SPRUCE POWER HOLDING CORP

Previous wording

The following discussion and analysis provides information which our management believes is relevant to an assessment and understanding of our financial condition and results of operations. This discussion and analysis should be read together with our results of operations and financial condition and the unaudited condensed consolidated financial statements and related notes that are included elsewhere in this Quarterly Report on Form 10-Q and the audited financial statements and the notes thereto included in our Annual Report on Form 10-K for the year ended December 31, 2024, filed with the U.S. Securities and Exchange Commission (the “SEC”) on March 31, 2025 (the “Annual Report”). In addition to historical financial information, this discussion and analysis contains forward-looking statements based upon current expectations that involve risks, uncertainties, and assumptions. Refer to the section entitled “Cautionary Note Regarding Forward-Looking Statements.” Actual results and timing of selected events may differ materially from those anticipated in these forward-looking statements as a result of various factors, including those set forth under “Risk Factors” or elsewhere in this Quarterly Report on Form 10-Q and under “Risk Factors” in Item 1A of the Annual Report.

Current wording

The following discussion and analysis provides information which our management believes is relevant to an assessment and understanding of our financial condition and results of operations. This discussion and analysis should be read together with our results of operations and financial condition and the unaudited condensed consolidated financial statements and related notes that are included elsewhere in this Quarterly Report on Form 10-Q and the audited financial statements and the notes thereto included in our Annual Report on Form 10-K for the year ended December 31, 2025, filed with the U.S. Securities and Exchange Commission (the “SEC”) on March 31, 2026 as amended by the Annual Report on Form 10-K/A filed with the SEC on April 3, 2026 (the “Annual Report”). In addition to historical financial information, this discussion and analysis contains forward-looking statements based upon current expectations that involve risks, uncertainties, and assumptions. Refer to the section entitled “Cautionary Note Regarding Forward-Looking Statements.” Actual results and timing of selected events may differ materially from those anticipated in these forward-looking statements as a result of various factors, including those set forth under “Risk Factors” or elsewhere in this Quarterly Report on Form 10-Q and under “Risk Factors” in Item 1A of the Annual Report.

Previous wording

We are a leading owner and operator of distributed solar energy assets across the U.S., offering subscription-based services to approximately 85,000 home solar assets and customer contracts, making renewable energy more accessible to everyone. We offer asset management and operating and maintenance services and are contracted to service approximately 60,000 systems owned by third parties, as well as to our Portfolio, through our Spruce Pro servicing platform.

Current wording

We are a leading owner and operator of distributed solar energy assets across the U.S., offering subscription-based services to approximately 84,000 home solar assets and customer contracts, making renewable energy more accessible to everyone. We offer asset management and operating and maintenance services and are contracted to service approximately 60,000 systems owned by third parties, as well as to our Portfolio, through our Spruce Pro servicing platform.

Previous wording

For the three months ended September 30, 2025 and 2024, our revenues totaled $30.7 million and $21.4 million, respectively, while our net loss attributable to stockholders was $0.9 million and $53.5 million, respectively. For the nine months ended September 30, 2025 and 2024, our revenues totaled $87.8 million and $61.9 million, respectively, while our net loss attributable to stockholders was $19.2 million and $64.6 million, respectively. Our financial performance during the three and nine months ended September 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. The three and nine months ended September 30, 2024 was impacted by goodwill impairment of $28.8 million and settlement costs associated with various Legacy XL Legal proceedings. 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 nine months ended September 30, 2025 and 2024. We focus on the following core pillars in our operations:

Current wording

For the three months ended March 31, 2026 and 2025, our revenues totaled $23.4 million and $23.8 million, respectively, while our net loss attributable to stockholders was $2.9 million and $15.3 million, respectively. Our financial performance during the three months ended March 31, 2026 was impacted by reductions in our operations and maintenance costs, reductions in our selling, general and administrative expenses, and fluctuations in the value of our interest rate swaps. 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, 2026 and 2025.

Previous wording

Certain information above constitutes key operating metrics that we use to evaluate our operations, measure our performance and identify trends in our business. Some of our key operating metrics are estimates that are based on our management’s beliefs and assumptions and on information currently available to management. Although we believe we have a reasonable basis for each of these estimates, we caution that these estimates are based on a combination of assumptions that may prove to be inaccurate over time, and any inaccuracies could be material to our actual results when compared to our calculations. See the section titled “Risk Factors” in this Quarterly Report on Form 10-Q and under “Risk Factors” in Item 1A of our Annual Report for more information. Furthermore, other companies may calculate these operating metrics differently than we do now or in the future, which would reduce their usefulness as a comparative measure.

Current wording

Certain information above constitutes key operating metrics that we use to evaluate our operations, measure our performance and identify trends in our business. Some of our key operating metrics are estimates that are based on our management’s beliefs and assumptions and on information currently available to management. Although we believe we have a reasonable basis for each of these estimates, we caution that these estimates are based on a combination of assumptions that may prove to be inaccurate over time, and any inaccuracies could be material to our actual results when compared to our calculations. See the section titled “Risk Factors” in Item 1A of our Annual Report for more information. Furthermore, other companies may calculate these operating metrics differently than we do now or in the future, which would reduce their usefulness as a comparative measure.

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 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.

Current wording

In November 2024, we completed the NJR Acquisition acquiring 9,800 solar energy systems for approximately $132.5 million, pursuant to an asset purchase agreement. The NJR Acquisition was funded by proceeds from the concurrent issuance of the SP5 Facility (defined below) and $22.7 million of our cash.

Previous wording

Cost of revenues - solar energy systems depreciation increased by $1.8 million, or 31%, to $7.5 million in the three months ended September 30, 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 was flat at $7.3 million in the three months ended March 31, 2026 as compared to the same period in 2025. A modest increase from incremental depreciation related to the NJR incremental acquisitions was offset by a reduction from buyouts.

Previous wording

Cost of revenues - operations and maintenance (“O&M”) decreased by $2.1 million, or 53%, to $1.8 million in the three months ended September 30, 2025 as compared to the same period in 2024 primarily due to cost reductions resulting from certain O&M efficiencies implemented in early 2025, including greater leverage of our asset management platform to streamline third-party vendor management and return material authorization (RMA) processing. We also experienced a reduction in our meter upgrade program cost as the program is nearing completion.

Current wording

Cost of revenues - operations and maintenance (“O&M”) decreased by $2.7 million, or 70%, to $1.2 million in the three months ended March 31, 2026 as compared to $3.9 million in the same period in 2025 primarily due to cost reductions resulting from certain O&M efficiencies implemented in 2025 and carried forward into the first quarter 2026. These efficiencies include greater leverage of our asset management platform to streamline third party vendors management and return material authorizations processing as well as utilizing more in-house servicing teams. Additionally, the first half of 2025 included a significant meter upgrade effort on our solar energy systems which has been completed.

Previous wording

Interest income of $5.2 million in the three months ended September 30, 2025 related to $4.5 million of interest income from the SEMTH Master Lease and $0.7 million of interest earned on investments in money market funds. In comparison, interest income of $6.3 million for the three months ended September 30, 2024 related to $4.8 million of interest income from the SEMTH Master Lease and $1.5 million of interest earned on investments in money market funds and U.S. Treasury securities.

Current wording

Interest income of $4.8 million in the three months ended March 31, 2026 related to $4.3 million of interest income from the SEMTH Master Lease and $0.5 million interest earned on investments. In comparison, interest income of $5.3 million for the three months ended March 31, 2025 related to $4.5 million of interest income from the SEMTH Master Lease and $0.8 million of interest earned on investments.

Previous wording

Interest expense, net in the three months ended September 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 of $2.0 million, and (ii) $1.6 million related to the amortization of debt discount and deferred financing costs. In comparison, interest expense, net in the three months ended September 30, 2024 of $11.4 million consisted of (i) $9.9 million of interest expense, net of realized gains from settlements of our interest rate swaps of $3.0 million, and (ii) $1.5 million related to the amortization of debt discount and deferred financing costs. Interest expense, net increased in the 2025 period due to the effect of the SP5 Facility entered into as part of the Initial NJR Acquisition in November 2024.

Current wording

Interest expense, net in the three months ended March 31, 2026 of $12.3 million consisted of $12.1 million of interest expense, $1.6 million related to the amortization deferred financing costs, partially offset by realized gains from settlements of our interest rate swaps of $1.4 million.

Previous wording

Interest expense, net increased year over year due to the effect of the SP5 Facility effective in November 2024 and the impact of the $3.6 million gain associated with the full settlement of interest rate swaps related to the SP4 Facility in June 2024. See Note 7. Non-Recourse Debt for further information on our debt and Note 8. Interest Rate Swaps for further information on our interest rate swaps.

Current wording

Interest expense, net decreased marginally year over year due to the lower debt balance resulting from repaying principal debt in 2025. See Note 7. Non-Recourse Debt for further information on our debt and Note 8. Interest Rate Swaps for further information on our interest rate swaps.

Previous wording

Other expense, net of $11.9 million for the nine months ended September 30, 2025 primarily related to the change in fair value of interest rate swaps due to changes in forecasted market interest rates, while other expense, net of $7.7 million for the nine months ended September 30, 2024 primarily related to the change in fair value of interest rate swaps of $8.2 million and other income, net of $0.5 million.

Current wording

Other expense, net of $0.8 million gain for the three months ended March 31, 2026 primarily related to the change in fair value of interest rate swaps due to changes in forecasted market interest rates, while other expense, net of $6.2 million loss for the three months ended March 31, 2025 primarily related to the change in fair value of interest rate swaps.

Previous wording

As of September 30, 2025, we had negative working capital of $121.7 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 $98.8 million. We had net losses attributable to stockholders of $19.2 million and $64.6 million for the nine months ended September 30, 2025 and 2024, respectively.

Current wording

As of March 31, 2026, we had negative working capital of $119.7 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 $85.6 million. We had net losses attributable to stockholders of $2.9 million and $15.3 million for the three months ended March 31, 2026 and 2025, respectively.

Previous 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 nine months ended September 30, 2025 and 2024.

Current wording

Our principal sources of liquidity include cash and cash equivalents and cash inflows 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 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 three months ended March 31, 2026 and 2025.

Previous wording

As of September 30, 2025, our aggregate debt balance was $685.2 million, net of $17.8 million of unamortized fair value adjustment and $2.5 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 September 30, 2025. 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 March 31, 2026, our aggregate debt balance was $668.3 million, net of $15.1 million of unamortized fair value adjustment and $3.9 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 October 30, 2026, unless a signed term sheet for a long-term financing is obtained, in which case the earliest maturity date is January 30, 2027 and has been classified as current at March 31, 2026. For additional information on our debt, refer to Note 7. Non-Recourse Debt included within the accompanying unaudited condensed consolidated financial statements.

Previous wording

These consolidated financial statements have been prepared in accordance with U.S. generally accepted accounting principles (GAAP) assuming the Company will continue as a going concern.

Current wording

These condensed consolidated financial statements have been prepared in accordance with U.S. generally accepted accounting principles (GAAP) assuming the Company will continue as a going concern.

Previous wording

The Company’s debt obligations under the SP1 Facility are non-recourse to the Company (see Note 7. Non-Recourse Debt) and have a maturity date of April 30, 2026 (the “SP1 Maturity Date”). Because (i) the SP1 Maturity Date is within twelve months from the date these unaudited condensed consolidated financial statements are issued, (ii) the Company has not yet entered into a commitment to refinance the SP1 Facility although the maturity date is in April 2026, (iii) the Company has determined that it is unlikely to have sufficient cash on hand or proceeds from currently available liquidity sources to satisfy the SP1 Facility at the SP1 Maturity Date, (iv) the Company had negative working capital of $121.7 million as of September 30, 2025 solely due to the current maturity of the SP1 Facility at that date, and (v) the Company has experienced recurring net losses and negative cash flows from operations for the nine months ended September 30, 2025, these conditions raise substantial doubt about the Company’s ability to continue as a going concern.

Current wording

The Company’s debt obligations under the SP1 Facility and SP2 Facility are non-recourse to the Company (see Note 7. Non-Recourse Debt). With regards to the SP1 Facility, on March 27, 2026, the Company entered into the SP1 Facility Amendment, as defined below, to extend the maturity of this facility to October 30, 2026 (the “Amended SP1 Maturity Date”), unless a signed term sheet for a long-term financing is obtained, in which case the extended maturity date will be January 30, 2027. With regards to the SP2 Facility, the maturity date is May 14, 2027 (the “SP2 Maturity Date”). Because (i) the Amended SP1 Maturity Date and the SP2 Maturity Date are within twelve months from the date the accompanying unaudited condensed consolidated financial statements are issued, (ii) the Company has not yet entered into a commitment to refinance the SP1 or SP2 Facility, (iii) the Company has determined that it is unlikely to have sufficient cash on hand or proceeds from currently available liquidity sources to satisfy the SP1 Facility at the Amended SP1 Maturity Date or the SP2 Facility at the SP2 Maturity Dates, (iv) the Company hadnegative working capital of$119.7 million as of March 31, 2026 solely due to the current maturity of the SP1 Facility at that date, and (v) the Company has experienced recurring net losses and negative cash flows from operations for thethree months ended March 31, 2026 and 2025, these conditions raise substantial doubt about the Company’s ability to continue as a going concern. Our condensed consolidated financial statements do not include any adjustments that may result from the outcome of this uncertainty.

Previous wording

The Company plans to refinance the SP1 facility prior to the SP1 Maturity Date consistent with the Company’s historical financing strategy for investing in solar assets on a leveraged basis. The Company has obtained term sheets from potential lenders and placement agents, which are currently being reviewed by management and the board of directors. The Company’s management believes that such refinancing will be completed prior to the SP1 Maturity Dateand that any such substantial doubt is alleviated by managements plans. Should the Company be unsuccessful in refinancing the SP1 facility, this could result in a foreclosure of collateral and negatively impact operations. Further, an event of default on the SP1 facility, if not cured in the permittable time allowed under the agreement, would result in a cross default on the Second KeyBank Credit Agreement, which is non-recourse.

Current wording

The Company plans to refinance the SP1 Facility prior to the Amended SP1 Maturity Date and the SP2 Facility by the SP2 Maturity Date consistent with the Company’s historical financing strategy for investing in solar assets on a leveraged basis. The Company has commenced preliminary discussions with potential lenders with respect to refinancing the SP1 Facility, which are currently being reviewed by management. The Company’s management believes that such refinancing will be completed prior to the Amended SP1 Maturity Date. However, the Company can offer no assurances it will be able to obtain financing at acceptable terms or at all. Therefore, the Company has concluded that there is substantial doubt about its ability to continue as a going concern. Should the Company be unsuccessful in refinancing the SP1 Facility or the SP2 Facility, this could result in a foreclosure of collateral and negatively impact operations. Further, an event of default on the SP1 Facility, if not cured in the permittable time allowed under the agreement, would result in a cross default on the Second Key Bank Credit Agreement, which is also non-recourse.

Previous wording

The net cash provided by continuing investing activities in the nine months ended September 30, 2025 was $16.9 million, which primarily related to $17.9 million of proceeds from our investments under the SEMTH Master Lease and $4.1 million of proceeds from the sale of solar energy systems, partially offset by $4.8 million of net payments related to the acquisition of the Additional NJR Systems in 2025.

Current wording

The net cash provided by investing activities in the three months ended March 31, 2025 primarily related to $4.5 million of proceeds from the SEMTH investment 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 Acquisition.

Previous wording

The net cash used in continuing financing activities in the nine months ended September 30, 2025 was $27.1 million, which primarily related to $25.0 million for repayments of our non-recourse debt, and $1.8 million related to shares repurchased under our Repurchase Program.

Current wording

The net cash used in financing activities in the three months ended March 31, 2025 primarily related to $6.8 million for repayments of our non-recourse debt and $0.8 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. 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 nine months ended September 30, 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 three months ended March 31, 2026.

Previous wording

Our significant accounting policies are consistent with those discussed in Note 2. Summary of Significant Accounting Policies of our audited consolidated financial statements in our Annual Report and Note 2. Summary of Significant Accounting Policies of our unaudited condensed consolidated financial statements in this Form 10-Q, and should be reviewed in connection with our critical accounting policies that require difficult, subjective and complex judgments.

Current wording

Our significant accounting policies are consistent with those discussed in Note 2. Summary of Significant Accounting Policies of our audited condensed consolidated financial statements in our Annual Report and Note 2. Summary of Significant Accounting Policies of our unaudited condensed consolidated financial statements in this Form 10-Q, and should be reviewed in connection with our critical accounting policies that require difficult, subjective and complex judgments.