| SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES | NOTE 3 -
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES Basis
of Presentation and principles of Consolidation The accompanying interim unaudited condensed consolidated financial
statements have been prepared in accordance with accounting principles generally accepted in the United States of America (“U.S.
GAAP”) and the rules and regulations of the Securities and Exchange Commission (“SEC”). Accordingly, they do not include
all of the information and notes required by U.S. GAAP for complete financial statements. In the opinion of management, all adjustments
(consisting of normal recurring adjustments) considered necessary for a fair presentation have been included. These statements should
be read in conjunction with Sunergy’s audited financial statements for the fiscal year ended December 31, 2023 as included with
the Company’s Form 8-K/A filed with the SEC on January 23, 2025. The results reported in these unaudited condensed consolidated
financial statements are not necessarily indicative of results for the full fiscal year. Our condensed consolidated financial statements include the accounts
of Zeo Energy Corp., the accounts of Sunergy Renewables, LLC, Sun First Energy, LLC, Sunergy Solar LLC and Sunergy Roofing and Construction,
Inc., all wholly owned subsidiaries, and ESGEN Opco, a variable interest entity (“VIE”) for which the Company is the primary
beneficiary. All intercompany balances and transactions have been eliminated in consolidation. The December 31, 2023 balances reported
herein are derived from the condensed consolidated financial statements of Sunergy as included with the Company’s Current Report
on Form 8-K/A Amendment No. 3, filed with the SEC on January 23, 2025. Restatement
to Previously Reported Financial Statements On November
13, 2024, the audit committee of the board of directors of Zeo Energy Corp. (the “Company”), after discussion with the management
of the Company, concluded that (i) the Company’s previously issued financial statements for the fiscal years ended December 31,
2023 and 2022 included in the Company’s Form 8-K as filed with SEC on March 20, 2024 and as amended on March 25, 2024 and August
19, 2024 (the “8-K”), (ii) the Company’s unaudited condensed consolidated interim financial statements for the three
months ended March 31, 2024 included in the Quarterly Report on Form 10-Q/A as filed with the SEC on August 19, 2024 (the “Q1 10-Q”),
(iii) the Company’s unaudited condensed consolidated interim financial statements for three and six months ended June 30, 2024
included in the Quarterly Report on Form 10-Q as filed with the SEC on August 19, 2024 (the “Q2 10-Q” and the Q3 2023 financial
statements as filed in the Esgen Acquisition Corporation Form S-4 amendment No.4 (S4/A) with the Securities and Exchange Commission (“SEC”)
on February 7, 2024, and together with the Q1 10-Q, the “10-Qs”) and (iv) the financial statements noted in items (i) through
(iii) above included in the Company’s Registration Statement on Form S-1, as amended (the “S-1”), which was declared
effective by the SEC on October 1, 2024, should no longer be relied upon due to the misstatement described below. During the
preparation of the Company’s unaudited condensed consolidated interim financial statements for the three and nine months ended
September 30, 2024, the Company’s management identified the following misstatements, to the Company’s financial statements:
● For
the three and nine months ended September 30, 2023, cost of goods sold (exclusive of depreciation
and amortization) included selling expenses related to commissions earned by the sales team
and third party dealers related to obtaining sales orders and contracts. The Company has
further determined that selling expenses should not be included in the cost of goods sold
(exclusive of depreciation and amortization) but instead in sales and marketing expense as
they do not relate to the direct delivery of the product or service but rather to the acquiring
of the customer and sale of the product or service. This misstatement has no impact on total
operating expenses, (loss) income from operations or net (loss) income. Additionally, this
misstatement has no impact on the balance sheets, statements of changes in redeemable noncontrolling
interests and stockholders’ equity or statements of cash flows.
● As
of September 30, 2023 and December 31, 2023, finance lease assets and liabilities were included
in property, equipment and other fixed assets, net and in the current portion of long-term
debt and long-term debt. The Company has further determined that the vehicles should be recorded
as right-of-use finance lease assets and finance lease liabilities. Adjustments have been
made to depreciation and amortization expense and interest expense on the statement of operations
as well as adjustments to reflect the presentation of finance leases in the statement of
cash flows.
● For
the nine months ended September 30, 2023, adjustments have been made to reflect the correct
presentation of operating leases within the statement of cash flows. This has no impact on
total operating cash flows.
● For the three and nine months ended September 30, 2023, due to the
nature of the underlying costs, reclassifications of expenses have been made between cost of goods sold (exclusive of depreciation and
amortization), sales and marketing and general and administrative. This misstatement has no impact on total operating expenses, (loss)
income from operations or net (loss) income. Additionally, this misstatement has no impact on the balance sheets, statements of changes
in redeemable noncontrolling interests and stockholders’ equity or statements of cash flows. This Note discloses the nature of the restatement adjustments and discloses
the cumulative effects of these adjustments included in the Original S-4. The effects of the misstatements have been corrected in all
impacted tables and footnotes throughout these unaudited condensed consolidated interim financial statements. Impact
to the condensed consolidated statement of operations for the three months ended September 30, 2023
As
reported Adjustment As
restated
Cost
of goods sold (exclusive of depreciation and amortization shown below) $ 28,950,493 $ (8,477,406 ) $ 20,473,087
Depreciation
and amortization $ 524,461 $ (3,172 ) $ 521,289
Sales
and marketing $ 764,828 $ 7,830,817 $ 8,595,645
General
and administrative $ 3,693,550 $ 609,303 $ 4,302,853
Total
operating expenses $ 33,933,332 $ (40,458 ) $ 33,892,874
(Loss) Income
from operations $ 3,960,834 $ 40,458 $ 4,001,292
Interest
expense $ (295 ) $ (10,101 ) $ (10,396 )
Total
other income (expense), net $ 8,856 $ (10,101 ) $ (1,245 )
Net income $ 3,969,690 $ 30,357 $ 4,000,047 Impact
to the condensed consolidated statement of operations for the nine months ended September 30, 2023
As
reported Adjustment As
restated
Cost
of goods sold (exclusive of depreciation and amortization shown below) $ 68,204,199 $ (18,958,478 ) $ 49,245,721
Depreciation
and amortization $ 1,446,626 $ (15,144 ) $ 1,431,482
Sales
and marketing $ 1,805,308 $ 18,008,671 $ 19,813,979
General
and administrative $ 8,846,154 $ 869,904 $ 9,716,058
Total
operating expenses $ 80,302,287 $ (95,047 ) $ 80,207,240
(Loss) Income
from operations $ 6,402,733 $ 95,047 $ 6,497,780
Interest
expense $ (39,838 ) $ (23,082 ) $ (62,920 )
Total
other income (expense), net $ (32,856 ) $ (23,082 ) $ (55,938 )
Net income $ 6,369,877 $ 71,965 $ 6,441,842 Impact to the condensed consolidated statement of changes in redeemable
noncontrolling interests and members’ equity for the three and nine months ended September 30, 2023
As reported Adjustment As restated
Retained earnings
Net income prior to the business combination $ 1,602,939 $ 9,798 1,612,737
Balance, March 31, 2023 $ 1,556,598 $ 9,798 $ 1,566,396
Net income prior to the business combination $ 797,249 $ 31,809 $ 829,058
Balance, June 30, 2023 $ 1,992,528 $ 41,607 $ 2,034,135
Net income prior to the business combination $ 3,969,690 $ 30,357 $ 4,000,047
Balance, September 30, 2023 $ 3,200,342 $ 71,964 $ 3,272,306
Total Stockholders’ Equity
Net income prior to the business combination $ 1,602,939 $ 9,798 $ 1,612,737
Balance, March 31, 2023 $ 32,712,462 $ 9,798 $ 32,722,260
Net income prior to the business combination $ 797,249 $ 31,809 $ 829,058
Balance, June 30, 2023 $ 33,259,392 $ 41,607 $ 33,189,999
Net income prior to the business combination $ 3,969,690 $ 30,357 $ 4,000,047
Balance, September 30, 2023 $ 34,356,206 $ 71,964 $ 34,428,170 Impact
to the condensed consolidated statement of cash flows for the nine months ended September 30, 2023
As
reported Adjustment As
restated
Cash Flows from Operating
Activities
Net Income $ 6,369,877 $ 71,965 $ 6,441,842
Adjustment to reconcile net
loss to cash used in operating activities:
Depreciation and amortization $ 1,446,626 $ (79,906 ) $ 1,366,720
Non-cash operating lease
expense $ - $ 399,610 $ 399,610
Non-cash finance lease expense $ - $ 64,762 $ 64,762
Changes in operating assets
and liabilities:
Operating lease $ 9,721 $ (399,611 ) $ (389,890 )
Net cash
used in operating activities $ 5,609,528 $ 56,820 $ 5,666,348
Cash flows
from Investing Activities
Purchase of property,
plant and equipment $ (907,563 ) 745,795 $ (161,768 )
Net
cash provided by investing activities $ (907,563 ) 745,795 $ (161,768 )
Cash flows
from Financing Activities
Issuance of debt $ 938,003 $ (745,793 ) $ 192,210
Repayments of finance lease $ - $ (56,822 ) $ (56,822 )
Net cash
provided by financing activities $ (2,624,251 ) $ (802,615 ) $ (3,426,866 )
Non-cash
transactions
Right-of-use assets obtained
in exchange for operating lease liabilities $ - $ 653,663 $ 653,663
Right-of-use assets obtained
in exchange for finance lease liabilities $ - $ 682,365 $ 682,365 Use of
Estimates The preparation
of the Company’s unaudited condensed consolidated financial statements in conformity with US GAAP requires it to make estimates
and assumptions that affect the reported amounts of assets and liabilities and the disclosure of contingent assets and liabilities as
of the date of the financial statements and the reported amounts of revenues and expenses for the reporting period. Some of the more
significant estimates include fair value of warrant liabilities, redemption value of non-controlling interest, subsequent realizability
of intangible assets, useful lives of depreciation and amortization and collectability of accounts receivable. Due to the uncertainty
involved in making estimates, actual results could differ from those estimates which could have a material effect on the financial condition
and results of operations in future periods. The Company
bases its estimates and assumptions on historical experience and other factors, including the current economic environment and on various
other judgements that it believes to be reasonable under the circumstances. The Company adjusts such estimates and assumptions when facts
and circumstances dictate. Changes in those estimates resulting from continuing changes in the economic environment could have a material
effect on the financial condition and results of future operations in future periods. Segments
Information Operating segments
are defined as components of an enterprise for which separate discrete financial information is evaluated regularly by our chief executive
officer, who is the chief operating decision maker (“CODM”), in deciding how to allocate resources and assess performance.
The CODM reviews financial information presented on a consolidated basis for the purposes of allocating resources and evaluating financial
performance. Accordingly, the Company operates and manages its business as one operating and reportable segment. Cash
and Cash Equivalents The Company
considers all highly liquid investments purchased with original maturities of three months or less from the purchase date to be cash
equivalents. The Company maintains its cash in checking and savings accounts. Income generated from cash held in savings accounts is
recorded as interest income. The carrying value of the Company’s savings accounts is included in cash and cash equivalents and
approximates the fair value. Accounts
receivable, net of allowance for credit losses Accounts receivable is presented at the invoiced receivable amounts,
less any allowance for any potential expected credit loss amounts, and do not bear interest. The Company estimates allowance for credit
losses based on the creditworthiness of each customer, historical collections experience, forward looking information and other information
including the aging of the receivables. This analysis resulted in an allowance for credit losses as of September 30, 2024, and December
31, 2023 of $3,145,168 and $862,580, respectively. The Company had no write-offs and no recoveries for each of the three and nine months
ended September 30, 2024 and 2023, respectively. The majority of our customers finance their purchase and installation of solar panels
through various financing companies, who then remit payment to Sunergy typically within 3 days after installation. The Company is not
deemed a borrower with these financing agreements and as a result is not subject to any of the terms of the financing transaction between
the financing company and the customer. Significant judgement is involved in determination of the collectability
of accounts receivable. Management assesses the reasonability of collectability of accounts receivable on a quarterly basis to record
the allowance for credit losses. In September 2024, based on a reassessment of creditworthiness of customers,
historical collections experience, forward looking information and other information including the aging of the receivables, the Company
revised its estimate of allowance for credit losses. This change in estimate has been accounted for prospectively in accordance
with ASC 250 Accounting Changes and Error Corrections Prepaid
installation costs Prepaid installation
costs include costs incurred prior to completion of installations of solar systems. Such costs include the cost of engineering, permits,
governmental fees, and other related solar installation costs. These costs are charged to Cost of goods sold when each installation is
completed. Prepaid
expenses and other current assets Prepaid expenses
and other current assets consist of employee advances, advanced sales commissions, prepaid insurance, and other current assets. Concentration
of credit risk Financial instruments
that potentially subject the Company to concentrations of credit risk consist of cash and cash equivalents and trade accounts receivable.
The Company maintains its cash and cash equivalent balances in highly rated financial institutions, which at times may exceed federally
insured limits. The amounts over these insured limits as of September 30, 2024, and December 31, 2023 were $4,080,061 and $6,979,011,
respectively. The Company mitigates this concentration of credit risk by monitoring the credit worthiness of the financial institutions.
No losses have been incurred to date on any deposits. The Company
performs periodic credit evaluations of its customers’ financial condition and also monitors the financial condition of the financial
counterparties that finance customer transactions and generally does not require collateral. No one customer or financing counterparty
exceeded 10% of accounts receivable as of September 30, 2024, and December 31, 2023. Inventories Inventories
are primarily comprised of solar panels and other related items necessary for installations and service needs. Inventories are accounted
for on a first-in-first-out basis and are measured at the lower of cost or net realizable value, where cost is determined using a weighted-average
cost method. When evidence exists that the net realizable value of inventory is lower than its cost, the difference is recognized as
cost of goods sold in the condensed consolidated statements of operations. As of September 30, 2024, and December 31, 2023, inventory
was $482,251 and $350,353, respectively. Property,
equipment and other fixed assets Property, equipment
and other fixed assets are carried at cost less accumulated depreciation and includes expenditures that substantially increase the useful
lives of existing property and equipment. Maintenance, repairs, and minor renovations are charged to expense as incurred. When property
and equipment is retired or otherwise disposed of, the related costs and accumulated depreciation are removed from their respective accounts,
and any difference between the sale proceeds and the carrying amount of the asset is recognized as a gain or loss on disposal in the
condensed consolidated Statements of Operations. Software that
is developed for internal use and is accounted for pursuant to ASC 350-40 , Intangibles, Goodwill and Other-Internal-Use Software Depreciation
is computed using the straight-line method over the estimated useful lives of the assets, which is five years, across all asset classes. The estimated
useful lives and depreciation methods are reviewed at each year-end, with the effect of any changes in estimates accounted for prospectively.
All depreciation expense is included with depreciation and amortization in the condensed consolidated statements of operations. Impairment
of long-lived assets Management
reviews each asset or asset group for impairment whenever events or circumstances indicate that the carrying value of an asset or asset
group may not be recoverable, and at least annually. No impairment provisions were recorded by the Company during the three and nine
months ended September 30, 2024, and 2023. Business
Combinations The Company
accounts for an acquisition as a business combination if the assets acquired and liabilities assumed in the transaction constitute a
business in accordance with ASC Topic 805. Such acquisitions are accounted using the acquisition method by recognizing the identifiable
tangible and intangible assets acquired and liabilities assumed, and any non-controlling interest in the acquired business, measured
at their acquisition date fair values. Where the set
of assets acquired and liabilities assumed doesn’t constitute a business, it is accounted for as an asset acquisition where the
individual assets and liabilities are recorded at their respective relative fair values corresponding to the consideration transferred. Goodwill Goodwill is
recognized and initially measured as any excess of the acquisition-date consideration transferred in a business combination over the
acquisition-date amounts recognized for the net identifiable assets acquired. Goodwill is not amortized but is tested for impairment
annually, or more frequently if an event occurs or circumstances change that would more likely than not result in an impairment of goodwill.
First, the Company assesses qualitative factors to determine whether or not it is more likely than not that the fair value of a reporting
unit is less than its carrying amount. If the Company concludes that it is more likely than not that the fair value of a reporting unit
is less than its carrying amount, the Company conducts a quantitative goodwill impairment test comparing the fair value of the applicable
reporting unit with its carrying value. If the carrying amount of the reporting unit exceeds the fair value of the reporting unit, the
Company recognizes an impairment loss in the condensed consolidated statements of operations for the amount by which the carrying amount
exceeds the fair value of the reporting unit. The Company performs its annual goodwill impairment test at December 31 of each year.
There was no goodwill impairment for the three and nine months ended September 30, 2024, and 2023. Intangible
assets subject to amortization Intangible
assets include tradenames, customer lists and non-compete agreements. Amounts are subject to amortization on a straight-line basis over
the estimated period of benefit and are subject to annual impairment consideration. Costs incurred to renew or extend the term of a recognized
intangible asset, such as the acquired tradename, are capitalized as part of the intangible asset and amortized over its revised estimated
useful life. Intangible
assets are reviewed for impairment whenever events or changes in circumstances indicate the carrying amount of the intangible assets
may not be recoverable. Conditions that would necessitate an impairment assessment include a significant decline in the observable market
value of an asset, a significant change in the extent or manner in which an asset is used, or any other significant adverse change that
would indicate that the carrying amount of an asset or group of assets may not be recoverable. The Company evaluates the recoverability
of intangible assets by comparing their carrying amounts to future net undiscounted cash flows expected to be generated by the intangible
assets. If such intangible assets are considered to be impaired, the impairment recognized is measured as the amount by which the carrying
amount of the intangible assets exceeds the fair value of the assets. The Company determines fair value based on discounted cash flows
using a discount rate commensurate with the risk inherent in the Company’s current business model for the specific intangible asset
being valued. No impairment charges were recorded for the three and nine months ended September 30, 2024, and 2023. Leases The Company
evaluates the contracts it entered into to determine whether such contracts contain leases at inception. A contract contains a lease
if the contract conveys the right to control the use of identified property, plant or equipment for a period of time in exchange for
consideration. At commencement, contracts containing a lease are further evaluated for classification as an operating or finance lease
where the Company is a lessee. When the arrangements include lease and non-lease components, the Company accounts for them as a single
lease component. Operating
Leases A lease for
which substantially all the benefits and risks incidental to ownership remain with the lessor is classified by the lessee as an operating
lease. Operating leases are included in the line items right-of-use (“ROU”) asset, lease liabilities, current, and non-current
lease liabilities in the condensed consolidated balance sheet. ROU assets represent the Company’s right to use an underlying asset
for the lease term and lease liabilities represent its obligation to make lease payments arising from the lease. For operating leases,
the Company measures its lease liabilities based on the present value of the total lease payments not yet paid. These payments are then
discounted based on the more readily determinable of the rate implicit in the lease or its incremental borrowing rate, which is the estimated
rate the Company would be required to pay for a collateralized borrowing equal to the total lease payments over the term of the lease.
The Company uses its incremental borrowing rate based on the information available at lease commencement date in determining the present
value of lease payments. The Company measures ROU assets based on the corresponding lease liability adjusted for payments made to the
lessor at or before the commencement date, and initial direct costs it incurs under the lease. The Company begins recognizing lease expense
when the lessor makes the underlying asset available to the Company. Lease expenses for lease payments are recognized on a straight-line
basis over the lease term. For leases
with a lease term of less than one year (short-term leases), the Company has elected not to recognize a lease liability or ROU asset
on its consolidated balance sheet. Instead, it recognizes the lease payments as expenses on a straight-line basis over the lease term.
Short-term lease costs are immaterial to its condensed consolidated statements of operations and cash flows. Finance
leases Leases that
transfer substantially all of the benefits and risks incidental to the ownership of assets are accounted for as finance leases as if
there was an acquisition of an asset and incurrence of an obligation at the inception of the lease. Lease cost for finance leases where
the Company is the lessee includes the amortization of the ROU asset, which is amortized on a straight-line basis and recorded to depreciation
and amortization and interest expense on the finance lease liability, which is calculated using the effective interest method and recorded
to interest expense on the accompanying condensed consolidated statements of operations. Finance lease ROU assets are amortized over
the shorter of their estimated useful lives or the terms of the respective leases. If the Company is reasonably certain to exercise the
option to purchase the underlying asset at the end of lease term, the finance lease ROU assets are amortized to the end of useful life
of the assets on a straight-line basis. Warrant
Liabilities The Company
evaluates all of its financial instruments, including issued share purchase warrants, to determine if such instruments are derivatives
or contain features that qualify as embedded derivatives, pursuant to ASC 815-40, Derivatives and Hedging Accrual
for Probable Loss Contingencies In
the normal course of business, the Company is involved in various claims and legal proceedings. A liability is recorded for such matters
when it is probable that a loss has been incurred and the amounts can be reasonably estimated. When only a range of possible loss can
be established, the most probable amount in the range is accrued. If no amount within this range is a better estimate than any other
amount within the range, the minimum amount in the range is accrued. Legal costs associated with loss contingencies are expensed as incurred. Revenue
Recognition The
Company accounts for its revenue in accordance with ASC 606, Revenue from Contracts with Customers
● Step
1 - Identification of the contract, or contracts, with a client.
● Step
2 - Identification of the performance obligations in the contract.
● Step
3 - Determination of the transaction price.
● Step
4 - Allocation of the transaction price to the performance obligations in the contract
● Step
5 - Recognition of revenue when, or as, the Company satisfies a performance obligation. The
Company recognizes and records revenue from its operations upon completion of installation for both solar system installations and roofing
installations. In connection with the sales and installation, a signed contract between the Company and the purchaser defines the duties
and obligations of each party. The contract is specific as to the duties and responsibilities which govern the accounting for these transactions.
Once the Company’s performance obligations are met with installation completed, according to the signed contract, the Company’s
obligations are completed, and title is transferred to the buyer. The Company believes its performance obligation is completed once the
installation of the solar panels is completed, which is prior to the customer receiving permission to operate the solar panels from the
local utility company. The Company records sales revenue at this point in time in its accounting records. Many of the Company’s
customers finance their obligations with third parties. In these situations, the finance company deducts their financing fees and remits
the net amount to the Company. Revenue recorded is equal to the contract amount signed by the purchaser, net of the financing fees. The
Company incurs several costs associated with the installation prior to its completion. In accordance with ASC 340, Other Assets and
Deferred Costs,
For
the three months ended For
the nine months ended
2024 2023 2024 2023
Solar systems installations, gross $ 24,120,570 $ 50,904,324 $ 69,727,470 $ 115,213,716
Financing fees (4,890,020 ) (14,941,988 ) (17,394,944 ) (33,726,283 )
Solar systems installations, net 19,230,550 35,962,336 52,332,526 81,487,433
Roofing installations 427,355 1,931,830 2,263,807 5,217,587
Total
net revenues $ 19,657,905 $ 37,894,166 $ 54,596,333 $ 86,705,020 Contract
liabilities The
Company receives both customer lender advances and, when the customer does not utilize third-party financing, customer advances. These
amounts are listed on the balance sheet as contract liabilities and are considered a liability of the Company until the installation
is completed. When an installation is delayed, the lender may withdraw their lender advances until the project installation is completed.
The contract liabilities amounts are expected to be recognized as revenue within a few months of the Company’s receipt of the funds.
The following table summarizes the change in contract liabilities:
September
30, December
31,
Contract
liabilities, beginning of the period $ 5,223,518 $ 1,149,047
Revenue
recognized from amounts included in contract liabilities at the beginning of the period (5,223,518 ) (1,149,047 )
Cash
received prior to completion of performance obligation 601,681 5,223,518
Contract
liabilities, as of the end of the period $ 601,681 $ 5,223,518 Contract
acquisition costs The
Company pays sales commissions to sales representatives based on a percentage of the sales contracts entered into by the customer and
the Company. Payment is made to the sales representative once installation is completed. Such costs are included as sales and marketing
on the condensed consolidated statements of operations. Since sales commission payments are subject to completion of the installation,
payment is made commensurate with the recognition of revenue from the sale, and therefore the full expense is incurred as the Company
does not have any remaining performance obligations. Earnings
per share The
Company reports both basic and diluted earnings per share. Basic earnings per share is calculated based on the weighted average number
of shares of Class A Common Stock outstanding and excludes the dilutive effect of warrants, stock options, and other types of convertible
securities. Diluted earnings per share is calculated based on the weighted average number of shares of Class A Common Stock outstanding
and the dilutive effect of warrants and other types of participating securities are included in the calculation. Dilutive securities
are excluded from the diluted earnings per share calculation if their effect is anti-dilutive, such as in periods where a net loss has
been reported. Prior
to the Business Combination, the membership structure of Sunergy Renewable, LLC included membership units. In conjunction with the closing
of the Business Combination, the Company effectuated a recapitalization whereby all membership units were converted to common units of
ESGEN OpCo, LLC, and Zeo Energy Corp. implemented a revised class structure including Class A Common Stock having one vote per share
and economic rights and Class V Common Stock having one vote per share and no economic rights. The Company has determined that the calculation
of loss per unit for periods prior to the Business Combination would not be meaningful to the users of these consolidated financial statements.
As a result, loss per share information has not been presented for periods prior to the Business Combination. Stock-based
Compensation The Company
recognizes an expense for stock-based compensation awards based on the estimated fair value of the award on the date of grant. The Company
has elected to account for restricted stock awards with market conditions using a graded vesting method. This method recognizes the compensation
cost in the condensed consolidated statements of operations over the requisite service period for each separately vesting tranche of
awards. The Company has elected to recognize forfeitures as they occur rather than estimate expected forfeitures. Fair
value of Financial Instruments Fair
value is the price that would be received to sell an asset, or the amount paid to transfer a liability in an orderly transaction between
market participants at the measurement date. There is a fair value hierarchy that prioritizes the inputs used to measure fair value.
The hierarchy gives the highest priority to quoted prices in active markets for identical assets or liabilities (Level 1 measurement)
and the lowest priority to unobservable inputs (Level 3 measurement). We classify fair value balances based on the observability of those
inputs. The three levels of the fair value hierarchy are as follows: Level 1
— Inputs based on unadjusted quoted market prices in active markets for identical assets or liabilities that the Company has the
ability to access at the measurement |
