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Related Party Transactions
 9 Months Ended
Sep. 30, 2025
Related Party Transactions [Abstract]  
RELATED PARTY TRANSACTIONS

NOTE 13—RELATED PARTY TRANSACTIONS

 

Some of the Company’s customers financed their obligations with a related party, Solar Leasing, whose CEO is also the CEO of the Company. These arrangements are similar to those with other third-party lenders. As such, Solar Leasing deducts their financing fees and remits the net amount to the Company. For the three months ended September 30, 2025 and 2024, the Company recognized $7,017,019 and $2,328,704 of revenue, net of financing fees of $1,644,395 and $783,650, respectively, from these arrangements. For the nine months ended September 30, 2025 and 2024, the Company recognized $17,709,806 and $18,139,099 of revenue, net of financing fees of $6,739,848 and $7,767,491, respectively, from these arrangements. As of September 30, 2025, the Company had $465,047 of accounts receivable and $3,581,890 of contract assets due from related parties relating to these arrangements.

 

During the year ended December 31, 2024, Solar Leasing performed a fair-market-value assessment of its lease assets. As a result, Solar Leasing paid a discretionary rebate to the Company of $3,000,000 based on the excess of fair-market-value over the carrying value of its assets, primarily to optimize certain tax positions for its owners. The Company agreed to transfer the received rebate to White Horse Energy, LC (“White Horse Energy”), an entity wholly owned by the Company’s CEO, in the form of convertible debt. Additionally, the Company guarantees the outstanding indebtedness of Solar Leasing (approximately $10 million) which results in the Company having a variable interest in Solar Leasing. The Company determined it was not the primary beneficiary as defined under ASC Topic 810, “Consolidation.” Although the Company’s CEO, wholly owns White Horse Energy, the Company does not have any control over White Horse Energy or Solar Leasing, nor any obligation to absorb losses from Solar Leasing. Based on the Company’s reassessment, the flow of funds resulting from the discretionary rebate does not transfer control or economic exposure to the Company in a manner that would require consolidation. White Horse Energy remains the primary beneficiary of Solar Leasing, and no changes to the Company’s financial statement presentation are required. For the three and nine months ended September 30, 2025, the Company recorded interest income of $66,472 and $189,938, respectively, included in other income, net in the accompanying condensed consolidated statements of operations. As of September 30, 2025, the principal balance of $3,000,000 is included in related party note receivable and the accrued interest balance of $114,393 is included in other assets – related parties in the accompanying condensed consolidated balance sheet.

 

In conjunction with the consummation of the ESGEN Business Combination on March 13, 2014, Zeo entered into a TRA with Opco and certain Opco members (the “TRA Holders”). Pursuant to the TRA, Zeo Energy Corp. 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 tax (computed using simplifying assumptions to address the impact of state and local taxes) that the Company actually realizes (or is deemed to realize in certain circumstances) in periods after the ESGEN Business Combination. As of September 30, 2025, the total unrecorded TRA liability is approximately $7.2 million. If utilization of the deferred tax assets subject to the TRA becomes more likely than not in the future, the Company will record a liability related to the TRA which will be recognized as expense within its condensed consolidated statements of operations.