{"url_path":"/sec/spwr/10-q/2026/item-1a","section_key":"item-1a","section_title":"Item 1A RISK FACTORS**","topic":"sec","document":{"doc_type":"10-Q/A","doc_date":"2026-05-18","source_url":"https://www.sec.gov/Archives/edgar/data/1838987/0001213900-26-058557-index.html","accession_number":"0001213900-26-058557","cik":"0001838987","ticker":"SPWR","issuer_name":"SunPower Inc.","edgar_url":"https://www.sec.gov/Archives/edgar/data/1838987/0001213900-26-058557-index.html","primary_entity_key":"0001838987","primary_entity_name":"SunPower Inc."},"word_count":22019,"has_tables":true,"body_markdown":"** **\n\n**ITEM 1A. RISK FACTORS**\n\n* *\n\n*Investing in our securities\ninvolves a high degree of risk. You should carefully consider the risks and uncertainties described below together with all of the other\ninformation contained in this Quarterly Report on Form 10-Q, including our unaudited condensed consolidated financial statements and related\nnotes appearing in Part I, Item 1 of this Quarterly Report on Form 10-Q and in the section titled “Management’s Discussion\nand Analysis of Financial Condition and Results of Operations,” before deciding to invest in our securities. If any of the events\nor developments described below were to occur, our business, prospects, operating results and financial condition could suffer materially,\nthe trading price of our common stock could decline, and you could lose all or part of your investment. The risks and uncertainties described\nbelow are not the only ones we face. Additional risks and uncertainties not presently known to us or that we currently believe to be immaterial\nmay also adversely affect our business. The risks facing our business have not changed substantively from those discussed in our Annual\nReport on Form 10-K, except for those risks marked with an asterisk (*).*\n\n \n\n**Risks Related to our Businesses and Industry**\n\n \n\n**We have a history of\nlosses that may continue in the future; our management has identified conditions that raise substantial doubt about our ability to continue\nas a going concern; and we may not achieve profitability or generate positive cash flow.**\n\n \n\nSince our inception, we\nhave incurred losses and negative cash flows from operations. Our operating loss was $3.7 million before interest expense of $6.0 million\nand non-operating income of $14.6 million, principally due to a gain on the remeasurement of derivative liabilities, in the thirteen\nweeks ended March 30, 2025. We have an accumulated deficit of $406.6 million as of March 30, 2025. We have accrued expenses and other\ncurrent liabilities of $50.9 million, current debt of $4.3 million, and notes payable and derivative liabilities, net of current portion\nof $131.6 million as of March 30, 2025, as well as other current and long-term liabilities (including the $6.9 million liability we recorded\nrelating to a litigation matter with Siemens as well as an additional accrual for $2.0 million for attorneys’ fees, expenses, and\npre-judgment interest, in accrued expenses and other current liabilities within our consolidated balance sheet as of December 29, 2024).\nWe had cash and cash equivalents, excluding restricted cash, of $10.6 million as of March 30, 2025, which was held for working capital\nexpenditures. These conditions raise substantial doubt about our ability to continue as a going concern. Our ability to continue\nas a going concern requires that we obtain sufficient funding, either through external financial transactions or cash flows generated\nfrom operations, to meet our obligations and finance our operations.\n\n \n\nIf we are not able to secure\nadequate additional funding, either through external financial transactions or cash flows generated from operations, when needed, we will\nneed to reevaluate our operating plan and may be forced to make reductions in spending, extend payment terms with suppliers, liquidate\nassets where possible, or suspend or curtail planned programs or cease operations entirely. These actions could materially impact our\nbusiness, results of operations and future prospects. There can be no assurance that in the event we require additional financing, such\nfinancing will be available on terms that are favorable, or at all.\n\n \n\nWe may not achieve profitability\nor positive cash flow for a number of reasons, including declines in revenue, as well as increases in costs of our products, U.S. and\nglobal macroeconomic trends, including with respect to the impact of U.S. trade tariffs and the imposition of additional tariffs applicable\nto our industry or our products. In addition, we may be unable to identify further cost savings opportunities below present levels that\nwould not adversely impact the functioning of our existing operations needed to meet customer and regulatory requirements. If we fail\nto generate sufficient revenue to support our operations, we may not be able to achieve profitability or generate sufficient cash flow\nto meet our financial obligations and our liquidity position will be negatively impacted. See “Management’s Discussion and\nAnalysis of Financial Condition and Results of Operations - Liquidity and Capital Resources” and “Notes to Consolidated Financial\nStatements – (1) Organization – (c) Liquidity and Going Concern” for a further discussion of the other factors that\nmay impact our liquidity position.\n\n \n\n57\n\n \n\n \n\nFailure to generate sufficient\ncash flows from operations, raise additional capital or reduce certain discretionary spending would have a material adverse effect on\nour ability to achieve our intended business objectives.\n\n \n\n**We\nmay need to raise additional funding to finance our operations. This additional financing may not be available on acceptable terms or\nat all. Failure to obtain this necessary capital when needed may force us to curtail planned programs or cease operations entirely.**\n\n** **\n\nOur\noperations have consumed significant amounts of cash since inception. We expect to incur significant operating expenses as we continue\nto grow our business, including expenses incurred in connection with acquisitions and the further integration of acquired businesses,\nincluding the SunPower Businesses. We believe that our operating losses and negative operating cash flows will continue into the foreseeable\nfuture.\n\n \n\nWe\nhad cash and cash equivalents of $10.6 million as of March 30, 2025. Our cash position raises substantial doubt regarding our ability\nto continue as a going concern for 12 months after the consolidated financial statements issuance. Further, we cannot guarantee that our\nbusiness will generate sufficient cash flow from operations to fund our operations or liquidity needs. Over time, we expect that we will\nneed to raise additional funds through the issuance of equity, equity-related or debt securities or through obtaining credit from financial\ninstitutions to fund, together with our principal sources of liquidity, any significant unplanned or accelerated expenses and new strategic\ninvestments.\n\n \n\nWe\nwill require substantial additional capital to continue operations. Such additional capital might not be available when we need it and\nour actual cash requirements might be greater than anticipated. Additionally, the ability to raise additional financing depends on numerous\nfactors that are outside our control, including general economic and market conditions, interest rates, the health of financial institutions,\ninvestors’ and lenders’ assessments of our prospects and the prospects of the solar industry in general. We cannot be certain\nthat additional capital will be available on attractive terms, if at all, when needed, which could be dilutive to stockholders, and our\nfinancial condition, results of operations, business and prospects could be materially and adversely affected. If the financial markets\nbecome difficult or costly to access, including due to rising interest rates, inflation, fluctuations in exchange rates or other changes\nin geopolitical or economic conditions, including, without limitation, with respect to tariffs and trade policies, our ability to raise\nadditional capital may be negatively impacted. Our failure to raise capital in the future would have a negative impact on our ability\nto expand our business.\n\n \n\n**Raising\nadditional funds may cause dilution to existing stockholders and/or may restrict our operations or require us to relinquish proprietary\nrights.**\n\n** **\n\nTo\nthe extent that we raise additional capital by issuing equity or convertible debt securities, our existing stockholders may experience\nsubstantial dilution, and the terms of these issued securities may include liquidation or other preferences that adversely affect the\nrights of our existing common stockholders. For example, we may issue debt or equity securities under our shelf registration statement,\nthrough our at-the-market offering facility, through our equity line of credit with White Lion, or we may issue additional debt or equity\nsecurities in private transactions. Any agreements for future debt or preferred equity financings, if available, may involve covenants\nlimiting or restricting our ability to take specific actions, such as raising additional capital, incurring additional debt, making capital\nexpenditures or declaring dividends. Our ability to use our at-the-market offering facility may be constrained by the size of our non-affiliate\nmarket capitalization, our trading volume and other factors, and there can be no assurance regarding the price at which we will be able\nto sell such shares, and any sales of our common stock under our at-the-market offering facility may be at prices that result in additional\ndilution to our existing stockholders. If we incur additional debt, the debt holders, together with holders of our outstanding Convertible\nSenior Notes (as defined below), would have rights senior to holders of common stock to make claims on our assets, and the terms of any\nfuture debt could restrict our operations, including our ability to pay dividends on our common stock.\n\n \n\n58\n\n \n\n \n\n**We have identified material\nweaknesses in our internal controls over financial reporting. If we are unable to maintain effective internal controls over financial\nreporting and disclosure controls and procedures, the accuracy and timeliness of our financial and operating reporting may be adversely\naffected, and confidence in our operations and disclosures may be lost.**\n\n \n\n In\nconnection with the preparation and audit of our financial statements for the year ended December 29, 2024, our management identified\nmaterial weaknesses in our internal control over financial reporting. A material weakness is a deficiency, or a combination of deficiencies,\nin internal control over financial reporting, such that a reasonable possibility exists that a material misstatement of annual or interim\nfinancial statements would not be prevented or detected on a timely basis. The material weaknesses are as follows:\n\n \n\nThe\nCompany did not maintain controls to execute the criteria established in the COSO Framework for (i) the control environment, (ii) risk\nassessment, (iii) control activities, (iv) information and communication, and (v) monitoring activities.\n\n \n\nEach\nof the control deficiencies identified below constitute material weaknesses, either individually or in the aggregate.\n\n \n\n*Control\nEnvironment.* The Company did not maintain an effective control environment and identified the following material weakness: the\nCompany lacked appropriate policies and resources to develop and operate effective internal control over financial reporting and a lack\nof appropriate and consistent IT policies given the significant volume of financially relevant IT changes, which contributed to the Company’s\ninability to properly analyze, record and disclose accounting matters timely and accurately.\n\n \n\nThis\ncontrol environment material weakness also contributed to the other material weaknesses identified below.\n\n \n\n*Risk\nAssessment.* The Company did not design and implement an effective risk assessment and identified a material weakness relating\nto: (i) identifying, assessing, and communicating appropriate objectives, (ii) identifying and analyzing risks to achieve these objectives,\nand (iii) identifying and assessing changes in the business that could impact the system of internal controls.\n\n \n\n*Control\nActivities.* The Company did not design and implement effective control activities and identified the following material weakness:\n\n \n\n \n●\nIneffective design and operation of certain control activities due to significant personnel changes throughout 2024. Control deficiencies, which aggregate to a material weakness, occurred within substantially all areas of financial reporting.\n\n* *\n\n*Information\nand Communication. *The Company did not design and implement effective information and communication activities and identified\nthe following material weaknesses*:*\n\n* *\n\n \n●\nThe Company did not design and maintain effective general information technology controls over logical access and program change management for our key information systems used to support the financial reporting process. Specifically, management did not maintain effective controls to ensure proper segregation of duties related to user administration and other privileged access functions and in implementing program changes in information systems. Due to the pervasive nature of these deficiencies, business process controls that are dependent upon information from these systems were also not effective.\n\n \n\n \n●\nThe Company did not have adequate processes and controls for communicating information among the accounting, finance, operations, and legal departments, necessary to support the proper functioning of internal controls.\n\n \n\n*Monitoring\nActivities. *The Company did not design and implement effective monitoring activities and identified the following material weaknesses:\n(i) failure to adequately monitor compliance with accounting policies, procedures and controls related to substantially all areas of financial\nreporting; and (ii) failure to properly select, develop and perform ongoing evaluations of the components of internal controls (including\nthe monitoring of service providers’ control environments).\n\n* *\n\n59\n\n \n\n* *\n\nThese\nmaterial weaknesses described in the paragraphs above contributed to material accounting errors identified and corrected during the audit\nof the Company’s financial statements. If we fail to adequately remediate these material weaknesses, there could be material misstatements\nthat may not be prevented or detected.\n\n \n\nWe have taken certain steps,\nsuch as recruiting additional personnel, in addition to utilizing third-party consultants and specialists, to supplement our internal\nresources, to enhance our internal control environment and plan to take additional steps to remediate the material weaknesses. Although\nwe plan to complete this remediation process as quickly as possible, we cannot estimate how long it will take. We cannot assure that the\nmeasures we have taken to date, and may take in the future, will be sufficient to remediate the control deficiencies that led to our material\nweakness in internal control over financial reporting or that such measures will prevent or avoid potential future material weaknesses.\n\n \n\nIf we are not able to maintain\neffective internal control over financial reporting and disclosure controls and procedures, or if material weaknesses are discovered in\nfuture periods, a risk that is significantly increased in light of the complexity of our business, we may be unable to accurately and\ntimely report our financial position, results of operations, cash flows or key operating metrics, which could result in late filings of\nthe annual and quarterly reports under the Exchange Act, restatements of financial statements or other corrective disclosures, an inability\nto access commercial lending markets, defaults under its secured revolving credit facility and other agreements, or other material adverse\neffects on our business, reputation, results of operations, financial condition or liquidity.\n\n \n\n**Our failure to prepare\nand timely file our periodic reports with the SEC limits our access to the public markets to raise debt or equity capital.**\n\n \n\nWe did not file our Annual\nReport on Form 10-K within the timeframe required by the SEC. Accordingly, we are not currently eligible to use a registration statement on Form S-3 that would allow us to\ncontinuously incorporate by reference our SEC reports into the registration statement, to use “shelf” registration statements\nto conduct offerings, or to use our at-the-market offering facility until approximately one year from the date we have regained and maintain\nstatus as a current filer. Our inability to use Form S-3 may significantly impair our ability to raise necessary capital to fund our operations\nand execute our strategy. If we seek to access the capital markets through a registered offering during the period of time that we are\nunable to use Form S-3, we may be required to publicly disclose the proposed offering and the material terms thereof before the offering\ncommences, we may experience delays in the offering process due to SEC review of a Form S-1 registration statement and we may incur increased\noffering and transaction costs and other considerations. If we are unable to raise capital through a registered offering, we would be\nrequired to conduct our equity financing transactions on a private placement basis, which may be subject to pricing, size and other limitations\nimposed under the Nasdaq rules, or seek other sources of capital. The foregoing limitations on our financing approaches could prevent\nus from pursuing transactions or implementing business strategies that would be beneficial to our business.\n\n \n\n**Changes in international\ntrade policies, tariffs, or trade disputes could significantly and adversely affect our business, revenues, margins, results of operations,\nand cash flows.**\n\n \n\nOn February 7, 2018, safeguard\ntariffs on imported solar cells and modules (“**CSPV**”) went into effect pursuant to Proclamation 9693, which approved\nrecommendations to provide relief to U.S. manufacturers and impose safeguard tariffs on imported solar cells and modules, based on the\ninvestigations, findings, and recommendations of the U.S. International Trade Commission (the “**International Trade Commission**”).\nOn February 4, 2022, President Biden issued Proclamation 10339 extending the existing safeguard measures on U.S. imports of CSPV products\nby an additional four years until February 6, 2026. Since 2022, modules are subject to a tariff rate of approximately 15%. Cells are subjected\nto a tariff-rate quota, under which the first 5 GW of cell imports each year will be exempt from tariffs, and cells imported after the\n5 GW quota has been reached will be subject to the same 14.75% tariff as modules in the first year, with the same 0.25% decline in each\nof the three subsequent years. The tariff-free cell quota applies globally, without any allocation by country or region.\n\n \n\n60\n\n \n\n \n\nThe tariffs could materially\nand adversely affect our business and results of operations. While solar cells and modules based on interdigitated back contact technology\nremain excluded from these safeguard tariffs, our solar products based on other technologies continue to be subject to the safeguard tariffs,\nwhich will remain in place until February 6, 2026. Although we are actively engaged in efforts to mitigate the effect of these tariffs,\nthere is no guarantee that these efforts will be successful.\n\n \n\nIn addition to the safeguard\naction, which imposes additional duties and tariffs rate quotas on solar panel and cell imports from all sources, solar cells and panels\nfrom various countries are also subject to U.S. antidumping, and countervailing duty (AD/CVD) actions in the United States. The U.S. Department\nof Commerce (the “**Department of Commerce**”) maintains antidumping and countervailing duty orders on solar cells as well\nas panels produced in China. In 2022, the Department of Commerce found that solar product producers in Cambodia, Malaysia, Thailand, and\nVietnam were circumventing the China AD/CVD actions. As a result, imports of solar products from these countries may be treated as if\nthey are of Chinese origin and therefore subject to the aforementioned antidumping and countervailing duty orders. On June 6, 2022, President\nBiden issued an Executive Order allowing U.S. solar installers to import solar modules and cells from Cambodia, Malaysia, Thailand and\nVietnam free from certain duties for 24 months, along with other incentives designed to accelerate U.S. domestic production of clean energy\ntechnologies. This moratorium ended in June 2024 and China-wide AD/CVD action now applies to imports from those countries that contain\nChinese-origin inputs.  Additionally, on December 29, 2023, Auxin and Concept Clean Energy, Inc. filed suit in the U.S. Court of\nInternational Trade challenging the legal basis for the moratorium and implementing regulations. Several motions have been filed to date,\nincluding a motion to dismiss by the U.S. government, which the court rejected. If the suit proves successful, solar module importers\ncould owe retroactive duties on goods that have already cleared customs. In addition, on May 15, 2024 the Department of Commerce initiated\nantidumping and countervailing duty investigations of CSPV products from Cambodia, Malaysia, Thailand, and Vietnam. On October 1 and November\n29, 2024, the Department of Commerce announced its preliminary affirmative determinations in the antidumping duty and countervailing duty\ninvestigations, respectively. The final determinations are scheduled to be announced on or before April 21, 2025\n\n \n\nUncertainty surrounding the\nimplications of existing tariffs affecting the U.S. solar market and potential trade tensions between the U.S. and other countries has\ncaused and is likely to cause further market volatility, price fluctuations, supply shortages, and project delays, any of which could\nharm our business, and the pursuit of mitigating actions may divert substantial resources from other projects.\n\n  \n\nFurther, the Uyghur Forced\nLabor Prevention Act may inhibit importation of certain solar modules or components. In addition, the imposition of tariffs is likely\nto result in a wide range of impacts to the U.S. solar industry and the global manufacturing market, as well as our business in particular.\nSuch tariffs could materially increase the price of our solar products and result in significant additional costs to the company, its\nresellers, and the resellers’ customers, which could cause a significant reduction in demand for the company’s solar power\nproducts and greatly reduce our competitive advantage.\n\n \n\n**Our business depends\nin part on the availability of rebates, tax credits and other financial incentives. The expiration, elimination or reduction of these\nrebates, credits or incentives or the ability to monetize them could adversely impact our business.***\n\n \n\nU.S. federal, state and local\ngovernment bodies provide incentives to end users, distributors, system integrators and manufacturers of solar energy systems to promote\nsolar electricity in the form of rebates, tax credits and other financial incentives such as system performance payments, payments for\nrenewable energy credits associated with renewable energy generation and the exclusion of solar energy systems from property tax assessments.\nThese incentives enable us to lower the price charged to customers for energy and for solar energy systems. However, these incentives\nmay expire on a particular date, end when the allocated funding is exhausted or be reduced or terminated as solar energy adoption rates\nincrease. These reductions or terminations often occur without warning.\n\n \n\nThe Inflation Reduction Act\n(“IRA”) extended and modified prior law applicable to U.S. federal tax credits that are available with respect to solar energy\nsystems. Under the IRA, the following tax credits are available: (i) a production tax credit under Code Section 45 (for facilities that\nare place in service after December 31, 2025) (the “**PTC**”) in connection with the installation of certain solar facilities\nand energy storage technology, (ii) an investment tax credit under Code Section 48 (for facilities that begin construction before January\n1, 2025) and Code Section 48E (for facilities that are placed in service after December 31, 2024 (the “**ITC**”) in connection\nwith the installation of certain solar facilities and energy storage technology, and (iii) a residential clean energy credit (the “Section\n25D Credit”) in connection with the installation of qualifying property that uses solar energy to generate electricity for residential\nuse.\n\n \n\n61\n\n \n\n \n\nPrior to the IRA, the PTC\nfor solar facilities had phased out and was no longer available. The IRA reinstated the PTC for solar facilities. The PTC available to\na taxpayer in 2024 and prior taxable years under Code Section 45 generally is equal to a certain rate multiplied by the kilowatt hours\nof electricity produced by the taxpayer from solar energy at a facility owned by it and sold to an unrelated party during that taxable\nyear. The base rates for the PTC under Code Section 45 is 0.3 cents (adjusted for inflation). This rate is increased to 1.5 cents (adjusted\nfor inflation) for projects that (i) have a maximum net output of less than one megawatt (measured in alternating current), (ii) begin\nconstruction before January 29, 2023, or (iii) meet certain prevailing wage and apprenticeship requirements. It also may be increased\nfor projects that include a certain percentage of components that were produced in the U.S., projects that are located in certain energy\ncommunities, and projects that are located in low-income communities. The PTC under Code Section 45Y, the successor to Code Section 45\nthat is applicable for taxable years after 2024, generally is similar to the PTC under Code Section 45 but includes certain different\nterms and qualification requirements.\n\n \n\nThe PTC under Code\nSection 45Y is the successor to the tax credit under Code Section 45 and is applicable for taxable years after 2024. The PTC under\nCode Section 45Y generally is equal to the PTC outlined above that is available under Code Section 45, including providing for the\nsame increased credit rates under the same circumstances. The PTC under Code Section 45Y applies to kilowatt hours of electricity\nproduced at a “qualified facility,” which generally is a facility, such as a solar energy facility, that generates\nelectricity and has a greenhouse gas emission rate that is not greater than zero. The tax credit phases out over four years based on\nthe later of either the U.S. Treasury determining that the annual greenhouse gas emission from the production of electricity in the\nU.S. is equal to or less than 25% of the annual greenhouse gas emissions from the production of electricity in the U.S. for 2022 or\n2032. The credit is phased out from 100% for construction beginning in the first calendar year after such date to 75% in the second\nyear, 50% in the third year, and 0% in the fourth year. A facility is not eligible for the PTC under Code Section 45Y if a tax\ncredit already is allowed with respect to the facility under Code Section 45, 48 or 48E, or certain other tax credit provisions, for\nthe taxable year or any prior taxable year.\n\n \n\nThe ITC available under Code\nSection 48E is the successor provision of Code Section 48 and is applicable for taxable years after 2024. The ITC under Code Section 48\ngenerally is equal to the ITC outlined above under Code Section 48, including generally providing for the same increased credit rates\nunder the same circumstances. The ITC under Code Section 48E applies to investments in a “qualified facility” and “energy\nstorage technology”. A “qualified facility” for these purposes generally is the same as described for the PTC under\nCode Section 45Y and “energy storage technology” is defined by reference to such term in Code Section 48. The ITC available\nunder Code Section 48E includes the same phase out schedule as outlined above with respect to the PTC under Code Section 45Y. The ITC\nunder Code Section 48E is subject to recapture if the Internal Revenue Service determines that the greenhouse gas emissions rate for the\nfacility exceeds a certain threshold. A facility is not eligible for the ITC under Code Section 48E if a tax credit already is allowed\nwith respect to the facility under Code Section 45, 45Y or 48, or certain other tax credit provisions, for the taxable year or any prior\ntaxable year. As discussed below, the US Congress has proposed to eliminate the ITC by the end of 2025.\n\n \n\nThe Section 25D Credit available\nto a taxpayer is equal to the “applicable percentage” of expenditures for property that uses solar energy to generate electricity\nfor use in a dwelling unit located in the U.S. and used as a residence by the taxpayer. The applicable percentage is 26% for such systems\nthat are placed in service before January 1, 2022, 30% for such systems that are placed in service after December 31, 2021 and before\nJanuary 1, 2033, 26% for such systems that are placed in service in 2033, and 22% for such systems that are placed in service in 2034.\nThe Section 25D Credit is scheduled to expire effective January 1, 2035. The availability of the Section 25D Credit may impact the prices\nof its solar energy systems and overall value proposition our solar systems provide to customers.\n\n \n\nReductions in,\neliminations of, or expirations of, governmental incentives could adversely impact results of operations and our ability to compete\nin this industry by increasing the cost of capital, causing us to increase the prices of our energy and solar energy systems and\nreduce the size of our addressable market. In particular, in May 2025, the US Congress has proposed to eliminate the ITC by the end\nof 2025. Elimination of ITCs will have an adverse impact on the demand for solar system and installation services.\n\n \n\n62\n\n \n\n \n\nThe U.S. federal tax credits\ndiscussed above have certain legal and operational requirements. There may be uncertainty as to how such requirements promulgated under\nthe IRA are interpreted. If Internal Revenue Service guidance regarding implementation of the IRA is viewed by investors as unclear, tax\ncredit financing may be delayed or downsized, harming our ability to secure financing for customers. Our failure to either (i) interpret\nthe new requirements under the IRA regarding among other things, prevailing wage, apprenticeship, domestic content, siting in an “energy\ncommunity,” accurately or (ii) adequately update our supply-chain, manufacturing, installation, and record-keeping processes to\nmeet such requirements, may result a partial or full reduction in the related U.S. federal tax benefit, and our customers, financiers\nand shareholders may require us to indemnify them for certain of such reductions.\n\n \n\n**We are an “emerging\ngrowth company” and a “smaller reporting company” and we cannot be certain if the reduced reporting requirements applicable\nto these companies will make our common stock less attractive to investors.**\n\n \n\nWe are an “emerging\ngrowth company,” as defined in the Jumpstart Our Business Startups Act of 2012 (JOBS Act). For as long as we continue to be an emerging\ngrowth company, we intend to take advantage of exemptions from various reporting requirements that apply to other public companies that\nare not emerging growth companies, including:\n\n \n\n \n●\nbeing permitted to provide only two years of audited financial statements, in addition to any required unaudited interim financial statements, with correspondingly reduced “Management’s Discussion and Analysis of Financial Condition and Results of Operations” disclosure in our periodic reports;\n\n \n\n \n●\nnot being required to comply with the auditor attestation requirements of Section 404 of the Sarbanes-Oxley Act of 2002, as amended (the “**Sarbanes-Oxley Act**”);\n\n \n\n \n●\nnot being required to comply with any requirement that may be adopted by the Public Company Accounting Oversight Board (the “**PCAOB**”) regarding mandatory audit firm rotation or a supplement to the auditor’s report providing additional information about the audit and the financial statements;\n\n \n\n \n●\nreduced disclosure obligations regarding executive compensation in our periodic reports and proxy statements; and\n\n \n\n \n●\nexemptions from the requirements of holding nonbinding advisory stockholder votes on executive compensation and stockholder approval of any golden parachute payments not previously approved.\n\n \n\nUnder the JOBS Act, emerging\ngrowth companies can also delay adopting new or revised accounting standards until such time as those standards apply to private companies.\nWe have elected to avail ourselves of this exemption from new or revised accounting standards and, therefore, will not be subject to the\nsame new or revised accounting standards as other public companies that are not emerging growth companies. As a result, our financial\nstatements may be different from companies that comply with the new or revised accounting pronouncements as of public company effective\ndates.\n\n \n\nWe will remain an emerging\ngrowth company until the earliest to occur of: (1) the last day of the fiscal year in which we have at least $1.235 billion\nin total annual gross revenues; (2) the date we qualify as a “large accelerated filer,” with at least $700.0 million\nof equity securities held by non-affiliates; (3) the date on which we have issued more than $1.0 billion in non-convertible\ndebt securities during the prior three-year period; and (4) the last day of the fiscal year ending after the fifth anniversary of\nour IPO.\n\n \n\nEven after we no longer qualify\nas an emerging growth company, we may still qualify as a “smaller reporting company,” as defined in the Securities Exchange\nAct of 1934, as amended (the “**Exchange Act**”), which would allow us to continue to take advantage of many of the same\nexemptions from disclosure requirements, including not being required to comply with the auditor attestation requirements of Section 404\nof the Sarbanes-Oxley Act and reduced disclosure obligations regarding executive compensation our periodic reports and proxy statements.\n\n \n\nWe cannot predict if investors\nwill find our securities less attractive because we may rely on these exemptions. If some investors find our common stock less attractive\nas a result, there may be a less active trading market for our securities and the trading price of our securities may be more volatile.\n\n \n\n63\n\n \n\n \n\n**Macroeconomic conditions\nin our domestic and international markets, as well as inflation concerns, instability of financial institutions, rising interest rates,\nand recessionary concerns may adversely affect our industry, business and financial results.**\n\n** **\n\nOur business depends on the\noverall demand for our solar energy products and on the economic health and willingness of our customers and potential customers to purchase\nour products and services. As a result of macroeconomic or market uncertainty, including inflation concerns, rising interest rates,\nrecessionary concerns, and geopolitical conflicts, customers may decide to delay purchasing our products and services or not purchase\nat all. In addition, a number of the risks associated with our business, which are disclosed in these risk factors, may increase in likelihood,\nmagnitude or duration, and we may face new risks that we have not yet identified.\n\n \n\nIn the past, unfavorable macroeconomic\nand market conditions have resulted in sustained periods of decreased demand. Macroeconomic and market conditions could be adversely affected\nby a variety of political, economic or other factors in the U.S. and international markets, which could, in turn, adversely affect spending\nlevels of installers and end users and could create volatility or deteriorating conditions in the markets in which we operate. Macroeconomic\nuncertainty or weakness could result in:\n\n \n\n \n●\nreduced demand for our products as a result of constraints on spending for solar energy systems by our customers and/or a reduction in government subsidies for renewable energy investments;\n\n \n\n \n●\nincreased price competition for our products that may adversely affect revenue, gross margin and profitability;\n\n \n\n \n●\nthe introduction of any disadvantageous trade regulations and import tariffs;\n\n \n\n \n●\ndecreased ability to forecast operating results and make decisions about budgeting, planning and future investments;\n\n \n\n \n●\ndecrease in the popularity of solar energy as a green energy solution;\n\n \n\n \n●\nbusiness and financial difficulties faced by our suppliers or other partners, including impacts to material costs, sales, liquidity levels, ability to continue investing in their businesses, ability to import or export goods, ability to meet development commitments and manufacturing capability; and\n\n \n\n \n●\nincreased** **overhead and production costs as a percentage of revenue.\n\n \n\nReductions in customer spending\nin response to unfavorable or uncertain macroeconomic and market conditions, globally or in a particular region where we operate, would\nadversely affect our business, results of operations and financial condition.\n\n \n\n**Existing regulations\nand policies, including trade policies and tariffs, and changes to these regulations and policies, including changes to trade policies\nand tariffs, may present technical, regulatory, and economic barriers to the purchase and use of solar power products, which may significantly\nreduce demand for our products and services.**\n\n \n\nThe market for electric generation\nproducts is heavily influenced by federal, state and local government laws, geopolitical forces (such as trade policies and tariffs),\nregulations and policies concerning the electric utility industry in the U.S. and abroad, as well as policies promulgated by electric\nutilities. These regulations and policies often relate to electricity pricing and technical interconnection of customer-owned electricity\ngeneration, and trade and policy changes that make solar power less competitive with other power sources could deter investment in the\nresearch and development of alternative energy sources as well as customer purchases of solar power technology, which could in turn result\nin a significant reduction in the demand for our solar power products. The market for electric generation equipment is also influenced\nby geopolitics, trade and local content laws, policies and tariffs, regulations and policies that can discourage growth and competition\nin the solar industry and create economic barriers to the purchase of solar power products, thus reducing demand for our solar products.\nIn addition, on-grid applications depend on access to the grid, which is also regulated by government entities. We anticipate that our\nsolar power products and our installation will continue to be subject to oversight and regulation in accordance with federal, state, local\nand foreign regulations relating to construction, safety, environmental protection, utility interconnection and metering, trade, and related\nmatters. It is difficult to track the requirements of individual states or local jurisdictions and design equipment to comply with the\nvarying standards. In addition, the U.S. and European Union, among others, have imposed tariffs or are in the process of evaluating the\nimposition of tariffs on solar panels, solar cells, polysilicon, and potentially other components. These and any other tariffs or similar\ntaxes or duties may increase the price of our solar products and adversely affect our cost reduction roadmap, which could harm our results\nof operations and financial condition. We cannot predict what actions may be taken by the United States or other countries with respect\nto trade policies and tariffs or with respect to other policies and incentives that impact the solar industry, or that promote other forms\nof energy production over the solar industry. Any new regulations or policies pertaining our solar power products may result in significant\nadditional expenses for our customers, which could cause a significant reduction in demand for our solar power products.\n\n \n\n64\n\n \n\n \n\n**We rely on net metering\nand related policies to offer competitive pricing to customers in many of our current markets and changes to net metering policies may\nsignificantly reduce demand for electricity from residential solar energy systems.**\n\n \n\nNet metering is one of several\nkey policies that have enabled the growth of distributed generation solar energy systems in the U.S., providing significant value to customers\nfor electricity generated by their residential solar energy systems but not directly consumed on-site. Net metering allows a homeowner\nto pay his or her local electric utility for power usage net of production from the solar energy system or other distributed generation\nsource. Homeowners receive a credit for the energy an interconnected solar energy system generates in excess of that needed by the home\nto offset energy purchases from the centralized utility made at times when the solar energy system is not generating sufficient energy\nto meet the customer’s demand. In many markets, this credit is equal to the residential retail rate for electricity and in other\nmarkets, such as Hawaii and Nevada, the rate is less than the retail rate and may be set, for example, as a percentage of the retail rate\nor based upon a valuation of the excess electricity. In some states and utility territories, customers are also reimbursed by the centralized\nelectric utility for net excess generation on a periodic basis.\n\n  \n\nNet metering programs have\nbeen subject to legislative and regulatory scrutiny in some states and territories including, but not limited to, California, New Jersey,\nArizona, Nevada, Connecticut, Florida, Maine, Kentucky, Puerto Rico and Guam. These jurisdictions, by statute, regulation, administrative\norder or a combination thereof, have recently adopted or are considering new restrictions and additional changes to net metering programs\neither on a state-wide basis or within specific utility territories. Many of these measures were introduced and supported by centralized\nelectric utilities. These measures vary by jurisdiction and may include a reduction in the rates or value of the credits customers are\npaid or receive for the power they deliver back to the electrical grid, caps or limits on the aggregate installed capacity of generation\nin a state or utility territory eligible for net metering, expiration dates for and phasing out of net metering programs, replacement\nof net metering programs with alternative programs that may provide less compensation and limits on the capacity size of individual distributed\ngeneration systems that can qualify for net metering. Net metering and related policies concerning distributed generation also received\nattention from federal legislators and regulators.\n\n \n\nIn California, the California\nPublic Utilities Commission (“**CPUC**”) issued an order in 2016 retaining retail-based net metering credits for residential\ncustomers of California’s major utilities as part of Net Energy Metering 2.0 (“**NEM 2.0**”). Under NEM 2.0, new\ndistributed generation customers receive the retail rate for electricity exported to the grid, less certain non-by passable fees. Customers\nunder NEM 2.0 also are subject to interconnection charges and time-of-use rates. Existing customers who receive service under the prior\nnet metering program, as well as new customers under the NEM 2.0 program, currently are permitted to remain covered by them on a legacy\nbasis for a period of 20 years. On September 3, 2020, the CPUC opened a new proceeding to review its current net metering policies and\nto develop Net Energy Metering 3.0 (“**NEM 3.0**”), also referred to by the CPUC as the NEM 2.0 successor tariff. NEM 3.0\nwas finalized on December 15, 2022 and includes several changes from previous net metering plans. The changes instituted by NEM 3.0 impacted\nthe amount that homeowners with solar power will be able to recuperate when selling excess energy back to the utility grid. With NEM 3.0,\nthe value of the credits for net exports are tied to the state’s Distributed Energy Resources Avoided Cost Calculator Documentation\n(“**ACC**”). Another significant change with NEM 3.0 relates to the netting period: the time period over which the utilities\nmeasure the clean energy being imported or exported. In general, longer netting periods have typically been advantageous for solar power\ncustomers because production can offset any consumption. NEM 3.0 will instead measure energy using instantaneous netting, which means\ninterval netting approximately every 15 minutes. This will lead to more NEM customers’ electricity registering as exports, now valued\nat the new, lower ACC value. Overall, the institution on NEM 3.0 has resulted in a smaller market for residential solar systems and it\nis not certain that market conditions will improve or that NEM 3.0 will be amended or replaced with a more solar-friendly rate structure.\nOther states may adopt policies similar to NEM 3.0 that cause deterioration to other residential solar markets.\n\n** **\n\n65\n\n \n\n \n\n**We utilize a limited\nnumber of suppliers of solar panels and other system components to adequately meet anticipated demand for our solar service offerings.\nAny shortage, delay or component price change from these suppliers or delays and price increases associated with the product transport\nlogistics could result in sales and installation delays, cancellations and loss of market share.**\n\n \n\nWe purchase solar panels,\ninverters and other system components from a limited number of suppliers for certain components, which makes us susceptible to quality\nissues, shortages and price changes. If we fail to develop, maintain and expand relationships with existing or new suppliers, we may be\nunable to adequately meet anticipated demand for our solar energy systems or may only be able to offer our systems at higher costs or\nafter delays. If one or more of the suppliers that we rely upon to meet anticipated demand ceases or reduces production, we may be unable\nto satisfy this demand due to an inability to quickly identify alternate suppliers or to qualify alternative products on commercially\nreasonable terms.\n\n \n\nIn particular, there are a\nlimited number of inverter and battery suppliers. Once we design a system for use with a particular inverter or battery, if that type\nof inverter or battery is not readily available at an anticipated price, we may incur additional delay and expense to redesign the system\nand source alternative inventory.\n\n \n\nIn addition, production of\nsolar panels involves the use of numerous raw materials and components. Several of these have experienced periods of limited availability,\nparticularly polysilicon, as well as indium, cadmium telluride, aluminum and copper. The manufacturing infrastructure for some of these\nraw materials and components has a long lead time, requires significant capital investment and relies on the continued availability of\nkey commodity materials, potentially resulting in an inability to meet demand for these components. The prices for these raw materials\nand components fluctuate depending on global market conditions and demand and we may experience rapid increases in costs or sustained\nperiods of limited supplies.\n\n \n\nDespite efforts to obtain\ncomponents from multiple sources whenever possible, many suppliers may be single-source suppliers of certain components. If we cannot\nmaintain long-term supply agreements or identify and qualify multiple sources for components, access to supplies at satisfactory prices,\nvolumes and quality levels may be harmed. We may also experience delivery delays of components from suppliers in various global locations.\nIn addition, while there are alternative suppliers and service providers that we could enter into agreements with to replace its suppliers\non commercially reasonable terms, we may be unable to establish alternate supply relationships or obtain or engineer replacement components\nin the short term, or at all, at favorable prices or costs. Qualifying alternate suppliers or developing our own replacements for certain\ncomponents may be time-consuming and costly and may force us to make modifications to our product designs.\n\n \n\nOur need to purchase supplies\nglobally and our continued international expansion further subjects us to risks relating to currency fluctuations. Any decline in the\nexchange rate of the U.S. dollar compared to the functional currency of component suppliers could increase component prices. In addition,\nthe state of the financial markets could limit suppliers’ ability to raise capital if they are required to expand their production\nto meet our needs or satisfy our operating capital requirements. Changes in economic and business conditions, wars, governmental changes\nand other factors beyond our control or which we do not presently anticipate, could also affect suppliers’ solvency and ability\nto deliver components on a timely basis. Any of these shortages, delays or price changes could limit our growth, cause cancellations or\nadversely affect profitability and the ability to compete in the markets in which we operate effectively.\n\n** **\n\n66\n\n \n\n** **\n\n**Our business substantially\nfocuses on solar service agreements and transactions with residential customers.**\n\n \n\nOur business substantially\nfocuses on solar service agreements and transactions with residential customers. Our energy system sales to homeowners utilize power purchase\nagreements (“**PPAs**”), leases, loans and other products and services. We currently offer PPAs and leases through LightReach,\nMosaic, EverBright, LLC, and other financial institutions. If we were unable to arrange new or alternative financing methods for PPAs\nand leases on favorable terms, our business, financial condition, results of operations, and prospects could be materially and adversely\naffected.\n\n \n\n**If we fail to manage\noperations and growth effectively, we may be unable to execute our business plan, maintain high levels of customer service or adequately\naddress competitive challenges.**\n\n \n\nWe have experienced significant\ngrowth in recent periods as measured by our number of customers; we intend to continue efforts to expand our business within existing\nand new markets. This growth has placed, and any future growth may place, a strain on management, operational and financial infrastructure.\nOur growth requires our management to devote a significant amount of time and effort to maintain and expand relationships with customers,\ndealers and other third parties, attract new customers and dealers, arrange financing for growth and manage expansion into additional\nmarkets.\n\n \n\nIn addition, our current and\nplanned operations, personnel, information technology and other systems and procedures might need to be revised to support future growth\nand may require us to make additional unanticipated investments in its infrastructure. Our success and ability to further scale our business\nwill depend, in part, on our ability to manage these changes in a cost-effective and efficient manner.\n\n \n\nIf we cannot manage operations\nand growth, we may be unable to meet expectations regarding growth, opportunity and financial targets, take advantage of market opportunities,\nexecute our business strategies or respond to competitive pressures. This could also result in declines in quality or customer satisfaction,\nincreased costs, difficulties in introducing new offerings or other operational difficulties. Any failure to effectively manage our operations\nand growth could adversely impact our reputation, business, financial condition, cash flows and results of operations.\n\n** **\n\n**We have incurred losses\nand may be unable to achieve or sustain profitability in the future.**\n\n \n\nAlthough we generated\nnet income of $4.8 million in the thirteen weeks ended March 30, 2025, we have incurred net losses in the past, including $56.5 million\nin the fiscal year ended December 29, 2024. We have an accumulated deficit of $406.6 million as of March 30, 2025. Additionally, as of\nMarch 30, 2025, we had long-term indebtedness of $131.6 million. We will continue to incur net losses as spending increases to finance\nthe expansion of operations, installation, engineering, administrative, sales and marketing staffs, spending increases on brand awareness\nand other sales and marketing initiatives and implement internal systems and infrastructure to support the company’s growth. We\ndo not know whether revenue will grow rapidly enough to absorb these costs, and our limited operating history makes it difficult to assess\nthe extent of these expenses or their impact on results of operations. Our ability to achieve profitability depends on a number of factors,\nincluding but not limited to:\n\n \n\n \n●\nGrowing the customer base;\n\n \n\n \n●\nMaintaining or further lowering the cost of capital;\n\n \n\n \n●\nReducing the cost of components for our solar service offerings;\n\n \n\n \n●\nGrowing and maintaining our sales partner network;\n\n \n\n \n●\nGrowing our direct-to-consumer and New Homes business to scale; and\n\n \n\n \n●\nReducing operating costs by lowering customer acquisition costs and optimizing our design and installation processes and supply chain logistics.\n\n \n\nEven if we do achieve profitability,\nwe may be unable to sustain or increase profitability in the future.\n\n \n\n67\n\n \n\n \n\n**A material drop in the\nretail price of utility-generated electricity or electricity from other sources could adversely impact our ability to attract customers,\nwhich would harm our business, financial condition, and results of operations.**\n\n \n\nWe believe a homeowner’s\ndecision to buy solar energy from us is primarily driven by a desire to lower electricity costs. Decreases in the retail prices of electricity\nfrom utilities or other energy sources would harm our ability to offer competitive pricing and could harm its business. The price of electricity\nfrom utilities could decrease as a result of:\n\n \n\n \n●\nthe construction of a significant number of new power generation plants, including nuclear, coal, natural gas or renewable energy technologies;\n\n \n\n \n●\nthe construction of additional electric transmission and distribution lines;\n\n \n\n \n●\na reduction in the price of natural gas or other natural resources as a result of new drilling techniques or other technological developments, a relaxation of associated regulatory standards, or broader economic or policy developments;\n\n \n\n \n●\nenergy conservation technologies and public initiatives to reduce electricity consumption;\n\n \n\n \n●\nsubsidies impacting electricity prices, including in connection with electricity generation and transmission; and\n\n \n\n \n●\ndevelopment of new energy technologies that provide less expensive energy.\n\n \n\nA reduction in utility electricity\nprices would make the purchase of our solar service offerings less attractive. If the retail price of energy available from utilities\nwere to decrease due to any of these or other reasons, we would be at a competitive disadvantage. As a result, we may be unable to attract\nnew homeowners and growth would be limited.\n\n** **\n\n**We face competition\nfrom both traditional energy companies and renewable energy companies.**\n\n \n\nThe solar energy and renewable\nenergy industries are both highly competitive and continually evolving as participants strive to distinguish themselves within their markets\nand compete with large utilities. Our primary competitors are the traditional utilities that supply energy to potential customers. We\ncompete with these utilities primarily based on price, predictability of price and the ease by which customers can switch to electricity\ngenerated by our solar energy systems. If we cannot offer compelling value to its customers based on these factors, then our business\nwill not grow. Utilities generally have substantially greater financial, technical, operational and other resources than us. As a result\nof their greater size, these competitors may be able to devote more resources to the research, development, promotion and sale of their\nproducts or respond more quickly to evolving industry standards and changes in market conditions than we can. Utilities could also offer\nother value added products and services that could help them compete with us even if the cost of electricity they offer is higher than\nours. In addition, a majority of utilities’ sources of electricity are non-solar, which may allow utilities to sell electricity\nmore cheaply than electricity generated by our solar energy systems.\n\n** **\n\n**Our growth strategy\ndepends on the widespread adoption of solar power technology.**\n\n \n\nThe distributed residential\nsolar energy market is at a relatively early stage of development compared to fossil fuel-based electricity generation. If additional\ndemand for distributed residential solar energy systems fails to develop sufficiently or takes longer to develop than we anticipate, the\ncompany may be unable to originate additional solar service agreements and related solar energy systems and energy storage systems to\ngrow the business. In addition, demand for solar energy systems and energy storage systems in our targeted markets may not develop to\nthe extent it anticipates. As a result, we may need to successfully broaden our customer base through origination of solar service agreements\nand related solar energy systems and energy storage systems within its current markets or in new markets we may enter.\n\n  \n\n68\n\n \n\n \n\nMany factors may affect the\ndemand for solar energy systems, including, but not limited to, the following:\n\n \n\n \n●\navailability, substance and magnitude of solar support programs including government targets, subsidies, incentives, renewable portfolio standards and residential net metering rules;\n\n \n\n \n●\nthe relative pricing of other conventional and non-renewable energy sources, such as natural gas, coal, oil and other fossil fuels, wind, utility-scale solar, nuclear, geothermal and biomass;\n\n \n\n \n●\nperformance, reliability and availability of energy generated by solar energy systems compared to conventional and other non-solar renewable energy sources;\n\n \n\n \n●\navailability and performance of energy storage technology, the ability to implement such technology for use in conjunction with solar energy systems and the cost competitiveness such technology provides to customers as compared to costs for those customers reliant on the conventional electrical grid; and\n\n \n\n \n●\ngeneral economic conditions and the level of interest rates.\n\n \n\nThe residential solar energy\nindustry is constantly evolving, which makes it difficult to evaluate our prospects. We cannot be certain if historical growth rates reflect\nfuture opportunities or its anticipated growth will be realized. The failure of distributed residential solar energy to achieve, or its\nbeing significantly delayed in achieving, widespread adoption could have a material adverse effect on our business, financial condition\nand results of operations.\n\n** **\n\n**Our business could be\nadversely affected by seasonal trends, poor weather, labor shortages, and construction cycles.**\n\n \n\nOur business is subject to\nsignificant industry-specific seasonal fluctuations. In the U.S., many customers make purchasing decisions towards the end of the year\nin order to take advantage of tax credits and residential solar sales tend to decline during the winter months. In addition, sales in\nthe new home development market are often tied to construction market demands, which tend to follow national trends in construction, including\ndeclining sales during cold weather months.\n\n** **\n\n**Natural disasters, terrorist\nactivities, political unrest, economic volatility, and other outbreaks could disrupt our delivery and operations, which could materially\nand adversely affect our business, financial condition, and results of operations.**\n\n \n\nGlobal pandemics or fear of\nspread of contagious diseases, such as Ebola virus disease (EVD), coronavirus disease 2019 (COVID-19), Middle East respiratory syndrome\n(MERS), severe acute respiratory syndrome (SARS), H1N1 flu, H7N9 flu, avian flu and monkeypox, as well as hurricanes, earthquakes, tsunamis,\nor other natural disasters could disrupt our business operations, reduce or restrict operations and services, incur significant costs\nto protect its employees and facilities, or result in regional or global economic distress, which may materially and adversely affect\nbusiness, financial condition, and results of operations. Actual or threatened war, terrorist activities, political unrest, civil strife,\nfuture disruptions in access to bank deposits or lending commitments due to bank failures and other geopolitical uncertainty could have\na similar adverse effect on our business, financial condition, and results of operations. On February 24, 2022, the Russian Federation\nlaunched an invasion of Ukraine that has had an immediate impact on the global economy resulting in higher energy prices and higher prices\nfor certain raw materials and goods and services which in turn is contributing to higher inflation in the U.S. and other countries across\nthe globe with significant disruption to financial markets. Any one or more of these events may impede our operation and delivery efforts\nand adversely affect sales results, or even for a prolonged period of time, which could materially and adversely affect our business,\nfinancial condition, and results of operations. We cannot predict the full effects the supply chain constraints will have on our business,\ncash flows, liquidity, financial condition and results of operations at this time due to numerous uncertainties.\n\n** **\n\n69\n\n \n\n** **\n\n**We are exposed to the\ncredit risk of customers and our finance partners, and payment delinquencies on accounts receivables.**\n\n \n\nDefaults by customers and\nthe financial institutions that fund some of our customers’ solar systems have not been material to date, but we expect that the\nrisk of customer defaults or financial partner defaults may increase as we grow our business. For example, Sunnova Energy International,\nInc. (“Sunnova”), a major provider of financing for solar systems, announced that substantial doubt exists regarding its ability\nto continue as a going concern. While Complete Solar does not use Sunnova for any of its customer financing, if any of our financing partners\nexperience liquidity concerns or stop funding projects, we may incur significant losses or project delays. If any of our customers are\nunable to make milestone payments on systems purchased in cash, our revenue and costs could be adversely affected. If economic conditions\nworsen, certain of our customers or finance partners may face liquidity concerns and may be unable to satisfy their payment obligations\nto us on a timely basis or at all, which could have a material adverse effect on our financial condition and results of operations.\n\n** **\n\n**We may not realize the\nanticipated benefits of past or future acquisitions, including the transactions under the APA with SunPower, and integration of these\nacquisitions may disrupt our business.**\n\n \n\nIn November 2022, we acquired\nThe Solaria Corporation (“Solaria”), after which Complete Solar was renamed “Complete Solaria, Inc.” In October\n2023, we subsequently sold solar panel assets of Solaria, including intellectual property and customer contracts, to Maxeon Solar Technologies,\nLtd., which resulted in an impairment loss of $147.5 million and loss on disposal of $1.8 million. On September 30, 2024, we completed\nthe acquisition of the Acquired Assets under the APA with SunPower, which resulted in our acquisition of the SunPower Businesses and a\nsignificant expansion of our business operations and headcount. In the future, we may acquire additional companies, project pipelines,\nproducts, or technologies, or enter into joint ventures or other strategic initiatives. Our ability as an organization to integrate acquisitions\nis unproven. We may not realize the anticipated benefits of our acquisitions or any other future acquisition or the acquisition may be\nviewed negatively by customers, financial markets or investors.\n\n \n\nAny acquisition has numerous\nrisks, including, but not limited to, the following:\n\n \n\n \n●\ndifficulty in assimilating the operations and personnel of the acquired company;\n\n \n\n \n●\ndifficulty in effectively integrating the acquired technologies or products with current products and technologies;\n\n \n\n \n●\ndifficulty in maintaining controls, procedures and policies during the transition and integration;\n\n \n\n \n●\ndisruption of ongoing business and distraction of management and employees from other opportunities and challenges due to integration issues;\n\n \n\n \n●\ndifficulty integrating the acquired company’s accounting, management information and other administrative systems;\n\n \n\n \n●\ninability to retain key technical and managerial personnel of the acquired business;\n\n \n\n \n●\ninability to retain key customers, vendors, and other business partners of the acquired business;\n\n \n\n \n●\ninability to achieve the financial and strategic goals for the acquired and combined businesses;\n\n \n\n \n●\nincurring acquisition-related costs or amortization costs for acquired intangible assets that could impact operating results;\n\n \n\n \n●\nfailure of due diligence processes to identify significant issues with product quality, legal and financial liabilities, among other things;\n\n \n\n \n●\ninability to assert that internal controls over financial reporting are effective; and\n\n \n\n \n●\ninability to obtain, or obtain in a timely manner, approvals from governmental authorities, which could delay or prevent such acquisitions.\n\n \n\n \n●\ninability to rebuild trust with home builders due to the SunPower bankruptcy. \n\n \n\n \n●\ninability to obtain advantageous financing arrangements with financiers in order to pass the saving on to customers.\n\n \n\n70\n\n \n\n \n\n**We may be required to\nfile claims against other parties for infringing its intellectual property that may be costly and may not be resolved in its favor.**\n\n \n\nTo protect our intellectual\nproperty rights and to maintain competitive advantage, we have filed, and may continue to file, suits against parties we believe infringe\nor misappropriate our intellectual property. Intellectual property litigation is expensive and time-consuming, could divert management’s\nattention from our business, and could have a material adverse effect on our business, operating results, or financial condition, and\nour enforcement efforts may not be successful. In addition, the validity of our patents may be challenged in such litigation. Our participation\nin intellectual property enforcement actions may negatively impact our financial results.\n\n** **\n\n**Developments in technology\nor improvements in distributed solar energy generation and related technologies or components may materially adversely affect demand for\nour offerings.**\n\n \n\nSignificant developments in\ntechnology, such as advances in distributed solar power generation, energy storage solutions such as batteries, energy storage management\nsystems, the widespread use or adoption of fuel cells for residential or commercial properties or improvements in other forms of distributed\nor centralized power production may materially and adversely affect demand for our offerings and otherwise affect our business. Future\ntechnological advancements may result in reduced prices to consumers or more efficient solar energy systems than those available today,\neither of which may result in current customer dissatisfaction. We may not be able to adopt these new technologies as quickly as its competitors\nor on a cost-effective basis.\n\n \n\nAdditionally, recent technological\nadvancements may impact our business in ways not currently anticipated. Any failure by us to adopt or have access to new or enhanced technologies\nor processes, or to react to changes in existing technologies, could result in product obsolescence or the loss of competitiveness of\nand decreased consumer interest in its solar energy services, which could have a material adverse effect on its business, financial condition\nand results of operations.\n\n \n\n**Our business is subject\nto complex and evolving data protection laws. Many of these laws and regulations are subject to change and uncertain interpretation and\ncould result in claims, increased cost of operations or otherwise harm its business.**\n\n \n\nConsumer personal privacy\nand data security have become significant issues and the subject of rapidly evolving regulation in the U.S. Furthermore, federal, state\nand local government bodies or agencies have in the past adopted, and may in the future adopt, more laws and regulations affecting data\nprivacy. For example, the state of California enacted the California Consumer Privacy Act of 2018 (“**CCPA**”) and California\nvoters recently approved the California Privacy Rights Act (“**CPRA**”). The CCPA creates individual privacy rights for\nconsumers and places increased privacy and security obligations on entities handling the personal data of consumers or households. The\nCCPA went into effect in January 2020 and it requires covered companies to provide new disclosures to California consumers, provides such\nconsumers, business-to-business contacts and employees new ways to opt-out of certain sales of personal information, and allows for a\nnew private right of action for data breaches. The CPRA modifies the CCPA and imposes additional data protection obligations on companies\ndoing business in California, including additional consumer rights processes and opt outs for certain uses of sensitive data. The CCPA\nand the CPRA may significantly impact Complete Solaria’s business activities and require substantial compliance costs that adversely\naffect its business, operating results, prospects and financial condition. To date, we have not experienced substantial compliance costs\nin connection with fulfilling the requirements under the CCPA or CPRA. However, we cannot be certain that compliance costs will not increase\nin the future with respect to the CCPA and CPRA or any other recently passed consumer privacy regulation.\n\n \n\n71\n\n \n\n \n\nOutside the U.S., an increasing\nnumber of laws, regulations, and industry standards may govern data privacy and security. For example, the European Union’s General\nData Protection Regulation (“**EU GDPR**”) and the United Kingdom’s GDPR (“**UK GDPR**”) impose strict\nrequirements for processing personal data. Under the EU GDPR, companies may face temporary or definitive bans on data processing and other\ncorrective actions; fines of up to 20 million Euros or 4% of annual global revenue, whichever is greater; or private litigation related\nto processing of personal data brought by classes of data subjects or consumer protection organizations authorized at law to represent\ntheir interests. Non-compliance with the UK GDPR may result in substantially similar adverse consequences to those in relation to the\nEU GDPR, including monetary penalties of up to £17.5 million or 4% of worldwide revenue, whichever is higher.\n\n \n\nIn addition, we may be unable\nto transfer personal data from Europe and other jurisdictions to the U.S. or other countries due to data localization requirements or\nlimitations on cross-border data flows. Europe and other jurisdictions have enacted laws requiring data to be localized or limiting the\ntransfer of personal data to other countries. In particular, the European Economic Area (“**EEA**”) and the United Kingdom\nhave significantly restricted the transfer of personal data to the U.S. and other countries whose privacy laws it believes are not adequate.\nOther jurisdictions may adopt similarly stringent interpretations of their data localization and cross- border data transfer laws. Although\nthere are currently various mechanisms that may be used to transfer personal data from the EEA and UK to the U.S. in compliance with law,\nsuch as the EEA and UK’s standard contractual clauses, these mechanisms are subject to legal challenges, and there is no assurance\nthat Complete Solaria can satisfy or rely on these measures to lawfully transfer personal data to the U.S. If there is no lawful manner\nfor us to transfer personal data from the EEA, the UK, or other jurisdictions to the U.S., or if the requirements for a legally-compliant\ntransfer are too onerous, we could face significant adverse consequences, including the interruption or degradation of its operations,\nthe need to relocate part of or all of its business or data processing activities to other jurisdictions at significant expense, increased\nexposure to regulatory actions, substantial fines and penalties, the inability to transfer data and work with partners, vendors and other\nthird parties, and injunctions against its processing or transferring of personal data necessary to operate its business. Some European\nregulators have ordered certain companies to suspend or permanently cease certain transfers out of Europe for allegedly violating the\nEU GDPR’s cross-border data transfer limitations.\n\n \n\nAny inability to adequately\naddress privacy and security concerns, even if unfounded, or comply with applicable privacy and data security laws, regulations and policies,\ncould result in additional cost and liability to us damage our reputation, inhibit sales and adversely affect our business. Furthermore,\nthe costs of compliance with, and other burdens imposed by, the laws, regulations and policies that are applicable to our business may\nlimit the use and adoption of, and reduce the overall demand for, its solutions. If we are not able to adjust to changing laws, regulations\nand standards related to privacy or security, our business may be harmed.\n\n \n\n**Any unauthorized access\nto or disclosure or theft of personal information we gather, store or use could harm our reputation and subject us to claims or litigation.**\n\n \n\nWe receive, store and use\npersonal information of customers, including names, addresses, e-mail addresses, and other housing and energy use information. We also\nstore information of dealers, including employee, financial and operational information. We rely on the availability of data collected\nfrom customers and dealers in order to manage our business and market our offerings. We take certain steps in an effort to protect the\nsecurity, integrity and confidentiality of the personal information collected, stored or transmitted, but there is no guarantee inadvertent\nor unauthorized use or disclosure will not occur or third parties will not gain unauthorized access to this information despite our efforts.\nAlthough we take precautions to provide for disaster recovery, our ability to recover systems or data may be expensive and may interfere\nwith normal operations. Also, although we obtain assurances from such third parties that they will use reasonable safeguards to secure\ntheir systems, we may be adversely affected by unavailability of their systems or unauthorized use or disclosure or its data maintained\nin such systems. Because techniques used to obtain unauthorized access or sabotage systems change frequently and generally are not identified\nuntil they are launched against a target, our suppliers or vendors and our dealers may be unable to anticipate these techniques or to\nimplement adequate preventative or mitigation measures.\n\n \n\nCyberattacks in particular\nare becoming more sophisticated and include, but are not limited to, malicious software, attempts to gain unauthorized access to data\nand other electronic security breaches that could lead to disruptions in critical systems, disruption of customers’ operations,\nloss or damage to data delivery systems, unauthorized release of confidential or otherwise protected information, corruption of data and\nincreased costs to prevent, respond to or mitigate cybersecurity events. In addition, certain cyber incidents, such as advanced persistent\nthreats, may remain undetected for an extended period.\n\n \n\n72\n\n \n\n \n\nUnauthorized use, disclosure\nof or access to any personal information maintained by us or on the behalf of us, whether through breach of our systems, breach of the\nsystems of our suppliers, vendors or dealers by an unauthorized party or through employee or contractor error, theft or misuse or otherwise,\ncould harm our business. If any such unauthorized use, disclosure of or access to such personal information were to occur, our operations\ncould be seriously disrupted and we could be subject to demands, claims and litigation by private parties and investigations, related\nactions and penalties by regulatory authorities.\n\n  \n\nIn addition, we could incur\nsignificant costs in notifying affected persons and entities and otherwise complying with the multitude of federal, state and local laws\nand regulations relating to the unauthorized access to, use of or disclosure of personal information. Finally, any perceived or actual\nunauthorized access to, use of or disclosure of such information could harm our reputation, substantially impair our business, financial\ncondition and results of operations. While we currently maintain cybersecurity insurance, such insurance may not be sufficient to cover\nagainst claims, and we cannot be certain that cyber insurance will continue to be available on economically reasonable terms, or at all,\nor that any insurer will not deny coverage as to any future claim.\n\n \n\n**If we fail to comply\nwith laws and regulations relating to interactions by the company or its dealers with current or prospective residential customers could\nresult in negative publicity, claims, investigations and litigation and adversely affect financial performance.**\n\n \n\nOur business substantially\nfocuses on home improvement contracts for the installation of solar systems for residential customers. We offer leases, loans and other\nproducts and services directly to consumers and through sales partners in our dealer networks, who utilize sales people employed by or\nengaged as third-party service providers of such contractors. We and our dealers must comply with numerous federal, state and local laws\nand regulations that govern matters relating to interactions with residential consumers, including those pertaining to consumer protection,\nmarketing and sales, privacy and data security, consumer financial and credit transactions, mortgages and refinancings, home improvement\ncontracts, warranties and various means of customer solicitation, including under the laws described below in “*As sales to residential\ncustomers have grown, we have increasingly become subject to substantial financing and consumer protection laws and regulations.*”\nThese laws and regulations are dynamic and subject to potentially differing interpretations and various federal, state and local legislative\nand regulatory bodies may initiate investigations, expand current laws or regulations, or enact new laws and regulations regarding these\nmatters. Changes in these laws or regulations or their interpretation could dramatically affect how we and our dealers do business, acquire\ncustomers and manage and use information collected from and about current and prospective customers and the costs associated therewith.\nWe and our dealers strive to comply with all applicable laws and regulations relating to interactions with residential customers. It is\npossible, however, that these requirements may be interpreted and applied in a manner inconsistent from one jurisdiction to another and\nmay conflict with other rules or our practices or the practices of our dealers.\n\n \n\nAlthough we require dealers\nto meet consumer compliance requirements, we do not control dealers and their suppliers or their business practices. Accordingly, we cannot\nguarantee they follow ethical business practices such as fair wage practices and compliance with environmental, safety and other local\nlaws. A lack of demonstrated compliance could lead us to seek alternative dealers or suppliers, which could increase costs and have a\nnegative effect on business and prospects for growth. Violation of labor or other laws by our dealers or suppliers or the divergence of\na dealer or supplier’s labor or other practices from those generally accepted as ethical in the U.S. or other markets in which the\ncompany does or intends to do business could also attract negative publicity and harm the business.\n\n \n\nFrom time to time, we have\nbeen included in lawsuits brought by the consumer customers of certain contractors in our networks, citing claims based on the sales practices\nof these contractors. We cannot be sure that a court of law would not determine that we are liable for the actions of the contractors\nin our networks or that a regulator or state attorney general’s office may hold us accountable for violations of consumer protection\nor other applicable laws by. Our risk mitigation processes may not be sufficient to mitigate financial harm associated with violations\nof applicable law by our contractors or ensure that any such contractor is able to satisfy its indemnification obligations to us. Any\nsignificant judgment against us could expose it to broader liabilities, a need to adjust our distribution channels for products and services\nor otherwise change our business model and could adversely impact the business.\n\n** **\n\n73\n\n \n\n** **\n\n**We may be unsuccessful\nin introducing new services and product offerings.**\n\n \n\nWe intend to introduce new\nofferings of services and products to both new and existing customers in the future, including home automation products and additional\nhome technology solutions. We may be unsuccessful in significantly broadening our customer base through the addition of these services\nand products within current markets or in new markets the company may enter. Additionally, we may not be successful in generating substantial\nrevenue from any additional services and products introduced in the future and may decline to initiate new product and service offerings.\n\n** **\n\n**Damage to our brand\nand reputation or change or loss of use of our brand could harm our business and results of operations.**\n\n \n\nWe depend significantly on\nour reputation for high-quality products, excellent customer service and the brand name “Complete Solaria” to attract new\ncustomers and grow our business. If we fail to continue to deliver solar energy systems or energy storage systems within the planned timelines,\nif our offerings do not perform as anticipated or if we damage any of our customers’ properties or delays or cancels projects, our\nbrand and reputation could be significantly impaired. Future technological improvements may allow the company to offer lower prices or\noffer new technology to new customers; however, technical limitations in our current solar energy systems and energy storage systems may\nprevent us from offering such lower prices or new technology to existing customers.\n\n \n\nIn addition, given the sheer\nnumber of interactions our personnel or dealers operating on our behalf have with customers and potential customers, it is inevitable\nthat some customers’ and potential customers’ interactions with us or dealers operating on our behalf will be perceived as\nless than satisfactory. This has led to instances of customer complaints, some of which have affected our digital footprint on rating\nwebsites and social media platforms. If we cannot manage hiring and training processes to avoid or minimize these issues to the extent\npossible, our reputation may be harmed and our ability to attract new customers would suffer.\n\n \n\nIn addition, if we were to\nno longer use, lose the right to continue to use or if others use the “Complete Solaria” brand, we could lose recognition\nin the marketplace among customers, suppliers and dealers, which could affect our business, financial condition, results of operations\nand would require financial and other investment and management attention in new branding, which may not be as successful.\n\n** **\n\n**Our success depends\non the continuing contributions of key personnel, including Thurman J. Rodgers. If we are unable to attract and retain key employees and\nqualified personnel, our business and prospects could be harmed. **\n\n \n\nWe rely heavily on the services\nof our key executive officers and other key employees, in particular Thurman J. Rodgers, and the loss of services of any principal member\nof the management team or other key employees could adversely affect our operations. There have been, and from time to time there may\ncontinue to be, changes in our management team resulting from the hiring or departure of executives and key employees, or the transition\nof executives within our business, which could disrupt our business. For example, during 2023 and 2024, we had turnover in key positions,\nincluding our Chief Executive Officer and our Chief Financial Officer. As a result of the SunPower Acquisition, we also appointed new\nemployees to key positions and restructured our management reporting lines. Such changes in our executive management team or workforce\nmay be disruptive to our business, divert management’s attention, result in a loss of knowledge and negatively impact employee morale.\nIf we encounter further turnover or difficulties associated with the transition or departure of our executive officers and key employees,\nor if we are unsuccessful in recruiting new personnel or in retaining and motivating existing personnel, our operations may be disrupted,\nwhich could harm our business.\n\n \n\nWe are investing significant\nresources in developing new members of management as we complete our restructuring and strategic transformation, including as a result\nof the SunPower Acquisition. We also anticipate that over time we will need to hire a number of highly skilled technical, sales, marketing,\nadministrative, and accounting personnel. The competition for qualified personnel is intense in this industry. We may not be successful\nin attracting and retaining sufficient numbers of qualified personnel to support its anticipated growth. We cannot guarantee that any\nemployee will remain employed with us for any definite period of time since all employees, including key executive officers, serve at-will\nand may terminate their employment at any time for any reason.\n\n \n\n74\n\n \n\n \n\nLabor is subject to external\nfactors that are beyond our control, including our industry’s highly competitive market for skilled workers and leaders, cost inflation,\nand workforce participation rates. As we build our brand and become more well known and grow globally, there is increased risk that competitors\nor other companies will seek to hire our personnel. The failure to attract, integrate, train, motivate and retain these personnel could\nseriously harm our business and prospects.\n\n \n\n**If we or our dealers\nor suppliers fail to hire and retain sufficient employees and service providers in key functions, our growth and ability to timely complete\ncustomer projects and successfully manage customer accounts would be constrained.**\n\n \n\nTo support growth, we and\nour dealers need to hire, train, deploy, manage and retain a substantial number of skilled employees, engineers, installers, electricians\nand sales and project finance specialists. Competition for qualified personnel in this industry has increased substantially, particularly\nfor skilled personnel involved in the installation of solar energy systems. We and our dealers also compete with the homebuilding and\nconstruction industries for skilled labor. These industries are cyclical and when participants in these industries seek to hire additional\nworkers, it puts upward pressure on us and our dealers’ labor costs. Companies with whom our dealers compete to hire installers\nmay offer compensation or incentive plans that certain installers may view as more favorable. As a result, our dealers may be unable to\nattract or retain qualified and skilled installation personnel. The further unionization of the industry’s labor force or the homebuilding\nand construction industries’ labor forces could also increase our dealers’ labor costs.\n\n \n\nShortages of skilled labor\ncould significantly delay a project or otherwise increase dealers’ costs. Further, we need to continue to increase the training\nof the customer service team to provide high-end account management and service to homeowners before, during and following the point of\ninstallation of its solar energy systems. Identifying and recruiting qualified personnel and training them requires significant time,\nexpense and attention. It can take several months before a new customer service team member is fully trained and productive at the standards\nestablished by us. If we are unable to hire, develop and retain talented customer service or other personnel, we may not be able to grow\nour business.\n\n** **\n\n**Our operating results\nand ability to grow may fluctuate from quarter to quarter and year to year, which could make future performance difficult to predict and\ncould cause operating results for a particular period to fall below expectations.**\n\n \n\nOur quarterly and annual operating\nresults and its ability to grow are difficult to predict and may fluctuate significantly. We have experienced seasonal and quarterly fluctuations\nin the past and expect to experience such fluctuations in the future. In addition to the other risks described in this “Risk Factors”\nsection, the following factors could cause operating results to fluctuate:\n\n \n\n \n●\nexpiration or initiation of any governmental rebates or incentives;\n\n \n\n \n●\nsignificant fluctuations in customer demand for our solar energy services, solar energy systems and energy storage systems;\n\n \n\n \n●\nour dealers’ ability to complete installations in a timely manner;\n\n \n\n \n●\nour and our dealers’ ability to gain interconnection permission for an installed solar energy system from the relevant utility;\n\n \n\n \n●\nthe availability, terms and costs of suitable financing;\n\n \n\n \n●\nthe amount, timing of sales and potential decreases in value of Solar Renewable Energy Certificates (“**SRECs**”);\n\n \n\n75\n\n \n\n \n\n \n●\nour ability to continue to expand its operations and the amount and timing of expenditures related to this expansion;\n\n \n\n \n●\nannouncements by us or our competitors of significant acquisitions, strategic partnerships, joint ventures or capital-raising activities or commitments;\n\n \n\n \n●\nchanges in our pricing policies or terms or those of competitors, including centralized electric utilities;\n\n \n\n \n●\nactual or anticipated developments in competitors’ businesses, technology or the competitive landscape; and\n\n \n\n \n●\nnatural disasters or other weather or meteorological conditions.\n\n \n\nFor these or other reasons,\nthe results of any prior quarterly or annual periods should not be relied upon as indications of our future performance.\n\n \n\n**Our ability to obtain\ninsurance on the terms of any available insurance coverage could be materially adversely affected by international, national, state or\nlocal events or company-specific events, as well as the financial condition of insurers.**\n\n \n\nOur insurance policies cover\nlegal and contractual liabilities arising out of bodily injury, personal injury or property damage to third parties and are subject to\npolicy limits.\n\n \n\nHowever, such policies do\nnot cover all potential losses and coverage is not always available in the insurance market on commercially reasonable terms. In addition,\nwe may have disagreements with insurers on the amount of recoverable damages and the insurance proceeds received for any loss of, or any\ndamage to, any of our assets may be claimed by lenders under financing arrangements or otherwise may not be sufficient to restore the\nloss or damage without a negative impact on its results of operations. Furthermore, the receipt of insurance proceeds may be delayed,\nrequiring us to use cash or incur financing costs in the interim. To the extent our experiences covered losses under its insurance policies,\nthe limit of our coverage for potential losses may be decreased or the insurance rates it has to pay increased. Furthermore, the losses\ninsured through commercial insurance are subject to the credit risk of those insurance companies. While we believe our commercial insurance\nproviders are currently creditworthy, we cannot assure such insurance companies will remain so in the future.\n\n \n\nWe may not be able to maintain\nor obtain insurance of the type and amount desired at reasonable rates. The insurance coverage obtained may contain large deductibles\nor fail to cover certain risks or all potential losses. In addition, our insurance policies are subject to annual review by insurers and\nmay not be renewed on similar or favorable terms, including coverage, deductibles or premiums, or at all. If a significant accident or\nevent occurs for which we are not fully insured or the company suffers losses due to one or more of its insurance carriers defaulting\non their obligations or contesting their coverage obligations, it could have a material adverse effect on our business, financial condition\nand results of operations.\n\n \n\n**We may be subject to\nbreaches of our information technology systems, which could lead to disclosure of internal information, damage to our reputation or relationships\nwith dealers, suppliers, and customers, and disrupt access to online services. Such breaches could subject us to significant reputational,\nfinancial, legal, and operational consequences.**\n\n \n\nOur business requires the\nuse and storage of confidential and proprietary information, intellectual property, commercial banking information, personal information\nconcerning customers, employees, and business partners, and corporate information concerning internal processes and business functions.\nMalicious attacks to gain access to such information affects many companies across various industries, including ours.\n\n \n\nWhere appropriate, we use\nencryption and authentication technologies to secure the transmission and storage of data. These security measures may be compromised\nas a result of third-party security breaches, employee error, malfeasance, faulty password management, or other irregularity or malicious\neffort, and result in persons obtaining unauthorized access to data.\n\n \n\n76\n\n \n\n \n\nWe devote resources to network\nsecurity, data encryption, and other security measures to protect our systems and data, but these security measures cannot provide absolute\nsecurity. Because the techniques used to obtain unauthorized access, disable or degrade service, or sabotage systems change frequently,\ntarget end users through phishing and other malicious techniques, and/or may be difficult to detect for long periods of time, we may be\nunable to anticipate these techniques or implement adequate preventative measures. As a result, we may experience a breach of our systems\nin the future that reduces our ability to protect sensitive data. In addition, hardware, software, or applications we develop or procure\nfrom third parties may contain defects in design or manufacture or other problems that could unexpectedly compromise information security.\nUnauthorized parties may also attempt to gain access to our systems or facilities through fraud, trickery or other forms of deceiving\nteam members, contractors and temporary staff. If we experience, or are perceived to have experienced, a significant data security breach,\nfail to detect and appropriately respond to a significant data security breach, or fail to implement disclosure controls and procedures\nthat provide for timely disclosure of data security breaches deemed material to our business, including corrections or updates to previous\ndisclosures, we could be exposed to a risk of loss, increased insurance costs, remediation and prospective prevention costs, damage to\nour reputation and brand, litigation and possible liability, or government enforcement actions, any of which could detrimentally affect\nour business, results of operations, and financial condition.\n\n \n\nWe may also share information\nwith contractors and third-party providers to conduct business. While we generally review and typically request or require such contractors\nand third-party providers to implement security measures, such as encryption and authentication technologies to secure the transmission\nand storage of data, those third-party providers may experience a significant data security breach, which may also detrimentally affect\nour business, results of operations, and financial condition as discussed above. See also under this section, “*We may be required\nto file claims against other parties for infringing its intellectual property that may be costly and may not be resolved in our favor*.”\nWe rely substantially upon trade secret laws and contractual restrictions to protect our proprietary rights, and, if these rights are\nnot sufficiently protected, our ability to compete and generate revenue could suffer.\n\n \n\n**As sales to residential\ncustomers have grown, we have increasingly become subject to consumer protection laws and regulations.**\n\n \n\nAs we continue to seek to\nexpand our retail customer base, our activities with customers are subject to consumer protection laws that may not be applicable to other\nbusinesses, such as federal truth-in-lending, consumer leasing, telephone and digital marketing, and equal credit opportunity laws and\nregulations, as well as state and local finance laws and regulations. Claims arising out of actual or alleged violations of law may be\nasserted against us by individuals or governmental entities and may expose the company to significant damages or other penalties, including\nfines. In addition, our affiliations with third-party dealers may subject the company to alleged liability in connection with actual or\nalleged violations of law by such dealers, whether or not actually attributable to us, which may expose us to significant damages and\npenalties, and we may incur substantial expenses in defending against legal actions related to third-party dealers, whether or not ultimately\nfound liable.\n\n** **\n\n**The competitive environment\nin which we operate often requires the undertaking of customer obligations, which may turn out to be costlier than anticipated and, in\nturn, materially and adversely affect our business, results of operations and financial condition.**\n\n \n\nWe are often required, at\nthe request of our end customer, to undertake certain obligations such as:\n\n \n\n \n●\nsystem output performance warranties; and\n\n \n\n \n●\nsystem maintenance.\n\n \n\nSuch customer obligations\ninvolve complex accounting analyses and judgments regarding the timing of revenue and expense recognition, and in certain situations these\nfactors may require us to defer revenue or profit recognition until projects are completed or until contingencies are resolved, which\ncould adversely affect revenues and profits in a particular period.\n\n** **\n\n77\n\n \n\n** **\n\n**We are subject to risks\nassociated with construction, cost overruns, delays, regulatory compliance and other contingencies, any of which could have a material\nadverse effect on its business and results of operations.**\n\n \n\nWe are a licensed contractor\nin certain communities that we service and are ultimately responsible as the contracting party for every solar energy system installation.\nA significant portion of our business depends on obtaining and maintaining required licenses in various jurisdictions. All such licenses\nare subject to audit by the relevant government agency. Our failure to obtain or maintain required licenses could result in the termination\nof certain of our contracts. For example, we hold a license with California’s Contractors State License Board (the “**CSLB**”)\nand that license is currently under probation with the CSLB. If we fail to comply with the CSLB’s law and regulations, it could\nresult in termination of certain of our contracts, monetary penalties, extension of the license probation period or revocation of its\nlicense in California. In addition, we may be liable, either directly or through its solar partners, to homeowners for any damage we cause\nto them, their home, belongings or property during the installation of our systems. For example, we either directly or through its solar\npartners, frequently penetrate homeowners’ roofs during the installation process and may incur liability for the failure to adequately\nweatherproof such penetrations following the completion of construction. In addition, because the solar energy systems we or our solar\npartners deploy are high voltage energy systems, we may incur liability for failing to comply with electrical standards and manufacturer\nrecommendations.\n\n \n\nFurther, we or our installation\npartners may face construction delays or cost overruns, which may adversely affect our or our sales partners’ ability to ramp up\nthe volume of installation in accordance with our plans. Such delays or overruns may occur as a result of a variety of factors, such as\nlabor shortages, defects in materials and workmanship, adverse weather conditions, transportation constraints, construction change orders,\nsite changes, labor issues and other unforeseen difficulties, any of which could lead to increased cancellation rates, reputational harm\nand other adverse effects.\n\n \n\nIn addition, the installation\nof solar energy systems, energy storage systems, and other energy-related products requiring building modifications are subject to oversight\nand regulation in accordance with national, state, and local laws and ordinances relating to building, fire, and electrical codes, safety,\nenvironmental protection, utility interconnection and metering, and related matters. We also rely on certain employees to maintain professional\nlicenses in many of the jurisdictions in which we operate, and the failure to employ properly licensed personnel could adversely affect\nour licensing status in those jurisdictions. It is difficult and costly to track the requirements of every individual authority having\njurisdiction over our installations and to design solar energy systems to comply with these varying standards. Any new government regulations\nor utility policies pertaining to our systems may result in significant additional expenses to homeowners and us and, as a result, could\ncause a significant reduction in demand for solar service offerings.\n\n \n\nWhile we have a variety of\nstringent quality standards that the company applies in the selection of its solar partners, we do not control our suppliers and solar\npartners or their business practices. Accordingly, we cannot guarantee that they follow our standards or ethical business practices, such\nas fair wage practices and compliance with environmental, safety and other local laws. A lack of demonstrated compliance could lead us\nto seek alternative suppliers or contractors, which could increase costs and result in delayed delivery or installation of our products,\nproduct shortages or other disruptions of its operations. Violation of labor or other laws by our suppliers and solar partners or the\ndivergence of a supplier’s or solar partners’ labor or other practices from those generally accepted as ethical in the U.S.\nor other markets in which we do business could also attract negative publicity and harm our business, brand and reputation in the market.\n\n \n\n**Compliance with occupational\nsafety and health requirements and best practices can be costly, and noncompliance with such requirements may result in potentially significant\npenalties, operational delays and adverse publicity.**\n\n \n\nThe installation and ongoing\noperations and maintenance of solar energy systems and energy storage systems requires individuals hired by us, our dealers, or third-party\ncontractors, potentially including employees, to work at heights with complicated and potentially dangerous electrical systems. The evaluation\nand modification of buildings as part of the installation process requires these individuals to work in locations that may contain potentially\ndangerous levels of asbestos, lead, mold or other materials known or believed to be hazardous to human health. There is substantial risk\nof serious injury or death if proper safety procedures are not followed. Our operations are subject to regulation by the Occupational\nSafety and Health Administration (“**OSHA**”) and the Department of Transportation (“**DOT**”) and equivalent\nstate and local laws. Changes to OSHA or DOT requirements, or stricter interpretation or enforcement of existing laws or regulations,\ncould result in increased costs. If we fail to comply with applicable OSHA or DOT regulations, even if no work-related serious injury\nor death occurs, we may be subject to civil or criminal enforcement and be required to pay substantial penalties, incur significant capital\nexpenditures or suspend or limit operations. Because individuals hired by us or on our behalf to perform installation and ongoing operations\nand maintenance of the company’s solar energy systems and energy storage systems, including its dealers and third-party contractors,\nare compensated on a per project basis, they are incentivized to work more quickly than installers compensated on an hourly basis. While\nwe have not experienced a high level of injuries to date, this incentive structure may result in higher injury rates than others in the\nindustry and could accordingly expose the company to increased liability. Individuals hired by or on behalf of us may have workplace accidents\nand receive citations from OSHA regulators for alleged safety violations, resulting in fines. Any such accidents, citations, violations,\ninjuries or failure to comply with industry best practices may subject us to adverse publicity, damage its reputation and competitive\nposition and adversely affect the business.\n\n** **\n\n78\n\n \n\n** **\n\n**Our business has benefited\nfrom the declining cost of solar energy system components, but it may be harmed if the cost of such components stabilizes or increases\nin the future.**\n\n \n\nOur business has benefited\nfrom the declining cost of solar energy system components and to the extent such costs stabilize, decline at a slower rate or increase,\nour future growth rate may be negatively impacted. The declining cost of solar energy system components and the raw materials necessary\nto manufacture them has been a key driver in the price of our solar energy systems, and the prices charged for electricity and customer\nadoption of solar energy. Solar energy system component and raw material prices may not continue to decline at the same rate as they have\nover the past several years or at all. In addition, growth in the solar industry and the resulting increase in demand for solar energy\nsystem components and the raw materials necessary to manufacture them may also put upward pressure on prices. An increase of solar energy\nsystem components and raw materials prices could slow growth and cause business and results of operations to suffer. Further, the cost\nof solar energy system components and raw materials has increased and could increase in the future due to tariff penalties, duties, the\nloss of or changes in economic governmental incentives or other factors.\n\n** **\n\n**Product liability claims\nagainst us could result in adverse publicity and potentially significant monetary damages.**\n\n \n\nIt is possible our solar energy\nsystems or energy storage systems could injure customers or other third parties or our solar energy systems or energy storage systems\ncould cause property damage as a result of product malfunctions, defects, improper installation, fire or other causes. Any product liability\nclaim we face could be expensive to defend and may divert management’s attention. The successful assertion of product liability\nclaims against us could result in potentially significant monetary damages, potential increases in insurance expenses, penalties or fines,\nsubject the company to adverse publicity, damage our reputation and competitive position and adversely affect sales of solar energy systems\nor energy storage systems. In addition, product liability claims, injuries, defects or other problems experienced by other companies in\nthe residential solar industry could lead to unfavorable market conditions to the industry as a whole and may have an adverse effect on\nour ability to expand its portfolio of solar service agreements and related solar energy systems and energy storage systems, thus affecting\nour business, financial condition and results of operations.\n\n** **\n\n**Our warranty costs may\nexceed the warranty reserve.**\n\n \n\nWe provide warranties that\ncover parts performance and labor to purchasers of our solar modules. We also have legacy warranty and performance obligations from our\nformer business manufacturing solar panels. We maintain a warranty reserve on our financial statements, and our warranty claims may exceed\nthe warranty reserve. Any significant warranty expenses could adversely affect our financial condition and results of operations. Significant\nwarranty problems could impair our reputation which could result in lower revenue and a lower gross margin.\n\n \n\n79\n\n \n\n \n\n**We are subject to legal\nproceedings and regulatory inquiries and may be named in additional claims or legal proceedings or become involved in regulatory inquiries,\nall of which are costly, distracting to our core business and could result in an unfavorable outcome or harm our business, financial condition,\nresults of operations or the trading price for our securities.**\n\n \n\nWe are involved in claims,\nlegal proceedings that arise from normal business activities. In addition, from time to time, third parties have asserted and may in the\nfuture assert claims against us. We evaluate all claims, lawsuits and investigations with respect to their potential merits, our potential\ndefenses and counter claims, settlement or litigation potential and the expected effect on us. In the event that we are involved in significant\ndisputes, including the legal claims noted below, or are the subject of a formal action by a regulatory agency, we could be exposed to\ncostly and time-consuming legal proceedings that could result in any number of outcomes. Although outcomes of such actions vary, any claims,\nproceedings or regulatory actions initiated by or against us whether successful or not, could result in expensive costs of defense, costly\ndamage awards, injunctive relief, increased costs of business, fines or orders to change certain business practices, significant dedication\nof management time, diversion of significant operational resources or some other harm to the business. In any of these cases, our business,\nfinancial condition or results of operations could be negatively impacted. We make a provision for a liability relating to legal matters\nwhen it is both probable that a liability has been incurred and the amount of the loss can be reasonably estimated. These provisions are\nreviewed at least quarterly and adjusted to reflect the impacts of negotiations, estimated settlements, legal rulings, advice of legal\ncounsel and other information and events pertaining to a particular matter. Depending on the nature and timing of any such controversy,\nan unfavorable resolution of a matter could materially affect our future business, financial condition or results of operations, or all\nof the foregoing, in a particular quarter.\n\n** **\n\nSee\n“Item 8. Financial Statements and Supplementary Data - Notes to Consolidated Financial\nStatements - **Note 14 – Commitments and Contingencies**” for a further discussion\nof the legal claims summarized therein.\n\n \n\nIn\naddition to the other information provided in **Note 14 – Commitments and Contingencies**,\non February 22, 2024, the court in the case issued an order against certain subsidiaries\nof the Company which awarded Siemens approximately $6.9 million. On March 15, 2024, Siemens\nfiled a motion seeking to recover $2.67 million for attorneys’ fees, expenses, and\npre-and post-judgment interest. The Company opposed Siemens’ motion for attorneys’\nfees, expenses, and pre- and post-judgment interest on April 5, 2024. On June 17, 2024, the\ncourt entered a final order which awarded Siemens a total of $2.0 million in attorneys’\nfees and costs. We have appealed these judgments. On August 19, 2024, Siemens applied for\nthe enforcement to a sister state judgment in the Superior Court of Alameda, California and\nthe court entered a judgement in favor of Siemens. On December 9, 2024, Siemens moved to\namend the judgment to add the Company as a judgement debtor. Our subsidiaries opposed the\nSiemens motion. The court heard the motion by submission on April 3, 2025, but has not yet\nissued a ruling. The Company recognized $6.9 million as a legal loss related to this litigation\nin 2023, and in 2024, and the Company recorded an additional accrual for $2.0 million for\nattorneys’ fees, expenses, and pre-judgment interest, in accrued expenses and other\ncurrent liabilities within its consolidated balance sheet as of December 29, 2024. This legal\nloss was recognized in fiscal 2024 in loss from discontinued operations, net of tax on the\nconsolidated statements of operations and comprehensive loss. The Company recorded a liability\nof $6.9 million as a legal loss related to this litigation, excluding amounts for attorneys’\nfees and costs, in accrued expenses and other current liabilities within its consolidated\nbalance sheets at each of March 30, 2025, and December 29, 2024.\n\n \n\n**The requirements of\nbeing a public company may strain our resources, divert management’s attention and affect our ability to attract and retain qualified\ndirectors and officers.**\n\n \n\nWe will face increased legal,\naccounting, administrative and other costs and expenses as a public company that we did not incur as a private company. The Sarbanes-Oxley\nAct, including the requirements of Section 404, as well as rules and regulations subsequently implemented by the SEC, the Dodd-Frank Wall\nStreet Reform and Consumer Protection Act of 2010 and the rules and regulations promulgated and to be promulgated thereunder, the PCAOB\nand the securities exchanges, impose additional reporting and other obligations on public companies. Compliance with public company requirements\nwill increase costs and make certain activities more time- consuming. A number of those requirements will require us to carry out activities\nwe had not done previously.\n\n \n\nIf any issues in complying\nwith those requirements are identified (for example, if we or the auditors identify a material weakness or significant deficiency in the\ninternal control over financial reporting), we could incur additional costs rectifying those issues, and the existence of those issues\ncould adversely affect our reputation or investor perceptions of it. It may also be more expensive to obtain director and officer liability\ninsurance. Risks associated with our status as a public company may make it more difficult to attract and retain qualified persons to\nserve on our board of directors or as executive officers. The additional reporting and other obligations imposed by these rules and regulations\nwill increase legal and financial compliance costs and the costs of related legal, accounting and administrative activities. These increased\ncosts will require us to divert a significant amount of money that could otherwise be used to expand the business and achieve strategic\nobjectives. Advocacy efforts by stockholders and third parties may also prompt additional changes in governance and reporting requirements,\nwhich could further increase costs.\n\n** **\n\n80\n\n \n\n \n\n**Our ability to use net\noperating loss carryforwards and certain other tax attributes may be limited.**\n\n \n\nWe have incurred substantial\nlosses during our history and do not expect to become profitable in the near future and may never achieve profitability. Under current\nU.S. federal income tax law, unused losses for the tax year ended December 31, 2017 and prior tax years will carry forward to offset future\ntaxable income, if any, until such unused losses expire, and unused federal losses generated after December 31, 2017 will not expire and\nmay be carried forward indefinitely but will be only deductible to the extent of 80% of current year taxable income in any given year.\nMany states have similar laws.\n\n \n\nIn addition, both current\nand future unused net operating loss (“**NOL**”) carryforwards and other tax attributes may be subject to limitation under\nSections 382 and 383 of the Internal Revenue Code of 1986, as amended (the “Code”), if a corporation undergoes an “ownership\nchange,” generally defined as a greater than 50 percentage point change (by value) in equity ownership by certain stockholders over\na three-year period. The Business Combination may have resulted in an ownership change for us and, accordingly, our NOL carryforwards\nand certain other tax attributes may be subject to limitations (or disallowance) on their use after the Business Combination. Our NOL\ncarryforwards may also be subject to limitation as a result of prior shifts in equity ownership. Additional ownership changes in the future\ncould result in additional limitations on our NOL carryforwards. Consequently, even if we achieve profitability, we may not be able to\nutilize a material portion of our NOL carryforwards and other tax attributes, which could have a material adverse effect on cash flow\nand results of operations.\n\n \n\n**Risks Related to our Common Stock and Other\nSecurities**\n\n** **\n\n**Our directors, executive officers\nand principal stockholders will continue to have significant influence over our company, which could limit your ability to influence the\noutcome of key transactions, including a change of control.***\n\n** **\n\nOur directors, executive officers\nand each of our 5% stockholders and their affiliates, in the aggregate, beneficially own approximately 40% of the outstanding shares\nof our common stock, based on the number of shares outstanding as of March 31, 2025. As a result, these stockholders, if acting together,\nwill be able to significantly influence matters requiring approval by our stockholders, including the election of directors and the approval\nof mergers, acquisitions or other extraordinary transactions. They may also have interests that differ from yours and may vote in a way\nwith which you disagree, and which may be adverse to your interests. This concentration of ownership may have the effect of delaying,\npreventing or deterring a change of control of our company, could deprive our stockholders of an opportunity to receive a premium for\ntheir common stock as part of a sale of our company and might ultimately affect the market price of our common stock.\n\n \n\n**The trading price of\nour common stock may be volatile, and you could lose all or part of your investment.**\n\n \n\nFluctuations in the price\nof our securities could contribute to the loss of all or part of your investment. The trading price of our securities could be volatile\nand subject to wide fluctuations in response to various factors, some of which are beyond our control. Any of the factors listed below\ncould have a material adverse effect on your investment in our securities and our securities may trade at prices significantly below the\nprice you paid for them. In such circumstances, the trading price of our securities may not recover and may experience a further decline. \n\n \n\nFactors affecting the trading\nprice of our securities:\n\n \n\n \n●\nactual or anticipated fluctuations in our quarterly financial results or the quarterly financial results of companies perceived to be similar to us;\n\n \n\n \n●\nchanges in the market’s expectations about our operating results;\n\n \n\n \n●\nsuccess of competitors;\n\n \n\n81\n\n \n\n \n\n \n●\nour operating results failing to meet the expectation of securities analysts or investors in a particular period;\n\n \n\n \n●\nchanges in financial estimates and recommendations by securities analysts concerning us or the market in general;\n\n \n\n \n●\noperating and stock price performance of other companies that investors deem comparable to us;\n\n \n\n \n●\nour ability to develop product candidates;\n\n \n\n \n●\nchanges in laws and regulations affecting our business;\n\n \n\n \n●\ncommencement of, or involvement in, litigation involving us;\n\n \n\n \n●\nchanges in our capital structure, such as future issuances of securities or the incurrence of additional debt;\n\n \n\n \n●\nthe volume of shares of our securities available for public sale\n\n \n\n \n●\nany major change in our board of directors or management;\n\n \n\n \n●\nsales of substantial amounts of common stock by our directors, executive officers or significant stockholders or the perception that such sales could occur; and\n\n \n\n \n●\ngeneral economic and political conditions such as recessions, interest rates, fuel prices, international currency fluctuations and acts of war or terrorism.\n\n** **\n\n**If securities or industry\nanalysts do not publish or cease publishing research or reports about us, our business, or our market, or if they change their recommendations\nregarding our securities adversely, the price and trading volume of our securities could decline.**\n\n \n\nThe trading market for our\nsecurities is influenced by the research and reports that industry or securities analysts may publish about us, our business, our market,\nor our competitors. If any of the analysts who currently cover us change their recommendation regarding our stock adversely, or provide\nmore favorable relative recommendations about our competitors, the price of our securities would likely decline. If any analyst who currently\ncover us were to cease coverage of us or fail to regularly publish reports on us, we could lose visibility in the financial markets, which\ncould cause our stock price or trading volume to decline. If we obtain additional coverage and any new analyst issues, an adverse or misleading\nopinion regarding us, our business model, our intellectual property or our stock performance, or if our operating results fail to meet\nthe expectations of analysts, our stock price could decline.\n\n \n\n**A market for our securities\nmay not continue, which would adversely affect the liquidity and price of our securities.**\n\n \n\nThe price of our securities\nmay fluctuate significantly due to general market and economic conditions and an active trading market for our securities may not be sustained.\nIn addition, the price of our securities can vary due to general economic conditions and forecasts, our general business condition and\nthe release of our financial reports. If our securities are not listed on, or become delisted from Nasdaq for any reason, and are quoted\non the OTC Bulletin Board, an inter-dealer automated quotation system for equity securities that is not a national securities exchange,\nthe liquidity and price of our securities may be more limited than if we were quoted or listed on Nasdaq or another national securities\nexchange. You may be unable to sell your securities unless a market can be established or sustained.\n\n \n\n82\n\n \n\n \n\n**If we fail to meet all\napplicable requirements of Nasdaq and Nasdaq determines to delist our common stock, the delisting could adversely affect the market liquidity\nof our common stock and the market price of our common stock could decrease.**\n\n \n\nIf we are unable to satisfy\nthe Nasdaq criteria for continued listing, our common stock would be subject to delisting. A delisting of our common stock could negatively\nimpact us by, among other things, reducing the liquidity and market price of our common stock; reducing the number of investors willing\nto hold or acquire our common stock, which could negatively impact our ability to raise equity financing; decreasing the amount of news\nand analyst coverage of us; and limiting our ability to issue additional securities or obtain additional financing in the future. In addition,\ndelisting from Nasdaq may negatively impact our reputation and, consequently, our business.\n\n** **\n\nThere can be no assurance\nthat we will maintain compliance with the requirements for listing our common stock on Nasdaq. On April 28, 2025,we received a letter\nfrom the Listing Qualifications staff of Nasdaq indicating that, as a result of our delay in filing its Annual Report on Form 10-K for\nthe year ended December 31, 2024 (the “2024 Form 10-K”), we were not in compliance with the timely filing requirements for\ncontinued listing under Nasdaq Listing Rule 5250(c)(1). The Nasdaq letter had no immediate effect on the listing or trading of our common\nstock or warrants. The Nasdaq listing rules require Nasdaq-listed companies to timely file all required periodic reports with the SEC.\nThe Nasdaq letter stated that, under Nasdaq rules, the Company had 60 calendar days to submit a plan to regain compliance with Nasdaq’s\ncontinued listing requirements. We filed our 2024 Form 10-K on April 30, 2025.\n\n \n\nIf we are unable to satisfy\nthe Nasdaq criteria for continued listing, our common stock would be subject to delisting.\n\n \n\nIf Nasdaq delists our securities\nfrom trading on its exchange for failure to meet the listing standards, we and our stockholders could face significant material adverse\nconsequences including:\n\n \n\n \n●\na limited availability of market quotations for our securities;\n\n \n\n \n●\na determination that our common stock is a “penny stock” which will require brokers trading in our common stock to adhere to more stringent rules, possibly resulting in a reduced level of trading activity in the secondary trading market for our common stock;\n\n \n\n \n●\na limited amount of analyst coverage; and a decreased ability to issue additional securities or obtain additional financing in the future.\n\n  \n\n**Sales of a substantial\nnumber of our common stock in the public market by our shareholders could cause the price of our common stock to decline.**\n\n \n\nSales of a substantial number\nof shares of our common stock in the public market could occur at any time. If our stockholders sell, or the market perceives that our\nstockholders intend to sell, substantial amounts of our common stock in the public market, the market price of our common stock could\ndecline.\n\n \n\n**Provisions in our Certificate\nof Incorporation and Bylaws and provisions of the Delaware General Corporation Law may delay or prevent an acquisition by a third party\nthat could otherwise be in the interests of shareholders.**\n\n** **\n\nOur Certificate of Incorporation\nand Bylaws contain several provisions that may make it more difficult or expensive for a third party to acquire control of us without\nthe approval of our board. These provisions, which may delay, prevent or deter a merger, acquisition, tender offer, proxy contest, or\nother transaction that stockholders may consider favorable, include the following:\n\n \n\n \n●\nadvance notice requirements for stockholder proposals and director nominations;\n\n \n\n \n●\nprovisions limiting stockholders’ ability to call special meetings of stockholders and to take action by written consent;\n\n \n\n \n●\nrestrictions on business combinations with interested stockholders;\n\n \n\n \n●\nno cumulative voting; and\n\n \n\n83\n\n \n\n \n\n \n●\nthe ability of the board of directors to designate the terms of and issue new series of preferred stock without stockholder approval, which could be used, among other things, to institute a rights plan that would have the effect of significantly diluting the stock ownership of a potential hostile acquirer, likely preventing acquisitions by such acquirer.\n\n \n\nThese provisions of our Certificate\nof Incorporation and Proposed Bylaws could discourage potential takeover attempts and reduce the price that investors might be willing\nto pay for the shares of our common stock in the future, which could reduce the market price of our common stock.\n\n \n\n**The provision of our\nCertificate of Incorporation requiring exclusive venue in the Court of Chancery in the State of Delaware and the federal district courts\nof the U.S. for certain types of lawsuits may have the effect of discouraging lawsuits against directors and officers.**\n\n** **\n\nOur Certificate of Incorporation\nprovides that, unless otherwise consented to by us in writing, the Court of Chancery of the State of Delaware (or, if the Court of Chancery\ndoes not have jurisdiction, another State court in Delaware or the federal district court for the District of Delaware) will, to the fullest\nextent permitted by law, be the sole and exclusive forum for the following types of actions or proceedings:\n\n \n\n \n●\nany derivative action or proceeding brought on behalf of us;\n\n \n\n \n●\nany action asserting a claim of breach of a duty (including any fiduciary duty) owed by any of our current or former directors, officers, stockholders, employees or agents to us or our stockholders;\n\n \n\n \n●\nany action asserting a claim against us or any of our current or former directors, officers, stockholders, employees or agents relating to any provision of the Delaware General Corporation Law (“DGCL”) or our Certificate of Incorporation or the Bylaws or as to which the DGCL confers jurisdiction on the Court of Chancery of the State of Delaware; and\n\n \n\n \n●\nany action asserting a claim against us or any of our current or former directors, officers, stockholders, employees or agents governed by the internal affairs doctrine of the State of Delaware, in each such case unless the Court of Chancery (or such other state or federal court located within the State of Delaware, as applicable) has dismissed a prior action by the same plaintiff asserting the same claims because such court lacked personal jurisdiction over an indispensable party named as a defendant therein.\n\n \n\nOur Certificate of Incorporation\nwill further provide that, unless otherwise consented to by us in writing to the selection of an alternative forum, the federal district\ncourts of the U.S. will, to the fullest extent permitted by law, be the sole and exclusive forum for the resolution of any complaint against\nany person in connection with any offering of our securities, asserting a cause of action arising under the Securities Act. Any person\nor entity purchasing or otherwise acquiring any interest in our securities will be deemed to have notice of and consented to this provision.\n\n \n\nAlthough our Certificate of\nIncorporation contains the choice of forum provisions described above, it is possible that a court could rule that such provisions are\ninapplicable for a particular claim or action or that such provisions are unenforceable. For example, under the Securities Act, federal\ncourts have concurrent jurisdiction over all suits brought to enforce any duty or liability created by the Securities Act, and investors\ncannot waive compliance with the federal securities laws and the rules and regulations thereunder. In addition, Section 27 of the Exchange\nAct creates exclusive federal jurisdiction over all suits brought to enforce any duty or liability created by the Exchange Act or the\nrules and regulations thereunder, and, therefore, the exclusive forum provisions described above do not apply to any actions brought under\nthe Exchange Act.\n\n \n\nAlthough we believe these\nprovisions will benefit us by limiting costly and time-consuming litigation in multiple forums and by providing increased consistency\nin the application of applicable law, these exclusive forum provisions may limit the ability of our shareholders to bring a claim in a\njudicial forum that such shareholders find favorable for disputes with us or our directors, officers or employees, which may discourage\nsuch lawsuits against us and our directors, officers and other employees.\n\n \n\n84\n\n \n\n \n\n**We may be required to\nrepurchase up to 5,618,488 shares of common stock from the investors with whom we entered into Forward Purchase Agreements in connection\nwith the closing of the Business Combination, which would reduce the amount of cash available to us to fund our growth plan.**\n\n** **\n\nOn and around July 13, 2023,\nFACT entered into separate Forward Purchase Agreements (the “Forward Purchase Agreements”) with each of (i) Meteora\nSpecial Opportunity Fund I, LP (“**MSOF**”), Meteora Capital Partners, LP (“**MCP**”) and Meteora Select\nTrading Opportunities Master, LP (“MSTO”) (with MSOF, MCP, and MSTO collectively as “**Meteora**”); (ii) Polar\nMulti-Strategy Master Fund (“**Polar**”), and (iii) Diametric True Alpha Market Neutral Master Fund, LP, Diametric\nTrue Alpha Enhanced Market Neutral Master Fund, LP, and Pinebridge Partners Master Fund, LP (collectively, “Sandia”, and each\nof Meteora, Polar, and Sandia, individually, an “**FPA Investor**”, and together, the “**FPA Investors**”),\npursuant to which FACT (now Complete Solaria following the closing of the Business Combination) agreed to purchase in the aggregate, on\nthe date that is 24 months after the closing date of the Forward Purchase Agreements (the “**Maturity Date**”), up to 5,618,488\nshares of common stock then held by the FPA Investors (subject to certain conditions and purchase limits set forth in the Forward Purchase\nAgreements). Pursuant to the terms of the Forward Purchase Agreements, each FPA Investor further agreed not to redeem any of the FACT\nClass A Ordinary Shares owned by it at such time. The per price at which the FPA Investors have the right to sell the shares to us on\nthe Maturity Date will not be less than $5.00 per share. On December 18, 2023, the Company and each FPA Investor entered into separate\namendments to the Forward Purchase Agreements (the “**First Amendments”).**The First Amendments lower the reset floor\nprice of each Forward Purchase Agreement from $5.00 to $3.00 and allow the Company to raise up to $10,000,000 of equity from existing\nstockholders without triggering certain anti-dilution provisions contained in the Forward Purchase Agreements; provided, the insiders\npay 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;\nprovided, further, that any subsequent investments are made at a price per share equal to the greater of (a) the closing price per share\nas 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,\nrespectively, the Company entered into separate amendments to the Forward Purchase Agreements (the collectively the “**Second Amendments**”)\nwith Sandia (the “**Sandia Second Amendment**”) and Polar (the “**Polar Second Amendment**”). The Second\nAmendments lower the reset price of each Forward Purchase Agreement from $3.00 to $1.00 per share and amend the VWAP Trigger Event provision\nto read: “After December 31, 2024, an event that occurs if the VWAP Price, for any 20 trading days during a 30 consecutive trading\nday-period, is below $1.00 per Share.” The Sandia Second Amendment is not effective until the Company executes similar amendments\nwith both Polar and Meteora. Subsequently, on June 14, 2024, the Company entered into an amendment to the Forward Purchase Agreement\nwith Sandia (the “**Sandia Third Amendment**”). The Sandia Third Amendment sets the reset price of each Forward Purchase\nAgreement to $1.00 per share and amends the VWAP Trigger Event provision to read: “After December 31, 2024, an event that occurs\nif the VWAP Price, for any 20 trading days during a 30 consecutive trading day-period, is below $1.00 per Share.” In the event\neither Polar or Meteora amend their Forward Purchase Agreements to include different terms from the $1.00 reset price and VWAP trigger\nadjustment, or file a notice of a VWAP trigger event, as referenced herein, the Sandia Forward Purchase Agreement will be retroactively\namended to reflect those improved terms and liquidity on the Sandia Forward Purchase Agreement, including any of the 1,050,000 shares\nthat were sold upon execution of the Sandia Forward Purchase Agreement. On July 17, 2024, the Company entered into the third amendment\nto the Forward Purchase Agreement with Polar (the “**Polar Third Amendment**”), pursuant to which the Company and Polar\nagreed that Section 2 (Most Favored Nation) of the Forward Purchase Agreement is applicable to all 2,450,000 shares subject to the Forward\nPurchase Agreement.\n\n \n\nIf the FPA Investors hold\nsome or all of the 5,618,488 forward purchase agreement shares on the Maturity Date, and the per share trading price of our common stock\nis less than the per share price at which the FPA Investors have the right to sell the common stock to us on the Maturity Date, we would\nexpect that the FPA Investors will exercise this repurchase right with respect to such shares. In the event that we are required to repurchase\nthese forward purchase agreement shares, or in the event that the Forward Purchase Agreements are terminated, the amount of cash arising\nfrom the Business Combination that would ultimately be available to fund our liquidity and capital resource requirements would be reduced\naccordingly, which would adversely affect our ability to fund our growth plan in the manner we had contemplated when entering into the\nForward Purchase Agreements.\n\n** **\n\n85\n\n \n\n** **\n\n**Warrants to purchase\nshares of our common stock may not be exercised at all or may be exercised on a cashless basis and we may not receive any cash proceeds\nfrom the exercise of such warrants.**\n\n \n\nThe exercise price of warrants\nto purchase shares of our common stock may be higher than the prevailing market price of the underlying shares of common stock. The exercise\nprice of such warrants is subject to market conditions and may not be advantageous if the prevailing market price of the underlying shares\nof common stock is lower than the exercise price. The cash proceeds associated with the exercise of such warrants to purchase our common\nstock are contingent upon our stock price. The value of our common stock will fluctuate and may not align with the exercise price of such\nwarrants at any given time. If such warrants are “out of the money,” meaning the exercise price is higher than the market\nprice of our common stock, there is a high likelihood that warrant holders may choose not to exercise their warrants. As a result, we\nmay not receive any proceeds from the exercise of such warrants.\n\n \n\nFurthermore, with regard to\ncertain warrants to purchase shares of our common stock that were issued in a private placement at the time of FACT’s IPO and warrants\nissued to certain selling securityholders in connection with conversion of working capital loans, it is possible that we may not receive\ncash upon their exercise, since these warrants may be exercised on a cashless basis. A cashless exercise allows warrant holders to convert\nthe warrants into shares of our common stock without the need for a cash payment. Instead of paying cash upon exercise, the warrant holder\nwould receive a reduced number of shares based on a predetermined formula. As a result, the number of shares issued through a cashless\nexercise will be lower than if the warrants were exercised on a cash basis, which could impact the cash proceeds we receive from the exercise\nof such warrants.\n\n \n\n**Servicing our debt requires a significant\namount of cash, and we may not have sufficient cash flow from our business to pay our substantial debt.***\n\n** **\n\nOur ability to make\nscheduled payments of the principal of, to pay interest on or to refinance our indebtedness, including 12.00% Notes due 2029 and the\n7.00% Convertible Senior Notes due 2029 (the 7.00% Notes due 2029 and with the 12.00% Notes due 2029, collectively, the\n“**Convertible Senior Notes**”), depends on our future performance, which is subject to economic, financial,\ncompetitive and other factors beyond our control. Our business may not continue to generate cash flow from operations in the future\nsufficient to service our debt and make necessary capital expenditures. Additionally, as a result of the delayed filing of our\nAnnual Report on Form 10-K for the year ended December 29, 2024, we incurred additional interest under the Convertible Senior Notes.\nIf we are unable to generate such cash flow, we may be required to adopt one or more alternatives, such as selling assets,\nrestructuring debt or obtaining additional equity capital on terms that may be onerous or highly dilutive. Our ability to refinance\nour indebtedness will depend on the capital markets and our financial condition at such time. We may not be able to engage in any of\nthese activities or engage in these activities on desirable terms, which could result in a default on our debt obligations,\nincluding the Convertible Senior Notes.\n\n \n\n**The conversion features\nof the Convertible Senior Notes may adversely affect our financial condition and operating results.**\n\n** **\n\nThe holders of Convertible\nSenior Notes will be entitled to convert their notes at and during specified periods at their option. If one or more holders elect to\nconvert their notes, unless we elect to satisfy our conversion obligation by delivering solely shares of our common stock (other than\npaying cash in lieu of delivering any fractional share), at maturity, we would be required to settle a portion or all of our conversion\nobligation through the payment of cash, which could adversely affect our liquidity.\n\n \n\n**Certain provisions in\nthe indentures or other agreements governing the Convertible Senior Notes may delay or prevent an otherwise a beneficial takeover attempt\nof us.**\n\n** **\n\nCertain provisions in the\nindentures or other agreements governing the Convertible Senior Notes may make it more difficult or expensive for a third party to acquire\nus. For example, the indentures and other agreements governing the Convertible Senior Notes will require us to repurchase the Convertible\nSenior Notes for cash upon the occurrence of a fundamental change and, in certain circumstances, to increase the conversion rate for a\nholder that converts its notes in connection with a make-whole fundamental change. A takeover of us may trigger the requirement that we\nrepurchase the Convertible Senior Notes and/or increase the conversion rate, which could make it costlier for a potential acquirer to\nengage in such takeover. Such additional costs may have the effect of delaying or preventing a takeover of us that would otherwise be\nbeneficial to investors.\n\n \n\n86\n\n \n\n \n\n**Conversion of the Convertible\nSenior Notes may dilute the ownership interest of our stockholders or may otherwise depress the price of our common stock.**\n\n** **\n\nThe conversion of some or\nall of the Convertible Senior Notes may dilute the ownership interests of our stockholders. Upon conversion of the Convertible Senior\nNotes, we have the option to pay or deliver, as the case may be, cash, shares of our common stock or a combination of cash and shares\nof our common stock. If we elect to settle our conversion obligation in shares of our common stock or a combination of cash and shares\nof our common stock, any sales in the public market of our common stock issuable upon such conversion could adversely affect prevailing\nmarket prices of our common stock. In addition, the existence of the Convertible Senior Notes may encourage short selling by market participants\nbecause the conversion of the Convertible Senior Notes could be used to satisfy short positions, or anticipated conversion of the Convertible\nSenior Notes into shares of our common stock could depress the price of our common stock.\n\n \n\n**The accounting method\nfor the Convertible Senior Notes could adversely affect our reported financial condition and results.**\n\n** **\n\nThe accounting method for\nreflecting the Convertible Senior Notes on our balance sheet, accruing interest expense for the Convertible Senior Notes and reflecting\nthe underlying shares of our common stock in our reported diluted earnings per share may adversely affect our reported earnings and financial\ncondition.\n\n \n\nIn August 2020, the Financial\nAccounting Standards Board (“**FASB**”) published Accounting Standards Update (“**ASU**”) 2020-06 (“**ASU\n2020-06**”), which simplified certain of the accounting standards that apply to convertible notes. ASU 2020-06 eliminated the\ncash conversion and beneficial conversion feature modes used to separately account for embedded conversion features as a component of\nequity. Instead, an entity would account for convertible debt or convertible preferred stock securities as a single unit of account, unless\nthe conversion feature requires bifurcation and recognition as derivatives. Additionally, the guidance requires entities to use the “if-converted”\nmethod for all convertible instruments in the diluted earnings per share calculation and to include the effect of potential share settlement\nfor instruments that may be settled in cash or shares. ASU 2020-06 became effective for us beginning on January 1, 2022.\n\n \n\nIn addition, we expect that\nthe shares of common stock underlying the Convertible Senior Notes will be reflected in our diluted earnings per share using the “if\nconverted” method, in accordance with ASU 2020-06. Under that method, diluted earnings per share would generally be calculated assuming\nthat all the Convertible Senior Notes were converted solely into shares of common stock at the beginning of the reporting period, unless\nthe result would be anti-dilutive. The application of the if-converted method may reduce our reported diluted earnings per share to the\nextent we are profitable in the future, and accounting standards may change in the future in a manner that may adversely affect our diluted\nearnings per share.\n\n \n\nFurthermore, if any of the\nconditions to the convertibility of the Convertible Senior Notes is satisfied, then we may be required under applicable accounting standards\nto reclassify the liability carrying value of the Convertible Senior Notes as a current, rather than a long-term, liability. This reclassification\ncould be required even if no noteholders or holders of affiliate notes convert their notes or affiliate notes, respectively, following\nthe satisfaction of those conditions and could materially reduce our reported working capital.\n\n \n\n87"}