Financial Analysis

"Commitments and Contingencies Legal Proceedings The Company is periodically involved in legal proceedings and claims arising in the normal course of business, including proceedings relating to intellectual property, employment and other matters. Management believes the outcome of these proceedings, as outlined below, will not have a significant adverse effect on the Companys financial position, operating results, or cash flows. Securities Class Action Proceedings On March 8, 2021, two putative securities class action complaints were filed against the Company, and certain of its current and former officers and directors in the federal district court for the Southern District of New York. Those cases were ultimately consolidated under C.A. No. 1:21-cv-2002, and a lead plaintiff was appointed in June 2021. On July 20, 2021, an amended complaint was filed alleging that certain public statements made by the defendants between October 2, 2020, and March 2, 2021, violated Sections 10(b) and 20(a) of the Securities Exchange Act of 1934 and Rule 10b-5 promulgated thereunder. Following negotiations with a mediator, in September 2023, the Company and the plaintiffs agreed on a settlement in principle in the aggregate amount of $19.5 million (the Settlement Amount), and on December 6, 2023, the lead plaintiff and the defendants entered into a stipulation and agreement of settlement requiring the Company to pay the Settlement Amount to resolve the class action litigation and the related …

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Non-Recourse Debt The following table provides a summary of the Companys non-recourse debt as of December 31, 2025 and 2024: As of December 31, (Amounts in thousands) Due 2025 2024 SVB Credit Agreement, SP1 Facility (1) April 2026 $ 177,515 $ 196,240 Second SVB Credit Agreement, SP2 Facility (1) May 2027 70,670 78,018 KeyBank Credit Agreement, SP3 Facility (1) November 2027 49,223 53,830 Second KeyBank Credit Agreement (1) April 2030 160,955 162,691 Barings GPSF Credit Agreement, SET Facility April 2042 128,140 130,000 Banco Santander Credit Agreement, SP5 Facility November 2027 109,017 109,842 Less: Unamortized fair value adjustment (1) (16,471) (21,948) Less: Unamortized deferred financing costs (2,281) (3,342) Total non-recourse debt 676,768 705,331 Less: Non-recourse debt, current (213,826) (28,310) Non-recourse debt, non-current $ 462,942 $ 677,021 (1) In connection with the acquisition of Legacy Spruce Power effective September 9, 2022, the Company assumed long-term debt instruments valued at approximately $507.2 million as of that date. In connection with accounting for the business combination, the Company adjusted the carrying value of this long-term debt to its fair value as of the Acquisition Date. This fair value adjustment resulted in a reduction of the carrying value of the debt by $35.2 million. This adjustment to fair value is being amortized to interest expense over the life of the related debt instruments using the effective interest method. Amortization exp …

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The following table presents the detail of the Companys revenues as reflected within the consolidated statements of operations for the years ended December 31, 2025 and 2024: Years Ended December 31, (Amounts in thousands) 2025 2024 PPA revenues $ 37,969 $ 38,391 SLA revenues 39,915 28,978 Solar renewable energy credit revenues 21,358 7,205 Performance-based incentives 2,145 425 Servicing revenues 3,803 778 Intangibles amortization, unfavorable solar renewable energy revenue agreements 2,993 3,097 Other revenue 3,629 3,233 Total $ 111,812 $ 82,107 …

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Stock-Based Compensation Expense Stock-based compensation expense for stock options and restricted stock units for the years ended December 31, 2025 and 2024 was $3.0 million and $2.7 million, respectively. As of December 31, 2025, there was $7.2 million of unrecognized compensation cost related to stock options and restricted stock units which is expected to be recognized over the remaining vesting periods, with a weighted-average period of 2.6 years. Stock Options The Company grants stock options to certain employees that will vest over a period of one to four years. A summary of stock option award activity for the years ended December 31, 2025 and 2024 was as follows: Options Shares Weighted Average Exercise Price Weighted Average Remaining Contractual Term Outstanding at December 31, 2023 193,156 $ 17.89 5.8 Granted 295,229 3.75 Exercised Cancelled or forfeited Outstanding at December 31, 2024 488,385 $ 9.34 7.5 Granted Exercised (1,562) 1.92 Cancelled or forfeited (2,053) 24.38 Outstanding at December 31, 2025 484,770 $ 9.30 6.5 Exercisable at December 31, 2025 263,348 $ 13.97 5.0 The aggregate intrinsic value of stock options outstanding as of December 31, 2025 and 2024 was $0.8 million and $0.1 million, respectively. Cash received from options exercised for the years ended December 31, 2025 and 2024 was less than $0.1 million and $0.0 million, respectively. During the year ended December 31, 2024, the Company granted 295,229 stock options to its President and Chief Exe …

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Fair Value Measurements The Company uses various assumptions and methods in estimating the fair values of its financial instruments. Assets and Liabilities Measured at Fair Value on a Recurring Basis Private placement warrants to purchase 529,167 shares of common stock with an exercise price of $92.00 per share, which expired on December 21, 2025, were valued using a Black-Scholes model, pursuant to the inputs provided in the table below. Assumptions for Assets and Liabilities Measured at Fair Value on a Recurring Basis Input December 31, 2024 Risk-free rate 4.16 % Remaining term in years 0.98 Expected volatility 53.7 % Exercise price $ 92.00 Fair value of common stock $ 2.97 The Companys interest rate swaps are not traded on a market exchange and the fair values are determined using a valuation model based on a discounted cash flow analysis. This analysis reflects the contractual terms of the interest rate swap agreements and uses observable market-based inputs, including estimated future SOFR interest rates. The fair value of the Company's interest rate swap is the net difference in the discounted future fixed cash payments and the discounted expected variable cash receipts. The variable cash receipts are based on the expectation of future interest rates and are observable inputs available to a market participant. The interest rate swap valuation is classified as Level 2 of the fair value hierarchy. The following table sets forth the Companys assets and liabilities which ar …

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Goodwill As of December 31, 2023 , the Goodwill balance was $28.8 million . During the year ended December 31, 2024, the Company identified indicators that the carrying amount of goodwill may be impaired due to a continuous decline in the Companys stock price and market capitalization. The Company performed a quantitative test using a market approach and an income approach, which both resulted in an impairment of goodwill. As such, the Company recorded a charge of $28.8 million to fully impair the Companys goodwill within the consolidated statements of operations for the year ended December 31, 2024. …

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Income Taxes Net deferred income tax assets consist of the following components as of December 31, 2025 and 2024: As of December 31, (Amounts in thousands) 2025 2024 Deferred tax assets (liabilities): Net operating loss carryforwards $ 154,741 $ 142,819 Accrued settlements 599 1,870 Pass-through equity interests 7,339 8,029 Fair market value adjustments (4,571) (8,746) Tax credit carryforwards 863 1,643 Reserves 3,972 3,773 Stock-based compensation 1,351 1,962 Depreciation and amortization (90,103) (69,118) Interest expense carryforward 20,910 17,020 Right of use assets 249 270 Other 1,332 485 Total deferred tax assets, net 96,682 100,007 Less valuation allowance (96,682) (100,007) Net deferred tax assets $ $ Upon adoption of ASU 2023-09, Improvements to Income Tax Disclosures, the reconciliation of taxes at the federal statutory rate to our provision for (benefit from) income taxes for the year ended December 31, 2025 was as follows: Year Ended December 31, 2025 (Amounts in thousands) Amount Percent US federal statutory income tax rate $ (5,866) 21.0 % State taxes, net of federal benefit % Effects of changes in tax law or rates enacted in the current period % Tax credits Research and development tax credits 780 (2.8) % Changes in valuation allowance (2,565) 9.2 % Nondeductible/nontaxable items Stock based compensation 16 (0.1) % Fair market value adjustments 1,150 (4.1) % Other 177 (0.6) % Other adjustments Return to accrual (355) 1.3 % Net operating loss adjustments 5,638 ( …

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Right-of-Use Assets and Lease Liabilities The Companys operating leases primarily relate to office space. The Companys related ROU assets and lease liabilities are comprised of the following as of each period end: As of December 31, (Amounts in thousands) 2025 2024 Operating leases: ROU assets $ 4,208 $ 4,750 Lease liability, current 945 892 Lease liability, non-current 4,181 4,848 Other information related to leases is presented below: Years Ended December 31, (Amounts in thousands) 2025 2024 Other information: Operating lease cost $ 1,235 $ 1,606 Variable lease cost 757 679 Sublease income 161 525 Operating cash outflows from operating ROU assets 1,992 2,285 . As of December 31, 2025 2024 Weighted-average remaining lease term operating leases (in months) 51.2 61.5 Weighted-average discount rate operating leases 7.2 % 7.2 % As of December 31, 2025, the annual minimum lease payments of the Companys operating lease liabilities were as follows: As of December 31, (Amounts in thousands) 2025 2026 $ 1,205 2027 1,257 2028 1,396 2029 1,195 2030 593 Total future minimum lease payments, undiscounted 5,646 Less: Imputed interest (520) Present value of future minimum lease payments $ 5,126 …

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Recent Accounting Pronouncements Adopted In November 2023, the FASB issued Accounting Standards Update (ASU) 2023-07, Segment Reporting (Topic 280): Improvement to Reportable Segment Disclosures, (ASU 2023-07), which requires enhanced disclosures for reportable segments, primarily in relation to significant segment expenses, even in the event an entity has a single reportable segment in accordance with Topic 280. ASU 2023-07 was effective for the Company for fiscal years beginning after December 15, 2023, and interim periods within fiscal years beginning after December 15, 2024. The Company adopted this ASU as of December 31, 2024 and has retrospectively applied its requirements to all prior periods based on the significant segment expense categories identified and disclosed in its consolidated financial statements in the period of adoption. See Note 20. Segment Information. In December 2023, the FASB issued ASU 2023-09, Income Taxes (Topic 740): Improvements to Income Tax Disclosures, (ASU 2023-09). The ASU enhances the transparency and decision usefulness of income tax disclosures by requiring additional disaggregation of information related to the effective tax rate reconciliation, income taxes paid, and income tax expense and pretax income by jurisdiction. The Company adopted ASU 2023 09 on a prospective basis effective January 1, 2025. Accordingly, the enhanced income tax disclosures are presented beginning in fiscal year 2025, and prior period disclosures have not been …

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Defined Contribution Plan The Company has adopted a 401(k) plan to provide all eligible employees a means to accumulate retirement savings on a tax-advantaged basis. The 401(k) plan requires participants to be at least 21 years old. In addition to the traditional 401(k), eligible employees are given the option of making an after- tax contribution to a Roth 401(k) or a combination of both. Plan participants may make before-tax elective contributions up to the maximum percentage of compensation and dollar amount allowed under the IRC. Participants are allowed to contribute, subject to IRS limitations on total annual contributions from 1% to 90% of eligible earnings. The plan provides for automatic enrollment at a 3% deferral rate of an employees eligible wages. The Company provides safe harbor matching contributions equal to 100% on the first 3% of an employees eligible earnings deferred and an additional 50% on the next 2% of an employees eligible earnings deferred. Employee elective deferrals and safe harbor matching contributions are 100% vested at all times. In connection with the acquisition of Legacy Spruce Power, the Company adopted the Spruce Power 401(k) plan, which contains features similar to those of the XL Fleet Corp. 401(k) plan, except that (i) participants are allowed to contribute, subject to IRS limitations, on total annual contributions from 1% to 80% of eligible earnings and (ii) the safe harbor non-elective contribution is equal to 3% of employees compensat …

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Segment Information As of December 31, 2025 and 2024, the Company has one reportable segment, which sells electricity to homeowners and provides related services to the homeowners, as well as to third party owners. The Companys CODM is its CEO who is focused on strategic planning aimed at generating revenue and monetizing the Companys home solar energy systems and its ability to provide top-tier related servicing solutions to its customers and third-parties. The CEO is provided on a quarterly basis with the Companys consolidated segment expenses for the year ended 2024, which the CEO utilizes to assess the Companys performance and for making decisions about resource allocation. For the year ended December 31, 2025, the information being provided to the CEO is at a lower level of aggregation as a result the Company has recast the prior period. The following tables presents the Companys significant segment expenses for the years ended December 31, 2025 and 2024: Years Ended December 31, (Amounts in thousands) 2025 2024 Revenues $ 111,812 $ 82,107 Cost of revenues - solar energy systems depreciation 29,139 23,377 Cost of revenues - operations and maintenance 9,764 16,597 Selling, general and administrative expenses - professional services 15,742 20,007 Selling, general and administrative expenses - compensation and benefits 27,189 26,713 Selling, general and administrative expenses - other 12,182 12,169 Interest expense, net 50,918 40,232 Litigation settlements 1,711 7,384 Impai …

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Summary of Significant Accounting Policies Basis of consolidated financial statement presentation The accompanying consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United States (U.S. GAAP) and include the accounts of its wholly owned subsidiaries and variable interest entities (VIEs), for which the Company was the primary beneficiary. All intercompany transactions and balances have been eliminated in consolidation. Certain prior year amounts have been reclassified to conform to the Companys presentation as of and for the year ended December 31, 2025 and such reclassifications had no effect on the Companys previously reported financial position, results of operations, or cash flows. Use of estimates The preparation of financial statements in conformity with U.S. GAAP requires management to make certain estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities as of the balance sheet date, as well as reported amounts of income and expenses during the reporting period. The Companys most significant estimates and judgments involve (i) valuation allowance on deferred income taxes, (ii) valuation of stock-based compensation, (iii) the useful lives of certain assets and liabilities, including property and equipment, and intangible assets, (iv) the allowance for credit losses, (v) asset retirement obligations, (vi) relative fair value …

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Stockholders Equity Common Stock As of December 31, 2025 and 2024, the Company had 350,000,000 authorized shares of common stock. The holders of common stock are entitled to vote on all matters and are entitled to the number of votes equal to the number of shares of common stock held. Common stockholders are entitled to dividends when and if declared by the Board of Directors. The following shares of common stock are issued and outstanding or unvested as of December 31, 2025: Restricted stock units 3,674,502 Stock options 484,770 Total 4,159,272 Share Repurchase Program In May 2023, the Company's Board of Directors approved a share repurchase program for the repurchase of up to $50.0 million of the Company's outstanding common stock through May 15, 2025 (the Repurchase Program). In May 2025, the Board authorized the extension of the Repurchase Program to expire on May 15, 2027. The Repurchase Program authorizes the Company to effect repurchases through open market transactions, privately negotiated transactions, Rule 10b5-1 trading plans and/or Rule 10b-18 trading plans, and other means. The Company is not obligated to repurchase any specific number of shares or dollar amount and may discontinue the Repurchase Program at any time. The timing, number and purchase price of share repurchases, if any, will be determined by the Companys management in its discretion and will depend on a number of factors, including the market price of shares, general market and economic conditions, …

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Subsequent Events On March 27, 2026 , the Company entered into an amendment (the SP1 Facility Amendment) to the SP1 Facility with Silicon Valley Bank (the SP1 Facility) which extends the maturity date 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 Amended SP1 Maturity Date will be January 30, 2027. Under the terms of the SP1 Facility Amendment, the applicable margin is 2.75% per annum from the effective date of the SP1 Facility Amendment to October 30, 2026, and 3.25% per annum thereafter. The SP1 Facility Amendment includes a cross-default provision with the Second Key Bank Credit Agreement. Management has reviewed all events subsequent to December 31, 2025 and prior to the issuance of these consolidated financial statements, and except as referenced above, the Company has determined there have been no events that have occurred that would require adjustments or disclosures within the consolidated financial statements. …

SubsequentEventsTextBlock · excerpt; the full note is in the filing