Zeo Energy Corp. Commitments Disclosure
NOTE 15—COMMITMENTS AND CONTINGENCIES
Workmanship and Warranties
The Company typically provides workmanship warranties for solar energy systems installed for customers for periods ranging from one to ten years against defects in design and workmanship and that installations will remain watertight. The manufacturers’ warranties on solar energy system components are generally passed through to customers and typically include product warranty periods ranging from 10 to 20 years and limited performance warranties of up to 25 years.
Based on historical experience, the Company has not incurred significant warranty costs associated with these obligations. Accordingly, no warranty reserve was recorded as of December 31, 2025 and 2024. The Company continues to evaluate warranty claims on an ongoing basis and may, at its discretion, provide reimbursements to customers if certain solar equipment does not operate as intended.
Litigation
From time to time, the Company may be involved in various claims, lawsuits, and legal proceedings arising in the ordinary course of business. The Company records a liability for loss contingencies when it is probable that a loss has been incurred and the amount of the loss can be reasonably estimated in accordance with ASC 450.
As of December 31, 2025 and 2024, the Company was not aware of any pending or threatened legal proceedings that it believes would have a material adverse effect on the Company’s consolidated financial position, results of operations, or cash flows. Legal costs associated with loss contingencies are expensed as incurred.
Historical Timeline
| Fiscal Year | Filed | |
|---|---|---|
| 2025 | Apr 1, 2026 | Showing above |
| 2024 | May 28, 2025 | |
| 2023 | Mar 25, 2024 | |
| 2022 | Mar 31, 2023 | |
| 2021 | Apr 1, 2022 | |
About Commitments Disclosures
Commitments and contingencies disclosures catalog a company's off-balance-sheet obligations and legal exposures — purchase commitments, guarantee arrangements, pending litigation, and regulatory proceedings. These items represent potential future cash outflows that may not appear as liabilities on the balance sheet until they become probable and estimable.
Key signals: litigation reserves and disclosed loss ranges quantify management's estimate of legal exposure, but unquantified "reasonably possible" losses often represent the larger risk. Watch for changes in language around pending cases — shifts from "remote" to "reasonably possible" or increases in estimated loss ranges signal deteriorating outcomes. Unconditional purchase obligations and take-or-pay contracts create fixed cost structures that reduce operational flexibility. Guarantee arrangements for subsidiaries or joint ventures can create cascading obligations. Compare the total commitment schedule against projected free cash flow to assess whether the company can meet its obligations without additional financing.