SPRU 10-K/A
Spruce Power Holding Corp (SPRU)
10-K/A
2026-04-03
For: 2025-12-31
View Original
Added on
April 12, 2026
Table of Contents
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-K/A
(Amendment No. 1)
___________________________________
(Mark One)
FOR THE FISCAL YEAR ENDED DECEMBER 31 , 2025
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: | ||||||||||||
Securities registered pursuant to Section 12(g) of the Act: None
Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act. Yes o No x
Indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or Section 15(d) of the Exchange Act. Yes o No x
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 has filed a report on and attestation to its management’s assessment of the effectiveness of its internal control over financial reporting under Section 404(b) of the Sarbanes-Oxley Act (15 U.S.C. 7262(b)) by the registered public accounting firm that prepared or issued its audit report. o
If securities are registered pursuant to Section 12(b) of the Act, indicate by check mark whether the financial statements of the registrant included in the filing reflect the correction of an error to previously issued financial statements. o
Indicate by check mark whether any of those error corrections are restatements that required a recovery analysis of incentive-based compensation received by any of the registrant’s executive officers during the relevant recovery period pursuant to §240.10D-1(b). 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
The aggregate market value of the Registrant’s voting and non-voting common stock held by non-affiliates of the Registrant as of June 30, 2025 based on the closing price of the Registrant’s common stock as reported by the New York Stock Exchange of $2.02 per share, was approximately $31.6 million. Shares of common stock beneficially owned by each executive officer, director or holder of more than 5% of the Registrant’s common stock have been excluded as such persons may be deemed to be affiliates. This determination of affiliate status is not necessarily a conclusive determination for other purposes.
As of March 19, 2026, 18,168,863 shares of the Registrant’s common stock, $0.0001 par value, were outstanding.
DOCUMENTS INCORPORATED BY REFERENCE:
Portions of the Proxy Statement for the 2026 Annual Meeting of the Stockholders of the registrant are incorporated by reference into Part III of this report.
EXPLANATORY NOTE
This Amendment No. I on Form 10-K/A (this "Amendment") amends the Annual Report on Form 10-K of Spruce Power Holding Corporation (the “Company”) for the fiscal year ended December 31, 2025, as filed with the Securities and Exchange Commission on March 31, 2026 (the "Original Filing"). This Amendment is being filed:
•To correct an erroneous date for the Report of Independent Registered Public Accounting Firm, CohnReznick LLP (the “Auditor Report”); and
•To file the Consent of Independent Registered Public Accounting Firm, CohnReznick LLP (the "Auditor Consent"), which was inadvertently omitted in the Original Filing.
This Amendment is being filed solely to correct the erroneous date of the Auditor Report and to file the Auditor Consent. No other changes were made to the Original Filing. Further, no attempt has been made in this Amendment to modify or update the other disclosures presented in the Original Filing. This Amendment does not reflect events occurring after the date of the Original Filing or modify or update those disclosures that may be affected by subsequent events. Accordingly, this Amendment should be read in conjunction with the Original Filing and the registrant's other filings with the Securities and Exchange Commission.
This Amendment includes new certifications by the Company's principal executive officer and principal financial officer as Exhibits 31.1, 31.2, 32.1 and 32.2, and the Auditor Consent as Exhibit 23.2. This Amendment consists solely of the cover page, this explanatory note, a replacement of Item 8 in the Original Filing with the corrected date in the Auditor Report, a replacement of Item 15 in the Original Filing (including only those exhibits required for this Amendment), the signature page, and the exhibits referenced above.
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Item 8. Financial Statements and Supplementary Data
Our consolidated financial statements are presented beginning on page F-1 following this caption.
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FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
Our consolidated financial statements are presented beginning on page F-1 following this caption.
Index to Consolidated Financial Statements
F-1
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REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
To the shareholders and the Board of Directors of Spruce Power Holding Corporation
Opinion on the Financial Statements
We have audited the accompanying consolidated balance sheet of Spruce Power Holding Corporation (the “Company”) as of December 31, 2025, and the related consolidated statements of operations, changes in stockholders’ equity, and cash flows for the year ended December 31, 2025, and the related notes (collectively referred to as the “consolidated financial statements”). In our opinion, the consolidated financial statements present fairly, in all material respects, the financial position of the Company as of December 31, 2025, and the results of their operations and their cash flows for the year ended December 31, 2025, in conformity with accounting principles generally accepted in the United States of America.
We also have audited the adjustments to the 2024 consolidated financial statements to retrospectively adjust the prior year segment information to conform with the current year segment information as described in Notes 2 and Note 20. In our opinion, such adjustments are appropriate and have been properly applied. We were not engaged to audit, review, or apply any procedures to the 2024 consolidated financial statements of the Company other than with respect to such adjustments and, accordingly, we do not express an opinion or any other form of assurance on the 2024 consolidated financial statements taken as a whole.
Substantial Doubt about the Company's Ability to Continue as a Going Concern
The accompanying consolidated financial statements have been prepared assuming that the Company will continue as a going concern. As discussed in Note 1 to the consolidated financial statements, (i) the Company has debt with a maturity date of less than one year from the date these consolidated financial statements are issued and has determined that it is unlikely to have sufficient cash on hand or proceeds from currently available liquidity sources to repay the debt and (ii) the Company has experienced recurring net losses and negative cash flows from operations for the year ended December 31, 2025. These conditions raise substantial doubt about the Company's ability to continue as a going concern. Management's plans in regard to these matters are also described in Note 1. The consolidated financial statements do not include any adjustments that might result from the outcome of this uncertainty.
Basis for Opinion
These consolidated financial statements are the responsibility of the Company’s management. Our responsibility is to express an opinion on the Company’s consolidated financial statements based on our audit. We are a public accounting firm registered with the Public Company Accounting Oversight Board (United States) (“PCAOB”) and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.
We conducted our audit in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the consolidated financial statements are free of material misstatement, whether due to error or fraud. The Company is not required to have, nor were we engaged to perform, an audit of its internal control over financial reporting. As part of our audit, we are required to obtain an understanding of internal control over financial reporting but not for the purpose of expressing an opinion on the effectiveness of the Company’s internal control over financial reporting. Accordingly, we express no such opinion.
Our audit included performing procedures to assess the risks of material misstatement of the consolidated financial statements, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the consolidated financial statements. Our audits also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the consolidated financial statements. We believe that our audits provide a reasonable basis for our opinion.
Critical Audit Matters
Critical audit matters are matters arising from the current period audit of the consolidated financial statements that were communicated or required to be communicated to the audit committee and that: (1) related to accounts or disclosures that are material to the consolidated financial statements and (2) involved our especially challenging, subjective, or complex judgments. We have determined that there are no critical audit matters.
/s/ CohnReznick LLP
March 31, 2026
We have served as the Company’s auditor since 2025.
F-2
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REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
To the shareholders and the Board of Directors of Spruce Power Holding Corporation
Opinion on the Financial Statements
We have audited the accompanying consolidated balance sheets of Spruce Power Holding Corporation (the "Company") as of December 31, 2024, the related consolidated statements of operations, changes in stockholders' equity, and cash flows, for the period ended December 31, 2024, and the related notes (collectively referred to as the "financial statements"). In our opinion, the financial statements present fairly, in all material respects, the financial position of the Company as of December 31, 2024, and the results of its operations and its cash flows for the period ended December 31, 2024, in conformity with accounting principles generally accepted in the United States of America.
Basis for Opinion
These financial statements are the responsibility of the Company's management. Our responsibility is to express an opinion on the Company's financial statements based on our audits. We are a public accounting firm registered with the Public Company Accounting Oversight Board (United States) (PCAOB) and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.
We conducted our audits in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement, whether due to error or fraud. The Company is not required to have, nor were we engaged to perform, an audit of its internal control over financial reporting. As part of our audits, we are required to obtain an understanding of internal control over financial reporting but not for the purpose of expressing an opinion on the effectiveness of the Company’s internal control over financial reporting. Accordingly, we express no such opinion.
Our audits included performing procedures to assess the risks of material misstatement of the financial statements, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the financial statements. Our audits also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the financial statements. We believe that our audits provide a reasonable basis for our opinion.
/s/ Deloitte and Touche, LLP
Houston, TX
March 31, 2025
We began serving as the Company's auditor in 2023. In 2025 we became the predecessor auditor.
F-3
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Spruce Power Holding Corporation
Consolidated Balance Sheets
| As of December 31, | ||||||||||||||
| (In thousands, except share and per share amounts) | 2025 | 2024 | ||||||||||||
| Assets | ||||||||||||||
| Current assets | ||||||||||||||
| Cash and cash equivalents | $ | $ | ||||||||||||
| Restricted cash | ||||||||||||||
Accounts receivable, net of allowance of $ December 31, 2025 and 2024, respectively | ||||||||||||||
| 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 assets 1 | $ | $ | ||||||||||||
| Liabilities, stockholders’ equity and noncontrolling interests | ||||||||||||||
| Current liabilities | ||||||||||||||
| Accounts payable | $ | $ | ||||||||||||
| Non-recourse debt, current | ||||||||||||||
| Accrued expenses and other current liabilities | ||||||||||||||
| Deferred revenue, current | ||||||||||||||
| Lease liability, current | ||||||||||||||
| Interest rate swap liabilities, current | ||||||||||||||
| Current liabilities of discontinued operations | ||||||||||||||
| 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 | ||||||||||||||
Long-term liabilities of discontinued operations | ||||||||||||||
Total liabilities 2 | ||||||||||||||
Commitments and contingencies (Note 14) | ||||||||||||||
| Stockholders’ equity: | ||||||||||||||
Common stock, $ | ||||||||||||||
| Additional paid-in capital | ||||||||||||||
| Accumulated deficit | ( | ( | ||||||||||||
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Treasury stock at cost, | ( | ( | ||||||||||||
| Noncontrolling interests | ||||||||||||||
| Total equity | ||||||||||||||
| Total liabilities, stockholders’ equity and noncontrolling interests | $ | $ | ||||||||||||
See Notes to Consolidated Financial Statements.
(1) The company’s consolidated assets include $35.1 million of assets from consolidated variable interest entities (“VIEs”) as of December 31, 2025 that can only be used to settle obligations of VIEs, see Note 13 Noncontrolling Interests.
(2) The company’s consolidated liabilities include $2.0 million of liabilities from consolidated variable interest entities (“VIEs”) as of December 31, 2025, for which creditors do not have recourse to the general credit of the Company, see Note 13 Noncontrolling Interests .
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Spruce Power Holding Corporation
Consolidated Statements of Operations
| Years Ended December 31, | ||||||||||||||
| (In thousands, except per share and share amounts) | 2025 | 2024 | ||||||||||||
| Revenues | $ | $ | ||||||||||||
| Operating expenses: | ||||||||||||||
| Cost of revenues - solar energy systems depreciation | ||||||||||||||
| Cost of revenues - operations and maintenance | ||||||||||||||
| Selling, general and administrative expenses | ||||||||||||||
| Litigation settlements | ||||||||||||||
| Gain on asset disposal, net | ( | ( | ||||||||||||
| Impairment of goodwill | ||||||||||||||
| Total operating expenses | ||||||||||||||
| Income (loss) from operations | ( | |||||||||||||
| Other (income) expense: | ||||||||||||||
| Interest income | ( | ( | ||||||||||||
| Interest expense, net | ||||||||||||||
| Change in fair value of warrant liabilities | ( | |||||||||||||
| Change in fair value of interest rate swaps | ||||||||||||||
| Other expense (income) | ( | |||||||||||||
| Net loss from continuing operations | ( | ( | ||||||||||||
| Net income (loss) from discontinued operations | ( | |||||||||||||
| Net loss | ( | ( | ||||||||||||
| Less: Net income attributable to noncontrolling interests | ||||||||||||||
| Net loss attributable to stockholders | $ | ( | $ | ( | ||||||||||
| Net loss from continuing operations per share, basic and diluted | $ | ( | $ | ( | ||||||||||
| Net income (loss) from discontinued operations 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 Consolidated Financial Statements.
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Spruce Power Holding Corporation
Consolidated Statements of Changes in Stockholders’ Equity
| Year Ended December 31, 2025 | ||||||||||||||||||||||||||||||||||||||||||||||||||
| Common Stock | Additional Paid-In Capital | Accumulated Deficit | Treasury Stock | Noncontrolling Interests | Total Equity | |||||||||||||||||||||||||||||||||||||||||||||
| (In thousands, except share data) | Shares | Amount | Shares | Amount | ||||||||||||||||||||||||||||||||||||||||||||||
| Balance at December 31, 2024 | $ | $ | $ | ( | $ | ( | $ | $ | ||||||||||||||||||||||||||||||||||||||||||
| Exercise of stock options | — | — | — | — | — | — | — | — | ||||||||||||||||||||||||||||||||||||||||||
| Issuance of restricted stock | — | — | — | — | — | — | — | |||||||||||||||||||||||||||||||||||||||||||
| Issuance of common stock | — | — | — | — | — | — | — | — | ||||||||||||||||||||||||||||||||||||||||||
| Share repurchases | — | — | — | — | ( | — | ( | |||||||||||||||||||||||||||||||||||||||||||
| Stock-based compensation expense, net | — | — | — | — | — | — | ||||||||||||||||||||||||||||||||||||||||||||
| Net income (loss) | — | — | — | ( | — | — | ( | |||||||||||||||||||||||||||||||||||||||||||
| Capital distributions to noncontrolling interests | — | — | — | — | — | — | ( | ( | ||||||||||||||||||||||||||||||||||||||||||
| Balance at December 31, 2025 | $ | $ | $ | ( | $ | ( | $ | $ | ||||||||||||||||||||||||||||||||||||||||||
| Year Ended December 31, 2024 | ||||||||||||||||||||||||||||||||||||||||||||||||||
| Common Stock | Additional Paid-in Capital | Accumulated Deficit | Treasury Stock | Noncontrolling Interests | Total Equity | |||||||||||||||||||||||||||||||||||||||||||||
| (In thousands, except share data) | Shares | Amount | Shares | Amount | ||||||||||||||||||||||||||||||||||||||||||||||
| Balance at December 31, 2023 | $ | $ | $ | ( | $ | ( | $ | $ | ||||||||||||||||||||||||||||||||||||||||||
| Issuance of restricted stock | — | — | — | — | — | — | — | |||||||||||||||||||||||||||||||||||||||||||
| Share repurchases | — | — | — | — | ( | — | ( | |||||||||||||||||||||||||||||||||||||||||||
| Stock-based compensation expense, net | — | — | — | — | — | — | ||||||||||||||||||||||||||||||||||||||||||||
| Net income (loss) | — | — | — | ( | — | — | ( | |||||||||||||||||||||||||||||||||||||||||||
| Capital distributions to noncontrolling interests | — | — | — | — | — | — | ( | ( | ||||||||||||||||||||||||||||||||||||||||||
| Balance at December 31, 2024 | $ | $ | $ | ( | $ | ( | $ | $ | ||||||||||||||||||||||||||||||||||||||||||
See Notes to Consolidated Financial Statements.
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Spruce Power Holding Corporation
Consolidated Statements of Cash Flows
| Years Ended December 31, | ||||||||||||||
| (In thousands) | 2025 | 2024 | ||||||||||||
| Operating activities: | ||||||||||||||
| Net loss | $ | ( | $ | ( | ||||||||||
| Add back: Net loss (income) from discontinued operations | ( | |||||||||||||
| 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 | ( | ( | ||||||||||||
| Impairment of goodwill | ||||||||||||||
| Accretion expense | ||||||||||||||
| Change in fair value of interest rate swaps | ||||||||||||||
| Change in fair value of warrant liabilities | ( | |||||||||||||
| 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 continuing operating activities | ( | ( | ||||||||||||
| Net cash used in discontinued operating activities | ( | ( | ||||||||||||
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 (used in) continuing investing activities | ( | |||||||||||||
| Financing activities: | ||||||||||||||
| Proceeds from issuance of non-recourse debt | ||||||||||||||
| Payment of deferred financing costs | ( | |||||||||||||
| Repayments of non-recourse debt | ( | ( | ||||||||||||
| Share repurchases | ( | ( | ||||||||||||
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| Capital distributions to noncontrolling interests | ( | ( | ||||||||||||
| Net cash provided by (used in) continuing financing activities | ( | |||||||||||||
| Net cash provided by discontinued financing activities | ||||||||||||||
Net cash provided by (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 | $ | $ | ||||||||||||
| Supplemental disclosure of noncash investing and financing information: | ||||||||||||||
| Right-of-use asset obtained in exchange for lease liability | $ | $ | ||||||||||||
See Notes to Consolidated Financial Statements.
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Spruce Power Holding Corporation
Notes to 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 United States (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) both the lease of, and 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 offered 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 the SEMTH Master Lease, defined below.
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, 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.
Corporate History and Discontinued Operations
Historically, as XL Fleet Corp. (“XL Fleet”), the Company provided fleet electrification solutions for commercial vehicles in North America, offering its systems for vehicle electrification (the “Drivetrain” business) and offering and installing charging stations to enable customers to develop charging infrastructure required for electrified vehicles (the “XL Grid” business). In early 2022, the Company performed a strategic review of its overall business operations, which resulted in (i) the sale of the Company’s Drivetrain and XL Grid businesses in January 2023, and (ii) the decision to pursue merger and acquisition (“M&A”) opportunities. On September 9, 2022, the Company acquired 100 % of the membership interests of Spruce Holding Company 1 LLC, Spruce Holding Company 2 LLC, Spruce Holding Company 3 LLC and Spruce Manager LLC (collectively and together with their subsidiaries, “Legacy Spruce Power”) (See Note 3. Business Combinations), which was one of the largest privately held owner and operator of home solar energy systems in the U.S. at the time of the transaction. In November 2022, following the acquisition of Legacy Spruce Power, the Company changed its corporate name from “XL Fleet Corp.” to “Spruce Power Holding Corporation.” Additionally, the Company changed its ticker symbol from “XL” to “SPRU.”
After the acquisition of Legacy Spruce Power, the Company also commenced a review of its XL Grid business to evaluate its strategic fit with Legacy Spruce Power, and in the fourth quarter of 2022, the Company entered into a non-binding letter of intent for the sale of World Energy Efficiency Services, LLC (“World Energy”) for an immaterial amount. The divestiture of World Energy closed in January 2023 and the Company subsequently ceased its XL Grid operations.
Both the Drivetrain and XL Grid operations are presented as discontinued operations in the consolidated financial statements.
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Spruce Power Holding Corporation
| Notes to Consolidated Financial Statements | ||
In the first quarter of 2023, the Company completed the acquisition of all issued and outstanding interests in SS Holdings 2017, LLC and its subsidiaries (“SEMTH”) from certain funds managed by HPS Investment Partners, LLC, pursuant to a membership interest purchase and sale agreement as of that date (the “SEMTH Acquisition”). The SEMTH related asset includes a 20-year use rights to customer payment streams of approximately 22,500 customer contracts (the “SEMTH Master Lease”). Subsequently on August 18, 2023, the Company acquired approximately 2,400 home solar assets and customer contracts, with an average remaining contract life of approximately 11 years, from a publicly traded, regulated utility company (the “Tredegar Acquisition”).
In the fourth quarter of 2024, the Company completed the acquisition of a residential solar portfolio consisting of approximately 9,800 home solar assets and customer contracts, with an average remaining contract life of approximately 10 years, from a publicly traded energy services company (the “NJR Acquisition”). During the year ended December 31, 2025, the Company acquired 200 additional systems for approximately $5.3 million in cash, inclusive of transaction costs of approximately $0.1 million.
With the completion of the NJR Acquisition, the Company has, in the aggregate, 14 portfolios of rooftop solar Customer Agreements. In the aggregate, as of December 31, 2025, the Company offered subscription-based services and owned the cash flows from approximately 84,000 home solar assets and customer contracts.
Going Concern
These 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 are non-recourse to the Company (see Note 7. Non-Recourse Debt included within the accompanying audited consolidated financial statements). On March 27, 2026, the Company entered into the SP1 Facility Amendment 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, see Note 7. Because (i) the Amended SP1 Maturity Date is within twelve months from the date the accompanying audited consolidated financial statements are issued, (ii) the Company has not yet entered into a commitment to refinance the SP1 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 (iv) the Company had negative working capital of $122.9 million as of December 31, 2025 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 year ended December 31, 2025, these conditions raise substantial doubt about the Company’s ability to continue as a going concern. Our 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 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, 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, 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 consolidated financial statement presentation
F-11
Spruce Power Holding Corporation
| Notes to Consolidated Financial Statements | ||
The accompanying consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United States (“U.S. GAAP”) and include the accounts of its wholly owned subsidiaries and variable interest entities (“VIEs”), for which the Company was the primary beneficiary. All intercompany transactions and balances have been eliminated in consolidation. Certain prior year amounts have been reclassified to conform to the Company’s presentation as of and for the year ended December 31, 2025 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,
Variable interest entities
The Company consolidates any variable interest entity (“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 VIEs and remained as such as of December 31, 2025 and 2024.
Noncontrolling interests
The distribution rights and priorities for the Funds (before any ceased being a VIE) as set forth in their respective operating agreements differ from the underlying percentage ownership interests of the members. As a result, the Company allocates income or loss to the noncontrolling interest holders of the Funds (before any ceased being a VIE) utilizing the hypothetical liquidation of book value (“HLBV”) method, in which income or loss is allocated based on the change in each member's claim on the net assets at the end of each reporting period, adjusted for any distributions or contributions made during such periods. The HLBV method is commonly applied to investments where cash distribution percentages vary at different points in time and are not directly linked to an equity member's ownership percentage.
F-12
Spruce Power Holding Corporation
| Notes to Consolidated Financial Statements | ||
The HLBV method is a balance sheet-focused approach. Under this method, a calculation is prepared at each reporting date to determine the amount that each member would receive if the entity were to liquidate all of its assets and distribute the resulting proceeds to its creditors and members based on the contractually defined liquidation priorities. The difference between the calculated liquidation distribution amounts at the beginning and the end of the reporting period, after adjusting for capital contributions and distributions, is used to derive each member's share of the income or loss for the period. Factors used in the HLBV calculation include U.S. GAAP income (loss), taxable income (loss), capital contributions, ITCs, capital distributions and the stipulated targeted investor return specified in the subsidiaries' operating agreements. Changes in these factors could have a significant impact on the amounts that investors would receive upon a hypothetical liquidation.
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 and cash equivalents. 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 December 31, 2025 and 2024, 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.
As of and for the year ended 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 balances and 11 % of total revenue.
As of and for the year ended December 31, 2024, the Company had no customers that represented at least 10% of the Company’s revenues or its accounts receivable balances.
Restricted cash
Restricted cash held at December 31, 2025 and 2024 of $38.3 million and $36.3 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 the Funds. The carrying amount reported in the consolidated balance sheets for restricted cash approximates its fair value.
The following table provides a reconciliation of cash and cash equivalents and restricted cash reflected on the consolidated balance sheets to the total amounts shown within the consolidated statements of cash flows for each year:
| As of December 31, | |||||||||||
| (Amounts in thousands) | 2025 | 2024 | |||||||||
| Cash and cash equivalents | $ | $ | |||||||||
| Restricted cash | |||||||||||
| Total cash, cash equivalents and restricted cash | $ | $ | |||||||||
F-13
Spruce Power Holding Corporation
| Notes to Consolidated Financial Statements | ||
Accounts receivable, net
| As of December 31, | ||||||||
| (Amounts in thousands) | 2025 | 2024 | ||||||
| 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 | $ | $ | ||||||
Derivative instruments and hedging activities
The Company utilizes interest rate swaps to manage interest rate risk on existing and planned future debt issuances. The fair value of all derivative instruments are recognized as assets or liabilities at the balance sheet date on the consolidated balance sheets. The fair value of the interest rate swaps are calculated by discounting the future net cash flows to the present value based on the terms and conditions of the agreements and the forward interest rate curves. As these inputs are based on observable data and valuations of similar instruments, the interest rate derivatives are primarily categorized as Level 2 in the fair value hierarchy.
Prepaid expenses and other current assets
Prepaid expenses and other current assets include prepaid insurance and supplies, which are expected to be recognized or realized within the next 12 months.
Investment related to SEMTH master lease agreement and interest income
The Company accounts for its investment related to the SEMTH master lease agreement in accordance with Accounting Standards Codification (“ASC”) 325-40, Investments—Other—Beneficial Interests in Securitized Financial Assets. The SEMTH master lease agreement 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 consolidated statements of operations in the amount of $18.1 million and $16.8 million for the years ended December 31, 2025 and 2024, 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.
Property and equipment, net
Property and equipment, net consists of solar energy systems and other property and equipment.
F-14
Spruce Power Holding Corporation
| Notes to Consolidated Financial Statements | ||
Solar energy systems, net
Solar energy systems, net consists of home solar energy systems which are subject to long-term Customer Agreements and asset retirement costs (“ARC”). Solar energy systems are recorded at their relative fair value upon acquisition, while ARCs are capitalized as part of the carrying amount of the solar energy systems and depreciated over the remaining useful life. Subsequently, any impairment charges that may arise are recognized and the impairment loss reduces the carrying amount of the asset to its recoverable amount. For all acquired systems, the Company calculates depreciation using the straight-line method over the remaining useful life as of the acquisition date based on a 30-year useful life from the date the asset was placed in service. When a solar energy system is sold or otherwise disposed of, a gain (or loss) is recognized for the amount of cash received in excess of the net book value of the solar energy system (or vice versa), at which time the related solar energy system is removed from the consolidated balance sheets.
Other property and equipment, net
Other property and equipment, net is stated at cost less accumulated depreciation, or if acquired in a business combination, at fair value as of the date of acquisition. Depreciation is calculated using the straight-line method, based upon the following estimated useful lives:
| Equipment | |||||
| Furniture and fixtures | |||||
| Computer and related equipment | |||||
| Software | |||||
| Vehicles | |||||
| Leasehold improvements | Lesser of useful life of the asset or remaining life of the lease | ||||
Intangible assets, net
Impairment of long-lived assets
F-15
Spruce Power Holding Corporation
| Notes to Consolidated Financial Statements | ||
Leases
The Company determines if an arrangement is a lease, or contains a lease, at the inception of the arrangement and evaluates whether the lease is an operating lease or a finance lease at the commencement date. The Company’s assessment is based on: (i) whether the contract involves the use of a distinct identified asset, (ii) whether the Company obtained the right to substantially all the economic benefit from the use of the asset throughout the period, and (iii) whether the Company has the right to direct the use of the asset.
The Company recognizes lease right-of-use (“ROU”) assets and lease liabilities for operating and finance leases with initial terms greater than 12 months. ROU assets represent the Company’s right to use an asset for the lease term, while lease liabilities represent the Company’s obligation to make the related lease payments. The ROU assets for all leases are recognized based on the present value of fixed lease payments over the lease term at the lease commencement date. The lease liabilities of all leases are calculated as the present value of fixed payments not yet paid at the measurement date, however subsequent to the measurement date, the lease liabilities are presented at amortized cost using the effective interest method.
The Company generally uses its incremental borrowing rate as the discount rate for leases unless an interest rate is implicitly stated in the leases. The Company’s incremental borrowing rate is determined using a portfolio approach based on the rate of interest that the Company would have to pay to borrow an amount equal to the lease payments on a collateralized basis over a similar term. The lease term for all of the Company’s leases includes the noncancelable period of the lease, in addition to any additional periods covered by either the Company’s option to extend the lease, which the Company is reasonably certain to exercise, or the option to extend the lease controlled by the lessor. All ROU assets are reviewed periodically for impairment.
Lease expense for operating leases consists of the lease payments plus any initial direct costs and is recognized on a straight-line basis over the lease term. Variable lease payments that are not based on an index or a rate, such as common area maintenance fees, taxes and insurance, are expensed as incurred.
Asset retirement obligations
| Years Ended December 31, | |||||||||||
| (Amounts in thousands) | 2025 | 2024 | |||||||||
| Balance at the beginning of the period | $ | $ | |||||||||
Additions | |||||||||||
| Accretion expense | |||||||||||
| Balance at the end of the period | $ | $ | |||||||||
F-16
Spruce Power Holding Corporation
| Notes to Consolidated Financial Statements | ||
Asset acquisitions
The Company accounts for assets acquired based on the consideration transferred by the Company, including direct and incremental transaction costs incurred by the Company as a result of the acquisition. An asset acquisition’s cost or the consideration transferred by the Company is assumed to be equal to the fair value of the net assets acquired. If the consideration transferred is cash, measurement is based on the amount of cash the Company paid to the seller, as well as transaction costs incurred by the Company. Consideration given in the form of nonmonetary assets, liabilities incurred or equity interests issued is measured based on either the cost to the Company or the fair value of the assets or net assets acquired, whichever is more clearly evident. The cost of an asset acquisition is allocated to the net assets acquired based on their estimated relative fair values. 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. Goodwill is not recognized in an asset acquisition.
Impairment of goodwill
Goodwill represents the excess of cost over the fair market value of net tangible and identifiable intangible assets of acquired businesses. Goodwill is not amortized, however it is annually tested for impairment, or more frequently if events or circumstances indicate that the carrying amount of goodwill may be impaired. The Company has historically recorded goodwill in connection with its business combinations.
The Company performs its annual goodwill impairment assessment on October 1 of each fiscal year, or more frequently if events or circumstances arise which indicate that goodwill may be impaired. An assessment can be performed by first completing a qualitative assessment of the Company’s single reporting unit. The Company can also bypass the qualitative assessment in any period and proceed directly to the quantitative impairment test and then resume the qualitative assessment in any subsequent period. Qualitative indicators that may trigger the need for annual or interim quantitative impairment testing include, among other things, deterioration in macroeconomic conditions, declining financial performance, deterioration in the operational environment, or an expectation of selling or disposing of a portion of the reporting unit. Additionally, a significant change in business climate, a loss of a significant customer, increased competition, a sustained decrease in share price, or a decrease in estimated fair value below book value may trigger the need for interim impairment testing of goodwill.
If the Company believes that, as a result of its qualitative assessment, it is more likely than not that the fair value of the reporting unit is less than its carrying amount, the quantitative impairment test is required. The quantitative test involves comparing the fair value of the reporting unit with its carrying amount, including goodwill. If the carrying amount of the reporting unit exceeds its fair value, an impairment loss is recorded as a reduction to goodwill with a corresponding charge to earnings in the period the goodwill is determined to be impaired. The income tax effect associated with an impairment of tax-deductible goodwill is also considered in the measurement of the goodwill impairment. Any goodwill impairment is limited to the total amount of goodwill.
The Company evaluates the fair value of the Company’s reporting unit using the market and income approach. Under the market approach, the Company uses multiples of earnings before interest, taxes, depreciation and amortization (“EBITDA”) or revenues of the comparable guideline public companies by selecting a population of public companies with similar operations and attributes. Using this guideline public company data, a range of multiples of enterprise value to EBITDA or revenue is calculated. The income approach of computing fair value is based on the present value of the expected future economic benefits generated by the asset or business, such as cash flows or profits which will then be compared to its book value. During the year ended December 31, 2024, the Company recorded a charge of $28.8 million to fully impair its goodwill within the consolidated statements of operations. See Note 11. Goodwill for further information on the Company’s determination relating to impairment of goodwill.
F-17
Spruce Power Holding Corporation
| Notes to Consolidated Financial Statements | ||
Warranties
Customers who purchased the Company's Drivetrain systems were provided limited-assurance-type warranties for equipment and work performed under the contracts. The warranty period typically extends for three years following transfer of control of the equipment. The warranties solely relate to correction of product defects during the warranty period, which is consistent with similar warranties offered by competitors. Customers of XL Grid were provided limited-assurance-type warranties for a term of one year for installation work performed under its contracts.
The Company accrued the estimated cost of product warranties for unclaimed charges based on historical experiences and expected results. Should product failure rates and material usage costs differ from these factors, estimated revisions to the estimated warranty liability will be required. The Company periodically assesses the adequacy of its recorded product warranty liabilities and adjusts the balances as required. Warranty expense is recorded as a component of discontinued operations in the consolidated statements of operations. With the Company’s exit from the Drivetrain business and the subsequent sale of World Energy, the Company will not enter into any additional warranty obligations and the existing warranty obligation expired in 2025.
The following is a roll forward of the Company’s accrued warranty liability:
| As of December 31, | |||||||||||
| (Amounts in thousands) | 2025 | 2024 | |||||||||
| Balance at the beginning of the period | $ | $ | |||||||||
| Warranty fulfillment charges | ( | ( | |||||||||
| Balance at the end of the period | $ | $ | |||||||||
The Company’s warranty liability is included in accrued expenses and other current liabilities on the consolidated balance sheets.
Unfavorable solar renewable energy agreements
Contingencies
F-18
Spruce Power Holding Corporation
| Notes to Consolidated Financial Statements | ||
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.
•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, accrued expenses and other current liabilities, non-recourse debt, and interest rate swaps. The carrying value of cash and cash equivalents, restricted cash, accounts receivable, accounts payable and accrued expenses and other current liabilities approximates fair value due to the short-term nature of those instruments. See Note 10. Fair Value Measurements for additional information on assets and liabilities measured at fair value.
Stock-based compensation
The Company grants stock-based awards to certain employees, directors and non-employee consultants. Awards issued under the Company’s stock-based compensation plans include stock options and restricted stock units. For transactions in which the Company obtains employee services in exchange for an award of equity instruments, the cost of the services are measured based on the grant date fair value of the award. The Company recognizes the cost over the period during which an employee is required to provide services in exchange for the award, known as the requisite service period (usually the vesting period). Costs related to plans with graded vesting are generally recognized using a straight-line method.
Stock Options
The Company uses the Black-Scholes option pricing model to determine the fair value of stock-based awards and recognizes the compensation cost on a straight line basis over the requisite service period of the awards for employees, which is typically the four-year vesting period of the award, and effective contract period specified in the award agreement for non-employees. The fair value of common stock is determined based on the closing price of the Company’s common stock on the NYSE at each award grant date.
F-19
Spruce Power Holding Corporation
| Notes to Consolidated Financial Statements | ||
The determination of the fair value of stock-based payment awards utilizing the Black-Scholes model is affected by the stock price and a number of assumptions, including expected volatility, expected life, risk-free interest rate and expected dividends. The Company does not have a significant history of trading its common stock as it was not a public company until December 21, 2020, and as such expected volatility was estimated using historical volatilities of comparable public entities. The expected life of the awards is estimated based on a simplified method, which uses the average of the vesting term and the original contractual term of the award. The risk-free interest rate assumption is based on observed interest rates appropriate for the expected life of the awards. The dividend yield assumption is based on history and expectation of paying no dividends. Forfeitures are accounted for as they occur.
Restricted Stock Units
Restricted stock units generally vest over the requisite service periods (vesting on a straight–line basis). The fair value of a restricted stock unit award is equal to the closing price of the Company’s common stock on the NYSE on the grant date. The Company accounts for the forfeiture of equity awards as they occur.
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 the home solar energy systems pursuant to long-term agreements. Pursuant to ASC 606 defined below, the Company has elected the “right to invoice” practical expedient for PPA 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 consolidated statements of operations for the years ended December 31, 2025 and 2024:
| Years Ended December 31, | ||||||||||||||
| (Amounts in thousands) | 2025 | 2024 | ||||||||||||
| 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, Revenue from Contracts with Customers (“ASC 606”) issued by the Financial Accounting Standards Board (“FASB”), 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.
F-20
Spruce Power Holding Corporation
| Notes to 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 consolidated balance sheets. As of December 31, 2023, the deferred rent assets balance was $2.5 million. 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. The Company recognizes revenue 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 did not incur costs 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.
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. Deferred revenue, in the aggregate, as of December 31, 2025 and 2024 was $5.0 million and $4.0 million, respectively. As of December 31, 2023, the Deferred Revenue balance was $2.7 million. During the years ended December 31, 2025 and 2024, the Company recognized revenues of $0.3 million and $0.2 million related to deferred revenue as of December 31, 2024 and 2023, respectively.
F-21
Spruce Power Holding Corporation
| Notes to Consolidated Financial Statements | ||
Cost of revenues - solar energy systems depreciation
Cost of revenues - solar energy systems depreciation consists of the depreciation expense relating to the solar energy systems.
Cost of revenues - operations and maintenance
Cost of revenues - operations and maintenance primarily consists of costs of third parties used to service the Company’s systems and any cost associated with meter swaps.
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 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. For the years ended December 31, 2025 and 2024, 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 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 years ended December 31, 2025 and 2024, the Company recognized no provision for income taxes, consistent with its losses incurred and the valuation allowance against its deferred tax assets. As a result, the Company's effective income tax rate was 0
On July 4, 2025, the One Big Beautiful Bill was enacted (“OBBBA”), introducing significant and wide-ranging changes to the U.S. federal tax system. Significant components include permanent extension of certain expiring provisions of the Tax Cuts and Jobs Act, the restoration of favorable tax treatment for certain business provisions, and accelerated phase outs to the Inflation Reduction Act energy tax credits. We continue to assess any potential impact to our Consolidated Financial Statements but for fiscal year 2025, OBBBA did not have a material impact.
F-22
Spruce Power Holding Corporation
| Notes to Consolidated Financial Statements | ||
Net income (loss) per share
Basic net income (loss) per share is computed by dividing net income (loss) by the weighted average number of shares of common stock outstanding during the period, without consideration for potentially dilutive securities. Diluted net income (loss) per share is computed by dividing net income (loss) by the weighted-average number of shares of common stock and potentially dilutive securities outstanding during the period determined using the treasury stock and if-converted methods. For purposes of the diluted income (loss) per share calculation, stock options, restricted stock units, restricted stock unit awards and warrants are considered to be potentially dilutive securities. Potentially dilutive securities are excluded from the calculation of diluted income (loss) per share when their effect would be anti-dilutive.
Segment reporting
Segment reporting is based on the management approach, following the method that management organizes the Company’s reportable 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, on a consolidated basis, which engages in the sole business of providing solar energy and related services to its customers, and as of December 31, 2025 and 2024, 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.
SEC Climate Disclosure Rule
Recent Accounting Pronouncements Adopted
F-23
Spruce Power Holding Corporation
| Notes to Consolidated Financial Statements | ||
In November 2023, the FASB issued Accounting Standards Update (“ASU”) 2023-07, Segment Reporting (Topic 280): Improvement to Reportable Segment Disclosures, (“ASU 2023-07”), which requires enhanced disclosures for reportable segments, primarily in relation to significant segment expenses, even in the event an entity has a single reportable segment in accordance with Topic 280. ASU 2023-07 was effective for the Company for fiscal years beginning after December 15, 2023, and interim periods within fiscal years beginning after December 15, 2024. The Company adopted this ASU as of December 31, 2024 and has retrospectively applied its requirements to all prior periods based on the significant segment expense categories identified and disclosed in its consolidated financial statements in the period of adoption. See Note 20. Segment Information.
In December 2023, the FASB issued ASU 2023-09, Income Taxes (Topic 740): Improvements to Income Tax Disclosures, (“ASU 2023-09”). The ASU enhances the transparency and decision usefulness of income tax disclosures by requiring additional disaggregation of information related to the effective tax rate reconciliation, income taxes paid, and income tax expense and pretax income by jurisdiction. The Company adopted ASU 2023 09 on a prospective basis effective January 1, 2025. Accordingly, the enhanced income tax disclosures are presented beginning in fiscal year 2025, and prior period disclosures have not been 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.
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.
F-24
Spruce Power Holding Corporation
| Notes to 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.
Note 3. Acquisitions
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 “APA”). 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.
The NJR Acquisition has been accounted for as an acquisition 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.
F-25
Table of Contents
Spruce Power Holding Corporation
Notes to Consolidated Financial Statements | ||
Note 4. Property and Equipment, Net
Property and equipment, net consisted of the following as of December 31, 2025 and 2024:
| As of December 31, | |||||||||||
| (Amounts in thousands) | 2025 | 2024 | |||||||||
| 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 | $ | $ | |||||||||
Depreciation expense related to solar energy systems is included within cost of revenues - solar energy systems depreciation within the consolidated statements of operations, and for the years ended December 31, 2025 and 2024 was $29.1 million and $23.4 million, respectively. Depreciation expense related to other property and equipment is included within selling, general and administrative expenses within the consolidated statements of operations, and for the years ended December 31, 2025 and 2024 was $0.3 million and $0.2 million, respectively.
Note 5. Intangible Assets, Net
The following table presents the detail of intangible assets, net as recorded in the consolidated balance sheets as of December 31, 2025 and 2024:
| As of December 31, | |||||||||||
| (Amounts in thousands) | 2025 | 2024 | |||||||||
| 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 the year ended December 31, 2025 was $0.7 million recorded in selling, general and administrative expenses. Amortization of intangible assets for the year ended December 31, 2024 was $1.2 million, of which $0.5 million and $0.7 million were recorded within revenues and selling, general and administrative expenses, respectively.
Amortization of unfavorable solar renewable energy revenue agreements for the years ended December 31, 2025 and 2024 was $3.0 million and $3.1 million, respectively, which is included within revenue on the statement of operations.
F-26
Spruce Power Holding Corporation
| Notes to Consolidated Financial Statements | ||
As of December 31, 2025, expected amortization of intangible assets for each of the five succeeding fiscal years and thereafter is as follows:
| As of December 31, | |||||
| (Amounts in thousands) | 2025 | ||||
| 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 December 31, 2025 and 2024:
| As of December 31, | ||||||||||||||
| (Amounts in thousands) | 2025 | 2024 | ||||||||||||
| Accrued interest | $ | $ | ||||||||||||
| Accrued professional fees | ||||||||||||||
Accrued contingencies (See Note 14 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 | $ | $ | ||||||||||||
F-27
Spruce Power Holding Corporation
| Notes to Consolidated Financial Statements | ||
Note 7. Non-Recourse Debt
The following table provides a summary of the Company’s non-recourse debt as of December 31, 2025 and 2024:
| As of December 31, | ||||||||||||||||||||
| (Amounts in thousands) | Due | 2025 | 2024 | |||||||||||||||||
SVB Credit Agreement, SP1 Facility (1) | April 2026 | $ | $ | |||||||||||||||||
Second SVB Credit Agreement, SP2 Facility (1) | May 2027 | |||||||||||||||||||
KeyBank Credit Agreement, SP3 Facility (1) | November 2027 | |||||||||||||||||||
Second KeyBank Credit Agreement (1) | April 2030 | |||||||||||||||||||
Barings GPSF Credit Agreement, SET Facility | April 2042 | |||||||||||||||||||
Banco Santander Credit Agreement, SP5 Facility | November 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) In connection with the acquisition of Legacy Spruce Power effective September 9, 2022, the Company assumed long-term debt instruments valued at approximately $507.2 million as of that date. In connection with accounting for the business combination, the Company adjusted the carrying value of this long-term debt to its fair value as of the Acquisition Date. This fair value adjustment resulted in a reduction of the carrying value of the debt by $35.2 million. This adjustment to fair value is being amortized to interest expense over the life of the related debt instruments using the effective interest method. Amortization expense for the fair value adjustment and deferred financing costs for the years ended December 31, 2025 and 2024 was $6.5 million and $6.0 million, respectively.
SVB Credit Agreement
The SVB Credit Agreement (the “SP1 Facility”), executed with Silicon Valley Bank (“SVB”), a division of First-Citizens Bank & Trust Company, includes a debt service reserve letter of credit (the “SP1 LC”) with related amounts outstanding of $17.1 million and $15.6 million as of December 31, 2025 and 2024, respectively. Amounts outstanding under the SP1 LC bear interest of 2.50 % per annum and unused amounts bear interest at 0.50 % per annum. The term loans under the SP1 Facility require quarterly interest and principal payments, paid a month in arrears, with the remaining principal balance due in a single payment in April 2026 and bear interest at the Secured Overnight Financing Rate (the “SOFR”) plus the applicable margin. The applicable margin is 2.25 % per annum for the first three years, 2.375 % per annum from the third anniversary through the sixth anniversary and 2.5 % per annum starting on the sixth anniversary. The effective interest rate on the SP1 Facility was 7.01 % and 7.16 % as of December 31, 2025 and 2024, respectively. The SP1 Facility 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 amount outstanding.
The obligations of the Company under the SP1 Facility are secured by substantially all of the assets and equity interest in certain of the Company’s subsidiaries. The SP1 Facility requires the Company to be in compliance with various covenants, including debt service coverage ratios and as of December 31, 2025, the Company was in compliance with the required covenants under the SP1 Facility.
On March 27, 2026, the Company entered into an amendment (the “SP1 Facility Amendment”) to the SP1 Facility with Silicon Valley Bank (the “SP1 Facility”) which extends the maturity date to October 30, 2026 (the “Amended SP1 Maturity Date”), unless a signed term sheet for a long-term financing is obtained, in which case the Amended SP1 Maturity Date will be January 30, 2027. Under the terms of the SP1 Facility Amendment, the applicable margin is 2.75 % per annum from the effective date of the SP1 Facility Amendment to 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.
F-28
Spruce Power Holding Corporation
| Notes to Consolidated Financial Statements | ||
Second SVB Credit Agreement
The Second SVB Credit Agreement (the “SP2 Facility”) includes a debt service reserve letter of credit (the “SP2 LC”). Amounts outstanding under the SP2 LC bear interest of 2.30 % per annum and unused amounts bear interest at 0.50 % per annum. The term loans under the SP2 Facility require quarterly principal and interest payments, mature in April 2027 and bear interest at the SOFR plus the applicable margin. The applicable margin is 2.30 % per annum for the first three years, 2.425 % per annum from the third anniversary through the sixth anniversary and 2.55 % per annum starting on the sixth anniversary.
On August 18, 2023, the Company entered into a second amendment to the SP2 Facility with SVB, which provided the Company (i) incremental term loans with a principal amount of approximately $21.4 million, of which proceeds were primarily used to fund the Tredegar Acquisition (See Note 3. Acquisitions) and (ii) incremental letters of credit in the aggregate amount of approximately $2.7 million (collectively, the “SP2 Facility Amendment”). Excluding the aforementioned amounts, all other terms of the original SP2 Facility remain unchanged. The SP2 Facility Amendment was treated as a debt modification under ASC 470-50, Debt—Modifications and Extinguishments. The Company also incurred $0.4 million of deferred financing costs, which is being amortized to interest expense over the term of the loan. Related unamortized deferred financing costs were $0.5 million as of December 31, 2025. The SP2 Facility 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 amount outstanding.
Amounts outstanding under the SP2 LC, as amended, was $6.0 6.97 % and 7.25 % as of December 31, 2025 and 2024, respectively. The obligations of the Company under the SP2 Facility are secured by substantially all of the assets and equity interest in certain of the Company’s subsidiaries. The SP2 Facility requires the Company to be in compliance with various covenants, including debt service coverage ratios, and as of December 31, 2025, the Company was in compliance with the required covenants under the SP2 Facility.
Key Bank Credit Agreement
The Key Bank Credit Agreement (the “SP3 Facility”), executed with KeyBank National Association, includes a debt service reserve letter of credit (the “SP 3 LC”) with related amounts outstanding of $4.1 3.00 % per annum. The term loans under the SP3 Facility require quarterly principal and interest payments, mature in November 2027 and bear interest at the SOFR plus the applicable margin. The applicable margin is 3.00 % per annum for the first three years, 3.125 % per annum from the third anniversary through the fifth anniversary and 3.25 % per annum starting on the fifth anniversary. The effective interest rate on the SP3 Facility was 7.58 % and 7.86 % as of December 31, 2025 and 2024, respectively. The SP3 Facility 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 amount outstanding.
The obligations of the Company under the SP3 Facility are secured by substantially all of the assets and equity interest in certain of the Company’s subsidiaries. The SP3 Facility requires the Company to be in compliance with various covenants, including debt service coverage ratios, and as of December 31, 2025, the Company was in compliance with those required covenants under the SP3 Facility.
Second Key Bank Credit Agreement
The Second Key Bank Credit Agreement, executed with Key Bank National Association as the administrative agent and certain third parties as the lenders, includes term loans which require semi-annual principal and interest payments, mature in April 2030 and bear interest at 8.25 % per annum. The effective interest rate on term loans under the Second Key Bank Agreement was 8.25
F-29
Spruce Power Holding Corporation
| Notes to Consolidated Financial Statements | ||
Deutsche Bank Credit Agreement
As part of the acquisition of SEMTH (See Note 3. Acquisitions) in March 2023, the Company assumed debt with Deutsche Bank AG, New York Bank (“Deutsche Bank”). Prior to the SEMTH Acquisition, SET Borrower 2022, LLC (“SET Borrower”), a wholly owned subsidiary of SEMTH, entered into a credit agreement effective June 10, 2022 (the “Closing Date”) with Deutsche Bank as the facility agent, which consisted of a term loan of $125.0 million (the “SP4 Facility”) and is collateralized by all of the assets and property of SET Borrower. The term loan bears interest at the SOFR rate, plus the applicable margin. For the period from the Closing Date through the first twelve months , the applicable margin is 2.25 % per annum, 2.50 % for the following six months , and 2.75 % for the next six months , and 3.00 % through the maturity date. The term loan required quarterly payments, which began on August 17, 2022, and if the outstanding loan balance exceeded the borrowing base on a calculation date, the remaining balance would become due in a single payment in August 2025.
On June 26, 2024, the Company fully repaid the outstanding balance on the SP4 Facility of $125.0 million using proceeds from the SET Facility, as defined below. The repayment of the SP4 Facility was treated as a debt extinguishment under ASC 470-50, Debt—Modifications and Extinguishments. In connection with the repayment of the SP4 Facility, the Company settled the related interest rate swap contracts (see Note 8. Interest Rate Swaps for further discussion).
Barings GPSF Credit Agreement
On June 26, 2024, Spruce SET Borrower 2024, LLC (the “SET Borrower”), a wholly owned subsidiary of the Company, entered into a non-recourse Credit Agreement with Barings GPSF LLC, which provided a fixed interest term loan in the aggregate principal amount of $130.0 million (the “SET Facility”). The proceeds of the SET Facility were primarily used to repay the SP4 Facility discussed above. The SET Borrower incurred approximately $2.1 million of deferred financing costs related to the SET Facility, which are being amortized on a straight-line basis over the anticipated debt servicing period. The SET Facility matures on April 17, 2042 and requires quarterly principal and interest payments at 6.89 % per annum beginning August 2024. The effective interest rate on the SET Facility as of December 31, 2025 and December 31, 2024 was 6.89 % and 6.89 %, respectively. Effective December 26, 2027, the SET Facility requires additional interest to be accrued on any outstanding aggregate principal or unpaid accrued interest.
The SET Facility is collateralized by all of the assets and property of the SET Borrower. The SET Facility requires the SET Borrower to be in compliance with various covenants, and the SET Borrower was in compliance with the required covenants under the SET Facility as of December 31, 2025.
Banco Santander Credit Agreement
On November 22, 2024, Spruce Power 5 Borrower 2024, LLC (the “SP5 Borrower”), a wholly owned subsidiary of the Company, entered into a non-recourse credit agreement with Banco Santander, S.A., New York, which provided for a 3-year term loan facility in the aggregate principal amount of approximately $109.8 million (the “SP5 Facility”), of which proceeds were used to fund the NJR Acquisition. The SP5 Facility matures on November 22, 2027 and requires quarterly principal and interest payments with the remaining balance due in a single payment on November 22, 2027. Borrowings under the SP5 Facility bear interest at a variable rate equal to the SOFR as administered by the Federal Reserve Bank of New York plus a margin of 2.15 % from the original closing date through the end of the 24th month after the original closing date, and 2.75 % from the beginning of the 25th month after the original closing date until the date all principal and accrued and unpaid interest has been paid in full. The effective interest rate on the SP5 Facility as of December 31, 2025 and December 31, 2024 was 6.48 % and 6.48 %, respectively.
The SP5 Facility is collateralized by all of the assets and property of the SP5 Borrower. The SP5 Facility requires a swap percentage of at least 80 % of the outstanding loan balance and to be in compliance with various covenants. The Company obtained a waiver for the swap coverage at year-end and subsequently entered into an additional incremental swap contract. As of the date these financials were issued, the SP5 Borrower is in compliance with all required covenants under the SP5 Facility.
F-30
Spruce Power Holding Corporation
| Notes to Consolidated Financial Statements | ||
Certain of the Company’s credit agreements require the Company, on a quarterly basis, to consider loan to value ratios or estimated principal repayments based on the projected cash waterfall when determining current and future debt principal payments, which are subject to change. As of December 31, 2025, the estimated principal maturities of the Company’s debt were as follows:
| As of December 31, | ||||||||
| (Amounts in thousands) | 2025 | |||||||
| 2026 | $ | |||||||
| 2027 | ||||||||
| 2028 | ||||||||
| 2029 | ||||||||
| 2030 | ||||||||
Thereafter | ||||||||
Total | $ | |||||||
F-31
Table of Contents
Spruce Power Holding Corporation
Notes to Consolidated Financial Statements | ||
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. In connection with the acquisition of Legacy Spruce Power, the Company assumed interest rate swaps from agreements Legacy Spruce Power executed with four financial institutions.
As part of the SEMTH Acquisition in 2023, the Company assumed interest rate swaps related to the SP4 Facility, which were settled concurrently with the full repayment of the SP4 Facility in June 2024 and resulted in a gain of approximately $3.6 million within interest expense, net during the year ended December 31, 2024. The Company also completed the early settlement of certain interest rate swaps, which resulted in a gain of approximately $1.6 million within interest expense, net during the year ended December 31, 2024.
As of December 31, 2025 and 2024, the notional amount of the interest rate swaps covered approximately 89 % and 91 % of the balance of the Company’s floating rate term loans, respectively.
As of December 31, 2025, the following interest rate swaps are outstanding (in thousands):
| # | Notional Amount | Fixed Rate | Effective Date | Maturity Date | Total Fair Value Asset (Liability) | |||||||||||||||||||||||||||
| 1 | $ | % | 4/30/2020 | 1/31/2031 | $ | |||||||||||||||||||||||||||
| 2 | % | 4/30/2020 | 1/31/2031 | |||||||||||||||||||||||||||||
| 3 | % | 4/30/2020 | 1/31/2031 | |||||||||||||||||||||||||||||
| 4 | % | 10/31/2019 | 1/31/2031 | |||||||||||||||||||||||||||||
| 5 | % | 10/31/2019 | 1/31/2031 | |||||||||||||||||||||||||||||
| 6 | % | 10/31/2019 | 1/31/2031 | |||||||||||||||||||||||||||||
| 7 | % | 10/31/2019 | 1/31/2031 | |||||||||||||||||||||||||||||
| 8 | % | 7/31/2019 | 1/31/2031 | |||||||||||||||||||||||||||||
| 9 | % | 7/31/2019 | 1/31/2031 | |||||||||||||||||||||||||||||
| 10 | % | 7/31/2019 | 1/31/2031 | |||||||||||||||||||||||||||||
| 11 | % | 7/31/2019 | 1/31/2031 | |||||||||||||||||||||||||||||
| 12 | % | 01/31/2023 | 07/31/2032 | |||||||||||||||||||||||||||||
| 13 | % | 01/31/2023 | 07/31/2032 | |||||||||||||||||||||||||||||
| 14 | % | 07/12/2022 | 04/30/2032 | |||||||||||||||||||||||||||||
| 15 | % | 07/12/2022 | 10/31/2031 | |||||||||||||||||||||||||||||
| 16 | % | 08/18/2023 | 01/31/2032 | ( | ||||||||||||||||||||||||||||
| 17 | % | 11/22/2024 | 05/17/2033 | ( | ||||||||||||||||||||||||||||
| $ | $ | |||||||||||||||||||||||||||||||
During the year ended December 31, 2025, the aggregate impact of the Company’s interest rate swaps in the consolidated statements of operation was $4.8 million, of which $12.7 million related to unrealized losses and $7.9 million related to realized gains, which is recognized within interest expense, net in the consolidated statements of operation.
During the year ended December 31, 2024, the aggregate impact of the Company’s interest rate swaps in the consolidated statements of operation was $15.2 million, of which $2.8 million related to unrealized losses and $18.0 million related to realized gains, which is recognized within interest expense, net in the consolidated statements of operations.
F-32
Spruce Power Holding Corporation
| Notes to Consolidated Financial Statements | ||
Note 9. Right-of-Use Assets and Lease Liabilities
The Company’s operating leases primarily relate to office space. The Company’s related ROU assets and lease liabilities are comprised of the following as of each period end:
| As of December 31, | |||||||||||
| (Amounts in thousands) | 2025 | 2024 | |||||||||
| Operating leases: | |||||||||||
| ROU assets | $ | $ | |||||||||
| Lease liability, current | |||||||||||
| Lease liability, non-current | |||||||||||
Other information related to leases is presented below:
| Years Ended December 31, | |||||||||||
| (Amounts in thousands) | 2025 | 2024 | |||||||||
| Other information: | |||||||||||
| Operating lease cost | $ | $ | |||||||||
| Variable lease cost | |||||||||||
| Sublease income | |||||||||||
| Operating cash outflows from operating ROU assets | |||||||||||
.
| As of December 31, | |||||||||||
| 2025 | 2024 | ||||||||||
| Weighted-average remaining lease term – operating leases (in months) | |||||||||||
| Weighted-average discount rate – operating leases | % | % | |||||||||
As of December 31, 2025, the annual minimum lease payments of the Company’s operating lease liabilities were as follows:
| As of December 31, | ||||||||
| (Amounts in thousands) | 2025 | |||||||
| 2026 | $ | |||||||
| 2027 | ||||||||
| 2028 | ||||||||
| 2029 | ||||||||
| 2030 | ||||||||
| Total future minimum lease payments, undiscounted | ||||||||
| Less: Imputed interest | ( | |||||||
| Present value of future minimum lease payments | $ | |||||||
F-33
Table of Contents
Spruce Power Holding Corporation
Notes to Consolidated Financial Statements | ||
Note 10. Fair Value Measurements
The Company uses various assumptions and methods in estimating the fair values of its financial instruments.
Assets and Liabilities Measured at Fair Value on a Recurring Basis
Private placement warrants to purchase 529,167 shares of common stock with an exercise price of $92.00 per share, which expired on December 21, 2025, were valued using a Black-Scholes model, pursuant to the inputs provided in the table below.
| Assumptions for Assets and Liabilities Measured at Fair Value on a Recurring Basis | |||||||||||
| Input | December 31, 2024 | ||||||||||
| Risk-free rate | % | ||||||||||
| Remaining term in years | |||||||||||
| Expected volatility | % | ||||||||||
| Exercise price | $ | ||||||||||
| Fair value of common stock | $ | ||||||||||
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:
| 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 | $ | $ | $ | $ | ||||||||||||||||||||||
F-34
Spruce Power Holding Corporation
| Notes to Consolidated Financial Statements | ||
| Fair Value Measurements as of December 31, 2024 | ||||||||||||||||||||||||||
| (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 December 31, 2025 and 2024 was $692.5 million and $723.8 million, respectively.
Note 11. Goodwill
Note 12. Stock-Based Compensation Expense
Stock-based compensation expense for stock options and restricted stock units for the years ended December 31, 2025 and 2024 was $3.0 million and $2.7 million, respectively. As of December 31, 2025, there was $7.2 million of unrecognized compensation cost related to stock options and restricted stock units which is expected to be recognized over the remaining vesting periods, with a weighted-average period of 2.6 years.
Stock Options
The Company grants stock options to certain employees that will vest over a period of to four years . A summary of stock option award activity for the years ended December 31, 2025 and 2024 was as follows:
F-35
Spruce Power Holding Corporation
| Notes to Consolidated Financial Statements | ||
| Options | Shares | Weighted Average Exercise Price | Weighted Average Remaining Contractual Term | |||||||||||||||||
Outstanding at December 31, 2023 | $ | |||||||||||||||||||
| Granted | ||||||||||||||||||||
| Exercised | ||||||||||||||||||||
| Cancelled or forfeited | ||||||||||||||||||||
Outstanding at December 31, 2024 | $ | |||||||||||||||||||
| Granted | ||||||||||||||||||||
| Exercised | ( | |||||||||||||||||||
| Cancelled or forfeited | ( | |||||||||||||||||||
Outstanding at December 31, 2025 | $ | |||||||||||||||||||
Exercisable at December 31, 2025 | $ | |||||||||||||||||||
The aggregate intrinsic value of stock options outstanding as of December 31, 2025 and 2024 was $0.8 million and $0.1 million, respectively. Cash received from options exercised for the years ended December 31, 2025 and 2024 was less than $0.1 million and $0.0 million, respectively.
During the year ended December 31, 2024, the Company granted 295,229 stock options to its President and Chief Executive Officer (the “CEO”) upon his appointment to such positions effective April 12, 2024. There were no stock options granted during the year ended December 31, 2025.
The fair value of stock options granted during the year ended December 31, 2024 was measured with the following assumptions:
| 2024 | ||||||||
| Expected volatility | ||||||||
| Expected term (in years) | ||||||||
| Risk-free interest rate | % | |||||||
| Expected dividend yield | % | |||||||
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 estimated by the fair value of the Company’s common stock at the date of grant. Restricted stock units activity during the years ended December 31, 2025 and 2024 was as follows:
F-36
Spruce Power Holding Corporation
| Notes to Consolidated Financial Statements | ||
| Number of Shares | Weighted Average Grant Date Fair Value Per Share | ||||||||||
Non-vested, at December 31, 2023 | $ | ||||||||||
| Granted | |||||||||||
| Vested | ( | ||||||||||
| Cancelled or forfeited | ( | ||||||||||
Non-vested, at December 31, 2024 | $ | ||||||||||
| Granted | |||||||||||
| Vested | ( | ||||||||||
| Cancelled or forfeited | ( | ||||||||||
Non-vested, at December 31, 2025 | $ | ||||||||||
During the year ended December 31, 2024, the Company granted restricted stock unit awards of 88,636 shares of common stock to the CEO upon his appointment effective April 12, 2024. In addition, upon the separation of the prior President and Chief Executive Officer (“Former CEO”) from the Company effective April 12, 2024, 97,994 and 244,267 restricted stock units awarded to the Former CEO were vested and forfeited, respectively. The Company recorded $0.5 million of expense related to the 97,994 vested awards during the year ended December 31, 2024.
Former CEO's Ladder Restricted Stock Unit Award
In connection with the acquisition of Legacy Spruce Power and his appointment as the Company's President effective September 9, 2022, the Company granted to its Former CEO a restricted stock unit award (the “Ladder RSUs”) of 208,333 shares of common stock. The Ladder RSUs were to vest in 10 % increments on the dates the Plan administrator certifies the applicable milestone stock prices have been achieved or exceeded, provided that the Former CEO remained employed on the date of certification and such achievement occurs within ten years of the date of the grant.
The Company used a Monte Carlo simulation valuation model to determine the fair value of the award as of the Acquisition Date, which was accounted for as a liability until the separation of the Former CEO effective April 12, 2024. The following inputs were used in the simulation: grant date stock price of $9.36 per share, annual volatility of 85.0 %, risk-free interest rate of 3.3 % and dividend yield of 0.0 %. For each tranche, a fair value was calculated as well as a derived service period which represents the median number of years it is expected to take for the Ladder RSUs to meet their corresponding milestone stock price excluding the simulation paths that result in the Ladder RSUs not vesting within the 10 -year term of the agreement. Each tranche's fair value would have been amortized ratably over the respective derived service period.
F-37
Spruce Power Holding Corporation
| Notes to Consolidated Financial Statements | ||
The fair value and derived service period of each tranche was as follows:
| Stock Price Tranche | Fair Value | Derived Service Period (in years) | ||||||||||||
| $ | $ | |||||||||||||
The Company recognized no expense related to the Ladder RSUs for the years ended December 31, 2025 and December 31, 2024. Upon separation of the Former CEO from the Company effective April 12, 2024, the Ladder RSUs were terminated and the Company recorded a gain of $0.7 million during the year ended December 31, 2024.
Note 13. Noncontrolling Interests
The following table summarizes the Company’s noncontrolling interests as of December 31, 2025:
| 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.
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.
Total assets on the consolidated balance sheets include $36.0 million as of December 31, 2024 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 $0.8 million as of December 31, 2024 of liabilities that are the obligations of the Company's VIEs.
F-38
Table of Contents
Spruce Power Holding Corporation
| Notes to Unaudited Condensed Consolidated Financial Statements | ||
Note 14. 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 March 8, 2021, two putative securities class action complaints were filed against the Company, and certain of its current and former officers and directors in the federal district court for the Southern District of New York. Those cases were ultimately consolidated under C.A. No. 1:21-cv-2002, and a lead plaintiff was appointed in June 2021. On July 20, 2021, an amended complaint was filed alleging that certain public statements made by the defendants between October 2,
2020, and March 2, 2021, violated Sections 10(b) and 20(a) of the Securities Exchange Act of 1934 and Rule 10b-5 promulgated thereunder. Following negotiations with a mediator, in September 2023, the Company and the plaintiffs agreed on a settlement in principle in the aggregate amount of $19.5 million (the “Settlement Amount”), and on December 6, 2023, the lead plaintiff and the defendants entered into a stipulation and agreement of settlement requiring the Company to pay the Settlement Amount to resolve the class action litigation and the related legal fees and administration costs. On April 30, 2024, the New York Court approved a final settlement of the Class Action Litigation. The Settlement Amount was offset by approximately $4.5 million of related loss recoveries from the Company’s directors and officers liability insurance policy with third parties, which was paid out in February 2024. The Company paid the $15.0 million net settlement amount to the settlement claims administrator in February 2024.
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 (See Note 6. Accrued Expenses and Other Current Liabilities). 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.
F-39
Spruce Power Holding Corporation
| Notes to Consolidated Financial Statements | ||
Shareholder Derivative Actions
On June 23, 2022, the Company received a shareholder derivative complaint filed in the U.S. District Court for the District of Massachusetts, captioned Val Kay derivatively on behalf of nominal defendant XL Fleet Corp., against all current directors and former officers and directors, C.A. No. 1:22-cv-10977. The action was filed by a shareholder purportedly on XL Fleet Corp.’s behalf, and raises claims for contribution, as well as claims for breach of fiduciary duty, waste of corporate assets, unjust enrichment, and abuse of control. In March 2023, two shareholder derivative actions were filed in the U.S. District Court for the District of Delaware, namely Reali v. Griffin, et al., C.A. No. 1:23-cv-00289 and Tucci v. Ledecky, et al., C.A. 1:23-cv-00322. These actions were consolidated and captioned In re Spruce Power Holding Corporation Shareholder Derivative Litigation, C.A. No. 1:23-cv-00289. In August 2023, an additional derivative action was filed in the U.S. District Court for the Southern District of New York, captioned Boyce v. Ledecky, et al., C.A. No. 1:23-cv- 8591 (collectively, the “Derivative Matters”).On December 8, 2023, the parties reached a settlement-in-principle to settle, the Derivative Matters. The court granted preliminary approval of the settlement on May 1, 2024, and final approval in full on August 8, 2024. The settlement provides for certain corporate governance enhancements and no monetary payments. On August 14, 2024, the court awarded attorney fees of $1.0 million, which were paid in September 2024.
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 December 31, 2025 (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 judgement against the Company in Massachusetts Trial Court and that enforcement action was dismissed in March 2025. In April 2025, BMZ sought to enforce the judgement against the Company in Colorado Superior Court, which was removed to Federal Court. That enforcement action was dismissed in March 2026. The Company believes it is probable that BMZ will either appeal the dismissal or seek to enforce the judgement in another jurisdiction and currently estimates the potential loss to be approximately $1.2 million, which has been accrued for as of December 31, 2025 (See Note 6. Accrued Expenses and Other Current Liabilities).
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 are not to be considered a capital contribution to the fund per the operating agreements, nor would it be considered a distribution to the Class A Members. A Recapture Event was not deemed to be probable by the Company, therefore no accrual has been recorded as of December 31, 2025 and 2024.
F-40
Spruce Power Holding Corporation
| Notes to Consolidated Financial Statements | ||
Plastic Omnium
Plastic Omnium is the assignee of the contractual rights of Actia Corp. under a certain battery purchase order between XL Hybrids and Actia Corp. On March 17, 2023, Plastic Omnium sued Legacy XL and the Company for breach of contract, alleging that Legacy XL ordered a total of 1,000 batteries from Plastic Omnium, paid for 455 of those batteries, and then reneged on 545 of those products. While Plastic Omnium admits it never actually delivered the remaining 545 products, it claims it purchased materials to complete the order, and as a result, Legacy XL and the Company are liable for at least approximately $2.5 million. The Company reached a settlement in principle to settle the matter for $1.25 million, which was paid in December 2024.
Parker-Hannifin
On March 11, 2024, the Company filed a lawsuit against Parker-Hannifin for a declaratory judgment, captioned
XL Hybrids, Inc. v. Parker-Hannifin Corporation, No. 1:24-cv-10894-WGY (D. Mass, removed from Mass. State Court No. 2484-CV-00661). The case related to a contract for the purchase of motors designed, produced and manufactured by Parker-Hannifin for XL Hybrids, Inc. which was executed in July 2019. On April 5, 2024, Parker-Hannafin filed counterclaims, alleging that XL Hybrids, Inc. and the Company were in breach of the contract. On November 1, 2024, the
parties reached a settlement in principle to settle the matter for $0.5 million, which was accrued for as of December 31, 2024, and subsequently paid in January 2025 (See Note 6. Accrued Expenses and Other Current Liabilities).
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 December 31, 2025 and 2024.
Insurance Claims and Recoveries related to Los Angeles Fires
Note 15. Stockholders’ Equity
Common Stock
F-41
Spruce Power Holding Corporation
| Notes to Consolidated Financial Statements | ||
As of December 31, 2025 and 2024, the Company had 350,000,000
The following shares of common stock are issued and outstanding or unvested as of December 31, 2025:
| Restricted stock units | |||||
| Stock options | |||||
| Total | |||||
Share Repurchase Program
In May 2023, the Company's Board of Directors approved a share repurchase program for the repurchase of up to $50.0 million of the Company's outstanding common stock through May 15, 2025 (the “Repurchase Program”). In May 2025, the Board authorized the extension of the Repurchase Program to expire on May 15, 2027. The Repurchase Program authorizes the Company to effect repurchases through open market transactions, privately negotiated transactions, Rule 10b5-1 trading plans and/or Rule 10b-18 trading plans, and other means. The Company is not obligated to repurchase any specific number of shares or dollar amount and may discontinue the Repurchase Program at any time. The timing, number and purchase price of share repurchases, if any, will be determined by the 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
During the years ended December 31, 2025 and 2024, the Company repurchased 0.8 million shares and 0.3 million shares of common stock under the Repurchase Program in open market transactions at a weighted-average price of $2.33 and $2.93 per share for an aggregate purchase price of $1.8 million and $0.9 million, respectively, inclusive of transaction costs. As of December 31, 2025, $42.0 million remained available for future share repurchases under the Repurchase Program.
Note 16. 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 years ended December 31, 2025 and 2024:
| Years Ended December 31, | |||||||||||
| (Amounts in thousands, except share data) | 2025 | 2024 | |||||||||
| 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 years 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 year 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 year presented.
F-42
Spruce Power Holding Corporation
| Notes to Consolidated Financial Statements | ||
Note 17. Income Taxes
Net deferred income tax assets consist of the following components as of December 31, 2025 and 2024:
As of December 31, | |||||||||||
| (Amounts in thousands) | 2025 | 2024 | |||||||||
| Deferred tax assets (liabilities): | |||||||||||
| Net operating loss carryforwards | $ | $ | |||||||||
| Accrued settlements | |||||||||||
| Pass-through equity interests | |||||||||||
| Fair market value adjustments | ( | ( | |||||||||
| Tax credit carryforwards | |||||||||||
| Reserves | |||||||||||
| Stock-based compensation | |||||||||||
| Depreciation and amortization | ( | ( | |||||||||
| Interest expense carryforward | |||||||||||
| Right of use assets | |||||||||||
| Other | |||||||||||
| Total deferred tax assets, net | |||||||||||
| Less valuation allowance | ( | ( | |||||||||
| Net deferred tax assets | $ | $ | |||||||||
F-43
Spruce Power Holding Corporation
| Notes to Consolidated Financial Statements | ||
Upon adoption of ASU 2023-09, Improvements to Income Tax Disclosures, the reconciliation of taxes at the federal statutory rate to our provision for (benefit from) income taxes for the year ended December 31, 2025 was as follows:
| Year Ended December 31, 2025 | |||||||||||
| (Amounts in thousands) | Amount | Percent | |||||||||
| US federal statutory income tax rate | $ | ( | % | ||||||||
| State taxes, net of federal benefit | % | ||||||||||
| Effects of changes in tax law or rates enacted in the current period | % | ||||||||||
| Tax credits | |||||||||||
| Research and development tax credits | ( | % | |||||||||
| Changes in valuation allowance | ( | % | |||||||||
| Nondeductible/nontaxable items | |||||||||||
| Stock based compensation | ( | % | |||||||||
| Fair market value adjustments | ( | % | |||||||||
| Other | ( | % | |||||||||
| Other adjustments | |||||||||||
| Return to accrual | ( | % | |||||||||
| Net operating loss adjustments | ( | % | |||||||||
| RSU forfeitures/cancellations | ( | % | |||||||||
| Sec 163(j) adjustment | ( | % | |||||||||
| Other | ( | % | |||||||||
| Effective tax rate | $ | % | |||||||||
For the year ended December 31, 2025, state taxes for California, New Jersey and New York made up the majority (greater than 50%) of the tax affect.
The reconciliation of taxes at the federal statutory rate to our provision for (benefit from) income taxes for the year ended December 31, 2024 in accordance with the guidance prior to the adoption of ASU 2023-09 was as follows:
| Year Ended December 31, 2024 | ||||||||
| U.S. federal statutory rate | % | |||||||
| State taxes, net of federal benefit | % | |||||||
| Change in fair value of warrant liability | % | |||||||
| Option and RSU expense | % | |||||||
| Goodwill impairment | ( | % | ||||||
| Other | ( | % | ||||||
| True-up to prior years' return | % | |||||||
| Change in valuation allowance | ( | % | ||||||
| Purchase accounting | % | |||||||
| Effective tax rate | % | |||||||
F-44
Spruce Power Holding Corporation
| Notes to Consolidated Financial Statements | ||
The Company utilizes an asset and liability approach for financial accounting and reporting for income taxes. The provision for income taxes is based upon income or loss after adjustment for those permanent items that are not considered in the determination of taxable income. Deferred income taxes represent the tax effects of differences between the financial reporting and tax basis of the Company’s assets and liabilities at the enacted tax rates in effect for the years in which the differences are expected to reverse.
The Company evaluates the recoverability of deferred tax assets and establishes a valuation allowance when it is more likely than not that some portion or all the deferred tax assets will not be realized. Management makes judgments as to the interpretation of the tax laws that might be challenged upon an audit and cause changes to previous estimates of tax liability. In management’s opinion, adequate provisions for income taxes have been made. If actual taxable income by tax jurisdiction varies from estimates, additional allowances or reversals of reserves may be necessary..
Tax benefits are recognized only for tax positions that are more likely than not to be sustained upon examination by tax authorities. The amount recognized is measured as the largest amount of benefit that is greater than 50% likely to be realized upon settlement. A liability for “unrecognized tax benefits” is recorded for any tax benefits claimed in the Company’s tax returns that do not meet these recognition and measurement standards. For the years ended December 31, 2025 and 2024, no liability for unrecognized tax benefits was required to be reported.
The Company has provided a full valuation allowance against its net deferred tax assets since realization of any future benefit from deductible temporary differences and net operating loss cannot be sufficiently assured. Management of the Company has evaluated the positive and negative evidence bearing upon the reliability of its deferred tax assets, which are comprised principally of net operating loss carryforwards and research and development credits. Under the applicable accounting standards, Management has considered the Company’s history of losses and concluded that it is more likely than not that the Company will not recognize the benefits of federal and state deferred tax assets. During the years ended December 31, 2025 and 2024, the Company decreased and increased its valuation allowance by $3.3 million and $25.1 million, respectively.
As of December 31, 2024, the Company had federal and state net operating loss (“NOL”) carryforwards of $523.3 million and $525.7 million, respectively. As of December 31, 2025, the Company had federal and state net operating loss (“NOL”) carryforwards of $568.7 million and $574.0 million, respectively. The federal NOL carryforwards were generated between the years ended December 31, 2018 and 2025 and have an indefinite life. At December 31, 2025, the Company had federal tax credits of approximately $0.9 million. These federal tax credits are available to reduce future taxable income and expire at various dates commencing 2038 through 2041.
The Company files income tax returns in the U.S. federal jurisdiction, and various states. With few exceptions, the Company is no longer subject to U.S. federal, state and local income tax examinations by tax authorities for years before 2018. The Company follows the provisions of FASB Accounting Standards Codification 740-10 (ASC 740-10), Accounting for Uncertainty in Income Taxes. ASC 740-10 prescribes a comprehensive model for the recognition, measurement, presentation and disclosure in consolidated financial statements of uncertain tax positions that have been taken or expected to be taken on a tax return. No
Note 18. Defined Contribution Plan
The Company has adopted a 401(k) plan to provide all eligible employees a means to accumulate retirement savings on a tax-advantaged basis. The 401(k) plan requires participants to be at least 21 years old. In addition to the traditional 401(k), eligible employees are given the option of making an after- tax contribution to a Roth 401(k) or a combination of both. Plan participants may make before-tax elective contributions up to the maximum percentage of compensation and dollar amount allowed under the IRC. Participants are allowed to contribute, subject to IRS limitations on total annual contributions from 1 % to 90 % of eligible earnings. The plan provides for automatic enrollment at a 3 % deferral rate of an employee’s eligible wages. The Company provides safe harbor matching contributions equal to 100 % on the first 3 % of an employee’s eligible earnings deferred and an additional 50 % on the next 2 % of an employee’s eligible earnings deferred. Employee elective deferrals and safe harbor matching contributions are 100 % vested at all times.
F-45
Spruce Power Holding Corporation
| Notes to Consolidated Financial Statements | ||
In connection with the acquisition of Legacy Spruce Power, the Company adopted the Spruce Power 401(k) plan, which contains features similar to those of the XL Fleet Corp. 401(k) plan, except that (i) participants are allowed to contribute, subject to IRS limitations, on total annual contributions from 1 % to 80 % of eligible earnings and (ii) the safe harbor non-elective contribution is equal to 3 % of employee’s compensation.
The Company recognized expenses related to its 401(k) plans of approximately $1.3 million and $1.0 million for the years ended December 31, 2025 and 2024, respectively.
Note 19. Discontinued Operations
The following table provides supplemental details of the Company’s discontinued operations related to the Drivetrain business contained within the consolidated statements of operations for the years ended December 31, 2025 and 2024:
| Years Ended December 31, | |||||||||||
| (Amounts in thousands) | 2025 | 2024 | |||||||||
| Revenues | $ | $ | |||||||||
| Operating expenses: | |||||||||||
| Cost of revenues - operations and maintenance | |||||||||||
| Gain on asset disposal | ( | ||||||||||
| Total operating expenses | |||||||||||
| Net income (loss) from discontinued operations | $ | ( | $ | ||||||||
The following table presents aggregate carrying amounts of assets and liabilities of discontinued operations related to the Drivetrain business contained within the consolidated balance sheets:
As of December 31, | ||||||||||||||
| (Amounts in thousands) | 2025 | 2024 | ||||||||||||
| Assets from discontinued operations | $ | $ | ||||||||||||
| Liabilities from discontinued operations | $ | $ | ||||||||||||
Note 20. Segment Information
As of December 31, 2025 and 2024, the Company has one
The Company’s CODM is its 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 for the year ended 2024, which the CEO utilizes to assess the Company’s performance and for making decisions about resource allocation. For the year ended December 31, 2025, the information being provided to the CEO is at a lower level of aggregation as a result the Company has recast the prior period. The following tables presents the Company’s significant segment expenses for the years ended December 31, 2025 and 2024:
F-46
Spruce Power Holding Corporation
| Notes to Consolidated Financial Statements | ||
| Years Ended December 31, | |||||||||||
| (Amounts in thousands) | 2025 | 2024 | |||||||||
| Revenues | $ | $ | |||||||||
| 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 | |||||||||||
| Litigation settlements | |||||||||||
| Impairment of goodwill | |||||||||||
| Other segment items | ( | ( | |||||||||
| Net loss | $ | ( | $ | ( | |||||||
Note 21. Subsequent Events
On March 27, 2026, the Company entered into an amendment (the “SP1 Facility Amendment”) to the SP1 Facility with Silicon Valley Bank (the “SP1 Facility”) which extends the maturity date to October 30, 2026 (the “Amended SP1 Maturity Date”), unless a signed term sheet for a long-term financing is obtained, in which case the Amended SP1 Maturity Date will be January 30, 2027. Under the terms of the SP1 Facility Amendment, the applicable margin is 2.75 % per annum from the effective date of the SP1 Facility Amendment to October 30, 2026, and 3.25 % per annum thereafter. The SP1 Facility Amendment includes a cross-default provision with the Second Key Bank Credit Agreement.
Management has reviewed all events subsequent to December 31, 2025 and prior to the issuance of these consolidated financial statements, and except as referenced above, the Company has determined there have been no events that have occurred that would require adjustments or disclosures within the consolidated financial statements.
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PART IV
Item 15. Exhibits, Financial Statement Schedules
(a)Documents filed as part of this report.
1.The following financial statements of Spruce Power Holding Corporation and Report of CohnReznick LLP and Deloitte & Touche LLP, Independent Registered Public Accounting Firms, are included in this report:
2.List of financial statement schedules:
All schedules have been omitted since they are not applicable, or the required information is shown in the financial statements or notes thereto.
F-48
3.List of Exhibits required by Item 601 of Regulation S-K in this Annual Report on Form 10-K/A. See part (b) below.
(b)Exhibits.
| Exhibit No. | Description | Included | Form | Exhibit | Filing Date | |||||||||||||||||||||||||||
| 23.2* | Herewith | |||||||||||||||||||||||||||||||
| 31.1* | Herewith | |||||||||||||||||||||||||||||||
| 31.2* | Herewith | |||||||||||||||||||||||||||||||
| 32.1^* | Herewith | |||||||||||||||||||||||||||||||
| 32.2^* | 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
^ 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 Annual Report on Form 10-K/A 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.
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.
| SPRUCE POWER HOLDING CORPORATION | ||||||||
Date: April 3, 2026 | By: | /s/ Christopher Hayes | ||||||
| Name: | Christopher Hayes | |||||||
| Title: | Chief Executive Officer | |||||||
| (Principal Executive Officer) | ||||||||
| SPRUCE POWER HOLDING CORPORATION | ||||||||
Date: April 3, 2026 | By: | /s/ Thomas J. Cimino | ||||||
| Name: | Thomas J. Cimino | |||||||
| Title: | Chief Financial Officer and Head of Sustainability | |||||||
| (Principal Financial Officer and Principal Accounting Officer) | ||||||||