Spruce Power (NYSE: SPRU) narrows Q1 loss but flags going concern risk
Filing Impact
Filing Sentiment
Form Type
10-Q
Spruce Power Holding Corporation reported a smaller net loss but raised serious liquidity concerns. For the three months ended March 31, 2026, revenue was $23.4 million, roughly flat with $23.8 million a year earlier, while net loss attributable to stockholders improved to $2.9 million from $15.3 million, or $0.16 per share versus $0.84.
The loss narrowed mainly through lower operations and maintenance costs, reduced selling, general and administrative expenses, and a favorable $0.8 million change in the fair value of interest rate swaps compared with a $6.2 million loss in 2025. Cash and cash equivalents were $50.0 million with $35.6 million of restricted cash, against $668.3 million of non-recourse debt (principal $687.3 million).
The company discloses that upcoming maturities on its SP1 Facility, due October 30, 2026 (or January 30, 2027 if a long-term financing term sheet is signed), and its SP2 Facility, due May 14, 2027, create substantial doubt about its ability to continue as a going concern. Management plans to refinance these facilities and has begun lender discussions, but there is no committed refinancing, and failure could lead to foreclosure on collateral and a cross-default under another non-recourse credit agreement.
Positive
- None.
Negative
- Going concern uncertainty: Management concludes that upcoming SP1 and SP2 non-recourse maturities, negative working capital of $119.7 million, recurring losses and negative operating cash flows create substantial doubt about the company’s ability to continue as a going concern.
Insights
Improved quarterly loss, but going concern doubt driven by looming non-recourse maturities.
Spruce Power generated $23.4 million in Q1 2026 revenue, essentially flat year over year, but cut its net loss attributable to stockholders to $2.9 million from $15.3 million. Cost discipline is evident in sharply lower operations and maintenance and selling, general and administrative expenses, and in a swing to a $0.8 million gain on interest rate swaps versus a $6.2 million loss.
However, the balance sheet is highly leveraged, with total assets of $824.4 million and non-recourse debt carrying value of $668.3 million (principal $687.3 million). Management highlights that the SP1 Facility, maturing on October 30, 2026 (or January 30, 2027 upon a qualifying term sheet), and the SP2 Facility, maturing on May 14, 2027, are within 12 months of the financial statement issuance date and are not yet refinanced.
The company reports negative working capital of $119.7 million driven by the current classification of SP1 and acknowledges recurring net losses and negative operating cash flows. Together, these factors lead management to conclude there is “substantial doubt” about its ability to continue as a going concern. While preliminary lender discussions are underway, the filing notes there is no assurance of acceptable refinancing terms, and an uncured default on SP1 could trigger a cross-default on the Second Key Bank credit agreement, amplifying refinancing execution risk.
Key Figures
Q1 2026 revenue: $23.4 million
Q1 2026 net loss attributable to stockholders: $2.9 million
Net loss per share: $0.16 per share
+5 more
8 metrics
Q1 2026 revenue
$23.4 million
Three months ended March 31, 2026
Q1 2026 net loss attributable to stockholders
$2.9 million
Versus $15.3 million in Q1 2025
Net loss per share
$0.16 per share
Basic and diluted, Q1 2026; $0.84 in Q1 2025
Cash and restricted cash
$85.6 million
Cash $50.0M and restricted cash $35.6M as of March 31, 2026
Non-recourse debt carrying value
$668.3 million
As of March 31, 2026; principal $687.3 million
Total assets
$824.4 million
Consolidated balance sheet as of March 31, 2026
Stockholders’ equity
$116.9 million
Common equity as of March 31, 2026
Negative working capital
$119.7 million
As of March 31, 2026, driven by SP1 current classification
Key Terms
going concern, non-recourse debt, variable interest entities, interest rate swaps, +2 more
6 terms
going concern financial
"these conditions raise substantial doubt about the Company’s ability to continue as a going concern"
A going concern is a business that is expected to continue its operations and meet its obligations for the foreseeable future, rather than shutting down or selling off assets. This assumption matters to investors because it indicates stability and ongoing profitability, making the business a more reliable investment. Think of it as believing a restaurant will stay open and serve customers, rather than closing down suddenly.
non-recourse debt financial
"The Company’s debt obligations under the SP1 Facility and SP2 Facility are non-recourse to the Company"
A non-recourse debt is a loan where the lender can seize only the specific asset pledged as security (for example, a building or equipment) if the borrower defaults, and cannot pursue the borrower’s other assets or income. Investors care because this limits how much downside the borrower’s other holdings absorb and changes who bears loss in trouble: lenders face higher recovery risk while equity holders can be wiped out more easily, affecting valuation and risk assessment.
variable interest entities financial
"The Company’s consolidated assets include $34.3 million of assets from consolidated variable interest entities"
A variable interest entity (VIE) is a business that a company controls through contracts or special arrangements instead of owning a majority of its shares, like steering a puppet without holding its ticket. Investors care because these arrangements can hide who really bears the financial risks and rewards, affect how assets and liabilities appear on financial statements, and create extra legal or enforcement uncertainty that can change the value and risk of an investment.
interest rate swaps financial
"Change in fair value of interest rate swaps | ( 800 ) | 6,237"
A contract between two parties to exchange streams of interest payments, typically swapping a fixed-rate payment for a floating-rate payment or vice versa. Think of it like two neighbors agreeing to trade the type of mortgage payments they make to reduce uncertainty or take advantage of expected rate moves; investors care because swaps change a company’s borrowing costs and risk exposure, which can materially affect cash flow, creditworthiness, and valuation.
performance-based incentives financial
"Performance-based incentives | 332 | 68"
SP1 Facility financial
"the Company entered into the SP1 Facility Amendment, as defined below, to extend the maturity of this facility to October 30, 2026"
Table of Contents
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
___________________________________
(Mark One)
FOR THE QUARTERLY PERIOD ENDED MARCH 31, 2026
OR
FOR THE TRANSITION PERIOD FROM _________ TO _________
Commission File Number: 001-38971
(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: (866) 777-8235
___________________________________
Securities registered pursuant to Section 12(b) of the Act:
| Title of Each Class: | Trading Symbol(s) | Name of Each Exchange on Which Registered: | ||||||||||||
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 x No o
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). Yes x No o
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 | o | Accelerated filer | o | ||||||||
| x | 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. o
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes o No x
As of May 7, 2026, 18,369,300 shares of the registrant’s common stock, $0.0001 par value, were outstanding.
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TABLE OF CONTENTS
| PAGE | ||||||||
PART I - FINANCIAL INFORMATION | ||||||||
Item 1. | Financial Statements | 5 | ||||||
Condensed Consolidated Balance Sheets as of March 31, 2026 and December 31, 2025 (unaudited) | 5 | |||||||
Condensed Consolidated Statements of Operations for the Three Months Ended March 31, 2026 and 2025 (unaudited) | 7 | |||||||
Condensed Consolidated Statements of Changes in Stockholders’ Equity and Noncontrolling Interests for the Three Months Ended March 31, 2026 and 2025 (unaudited) | 8 | |||||||
Condensed Consolidated Statements of Cash Flows for the Three Months Ended March 31, 2026 and 2025 (unaudited) | 9 | |||||||
Notes to Unaudited Condensed Consolidated Financial Statements | 10 | |||||||
Item 2. | Management’s Discussion and Analysis of Financial Condition and Results of Operations | 32 | ||||||
Item 3. | Quantitative and Qualitative Disclosures About Market Risk | 39 | ||||||
Item 4. | Controls and Procedures | 40 | ||||||
PART II- OTHER INFORMATION | ||||||||
Item 1. | Legal Proceedings | 41 | ||||||
Item 1A. | Risk Factors | 41 | ||||||
Item 2. | Unregistered Sales of Equity Securities and Use of Proceeds | 41 | ||||||
Item 3. | Defaults Upon Senior Securities | 42 | ||||||
Item 4. | Mine Safety Disclosures | 42 | ||||||
Item 5. | Other Information | 43 | ||||||
Item 6. | Exhibits | 44 | ||||||
SIGNATURES | 46 | |||||||
CAUTIONARY NOTE REGARDING FORWARD LOOKING STATEMENTS
This Quarterly Report on Form 10-Q includes forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995 that relate to future events or our future financial performance including, but not limited to, statements regarding our plans, strategies and prospects, both business and financial, our growth plans, future financial and operating results, costs and expenses, our ability to continue as a going concern and to repay or refinance our debt prior to the applicable maturity date, the outcome of contingencies, financial condition, results of operations, liquidity, our ability to continue as a going concern, cost savings, business strategies, and other statements that are not historical facts. Forward-looking statements generally are characterized by the use of certain words or phrases (and their derivatives) such as “anticipate,” “believe,” “could,” “expect,” “intend,” “may,” “opportunity,” “plan,” “goals,” “target” “predict,” “potential,” “estimate,” “should,” “will,” “would,” “continue,” “likely,” and similar expressions that predict or indicate future events or trends or that are not statements of historical matters. These statements are based upon our current plans and strategies, management’s assumptions and expectations about future events, and market conditions, and reflect our current assessment of the risks and uncertainties related to our business and are made as of the date of this report. There can be no assurance that actual future results, performance or achievements of, or trends affecting, us will not differ materially from any future results, performance, achievements or trends expressed or implied by such forward-looking statements. Forward-looking statements are subject to a number of risks and uncertainties that could cause actual results to differ materially from historical results or the forward-looking statements contained herein, including but not limited to:
•Uncertainties relating to the solar energy industry and the risk that sufficient additional demand for home solar energy systems may not develop or take longer to develop than we anticipate.
•Disruptions to our solar monitoring systems could negatively impact our revenues and increase our expenses.
•Warranties provided by the manufacturers of equipment for our assets and maintenance obligations may be inadequate to protect us.
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•The solar energy systems we own or may acquire may have a limited operating history and may not perform as we expect, including as a result of unsuitable solar and meteorological conditions.
•Problems with performance of our solar energy systems may cause us to incur expenses, may lower the value of our solar energy systems, and may damage our market reputation.
•Developments in technology or improvements in distributed solar energy generation and related technologies or components may materially adversely affect demand for our offerings.
•We could be harmed by a material reduction in the retail price of traditional utility generated electricity, electricity from other sources or renewable energy credits.
•We may fail to manage our growth effectively, grow by expanding our market penetration, or execute and consummate business plans in anticipated time frames.
•We may not be able to identify strategic acquisition or strategic relationship opportunities, we may not be able to complete strategic acquisitions or strategic relationships, or we may experience difficulties in integrating strategic acquisitions.
•We may not be able to develop and market new products and services.
•We may require additional financing to support the development of our business and implementation of our growth strategy.
•We are subject to risks relating to our outstanding debt, including risks relating to rising interest rates, the risk that we may not have sufficient cash flow to pay our debt, the risk that we may not maintain compliance with financial or other covenants relating to our outstanding debt, and the risk that we may not be able to continue as a going concern if we are unable to repay or refinance our debt prior to the applicable maturity dates.
•We may be adversely affected by the impact of natural disasters and other events beyond our control, such as hurricanes, wildfires, or pandemics.
•We are subject to cybersecurity risks.
•We are subject to risks relating to general economic, financial, legal, political, and business conditions and changes in domestic and foreign markets.
•Governmental investigations, litigation, complaints, other claims, or adverse publicity may cause us to incur significant expense, hinder execution of business and growth strategy, harm our reputation or impact the price of our common stock.
•Changes in tax laws may materially adversely affect our business, prospects, financial condition, and operating results.
•Our ability to use net operating loss carryforwards and other tax attributes may be limited in connection with business combinations or other ownership changes.
•We are subject to risks associated with construction, regulatory compliance, risks relating to changes in, and our compliance with, laws and regulations affecting our business, and other contingencies.
•Violations of export control and/or economic sanctions laws and regulations to which we are subject could have a material adverse effect on our business operations, financial position, and results of operations.
•Our insurance coverage may not be adequate to protect us from all business risks.
•We face competition from traditional energy companies as well as solar and other renewable energy companies.
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These and other factors that could cause actual results to differ from those implied by the forward-looking statements in this Quarterly Report on Form 10-Q are more fully described in Part II, Item 1A under the heading “Risk Factors” and elsewhere in this Quarterly Report on Form 10-Q and in Part I, Item 1A under the heading “Risk Factors”, within our Annual Report on Form 10-K for the year ended December 31, 2025, filed with the U.S. Securities and Exchange Commission (the “SEC”) on March 31, 2026 (the “Annual Report”). These factors are not exhaustive. Other sections of this Quarterly Report on Form 10-Q, such as Management’s Discussion and Analysis of Financial Condition and Results of Operations set forth in Item 2 describe additional factors that could adversely affect the business, financial condition or results of operations of the Company and its consolidated subsidiaries. New risk factors emerge from time to time, and it is not possible to predict all such risk factors, nor can the Company assess the impact of all such risk factors on its business or the extent to which any factor or combination of factors may cause actual results to differ materially from those contained in any forward-looking statements. Forward-looking statements are not guarantees of performance. You should not put undue reliance on these statements, which speak only as of the date hereof. All forward-looking statements attributable to the Company or persons acting on its behalf are expressly qualified in their entirety by the foregoing cautionary statements. The Company undertakes no obligation to update or revise publicly any forward-looking statements, whether as a result of new information, future events or otherwise, except as required by law.
This report includes certain registered trademarks, including trademarks that are the property of Spruce Power and its affiliates. This report also includes other trademarks, service marks, and trade names owned by Spruce Power or other persons. All trademarks, service marks, and traded names included herein are the property of their respective owners. Use or display by us of other parties’ trademarks, trade dress, or products in this report is not intended to, and does not, imply a relationship with, or endorsements or sponsorship of, us by the trademark or trade dress owners.
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Part I - Financial Information
Item 1. Financial Statements
Spruce Power Holding Corporation
Condensed Consolidated Balance Sheets (Unaudited)
| As of | ||||||||||||||
| (In thousands, except share and per share amounts) | March 31, 2026 | December 31, 2025 | ||||||||||||
| Assets | ||||||||||||||
| Current assets | ||||||||||||||
| Cash and cash equivalents | $ | $ | ||||||||||||
| Restricted cash | ||||||||||||||
Accounts receivable, net of allowance for credit losses of $ | ||||||||||||||
| Interest rate swap assets, current | ||||||||||||||
| Prepaid expenses and other current assets | ||||||||||||||
| Total current assets | ||||||||||||||
| Investment related to SEMTH master lease agreement | ||||||||||||||
| Property and equipment, net | ||||||||||||||
| Interest rate swap assets, non-current | ||||||||||||||
| Intangible assets, net | ||||||||||||||
| Deferred rent assets | ||||||||||||||
| Right-of-use assets, net | ||||||||||||||
| Other assets | ||||||||||||||
Total assets1 | $ | $ | ||||||||||||
| Liabilities, stockholders’ equity and noncontrolling interests | ||||||||||||||
| Current liabilities | ||||||||||||||
| Accounts payable | $ | $ | ||||||||||||
| Accrued expenses and other current liabilities | ||||||||||||||
| Non-recourse debt, current | ||||||||||||||
| Deferred revenue, current | ||||||||||||||
| Lease liability, current | ||||||||||||||
| Interest rate swap liabilities, current | ||||||||||||||
| Total current liabilities | ||||||||||||||
| Non-recourse debt, non-current | ||||||||||||||
| Deferred revenue, non-current | ||||||||||||||
| Lease liability, non-current | ||||||||||||||
| Unfavorable solar renewable energy agreements, net | ||||||||||||||
| Interest rate swap liabilities, non-current | ||||||||||||||
| Other long-term liabilities | ||||||||||||||
Total liabilities2 | ||||||||||||||
Commitments and contingencies (Note 12) | ||||||||||||||
| Stockholders’ equity: | ||||||||||||||
Common stock, $ | ||||||||||||||
| Additional paid-in capital | ||||||||||||||
| Accumulated deficit | ( | ( | ||||||||||||
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Treasury stock at cost, | ( | ( | ||||||||||||
| Total stockholders’ equity | ||||||||||||||
| Noncontrolling interests | ||||||||||||||
| Total equity | ||||||||||||||
| Total liabilities, stockholders’ equity and noncontrolling interests | $ | $ | ||||||||||||
See Notes to Unaudited Condensed Consolidated Financial Statements.
(1) The Company’s consolidated assets include $34.3 million of assets from consolidated variable interest entities (“VIEs”) as of March 31, 2026 that can only be used to settle obligations of VIEs, see Note 11 Noncontrolling Interests.
(2) The Company’s consolidated liabilities include $1.7 million of liabilities from consolidated variable interest entities (“VIEs”) as of March 31, 2026, for which creditors do not have recourse to the general credit of the Company, see Note 11 Noncontrolling Interests .
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Spruce Power Holding Corporation
Condensed Consolidated Statements of Operations (Unaudited)
| Three Months Ended March 31, | ||||||||||||||||||||||||||
| (In thousands, except per share and share amounts) | 2026 | 2025 | ||||||||||||||||||||||||
| Revenues | $ | $ | ||||||||||||||||||||||||
| Operating expenses: | ||||||||||||||||||||||||||
| Cost of revenues - solar energy systems depreciation | ||||||||||||||||||||||||||
| Cost of revenues - operations and maintenance | ||||||||||||||||||||||||||
| Selling, general and administrative expenses | ||||||||||||||||||||||||||
| Gain on asset disposal, net | ( | ( | ||||||||||||||||||||||||
| Total operating expenses | ||||||||||||||||||||||||||
| Income (loss) from operations | ( | |||||||||||||||||||||||||
| Other (income) expense: | ||||||||||||||||||||||||||
| Interest income | ( | ( | ||||||||||||||||||||||||
| Interest expense, net | ||||||||||||||||||||||||||
| Change in fair value of interest rate swaps | ( | |||||||||||||||||||||||||
| Other expense (income) | ( | |||||||||||||||||||||||||
| Net loss | ( | ( | ||||||||||||||||||||||||
| Less: Net income attributable to noncontrolling interests | ||||||||||||||||||||||||||
| Net loss attributable to stockholders | $ | ( | $ | ( | ||||||||||||||||||||||
| Net loss per share, basic and diluted | $ | ( | $ | ( | ||||||||||||||||||||||
| Net loss attributable to stockholders per share, basic and diluted | $ | ( | $ | ( | ||||||||||||||||||||||
| Weighted-average shares outstanding, basic and diluted | ||||||||||||||||||||||||||
See Notes to Unaudited Condensed Consolidated Financial Statements.
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Spruce Power Holding Corporation
Condensed Consolidated Statements of Changes in Stockholders’ Equity and Noncontrolling Interests (Unaudited)
| Three Months Ended March 31, 2026 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Common Stock | Additional Paid-In Capital | Accumulated Deficit | Treasury Stock | Total Stockholder's Equity | Noncontrolling Interests | Total Equity | ||||||||||||||||||||||||||||||||||||||||||||||||||
| (In thousands, except share data) | Shares | Amount | Shares | Amount | ||||||||||||||||||||||||||||||||||||||||||||||||||||
| Balance at December 31, 2025 | $ | $ | $ | ( | $ | ( | $ | $ | $ | |||||||||||||||||||||||||||||||||||||||||||||||
| Capital distributions to noncontrolling interests | — | — | — | — | — | — | — | ( | ( | |||||||||||||||||||||||||||||||||||||||||||||||
| Stock-based compensation expense, net | — | — | — | — | — | — | ||||||||||||||||||||||||||||||||||||||||||||||||||
| Net income (loss) | — | — | — | ( | — | — | ( | ( | ||||||||||||||||||||||||||||||||||||||||||||||||
| Balance at March 31, 2026 | $ | $ | $ | ( | $ | ( | $ | $ | $ | |||||||||||||||||||||||||||||||||||||||||||||||
| Three Months Ended March 31, 2025 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Common Stock | Additional Paid-in Capital | Accumulated Deficit | Treasury Stock | Total Stockholder's Equity | Noncontrolling Interests | Total Equity | ||||||||||||||||||||||||||||||||||||||||||||||||||
| (In thousands, except share data) | Shares | Amount | Shares | Amount | ||||||||||||||||||||||||||||||||||||||||||||||||||||
| Balance at December 31, 2024 | $ | $ | $ | ( | $ | ( | $ | $ | $ | |||||||||||||||||||||||||||||||||||||||||||||||
| Issuance of restricted stock | — | — | — | — | — | — | — | — | ||||||||||||||||||||||||||||||||||||||||||||||||
| Share Repurchases | — | — | — | — | ( | ( | — | ( | ||||||||||||||||||||||||||||||||||||||||||||||||
| Capital distributions to noncontrolling interests | — | — | — | — | — | — | — | ( | ( | |||||||||||||||||||||||||||||||||||||||||||||||
| Stock-based compensation expense, net | — | — | — | — | — | — | ||||||||||||||||||||||||||||||||||||||||||||||||||
| Net income (loss) | — | — | — | ( | — | — | ( | ( | ||||||||||||||||||||||||||||||||||||||||||||||||
| Balance at March 31, 2025 | $ | $ | $ | ( | $ | ( | $ | $ | $ | |||||||||||||||||||||||||||||||||||||||||||||||
See Notes to Unaudited Condensed Consolidated Financial Statements.
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Spruce Power Holding Corporation
Condensed Consolidated Statements of Cash Flows (Unaudited)
| Three Months Ended March 31, | ||||||||||||||
| (In thousands) | 2026 | 2025 | ||||||||||||
| Operating activities: | ||||||||||||||
| Net loss | $ | ( | $ | ( | ||||||||||
| Adjustments to reconcile net loss to net cash used in operating activities: | ||||||||||||||
| Stock-based compensation, net | ||||||||||||||
| Bad debt expense | ||||||||||||||
| Amortization of deferred revenue | ( | ( | ||||||||||||
Depreciation and amortization expense | ||||||||||||||
Amortization related to unfavorable solar renewable energy agreements | ( | ( | ||||||||||||
| Accretion expense | ||||||||||||||
| Change in fair value of interest rate swaps | ( | |||||||||||||
| Interest income related to SEMTH master lease agreement | ( | ( | ||||||||||||
| Gain on disposal of assets | ( | ( | ||||||||||||
| Change in operating right-of-use assets and lease liability | ( | ( | ||||||||||||
| Amortization of debt discount and deferred financing costs | ||||||||||||||
| Changes in operating assets and liabilities: | ||||||||||||||
| Accounts receivable, net | ( | ( | ||||||||||||
| Deferred rent assets | ( | ( | ||||||||||||
| Prepaid expenses and other current assets | ||||||||||||||
| Other assets | ( | |||||||||||||
| Accounts payable | ( | ( | ||||||||||||
| Accrued expenses and other current liabilities | ( | ( | ||||||||||||
| Other long-term liabilities | ( | |||||||||||||
| Deferred revenue | ||||||||||||||
Net cash used in operating activities | ( | ( | ||||||||||||
| Investing activities: | ||||||||||||||
| Proceeds from sale of solar energy systems | ||||||||||||||
| Proceeds from investment related to SEMTH master lease agreement | ||||||||||||||
| Cash paid for acquisitions | ( | |||||||||||||
| Purchases of other property and equipment | ( | |||||||||||||
| Net cash provided by investing activities | ||||||||||||||
| Financing activities: | ||||||||||||||
| Payment of deferred financing costs | ( | |||||||||||||
| Repayments of non-recourse debt | ( | ( | ||||||||||||
| Share repurchases | ( | |||||||||||||
| Capital distributions to noncontrolling interests | ( | ( | ||||||||||||
Net cash used in financing activities | ( | ( | ||||||||||||
| Net change in cash and cash equivalents and restricted cash: | ( | ( | ||||||||||||
| Cash and cash equivalents and restricted cash, beginning of period | ||||||||||||||
| Cash and cash equivalents and restricted cash, end of period | $ | $ | ||||||||||||
| Supplemental disclosure of cash flow information: | ||||||||||||||
| Cash paid for interest | $ | $ | ||||||||||||
See Notes to Unaudited Condensed Consolidated Financial Statements.
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Spruce Power Holding Corporation
Notes to Unaudited Condensed Consolidated Financial Statements | ||
Note 1. Organization and Description of Business
Description of Business
Spruce Power Holding Corporation and its subsidiaries (“Spruce Power” or the “Company”) is a leading owner and operator of distributed solar energy assets across the U.S., offering subscription-based services to approximately 84,000 home solar assets and customer contracts, making renewable energy more accessible to everyone. The Company is engaged in the ownership and maintenance of home solar energy systems for homeowners in the U.S.
The Company’s primary customers are homeowners and its core solar service offerings to these customers generate revenues primarily through (i) the sale of electricity generated by its home solar energy systems to homeowners pursuant to long-term Customer Agreements as defined below, which require the homeowners to make recurring monthly payments, (ii) third-party contracts to sell solar renewable energy credits (“SRECs”) generated by the Company’s home solar energy systems for contracted prices, and (iii) the servicing of third-party owned solar energy systems through the Company’s Spruce Pro servicing platform, which is contracted to offer portfolio managed services to third-party owners, as well as to the Company’s portfolio of home solar energy systems (the “Portfolio”). These portfolio managed services include (a) billing and collections/asset recovery, (b) account support services, (c) financial asset management, (d) homeowner support and servicing technology, (e) asset operations, and (f) transaction and execution services related to SRECs.
In addition to the Company’s core solar service offerings, the Company generates cash flows and earns interest income from customer contracts related to a master lease agreement, which is referred to in these condensed consolidated financial statements as the “SEMTH Master Lease”.
The Company holds subsidiary fund companies, defined below as the Funds, that own and operate the Company’s portfolio of home solar energy systems, which are subject to solar lease agreements (“SLAs”) and power purchase agreements (“PPAs”, together with the SLAs, “Customer Agreements”) with residential customers who benefit from the production of electricity generated by the Company’s portfolio of home solar energy systems, which may qualify for subsidies, renewable energy credits and other incentives as provided by the federal government and various states and local agencies. These benefits have generally been retained by the Company's subsidiaries that own the systems, with the exception of the investment tax credit (“ITCs”) under Section 48 of the Internal Revenue Code, as amended (the “IRC”), which were generally passed through to the various financing partners of the solar energy systems.
Going Concern
These condensed consolidated financial statements have been prepared in accordance with U.S. generally accepted accounting principles (GAAP) assuming the Company will continue as a going concern.
The Company’s debt obligations under the SP1 Facility and SP2 Facility are non-recourse to the Company (see Note 7. Non-Recourse Debt). With regards to the SP1 Facility, on March 27, 2026, the Company entered into the SP1 Facility Amendment, as defined below, to extend the maturity of this facility to October 30, 2026 (the “Amended SP1 Maturity Date”), unless a signed term sheet for a long-term financing is obtained, in which case the extended maturity date will be January 30, 2027. With regards to the SP2 Facility, the maturity date is May 14, 2027 (the “SP2 Maturity Date”), see Note 7. Because (i) the Amended SP1 Maturity Date and the SP2 Maturity Date are within twelve months from the date the accompanying unaudited condensed consolidated financial statements are issued, (ii) the Company has not yet entered into a commitment to refinance the SP1 or SP2 Facility, (iii) the Company has determined that it is unlikely to have sufficient cash on hand or proceeds from currently available liquidity sources to satisfy the SP1 Facility at the Amended SP1 Maturity Date or the SP2 Facility at the SP2 Maturity Date, (iv) the Company had negative working capital of $119.7 million as of March 31, 2026 solely due to the current maturity of the SP1 Facility at that date, and (v) the Company has experienced recurring net losses and negative cash flows from operations for the three months ended March 31, 2026 and 2025, these conditions raise substantial doubt about the Company’s ability to continue as a going concern. Our condensed consolidated financial statements do not include any adjustments that may result from the outcome of this uncertainty.
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Notes to Unaudited Condensed Consolidated Financial Statements | ||
The Company plans to refinance the SP1 Facility prior to the Amended SP1 Maturity Date and the SP2 Facility prior to the SP2 Maturity Date consistent with the Company’s historical financing strategy for investing in solar assets on a leveraged basis. The Company has commenced preliminary discussions with potential lenders with respect to the SP1 Facility, which are currently being reviewed by management. The Company’s management believes that such refinancing will be completed prior to the Amended SP1 Maturity Date. However, the Company can offer no assurances it will be able to obtain financing at acceptable terms or at all. Therefore, the Company has concluded that there is substantial doubt about its ability to continue as a going concern. Should the Company be unsuccessful in refinancing the SP1 Facility or the SP2 Facility, this could result in a foreclosure of collateral and negatively impact operations. Further, an event of default on the SP1 Facility, if not cured in the permittable time allowed under the agreement, would result in a cross default on the Second Key Bank Credit Agreement, which is also non-recourse.
Note 2. Summary of Significant Accounting Policies
Basis of unaudited condensed consolidated financial statement presentation
The accompanying unaudited condensed consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the U.S. (“U.S. GAAP”) for interim financial information and Article 8 of Regulation S-X. The accompanying unaudited condensed consolidated balance sheet as of March 31, 2026 has been derived from the Company’s audited condensed consolidated financial statements included in the Annual Report. The Company has condensed or omitted certain information and note disclosures normally included in the financial statements prepared in accordance with GAAP pursuant to the applicable rules and regulations of the Securities and Exchange Commission (“SEC”) regarding interim financial reporting. As such, these interim unaudited condensed consolidated financial statements should be read in conjunction with the Company’s annual audited consolidated financial statements and accompanying notes included in its Annual Report.
The Company’s interim unaudited condensed consolidated financial statements reflect all normal and recurring adjustments and material adjustments for nonrecurring transactions and events necessary, in its opinion, to state fairly the financial position and results of operations for the reported periods. Amounts reported for interim periods may not be indicative of a full year period due to the Company’s continual growth, seasonal fluctuations in demand for power, timing of maintenance and other expenditures, changes in interest expense and other factors.
The Company's accompanying unaudited condensed consolidated financial statements include the accounts of its wholly owned subsidiaries and two controlled variable interest entities (“VIEs”), for which the Company is the primary beneficiary. All intercompany transactions and balances have been eliminated in consolidation. Certain prior period amounts have been reclassified to conform to the Company’s presentation as of and for the quarter ended March 31, 2026, and such reclassifications had no effect on the Company’s previously reported financial position, results of operations, or cash flows.
Use of estimates
The preparation of financial statements in conformity with U.S. GAAP requires management to make certain estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities as of the balance sheet date, as well as reported amounts of income and expenses during the reporting period. The Company’s most significant estimates and judgments involve (i) valuation allowance on deferred income taxes, (ii) valuation of stock-based compensation, (iii) the useful lives of certain assets and liabilities, including property and equipment, and intangible assets, (iv) the allowance for credit losses, (v) asset retirement obligations, (vi) relative fair value of asset acquisitions,
(vii) the fair value estimates of long-lived assets in impairment analysis, (viii) valuation models used in determining future principal debt amortization on certain credit facilities, (ix) future cash flows for the SEMTH Master Lease, and (x) fair value of interest rate swaps. Management bases its estimates on historical experience and on various other assumptions believed to be reasonable, the results of which form the basis for making judgments about the carrying values of assets and liabilities. Actual results could differ from those estimates, and such differences could be material to the Company’s financial statements.
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Notes to Unaudited Condensed Consolidated Financial Statements | ||
Discontinued Operations
Variable interest entities
The Company consolidates any VIE of which it is the primary beneficiary. The Company formed or acquired VIEs which are partially funded by tax equity investors in order to facilitate the funding and monetization of certain attributes associated with solar energy systems. The typical condition for a controlling financial interest ownership is holding a majority of the voting interests of an entity; however, a controlling financial interest may also exist in entities, such as VIEs, through arrangements that do not involve controlling voting interests. A variable interest holder is required to consolidate a VIE if that party has the power to direct the activities of the VIE that most significantly impact the VIE's economic performance and the obligation to absorb losses of the VIE that could potentially be significant to the VIE or the right to receive benefits from the VIE that could potentially be significant to the VIE. The Company does not consolidate a VIE in which it has a majority ownership interest when the Company is not considered the primary beneficiary. The Company evaluates its relationships with the VIEs on an ongoing basis to determine if it is the primary beneficiary.
The Company’s initial investments in Volta Solar Owner II, LLC and ORE F4 HoldCo, LLC (collectively, the “Funds”) were determined to be variable interests in VIEs and remained as such as of March 31, 2026 and December 31, 2025.
Cash and cash equivalents
The Company considers all highly liquid investments with a maturity of three months or less at the time of purchase to be cash equivalents. Cash and cash equivalents include cash held in banks, and money market accounts. Cash equivalents are carried at cost, which approximates fair value due to their short-term nature. The Company’s cash and cash equivalents are placed with large financial institutions, and at times exceed federally insured limits. To date, the Company has not experienced any credit loss relating to its cash and cash equivalents.
Concentration of credit risks and revenue
Financial instruments which potentially subject the Company to concentrations of credit risk consist of cash, cash equivalents and accounts receivables, net. At times, the Company may hold cash balances at a single bank in excess of the Federal Deposit Insurance Corporation deposit insurance limit of $250,000. At March 31, 2026 and December 31, 2025, the Company had cash in excess of the federal deposit insurance limit. The Company believes it is not exposed to any significant credit risk on cash and cash equivalents as most of the balances are invested in treasury bills, which are government backed securities.
For the three months ended March 31, 2026, the Company had no customers that represented at least 10% of the Company’s revenues. For the three months ended March 31, 2025 the Company had one customer that represented 12 % of the Company’s revenues.
As of March 31, 2026 the Company had one customer that represented 47 % of the Company’s accounts receivable balance related to solar renewable energy credits. As of December 31, 2025 the Company had one customer receivable balance related to solar renewable energy credits that represented 41 % of the Company’s accounts receivable balance.
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Notes to Unaudited Condensed Consolidated Financial Statements | ||
Restricted cash
Restricted cash held at March 31, 2026 and December 31, 2025 of $35.6 million and $38.3 million, respectively, primarily consists of cash that is subject to restriction due to provisions in the Company's financing agreements and the operating agreements of subsidiary fund companies. The carrying amount reported in the unaudited condensed consolidated balance sheets for restricted cash approximates its fair value.
The following table provides a reconciliation of cash and cash equivalents and restricted cash to the total amounts shown within the unaudited condensed consolidated statements of cash flows for each period ended:
| Three Months Ended | |||||||||||
| (Amounts in thousands) | March 31, 2026 | March 31, 2025 | |||||||||
| Cash and cash equivalents | $ | $ | |||||||||
| Restricted cash | |||||||||||
| Total cash, cash equivalents and restricted cash | $ | $ | |||||||||
Accounts receivable, net
| As of | |||||||||||
| (Amounts in thousands) | March 31, 2026 | December 31, 2025 | |||||||||
| Balance at the beginning of the period | $ | $ | |||||||||
| Write-off of uncollectible accounts | ( | ( | |||||||||
| Provision for current expected credit losses | |||||||||||
| Balance at the end of the period | $ | $ | |||||||||
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Notes to Unaudited Condensed Consolidated Financial Statements | ||
Investment related to SEMTH Master Lease and interest income
The Company accounts for its investment related to the SEMTH, as defined below, master lease agreement in accordance with Accounting Standards Codification (“ASC”) 325-40, Investments—Other—Beneficial Interests in Securitized Financial Assets. The SEMTH Master Lease includes 20 year use rights to customer payment streams of approximately 22,500 home SLAs and PPAs. The Company recognizes accretable yield as interest income over the life of the related beneficial interest using the effective yield method, which is reflected within interest income in the unaudited condensed consolidated statements of operations in the amount of $4.3 million and $4.6 million for the three months ended March 31, 2026 and 2025, respectively. On a recurring basis, the Company evaluates changes in the cash flows expected to be collected from the cash flows previously projected, and when favorable or adverse changes are deemed other than temporary, the Company prospectively updates its expectation of cash flows to be collected, which may impact the allowance for credit losses if the cash flow change is unfavorable, and recalculates the amount of accretable yield for the related beneficial interest. Assumptions used in the development of the expected cash flows include expected cash inflows related to the market utility rates in the states where these solar assets are located and expected cash outflows associated with operating and maintenance of these solar assets.
Impairment of long-lived assets
Contingencies
When it is probable that a loss has occurred and the loss amount can be reasonably estimated, the Company records liabilities for loss contingencies. In certain cases, the Company may be covered by one or more corporate insurance policies, resulting in insurance loss recoveries. The Company records proceeds up to the amount of the loss recognized as receivable when realization of the claim for recovery is determined to be probable. When such recoveries are in excess of a loss recognized in the Company’s financial statements, the Company recognizes a gain contingency at the earlier of when the gain has been realized or when it is realizable.
Fair value measurements
The fair value of the Company’s financial assets and liabilities reflects Management’s estimate of amounts that the Company would have received in connection with the sale of the assets or paid in connection with the transfer of the liabilities in an orderly transaction between market participants at the measurement date. For assets and liabilities measured at fair value on a recurring and nonrecurring basis, a three-level hierarchy of measurements based upon observable and unobservable inputs is used to arrive at fair value. Observable inputs are developed based on market data obtained from independent sources, while unobservable inputs reflect the Company’s assumptions about valuation based on the best information available in the circumstances. Depending on the inputs, the Company classifies each fair value measurement as follows:
•Level 1: Observable inputs that reflect unadjusted quoted market prices in active markets for identical assets or liabilities that are accessible at the measurement date.
•Level 2: Observable inputs other than Level 1 prices, such as quoted market prices for similar assets or liabilities in active markets, quoted market prices in markets that are not active or other inputs that are observable or can be corroborated by observable market data for substantially the full term of the assets or liabilities.
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Notes to Unaudited Condensed Consolidated Financial Statements | ||
•Level 3: Unobservable inputs that are supported by little or no market activity and that are significant to the fair value of the assets or liabilities.
In certain cases, the inputs used to measure fair value may fall into different levels of the fair value hierarchy. In such cases, the level in the fair value hierarchy must be determined based on the lowest level input that is significant to the fair value measurement. An assessment of the significance of a particular input to the fair value measurement in its entirety requires judgment and consideration of factors specific to the asset or liability.
The Company’s financial instruments consist of cash and cash equivalents, restricted cash, accounts receivable, net, accounts payable, non-recourse debt, and interest rate swaps. The carrying value of cash and cash equivalents, restricted cash, accounts receivable, and accounts payable approximates fair value due to the short-term nature of those instruments. See Note 9. Fair Value Measurements for additional information on assets and liabilities measured at fair value.
Revenues
The Company’s revenue is derived from its home solar energy portfolio and servicing platform, which primarily generates revenue through the sale to homeowners of power generated by home solar energy systems pursuant to long-term agreements. Pursuant to ASC 606, Revenue from Contracts with Customers (“ASC 606”), issued by the Financial Accounting Standards Board (“FASB”), the Company has elected the “right to invoice” practical expedient for energy generation and servicing revenues, and revenues for the performance obligations related to energy generation and servicing revenue are recognized as services are rendered based upon the underlying contractual arrangements.
The following table presents the detail of the Company’s revenues as reflected within the unaudited condensed consolidated statements of operations for the three months ended March 31, 2026 and 2025:
| Three Months Ended March 31, | ||||||||||||||||||||||||||
| (Amounts in thousands) | 2026 | 2025 | ||||||||||||||||||||||||
| PPA revenues | $ | $ | ||||||||||||||||||||||||
| SLA revenues | ||||||||||||||||||||||||||
| Solar renewable energy credit revenues | ||||||||||||||||||||||||||
| Performance-based incentives | ||||||||||||||||||||||||||
| Servicing revenues | ||||||||||||||||||||||||||
| Intangibles amortization, unfavorable solar renewable energy revenue agreements | ||||||||||||||||||||||||||
| Other revenue | ||||||||||||||||||||||||||
| Total | $ | $ | ||||||||||||||||||||||||
Energy generation
Customers purchase solar energy from the Company under PPAs or SLAs, both defined above. Revenue is recognized from contracts with customers as performance obligations are satisfied at a transaction price reflecting an amount of consideration based upon an estimated rate of return which is expressed as the solar rate per kilowatt hour or a flat rate per month as defined in the customer contracts.
•PPA revenues - Under ASC 606, PPA revenue is recognized when generated based upon the amount of electricity delivered as determined by remote monitoring equipment at solar rates specified under the PPAs.
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Notes to Unaudited Condensed Consolidated Financial Statements | ||
•SLA revenues - The Company has SLAs, which do not meet the definition of a lease under ASC 842, Leases, and are accounted for as contracts with customers under ASC 606. Revenue is recognized on a straight-line basis over the contract term as the obligation to provide continuous access to the solar energy system is satisfied. The amount of revenue recognized may not equal customer cash payments due to the performance obligation being satisfied ahead of cash receipt or evenly as continuous access to the solar energy system has been provided. The differences between revenue recognition and cash payments received are reflected as deferred rent assets on the unaudited condensed consolidated balance sheets. The deferred rent asset balances as of December 31, 2025 and 2024, were $4.9 million and $3.7 million, respectively. Certain SLAs contain provisions to provide customers a performance guarantee that each solar energy system will achieve certain specified minimum solar energy production output. If the solar energy system does not produce the guaranteed production amount, the Company is obligated to pay a performance guarantee calculated as the product of (a) the shortfall production amount and (b) guaranteed rate per kWh as defined in the SLA.
Solar renewable energy credit revenues
The Company enters into contracts with third parties to sell SRECs generated by the solar energy systems for fixed prices. Certain contracts that meet the definition of a derivative may be exempted as normal purchase or normal sales transactions (“NPNS”). NPNS are contracts that provide for the purchase or sale of something other than a financial instrument or derivative instrument that will be delivered in quantities expected to be used or sold over a reasonable period in the normal course of business. Certain SREC contracts meet these requirements and are designated as NPNS contracts. Such SRECs are exempted from the derivative accounting and reporting requirements, and the Company recognizes revenues in accordance with ASC 606 when the SRECs are transferred to the counterparty.
The Company recognizes revenues for SRECs based on pricing predetermined within the respective contracts at a point in time when the SRECs are transferred. As SRECs can be sold separate from the actual electricity generated by the renewable-based generation source, the Company accounts for the SRECs it generates from its solar energy systems as governmental incentives and does not consider those SRECs output of the underlying solar energy systems. The Company classifies these SRECs as inventory held until sold and delivered to third parties. As the Company uses the incremental cost method and did not incur any incremental costs beyond the costs of producing the related electricity to obtain these governmental incentives, the inventory carrying value for the SRECs was $0
Performance-based incentives
The Company participates in residential solar investment programs, which offer a performance-based incentive (“PBI”) for certain of its solar energy systems that are associated with the programs (“eligible systems”). PBIs are accounted for under ASC 606 and are earned based upon the actual electricity produced by the eligible systems.
Servicing revenues
The Company earns operating and maintenance revenue from third-party solar fund customers at pre-determined rates for various operating and maintenance and asset management services as specified in Maintenance Service Agreements (“MSAs”). The MSAs contain multiple performance obligations, including routine maintenance, nonroutine maintenance, renewable energy certificate management, inventory management, delinquent account collections, expense reimbursements and customer account management. Under ASC 606, the total transaction price is allocated to the identified performance obligation based on the relative standalone selling price, and the servicing revenues related to each performance obligation is recognized on a periodic basis over the term of the MSA.
Unfavorable solar renewable energy revenue agreements
The Company amortizes its unfavorable solar renewable energy agreements that have finite lives based on the pattern in which the economic benefit of the liability is relieved. The useful life of the Company’s liabilities generally range between three years and six years . The useful life of these liabilities is assessed and assigned based on the facts and circumstances specific to the agreements acquired. The Company recognizes the amortization of unfavorable solar renewable energy agreements as revenues in the unaudited condensed consolidated statements of operations.
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Notes to Unaudited Condensed Consolidated Financial Statements | ||
Other revenue
Other revenue relates to revenue generating activities that do not fall into the Company’s primary revenue categories discussed above, including uniform commercial code revenues, other fees charged to the Company’s customers pursuant to the Company’s long-term Customer Agreements and servicing contracts, and other miscellaneous revenue and income.
Deferred revenue
Deferred revenue consists of amounts for which the criteria for revenue recognition have not yet been met and includes prepayments received for unfulfilled performance obligations that will be recognized on a straight-line basis over the remaining term of the respective customer agreements. The deferred revenue balances as of March 31, 2025 and December 31, 2024, were $4.1 million and $4.0 million, respectively. Deferred revenue, in the aggregate, as of March 31, 2026 and December 31, 2025 was $5.1 million and $5.0 million, respectively.
Income taxes
The Company accounts for income taxes using the asset and liability method under which deferred tax liabilities and assets are recognized for the expected future tax consequences of temporary differences between financial statement carrying amounts and the tax basis of assets and liabilities and net operating loss and tax credit carryforwards. Deferred income taxes are provided for the temporary differences arising between the carrying amounts of assets and liabilities for financial reporting purposes and the amounts used for income tax purposes, and net operating loss carry-forwards and credits. Deferred tax assets and liabilities are measured using enacted rates in effect for the year in which the differences are expected to be recovered or settled. The effect of changes in tax rates on deferred tax assets and liabilities is recognized in the unaudited condensed consolidated statements of operations in the period in which the enactment rate changes. The ultimate recovery of deferred tax assets is dependent upon the amount and timing of future taxable income and other factors, such as the taxing jurisdiction in which the asset is to be recovered. Deferred tax assets and liabilities are reduced through the establishment of a valuation allowance if, based on available evidence, it is more likely than not that the deferred tax assets will not be realized.
Uncertain tax positions taken or expected to be taken in a tax return are accounted for using the more likely than not threshold for financial statement recognition and measurement. The determination as to whether the tax benefit will more likely than not be realized is based upon the technical merits of the tax position as well as consideration of the available facts and circumstances. As of March 31, 2026 and December 31, 2025, there were no uncertain tax positions taken or expected to be taken in the Company’s tax returns.
In the normal course of business, the Company is subject to regular audits by U.S. federal and state and local tax authorities. With few exceptions, the Company is no longer subject to federal, state or local tax examinations by tax authorities in its major jurisdictions for tax years prior to 2020. However, net operating loss carryforwards remain subject to examination to the extent they are carried forward and impact a year that is open to examination by tax authorities.
The Company did not recognize any tax related interest or penalties during the periods presented in the accompanying unaudited condensed consolidated financial statements, however, would record any such interest and penalties as a component of the provision for income taxes. There has historically been no federal or state provision for income taxes since the Company has historically incurred net operating losses and maintains a full valuation allowance against its net deferred tax assets. For the three months ended March 31, 2026 and 2025, the Company recognized no 0
Effective July 4, 2025, new U.S. tax legislation (the “New Tax Act”) was enacted. The New Tax Act extends the provisions of the 2017 Tax Cuts and Jobs Act and makes other changes to U.S. federal tax law. The Company has assessed the impact of the New Tax Act under ASC 740, Income Taxes, on its condensed consolidated financial statements and does not expect a related material effect on its condensed consolidated financial statements and income tax disclosures for interim and annual periods subsequent to July 4, 2025.
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Notes to Unaudited Condensed Consolidated Financial Statements | ||
Segment reporting
Segment reporting is based on the management approach, following the method that management organizes the Company’s operating segments for which separate financial information is made available to, and evaluated regularly by, the Company’s chief operating decision maker (“CODM”) in allocating resources and in assessing performance. The Company is organized and managed as a single operating and reportable segment, which engages in the sole business of providing solar energy and related services to its customers, and as of March 31, 2026 and 2025, the Company had one
Related parties
A party is considered to be related to the Company if the party directly or indirectly or through one or more intermediaries, controls, is controlled by, or is under common control with the Company. Related parties also include principal owners of the Company, its management, the board of directors, members of the immediate families of principal owners of the Company, its management, the board of directors and other parties with which the Company may deal with if one party controls or can significantly influence the management or operating policies of the other to an extent that one of the transacting parties might be prevented from fully pursuing its own separate interests. A party which can significantly influence the management or operating policies of the transacting parties or that has an ownership interest in one of the transacting parties and can significantly influence the other to an extent that one or more of the transacting parties might be prevented from fully pursuing its own separate interests is also a related party.
Recent Accounting Pronouncements Adopted
In December 2023, the FASB issued ASU 2023-09, Income Taxes (Topic 740): Improvements to Income Tax Disclosures, (“ASU 2023-09”). The ASU enhances the transparency and decision usefulness of income tax disclosures by requiring additional disaggregation of information related to the effective tax rate reconciliation, income taxes paid, and income tax expense and pretax income by jurisdiction. The Company adopted ASU 2023-09 on a prospective basis effective January 1, 2025. Accordingly, the enhanced income tax disclosures are presented beginning in fiscal year 2025, and prior period disclosures have not been recast. The adoption of this guidance did not have an impact on the Company’s consolidated results of operations, financial position, or cash flows, as the amendments relate solely to disclosure requirements.
In July 2025, the FASB issued ASU 2025-05, Financial Instruments Credit Losses (Topic 326): Measurement of Credit Losses for Accounts Receivable and Contract Assets, (“ASU 2025-05”), to address challenges encountered by entities when estimating expected credit losses on current accounts receivable or current contract assets resulting from transactions accounted for under ASC 606. ASU 2025-05 introduces a practical expedient for entities which, if elected, assumes that current conditions as of the balance sheet date do not change for the remaining life of the asset. ASU 2025-05 is effective for annual reporting periods, including interim reporting periods within those annual reporting periods, beginning after December 15, 2025, with early adoption permitted. The Company evaluated the practical expedient and determined that it will not adopt the practical expedient in its annual consolidated financial statements for the year ending December 31, 2025.
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Notes to Unaudited Condensed Consolidated Financial Statements | ||
Recent Accounting Pronouncements Not Yet Adopted
In November 2024, the FASB issued ASU 2024-03, Income Statement - Reporting Comprehensive Income - Expense Disaggregation Disclosures (Subtopic 220-40) (“ASU 2024-03”), which requires enhanced detailed disclosures about the types of expenses in commonly presented expense line items of entities. Subsequent to the issuance of ASU 2024-03, the FASB issued ASU 2025-01 of the same topic to clarify the effective date of ASU 2024-03, stating that all public entities are required to adopt the disclosure requirements in the first annual reporting period beginning after December 15, 2026, and interim reporting periods within annual reporting periods beginning after December 15, 2027. The Company plans to adopt this ASU in its annual financial statements for the year ending December 31, 2027 and in its interim financial statements in the subsequent year ending December 31, 2028, and is currently assessing the impact of this ASU on its consolidated financial statements.
In September 2025, the FASB issued ASU No. 2025-07, Derivatives and Hedging (Topic 815) and Revenue from Contracts with Customers (Topic 606) Derivatives Scope Refinements and Scope Clarification for Share-Based Noncash Consideration from a Customer in a Revenue Contract. The ASU amends derivative scope exceptions for specific non-exchange traded contracts and clarifies the application of ASC 606 to share-based noncash consideration from customers. The ASU is effective for interim reporting periods within annual reporting periods beginning after December 15, 2026. An entity is permitted to apply the amendments either (1) prospectively to new contracts entered into on or after the date of adoption or (2) on a modified retrospective basis through a cumulative-effect adjustment to the opening balance of retained earnings as of the beginning of the annual reporting period of adoption for contracts existing as of the beginning of the annual reporting period of adoption. Early adoption is permitted. The Company is currently evaluating the provisions of this ASU and does not expect this ASU to have a material impact on our consolidated financial statements.
In December 2025, the FASB issued ASU No. 2025-11, Interim Reporting (Topic 270): Narrow-Scope Improvements. The ASU clarifies interim disclosure requirements and the applicability of Topic 270. The objective of the amendments is to provide further clarity about the current interim disclosure requirements. The ASU is effective for interim reporting periods within annual reporting periods beginning after December 15, 2027. Adoption of this ASU can be applied either a prospective or a retrospective approach. Early adoption is permitted. The Company is currently evaluating the provisions of this ASU and does not expect this ASU to have a material impact on our consolidated financial statements.
In December 2025, the FASB issued ASU No. 2025-12, Codification Improvements. The ASU addresses thirty-three items, representing the changes to the Codification that (1) clarify, (2) correct errors, or (3) make minor improvements. Generally, the amendments in this Update are not intended to result in significant changes for most entities. The ASU is effective for interim reporting periods within annual reporting periods beginning after December 15, 2026. The adoption method of this ASU may vary, on an issue-by-issue basis. Early adoption is permitted. The Company is currently evaluating the provisions of this ASU and does not expect this ASU to have a material impact on our consolidated financial statements.
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Notes to Unaudited Condensed Consolidated Financial Statements | ||
Note 3. Acquisition
NJR Acquisition
On November 22, 2024, the Company acquired approximately 9,800 solar energy systems from the subsidiary of a publicly traded, regulated utility company for $132.5 million (the “NJR Acquisition”) pursuant to an asset purchase agreement . The solar energy systems acquired have an average remaining contract life of approximately 11 years. The NJR Acquisition was funded in part by the proceeds from the concurrent issuance of the SP5 Facility, as defined below (See Note 7. Non-Recourse Debt) and $22.7 million of the Company’s cash balances. Pursuant to the NJR Acquisition, the Company was obligated to acquire approximately 200 additional solar energy systems, subject to those systems having achieved operational milestones.
The NJR Acquisition has been accounted for as acquisitions of assets, wherein the total consideration paid was allocated to the assets acquired and liabilities assumed based on their relative fair value. The Company’s determination of the fair value of assets acquired and liabilities assumed was based on an independent third-party valuation, which involved significant estimates and assumptions, including Level 3 (unobservable) inputs, using the income method approach to value long-lived assets. The Company engages third-party appraisal firms to assist in the fair value determination, however management is responsible for, and ultimately determines the fair value. The Company estimated the fair value of the NJR Acquisition to be approximately $132.5 million, inclusive of transaction costs of $0.3 million, all of which was allocated to the solar energy systems.
During the three months ended March 31, 2025, the Company acquired 83 additional solar energy systems, in the aggregate, for approximately $1.6 million in cash, inclusive of transaction costs of $0.1 million.
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Notes to Unaudited Condensed Consolidated Financial Statements | ||
Note 4. Property and Equipment, Net
Property and equipment, net consisted of the following as of March 31, 2026 and December 31, 2025:
| As of | |||||||||||
| (Amounts in thousands) | March 31, 2026 | December 31, 2025 | |||||||||
| Solar energy systems | $ | $ | |||||||||
| Less: Accumulated depreciation | ( | ( | |||||||||
| Solar energy systems, net | $ | $ | |||||||||
| Furniture and fixtures | $ | $ | |||||||||
| Computers and related equipment | |||||||||||
| Leasehold improvements | |||||||||||
| Gross other property and equipment | |||||||||||
| Less: Accumulated depreciation | ( | ( | |||||||||
| Other property and equipment, net | $ | $ | |||||||||
| Property and equipment, net | $ | $ | |||||||||
Cost of revenues - solar energy systems depreciation within the unaudited condensed consolidated statements of operations relates to depreciation expense of the Company’s solar energy systems. For the three months ended March 31, 2026 and 2025 the related amounts were $7.3
Depreciation expense related to other property and equipment is included within selling, general and administrative expenses within the unaudited condensed consolidated statements of operations, and for each of the three months ended March 31, 2026 and 2025 was less than $0.1
Note 5. Intangible Assets, Net
The following table presents the details of intangible assets, net as recorded in the unaudited condensed consolidated balance sheets as of March 31, 2026 and December 31, 2025:
| As of | ||||||||||||||||||||||||||
| (Amounts in thousands) | Estimated Life (in Years) | Weighted Average Amortization (in Years) | March 31, 2026 | December 31, 2025 | ||||||||||||||||||||||
| Intangible assets: | ||||||||||||||||||||||||||
| Solar renewable energy agreements | $ | $ | ||||||||||||||||||||||||
| Performance based incentives agreements | ||||||||||||||||||||||||||
| Trade name | ||||||||||||||||||||||||||
| Gross intangible assets | ||||||||||||||||||||||||||
| Less: Accumulated amortization | ( | ( | ||||||||||||||||||||||||
| Intangible assets, net | $ | $ | ||||||||||||||||||||||||
Amortization of intangible assets for each of the three months ended March 31, 2026 and 2025 was $0.3 0.1 million and $0.2 million were recorded within revenue and selling, general and administrative expenses, respectively, for each of the periods.
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Notes to Unaudited Condensed Consolidated Financial Statements | ||
As of March 31, 2026, expected amortization of intangible assets for each of the five succeeding fiscal years and thereafter is as follows:
As of | |||||
| (Amounts in thousands) | March 31, 2026 | ||||
| Remainder of 2026 | $ | ||||
| 2027 | |||||
| 2028 | |||||
| 2029 | |||||
| 2030 | |||||
Thereafter | |||||
Total | $ | ||||
Note 6. Accrued Expenses and Other Current Liabilities
Accrued expenses and other current liabilities consisted of the following as of March 31, 2026 and December 31, 2025:
| As of | ||||||||||||||
| (Amounts in thousands) | March 31, 2026 | December 31, 2025 | ||||||||||||
| Accrued interest | $ | $ | ||||||||||||
| Accrued professional fees | ||||||||||||||
Accrued contingencies (See Note 12. Commitments and Contingencies) | ||||||||||||||
| Accrued compensation and related benefits | ||||||||||||||
| Accrued expenses, other | ||||||||||||||
| Accrued taxes, stock-based compensation | ||||||||||||||
| Accrued operating and maintenance | ||||||||||||||
Accrued expenses and other current liabilities | $ | $ | ||||||||||||
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Notes to Unaudited Condensed Consolidated Financial Statements | ||
Note 7. Non-Recourse Debt
The following table provides a summary of the Company’s non-recourse debt as of March 31, 2026 and December 31, 2025:
| (Amounts in thousands) | Due | March 31, 2026 | December 31, 2025 | |||||||||||||||||
SVB Credit Agreement, SP1 Facility (1) | October 30, 2026 | $ | $ | |||||||||||||||||
Second SVB Credit Agreement, SP2 Facility (1) | May 14, 2027 | |||||||||||||||||||
KeyBank Credit Agreement, SP3 Facility (1) | November 13, 2027 | |||||||||||||||||||
Second KeyBank Credit Agreement (1) | April 28, 2030 | |||||||||||||||||||
Barings GPSF Credit Agreement, SET Facility | April 17, 2042 | |||||||||||||||||||
Banco Santander Credit Agreement, SP5 Facility | November 22, 2027 | |||||||||||||||||||
Less: Unamortized fair value adjustment (1) | ( | ( | ||||||||||||||||||
| Less: Unamortized deferred financing costs | ( | ( | ||||||||||||||||||
Total non-recourse debt | ||||||||||||||||||||
| Less: Non-recourse debt, current | ( | ( | ||||||||||||||||||
| Non-recourse debt, non-current | $ | $ | ||||||||||||||||||
(1) Fair value adjustment is being amortized to interest expense over the life of the related debt instruments using the effective interest method. Amortization expense for the fair value adjustment and deferred financing costs for the three months ended March 31, 2026 and 2025 were $1.6 1.6
The SP1 Facility includes debt service reserve letter of credits with related amounts outstanding of $17.1 6.0 4.1
All amounts outstanding under the SP1 Facility are included in non-recourse debt, current in the unaudited condensed consolidated balance sheet as of March 31, 2026. The effective interest rate on the SP1 Facility was 6.60 % and 7.01 % as of March 31, 2026 and December 31, 2025, respectively.
On March 27, 2026, the Company entered into an amendment (the “SP1 Facility Amendment”) which modifies the term of the SP1 Facility with Silicon Valley Bank (the “SP1 Facility”) and extended the maturity date to October 30, 2026 (the “Amended SP1 Maturity Date”), unless a signed term sheet for a long-term financing is obtained, in which case the Amended SP1 Maturity Date will be January 30, 2027. Under the terms of the SP1 Facility Amendment, the applicable margin is 2.75 % per annum from the effective date of the SP1 Facility Amendment to October 30, 2026, and 3.25 % per annum thereafter. The SP1 Facility Amendment includes a cross-default provision with the Second Key Bank Credit Agreement.
The Company’s credit agreements related to each of its non-recourse debts require the Company to be in compliance with various covenants, and the Company was in compliance with those required covenants as of March 31, 2026. The SP1, SP2, and SP3 Facilities requires the Company to enter into and maintain Interest Rate Hedging Agreements on a pro rata basis to the extent necessary to provide interest rate protection of at least 75 % but in no event greater than 100 % of the aggregate principal amounts outstanding.
Certain of the Company’s credit agreements require the Company, on a quarterly basis, to consider loan to value ratios when determining current and future debt principal payments, which are subject to change. As of March 31, 2026, the principal maturities of the Company’s debt were as follows:
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Notes to Unaudited Condensed Consolidated Financial Statements | ||
| As of March 31, | ||||||||
| (Amounts in thousands) | 2026 | |||||||
| 2026 | $ | |||||||
| 2027 | ||||||||
| 2028 | ||||||||
| 2029 | ||||||||
| 2030 | ||||||||
Thereafter | ||||||||
| Total | $ | |||||||
Note 8. Interest Rate Swaps
The purpose of the Company’s swap agreements is to convert the floating interest rate on its credit agreements, discussed above, to a fixed rate. As of March 31, 2026 and December 31, 2025, the notional amount of the interest rate swaps covered approximately 91 % and 89 %, respectively, of the balance of the Company’s floating rate term loans as of each period end. See Note 9. Fair Value Measurements for further information on the Company’s determination of the fair value of its interest rate swaps.
During the three months ended March 31, 2026, the aggregate impact of the Company’s interest rate swaps was a gain of $2.2 million, of which $0.8 million related to favorable changes in the fair value of the interest rate swaps within the unaudited condensed consolidated statements of operations, and $1.4 million related to realized gains from settlements of the interest rate swaps, which are recognized within interest expense, net in the unaudited condensed consolidated statements of operations.
During the three months ended March 31, 2025, the aggregate impact of the Company’s interest rate swaps was a loss of $4.1 million, of which $6.2 million related to unfavorable changes in the fair value of the interest rate swaps within the unaudited condensed consolidated statements of operations, and $2.1 million related to realized gains from settlements of the interest rate swaps, which are recognized within interest expense, net in the unaudited condensed consolidated statements of operations.
Note 9. Fair Value Measurements
The Company uses various assumptions and methods in estimating the fair values of its financial instruments.
Assets and Liabilities Measured at Fair Value on a Recurring Basis
The Company’s interest rate swaps are not traded on a market exchange and the fair values are determined using a valuation model based on a discounted cash flow analysis. This analysis reflects the contractual terms of the interest rate swap agreements and uses observable market-based inputs, including estimated future SOFR interest rates. The fair value of the Company's interest rate swap is the net difference in the discounted future fixed cash payments and the discounted expected variable cash receipts. The variable cash receipts are based on the expectation of future interest rates and are observable inputs available to a market participant. The interest rate swap valuation is classified as Level 2 of the fair value hierarchy.
The following table sets forth the Company’s assets and liabilities which are measured at fair value on a recurring basis by level within the fair value hierarchy:
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Notes to Unaudited Condensed Consolidated Financial Statements | ||
| Fair Value Measurements as of March 31, 2026 | ||||||||||||||||||||||||||
| (Amounts in thousands) | Level I | Level II | Level III | Total | ||||||||||||||||||||||
| Asset: | ||||||||||||||||||||||||||
| Interest rate swaps | $ | $ | $ | $ | ||||||||||||||||||||||
| Money market accounts | ||||||||||||||||||||||||||
| Total | $ | $ | $ | |||||||||||||||||||||||
| Liabilities: | ||||||||||||||||||||||||||
| Interest rate swaps | $ | $ | $ | $ | ||||||||||||||||||||||
| Total | $ | $ | $ | $ | ||||||||||||||||||||||
| Fair Value Measurements as of December 31, 2025 | ||||||||||||||||||||||||||
| (Amounts in thousands) | Level I | Level II | Level III | Total | ||||||||||||||||||||||
| Asset: | ||||||||||||||||||||||||||
| Interest rate swaps | $ | $ | $ | $ | ||||||||||||||||||||||
| Money market accounts | ||||||||||||||||||||||||||
| Total | $ | $ | $ | $ | ||||||||||||||||||||||
| Liabilities: | ||||||||||||||||||||||||||
| Interest rate swaps | $ | $ | $ | $ | ||||||||||||||||||||||
| Total | $ | $ | $ | $ | ||||||||||||||||||||||
The fair value of the Company’s non-recourse debt as of March 31, 2026 and December 31, 2025 was $680.8 million and $692.5 million, respectively.
Note 10. Stock-Based Compensation Expense
Stock-based compensation expense for stock options and restricted stock units for the three months ended March 31, 2026 and 2025 were $1.0 million, and $0.8 million, respectively. As of March 31, 2026, there was $6.3 million of unrecognized compensation cost related to stock options and restricted stock units which is expected to be recognized over the remaining vesting periods, with a weighted-average period of 2.5 years.
Stock Options
The Company grants stock options to certain employees that will vest over a period of one to four years . A summary of stock option award activity for the three months ended March 31, 2026 was as follows:
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Notes to Unaudited Condensed Consolidated Financial Statements | ||
| Options | Shares | Weighted Average Exercise Price | Weighted Average Remaining Contractual Term | |||||||||||||||||
Outstanding at December 31, 2025 | $ | |||||||||||||||||||
| Granted | ||||||||||||||||||||
| Exercised | ||||||||||||||||||||
| Cancelled or forfeited | ||||||||||||||||||||
Outstanding at March 31, 2026 | $ | |||||||||||||||||||
Exercisable at March 31, 2026 | $ | |||||||||||||||||||
The aggregate intrinsic value of stock options outstanding as of March 31, 2026 was less than $0.4 million. There were no stock options granted during the three months ended March 31, 2026.
A summary of stock option award activity for the three months ended March 31, 2025 was as follows:
| Options | Shares | Weighted Average Exercise Price | Weighted Average Remaining Contractual Term | |||||||||||||||||
Outstanding at December 31, 2024 | $ | |||||||||||||||||||
| Granted | $ | |||||||||||||||||||
| Exercised | ||||||||||||||||||||
| Cancelled or forfeited | ||||||||||||||||||||
Outstanding at March 31, 2025 | $ | |||||||||||||||||||
Exercisable at March 31, 2025 | $ | |||||||||||||||||||
The aggregate intrinsic value of stock options outstanding as of March 31, 2025 was $0.1 million.
Restricted Stock Units
The Company grants restricted stock units to certain employees that will generally vest over a period of four years . The fair value of restricted stock unit awards is determined by the fair value of the Company’s common stock at the date of grant. Restricted stock units activity during the three months ended March 31, 2026 was as follows:
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Notes to Unaudited Condensed Consolidated Financial Statements | ||
| Number of Shares | Weighted Average Grant Date Fair Value Per Share | ||||||||||
Non-vested, at December 31, 2025 | $ | ||||||||||
| Granted | |||||||||||
| Vested | |||||||||||
| Cancelled or forfeited | ( | ||||||||||
Non-vested, at March 31, 2026 | $ | ||||||||||
Restricted stock units activity during the three months ended March 31, 2025 was as follows:
| Number of Shares | Weighted Average Grant Date Fair Value Per Share | ||||||||||
Non-vested, at December 31, 2024 | $ | ||||||||||
| Granted | |||||||||||
| Vested | ( | ||||||||||
| Cancelled or forfeited | ( | ||||||||||
Non-vested, at March 31, 2025 | $ | ||||||||||
Note 11. Noncontrolling Interests
The following table summarizes the Company’s noncontrolling interests as of March 31, 2026:
| Tax Equity Entity | Date Class A Member Admitted | |||||||
| ORE F4 Holdco, LLC | August 2014 | |||||||
| Volta Solar Owner II, LLC | August 2017 | |||||||
The tax equity entities were structured at inception so that the allocations of income and loss for tax purposes will flip at a future date. The terms of the tax equity entities’ operating agreements contain allocations of taxable income (loss), Section 48(a) ITCs and cash distributions that vary over time and adjust between the members on an agreed date (referred to as the flip date). The operating agreements specify either a date certain flip date or an internal rate of return (“IRR”) flip date. The date certain flip date is based on the passage of a fixed period of time as defined in the operating agreements for each entity. The IRR flip date is the date on which the tax equity investor has achieved a contractual rate of return. From inception through the flip date, the Class A members' allocation of taxable income (loss) and Section 48(a) ITCs is generally 99 % and the Class B members' allocation of taxable income (loss) and Section 48(a) ITCs is generally 1 %. After the related flip date (or, if the tax equity investor has a deficit capital account, typically after such deficit has been eliminated), the Class A members' allocation of taxable income (loss) will typically decrease to 5 % (or, in some cases, a higher percentage if required by the tax equity investor) and the Class B members' allocation of taxable income (loss) will increase by an inverse amount. Volta II Solar Owner II, LLC has not reached its flip date as of March 31, 2026, whereas ORE F4 Holdco, LLC has reached its flip date as of March 31, 2026.
The Company’s historical noncontrolling interests are comprised of Class A units, which represent the tax equity investors' interest in the tax equity entities. Both the Class A members and Class B members may have call options to allow either member to redeem the other member's interest in the tax equity entities upon the occurrence of certain contingent events, such as bankruptcy, dissolution/liquidation and forced divestitures of the tax equity entities. Additionally, the Class B member in Volta Solar Owner II, LLC has the option of purchasing all Class A units, which is exercisable at any time during the periods specified under its governing document.
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Notes to Unaudited Condensed Consolidated Financial Statements | ||
Total assets on the consolidated balance sheets include $34.3 million, of which $32.7 million relate to Property and equipment, net as of March 31, 2026 of assets held by the company’s VIEs, which can only be used to settle obligations of the VIEs. Total liabilities on the consolidated balance sheets include $1.7 million as of March 31, 2026 of liabilities that are the obligations of the Company's VIEs.
Total assets on the consolidated balance sheets include $35.1 million, of which $33.2 million relate to Property and equipment, net as of December 31, 2025 of assets held by the company’s VIEs, which can only be used to settle obligations of the VIEs. Total liabilities on the consolidated balance sheets include $2.0 million as of December 31, 2025 of liabilities that are the obligations of the Company's VIEs.
Note 12. Commitments and Contingencies
Legal Proceedings
The Company is periodically involved in legal proceedings and claims arising in the normal course of business, including proceedings relating to intellectual property, employment and other matters. Management believes the outcome of these proceedings, as outlined below, will not have a significant adverse effect on the Company’s financial position, operating results, or cash flows.
Securities Class Action Proceedings
On September 20, 2021, and October 19, 2021, two class action complaints were filed in the Delaware Court of Chancery against certain of the Company’s current officers and directors, and the Company’s sponsor of its special purpose acquisition company merger, Pivotal Investment Holdings II LLC. These actions were consolidated as in re XL Fleet Corp. (Pivotal) Stockholder Litigation, C.A. No. 2021-0808, and an amended complaint was filed on January 31, 2022. Defendants filed a motion to dismiss the amended complaint on May 13, 2022, and on July 11, 2022, plaintiffs filed a second amended complaint. The second amended complaint alleges various breaches of fiduciary duty against the Company and/or its officers, several allegedly misleading statements made in connection with the merger, and aiding and abetting breaches of fiduciary duty in connection with the negotiation and approval of the December 21, 2020 merger and organization of XL Hybrids, Inc., a Delaware corporation (“Legacy XL”) to become XL Fleet Corp. On August 19, 2022, defendants moved to dismiss the second amended complaint, which was granted in part and denied in part on June 9, 2023. The parties then engaged in discovery. On November 13, 2024, the Company filed a stipulation and settlement agreement seeking court approval to settle this matter in full for $4.75 million, which is currently accrued for as of December 31, 2024. On March 26, 2025, the court approved the stipulation and settlement agreement, and in April 2025, the Company paid the settlement amount of $4.75 million.
State Attorney Generals’ Investigations
In 2023, the Company received subpoenas from the attorneys general for the states of Connecticut, New Jersey, New York and Texas requesting information on the Company’s billing and operations practices. The Company has been timely responding to the states’ information requests and otherwise cooperating with these investigations and intends to continue to do so until they are resolved. In March 2026, the Company resolved the matter with the Connecticut Attorney General pursuant to a Stipulation that required the Company’s subsidiary Spruce Power 3, LLC to adhere to certain billing practices and pay a nominal fee. At this time, the Company estimates the potential loss to be approximately $0.1 million for the Connecticut matter, and has been accrued for as of March 31, 2026 (See Note 6. Accrued Expenses and Other Current Liabilities). At this time the Company is unable to estimate potential losses, if any, related to these matters in the remaining states.
BMZ USA, Inc.
On February 11, 2022, BMZ USA Inc. (“BMZ”), a battery manufacturer, sued XL Hybrids for breach of contract, alleging that XL Hybrids failed to timely purchase the full allotment of batteries required under a certain master supply agreement between the parties. In January 2024, BMZ obtained a judgment for $3.9 million against XL Hybrids, Inc. In June 2024, BMZ sought to enforce the judgment against the Company in Massachusetts Trial Court and that enforcement action was
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Notes to Unaudited Condensed Consolidated Financial Statements | ||
dismissed in March 2025. In April 2025, BMZ sought to enforce the judgment against the Company in Colorado Superior Court, which was removed to Federal Court. That enforcement action was dismissed in March 2026 with BMZ potentially appealing at the highest level. No further subsequent appeal was entered by BMZ. As a result, the Company believes the loss is remote and the previous accrual of $1.2 million has been removed.
ITC Recapture Provisions
The IRS may disallow and recapture some, or all, of the ITCs due to improperly calculated basis after a project was placed in service ("Recapture Event"). If a Recapture Event occurs, Spruce Power is obligated to pay the applicable Class A Member a recapture adjustment, which includes the amounts the Class A Members are required to repay the IRS, including interest and penalties, as well as any third-party legal and accounting fees incurred by the Class A Members in connection to the Recapture Event, as specified in the operating agreements. Such a payment by Spruce Power to the Class A Members would not be considered a capital contribution to the fund per the operating agreements, nor would it be considered a distribution to the Class A Members. No Recapture Event was deemed probable by the Company, therefore no accrual was recorded as of March 31, 2026 and December 31, 2025.
Master SREC Purchase and Sale Agreement
The Company has forward sales agreements, which are related to a certain number of SRECs, to be generated from the Company’s solar energy systems located in Maryland, Massachusetts, Delaware, and New Jersey to be sold at fixed prices over varying terms of up to 20 years. In the event the Company does not deliver such SRECs to the counterparty, the Company could be forced to pay additional penalties and fees as stipulated within the contracts.
Debt Guarantees
The Spruce Guarantor, Spruce Power Holding Corporation, entered into guarantees in favor of the SP5 Borrower and the SET Borrower wherein they guaranteed the payment and performance of Solar Service Experts, LLC, a wholly owned subsidiary of the Company, as servicer under servicing agreements with these borrowers.
Indemnities and Other Guarantees
During the normal course of business, the Company has made certain indemnities and guarantees under which it may be required to make payments in relation to certain transactions. The duration of the Company’s indemnities and guarantees varies, however the majority of these indemnities and guarantees are limited in duration. Historically, the Company has not been obligated to make significant payments for such obligations, does not anticipate future payments, and as such, no reserve has been established and no other liabilities have been recorded for these indemnities and guarantees as of March 31, 2026 and December 31, 2025.
Insurance Claims and Recoveries related to Los Angeles Fires
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Notes to Unaudited Condensed Consolidated Financial Statements | ||
Note 13. Net Loss Per Share
The following is a reconciliation of the numerator and denominator used to calculate basic and diluted earnings per share for the three months ended March 31, 2026 and 2025:
| Three Months Ended March 31, | |||||||||||||||||||||||
(Amounts in thousands, except share and per share data) | 2026 | 2025 | |||||||||||||||||||||
| Numerator: | |||||||||||||||||||||||
| Net loss attributable to stockholders | $ | ( | $ | ( | |||||||||||||||||||
| Denominator: | |||||||||||||||||||||||
| Weighted average shares outstanding, basic and diluted | |||||||||||||||||||||||
| Net loss attributable to stockholders per share, basic and diluted | $ | ( | $ | ( | |||||||||||||||||||
For the periods presented, potentially dilutive outstanding securities, which include stock options, restricted stock units and warrants, have been excluded from the computation of diluted net loss per share as their effect would be anti-dilutive for each period presented. As such, the weighted average number of common shares outstanding used to calculate both basic and diluted net loss per share are the same for each period presented.
Note 14. Segment Information
As of March 31, 2026 and December 31, 2025, the Company had one
The Company’s CODM is its chief executive officer (“CEO”) who is focused on strategic planning aimed at generating revenue and monetizing the Company’s home solar energy systems and its ability to provide top-tier related servicing solutions to its customers and third parties. The CEO is provided on a quarterly basis with the Company’s consolidated segment expenses, which the CEO utilizes to assess the Company’s performance and for making decisions about resource allocation. For the three months ended March 31, 2026, the information provided to the CEO is at a lower level of aggregation as presented within the unaudited condensed consolidated statements of operations. Beginning in the period ended June 30, 2025, the financial information provided to and utilized by the CEO reflects a more detailed breakdown of relevant expenses then previously provided and utilized in the period ended March 31, 2025 and prior quarters.
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Notes to Unaudited Condensed Consolidated Financial Statements | ||
The following table presents the Company’s significant segment expenses for the three months ended March 31, 2026 and 2025:
| Three Months Ended March 31, | |||||||||||||||||||||||
| (Amounts in thousands) | 2026 | 2025 | |||||||||||||||||||||
| Revenues | $ | $ | |||||||||||||||||||||
| Expenses: | |||||||||||||||||||||||
| Cost of revenues - solar energy systems depreciation | |||||||||||||||||||||||
| Cost of revenues - operations and maintenance | |||||||||||||||||||||||
| Selling, general and administrative expenses - professional services | |||||||||||||||||||||||
| Selling, general and administrative expenses - compensation and benefits | |||||||||||||||||||||||
| Selling, general and administrative expenses - other | |||||||||||||||||||||||
| Interest expense, net | |||||||||||||||||||||||
Other segment items, net (1) | ( | ||||||||||||||||||||||
| Total expenses | |||||||||||||||||||||||
| Net loss | $ | ( | $ | ( | |||||||||||||||||||
(1) Comprised of gain on asset disposal, net, interest income, change in fair value of interest rate swaps, other income, net, and net income (loss) from discontinued operations for each of the three months ended March 31, 2026 and 2025.
Note 15. Share Repurchase Program
In May 2023, the Company’s Board of Directors (the “Board”) approved a share repurchase program for the repurchase of up to $50.0 million of the Company's outstanding common stock through May 15, 2025 (the “Repurchase Program”). In May 2025, the Board authorized the extension of the Repurchase Program to expire on May 15, 2027. The Repurchase Program authorizes the Company to effect repurchases through open market transactions, privately negotiated transactions, Rule 10b5-1 trading plans and/or Rule 10b-18 trading plans, and other means. The Company is not obligated to repurchase any specific number of shares or dollar amount and may discontinue the Repurchase Program at any time. The timing, number and purchase price of share repurchases, if any, will be determined by the Company’s management in its discretion and will depend on a number of factors, including the market price of shares, general market and economic conditions, and other alternatives available to the Company.
The Company repurchased no shares of common stock under the Repurchase Program during the three months ended March 31, 2026. During the three months ended March 31, 2025, the Company repurchased 0.3 million shares of common stock under the Repurchase Program in open market transactions at a weighted-average price of $2.70 per share for an aggregate purchase price of $0.8 million, inclusive of transaction costs.
Note 16. Subsequent Events
Management has reviewed all events subsequent to March 31, 2026 and prior to the filing of these unaudited condensed financial statements, the Company has determined there have been no events that have occurred that would require adjustments or disclosures within the unaudited condensed consolidated financial statements.
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Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations
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, 2025, filed with the U.S. Securities and Exchange Commission (the “SEC”) on March 31, 2026 as amended by the Annual Report on Form 10-K/A filed with the SEC on April 3, 2026 (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 84,000 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.
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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 March 31, 2026 and 2025, our revenues totaled $23.4 million and $23.8 million, respectively, while our net loss attributable to stockholders was $2.9 million and $15.3 million, respectively. Our financial performance during the three months ended March 31, 2026 was impacted by reductions in our operations and maintenance costs, reductions in our selling, general and administrative expenses, and fluctuations in the value of our interest rate swaps. 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 months ended March 31, 2026 and 2025.
We focus on several core pillars in our operations and we strive to deliver operational excellence to our clean energy customers and the communities we serve. For the three months ended March 31, 2026, our portfolio generated approximately 105 thousand MWh of power, compared to the 123 thousand MWh of power for the three months ended March 31, 2025. We prioritize a high level of customer satisfaction through our in-house call centers and customer service support teams. For three months ended March 31, 2026, our customer satisfaction score was 81%. We also concentrate our efforts on a growth strategy focusing on accretive acquisitions and a capital-light approach expanding our existing service offerings through our Sprue Pro services platform. As a result of fully integrating the NJR Acquisition and limited deployment of new growth capital in 2025, revenues remained relatively flat for the three months ended March 31, 2026 compared to the three months ended March 31, 2025.
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 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.
Acquisition
In November 2024, we completed the NJR Acquisition acquiring 9,800 solar energy systems for approximately $132.5 million, pursuant to an asset purchase agreement. The NJR Acquisition was funded by proceeds from the concurrent issuance of the SP5 Facility (defined below) and $22.7 million of our cash.
During the three months ended March 31, 2025, we acquired 83 additional solar energy systems pursuant to the NJR Acquisition, for approximately $1.6 million in cash, inclusive of transaction costs of $0.1 million. During the three months ended March 31, 2026, no additional systems were acquired.
SP1 Facility Amendment
On March 27, 2026, the Company entered into an amendment (the “SP1 Facility Amendment”) to the SP1 Facility with Silicon Valley Bank (the “SP1 Facility”) which extends the maturity date to October 30, 2026 (the “Amended SP1 Maturity Date”), unless a signed term sheet for a long-term financing is obtained, in which case the Amended SP1 Maturity Date will be January 30, 2027. Under the terms of the SP1 Facility Amendment, the applicable margin is 2.75% per annum from the effective date of the extension to October 30, 2026, and 3.25% per annum until maturity. The SP1 Facility Amendment includes a cross-default provision with the Second Key Bank Credit Agreement.
Operating Segments
For information about our operating segments, see “Segment reporting” in Note 2. Summary of Significant Accounting Policies and Note 14. Segment Information.
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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 March 31, 2026 and 2025
Information with respect to the unaudited condensed consolidated statements of operations for the three months ended March 31, 2026 and 2025 is presented below:
| Three Months Ended March 31, 2026 | |||||||||||||||||||||||
| (in thousands) | 2026 | 2025 | $ Change | % Change | |||||||||||||||||||
| Revenues | $ | 23,420 | $ | 23,834 | $ | (414) | (2) | % | |||||||||||||||
| Operating expenses: | |||||||||||||||||||||||
| Cost of revenues - solar energy systems depreciation | 7,272 | 7,285 | (13) | — | % | ||||||||||||||||||
| Cost of revenues - operations and maintenance | 1,169 | 3,916 | (2,747) | (70) | % | ||||||||||||||||||
| Selling, general and administrative expenses | 11,580 | 14,666 | (3,086) | (21) | % | ||||||||||||||||||
| Gain on asset disposal, net | (449) | (335) | (114) | 34 | % | ||||||||||||||||||
| Total operating expenses | 19,572 | 25,532 | (5,960) | (23) | % | ||||||||||||||||||
| Income (loss) from operations | 3,848 | (1,698) | 5,546 | (327) | % | ||||||||||||||||||
| Other (income) expense: | |||||||||||||||||||||||
| Interest income | (4,784) | (5,267) | 483 | (9) | % | ||||||||||||||||||
| Interest expense, net | 12,287 | 12,667 | (380) | (3) | % | ||||||||||||||||||
| Other expense, net | (800) | 6,216 | (7,016) | (113) | % | ||||||||||||||||||
| Net loss | (2,855) | (15,314) | 12,459 | (81) | % | ||||||||||||||||||
| Less: Net income attributable to noncontrolling interests | 70 | 24 | 46 | 192 | % | ||||||||||||||||||
| Net loss attributable to stockholders | $ | (2,925) | $ | (15,338) | $ | 12,413 | (81) | % | |||||||||||||||
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Revenues
Revenues decreased by $0.4 million, or 2%, to $23.4 million in the three months ended March 31, 2026 as compared to the same period in 2025. The decrease was due primarily to a $0.6 million reduction in non-cash amortization revenues related to capitalized intangible solar agreements as well as a $0.3 million decrease in PPA revenues due to buyouts and weather related impacts. This was partially offset by a modest $0.1 million increase in SLA revenues primarily related to the incremental NJR system acquisitions closed in the second half of 2025 and a $0.6 million net increase in SREC and performance based revenues.
Cost of Revenues — Solar Energy Systems Depreciation
Cost of revenues - solar energy systems depreciation was flat at $7.3 million in the three months ended March 31, 2026 as compared to the same period in 2025. A modest increase from incremental depreciation related to the NJR incremental acquisitions was offset by a reduction from buyouts.
Cost of Revenues — Operations and Maintenance
Cost of revenues - operations and maintenance (“O&M”) decreased by $2.7 million, or 70%, to $1.2 million in the three months ended March 31, 2026 as compared to $3.9 million in the same period in 2025 primarily due to cost reductions resulting from certain O&M efficiencies implemented in 2025 and carried forward into the first quarter 2026. These efficiencies include greater leverage of our asset management platform to streamline third party vendors management and return material authorizations processing as well as utilizing more in-house servicing teams. Additionally, the first half of 2025 included a significant meter upgrade effort on our solar energy systems which has been completed.
Selling, General and Administrative
Selling, general and administrative (“SG&A”) expenses decreased by $3.1 million, or 21%, to $11.6 million in the three months ended March 31, 2026 as compared to $14.7 million in the same period in 2025 primarily due to a decrease in compensation and benefits driven by a decrease in labor force, lower professional and audit related fees, and a marginal decrease in net legal fees including litigation settlements. This was partially offset by a marginal increase in bad debt expense and other expenses associated with the debt extension.
Interest Income
Interest income of $4.8 million in the three months ended March 31, 2026 related to $4.3 million of interest income from the SEMTH Master Lease and $0.5 million interest earned on investments. In comparison, interest income of $5.3 million for the three months ended March 31, 2025 related to $4.5 million of interest income from the SEMTH Master Lease and $0.8 million of interest earned on investments.
Interest Expense, Net
Interest expense, net in the three months ended March 31, 2026 of $12.3 million consisted of $12.1 million of interest expense, $1.6 million related to the amortization deferred financing costs, partially offset by realized gains from settlements of our interest rate swaps of $1.4 million.
In comparison, interest expense, net in the three months ended March 31, 2025 consisted of $12.7 million $13.2 million of interest expense related to the principal amounts of our outstanding non-recourse debt and $1.6 million related to the amortization of debt discount and deferred financing costs, both partially offset by $2.1 million of net realized gains from settlements of our interest rate swaps.
Interest expense, net decreased marginally year over year due to the lower debt balance resulting from repaying principal debt in 2025. 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 Expense, net
Other expense, net of $0.8 million gain for the three months ended March 31, 2026 primarily related to the change in fair value of interest rate swaps due to changes in forecasted market interest rates, while other expense, net of $6.2 million loss for the three months ended March 31, 2025 primarily related to the change in fair value of interest rate swaps.
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Liquidity and Capital Resources
As of March 31, 2026, we had negative working capital of $119.7 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 $85.6 million. We had net losses attributable to stockholders of $2.9 million and $15.3 million for the three months ended March 31, 2026 and 2025, respectively.
Our principal sources of liquidity include cash and cash equivalents and cash inflows from 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 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 three months ended March 31, 2026 and 2025.
As of March 31, 2026, our aggregate debt balance was $668.3 million, net of $15.1 million of unamortized fair value adjustment and $3.9 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 October 30, 2026, unless a signed term sheet for a long-term financing is obtained, in which case the earliest maturity date is January 30, 2027 and has been classified as current at March 31, 2026. For additional information on our debt, refer to Note 7. Non-Recourse Debt included within the accompanying unaudited condensed consolidated financial statements.
These condensed consolidated financial statements have been prepared in accordance with U.S. generally accepted accounting principles (GAAP) assuming the Company will continue as a going concern.
The Company’s debt obligations under the SP1 Facility and SP2 Facility are non-recourse to the Company (see Note 7. Non-Recourse Debt). With regards to the SP1 Facility, on March 27, 2026, the Company entered into the SP1 Facility Amendment, as defined below, to extend the maturity of this facility to October 30, 2026 (the “Amended SP1 Maturity Date”), unless a signed term sheet for a long-term financing is obtained, in which case the extended maturity date will be January 30, 2027. With regards to the SP2 Facility, the maturity date is May 14, 2027 (the “SP2 Maturity Date”). Because (i) the Amended SP1 Maturity Date and the SP2 Maturity Date are within twelve months from the date the accompanying unaudited condensed consolidated financial statements are issued, (ii) the Company has not yet entered into a commitment to refinance the SP1 or SP2 Facility, (iii) the Company has determined that it is unlikely to have sufficient cash on hand or proceeds from currently available liquidity sources to satisfy the SP1 Facility at the Amended SP1 Maturity Date or the SP2 Facility at the SP2 Maturity Dates, (iv) the Company had negative working capital of $119.7 million as of March 31, 2026 solely due to the current maturity of the SP1 Facility at that date, and (v) the Company has experienced recurring net losses and negative cash flows from operations for the three months ended March 31, 2026 and 2025, these conditions raise substantial doubt about the Company’s ability to continue as a going concern. Our condensed consolidated financial statements do not include any adjustments that may result from the outcome of this uncertainty.
The Company plans to refinance the SP1 Facility prior to the Amended SP1 Maturity Date and the SP2 Facility by the SP2 Maturity Date consistent with the Company’s historical financing strategy for investing in solar assets on a leveraged basis. The Company has commenced preliminary discussions with potential lenders with respect to refinancing the SP1 Facility, which are currently being reviewed by management. The Company’s management believes that such refinancing will be completed prior to the Amended SP1 Maturity Date. However, the Company can offer no assurances it will be able to obtain financing at acceptable terms or at all. Therefore, the Company has concluded that there is substantial doubt about its ability to continue as a going concern. Should the Company be unsuccessful in refinancing the SP1 Facility or the SP2 Facility, this could result in a foreclosure of collateral and negatively impact operations. Further, an event of default on the SP1 Facility, if not cured in the permittable time allowed under the agreement, would result in a cross default on the Second Key Bank Credit Agreement, which is also non-recourse.
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Cash Flows Summary
Presented below is a summary of our operating, investing and financing cash flows:
| Three Months Ended | |||||||||||||||||
| (Amounts in thousands) | March 31, 2026 | March 31, 2025 | |||||||||||||||
| Net cash provided by (used in) | |||||||||||||||||
| Operating activities | $ | (2,697) | $ | (9,124) | |||||||||||||
| Investing activities | 5,334 | 4,176 | |||||||||||||||
| Financing activities | (10,157) | (7,731) | |||||||||||||||
| Net change in cash and cash equivalents and restricted cash | $ | (7,520) | $ | (12,679) | |||||||||||||
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 discontinued operating activities for the years presented relate to ongoing operating and maintenance costs. 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 operating activities improved by $6.4 million in the three months ended March 31, 2026 compared to the same period in 2025 primarily due to a decrease in the Net Loss primarily related to lower O&M and SG&A expenses during the three months ended March 31, 2026, discussed above. Net working capital changes remained consistent compared to the prior year quarter while accounts receivable increased primarily due to SREC receivables resulting in a negative impact on cash.
Cash Flows Provided by Investing Activities
The net cash provided by investing activities in the three months ended March 31, 2026 was $5.3 million, which primarily related to $3.9 million of proceeds from our investments under the SEMTH Master Lease and $1.4 million of proceeds from the sale of solar energy systems. There were no payments related to the acquisition or purchases of property and equipment in 2026 compared to $1.6 million paid for incremental NJR solar systems and $0.1 million paid for equipment in 2025.
The net cash provided by investing activities in the three months ended March 31, 2025 primarily related to $4.5 million of proceeds from the SEMTH investment and $1.4 million of proceeds from the sale of solar energy systems, partially offset by $1.6 million of net payments related to the NJR Acquisition.
Cash Flows Used in Financing Activities
The net cash used in financing activities in the three months ended March 31, 2026 was $10.2 million, which primarily related to $8.2 million for repayments of our non-recourse debt, and $1.9 million related to deferred financing costs incurred as part of the SP1 extension.
The net cash used in financing activities in the three months ended March 31, 2025 primarily related to $6.8 million for repayments of our non-recourse debt and $0.8 million related to shares repurchased under our Repurchase Program.
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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 three months ended March 31, 2026.
Our significant accounting policies are consistent with those discussed in Note 2. Summary of Significant Accounting Policies of our audited condensed 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.
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Item 3. Quantitative and Qualitative Disclosures About Market Risk
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.
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Item 4. Controls and Procedures
Evaluation of Disclosure Controls and Procedures
The term “disclosure controls and procedures” is defined in Rules 13a-15(e) and 15d-15(e) under 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 March 31, 2026. Based upon that evaluation, the Company’s Chief Executive Officer and Chief Financial Officer concluded that the Company’s disclosure controls and procedures were effective as of that date. It should be noted that in designing and evaluating our disclosure controls and procedures, management recognized that any controls and procedures, no matter how well designed and operated, can provide only reasonable assurance of achieving the desired control objectives, and management necessarily was required to apply its judgment in evaluating the cost-benefit relationship of possible controls and procedures. The Company has designed its disclosure controls and procedures to reach a level of reasonable assurance of achieving desired control objectives and, based on the evaluation described above, the Company's Chief Executive Officer and Chief Financial Officer concluded that the Company's disclosure controls and procedures were effective at reaching that level of reasonable assurance.
Changes in Internal Control Over Financial Reporting
There have been no changes in our internal control over financial reporting (as defined in Rules 13a-15(f) and 15d-15(f) under the Exchange Act) during the quarter ended March 31, 2026 that materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.
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PART II-OTHER INFORMATION
Item 1. Legal Proceedings
For a description of our material pending legal proceedings, see Legal Proceedings in Note 12. Commitments and Contingencies to the unaudited condensed consolidated financial statements included elsewhere in this Quarterly Report on Form 10-Q and incorporated herein by reference.
Item 1A. Risk Factors
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, 2025. There have been no material changes from the risk factors previously disclosed in our Annual Report on Form 10-K for the fiscal year ended December 31, 2025. Additional risks that we are not yet aware of or that we currently believe are immaterial may also impair our business operations.
Item 2. Unregistered Sales of Equity Securities and Use of Proceeds
There were no share repurchases during the three months ended March 31, 2026.
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Item 3. Defaults Upon Senior Securities
None.
Item 4. Mine Safety Disclosures
Not applicable.
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Item 5. Other Information
Rule 10b5-1 Trading Arrangements
During the three months ended March 31, 2026, none of our directors or officers (as defined in Rule 16a-1(f) of the Exchange Act) informed us of the adoption termination
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Item 6. Exhibits
| Exhibit No. | Description | Included | Form | Exhibit | Filing Date | |||||||||||||||||||||||||||
| 2.1 | Asset Purchase Agreement by and between NJR Clean Energy Ventures II Corporation, as Seller, and Spruce Power 5, LLC, as Buyer, dated as of November 22, 2024 | By Reference | 10-K | 2.2 | March 31, 2025 | |||||||||||||||||||||||||||
| 3.1 | Second Amended and Restated Certificate of Incorporation. | By Reference | 8-K | 3.1 | December 23, 2020 | |||||||||||||||||||||||||||
| 3.2 | Certificate of Amendment to the Second Amended and Restated Certificate of Incorporation | By Reference | 8-K | 3.1 | October 6, 2023 | |||||||||||||||||||||||||||
| 3.3 | Certificate of Amendment changing name of Registrant to Spruce Power Holding Corporation | By Reference | 8-K | 3.1 | November 14, 2022 | |||||||||||||||||||||||||||
| 3.4 | Amended and Restated Bylaws, as amended as of November 10, 2022 | By Reference | 8-K | 3.2 | November 14, 2022 | |||||||||||||||||||||||||||
| 10.1 | Omnibus Amendment dated as of March 27, 2026 | By Reference | 10-K | 10.18 | March 31, 2026 | |||||||||||||||||||||||||||
| 31.1* | Certification of Principal Executive Officer Pursuant to Rule 13a-14(a) and Rule 15d-14(a) of the Securities and Exchange Act of 1934, as amended, pursuant to Section 302 of the Sarbanes-Oxley Act of 2002. | Herewith | ||||||||||||||||||||||||||||||
| 31.2* | Certification of Principal Financial Officer Pursuant to Rule 13a-14(a) and Rule 15d-14(a) of the Securities and Exchange Act of 1934, as amended, pursuant to Section 302 of the Sarbanes-Oxley Act of 2002. | Herewith | ||||||||||||||||||||||||||||||
| 32.1^* | Certification of Principal Executive Officer Pursuant to 18 U.S.C. Section 1350, as Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002. | Herewith | ||||||||||||||||||||||||||||||
| 32.2^* | Certification of Principal Financial Officer Pursuant to 18 U.S.C. Section 1350, as Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002. | Herewith | ||||||||||||||||||||||||||||||
| 101.INS* | Inline XBRL Instance Document | Herewith | ||||||||||||||||||||||||||||||
| 101.SCH* | Inline XBRL Taxonomy Extension Schema Document | Herewith | ||||||||||||||||||||||||||||||
| 101.CAL* | Inline XBRL Taxonomy Extension Calculation Linkbase Document | Herewith | ||||||||||||||||||||||||||||||
| 101.DEF* | Inline XBRL Taxonomy Extension Definition Linkbase Document | Herewith | ||||||||||||||||||||||||||||||
| 101.LAB* | Inline XBRL Taxonomy Extension Label Linkbase Document | Herewith | ||||||||||||||||||||||||||||||
| 101.PRE* | XBRL Taxonomy Extension Presentation Linkbase Document | Herewith | ||||||||||||||||||||||||||||||
104* | Cover Page Interactive Data File (formatted as Inline XBRL and contained in Exhibit 101). | Herewith | ||||||||||||||||||||||||||||||
*Filed herewith
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^ In accordance with Item 601(b)(32)(ii) of Regulation S-K and SEC Release No. 34-47986, the certifications furnished in Exhibits 32.1 and 32.2 hereto are deemed to accompany this Quarterly Report on Form 10-Q and will not be deemed “filed” for purposes of Section 18 of the Exchange Act or deemed to be incorporated by reference into any filing under the Exchange Act or the Securities Act of 1933 except to the extent that the registrant specifically incorporates it by reference.
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SIGNATURES
Pursuant to the requirements 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.
| SPRUCE POWER HOLDING CORPORATION | ||||||||
Date: May 14, 2026 | By: | /s/ Christopher Hayes | ||||||
| Name: | Christopher Hayes | |||||||
| Title: | Chief Executive Officer | |||||||
| (Principal Executive Officer) | ||||||||
Date: May 14, 2026 | By: | /s/ Thomas James Cimino | ||||||
| Name: | Thomas James Cimino | |||||||
| Title: | Chief Financial Officer | |||||||
| (Principal Financial Officer and Principal Accounting Officer) | ||||||||
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FAQ
How did Spruce Power (SPRU) perform financially in Q1 2026?
Spruce Power reported revenue of $23.4 million for Q1 2026, slightly below $23.8 million a year earlier. Net loss attributable to stockholders improved to $2.9 million, or $0.16 per share, compared with a $15.3 million loss, or $0.84 per share, in Q1 2025.
Why does Spruce Power (SPRU) flag substantial doubt about going concern?
The company states there is substantial doubt about its ability to continue as a going concern because key non-recourse facilities, SP1 and SP2, mature by October 30, 2026/January 30, 2027 and May 14, 2027, and it lacks committed refinancing while also facing negative working capital and recurring losses.
What are Spruce Power’s main debt obligations and maturities?
Spruce Power carries non-recourse debt with a principal balance of about $687.3 million. Major facilities include the SP1 Facility maturing in late 2026 (or early 2027 with a qualifying term sheet) and the SP2 Facility maturing on May 14, 2027, along with several longer-dated project financings.
What is Spruce Power’s liquidity position as of March 31, 2026?
As of March 31, 2026, Spruce Power held $50.0 million in cash and cash equivalents and $35.6 million in restricted cash, totaling $85.6 million. These balances must support operations and help address upcoming non-recourse project debt obligations under various credit facilities.
How does Spruce Power generate its revenues?
Spruce Power earns revenue primarily from long-term residential solar contracts, including PPAs and SLAs, sales of solar renewable energy credits, performance-based incentives and servicing fees through its Spruce Pro platform. In Q1 2026, SLA revenues were $10.0 million and PPA revenues were $7.6 million.
What strategy does Spruce Power (SPRU) outline for future growth?
The company’s strategy focuses on leveraging its platform to provide subscription-based distributed energy solutions, emphasizing low customer acquisition cost channels such as acquiring existing solar portfolios, expanding services to its roughly 84,000 home solar assets, and using the Spruce Pro servicing platform for third-party portfolios.