Item 1. Business
ITEM 1. BUSINESS
Our Mission
Our mission is to deliver
energy-efficient solutions to homeowners and small to medium-sized businesses that allow them to lower their energy bills while reducing
their carbon footprint. Complete Solaria, Inc., or Complete Solaria, has created a unique, end-to-end offering that delivers a best-in-class
customer experience with a robust technology platform, financing solutions, and high-performance solar modules.
Business Overview
Complete Solaria was formed
in November 2022 through the merger of Complete Solar Holding Corporation, a Delaware corporation (“Complete Solar”), and
The Solaria Corporation, a Delaware corporation (such entity, “Solaria,” and such transaction, the “Business Combination”).
Complete Solaria created a technology platform to offer clean energy products to homeowners by enabling a national network of sales partners
and build partners. Our sales partners generate solar installation contracts with homeowners on our behalf. To facilitate this process,
we provide the software tools, sales support and brand identity to our sales partners, making them competitive with national providers.
This turnkey solution makes it easy for anyone to sell solar. We fulfill our customer contracts by engaging with local construction specialists
and using our in-house installation experts. We manage the customer experience and complete all pre-construction activities prior to delivering
build-ready projects including hardware, engineering plans, and building permits to our builder partners and in-house teams.
In October 2023, we sold solar
panel assets of The Solaria Corporation, including intellectual property and customer contracts to Maxeon Solar Technologies, Ltd. (“Maxeon”)
pursuant to the terms of an asset purchase agreement (the “Disposal Agreement”). Under the terms of the Disposal Agreement,
Maxeon agreed to acquire certain assets and employees of Complete Solaria for an aggregate purchase price of approximately $11.0 million
consisting of 1,100,000 shares of Maxeon ordinary shares.
We expect to continue making
acquisitions and entering into strategic partnerships as part of our long-term business strategy. For example, on August 5, 2024, Complete
Solaria entered into an Asset Purchase Agreement (the “APA”) among Complete Solaria, SunPower Corporation (“SunPower”)
and SunPower’s direct and indirect subsidiaries (collectively, the “SunPower Debtors”) providing for the sale and purchase
of certain assets relating to the Blue Raven Solar business, New Homes Business and Non-Installing Dealer network previously operated
by the SunPower Debtors (the “Acquired SunPower Assets”). The APA was entered into in connection with a voluntary petition
filed by SunPower under Chapter 11 of the United States Code, 11 U.S.C.§§ 101-1532. The sale by SunPower was approved on September
23, 2024, by the United States Bankruptcy Court for the District of Delaware. The Company completed the acquisition of the Acquired SunPower
Assets effective September 30, 2024. The acquisition transactions under the APA are referred to herein as the “Acquisition,”
and the assets and businesses acquired by the Company under the APA are referred to as the “SunPower Businesses.” The acquisition
was closed on September 30, 2024. As part of the acquisition the Company acquired Albatross, an order-to-management proprietary software
to manage our orders, fulfillment and customer service all in one central location.
Revenue Model
We offer Solar System
Sales and Installation to residential homeowners and the New Home Builders’ community. The SunPower acquisition will allow us
to accelerate our revenue growth, and expand our footprint to deliver solar system sales into regions where we might have not
previously done business.
Solar System Sales: Complete
Solaria sells solar systems to homeowners, home builders and small to medium-sized commercial customers through third-party sales partners.
Complete Solaria manages every aspect of project management for those contracts before ultimately contracting with builder partners or
using in-house installation experts to complete the construction and installation of the solar systems. This residential solar platform
provides homeowners with simple pricing for solar energy that provides significant savings compared to traditional utility energy. Homeowners
can choose from a wide array of system features and financing options that best meet their needs. By delivering the best-matched products
and a best-in-class customer experience, Complete Solaria establishes valuable customer relationships that can extend beyond the initial
solar energy system purchase and provide Complete Solaria with opportunities to offer additional products and services in the future.
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Technology Innovation
Since its inception, Complete
Solaria has continued to invest in a platform of services and tools to enable large-scale operations for sales and builder partners. The
platform incorporates processes and software solutions that simplify and streamline design, proposals, and project management throughout
the lifecycle of a residential solar project. The platform empowers new market entrants and smaller industry participants with its plug-and-play
capabilities. The ecosystem Complete Solaria has built provides broad reach, and we believe it positions Complete Solaria for sustained
and rapid growth through a capital-efficient business model. The network of our partners continues to expand today.
With the completion of the
SunPower acquisition we believe that our ability to fuel innovation and gain operational efficiencies through our priority platform, Albatross,
will allow us to service not only our customers more effectively but our sales and installation partners will be able to access real-time
data in order to run their business.
Differentiation and Operating Results
Delivering a differentiated
customer experience is core to Complete Solaria’s strategy. It emphasizes a customized solution, including a design specific to
each customer’s home and pricing configurations that typically drive both customer savings and value. Developing a trusted brand
and providing a customized solar service offering resonates with customers accustomed to a traditional residential power market that is
often overpriced and lacking in customer choice.
Our overall mission is to
deliver energy-efficient solutions to homeowners, home builders and small to medium-sized businesses that allow them to lower their energy
bills while reducing their carbon footprint. We want to pass our operational costs savings back to our customers by keeping costs low
in an environment where labor costs are rising and interest rates remain uncertain. These operational costs savings are attributed to
the workforce that was acquired as part of the SunPower acquisition. We increased our operations center that supports operations, order
process, customer care and support, credit and collections, procurement, vendor management and accounting related functions, and have
rationalized our headcount.
Our Strategy
Complete Solaria’s strategy
focuses on providing its sales partners with the software tools, sales support, and ability to compete effectively with national providers.
This turnkey solution makes it easy for anyone to sell solar.
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Solar System Sales
Solar System Sales are full
systems sold to homeowners, home builders and small to medium-sized commercial businesses through Complete Solaria’s sales partner
channels. Complete Solaria and its builder partners fulfill and install the systems.
●
Increase revenue by
expanding installation capacity and developing new geographic markets through Complete Solaria’s partner programs— Certain
Complete Solaria partners become builder partners who install systems resulting from sales generated by Complete Solaria’s
sales partners. By leveraging this network of skilled builders, in addition to our in-house installation experts, Complete Solaria
aims to increase its installation capacity in traditional markets and expand its offering into new geographies throughout the
U.S. We believe this will enable greater sales growth in existing markets and create new revenue in expansion
markets.
●
Increase
revenue and margin by engaging national-scale sales partners —Complete Solaria expects
to create a consistent offering with a single execution process for national-scale sales partners throughout their territories, including
in territories where Complete Solaria does not currently operate. These national accounts have unique customer relationships that
will facilitate meaningful sales opportunities and low acquisition cost to increase revenue and improve margin.
Our Strengths
The following strengths position
Complete Solaria to drive the mass adoption of residential solar in a manner that maximizes the value of its growing customer base over
the long term:
●
Platform of Services and Tools : A diversified and multi-pronged customer acquisition approach. This infrastructure underpins the ability to enjoy broad customer reach with a low system-wide cost structure and positions Complete Solaria for expansion to every market where distributed solar energy generation can offer homeowners savings versus traditional utility retail power.
●
Differentiated Customer Experience :
We offer a unique customer experience through various methods: customer-friendly solar service features, tailored designs and customizable
pricing for each homeowner, a highly consultative sales process, and a focus on customer savings.
●
Access
to customers through third-party sales channels: The turn-key solar product offering, best-in-class
customer service, and national footprint support third-party sales channels and strategic national partnerships. Complete Solaria
provides solutions for sales channels seeking to expand their geographic reach and strengthen their relationships with their own
customers.
●
Skilled
labor workforce: We invest in safety first and ensure that our labor workforce is not only proficient in construction and energy
but has strong communication, problem-solving and customer service skills. This allows them not only to make decisions quickly
onsite but allows them to be empowered to service our customers on the spot and timely.
Customer Service and Operations
Solar System Sales
Complete Solaria has made
significant investments to create a platform of services and tools that addresses customer origination, system design and installation,
and general customer support. Before a sales representative conducts a consultation, homeowners are pre-qualified based on a preliminary
evaluation which considers a homeowner’s credit, home ownership, electricity usage and suitability of the roof based on age, condition,
shading and pitch. Once a homeowner is pre-qualified, all necessary data is collected and a proposal is generated for the homeowner. If
a homeowner is interested in moving forward, a customer contract is automatically generated for electronic execution. This contract then
undergoes a final review and before it is countersigned. Homeowners financing their purchase via a loan, lease or power purchase agreement
submit applications to financial institutions and, upon credit approval, execute financing agreements between the homeowner and the financier.
Once an agreement is fully
executed, a service tech performs a site audit at the home to inspect the roof and measure shading. This audit follows a final system
design plan and an application for any required building permits. The plans are reviewed to ensure they conform to the executed contract
or to process a change order if required. A second production estimate is generated at this time and if the expected energy production
exceeds or falls below the original estimate by certain thresholds, the homeowner agreement is modified accordingly. To reduce installation
costs and operational risk, there are defined design and installation quality standards designed to ensure that homeowners receive a quality
product, regardless of who installs the system.
After the solar panels are
installed, the customer care team follows up with the homeowner with a survey on their experience. If a system requires maintenance, Complete
Solaria or a partner or dedicated service-only contractor will visit the customer’s home and perform any necessary repairs or maintenance
at no additional cost to the customer.
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Software Enhanced Services
Complete Solaria’s partners
are third-party Sales organizations that use the design and proposal services for their residential solar projects. Complete Solaria staffs
a sales support desk six days a week to provide live customer support for sales representatives who need a design or proposal for a potential
homeowner sale. These customer support teams rapidly produce proposals, answer questions, and offer other forms of support for sales personnel.
Suppliers
The main components of a residential
solar energy system are the solar modules, inverters, and racking systems. Complete Solaria generally purchases these components from
select distributors, which are then shipped to build partners for installation. There is a running list of approved suppliers in the event
any of the sources for modules, inverters or other components become unavailable. If Complete Solaria fails to develop, maintain, and
expand relationships with these or other suppliers, the ability to meet anticipated demand for solar energy systems may be adversely affected,
or at higher costs or delayed. If one or more of the suppliers ceases or reduces production due to its financial condition, acquisition
by a competitor or otherwise, it may be difficult to identify alternate suppliers quickly or to qualify alternative products on commercially
reasonable terms, and the ability to satisfy this demand may be adversely affected.
Complete Solaria screens all
suppliers and components based on expected cost, reliability, warranty coverage, ease of installation, etc. The declining cost of solar
modules and the raw materials necessary to manufacture them have been a key driver in the prices charged for electricity and homeowner
adoption of solar energy. If solar module and raw material prices do not continue to decline at the same rate as they have over the past
several years, the resulting prices could slow growth and cause financial results to suffer. If Complete Solaria is required to pay higher
prices for supplies, accept less favorable terms, or purchase solar modules or other system components from alternative, higher-priced
sources, financial results may be adversely affected.
Complete Solaria and its build
partners are responsible for and source the other products related to solar energy systems, such as fasteners, wiring and electrical fittings.
From time-to-time, Complete Solaria procures these other products related to solar energy systems for its own installation business. Complete
Solaria manages inventory through just-in-time delivery, at local warehouses, and as segregated inventory at build partners.
The main components of a residential
solar module are the solar cells. Complete Solaria’s solar modules are generally manufactured by third-party select manufacturers
and are purchased from distributors.
Complete Solaria screens all
suppliers and components based on expected cost, reliability, warranty coverage, ease of installation, and other factors. It typically
enters into master contract arrangements with major suppliers that define the general terms and conditions of purchases, including warranties,
product specifications, indemnities, delivery and other customary terms.
Competition
Solar System Sales
Complete Solaria’s primary
competitors are the traditional utilities that supply electricity to potential customers. It competes with these traditional utilities
primarily based on price (cents per kilowatt hour), predictability of future prices (by providing pre-determined annual price escalations)
and the ease by which homeowners can switch to electricity generated by solar energy systems. Based on these factors, Complete Solaria
competes favorably with many traditional utilities.
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Complete Solaria competes
for homeowner customers with other solar sales and installation companies and with solar companies with business models that are similar
to Complete Solaria’s. Complete Solaria’s main competitors can be grouped broadly into (a) national, vertically integrated
companies with established brands and proprietary consumer financing products; (b) small, local solar contractors who operate with relatively
low fixed overhead expenses but who may lack systems, tools, and sophisticated product offerings; and (c) sales aggregators who engage
with third-party sales companies to generate installation contracts. Complete Solaria competes favorably with these companies, with (a)
better customer experience and better Sales Partner experience than the national vertically integrated companies; (b) better pricing and
broader customer offerings than smaller local solar contractors; and (c) a better build partner experience than sales aggregators.
Complete Solaria also faces
competition from purely finance-driven organizations that acquire homeowner customers and then subcontract out the installation of solar
energy systems, installation businesses that seek financing from external parties, large construction companies and utilities and sophisticated
electrical and roofing companies. At the same time, the open platform provides opportunities for these competitors to become partners,
and the open platform offers these new market participants a cost-effective way to enter the market and compelling process, technology
and supply chain services over the long term.
Intellectual Property
Complete Solaria seeks to
protect its intellectual property rights by relying on federal, state and common law rights in the U.S. and other countries, as well as
contractual restrictions. It generally enters into confidentiality and invention assignment agreements with employees and contractors,
and confidentiality agreements with other third parties, in order to limit access to, and disclosure and use of, confidential information
and proprietary technology. In addition to these contractual arrangements, Complete Solaria also relies on a combination of trademarks,
trade dress, domain names, copyrights, and trade secrets to help protect the brand and other intellectual property.
Government Regulations and Incentives
Governments have
used different public policy mechanisms to accelerate the adoption and use of solar power. Examples of customer-focused financial mechanisms
include capital cost rebates, performance-based incentives, feed-in tariffs, tax credits, renewable portfolio standards, net metering,
and carbon regulations. Some of these government mandates and economic incentives are scheduled to be reduced or to expire or could be
eliminated. Capital cost rebates provide funds to customers based on the cost and size of a customer’s solar power system. Performance-based
incentives provide funding to a customer based on the energy produced by their solar power system. Feed-in tariffs pay customers for
solar power system generation based on energy produced at a rate generally guaranteed for a period of time. Tax credits reduce a customer’s
taxes at the time the taxes are due. Renewable portfolio standards mandate that a certain percentage of electricity delivered to customers
comes from eligible renewable energy resources. Net metering allows customers to deliver to the electric grid any excess electricity
produced by their on-site solar power systems and to be credited for that excess electricity at or near the full retail price of electricity.
Carbon regulations, including cap-and-trade and carbon pricing programs, increase the cost of fossil fuels, which release climate-altering
carbon dioxide and other greenhouse gas emissions during combustion.
In addition to the mechanisms
described above, there are various incentives for homeowners and businesses to adopt solar power in The Inflation Reduction Act of 2022.
Moreover, in Europe, the European Commission has mandated that its member states adopt integrated national climate and energy plans to
increase their renewable energy targets to be achieved by 2030, which could benefit the deployment of solar. However, the U.S. and European
Union, among others, have imposed tariffs or other import duties on solar products, or are evaluating the imposition of such duties on
solar panels, solar cells, polysilicon, and other components. These import duties may offset the incentives described above and increase
the price of Complete Solaria’s solar products.
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Employees and Human Capital Resources
As of December 29, 2024, Complete Solaria had over 600 employees on
a full-time basis, of that total approximately 534 joined Complete Solaria as part of the SunPower acquisition. Complete Solaria also
engages independent contractors and consultants. No employees are covered by collective bargaining agreements. There have not been any
work stoppages.
Complete Solaria’s human
capital resources objectives include identifying, recruiting, retaining, training, and integrating its existing and new employees. The
principal purposes of Complete Solaria’s equity incentive plans are to attract, retain and motivate personnel through the granting
of equity-based awards, increasing stockholder value and the success of Complete Solaria by motivating such individuals to perform to
the best of their abilities and achieve Complete Solaria’s objectives.
Facilities
Complete Solaria’s corporate
headquarters and executive offices are located in Fremont, California and it also maintains
offices in Orem, Utah .
Complete Solaria leases all
the facilities and owns no real property. Complete Solaria believes that current facilities are adequate to meet ongoing needs. If additional
space is required, Complete Solaria believes that it will be able to obtain additional facilities on commercially reasonable terms.
U.S. Corporate Information
We were originally known as
Freedom Acquisition I Corp (“FACT”). We are engaged in solar system sales and associated commerce. On July 18, 2023, Complete
Solaria, FACT, and certain other entities consummated the transactions contemplated under that certain amended and restated Business Combination
Agreement, dated as of May 26, 2023, following the approval at the special meeting of the stockholders of FACT held July 11, 2023. In
connection with the closing of the Business Combination, we changed our name from Freedom Acquisition I Corp. to Complete Solaria, Inc.
Our principal executive offices
are located at 45700 Northport Loop E, Fremont, CA 94538, and our telephone number is (510) 270-2507.
Access to Company Information
We file or furnish periodic
reports and amendments thereto, including our Annual Reports on Form 10-K, our Quarterly Reports on Form 10-Q and Current Reports on Form
8-K, proxy statements and other information with the Securities and Exchange Commission (“SEC”). In addition, the SEC maintains
a website (www.sec.gov) that contains reports, proxy and information statements, and other information regarding issuers that file electronically.
Complete Solar’s internet address is https://www.completesolaria.com. Through our internet website, we make available, free of charge,
our Annual Report on Form 10-K, quarterly reports on Form 10-Q, current reports on Form 8-K, and all amendments to those reports as soon
as reasonably practicable after such reports have been filed with or furnished to the SEC. The information on our website is not
a part of this Annual Report on Form 10-K.