Zeo Energy Corp. (NASDAQ:ZEO) has announced that previously issued financial statements for the fiscal year ending December 31, 2023, and the first quarter of 2024 should no longer be relied upon. The Dallas-based company, specializing in miscellaneous electrical machinery and equipment, disclosed the decision was made by the audit committee of its board of directors on Monday, after identifying several misstatements.
The errors, found during the preparation of consolidated interim financial statements for the quarter ending June 30, 2024, include incorrect accounts payable and accrued expenses, errors in sales and cost of sales cut-off, unrecorded distributions paid to owners, and unrecorded stock-based compensation and transaction costs.
The adjustments will result in a reduction of net income by $1.417 million for 2023 and $144,000 for the first quarter of 2024. The company plans to amend the affected reports, including the Form 8-K, Form 10-Q, and Form S-1, to correct these inaccuracies.
The discovery of these misstatements also highlighted a material weakness in the company's internal control over financial reporting. Specifically, the company had ineffective controls over period-end financial disclosure and reporting processes, including insufficient reconciliations and review procedures for financial statement elements and incorrect journal entries.
Zeo Energy Corp. has already communicated these issues to its independent registered public accounting firm, Grant Thornton LLP, and is working on a detailed remediation plan to address the identified material weakness. The plan will be outlined in the forthcoming amended reports.
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