UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM
Amendment #1
For the fiscal year ended
OR
For the transition period from to
Commission file number:
(Exact name of registrant as specified in its charter)
| (State or other jurisdiction of incorporation or organization) | (I.R.S. Employer Identification No.) | |
|
| | |
| (Address of principal executive offices) | (Zip Code) |
Registrant’s telephone number, including
area code:
Securities registered pursuant to Section 12(b) of the Act:
| Title of each class | Trading Symbol(s) | Name of each exchange on which registered | ||
Securities registered pursuant to Section 12(g) of the Act: None
Indicate by check mark if the registrant is a well-known seasoned
issuer, as defined in Rule 405 of the Securities Act. Yes ☐
Indicate by check mark if the registrant is not required to file
reports pursuant to Section 13 or Section 15(d) of the Act. Yes ☐
Indicate by check mark whether the registrant (1) has filed all
reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months
(or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements
for the past 90 days. Yes ☐
Indicate by check mark whether the registrant has submitted electronically
every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during
the preceding 12 months (or for such shorter period that the registrant was required to submit such files).
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.
| Large accelerated filer ☐ | Accelerated filer ☐ | Smaller reporting company | Emerging growth company |
If an emerging growth company, indicate by check mark if the registrant
has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant
to Section 13(a) of the Exchange Act.
Indicate by check mark whether the registrant has filed a report on
and attestation to its management’s assessment of the effectiveness of its internal control over financial reporting under Section 404(b) of
the Sarbanes-Oxley Act (15 U.S.C. 7262(b)) by the registered public accounting firm that prepared or issued its audit report.
If securities are registered pursuant to Section
12(b) of the Act, indicate by check mark whether the financial statements of the registrant included in the filing reflect the correction
of an error to previously issued financial statements.
Indicate by check mark whether any of those error corrections are restatements that required a recovery analysis of incentive-based compensation received by any of the registrant’s executive officers during the relevant recovery period pursuant to §240.10D-1(b). ☐
Indicate by check mark whether the registrant is a shell company (as
defined in Rule 12b-2 of the Act). Yes ☐ No
As of June 30, 2023, the last business day of the registrant’s
most recently completed second fiscal quarter, the aggregate market value of the Class A ordinary shares outstanding, other than shares
held by persons who may be deemed affiliates of the registrant, computed by reference to the closing sales price for the Class A ordinary
shares on June 30, 2023, as reported on Nasdaq, was $
As of March 25, 2024,
Documents Incorporated by Reference
EXPLANATORY NOTE
TABLE OF CONTENTS
| PART II | |
| ITEM 8. FINANCIAL STATEMENT AND SUPPLEMENTARY DATA | 1 |
| PART IV | |
| ITEM 15. EXHIBIT AND FINANCIAL STATEMENT SCHEDULES | 1 |
i
PART II
ITEM 8. FINANCIAL STATEMENT AND SUPPLEMENTARY DATA.
This information appears following Item 15 of this Report and is incorporated herein by reference.
PART IV
ITEM 15. EXHIBIT AND FINANCIAL STATEMENT SCHEDULES.
The following documents are filed as part of this Form 10-K:
(1) Financial Statements: Our financial statements are listed in the “Index to Financial Statements” on page F-1.
(2) Financial Statement Schedules: None.
1
(3) Exhibits
We hereby file as part of this Report the exhibits listed in the attached Exhibit Index. Copies of such material can also be obtained on the SEC website at www.sec.gov.
| * | Filed herewith |
| ** | Furnished herewith |
ITEM 16. FORM 10-K SUMMARY.
None.
2
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized this date of April 1, 2024.
| Zeo Energy Corp. | ||
| By: | /s/ Timothy Bridgewater | |
| Name: | Timothy Bridgewater | |
| Title: | Chief Executive Officer and Chief Financial Officer | |
| Name | Position | |
| /s/ Timothy Bridgewater | Chief Executive Officer and Chief Financial | |
| Officer (Principal Executive Officer, Principal Financial Officer and Principal | ||
| Accounting Officer) | ||
| /s/ Gianluca “Luke” Guy | Director | |
| Gianluca “Luke” Guy | ||
| /s/ Dr. Abigail M. Allen | Director | |
| Dr. Abigail M. Allen | ||
| /s/ James P. Benson | Director | |
| James P. Benson | ||
| /s/ Neil Bush | Director | |
| Neil Bush | ||
| /s/ Mark Jacobs | Director | |
| Mark Jacobs |
3
ESGEN ACQUISITION CORPORATION
INDEX TO FINANCIAL STATEMENTS
F-1
REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
Shareholders and Board of Directors
ESGEN Acquisition Corporation
Dallas, Texas
Opinion on the Financial Statements
We have audited the accompanying balance sheets of ESGEN Acquisition Corporation (the “Company”) as of December 31, 2023, and 2022, the related statements of operations, changes in redeemable ordinary shares and shareholders’ deficit, and cash flows for each of the years then ended, and the related notes (referred to as the “financial statements”). In our opinion, the financial statements present fairly, in all material respects, the financial position at December 31, 2023 and 2022 of the Company, and the results of its operations and its cash flows for each of the years then ended, in conformity with accounting principles generally accepted in the United States of America.
Going Concern Uncertainty
The accompanying financial statements have been prepared assuming that the Company will continue as a going concern. As discussed in Note 1 to the financial statements, the Company does not have sufficient cash and working capital to sustain its operations. These conditions raise substantial doubt about the Company’s ability to continue as a going concern. Management’s plans in regard to these matters are also described in Note 1. The financial statements do not include any adjustments that might result from the outcome of this uncertainty.
Basis for Opinion
These financial statements are the responsibility of the Company’s management. Our responsibility is to express an opinion on the Company’s financial statements based on our audits. We are a public accounting firm registered with the Public Company Accounting Oversight Board (United States) (“PCAOB”) and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.
We conducted our audits in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement, whether due to error or fraud. The Company is not required to have, nor were we engaged to perform, an audit of its internal control over financial reporting. As part of our audits, we are required to obtain an understanding of internal control over financial reporting but not for the purpose of expressing an opinion on the effectiveness of the Company’s internal control over financial reporting. Accordingly, we express no such opinion.
Our audits included performing procedures to assess the risks of material misstatement of the financial statements, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the financial statements. Our audits also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of financial statements. We believe that our audits provide a reasonable basis for our opinion.
Emphasis of Matter - Business Combination
As discussed in Note 10 to the financial statements, the Company consummated the business combination discussed in Note 6 on March 13, 2024.
/s/
We have served as the Company’s auditor since 2021.
March 25, 2024
F-2
ESGEN ACQUISITION CORPORATION
BALANCE SHEETS
| December 31, 2023 | December 31, 2022 | |||||||
| Assets | ||||||||
| Current assets: | ||||||||
| Cash | $ | $ | ||||||
| Prepaid expenses | ||||||||
| Total current assets | ||||||||
| Non-current assets: | ||||||||
| Marketable securities and cash held in Trust Account | ||||||||
| Total assets | $ | $ | ||||||
| Liabilities, Redeemable Ordinary Shares and Shareholders’ Deficit | ||||||||
| Current liabilities: | ||||||||
| Accounts payable and accrued expenses | $ | $ | ||||||
| Due to related party | ||||||||
| Promissory note-related party | ||||||||
| Total current liabilities | ||||||||
| Non-current liabilities: | ||||||||
| Warrant liabilities | ||||||||
| Deferred underwriters fee | ||||||||
| Total liabilities | $ | $ | ||||||
| Commitments and Contingencies | ||||||||
| Class A ordinary shares subject to possible redemption, $ | ||||||||
| Shareholders’ Deficit: | ||||||||
| Preferred shares, $ | ||||||||
| Class A shares, $ | ||||||||
| Class B shares, $ | ||||||||
| Accumulated deficit | ( | ) | ( | ) | ||||
| Total shareholders’ deficit | ( | ) | ( | ) | ||||
| Total Liabilities, Redeemable Ordinary Shares and Shareholders’ Deficit | $ | $ | ||||||
The accompanying notes are an integral part of these financial statements.
F-3
ESGEN ACQUISITION CORPORATION
STATEMENTS OF OPERATIONS
| Year Ended December 31, | Year Ended December 31, | |||||||
| 2023 | 2022 | |||||||
| Legal and professional fees | $ | $ | ||||||
| Insurance | ||||||||
| Other operating costs | ||||||||
| Operating cost-related party | ||||||||
| Loss from operations | ( | ) | ( | ) | ||||
| Other income (expense): | ||||||||
| Change in fair value of warrants liabilities | ( | ) | ||||||
| Interest and investment income on marketable securities and cash held in Trust Account | ||||||||
| Recovery of deferred offering costs allocated to warrants | ||||||||
| Total other income, net | ||||||||
| Net (loss) income | $ | ( | ) | $ | ||||
| $ | ( | ) | $ | |||||
| $ | $ | |||||||
The accompanying notes are an integral part of these financial statements.
F-4
ESGEN ACQUISITION CORPORATION
STATEMENTS OF CHANGES IN REDEEMABLE ORDINARY SHARES AND SHAREHOLDERS’ DEFICIT
FOR THE YEAR ENDED DECEMBER 31, 2023 AND 2022
| Class A Ordinary share subject to possible | Class A | Class B | Additional | Total | ||||||||||||||||||||||||||||||||
| redemption | Ordinary share | Ordinary share | Paid-in | Accumulated | Shareholder’ | |||||||||||||||||||||||||||||||
| Shares | Amount | Shares | Amount | Shares | Amount | Capital | Deficit | Deficit | ||||||||||||||||||||||||||||
| Balance as of December 31, 2021 | $ | $ | $ | $ | $ | ( | ) | $ | ( | ) | ||||||||||||||||||||||||||
| Accretion of ordinary shares subject to possible redemption | - | - | - | ( | ) | ( | ) | |||||||||||||||||||||||||||||
| Net income | - | - | - | |||||||||||||||||||||||||||||||||
| Balance as of December 31, 2022 | - | ( | ) | ( | ) | |||||||||||||||||||||||||||||||
| Redemption of Class A ordinary shares subject to possible redemption | ( | ) | ( | ) | ||||||||||||||||||||||||||||||||
| Recovery of deferred offering costs | - | - | - | |||||||||||||||||||||||||||||||||
| Conversion of Class B ordinary shares to Class A ordinary shares | - | ( | ) | ( | ) | |||||||||||||||||||||||||||||||
| Accretion of ordinary shares subject to possible redemption | - | - | - | ( | ) | ( | ) | |||||||||||||||||||||||||||||
| Net loss | - | - | - | ( | ) | ( | ) | |||||||||||||||||||||||||||||
| Balance as of December 31, 2023 | $ | $ | $ | $ | $ | ( | ) | $ | ( | ) | ||||||||||||||||||||||||||
The accompanying notes are an integral part of these financial statements.
F-5
ESGEN ACQUISITION CORPORATION
STATEMENTS OF CASH FLOWS
| For the year ended | For the year ended | |||||||
| December 31, 2023 | December 31, 2022 | |||||||
| Cash flows from operating activities: | ||||||||
| Net (loss) income | $ | ( | ) | $ | ||||
| Adjustments to reconcile net (loss) income to net cash provided by in operating activities: | ||||||||
| Recovery of deferred offering costs allocated to warrants | ( | ) | ||||||
| Change in fair value of warrant liabilities | ( | ) | ||||||
| Changes in operating assets and liabilities: | ||||||||
| Due to related party | ||||||||
| Prepaid assets | ||||||||
| Accounts payable and accrued expenses | ||||||||
| Net cash provided by operating activities | ||||||||
| Cash Flows from Investing Activities: | ||||||||
| Extension funding used to purchase marketable securities and cash held in Trust Account | ( | ) | ||||||
| Cash withdrawn from Trust Account in connection with redemptions | ||||||||
| Proceeds from sale of marketable securities deposited into cash held in Trust Account | ||||||||
| Reinvestment of marketable securities and cash held in Trust Account | ( | ) | ( | ) | ||||
| Net cash provided by (used in) investing activities | ( | ) | ||||||
| Cash flows from financing activities: | ||||||||
| Proceeds from note payable-related party | ||||||||
| Redemptions of Class A ordinary shares subject to possible redemption | ( | ) | ||||||
| Net cash used in financing activities | ( | ) | ||||||
| Net change in cash | $ | $ | ( | ) | ||||
| Cash, beginning of the period | $ | $ | ||||||
| Cash, end of the period | $ | $ | ||||||
| Cash held in Trust Account | ||||||||
| Total cash and cash in Trust Account | $ | $ | ||||||
| Supplemental disclosure of cash flow information: | ||||||||
| Change in value of Class A ordinary shares subject to possible redemption | $ | $ | ||||||
| Impact of the waiver of deferred commission by the underwriters | $ | $ | ||||||
| Conversion of Class B ordinary shares to Class A ordinary shares | $ | $ | ||||||
The accompanying notes are an integral part of these financial statements.
F-6
ESGEN ACQUISITION CORPORATION
NOTES TO FINANCIAL STATEMENTS
Note 1 - Organization and Business Operation
ESGEN Acquisition Corporation (the “Company” or “ESGEN”) was incorporated as a Cayman Islands exempted company on April 19, 2021. The Company was incorporated for the purpose of effecting a merger, share exchange, asset acquisition, share purchase, reorganization or similar business combination with one or more businesses or entities (the “Business Combination”). The Company will not be limited to a particular industry or geographic region in its identification and acquisition of a target company. The Company consummated the Business Combination on March 13, 2024 (see Note 10 – Subsequent Events).
As of December 31, 2023, the Company had not commenced any operations. All activity for the period from April 19, 2021 (inception) through December 31, 2023, relates to the Company’s formation and the initial public offering (“Public Offering” or “IPO”) described below and since the closing of the IPO, the search for a prospective initial Business Combination. The Company will not generate any operating revenues until after the completion of its initial Business Combination, at the earliest. The Company will generate non-operating income in the form of interest or dividend income on cash and cash equivalents from the proceeds derived from the Public Offering (as defined below).
The Company’s sponsor is ESGEN LLC, a Delaware limited liability company (the “Sponsor”).
The registration statement for the Company’s IPO was
declared effective on October 19, 2021. On October 22, 2021, the Company consummated its IPO of
The Company must complete one or more initial Business Combinations
having an aggregate fair market value of at least
Following
the closing of the IPO on October 22, 2021, $
F-7
Except
with respect to interest or other income earned on the funds held in the Trust Account that may be released to the Company to pay
its income taxes, if any, the amended and restated memorandum and articles of association, as discussed below and subject to the
requirements of law and regulation, will provide that the proceeds from the Public Offering and the sale of the Private Placement
Warrants held in the Trust Account will not be released from the Trust Account (1) to the Company, until the completion of the
initial Business Combination, or (2) to the public shareholders, until the earliest of (a) the completion of the initial Business
Combination, and then only in connection with those Class A ordinary shares that such shareholders properly elected to redeem,
subject to the limitations described herein, (b) the redemption of any public shares properly tendered in connection with a
shareholder vote to amend the amended and restated memorandum and articles of association (A) to modify the substance or timing of
the Company’s obligation to provide holders of the Class A ordinary shares the right to have their shares redeemed in
connection with the initial Business Combination or to redeem
The Company will provide its public shareholders with the opportunity to redeem all or a portion of their public shares upon the completion of the initial Business Combination either (i) in connection with a shareholder meeting called to approve the Business Combination or (ii) by means of a tender offer. The decision as to whether the Company will seek shareholder approval of a proposed Business Combination or conduct a tender offer will be made by the Company, solely in its discretion, and will be based on a variety of factors such as the timing of the transaction and whether the terms of the transaction would require the Company to seek shareholder approval under applicable law or stock exchange listing requirement.
The
Company will provide its public shareholders with the opportunity to redeem all or a portion of their Class A ordinary shares upon
the completion of its initial Business Combination at a per-share price, payable in cash, equal to the aggregate amount then on
deposit in the Trust Account calculated as of two business days prior to the consummation of the initial Business Combination,
including interest or dividends earned on the funds held in the Trust Account and not previously released to the Company to pay its
income taxes, if any, divided by the number of then-outstanding public shares, subject to the limitations described herein. The
amount in the Trust Account is initially $
The
ordinary shares subject to redemption were recorded at redemption value and classified as temporary equity upon the completion of
the Public Offering, in accordance with Financial Accounting Standards Board’s (“FASB”) Accounting Standards
Codification (“ASC”) Topic 480 “Distinguishing Liabilities from Equity.” In such case, the Company will
proceed with a Business Combination if the Company has net tangible assets of at least $
The
Company has until July 22, 2024 (assuming the Sponsor deposits the required amount into the Trust Account for each New Additional
Extension Date and unless the Company’s shareholders approve one or more further Additional Extensions), to consummate the
initial Business Combination. If the Company has not consummated the initial Business Combination within the Combination Period, the
Company will: (i) cease all operations except for the purpose of winding up; (ii) as promptly as reasonably possible but not more
than ten business days thereafter, redeem the public shares, at a per-share price, payable in cash, equal to the aggregate amount
then on deposit in the Trust Account, including interest or dividends earned on the funds held in the Trust Account and not
previously released to the Company to pay its income taxes, if any (less up to $
F-8
On January
18, 2023, the Company held an extraordinary general meeting of shareholders to consider and vote upon, among other things, a proposal
to amend the Company’s amended and restated memorandum and articles of association (the “First Extension Charter Amendment”)
to (i) extend the date by which the Company must consummate its initial Business Combination (the “Termination Date”) from
January 22, 2023 to April 22, 2023 and (ii) in the event that the Company has not consummated an initial business combination by April
22, 2023, to allow the Company, by resolution of the Company’s board of directors (the “Board”) and, without any approval
of the Company’s shareholders, upon five days’ advance notice prior to each Additional Extension, to extend the Termination
Date up to six times (with each such extension being upon five days’ advance notice), each by one additional month (for a total
of up to six additional months to complete a business combination) (each, an “Additional Extension” and such date, the “Additional
Extension Date”), provided that the Sponsor or the Sponsor’s affiliates or permitted designees will deposit into the Trust
Account for each Additional Extension Date the lesser of (a) $
The
Sponsor and each member of the management team have entered into an agreement with the Company, pursuant to which they have agreed
to (i) waive their redemption rights with respect to their Founder Shares; (ii) waive their redemption rights with respect to their
Founder Shares and public shares in connection with a shareholder vote to approve an amendment to the Company’s amended and
restated memorandum and articles of association (A) that would modify the substance or timing of the Company’s obligation to
provide holders of the Class A ordinary shares the right to have their shares redeemed in connection with the initial Business
Combination or to redeem
The Sponsor has agreed that it will be liable to the Company
if and to the extent any claims by a third party for services rendered or products sold to the Company (other than the Company’s
independent registered public accounting firm), or a prospective target business with which the Company has discussed entering into a
transaction agreement, reduce the amounts in the Trust Account to below the lesser of (i) $
On
October 20, 2023, at the Company’s extraordinary general meeting, the shareholders approved, among other proposals, (i) (a)
the extension (such proposal, the “Extension Proposal”) of the time period the Company has to complete an initial
Business Combination from October 22, 2023 to January 22, 2024 (the “Charter Amendment”) and (b) in the event that the
Company has not consummated an initial Business Combination by January 22, 2024, to allow the Company, by resolution of the Board
and, without any approval of the Company’s shareholders, upon five days’ advance notice prior to each Additional
Extension, to complete six Additional Extensions, provided that the Sponsor or the Sponsor’s affiliates or permitted designees
will deposit into the Trust Account for each Additional Extension Date the lesser of (x) $
F-9
Additionally, the shareholders approved a proposal to amend, by special resolution, the Company’s amended and restated memorandum and articles of association to change certain provisions which restrict the Class B ordinary shares from converting to Class A ordinary shares prior to the consummation of an initial Business Combination.
In connection with the vote to approve the above proposals,
the holders of
In
connection with the approval of the Extension Proposal at the Meeting and the adoption of the Charter Amendment, the Sponsor
contributed into the Trust Account $
In
connection with the approval of the Conversion Proposal at the Meeting and the adoption of the Charter Amendment, the Sponsor
converted all of its
On October 16, 2023 (the “Compliance Date”), the Company was notified by The Nasdaq Stock Market LLC (the “Nasdaq”) that the Company was not in compliance with the minimum number of round lot holders required for continued listing on the Nasdaq Global Market (the “Round Lot Requirement”). The Company has until April 15, 2024 to comply with the Round Lot Requirement. If ESGEN does not regain compliance with the Round Lot Requirement by the Compliance Date, ESGEN will receive written notification that its securities are subject to delisting, at which time ESGEN may appeal the Nasdaq’s delisting determination to a Nasdaq Listing Qualifications Panel (the “Panel”). There can be no assurance that ESGEN will be able to regain compliance with the Round Lot Requirement or that any appeal of the Nasdaq’s delisting determination to the Panel would be successful.
Founder Shares
Founder Shares refers to the Class B ordinary shares (the “Founder Shares”) acquired by the initial shareholders prior to the Company’s IPO.
The
initial shareholders and each member of the management team have entered into an agreement with the Company, pursuant to which they
have agreed to (i) waive their redemption rights with respect to their Founder Shares and public shares in connection with the
completion of the Business Combination; (ii) waive their redemption rights with respect to their Founder Shares and public shares in
connection with a shareholder vote to approve an amendment to the amended and restated memorandum and articles of association (A)
that would modify the substance or timing of the Company’s obligation to provide holders of the Class A ordinary shares the
right to have their shares redeemed in connection with the Business Combination or to redeem
In
connection with the approval of the Conversion Proposal at the Meeting and the adoption of the Charter Amendment, the Sponsor
converted all of its
F-10
Risks and Uncertainties
The credit and financial markets have experienced extreme volatility and disruptions due to the current conflict between Ukraine and Russia. The conflict is expected to have further global economic consequences, including but not limited to the possibility of severely diminished liquidity and credit availability, declines in consumer confidence, declines in economic growth, increases in inflation rates and uncertainty about economic and political stability. In addition, the United States and other countries have imposed sanctions on Russia which increases the risk that Russia, as a retaliatory action, may launch cyberattacks against the United States, its government, infrastructure and businesses. Any of the foregoing consequences, including those we cannot yet predict, may cause our business, financial condition, results of operations and the price of our ordinary shares to be adversely affected.
Additionally, recent military conflicts, including the Russian invasion of Ukraine, the Israel-Hamas war, and increased military tensions, may have a material adverse effect on financial and business conditions. These circumstances could reduce the number of attractive targets for an initial Business Combination, increase the cost of consummating an initial Business Combination and delay or prevent the Company from completing an initial Business Combination.
Going Concern
As of December 31, 2023, the Company had $
The Company will seek additional capital through other financing alternatives. There can be no assurance that new financings or other transactions will be available to the Company on commercially acceptable terms, or at all. Should the Company fail to raise additional cash from outside sources, this would have a material adverse impact on its operations.
The accompanying financial statements have been prepared assuming the Company will continue to operate as a going concern, which contemplates the realization of assets and settlement of liabilities in the normal course of business, and do not include any adjustments to reflect the possible future effects on the recoverability and classification of assets or the amounts and classifications of liabilities that may result from uncertainty related to its ability to continue as a going concern.
Note 2 - Significant Accounting Policies
Basis of Presentation
The accompanying audited financial statements have been prepared in accordance with accounting principles generally accepted in the United States of America (“GAAP”). The summary of significant accounting policies presented below is designed to assist in understanding the Company’s financial statements. Such financial statements and accompanying notes are the representations of the Company’s management, who is responsible for their integrity and objectivity.
F-11
Emerging Growth Company Status
The Company is an “emerging growth company,” as defined in Section 2(a) of the Securities Act, as modified by the Jumpstart our Business Startups Act of 2012 (the “JOBS Act”), and it may take advantage of certain exemptions from various reporting requirements that are applicable to other public companies that are not emerging growth companies.
Further, Section 102(b)(1) of the JOBS Act exempts emerging growth companies from being required to comply with new or revised financial accounting standards until private companies (that is, those that have not had a Securities Act registration statement declared effective or do not have a class of securities registered under the Exchange Act) are required to comply with the new or revised financial accounting standards. The JOBS Act provides that a company can elect to opt out of the extended transition period and comply with the requirements that apply to non-emerging growth companies but any such election to opt out is irrevocable. The Company has elected not to opt out of such extended transition period which means that when a standard is issued or revised and it has different application dates for public or private companies, the Company, as an emerging growth company, can adopt the new or revised standard at the time private companies adopt the new or revised standard. This may make comparison of the Company’s financial statements with another public company which is neither an emerging growth company nor an emerging growth company which has opted out of using the extended transition period difficult or impossible because of the potential differences in accounting standards used.
Use of Estimates
The preparation of financial statements in conformity with GAAP requires the Company’s management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Making estimates requires management to exercise significant judgment. It is at least reasonably possible that the estimate of the effect of a condition, situation or set of circumstances that existed at the date of the financial statements, which management considered in formulating its estimate, could change in the near term due to one or more future confirming events. Accordingly, the actual results could differ significantly from those estimates.
Cash and Cash Equivalents
The Company considers all short-term investments with an original maturity of three months or less when purchased to be cash and cash equivalents. The Company had cash equivalents as of December 31, 2023 and 2022, respectively.
Marketable Securities and Cash Held in Trust Account
As of December 31, 2023, investments held in the Trust Account consisted of interest bearing demand deposits. As of December 31, 2022, substantially all of the assets held in the Trust Account were held in U.S. Money Market Funds. Such investments are presented on the condensed balance sheets at fair value at the end of the reporting period. Interest, dividends, gains and losses resulting from the change in fair value of these investments are included in income from investments held in Trust Account in the accompanying condensed statements of operations. The estimated fair values of investments held in the Trust Account are determined using available market information.
Fair Value Measurement
The fair value of the Company’s assets and liabilities, which qualify as financial instruments under ASC Topic 820, “Fair Value Measurement,” approximates the carrying amounts represented in the balance sheet, primarily due to its short-term nature.
Fair value is defined as the price that would be received for sale of an asset or paid for transfer of a liability, in an orderly transaction between market participants at the measurement date. GAAP establishes a three-tier fair value hierarchy, which prioritizes the inputs used in measuring fair value. The hierarchy gives the highest priority to unadjusted quoted prices in active markets for identical assets or liabilities (Level 1 measurements) and the lowest priority to unobservable inputs (Level 3 measurements). The Company’s financial instruments are classified as either Level 1, Level 2 or Level 3. These tiers include:
| ● | Level 1, defined as observable inputs such as quoted prices (unadjusted) for identical instruments in active markets; |
| ● | Level 2, defined as inputs other than quoted prices in active markets that are either directly or indirectly observable such as quoted prices for similar instruments in active markets or quoted prices for identical or similar instruments in markets that are not active; and |
F-12
| ● | Level 3, defined as unobservable inputs in which little or no market data exists, therefore requiring an entity to develop its own assumptions, such as valuations derived from valuation techniques in which one or more significant inputs or significant value drivers are unobservable. |
Derivative Financial Instruments
The Company evaluates its financial instruments to determine if such instruments are derivatives or contain features that qualify as embedded derivatives in accordance with ASC Topic 815, “Derivatives and Hedging”. The Company’s derivative instruments are recorded at fair value on the balance sheet with changes in the fair value reported in the statements of operations. Derivative liabilities are classified on the balance sheets as current or non-current based on whether or not net-cash settlement or conversion of the instrument is reasonably expected to require the use of existing resources properly classifiable as current assets, or the creation of other current liabilities.
Warrant Liabilities
The Company accounts for the Public and Private Placement warrants issued in connection with the Public Offering in accordance with the guidance contained in ASC Topic 815-40 and ASC Topic 480. Such guidance provides that because the warrants do not meet the criteria for equity treatment thereunder, each warrant must be recorded as a liability. Accordingly, the Company will classify each warrant as a liability at its fair value. These liabilities are subject to re-measurement at each balance sheet date. With each such re-measurement, the warrant liabilities will be adjusted to fair value, with the change in fair value recognized in the Company’s statements of operations.
Net (Loss) Income Per Ordinary Share
The Company has two classes of shares, which are referred to as redeemable Class A ordinary shares and non-redeemable Class A and Class B ordinary shares. Income and losses are shared pro rata between the two classes of shares. Net (loss) income per ordinary share is calculated by dividing the net (loss) income by the weighted average ordinary shares outstanding for the respective period. With respect to the accretion of Class A ordinary shares subject to possible redemption, the Company treated accretion in the same manner as a dividend, paid to the shareholder in the calculation of the net (loss) income per ordinary share.
| Year Ended December 31, 2023 | Year Ended December 31, 2022 | |||||||
| Net (loss) income | $ | ( | ) | $ | ||||
| Accretion of temporary equity to redemption value | ( | ) | ||||||
| Net income including accretion of temporary equity to redemption value | $ | $ | ||||||
| Year Ended December 31, 2023 | Year Ended December 31, 2022 | |||||||||||||||
| Non-redeemable | Non-redeemable | |||||||||||||||
| Redeemable Class A | Class A and Class B | Redeemable Class A | Class A and Class B | |||||||||||||
| Basic and diluted net (loss) income per share | ||||||||||||||||
| Numerator: | ||||||||||||||||
| Allocation of net (loss) income including accretion of temporary equity | $ | $ | $ | $ | ||||||||||||
| Allocation of accretion of temporary equity to redemption value | ( | ) | ||||||||||||||
| Allocation of net (loss) income | $ | ( | ) | $ | $ | $ | ||||||||||
| Denominator: | ||||||||||||||||
| Weighted-average shares outstanding | ||||||||||||||||
| $ | ( | ) | $ | $ | $ | |||||||||||
F-13
Net (loss) income per share is computed by dividing
net (loss) income by the weighted average number of ordinary shares outstanding during the period. The Company has not considered the
effect of the
Class A Ordinary Shares Subject to Possible Redemption
The Company accounts for its Class A ordinary shares subject to possible redemption in accordance with the guidance in ASC Topic 480. Class A ordinary shares subject to mandatory redemption (if any) are classified as a liability instrument and are measured at fair value. Conditionally redeemable ordinary shares (including shares that feature redemption rights that are either within the control of the holder or subject to redemption upon the occurrence of uncertain events not solely within the Company’s control) are classified as temporary equity. At all other times, ordinary shares are classified as shareholders’ equity. The Company’s Class A ordinary shares sold in the IPO feature certain redemption rights that are considered to be outside of the Company’s control and subject to the occurrence of uncertain future events.
The Company has made a policy election in accordance
with ASC 480-10-S99-3A and recognizes changes in redemption value in additional paid-in capital (or accumulated deficit in the absence
of additional paid-in capital) immediately as they occur. The Company recorded accretion of $
Income Taxes
ASC Topic 740, “Income Taxes”, requires the recognition of deferred tax assets and liabilities for both the expected impact of differences between the financial statement and tax basis of assets and liabilities and for the expected future tax benefit to be derived from tax loss and tax credit carry forwards. ASC Topic 740 additionally requires a valuation allowance to be established when it is more likely than not that all or a portion of deferred tax assets will not be realized.
ASC Topic 740 prescribes a recognition threshold and a measurement attribute for the financial statement recognition and measurement of tax positions taken or expected to be taken in a tax return. For those benefits to be recognized, a tax position must be more likely than not to be sustained upon examination by taxing authorities. There were unrecognized tax benefits as of December 31, 2023 and 2022.
The Company’s management determined that the Cayman Islands is the Company’s only major tax jurisdiction. There is currently no taxation imposed on income by the Government of the Cayman Islands. In accordance with Cayman income tax regulations, income taxes are not levied on the Company. Consequently, income taxes are not reflected in the Company’s financial statements.
F-14
The Company recognizes accrued interest and penalties related to unrecognized tax benefits as income tax expense. As of December 31, 2023 and 2022, there were unrecognized tax benefits and no amounts were accrued for the payment of interest and penalties. The Company is currently not aware of any issues under review that could result in significant payments, accruals or material deviation from its position.
Recent Accounting Pronouncements
Management does not believe that any other recently issued, but not yet effective, accounting pronouncements, if currently adopted, would have a material effect on the Company’s financial statements.
Note 3 - Related Party Transactions
Promissory Notes - Related Party
On April 27, 2021, the Sponsor agreed to loan
the Company up to $
On April 5, 2023, the Company issued an unsecured
promissory note (the “Note”) in the principal amount of up to $
On October 17, 2023, ESGEN issued an amended and restated promissory
note (the “October 2023 Promissory Note”) in the principal amount of up to $
On January 24, 2024, ESGEN issued a new promissory note (“January
2024 Promissory Note”) in the principal amount of up to $
F-15
Due to Related Party
In the ordinary course of business, the Sponsor
or an affiliate of the Sponsor, or certain of the Company’s officers and directors may pay for certain expenses on behalf of the
Company. These amounts paid for on behalf of the Company are due upon demand and are non-interest bearing. At December 31, 2023 and 2022,
$
Working Capital Loans
In order to finance transaction costs in connection
with an intended Business Combination, the Sponsor or an affiliate of the Sponsor, or certain of the Company’s officers and directors
may, but are not obligated to, loan the Company funds as may be required (“Working Capital Loans”). If the Company completes
the initial Business Combination, the Company may repay the Working Capital Loans out of the proceeds of the Trust Account released to
the Company. Otherwise, the Working Capital Loans may be repaid only out of funds held outside the Trust Account. In the event that the
initial Business Combination does not close, the Company may use a portion of the working capital held outside the Trust Account to repay
the Working Capital Loans but no proceeds from the Trust Account would be used to repay the Working Capital Loans. Up to $
Office Space, Secretarial and Administrative Services
Through the earlier of consummation of the initial
Business Combination and the liquidation, the Company incurs $
Note 4 - Prepaid Expenses
| December 31, 2023 | December 31, 2022 | |||||||
| Prepaid insurance | $ | $ | ||||||
| Other prepaid expenses | ||||||||
| $ | $ | |||||||
F-16
Note 5 - Accounts Payable and Accrued Expense
| December 31, 2023 | December 31, 2022 | |||||||
| Legal accrual | $ | $ | ||||||
| Other payables and expenses | ||||||||
| $ | $ | |||||||
Note 6 - Commitments & Contingencies
Registration and Shareholder Rights
The holders of the Founder Shares, Private Placement
Warrants and any warrants that may be issued upon conversion of Working Capital Loans (and any Class A ordinary shares issuable upon the
exercise of the Private Placement Warrants and warrants that may be issued upon conversion of Working Capital Loans) will be entitled
to registration rights pursuant to a registration and expected shareholder rights agreement signed at the closing of our Public Offering.
The holders of these securities are entitled to make up to three demands, excluding short form demands, that the Company registers such
securities. In addition, the holders have certain “piggy-back” registration rights with respect to registration statements
filed subsequent to the Company’s completion of its initial Business Combination. However, the registration and expected shareholder
rights agreement provides that the Company will not permit any registration statement filed under the Securities Act to become effective
until termination of the applicable lock-up period, which occurs (i) in the case of the Founder Shares, and (ii) in the case of the private
placement warrants and the respective Class A ordinary shares issuable upon exercise of the private placement warrants,
In addition, the holders have certain “piggy-back”
registration rights with respect to registration statements filed subsequent to the completion of its initial Business Combination. However,
the registration and expected shareholder rights agreement provides that the Company will not permit any registration statement filed
under the Securities Act to become effective until termination of the applicable lockup period, which occurs (i) in the case of the Founder
Shares, as described in the following paragraph, and (ii) in the case of the Private Placement Warrants and the respective Class A ordinary
shares underlying such warrants,
Except as described herein, the Sponsor and its
directors and executive officers have agreed not to transfer, assign or sell any of their Founder Shares until the earliest of (A)
F-17
In addition, pursuant to the registration and expected shareholder rights agreement, the Sponsor, upon and following consummation of an initial Business Combination, will be entitled to nominate three individuals for election to the board of directors, as long as the Sponsor holds any securities covered by the registration and expected shareholder rights agreement.
Underwriting Agreement
The underwriters were entitled to a deferred underwriters
fee of
To account for the waiver of the deferred underwriters
fee, the Company analogized to the SEC staff’s guidance on accounting for reducing a liability for “trailing fees”.
Upon the waiver of the deferred underwriters fee, the Company reduced the deferred underwriters fee to $
Business Combination
Note 7 - Warrant Liabilities
The Company accounts for the
With each such remeasurement, the warrant liabilities will be adjusted to fair value, with the change in fair value recognized in the Company’s statements of operations.
F-18
Public Warrants
Each whole warrant entitles the holder to purchase
one Class A ordinary share at a price of $
The warrants will become exercisable
The
Company has agreed that as soon as practicable, but in no event later than 20 business days after the closing of the initial Business
Combination, it will use its commercially reasonable efforts to file with the SEC a post-effective amendment to the registration statement
of which this prospectus forms a part or a new registration statement for the registration, under the Securities Act, of the Class A ordinary
shares issuable upon exercise of the warrants, and the Company will use its commercially reasonable efforts to cause the same to become
effective within
Redemption of warrants when the price per Class
A ordinary share equals or exceeds $
| ● | in whole and not in part; |
| ● | at a price of $ |
| ● | upon a minimum of |
F-19
| ● | if, and only if, the closing price of the Class A ordinary shares equals or exceeds $ |
Redemption of warrants when the price per Class
A ordinary share equals or exceeds $
| ● | in whole and not in part; |
| ● | at $ |
| ● | if, and only if, the closing price of the Class A ordinary shares equals or exceeds $ |
Private Warrants
If the Private Placement Warrants are held by
holders other than the Sponsor or its permitted transferees, the Private Placement Warrants will be redeemable by the Company in all redemption
scenarios and exercisable by the holders on the same basis as the warrants included in the units sold in the Public Offering. Any amendment
to the terms of the Private Placement Warrants or any provision of the warrant agreement with respect to the Private Placement Warrants
will require a vote of holders of at least
The accounting treatment of derivative financial instruments requires that the Company record a derivative liability upon the closing of the IPO. Accordingly, the Company has classified each warrant as a liability at its fair value and the warrants were allocated a portion of the proceeds from the issuance of the Units equal to its fair value. These liabilities are subject tore-measurement at each balance sheet date. With each such re-measurement, the warrant liabilities will be adjusted to fair value, with the change in fair value recognized in the Company’s statement of operations. The Company will reassess the classification at each balance sheet date. If the classification changes as a result of events during the period, the warrants will be reclassified as of the date of the event that causes the reclassification.
Note 8 - Recurring Fair Value Measurements
As of December 31, 2023 and 2022, marketable securities and cash held in Trust Account are determined by Level 1 inputs utilizing quoted prices (unadjusted) in active markets for identical assets.
The Company’s Public Warrants are traded on the Nasdaq. As such, the Public Warrant valuation is based on unadjusted quoted prices in active markets for identical assets or liabilities that the Company has the ability to access. The fair value of the Public Warrant liabilities is classified within Level 1 of the fair value hierarchy.
At December 31, 2023 and 2022, the Company considers the Private Warrants to be economically equivalent to the Public Warrants. As such, the valuation of the Public Warrants was used to value the Private Warrants. The fair value of the Private Warrant liabilities is classified within Level 2 of the fair value hierarchy.
| December 31, 2023 | ||||||||||||||||
| Level 1 | Level 2 | Level 3 | Total | |||||||||||||
| Assets: | ||||||||||||||||
| Cash held in Trust Account | $ | $ | $ | $ | ||||||||||||
| Liabilities: | ||||||||||||||||
| Public Warrants | ||||||||||||||||
| Private Warrants | ||||||||||||||||
| Total liabilities | $ | $ | $ | $ | ||||||||||||
F-20
| December 31, 2022 | ||||||||||||||||
| Level 1 | Level 2 | Level 3 | Total | |||||||||||||
| Assets: | ||||||||||||||||
| Marketable securities held in Trust Account | $ | $ | $ | $ | ||||||||||||
| Liabilities: | ||||||||||||||||
| Public Warrants | $ | $ | $ | $ | ||||||||||||
| Private Warrants | ||||||||||||||||
| Total liabilities | $ | $ | $ | $ | ||||||||||||
There were
Note 9 - Shareholders’ Deficit
Preference shares- The Company is authorized
to issue
Class A ordinary shares- The Company is
authorized to issue
In connection with the approval of the Conversion
Proposal at the October 20, 2023 shareholder meeting and the adoption of the Charter Amendment, the Sponsor converted all of its
Class B ordinary shares- The Company is
authorized to issue
Holders of Class A ordinary shares and holders of Class B ordinary shares will vote together as a single class on all matters submitted to a vote of the Company’s shareholders except as required by law. Unless specified in the Company’s amended and restated memorandum and articles of association, or as required by applicable provisions of the Companies Act or applicable stock exchange rules, the affirmative vote of a majority of the Company’s ordinary shares that are voted is required to approve any such matter voted on by its shareholders.
The Class B ordinary shares will automatically
convert into Class A ordinary shares (which such Class A ordinary shares delivered upon conversion will not have any redemption rights
or be entitled to liquidating distributions from the Trust Account if the Company fails to consummate an initial Business Combination)
at the time of the initial Business Combination or earlier at the option of the holders thereof at a ratio such that the number of Class
A ordinary shares issuable upon conversion of all Founder Shares will equal, in the aggregate, on an as-converted basis,
This is different than some other similarly structured
blank check companies in which the initial shareholders will only be issued an aggregate of
F-21
Note 10 - Subsequent Events
On each of January 18, 2024 and February 16, 2024,
the Company deposited $
First Amendment to the Business Combination Agreement
On January 24, 2024, ESGEN and Sunergy entered into the First Amendment to the Initial Business Combination Agreement (the “First Amendment” and, the Initial Business Combination Agreement as amended by the First Amendment, the “Business Combination Agreement”). The First Amendment provides for, among other things, the:
(i) reduction of the aggregate
consideration to the pre-transaction Sunergy equity holders from $
(ii) removal of the (a) $
(iii) modification of the
terms and structure of the Sponsor PIPE Investment (as defined below) from $
(iv) forfeiture of an aggregate
of
(v) forfeiture of all private
warrants to purchase one ESGEN Class A ordinary share, par value $
(vi) Sponsor will contribute those certain promissory notes, dated as of April 27, 2021 and October 17, 2023 (which promissory note amended and restated that certain promissory note dated as of April 5, 2023), by and between Sponsor and ESGEN, to ESGEN as a contribution to the capital of ESGEN and all amounts due thereunder will be cancelled; and
(vii) the outside date for the Business Combination to be extended to April 22, 2024.
Non-redemption Agreement
On March 11, 2024, ESGEN,
entered into a non-redemption agreement (the “Non-Redemption Agreement”) with The K2 Principal Fund L.P.
(“K2”), pursuant to which K2 agreed (i) to purchase at least
In exchange for the foregoing
commitments to purchase and not redeem such Class A ordinary shares, ESGEN agreed to issue, for no consideration an aggregate of
F-22
Business Combination
On March 13, 2024 (the “Closing Date”),
the registrant consummated its previously announced business combination (the “Closing”), pursuant to that certain Business
Combination Agreement, dated as of April 19, 2023 (as amended on January 24, 2024, the “Business Combination Agreement”),
by and among Zeo Energy Corp., a Delaware corporation (f/k/a ESGEN Acquisition Corporation, a Cayman Islands exempted company), ESGEN
OpCo, LLC, a Delaware limited liability company(“OpCo”), Sunergy Renewables, LLC, a Nevada limited liability company (“Sunergy”),
the Sunergy equityholders set forth on the signature pages thereto or joined thereto (collectively, “Sellers” and each, a
“Seller”, and collectively with Sunergy, the “Sunergy Parties”), for limited purposes, ESGEN LLC, a Delaware limited
liability company (the “Sponsor”), and for limited purposes, Timothy Bridgewater, an individual, in his capacity as the Sellers
Representative (collectively, the “Business Combination”). Prior to the Closing, (i) except as otherwise specified in the
Business Combination Agreement, each issued and outstanding Class B ordinary share of ESGEN was converted into
In connection with entering into the Business
Combination Agreement, ESGEN and the Sponsor entered into a subscription agreement, dated April 19, 2023, which ESGEN, the Sponsor and
OpCo subsequently amended and restated on January 24, 2024 (the “Sponsor Subscription Agreement”), pursuant to which, among
other things, the Sponsor agreed to purchase an aggregate of
F-23