# EDGAR Filing Document

**Accession Number:** 0001838987
**File Stem:** 0001213900-26-058557
**Filing Date:** 2026-5
**Character Count:** 383285
**Document Hash:** 0c9644b96b10f2032170b89c000b341f
**Contains OCR:** False
**Source Format:** 

## Filing Content

## Filing Summary
**0001213900-26-058557.hdr.sgml**: 20260518

**ACCESSION NUMBER**: 0001213900-26-058557

**CONFORMED SUBMISSION TYPE**: 10-Q/A

**PUBLIC DOCUMENT COUNT**: 101

**CONFORMED PERIOD OF REPORT**: 20250330

**FILED AS OF DATE**: 20260518

**DATE AS OF CHANGE**: 20260518

**FILER**: 

**COMPANY DATA:**
- **COMPANY CONFORMED NAME:** SunPower Inc.
- **CENTRAL INDEX KEY:** 0001838987
- **STANDARD INDUSTRIAL CLASSIFICATION:** CONSTRUCTION SPECIAL TRADE CONTRACTORS [1700]
- **ORGANIZATION NAME:** 05 Real Estate & Construction
- **EIN:** 932279786
- **STATE OF INCORPORATION:** DE
- **FISCAL YEAR END:** 1229

**FILING VALUES:**
- **FORM TYPE:** 10-Q/A
- **SEC ACT:** 1934 Act
- **SEC FILE NUMBER:** 001-40117
- **FILM NUMBER:** 26994979

**BUSINESS ADDRESS:**
- **STREET 1:** 1403 N RESEARCH WAY
- **CITY:** OREM
- **STATE:** UT
- **ZIP:** 84097
- **BUSINESS PHONE:** (877) 299-4943

**MAIL ADDRESS:**
- **STREET 1:** 1403 N RESEARCH WAY
- **CITY:** OREM
- **STATE:** UT
- **ZIP:** 84097

**FORMER COMPANY:**
- **FORMER CONFORMED NAME:** Complete Solaria, Inc.
- **DATE OF NAME CHANGE:** 20230721

**FORMER COMPANY:**
- **FORMER CONFORMED NAME:** Freedom Acquisition I Corp.
- **DATE OF NAME CHANGE:** 20210105

?xml version='1.0' encoding='ASCII'?

**UNITED STATES**

**SECURITIES AND EXCHANGE COMMISSION**

Washington, D.C. 20549

**FORM 10-Q/A**

☒ **QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934**

For the quarterly period ended March 30, 2025

**OR**

☐ **TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934**

For the transition period &nbsp;&nbsp;&nbsp;&nbsp; from &nbsp;&nbsp;&nbsp;&nbsp; to

**Commission file number 001-40117**

**SUNPOWER INC.**

(Exact Name of Registrant as Specified in Its Charter)

---

| | |
|:---|:---|
| **Delaware** | **93-2279786** |
| (State or Other Jurisdiction of<br> Incorporation or Organization) | (I.R.S. Employer<br> Identification Number) |

---

**1403 N. Research Way, Orem UT 84097**

(Address of Principal Executive Offices) (Zip Code)

**(877) 299-4943**

‎(Registrant's telephone number, including area code)

(Former name, former address and former fiscal year, if changed since last report)

Securities registered pursuant to Section 12(b) of the Act:

---

| | | |
|:---|:---|:---|
| **Title of Each Class** | **Trading Symbol(s)** | **Name of Each Exchange on Which Registered** |
| Common stock, par value $0.0001 per share | SPWR | Nasdaq |
| Redeemable warrants, each whole warrant exercisable for one share of common stock | SPWRW | Nasdaq |

---

Securities registered pursuant to Section 12(g) of the Act:

**None**

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 ☐ No ☒

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 ☒ No ☐

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 ☐ Accelerated filer ☐ <br> Non-accelerated filer ☒ Smaller reporting company ☒ <br> 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.‎ ☐

Indicate by check mark whether the Registrant is a shell company (as defined in Rule 12b-2 of ‎the Act).‎‎ Yes ☐ No ☒

As of May 16, 2025, 80,272,256 shares of common stock, par value $0.0001 per share, were issued and outstanding.

**EXPLANATORY NOTE**

**Overview**

SunPower Inc. ("SunPower" or the "Company") is filing this Amendment No. 1 on Form 10Q/A (the "Amended Report") to amend and restate certain items in its Quarterly Report on Form 10-Q for the quarterly period ended March 30, 2025 originally filed with the U.S. Securities and Exchange Commission (the "SEC") on May 19, 2025 (the "Original Report"), in order to reflect the effects of the restatement of the financial statements included the Original Report (the "Restatement"). This Amended Report includes the Company's restated unaudited condensed consolidated financial statements as of and for the thirteen week period ended March 30, 2025 to correct errors related to the recognition of revenues, cost of revenues, stock-based compensation expense and interest and amortization of debt discount expense, and the related balance sheet accounts including accounts receivable, net, inventories, accrued expenses and other current liabilities, notes payable, current, notes payable and derivative liabilities, net of current portion, notes payable and derivative liabilities with related parties, net of current portion and additional paid-in capital. The Company also identified payroll and amortization expense classification errors within cost of revenues and operating expenses, which did not have any impact on the Company's net operating results but misstated the expense categories within the unaudited condensed consolidated statements of operations.

**Restatement Background**

As previously disclosed by the Company in its Current Report on Form 8-K filed with the SEC on April 14, 2026, the Company identified material errors related to the recognition of revenue (and related cost of revenues, sales commissions, sales and marketing, and general and administrative expenses), and interest expense (collectively "Misstatements"). The Company has determined that these material errors were the result of its previously reported material weaknesses in its internal control over financial reporting related to the Company's control activities, information and communication, and monitoring activities. These errors were not caused by any override of controls, misconduct, or fraud. The correction of the Misstatements impact the previously reported amounts of revenues, cost of revenues, interest expense and amortization of debt discount and issuance costs, inventory, net income per common share, and all related financial statement subtotals and totals. In addition to correcting the Misstatements, the Amended Filings also reflect adjustments to correct unrelated errors to other financial statement line items identified by the Company in prior periods which include, but are not limited to, adjustments to the reclassification of current and non-current debt obligations, reclassification of payroll expenses between cost of revenues and operating expenses, and the vesting of restricted stock units and related stock-based compensation expense.

Refer to **Note 2 - Restatement of Previously Issued Unaudited Condensed Financial Statements** in the Notes to Unaudited Condensed Consolidated Financial Statements - for more information related to the Restatement, including the impact on the Company's Consolidated Financial Statements.

**Internal Control Considerations**

In connection with preparing this Amended Report, management has updated its evaluation of the effectiveness of its internal control over financial reporting as of March 30, 2025, as further described in Part I, Item 4. "Controls and Procedures" of this Amended Report. Consistent with the conclusion in Part II, Item 9A. "Controls and Procedures" of the Annual Report filed on April 14, 2026 on Form 10-K for the fiscal year ended December 28, 2025, management continued to conclude that its internal control over financial reporting and disclosure controls and procedures were not effective as of March 30, 2025 due to the previously identified material weaknesses in its internal control over financial reporting.

**Items Amended in this Amended Report**

This Amended Report amends and restates the sections of the Original Report listed below, with modifications as necessary to reflect the restatement.

● Part I, Item 1. Financial Statements (Unaudited)

● Part I, Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations

● Part I, Item 4. Controls and Procedures

● Part II, Item 6. Exhibits

Except as described above, this Amended Report does not amend, update, or change any other disclosures in the Original Report. Among other things, except as related to the Restatement, forward looking statements made in the Original Report have not been revised to reflect events that occurred or facts that became known to the Company after the filing of the Original Report, and such forward looking statements should be read in their historical context. As such, this Amended Report speaks only as of the date the Original Report was filed, and the Company has not undertaken herein to amend, supplement, or update any information contained in the Original Report and the Company's other filings with the SEC subsequent to the Original Report (including, without limitation, in conjunction with the risk factors included in such subsequent SEC filings).

In addition, as required by Rule 12b-15 under the Securities Exchange Act of 1934, as amended (the "Exchange Act"), new certifications by the Company's principal executive officer and principal financial officer are filed as exhibits to this Amendment.

**SUNPOWER INC.**

**TABLE OF CONTENTS**

---

| | | |
|:---|:---|:---|
|  |  | **PAGES** |
|  | [Special Note Regarding Forward-Looking Statements](#a_001) | ii |
|  | [Summary Risk Factors](#a_002) | iv |
| [**PART I.**](#a_003) | [**FINANCIAL INFORMATION**](#a_003) | 1 |
| Item 1. | [Financial Statements](#a_004) | 1 |
|  | [Unaudited Condensed Consolidated Balance Sheets (As Restated)](#a_005) | 1 |
|  | [Unaudited Condensed Consolidated Statements of Operations and Comprehensive Income (Loss) (As Restated)](#a_006) | 2 |
|  | [Unaudited Condensed Consolidated Statements Stockholders' Deficit (As Restated)](#a_007) | 3 |
|  | [Unaudited Condensed Consolidated Statements of Cash Flows (As Restated)](#a_008) | 4 |
|  | [Notes to Unaudited Condensed Consolidated Financial Statements (As Restated)](#a_009) | 5 |
| Item 2. | [Management's Discussion and Analysis of Financial Condition and Results of Operations (As Restated)](#a_010) | 40 |
| Item 3. | [Quantitative and Qualitative Disclosures about Market Risk](#a_011) | 54 |
| Item 4. | [Controls and Procedures](#a_012) | 54 |
| [**PART II.**](#a_013) | [**OTHER INFORMATION**](#a_013) | 57 |
| Item 1. | [Legal Proceedings](#a_014) | 57 |
| Item 1A. | [Risk Factors](#a_015) | 57 |
| Item 2. | [Unregistered Sales of Equity Securities and Use of Proceeds](#a_016) | 88 |
| Item 3. | [Defaults Upon Senior Securities](#a_017) | 88 |
| Item 4. | [Mine Safety Disclosures](#a_018) | 88 |
| Item 5. | [Other Information](#a_019) | 88 |
| Item 6. | [Exhibits](#a_020) | 88 |
| [Signatures](#a_021) | [Signatures](#a_021) | 89 |

---

i

**SPECIAL NOTE REGARDING FORWARD-LOOKING STATEMENTS**

Certain statements in this Quarterly Report on Form 10-Q may constitute "forward-looking statements" for purposes of the federal securities laws. Our forward-looking statements include, but are not limited to, statements regarding our and our management team's expectations, hopes, beliefs, intentions or strategies regarding the future. In addition, any statements that refer to projections, forecasts or other characterizations of future events or circumstances, including any underlying assumptions, are forward-looking statements. The words "anticipate," "believe," "continue," "could," "estimate," "expect," "intends," "may," "might," "plan," "possible," "potential," "predict," "project," "should," "will," "would" and similar expressions may identify forward-looking statements, but the absence of these words does not mean that a statement is not forward-looking. Forward-looking statements in this Quarterly Report on Form 10-Q may include, for example and without limitation, statements about:

● our direct and indirect exposure to companies in the solar and renewable energy industries that are facing financial difficulties and potential bankruptcies;

● our ability to grow and manage growth profitably following the closing of the Business Combination and the acquisition of the SunPower Businesses;

● disruptions in our supply chains and distribution channels, tariffs and trade barriers, export regulations, bank failures, geopolitical conflicts and other macroeconomic conditions on our business and operations, results of operations and financial position;

● our ability to leverage our acquisition under the asset purchase agreement with SunPower and other acquisitions, including our ability to integrate acquired businesses, to fund and meet the liquidity needs of the acquired businesses, to retain key employees of the acquired businesses, to take advantage of growth opportunities and to realize the expected benefits of such acquisitions;

● the potential impact of changes to and developments relating to the regulations and policies applicable to our business, customers and the industry;

● changes in the availability of rebates, tax credits and other incentives;

● changes impacting the demand for solar solutions from residential customers and small and medium-sized businesses, including changes resulting from the current political climate and also changes in the price of electricity from other sources, including traditional utilities;

● changes in and the volatility of interest rates;

● our financial and business performance following the Business Combination and the acquisition of the SunPower Businesses, including financial projections and business metrics, and our ability to manage our costs;

● changes in our strategy, future operations, financial position, estimated revenues and losses, projected costs, prospects and plans;

● our future capital requirements, the sufficiency of our cash, and sources and uses of cash, including cash required to service our current and future borrowings;

● our ability to obtain funding for our operations and future growth, including in connection with the integration of our acquisitions, and our ability to raise capital and refinance our existing debt;

ii

● our ability to meet the expectations of new and current customers, and our ability to achieve market acceptance for our products and services, especially in light of the intense competition faced in our industry;

● our expectations and forecasts with respect to market opportunity and market growth;

● our expectations and plans relating to cost control efforts (including headcount management and potential reductions) and expectations with respect to when we achieve breakeven operating income;

● the ability of our products and services to meet customers' compliance and regulatory needs;

● our ability to attract and retain qualified employees and management;

● our ability to develop and maintain our brand and reputation, and our ability to maintain our relationships with key suppliers, installers and build partners;

● developments and projections relating to our competitors and industry;

● changes in general economic and financial conditions, inflationary pressures and the resulting impact demand, and our ability to plan for and respond to the impact of those changes;

● our expectations regarding our ability to obtain and maintain intellectual property protection and not infringe on the rights of others; and

● our business, expansion plans and opportunities.

Actual events or results may differ from those expressed in forward-looking statements. You should not rely on forward-looking statements as predictions of future events. We have based the forward-looking statements in this Quarterly Report on Form 10-Q primarily on our current expectations and projections about future events and trends that may affect our business, financial condition and operating results. The outcome of the events described in these forward-looking statements is subject to risks, uncertainties and other factors described in the section titled "Risk Factors" and elsewhere in this Quarterly Report on Form 10-Q. Moreover, we operate in a very competitive and rapidly changing environment. New risks and uncertainties emerge from time to time, and we cannot predict all risks and uncertainties that could impact the forward-looking statements contained in this Quarterly Report on Form 10-Q. The results, events and circumstances reflected in the forward-looking statements may not be achieved or occur, and actual results, events or circumstances could differ materially from those described in the forward-looking statements.

In addition, statements that "we believe" and similar statements reflect our beliefs and opinions on the relevant subject. These statements are based on information available to us as of the date of this Quarterly Report on Form 10-Q. While we believe that information provides a reasonable basis for these statements, that information may be limited or incomplete. Our statements should not be read to indicate that we have conducted an exhaustive inquiry into, or review of, all relevant information. These statements are inherently uncertain, and investors are cautioned not to unduly rely on these statements.

The forward-looking statements in this Quarterly Report on Form 10-Q relate only to events as of the date the statements are made. We undertake no obligation to update any forward-looking statements made in this Quarterly Report on Form 10-Q to reflect events or circumstances after the date of this Quarterly Report on Form 10-Q or to reflect new information or the occurrence of unanticipated events, except as required by law. We may not achieve the plans, intentions or expectations disclosed in our forward-looking statements, and you should not place undue reliance on our forward-looking statements. Our forward-looking statements do not reflect the potential impact of future acquisitions, mergers, dispositions, joint ventures or investments.

iii

**SUMMARY RISK FACTORS**

Below is a summary of material factors that make an investment in our securities speculative or risky. Importantly, this summary does not address all of the risks and uncertainties that we face.

● We have a history of losses that may continue in the future; our management has identified conditions that raise substantial doubt about or ability to continue as a going concern; and we may not achieve profitability or generate positive cash flow.

● We may need to raise additional funding to finance our operations. This additional financing may not be available on acceptable terms or at all. Failure to obtain this necessary capital when needed may force us to curtain planned programs or cease operations entirely.

● We have identified material weaknesses in our internal controls over financial reporting. If we are unable to maintain effective internal controls over financial reporting and disclosure controls and procedures, the accuracy and timeliness of our financial and operating reporting may be adversely affected, and confidence in our operations and disclosures may be lost.

● Our failure to prepare and timely file our periodic reports with the SEC limits our access to the public markets to raise debt or equity capital.

● Changes in international trade policies, tariffs, or trade disputes could significantly and adversely affect our business, revenues, margins, results of operations, and cash flows.

● Our business depends in part on the availability of rebates, tax credits and other financial incentives. The expiration, elimination or reduction of these rebates, credits or incentives or the ability to monetize them could adversely impact the business.

● Macroeconomic conditions in our domestic and international markets, as well as inflation concerns, instability of financial institutions, rising interest rates, and recessionary concerns may adversely affect our industry, business and financial results.

● Existing regulations and policies and changes to these regulations and policies may present technical, regulatory, and economic barriers to the purchase and use of solar power products, which may significantly reduce demand for our products and services.

● We rely on net metering and related policies to offer competitive pricing to customers in many of our current markets and changes to net metering policies may significantly reduce demand for electricity from residential solar energy systems.

● We utilize a limited number of suppliers of solar panels and other system components to adequately meet anticipated demand for our solar service offerings. Any shortage, delay or component price change from these suppliers or delays and price increases associated with the product transport logistics could result in sales and installation delays, cancellations and loss of market share.

● Our business substantially focuses on solar service agreements and transactions with residential customers.

● We have incurred losses and may be unable to achieve or sustain profitability in the future.

● A material drop in the retail price of utility-generated electricity or electricity from other sources could adversely impact our ability to attract customers, which would harm our business, financial condition, and results of operations.

● Our growth strategy depends on the widespread adoption of solar power technology.

iv

● We may not realize the anticipated benefits of past or future acquisitions, including the transactions under the asset purchase agreement with SunPower, and integration of these acquisitions may disrupt our business.

● Our success depends on the continuing contributions of key personnel, including Thurman J. Rodgers. If we are unable to attract and retain key employees and qualified personnel, our business and prospects could be harmed.

● Our warranty costs may exceed the warranty reserve.

● We are subject to legal proceedings and regulatory inquiries and may be named in additional claims or legal proceedings or become involved in regulatory inquiries, all of which are costly, distracting to our core business and could result in an unfavorable outcome or harm our business, financial condition, results of operations or the trading price for our securities.

● Our directors, executive officers and principal stockholders will continue to have significant influence over our company, which could limit your ability to influence the outcome of key transactions, including a change of control.

● The trading price of our common stock may be volatile, and you could lose all or part of your investment.

● If we fail to meet all applicable requirements of Nasdaq and Nasdaq determines to delist our common stock, the delisting could adversely affect the market liquidity of our common stock and the market price of our common stock could decrease.

● Servicing our debt requires a significant amount of cash, and we may not have sufficient cash flow from our business to pay our substantial debt.

● The conversion features of the Convertible Senior Notes may adversely affect our financial condition and operating results.

● Conversion of the Convertible Senior Notes may dilute the ownership interest of our stockholders or may otherwise depress the price of our common stock.

v

**PART I. FINANCIAL INFORMATION**

**Item 1. Financial Statements**

**SUNPOWER INC.**

**Unaudited Condensed Consolidated Balance Sheets**

**(*in thousands except share and per share amounts*)**

---

| | | |
|:---|:---|:---|
|  | **March 30,**<br>**2025** | **December 29,**<br>**2024** |
|  | (As Restated) | |
| **ASSETS** |  |  |
| Current assets: |  |  |
| &nbsp;&nbsp;&nbsp;Cash and cash equivalents | $10553 | $13378 |
| &nbsp;&nbsp;&nbsp;Accounts receivable, net | 24978 | 25842 |
| &nbsp;&nbsp;&nbsp;Inventories | 10724 | 22110 |
| &nbsp;&nbsp;&nbsp;Prepaid expenses and other current assets | 12619 | 8206 |
| &nbsp;&nbsp;&nbsp;Contract assets | 37345 | 26066 |
| &nbsp;&nbsp;&nbsp;Total current assets | 96219 | 95602 |
| &nbsp;&nbsp;&nbsp;Restricted cash | 3841 | 3841 |
| &nbsp;&nbsp;&nbsp;Property and equipment, net | 4625 | 5493 |
| &nbsp;&nbsp;&nbsp;Operating lease right-of-use assets | 2753 | 3041 |
| &nbsp;&nbsp;&nbsp;Other noncurrent assets | 614 | 628 |
| &nbsp;&nbsp;&nbsp;Goodwill | 18476 | 18476 |
| &nbsp;&nbsp;&nbsp;Intangible assets, net | 16670 | 17385 |
| &nbsp;&nbsp;&nbsp;Total assets | $143198 | $144466 |
| **LIABILITIES AND STOCKHOLDERS' DEFICIT** |  |  |
| &nbsp;&nbsp;&nbsp;Current liabilities: |  |  |
| &nbsp;&nbsp;&nbsp;Accounts payable | $14876 | $7980 |
| &nbsp;&nbsp;&nbsp;Accrued expenses and other current liabilities <sup>(1)</sup> | 50931 | 56081 |
| &nbsp;&nbsp;&nbsp;Short-term debt with related parties | 1500 | 1500 |
| &nbsp;&nbsp;&nbsp;Notes payable, current | 2786 |  |
| &nbsp;&nbsp;&nbsp;Contract liabilities | 13101 | 10003 |
| &nbsp;&nbsp;&nbsp;SAFE Agreement with related party | 404 | 384 |
| &nbsp;&nbsp;&nbsp;Forward purchase agreement liabilities with related parties | 1176 | 1274 |
| &nbsp;&nbsp;&nbsp;Forward purchase agreement liabilities | 2050 | 2220 |
| &nbsp;&nbsp;&nbsp;Total current liabilities | 86824 | 79442 |
| &nbsp;&nbsp;&nbsp;Warranty provision, noncurrent | 3437 | 3437 |
| &nbsp;&nbsp;&nbsp;Warrant liability | 2653 | 1561 |
| &nbsp;&nbsp;&nbsp;Contract liabilities, noncurrent | 884 | 918 |
| &nbsp;&nbsp;&nbsp;Notes payable and derivative liabilities | 81610 | 92638 |
| &nbsp;&nbsp;&nbsp;Notes payable and derivative liabilities with related parties, net of current portion | 50005 | 53193 |
| &nbsp;&nbsp;&nbsp;Other long-term liabilities | 8039 | 8553 |
| &nbsp;&nbsp;&nbsp;Operating lease liabilities, net of current portion | 1887 | 2263 |
| &nbsp;&nbsp;&nbsp;Total liabilities | 235339 | 242005 |
| &nbsp;&nbsp;&nbsp;Commitments and contingencies (Note 14) |  |  |
| &nbsp;&nbsp;&nbsp;**Stockholders' (deficit):** |  |  |
| &nbsp;&nbsp;&nbsp;Common stock, $0.0001 par value; Authorized 1,000,000,000 shares as of March 30, 2025, and December 29, 2024; issued and outstanding 80,020,836 and 73,784,645 shares as of March 30, 2025, and December 29, 2024, respectively. | 14 | 14 |
| &nbsp;&nbsp;&nbsp;Additional paid-in capital | 314247 | 313661 |
| &nbsp;&nbsp;&nbsp;Accumulated other comprehensive loss | 165 | 165 |
| &nbsp;&nbsp;&nbsp;Accumulated deficit | (406567) | (411379) |
| &nbsp;&nbsp;&nbsp;Total stockholders' (deficit) | (92141) | (97539) |
| &nbsp;&nbsp;&nbsp;Total liabilities and stockholders' (deficit) | $143198 | $144466 |

---

<sup>(1)</sup> Includes accrued interest due to related parties of $2.1 million and $2.2 million as of March 30, 2025, and December 29, 2024, respectively.

*The accompanying notes are an integral part of these unaudited condensed consolidated financial statements.*

**SUNPOWER INC.**

**Unaudited Condensed Consolidated Statements of Operations and Comprehensive Income (Loss)**

**(*in thousands except share and per share amounts*)**

---

| | | |
|:---|:---|:---|
|  | **Thirteen-Weeks Ended** | **Thirteen-Weeks Ended** |
|  | **March 30,**<br>**2025** | **March 31**<br>**2024** |
|  | (As Restated) | |
| Revenues | $78413 | $10040 |
| Cost of revenues <sup>(1)</sup> | 51037 | 7757 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Gross profit | 27376 | 2283 |
| Operating expenses: |  |  |
| &nbsp;&nbsp;&nbsp;Sales commissions | 7684 | 3116 |
| &nbsp;&nbsp;&nbsp;Sales and marketing | 8522 | 1618 |
| &nbsp;&nbsp;&nbsp;General and administrative | 14896 | 5093 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Total operating expenses | 31102 | 9827 |
| Loss from operations | (3726) | (7544) |
| Interest expense<sup>(2)</sup> | (6041) | (3568) |
| Interest income | 3 | 6 |
| Other income, net <sup>(3)</sup> | 14576 | 1519 |
| &nbsp;&nbsp;&nbsp;Total Other income (expense), net | 8538 | (2043) |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Income (loss) before income taxes | 4812 | (9587) |
| Income tax provision |  | (1) |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Net income (loss) | 4812 | (9588) |
| Other Comprehensive income (loss) |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Foreign currency translation adjustment |  | (45) |
| Comprehensive income (loss) (net of tax) | $4812 | $(9633) |
| Net income (loss) per share attributable to common stockholders |  |  |
| &nbsp;&nbsp;&nbsp;Basic | $0.06 | $(0.20) |
| &nbsp;&nbsp;&nbsp;Diluted | $0.02 | $(0.20) |
| Weighted-average shares used to compute net income (loss) per share attributable to common stockholders |  |  |
| &nbsp;&nbsp;&nbsp;Basic | 80209585 | 49077330 |
| &nbsp;&nbsp;&nbsp;Diluted | 112302063 | 49077330 |

---

<sup>(1)</sup> Includes, cost of revenues $0.2 million with a related party in the thirteen weeks ended March 30, 2025. There were no related party amounts included the thirteen weeks ended March 31, 2024. Refer to **Note 18 – Related Party Transactions** for details.

<sup>(2)</sup> Includes related party interest expense and amortization of debt issuance costs of $1.4 million and $2.7 million in the thirteen weeks ended March 30, 2025, and March 31, 2024, respectively.

<sup>(3)</sup> Includes a gain of $3.7 million on the change in the fair value of derivative liabilities with related parties in the thirteen weeks ended March 30, 2025. Refer to **Note 11 – Borrowings and Derivative Liabilities** for details. Includes income of $0.1 million and expense of $4.7 million due to related parties relating to the change in the fair value of forward purchase agreements for the thirteen weeks ended March 30, 2025, and March 31, 2024, respectively. Includes $0.1 million and zero of income due to related parties other income, net in the thirteen weeks ended March 30, 2025, and March 31, 2024, respectively.

*The accompanying notes are an integral part of these unaudited condensed consolidated financial statements.*

**SUNPOWER INC.**

**Unaudited Condensed Consolidated Statements of Stockholders' Deficit** 

**(*in thousands except number of shares*)**

---

| | | | | | | |
|:---|:---|:---|:---|:---|:---|:---|
|  | **Thirteen Weeks Ended March 30, 2025 (As Restated)** | **Thirteen Weeks Ended March 30, 2025 (As Restated)** | **Thirteen Weeks Ended March 30, 2025 (As Restated)** | **Thirteen Weeks Ended March 30, 2025 (As Restated)** | **Thirteen Weeks Ended March 30, 2025 (As Restated)** | **Thirteen Weeks Ended March 30, 2025 (As Restated)** |
|  | **Common Stock** | **Common Stock** | | | | |
|  | **Shares** | **Amount** |<br>**Additional**<br>**Paid-in-**<br>**Capital** |<br>**Accumulated**<br>**Deficit** | **Accumulated**<br>**Other**<br>**Comprehensive**<br>**Income** | **Total**<br>**Stockholders'**<br>**Equity**<br>**(Deficit)** |
| **Balance as of December 29, 2024** | **73784645** | $**14** | $**313661** | $**(411379)** | $**165** | $**(97539)** |
| Exercise of common stock options | 43793 |  | 57 |  |  | 57 |
| Stock-based compensation |  |  | 469 |  |  | 469 |
| Vesting of restricted stock units | 192398 |  |  |  |  |  |
| Exercise of common stock warrants | 6000000 |  | 60 |  |  | 60 |
| Net income |  |  |  | 4812 |  | 4812 |
| Foreign currency translation adjustment |  |  |  |  |  |  |
| **Balance as of March 30, 2025 (As Restated)** | **80020836** | $**14** | $**314247** | $**(406567)** | $**165** | $**(92141)** |

---

---

| | | | | | | |
|:---|:---|:---|:---|:---|:---|:---|
|  | **Thirteen Weeks Ended March 31, 2024** | **Thirteen Weeks Ended March 31, 2024** | **Thirteen Weeks Ended March 31, 2024** | **Thirteen Weeks Ended March 31, 2024** | **Thirteen Weeks Ended March 31, 2024** | **Thirteen Weeks Ended March 31, 2024** |
|  | **Common Stock** | **Common Stock** |<br>**Additional**<br>**Paid-in-** | | | |
|  | **Shares** | **Amount** | **Capital** |<br>**Accumulated**<br>**Deficit** | **Accumulated**<br>**Other**<br>**Comprehensive**<br>**Income** | **Total**<br>**Stockholders'**<br>**Equity**<br>**(Deficit)** |
| **Balance as of December 31, 2023** | **49065361** | $**7** | $**277965** | $**(354928)** | $**143** | $**(76813)** |
| Exercise of common stock options | 31176 |  | 26 |  |  | 26 |
| Stock-based compensation |  |  | 1341 |  |  | 1341 |
| Net loss |  |  |  | (9588) |  | (9588) |
| Foreign currency translation adjustment |  |  |  |  | (45) | (45) |
| **Balance as of March 31, 2024** | **49096537** | $**7** | $**279332** | $**(364516)** | $**98** | $**(85079)** |

---

*The accompanying notes are an integral part of these unaudited condensed consolidated financial statements.*

**SUNPOWER INC.**

**Unaudited Condensed Consolidated Statements of Cash Flows**

**(*in thousands except number of shares*)**

---

| | | |
|:---|:---|:---|
|  | **Thirteen Weeks Ended** | **Thirteen Weeks Ended** |
|  | **March 30,<br> 2025** | **March 31,<br> 2024** |
|  | (As Restated) | |
| **Cash flows from operating activities** |  |  |
| Net income (loss) | $4812 | $(9588) |
| Adjustments to reconcile net income (loss) from operations to net cash used in operating activities: |  |  |
| &nbsp;&nbsp;&nbsp;Stock-based compensation expense | 469 | 1341 |
| &nbsp;&nbsp;&nbsp;Non-cash interest expense |  | 1008 |
| &nbsp;&nbsp;&nbsp;Non-cash lease expense | 288 | 181 |
| &nbsp;&nbsp;&nbsp;Depreciation and amortization | 1583 | 357 |
| &nbsp;&nbsp;&nbsp;Provision for credit losses | 1087 | 62 |
| &nbsp;&nbsp;&nbsp;Change in reserve for excess and obsolete inventory |  | (344) |
| &nbsp;&nbsp;&nbsp;Change in fair value of SAFE Agreement – related party | 20 |  |
| &nbsp;&nbsp;&nbsp;Change in fair value of forward purchase agreement liabilities <sup>(1)</sup> | (268) | 5578 |
| &nbsp;&nbsp;&nbsp;Change in fair value of derivative liabilities <sup>(2)</sup> | (15127) |  |
| &nbsp;&nbsp;&nbsp;Amortization of debt issuance costs <sup>(3)</sup> | 3655 |  |
| &nbsp;&nbsp;&nbsp;Change in fair value of warrant liabilities | 1092 | (7246) |
| &nbsp;&nbsp;&nbsp;Non-cash income <sup>(4)</sup> | (158) |  |
| &nbsp;&nbsp;&nbsp;Accretion of debt in CS Solis – related party |  | 2560 |
| Changes in operating assets and liabilities: |  |  |
| &nbsp;&nbsp;&nbsp;Accounts receivable | (223) | 5280 |
| &nbsp;&nbsp;&nbsp;Inventories | 11386 | 629 |
| &nbsp;&nbsp;&nbsp;Contract assets | (11279) |  |
| &nbsp;&nbsp;&nbsp;Prepaid expenses and other current assets | (4413) | 41 |
| &nbsp;&nbsp;&nbsp;Other noncurrent assets | 14 |  |
| &nbsp;&nbsp;&nbsp;Accounts payable | 6896 | (2599) |
| &nbsp;&nbsp;&nbsp;Accrued expenses and other liabilities | (5173) | (1613) |
| &nbsp;&nbsp;&nbsp;Operating lease liabilities | (352) | (180) |
| &nbsp;&nbsp;&nbsp;Contract liabilities | 3064 | (413) |
| Net cash used in operating activities | (2627) | (4946) |
| **Cash flows from investing activities** |  |  |
| Capitalization of internal-use software costs |  | (536) |
| Net cash used in investing activities |  | (536) |
| **Cash flows from financing activities** |  |  |
| Proceeds from issuance of convertible notes | 200 |  |
| Principal repayment of note payable |  | (300) |
| Finance lease payments | (515) |  |
| Proceeds from exercise of common stock options | 57 | 26 |
| Proceeds from exercise of warrant for common stock | 60 |  |
| Proceeds from issuance of SAFE agreements |  | 5000 |
| Net cash (used in) provided by financing activities | (198) | 4726 |
| Effect of exchange rate changes |  | (45) |
| Net decrease in cash, cash equivalents and restricted cash | (2825) | (801) |
| Cash, cash equivalents, and restricted cash at beginning of period | 17219 | 6416 |
| Cash, cash equivalents, and restricted cash at end of period | $14394 | $5615 |
| **Supplemental disclosures of cash flow information:** |  |  |
| Cash paid during the period for interest | $1388 | $— |

---

<sup>(1)</sup> Includes related party income $0.1 million in the thirteen weeks ended March 30, 2025.

<sup>(2)</sup> Includes related party gain on remeasurement of $3.7 million in the thirteen weeks ended March 30, 2025.

<sup>(3)</sup> Includes related party amortization of $0.7 million in the thirteen weeks ended March 30, 2025.

<sup>(4)</sup> Includes related party non-cash income of less than $0.1 million in the thirteen weeks ended March 30, 2025.

*The accompanying notes are an integral part of these unaudited condensed consolidated financial statements.*

**SUNPOWER INC.**

**Notes to Unaudited Condensed Consolidated Financial Statements**

**(1) Organization**

***(a) Description of Business***

SunPower Inc. ("SunPower" or the "Company") is the rebranded name of Complete Solaria, Inc. ("Complete Solaria"). The rebranding was effective April 22, 2025. References to the Company and SunPower include the same entity under its previous name of Complete Solaria.

The Company originally incorporated in Delaware under the name Complete Solaria Inc. and is a residential solar installer that offers storage and home energy solutions to customers in North America. The Company was formed through Complete Solar Holding Corporation's acquisition of The Solaria Corporation ("Solaria"). The Company is headquartered in Orem, Utah.

Complete Solar, Inc. ("Complete Solar") was incorporated in Delaware on February 22, 2010. Through February 2022, the Company operated as a single legal entity as Complete Solar, Inc. In February 2022, the Company implemented a holding company reorganization (the "Reorganization") in which the Company created and incorporated Complete Solar Holding Corporation ("Complete Solar Holdings"). As a result of the Reorganization, Complete Solar Holdings became the successor entity to Complete Solar, Inc. Subsequently, Complete Solar Holdings changed its name to Complete Solaria, Inc.

On July 18, 2023, the Company consummated series of merger transactions contemplated by an Amended and Restated Business Combination Agreement entered into with wholly-owned subsidiaries of Freedom Acquisition I Corp. ("FACT") entered into on May 26, 2023 ("Mergers"), equating to a reverse recapitalization for accounting purposes. Under the reverse recapitalization of accounting, FACT was treated as the acquired company for financial statement reporting purposes. This determination was based on the Company having a majority of the voting power of the post-combination company, the Company's senior management comprising substantially all of the senior management of the post-combination company, and the Company's operations comprising the ongoing operations of the post-combination company. Accordingly, for accounting purposes, the Mergers were treated as the equivalent of a capital transaction in which Complete Solaria issued stock for the net assets of FACT. The net assets of FACT were stated at historical cost, with no goodwill or other intangible assets recorded.

On August 5, 2024, Complete Solaria entered into an Asset Purchase Agreement (the "APA") among Complete Solaria, SunPower Corporation ("SunPower") and SunPower's direct and indirect subsidiaries (collectively, the "SunPower Debtors") providing for the Company's purchase of certain assets relating to the Blue Raven Solar business, New Homes Business and Non-Installing Dealer network previously operated by the SunPower Debtors ("SunPower Acquisition"). The APA was entered into in connection with a voluntary petition filed by SunPower under Chapter 11 of the United States Code, 11 U.S.C.§§ 101-1532. The sale by SunPower was approved on September 23, 2024, by the United States Bankruptcy Court for the District of Delaware.

As described in **Note 2 – Restatement of Previously Issued unaudited Condensed Consolidated Financial Statements**, the unaudited condensed consolidated financial statements as of and for the thirteen and thirty-nine week periods ended March 30, 2025, (collectively, the "Affected Periods"), are restated in this Quarterly Report on Form 10-Q/A (this "Amended Report", this "Quarterly Report" or this "Form 10-Q/A") to reflect the corrections related the recognition of revenue, cost of revenues, sales commissions, general and administrative expenses and interest expense. The restated unaudited condensed consolidated financial statements are indicated as "Restated" in the unaudited condensed consolidated financial statements and accompanying notes, as applicable. See **Note 2 – Restatement of Previously Issued Unaudited Condensed Consolidated Financial Statements** for further discussion.

***(b) Liquidity and Going Concern***

Since inception through December 29, 2024, the Company incurred recurring losses and through March 30, 2025, has incurred negative cash flows from operations. The Company's net income was $4.8 million in the thirteen weeks ended March 30, 2025. The Company's income before tax is principally attributable to a $15.1 million gain on the remeasurement of its derivative liabilities in the period. The Company had an accumulated deficit of $406.6 million and current debt of $4.3 million as of March 30, 2025, and cash and cash equivalents, excluding restricted cash, of $10.6 million as of March 30, 2025. The Company believes that operating losses and negative operating cash flows will continue into the foreseeable future. These conditions raise substantial doubt about the Company's ability to continue as a going concern.

Management plans to obtain additional funding when necessary. Historically, the Company's activities primarily have been financed through private placements of equity securities, debt, the issuance of convertible notes, cash generated from operations, and proceeds from the Mergers.

As a result of not timely filing its Annual Report on Form 10-K for the fiscal year ended December 29, 2024, the Company is not currently eligible to use a registration statement on Form S-3 that would allow the Company to continuously incorporate by reference its SEC reports into the registration statement, to use "shelf" registration statements to conduct offerings, or to use its at-the-market offering facility until approximately one year from the date the Company has regained and maintained status as a current filer. The Company's inability to use Form S-3 may significantly impair its ability to raise necessary capital to fund its operations and execute its strategy. If the Company seeks to access the capital markets through a registered offering during the period of time that it is unable to use Form S-3, the Company may be required to publicly disclose the proposed offering and the material terms thereof before the offering commences, the Company may experience delays in the offering process due to SEC review of a Form S-1 registration statement and the Company may incur increased offering and transaction costs and other considerations. If the Company is unable to raise capital through a registered offering, the Company would be required to conduct its equity financing transactions on a private placement basis, which may be subject to pricing, size and other limitations imposed under the Nasdaq rules, or seek other sources of capital. The foregoing limitations on the Company's financing approaches could prevent the Company from pursuing transactions or implementing business strategies that would be beneficial to its business.

If the Company is not able to secure adequate additional funding when needed, the Company will need to reevaluate its operating plan and may be forced to make reductions in spending, extend payment terms with suppliers, liquidate assets where possible, or suspend or curtail planned programs or cease operations entirely. These actions could materially impact the Company's business, results of operations and future prospects. While the Company has been able to raise multiple rounds of financing, there can be no assurance that in the event the Company requires additional financing, such financing will be available on terms that are favorable, or at all. Failure to generate sufficient cash flows from operations, raise additional capital or reduce certain discretionary spending would have a material adverse effect on the Company's ability to achieve its intended business objectives.

Therefore, there is substantial doubt about the Company's ability to continue as a going concern within one year after the date that the unaudited condensed consolidated financial statements are issued. The accompanying unaudited condensed consolidated financial statements have been prepared assuming the Company will continue to operate as a going concern, which contemplates the realization of assets and settlement of liabilities in the normal course of business. They do not include any adjustments to reflect the possible future effects on the recoverability and classification of assets or the amounts and classifications of liabilities that may result from uncertainty related to its ability to continue as a going concern.

**(2) Restatement of Previously Issued Unaudited Condensed Consolidated Financial Statements**

On April 14, 2026, authorized officers of the Company and the Audit Committee of the Board of Directors determined that the Company's previously issued interim financial statements as of and for the thirteen weeks ended March 30, 2025 contain material errors and should no longer be relied upon and should be restated. These material errors related to the recognition of revenue (and related cost of revenues, sales commissions, sales and marketing, and general and administrative expenses) and interest expense. Additionally, the Company has corrected other immaterial errors related to the reclassification of current and non-current debt obligations, reclassification of payroll expenses between cost of revenues and operating expenses, and the vesting of restricted stock units and related stock-based compensation expense.

This note discloses the nature of the restatement and other adjustments and the cumulative effects of these adjustments on the Company's unaudited condensed consolidated balance sheets, unaudited condensed consolidated statements of operations and comprehensive income (loss), unaudited condensed consolidated statements of stockholders' deficit and unaudited condensed consolidated statements of cash flows for the periods included in the original Form 10-Q for the thirteen week period ended March 30, 2025 (the "Original Report").

The unaudited condensed consolidated balance sheet, statement of operations and comprehensive income (loss), statement of changes in stockholders' deficit and statement of cash flows as of and for the thirteen week period ended March 30, 2025 have been restated to reflect the corrections identified and described below. The restatement adjustments and their impacts on the previously issued unaudited condensed consolidated financial statements are shown in the restatement tables of this footnote. The effects of the restatement also have been reflected in the impacted tables and footnotes throughout the notes to these unaudited condensed consolidated financial statements in this Form 10-Q/A.

***Unaudited Condensed Consolidated Financial Statements – Restatement Reconciliation Tables***

In light of the foregoing, in accordance with ASC 250, Accounting Changes and Error Corrections, we are restating the previously issued condensed consolidated financial statements as of March 30, 2025, to reflect the effects of the restatement adjustments, and to make certain corresponding disclosures. The following tables present a reconciliation of the Company's unaudited condensed consolidated balance sheets, unaudited condensed consolidated statements of operations and comprehensive income (loss), unaudited condensed consolidated statements of stockholders' deficit and unaudited condensed consolidated statements of cash flows previously reported for the period to the restated and revised amounts.

**SUNPOWER INC.**

**Restated Unaudited Condensed Consolidated Balance Sheet**

***(in thousands except share and per share amounts)***

---

| | | | |
|:---|:---|:---|:---|
|  | **As of March 30, 2025** | **As of March 30, 2025** | **As of March 30, 2025** |
|  | **As<br> Previously<br> Reported** | **Restatement<br> Adjustments** | **As<br> Restated** |
| **ASSETS** | | | |
| Current assets |  |  |  |
| &nbsp;&nbsp;&nbsp; Cash and cash equivalents | $10553 | $— | $10553 |
| &nbsp;&nbsp;&nbsp; Accounts receivable, net | 29305 | (4327) | 24978 |
| &nbsp;&nbsp;&nbsp; Inventories B | 11010 | (286) | 10724 |
| &nbsp;&nbsp;&nbsp; Prepaid expenses and other current assets | 12619 |  | 12619 |
| &nbsp;&nbsp;&nbsp; Contract assets | 37345 |  | 37345 |
| Total current assets | 100832 | (4613) | 96219 |
| Restricted cash | 3841 |  | 3841 |
| Property and equipment, net | 4625 |  | 4625 |
| Operating lease right-of-use assets | 2753 |  | 2753 |
| Other noncurrent assets | 614 |  | 614 |
| Goodwill | 18476 |  | 18476 |
| Intangible assets, net | 16670 |  | 16670 |
| **TOTAL ASSETS** | $147811 | $(4613) | $143198 |
| **LIABILITIES AND STOCKHOLDERS' DEFICIT** |  |  |  |
| Current liabilities: |  |  |  |
| &nbsp;&nbsp;&nbsp; Accounts payable | $14876 | $— | $14876 |
| &nbsp;&nbsp;&nbsp; Accrued expenses and other current liabilities C | 51431 | (500) | 50931 |
| &nbsp;&nbsp;&nbsp; Short-term debt with related parties | 1500 |  | 1500 |
| &nbsp;&nbsp;&nbsp; Notes payable, current D |  | 2786 | 2786 |
| &nbsp;&nbsp;&nbsp; Contract liabilities | 13101 |  | 13101 |
| &nbsp;&nbsp;&nbsp; SAFE Agreement with related party | 404 |  | 404 |
| &nbsp;&nbsp;&nbsp; Forward purchase agreement with related parties | 1176 |  | 1176 |
| &nbsp;&nbsp;&nbsp; Forward purchase agreement liabilities | 2050 |  | 2050 |
| Total current liabilities | 84538 | 2286 | 86824 |
| Warranty provision, noncurrent | 3437 |  | 3437 |
| Warrant liability | 2653 |  | 2653 |
| Contract liabilities, noncurrent | 884 |  | 884 |
| Notes payable and derivative liabilities, net of current portion E | 84959 | (3349) | 81610 |
| Notes payable and derivative liabilities with related parties, net of current portion F | 50395 | (390) | 50005 |
| Other long-term liabilities | 8039 |  | 8039 |
| Operating lease liabilities, net of current portion | 1887 |  | 1887 |
| Total liabilities | 236792 | (1453) | 235339 |
| Commitments and contingencies |  |  |  |
| Stockholders' (deficit) |  |  |  |
| Common stock | 14 |  | 14 |
| Additional paid-in-capital G | 314092 | 155 | 314247 |
| Accumulated other comprehensive income | 165 |  | 165 |
| Accumulated deficit | (403252) | (3315) | (406567) |
| Total stockholders' deficit | (88981) | (3160) | (92141) |
| Total liabilities and stockholders' (deficit) | $147811 | $(4613) | $143198 |

---

**SUNPOWER INC.**

**Restated Unaudited Condensed Consolidated Statement of Operations and Comprehensive Income (Loss)**

***(in thousands except share and per share amounts)***

---

| | | | |
|:---|:---|:---|:---|
|  | **Thirteen Weeks Ended March 30, 2025** | **Thirteen Weeks Ended March 30, 2025** | **Thirteen Weeks Ended March 30, 2025** |
|  | **As<br> Previously<br> Reported** | **Restatement<br> Adjustments** | **As<br> Restated** |
| Revenues A | $82740 | $(4327) | $78413 |
| Cost of revenues H | 42599 | 8438 | 51037 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Gross profit | 40141 | (12765) | 27376 |
| Operating expenses: |  |  |  |
| &nbsp;&nbsp;&nbsp;Sales commissions | 7684 |  | 7684 |
| &nbsp;&nbsp;&nbsp;Sales and marketing I | 6825 | 1697 | 8522 |
| &nbsp;&nbsp;&nbsp;General and administrative J | 24590 | (9694) | 14896 |
| Total operating expenses | 39099 | (7997) | 31102 |
| Income (loss) from operations | 1042 | (4768) | (3726) |
| Interest expense K | (7494) | 1453 | (6041) |
| Interest income | 3 |  | 3 |
| Other income, net | 14576 |  | 14576 |
| Total other income (expense), net | 7085 | 1453 | 8538 |
| Income before income taxes | 8127 | (3315) | 4812 |
| Income tax provision |  |  |  |
| Net income | 8127 | (3315) | 4812 |
| Comprehensive loss, net of tax | $8127 | $(3315) | $4812 |
| Net income per share attributable to common stockholders |  |  |  |
| &nbsp;&nbsp;&nbsp;Basic | $0.10 | $(0.04) | $0.06 |
| &nbsp;&nbsp;&nbsp;Diluted | $0.00 | $0.06 | $0.02 |
| Weighted-average shares used to compute net income per share attributable to common stockholders |  |  |  |
| Basic G | 80110127 | 99458 | 80209585 |
| Diluted L | 162367934 | (50065871) | 112302063 |

---

**SUNPOWER INC.**

**Restated Unaudited Condensed Consolidated Statement of Stockholders' Deficit**

***(in thousands except number of shares)***

---

| | | | | | | |
|:---|:---|:---|:---|:---|:---|:---|
|  | **Thirteen Weeks Ended March 30, 2025** | **Thirteen Weeks Ended March 30, 2025** | **Thirteen Weeks Ended March 30, 2025** | **Thirteen Weeks Ended March 30, 2025** | **Thirteen Weeks Ended March 30, 2025** | **Thirteen Weeks Ended March 30, 2025** |
|  | **Common Stock** | **Common Stock** | | | | |
|  | **Shares** | **Amount** | **Additional<br> Paid-in**<br>**Capital** | **Accumulated**<br>**Deficit** | **Accumulated<br> Other<br> Comprehensive**<br>**Income** | **Total<br> Stockholders'**<br>**Deficit** |
| **As Previously Reported** | | | | | | |
| **Balance as of December 29, 2024** | 73784645 | $14 | $313661 | $(411379) | $165 | $(97539) |
| Exercise of common stock options | 43793 |  | 57 |  |  | 57 |
| Stock-based compensation |  |  | 314 |  |  | 314 |
| Vesting of restricted stock units | 93470 |  |  |  |  |  |
| Exercise of common stock warrants | 6000000 |  | 60 |  |  | 60 |
| Net income (loss) |  |  |  | 8127 |  | 8127 |
| **Balance as of March 30, 2025** | 79921908 | $14 | $314092 | $(403252) | $165 | $(88981) |
| **Adjustments** |  |  |  |  |  |  |
| **Balance as of December 29, 2024** |  | $— | $— | $— | $— | $— |
| Exercise of common stock options |  |  |  |  |  |  |
| Stock-based compensation G |  |  | 155 |  |  | 155 |
| Vesting of restricted stock units G | 98928 |  |  |  |  |  |
| Exercise of common stock warrants |  |  |  |  |  |  |
| Net income (loss) |  |  |  | (3315) |  | (3315) |
| **Balance as of March 30, 2025** | 98928 | $— | $155 | $(3315) | $— | $(3160) |
| **As Restated** |  |  |  |  |  |  |
| **Balance as of December 29, 2024** | 73784645 | $14 | $313661 | $(411379) | $165 | $(97539) |
| Exercise of common stock options | 43793 |  | 57 |  |  | 57 |
| Stock-based compensation |  |  | 469 |  |  | 469 |
| Vesting of restricted stock units | 192398 |  |  |  |  |  |
| Exercise of common stock warrants | 6000000 |  | 60 |  |  | 60 |
| Net income (loss) |  |  |  | 4812 |  | 4812 |
| **Balance as of March 30, 2025** | 80020836 | $14 | $314247 | $(406567) | $165 | $(92141) |

---

 ****

**SUNPOWER INC.**

**Restated Unaudited Condensed Consolidated Statement of Cash Flows**

***(in thousands except share and per share amounts)***

---

| | | | | |
|:---|:---|:---|:---|:---|
|  | | **Thirteen Weeks Ended March 30, 2025** | **Thirteen Weeks Ended March 30, 2025** | **Thirteen Weeks Ended March 30, 2025** |
|  | <br>**Explanatory <br> Note** | **As<br> Previously<br> Reported** | **Restatement<br> Adjustments** | **As<br> Restated** |
| **Cash flows from operating activities** |  | | | |
| Net income (loss) | A,H,I,J,K | $8127 | $(3315) | $4812 |
| Adjustments to reconcile net loss from continuing operations to net cash used in operating activities: |  |  |  |  |
| &nbsp;&nbsp;&nbsp;Stock-based compensation | G | 314 | 155 | 469 |
| &nbsp;&nbsp;&nbsp;Non-cash interest expense |  |  |  |  |
| &nbsp;&nbsp;&nbsp;Non-cash lease expense |  | 288 |  | 288 |
| &nbsp;&nbsp;&nbsp;Depreciation and amortization |  | 1583 |  | 1583 |
| &nbsp;&nbsp;&nbsp;Provision for credit losses |  | 1087 |  | 1087 |
| &nbsp;&nbsp;&nbsp;Change in fair value of SAFE Agreements with related party |  | 20 |  | 20 |
| &nbsp;&nbsp;&nbsp;Change in fair value of forward purchase agreement liabilities |  | (268) |  | (268) |
| &nbsp;&nbsp;&nbsp;Change in fair value of derivative liabilities |  | (15127) |  | (15127) |
| &nbsp;&nbsp;&nbsp;Amortization of debt issuance costs | M | 4608 | (953) | 3655 |
| &nbsp;&nbsp;&nbsp;Change in fair value of warrant liabilities |  | 1092 |  | 1092 |
| &nbsp;&nbsp;&nbsp;Non-cash income |  | (158) |  | (158) |
| Changes in operating assets and liabilities, net of acquisitions: |  |  |  |  |
| &nbsp;&nbsp;&nbsp;Accounts receivable | A | (4550) | 4327 | (223) |
| &nbsp;&nbsp;&nbsp;Inventories | B | 11100 | 286 | 11386 |
| &nbsp;&nbsp;&nbsp;Contract assets |  | (11279) |  | (11279) |
| &nbsp;&nbsp;&nbsp;Prepaid expenses and other current assets |  | (4413) |  | (4413) |
| &nbsp;&nbsp;&nbsp;Other noncurrent assets |  | 14 |  | 14 |
| &nbsp;&nbsp;&nbsp;Accounts payable |  | 6896 |  | 6896 |
| &nbsp;&nbsp;&nbsp;Accrued expenses and other current liabilities | C | (4673) | (500) | (5173) |
| &nbsp;&nbsp;&nbsp;Operating lease liabilities |  | (352) |  | (352) |
| &nbsp;&nbsp;&nbsp;Contract liabilities |  | 3064 |  | 3064 |
| Net cash used in operating activities |  | (2627) |  | (2627) |
| **Cash flows from investing activities** |  |  |  |  |
| &nbsp;&nbsp;&nbsp;Capitalization of internal-use-software costs |  |  |  |  |
| Net cash used in investing activities |  |  |  |  |
| **Cash flows from financing activities** |  |  |  |  |
| &nbsp;&nbsp;&nbsp;Proceeds from issuance of convertible notes |  | 200 |  | 200 |
| &nbsp;&nbsp;&nbsp;Finance lease payments |  | (515) |  | (515) |
| &nbsp;&nbsp;&nbsp;Proceeds from exercise of common stock options |  | 57 |  | 57 |
| &nbsp;&nbsp;&nbsp;Proceeds from exercise of warrant for common stock |  | 60 |  | 60 |
| Net cash provided by financing activities |  | (198) |  | (198) |
| Effect of exchange rate changes |  |  |  |  |
| Net decrease in cash, cash equivalents and restricted cash |  | (2825) |  | (2825) |
| Cash, cash equivalents, and restricted cash at beginning of period |  | 17219 |  | 17219 |
| Cash, cash equivalents and restricted cash at end of period |  | $14394 | $— | $14394 |

---

***Description of Restatement Adjustments***

The nature and categories of the restatement adjustments and their impacts on the previously reported unaudited condensed consolidated financial statements included in the Original Report are described in the following explanatory notes. The correction of these errors resulted in changes in the components of within cash flows from operations, but resulted in no net change in cash flows from operations. (*in thousands*):

---

| | |
|:---|:---|
| A | To correct errors relating to an overstatement of accounts receivables and revenues of $4.3 million attributable to transactions that were double counted or recognized in the incorrect period. |

---

---

| | |
|:---|:---|
| B | To correct the overstatement of inventory by $0.3 million arising from errors in the reconciliation of inventory balances. |

---

C To correct errors related to the overstatement of accrued interest of $0.5 million relating to the senior unsecured convertible notes payable.

D To correct an error in the classification of the current portion of the senior unsecured convertible notes of $2.8 million that was previously classified as a long-term liability within notes payable and derivative liabilities, net of current portion.

---

| | |
|:---|:---|
| E | To correct an error in the classification of the current portion of the senior unsecured convertible notes of $2.8 million that was previously classified as a long-term liability within notes payable and derivative liabilities, net of current portion and to correct an error in the overstatement of amortization of debt discount and issuance costs and resulted understatement of unamortized debt discount and issuance costs of $0.6 million related to the senior unsecured convertible notes. |

---

---

| | |
|:---|:---|
| F | To correct an error in the overstatement of amortization of debt discount and issuance costs and resulted understatement of unamortized debt discount and issuance costs of $0.4 million related to the senior unsecured convertible notes. |

---

---

| | |
|:---|:---|
| G | To correct errors in the restricted stock units ("RSUs") granted and vested resulting in an understatement of stock-based compensation expense by $0.2 million which understated additional paid-in capital. This error resulted in an understatement of the non-cash adjustment of stock-based compensation in the unaudited consolidated statement of cash flow. |

---

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| | |
|:---|:---|
| H | To correct (i) the classification of $7.6 million of payroll expense that was classified in general and administrative expense (ii) the classification of amortization expense related to intangible assets by $0.4 million that was classified in general and administrative expense, (iii) to correct for the understatement of stock-based compensation expense by $0.1 million and (iv) for an overstatement of inventory $0.3 million arising from errors in the reconciliation of inventory balances. |

---

I To correct the classification of $1.6 million of payroll expenses previously classified within general and administrative expense and correct an error related to understatement of stock-based compensation expense by $0.06 million relating to the grant and vesting of RSUs.

---

| | |
|:---|:---|
| J | To correct (i) the classification of $0.4 million of amortization expense from general & administrative expenses to cost of revenues; and (ii) the classification of payroll expenses by $9.3 million that was misclassified as general and administrative expenses and reclassified to cost of revenues and sales and marketing expenses. |

---

&nbsp;&nbsp;&nbsp;&nbsp;K To correct for the overstatement of amortization of debt discount and issuance costs of $1.0 million and overstatement of interest expense by $0.5 million relating to long-term debt.

L The change in the dilutive shares is to correct dilutive securities considered in the calculation of diluted earnings per share due to the change in operating results.

M To correct the overstatement of amortization of debt discount and issuance costs of $1.0 million resulting in the overstatement of non-cash adjustments in the unaudited consolidated statement of cash flow.

**(3) Summary of Significant Accounting Policies**

***(a) Basis of Presentation***

The interim unaudited condensed consolidated financial statements include the accounts of the Company and its wholly-owned subsidiaries. All material intercompany balances and transactions have been eliminated in consolidation.

The accompanying interim consolidated financial statements are unaudited and have been prepared by the Company in accordance with U.S. generally accepted accounting principles ("U.S. GAAP") for interim financial information and in accordance with the rules and regulations of the Securities and Exchange Commission (the "SEC"). Accordingly, these interim unaudited consolidated financial statements do not include all the information and disclosures required by U.S. GAAP for complete financial statements. In the opinion of management, these interim unaudited consolidated financial statements reflect all adjustments, consisting of normal recurring adjustments, necessary to present fairly the Company's financial position as of March 30, 2025, and the results of operations for the thirteen week periods ended March 30, 2025, and March 31, 2024. The results of operations for interim periods are not necessarily indicative of the results to be expected for the full year or any other future period. These interim unaudited consolidated financial statements and related notes should be read in conjunction with the audited consolidated financial statements and related notes for the fiscal year ended December 29, 2024, included in the Company's Annual Report on Form 10-K filed with the SEC on April 30, 2025.

On March 10, 2025, the Company's board of directors approved a change in the Company's fiscal year end to a 52-to-53-week fiscal year that ends on the Sunday closest to December 31. This change was effective for the fiscal year ended December 29, 2024. The Company's first fiscal quarters for 2025 and 2024 in this report on Form 10-Q ended March 30, 2025 ("First Quarter 2025") and March 31, 2024 ("First Quarter 2024"), respectively.

 ****

***(b) Concentration of Risks***

As of March 30, 2025, one customer had an outstanding balance that represented 12% of the total accounts receivable balance. As of December 29, 2024, no customer had an outstanding balance that represented more than 10% of the total accounts receivable balance.

***Concentration of customers***

The Company's major customers are within the Residential Solar Installation reportable segment. For the thirteen weeks ended March 30, 2025, one customer within the Residential Solar Installation reportable segment accounted for 29% of gross revenue and one customer within the New Homes Business reportable segment accounted for 13% of gross revenue. For the thirteen-weeks ended March 31, 2024, one customer represented 76% of gross revenues.

***Concentration of suppliers***

No supplier represented more than 10% of the Company's inventory purchases for the thirteen weeks ended March 30, 2025. For the thirteen-weeks ended March 31, 2024, one supplier represented 99% of the Company's inventory purchases.

***(c) Cash and Cash Equivalents and Restricted Cash***

The Company reconciles cash, cash equivalents, and restricted cash reported in its unaudited condensed consolidated balance sheets that aggregate to the beginning and ending balances shown in the Company's unaudited condensed consolidated statements of cash flows as follows (*in thousands*):

---

| | | |
|:---|:---|:---|
|  | **March 30, <br> 2025** | **December 29, <br> 2024** |
| Cash and cash equivalents | $10553 | $13378 |
| Restricted cash | 3841 | 3841 |
| Total cash, cash equivalents and restricted cash | $14394 | $17219 |

---

 ***(d) Estimated Credit Losses***

The Company recognizes an allowance for credit loss at the time a receivable is recorded based on the Company's estimate of expected credit losses, historical write-off experience, and current account knowledge, and adjusts this estimate over the life of the receivable as needed. The Company evaluates the aggregation and risk characteristics of a receivable pool and develops loss rates that reflect historical collections, current forecasts of future economic conditions over the time horizon that the Company is exposed to credit risk, and payment terms or conditions that may materially affect future forecasts.

The Company performs ongoing credit evaluations of its customers' financial condition when deemed necessary. The Company maintains an allowance for credit losses based on the expected collectability of all accounts receivable, which takes into consideration an analysis of historical bad debts, specific customer creditworthiness and current economic trends. The Company believes that its concentration of credit risk is limited because of the large number of customers, credit quality of the customer base, small account balances for most of these customers, and customer geographic diversification. The Company does not have any off-balance sheet credit exposure relating to its customers.

The following table summarizes the allowance for credit losses as follows (*in thousands*):

---

| | | |
|:---|:---|:---|
|  | **As of** | **As of** |
|  | **March 30,**<br>**2025** | **March 31,**<br>**2024** |
| Balance at beginning of period | $(1701) | $(9846) |
| (Provision) credit charged to earnings | (1087) | (62) |
| Amounts written off, net of recoveries and other adjustments | 313 | 412 |
| Balance at end of period | $(2475) | $(9496) |

---

***(e) Contract Assets and Contract Liabilities***

Contract assets consist of unbilled receivables which represent revenue that has been recognized in advance of billing the customer. Contract liabilities consist of deferred revenue and customer advances, which represent consideration received from a customer prior to transferring control of goods or services to the customer under the terms of a sales contract. Total contract assets and contract liabilities balances as of the respective dates are as follows (*in thousands*):

---

| | | |
|:---|:---|:---|
|  | **As of** | **As of** |
|  | **March 30,**<br>**2025** | **December 29,**<br>**2024** |
| Contract assets | $37345 | $26066 |
| Contract liabilities current and noncurrent | 13985 | 10921 |

---

The Company typically invoices its customers upon completion of set milestones, generally upon installation of the solar energy system with the remaining balance invoiced upon passing final building inspection. Standard payment terms to customers range from 30 to 60 days. When the Company receives payment, or when such payment is unconditionally due from a customer prior to delivering goods or services to the customer under the terms of a customer agreement, the Company records this deferred revenue as a contract liability. As installation projects are typically completed within 12-months, the Company's contract liability is reflected within current liabilities in the accompanying consolidated balance sheets.

***(f) Revenue Recognition***

 ****

Revenue is recognized for Residential Solar Installation and New Home Business when a customer obtains control of promised products and services and the Company has satisfied its performance obligations which is the date by which substantially all of its design and installation is complete for a fully functioning solar power system to interconnect to the local power grid.

Installation includes the design of a solar energy system, the delivery of the components of the solar energy system (i.e., photovoltaic system, inverter, battery storage, etc.), installation services and services facilitating the connection of the solar energy system to the power grid. The Company accounts for these services as inputs to a combined output, resulting in a single service-based performance obligation.

The amount of revenue recognized reflects the consideration which the Company expects to be entitled to receive in exchange for the products and services. To achieve this core principle, the Company applies the following five steps:

Step 1. Identification of the contract(s) with a customer;

Step 2. Identification of the performance obligations in the contracts(s);

Step 3. Determination of the transaction price;

Step 4. Allocation of the transaction price to the performance obligations;

Step 5. Recognition of the revenue when, or as, the Company satisfies a performance obligation.

 

*Residential Solar Installation Revenues*

The Company's Residential Solar Installation segment sells products through a network of installing and non-installing dealers and resellers, as well as its internal sales team. The Company's contracts with customers include three primary contract types:

● *Cash agreements* – The Company contracts directly with homeowners who purchase the solar energy system and related services from the Company. Customers are invoiced on a billing schedule, where the majority of the transaction price is due upon installation with an additional payment due when the system passes inspection by the authority having jurisdiction.

● *Financing partner agreements* – In its financing partner agreements, the Company contracts directly with homeowners for the purchase of the solar energy system and related services. The Company refers the homeowner to a financing partner to finance the system, and the homeowner makes payments directly to the financing partner. The Company receives consideration from the financing partner on a billing schedule where the majority of the transaction price is due upon installation with an additional payment due when the system passes inspection by the authority having jurisdiction.

● *Power purchase agreements and lease agreements* – The Company contracts directly with a leasing partner to perform the solar energy system installation, and the homeowner will finance the system through a power purchase agreement (or lease), which is signed with the Company's leasing partner. The Company considers the leasing partner to be its customer, as the Company does not contract directly with the homeowner and the leasing partner takes ownership of the system upon the completion of installation. The Company receives consideration from the leasing partner on a billing schedule where the majority of the transaction price is due upon installation with an additional payment due when the system passes inspection by the authority having jurisdiction.

*New Home Business Revenues*

The Company's New Homes Business segment sells through a network of home builders as well as its internal sales team. The Company's contracts with customers include two primary contract types:

● *Cash agreements* – The Company contracts directly with homebuilders who purchase the solar energy system from the Company and are the customers in the transaction. The Company's customers are invoiced upon the completion of installation.

● *Lease agreements* – Prior to the SunPower Corporation's declaration of bankruptcy, certain homeowners had intended to lease a system from the SunPower Corporation but were unable to consummate the transaction (as a result of SunPower's declaration of bankruptcy). The in-process system inventory (installed on recently constructed homes) was acquired by the Company in connection with the SunPower Acquisition. The Company contracted directly with a leasing partner to facilitate the leasing of the system to the impacted homeowners. The Company considers the leasing partner to be its customer. Under the terms of the Company's arrangement with the leasing partner, control is not transferred to the customer until the completed system is accepted by the customer. The Company receives consideration from the leasing partner following the acceptance of the system.

The Company's performance obligation for both of these reportable segments is to design and install a fully functioning solar energy system. For all contract types (with the exception of New Homes Business Lease agreements), the Company recognizes revenue over time. The Company's over-time revenue recognition begins when the solar power system is fully installed (as it is at this point that control of the asset begins to be transferred to the customer and the customer retains the significant risks and rewards of ownership of the solar power system). The Company recognizes revenue using the input method based on direct costs to install the system and defers the costs of installation until such time that control of the asset transfers to the customer (installation). For New Homes Business Lease agreements, the Company considers the performance obligation to be satisfied at a point in time upon acceptance of the system by the customer.

Revenue is generally recognized at the transaction price contained within the agreement, net of costs of financing, or other consideration paid to the customers that is not in exchange for a distinct good or service. The Company's arrangements may contain clauses that can either increase or decrease the transaction price. Variable consideration is estimated at each measurement date at its most likely amount to the extent that it is probably that a significant reversal of cumulative revenue recognized will not occur and true-ups are applied prospectively as such estimates change.

The Company records deferred revenue for amounts invoiced that are received in advance of the provisioning of services. In certain contracts with customers, the Company arranges for a third-party financing partner to provide financing to the customer. The Company collects upfront from the financing partner and the customer will provide instalment payments to the financing partner. The Company records revenue in the amount received from the financing partner, net of any financing fees charged to the homeowner, which the Company considers to be a customer incentive. None of the Company's contracts contain a significant financing component.

*Costs to obtain and fulfill contracts*

The Company's costs to obtain and fulfill contracts, when recognized, associated with systems sales are expensed as sales commission and cost of revenue, respectively. In addition, incentives the Company provides to its customers, such as discounts and rebates, are recorded net to the revenue the Company has recognized on the solar power system.

 **

***Disaggregation of revenue***

 **

Refer to the table below for the Company's revenue recognized (*in thousands*):

---

| | | |
|:---|:---|:---|
|  | **Thirteen weeks ended** | **Thirteen weeks ended** |
|  | **March 30,**<br>**2025** | **March 31,**<br>**2024** |
|  | (As Restated) | |
| Residential Solar Installation |  |  |
| &nbsp;&nbsp;&nbsp;Revenue recognized over time | $36504 | $10040 |
| &nbsp;&nbsp;&nbsp;Revenue recognized at a point in time |  |  |
| Total Residential Solar Installation | 36504 | 10040 |
| New Homes Business |  |  |
| &nbsp;&nbsp;&nbsp;Revenue recognized over time | 15466 |  |
| &nbsp;&nbsp;&nbsp;Revenue recognized at a point in time | 26443 |  |
| Total New Homes Business | 41909 |  |
| Total revenue | $78413 | $10040 |
| Total revenue recognized over time | $51970 | $10040 |
| Total revenue recognized at a point in time | 26443 |  |

---

For the thirteen weeks ended March 30, 2025, and March 31, 2024, all revenue recognized was generated in the U.S.

***Remaining performance obligations***

 ****

The Company elected the practical expedient not to disclose the remaining performance obligations for contracts that are less than one year in length.

***Incremental costs of obtaining customer contracts***

Incremental costs of obtaining customer contracts consist of sales commissions, which are costs paid to third-party vendors who source residential customer contracts for the sale of solar energy systems by the Company. The Company defers sales commissions and recognizes expenses in accordance with the timing of the related revenue recognition. Amortization of deferred commissions is recorded as sales commissions in the accompanying unaudited condensed consolidated statements of operations and comprehensive income (loss). As of March 30, 2025, and December 29, 2024, deferred commissions were insignificant.

 ****

***(g) Accounting Pronouncements not yet adopted***

In December 2023, the Financial Accounting Standards Board ("FASB") issued Accounting Standards Update ("ASU") 2023-09, Income Taxes (Topic 740): Improvements to Income Tax Disclosures. The objective of ASU 2023-09 is to enhance disclosures related to income taxes, including specific thresholds for inclusion within the tabular disclosure of income tax rate reconciliation and specified information about income taxes paid. ASU 2023-09 is effective for public companies starting in annual periods beginning after December 15, 2024. The Company will adopt this ASU in its annual report for the fiscal year ending December 28, 2025. The Company is assessing the impact of adopting this guidance on its consolidated financial statements.

In November 2024, the FASB issued ASU 2024-03, Income Statement-Reporting Comprehensive Income-Expense Disaggregation Disclosures (Subtopic 220-40): Disaggregation of Income Statement Expenses, which requires the disaggregation of certain expenses in the notes of the financial statements to provide enhanced transparency into the expense captions presented on the face of the income statement. The FASB subsequently issued ASU 2025-01 "Income Statement-Reporting Comprehensive Income-Expense Disaggregation Disclosures (Subtopic 220-40): Clarifying the Effective Date", which amends the effective date of ASU 2024-03 to clarify that all public business entities are required to adopt the guidance in ASU 2024-03 in annual reporting periods beginning after December 15, 2026, and interim periods within annual reporting periods beginning after December 15, 2027. Early adoption of ASU 2024-03 is permitted. The Company is assessing the impact of adopting this guidance on its consolidated financial statements.

In November 2024, the FASB issued ASU No. 2024-04, Debt-Debt with Conversion and Other Options (Subtopic 470-20) ("ASU 2024-04"). The guidance in ASU 2024-04 clarifies the requirements related to accounting for the settlement of a debt instrument as an induced conversion. The standard is effective for fiscal years beginning after December 15, 2025, and interim periods within fiscal years beginning after December 15, 2025, with early adoption permitted as of the beginning of a reporting period if the entity has also adopted ASU 2020-06 for that period. The Company is currently evaluating the impact that the adoption of ASU 2024-04 may have on its disclosures in its consolidated financial statements.

In March 2024, the FASB issued ASU 2024-02 "Codification Improvements-Amendments to Remove References to the Concepts Statements", which removes various references to concepts statements from the FASB Accounting Standards Codification. This ASU is effective for the Company beginning in the first quarter of fiscal year 2026, with early adoption permitted. The Company expects the new guidance will have an immaterial impact on its consolidated financial statements and intends to adopt the guidance when it becomes effective in the first quarter of fiscal year 2026.

**(4) Business Combination**

***SunPower Acquisition***

On September 30, 2024, the Company completed the acquisition of certain assets and assumption of certain liabilities of SunPower for an aggregate cash consideration paid of $54.5 million, net of $1.0 million of cash acquired. SunPower Corporation is a solar technology and energy services provider that offers fully integrated solar, storage, and home energy solutions to customers in the United States through an array of hardware, software, and "Smart Energy" solutions. The financial results of the SunPower Acquisition have been included in the Company's unaudited condensed consolidated financial statements since the date of Acquisition. This transaction was accounted for as a business combination in accordance with ASC 805, Business Combinations.

Transaction costs incurred in connection with the close of the Acquisition totaled $7.2 million and were expensed by the Company and included in general and administrative expenses within the fourth quarter of the Company's fiscal year ended December 29, 2024.

The fair values of assets acquired and liabilities assumed were based upon a preliminary valuation, and the Company's estimates and assumptions are subject to change within the measurement period. Due to the complexities of acquiring assets out of bankruptcy the purchase price accounting remains open for certain assets acquired and liabilities assumed. The primary areas that remain preliminary relate to the cash consideration for the transaction for balances remaining in escrow, fair value of intangible assets and goodwill. The following table summarizes the provisional fair value of identifiable assets acquired and liabilities assumed (*in thousands*):

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| | |
|:---|:---|
| **Net assets acquired:** | |
| &nbsp;&nbsp;&nbsp;Cash | $1000 |
| &nbsp;&nbsp;&nbsp;Accounts receivable | 11999 |
| &nbsp;&nbsp;&nbsp;Contract assets | 4615 |
| &nbsp;&nbsp;&nbsp;Inventories | 27706 |
| &nbsp;&nbsp;&nbsp;Prepaid expenses and other current assets | 2219 |
| &nbsp;&nbsp;&nbsp;Property and equipment | 5867 |
| &nbsp;&nbsp;&nbsp;Operating lease right-of-use assets | 2506 |
| &nbsp;&nbsp;&nbsp;Other noncurrent assets | 541 |
| &nbsp;&nbsp;&nbsp;Intangibles | 18100 |
| &nbsp;&nbsp;&nbsp;Deferred revenue | (7361) |
| &nbsp;&nbsp;&nbsp;Accounts payable | (5270) |
| &nbsp;&nbsp;&nbsp;Accrued expenses and other current liabilities | (13955) |
| &nbsp;&nbsp;&nbsp;Operating lease liabilities | (2963) |
| &nbsp;&nbsp;&nbsp;Other long-term liabilities | (8980) |
| &nbsp;&nbsp;&nbsp;Fair value of net tangible assets acquired | 36024 |
| &nbsp;&nbsp;&nbsp;Consideration transferred | $54500 |
| &nbsp;&nbsp;&nbsp;Goodwill recognized | $18476 |

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**(5) Fair Value Measurements**

The following table sets forth the Company's financial assets and liabilities that are measured at fair value, on a recurring basis (*in thousands*):

---

| | | | | |
|:---|:---|:---|:---|:---|
|  | **As of March 30, 2025** | **As of March 30, 2025** | **As of March 30, 2025** | **As of March 30, 2025** |
|  | **Level 1** | **Level 2** | **Level 3** | **Total** |
|  | (As Restated) | (As Restated) | (As Restated) | (As Restated) |
| **Financial Assets** |  |  |  |  |
| Restricted cash | $3841 | $— | $— | $3841 |
| Total | $3841 | $— | $— | $3841 |
| **Financial Liabilities** |  |  |  |  |
| July 2024 Notes derivative liability | $— | $— | $11885 | $11885 |
| July 2024 Notes derivative liability – related parties |  |  | 18514 | 18514 |
| September 2024 derivative liability |  |  | 45920 | 45920 |
| September 2024 derivative liability - related parties |  |  | 5676 | 5676 |
| Forward purchase agreement liabilities <sup>(1)</sup> |  |  | 3226 | 3226 |
| Public warrants | 1466 |  |  | 1466 |
| Private placement warrants |  |  | 1065 | 1065 |
| Working capital warrants |  |  | 122 | 122 |
| SAFE Agreement with related party |  |  | 404 | 404 |
| Total | $1466 | $— | $86812 | $88278 |

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| | | | | |
|:---|:---|:---|:---|:---|
|  | **As of December 29, 2024** | **As of December 29, 2024** | **As of December 29, 2024** | **As of December 29, 2024** |
|  | **Level 1** | **Level 2** | **Level 3** | **Total** |
| **Financial Assets** |  |  |  |  |
| Restricted cash | $3841 | $— | $— | $3841 |
| Total | $3841 | $— | $— | $3841 |
| **Financial Liabilities** |  |  |  |  |
| July 2024 Notes derivative liability | $— | $— | $13563 | $13563 |
| July 2024 Notes derivative liability – related parties |  |  | 21127 | 21127 |
| September 2024 Notes derivative liability |  |  | 55474 | 55474 |
| September 2024 Notes derivative liability – related parties |  |  | 6958 | 6958 |
| Forward purchase agreement liabilities <sup>(1)</sup> |  |  | 3494 | 3494 |
| Public warrants | 862 |  |  | 862 |
| Private placement warrants |  |  | 627 | 627 |
| Working capital warrants |  |  | 72 | 72 |
| SAFE Agreement with related party |  |  | 384 | 384 |
| Total | $862 | $— | $101699 | $102561 |

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<sup>(1)</sup> Includes $1.2 million and $1.3 million due to related parties as of March 30, 2025, and December 29, 2024, respectively.

Subsequent to issuance, changes in the fair value of the derivative liabilities, liability classified warrants, forward purchase agreements and SAFEs are recorded within other income, net in the Company's unaudited condensed consolidated statements of operations and comprehensive income (loss).

*Derivative liabilities* 

 

The Company issued derivative liabilities in conjunction with the issuance of certain convertible notes in July 2024 and September 2024 (refer to **Note 11 – Borrowings and Derivative Liabilities**). The Company valued the derivative liabilities as of March 30, 2025, and December 29, 2024 using a binomial lattice model, which includes level 3 unobservable inputs. The key inputs used were dividend yield, the Company's common stock price, volatility, risk-free rate and the expected term of the derivative liabilities.

The July 2024 Notes derivative liability valuation included the following inputs:

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| | | |
|:---|:---|:---|
|  | **As of** | **As of** |
|  | **March 30, <br> 2025** | **December 29,<br> 2024** |
| Coupon rate | 12.0% | 12.0% |
| Conversion rate | 595.24 | 595.24 |
| Conversion price | $1.68 | $1.68 |
| Common stock price | $1.54 | $1.81 |
| Dividend yield | 0.0% | 0.0% |

---

The September 2024 Notes derivative liability valuation included the following inputs:

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| | | |
|:---|:---|:---|
|  | **As of** | **As of** |
|  | **March 30, <br> 2025** | **December 29,<br> 2024** |
| Coupon rate | 7.0% | 7.0% |
| Conversion rate | 467.84 | 467.84 |
| Conversion price | $2.14 | $2.14 |
| Common stock price | $1.54 | $1.81 |
| Dividend yield | 0.0% | 0.0% |

---

*Public Warrants*

The public warrants are measured at fair value on a recurring basis. The public warrants were valued based on the closing price of the publicly traded instrument and therefore are considered a Level 1 instrument in the fair value hierarchy.

*Private Placement and Working Capital Warrants*

The private placement and working capital warrants are measured at fair value. The Company valued the private placement and working capital warrants, based on a Black-Scholes Option Pricing Method, which included the following inputs:

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| | | |
|:---|:---|:---|
|  | **As of** | **As of** |
|  | **March 30,**<br>**2025** | **December 29,**<br>**2024** |
| Expected term | 3.31 years | 3.56 years |
| Expected volatility | 110.8% | 68.1% |
| Risk-free rate | 3.92% | 4.39% |
| Expected dividend yield | 0.00% | 0.00% |

---

*Forward Purchase Agreement Liabilities*

FPAs are measured at fair value on a recurring basis using a Monte Carlo simulation analysis. The expected volatility is determined based on the historical equity volatility of comparable companies over a period that matches the simulation period, which included the following inputs:

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| | | |
|:---|:---|:---|
|  | **As of** | **As of** |
|  | **March 30,**<br>**2025** | **December 29,**<br>**2024** |
| VWAP | $1.50 | $1.78 |
| Simulation period | 0.3 years | 0.55 years |
| Risk-free rate | 4.31% | 4.28% |
| Volatility | 54.8% | 117% |

---

*SAFE Agreement with related party*

The SAFE Agreement was valued based on a conversion probability of 50% based on historical SAFE agreements and a 50% discount rate at the time of conversion as of March 30, 2025, and December 29, 2024.

*Financial Liabilities Not Measured at Fair Value:*

The following table sets forth the Company's financial liabilities that were not measured at fair value, on a non-recurring basis (*in thousands*):

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| | | | | |
|:---|:---|:---|:---|:---|
|  | **As of March 30, 2025** | **As of March 30, 2025** | **As of March 30, 2025** | **As of March 30, 2025** |
|  | **Principal<br> amount <sup>(1)</sup>** | **Unamortized<br> debt<br> discount<br> and debt<br> issuance<br> costs** | **Net<br> carrying<br> amount<br> excluding<br> capitalized<br> interest <sup>(1)</sup>** | **Fair value** |
|  | (As Restated) | (As Restated) | (As Restated) | (As Restated) |
| **12.0% senior unsecured convertible notes** |  |  |  |  |
| July 2024 Notes | $22763 | $(10761) | $12002 | $20333 |
| July 2024 Notes – related parties | 33969 | (16678) | 17291 | 31677 |
| Subtotal July 2024 Notes | 56732 | (27439) | 29293 | 52010 |
| **7.0% senior unsecured convertible notes** |  |  |  |  |
| September 2024 Notes | 71250 | (62607) | 8643 | 68347 |
| September 2024 Notes – related parties | 8750 | (7738) | 1012 | 8394 |
| Subtotal September 2024 Notes | 80000 | (70345) | 9655 | 76741 |
| Total (As Restated) | $136732 | $(97784) | $38948 | $128751 |

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| | | | | |
|:---|:---|:---|:---|:---|
|  | **As of December 29, 2024** | **As of December 29, 2024** | **As of December 29, 2024** | **As of December 29, 2024** |
|  | **Principal<br> amount <sup>(1)</sup>** | **Unamortized<br> debt<br> discount<br> and debt<br> issuance<br> costs** | **Net<br> carrying<br> amount<br> excluding<br> capitalized<br> interest <sup>(1)</sup>** | **Fair value** |
| **12.0% senior unsecured convertible notes** | | | | |
| July 2024 Notes | $22765 | $(10874) | $11891 | $21390 |
| July 2024 Notes – related parties | 33969 | (16877) | 17092 | 33323 |
| Subtotal July 2024 Notes | 56734 | (27751) | 28983 | 54713 |
| **7.0% senior unsecured convertible notes** |  |  |  |  |
| September 2024 Notes | 71800 | (66164) | 5636 | 77245 |
| September 2024 Notes – related parties | 8000 | (7524) | 476 | 8583 |
| Subtotal September 2024 Notes | 79800 | (73688) | 6112 | 85828 |
| Total | $136534 | $(101439) | $35095 | $140541 |

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&nbsp;&nbsp;&nbsp;&nbsp;(1) Excludes capitalized interest (coupon interest, default interest and failure to file interest) of $13.5 million and $13.6 million as of March 30, 2025, and December 29, 2024, respectively, included in the July 2024 Notes.

As of March 30, 2025, and December 29, 2024, the July 2024 Notes and the September 2024 Notes were fair valued using a binomial lattice model, which includes Level 3, unobservable inputs. The key inputs used are consistent with those used to fair value the derivative liabilities as discussed under Derivative liabilities above.

**(6) Other Intangible Assets**

The Company's other intangible assets were acquired in connection with the SunPower Acquisition on September 30, 2024. The following table represents the Company's other intangible assets with finite useful lives as of March 30, 2025, and December 29, 2024 (*in thousands*):

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| | | | |
|:---|:---|:---|:---|
| **As of March 30, 2025** | **Gross Carrying<br> Amount** | **Accumulated<br> Amortization** | **Net Book<br> Value** |
| Trademark – Blue Raven Solar | $8400 | $(420) | $7980 |
| Trademark – SunPower | 5200 | (260) | 4940 |
| Developed technology | 4500 | (750) | 3750 |
| &nbsp;&nbsp;&nbsp;Total | $18100 | $(1430) | $16670 |

---

---

| | | | |
|:---|:---|:---|:---|
| **As of December 29, 2024** | **Gross Carrying<br> Amount** | **Accumulated<br> Amortization** | **Net Book<br> Value** |
| Trademark – Blue Raven Solar | $8400 | $(210) | $8190 |
| Trademark – SunPower | 5200 | (130) | 5070 |
| Developed technology | 4500 | (375) | 4125 |
| &nbsp;&nbsp;&nbsp;Total | $18100 | $(715) | $17385 |

---

Aggregate amortization expense for intangible assets was $0.7 million and zero for the thirteen weeks ended March 30, 2025, and March 31, 2024, respectively. Amortization expense is recognized within cost of revenues and general and administrative expenses in the accompany unaudited condensed consolidated statements of operations and comprehensive income (loss).

**(7) Accrued Expenses and Other Current Liabilities**

Accrued expenses and other current liabilities consist of the following (*in thousands*):

---

| | | |
|:---|:---|:---|
|  | **As of** | **As of** |
|  | **March 30,**<br>**2025** | **December 29,**<br>**2024** |
|  | (As Restated) | |
| Accrued compensation and benefits | $7406 | $6619 |
| Professional fees | 7629 | 8028 |
| Accrued legal settlements | 7700 | 7700 |
| Accrued rebates and credits | 7194 | 7641 |
| Deferred financing fees | 4674 | 4674 |
| Accrued interest <sup>(1)</sup> | 5543 | 4523 |
| Other accrued liabilities <sup>(2)</sup> | 10785 | 16896 |
| Total accrued expenses and other current liabilities | $50931 | $56081 |

---

<sup>(1)</sup> Includes related party accrued interest of $2.1 million and $2.2 million at March 30, 2025, and December 29, 2024, respectively.

<sup>(2)</sup> No individual items exceed 5% of total current liabilities.

**(8) Other Income, Net**

Other income, net consists of the following (*in thousands*):

---

| | | |
|:---|:---|:---|
|  | **Thirteen weeks ended** | **Thirteen weeks ended** |
|  | **March 30,**<br>**2025** | **March 31,**<br>**2024** |
| Gain on remeasurement of derivative liabilities<sup>(1)</sup> | $15127 | $— |
| Change in fair value of forward purchase agreement liabilities<sup>(2)</sup> | 269 | (5578) |
| Change in fair value of SAFE Agreement with related party | (20) |  |
| Change in fair value of FACT public, private placement and working capital warrants | (1092) | (489) |
| Change in fair value of Carlyle Warrants with related party |  | 6429 |
| Change in fair value of redeemable convertible preferred stock warrant liability |  | 1305 |
| Other, net<sup>(3)</sup> | 292 | (148) |
| Total Other income, net | $14576 | $1519 |

---

&nbsp;&nbsp;&nbsp;&nbsp;(1) Includes a gain of $3.7 million on the change in the fair value of derivative liabilities with related parties in the thirteen weeks ended March 30, 2025. Refer to **Note 11 – Borrowings and Derivative Liabilities** for details.

(2) Includes income of $0.1 million and expense of $4.7 million due to
related parties for the thirteen weeks ended March 30, 2025, and March 31, 2024, respectively.

(3) Includes $0.1 million and zero of income due to related parties in the thirteen weeks ended March 30, 2025, and March 31, 2024, respectively.

**(9) Common Stock**

The Company has authorized the issuance of 1,000,000,000 shares of common stock and 10,000,000 shares of preferred stock as of March 30, 2025. No preferred stock has been issued and none are outstanding as of March 30, 2025.

*Common Stock Purchase Agreements*

On July 16, 2024, the Company entered into a common stock purchase agreement with White Lion Capital, LLC ("White Lion"), as amended on July 24, 2024 ("White Lion SPA"), and a related registration rights agreement for an equity line of credit financing facility. Pursuant to the White Lion SPA, the Company has the right, but not the obligation, to require White Lion to purchase, from time to time up to $30 million in aggregate gross purchase price of newly issued shares of the Company's common stock, subject to the caps and certain limitations and conditions set forth in the White Lion SPA, including terms that restrict the ability of the Company to issue shares of common stock to White Lion that would result in White Lion beneficially owning more than 9.99% of the Company's outstanding common stock.

On August 14, 2024, the Company entered into Amendment No. 2 to the White Lion SPA (collectively with the White Lion SPA "White Lion Amended SPA"). The White Lion Amended SPA provides that the Company may notify White Lion to exercise the Company's right to sell shares of its common stock by delivering an Hour Rapid Purchase Notice. If the Company delivers an Hour Rapid Purchase Notice, the Company shall deliver to White Lion shares of common stock not to exceed the lesser of (i) five percent of the Average Daily Trading Volume on the date of an Hour Rapid Purchase Notice and (ii) 100,000 shares of common stock. The closing of the transactions under an Hour Rapid Purchase Notice will occur one Business Day following the date on which the Hour Rapid Purchase Notice is delivered. At such closing, White Lion will pay the Company the Hour Rapid Purchase Investment Amount equal to the number of shares of common stock subject to the applicable Hour Rapid Purchase Notice multiplied by the lowest traded price of the Company's common stock during the one-hour period following White Lion's consent to the acceptance of the applicable Hour Rapid Purchase Notice. Under the White Lion Amended SPA, the Company did not issue any shares of common stock in the thirteen week periods ended March 30, 2025, and March 31, 2024.

The Company has reserved shares of common stock for issuance related to the following:

---

| | | |
|:---|:---|:---|
|  | **As of** | **As of** |
|  | **March 30,**<br>**2025** | **December 29** <br>**2024** |
| Common stock warrants | 25670265 | 31670265 |
| Employee stock purchase plan | 2628996 | 2628996 |
| Stock options and RSUs, issued and outstanding | 9490800 | 11979368 |
| Stock options and RSUs, authorized for future issuance | 4929200 | 2577895 |
| SAFE Agreement | 2750000 | 2750000 |
| Forward purchase agreements | 6720000 | 6720000 |
| Convertible notes | 58579636 | 58579636 |
| Total shares reserved | 110768897 | 116906160 |

---

**(10) Warrants**

*Liability-classified warrants*

 

---

| | | |
|:---|:---|:---|
|  | **As of** | **As of** |
|  | **March 30,**<br>**2025** | **December 29,** <br>**2024** |
| Public warrants | 1466 | 862 |
| Private placements warrants | 1065 | 627 |
| Working capital warrants | 122 | 72 |
|  | $2653 | $1561 |

---

*Public and Private Placement Warrants*

In conjunction with the Mergers, Complete Solaria, as accounting acquirer, was deemed to assume 6,266,667 warrants to purchase FACT Class A Ordinary Shares that were held by the sponsor at an exercise price of $11.50 ("Private Placement Warrants") and 8,625,000 warrants to purchase FACT's shareholders FACT Class A Ordinary Shares at an exercise price of $11.50 ("Public Warrants"). Subsequent to the Mergers, the Private Placement Warrants and Public Warrants are exercisable for shares of Complete Solaria Common Stock and meet liability classification requirements since the warrants may be required to be settled in cash under a tender offer. In addition, Private Placement Warrants are potentially subject to a different settlement amount as a result of being held by the sponsor which precludes the Private Placement Warrants from being considered indexed to the entity's own stock. Therefore, these warrants are classified as liabilities on the accompanying unaudited condensed consolidated balance sheets.

The change in the fair value of the Private Placement Warrants and the Public Warrants was expense of $1.0 million and $0.5 million in the thirteen week periods ended March 30, 2025, and March 31, 2024, respectively. These changes were recorded within Other income, net in the accompanying unaudited condensed consolidated statements of operations and comprehensive income (loss).

*Working Capital Warrants*

Additionally, at the closing of the Mergers, the Company issued 716,668 Working Capital warrants, which have identical terms as the Private Placement Warrants to the sponsor in satisfaction of certain liabilities of FACT. The Company recorded an expense of less than $0.1 million within Other income, net in the accompanying unaudited condensed consolidated statements of operations and comprehensive income (loss) in each of the thirteen week periods ended March 30, 2025, and March 31, 2024, respectively.

*Carlyle Warrant*

In February 2022, as part of a debt financing arrangement with CRSEF Solis Holdings, LLC and its affiliates ("Carlyle"), the Company issued Carlyle a warrant to purchase 2,886,952 shares of Legacy Complete Solaria Common Stock at a price per share of $0.01. The warrant contained two tranches, the first of which was immediately exercisable for 1,995,879 shares of common stock. The second tranche expired on December 31, 2022, prior to becoming exercisable. In December 2023, Carlyle was issued a warrant to purchase an additional 2,190,604 shares of the Company's common stock related to an anti-dilution provision under the then-existing debt arrangement with Carlyle.

In July 2023, and in connection with the closing of the Mergers, the Company entered into the Carlyle Warrant Amendment (as defined in **Note 11 – Borrowings and Derivative Liabilities**), Based on the exchange ratio included in the Mergers, the 1,995,879 outstanding warrants to purchase Legacy Complete Solaria Common Stock prior to modification were exchanged into warrants to purchase 1,995,879 shares of Complete Solaria Common Stock. The Carlyle Warrant Amendment required the Company to issue to Carlyle a warrant to purchase up to 2,745,879 shares of Complete Solaria Common Stock at a price per share of $0.01, which was inclusive of the outstanding warrant to purchase 1,995,879 shares at the time of modification. The warrant, which expires on July 18, 2030, provided Carlyle with the right to purchase shares of Complete Solaria Common Stock based on (a) the greater of (i) 1,995,879 shares and (ii) the number of shares equal to 2.795% of Complete Solaria's issued and outstanding shares of common stock, on a fully-diluted basis; plus (b) on and after the date that was ten (10) days after the date of the agreement, an additional 350,000 shares; plus (c) on and after the date that was thirty (30) days after the date of the agreement, if the original investment amount had not been repaid, an additional 150,000 shares; plus (d) on and after the date that was ninety (90) days after the date of the agreement, if the original investment amount had not been repaid, an additional 250,000 shares, in each case, of Complete Solaria Common Stock at a price of $0.01 per share. The modification of the warrant resulted in the reclassification of previously equity-classified warrants to liability classification, which was accounted for in accordance with ASC 815 and ASC 718, *Compensation – Stock Compensation*.

As of March 31, 2024, the fair value of the Carlyle warrant was $3.1 million, and the Company recorded income of $6.4 million within Other income, net in the Company's unaudited condensed consolidated statements of operations and comprehensive loss for the thirteen weeks ended March 31, 2024.

As of June 30, 2024, the Carlyle Warrant had a fair value of $6.6 million. On July 1, 2024, in connection with the Exchange Agreement (as defined in **Note 11 – Borrowings and Derivative Liabilities**), the Carlyle Warrant was modified, and the modification fixed the number of shares of the Company's common stock that may be issued upon exercise of the Carlyle Warrant at 4,936,483. At the July 1, 2024, modification date, the Carlyle Warrant had a fair value of $7.3 million, and the Company recognized $0.7 million of expense related to the remeasurement of the liability which was classified within "Gain on Troubled Debt Restructuring" within the Company's consolidated statement of operations and comprehensive loss in its fiscal 2024 consolidated results. The modification of the Carlyle Warrant also resulted in the reclassification of the Carlyle Warrant from liability to equity classification, resulting in an increase to additional paid-in capital of $7.3 million and a reduction in the warrant liability of $7.3 million.

Carlyle exercised the warrant for shares of the Company's common stock in the fourth quarter of fiscal 2024.

*Equity Classified Warrants*

*Series B Warrants (Converted to Common Stock Warrants)* 

 

In February 2016, the Company issued a warrant to purchase 5,054 shares of Series B preferred stock (the "Series B warrant") in connection with a 2016 credit facility. The Series B warrant is exercisable at a price of $4.30 per share and has an expiration date of February 2026. The fair value of the Series B warrant was less than $0.1 million as of July 18, 2023, when the Series B warrant was reclassified from warrant liability to additional paid-in-capital, upon the warrant becoming exercisable into shares of Complete Solaria common stock upon the close of the Mergers.

*Series C Warrants (Converted to Common Stock Warrants)*

In July 2016, the Company issued a warrant to purchase 148,477 shares of Series C preferred stock (the "Series C warrant") in connection with the Series C financing. The Series C warrant agreement also provided for an additional number of Series C shares calculated on a monthly basis commencing on June 2016 based on the principal balance outstanding of the notes payable outstanding. The maximum number of shares exercisable under the Series C warrant agreement was 482,969 shares of Series C preferred stock. The Series C warrant is exercisable at a price of $1.00 per share and has an expiration date of July 2026. The fair value of the Series C Warrant was $2.3 million as of July 18, 2023, when the Series C warrant was reclassified from redeemable convertible preferred stock warrant liability to additional paid-in capital, as the warrant became exercisable into shares of Complete Solaria common stock upon the close of the Mergers.

*Series C-1 Warrants (Converted to Common Stock Warrants)*

In January 2020, the Company issued a warrant to purchase 173,067 shares of common stock in conjunction with the Series C-1 preferred stock financing. The warrant is exercisable at a price of $0.01 per share and has an expiration date of January 2030. The warrant remains outstanding as of March 30, 2025.

*SVB Common Stock Warrants*

In May and August 2021, the Company issued warrants to purchase 2,473 and 2,525 shares of common stock, respectively, in conjunction a prior loan and security agreement with then Silicon Valley Bank. The warrants are exercisable at prices of $0.38 and $0.62 per share, respectively, and have expiration dates in 2033.

*Promissory Note Common Stock Warrants*

In October 2021, the Company issued a warrant to purchase 24,148 shares of common stock in conjunction with the issuance of a short-term promissory note. The warrant is exercisable at a price of $0.01 per share and has an expiration date of October 2031.

*July 2023 Common Stock Warrants*

In July 2023, the Company issued a warrant to a third-party service provider to purchase 38,981 shares of the Company's common stock in exchange for services provided in obtaining financing at the Closing of the Mergers. The warrant is exercisable at a price of $0.01 per share and has an expiration date of July 2028.

*Warrant Consideration*

In July 2023, in connection with the Mergers, the Company issued 6,266,572 warrants to purchase Complete Solaria Common Stock to holders of Legacy Complete Solaria Redeemable Convertible Preferred Stock, Legacy Complete Solaria Common Stock. The exercise price of the common stock warrants is $11.50 per share and the warrants expire 10 years from the date of the Mergers. The warrant consideration was issued as part of the close of the Mergers and was recorded within additional paid-in capital, net of the issuance costs of the Mergers.

<u>Ayna Warrant</u>

On June 17, 2024, a warrant to purchase shares of the Company's common stock ("Ayna Warrant") was issued to Ayna.AI LLC ("Ayna") for the purchase of 6,000,000 shares of the Company's common stock at an exercise price per share of $0.01, subject to the provisions and upon the terms and conditions set forth in the Ayna Warrant. At issuance, the fair value of the Ayna Warrant was determined to be $9.2 million, based on the intrinsic value of the Ayna Warrant and the $0.01 per share exercise price. The Ayna Warrant was to expire on June 17, 2029. The issuance of the Ayna Warrant by the Company to Ayna was in satisfaction of the compensation for services provided to the Company by Ayna under the terms of a statement of work ("Ayna SOW"), signed May 21, 2024 (and effective as of March 12, 2024), as incorporated into a master services agreement dated March 12, 2024. Under the Ayna SOW, Ayna provided services in connection with the anticipated return of the Company to cash-flow positive performance.

The Ayna Warrant was accounted for under ASC 718 as it met the conditions for equity classification and therefore, the Ayna Warrant was not remeasured in future periods. The Company recognized the full amount of the fair value of $9.2 million as an expense between the date of issue and December 29, 2024.

The Ayna Warrant became fully exercisable for the 6,000,000 shares of the Company's common stock on September 9, 2024. The Ayna Warrant was exercised in full for cash of $60,000 in January 2025.

<u>Cantor Warrant</u>

In July 2024, the Company issued a warrant ("Cantor Warrant") to a third-party service provider to purchase 3,066,141 shares of the Company's common stock in exchange for services provided in the issuance of the July 2024 Notes (refer to **Note 11 – Borrowings and Derivative Liabilities**). The Cantor Warrant was immediately exercisable at a price of $1.68 per share and has an expiration date in July 2029. At issuance, the fair value of the Cantor Warrant was determined to be $1.4 million, of which $0.9 million was recorded as a debt discount and $0.5 million was attributable to the convertible notes issued in the Exchange Agreement and reduced the gain on the troubled debt restructuring recognized in its annual consolidated statement of operations and comprehensive loss for fiscal 2024 as described in **Note 11 – Borrowings and Derivative Liabilities**. The fair value of this warrant was derived using the Black-Scholes model with the following assumptions: expected volatility of 55%; risk-free interest rate of 4.2%; expected term of 5 years; and no dividend yield. The fair value of this warrant was recorded within additional paid-in capital on the Company's unaudited condensed consolidated balance sheets and is not remeasured in future periods as it meets the conditions for equity classification.

**(11) Borrowings and Derivative Liabilities**

The Company's borrowings and derivative liabilities consisted of the following (*in thousands*):

---

| | | |
|:---|:---|:---|
|  | **As of** | **As of** |
|  | **March 30,**<br>**2025** | **December 29,**<br>**2024** |
|  | (As Restated) | |
| July 2024 Notes | $17972 | $17965 |
| July 2024 Notes derivative liability | 11885 | 13563 |
| July 2024 Notes – related parties | 24779 | 24632 |
| July 2024 derivative liability – related parties | 18514 | 21127 |
| September 2024 Notes | 8643 | 5636 |
| September 2024 Notes derivative liability | 45920 | 55474 |
| September 2024 Notes – related party | 1012 | 476 |
| September 2024 Notes – derivative liability – related party | 5676 | 6958 |
| Revolver Loan | 1500 | 1500 |
| Total Notes payable | 135901 | 147331 |
| Less amounts classified as current | (4286) | (1500) |
| Notes payable and convertible notes, net of current portion | $131615 | $145831 |

---

 

*12% Senior Unsecured Convertible Notes*

In July 2024, the Company issued $46.0 million of senior unsecured convertible notes ("July 2024 Notes") consisting of $28.0 million in cash proceeds and $18.0 million arising from an exchange of debt ("Debt Exchange") as described below under *Exchange Agreement*. Cash proceeds of $28.0 million included $18.0 million from the Rodgers Massey Revocable Trust ("Rodgers Revocable Trust"), a related party. The $18.0 million exchange of debt included $10.0 million issued to Carlyle. Carlyle was deemed to be a related party in the fiscal year ended December 29, 2024 and in the thirteen week period ended March 30, 2025.

The July 2024 Notes bear interest at 12.0% per annum, and the principal is payable in full at maturity on July 1, 2029. The interest is payable in cash on January 1 and July 1 of each year, beginning on July 1, 2025. The interest rate increases by 3% in the event of default. The conversion rate of the July 2024 Notes is initially equal to 595.2381 shares of common stock per $1,000 of principal amount due under the July 2024 Notes. Holders of July 2024 Notes may convert at any time. The July 2024 Notes may be declared due and payable at the option of the holder upon an event of default and upon a qualifying change of control event. The conversion option was required to be bifurcated as a derivative liability, and the Company recorded a derivative liability of $28.7 million on the issuance date. Of this amount $17.5 million was recognized as a debt discount to the $28.0 million cash proceeds and $11.2 million associated with the Debt Exchange was recognized as an expense in the calculation of the Company's "Gain on the Troubled Debt Restructuring" on the Company's consolidated statement of operations and comprehensive loss in the year ended December 29, 2024.

In connection with the Debt Exchange, the Company issued the Cantor Warrant, as described in **Note 10 –Warrants**, for shares of the Company's common stock. At issuance, the Cantor Warrant had a fair value of $1.4 million, of which $0.9 million was recorded as a debt discount, and $0.5 million was included in the calculation of the Company's "Gain on the Troubled Debt Restructuring" on the Company's consolidated statement of operations and comprehensive loss in the year ended December 29, 2024, as discussed below in the *Exchange Agreement*.

The effective interest rate on the July 2024 Notes cash proceeds of $28.0 million approximates 45%. Coupon interest, default interest and failure to file interest on the $18.0 million Debt Exchange were capitalized as part of the July 2024 Notes. Accordingly, the effective interest rate on the $18.0 million arising from the Debt Exchange is nil as of December 28, 2025.

There are no financial covenants. The July 2024 Notes are not in default. However, due to the delayed filing of its Form 10-K for the year ended December 29, 2024, the Company was required to accrue incremental interest of 0.5% beginning April 16, 2025, through April 30, 2025, the date upon which the Form 10-K was filed.

The carrying amount of the convertible July 2024 Notes, excluding the fair value of the derivative liability was as follows (*in thousands*):

---

| | | |
|:---|:---|:---|
|  | **As of** | **As of** |
|  | **March 30,**<br>**2025** | **December 29,**<br>**2024** |
|  | (As Restated) | |
| July 2024 Notes | $70190 | $70348 |
| Less Unamortized debt discount | (27439) | (27751) |
| Total carrying amount of July 2024 Notes | $42751 | $42597 |

---

For the thirteen week period ended March 30, 2025, total interest expense was $1.1 million of which interest expense and amortization of debt discount and issuance costs were $0.8 million and $0.3 million, respectively. Of these amounts related party interest expense and amortization of debt discount and issuance costs were $0.5 million and $0.2 million, respectively.

7% Senior Unsecured Convertible Notes

 

In September 2024, the Company issued $66.8 million of senior unsecured convertible notes to various lenders (the "September 2024 Notes"), $4.0 million of which were issued to Rodgers Family Freedom and Free Markets Charitable Trust ("Massey Charitable Trust"), a related party and $4.0 million were issued to Rodgers Massey Revocable Living Trust (collectively with Massey Charitable Trust, "Massey Trusts"), also a related party. In addition, effective December 30, 2024, an additional $0.75 million of the September 2024 Notes was deemed to be with a related party. The September 2024 Notes bear interest at 7% per annum, and the principal is payable in full at maturity on July 1, 2029. The interest is payable in cash on January 1 and July 1 of each year, beginning on January 1, 2025. The September 2024 Notes are convertible into shares of the Company's common stock at the option of the holder at a conversion rate of $2.14 per common share. Holders of the September 2024 Notes may convert at any time. The September 2024 Notes may be declared due and payable at the option of the holder upon an event of default and upon a qualifying change of control event. The conversion option is required to be bifurcated as a derivative liability, and the Company recorded a derivative liability of $91.5 million on the issuance date. As the fair value of the derivative liability exceeded the proceeds received, the Company recorded a corresponding financing loss of $24.7 million and debt discount for $66.8 million as of the issuance date as further described below in the *Exchange Agreement*. At the date of issuance, the $66.8 million of notes were issued with a debt discount equal to the entire principal amount, resulting in an initial net carrying amount of zero. The debt discount is being amortized on a straight-line basis over the term of the September 2024 Notes. In December 2024, the Company issued an additional $13.0 million of September 2024 Notes for cash. The Company recognized a $10.9 million debt discount in connection with these additional proceeds. The effective interest rate on this tranche is 64%. The Company issued an additional $0.2 million of September 2024 Notes in the quarter ended March 30, 2025. There are no financial covenants.

 

The carrying amount of the convertible September 2024 Notes, inclusive of the fair value of the derivative liability was as follows (*in thousands*):

---

| | | |
|:---|:---|:---|
|  | **As of** | **As of** |
|  | **March 30,**<br>**2025** | **December 29,**<br>**2024** |
|  | (As Restated) | |
| September 2024 Notes | $80000 | $79800 |
| Less Unamortized debt discount | (70345) | (73688) |
| Total carrying amount of September 2024 Notes | $9655 | $6112 |

---

For the thirteen week period ended March 30, 2025, total interest expense was $5.0 million of which interest expense and amortization of debt discount and issuance costs were $1.4 million and $3.6 million, respectively. Interest expense and amortization of debt issuance costs with related parties was $0.1 million and $0.5 million in the thirteen week period ended March 30, 2025, respectively.

Exchange Agreement

On July 1, 2024, the Company entered into an Exchange Agreement (the "Exchange Agreement") with Carlyle, deemed to be a related party, and Kline Hill (as defined below) providing for:

&nbsp;&nbsp;&nbsp;&nbsp;(i) the cancellation of all indebtedness, inclusive of the CS Solis Debt, owed to Carlyle by the Company, termination of all debt instruments by and between the Company and Carlyle (through the transfer of Carlyle's interest in CS Solis, LLC, to the Company), and the satisfaction of all obligations owed to Carlyle by the Company under the terminated debt instruments;

&nbsp;&nbsp;&nbsp;&nbsp;(ii) the issuance of a note for the principal amount of $10.0 million to Carlyle as part of the July 2024 Notes;

&nbsp;&nbsp;&nbsp;&nbsp;(iii) the cancellation of all indebtedness owed to Kline Hill Partners Fund LP, Kline Hill Partners IV SPV LLC, and Kline Hill Partners Opportunity IV SPV, LLC (collectively "Kline Hill"). by the Company, termination of all debt instruments by and between the Company and Kline Hill, including the 2018 Bridge Notes, the revolving loan and the secured credit facility, and the satisfaction of all obligations owed to Kline Hill by the Company under the terminated debt instruments;

&nbsp;&nbsp;&nbsp;&nbsp;(iv) the issuance of a note for the principal amount of $8.0 million to Kline Hill as part of the July 2024 Notes; and

&nbsp;&nbsp;&nbsp;&nbsp;(v) the issuance of 1,500,000 shares of common stock, par value $0.0001 per share, of the Company (the "Common Stock") to Kline Hill (the "Shares").

 

 

<u>2018 Bridge Notes</u>

In 2018, Solaria issued senior subordinated convertible secured notes ("2018 Notes") totaling approximately $3.4 million in exchange for cash. The 2018 Notes were secured by substantially all of the assets of Solaria, bore interest at the rate of 8% per annum, and the investors were entitled to receive twice the face value of the 2018 Notes at maturity. In connection with an amendment in 2021 to extend the maturity date of the 2018 Notes, Solaria issued warrants to purchase shares of Series E-1 redeemable convertible preferred stock of Solaria. The warrants were exercisable immediately in whole or in part at and expire on December 13, 2031. As part of the Business Combination with Complete Solar, the Solaria outstanding warrants issued were assumed by the parent company, Complete Solaria.

In December 2022, the Company entered into an amendment to the 2018 Notes further extending the maturity date from December 13, 2022 to December 13, 2023 in exchange for an increased repayment premium from 110% to 120% of the principal and accrued interest at the time of repayment. The amendment represented a troubled debt restructuring as the Company was experiencing financial difficulty, and the amended terms resulted in a concession to the Company. As the future undiscounted cash payments under the modified terms exceeded the carrying amount of the 2018 Notes on the date of modification, the modification was accounted for prospectively. The incremental repayment premium was being amortized to interest expense using the effective interest rate method.

The 2018 Notes were settled as part of the Exchange Agreement. In connection with the Exchange Agreement, the balance of the 2018 Notes was exchanged for the July 2024 Notes. In July 2024, the Company issued the principal amount of $8.0 million of its July 2024 Notes and 1,500,000 shares of the Company's common stock in exchange for the cancellation of all indebtedness with Kline Hill. At the date of the cancellation, such indebtedness was comprised of the 2018 Notes of $11.7 million, the portion of the Revolving Loan balance assigned to Kline Hill of $3.9 million, and the Secured Credit Facility balance of $13.1 million. The Company concluded that the exchange represented a troubled debt restructuring as the Company was experiencing financial difficulty, and the new terms of the July 2024 Notes resulted in a concession to the Company. As the carrying amount of the debt exceeded the future undiscounted cash payments under the new terms on the date of the exchange, the Company recorded a gain on the troubled debt restructuring of $9.8 million in its fiscal 2024 unaudited condensed consolidated results of operations of which $7.3 million was recognized in the thirteen week period ended September 29, 2024 and $2.5 million was recognized in the fourth quarter of fiscal 2024.

Interest expense recognized on the 2018 Bridge was zero and $0.3 million in the thirteen weeks ended March 30, 2025, and March 31, 2024, respectively.

<u>Revolving Loan</u>

In October 2020, Solaria entered into a loan agreement ("SCI Loan Agreement") with Structural Capital Investments III, LP ("SCI").The SCI Loan Agreement was comprised of two facilities, a term loan (the "Term Loan") and a revolving loan (the "Revolving Loan") (together "Original Agreement") for $5.0 million each with a maturity date of October 31, 2023. At December 29, 2024, only the Revolving Loan was outstanding.

The Revolving Loan had a term of thirty-six months, with the principal due at the end of the term and an annual interest rate of 7.75% or Prime rate plus 4.5%, whichever was higher. The SCI Loan Agreement required the Company to meet certain financial covenants relating to the maintenance of specified restricted cash balance, achieve specified revenue targets and maintain specified contribution margins ("Financial Covenants") over the term of the Revolving Loan. The Revolving Loan was collateralized by substantially all assets and property of the Company.

Solaria had historically issued warrants to purchase shares of its Series E-1 redeemable convertible preferred stock of Solaria ("SCI Series E-1 warrants"). The warrants were fully exercisable in whole or in part at any time during the term of the Original agreement. As part of the Business Combination with Complete Solar, all the outstanding SCI Series E-1 warrants were assumed by the parent company, Complete Solaria.

In October 2023, the Company entered into an Assignment Agreement whereby Structural Capital Investments III, LP assigned the SCI debt to Kline Hill and Rodgers Massey Revocable Living Trust,, a related party, for a total purchase price of $5.0 million. In connection with the Exchange Agreement, the principal amount of $3.5 million of the Revolving Loan, plus accrued interest, owed to Kline Hill was exchanged for the July 2024 Notes. The principal portion of the Revolving Loan owing to the Rodgers Massey Revocable Living Trust of $1.5 million (plus accrued interest) remained outstanding as of March 30, 2025, and December 29, 2024. There are no financial covenants.

Interest expense recognized was less than $0.1 million in each of the thirteen weeks ended March 30, 2025, and March 31, 2024. Related party interest expense was less than $0.1 million in each of the thirteen weeks ended March 30, 2025, and March 31, 2024.

 

<u>Secured Credit Facility</u> 

In December 2022, the Company entered into a secured credit facility agreement with Kline Hill Partners IV SPV LLC and Kline Hill Partners Opportunity IV SPV LLC ("Secured Credit Facility"). The Secured Credit Facility agreement allowed the Company to borrow up to 70% of the net amount of its eligible vendor purchase orders with a maximum amount of $10.0 million at any point in time. The purchase orders were backed by relevant customer sales orders which served as collateral. The amounts drawn under the Secured Credit Facility were eligible to be reborrowed provided that the aggregate borrowing did not exceed $20.0 million. The repayment terms under the Secured Credit Facility were (i) the borrowed amount multiplied by 1.15x if repaid within 75 days and (ii) the borrowed amount multiplied by 1.175x if repaid after 75 days. The Company could have repaid any borrowed amount without premium or penalty. Under the original terms, the Secured Credit Facility agreement was due to mature in April 2023. The Company set the balance outstanding as part of the Exchange Agreement, whereby the balance of $13.1 million of the Secured Credit Facility was exchanged for July 2024 Notes.

Interest expense recognized was zero and $0.5 million in the thirteen weeks ended March 30, 2025, and March 31, 2024, respectively.

<u>Debt in CS Solis</u>

 ****

As part of the Reorganization described in **Note 1(a) Organization -** *Description of Business*, the Company received cash and recorded debt for an investment by Carlyle. The investment was made pursuant to a subscription agreement, under which Carlyle contributed $25.6 million in exchange for 100 Class B Membership Units of CS Solis and the Company contributed the net assets of Complete Solar, Inc. in exchange for 100 Class A Membership Units. The Class B Membership Units were mandatorily redeemable by the Company on the three-year anniversary of the effective date of the CS Solis amended and restated LLC agreement (February 14, 2025). The Class B Membership Units accrued interest that was payable upon redemption at a rate of 10.5% (which was structured as a dividend payable based on 25% of the investment amount measured quarterly), compounded annually, and subject to increases in the event the Company declared any dividends. In connection with the investment by Carlyle, the Company issued to Carlyle a warrant to purchase 5,978,960 shares of the Company's common stock at a price of $0.01 per share, of which, the purchase of 4,132,513 shares of the Company's common stock is immediately exercisable. The Company accounted for the mandatorily redeemable investment from Carlyle in accordance with ASC 480 and recorded the investment as a liability, which was accreted to its redemption value under the effective interest method. The Company recorded the warrants as a discount to the liability.

On July 17 and July 18, 2023, and in connection with obtaining consent for the Mergers, Legacy Complete Solaria, FACT and Carlyle entered into an Amended and Restated Consent to the Business Combination Agreement ("Carlyle Debt Modification Agreement") and an amended and restated warrant agreement ("Carlyle Warrant Amendment"), which modified the terms of the mandatorily redeemable investment made by Carlyle in Legacy Complete Solaria. Refer to **Note 10 – Warrants** for a description of the Carlyle Warrant Amendment. The Carlyle Debt Modification Agreement accelerated the redemption date of the investment to March 31, 2024, subsequent to the modification. The acceleration of the redemption date of the investment resulted in the total redemption amount to be 1.3 times the principal at December 31, 2023. The redemption amount increased to 1.4 times the original investment as of March 31, 2024.

The Company determined that the Carlyle was a related party beginning in 2024. In July 2024, in connection with the *Exchange Agreement*, the Company issued $10.0 million of the July 2024 Notes in exchange for the cancellation of all indebtedness with CS Solis of $37.2 million. The Company concluded that the exchange represented a troubled debt restructuring as the Company was experiencing financial difficulty, and the new terms under the convertible notes resulted in a concession to the Company. As the carrying amount of the debt exceeded the future undiscounted cash payments under the new terms on the date of the exchange, the Company recorded a gain on the troubled debt restructuring of $12.5 million in the third quarter of fiscal 2024 in connection with this transaction.

For the thirteen week periods ended March 30, 2025, and March 31, 2024, the Company recorded accretion of the liability as related party interest expense of zero and $2.5 million, respectively, and made no payments of interest expense.

**(12) SAFE Agreements** 

 ****

*First SAFE*

On January 31, 2024, the Company entered into a Simple Agreement for Future Equity ("SAFE") (the "First SAFE") with the Rodgers Massey Freedom and Free Markets Charitable Trust (the "Purchaser"), a related party, affiliated with Thurman J. Rodgers, the Company's Chief Executive Officer and a director, in connection with the Purchaser investing $1.5 million in the Company. The First SAFE did not accrue interest. The First SAFE was initially convertible into shares of the Company's common stock, par value $0.0001 per share, upon the closing of a bona fide transaction or series of transactions with the principal purpose of raising capital, pursuant to which the Company would have issued and sold shares of its common stock at a fixed valuation (an "Equity Financing"), at a per share conversion price which was equal to the lower of (i) (a) $53.54 million divided by (b) the Company's capitalization immediately prior to such Equity Financing (such conversion price, the "SAFE Price"), and (ii) 80% of the price per share of its common stock sold in the Equity Financing. If the Company consummated a change of control prior to the termination of the First SAFE, the Purchaser would have been automatically entitled to receive a portion of the proceeds of such liquidity event equal to the greater of (i) $1.5 million and (ii) the amount payable on the number of shares of common stock equal to (a) $1.5 million divided by (b)(1) $53.54 million divided by (2) the Company's capitalization immediately prior to such liquidity event (the "Liquidity Price"), subject to certain adjustments as set forth in the First SAFE. The First SAFE was convertible into a maximum of 1,431,297 shares of the Company's common stock, assuming a per share conversion price of $1.05, which is the product of (i) $1.31, the closing price per share of the Company's common stock on January 31, 2024, multiplied by (ii) 80%.

On April 21, 2024, the Company entered into an amendment ("First SAFE Amendment") that converted the First SAFE investment of $1.5 million into 4,166,667 shares of the Company's common stock based on a conversion price of $0.36 per share, defined in the First SAFE Amendment as the product of (i) $0.45, the closing price of the Company's common stock on April 19, 2024, multiplied by (ii) 80%. Upon conversion, the Company recorded a debit to SAFE Agreement of $1.5 million, a credit to Additional paid-in-capital of $1.9 million and recognized expense of $0.4 million within Other income, net in its unaudited condensed consolidated statement of operations for the thirteen week period ended June 30, 2024.

 

*Second SAFE* 

On February 15, 2024, the Company entered into a second SAFE (the "Second SAFE") with the Purchaser, in connection with the Purchaser investing $3.5 million in the Company. The Second SAFE did not accrue interest. The Second SAFE was initially convertible into shares of the Company's common stock upon the initial closing of an Equity Financing at a per share conversion price which was equal to the lower of (i) the Second SAFE Price, and (ii) 80% of the price per share of the Company's common stock sold in the Equity Financing. If the Company consummated a change of control prior to the termination of the Second SAFE, the Purchaser would have been automatically entitled to receive an amount equal to the greater of (i) $3.5 million and (ii) the amount payable on the number of shares of the Company's common stock equal to $3.5 million divided by the Liquidity Price, subject to certain adjustments as set forth in the Second SAFE. The Second SAFE was convertible into a maximum of 3,707,627 shares of the Company's common stock, assuming a per share conversion price of $0.94, which is the product of (i) $1.18, the closing per share price of its common stock on February 15, 2024, multiplied by (ii) 80%.

On April 21, 2024, the Company entered into an amendment ("Second SAFE Amendment") that converted the Second SAFE investment of $3.5 million into 9,722,222 shares of the Company's common stock based on a conversion price of $0.36 per share, defined in the Second SAFE Amendment as the product of (i) $0.45, the closing price of the Company's common stock on April 19, 2024, multiplied by (ii) 80%. Upon conversion, the Company recorded a debit to SAFE Agreement of $3.5 million, a credit to Additional paid-in-capital of $4.4 million and recognized expense of $0.9 million within Other income, net in its unaudited condensed consolidated statement of operations for the thirteen week period ended June 30, 2024.

 

 

*Third SAFE*

On May 13, 2024, the Company entered into a third SAFE (the "Third SAFE") with the Purchaser, in connection with the Purchaser investing $1.0 million in the Company. The Third SAFE is convertible into shares of the Company's common stock upon the initial closing of a bona fide transaction or series of transactions with the principal purpose of raising capital, pursuant to which the Company issues and sells shares of its common stock in an Equity Financing, at a per share conversion price which is equal to 50% of the price per share of the Company's common stock sold in the Equity Financing. If the Company consummates a change of control prior to the termination of the Third SAFE, the Purchaser will be automatically entitled to receive a portion of the proceeds of such liquidity event equal to $1.0 million, subject to certain adjustments as set forth in the Third SAFE. The Third SAFE is convertible into a maximum of 2,750,000 shares of the Company's common stock, assuming a per share conversion price of $0.275, which is the product of (i) $0.55, the closing price of the Company's common stock on May 13, 2024, multiplied by (ii) 50%. Given that the SAFE may be settled in cash or a variable number of shares, the Company has accounted for the instrument as a liability at its fair value.

The estimated fair value of the Third SAFE was $0.4 million at each of March 30, 2025, and December 29, 2024, based upon the assumptions disclosed in **Note 5 – Fair Value Measurements**. The change in the fair value of the SAFEs was expense of less than $0.1 million and zero in the thirteen weeks ended March 30, 2025, and March 31, 2024, respectively.

**(13) Stock-Based Compensation** 

In July 2023, the Company's board of directors adopted and stockholders approved the 2023 Incentive Equity Plan (the "2023 Plan"). The 2023 Plan became effective immediately upon the closing of the Amended and Restated Business Combination Agreement. Initially, a maximum number of 8,763,322 shares of Complete Solaria Common Stock may be issued under the 2023 Plan. In addition, the number of shares of Complete Solaria Common Stock reserved for issuance under the 2023 Plan will automatically increase on January 1 of each year, starting on January 1, 2024 and ending on January 1, 2033, in an amount equal to the lesser of (1) 4% of the total number of shares of Complete Solaria's Common Stock outstanding on December 31 of the preceding year, or (2) a lesser number of shares of Complete Solaria Common Stock determined by Complete Solaria's Board prior to the date of the increase. The maximum number of shares of Complete Solaria Common Stock that may be issued on the exercise of incentive stock options ("ISOs") under the 2023 Plan is three times the number of shares available for issuance upon the 2023 Plan becoming effective (or 26,289,966 shares).

Historically, awards were granted under the Amended and Restated Complete Solaria Omnibus Incentive Plan ("2022 Plan"), the Complete Solar 2011 Stock Plan ("2011 Plan"), the Solaria Corporation 2016 Stock Plan ("2016 Plan") and the Solaria Corporation 2006 Stock Plan ("2006 Plan") (together with the Complete Solaria, Inc. 2023 Incentive Equity Plan ("2023 Plan"), "the Plans").

Under the Plans, the Company has granted service-based stock options and restricted stock units ("RSUs"). Compensation expense for stock options under the Company's cliff vesting schedule is generally recognized equally over the vesting period of five years. RSUs granted during the fiscal year ended December 29, 2024 are also generally recognized under the cliff vesting schedule that is recognized equally over the vesting period of five years.

The information below summarizes the stock option activity under the Plans.

---

| | | | | |
|:---|:---|:---|:---|:---|
|  | **Number of<br> Shares** | **Weighted<br> Average<br> Exercise<br> Price per<br> Share** | **Weighted<br> Average<br> Contractual<br> Term<br> (Years)** | **Aggregate<br> Intrinsic<br> Value<br> (*in thousands*)** |
|  | (As Restated) |  |  |  |
| Outstanding—December 29, 2024 | 9997233 | $2.77 | 5.29 | $6.356 |
| Options granted |  |  |  |  |
| Options exercised | (43793) | 0.99 |  | 39 |
| Options canceled | (2194273) | 3.58 |  |  |
| Outstanding—March 30, 2025 | 7759167 | 2.54 | 4.88 | 3764 |
| Vested and expected to vest— March 30, 2025 | 7759167 | 2.54 | 4.88 | 3764 |
| Vested and exercisable— March 30, 2025 | 3767004 | 4.73 | 3.53 | 1763 |

---

The information below summarizes the RSU activity.

---

| | | |
|:---|:---|:---|
|  | **Number <br> of RSUs** | **Weighted <br> Average <br> Grant Date <br> Fair Value** |
|  | (As Restated) | |
| Unvested at December 29, 2024 | 1982135 | $1.79 |
| Granted | 100000 | 1.83 |
| Vested and released | (192398) | 1.81 |
| Cancelled or forfeited | (236143) | 1.77 |
| Unvested at March 30, 2025 | 1653594 | 1.79 |

---

***Stock-based compensation expense***

 ****

The following table summarizes stock-based compensation expense and its allocation within the accompanying unaudited condensed consolidated statements of operations and comprehensive income (loss) (*in thousands*):

---

| | | |
|:---|:---|:---|
|  | **Thirteen Weeks Ended** | **Thirteen Weeks Ended** |
|  | **March 30,<br> 2025** | **March 31,<br> 2024** |
|  | (As Restated) | |
| Cost of revenues | $155 | $27 |
| Sales and marketing | 184 | 216 |
| General and administrative | 130 | 1098 |
| Total stock-based compensation expense | $469 | $1341 |

---

As of March 30, 2025, unrecognized stock-based compensation costs related to service-based options and RSUs was $2.7 million and $0.7 million respectively, and such compensation cost is expected to be recognized over a weighted-average period of 3.3 years and 4.4 years, respectively.

**(14) Commitments and Contingencies**

***Warranty Provision***

Activity by period relating to the Company's warranty provision was as follows (*in thousands*):

---

| | | |
|:---|:---|:---|
|  | **Thirteen weeks ended** | **Thirteen weeks ended** |
|  | **March 30,<br> 2025** | **March 31, <br> 2024** |
| Warranty provision, beginning of period | $5968 | $4849 |
| Accruals for new warranties issued | 526 | 265 |
| Settlements | (38) | (250) |
| Warranty provision, end of period | $6456 | $4864 |
| Warranty provision, current | $3019 | $1448 |
| Warranty provision, noncurrent | $3437 | $3416 |

---

***Indemnification Agreements***

From time to time, in its normal course of business, the Company may indemnify other parties, with which it enters into contractual relationships, including customers, lessors, and parties to other transactions with the Company. The Company may agree to hold other parties harmless against specific losses, such as those that could arise from breach of representation, covenant or third-party infringement claims. It may not be possible to determine the maximum potential amount of liability under such indemnification agreements due to the unique facts and circumstances that are likely to be involved in each particular claim and indemnification provision. Historically, there have been no such indemnification claims. In the opinion of management, any liabilities resulting from these agreements would not have a material adverse effect on the business, financial position, results of operations, or cash flows of the Company.

***Legal Matters***

The Company is a party to various legal proceedings and claims which arise in the ordinary course of business. The Company records a liability when it is probable that a loss has been incurred and the amount of the loss can be reasonably estimated. If the Company determines that a loss is reasonably possible and the loss or range of loss can be reasonably estimated, the Company discloses the reasonably possible loss. The Company adjusts its accruals to reflect the impact of negotiations, settlements, rulings, advice of legal counsel and other information and events pertaining to a particular case. Legal costs are expensed as incurred. Although claims are inherently unpredictable, the Company is not aware of any matters that may have a material adverse effect on the Company's business, financial position, results of operations, or cash flows. The Company has recorded $7.7 million and $7.7 million as a loss contingency for legal settlements within accrued expenses and other current liabilities in its unaudited condensed consolidated balance sheets as of March 30, 2025, and December 29, 2024, respectively.

***SolarPark Litigation***

In January 2023, SolarPark Korea Co., LTD ("SolarPark") demanded approximately $80.0 million during discussions between the Company and SolarPark. In February 2023, the Company submitted its statement of claim seeking approximately $26.4 million in damages against SolarPark. The ultimate outcome of this arbitration is currently unknown and could result in a material liability to the Company. However, the Company believes that the allegations lack merit and intends to vigorously defend all claims asserted. No liability has been recorded in the Company's unaudited condensed consolidated financial statements as the likelihood of a loss is not probable at this time.

On March 16, 2023, SolarPark filed a complaint against Solaria and the Company in the U.S. District Court for the Northern District of California ("the court"). The complaint alleges a civil conspiracy involving misappropriation of trade secrets, defamation, tortious interference with contractual relations, inducement to breach of contract, and violation of California's Unfair Competition Law. The complaint indicates that SolarPark has suffered in excess of $220.0 million in damages.

On May 11, 2023, SolarPark filed a motion for preliminary injunction to seek an order restraining the Company from using or disclosing SolarPark's trade secrets, making or selling shingled modules other than those produced by SolarPark, and from soliciting solar module manufacturers to produce shingled modules using Solaria's shingled patents. On May 18, 2023, the Company responded by filing a motion for partial dismissal and stay. On June 1, 2023, SolarPark filed an opposition to the Company's motion for dismissal and stay and a reply in support of their motion for preliminary injunction. On June 8, 2023, the Company replied in support of its motion for partial dismissal and stay. On July 11, 2023, the court conducted a hearing to consider SolarPark's and the Company's respective motions. On August 3, 2023, the court issued a ruling, which granted the preliminary injunction motion with respect to any purported misappropriation of SolarPark's trade secrets. The court's ruling does not prohibit the Company from producing shingled modules or from utilizing its own patents for the manufacture of shingled modules. The court denied SolarPark's motion seeking a defamation injunction. The court denied the Company's motion to dismiss and granted the Company's motion to stay the entire litigation pending the arbitration in Singapore. On September 1, 2023, the Company filed a Limited Notice of Appeal to appeal the August 2023 order granting SolarPark's motion for preliminary injunction. On September 26, 2023, Solaria filed a Notice of Withdrawal of Appeal and will not appeal the Court's Preliminary Injunction Order. Between August 2023 and March 2024, the parties were engaged in discovery negotiations and the Company produced documents to SolarPark. The Company produced its last set of documents on March 14, 2024. Since then, SolarPark has been reviewing the documents, and the case has remained stayed.

No liability has been recorded in the Company's unaudited condensed consolidated financial statements as the likelihood of a loss is not probable at this time.

***Siemens Litigation***

On July 22, 2021, Siemens Government Technologies, Inc. ("Siemens Government Technologies") filed a lawsuit against Solaria Corporation in Fairfax Circuit Court (the "Court") in Fairfax, Virginia. On July 27, 2023, Siemens Government Technologies, moved to amend the complaint to add Siemens Industry Inc. as a co-plaintiff. This motion was granted on August 25, 2023. On October 23, 2023, Siemens Government Technologies and Siemens Industry Inc. (collectively, "Siemens") and Solaria Corporation stipulated to add Solar CA, LLC as a co-defendant. Solaria Corporation and Solar CA, LLC (collectively, the "Subsidiaries") are both wholly-owned subsidiaries of the Company. In the lawsuit, Siemens alleged that the Subsidiaries breached express and implied warranties under a purchase order that Siemens placed with the Subsidiaries for a solar module system. Siemens claimed damages of approximately $6.9 million, inclusive of amounts of the Subsidiaries' indemnity obligations to Siemens, plus attorneys' fees.

On February 22, 2024, the Court issued an order against the Subsidiaries which awarded Siemens approximately $6.9 million, inclusive of the amounts of the Subsidiaries' indemnity obligations to Siemens, plus attorneys' fees, the amount of which would be determined at a later hearing. On March 15, 2024, Siemens filed a motion seeking to recover $2.67 million for attorneys' fees, expenses, and pre-and post-judgment interest. The Company opposed Siemens' motion for attorneys' fees, expenses, and pre- and post-judgment interest on April 5, 2024. On June 17, 2024, the Court entered a final order which awarded Siemens a total of $2.0 million in attorneys' fees and costs. The Company has appealed these judgments.

In addition to the above, on August 19, 2024, Siemens applied for the enforcement to a sister state judgment in the Superior Court of Alameda, California and the court entered a judgement in favor of Siemens. On December 9, 2024, Siemens moved to amend the judgment to add the Company. as a judgement debtor. The subsidiaries opposed the Siemens motion. The court heard the motion by submission on April 3, 2025, but has not yet issued a ruling.

The Company recognized $6.9 million as a legal loss related to this litigation in 2023 which amount is included in the $7.7 million identified above, and this liability is recorded within accrued expenses and other current liabilities in the accompanying unaudited condensed consolidated balance sheets as of March 30, 2025, and December 29, 2024.

The Company recorded an additional expense of $2.0 million within discontinued operations in its unaudited condensed consolidated statement of operations and comprehensive (loss) in the thirteen week period ended June 29, 2024, for attorneys' fees, expenses, and pre-judgment interest, and this liability is recorded within accrued expenses and other current liabilities in the accompanying unaudited condensed consolidated balance sheets as of March 30, 2025, and December 29, 2024.

***Letters of Credit***

The Company had $3.5 million of outstanding letters of credit related to normal business transactions as of March 30, 2025, and December 29, 2024. These agreements require the Company to maintain specified amounts of cash as collateral in segregated accounts to support the letters of credit issued thereunder. As discussed in **Note 3 – Basis of Presentation and Summary of Significant Accounting Policies**, the cash collateral in these restricted cash accounts was $3.8 million as of March 30, 2025, and December 29, 2024, respectively.

**(15) Income Taxes** 

As a result of the Company's history of net operating losses, the Company has provided for a full valuation allowance against its deferred tax assets. For the thirteen weeks ended March 30, 2025, and March 31, 2024, the Company recognized income tax expense of zero and one thousand dollars, respectively.

**(16) Basic and Diluted Net Income (Loss) Per Share** 

The Company uses the two-class method to calculate net income (loss) per share. No dividends were declared or paid for the in the thirteen week periods ended March 30, 2025, and March 31, 2024.

The following table sets forth the computation of the Company's basic and diluted net income (loss) per share attributable to common stockholders for the thirteen week periods ended March 30, 2025, and March 31, 2024 (*in thousands*, except share and per share amounts):

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| | | |
|:---|:---|:---|
|  | **Thirteen Weeks Ended** | **Thirteen Weeks Ended** |
|  | **March 30,**<br>**2025** | **March 31,**<br>**2024** |
|  | (As Restated) | |
| **Numerator for basic income (loss) per share:** |  |  |
| &nbsp;&nbsp;&nbsp;Net income (loss) - basic | $4812 | $(9588) |
| **Numerator for diluted income (loss) per share** |  |  |
| &nbsp;&nbsp;&nbsp;July 2024 Notes derivative liability and interest expense, net of tax | (3138) |  |
| &nbsp;&nbsp;&nbsp;Third SAFE | 20 |  |
| &nbsp;&nbsp;&nbsp;Net income (loss) - diluted | $1694 | $(9588) |
| **Denominator:** |  |  |
| Weighted average shares: |  |  |
| &nbsp;&nbsp;&nbsp;Denominator for basic income (loss) per share | 80209585 | 49077330 |
| &nbsp;&nbsp;&nbsp;Effect of dilutive securities: |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;July 2024 Notes derivative liability | 27364717 |  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Third SAFE | 2750000 |  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Stock options and RSUs | 1489794 |  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Warrants | 487967 |  |
| &nbsp;&nbsp;&nbsp;Denominator for diluted income (loss) per share | 112302063 | 49077330 |
| **Net income (loss) per share:** |  |  |
| &nbsp;&nbsp;&nbsp;Net income (loss) – basic | $0.06 | $(0.20) |
| &nbsp;&nbsp;&nbsp;Net income (loss) – diluted | $0.02 | $(0.20) |

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The Company's calculation of the weighted average shares outstanding is inclusive of 236,196 warrants with an insignificant exercise price (which assumes that the warrants were outstanding as of the beginning of the period or the date of the grant, whichever is earlier) for the thirteen weeks ended March 30, 2025. The computation of diluted net loss per share attributable to common stockholders is inclusive of the impact of the Third SAFE using the if-converted method for the thirteen weeks ended March 30, 2025.

The following table presents the potential common shares outstanding that were excluded from the computation of diluted net loss per share of common stock as of the periods presented because including them would have been anti-dilutive:

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| | | |
|:---|:---|:---|
|  | **As of** | **As of** |
|  | **March 30,**<br>**2025** | **March 31,**<br>**2024** |
|  | (As Restated) | |
| Common stock warrants |  | 23024556 |
| Convertible notes | 37333318 |  |
| Stock options and RSUs issued and outstanding |  | 11436369 |
| Potential common shares excluded from diluted net income (loss) per share | 37333318 | 34460925 |

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**(17) Segment Information**

The segment information is presented on a basis that is consistent with the Company's internal management reporting. The Company's Chief Executive Officer ("CEO") is the Chief Operating Decision Maker ("CODM"). The CODM manages the Company and reports financial results based on two reportable segments which are the same as The Company's operating segments. The CODM evaluates the performance of these reportable segments and allocates resources to make operating decisions based on certain financial information, including segmented internal income/(loss) prepared on a basis consistent with U.S. GAAP. The measurement criteria is based on their operating revenue and operating income (loss) and excluding any corporate costs which are not allocatable to the operating segments. The CODM's measurement criteria does not include segment assets. During the periods presented, the Company reported its financial performance through the following two reportable segments; Residential Solar Installation and New Homes Business.

***Residential Solar Installation***. This segment performs solar system, storage and battery installations for residential homeowners.

***New Homes Business***. This segment is new in the thirteen week period ended March 30, 2025, as a result of the SunPower Acquisition which occurred in the fourth quarter of fiscal 2024. The Company developed a method to allocate direct expenses for the respective reportable segments. This segment performs solar system installations for new home builders.

Results by segment are as follows *(in thousands)*:

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| | | | |
|:---|:---|:---|:---|
| | **Thirteen Weeks Ended <br> March 30, 2025** | **Thirteen Weeks Ended <br> March 30, 2025** | **Thirteen Weeks Ended <br> March 30, 2025** |
| <br>**(*in thousands*)** | **Residential<br> Solar<br> Installation** | **New Homes<br> Business** | **Total** |
|  | (As Restated) | (As Restated) | (As Restated) |
| Operating revenues | $36504 | $41909 | $78413 |
| Less: |  |  |  |
| &nbsp;&nbsp;&nbsp;Cost of revenues<sup>(1)</sup> | 22615 | 28422 |  |
| &nbsp;&nbsp;&nbsp;Sales commissions | 6667 | 1017 |  |
| &nbsp;&nbsp;&nbsp;Sales and marketing | 8522 |  |  |
| &nbsp;&nbsp;&nbsp;General and administrative<sup>(2)</sup> | 10440 | 4456 |  |
| Operating (loss) income | (11740) | 8014 | (3726) |
| *Reconciliation of segment income before income taxes:* |  |  |  |
| &nbsp;&nbsp;&nbsp;Unallocated amounts: |  |  |  |
| &nbsp;&nbsp;&nbsp;Interest expense |  |  | (6041) |
| &nbsp;&nbsp;&nbsp;Interest income |  |  | 3 |
| &nbsp;&nbsp;&nbsp;Other income (expense), net |  |  | 14576 |
| &nbsp;&nbsp;&nbsp;Income before income taxes |  |  | $4812 |

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<sup>(1)</sup> For the thirteen weeks ended March 30, 2025, depreciation and amortization expense was $0.4 million for the Residential Solar Installation reportable segments.

<sup>(2)</sup> For the thirteen weeks ended March 30, 2025, depreciation and amortization expense was $1.0 million and $0.2 million for the Residential Solar Installation and New Homes Business reportable segments, respectively.

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| | | | |
|:---|:---|:---|:---|
| | **Thirteen Weeks Ended March 31, 2024** | **Thirteen Weeks Ended March 31, 2024** | **Thirteen Weeks Ended March 31, 2024** |
| <br>**(*in thousands*)** | **Residential<br> Solar<br> Installation** | **New Homes<br> Business** | **Total** |
| Operating revenues | $10040 | $— | $10040 |
| Less: |  |  |  |
| &nbsp;&nbsp;&nbsp;Cost of revenues | 7757 |  |  |
| &nbsp;&nbsp;&nbsp;Sales commissions | 3116 |  |  |
| &nbsp;&nbsp;&nbsp;Sales and marketing | 1618 |  |  |
| &nbsp;&nbsp;&nbsp;General and administrative<sup>(1)</sup> | 5093 |  |  |
| Operating income (loss) | (7544) |  | (7544) |
| *Reconciliation of segment loss before income taxes:* |  |  |  |
| &nbsp;&nbsp;&nbsp;Unallocated amounts: |  |  |  |
| &nbsp;&nbsp;&nbsp;Interest expense |  |  | (3568) |
| &nbsp;&nbsp;&nbsp;Interest income |  |  | 6 |
| &nbsp;&nbsp;&nbsp;Other income (expense), net |  |  | 1519 |
| &nbsp;&nbsp;&nbsp;Gain on troubled debt restructuring |  |  |  |
| &nbsp;&nbsp;&nbsp;Loss before income taxes |  |  | $(9587) |

---

<sup>(1)</sup> For the thirteen weeks ended March 31, 2024, depreciation and amortization expense was $0.4 million for the Residential Solar Installation reportable segment.

**(18) Related Party Transactions** 

Refer to the following notes to the Company's unaudited condensed consolidated financial statements for details regarding the related party transactions entered into by the Company; **Note 1(a) – Description of Business**; **Note 5 – Fair Value Measurements**; **Note 8 – Other Income, Net**; **Note 10 – Warrants**; **Note 11 – Borrowings and Derivative Liabilities**, and **Note 12 – SAFE Agreements**. All other related party transactions are described herein.

The Company determined that SameDay Solar became a related party in the fourth quarter of fiscal 2024 with which the Company does business. Cost of revenue with SameDay Solar, a related party, was $0.2 million in the thirteen weeks ended March 30, 2025.

**(19) Subsequent Event**

***NASDAQ Deficiency***

On April 28, 2025, the Company received a letter from the Listing Qualifications staff of Nasdaq indicating that, as a result of the Company's delay in filing its Annual Report on Form 10-K for the year ended December 31, 2024 (the "2024 Form 10-K"), the Company was not in compliance with the timely filing requirements for continued listing under Nasdaq Listing Rule 5250(c)(1). The Nasdaq letter had no immediate effect on the listing or trading of the Company's common stock or warrants. The Nasdaq listing rules require Nasdaq-listed companies to timely file all required periodic reports with the SEC. The Nasdaq letter stated that, under Nasdaq rules, the Company had 60 calendar days to submit a plan to regain compliance with Nasdaq's continued listing requirements. The Company filed its 2024 Form 10-K on April 30, 2025.

**ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS**

*You should read the following discussion and analysis of our financial condition and results of operations together with the unaudited condensed consolidated financial statements and related notes included elsewhere in this Quarterly Report on Form 10-Q and with our audited consolidated financial statements and related notes included in our Annual Report on Form 10-K filed with the Securities and Exchange Commission on April 30, 2025, and related management's discussion and analysis in Item 7 of the Annual Report on Form 10-K. This discussion contains forward-looking statements that involve risks and uncertainties. Our actual results could differ materially from those discussed below. Factors that could cause or contribute to such differences include those identified below and those discussed in the section titled "Risk Factors" included elsewhere in this Quarterly Report on Form 10-Q. Please also see the section titled "Special Note Regarding Forward-Looking Statements."*

**Overview** 

Complete Solaria was formed in November 2022 through the merger of Complete Solar and The Solaria Corporation. Founded in 2010, Complete Solar created a technology platform to offer clean energy products to homeowners by enabling a national network of sales partners and build partners. Our sales partners generate solar installation contracts with homeowners on our behalf. To facilitate this process, we provide the software tools, sales support and brand identity to our sales partners, making them competitive with national providers. This turnkey solution makes it easy for anyone to sell solar. On September 30, 2024, upon approval by the Bankruptcy Court for the District of Delaware, we completed the acquisition of certain assets relating to the Blue Raven Solar Business, New Homes Business and non-Installing Dealer network previously operated by SunPower Debtors.

We fulfill our customer contracts by using in-house installation experts and by engaging with local construction specialists. We manage the customer experience and complete all pre-construction activities prior to delivering build-ready projects including hardware, engineering plans, and building permits to our builder partners. We manage and coordinate this process through our proprietary software system.

As further discussed below and above (**Note 17 – Segment Information**), we have two reportable segments: Residential Solar Installation and New Home Business.

There is substantial doubt about our ability to continue as a going concern within one year after the date that the unaudited condensed consolidated financial statements are issued. The unaudited condensed consolidated financial statements included in this Quarterly Report on Form 10-Q have been prepared assuming the Company will continue to operate as a going concern, which contemplates the realization of assets and settlement of liabilities in the normal course of business. They do not include any adjustments to reflect the possible future effects on the recoverability and classification of assets or the amounts and classifications of liabilities that may result from uncertainty related to its ability to continue as a going concern.

**Growth Strategy and Outlook**

Our growth strategy contains the following elements:

● *Increase revenue by expanding installation capacity and developing new geographic markets* – We continue to expand our network of partners who will install systems resulting from sales generated by our sales partners. By leveraging this network of skilled builders in addition to our in-house installation experts, we aim to increase our installation capacity in our traditional markets and expand our offering into new geographies throughout the U.S. This will enable greater sales growth in existing markets and create new revenue in expansion markets.

● *Increase revenue and margin by engaging national-scale sales partners* – We aim to offer a turnkey solar solution to prospective sales partners with a national footprint. These include electric vehicle manufacturers, national home security providers, and real estate brokerages. We expect to create a consistent offering with a single execution process for such sales partners throughout their geographic territories. These national accounts have unique customer relationships that we believe will facilitate meaningful sales opportunities and low cost of acquisition to both increase revenue and improve margin.

**The Mergers**

We entered into an Amended and Restated Business Combination Agreement with FACT, First Merger Sub, Second Merger Sub, and Solaria on October 3, 2022. The Merger was consummated on July 18, 2023. Upon the terms and subject to the conditions of the Merger, (i) First Merger Sub merged with and into Complete Solaria with Complete Solaria surviving as a wholly-owned subsidiary of FACT (the "**First Merger**"), (ii) immediately thereafter and as part of the same overall transaction, Complete Solaria merged with and into Second Merger Sub, with Second Merger Sub surviving as a wholly-owned subsidiary of FACT (the "**Second Merger**"), and FACT changed its name to "Complete Solaria, Inc." and Second Merger Sub changed its name to "CS, LLC" and (iii) immediately after the consummation of the Second Merger and as part of the same overall transaction, Solaria merged with and into a newly formed Delaware limited liability company and wholly-owned subsidiary of FACT and changed its name to "The SolarCA LLC" ("**Third Merger Sub**"), with Third Merger Sub surviving as a wholly-owned subsidiary of FACT (the "Additional Merger", and together with the First Merger and the Second Merger, the "**Mergers**").

The Mergers between Complete Solaria and FACT has been accounted for as a reverse recapitalization. Under this method of accounting, FACT is treated as the acquired company for financial statement reporting purposes. This determination was primarily based on the Company having a majority of the voting power of the post-combination company, the Company's senior management comprising substantially all of the senior management of the post-combination company, and the Company's operations comprising the ongoing operations of the post-combination company. Accordingly, for accounting purposes, the Mergers have been treated as the equivalent of a capital transaction in which Complete Solaria is issuing stock for the net assets of FACT. The net assets of FACT have been stated at historical cost, with no goodwill or other intangible assets recorded.

**Disposal Transaction**

In October 2023, we completed the divestiture of our solar panel business to Maxeon ("**Divestiture**"), pursuant to the terms of the Disposal Agreement. Under the terms of the Disposal Agreement, Maxeon agreed to acquire certain assets and employees of Complete Solaria, for an aggregate purchase price of approximately $11.0 million consisting of 1,100,000 shares of Maxeon ordinary shares. We determined that the criteria were met for discontinued operations classification as the divestiture represented a strategic shift in our business. In connection with the Divestiture, we recognized a loss from discontinued operations of $2.0 million and $173.4 million in the fiscal years ended December 29, 2024 and December 31, 2023, respectively. We also sold all the Maxeon shares in the year ended December 31, 2023, and recorded a $4.2 million loss on the sale of these shares in our consolidated statements of operations and comprehensive loss.

Below we have discussed our historical results of operations, which excludes our product revenues and related metrics, as all results of operations associated with the solar panel business have been presented as discontinued operations, unless otherwise noted.

**SunPower Acquisition Transaction**

On August 5, 2024, we entered into the asset purchase agreement among us and the SunPower Debtors which provided for the sale and purchase of certain assets relating to the Blue Raven Solar business, New Homes Business and Non-Installing Dealer network previously operated by the SunPower Debtors (the "Acquired SunPower Assets"). The sale by SunPower was approved on September 23, 2024, by the United States Bankruptcy Court for the District of Delaware. We completed the acquisition ("**Acquisition**") of the Acquired SunPower Assets ("SunPower Businesses") effective September 30, 2024.

***Financing of the Acquisition***

We financed the Acquisition by issuing 7% convertible senior notes ("**September 2024 Notes**") in September 2024, which are due in 2029. The September 2024 Notes mature on July 1, 2029 and are convertible into shares of our common stock at the option of the holder at a conversion rate of $2.14 per share. The September 2024 Notes will become immediately due and payable at the option of the holder in the event of default and upon a qualifying change of control event.

**Key Financial Definitions/Components of Results of Operations**

 ****

***Revenues***

Revenue is recognized for Residential Solar Installation and New Home Business when a customer obtains control of promised products and services and we have satisfied our performance obligations which is the date by which substantially all of our design and installation is complete for a fully functioning solar power system to interconnect to the local power grid.

Installation includes the design of a solar energy system, the delivery of the components of the solar energy system (i.e., photovoltaic system, inverter, battery storage, etc.), installation services and services facilitating the connection of the solar energy system to the power grid. We account for these services as inputs to a combined output, resulting in a single service-based performance obligation.

The amount of revenue recognized reflects the consideration which we expect to be entitled to receive in exchange for the products and services. To achieve this core principle, we apply the following five steps:

Step 1. Identification of the contract(s) with a customer;

Step 2. Identification of the performance obligations in the contracts(s);

Step 3. Determination of the transaction price;

Step 4. Allocation of the transaction price to the performance obligations;

Step 5. Recognition of the revenue when, or as, we satisfy a performance obligation.

 

*Residential Solar Installation Revenues*

Our Residential Solar Installation segment sells products through a network of installing and non-installing dealers and resellers, as well as our internal sales team. Our contracts with customers include three primary contract types:

● *Cash agreements* – We contract directly with homeowners who purchase the solar energy system and related services from us. Customers are invoiced on a billing schedule, where the majority of the transaction price is due upon installation with an additional payment due when the system passes inspection by the authority having jurisdiction.

● *Financing partner agreements* – In our financing partner agreements, we contract directly with homeowners for the purchase of the solar energy system and related services. We refer the homeowner to a financing partner to finance the system, and the homeowner makes payments directly to the financing partner. We receive consideration from the financing partner on a billing schedule where the majority of the transaction price is due upon installation with an additional payment due when the system passes inspection by the authority having jurisdiction.

● *Power purchase agreements and lease agreements* – We contract directly with a leasing partner to perform the solar energy system installation, and the homeowner will finance the system through a power purchase agreement (or lease), which is signed with our leasing partner. We consider the leasing partner to be our customer, as we do not contract directly with the homeowner and the leasing partner takes ownership of the system upon the completion of installation. We receive consideration from the leasing partner on a billing schedule where the majority of the transaction price is due upon installation with an additional payment due when the system passes inspection by the authority having jurisdiction.

*New Home Business Revenues*

Our New Homes Business segment sells through a network of home builders as well as our internal sales team. Our contracts with customers include two primary contract types:

● *Cash agreements* – We contract directly with homebuilders who purchase the solar energy system from us and are the customers in the transaction. Our customers are invoiced upon the completion of installation.

● *Lease agreements* – Prior to the SunPower Corporation's declaration of bankruptcy, certain homeowners had intended to lease a system from the SunPower Corporation, but were unable to consummate the transaction (as a result of SunPower's declaration of bankruptcy). The in-process system inventory (installed on recently constructed homes) was acquired by us in connection with the SunPower Acquisition. We contracted directly with a leasing partner to facilitate the leasing of the system to the impacted homeowners. We consider the leasing partner to be our customer. Under the terms of our arrangement with the leasing partner, control is not transferred to the customer until the completed system is accepted by the customer. We receive consideration from the leasing partner following the acceptance of the system.

Our performance obligation for both reportable segments is to design and install a fully functioning solar energy system. For all contract types (with the exception of New Homes Business Lease agreements), we recognize revenue over time. Our over-time revenue recognition begins when the solar power system is fully installed (as it is at this point that control of the asset begins to be transferred to the customer and the customer retains the significant risks and rewards of ownership of the solar power system). We recognize revenue using the input method based on direct costs to install the system and defer the costs of installation until such time that control of the asset transfers to the customer (installation). For New Homes Business Lease agreements, we consider the performance obligation to be satisfied at a point in time upon acceptance of the system by the customer.

Revenue is generally recognized at the transaction price contained within the agreement, net of costs of financing, or other consideration paid to the customers that is not in exchange for a distinct good or service. Our arrangements may contain clauses that can either increase or decrease the transaction price. Variable consideration is estimated at each measurement date at its most likely amount to the extent that it is probably that a significant reversal of cumulative revenue recognized will not occur and true-ups are applied prospectively as such estimates change.

We record deferred revenue for amounts invoiced that are received in advance of the provisioning of services. In certain contracts with customers, we arrange for a third-party financing partner to provide financing to the customer. We collect upfront from the financing partner and the customer will provide installment payments to the financing partner. We record revenue in the amount received from the financing partner, net of any financing fees charged to the homeowner, which we consider to be a customer incentive. None of our contracts contain a significant financing component.

 ****

*Costs to obtain and fulfill contracts*

Our costs to obtain and fulfill contracts, when recognized, associated with systems sales are expensed as sales commission and cost of revenue, respectively. In addition, incentives we provide to our customers, such as discounts and rebates, are recorded net to the revenue we have recognized on the solar power system.

 ****

***Cost of Revenues***

Cost of revenues is comprised primarily of cost of material, internal labor costs, third-party subcontractors, design services, engineering personnel and employee-related expenses associated with permitting services, associated warranty costs, freight and delivery costs, depreciation, and amortization of internally developed software. Cost of revenues from these services is recognized when we transfer control of the product to the customer, which is generally upon installation.

**Operating Expenses**

 ****

***Sales Commissions***

Sales commissions are direct and incremental costs of obtaining customer contracts. These costs are paid to internal sales teams and third-party vendors who source residential customer contracts for the sale of solar energy systems.

 ****

***Sales and Marketing***

Sales and marketing expenses primarily consist of personnel related costs, including salaries and employee benefits, stock-based compensation, and other promotional and advertising expenses. We expense certain sales and marketing, including promotional expenses, as incurred.

 ****

***General and Administrative***

General and administrative expenses consist primarily of personnel and related expenses for employees, in our finance, research, engineering, and administrative teams including salaries, bonuses, payroll taxes, and stock-based compensation. It also consists of legal, consulting, and professional fees, rent expenses pertaining to our offices, business insurance costs and other costs.

 ****

***Interest Expense***

Interest expense primarily relates to interest expense on the issuance of debt and convertible notes and the amortization of debt issuance costs.

 ****

***Other income, net***

Other income, net consists of changes in the fair value of our derivative liabilities in connection with our convertible notes and changes in the fair value of common stock warrant liabilities, forward purchase agreements, and SAFE Agreements.

 ****

***Income Tax Expense***

Income tax expense primarily consists of income taxes in certain jurisdictions in which we conduct business.

**Supply Chain Constraints and Risk**

We rely on a small number of suppliers of solar energy systems and other equipment. If any of our suppliers was unable or unwilling to provide us with contracted quantities in a timely manner at prices, quality levels and volumes acceptable to us, we would have very limited alternatives for supply, and we may not be able find suitable replacements for our customers, or at all. Such an event could materially adversely affect our business, prospects, financial condition and results of operations.

The global supply chain and our industry have experienced significant disruptions in recent periods. We have seen supply chain challenges and logistics constraints increase, including shortages of panels, inverters, batteries and associated component parts for inverters and solar energy systems available for purchase, which materially impacted our results of operations. These shortages and delays can be attributed in part to the broader macroeconomic conditions and have been exacerbated by the ongoing conflicts in Ukraine and Israel. If any of our suppliers of solar modules experienced disruptions in the supply of the modules' component parts, for example semiconductor solar wafers or investors, this may decrease production capabilities and restrict our inventory and sales. In addition, we have experienced and are experiencing varying levels of volatility in costs of equipment and labor resulting in part from disruptions caused by general global economic conditions. While inflationary pressures have resulted in higher costs of products, in part due to an increase in the cost of the materials and wage rates, these additional costs have been offset by the related rise in electricity rates.

We cannot predict the full effects the supply chain constraints will have on our business, cash flows, liquidity, financial condition and results of operations at this time due to numerous uncertainties. Given the dynamic nature of these circumstances on our ongoing business, results of operations and overall financial performance, the full impact of macroeconomic factors, including the conflicts in Ukraine and Israel, cannot be reasonably estimated at this time. In the event we are unable to mitigate the impact of delays or price volatility in solar energy systems, raw materials, and freight, it could materially adversely affect our business, prospects, financial condition and results of operations. For additional information on risk factors that could impact our results, please refer to "*Risk Factors*" located in our Annual Report on Form 10-K for the year ended December 29, 2024.

**Critical Accounting Policies and Estimates**

See "Management's Discussion and Analysis of Financial Condition and Results of Operations – Critical Accounting Estimates" and our consolidated financial statements and related notes included in our Annual Report on Form 10-K for the fiscal year ended December 29, 2024 for accounting policies and related estimates we believe are the most critical to understanding our consolidated financial statements, financial condition and results of operations and which require complex management judgment and assumptions, or involve uncertainties. These critical accounting estimates include revenue recognition, accounting and accounting for business combinations. There have been no changes to our critical accounting estimates or their application since the date of our Annual Report on Form 10-K for the fiscal year ended December 29, 2024

**Results of Operations**

 ****

***Thirteen-weeks ended March 30, 2025 compared to the thirteen-weeks ended March 31, 2024***

The following table sets forth our unaudited statements of operations data for the thirteen-weeks ended March 30, 2025, and the thirteen weeks ended March 31, 2024. We have derived this data from our unaudited condensed consolidated financial statements included elsewhere in this Quarterly Report on Form 10-Q. This information should be read in conjunction with our unaudited condensed consolidated financial statements and related notes included elsewhere in this Quarterly Report on Form 10-Q. The results of historical periods are not necessarily indicative of the results of operations for any future period.

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| | | | | |
|:---|:---|:---|:---|:---|
| | **Thirteen Weeks Ended** | **Thirteen Weeks Ended** | | |
| <br>**(*in thousands*)** | **March 30,<br> 2025** | **March 31,<br> 2024** |<br>**$ Change** |<br>**%<br> Change** |
|  | (As Restated) |  |  |  |
| Revenues | $78413 | $10040 | $68373 | 681% |
| Cost of revenues<sup>(1)</sup> | 51037 | 7757 | 43280 | 558 |
| &nbsp;&nbsp;&nbsp;Gross profit | 27376 | 2283 | 25093 | 1099 |
| &nbsp;&nbsp;&nbsp;Gross margin % | 35% | 23% |  |  |
| Operating expenses: |  |  |  |  |
| &nbsp;&nbsp;&nbsp;Sales commissions | 7684 | 3116 | 4568 | 147 |
| &nbsp;&nbsp;&nbsp;Sales and marketing<sup>(1)</sup> | 8522 | 1618 | 6904 | 427 |
| &nbsp;&nbsp;&nbsp;General and administrative<sup>(1)</sup> | 14896 | 5093 | 9803 | 192 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Total operating expenses | 31102 | 9827 | 21275 | 216 |
| (Loss) from operations | (3726) | (7544) | 3818 | 51 |
| Interest expense<sup>(2)</sup> | (6041) | (3568) | (2473) | 69 |
| Interest income | 3 | 6 | (3) | (50) |
| Other income, net<sup>(3)</sup> | 14576 | 1519 | 13057 | 860 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Income (Loss) from before taxes | 4812 | (9587) | 14399 |  |
| Income tax provision |  | (1) | 1 | \* |
| Net income (loss) | $4812 | $(9588) | $14400 |  |

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\* Percentage change not meaningful

<sup>(1)</sup> Includes stock-based compensation expense as follows (*in thousands*):

---

| | | |
|:---|:---|:---|
|  | **Thirteen Weeks Ended** | **Thirteen Weeks Ended** |
|  | **March 30,<br> 2025** | **March 31,<br> 2024** |
|  | (As Restated) | |
| Cost of revenues | $155 | $27 |
| Sales and marketing | 184 | 216 |
| General and administrative | 130 | 1098 |
| Total stock-based compensation expense | $469 | $1341 |

---

<sup>(2)</sup> Includes interest expense and amortization of debt issuance costs to related party of $1.4 million and $2.7 million in the thirteen-weeks ended March 30, 2025, and March 31, 2024, respectively.

<sup>(3)</sup> Includes a gain of $3.7 million on the change in the fair value of derivative liabilities with related parties in the thirteen weeks ended March 30, 2025. Refer to **Note 11 – Borrowings and Derivative Liabilities** for details. Includes income of $0.1 million and expense of $4.7 million with related parties relating to the change in the fair value of forward purchase agreements for the thirteen weeks ended March 30, 2025, and March 31, 2024, respectively. Includes $0.1 million and zero of income with related parties other income in the thirteen weeks ended March 30, 2025, and March 31, 2024, respectively.

***Revenues***

We disaggregate our revenues based on the following types of services (*in thousands*):

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| | | | | |
|:---|:---|:---|:---|:---|
|  | **Thirteen Weeks Ended** | **Thirteen Weeks Ended** | | |
|  | **March 30,<br> 2025** | **March 31,<br> 2024** |<br>**$ Change** |<br>**%<br> Change** |
|  | (As Restated) | | | |
| Residential Solar Installation | $36504 | $10040 | $26464 | 264% |
| New Homes Businesses | 41909 |  | 41909 | \* |
| Total revenue | $78413 | $10040 | $68373 | 681 |

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\* Percentage change not meaningful.

Revenue for Residential Solar Installation and New Homes Business reportable segments increased by $26.4 million and $42.0 million, respectively. The increase is primarily attributed to the acquisition of SunPower assets, which increased installations by approximately 800 and 2,600 for Residential Solar Installation and New Homes Business reportable segments, respectively.

***Cost of Revenues and gross margin***

 ****

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| | | | | |
|:---|:---|:---|:---|:---|
|  | **Thirteen Weeks Ended** | **Thirteen Weeks Ended** | | |
|  | | | $**%** | **%** |
|  | **March 30,**<br>**2025** | **March 31,**<br>**2024** | **Change** | **Change** |
|  | (As Restated) | | | |
| Residential Solar Installation | $22615 | $7757 |  | 192% |
| New Homes Business | 28422 |  |  | \* |
| Total cost of revenues | $51037 | $7757 |  | 558 |
| **Gross Margin** |  |  |  |  |
| Total gross margin | 35% | 23% |  |  |

---

\* Percentage change not meaningful.

Cost of revenues for the Residential Solar Installation and New Homes Business reportable segments increased by $24.2 million and $19.1 million, respectively, primarily attributed to the acquisition of SunPower assets in the fourth quarter of fiscal 2024, which increased installations by approximately 800 and 2,600 for Residential Solar Installation and New Homes Business reportable segments, respectively.

***Sales Commissions***

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| | | | | |
|:---|:---|:---|:---|:---|
|  | **Thirteen Weeks Ended** | **Thirteen Weeks Ended** | | |
|  | | | $**%** | **%** |
|  | **March 30,**<br>**2025** | **March 31,**<br>**2024** | **Change** | **Change** |
|  | (As Restated) | | | |
| Residential Solar Installation | $6667 | $3116 |  | 114% |
| New Homes Business | 1017 |  |  | \* |
| Sales Commission | $7684 | $3116 |  | 147 |

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\* Percentage change not meaningful.

Sales commissions for the Residential Solar Installation and New Homes Business reportable segments increased due to the increase in revenue arising from the acquisition of the SunPower assets in the fourth quarter of fiscal 2024.

 ****

***Sales and Marketing***

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| | | | | |
|:---|:---|:---|:---|:---|
|  | **Thirteen Weeks Ended** | **Thirteen Weeks Ended** | | |
|  | | | $**%** | **%** |
|  | **March 30,**<br>**2025** | **March 31,**<br>**2024** | **Change** | **Change** |
|  | (As Restated) | | | |
| Residential Solar Installation | $8522 | $1618 |  | 427% |
| New Homes Business |  |  |  |  |
| Sales & Marketing | $8522 | $1618 |  | 427 |

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Sales & Marketing expenses in the Residential Solar Installation reportable segment increased due to the acquisition of SunPower assets in the fourth quarter of fiscal 2024.

***General and Administrative***

 ****

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| | | | | |
|:---|:---|:---|:---|:---|
|  | **Thirteen Weeks Ended** | **Thirteen Weeks Ended** | | |
|  | | | $**%** | **%** |
|  | **March 30,**<br>**2025** | **March 31,**<br>**2024** | **Change** | **Change** |
|  | (As Restated) | | | |
| Residential Solar Installation | $10440 | $5093 |  | 105% |
| New Homes Business | 4456 |  |  | \* |
| General & Administrative | $14896 | $5093 |  | 192 |

---

 ****

\* Percentage change not meaningful.

General & Administrative expenses for the Residential Solar Installation and New Homes Business reportable segments increased due to the acquisition of the SunPower assets in the fourth quarter of fiscal 2024.

***Interest Expense***

Interest expense in the thirteen-weeks ended March 30, 2025, consisted principally of $5.0 million of interest expense attributable to our September 2024 Notes and the remainder principally attributable to the July 2024 Notes. The July 2024 Notes and September 2024 Notes were issued in fiscal 2024 and replaced our then existing debt.

Interest expense in the thirteen weeks ended March 30, 2024, consisted principally of $2.6 million of relating to our obligation to Carlyle, $0.5 million relating to our secured credit line, $0.3 million related to our 2018 Bridge Loan and $0.1 million attributable to the $5.0 million revolver balance. These obligations were fully settled in the exchange agreement that we entered into in July 2024.

***Other Income, Net***

Other income net, for the thirteen weeks ended March 30, 2025, was $14.6 million. The main drivers of Other income, net were $15.1 million of gains on the remeasurement of the fair value of derivative liabilities associated with our July 2024 Notes and September 2024 Notes, $0.3 million of income arising from the change in the fair value of our forward purchase agreements and $0.2 million of other income, partially offset by $1.1 million of expense associated with the change in the fair value of our public, private placement and working capital warrants which are accounted for as liabilities.

Other income, net in the thirteen-weeks ended March 31, 2024, was income of $1.5 million. The main drivers of this Other income, net were $6.4 million of income due to the change in the fair value of Carlyle warrants which we accounted for as a liability and $1.3 million of income arising from the change in the fair value of a redeemable convertible preferred stock warrant liability, partially offset by $5.6 million of expense recognized in connection with the change in the fair value of forward purchase agreement liabilities and $0.5 million of expense recognized in connection with the fair value of our public, private placement and working capital warrants.

***Net Income (Loss)***

As a result of the factors discussed above, our net income for the thirteen-weeks ended March 30, 2025, was $4.8 million, a $14.4 million improvement, as compared to a net loss $9.6 million for the thirteen weeks ended March 31, 2024.

**Liquidity and Capital Resources**

***Overview***

Since our inception, we have incurred losses and negative cash flows from operations. We had net income of $4.8 million in the thirteen week period ended March 30, 2025, and have an accumulated deficit of $406.6 million and current debt of $4.3 million as of March 30, 2025. We had cash and cash equivalents, excluding restricted cash of $10.6 million as of March 30, 2025, which was held for working capital expenditures. We believe our operating losses and negative operating cash flows will continue into the foreseeable future.

Our material cash requirements include cash required to fund our operations, to meet our working capital requirements and to fund our capital expenditures.

We have financed our operations primarily through sales of equity securities, debt, issuance of convertible notes, cash generated from operations and the proceeds from the Mergers. As a result of not timely filing our Annual Report on Form 10-K for the fiscal year ended December 29, 2024, we are not currently eligible to use a registration statement on Form S-3 that would allow us to continuously incorporate by reference our SEC reports into the registration statement, to use "shelf" registration statements to conduct offerings, or to use our at-the-market offering facility until approximately one year from the date we have regained and maintain status as a current filer. Our inability to use Form S-3 may significantly impair our ability to raise necessary capital to fund our operations and execute our strategy. If we seek to access the capital markets through a registered offering during the period of time that we are unable to use Form S-3, we may be required to publicly disclose the proposed offering and the material terms thereof before the offering commences, we may experience delays in the offering process due to SEC review of a Form S-1 registration statement and we may incur increased offering and transaction costs and other considerations. If we are unable to raise capital through a registered offering, we would be required to conduct our equity financing transactions on a private placement basis, which may be subject to pricing, size and other limitations imposed under the Nasdaq rules, or seek other sources of capital. The foregoing limitations on our financing approaches could prevent us from pursuing transactions or implementing business strategies that would be beneficial to our business.

Our cash equivalents are on deposit with major financial institutions. Our cash position raises substantial doubt regarding our ability to continue as a going concern for 12 months following the issuance of the unaudited condensed consolidated financial statements.

We will receive the proceeds from any cash exercise of warrants for shares of our common stock. The aggregate amount of proceeds could be up to $257.2 million if all the warrants are exercised for cash. However, to the extent the warrants are exercised on a "cashless basis," the amount of cash we would receive from the exercise of those warrants will decrease. The Private Warrants and Working Capital Warrants, as so identified in our unaudited condensed consolidated financial statements, may be exercised for cash or on a "cashless basis." The Public Warrants and the Mergers Warrants may only be exercised for cash provided there is an effective registration statement registering the shares of common stock issuable upon the exercise of such warrants. If there is not a then-effective registration statement, then such warrants may be exercised on a "cashless basis," pursuant to an available exemption from registration under the Securities Act. We expect to use any such proceeds for general corporate and working capital purposes, which would increase our liquidity. As of May 16, 2025, the price of our common stock was $1.88 per share. The weighted average exercise price of the warrants was $10.02 as of March 30, 2025. We believe the likelihood that warrant holders will exercise their warrants, and therefore the amount of cash proceeds that we would receive, is dependent upon the market price of our common stock. If the market price for our common stock remains less than the exercise price, we believe warrant holders will be unlikely to exercise.

***Debt Financings***

In July 2024 we issued $46.0 million of 12% senior unsecured convertible notes. Of this issuance, $28.0 million was for cash and $18.0 million was in an exchange of existing debt on our unaudited condensed consolidated balance sheet. Also, during 2024, we issued $79.8 million of 7% senior unsecured convertible notes for cash. We also issued an additional $0.2 million of 7% senior unsecured convertible notes in the thirteen week period ended March 30, 2025.

*12% Unsecured Convertible Senior Notes*

In July 2024, we issued $46.0 million of senior unsecured convertible notes ("July 2024 Notes") to various lenders. Including in connection with the exchange agreement transactions summarized below. Of the July 2024 Notes, $18.0 million were issued in exchange for the cancellation of indebtedness as discussed below, which amount included $10.0 million issued to a strategic investor identified by us as a related party. The July 2024 Notes also included $18.0 million issued to a related party affiliated with the Company's CEO, Rodgers Massey Revocable Living Trust. The July 2024 Notes bear interest at 12% per annum and mature on July 1, 2029. The interest rate increases by 3% in the event of default. The July 2024 Notes are convertible into shares of our common stock at the option of the holder at a conversion rate and initially equal to 595.2381 shares of common stock per $1,000 principal amount of the July notes. The July 2024 Notes may be declared due and payable at the option of the holder upon event of default and upon a qualifying change of control event.

 

 

*7% Unsecured Convertible Senior Notes* 

In September 2024, we issued $66.8 million of senior unsecured convertible notes to various lenders (the "September 2024 Notes"), $8.8 million are deemed to be with a related party. In December 2024, we issued additional September 2024 Notes for cash proceeds of $13.0 million, and we issued an additional $0.2 million of the September 2024 Notes in the thirteen weeks ended March 30, 2025. The September 2024 Notes bear interest at 7% per annum and mature on July 1, 2029. The September 2024 Notes are initially convertible into 467.8363 shares of common stock per $1,000 principal amount of September 2024 Notes. The September 2024 Notes may be declared due and payable at the option of the holder upon an event of default and upon a qualifying change of control event.

*Revolving Loan Balance*

We have a fixed principal balance of $1.5 million outstanding as of March 30, 2025, due to the Rodgers Massey Revocable Living Trust, a related party.

***Forward Purchase Agreements***

In July 2023, FACT and Legacy Complete Solaria, Inc. entered into FPAs with each of (i) Meteora; (ii) Polar, and (iii) Sandia (each individually, a "Seller", and together, the "FPA Sellers").

Pursuant to the terms of the FPAs, the FPA Sellers may purchase through a broker in the open market, from holders of Shares other than the Company or affiliates thereof, FACT's ordinary shares, par value of $0.0001 per share, (the "Shares"). While the FPA Sellers have no obligation to purchase any Shares under the FPAs, the aggregate total Shares that may be purchased under the FPAs shall be no more than 6,720,000 in aggregate. The FPA Sellers may not beneficially own greater than 9.9% of issued and outstanding Shares following the Mergers as per the Amended and Restated Business Combination Agreement.

The key terms of the forward contracts are as follows:

● The FPA Sellers can terminate the transaction following the Optional Early Termination ("OET") Date which shall specify the quantity by which the number of shares is to be reduced (such quantity, the "Terminated Shares"). Seller shall terminate the transaction in respect of any shares sold on or prior to the maturity date. The counterparty is entitled to an amount from the seller equal to the number of terminated shares multiplied by a reset price. The reset price is initially $10.56 (the "Initial Price") and is subject to a $5.00 floor.

● The FPAs contains multiple settlement outcomes. Per the terms of the agreements, the FPAs will (1) settle in cash in the event the Company is due cash upon settlement from the FPA Sellers or (2) settle in either cash or shares, at the discretion of the Company, should the settlement amount adjustment exceed the settlement amount. Should the Company elect to settle via shares, the equity will be issued in Complete Solaria Common Stock, with a per share price based on the volume-weighted average price ("VWAP") Price over 15 scheduled trading days. The magnitude of the settlement is based on the Settlement Amount, an amount equal to the product of: (1) Number of shares issued to the FPA Seller pursuant to the FPA, less the number of Terminated Shares multiplied by (2) the VWAP Price over the valuation period. The Settlement amount will be reduced by the Settlement Adjustment, an amount equal to the product of (1) Number of shares in the Pricing Date Notice, less the number of Terminated Shares multiplied by $2.00.

● The Settlement occurs as of the Valuation Date, which is the earlier to occur of (a) the date that is two years after the date of the Closing Date of the Mergers (b) the date specified by Seller in a written notice to be delivered to Counterparty at Seller's discretion (which Valuation Date shall not be earlier than the day such notice is effective) after the occurrence of certain triggering events; and (c) 90 days after delivery by the Counterparty of a written notice in the event that for any 20 trading days during a 30 consecutive trading day-period (the "Measurement Period") that occurs at least 6 months after the Closing Date, the VWAP Price is less than the then applicable Reset Price.

We entered into four separate FPAs, three of which, associated with the obligation to issue 6,300,000 Shares, were entered into prior to the closing of the Mergers. Upon signing the FPAs, we incurred an obligation to issue a fixed number of shares to the FPA Sellers contingent upon the closing of the Mergers in addition to the terms and conditions associated with the settlement of the FPAs.

On December 18, 2023, we and the FPA Sellers entered into separate amendments to the FPA (the "Amendments"). The Amendments lowered the reset floor price of each FPA from $5.00 to $3.00 and allow us to raise up to $10.0 million of equity from existing stockholders without triggering certain anti-dilution provisions contained in the FPA; provided, the insiders pay a price per share for their initial investment equal to the closing price per share as quoted on the Nasdaq on the day of purchase; provided, further, that any subsequent investments are made at a price per share equal to the greater of (a) the closing price per share as quoted by Nasdaq on the day of the purchase or (b) the amount paid in connection with the initial investment.

On May 7 and 8, 2024, respectively, we entered into and executed separate amendments to the FPAs (collectively the "Second Amendments") with Sandia (the "Sandia Second Amendment") and Polar (the "Polar Second Amendment"). The Second Amendments lowered the reset price of each FPA from $3.00 to $1.00 per share and amended the VWAP Trigger Event provision to read as "After December 31, 2024, an event that occurs if the VWAP Price, for any 20 trading days during a 30 consecutive trading day-period, is below $1.00 per Share". The Sandia Second Amendment is not effective until we execute similar amendments with both Polar and Meteora.

On June 14, 2024, we entered into and executed an amendment to the FPA with Sandia (the "Sandia Third Amendment"). The Sandia Third Amendment set the reset price of each FPA to $1.00 per share and amended the VWAP Trigger Event provision to read as "After December 31, 2024, an event that occurs if the VWAP Price, for any 20 trading days during a 30 consecutive trading day-period, is below $1.00 per Share."

On July 17, 2024, we entered into an amendment to the FPA with Polar pursuant to which we and Polar agreed that Section 2 (Most Favored Nation) of the FPA is applicable to all 2,450,000 shares subject to the FPA.

***Simple Agreement for Future Equity ("SAFE") Agreements***

*First SAFE* 

On January 31, 2024, we entered into a SAFE ("First SAFE") with the Rodgers Massey Freedom and Free Markets Charitable Trust (the "Purchaser") in connection with the Purchaser investing $1.5 million in the Company. The First SAFE is convertible into shares of our common stock, par value $0.0001 per share, upon the initial closing of a bona fide transaction or series of transactions with the principal purpose of raising capital, pursuant to which we issue and sell common stock at a fixed valuation (an "Equity Financing"), at a per share conversion price which is equal to the lower of (i) (a) $53.54 million divided by (b) our capitalization immediately prior to such Equity Financing (such conversion price, the "SAFE Price"), and (ii) 80% of the price per share of our common stock sold in the Equity Financing. If we consummate a change of control prior to the termination of the First SAFE, the Purchaser will be automatically entitled to receive a portion of the proceeds of such liquidity event equal to the greater of (i) $1.5 million and (ii) the amount payable on the number of shares of our common stock equal to (a) $1.5 million divided by (b)(1) $53.54 million divided by (2) our capitalization immediately prior to such liquidity event (the "Liquidity Price"), subject to certain adjustments as set forth in the First SAFE. The First SAFE was convertible into a maximum of 1,431,297 shares of our common stock, assuming a per share conversion price of $1.05, which is the product of (i) $1.31, the closing price of our common stock on January 31, 2024, multiplied by (ii) 80%.

On April 21, 2024, we entered into an amendment ("First SAFE Amendment") that converted the First SAFE investment of $1.5 million into 4,166,667 shares of our common stock based on a conversion price of $0.36 per share, defined in the First SAFE Amendment as the product of (i) $0.45, the closing price of our common stock on April 19, 2024, multiplied by (ii) 80%. Upon conversion, we recorded a debit to SAFE Agreement of $1.5 million, a credit to Additional paid-in-capital of $1.9 million and recognized expense of $0.4 million within Other income (expense), net in results of operations for the fiscal year ended December 29, 2024.

*Second SAFE* 

 

On February 15, 2024, we entered into a second SAFE (the "Second SAFE") with the Purchaser, in connection with the Purchaser investing $3.5 million in the Company. The Second SAFE did not accrue interest. The Second SAFE was initially convertible into shares of our common stock upon the initial closing of an Equity Financing at a per share conversion price which was equal to the lower of (i) the Second SAFE Price, and (ii) 80% of the price per share of our common stock sold in the Equity Financing. If we consummated a change of control prior to the termination of the Second SAFE, the Purchaser would have been automatically entitled to receive an amount equal to the greater of (i) $3.5 million and (ii) the amount payable on the number of shares of our common stock equal to $3.5 million divided by the Liquidity Price, subject to certain adjustments as set forth in the Second SAFE. The Second SAFE was convertible into a maximum of 3,707,627 shares of our common stock, assuming a per share conversion price of $0.94, which is the product of (i) $1.18, the closing per share price of our common stock on February 15, 2024, (ii) 80%.

On April 21, 2024, we entered into an amendment ("Second SAFE Amendment") that converted the Second SAFE investment of $3.5 million into 9,722,222 shares of our common stock based on a conversion price of $0.36 per share, defined in the Second SAFE Amendment as the product of (i) $0.45, the closing price of our common stock on April 19, 2024, multiplied by (ii) 80%. Upon conversion, we recorded a debit to SAFE Agreement of $3.5 million, a credit to Additional paid-in-capital of $4.4 million and recognized expense of $0.9 million within Other income (expense), net in our results of operations for the fiscal year ended December 29, 2024.

*Third SAFE*

On May 13, 2024, we entered into a third SAFE (the "Third SAFE") with the Purchaser, in connection with the Purchaser investing $1.0 million in the Company. The Third SAFE is convertible into shares of our common stock upon the initial closing of a bona fide transaction or series of transactions with the principal purpose of raising capital, pursuant to which the Company issues and sells shares of its common stock in an Equity Financing, at a per share conversion price which is equal to 50% of the price per share of our common stock sold in the Equity Financing. If we consummate a change of control prior to the termination of the Third SAFE, the Purchaser will be automatically entitled to receive a portion of the proceeds of such liquidity event equal to $1.0 million, subject to certain adjustments as set forth in the Third SAFE. The Third SAFE is convertible into a maximum of 2,750,000 shares of our common stock, assuming a per share conversion price of $0.275, which is the product of (i) $0.55, the closing price of our common stock on May 13, 2024, multiplied by (ii) 50%. Given that the SAFE could be settled in cash or a variable number of shares, we have accounted for the instrument as a liability at its fair value.

As March 30, 2025, we estimated the fair value of the Third SAFE at $0.4 million based upon the assumptions disclosed in **Note 5 – Fair Value Measurements** to our unaudited condensed consolidated financial statements.

**Cash Flows for the Thirteen Weeks Ended March 30, 2025 and March 31, 2024**

The following table summarizes Complete Solaria's cash flows from operating, investing, and financing activities for the thirteen-weeks ended March 30, 2025, and March 31, 2024 (*in thousands*):

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| | | |
|:---|:---|:---|
|  | **Thirteen Weeks Ended** | **Thirteen Weeks Ended** |
|  | **March 30,<br> 2025** | **March 31,<br> 2024** |
| Net cash used in operating activities | $(2627) | $(4946) |
| Net cash used in investing activities |  | (536) |
| Net cash provided by financing activities | (198) | 4726 |
| Net decrease in cash, cash equivalents and restricted cash | (2825) | (801) |

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***Cash Flows from Operating Activities***

Net cash used in operating activities of $2.7 million in the thirteen weeks ended March 30, 2025, was due to net income of $4.8 million offset by $7.4 million of unfavorable noncash adjustments and $0.1 million of cash outflow from changes in operating assets and liabilities. Non-cash adjustments consisted principally of $15.1 million arising from remeasurement of derivative liabilities, partially offset by $3.7 million of amortization of debt issuance costs, $1.6 million of depreciation and amortization, $1.1 million provision for credit losses, $1.1 million due to the change in the fair value of warrants classified as liabilities, and $0.5 million of stock-based compensation. Cash outflows from changes in operating assets consisted principally of $11.3 million increase in contract assets, $4.4 million increase in prepaid expenses and other current assets, a $5.2 million decrease in accrued expenses and other liabilities, and a $0.4 million decrease in current operating lease liabilities almost entirely offset by an $11.4 million decrease in inventories, a $6.9 million increase in accounts payable and a $3.1 million decrease in contract liabilities.

Net cash used in operating activities of $4.9 million for the thirteen-weeks ended March 31, 2024 was primarily due to the net loss of $9.6 million partially offset by non-cash charges of $3.5 million and net cash inflows of $1.1 million from changes in our operating assets and liabilities. Non-cash charges in our operating results consisted of a $5.6 million adjustment to our forward purchase agreement liabilities, $1.3 million stock-based compensation expense, $2.5 in million accretion of interest attributable to the CS Solis Debt, $1.0 million of other non-cash interest, $0.4 million of depreciation and amortization and $0.2 million of non-cash lease costs, partially offset by $7.2 million of income from the change in the fair value of our warrant liabilities and a $0.3 million decrease in our reserve for excess and obsolete inventory. The main drivers of net cash inflows derived from the changes in operating assets and liabilities were related to a decrease in accounts receivable, net of $5.3 million and a decrease in inventories of $0.6 million, partially offset by a decrease in accounts payable of $2.6 million, a decrease in accrued expenses and other liabilities of $1.6 million, a decrease in operating lease liabilities of $0.2 million and a decrease in contract liabilities of $0.4 million.

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***Cash Flows from Investing Activities***

Net cash used in investing activities was zero and $0.5 million for the thirteen-weeks ended March 30, 2025, and March 31, 2024, respectively, and attributable to additions to internal-use-software.

***Cash Flows from Financing Activities***

Net cash used in financing activities was $0.2 million for the thirteen weeks ended March 30, 2025, and consisted of $0.5 million of payments on our finance leases partially offset by $0.2 million in proceeds from the issuance of September 2024 Notes, and $0.1 million in proceeds from the exercise of stock options and warrants in exchange for the issuance of shares of our common stock.

Net cash provided by financing activities of $5.0 million for the thirteen-weeks ended March 31, 2024 was primarily due to $5.0 million in net proceeds from the issuance of SAFE agreements to a related party and $0.3 million final payment on the settlement of the amount due to Polar Multi-Strategy Master Fund.

**Emerging Growth Company Status**

Section 102(b)(1) of the Jumpstart Our Business Startups Act of 2012, or the JOBS Act, exempts emerging growth companies from being required to comply with new or revised financial accounting standards until private companies are required to comply with the new or revised financial accounting standards. The JOBS Act provides that a company can choose not to take advantage of the extended transition period and comply with the requirements that apply to non-emerging growth companies, and any such election to not take advantage of the extended transition period is irrevocable.

Complete Solaria is an "emerging growth company" as defined in Section 2(a) of the Securities Act and has elected to take advantage of the benefits of the extended transition period for new or revised financial accounting standards. Following the closing of the Mergers, our Post-Combination Company remains an emerging growth company until the earliest of (i) the last day of the fiscal year in which the market value of common stock that is held by non-affiliates exceeds $700 million as of the end of that year's second fiscal quarter, (ii) the last day of the fiscal year in which we has total annual gross revenue of $1.235 billion or more during such fiscal year (as indexed for inflation), (iii) the date on which we have issued more than $1.0 billion in non-convertible debt in the prior three-year period, or (iv) the last day of the fiscal year ending after the fifth anniversary of our IPO. Complete Solaria expects to continue to take advantage of the benefits of the extended transition period, although it may decide to early adopt such new or revised accounting standards to the extent permitted by such standards. This may make it difficult or impossible to compare our financial results with the financial results of another public company that is either not an emerging growth company or is an emerging growth company that has chosen not to take advantage of the extended transition period exemptions because of the potential differences in accounting standards used.

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**ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK**

Not applicable.

**ITEM 4. CONTROLS AND PROCEDURES**

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***Evaluation of Disclosure Controls and Procedures***

As of the end of the period covered by this Quarterly Report on Form 10-Q, we conducted an evaluation, under the supervision and with the participation of our Chief Executive Officer and Chief Financial Officer, of the effectiveness of the design and operation of our disclosure controls and procedures as defined in Rule 13a-15(e) and 15d-15(e) under the Securities Exchange Act of 1934 (the "Exchange Act"). Based on this evaluation, our Chief Executive Officer and Chief Financial Officer concluded that, as of March 30, 2025, such disclosure controls and procedures were not effective, solely as a result of previously reported material weaknesses.

As previously disclosed by us in our Current Report on Form 8-K filed with the SEC on April 14, 2026, we identified material errors related to the recognition of revenue (and related cost of revenues, sales commissions, sales and marketing, and general and administrative expenses), and interest expense (collectively "Misstatements") in each of the quarterly periods in fiscal 2025. We determined that these material errors were the result of our previously reported material weaknesses in our internal control over financial reporting related to our control activities, information and communication, and monitoring activities. These errors were not caused by any override of controls, misconduct, or fraud. The correction of the Misstatements impacted the previously reported amounts of revenues, cost of revenues, interest expense and amortization of debt discount and issuance costs, inventory, net income per common share, and all related financial statement subtotals and totals. As a result, this Amended Report amends our previously issued quarterly report for the thirteen week period ended March 30, 2025.

As a result of this Amended Report, our principal executive officer and principal financial officer believes that the interim unaudited condensed consolidated financial statements included in this Amended Report fairly present, in all material respects, our financial condition, results of operations and cash flows as of and for the periods presented in accordance with U.S. GAAP.

A material weakness is a deficiency, or a combination of deficiencies, in internal control over financial reporting, such that there is a reasonable possibility that a material misstatement of our annual or interim financial statements will not be prevented or detected on a timely basis. The material weaknesses are as follows:

The Company did not maintain controls to execute the criteria established in the COSO Framework for (i) the control environment, (ii) risk assessment, (iii) control activities, (iv) information and communication, and (v) monitoring activities.

Each of the control deficiencies identified below constitute material weaknesses, either individually or in the aggregate.

*Control Environment.* The Company did not maintain an effective control environment and identified the following material weakness: the Company lacked appropriate policies and resources to develop and operate effective internal control over financial reporting and a lack of appropriate and consistent IT policies given the significant volume of financially relevant IT changes, which contributed to the Company's inability to properly analyze, record and disclose accounting matters timely and accurately.

This control environment material weakness also contributed to the other material weaknesses identified below.

*Risk Assessment.* The Company did not design and implement an effective risk assessment and identified a material weakness relating to: (i) identifying, assessing, and communicating appropriate objectives, (ii) identifying and analyzing risks to achieve these objectives, and (iii) identifying and assessing changes in the business that could impact the system of internal controls.

*Control Activities.* The Company did not design and implement effective control activities and identified the following material weakness:

● Ineffective design and operation of certain control activities due to significant personnel changes throughout 2024. Control deficiencies, which aggregate to a material weakness, occurred within substantially all areas of financial reporting.

 

*Information and Communication.* The Company did not design and implement effective information and communication activities and identified the following material weaknesses:

● The Company did not design and maintain effective general information technology controls over logical access and program change management for our key information systems used to support the financial reporting process. Specifically, management did not maintain effective controls to ensure proper segregation of duties related to user administration and other privileged access functions and in implementing program changes in information systems. Due to the pervasive nature of these deficiencies, business process controls that are dependent upon information from these systems were also not effective.

● The Company did not have adequate processes and controls for communicating information among the accounting, finance, operations, and legal departments, necessary to support the proper functioning of internal controls.

*Monitoring Activities.* The Company did not design and implement effective monitoring activities and identified the following material weaknesses: (i) failure to adequately monitor compliance with accounting policies, procedures and controls related to substantially all areas of financial reporting; and (ii) failure to properly select, develop and perform ongoing evaluations of the components of internal controls (including the monitoring of service providers' control environments).

These material weaknesses described in the paragraphs above contributed to material accounting errors identified and corrected during the audit of the Company's financial statements [for the fiscal year ended December 28, 2025]. If we fail to adequately remediate these material weaknesses, there could be material misstatements that may not be prevented or detected.

*Remediation Plan and Status.* As previously described in Part II, Item 9A of our Annual Report on Form 10-K for the fiscal year ended December 29, 2024, management is in the process of implementing its remediation plan. The Company is committed to remediating the material weaknesses identified above, fostering continuous improvement in internal controls and enhancing its overall internal control environment. Since identifying the above material weaknesses, the Company has begun the process of implementing the remediation activities described below. The Company believes that these activities, when fully implemented, should remediate the identified material weaknesses and strengthen its internal control over financial reporting. These remediation efforts remain ongoing, and additional remediation initiatives may be necessary.

Accordingly, as management continues to monitor the effectiveness of our internal control over financial reporting, the Company will continue to perform additional procedures prescribed by management, including the use of certain manual mitigating control procedures and the employment of additional tools and resources deemed necessary, to ensure that our future consolidated financial statements are fairly stated in all material respects. The following planned remediation activities highlight the Company's commitment to remediating the identified material weaknesses:

● Hire finance and accounting professionals with the appropriate level of experience and training necessary to develop, maintain and improve our accounting policies, procedures and internal controls, utilize third-party consultants and internal audit professionals to enhance the control environment, and continue to hire other qualified finance and accounting professionals.

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● Provide, and continue to provide, training for employees regarding their responsibilities related to the performance or oversight of internal controls.

● Reinforce the importance of communication between the operations, accounting, and legal departments regarding key terms of, and changes or modifications to, customer, debt, equity, legal and other contracts by establishing controls requiring finance department approval of certain non-standard terms and agreements.

● Begin the implementation of a process to reevaluate, revise and improve our Sarbanes-Oxley compliance program, including governance, risk assessment, testing methodologies and corrective action. The Company plans to enhance our risk assessment procedures and conduct a comprehensive risk assessment.

● Develop, and continue to develop, internal control documentation over financial processes and related disclosures. The Company plans to continue to design and implement control activities to mitigate risks identified and test the operating effectiveness of such controls.

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If we are not able to maintain effective internal control over financial reporting and Disclosure Controls, or if material weaknesses are discovered in future periods, a risk that is significantly increased in light of the complexity of our business, we may be unable to accurately and timely report our financial position, results of operations, cash flows or key operating metrics, which could result in late filings of the annual and quarterly reports under the Exchange Act, restatements of financial statements or other corrective disclosures, an inability to access commercial lending markets, defaults under its credit facilities and other agreements, or other material adverse effects on our business, reputation, results of operations, financial condition or liquidity.

The material weaknesses will not be considered remediated, however, until the applicable controls operate for a sufficient period of time, and management has concluded, through testing, that these controls are operating effectively.

***Changes in Internal Control over Financial Reporting***

Other than the remediation efforts described above, there were no changes in our internal control over financial reporting (as defined in Exchange Act Rule 13a-15(f)) that have occurred during the thirteen week period ended March 30, 2025, that have materially impacted, or are reasonably likely to materially impact, our internal control over financial reporting.

***Limitations on Effectiveness of Controls and Procedures***

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We do not expect that our Disclosure Controls or our will prevent all errors and all instances of fraud. Disclosure Controls, no matter how well conceived and operated, can provide only reasonable, not absolute, assurance that the objectives of the Disclosure Controls are met. Further, the design of Disclosure Controls must reflect the fact that there are resource constraints, and the benefits must be considered relative to their costs. Because of the inherent limitations in all Disclosure Controls, no evaluation of Disclosure Controls can provide absolute assurance that we have detected all our control deficiencies and instances of fraud, if any. The design of Disclosure Controls also is based partly on certain assumptions about the likelihood of future events, and there can be no assurance that any design will succeed in achieving its stated goals under all potential future conditions.

**PART II. OTHER INFORMATION**

**ITEM 1. LEGAL PROCEEDINGS**

The information with respect to legal proceedings is set forth under **Note 14 – Commitments and Contingencies**, in the accompanying unaudited condensed consolidated financial statements in Part I, Item 1 of this Quarterly Report on Form 10-Q, and is incorporated herein by reference.

**ITEM 1A. RISK FACTORS**

 

*Investing in our securities involves a high degree of risk. You should carefully consider the risks and uncertainties described below together with all of the other information contained in this Quarterly Report on Form 10-Q, including our unaudited condensed consolidated financial statements and related notes appearing in Part I, Item 1 of this Quarterly Report on Form 10-Q and in the section titled "Management's Discussion and Analysis of Financial Condition and Results of Operations," before deciding to invest in our securities. If any of the events or developments described below were to occur, our business, prospects, operating results and financial condition could suffer materially, the trading price of our common stock could decline, and you could lose all or part of your investment. The risks and uncertainties described below are not the only ones we face. Additional risks and uncertainties not presently known to us or that we currently believe to be immaterial may also adversely affect our business. The risks facing our business have not changed substantively from those discussed in our Annual Report on Form 10-K, except for those risks marked with an asterisk (\*).*

**Risks Related to our Businesses and Industry**

***We have a history of losses that may continue in the future; our management has identified conditions that raise substantial doubt about our ability to continue as a going concern; and we may not achieve profitability or generate positive cash flow.***

Since our inception, we have incurred losses and negative cash flows from operations. Our operating loss was $3.7 million before interest expense of $6.0 million and non-operating income of $14.6 million, principally due to a gain on the remeasurement of derivative liabilities, in the thirteen weeks ended March 30, 2025. We have an accumulated deficit of $406.6 million as of March 30, 2025. We have accrued expenses and other current liabilities of $50.9 million, current debt of $4.3 million, and notes payable and derivative liabilities, net of current portion of $131.6 million as of March 30, 2025, as well as other current and long-term liabilities (including the $6.9 million liability we recorded relating to a litigation matter with Siemens as well as an additional accrual for $2.0 million for attorneys' fees, expenses, and pre-judgment interest, in accrued expenses and other current liabilities within our consolidated balance sheet as of December 29, 2024). We had cash and cash equivalents, excluding restricted cash, of $10.6 million as of March 30, 2025, which was held for working capital expenditures. These conditions raise substantial doubt about our ability to continue as a going concern. Our ability to continue as a going concern requires that we obtain sufficient funding, either through external financial transactions or cash flows generated from operations, to meet our obligations and finance our operations.

If we are not able to secure adequate additional funding, either through external financial transactions or cash flows generated from operations, when needed, we will need to reevaluate our operating plan and may be forced to make reductions in spending, extend payment terms with suppliers, liquidate assets where possible, or suspend or curtail planned programs or cease operations entirely. These actions could materially impact our business, results of operations and future prospects. There can be no assurance that in the event we require additional financing, such financing will be available on terms that are favorable, or at all.

We may not achieve profitability or positive cash flow for a number of reasons, including declines in revenue, as well as increases in costs of our products, U.S. and global macroeconomic trends, including with respect to the impact of U.S. trade tariffs and the imposition of additional tariffs applicable to our industry or our products. In addition, we may be unable to identify further cost savings opportunities below present levels that would not adversely impact the functioning of our existing operations needed to meet customer and regulatory requirements. If we fail to generate sufficient revenue to support our operations, we may not be able to achieve profitability or generate sufficient cash flow to meet our financial obligations and our liquidity position will be negatively impacted. See "Management's Discussion and Analysis of Financial Condition and Results of Operations - Liquidity and Capital Resources" and "Notes to Consolidated Financial Statements – (1) Organization – (c) Liquidity and Going Concern" for a further discussion of the other factors that may impact our liquidity position.

Failure to generate sufficient cash flows from operations, raise additional capital or reduce certain discretionary spending would have a material adverse effect on our ability to achieve our intended business objectives.

***We may need to raise additional funding to finance our operations. This additional financing may not be available on acceptable terms or at all. Failure to obtain this necessary capital when needed may force us to curtail planned programs or cease operations entirely.***

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Our operations have consumed significant amounts of cash since inception. We expect to incur significant operating expenses as we continue to grow our business, including expenses incurred in connection with acquisitions and the further integration of acquired businesses, including the SunPower Businesses. We believe that our operating losses and negative operating cash flows will continue into the foreseeable future.

We had cash and cash equivalents of $10.6 million as of March 30, 2025. Our cash position raises substantial doubt regarding our ability to continue as a going concern for 12 months after the consolidated financial statements issuance. Further, we cannot guarantee that our business will generate sufficient cash flow from operations to fund our operations or liquidity needs. Over time, we expect that we will need to raise additional funds through the issuance of equity, equity-related or debt securities or through obtaining credit from financial institutions to fund, together with our principal sources of liquidity, any significant unplanned or accelerated expenses and new strategic investments.

We will require substantial additional capital to continue operations. Such additional capital might not be available when we need it and our actual cash requirements might be greater than anticipated. Additionally, the ability to raise additional financing depends on numerous factors that are outside our control, including general economic and market conditions, interest rates, the health of financial institutions, investors' and lenders' assessments of our prospects and the prospects of the solar industry in general. We cannot be certain that additional capital will be available on attractive terms, if at all, when needed, which could be dilutive to stockholders, and our financial condition, results of operations, business and prospects could be materially and adversely affected. If the financial markets become difficult or costly to access, including due to rising interest rates, inflation, fluctuations in exchange rates or other changes in geopolitical or economic conditions, including, without limitation, with respect to tariffs and trade policies, our ability to raise additional capital may be negatively impacted. Our failure to raise capital in the future would have a negative impact on our ability to expand our business.

***Raising additional funds may cause dilution to existing stockholders and/or may restrict our operations or require us to relinquish proprietary rights.***

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To the extent that we raise additional capital by issuing equity or convertible debt securities, our existing stockholders may experience substantial dilution, and the terms of these issued securities may include liquidation or other preferences that adversely affect the rights of our existing common stockholders. For example, we may issue debt or equity securities under our shelf registration statement, through our at-the-market offering facility, through our equity line of credit with White Lion, or we may issue additional debt or equity securities in private transactions. Any agreements for future debt or preferred equity financings, if available, may involve covenants limiting or restricting our ability to take specific actions, such as raising additional capital, incurring additional debt, making capital expenditures or declaring dividends. Our ability to use our at-the-market offering facility may be constrained by the size of our non-affiliate market capitalization, our trading volume and other factors, and there can be no assurance regarding the price at which we will be able to sell such shares, and any sales of our common stock under our at-the-market offering facility may be at prices that result in additional dilution to our existing stockholders. If we incur additional debt, the debt holders, together with holders of our outstanding Convertible Senior Notes (as defined below), would have rights senior to holders of common stock to make claims on our assets, and the terms of any future debt could restrict our operations, including our ability to pay dividends on our common stock.

***We have identified material weaknesses in our internal controls over financial reporting. If we are unable to maintain effective internal controls over financial reporting and disclosure controls and procedures, the accuracy and timeliness of our financial and operating reporting may be adversely affected, and confidence in our operations and disclosures may be lost.***

In connection with the preparation and audit of our financial statements for the year ended December 29, 2024, our management identified material weaknesses in our internal control over financial reporting. A material weakness is a deficiency, or a combination of deficiencies, in internal control over financial reporting, such that a reasonable possibility exists that a material misstatement of annual or interim financial statements would not be prevented or detected on a timely basis. The material weaknesses are as follows:

The Company did not maintain controls to execute the criteria established in the COSO Framework for (i) the control environment, (ii) risk assessment, (iii) control activities, (iv) information and communication, and (v) monitoring activities.

Each of the control deficiencies identified below constitute material weaknesses, either individually or in the aggregate.

*Control Environment.* The Company did not maintain an effective control environment and identified the following material weakness: the Company lacked appropriate policies and resources to develop and operate effective internal control over financial reporting and a lack of appropriate and consistent IT policies given the significant volume of financially relevant IT changes, which contributed to the Company's inability to properly analyze, record and disclose accounting matters timely and accurately.

This control environment material weakness also contributed to the other material weaknesses identified below.

*Risk Assessment.* The Company did not design and implement an effective risk assessment and identified a material weakness relating to: (i) identifying, assessing, and communicating appropriate objectives, (ii) identifying and analyzing risks to achieve these objectives, and (iii) identifying and assessing changes in the business that could impact the system of internal controls.

*Control Activities.* The Company did not design and implement effective control activities and identified the following material weakness:

● Ineffective design and operation of certain control activities due to significant personnel changes throughout 2024. Control deficiencies, which aggregate to a material weakness, occurred within substantially all areas of financial reporting.

 

*Information and Communication.* The Company did not design and implement effective information and communication activities and identified the following material weaknesses*:* 

 

● The Company did not design and maintain effective general information technology controls over logical access and program change management for our key information systems used to support the financial reporting process. Specifically, management did not maintain effective controls to ensure proper segregation of duties related to user administration and other privileged access functions and in implementing program changes in information systems. Due to the pervasive nature of these deficiencies, business process controls that are dependent upon information from these systems were also not effective.

● The Company did not have adequate processes and controls for communicating information among the accounting, finance, operations, and legal departments, necessary to support the proper functioning of internal controls.

*Monitoring Activities.* The Company did not design and implement effective monitoring activities and identified the following material weaknesses: (i) failure to adequately monitor compliance with accounting policies, procedures and controls related to substantially all areas of financial reporting; and (ii) failure to properly select, develop and perform ongoing evaluations of the components of internal controls (including the monitoring of service providers' control environments).

 

 

These material weaknesses described in the paragraphs above contributed to material accounting errors identified and corrected during the audit of the Company's financial statements. If we fail to adequately remediate these material weaknesses, there could be material misstatements that may not be prevented or detected.

We have taken certain steps, such as recruiting additional personnel, in addition to utilizing third-party consultants and specialists, to supplement our internal resources, to enhance our internal control environment and plan to take additional steps to remediate the material weaknesses. Although we plan to complete this remediation process as quickly as possible, we cannot estimate how long it will take. We cannot assure that the measures we have taken to date, and may take in the future, will be sufficient to remediate the control deficiencies that led to our material weakness in internal control over financial reporting or that such measures will prevent or avoid potential future material weaknesses.

If we are not able to maintain effective internal control over financial reporting and disclosure controls and procedures, or if material weaknesses are discovered in future periods, a risk that is significantly increased in light of the complexity of our business, we may be unable to accurately and timely report our financial position, results of operations, cash flows or key operating metrics, which could result in late filings of the annual and quarterly reports under the Exchange Act, restatements of financial statements or other corrective disclosures, an inability to access commercial lending markets, defaults under its secured revolving credit facility and other agreements, or other material adverse effects on our business, reputation, results of operations, financial condition or liquidity.

***Our failure to prepare and timely file our periodic reports with the SEC limits our access to the public markets to raise debt or equity capital.***

We did not file our Annual Report on Form 10-K within the timeframe required by the SEC. Accordingly, we are not currently eligible to use a registration statement on Form S-3 that would allow us to continuously incorporate by reference our SEC reports into the registration statement, to use "shelf" registration statements to conduct offerings, or to use our at-the-market offering facility until approximately one year from the date we have regained and maintain status as a current filer. Our inability to use Form S-3 may significantly impair our ability to raise necessary capital to fund our operations and execute our strategy. If we seek to access the capital markets through a registered offering during the period of time that we are unable to use Form S-3, we may be required to publicly disclose the proposed offering and the material terms thereof before the offering commences, we may experience delays in the offering process due to SEC review of a Form S-1 registration statement and we may incur increased offering and transaction costs and other considerations. If we are unable to raise capital through a registered offering, we would be required to conduct our equity financing transactions on a private placement basis, which may be subject to pricing, size and other limitations imposed under the Nasdaq rules, or seek other sources of capital. The foregoing limitations on our financing approaches could prevent us from pursuing transactions or implementing business strategies that would be beneficial to our business.

***Changes in international trade policies, tariffs, or trade disputes could significantly and adversely affect our business, revenues, margins, results of operations, and cash flows.***

On February 7, 2018, safeguard tariffs on imported solar cells and modules ("**CSPV**") went into effect pursuant to Proclamation 9693, which approved recommendations to provide relief to U.S. manufacturers and impose safeguard tariffs on imported solar cells and modules, based on the investigations, findings, and recommendations of the U.S. International Trade Commission (the "**International Trade Commission**"). On February 4, 2022, President Biden issued Proclamation 10339 extending the existing safeguard measures on U.S. imports of CSPV products by an additional four years until February 6, 2026. Since 2022, modules are subject to a tariff rate of approximately 15%. Cells are subjected to a tariff-rate quota, under which the first 5 GW of cell imports each year will be exempt from tariffs, and cells imported after the 5 GW quota has been reached will be subject to the same 14.75% tariff as modules in the first year, with the same 0.25% decline in each of the three subsequent years. The tariff-free cell quota applies globally, without any allocation by country or region.

The tariffs could materially and adversely affect our business and results of operations. While solar cells and modules based on interdigitated back contact technology remain excluded from these safeguard tariffs, our solar products based on other technologies continue to be subject to the safeguard tariffs, which will remain in place until February 6, 2026. Although we are actively engaged in efforts to mitigate the effect of these tariffs, there is no guarantee that these efforts will be successful.

In addition to the safeguard action, which imposes additional duties and tariffs rate quotas on solar panel and cell imports from all sources, solar cells and panels from various countries are also subject to U.S. antidumping, and countervailing duty (AD/CVD) actions in the United States. The U.S. Department of Commerce (the "**Department of Commerce**") maintains antidumping and countervailing duty orders on solar cells as well as panels produced in China. In 2022, the Department of Commerce found that solar product producers in Cambodia, Malaysia, Thailand, and Vietnam were circumventing the China AD/CVD actions. As a result, imports of solar products from these countries may be treated as if they are of Chinese origin and therefore subject to the aforementioned antidumping and countervailing duty orders. On June 6, 2022, President Biden issued an Executive Order allowing U.S. solar installers to import solar modules and cells from Cambodia, Malaysia, Thailand and Vietnam free from certain duties for 24 months, along with other incentives designed to accelerate U.S. domestic production of clean energy technologies. This moratorium ended in June 2024 and China-wide AD/CVD action now applies to imports from those countries that contain Chinese-origin inputs. Additionally, on December 29, 2023, Auxin and Concept Clean Energy, Inc. filed suit in the U.S. Court of International Trade challenging the legal basis for the moratorium and implementing regulations. Several motions have been filed to date, including a motion to dismiss by the U.S. government, which the court rejected. If the suit proves successful, solar module importers could owe retroactive duties on goods that have already cleared customs. In addition, on May 15, 2024 the Department of Commerce initiated antidumping and countervailing duty investigations of CSPV products from Cambodia, Malaysia, Thailand, and Vietnam. On October 1 and November 29, 2024, the Department of Commerce announced its preliminary affirmative determinations in the antidumping duty and countervailing duty investigations, respectively. The final determinations are scheduled to be announced on or before April 21, 2025

Uncertainty surrounding the implications of existing tariffs affecting the U.S. solar market and potential trade tensions between the U.S. and other countries has caused and is likely to cause further market volatility, price fluctuations, supply shortages, and project delays, any of which could harm our business, and the pursuit of mitigating actions may divert substantial resources from other projects.

Further, the Uyghur Forced Labor Prevention Act may inhibit importation of certain solar modules or components. In addition, the imposition of tariffs is likely to result in a wide range of impacts to the U.S. solar industry and the global manufacturing market, as well as our business in particular. Such tariffs could materially increase the price of our solar products and result in significant additional costs to the company, its resellers, and the resellers' customers, which could cause a significant reduction in demand for the company's solar power products and greatly reduce our competitive advantage.

***Our business depends in part on the availability of rebates, tax credits and other financial incentives. The expiration, elimination or reduction of these rebates, credits or incentives or the ability to monetize them could adversely impact our business.\****

U.S. federal, state and local government bodies provide incentives to end users, distributors, system integrators and manufacturers of solar energy systems to promote solar electricity in the form of rebates, tax credits and other financial incentives such as system performance payments, payments for renewable energy credits associated with renewable energy generation and the exclusion of solar energy systems from property tax assessments. These incentives enable us to lower the price charged to customers for energy and for solar energy systems. However, these incentives may expire on a particular date, end when the allocated funding is exhausted or be reduced or terminated as solar energy adoption rates increase. These reductions or terminations often occur without warning.

The Inflation Reduction Act ("IRA") extended and modified prior law applicable to U.S. federal tax credits that are available with respect to solar energy systems. Under the IRA, the following tax credits are available: (i) a production tax credit under Code Section 45 (for facilities that are place in service after December 31, 2025) (the "**PTC**") in connection with the installation of certain solar facilities and energy storage technology, (ii) an investment tax credit under Code Section 48 (for facilities that begin construction before January 1, 2025) and Code Section 48E (for facilities that are placed in service after December 31, 2024 (the "**ITC**") in connection with the installation of certain solar facilities and energy storage technology, and (iii) a residential clean energy credit (the "Section 25D Credit") in connection with the installation of qualifying property that uses solar energy to generate electricity for residential use.

Prior to the IRA, the PTC for solar facilities had phased out and was no longer available. The IRA reinstated the PTC for solar facilities. The PTC available to a taxpayer in 2024 and prior taxable years under Code Section 45 generally is equal to a certain rate multiplied by the kilowatt hours of electricity produced by the taxpayer from solar energy at a facility owned by it and sold to an unrelated party during that taxable year. The base rates for the PTC under Code Section 45 is 0.3 cents (adjusted for inflation). This rate is increased to 1.5 cents (adjusted for inflation) for projects that (i) have a maximum net output of less than one megawatt (measured in alternating current), (ii) begin construction before January 29, 2023, or (iii) meet certain prevailing wage and apprenticeship requirements. It also may be increased for projects that include a certain percentage of components that were produced in the U.S., projects that are located in certain energy communities, and projects that are located in low-income communities. The PTC under Code Section 45Y, the successor to Code Section 45 that is applicable for taxable years after 2024, generally is similar to the PTC under Code Section 45 but includes certain different terms and qualification requirements.

The PTC under Code Section 45Y is the successor to the tax credit under Code Section 45 and is applicable for taxable years after 2024. The PTC under Code Section 45Y generally is equal to the PTC outlined above that is available under Code Section 45, including providing for the same increased credit rates under the same circumstances. The PTC under Code Section 45Y applies to kilowatt hours of electricity produced at a "qualified facility," which generally is a facility, such as a solar energy facility, that generates electricity and has a greenhouse gas emission rate that is not greater than zero. The tax credit phases out over four years based on the later of either the U.S. Treasury determining that the annual greenhouse gas emission from the production of electricity in the U.S. is equal to or less than 25% of the annual greenhouse gas emissions from the production of electricity in the U.S. for 2022 or 2032. The credit is phased out from 100% for construction beginning in the first calendar year after such date to 75% in the second year, 50% in the third year, and 0% in the fourth year. A facility is not eligible for the PTC under Code Section 45Y if a tax credit already is allowed with respect to the facility under Code Section 45, 48 or 48E, or certain other tax credit provisions, for the taxable year or any prior taxable year.

The ITC available under Code Section 48E is the successor provision of Code Section 48 and is applicable for taxable years after 2024. The ITC under Code Section 48 generally is equal to the ITC outlined above under Code Section 48, including generally providing for the same increased credit rates under the same circumstances. The ITC under Code Section 48E applies to investments in a "qualified facility" and "energy storage technology". A "qualified facility" for these purposes generally is the same as described for the PTC under Code Section 45Y and "energy storage technology" is defined by reference to such term in Code Section 48. The ITC available under Code Section 48E includes the same phase out schedule as outlined above with respect to the PTC under Code Section 45Y. The ITC under Code Section 48E is subject to recapture if the Internal Revenue Service determines that the greenhouse gas emissions rate for the facility exceeds a certain threshold. A facility is not eligible for the ITC under Code Section 48E if a tax credit already is allowed with respect to the facility under Code Section 45, 45Y or 48, or certain other tax credit provisions, for the taxable year or any prior taxable year. As discussed below, the US Congress has proposed to eliminate the ITC by the end of 2025.

The Section 25D Credit available to a taxpayer is equal to the "applicable percentage" of expenditures for property that uses solar energy to generate electricity for use in a dwelling unit located in the U.S. and used as a residence by the taxpayer. The applicable percentage is 26% for such systems that are placed in service before January 1, 2022, 30% for such systems that are placed in service after December 31, 2021 and before January 1, 2033, 26% for such systems that are placed in service in 2033, and 22% for such systems that are placed in service in 2034. The Section 25D Credit is scheduled to expire effective January 1, 2035. The availability of the Section 25D Credit may impact the prices of its solar energy systems and overall value proposition our solar systems provide to customers.

Reductions in, eliminations of, or expirations of, governmental incentives could adversely impact results of operations and our ability to compete in this industry by increasing the cost of capital, causing us to increase the prices of our energy and solar energy systems and reduce the size of our addressable market. In particular, in May 2025, the US Congress has proposed to eliminate the ITC by the end of 2025. Elimination of ITCs will have an adverse impact on the demand for solar system and installation services.

The U.S. federal tax credits discussed above have certain legal and operational requirements. There may be uncertainty as to how such requirements promulgated under the IRA are interpreted. If Internal Revenue Service guidance regarding implementation of the IRA is viewed by investors as unclear, tax credit financing may be delayed or downsized, harming our ability to secure financing for customers. Our failure to either (i) interpret the new requirements under the IRA regarding among other things, prevailing wage, apprenticeship, domestic content, siting in an "energy community," accurately or (ii) adequately update our supply-chain, manufacturing, installation, and record-keeping processes to meet such requirements, may result a partial or full reduction in the related U.S. federal tax benefit, and our customers, financiers and shareholders may require us to indemnify them for certain of such reductions.

***We are an "emerging growth company" and a "smaller reporting company" and we cannot be certain if the reduced reporting requirements applicable to these companies will make our common stock less attractive to investors.***

We are an "emerging growth company," as defined in the Jumpstart Our Business Startups Act of 2012 (JOBS Act). For as long as we continue to be an emerging growth company, we intend to take advantage of exemptions from various reporting requirements that apply to other public companies that are not emerging growth companies, including:

● being permitted to provide only two years of audited financial statements, in addition to any required unaudited interim financial statements, with correspondingly reduced "Management's Discussion and Analysis of Financial Condition and Results of Operations" disclosure in our periodic reports;

● not being required to comply with the auditor attestation requirements of Section 404 of the Sarbanes-Oxley Act of 2002, as amended (the "**Sarbanes-Oxley Act** ");

● not being required to comply with any requirement that may be adopted by the Public Company Accounting Oversight Board (the "**PCAOB**") regarding mandatory audit firm rotation or a supplement to the auditor's report providing additional information about the audit and the financial statements;

● reduced disclosure obligations regarding executive compensation in our periodic reports and proxy statements; and

● exemptions from the requirements of holding nonbinding advisory stockholder votes on executive compensation and stockholder approval of any golden parachute payments not previously approved.

Under the JOBS Act, emerging growth companies can also delay adopting new or revised accounting standards until such time as those standards apply to private companies. We have elected to avail ourselves of this exemption from new or revised accounting standards and, therefore, will not be subject to the same new or revised accounting standards as other public companies that are not emerging growth companies. As a result, our financial statements may be different from companies that comply with the new or revised accounting pronouncements as of public company effective dates.

We will remain an emerging growth company until the earliest to occur of: (1) the last day of the fiscal year in which we have at least $1.235 billion in total annual gross revenues; (2) the date we qualify as a "large accelerated filer," with at least $700.0 million of equity securities held by non-affiliates; (3) the date on which we have issued more than $1.0 billion in non-convertible debt securities during the prior three-year period; and (4) the last day of the fiscal year ending after the fifth anniversary of our IPO.

Even after we no longer qualify as an emerging growth company, we may still qualify as a "smaller reporting company," as defined in the Securities Exchange Act of 1934, as amended (the "**Exchange Act**"), which would allow us to continue to take advantage of many of the same exemptions from disclosure requirements, including not being required to comply with the auditor attestation requirements of Section 404 of the Sarbanes-Oxley Act and reduced disclosure obligations regarding executive compensation our periodic reports and proxy statements.

We cannot predict if investors will find our securities less attractive because we may rely on these exemptions. If some investors find our common stock less attractive as a result, there may be a less active trading market for our securities and the trading price of our securities may be more volatile.

***Macroeconomic conditions in our domestic and international markets, as well as inflation concerns, instability of financial institutions, rising interest rates, and recessionary concerns may adversely affect our industry, business and financial results.***

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Our business depends on the overall demand for our solar energy products and on the economic health and willingness of our customers and potential customers to purchase our products and services. As a result of macroeconomic or market uncertainty, including inflation concerns, rising interest rates, recessionary concerns, and geopolitical conflicts, customers may decide to delay purchasing our products and services or not purchase at all. In addition, a number of the risks associated with our business, which are disclosed in these risk factors, may increase in likelihood, magnitude or duration, and we may face new risks that we have not yet identified.

In the past, unfavorable macroeconomic and market conditions have resulted in sustained periods of decreased demand. Macroeconomic and market conditions could be adversely affected by a variety of political, economic or other factors in the U.S. and international markets, which could, in turn, adversely affect spending levels of installers and end users and could create volatility or deteriorating conditions in the markets in which we operate. Macroeconomic uncertainty or weakness could result in:

● reduced demand for our products as a result of constraints on spending for solar energy systems by our customers and/or a reduction in government subsidies for renewable energy investments;

● increased price competition for our products that may adversely affect revenue, gross margin and profitability;

● the introduction of any disadvantageous trade regulations and import tariffs;

● decreased ability to forecast operating results and make decisions about budgeting, planning and future investments;

● decrease in the popularity of solar energy as a green energy solution;

● business and financial difficulties faced by our suppliers or other partners, including impacts to material costs, sales, liquidity levels, ability to continue investing in their businesses, ability to import or export goods, ability to meet development commitments and manufacturing capability; and

● increased  **** ** overhead and production costs as a percentage of revenue.

Reductions in customer spending in response to unfavorable or uncertain macroeconomic and market conditions, globally or in a particular region where we operate, would adversely affect our business, results of operations and financial condition.

***Existing regulations and policies, including trade policies and tariffs, and changes to these regulations and policies, including changes to trade policies and tariffs, may present technical, regulatory, and economic barriers to the purchase and use of solar power products, which may significantly reduce demand for our products and services.***

The market for electric generation products is heavily influenced by federal, state and local government laws, geopolitical forces (such as trade policies and tariffs), regulations and policies concerning the electric utility industry in the U.S. and abroad, as well as policies promulgated by electric utilities. These regulations and policies often relate to electricity pricing and technical interconnection of customer-owned electricity generation, and trade and policy changes that make solar power less competitive with other power sources could deter investment in the research and development of alternative energy sources as well as customer purchases of solar power technology, which could in turn result in a significant reduction in the demand for our solar power products. The market for electric generation equipment is also influenced by geopolitics, trade and local content laws, policies and tariffs, regulations and policies that can discourage growth and competition in the solar industry and create economic barriers to the purchase of solar power products, thus reducing demand for our solar products. In addition, on-grid applications depend on access to the grid, which is also regulated by government entities. We anticipate that our solar power products and our installation will continue to be subject to oversight and regulation in accordance with federal, state, local and foreign regulations relating to construction, safety, environmental protection, utility interconnection and metering, trade, and related matters. It is difficult to track the requirements of individual states or local jurisdictions and design equipment to comply with the varying standards. In addition, the U.S. and European Union, among others, have imposed tariffs or are in the process of evaluating the imposition of tariffs on solar panels, solar cells, polysilicon, and potentially other components. These and any other tariffs or similar taxes or duties may increase the price of our solar products and adversely affect our cost reduction roadmap, which could harm our results of operations and financial condition. We cannot predict what actions may be taken by the United States or other countries with respect to trade policies and tariffs or with respect to other policies and incentives that impact the solar industry, or that promote other forms of energy production over the solar industry. Any new regulations or policies pertaining our solar power products may result in significant additional expenses for our customers, which could cause a significant reduction in demand for our solar power products.

***We rely on net metering and related policies to offer competitive pricing to customers in many of our current markets and changes to net metering policies may significantly reduce demand for electricity from residential solar energy systems.***

Net metering is one of several key policies that have enabled the growth of distributed generation solar energy systems in the U.S., providing significant value to customers for electricity generated by their residential solar energy systems but not directly consumed on-site. Net metering allows a homeowner to pay his or her local electric utility for power usage net of production from the solar energy system or other distributed generation source. Homeowners receive a credit for the energy an interconnected solar energy system generates in excess of that needed by the home to offset energy purchases from the centralized utility made at times when the solar energy system is not generating sufficient energy to meet the customer's demand. In many markets, this credit is equal to the residential retail rate for electricity and in other markets, such as Hawaii and Nevada, the rate is less than the retail rate and may be set, for example, as a percentage of the retail rate or based upon a valuation of the excess electricity. In some states and utility territories, customers are also reimbursed by the centralized electric utility for net excess generation on a periodic basis.

Net metering programs have been subject to legislative and regulatory scrutiny in some states and territories including, but not limited to, California, New Jersey, Arizona, Nevada, Connecticut, Florida, Maine, Kentucky, Puerto Rico and Guam. These jurisdictions, by statute, regulation, administrative order or a combination thereof, have recently adopted or are considering new restrictions and additional changes to net metering programs either on a state-wide basis or within specific utility territories. Many of these measures were introduced and supported by centralized electric utilities. These measures vary by jurisdiction and may include a reduction in the rates or value of the credits customers are paid or receive for the power they deliver back to the electrical grid, caps or limits on the aggregate installed capacity of generation in a state or utility territory eligible for net metering, expiration dates for and phasing out of net metering programs, replacement of net metering programs with alternative programs that may provide less compensation and limits on the capacity size of individual distributed generation systems that can qualify for net metering. Net metering and related policies concerning distributed generation also received attention from federal legislators and regulators.

In California, the California Public Utilities Commission ("**CPUC**") issued an order in 2016 retaining retail-based net metering credits for residential customers of California's major utilities as part of Net Energy Metering 2.0 ("**NEM 2.0**"). Under NEM 2.0, new distributed generation customers receive the retail rate for electricity exported to the grid, less certain non-by passable fees. Customers under NEM 2.0 also are subject to interconnection charges and time-of-use rates. Existing customers who receive service under the prior net metering program, as well as new customers under the NEM 2.0 program, currently are permitted to remain covered by them on a legacy basis for a period of 20 years. On September 3, 2020, the CPUC opened a new proceeding to review its current net metering policies and to develop Net Energy Metering 3.0 ("**NEM 3.0**"), also referred to by the CPUC as the NEM 2.0 successor tariff. NEM 3.0 was finalized on December 15, 2022 and includes several changes from previous net metering plans. The changes instituted by NEM 3.0 impacted the amount that homeowners with solar power will be able to recuperate when selling excess energy back to the utility grid. With NEM 3.0, the value of the credits for net exports are tied to the state's Distributed Energy Resources Avoided Cost Calculator Documentation ("**ACC**"). Another significant change with NEM 3.0 relates to the netting period: the time period over which the utilities measure the clean energy being imported or exported. In general, longer netting periods have typically been advantageous for solar power customers because production can offset any consumption. NEM 3.0 will instead measure energy using instantaneous netting, which means interval netting approximately every 15 minutes. This will lead to more NEM customers' electricity registering as exports, now valued at the new, lower ACC value. Overall, the institution on NEM 3.0 has resulted in a smaller market for residential solar systems and it is not certain that market conditions will improve or that NEM 3.0 will be amended or replaced with a more solar-friendly rate structure. Other states may adopt policies similar to NEM 3.0 that cause deterioration to other residential solar markets.

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***We utilize a limited number of suppliers of solar panels and other system components to adequately meet anticipated demand for our solar service offerings. Any shortage, delay or component price change from these suppliers or delays and price increases associated with the product transport logistics could result in sales and installation delays, cancellations and loss of market share.***

We purchase solar panels, inverters and other system components from a limited number of suppliers for certain components, which makes us susceptible to quality issues, shortages and price changes. If we fail to develop, maintain and expand relationships with existing or new suppliers, we may be unable to adequately meet anticipated demand for our solar energy systems or may only be able to offer our systems at higher costs or after delays. If one or more of the suppliers that we rely upon to meet anticipated demand ceases or reduces production, we may be unable to satisfy this demand due to an inability to quickly identify alternate suppliers or to qualify alternative products on commercially reasonable terms.

In particular, there are a limited number of inverter and battery suppliers. Once we design a system for use with a particular inverter or battery, if that type of inverter or battery is not readily available at an anticipated price, we may incur additional delay and expense to redesign the system and source alternative inventory.

In addition, production of solar panels involves the use of numerous raw materials and components. Several of these have experienced periods of limited availability, particularly polysilicon, as well as indium, cadmium telluride, aluminum and copper. The manufacturing infrastructure for some of these raw materials and components has a long lead time, requires significant capital investment and relies on the continued availability of key commodity materials, potentially resulting in an inability to meet demand for these components. The prices for these raw materials and components fluctuate depending on global market conditions and demand and we may experience rapid increases in costs or sustained periods of limited supplies.

Despite efforts to obtain components from multiple sources whenever possible, many suppliers may be single-source suppliers of certain components. If we cannot maintain long-term supply agreements or identify and qualify multiple sources for components, access to supplies at satisfactory prices, volumes and quality levels may be harmed. We may also experience delivery delays of components from suppliers in various global locations. In addition, while there are alternative suppliers and service providers that we could enter into agreements with to replace its suppliers on commercially reasonable terms, we may be unable to establish alternate supply relationships or obtain or engineer replacement components in the short term, or at all, at favorable prices or costs. Qualifying alternate suppliers or developing our own replacements for certain components may be time-consuming and costly and may force us to make modifications to our product designs.

Our need to purchase supplies globally and our continued international expansion further subjects us to risks relating to currency fluctuations. Any decline in the exchange rate of the U.S. dollar compared to the functional currency of component suppliers could increase component prices. In addition, the state of the financial markets could limit suppliers' ability to raise capital if they are required to expand their production to meet our needs or satisfy our operating capital requirements. Changes in economic and business conditions, wars, governmental changes and other factors beyond our control or which we do not presently anticipate, could also affect suppliers' solvency and ability to deliver components on a timely basis. Any of these shortages, delays or price changes could limit our growth, cause cancellations or adversely affect profitability and the ability to compete in the markets in which we operate effectively.

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***Our business substantially focuses on solar service agreements and transactions with residential customers.***

Our business substantially focuses on solar service agreements and transactions with residential customers. Our energy system sales to homeowners utilize power purchase agreements ("**PPAs**"), leases, loans and other products and services. We currently offer PPAs and leases through LightReach, Mosaic, EverBright, LLC, and other financial institutions. If we were unable to arrange new or alternative financing methods for PPAs and leases on favorable terms, our business, financial condition, results of operations, and prospects could be materially and adversely affected.

***If we fail to manage operations and growth effectively, we may be unable to execute our business plan, maintain high levels of customer service or adequately address competitive challenges.***

We have experienced significant growth in recent periods as measured by our number of customers; we intend to continue efforts to expand our business within existing and new markets. This growth has placed, and any future growth may place, a strain on management, operational and financial infrastructure. Our growth requires our management to devote a significant amount of time and effort to maintain and expand relationships with customers, dealers and other third parties, attract new customers and dealers, arrange financing for growth and manage expansion into additional markets.

In addition, our current and planned operations, personnel, information technology and other systems and procedures might need to be revised to support future growth and may require us to make additional unanticipated investments in its infrastructure. Our success and ability to further scale our business will depend, in part, on our ability to manage these changes in a cost-effective and efficient manner.

If we cannot manage operations and growth, we may be unable to meet expectations regarding growth, opportunity and financial targets, take advantage of market opportunities, execute our business strategies or respond to competitive pressures. This could also result in declines in quality or customer satisfaction, increased costs, difficulties in introducing new offerings or other operational difficulties. Any failure to effectively manage our operations and growth could adversely impact our reputation, business, financial condition, cash flows and results of operations.

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***We have incurred losses and may be unable to achieve or sustain profitability in the future.***

Although we generated net income of $4.8 million in the thirteen weeks ended March 30, 2025, we have incurred net losses in the past, including $56.5 million in the fiscal year ended December 29, 2024. We have an accumulated deficit of $406.6 million as of March 30, 2025. Additionally, as of March 30, 2025, we had long-term indebtedness of $131.6 million. We will continue to incur net losses as spending increases to finance the expansion of operations, installation, engineering, administrative, sales and marketing staffs, spending increases on brand awareness and other sales and marketing initiatives and implement internal systems and infrastructure to support the company's growth. We do not know whether revenue will grow rapidly enough to absorb these costs, and our limited operating history makes it difficult to assess the extent of these expenses or their impact on results of operations. Our ability to achieve profitability depends on a number of factors, including but not limited to:

● Growing the customer base;

● Maintaining or further lowering the cost of capital;

● Reducing the cost of components for our solar service offerings;

● Growing and maintaining our sales partner network;

● Growing our direct-to-consumer and New Homes business to scale; and

● Reducing operating costs by lowering customer acquisition costs and optimizing our design and installation processes and supply chain logistics.

Even if we do achieve profitability, we may be unable to sustain or increase profitability in the future.

***A material drop in the retail price of utility-generated electricity or electricity from other sources could adversely impact our ability to attract customers, which would harm our business, financial condition, and results of operations.***

We believe a homeowner's decision to buy solar energy from us is primarily driven by a desire to lower electricity costs. Decreases in the retail prices of electricity from utilities or other energy sources would harm our ability to offer competitive pricing and could harm its business. The price of electricity from utilities could decrease as a result of:

● the construction of a significant number of new power generation plants, including nuclear, coal, natural gas or renewable energy technologies;

● the construction of additional electric transmission and distribution lines;

● a reduction in the price of natural gas or other natural resources as a result of new drilling techniques or other technological developments, a relaxation of associated regulatory standards, or broader economic or policy developments;

● energy conservation technologies and public initiatives to reduce electricity consumption;

● subsidies impacting electricity prices, including in connection with electricity generation and transmission; and

● development of new energy technologies that provide less expensive energy.

A reduction in utility electricity prices would make the purchase of our solar service offerings less attractive. If the retail price of energy available from utilities were to decrease due to any of these or other reasons, we would be at a competitive disadvantage. As a result, we may be unable to attract new homeowners and growth would be limited.

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***We face competition from both traditional energy companies and renewable energy companies.***

The solar energy and renewable energy industries are both highly competitive and continually evolving as participants strive to distinguish themselves within their markets and compete with large utilities. Our primary competitors are the traditional utilities that supply energy to potential customers. We compete with these utilities primarily based on price, predictability of price and the ease by which customers can switch to electricity generated by our solar energy systems. If we cannot offer compelling value to its customers based on these factors, then our business will not grow. Utilities generally have substantially greater financial, technical, operational and other resources than us. As a result of their greater size, these competitors may be able to devote more resources to the research, development, promotion and sale of their products or respond more quickly to evolving industry standards and changes in market conditions than we can. Utilities could also offer other value added products and services that could help them compete with us even if the cost of electricity they offer is higher than ours. In addition, a majority of utilities' sources of electricity are non-solar, which may allow utilities to sell electricity more cheaply than electricity generated by our solar energy systems.

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***Our growth strategy depends on the widespread adoption of solar power technology.***

The distributed residential solar energy market is at a relatively early stage of development compared to fossil fuel-based electricity generation. If additional demand for distributed residential solar energy systems fails to develop sufficiently or takes longer to develop than we anticipate, the company may be unable to originate additional solar service agreements and related solar energy systems and energy storage systems to grow the business. In addition, demand for solar energy systems and energy storage systems in our targeted markets may not develop to the extent it anticipates. As a result, we may need to successfully broaden our customer base through origination of solar service agreements and related solar energy systems and energy storage systems within its current markets or in new markets we may enter.

Many factors may affect the demand for solar energy systems, including, but not limited to, the following:

● availability, substance and magnitude of solar support programs including government targets, subsidies, incentives, renewable portfolio standards and residential net metering rules;

● the relative pricing of other conventional and non-renewable energy sources, such as natural gas, coal, oil and other fossil fuels, wind, utility-scale solar, nuclear, geothermal and biomass;

● performance, reliability and availability of energy generated by solar energy systems compared to conventional and other non-solar renewable energy sources;

● availability and performance of energy storage technology, the ability to implement such technology for use in conjunction with solar energy systems and the cost competitiveness such technology provides to customers as compared to costs for those customers reliant on the conventional electrical grid; and

● general economic conditions and the level of interest rates.

The residential solar energy industry is constantly evolving, which makes it difficult to evaluate our prospects. We cannot be certain if historical growth rates reflect future opportunities or its anticipated growth will be realized. The failure of distributed residential solar energy to achieve, or its being significantly delayed in achieving, widespread adoption could have a material adverse effect on our business, financial condition and results of operations.

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***Our business could be adversely affected by seasonal trends, poor weather, labor shortages, and construction cycles.***

Our business is subject to significant industry-specific seasonal fluctuations. In the U.S., many customers make purchasing decisions towards the end of the year in order to take advantage of tax credits and residential solar sales tend to decline during the winter months. In addition, sales in the new home development market are often tied to construction market demands, which tend to follow national trends in construction, including declining sales during cold weather months.

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***Natural disasters, terrorist activities, political unrest, economic volatility, and other outbreaks could disrupt our delivery and operations, which could materially and adversely affect our business, financial condition, and results of operations.***

Global pandemics or fear of spread of contagious diseases, such as Ebola virus disease (EVD), coronavirus disease 2019 (COVID-19), Middle East respiratory syndrome (MERS), severe acute respiratory syndrome (SARS), H1N1 flu, H7N9 flu, avian flu and monkeypox, as well as hurricanes, earthquakes, tsunamis, or other natural disasters could disrupt our business operations, reduce or restrict operations and services, incur significant costs to protect its employees and facilities, or result in regional or global economic distress, which may materially and adversely affect business, financial condition, and results of operations. Actual or threatened war, terrorist activities, political unrest, civil strife, future disruptions in access to bank deposits or lending commitments due to bank failures and other geopolitical uncertainty could have a similar adverse effect on our business, financial condition, and results of operations. On February 24, 2022, the Russian Federation launched an invasion of Ukraine that has had an immediate impact on the global economy resulting in higher energy prices and higher prices for certain raw materials and goods and services which in turn is contributing to higher inflation in the U.S. and other countries across the globe with significant disruption to financial markets. Any one or more of these events may impede our operation and delivery efforts and adversely affect sales results, or even for a prolonged period of time, which could materially and adversely affect our business, financial condition, and results of operations. We cannot predict the full effects the supply chain constraints will have on our business, cash flows, liquidity, financial condition and results of operations at this time due to numerous uncertainties.

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***We are exposed to the credit risk of customers and our finance partners, and payment delinquencies on accounts receivables.***

Defaults by customers and the financial institutions that fund some of our customers' solar systems have not been material to date, but we expect that the risk of customer defaults or financial partner defaults may increase as we grow our business. For example, Sunnova Energy International, Inc. ("Sunnova"), a major provider of financing for solar systems, announced that substantial doubt exists regarding its ability to continue as a going concern. While Complete Solar does not use Sunnova for any of its customer financing, if any of our financing partners experience liquidity concerns or stop funding projects, we may incur significant losses or project delays. If any of our customers are unable to make milestone payments on systems purchased in cash, our revenue and costs could be adversely affected. If economic conditions worsen, certain of our customers or finance partners may face liquidity concerns and may be unable to satisfy their payment obligations to us on a timely basis or at all, which could have a material adverse effect on our financial condition and results of operations.

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***We may not realize the anticipated benefits of past or future acquisitions, including the transactions under the APA with SunPower, and integration of these acquisitions may disrupt our business.***

In November 2022, we acquired The Solaria Corporation ("Solaria"), after which Complete Solar was renamed "Complete Solaria, Inc." In October 2023, we subsequently sold solar panel assets of Solaria, including intellectual property and customer contracts, to Maxeon Solar Technologies, Ltd., which resulted in an impairment loss of $147.5 million and loss on disposal of $1.8 million. On September 30, 2024, we completed the acquisition of the Acquired Assets under the APA with SunPower, which resulted in our acquisition of the SunPower Businesses and a significant expansion of our business operations and headcount. In the future, we may acquire additional companies, project pipelines, products, or technologies, or enter into joint ventures or other strategic initiatives. Our ability as an organization to integrate acquisitions is unproven. We may not realize the anticipated benefits of our acquisitions or any other future acquisition or the acquisition may be viewed negatively by customers, financial markets or investors.

Any acquisition has numerous risks, including, but not limited to, the following:

● difficulty in assimilating the operations and personnel of the acquired company;

● difficulty in effectively integrating the acquired technologies or products with current products and technologies;

● difficulty in maintaining controls, procedures and policies during the transition and integration;

● disruption of ongoing business and distraction of management and employees from other opportunities and challenges due to integration issues;

● difficulty integrating the acquired company's accounting, management information and other administrative systems;

● inability to retain key technical and managerial personnel of the acquired business;

● inability to retain key customers, vendors, and other business partners of the acquired business;

● inability to achieve the financial and strategic goals for the acquired and combined businesses;

● incurring acquisition-related costs or amortization costs for acquired intangible assets that could impact operating results;

● failure of due diligence processes to identify significant issues with product quality, legal and financial liabilities, among other things;

● inability to assert that internal controls over financial reporting are effective; and

● inability to obtain, or obtain in a timely manner, approvals from governmental authorities, which could delay or prevent such acquisitions.

● inability to rebuild trust with home builders due to the SunPower bankruptcy.

● inability to obtain advantageous financing arrangements with financiers in order to pass the saving on to customers.

***We may be required to file claims against other parties for infringing its intellectual property that may be costly and may not be resolved in its favor.***

To protect our intellectual property rights and to maintain competitive advantage, we have filed, and may continue to file, suits against parties we believe infringe or misappropriate our intellectual property. Intellectual property litigation is expensive and time-consuming, could divert management's attention from our business, and could have a material adverse effect on our business, operating results, or financial condition, and our enforcement efforts may not be successful. In addition, the validity of our patents may be challenged in such litigation. Our participation in intellectual property enforcement actions may negatively impact our financial results.

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***Developments in technology or improvements in distributed solar energy generation and related technologies or components may materially adversely affect demand for our offerings.***

Significant developments in technology, such as advances in distributed solar power generation, energy storage solutions such as batteries, energy storage management systems, the widespread use or adoption of fuel cells for residential or commercial properties or improvements in other forms of distributed or centralized power production may materially and adversely affect demand for our offerings and otherwise affect our business. Future technological advancements may result in reduced prices to consumers or more efficient solar energy systems than those available today, either of which may result in current customer dissatisfaction. We may not be able to adopt these new technologies as quickly as its competitors or on a cost-effective basis.

Additionally, recent technological advancements may impact our business in ways not currently anticipated. Any failure by us to adopt or have access to new or enhanced technologies or processes, or to react to changes in existing technologies, could result in product obsolescence or the loss of competitiveness of and decreased consumer interest in its solar energy services, which could have a material adverse effect on its business, financial condition and results of operations.

***Our business is subject to complex and evolving data protection laws. Many of these laws and regulations are subject to change and uncertain interpretation and could result in claims, increased cost of operations or otherwise harm its business.***

Consumer personal privacy and data security have become significant issues and the subject of rapidly evolving regulation in the U.S. Furthermore, federal, state and local government bodies or agencies have in the past adopted, and may in the future adopt, more laws and regulations affecting data privacy. For example, the state of California enacted the California Consumer Privacy Act of 2018 ("**CCPA**") and California voters recently approved the California Privacy Rights Act ("**CPRA**"). The CCPA creates individual privacy rights for consumers and places increased privacy and security obligations on entities handling the personal data of consumers or households. The CCPA went into effect in January 2020 and it requires covered companies to provide new disclosures to California consumers, provides such consumers, business-to-business contacts and employees new ways to opt-out of certain sales of personal information, and allows for a new private right of action for data breaches. The CPRA modifies the CCPA and imposes additional data protection obligations on companies doing business in California, including additional consumer rights processes and opt outs for certain uses of sensitive data. The CCPA and the CPRA may significantly impact Complete Solaria's business activities and require substantial compliance costs that adversely affect its business, operating results, prospects and financial condition. To date, we have not experienced substantial compliance costs in connection with fulfilling the requirements under the CCPA or CPRA. However, we cannot be certain that compliance costs will not increase in the future with respect to the CCPA and CPRA or any other recently passed consumer privacy regulation.

Outside the U.S., an increasing number of laws, regulations, and industry standards may govern data privacy and security. For example, the European Union's General Data Protection Regulation ("**EU GDPR**") and the United Kingdom's GDPR ("**UK GDPR**") impose strict requirements for processing personal data. Under the EU GDPR, companies may face temporary or definitive bans on data processing and other corrective actions; fines of up to 20 million Euros or 4% of annual global revenue, whichever is greater; or private litigation related to processing of personal data brought by classes of data subjects or consumer protection organizations authorized at law to represent their interests. Non-compliance with the UK GDPR may result in substantially similar adverse consequences to those in relation to the EU GDPR, including monetary penalties of up to £17.5 million or 4% of worldwide revenue, whichever is higher.

In addition, we may be unable to transfer personal data from Europe and other jurisdictions to the U.S. or other countries due to data localization requirements or limitations on cross-border data flows. Europe and other jurisdictions have enacted laws requiring data to be localized or limiting the transfer of personal data to other countries. In particular, the European Economic Area ("**EEA**") and the United Kingdom have significantly restricted the transfer of personal data to the U.S. and other countries whose privacy laws it believes are not adequate. Other jurisdictions may adopt similarly stringent interpretations of their data localization and cross- border data transfer laws. Although there are currently various mechanisms that may be used to transfer personal data from the EEA and UK to the U.S. in compliance with law, such as the EEA and UK's standard contractual clauses, these mechanisms are subject to legal challenges, and there is no assurance that Complete Solaria can satisfy or rely on these measures to lawfully transfer personal data to the U.S. If there is no lawful manner for us to transfer personal data from the EEA, the UK, or other jurisdictions to the U.S., or if the requirements for a legally-compliant transfer are too onerous, we could face significant adverse consequences, including the interruption or degradation of its operations, the need to relocate part of or all of its business or data processing activities to other jurisdictions at significant expense, increased exposure to regulatory actions, substantial fines and penalties, the inability to transfer data and work with partners, vendors and other third parties, and injunctions against its processing or transferring of personal data necessary to operate its business. Some European regulators have ordered certain companies to suspend or permanently cease certain transfers out of Europe for allegedly violating the EU GDPR's cross-border data transfer limitations.

Any inability to adequately address privacy and security concerns, even if unfounded, or comply with applicable privacy and data security laws, regulations and policies, could result in additional cost and liability to us damage our reputation, inhibit sales and adversely affect our business. Furthermore, the costs of compliance with, and other burdens imposed by, the laws, regulations and policies that are applicable to our business may limit the use and adoption of, and reduce the overall demand for, its solutions. If we are not able to adjust to changing laws, regulations and standards related to privacy or security, our business may be harmed.

***Any unauthorized access to or disclosure or theft of personal information we gather, store or use could harm our reputation and subject us to claims or litigation.***

We receive, store and use personal information of customers, including names, addresses, e-mail addresses, and other housing and energy use information. We also store information of dealers, including employee, financial and operational information. We rely on the availability of data collected from customers and dealers in order to manage our business and market our offerings. We take certain steps in an effort to protect the security, integrity and confidentiality of the personal information collected, stored or transmitted, but there is no guarantee inadvertent or unauthorized use or disclosure will not occur or third parties will not gain unauthorized access to this information despite our efforts. Although we take precautions to provide for disaster recovery, our ability to recover systems or data may be expensive and may interfere with normal operations. Also, although we obtain assurances from such third parties that they will use reasonable safeguards to secure their systems, we may be adversely affected by unavailability of their systems or unauthorized use or disclosure or its data maintained in such systems. Because techniques used to obtain unauthorized access or sabotage systems change frequently and generally are not identified until they are launched against a target, our suppliers or vendors and our dealers may be unable to anticipate these techniques or to implement adequate preventative or mitigation measures.

Cyberattacks in particular are becoming more sophisticated and include, but are not limited to, malicious software, attempts to gain unauthorized access to data and other electronic security breaches that could lead to disruptions in critical systems, disruption of customers' operations, loss or damage to data delivery systems, unauthorized release of confidential or otherwise protected information, corruption of data and increased costs to prevent, respond to or mitigate cybersecurity events. In addition, certain cyber incidents, such as advanced persistent threats, may remain undetected for an extended period.

Unauthorized use, disclosure of or access to any personal information maintained by us or on the behalf of us, whether through breach of our systems, breach of the systems of our suppliers, vendors or dealers by an unauthorized party or through employee or contractor error, theft or misuse or otherwise, could harm our business. If any such unauthorized use, disclosure of or access to such personal information were to occur, our operations could be seriously disrupted and we could be subject to demands, claims and litigation by private parties and investigations, related actions and penalties by regulatory authorities.

In addition, we could incur significant costs in notifying affected persons and entities and otherwise complying with the multitude of federal, state and local laws and regulations relating to the unauthorized access to, use of or disclosure of personal information. Finally, any perceived or actual unauthorized access to, use of or disclosure of such information could harm our reputation, substantially impair our business, financial condition and results of operations. While we currently maintain cybersecurity insurance, such insurance may not be sufficient to cover against claims, and we cannot be certain that cyber insurance will continue to be available on economically reasonable terms, or at all, or that any insurer will not deny coverage as to any future claim.

***If we fail to comply with laws and regulations relating to interactions by the company or its dealers with current or prospective residential customers could result in negative publicity, claims, investigations and litigation and adversely affect financial performance.***

Our business substantially focuses on home improvement contracts for the installation of solar systems for residential customers. We offer leases, loans and other products and services directly to consumers and through sales partners in our dealer networks, who utilize sales people employed by or engaged as third-party service providers of such contractors. We and our dealers must comply with numerous federal, state and local laws and regulations that govern matters relating to interactions with residential consumers, including those pertaining to consumer protection, marketing and sales, privacy and data security, consumer financial and credit transactions, mortgages and refinancings, home improvement contracts, warranties and various means of customer solicitation, including under the laws described below in "*As sales to residential customers have grown, we have increasingly become subject to substantial financing and consumer protection laws and regulations.*" These laws and regulations are dynamic and subject to potentially differing interpretations and various federal, state and local legislative and regulatory bodies may initiate investigations, expand current laws or regulations, or enact new laws and regulations regarding these matters. Changes in these laws or regulations or their interpretation could dramatically affect how we and our dealers do business, acquire customers and manage and use information collected from and about current and prospective customers and the costs associated therewith. We and our dealers strive to comply with all applicable laws and regulations relating to interactions with residential customers. It is possible, however, that these requirements may be interpreted and applied in a manner inconsistent from one jurisdiction to another and may conflict with other rules or our practices or the practices of our dealers.

Although we require dealers to meet consumer compliance requirements, we do not control dealers and their suppliers or their business practices. Accordingly, we cannot guarantee they follow ethical business practices such as fair wage practices and compliance with environmental, safety and other local laws. A lack of demonstrated compliance could lead us to seek alternative dealers or suppliers, which could increase costs and have a negative effect on business and prospects for growth. Violation of labor or other laws by our dealers or suppliers or the divergence of a dealer or supplier's labor or other practices from those generally accepted as ethical in the U.S. or other markets in which the company does or intends to do business could also attract negative publicity and harm the business.

From time to time, we have been included in lawsuits brought by the consumer customers of certain contractors in our networks, citing claims based on the sales practices of these contractors. We cannot be sure that a court of law would not determine that we are liable for the actions of the contractors in our networks or that a regulator or state attorney general's office may hold us accountable for violations of consumer protection or other applicable laws by. Our risk mitigation processes may not be sufficient to mitigate financial harm associated with violations of applicable law by our contractors or ensure that any such contractor is able to satisfy its indemnification obligations to us. Any significant judgment against us could expose it to broader liabilities, a need to adjust our distribution channels for products and services or otherwise change our business model and could adversely impact the business.

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***We may be unsuccessful in introducing new services and product offerings.***

We intend to introduce new offerings of services and products to both new and existing customers in the future, including home automation products and additional home technology solutions. We may be unsuccessful in significantly broadening our customer base through the addition of these services and products within current markets or in new markets the company may enter. Additionally, we may not be successful in generating substantial revenue from any additional services and products introduced in the future and may decline to initiate new product and service offerings.

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***Damage to our brand and reputation or change or loss of use of our brand could harm our business and results of operations.***

We depend significantly on our reputation for high-quality products, excellent customer service and the brand name "Complete Solaria" to attract new customers and grow our business. If we fail to continue to deliver solar energy systems or energy storage systems within the planned timelines, if our offerings do not perform as anticipated or if we damage any of our customers' properties or delays or cancels projects, our brand and reputation could be significantly impaired. Future technological improvements may allow the company to offer lower prices or offer new technology to new customers; however, technical limitations in our current solar energy systems and energy storage systems may prevent us from offering such lower prices or new technology to existing customers.

In addition, given the sheer number of interactions our personnel or dealers operating on our behalf have with customers and potential customers, it is inevitable that some customers' and potential customers' interactions with us or dealers operating on our behalf will be perceived as less than satisfactory. This has led to instances of customer complaints, some of which have affected our digital footprint on rating websites and social media platforms. If we cannot manage hiring and training processes to avoid or minimize these issues to the extent possible, our reputation may be harmed and our ability to attract new customers would suffer.

In addition, if we were to no longer use, lose the right to continue to use or if others use the "Complete Solaria" brand, we could lose recognition in the marketplace among customers, suppliers and dealers, which could affect our business, financial condition, results of operations and would require financial and other investment and management attention in new branding, which may not be as successful.

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***Our success depends on the continuing contributions of key personnel, including Thurman J. Rodgers. If we are unable to attract and retain key employees and qualified personnel, our business and prospects could be harmed.***

We rely heavily on the services of our key executive officers and other key employees, in particular Thurman J. Rodgers, and the loss of services of any principal member of the management team or other key employees could adversely affect our operations. There have been, and from time to time there may continue to be, changes in our management team resulting from the hiring or departure of executives and key employees, or the transition of executives within our business, which could disrupt our business. For example, during 2023 and 2024, we had turnover in key positions, including our Chief Executive Officer and our Chief Financial Officer. As a result of the SunPower Acquisition, we also appointed new employees to key positions and restructured our management reporting lines. Such changes in our executive management team or workforce may be disruptive to our business, divert management's attention, result in a loss of knowledge and negatively impact employee morale. If we encounter further turnover or difficulties associated with the transition or departure of our executive officers and key employees, or if we are unsuccessful in recruiting new personnel or in retaining and motivating existing personnel, our operations may be disrupted, which could harm our business.

We are investing significant resources in developing new members of management as we complete our restructuring and strategic transformation, including as a result of the SunPower Acquisition. We also anticipate that over time we will need to hire a number of highly skilled technical, sales, marketing, administrative, and accounting personnel. The competition for qualified personnel is intense in this industry. We may not be successful in attracting and retaining sufficient numbers of qualified personnel to support its anticipated growth. We cannot guarantee that any employee will remain employed with us for any definite period of time since all employees, including key executive officers, serve at-will and may terminate their employment at any time for any reason.

Labor is subject to external factors that are beyond our control, including our industry's highly competitive market for skilled workers and leaders, cost inflation, and workforce participation rates. As we build our brand and become more well known and grow globally, there is increased risk that competitors or other companies will seek to hire our personnel. The failure to attract, integrate, train, motivate and retain these personnel could seriously harm our business and prospects.

***If we or our dealers or suppliers fail to hire and retain sufficient employees and service providers in key functions, our growth and ability to timely complete customer projects and successfully manage customer accounts would be constrained.***

To support growth, we and our dealers need to hire, train, deploy, manage and retain a substantial number of skilled employees, engineers, installers, electricians and sales and project finance specialists. Competition for qualified personnel in this industry has increased substantially, particularly for skilled personnel involved in the installation of solar energy systems. We and our dealers also compete with the homebuilding and construction industries for skilled labor. These industries are cyclical and when participants in these industries seek to hire additional workers, it puts upward pressure on us and our dealers' labor costs. Companies with whom our dealers compete to hire installers may offer compensation or incentive plans that certain installers may view as more favorable. As a result, our dealers may be unable to attract or retain qualified and skilled installation personnel. The further unionization of the industry's labor force or the homebuilding and construction industries' labor forces could also increase our dealers' labor costs.

Shortages of skilled labor could significantly delay a project or otherwise increase dealers' costs. Further, we need to continue to increase the training of the customer service team to provide high-end account management and service to homeowners before, during and following the point of installation of its solar energy systems. Identifying and recruiting qualified personnel and training them requires significant time, expense and attention. It can take several months before a new customer service team member is fully trained and productive at the standards established by us. If we are unable to hire, develop and retain talented customer service or other personnel, we may not be able to grow our business.

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***Our operating results and ability to grow may fluctuate from quarter to quarter and year to year, which could make future performance difficult to predict and could cause operating results for a particular period to fall below expectations.***

Our quarterly and annual operating results and its ability to grow are difficult to predict and may fluctuate significantly. We have experienced seasonal and quarterly fluctuations in the past and expect to experience such fluctuations in the future. In addition to the other risks described in this "Risk Factors" section, the following factors could cause operating results to fluctuate:

● expiration or initiation of any governmental rebates or incentives;

● significant fluctuations in customer demand for our solar energy services, solar energy systems and energy storage systems;

● our dealers' ability to complete installations in a timely manner;

● our and our dealers' ability to gain interconnection permission for an installed solar energy system from the relevant utility;

● the availability, terms and costs of suitable financing;

● the amount, timing of sales and potential decreases in value of Solar Renewable Energy Certificates ()"**SRECs** ");

● our ability to continue to expand its operations and the amount and timing of expenditures related to this expansion;

● announcements by us or our competitors of significant acquisitions, strategic partnerships, joint ventures or capital-raising activities or commitments;

● changes in our pricing policies or terms or those of competitors, including centralized electric utilities;

● actual or anticipated developments in competitors' businesses, technology or the competitive landscape; and

● natural disasters or other weather or meteorological conditions.

For these or other reasons, the results of any prior quarterly or annual periods should not be relied upon as indications of our future performance.

***Our ability to obtain insurance on the terms of any available insurance coverage could be materially adversely affected by international, national, state or local events or company-specific events, as well as the financial condition of insurers.***

Our insurance policies cover legal and contractual liabilities arising out of bodily injury, personal injury or property damage to third parties and are subject to policy limits.

However, such policies do not cover all potential losses and coverage is not always available in the insurance market on commercially reasonable terms. In addition, we may have disagreements with insurers on the amount of recoverable damages and the insurance proceeds received for any loss of, or any damage to, any of our assets may be claimed by lenders under financing arrangements or otherwise may not be sufficient to restore the loss or damage without a negative impact on its results of operations. Furthermore, the receipt of insurance proceeds may be delayed, requiring us to use cash or incur financing costs in the interim. To the extent our experiences covered losses under its insurance policies, the limit of our coverage for potential losses may be decreased or the insurance rates it has to pay increased. Furthermore, the losses insured through commercial insurance are subject to the credit risk of those insurance companies. While we believe our commercial insurance providers are currently creditworthy, we cannot assure such insurance companies will remain so in the future.

We may not be able to maintain or obtain insurance of the type and amount desired at reasonable rates. The insurance coverage obtained may contain large deductibles or fail to cover certain risks or all potential losses. In addition, our insurance policies are subject to annual review by insurers and may not be renewed on similar or favorable terms, including coverage, deductibles or premiums, or at all. If a significant accident or event occurs for which we are not fully insured or the company suffers losses due to one or more of its insurance carriers defaulting on their obligations or contesting their coverage obligations, it could have a material adverse effect on our business, financial condition and results of operations.

***We may be subject to breaches of our information technology systems, which could lead to disclosure of internal information, damage to our reputation or relationships with dealers, suppliers, and customers, and disrupt access to online services. Such breaches could subject us to significant reputational, financial, legal, and operational consequences.***

Our business requires the use and storage of confidential and proprietary information, intellectual property, commercial banking information, personal information concerning customers, employees, and business partners, and corporate information concerning internal processes and business functions. Malicious attacks to gain access to such information affects many companies across various industries, including ours.

Where appropriate, we use encryption and authentication technologies to secure the transmission and storage of data. These security measures may be compromised as a result of third-party security breaches, employee error, malfeasance, faulty password management, or other irregularity or malicious effort, and result in persons obtaining unauthorized access to data.

We devote resources to network security, data encryption, and other security measures to protect our systems and data, but these security measures cannot provide absolute security. Because the techniques used to obtain unauthorized access, disable or degrade service, or sabotage systems change frequently, target end users through phishing and other malicious techniques, and/or may be difficult to detect for long periods of time, we may be unable to anticipate these techniques or implement adequate preventative measures. As a result, we may experience a breach of our systems in the future that reduces our ability to protect sensitive data. In addition, hardware, software, or applications we develop or procure from third parties may contain defects in design or manufacture or other problems that could unexpectedly compromise information security. Unauthorized parties may also attempt to gain access to our systems or facilities through fraud, trickery or other forms of deceiving team members, contractors and temporary staff. If we experience, or are perceived to have experienced, a significant data security breach, fail to detect and appropriately respond to a significant data security breach, or fail to implement disclosure controls and procedures that provide for timely disclosure of data security breaches deemed material to our business, including corrections or updates to previous disclosures, we could be exposed to a risk of loss, increased insurance costs, remediation and prospective prevention costs, damage to our reputation and brand, litigation and possible liability, or government enforcement actions, any of which could detrimentally affect our business, results of operations, and financial condition.

We may also share information with contractors and third-party providers to conduct business. While we generally review and typically request or require such contractors and third-party providers to implement security measures, such as encryption and authentication technologies to secure the transmission and storage of data, those third-party providers may experience a significant data security breach, which may also detrimentally affect our business, results of operations, and financial condition as discussed above. See also under this section, "*We may be required to file claims against other parties for infringing its intellectual property that may be costly and may not be resolved in our favor*." We rely substantially upon trade secret laws and contractual restrictions to protect our proprietary rights, and, if these rights are not sufficiently protected, our ability to compete and generate revenue could suffer.

***As sales to residential customers have grown, we have increasingly become subject to consumer protection laws and regulations.***

As we continue to seek to expand our retail customer base, our activities with customers are subject to consumer protection laws that may not be applicable to other businesses, such as federal truth-in-lending, consumer leasing, telephone and digital marketing, and equal credit opportunity laws and regulations, as well as state and local finance laws and regulations. Claims arising out of actual or alleged violations of law may be asserted against us by individuals or governmental entities and may expose the company to significant damages or other penalties, including fines. In addition, our affiliations with third-party dealers may subject the company to alleged liability in connection with actual or alleged violations of law by such dealers, whether or not actually attributable to us, which may expose us to significant damages and penalties, and we may incur substantial expenses in defending against legal actions related to third-party dealers, whether or not ultimately found liable.

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***The competitive environment in which we operate often requires the undertaking of customer obligations, which may turn out to be costlier than anticipated and, in turn, materially and adversely affect our business, results of operations and financial condition.***

We are often required, at the request of our end customer, to undertake certain obligations such as:

● system output performance warranties; and

● system maintenance.

Such customer obligations involve complex accounting analyses and judgments regarding the timing of revenue and expense recognition, and in certain situations these factors may require us to defer revenue or profit recognition until projects are completed or until contingencies are resolved, which could adversely affect revenues and profits in a particular period.

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***We are subject to risks associated with construction, cost overruns, delays, regulatory compliance and other contingencies, any of which could have a material adverse effect on its business and results of operations.***

We are a licensed contractor in certain communities that we service and are ultimately responsible as the contracting party for every solar energy system installation. A significant portion of our business depends on obtaining and maintaining required licenses in various jurisdictions. All such licenses are subject to audit by the relevant government agency. Our failure to obtain or maintain required licenses could result in the termination of certain of our contracts. For example, we hold a license with California's Contractors State License Board (the "**CSLB**") and that license is currently under probation with the CSLB. If we fail to comply with the CSLB's law and regulations, it could result in termination of certain of our contracts, monetary penalties, extension of the license probation period or revocation of its license in California. In addition, we may be liable, either directly or through its solar partners, to homeowners for any damage we cause to them, their home, belongings or property during the installation of our systems. For example, we either directly or through its solar partners, frequently penetrate homeowners' roofs during the installation process and may incur liability for the failure to adequately weatherproof such penetrations following the completion of construction. In addition, because the solar energy systems we or our solar partners deploy are high voltage energy systems, we may incur liability for failing to comply with electrical standards and manufacturer recommendations.

Further, we or our installation partners may face construction delays or cost overruns, which may adversely affect our or our sales partners' ability to ramp up the volume of installation in accordance with our plans. Such delays or overruns may occur as a result of a variety of factors, such as labor shortages, defects in materials and workmanship, adverse weather conditions, transportation constraints, construction change orders, site changes, labor issues and other unforeseen difficulties, any of which could lead to increased cancellation rates, reputational harm and other adverse effects.

In addition, the installation of solar energy systems, energy storage systems, and other energy-related products requiring building modifications are subject to oversight and regulation in accordance with national, state, and local laws and ordinances relating to building, fire, and electrical codes, safety, environmental protection, utility interconnection and metering, and related matters. We also rely on certain employees to maintain professional licenses in many of the jurisdictions in which we operate, and the failure to employ properly licensed personnel could adversely affect our licensing status in those jurisdictions. It is difficult and costly to track the requirements of every individual authority having jurisdiction over our installations and to design solar energy systems to comply with these varying standards. Any new government regulations or utility policies pertaining to our systems may result in significant additional expenses to homeowners and us and, as a result, could cause a significant reduction in demand for solar service offerings.

While we have a variety of stringent quality standards that the company applies in the selection of its solar partners, we do not control our suppliers and solar partners or their business practices. Accordingly, we cannot guarantee that they follow our standards or ethical business practices, such as fair wage practices and compliance with environmental, safety and other local laws. A lack of demonstrated compliance could lead us to seek alternative suppliers or contractors, which could increase costs and result in delayed delivery or installation of our products, product shortages or other disruptions of its operations. Violation of labor or other laws by our suppliers and solar partners or the divergence of a supplier's or solar partners' labor or other practices from those generally accepted as ethical in the U.S. or other markets in which we do business could also attract negative publicity and harm our business, brand and reputation in the market.

***Compliance with occupational safety and health requirements and best practices can be costly, and noncompliance with such requirements may result in potentially significant penalties, operational delays and adverse publicity.***

The installation and ongoing operations and maintenance of solar energy systems and energy storage systems requires individuals hired by us, our dealers, or third-party contractors, potentially including employees, to work at heights with complicated and potentially dangerous electrical systems. The evaluation and modification of buildings as part of the installation process requires these individuals to work in locations that may contain potentially dangerous levels of asbestos, lead, mold or other materials known or believed to be hazardous to human health. There is substantial risk of serious injury or death if proper safety procedures are not followed. Our operations are subject to regulation by the Occupational Safety and Health Administration ("**OSHA**") and the Department of Transportation ("**DOT**") and equivalent state and local laws. Changes to OSHA or DOT requirements, or stricter interpretation or enforcement of existing laws or regulations, could result in increased costs. If we fail to comply with applicable OSHA or DOT regulations, even if no work-related serious injury or death occurs, we may be subject to civil or criminal enforcement and be required to pay substantial penalties, incur significant capital expenditures or suspend or limit operations. Because individuals hired by us or on our behalf to perform installation and ongoing operations and maintenance of the company's solar energy systems and energy storage systems, including its dealers and third-party contractors, are compensated on a per project basis, they are incentivized to work more quickly than installers compensated on an hourly basis. While we have not experienced a high level of injuries to date, this incentive structure may result in higher injury rates than others in the industry and could accordingly expose the company to increased liability. Individuals hired by or on behalf of us may have workplace accidents and receive citations from OSHA regulators for alleged safety violations, resulting in fines. Any such accidents, citations, violations, injuries or failure to comply with industry best practices may subject us to adverse publicity, damage its reputation and competitive position and adversely affect the business.

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***Our business has benefited from the declining cost of solar energy system components, but it may be harmed if the cost of such components stabilizes or increases in the future.***

Our business has benefited from the declining cost of solar energy system components and to the extent such costs stabilize, decline at a slower rate or increase, our future growth rate may be negatively impacted. The declining cost of solar energy system components and the raw materials necessary to manufacture them has been a key driver in the price of our solar energy systems, and the prices charged for electricity and customer adoption of solar energy. Solar energy system component and raw material prices may not continue to decline at the same rate as they have over the past several years or at all. In addition, growth in the solar industry and the resulting increase in demand for solar energy system components and the raw materials necessary to manufacture them may also put upward pressure on prices. An increase of solar energy system components and raw materials prices could slow growth and cause business and results of operations to suffer. Further, the cost of solar energy system components and raw materials has increased and could increase in the future due to tariff penalties, duties, the loss of or changes in economic governmental incentives or other factors.

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***Product liability claims against us could result in adverse publicity and potentially significant monetary damages.***

It is possible our solar energy systems or energy storage systems could injure customers or other third parties or our solar energy systems or energy storage systems could cause property damage as a result of product malfunctions, defects, improper installation, fire or other causes. Any product liability claim we face could be expensive to defend and may divert management's attention. The successful assertion of product liability claims against us could result in potentially significant monetary damages, potential increases in insurance expenses, penalties or fines, subject the company to adverse publicity, damage our reputation and competitive position and adversely affect sales of solar energy systems or energy storage systems. In addition, product liability claims, injuries, defects or other problems experienced by other companies in the residential solar industry could lead to unfavorable market conditions to the industry as a whole and may have an adverse effect on our ability to expand its portfolio of solar service agreements and related solar energy systems and energy storage systems, thus affecting our business, financial condition and results of operations.

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***Our warranty costs may exceed the warranty reserve.***

We provide warranties that cover parts performance and labor to purchasers of our solar modules. We also have legacy warranty and performance obligations from our former business manufacturing solar panels. We maintain a warranty reserve on our financial statements, and our warranty claims may exceed the warranty reserve. Any significant warranty expenses could adversely affect our financial condition and results of operations. Significant warranty problems could impair our reputation which could result in lower revenue and a lower gross margin.

***We are subject to legal proceedings and regulatory inquiries and may be named in additional claims or legal proceedings or become involved in regulatory inquiries, all of which are costly, distracting to our core business and could result in an unfavorable outcome or harm our business, financial condition, results of operations or the trading price for our securities.***

We are involved in claims, legal proceedings that arise from normal business activities. In addition, from time to time, third parties have asserted and may in the future assert claims against us. We evaluate all claims, lawsuits and investigations with respect to their potential merits, our potential defenses and counter claims, settlement or litigation potential and the expected effect on us. In the event that we are involved in significant disputes, including the legal claims noted below, or are the subject of a formal action by a regulatory agency, we could be exposed to costly and time-consuming legal proceedings that could result in any number of outcomes. Although outcomes of such actions vary, any claims, proceedings or regulatory actions initiated by or against us whether successful or not, could result in expensive costs of defense, costly damage awards, injunctive relief, increased costs of business, fines or orders to change certain business practices, significant dedication of management time, diversion of significant operational resources or some other harm to the business. In any of these cases, our business, financial condition or results of operations could be negatively impacted. We make a provision for a liability relating to legal matters when it is both probable that a liability has been incurred and the amount of the loss can be reasonably estimated. These provisions are reviewed at least quarterly and adjusted to reflect the impacts of negotiations, estimated settlements, legal rulings, advice of legal counsel and other information and events pertaining to a particular matter. Depending on the nature and timing of any such controversy, an unfavorable resolution of a matter could materially affect our future business, financial condition or results of operations, or all of the foregoing, in a particular quarter.

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See "Item 8. Financial Statements and Supplementary Data - Notes to Consolidated Financial Statements - **Note 14 – Commitments and Contingencies**" for a further discussion of the legal claims summarized therein.

In addition to the other information provided in **Note 14 – Commitments and Contingencies**, on February 22, 2024, the court in the case issued an order against certain subsidiaries of the Company which awarded Siemens approximately $6.9 million. On March 15, 2024, Siemens filed a motion seeking to recover $2.67 million for attorneys' fees, expenses, and pre-and post-judgment interest. The Company opposed Siemens' motion for attorneys' fees, expenses, and pre- and post-judgment interest on April 5, 2024. On June 17, 2024, the court entered a final order which awarded Siemens a total of $2.0 million in attorneys' fees and costs. We have appealed these judgments. On August 19, 2024, Siemens applied for the enforcement to a sister state judgment in the Superior Court of Alameda, California and the court entered a judgement in favor of Siemens. On December 9, 2024, Siemens moved to amend the judgment to add the Company as a judgement debtor. Our subsidiaries opposed the Siemens motion. The court heard the motion by submission on April 3, 2025, but has not yet issued a ruling. The Company recognized $6.9 million as a legal loss related to this litigation in 2023, and in 2024, and the Company recorded an additional accrual for $2.0 million for attorneys' fees, expenses, and pre-judgment interest, in accrued expenses and other current liabilities within its consolidated balance sheet as of December 29, 2024. This legal loss was recognized in fiscal 2024 in loss from discontinued operations, net of tax on the consolidated statements of operations and comprehensive loss. The Company recorded a liability of $6.9 million as a legal loss related to this litigation, excluding amounts for attorneys' fees and costs, in accrued expenses and other current liabilities within its consolidated balance sheets at each of March 30, 2025, and December 29, 2024.

***The requirements of being a public company may strain our resources, divert management's attention and affect our ability to attract and retain qualified directors and officers.***

We will face increased legal, accounting, administrative and other costs and expenses as a public company that we did not incur as a private company. The Sarbanes-Oxley Act, including the requirements of Section 404, as well as rules and regulations subsequently implemented by the SEC, the Dodd-Frank Wall Street Reform and Consumer Protection Act of 2010 and the rules and regulations promulgated and to be promulgated thereunder, the PCAOB and the securities exchanges, impose additional reporting and other obligations on public companies. Compliance with public company requirements will increase costs and make certain activities more time- consuming. A number of those requirements will require us to carry out activities we had not done previously.

If any issues in complying with those requirements are identified (for example, if we or the auditors identify a material weakness or significant deficiency in the internal control over financial reporting), we could incur additional costs rectifying those issues, and the existence of those issues could adversely affect our reputation or investor perceptions of it. It may also be more expensive to obtain director and officer liability insurance. Risks associated with our status as a public company may make it more difficult to attract and retain qualified persons to serve on our board of directors or as executive officers. The additional reporting and other obligations imposed by these rules and regulations will increase legal and financial compliance costs and the costs of related legal, accounting and administrative activities. These increased costs will require us to divert a significant amount of money that could otherwise be used to expand the business and achieve strategic objectives. Advocacy efforts by stockholders and third parties may also prompt additional changes in governance and reporting requirements, which could further increase costs.

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***Our ability to use net operating loss carryforwards and certain other tax attributes may be limited.***

We have incurred substantial losses during our history and do not expect to become profitable in the near future and may never achieve profitability. Under current U.S. federal income tax law, unused losses for the tax year ended December 31, 2017 and prior tax years will carry forward to offset future taxable income, if any, until such unused losses expire, and unused federal losses generated after December 31, 2017 will not expire and may be carried forward indefinitely but will be only deductible to the extent of 80% of current year taxable income in any given year. Many states have similar laws.

In addition, both current and future unused net operating loss ("**NOL**") carryforwards and other tax attributes may be subject to limitation under Sections 382 and 383 of the Internal Revenue Code of 1986, as amended (the "Code"), if a corporation undergoes an "ownership change," generally defined as a greater than 50 percentage point change (by value) in equity ownership by certain stockholders over a three-year period. The Business Combination may have resulted in an ownership change for us and, accordingly, our NOL carryforwards and certain other tax attributes may be subject to limitations (or disallowance) on their use after the Business Combination. Our NOL carryforwards may also be subject to limitation as a result of prior shifts in equity ownership. Additional ownership changes in the future could result in additional limitations on our NOL carryforwards. Consequently, even if we achieve profitability, we may not be able to utilize a material portion of our NOL carryforwards and other tax attributes, which could have a material adverse effect on cash flow and results of operations.

**Risks Related to our Common Stock and Other Securities**

***Our directors, executive officers and principal stockholders will continue to have significant influence over our company, which could limit your ability to influence the outcome of key transactions, including a change of control.\****

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Our directors, executive officers and each of our 5% stockholders and their affiliates, in the aggregate, beneficially own approximately 40% of the outstanding shares of our common stock, based on the number of shares outstanding as of March 31, 2025. As a result, these stockholders, if acting together, will be able to significantly influence matters requiring approval by our stockholders, including the election of directors and the approval of mergers, acquisitions or other extraordinary transactions. They may also have interests that differ from yours and may vote in a way with which you disagree, and which may be adverse to your interests. This concentration of ownership may have the effect of delaying, preventing or deterring a change of control of our company, could deprive our stockholders of an opportunity to receive a premium for their common stock as part of a sale of our company and might ultimately affect the market price of our common stock.

***The trading price of our common stock may be volatile, and you could lose all or part of your investment.***

Fluctuations in the price of our securities could contribute to the loss of all or part of your investment. The trading price of our securities could be volatile and subject to wide fluctuations in response to various factors, some of which are beyond our control. Any of the factors listed below could have a material adverse effect on your investment in our securities and our securities may trade at prices significantly below the price you paid for them. In such circumstances, the trading price of our securities may not recover and may experience a further decline.

Factors affecting the trading price of our securities:

● actual or anticipated fluctuations in our quarterly financial results or the quarterly financial results of companies perceived to be similar to us;

● changes in the market's expectations about our operating results;

● success of competitors;

● our operating results failing to meet the expectation of securities analysts or investors in a particular period;

● changes in financial estimates and recommendations by securities analysts concerning us or the market in general;

● operating and stock price performance of other companies that investors deem comparable to us;

● our ability to develop product candidates;

● changes in laws and regulations affecting our business;

● commencement of, or involvement in, litigation involving us;

● changes in our capital structure, such as future issuances of securities or the incurrence of additional debt;

● the volume of shares of our securities available for public sale

● any major change in our board of directors or management;

● sales of substantial amounts of common stock by our directors, executive officers or significant stockholders or the perception that such sales could occur; and

● general economic and political conditions such as recessions, interest rates, fuel prices, international currency fluctuations and acts of war or terrorism.

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***If securities or industry analysts do not publish or cease publishing research or reports about us, our business, or our market, or if they change their recommendations regarding our securities adversely, the price and trading volume of our securities could decline.***

The trading market for our securities is influenced by the research and reports that industry or securities analysts may publish about us, our business, our market, or our competitors. If any of the analysts who currently cover us change their recommendation regarding our stock adversely, or provide more favorable relative recommendations about our competitors, the price of our securities would likely decline. If any analyst who currently cover us were to cease coverage of us or fail to regularly publish reports on us, we could lose visibility in the financial markets, which could cause our stock price or trading volume to decline. If we obtain additional coverage and any new analyst issues, an adverse or misleading opinion regarding us, our business model, our intellectual property or our stock performance, or if our operating results fail to meet the expectations of analysts, our stock price could decline.

***A market for our securities may not continue, which would adversely affect the liquidity and price of our securities.***

The price of our securities may fluctuate significantly due to general market and economic conditions and an active trading market for our securities may not be sustained. In addition, the price of our securities can vary due to general economic conditions and forecasts, our general business condition and the release of our financial reports. If our securities are not listed on, or become delisted from Nasdaq for any reason, and are quoted on the OTC Bulletin Board, an inter-dealer automated quotation system for equity securities that is not a national securities exchange, the liquidity and price of our securities may be more limited than if we were quoted or listed on Nasdaq or another national securities exchange. You may be unable to sell your securities unless a market can be established or sustained.

***If we fail to meet all applicable requirements of Nasdaq and Nasdaq determines to delist our common stock, the delisting could adversely affect the market liquidity of our common stock and the market price of our common stock could decrease.***

If we are unable to satisfy the Nasdaq criteria for continued listing, our common stock would be subject to delisting. A delisting of our common stock could negatively impact us by, among other things, reducing the liquidity and market price of our common stock; reducing the number of investors willing to hold or acquire our common stock, which could negatively impact our ability to raise equity financing; decreasing the amount of news and analyst coverage of us; and limiting our ability to issue additional securities or obtain additional financing in the future. In addition, delisting from Nasdaq may negatively impact our reputation and, consequently, our business.

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There can be no assurance that we will maintain compliance with the requirements for listing our common stock on Nasdaq. On April 28, 2025,we received a letter from the Listing Qualifications staff of Nasdaq indicating that, as a result of our delay in filing its Annual Report on Form 10-K for the year ended December 31, 2024 (the "2024 Form 10-K"), we were not in compliance with the timely filing requirements for continued listing under Nasdaq Listing Rule 5250(c)(1). The Nasdaq letter had no immediate effect on the listing or trading of our common stock or warrants. The Nasdaq listing rules require Nasdaq-listed companies to timely file all required periodic reports with the SEC. The Nasdaq letter stated that, under Nasdaq rules, the Company had 60 calendar days to submit a plan to regain compliance with Nasdaq's continued listing requirements. We filed our 2024 Form 10-K on April 30, 2025.

If we are unable to satisfy the Nasdaq criteria for continued listing, our common stock would be subject to delisting.

If Nasdaq delists our securities from trading on its exchange for failure to meet the listing standards, we and our stockholders could face significant material adverse consequences including:

● a limited availability of market quotations for our securities;

● a determination that our common stock is a "penny stock" which will require brokers trading in our common stock to adhere to more stringent rules, possibly resulting in a reduced level of trading activity in the secondary trading market for our common stock;

● a limited amount of analyst coverage; and a decreased ability to issue additional securities or obtain additional financing in the future.

***Sales of a substantial number of our common stock in the public market by our shareholders could cause the price of our common stock to decline.***

Sales of a substantial number of shares of our common stock in the public market could occur at any time. If our stockholders sell, or the market perceives that our stockholders intend to sell, substantial amounts of our common stock in the public market, the market price of our common stock could decline.

***Provisions in our Certificate of Incorporation and Bylaws and provisions of the Delaware General Corporation Law may delay or prevent an acquisition by a third party that could otherwise be in the interests of shareholders.***

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Our Certificate of Incorporation and Bylaws contain several provisions that may make it more difficult or expensive for a third party to acquire control of us without the approval of our board. These provisions, which may delay, prevent or deter a merger, acquisition, tender offer, proxy contest, or other transaction that stockholders may consider favorable, include the following:

● advance notice requirements for stockholder proposals and director nominations;

● provisions limiting stockholders' ability to call special meetings of stockholders and to take action by written consent;

● restrictions on business combinations with interested stockholders;

● no cumulative voting; and

● the ability of the board of directors to designate the terms of and issue new series of preferred stock without stockholder approval, which could be used, among other things, to institute a rights plan that would have the effect of significantly diluting the stock ownership of a potential hostile acquirer, likely preventing acquisitions by such acquirer.

These provisions of our Certificate of Incorporation and Proposed Bylaws could discourage potential takeover attempts and reduce the price that investors might be willing to pay for the shares of our common stock in the future, which could reduce the market price of our common stock.

***The provision of our Certificate of Incorporation requiring exclusive venue in the Court of Chancery in the State of Delaware and the federal district courts of the U.S. for certain types of lawsuits may have the effect of discouraging lawsuits against directors and officers.***

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Our Certificate of Incorporation provides that, unless otherwise consented to by us in writing, the Court of Chancery of the State of Delaware (or, if the Court of Chancery does not have jurisdiction, another State court in Delaware or the federal district court for the District of Delaware) will, to the fullest extent permitted by law, be the sole and exclusive forum for the following types of actions or proceedings:

● any derivative action or proceeding brought on behalf of us;

● any action asserting a claim of breach of a duty (including any fiduciary duty) owed by any of our current or former directors, officers, stockholders, employees or agents to us or our stockholders;

● any action asserting a claim against us or any of our current or former directors, officers, stockholders, employees or agents relating to any provision of the Delaware General Corporation Law ("DGCL") or our Certificate of Incorporation or the Bylaws or as to which the DGCL confers jurisdiction on the Court of Chancery of the State of Delaware; and

● any action asserting a claim against us or any of our current or former directors, officers, stockholders, employees or agents governed by the internal affairs doctrine of the State of Delaware, in each such case unless the Court of Chancery (or such other state or federal court located within the State of Delaware, as applicable) has dismissed a prior action by the same plaintiff asserting the same claims because such court lacked personal jurisdiction over an indispensable party named as a defendant therein.

Our Certificate of Incorporation will further provide that, unless otherwise consented to by us in writing to the selection of an alternative forum, the federal district courts of the U.S. will, to the fullest extent permitted by law, be the sole and exclusive forum for the resolution of any complaint against any person in connection with any offering of our securities, asserting a cause of action arising under the Securities Act. Any person or entity purchasing or otherwise acquiring any interest in our securities will be deemed to have notice of and consented to this provision.

Although we believe these provisions will benefit us by limiting costly and time-consuming litigation in multiple forums and by providing increased consistency in the application of applicable law, these exclusive forum provisions may limit the ability of our shareholders to bring a claim in a judicial forum that such shareholders find favorable for disputes with us or our directors, officers or employees, which may discourage such lawsuits against us and our directors, officers and other employees.

***We may be required to repurchase up to 5,618,488 shares of common stock from the investors with whom we entered into Forward Purchase Agreements in connection with the closing of the Business Combination, which would reduce the amount of cash available to us to fund our growth plan.***

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On and around July 13, 2023, FACT entered into separate Forward Purchase Agreements (the "Forward Purchase Agreements") with each of (i) Meteora Special Opportunity Fund I, LP ("**MSOF**"), Meteora Capital Partners, LP ("**MCP**") and Meteora Select Trading Opportunities Master, LP ("MSTO") (with MSOF, MCP, and MSTO collectively as "**Meteora**"); (ii) Polar Multi-Strategy Master Fund ("**Polar**"), and (iii) Diametric True Alpha Market Neutral Master Fund, LP, Diametric True Alpha Enhanced Market Neutral Master Fund, LP, and Pinebridge Partners Master Fund, LP (collectively, "Sandia", and each of Meteora, Polar, and Sandia, individually, an "**FPA Investor**", and together, the "**FPA Investors**"), pursuant to which FACT (now Complete Solaria following the closing of the Business Combination) agreed to purchase in the aggregate, on the date that is 24 months after the closing date of the Forward Purchase Agreements (the "**Maturity Date**"), up to 5,618,488 shares of common stock then held by the FPA Investors (subject to certain conditions and purchase limits set forth in the Forward Purchase Agreements). Pursuant to the terms of the Forward Purchase Agreements, each FPA Investor further agreed not to redeem any of the FACT Class A Ordinary Shares owned by it at such time. The per price at which the FPA Investors have the right to sell the shares to us on the Maturity Date will not be less than $5.00 per share. On December 18, 2023, the Company and each FPA Investor entered into separate amendments to the Forward Purchase Agreements (the "**First Amendments").** The First Amendments lower the reset floor price of each Forward Purchase Agreement from $5.00 to $3.00 and allow the Company to raise up to $10,000,000 of equity from existing stockholders without triggering certain anti-dilution provisions contained in the Forward Purchase Agreements; provided, the insiders pay a price per share for their initial investment equal to the closing price per share as quoted on the Nasdaq on the day of purchase; provided, further, that any subsequent investments are made at a price per share equal to the greater of (a) the closing price per share as quoted by Nasdaq on the day of the purchase or (b) the amount paid in connection with the initial investment. On May 7 and 8, 2024, respectively, the Company entered into separate amendments to the Forward Purchase Agreements (the collectively the "**Second Amendments**") with Sandia (the "**Sandia Second Amendment**") and Polar (the "**Polar Second Amendment**"). The Second Amendments lower the reset price of each Forward Purchase Agreement from $3.00 to $1.00 per share and amend the VWAP Trigger Event provision to read: "After December 31, 2024, an event that occurs if the VWAP Price, for any 20 trading days during a 30 consecutive trading day-period, is below $1.00 per Share." The Sandia Second Amendment is not effective until the Company executes similar amendments with both Polar and Meteora. Subsequently, on June 14, 2024, the Company entered into an amendment to the Forward Purchase Agreement with Sandia (the "**Sandia Third Amendment**"). The Sandia Third Amendment sets the reset price of each Forward Purchase Agreement to $1.00 per share and amends the VWAP Trigger Event provision to read: "After December 31, 2024, an event that occurs if the VWAP Price, for any 20 trading days during a 30 consecutive trading day-period, is below $1.00 per Share." In the event either Polar or Meteora amend their Forward Purchase Agreements to include different terms from the $1.00 reset price and VWAP trigger adjustment, or file a notice of a VWAP trigger event, as referenced herein, the Sandia Forward Purchase Agreement will be retroactively amended to reflect those improved terms and liquidity on the Sandia Forward Purchase Agreement, including any of the 1,050,000 shares that were sold upon execution of the Sandia Forward Purchase Agreement. On July 17, 2024, the Company entered into the third amendment to the Forward Purchase Agreement with Polar (the "**Polar Third Amendment**"), pursuant to which the Company and Polar agreed that Section 2 (Most Favored Nation) of the Forward Purchase Agreement is applicable to all 2,450,000 shares subject to the Forward Purchase Agreement.

If the FPA Investors hold some or all of the 5,618,488 forward purchase agreement shares on the Maturity Date, and the per share trading price of our common stock is less than the per share price at which the FPA Investors have the right to sell the common stock to us on the Maturity Date, we would expect that the FPA Investors will exercise this repurchase right with respect to such shares. In the event that we are required to repurchase these forward purchase agreement shares, or in the event that the Forward Purchase Agreements are terminated, the amount of cash arising from the Business Combination that would ultimately be available to fund our liquidity and capital resource requirements would be reduced accordingly, which would adversely affect our ability to fund our growth plan in the manner we had contemplated when entering into the Forward Purchase Agreements.

 ****

 ****

***Warrants to purchase shares of our common stock may not be exercised at all or may be exercised on a cashless basis and we may not receive any cash proceeds from the exercise of such warrants.***

The exercise price of warrants to purchase shares of our common stock may be higher than the prevailing market price of the underlying shares of common stock. The exercise price of such warrants is subject to market conditions and may not be advantageous if the prevailing market price of the underlying shares of common stock is lower than the exercise price. The cash proceeds associated with the exercise of such warrants to purchase our common stock are contingent upon our stock price. The value of our common stock will fluctuate and may not align with the exercise price of such warrants at any given time. If such warrants are "out of the money," meaning the exercise price is higher than the market price of our common stock, there is a high likelihood that warrant holders may choose not to exercise their warrants. As a result, we may not receive any proceeds from the exercise of such warrants.

Furthermore, with regard to certain warrants to purchase shares of our common stock that were issued in a private placement at the time of FACT's IPO and warrants issued to certain selling securityholders in connection with conversion of working capital loans, it is possible that we may not receive cash upon their exercise, since these warrants may be exercised on a cashless basis. A cashless exercise allows warrant holders to convert the warrants into shares of our common stock without the need for a cash payment. Instead of paying cash upon exercise, the warrant holder would receive a reduced number of shares based on a predetermined formula. As a result, the number of shares issued through a cashless exercise will be lower than if the warrants were exercised on a cash basis, which could impact the cash proceeds we receive from the exercise of such warrants.

***Servicing our debt requires a significant amount of cash, and we may not have sufficient cash flow from our business to pay our substantial debt.\****

 ****

Our ability to make scheduled payments of the principal of, to pay interest on or to refinance our indebtedness, including 12.00% Notes due 2029 and the 7.00% Convertible Senior Notes due 2029 (the 7.00% Notes due 2029 and with the 12.00% Notes due 2029, collectively, the "**Convertible Senior Notes**"), depends on our future performance, which is subject to economic, financial, competitive and other factors beyond our control. Our business may not continue to generate cash flow from operations in the future sufficient to service our debt and make necessary capital expenditures. Additionally, as a result of the delayed filing of our Annual Report on Form 10-K for the year ended December 29, 2024, we incurred additional interest under the Convertible Senior Notes. If we are unable to generate such cash flow, we may be required to adopt one or more alternatives, such as selling assets, restructuring debt or obtaining additional equity capital on terms that may be onerous or highly dilutive. Our ability to refinance our indebtedness will depend on the capital markets and our financial condition at such time. We may not be able to engage in any of these activities or engage in these activities on desirable terms, which could result in a default on our debt obligations, including the Convertible Senior Notes.

***The conversion features of the Convertible Senior Notes may adversely affect our financial condition and operating results.***

 ****

The holders of Convertible Senior Notes will be entitled to convert their notes at and during specified periods at their option. If one or more holders elect to convert their notes, unless we elect to satisfy our conversion obligation by delivering solely shares of our common stock (other than paying cash in lieu of delivering any fractional share), at maturity, we would be required to settle a portion or all of our conversion obligation through the payment of cash, which could adversely affect our liquidity.

***Certain provisions in the indentures or other agreements governing the Convertible Senior Notes may delay or prevent an otherwise a beneficial takeover attempt of us.***

 ****

Certain provisions in the indentures or other agreements governing the Convertible Senior Notes may make it more difficult or expensive for a third party to acquire us. For example, the indentures and other agreements governing the Convertible Senior Notes will require us to repurchase the Convertible Senior Notes for cash upon the occurrence of a fundamental change and, in certain circumstances, to increase the conversion rate for a holder that converts its notes in connection with a make-whole fundamental change. A takeover of us may trigger the requirement that we repurchase the Convertible Senior Notes and/or increase the conversion rate, which could make it costlier for a potential acquirer to engage in such takeover. Such additional costs may have the effect of delaying or preventing a takeover of us that would otherwise be beneficial to investors.

***Conversion of the Convertible Senior Notes may dilute the ownership interest of our stockholders or may otherwise depress the price of our common stock.***

 ****

The conversion of some or all of the Convertible Senior Notes may dilute the ownership interests of our stockholders. Upon conversion of the Convertible Senior Notes, we have the option to pay or deliver, as the case may be, cash, shares of our common stock or a combination of cash and shares of our common stock. If we elect to settle our conversion obligation in shares of our common stock or a combination of cash and shares of our common stock, any sales in the public market of our common stock issuable upon such conversion could adversely affect prevailing market prices of our common stock. In addition, the existence of the Convertible Senior Notes may encourage short selling by market participants because the conversion of the Convertible Senior Notes could be used to satisfy short positions, or anticipated conversion of the Convertible Senior Notes into shares of our common stock could depress the price of our common stock.

***The accounting method for the Convertible Senior Notes could adversely affect our reported financial condition and results.***

 ****

The accounting method for reflecting the Convertible Senior Notes on our balance sheet, accruing interest expense for the Convertible Senior Notes and reflecting the underlying shares of our common stock in our reported diluted earnings per share may adversely affect our reported earnings and financial condition.

In August 2020, the Financial Accounting Standards Board ("**FASB**") published Accounting Standards Update ("**ASU**") 2020-06 ("**ASU 2020-06**"), which simplified certain of the accounting standards that apply to convertible notes. ASU 2020-06 eliminated the cash conversion and beneficial conversion feature modes used to separately account for embedded conversion features as a component of equity. Instead, an entity would account for convertible debt or convertible preferred stock securities as a single unit of account, unless the conversion feature requires bifurcation and recognition as derivatives. Additionally, the guidance requires entities to use the "if-converted" method for all convertible instruments in the diluted earnings per share calculation and to include the effect of potential share settlement for instruments that may be settled in cash or shares. ASU 2020-06 became effective for us beginning on January 1, 2022.

In addition, we expect that the shares of common stock underlying the Convertible Senior Notes will be reflected in our diluted earnings per share using the "if converted" method, in accordance with ASU 2020-06. Under that method, diluted earnings per share would generally be calculated assuming that all the Convertible Senior Notes were converted solely into shares of common stock at the beginning of the reporting period, unless the result would be anti-dilutive. The application of the if-converted method may reduce our reported diluted earnings per share to the extent we are profitable in the future, and accounting standards may change in the future in a manner that may adversely affect our diluted earnings per share.

Furthermore, if any of the conditions to the convertibility of the Convertible Senior Notes is satisfied, then we may be required under applicable accounting standards to reclassify the liability carrying value of the Convertible Senior Notes as a current, rather than a long-term, liability. This reclassification could be required even if no noteholders or holders of affiliate notes convert their notes or affiliate notes, respectively, following the satisfaction of those conditions and could materially reduce our reported working capital.

**ITEM 2. UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS**

None.

**ITEM 3. DEFAULTS UPON SENIOR SECURITIES**

None.

**ITEM 4. MINE SAFETY DISCLOSURES**

Not applicable.

**ITEM 5. OTHER INFORMATION**

None.

**ITEM 6. EXHIBITS**

---

| | | | | | |
|:---|:---|:---|:---|:---|:---|
| **Exhibit Number** | **Exhibit Description** | **Form** | **File Number** | **Exhibit** | **Filing Date** |
| 2.1 | [Amended and Restated Business Combination Agreement, dated as of May 26, 2023, by and among Freedom Acquisition I Corp., Jupiter Merger Sub I Corp., Jupiter Merger Sub II LLC, Complete Solar Holding Corporation, and The Solaria Corporation](http://www.sec.gov/Archives/edgar/data/1838987/000119312523155921/d425844ds4a.htm#anxacov) | S-4 | 333-269674 | 2.1 | May 31, 2023 |
| 2.2 | [Agreement and Plan of Merger, dated as of October 3, 2022, by and between Complete Solar Holding Corporation, Complete Solar Midco, LLC, Complete Solar Merger Sub, Inc., The Solaria Corporation, and Fortis Advisors LLC](http://www.sec.gov/Archives/edgar/data/1838987/000119312523030704/d425844dex24.htm) | S-4 | 333-269674 | 2.4 | February 10, 2023 |
| 2.3 | [Asset Purchase Agreement dated September 19, 2023, by and among Complete Solaria, Inc., SolarCA, LLC, and Maxeon Solar Technologies, Ltd.](http://www.sec.gov/Archives/edgar/data/1838987/000119312523239699/d558159dex21.htm) | 8-K | 001-40117 | 2.1 | 2023-09-21 |
| 3.1 | [Certificate of Incorporation of Complete Solaria](http://www.sec.gov/Archives/edgar/data/1838987/000119312523191334/d862117dex31.htm) | 8-K | 001-40017 | 3.1 | 2023-07-21 |
| 3.2 | [Bylaws of Complete Solaria](http://www.sec.gov/Archives/edgar/data/1838987/000119312523191334/d862117dex32.htm) | 8-K | 001-40017 | 3.2 | 2023-07-21 |
| 4.1 | [Form of Replacement Warrant](http://www.sec.gov/Archives/edgar/data/1838987/000119312523255093/d569645dex41.htm) | 8-K | 001-40117 | 4.1 | 2023-10-12 |
| 4.2 | [Form of First Amendment to Replacement Warrant](http://www.sec.gov/Archives/edgar/data/1838987/000119312523255093/d569645dex42.htm) | 8-K | 001-40117 | 4.2 | 2023-10-12 |
| 4.3 | [Amended and Restated Registration Rights Agreement, dated July 18, 2023, by and among the Company and certain other stockholders party thereto](http://www.sec.gov/Archives/edgar/data/1838987/000119312523192359/d530739dex41.htm) | 8-K | 001-40117 | 4.1 | 2023-07-24 |
| 4.4 | [Warrant Agreement, dated February 25, 2021, by and between the Company and Continental Stock Transfer & Trust Company, as warrant agent](http://www.sec.gov/Archives/edgar/data/1838987/000095010321003441/dp147251_ex0401.htm) | 8-K | 001-40117 | 4.1 | 2021-03-2 |
| 4.5 | [Indenture, dated September 16, 2024, between the Company and U.S. Bank Trust Company, National Association](http://www.sec.gov/Archives/edgar/data/1838987/000121390024082266/ea021574201ex4-1_complete.htm) | 8-K | 001-40117 | 4.1 | 2024-09-26 |
| 4.6 | [Form of 7.0% Convertible Senior Note due 2029](http://www.sec.gov/Archives/edgar/data/1838987/000121390024082266/ea021574201ex4-2_complete.htm) | 8-K | 001-40117 | 4.2 | 2024-09-26 |
| 4.7 | [Exchange Agreement, dated July 1, 2024, among the Company and the purchasers party thereto](http://www.sec.gov/Archives/edgar/data/1838987/000121390024059870/ea020910501ex10-1_complete.htm) | 8-K | 001-40117 | 10.1 | 2024-07-08 |
| 4.8 | [Form of SAFE (2024)](http://www.sec.gov/Archives/edgar/data/1838987/000121390024014892/ea193922ex10-1_complete.htm) | 8-K | 001-40017 | 10.1 | 2024-02-16 |
| 31.1\* | [Certification pursuant to Rule 13a-14(a) and Rule 15d-14(a) under the Securities Exchange Act of 1934, as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.](ea029048901ex31-1.htm) |  |  |  |  |
| 32.1\*\* | [Certification pursuant to 18 U.S.C. 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.](ea029048901ex32-1.htm) |  |  |  |  |
| 101\* | Inline XBRL Document Set for the unaudited condensed consolidated financial statements and accompanying notes in the Condensed Consolidated Financial Statements and Supplemental Details |  |  |  |  |
| 104\* | Cover Page Interactive Data File - formatted in Inline XBRL and included as Exhibit 101 |  |  |  |  |

---

\* Filed herewith

\*\* Furnished herewith

**Signatures**

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.

---

| | | |
|:---|:---|:---|
|  | SunPower Inc. | SunPower Inc. |
| Date: May 18, 2026 | By: | /s/ THURMAN J. RODGERS |
|  |  | Thurman J. Rodgers |
|  |  | Chief Executive Officer and Executive Chairman; Principal Financial Officer |

---

## Exhibit 31.1

**Exhibit 31.1**

CERTIFICATION

I, Thurman J. Rodgers, certify that:

1. I have reviewed this quarterly report on Form 10-Q of SunPower Inc.;

2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary
to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period
covered by this report;

3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material
respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this
report;

4. The registrant's other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures
(as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules
13a-15(f) and 15d-15(f)) for the registrant and have:

&nbsp;&nbsp;&nbsp;&nbsp;a) Designed such disclosure controls and procedures, or caused
such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant,
including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which
this report is being prepared;

&nbsp;&nbsp;&nbsp;&nbsp;b) Designed such internal control over financial reporting,
or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding
the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally
accepted accounting principles;

&nbsp;&nbsp;&nbsp;&nbsp;c) Evaluated the effectiveness of the registrant's disclosure
controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures,
as of the end of the period covered by this report based on such evaluation; and

&nbsp;&nbsp;&nbsp;&nbsp;d) Disclosed in this report any change in the registrant's
internal control over financial reporting that occurred during the registrant's most recent fiscal quarter (the registrant's
fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the
registrant's internal control over financial reporting; and

5. The registrant's other certifying officer and I have disclosed, based on our most recent evaluation
of internal control over financial reporting, to the registrant's auditors and the audit committee of the registrant's board
of directors (or persons performing the equivalent functions):

&nbsp;&nbsp;&nbsp;&nbsp;a) All significant deficiencies and material weaknesses in the
design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant's
ability to record, process, summarize and report financial information; and

&nbsp;&nbsp;&nbsp;&nbsp;b) Any fraud, whether or not material, that involves management
or other employees who have a significant role in the registrant's internal control over financial reporting.

---

| | | |
|:---|:---|:---|
| Date: May 18, 2026 | By: | /s/ Thurman J. Rodgers |
|  |  | Thurman J. Rodgers |
|  |  | Chief Executive Officer and Executive Chairman |
|  |  | (*Principal Executive Officer and Principal Financial Officer)* |

---

## Exhibit 32.1

**Exhibit 32.1**

**CERTIFICATION**

**PURSUANT TO 18 U.S.C. SECTION 1350, AS ADOPTED PURSUANT TO SECTION 906**

**OF THE SARBANES-OXLEY ACT OF 2002**

In connection with the Quarterly Report on Form 10-Q of SunPower Inc. (the "Company") for the period ended March 30, 2025, as filed with the Securities and Exchange Commission on the date hereof (the "Report"), I certify, pursuant to 18 U.S.C. § 1350, as adopted pursuant to § 906 of the Sarbanes-Oxley Act of 2002, that:

&nbsp;&nbsp;&nbsp;&nbsp;1. The Report fully complies with the requirements of section
13(a) or 15(d) of the Securities Exchange Act of 1934; and

&nbsp;&nbsp;&nbsp;&nbsp;2. The information contained in the Report fairly presents,
in all material respects, the financial condition and results of operations of the Company.

---

| | | |
|:---|:---|:---|
| Date: May 18, 2026 | By: | /s/ Thurman J. Rodgers |
|  |  | Thurman J. Rodgers |
|  |  | Chief Executive Officer and Executive Chairman |
|  |  | *(Principal Executive Officer and Principal Financial Officer)* |

---