Zeo Energy Corp.

Zeo Energy Corp.

Notes to the CONDENSED Consolidated Financial Statements

March 31, 2026

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 (“U.S. 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 U.S. GAAP for complete financial statements. The December 31, 2025 consolidated balance sheet data was derived from audited financial statements but do not include all disclosures required by U.S. 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 April 1, 2026. In the opinion of management, all adjustments considered necessary for a fair presentation of the financial statements, consisting solely of normal recurring adjustments, have been made. Operating results for the three months ended March 31, 2026 are not necessarily indicative of the results that may be expected for the year ending December 31, 2026.

Reclassifications

Certain prior period amounts have been reclassified to conform to the current period presentation of the condensed consolidated financial statements. These reclassifications had no impact on previously reported net loss, total assets, total liabilities, stockholders’ equity, or cash flows from operating activities.

Recently Adopted Accounting Pronouncements

In November 2024, the FASB issued ASU 2024-04, “Debt—Debt with Conversion and Other Options,” which clarifies the requirements for determining whether certain settlements of convertible debt instruments should be accounted for as an induced conversion. The new guidance is effective for reporting annual periods beginning after December 15, 2025 and can be applied either prospectively or retrospectively. Early adoption is permitted. The adoption of ASU 2024-04 did not have a material impact on the Company’s condensed consolidated financial statements.

In July 2025, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) 2025-05, “Financial Instruments—Credit Losses (Topic 326): Measurement of Credit Losses for Accounts Receivable and Contract Assets,” which introduces a practical expedient for the application of the current expected credit loss model to current accounts receivable and contract assets. The amendment is effective for interim and annual periods beginning after December 15, 2025, with early adoption permitted. This amendment is to be applied on a prospective basis. The adoption of ASU 2025-05 did not have a material impact on the Company’s condensed consolidated financial statements.

Recently Issued Accounting Pronouncements Not Yet Adopted

In November 2024, the FASB issued ASU 2024-03, “Income Statement—Reporting Comprehensive Income—Expense Disaggregation Disclosures (Subtopic 220-40): Disaggregation of Income Statement Expenses,” which requires disaggregated disclosure of specific expense categories, including purchases of inventory, employee compensation, depreciation, and amortization included in each relevant expense caption presented on the statement of operations. The standard also requires a qualitative description of the amounts remaining in relevant expense captions that are not separately disaggregated quantitatively, as well as the total amount of selling expenses and an entity’s definition of selling expenses. ASU 2024-03 is effective for annual periods beginning after December 15, 2026, and interim periods beginning after December 15, 2027. The Company is currently evaluating the impact ASU 2024-03 will have on its condensed consolidated financial statements.

In May 2025, the FASB issued ASU 2025-03, “Business Combinations (Topic 805) and Consolidation (Topic 810): Determining the Accounting Acquirer in the Acquisition of a Variable Interest Entity,” which requires entities to consider existing factors in ASC 805 when identifying the accounting acquirer in a transaction effected primarily by exchanging equity interests in which the legal acquiree is a variable interest entity that meets the definition of a business. ASU 2025-03 is effective for fiscal years beginning after December 15, 2026, with early adoption permitted. The Company is currently evaluating the impact ASU 2025-03 will have on its condensed consolidated financial statements.

In September 2025, the FASB issued ASU 2025-06, “Intangibles—Goodwill and Other—Internal-Use Software (Subtopic 350-40): Targeted Improvements to the Accounting for Internal-Use Software.” This guidance removes references to project stages throughout ASC 350-40 and clarifies the threshold entities apply to begin capitalizing costs. Under the new standard, cost capitalization should only commence when an entity has committed to funding a software project and it is probable the project will be completed and the software will be used for its intended purpose. The amendments are effective for annual reporting periods beginning after December 15, 2027, and interim reporting periods within those annual reporting periods. Entities may apply the guidance using a prospective, retrospective or modified transition approach. Early adoption is permitted as of the beginning of an annual reporting period. The Company is currently evaluating the impact ASU 2025-06 will have on its condensed consolidated financial statements.

In December 2025, the FASB issued ASU 2025-11, “Interim Reporting (Topic 270): Narrow-Scope Improvements.” ASU 2025-11 clarifies and improves existing interim reporting guidance by consolidating disclosure requirements within Topic 270 and introducing a disclosure principle requiring entities to disclose events and changes occurring after the most recent annual reporting period that are expected to have a material effect on the entity’s financial condition or results of operations. The ASU does not introduce significant changes to recognition or measurement guidance. The amendments in ASU 2025-11 are effective for interim reporting periods within fiscal years beginning after December 15, 2027, with early adoption permitted. ASU 2025-11 allows for either a prospective or retrospective approach on adoption. The Company is currently evaluating the impact ASU 2025-11 will have on its condensed consolidated financial statements.

The Company currently believes there are no other issued and not yet effective accounting standards that are materially relevant to its condensed consolidated financial statements.

NOTE 2**—LIQUIDITY AND GOING CONCERN ASSESSMENT**

As of March 31, 2026, the Company had cash and cash equivalents of $1.7 million, positive working capital of $7.9 million, and total stockholders’ equity of $13.7 million. For the three months ended March 31, 2026, the Company incurred a net loss of $4.7 million and $0.9 million of cash used in operating activities. Management has assessed the going concern assumptions of the Company during the preparation of these condensed consolidated financial statements.

The Company has operational plans to increase revenue and move towards the goal of profitable operations in 2026, which plans are expected to improve cash flows. The operational plan includes an increase in the number of sales agents to increase revenue and improved efficiency in the operations of the Company through centralization of field offices and labor and productivity improvement in the corporate operations through the implementation of a new CRM software.

The Company is also working internally and with third parties to address short-term cash needs through the use of the common stock purchase agreement with White Lion Capital LLC (the “White Lion ELOC”), which provides the Company the right to sell up to $30.0 million in shares of Class A common stock, subject to market liquidity and contractual limitations. The White Lion ELOC is limited to selling shares equal to 4.99% of the outstanding shares at the time of sale and resets once White Lion Capital LLC liquidates their holdings in the open market (seeNote 10—Redeemable Noncontrolling Interests and Equityfor additional information). The Company also has other opportunities to raise capital, such as through revenue generating initiatives, private placements, public offerings or repricing of outstanding warrants. In addition, in June 2026 the Company will become eligible to utilize a universal shelf registration statement to raise funding for the Company.

The Company’s condensed consolidated financial statements have been prepared on a going concern basis, which contemplates the generation of revenue, access to capital markets or other funding sources, realization of assets and the satisfaction of liabilities in the normal course of business.

NOTE 3**—DISAGGREGATION OF REVENUES AND SEGMENT REPORTING**

Disaggregation of Revenues

The Company’s revenues are disaggregated based on revenue type, including (i) solar system installations, (ii) roofing installations, and (iii) energy storage solutions.

The Company’s net revenues for the three months ended March 31, 2026 and 2025 are disaggregated as follows:

For the three months ended March 31, 2026 and 2025, the Company had two and four customers, respectively, that accounted for more than 10% of revenue. Aggregate revenue from these customers was $7,973,865 and $7,276,203 for the three months ended March 31, 2026 and 2025, respectively.

Segment Reporting

The Company operates intwo operating and reportable segments: (1) Sunergy, which includes the design, procurement, installation, and servicing of residential solar photovoltaic systems and related roofing services; and (2) Heliogen, which includes concentrated solar power and long-duration energy generation and storage technology solutions for commercial and industrial applications.

The Chief Operating Decision Maker (“CODM”) evaluates segment performance and allocates resources based on the operating results of each reportable segment, including revenues, cost of revenues, operating expenses, and net loss.

Prior to the acquisition of Heliogen on August 8, 2025, the Company operated as a single operating and reportable segment consisting of its solar installation and related services operations.

Corporate public company costs and other activities that are not allocated to Heliogen are included within the Sunergy segment.

Segment information for the three months ended March 31, 2026 and 2025 is as follows:

NOTE 4**—PREPAID EXPENSES AND OTHER CURRENT ASSETS**

Prepaid expenses and other current assets as of March 31, 2026 and December 31, 2025 consisted of the following:

NOTE 5**—PROPERTY AND EQUIPMENT**

Property and equipment as of March 31, 2026 and December 31, 2025 consisted of the following:

Depreciation expense for the three months ended March 31, 2026 and 2025 was $1,047,410 and $219,259, respectively.

During the three months ended March 31, 2026, the Company committed to a plan to abandon certain internally-developed software that had been placed into service. In accordance with ASC 350-40, the Company reassessed the remaining useful life of the software and accelerated the amortization to reflect the shortened period of expected use. As a result, the Company recognized additional depreciation expense of $833,014 during the three months ended March 31, 2026, which reduced the net carrying value of the internally-developed software to zero. The gross cost of $1,286,879 and related accumulated depreciation were removed from the condensed consolidated balance sheet upon retirement of the asset.

NOTE 6**—ACCRUED EXPENSES AND OTHER CURRENT LIABILITIES**

Accrued expenses and other current liabilities as of March 31, 2026 and December 31, 2025 consisted of the following:

Accrued expenses and other current liabilities – related parties as of March 31, 2026 and December 31, 2025 consisted of the following:

NOTE 7**—LEASES**

Operating Leases

Operating leases as of March 31, 2026 and December 31, 2025 consisted of the following:

The components of operating lease expense consist of the following for the three months ended March 31, 2026 and 2025:

For the three months ended March 31, 2026 and 2025, cash paid for amounts included in the measurement of operating lease liabilities totaled $192,763 and $180,784, respectively.

As of March 31, 2026, future minimum lease payments under operating lease liabilities were as follows:

Finance Leases

Finance leases ROU assets and liabilities as of March 31, 2026 and December 31, 2025 consisted of the following:

Finance lease costs included in depreciation and amortization in the condensed consolidated statements of operations were $34,118 and $34,119 for the three months ended March 31, 2026 and 2025, respectively. Interest expense related to finance leases was $8,717 and $11,174 for the three months ended March 31, 2026 and 2025, respectively. For the three months ended March 31, 2026 and 2025, cash paid for amounts included in the measurement of finance lease liabilities and interest expense totaled $42,893 and $42,870, respectively.

As of March 31, 2026, future minimum lease payments under finance leases were as follows:

NOTE 8**—RELATED PARTY TRANSACTIONS**

Solar Leasing Arrangements

Certain customers of the Company finance their solar energy system purchases through Solar Leasing I, LLC (“SLI”). These arrangements are substantially similar to those with unrelated third-party financing providers.

For the three months ended March 31, 2026 and 2025, the Company recognized related party revenue of $1,029,423 and $2,567,304, respectively. As of March 31, 2026 and December 31, 2025, the Company had accounts receivable of $765,757 and $611,807, respectively, due from SLI related to these arrangements.

In August 2024, the Company entered into a guarantee of SLI’s obligations under a Business Loan Agreement between SLI and a bank for borrowings up to $10 million. The loan is also personally guaranteed by the Company’s CEO, who serves as the manager of SLI through White Horse Energy, LLC (“White Horse”). As of March 31, 2026 and December 31, 2025, the outstanding balance under the loan was $9,937,246 and $9,976,752, respectively.

Note Receivable

During 2025, SLI performed a fair-market-value assessment of certain lease assets. As a result of this assessment, SLI paid a discretionary rebate of $3,150,000 to the Company based on the excess of fair value over the carrying value of the assets. The Company subsequently transferred the rebate proceeds as a subordinated loan, recorded as a note receivable from White Horse.

On January 30, 2026, the Company increased the subordinated loan in the form of a note receivable with White Horse Energy, LLC from $3.0 million to $6.15 million under the same terms as the original note.

For the three months ended March 31, 2026 and 2025, the Company recognized interest income of $39,584 and $37,656, respectively, related to the note receivable, which is included in other income in the condensed consolidated statements of operations. As of March 31, 2026, the outstanding principal balance of the loan was $6,150,000 with accrued interest of $193,069. As of December 31, 2025, the outstanding principal balance of the loan was $3,000,000 with accrued interest of $153,485. The outstanding principal and accrued interest balances are included in note receivable – related parties in the condensed consolidated balance sheets.

Tax Receivable Agreement

In connection with the consummation of the Sunergy business combination on March 13, 2024, the Company entered into a TRA with OpCo and certain OpCo members (the “TRA Holders”). Pursuant to the TRA, the Company is required to pay the TRA Holders 85% of the net cash savings, if any, in U.S. federal, state, and local income and franchise taxes that the Company actually realizes, or is deemed to realize in certain circumstances, as a result of increases in tax basis and certain other tax attributes arising from the Sunergy business combination and related transactions.

As of March 31, 2026, the Company had not recorded a liability related to the TRA because realization of the related tax benefits was not considered more likely than not. The estimated unrecorded TRA liability was approximately $4.6 million as of March 31, 2026 and $5.7 million as of December 31, 2025. If realization of the related tax benefits becomes more likely than not in future periods, the Company will record a liability related to the TRA with a corresponding charge to expense in the condensed consolidated statements of operations.

NOTE 9**—COMMITMENTS AND CONTINGENCIES**

Litigation

From time to time, the Company may be involved in various claims, lawsuits, and legal proceedings arising in the ordinary course of business. The Company records a liability for loss contingencies when it is probable that a loss has been incurred and the amount of the loss can be reasonably estimated in accordance with ASC 450.

On July 3, 2025, the Company filed a civil complaint in the California Superior Court, Riverside County, in an action captionedZeo Energy Corp. v. SolWerks, Inc. and SolKraft, Inc., Case No. CVME2507379. The complaint asserts a claim for breach of contract and nonpayment of no less than $955,914 for residential solar installation services performed between 2020 and 2024. The Company is the successor-in-interest to Lift Energy Construction, Inc. and Lumio HX, Inc., having acquired all rights under the parties’ Master Installation Agreement and related accounts receivable pursuant to a November 1, 2024 bankruptcy sales order. The parties are currently engaged in discovery and the defendants have asserted no counterclaims at this time. The Company anticipates recovery from SolKraft; however, it is too early to assess the likely outcome or range of potential recovery as of March 31, 2026.

As of March 31, 2026 and December 31, 2025, the Company was not aware of any pending or threatened legal proceedings against the Company that it believes would have a material adverse effect on the Company’s consolidated financial position, results of operations, or cash flows. Legal costs associated with loss contingencies are expensed as incurred

NOTE 10**—REDEEMABLE NONCONTROLLING INTERESTS AND EQUITY**

The table below reflects share information about the Company’s capital stock as of March 31, 2026:

Class A common stock, Class V common stock, and preferred stock represent capital stock of Zeo. Class A convertible preferred units, Class A units, and Class B units represent limited liability company interests of OpCo. Class A convertible preferred units are held by the Sponsor and are classified as redeemable noncontrolling interests on the condensed consolidated balance sheet. Class B units are exchangeable for shares of Class A common stock on a one-for-one basis, together with cancellation of an equal number of shares of Class V common stock, and are classified as redeemable noncontrolling interests on the condensed consolidated balance sheet. Class A units are held by Zeo as managing member of OpCo and are eliminated in consolidation.

Class A Common Stock

During the three months ended March 31, 2026,1,500,000 shares of Class A common stock were issued in exchange for OpCo Class B units and the cancellation of corresponding shares of Class V common stock.

During the three months ended March 31, 2026,31,793 shares of Class A common stock were issued to an employee for services valued at $31,315.

On January 27, 2026, the Company entered into the White Lion ELOC with White Lion Capital LLC (“White Lion”), pursuant to which the Company has the right, but not the obligation, to sell to White Lion up to $30.0 million in aggregate gross purchase price of newly issued shares of Class A common stock, subject to certain limitations and conditions, over a period ending on the earlier of January 27, 2029 or the purchase of the full commitment amount. The Company’s ability to issue shares under the White Lion ELOC is subject to certain limitations, including Nasdaq stockholder approval requirements and beneficial ownership limitations under the agreement. As a result, the actual amount available under the facility may be significantly less than the stated $30.0 million commitment amount depending on the Company’s stock price and shares available for issuance. Specifically, the White Lion ELOC is limited to selling shares equal to 4.99% of the outstanding shares at the time of sale and resets once White Lion Capital LLC liquidates their holdings in the open market. In consideration for the commitment, the Company agreed to issue 66,225 shares of Class A common stock to White Lion with a fair value of $100,000. Concurrently, the Company entered into a Registration Rights Agreement with White Lion. During the three months ended March 31, 2026, the Company sold 241,000 shares of Class A common stock under the White Lion ELOC for gross proceeds of $272,020. Offering costs of $258,565, including registration and legal costs associated with the facility, were offset against the proceeds, resulting in net proceeds of $13,455.

On March 13, 2026,46,175 shares of Class A common stock, net of tax withholding, were issued upon vesting of restricted stock awards granted in March 2024. SeeNote 11—Stock-Based Compensation for additional information.

On February 5, 2026,73,876 shares of Class A common stock, net of tax withholding, were issued upon vesting of restricted stock awards granted in February 2025. SeeNote 11—Stock-Based Compensation for additional information.

Redeemable Noncontrolling Interests

During the three months ended March 31, 2026,1,500,000 OpCo units were exchanged for shares of the Company’s Class A common stock. As a result, as of March 31, 2026,21,380,000 OpCo units remained outstanding. The prior investors’ interests in OpCo represent redeemable noncontrolling interests. Holders of OpCo units may exchange their units, together with the cancellation of a corresponding number of shares of Class V common stock, for shares of the Company’s Class A common stock on a one-for-one basis, or cash proceeds of equal value at the time of redemption. Any redemption of OpCo units for cash must be funded through a private or public offering of Class A common stock and is subject to approval by the Company’s Board of Directors. Future exchanges of OpCo units may generate incremental tax attributes and related cash tax savings for the Company. Pursuant to the TRA, the Company is generally required to pay the TRA holders 85% of the net cash tax savings realized as a result of increases in tax basis and certain other tax attributes arising from such exchanges. SeeNote 8—Related Party Transactions for additional information regarding the TRA.

As of March 31, 2026 and December 31, 2025, the noncontrolling interest holders owned approximately 37.8% and 40.8%, respectively, of the outstanding OpCo common units.

The OpCo amended and restated agreement provides, among other things, for the issuance of corresponding economic, non-voting Class B units of OpCo. Holders of exchangeable OpCo units may cause OpCo to redeem one or more units, together with the cancellation of a corresponding number of shares of the Company’s Class V common stock, for shares of the Company’s Class A common stock on a one-for-one basis, subject to certain restrictions. Under certain circumstances, the Company may be required to redeem OpCo units. Subject to certain conditions, the Class A convertible preferred OpCo units may be redeemed by the Company following the first anniversary of closing and converted by the Sponsor into exchangeable OpCo units, which may then be exchanged for Class A common stock.

The Class A convertible preferred units accrue distributions at a rate of 10% per annum. During the three months ended March 31, 2026, the Company recognized $432,398 of preferred unit distributions and paid cash distributions of $160,153 to holders of the Class A preferred units. The financial results of OpCo are consolidated with those of the Company, with the redeemable noncontrolling interests’ share of net loss presented separately in the condensed consolidated financial statements.

NOTE 11**—STOCK-BASED COMPENSATION**

2024 Omnibus Incentive Plan

On March 6, 2024, the shareholders of ESGEN approved the Zeo 2024 Omnibus Incentive Equity Plan (the “Incentive Plan”), which became effective upon the closing of the Sunergy business combination. A total of 3,220,400 shares of Class A common stock were initially reserved for issuance under the Incentive Plan (the “Plan Share Reserve”). Each award granted under the Incentive Plan reduces the Plan Share Reserve by the number of shares underlying the award.

The Plan Share Reserve automatically increases on the first day of each fiscal year beginning in 2025 through 2029 by a number of shares equal to the lesser of (i)2% of the outstanding shares of common stock on the last day of the immediately preceding fiscal year or (ii) a lesser number of shares determined by the Board of Directors. The purpose of the Incentive Plan is to enable the Company and its subsidiaries to attract and retain key personnel and to align the interests of directors, officers, employees, consultants, and advisors with those of the Company’s stockholders through equity-based compensation.

The following table summarizes restricted stock unit activity under the Incentive Plan for the three months ended March 31, 2026:

The following table summarizes equity compensation expense and remaining unrecognized compensation cost for grants outstanding under the Incentive Plan during the three months ended March 31, 2026 and 2025:

Sun Managers, LLC Management Incentive Plan

Sun Managers intends to grant Class B units (as defined in the SM LLCA) in Sun Managers through the Sun Managers, LLC Management Incentive Plan (the “Management Incentive Plan”) adopted by Sun Managers to certain eligible employees or service providers of OpCo, Sunergy or their subsidiaries, in the discretion of Timothy Bridgewater, as manager of Sun Managers. Such Class B units may be subject to a vesting schedule, and once such Class B units become vested, there may be an exchange opportunity through which the grantees may request (subject to the terms of the Management Incentive Plan and the OpCo amended and restated limited liability company agreement in its entirety (the “OpCo A&R LLC Agreement”)) the exchange of their Class B units into Seller OpCo Units (together with an equal number of Zeo Class V shares), which may then be converted into Zeo Class A common Stock (subject to the terms of the Management Incentive Plan and the OpCo A&R LLC Agreement). 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 718. In accordance with the OpCo A&R LLC Agreement, the Company allocates 100% of all related expense and deduction items to Sun Managers. These compensatory payments are accounted for as capital contributions from Sun Managers to the Company, with no new equity units issued in return.

On March 31, 2026, Sun Managers granted an aggregate of 527,953 restricted shares of Zeo Class A common stock under the Management Incentive Plan to five employees. The restricted shares vested immediately upon grant. During the three months ended March 31, 2026, the Company recognized $303,045 in equity compensation expense related to these awards.

Seasonal Manager Stock Compensation Plan

Beginning January 1, 2025, certain eligible sales managers may earn shares of the Company’s Class A common stock under the Seasonal Manager Stock Compensation Plan, which operates under the umbrella of the Management Incentive Plan. Managers are eligible to earn 40 shares per kW installed for projects sold by the manager’s organization, provided they exceed 1,500 kW installed during a calendar year, and as long as the manager sells 700kW the subsequent calendar year. The number of shares awarded may be reduced if the average price for Zeo stock during the quarter in which installations are completed exceeds $5 per share, the number of shares granted per kW will be correspondingly decreased.

The managers become eligible to receive certain grants of vested shares under the Seasonal Manager Stock Compensation Plan as follows:

On March 31, 2026, Sun Managers granted an aggregate of 355,264 restricted shares of Zeo Class A common stock under the Management Incentive Plan to six sales managers. The restricted shares vest in two equal installments as follows.

The following table summarizes equity compensation expense and remaining unrecognized compensation cost for grants outstanding under the Seasonal Manager Compensation Plan during the three months ended March 31, 2026 and 2025:

The negative compensation expense for the three months ended March 31, 2026 reflects the forfeiture and recapture of previously recognized compensation cost resulting from the termination of three sales managers prior to vesting.

NOTE 12**—FAIR VALUE MEASUREMENTS**

The carrying amounts of the Company’s financial instruments, including cash and cash equivalents, accounts receivable, inventories, prepaid expenses and other current assets, accounts payable, accrued expenses, and contract assets and liabilities, approximate fair value due to the short-term nature of these instruments.

The carrying amounts of lease liabilities and notes payable also approximate fair value as these instruments bear interest rates that are consistent with current market rates for similar instruments.

Recurring Fair Value Measurements

The Company measures certain financial instruments at fair value on a recurring basis. As of March 31, 2026, the Company’s financial instruments measured at fair value on a recurring basis consist of warrant liabilities.

The fair value of financial instruments measured at fair value on a recurring basis as of March 31, 2026 consisted of the following:

The following table presents changes in the Company’s warrant liabilities measured at fair value on a recurring basis:

NOTE 13**—INCOME TAXES**

The Company accounts for income taxes in accordance with ASC 740, which requires the recognition of deferred tax assets and liabilities for the expected future tax consequences of events that have been included in the condensed consolidated financial statements. Deferred tax assets and liabilities are determined based on differences between the financial statement carrying amounts and the tax bases of existing assets and liabilities and are measured using enacted tax rates expected to apply in the years in which those temporary differences are expected to reverse.

The Company’s effective tax rate was a 2.3% benefit and (3.9)% provision for the three months ended March 31, 2026 and 2025, respectively. The effective tax rate differs from the U.S. federal statutory tax rate primarily due to the noncontrolling interest ownership in OpCo, which is treated as a partnership for U.S. federal income tax purposes, as well as changes in the valuation allowance on deferred tax assets.

The Company evaluated the realizability of its deferred tax assets based on all available positive and negative evidence. Based on this evaluation, the Company determined that it is not more likely than not that certain deferred tax assets will be realized and therefore recorded a valuation allowance against those deferred tax assets as of March 31, 2026 and December 31, 2025.

Due to the Company’s Up-C organizational structure, a portion of the Company’s earnings is attributable to noncontrolling interests in OpCo, which is treated as a partnership for U.S. federal income tax purposes. Accordingly, income attributable to these noncontrolling interests is generally not subject to corporate-level income taxes, which reduces the Company’s overall effective tax rate.

The components of the deferred income tax assets and liabilities were as follows:

NOTE 14**—NET LOSS PER SHARE**

Basic net loss per share is calculated by dividing net loss attributable to Class A common stockholders by the weighted-average number of Class A common shares outstanding during the period. Diluted net loss per share is calculated by adjusting the weighted-average number of Class A common shares outstanding for the potentially dilutive effect of securities that could be converted into or settled in shares of Class A common stock. Potentially dilutive securities include exchangeable OpCo units and other instruments that may be settled in shares of Class A common stock.

The Company applies the treasury stock method to restricted stock awards and warrants, which assumes that all Class A common share equivalents have been exercised at the beginning of the period and that the proceeds from those exercises are assumed to be used to repurchase Class A common shares at the average closing market price during the period. The Company applies the if-converted method to securities that are convertible into Class A common shares.

For the three months ended March 31, 2026 and 2025, the Company reported a net loss. Accordingly, all potentially dilutive securities were excluded from the calculation of diluted net loss per share because their effect would be anti-dilutive, and diluted net loss per share equals basic net loss per share. As of March 31, 2026 and 2025,37,495,002 and 43,221,852 potential common share equivalents, respectively, consisting of convertible OpCo Class A Preferred Units, exchangeable OpCo Class B units, convertible notes, warrants, and restricted stock awards, were excluded from the calculation of diluted net loss per share because their effect would be anti-dilutive.

The following table presents the computation of the basic and diluted loss per share of Class A common stock for the three months ended March 31, 2026 and 2025:

NOTE 15**—SUBSEQUENT EVENTS**

On April 23, 2026, the Company received a letter from the Listing Qualifications Staff of The Nasdaq Stock Market LLC (“Nasdaq”) indicating that, based upon the closing bid price of the Company’s Class A common stock for the last 30 consecutive business days, the Company no longer meets Nasdaq Listing Rule 5550(a)(2), which requires listed companies to maintain a minimum bid price of at least $1 per share. Nasdaq Listing Rule 5810(c)(3)(A) provides a compliance period of 180 calendar days, or until October 20, 2026, in which to regain compliance with the minimum bid price requirement. If the Company evidences a closing bid price of at least $1 per share for a minimum of 10 consecutive business days during the 180-day compliance period, the Company will automatically regain compliance. In the event the Company does not regain compliance with the $1 bid price requirement by October 14, 2026, the Company may be eligible for consideration of a second 180-day compliance period if it meets the continued listing requirement for market value of publicly held shares and all other initial listing standards for Nasdaq’s Capital Market, other than the minimum bid price requirement. In addition, the Company would also be required to notify Nasdaq of its intent to cure the minimum bid price deficiency.