# Spruce Power Holding Corp: Form 10-Q for the period ended Jun 30, 2025

- Company: [Spruce Power Holding Corp](/companies/spru.md) (CIK 1772720)
- Form: 10-Q
- Filed: 2025-08-12
- Accepted by EDGAR: Aug 12, 2025, 16:22 ET
- Period: 2025-06-30
- Accession: 0001628280-25-039904
- Inline XBRL: yes
- Main document: https://www.sec.gov/Archives/edgar/data/1772720/000162828025039904/spru-20250630.htm
- All documents and exhibits: https://www.sec.gov/Archives/edgar/data/1772720/000162828025039904/

## Figures reported in this filing

Standardized XBRL line items for the period ended 2025-06-30.

| Line item | Period | Value | XBRL concept |
| --- | --- | ---: | --- |
| Revenue | 3 months, 2025-04-01 to 2025-06-30 | $33.2m | us-gaap:RevenueFromContractWithCustomerExcludingAssessedTax |
| Revenue | 6 months, 2025-01-01 to 2025-06-30 | $57.1m | us-gaap:RevenueFromContractWithCustomerExcludingAssessedTax |
| Selling, general and administrative | 3 months, 2025-04-01 to 2025-06-30 | $15.1m | us-gaap:SellingGeneralAndAdministrativeExpense |
| Selling, general and administrative | 6 months, 2025-01-01 to 2025-06-30 | $29.2m | us-gaap:SellingGeneralAndAdministrativeExpense |
| Operating income | 3 months, 2025-04-01 to 2025-06-30 | $8.9m | us-gaap:OperatingIncomeLoss |
| Operating income | 6 months, 2025-01-01 to 2025-06-30 | $7.2m | us-gaap:OperatingIncomeLoss |
| Interest expense | 3 months, 2025-04-01 to 2025-06-30 | $12.8m | us-gaap:InterestExpenseNonoperating |
| Interest expense | 6 months, 2025-01-01 to 2025-06-30 | $25.5m | us-gaap:InterestExpenseNonoperating |
| Income tax | 3 months, 2025-04-01 to 2025-06-30 | $0 | us-gaap:IncomeTaxExpenseBenefit |
| Income tax | 6 months, 2025-01-01 to 2025-06-30 | $0 | us-gaap:IncomeTaxExpenseBenefit |
| Net income | 3 months, 2025-04-01 to 2025-06-30 | −$3.0m | us-gaap:NetIncomeLoss |
| Net income | 6 months, 2025-01-01 to 2025-06-30 | −$18.3m | us-gaap:NetIncomeLoss |
| Diluted EPS | 3 months, 2025-04-01 to 2025-06-30 | −$0.17 | us-gaap:EarningsPerShareDiluted |
| Diluted EPS | 6 months, 2025-01-01 to 2025-06-30 | −$1.01 | us-gaap:EarningsPerShareDiluted |
| Basic EPS | 3 months, 2025-04-01 to 2025-06-30 | −$0.17 | us-gaap:EarningsPerShareBasic |
| Basic EPS | 6 months, 2025-01-01 to 2025-06-30 | −$1.01 | us-gaap:EarningsPerShareBasic |
| Diluted shares (weighted) | 3 months, 2025-04-01 to 2025-06-30 | 17,917,611 shares | us-gaap:WeightedAverageNumberOfDilutedSharesOutstanding |
| Diluted shares (weighted) | 6 months, 2025-01-01 to 2025-06-30 | 18,052,559 shares | us-gaap:WeightedAverageNumberOfDilutedSharesOutstanding |
| Operating cash flow | 6 months, 2025-01-01 to 2025-06-30 | −$11.5m | us-gaap:NetCashProvidedByUsedInOperatingActivities |
| Capital expenditure | 6 months, 2025-01-01 to 2025-06-30 | $184.0k | us-gaap:PaymentsToAcquirePropertyPlantAndEquipment |
| Cash and equivalents | at 2025-06-30 | $53.5m | us-gaap:CashAndCashEquivalentsAtCarryingValue |
| Current assets | at 2025-06-30 | $119.3m | us-gaap:AssetsCurrent |
| Total assets | at 2025-06-30 | $862.6m | us-gaap:Assets |
| Current liabilities | at 2025-06-30 | $239.5m | us-gaap:LiabilitiesCurrent |
| Total liabilities | at 2025-06-30 | $735.2m | us-gaap:Liabilities |
| Long-term debt | at 2025-06-30 | $479.4m | us-gaap:LongTermDebtNoncurrent |
| Current portion of debt | at 2025-06-30 | $215.6m | us-gaap:LongTermDebtCurrent |
| Shareholders' equity | at 2025-06-30 | $125.0m | us-gaap:StockholdersEquity |

## Management's discussion and analysis

As filed, 32,269 characters.

*The following discussion and analysis provides information which our management believes is relevant to an assessment and understanding of our financial condition and results of operations. This discussion and analysis should be read together with our results of operations and financial condition and the unaudited condensed consolidated financial statements and related notes that are included elsewhere in this Quarterly Report on Form 10-Q and the audited financial statements and the notes thereto included in our Annual Report on Form 10-K for the year ended December 31, 2024, filed with the U.S. Securities and Exchange Commission (the “SEC”) on March 31, 2025 (the “Annual Report”). In addition to historical financial information, this discussion and analysis contains forward-looking statements based upon current expectations that involve risks, uncertainties, and assumptions. Refer to the section entitled “Cautionary Note Regarding Forward-Looking Statements.” Actual results and timing of selected events may differ materially from those anticipated in these forward-looking statements as a result of various factors, including those set forth under “Risk Factors” or elsewhere in this Quarterly Report on Form 10-Q and under “Risk Factors” in Item 1A of the Annual Report.*

*Certain figures, such as interest rates and other percentages, included in this section have been rounded for ease of presentation. Percentage figures included in this section have not in all cases been calculated on the basis of such rounded figures but on the basis of such amounts prior to rounding. For this reason, percentage amounts in this section may vary slightly from those obtained by performing the same calculations using the figures in our unaudited condensed consolidated financial statements or in the associated text. Certain other amounts that appear in this section may similarly not sum due to rounding.*

*As used in this discussion and analysis, references to “SPRU,” “the Company,” “we,” “us” or “our” refer only to Spruce Power Holding Corporation and its consolidated subsidiaries.*

### Company Overview

We are a leading owner and operator of distributed solar energy assets across the U.S., offering subscription-based services to approximately 85,000 home solar assets and customer contracts, making renewable energy more accessible to everyone. We offer asset management and operating and maintenance services and are contracted to service approximately 60,000 systems owned by third parties, as well as to our Portfolio, through our Spruce Pro servicing platform.

### Corporate Strategy

We believe the combination of our existing customer base and proven servicing platform related to our Customer Agreements, together with our capital resources and relationships, gives us the ability to take advantage of growth in distributed solar and battery storage services, while creating a path to more predictable revenues, profits and cash flow for our shareholders. Our corporate strategy has three key elements:

### Leveraging the Spruce Power platform to become a leading provider of subscription-based solutions for distributed energy resources

We have more than a decade of experience owning and operating rooftop solar systems, as well as energy efficiency upgrades. We believe our proven platform for managing home solar can be extended to other categories of distributed energy resources, and by leveraging our platform, we intend to grow our revenues by providing subscription-based solutions for rooftop solar and energy storage and other future energy-related products to homeowners and businesses. We are focused on delivering best-in-class customer service, with investment into process and platform improvement for on-site monitoring, customer billing and working with qualified partners for field services.

### Profitably growing return on assets by focusing on channels with the lowest customer acquisition cost

We seek to grow our customer revenues by focusing on those channels that have lowest customer acquisition costs and the ability to increase return on assets, including acquiring existing systems from other companies or investment funds, selling additional services to existing customers, selling services to new customers online and partnering with selected independent installers to provide a subscription-based solution for their customers. Historically, we have grown our number of residential customers through acquisitions, while also organically developing our Spruce Pro servicing platform.

### Increasing shareholder value by delivering predictable revenues, profits and cash flow

By focusing on subscription-based solutions with long-term customer contracts, we seek to generate consistent revenues, profits and cash flow from our residential customers and by leveraging our Spruce Pro servicing platform for portfolio managed services.

### Operating Highlights

For the three months ended June 30, 2025 and 2024, our revenues totaled $33.2 million and $22.5 million, respectively, while our net loss attributable to stockholders was $3.0 million and $8.6 million, respectively. For the six months ended June 30, 2025 and 2024, our revenues totaled $57.1 million and $40.8 million, respectively, while our net loss attributable to stockholders was $18.3 million and $11.0 million, respectively. Our financial performance during the three and six months ended June 30, 2025 was impacted by fluctuations in the value of our interest rate swaps, variations in our operations and maintenance costs, and the incremental impact of the NJR Acquisitions. See the section below titled “Results of Operations” in this Quarterly Report on Form 10-Q for more information on our operating results for the three and six months ended June 30, 2025 and 2024. We focus on the following core pillars in our operations:

- *Deliver operational excellence in our clean energy portfolio for customers and communities.* Combined portfolio generation was approximately 187 thousand MWh of power for the three months ended June 30, 2025, compared to 160 thousand MWh of power for the three months ended June 30, 2024, respectively.
- *Execute on our growth and capital strategies.* As of June 30, 2025, we owned cash flows from approximately 85,000 home solar assets and customer contracts across 18 U.S. states with an average remaining contract life of approximately 11 years compared to approximately 75,000 home solar assets and customer contracts with an average remaining contract life of approximately 12 years as of June 30, 2024 due to the impact of the NJR Acquisitions.

Certain information above constitutes key operating metrics that we use to evaluate our operations, measure our performance and identify trends in our business. Some of our key operating metrics are estimates that are based on our management’s beliefs and assumptions and on information currently available to management. Although we believe we have a reasonable basis for each of these estimates, we caution that these estimates are based on a combination of assumptions that may prove to be inaccurate over time, and any inaccuracies could be material to our actual results when compared to our calculations. See the section titled “Risk Factors” in this Quarterly Report on Form 10-Q and under “Risk Factors” in Item 1A of our Annual Report for more information. Furthermore, other companies may calculate these operating metrics differently than we do now or in the future, which would reduce their usefulness as a comparative measure.

### Acquisitions

In November 2024, we completed the Initial NJR Acquisition acquiring 9,800 solar energy systems for approximately $132.5 million, pursuant to an asset purchase agreement (the “APA”). The Initial NJR Acquisition was funded by proceeds from the concurrent issuance of the SP5 Facility (defined below) and $22.7 million of our cash. Under the APA, we were obligated to acquire approximately 200 additional solar energy systems, subject to those systems having achieved operational milestones, and assuming those milestones are achieved, the aggregate purchase consideration payable with respect to these additional solar energy systems would be approximately $5.0 million pursuant to the APA.

During the three months ended March 31, 2025 and June 30, 2025, we acquired 83 and 109, respectively, of the Additional NJR Systems, resulting in 192 systems in the aggregate for approximately $4.5 million in cash, inclusive of transaction costs of $0.1 million. We expect to purchase the remaining additional solar energy systems that we may be obligated to acquire upon those systems achieving operational milestones.

### SP5 Facility

In November 2024, we entered into a non-recourse credit agreement with Banco Santander, S.A., New York (the “SP5 Facility”), which provided a term loan of approximately $109.8 million, of which proceeds were used to partially fund the Initial NJR Acquisition described above. In addition, we entered into an interest rate swap agreement to hedge the floating rate of the SP5 Facility, which included a notional amount of $87.9 million, a swap rate of 3.98%, and a maturity date of November 22, 2027.

### Common Share Repurchase Program

During the three and six months ended June 30, 2025, we repurchased 0.5 million and 0.8 million shares, respectively, of common stock under our Repurchase Program in open market transactions at a weighted-average price of $2.10 and $2.33 per share, for an aggregate purchase price of $1.0 million and $1.8 million, respectively, inclusive of transaction costs.

### Operating Segments

For information about our operating segments, see “Segment reporting” in Note 2. Summary of Significant Accounting Policies and Note 15. Segment Information.

### Key Factors Affecting Operating Results

We are a leading owner and operator of distributed solar energy assets across the U.S., offering subscription-based services to owners of home solar assets and customer contracts. Additionally, we provide servicing functions for our assets and customers, as well as for other institutional owners of home solar energy systems. Our operating results and ability to grow our business over time could be impacted by certain factors and trends that affect our industry, as well as elements of our strategy, including the following factors, as well as the risk factors disclosed in Part I, Item 1A, “Risk Factors,” in our Annual Report and other risk factors set forth elsewhere in this Quarterly Report on Form 10-Q:

### Development of Distributed Energy Assets

Our future growth depends significantly on our ability to acquire operating home solar energy systems “in-bulk” from other companies. Industry data suggests there is a substantial existing base of operating home solar energy systems, providing us the opportunity to pursue acquisitions. Over the long-term, our continued ability to pursue acquisitions will be dependent on development of distributed energy assets, namely home solar energy systems, by third parties. This development may be impacted by numerous factors that influence homeowner demand for home solar energy systems including but not limited to macroeconomic dynamics, utility rates, climate change impacts and government policy and incentives.

### Availability of Financing

Our ability to raise capital from third parties at reasonable terms is a critical element in supporting ownership of our existing home solar energy assets as well as enabling our future growth. We have historically utilized non-recourse, project-level debt as a primary source of capital for acquisitions. Our ability to raise debt either as a means to refinance existing indebtedness or for future acquisitions may be impacted by general macroeconomic conditions, the health of debt capital markets, the interest rate environment and general concerns over its industry or specific concerns over our business.

### Results of Operations

### Comparison of the Three Months Ended June 30, 2025 and 2024

The results of operations related to our Drivetrain business are presented as net loss from discontinued operations in our unaudited condensed consolidated statements of operations.

Information with respect to the unaudited condensed consolidated statements of operations for the three months ended June 30, 2025 and 2024 is presented below:

*(in thousands)*

|  | Three Months Ended June 30, 2025 | 2024 | $ Change | % Change |
| --- | ---: | ---: | ---: | ---: |
| Revenues | $33,239 | $22,481 | $10,758 | 48% |
| Operating expenses: |  |  |  |  |
| Cost of revenues - solar energy systems depreciation | 7,291 | 5,665 | 1,626 | 29% |
| Cost of revenues - operations and maintenance | 2,137 | 4,474 | (2,337) | (52)% |
| Selling, general and administrative expenses | 15,099 | 16,701 | (1,602) | (10)% |
| Litigation settlements | 135 | — | 135 | 100% |
| Gain on asset disposal | (325) | (999) | 674 | (67)% |
| Total operating expenses | 24,337 | 25,841 | (1,504) | (6)% |
| **Income (loss) from operations** | 8,902 | (3,360) | 12,262 | (365)% |
| Other (income) expense: |  |  |  |  |
| Interest income | (5,174) | (5,257) | 83 | (2)% |
| Interest expense, net | 12,820 | 7,591 | 5,229 | 69% |
| Other expense, net | 4,109 | 3,098 | 1,011 | 33% |
| **Net loss from continuing operations** | (2,853) | (8,792) | 5,939 | (68)% |
| Net income (loss) from discontinued operations | (14) | 219 | (233) | (106)% |
| **Net loss** | (2,867) | (8,573) | 5,706 | (67)% |
| Less: Net income attributable to noncontrolling interests | 99 | 5 | 94 | 1880% |
| **Net loss attributable to stockholders** | $(2,966) | $(8,578) | $5,612 | (65)% |

#### Revenues

Revenues increased by $10.8 million, or 48%, to $33.2 million in the three months ended June 30, 2025 as compared to the same period in 2024. The increase was primarily due to (i) approximately $3.0 million of incremental SLA revenues related to the NJR Acquisitions, (ii) $5.9 million increase in SREC revenues, of which approximately $5.0 million related to the NJR Acquisitions, and (iii) $1.5 million increase due to government incentive PBIs in 2025.

#### Cost of Revenues — Solar Energy Systems Depreciation

Cost of revenues - solar energy systems depreciation increased by $1.6 million, or 29%, to $7.3 million in the three months ended June 30, 2025 as compared to the same period in 2024 primarily due to incremental depreciation related to the NJR Acquisitions.

#### Cost of Revenues — Operations and Maintenance

Cost of revenues - operations and maintenance (“O&M”) decreased by $2.3 million, or 52%, to $2.1 million in the three months ended June 30, 2025 as compared to the same period in 2024 primarily due to cost reductions resulting from certain O&M efficiencies implemented in early 2025, including greater leverage of our asset management platform to streamline third-party vendor management and return material authorization (RMA) processing. We also experienced a reduction in our meter upgrade program cost as the program is nearing completion.

#### Selling, General and Administrative

Selling, general and administrative (“SG&A”) expenses decreased by $1.6 million, or 10%, to $15.1 million in the three months ended June 30, 2025 as compared to the same period in 2024 primarily due to a one-time severance cost of $1.9 million recognized upon the separation of the Former CEO from the Company in April 2024 and non-recurring legal fees of $0.9 million related to Legacy XL legal matters incurred in the prior quarter of 2024, both partially offset by a $1.2 million increase in SG&A expenses in the comparable period in 2025 primarily due to compensation and related costs and professional fees.

#### Interest Income

Interest income of $5.2 million in the three months ended June 30, 2025 related to $4.4 million of interest income from the SEMTH Master Lease and $0.8 million of interest earned on investments in money market funds and U.S. Treasury securities. In comparison, interest income of $5.3 million for the three months ended June 30, 2024 related to $3.7 million of interest income from the SEMTH Master Lease and $1.6 million of interest earned on investments in money market funds and U.S. Treasury securities.

#### Interest Expense, Net

Interest expense, net in the three months ended June 30, 2025 of $12.8 million consisted of (i) $11.2 million of interest expense, net of realized gains from settlements of our interest rate swaps, and (ii) $1.6 million related to the amortization of debt discount and deferred financing costs.

In comparison, interest expense, net in the three months ended June 30, 2024 of $7.6 million consisted of (i) $6.2 million of interest expense, net of realized gains from settlements of our interest rate swaps, which included a one-time gain of approximately $3.6 million associated with the full settlement of interest rate swaps related to the SP4 Facility which was fully repaid in June 2024, and (ii) $1.4 million related to the amortization of debt discount and deferred financing costs.

Interest expense, net increased in the 2025 period due to the effect of the SP5 Facility entered into as part of the Initial NJR Acquisition in November 2024 and the impact of the $3.6 million gain associated with the full settlement of interest rate swaps related to the SP4 Facility.

#### Other Expense, net

Other expense, net of $4.1 million and $3.1 million, respectively, for the three months ended June 30, 2025 and 2024 primarily related to the change in the fair value of our interest rate swaps due to changes in forecasted market interest rates.

### Comparison of the Six Months Ended June 30, 2025 and 2024

The results of operations related to our Drivetrain business are presented as net loss from discontinued operations in our unaudited condensed consolidated statements of operations.

Information with respect to the unaudited condensed consolidated statements of operations for the six months ended June 30, 2025 and 2024 is presented below:

*(in thousands)*

|  | Six Months Ended June 30, 2025 | 2024 | $ Change | % Change |
| --- | ---: | ---: | ---: | ---: |
| Revenues | $57,057 | $40,768 | $16,289 | 40% |
| Operating expenses: |  |  |  |  |
| Cost of revenues - solar energy systems depreciation | 14,576 | 11,400 | 3,176 | 28% |
| Cost of revenues - operations and maintenance | 6,033 | 7,607 | (1,574) | (21)% |
| Selling, general and administrative expenses | 29,199 | 30,170 | (971) | (3)% |
| Litigation settlements | 701 | — | 701 | 100% |
| Gain on asset disposal, net | (660) | (1,452) | 792 | (55)% |
| Total operating expenses | 49,849 | 47,725 | 2,124 | 4% |
| **Income (loss) from operations** | 7,208 | (6,957) | 14,165 | (204)% |
| Other (income) expense: |  |  |  |  |
| Interest income | (10,441) | (10,643) | 202 | (2)% |
| Interest expense, net | 25,487 | 18,533 | 6,954 | 38% |
| Other (income) expense, net | 10,325 | (3,606) | 13,931 | (386)% |
| **Net loss from continuing operations** | (18,163) | (11,241) | (6,922) | 62% |
| Net income (loss) from discontinued operations | (18) | 218 | (236) | (108)% |
| **Net loss** | (18,181) | (11,023) | (7,158) | 65% |
| Less: Net income attributable to noncontrolling interests | 123 | 9 | 114 | 1267% |
| **Net loss attributable to stockholders** | $(18,304) | $(11,032) | $(7,272) | 66% |

#### Revenues

Revenues increased by $16.3 million, or 40%, to $57.1 million in the six months ended June 30, 2025 as compared to the same period in 2024. The increase was primarily due to (i) approximately $6.0 million of incremental SLA revenues related to the NJR Acquisitions, (ii) $7.9 million net increase in SREC revenues, of which the majority related to the NJR Acquisitions, (iii) $1.5 million increase due to government incentive PBIs, and (iv) $1.0 million of incremental servicing revenues related to contracted services on third-party owned solar energy systems in 2025.

#### Cost of Revenues — Solar Energy Systems Depreciation

Cost of revenues - solar energy systems depreciation increased by $3.2 million, or 28%, to $14.6 million in the six months ended June 30, 2025 as compared to the same period in 2024 primarily due to incremental depreciation related to the NJR Acquisitions.

#### Cost of Revenues — Operations and Maintenance

Cost of revenues - operations and maintenance decreased by $1.6 million, or 21%, to $6.0 million in the six months ended June 30, 2025 as compared to the same period in 2024 primarily due to cost reductions resulting from certain O&M efficiencies implemented in early 2025 (discussed above) and nearing completion of the meter upgrade efforts on our solar energy systems, both slightly offset by incremental O&M third-party service costs in 2025 related to the NJR Acquisitions.

#### Selling, General and Administrative

SG&A expenses decreased by $1.0 million, or 3%, to $29.2 million in the six months ended June 30, 2025 as compared to the same period in 2024 due to a one-time severance cost of $1.9 million recognized upon the separation of the Former CEO from the Company in April 2024 and non-recurring legal fees of $1.6 million related to Legacy XL legal matters incurred in 2024, both partially offset by a $2.5 million increase in SG&A expenses in 2025 primarily due to compensation and related costs and professional fees.

#### Litigation Settlements

Litigation settlements of $0.7 million in the six months ended June 30, 2025 primarily related to a $0.6 million settlement in the first quarter of 2025 related to the termination of a Legacy XL lease.

#### Interest Income

Interest income of $10.4 million in the six months ended June 30, 2025 related to $9.0 million of interest income from the SEMTH Master Lease and $1.4 million of interest earned on investments in U.S. Treasury securities. In comparison, interest income of $10.6 million for the six months ended June 30, 2024 related to $7.5 million of interest income from the SEMTH Master Lease and $3.1 million of interest earned on investments in U.S. Treasury securities.

#### Interest Expense, Net

Interest expense, net in the six months ended June 30, 2025 of $25.5 million consisted of (i) $22.2 million of interest expense, net of realized gains from settlements of our interest rate swaps, and (ii) $3.3 million related to the amortization of debt discount and deferred financing costs.

In comparison, interest expense, net in the six months ended June 30, 2024 of $18.5 million consisted of (i) $15.6 million of interest expense, net of realized gains from settlements of our interest rate swaps, which included a one-time gain of approximately $3.6 million associated with the settlement of interest rate swaps related to the SP4 Facility which was fully repaid in June 2024, and (ii) $2.9 million related to the amortization of debt discount and deferred financing costs.

Interest expense, net increased year over year due to the effect of the SP5 Facility effective in November 2024 and the impact of the $3.6 million gain associated with the full settlement of interest rate swaps related to the SP4 Facility. See Note 7. Non-Recourse Debt for further information on our debt and Note 8. Interest Rate Swaps for further information on our interest rate swaps.

#### Other (Income) Expense, net

Other expense, net of $10.3 million for the six months ended June 30, 2025 primarily related to the change in fair value of interest rate swaps due to changes in forecasted market interest rates, while other income, net of $3.6 million for the six months ended June 30, 2024 primarily related to the change in fair value of interest rate swaps of $3.2 million and other income, net of $0.4 million.

### Liquidity and Capital Resources

As of June 30, 2025, we had negative working capital of $120.2 million resulting from the presentation of the principal amounts outstanding under the SP1 Facility as current debt as of that date. Our negative working capital included cash and cash equivalents and restricted cash of $90.5 million. We had net losses attributable to stockholders of $18.3 million and $11.0 million for the six months ended June 30, 2025 and 2024, respectively.

Our principal sources of liquidity include cash and cash equivalents and cash inflows from daily operations. We receive cash from certain of our wholly-owned subsidiaries specifically related to the portfolio servicing fees provided for under the relevant servicing agreements between us and the subsidiaries, as well as reimbursement for any expenses we pay on behalf of those subsidiaries, which are allowed under certain agreements related to those subsidiaries. Our cash requirements depend on many factors, including the execution of our business strategy. We may be required to utilize our cash to support certain current and future operations of our wholly owned subsidiaries. We remain focused on managing costs, including capital expenditures, maintaining a strong balance sheet, and ensuring adequate liquidity. Our primary cash needs are debt servicing, acquisition of solar energy portfolios, operating expenses, and working capital to support the growth in our business. Working capital is impacted by the timing and extent of our business needs. See below discussions under “*Cash Flows Summary”* for the impact of our operations on our cash balances during the six months ended June 30, 2025 and 2024.

As of June 30, 2025, our aggregate debt balance was $695.0 million, net of $19.2 million of unamortized fair value adjustment and $2.8 million of unamortized deferred financing costs, all of which is non-recourse project-level debt. Our debt consists of five senior debt facilities and one subordinated debt facility, of which the earliest maturity date is April 30, 2026 and has been classified as current at June 30, 2025. For additional information on our debt, refer to Note 7. Non-Recourse Debt included within the accompanying unaudited condensed consolidated financial statements.

Based on our current liquidity, we believe that our current cash and cash equivalents, together with the future cash inflows generated from our daily operations and management’s plans to refinance debt under the SP 1 Facility (see “Liquidity” discussions within Note 1. Organization and Description of Business), will be sufficient to satisfy the cash requirements of our current operations and principal payments on our debt obligations for the next 12 months. We continually evaluate our cash needs to raise additional funds or seek alternative sources to invest in growth opportunities and other purposes. We expect that we will continue to be dependent on financing from outside parties to complete future acquisitions, and we may invest our own cash in such future acquisitions. If financing is not available to us on acceptable terms if and when needed, we may not be able to achieve further growth or complete identified acquisition opportunities.

### Cash Flows Summary

Presented below is a summary of our operating, investing and financing cash flows:

*(Amounts in thousands)*

| Net cash provided by (used in) | Six Months Ended June 30, 2025 | June 30, 2024 |
| --- | ---: | ---: |
| Continuing operating activities | $(11,416) | $(27,402) |
| Discontinued operating activities | (51) | 100 |
| Continuing investing activities | 8,296 | 13,487 |
| Continuing financing activities | (15,520) | (8,998) |
| Discontinued financing activities | — | 81 |
| Net change in cash and cash equivalents and restricted cash | $(18,691) | $(22,732) |

### Cash Flows Used in Operating Activities

Operating cash inflows include cash from the sale of solar energy power generated by our home solar energy systems and the servicing of long-term agreements for other institutional owners of home solar energy systems. These operating cash inflows are primarily offset by operating expenses, operating lease payments and interest payments on our outstanding debt. The related cash flows for our Drivetrain business are reflected as discontinued operating activities for the years presented. The net cash used in continuing operating activities consists of our corporate costs and certain other costs that were not allocated to our discontinued operations.

Net cash used in continuing operating activities improved by $16.0 million in the six months ended June 30, 2025 compared to the same period in 2024 primarily due to a $15.0 million net settlement amount paid in February 2024 compared to $5.3 million aggregate settlements paid in early 2025, both related to settled legal proceedings (see Note 12. Commitments and Contingencies), and decreased operating expenses primarily related to O&M efficiencies during the six months ended June 30, 2025 discussed above.

### Cash Flows Provided by Investing Activities

The net cash provided by continuing investing activities in the six months ended June 30, 2025 was $8.3 million, which primarily related to $10.5 million of proceeds from our investments under the SEMTH Master Lease and $2.6 million of proceeds from the sale of solar energy systems, partially offset by $4.5 million of net payments related to the acquisition of the Additional NJR Systems in 2025.

The net cash provided by continuing investing activities in the six months ended June 30, 2024 primarily related to $10.8 million of proceeds from the SEMTH investment and $2.9 million of proceeds from the sale of solar energy systems.

### Cash Flows Used in Financing Activities

The net cash used in continuing financing activities in the six months ended June 30, 2025 was $15.5 million, which primarily related to $13.6 million for repayments of our non-recourse long-term debt, and $1.8 million related to shares repurchased under our Repurchase Program.

The net cash used in continuing financing activities in the six months ended June 30, 2024 primarily related to $136.8 million for repayments of our non-recourse debt which included the full repayment of the SP4 Facility of $125.0 million in June 2024, partially offset by $130.0 million proceeds from the issuance of the SET Facility also in June 2024.

### Critical Accounting Estimates

Our unaudited condensed consolidated financial statements are prepared in accordance with U.S. GAAP. Preparation of these unaudited condensed financial statements requires us to make estimates, assumptions and judgments that affect the reported amounts of assets, liabilities, revenues and expenses, and related disclosure of contingent assets and liabilities. Our most critical accounting estimates are those most important to the portrayal of its financial condition and results of operations and which require us to make its most difficult and subjective judgments, often as a result of the need to make estimates regarding matters that are inherently uncertain. Although management believes that its estimates and assumptions are reasonable, they are based on information available when they are made and, therefore, may differ from estimates made under different assumptions or conditions. Our critical accounting estimates are discussed within Item 7. “Management’s Discussion and Analysis of Financial Condition and Results of Operations” in our Annual Report. Other than the valuation models used in determining future principal debt amortization on certain of our credit facilities, there have been no other material changes to our critical accounting estimates during the six months ended June 30, 2025.

Our significant accounting policies are consistent with those discussed in Note 2. Summary of Significant Accounting Policies of our audited consolidated financial statements in our Annual Report and Note 2. Summary of Significant Accounting Policies of our unaudited condensed consolidated financial statements in this Form 10-Q, and should be reviewed in connection with our critical accounting policies that require difficult, subjective and complex judgments.

### New and Recently Adopted Accounting Pronouncements

For information with respect to recent accounting pronouncements and the impact of these pronouncements on our unaudited condensed consolidated financial statements, see Note 2. Summary of Significant Accounting Policies of our unaudited condensed consolidated financial statements included in Part I, Item 1 of this Quarterly Report on Form 10-Q.

## Market risk

As filed, 144 characters.

We are a smaller reporting company as defined by Rule 12b-2 of the Exchange Act and are not required to provide the information under this item.

## Controls and procedures

As filed, 7,407 characters.

### Evaluation of Disclosure Controls and Procedures

The term “disclosure controls and procedures” is defined in Rules 13a-15(e) and 15d-15(e) of the Exchange Act, as “controls and other procedures of an issuer that are designed to ensure that information required to be disclosed by the issuer in the reports that it files or submits under the Exchange Act are recorded, processed, summarized and reported, within the time periods specified in the SEC's rules and forms.” The Company’s disclosure controls and procedures are designed to ensure that material information relating to the Company and its consolidated subsidiaries is accumulated and communicated to its management, including its Chief Executive Officer and its Chief Financial Officer, as appropriate to allow timely decisions regarding required disclosures.

The Company’s management, with the participation of its Chief Executive Officer and Chief Financial Officer, conducted an evaluation of the effectiveness of its disclosure controls and procedures as of June 30, 2025. Based upon that evaluation, the Company’s Chief Executive Officer and Chief Financial Officer concluded that the Company’s disclosure controls and procedures were not effective as of that date, due to a material weakness in internal control over financial reporting identified within the Annual Report and described below.

Notwithstanding, after giving full consideration to this material weakness, and the additional analyses and other procedures that were performed to ensure that the Company’s unaudited condensed consolidated financial statements included in this Quarterly Report on Form 10-Q were prepared in accordance with GAAP, management has concluded that our unaudited condensed consolidated financial statements present fairly, in all material respects, our financial position, results of operations and cash flows for the periods disclosed in conformity with GAAP.

### Material Weakness in Internal Control over Financial Reporting

As previously disclosed in Part II, Item 9A. “Controls and Procedures” in the Company’s Annual Report on Form 10-K for the year ended December 31, 2024, as of that date, the Company did not design and maintain effective controls and identified a material weakness in the control environment and a material weakness resulting from the aggregation of deficiencies in control activities.

### Control Environment

As of June 30, 2025, Management has concluded that the Company did not maintain an effective control environment based on the criteria established in the Committee of Sponsoring Organizations (“COSO”) Framework, and its relevant components, which resulted in deficiencies that constituted a material weakness. The Company determined that it did not maintain a sufficient complement of qualified personnel to perform control activities. This contributed to the Company’s failure to: (i) design and implement certain risk-mitigating internal controls; and (ii) consistently operate the Company’s internal controls. The control environment material weakness contributed to a material weakness within our system of internal control over financial reporting in the Control Activities component of the COSO Framework.

### Control Activities

The Company did not maintain effective control activities based on the criteria established in the COSO Framework. The Company identified control deficiencies as of June 30, 2025 that constitute a material weakness from the lack of effectively designed and implemented controls related to revenue recognition, including the review of contracts upon inception and/or acquisition and the accounting for revenue recognition under ASC 606, *Revenue from Contracts with Customers.*

### Remediation Actions and Status

A material weakness cannot be considered remediated until the applicable internal controls have been designed, implemented, have operated for a sufficient period of time and management has concluded, through testing, that those controls are operating effectively over a sustained period of financial reporting cycles.

### 2025 Remediation Plan

The Company is committed to supporting a strong culture of internal controls and designing, implementing and maintaining internal controls over financial reporting to maintain a strong internal control environment. In order to strengthen our culture of internal controls and remediate the material weakness related to revenue accounting, management, with the oversight of the Audit Committee, has taken the following action steps and continues to implement a comprehensive remediation plan.

The Company’s comprehensive remediation plan includes the following:

- The Company developed and presented a training program educating control owners concerning financial statement risk and principles of the Internal Control - Integrated Framework issued by COSO, and continues to invest in additional training opportunities related to the COSO Framework;
- The Company created an internal control department specifically focused on oversight of the Company’s internal control over financial reporting through the establishment of structures, reporting lines, and appropriate authorities and responsibilities for professionals within the Company;
- The Company is designing and implementing controls related to billing and revenue recognition of its revenue contracts, in accordance with ASC 606, Revenue from Contracts with Customers. This includes a combination of manual and automated controls as the Company has increased and is continuing to increase the use of automated controls to help mitigate the risk associated with manual intervention and human error.

During the six months ended June 30, 2025, the Company continues to make significant progress hiring qualified personnel with specialized skill sets to further bolster the Company’s ability to provide an appropriate level of oversight activities related to internal control over financial reporting. These personnel have significantly contributed to the remediation efforts related to previously disclosed material weaknesses in control activities.

Management believes that the Company is making significant progress toward achieving effectiveness of its internal controls and disclosure controls and that, in many cases, the Company is making significant progress regarding the testing and evaluation of the operating effectiveness of controls related to the identified, unremediated material weakness. However, as the Company continues to evaluate and work to remediate the control deficiencies that resulted in a material weakness related to revenue recognition, the Company may determine that additional measures or time are required to address the issues fully, or that the Company will need to modify or otherwise adjust the remedial actions described above.

The actions that Management is taking are subject to ongoing Management review, as well as Audit Committee oversight. Management will continue to assess the effectiveness of the Company’s internal control over financial reporting and take steps to remediate the known material weakness expeditiously.

### Changes in Internal Control Over Financial Reporting

There have been no changes in our internal control over financial reporting during the quarter ended June 30, 2025 that materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.

## Risk factors

As filed, 3,606 characters.

### Risk Factors

In addition to the other information set forth in this Quarterly Report on Form 10-Q, you should carefully consider the risks and uncertainties relating to the Company’s business disclosed in Part I, Item 1A, “Risk Factors,” in the Company’s Annual Report on Form 10-K for the fiscal year ended December 31, 2024. Except as described below, there have been no material changes from the risk factors previously disclosed in our Annual Report on Form 10-K. Additional risks that we are not yet aware of or that we currently believe are immaterial may also impair our business operations.

***The loss or transition of key members of senior management or key employees, or our inability to attract and retain qualified personnel, could adversely affect our business***

Our success depends in part, on our ability to retain our key personnel. The loss of any of our key personnel could have an adverse effect on our business. There have been, and from time to time, there may continue to be, changes in our management team resulting from the hiring or departure of executive and key employees, or the transition of executives within our business, which could disrupt our business. For example, during 2024 and thus far in 2025, we had turnover in key positions, including our Former CEO and former Chief Financial Officer (“Former CFO”). In April 2024, we completed a CEO transition, and effective May 14, 2025, our Former CFO resigned and the Company initiated a search process of internal and external candidates with the assistance of an executive search firm to identify the Company’s next CFO. Effective June 5, 2025, the Company appointed Thomas James Cimino as the Company’s Interim CFO. We may not be able to identify a new CFO before the end of Mr. Cimino’s term as Interim CFO.

Management transitions may create uncertainty and involve a diversion of resources and management attention, be disruptive to our daily operations or impact public or market perception, any of which could negatively impact our ability to operate effectively or execute our strategies and result in a material adverse impact on our business, financial condition, results of operations or cash flows. Additionally, if we do not successfully manage transitions in our executive team, including our need to transition to a new CFO, it could be viewed negatively by our customers, employees or investors and negatively affect our business, financial condition and operating results, as well as our ability to execute our business strategies. With the recent changes in leadership, there also is a risk to retention of other members of senior management, as well as to continuity of business initiatives, plans, and strategies through the transition period and if we are unable to execute an orderly transition, our business may be adversely affected.

Our success also depends, in part, on our continuing ability to identify, hire, attract, train, develop and retain other highly qualified personnel. Experienced and highly skilled employees are in high demand and competition for these employees can be intense, and our ability to hire, attract and retain them depends on our ability to provide competitive compensation. We may not be able to attract, assimilate, develop or retain qualified personnel in the future, and our failure to do so could adversely affect our business, including the execution of our global business strategy. Any failure by management and our employees to perform as expected may have a material adverse effect on our business, prospects, financial condition and operating results.

Filed Aug 12, 2025.
Source: SEC EDGAR, the filing index for accession 0001628280-25-039904. Last ingested by Listed: Oct 30, 2026, 17:41 ET. No prices; not investment advice.