What changed in this filing

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Item 8. Financial Statements and Supplementary Data

2026-04-14 compared with 2025-04-30 · 2503 added, 2301 removed, 339 unchanged (93% of the section changed)

FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA

INDEX TO CONSOLIDATED FINANCIAL STATEMENTS

COMPLETE SOLARIA, INC.

TO CONSOLIDATED FINANCIAL STATEMENTS

Consolidated Financial Statements

Report of Independent Registered Public Accounting Firm (PCAOB ID 243 ) F-2

Report of Independent Registered Public Accounting Firm (PCAOB ID 34) F-3

Consolidated Balance Sheets as of December 28, 2025 and December 29, 2024 F-3

3 unchanged sentences

Notes to Consolidated Financial Statements F-7

Report of Independent Registered Public Accounting

Shareholders and Board of Directors

Complete Solaria, Inc.

Fremont, California

Opinion on the Consolidated

Financial Statements

We have audited the accompanying

consolidated balance sheet of Complete Solaria, Inc.

(the “Company”) as of December 29, 2024, the related consolidated statements

of operations and comprehensive loss, stockholders’ deficit, and cash flows for the fiscal year then ended, and the related notes

of Independent Registered Public Accounting Firm

and Board of Directors

on the Consolidated Financial Statements

We have audited the accompanying consolidated balance

sheet of SunPower Inc.

(the “Company”) as of December 28, 2025 and December 29, 2024, the related consolidated statements

of operations and comprehensive loss, stockholders’ deficit, and cash flows for the fiscal years then ended, and the related notes

collectively referred to as the “consolidated financial statements.” In our opinion, the consolidated financial statements

present fairly, in all material respects, the financial position of the Company at December 29, 2024, and the results of its operations

and its cash flows for the fiscal year then ended , in conformity with accounting principles generally accepted in the United States

Going Concern Uncertainty

The accompanying consolidated

financial statements have been prepared assuming that the Company will continue as a going concern.

As discussed in Note 1 to the consolidated

financial statements, the Company has suffered recurring losses, and has negative cash flows that raise substantial doubt about its ability

to continue as a going concern.

Management’s plans in regard to these matters are also described in Note 1.

The consolidated financial

statements do not include any adjustments that might result from the outcome of this uncertainty.

Basis for Opinion

These consolidated financial

statements are the responsibility of the Company’s management.

Our responsibility is to express an opinion on the Company’s

consolidated financial statements based on our audit.

We are a public accounting firm registered with the Public Company Accounting Oversight

Board (United States) (PCAOB) and are required to be independent with respect to the Company in accordance with the U.S.

federal securities

laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.

We conducted our audit in accordance with the

standards of the PCAOB.

Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the consolidated

financial statements are free of material misstatement, whether due to error or fraud.

The Company is not required to have, nor were we

engaged to perform, an audit of its internal control over financial reporting.

As part of our audit, we are required to obtain an understanding

of internal control over financial reporting but not for the purpose of expressing an opinion on the effectiveness of the Company’s

internal control over financial reporting.

present fairly, in all material respects, the financial position of the Company at December 28, 2025 and December 29, 2024, and the results

of its operations and its cash flows for the fiscal years then ended , in conformity with accounting principles generally accepted

in the United States of America.

Concern Uncertainty

accompanying consolidated financial statements have been prepared assuming that the Company will continue as a going concern.

in Note 1 to the consolidated financial statements, the Company has suffered recurring losses, and has negative cash flows that raise

substantial doubt about its ability to continue as a going concern.

Management’s plans in regard to these matters are also described

The consolidated financial statements do not include any adjustments that might result from the outcome of this uncertainty.

These consolidated financial statements are the responsibility of the

Company’s management.

Our responsibility is to express an opinion on the Company’s consolidated financial statements based

on our audits.

We are a public accounting firm registered with the Public Company Accounting Oversight Board (United States) (PCAOB) and

are required to be independent with respect to the Company in accordance with the U.S.

federal securities laws and the applicable rules

and regulations of the Securities and Exchange Commission and the PCAOB.

We conducted our audits in accordance with the standards of the PCAOB.

Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the consolidated financial statements

are free of material misstatement, whether due to error or fraud.

The Company is not required to have, nor were we engaged to perform,

an audit of its internal control over financial reporting.

As part of our audits, we are required to obtain an understanding of internal

control over financial reporting but not for the purpose of expressing an opinion on the effectiveness of the Company’s internal

control over financial reporting.

Accordingly, we express no such opinion.

Our audit included performing procedures to assess

the risks of material misstatement of the consolidated financial statements, whether due to error or fraud, and performing procedures

that respond to those risks.

Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the

consolidated financial statements.

Our audit also included evaluating the accounting principles used and significant estimates made by

management, as well as evaluating the overall presentation of the consolidated financial statements.

We believe that our audit provides

a reasonable basis for our opinion.

/s/ BDO USA, P.C.

We have served as the Company’s auditor since

Atlanta, Georgia

Our audits included performing procedures to assess the risks of material

misstatement of the consolidated financial statements, whether due to error or fraud, and performing procedures that respond to those

Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the consolidated financial

Our audits also included evaluating the accounting principles used and significant estimates made by management, as well as

evaluating the overall presentation of the consolidated financial statements.

We believe that our audits provide a reasonable basis for

BDO USA, P.C.

have served as the Company’s auditor since 2024.

April 14, 2026

REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING

To the shareholders and the Board of Directors

of Complete Solaria, Inc.

Opinion on the Financial Statements

We have audited the accompanying consolidated

balance sheet of Complete Solaria, Inc.

and subsidiaries (the “Company”) as of December 31, 2023, the related consolidated

statements of operations and comprehensive loss, stockholders’ deficit, and cash flows, for the period ended December 31, 2023,

and the related notes (collectively referred to as the “financial statements”).

In our opinion, the financial statements present

fairly, in all material respects, the financial position of the Company as of December 31, 2023, and the results of its operations and

its cash flows for the period ended December 31, 2023, in conformity with accounting principles generally accepted in the United States

Change in Accounting Principle

As discussed in Notes 2 and 22 to the financial

statements, the accompanying 2023 financial statements have been retrospectively adjusted for the adoption of Accounting Standards Update

2023-07, Segment Reporting (Topic 280):

Improvements to Reportable Segment Disclosures .

Going Concern

The accompanying consolidated financial statements

have been prepared assuming that the Company will continue as a going concern.

As discussed in Note 1(c) to the consolidated financial

statements, the Company has recurring net losses, accumulated deficit, negative cash outflows from operations and current debt outstanding

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

Management’s plans in regard to these matters are also

described in Note 1(c).

The consolidated financial statements do not include any adjustments that might result from the outcome of this

Basis for Opinion

These financial statements are the responsibility

of the Company’s management.

Our responsibility is to express an opinion on the Company’s financial statements based on our audits.

are a public accounting firm registered with the Public Company Accounting Oversight Board (United States) (PCAOB) and are required to

be independent with respect to the Company in accordance with the U.S.

federal securities laws and the applicable rules and regulations

of the Securities and Exchange Commission and the PCAOB.

We conducted our audits in accordance with the

standards of the PCAOB and in accordance with auditing standards generally accepted in the United States of America.

Those standards require

that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement,

whether due to error or fraud.

The Company is not required to have, nor were we engaged to perform, an audit of its internal control over

financial reporting.

As part of our audits, we are required to obtain an understanding of internal control over financial reporting but

not for the purpose of expressing an opinion on the effectiveness of the Company’s internal control over financial reporting.

we express no such opinion.

Our audits included performing procedures to assess

the risks of material misstatement of the financial statements, whether due to error or fraud, and performing procedures that respond

to those risks.

Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the financial statements.

Our audits also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating

the overall presentation of the financial statements.

We believe that our audits provide a reasonable basis for our opinion.

/s/ Deloitte & Touche LLP

San Francisco, California

April 1, 2024 (April 30, 2025, as to the effects

of the Company’s adoption of ASU 2023-07, Segment Reporting , as described in Notes 2 and 22).

We began serving as the Company’s auditor in 2022.

In 2024 we became the predecessor auditor.

COMPLETE SOLARIA, INC.

Consolidated Balance Sheets

( in thousands, except share and per share

Balance Sheets

thousands, except share and per share amounts )

Current assets:

Cash and cash equivalents

Accounts receivable, net

Trade accounts receivable, net of allowance for credit losses of $ 5,206 and $ 1,701 as of December 28, 2025 and December 29, 2024, respectively

Prepaid expenses and other current assets

10 unchanged sentences

Accrued expenses and other current liabilities (1)

Notes payable to related parties

Notes payable, net

Contract liabilities

Short-term debt with related parties

Current portion of long-term notes payable

Deferred consideration, current with related party

Deferred consideration, current

Contract liabilities, current portion

SAFE Agreement with related party

Debt with CS Solis

Forward purchase agreement liabilities with related parties

4 unchanged sentences

Contract liabilities, noncurrent

Notes payable and derivative liabilities, net of current portion

Notes payable and derivative liabilities with related parties

Notes payable and derivative liabilities

Notes payable and derivative liabilities with related parties, net of current portion

Deferred income taxes

Deferred consideration, noncurrent with related party

Other long-term liabilities

Operating lease liabilities, net of current portion

Total liabilities

2 unchanged sentences

Common stock, $ 0.0001 par value;

Authorized 1,000,000,000 and 60,000,000 shares as of December 29, 2024 and December 31, 2023, respectively;

Authorized 1,000,000,000 shares as of December 28, 2025 and December 29, 2024;

issued and outstanding 111,334,959 and 73,784,645 shares as of December 28, 2025 and December 29, 2024, respectively

3 unchanged sentences

Total stockholders’ (deficit)

Total liabilities and stockholders’ equity

The accompanying notes are an integral part of

these consolidated financial statements.

COMPLETE SOLARIA, INC.

Consolidated Statements of Operations and Comprehensive

( in thousands, except share and per share

Total liabilities and stockholders’ (deficit)

(1) Includes accrued interest due to related parties of $2.6 million and $2.5

million as of December 28, 2025 and December 29, 2024, respectively, and includes investor financing deposit with related party of $2.0

million as of December 28, 2025.

accompanying notes are an integral part of these consolidated financial statements.

Statements of Operations and Comprehensive Loss

thousands, except share and per share amounts )

Fiscal Year Ended

8 unchanged sentences

Interest income

Other income (expense), net (2)

Other non-operating income, net (3)

Gain on troubled debt restructuring (4)

Total Other expense

Total Other (expense) income, net

Loss from continuing operations before income taxes

Income tax benefit (provision)

Income tax (provision)

Net loss from continuing operations

Loss from discontinued operations, net of taxes

Impairment loss from discontinued operations

Net loss from discontinued operations, net of taxes

Other Comprehensive income:

Foreign currency translation adjustment

Comprehensive loss (net of tax)

$ ( 269,439 )

Net loss from continuing operations per share attributable to common stockholders, basic

6 unchanged sentences

Weighted-average shares used to compute net loss per share attributable to common stockholders’, basic and diluted

(1) 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.

Refer to Note 15 – Borrowings and Derivative

Liabilities for details.

(2) 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 (defined in the notes to the consolidated financial statements),

(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) income of $0.1 million of expense 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.

(3) Gain includes $12.5 million with a related party in the fiscal year ended December 29, 2024.

Refer to Note 15 – Borrowings and Derivative Liabilities for details.

The accompanying notes are an integral part of

these consolidated financial statements.

SOLARIA, INC.

(1) The Company identified SameDay Solar as a related party beginning in

Cost of revenue paid to SameDay Solar totaled $1.0 million and $0.6 million in the fiscal years ended December 28, 2025 and

December 29, 2024, respectively.

Refer to Note 19 – Related Party Transactions for details.

(2) Includes interest expense and amortization of debt issuance costs due

to related parties of $ 5.7 million and $ 7.6 million in the fiscal years ended December 28, 2025 and December 29, 2024, respectively.

to Note 10 – Borrowings and Derivative Liabilities for details.

(3) Includes the following related party transactions (in millions) :

on issuance of derivative liabilities

on remeasurement of derivative liabilities (Refer to Note 10 – Borrowings and Derivative Liabilities for details.)

(loss) due to change in fair value of Forward Purchase Agreements

on conversion of SAFE Agreements to common stock

in fair value of SAFE Agreement

due to change in fair value of Carlyle warrants

Gain includes $12.5 million

with a related party in the fiscal year ended December 29, 2024.

Refer to Note 10 – Borrowings and Derivative Liabilities

accompanying notes are an integral part of these consolidated financial statements.

Statements of Stockholders’ Deficit

2 unchanged sentences

Comprehensive

Balance as of January 1, 2023

Conversion of 2022 Convertible Notes into common stock

Issuance of common stock upon the reverse capitalization, net of offering costs

Reclassification of prepaid PIPE

Reclassification of warrants between liabilities and equity

Reclassification of Legacy Complete Solaria Common stock into Complete Solaria Common Stock

Issuance of common stock in connection with forward purchase agreements

Issuance of common stock in connection with forward purchase agreements due to related party

Issuance of common stock bonus shares in connection with Mergers

Residual Mergers proceeds

Modification of Carlyle Warrant

Issuance of restricted stock units

Issuance of common stock warrants

Issuance of common stock to related party

Exercise of common stock options

Stock-based compensation

Foreign currency translation

Balance as of December 31, 2023

13 unchanged sentences

Balance as of December 29, 2024

$ ( 411,379 )

The accompanying notes are an integral part of

these consolidated financial statements.

COMPLETE SOLARIA, INC.

Consolidated Statements of Cash Flows

( in thousands, except number of shares )

Exercise of common stock options

Stock-based compensation

Taxes paid related to net share settlements of equity awards

Vesting of restricted stock units

Exercise of common stock warrants

Issuance of common stock as consideration for acquisition of businesses

Issuance of common stock

Conversion of 7.0 % senior unsecured convertible notes for shares of common stock

Balance as of December 28, 2025

accompanying notes are an integral part of these consolidated financial statements.

Statements of Cash Flows

thousands, except number of shares )

Fiscal Year Ended

4 unchanged sentences

Stock-based compensation expense

Non-cash interest expense (1)

Accretion of debt in CS Solis (2)

Non-cash lease expense

Gain on troubled debt restructuring (8)

Loss on CS Solis debt extinguishment

Depreciation and amortization

Amortization of debt issuance costs (1)

Other financing costs

Deferred income tax provision

Provision for credit losses

Change in reserve for excess and obsolete inventory

Change in fair value of SAFE Agreements with related party

Loss on conversion of SAFE Agreements to shares of common stock with related party

Loss on sale of equity securities

Change in fair value of deferred consideration

Loss on issuance of derivative liability (2)

1 unchanged sentence

Change in fair value of warrant liabilities

Issuance of forward purchase agreements (4)

Change in fair value of forward purchase agreement liabilities (4)

Loss on issuance of common stock in connection with forward purchase agreements (6)

Non-cash expense in connection with warrants issued for vendor services

Loss on asset impairments and disposals

Loss on issuance of common stock bonus shares in connection with the Mergers (7)

Issuance of restricted stock units in connection with vendor services

Changes in operating assets and liabilities:

Loss on impairments and disposals

Non-cash income (5)

Non-cash interest expense

Gain on troubled debt restructuring (6)

Accretion of debt in CS Solis (7)

Other financing costs

Changes in operating assets and liabilities, net of acquisitions:

Accounts receivable

6 unchanged sentences

Warranty provision, noncurrent

Deferred revenue

Contract liabilities

Net cash used in operating activities from continuing operations

Net cash provided by operating activities from discontinued operations

Net cash used in operating activities

Cash flows from investing activities from continuing operations

Purchases of property and equipment

Capitalization of internal-use-software costs

1 unchanged sentence

net of cash acquired

Proceeds from the sale of equity securities

Net cash (used in) provided by investing activities

Net cash used in investing activities from continuing operations

Cash flows from financing activities from continuing operations

Proceeds from issuance of notes payable, net of issuance cost

Principal repayment of notes payable

Proceeds from issuance of convertible notes, net of issuance cost

Proceeds from issuance of convertible notes to related parties

Proceeds from issuance of SAFE agreements

Payment of debt issuance costs

Proceeds from issuance of SAFE agreements with related party

Proceeds from issuance of common stock

Proceeds from exercise of common stock options

Proceeds from Mergers and PIPE Financing

Proceeds from Mergers and PIPE Financing from related parties

Proceeds from common stock

Proceeds from exercise of warrant for common stock

Investor financing deposit – related party

Taxes paid related to net share settlement of equity awards

Principal repayment of notes payable

Financing lease payments

Net cash provided by financing activities from continuing operations

Effect of exchange rate changes

Effect of exchange rate changes on cash

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

5 unchanged sentences

Supplemental schedule of noncash investing and financing activities:

Issuance of Seller Note as partial purchase consideration for acquisition of Sunder (8)

Issuance of common stock as partial consideration for acquisition of Sunder

Deferred consideration recognized for acquisition of Sunder

Issuance of common stock as partial purchase consideration for acquisition of Ambia

Deferred consideration recognized for acquisition of Ambia

Conversion of September 2024 Notes to shares of common stock:

September 2024 Notes and related derivative liability, net of unamortized debt discount

Accrued interest

Additional paid-in capital

Debt issuance costs incurred in connection with the issuance of September 2025 Notes

Taxes accrued but unpaid related to net share settlement of equity awards

Cancellation of existing indebtedness in Exchange Agreement (9)

6 unchanged sentences

Carlyle Warrant modification – related party

Conversion of 2022 Convertible notes into common stock

Issuance of common stock warrants

Conversion of 2022 Convertible Notes into common stock

Conversion of 2022 Convertible Notes issued to related parties into common stock

Conversion of preferred stock into common stock

Issuance of common stock in connection with forward purchase agreements (5)

Issuance of common stock bonus shares in connection with the Mergers (6)

Recapitalization of Legacy Complete Solaria Common stock into Complete Solaria Common Stock

Reclassification of investor deposit to PIPE funds

Reclassification of warrants between liabilities and equity

(1) Non-cash interest expense to related parties of zero and $0.4 million

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

(2) Identified as a related party transaction in the fiscal year ended December 29, 2024.

(3) Includes $3.0 million loss on a derivative liability issued to the Massey Trust

(as later defined in Note 15 – Borrowings and Derivative Liabilities) a related party.

(4) Issuance of forward purchase agreements includes other income from related parties of zero and $0.4 million during the fiscal years ended December 29, 2024 and December 31, 2023, respectively.

(5) Change in fair value of forward purchase agreement liabilities from related parties was income of $0.1 million and ($9.1) million during the fiscal years ended December 29, 2024 and December 31, 2023, respectively.

(6) Issuance of common stock in connection with forward purchase agreements includes other expense from related parties of zero and ($30.7) million during the fiscal years ended December 29, 2024 and December 31, 2023, respectively.

(7) Issuance of common stock bonus shares to related parties in connection with the Mergers includes other expense of $0.7 million during the fiscal year ended December 31, 2023.

(8) Gain includes $12.5 million with a related party in the fiscal year ended December 29, 2024.

(1) Amortization of debt issuance costs includes $2.6 million and $1.6 million with related parties in 2025 and 2024, respectively.

(2) Includes $3.0 million loss in 2024 with the Massey Trust (as later defined in Note 10 – Borrowings and Derivative Liabilities ), a related party.

(3) Includes $3.5 gain and $0.3 million gain in 2025 and 2024, respectively, in connection with the change in the fair value of derivative liabilities with related parties, the Massey Trust and Carlyle (as later defined in Note 10 – Borrowings and Derivative Liabilities ).

(4) Change in fair value of forward purchase agreement liabilities with related parties was income of $0.1 million in each of 2025 and 2024, respectively.

(5) Includes related party non-cash income of $0.1 million in 2025.

(6) Gain includes $12.5 million with a related party in 2024.

Refer to Note 10 – Borrowings and Derivative Liabilities for details.

(7) Identified as a related party transaction in 2024.

(8) Issuance of Seller Note was deemed to be with a related party.

Refer to Note 10.

– Borrowings and Derivative Liabilities for details.

(9) Includes related party debt cancellation of $37.2 million.

(10) Includes $23.7 million issuance of convertible notes with related parties.

(11) Includes $1.6 million of amortization of debt issuance costs with related parties.

(12) Includes $0.3 million gain in connection with the change in the fair value of derivative liabilities issued to the Massey Trust and Carlyle (as later defined in Note 15 – Borrowings and Derivative Liabilities) with related parties.

The accompanying notes are an integral part of

these consolidated financial statements.

Notes to Consolidated Financial Statements

(1) Organization

(a) Description of Business

Complete Solaria, Inc.

(the “Company”

or “Complete Solaria”) is a residential solar installer that offers storage and home energy solutions to customers in North

The Company is headquartered in Fremont, California.

accompanying notes are an integral part of these consolidated financial statements.

to Consolidated Financial Statements

SunPower Inc.

(“SunPower” or the “Company”)

is the rebranded name of Complete Solaria, Inc.

(“Complete Solaria”).

The rebranding was effective April 22, 2025 and the

Company’s legal name change became effective on October 16, 2025.

Company was originally incorporated in Delaware under the name Complete Solaria, Inc.

and is a residential solar installer that offers

storage and home energy solutions to customers in North America.

The Company was formed through Complete Solar Holding Corporation’s

acquisition of The Solaria Corporation (“Solaria”).

The Company is headquartered in Orem, Utah.

Complete Solar, Inc.

(“Complete Solar”)

was incorporated in Delaware on February 22, 2010 .

Through February 2022, the Company operated as a single legal entity as Complete Solar,

In February 2022, the Company implemented a holding company reorganization (the “Reorganization”) in which the Company

created and incorporated Complete Solar Holding Corporation (“Complete Solar Holdings”).

As a result of the Reorganization,

Complete Solar Holdings became the successor entity to Complete Solar, Inc.

Subsequently, Complete Solar Holdings changed its name to

(“Complete Solar”) was incorporated

in Delaware on February 22, 2010 .

Through February 2022, the Company operated as Complete Solar, Inc., a single legal entity.

2022, Complete Solar implemented a holding company reorganization (the “Reorganization”) in which the Company created and

incorporated Complete Solar Holding Corporation (“Complete Solar Holdings”).

As a result of the Reorganization, Complete Solar

Holdings became the successor entity to Complete Solar, Inc.

Complete Solaria, Inc.

In October 2022, the Company entered into a business

combination agreement, as amended on December 26, 2022 and January 17, 2023 (“Original Business Combination Agreement”)

and as amended on May 26, 2023 (“Amended and Restated Business Combination Agreement”), with Jupiter Merger Sub I Corp.,

a Delaware corporation and a wholly owned subsidiary of Freedom Acquisition I Corp.

(“FACT”) (“First Merger Sub”),

Jupiter Merger Sub II LLC, a Delaware limited liability company and a wholly owned subsidiary of FACT (“Second Merger Sub”),

Complete Solar Holding Corporation, a Delaware corporation, and The Solaria Corporation (“Solaria”), a Delaware corporation.

The transactions contemplated by the Amended and

Restated Business Combination Agreement were consummated on July 18, 2023 (“Closing Date”).

Following the consummation

of the Merger on the Closing Date, FACT changed its name to “Complete Solaria, Inc.”

As part of the transactions contemplated by the

Amended and Restated Business Combination Agreement, FACT affected a deregistration under the Cayman Islands Companies Act and a domestication

under Section 388 of the Delaware’s General Corporation Law (the “DGCL” or “Domestication”).

On the Closing

Date, following the Domestication, First Merger Sub merged with and into Complete Solaria, with Complete Solaria surviving such merger

as a wholly owned subsidiary of FACT (the “First Merger”), and immediately following the First Merger, 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 Second Merger Sub changed its name to CS, LLC, and immediately following the Second Merger, Solaria merged with and into a newly formed

Delaware limited liability company and wholly-owned subsidiary of FACT and changed its name to The Solaria Corporation 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”).

In connection with the closing of the Mergers:

● Each share of the Company’s capital stock, inclusive of shares converted from 2022 Convertible Notes, issued and outstanding immediately prior to the Closing (“Legacy Complete Solaria Capital Stock”) were cancelled and exchanged into an aggregate of 25,494,332 shares of Complete Solaria Common Stock.

● In July 2023, (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”) (together, the “FPA Funding PIPE Investors”) entered into separate subscription agreements (the “FPA Funding Amount PIPE Subscription Agreements”) pursuant to which, the FPA Funding PIPE Investors subscribed for on the Closing Date, an aggregate of 6,300,000 shares of FACT Class A Ordinary Shares, less, in the case of Meteora, 1,161,512 FACT Class A Ordinary Shares purchased by Meteora separately from third parties through a broker in the open market (“Recycled Shares”) in connection with the Forward Purchase Agreements (“FPAs”).

Subsequent to the Closing Date, Complete Solaria entered into an additional FPA Funding PIPE Subscription Agreement with Meteora, to subscribe for and purchase, and Complete Solaria agreed to issue and sell, an aggregate of 420,000 shares of Complete Solaria Common Stock.

The Company issued shares of Complete Solaria Common Stock underlying the FPAs as of the latter of the closing of the Mergers or execution of the FPAs.

● All certain investors (the “PIPE Investors”) purchased from the Company an aggregate of 1,570,000 shares of Complete Solaria Common Stock (the “PIPE Shares”) for a purchase price of $ 10.00 per share, for aggregate gross proceeds of $ 15.7 million (the “PIPE Financing”), including $ 3.5 million that was funded prior to the Closing Date, pursuant to subscription agreements (the “Subscription Agreements”).

At the time of the PIPE Financing, Complete Solaria issued an additional 60,000 shares to certain investors as an incentive to participate in the PIPE Financing.

● On or around the Closing Date, pursuant to the New Money PIPE Subscription Agreements, certain investors affiliated with the New Money PIPE Subscription Agreements (“New Money PIPE Investors”) agreed to subscribe for and purchase, and Complete Solaria agreed to issue and sell to the New Money PIPE Investors an aggregate of 120,000 shares of Complete Solaria Common Stock for a purchase price of $ 5.00 per share, for aggregate gross proceeds of $ 0.6 million.

Pursuant to its New Money PIPE Subscription Agreement, Complete Solaria issued an additional 60,000 shares of Complete Solaria Common Stock in consideration of certain services provided by it in the structuring of its FPA and the transactions described therein.

● Subsequent to the Closing, Complete Solaria issued an additional 193,976 shares of Complete Solaria Common Stock to the sponsors for reimbursing sponsors’ transfer to certain counterparties and issued an additional 150,000 shares of Complete Solaria Common Stock to an FPA investor for services provided in connection with the Mergers.

● In March 2023, holders of 23,256,504 of the originally issued 34,500,000 FACT Class A Ordinary shares exercised their rights to redeem those shares for cash, and immediately prior to the Closing there were 11,243,496 FACT Class A Ordinary Shares that remained outstanding.

At the Closing, holders of 7,784,739 shares of Class A common stock of FACT exercised their rights to redeem those shares for cash, for an aggregate of approximately $ 82.2 million which was paid to such holders at Closing.

The remaining FACT Class A Ordinary Share converted, on a one-for-one basis, into one share of Complete Solaria Common Stock.

● Each issued and outstanding FACT Class B Ordinary Share converted, on a one-for-one basis, into one share of Complete Solaria Common Stock.

On August 18, 2023, the Company entered into a

Non-Binding Letter of Intent to sell certain of Complete Solaria’s North American solar panel assets to Maxeon Solar Technologies,

On August 5, 2024, Complete Solaria entered into

an Asset Purchase Agreement (the “APA”) among Complete Solaria, SunPower Corporation (“SunPower”) and SunPower’s

direct and indirect subsidiaries (collectively, the “SunPower Debtors”) providing for the Company’s purchase of certain

assets relating to the Blue Raven Solar business, New Homes Business and Non-Installing Dealer network previously operated by the SunPower

Debtors (“SunPower Acquisition”).

The APA was entered into in connection with a voluntary petition filed by SunPower under

Chapter 11 of the United States Code, 11 U.S.C.§§ 101-1532.

The sale by SunPower was approved on September 23, 2024, by the

United States Bankruptcy Court for the District of Delaware.

The Company completed the acquisition of the Acquired Assets (as defined

in the APA) effective September 30, 2024, in exchange for consideration of $ 54.5 million, net of $ 1.0 cash acquired.

The acquisition

transactions under the APA are referred to herein as the “Acquisition,” and the assets and businesses acquired by the Company

under the APA are referred to as the “SunPower Businesses.” Refer to Note 4 – Business Combination for a further discussion

of the allocation of consideration transferred.

(b) Divestiture

In October 2023, the Company completed the sale

of its solar panel business to Maxeon (“Divestiture”), pursuant to the terms of the Asset Purchase Agreement (the “Disposal

The Company determined that the Divestiture represented a strategic shift in the Company’s business and qualified

as a discontinued operation.

Under the terms of the Disposal Agreement, Maxeon agreed to acquire certain assets and employees of Complete

Solaria, for an aggregate purchase price of approximately $ 11.0 million consisting of 1,100,000 shares of Maxeon ordinary shares.

connection with the divestiture the Company recognized a net 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.

The Company subsequently sold all of its Maxeon shares

received in the Divestiture and recognized a loss upon sale of $ 4.2 million which is classified within continuing operations as Other

income (expense), net within the Company’s consolidated statement of operations and comprehensive loss in the year ended December

Accordingly, the results of operations and cash

flows relating to Solaria were reflected as discontinued operations in the consolidated statements of operations and comprehensive loss

and consolidated statements of cash flows for the fiscal years ended December 29, 2024 and December 31, 2023.

Components of amounts reflected in the consolidated

statements of operations and comprehensive loss related to discontinued operations are presented in the table, as follows (in thousands):

Fiscal Year Ended

Cost of revenues

Operating expenses:

Sales and marketing

General and administrative

Total operating expenses

Loss from discontinued operations

Other income, net

Loss from discontinued operations before income taxes

Income tax benefit

Loss from discontinued operations, net of tax

Impairment loss from discontinued operations

Net loss from discontinued operations

$ ( 173,358 )

Since inception, the Company has incurred recurring

losses and negative cash flows from operations.

The Company incurred a net loss of $ 56.5 million during the fiscal year ended December

29, 2024 and had an accumulated deficit of $ 411.4 million and current debt of $ 1.5 million as of December 29, 2024.

The Company had cash

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

The Company believes that its operating losses

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

These conditions raise substantial doubt about the Company’s

ability to continue as a going concern.

Management plans to obtain additional funding.

Historically, the Company’s activities have been financed through private placements of equity securities, debt and proceeds from

If the Company is not able to secure adequate additional funding when needed, the Company will need to reevaluate its operating

plan and may be forced to make reductions in spending, extend payment terms with suppliers, liquidate assets where possible, or suspend

or curtail planned programs or cease operations entirely.

These actions could materially impact the Company’s business, results

of operations and future prospects.

While the Company has been able to raise multiple rounds of financing, there can be no assurance that

in the event the Company requires additional financing, such financing will be available on terms that are favorable, or at all.

to generate sufficient cash flows from operations, raise additional capital or reduce certain discretionary spending would have a material

adverse effect on the Company’s ability to achieve its intended business objectives.

Therefore, there is substantial doubt about the

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

The accompanying consolidated financial statements have been prepared assuming the Company will continue to operate as a going concern,

which contemplates the realization of assets and settlement of liabilities in the normal course of business.

They do not include any adjustments

to reflect the possible future effects on the recoverability and classification of assets or the amounts and classifications of liabilities

that may result from uncertainty related to its ability to continue as a going concern.

(2) Summary of Significant Accounting Policies

(a) Basis of Presentation

The consolidated financial statements and accompanying

notes have been prepared in accordance with generally accepted accounting principles (“U.S.

GAAP”) and pursuant to the rules

and regulations of the Securities and Exchange Commission (“SEC”).

The consolidated financial statements include the accounts

of the Company and its wholly-owned subsidiaries.

All material intercompany balances and transactions have been eliminated in consolidation.

On March 10, 2025, the Company’s board of

directors approved a change in the Company’s fiscal year end to have a 52-to-53-week fiscal year that ends on the Sunday closest

to December 31.

This change is effective for the fiscal year ended December 29, 2024.

(b) Use of Estimates

The preparation of the Company’s consolidated

financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts of

assets, liabilities, revenues, expenses, as well as related disclosure of contingent assets and liabilities.

Significant estimates and

assumptions made by management include, but are not limited to, the determination of:

Fair value of warrant liabilities;

Fair value of the forward purchase agreements

Fair value of Simple Agreements for Future Equity Agreements (“SAFEs”)

The reserve methodology for inventory obsolescence;

The reserve methodology for product warranty;

The reserve methodology for the allowance for credit losses;

Fair value of the derivative liabilities;

The measurement of stock-based compensation.

To the extent that there are material differences

between these estimates and actual results, the Company’s financial condition or operating results will be affected.

bases its estimates on past experience and other assumptions that the Company believes are reasonable under the circumstances, and the

Company evaluates these estimates on an ongoing basis.

The Company has assessed the impact and management is not aware of any specific

events or circumstances that required an update to the Company’s estimates and assumptions or materially affected the carrying value

of the Company’s assets or liabilities as of the date of issuance of this report.

These estimates may change as new events occur

and additional information is obtained.

The Company is exposed to credit losses in the event of nonperformance

by the counterparties to its financial and derivative instruments.

Financial and derivative instruments that potentially subject the Company

to concentrations of credit risk are primarily cash and cash equivalents, restricted cash and cash equivalents, accounts receivable, contract

receivables and forward purchase agreement assets.

The Company’s cash and cash equivalents are on deposit with major financial institutions.

(“Complete Solaria”) was formed in November

2022 through the merger of Complete Solar Holding Corporation, a Delaware corporation (“Complete Solar”), and The Solaria

Corporation, a Delaware corporation (such entity, “Solaria,” and such transaction, the “Business Combination”).

July 18, 2023, the Company 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 the Company having a majority of the voting power

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

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

Accordingly, for accounting

purposes, the Mergers were treated as the equivalent of a capital transaction in which Complete Solaria issued stock for the net assets

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

Company’s operates on a 52-to-53-week fiscal year that ends on the Sunday closest to December 31.

The Company’s fiscal years

ended on December 28, 2025 (“2025”) and December 29, 2024 (“2024”).

and Divestitures

In October 2023, the Company completed the sale of its solar panel

business (“Divestiture”).

The Company determined that the Divestiture represented a strategic shift in the Company’s

business and qualified as a discontinued operation for accounting purposes.

The Company recognized losses from discontinued operations

in its consolidated statements of operations and comprehensive loss and consolidated statements of cash flows related to the Divestiture

of $ 1.1 million and $ 2.0 million in the fiscal years ended December 28, 2025 and December 29, 2024, respectively.

The additional losses

recognized in 2025 and 2024 related to legal expenses incurred in connection with litigation related to its former solar panel business.

the fiscal year ended December 29, 2024, the Company completed the acquisition of certain assets relating to the Blue Raven Solar business,

New Homes business and Non-Installing Dealer network (collectively the “SunPower Businesses”) from SunPower Debtors, the

successor entity in bankruptcy to SunPower Corporation and its direct and indirect subsidiaries (collectively “SunPower Corporation”).

In the fiscal year ended December 28, 2025, the Company completed the acquisitions of Sunder Energy, LLC and Ambia Energy LLC.

these acquisitions was accounted for as business combinations in accordance with Accounting Standards Codification (“ASC”)

805, Business Combination.

Refer to Note 3 – Business Combinations for details of these transactions.

and Going Concern

Since inception through the fiscal year ended December 28, 2025, the Company has

incurred recurring losses and negative cash flows from operations.

The Company’s net loss from continuing operations was $ 44.3 million

in the fiscal year ended December 28, 2025.

As of December 28, 2025, the Company had an accumulated deficit of $ 456.7 million, short-term

debt of $ 24.3 million, and cash and cash equivalents, excluding restricted cash, of $ 9.6 million.

The Company anticipates that operating

losses and negative operating cash flows may continue in the near term.

is actively pursuing plans to mitigate these conditions, including obtaining additional capital resources through equity or debt financing

and leveraging support from significant shareholders when necessary.

The Company has financed its operations primarily through sales

of equity securities, private placements, debt, issuance of convertible notes and other debt instruments, other financing instruments,

cash from operations, and proceeds from the Mergers.

The Company did not file its Annual Report on Form 10-K for the fiscal

year ended December 29, 2024 within the timeframe required by the SEC, its Quarterly Report on Form 10Q for the quarter ended September

28, 2025 or the amendment required to the Current Report originally filed on September 26, 2025 relating to the Sunder acquisition.

a result, the Company is not currently eligible to use a registration statement on Form S-3 that would allow it to

continuously incorporate by reference its SEC reports into the registration statement, to use “shelf” registration statements

to conduct offerings, or to use the at-the-market offering facility until approximately one year from the date that the Company has regained

and maintained status as a current filer.

Aside from a “shelf” registration, the Company has alternative financing options

and may seek additional liquidity through the use of a Form S-1 registration statement and or private placements.

If the Company is not able to secure adequate additional funding when

needed, the Company will need to reevaluate its operating plan and may be forced to make reductions in spending, extend payment terms

with suppliers, liquidate assets where possible, or suspend or curtail planned programs or cease operations entirely.

These actions could

materially impact the Company’s business, results of operations and future prospects.

While the Company has been able to raise multiple

rounds of financing, there can be no assurance that in the event the Company requires additional financing, such financing will be available

on terms that are favorable, or at all.

Failure to generate sufficient cash flows from operations, raise additional capital or reduce

certain discretionary spending would have a material adverse effect on the Company’s ability to achieve its intended business objectives.

there is substantial doubt about the Company’s ability to continue as a going concern within one year after the date that the consolidated

financial statements are issued.

The accompanying consolidated financial statements have been prepared assuming the Company will continue

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

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

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

Basis of Presentation and Summary of Significant Accounting Policies

of Presentation

consolidated financial statements and accompanying notes have been prepared in accordance with generally accepted accounting principles

GAAP”) and pursuant to the rules and regulations of the Securities and Exchange Commission (“SEC”).

consolidated financial statements include the accounts of the Company and its wholly-owned subsidiaries.

All material intercompany balances

and transactions have been eliminated in consolidation.

The preparation of the Company’s consolidated financial statements

in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets, liabilities,

revenues, expenses, as well as related disclosure of contingent assets and liabilities.

Significant estimates and assumptions made by

management include, but are not limited to, the determination of (i) the allowance for credit losses;

(ii) inventory obsolescence;

stock-based compensation;

(iv) workmanship warranty;

(v) intangible assets acquired in business combinations;

(vi) forward purchase agreements;

(vii) Simple Agreement for Future Equity (“SAFE”) Agreements, (viii) derivative liabilities;

and (ix) warrant liabilities.

Company’s financial condition or operating results may be affected to the extent that there are material differences between estimates

and actual results.

The Company bases its estimates on past experience and other assumptions that the Company believes are reasonable

under the circumstances, and the Company evaluates these estimates on an ongoing basis.

The Company has assessed the impact and management

is not aware of any specific events or circumstances that required an update to the Company’s estimates and assumptions or materially

affected the carrying value of the Company’s assets or liabilities as of the date of issuance of this report.

These estimates may

change as new events occur and additional information is obtained.

Reclassification

of prior year balances

Company reclassified long-term operating lease liabilities of $ 2.3 million from Operating lease liabilities, net of current portion to

Other long-term liabilities to conform to the current year’s presentation.

Company’s segment information is presented on a basis that is consistent with the Company’s internal management

The Company’s Chief Executive Officer (“CEO”) is the Chief Operating Decision Maker

The CODM manages the Company and reports financial results based on three reportable segments which are the

same as the Company’s operating segments.

The CODM evaluates the performance of these reportable segments and allocates

resources to make operating decisions based on certain financial information, including segment operating results prepared on a

basis consistent with U.S.

The measurement criteria is based on each respective segment’s operating revenue and

operating (loss) income and excludes any corporate costs which are not allocatable to the operating segments.

measurement criteria does not include segment assets.

For the periods presented, the Company reported its financial performance

within three reportable segments;

Residential Solar Installation, New Homes Business and Dealer.

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

Homes Business – This segment performs solar system installations for new home builders.

This segment was new in fiscal

year 2024 as a result of the acquisition of the SunPower Businesses in the fourth quarter of fiscal year 2024.

– This segment provides a third-party solar energy sales force to initiate and execute contracts with customers throughout

the United States.

This segment’s sales force works with solar installation companies and acts as the agent for each transaction

This segment is new in fiscal year 2025 as a result of the acquisition of Sunder.

Concentration

Company is exposed to credit losses in the event of nonperformance by the counterparties to its financial and derivative instruments.

Financial and derivative instruments that potentially subject the Company to concentrations of credit risk are primarily cash and cash

equivalents, restricted cash and cash equivalents, accounts receivable, and contract assets.

The Company’s cash and cash equivalents

are on deposit with major financial institutions.

Such deposits may be in excess of insured limits.

The Company believes that the financial institutions that hold the Company’s cash

are financially sound, and accordingly, minimum credit risk exists with respect to these balances.

The Company has not experienced any

losses due to institutional failure or bankruptcy.

The Company performs credit evaluations of its customers and generally does not require

collateral for sales on credit.

As of December 29, 2024, no customer had an outstanding balance that represented more than 10% of the

total accounts receivable balance.

As of December 31, 2023, two customers had an outstanding balance that represented 38 % and 16 % of the

total accounts receivable balance.

Concentration of Customers

The Company defines major customers as those customers

who generate revenues that exceed 10% of the Company’s annual net revenues.

For the fiscal years ended December 29, 2024 and December

31, 2023, three customers and one customer represented 36 % and 55 % of gross revenues, respectively, all from the Residential Solar Installation

reportable segment.

Concentration of Suppliers

For the fiscal year ended December 29, 2024, the

Company expanded its preferred supplier list, as such there was no concentration of suppliers.

For the fiscal year ended December 31,

2023, one supplier represented 40 % of the Company’s inventory purchases.

(d) Cash and Cash Equivalents

The Company considers all highly liquid securities

that mature within three months or less from the original date of purchase to be cash equivalents.

The Company maintains the majority

of its cash balances with commercial banks in interest bearing accounts.

The Company believes that the financial

institutions that hold the Company’s cash are financially sound, and accordingly, minimum credit risk exists with respect to these

The Company has not experienced any losses due to institutional failure or bankruptcy.

The Company performs credit evaluations

of its customers and generally does not require collateral for sales on credit.

and Cash Equivalents

Cash and cash equivalents include cash held in checking and savings

accounts and money market accounts consisting of highly liquid securities with maturity dates of three months or less from the original

date of purchase.

As of December 29, 2024 and December 31, 2023, the Company had cash balances of $ 13.4 million and $ 2.6 million, respectively,

in excess of federally insured limits.

(e) Restricted Cash

The Company classifies all cash for which usage

is limited by contractual provisions as restricted cash.

The restricted cash consists of deposits in money market accounts, which is used

as cash collateral backing letters of credit related to customs duty authorities’ requirements.

The Company has presented these

balances under restricted cash, as a long-term asset, in the consolidated balance sheets.

accounts consisting of highly liquid securities with maturity dates of three months or less from the original date of purchase.

maintains the majority of its cash balances with commercial banks in interest bearing accounts.

The Company considers all highly liquid

securities that mature within three months or less from the original date of purchase to be cash equivalents.

Company classifies all cash for which usage is limited by contractual provisions as restricted cash.

Restricted cash consists of deposits

in money market accounts, which is used as cash collateral backing letters of credit related to customs duty authorities’ requirements.

The Company presents restricted cash as a noncurrent asset in its consolidated balance sheets.

The Company reconciles cash, cash equivalents,

and restricted cash reported in its consolidated balance sheets that aggregate to the beginning and ending balances shown in the Company’s

and restricted cash reported on its consolidated balance sheets that aggregate to the beginning and ending balances shown on the Company’s

consolidated statements of cash flows as follows (in thousands) :

Cash and cash equivalents

Restricted cash

Total cash, cash equivalents, and restricted cash

(f) Estimated Credit Losses

The Company recognizes an allowance for credit

loss at the time a receivable is recorded based on the Company’s estimate of expected credit losses, historical write-off experience,

and current account knowledge, and adjusts this estimate over the life of the receivable as needed.

The Company evaluates the aggregation

and risk characteristics of a receivable pool and develops loss rates that reflect historical collections, current forecasts of future

economic conditions over the time horizon that the Company is exposed to credit risk, and payment terms or conditions that may materially

affect future forecasts.

The Company performs ongoing credit evaluations of its customers’

financial condition when deemed necessary.

The Company maintains an allowance for credit losses based on the expected collectability of

all accounts receivable, which takes into consideration an analysis of historical bad debts, specific customer creditworthiness and current

economic trends.

The Company believes that its concentration of credit risk is limited because of the large number of customers, credit

quality of the customer base, small account balances for most of these customers, and customer geographic diversification.

The following table summarizes the allowance for

credit losses as follows (in thousands):

Balance at beginning of period

Provision charged to earnings

Amounts written off, net of recoveries and other adjustments

Balance at end of period

The Company does not have any off-balance sheet credit exposure relating

to its customers.

In fiscal year 2024, the Company identified customer accounts receivable balances that were deemed to be uncollectible,

which were reserved and written off.

(g) Contract Assets and Contract Liabilities

Contract assets consist of unbilled receivables

which represent revenue that has been recognized in advance of billing the customer.

Contract liabilities consist of deferred revenue

and customer advances, which represent consideration received from a customer prior to transferring control of goods or services to the

customer under the terms of a sales contract.

Total contract assets and contract liabilities balances as of the respective dates

are as follows (in thousands):

Contract assets

Contract liabilities current and noncurrent

During the fiscal year ended December 29, 2024,

the increase in contract assets of $ 26.1 million was primarily driven by an increase in residential project sales that have met revenue

recognition based on applicable milestones but have not been billed.

The increase in contract assets and contract liabilities is primarily

attributed to the SunPower Acquisition in fiscal year 2024.

The Company typically invoices its customers upon

completion of set milestones, generally upon installation of the solar energy system with the remaining balance invoiced upon passing

final building inspection.

Standard payment terms to customers range from 30 to 60 days.

When the Company receives payment, or when such

payment is unconditionally due from a customer prior to delivering goods or services to the customer under the terms of a customer agreement,

the Company records this deferred revenue as a contract liability.

As installation projects are typically completed within 12-months,

the Company’s contract liability is reflected within current liabilities in the accompanying consolidated balance sheets.

of revenue recognized during the years ended December 29, 2024, and December 31, 2023, that was included in contract liabilities at the

beginning of each period was $ 3.5 million and $ 2.1 million, respectively.

(h) Inventories

Inventories consist of solar panels and the components

of solar energy systems all of which is classified as finished goods within current assets at December 29, 2024 and December 31, 2023.

Inventory is valued using the average cost method.

The Company identifies inventory which is considered obsolete or in excess of anticipated

demand based on a consideration of marketability and product life cycle stage, component cost trends, demand forecasts, historical revenues,

and assumptions about future demand and market conditions, and such inventory has been adjusted to its lower of cost or net realizable

(i) Revenue Recognition

Revenue is recognized for Residential Solar Installation

and New Home Business when a customer obtains control of promised products and services and the Company has satisfied its performance

obligations which is the date by which substantially all of its design and installation is complete for a fully functioning solar power

system to interconnect to the local power grid.

Installation includes the design of a solar energy

system, the delivery of the components of the solar energy system (i.e., photovoltaic system, inverter, battery storage, etc.), installation

services and services facilitating the connection of the solar energy system to the power grid.

The Company accounts for these services

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

The amount of revenue recognized reflects the

consideration which the Company expects to be entitled to receive in exchange for the products and services.

To achieve this core principle,

the Company applies the following five steps:

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, the Company satisfies a performance obligation.

Residential Solar Installation Revenues

The Company’s Residential Solar Installation

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

Company’s contracts with customers include three primary contract types:

Cash agreements – The Company contracts directly with homeowners who purchase the solar energy system and related services from the Company.

Customers are invoiced on a billing schedule, where the majority of the transaction price is due upon installation with an additional payment due when the system passes inspection by the authority having jurisdiction.

Financing partner agreements – In its financing partner agreements, the Company contracts directly with homeowners for the purchase of the solar energy system and related services.

The Company refers the homeowner to a financing partner to finance the system, and the homeowner makes payments directly to the financing partner.

The Company receives consideration from the financing partner on a billing schedule where the majority of the transaction price is due upon installation with an additional payment due when the system passes inspection by the authority having jurisdiction.

Power purchase agreements and lease agreements – The Company contracts directly with a leasing partner to perform the solar energy system installation, and the homeowner will finance the system through a power purchase agreement (or lease), which is signed with the Company’s leasing partner.

The Company considers the leasing partner to be its customer, as the Company does not contract directly with the homeowner and the leasing partner takes ownership of the system upon the completion of installation.

The Company receives consideration from the leasing partner on a billing schedule where the majority of the transaction price is due upon installation with an additional payment due when the system passes inspection by the authority having jurisdiction.

New Home Business Revenues

The Company’s New Homes Business sells through

a network of home builders as well as its internal sales team.

The Company’s contracts with customers include two primary contract

Cash agreements – The Company contracts

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

Cash and cash

cash, cash equivalents, and restricted cash

Concentration

of Customers – homeowners and financiers

As of December 28, 2025, one customer had an

outstanding balance that represented 11 % of the Company’s outstanding trade receivable balance.

As of December 28, 2024, no customer

had an outstanding balance that represented more than 10% of the Company’s total trade accounts receivable balance.

The Company defines major customers as those customers which generate revenues that exceed 10 % of the Company’s annual net revenues

by reportable segment.

In fiscal 2025 Customer A accounted for 19 % of revenues across the Residential Solar Installation and New Homes

reportable segments.

In fiscal year 2024, Customer A and Customer B accounted for 12 % and 14 %, respectively, of gross revenues.

A generates revenue across the Residential Solar Installation and New Homes reportable segments.

Customer B generated revenue within the

New Homes reportable segment.

is recognized for the Residential Solar Installation and New Homes Business reportable segments when a customer obtains control of promised

products and services and the Company has satisfied its performance obligations which is the date by which substantially all of its design

and installation is complete for a fully functioning solar power system to interconnect to the local power grid.

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

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

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

entering into a sales contract within the Dealer reportable segment, the requisite performance obligation of the Company is to assist

the customer in the progress of the installation and obtain Permission to Operate (“PTO”).

PTO typically occurs within 3

to 6 months after the initial sale, but can happen as early as two months or as late as twelve months after the sale.

amount of revenue recognized reflects the consideration which the Company expects to be entitled to receive in exchange for the products

and services.

To achieve this core principle, the Company applies the following five steps:

Identification of the contract(s) with a customer;

Identification of the performance obligations in the contracts(s);

Determination of the transaction price;

Allocation of the transaction price to the performance obligations;

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

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

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

The Company’s arrangements may contain clauses that

can either increase or decrease the transaction price.

Variable consideration is estimated at each measurement date at its most likely

amount to the extent that it is probable that a significant reversal of cumulative revenue recognized will not occur and true-ups are

applied prospectively as such estimates change.

Company may provide incentives to its customers, such as discounts and rebates which are recorded net against the revenue that the Company

has recognized related to the solar energy system sale.

Company records deferred revenue for amounts invoiced that are received in advance of the provisioning of services.

In certain contracts

with customers, the Company arranges for a third-party financing partner to provide financing to the customer.

The Company collects upfront

from the financing partner and the customer will provide instalment payments to the financing partner.

The Company records revenue in

the amount received from the financing partner, net of any financing fees charged to the homeowner, which the Company considers to be

a customer incentive.

None of the Company’s contracts contain a significant financing component.

Solar Installation revenues

Company’s Residential Solar Installation segment sells products through a network of installing and non-installing dealers and

resellers, as well as its internal sales team.

The Company’s contracts with customers include three primary contract types:

Cash agreements

– The Company contracts directly with homeowners who purchase the solar energy system and related services from the Company.

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

payment due when the system passes inspection by the authority having jurisdiction.

Financing partner agreements

– In its financing partner agreements, the Company contracts directly with homeowners for the purchase of the solar energy

system and related services.

The Company refers the homeowner to a financing partner to finance the system, and the homeowner makes

payments directly to the financing partner.

The Company receives consideration from the financing partner on a billing schedule where

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

the authority having jurisdiction.

Power purchase agreements

and lease agreements – The Company contracts directly with a leasing partner to perform the solar energy system installation,

and the homeowner will finance the system through a power purchase agreement (or lease), which is signed with the Company’s

leasing partner.

The Company considers the leasing partner to be its customer, as the Company does not contract directly with the

homeowner and the leasing partner takes ownership of the system upon the completion of installation.

The Company receives consideration

from the leasing partner on a billing schedule where the majority of the transaction price is due upon installation with an additional

payment due when the system passes inspection by the authority having jurisdiction.

Homes Business revenues

Company’s New Homes Business segment sells through a network of home builders as well as its internal sales team.

The Company’s

customers are invoiced upon the completion of installation.

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

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

contracts with customers include two primary contract types:

Cash agreements

– The Company contracts directly with homebuilders who purchase the solar energy system from the Company and are the customers

in the transaction.

The Company’s customers are invoiced upon the completion of installation.

Lease agreements

– Prior to SunPower Debtor’s declaration of bankruptcy, certain homeowners had intended to lease a system from SunPower

Debtors but were unable to consummate the transaction (as a result of SunPower Debtor’s declaration of bankruptcy).

The in-process

system inventory (installed on recently constructed homes) was acquired by the Company in connection with the SunPower Acquisition.

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

The Company considers the leasing partner to be its customer.

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

The Company receives consideration from the leasing partner following the acceptance of the system.

The Company’s performance obligation for both reportable segments

is to design and install a fully functioning solar energy system.

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

agreements), the Company recognizes revenue over time.

The Company’s over-time revenue recognition begins when the solar power system

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

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

The Company recognizes revenue using the input method based

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

customer (installation).

For New Homes Business Lease agreements, the Company considers the performance obligation to be satisfied at

a point in time upon acceptance of the system by the customer.

Revenue is generally recognized at the transaction

price contained within the agreement, net of costs of financing, or other consideration paid to the customers that is not in exchange

for a distinct good or service.

The Company’s arrangements may contain clauses that can either increase or decrease the transaction

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

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

The Company records deferred revenue for amounts

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

In certain contracts with customers, the Company arranges for a

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

The Company collects upfront from the financing partner and the customer

will provide installment payments to the financing partner.

The Company records revenue in the amount received from the financing partner,

net of any financing fees charged to the homeowner, which the Company considers to be a customer incentive.

None of the Company’s

contracts contain a significant financing component.

Costs to obtain and fulfill contracts

The Company’s costs to obtain and fulfill contracts, when recognized, associated with systems sales are expensed as sales commission

and cost of revenue, respectively.

In addition, incentives the Company provides to its customers, such as discounts and rebates, are recorded

net to the revenue the Company has recognized on the solar power system.

The Company typically provides a 10 -year warranty

on its solar energy system installations, which provides assurance over the workmanship in performing the installation, including roof

leaks caused by the Company’s performance.

For solar panel sales recognized prior to the Divestiture, the Company provides a 30 -year

warranty that the products will be free from defects in material and workmanship.

The Company retained its warranty obligations associated

with panel sales prior to the Divestiture.

When the revenues are recognized for the solar

energy systems installations services, the Company accrues liabilities for the estimated future costs of meeting its warranty obligations.

The Company makes and revises these estimates based primarily on the volume of new sales that contain warranties, historical experience

with and projections of warranty claims, and estimated solar energy system and panel replacement costs.

The Company records a provision

for estimated warranty expenses in cost of revenues within the accompanying consolidated statements of operations and comprehensive loss.

Warranty costs primarily consist of replacement materials and equipment and labor costs for service personnel.

Disaggregation of revenue

Refer to the table below for the Company’s

revenue recognized (in thousands):

Fiscal Year Ended

Residential Solar Installations

Revenue recognized over time

Revenue recognized at a point in time

Total Residential Solar Installations

New Homes Business

Revenue recognized over time

Revenue recognized at a point in time

Total New Homes Business

Total revenue

For the fiscal years ended December 29, 2024,

and December 31, 2023, all revenue recognized was generated in the U.S.

Remaining performance obligations

The Company elected the practical expedient not

to disclose the remaining performance obligations for contracts that are less than one year in length.

As of December 29, 2024, the Company

has deferred $ 0.9 million associated with a long-term service contract, which will be recognized evenly through 2028.

The Company had

deferred $ 1.2 million associated with a long-term service contract as of December 31, 2023.

Incremental costs of obtaining customer contracts

Incremental costs of obtaining customer contracts consist of sales

commissions, which are costs paid to third-party vendors who source residential customer contracts for the sale of solar energy systems

considers the leasing partner to be its customer.

Under the terms of the Company’s arrangement with the leasing partner, control

is not transferred to the customer until the completed system is accepted by the customer.

The Company receives consideration from

the leasing partner following the acceptance of the system.

Company’s performance obligation for both of these reportable segments is to design and install a fully functioning solar energy

For all contract types (with the exception of New Homes Business Lease agreements), the Company recognizes revenue over time.

The Company’s over-time revenue recognition begins when the solar power system is fully installed (as it is at this point that

control of the asset begins to be transferred to the customer, and the customer retains the significant risks and rewards of ownership

of the solar power system).

The Company recognizes revenue using the input method based on direct costs to install the system and defers

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

For New Homes Business

Lease agreements, the Company considers the performance obligation to be satisfied at a point in time upon acceptance of the system by

the customer.

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

recognizes revenue at a point in time when PTO is complete.

The Company acts as an agent in these arrangements and records revenue on

The Company does not have any significant financing components in these contracts.

The Company does not provide warranty

services related to these sales contracts, and therefore, the Company does not record a warranty reserve with respect to these sales

to Obtain Contracts

The incremental costs of obtaining customer contracts

consist of sales commissions which are paid to third-parties who source residential customer contracts for the sale of solar energy systems

by the Company.

The Company defers sales commissions and recognizes expenses in accordance with the timing of the related revenue recognition.

The Company defers sales commissions and recognizes the expense in accordance with the timing of the related revenue recognition.

Amortization of deferred commissions is recorded as sales commissions in the accompanying consolidated statements of operations and comprehensive

As of December 29, 2024 and December 31, 2023, deferred commissions were zero and $ 4.2 million, respectively, and classified within

prepaid expenses and other current assets in the accompanying consolidated balance sheets.

(j) Property and Equipment, Net

Property and equipment are stated at cost less

accumulated depreciation and amortization.

When assets are retired or disposed of, the cost and accumulated depreciation are removed from

the accounts, and any resulting gain or loss is included in the current period.

Repair and maintenance costs are expensed as incurred.

Depreciation and amortization are calculated using the straight-line method over the following estimated useful lives of the assets:

Manufacturing equipment

Internal-use software

Furniture & equipment

Leasehold improvements

Shorter of 3 to 5 years of the asset or the term of the lease.

(k) Internal-Use Software

The Company capitalizes costs to develop its internal-use software

when preliminary development efforts are successfully completed, management has authorized and committed project funding, it is probable

that the project will be completed, and the software will be utilized as intended.

These costs include personnel and related employee

benefits and expenses for employees who are directly associated with and who devote time to software projects, and external direct costs

of materials and services consumed in developing or obtaining software.

Costs incurred prior to meeting these criteria, together with

costs incurred for training and maintenance, are expensed as incurred.

Costs incurred for enhancements that are expected to provide additional

material functionality are capitalized and amortized over the estimated useful life of the related upgrade.

During the fiscal years ended

December 29, 2024 and December 31, 2023, the Company capitalized $ 1.2 million and $ 1.9 million, respectively, of internal-use software

development costs.

The remaining unamortized balance as of December 29, 2024 and December 31, 2023, of $ 0.2 million and $ 3.8 million,

respectively, is included in property and equipment, net within the accompanying consolidated balance sheets.

(l) 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

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

is generally upon installation.

(m) Advertising and Promotional Expenses

Advertising and promotional costs are expensed

as incurred and included in sales and marketing expense in the accompanying consolidated statements of operations and comprehensive loss.

Advertising costs were not material for the fiscal years ended December 29, 2024 and December 31, 2023.

(n) Income Taxes

Income taxes are accounted for under the liability

Deferred tax assets and liabilities are recognized for the future tax consequences attributable to differences between the financial

statement carrying amounts of existing assets and liabilities and their respective tax bases and operating loss and tax credit carryforwards.

Deferred tax assets and liabilities are measured using enacted tax rates expected to apply to taxable income in the years in which those

temporary differences are expected to be recovered or settled.

The effect on deferred tax assets and liabilities of a change in tax rates

is recognized in income in the period that includes the enactment date.

The Company recognizes the effect of income tax positions only

if those positions are more likely than not to be sustained.

Recognized income tax positions are measured at the largest amount that is

greater than 50 % likely of being realized.

Changes in recognition or measurement are reflected in the period in which the change in judgment

The Company recognizes accrued interest and penalties, if any, related to unrecognized tax benefits in its income tax provision.

The Company tests goodwill at the reporting unit

level for impairment annually on the first day of the fourth quarter, or more frequently if an event occurs or circumstances change that

would more likely than not reduce the fair value of the reporting unit below its carrying amount.

The Company may elect to perform a qualitative

assessment that considers economic, industry and company-specific factors.

If, after completing the assessment, it is determined that

it is more likely than not that the fair value of a reporting unit is less than its carrying value, the Company proceeds to a quantitative

Quantitative testing requires a comparison of the fair value of each reporting unit to its carrying value.

If the carrying value

of the reporting unit exceeds its fair value, goodwill impairment is measured as the amount by which the reporting unit’s carrying

value exceeds its fair value, not to exceed the carrying value of goodwill.

(p) Comprehensive Loss

Comprehensive loss consists of two components,

net loss and other comprehensive income (loss), net.

The Company’s other comprehensive loss consists of foreign currency translation

adjustments that result from the consolidation of its foreign entities and is reported net of their related tax effects.

(q) Impairment of Long-Lived Assets

Long-lived assets, such as property and equipment,

ROU assets, and intangible assets subject to amortization, are reviewed for impairment whenever events or changes in circumstances indicate

that the carrying amount of an asset may not be recoverable.

If circumstances require a long-lived asset or asset group to be tested for

possible impairment, the Company first compares undiscounted cash flows expected to be generated by that asset or asset group to its carrying

If the carrying value of the long-lived asset or asset group is not recoverable on an undiscounted cash flow basis, an impairment

is recognized to the extent that the carrying value exceeds its fair value.

Fair value is determined through various valuation techniques

including discounted cash flow models, and quoted market values, as considered necessary.

The Company recognized an impairment loss in the

fiscal year ended December 29, 2024 as disclosed in Note 9 - Property and equipment, net.

There were no impairment charges recorded in

continuing operations for the fiscal year ended December 31, 2023.

(r) Intangible Assets, Net

Intangible assets are recorded at cost, less accumulated

amortization.

As of December 28, 2025 deferred commissions was $ 5.6 million.

Deferred commissions were not material as of December 29, 2024.

Assets and Contract Liabilities

The timing of revenue recognition, billings, and

cash collections results in billed accounts receivable, unbilled revenue (contract assets), and deferred revenue (contract liabilities)

on the balance sheet.

Contract assets consist of unbilled receivables which represent revenue

that has been recognized in advance of the Company’s right to bill the customer.

Contract liabilities consist of deferred revenue

and customer advances, which represent consideration received from a customer prior to transferring control of goods or services to the

customer under the terms of a sales contract

Company typically invoices its customers upon completion of set milestones, generally upon installation of the solar energy system with

the remaining balance invoiced upon passing final building inspection.

Standard payment terms to customers range from 30 to 60 days.

When the Company receives payment, or when such payment is unconditionally due from a customer prior to delivering goods or services

to the customer under the terms of a customer agreement, the Company records this deferred revenue as a contract liability.

Most installation

projects are completed within 12 -months.

As such, a significant portion of the Company’s contract liabilities is reflected within

current liabilities in the accompanying consolidated balance sheets.

Contract liabilities for installation projects expected to be completed

beyond 12 months are classified as noncurrent obligations in the accompanying consolidated balance sheets.

Performance Obligations

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

The Company’s performance obligations associated with long-term service contracts are not material.

for Estimated Credit losses

The Company recognizes an allowance for credit

losses at the time a receivable is recorded based on the Company’s estimate of expected credit losses, historical write-off experience,

and current account knowledge.

In developing its estimate of expected credit losses, the Company has elected to apply the practical expedient

permitted under Accounting Standards Codification (“ASC”) 326 – Financial Instruments – Credit Losses ,

under which it assumes that current conditions at the balance-sheet date remain unchanged for the remaining life of the financial assets.

The Company evaluates the aggregation and risk

characteristics of a receivable pool and develops loss rates that reflect historical collections over the time horizon that the Company

is exposed to credit risk, and payment terms or conditions that may materially affect future forecasts.

Company performs ongoing credit evaluations of its customers’ financial condition when deemed necessary.

The Company maintains

an allowance for credit losses based on the expected collectability of all accounts receivable, which takes into consideration an analysis

of historical bad debts, specific customer creditworthiness and current economic trends.

The Company believes that its concentration

of credit risk is limited because of the large number of customers, credit quality of the customer base, small account balances for most

of these customers, and customer geographic diversification.

The Company does not have any off-balance sheet credit exposure relating

to its customers.

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

of and for the Year Ended

Balance at beginning

Provision charged to earnings

written off, net of recoveries and other adjustments

at end of period

In fiscal year 2024, the Company identified customer

accounts receivable balances that were deemed to be uncollectible, which were reserved and written off.

consist of solar panels and the components of solar energy systems all of which are classified as finished goods within inventories as

of December 28, 2025 and December 29, 2024.

Inventories are valued using the average cost method.

The Company identifies inventory which

is considered obsolete or in excess of anticipated demand based on a consideration of marketability and product life cycle stage, component

cost trends, demand forecasts, historical revenues, and assumptions about future demand and market conditions, and such inventory has

been adjusted to its lower of cost or net realizable value.

Company’s costs to fulfill contracts associated with systems sales are expensed as cost of revenues.

Cost of revenues is comprised

primarily of materials, internal labor, 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.

Company typically provides a 10-year warranty on its solar energy system installations, which provides assurance over the workmanship

in performing the installation, including roof leaks caused by the Company’s performance.

For solar panel sales recognized prior

to the Divestiture, the Company provides a 30-year warranty that the products will be free from defects in material and workmanship.

The Company retained its warranty obligations associated with panel sales prior to the Divestiture.

revenue is recognized for a solar energy system installation service, the Company accrues a liability for the estimated future cost of

meeting its warranty obligations.

The Company makes and revises its estimated warranty liability based primarily on the volume of new

sales that contain warranties, historical experience with and projections of warranty claims, and estimated solar energy system and panel

replacement costs.

The Company records a provision for estimated warranty expenses in cost of revenues within the accompanying consolidated

statements of operations and comprehensive loss.

Warranty costs primarily consist of replacement materials, equipment and labor costs

for service personnel.

and Equipment, Net

and equipment are stated at cost less accumulated depreciation and amortization.

When assets are retired or disposed of, the cost and

accumulated depreciation are removed from the accounts, and any resulting gain or loss is recognized in that period.

Repair and maintenance

costs are expensed as incurred.

Depreciation and amortization are calculated using the straight-line method over the following estimated

useful lives of the assets:

Equipment 1 – 3 years

Internal-use software 3 – 5 years

Furniture & equipment 3 – 5 years

Vehicles 3 to 5 years

Leasehold improvements Shorter of 3 to 5 years of the asset or the term of the lease.

Company capitalizes costs to develop its internal-use software when preliminary development efforts are successfully completed, management

has authorized and committed project funding, it is probable that the project will be completed, and the software will be utilized as

These costs include personnel and related employee benefits and expenses for employees who are directly associated with and

who devote time to software projects, and external direct costs of materials and services consumed in developing or obtaining software.

Costs incurred prior to meeting these criteria, together with costs incurred for training and maintenance, are expensed as incurred.

Costs incurred for enhancements that are expected to provide additional material functionality are capitalized and amortized over the

estimated useful life of the related upgrade.

assets are recorded at cost, less accumulated amortization.

Amortization is recorded using the straight-line method.

All intangible assets that have been determined to have definite

lives are amortized over their estimated useful life as indicated below:

Trademarks 10 years

Developed technology 3 years

(s) Stock-Based Compensation

The Company recognizes stock-based compensation expense over the requisite

service period on a straight- line basis for all stock-based payments that are expected to vest to employees, non-employees and directors,

including grants of employee stock options and other stock-based awards.

Equity-classified awards issued to employees, non-employees such

as consultants and non-employee directors are measured at the grant-date fair value of the award.

Forfeitures are recognized as they occur.

For accounting purposes, the Company estimates grant-date fair value of stock options using the Black-Scholes option pricing model.

Black-Scholes option pricing model requires the input of highly subjective assumptions, including the fair value of the underlying common

stock as of the grant date, the expected term of the option, the expected volatility of the price of the Company’s common stock

and expected dividend yield.

(t) Fair Value Measurements

The Company utilizes valuation techniques that

maximize the use of observable inputs and minimize the use of unobservable inputs to the extent possible.

The Company determines fair

value based on assumptions that market participants would use in pricing an asset or liability in the principal or most advantageous market.

When considering market participant assumptions

in fair value measurements, the following fair value hierarchy distinguishes between observable and unobservable inputs, which are categorized

in one of the following levels:

All intangible assets

that have been determined to have definite lives are amortized over their estimated useful life as indicated below:

Customer related intangibles

Developed technology

of Long-Lived Assets

assets, such as property and equipment, Right-of-Use (“ROU”) assets, and intangible assets subject to amortization, are reviewed

for impairment whenever events or changes in circumstances indicate that the carrying amount of an asset may not be recoverable.

If circumstances

require a long-lived asset or asset group to be tested for possible impairment, the Company first compares undiscounted cash flows expected

to be generated by that asset or asset group to its carrying value.

If the carrying value of the long-lived asset or asset group is not

recoverable on an undiscounted cash flow basis, an impairment is recognized to the extent that the carrying value exceeds its fair value.

Fair value is determined through various valuation techniques including discounted cash flow models, and quoted market values, as considered

Company recognized an impairment loss of zero and $ 3.8 million in the fiscal years ended December 28, 2025 and December 29, 2024, respectively,

as disclosed in Note 6 – Supplemental Balance Sheet Information .

Company tests goodwill at the reporting unit level for impairment annually on the first day of the fourth quarter, or more frequently

if an event occurs or circumstances change that would more likely than not reduce the fair value of the reporting unit below its carrying

Company may elect to perform a qualitative assessment that considers economic, industry and company-specific factors.

If, after completing

the assessment, it is determined that it is more likely than not that the fair value of a reporting unit is less than its carrying value,

the Company proceeds to a quantitative test.

Quantitative testing requires a comparison of the fair value of each reporting unit to its

carrying value.

If the carrying value of the reporting unit exceeds its fair value, goodwill impairment is measured as the amount by

which the reporting unit’s carrying value exceeds its fair value, not to exceed the carrying value of goodwill.

Company did not recognize any goodwill impairment in the fiscal years ended December 28, 2025 or December 29, 2024.

Value Measurements

Company utilizes valuation techniques that maximize the use of observable inputs and minimize the use of unobservable inputs to the extent

The Company determines fair value based on assumptions that market participants would use in pricing an asset or liability

in the principal or most advantageous market.

considering market participant assumptions in fair value measurements, the following fair value hierarchy distinguishes between observable

and unobservable inputs, which are categorized in one of the following levels:

Level 1 inputs:

Unadjusted quoted prices in active markets for identical assets or liabilities accessible to the reporting entity at the measurement date.

quoted prices in active markets for identical assets or liabilities accessible to the reporting entity at the measurement date.

Level 2 inputs:

Other than quoted prices included in Level 1 inputs that are observable for the asset or liability, either directly or indirectly, for substantially the full term of the asset or liability.

quoted prices included in Level 1 inputs that are observable for the asset or liability, either directly or indirectly, for substantially

the full term of the asset or liability.

Level 3 inputs:

Unobservable inputs for the asset or liability used to measure fair value to the extent that observable inputs are not available, thereby allowing for situations in which there is little, if any, market activity for the asset or liability at the measurement date.

Financial assets and liabilities held by the Company measured at fair

value every reporting period as of December 29, 2024 and December 31, 2023 include cash and cash equivalents, accounts receivable, accounts

payable, accrued expenses, the warrant liabilities, FPAs, and derivative liabilities associated with the Company’s debt.

The carrying amounts of cash, accounts receivable,

accounts payable and accrued expenses approximate their fair value because of their short-term nature (classified as Level 1).

The warrant liabilities, derivative liabilities and FPAs are measured

at fair value using Level 3 inputs.

The Company records subsequent adjustments to reflect the increase or decrease in estimated fair value

at each reporting date within Other income (expense), net in its consolidated statements of operations and comprehensive loss.

(u) Net Loss Per Share

The Company computes net loss per share following ASC 260, Earnings

Basic net loss per share is measured as the loss attributable to common stockholders divided by the weighted average common

shares outstanding during periods with undistributed losses.

Diluted net loss per share of common stock is computed by dividing the net

loss attributable to common stockholders by the weighted-average number of common share equivalents outstanding for the period determined

using the treasury-stock method and if-converted method, as applicable.

Securities that potentially have an anti-dilutive effect (i.e.,

those that increase income per share or decrease loss per share) are excluded from the diluted loss per share calculation.

The Company accounts for its leases following

ASC 842, Leases .

The Company determines if a contract is a lease or contains a lease at the inception of the contract and reassesses

that conclusion if the contract is modified.

The Company’s lease agreements generally contain lease and non-lease components.

under lease arrangements are primarily fixed.

The Company combines lease and non-lease components and accounts for them together as a

single lease component.

All leases are assessed for classification as an operating lease or a finance lease.

Each of operating lease right-of-use

(“ROU”) assets and financed lease assets are presented separately on the Company’s consolidated balance sheets.

lease liabilities and finance lease obligations are separated into their respective current portion and non-current portions and are presented

separately on the Company’s consolidated balance sheets.

ROU assets represent the Company’s right

to use an underlying asset for the lease term and lease liabilities represent its obligation to make lease payments arising from the lease.

Operating lease ROU assets and liabilities are recognized on the date in which the lessor makes the underlying asset available for use,

based upon the present value of the lease payments over the respective lease term.

Lease expense is recognized on a straight-line basis

over the lease term, subject to any changes in the lease or expectation regarding the terms.

Variable lease costs such as common area

maintenance, property taxes and insurance are expensed as incurred.

The Company generally uses its incremental borrowing

rate to discount the lease payments to present value.

The estimated incremental borrowing rate is derived from information available at

the lease commencement date.

The Company’s lease terms include periods under options to extend or terminate the lease.

renew or extend leases beyond their initial term have been excluded from measurement of the ROU assets and lease liabilities as exercise

of such options is not reasonably certain.

The Company generally uses the base, non-cancellable, lease term when determining the lease

assets and liabilities.

The Company records a right-of-use asset which is calculated based on the amount of the lease liability, adjusted

for any advance lease payments made, lease incentives received, and initial direct costs incurred.

Right-of-use assets are subject to

evaluation for impairment or disposal on a basis consistent with other long-lived assets.

The Company has elected, for all classes of underlying assets, not

to recognize ROU assets and lease liabilities for leases with an initial term of twelve months or less.

Lease cost for short-term leases

is recognized on a straight-line basis over the lease term.

(w) Warrant Liabilities

The Company accounts for its warrant liabilities in accordance with

the guidance in ASC 815-40, Derivatives and Hedging – Contracts in Entity’s Own Equity , under which the warrants that

do not meet the criteria for equity classification and must be recorded as liabilities.

The warrant liabilities are measured at fair value

at inception and at each reporting date in accordance with the guidance in ASC 820, Fair Value Measurement , with any subsequent

changes in fair value recognized in Other income (expense), net on the consolidated statements of operations and comprehensive loss.

to Note 5 – Fair Value Measurements and Note 14 – Warrants.

(x) Forward Purchase Agreements

The Company accounts for its FPAs in accordance with the guidance in

ASC 480, Distinguishing Liabilities from Equity , as the agreements embody an obligation to transfer assets to settle a forward

The FPAs are measured at fair value at inception and at each reporting date in accordance with the guidance in ASC 820, Fair

Value Measurement , with any subsequent changes in fair value recognized in Other income (expense), net on the consolidated statements

inputs for the asset or liability used to measure fair value to the extent that observable inputs are not available, thereby allowing

for situations in which there is little, if any, market activity for the asset or liability at the measurement date.

assets and liabilities held by the Company measured at fair value every reporting period include cash and cash equivalents, accounts

receivable, accounts payable, accrued expenses, warrant liabilities, forward purchase agreements (“FPAs”), SAFEs, deferred

purchase price consideration, and derivative liabilities associated with the Company’s borrowings.

carrying amounts of cash, accounts receivable, accounts payable, accrued expenses and other current liabilities, public warrants, and

deferred purchase price consideration approximate their respective fair values because of their short-term nature or they have observable

inputs (classified as Level 1).

The derivative liabilities associated with the Company’s borrowings,

FPAs, SAFEs, and private and working capital warrant liabilities are initially measured at fair value using Level 3 inputs.

At each subsequent

reporting date, the Company remeasures the fair value of these instruments in accordance with ASC 820, Fair Value Measurement ,

and records the respective adjustment to the fair value within Other non-operating income, net the Company’s consolidated statements

of operations and comprehensive loss.

Refer to Note 5 – Fair Value Measurements and Note 6 – Forward Purchase Agreements.

(y) Recently Adopted Accounting Pronouncements

In November 2023, the FASB issued ASU No.

2023-07 “Segment Reporting

Improvements to Reportable Segment Disclosures” (“ASU 2023-07”).

The ASU expands public entities’

segment disclosures by requiring disclosure of significant segment expenses that are regularly provided to the CODM and included within

each reported measure of segment profit or loss, an amount and description of its composition for other segment items, and interim disclosures

of a reportable segment’s profit or loss and assets.

This guidance is effective for fiscal years beginning after December 15, 2023,

and interim periods within fiscal years beginning after December 15, 2024, and requires retrospective adoption.

with Embedded Derivative Liabilities

Company accounts for its borrowings with embedded derivative liabilities in accordance with ASC 815, Derivatives and Hedging ,

to determine whether such features must be bifurcated and accounted for separately as derivative liabilities.

Upon issuance of a debt

instrument with an embedded conversion option feature, the Company assesses whether the embedded feature qualifies as a derivative that

requires bifurcation from the host contract.

An embedded feature is bifurcated and accounted for as a separate derivative instrument

if (i) the economic characteristics and risks of the embedded feature are not clearly and closely related to those of the host debt instrument;

(ii) the embedded feature, if freestanding, would meet the definition of a derivative;

and (iii) the hybrid instrument is not remeasured

at fair value through earnings.

an embedded feature requires bifurcation, the Company allocates a portion of the initial proceeds to the fair value of the derivative

liability, with the residual assigned to the carrying amount of the host debt instrument.

The derivative liability is subsequently measured

at fair value at each reporting date.

host debt instrument is recorded at amortized cost using the effective interest method.

Any discounts or premiums resulting from the

initial allocation between the host debt and the embedded derivative are amortized as interest expense over the expected term of the

liabilities are measured at fair value in accordance with ASC 820, Fair Value Measurement .

The fair value of a derivative liability

is measured using a Monte Carlo simulation that incorporates a binomial lattice model.

Refer to Note 5 – Fair Value Measurements

and Note 10 – Borrowings and Derivative Liabilities for details.

Purchase Agreements

Company accounts for its FPAs in accordance with the guidance in ASC 480, Distinguishing Liabilities from Equity , as the agreements

embody an obligation to transfer assets to settle a forward contract.

The FPAs are measured at fair value at inception and at each reporting

date in accordance with the guidance in ASC 820, Fair Value Measurement .

Refer to Note 5 – Fair Value Measurements

and Note 8 – Forward Purchase Agreements for details.

Company accounts for its warrant liabilities in accordance with the guidance in ASC 815-40, Derivatives and Hedging – Contracts

in Entity’s Own Equity , under which the warrants that do not meet the criteria for equity classification must be recorded as

The warrant liabilities are measured at fair value at inception and at each reporting date in accordance with the guidance

in ASC 820, Fair Value Measurement .

Refer to Note 5 – Fair Value Measurements and Note 14 – Common Stock

and Common Stock Warrants for details.

Company accounts for its SAFEs in accordance with the guidance in ASC 480, Distinguishing Liabilities from Equity .

SAFEs are measured

at fair value at inception and at each reporting date in accordance with the guidance in ASC 820, Fair Value Measurement .

to Note 5 – Fair Value Measurements and Note 9 – SAFE Agreements for details.

and Promotion Expenses

and promotion costs are expensed as incurred and included in sales and marketing expense in the accompanying consolidated statements

of operations and comprehensive loss.

Advertising costs were not material for the fiscal years ended December 28, 2025 and December 29,

taxes are accounted for under the liability method.

Deferred tax assets and liabilities are recognized for the future tax consequences

attributable to differences between the financial statement carrying amounts of existing assets and liabilities and their respective

tax bases and operating loss and tax credit carryforwards.

Deferred tax assets and liabilities are measured using enacted tax rates expected

to apply to taxable income in the years in which those temporary differences are expected to be recovered or settled.

A valuation allowance

is established when it is more likely than not that the deferred tax assets with not be realized.

The Company recognizes the effect of

income tax positions only if those positions are more likely than not to be sustained.

The Company recognizes accrued interest and penalties,

if any, related to unrecognized tax benefits in its income tax provision.

July 4, 2025, Public Law No.

119-21, commonly known as the One Big Beautiful Bill Act (the “OBBBA”), was enacted in the United

States, resulting in broad-based changes to federal tax law.

The Company included the impact of OBBBA in its income tax provision for

the fiscal year ended December 28, 2025.

The OBBBA did not have a material impact on income tax expense for the fiscal year ended December

Company recognizes stock-based compensation expense over the requisite service period on a straight- line basis for all stock-based payments

that are expected to vest to employees, non-employees and Directors, including grants of employee stock options and other stock-based

Equity-classified awards issued to employees, non-employees such as consultants and non-employee Directors are measured at the

grant-date fair value of the award.

Forfeitures are recognized as they occur.

Comprehensive

loss consists of two components, net loss and other comprehensive income (loss), net.

Loss Per Share

Company computes net loss per share following ASC 260, Earnings Per Share .

Basic net loss per share is measured as the loss attributable

to common stockholders divided by the weighted average common shares outstanding during periods with undistributed losses.

loss per share of common stock is computed by dividing the net loss attributable to common stockholders by the weighted-average number

of common share equivalents outstanding for the period determined using the treasury-stock method and if-converted method, as applicable.

Securities that potentially have an anti-dilutive effect (i.e., those that increase income per share or decrease loss per share) are

excluded from the diluted loss per share calculation.

Company accounts for its leases following ASC 842, Leases .

The Company determines if a contract is a lease or contains a lease

at the inception of the contract and reassesses that conclusion if the contract is modified.

ROU assets represent the Company’s

right to use an underlying asset for the lease term and lease liabilities represent its obligation to make lease payments arising from

The Company’s lease agreements generally

contain lease and non-lease components.

Payments under lease arrangements are primarily fixed.

The Company has elected the practical expedient

to combine lease and non-lease components and accounts for them together as a single lease component.

All leases are assessed for classification

as an operating lease or a finance lease.

Finance lease ROU assets are classified within Property and Equipment, net, on the Company’s

consolidated balance sheets.

Operating lease ROU assets are classified separately on the Company’s consolidated balance sheets.

Operating lease liabilities and finance lease obligations are separated into their respective current portion and non-current portions

and are presented separately on the Company’s consolidated balance sheets.

Finance lease ROU assets and liabilities and operating

lease ROU assets and liabilities are recognized on the Company’s consolidated balance sheet on the date in which the lessor makes

the underlying asset available for use.

lease ROU assets are those that meet one or more of the criteria outlined in ASC 842-10-25-2, such as transfer of ownership, purchase

option, lease term for a major part of the asset’s economic life, or present value of lease payments substantially equal to the

fair value of the asset.

Finance lease ROU assets are initially measured at cost, which includes the initial lease liability, plus any

lease payments made at or before commencement, less any lease incentives received.

Finance lease ROU assets are amortized on a straight-line

basis over the shorter of the lease term or the useful life of the underlying asset.

Interest expense on the finance lease liability

is recognized using the effective interest method.

lease ROU assets and liabilities are recognized based upon the present value of the lease payments over the respective lease term.

lease expense is recognized on a straight-line basis over the lease term, subject to any changes in the lease or expectation regarding

Variable lease costs such as common area maintenance, property taxes and insurance are expensed as incurred.

Company generally uses its incremental borrowing rate to discount the lease payments to present value.

The estimated incremental borrowing

rate is derived from information available at the lease commencement date.

The Company’s lease terms include periods under options

to extend or terminate the lease.

Options to renew or extend leases beyond their initial term have been excluded from measurement of

the ROU assets and lease liabilities when exercise of such options is not reasonably certain.

The Company generally uses the base, non-cancellable,

lease term when determining the lease assets and liabilities.

The Company records a right-of-use asset which is calculated based on the

amount of the lease liability, adjusted for any advance lease payments made, lease incentives received, and initial direct costs incurred.

Right-of-use assets are subject to evaluation for impairment or disposal on a basis consistent with other long-lived assets.

Company has elected, for all classes of underlying assets, not to recognize ROU assets and lease liabilities for leases with an initial

term of twelve months or less.

The cost for short-term leases is recognized on a straight-line basis over the term of the contract.

Adopted Accounting Pronouncements

July 2025, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) 2025-05

“Measurement of Credit Losses for Accounts Receivable and Contract Assets” which provides an update to all entities

with a practical expedient when estimating expected credit losses.

This ASU is effective for annual reporting periods beginning after

December 15, 2025, and interim reporting periods within those annual reporting periods.

Early adoption is permitted in both interim and

annual reporting periods in which financial statements have not yet been issued or made available for issuance.

The Company adopted ASU

2023-07 in its fourth quarter of 2024 using a retrospective transition method.

See Note 22 – Segment Information for the Company’s

disclosures reflecting the adoption.

(z) Accounting Pronouncements Not Yet Adopted

In December 2023, the FASB issued ASU 2023-09,

Income Taxes (Topic 740):

2025-05 in the fiscal year ended December 28, 2025.

The impact of the adoption was not material to the Company’s consolidated financial

December 2023, the FASB issued ASU 2023-09, “ Income Taxes (Topic 740):

Improvements to Income Tax Disclosures” .

The objective of ASU 2023-09 is to enhance disclosures related to income

taxes, including specific thresholds for inclusion within the tabular disclosure of income tax rate reconciliation and specified information

about income taxes paid.

ASU 2023-09 is effective for public companies starting in annual periods beginning after December 15, 2024.

Company is currently evaluating this ASU to determine its impact upon the Company’s disclosures.

In November 2024, the FASB issued ASU 2024-03,

Income Statement (Topic 220) Reporting Comprehensive Income – Expense Disaggregation Disclosure.

The objective of ASU 2024-03 is

to disclose disaggregated information about certain income statement expense line items.

objective of ASU 2023-09 is to enhance disclosures related to income taxes, including specific thresholds for inclusion within the tabular

disclosure of income tax rate reconciliation and specified information about income taxes paid.

ASU 2023-09 is effective for public companies

starting in annual periods beginning after December 15, 2024.

The Company is currently evaluating this ASU to determine its impact on

the Company’s disclosures.

(3) Reverse Recapitalization

As discussed in Note 1 – Organization, on

July 18, 2023, the Company consummated the Mergers pursuant to the Amended and Restated Business Combination Agreement.

The Mergers was

accounted for as a reverse recapitalization, rather than a business combination, for financial accounting and reporting purposes.

Complete Solaria was deemed the accounting acquirer (and legal acquiree) and FACT was treated as the accounting acquiree (and legal acquirer).

Complete Solaria was determined to be the accounting acquirer based on evaluation of the following facts and circumstances:

Complete Solaria’s pre-combination stockholders have the majority of the voting power in the post- merged company;

Legacy Complete Solaria’s stockholders have the ability to appoint a majority of the Complete Solaria Board of Directors;

Legacy Complete Solaria’s management team is considered the management team of the post-merged company;

Legacy Complete Solaria’s prior operations are comprised of the ongoing operations of the post-merged company;

Complete Solaria is the larger entity based on historical revenues and business operations;

the post-merged company has assumed Complete Solaria’s operating name.

Under this method of accounting, the reverse recapitalization

was treated as the equivalent of Complete Solaria issuing stock for the net assets of FACT, accompanied by a recapitalization.

assets of FACT were stated at historical cost, with no goodwill or other intangible assets recorded.

The consolidated assets, liabilities,

and results of operations prior to the Mergers are those of Legacy Complete Solaria.

All periods prior to the Mergers have been retrospectively

adjusted in accordance with the Amended and Restated Business Combination Agreement for the equivalent number of preferred or common shares

outstanding immediately after the Mergers to effect the reverse recapitalization.

Upon the closing of the Mergers and the PIPE Financing

in July 2023, the Company received net cash proceeds of $ 19.7 million.

The following table reconciles the elements of the Mergers to the

audited consolidated statements of cash flows and the audited consolidated statements of stockholders’ deficit for the year-ended

December 31, 2023 (in thousands):

Recapitalization

Cash proceeds from FACT, net of redemptions

Cash proceeds from PIPE Financing

cash payment of FACT transaction costs and underwriting fees

cash payment to FPA investors for rebates and recycled shares

cash payment for Promissory Note

Net cash proceeds upon the closing of the Mergers and PIPE financing

non-cash net liabilities assumed from FACT

Net contributions from the Mergers and PIPE financing upon closing

Immediately upon closing of the Mergers, the Company

had 45,290,553 shares issued and outstanding of Class A Common Stock.

The following table presents the number of shares of Complete Solaria

Common Stock outstanding immediately following the consummation of the Mergers:

Recapitalization

FACT Class A Ordinary Shares, outstanding prior to Mergers

FACT Class B Ordinary Shares, outstanding prior to Mergers

Bonus shares issued to sponsor

Bonus shares issued to PIPE investors

Bonus shares issued to FPA investors

Shares issued from PIPE financing

Shares issued from FPA agreements, net of recycled shares

redemption of FACT Class A Ordinary Shares

( 31,041,243 )

Total shares from the Mergers and PIPE Financing

Legacy Complete Solaria shares

2022 Convertible Note Shares

Shares of Complete Solaria Common stock immediately after Mergers

In connection with the Mergers, the Company incurred

direct and incremental costs of approximately $ 16.4 million related to legal, accounting, and other professional fees, which were offset

against the Company’s additional paid-in capital.

Of the $ 16.4 million, $ 5.8 million was incurred by Legacy Complete Solaria and

$ 10.6 million was incurred by FACT.

As of December 31, 2023, the Company made cash payments totaling $ 5.4 million to settle transaction

As a result of the Closing, the outstanding 2022 Convertible Notes were converted into shares of Complete Solaria Common Stock.

(4) Business Combination

SunPower Acquisition

On September 30, 2024, the Company completed the

acquisition of certain assets and assumption of certain liabilities of SunPower for an aggregate cash consideration paid of $ 54.5 million,

net of $ 1.0 million of cash acquired.

SunPower Corporation is a solar technology and energy services provider that offers fully integrated

solar, storage, and home energy solutions to customers in the United States through an array of hardware, software, and “Smart Energy”

The financial results of the SunPower Acquisition have been included in the Company’s consolidated financial statements

since the date of Acquisition.

This transaction was accounted for as a business combination in accordance with ASC 805, Business Combinations .

Transaction costs incurred in connection with

the close of the acquisition totaled $ 7.2 million and were expensed by the Company and are included in general and administrative expenses

within the consolidated statements of operations and comprehensive loss for the fiscal year ended December 29, 2024.

The fair values of assets acquired and liabilities

assumed were based upon a preliminary valuation, and the Company’s estimates and assumptions are subject to change within the measurement

Due to the complexities of acquiring assets out of bankruptcy the purchase price accounting remains open for certain assets acquired

and liabilities assumed.

The primary areas that remain preliminary relate to the cash consideration for the transaction for balances remaining

in escrow, fair value of intangible assets and goodwill.

The following table summarizes the provisional fair value of identifiable assets

acquired and liabilities assumed (in thousands):

The Company adopted this ASU on a prospective basis in its annual report

in the fiscal year ended December 28, 2025.

The impact of the adoption was not material to the Company’s consolidated financial

Pronouncements Not Yet Adopted

March 2024, the FASB issued ASU 2024-02 “Codification Improvements-Amendments to Remove References to the Concepts

Statements” , which removes various references to concepts statements from the FASB Accounting Standards Codification.

ASU is effective for the Company beginning in the first quarter of fiscal year 2026, with early adoption permitted.

The Company expects

the new guidance will have an immaterial impact on its consolidated financial statements and intends to adopt the guidance when it becomes

effective in the first quarter of fiscal year 2026.

November 2024, the FASB issued ASU 2024-03, “Income Statement-Reporting Comprehensive Income-Expense Disaggregation Disclosures

(Subtopic 220-40):

Disaggregation of Income Statement Expenses”, which requires the disaggregation of certain expenses in the

notes of the financial statements to provide enhanced transparency into the expense captions presented on the face of the income statement.

The FASB subsequently issued ASU 2025-01 “Income Statement-Reporting Comprehensive Income-Expense Disaggregation Disclosures

(Subtopic 220-40):

Clarifying the Effective Date” , which amends the effective date of ASU 2024-03 to clarify that

all public business entities are required to adopt the guidance in ASU 2024-03 in annual reporting periods beginning after

December 15, 2026, and interim periods within annual reporting periods beginning after December 15, 2027.

Early adoption of ASU

2024-03 is permitted.

The Company is assessing the impact of adopting this guidance on its consolidated financial statements.

November 2024, the FASB issued ASU No.

2024-04, “ Debt-Debt with Conversion and Other Options (Subtopic 470-20) (“ASU 2024-04”)” .

The guidance in ASU 2024-04 clarifies the requirements related to accounting for the settlement of a debt instrument as

an induced conversion.

The standard is effective for fiscal years beginning after December 15, 2025, and interim periods within fiscal

years beginning after December 15, 2025, with early adoption permitted as of the beginning of a reporting period if the entity has also

adopted ASU 2020-06 for that period.

The Company is currently evaluating the impact that the adoption of ASU 2024-04 may

have on its consolidated financial statements.

September 2025, the FASB issued ASU 2025-06 “Targeted improvements to the Accounting for Internal-Use Software” which

is an update to remove all references to prescriptive and sequential software development stages (referred to as “project stages”).

This ASU is effective for all entities for annual reporting periods beginning after December 15, 2027, and interim reporting periods

within those annual reporting periods.

Early adoption is permitted as of the beginning of an annual reporting period.

The Company is

currently evaluating the impact that the adoption of ASU 2025-06 may have on its consolidated financial statements.

December 2025, the FASB issued ASU 2025-11, “Interim Reporting Narrow Scope Improvements” which amends and clarifies

interim reporting and disclosure requirements including additional guidance on what disclosures should be provided in interim reporting

This amendment also includes a disclosure principle that requires entities to disclose events since the end of the last annual

reporting period that have a material impact on the entity.

This ASU is effective for interim reporting periods within annual reporting

periods beginning after December 15, 2027, for public companies.

This ASU may be applied prospectively or retrospectively to any or all

periods presented in the Company’s consolidated financial statements.

Early adoption of this ASU is permitted.

The Company is currently

evaluating the impact that the adoption of this ASU may have on its consolidated financial statements.

December 2025, the FASB issued ASU 2025-12, “ Codification Improvements ” which makes changes to the Accounting Standards

Codification that clarify, correct errors or make minor improvements and make ASCs easier to understand and apply.

The amendments in

this ASU are effective for all entities for annual reporting periods beginning after December 15, 2026, and interim reporting periods

within those annual reporting periods.

This ASU may be adopted prospectively or retrospectively, except as to the clarification of the

calculation of earnings per share when a loss from continuing operations exists which must be adopted retrospectively.

All other codification

improvements may be adopted prospectively or retrospectively.

Early adoption is permitted.

The Company is currently evaluating the impact

that the adoption of this ASU may have on its consolidated financial statements.

in Related Parties

with CRSEF Solis Holdings, LLC and its affiliates (“Carlyle”), have been disclosed as related party transactions until it

ceased being a significant shareholder in the Company.

Effective March 31, 2025, transactions with Carlyle are no longer deemed related

party transactions.

The Company continues to engage in transactions with Carlyle as it is a creditor of the Company’s 12.0 % senior

unsecured convertible notes.

Refer to Note 10 – Borrowings and Derivative Liabilities for additional information.

Daniel McCranie became a member of the Company’s Board of Directors in January 2025 and through a related trust, holds $ 750 thousand

of the Company’s 12.0 % senior unsecured convertible notes.

The Company concluded that this relationship is a related party transaction

effective in the Company’s fiscal year 2025.

Refer to Note 10 – Borrowings and Derivative Liabilities for additional

Multi-Strategy Master Fund (“Polar”) ceased to be a related party, and as a result, effective March 31, 2025, transactions

with Polar are no longer deemed related party transactions.

Transactions previously reported with Polar have been disclosed as related

party transactions.

The Company has a forward purchase agreement with Polar.

November 19, 2025, the Company received a letter from the Listing Qualifications staff of Nasdaq indicating that, as a result of the

Company’s delay in filing its quarterly report on Form 10-Q for the period ended September 28, 2025, the Company was not in compliance

with the timely filing requirements for continued listing under Nasdaq Listing Rule 5250(c)(1).

The Nasdaq letter had no immediate effect

on the listing or trading of the Company’s common stock or warrants.

The Nasdaq listing rules require Nasdaq-listed companies to

timely file all required periodic reports with the SEC.

The Nasdaq letter stated that, under Nasdaq rules, the Company has 60 calendar

days to submit a plan to regain compliance with Nasdaq’s continued listing requirements.

The Company filed its quarterly report

on Form 10-Q for the period ended September 28, 2025 on December 19, 2025.

Business Combinations

Businesses Acquisition

August 5, 2024, the Company entered into an Asset Purchase Agreement (the “APA”) with SunPower Corporation and SunPower Corporation’s

direct and indirect subsidiaries (collectively, the “SunPower Debtors”) providing for the sale and purchase of certain assets

relating to the Blue Raven Solar business, New Homes Business and Non-Installing Dealer network previously operated by the SunPower Debtors.

The APA was entered into in connection with a voluntary petition filed by SunPower Corporation under Chapter 11 of the United States

Code, 11 U.S.C.§§ 101-1532.

The transaction was approved on September 23, 2024, by the United States Bankruptcy Court for the

District of Delaware.

The Company completed the acquisition of the Acquired Assets (as defined in the APA) effective September 30, 2024,

in the Company’s fourth quarter of fiscal year 2024, in consideration for a cash purchase price of $ 54.5 million (“SunPower

Acquisition”).

The assets and businesses acquired, including liabilities assumed, by the Company under the APA are referred to

herein as the “SunPower Businesses.”

to its acquisition, 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.

The financial results of the SunPower Businesses have been included in the Company’s consolidated financial

statements since its date of acquisition.

This transaction was accounted for as a business combination in accordance with ASC 805 .

costs of $ 7.2 million incurred in connection with the close of the SunPower Businesses were expensed by the Company and included in general

and administrative expenses on the Company’s statement of operations and comprehensive loss in the fiscal year ended December 29,

provisional fair values of assets acquired and liabilities assumed initially recorded were based upon a preliminary valuation in the

fiscal year ended December 29, 2024.

Upon finalization of the fair values in the fiscal year ended December 28, 2025, the Company recorded

adjustments to acquired inventory related to (1) the resolution of work-in-progress at various stages of completion as of the acquisition

date for which further analysis was required in order to determine which systems could be sold to a financing partner, and (2) completed

systems that were acquired as of the acquisition date for which uncertainty existed due to unsettled matters with the SunPower Bankruptcy

Estate, which were resolved in connection with the Company’s settlement with the SunPower Bankruptcy Estate.

The settlement of

these matters resulted in adjustments to the provisional fair values of the inventory and intangibles with an offsetting adjustment to

goodwill during the measurement period.

following table summarizes the provisional and final fair values of identifiable assets acquired and liabilities assumed and measurement

period adjustments (in thousands) :

fair values as of December 29, 2024

adjustments in fiscal 2025

assets acquired:

expenses and other current assets

and equipment

lease right-of-use assets

noncurrent assets

expenses and other current liabilities

lease liabilities

long-term liabilities

value of net assets acquired

Consideration

provisional and final fair values of the intangible assets acquired and estimated useful lives were as follows:

useful life Provisional

2024 Measurement

Trademark – Blue Raven Solar 10 years $ 8,400 $ ( 1,306 ) $ 7,094

Trademark - SunPower 10 years 5,200 ( 900 ) 4,300

Developed technology 3 years 4,500 — 4,500

Total $ 18,100 $ ( 2,206 ) $ 15,894

The fair values of the trademarks were estimated using the relief-from-royalty

This approach measures the value of the asset based on the hypothetical royalties the Company would avoid paying if it had to

license the trademark from a third party.

The analysis considers the established history and longevity of the trade names, including the

Blue Raven brand, in use since 2014, and the SunPower brand, which has been in the market for over 20 years.

Key assumptions include projecting

sales attributable to business enterprise value for each respective business, applying a 1 % royalty rate derived from a profit-split analysis

and benchmarking against the median of comparable licensing arrangements, and utilizing a 10-year economic life in line with management’s

plans to continue using the brands for the foreseeable future.

fair value of the developed technology was estimated using the cost approach, which measures the economic resources required to recreate

the asset, including direct costs and necessary entrepreneurial incentives.

Direct costs were based on management’s estimate of

the fees and profit margin that would be required to engage external consultants to rebuild the technology.

In addition, an opportunity

cost was incorporated to reflect the hypothetical return foregone during the development period, representing the income that could have

been earned had these funds been invested elsewhere.

The total replacement cost was calculated assuming a weighted-average redevelopment

period of 19 months.

The SunPower Acquisition contributed $ 83.8 million

and $ 6.5 million in revenue and income before income taxes from continuing operations, respectively, for the period from the acquisition

date to the fiscal year ended December 29, 2024.

Energy LLC Acquisition

On September 21, 2025, a subsidiary of the Company

entered into a Membership Interest Purchase Agreement (“Sunder MIPA”) with Sunder Energy LLC (“Sunder”) and the

seller, Chicken Parm Pizza LLC (“Seller/Member”), the sole member of Sunder.

On September 24, 2025 (“Sunder Closing”),

the Company completed the acquisition of the membership interests of Sunder for an aggregate consideration of $ 57.8 million (“Sunder

Acquisition”).

Per the terms of the Sunder MIPA, the Company acquired all of the outstanding membership interest of Sunder for

(1) $ 20.7 million in cash, subject to certain working capital and other adjustments;

(2) a promissory note to the Member in the principal

amount of $ 20.0 million (“Seller Note”);

and (3) 10.0 million shares of the Company’s common stock (valued at the closing

share price on September 24, 2025, of $ 1.71 per share), consisting of (i) 3,333,334 shares of the Company’s common stock issued

at the Sunder Closing and (ii) subject to approval of such issuances by the Company’s stockholders, (x) 3,333,333 shares of the

Company’s common stock to be issued on the 12-month anniversary of the Sunder Closing and (y) 3,333,333 shares of the Company’s

common stock to be issued on the 18-month anniversary of the Sunder Closing (“Deferred Sunder Consideration Shares”).

lieu of issuing the Deferred Sunder Consideration Shares, the Company, in its sole discretion, may elect to pay the Member a cash payment

equal to the number of Deferred Sunder Consideration Shares otherwise issuable by the Company multiplied by the volume-weighted average

price of the Company’s common stock as quoted on Nasdaq for the 30 -trading day period ending two business days prior to the date

on which the applicable Deferred Sunder Consideration Shares are otherwise issuable (“Cash in Lieu Amount”).

If the Company

elects to pay the Cash in Lieu Amount, 50 % of the Cash in Lieu Amount will be paid on the three-month anniversary of the date on which

the applicable Deferred Sunder Consideration Shares are otherwise issuable, with the remaining 50 % of the Cash in Lieu Amount payable

on the 6 month anniversary of the date on which the applicable Deferred Sunder Consideration Shares are otherwise issuable.

of the Company’s common stock issued and expected to be issued were valued at aggregate of $ 17.1 million at the date of acquisition.

The common stock issued at the Sunder Closing was valued at $ 5.7 million and accounted for within Additional paid-in-capital on the Company’s

consolidated balance sheet.

The Deferred Sunder Consideration Shares payable is presented as noted below on the Company’s consolidated

balance sheet as of December 28, 2025.

The fair value of the Sunder deferred consideration was subsequently adjusted downward to $ 10.8

million from the Sunder Closing to December 28, 2025.

The Company concluded that since the sellers joined the Company and represent members

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

Consideration and Seller Note are a related party obligations.

consideration is summarized as follows (in thousands):

Consideration

Fair value of 3,333,334 shares of the Company’s common stock (classified within Additional paid-in-capital)

Sunder Consideration Shares (fair value of 6,666,666 shares of the Company’s common stock):

within Deferred consideration, current with related party

within Deferred consideration, noncurrent with related party

value of total consideration

Company financed a portion of the transaction through the issuance of $ 22.0 million of 7.0 % senior unsecured convertible notes (the “September

2025 Notes”) and a $ 20.0 million Seller Note.

Refer to Note 10 – Borrowings and Derivative Liabilities for details

regarding these obligations.

is a solar sales company.

The Company acquired Sunder as a strategic acquisition to expand its overall market share and its penetration

into more U.S.

The financial results of Sunder have been included in the Company’s consolidated financial statements since

its date of acquisition.

provisional fair values of assets acquired and liabilities assumed were based upon a preliminary valuation, and the Company’s estimates

and assumptions have been revised during the measurement period to refine the fair values of the assets acquired and liabilities assumed

based upon the facts and circumstances existing at the date of acquisition which resulted in the measurement period adjustments noted

The purchase price accounting remains open for the components of working capital, identification and valuation of intangibles

and allocation of goodwill.

The Company has elected the practical expedient within ASC 805-20-30-27 through 805-20-30-30 to recognize

and measure contract liabilities in accordance with ASC 606 – Revenue from Contracts with Customers (“ASC 606”)

as if it had originated the acquired contract.

Thus, the amount of any contract liabilities immediately prior to the acquisition will

be the comparable amounts recognized in the determination of assets acquired and liabilities assumed by the Company.

following table summarizes the provisional fair value of identifiable assets acquired and liabilities assumed (in thousands) :

September 24,

adjustments in

Net assets acquired:

Accounts receivable

Contract assets

Prepaid expenses and other current assets

2 unchanged sentences

Other noncurrent assets

Deferred revenue

Contract liabilities

Accounts payable

1 unchanged sentence

Operating lease liabilities

Other long-term liabilities

Fair value of net assets acquired

1 unchanged sentence

Goodwill recognized

Goodwill represents the excess of the preliminary

estimated consideration transferred over the fair value of the net tangible and intangible assets acquired that is associated with the

excess cash flows that the acquisition is expected to generate in the future and has been allocated to the Company’s Residential

Solar Installation and New Homes Business reporting units.

The goodwill is tax deductible.

The income approach, using the relief from royalty

method, was used to value the trademarks, and the cost approach was used for developed technology.

Significant assumptions included in

the valuation of trademarks include projected revenues, the selected royalty rate, discount rate, and the economic life of the underlying

Significant assumptions included in the valuation of the acquired technology include the estimated costs to reconstruct the asset

(inclusive of a third-party profit margin) as well as the value of the opportunity cost of foregone returns over the period that the Company

has estimated to recreate the asset.

Contract assets and liabilities were measured

at fair value using the cost approach which approximates the carrying value at date of acquisition.

The SunPower Acquisition contributed $ 83.8 million

and $ 6.5 million in revenue and income before income taxes, respectively for the period from the acquisition date to fiscal year ended

December 29, 2024.

Unaudited Pro Forma Financial Information

of the date of acquisition, the intangible assets acquired and estimated useful lives were as follows:

useful life Provisional

September 24,

2025 Measurement

adjustments in

2025 Provisional

Customer relationships 10 years $ 9,279 $ 21,321 $ 30,600

Trademark - Sunder 10 years 2,427 3,673 6,100

Developed technology - Sunder 2 years 14,216 ( 13,416 ) 800

Total $ 25,922 $ 11,578 $ 37,500

fair value of customer relationships was estimated using the excess earnings method, which measures the cash flows attributable to existing

customers after deducting all supporting expenses and contributory asset charges.

The assumptions used included revenue included all

business enterprise valuation sales, reduced by a 5% attrition rate based on historical customer turnover, with operating expenses estimated

as a percentage of sales and no sales-and-marketing adjustment since such efforts do not directly support existing customers.

asset charges were applied for the use of working capital, fixed assets, workforce, trademarks, and internal-use software, and cash flows

were projected over the period in which customer relationships were expected to produce meaningful benefit, with the economic life extending

until those cash flows became minimal.

fair value of the trademark was estimated using the relief-from-royalty method.

This approach measures the value of the asset based on

the hypothetical royalties the Company would avoid paying if it had to license the trademark from a third party.

The assumptions used

to value the trademark included projected sales based upon the business enterprise valuation considered attributable to the trademark,

a royalty rate of 1.0 % supported by a profit-split analysis and benchmarking against comparable licensing arrangements in the solar and

broader energy industries and a useful economic life of 10 years consistent with management’s expectations for continued use and

the anticipated longevity of the brand’s market relevance.

fair value of Sunder’s developed technology was estimated using the cost approach, which measures value based on the cost to reproduce

or replace the existing software in its current state.

The analysis considered the historical direct development costs, including Sunder’s

ongoing investment of approximately since late 2023, representing labor, design, coding, and testing efforts required to build the technology.

In addition to direct costs, the valuation incorporated opportunity costs, which reflect the portion of the software expected to be added,

modified, or removed over time based on management’s estimates of ongoing development needs.

Together, these inputs approximate

the current replacement cost of the technology, adjusted for necessary updates and functional improvements.

represents the excess of the preliminary estimated consideration transferred over the fair value of the net tangible and intangible assets

acquired that is associated with the excess cash flows that the acquisition is expected to generate in the future.

The goodwill is tax

Sunder contributed $ 14.4 million and $ 6.2 million

in revenue and income before income taxes from continuing operations, respectively, for the period from the acquisition date to the fiscal

year ended December 28, 2025.

Energy LLC Acquisition

November 21, 2025, the Company entered into a Membership Interest Purchase Agreement (the “Ambia MIPA”) with Ambia and Ambia

Holdings, Inc., a Delaware corporation and the sole member of Ambia (“Ambia Holdings”) to acquire Ambia (the “Ambia

Acquisition”).

Ambia was the sole operating entity within Ambia Holdings.

Company, Ambia and Ambia Holdings completed the closing under the Ambia MIPA on November 21, 2025 (the “Ambia Closing”).

At the Ambia Closing, the Company acquired all of the outstanding membership interests of Ambia from Ambia Holdings for:

(a) 10,243,924

shares of common stock of the Company (the “Ambia Closing Consideration Shares”), issued at the Ambia Closing to Ambia Holdings;

and (b) an agreement to issue an additional $ 9.375 million of shares of the Company’s common stock on each of the six-month anniversary

of the Ambia Closing and the 12-month anniversary of the Ambia Closing (collectively such additional shares of common stock, the “Deferred

Ambia Consideration Shares”).

The issuance of the Deferred Ambia Consideration Shares is subject to approval by the Company’s

stockholders following the Ambia Closing.

The actual number of Deferred Ambia Consideration

Shares issuable by the Company on the six- and 12-month anniversaries of the Ambia Closing will be determined based on the 20 -day trailing

volume-weighted average price of the Company’s common stock after market close on the business day immediately prior to the issuance

date of the applicable shares (the “VWAP Value”);

provided that the VWAP Value for the calculation of the actual number of

Deferred Ambia Consideration Shares issuable by the Company will not be more than $ 2.8102 per share or less than $ 1.4988 per share.

Additionally,

the number of Deferred Ambia Consideration Shares issuable by the Company is subject to adjustment pursuant to customary working capital

and balance sheet adjustment terms and subject to offset for certain indemnifiable damages in accordance with the Ambia MIPA.

The fair value of the deferred consideration shares

at the Ambia Closing was $ 16.9 million.

The Company’s closing share price for its common stock of $ 1.61 on November 21, 2025 was

used to fair value the shares issued at the Ambia Closing.

The total consideration is summarized as follows (in thousands):

Consideration

Fair value of 10,243,924 shares of the Company’s common stock issued at Ambia Closing (classified within Additional paid-in capital)

Ambia Consideration Shares (Classified within Deferred consideration, current)

value of total consideration

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

The provisional fair values of assets acquired and liabilities assumed

were based upon the facts and circumstances existing at the date of acquisition.

The purchase price accounting remains open for the valuation

of the customer relationship and allocation of goodwill.

The Company elected the practical expedient within ASC 805-20-30-27 through 805-20-30-30

to recognize and measure contract liabilities in accordance with ASC 606 as if it had originated the acquired contract.

Thus, the amount

of any contract liabilities immediately prior to the acquisition will be the comparable amounts recognized in the determination of assets

acquired and liabilities assumed by the Company.

provisional fair values of identifiable assets acquired and liabilities assumed are identified below (in thousands) :

Net assets acquired:

Cash and cash equivalents

Accounts receivable

Contract assets - unbilled receivables

Prepaid expenses and other current assets

Property and equipment, net

Intangible assets

Operating lease right-of-use assets

Other noncurrent assets

Accounts payable

Accrued expenses and other current liabilities

Contract liabilities

Operating lease liabilities, noncurrent

Finance lease liabilities

Fair value of net assets acquired

Fair value of common stock issued (classified within Additional paid-in-capital)

Fair value of Deferred Ambia Consideration Shares (Accrued expenses and other current liabilities)

Consideration transferred

Goodwill recognized

of the date of acquisition, the intangible assets acquired and estimated useful lives were as follows:

Customer relationships (Backlog)

Trademarks - Ambia

Useful life is based upon customer consumption, expected to occur within one year.

were derived using the relief from royalty method based upon the following key assumptions;

(i) all sales based upon the business enterprise

(ii) a royalty rate of 1 % based upon profit split analysis and comparable licensing royalty agreements and (iii) an economic life

of the Ambia name through the end of 2026, the Ambia name will only be used in certain small markets and that all sales, marketing and

branding will be done under the SunPower brand name in relatively short order.

relationships (backlog) was derived using the excess earnings method based upon the following key assumptions:

(i) backlog meets the appropriate contractual

(ii) sales were based upon the backlog of sales;

(iii) expenses were based upon a percentage of sales with an adjustments for

sales and marketing expenses, upon which management estimates that 100% of Ambia’s sales and marketing expenses are directed at

acquiring new customers and is not required to support the backlog;

(iv) charges were taken for the use of working capital, fixed assets,

workforce and trademarks;

(v) the economic life of the backlog is to the end of fiscal 2026 based upon management’s estimate of

average deal length.

represents the excess of the preliminary estimated consideration transferred over the fair value of the net tangible and intangible assets

acquired that is associated with the excess cash flows that the acquisition is expected to generate in the future.

The goodwill is tax

Ambia contributed $ 7.0 million and $ 2.8 million

in revenue and loss before income taxes from continuing operations, respectively, for the period from the acquisition date to the fiscal

year ended December 28, 2025.

Pro Forma Financial Information

The following unaudited pro forma financial information

represents the consolidated financial statements of the Company for the periods presented, as if the acquisition occurred on January 1,

The unaudited pro forma combined financial information

does not give effect to any cost savings, operating synergies or revenue synergies that may result from the Acquisition.

The pro forma

results do not necessarily reflect the actual results of operations of the combined business (in thousands).

represents the consolidated financial statements of the Company for the periods presented, as if the SunPower Businesses acquisition occurred

on January 1, 2023 and the Sunder and Ambia acquisitions occurred on December 30, 2024.

unaudited pro forma combined financial information does not give effect to any cost savings, operating synergies or revenue synergies

that may result from the acquisitions.

The pro forma results do not necessarily reflect the actual results of operations of the combined

business (in thousands) :

Fiscal Year Ended

1 unchanged sentence

Pro forma net loss from continuing operations

Revenue Recognition and Contract Balances

Disaggregated

revenue is generated in the U.S.

Revenue is disaggregated as follows (in thousands) :

Fiscal Year Ended

Residential Solar Installation

Revenue recognized over time

Total Residential Solar Installation

New Homes Business

Revenue recognized over time

Revenue recognized at a point in time

Total New Homes Business

Revenue recognized at a point in time

Total revenue

Total revenue recognized over time

Total revenue recognized at a point in time

receivable, contract assets and contract liabilities from contracts with customers are as follows (in thousands):

Trade accounts receivable, net

Contract assets:

Contract assets, current

Total contract assets

Contract liabilities:

Contract liabilities, current

Contract liabilities, noncurrent

Total contract liabilities

The Company receives payments from customers

based upon contractual payment terms.

Accounts receivable are recorded in an amount that reflects the consideration that is expected

to be received in exchange for those goods or services when the right to consideration becomes unconditional.

increase in contract liabilities is primarily attributed to the acquisition of Sunder in fiscal year 2025.

Changes in the balances of contract assets in

the fiscal years ended December 28, 2025 and December 29, 2024 were as follows ( in thousands ):

Fiscal Year Ended

Contract assets

Contract assets, beginning of period

Contract assets recognized

Reclassifications to accounts receivable

Increase due to contract assets acquired in business combination

Contract assets, end of period

Changes in the balances of contract liabilities

in the fiscal years ended December 28, 2025 and December 29, 2024 were as follows (in thousands):

Fiscal Year Ended

Contract liabilities

Contract liabilities, beginning of period

Increases due to billings or cash received in advance

Revenue recognized from beginning balance of contract liabilities

Increase due to contract liabilities assumed in a business combination

Contract liabilities, end of period

Substantially all of the revenue recognized from

the beginning balance of contract liabilities was recognized in the current year.

Fair Value Measurements

The following table sets forth the Company’s

financial assets and liabilities that were measured at fair value, on a recurring basis (in thousands):

following tables set forth the Company’s financial assets and liabilities that are measured at fair value , on a recurring basis

(in thousands) :

As of December 28, 2025

2 unchanged sentences

Financial Liabilities

July 2024 derivative liability (1)

September 2024 derivative liability (1)

Forward purchase agreements (2)

Public warrants

July 2024 Notes derivative liability (1)

July 2024 Notes derivative liability – related parties (1)

September 2024 Notes derivative liability (1)

September 2024 Notes derivative liability – related parties (1)

July 2025 Note derivative liability– related party (1)

September 2025 Notes derivative liability (1)

November 2025 Note derivative liability – related party (1)

Forward purchase agreement liabilities

SAFE Agreement with related party

Private placement warrants

Working capital warrants

SAFE Agreement with related party

As of December 31, 2023

Financial Assets

Restricted cash

Financial Liabilities

Carlyle Warrants

Public warrants

Deferred Sunder Consideration Shares

Deferred Ambia Consideration Shares

of December 29, 2024

July 2024 Notes derivative

liability (1)

July 2024 Notes derivative

liability – related parties (1)

September 2024 Notes derivative

liability (1)

September 2024 Notes derivative

liability – related parties (1)

Forward purchase agreement

liabilities (2)

SAFE Agreement with related

Private placement warrants

Working capital warrants

Replacement warrants

Forward purchase agreements (1)

(1) A portion of these balances are with related parties.

Refer to Note 15 – Borrowings and Derivative Liabilities for details.

(2) A portion of these balances are with related parties.

Refer to Note 6 – Forward Purchase Agreements for details.

Subsequent to issuance, changes in the fair value

of liability classified warrants, forward purchase agreements and SAFEs are recorded within other income (expense), net in the Company’s

consolidated statements of operations and comprehensive loss.

(1) The derivative liabilities are associated with the Company’s outstanding senior unsecured convertible notes with stated interest rates of 7.0 % (the “September 2024 Notes” and “September 2025 Notes”) and 12.0 % (the “July 2024 Notes”, “July 2025 Note”, and “November 2025 Note”) all of which are defined in Note 10 – Borrowings and Derivative Liabilities .

(2) Includes $ 1.3 million due to related parties as of and December 29, 2024.

reconciliation of liabilities by class and categorized within Level 3 under the fair value hierarchy is as follows for the fiscal years

ended December 28, 2025 and December 29, 2024 (in thousands) :

Fiscal Year Ended December 28, 2025

Derivative liabilities

The Company issued derivative liabilities in conjunction

with the issuance of certain convertible notes in July 2024 and September 2024 (refer to Note 15

– Borrowings and Derivative Liabilities).

The Company valued the derivative liabilities as of their issuance date and as of December

29, 2024 using a binomial lattice model, which includes level 3 unobservable inputs.

The key inputs used were dividend yield, the Company’s

common stock price, volatility, risk-free rate and the expected term of the derivative liabilities.

The derivative liability valuation

included the following inputs as of December 29, 2024:

Forward Purchase Agreements

SAFE Agreements

Warrant liabilities

Deferred Ambia Consideration Shares

Balance as of December 29, 2024

Net (gain)/loss recognized within Other non-operating income, net in the consolidated statement of operations

Balance as of December 28, 2025

Year Ended December 29, 2024

Purchase Agreements

Balance as of December 31, 2023

(gain)/loss recognized within Other non-operating income, net in the consolidated statement of operations

Balance as of December

to issuance, changes in the fair value of derivative liabilities, FPAs, SAFEs and liability classified warrants, are recorded within

Other non-operating income, net on the Company’s consolidated statements of operations and comprehensive loss.

Refer to Note

11 – Other Non-Operating Income, Net for details.

Company recognized derivative liabilities arising from the conversion features of its senior unsecured convertible notes issued in the

years ended December 28, 2025 and December 29, 2024 (refer to Note 10 – Borrowings and Derivative Liabilities ).

liabilities are measured at fair value in accordance with ASC 820, Fair Value Measurement .

The fair value of each respective derivative

liability is measured using a Monte Carlo simulation that incorporates a binomial lattice model.

Significant inputs to the binomial lattice

model include the terms of the senior unsecured convertible notes (including the interest rate, conversion rate and conversion price),

the underlying price of the Company’s common stock, risk-free rate and volatility.

Certain of these inputs are unobservable.

these derivative liabilities are classified within Level 3 of the fair value hierarchy.

The binomial lattice model produces an estimated

fair value based on changes in the price of the underlying shares of the Company’s common stock over successive periods of time.

As a result of these interrelationships and inherent unobservable assumptions, the fair value of a derivative liability is subject to significant

measurement uncertainty, and alternative reasonable assumptions could have produced materially different results as of December 28, 2025

and December 29, 2024.

assumptions used to value the derivative liabilities as of December 28, 2025 were as follows:

Senior Unsecured Convertible Notes

Conversion rate

1 unchanged sentence

Common stock price

Dividend Yield

Carlyle Warrants

As part of the Company’s amended and restated

warrant agreement with CRSEF Solis Holdings, LLC and its affiliates (“Carlyle”), the Company issued Carlyle a warrant to purchase

shares of Complete Solaria Common Stock at a price per share of $ 0.01 .

Refer to Note 14 – Warrants for further details.

In connection

with an exchange of debt effective July 1, 2024, as discussed in Note 15 – Borrowings and Derivative Liabilities, the number of

shares expected to be issued in connection with the Carlyle Warrant became fixed and the Carlyle Warrant was reclassified from liability

Accordingly, the Carlyle Warrant is not subject to a fair value measurement as of December 29, 2024.

The Company valued the Carlyle Warrants as of

December 31, 2023, based on a Black-Scholes Option Pricing Method, which included the following inputs:

Expected term

Expected volatility

Risk-free interest rate

Expected dividend yield

Public Warrants

The public warrants are measured at fair value

on a recurring basis.

The public warrants were valued based on the closing price of the publicly traded instrument.

Private Placement and Working Capital Warrants

The private placement and working capital warrants

are measured at fair value.

The Company valued the private placement and working capital warrants, based on a Black-Scholes Option

Pricing Method, which included the following inputs:

Expected term

Expected volatility

Dividend yield

assumptions used to value the derivative liabilities as of December 29, 2024 were as follows:

Unsecured Convertible Notes

Conversion rate

Conversion price

Common stock price

Risk-free interest rate

Expected dividend yield

As of December 31, 2023, the private placement and working capital warrants

were valued using observable inputs for similar publicly traded instruments.

Forward Purchase Agreement Liabilities

FPAs are measured at fair value on a recurring

basis using a Monte Carlo simulation analysis.

The expected volatility is determined based on the historical equity volatility of comparable

companies over a period that matches the simulation period, which included the following inputs:

Dividend yield

purchase agreement liabilities

are measured at fair value on a recurring basis using a Monte Carlo simulation analysis based upon the following inputs:

VWAP stock price

Simulation period

Risk-free rate

SAFE Agreement

The SAFE Agreement was valued based on a conversion

probability of 50 % based on historical SAFE agreements and a 50 % discount rate at the time of conversion as of December 29, 2024.

Replacement Warrants

There were no replacement warrants as of December

The Company valued the Replacement Warrants as of December 31, 2023, based on a Black-Scholes Option Pricing Method, which included

the following inputs:

The volume-weighted

average price (“VWAP”) reflects management’s judgment regarding expected future trading activity and price behavior

as an active forward market does not exist for the Company’s common stock.

Reasonably possible alternative VWAP outcomes at the

reporting date could have resulted in a materially different fair value.

The risk-free rate is derived from the applicable tenor of the

Treasury yield curve.

Changes in the risk-free rate would alter the present value of the simulated settlement amounts and could

significantly impact the fair value estimate.

The expected volatility is determined based on the historical equity volatility

of comparable companies over a period that matches the simulation period.

Because expected volatility drives the dispersion of simulated

price paths, reasonably higher or lower volatility assumptions could materially increase or decrease the estimated fair value.

inputs are interrelated, and changes in one may affect the others.

As a result of these interrelationships and inherent unobservable

assumptions, the fair value of FPAs is subject to significant measurement uncertainty, and alternative reasonable assumptions could

have produced materially different results as of December 28, 2025 and December 29, 2024.

Thus, FPAs are classified within Level 3 of

the fair value hierarchy.

placement and working capital warrants

Company valued the private placement and working capital warrants, based on a binomial lattice model, which included the following

Expected term

Exercise price

Expected volatility

Risk-free interest rate

Risk-free rate

Expected dividend yield

The following table sets forth the Company’s

financial liabilities that were not measured at fair value, on a non-recurring basis (in thousands):

expected term is the time period to the expiration date of the warrants.

The risk-free rate is interpolated from the U.S.

Constant Maturity

Treasury curve for a term matching the corresponding remaining life.

Volatility was calibrated based on the public warrants closing price

as of the valuation date.

As the private and working capital warrants have terms nearly identical to the publicly traded warrants, the

volatility was calibrated until the model price equaled the public warrants closing price.

These inherent unobservable assumptions are

subject to significant measurement uncertainty, and alternative reasonable assumptions could have produced materially different

results as of December 28, 2025 and December 29, 2024.

Thus, the private placement and working capital warrant liabilities are classified

within Level 3 of the fair value hierarchy.

public warrants are measured at fair value on a recurring basis.

The public warrants were valued based on the closing price of the publicly

traded instrument and therefore are considered a Level 1 instrument in the fair value hierarchy.

agreement with related party

Company measured the fair value of its SAFE using a valuation technique that incorporates significant unobservable inputs and is therefore

classified within Level 3 of the fair value hierarchy.

The fair value of the SAFE is subject to estimation uncertainty because it depends

on management’s judgments about future events that are not directly observable in active markets.

Management assigned a 50 % probability

that the SAFE will convert into shares of the Company’s stock in connection with a qualifying financing or other specified event.

If the SAFE does not convert, management expects cash repayment in fiscal 2026 or fiscal 2027, with a 50 % probability assigned to each

repayment year.

SAFE valuation also considers assumptions such as discount rates implied by the Company’s convertible notes as of the valuation

date, the timing and likelihood of financing or liquidity events, and, for the conversion path, the expected equity valuation and any

applicable conversion economics (e.g., discounts or valuation caps).

Settlement of the SAFE is contingent on future financing or liquidity

events and the Company’s funding plans.

Accordingly, the measurement requires judgment about the likelihood and timing of conversion

versus repayment and, where relevant, assumptions about the Company’s equity value at conversion.

Because these factors are not

directly observable, reasonably possible alternative assumptions at the reporting date could produce a materially different fair value.

Increasing the probability of conversion would generally increase the fair value if the conversion terms imply a beneficial outcome to

the holder relative to repayment;

decreasing that probability would place more weight on the repayment scenarios and could increase or

decrease the fair value depending on the applicable discount rate and timing of cash flows.

Within the non-conversion path, shifting

probability weight toward repayment in fiscal year 2026 would generally increase fair value (lower discounting), while shifting weight

toward fiscal 2027 would generally decrease fair value (greater discounting), holding other inputs constant.

A higher discount rate would

decrease the present value of expected cash flows (and thus fair value), while a lower rate would increase fair value.

Higher expected

equity values or more favorable conversion economics would increase the fair value under the conversion path;

lower expected equity values

or less favorable terms would decrease it.

These inputs are interrelated and unobservable.

Because the valuation depends on significant

unobservable inputs—including a 50% probability of conversion to equity and an even allocation between fiscal years 2026 and 2027

of repayment if conversion does not occur—there is significant measurement uncertainty, and alternative reasonable assumptions

at the reporting date could have resulted in a materially different fair value of the SAFE liability as of December 28, 2025 and December

Thus, the SAFE liability is classified within Level 3 of the fair value hierarchy.

Financial liabilities not measured at fair value

The Company’s senior unsecured convertible

notes were fair valued using a binomial lattice model, which includes Level 3, unobservable inputs.

The key inputs used are consistent

with those used to fair value the derivative liabilities as discussed under Derivative Liabilities above.

The following table

sets forth the Company’s financial liabilities that were not measured at fair value and are considered a Level 3 instrument in

the fair value hierarchy (in thousands) :

As of December 28, 2025

Financial Liabilities

12.0% senior unsecured convertible notes

July 2024 Notes

July 2024 Notes – related parties

Subtotal July 2024 Notes

July 2025 Note – related party

November 2025 Note – related party

7.0% senior unsecured convertible notes

September 2024 Notes

September 2024 Notes – related parties

As of December 29, 2024, the July 2024 Notes and

the September 2024 Notes were fair valued using a binomial lattice model, which includes Level 3, unobservable inputs.

The key inputs

used are consistent with those used to fair value the derivative liabilities as discussed under Derivative liabilities above.

(6) Forward Purchase Agreements

In July 2023, FACT and Legacy Complete Solaria,

entered into FPAs with each of (i) Meteora; (ii) Polar, and (iii) Sandia (each individually, a “Seller”, and together,

the “FPA Sellers”).

In connection with the FPAs, the Company recognized other expense of $ 30.7 million in the fiscal year

ended December 31, 2023 in connection with the issuance of 5,670,000 shares of the Company’s common stock to the related party FPA

Pursuant to the terms of the FPAs, the FPA Sellers

may purchase through a broker in the open market, from holders of shares other than the Company or affiliates thereof, FACT’s ordinary

shares, par value of $ 0.0001 per share, (the “Shares”).

While the FPA Sellers have no obligation to purchase any Shares under

the FPAs, the aggregate total Shares that may be purchased under the FPAs shall be no more than 6,720,000 in aggregate.

The FPA Sellers

may not beneficially own greater than 9.9% of issued and outstanding Shares following the Mergers as per the Amended and Restated

Business Combination Agreement.

The key terms of the forward contracts are as

● The FPA Sellers can terminate the transaction following the Optional Early Termination (“OET”) Date which shall specify the quantity by which the number of shares is to be reduced (such quantity, the “Terminated Shares”).

Seller shall terminate the transaction in respect of any shares sold on or prior to the maturity date.

The counterparty is entitled to an amount from the Seller equal to the number of terminated shares multiplied by a reset price.

The reset price is initially $ 10.56 (the “Initial Price”) and is subject to a $ 5.00 floor.

● The FPA contains multiple settlement outcomes.

Per the terms of the agreements, the FPAs will (1) settle in cash in the event the Company is due cash upon settlement from the FPA Sellers or (2) settle in either cash or shares, at the discretion of the Company, should the settlement amount adjustment exceed the settlement amount.

Should the Company elect to settle via shares, the equity will be issued in Complete Solaria Common Stock, with a per share price based on the volume-weighted average price (“VWAP”) Price over 15 scheduled trading days.

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

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

The Settlement amount will be reduced by the Settlement Adjustment, an amount equal to the product of (1) Number of shares in the Pricing Date Notice, less the number of Terminated Shares multiplied by $ 2.00 .

The Settlement occurs as of the Valuation Date, which is the earlier to occur of (a) the date that is two years after the date of the Closing Date of the Mergers (b) the date specified by Seller in a written notice to be delivered to Counterparty at Seller’s discretion (which Valuation Date shall not be earlier than the day such notice is effective) after the occurrence of certain triggering events;

and (c) 90 days after delivery by the Counterparty of a written notice in the event that for any 20 trading days during a 30 consecutive trading day-period (the “Measurement Period”) that occurs at least 6 months after the Closing Date, the VWAP Price is less than the then applicable Reset Price.

The Company 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.

the FPAs, the Company 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.

The Company accounted for the contingent obligation

to issue shares in accordance with ASC 815, Derivatives and Hedging , and recorded a liability and other income (expense), net based

on the fair value of the obligation upon the signing of the FPAs.

The liability was extinguished in July 2023 upon the issuance of Complete

Solaria Common Stock to the FPA sellers.

Additionally, in accordance with ASC 480,

Distinguishing Liabilities from Equity , the Company determined that the forward contract is a financial instrument other than a

share that represents or is indexed to obligations to repurchase the issuer’s equity shares by transferring assets, referred to

herein as the “forward purchase liability” on its consolidated balance sheets.

The Company initially measured the forward

purchase liability at fair value and has subsequently remeasured it at fair value with changes in fair value recognized in earnings.

As of the closing of the Mergers and issuance

of the Complete Solaria Common Stock underlying the FPAs, the fair value of the prepaid FPAs was an asset balance of $ 0.1 million and

was recorded on the Company’s consolidated balance sheets and within Other income (expense), net on the consolidated statements

of operations and comprehensive loss.

On December 18, 2023, the Company 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 the Company to raise up to $ 10.0 million of equity from existing stockholders without triggering certain

anti-dilution provisions contained in the FPA;

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

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

provided, further, that any subsequent investments are made at

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

paid in connection with the initial investment.

On May 7 and 8, 2024, respectively, the Company

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 the Company executes similar amendments with both Polar and

On June 14, 2024, the Company entered into and

executed an amendment to the FPA with Sandia (the “Sandia Third Amendment”).

The Sandia Third Amendment set the reset price

of each FPA to $ 1.00 per share and amended the VWAP Trigger Event provision to read as “After December 31, 2024, an event that occurs

if the VWAP Price, for any 20 trading days during a 30 consecutive trading day-period, is below $ 1.00 per Share.”

On July 17, 2024, the Company entered into an

amendment to the FPA with Polar pursuant to which the Company and Polar agreed that Section 2 (Most Favored Nation) of the FPA is applicable

to all 2,450,000 shares subject to the FPA.

Through the date of issuance of the Complete Solaria

Common Stock in satisfaction of the Company’s obligation to issue shares around the closing of the Mergers, the Company recorded

$ 35.5 million to Other expense, in the fiscal year ended December 31, 2023, net associated with the issuance of 6,720,000 shares of Complete

Solaria Common Stock in association with the FPAs.

The FPA liability balance was $ 3.5 million and

$ 3.8 million, as of December 29, 2024 and December 31, 2023, respectively.

The Company concluded that $ 1.3 million and $ 3.2 million of

the FPA liability was with related parties as of December 29, 2024 and December 31, 2023, respectively.

The change in the fair value of

the forward purchase liabilities amounted to income of $ 0.3 million and expense of $ 3.9 million for the fiscal years ended December 29,

2024 and December 31, 2023, respectively.

The change in the fair value of the FPA liability with related parties was income of $ 0.1 million

and expense of $ 8.7 million ($ 9.1 million of expense upon issuance, net of $ 0.4 million of income) in the fiscal years ended December

29, 2024 and December 31, 2023, respectively.

(7) Prepaid Expenses and Other Current Assets

Prepaid expenses and other current assets consist

of the following (in thousands):

Inventory deposits

Deferred costs

Prepaid sales commissions

Subtotal September 2024 Notes

September 2025 Notes

of December 29, 2024

12.0% senior unsecured convertible

July 2024 Notes

2024 Notes – related parties

July 2024 Notes

unsecured convertible notes

September 2024 Notes

2024 Notes – related parties

September 2024 Notes

(1) Excludes capitalized interest (coupon interest, default interest and

failure to file interest) of $ 10.8 million and $ 13.6 million as of December 28, 2025 and December 29, 2024, respectively, included in

the July 2024 Notes.

Supplemental Balance Sheet Information

Expenses and Other Current Assets

expenses and other current assets consist of the following (in thousands) :

Costs to obtain contracts and costs to fulfill contracts (1)

Total prepaid expenses and other current assets

(8) Goodwill and Other Intangible Assets

On September 30, 2024, the Company

completed the SunPower Acquisition.

Goodwill presented on the Company’s consolidated financial statements represents Goodwill

recognized from the SunPower Acquisition.

The goodwill recognized was assigned to the Residential Solar Installation and New Homes Business

reportable segments as $ 18.3 million and $ 0.2 million, respectively.

The Company performed a qualitative assessment of goodwill and determined

that at the acquisition date and the date at which the Company performed an impairment analysis, there were no relevant events or circumstances

that would result in the reportable segment being less than its carrying amount.

The Company concluded that as of December 29, 2024, there

is no impairment.

Other Intangible Assets

The following table represents our other intangible

assets with finite useful lives as of December 29, 2024 (in thousands):

Gross Carrying

Trademark – Blue Raven Solar

Trademark – SunPower

Developed technology

Aggregate amortization expense for intangible assets was $ 0.7 million

and zero for the fiscal years ended December 29, 2024, and December 31, 2023, respectively.

Amortization expense is recognized in general

and administrative expenses in the consolidated statement of operations.

No impairment loss was recorded for intangible assets for the

fiscal year 2024.

The weighted average remaining life of these intangible assets is 8.1 years as of December 29, 2024.

The estimated amortization expense related to

intangible assets with finite useful lives is as follows (in thousands):

(9) Property and Equipment, Net

Property and equipment, net consist of the following

(in thousands):

(1) Costs to obtain contracts and costs to fulfill contracts with customers are recognized

within sales commissions and cost of revenues, respectively, when the related revenue is recognized.

and Equipment, Net

and equipment, net consist of the following (in thousands) :

Internal-use software

Manufacturing equipment

Furniture and equipment

Leasehold improvements

Total property and equipment

property and equipment

accumulated depreciation and amortization

Total property and equipment, net

Depreciation and amortization expense on totaled $ 2.0 million and $ 0.9

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

Finance leases are included within vehicles and makes up $ 3.9

million of the total balance as of fiscal year ended December 29, 2024.

The Company recognized a total of $ 3.8 million

on impairment and loss on disposal of property and equipment for the fiscal year ended December 29, 2024 consisting primarily of $ 3.4

million relating to its proprietary HelioTrackTM software system.

The Company impaired the value of its HelioTrackTM software as this

software has no future use following the completion of the migration to software acquired in the SunPower Acquisition.

There were no impairment

charges on tangible assets recognized for the fiscal year ended December 31, 2023.

(10) Accrued Expenses and Other Current Liabilities

Accrued expenses and other current liabilities

consist of the following (in thousands):

property and equipment, net

Depreciation and amortization expense

totaled $ 3.0 million and $ 2.0 million for the fiscal years ended December 28, 2025 and December 29, 2024, respectively.

Finance leases

are included within vehicles and account for $ 1.7 million and $ 3.9 million of the total balance as of the fiscal years ended December

28, 2025, and December 29, 2024, respectively.

the fiscal year ended December 29, 2024, the Company capitalized $ 1.2 million, of internal-use software development costs.

Company recognized a total of $ 3.8 million on impairment and loss on disposal of property and equipment for the fiscal year ended December

29, 2024 consisting primarily of $ 3.4 million relating to its proprietary HelioTrackTM software system.

The Company impaired the value

of its HelioTrackTM software as this software has no future use following the completion of the migration to software acquired in the

SunPower Acquisition.

Expenses and Other Current Liabilities

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

Accrued compensation and benefits

Income taxes payable

Professional fees

Installation costs

Term loan and revolving loan amendment final payment fees

Accrued legal settlements

Accrued taxes

Accrued rebates and credits

Operating lease liabilities, current

Finance lease liabilities, current

Accrued warranty, current

Deferred financing fees

Investor financing deposit with related party (1)

Accrued interest (2)

Accrued interest due to related parties

Other accrued liabilities

Total accrued expenses and other current liabilities

(11) Employee Benefit Plan

The Company sponsors a 401(k) defined contribution

and profit-sharing plan (“401(k) Plan”) for its eligible employees.

This 401(k) Plan provides for tax-deferred salary deductions

for all eligible employees.

Employee contributions are voluntary.

Employees may contribute the maximum amount allowed by law, as limited

by the annual maximum amount as determined by the Internal Revenue Service.

The Company may match employee contributions in amounts to

be determined at the Company’s sole discretion.

The Company made no contributions to the 401(k) Plan for the fiscal years ended

December 29, 2024 and December 31, 2023.

(12) Other Income (Expense), Net

Other income (expense), net consist of the following (in thousands):

Fiscal Year Ended

Change in fair value of redeemable convertible preferred stock warrant liability

Change in fair value of Carlyle Warrants (1)

Change in fair value of FACT public, private placement and working capital warrants

Loss on conversion of SAFE agreements to common stock with related party

Change in fair value of SAFE Agreement with related party

Loss on sale of equity securities

Loss on CS Solis debt extinguishment

Bonus shares issued in connection with the Mergers (2)

Issuance of forward purchase agreements (3)

Change in fair value of forward purchase agreement liabilities (4)

Loss on issuance of shares in connection with the forward purchase agreements (5)

Loss on discontinued Solaria business and other, net

Loss on issuance of derivative liability (6)

Gain on remeasurement of derivative liabilities (7)

Other financing costs

Total Other income (expense), net

(1) Deemed to be a related party in the fiscal year ended December 29, 2024.

Refer to Note 15 – Borrowings and Derivative Liabilities for details.

(2) Includes $ 0.7 million of other expense for the fiscal year ended December

31, 2023, for bonus shares issued to related parties in connection with the Mergers.

(3) Includes $ 0.4 million of other income for the fiscal year ended December

31, 2023, for forward purchase agreements entered into with related parties.

(4) Includes income of $ 0.1 million and $ 9.1 million of other expenses

for the fiscal years ended December 29, 2024, and December 31, 2023, for the change in fair value of FPAs entered into with related parties.

(5) Includes $ 30.7 million of other expense the fiscal year ended December 31, 2023 for shares issued to related parties in connection with the forward purchase agreements.

(6) Includes a loss of $ 3.0 million on the issuance of a derivative liability with a related party in the fiscal year ended December 29, 2024.

Refer to Note 15 – Borrowings and Derivative Liabilities for details.

(7) Includes a gain of $ 0.3 million on the change in the fair value of derivative liabilities with related parties in the fiscal year ended December 29, 2024.

Refer to Note 15 – Borrowings and Derivative Liabilities for details.

(13) Common Stock

The Company’s authorized capital stock comprises 1,000,000,000

shares of common stock and 10,000,000 shares of preferred stock as of December 29, 2024.

No preferred stock has been issued and none are

outstanding as of December 29, 2024.

Common Stock Purchase Agreements

On December 18, 2023, the Company entered into

separate common stock purchase agreements (the “Purchase Agreements”) with the Rodgers Massey Freedom and Free Markets Charitable

Trust and the Rodgers Massey Revocable Living Trust (each a “Purchaser”, and together, the “Purchasers”).

to the terms of the Purchase Agreements, each Purchaser purchased 1,838,235 shares of common stock of the Company, par value $ 0.0001 ,

(the “Shares”), at a price per share of $ 1.36 , representing an aggregate purchase price of $ 5.0 million.

The Purchasers paid

for the shares in cash.

Rodgers is a trustee of each Purchaser, Executive Chairman of the Company’s board of directors

and Chief Executive Officer of the Company (“Rodgers” or “CEO”).

On July 16, 2024, the Company entered into a common

stock purchase agreement with White Lion Capital, LLC (“White Lion”), as amended on July 24, 2024 (“White Lion SPA”),

and a related registration rights agreement for an equity line of credit financing facility.

Pursuant to the White Lion SPA, the Company

has the right, but not the obligation, to require White Lion to purchase, from time to time up to $ 30 million in aggregate gross purchase

price of newly issued shares of the Company’s common stock, subject to the caps and certain limitations and conditions set forth

in the White Lion SPA, including terms that restrict the ability of the Company to issue shares of common stock to White Lion that would

result in White Lion beneficially owning more than 9.99 % of the Company’s outstanding common stock.

On August 14, 2024, the Company entered into Amendment No.

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

The White Lion Amended SPA provides that the

Company may notify White Lion to exercise the Company’s right to sell shares of its common stock by delivering an Hour Rapid Purchase

If the Company delivers an Hour Rapid Purchase Notice, the Company shall deliver to White Lion shares of common stock not to exceed

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

of common stock.

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

which the Hour Rapid Purchase Notice is delivered.

At such closing, White Lion will pay the Company the Hour Rapid Purchase Investment

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

price of the Company’s common stock during the one-hour period following White Lion’s consent to the acceptance of the applicable

Hour Rapid Purchase Notice.

Under the White Lion Amended SPA, the Company issued a total of 2.9 million shares of common stock for net

proceeds of $ 6.7 million in the fiscal year ended December 29, 2024.

The Company has reserved shares of common stock

for issuance related to the following:

Common stock warrants

Employee stock purchase plan

Stock options and RSUs, issued and outstanding

Stock options and RSUs, authorized for future issuance

SAFE Agreement

Forward purchase agreements

Convertible notes

Total shares reserved

(14) Warrants

Liability-classified warrants

Liability classified warrants are as follows (in thousands):

placements warrants

capital warrants

Total liability classified warrants

Series D-7 Warrants (Converted to Common Stock

Warrants “Replacement Warrants”)

In November 2022, the Company issued warrants

to purchase 656,630 shares of Series D-7 preferred stock (the “Series D-7 warrants”) in conjunction with the Business Combination.

The warrant contained two tranches.

The first tranche of 518,752 shares of Series D-7 preferred stock was exercisable at an exercise price

of $ 2.50 per share upon consummation of a merger transaction, or at an exercise price of $ 2.04 per share upon remaining private and had

an expiration date of April 2024.

The second tranche of 137,878 shares of Series D-7 preferred stock was exercisable at an exercise price

of $ 5.00 per share upon consummation of a merger transaction, or at an exercise price of $ 4.09 per share upon remaining private and had

an expiration date of April 2024.

The fair value of the Series D-7 warrants was $ 2.4 million as of July 18, 2023 when the warrants were

reclassified from redeemable convertible preferred stock warrant liability to additional paid-in capital, as the exercise price of the

warrants was fixed at $ 2.50 per share of Complete Solaria Common Stock for the first tranche and $ 5.00 per share of Complete Solaria Common

Stock for the second tranche upon the closing of the Mergers.

In October 2023, the Company entered into an Assignment and Acceptance

Agreement (“Assignment Agreement”), (refer to Note 15 – Borrowings and Derivative Liabilities).

In connection with the

Assignment Agreement, the Company also entered into the First Amendment to Warrant to Purchase Stock Agreements with the holders of the

Series D-7 warrants.

Pursuant to the terms of the agreement, the warrants to purchase 1,376,414 shares of Series D-7 preferred stock converted

into warrants to purchase 656,630 shares of common stock (the “Replacement Warrants”).

As a result of the warrant amendment,

the Company reclassified the Replacement Warrants from equity to liability.

The Replacement Warrants were remeasured to fair value on

the amendment effective date and the Company recorded subsequent changes in fair value within Other income (expense), net in its consolidated

statements of operations and comprehensive loss.

The Replacement Warrants expired in April 2024

and the Company released the $ 1.3 million liability recognized in connection with the warranty liability.

The $ 1.3 million of income was

classified in Other income (expense), net within its consolidated statements of operations and comprehensive loss.

Public, Private Placement, and Working Capital Warrants

In conjunction with the Mergers, Complete Solaria,

as accounting acquirer, was deemed to assume 6,266,667 warrants to purchase FACT Class A Ordinary Shares that were held by the sponsor

at an exercise price of $ 11.50 (“Private Placement Warrants”) and 8,625,000 warrants to purchase FACT’s shareholders

FACT Class A Ordinary Shares at an exercise price of $ 11.50 (“Public Warrants”).

Subsequent to the Mergers, the Private Placement

Warrants and Public Warrants are exercisable for shares of Complete Solaria Common Stock and meet liability classification requirements

since the warrants may be required to be settled in cash under a tender offer.

In addition, Private Placement Warrants are potentially

subject to a different settlement amount as a result of being held by the Sponsor which precludes the Private Placement Warrants from

being considered indexed to the entity’s own stock.

Therefore, these warrants are classified as liabilities on the consolidated

balance sheets.

The fair values of the warrant liabilities were

$ 1.5 million and $ 0.3 million as of December 29, 2024, and December 31, 2023, respectively.

The Company recorded a $ 1.2 million and $ 6.4

million increase in the fair value of these warrants for the fiscal years ended December 29, 2024 and December 31, 2023, respectively.

These changes were recorded in Other income (expense), net in the Company’s consolidated statements of operations and comprehensive

Additionally, at the closing of the Mergers, the Company issued 716,668

Working Capital warrants, which have identical terms as the Private Placement Warrants to the sponsor in satisfaction of certain liabilities

The warrants were fair valued at $ 0.3 million upon the closing of the Mergers, which was recorded in warrant liability on the

Company’s consolidated balance sheets.

As of December 29, 2024 and December 31, 2023, the Working Capital warrants had a fair value

of $ 0.08 million and $ 0.01 million, respectively and the Company recorded the change in fair value of less than $ 0.07 million and $ 0.1

million in Other income (expense), net within the Company’s consolidated statements of operations and comprehensive loss in the

years ended December 29, 2024 and December 31, 2023, respectively.

Previous Liability Classified Warrant Now Classified

Carlyle Warrant

In February 2022, as part of a debt financing from Carlyle (“CS

Solis Debt”) (refer to Note 15 – Borrowings and Derivative Liabilities), the Company issued a warrant to Carlyle to purchase

2,886,952 shares of common stock (“Carlyle Warrant”).

The warrant contained two tranches, the first of which was immediately

exercisable for 1,995,879 shares of Legacy Complete Solaria common stock.

The second tranche, which was determined to be a separate unit

of account, expired on December 31, 2022 prior to becoming exercisable.

At issuance, the relative fair value of the warrant was determined

to be $ 3.4 million using the Black-Scholes model and was initially recorded within additional paid-in capital as it met the conditions

for equity classification.

The Carlyle Warrant has an exercise price of $ 0.01 per share.

In July 2023, and in connection with the closing

of the Mergers, the Carlyle debt and warrants were modified.

Based on the exchange ratio included in the Mergers, the 1,995,879 outstanding

warrants to purchase Legacy Complete Solaria Common Stock prior to modification were exchanged

into warrants to purchase 1,995,879 shares of Complete Solaria Common Stock .

the modification, the warrant, which expires on July 18, 2030 , provides Carlyle with the right to purchase shares of Complete Solaria

Common Stock based on (a) the greater of (i) 1,995,879 shares and (ii) the number of shares equal to 2.795 % of Complete Solaria’s

issued and outstanding shares of common stock, on a fully-diluted basis;

plus (b) on and after the date that is ten (10) days after the

date of the agreement, an additional 350,000 shares;

plus (c) on and after the date that is thirty (30) days after the date of the agreement,

if the original investment amount has not been repaid, an additional 150,000 shares;

plus (d) on and after the date that is ninety (90)

days after the date of the agreement, if the original investment amount has not been repaid, an additional 250,000 shares, in each case,

of Complete Solaria Common Stock at a price of $ 0.01 per share.

Of the additional warrants that become exercisable after the modification,

the tranches of 350,000 warrants vesting ten days after the date of the agreement and 150,000 warrants vesting thirty days after the date

of the agreement were exercisable as of October 31, 2023.

In December 2023, Carlyle was issued an additional

warrant to purchase an additional 2,190,604 shares of the Company’s common stock related to an anti-dilution provision within the

CS Solis Debt that provides for such additional warrants under such circumstances as provided within the CS Solis Debt.

The modification of the warrant resulted in the reclassification of

previously equity-classified warrants to liability classification, which was accounted for in accordance with ASC 815 and ASC 718, Compensation

– Stock Compensation.

The fair value of the warrant liability was determined based on its intrinsic value, given a nominal exercise

At issuance, the relative fair value of the warrant was determined to be $ 20.4 million using the Black-Scholes model with the following

weighted average assumptions:

expected term of 7 years;

expected volatility of 77.0 %;

risk-free interest rate of 3.9 %;

and no dividend

The Company recorded the fair value of the modified warrants as a warrant liability of $ 20.4 million, the pre-modification fair

value of the warrants as a reduction to additional paid-in capital of $ 10.9 million and an expense of $ 9.5 million to Other income (expense),

net in the fiscal year ended December 31, 2023, equal to the incremental value of the warrants upon the modification.

(1) The Company received a deposit of $ 2.0 million from the Rodgers Massey Revocable Living Trust (“Rodgers Revocable Trust”), a related party, in fiscal 2025.

In January 2026, these proceeds along with an additional $ 1.3 million received in January 2026 was converted to a 12.0 % convertible promissory note.

Refer to Note 20 – Subsequent Events – 12.0% Convertible Promissory Not e for further details.

(2) Includes accrued interest due to related parties of $ 2.6 million and $ 2.5 million as of December 28, 2025 and December 29, 2024, respectively.

(3) No individual items exceed 5 % of total current liabilities.

Intangible Assets, Net and Goodwill

September 30, 2024, the Company completed the acquisition of the SunPower Businesses.

As of December 29, 2024, the Company had assigned

provisional goodwill of $ 18.3 million to the Residential Solar Installation reportable segment and $ 0.2 million to the New Homes Businesses

reportable segment.

Upon finalization of the fair values in fiscal 2025 related to the SunPower Businesses, the Company concluded that

the purchase price did not include any excess purchase price over the fair value of net assets acquired related to the SunPower Businesses

On September 24, 2025, the Company completed the acquisition of Sunder

and assigned provisional goodwill of $ 31.8 million from this acquisition to the Dealer reportable segment.

On November 21, 2025, the Company

completed the acquisition of Ambia and assigned provisional goodwill of $ 30.8 million from this acquisition to the Residential Solar Installation

reportable segment.

Goodwill as of and for the fiscal years ended

December 28, 2025 and December 29, 2024 is as follows ( in thousands ):

Residential Solar Installation

Balance as of December 31, 2023

Goodwill acquired in business combinations

Impairment losses

Balance as of December 29, 2024

Accumulated impairment losses

Measurement period adjustments

Goodwill acquired in business combinations

Impairment losses

Balance as of December 28, 2025

Accumulated impairment losses

(1) Subsequent

to December 29, 2024, the Company recognized a measurement period adjustment attributable

to the net assets of the SunPower Businesses acquired resulting in a measurement period adjustment

that eliminated the goodwill provisionally recorded in fiscal 2024.

The acquisitions of Sunder

and Ambia account for the balance in goodwill as of December 28, 2025 as described above.

The Company performed a qualitative assessment

of goodwill and determined that at the acquisition date and the date at which the Company performed an impairment analysis, there were

no relevant events or circumstances that would result in the fair value of a reportable unit being less than its carrying amount.

following tables present intangible assets with finite useful lives as of December 28, 2025 and December 29, 2024 (in thousands) :

As of December 28, 2025

2023, the fair value of the warrant was $ 9.5 million, and the Company recorded an expense of $ 14.4 million as other income (expense),

net on the consolidated statement of operations and comprehensive loss.

On July 1, 2024, in connection with the Exchange Agreement (as defined

in Note 15 – Borrowings and Derivative Liabilities), the Carlyle Warrant was modified, and the modification fixed the number of

shares of the Company’s common stock that may be issued upon exercise of the Carlyle Warrant at 4,936,483 .

At the modification date,

the Carlyle Warrant had a fair value of $ 7.3 million.

At the modification date, the Company recognized $ 0.7 million of expense related

to the remeasurement of the liability which was classified within “Gain on Troubled Debt Restructuring” within the Company’s

consolidated statement of operations and comprehensive loss.

The modification of the warrant resulted in the reclassification of the previously

liability-classified warrant to equity classification, resulting in an increase to additional paid-in capital of $ 7.3 million, a reduction

in the warrant liability of $ 7.3 million.

The Company recorded income of $ 2.9 million and

$ 14.4 million within Other income (expense), net in its consolidated statements of operations and comprehensive loss for the fiscal years

ended December 29, 2024 and December 31, 2023, respectively, related to the Carlyle Warrant.

The warrant remains outstanding as of December

Equity Classified Warrants

Series B Warrants

In February 2016, the Company issued a warrant

to purchase 5,054 shares of Series B preferred stock (the “Series B warrant”) in connection with a 2016 credit facility.

Series B warrant was immediately exercisable at an exercise price of $ 4.30 per share and has an expiration date of February 2026.

relative fair value of the Series B warrant at issuance was recorded as a debt issuance cost within other noncurrent liabilities upon

The fair value of the Series B warrant was less than $ 0.1 million as of July 18, 2023, when the Series B warrant was reclassified

from warrant liability to additional paid-in capital, upon the warrant becoming exercisable into shares of Complete Solaria common stock

upon the close of the Mergers.

Prior to its reclassification during 2023, changes in the fair value of the liability-classified warrants

were recorded in Other income (expense), net in the Company’s consolidated statement of operations and comprehensive loss for the

fiscal year ended December 31, 2023.

The Series B warrant is not remeasured in future periods as it meets the conditions for equity classification.

The warrants remain outstanding as of December 29, 2024.

Series C Warrants

In July 2016, the Company issued a warrant to

purchase 148,477 shares of Series C preferred stock (the “Series C warrant”) in connection with the Series C financing.

Series C warrant agreement also provided for an additional number of Series C shares calculated on a monthly basis commencing on June

2016 based on the principal balance outstanding of the notes payable outstanding.

The maximum number of shares exercisable under the Series

C warrant agreement was 482,969 shares of Series C preferred stock.

The Series C Warrant was immediately exercisable at an exercise price

of $ 1.00 per share and has an expiration date of July 2026.

The fair value of the Series C Warrant was $ 2.3 million as of July 18, 2023,

when the Series C warrant was reclassified from redeemable convertible preferred stock warrant liability to additional paid-in capital,

as the warrant became exercisable into shares of Complete Solaria common stock upon the close of the Mergers.

The Series C warrant is

not remeasured in future periods as it meets the conditions for equity classification.

The warrants remain outstanding as of December

Series C-1 Warrants

In January 2020, the Company issued a warrant

to purchase 173,067 shares of common stock in conjunction with the Series C-1 preferred stock financing.

The warrant was immediately exercisable

at an exercise price of $ 0.01 per share and has an expiration date of January 2030.

The warrant remains outstanding as of December 29,

At issuance, the relative fair value of the warrant was determined to be $ 0.1 million using the Black-Scholes.

Customer related intangibles

Developed technology

of December 29, 2024

(1) The gross carrying amounts as of December 28, 2025 reflect the final allocation of the purchase consideration in connection with the SunPower Businesses.

The gross carrying amounts as of December 29, 2024 were provisional amounts.

As a result of the measurement period adjustment to the intangible assets of the SunPower Businesses, amortization expense was $ 1.4 million lower in the fiscal year ended December 28, 2025.

Aggregate amortization expense for intangible

assets was $ 6.2 million and $ 0.7 million for the fiscal years ended December 28, 2025, and December 29, 2024, respectively.

expense for developed technology is classified in cost of revenues and all other amortization expense is classified in general and administrative

expenses on the Company’s consolidated statements of operations and comprehensive loss.

following tables present the weighted average remaining life of these intangible assets as of December 28, 2025 and December 29, 2024

( in years ).

December 28, December 29,

Customer relationships 18.4

Trademarks 7.5 7.8

Developed technology 3.0 3.0

estimated remaining amortization expense of intangible assets with finite useful lives is as follows (in thousands) :

Forward Purchase Agreements

and around July 13, 2023, FACT (now SunPower, formerly Complete Solaria, Inc.

following the closing of the Business Combination) entered

into separate Forward Purchase Agreements (“FPAs”) with (i) Meteora Special Opportunity Fund I, LP, Meteora Capital Partners,

LP, and Meteora Select Trading Opportunities Master, LP (collectively, “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 together with Meteora and Polar, the “FPA

Under the FPAs, the Company agreed to purchase, subject to certain terms and limitations, up to 5,618,488 shares of

common stock held by the FPA Investors on a date 24 months after execution of the FPAs (the “Maturity Date”).

The FPA Investors

agreed not to redeem their Class A ordinary shares in connection with the Business Combination, and the FPAs originally provided the

FPA Investors with a minimum sale price of $ 5.00 per share at maturity.

On December 18, 2023, the Company entered into

amendments with each FPA Investor reducing the reset floor price from $ 5.00 to $ 3.00 and permitting the Company to raise up to $ 10.0 million

of equity from existing stockholders without triggering anti-dilution protections, subject to specified per-share pricing requirements

for insider investments.

On May 7 and 8, 2024, the Company executed additional amendments with Sandia and Polar reducing the reset price

to $ 1.00 per share and modifying the volume-weighted average price (“VWAP”) trigger event to occur if, after December 31,

2024, the Company’s VWAP is below $ 1.00 for 20 out of 30 consecutive trading days.

On June 14, 2024, the Company and Sandia executed

an additional amendment confirming a $ 1.00 reset price and the revised VWAP trigger and providing that Sandia will automatically receive

any more favorable terms provided to Polar or Meteora, including with respect to the shares sold upon execution of its FPA.

2024, the Company and Polar executed an amendment applying the “Most Favored Nation” provision of the Polar FPA to all of

its shares covered by that agreement.

July 15 and August 1, 2025, the Company entered into further amendments with Meteora, Sandia, and Polar that extended the valuation date

applicable to the FPAs to the earliest of (i) July 17, 2026, (ii) a date specified by Meteora or Sandia, as applicable, or (iii) 90 days

after Company notice if the Company’s VWAP is below the applicable reset price for 20 out of 30 consecutive trading days occurring

at least six months after the closing of the Business Combination, provided that a registration statement is effective throughout both

the measurement and notice periods.

These amendments also revised the settlement provisions to clarify that the Settlement Amount is

used solely as a calculation mechanism to determine any liability owed by the Company to an FPA Investor.

If the Settlement Amount Adjustment

exceeds the Settlement Amount, the excess will be paid to the FPA Investor in cash or shares, at the Company’s election, and the

FPA Investors are not required to remit the Settlement Amount or return any prepayment to the Company.

If the FPA Investors continue to hold some or

all of the FPA shares on the Maturity Date and the trading price of the Company’s common stock is below the applicable FPA sale

price, the Company expects the FPA Investors to exercise their repurchase rights.

connection with these FPAs, the Company has recorded a liability on its consolidated balance sheets of $ 4.0 million and $ 3.5 million

as of December 28, 2025 and December 29, 2024, respectively.

The Company concluded that $ 1.3 million of the liability as of December

29, 2024 was with a related party.

SAFE Agreements

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

Trust (the “Purchaser”), a related party, affiliated with Thurman J.

Rodgers, the Company’s Chief Executive Officer

and a Director, in connection with the Purchaser investing $1.5 million in the Company.

The First SAFE did not accrue interest.

SAFE was initially convertible into shares of the Company’s common stock, par value $0.0001 per share, upon the closing of a bona

fide transaction or series of transactions with the principal purpose of raising capital, pursuant to which the Company would have issued

and sold shares of its common stock at a fixed valuation (an “Equity Financing”), at a per share conversion price which was

equal to the lower of (i) (a) $53.54 million divided by (b) the Company’s capitalization immediately prior to such Equity Financing

(such conversion price, the “SAFE Price”), and (ii) 80% of the price per share of its common stock sold in the Equity Financing.

If the Company consummated a change of control prior to the termination of the First SAFE, the Purchaser would have been automatically

entitled to receive a portion of the proceeds of such liquidity event equal to the greater of (i) $1.5 million and (ii) the amount payable

on the number of shares of common stock equal to (a) $1.5 million divided by (b)(1) $53.54 million divided by (2) the Company’s

capitalization immediately prior to such liquidity event (the “Liquidity Price”), subject to certain adjustments as set forth

in the First SAFE.

The First SAFE was convertible into a maximum of 1,431,297 shares of the Company’s common stock, assuming a

per share conversion price of $1.05, which is the product of (i) $1.31, the closing price per share of the Company’s common stock

on January 31, 2024, multiplied by (ii) 80%.

On April 21, 2024, the Company entered into an

amendment (“First SAFE Amendment”) that converted the First SAFE investment of $1.5 million into 4.2 million shares of the

Company’s common stock based on a conversion price of $0.36 per share, defined in the First SAFE Amendment as the product of (i)

$0.45, the closing price of the Company’s common stock on April 19, 2024, multiplied by (ii) 80%.

Upon conversion to shares

of the Company’s common stock, the Company recognized $1.9 million of Additional paid-in capital, and a loss on conversion of the

First SAFE of $0.4 million within Other non-operating income, net in its consolidated statement of operations for the fiscal year ended

December 29, 2024.

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

Purchaser investing $3.5 million in the Company.

The Second SAFE did not accrue interest.

The Second SAFE was initially convertible into

shares of the Company’s common stock upon the initial closing of an Equity Financing at a per share conversion price which was

equal to the lower of (i) the Second SAFE Price, and (ii) 80% of the price per share of the Company’s common stock sold in the

Equity Financing.

If the Company consummated a change of control prior to the termination of the Second SAFE, the Purchaser would have

been automatically entitled to receive an amount equal to the greater of (i) $3.5 million and (ii) the amount payable on the number of

shares of the Company’s common stock equal to $3.5 million divided by the Liquidity Price, subject to certain adjustments as set

forth in the Second SAFE.

The Second SAFE was convertible into a maximum of 3,707,627 shares of the Company’s common stock, assuming

a per share conversion price of $0.94, which is the product of (i) $1.18, the closing per share price of its common stock on February

15, 2024, and (ii) 80%.

On April 21, 2024, the Company entered into an

amendment (“Second SAFE Amendment”) that converted the Second SAFE investment of $3.5 million into 9.7 million shares of the

Company’s common stock based on a conversion price of $0.36 per share, defined in the Second SAFE Amendment as the product of (i)

$0.45, the closing price of the Company’s common stock on April 19, 2024, multiplied by (ii) 80%.

Upon conversion to shares

of the Company’s common stock, the Company recognized $4.4 million of Additional paid-in capital, and a loss on conversion of the

Second SAFE of $0.9 million within Other non-operating income, net in its consolidated statement of operations for the fiscal year ended

December 29, 2024 .

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

investing $1.0 million in the Company.

The Third SAFE is convertible into shares of the Company’s common stock upon the initial

closing of a bona fide transaction or series of transactions with the principal purpose of raising capital, pursuant to which the Company

issues and sells shares of its common stock in an Equity Financing, at a per share conversion price which is equal to 50% of the

price per share of the Company’s common stock sold in the Equity Financing.

If the Company consummates a change of control prior

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

event equal to $1.0 million, subject to certain adjustments as set forth in the Third SAFE.

The Third SAFE is convertible into a maximum

of 2,750,000 shares of the Company’s common stock, assuming a per share conversion price of $0.275, which is the product of (i)

$0.55, the closing price of the Company’s common stock on May 13, 2024, multiplied by (ii) 50%.

Given that the SAFE could be settled

in cash or a variable number of shares, the Company has accounted for the instrument as a liability at its fair value.

SAFE liability represents the estimated fair value of the Company’s obligation to issue equity in the future.

The fair value of

the warrant was recorded within additional paid-in capital on the Company’s consolidated balance sheets.

The warrant is not remeasured

in future periods as it meets the conditions for equity classification.

SVB Common Stock Warrants

In May and August 2021, the Company issued warrants

to purchase 2,473 and 2,525 shares of common stock, respectively, in conjunction with the Fifth and Sixth Amendments to the Loan and Security

Agreement (“Loan Agreement”) with Silicon Valley Bank (“SVB”).

These warrants are immediately exercisable at exercise

prices of $ 0.38 and $ 0.62 per share, respectively, and have expiration dates in 2033.

The warrants remain outstanding as of December 29,

The fair value of the warrant was recorded within additional paid-in-capital on the accompanying consolidated balance sheets.

warrants are not remeasured in future periods as they meet the conditions for equity classification.

Promissory Note Common Stock Warrants

In October 2021, the Company issued a warrant

to purchase 50,000 shares of the Company’s common stock in connection with the issuance of a short-term promissory note.

As of December

29, 2024, the warrant for 24,148 shares of the Company’s common stock remains unexercised.

The warrant was immediately exercisable

at an exercise price of $ 0.01 per share and has an expiration date of October 2031.

The warrant remains outstanding as of December 29,

The fair value of the warrant was recorded within additional paid-in capital on the Company’s consolidated balance sheets.

The warrant is not remeasured in future periods as it meets the conditions for equity classification.

July 2023 Common Stock Warrants

In July 2023, the Company issued a warrant to

a third-party service provider to purchase 38,981 shares of the Company’s common stock in exchange for services provided in obtaining

financing at the Closing of the Mergers.

The warrant was immediately exercisable at a price of $ 0.01 per share and has an expiration date

of July 2028 .

At issuance, the fair value of the warrant was determined to be $ 0.2 million, based on the intrinsic value of the warrant

and the $ 0.01 per share exercise price.

As the warrant is accounted for as an equity issuance cost, the fair value of the warrant was

recorded within additional paid-in capital on the Company’s consolidated balance sheet.

The warrant is not remeasured in future

periods as it meets the conditions for equity classification.

Warrant Consideration

In July 2023, in connection with the Mergers,

the Company issued 6,266,572 warrants to purchase Complete Solaria Common Stock to holders of Legacy Complete Solaria Redeemable Convertible

Preferred Stock, Legacy Complete Solaria Common Stock.

The exercise price of the common stock warrants is $ 11.50 per share and the warrants

expire 10 years from the date of the Mergers.

The warrant consideration was issued as part of the close of the Mergers and was recorded

within additional paid-in capital, net of the issuance costs of the Mergers.

As of December 29, 2024, this warrant remains outstanding.

The warrant is not remeasured in future periods as it meets the conditions for equity classification.

On June 17, 2024, a warrant to purchase shares of the Company’s

common stock (“Ayna Warrant”) was issued to Ayna.AI LLC (“Ayna”) for the purchase of 6,000,000 shares of the Company’s

common stock at an exercise price per share of $ 0.01 , subject to the provisions and upon the terms and conditions set forth in the Ayna

The Ayna Warrant expires on June 17, 2029.

The issuance of the Ayna Warrant by the Company to Ayna is in satisfaction of the

compensation for services provided to the Company by Ayna under the terms of a statement of work (“Ayna SOW”), signed May

21, 2024 (and effective as of March 12, 2024), as incorporated into a master services agreement dated March 12, 2024.

Under the Ayna SOW,

Ayna provides services in connection with the anticipated return of the Company to cash-flow positive performance.

The Ayna Warrant became

fully exercisable for the 6,000,000 shares on September 9, 2024 and Anya exercised the Ayna Warrant in full for cash in January 2025.

In lieu of exercising the Ayna Warrant for cash,

Ayna may from time to time convert the Ayna Warrant, in whole or in part, into a number of shares of the Company’s common stock

determined by dividing (a) the aggregate fair market value of the shares of the Company’s common stock or other securities otherwise

issuable upon exercise of the Ayna Warrant minus the aggregate warrant price of such shares of the Company’s common stock by (b)

the fair market value (“Ayna Warrant FMV”) of one share of the Company’s common stock.

If the Company’s shares of common

stock are traded regularly in a public market, the Ayna Warrant FMV shall be the weighted average price for the 30 trading days ending

on the trading day immediately before Ayna delivers its notice of exercise to the Company.

If the Company’s shares of common stock

are not regularly traded in a public market, the Company’s Board of Directors shall determine that the Ayna Warrant FMV in its reasonable

good faith judgment.

The foregoing notwithstanding, if Ayna advises the Company’s Board of Directors in writing that Ayna disagrees

with such determination, then the Company and Ayna shall promptly agree upon a reputable investment banking firm or a third party independent

appraiser to undertake such valuation.

If the valuation of such investment banking firm is greater than that determined by the Board of

Directors, then all fees and expenses of such investment banking firm shall be paid by the Company.

In all other circumstances, such fee

and expenses shall be paid by Ayna.

At issuance, the fair value of the Ayna Warrant

was determined to be $ 9.2 million, based on the intrinsic value of the Ayna Warrant and the $ 0.01 per share exercise price.

Warrant is accounted for as stock-based compensation under ASC 718, the Ayna Warrant is recorded within additional paid-in capital on

the consolidated balance sheets.

The Ayna Warrant is not remeasured in future periods as it meets the conditions for equity classification.

As the Ayna statement of work period is different than the date of the warrant agreement, the differences in dates cause an accrued expense

for services rendered by Ayna.

The Company recognized expenses incurred to date of $ 9.2 million for the fiscal year ended December 29,

2024, within General and administrative expenses on the Company’s consolidated statement of operations.

The full amount of the

Ayna Warrant, $ 9.2 million, was recorded within additional paid-in-capital as of December 29, 2024.

Cantor Warrant

In July 2024, the Company issued a warrant

(“Cantor Warrant”) to a third-party service provider to purchase 3,066,141 shares of the Company’s common stock in exchange

for services provided in the issuance of the July 2024 Notes (refer to Note 15 – Borrowings

the Third SAFE approximated $ 0.5 million and $ 0.4 million as of December 28, 2025 and December 29, 2024, respectively.

Note 5 – Fair Value Measurements for details.

(10) Borrowings

and Derivative Liabilities

The Cantor Warrant was immediately exercisable at a price of $ 1.68 per share and has an expiration date

in July 2029.

At issuance, the fair value of the Cantor Warrant was determined to be $ 1.4 million, of which $ 0.9 million was recorded

as a debt discount and $ 0.5 million was attributable to the convertible notes issued in the Exchange Agreement and reduced the gain on

the troubled debt restructuring (refer to Note 15 – Borrowings and Derivative Liabilities).

The fair value of this warrant was derived using the Black-Scholes model with the following assumptions:

expected volatility of 55 %;

interest rate of 4.2 %;

expected term of 5 years;

and no dividend yield.

The fair value of this warrant was recorded within additional

paid-in capital on the Company’s consolidated balance sheets and is not remeasured in future periods as it meets the conditions

for equity classification.

(15) Borrowings and Derivative

The Company’s borrowings and derivative

liabilities consisted of the following (in thousands):

Company’s borrowings and derivative liabilities consisted of the following (in thousands) :

Seller Note – related party

Loan with related party

Total short-term debt with related parties

12.0% senior unsecured convertible notes and related derivative liabilities

July 2024 Notes

July 2024 Notes derivative liability

July 2024 Notes – related parties

July 2024 derivative liability – related parties

Subtotal July 2024 Notes

July 2025 Note – related party

November 2025 Note – related party

July 2024 Notes derivative liability

July 2024 Notes derivative liability – related party

Subtotal July 2024 Notes derivative liability

July 2025 Note derivative liability – related party

November 2025 Note derivative liability – related party

Total 12.0% senior unsecured convertible notes and derivative liabilities

7.0% senior unsecured convertible notes and derivative liabilities

September 2024 Notes

September 2024 Notes – related parties

Subtotal September 2024 Notes

September 2025 Notes

September 2024 Notes derivative liability

September 2024 Notes – related party

September 2024 Notes – derivative liability – related party

2018 Bridge Notes

Revolver Loan

Secured Credit Facility

Polar Settlement Agreement

Total Notes payable

Debt in CS Solis

Total notes payable and convertible notes, net

September 2024 Notes derivative liability – related parties

Subtotal September 2024 Notes derivative liability

September 2025 Notes derivative liability

Total 7.0% senior unsecured convertible notes and derivative liabilities

Total notes payable and derivative liabilities

Less current portion

Notes payable and convertible notes, net of current portion

Total senior unsecured convertible notes payable and derivative liabilities, net of current portion

Balance sheet classification

Current liabilities

Notes payable, current portion

Long-term liabilities

Notes payable and derivative liabilities, net of current portion

Notes payable and derivative liabilities with related parties

Senior Unsecured Convertible Notes

In July 2024, the Company issued $ 46.0 million

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

Of the July 2024 Notes, $ 18.0 million were issued

to a related party affiliated with the Company’s Chief Executive Officer and a director, Rodgers Massey Revocable Living Trust,

$ 18.0 million were issued in exchange for the cancellation of indebtedness as discussed below of which $ 10.0 million were issued to Carlyle

which was also deemed to be a related party in the fiscal year ended December 29, 2024.

The July 2024 Notes bear interest at 12 % per annum,

and the principal is payable in full at maturity on July 1, 2029 .

The interest is payable in cash on January 1 and July 1 of each year,

beginning on July 1, 2025.

Upon default, principal and interest become immediately due and payable.

The interest rate increases by 3 %

in the event of default.

The July 2024 Notes are convertible into the Company’s common stock at the option of the holder at a conversion

rate of $ 1.68 per share.

July 2024, the Company issued $ 46.0 million of senior unsecured convertible notes (“July 2024 Notes”) consisting of $ 28.0

million in cash proceeds and $ 18.0 million arising from an exchange of debt (“Debt Exchange”) as described below under Exchange

Cash proceeds of $ 28.0 million included $ 18.0 million from the Rodgers Revocable Trust, a related party.

The $ 18.0 million

exchange of debt included $ 10.0 million issued to Carlyle.

Carlyle was deemed to be a related party in the fiscal year ended December

Carlyle was no longer deemed a related party to the Company during the fiscal year ended December 28, 2025.

Refer to Note

2 – Summary of Significant Accounting Policies – Changes in Related Parties for details.

July 2024 Notes bear interest at 12.0 % per annum, and the principal is payable in full at maturity on July 1, 2029 .

The interest is payable

in cash on January 1 and July 1 of each year, beginning on July 1, 2025.

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

conversion rate of the July 2024 Notes is initially equal to 595.2381 shares of common stock per $ 1,000 of principal amount due under

the July 2024 Notes.

Holders of July 2024 Notes may convert at any time.

The July 2024 Notes may be declared due and payable at the

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

The conversion option is required to be bifurcated

as a derivative liability, and the Company recorded a derivative liability of $ 28.7 million on the issuance date with a corresponding

debt discount.

In connection with the issuance of the July 2024 Notes, the Company issued the Cantor Warrant, as described in Note 14

– Warrants, to purchase shares of the Company’s common stock.

At issuance, the Cantor Warrant had a fair value of $ 1.4 million,

of which $ 0.9 million was recorded as a debt discount, and $ 0.5 million was included in the calculation of the Company’s gain on

the troubled debt restructuring, as discussed above.

As of December 29, 2024, the carrying amount of the convertible July 2024 Notes inclusive

of the fair value of the derivative liability was $ 77.3 million, which reflects a derivative liability of $ 34.7 million and convertible

notes of $ 70.4 million, less an unamortized debt discount of $ 27.8 million.

Interest expense recognized on the July 2024 Notes

was $ 2.8 million and zero in the fiscal years ended December 29, 2024 and December 31, 2023, respectively.

Of the total interest expense,

related party interest expense was $ 1.7 million and zero in the fiscal years ended December 29, 2024 and December 31, 2023, respectively.

Debt discount expense recognized on the July 2024 Notes was $ 1.8 million and zero in the fiscal years ended December 29, 2024 and December

31, 2023, respectively.

Of the total debt discount expense, related party expense was $ 1.1 million and zero in the fiscal years ended

December 29, 2024, and December 31, 2023, respectively.

There are no financial covenants.

The July 2024 Notes may be declared due and payable at the option

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

The conversion option was required to be bifurcated

as a derivative liability, and the Company recorded a derivative liability of $ 28.7 million on the issuance date.

Of this amount $ 17.5

million was recognized as a debt discount to the $ 28.0 million cash proceeds and $ 11.2 million associated with the Debt Exchange was

recognized as an expense in the calculation of the Company’s “Gain on the Troubled Debt Restructuring” on the Company’s

consolidated statement of operations and comprehensive loss in the year ended December 29, 2024.

In connection with the Debt Exchange, the Company

issued the Cantor Warrant, as described in Note 14 – Common Stock and Common Stock Warrants , for shares of the Company’s

common stock.

At issuance, the Cantor Warrant had a fair value of $ 1.4 million, of which $ 0.9 million was recorded as a debt discount,

and $ 0.5 million was included in the calculation of the Company’s “Gain on the Troubled Debt Restructuring” on the

Company’s consolidated statement of operations and comprehensive loss in the year ended December 29, 2024, as discussed below in

the Exchange Agreement .

The effective interest rate on the July 2024

Notes cash proceeds of $ 28.0 million approximates 45 % as of December 28, 2025.

Coupon interest, default interest and failure to file

interest on the $ 18.0 million Debt Exchange were capitalized as part of the July 2024 Notes.

Accordingly, the effective interest rate

on the $ 18.0 million arising from the Debt Exchange is nil as of December 28, 2025.

are no financial covenants.

The July 2024 Notes are not in default.

due to the Company’s delayed filing of its Form 10K for the year ended December 29, 2024, the Company will be required to pay incremental

default interest of 0.5 % beginning April 16, 2025, which will cease upon the Company’s filing of its Form 10K.

The effective interest rate is 33.4 % and 31.7 %

on the July 2024 Notes’ principal amounts of $ 28.0 million and $ 18.0 million, respectively.

As of December 29, 2024, $ 1.3 million and $ 1.6

million of contingent interest which is payable upon default is included in the July 2024 Notes and July 2024 Notes - related parties,

However, due to the delayed filing of its Form 10-K for the year

ended December 29, 2024, the Company was required to accrue incremental interest of 0.5 % beginning April 16, 2025 through April 30, 2025,

the date upon which the Form 10-K was filed.

The interest accrued was not material.

Due to the Company’s delayed filing of its

Form 10Q for the third quarter ended September 28, 2025 (“Q3 2025 Form 10Q”), the Company was required to accrue incremental

interest of 0.5 % beginning November 17, 2025, through December 19, 2025, the date upon which the Q3 2025 Form 10Q was filed.

accrued was not material.

carrying amount of the July 2024 Notes was as follows (in thousands) :

July 2024 Notes

principal amount

Unamortized debt discount

carrying amount of July 2024 Notes

For the fiscal years ended December 28, 2025 and December

29, 2024, the total interest expense was $ 3.0 million and $ 4.6 million, respectively, with coupon interest expense of $ 2.2 million and

$ 2.8 million, respectively, and debt discount and issuance costs of $ 0.8 million and $ 1.8 million, respectively.

Of the coupon interest

expense, related party interest expense was $ 1.5 million and $ 1.7 million in the fiscal years ended December 28, 2025 and December 29,

2024, respectively.

7% Senior Unsecured Convertible Notes

In September 2024, the Company issued $ 66.8 million of senior unsecured

convertible notes to various lenders (the “September 2024 Notes”), $ 4.0 million of which were issued to Rodgers Family Freedom

and Free Markets Charitable Trust (“Massey Charitable Trust”), a related party and $ 4.0 million were issued to Rodgers Massey

Revocable Living Trust (collectively with Massey Charitable Trust, “Massey Trusts”), also a related party.

The September 2024

Notes bear interest at 7 % per annum, and the principal is payable in full at maturity on July 1, 2029 .

The interest is payable in cash

on January 1 and July 1 of each year, beginning on July 1, 2025.

Upon default, principal and interest become immediately due and payable.

The September 2024 Notes are convertible into shares of the Company’s common stock at the option of the holder at a conversion rate

of $ 2.14 per common share.

Holders of September 2024 Notes may convert at any time.

The September 2024 Notes may be declared due and payable

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

The conversion option is required to

be bifurcated as a derivative liability, and the Company recorded a derivative liability of $ 91.5 million on the issuance date.

fair value of the derivative liability exceeds the proceeds received, the Company recorded a corresponding financing loss of $ 24.7 million

and debt discount for $ 66.8 million as of the issuance date.

In December 2024, the Company issued an additional $ 13.0 million of September

2024 Notes for cash.

The Company recognized a $ 10.9 million debt discount in connection with these additional proceeds.

As of December 29, 2024, the carrying amount of

the September 2024 Notes inclusive of the fair value of the derivative liability was $ 68.5 million, which reflects a derivative liability

of $ 62.4 million and convertible notes of $ 79.8 million, less an unamortized debt discount of $ 73.7 million.

Interest expense recognized on the September 2024

Notes was $ 1.4 million and zero in the fiscal years ended December 29, 2024 and December 31, 2023, respectively.

Of the total interest

expense, related party interest expense was $ 0.2 million and zero in the fiscal years ended December 29, 2024 and 2023, respectively.

Debt discount expense recognized on the September 2024 Notes was $ 4.0 million and zero in the fiscal years ended December 29, 2024 and

Related party amortization expense was $ 0.7 million and $ 1.1 million in the fiscal years ended December 28, 2025 and

December 29, 2024, respectively.

Of the total debt discount expense, related party expense was $ 0.5 million and zero in the fiscal years

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

There are no financial covenants.

The September 2024 Notes are not in default.

However, due to the Company’s delayed filing of its Form 10K for the year ended December 29, 2024, the Company will be required

to pay incremental default interest of 0.5 % beginning April 16, 2025, which will cease upon the Company’s filing of its Form 10K.

The effective interest rate is 27.6 % and 47.3 %

on the September 2024 Notes’ principal amounts of $ 66.8 million and $ 13.0 million, respectively.

Exchange Agreement

On July 1, 2024, the Company entered into an Exchange

Agreement (the “Exchange Agreement”) with 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;

July 1, 2024, the Company entered into an Exchange Agreement (the “ Exchange Agreement ”) with Carlyle and Kline Hill

(as defined below) resulting in the Debt Exchange and 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;

(ii) 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;

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

(v) the issuance of 1,500,000 shares of common stock, par value $ 0.0001

per share, of the Company (the “Common Stock”) to Kline Hill (the “Shares”).

2018 Bridge Notes

In 2018, Solaria issued senior subordinated convertible

secured notes (“2018 Notes”) totaling approximately $ 3.4 million in exchange for cash.

The 2018 Notes were secured by

substantially all of the assets of Solaria, bore interest at the rate of 8 % per annum, and the investors were entitled to receive twice

the face value of the 2018 Notes at maturity.

In connection with an amendment in 2021 to extend the maturity date of the 2018 Notes, Solaria

issued warrants to purchase shares of Series E-1 redeemable convertible preferred stock of Solaria.

The warrants were exercisable immediately

in whole or in part at and expire on December 13, 2031.

As part of the Business Combination with Complete Solar, the outstanding warrants

issued were assumed by the parent company, Complete Solaria.

In December 2022, the Company entered into an

amendment to the 2018 Notes further extending the maturity date from December 13, 2022 to December 13, 2023 in exchange for an increased

repayment premium from 110 % to 120 % of the principal and accrued interest at the time of repayment.

The amendment represented a troubled

debt restructuring as the Company was experiencing financial difficulty, and the amended terms resulted in a concession to the Company.

As the future undiscounted cash payments under the modified terms exceeded the carrying amount of the 2018 Notes on the date of modification,

the modification was accounted for prospectively.

The incremental repayment premium was being amortized to interest expense using the

effective interest rate method.

The 2018 Bridge Notes were settled as part of

the Exchange Agreement.

In connection with the Exchange Agreement, the balance of the 2018 Bridge Notes was exchanged for the July 2024

In July 2024, the Company issued the principal amount of $ 8.0 million of its July 2024 Notes and 1,500,000 shares of the Company’s

common stock in exchange for the cancellation of all indebtedness with Kline Hill.

At the date of the cancellation, such indebtedness

was comprised of the 2018 Notes of $ 11.7 million, the portion of the Revolving Loan balance assigned to Kline Hill of $ 3.9 million, and

the Secured Credit Facility balance of $ 13.1 million.

The Company concluded that the exchange represented a troubled debt restructuring

as the Company was experiencing financial difficulty, and the new terms of the July 2024 Notes resulted in a concession to the Company.

As the carrying amount of the debt exceeded the future undiscounted cash payments under the new terms on the date of the exchange, the

Company recorded a gain on the troubled debt restructuring of $ 9.8 million.

Interest expense recognized on the 2018 Bridge

Notes was $ 0.7 million and $ 1.2 million , for the fiscal year ended December 29, 2024 and

December 31, 2023, respectively.

Revolving Loan

In October 2020, Solaria entered into a loan agreement

(“SCI Loan Agreement”) with Structural Capital Investments III, LP (“SCI”).

The SCI Loan Agreement was comprised of two facilities,

a term loan (the “Term Loan”) and a revolving loan (the “Revolving Loan”) (together “Original Agreement”)

for $ 5.0 million each with a maturity date of October 31, 2023 .

The Term Loan was repaid prior to the acquisition of Solaria by Complete

The Revolving Loan had a term of thirty-six months,

with the principal due at the end of the term and an annual interest rate of 7.75 % or Prime rate plus 4.5 %, whichever was higher.

SCI Loan Agreement required the Company to meet certain financial covenants relating to the maintenance of specified restricted cash balance,

achieve specified revenue targets and maintain specified contribution margins (“Financial Covenants”) over the term of the

Revolving Loan.

The Revolving Loan was collateralized by substantially all assets and property of the Company.

Solaria had historically issued warrants to purchase

shares of Series E-1 redeemable convertible preferred stock of Solaria (“SCI Series E-1 warrants”).

The warrants were fully

exercisable in whole or in part at any time during the term of the Original agreement.

As part of the Business Combination with Complete

Solar, all the outstanding SCI Series E-1 warrants were assumed by the parent company, Complete Solaria.

In October 2023, the Company entered into an Assignment

Agreement whereby Structural Capital Investments III, LP assigned the SCI debt to Kline Hill and Rodgers Massey Revocable Living Trust

for a total purchase price of $ 5.0 million.

The Company identified this arrangement as a related party transaction, as discussed in Note

23 – Related Party Transactions.

A portion of the SCI Revolving Loan was cancelled as part of the Exchange Agreement.

In connection

with the Exchange Agreement, the principal amount of $ 3.5 million of the Revolving Loan was exchanged for the July 2024 Notes.

The principal

portion of the Revolving Loan owing to the Rodgers Massey Revocable Living Trust of $ 1.5 million (plus accrued interest) remains outstanding

as of December 29, 2024.

The outstanding amount is due on demand plus accrued interest.

Interest expense recognized for the fiscal years

ended December 29, 2024 and December 31, 2023, was $ 0.5 million and $ 0.5 million, respectively.

Related party interest was $ 0.2 million

in the year ended December 29, 2024.

(iii) a previously issued warrant to Carlyle (“Carlyle Warrant”) for shares of the Company’s common stock was fixed at 4,936,483 .

At the July 1, 2024, modification date, the Carlyle Warrant had a fair value of $ 7.3 million compared to its fair value of $ 6.6 million on June 30, 2024.

The Company recognized this $ 0.7 million of expense related to the remeasurement of the Carlyle Warrant liability to its fair value within “Gain on Troubled Debt Restructuring” on the Company’s consolidated statement of operations and comprehensive loss in the year ended December 29, 2024.

The modification of the Carlyle Warrant also resulted in the reclassification of the Carlyle Warrant from liability to equity classification, resulting in an increase to additional paid-in capital of $ 7.3 million and a reduction in the warrant liability of $ 7.3 million.

Carlyle exercised the warrant in full in the year ended December 29, 2024.

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 2018 bridge notes, a portion of a revolving loan

(“Revolving Loan”) and a secured credit facility (“Secured Credit Facility”), and the satisfaction of all obligations

owed to Kline Hill by the Company under the terminated debt instruments;

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

(vi) the issuance of 1,500,000 shares of the Company’s common stock to Kline Hill.

the date of the cancellation under the Exchange Agreement , the Company’s indebtedness to CS Solis was $ 37.2 million and

the indebtedness to Kline Hill was comprised of 2018 bridge notes of $ 11.7 million, a revolving loan balance of $ 3.9 million, and the

Secured Credit Facility balance of $ 13.1 million.

Company concluded that the transactions entered into in the Exchange Agreement represented a troubled debt restructuring as the

Company was experiencing financial difficulty, and the terms of the July 2024 Notes resulted in a concession to the Company.

As the carrying

amount of the debt exceeded the future undiscounted cash payments under the new terms on the date of the Exchange Agreement , the

Company recorded a gain on the troubled debt restructuring of $ 22.3 million in the year ended December 29, 2024.

the year ended December 29, 2024, prior to entering into the Exchange Agreement , the Company recognized (i) accretion of the liability

of the debt in CS Solis as related party interest expense of $ 3.9 million, (ii) $ 0.7 million of interest on the 2018 bridge notes, and

(iii) $ 1.0 million of interest on the Secured Credit Facility.

2025 Note – related party

July 10, 2025, the Company issued a convertible promissory note (the “July 2025 Note”) to the Rodgers Revocable Trust, a

related party, in exchange for $ 5.0 million of proceeds.

2025 Note is a general unsecured obligation of the Company and will mature on July 1, 2029, unless earlier converted, redeemed or repurchased.

The July 2025 Note has an annual coupon interest rate of 12.0 % which is payable semiannually in arrears on January 1 and July 1 of each

year, beginning on January 1, 2026.

The July 2025 Note is convertible at the option of the holder at any time prior to the payment

of the principal amount of the July 2025 Note in full.

Upon conversion of the July 2025 Note, the Company will satisfy its conversion

obligation by delivering shares of the Company’s common stock and paying cash in respect of any fractional shares.

The conversion

rate of the July 2025 Note is initially equal to 558.6592 shares of common stock per $ 1,000 of principal amount due under the July 2025

The conversion rate is subject to adjustment from time to time pursuant to the terms of the July 2025 Note.

The conversion option

related to the July 2025 Note was required to be bifurcated as a derivative liability.

The Company recorded a derivative liability of

$ 3.7 million with a corresponding offset to debt discount on the issuance date.

The July 2025 Note has an effective interest rate of

carrying amount of the July 2025 Note was as follows (in thousands) :

July 2025 Note

– related party

Unamortized debt discount – related party

carrying amount of July 2025 Note – related party

For the fiscal year ended December 28, 2025, the

total interest expense was $ 0.4 million with coupon interest expense of $ 0.3 million and debt discount and issuance costs of $ 0.1 million,

all of which was with a related party.

2025 Note – related party

November 20, 2025, the Company issued a convertible note (the “November 2025 Note”) to the Rodgers Massey Freedom and Free

Markets Charitable Trust in exchange for $ 2.0 million of proceeds.

The November 2025 Note is a general unsecured obligation of the Company

and will mature on July 1, 2029, unless earlier converted, redeemed or repurchased.

The November 2025 Note has an annual coupon interest

rate of 12.0 % which is payable semiannually in arrears on January 1 and July 1 of each year, beginning on January 1, 2026.

2025 Note is convertible at the option of the holder at any time prior to the payment of the principal amount of the November 2025 Note

The conversion rate of the November 2025 Note is initially equal to 626.9592 shares of the Company’s common stock per $ 1,000

principal amount due under the November 2025 Note.

The conversion rate shall be subject to adjustment from time to time pursuant to the

terms of the November 2025 Note.

The Company may not redeem the November 2025 Note prior to July 5, 2026.

The conversion option related

to the November 2025 Note was required to be bifurcated as a derivative liability, and the Company recorded a derivative liability of

$ 1.5 million on the issuance date with a corresponding offset to debt discount.

The November 2025 Note has an effective interest rate

of 71 % as of December 28, 2025.

carrying amount of the convertible November 2025 Note was as follows (in thousands) :

November 2025

Note – related party

Unamortized debt discount – related party

carrying amount of November 2025 Note – related party

For the fiscal year ended December 28, 2025, the

total interest expense was less than $ 0.1 million with each of coupon interest and amortization of debt discount and issuance costs being

less than $ 0.1 million.

Senior Unsecured Convertible Notes

On September 16, 2024, the Company entered into

an Indenture agreement with U.S.

Bank Trust Company, National Association, as trustee (the “Indenture”), for the issuance

of 7.0 % senior unsecured convertible notes (“7.0% Notes”).

The 7.0 % Notes issued under the Indenture bear interest at 7.0 %

per annum, and the interest is payable semiannually in arrears on January 1 and July 1 of each year beginning on January 1, 2025.

principal is payable in full at maturity on July 1, 2029.

Holders of the 7.0 % Senior Notes may convert all or any portion of their 7 %

Notes at any time, in integral multiples of $ 1,000 principal amount, at the option of the holder.

Upon conversion, the Company may satisfy

its conversion obligation by paying or delivering, as the case may be, cash, shares of common stock or a combination of cash and shares

of common stock, at the Company’s election, in the manner and subject to the terms, conditions and limitations provided in the Indenture.

The 7.0 % Senior 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.

There are no financial covenants.

Secured Credit Facility

In December 2022, the Company entered into a secured

credit facility agreement with Kline Hill Partners IV SPV LLC and Kline Hill Partners Opportunity IV SPV LLC (“Secured Credit Facility”).

The Secured Credit Facility agreement allowed the Company to borrow up to 70 % of the net amount of its eligible vendor purchase orders

with a maximum amount of $ 10.0 million at any point in time.

The purchase orders were backed by relevant customer sales orders which served

as collateral.

The amounts drawn under the Secured Credit Facility were eligible to be reborrowed provided that the aggregate borrowing

did not exceed $ 20.0 million.

The repayment terms under the Secured Credit Facility were (i) the borrowed amount multiplied by 1.15x if

repaid within 75 days and (ii) the borrowed amount multiplied by 1.175x if repaid after 75 days.

The Company could have repaid any borrowed

amount without premium or penalty.

Under the original terms, the Secured Credit Facility agreement was due to mature in April 2023.

Company set the balance outstanding as part of the Exchange Agreement, whereby the balance of $ 13.1 million of the Secured Credit Facility

was exchanged for the July 2024 Notes.

The Secured Credit Facility outstanding was

zero and $ 12.2 million, including accrued financing cost of $ 4.5 million as of December 29, 2024 and December 31, 2023,

As described below, the Company has issued multiple tranches under this Indenture.

conversion rate for the 7.0 % Notes was initially 467.8363 shares of common stock per $ 1,000 principal amount of 7.0 % Notes.

The conversion

rate for the 7.0 % Notes is subject to adjustment from time to time in accordance with the terms of the Indenture, and as of December

28, 2025 the 7.0 % Notes are convertible at the rate of 584.7953 shares of common stock per $ 1,000 principal amount of the notes.

upon a conversion of the 7.0 % Notes, following certain corporate events that occur prior to the maturity date of the 7.0 % Notes or if

the Company delivers a notice of redemption in respect of the 7.0 % Notes, the Company will, under certain circumstances, increase the

conversion rate of the 7.0 % Notes for a holder who elects to convert its 7.0 % Notes following September 16, 2025, in connection with

such a corporate event that occurs prior to the maturity date, or if the Company delivers a notice of redemption in respect of the 7.0 %

The Company issued an aggregate of $ 80.0 million

of 7.0 % Notes to various lenders (the “September 2024 Notes”), of which the Company received cash proceeds in two tranches

of $ 66.8 million and $ 13.0 million in fiscal 2024.

The remainder was received in fiscal 2025.

The cash proceeds of $ 66.8 million included $ 4.0 million

from the Rodgers Family Freedom and Free Markets Charitable Trust (“Massey Charitable Trust”), a related party, and $ 4.0 million

from the Rodgers Revocable Trust (collectively with Massey Charitable Trust, “Massey Trusts”), also a related party.

2025, a holder of $ 0.75 million of the September 2024 Notes became a member of the Company’s board of directors and this note is

now deemed to be with a related party beginning in fiscal 2025.

Refer to Note 2 Summary of Significant Accounting Policies –

Changes in related parties , for further detail.

The conversion option of this first tranche was required to be bifurcated as

a derivative, and the Company recorded a derivative liability of $ 91.5 million on the issuance date.

In connection with the derivative

liability, the Company recorded a debt discount of $ 66.8 million at the date of issuance.

As the fair value of the derivative liability

exceeded the proceeds received, the remaining portion of the derivative liability of $ 24.7 million was recorded as a financing loss, of

which $ 3.0 million was with a related party.

At the date of issuance, the $ 66.8 million of notes were issued with a debt discount equal

to the entire principal amount, resulting in an initial net carrying amount of zero.

The debt discount is being amortized on a straight-line

basis over the term of the September 2024 Notes.

In December 2024, the Company received proceeds of $ 13.0 million in

a second tranche.

The Company recognized a $ 10.9 million debt discount in connection with these additional proceeds.

The effective interest

rate on this tranche is 64 % as of December 28, 2025.

holders of the September 2024 Notes exercised their rights to convert this debt to shares of the Company’s common stock.

fiscal year ended December 29, 2025, $ 14.7 million of the September 2024 Notes were converted into 8.6 million shares of the Company’s

common stock.

carrying amount of the convertible September 2024 Notes was as follows (in thousands) :

September 2024

Unamortized debt discount

carrying amount of September 2024 Notes

For the fiscal years ended December 28, 2025 and

December 29, 2024, the total interest expense was $ 19.6 million and $ 5.4 million with coupon interest expense of $ 5.5 million and $ 1.4

million, respectively, and debt discount and issuance costs of $ 14.1 million and $ 4.0 million, respectively.

Of the coupon interest expense,

related party interest expense was $ 0.6 million and $ 0.2 million in the fiscal years ended December 28, 2025 and December 29, 2024, respectively.

Related party amortization expense was $ 1.8 million and $ 0.5 million in the fiscal years ended December 28, 2025 and December 29, 2024,

respectively.

The Company recognized interest expense of $ 1.0 million and $ 3.5 million related to the Secured Credit Facility during

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

Polar Settlement Agreement

In September 2023, in connection with the Mergers, the Company 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 the Company 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

The remaining balance owed to Polar was paid in full in the fiscal year ended December 29, 2024.

Debt in CS Solis

As part of the Reorganization described in Note

1(a) Organization - Description of Business, the Company received cash and recorded debt for an investment by Carlyle.

The investment

was made pursuant to a subscription agreement, under which Carlyle contributed $ 25.6 million in exchange for 100 Class B Membership Units

of CS Solis and the Company contributed the net assets of Complete Solar, Inc.

in exchange for 100 Class A Membership Units.

B Membership Units were mandatorily redeemable by the Company on the three-year anniversary of the effective date of the CS Solis amended

and restated LLC agreement (February 14, 2025).

The Class B Membership Units accrued interest that was payable upon redemption at a rate

of 10.5 % (which was structured as a dividend payable based on 25 % of the investment amount measured quarterly), compounded annually, and

subject to increases in the event the Company declared any dividends.

In connection with the investment by Carlyle, the Company issued

to Carlyle a warrant to purchase 5,978,960 shares of the Company’s common stock at a price of $ 0.01 per share, of which, the purchase

of 4,132,513 shares of the Company’s common stock is immediately exercisable.

The Company has accounted for the mandatorily redeemable

investment from Carlyle in accordance with ASC 480 and recorded the investment as a liability, which was accreted to its redemption value

under the effective interest method.

The Company recorded the warrants as a discount to the liability.

On July 17 and July 18, 2023, and in connection

with obtaining consent for the Mergers, Legacy Complete Solaria, FACT and Carlyle entered into an Amended and Restated Consent to the

Business Combination Agreement (“Carlyle Debt Modification Agreement”) and an amended and restated warrant agreement (“Carlyle

Warrant Amendment”), which modified the terms of the mandatorily redeemable investment made by Carlyle in Legacy Complete Solaria.

The Carlyle Debt Modification Agreement accelerated

the redemption date of the investment to March 31, 2024 subsequent to the modification.

The acceleration of the redemption date of the

investment resulted in the total redemption amount to be 1.3 times the principal at December 31, 2023.

The redemption amount increased

to 1.4 times the original investment as of March 31, 2024.

Additionally, as part of the amendment, the parties entered into an amended

and restated warrant agreement.

As part of the Carlyle Warrant Amendment, Complete Solaria issued Carlyle a warrant to purchase up to

2,745,879 shares of Complete Solaria Common Stock at a price per share of $ 0.01 , which is inclusive of the outstanding warrant to purchase

1,995,879 shares at the time of modification.

The warrant, which expires on July 18, 2030, provides Carlyle with the right to purchase

shares of Complete Solaria Common Stock based on (a) the greater of (i) 1,995,879 shares and (ii) the number of shares equal to 2.795%

of Complete Solaria’s issued and outstanding shares of common stock, on a fully-diluted basis; plus (b) on and after the date

that is ten (10) days after the date of the agreement, an additional 350,000 shares; plus (c) on and after the date that is thirty

(30) days after the date of the agreement, if the original investment amount has not been repaid, an additional 150,000 shares; plus

(d) on and after the date that is ninety (90) days after the date of the agreement, if the original investment amount has not been repaid,

an additional 250,000 shares, in each case, of Complete Solaria Common Stock at a price of $0.01 per share.

The warrants are classified

as liabilities under ASC 815 and are recorded within warrant liability on the Company’s consolidated statements of operations and

comprehensive loss.

The Company accounted for the modification of the long-term debt due

CS Solis as a debt extinguishment in accordance with ASC 480 and ASC 470.

As a result of the extinguishment, the Company recorded a loss

on extinguishment, of $10.3 million, which is recorded within other income (expense), net in the consolidated statements of operations

and comprehensive loss in the fiscal year ended December 31, 2023.

The Company had a liability of $ 33.3 million in short-term debt due

CS Solis on the consolidated balance sheet as of December 31, 2023.

The Company recorded accretion of the liability as interest expense

of $ 7.2 million for the fiscal year ended December 31, 2023, and made payments of interest expense of $ 0.6 million during the fiscal year

ended December 31, 2023 Prior to the modification, during the fiscal years ended December 31, 2023 the Company recorded amortization of

issuance costs as interest expense of $ 0.7 million.

The Company determined that the Carlyle was a related party beginning

In July 2024, the Company issued $ 10.0 million of senior unsecured convertible notes in exchange for the cancellation of all

indebtedness with CS Solis of $ 37.2 million.

The Company concluded that the exchange represented a troubled debt restructuring as the

Company was experiencing financial difficulty, and the new terms under the convertible notes resulted in a concession to the Company.

As the carrying amount of the debt exceeded the future undiscounted cash payments under the new terms on the date of the exchange, the

Company recorded a gain on the troubled debt restructuring of $ 12.5 million.

The convertible notes have the same terms and conditions

as the other convertible notes issued in July 2024 described above.

For the fiscal years ended December 29, 2024

and December 31, 2023, the Company recorded accretion of the liability as interest expense of $ 3.9 million and $ 2.7 million, respectively,

and made no payments of interest expense.

For the fiscal years ended December 29, 2024

and December 31, 2023, the Company recorded amortization of issuance costs as interest expense of zero and $ 0.7 million, respectively.

2022 Convertible Notes

In connection with the Original

Business Combination Agreement, the Company raised a series of convertible notes (“2022 Convertible Notes”) during the fiscal

year ended December 31, 2022 with an aggregate purchase price of $ 12.0 million, and during the fiscal year ended December 31, 2023 for

an additional total purchase price of $ 21.3 million.

Of the $ 33.3 million 2022 Convertible Notes issued, $ 12.1 million was issued to five

related parties.

Additionally, as part of the acquisition of Solaria, the Company assumed a note from an existing investor for its fair

value of $ 6.7 million.

The note contained the same terms as the other 2022 Convertible Notes.

The Company did not incur significant issuance

costs associated with the 2022 Convertible Notes.

The 2022 Convertible Notes accrued interest at a rate of 5 % per annum.

Immediately prior

to the closing of the Mergers, the 2022 Convertible Notes were converted into the number of shares of common stock of Complete Solaria

equal to (x) the principal amount together with all accrued interest of the 2022 Convertible Notes divided by 0.75, divided by (y) the

price of a share of common stock of Complete Solaria used to determine the conversion ratio in the Amended and Restated Business Combination

This resulted in the issuance of 5,316,460 shares of Complete Solaria common stock to the noteholders and no debt remains outstanding

associated with the 2022 Convertible Notes as of December 31, 2023.

The Company recognized interest expense of $ 0.7 million related to

the 2022 Convertible Notes during the fiscal year ended December 31, 2023.

Of this interest expense, $ 0.4 million was with related parties.

SAFE Agreements

On January 31, 2024, the Company entered into a Simple Agreement for

Future Equity (“SAFE”) (the “First SAFE”) with the Rodgers Massey Freedom and Free Markets Charitable Trust (the

“Purchaser”), a related party, affiliated with Thurman J.

Rodgers, the Company’s Chief Executive Officer and a director,

in connection with the Purchaser investing $1.5 million in the Company.

The First SAFE did not accrue interest.

The First SAFE was initially

convertible into shares of the Company’s common stock, par value $0.0001 per share, upon the closing of a bona fide transaction

or series of transactions with the principal purpose of raising capital, pursuant to which the Company would have issued and sold shares

of its common stock at a fixed valuation (an “Equity Financing”), at a per share conversion price which was equal to the lower

of (i) (a) $53.54 million divided by (b) the Company’s capitalization immediately prior to such Equity Financing (such conversion

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

If the Company

consummated a change of control prior to the termination of the First SAFE, the Purchaser would have been automatically entitled to receive

a portion of the proceeds of such liquidity event equal to the greater of (i) $1.5 million and (ii) the amount payable on the number of

shares of common stock equal to (a) $1.5 million divided by (b)(1) $53.54 million divided by (2) the Company’s capitalization immediately

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

First SAFE was convertible into a maximum of 1,431,297 shares of the Company’s common stock, assuming a per share conversion price

of $1.05, which is the product of (i) $1.31, the closing price per share of the Company’s common stock on January 31, 2024, multiplied

On April 21, 2024, the Company entered into an amendment (“First

SAFE Amendment”) that converted the First SAFE investment of $1.5 million into 4,166,667 shares of the Company’s common stock

based on a conversion price of $0.36 per share, defined in the First SAFE Amendment as the product of (i) $0.45, the closing price

of the Company’s common stock on April 19, 2024, multiplied by (ii) 80%.

Upon conversion, the Company recorded a debit to SAFE

Agreement of $1.5 million, a credit to Additional paid-in-capital of $1.9 million and recognized expense of $0.4 million within Other

income (expense), net in its consolidated statement of operations for the fiscal year ended December 29, 2024.

On February 15, 2024, the Company entered into

a second SAFE (the “Second SAFE”) with the Purchaser, in connection with the Purchaser investing $3.5 million in the Company.

The Second SAFE did not accrue interest.

The Second SAFE was initially convertible into shares of the Company’s common stock upon

the initial closing of an Equity Financing at a per share conversion price which was equal to the lower of (i) the Second SAFE Price,

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

If the Company consummated a change

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

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

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

The Second SAFE was convertible

into a maximum of 3,707,627 shares of the Company’s common stock, assuming a per share conversion price of $0.94, which is the product

of (i) $1.18, the closing per share price of its common stock on February 15, 2024, (ii) 80%.

On April 21, 2024, the Company entered into an amendment (“Second

SAFE Amendment”) that converted the Second SAFE investment of $3.5 million into 9,722,222 shares of the Company’s common stock

based on a conversion price of $0.36 per share, defined in the Second SAFE Amendment as the product of (i) $0.45, the closing price

of the Company’s common stock on April 19, 2024, multiplied by (ii) 80%.

Upon conversion, the Company recorded a debit to SAFE

Agreement of $3.5 million, a credit to Additional paid-in-capital of $4.4 million and recognized expense of $0.9 million within Other

income (expense), net in its consolidated statement of operations for the fiscal year ended December 29, 2024.

On May 13, 2024, the Company entered into a third

SAFE (the “Third SAFE”) with the Purchaser, in connection with the Purchaser investing $1.0 million in the Company.

SAFE is convertible into shares of the Company’s common stock upon the initial closing of a bona fide transaction or series of transactions

with the principal purpose of raising capital, pursuant to which the Company issues and sells shares of its common stock in an Equity

Financing, at a per share conversion price which is equal to 50% of the price per share of the Company’s common stock sold

in the Equity Financing.

If the Company consummates a change of control prior to the termination of the Third SAFE, the Purchaser will

be automatically entitled to receive a portion of the proceeds of such liquidity event equal to $1.0 million, subject to certain adjustments

as set forth in the Third SAFE.

The Third SAFE is convertible into a maximum of 2,750,000 shares of the Company’s common stock,

assuming a per share conversion price of $0.275, which is the product of (i) $0.55, the closing price of the Company’s common stock

on May 13, 2024, multiplied by (ii) 50%.

Given that the SAFE could be settled in cash or a variable number of shares, the Company has

accounted for the instrument as a liability at its fair value.

As of December 29, 2024, the Company estimated

the fair value of the Third SAFE at $ 0.4 million based upon the assumptions disclosed in Note 5

– Fair Value Measurements .

(17) Stock-Based Compensation

In July 2023, the Company’s board of directors

adopted and stockholders approved the 2023 Incentive Equity Plan (the “2023 Plan”).

The 2023 Plan became effective immediately

upon the closing of the Amended and Restated Business Combination Agreement.

Initially, a maximum number of 8,763,322 shares of Complete

Solaria Common Stock may be issued under the 2023 Plan.

In addition, the number of shares of Complete Solaria Common Stock reserved for

issuance under the 2023 Plan will automatically increase on January 1 of each year, starting on January 1, 2024 and ending on January

1, 2033, in an amount equal to the lesser of (1) 4 % of the total number of shares of Complete Solaria’s Common Stock outstanding

on December 31 of the preceding year, or (2) a lesser number of shares of Complete Solaria Common Stock determined by Complete Solaria’s

Board prior to the date of the increase.

The maximum number of shares of Complete Solaria Common Stock that may be issued on the exercise

of incentive stock options (“ISOs”) under the 2023 Plan is three times the number of shares available for issuance upon the

2023 Plan becoming effective (or 26,289,966 shares).

Historically, awards were granted under the Amended

and Restated Complete Solaria Omnibus Incentive Plan (“2022 Plan”), the Complete Solar 2011 Stock Plan (“2011 Plan”),

the Solaria Corporation 2016 Stock Plan (“2016 Plan”) and the Solaria Corporation 2006 Stock Plan (“2006 Plan”)

(together with the Complete Solaria, Inc.

2023 Incentive Equity Plan (“2023 Plan”), “the Plans”).

Under the Plans, the Company has granted service-based

stock options and restricted stock units (“RSUs”).

Compensation expense for stock options under the Company’s cliff

vesting schedule is generally recognized equally over the vesting period of five years.

RSUs granted during the fiscal year ended December

29, 2024 are also generally recognized under the cliff vesting schedule that is recognized equally over the vesting period of five years.

The information below summarizes the stock option activity under the

Shares Weighted

Share Weighted

(Years) Aggregate

(in thousands)

Outstanding—December 31, 2023 11,716,646 $ 3.48 8.53 $ 2,756

Options granted 6,121,251 0.93

Options exercised ( 398,883 ) 0.77 39

Options canceled ( 7,441,781 ) 0.17

Outstanding—December 29, 2024 9,997,233 2.77 5.29 6,356

Vested and expected to vest— December 29, 2024 9,997,233 2.77 5.29 6,356

Vested and exercisable— December 29, 2024 4,264,705 3.54 3.75 1,857

The information below summarizes the RSU activity.

Unvested at December 31, 2023

Vested and released

Cancelled or forfeited

Unvested at December 29, 2024

The aggregate fair value of the Company’s stock options vested

during 2024 and 2023 was $ 1.9 million and $ 3.8 million, respectively.

Determination of Fair Value

The Company estimated the grant-date fair value

of stock options using the Black-Scholes-Merton option-pricing model.

The determination of the fair value of each stock award using this

option-pricing model is affected by the Company’s assumptions regarding a number of complex and subjective variables.

These variables

include, but are not limited to, the expected stock price volatility over the term of the awards.

Stock-based compensation is measured

at the grant date based on the fair value of the award and is recognized as expense on a straight-line basis over the requisite service

period, which is generally the vesting period of the respective award.

The following assumptions were used to calculate the fair value of

stock-based compensation:

Fiscal Year Ended

Expected term (in years)

Expected volatility

58.45 % - 62.39 %

Risk-free interest rate

3.81 % – 4.71 %

1.7 % – 4.7 %

Expected dividends

Expected term — The Company uses the simplified method to calculate the expected term

of stock option grants to employees as the Company does not have sufficient comparable historical exercise data to provide a reasonable

basis upon which to estimate the expected term of stock options granted to employees.

The expected term equals the arithmetic average

of the vesting term and the original contractual term of the option (generally 10 years).

Expected volatility — Due to the

Company’s limited operating history and a lack of company specific historical and implied volatility data, the Company has based

its estimate of expected volatility on the historical volatility of a group of peer companies that are publicly traded.

The historical

volatility data was computed using the daily closing prices for the selected companies’ shares during the equivalent period of the

calculated expected term of the stock-based awards.

Risk-free interest rate — The risk-free

rate assumption is based on U.S.

Treasury instruments with maturities similar to the expected term of the Company’s stock options.

Expected dividends — The Company

has not issued any dividends in its history and does not expect to issue dividends over the life of the options and therefore has estimated

the dividend yield to be zero .

Fair value of common stock — Prior

to the Mergers, fair value of the shares of common stock underlying the stock-based awards has historically been determined by the Board

of Directors, with input from management.

Because there has been no public market for the Company’s common stock prior to the Mergers,

the Board of Directors has determined the fair value of the common stock on the grant-date of the stock-based award by considering a

number of objective and subjective factors.

Such factors include a valuation of the Company’s common stock performed by an unrelated

third-party specialist, valuations of comparable companies, sales of the Company’s redeemable convertible preferred stock to unrelated

third-parties, operating and financial performance, the lack of liquidity of the Company’s capital stock, as well as general and

industry-specific economic outlooks.

For financial reporting purposes, the Company considers the amount of time between the valuation

date and the grant date to determine whether to use the latest common stock valuation or a straight-line interpolation between the two

valuation dates.

The determination included an evaluation of whether the subsequent valuation indicated that any significant change in

valuation had occurred between the previous valuation and the grant date.

Subsequent to the Mergers, the fair value of the shares of common stock

underlying the stock-based awards is based on the price of the Company’s common stock in the open market on the date of the grant.

Stock-based compensation expense

The following table summarizes stock-based compensation

expense and its allocation within the accompanying consolidated statements of operations and comprehensive loss (in thousands):

Fiscal Year Ended

Cost of revenues

Sales and marketing

General and administrative

Loss from discontinued operations, net of tax

Total stock-based compensation expense

As of December 29, 2024, there was a total of $ 15.1 million and $ 4.2

million unrecognized stock-based compensation costs related to service-based options and RSUs, respectively.

Such compensation cost is

expected to be recognized over a weighted-average period of approximately 2.2 years and 4.7 years, respectively.

In 2024 and 2023, the Company’s board of

directors approved the modification to accelerate the vesting of 788,192 and 52,167 options, respectively, for employees that were terminated.

Additionally, the board of directors approved an extension of the post termination exercise period for 4,343,172 and 280,412 vested options

of terminated employees in the years ended December 29, 2024, and December 31, 2023, respectively.

In connection with the modifications,

the Company recorded incremental stock-based compensation expense of $ 0.7 million and $ 0.1 million in the fiscal years ended December

29, 2024, and December 31, 2023, respectively.

(18) Employee Stock Purchase Plan

The Company adopted the Employee Stock Purchase Plan (the “ESPP

Plan”) in connection with the consummation of the Mergers in July 2023.

All qualified employees may voluntarily enroll to purchase

the Company’s common stock through payroll deductions at a price equal to 85 % of the lower of the fair market values of the stock

of the offering periods or the applicable purchase date.

As of December 29, 2024, 2,628,996 shares were reserved for future issuance under

the ESPP Plan.

On September 21, 2025, the Company issued an additional

$ 22.0 million of the 7.0 % Notes (the “September 2025 Notes”) pursuant to the Indenture to various parties.

The September 2025

Notes contain a conversion option which required bifurcation and recognition of a derivative, and the Company recorded a derivative liability

of $ 15.4 million on the issuance date.

The Company also recognized a $ 2.2 million debt discount and $ 1.4 million of debt issuance costs

in connection with the September 2025 Notes.

The debt issuance costs include an estimate of the value of a warrant that will be issued

in the subsequent fiscal year to the entity that arranged the financing.

The effective interest rate on the September 2025 Notes approximated

67 % as of December 28, 2025.

The net proceeds from the issuance of the September 2025 Notes were principally used to pay a portion of

the cash consideration for the Company’s acquisition of Sunder.

carrying amount of the September 2025 Notes, inclusive of the fair value of the derivative liabilities was as follows (in thousands) :

September 2025 Notes

Less Unamortized debt discount

Net carrying amount of September 2025 Notes

For the fiscal year ended December 28, 2025 the total

interest expense was $ 0.7 million with coupon interest of $ 0.4 million and amortization of debt discount and issuance costs $ 0.3 million.

Seller Note – related party

On September 24, 2025, the Company issued a note payable to the sellers

of Sunder (“Seller Note”) in connection with the acquisition of 100 % of the membership interests in Sunder and concluded that

the Seller Note is a related party obligation (see Note 3 – Business Combinations ).

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.

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.

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 its subsidiaries.

The Seller Note includes customary events of default, including:

(a) the Company’s failure

to pay the Seller Note when due, (b) the Company’s voluntary or involuntary bankruptcy, (c) the Company’s liquidation or dissolution,

(d) a change of control of the Company, (e) the Company’s material breach of the covenants applicable to the Company under the Seller

Note, subject to applicable cure periods, and (f) if any of the Company’s representations or warranties made in the Seller Note

were untrue in any material respect when made.

Management concluded that the carrying value of the Seller Note approximates its fair value

due to the short-term nature of the obligation.

Interest expense recognized on the Seller Note was $ 0.4 million in the fiscal year ended

December 28, 2025.

with related party

to entering into the Exchange Agreement , the Company had a Revolving Loan due to Kline Hill and Rodgers Revocable Trust which

is a related party.

The Revolving Loan arrangement was entered into in 2020 and in 2023, the Rodgers Revocable Trust became a party to

the Revolving Loan.

The Revolving Loan has an annual interest rate equal to the greater of 7.75 % or Prime plus 4.5 %.

In connection with

the Exchange Agreement in July 2024, $ 3.5 million of the Revolving Loan, plus accrued interest owed to Kline Hill, was exchanged

for a portion of the July 2024 Notes.

The remaining principal balance of $ 1.5 million is payable to the Rodgers Revocable Trust and remains

outstanding as of December 28, 2025.

There are no financial covenants.

interest expense recognized on this obligation in the fiscal years ended December 28, 2025 and December 29, 2024 was $ 0.2 million and

$ 0.5 million, respectively.

Of the interest expense recognized, related party interest expense was $ 0.2 million and $ 0.2 million in the

fiscal years ended December 28, 2025 and December 29, 2024, respectively.

payments due in the next five fiscal years

principal amount of all short and long-term debt, excluding capitalized interest in connection with the exchanged notes, is as follows:

Fiscal year ending

Other Non-Operating Income, Net

non-operating income, net consists of the following (in thousands) :

Change in fair

value of derivative liabilities (1)

Change in fair value of FACT

public, private placement and working capital warrants

Loss on conversion of SAFE

agreements to common stock with related party

Change in fair value of SAFE

Agreement with related party

Change in fair value of forward

purchase agreement liabilities (2)

Loss on issuance of derivative

liabilities (3)

Change in fair value of Carlyle

Warrants with related party

Change in fair value of redeemable

convertible preferred stock warrant liability

Other financing costs

Other non-operating income, net

(1) Includes a gain of $ 3.5 million and $ 0.3 million on the change in the fair value of derivative liabilities with related parties in the fiscal years ended December 28, 2025 and December 29, 2024, respectively.

Refer to Note 10 – Borrowings and Derivative Liabilities for details.

(2) Includes related party income of $ 0.1 million in each of the years ended December 28, 2025 and December 29, 2024.

(3) Includes a loss of $ 3.0 million on the issuance of a derivative liability with a related party in the fiscal year ended December 29, 2024.

Refer to Note 10 – Borrowings and Derivative Liabilities for details.

(4) Includes non-cash income with related party of $ 0.1 million in the fiscal year ended December 28, 2025.

Commitments and Contingencies

The Company leases its facilities under non-cancelable

operating lease agreements.

Company leases its facilities under non-cancelable operating lease agreements.

The Company leases vehicles under finance lease agreements.

Operating and financing lease activity for the

fiscal years ended December 29, 2024 and 2023 is as follows (dollars in thousands):

Operating and financing lease activity was as follows (dollars in thousands):

Fiscal Year Ended

3 unchanged sentences

Interest on lease liabilities 213 77

Total finance lease cost 2,221 630

Operating lease cost

Variable lease cost -

Operating leases 1,754 1,003

Total operating lease cost 1,754 1,003

Total lease cost $ 3,975 $ 1,633

9 unchanged sentences

Operating leases 9.1 % 9.5 %

Future minimum lease payments under non-cancellable

leases are as follows as of December 29, 2024 (in thousands):

minimum lease payments under non-cancellable leases are as follows as of December 28, 2025 (in thousands) :

Fiscal year ending

and thereafter

Total undiscounted liabilities

imputed interest

Total lease liabilities

As of December 29, 2024, the Company’s

consolidated balance sheet classified the current portion of finance lease liabilities of $ 2.1 million and operating lease liabilities

of $ 1.4 million within Accrued expenses and other current liabilities and the noncurrent portion of finance lease liabilities of $ 1.8

million and operating lease liabilities of $ 2.3 million within Other long-term liabilities.

Activity by period relating to the Company’s

warranty provision was as follows (in thousands):

Fiscal Year Ended

Warranty provision, beginning of period

Warranty liability from Business Combination

Accruals for new warranties issued

Warranty provision, end of period

Warranty provision, current

Warranty provision, noncurrent

Indemnification Agreements

From time to time, in its normal course of business,

the Company may indemnify other parties, with which it enters into contractual relationships, including customers, lessors, and parties

to other transactions with the Company.

The Company may agree to hold other parties harmless against specific losses, such as those that

could arise from breach of representation, covenant or third-party infringement claims.

It may not be possible to determine the maximum

potential amount of liability under such indemnification agreements due to the unique facts and circumstances that are likely to be involved

in each particular claim and indemnification provision.

Historically, there have been no such indemnification claims.

In the opinion of

management, any liabilities resulting from these agreements will not have a material adverse effect on the business, financial position,

results of operations, or cash flows of the Company.

Legal Matters

lease liabilities

Company’s consolidated balance sheet includes the following lease liabilities (in thousands) :

Operating lease liabilities

lease liabilities, current (Accrued expenses and other current liabilities)

lease liabilities, noncurrent (Other long-term liabilities)

operating lease liabilities

Finance lease liabilities

portion (Accrued expenses and other current liabilities)

lease liabilities, noncurrent (Other long-term liabilities)

finance lease liabilities

activity by period was as follows (in thousands) :

Warranty provision, beginning of

Warranty liability from Business

Accruals for new warranties

Warranty provision, end

Balance sheet classification

warranty current (Classified in Accrued expenses and other current liabilities)

provision, noncurrent

warranty liability

Indemnification

time to time, in its normal course of business, the Company may indemnify other parties with which it enters into contractual relationships,

including customers, lessors, and parties to other transactions with the Company.

The Company may agree to hold other parties harmless

against specific losses, such as those that could arise from breach of representation, covenant or third-party infringement claims.

may not be possible to determine the maximum potential amount of liability under such indemnification agreements due to the unique facts

and circumstances that are likely to be involved in each particular claim and indemnification provision.

Historically, there have been

no such indemnification claims.

In the opinion of management, any liabilities resulting from these agreements would not have a material

adverse effect on the business, financial position, results of operations, or cash flows of the Company.

of dispute with SunPower Debtors Bankruptcy Estate

the consummation of the acquisition of certain assets and assumption of certain liabilities of SunPower Debtors on September 30, 2024,

certain matters pertaining to the acquisition were under dispute which included 1) amounts owed to and from the buyer and seller with

respect to amounts held in escrow related to the consideration transferred, 2) the right to the cash acquired in the acquisition, and

3) the right for the Company to sell and collect for certain solar systems that were acquired as a part of the acquisition that were

sold or are to be sold to homebuilders within the New Homes Business.

On June 25, 2025, all matters under dispute were resolved by the

Company and the SunPower Bankruptcy Estate.

Matters 1) and 2) were resolved with such that no amounts were required to be paid (or received)

by the Company.

Matter 3) was resolved such that the Company has the right to sell the related inventory acquired and collect the

underlying sales price for the sale of the solar system.

In connection with each system sold, the Company is required to remit a

portion of the sales price to the SunPower Bankruptcy Estate.

The impact of the related settlement is not anticipated to be material.

The Company is a party to various legal proceedings

9 unchanged sentences

a material adverse effect on the Company’s business, financial position, results of operations, or cash flows.

The Company has recorded

$ 7.7 million and $ 7.7 million as a loss contingency in accrued expenses and other current liabilities on its consolidated balance sheets

as of December 29, 2024 and December 31, 2023, respectively.

SolarPark Litigation

The Company has a

loss contingency for legal settlements of $ 9.5 million and $ 7.7 million recorded within accrued expenses and other current liabilities

on its consolidated balance sheets as of December 28, 2025 and December 29, 2024, respectively.

In January 2023, SolarPark Korea Co., LTD (“SolarPark”)

6 unchanged sentences

to vigorously defend all claims asserted.

No liability has been recorded in the Company’s consolidated financial statements as the

likelihood of a loss is not probable at this time.

On March 16, 2023, SolarPark filed a complaint

against Solaria and the Company in the U.S.

District Court for the Northern District of California (“the court”).

March 16, 2023, SolarPark filed a complaint against the Company in the U.S.

District Court for the Northern District of California (“the

The complaint alleges a civil conspiracy involving misappropriation of trade secrets, defamation, tortious interference

with contractual relations, inducement to breach of contract, and violation of California’s Unfair Competition Law.

The complaint

alleges a civil conspiracy involving misappropriation of trade secrets, defamation, tortious interference with contractual relations,

inducement to breach of contract, and violation of California’s Unfair Competition Law.

The complaint indicates that SolarPark has

suffered in excess of $ 220.0 million in damages.

On May 11, 2023, SolarPark filed a motion for

preliminary injunction to seek an order restraining the Company from using or disclosing SolarPark’s trade secrets, making or selling

shingled modules other than those produced by SolarPark, and from soliciting solar module manufacturers to produce shingled modules using

Solaria’s shingled patents.

On May 18, 2023, the Company responded by filing a motion for partial dismissal and stay.

2023, SolarPark filed an opposition to the Company’s motion for dismissal and stay and a reply in support of their motion for preliminary

On June 8, 2023, the Company replied in support of its motion for partial dismissal and stay.

On July 11, 2023, the court

conducted a hearing to consider SolarPark and the Company’s respective motions.

On August 3, 2023, the court issued a ruling, which

granted the preliminary injunction motion with respect to any purported misappropriation of SolarPark’s trade secrets.

ruling does not prohibit the Company from producing shingled modules or from utilizing its own patents for the manufacture of shingled

indicates that SolarPark has suffered in excess of $ 220.0 million in damages.

May 11, 2023, SolarPark filed a motion for preliminary injunction to seek an order restraining the Company from using or disclosing SolarPark’s

trade secrets, making or selling shingled modules other than those produced by SolarPark, and from soliciting solar module manufacturers

to produce shingled modules using Solaria’s shingled patents.

On May 18, 2023, the Company responded by filing a motion for partial

dismissal and stay.

On June 1, 2023, SolarPark filed an opposition to the Company’s motion for dismissal and stay and a reply in

support of their motion for preliminary injunction.

On June 8, 2023, the Company replied in support of its motion for partial dismissal

On July 11, 2023, the Court conducted a hearing to consider SolarPark’s and the Company’s respective motions.

August 3, 2023, the Court issued a ruling, which granted the preliminary injunction motion with respect to any purported misappropriation

of SolarPark’s trade secrets.

The Court’s ruling does not prohibit the Company from producing shingled modules or from utilizing

its own patents for the manufacture of shingled modules.

The Court denied SolarPark’s motion seeking a defamation injunction.

The court denied the Company’s motion to dismiss

and granted the Company’s motion to stay the entire litigation pending the arbitration in Singapore.

On September 1, 2023, the Company

filed a Limited Notice of Appeal to appeal the August 2023 order granting SolarPark’s motion for preliminary injunction.

26, 2023, Solaria filed a Notice of Withdrawal of Appeal and will not appeal the Court’s Preliminary Injunction Order.

Between August

2023 and March 2024, the parties were engaged in discovery negotiations and the Company produced documents to SolarPark.

The Company produced

its last set of documents on March 14, 2024.

Since then, SolarPark has been reviewing the documents, and the case has remained stayed.

No liability has been recorded in the Company’s

consolidated financial statements as the likelihood of a loss is not probable at this time.

Siemens Litigation

Court denied the Company’s motion to dismiss and granted the Company’s motion to stay the entire litigation pending the arbitration

in Singapore.

On September 1, 2023, the Company filed a Limited Notice of Appeal to appeal the August 2023 order granting SolarPark’s

motion for preliminary injunction.

On September 26, 2023, the Company filed a Notice of Withdrawal of Appeal and will not appeal the

Court’s Preliminary Injunction Order.

Between August 2023 and March 2024, the parties were engaged in discovery negotiations and

the Company produced documents to SolarPark.

The Company produced its last set of documents on March 14, 2024.

On August 14, 2025, the

Court held a virtual hearing and revived the case.

SolarPark subsequently amended the complaint, and the Company responded on October

14, 2025, with a motion to dismiss the complaint in its entirety.

The Company also believes it has valid counterclaims to pursue against

The litigation remains ongoing.

liability has been recorded on the Company’s consolidated financial statements as the likelihood of a loss is not probable at this

July 22, 2021, Siemens Government Technologies, Inc.

(“Siemens Government Technologies”) filed a lawsuit against Solaria

Corporation in Fairfax Circuit Court (the “Circuit Court”) in Fairfax, Virginia.

On July 27, 2023, Siemens Government Technologies

(“Siemens Government Technologies”) filed a lawsuit against Solaria Corporation in Fairfax Circuit Court (the “Court”)

in Fairfax, Virginia.

On July 27, 2023, Siemens Government Technologies, moved to amend the complaint to add Siemens Industry Inc.

a co-plaintiff.

moved to amend the complaint to add Siemens Industry Inc.

as a co-plaintiff.

This motion was granted on August 25, 2023.

On October 23,2023, Siemens Government Technologies and Siemens Industry Inc.

(collectively, “Siemens”) and Solaria Corporation stipulated to add Solar CA, LLC as a co-defendant.

Solaria Corporation and

Solar CA, LLC (collectively, the “Subsidiaries”) are both wholly-owned subsidiaries of Complete Solaria, Inc.

In the lawsuit,

Siemens alleged that the Subsidiaries breached express and implied warranties under a purchase order that Siemens placed with the Subsidiaries

for a solar module system.

Siemens claimed damages of approximately $ 6.9 million, inclusive of amounts of the Subsidiaries’ indemnity

obligations to Siemens, plus attorneys’ fees.

On February 22, 2024, the Court issued an order

against the Subsidiaries which awarded Siemens approximately $ 6.9 million, inclusive of the amounts of the Subsidiaries’ indemnity

obligations to Siemens, plus attorney’s fees, the amount of which would be determined at a later hearing.

On March 15, 2024, Siemens

filed a motion seeking to recover $ 2.67 million for attorneys’ fees, expenses, and pre-and post-judgment interest.

The Company opposed

Siemens’ motion for attorneys’ fees, expenses, and pre- and post-judgment interest on April 5, 2024.

On June 17, 2024, the

Court entered a final order which awarded Siemens a total of $ 2.0 million in attorneys’ fees and costs.

The Company has appealed

these judgments.

In addition to the above, on August 19, 2024, Siemens applied for the

enforcement to a sister state judgment in the Superior Court of Alameda, California and the court entered a judgement in favor of Siemens.

On December 9, 2024, Siemens moved to amend the judgment to add Complete Solaria, Inc.

as a judgement debtor.

The subsidiaries opposed

the Siemens motion.

The court heard the motion by submission on April 3, 2025, but has not yet issued a ruling.

On October 23,

2023, Siemens Government Technologies and Siemens Industry Inc.

(collectively, “Siemens”) and Solaria Corporation stipulated

to add Solar CA, LLC as a co-defendant.

Solaria Corporation and Solar CA, LLC (collectively, the “Subsidiaries”) are both

wholly-owned subsidiaries of the Company.

In the lawsuit, Siemens alleged that the Subsidiaries breached express and implied warranties

under a purchase order that Siemens placed with the Subsidiaries for a solar module system.

Siemens claimed damages of approximately

$ 6.9 million, inclusive of amounts of the Subsidiaries’ indemnity obligations to Siemens, plus attorneys’ fees.

February 22, 2024, the Circuit Court issued an order against the Subsidiaries which awarded Siemens approximately $ 6.9 million, inclusive

of the amounts of the Subsidiaries’ indemnity obligations to Siemens, plus attorneys’ fees, the amount of which would be

determined at a later hearing.

On March 15, 2024, Siemens filed a motion seeking to recover $ 2.67 million for attorneys’ fees,

expenses, and pre-and post-judgment interest.

The Company opposed Siemens’ motion for attorneys’ fees, expenses, and pre-

and post-judgment interest on April 5, 2024.

On June 17, 2024, the Circuit Court entered a final order which awarded Siemens a total

of $ 2.0 million in attorneys’ fees and costs.

The Company appealed these judgments.

addition to the above, on August 19, 2024, Siemens applied for the enforcement to a sister state judgment in the Superior Court of Alameda,

California and the court entered a judgement in favor of Siemens.

On December 9, 2024, Siemens moved to amend the judgment to add the

Company as a judgement debtor.

The Subsidiaries opposed the Siemens motion.

On June 30, 2025, the California court found that the Company

should be added as a judgment debtor party in California.

In addition, the parties argued the appeal of the underlying Virginia litigation

on July 24, 2025.

On September 23, 2025, the Virginia Court of Appeals issued a decision on the appeal, affirming the original lower

court decision and judgment against the Company.

The Alameda County litigation has continued with several upcoming deadlines related

to the already-noticed appeal and Siemens’ motion for fees and costs.

The Company recognized $ 6.9 million as a legal

loss related to this litigation in 2023, and in 2024, the Company recorded an additional accrual for $ 2.0 million for attorneys’

fees, expenses, and pre-judgment interest, in accrued expenses and other current liabilities within its consolidated balance sheet as

of December 29, 2024.

This legal loss was recognized in loss from discontinued operations, net of tax on the consolidated statements of

operations and comprehensive loss.

The Company recorded a liability of $ 6.9 million as a legal loss related to this litigation, excluding

amounts for attorneys’ fees and costs, in accrued expenses and other current liabilities within its consolidated balance sheets

at each of December 29, 2024 and December 31, 2023.

Letters of Credit

The Company had $ 3.5 million of outstanding letters

of credit related to normal business transactions as of December 29, 2024.

These agreements require the Company to maintain specified

amounts of cash as collateral in segregated accounts to support the letters of credit issued thereunder.

As discussed in Note 2 –

Summary of Significant Accounting Policies, the cash collateral in these restricted cash accounts was $ 3.8 million as of December 29,

2024 and December 31, 2023, respectively.

(20) Income Taxes

The Company’s loss

from continuing operations before provision for income taxes for the fiscal years ended December 29, 2024 and December 31, 2023,

was as follows (in thousands):

settlement loss related to this litigation as of December 31, 2023.

The Company recorded additional expense of $ 1.1 million and $ 2.0 million

within discontinued operations in the years ended December 28, 2025 and December 29, 2024, respectively, for attorneys’ fees, expenses,

and pre-judgment interest related to this matter.

The legal settlement liability associated with this matter is included within accrued

expenses and other current liabilities on the Company’s consolidated balance sheet as of December 28, 2025.

December 4, 2025, the Company entered into a global Settlement Agreement (“Settlement Agreement”) with Siemens to resolve

the case and other related cases as well as to resolve potential claims related to Siemens’ Atwater Wastewater Treatment Plant.

In exchange for full releases, the Company agreed to pay Siemens $ 9.5 million spread across four payments to be made at the end of each

calendar quarter during 2026.

If the Company successfully engages in any form of new financing or new debt worth $ 1.0 million or more,

or successfully obtains shareholder approval for the issuance of additional shares in connection with the raise of additional funds and/or

any merger or acquisition activity, the next due quarterly payment to Siemens (if any) becomes immediately due and payable.

The settlement

payment to Siemens is secured by a first-priority continuing security interest in $ 9.5 million of Company collateral.

This security interest

is reduced on a one-to-one basis as the settlement payments are made.

LGCY Power, LLC Matter

LGCY Power, LLC (“LGCY”) markets and sells residential

solar energy systems throughout the United States, and is a competitor of the Company.

In 2019, LGCY filed suit against Sunder and several

individuals associated with Sunder.

LGCY asserts claims of over $ 16.0 million against Sunder and its associated individuals.

claims against Sunder and its associated individuals center on the alleged misappropriation of LGCY’s confidential information,

the alleged wrongful solicitation of LGCY’s customers and potential customers, and the alleged wrongful solicitation of LGCY’s

sales representatives.

In addition, several of the Sunder associated individuals have filed counterclaims against LGCY for declaratory

relief, unjust enrichment, and breach of contract based on LGCY’s failure to pay these individuals earned sales commissions following

their resignations as LGCY sales managers.

LGCY denies these claims.

The Company denies LGCY’s claims.

The Company has assumed the defense of the case, including

the costs of defense, following the Company’s acquisition of Sunder in September 2025.

Under the terms of the Sunder MIPA, the Seller

agreed to indemnify the Company in the event of damages (such as a settlement or an adverse judgement) stemming from LGCY’s claims,

separate and apart from their other indemnification obligations or limitations in the Sunder MIPA.

Discovery is complete and no trial

date has been set.

Both sides have filed various summary judgment motions, and oral arguments for these motions are scheduled for July

Based upon information currently available, management is

unable to determine the probability of an adverse outcome or to reasonably estimate the amount or range of potential loss, if any.

no provision for loss has been recorded in the accompanying consolidated financial statements.

While the ultimate resolution of these

matters could have a material effect on the Company’s results of operations, cash flows, or financial position, management believes

that the resolution will not have a material adverse effect on the Company’s financial condition

The Company had $ 3.5 million of outstanding letters of credit as of

December 28, 2025 and December 29, 2024.

The Company is required to maintain specified amounts of cash as collateral in segregated accounts

to support the letters of credit issued thereunder.

As discussed in Note 2 – Summary of Significant Accounting Policies ,

the cash collateral in these restricted cash accounts was $ 3.8 million at each of December 28, 2025 and December 29, 2024.

Company’s loss from continuing and discontinued operations before provision for income taxes for the fiscal years ended December

28, 2025 and December 29, 2024, was as follows (in thousands) :

Fiscal Year Ended

The following is a reconciliation of the Company’s income tax

applied at the federal statutory income tax rate compared to the income tax provision in its consolidated statements of operations for

continuing operations.

Certain prior year amounts have been reclassified to conform to the current year presentation (in thousands):

Loss from continuing operations before income taxes

Loss from discontinued operations before income taxes

components of income tax benefit from continuing and discontinued operations were as follows ( in thousands) :

Fiscal Year Ended

Statutory federal income tax

State income taxes, net of federal tax benefits

Stock compensation

Fair value adjustments

Nondeductible items

Debt extinguishment

Foreign earnings taxed at different rates

Forward purchase agreements

Effect of changes in tax rates

Prior year adjustments

Current income tax expense

Total current income tax expense

Deferred income tax expense

Total deferred income tax expense

Income tax expense from continuing operations

Income tax expense as a component of discontinued operations

The Company adopted ASU 2023-09 prospectively for the fiscal year ended

December 28, 2025.

The following table presents required disclosure pursuant of ASU 2023-09 and reconciles the Company’s federal

statutory tax amount and rate, based on its results from continuing operations, to its actual effective amount and rate:

Federal tax (benefit) at statutory rate

State income taxes, net of federal tax benefit (1)

Foreign tax effects

Tax law changes

Effect of cross-border tax laws

Valuation allowance

Tax Provision

Significant components of our deferred tax assets and liabilities are

Certain prior year amounts have been reclassified to conform to the current year presentation (in thousands):

Nondeductible items

Warranty liability

Other nondeductible items

Changes in unrecognized tax benefits

Deferred tax true-up

Total provision

(1) State taxes in California made up the majority (greater than

50 percent) of the tax effect in this category.

The following table represents the required disclosures prior to the

Company’s adoption of ASU 2023-09 and is a reconciliation of the Company’s income tax applied at the federal statutory income

tax rate compared to the income tax provision reported on its consolidated statements of operations for continuing operations.

federal income tax

income taxes, net of federal tax benefits

Nondeductible

extinguishment

earnings taxed at different rates

purchase agreements

of changes in tax rates

year adjustments

Significant components of deferred tax assets and liabilities are as

(in thousands) :

Deferred income tax assets

12 unchanged sentences

Total deferred tax liabilities

Net deferred tax assets

Management regularly assess its ability to realize

deferred tax assets recorded based upon the weight of available evidence, including such factors as recent earnings history and expected

future taxable income on a jurisdiction by jurisdiction basis.

In the event that the Company changes its determination as to the amount

or realizable deferred tax assets, the Company will adjust its valuation allowance with a corresponding impact to the provision for income

taxes in the period in which such determination is made.

The Company’s management believes that, based upon a number of factors,

it is more likely than not that all or some portion of the deferred tax assets will not be realized.

Accordingly, for the fiscal years

ended December 29, 2024, and December 31, 2023, the Company provided a valuation allowance against its U.S.

net deferred tax assets of

$ 55.7 million and $ 38.4 million, respectively.

The valuation allowance increased by $ 17.3 million in the year ended December 29, 2024.

As of December 29, 2024, the Company had net operating loss carryforwards for federal and state income tax purposes of approximately $ 127.3 million and $ 106.7 million, respectively.

Excluding $ 111.5 million of federal net operating losses which carryforward indefinitely, the net operating loss carryforwards will expire between 2030 and 2044.

The Internal Revenue Code (“IRC”)

of 1986, as amended, imposes restrictions on the utilization of net operating losses in the event of an “ownership change”

of a corporation.

Accordingly, a company’s ability to use net operating losses may be limited as prescribed under IRC Section 382.

Events which may cause limitations in the amount of the net operating losses that the Company may use in any one year include, but are

not limited to, a cumulative ownership change of more than 50 % over a three-year period.

Utilization of the federal and state net operating

losses may be subject to substantial annual limitation due to the ownership change limitations provided by IRC Section 382 and similar

Such limitations may result in the expiration of these carryforwards before their utilization.

The Company’s acquired

net operating loss carryforwards have been reduced based on the estimated amount which will be lost due to these limitations.

If the Company

has experienced subsequent ownership changes, our losses may be further limited, which may result in the expiration of net operating losses

before utilization.

To date, Company has not yet completed a Section 382 ownership change analysis.

During the current year, the Company

has undergone restructuring and strategic transformation, including the completion of the SunPower businesses.

As a result of this change

in facts and lack of certainty regarding the acquired losses of the legacy Solaria business, the Company has written off the remaining

acquired net operating losses as the Company does not intend to pursue the potential tax benefits as it believes those benefits will be

lost due to continuation of business enterprise rules.

As a result, the corresponding uncertain tax position is also reversed as the Company

does not intend to pursue utilization of those attributes.

The Company files income tax returns in the

U.S for federal and various state jurisdictions as well as foreign jurisdictions each of which have varying statutes of limitations.

The Company is in the process of filing returns for prior years, and the penalties related to the delinquent filings are not

Due to the history of losses, the Company’s tax years remain open for examination by all tax authorities since

Net deferred tax liability

Management regularly assesses its ability to realize deferred tax assets

recorded based upon the weight of available evidence, including such factors as recent earnings history and expected future taxable income

on a jurisdiction by jurisdiction basis.

In the event that the Company changes its determination as to the amount or realizable deferred

tax assets, the Company will adjust its valuation allowance with a corresponding impact to the provision for income taxes in the period

in which such determination is made.

The Company’s management believes that, based upon a number of factors, it is more likely than

not that all or some portion of the deferred tax assets will not be realized.

Accordingly, for the fiscal years ended December 28, 2025

and December 29, 2024, the Company provided a valuation allowance against its U.S.

net deferred tax assets of $ 70.3 million and $55.7

million, respectively.

The net change in the valuation allowance was an increase of $ 14.6 million and $ 17.3 million in the fiscal years

ended December 28, 2025 and 2024, respectively.

As of December 28, 2025, the Company had net operating loss carryforwards

for federal and state income tax purposes of approximately $ 131.4 million and $ 114.8 million, respectively.

Excluding $ 115.3 million of

federal net operating losses which carryforward indefinitely, the net operating loss carryforwards will expire between 2030 and 2044 .

Internal Revenue Code (“IRC”) of 1986, as amended, imposes restrictions on the utilization of net operating losses in the

event of an “ownership change” of a corporation.

Accordingly, a company’s ability to use net operating losses may be

limited as prescribed under IRC Section 382.

Events which may cause limitations in the amount of the net operating losses that the Company

may use in any one year include, but are not limited to, a cumulative ownership change of more than 50% over a three-year period.

of the federal and state net operating losses may be subject to substantial annual limitation due to the ownership change limitations

provided by IRC Section 382 and similar provisions.

Such limitations may result in the expiration of these carryforwards before their

The Company’s acquired net operating loss carryforwards have been reduced based on the estimated amount which will

be lost due to these limitations.

If the Company has experienced subsequent ownership changes, the Company’s losses may be further

limited, which may result in the expiration of net operating losses before utilization.

To date, Company has not yet completed a Section

382 ownership change analysis.

During the fiscal year ended December 29, 2024, the Company had undergone restructuring and strategic

transformation, including the completion of the SunPower Businesses.

As a result of the change in facts and lack of certainty regarding

the acquired losses of the legacy Solaria business, the Company wrote off the remaining acquired net operating losses as the Company

does not intend to pursue the potential tax benefits as it believes those benefits will be lost due to the continuation of business enterprise

As a result, the corresponding uncertain tax position was also reversed as the Company does not intend to pursue utilization of

those attributes.

Company files income tax returns in the U.S for federal and various state jurisdictions as well as foreign jurisdictions each of which

have varying statutes of limitations.

The Company is in the process of filing returns for prior years, and the penalties related to the

delinquent filings are not material.

Due to the history of losses, the Company’s tax years remain open for examination by all tax

authorities since inception.

The Company is not currently under examination in any tax jurisdictions.

The Company has unrecognized tax benefit of zero

and $ 53.1 million at December 29, 2024 and December 31, 2023, respectively.

The reversal of the uncertain tax benefits would not affect

the Company’s effective tax rate to the extent that it continues to maintain a full valuation allowance against its deferred tax

As outlined above, the reduction in the uncertain tax positions during the current period is a result of the Company’s decision

to forgo the right to certain acquired attributes for which the Company does not intend to claim any tax benefits.

The Company applies the provisions set forth

in FASB ASC Topic 740, Income Taxes, to account for the uncertainty in income taxes.

In the preparation of income tax returns in federal

and state jurisdictions, the Company asserts certain tax positions based on its understanding and interpretation of income tax laws.

The following is a tabular reconciliation of the

total amounts of unrecognized tax benefits (in thousands):

Company has no unrecognized tax benefits as of December 28, 2025 and December 29, 2024, respectively.

The reversal of the uncertain tax

benefits would not affect the Company’s effective tax rate to the extent that it continues to maintain a full valuation allowance

against its deferred tax assets.

As outlined above, the reduction in the uncertain tax positions during the fiscal year ended December

29, 2024, is a result of the Company’s decision to forgo the right to certain acquired attributes for which the Company does not

intend to claim any tax benefits.

Company applies the provisions set forth in FASB ASC Topic 740, Income Taxes, to account for the uncertainty in income taxes.

preparation of income tax returns in federal and state jurisdictions, the Company asserts certain tax positions based on its understanding

and interpretation of income tax laws.

following is a tabular reconciliation of the total amounts of unrecognized tax benefits (in thousands) :

Unrecognized tax

benefits as of beginning of year

Increases related to prior

year tax positions

Increases related to current

year tax positions

related to prior year tax positions

tax benefits as of end of year

Company recognizes interest and penalties related to unrecognized tax benefits within the income tax expense line in its consolidated

statements of operations and comprehensive loss.

Accrued interest and penalties are included as part of income tax payable in the consolidated

balance sheets.

No accrued interest or penalties have been recorded for the fiscal years ended December 28, 2025 and December 29, 2024.

Company did not pay any federal, state or foreign income taxes during the fiscal year ended December 28, 2025.

Company has not provided U.S.

income or foreign withholding taxes on the undistributed earnings of its foreign subsidiary as of December

28, 2025 or December 29, 2024, as there are no undistributed earnings within the foreign subsidiaries, which were inactive throughout

the years ended December 28, 2025 and December 29, 2024.

OBBA enacted on July 4, 2025 contains significant changes to corporate taxation, including accelerated deductions for capital expenditures,

expensing of research and development costs incurred in the U.S., and increased deductibility of interest expense.

As the Company maintains

a full valuation allowance against its deferred tax assets, any adjustments to the gross value of these assets resulting from the enactment

of the OBBBA were offset by a corresponding change in the valuation allowance, resulting in no net impact to the consolidated financial

The Company will continue to monitor the impact of the OBBBA as additional guidance is issued and further provisions become

effective in future periods.

Common Stock and Common Stock Warrants

Company has authorized the issuance of 1,000,000,000 shares of common stock and 10,000,000 shares of preferred stock as of December 28,

No preferred stock has been issued and none are outstanding as of December 28, 2025 and December 29, 2024.

stock purchase agreement

July 16, 2024, the Company entered into a common stock purchase agreement with White Lion Capital, LLC (“White Lion”), as

amended on July 24, 2024 (“White Lion SPA”), and a related registration rights agreement for an equity line of credit financing

Pursuant to the White Lion SPA, the Company has the right, but not the obligation, to require White Lion to purchase, from

time to time, up to $ 30 million in aggregate gross purchase price of newly issued shares of the Company’s common stock, subject

to the caps and certain limitations and conditions set forth in the White Lion SPA, including terms that restrict the ability of the

Company to issue shares of common stock to White Lion that would result in White Lion beneficially owning more than 9.99 % of the Company’s

outstanding common stock.

August 14, 2024, the Company entered into Amendment No.

2 to the White Lion SPA (collectively with the White Lion SPA “White Lion

Amended SPA”).

The White Lion Amended SPA provides that the Company may notify White Lion to exercise the Company’s right

to sell shares of its common stock by delivering an Hour Rapid Purchase Notice.

If the Company delivers an Hour Rapid Purchase Notice,

the Company shall deliver to White Lion shares of common stock not to exceed the lesser of (i) five percent of the Average Daily Trading

Volume on the date of an Hour Rapid Purchase Notice and (ii) 100,000 shares of common stock.

The closing of the transactions under an

Hour Rapid Purchase Notice will occur one Business Day following the date on which the Hour Rapid Purchase Notice is delivered.

closing, White Lion will pay the Company the Hour Rapid Purchase Investment Amount equal to the number of shares of common stock subject

to the applicable Hour Rapid Purchase Notice multiplied by the lowest traded price of the Company’s common stock during the one-hour

period following White Lion’s consent to the acceptance of the applicable Hour Rapid Purchase Notice.

the White Lion Amended SPA, the Company issued 4.0 million and 2.9 million shares of the Company’s common stock for proceeds of

$ 6.7 million and $ 6.7 million in the years ended December 28, 2025 and December 29, 2024, respectively.

Note 20 – Subsequent Events for information regarding an amendment to the White Lion SPA entered into on after the fiscal

year ended December 28, 2025.

Stock Purchase Plan

Company adopted the Employee Stock Purchase Plan (the “ESPP Plan”) in July 2023.

All qualified employees may voluntarily

enroll to purchase the Company’s common stock through payroll deductions at a price equal to 85 % of the lower of the fair market

value of the stock in the offering period or the applicable purchase date.

Stock Warrants

potential number of shares of the Company’s common stock for outstanding warrants were as follows:

Potential shares of common

stock as of Exercise

2025 (1) December 29,

2024 price per

share Expiration date

Liability classified warrants

Public Warrants 8,625,000 8,625,000 $ 11.50 July 18, 2028 (2)

Private Placement Warrants 6,266,667 6,266,667 11.50 July 18, 2028 (2)

Working Capital Warrants 716,668 716,668 11.50 July 18, 2028 (2)

Total shares of common stock – liability classified warrants 15,608,335 15,608,335

Equity classified warrants

Series B Warrants (converted to common stock warrants) 5,054 5,054 $ 4.30 February 2026

Series C Warrants (converted to common stock warrants) 482,969 482,969 1.00 July 2026

Series C-1 Warrants (converted to common stock warrants) 173,067 173,067 0.01 January 2030

SVB Common Stock Warrants 2,473 2,473 0.38 2033

SVB Common Stock Warrants 2,525 2,525 0.62 2033

Promissory Note Common Stock Warrants 24,148 24,148 0.01 October 2031

July 2023 Common Stock Warrants 38,981 38,981 0.01 July 2028

Common Stock Warrants Issued in 2023 (“Merger Warrants”) 6,266,572 6,266,572 11.50 July 18, 2033

Ayna Warrant — 6,000,000 0.01 June 2029

Cantor Warrant 3,066,141

3,066,141 1.68 June 2029

Total shares of common stock – equity classified warrants 10,061,930

Total potential shares of common stock 25,670,265

(1) Excludes the 2025 Cantor Warrant (as defined below) which was not issued as of December 28, 2025.

(2) The warrants expire five years after the Closing date of the Mergers, which date was July 18, 2023, or earlier upon redemption or liquidation.

June 17, 2024, a warrant to purchase 6,000,000 shares of the Company’s common stock (“Ayna Warrant”) was issued to

Ayna.AI LLC (“Ayna”) at an exercise price per share of $ 0.01 , subject to the provisions and upon the terms and conditions

set forth in the Ayna Warrant.

At issuance, the fair value of the Ayna Warrant was determined to be $ 9.2 million, based on the intrinsic

value of the Ayna Warrant and the $ 0.01 per share exercise price.

The Ayna Warrant was set to expire on June 17, 2029.

The issuance of

the Ayna Warrant by the Company was in satisfaction of the compensation for services provided to the Company by Ayna under the terms

of a statement of work (“Ayna SOW”), signed May 21, 2024 (and effective as of March 12, 2024), as incorporated into a master

services agreement dated March 12, 2024.

Under the Ayna SOW, Ayna provided services in connection with the anticipated return of the

Company to cash-flow positive performance.

Ayna Warrant was accounted for under ASC 718 Compensation – Stock Compensation as it met the conditions for equity classification,

and therefore, the Ayna Warrant was not subsequently remeasured in future periods.

The Company recognized expense of $ 9.2 million in

the year ended December 29, 2024 for the Ayna Warrant.

Ayna Warrant became fully exercisable for the 6,000,000 shares of the Company’s common stock on September 9, 2024.

The Ayna Warrant

was exercised in full for cash of $ 0.06 million in January 2025.

In July 2024, the Company issued a warrant (“Cantor

Warrant”) to a Cantor Fitzgerald & Co., (“Cantor”) to purchase 3,066,141 shares of the Company’s common stock

in exchange for services provided in the issuance of the July 2024 Notes (refer to Note 10 – Borrowings and Derivative Liabilities ).

The Cantor Warrant was immediately exercisable at a price of $ 1.68 per share and has an expiration date in July 2029.

the fair value of the Cantor Warrant was determined to be $ 1.4 million, of which $ 0.9 million was recorded as a debt discount and

$ 0.5 million was attributable to the convertible notes issued in the Exchange Agreement (as described in Note 10 – Borrowings

and Derivative Liabilities) and reduced the gain on the troubled debt restructuring recognized in the Company’s annual consolidated

statement of operations and comprehensive loss for fiscal 2024 as described in Note 10 – Borrowings and Derivative Liabilities .

The fair value of the Cantor Warrant was derived using the Black-Scholes model with the following assumptions:

expected volatility of

risk-free interest rate of 4.2 %;

expected term of 5 years;

and no dividend yield.

The fair value of this warrant is recorded within

additional paid-in capital on the Company’s consolidated balance sheets and has not been subsequently remeasured in future periods

as it met the conditions for equity classification.

of common stock reserved for future issuance

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

Common stock warrants

Employee stock purchase plan

Stock options and RSUs, issued and outstanding

Stock options and RSUs, authorized for future issuance

SAFE Agreement

Forward purchase agreements

Convertible notes

Deferred purchase price consideration

Total shares reserved

Stock-Based Compensation

July 2023, the Company’s Board of Directors adopted and stockholders approved the 2023 Incentive Equity Plan (the “2023 Plan”).

The 2023 Plan became effective immediately upon the closing of the Amended and Restated Business Combination Agreement.

maximum number of 8,763,322 shares of the Company’s common stock may be issued under the 2023 Plan.

In addition, the number of

shares of the Company’s common stock reserved for issuance under the 2023 Plan automatically increases on January 1 of each year,

effective January 1, 2024 through January 1, 2033, in an amount equal to the lesser of (1) 4 % of the total number of shares of the Company’s

common stock outstanding on December 31 of the preceding year, or (2) a lesser number of shares of the Company’s common stock determined

by the Company’s Board of Directors prior to the date of the increase.

The maximum number of shares of the Company’s common

stock that may be issued on the exercise of incentive stock options (“ISOs”) under the 2023 Plan is three times the number

of shares available for issuance upon the 2023 Plan becoming effective (or 26,289,966 shares).

Historically,

awards were granted under the Amended and Restated Complete Solaria Omnibus Incentive Plan (“2022 Plan”), the Complete Solar

2011 Stock Plan (“2011 Plan”), the Solaria Corporation 2016 Stock Plan (“2016 Plan”) and the Solaria Corporation

2006 Stock Plan (“2006 Plan”) (collectively with the 2023 Plan, “the Plans”).

Under the Plans, the Company has

granted service-based stock options and restricted stock units (“RSUs”).

Compensation expense for stock options under the

Company’s cliff vesting schedule is generally recognized equally over the vesting period of five years.

RSUs granted during the

fiscal year ended December 28, 2025 are also generally recognized under the cliff vesting schedule that is recognized equally over the

vesting period of five years.

information below summarizes the stock option activity under the Plans.

Shares Weighted

Share Weighted

(Years) Aggregate

(in thousands)

Outstanding – December 31, 2023 11,716,646 $ 3.48 8.53 $ 2,756

Options granted 6,121,251 0.93

Options exercised ( 398,883 ) 0.77 39

Options cancelled ( 7,441,781 ) 0.17

Outstanding – December 29, 2024 9,997,233 2.77 5.29 6,356

Options granted —

Options exercised ( 712,467 ) 0.72 83

Options cancelled ( 4,354,466 ) 2.69

Outstanding – December 28, 2025 4,930,300 4.62 5.58 1,903

Vested and expected to vest— December 28, 2025 4,930,300 4.62 5.58 1,903

Vested and exercisable— December 28, 2025 1,909,809 5.94 5.87 635

The aggregate fair value of the Company’s stock options that vested

during the fiscal years ended 2025 and 2024 was $ 0.4 million and $ 1.9 million, respectively.

information below summarizes the RSU activity.

Unvested at December 31, 2023

Vested and released

Cancelled or forfeited

Unvested at December 29, 2024

Vested and released

Cancelled or forfeited

Unvested at December 28, 2025

The aggregate fair value of the Company’s RSUs that vested during

the fiscal years ended 2025 and 2024 was $ 8.1 million and $ 1.2 million, respectively.

Determination

of Fair Value

Company estimated the grant-date fair value of stock options using the Black-Scholes-Merton option-pricing model.

The determination of

the fair value of each stock award using this option-pricing model is affected by the Company’s assumptions regarding a number

of complex and subjective variables.

These variables include, but are not limited to, the expected stock price volatility over the term

of the awards.

Stock-based compensation is measured at the grant date based on the fair value of the award and is recognized as expense

on a straight-line basis over the requisite service period, which is generally the vesting period of the respective award.

following assumptions were used to calculate the fair value of stock-based compensation for the options granted in the fiscal year ended

December 29, 2024:

Expected term (in years)

Expected volatility

58.45 % – 62.39 %

Risk-free interest rate

3.81 % – 4.71 %

Expected dividends

term — The Company uses the simplified method to calculate the expected term of stock option grants to employees as the Company

does not have sufficient comparable historical exercise data to provide a reasonable basis upon which to estimate the expected term of

stock options granted to employees.

The expected term equals the arithmetic average of the vesting term and the original contractual

term of the option (generally 10 years).

volatility — Due to the Company’s limited operating history and a lack of company specific historical and implied volatility

data, the Company has based its estimate of expected volatility on the historical volatility of a group of peer companies that are publicly

The historical volatility data was computed using the daily closing prices for the selected companies’ shares during the

equivalent period of the calculated expected term of the stock-based awards.

interest rate — The risk-free rate assumption is based on U.S.

Treasury instruments with maturities similar to the expected

term of the Company’s stock options.

dividends — The Company has not issued any dividends in its history and does not expect to issue dividends over the life of

the options and therefore has estimated the dividend yield to be zero.

value of common stock — The fair value of the shares of common stock underlying the stock-based awards is based on the price

of the Company’s common stock in the open market on the date of the grant.

compensation expense

following table summarizes stock-based compensation expense and its allocation within the accompanying consolidated statements of operations

and comprehensive loss (in thousands) :

Fiscal Year Ended

Unrecognized tax benefits as of beginning of year

Increases related to prior year tax positions

Increases related to current year tax positions

Decreases related to prior year tax positions

Unrecognized tax benefits as of end of year

The Company recognizes interest and penalties

related to unrecognized tax benefits within the income tax expense line in the statements of operations and comprehensive loss.

interest and penalties are included as part of income tax payable in the consolidated balance sheets.

No accrued interest or penalties

have been recorded for the fiscal years ended December 29, 2024 and December 31, 2023.

The Company has not provided U.S.

income or foreign

withholding taxes on the undistributed earnings of its foreign subsidiary as of December 29, 2024 and December 31, 2023, because it intends

to permanently reinvest such earnings outside of the U.S.

If these foreign earnings were to be repatriated in the future, the related

tax liability will be immaterial, due to the participation exemption put in place under the 2017 Tax Cuts and Jobs Act.

Cost of revenues

Sales and marketing

General and administrative

Total stock-based compensation expense

As of December 28, 2025, there was a total of $ 1.1 million and $ 23.1

million of unrecognized stock-based compensation costs related to service-based options and RSUs, respectively.

Such compensation cost

is expected to be recognized over a weighted-average period of approximately 2.4 years and 4.0 years, respectively.

fiscal 2024, the Company’s Board of Directors approved the modification to accelerate the vesting of 788,192 options, for employees

that were terminated.

Additionally, the Board of Directors approved an extension of the post termination exercise period for 4,343,172

vested options of terminated employees in the fiscal years ended December 29, 2024.

In connection with the modifications, the Company

recorded incremental stock-based compensation expense of $ 0.7 million in the fiscal year ended December 29, 2024.

Basic and Diluted Net Loss Per Share

The Company uses the two-class method to calculate

net loss per share.

No dividends were declared or paid for the fiscal years ended December 29, 2024 and December 31, 2023.

The following table sets forth the computation of the Company’s

basic and diluted net loss per share attributable to common stockholders for the fiscal years ended December 29, 2024 and December 31,

Company uses the two-class method to calculate net loss per share.

No dividends were declared or paid in the fiscal years ended December

28, 2025, or December 29, 2024.

following table sets forth the computation of the Company’s basic and diluted net loss per share attributable to common stockholders

(in thousands, except share and per share amounts) :

3 unchanged sentences

Net loss from discontinued operations

Impairment loss from discontinued operations

Numerator for diluted loss per share

Impact of September 2024 Notes derivative liability and interest expense, net of tax

$ ( 269,555 )

Weighted average shares:

4 unchanged sentences

Net loss per share:

Continuing operations – basic

Discontinued operations - basic

Net loss - basic

Continuing operations – diluted

Discontinued operations – diluted

Net loss – diluted

Continuing operations

Discontinued operations

Continuing operations

Discontinued operations

The computation of basic net loss per share attributable

to common stockholders is inclusive of warrants with an insignificant exercise price.

The Company’s calculation of the

weighted average shares outstanding is inclusive of 3,427,324 warrants with an insignificant exercise price (which assumes that the warrants

were outstanding as of the beginning of the period or the date of the grant, whichever is earlier) for the fiscal year ended December

The computation of diluted net loss per share attributable to common stockholders is inclusive of the impact of the Company’s

September 2024 Notes (which were dilutive) using the if-converted method for the year ended December 29, 2024.

The computation of basic

and diluted net loss per share attributable to common stockholders is the same for the fiscal year ended December 31, 2023 because the

inclusion of potential shares of common stock would have been anti-dilutive.

The following table presents the potential common

shares outstanding that were excluded from the computation of diluted net loss per share of common stock as of the periods presented because

including them would have been anti-dilutive:

to common stockholders is inclusive of warrants with an insignificant exercise price and the minimum number of shares to be issued in

connection with the deferred consideration related to the Ambia acquisition.

The Company’s calculation of the weighted average shares

outstanding with an insignificant exercise price was 234,610 and 3,427,324 warrants (which assumes that the warrants were outstanding

as of the beginning of the period or the date of the grant, whichever is earlier) for the fiscal years ended December 28, 2025, and December

29, 2024, respectively.

The computation of diluted net loss per share attributable to common stockholders is inclusive of the impact of

the Company’s September 2024 Notes (which were dilutive) using the if-converted method for the year ended December 29, 2024.

following table presents the potential common shares outstanding that were excluded from the computation of diluted net loss per share

of common stock as of the periods presented because including them would have been anti-dilutive:

Fiscal Year Ended

2 unchanged sentences

Stock options and RSUs issued and outstanding

Third SAFE Agreement

Deferred consideration shares

Potential common shares excluded from diluted net loss per share

Segment Information

The segment information is presented on a basis

that is consistent with the Company’s internal management reporting.

The Company’s Chief Executive Officer (“CEO”)

is the Chief Operating Decision Maker (“CODM”).

The CODM manages the Company and report financial results based on two reportable

segments which are the same as our operating segments.

CODM evaluates the performance of these reportable segments and allocates resources

to make operating decisions based on certain financial information, including segmented internal income/(loss) from continuing operations

prepared on a basis consistent with U.S.

The measurement criteria is based on their operating revenue and operating income (loss)

and excluding any corporate costs which are not allocatable to the operating segments.

The CODM’s measurement criteria does not

include segment assets.

During the periods presented, the Company reported its financial performance through the following two reportable

Residential Solar Installation and New Homes Business.

Residential Solar Installation .

This segment performs solar system, storage and battery installations for residential homeowners.

New Homes Business .

is new in fiscal year 2024 as a result of the SunPower Acquisition which occurred in the fourth quarter of fiscal 2024.

The Company developed

a method to allocate direct expenses for the respective reportable segments.

This segment performs solar system installations for new

home builders.

Fiscal Year Ended December 28, 2025

5 unchanged sentences

General and administrative (1)

Operating income (loss)

Reconciliation of segment loss from continuing operations before income taxes:

Segment operating income (loss)

Reconciliation of segment income (loss) from continuing operations before income taxes:

Unallocated amounts:

General corporate expense

Interest expense

Interest income

Other income (expense), net

Gain on troubled debt restructuring

Other non-operating income, net

Loss from continuing operations before taxes

(1) For the year ended December 28, 2025, depreciation and amortization

expense was $ 2.6 million and $ 0.1 million for the Residential Solar Installation and New Homes Business reportable segments, respectively.

expense was as follows

(in millions)

Residential Solar Installation

New Homes Business

Depreciation and amortization classified in:

Cost of revenues

General and administrative

Fiscal Year Ended December 29, 2024

5 unchanged sentences

General and administrative (1)

Operating income (loss)

Segment operating (loss)

Reconciliation of segment loss from continuing operations before income taxes:

Unallocated amounts:

General corporate expense

Interest expense

Interest income

Other income (expense), net

Other non-operating income, net

Gain on troubled debt restructuring

Loss from continuing operations before taxes

(1) For the year ended December 31, 2023, depreciation and amortization

expense was $ 0.9 million for the Residential Solar Installation reportable segment.

Assets by segment are as follows (in thousands):

Residential Solar Installation

New Homes Business

(1) For the year ended December 29, 2024, depreciation and amortization expense was $ 2.6 million and $ 0.1 million for the Residential Solar Installation and New Homes Business reportable segments, respectively.

corporate expense represents costs primarily legacy costs that were not expected to be ongoing subsequent to the acquisition of the

SunPower Businesses.

The Company recast its general and administrative expenses within

results of operations by reportable segment for the fiscal year ended December 29, 2024 to conform to the fiscal 2025 presentation.

fiscal 2024, the Company allocated those costs which were specifically associated with the specific reportable segment with the remainder

being presented as unallocated.

Beginning in fiscal 2025, the Company changed its method to an allocation of general and administrative

costs based upon relative revenue of each reportable segment consistent with the presentation of fiscal 2025 results segment results

of operations.

Employee Benefit Plan

Company sponsors a 401(k) defined contribution and profit-sharing plan (“401(k) Plan”) for its eligible employees.

Plan provides for tax-deferred salary deductions for all eligible employees.

Employee contributions are voluntary.

Employees may contribute

the maximum amount allowed by law, as limited by the annual maximum amount as determined by the Internal Revenue Service.

may match employee contributions in amounts to be determined at the Company’s sole discretion.

The Company made no contributions

to the 401(k) Plan for the fiscal years ended December 28, 2025 and December 29, 2024.

Related Party Transactions

Refer to the following notes to the Company’s

consolidated financial statements for details regarding the related party transactions entered into by the Company;

Description of Business;

Note 3 – Reverse Recapitalization, Note 6 – Forward Purchase Agreements, Note 12 – Other Income

(Expense), Net;

Note 15 – Borrowings and Derivative Liabilities and Note 16 – SAFE Agreements.

All other related party transactions

are described herein.

In December 2023, the Company entered into separate

common stock purchase agreements with the Rodgers Massey Freedom and Free Markets Charitable Trust and the Rodgers Massey Revocable Living

Trust , each a related party affiliated with Thurman J.

Rodgers, the Company’s Chief Executive Officer and a director, for

an aggregate purchase price of $ 5.0 million.

The Company determined that SameDay Solar became

a related party in fiscal 2024 with which the Company does business.

Revenue, cost of revenue and commission expense with SameDay Solar

were $ 1.6 million and $ 0.6 million and $ 1.2 million for the fiscal year ended December 29, 2024.

CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS

ON ACCOUNTING AND FINANCIAL DISCLOSURE

Refer to the consolidated financial statements

and the following notes to the consolidated financial statements for details and disclosures relating to related party transactions

entered into by the Company;

Note 2 – Basis of Presentation and Summary of Significant Accounting Policies;

Supplemental Balance Sheet Information;

Note 8 – Forward Purchase Agreements, Note 9 – SAFE Agreements, Note 10 –

Borrowings and Derivative Liabilities, and Note 11 – Other Non-Operating Income, Net .

Subsequent Events

to White Lion SPA

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

3 (“Amendment No.

3”) to the White Lion SPA.

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 the Company’s common stock equal to the Commitment

Amount (as defined below).

Further, Amendment No.

3 increases, subject to approval by the Company’s stockholders, the commitment

amount under the Purchase Agreement to $ 55.0 million of shares of its common stock (the “Commitment Amount”), which the Company

may elect to sell to White Lion pursuant to the White Lion SPA, from time to time in the Company’s sole discretion, during the

Commitment Period.

addition, Amendment No.

3 adds an option for the Company 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 the Company to sell shares of its common

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

White Lion’s written acceptance of a three hour purchase notice.

Standby Equity Purchase Agreement;

Convertible Note;

Convertible Debenture

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

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

Pursuant to the SEPA, the Investor will advance

up to $ 20.0 million to the Company 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.

The Promissory Notes are convertible into shares of the Company’s

common stock.

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.

to the SEPA the Company 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 the Company’s common stock (“Commitment Amount”) subject

to certain limitations and conditions set forth in the SEPA.

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

the Company’s common stock within three days of the Effective Date as a commitment fee.

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 the Company under the SEPA the Commitment Amount in full.

The Company 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 the Company is yet to issue

shares of its common stock, there are no amounts outstanding under the Promissory Notes, and provided that the Company has paid all amounts

owed to the Investor pursuant to the SEPA.

The Company and the Investor may also agree to terminate the SEPA by mutual written consent.

On March 6, 2026 the Company entered into a further

Purchase Agreement pursuant to which the Investor purchased and the Company issued a convertible debenture in the principal amount of

$ 10.0 million (the “Debenture”).

At the closing under such purchase agreement, the Company 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”).

The Company may repay each applicable Installment Amount, at

the Company’s 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 the Company’s 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 the Company’s common stock

at a price equal to 95 % of the volume weighted average price (“VWAP”) of the 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 its 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 the Company may only deliver a notice of Optional Redemption if the VWAP of the

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 the Company 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;

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

Convertible Promissory Note

Company received a deposit of $ 2.0 million from the Rodgers Revocable Trust, a related party, in the fiscal year ended December 28, 2025.

In January 2026, the Company received an additional $ 1.3 million in proceeds from the Rodgers Revocable Trust.

On January 29, 2026, the

Company issued a convertible promissory note in the original principal amount of $ 3.3 million (the “January 2026 Note”) with

respect to the aggregate proceeds received.

January 2026 Note bears an interest rate of 12.0 % and is a general unsecured obligation of the Company.

The January 2026 Note will mature

on July 1, 2029, unless earlier converted, redeemed or repurchased.

Interest on the January 2026 Note is payable semiannually in arrears

on January1 and July 1 of each year, beginning on July 1, 2026.

The January 2026 Note is convertible at the option of the holder at any

time prior to the payment of the principal amount of the January 2026 Note in full.

The conversion rate of the January 2026 Note is initially

equal to 540.5405 shares of the Company’s common stock per $ 1,000 of principal amount due under the January 2026 Note.

The conversion

rate is subject to adjustment from time to time pursuant to the terms of the January 2026 Note.

of Cobalt Power Systems, Inc.

On January 30, 2026, the Company entered into a share purchase agreement

(“Share Purchase Agreement”) with Cobalt Power Systems, Inc., a California corporation (“Cobalt”) and its stockholders

to acquire all of the outstanding stock of Cobalt (“Cobalt Acquisition”).

The Company completed the Cobalt Acquisition on

February 2, 2026 (“Cobalt Closing”) for (a) 1.8 million shares of the Company’s common stock issued at the Cobalt Closing

and (ii) an agreement to issue an additional $ 3.33 million shares of the Company’s common stock on each of the 12-month and 18-month

anniversaries of the Cobalt Closing.

Additionally, the Company agreed to issue up to $ 2.0 million of restricted stock units to those Cobalt

employees who continue their employment with the Company following the Cobalt Closing, and 850,000 restricted stock units will be issued

as inducement grants to certain Cobalt key employees.

Cobalt designs and installs solar systems.

The initial accounting for the business

combination is incomplete as a result of the timing of the acquisition.

to Seller Note

On March 5, 2026, the Company 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 SEPA 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 Company and the Member agreed that 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.

an inducement to the Member’s agreement to the foregoing, the Amendment also provides that, within two business days following approval

by the Company’s stockholders of the issuance of shares under the Sunder MIPA in accordance with applicable Nasdaq rules, the Company

will issue the remaining shares of common stock otherwise issuable to the Member pursuant to the Sunder MIPA.

On April 8, 2026, the Company

issued the remaining shares due under the Seller Note, 6.7 million shares of its common stock.

Investor Deposit by a Related Party

The Company received a deposit of $ 5.0 million (“Purchase

Amount”) from the Rodgers Revocable Trust on March 27, 2026.

On April 8, 2026, the Company entered into a SAFE with the Rodgers

Revocable Trust in exchange for the $ 5.0 million received.

The SAFE is automatically convertible into equity securities of the Company

in an amount equal to the Purchase Amount divided by the applicable price per share, unit or other increment of the equity securities

issued by the Company in its next equity financing transaction.

of September 2024 Notes

Subsequent to December 28, 2025, $ 2.8 million

of the September 2024 Notes were converted by holders into 1.6 million shares of common stock of the Company.

CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE

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 8. Financial Statements and Supplementary Data