3 million, compared to $0.6 million in the same period of 2023[216]. - Net cash provided by financing activities was approximately $10.1 million for the three months ended March 31, 2024, primarily due to cash acquired from the Business Combination of $10.4 million, compared to approximately $0.2 million in the same period of 2023[217]. - The company utilized internally generated positive cash flow to grow the business, with significant cash inflows from financing activities[217]. Corporate Structure and Governance - Following the Business Combination, the Sellers own 83.8% of the equity of the company, indicating no change in control[175]. - The Business Combination was treated as a reverse recapitalization, with ESGEN being considered the acquired company[171]. - The Class A Common Stock and public warrants are traded on Nasdaq under the ticker symbols "ZEO" and "ZEOWW," respectively[170]. - The company has $3.0 million payable for professional services related to the business combination, to be paid over the next six quarters[218]. - There was no goodwill impairment recorded for the three months ended March 31, 2024, and 2023[229]. Compliance and Operational Efficiency - Ongoing public company costs are expected to increase due to compliance requirements and additional expenses related to legal, accounting, and investor relations[179]. - The company has focused on improving operational efficiency and expanding its workforce to ensure high standards for quality and safety[161]. - The company emphasizes the use of non-GAAP financial measures to evaluate performance and facilitate comparisons with other companies in the industry[220].

Financial Performance - Total revenue for Q1 2024 increased by 4% to $19.5 million compared to $18.7 million in Q1 2023[11] - Gross profit for Q1 2024 decreased by 47% to $1.8 million, representing 9.5% of net revenue, down from 18.6% in Q1 2023[11] - Net loss for Q1 2024 was $1.7 million, compared to a net income of approximately $1.6 million in Q1 2023[11] - Adjusted EBITDA for Q1 2024 resulted in a loss of $1.2 million, a decrease from a profit of approximately $2.0 million in Q1 2023[11] - The net loss for the period was $1,699,200, compared to a net income of $1,602,939 in the same quarter of 2023, indicating a significant decline in profitability[20] - The company reported a basic and diluted net loss per common unit of $1.20 for the quarter[20] Operating Expenses - Operating expenses increased to $21,102,265, up 23.2% from $17,118,006 in the prior year, primarily due to higher cost of goods sold and general administrative expenses[20] - Cash flows from operating activities showed a net cash used of $10,153,821, contrasting with a net cash provided of $1,589,777 in the prior year[22] Merger and Financing - The merger with ESGEN Acquisition Corp. was completed on March 13, 2024, with transaction expenses totaling $11.7 million[5] - Preferred equity of $15.0 million was provided by Energy Spectrum to cover merger expenses and support ongoing operations[5] - Proceeds from the issuance of convertible preferred stock amounted to $10,277,275, contributing to financing activities[22] Sales and Market Outlook - The company expanded its sales and installation capacity into Ohio and Illinois during Q1 2024[5] - The company anticipates more favorable equipment pricing and stable or declining interest rates throughout 2024[4] - The company expects profitability to return to historical growth levels in the remaining quarters of 2024[4] Assets and Cash Position - The total assets as of March 31, 2024, were $51.6 million, an increase from $48.0 million as of December 31, 2023[18] - Cash and cash equivalents at the end of the period were $7,731,124, down from $8,022,306 at the beginning of the period[22] - The company experienced a net decrease in cash and cash equivalents of $291,182 during the quarter[22] Related Party Transactions - Related party revenue for the three months ended March 31, 2024, was $8,812,769, with no related party revenue reported in the same period of 2023[20] Warrant Liabilities - The company incurred a change in fair value of warrant liabilities amounting to $(138,000) during the quarter[22]

Business Operations and Growth - Zeo Energy Corp. completed its initial business combination with Sunergy Renewables, LLC on March 13, 2024, and changed its name from ESGEN Acquisition Corp.[28] - As of December 31, 2023, Zeo has expanded its personnel from approximately 180 to approximately 288, reflecting a 60% increase since the Contribution[32] - The internal sales team grew to approximately 270 agents by December 31, 2023, marking a 100% increase from the previous year[38] - The company plans to continue growing its roofing operations, which complement its solar energy system installations[35] - The company plans to expand operations into new geographic markets with a focus on areas where less than 7% of the residential market has solar energy systems[55] - The company aims to increase installation capacity by hiring and training more skilled technicians and collaborating with subcontractors[56] - The company has experienced profitable growth over the last four years, despite challenges associated with operating as a publicly traded entity[59] - The company’s scalable business platform is designed to support rapid growth by efficiently adding personnel and collaborating with external dealers[66] - The company has experienced significant growth and intends to continue expanding within existing markets and new locations, which may strain management and operational infrastructure[127] Customer Financing and Sales - The majority of customers (at least 90%) financed their solar energy system purchases through third-party loans with terms between 7 and 25 years[44] - The company has launched a leasing program for residential solar energy systems to enhance affordability and increase sales potential[58] - The company's sales model emphasizes high volume and low customer acquisition costs through effective training and a multi-step sales process[60][62] - The company’s growth strategy relies on third-party financing arrangements for customer purchases, making it vulnerable to changes in credit markets[130] - The company is currently dependent on third-party leasing companies for financing solar energy system leases, which represented 8% of installations in 2023, with expectations for growth in 2024[196][197] Supply Chain and Equipment - Zeo purchased approximately 98% of its installed equipment from Greentech in 2023, establishing a strong supplier relationship[49] - The company sources approximately 98% of its equipment from a single supplier, Greentech, making it vulnerable to supply chain disruptions and price changes[117] - The company has a variety of quality standards for third-party suppliers, but reliance on them poses risks of increased costs and operational disruptions[124] - The company may incur higher compliance costs due to trade restrictions and governmental responses related to human rights concerns[219] - Supply chain constraints, increased demand for solar systems, and rising inflation have contributed to price increases for solar components[220] Regulatory and Compliance Risks - The company is subject to various government regulations that impact installation processes and component pricing due to tariffs and trade restrictions[79][80] - Changes in government policies and regulations regarding utility rebates, tax credits, and other financial incentives could significantly impact the company's business model and financial performance[200][201] - The company faces potential regulatory changes that could classify it as a utility, imposing significant operational restrictions and increased costs[211] - Compliance with environmental laws and regulations can be expensive, with potential fines and damages for noncompliance impacting financial performance[225] - Noncompliance with health and safety regulations could result in significant monetary damages and operational restrictions[227] Market Competition and Challenges - The company faces competition from electric utilities, retail electric providers, and other solar companies, which may impact sales growth[67][68] - The company faces competition from electric utilities, retail electric providers, and independent power producers, which have greater resources[97][98] - A material reduction in retail electricity prices could harm the company's offerings and competitiveness[107] - The potential for over-generation of solar energy could lead to curtailment of existing resources, adversely impacting future growth and cash flows[147] - Competition for qualified personnel is increasing, particularly for skilled installation personnel, which could adversely affect the company's business[175] Financial Performance and Economic Factors - The company has experienced heightened inflation in labor and component costs, impacting solar energy equipment prices since 2020[51] - Inflation could lead to increased costs for labor and equipment, adversely impacting the company's financial condition and results of operations[189] - Fluctuations in interest rates could lower demand for solar power products, reducing revenue and adversely affecting financial results[191] - The company may incur debt in the future, which could introduce debt servicing costs and risks to business operations[192] - The company may incur net losses as it increases spending to finance operational expansion and marketing initiatives, making it difficult to assess the impact on profitability[112] Customer Experience and Satisfaction - The company’s vertically integrated business model enhances project completion speed and customer satisfaction, leading to higher retention rates[64] - The company has experienced increased customer cancellations in certain markets, which may adversely affect financial results if trends continue[121] - Disruptions to solar production metering and energy storage solutions could negatively impact customer experiences and harm market reputation[157] - The company relies heavily on its brand and reputation for high-quality solar service offerings, and any failure to meet customer expectations could harm growth through referrals[171] Environmental and Climate Risks - Climate change poses systemic risks to the company's operations, potentially leading to increased operational costs and decreased revenue due to extreme weather events[110] - The company’s growth may be adversely affected by unfavorable meteorological conditions impacting solar energy production[109] - Changes in net metering policies could affect the company's operations and customer incentives in various states[87] Legal and Cybersecurity Risks - The company is not currently involved in any material litigation, but may face legal proceedings in the ordinary course of business[91] - The company has not experienced a material cybersecurity incident to date, but future incidents could adversely affect business operations[166] - The company may face claims related to noncompliance with open source license terms, which could result in litigation and additional costs[165] International Trade and Tariffs - The U.S. government imposed tariffs on $200 billion worth of imports from China, including solar inverters, with tariffs increasing from 10% to 25% in May 2019[214] - The Department of Commerce found that certain Chinese solar manufacturers circumvented U.S. import duties by routing operations through Cambodia, Malaysia, Thailand, and Vietnam[216] - An emergency declaration established a two-year tariff exemption for solar panels and cells imported from Cambodia, Malaysia, Thailand, and Vietnam, delaying potential dumping duties[217] - The U.S. International Trade Commission recommended extending tariffs on imported crystalline silicon PV cells and modules for another four years, until 2026, starting at 14.75%[218]

Financial Performance - Net revenue for the full year 2023 increased 24% to $110.1 million compared to $89.0 million in 2022[6] - Gross profit for the full year 2023 increased 26% to $20.2 million, representing 18.3% of net revenue[6] - Adjusted EBITDA for the full year 2023 increased 8% to $11.2 million, which is 10.2% of net revenue[6] - Fourth quarter net revenue totaled $23.4 million, a 2% increase from $22.9 million in the comparable 2022 period[10] - Total revenue for the year ended December 31, 2023, increased to $110,066,601, up 23.8% from $88,963,855 in 2022[20] - Net income for the year ended December 31, 2023, was $6,230,438, a decrease of 28.2% compared to $8,665,770 in 2022[20] - Adjusted EBITDA margin decreased from 11.7% in 2022 to 10.2% in 2023[14] Cash and Assets - Cash and cash equivalents as of December 31, 2023, totaled $8.0 million, up from $4.3 million at September 30, 2023[10] - Cash and cash equivalents at the end of 2023 were $8,022,306, significantly up from $2,268,306 at the end of 2022, representing a 253.5% increase[23] - Total assets increased to $47,987,187 in 2023, compared to $35,201,421 in 2022, reflecting a growth of 36.3%[18] Liabilities and Expenses - Total liabilities rose to $15,654,299 in 2023, up from $3,925,575 in 2022, marking a substantial increase of 298.5%[18] - Operating expenses for the year ended December 31, 2023, totaled $103,528,766, an increase of 29.0% from $80,318,089 in 2022[20] - The company reported a provision for credit losses of $1,531,223 in 2023, compared to $742,772 in 2022, indicating a 106.5% increase[23] - The company incurred interest expenses of $123,996 in 2023, compared to $51,295 in 2022, reflecting an increase of 142.4%[20] Strategic Developments - The company opened a new market in Missouri, advancing its commitment to geographic expansion in the US[4] - The completed business combination with ESGEN Acquisition Corp. occurred on March 13, 2024, resulting in ZEO and ZEOWW trading on the Nasdaq Capital Market[6] - The company plans to expand into several new geographies and drive sustainable profitability in 2024[5] Operating Activities - The net cash provided by operating activities for the year ended December 31, 2023, was $11,963,994, an increase from $10,719,945 in 2022[23] - The weighted average units outstanding remained stable at 1,000,000 for both 2023 and 2022[20] - The company reported a net income loss of $0.1 million in Q4 2023, down from a net income of approximately $1.1 million in Q4 2022[10]