8. Large-scale EPC Contracts

On July 31, 2025, SREP, entered into the Longfellow Contract for an industrial project to develop a BESS facility. Based on the initial terms of the contract, the contract is expected to generate revenues of approximately $120.1 million and financing income of $7.2 million related to milestone payments that extend beyond the project completion date. Longfellow will own and operate the facility, which will be located in Pecos County, Texas and is expected to have a storage capacity of 430 megawatt-hours. Due to a change order being discussed but still not approved, the BESS facility is expected to be completed by March 2028. One of Longfellow’s members is a stockholder of the Company with 2.3% interest at December 31, 2025 and June 30, 2026. The member acquired its interest in the Company as part of the Company’s private placement in 2025 on the same terms as other investors, which was at a 25% discount from the market price at the date of the purchase agreement.

The Company has committed to make a $5.0 million contribution to capital in Longfellow for an 8% equity interest. This capital contribution was due the earlier of December 31, 2025 or when the board of managers determines such contributions are necessary to meet Longfellow’s obligations under the Longfellow Contract for which the Company is the EPC contractor (see Note 8). At December 31, 2025, June 30, 2026 and on the date of the issuance of these financial statements, the Company has not made such contribution and has not recorded the investment. The Company has obtained the consent from Longfellow for the Company to defer its capital commitment to a later date, which has not been determined. The Company’s chief executive officer, who is representing the Company, is one of the five members of Longfellow’s board of managers, which collectively manages the affairs of Longfellow.

The Longfellow Contract is a fixed-price contract consisting of battery inventories of $75.3 million and non-inventory services of $52.0 million. During the three and six months ended June 30, 2026, battery inventories of $828,000 and $5.8 million, respectively, were procured and delivered to the customer’s premises but have not been installed, resulting in revenues related to battery inventories being reported at the Company’s cost. Additionally, the Company completed engineering and pre-construction services under the contract totaling $159,000, which is included in cost of revenue for the six months ended June 30, 2026, representing 0.5% of the estimated services. During the three months ended June 30, 2026, the Company recorded revenues of $809,000 and cost of revenues of $756,000, and during the six months ended June 30, 2026, the Company recorded revenues of $6.0 million and cost of revenues of $6.0 million. Since project inception through June 30, 2026, the Company recorded revenues of $66.2 million and cost of revenues of $65.8 million. As of June 30, 2026, accounts receivable from Longfellow were $9.4 million, contract asset, current was $15.0 million, and contract asset, noncurrent was $36.9 million. As of June 30, 2026, approximately $61.1 million of contractual value remained under the Longfellow Contract. The remaining contractual value represents future consideration expected to be received for performance of the remaining performance obligation under the Longfellow Contract.

On December 31, 2025, the Company entered into three EPC contracts for large-scale BESS systems, two in Puerto Rico and one in Corpus Christi, Texas. Pursuant to an EPC contract with Naguabo BESS, LLC, a Texas limited liability company (“Naguabo”), the Company will develop a BESS facility in Ceiba Municipality, Puerto Rico. The contract value is approximately $122.3 million. Naguabo will own and operate the facility, which is expected to have a storage capacity of 320 megawatt-hours. The Company is to have a 9% membership interest in Naguabo. Pursuant to an EPC contract with Yabucoa BESS, LLC, a Texas limited liability company (“Yabucoa”), the Company will develop a BESS facility in Humacao Municipality, Puerto Rico. The contract value is approximately $35.9 million. Yabucoa will own and operate the facility, which is expected to have a storage capacity of 80 megawatt-hours. The Company will have a 9% membership interest in Yabucoa. Pursuant to an EPC contract with Navboot Holdco, LLC, a Delaware limited liability company (“Navboot”), the Company will develop a BESS facility in Corpus Christi, Texas. The contract value is approximately $258.1 million. Navboot will own and operate the facility, which is expected to have a storage capacity of 600 megawatt-hours. As of June 30, 2026, the Company has not started work on these three projects and certain agreements affecting the three customers which are necessary to be completed before the Company can commence work on the projects have not been completed.