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Item 7. Management’s Discussion and Analysis

2026-04-14 compared with 2025-04-30 · 728 added, 717 removed, 106 unchanged (93% of the section changed)

MANAGEMENT’S DISCUSSION AND ANALYSIS

OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

You should read the following

discussion and analysis of our financial condition and results of operations together with the consolidated financial statements and related

notes included elsewhere in this Annual Report on Form 10-K.

This discussion contains forward-looking statements that involve risks and

uncertainties.

MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

should read the following discussion and analysis of our financial condition and results of operations together with the consolidated

financial statements and related notes included elsewhere in this Annual Report on Form 10-K.

This discussion contains forward-looking

statements that involve risks and uncertainties.

Our actual results could differ materially from those discussed below.

Factors that could cause or contribute to such differences

include those identified below and those discussed in the section titled “Risk Factors” included elsewhere in this Annual

Report on Form 10-K.

Please also see the section titled “Special Note Regarding Forward-Looking Statements.”

Complete Solaria was formed

in November 2022 through the merger of Complete Solar and Solaria.

Founded in 2010, Complete Solar created a technology platform to offer

clean energy products to homeowners by enabling a national network of sales partners and build partners.

Our sales partners generate solar

installation contracts with homeowners on our behalf.

To facilitate this process, we provide the software tools, sales support and brand

identity to our sales partners, making them competitive with national providers.

This turnkey solution makes it easy for anyone to sell

We fulfill our customer contracts

by using in-house installation experts and by engaging with local construction specialists.

We manage the customer experience and complete

all pre-construction activities prior to delivering build-ready projects including hardware, engineering plans, and building permits to

our builder partners.

could cause or contribute to such differences include those identified below and those discussed in the section titled “Risk Factors”

included elsewhere in this Annual Report on Form 10-K.

Please also see the section titled “Special Note Regarding Forward-Looking

SunPower Inc.

is the rebranded name of Complete Solaria, Inc.

The rebranding

was effective April 22, 2025 and our legal name change became effective on October 16, 2025.

We are headquartered in Orem, Utah.

Company was originally incorporated in Delaware as Complete Solar, Inc.

on February 22, 2010.

In 2022, Complete Solar, Inc.

a holding company reorganization creating Complete Solar Holding Corporation (“Complete Solar Holding”) as successor to Complete

Complete Solar Holding then acquired The Solaria Corporation in November 2022 and we changed our name to Complete Solaria,

We 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.

July 18, 2023, we consummated a series of merger transactions contemplated by an Amended and Restated Business Combination Agreement

entered into with wholly-owned subsidiaries of Freedom Acquisition I Corp.

(“FACT”) (“Mergers”), equating to

a reverse recapitalization for accounting purposes.

Under the reverse recapitalization of accounting, FACT was treated as the acquired

company for financial statement reporting purposes.

This determination was based on us having a majority of the voting power of the post-combination

company, our senior management comprising substantially all of the senior management of the post-combination company, and our operations

comprising the ongoing operations of the post-combination company.

Accordingly, for accounting purposes, the Mergers were treated as

the equivalent of a capital transaction in which we issued stock for the net assets of FACT.

The net assets of FACT were stated at historical

cost, with no goodwill or other intangible assets recorded.

In October 2023, we completed the sale of our solar panel business.

On September 30, 2024, we acquired certain assets relating to the Blue Raven Solar business, New Homes business and Non-Installing Dealer

network (collectively the “SunPower Businesses”) from the SunPower Debtors, the successor entity in bankruptcy to SunPower

Corporation and its direct and indirect subsidiaries.

The acquired SunPower Businesses sell products to residential customers and home

builders through a network of installing and non-installing dealers and resellers and internal sales team.

On September 24, 2025, we completed

the acquisition of Sunder Energy, LLC, (“Sunder”), which contracts with customers for solar installations performed by third-party

installation companies through a dealer network.

On November 21, 2025, we completed the acquisition of Ambia Energy LLC, (“Ambia”)

a residential solar energy system installer.

fulfill our customer contracts by using in-house installation experts and by engaging with local construction specialists.

the customer experience and complete all pre-construction activities prior to delivering build-ready projects including hardware, engineering

plans, and building permits to our builder partners.

We manage and coordinate this process through our proprietary software system.

There is substantial doubt

about our ability to continue as a going concern within one year after the date that the consolidated financial statements are issued.

The consolidated financial statements included in this Annual Report on Form 10-K have been prepared assuming the Company will continue to operate

as a going concern, which contemplates the realization of assets and settlement of liabilities in the normal course of business.

do not include any adjustments to reflect the possible future effects on the recoverability and classification of assets or the amounts

and classifications of liabilities that may result from uncertainty related to its ability to continue as a going concern.

Growth Strategy and Outlook

Our growth strategy contains the following

is substantial doubt about our ability to continue as a going concern within one year after the date that the consolidated financial

statements are issued.

The consolidated financial statements included in this Annual Report on Form 10-K have been prepared assuming

that we will continue to operate as a going concern, which contemplates the realization of assets and settlement of liabilities in the

normal course of business.

They do not include any adjustments to reflect the possible future effects on the recoverability and classification

of assets or the amounts and classifications of liabilities that may result from uncertainty related to its ability to continue as a

going concern.

Strategy and Outlook

growth strategy contains the following elements:

Increase revenue by

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will install systems resulting from sales generated by our sales partners.

By leveraging this network of skilled builders in

addition to our in-house installation experts, we aim to increase our installation capacity in our traditional markets and expand

our offering into new geographies throughout the U.S.

This will enable greater sales growth in existing markets and create new

revenue in expansion markets.

Increase revenue and margin by engaging national-scale sales partners – We aim to offer a turnkey solar solution to prospective sales partners with a national footprint.

By leveraging this network of skilled builders in addition

to our in-house installation experts, we aim to increase our installation capacity in our traditional markets and expand our offering

into new geographies throughout the U.S.

This will enable greater sales growth in existing markets and create new revenue in expansion

Increase revenue and

margin by engaging national-scale sales partners – We aim to offer a turnkey solar solution to prospective sales partners

with a national footprint.

These include electric vehicle manufacturers, national home security providers, and real estate brokerages.

We expect to create a consistent offering with a single execution process for such sales partners throughout their geographic territories.

These national accounts have unique customer relationships that we believe will facilitate meaningful sales opportunities and low cost of acquisition to both increase revenue and improve margin.

We entered into an Amended

and Restated Business Combination Agreement with FACT, First Merger Sub, Second Merger Sub, and Solaria on October 3, 2022.

was consummated on July 18, 2023.

Upon the terms and subject to the conditions of the Merger, (i) First Merger Sub merged with and into

Complete Solaria with Complete Solaria surviving as a wholly-owned subsidiary of FACT (the “ First Merger ”), (ii) immediately

thereafter and as part of the same overall transaction, Complete Solaria merged with and into Second Merger Sub, with Second Merger Sub

surviving as a wholly-owned subsidiary of FACT (the “ Second Merger ”), and FACT changed its name to “Complete

Solaria, Inc.” and Second Merger Sub changed its name to “CS, LLC” and (iii) immediately after the consummation of the

Second Merger and as part of the same overall transaction, Solaria merged with and into a newly formed Delaware limited liability company

and wholly-owned subsidiary of FACT and changed its name to “The SolarCA LLC” (“ Third Merger Sub ”), with

Third Merger Sub surviving as a wholly-owned subsidiary of FACT (the “Additional Merger”, and together with the First Merger

and the Second Merger, the “ Mergers ”).

The Mergers between Complete

Solaria and FACT has been accounted for as a reverse recapitalization.

Under this method of accounting, FACT is treated as the acquired

company for financial statement reporting purposes.

This determination was primarily based on the Company having a majority of the voting

power of the post-combination company, the Company’s senior management comprising substantially all of the senior management of

the post-combination company, and the Company’s operations comprising the ongoing operations of the post-combination company.

for accounting purposes, the Mergers have been treated as the equivalent of a capital transaction in which Complete Solaria is issuing

stock for the net assets of FACT.

The net assets of FACT have been stated at historical cost, with no goodwill or other intangible assets

Disposal Transaction

These national accounts have unique customer relationships that we believe will facilitate meaningful sales opportunities and low

cost of acquisition to both increase revenue and improve margin.

Increase revenue and

margin by executing on a battery storage opportunity – We have an opportunity to increase our revenue and margin in the

battery space through our partnership with Enphase.

By providing homeowners with an option to include battery storage as part of

their solar system install, we believe there will be a greater need for battery storage as the demand and costs of energy will increase.

entered into an Amended and Restated Business Combination Agreement with FACT, First Merger Sub, Second Merger Sub, and Solaria on October

The Merger was consummated on July 18, 2023.

Upon the terms and subject to the conditions of the Merger, (i) First Merger Sub

merged with and into Complete Solaria with Complete Solaria surviving as a wholly-owned subsidiary of FACT (the “ First Merger ”),

(ii) immediately thereafter and as part of the same overall transaction, Complete Solaria merged with and into Second Merger Sub, with

Second Merger Sub surviving as a wholly-owned subsidiary of FACT (the “ Second Merger ”), and FACT changed its name

to “Complete Solaria, Inc.” and Second Merger Sub changed its name to “CS, LLC” and (iii) immediately after the

consummation of the Second Merger and as part of the same overall transaction, Solaria merged with and into a newly formed Delaware limited

liability company and wholly-owned subsidiary of FACT and changed its name to “The SolarCA LLC” (“ Third Merger Sub ”),

with Third Merger Sub surviving as a wholly-owned subsidiary of FACT (the “Additional Merger”, and together with the First

Merger and the Second Merger, the “ Mergers ”).

Mergers between Complete Solaria and FACT were accounted for as a reverse recapitalization.

Under this method of accounting, FACT was

treated as the acquired company for financial statement reporting purposes.

This determination was primarily based on the Company having

a majority of the voting power of the post-combination company, the Company’s senior management comprising substantially all of

the senior management of the post-combination company, and the Company’s operations comprising the ongoing operations of the post-combination

Accordingly, for accounting purposes, the Mergers were treated as the equivalent of a capital transaction in which Complete

Solaria issued stock for the net assets of FACT.

The net assets of FACT were stated at historical cost, with no goodwill or other intangible

assets recorded.

In October 2023, we completed

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In connection with

the Divestiture, we recognized a loss from discontinued operations of $2.0 million and $173.4 million in the fiscal years ended December

29, 2024 and December 31, 2023, respectively.

We also sold all the Maxeon shares in the year ended December 31, 2023, and recorded a $4.2

million loss on the sale of these shares in our consolidated statements of operations and comprehensive loss.

Below we have discussed our

historical results of continuing operations, which excludes our product revenues and related metrics, as all results of operations associated

with the solar panel business have been presented as discontinued operations, unless otherwise noted.

SunPower Acquisition Transaction

On August 5, 2024, we entered

into the aforementioned APA among us and the SunPower Debtors which provided for the sale and purchase of certain assets relating to the

Blue Raven Solar business, New Homes Business and Non-Installing Dealer network previously operated by the SunPower Debtors (the “Acquired

SunPower Assets”).

The sale by SunPower was approved on September 23, 2024, by the United States Bankruptcy Court for the District

We completed the acquisition (“ Acquisition ”) of the Acquired SunPower Assets (“SunPower Businesses”)

effective September 30, 2024.

Financing of the Acquisition

Complete Solaria financed

the Acquisition by issuing 7% convertible senior notes (“ September 2024 Notes ”) in September 2024, which are due in

The September 2024 Notes mature on July 1, 2029 and are convertible into the Company’s common stock at the option of the holder

at a conversion rate of $2.14 per share.

The September 2024 Notes will become immediately due and payable at the option of the holder

in the event of default and upon a qualifying change of control event.

Key Financial Definitions/Components of Results

of Operations

Revenue is recognized for

Residential Solar Installation and New Home Business when a customer obtains control of promised products and services and we have satisfied

our performance obligations which is the date by which substantially all of our design and installation is complete for a fully functioning

solar power system to interconnect to the local power grid.

Installation includes the

design of a solar energy system, the delivery of the components of the solar energy system (i.e., photovoltaic system, inverter, battery

storage, etc.), installation services and services facilitating the connection of the solar energy system to the power grid.

for these services as inputs to a combined output, resulting in a single service-based performance obligation.

The amount of revenue recognized

reflects the consideration which we expect to be entitled to receive in exchange for the products and services.

To achieve this core principle,

we apply the following five steps:

Identification of the contract(s)

with a customer;

Identification of the performance

obligations in the contracts(s);

Determination of the transaction

Allocation of the transaction

price to the performance obligations;

Recognition of the revenue

when, or as, we satisfy a performance obligation.

Residential Solar Installation Revenues

Our Residential Solar Installation

segment sells products through a network of installing and non-installing dealers and resellers, as well as our internal sales team.

contracts with customers include three primary contract types:

agreements – We contract directly with homeowners who purchase the solar energy system and related services from us.

are invoiced on a billing schedule, where the majority of the transaction price is due upon installation with an additional payment due

when the system passes inspection by the authority having jurisdiction.

partner agreements – In our financing partner agreements, we contract directly with homeowners for the purchase of the solar energy

system and related services.

We refer the homeowner to a financing partner to finance the system, and the homeowner makes payments directly

to the financing partner.

We receive consideration from the financing partner on a billing schedule where the majority of the transaction

price is due upon installation with an additional payment due when the system passes inspection by the authority having jurisdiction.

purchase agreements and lease agreements – We contract directly with a leasing partner to perform the solar energy system installation,

and the homeowner will finance the system through a power purchase agreement (or lease), which is signed with our leasing partner.

consider the leasing partner to be our customer, as we do not contract directly with the homeowner and the leasing partner takes ownership

of the system upon the completion of installation.

We receive consideration from the leasing partner on a billing schedule where the

majority of the transaction price is due upon installation with an additional payment due when the system passes inspection by the authority

having jurisdiction.

New Home Business Revenues

Our New Homes Business sells

through a network of home builders as well as our internal sales team.

Our contracts with customers include two primary contract types:

● Cash agreements – We contract directly with homebuilders

who purchase the solar energy system from us and are the customers in the transaction.

Our customers are invoiced upon the completion

of installation.

● Lease agreements – Prior to the SunPower Corporation’s

declaration of bankruptcy, certain homeowners had intended to lease a system from the SunPower Corporation, but were unable to consummate

the transaction (as a result of SunPower’s declaration of bankruptcy).

The in-process system inventory (installed on recently constructed

homes) was acquired by us in connection with the SunPower Acquisition.

We contracted directly with a leasing partner to facilitate the

leasing of the system to the impacted homeowners.

We consider the leasing partner to be our customer.

Under the terms of our arrangement

with the leasing partner, control is not transferred to the customer until the completed system is accepted by the customer.

consideration from the leasing partner following the acceptance of the system.

Our performance obligation

for both reportable segments is to design and install a fully functioning solar energy system.

For all contract types (with the exception

of New Homes Business Lease agreements), we recognize revenue over time.

Our over-time revenue recognition begins when the solar power

system is fully installed (as it is at this point that control of the asset begins to be transferred to the customer and the customer

retains the significant risks and rewards of ownership of the solar power system).

We recognize revenue using the input method based on

direct costs to install the system and defer the costs of installation until such time that control of the asset transfers to the customer

(installation).

For New Homes Business Lease agreements, we consider the performance obligation to be satisfied at a point in time upon

acceptance of the system by the customer.

Revenue is generally recognized

at the transaction price contained within the agreement, net of costs of financing, or other consideration paid to the customers that

is not in exchange for a distinct good or service.

Our arrangements may contain clauses that can either increase or decrease the transaction

Variable consideration is estimated at each measurement date at its most likely amount to the extent that it is probably that a

significant reversal of cumulative revenue recognized will not occur and true-ups are applied prospectively as such estimates change.

We record deferred revenue

for amounts invoiced that are received in advance of the provisioning of services.

In certain contracts with customers, we arrange for

a third-party financing partner to provide financing to the customer.

We collect upfront from the financing partner and the customer will

provide installment payments to the financing partner.

We record revenue in the amount received from the financing partner, net of any

financing fees charged to the homeowner, which we consider to be a customer incentive.

None of our contracts contain a significant financing

Costs to obtain and fulfill contracts

Our costs to obtain and fulfill contracts, when recognized, associated with systems sales are expensed as sales commission and cost of

revenue, respectively.

In addition, incentives we provide to our customers, such as discounts and rebates, are recorded net to the revenue

we have recognized on the solar power system.

Cost of Revenues

Cost of revenues is comprised

primarily of cost of material, internal labor costs, third-party subcontractors, design services, engineering personnel and employee-related

expenses associated with permitting services, associated warranty costs, freight and delivery costs, depreciation, and amortization of

internally developed software.

Cost of revenues from these services is recognized when the Company transfers control of the product to

the customer, which is generally upon installation.

Operating Expenses

Sales Commissions

Sales commissions are direct

and incremental costs of obtaining customer contracts.

These costs are paid to internal sales teams and third-party vendors who source

residential customer contracts for the sale of solar energy systems.

Sales and Marketing

Sales and marketing expenses

primarily consist of personnel related costs, including salaries and employee benefits, stock-based compensation, and other promotional

and advertising expenses.

We expense certain sales and marketing, including promotional expenses, as incurred.

General and Administrative

General and administrative

expenses consist primarily of personnel and related expenses for employees, in our finance, research, engineering, and administrative

teams including salaries, bonuses, payroll taxes, and stock-based compensation.

It also consists of legal, consulting, and professional

fees, rent expenses pertaining to our offices, business insurance costs and other costs.

Interest Expense

Interest expense primarily

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

Other income (expense), net

consists of changes in the fair value of our convertible notes, the impact of debt extinguishment, troubled debt restructuring, changes

in the fair value of stock warrant liabilities and forward purchase agreements, and loss on the sale of an equity investment.

Income Tax Expense

Income tax expense primarily

consists of income taxes in certain foreign and state jurisdictions in which we conduct business.

Supply Chain Constraints

rely on a small number of suppliers of solar energy systems and other equipment.

If any of our suppliers was unable or unwilling to provide

us with contracted quantities in a timely manner at prices, quality levels and volumes acceptable to us, we would have very limited alternatives

for supply, and we may not be able find suitable replacements for our customers, or at all.

Such an event could materially adversely affect

our business, prospects, financial condition and results of operations.

addition, the global supply chain and our industry have experienced significant disruptions in recent periods.

We have seen supply chain

challenges and logistics constraints increase, including shortages of panels, inverters, batteries and associated component parts for

inverters and solar energy systems available for purchase, which materially impacted our results of operations.

In an effort to mitigate

unpredictable lead times, we experienced a substantial build up in inventory on hand commencing in early 2022 in response to global supply

chain constraints.

In certain cases, this has caused delays in critical equipment and inventory, longer lead times, and has resulted in

cost volatility.

These shortages and delays can be attributed in part to the COVID-19 pandemic and resulting government action, as well

as broader macroeconomic conditions, and have been exacerbated by the ongoing conflicts in Ukraine and Israel.

While we believe that a

majority our suppliers have secured sufficient supply to permit them to continue delivery and installations through the end of 2023, if

these shortages and delays persist into 2024, they could adversely affect the timing of when battery energy storage systems can be delivered

and installed, and when (or if) we can begin to generate revenue from those systems.

If any of our suppliers of solar modules experienced

disruptions in the supply of the modules’ component parts, for example semiconductor solar wafers or investors, this may decrease

production capabilities and restrict our inventory and sales.

In addition, we have experienced and are experiencing varying levels of

volatility in costs of equipment and labor resulting in part from disruptions caused by general global economic conditions.

While inflationary

pressures have resulted in higher costs of products, in part due to an increase in the cost of the materials and wage rates, these additional

costs have been offset by the related rise in electricity rates.

the Divestiture, we recognized a loss from discontinued operations of $1.1 million, $2.0 million and $173.4 million in the fiscal years

ended December 28, 2025, December 29, 2024 and December 31, 2023, respectively.

We also sold all the Maxeon shares in the year ended

December 31, 2023, and recorded a $4.2 million loss on the sale of these shares in our consolidated statements of operations and comprehensive

Assets of SunPower Debtors

On September 30, 2024, we acquired the SunPower Businesses for consideration

of $54.5 million which we financed through the issuance of $66.8 million of 7.0% senior unsecured convertible notes in September 2024.

These notes mature on July 1, 2029 and are convertible into shares of the Company’s common stock at the option of the holder at

a current conversion rate of $1.71 per share.

The SunPower Businesses operated as a solar technology and energy services provider that

offered fully integrated solar, storage, and home energy solutions to customers in the United States through an array of hardware, software,

and “Smart Energy” solutions.

This transaction was accounted for as a business combination under Accounting Standards Codification

(“ASC”) 805, Business Combinations .

September 24, 2025, we acquired all of the membership interests in Sunder Energy LLC (“Sunder”) for consideration of $57.8

We financed this transaction through (1) $20.7 million in cash, subject to certain working capital and other adjustments;

a promissory note to the seller in the principal amount of $20.0 million (“Seller Note”);

and (3) 10.0 million shares of

the Company’s common stock valued at $17.1 million (based on the $1.71 closing share price of the Company’s common stock

on September 24, 2025).

We issued 3.3 million shares at the acquisition date and will issue the remining shares in two equal tranches

of 3.3 million shares at 12 months and 18 months following the date of acquisition.

Sunder is a solar sales company.

Sunder provides

a third-party solar energy sales force to initiate and execute contracts with customers throughout the United States.

sales force works with solar installation companies in which Sunder acts as the agent for each transaction entered.

Sunder earns revenue

from contracts sold to customers for solar installations performed by third-party installation companies.

We acquired Sunder as a strategic

acquisition to expand its overall market share and its penetration into more U.S.

We accounted for this transaction as a business

combination under ASC 805.

On November 21, 2025, we acquired all of the membership interests in

Ambia Energy LLC (“Ambia”) for consideration of $33.4 million.

We financed this acquisition through the issuance of 10.2 million

shares of our common stock with a fair value of $16.5 million on the date of acquisition and an agreement to issue an additional $16.9

million in shares of our common stock in two tranches with the final issuance on the 12-month anniversary of the Ambia closing.

is a residential solar energy system installer and operates in various markets throughout the United States.

Chain Constraints and Risk

global supply chain and our industry have experienced significant disruptions in recent periods.

We have seen supply chain challenges

and logistics constraints increase, including shortages of panels, inverters, batteries and associated component parts for inverters

and solar energy systems available for purchase, which materially impacted our results of operations.

These shortages and delays can

be attributed in part to the broader macroeconomic conditions and have been exacerbated by the conflicts in Ukraine and Israel.

of our suppliers of solar modules experienced disruptions in the supply of the modules’ component parts, for example semiconductor

solar wafers or inverters, this may decrease production capabilities and restrict our inventory and sales.

In addition, we have experienced

and are experiencing varying levels of volatility in costs of equipment and labor resulting in part from disruptions caused by general

global economic conditions.

While inflationary pressures have resulted in higher costs of products, in part due to an increase in the

cost of the materials and wage rates, these additional costs have been offset by the related rise in electricity rates.

cannot predict the full effects the supply chain constraints will have on our business, cash flows, liquidity, financial condition and

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and results of operations.

For additional information on risk factors that could impact our results, please refer to “ Risk Factors ”

located elsewhere in this Annual Report on Form 10-K.

Critical Accounting

additional information on risk factors that could impact our results, please refer to “ Risk Factors ” located elsewhere

in this Annual Report on Form 10-K.

Financial Definitions/Components of Results of Operations

recognize revenue for the Residential Solar Installation and New Homes Business reportable segments when installation is substantially

complete, the system is capable of interconnection to the local power grid, and control has transferred to the customer.

activities—including system design, equipment delivery, installation, and grid interconnection—are treated as a single performance

For most contracts, revenue is recognized over time beginning upon installation, using an input method based on direct installation

Installation costs incurred prior to this point are deferred.

Solar Installation revenue is generated through cash sales, third-party financing arrangements, and power purchase or lease structures.

Homeowners are the customers in cash and financing arrangements, while leasing partners are the customers in power purchase and lease

arrangements.

New Homes Business revenue is primarily generated from sales to homebuilders, with limited lease arrangements recognized

upon system acceptance.

is recorded at the transaction price, net of customer incentives and financing-related fees, and may include estimated variable consideration.

Deferred revenue represents amounts billed or collected in advance of performance.

None of the Company’s arrangements contain a

significant financing component.

respect to our Dealer reportable segment, we earn revenue from contracts in which solar installations are performed by third-party installation

In these arrangements, our performance obligation is to facilitate the transaction and arrange for installation services rather

than provide those services directly.

As a result, we act as an agent and recognize revenue on a net basis, representing the fee retained

revenue is recognized at a point in time when Permission to Operate (“PTO”) is obtained, which indicates that installation

is complete and the system is authorized for operation.

These arrangements do not include significant financing components, and we do

not provide warranty services related to dealer-installed systems.

to Obtain and Fulfill Contracts

costs to obtain and fulfill contracts, when recognized, associated with systems sales are expensed as sales commission and cost of revenue,

respectively.

In addition, incentives we provide to our customers, such as discounts and rebates, are recorded net to the revenue we

have recognized on the solar power system.

of revenues is comprised primarily of cost of material, internal labor costs, third-party subcontractors, design services, engineering

personnel and employee-related expenses associated with permitting services, associated warranty costs, freight and delivery costs, depreciation,

amortization of internally developed software and amortization of developed technology.

Cost of revenues from these services is recognized

when we transfer control of the product to the customer, which is generally upon installation.

commissions are direct and incremental costs of obtaining customer contracts.

These costs are paid to internal sales teams and third-party

vendors who source residential customer contracts for the sale of solar energy systems.

and Marketing

and marketing expenses primarily consist of personnel related costs, including salaries and employee benefits, stock-based compensation,

and other advertising and promotional expenses.

We expense certain sales and marketing, including promotional expenses, as incurred.

and Administrative

and administrative expenses consist primarily of personnel and related expenses for employees, in our finance, research, engineering,

and administrative teams including salaries, bonuses, payroll taxes, and stock-based compensation.

It also consists of legal, consulting,

and professional fees, rent expenses pertaining to our offices, depreciation expense, business insurance costs and other costs.

(Expense) Income, Net

non-operating income, net

classify changes in the fair value of (i) derivative liabilities associated with our debt, (ii) warrant liabilities, (iii) Simple Agreements

for Future Equity (“SAFE”), and (iv) forward purchase agreements (“FPAs”) as non-operating gains and losses within

this category.

Accounting Estimates

discussion and analysis of our financial condition and results of operations are based upon our financial statements, which have been

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Therefore, we consider these to be our critical accounting policies and estimates.

Revenue Recognition

Revenue is recognized for

Residential Solar Installation and New Home Business when a customer obtains control of promised products and services and we have satisfied

our performance obligations which is the date by which substantially all of our design and installation is complete for a fully functioning

solar power system to interconnect to the local power grid.

Installation includes the

design of a solar energy system, the delivery of the components of the solar energy system (i.e., photovoltaic system, inverter, battery

storage, etc.), installation services and services facilitating the connection of the solar energy system to the power grid.

for these services as inputs to a combined output, resulting in a single service-based performance obligation.

The amount of revenue recognized

reflects the consideration which we expect to be entitled to receive in exchange for the products and services.

To achieve this core principle,

we apply the following five steps:

Identification of the contract(s)

with a customer;

Identification of the performance

obligations in the contracts(s);

Determination of the transaction

Allocation of the transaction

price to the performance obligations;

Recognition of the revenue

when, or as, we satisfy a performance obligation.

Residential Solar Installation Revenues

Our Residential Solar Installation

segment sells products through a network of installing and non-installing dealers and resellers, as well as our internal sales team.

contracts with customers include three primary contract types:

agreements – We contract directly with homeowners who purchase the solar energy system and related services from us.

are invoiced on a billing schedule, where the majority of the transaction price is due upon installation with an additional payment due

when the system passes inspection by the authority having jurisdiction.

partner agreements – In our financing partner agreements, we contract directly with homeowners for the purchase of the solar energy

system and related services.

We refer the homeowner to a financing partner to finance the system, and the homeowner makes payments directly

to the financing partner.

We receive consideration from the financing partner on a billing schedule where the majority of the transaction

price is due upon installation with an additional payment due when the system passes inspection by the authority having jurisdiction.

purchase agreements and lease agreements – We contract directly with a leasing partner to perform the solar energy system installation,

and the homeowner will finance the system through a power purchase agreement (or lease), which is signed with our leasing partner.

consider the leasing partner to be our customer, as we do not contract directly with the homeowner and the leasing partner takes ownership

of the system upon the completion of installation.

We receive consideration from the leasing partner on a billing schedule where the

majority of the transaction price is due upon installation with an additional payment due when the system passes inspection by the authority

having jurisdiction.

New Home Business Revenues

Our New Homes Business sells

through a network of home builders as well as our internal sales team.

Our contracts with customers include two primary contract types:

Cash agreements – We contract directly

with homebuilders who purchase the solar energy system from us and are the customers in the transaction.

Our customers are invoiced upon

the completion of installation.

Lease agreements – Prior to the SunPower Corporation’s declaration of bankruptcy, certain homeowners had intended to lease a system from the SunPower Corporation, but were unable to consummate the transaction (as a result of SunPower’s declaration of bankruptcy).

The in-process system inventory (installed on recently constructed homes) was acquired by us in connection with the SunPower Acquisition.

We contracted directly with a leasing partner to facilitate the leasing of the system to the impacted homeowners.

We consider the leasing partner to be our customer.

Under the terms of our arrangement with the leasing partner, control is not transferred to the customer until the completed system is accepted by the customer.

We receive consideration from the leasing partner following the acceptance of the system.

Our performance obligation for both reportable segments is to design

and install a fully functioning solar energy system.

For all contract types (with the exception of New Homes Business Lease agreements),

we recognize revenue over time.

Our over-time revenue recognition begins when the solar power system is fully installed (as it is at this

point that control of the asset begins to be transferred to the customer and the customer retains the significant risks and rewards of

ownership of the solar power system).

We recognize revenue using the input method based on direct costs to install the system and defer

the costs of installation until such time that control of the asset transfers to the customer (installation).

For New Homes Business Lease

agreements, we consider the performance obligation to be satisfied at a point in time upon acceptance of the system by the customer.

is generally recognized at the transaction price contained within the agreement, net of costs of financing, or other consideration paid

to the customers that is not in exchange for a distinct good or service.

Our arrangements may contain clauses that can either increase

or decrease the transaction price.

Variable consideration is estimated at each measurement date at its most likely amount to the extent

that it is probably that a significant reversal of cumulative revenue recognized will not occur and true-ups are applied prospectively

as such estimates change.

We record deferred revenue

for amounts invoiced that are received in advance of the provisioning of services.

In certain contracts with customers, we arrange for

a third-party financing partner to provide financing to the customer.

We collect upfront from the financing partner and the customer will

provide installment payments to the financing partner.

We record revenue in the amount received from the financing partner, net of any

financing fees charged to the homeowner, which we consider to be a customer incentive.

None of our contracts contain a significant financing

to obtain and fulfill contracts

Our costs to obtain and fulfill contracts, when recognized, associated with systems sales are expensed as sales commission and cost of

revenue, respectively.

In addition, incentives we provide to our customers, such as discounts and rebates, are recorded net to the revenue

we have recognized on the solar power system.

Accounting for

Business Combinations

recognition involves significant judgment in determining the timing of control transfer, identification of the customer, estimation of

variable consideration, and measurement of progress toward completion.

For the Residential Solar Installation and New Homes Business

segments, the Company’s performance obligation is the design and installation of a fully functioning solar energy system, which

includes design, equipment delivery, installation, and grid interconnection services.

These activities are combined into a single performance

is generally recognized over time using an input method based on direct installation costs, beginning when installation is complete and

control of the system begins to transfer to the customer.

This approach requires management to estimate total expected installation costs,

and changes in these estimates may impact the timing and amount of revenue recognized.

Installation costs incurred prior to the transfer

of control are deferred.

certain New Homes Business lease arrangements, revenue is recognized at a point in time upon system acceptance.

In arrangements involving

financing partners or leasing partners, judgment is required to determine the appropriate customer, which affects revenue timing and

presentation.

Dealer segment revenue is recognized on a net basis at the point in time when Permission to Operate is obtained.

transaction price may include variable consideration, which is estimated using the most likely amount and constrained to amounts for

which a significant revenue reversal is not probable.

Estimates are reassessed each reporting period, and changes are recognized prospectively.

Revenue is recorded net of customer incentives and does not include a significant financing component.

Changes in assumptions related

to these estimates could materially affect reported revenue and deferred balances.

revenue is recognized at a point in time when PTO is obtained, which indicates that installation is complete and the system is authorized

for operation.

These arrangements do not include significant financing components, and we do not provide warranty services related to

dealer-installed systems.

for Business Combinations

record all acquired assets and liabilities, including goodwill, and other identifiable intangible assets at fair value.

The initial recording

of goodwill, other identifiable intangible assets, requires certain estimates and assumptions concerning the determination of the fair

values and useful lives.

The judgments made in the context of the purchase price allocation can materially affect our future results of

Accordingly, for significant acquisitions, we obtain assistance from third-party valuation specialists.

The valuations calculated

from estimates are based on information available at the acquisition date.

Goodwill is not amortized but is subject to annual tests for

impairment or more frequent tests if events or circumstances indicate it may be impaired.

Other intangible assets are amortized over their

estimated useful lives and are subject to impairment if events or circumstances indicate a possible inability to realize the carrying

Recent Accounting

Pronouncements

discussion of recently issued accounting standards applicable to Complete Solaria is described in Note 2 – Summary of Significant

The initial recognition

of identifiable intangible assets, requires certain estimates and assumptions concerning the determination of the fair values and useful

The judgments made in the context of the purchase price allocation can materially affect our future results of operations.

when valuing identifiable intangible assets, we obtain assistance from third-party valuation specialists.

The valuations calculated from

estimates are based on information available at the acquisition date.

Goodwill is not amortized but is subject to annual tests for impairment

or more frequent tests if events or circumstances indicate it may be impaired.

Other intangible assets are amortized over their estimated

useful lives and are subject to impairment if events or circumstances indicate a possible inability to realize the carrying amount.

Accounting Pronouncements

discussion of recently issued accounting standards applicable to our Company is described in Note 2 – Summary of Significant

Accounting Policies, in the accompanying notes to the consolidated financial statements.

Results of Operations

Fiscal year ended

December 29, 2024 (“2024”) compared to year ended December 31, 2023 (“2023”)

of Operations

year ended December 28, 2025 (“2025”) compared to the fiscal year ended December 29, 2024 (“2024”)

this section, we discuss the results of our operations for fiscal 2025 compared to fiscal 2024.

20 unchanged sentences

Interest income

Other income (expense), net (3)

Other non-operating income, net (3)

Gain on troubled debt restructuring (4)

Loss from continuing operations before taxes

Income tax benefit (provision)

Income tax (provision)

Net loss from continuing operations

(1) Includes stock-based compensation expense.

See table below.

(2) Includes interest expense to related parties of $7.6 million and $0.4

million during the fiscal years ended December 29, 2024, and December 31, 2023, respectively.

Other income (expense), net, in the fiscal

year ended December 29, 2024, includes the following related party transactions;

(i) $0.7 million of expense in connection with the conversion

of SAFE Agreements into shares of common stock and the change in the fair value of SAFE Agreements, (ii) $3.0 million of expense in connection

with the loss on issuance of a derivative liability and $0.3 million of income due to the change in the value of derivative liabilities,

and (iii) $0.1 million of income in connection with the change in the fair value of forward purchase agreements.

Other income (expense), net in the fiscal year

ended December 31, 2023, includes the following related party transaction;

$0.7 million of expense for bonus shares issued in connection

with the Mergers;

$0.4 million of forward purchase agreements entered into and $9.1 million of change in the fair value of the forward

purchase agreements;

and $30.7 million of expense for shares issued in connection with the forward purchase agreements

Gain includes $12.5 million with a related party in the fiscal year

ended December 29, 2024.

Percentage change not meaningful.

Includes stock-based

compensation expense as follows (in thousands):

stock-based compensation expense as follows ( in thousands ):

Fiscal Year Ended

3 unchanged sentences

Total stock-based compensation expense

We disaggregate our revenues

based on the following operating segments (in thousands):

interest expense and amortization of debt discount costs with related parties of $5.7 million

and $7.6 million in 2025 and 2024, respectively.

the following related party transactions in 2025 (i) a gain of $3.5 million due to the change in the fair value of derivative

and (ii) $0.1 million of other income due to a change in the fair value of a forward purchase agreement.

the following related party transactions in 2024;

(i) $0.7 million of expense in connection with the conversion of SAFE Agreements

into shares of common stock and the change in the fair value of SAFE Agreements, (ii) $3.0 million of expense in connection with

the loss on issuance of a derivative liability and $0.3 million of income due to the change in the value of derivative liabilities,

and (iii) $0.1 million of income in connection with the change in the fair value of forward purchase agreements.

includes $12.5 million with a related party in 2024.

change not meaningful.

disaggregate our revenues based on the following reportable segments (in thousands) :

Fiscal Year Ended

1 unchanged sentence

New Homes Business

Total revenue

Total revenues increased by

$21.1 million or 24%, during 2024 compared to 2023.

This increase includes $84.6 million in revenue generated from the SunPower acquisition,

partially offset by a decrease in legacy solar energy system installation of $61.0 million or 70% when compared to the previous year.

The decrease in Residential Solar Installation during 2024 is primarily a result of decreased demand for solar energy systems due to the

net energy metering program (“NEM 3.0”) that went live in California in April 2023, an overall softening in the industry due

to reduced economic outlook in key markets, and rising interest rates.

The decrease in software enhanced

services during 2024 was the result of a shift in focus towards solar energy installations.

Cost of Revenues

Total revenues

Percentage change not meaningful.

Solar Installation revenue increased primarily attributed to a full year of Solar Installation due to the acquisition of SunPower Businesses

at the beginning of our fourth quarter in fiscal year ended December 29, 2024.

New Homes Business increased due to the sale of solar

system sales to home builders and the completion of backlog projects acquired with the SunPower Businesses.

Dealer revenues are attributable

to the acquisition of Sunder.

of Revenues and Gross Margin

Fiscal Year Ended

Residential Solar Installations

Residential Solar Installation

New Homes Business

Total cost of revenues

Total gross margin

costs of revenues decreased by $0.5 million, during 2024 compared to 2023.

This decrease includes $49.0 million in cost of revenue generated

from the SunPower acquisition partially offset by a $49.5 million or 1% decrease in costs attributable to decrease in legacy solar energy

systems revenues

Gross margin increased from

20% for the fiscal year ended December 31, 2023 to 36% for the fiscal year ended December 29, 2024.

The increase in gross margin is primarily

attributed to the SunPower acquisition.

New Homes Business has a higher gross margin because the systems are integrated into new builds

whereas solar system installations require retrofitting that may require additional labor and costly renovations for optimal roof orientation

and proper installation.

Sales Commissions

Percentage change not meaningful.

Residential Solar Installation

cost of revenue increase is primarily attributed to a full year of Solar Installation as described above.

New Homes Business cost of

revenue increased as a result of a full year of completing backlog and the inventory costs associated with each solar system sale.

of revenues attributable to the Dealer network is attributable to the acquisition of Sunder.

increase in gross margins is attributed to operational efficiencies gained through the synergies created by consolidating the various

lines of business and streamlining direct overhead costs attributed to each solar installation.

Fiscal Year Ended

Residential Solar Installations

Residential Solar Installation

New Homes Business

Sales Commission

The decrease in Residential

Solar Installations commissions during 2024 compared to 2023 is attributed to a decrease in sales in solar system installation revenue

and overall decrease in customer acquisition costs.

Sales and Marketing

Total sales commissions

Percentage change not meaningful.

Solar and New Homes Business sales commission increased from the prior fiscal year ended December 28, 2025 is primarily attributable

to the increase in revenue.

and Marketing

Fiscal Year Ended

Residential Solar Installations

New Homes Business

Sales & Marketing

Residential Solar Installation

expense decreased in 2024 compared to 2023 due to the decrease in revenues and a reduction in incentives and rebates for the solar energy

system installations.

New Homes Business

Total sales & marketing

Percentage change not meaningful.

Solar Installation expense increased in fiscal 2025 compared to fiscal 2024 due to increase in overall headcount due to combined business

and increasing sales and marketing footprint.

New Homes Business increased when compared to prior year primarily attributable to our

decision to invest in sales and marketing efforts in fiscal 2025.

General and Administrative

Fiscal Year Ended

Residential Solar Installations

Residential Solar Installation

New Homes Business

Sales & Marketing

The increase in general and administrative costs during 2024 compared

to 2023 was primarily attributed to transformation costs as it relates to the SunPower acquisition.

Increases in contractors, professional

services such as legal, accounting and other outside services costs of $14.0 million related to the acquisition, payroll of $10.4 million,

bad debt expense of $10.0 million, and overall one-time costs of $13.3 million of integrating the companies include consultants to identify

areas of automation and operational synergies, software implementation, and data migration.

Interest Expense

expense for the fiscal year ended December 29, 2024 increased $2.2 million or 16%, compared to the fiscal year ended December 31,

The increase was primarily attributed to debt restructuring that was completed during the third quarter of fiscal 2024.

Other Income (Expense), Net

Other income (expense), net was $7.9 million for the fiscal year ended

December 29, 2024.

The expenses consisted primarily of and increased due to $34.0 million gain on remeasurement of derivative liability,

and $6.5 million due to the change in fair value of warrant liability, warrants, forward purchase agreement liabilities and SAFE Agreement.

The increase is offset by $24.7 million loss on issuance of a derivative liability, $1.3 million change in the fair value of FACT public,

private placement and working capital warrants, $1.3 million loss on conversion of SAFE agreements to common stock with a related party

and $3.8 million in other financing costs.

income (expense), net was $29.9 million for the fiscal year ended December 31, 2023.

The expenses consisted primarily of $35.4 million

in other expense related to the issuance of common stock in connection with the FPAs, the loss on extinguishment of debt in CS Solis of

$10.3 million, the loss on sale of Maxeon equity securities of $4.2 million, $3.9 million in other expense associated with the change

in fair value of FPAs, $2.4 million for the issuance of bonus shares in connection with the Mergers, $3.0 million relating to expenses

relating to disposed operations and other expenses of $0.4 million.

These expenses were offset by $29.3 million related to the change

in fair value of our warrant liabilities.

Net Loss from Continuing Operations

a result of the factors discussed above, our net loss from continuing operations for the fiscal year ended December 29, 2024, was $54.4

million a decrease of $41.8 million, as compared to a net loss from continuing operations of $96.2 million for the fiscal year ended December

Liquidity and Capital Resources

Since inception, we have incurred losses and negative cash flows from

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 and current debt of $1.5 million as of December 29, 2024.

had cash and cash equivalents of $13.4 million as of December 29, 2024, which were held for working capital expenditures.

We believe our

operating losses and negative operating cash flows will continue into the foreseeable future.

We have financed our operations primarily

through sales of equity securities, the issuance of convertible notes and cash generated from operations.

Our cash equivalents are on

deposit with major financial institutions.

Our cash position raises substantial doubt regarding our ability to continue as a going concern

for 12 months following the issuance of the consolidated financial statements.

Total general and administrative

Percentage change not meaningful.

Solar Installation expenses decreased as a result of declines in our legacy operations following a strategic resizing of this reportable

segment including reduction of personnel costs.

New Homes Business increased due a full year of operations in fiscal 2025.

Dealer reportable

segment expenses increased entirely attributable to our acquisition of Sunder.

Interest expense inclusive of amortization of debt issuance costs was

$25.1 million in fiscal 2025 and principally consisted of $20.4 million attributable to our 7.0% senior unsecured convertible notes and

$3.4 million attributable to our 12.0% senior unsecured convertible notes with the remainder attributable to interest expense on our other

expense inclusive of amortization of debt issuance costs was $16.2 million in fiscal 2024 and principally consisted of (i) $5.5 million

related to our 7.0% senior unsecured convertible notes, (ii) $3.5 million related to our 12.0% senior unsecured convertible notes, (iii)

$5.8 million relating to obligations that were exchanged during fiscal 2024 for 12.0% senior unsecured convertible notes, and (iv) other

of $1.4 million.

Non-Operating Income, Net

Other non-operating income, net, was $9.3 million in in fiscal 2025.

Other income principally consisted of $11.5 million of gains from changes in the fair value of derivative liabilities associated with

our 12.0% and 7.0% senior unsecured convertible notes and other non-cash income and other of $1.3 million.

These gains were partially

offset by a $2.8 million increase in the fair value of our public, private placement and working capital warrants accounted for as liabilities,

$0.5 million increase in the fair value of our forward purchase agreements liabilities, and $0.2 million increase in the fair value of

a SAFE Agreement liability.

non-operating income, net was $7.9 million in fiscal 2024.

The amounts consisted primarily of a $34.0 million gain on remeasurement of

derivative liabilities associated with our 12.0% and 7.0% senior unsecured convertible notes, a $2.9 million net gain due to changes

in fair values of warrants accounted for as liabilities, a $0.6 million gain due to the change in the fair value of SAFE Agreements and

net other of $0.2 million partially offset by a $24.7 million loss on issuance of a derivative liabilities, $3.8 million of other financing

costs and $1.3 million loss on the conversion of SAFE Agreements.

Loss from Continuing Operations

Our net loss from continuing operations in 2025, was $44.3 million, a decrease

in net loss of $10.1 million, as compared to a net loss from continuing operations of $54.4 million in 2024.

and Capital Resources

Since inception, we have incurred

losses and negative cash flows from operations.

We incurred net losses of $41.7 million and $56.5 million, in 2025 and 2024, respectively,

and had an accumulated deficit of $453.1 million and current debt of $24.3 million as of December 28, 2025.

We had cash and cash equivalents

(excluding restricted cash) of $9.6 million as of December 28, 2025, which is held for working capital expenditures.

We believe our operating

losses and negative operating cash flows will continue into the foreseeable future.

We finance our continuing

operations through the revenue we collect and through the issuance of debt and equity instruments.

For expenses related to mergers and

acquisition and payments on our debt obligation we rely on sales of equity securities, the issuance of debt instruments, SAFE Agreements,

leases and cash generated from operations.

Our cash equivalents are on deposit with major financial institutions.

Our cash position raises

substantial doubt regarding our ability to continue as a going concern for 12 months following the issuance of the accompanying consolidated

financial statements.

In the fiscal year ended December 28, 2025, we issued a $20.0 million Seller note and $22.0 million of 7.0% senior

unsecured convertible notes to finance our acquisition of Sunder.

We also issued $7.0 million in 12.0% senior unsecured convertible notes

to entities related to our CEO in fiscal 2025 to finance our operations.

As of December 28, 2025, we had negative working capital, including

cash and cash equivalents, of $38.0 million.

contractual debt obligations consist of the following principal amounts excluding unamortized debt issuance costs and accrued interest

(in thousands) :

12.0% senior unsecured

convertible notes (1)

7.0% senior unsecured convertible

Seller note – related party

with related party

amount of debt outstanding

connection with an exchange of debt in fiscal 2024 for $18.0 million of the principal amount

of the 12% senior unsecured convertible notes, we also capitalized all future interest (including

coupon interest, default interest and failure to file interest) associated with this portion

of the notes which amounts to $10.8 million and $13.6 million as of December 28, 2025 and

December 29, 2024, respectively.

These amounts are included in the above table.

In the fiscal year ended December

28, 2025, we issued $7.0 million principal amount of 12.0% senior unsecured convertible notes to an entity controlled by our CEO, for

an aggregate related party principal balance of $25.0 million principal amount of the 12.0% senior unsecured convertible notes.

fiscal year ended December 28, 2025, we issued $22.0 million principal amount of 7% senior unsecured convertible notes and $14.7 million

principal amount of 7% senior unsecured convertible notes were converted into approximately 8.6 million shares of our common stock.

pay interest on both the 7.0% and 12.0% senior unsecured convertible notes semi-annually on January 1 and July 1.

The principal amount

of these senior unsecured convertible notes is due in full on July 1, 2029.

In September 2025, we issued the Seller note in the principal amount

of $20.0 million in connection with our acquisition of Sunder Energy LLC.

Interest accrues under the Seller note at a rate of 7.0%.

and interest are payable upon maturity on the earlier of May 15, 2026, subject to certain terms that defer the maturity date to September

30, 2026, depending on the amount of outstanding indebtedness under our Yorkville facilities.

to Note 10 – Borrowings and Derivative Liabilities, in Part II, Item 8 of this Annual Report on Form 10-K for more information

on our debt obligations.

We received a deposit of $2.0 million from the Rodgers Revocable Trust,

a party to our CEO, in the fiscal year ended December 28, 2025.

In January 2026, we received an additional $1.3 million in proceeds from

the Rodgers Revocable Trust and together with the $2.0 million, we issued a convertible promissory note in the principal amount of $3.3

million (the “January 2026 Note”).

The January 2026 Note will mature on July 1, 2029, unless earlier converted, redeemed or

Interest on the January 2026 Note is payable semiannually in arrears on January1 and July 1 of each year, beginning on July

stock purchase agreement with White Lion Capital LLC (“White Lion”)

have a common stock purchase agreement with White Lion for an equity line of credit financing facility (“White Lion SPA”).

Pursuant to the White Lion SPA, we have the right, but not the obligation, to require White Lion to purchase, from time to time, up to

$30 million in aggregate gross purchase price of newly issued shares of our common stock, subject to the caps and certain limitations

and conditions set forth in the White Lion SPA, including terms that restrict our ability to issue shares of common stock to White Lion

that would result in White Lion beneficially owning more than 9.99% of our outstanding common stock.

On August 14, 2024, we entered into

Amendment No.

2 to the White Lion SPA (collectively with the White Lion SPA “White Lion Amended SPA”).

The White Lion Amended

SPA provides that we may notify White Lion to exercise our right to sell shares of our common stock by delivering an Hour Rapid Purchase

If we deliver an Hour Rapid Purchase Notice, we shall deliver to White Lion shares of our common stock not to exceed the lesser

of (i) five percent of the Average Daily Trading Volume on the date of an Hour Rapid Purchase Notice and (ii) 100,000 shares of common

The closing of the transactions under an Hour Rapid Purchase Notice will occur one Business Day following the date on which the

Hour Rapid Purchase Notice is delivered.

At such closing, White Lion will pay us the Hour Rapid Purchase Investment Amount equal to the

number of shares of our common stock subject to the applicable Hour Rapid Purchase Notice multiplied by the lowest traded price of our

common stock during the one-hour period following White Lion’s consent to the acceptance of the applicable Hour Rapid Purchase

Under this arrangement, we received proceeds of $6.7 million and $6.7 million in the years ended December 28, 2025 and December

29, 2024, respectively.

Refer to Note 14 – Common Stock and Common Stock Warrants , in Part II, Item 8 of this Annual Report

on Form 10-K for more information on our lease obligations.

January 11, 2026, we and White Lion entered into Amendment No.

3 (“Amendment No.

3”) to the White Lion SPA.

Amendment No.

3 extends the commitment period under the White Lion SPA (the “Commitment Period”) to the earlier of December 31,2027 and

the date on which White Lion has purchased an aggregate number of shares of our common stock equal to the Commitment Amount (as defined

Further, Amendment No.

3 increases, subject to approval by our stockholders, the commitment amount under the Purchase Agreement

to $55.0 million of shares of our common stock (the “Commitment Amount”), which we may elect to sell to White Lion pursuant

to the White Lion SPA, from time to time in our sole discretion, during the Commitment Period.

As a result of our total sales of common

stock to White Lion as of January 12, 2026, we may receive up to an additional $48.5 million in gross proceeds after such date under

the White Lion Purchase Agreement (assuming the shares to be issued are sold at a price of $1.00 per share) if our stockholders authorize

the increase in the White Lion Commitment Amount to $55.0 million.

addition, Amendment No.

3 adds an option for us to submit three hour rapid purchase notices to White Lion that, if accepted by White

Lion and otherwise delivered in accordance with the Purchase Agreement, would enable us to sell shares of our common stock to White Lion

based on the lowest traded price of our common stock during the three-hour valuation period following White Lion’s written acceptance

of a three hour purchase notice.

Purchase Agreements

On and around July 13, 2023,

FACT entered into separate Forward Purchase Agreements (the “Forward Purchase Agreements”) with each of (i) Meteora

Special Opportunity Fund I, LP (“MSOF”), Meteora Capital Partners, LP (“MCP”) and Meteora Select Trading Opportunities

Master, LP (“MSTO”) (with MSOF, MCP, and MSTO collectively as “Meteora”);

(ii) Polar Multi-Strategy Master

Fund (“Polar”), and (iii) Diametric True Alpha Market Neutral Master Fund, LP, Diametric True Alpha Enhanced Market Neutral

Master Fund, LP, and Pinebridge Partners Master Fund, LP (collectively, “Sandia”, and each of Meteora, Polar, and Sandia,

individually, an “FPA Investor”, and together, the “FPA Investors”), pursuant to which FACT (now SunPower (f/k/a

Complete Solaria, Inc.) following the closing of the Business Combination) agreed to purchase in the aggregate, on the date that was originally

24 months after the closing date of the Forward Purchase Agreements, up to 5,618,488 shares of common stock then held by the FPA Investors

(subject to certain conditions and purchase limits set forth in the Forward Purchase Agreements).

Pursuant to the terms of the Forward

Purchase Agreements, each FPA Investor further agreed not to redeem any of the FACT Class A Ordinary Shares owned by it at such time.

The per price at which the FPA Investors have the right to sell the shares to us on the original maturity date will not be less than $5.00

On December 18, 2023, we and

each FPA Investor entered into separate amendments to the Forward Purchase Agreements (the “First Amendments”).

Amendments lower the reset floor price of each Forward Purchase Agreement from $5.00 to $3.00 and allow us to raise up to $10.0 million

of equity from existing stockholders without triggering certain anti-dilution provisions contained in the 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,

we entered into separate amendments to the Forward Purchase Agreements (the collectively the “Second Amendments”) with Sandia

(the “Sandia Second Amendment”) and Polar (the “Polar Second Amendment”).

The Second Amendments lower the reset

price of each Forward Purchase Agreement from $3.00 to $1.00 per share and amend the VWAP (as defined below) Trigger Event provision to

“After December 31, 2024, an event that occurs if the VWAP Price, for any 20 trading days during a 30 consecutive trading

day-period, is below $1.00 per Share.” The Sandia Second Amendment is not effective until we execute similar amendments with both

Polar and Meteora.

Subsequently, on June 14, 2024, we 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, we entered

into the third amendment to the Forward Purchase Agreement with Polar (the “Polar Third Amendment”), pursuant to which we

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.

On July 15, 2025, we and Meteora entered into an amendment to the FPA between Meteora and us, on July

16, 2025, we and Sandia entered into an amendment to the FPA between Sandia and us, and on August 1, 2025, we and Polar entered in an

amendment to the FPA between Polar and us (collectively, the “FPA Amendments”).

The FPA Amendments extend the valuation date

applicable to the Forward Purchase Agreements (the “Valuation Date”) to the earliest to occur of (a) July 17, 2026, (b) the

date specified by Meteora or Sandia, as applicable, in a written notice to be delivered to us at their discretion and (c) 90 days after

delivery by us of a written notice in the event that for any 20 trading days during a 30 consecutive trading day-period that occurs at

least six months after the closing date of the transactions under the Amended and Restated Business Combination Agreement entered into

on May 26, 2023, the applicable volume-weighted average price (“VWAP Price”) is less than the then applicable reset price,

provided that a registration statement was effective and available for the entire measurement period and remains continuously effective

and available during the entire 90 day notice period.

The FPA Amendments further amend the definition of “Settlement Amount Adjustment”

to provide that if the expected Settlement Amount (as defined in the FPA Amendments) determined by the VWAP Price over the 15 scheduled

trading days ending on but excluding the valuation date exceeds the Settlement Amount Adjustment, then the Settlement Amount Adjustment

shall be deemed to be zero, and that if the Settlement Amount Adjustment exceeds the Settlement Amount, then the Settlement Amount Adjustment

shall be paid, at the Company’s option, in cash or shares of our common stock.

The FPA Amendments also amend the definition of “Cash

Settlement Payment Date” to provide that if the Settlement Amount Adjustment exceeds the Settlement Amount, we shall remit to the

applicable seller the difference between (i) the Settlement Amount Adjustment and (ii) the Settlement Amount.

The FPA Amendments further

provide that the Settlement Amount will be used solely as a calculation mechanism to determine any liability we may owe to the applicable

seller via the Settlement Amount Adjustment, and notwithstanding anything to the contrary, the applicable seller shall not be required

to remit the Settlement Amount to the Company or return any portion of the Prepayment Amount.

As a result of these terms, the Forward Purchase Agreements represent

a potential use of liquidity that is sensitive to future trading prices of the Company’s common stock.

If, on the applicable maturity

date or an earlier valuation date triggered by applicable VWAP-based events, our stock price is below the amended reset price, the FPA

investors are expected to exercise their contractual repurchase rights.

In such circumstances, we could be required to make substantial

cash payments or issue additional shares, which would reduce liquidity and, in the case of share settlement, result in further dilution

to existing stockholders.

Any required repurchase of shares pursuant to the Forward Purchase

Agreements or early settlement obligations could materially reduce the cash available to fund operations, capital expenditures, and strategic

These obligations may also limit our ability to raise additional capital on favorable terms.

We continue to evaluate the

potential impacts of the Forward Purchase Agreements on future liquidity needs, and the Company’s ability to satisfy any required

cash settlements will depend on market conditions, operating performance, access to financing, and the market price of our common stock

during the applicable measurement periods.

In connection with the Forward Purchase Agreements, we have recorded

a liability on our consolidated balance sheets of $4.0 million and $3.5 million as of December 28, 2025 and December 29, 2024, respectively.

obligations are a source of financing received which may be converted into shares of our common stock in an equity financing transaction,

or upon a change in control arising from a liquidity event, the holder of a SAFE is entitled to a portion of the proceeds.

into three SAFE Agreements with the Rodgers Massey Freedom and Free Markets Charitable Trust, a related party affiliated with our CEO

for an aggregate amount of $6.0 million in fiscal 2024.

Two of the SAFEs with an original amount of $5.0 million were converted to shares

of our common stock in fiscal 2024.

As of December 28, 2025 and December 29, 2024, we had SAFE obligations recorded on our consolidated

balance sheets of $0.5 million and $0.4 million, respectively.

Refer to Note 9 – SAFE Agreements, in Part II, Item 8 of

this Annual Report on Form 10-K for more information.

enter into various non-cancelable operating and finance leases.

Current operating leases are primarily for our facilities with original

lease periods expiring through the year 2030.

We had total operating lease obligations recorded on our consolidated balance sheets of

$5.2 million and $3.7 million as of December 28, 2025 and December 29, 2024, respectively.

We have entered into various non-cancelable

finance leases for vehicles used in operations with original lease periods expiring through the year 2029.

We had total finance lease

obligations recorded on our consolidated balance sheets of $3.1 million and $3.9 million as of December 28, 2025 and December 29, 2024,

respectively.

Refer to Note 12 – Commitments and Contingencies, in Part II, Item 8 of this Annual Report on Form 10-K for

more information on our lease obligations.

Standby Equity Purchase Agreement;

Convertible Note, and Convertible

January 27, 2026 (the “Effective Date”), we entered into a Standby Equity Purchase Agreement (the “SEPA”) with

YA IIPN, LTD., a Cayman Islands exempt limited company (the “Investor”).

Pursuant to the SEPA, the Investor will advance

up to $20.0 million to us in the form of a promissory note (“Promissory Note”).

Promissory Notes will accrue interest on

the outstanding principal balance at an annual rate equal to 0%, which will increase to an annual rate of 18% upon the occurrence of

an Event of Default (as defined in the Promissory Notes) for so long as such event remains uncured.

The Promissory Notes will mature

on January 27, 2027, which may be extended at the option of the Investor.

Each tranche of a Promissory Note will be advanced less a discount

in the amount equal to 10% of the principal amount of such tranche.

The first tranche was disbursed on January 27, 2026 in the principal

amount of $1.9 million.

Subject to the conditions set forth in the SEPA, a second tranche in a principal amount of up to $18.1 million

may be advanced on the second trading day after the initial registration statement relating to the resale of the shares of our common

stock issuable upon conversion of the Promissory Notes first becomes effective.

Promissory Notes are convertible into shares of our common stock, $0.0001 par value per share at a conversion price equal to the lower

of (i) a price per share equal to 125% of the VWAP of our common stock on the trading day prior to the issuance date of each Promissory

Note, or (ii) 93% of the lowest daily VWAP during the five consecutive trading days immediately preceding the conversion date (but no

lower than the “floor price” then in effect, subject to adjustment from time to time in accordance with the terms contained

in the Promissory Notes).

to the SEPA, we will have the right, from time to time, until January 27, 2029 (unless the SEPA is terminated earlier), to require the

Investor to purchase up to $25.0 million of shares of our common stock (“Commitment Amount”) subject to certain limitations

and conditions set forth in the SEPA.

may not issue or sell any shares of our common stock to the Investor under the SEPA or under the Promissory Notes, which, when aggregated

with all other shares of our common stock then beneficially owned by the Investor and its affiliates would result in the Investor and

its affiliates beneficially owning more than 4.99% of the then-outstanding shares of our common stock.

paid the Investor a structuring and due diligence fee of $0.05 million and agreed to issue to the Investor 175,000 shares of our common

stock within three days of the Effective Date as a commitment fee.

The SEPA will automatically terminate on the earliest to occur of (i)

January 27, 2029 or (ii) the date on which the Investor has purchased from us under the SEPA the Commitment Amount in full.

We may terminate

the SEPA at any time upon five trading days’ prior written notice to the Investor, provided that there are no outstanding advance

notices under which we are yet to issue shares of our common stock, there are no amounts outstanding under the Promissory Notes, and provided

that we have paid all amounts owed to the Investor pursuant to the SEPA.

We and the Investor may also agree to terminate the SEPA by mutual

written consent.

On March 6, 2026 we entered

into a further Purchase Agreement pursuant to which the Investor purchased and we issued a convertible debenture in the principal amount

of $10.0 million (the “ Debenture ”).

At the closing under such purchase agreement, we issued the Debenture to the Investor

in the original principal amount of $10.0 million for a purchase price of $9.0 million, less certain fees payable under the purchase agreement.

The Debenture accrues interest on the outstanding principal balance at an annual rate equal to 0%, which will increase to an annual rate

of 18% upon the occurrence of an event of default under the Debenture for so long as such event remains uncured.

The Debenture will mature

on March 6, 2027, which may be extended at the option of the Investor.

On each of May 6, 2026, June

6, 2026, July 6, 2026, August 6, 2026 and September 6, 2026 (each an “ Installment Date ”), the Company is required to

pay an installment amount under the Debenture equal to (i) $2.0 million, plus (ii) a $0.06 million payment premium, and plus (iii) any

accrued and unpaid interest (collectively, the “ Installment Amount ”).

We may repay each applicable Installment Amount,

at our option, (a) in cash on or before the applicable Installment Date or (b) by submitting an advance notice under the SEPA, or a combination

of a payment in cash and delivery of such advance notice.

At any time after the Effective Date, the Investor may convert any portion of

the outstanding balance under the Debenture into shares of our common stock at a fixed price of $2.50 per share (the “ Fixed Price ”).

Additionally, at any time on or after any Installment Date, the Investor may convert any portion of any due and unpaid Installment Amount

outstanding under the Debenture into shares of our common stock at a price equal to 95% of the volume weighted average price (“ VWAP ”)

of our common stock during the five trading days prior to the conversion date (but the conversion price will not be lower than the “Floor

Price” then in effect).

The Company, at our option,

shall have the right to redeem early all or a portion of the amounts outstanding under the Debenture upon written notice to the Investor

(an “ Optional Redemption ”), provided, that we may only deliver a notice of Optional Redemption if the VWAP of our

common stock at the time the notice is delivered is less than the Fixed Price.

In connection with an Optional Redemption, the redemption

price payable by us will be equal to (i) the outstanding principal amount of the Debenture being redeemed, plus (ii) a payment premium

equal to 3% of the principal amount being repaid, and plus (iii) accrued and unpaid interest under the Debenture;

however, the prepayment

premium shall not apply to any Optional Redemption of the Debenture if the redemption price is paid on or before April 30, 2026.

Sunder Seller Note – related party

On September 24, 2025, we issued a promissory note to the selling member

of Sunder (as amended, the “Seller Note”) in connection with the acquisition of 100% of the membership interests in Sunder.

The Seller Note has an original principal amount of $20.0 million.

The Seller Note bears interest at 7.0% per annum, compounded at the

end of each calendar quarter.

Interest is due and payable concurrent with the payment of the principal balance.

The maturity date of the

Seller Note is the earlier of (i) May 15, 2026 and (ii) the date on which all amounts under the Seller Note otherwise become due and payable

following an event of default.

The Seller Note must also be repaid in the event of a change of control of the Company or the sale of all

or substantially all of the consolidated assets of the Company and our subsidiaries.

We concluded that since the sellers joined the Company

and have a level of influence that is not insignificant, they are related parties of the Company and therefore the Seller Note is a related

party obligation.

On March 5, 2026, we entered into an amendment of the Seller Note (“Amendment”)

that if the SEPA Debenture restricts repayment of the Seller Note on May 15, 2026, then the maturity date of the Seller Note will be extended

to the earlier of (a) the date that is two business days following the date on which the Seller Note may be repaid pursuant to the restrictions

set forth in the Debenture and (b) September 30, 2026 (or, if the registration statement required to be filed pursuant to the Registration

Rights Agreement has not been declared effective prior to April 30, 2026, then the outside maturity date will extend to December 31, 2026).

Additionally, the interest rate applicable to the Seller Note will increase to 10.0% per annum if the principal amount of the Seller Note

remains outstanding after May 15, 2026.

As an inducement to agree to the foregoing, the Amendment also provides that, within two business

days following approval by our stockholders of the issuance of shares under the purchase agreement in accordance with applicable Nasdaq

rules, we will issue the remaining shares of common stock otherwise issuable to the seller pursuant to the purchase agreement.

8, 2026, we issued the remaining shares due under the Seller Note, 6.7 million shares of our common stock.

from Warrant Exercises

We will receive the proceeds from any cash exercise of any warrants.

17 unchanged sentences

exercise of the warrants.

Debt Financings

In July 2024 we issued $46.0

million of 12% senior unsecured convertible notes.

Of this issuance, $28.0 million was for cash and $18.0 million was in an exchange of

existing debt on our consolidated balance sheet.

Also during 2024, we issued $79.8 million of 7% senior unsecured convertible notes for

12% Unsecured Convertible Senior Notes

In July 2024, we issued $46.0

million of senior unsecured convertible notes (“July 2024 Notes”) to various lenders.

Including in connection with the exchange

agreement transactions summarized below.

Of the July 2024 Notes, $18.0 million were issued in exchange for the cancellation of indebtedness

as discussed below, which amount included $10.0 million issued to a strategic investor identified by us as a related party.

The July 2024

Notes also included $18.0 million issued to a related party affiliated with the Company’s CEO, Rodgers Massey Revocable Living Trust.

The July 2024 Notes bear interest at 12% per annum and mature on July 1, 2029.

The interest rate increases by 3% in the event of default.

The July 2024 Notes are convertible into shares of our common stock at the option of the holder at a conversion rate and initially equal

to 595.2381 shares of common stock per $1,000 principal amount of the July notes.

The July 2024 Notes may be declared due and payable

at the option of the holder upon event of default and upon a qualifying change of control event.

7% Unsecured Convertible Senior Notes

In September 2024, we

issued $66.8 million of senior unsecured convertible notes to various lenders (the “September 2024 Notes”), $8.0 million of

which were issued to a related party.

In December 2024, we issued additional September 2024 Notes for cash proceeds of $13.0 million.

The September 2024 Notes bear interest at 7% per annum and mature on July 1, 2029.

The September 2024 Notes are initially convertible

into 467.8363 shares of common stock per $1,000 principal amount of September 2024 Notes.

The September 2024 Notes may be declared due

and payable at the option of the holder upon an event of default and upon a qualifying change of control event.

Exchange Agreement

On July 1, 2024, we entered into an Exchange Agreement

(the “Exchange Agreement”) with CSEF Holdings, LLC and its affiliates (“Carlyle”) and Kline Hill (as defined below)

providing for:

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

the issuance of a note for the principal amount of $10.0 million to Carlyle as part of the July 2024 Notes;

the cancellation of all indebtedness owed to Kline Hill Partners Fund LP, Kline Hill Partners IV SPV LLC, and Kline Hill Partners Opportunity IV SPV, LLC (collectively “Kline Hill”).

by the Company, termination of all debt instruments by and between the Company and Kline Hill, including the 2018 Bridge Notes, the revolving loan and the secured credit facility, and the satisfaction of all obligations owed to Kline Hill by the Company under the terminated debt instruments;

the issuance of a note for the principal amount of $8.0 million to Kline Hill as part of the July 2024 Notes;

the issuance of 1,500,000 shares of common stock, par value $0.0001 per share, of the Company (the “Common Stock”) to Kline Hill (the “Shares”)

As a result of the Exchange Agreement, we settled

our obligations relating to (i) 2018 Bridge Notes issued in 2018 which bore interest at 8% per annum, (ii) $3.7 million of the Revolving

Loan entered into in 2020 which bore interest at the greater of 7.75% or Prime plus 4.5%;

(iii) a Secured Credit Facility entered into

in December 2022 which required the Company to repay amounts borrowed based upon a multiplier of 1.15 if repaid within 75 days and 1.175

if repaid after 75 days;

and (iv) debt with CS Solis, an investment by Carlyle.

The cancellation of existing indebtedness of these obligations

in the Exchange Agreement aggregated to $65.9 million.

The Revolving Loan has a remaining outstanding

balance of $1.5 million as of December 29, 2024 due to the Rodgers Massey Revocable Living Trust, a related party.

Polar Settlement Agreement

In September 2023, in connection with the Mergers,

we entered into a settlement and release agreement with Polar Multi-Strategy Master Fund (“Polar”) for the settlement of a

working capital loan that had been made by Polar to the Sponsor, prior to the closing of the Mergers.

The settlement agreement required

us to pay Polar $0.5 million in ten equal monthly installments and did not accrue interest.

The balance outstanding was $0.3 million as

of December 31, 2023.

The remaining balance owed to Polar was paid in full in 2024.

Forward Purchase Agreements

July 2023, FACT and Legacy Complete Solaria, Inc.

entered into FPAs with each of (i) Meteora; (ii) Polar, and (iii) Sandia (each

individually, a “Seller”, and together, the “FPA Sellers”).

to the terms of the FPAs, the FPA Sellers may purchase through a broker in the open market, from holders of Shares other than the Company

or affiliates thereof, FACT’s ordinary shares, par value of $0.0001 per share, (the “Shares”).

While the FPA Sellers

have no obligation to purchase any Shares under the FPAs, the aggregate total Shares that may be purchased under the FPAs shall be no

more than 6,720,000 in aggregate.

The FPA Sellers may not beneficially own greater than 9.9% of issued and outstanding Shares

following the Mergers as per the Amended and Restated Business Combination Agreement.

The key terms of the

forward contracts are as follows:

FPA Sellers can terminate the transaction following the Optional Early Termination (“OET”) Date which shall specify the quantity

by which the number of shares is to be reduced (such quantity, the “Terminated Shares”).

Seller shall terminate the transaction

in respect of any shares sold on or prior to the maturity date.

The counterparty is entitled to an amount from the seller equal to the

number of terminated shares multiplied by a reset price.

The reset price is initially $10.56 (the “Initial Price”) and is

subject to a $5.00 floor.

FPAs contains multiple settlement outcomes.

Per the terms of the agreements, the FPAs will (1) settle in cash in the event the Company

is due cash upon settlement from the FPA Sellers or (2) settle in either cash or shares, at the discretion of the Company, should the

settlement amount adjustment exceed the settlement amount.

Should the Company elect to settle via shares, the equity will be issued in

Complete Solaria Common Stock, with a per share price based on the volume-weighted average price (“VWAP”) Price over 15 scheduled

trading days.

The magnitude of the settlement is based on the Settlement Amount, an amount equal to the product of:

(1) Number of shares

issued to the FPA Seller pursuant to the FPA, less the number of Terminated Shares multiplied by (2) the VWAP Price over the valuation

The Settlement amount will be reduced by the Settlement Adjustment, an amount equal to the product of (1) Number of shares in

the Pricing Date Notice, less the number of Terminated Shares multiplied by $2.00.

Settlement occurs as of the Valuation Date, which is the earlier to occur of (a) the date that is two years after the date of the Closing

Date of the Mergers (b) the date specified by Seller in a written notice to be delivered to Counterparty at Seller’s discretion

(which Valuation Date shall not be earlier than the day such notice is effective) after the occurrence of certain triggering events;

and (c) 90 days after delivery by the Counterparty of a written notice in the event that for any 20 trading days during a 30 consecutive

trading day-period (the “Measurement Period”) that occurs at least 6 months after the Closing Date, the VWAP Price is less

than the then applicable Reset Price.

entered into four separate FPAs, three of which, associated with the obligation to issue 6,300,000 Shares, were entered into prior to

the closing of the Mergers.

Upon signing the FPAs, we incurred an obligation to issue a fixed number of shares to the FPA Sellers contingent

upon the closing of the Mergers in addition to the terms and conditions associated with the settlement of the FPAs.

December 18, 2023, we and the FPA Sellers entered into separate amendments to the FPA (the “Amendments”).

The Amendments lowered

the reset floor price of each FPA from $5.00 to $3.00 and allow us to raise up to $10.0 million of equity from existing stockholders without

triggering certain anti-dilution provisions contained in the FPA;

provided, the insiders pay a price per share for their initial investment

equal to the closing price per share as quoted on the Nasdaq on the day of purchase;

provided, further, that any subsequent investments

are made at a price per share equal to the greater of (a) the closing price per share as quoted by Nasdaq on the day of the purchase or

(b) the amount paid in connection with the initial investment.

May 7 and 8, 2024, respectively, we entered into and executed separate amendments to the FPAs (collectively the “Second Amendments”)

with Sandia (the “Sandia Second Amendment”) and Polar (the “Polar Second Amendment”).

The Second Amendments lowered

the reset price of each FPA from $3.00 to $1.00 per share and amended the VWAP Trigger Event provision to read as “ After

December 31, 2024, an event that occurs if the VWAP Price, for any 20 trading days during a 30 consecutive trading day-period, is below

$1.00 per Share”.

The Sandia Second Amendment is not effective until we execute similar amendments with both Polar and Meteora .

June 14, 2024, we entered into and executed an amendment to the FPA with Sandia (the “Sandia Third Amendment”).

Third Amendment set the reset price of each FPA to $1.00 per share and amended the VWAP Trigger Event provision to read as “After

December 31, 2024, an event that occurs if the VWAP Price, for any 20 trading days during a 30 consecutive trading day-period, is below

$1.00 per Share.”

July 17, 2024, we entered into an amendment to the FPA with Polar pursuant to which we and Polar agreed that Section 2 (Most Favored Nation)

of the FPA is applicable to all 2,450,000 shares subject to the FPA.

Simple Agreement for Future Equity (“SAFE”)

January 31, 2024, we entered into a SAFE (“First SAFE”) with the Rodgers Massey Freedom and Free Markets Charitable

Trust (the “Purchaser”) in connection with the Purchaser investing $1.5 million in the Company.

The First SAFE is

convertible into shares of our common stock, par value $0.0001 per share, upon the initial closing of a bona fide transaction or

series of transactions with the principal purpose of raising capital, pursuant to which we issue and sell common stock at a fixed

valuation (an “Equity Financing”), at a per share conversion price which is equal to the lower of (i) (a) $53.54 million

divided by (b) our capitalization immediately prior to such Equity Financing (such conversion price, the “SAFE Price”),

and (ii) 80% of the price per share of our common stock sold in the Equity Financing.

If we consummate a change of control prior to

the termination of the First SAFE, the Purchaser will be automatically entitled to receive a portion of the proceeds of such

liquidity event equal to the greater of (i) $1.5 million and (ii) the amount payable on the number of shares of our common stock

equal to (a) $1.5 million divided by (b)(1) $53.54 million divided by (2) our capitalization immediately prior to such liquidity

event (the “Liquidity Price”), subject to certain adjustments as set forth in the First SAFE.

The First SAFE was

convertible into a maximum of 1,431,297 shares of our common stock, assuming a per share conversion price of $1.05, which is the

product of (i) $1.31, the closing price of our common stock on January 31, 2024, multiplied by (ii) 80%.

On April 21, 2024, we entered into an amendment (“First SAFE

Amendment”) that converted the First SAFE investment of $1.5 million into 4,166,667 shares of our common stock based on a conversion

price of $0.36 per share, defined in the First SAFE Amendment as the product of (i) $0.45, the closing price of our common stock

on April 19, 2024, multiplied by (ii) 80%.

Upon conversion, we recorded a debit to SAFE Agreement of $1.5 million, a credit to Additional

paid-in-capital of $1.9 million and recognized expense of $0.4 million within Other income (expense), net in our consolidated statement

of operations for the fiscal year ended December 29, 2024.

February 15, 2024, we entered into a second SAFE (the “Second SAFE”) with the Purchaser, in connection with the Purchaser

investing $3.5 million in the Company.

The Second SAFE did not accrue interest.

The Second SAFE was initially convertible into shares

of our common stock upon the initial closing of an Equity Financing at a per share conversion price which was equal to the lower of (i)

the Second SAFE Price, and (ii) 80% of the price per share of our common stock sold in the Equity Financing.

If we consummated a change

of control prior to the termination of the Second SAFE, the Purchaser would have been automatically entitled to receive an amount equal

to the greater of (i) $3.5 million and (ii) the amount payable on the number of shares of our common stock equal to $3.5 million divided

by the Liquidity Price, subject to certain adjustments as set forth in the Second SAFE.

The Second SAFE was convertible into a maximum

of 3,707,627 shares of our common stock, assuming a per share conversion price of $0.94, which is the product of (i) $1.18, the closing

per share price of our common stock on February 15, 2024, (ii) 80%.

On April 21, 2024, we entered into an amendment (“Second SAFE

Amendment”) that converted the Second SAFE investment of $3.5 million into 9,722,222 shares of our common stock based on a conversion

price of $0.36 per share, defined in the Second SAFE Amendment as the product of (i) $0.45, the closing price of our common stock

on April 19, 2024, multiplied by (ii) 80%.

Upon conversion, we recorded a debit to SAFE Agreement of $3.5 million, a credit to Additional

paid-in-capital of $4.4 million and recognized expense of $0.9 million within Other income (expense), net in our consolidated statement

of operations for the fiscal year ended December 29, 2024.

May 13, 2024, we entered into a third SAFE (the “Third SAFE”) with the Purchaser, in connection with the Purchaser investing

$1.0 million in the Company.

The Third SAFE is convertible into shares of our common stock upon the initial closing of a bona fide transaction

or series of transactions with the principal purpose of raising capital, pursuant to which the Company issues and sells shares of its

common stock in an Equity Financing, at a per share conversion price which is equal to 50% of the price per share of our common stock

sold in the Equity Financing.

If we consummate a change of control prior to the termination of the Third SAFE, the Purchaser will be automatically

entitled to receive a portion of the proceeds of such liquidity event equal to $1.0 million, subject to certain adjustments as set forth

in the Third SAFE.

The Third SAFE is convertible into a maximum of 2,750,000 shares of our common stock, assuming a per share conversion

price of $0.275, which is the product of (i) $0.55, the closing price of our common stock on May 13, 2024, multiplied by (ii) 50%.

that the SAFE could be settled in cash or a variable number of shares, we have accounted for the instrument as a liability at its fair

of December 29, 2024, we estimated the fair value of the Third SAFE at $0.4 million based upon the assumptions disclosed in Note

5 – Fair Value Measurements to our consolidated financial statements.

Cash Flows for the Fiscal Years Ended December

29, 2024 and December 31, 2023

The following table summarizes

Complete Solaria’s cash flows from operating, investing, and financing activities for the fiscal years ended (in thousands):

expect that our principal short-term (over the next 12 months) cash needs related to our operations will be to fund working capital,

acquisitions, payments on our outstanding debt, and legal settlements.

We plan to fund any cash requirements for the next 12 months from

our existing cash and cash equivalents, cash generated from operations and debt and equity financings.

For the long-term period (beyond

12 months), we aim to generate cash flows from operations to support our ongoing business operations and strategic investment plans.

We regularly evaluate our liquidity position, debt obligations and expected cash requirements.

As part of this ongoing assessment, we

may pursue additional financing through the issuance of equity or the debt financing, as necessary, to meet our operational and investment

Our ability to obtain debt or any other additional financing that we may choose to, or need to, obtain will depend on, among other

things, our development efforts, business plans, operating performance and the condition of the capital markets at the time we seek financing.

As a result of not timely filing our Annual Report on Form 10-K for

the fiscal year ended December 29, 2024, we are not currently eligible to use a registration statement on Form S-3 that

would allow us to continuously incorporate by reference our SEC reports into the registration statement, to use “shelf” registration

statements to conduct offerings, or to use our at-the-market offering facility until approximately one year from the date we have regained

and maintained status as a current filer.

Our inability to use Form S-3 significantly impairs our ability to raise the necessary capital

to fund our operations and execute our strategy.

If we seek to access to 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.

Flows for the Fiscal Years Ended December 28, 2025 and December 29, 2024

following table summarizes our cash flows from operating, investing, and financing activities for the fiscal years ended (in thousands) :

Fiscal Year Ended

Net cash used in operating activities from continuing operations

Net cash provided by investing activities from continuing operations

Net cash used in investing activities from continuing operations

Net cash provided by financing activities from continuing operations

Net increase in cash, cash equivalents and restricted cash from discontinued operations

Net increase (decrease) in cash, cash equivalents and restricted cash

Cash Flows from Operating Activities

Net (decrease) increase in cash, cash equivalents and restricted cash

Flows from Operating Activities

Net cash used in operating activities from continuing operations of $15.3

million for the fiscal year ended December 28, 2025 was primarily due to the net loss from continuing operations, net of tax of $44.3

$54.4 million and net cash outflows of $6.6 million from changes in our operating assets and liabilities which was partially offset by

non-cash adjustments of $6.4 million.

Non-cash charges primarily consisted of $24.7 million for loss on issuance of derivative liability,

$9.1 million provision for credit losses, $5.8 million of amortization of debt issuance costs, $9.2 million of non-cash expense in connection

with warrants issued for vendor services, $3.1 million of stock-based compensation expense, $3.9 million accretion of debt in CS Solis,

$3.8 million for asset impairment and disposals, $2.7 million for depreciation and amortization, $1.8 million for non-cash interest expense,

$0.8 million for lease expense, and $1.3 million for loss on conversion of SAFE Agreements to shares of common stock, and $0.4 million

of other financing costs, partially offset by a decrease of $34.0 million for the change in fair value of derivative liabilities, $22.3

gain on troubled debt restructuring, $2.9 million change in fair value of warrant liabilities, and $1.0 million change due to fair value

The main drivers of net cash outflows derived from the changes in operating assets and liabilities were related to an increase

in contract assets of $21.5 million, a $10.4 million decrease in accounts payable, a $0.8 million decrease in operating lease liabilities,

and a $0.2 million increase in prepaid expenses and other current assets, partially offset by an $8.7 million decrease in inventories,

a $3.3 million decrease in accounts receivable, a $14.1 million increase in accrued expenses and $0.2 million of other.

Net cash used in operating

activities from continuing operations of $58.8 million for the fiscal year ended December 31, 2023 was primarily due to the net loss from

continuing operations, net of tax of $96.2 million and net cash outflows of $17.4 million from changes in our operating assets and liabilities,

adjusted for non-cash charges of $54.1 million.

Non-cash charges primarily consisted of $35.5 million for the issuance of common stock

in connection with FPAs, $10.3 million loss on CS Solis debt extinguishment, $4.2 million loss on sale of equity securities, $3.9 million

change in fair value of FPAs, $4.3 million change in allowance for credit losses, $4.9 million of interest expense, $6.6 million accretion

of long-term debt in CS Solis, $2.4 million related to the issuance of bonus common stock shares in connection with the Mergers, $3.4

million of stock-based compensation expense, and $6.1 million change in reserve for excess and obsolete inventory, $0.9 million in lease

expense and $0.9 million in depreciation and amortization, partially offset by a decrease in the fair value of warrant liabilities of

$29.3 million.

The main drivers of net cash outflows derived from the changes in operating assets and liabilities were related to an increase

in accounts receivable, net of $12.1 million, an increase in prepaid expenses and other current assets of $4.2 million, a decrease in

deferred revenue of $1.7 million, a decrease in accrued expenses and other liabilities of $3.3 million and a decrease in operating lease

liabilities of $0.6 million, partially offset a decrease in inventory of $1.5 million, an increase in accounts payable of $2.3 million,

and a decrease in other noncurrent assets of $1.1 million.

Cash Flows from Investing Activities

Net cash used by investing activities of $54.7 million for the fiscal

year ended December 29, 2024 was primarily due to the acquisition of SunPower of $53.5 million and $1.2 million in capital expenditures.

Net cash provided by investing

activities of $6.2 million for the fiscal year ended December 31, 2023 was primarily due to sale of an investment.

Cash Flows from Financing Activities

Net cash provided by financing

activities of $120.1 million for the fiscal year ended December 29, 2024 was primarily due to proceeds from the issuance of convertible

notes, net of $107.7 million, proceeds from SAFE agreements of $6.0 million, proceeds from the issuance of common stock of $6.7 million

and proceeds from the exercise of common stock options of $0.5 million.

The proceeds were partially offset by finance lease payments and

the payment of a note aggregating $0.8 million.

Net cash provided by financing

activities of $50.4 million for the fiscal year ended December 31, 2023 was primarily due to total proceeds from the issuance of convertible

notes, net of $21.3 million, total proceeds from the Mergers and PIPE Financing of $19.8 million, and proceeds from the issuance of notes

payable, net of $14.1 million, partially offset by the repayment of notes payable of $9.8 million.

Emerging Growth Company

Section 102(b)(1) of the Jumpstart

Our Business Startups Act of 2012, or the JOBS Act, exempts emerging growth companies from being required to comply with new or revised

financial accounting standards until private companies are required to comply with the new or revised financial accounting standards.

The JOBS Act provides that a company can choose not to take advantage of the extended transition period and comply with the

requirements that apply to non-emerging growth companies, and any such election to not take advantage of the extended transition

period is irrevocable.

Complete Solaria is an “emerging

growth company” as defined in Section 2(a) of the Securities Act and has elected to take advantage of the benefits of the extended

transition period for new or revised financial accounting standards.

Following the closing of the Mergers, our Post-Combination Company

remains an emerging growth company until the earliest of (i) the last day of the fiscal year in which the market value of common stock

that is held by non-affiliates exceeds $700 million as of the end of that year’s second fiscal quarter, (ii) the last

day of the fiscal year in which we has total annual gross revenue of $1.235 billion or more during such fiscal year (as indexed for inflation),

(iii) the date on which we have issued more than $1.0 billion in non-convertible debt in the prior three-year period, or (iv)

the last day of the fiscal year ending after the fifth anniversary of our IPO.

Complete Solaria expects to continue to take advantage of the benefits of the extended transition period, although

it may decide to early adopt such new or revised accounting standards to the extent permitted by such standards.

This may make it difficult

or impossible to compare our financial results with the financial results of another public company that is either not an emerging growth

company or is an emerging growth company that has chosen not to take advantage of the extended transition period exemptions because of

the potential differences in accounting standards used.

million and net cash outflows of $3.1 million from changes in our operating assets and liabilities which was partially offset by non-cash

adjustments of $32.1 million.

The main drivers of non-cash charges of $31.3 million consisted of $15.3 million of amortization of

debt issuance costs, $10.5 million of stock-based compensation expense, $9.1 million of depreciation and amortization expense, $3.6 million

provision for credit losses, $2.8 million loss due to the changes in the fair value warrant liabilities, $1.4 million of non-cash lease

expense, and $1.3 million of deferred tax expense, partially offset by an $11.5 million change in the fair value of derivative liabilities,

a $0.5 million change in the fair value of our forward purchase agreement liabilities, and a $0.6 million change in the fair value of

deferred consideration in connection with our acquisition of Sunder.

The main drivers of net cash outflows from changes in operating assets

and liabilities consisted of a $38.8 million increase in trade accounts receivable, an $15.9 million decrease in accrued expenses and

other current liabilities, a $1.5 million decrease in operating lease liabilities, a $5.6 million increase in prepaid expenses and other

assets and a $3.1 million decrease in contract liabilities, partially offset by a $38.4 million decrease in inventories, a $15.3 million

increase in accounts payable and an $8.5 million decrease in contract assets.

cash used in operating activities from continuing operations of $54.6 million for the fiscal year ended December 29, 2024 was primarily

due to the net loss from continuing operations, net of tax of $54.4 million and net cash outflows of $6.6 million from changes in our

operating assets and liabilities which was partially offset by non-cash adjustments of $6.4 million.

Non-cash charges primarily consisted

of $24.7 million for loss on issuance of derivative liability, $9.1 million provision for credit losses, $5.8 million of amortization

of debt issuance costs, $9.2 million of non-cash expense in connection with warrants issued for vendor services, $3.1 million of stock-based

compensation expense, $3.9 million accretion of debt in CS Solis, $3.8 million for asset impairment and disposals, $2.7 million for depreciation

and amortization, $1.8 million for non-cash interest expense, $0.8 million for lease expense, and $1.3 million for loss on conversion

of SAFE Agreements to shares of common stock, and $0.4 million of other financing costs, partially offset by a decrease of $34.0 million

for the change in fair value of derivative liabilities, $22.3 million gain on troubled debt restructuring, $2.9 million change in fair

value of warrant liabilities, and $1.0 million change due to fair value adjustments.

The main drivers of net cash outflows derived from

the changes in operating assets and liabilities were related to an increase in contract assets of $21.5 million, a $10.4 million decrease

in accounts payable, a $0.8 million decrease in operating lease liabilities, and a $0.2 million increase in prepaid expenses and other

current assets, partially offset by an $8.7 million decrease in inventories, a $3.3 million decrease in accounts receivable, a $14.1

million increase in accrued expenses and $0.2 million of other.

Flows from Investing Activities

Net cash used in investing activities from continuing operations of

$19.3 million in 2025 is principally attributable to the cash paid for the acquisition of Sunder.

cash used by investing activities from continuing operations of $54.7 million for the fiscal year ended December 29, 2024 was primarily

due to the acquisition of SunPower of $53.5 million (net of $1.0 million of cash) and $1.2 million in capital expenditures.

Flows from Financing Activities

Net cash provided by financing activities from continuing operations in

2025 was $30.9 million and consisted of $19.8 million received in exchange for 7.0% senior unsecured convertible notes, $7.0 million received

from related party trusts of T.J.

Rodgers, our Chairman and CEO, in exchange for 12% senior unsecured convertible notes, an investor deposit

of $2.0 million received from a related party trust of T.J.

Rodgers, $6.7 million in proceeds from the issuance of shares of our common

stock, and $0.6 million in proceeds from the exercise of stock options and a warrant in exchange for shares of our common stock, partially

offset by $2.3 million of finance lease payments, $2.2 million in payments on our debt obligations and $0.7 million for taxes paid related

to net share settlement of equity awards.

cash provided by financing activities from continuing operations in 2024 was of $120.1 million and consisted of $107.7 million in proceeds

from the issuance of convertible notes, $6.0 million in proceeds from the issuance of SAFE agreement, $6.7 million in proceeds from the

issuance of common stock and $0.5 million in proceeds from the exercise of common stock options.

The proceeds were partially offset by

finance lease payments and the payment of a note aggregating $0.8 million.

Growth Company Status

102(b)(1) of the Jumpstart Our Business Startups Act of 2012, or the JOBS Act, exempts emerging growth companies from being required

to comply with new or revised financial accounting standards until private companies are required to comply with the new or revised financial

accounting standards.

The JOBS Act provides that a company can choose not to take advantage of the extended transition period

and comply with the requirements that apply to non-emerging growth companies, and any such election to not take advantage of

the extended transition period is irrevocable.

is an “emerging growth company” as defined in Section 2(a) of the Securities Act and has elected to take advantage of the

benefits of the extended transition period for new or revised financial accounting standards.

Following the closing of the Mergers, our

post-combination company remains an emerging growth company until the earliest of (i) the last day of the fiscal year in which the market

value of common stock that is held by non-affiliates exceeds $700 million as of the end of that year’s second fiscal

quarter, (ii) the last day of the fiscal year in which we have total annual gross revenue of $1.235 billion or more during such fiscal

year (as indexed for inflation), (iii) the date on which we have issued more than $1.0 billion in non-convertible debt in the

prior three-year period, or (iv) the last day of the fiscal year ending after the fifth anniversary of our IPO.

We expect to continue

to take advantage of the benefits of the extended transition period, although we may decide to early adopt such new or revised accounting

standards to the extent permitted by such standards.

This may make it difficult or impossible to compare our financial results with the

financial results of another public company that is either not an emerging growth company or is an emerging growth company that has chosen

not to take advantage of the extended transition period exemptions because of the potential differences in accounting standards used.

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 7. Management’s Discussion and Analysis