What changed in this filing

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Item 1A. Risk Factors

2025-04-30 compared with 2024-04-01 · 892 added, 626 removed, 805 unchanged (65% of the section changed)

15 unchanged sentences

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.

We incurred net losses of $56.5 million and $269.6 million, during the

fiscal years ended December 29, 2024 and December 31, 2023, respectively, and had an accumulated deficit of $411.4 million, accrued

expenses and other current liabilities of $56.1 million, current debt of $1.5 million, and notes payable and derivative liabilities,

net of current portion of $145.8 million, respectively, as of December 29, 2024, as well as other current and long-term liabilities

(including the $6.9 million liability we recorded relating to a litigation matter with Siemens).

We had cash and cash equivalents of

$13.4 million as of December 29, 2024, which were 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.

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.

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

may need to raise additional funding to finance our operations.

This additional financing may not be available on acceptable terms or

Failure to obtain this necessary capital when needed may force us to curtail planned programs or cease operations entirely.

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

had cash and cash equivalents of $13.4 million as of December 29, 2024.

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

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.

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

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.

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:

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.

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

The Company did not maintain an effective control environment and identified the following material weakness:

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.

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

The Company did not design and implement an effective risk assessment and identified a material weakness relating

(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.

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.

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.

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

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).

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.

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 this Annual

Report on Form 10-K within the timeframe required by the SEC.

Accordingly, we have not remained current in our reporting requirements

with the SEC, and 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%.

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.

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.

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

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The Inflation Reduction Act

(“IRA”) extended and modified prior law applicable to tax credits that are available with respect to solar energy systems.

Under the IRA, the following credits are available:

(i) a production tax credit under Code Section 44 (for facilities that begin construction

before January 1, 2025) and Code Section 45Y (for facilities that begin construction between January 1, 2025 and the year that is four

calendar years after the year in which certain U.S.

greenhouse gas emissions percentages are met) (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 begin construction between January

1, 2025 and the year that is four calendar years after the year in which certain U.S.

greenhouse gas emissions percentages are met) (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 property that uses solar energy to generate

electricity for residential use.

(“IRA”) extended and modified prior law applicable to U.S.

federal tax credits that are available with respect to solar energy

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

Prior to the IRA, the PTC

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The PTC available to

a taxpayer in a taxable year 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 is 0.3 cents.

This rate is increased to 1.5 cents for projects that (i) have a maximum net output of less than one MW AC, (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 ITC available to a taxpayer

in a taxable year is equal to the “energy percentage” of the basis of “energy property” placed in service by the

taxpayer during that taxable year.

“Energy property” includes equipment that uses solar energy to generate electricity (including

structural components that are necessary to the functioning of a solar facility as a whole) and certain energy storage systems (including

batteries included as part of or adjacent to a solar facility).

The base “energy percentage” for the ITC is 6%.

percentage is increased to 30% for projects that (i) have a maximum net output of less than one MW AC, (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.

ITCs are subject to recapture if, during the five-year period after a facility is placed in

service, the facility is sold, exchanged, involuntarily converted, or ceases its business usage.

If the event that causes such recapture

occurs within the first year after a project is placed in service, 100% of the ITCs will be recaptured.

The recapture percentage is reduced

20% for each subsequent year.

Historically, we have utilized the ITC when available for both residential and commercial leases and power

purchase agreements, based on ownership of the solar energy system.

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

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.

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

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.

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.

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 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.

Although it is unlikely that Complete Solaria would qualify for the Section 25D Credit, the availability

of the Section 25D Credit may impact the prices of its solar energy systems.

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 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

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.

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

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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:

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;

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

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 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

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;

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

We will remain an emerging

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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.

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

2 unchanged sentences

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.

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

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;

● 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 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.

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, regulations and policies concerning the electric utility industry

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 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.

for electric generation equipment is also influenced by trade and local content laws, 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.

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

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.

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

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.

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.

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

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Under NEM 2.0, new

distributed generation customers receive the retail rate for electricity exported to the grid, less certain non-bypassable fees.

distributed generation customers receive the retail rate for electricity exported to the grid, less certain non-by passable fees.

under NEM 2.0 also are subject to interconnection charges and time-of-use rates.

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to develop Net Energy Metering 3.0 (“ NEM 3.0 ”), also referred to by the CPUC as the NEM 2.0 successor tariff.

was finalized on December 15, 2022 and will include several changes from previous net metering plans.

There will be changes that impact

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 will be tied to the state’s 2022 Distributed Energy Resources Avoided Cost Calculator Documentation

Another significant change with NEM 3.0 will be applied 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.

the value of the credits for net exports are tied to the state’s Distributed Energy Resources Avoided Cost Calculator Documentation

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.

We utilize a limited

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We purchase solar panels,

inverters and other system components from a limited number of suppliers, 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.

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.

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 suppliers.

Once we design a system for use with a particular inverter, if that type of inverter is not readily

available at an anticipated price, we may incur additional delay and expense to redesign the system.

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

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agreements (“ PPAs ”), leases, loans and other products and services.

We currently offer PPAs and leases through, 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.

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 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 ”).

modules are subject to a tariff rate of 15%.

Cells are subjected to a tariff-rate quota, under which the first 2.5 GW of cell imports

each year will be exempt from tariffs, and cells imported after the 2.5 GW quota has been reached will be subject to the same 30% tariff

as modules in the first year, with the same 5% 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

were granted exclusion from these safeguard tariffs on September 19, 2018, our solar products based on other technologies continue to

be subject to the safeguard tariffs.

Although we are actively engaged in efforts to mitigate the effect of these tariffs, there is no

guarantee that these efforts will be successful.

Uncertainty surrounding the

implications of existing tariffs affecting the U.S.

solar market and potential trade tensions between the U.S.

and other countries is

likely to cause 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

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

If we fail to manage

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and growth could adversely impact our reputation, business, financial condition, cash flows and results of operations.

We have international

activities and customers in the European Union, and plans to continue these efforts, which subjects us to additional business risks, including

logistical and compliance related complexity.

A portion of our sales are

made to customers outside of the U.S., and a substantial portion of our supply agreements are with supply and equipment vendors located

outside of the U.S.

We have solar cell and module production lines located at our outsourced manufacturing facilities in Thailand, Vietnam,

We are also considering other manufacturing locations.

Risks we face in conducting

business internationally include:

conflicting and changing laws and regulations, export and import restrictions, employment laws, data protection laws, environmental protection,

regulatory requirements, international trade agreements, and other government approvals, permits and licenses;

● difficulties

and costs in staffing and managing foreign operations as well as cultural differences;

● potentially

adverse tax consequences associated with current, future or deemed permanent establishment of operations in multiple countries;

uncertain legal systems, including potentially limited protection for intellectual property rights, and laws, changes in the governmental

incentives that we rely on, regulations and policies which impose additional restrictions on the ability of foreign companies to conduct

business in certain countries or otherwise place them at a competitive disadvantage in relation to domestic companies;

local infrastructure and developing telecommunications infrastructures;

risks, such as longer sales and payment cycles and greater difficulty collecting accounts receivable;

fluctuations, government-fixed foreign exchange rates, the effects of currency hedging activity, and the potential inability to hedge

currency fluctuations;

and economic instability, including wars, acts of terrorism, political unrest, boycotts, curtailments of trade and other business restrictions;

barriers such as export requirements, tariffs, taxes and other restrictions and expenses, which could increase the prices of our products

and make the company less competitive in some countries;

liabilities associated with compliance with laws (for example, the Foreign Corrupt Practices Act in the U.S.

and similar laws outside of the U.S.).

We have an organizational

structure involving entities globally.

This increases the potential impact of adverse changes in laws, rules and regulations affecting

the free flow of goods and personnel, and therefore heightens some of the risks noted above.

Further, this structure requires us to manage

our international inventory and warehouses effectively.

If we fail to do so, our shipping movements may not correspond with product demand

Unsettled intercompany balances between entities could result, if changes in law, regulations or related interpretations occur

in adverse tax or other consequences that affect capital structure, intercompany interest rates and legal structure.

If we are unable

to successfully manage any such risks, any one or more could materially and negatively affect our business, financial condition and results

of operations.

We have incurred losses

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We have incurred net losses

in the past and had an accumulated deficit of $354.9 million and $85.4 million as of December 31, 2023 and 2022, respectively.

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:

the customer base;

● Maintaining

or further lowering the cost of capital;

the cost of components for our solar service offerings;

and maintaining our channel partner network;

our direct-to-consumer business to scale;

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

in the past, including $56.5 million in the fiscal year ended December 29, 2024, and we have an accumulated deficit of $411.4 million

as of December 29, 2024.

Additionally, as of December 29, 2024, we had long-term indebtedness of $145.8 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;

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,

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from utilities could decrease as a result of:

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

construction of additional electric transmission and distribution lines;

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;

conservation technologies and public initiatives to reduce electricity consumption;

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

● development

of new energy technologies that provide less expensive energy.

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;

development of new energy technologies that provide less expensive energy.

A reduction in utility electricity

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other value added products and services that could help them compete with us even if the cost of electricity they offer is higher than

In addition, a majority of utilities’ sources of electricity is non-solar, which may allow utilities to sell electricity more

cheaply than electricity generated by our solar energy systems.

Our business is concentrated

in certain markets including California, putting us at risk of region-specific disruptions.

As of December 31, 2023, a

substantial portion of our installations were in California.

We expect much of its near-term future growth to occur in California, further

concentrating our customer base and operational infrastructure.

Accordingly, our business and operations results are particularly susceptible

to adverse economic, regulatory, pollical, weather, and other conditions in this market and other markets that may become similarly concentrated.

We may not have adequate insurance, including business interruption insurance, to compensate for losses that may occur from any such significant

A significant natural disaster could have a material adverse impact on our business, results of operations and financial condition.

In addition, acts of terrorism or malicious computer viruses could cause disruptions in our business, our partners’ businesses or

the economy as a whole.

To the extent that these disruptions result in delays or cancellations of installations or the deployment of solar

service offerings, our business, results of operations and financial condition would be adversely affected.

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.

Our growth strategy

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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;

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

● 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;

economic conditions and the level of interest rates.

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;

general economic conditions and the level of interest rates.

The residential solar energy

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In the U.S., many customers make purchasing decisions towards the end of the year

in order to take advantage of tax credits.

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.

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.

Natural disasters, terrorist

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the globe with significant disruption to financial markets.

We have outsourced product development and software engineering in Ukraine

and we may potentially indirectly be adversely impacted any significant disruption it has caused and may continue to escalate.

the current armed conflict in Israel and the Gaza Strip may impact our operations.

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.

We depend on a limited

number of customers and sales contracts for a significant portion of revenues, and the loss of any customer or cancellation of any contract

may cause significant fluctuations or declines in revenues.

In 2023, our top customer

accounted for 55% of our total revenues, while in 2022 another customer accounted for 47% of our total revenues from continuing operations.

We anticipate that our dependence on a limited number of customers may continue for the foreseeable future.

As a result of customer concentration,

our financial performance may fluctuate significantly from period to period based, among others, on exogenous circumstances related to

In addition, any one of the following events may materially adversely affect cash flows, revenues and results of operations:

delay or cancellation of orders from one or more significant customers;

of one or more significant customers and failure to identify additional or replacement customers;

of any significant customers to make timely payment for our products;

customers becoming insolvent or having difficulties meeting their financial obligations for any reason.

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.

We are exposed to the

credit risk of customers and payment delinquencies on its accounts receivables.

While customer defaults have

been immaterial to date, we expect that the risk of customer defaults may increase as we grow our business.

If we experience increased

customer credit defaults, our revenue and our ability to raise new investment funds could be adversely affected.

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,

(“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 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.

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.

We may not realize the

anticipated benefits of past or future acquisitions, and integration of these acquisitions may disrupt our business.

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

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Ltd., which resulted in an impairment loss of $147.5 million and loss on disposal of $1.8 million.

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.

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

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;

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;

inability to obtain, or obtain in a timely manner,

approvals from governmental authorities, which could delay or prevent such acquisitions.

We depend on our intellectual

property and may face intellectual property infringement claims that could be time-consuming and costly to defend and could result in

the loss of significant rights.

From time to time, we and

our customers, or the third parties with whom we work may receive letters, including letters from other third parties, and may become

subject to lawsuits with such third parties alleging infringement of their patents.

Additionally, we are required by contract to indemnify

some customers and third-party intellectual property providers for certain costs and damages of patent infringement in circumstances where

our products are a factor creating the customer’s or these third-party providers’ infringement liability.

This practice may

subject us to significant indemnification claims by customers and third-party providers.

We cannot assure investors that indemnification

claims will not be made or that these claims will not harm our business, operating results or financial condition.

Intellectual property

litigation is very expensive and time-consuming and could divert management’s attention from our business and could have a material

adverse effect on our business, operating results or financial condition.

If there is a successful claim of infringement against us, our

customers or our third-party intellectual property providers, we may be required to pay substantial damages to the party claiming infringement,

stop selling products or using technology that contains the allegedly infringing intellectual property, or enter into royalty or license

agreements that may not be available on acceptable terms, if at all.

Parties making infringement claims may also be able to bring an action

before the International Trade Commission that could result in an order stopping the importation into the U.S.

of our solar products.

Any of these judgments could materially damage our business.

We may have to develop non-infringing technology, and our failure in doing

so or in obtaining licenses to the proprietary rights on a timely basis could have a material adverse effect on the business.

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

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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.

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.

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

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requirements for processing personal data.

Under the EU GDPR, companies may face temporary or definitive bans on data processing and

other corrective actions;

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.

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

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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

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.

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Our business substantially

focuses on solar service agreements and transactions with residential customers.

We offer leases, loans and other products and services

to consumers by contractors 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, 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.

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

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.

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

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of these contractors.

While we have paid only minimal damages to date, 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.

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.

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.

We may be unsuccessful

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and would require financial and other investment and management attention in new branding, which may not be as successful.

Our success depends

on the continuing contributions of key personnel.

We rely heavily on the services

of our key executive officers and the loss of services of any principal member of the management team could adversely affect 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.

We are investing significant resources in developing new members of management as we complete our restructuring and strategic transformation.

We also anticipate that over time we will need to hire a number of highly skilled technical, sales, marketing, administrative, and accounting

Our success depends on the continuing contributions of key personnel,

including Thurman J.

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.

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

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section, the following factors could cause operating results to fluctuate:

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;

dealers’ ability to complete installations in a timely manner;

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

availability, terms and costs of suitable financing;

● the amount, timing of sales and potential decreases in value of Solar

Renewable Energy Certificates (“SRECs”);

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;

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

or anticipated developments in competitors’ businesses, technology or the competitive landscape;

disasters or other weather or meteorological conditions.

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;

natural disasters or other weather or meteorological conditions.

For these or other reasons,

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in the future that reduces our ability to protect sensitive data.

In addition, hardware, software, or applications we develop or procures

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.

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the request of our end customer, to undertake certain obligations such as:

output performance warranties;

system output performance warranties;

system maintenance.

Such customer obligations

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license in California.

In addition, we may be liable, either directly or through its solar partners, to homeowners for any damage we causes

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.

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recommendations.

Further, we or our solar partners

may face construction delays or cost overruns, which may adversely affect our or our solar 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

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

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or other markets in which we do business could also attract negative publicity and harm our business, brand and reputation in the market.

Our management has identified

conditions that raise substantial doubt about our ability to continue as a going concern.

Since our inception, we have

incurred losses and negative cash flows from operations.

We incurred net losses of $269.6 million and $29.5 million, during the fiscal

years ended December 31, 2023 and 2022, respectively, and had an accumulated deficit of $354.9 million and current debt of $61.9 million

as of December 31, 2023.

We had cash and cash equivalents of $2.6 million as of December 31, 2023, which were 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 to meet our obligations and finance our operations.

If we are not able to secure

adequate additional funding 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.

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 expect that we

will need to raise additional funding to finance our operations.

This additional financing may not be available on acceptable terms or

Failure to obtain this necessary capital when needed may force us to curtail planned programs or cease operations entirely.

operations have consumed significant amounts of cash since inception.

We expect to incur significant operating expenses as we continue

to grow our business.

We believe that our operating losses and negative operating cash flows will continue into the foreseeable future.

had cash and cash equivalents of $2.6 million as of December 31, 2023.

Our cash position raises substantial doubt regarding our ability

to continue as a going concern for 12 months after the consolidated financial statements issuance.

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.

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.

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 years ended December 31, 2022 and 2021, and our consolidated financial statements for the

year ended December 31, 2023, our management identified a material weakness in our internal control over financial reporting.

weakness is a deficiency, or combination of deficiencies, in internal control over financial reporting such that there is a reasonable

possibility that a material misstatement of our annual or inter im consolidated

financial statements will not be prevented or detected on a timely basis.

The material weakness is as follows:

● We do not have sufficient full-time accounting personnel, (i) to enable

appropriate reviews over the financial close and reporting process, (ii) to allow for appropriate segregation of duties, and (iii) with

the requisite experience and technical accounting knowledge to identify, review and resolve complex accounting issues under generally

accepted accounting principles in the U.S.

Additionally, we did not adequately design and/or implement controls

related to conducting a formal risk assessment process.

In connection with the preparation

and audit of our consolidated financial statements for the year ended December 31, 2023, our management identified a material weakness

in our internal control over financial reporting.

The material weakness is as follows:

controls related to the completeness, existence, and cut-off of inventories held at third

parties, and controls related to the calculation of adjustments to inventory for items considered

excessive and obsolete.

Had such an evaluation been

performed, additional control deficiencies may have been identified by the Company’s management, and those control deficiencies

could have also represented one or more material weaknesses.

Complete Solaria was not required to evaluate internal control over

financial reporting as of December 31, 2023 in accordance with the provisions of the Sarbanes-Oxley Act.

Had such an evaluation been performed,

Complete Solaria’s management may have identified additional control deficiencies, and those control deficiencies could have also

represented one or more material weaknesses.

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.

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.

Compliance with occupational

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Our operations are subject to regulation by the Occupational

Safety and Health Administration (“OSHA”) and the Department of Transportation (“DOT”) and equivalent state and

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.

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.

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.

Our business has benefited

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cover parts performance and labor to purchasers of our solar modules.

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

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.

warranty problems could impair our reputation which could result in lower revenue and a lower gross margin.

We are subject to legal

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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 may assert

claims against us.

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 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

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.

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.

Statements and Supplementary Data - Notes to Consolidated Financial Statements - Note 19.

Commitments and Contingencies” for a further

discussion of the legal claims summarized therein.

In addition to the other information

provided in Note 19, 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 Complete Solaria, Inc.

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, 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 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 December 29, 2024 and December 31, 2023.

The requirements of

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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.

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

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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.

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.

Our directors, executive officers

and each of our 5% stockholders and their affiliates, in the aggregate, beneficially own approximately 28.2% 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

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of our securities could contribute to the loss of all or part of your investment.

Prior to the Business Combination, there was no public

market for Solaria’s stock and trading in the shares of our common stock (prior to consummation of the Business Combination, “FACT

Common Stock”) was not active.

Accordingly, the valuation ascribed to Solaria and FACT Common Stock in the Business Combination

may not have been indicative of the price that will prevail in the trading market following the Business Combination.

If an active market

for our securities develops and continues, the trading price of our securities could be volatile an d

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.

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.

affecting the trading price of our securities:

or anticipated fluctuations in our quarterly financial results or the quarterly financial

results of companies perceived to be similar to us;

in the market’s expectations about our operating results;

of competitors;

operating results failing to meet the expectation of securities analysts or investors in

a particular period;

in financial estimates and recommendations by securities analysts concerning us or the market

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

ability to develop product candidates;

in laws and regulations affecting our business;

● commencement

of, or involvement in, litigation involving us;

in our capital structure, such as future issuances of securities or the incurrence of additional

volume of shares of our securities available for public sale

major change in our board of directors or management;

of substantial amounts of common stock by our directors, executive officers or significant

stockholders or the perception that such sales could occur;

economic and political conditions such as recessions, interest rates, fuel prices, international

currency fluctuations and acts of war or terrorism.

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.

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;

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

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

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You may be unable to sell your securities unless a market can be established or sustained.

There can be no assurance

that we will be able to comply with the continued listing standards of Nasdaq.

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.

delisting from Nasdaq may negatively impact our reputation and, consequently, our business.

There can be no assurance that we will maintain compliance with the

requirements for listing our common stock on Nasdaq.

As a result of not filing this Annual Report on Form 10-K within the timeframe required

by the SEC, we were not in compliance with the Nasdaq continued listing rules.

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

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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 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.

and a decreased ability to issue additional securities or obtain additional financing in the future.

Sales of a substantial

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other transaction that stockholders may consider favorable, include the following:

notice requirements for stockholder proposals and director nominations;

limiting stockholders’ ability to call special meetings of stockholders and to take action by written consent;

● restrictions

on business combinations with interested stockholders;

cumulative voting;

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.

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;

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

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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:

derivative action or proceeding brought on behalf of us;

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

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.

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;

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

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On and around July 13, 2023,

FACT entered into separate Forward Purchase Agreements with certain investors (together, the “ FPA Investors ”), pursuant

to which FACT (now Complete Solaria following the Closing) agreed to purchase in the aggregate, on the date that is 24 months after the

Closing Date (the “ Maturity Date ”), up to 6,720,000 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.

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 ”);

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

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 ”).

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

“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

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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.

may not continue to generate cash flow from operations in the future sufficient to service our debt and make necessary capital expenditures.

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

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

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

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

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.

Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.

What changed 10-K

Item 1A. Risk Factors