EX-99.2 4 ea025261601ex99-2_zeoenergy.htm UNAUDITED PRO FORMA CONDENSED COMBINED FINANCIAL INFORMATION AS OF AND FOR THE THREE-MONTH PERIOD ENDED MARCH 31, 2025 AND FOR THE YEAR ENDED DECEMBER 31, 2024

Exhibit 99.2

 

UNAUDITED PRO FORMA CONDENSED COMBINED FINANCIAL STATEMENTS

 

Defined terms included below shall have the same meaning as terms defined and included elsewhere in the Registration Statement.

 

Introduction

 

On May 28, 2025, Zeo Energy, Heliogen and the Merger Subs entered into the Merger Agreement. Pursuant to the Merger Agreement, and upon the terms and subject to the satisfaction or waiver of the conditions therein: (i) in accordance with the DGCL, at the Effective Time, Merger Sub I will merge with and into Heliogen, with Heliogen surviving the First Merger as the First Surviving Corporation and immediately following the First Merger, the First Surviving Corporation will be a direct, wholly owned subsidiary of Zeo Energy; and (ii) in accordance with the DGCL and DLLCA, immediately after the Effective Time, the First Surviving Corporation will merge with and into Merger Sub II, with Merger Sub II surviving the Second Merger as the Surviving Company. The Merger Agreement and the consummation of the Transactions have been approved by each of the Heliogen Board of Directors and the Zeo Energy Board of Directors, and the Heliogen Board of Directors has resolved to recommend to the Heliogen Stockholders to approve the Transactions, including the Mergers, and adopt the Merger Agreement, subject to its terms and conditions.

 

Under the terms of the Merger Agreement, upon the closing of the transaction, Heliogen’s security holders will receive the Merger Consideration consisting of shares of Zeo Energy Class A Common Stock valued at approximately $10.0 million in the aggregate, based on a Zeo Energy Class A Common Stock price of $1.5859 per share (assuming 6,305,568 shares of Heliogen Common Stock outstanding on a fully diluted basis at the Closing), and subject to an adjustment mechanism based on the Heliogen Net Cash at the Closing. The $10.0 million closing price could be adjusted (a) down by 50% of the Net Cash if below $13 million, which we refer to as the “Net Cash Collar Floor”, or (b) up by 50% of the Net Cash that exceeds $16 million, which we refer to as the “Net Cash Collar Ceiling.”

 

The unaudited pro forma condensed combined balance sheet is presented as if the Transactions occurred on March 31, 2025. The unaudited pro forma condensed combined statement of operations is presented as if the Transactions occurred on January 1, 2024, the beginning of the earliest period presented.

 

The unaudited pro forma condensed combined financial information reflects the following pro forma adjustments related to the Mergers, based on available information and certain assumptions that Zeo Energy management believes are reasonable:

 

●the Mergers will be accounted for using the acquisition method of accounting, with Zeo Energy identified as the acquirer;

 

●certain reclassification adjustments to conform Heliogen’s historical financial presentation to Zeo Energy’s financial statements presentation;

 

●the assumption of liabilities by Zeo Energy for any remaining transaction-related expenses to be incurred; and

 

●the estimated tax impact of pro forma adjustments.

 

The unaudited pro forma condensed combined financial information should be read in conjunction with:

 

●accompanying notes to the unaudited pro forma condensed combined financial information;

 

●Zeo Energy’s unaudited historical condensed consolidated financial statements for the three months ended March 31, 2025 and 2024 in the Quarterly Report on Form 10-Q for the quarter ended March 31, 2025;

 

●Zeo Energy’s audited historical consolidated financial statements for the year ended December 31, 2024 in the Annual Report on Form 10-K of Zeo Energy for the year ended December 31, 2024;

 

●Heliogen’s unaudited historical condensed consolidated financial statements for the three months ended March 31, 2025 and 2024 in the Quarterly Report on Form 10-Q for the quarter ended March 31, 2025;

 

●Heliogen’s audited historical consolidated financial statements for the year ended December 31, 2024 in the Annual Report on Form 10-K of Heliogen for the year ended December 31, 2024; and

 

●other information relating to Zeo Energy and Heliogen contained in or incorporated by reference in the Registration Statement.

 

 

 

The allocation of the purchase price used in the unaudited pro forma condensed combined financial information is based on preliminary estimates of the fair value of the assets acquired and liabilities assumed, and the related income tax impact of the acquisition accounting adjustments. The pro forma adjustments included herein, which include a preliminary evaluation of accounting policies for conformity, may be revised as additional information becomes available and as additional analyses are performed. The final allocation of the purchase price will be determined based on the closing price of the Zeo Energy Class A Common Stock on the Closing Date and after completion of a final analysis to determine the fair values of the tangible assets, identifiable intangible assets, and liabilities as of the Closing Date.

 

Accordingly, the final purchase accounting adjustments may be materially different from the pro forma adjustments presented herein. Increases or decreases in the fair value of assets acquired and liabilities assumed may change the amount of the purchase price allocated to the bargain purchase gain and other assets and liabilities. This may impact the unaudited pro forma condensed combined statement of operations due to an increase or decrease in the amount of amortization or depreciation of the adjusted assets, among other items.

 

The unaudited pro forma condensed combined financial information has been prepared for illustrative purposes only, and is not necessarily indicative of the operating results or financial position that would have occurred if the Mergers had been consummated on the dates indicated, nor are they necessarily indicative of any future operating results or financial position.

 

See the section of the Registration Statement titled “Risk Factors” for a further discussion of risk factors associated with the pro forma financial information.

 

Items Not Reflected in the Unaudited Pro Forma Condensed Combined Financial Information

 

The unaudited pro forma condensed combined financial information do not include the realization of any potential profit improvement, cost savings from operating efficiencies, synergies or other restructuring activities that might result from the Mergers. Further, there may be additional charges related to the restructuring or other integration activities resulting from the Mergers, the timing, nature and amount of which Zeo Energy’s management cannot identify, and thus, such charges are not reflected in the unaudited pro forma condensed combined financial information.

 

2

 

ZEO ENERGY CORP.
Unaudited Pro Forma Condensed Combined Balance Sheet
As of March 31, 2025

 

   Zeo Energy
(Historical)		   Heliogen
Historical
After
Reclassifications
(See Note 2)		   Transaction
Accounting
Adjustments		   Notes   Pro Forma
Combined		 
Assets                    
Current assets                    
Cash and cash equivalents  $2,894,103   $30,064,313   $—       $32,958,416 
Accounts receivable   4,999,508    179,000    —        5,178,508 
Inventories   847,395    —    —        847,395 
Contract assets   577,398    —    —        577,398 
Prepaid expenses and other current assets   936,673    1,159,965    —        2,096,638 
Total current assets   10,255,077    31,403,278    —        41,658,355 
Other assets   113,591    997,766    —        1,111,357 
Property, equipment and other fixed assets, net   2,629,283    137,018    —        2,766,301 
Right-of-use operating lease asset   1,087,496    146,135    —        1,233,631 
Right-of-use finance lease asset   412,893    —    —        412,893 
Intangibles, net   2,938,804    —    —        2,938,804 
Related party note receivable   3,000,000    —    —        3,000,000 
Goodwill   27,010,745    —    —        27,010,745 
Total assets  $47,447,889   $32,684,197   $—       $80,132,086 
                         
Liabilities, redeemable noncontrolling interest and stockholders’ (deficit) equity                        
Current liabilities                        
Accounts payable  $3,569,632   $1,170,345   $—       $4,739,977 
Accrued expenses and other current liabilities   6,581,799    6,426,683    1,400,000   4d    14,408,482 
Current portion of long-term debt   301,091    —    —        301,091 
Current portion of obligations under operating leases   555,672    974,192    —        1,529,864 
Current portion of obligations under finance leases   133,408    —    —        133,408 
Convertible promissory note, net of debt issuance costs   2,455,000    —    —        2,455,000 
Contract liabilities   119,417    —    —        119,417 
Total current liabilities   13,716,019    8,571,220    1,400,000        23,687,239 
Obligations under operating leases, non-current   662,291    729,949    —        1,392,240 
Obligations under finance leases, non-current   314,167    —    —        314,167 
Warrant liabilities   785,551    37,693    (37,693)  4a    785,551 
Long-term debt   414,268    —    —        414,268 
Other long-term liabilities   —    316,673    —        316,673 
Total liabilities   15,892,296    9,655,535    1,362,307        26,910,138 

 

3

 

ZEO ENERGY CORP.
Unaudited Pro Forma Condensed Combined Balance Sheet — (Continued)
As of March 31, 2025

 

   Zeo Energy
(Historical)		   Heliogen
Historical
After
Reclassifications
(See Note 2)		   Transaction
Accounting
Adjustments		   Notes   Pro Forma
Combined		 
Commitments and contingencies                    
                     
Redeemable noncontrolling interests                        
Convertible preferred units   16,536,108    —    —        16,536,108 
Class B Units   38,097,300    —    —        38,097,300 
                         
Stockholders’ (deficit) equity                        
Class V common stock   2,673    —    —        2,673 
Class A common stock   2,180    —    1,074   4b    3,254 
HLGN common stock   —    612    (612)  4b    — 
Additional paid-in capital   16,486,224    435,556,613    (418,525,531)  4b    33,517,307 
Accumulated other comprehensive income (loss)   —    (537,830)   537,830   4b    — 
Accumulated deficit   (39,568,892)   (411,990,733)   416,624,932   4b    (34,934,693)
Total stockholders’ (deficit) equity   (23,077,815)   23,028,662    (1,362,307)       (1,411,460)
Total liabilities, redeemable noncontrolling interests and stockholders’ (deficit) equity  $47,447,889   $32,684,197   $—       $80,132,086 

 

4

 

ZEO ENERGY CORP.
Unaudited Pro Forma Condensed Combined Statement of Operations and Comprehensive Loss
For the Three Months Ended March 31, 2025

 

   Zeo Energy
(Historical)		   Heliogen
Historical
After
Reclassifications
(See Note 2)		   Transaction
Accounting
Adjustments		  Notes   Pro Forma
Combined		 
Revenue, net  $6,216,391   $—   $—      $6,216,391 
Related party revenue, net   2,567,304    —    —       2,567,304 
Total revenue   8,783,695    —    —       8,783,695 
Operating costs and expenses:                       
Cost of goods sold (exclusive of depreciation and amortization shown below)   4,789,679    —    —       4,789,679 
Depreciation and amortization   4,900,729    24,105    —       4,924,834 
Sales and marketing   2,137,092    96,086    —       2,233,178 
General and administrative   10,467,592    4,521,272    —       14,988,864 
Selling, general and administrative   —    —    —       — 
Research and development   —    1,084,969    —       1,084,969 
Impairment and other charges   —    1,154,425    —       1,154,425 
Total operating expenses   22,295,092    6,880,857            29,175,949 
(Loss) income from operations   (13,511,397)   (6,880,857)           (20,392,254)
Other income (expenses), net:                       
Other income, net   82,363    227,123    —       309,486 
Bargain purchase gain on acquisition             —       — 
Change in fair value of warrant liabilities   663,449    (3,427)   3,427  4b   663,449 
Interest expense   (30,277)   299,587    —       269,310 
Total other income (expense), net   715,535    523,283    3,427       1,242,245 
Net (loss) income before taxes   (12,795,862)   (6,357,574)   3,427       (19,150,009)
Income tax benefit   (523,500)   (1,825)   1  4c   (524,324)
Net (loss) income   (13,319,362)   (6,359,399)   3,428       (19,675,333)
Less: Net loss attributable to Sunergy Renewables, LLC prior to the ESGEN Business Combination   —    —    —       — 
Net loss subsequent to the ESGEN Business Combination   (13,319,362)   (6,359,399)   3,428       (19,675,333)
Less: Net loss attributable to redeemable non-controlling interests   (6,958,098)   —    —       (6,958,098)
Net loss attributable to Class A common stock  $(6,361,264)  $(6,359,399)  $3,428      $(12,717,235)
Other comprehensive loss, net of taxes                       
Unrealized losses on available-for-sale securities        —    —       — 
Cumulative translation adjustment        (26,932)   —       (26,932)
Comprehensive loss       $(6,386,331)  $3,428      $(12,744,167)
                        
Basic and diluted net loss per common share  $(0.48)               $(0.53)
Weighted average units outstanding, basic and diluted   13,252,964         10,739,742       22,992,706

 

 

5

 

ZEO ENERGY CORP.
Unaudited Pro Forma Condensed Combined Statement of Operations and Comprehensive Income
For the Year Ended December 31, 2024

 

   Zeo Energy
(Historical)		   Heliogen
Historical
After
Reclassifications
(See Note 2)		   Transaction
Accounting
Adjustments		   Notes   Pro Forma
Combined		 
Revenue, net  $51,088,065   $23,028,994   $—       $74,117,059 
Related party revenue, net   22,156,018    194,836    —        22,350,854 
Total revenue   73,244,083    23,223,830    —        96,467,913 
Operating costs and expenses:                        
Cost of goods sold (exclusive of depreciation and amortization shown below)   38,021,519    7,969,678    —        45,991,197 
Contract loss (adjustments) provisions   —    (74,117,460)            (74,117,460)
Depreciation and amortization   4,836,538    965,330    —        5,801,868 
Sales and marketing   19,587,073    850,468    —        20,437,541 
General and administrative   21,628,725    34,672,871    1,400,000   4d    57,701,596 
Selling, general and administrative   —    —    —        — 
Research and development   —    16,231,406    —        16,231,406 
Impairment and other charges   —    7,024,121    —        7,024,121 
Total operating expenses   84,073,855    (6,403,586)   1,400,000        79,070,269 
(Loss) income from operations   (10,829,772)   29,627,416    (1,400,000)       17,397,644 
Other income (expenses), net:                        
Other income, net   233,151    561,246    —        794,397 
Bargain purchase gain on acquisition             6,034,199   4e    6,034,199 
Change in fair value of warrant liabilities   69,000    65,963    (65,963)  4b    69,000 
Interest expense   (333,539)   2,298,658    —        1,965,119 
Total other income (expense), net   (31,388)   2,925,867    5,968,236        8,862,715 
Net (loss) income before taxes   (10,861,160)   32,553,283    4,568,236        26,260,359 
Income tax benefit (expense)   988,802    (5,913)   (830)  4d    982,059 
Net (loss) income   (9,872,358)   32,547,370    4,567,406        27,242,418 
Less: Net loss attributable to Sunergy Renewables, LLC prior to the ESGEN Business Combination   (523,681)   —    —        (523,681)
Net loss subsequent to the ESGEN Business Combination   (9,348,677)   32,547,370    4,567,406        27,766,099 
Less: Net loss attributable to redeemable non-controlling interests   (6,679,788)   —    —        (6,679,788)
Net loss attributable to Class A common stock  $(2,668,889)  $32,547,370   $4,567,406       $34,445,887 
Other comprehensive income, net of taxes                        
Unrealized gains on available-for-sale securities        773    —        773 
Cumulative translation adjustment        3,981    —        3,981 
Comprehensive income       $32,552,124   $5,967,152       $35,850,387 
                         
Basic and diluted net loss per common share  $(0.48)                $(2.12)
Weighted average units outstanding, basic and diluted   5,546,925         10,739,742        16,286,667 

 

 

6

 

NOTES TO UNAUDITED PRO FORMA CONDENSED COMBINED FINANCIAL INFORMATION

 

NOTE 1 — Basis of Presentation

 

The unaudited pro forma condensed combined financial information has been derived from the historical consolidated financial statements of Zeo Energy and Heliogen and has been prepared in accordance with Article 11 of Regulation S-X using assumptions set forth in the notes herein. The unaudited proforma condensed combined balance sheet gives effect to the Mergers as if the transaction occurred on March 31, 2025. The unaudited proforma condensed combined statement of operations gives effect to the Mergers as if the transaction had been completed on January 1, 2024.

 

The transaction is being accounted for under the acquisition method of accounting, and accordingly, the allocation of the preliminary estimated purchase price is based upon management’s estimates of and assumptions related to the fair value of assets to be acquired and liabilities to be assumed as of March 31, 2025, using currently available information. Due to the fact that the unaudited pro forma condensed combined financial information has been prepared based on these preliminary estimates, the final purchase price allocation and the resulting effect on Zeo Energy’s financial position and results of operations may differ significantly from the pro forma amounts included herein. Zeo expects to finalize its allocation of the purchase consideration as soon as practicable after completion of the Mergers.

 

Certain amounts in the historical financial statements of Heliogen have been reclassified to conform with Zeo Energy’s historical financial presentation. The unaudited pro forma condensed combined financial information does not necessarily indicate the results of operations or the combined financial position that would have resulted had the Mergers been completed at the beginning of the applicable period presented, nor is it indicative of the results of operation in future periods or the future.

 

The accounting policies used in the preparation of the unaudited pro forma condensed combined financial information are those set out in Zeo Energy’s audited financial statements as of and for the year ended December 31, 2024. Upon completion of the Mergers, Zeo Energy’s management will perform a comprehensive review of Heliogen’s accounting policies. Zeo Energy’s management is currently not aware of any significant accounting policy differences and, therefore, has not made any adjustments to the pro forma condensed combined financial information related to these potential differences other than the adjustments described in Note 2 below. Upon completion of the Mergers and following Zeo Energy management’s comprehensive review, Zeo Energy’s management may identify differences in accounting policies between the two entities which, when conformed, could have a material impact on the consolidated financial statements of Zeo Energy following the Mergers.

 

NOTE 2 — Reclassification of Heliogen’s Historical Financial Information

 

Certain reclassifications are reflected in the transaction accounting adjustments to conform Heliogen’s financial statement presentation to Zeo Energy’s in the unaudited pro forma condensed combined balance sheet and statement of operations and comprehensive income (loss). These reclassifications have no effect on previously reported shareholders’ equity or income of Zeo Energy or Heliogen. The pro forma financial information may not reflect all reclassifications necessary to conform Heliogen’s presentation to that of Zeo Energy due to limitations on the availability of information as of the date hereof. Accounting policy differences and additional reclassification adjustments may be identified as more information becomes available.

 

7

 

The following reclassification adjustments were made to conform Heliogen’s financial statement presentation to Zeo Energy’s:

 

Unaudited Condensed Combined Balance Sheet
As of March 31, 2025

 

Zeo presentation  Heliogen presentation  Heliogen
(Historical)		   Reclassification
Adjustments		      Heliogen
Historical
Adjusted		 
Assets  Assets                  
Cash and cash equivalents  Cash and cash equivalents  $30,064,313   $—      $30,064,313 
Accounts receivable  Receivables, net   179,000    —       179,000 
Prepaid expenses and other current assets  Prepaid and other current assets   1,159,965    —       1,159,965 
Total current assets  Total current assets   31,403,278    —       31,403,278 
Other assets  Other long-term assets   997,766    —       997,766 
Property, equipment and other fixed assets, net  Property, plant and equipment, net   137,018    —       137,018 
Right-of-use operating lease asset  Operating lease right-of-use assets   146,135    —       146,135 
Total assets  Total assets  $32,684,197   $—      $32,684,197 
                      
Liabilities, redeemable noncontrolling interest and stockholders’ (deficit) equity  Liabilities and Stockholders’s Equity                  
Accounts payable  Trade payables  $1,170,345   $—      $1,170,345 
Accrued expenses and other current liabilities  Accrued expenses and other current liabilities   7,400,875    (974,192)  (a)   6,426,683 
Current portion of obligations under operating leases      —    974,192   (a)   974,192 
Total current liabilities  Total current liabilities   8,571,220    —       8,571,220 
Obligations under operating leases, non-current  Operating lease liabilities, non-current   729,949    —       729,949 
Warrant liabilities      —    37,693   (b)   37,693 
   Other long-term liabilities   354,366    (37,693)  (b)   316,673 
Total liabilities  Total liabilities   9,655,535    —       9,655,535 
Commitments and contingencies  Commitments and contingencies                  
                      
Stockholders’ (deficit) equity  Stockholders’ equity                  
   Preferred stock   —    —       — 
   Common stock   612    —       612 
Additional paid-in capital  Additional paid-in capital   435,556,613    —       435,556,613 
   Accumulated other comprehensive loss   (537,830)   —       (537,830)
Accumulated deficit  Accumulated deficit   (411,990,733)   —       (411,990,733)
Total stockholders’ (deficit) equity  Total stockholders’ equity   23,028,662    —       23,028,662 
Total liabilities, redeemable noncontrolling interests and stockholders’ (deficit) equity  Total liabilities, and stockholders’ equity  $32,684,197   $—      $32,684,197 

 

 

(a)Reclassification of operating lease liabilities, current portion from “Accrued expenses and other current liabilities” as reported by Heliogen to “Current portion of obligations under operating leases” as reported by Zeo.
(b)Reclassification of warrant liabilities, current portion from “Other long-term liabilities” as reported by Heliogen to “Warrant liabilities” as reported by Zeo.

 

8

 

Unaudited Condensed Combined Statement of Operations and Comprehensive Loss
For the Three Months Ended March 31, 2025

 

Zeo presentation  Heliogen presentation  Heliogen
(Historical)		   Reclassification
Adjustments		      Heliogen
Historical
Adjusted		 
Total revenue  Total revenue  $—   $—      $— 
Cost of goods sold (exclusive of depreciation and amortization shown below)  Total cost of revenue (including depreciation)   —    —       — 
Depreciation and amortization           24,105   (a)   24,105 
Sales and marketing           96,086   (b)   96,086 
General and administrative           4,521,272   (c)   4,521,272 
   Selling, general and administrative   4,638,472    (4,638,472)  (d)   — 
   Research and development   1,087,960    (2,991)  (a)   1,084,969 
   Impairment and other charges   1,154,425    —       1,154,425 
(Loss) income from operations  Operating loss   (6,880,857)   —       (6,880,857)
Other income, net  Other income, net   227,123    —       227,123 
Change in fair value of warrant liabilities  Loss on warrant remeasurement   (3,427)   —       (3,427)
Interest expense  Interest income   299,587    —       299,587 
Net (loss) income before taxes  Net loss before taxes   (6,357,574)   —       (6,357,574)
Income tax benefit  Provision for income taxes   (1,825)   —       (1,825)
Net (loss) income  Net loss   (6,359,399)   —       (6,359,399)
   Cumulative translation adjustment   (26,932)   —       (26,932)
   Comprehensive loss  $(6,386,331)  $—      $(6,386,331)

 

 

(a)Reclassification of depreciation and amortization expense from “Selling, general and administrative” and “Research and development” as reported by Heliogen to “Depreciation and amortization” as reported by Zeo.
(b)Reclassification of sales and marketing costs from “Selling, general and administrative” as reported by Heliogen to “Sales and marketing” as reported by Zeo.
(c)Reclassification of general and administrative costs from “Selling, general and administrative” as reported by Heliogen to “General and administrative” as reported by Zeo.
(d)Elimination of the “Selling, general and administrative” financial statement line item as reported by Heliogen to conform with the financial statement presentation as reported by Zeo.

 

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Unaudited Condensed Combined Statement of Operations and Comprehensive Income
For the Year Ended December 31, 2024

 

Zeo presentation  Heliogen presentation  Heliogen
(Historical)		   Reclassification
Adjustments		      Heliogen
Historical
Adjusted		 
Revenue, net  Revenue  $23,223,830   $(194,836)  (a)  $23,028,994 
Related party revenue, net      —    194,836   (a)   194,836 
Total revenue  Total revenue   23,223,830    —       23,223,830 
Cost of goods sold (exclusive of depreciation and amortization shown below)  Total cost of revenue (including depreciation)   8,035,306    (65,628)  (b)   7,969,678 
   Contract loss adjustments   (74,117,460)   —       (74,117,460)
Depreciation and amortization           965,330   (b)   965,330 
Sales and marketing           850,468   (c)   850,468 
General and administrative           34,672,871   (d)   34,672,871 
   Selling, general and administrative   36,319,520    (36,319,520)  (e)   — 
   Research and development   16,334,927    (103,521)  (b)   16,231,406 
   Impairment and other charges   7,024,121    —       7,024,121 
(Loss) income from operations  Operating income   29,627,416    —       29,627,416 
Other income, net  Other income, net   561,246    —       561,246 
Change in fair value of warrant liabilities  Loss on warrant remeasurement   65,963    —       65,963 
Interest expense  Interest income   2,298,658    —       2,298,658 
Net (loss) income before taxes  Net income before taxes   32,553,283    —       32,553,283 
Income tax benefit  Provision for income taxes   (5,913)   —       (5,913)
Net (loss) income  Net income   32,547,370    —       32,547,370 
   Unrealized gains on available-for-sale securities   773    —       773 
   Cumulative translation adjustment   3,981    —       3,981 
   Comprehensive income  $32,552,124   $—      $32,552,124 

 

 

(a)Reclassification of related party revenues from “Revenue” as reported by Heliogen to “Related party revenue, net” as reported by Zeo.
(b)Reclassification of depreciation and amortization expense from “Cost of revenue,” “Selling, general and administrative” and “Research and development” as reported by Heliogen to “Depreciation and amortization” as reported by Zeo.
(c)Reclassification of sales and marketing costs from “Selling, general and administrative” as reported by Heliogen to “Sales and marketing” as reported by Zeo.
(d)Reclassification of general and administrative costs from “Selling, general and administrative” as reported by Heliogen to “General and administrative” as reported by Zeo.
(e)Elimination of the “Selling, general and administrative” financial statement line item as reported by Heliogen to conform with the financial statement presentation as reported by Zeo.

 

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NOTE 3 — Preliminary Purchase Price Allocation

 

The preliminary fair value assessment of the assets acquired and liabilities assumed expected to be recorded is as follows:

 

Cash and cash equivalents  $30,064,313 
Accounts receivable   179,000 
Prepaid expenses and other current assets   1,159,965 
Other assets   997,766 
Property, equipment and other fixed assets, net   137,018 
Right-of-use operating lease asset   146,135 
Accounts payable   (1,170,345)
Accrued expenses and other current liabilities   (6,426,683)
Current portion of obligations under operating leases   (974,192)
Obligations under operating leases, non-current   (729,949)
Other long-term liabilities   (316,673)
Preliminary estimate of bargain purchase gain on acquisition   (6,034,199)
Preliminary estimate of total consideration paid  $17,032,157 

 

The preliminary purchase price allocation is subject to change due to several factors, including, but not limited to:

 

●changes in the “net cash” at closing will, above or below certain thresholds, will result in a change in consideration as follows:

 

●If net cash is less than the “Net Cash Collar Floor” of $13 million the purchase price will be decreased by 50% of the amount below the floor. For example, if net cash at closing is $10 million, the purchase price will be adjusted down by $1.5 million (50% of $13 million floor less $10 million acquired).

 

●If net cash is greater than the “Net Cash Collar Ceiling” of $16 million the purchase price will be increased by 50% of the amount below the floor. For example, if net cash at closing is $20 million, the purchase price will be adjusted up by $2 million (50% of $20 million acquired less $16 million ceiling).

 

●changes in the estimated fair value of Heliogen’s assets acquired and liabilities assumed as of the closing date of the Merger, which could result from changes in the values of equipment, reserve estimates and other accounts which could change from the ordinary business operations, including: cash, accounts, other assets, accounts payable and other liabilities and other factors;

 

●the tax bases of Heliogen’s assets and liabilities as of the Closing Date of the Mergers; and

 

●the risk factors described in the section entitled “Risk Factors” beginning on page 18.

 

NOTE 4 — Transaction Accounting Adjustments

 

The preliminary transaction accounting adjustments included in the unaudited pro forma condensed combined financial information are as follows:

 

a.reflects the elimination of Heliogen warrant liabilities to be cancelled at closing and the associated gains and losses recorded

 

b.reflects the elimination of Heliogen “HLGN common stock”, “Additional paid-in capital” and “Accumulated deficit”, the ZEO stock issued as consideration of $17,032,157 ($1,074 “Class A common stock” and $17,031,083 “Additional paid-in capital”) and the bargain purchase gain of $6,034,199 recorded in “Accumulated deficit”

 

c.reflects the estimated tax impact of transaction accounting adjustments reflected in the “Income tax benefit (expense)” by using the effective rate realized in the period impacted by the adjustments

 

d.reflects ZEO Energy’s estimated cash payments for legal, audit and investment banker related fees. Heliogen’s estimated cash payments for legal, audit and investment banker related fees is $2,400,000.

 

e.reflects the “Bargain purchase gain on acquisition” (see note 3 for purchase price allocation)

 

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