Quarterly Report for Quarter Ending September 28, 2025 (Form 10-Q)

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

You should read the following discussion and analysis of our financial condition and results of operations together with the unaudited condensed consolidated financial statements and related notes included elsewhere in this Quarterly Report on Form 10-Q and with our audited consolidated financial statements and related notes included in our Annual Report on Form 10-K filed with the Securities and Exchange Commission on April 30, 2025, and related management's discussion and analysis in Item 7 of the Annual Report on Form 10-K. This discussion contains forward-looking statements that involve risks and uncertainties. Our actual results could differ materially from those discussed below. Please also see the section titled "Special Note Regarding Forward-Looking Statements."

Overview

SunPower Inc. ("SunPower" or the "Company") is the rebranded name of Complete Solaria, Inc. Complete Solaria, Inc. was formed in November 2022 through the merger of Complete Solar and The Solaria Corporation. Founded in 2010, Complete Solar created a technology platform to offer clean energy products to homeowners by enabling a national network of sales partners and build partners. Our sales partners generate solar installation contracts with homeowners on our behalf. To facilitate this process, we provide the software tools, sales support and brand identity to our sales partners, making them competitive with national providers. This turnkey solution makes it easy for anyone to sell solar.

We fulfill our customer contracts by using in-house installation experts and by engaging with local construction specialists. We manage the customer experience and complete all pre-construction activities prior to delivering build-ready projects including hardware, engineering plans, and building permits to our builder partners. We manage and coordinate this process through our proprietary software system.

As further discussed below and above (Note 15 - Segment Information), we have three reportable segments: Residential Solar Installation, New Homes Business and Sunder Energy ("Sunder").

There is substantial doubt about our ability to continue as a going concern within one year after the date that the unaudited condensed consolidated financial statements are issued. The unaudited condensed consolidated financial statements included in this Quarterly Report on Form 10-Q 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 our ability to continue as a going concern.

Growth strategy and outlook

Our growth strategy contains the following elements:

●

Increase revenue by expanding installation capacity and developing new geographic markets - We continue to expand our network of partners who will install systems resulting from sales generated by our sales partners. By leveraging this network of skilled builders in addition to our in-house installation experts, we aim to increase our installation capacity in our traditional markets and expand our offering into new geographies throughout the U.S. This will enable greater sales growth in existing markets and create new revenue in expansion markets. On September 30, 2024, upon approval by the Bankruptcy Court for the District of Delaware, we completed the acquisition of certain assets relating to the Blue Raven Solar Business, New Homes Business and non-Installing Dealer network previously operated by SunPower Debtors. On September 24, 2025, we completed the acquisition of Sunder, a residential solar sales company. The acquisition of Sunder expanded our footprint from 22 to 45 states. By doubling our dealer network salesforce to 1,744 this allows for further reach into new geographic markets where we were not previously concentrated. This acquisition will position us to be lone of the largest residential solar provider in the U.S. Sunder's established relationships with Electrical, Permit and Connection companies ("EPC") will allow us to expand into markets where we do not have install capacity due to limitations of not being able to hire a skilled installation workforce due to lack of density. By leveraging a preferred network of EPCs this allows us to accelerate our growth, while keeping our overhead costs low. By leveraging Sunder existing operating platform, our dealer network will be able to focus on delivering superior customer service to homeowners, while providing options to the homeowner based on their preferences.

●

Increase revenue and margin by engaging national-scale sales partners - We aim to offer a turnkey solar solution to prospective sales partners with a national footprint. These include electric vehicle manufacturers, national home security providers, and real estate brokerages. We expect to create a consistent offering with a single execution process for such sales partners throughout their geographic territories. These national accounts have unique customer relationships that we believe will facilitate meaningful sales opportunities and low cost of acquisition to both increase revenue and improve margin.

●

Increase revenue and margin by executing on 200,000-unit battery storage opportunity - We have an opportunity to increase our revenue and margin in the battery space through our partnership with Enphase. By providing homeowners with an option to include battery storage as part of their solar system install, we believe there will be a greater need for battery storage as the demand and costs of energy will increase.

Mergers

We entered into an Amended and Restated Business Combination Agreement with FACT, First Merger Sub, Second Merger Sub, and Solaria on October 3, 2022. The Merger was consummated on July 18, 2023. Upon the terms and subject to the conditions of the Merger, (i) First Merger Sub merged with and into Complete Solaria with Complete Solaria surviving as a wholly-owned subsidiary of FACT (the "First Merger"), (ii) immediately thereafter and as part of the same overall transaction, Complete Solaria merged with and into Second Merger Sub, with Second Merger Sub surviving as a wholly-owned subsidiary of FACT (the "Second Merger"), and FACT changed its name to "Complete Solaria, Inc." and Second Merger Sub changed its name to "CS, LLC" and (iii) immediately after the consummation of the Second Merger and as part of the same overall transaction, Solaria merged with and into a newly formed Delaware limited liability company and wholly-owned subsidiary of FACT and changed its name to "The SolarCA LLC" ("Third Merger Sub"), with Third Merger Sub surviving as a wholly-owned subsidiary of FACT (the "Additional Merger", and together with the First Merger and the Second Merger, the "Mergers").

The Mergers between Complete Solaria and FACT has been accounted for as a reverse recapitalization. Under this method of accounting, FACT was treated as the acquired company for financial statement reporting purposes. This determination was primarily based on the Company having a majority of the voting power of the post-combination company, the Company's senior management comprising substantially all of the senior management of the post-combination company, and the Company's operations comprising the ongoing operations of the post-combination company. Accordingly, for accounting purposes, the Mergers have been treated as the equivalent of a capital transaction in which Complete Solaria is issuing stock for the net assets of FACT. The net assets of FACT have been stated at historical cost, with no goodwill or other intangible assets recorded.

Disposal transaction

In October 2023, we completed the divestiture of our solar panel business to Maxeon ("Divestiture"), pursuant to the terms of a disposal agreement ("Disposal Agreement"). Under the terms of the Disposal Agreement, Maxeon agreed to acquire from the Company certain assets and employees, for an aggregate purchase price of approximately $11.0 million consisting of 1,100,000 shares of Maxeon ordinary shares. We determined that the criteria were met for discontinued operations classification as the divestiture represented a strategic shift in our business. In connection with the Divestiture, we recognized a loss from discontinued operations of $2.0 million and $173.4 million in the fiscal years ended December 29, 2024 and December 31, 2023, respectively. We also sold all the Maxeon shares in the year ended December 31, 2023, and recorded a $4.2 million loss on the sale of these shares in our consolidated statements of operations and comprehensive loss.

Following is a discussion of our historical results of operations, which excludes product revenues and metrics related to the disposal, as all results of operations associated with the solar panel business have been presented as discontinued operations, unless otherwise noted.

SunPower acquisition transaction

On August 5, 2024, we entered into an asset purchase agreement among us and SunPower Corporation and SunPower Corporation's direct and indirect subsidiaries ("SunPower Debtors") which provided for the purchase of certain assets relating to the Blue Raven Solar business, New Homes Business and Non-Installing Dealer network previously operated by the SunPower Debtors (the "Acquired SunPower Assets"). The sale by the SunPower Debtors was approved on September 23, 2024, by the United States Bankruptcy Court for the District of Delaware. We completed the acquisition ("SunPower Acquisition") of the Acquired SunPower Assets ("SunPower Businesses") effective September 30, 2024.

We financed the SunPower Acquisition by issuing 7.0% senior unsecured convertible notes ("7.0% Senior Notes") in September 2024, which are due in 2029. The 7.0% Senior Notes mature on July 1, 2029 and are convertible into shares of our common stock at the option of the holder at a conversion rate of $2.14 per share. The 7.0% Senior Notes will become immediately due and payable at the option of the holder in the event of default and upon a qualifying change of control event.

Sunder Energy acquisition transaction

On September 21, 2025, we entered into an agreement to acquire Sunder Energy ("Sunder") and completed the acquisition effective September 24, 2025 ("Sunder Acquisition"). The acquisition was completed through the acquisition of all of the Membership Interests of Sunder for aggregate consideration of $57.8 million consisting of cash, a note issued to the seller, 3,333,334 shares of our common stock issued as of the acquisition date plus an additional 3,333,333 shares to be issued on each of the 12-month and 18-month anniversaries of the closing of the acquisition. The shares of our common stock were valued at $17.1 million at the date of acquisition. This transaction was accounted for as a business combination in accordance with ASC 805, Business Combinations. The financial results of Sunder have been included in our unaudited condensed consolidated financial statements since the date of acquisition.

We financed the Sunder Acquisition through the issuance of a $20.0 million note ("Seller Note") with an interest rate of 7.0% and due 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 and the issuance of $22.0 million of 7.0% senior unsecured convertible notes due July 1, 2029.

Key financial definitions/components of results of operations

Revenues

Revenue is recognized for Residential Solar Installation and New Homes Business when a customer obtains control of promised products and services and we have satisfied our performance obligations which is the date by which substantially all of our design and installation is complete for a fully functioning solar power system to interconnect to the local power grid.

Installation includes the design of a solar energy system, the delivery of the components of the solar energy system (i.e., photovoltaic system, inverter, battery storage, etc.), installation services and services facilitating the connection of the solar energy system to the power grid. We account for these services as inputs to a combined output, resulting in a single service-based performance obligation.

The amount of revenue recognized reflects the consideration which we expect to be entitled to receive in exchange for the products and services. To achieve this core principle, we apply the following five steps:

Step 1. Identification of the contract(s) with a customer;

Step 2. Identification of the performance obligations in the contracts(s);

Step 3. Determination of the transaction price;

Step 4. Allocation of the transaction price to the performance obligations;

Step 5. Recognition of the revenue when, or as, we satisfy a performance obligation.

Residential Solar Installation revenues

Our Residential Solar Installation segment sells products through a network of installing and non-installing dealers and resellers, as well as our internal sales team. Our contracts with customers include three primary contract types:

●

Cash agreements - We contract directly with homeowners who purchase the solar energy system and related services from us. 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 our financing partner agreements, we contract directly with homeowners for the purchase of the solar energy system and related services. We refer the homeowner to a financing partner to finance the system, and the homeowner makes payments directly to the financing partner. We receive consideration from the financing partner on a billing schedule where the majority of the transaction price is due upon installation with an additional payment due when the system passes inspection by the authority having jurisdiction.

●

Power purchase agreements and lease agreements - We contract directly with a leasing partner to perform the solar energy system installation, and the homeowner will finance the system through a power purchase agreement (or lease), which is signed with our leasing partner. We consider the leasing partner to be our customer, as we do not contract directly with the homeowner and the leasing partner takes ownership of the system upon the completion of installation. We receive consideration from the leasing partner on a billing schedule where the majority of the transaction price is due upon installation with an additional payment due when the system passes inspection by the authority having jurisdiction.

New Homes Business revenues

Our New Homes Business segment sells through a network of home builders as well as our internal sales team. Our contracts with customers include two primary contract types:

●

Cash agreements - We contract directly with homebuilders who purchase the solar energy system from us and are the customers in the transaction. Our customers are invoiced upon the completion of installation.

●

Lease agreements - Prior to the SunPower 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 us in connection with the SunPower Acquisition. We contracted directly with a leasing partner to facilitate the leasing of the system to the impacted homeowners. We consider the leasing partner to be our customer. Under the terms of our arrangement with the leasing partner, control is not transferred to the customer until the completed system is accepted by the customer. We receive consideration from the leasing partner following the acceptance of the system.

Our performance obligation for both reportable segments is to design and install a fully functioning solar energy system. For all contract types (with the exception of New Homes Business Lease agreements), we recognize revenue over time. Our over-time revenue recognition begins when the solar power system is fully installed (as it is at this point that control of the asset begins to be transferred to the customer and the customer retains the significant risks and rewards of ownership of the solar power system). We recognize revenue using the input method based on direct costs to install the system and defer the costs of installation until such time that control of the asset transfers to the customer (installation). For New Homes Business Lease agreements, we consider the performance obligation to be satisfied at a point in time upon acceptance of the system by the customer.

Revenue is generally recognized at the transaction price contained within the agreement, net of costs of financing, or other consideration paid to the customers that is not in exchange for a distinct good or service. Our arrangements may contain clauses that can either increase or decrease the transaction price. Variable consideration is estimated at each measurement date at its most likely amount to the extent that it is probably that a significant reversal of cumulative revenue recognized will not occur and true-ups are applied prospectively as such estimates change.

We record deferred revenue for amounts invoiced that are received in advance of the provisioning of services. In certain contracts with customers, we arrange for a third-party financing partner to provide financing to the customer. We collect upfront from the financing partner and the customer will provide installment payments to the financing partner. We record revenue in the amount received from the financing partner, net of any financing fees charged to the homeowner, which we consider to be a customer incentive. None of our contracts contain a significant financing component.

Sunder

We earn revenue from contracts sold to customers for solar installations performed by third-party installation companies. We recognize revenue at a point in time when Permission to Operate ("PTO") is complete. We act as an agent in these arrangements and record revenue on a net basis. We do not have significant financing components in our contracts. We do not provide warranty services and do not record a warranty reserve.

Costs to obtain and fulfill contracts

Our costs to obtain and fulfill contracts, when recognized, associated with systems sales are expensed as sales commission and cost of revenue, respectively. In addition, incentives we provide to our customers, such as discounts and rebates, are recorded net to the revenue we have recognized on the solar power system.

Cost of revenues

Cost of revenues is comprised primarily of cost of material, internal labor costs, third-party subcontractors, design services, engineering personnel and employee-related expenses associated with permitting services, associated warranty costs, freight and delivery costs, depreciation, and amortization of internally developed software. Cost of revenues from these services is recognized when we transfer control of the product to the customer, which is generally upon installation.

Operating expenses

Sales commissions

Sales commissions are direct and incremental costs of obtaining customer contracts. These costs are paid to internal sales teams and third-party vendors who source residential customer contracts for the sale of solar energy systems.

Sales and marketing

Sales and marketing expenses primarily consist of personnel related costs, including salaries and employee benefits, stock-based compensation, and other promotional and advertising expenses. We expense certain sales and marketing, including promotional expenses, as incurred.

General and administrative

General and administrative expenses consist primarily of personnel and related expenses for employees, in our finance, research, engineering, and administrative teams including salaries, bonuses, payroll taxes, and stock-based compensation. It also consists of legal, consulting, and professional fees, rent expenses pertaining to our offices, business insurance costs and other costs.

Interest expense

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

Other expense, net

Other expense, net consists of changes in the fair value of our derivative liabilities in connection with our convertible notes and changes in the fair value of common stock warrant liabilities, forward purchase agreements, and SAFE Agreements.

Income tax expense

Income tax expense primarily consists of income taxes in certain jurisdictions in which we conduct business.

Supply chain constraints and risk

The global supply chain and our industry have experienced significant disruptions in recent periods. We have seen supply chain challenges and logistics constraints increase, including shortages of panels, inverters, batteries and associated component parts for inverters and solar energy systems available for purchase, which materially impacted our results of operations. These shortages and delays can be attributed in part to the broader macroeconomic conditions and have been exacerbated by the conflicts in Ukraine and Israel. If any of our suppliers of solar modules experienced disruptions in the supply of the modules' component parts, for example semiconductor solar wafers or inverters, this may decrease production capabilities and restrict our inventory and sales. In addition, we have experienced and are experiencing varying levels of volatility in costs of equipment and labor resulting in part from disruptions caused by general global economic conditions. While inflationary pressures have resulted in higher costs of products, in part due to an increase in the cost of the materials and wage rates, these additional costs have been offset by the related rise in electricity rates.

We cannot predict the full effects the supply chain constraints will have on our business, cash flows, liquidity, financial condition and results of operations at this time due to numerous uncertainties. Given the dynamic nature of these circumstances on our ongoing business, results of operations and overall financial performance, the full impact of macroeconomic factors, including the conflicts in Ukraine and Israel, cannot be reasonably estimated at this time. In the event we are unable to mitigate the impact of delays or price volatility in solar energy systems, raw materials, and freight, it could materially adversely affect our business, prospects, financial condition and results of operations.

Critical accounting policies and estimates

See "Management's Discussion and Analysis of Financial Condition and Results of Operations - Critical Accounting Estimates" and our consolidated financial statements and related notes included in our Annual Report on Form 10-K for the fiscal year ended December 29, 2024 for accounting policies and related estimates we believe are the most critical to understanding our consolidated financial statements, financial condition and results of operations and which require complex management judgment and assumptions, or involve uncertainties. These critical accounting estimates include revenue recognition, accounting and accounting for business combinations. There have been no changes to our critical accounting estimates or their application since the date of our Annual Report on Form 10-K for the fiscal year ended December 29, 2024.

Results of operations

We have derived the following data from our unaudited condensed consolidated financial statements included elsewhere in this Quarterly Report on Form 10-Q. This information should be read in conjunction with our unaudited condensed consolidated financial statements and related notes included elsewhere in this Quarterly Report on Form 10-Q. The results of historical periods are not necessarily indicative of the results of operations for any future period.

Thirteen-weeks ended September 28, 2025 compared to the thirteen weeks ended September 29, 2024

The following table sets forth our unaudited statements of operations from continuing operations for the thirteen weeks ended September 28, 2025, and the thirteen weeks ended September 29, 2024.

		Thirteen Weeks Ended
(in thousands)		September 28, 2025				September 29, 2024				$ Change				% Change
Revenues		$	70,005			$	5,536			$	64,469				1,165	%
Cost of revenues			37,965				8,693				29,272				337	%
Gross (loss) profit			32,040				(3,157	)			35,197				*
Gross margin %			46	%			(57	)%
Operating expenses:
Sales commissions			7,534				7,270				264				4	%
Sales and marketing			6,467				1,093				5,374				492	%
General and administrative			21,483				18,450				3,033				16	%
Total operating expenses			35,484				26,813				8,671				32	%
Loss from continuing operations			(3,444	)			(29,970	)			26,526				(89	)%
Interest expense(1)			(8,104	)			(2,338	)			(5,766	)			247	%
Interest income			-				86				(86	)			(100	)%
Other expense, net(2)			(4,256	)			(65,684	)			61,428				(94	)%
Gain on extinguishment of debt			-				19,948				(19,948	)			(100	)%
Loss from continuing operations before taxes			(15,804	)			(77,958	)			62,154				(80	)%
Income tax benefit (provision)			-				-				-				-	%
Net loss from continuing operations		$	(15,804	)		$	(77,958	)		$	62,154				(80	)%

*	Percentage change is not meaningful.

(1)	Includes interest expense and amortization of debt issuance costs to related party of $1.8 million and $1.5 million in the thirteen-weeks ended September 28, 2025 and September 29, 2024, respectively.

(2)

Includes loss of $3.0 million on issuance of derivative liability with a related party in the thirteen week period ended September 29, 2024. Includes expense of $0.3 million and $22.8 million due to the change in the fair value of derivative liabilities with related parties in the thirteen weeks ended September 28, 2025 and September 29, 2024, respectively. Refer to Note 9 - Borrowings and Derivative Liabilities for details. Other expense, net includes related party transactions of $2.8 million of income due to the change in the fair value of a forward purchase agreement, and $0.9 million of expense related to the change in fair value of a SAFE Agreement in the thirteen week period ended September 29, 2024.

Revenues

We disaggregate our revenues based on the following types of services (in thousands):

		Thirteen Weeks Ended
		September 28, 2025				September 29, 2024				$ Change				% Change
Residential Solar Installation		$	38,579			$	5,536			$	33,043				597	%
New Homes Business			27,116				-				27,116				*
Sunder			4,310				-				4,310				*
Total revenues		$	70,005			$	5,536			$	64,469				1,165	%

*	Percentage change is not meaningful.

The revenue increase is primarily attributed to the SunPower Acquisition in the fourth quarter of fiscal 2024. As a result, installations increased compared to the same period in the prior year by approximately 1,290 and 757 for Residential Solar Installation and New Homes Business reportable segments, respectively.

Cost of revenues and gross margins

		Thirteen Weeks Ended
		September 28,				September 29,				$				%
		2025				2024				Change				Change
Residential Solar Installation		$	20,984			$	8,693			$	12,291				141	%
New Homes Business			13,329				-				13,329				*
Sunder			3,652				-				3,652				*
Total cost of revenues		$	37,965			$	8,693			$	29,272				337	%
Gross margin			46	%			(57	)%

*	Percentage change is not meaningful.

Cost of revenues increased attributed to the SunPower Acquisition as installations increased the over the same period in the prior year period by approximately 1,290 and 757 for Residential Solar Installation and New Homes Business reportable segments, respectively.

Sales commissions

		Thirteen Weeks Ended
		September 28, 2025				September 29, 2024				$ Change				% Change
Residential Solar Installation		$	7,479			$	7,270			$	209				3	%
New Homes Business			55				-				55				*
Sunder			-				-				-				*
Total sales commissions		$	7,534			$	7,270			$	264				4	%

*	Percentage change is not meaningful.

Sales commissions for the Residential Solar Installation and New Homes Business reportable segments increased due to the increase in revenue arising from the SunPower Acquisition in the fourth quarter of fiscal 2024.

Sales and marketing

		Thirteen Weeks Ended
		September 28, 2025				September 29, 2024				$ Change				% Change
Residential Solar Installation		$	4,781			$	1,093			$	3,688				337	%
New Homes Business			1,686				-				1,686				*
Sunder			-				-				-				*
Total sales and marketing		$	6,467			$	1,093			$	5,374				492	%

*	Percentage change is not meaningful.

Sales and marketing expenses in the Residential Solar Installation reportable segment increased due to the SunPower Acquisition in the fourth quarter of fiscal 2024.

General and administrative

		Thirteen Weeks Ended
		September 28, 2025				September 29, 2024				$ Change				% Change
Residential Solar Installation		$	12,240			$	18,450			$	(6,210	)			(34	)%
New Homes Business			9,243				-				9,243				*
Sunder			-				-				-				*
Total general and administrative		$	21,483			$	18,450			$	3,033				16	%

*	Percentage change is not meaningful.

General and administrative expenses for the Residential Solar Installation and New Homes Business reportable segments increased due to the SunPower Acquisition in the fourth quarter of fiscal 2024.

Interest expense

Interest expense inclusive of amortization of debt issuance costs was $8.1 million in the thirteen-weeks ended September 28, 2025. Interest expense and amortization of debt issuance costs primarily consisted of $2.5 million attributable to the July 2024 Notes, $5.2 million attributable to the September 2024 Notes, and the remainder attributable to interest expense on our other obligations

Interest expense was $2.3 million in the thirteen weeks ended September 29, 2024, and consisted of $1.3 million of interest expense relating to our July 2024 Notes and $0.5 million relating to the September 2024 Notes.

Other expense, net

Other expense, net for the thirteen weeks ended September 28, 2025, was $4.3 million. The main drivers consist of $2.0 million expense due to the remeasurement of the fair value of derivative liabilities associated with our 12% and 7% senior unsecured convertible notes and $2.4 million expense associated with the change in the fair value of our forward purchase agreements.

Other expense, net in the thirteen-weeks ended September 29, 2024 was expense of $65.7 million and was comprised of $62.6 million related to the recognition of a derivative liability and subsequent change in fair value, $6.0 million of expense arising from changes in the fair value of warrants issued for our common stock, $3.8 million of other financing costs, $0.9 million expense arising from the change in the fair value of a SAFE Agreement and $0.1 million of other expenses, partially offset by $7.7 million of income related to changes in the fair value of our forward purchase agreements.

Net loss from continuing operations

As a result of the factors discussed above, our net loss from continuing operations for the thirteen-weeks ended September 28, 2025 was $15.8 million, a $62.2 million decrease in our net loss as compared to a net loss from continuing operations of $78.0 million for the thirteen weeks ended September 29, 2024.

Thirty-nine weeks ended September 28, 2025 compared to the thirty-nine weeks ended September 29, 2024

The following table sets forth our unaudited statements of operations from continuing operations for the thirty-nine weeks ended September 28, 2025, and the thirty-nine weeks ended September 29, 2024.

		Thirty-Nine Weeks Ended
(in thousands)		September 28, 2025				September 29, 2024				$ Change				% Change
Revenues		$	220,269			$	20,068			$	200,201				998	%
Cost of revenues			126,970				21,834				105,136				482	%
Gross profit (loss)			93,299				(1,766	)			95,065				*
Gross margin %			42	%			(9	)%
Operating expenses:
Sales commissions			24,273				11,691				12,582				108	%
Sales and marketing			21,764				3,762				18,002				479	%
General and administrative			52,382				29,789				22,593				76	%
Total operating expenses			98,419				45,242				53,177				118	%
Loss from continuing operations			(5,120	)			(47,008	)			(41,888	)			(89	)%
Interest expense(1)			(23,258	)			(8,230	)			(15,028	)			183	%
Interest income			3				102				(99	)			(97	)%
Other expense, net(2)			(1,724	)			(66,234	)			64,510				(97	)%
Gain on extinguishment of debt			-				19,948				(19,948	)			(100	)%
Loss from continuing operations before income taxes			(30,099	)			(101,422	)			71,323				(70	)%
Income tax provision			-				(11	)			11				(100	)%
Net loss from continuing operations		$	(30,099	)		$	(101,433	)		$	71,334				(70	)%

*	Percentage change is not meaningful.

(1)	Includes interest expense and amortization of debt issuance costs to related parties of $5.4 million and $5.6 million in the thirty-nine week periods ended September 28, 2025 and September 29, 2024, respectively.

(2)

Includes loss of $3.0 million on issuance of derivative liability with a related party in the thirty-nine week period ended September 29, 2024. Includes a gain of $1.8 million and a loss of $22.8 million due to the change in the fair value of derivative liabilities with related parties in the thirty-nine week periods ended September 28, 2025 and September 29, 2024, respectively. Refer to Note 9 - Borrowings and Derivative Liabilities for details. Also includes $0.1 million of other income, net due to a change in the fair value of a forward purchase agreement with a related party in the thirty-nine week period ended September 28, 2025. Other expense, net includes related party transactions of $1.0 million of income due to the change in the fair value of a forward purchase agreement, $1.3 million loss on the conversion of SAFE Agreements, $0.9 million of expense related to the change in fair value of a SAFE Agreement and a $2.9 million gain due to the change in the fair value of the Carlyle warrants in the thirty-nine week period ended September 29, 2024.

Revenues

We disaggregate our revenues based on the following types of services (in thousands):

		Thirty-Nine Weeks Ended
		September 28, 2025				September 29, 2024				$ Change				% Change
Residential Solar Installation		$	114,097			$	20,068			$	94,029				469	%
New Homes Business			101,862				-				101,862				*
Sunder			4,310				-				4,310				*
Total revenues		$	220,269			$	20,068			$	200,201				998	%

*	Percentage change is not meaningful.

The increase in revenues is primarily attributed to the SunPower Acquisition. As a result, installations increased compared to the same period in the prior year by 3,067 and 4,859 for Residential Solar Installation and New Homes Business reportable segments, respectively.

Cost of revenues and gross margins

		Thirty-Nine Weeks Ended
		September 28,				September 29,				$				%
		2025				2024				Change				Change
Residential Solar Installation		$	67,388			$	21,834			$	45,554				209	%
New Homes Business			55,930				-				55,930				*
Sunder			3,652				-				3,652				*
Total cost of revenues		$	126,970			$	21,834			$	105,136				482	%
Gross margin			42	%			(9	)%

*	Percentage change is not meaningful.

Cost of revenues increased primarily attributed to the SunPower Acquisition. As a result, installations increased compared to the same period in the prior year by approximately 3,067 and 4,859 for Residential Solar Installation and New Homes Business reportable segments, respectively.

Sales commissions

		Thirty-Nine Weeks Ended
		September 28, 2025				September 29, 2024				$ Change				% Change
Residential Solar Installation		$	22,882			$	11,691			$	11,191				96	%
New Homes Business			1,391				-				1,391				*
Sunder			-				-				-				*
Total sales commissions		$	24,273			$	11,691			$	12,582				108	%

*	Percentage change is not meaningful.

Sales commissions for the Residential Solar Installation and New Homes Business reportable segments increased due to the increase in revenue arising from the SunPower Acquisition in the fourth quarter of fiscal 2024.

Sales and marketing

		Thirty-Nine Weeks Ended
		September 28, 2025				September 29, 2024				$ Change				% Change
Residential Solar Installation		$	19,591			$	3,762			$	15,829				421	%
New Homes Business			2,173				-				2,173				*
Sunder			-				-				-				*
Total sales and marketing		$	21,764			$	3,762			$	18,002				479	%

*	Percentage change is not meaningful.

Sales and marketing expenses in the Residential Solar Installation reportable segment increased due to the SunPower Acquisition in the fourth quarter of fiscal 2024.

General and administrative

		Thirty-Nine Weeks Ended
		September 28, 2025				September 29, 2024				$ Change				% Change
Residential Solar Installation		$	32,782			$	29,789			$	2,993				10	%
New Homes Business			19,600				-				19,600				*
Sunder			-				-				-				*
Total general and administrative		$	52,382			$	29,789			$	22,593				76	%

*	Percentage change is not meaningful.

General and administrative expenses for the Residential Solar Installation and New Homes Business reportable segments increased due to the SunPower Acquisition in the fourth quarter of fiscal 2024.

Interest expense

Interest expense inclusive of amortization of debt issuance costs was $23.3 million in the thirty-nine weeks ended September 28, 2025. Interest expense and amortization of debt issuance costs primarily consisted of $7.2 million attributable to the July 2024 Notes and $15.3 million attributable to the September 2024 Notes, with the remainder attributable to interest expense on our other obligations.

Interest expense was $8.2 million in the thirty-nine weeks ended September 29, 2024, and consisted of $1.8 million of interest expense relating to our July 2024 Notes, $0.5 million relating to our September 2024 Notes, $3.9 million relating to our obligation to Carlyle, $1.0 million relating to our secured credit line, $0.7 million related to our 2018 Bridge Loan and $0.3 million attributable to the $5.0 million revolver balance.

Other expense, net

Other expense, net for the thirty-nine weeks ended September 28, 2025, was $1.7 million. The main drivers consisted of $3.1 million of expense associated with the change in the fair value of our public, private placement and working capital warrants which are accounted for as liabilities and $0.8 million arising from the change in the fair value of our forward purchase agreements. These expenses were partially offset by $1.6 of gains from changes in the fair value of derivative liabilities associated with our 12% and 7% senior unsecured convertible notes.

We had other expense, net of $66.2 million, in the thirty-nine weeks ended September 29, 2024, which was comprised of $62.6 million related to the recognition of a derivative liability and subsequent change in fair value, $3.8 million of other financing costs, $2.1 million of expense incurred on the conversion and changes in the fair value our SAFE Agreements, $2.1 million of expense arising from changes in the fair value of warrants issued for our common stock and $0.5 million of other expenses partially offset by income of $4.9 million related to changes in the fair value of our forward purchase agreements.

Net loss from continuing operations

As a result of the factors discussed above, our net loss from continuing operations for the thirty-nine weeks ended September 28, 2025 was $30.1 million, as compared to a net loss from continuing operations of $101.4 million in the thirty-nine week period ended September 29, 2024.

Liquidity and capital resources

Overview

Since inception, we have incurred losses and negative cash flows from operations. We had a net loss from continuing operations of $30.1 million in the thirty-nine week period ended September 28, 2025. As of September 28, 2025, we had an accumulated deficit of $442.6 million, total debt, including derivative liabilities of $204.3 million, and cash and cash equivalents (excluding restricted cash) of $5.1 million which was held for working capital expenditures. We believe our operating losses and negative operating cash flows will continue into the foreseeable future.

Our material cash requirements include cash required to fund our operations, to meet our working capital requirements and to fund our capital expenditures.

We have financed our operations primarily through sales of equity securities, debt, issuance of convertible notes, cash generated from operations and the proceeds from the Mergers. As a result of not timely filing our Annual Report on Form 10-K for the fiscal year ended December 29, 2024, we are not currently eligible to use a registration statement on Form S-3 that would allow us to continuously incorporate by reference our SEC reports into the registration statement, to use "shelf" registration statements to conduct offerings, or to use our at-the-market offering facility until approximately one year from the date we have regained and maintained status as a current filer. Our inability to use Form S-3 may significantly impair our ability to raise the necessary capital to fund our operations and execute our strategy. If we seek to access the capital markets through a registered offering during the period of time that we are unable to use Form S-3, we may be required to publicly disclose the proposed offering and the material terms thereof before the offering commences, we may experience delays in the offering process due to SEC review of a Form S-1 registration statement and we may incur increased offering and transaction costs and other considerations. If we are unable to raise capital through a registered offering, we would be required to conduct our equity financing transactions on a private placement basis, which may be subject to pricing, size and other limitations imposed under the Nasdaq rules, or seek other sources of capital. The foregoing limitations on our financing approaches could prevent us from pursuing transactions or implementing business strategies that would be beneficial to our business.

Our cash equivalents are on deposit with major financial institutions. Our cash position raises substantial doubt regarding our ability to continue as a going concern for 12 months following the issuance of the unaudited condensed consolidated financial statements.

We will receive the proceeds from any cash exercise of warrants for shares of our common stock. The aggregate amount of proceeds could be up to $257.2 million if all the warrants are exercised for cash. However, to the extent the warrants are exercised on a "cashless basis," the amount of cash we would receive from the exercise of those warrants will decrease. The Private Warrants and Working Capital Warrants, as so identified in our unaudited condensed consolidated financial statements, may be exercised for cash or on a "cashless basis." The Public Warrants and the Merger Warrants may only be exercised for cash provided there is an effective registration statement registering the shares of common stock issuable upon the exercise of such warrants. If there is not a then-effective registration statement, then such warrants may be exercised on a "cashless basis," pursuant to an available exemption from registration under the Securities Act of 1933, as amended ("Securities Act"). We expect to use any such proceeds for general corporate and working capital purposes, which would increase our liquidity. As of December 18, 2025, the price of our common stock was $1.74 per share. The weighted average exercise price of the warrants was $10.02 as of September 28, 2025. We believe the likelihood that warrant holders will exercise their warrants, and therefore the amount of cash proceeds that we would receive is dependent upon the market price of our common stock. If the market price for our common stock remains less than the exercise price, we believe warrant holders will be unlikely to exercise.

Debt financings

12.0% unsecured convertible senior notes

In July 2024, we issued $46.0 million of senior unsecured convertible notes ("July 2024 Notes") to various lenders in connection with the exchange agreement transactions summarized below. Of the July 2024 Notes, $18.0 million were issued in exchange for the cancellation of existing indebtedness, which amount included $10.0 million issued to CRSEF Solis Holdings, LLC and its affiliates ("Carlyle"), identified by us as a related party at the transaction date. During the thirteen week period ended June 29, 2025, Carlyle ceased to be a significant shareholder and therefore is no longer deemed a related party with the Company. The July 2024 Notes also include $18.0 million initially issued to a related party affiliated with the Company's CEO, Rodgers Massey Revocable Living Trust ("Rodgers Revocable Trust"). The July 2024 Notes bear interest at 12.0% per annum and mature on July 1, 2029. The interest rate increases by 3% in the event of default. Interest is payable semiannually in arrears on January 1 and July 1. The July 2024 Notes are convertible into shares of our common stock at the option of the holder at a conversion rate initially equal to 595.2381 shares of common stock per $1,000 principal amount of the July notes. The July 2024 Notes may be declared due and payable at the option of the holder upon an event of default and upon a qualifying change of control event.

On July 10, 2025, the Company issued a convertible promissory note (the "July 2025 Note") to the Rodgers Revocable Trust in exchange for $5.0 million of proceeds received by the Company. The July 2025 Note bears the same features as the July 2024 Notes except for the conversion rate which is initially equal to 558.6592 shares of common stock per $1,000 principal amount due under the July 2025 Note. The conversion rate is subject to adjustment from time to time pursuant to the terms of the July 2025 Note. The July 2025 Note matures on July 1, 2029.

7.0% unsecured convertible senior notes

In September 2024, we issued $66.8 million of senior unsecured convertible notes to various lenders (the "September 2024 Notes"), $8.0 million of which were issued to a related party. In December 2024, we issued additional September 2024 Notes for cash proceeds of $13.0 million, and we issued an additional $0.2 million of the September 2024 Notes in the thirteen week period ended March 30, 2025. The September 2024 Notes bear interest at 7.0% per annum and mature on July 1, 2029. Interest is payable semiannually in arrears on January 1 and July 1.The September 2024 Notes are initially convertible into 467.8363 shares of common stock per $1,000 principal amount of September 2024 Notes. The September 2024 Notes may be declared due and payable at the option of the holder upon an event of default and upon a qualifying change of control event.

In September 2025, we issued an additional $22.0 million of the 7.0% unsecured senior convertible notes to various creditors ("September 2025 Notes") for net proceeds of $19.6 million which was used to fund our acquisition of Sunder.

Seller Note

In addition to the September 2025 Notes to finance the acquisition of Sunder, we also issued a note to the seller of Sunder ("Seller Note") on September 24, 2025. The Seller Note has an original principal amount of $20.0 million. The Seller Note bears interest at 7.0% per annum, compounded at the end of each calendar quarter. Interest is due and payable concurrent with the payment of the principal balance. The maturity date under the Seller Note is the earlier of (i) May 15, 2026 and (ii) the date on which all amounts under the Seller Note otherwise become due and payable following an event of default. The Seller Note must also be repaid in the event of a change of control of the Company or the sale of all or substantially all of the consolidated assets of the Company and its subsidiaries. The Seller Note includes customary events of default, including: (a) our failure to pay the Seller Note when due, (b) our voluntary or involuntary bankruptcy, (c) our liquidation or dissolution, (d) a change of control of the Company, (e) our material breach of the covenants applicable to us under the Seller Note, subject to applicable cure periods, and (f) if any of our representations or warranties made in the Seller Note were untrue in any material respect when made.

Loan with related party

We have a fixed principal balance of $1.5 million outstanding as of September 28, 2025, due to the Rodgers Revocable Trust, a related party.

Forward purchase agreements

In July 2023, FACT and Legacy Complete Solaria, Inc. entered into FPAs with each of (i) Meteora Special Opportunity Fund I, LP ("MSOF"), Meteora Capital Partners, LP ("MCP") and Meteora Select Trading Opportunities Master, LP ("MSTO") (with MSOF, MCP, and MSTO collectively as "Meteora"); (ii) Sandia Investment Management LP ("Sandia") , and (iii) Polar Multi-Strategy Master Fund ("Polar") (each individually, a "Seller", and together, the "FPA Sellers").

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 follows:

●

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 FPAs contains multiple settlement outcomes. Per the terms of the agreements, the FPAs will (1) settle in cash in the event the Company is due cash upon settlement from the FPA Sellers or (2) settle in either cash or shares, at the discretion of the Company, should the settlement amount adjustment exceed the settlement amount. Should the Company elect to settle via shares, the equity will be issued in Complete Solaria Common Stock, with a per share price based on the volume-weighted average price ("VWAP") Price over 15 scheduled trading days. The magnitude of the settlement is based on the Settlement Amount, an amount equal to the product of: (1) Number of shares issued to the FPA Seller pursuant to the FPA, less the number of Terminated Shares multiplied by (2) the VWAP Price over the valuation 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.

We entered into four separate FPAs, three of which, associated with the obligation to issue 6,300,000 Shares, were entered into prior to the closing of the Mergers. Upon signing the FPAs, we incurred an obligation to issue a fixed number of shares to the FPA Sellers contingent upon the closing of the Mergers in addition to the terms and conditions associated with the settlement of the FPAs.

On December 18, 2023, we and the FPA Sellers entered into separate amendments to the FPA (the "Amendments"). The Amendments lowered the reset floor price of each FPA from $5.00 to $3.00 and allow us to raise up to $10.0 million of equity from existing stockholders without triggering certain anti-dilution provisions contained in the FPA; provided, the insiders pay a price per share for their initial investment equal to the closing price per share as quoted on the Nasdaq on the day of purchase; provided, further, that any subsequent investments are made at a price per share equal to the greater of (a) the closing price per share as quoted by Nasdaq on the day of the purchase or (b) the amount paid in connection with the initial investment.

On May 7 and 8, 2024, respectively, we entered into and executed separate amendments to the FPAs (collectively the "Second Amendments") with Sandia (the "Sandia Second Amendment") and Polar (the "Polar Second Amendment"). The Second Amendments lowered the reset price of each FPA from $3.00 to $1.00 per share and amended the VWAP Trigger Event provision to read as "After December 31, 2024, an event that occurs if the VWAP Price, for any 20 trading days during a 30 consecutive trading day-period, is below $1.00 per Share". The Sandia Second Amendment is not effective until we execute similar amendments with both Polar and Meteora.

On June 14, 2024, we 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, we entered into an amendment to the FPA with Polar pursuant to which we and Polar agreed that Section 2 (Most Favored Nation) of the FPA is applicable to all 2,450,000 shares subject to the FPA.

On July 15, 2025, we and Meteora entered into an amendment to the FPA between Meteora and us, on July 16, 2025, we and Sandia entered into an amendment to the FPA between Sandia and us, and on August 1, 2025, we and Polar entered in an amendment to the FPA between Polar and us (collectively, the "FPA Amendments").

The FPA Amendments extend the valuation date applicable to the Forward Purchase Agreements (the "Valuation Date") to the earliest to occur of (a) July 17, 2026, (b) the date specified by Meteora or Sandia, as applicable, in a written notice to be delivered to the Company at their discretion and (c) 90 days after delivery by us of a written notice in the event that for any 20 trading days during a 30 consecutive trading day-period that occurs at least six months after the closing date of the transactions under the Amended and Restated Business Combination Agreement entered into on May 26, 2023, the applicable volume-weighted average price ("VWAP Price") is less than the then applicable reset price, provided that a registration statement was effective and available for the entire measurement period and remains continuously effective and available during the entire 90 day notice period.

The FPA Amendments further amend the definition of "Settlement Amount Adjustment" to provide that if the expected Settlement Amount (as defined in the FPA Amendments) determined by the VWAP Price over the 15 scheduled trading days ending on but excluding the valuation date exceeds the Settlement Amount Adjustment, then the Settlement Amount Adjustment shall be deemed to be zero, and that if the Settlement Amount Adjustment exceeds the Settlement Amount, then the Settlement Amount Adjustment shall be paid, at our option, in cash or shares of the our common stock.

The FPA Amendments also amend the definition of "Cash Settlement Payment Date" to provide that if the Settlement Amount Adjustment exceeds the Settlement Amount, we shall remit to the applicable seller the difference between (i) the Settlement Amount Adjustment and (ii) the Settlement Amount. The FPA Amendments further provide that the Settlement Amount will be used solely as a calculation mechanism to determine any liability we may owe to the applicable seller via the Settlement Amount Adjustment, and notwithstanding anything to the contrary, the applicable seller shall not be required to remit the Settlement Amount to us or return any portion of the Prepayment Amount.

Simple agreement for future equity ("SAFE") agreements

First SAFE

On January 31, 2024, we entered into a SAFE ("First SAFE") with the Rodgers Massey Freedom and Free Markets Charitable Trust (the "Purchaser") in connection with the Purchaser investing $1.5 million in the Company. The First SAFE is convertible into shares of our common stock, par value $0.0001 per share, upon the initial closing of a bona fide transaction or series of transactions with the principal purpose of raising capital, pursuant to which we issue and sell common stock at a fixed valuation (an "Equity Financing"), at a per share conversion price which is equal to the lower of (i) (a) $53.54 million divided by (b) our capitalization immediately prior to such Equity Financing (such conversion price, the "SAFE Price"), and (ii) 80% of the price per share of our common stock sold in an Equity Financing transaction. If we consummate a change of control prior to the termination of the First SAFE, the Purchaser will be automatically entitled to receive a portion of the proceeds of such liquidity event equal to the greater of (i) $1.5 million and (ii) the amount payable on the number of shares of our common stock equal to (a) $1.5 million divided by (b)(1) $53.54 million divided by (2) our capitalization immediately prior to such liquidity event (the "Liquidity Price"), subject to certain adjustments as set forth in the First SAFE. The First SAFE was convertible into a maximum of 1,431,297 shares of our common stock, assuming a per share conversion price of $1.05, which is the product of (i) $1.31, the closing price of our common stock on January 31, 2024, multiplied by (ii) 80%.

On April 21, 2024, we entered into an amendment ("First SAFE Amendment") that converted the First SAFE investment of $1.5 million into 4,166,667 shares of our common stock based on a conversion price of $0.36 per share, defined in the First SAFE Amendment as the product of (i) $0.45, the closing price of our common stock on April 19, 2024, multiplied by (ii) 80%. Upon conversion, we recorded a debit to SAFE Agreement of $1.5 million, a credit to Additional paid-in-capital of $1.9 million and recognized expense of $0.4 million within Other expense, net in our results of operations for that period.

Second SAFE

On February 15, 2024, we entered into a second SAFE (the "Second SAFE") with the Purchaser, in connection with the Purchaser investing $3.5 million in the Company. The Second SAFE did not accrue interest. The Second SAFE was initially convertible into shares of our common stock upon the initial closing of an Equity Financing transaction at a per share conversion price which was equal to the lower of (i) the Second SAFE Price, and (ii) 80% of the price per share of our common stock sold in such Equity Financing. If we consummated a change of control prior to the termination of the Second SAFE, the Purchaser would have been automatically entitled to receive an amount equal to the greater of (i) $3.5 million and (ii) the amount payable on the number of shares of our common stock equal to $3.5 million divided by the Liquidity Price, subject to certain adjustments as set forth in the Second SAFE. The Second SAFE was convertible into a maximum of 3,707,627 shares of our common stock, assuming a per share conversion price of $0.94, which is the product of (i) $1.18, the closing per share price of our common stock on February 15, 2024, (ii) 80%.

On April 21, 2024, we entered into an amendment ("Second SAFE Amendment") that converted the Second SAFE investment of $3.5 million into 9,722,222 shares of our common stock based on a conversion price of $0.36 per share, defined in the Second SAFE Amendment as the product of (i) $0.45, the closing price of our common stock on April 19, 2024, multiplied by (ii) 80%. Upon conversion, we recorded a debit to SAFE Agreement of $3.5 million, a credit to Additional paid-in-capital of $4.4 million and recognized expense of $0.9 million within Other expense, net in our results of operations for that period.

Third SAFE

On May 13, 2024, we entered into a third SAFE (the "Third SAFE") with the Purchaser, in connection with the Purchaser investing $1.0 million in the Company. The Third SAFE is convertible into shares of our common stock upon the initial closing of a bona fide transaction or series of transactions with the principal purpose of raising capital, pursuant to which the Company issues and sells shares of its common stock in an Equity Financing transaction, at a per share conversion price which is equal to 50% of the price per share of our common stock sold in such Equity Financing transaction. If we consummate a change of control prior to the termination of the Third SAFE, the Purchaser will be automatically entitled to receive a portion of the proceeds of such liquidity event equal to $1.0 million, subject to certain adjustments as set forth in the Third SAFE. The Third SAFE is convertible into a maximum of 2,750,000 shares of our common stock, assuming a per share conversion price of $0.275, which is the product of (i) $0.55, the closing price of our common stock on May 13, 2024, multiplied by (ii) 50%. Given that the SAFE could be settled in cash or a variable number of shares, we have accounted for the instrument as a liability at its fair value.

As September 28, 2025, we estimated the fair value of the Third SAFE at $0.5 million based upon the assumptions disclosed in Note 4 - Fair Value Measurements to our unaudited condensed consolidated financial statements.

Cash flows for the thirty-nine weeks ended September 28, 2025 and September 29, 2024

The following table summarizes our cash flows from operating, investing, and financing activities for the thirty-nine week periods ended September 28, 2025 and September 29, 2024 (in thousands):

		Thirty-Nine Weeks Ended
		September 28, 2025				September 29 2024
Net cash used in operating activities from continuing operations		$	(13,406	)		$	(29,111	)
Net cash used in investing activities from continuing operations			(20,689	)			(1,044	)
Net cash provided by financing activities from continuing operations			25,789				107,060
Net (decrease) increase in cash, cash equivalents and restricted cash			(8,306	)			76,927

Cash flows from operating activities

Net cash used in operating activities from continuing operations of $13.4 million in the thirty-nine weeks ended September 28, 2025 was due to net loss from continuing operations of $30.1 million offset by $33.8 million of favorable noncash adjustments and $17.1 million of cash outflows from changes in operating assets and liabilities. Significant movement in non-cash adjustments consisted of favorable non-cash adjustments of $14.3 million of amortization of debt issuance costs, $8.2 million of stock-based compensation, $4.3 million of depreciation and amortization, $3.1 million for the change in the fair value of warrant liabilities, $4.2 million for the provision of credit losses, $0.8 million of non-cash lease expense and $0.8 million change in the fair value of forward purchase agreements, partially offset by $1.6 million net gain on the change in the fair value of derivative liabilities and $0.3 million of other items. Significant movement attributable to net cash outflows from changes in operating assets of $17.1 million consisted of a $32.7 million increase in accounts receivable, a $12.3 million increase in prepaid expenses and other current assets and noncurrent assets, a $6.4 million decrease in accrued expenses and other liabilities, a $10.6 million decrease in contract liabilities, and a $0.9 million decrease in operating lease obligations, partially offset by a $34.1 million decrease in inventories and a $11.7 million increase in accounts payable.

Net cash used in operating activities from continuing operations of $29.1 million for the thirty-nine weeks ended September 29, 2024 was primarily due to the net loss from continuing operations, net of tax of $101.4 million, partially offset by non-cash adjustments of $70.8 million and net cash inflows of $1.5 million from changes in our operating assets and liabilities. Non-cash adjustments in our operating results consisted of $62.6 million arising from the issuance and subsequent change in fair value of derivative liabilities in connection with our convertible notes issued and outstanding, $5.4 million of expense in connection with warrants issued for vendor services, $3.1 million of expense related to changes in provision for credit losses, $4.1 million of stock-based compensation expense, $3.7 million of loss on impairment of assets, $3.9 million of expense in accretion of interest attributable to the CS Solis debt, $3.8 million of other noncash financing costs, $1.9 million of non-cash interest expense, $1.3 million of loss arising from the conversion of two SAFE Agreements to shares of our common stock, $1.0 million of depreciation and amortization, $0.9 million of expense related to changes in the fair value of the SAFE Agreements, $2.1 million of loss from the changes in the fair value of our warrant liabilities, $1.4 million amortization of debt issuance costs, $0.5 million of lease expense and $0.1 million provision for excess and obsolete inventory. These adjustments were partially offset by a $19.9 million gain on extinguishment of debt, $4.9 million of income related to changes in fair value of our forward purchase agreements. The main drivers of net cash inflows derived from the changes in operating assets and liabilities were related to a decrease in accounts receivable, net of $14.7 million and a decrease in inventories of $2.4 million, partially offset by a decrease in accounts payable of $8.5 million, an increase in prepaid and other current assets of $3.2 million, a decrease in contract liabilities of $1.4 million, a decrease in accrued expenses and other liabilities of $1.6 million, and a decrease in operating lease liabilities of $0.9 million.

Cash flows from investing activities

Net cash used in investing activities from continuing operations of $20.7 million in the thirty-nine week period is attributable to the cash paid for the acquisition of Sunder. Net cash used of $1.0 million for the thirty-nine September 29, 2024 is attributable to additions to internal-use-software.

Cash flows from financing activities

Net cash provided by financing activities from continuing operations was $25.8 million for the thirty-nine weeks ended September 28, 2025 and consisted of $1.7 million in proceeds from the issuance of shares of our common stock, $5.0 million received from the Rodgers Revocable Trust, a related party in exchange for the July 2025 Note, $19.8 million received in exchange for 7% senior unsecured convertible notes, and $0.8 million in proceeds from the exercise of stock options and warrants in exchange for the issuance of shares of our common stock, partially offset by $1.5 million of finance leases payments.

Net cash provided by financing activities of $107.1 million for the thirty-nine weeks ended September 29, 2024 was primarily due to $94.7 million in net proceeds from the issuance of convertible notes, inclusive of $26.0 million from a related party, $6.1 million in net proceeds from the issuance of shares of our common stock from White Lion and $6.0 million in net proceeds from the issuance of SAFE Agreements, and $0.6 million of proceeds from the exercise of common stock options, partially offset by $0.3 million repayment of notes payable.

Emerging growth company status

Section 102(b)(1) of the Jumpstart Our Business Startups Act of 2012, or the JOBS Act, exempts emerging growth companies from being required to comply with new or revised financial accounting standards until private companies are required to comply with the new or revised financial accounting standards. The JOBS Act provides that a company can choose not to take advantage of the extended transition period and comply with the requirements that apply to non-emerging growth companies, and any such election to not take advantage of the extended transition period is irrevocable.

Complete Solaria is an "emerging growth company" as defined in Section 2(a) of the Securities Act and has elected to take advantage of the benefits of the extended transition period for new or revised financial accounting standards. Following the closing of the Mergers, our Post-Combination Company remains an emerging growth company until the earliest of (i) the last day of the fiscal year in which the market value of common stock that is held by non-affiliates exceeds $700 million as of the end of that year's second fiscal quarter, (ii) the last day of the fiscal year in which we has total annual gross revenue of $1.235 billion or more during such fiscal year (as indexed for inflation), (iii) the date on which we have issued more than $1.0 billion in non-convertible debt in the prior three-year period, or (iv) the last day of the fiscal year ending after the fifth anniversary of our IPO. Complete Solaria expects to continue to take advantage of the benefits of the extended transition period, although it may decide to early adopt such new or revised accounting standards to the extent permitted by such standards. This may make it difficult or impossible to compare our financial results with the financial results of another public company that is either not an emerging growth company or is an emerging growth company that has chosen not to take advantage of the extended transition period exemptions because of the potential differences in accounting standards used.