plete Solaria(CSLR) - 2024 Q4 - Annual Report

Part I Business Complete Solaria provides solar system sales and installation, formed by a 2022 merger, and expanded through the 2024 SunPower residential business acquisition - The company's mission is to provide energy-efficient solutions to homeowners and small to medium-sized businesses to lower energy bills and reduce their carbon footprint[20] - Complete Solaria was formed in November 2022 through the merger of Complete Solar Holding Corporation and The Solaria Corporation[21] - In October 2023, the company sold its solar panel assets, including intellectual property, to Maxeon Solar Technologies, Ltd. for approximately $11.0 million in Maxeon shares[22] - On September 30, 2024, the company completed the acquisition of certain SunPower assets, including the Blue Raven Solar business, New Homes Business, and Non-Installing Dealer network[23] - The company's primary revenue source is Solar System Sales and Installation for residential homeowners and new home builders, leveraging a network of third-party sales and builder partners[24][25] - As of December 29, 2024, the company had over 600 full-time employees, with approximately 534 joining as part of the SunPower acquisition[48] Risk Factors The company faces substantial risks including recurring losses, negative cash flows, internal control weaknesses, and integration challenges, raising going concern doubts - The company has a history of losses, with net losses of $56.5 million in fiscal 2024 and $269.6 million in fiscal 2023, and an accumulated deficit of $411.4 million. These conditions, along with a cash balance of $13.4 million, raise substantial doubt about its ability to continue as a going concern[57][62] - Material weaknesses have been identified in the company's internal controls over financial reporting across all five components of the COSO framework: control environment, risk assessment, control activities, information and communication, and monitoring[66][68][69][70][71] - The company's business is significantly affected by international trade policies, particularly safeguard tariffs on imported solar cells and modules, which could increase costs and reduce demand[76][77] - The business relies heavily on the availability of government rebates and tax credits, such as the Investment Tax Credit (ITC) and Residential Clean Energy Credit. The reduction or elimination of these incentives could adversely impact business[81][82][88] - The company may not realize the anticipated benefits from the acquisition of SunPower's businesses, and the integration process poses numerous risks, including assimilation of operations and personnel, and retaining key customers[128][129] - Due to not timely filing its Annual Report on Form 10-K, the company is not in compliance with Nasdaq continued listing rules, which could lead to delisting and adversely affect stock liquidity and price[188][189] Unresolved Staff Comments The company reports that it has no unresolved staff comments from the SEC - None[215] Cybersecurity The company is implementing a cybersecurity risk management program overseen by key executives and the Audit Committee, utilizing third-party providers to manage threats - The company is implementing information security procedures to manage material risks from cybersecurity threats, with oversight from the Chief Information Officer, Chief Legal Officer, CEO, CFO, and Chief Administrative Officer[216][217] - The Audit Committee of the board of directors is responsible for overseeing the company's cybersecurity risk management processes and regularly reviews these risks with management[221] Properties Complete Solaria leases all its facilities, with corporate headquarters in Fremont, California, and an additional administrative office in Orem, Utah Leased Facilities | Principal Operations | Location | Approx. square footage | Ownership | Lease Term Ends | | :--- | :--- | :--- | :--- | :--- | | Headquarters | Fremont, CA | 22,847 | Leased | 2026 | | General administrative and operations | Orem, UT | 43,470 | Leased | 2027 | Legal Proceedings Information regarding legal proceedings is incorporated by reference from Note 19 – Commitments and Contingencies in the consolidated financial statements - Details on legal proceedings are provided in Note 19 to the consolidated financial statements[225] Mine Safety Disclosures This item is not applicable to the company - Not applicable[226] Part II Market for Registrant's Common Equity, Related Stockholder Matters, and Issuer Purchases of Equity Securities Complete Solaria's common stock trades on Nasdaq under "SPWR", with approximately 140 holders of record, and the company has never paid nor plans to pay cash dividends - The company's common stock is traded on Nasdaq under the symbol "SPWR"[228] - The company has never paid cash dividends and has no plans to do so[229] Reserved This item is reserved and contains no information Management's Discussion and Analysis of Financial Condition and Results of Operations Fiscal 2024 revenue increased 24% to $108.7 million due to the SunPower acquisition, improving gross margin to 36%, but the company reported a $54.4 million net loss from continuing operations, raising substantial doubt about its going concern ability Fiscal Year 2024 vs 2023 Performance | (in thousands) | Fiscal Year Ended Dec 29, 2024 | Fiscal Year Ended Dec 31, 2023 | $ Change | % Change | | :--- | :--- | :--- | :--- | :--- | | Revenues | $108,742 | $87,616 | $21,126 | 24% | | Gross profit | $39,502 | $17,788 | $21,714 | 122% | | Gross margin % | 36% | 20% | | | | Loss from continuing operations | ($68,509) | ($52,358) | ($16,151) | 31% | | Net loss from continuing operations | ($54,444) | ($96,197) | $41,753 | (43)% | Revenue by Segment | (in thousands) | FY 2024 | FY 2023 | $ Change | | :--- | :--- | :--- | :--- | | Residential Solar Installation | $67,460 | $87,616 | ($20,156) | | New Homes Business | $41,282 | $0 | $41,282 | | Total revenue | $108,742 | $87,616 | $21,126 | - The increase in General and Administrative costs in 2024 was primarily due to transformation costs related to the SunPower acquisition, including $14.0 million in professional services, $10.4 million in payroll, $10.0 million in bad debt expense, and $13.3 million in one-time integration costs[289] - The company's cash position of $13.4 million as of December 29, 2024, combined with a history of net losses, raises substantial doubt about its ability to continue as a going concern[294] Cash Flow Summary | (in thousands) | Fiscal Year Ended Dec 29, 2024 | Fiscal Year Ended Dec 31, 2023 | | :--- | :--- | :--- | | Net cash used in operating activities | ($54,662) | ($58,802) | | Net cash (used in) provided by investing activities | ($54,657) | $6,171 | | Net cash provided by financing activities | $120,100 | $50,425 | Quantitative and Qualitative Disclosures about Market Risk The company has no significant interest rate risk but is exposed to credit risk from customers and a notable revenue concentration, with three customers accounting for 36% of fiscal 2024 gross revenues - The company does not have significant exposure to interest rate risk as it holds no variable rate debt[326] - For the fiscal year ended December 29, 2024, three customers represented 36% of gross revenues. For the fiscal year ended December 31, 2023, one customer represented 55% of gross revenues[328] Financial Statements and Supplementary Data This section presents the company's audited consolidated financial statements, with the auditor's report expressing substantial doubt about going concern, reflecting a $56.5 million net loss in 2024 and increased assets and liabilities from the SunPower acquisition - The auditor's report for the fiscal year ended December 29, 2024, includes a paragraph stating that the company's recurring losses and negative cash flows raise substantial doubt about its ability to continue as a going concern[333] Consolidated Balance Sheet Data (in thousands) | | Dec 29, 2024 | Dec 31, 2023 | | :--- | :--- | :--- | | Total Current Assets | $95,602 | $37,749 | | Total Assets | $144,466 | $47,322 | | Total Current Liabilities | $79,442 | $109,183 | | Total Liabilities | $242,005 | $124,135 | | Total Stockholders' (Deficit) | ($97,539) | ($76,813) | Consolidated Statement of Operations Data (in thousands) | | Fiscal Year Ended Dec 29, 2024 | Fiscal Year Ended Dec 31, 2023 | | :--- | :--- | :--- | | Revenues | $108,742 | $87,616 | | Net loss from continuing operations | ($54,444) | ($96,197) | | Net loss from discontinued operations | ($2,007) | ($173,358) | | Net loss | ($56,451) | ($269,555) | | Net loss per share, basic | ($0.85) | ($4.94) | Changes in and Disagreements with Accountants on Accounting and Financial Disclosure The company reports no disagreements with its accountants on any matter of accounting principles or practices, or financial statement disclosure - None[602] Controls and Procedures Management concluded that disclosure controls and procedures were ineffective as of December 29, 2024, due to material weaknesses across all COSO framework components, with a remediation plan underway - Management concluded that as of December 29, 2024, the company's disclosure controls and procedures were not effective[604] - Material weaknesses were identified in all five components of the COSO Framework for internal control: control environment, risk assessment, control activities, information and communication, and monitoring activities[610][612][613][614][615] - The assessment of internal control over financial reporting as of December 29, 2024, excluded the SunPower Acquisition, which represents 93% of consolidated total assets[609] - A remediation plan is in progress, which includes hiring additional finance and accounting professionals, providing training, and re-evaluating the Sarbanes-Oxley compliance program[618][622] Other Information The company has adopted an Insider Trading Policy, and no directors or officers adopted or terminated Rule 10b5-1 trading plans in Q4 2024 - The company has adopted an Insider Trading Policy applicable to all directors, officers, and employees[625] - No directors or officers adopted or terminated any Rule 10b5-1 trading arrangements in the three months ended December 29, 2024[626] Disclosure Regarding Foreign Jurisdictions that Prevent Inspections This item is not applicable to the company - Not applicable[627] Part III Directors, Executive Officers and Corporate Governance This section provides biographical information for the company's directors and executive officers, led by Executive Chairman and CEO Thurman J. Rodgers. It confirms that a majority of the board is independent as per Nasdaq listing standards. The board has established Audit, Compensation, and Nominating and Corporate Governance committees with defined memberships and responsibilities. The company has adopted a code of ethical business conduct. It also discloses several delinquent Section 16(a) filings for various directors and officers during fiscal 2024 - The company's executive leadership includes Thurman J. Rodgers as Executive Chairman & CEO and Daniel Foley as Chief Financial Officer[632][644] - The Board of Directors has determined that a majority of its members are "independent" under Nasdaq listing standards[645] - The Board has three standing committees: Audit, Compensation, and Nominating and Corporate Governance[648] - Several late Form 4 filings were reported for fiscal 2024, involving directors and officers including T.J. Rodgers, Tidjane Thiam, William Anderson, Chris Lundell, and Daniel Foley[661] Executive Compensation As an emerging growth company, Complete Solaria provides summary compensation information for its named executive officers (NEOs). For 2024, the NEOs were CEO T.J. Rodgers, CFO Daniel Foley, former CEO Chris Lundell, and former CFO/COO Brian Wuebbels. Compensation primarily consists of base salary and equity awards. Mr. Rodgers received no separate compensation for his CEO role in 2024. The section details employment agreements, outstanding equity awards at year-end, and the company's equity incentive plans, including the 2023 Plan and several legacy plans from predecessor companies 2024 Summary Compensation Table | Name and Principal Position | Year | Salary | Option Awards | Total | | :--- | :--- | :--- | :--- | :--- | | Thurman J. (T.J.) Rodgers, CEO | 2024 | — | — | — | | Daniel Foley, CFO | 2024 | $161,947 | $474,761 | $636,708 | | Chris Lundell, Former CEO | 2024 | $375,024 | $152,876 | $527,900 | | Brian Wuebbels, Former CFO/COO | 2024 | $210,708 | $280,732 | $491,440 | - CEO Thurman J. Rodgers did not receive any separate compensation for his role as Chief Executive Officer during 2024[666][674] - The company adopted the 2023 Incentive Equity Plan and an Employee Stock Purchase Plan in July 2023. Outstanding awards also exist under several legacy plans from Complete Solar and Solaria[691][693][716] Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters This section discloses the beneficial ownership of the company's common stock as of April 30, 2025. Key beneficial owners include entities affiliated with director Devin Whatley (12.3%), CEO T.J. Rodgers (16.3%), Alyeska Investment Group (10.9%), and Kline Hill (10.3%). Collectively, all directors and executive officers as a group beneficially own approximately 32.3% of the outstanding common stock Security Ownership of Certain Beneficial Owners and Management (as of April 30, 2025) | Name of Beneficial Owner | Percentage of Common Stock Outstanding | | :--- | :--- | | 5% or Greater Stockholders: | | | Ecosystem Integrity Fund II, L.P. | 12.3% | | Thurman J. (T.J.) Rodgers | 16.3% | | Entities affiliated with Alyeska Investment Group, L.P. | 10.9% | | Entities Affiliated with Kline Hill | 10.3% | | All directors and executive officers as a group (11 persons) | 32.3% | Certain Relationships and Related Transactions, and Director Independence The company engaged in several significant related party transactions in 2024. These include multiple Simple Agreements for Future Equity (SAFEs) and participation in convertible note financings with entities affiliated with CEO T.J. Rodgers. A major debt restructuring via an Exchange Agreement involved 5% stockholders Carlyle and Kline Hill. The company also had commercial dealings with Pegasus Solar, affiliated with director Devin Whatley, and SameDay Solar, affiliated with director William Anderson. The company has a formal policy for reviewing and approving such transactions - In 2024, the company entered into three SAFE agreements totaling $6.0 million with a trust affiliated with CEO Thurman J. Rodgers[781][782][784] - In July 2024, the company issued 12% convertible notes, with significant participation from related parties including the Rodgers Massey Revocable Living Trust ($18.0M), CRSEF Solis Holdings, L.L.C. ($10.0M), and Kline Hill entities (approx. $7.97M)[792] - In September 2024, the company issued 7% convertible notes, with $8.0 million purchased by trusts affiliated with CEO T.J. Rodgers and $750,000 by a trust for which director J. Daniel McCranie is a trustee[794] - The company has commercial agreements with Pegasus Solar (affiliated with director Devin Whatley) and SameDay Solar (60% owned by director William Anderson)[797][798] Principal Accountant Fees and Services This section details the fees paid to the company's principal accountants. On August 1, 2024, BDO USA, P.C. was engaged as the new independent registered public accounting firm, replacing Deloitte & Touche LLP. For fiscal year 2024, BDO was billed a total of $7.2 million, primarily for audit and audit-related services. For fiscal year 2023, Deloitte was billed a total of $2.0 million. The company confirms that all services were pre-approved by the Audit Committee and that there were no disagreements with the former auditors - On August 1, 2024, the company dismissed Deloitte & Touche LLP and engaged BDO USA, P.C. as its new independent registered public accounting firm[810][815] Accountant Fees (in thousands) | | BDO (FY 2024) | Deloitte (FY 2023) | | :--- | :--- | :--- | | Audit Fees | $2,601 | $1,440 | | Audit-Related Fees | $4,621 | $400 | | Tax Fees | $0 | $147 | | All Other Fees | $0 | $200 | | Total Fees | $7,222 | $1,987 | Part IV Exhibits and Financial Statement Schedules This section lists exhibits filed as part of the Annual Report on Form 10-K, including key agreements, debt indentures, equity plans, and required certifications Form 10-K Summary The company indicates that no Form 10-K summary is provided - None[833]