SPRUCE POWER HOLDING CORP

Previous wording

We believe the combination of our existing customer base and proven servicing platform related to our Customer Agreements, together with our capital resources and relationships, gives us the ability to take advantage of rapid growth in distributed solar and battery storage services, while creating a path to more predictable revenues, profits and cash flow for our shareholders. Our corporate strategy has three key elements:

Current wording

We believe the combination of our existing customer base and proven servicing platform related to our Customer Agreements, together with our capital resources and relationships, gives us the ability to take advantage of growth in distributed solar and battery storage services, while creating a path to more predictable revenues, profits and cash flow for our shareholders. Our corporate strategy has three key elements:

Previous wording

For the three months ended March 31, 2025 and 2024, our revenues totaled $23.8 million and $18.3 million, respectively, while our net loss attributable to stockholders was $15.3 million and $2.5 million, respectively. Our financial performance during the three months ended March 31, 2025 was impacted by fluctuations in the value of our hedging portfolio, variations in our operations and maintenance costs, and the incremental impact of the NJR Acquisitions. See the section below titled “Results of Operations” in this Quarterly Report on Form 10-Q for more information on our operating results for the three months ended March 31, 2025 and 2024.

Current wording

For the three months ended June 30, 2025 and 2024, our revenues totaled $33.2 million and $22.5 million, respectively, while our net loss attributable to stockholders was $3.0 million and $8.6 million, respectively. For the six months ended June 30, 2025 and 2024, our revenues totaled $57.1 million and $40.8 million, respectively, while our net loss attributable to stockholders was $18.3 million and $11.0 million, respectively. Our financial performance during the three and six months ended June 30, 2025 was impacted by fluctuations in the value of our interest rate swaps, variations in our operations and maintenance costs, and the incremental impact of the NJR Acquisitions. See the section below titled “Results of Operations” in this Quarterly Report on Form 10-Q for more information on our operating results for the three and six months ended June 30, 2025 and 2024. We focus on the following core pillars in our operations:

Previous wording

•Deliver operational excellence in our clean energy portfolio for customers and communities. Combined portfolio generation was approximately 121 thousand MWh of power for the three months ended March 31, 2025 compared to 96 thousand MWh of power for the three months ended March 31, 2024.

Current wording

•Deliver operational excellence in our clean energy portfolio for customers and communities. Combined portfolio generation was approximately 187 thousand MWh of power for the three months ended June 30, 2025, compared to 160 thousand MWh of power for the three months ended June 30, 2024, respectively.

Previous wording

In November 2024, we completed the Initial NJR Acquisition acquiring 9,800 solar energy systems for approximately $132.5 million, pursuant to an asset purchase agreement (the “APA”). The Initial NJR Acquisition was funded by proceeds from the concurrent issuance of the SP5 Facility (defined below) and $22.7 million of our cash. Under the APA, we may be obligated to acquire approximately 200 additional solar energy systems, subject to those systems having achieved operational milestones. Assuming those milestones are achieved, the aggregate purchase consideration payable with respect to these additional solar energy systems would be approximately $5.0 million pursuant to the APA. During the three months ended March 31, 2025, we acquired 83 of the additional 200 solar energy systems, in the aggregate, for approximately $1.6 million in cash, inclusive of transaction costs of $0.1 million.

Current wording

In November 2024, we completed the Initial NJR Acquisition acquiring 9,800 solar energy systems for approximately $132.5 million, pursuant to an asset purchase agreement (the “APA”). The Initial NJR Acquisition was funded by proceeds from the concurrent issuance of the SP5 Facility (defined below) and $22.7 million of our cash. Under the APA, we were obligated to acquire approximately 200 additional solar energy systems, subject to those systems having achieved operational milestones, and assuming those milestones are achieved, the aggregate purchase consideration payable with respect to these additional solar energy systems would be approximately $5.0 million pursuant to the APA.

Previous wording

Subsequent to March 31, 2025, the Company repurchased 0.5 million shares of common stock under the Repurchase Program in open market transactions at a weighted-average price of $2.10 per share for an aggregate purchase price of $1.0 million, inclusive of transaction costs.

Current wording

During the three and six months ended June 30, 2025, we repurchased 0.5 million and 0.8 million shares, respectively, of common stock under our Repurchase Program in open market transactions at a weighted-average price of $2.10 and $2.33 per share, for an aggregate purchase price of $1.0 million and $1.8 million, respectively, inclusive of transaction costs.

Previous wording

Our ability to raise capital from third parties at reasonable terms is a critical element in supporting ownership of our existing home solar energy assets as well as enabling our future growth. We have historically utilized non-recourse, project-level debt as a primary source of capital for acquisitions. Our ability to raise debt either as means to refinance existing indebtedness or for future acquisitions may be impacted by general macroeconomic conditions, the health of debt capital markets, the interest rate environment and general concerns over its industry or specific concerns over our business.

Current wording

Our ability to raise capital from third parties at reasonable terms is a critical element in supporting ownership of our existing home solar energy assets as well as enabling our future growth. We have historically utilized non-recourse, project-level debt as a primary source of capital for acquisitions. Our ability to raise debt either as a means to refinance existing indebtedness or for future acquisitions may be impacted by general macroeconomic conditions, the health of debt capital markets, the interest rate environment and general concerns over its industry or specific concerns over our business.

Previous wording

Information with respect to the unaudited condensed consolidated statements of operations for the three months ended March 31, 2025 and 2024 are presented below:

Current wording

Information with respect to the unaudited condensed consolidated statements of operations for the three months ended June 30, 2025 and 2024 is presented below:

Previous wording

Cost of revenues - solar energy systems depreciation increased by $1.6 million, or 27%, to $7.3 million in the three months ended March 31, 2025 as compared to the same period in 2024 primarily due to incremental depreciation related to the NJR Acquisitions.

Current wording

Cost of revenues - solar energy systems depreciation increased by $1.6 million, or 29%, to $7.3 million in the three months ended June 30, 2025 as compared to the same period in 2024 primarily due to incremental depreciation related to the NJR Acquisitions.

Previous wording

Interest income of $5.3 million in the three months ended March 31, 2025 related to $4.6 million of interest income from the SEMTH Master Lease and $0.7 million of interest earned on investments in U.S. Treasury securities. In comparison, interest income of $5.4 million for the three months ended March 31, 2024 related to $3.8 million of interest income from the SEMTH Master Lease and $1.6 million of interest earned on investments in U.S. Treasury securities.

Current wording

Interest income of $5.2 million in the three months ended June 30, 2025 related to $4.4 million of interest income from the SEMTH Master Lease and $0.8 million of interest earned on investments in money market funds and U.S. Treasury securities. In comparison, interest income of $5.3 million for the three months ended June 30, 2024 related to $3.7 million of interest income from the SEMTH Master Lease and $1.6 million of interest earned on investments in money market funds and U.S. Treasury securities.

Previous wording

Interest expense, net in the three months ended March 31, 2025 of $12.7 million consisted of (i) $13.2 million of interest expense related to the principal amounts of our outstanding non-recourse debt and (ii) $1.6 million related to the amortization of debt discount and deferred financing costs, both partially offset by $2.1 million of net realized gains from settlements of our interest rate swaps.

Current wording

Interest expense, net in the three months ended June 30, 2025 of $12.8 million consisted of (i) $11.2 million of interest expense, net of realized gains from settlements of our interest rate swaps, and (ii) $1.6 million related to the amortization of debt discount and deferred financing costs.

Previous wording

Revenues increased by $5.5 million, or 30%, to $23.8 million in the three months ended March 31, 2025 as compared to the same period in 2024. The increase was primarily due to (i) incremental SLA revenues of approximately $3.0 million related to the NJR Acquisitions, (ii) net increase of $2.0 million from SREC revenues, of which $2.9 million related to the NJR Acquisitions, and (iii) incremental servicing revenues of approximately $0.6 million related to newly contracted services on third-party owned solar energy systems. Revenues related to our Drivetrain operations are included in net loss from discontinued operations.

Current wording

Revenues increased by $16.3 million, or 40%, to $57.1 million in the six months ended June 30, 2025 as compared to the same period in 2024. The increase was primarily due to (i) approximately $6.0 million of incremental SLA revenues related to the NJR Acquisitions, (ii) $7.9 million net increase in SREC revenues, of which the majority related to the NJR Acquisitions, (iii) $1.5 million increase due to government incentive PBIs, and (iv) $1.0 million of incremental servicing revenues related to contracted services on third-party owned solar energy systems in 2025.

Previous wording

Litigation settlements of $0.6 million in the three months ended March 31, 2025 primarily relates to the settlement of a legal matter associated with the termination of a Legacy XL lease.

Current wording

Litigation settlements of $0.7 million in the six months ended June 30, 2025 primarily related to a $0.6 million settlement in the first quarter of 2025 related to the termination of a Legacy XL lease.

Previous wording

Other expense, net of $6.2 million for the three months ended March 31, 2025 primarily related to the change in fair value of interest rate swaps due to changes in forecasted market interest rates, while other income, net of $6.7 million for the three months ended March 31, 2024 primarily related to the change in fair value of interest rate swaps of $6.4 million and other income, net of $0.3 million.

Current wording

Other expense, net of $10.3 million for the six months ended June 30, 2025 primarily related to the change in fair value of interest rate swaps due to changes in forecasted market interest rates, while other income, net of $3.6 million for the six months ended June 30, 2024 primarily related to the change in fair value of interest rate swaps of $3.2 million and other income, net of $0.4 million.

Previous wording

As of March 31, 2025, we had working capital of $66.5 million, including cash and cash equivalents and restricted cash of $96.5 million. We had net losses attributable to stockholders of $15.3 million and $2.5 million for the three months ended March 31, 2025 and 2024, respectively.

Current wording

As of June 30, 2025, we had negative working capital of $120.2 million resulting from the presentation of the principal amounts outstanding under the SP1 Facility as current debt as of that date. Our negative working capital included cash and cash equivalents and restricted cash of $90.5 million. We had net losses attributable to stockholders of $18.3 million and $11.0 million for the six months ended June 30, 2025 and 2024, respectively.

Previous wording

Our principal sources of liquidity include cash and cash equivalents and cash flows from operations. We receive cash from certain of our wholly-owned subsidiaries specifically related to the portfolio servicing fees provided for under the relevant servicing agreements between us and the subsidiaries, as well as reimbursement for any expenses we pay on behalf of those subsidiaries, which are allowed under certain agreements related to those subsidiaries. Our cash requirements depend on many factors, including the execution of our business strategy. We may be required to utilize our cash to support certain current and future operations of our wholly owned subsidiaries. We remain focused on carefully managing costs, including capital expenditures, maintaining a strong balance sheet, and ensuring adequate liquidity. Our primary cash needs are debt servicing, acquisition of solar energy portfolios, operating expenses, and working capital to support the growth in our business. Working capital is impacted by the timing and extent of our business needs. See below discussions under “Cash Flows Summary” for the impact of our operations on our cash balances during the three months ended March 31, 2025 and 2024.

Current wording

Our principal sources of liquidity include cash and cash equivalents and cash inflows from daily operations. We receive cash from certain of our wholly-owned subsidiaries specifically related to the portfolio servicing fees provided for under the relevant servicing agreements between us and the subsidiaries, as well as reimbursement for any expenses we pay on behalf of those subsidiaries, which are allowed under certain agreements related to those subsidiaries. Our cash requirements depend on many factors, including the execution of our business strategy. We may be required to utilize our cash to support certain current and future operations of our wholly owned subsidiaries. We remain focused on managing costs, including capital expenditures, maintaining a strong balance sheet, and ensuring adequate liquidity. Our primary cash needs are debt servicing, acquisition of solar energy portfolios, operating expenses, and working capital to support the growth in our business. Working capital is impacted by the timing and extent of our business needs. See below discussions under “Cash Flows Summary” for the impact of our operations on our cash balances during the six months ended June 30, 2025 and 2024.

Previous wording

As of March 31, 2025, our debt balance was $700.1 million, net of $20.6 million of unamortized fair value adjustment and $3.1 million of unamortized deferred financing costs, all of which is non-recourse project-level debt. Our debt consists of five senior debt facilities and one subordinated debt facility, of which the earliest maturity date is April 30, 2026. For additional information on our debt, refer to Note 7. Non-Recourse Debt included within the accompanying unaudited condensed consolidated financial statements.

Current wording

As of June 30, 2025, our aggregate debt balance was $695.0 million, net of $19.2 million of unamortized fair value adjustment and $2.8 million of unamortized deferred financing costs, all of which is non-recourse project-level debt. Our debt consists of five senior debt facilities and one subordinated debt facility, of which the earliest maturity date is April 30, 2026 and has been classified as current at June 30, 2025. For additional information on our debt, refer to Note 7. Non-Recourse Debt included within the accompanying unaudited condensed consolidated financial statements.

Previous wording

Based on our current liquidity, we believe that our current cash and cash equivalents, together with the future cash generated from our operations and cash generated by management’s plans to extend or refinance debt obligations under the SP 1 Facility, will be sufficient to satisfy the cash requirements of our current operations and principal payments on our debt obligations for the next 12 months. We continually evaluate our cash needs to raise additional funds or seek alternative sources to invest in growth opportunities and other purposes. We expect that we will continue to be dependent on financing from outside parties to complete future acquisitions, and we may invest our own cash in such future acquisitions. If financing is not available to us on acceptable terms if and when needed, we may not be able to achieve further growth or complete identified acquisition opportunities.

Current wording

Based on our current liquidity, we believe that our current cash and cash equivalents, together with the future cash inflows generated from our daily operations and management’s plans to refinance debt under the SP 1 Facility (see “Liquidity” discussions within Note 1. Organization and Description of Business), will be sufficient to satisfy the cash requirements of our current operations and principal payments on our debt obligations for the next 12 months. We continually evaluate our cash needs to raise additional funds or seek alternative sources to invest in growth opportunities and other purposes. We expect that we will continue to be dependent on financing from outside parties to complete future acquisitions, and we may invest our own cash in such future acquisitions. If financing is not available to us on acceptable terms if and when needed, we may not be able to achieve further growth or complete identified acquisition opportunities.

Previous wording

Operating cash inflows include cash from the sale of solar energy power generated by our home solar energy systems and the servicing of long-term agreements for other institutional owners of home solar energy systems. These operating cash inflows are primarily offset by operating expenses, operating lease payments and interest payments on our outstanding debt. The related cash flows for our Drivetrain business are reflected as discontinued operating activities for the years presented. The net cash used in continuing operating activities consists of our corporate costs and certain other costs that were not allocated to our discontinued operations. Net cash used in continuing operating activities decreased in the three months ended March 31, 2025 compared to the same period in 2024 by $13.1 million primarily due to a $15.0 million net settlement amount paid in February 2024 related to a settled legal proceeding (see Note 12. Commitments and Contingencies), partially offset by increases in operations and maintenance costs and selling, general and administrative expenses in the three months ended March 31, 2025 discussed above.

Current wording

Operating cash inflows include cash from the sale of solar energy power generated by our home solar energy systems and the servicing of long-term agreements for other institutional owners of home solar energy systems. These operating cash inflows are primarily offset by operating expenses, operating lease payments and interest payments on our outstanding debt. The related cash flows for our Drivetrain business are reflected as discontinued operating activities for the years presented. The net cash used in continuing operating activities consists of our corporate costs and certain other costs that were not allocated to our discontinued operations.

Previous wording

The net cash provided by continuing investing activities in the three months ended March 31, 2025 was $4.2 million, which primarily related to $4.5 million of proceeds from our investments under the SEMTH Master Lease and $1.4 million of proceeds from the sale of solar energy systems, partially offset by $1.6 million of net payments related to the NJR Acquisitions. The net cash provided by continuing investing activities in the three months ended March 31, 2024 primarily related to $4.5 million of proceeds from the SEMTH investment and $1.3 million of proceeds from the sale of solar energy systems.

Current wording

The net cash provided by continuing investing activities in the six months ended June 30, 2025 was $8.3 million, which primarily related to $10.5 million of proceeds from our investments under the SEMTH Master Lease and $2.6 million of proceeds from the sale of solar energy systems, partially offset by $4.5 million of net payments related to the acquisition of the Additional NJR Systems in 2025.

Previous wording

The net cash used in continuing financing activities in the three months ended March 31, 2025 was $7.7 million, which primarily related to $6.8 million for repayments of our non-recourse long-term debt, and $0.8 million related to shares repurchased under our Repurchase Program. The net cash used in continuing financing activities in the three months ended March 31, 2024 primarily related to $6.7 million for the repayment of non-recourse debt.

Current wording

The net cash used in continuing financing activities in the six months ended June 30, 2025 was $15.5 million, which primarily related to $13.6 million for repayments of our non-recourse long-term debt, and $1.8 million related to shares repurchased under our Repurchase Program.

Previous wording

Our unaudited condensed consolidated financial statements are prepared in accordance with U.S. GAAP. Preparation of these unaudited condensed financial statements requires us to make estimates, assumptions and judgments that affect the reported amounts of assets, liabilities, revenues and expenses, and related disclosure of contingent assets and liabilities. Our most critical accounting estimates are those most important to the portrayal of its financial condition and results of operations and which require us to make its most difficult and subjective judgments, often as a result of the need to make estimates regarding matters that are inherently uncertain. Although Management believes that its estimates and assumptions are reasonable, they are based on information available when they are made and, therefore, may differ from estimates made under different assumptions or conditions. Our critical accounting estimates are discussed within Item 7. “Management’s Discussion and Analysis of Financial Condition and Results of Operations” in our Annual Report. There have been no material changes in those critical accounting estimates for the three months ended March 31, 2025.

Current wording

Our unaudited condensed consolidated financial statements are prepared in accordance with U.S. GAAP. Preparation of these unaudited condensed financial statements requires us to make estimates, assumptions and judgments that affect the reported amounts of assets, liabilities, revenues and expenses, and related disclosure of contingent assets and liabilities. Our most critical accounting estimates are those most important to the portrayal of its financial condition and results of operations and which require us to make its most difficult and subjective judgments, often as a result of the need to make estimates regarding matters that are inherently uncertain. Although management believes that its estimates and assumptions are reasonable, they are based on information available when they are made and, therefore, may differ from estimates made under different assumptions or conditions. Our critical accounting estimates are discussed within Item 7. “Management’s Discussion and Analysis of Financial Condition and Results of Operations” in our Annual Report. Other than the valuation models used in determining future principal debt amortization on certain of our credit facilities, there have been no other material changes to our critical accounting estimates during the six months ended June 30, 2025.