Item 1. Business
ITEM 1. BUSINESS
Our Mission
Our
mission is to deliver energy-efficient solutions to homeowners and small to medium-sized businesses that allow them to lower their energy
bills while reducing their carbon footprint. Complete Solaria , Inc., or
Complete Solaria, has created a unique, end-to-end offering that delivers a best-in-class customer experience with a robust technology
platform, financing solutions, and high-performance solar modules.
Business Overview
Complete Solaria was formed
in November 2022 through the merger of Complete Solar Holding Corporation, a Delaware corporation (“Complete Solar”),and The
Solaria Corporation, a Delaware corporation (such entity, “Solaria,” and such transaction, the “Business Combination”).
Complete Solaria 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. We fulfill our customer contracts 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 HelioTrackTM
software system.
Complete Solaria provides
residential solar system designs, proposals, and CAD drawing sets to existing sales partners and other residential solar companies, regardless
of whether they participate as or builder partners. In doing so, Complete Solaria seeks to power the entire solar power industry.
In October 2023, we sold solar
panel assets of The Solaria Corporation, including intellectual property and customer contracts to Maxeon Solar Technologies, Ltd. (“Maxeon”),
pursuant to the terms of an asset purchase agreement (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.
Revenue Model
Our current products fall
into two general categories: Solar System Sales and Software Enhanced Services.
●
Solar System Sales: Complete Solaria sells solar systems to homeowners and small to medium-sized commercial customers through third-party sales partners. Complete Solaria manages every aspect of project management for those contracts before ultimately contracting with builder partners to complete the construction of the solar systems. This residential solar platform provides homeowners with simple pricing for solar energy that provides significant savings to traditional utility energy. Homeowners can choose from a wide array of system features and financing options that best meet their needs. By delivering the best-matched products and a best-in-class customer experience, Complete Solaria establishes valuable customer relationships that can extend beyond the initial solar energy system purchase and provides Complete Solaria with opportunities to offer additional products and services in the future.
● Software
Enhanced Services: The HelioQuoteTM software system is provided to existing sales partners and other participants in the solar industry
and powers our sales of residential solar designs, proposals, and engineering services.
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Technology Innovation
Since its inception, Complete
Solaria has continued to invest in a platform of services and tools to enable large-scale operations for sales and builder partners. The
platform incorporates processes and software solutions that simplify and streamline design, proposals, and project management throughout
the lifecycle of a residential solar project. The platform empowers new market entrants and smaller industry participants with its plug-and-play
capabilities. The ecosystem Complete Solaria has built provides broad reach, and we believe it positions Complete Solaria for sustained
and rapid growth through a capital-efficient business model. The network of our partners continues to expand today.
Differentiation and Operating Results
Delivering a differentiated customer experience
is core to Complete Solaria’s strategy. It emphasizes a customized solution, including a design specific to each customer’s
home and pricing configurations that typically drive both customer savings and value. Developing a trusted brand and providing a customized
solar service offering resonates with customers accustomed to a traditional residential power market that is often overpriced and lacking
in customer choice.
Financing Solutions
Complete Solaria assists its
end customers with financing solutions through third-party lease providers, power purchase agreement providers and third-party loan
providers.
Customers may lease a Complete Solaria solar system.
The lease provider will purchase the solar system and the property owner will rent the solar system in exchange for the electricity the
system produces.
Through a power purchase agreement, a third-party
developer installs, owns, and operates a solar system on a customer’s property. The customer then purchases the system’s electric
output for a predetermined period. A power purchase agreement allows the customer to receive stable and often low-cost electricity with
no upfront cost while also enabling the owner of the system to take advantage of tax credits and receive income from the sale of electricity.
Lastly, third-party loan
providers offer Complete Solaria’s end customers a loan to purchase solar systems, and then the customers will pay off the loan
over a period of time.
Our Strategy
Complete Solaria’s strategy focuses on providing its sales partners
with the software tools, sales support, and ability to compete effectively with national providers. This turnkey solution makes it easy
for anyone to sell solar.
Solar System Sales
Solar System Sales are full systems sold to homeowners
and small to medium-sized commercial businesses through Complete Solaria’s sales partner channels. Complete Solaria and its builder
partners fulfill and install the systems.
●
Increase revenue by expanding installation capacity and developing new geographic markets through Complete Solaria’s partner programs.— Certain Complete Solaria partners become builder partners who install systems resulting from sales generated by Complete Solaria’s sales partners. By leveraging this network of skilled builders, Complete Solaria aims to increase its installation capacity in traditional markets and expand its offering into new geographies throughout the U.S. We believe 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 — Complete Solar operated in 16 states before the formation of Complete Solaria. By expanding operations nationally,
Complete Solaria will be able 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 brokers. Complete Solaria expects to create a consistent
offering with a single execution process for such sales partners throughout their territories. These national accounts have unique customer
relationships that will facilitate meaningful sales opportunities and low acquisition cost to increase revenue and improve margin.
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Software and Services
Software and services sales include access to Complete
Solaria’s HelioQuoteTM sales proposal and system design software; proposal writing services that support field sales agents; and
design, engineering, and permitting services that improve subscale solar companies’ operational effectiveness and cost efficiency. See
“Increase revenue and margin by bundling software enhanced services with solar module sales ” above.
In support of Complete Solaria’s strategy
to increase revenue and expand margin opportunities in its two core products, Complete Solaria also considers the following activities
to be key elements of its strategy:
● Expand Partnerships with Solar Partners, Strategic Partners,
and Attractive New Market Participants. Complete Solaria’s platform of services and tools allows it to engage with a wide variety
of solar industry partners and new industry participants, such as retailers and service providers who would like to offer solar to new
and existing customers. Complete Solaria plans to continue to invest in its ability to attract, convert, grow, and retain promising partners
to facilitate capital-efficient growth.
● Continue to Invest in the digital platform . Complete
Solaria plans to continue to invest in and develop complementary software, services, and technologies to enhance the scalability of its
platform and support an automated, highly efficient operational structure that delivers a world-class customer experience. Complete Solaria
expects to continue to make significant investments in automating the end-to-end solar process through improved workflow management,
electronic site-audit, and electronic permitting capabilities. Additionally, Complete Solaria plans to continue to develop consumer facing
software to enhance consumers’ ability to manage their solar systems and integrate other energy-efficient products and services
into their homes.
● Continue to Deliver a Differentiated Customer Experience.
Complete Solaria prioritizes the customer experience. Its systems enable fast project fulfillment, direct customer communication,
and facilitation of third-party sales, installation, and finance partners for a seamless customer experience. These systems also enable
a broad service offering with customized configurations and pricing. Further development of these systems will enable future product
offerings and increasingly optimized solar and energy-efficient configurations for Complete Solaria’s customers.
Our Strengths
The following strengths position Complete Solaria
to drive the mass adoption of residential solar in a manner that maximizes the value of its growing customer base over the long term:
● Platform of Services and Tools : A diversified and multi-pronged
customer acquisition approach. This infrastructure underpins the ability to enjoy broad customer reach with a low system-wide cost structure
and positions Complete Solaria for expansion to every market where distributed solar energy generation can offer homeowners savings versus
traditional utility retail power.
● Differentiated Customer Experience : We offer a unique
customer experience through various methods: customer-friendly solar service features, tailored designs and customizable pricing for
each homeowner, a highly consultative sales process, and a focus on customer savings.
● Unique access to customers through third-party sales channels:
The turn-key solar product offering, best-in-class customer service, and national footprint support third-party sales channels and
strategic national partnerships. Complete Solaria provides solutions for sales channels seeking to expand their geographic reach and
strengthen their relationships with their own customers.
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Technology Suite
HelioSuite is an innovative,
end-to-end software platform designed to manage every aspect of a residential solar project. HelioSuite was originally designed to support
our internal sales and build partners to ensure a seamless customer experience. In 2021, Complete Solaria commercialized the software
solutions through Helio Proposal Services provide proposal services for residential solar sales companies outside of Complete Solar’s
existing network of sales partners. Features of the Technology Suite include the following capabilities, some of which are planned for
roll-out in the future:
● HelioQuoteTM : is an automated solar design tool that
rapidly generates optimized proposals and executable contracts. Software innovations that automate system design and layout while optimizing
homeowner economics enable proposal generation. The average turnaround time for a proposal is only five minutes, which we believe is
much faster than our competitors.
● HelioTrackTM : a project management software that streamlines
the installation process and coordinates interactions between Complete Solaria, homeowners, sales partners and build partners. It includes
a customer relationship management tool that provides payroll, commissions tracking, and project progression to all partners. The equipment
management module coordinates the bill of materials and ordering process and tracks and manages all inventory for a project. The construction
module assigns projects, calculates commissions and payments, and control quality. The Complete Solar Project Management tools automate
task assignments and times and track progress.
● Share The Sun : is an online customer engagement platform
where customers can make referrals and share information on social networks. Complete Solaria has considered offering services that allow
customers to view their energy generation, pay their bills, contact the customer service team, and assess their positive environmental
impact.
Customer Service and Operations
Solar System Sales
Complete Solaria has made significant investments
to create a platform of services and tools that addresses customer origination, system design and installation, and general customer support.
Before a sales representative conducts a consultation, homeowners are pre-qualified based on a preliminary evaluation which considers
a homeowner’s credit, home ownership, electricity usage and suitability of the roof based on age, condition, shading and pitch.
Once a homeowner is pre-qualified, all necessary data is collected and a proposal is generated for the homeowner. If a homeowner is interested
in moving forward, a customer contract is automatically generated for electronic execution. This contract then undergoes a final review
and verification of credit before it is countersigned.
Once an agreement is fully executed, a service
tech performs a site audit at the home to inspect the roof and measure shading. This audit follows a final system design plan and an application
for any required building permits. The plans are reviewed to ensure they conform to the executed contract or to process a change order
if required. A second production estimate is generated at this time and if the expected energy production exceeds or falls below the original
estimate by certain thresholds, the homeowner agreement is modified accordingly. To reduce installation costs and operational risk, there
are defined design and installation quality standards designed to ensure that homeowners receive a quality product, regardless of who
installs the system.
After the solar panels are installed, the customer care team follows
up with the homeowner with a survey on their experience. If a system requires maintenance, Complete Solaria or a partner or dedicated
service-only contractor will visit the customer’s home and perform any necessary repairs or maintenance at no additional cost to
the customer.
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Software Enhanced Services
Complete Solaria’s partners are third-party
Sales organizations that use the design and proposal services for their residential solar projects. Complete Solaria staffs a sales support
desk six days a week to provide live customer support for sales representatives who need a design or proposal for a potential homeowner
sale. These customer support teams rapidly produce proposals, answer questions, and offer other forms of support for sales personnel.
Suppliers
The main components of a residential solar energy
system are the solar modules, inverters, and racking systems. Complete Solaria generally purchases these components for build partners
from select distributors, which are then shipped to build partners for installation. There is a running list of approved suppliers in
the event any of the sources for modules, inverters or other components become unavailable. If Complete Solaria fails to develop, maintain,
and expand relationships with these or other suppliers, the ability to meet anticipated demand for solar energy systems may be adversely
affected, or at higher costs or delayed. If one or more of the suppliers ceases or reduces production due to its financial condition,
acquisition by a competitor or otherwise, it may be difficult to identify alternate suppliers quickly or to qualify alternative products
on commercially reasonable terms, and the ability to satisfy this demand may be adversely affected.
Complete Solaria screens all suppliers and components
based on expected cost, reliability, warranty coverage, ease of installation, etc. The declining cost of solar modules and the raw materials
necessary to manufacture them have been a key driver in the prices charged for electricity and homeowner adoption of solar energy. If
solar module and raw material prices do not continue to decline at the same rate as they have over the past several years, the resulting
prices could slow growth and cause financial results to suffer. If Complete Solaria is required to pay higher prices for supplies, accept
less favorable terms, or purchase solar modules or other system components from alternative, higher-priced sources, financial results
may be adversely affected.
Complete Solaria’s build partners are responsible
for and source the other products related to solar energy systems, such as fasteners, wiring and electrical fittings. From time-to-time,
Complete Solaria procures these other products related to solar energy systems for its own installation business. Complete Solaria manages
inventory through local warehouses and as segregated inventory at build partners.
The main components of a residential solar module
are the solar cells. Complete Solaria’s solar modules are generally manufactured by third-party select manufacturers and are purchased
from distributors.
Complete Solaria screens all suppliers and components
based on expected cost, reliability, warranty coverage, ease of installation, and other factors. It typically enters into master contract
arrangements with major suppliers that define the general terms and conditions of purchases, including warranties, product specifications,
indemnities, delivery and other customary terms.
Competition
Solar System Sales
Complete Solaria’s primary competitors are
the traditional utilities that supply electricity to potential customers. It competes with these traditional utilities primarily based
on price (cents per kilowatt hour), predictability of future prices (by providing pre-determined annual price escalations) and the ease
by which homeowners can switch to electricity generated by solar energy systems. Based on these factors, Complete Solaria competes favorably
with traditional utilities.
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Complete Solaria competes for homeowner customers
with other solar sales and installation companies and with solar companies with business models that are similar to Complete Solaria’s.
Complete Solaria’s main competitors can be grouped broadly into (a) national, vertically integrated companies with established brands
and proprietary consumer financing products; (b) small, local solar contractors who operate with relatively low-fixed overhead expenses
but who may lack systems, tools, and sophisticated product offerings; and (c) sales aggregators who engage with third-party sales companies
to generate installation contracts. Complete Solaria competes favorably with these companies, with (a) better customer experience and
better Sales Partner experience than the national vertically integrated companies; (b) better pricing and broader customer offerings than
smaller local solar contractors; and (c) a better build partner experience than sales aggregators.
Complete Solaria also faces competition from purely
finance-driven organizations that acquire homeowner customers and then subcontract out the installation of solar energy systems, installation
businesses that seek financing from external parties, large construction companies and utilities and sophisticated electrical and roofing
companies. At the same time, the open platform provides opportunities for these competitors to become partners, and the open platform
offers these new market participants a cost-effective way to enter the market and compelling process, technology and supply chain services
over the long term.
Intellectual Property
Complete Solaria seeks to
protect its intellectual property rights by relying on federal, state and common law rights in the U.S. and other countries, as well
as contractual restrictions. It generally enters into confidentiality and invention assignment agreements with employees and contractors,
and confidentiality agreements with other third parties, in order to limit access to, and disclosure and use of, confidential information
and proprietary technology. In addition to these contractual arrangements, Complete Solaria also relies on a combination of trademarks,
trade dress, domain names, copyrights, and trade secrets to help protect the brand and other intellectual property.
Government Regulations and Incentives
Governments have used different public policy mechanisms
to accelerate the adoption and use of solar power. Examples of customer-focused financial mechanisms include capital cost rebates, performance-based
incentives, feed-in tariffs, tax credits, renewable portfolio standards, net metering, and carbon regulations. Some of these government
mandates and economic incentives are scheduled to be reduced or to expire or could be eliminated. Capital cost rebates provide funds to
customers based on the cost and size of a customer’s solar power system. Performance-based incentives provide funding to a customer
based on the energy produced by their solar power system. Feed-in tariffs pay customers for solar power system generation based on energy
produced at a rate generally guaranteed for a period of time. Tax credits reduce a customer’s taxes at the time the taxes are due.
Renewable portfolio standards mandate that a certain percentage of electricity delivered to customers comes from eligible renewable energy
resources. Net metering allows customers to deliver to the electric grid any excess electricity produced by their on-site solar power
systems and to be credited for that excess electricity at or near the full retail price of electricity. Carbon regulations, including
cap-and-trade and carbon pricing programs, increase the cost of fossil fuels, which release climate-altering carbon dioxide and other
greenhouse gas emissions during combustion.
In addition to the mechanisms
described above, there are various incentives for homeowners and businesses to adopt solar power in The Inflation Reduction Act of 2022.
Moreover, in Europe, the European Commission has mandated that its member states adopt integrated national climate and energy plans to
increase their renewable energy targets to be achieved by 2030, which could benefit the deployment of solar. However, the U.S. and European
Union, among others, have imposed tariffs or are evaluating the imposition of tariffs on solar panels, solar cells, polysilicon, and other
components. These and any other tariffs or similar taxes or duties may offset the incentives described above and increase the price of
Complete Solaria’s solar products.
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Employees and Human Capital Resources
As of December 31, 2023, Complete Solaria had over
134 employees. Complete Solaria also engages independent contractors and consultants. No employees are covered by collective bargaining
agreements. There have not been any work stoppages.
Complete Solaria’s human capital resources
objectives include identifying, recruiting, retaining, training, and integrating its existing and new employees. The principal purposes
of Complete Solaria’s equity incentive plans are to attract, retain and motivate personnel through the granting of equity-based
awards, increasing stockholder value and the success of Complete Solaria by motivating such individuals to perform to the best of their
abilities and achieve Complete Solaria’s objectives.
Facilities
Complete Solaria’s corporate headquarters
and executive offices are located in Fremont, California and it also maintains an office in Lehi, Utah.
Complete Solaria leases all the facilities and
owns no real property. Complete Solaria believes that current facilities are adequate to meet ongoing needs. If additional space is required,
Complete Solaria believes that it will be able to obtain additional facilities on commercially reasonable terms.
U.S. Corporate Information
We were originally known as
Freedom Acquisition I Corp (“FACT”). We are engaged in solar system sales and associated commerce. On July 18, 2023, Complete
Solaria, FACT, and certain other entities consummated the transactions contemplated under that certain amended and restated Business Combination
Agreement, dated as of May 26, 2023, following the approval at the special meeting of the stockholders of FACT held July 11, 2023. In
connection with the closing of the Business Combination, we changed our name from Freedom Acquisition I Corp. to Complete Solaria, Inc.
Our principal executive offices
are located at 45700 Northport Loop E, Fremont, CA 94538, and our telephone number is (510) 270-2507.
Access to Company Information
We file or furnish periodic
reports and amendments thereto, including our Annual Reports on Form 10-K, our Quarterly Reports on Form 10-Q and Current Reports on Form
8-K, proxy statements and other information with the Securities and Exchange Commission (“SEC”). In addition, the SEC maintains
a website (www.sec.gov) that contains reports, proxy and information statements, and other information regarding issuers that file electronically.
Complete Solar’s internet address is https://www.completesolaria.com. Through our internet website, we make available, free of charge,
our Annual Report on Form 10-K, quarterly reports on Form 10-Q, current reports on Form 8-K, and all amendments to those reports as soon
as reasonably practicable after such reports have been filed with or furnished to the SEC. The information on our website is not
a part of this Annual Report on Form 10-K.
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