Delaware | 001-40117 | 93-2279786 | ||
(State or other jurisdiction of incorporation or organization) | (Commission File Number) | (I.R.S. Employer Identification Number) |
Copies to: |
Matthew B. Hemington John T. McKenna Cooley LLP 3175 Hanover Street Palo Alto, CA 94304 Tel: (650) 843-5000 |
| Large accelerated filer | ☐ | Accelerated filer | ☐ | |||
| Non-accelerated filer | ☒ | Smaller reporting company | ☐ | |||
| Emerging growth company | ☒ | |||||
The information in this preliminary proxy statement/prospectus is not complete and may be changed. These securities described herein may not be sold until the registration statement filed with the U.S. Securities and Exchange Commission is declared effective. This preliminary proxy statement/prospectus is not an offer to sell these securities and it is not soliciting an offer to buy these securities in any jurisdiction where the offer or sale is not permitted.
PRELIMINARY PROSPECTUS
SUBJECT TO COMPLETION, DATED AUGUST 8,DECEMBER 22, 2023
Up to 45,922,53647,408,854 Shares of Common Stock
Up to 21,874,907 Shares of Common Stock Issuable Upon Exercise of Warrants
Up to 13,249,907 Warrants to Purchase Common Stock
This prospectus relates to the issuance by us of an aggregate of up to 21,874,907 shares of our common stock, $0.0001 par value per share (the “common stock”), which consists of (i) up to 6,266,667 shares of common stock that are issuable upon the exercise of warrants (the “Private Warrants”) originally issued in a private placement to Freedom Acquisition I, LLC (the “Sponsor”) in connection with the initial public offering of Freedom Acquisition I Corp. (“FACT”), (ii) up to 8,625,000 shares of common stock that are issuable upon the exercise of warrants (the “Public Warrants”) originally issued in the initial public offering of FACT, (iii) up to 716,668 shares of common stock that are issuable upon the exercise of warrants issued to certain selling stockholderssecurityholders in connection with conversion of working capital loans (the “Working Capital Warrants”) and (iv) up to 6,266,572 shares of common stock that are issuable upon the exercise of warrants issued to certain equityholders of Legacy Complete Solaria (as defined herein) received as consideration in connection with the exchange of their capital stock held in Legacy Complete Solaria (the “Merger Warrants” and together with the Private Warrants, Public Warrants and the Working Capital Warrants, the “Warrants”). We will receive the proceeds from any exercise of any Warrants for cash.
This prospectus also relates to the offer and sale from time to time by the selling securityholders named in this prospectus or their permitted transferees (the “selling stockholderssecurityholders”) of (i) up to 45,922,53647,408,854 shares of common stock consisting of (a) up to 10,966,6359,028,488 shares of common stock issued in connection with private placements pursuant to subscription agreements entered into on or around July 13, 2023 (theconsisting of (1) 1,630,000 shares of common stock issued pursuant to private investment in public equity subscription agreements, issued at $10.00 per share, (2) 1,780,000 shares of common stock transferred to the selling securityholders by the Sponsor for no consideration and (3) 5,618,488 shares of common stock issued pursuant to forward purchase agreements issued at approximately $10.00 per share (collectively, the “PIPE Shares”), (b) up to 8,625,000 shares of common stock originally issued in a private placement to the Sponsor in connection with the initial public offering of FACT at a price of $0.003 per share, (c) up to 6,266,667 shares of common stock issuable upon exercise of the Private Warrants at an exercise price of $11.50 per share of common stock, (d) up to 13,080,99416,505,459 shares of common stock pursuant to that certain Amended and Restated Registration Rights Agreement, July 18, 2023, between us and the selling securityholders granting such holders registration rights with respect to such shares originally issued at a price of $0.48 per share, (e) up to 716,668 shares of common stock that are issuable upon the exercise of the Working Capital Warrants at a price of $11.50 per share, and (f) up to 6,266,572 shares of common stock issuable upon exercise of the Merger Warrants at a price of $11.50 per share, and (ii) up to 13,249,907 Warrants consisting of (a) up to 6,266,667 Private Warrants, (b) up to 716,668 Working Capital Warrants and (c) up to 6,266,572 Merger Warrants. We will not receive any proceeds from the sale of shares of common stock or Warrants by the selling stockholderssecurityholders pursuant to this prospectus.
The selling securityholders may offer, sell or distribute all or a portion of the securities hereby registered publicly or through private transactions at prevailing market prices or at negotiated prices. We will not receive any of the proceeds from such sales of the shares of common stock or Warrants, except with respect to amounts received by us upon exercise of the Warrants. We believe the likelihood that warrant holders will exercise their Warrants and therefore the amount of cash proceeds that we would receive, is dependent upon the trading price of our common stock. If the trading price for our common stock is less than $11.50 per share, we believe holders of Warrants will be unlikely to exercise these warrants. In addition, to the extent the Warrants are exercised on a “cashless basis,” the amount of cash we would receive from the exercise of the Warrants will decrease. The Private Warrants and Working Capital Warrants may be exercised for cash or on a “cashless basis.” The Public Warrants and the Merger Warrants may only be exercised for cash provided there is then an effective registration statement registering the shares of common stock issuable upon the exercise of such warrants. If there is not a then-effective registration statement, then such warrants may be exercised on a “cashless basis,” pursuant to an available exemption from registration under the Securities Act. We will bear all costs, expenses and fees in connection with the registration of these securities, including with regard to compliance with state securities or “blue sky” laws. The selling securityholders will bear all commissions and discounts, if any, attributable to their sale of shares of common stock or Warrants. See the section titled “Plan of Distribution.”
Our common stock and Warrants are listed on The Nasdaq Stock Market under the symbols “CSLR” and “CSLRW,” respectively. On August 7,December 21, 2023, the last reported sales price of our common stock was $3.10$1.52 per share and the last reported sales price of our Public Warrants was $0.32$0.49 per warrant.
The number of shares of common stock being offered for resale in this prospectus (the “Resale Securities”) exceeds the number of shares of common stock constituting our public float. The Resale Securities represent approximately 190% of our public float and approximately 105% of our outstanding shares of common stock as of December 21, 2023 (after giving effect to the issuance of shares of common stock upon exercise of the Warrants. The sale of the Resale Securities, or the perception that these sales could occur, could depress the market price of our common stock. Despite a decline in price, our selling securityholders may still experience a positive rate of return on the shares purchased by them due to the lower price per share at which such shares were purchased. While these selling securityholders may, on average, experience a positive rate of return based on the current market price, public securityholders may not experience a similar rate of return on the common stock they purchased if there is such a decline in price and due to differences in the purchase prices and the current market price.
We are an “emerging growth company” as defined under U.S. federal securities laws and, as such, have elected to comply with reduced public company reporting requirements. This prospectus complies with the requirements that apply to an issuer that is an emerging growth company.
Investing in our securities involves a high degree of risk. You should review carefully the risks and uncertainties described in the section titled “Risk Factors” beginning on page 6 of this prospectus, and under similar headings in any amendments or supplements to this prospectus.
Neither the Securities and Exchange Commission nor any state securities commission has approved or disapproved of these securities, or passed upon the accuracy or adequacy of this prospectus. Any representation to the contrary is a criminal offense.
Prospectus dated , 2023
ABOUT THIS PROSPECTUS
This prospectus is part of a registration statement on Form S-1 that we filed with the Securities and Exchange Commission (the “SEC”) using the “shelf” registration process. Under this shelf registration process, the selling securityholders may, from time to time, sell the securities offered by them described in this prospectus. We will not receive any proceeds from the sale by such selling securityholders of the securities offered by them described in this prospectus. This prospectus also relates to the issuance by us of the shares of common stock issuable upon the exercise of any Warrants. We will not receive any proceeds from the sale of shares of common stock underlying the Warrants pursuant to this prospectus, except with respect to amounts received by us upon the exercise of the Warrants for cash.
Neither we nor the selling securityholders have authorized anyone to provide you with any information or to make any representations other than those contained in this prospectus or any applicable prospectus supplement or any free writing prospectuses prepared by or on behalf of us or to which we have referred you. Neither we nor the selling securityholders take responsibility for, and can provide no assurance as to the reliability of, any other information that others may give you. Neither we nor the selling securityholders will make an offer to sell these securities in any jurisdiction where the offer or sale is not permitted.
We may also provide a prospectus supplement or post-effective amendment to the registration statement to add information to, or update or change information contained in, this prospectus. You should read both this prospectus and any applicable prospectus supplement or post-effective amendment to the registration statement together with the additional information to which we refer you in the sections of this prospectus titled “Where You Can Find More Information.”
On July 17, 2023, FACT filed an application for deregistration with the Cayman Islands Registrar of Companies, together with the necessary accompanying documents, and filed a certificate of incorporation and a certificate of corporate domestication with the Secretary of State of the State of Delaware, under which FACT was domesticated and continues as a Delaware corporation, changing its name to “Complete Solaria, Inc.”
Complete Solaria, Inc. (f/k/a Complete Solar Holding Corporation), a Delaware corporation (“Legacy Complete Solaria”), FACT, Jupiter Merger Sub I Corp., a Delaware corporation and wholly-owned subsidiary of FACT (“First Merger Sub”), Jupiter Merger Sub II LLC, a Delaware limited liability company and a wholly-owned subsidiary of FACT (“Second Merger Sub”) and The Solaria Corporation, a Delaware corporation and a wholly-owned indirect subsidiary of Complete Solaria (“Solaria”), entered into that certain Amended and Restated Business Combination Agreement, dated as of May 26, 2023 (as may be further amended, supplemented or otherwise modified from time to time, the “Business Combination Agreement”). Pursuant to the terms and subject to the conditions of the Business Combination, on July 18, 2023, (i) First Merger Sub merged with and into Complete Solaria with Complete Solaria surviving as a wholly-owned subsidiary of FACT (the “First Merger”), (ii) immediately thereafter and as part of the same overall transaction, Complete Solaria merged with and into Second Merger Sub, with Second Merger Sub surviving as a wholly-owned subsidiary of FACT (the “Second Merger”), and FACT changed its name to “Complete Solaria, Inc.” and Second Merger Sub changed its name to “CS, LLC” and (iii) immediately after the consummation of the Second Merger and as part of the same overall transaction, Solaria merged with and into a newly formed Delaware limited liability company and wholly-owned subsidiary of FACT and changed its name to “SolarCA LLC” (“Third Merger Sub”), with Third Merger Sub surviving as a wholly-owned subsidiary of FACT (the “Additional Merger”, and together with the First Merger and the Second Merger, the “Mergers”).
Unless the context indicates otherwise, references in this prospectus to the “Complete Solaria,” “we,” “us,” “our” and similar terms refer to CS, LLC. (f/k/a Complete Solaria, Inc.). References to “FACT” refer to the predecessor company prior to the consummation of the Business Combination.
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SPECIAL NOTE REGARDING FORWARD-LOOKING STATEMENTS
Certain statements in this prospectus may constitute “forward-looking statements” for purposes of the federal securities laws. Our forward-looking statements include, but are not limited to, statements regarding our and our management team’s expectations, hopes, beliefs, intentions or strategies regarding the future. In addition, any statements that refer to projections, forecasts or other characterizations of future events or circumstances, including any underlying assumptions, are forward-looking statements. The words “anticipate,” “believe,” “continue,” “could,” “estimate,” “expect,” “intends,” “may,” “might,” “plan,” “possible,” “potential,” “predict,” “project,” “should,” “will,” “would” and similar expressions may identify forward-looking statements, but the absence of these words does not mean that a statement is not forward-looking.
our ability to recognize the anticipated benefits of the Business Combination, which may be affected by, among other things, competition and our ability to grow and manage growth profitably following the Closing;
our financial and business performance following the Business Combination, including financial projections and business metrics;
changes in our strategy, future operations, financial position, estimated revenues and losses, projected costs, prospects and plans;
our ability to meet the expectations of new and current customers, and our ability to achieve market acceptance for our products;
our expectations and forecasts with respect to market opportunity and market growth;
the ability of our products and services to meet customers’ compliance and regulatory needs;
our ability to attract and retain qualified employees and management;
our ability to develop and maintain its brand and reputation;
developments and projections relating to our competitors and industry;
changes in general economic and financial conditions, inflationary pressures and the resulting impact demand, and our ability to plan for and respond to the impact of those changes;
our expectations regarding our ability to obtain and maintain intellectual property protection and not infringe on the rights of others;
our future capital requirements and sources and uses of cash;
our ability to obtain funding for its operations and future growth; and
our business, expansion plans and opportunities.
These forward-looking statements are based on information available as of the date of this prospectus, and current expectations, forecasts and assumptions, and involve a number of judgments, risks and uncertainties. Accordingly, forward-looking statements should not be relied upon as representing our views as of any subsequent date, and we do not undertake any obligation to update forward-looking statements to reflect events or circumstances after the date they were made, whether as a result of new information, future events or otherwise, except as may be required under applicable securities laws.
You should read this prospectus and the documents that we reference in this prospectus and have filed as exhibits to the registration statement, of which this prospectus is a part, completely and with the understanding that our actual future results may be materially different from what we expect. We qualify all of our forward-looking statements by these cautionary statements.
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In addition, statements that “we believe” and similar statements reflect our beliefs and opinions on the relevant subject. These statements are based upon information available to us as of the date of this prospectus and while we believe such information forms a reasonable basis for such statements, such information may be limited or incomplete, and such statements should not be read to indicate that we have conducted an exhaustive inquiry into, or review of, all potentially available relevant information. These statements are inherently uncertain, and investors are cautioned not to unduly rely upon these statements.
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TABLE OF CONTENTS
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Management’s Discussion and Analysis of Financial Condition and Results of Operations | 36 | ||||||
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Unaudited Pro Forma Condensed Combined Financial Information | |||||||
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You should rely only on the information contained in this prospectus, any supplement to this prospectus or in any free writing prospectus, filed with the Securities and Exchange Commission. Neither we nor the selling stockholderssecurityholders have authorized anyone to provide you with additional information or information different from that contained in this prospectus filed with the Securities and Exchange Commission. We take no responsibility for, and can provide no assurance as to the reliability of, any other information that others may give you. The selling stockholderssecurityholders are offering to sell, and seeking offers to buy, our securities only in jurisdictions where offers and sales are permitted. The information contained in this prospectus is accurate only as of the date of this prospectus, regardless of the time of delivery of this prospectus or any sale of our securities. Our business, financial condition, results of operations and prospects may have changed since that date.
For investors outside of the United States: Neither we nor the selling stockholders,securityholders, have done anything that would permit this offering or possession or distribution of this prospectus in any jurisdiction where action for that purpose is required, other than in the United States. Persons outside the United States who come into possession of this prospectus must inform themselves about, and observe any restrictions relating to, the offering of our securities and the distribution of this prospectus outside the United States.
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FREQUENTLY USED TERMS
“2022 Convertible Notes” means the Pre-Signing Convertible Notes and the Post-Signing Convertible Notes issued by Complete Solaria.
“April 2022 FACT Note” means the unsecured promissory note in the amount of up to $500,000 issued on April 1, 2022, by FACT to the Sponsor.
“Articles of Association” means the amended and restated memorandum and articles of association of FACT, dated February 25, 2021.
“Business Combination” means the transactions contemplated by the Business Combination Agreement.
“Business Combination Agreement” means the amended and restated business combination agreement, dated as of May 26, 2023, by and among FACT, First Merger Sub, Second Merger Sub, Complete Solaria and Solaria.
“Cayman Islands Companies Act” means the Companies Act (As Revised) of the Cayman Islands as the same may be amended from time to time.
“Closing” means the closing of the Business Combination.
“Closing Date” means the date of the Closing.
“Code” means the Internal Revenue Code of 1986, as amended.
“Complete Solar” means Complete Solar Holding Corporation, a Delaware corporation, prior to the consummation of the Required Transaction.
“Complete Solaria” means Complete Solaria, Inc. (f/k/a Freedom Acquisition I Corp.), a Delaware corporation.
“Complete Solaria Board” means the board of directors of Complete Solaria.
“Complete Solaria Capital Stock” means Complete Solaria Common Stock and Complete Solaria Preferred Stock.
“Complete Solaria Common Stock” means the common stock, par value $0.0001 per share, of Complete Solaria.
“Complete Solaria Preferred Stock” means the preferred stock, par value $0.0001 per share, of Complete Solaria.
“Complete Solaria Subscription Agreements” means the Pre-Signing Complete Solaria Subscription Agreements together with the Post-Signing Complete Solaria Subscription Agreements.
“Continental” means Continental Stock Transfer & Trust Company.
“December 2022 FACT Note” means the unsecured promissory note in the amount of up to $325,000 issued on December 14, 2022, by FACT to Tidjane Thiam, Adam Gishen, Abhishek Bhatia and Edward Zeng.
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“DGCL” means the Delaware General Corporation Law, as amended.
“DLLCA” means the Delaware Limited Liability Company Act, as amended.
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“Domestication” means the domestication of FACT as a corporation incorporated in the State of Delaware.
“ESPP” means the Complete Solaria, Inc. 2023 Employee Stock Purchase Plan.
“Exchange Act” means the U.S. Securities Exchange Act of 1934, as amended.
“Extension Amendment Proposal” means the proposal presented at the Extension Meeting to amend the amended and restated memorandum and articles of association of FACT to extend the date by which FACT must complete its initial business combination from March 2, 2023 to June 2, 2023, and thereafter to up to three (3) times by an additional one month each time (or up to September 2, 2023) (such period, as may be extended, the “Extension Period”).
“Extension” means any extension of the date by which FACT must complete its initial business combination as contemplated by the Extension Amendment Proposal.
“Extension Articles Amendment” means the amendment to the amended and restated memorandum and articles of association of FACT, as proposed in the Extension Amendment Proposal, which was approved as a special resolution at the Extension Meeting.
“Extension Amendment Redemptions” means the redemption on March 1, 2023 by FACT shareholders of an aggregate of 23,256,504 Class A Ordinary Shares at a redemption price of $10.21 per share, for an aggregate redemption amount of approximately $237,372,952, in connection with the approval of the Extension Amendment Proposal and implementation of the Extension Articles Amendment.
“Extension Meeting” means the extraordinary general meeting of FACT shareholders held on February 28, 2023 to consider the Extension Amendment Proposal and Trust Amendment Proposal.
“FACT” means Freedom Acquisition I Corp., a Cayman Islands exempted company, prior to the consummation of the Domestication.
“FACT Board” means the board of directors of FACT.
“FACT Class A Ordinary Shares” or “Class A Ordinary Shares” means the 34,500,000 Class A ordinary shares, par value $0.0001 per share, of FACT prior to the consummation of the Domestication.
“FACT Class B Ordinary Shares” or “Class B Ordinary Shares” means the 8,625,000 Class B ordinary shares, par value $0.0001 per share, of FACT prior to the consummation of the Domestication.
“FACT Initial Shareholders” means the Sponsor, members of the Sponsor, and FACT’s officers and directors.
“FACT Ordinary Shares” means the FACT Class A Ordinary Shares and the FACT Class B Ordinary Shares.
“FACT PIPE Investment” means investments in FACT or any subsidiary of FACT (including New Complete Solaria following the Closing).
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“FACT PIPE Investors” means the investors in any FACT PIPE Investment.
“FACT Private Placement Warrants,” “Private Placement Warrants” or “Private Placement Warrants” means the 6,266,667 warrants held by the Sponsor that were issued in a private placement at the time of FACT’s IPO, each of which is exercisable for one Class A Ordinary Share at an exercise price of $11.50 per share.
“FACT Public Warrants” or “Public Warrants” means the 8,625,000 warrants to acquire FACT Class A Ordinary Shares, issued as part of the FACT Public Units, at an initial exercise price of $11.50 per share.
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“FACT Special Committee” means the special committee of the FACT Board.
“FACT Warrants” means the FACT Private Placement Warrants and the FACT Public Warrants.
“February 2023 FACT Note” means the unsecured promissory note in the amount of up to $2,100,000 issued on February 28, 2023, by FACT to the Sponsor.
“Founder Shares” means the FACT Class B Ordinary Shares purchased by the Sponsor in a private placement prior to the initial public offering, and the FACT Class A Ordinary Shares that issued upon the conversion thereof.
“GAAP” means U.S. generally accepted accounting principles.
“HSR Act” means the Hart-Scott-Rodino Antitrust Improvements Act of 1976, as amended.
“Investment Company Act” means the Investment Company Act of 1940, as amended.
“IPO” means FACT’s initial public offering of its units, ordinary shares and warrants pursuant to its registration statement on Form S-1 declared effective by the SEC on February 25, 2021 (SEC File No. 333-252940).
“June 2022 FACT Note” means the unsecured promissory note in the amount of up to $500,000 issued on June 6, 2022, by FACT to the Sponsor.
“May 2023 FACT Note” means the unsecured promissory note in the amount of up to $300,000 issued on May 31, 2023, by FACT to the Sponsor.
“Legacy Complete Solaria” means Complete Solaria, Inc. (f/k/a Complete Solar Holding Corporation), a Delaware corporation which, pursuant to the Business Combination, became a direct, wholly owned subsidiary of Complete Solaria, Inc.
“Nasdaq” means the Nasdaq Stock Market.
“NYSE” means the New York Stock Exchange.
“Original Business Combination Agreement” means the business combination agreement, dated as of October 3, 2022, by and among FACT, First Merger Sub, Second Merger Sub, Complete Solaria and Solaria, as amended by that certain First Amendment to Business Combination Agreement, dated as of December 26, 2022, as further amended by that certain Second Amendment to Business Combination Agreement, dated as of January 17, 2023.
“Post-Signing Convertible Notes” means the convertible promissory notes issued by Complete Solaria pursuant to the Post-Signing Complete Solaria Subscription Agreements.
“Post-Signing Complete Solaria Subscription Agreements” means the additional subscription agreements entered into by Complete Solaria and certain investors pursuant to which such investors purchased Post-Signing Convertible Notes from Complete Solaria following the date of the Original Business Combination Agreement, on terms substantially similar to, or no less favorable in all material respects to Complete Solaria than the Pre-Signing Complete Solaria Subscription Agreements.
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“Pre-Signing Complete Solaria Subscription Agreements” means the note subscription agreements entered into by Complete Solaria and certain investors pursuant to which such investors purchased Pre-Signing Convertible Notes from Complete Solaria prior to date of the Original Business Combination Agreement.
“Pre-Signing Convertible Notes” means the convertible promissory notes issued by Complete Solaria pursuant to the Pre-Signing Complete Solaria Subscription Agreements.
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“Public Shareholders” means the holders of the Public Shares.
“Public Shares” means the FACT Class A Ordinary Shares.
“Required Transaction” means the transactions contemplated by the Required Transaction Merger Agreement, including the merger of Solaria with and into a wholly-owned subsidiary of Complete Solaria, which were consummated on November 4, 2022.
“Required Transaction Merger Agreement” means that certain merger agreement by and among Complete Solaria, Complete Solaria Midco, LLC, a Delaware limited liability company and a wholly-owned subsidiary of Solaria, Complete Solaria Merger Sub, Inc., a Delaware corporation and a wholly-owned Subsidiary of Midco, Solaria, and Fortis Advisors LLC, a Delaware limited liability company, solely in its capacity as the representative of Solaria’s stockholders.
“SEC” means the U.S. Securities and Exchange Commission.
“Securities Act” means the Securities Act of 1933, as amended.
“Solaria” means The Solaria Corporation, a Delaware corporation and a wholly-owned subsidiary of Complete Solaria.
“Specified Sponsor Share Amount” means the difference of (i) 3,300,000 minus (ii) the number of shares, if any, of FACT Class A Ordinary Shares transferred by Sponsor to holders of 2022 Convertible Notes minus (iii) the number of shares, if any, of FACT Class A Ordinary Shares transferred by Sponsor to certain counterparties in consideration for loans and other amounts paid to finance the working capital loans due to the Sponsor and extension fees.
“Sponsor” means Freedom Acquisition I LLC, a Cayman Islands limited liability company.
“Transfer Agent” means Continental Stock Transfer & Trust Company.
“Trust Account” means the trust account established at the consummation of FACT’s IPO that holds the proceeds of the IPO and is maintained by Continental, acting as trustee.
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PROSPECTUS SUMMARY
This summary highlights information contained elsewhere in this prospectus and does not contain all of the information that you should consider in making your investment decision. Before investing in our securities, you should carefully read this entire prospectus, including our consolidated financial statements and the related notes thereto and the information set forth in the sections titled “Risk Factors” and “Management’s Discussion and Analysis of Financial Condition and Results of Operations.” Unless the context otherwise requires, we use the terms “Complete Solaria,” “company,” “we,” “us” and “our” in this prospectus to refer to Complete Solaria, Inc. and our wholly owned subsidiaries.
Overview
Our mission is to deliver energy-efficient solutions to homeowners and small to medium size businesses that allow them to lower their energy bills while reducing their carbon footprint. With a strong technology platform, financing solutions, and aesthetically pleasing high-performance solar modules, Complete Solaria has created a unique, end-to-end offering that delivers a best-in-class customer experience. With installation partners in 47 states in the United States and 13 countries in Europe, Complete Solaria is building an international brand for solar energy. Complete Solaria’s relentless drive to expand the accessibility of solar energy is underpinned by its vision: to create a global society powered by the sun.
In November 2022, Complete Solar, Inc. and The Solaria Corporation merged to form Complete Solaria. Complete Solaria combines two complementary businesses: Solaria, a seller of premium solar modules through a national network of installers, and Complete Solar, a residential solar sales and fulfillment company. The combination of these two companies establishes Complete Solaria as a full, renewable energy system operator with compelling customer offerings, advanced technology, financing solutions, and project fulfillment that enables Complete Solaria to sell more products across more geographies in the United States and Europe.
Corporate Information
We were originally known as Freedom Acquisition I Corp. We are engaged in solar system sales and associated commerce. On July 18, 2023, Complete Solaria, FACT, First Merger Sub, Second Merger Sub and Third Merger Sub consummated the transactions contemplated under the Business Combination Agreement, following the approval at the special meeting of the stockholders of FACT held July 11, 2023. In connection with the closing of the Business Combination, we changed our name from Freedom Acquisition I Corp. to Complete Solaria, Inc.
Our principal executive offices are located at 45700 Northport Loop E, Fremont, CA 94538, and our telephone number is (510) 270-2507. Our corporate website address is https://www.completesolaria.com/. Information contained on or accessible through our website is not a part of this prospectus, and the inclusion of our website address in this prospectus is an inactive textual reference only.
“Complete Solaria” and our other registered and common law trade names, trademarks and service marks are property of Complete Solaria, Inc. This prospectus contains additional trade names, trademarks and service marks of others, which are the property of their respective owners. Solely for convenience, trademarks and trade names referred to in this prospectus may appear without the ® or ™ symbols.
Emerging Growth Company Status
We are an “emerging growth company,” as defined in the Jumpstart Our Business Startups Act of 2012 (“JOBS Act”). As an emerging growth company, we are exempt from certain requirements related to executive compensation, including the requirements to hold a nonbinding advisory vote on executive compensation and to
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provide information relating to the ratio of total compensation of our President and Chief Executive Officer to the median of the annual total compensation of all of our employees, each as required by the Investor Protection and Securities Reform Act of 2010, which is part of the Dodd-Frank Act.
Section 102(b)(1) of the Jumpstart Our Business Startups Act of 2012 (the “JOBS Act”) exempts emerging growth companies from being required to comply with new or revised financial accounting standards until private companies (that is, those that have not had a registration statement under the Securities Act declared
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effective or do not have a class of securities registered under the Exchange Act) are required to comply with the new or revised financial accounting standards. The JOBS Act provides that a company can elect to opt out of the extended transition period and comply with the requirements that apply to non-emerging growth companies but any such an election to opt out is irrevocable. We have elected not to opt out of such extended transition period, which means that when a standard is issued or revised and it has different application dates for public or private companies, we, as an emerging growth company, can adopt the new or revised standard at the time private companies adopt the new or revised standard. This may make comparison of New Complete Solaria’s financial statements with those of another public company that is neither an emerging growth company nor an emerging growth company that has opted out of using the extended transition period difficult or impossible because of the potential differences in accounting standards used.
We will remain an emerging growth company until the earlier of: (1) the last day of the fiscal year (a) following the fifth anniversary of the Closing of FACT’s IPO, (b) in which we have total annual gross revenue of at least $1.235 billion or (c) in which we are deemed to be a large accelerated filer, which means the market value of our common equity that is held by non-affiliates exceeds $700 million as of the end of the prior fiscal year’s second fiscal quarter; and (2) the date on which we have issued more than $1.00 billion in non-convertible debt securities during the prior three-year period. References herein to “emerging growth company” are to its meaning under the Securities Act, as modified by the JOBS Act.
Summary Risk Factors
Our management has identified conditions that raise substantial doubt about our ability to continue as a going concern.
Our business currently depends in part on the availability of rebates, tax credits and other financial incentives. The expiration, elimination or reduction of these rebates, credits or incentives or the ability to monetize them could adversely impact the business.
Existing regulations and policies and changes to these regulations and policies may present technical, regulatory, and economic barriers to the purchase and use of solar power products, which may significantly reduce demand for our products and services.
We rely on net metering and related policies to offer competitive pricing to customers in many of our current markets and changes to net metering policies may significantly reduce demand for electricity from residential solar energy systems.
We utilize a limited number of suppliers of solar panels and other system components to adequately meet anticipated demand for its solar service offerings. Any shortage, delay or component price change from these suppliers or delays and price increases associated with the product transport logistics could result in sales and installation delays, cancellations and loss of market share.
We utilize third-party sales and installation partners whose performance could result in sales and installation delays, cancellations, and loss of market share.
We may be unable to generate sufficient cash flows or obtain access to external financing necessary to fund operations and make adequate capital investments as planned due to the general economic environment and any market pressure that would drive down the average selling prices of solar power products, among other factors.
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Our business substantially focuses on solar service agreements and transactions with residential customers.
We have incurred losses and may be unable to achieve or sustain profitability in the future.
Our business is concentrated in certain markets including California, putting us at risk of region-specific disruptions.
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We depend on a limited number of customers and sales contracts for a significant portion of revenues, and the loss of any customer or cancellation of any contract may cause significant fluctuations or declines in revenues.
We have identified a material weakness in our internal controls over financial reporting. If we are unable to maintain effective internal controls over financial reporting and disclosure controls and procedures, the accuracy and timeliness of its financial and operating reporting may be adversely affected, and confidence in its operations and disclosures may be lost.
The common stock being offered in this prospectus represent a substantial percentage of our outstanding common stock, and the sales of such shares, or the perception that these sales could occur, could cause the market price of our common stock to decline significantly.
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The Offering
Issuance of common stock
Shares of common stock offered by us | Up to 21,874,907 shares of common stock, consisting of (i) up to 6,266,667 shares of common stock that are issuable upon exercise of the Private Warrants, (ii) up to 8,625,000 shares of common stock that are issuable upon exercise upon the exercise of the Public Warrants, (iii) up to 716,668 shares of common stock that are issuable upon the exercise of the Working Capital Warrants and (iv) up to 6,266,572 shares of common stock issuable upon exercise of the Merger Warrants. |
Shares of common stock outstanding prior to the exercise of all Warrants | 45,290,553 (as of |
Shares of common stock outstanding assuming exercise of all Warrants | 67,165,460 (based on the total shares outstanding as of |
Exercise price of Warrants | $11.50 per share, subject to adjustment as described herein |
Use of proceeds | We will receive up to an aggregate of approximately $251.6 million from the exercise of the Warrants. We expect to use the net proceeds from the exercise of the Warrants for general corporate purposes. See “Use of Proceeds.” |
Resale of common stock and Warrants
Shares of common stock offered by the selling securityholders | We are registering the resale by the selling securityholders named in this prospectus, or their permitted transferees, and aggregate of |
up to 10,966,6359,028,488 PIPE Shares;
up to 8,625,000 Founder Shares;
up to 6,266,667 shares of common stock issuable upon the exercise of the Private Warrants;
up to 13,080,99416,505,459 shares of common stock pursuant to the Registration Rights Agreement (including shares issuable upon exercise of convertible securities);
up to 716,668 shares of common stock issuable upon exercise of the Working Capital Warrants; and
up to 6,266,572 shares of common stock issuable upon exercise of the Merger Warrants.
| In addition, we are registering 8,625,000 shares of common stock issuable upon exercise of the Public Warrants that were previously registered. |
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Warrants offered by the selling | Up to 13,249,907 Warrants, consisting of (i) up to 6,266,667 Private Warrants, (ii) up to 716,668 Working Capital Warrants and (iii) up to 6,266,572 Merger Warrants. |
Redemption | The Public Warrants are redeemable in certain circumstances. See “Description of Our Securities — Warrants.” |
Terms of the offering | The selling |
Lock-Up Agreements | Certain of our securityholders are subject to certain restrictions on transfer until the termination of applicable lock-up periods. See the section titled “Certain Relationships and Related Party Transactions — Lock-Up Agreement.” |
Use of proceeds | We will not receive any of the proceeds from the sale of the shares of common stock or Warrants by the selling |
Risk factors | Before investing in our securities, you should carefully read and consider the information set forth in “Risk Factors” beginning on page 6. |
Nasdaq ticker symbols | “CSLR” and “CSLRW” |
For additional information concerning the offering, see “Plan of Distribution” beginning on page 119.
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RISK FACTORS
Investing in our securities involves a high degree of risk. You should carefully consider the risks and uncertainties described below together with all of the other information contained in this prospectus, including our financial statements and related notes appearing at the end of this prospectus and in the section titled “Management’s Discussion and Analysis of Financial Condition and Results of Operations,” before deciding to invest in our securities. If any of the events or developments described below were to occur, our business, prospects, operating results and financial condition could suffer materially, the trading price of our common stock could decline, and you could lose all or part of your investment. The risks and uncertainties described below are not the only ones we face. Additional risks and uncertainties not presently known to us or that we currently believe to be immaterial may also adversely affect our business.
Risks Related to our Businesses and Industry
Our business currently depends in part on the availability of rebates, tax credits and other financial incentives. The expiration, elimination or reduction of these rebates, credits or incentives or the ability to monetize them could adversely impact our business.
U.S. federal, state and local government bodies provide incentives to end users, distributors, system integrators and manufacturers of solar energy systems to promote solar electricity in the form of rebates, tax credits and other financial incentives such as system performance payments, payments for renewable energy credits associated with renewable energy generation and the exclusion of solar energy systems from property tax assessments. These incentives enable us to lower the price charged to customers for energy and for solar energy systems. However, these incentives may expire on a particular date, end when the allocated funding is exhausted or be reduced or terminated as solar energy adoption rates increase. These reductions or terminations often occur without warning.
The IRA extended and modified prior law applicable to tax credits that are available with respect to solar energy systems. Under the IRA, the following credits are available: (i) a production tax credit under Code Section 44 (for facilities that begin construction before January 1, 2025) and Code Section 45Y (for facilities that begin construction between January 1, 2025 and the year that is four calendar years after the year in which certain U.S. greenhouse gas emissions percentages are met) (the “PTC”) in connection with the installation of certain solar facilities and energy storage technology, (ii) an investment tax credit under Code Section 48 (for facilities that begin construction before January 1, 2025) and Code Section 48E (for facilities that begin construction between January 1, 2025 and the year that is four calendar years after the year in which certain U.S. greenhouse gas emissions percentages are met) (the “ITC”) in connection with the installation of certain solar facilities and energy storage technology, and (iii) a residential clean energy credit (the “Section 25D Credit”) in connection with the installation of property that uses solar energy to generate electricity for residential use.
Prior to the IRA, the PTC for solar facilities had phased out and was no longer available. The IRA reinstated the PTC for solar facilities. The PTC available to a taxpayer in a taxable year is equal to a certain rate multiplied by the kilowatt hours of electricity produced by the taxpayer from solar energy at a facility owned by it and sold to an unrelated party during that taxable year. The base rate for the PTC is 0.3 cents. This rate is increased to 1.5 cents for projects that (i) have a maximum net output of less than one MW AC, (ii) begin construction before January 29, 2023, or (iii) meet certain prevailing wage and apprenticeship requirements. It also may be increased for projects that include a certain percentage of components that were produced in the United States, projects that are located in certain energy communities, and projects that are located in low-income communities.
The ITC available to a taxpayer in a taxable year is equal to the “energy percentage” of the basis of “energy property” placed in service by the taxpayer during that taxable year. “Energy property” includes equipment that uses solar energy to generate electricity (including structural components that are necessary to the functioning of a solar facility as a whole) and certain energy storage systems (including batteries included as part of or adjacent
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to a solar facility). The base “energy percentage” for the ITC is 6%. This energy percentage is increased to 30% for projects that (i) have a maximum net output of less than one MW AC, (ii) begin construction before January 29, 2023, or (iii) meet certain prevailing wage and apprenticeship requirements. It also may be increased for projects that include a certain percentage of components that were produced in the United States, projects that are located in certain energy communities, and projects that are located in low-income communities. ITCs are subject to recapture if, during the five-year period after a facility is placed in service, the facility is sold, exchanged, involuntarily converted, or ceases its business usage. If the event that causes such recapture occurs within the first year after a project is placed in service, 100% of the ITCs will be recaptured. The recapture percentage is reduced 20% for each subsequent year. Historically, we have utilized the ITC when available for both residential and commercial leases and power purchase agreements, based on ownership of the solar energy system.
The Section 25D Credit available to a taxpayer is equal to the “applicable percentage” of expenditures for property that uses solar energy to generate electricity for use in a dwelling unit used as a residence by the taxpayer. The applicable percentage is 26% for such systems that are placed in service before January 1, 2022, 30% for such systems that are placed in service after December 31, 2021 and before January 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. The Section 25D Credit is scheduled to expire effective January 1, 2035. Although it is unlikely that Complete Solaria would qualify for the Section 25D Credit, the availability of the Section 25D Credit may impact the prices of its solar energy systems.
Reductions in, eliminations of, or expirations of, governmental incentives could adversely impact results of operations and ability to compete in this industry by increasing the cost of capital, causing us to increase the prices of our energy and solar energy systems and reduce the size of our addressable market.
Existing regulations and policies and changes to these regulations and policies may present technical, regulatory, and economic barriers to the purchase and use of solar power products, which may significantly reduce demand for our products and services.
The market for electric generation products is heavily influenced by federal, state and local government laws, regulations and policies concerning the electric utility industry in the United States and abroad, as well as policies promulgated by electric utilities. These regulations and policies often relate to electricity pricing and technical interconnection of customer-owned electricity generation, and changes that make solar power less competitive with other power sources could deter investment in the research and development of alternative energy sources as well as customer purchases of solar power technology, which could in turn result in a significant reduction in the demand for our solar power products. The market for electric generation equipment is also influenced by trade and local content laws, regulations and policies that can discourage growth and competition in the solar industry and create economic barriers to the purchase of solar power products, thus reducing demand for our solar products. In addition, on-grid applications depend on access to the grid, which is also regulated by government entities. We anticipate that our solar power products and our installation will continue to be subject to oversight and regulation in accordance with federal, state, local and foreign regulations relating to construction, safety, environmental protection, utility interconnection and metering, trade, and related matters. It is difficult to track the requirements of individual states or local jurisdictions and design equipment to comply with the varying standards. In addition, the United States and European Union, among others, have imposed tariffs or are in the process of evaluating the imposition of tariffs on solar panels, solar cells, polysilicon, and potentially other components. These and any other tariffs or similar taxes or duties may increase the price of our solar products and adversely affect our cost reduction roadmap, which could harm our results of operations and financial condition. Any new regulations or policies pertaining our solar power products may result in significant additional expenses for our customers, which could cause a significant reduction in demand for our solar power products.
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We rely on net metering and related policies to offer competitive pricing to customers in many of our current markets and changes to net metering policies may significantly reduce demand for electricity from residential solar energy systems.
Net metering is one of several key policies that have enabled the growth of distributed generation solar energy systems in the United States, providing significant value to customers for electricity generated by their residential solar energy systems but not directly consumed on-site. Net metering allows a homeowner to pay his or her local electric utility for power usage net of production from the solar energy system or other distributed generation source. Homeowners receive a credit for the energy an interconnected solar energy system generates in excess of that needed by the home to offset energy purchases from the centralized utility made at times when the solar energy system is not generating sufficient energy to meet the customer’s demand. In many markets, this credit is equal to the residential retail rate for electricity and in other markets, 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 or based upon a valuation of the excess electricity. In some states and utility territories, customers are also reimbursed by the centralized electric utility for net excess generation on a periodic basis.
Net metering programs have been subject to legislative and regulatory scrutiny in some states and territories including, but not limited to, California, New Jersey, Arizona, Nevada, Connecticut, Florida, Maine, Kentucky, Puerto Rico and Guam. These jurisdictions, by statute, regulation, administrative order or a combination thereof, have recently adopted or are considering new restrictions and additional changes to net metering programs either on a state-wide basis or within specific utility territories. Many of these measures were introduced and supported by centralized electric utilities. These measures vary by jurisdiction and may include a reduction in the rates or value of the credits customers are paid or receive for the power they deliver back to the electrical grid, caps or limits on the aggregate installed capacity of generation in a state or utility territory eligible for net metering, expiration dates for and phasing out of net metering programs, replacement of net metering programs with alternative programs that may provide less compensation and limits on the capacity size of individual distributed generation systems that can qualify for net metering. Net metering and related policies concerning distributed generation also received attention from federal legislators and regulators.
In California, the California Public Utilities Commission (“CPUC”) issued an order in 2016 retaining retail-based net metering credits for residential customers of California’s major utilities as part of Net Energy Metering 2.0 (“NEM 2.0”). Under NEM 2.0, new distributed generation customers receive the retail rate for electricity exported to the grid, less certain non-bypassable fees. Customers under NEM 2.0 also are subject to interconnection charges and time-of-use rates. Existing customers who receive service under the prior net metering program, as well as new customers under the NEM 2.0 program, currently are permitted to remain covered by them on a legacy basis for a period of 20 years. On September 3, 2020, the CPUC opened a new proceeding to review its current net metering policies and to 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 was finalized on December 15, 2022 and will include several changes from previous net metering plans. There will be changes that impact the amount that homeowners with solar power will be able to recuperate when selling excess energy back to the utility grid. With NEM 3.0, the value of the credits for net exports will be tied to the state’s 2022 Distributed Energy Resources Avoided Cost Calculator Documentation (“ACC”). Another significant change with NEM 3.0 will be applied to the netting period: the time period over which the utilities measure the clean energy being imported or exported. In general, longer netting periods have typically been advantageous for solar power customers because any consumption can be offset with production. NEM 3.0 will instead measure energy using instantaneous netting, which means interval netting approximately every 15 minutes. This will lead to more NEM customers’ electricity registering as exports, now valued at the new, lower ACC value.
We utilize a limited number of suppliers of solar panels and other system components to adequately meet anticipated demand for our solar service offerings. Any shortage, delay or component price change from these suppliers or delays and price increases associated with the product transport logistics could result in sales and installation delays, cancellations and loss of market share.
We purchase solar panels, inverters and other system components from a limited number of suppliers, which makes us susceptible to quality issues, shortages and price changes. If we fail to develop, maintain and
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expand relationships with existing or new suppliers, we may be unable to adequately meet anticipated demand for our solar energy systems or may only be able to offer our systems at higher costs or after delays. If one or more of the suppliers that we rely upon to meet anticipated demand ceases or reduces production, we may be unable to satisfy this demand due to an inability to quickly identify alternate suppliers or to qualify alternative products on commercially reasonable terms.
In particular, there are a limited number of inverter suppliers. Once we design a system for use with a particular inverter, if that type of inverter is not readily available at an anticipated price, we may incur additional delay and expense to redesign the system.
In addition, production of solar panels involves the use of numerous raw materials and components. Several of these have experienced periods of limited availability, particularly polysilicon, as well as indium, cadmium telluride, aluminum and copper. The manufacturing infrastructure for some of these raw materials and components has a long lead time, requires significant capital investment and relies on the continued availability of key commodity materials, potentially resulting in an inability to meet demand for these components. The prices for these raw materials and components fluctuate depending on global market conditions and demand and we may experience rapid increases in costs or sustained periods of limited supplies.
Despite efforts to obtain components from multiple sources whenever possible, many suppliers may be single-source suppliers of certain components. If we are not able to maintain long-term supply agreements or identify and qualify multiple sources for components, access to supplies at satisfactory prices, volumes and quality levels may be harmed. We may also experience delivery delays of components from suppliers in various global locations. In addition, while there are alternative suppliers and service providers that we could enter into agreements with to replace its suppliers on commercially reasonable terms, we may be unable to establish alternate supply relationships or obtain or engineer replacement components in the short term, or at all, at favorable prices or costs. Qualifying alternate suppliers or developing our own replacements for certain components may be time-consuming and costly and may force us to make modifications to our product designs.
Our need to purchase supplies globally and our continued international expansion further subjects us to risks relating to currency fluctuations. Any decline in the exchange rate of the U.S. dollar compared to the functional currency of component suppliers could increase component prices. In addition, the state of the financial markets could limit suppliers’ ability to raise capital if they are required to expand their production to meet our needs or satisfy our operating capital requirements. Changes in economic and business conditions, wars, governmental changes and other factors beyond our control or which we do not presently anticipate, could also affect suppliers’ solvency and ability to deliver components on a timely basis. Any of these shortages, delays or price changes could limit our growth, cause cancellations or adversely affect profitability and the ability to effectively compete in the markets in which the company operates.
We utilize third-party sales and installation partners whose performance could result in sales and installation delays, cancellations, and loss of market share.
We outsource our module manufacturing to contract manufacturers in Thailand, Vietnam, and India. As a result of outsourcing, we face several significant risks, including limited control over assembly and testing capacity, delivery schedules, quality assurance, manufacturing yields, production costs and tariffs. If the operations of third-party contract manufacturers were disrupted or their financial stability impaired, or if they were unable or unwilling to devote capacity to our solar panels in a timely manner, our business could suffer as we might be unable to produce finished solar panels on a timely basis. We also risk customer delays resulting from an inability to move module production to an alternate provider or to complete production internationally, and it may not be possible to obtain sufficient capacity or comparable production costs at another facility in a timely manner. In addition, migrating our design methodology to third-party contract manufacturers or to a captive panel assembly facility could involve increased costs, resources and development time, and utilizing additional third-party contract manufacturers could expose the company to further risk of losing control over
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intellectual property and the quality of solar panels. Any reduction in the supply of solar panels could impair revenue by significantly delaying the ability to ship products and potentially damage relationships with new and existing customers, any of which could have a material and adverse effect on our financial condition and results of operation.
We may be unable to generate sufficient cash flows or obtain access to external financing necessary to fund operations and make adequate capital investments as planned due to the general economic environment and any market pressure that would drive down the average selling prices of solar power products, among other factors.
To develop new products, including our Power XT Modules, support future growth, achieve operating efficiencies, and maintain product quality, we must make capital investments in research and development, and product and process technology. Our activities have required and will continue to require investment of capital and substantial engineering expenditures.
We manage our working capital requirements and fund our committed capital expenditures through our current cash and cash equivalents, and cash generated from operations, and funds available under venture debt lines of credits (the “Credit Facilities”). Upon termination of the Credit Facilities, we may be unable to find adequate credit support in replacement, on acceptable terms or at all. In such case, our ability to obtain adequate amounts of debt financing may be harmed. The lenders under our credit facilities and holders of our debentures may also require the repayment of indebtedness to them in the event that obligations under other indebtedness or contracts in excess of the applicable threshold amount are accelerated and we fail to discharge such obligations. If our capital resources are insufficient to satisfy liquidity requirements, for example, due to cross acceleration of indebtedness, we may seek to sell additional equity investments or debt securities or obtain other debt financings. Market conditions, however, could limit our ability to raise capital by issuing new equity or debt securities on acceptable terms, and lenders may be unwilling to lend funds on acceptable terms. The sale of additional equity investments or convertible debt securities may result in additional dilution to our stockholders. Additional debt would result in increased expenses and could impose new restrictive covenants that may be different from those restrictions contained in the covenants under certain of our current debt agreements and debentures. Financing arrangements, including letters of credit facilities, may not be available to us, or may not be available in amounts or on terms acceptable to us. If additional financing is not available, we may be forced to seek to sell assets or reduce or delay capital investments, any of which could adversely affect our business, results of operations and financial condition.
If we cannot generate sufficient cash flows, find other sources of capital to fund operations and projects, or make adequate capital investments to remain technologically and price competitive, we may need to sell additional equity investments or debt securities, or obtain other debt financings. If adequate funds from these or and other sources are not available on acceptable terms, the ability to fund operations, develop and expand our distribution network, maintain research and development efforts, meet debt service obligations, or otherwise respond to competitive pressures would be significantly impaired. Our inability to do any of the foregoing could have a material adverse effect on our business, results of operations and financial condition.
Our business substantially focuses on solar service agreements and transactions with residential customers.
Our business substantially focuses on solar service agreements and transactions with residential customers. Our energy system sales to homeowners utilize power purchase agreements (“PPAs”), leases, loans and other products and services. We currently offer PPAs and leases through Sunrun, Inc., EverBright, LLC, Sunnova Energy International, and OakStar Bank. If we were to be unable to arrange new or alternative methods of financing for PPAs and leases on favorable terms, our business, financial condition, results of operations and prospects could be materially and adversely affected.
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Changes in international trade policies, tariffs, or trade disputes could significantly and adversely affect our business, revenues, margins, results of operations, and cash flows.
On February 7, 2018, safeguard tariffs on imported solar cells and modules went into effect pursuant to Proclamation 9693, which approved recommendations to provide relief to U.S. manufacturers and impose
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safeguard tariffs on imported solar cells and modules, based on the investigations, findings, and recommendations of the U.S. International Trade Commission (the “International Trade Commission”). Since 2021, modules are subject to a tariff rate of 15%. Cells are subjected to a tariff-rate quota, under which the first 2.5 GW of cell imports each year will be exempt from tariffs; and cells imported after the 2.5 GW quota has been reached will be subject to the same 30% tariff as modules in the first year, with the same 5% decline in each of the three subsequent years. The tariff-free cell quota applies globally, without any allocation by country or region.
The tariffs could materially and adversely affect our business and results of operations. While solar cells and modules based on interdigitated back contact technology were granted exclusion from these safeguard tariffs on September 19, 2018, our solar products based on other technologies continue to be subject to the safeguard tariffs. Although we are actively engaged in efforts to mitigate the effect of these tariffs, there is no guarantee that these efforts will be successful.
Uncertainty surrounding the implications of existing tariffs affecting the U.S. solar market and potential trade tensions between the United States and other countries is likely to cause market volatility, price fluctuations, supply shortages, and project delays, any of which could harm our business, and the pursuit of mitigating actions may divert substantial resources from other projects. Further, the Uyghur Forced Labor Prevention Act may inhibit importation of certain solar modules or components. In addition, the imposition of tariffs is likely to 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. Such tariffs could materially increase the price of our solar products and result in significant additional costs to the company, its resellers, and the resellers’ customers, which could cause a significant reduction in demand for the company’s solar power products and greatly reduce our competitive advantage.
If we fail to manage operations and growth effectively, we may be unable to execute our business plan, maintain high levels of customer service or adequately address competitive challenges.
We have experienced significant growth in recent periods as measured by our number of customers; we intend to continue efforts to expand our business within existing and new markets. This growth has placed, and any future growth may place, a strain on management, operational and financial infrastructure. Our growth requires our management to devote a significant amount of time and effort to maintain and expand relationships with customers, dealers and other third parties, attract new customers and dealers, arrange financing for growth and manage expansion into additional markets.
In addition, our current and planned operations, personnel, information technology and other systems and procedures might be inadequate to support future growth and may require us to make additional unanticipated investments in its infrastructure. Our success and ability to further scale our business will depend, in part, on our ability to manage these changes in a cost-effective and efficient manner.
If we cannot manage operations and growth, we may be unable to meet expectations regarding growth, opportunity and financial targets, take advantage of market opportunities, execute our business strategies or respond to competitive pressures. This could also result in declines in quality or customer satisfaction, increased costs, difficulties in introducing new offerings or other operational difficulties. Any failure to effectively manage our operations and growth could adversely impact our reputation, business, financial condition, cash flows and results of operations.
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We have international activities and customers in the European Union, and plans to continue these efforts, which subjects us to additional business risks, including logistical and compliance related complexity.
A portion of our sales are made to customers outside of the United States, and a substantial portion of our supply agreements are with supply and equipment vendors located outside of the United States. We have solar cell and module production lines located at our outsourced manufacturing facilities in Thailand, Vietnam, and India. We are also considering other manufacturing locations.
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Risks we face in conducting business internationally include:
multiple, conflicting and changing laws and regulations, export and import restrictions, employment laws, data protection laws, environmental protection, regulatory requirements, international trade agreements, and other government approvals, permits and licenses;
difficulties and costs in staffing and managing foreign operations as well as cultural differences;
potentially adverse tax consequences associated with current, future or deemed permanent establishment of operations in multiple countries;
relatively uncertain legal systems, including potentially limited protection for intellectual property rights, and laws, changes in the governmental incentives that we rely on, regulations and policies which impose additional restrictions on the ability of foreign companies to conduct business in certain countries or otherwise place them at a competitive disadvantage in relation to domestic companies;
inadequate local infrastructure and developing telecommunications infrastructures;
financial risks, such as longer sales and payment cycles and greater difficulty collecting accounts receivable;
currency fluctuations, government-fixed foreign exchange rates, the effects of currency hedging activity, and the potential inability to hedge currency fluctuations;
political and economic instability, including wars, acts of terrorism, political unrest, boycotts, curtailments of trade and other business restrictions;
trade barriers such as export requirements, tariffs, taxes and other restrictions and expenses, which could increase the prices of our products and make the company less competitive in some countries; and
liabilities associated with compliance with laws (for example, the Foreign Corrupt Practices Act in the United States and similar laws outside of the United States).
We have an organizational structure involving entities globally. This increases the potential impact of adverse changes in laws, rules and regulations affecting the free flow of goods and personnel, and therefore heightens some of the risks noted above. Further, this structure requires us to effectively manage our international inventory and warehouses. If we fail to do so, our shipping movements may not correspond with product demand and flow. Unsettled intercompany balances between entities could result, if changes in law, regulations or related interpretations occur in adverse tax or other consequences that affect capital structure, intercompany interest rates and legal structure. If we are unable to successfully manage any such risks, any one or more could materially and negatively affect our business, financial condition and results of operations.
We have incurred losses and may be unable to achieve or sustain profitability in the future.
We have incurred net losses in the past and had an accumulated deficit of $85.4$50.8 million as of December 31, 2022.October 1, 2023. We will continue to incur net losses as spending increases to finance the expansion of operations, installation, engineering, administrative, sales and marketing staffs, spending increases on brand awareness and other sales and marketing initiatives, and implement internal systems and infrastructure to support the company’s growth. We do not know whether revenue will grow rapidly enough to absorb these costs, and our limited
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operating history makes it difficult to assess the extent of these expenses or their impact on results of operations. Our ability to achieve profitability depends on a number of factors, including but not limited to:
Growing the customer base;
Maintaining or further lowering the cost of capital;
Reducing the cost of components for our solar service offerings;
Growing and maintaining our channel partner network;
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| • | Growing our direct-to-consumer business to scale; and |
Reducing operating costs by lowering customer acquisition costs and optimizing our design and installation processes and supply chain logistics.
Even if we do achieve profitability, we may be unable to sustain or increase profitability in the future.
A material drop in the retail price of utility-generated electricity or electricity from other sources could adversely impact our ability to attract customers which would harm our business, financial condition and results of operations.
We believe that a homeowner’s decision to buy solar energy from us is primarily driven by a desire to lower electricity costs. Decreases in the retail prices of electricity from utilities or other energy sources would harm our ability to offer competitive pricing and could harm its business. The price of electricity from utilities could decrease as a result of:
the construction of a significant number of new power generation plants, including nuclear, coal, natural gas or renewable energy technologies;
the construction of additional electric transmission and distribution lines;
a 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;
energy conservation technologies and public initiatives to reduce electricity consumption;
subsidies impacting electricity prices, including in connection with electricity generation and transmission; and
development of new energy technologies that provide less expensive energy.
A reduction in utility electricity prices would make the purchase of our solar service offerings less attractive. If the retail price of energy available from utilities were 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 new homeowners and growth would be limited.
We face competition from both traditional energy companies and renewable energy companies.
The solar energy and renewable energy industries are both highly competitive and continually evolving as participants strive to distinguish themselves within their markets and compete with large utilities. We believe that our primary competitors are the traditional utilities that supply energy to potential customers. We compete with these utilities primarily based on price, predictability of price and the ease by which customers can switch to electricity generated by our solar energy systems. If we cannot offer compelling value to its customers based on these factors, then our business will not grow. Utilities generally have substantially greater financial, technical, operational and other resources than us. As a result of their greater size, these competitors may be able to devote more resources to the research, development, promotion and sale of their products or respond more quickly to
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evolving industry standards and changes in market conditions than we can. Utilities could also offer other value-added products and services that could help them compete with us even if the cost of electricity they offer is higher than ours. In addition, a majority of utilities’ sources of electricity is non-solar, which may allow utilities to sell electricity more cheaply than electricity generated by our solar energy systems.
Our business is concentrated in certain markets including California, putting us at risk of region-specific disruptions.
As of December 31, 2022, a substantial portion of our installations were in California and we expect much of its near-term future growth to occur in California, further concentrating our customer base and operational
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infrastructure. Accordingly, our business and results of operations are particularly susceptible to adverse economic, regulatory, political, weather and other conditions in this market and in other markets that may become similarly concentrated. We may not have adequate insurance, including business interruption insurance, to compensate for losses that may occur from any such significant events. A significant natural disaster could have a material adverse impact on our business, results of operations and financial condition. In addition, acts of terrorism or malicious computer viruses could cause disruptions in our business, our partners’ businesses or the economy as a whole. To the extent that these disruptions result in delays or cancellations of installations or the deployment of solar service offerings, our business, results of operations and financial condition would be adversely affected.
Our growth strategy depends on the widespread adoption of solar power technology.
The distributed residential solar energy market is at a relatively early stage of development in comparison to fossil fuel-based electricity generation. If additional demand for distributed residential solar energy systems fails to develop sufficiently or takes longer to develop than we anticipate, the company may be unable to originate additional solar service agreements and related solar energy systems and energy storage systems to grow the business. In addition, demand for solar energy systems and energy storage systems in our targeted markets may not develop to the extent it anticipates. As a result, we may be unsuccessful in broadening our customer base through origination of solar service agreements and related solar energy systems and energy storage systems within its current markets or in new markets we may enter.
Many factors may affect the demand for solar energy systems, including, but not limited to, the following:
availability, substance and magnitude of solar support programs including government targets, subsidies, incentives, renewable portfolio standards and residential net metering rules;
| • | the 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; |
| • | performance, reliability and availability of energy generated by solar energy systems compared to conventional and other non-solar renewable energy sources; |
availability 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
general economic conditions and the level of interest rates.
The residential solar energy industry is constantly evolving, which makes it difficult to evaluate our prospects. We cannot be certain if historical growth rates reflect future opportunities or its anticipated growth will be realized. The failure of distributed residential solar energy to achieve, or its being significantly delayed in achieving, widespread adoption could have a material adverse effect on our business, financial condition and results of operations.
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Our business could be adversely affected by seasonal trends, poor weather, labor shortages, and construction cycles.
Our business is subject to significant industry-specific seasonal fluctuations. In the United States, many customers make purchasing decisions towards the end of the year in order to take advantage of tax credits. In addition, sales in the new home development market are often tied to construction market demands, which tend to follow national trends in construction, including declining sales during cold weather months.
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The ongoing COVID-19 pandemic could adversely affect our business, financial condition and results of operations.
The ongoing COVID-19 pandemic has resulted in and may continue to result in widespread adverse impacts on the global economy. We have experienced some resulting disruptions to business operations as the COVID-19 virus has continued to evolve and circulate through the states and U.S. territories in which the company operates. We, along with our dealers, modified certain business and workforce practices (including those related to new contract origination, installation and servicing of solar energy systems and employee work locations) to conform to government restrictions and best practices encouraged by governmental and regulatory authorities. Such modifications have allowed our dealers to continue to install and the company to continue to service solar energy systems, but may also disrupt operations, impede productivity or otherwise be ineffective in the future. If there are additional outbreaks of the COVID-19 virus or other viruses or more stringent health and safety guidelines are adopted, our ability, and the ability of our dealers to continue performing installations and service calls may be adversely impacted. A significant or extended decline in new contract origination may have a material adverse effect on our business, cash flows, liquidity, financial condition and results of operations.
There is considerable uncertainty regarding the extent and duration of governmental and other measures implemented to try to slow the spread of the COVID-19 virus, such as large-scale travel bans and restrictions, border closures, quarantines, shelter-in-place orders and business and government shutdowns. We have seen delays in most jurisdictions from whom it must receive permission to operate for its solar energy systems to be placed in service. Worsening economic conditions could result in less favorable outcomes over time, which would impact future financial performance. Further, the effects of the economic downturn associated with the COVID-19 pandemic may increase unemployment and reduce consumer credit ratings and credit availability, which may adversely affect new customer origination and existing customers’ ability to make payments on their solar service agreements. Periods of high unemployment and a lack of availability of credit may lead to increased delinquency and default rates. Finally, if supply chains become significantly disrupted due to additional outbreaks of the COVID-19 virus or other viruses or more stringent health and safety guidelines are implemented, our ability to install and service solar energy systems could become adversely impacted.
We cannot predict the full impact the COVID-19 pandemic or the significant disruption and volatility currently being experienced in the capital markets will have on our business, cash flows, liquidity, financial condition and results of operations at this time due to numerous uncertainties. The ultimate impact will depend on future developments, including, among other things, the ultimate duration of the COVID-19 virus, the distribution, acceptance and efficacy of the vaccine, the depth and duration of the economic downturn and other economic effects of the COVID-19 pandemic, the consequences of governmental and other measures designed to prevent the spread of the COVID-19 virus, actions taken by governmental authorities, customers, dealers and other third parties, our ability and the ability of our customers, potential customers and dealers to adapt to operating in a changed environment and the timing and extent to which normal economic and operating conditions resume.
Natural disasters, terrorist activities, political unrest, economic volatility, and other outbreaks could disrupt our delivery and operations, which could materially and adversely affect our business, financial condition, and results of operations.
Global pandemics or fear of spread of contagious diseases, such as Ebola virus disease (EVD), coronavirus disease 2019 (COVID-19), Middle East respiratory syndrome (MERS), severe acute respiratory syndrome
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(SARS), H1N1 flu, H7N9 flu, avian flu and monkeypox, as well as hurricanes, earthquakes, tsunamis, or other natural disasters could disrupt our business operations, reduce or restrict operations and services, incur significant costs to protect its employees and facilities, or result in regional or global economic distress, which may materially and adversely affect business, financial condition, and results of operations. Actual or threatened war, terrorist activities, political unrest, civil strife, future disruptions in access to bank deposits or lending commitments due to bank failures and other geopolitical uncertainty could have a similar adverse effect on our
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business, financial condition, and results of operations. On February 24, 2022, the Russian Federation launched an invasion of Ukraine that has had an immediate impact on the global economy resulting in higher energy prices and higher prices for certain raw materials and goods and services which in turn is contributing to higher inflation in the United States and other countries across the globe with significant disruption to financial markets. We have outsourced product development and software engineering in Ukraine and we may potentially indirectly be adversely impacted any significant disruption it has caused and may continue to escalate. The recent Israel-Palestine Israel has created volatility in the global capital markets and may have further global economic consequences, including disruptions of the global supply chain and energy markets. Any one or more of these events may impede our operation and delivery efforts and adversely affect sales results, or even for a prolonged period of time, which could materially and adversely affect our business, financial condition, and results of operations.
We depend on a limited number of customers and sales contracts for a significant portion of revenues, and the loss of any customer or cancellation of any contract may cause significant fluctuations or declines in revenues.
In 2020, 2021 and 2022, our top customers, Consolidated Electrical Distributors, Inc. andcustomer, Sunrun Inc., accounted for 32%81%, 36%, 30%63% and 33%, 31%, 30%47% of itsour total revenues from continuing operations, respectively, on a pro forma basis.respectively. We anticipate that our dependence on a limited number of customers will continue for the foreseeable future. As a result of customer concentration, our financial performance may fluctuate significantly from period to period based, among others, on exogenous circumstances related to its clients. In addition, any one of the following events may materially adversely affect cash flows, revenues and results of operations:
reduction, delay or cancellation of orders from one or more significant customers;
loss of one or more significant customers and failure to identify additional or replacement customers;
failure of any significant customers to make timely payment for our products; or
the customers becoming insolvent or having difficulties meeting their financial obligations for any reason.
We are exposed to the credit risk of customers and payment delinquencies on its accounts receivables.
While customer defaults have been immaterial to date, we expect that the risk of customer defaults may increase as we grow our business. If we experience increased customer credit defaults, our revenue and our ability to raise new investment funds could be adversely affected. If economic conditions worsen, certain of our customers may face liquidity concerns and may be unable to satisfy their payment obligations to us on a timely basis or at all, which could have a material adverse effect on our financial condition and results of operations.
Rising interest rates may adversely impact our business.
Due to recent increases in inflation, the U.S. Federal Reserve has raised its benchmark interest rates. Increases in the federal benchmark rate could result in an increase in market interest rates, which may increase our interest expense and the costs of refinancing existing indebtedness or obtaining new debt. Consequently, rising interest rates will increase cost of capital. As a result, rising interest rates may have an adverse impact on our ability to offer attractive pricing on solar service agreements to customers. If in the future we have a need for significant borrowings and interest rates increase, that would increase the cost of the solar systems purchased us, which either would make those systems more expensive for customers, which is likely to reduce demand, or would lower operating margins, or both.
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We may not realize the anticipated benefits of past or future acquisitions, and integration of these acquisitions may disrupt our business.
In November 2022, we acquired The Solaria Corporation, after which Complete Solar was renamed “Complete Solaria, Inc.” In October 2023, we subsequently sold solar panel assets of The Solaria Corporation, including intellectual property and customer contracts, to Maxeon Solar Technologies, Ltd, which resulted in an impairment loss of $147.5 million and loss on disposal of $1.8 million. In the future, we may acquire additional
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companies, project pipelines, products or technologies, or enter into joint ventures or other strategic initiatives. Our ability as an organization to integrate acquisitions is unproven. We may not realize the anticipated benefits of our acquisitions or any other future acquisition or the acquisition may be viewed negatively by customers, financial markets or investors.
Any acquisition has numerous risks, including, but not limited to, the following:
difficulty in assimilating the operations and personnel of the acquired company;
difficulty in effectively integrating the acquired technologies or products with current products and technologies;
difficulty in maintaining controls, procedures and policies during the transition and integration;
disruption of ongoing business and distraction of management and employees from other opportunities and challenges due to integration issues;
difficulty integrating the acquired company’s accounting, management information and other administrative systems;
inability to retain key technical and managerial personnel of the acquired business;
inability to retain key customers, vendors, and other business partners of the acquired business;
inability to achieve the financial and strategic goals for the acquired and combined businesses;
incurring acquisition-related costs or amortization costs for acquired intangible assets that could impact operating results;
failure of due diligence processes to identify significant issues with product quality, legal and financial liabilities, among other things;
inability to assert that internal controls over financial reporting are effective; and
inability to obtain, or obtain in a timely manner, approvals from governmental authorities, which could delay or prevent such acquisitions.
We depend on our intellectual property and may face intellectual property infringement claims that could be time-consuming and costly to defend and could result in the loss of significant rights.
From time to time, we and our customers, or the third parties with whom we work may receive letters, including letters from other third parties, and may become subject to lawsuits with such third parties alleging infringement of their patents. Additionally, we are required by contract to indemnify some customers and third-party intellectual property providers for certain costs and damages of patent infringement in circumstances where our products are a factor creating the customer’s or these third-party providers’ infringement liability. This practice may subject us to significant indemnification claims by customers and third-party providers. We cannot assure investors that indemnification claims will not be made or that these claims will not harm our business, operating results or financial condition. Intellectual property litigation is very expensive and time-consuming and could divert management’s attention from our business and could have a material adverse effect on our business, operating results or financial condition. If there is a successful claim of infringement against us, our customers or our third-party intellectual property providers, we may be required to pay substantial damages to the party claiming infringement, stop selling products or using technology that contains the allegedly infringing intellectual property, or enter into royalty or license agreements that may not be available on acceptable terms, if at all. Parties making infringement claims may also be able to bring an action before the International Trade
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Commission that could result in an order stopping the importation into the United States of our solar products. Any of these judgments could materially damage our business. We may have to develop non-infringing technology, and our failure in doing so or in obtaining licenses to the proprietary rights on a timely basis could have a material adverse effect on the business.
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We may be required to file claims against other parties for infringing its intellectual property that may be costly and may not be resolved in its favor.
To protect our intellectual property rights and to maintain competitive advantage, we have filed, and may continue to file, suits against parties we believe infringe or misappropriate our intellectual property. Intellectual property litigation is expensive and time-consuming, could divert management’s attention from our business, and could have a material adverse effect on our business, operating results, or financial condition, and our enforcement efforts may not be successful. In addition, the validity of our patents may be challenged in such litigation. Our participation in intellectual property enforcement actions may negatively impact our financial results.
Developments in technology or improvements in distributed solar energy generation and related technologies or components may materially adversely affect demand for our offerings.
Significant developments in technology, such as advances in distributed solar power generation, energy storage solutions such as batteries, energy storage management systems, the widespread use or adoption of fuel cells for residential or commercial properties or improvements in other forms of distributed or centralized power production may materially and adversely affect demand for our offerings and otherwise affect our business. Future technological advancements may result in reduced prices to consumers or more efficient solar energy systems than those available today, either of which may result in current customer dissatisfaction. We may not be able to adopt these new technologies as quickly as its competitors or on a cost-effective basis.
Additionally, recent technological advancements may impact our business in ways not currently anticipated. Any failure by us to adopt or have access to new or enhanced technologies or processes, or to react to changes in existing technologies, could result in product obsolescence or the loss of competitiveness of and decreased consumer interest in its solar energy services, which could have a material adverse effect on its business, financial condition and results of operations.
We depend on the success of our relationships with third-party contract manufacturers to assemble solar cells into solar panels and any damage to those relationships or any failure to obtain sufficient capacity could significantly delay the our ability to ship solar panels and damage its customer relationships.
We outsource our module manufacturing to contract manufacturers in Thailand, Vietnam, and India. As a result of outsourcing this final step in production, we face several significant risks, including limited control over assembly and testing capacity, delivery schedules, quality assurance, manufacturing yields, production costs and tariffs. If the operations of third-party contract manufacturers were disrupted or their financial stability impaired, or if they were unable or unwilling to devote capacity to our solar panels in a timely manner, business could suffer as we might be unable to produce finished solar panels on a timely basis. We also risk customer delays resulting from an inability to move module production to an alternate provider at all or on commercially reasonable terms, or to complete production internationally, and it may not be possible to obtain sufficient capacity or comparable production costs at another facility in a timely manner. In addition, migrating design methodology to third-party contract manufacturers or to a captive panel assembly facility could involve increased costs, resources and development time, and utilizing additional third-party contract manufacturers could expose us to further risk of losing control over intellectual property and the quality of its solar panels. Any reduction in the supply of solar panels could impair revenue by significantly delaying our ability to ship products and potentially damage relationships with new and existing customers, any of which could have a material and adverse effect on our financial condition and results of operation.
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Our business is subject to complex and evolving data protection laws. Many of these laws and regulations are subject to change and uncertain interpretation and could result in claims, increased cost of operations or otherwise harm its business.
Consumer personal privacy and data security have become significant issues and the subject of rapidly evolving regulation in the United States. Furthermore, federal, state and local government bodies or agencies have in the past adopted, and may in the future adopt, more laws and regulations affecting data privacy. For example, the state of California enacted the California Consumer Privacy Act of 2018 (“CCPA”) and California voters recently approved the California Privacy Rights Act (“CPRA”). The CCPA creates individual privacy rights for consumers and places increased privacy and security obligations on entities handling the personal data of consumers or households. The CCPA went into effect in January 2020 and it requires covered companies to provide new disclosures to California consumers, provides such consumers, business-to-business contacts and employees new ways to opt-out of certain sales of personal information, and allows for a new private right of action for data breaches. The CPRA modifies the CCPA and imposes additional data protection obligations on companies doing business in California, including additional consumer rights processes and opt outs for certain uses of sensitive data. The CCPA and the CPRA may significantly impact Complete Solaria’s business activities and require substantial compliance costs that adversely affect its business, operating results, prospects and financial condition. To date, we have not experienced substantial compliance costs in connection with fulfilling the requirements under the CCPA or CPRA. However, we cannot be certain that compliance costs will not increase in the future with respect to the CCPA and CPRA or any other recently passed consumer privacy regulation.
Outside the United States, an increasing number of laws, regulations, and industry standards may govern data privacy and security. For example, the European Union’s General Data Protection Regulation (“EU
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GDPR”) and the United Kingdom’s GDPR (“UK GDPR”) impose strict requirements for processing personal data. Under the EU GDPR, companies may face temporary or definitive bans on data processing and other corrective actions; fines of up to 20 million Euros or 4% of annual global revenue, whichever is greater; or private litigation related to processing of personal data brought by classes of data subjects or consumer protection organizations authorized at law to represent their interests. Non-compliance with the UK GDPR may result in substantially similar adverse consequences to those in relation to the EU GDPR, including monetary penalties of up to £17.5 million or 4% of worldwide revenue, whichever is higher.
In addition, we may be unable to transfer personal data from Europe and other jurisdictions to the United States or other countries due to data localization requirements or limitations on cross-border data flows. Europe and other jurisdictions have enacted laws requiring data to be localized or limiting the transfer of personal data to other countries. In particular, the European Economic Area (“EEA”) and the United Kingdom have significantly restricted the transfer of personal data to the United States and other countries whose privacy laws it believes are not adequate. Other jurisdictions may adopt similarly stringent interpretations of their data localization and cross-border data transfer laws. Although there are currently various mechanisms that may be used to transfer personal data from the EEA and UK to the United States in compliance with law, such as the EEA and UK’s standard contractual clauses, these mechanisms are subject to legal challenges, and there is no assurance that Complete Solaria can satisfy or rely on these measures to lawfully transfer personal data to the United States. If there is no lawful manner for us to transfer personal data from the EEA, the UK, or other jurisdictions to the United States, or if the requirements for a legally-compliant transfer are too onerous, we could face significant adverse consequences, including the interruption or degradation of its operations, the need to relocate part of or all of its business or data processing activities to other jurisdictions at significant expense, increased exposure to regulatory actions, substantial fines and penalties, the inability to transfer data and work with partners, vendors and other third parties, and injunctions against its processing or transferring of personal data necessary to operate its business. Some European regulators have ordered certain companies to suspend or permanently cease certain transfers out of Europe for allegedly violating the EU GDPR’s cross-border data transfer limitations.
Any inability to adequately address privacy and security concerns, even if unfounded, or comply with applicable privacy and data security laws, regulations and policies, could result in additional cost and liability to
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us damage our reputation, inhibit sales and adversely affect our business. Furthermore, the costs of compliance with, and other burdens imposed by, the laws, regulations and policies that are applicable to our business may limit the use and adoption of, and reduce the overall demand for, its solutions. If we are not able to adjust to changing laws, regulations and standards related to privacy or security, our business may be harmed.
Any unauthorized access to or disclosure or theft of personal information we gather, store or use could harm our reputation and subject us to claims or litigation.
We receive, store and use personal information of customers, including names, addresses, e-mail addresses, and other housing and energy use information. We also store information of dealers, including employee, financial and operational information. We rely on the availability of data collected from customers and dealers in order to manage our business and market our offerings. We take certain steps in an effort to protect the security, integrity and confidentiality of the personal information collected, stored or transmitted, but there is no guarantee inadvertent or unauthorized use or disclosure will not occur or third parties will not gain unauthorized access to this information despite our efforts. Although Complete Solaria takes precautions to provide for disaster recovery, the company’s ability to recover systems or data may be expensive and may interfere with normal operations. Also, although we obtain assurances from such third parties they will use reasonable safeguards to secure their systems, we may be adversely affected by unavailability of their systems or unauthorized use or disclosure or its data maintained in such systems. Because techniques used to obtain unauthorized access or sabotage systems change frequently and generally are not identified until they are launched against a target, we our suppliers or vendors and our dealers may be unable to anticipate these techniques or to implement adequate preventative or mitigation measures.
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Cyberattacks in particular are becoming more sophisticated and include, but are not limited to, malicious software, attempts to gain unauthorized access to data and other electronic security breaches that could lead to disruptions in critical systems, disruption of customers’ operations, loss or damage to data delivery systems, unauthorized release of confidential or otherwise protected information, corruption of data and increased costs to prevent, respond to or mitigate cybersecurity events. In addition, certain cyber incidents, such as advanced persistent threats, may remain undetected for an extended period.
Unauthorized use, disclosure of or access to any personal information maintained by us or on the behalf of us, whether through breach of our systems, breach of the systems of our suppliers, vendors or dealers by an unauthorized party or through employee or contractor error, theft or misuse or otherwise, could harm our business. If any such unauthorized use, disclosure of or access to such personal information were to occur, our operations could be seriously disrupted and we could be subject to demands, claims and litigation by private parties and investigations, related actions and penalties by regulatory authorities.
In addition, we could incur significant costs in notifying affected persons and entities and otherwise complying with the multitude of federal, state and local laws and regulations relating to the unauthorized access to, use of or disclosure of personal information. Finally, any perceived or actual unauthorized access to, use of or disclosure of such information could harm our reputation, substantially impair our business, financial condition and results of operations. The COVID-19 pandemic generally is increasing the attack surface available to criminals, as more companies and individuals work remotely and otherwise work online. Consequently, the risk of a cybersecurity incident suffered by us or our vendors or service providers is increased, and our investment in risk mitigations against cybersecurity incidents is evolving as the threat landscape changes. While we currently maintain cybersecurity insurance, such insurance may not be sufficient to cover against claims, and we cannot be certain that cyber insurance will continue to be available on economically reasonable terms, or at all, or that any insurer will not deny coverage as to any future claim.
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If we fail to comply with laws and regulations relating to interactions by the company or its dealers with current or prospective residential customers could result in negative publicity, claims, investigations and litigation and adversely affect financial performance.
Our business substantially focuses on solar service agreements and transactions with residential customers. We offer leases, loans and other products and services to consumers by contractors in our dealer networks, who utilize sales people employed by or engaged as third-party service providers of such contractors. We and our dealers must comply with numerous federal, state and local laws and regulations that govern matters relating to interactions with residential consumers, including those pertaining to consumer protection, marketing and sales, privacy and data security, consumer financial and credit transactions, mortgages and refinancings, home improvement contracts, warranties and various means of customer solicitation, including under the laws described below in “As sales to residential customers have grown, we have increasingly become subject to substantial financing and consumer protection laws and regulations.” These laws and regulations are dynamic and subject to potentially differing interpretations and various federal, state and local legislative and regulatory bodies may initiate investigations, expand current laws or regulations, or enact new laws and regulations regarding these matters. Changes in these laws or regulations or their interpretation could dramatically affect how we and our dealers do business, acquire customers and manage and use information collected from and about current and prospective customers and the costs associated therewith. We and our dealers strive to comply with all applicable laws and regulations relating to interactions with residential customers. It is possible, however, these requirements may be interpreted and applied in a manner inconsistent from one jurisdiction to another and may conflict with other rules or our practices or the practices of our dealers.
Although we require dealers to meet consumer compliance requirements, we do not control dealers and their suppliers or their business practices. Accordingly, we cannot guarantee they follow ethical business practices such as fair wage practices and compliance with environmental, safety and other local laws. A lack of demonstrated compliance could lead us to seek alternative dealers or suppliers, which could increase costs and
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have a negative effect on business and prospects for growth. Violation of labor or other laws by our dealers or suppliers or the divergence of a dealer or supplier’s labor or other practices from those generally accepted as ethical in the United States or other markets in which the company does or intends to do business could also attract negative publicity and harm the business.
From time to time, we have been included in lawsuits brought by the consumer customers of certain contractors in our networks, citing claims based on the sales practices of these contractors. While we have paid only minimal damages to date, we cannot be sure that a court of law would not determine that we are liable for the actions of the contractors in our networks or that a regulator or state attorney general’s office may hold us accountable for violations of consumer protection or other applicable laws by. Our risk mitigation processes may not be sufficient to mitigate financial harm associated with violations of applicable law by our contractors or ensure that any such contractor is able to satisfy its indemnification obligations to us. Any significant judgment against us could expose it to broader liabilities, a need to adjust our distribution channels for products and services or otherwise change our business model and could adversely impact the business.
We may be unsuccessful in introducing new service and product offerings.
We intend to introduce new offerings of services and products to both new and existing customers in the future, including home automation products and additional home technology solutions. We may be unsuccessful in significantly broadening our customer base through the addition of these services and products within current markets or in new markets the company may enter. Additionally, we may not be successful in generating substantial revenue from any additional services and products introduced in the future and may decline to initiate new product and service offerings.
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Damage to our brand and reputation or change or loss of use of our brand could harm our business and results of operations.
We depend significantly on our reputation for high-quality products, excellent customer service and the brand name “Complete Solaria” to attract new customers and grow our business. If we fail to continue to deliver solar energy systems or energy storage systems within the planned timelines, if our offerings do not perform as anticipated or if we damage any of our customers’ properties or delays or cancels projects, our brand and reputation could be significantly impaired. Future technological improvements may allow the company to offer lower prices or offer new technology to new customers; however, technical limitations in our current solar energy systems and energy storage systems may prevent us from offering such lower prices or new technology to existing customers.
In addition, given the sheer number of interactions our personnel or dealers operating on our behalf have with customers and potential customers, it is inevitable that some customers’ and potential customers’ interactions with us or dealers operating on our behalf will be perceived as less than satisfactory. This has led to instances of customer complaints, some of which have affected our digital footprint on rating websites and social media platforms. If we cannot manage hiring and training processes to avoid or minimize these issues to the extent possible, our reputation may be harmed and our ability to attract new customers would suffer.
In addition, if we were to no longer use, lose the right to continue to use or if others use the “Complete Solaria” brand, we could lose recognition in the marketplace among customers, suppliers and dealers, which could affect our business, financial condition, results of operations and would require financial and other investment and management attention in new branding, which may not be as successful.
Our success depends on the continuing contributions of key personnel.
We rely heavily on the services of our key executive officers and the loss of services of any principal member of the management team could adversely affect operations. We are investing significant resources in
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developing new members of management as we complete our restructuring and strategic transformation. In connection with the recent merger with The Solaria Corporation, members of Complete Solar’s management team and Solaria’s management team are being integrated into one management team for Complete Solaria. We also anticipate that over time we will need to hire a number of highly skilled technical, sales, marketing, administrative, and accounting personnel. The competition for qualified personnel is intense in this industry. We may not be successful in attracting and retaining sufficient numbers of qualified personnel to support its anticipated growth. We cannot guarantee that any employee will remain employed with us for any definite period of time since all of employees, including key executive officers, serve at-will and may terminate their employment at any time for any reason.
If we or our dealers or suppliers fail to hire and retain a sufficient number of employees and service providers in key functions, our growth and ability to timely complete customer projects and successfully manage customer accounts would be constrained.
To support growth, we and our dealers need to hire, train, deploy, manage and retain a substantial number of skilled employees, engineers, installers, electricians and sales and project finance specialists. Competition for qualified personnel in this industry has increased substantially, particularly for skilled personnel involved in the installation of solar energy systems. We and our dealers also compete with the homebuilding and construction industries for skilled labor. These industries are cyclical and when participants in these industries seek to hire additional workers, it puts upward pressure on us and our dealers’ labor costs. Companies with whom our dealers compete to hire installers may offer compensation or incentive plans that certain installers may view as more favorable. As a result, our dealers may be unable to attract or retain qualified and skilled installation personnel. The further unionization of the industry’s labor force or the homebuilding and construction industries’ labor forces, either in response to the COVID-19 pandemic or otherwise, could also increase our dealers’ labor costs.
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Shortages of skilled labor could significantly delay a project or otherwise increase dealers’ costs. Further, we need to continue to increase the training of the customer service team to provide high-end account management and service to homeowners before, during and following the point of installation of its solar energy systems. Identifying and recruiting qualified personnel and training them requires significant time, expense and attention. It can take several months before a new customer service team member is fully trained and productive at the standards established by us. If we are unable to hire, develop and retain talented customer service or other personnel, we may not be able to grow our business.
Our operating results and ability to grow may fluctuate from quarter to quarter and year to year, which could make future performance difficult to predict and could cause operating results for a particular period to fall below expectations.
Our quarterly and annual operating results and its ability to grow are difficult to predict and may fluctuate significantly in the future. We have experienced seasonal and quarterly fluctuations in the past and expect to experience such fluctuations in the future. In addition to the other risks described in this “Risk Factors” section, the following factors could cause operating results to fluctuate:
expiration or initiation of any governmental rebates or incentives;
significant fluctuations in customer demand for our solar energy services, solar energy systems and energy storage systems;
our dealers’ ability to complete installations in a timely manner;
our’s and our dealers’ ability to gain interconnection permission for an installed solar energy system from the relevant utility;
the availability, terms and costs of suitable financing;
the amount, timing of sales and potential decreases in value of SRECs;
Our ability to continue to expand its operations and the amount and timing of expenditures related to this expansion;
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announcements by us or our competitors of significant acquisitions, strategic partnerships, joint ventures or capital-raising activities or commitments;
changes in our pricing policies or terms or those of competitors, including centralized electric utilities;
actual or anticipated developments in competitors’ businesses, technology or the competitive landscape; and
natural disasters or other weather or meteorological conditions.
For these or other reasons, the results of any prior quarterly or annual periods should not be relied upon as indications of our future performance.
Our ability to obtain insurance on the terms of any available insurance coverage could be materially adversely affected by international, national, state or local events or company-specific events, as well as the financial condition of insurers.
Our insurance policies cover legal and contractual liabilities arising out of bodily injury, personal injury or property damage to third parties and are subject to policy limits.
However, such policies do not cover all potential losses and coverage is not always available in the insurance market on commercially reasonable terms. In addition, we may have disagreements with insurers on the amount of recoverable damages and the insurance proceeds received for any loss of, or any damage to, any of
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our assets may be claimed by lenders under financing arrangements or otherwise may not be sufficient to restore the loss or damage without a negative impact on its results of operations. Furthermore, the receipt of insurance proceeds may be delayed, requiring us to use cash or incur financing costs in the interim. To the extent our experiences covered losses under its insurance policies, the limit of our coverage for potential losses may be decreased or the insurance rates it has to pay increased. Furthermore, the losses insured through commercial insurance are subject to the credit risk of those insurance companies. While we believe our commercial insurance providers are currently creditworthy, we cannot assure such insurance companies will remain so in the future.
We may not be able to maintain or obtain insurance of the type and amount desired at reasonable rates. The insurance coverage obtained may contain large deductibles or fail to cover certain risks or all potential losses. In addition, our insurance policies are subject to annual review by insurers and may not be renewed on similar or favorable terms, including coverage, deductibles or premiums, or at all. If a significant accident or event occurs for which we are not fully insured or the company suffers losses due to one or more of its insurance carriers defaulting on their obligations or contesting their coverage obligations, it could have a material adverse effect on our business, financial condition and results of operations.
We may be subject to breaches of our information technology systems, which could lead to disclosure of internal information, damage to our reputation or relationships with dealers, suppliers, and customers, and disrupt access to online services. Such breaches could subject us to significant reputational, financial, legal, and operational consequences.
Our business requires the use and storage of confidential and proprietary information, intellectual property, commercial banking information, personal information concerning customers, employees, and business partners, and corporate information concerning internal processes and business functions. Malicious attacks to gain access to such information affects many companies across various industries, including ours.
Where appropriate, we use encryption and authentication technologies to secure the transmission and storage of data. These security measures may be compromised as a result of third-party security breaches, employee error, malfeasance, faulty password management, or other irregularity or malicious effort, and result in persons obtaining unauthorized access to data.
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We devote resources to network security, data encryption, and other security measures to protect our systems and data, but these security measures cannot provide absolute security. Because the techniques used to obtain unauthorized access, disable or degrade service, or sabotage systems change frequently, target end users through phishing and other malicious techniques, and/or may be difficult to detect for long periods of time, we may be unable to anticipate these techniques or implement adequate preventative measures. As a result, we may experience a breach of our systems in the future that reduces our ability to protect sensitive data. In addition, hardware, software, or applications we develop or procures from third parties may contain defects in design or manufacture or other problems that could unexpectedly compromise information security. Unauthorized parties may also attempt to gain access to our systems or facilities through fraud, trickery or other forms of deceiving team members, contractors and temporary staff. If we experience, or are perceived to have experienced, a significant data security breach, fail to detect and appropriately respond to a significant data security breach, or fail to implement disclosure controls and procedures that provide for timely disclosure of data security breaches deemed material to our business, including corrections or updates to previous disclosures, we could be exposed to a risk of loss, increased insurance costs, remediation and prospective prevention costs, damage to our reputation and brand, litigation and possible liability, or government enforcement actions, any of which could detrimentally affect our business, results of operations, and financial condition.
We may also share information with contractors and third-party providers to conduct business. While we generally review and typically request or require such contractors and third-party providers to implement security measures, such as encryption and authentication technologies to secure the transmission and storage of data, those third-party providers may experience a significant data security breach, which may also detrimentally
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affect our business, results of operations, and financial condition as discussed above. See also under this section, “We may be required to file claims against other parties for infringing its intellectual property that may be costly and may not be resolved in our favor.” We rely substantially upon trade secret laws and contractual restrictions to protect our proprietary rights, and, if these rights are not sufficiently protected, our ability to compete and generate revenue could suffer.
As sales to residential customers have grown, we have increasingly become subject to consumer protection laws and regulations.
As we continue to seek to expand our retail customer base, our activities with customers are subject to consumer protection laws that may not be applicable to other businesses, such as federal truth-in-lending, consumer leasing, telephone and digital marketing, and equal credit opportunity laws and regulations, as well as state and local finance laws and regulations. Claims arising out of actual or alleged violations of law may be asserted against us by individuals or governmental entities and may expose the company to significant damages or other penalties, including fines. In addition, our affiliations with third-party dealers may subject the company to alleged liability in connection with actual or alleged violations of law by such dealers, whether or not actually attributable to us, which may expose us to significant damages and penalties, and we may incur substantial expenses in defending against legal actions related to third-party dealers, whether or not ultimately found liable.
The competitive environment in which we operate often requires the undertaking of customer obligations, which may turn out to be costlier than anticipated and, in turn, materially and adversely affect our business, results of operations and financial condition.
We are often required, at the request of our end customer, to undertake certain obligations such as:
system output performance warranties; and
system maintenance.
Such customer obligations involve complex accounting analyses and judgments regarding the timing of revenue and expense recognition, and in certain situations these factors may require us to defer revenue or profit recognition until projects are completed or until contingencies are resolved, which could adversely affect revenues and profits in a particular period.
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We are subject to risks associated with construction, cost overruns, delays, regulatory compliance and other contingencies, any of which could have a material adverse effect on its business and results of operations.
We are a licensed contractor in certain communities that we service and are ultimately responsible as the contracting party for every solar energy system installation. A significant portion of our business depends on obtaining and maintaining required licenses in various jurisdictions. All such licenses are subject to audit by the relevant government agency. Our failure to obtain or maintain required licenses could result in the termination of certain of our contracts. For example, we hold a license with California’s Contractors State License Board (the “CSLB”) and that license is currently under probation with the CSLB. If we fail to comply with the CSLB’s law and regulations, it could result in termination of certain of our contracts, monetary penalties, extension of the license probation period or revocation of its license in California. In addition, we may be liable, either directly or through its solar partners, to homeowners for any damage we causes to them, their home, belongings or property during the installation of our systems. For example, we either directly or through its solar partners, frequently penetrate homeowners’ roofs during the installation process and may incur liability for the failure to adequately weatherproof such penetrations following the completion of construction. In addition, because the solar energy systems we or our solar partners deploy are high voltage energy systems, we may incur liability for any failure to comply with electrical standards and manufacturer recommendations.
Further, we or our solar partners may face construction delays or cost overruns, which may adversely affect our or our solar partners’ ability to ramp up the volume of installation in accordance with our plans. Such delays
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or overruns may occur as a result of a variety of factors, such as labor shortages, defects in materials and workmanship, adverse weather conditions, transportation constraints, construction change orders, site changes, labor issues and other unforeseen difficulties, any of which could lead to increased cancellation rates, reputational harm and other adverse effects.
In addition, the installation of solar energy systems, energy-storage systems and other energy-related products requiring building modifications are subject to oversight and regulation in accordance with national, state and local laws and ordinances relating to building, fire and electrical codes, safety, environmental protection, utility interconnection and metering, and related matters. We also rely on certain employees to maintain professional licenses in many of the jurisdictions in which we operate, and the failure to employ properly licensed personnel could adversely affect our licensing status in those jurisdictions. It is difficult and costly to track the requirements of every individual authority having jurisdiction over our installations and to design solar energy systems to comply with these varying standards. Any new government regulations or utility policies pertaining to our systems may result in significant additional expenses to us and our homeowners and, as a result, could cause a significant reduction in demand for solar service offerings.
While we have a variety of stringent quality standards that the company applies in the selection of its solar partners, we do not control our suppliers and solar partners or their business practices. Accordingly, we cannot guarantee that they follow our standards or ethical business practices, such as fair wage practices and compliance with environmental, safety and other local laws. A lack of demonstrated compliance could lead us to seek alternative suppliers or contractors, which could increase costs and result in delayed delivery or installation of our products, product shortages or other disruptions of its operations. Violation of labor or other laws by our suppliers and solar partners or the divergence of a supplier’s or solar partners’ labor or other practices from those generally accepted as ethical in the United States or other markets in which we do business could also attract negative publicity and harm our business, brand and reputation in the market.
Our management has identified conditions that raise substantial doubt about our ability to continue as a going concern.
Our management has concluded that there is substantial doubt about our ability to continue as a going concern. If we are not able to secure adequate additional funding when needed, we will need to reevaluate our operating plan and may be forced to make reductions in spending, extend payment terms with suppliers, liquidate
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assets where possible, or suspend or curtail planned programs or cease operations entirely. These actions could materially impact our business, results of operations and future prospects. There can be no assurance that in the event we require additional financing, such financing will be available on terms that are favorable, or at all. Failure to generate sufficient cash flows from operations, raise additional capital or reduce certain discretionary spending would have a material adverse effect on our ability to achieve our intended business objectives.
We expect that we will need to raise additional funding to finance our operations. This additional financing may not be available on acceptable terms or at all. Failure to obtain this necessary capital when needed may force us to curtail planned programs or cease operations entirely.
Our operations have consumed significant amounts of cash since inception. We expect to incur significant operating expenses as we continue to grow our business. We believe that our operating losses and negative operating cash flows will continue into the foreseeable future.
We had cash and cash equivalents of $1.7 million as of October 1, 2023. Our cash position raises substantial doubt regarding our ability to continue as a going concern for 12 months following the issuance of the unaudited condensed consolidated financial statements. We will require substantial additional capital to continue operations. Such additional capital might not be available when we need it and our actual cash requirements might be greater than anticipated. We cannot be certain that additional capital will be available on attractive terms, if at all, when needed, which could be dilutive to stockholders, and our financial condition, results of operations, business and prospects could be materially and adversely affected.
We have identified a material weakness in our internal controls over financial reporting. If Wewe are unable to maintain effective internal controls over financial reporting and disclosure controls and procedures, the accuracy and timeliness of our financial and operating reporting may be adversely affected, and confidence in our operations and disclosures may be lost.
In connection with the preparation and audit of our financial statements for the years ended December 31, 2021 and 2020, and our consolidated financial statements for the year ended December 31, 2022, our management identified a material weakness in our internal control over financial reporting. A material weakness is a deficiency, or combination of deficiencies, in internal control over financial reporting such that there is a reasonable possibility that a material misstatement of our annual or interim consolidated financial statements will not be prevented or detected on a timely basis. The material weakness is as follows:
We do not have sufficient full-time accounting personnel, (i) to enable appropriate reviews over the financial close and reporting process, (ii) to allow for an appropriate segregation of duties, and (iii) with the requisite experience and technical accounting knowledge to identify, review and resolve complex accounting issues under generally accepted accounting principles in the United States (“GAAP”). Additionally, we did not adequately design and/or implement controls related to conducting a formal risk assessment process.
Complete Solar was not required to perform an evaluation of internal control over financial reporting as of December 31, 2021 and 2020 in accordance with the provisions of the Sarbanes-Oxley Act, nor were we required to do so as of December 31, 2022. Had such an evaluation been performed, additional control deficiencies may have been identified by Complete Solar’s management, and those control deficiencies could have also represented one or more material weaknesses.
We have taken certain steps, such as recruiting additional personnel, in addition to utilizing third-party consultants and specialists, to supplement its internal resources, to enhance its internal control environment and
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plans to take additional steps to remediate the material weaknesses. Although we plan to complete this remediation process as quickly as possible, we cannot at this time estimate how long it will take. We cannot assure you that the measures we have taken to date and may take in the future, will be sufficient to remediate the control deficiencies that led to our material weakness in internal control over financial reporting or that it will prevent or avoid potential future material weaknesses.
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If we are not able to maintain effective internal control over financial reporting and disclosure controls and procedures, or if material weaknesses are discovered in future periods, a risk that is significantly increased in light of the complexity of our business, we may be unable to accurately and timely report our financial position, results of operations, cash flows or key operating metrics, which could result in late filings of the annual and quarterly reports under the Exchange Act, restatements of financial statements or other corrective disclosures, an inability to access commercial lending markets, defaults under its secured revolving credit facility and other agreements, or other material adverse effects on our business, reputation, results of operations, financial condition or liquidity.
Compliance with occupational safety and health requirements and best practices can be costly, and noncompliance with such requirements may result in potentially significant penalties, operational delays and adverse publicity.
The installation and ongoing operations and maintenance of solar energy systems and energy storage systems requires individuals hired by us, our dealers or third-party contractors, potentially including employees, to work at heights with complicated and potentially dangerous electrical systems. The evaluation and modification of buildings as part of the installation process requires these individuals to work in locations that may contain potentially dangerous levels of asbestos, lead, mold or other materials known or believed to be hazardous to human health. There is substantial risk of serious injury or death if proper safety procedures are not followed. Our operations are subject to regulation under OSHA, DOT regulations and equivalent state and local laws. Changes to OSHA or DOT requirements, or stricter interpretation or enforcement of existing laws or regulations, could result in increased costs. If we fail to comply with applicable OSHA or DOT regulations, even if no work-related serious injury or death occurs, we may be subject to civil or criminal enforcement and be required to pay substantial penalties, incur significant capital expenditures or suspend or limit operations. Because individuals hired by us or on our behalf to perform installation and ongoing operations and maintenance of the company’s solar energy systems and energy storage systems, including its dealers and third-party contractors, are compensated on a per project basis, they are incentivized to work more quickly than installers compensated on an hourly basis. While we have not experienced a high level of injuries to date, this incentive structure may result in higher injury rates than others in the industry and could accordingly expose the company to increased liability. Individuals hired by or on behalf of us may have workplace accidents and receive citations from OSHA regulators for alleged safety violations, resulting in fines. Any such accidents, citations, violations, injuries or failure to comply with industry best practices may subject us to adverse publicity, damage its reputation and competitive position and adversely affect the business.
Our business has benefited from the declining cost of solar energy system components and business may be harmed to the extent the cost of such components stabilize or increase in the future.
Our business has benefited from the declining cost of solar energy system components and to the extent such costs stabilize, decline at a slower rate or increase, our future growth rate may be negatively impacted. The declining cost of solar energy system components and the raw materials necessary to manufacture them has been a key driver in the price of the solar energy systems we own, and the prices charged for electricity and customer adoption of solar energy. Solar energy system component and raw material prices may not continue to decline at the same rate as they have over the past several years or at all. In addition, growth in the solar industry and the resulting increase in demand for solar energy system components and the raw materials necessary to manufacture them may also put upward pressure on prices. An increase of solar energy system components and raw materials prices could slow growth and cause business and results of operations to suffer. Further, the cost of solar energy
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system components and raw materials has increased and could increase in the future due to tariff penalties, duties, the loss of or changes in economic governmental incentives or other factors.
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Product liability claims against us could result in adverse publicity and potentially significant monetary damages.
It is possible our solar energy systems or energy storage systems could injure customers or other third parties or our solar energy systems or energy storage systems could cause property damage as a result of product malfunctions, defects, improper installation, fire or other causes. Any product liability claim we face could be expensive to defend and may divert management’s attention. The successful assertion of product liability claims against us could result in potentially significant monetary damages, potential increases in insurance expenses, penalties or fines, subject the company to adverse publicity, damage our reputation and competitive position and adversely affect sales of solar energy systems or energy storage systems. In addition, product liability claims, injuries, defects or other problems experienced by other companies in the residential solar industry could lead to unfavorable market conditions to the industry as a whole and may have an adverse effect on our ability to expand its portfolio of solar service agreements and related solar energy systems and energy storage systems, thus affecting our business, financial condition and results of operations.
Our warranty costs may exceed the warranty reserve.
We provide warranties that cover parts performance and labor to purchasers of our solar modules. We maintain a warranty reserve on our financial statements, and our warranty claims may exceed the warranty reserve. Any significant warranty expenses could adversely affect our financial condition and results of operations. Significant warranty problems could impair our reputation which could result in lower revenue and a lower gross margin.
We are subject to legal proceedings and regulatory inquiries and may be named in additional claims or legal proceedings or become involved in regulatory inquiries, all of which are costly, distracting to our core business and could result in an unfavorable outcome or harm our business, financial condition, results of operations or the trading price for our securities.
We are involved in claims, legal proceedings that arise from normal business activities. In addition, from time to time, third parties may assert claims against us. We evaluate all claims, lawsuits and investigations with respect to their potential merits, our potential defenses and counter claims, settlement or litigation potential and the expected effect on us. In the event that we are involved in significant disputes or are the subject of a formal action by a regulatory agency, we could be exposed to costly and time-consuming legal proceedings that could result in any number of outcomes. Although outcomes of such actions vary, any claims, proceedings or regulatory actions initiated by or against us whether successful or not, could result in expensive costs of defense, costly damage awards, injunctive relief, increased costs of business, fines or orders to change certain business practices, significant dedication of management time, diversion of significant operational resources or some other harm to the business. In any of these cases, our business, financial condition or results of operations could be negatively impacted.
We make a provision for a liability relating to legal matters when it is both probable that a liability has been incurred and the amount of the loss can be reasonably estimated. These provisions are reviewed at least quarterly and adjusted to reflect the impacts of negotiations, estimated settlements, legal rulings, advice of legal counsel and other information and events pertaining to a particular matter. In our opinion, resolution of all current matters is not expected to have a material adverse impact on our business, financial condition or results of operations. However, depending on the nature and timing of any such controversy, an unfavorable resolution of a matter could materially affect our future business, financial condition or results of operations, or all of the foregoing, in a particular quarter.
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The requirements of being a public company may strain our resources, divert management’s attention and affect our ability to attract and retain qualified directors and officers.
We will face increased legal, accounting, administrative and other costs and expenses as a public company that we did not incur as a private company. The Sarbanes-Oxley Act, including the requirements of Section 404, as well as rules and regulations subsequently implemented by the SEC, the Dodd-Frank Wall Street Reform and Consumer Protection Act of 2010 and the rules and regulations promulgated and to be promulgated thereunder, the PCAOB and the securities exchanges, impose additional reporting and other obligations on public companies. Compliance with public company requirements will increase costs and make certain activities more time-consuming. A number of those requirements will require us to carry out activities we had not done previously. For example, we created new board committees and adopted new internal controls and disclosure controls and
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procedures. In addition, expenses associated with SEC reporting requirements will be incurred. Furthermore, if any issues in complying with those requirements are identified (for example, if the auditors identify a material weakness or significant deficiency in the internal control over financial reporting), we could incur additional costs rectifying those issues, and the existence of those issues could adversely affect our reputation or investor perceptions of it. It may also be more expensive to obtain director and officer liability insurance. Risks associated with our status as a public company may make it more difficult to attract and retain qualified persons to serve on our board of directors or as executive officers. The additional reporting and other obligations imposed by these rules and regulations will increase legal and financial compliance costs and the costs of related legal, accounting and administrative activities. These increased costs will require us to divert a significant amount of money that could otherwise be used to expand the business and achieve strategic objectives. Advocacy efforts by stockholders and third parties may also prompt additional changes in governance and reporting requirements, which could further increase costs.
Our ability to use net operating loss carryforwards and certain other tax attributes may be limited.
We have incurred substantial losses during our history and do not expect to become profitable in the near future and may never achieve profitability. Under current U.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 taxable income, if any, until such unused losses expire, and unused federal losses generated after December 31, 2017 will not expire and may be carried forward indefinitely but will be only deductible to the extent of 80% of current year taxable income in any given year. Many states have similar laws.
In addition, both current and future unused net operating loss (“NOL”) carryforwards and other tax attributes may be subject to limitation under Sections 382 and 383 of the Code, if a corporation undergoes an “ownership change,” generally defined as a greater than 50 percentage point change (by value) in equity ownership by certain stockholders over a three-year period. The Business Combination may have resulted in an ownership change for us and, accordingly, our NOL carryforwards and certain other tax attributes may be subject to limitations (or disallowance) on their use after the Business Combination. Our NOL carryforwards may also be subject to limitation as a result of prior shifts in equity ownership. Additional ownership changes in the future could result in additional limitations on our NOL carryforwards. Consequently, even if we achieve profitability, we may not be able to utilize a material portion of our NOL carryforwards and other tax attributes, which could have a material adverse effect on cash flow and results of operations.
Sales of a substantial number of our common stock in the public market by our shareholders could cause the price of our common stock to decline.
Sales of a substantial number of shares of our common stock in the public market could occur at any time. If our stockholders sell, or the market perceives that our stockholders intend to sell, substantial amounts of the our common stock in the public market, the market price of our common stock could decline.
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Provisions in our Certificate of Incorporation and Bylaws and provisions of the DGCL may delay or prevent an acquisition by a third party that could otherwise be in the interests of shareholders.
Our Certificate of Incorporation and Bylaws contain several provisions that may make it more difficult or expensive for a third party to acquire control of us without the approval of the our board. These provisions, which may delay, prevent or deter a merger, acquisition, tender offer, proxy contest, or other transaction that stockholders may consider favorable, include the following:
advance notice requirements for stockholder proposals and director nominations;
provisions limiting stockholders’ ability to call special meetings of stockholders and to take action by written consent;
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restrictions on business combinations with interested stockholders;
no cumulative voting; and
the 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.
These provisions of our Certificate of Incorporation and Proposed Bylaws could discourage potential takeover attempts and reduce the price that investors might be willing to pay for the shares of our common stock in the future, which could reduce the market price of our common stock.
The provision of our Certificate of Incorporation requiring exclusive venue in the Court of Chancery in the State of Delaware and the federal district courts of the United States for certain types of lawsuits may have the effect of discouraging lawsuits against directors and officers.
Our Certificate of Incorporation provides that, unless otherwise consented to by us in writing, the Court of Chancery of the State of Delaware (or, if the Court of Chancery does not have jurisdiction, another State court in Delaware or the federal district court for the District of Delaware) will, to the fullest extent permitted by law, be the sole and exclusive forum for the following types of actions or proceedings:
any derivative action or proceeding brought on behalf of us;
any 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;
any 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 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
any 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.
Our Certificate of Incorporation will further provide that, unless otherwise consented to by us in writing to the selection of an alternative forum, the federal district courts of the United States will, to the fullest extent permitted by law, be the sole and exclusive forum for the resolution of any complaint against any person in connection with any offering of our securities, asserting a cause of action arising under the Securities Act. Any person or entity purchasing or otherwise acquiring any interest in our securities will be deemed to have notice of and consented to this provision.
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Although our Certificate of Incorporation contains the choice of forum provisions described above, it is possible that a court could rule that such provisions are inapplicable for a particular claim or action or that such provisions are unenforceable. For example, under the Securities Act, federal courts have concurrent jurisdiction over all suits brought to enforce any duty or liability created by the Securities Act, and investors cannot waive compliance with the federal securities laws and the rules and regulations thereunder. In addition, Section 27 of the Exchange Act creates exclusive federal jurisdiction over all suits brought to enforce any duty or liability created by the Exchange Act or the rules and regulations thereunder, and, therefore, the exclusive forum provisions described above do not apply to any actions brought under the Exchange Act.
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Although we believe these provisions will benefit us by limiting costly and time-consuming litigation in multiple forums and by providing increased consistency in the application of applicable law, these exclusive forum provisions may limit the ability of our shareholders to bring a claim in a judicial forum that such shareholders find favorable for disputes with us or our directors, officers or employees, which may discourage such lawsuits against us and our directors, officers and other employees.
The shares of common stock being offered in this prospectus represent a substantial percentage of our outstanding common stock, and the sales of such shares, or the perception that these sales could occur, could cause the market price of our common stock to decline significantly.
This prospectus relates to the offer and sale from time to time by the selling securityholders named in this prospectus or their permitted transferees of (i) up to 47,408,854 shares of common stock consisting of (a) up to 9,028,488 shares of common stock issued in connection with private placements pursuant to subscription agreements entered into on or around July 13, 2023 consisting of (1) 1,630,000 PIPE Shares originally issued at $10.00 per share, (2) 1,780,000 shares of common stock transferred to selling securityholders by the Sponsor for no consideration and (3) 5,618,488 shares issued pursuant to forward purchase agreements, (b) up to 8,625,000 shares of common stock originally issued in a private placement to the Sponsor in connection with the initial public offering of FACT at a price of $0.003 per share, (c) up to 6,266,667 shares of common stock issuable upon exercise of the Private Warrants at an exercise price of $11.50 per share, (d) up to 16,505,459 shares of common stock pursuant to that certain Amended and Restated Registration Rights Agreement, July 18, 2023, between us and the selling securityholders granting such holders registration rights with respect to such shares originally issued at a price of $0.48 per share, (e) up to 716,668 shares of common stock that are issuable upon the exercise of the Working Capital Warrants at an exercise price of $11.50 per share, and (f) up to 6,266,572 shares of common stock issuable upon exercise of the Merger Warrants, and (ii) up to 13,249,907 Warrants consisting of (a) up to 6,266,667 Private Warrants, (b) up to 716,668 Working Capital Warrants and (c) up to 6,266,572 Merger Warrants. We will not receive any proceeds from the sale of shares of common stock or Warrants by the selling securityholders pursuant to this prospectus.
The number of Resale Securities exceeds the number of shares of common stock constituting our public float, and represents approximately 190% of our public float and approximately 105% of our outstanding shares of common stock (after giving effect to the issuance of shares of common stock upon exercise of the Warrants) as of December 21, 2023. The sale of all Resale Securities by the selling securityholders, or the perception that these sales could occur, could depress the market price of our common stock. Even if our trading price were to trade significantly below $10.00 per share, the offering price for the units sold in the FACT IPO, certain of the selling securityholders may still have an incentive to sell our common stock because they may still experience a positive rate of return on the securities they purchased due to the differences in the purchase prices described in the preceding paragraph and the public trading price of our common stock. While these selling securityholders may, on average, experience a positive rate of return based on the current market price of the common stock they purchased, public securityholders may not experience a similar rate of return on the common stock they purchased due to differences in the purchase prices and the current market price. Despite the closing price being $1.52 per share as of December 21, 2023, our Sponsor and the selling securityholders may still experience a positive rate of return on the shares purchased by them due to the lower price per share at which their shares were purchased. While these selling securityholders may, on average, experience a positive rate of return based on the current market price, public stockholders may not experience a similar rate of return on the common stock they purchased if there is such a decline in price and due to differences in the purchase prices and the current market price. The PIPE Investors will not experience any profit per share unless our common stock trades above $10.00 per share. The sale of the Resale Securities being offered pursuant to this prospectus, or the perception that these sales could occur, could result in a significant decline in the public trading price of our common stock.
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We may be required to repurchase up to 5,618,488 shares of common stock from the investors with whom we entered into Forward Purchase Agreements in connection with the closing of the Business Combination, which would reduce the amount of cash available to us to fund our growth plan.
On and around July 13, 2023, FACT entered into separate Forward Purchase Agreements with certain investors (together, the “FPA Investors”), pursuant to which FACT (now Complete Solaria following the Closing) agreed to purchase in the aggregate, on the date that is 24 months after the Closing Date (the “Maturity Date”), up to 5,618,488 shares of common stock then held by the FPA Investors (subject to certain conditions and purchase limits set forth in the Forward Purchase Agreements). Pursuant to the terms of the Forward Purchase Agreements, each FPA Investor further agreed not to redeem any of the FACT Class A Ordinary Shares owned by it at such time. The per price at which the FPA Investors have the right to sell the shares to us on the Maturity Date will not be less than $5.00 per share.
If the FPA Investors hold some 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 is 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 expect that the FPA Investors will exercise this repurchase right with respect to such shares. In the event that we are required to repurchase these forward purchase agreement shares, or in the event that the forward purchase agreements are terminated the amount of cash arising from the Business Combination that would ultimately be available to fund our liquidity and capital resource requirements would be reduced accordingly, which would adversely affect our ability to fund our growth plan in the manner we had contemplated when entering into the forward purchase agreements.
Our Warrants may not be exercised at all or may be exercised on a cashless basis and we may not receive any cash proceeds from the exercise of the Warrants.
The exercise price of the Warrants may be higher than the prevailing market price of the underlying shares of common stock. The exercise price of the Warrants is subject to market conditions and may not be advantageous if the prevailing market price of the underlying shares of common stock is lower than the exercise price. The cash proceeds associated with the exercise of Warrants to purchase our common stock are contingent upon our stock price. The value of our common stock will fluctuate and may not align with the exercise price of the warrants at any given time. If the Warrants are “out of the money,” meaning the exercise price is higher than the market price of our common stock, there is a high likelihood that warrant holders may choose not to exercise their warrants. As a result, we may not receive any proceeds from the exercise of the Warrants.
Furthermore, with regard to the Private Warrants and Working Capital Warrants, it is possible that we may not receive cash upon their exercise, since these warrants may be exercised on a cashless basis. A cashless exercise allows warrant holders to convert the warrants into shares of our common stock without the need for a cash payment. Instead of paying cash upon exercise, the warrant holder would receive a reduced number of shares based on a predetermined formula. As a result, the number of shares issued through a cashless exercise will be lower than if the warrants were exercised on a cash basis, which could impact the cash proceeds we receive from the exercise of such warrants.
The Public Warrants and the Merger Warrants may only be exercised for cash provided there is then an effective registration statement registering the shares of common stock issuable upon the exercise of such warrants. If there is not a then-effective registration statement, then such warrants may be exercised on a “cashless basis,” pursuant to an available exemption from registration under the Securities Act.
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MARKET AND INDUSTRY DATA
Information contained in this prospectus concerning the market and the industries in which Complete Solaria competes, including its market position, general expectations of market opportunities and market size, is based on information from various third-party sources, publicly available information, various industry publications, internal data and estimates, and assumptions made by Complete Solaria based on such sources. Internal data and estimates are based upon information obtained from trade and business organizations and other contacts in the markets in which Complete Solaria operates and Complete Solaria management’s understanding of industry conditions. This information and any estimates provided herein involve numerous assumptions and limitations, and you are cautioned not to give undue weight to such information. Third-party sources generally state that the information contained in such sources has been obtained from sources believed to be reliable. Although we believe that such information is reliable, there can be no assurance as to the accuracy or completeness of such information. Industry and market data could be wrong because of the method by which sources obtained their data and because information cannot always be verified with complete certainty due to the limits on the availability and reliability of raw data, the voluntary nature of the data gathering process and other limitations and uncertainties. Although we are responsible for all of the disclosure contained in this prospectus and we believe the third-party market position, general expectations of market opportunity and market size data included in this prospectus are reliable, we have not independently verified any third-party information and each publication speaks as of its original publication date (and not as of the date of this prospectus). In addition, we do not know all of the assumptions regarding general economic conditions or growth that were used in preparing the forecasts from the sources relied upon or cited herein.
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USE OF PROCEEDS
All of the shares of common stock and Warrants offered by the selling securityholders pursuant to this prospectus will be sold by the selling securityholders for their respective accounts. We will not receive any of the proceeds from these sales.
We will receive up to an aggregate of approximately $251.6 million from the exercise of the Warrants, assuming the exercise in full of all of the Warrants for cash. We expect to use the net proceeds from the exercise of the Warrants for general corporate purposes We will have broad discretion over the use of proceeds from the exercise of the Warrants. There is no assurance that the holders of the Warrants will elect to exercise any or all of such Warrants. To the extent that the Warrants are exercised on a “cashless basis,” the amount of cash we would receive from the exercise of the Warrants will decrease. The Private Warrants and Working Capital Warrants may be exercised for cash or on a “cashless basis.” The Public Warrants and the Merger Warrants may only be exercised for cash provided there is then an effective registration statement registering the shares of common stock issuable upon the exercise of such warrants. If there is not a then-effective registration statement, then such warrants may be exercised on a “cashless basis,” pursuant to an available exemption from registration under the Securities Act.
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DETERMINATION OF OFFERING PRICE
The offering price of the shares of common stock underlying the Warrants offered hereby is determined by reference to the exercise price of the Warrants of $11.50 per share. The Public Warrants are listed on Nasdaq under the symbol “CSLRW.”
We cannot currently determine the price or prices at which shares of common stock or Warrants may be sold by the selling securityholders under this prospectus.
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MARKET INFORMATION FOR SECURITIES AND DIVIDEND POLICY
Market Information
Our common stock and Public Warrants are currently listed on Nasdaq under the symbols “CSLR” and “CSLRW,” respectively. Prior to the consummation of the Business Combination, our common stock and our Public Warrants were listed on the NYSE under the symbols “FACT” and “FACT WS,” respectively. On August 7,December 21, 2023, there were 230 holders of record of the common stock and 198 holders of record of our Warrants. We currently do not intend to list the Private Warrants on any stock exchange or stock market.
Dividend Policy
We have never declared or paid any dividends on shares of our common stock. We anticipate that we will retain all of our future earnings, if any, for use in the operation and expansion of our business and do not anticipate paying cash dividends in the foreseeable future. Any decision to declare and pay dividends in the future will depend on, among other things, the consent of our lender(s), our results of operations, cash requirements, financial condition, contractual restrictions and other factors that our board of directors may deem relevant.
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MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
You should read the following discussion and analysis of our financial condition and results of operations together with our consolidated financial statements and the related notes appearing at the end of this prospectus. Some of the information contained in this discussion and analysis or set forth elsewhere in this prospectus, including information with respect to our plans and strategy for our business and related financing, includes forward-looking statements that involve risks, uncertainties and assumptions. You should read the “Special Note Regarding Forward-Looking Statements” and “Risk Factors” sections of this prospectus/proxy statementprospectus for a discussion of important factors that could cause actual results to differ materially from the results described in or implied by the forward-looking statements contained in the following discussion and analysis.
Overview
Complete Solaria was formed in November 2022 through the merger of Solaria and Complete Solar which combines two complementary businesses: Complete Solar, a residential solar sales and fulfillment company and Solaria, a seller of premium solar modules through a national network of installers. The combination of the two companies establishes Complete Solaria as a full renewable energy system operator with compelling customer offerings, advanced technology and project fulfillment that enables Complete Solaria to sell more products across more geographies in the United States and Europe.
Solaria. Founded in 2010, Complete Solar created a technology platform to offer clean energy products to homeowners by enabling a national network of sales partners and build partners. Complete Solar’sOur sales partners generate solar installation contracts with homeowners on behalf of Complete Solar.our behalf. To facilitate this process, Complete Solar provideswe provide the software tools, sales support and brand identity to its sales partners, making them competitive with national providers. This turnkey solution makes it easy for anyone to sell solar.
We fulfill our customer contracts by engaging with local construction specialists. We manage the customer experience and complete all pre-construction activities prior to delivering build-ready projects including hardware, engineering plans, and building permits to its builder partners. We manage and coordinate this process through our proprietary HelioTrackTM software system.
Founded in 2000, Solaria is a provider of residential solar modules. Our business model leverages manufacturing with third-party contract manufacturers to produce our solar modules utilizing Solaria’s proprietary intellectual property.
We fulfill our customer contracts by selling through distributors that are linked to a network of installers, called the Pro Partner Network (“PPN”), who, in turn, contract with residential customers to “go solar” using Solaria modules. The PPN is present in 47 states in the United States and 13 countries in Europe.
Effective January 1, 2023, we changed our fiscal quarters to four, thirteen-week periods within a standard calendar year. Each annual reporting period begins on January 1 and ends on December 31. Since the fiscal quarter change was made after the end of fiscal 2022, we will continue to report prior year financial information based on its prior year fiscal calendar. Our financial results for the thirteenthirty-nine weeks ended April 2,October 1, 2023 are compared to itsour results for the threenine months ended March 31,September 30, 2022. The comparison of these two quartersperiods is primarily affected by the difference of two daysone day between the first quarterthree quarters of fiscal 2023 and the first quarterthree quarters of 2022.
There is substantial doubt about the entity’s ability to continue as a going concern within one year after the date the unaudited condensed consolidated financial statements are issued. The accompanying unaudited condensed consolidated financial statements have been prepared assuming the Company will continue to operate as a going concern, which contemplates the realization of assets and settlement of liabilities in the normal course of business. They do not include any adjustments to reflect the possible future effects on the recoverability and classification of assets or the amounts and classifications of liabilities that may result from uncertainty relating to its ability to continue as a going concern.
Growth Strategy and Outlook
Complete Solaria’s growth strategy contains the following elements:
| • | Increase revenue by expanding installation capacity and developing new geographic markets – We continue to expand our network of partners who will install systems resulting from sales generated by |
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our sales partners. By leveraging this network of skilled builders, we aim to increase our installation capacity in our traditional markets and expand our offering into new geographies throughout the United States. This will enable greater sales growth in existing markets and create new revenue in expansion markets. |
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| • | Increase revenue and margin by engaging national-scale sales partners – We aim to offer a turnkey solar solution to prospective sales partners with a national footprint. These include electric vehicle manufacturers, national home security providers, and real estate brokerages. We expect to create a consistent offering with a single execution process for such sales partners throughout their geographic territories. These national accounts have unique customer relationships that we believe will facilitate meaningful sales opportunities and low cost of acquisition to both increase revenue and improve margin. |
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The Business Combination
Complete Solaria, Inc. (f/k/Solar entered into a Complete Solar Holding Corporation),Business Combination Agreement with FACT, First Merger Sub, Second Merger Sub, and Solaria entered into that certainon October 3, 2022. The Business Combination Agreement. Pursuant towas consummated on July 18, 2023. Upon the terms and subject to the conditions of the Business Combination, (i) First Merger Sub merged with and into Complete Solaria with Complete Solaria surviving as a wholly-owned subsidiary of FACT (the “First Merger”), (ii) immediately thereafter and as part of the same overall transaction, Complete Solaria merged with and into Second Merger Sub, with Second Merger Sub surviving as a wholly-owned subsidiary of FACT (the “Second Merger”), and FACT changed its name to “Complete Solaria, Inc.” and Second Merger Sub changed its name to “CS, LLC” and (iii) immediately after the consummation of the Second Merger and as part of the same overall transaction, Solaria merged with and into a newly formed Delaware limited liability company and wholly-owned subsidiary of FACT and changed its name to “SolarCA LLC” (“Third Merger Sub”), with Third Merger Sub surviving as a wholly-owned subsidiary of FACT (the “Additional Merger”“Additional Merger”, and together with the First Merger and the Second Merger, the “Mergers”“Mergers”).
As a condition to closing the Business Combination, in October 2022, Complete Solar entered into a merger agreement with The Solaria Corporation to merge and form Complete Solaria, Inc. The merger between Complete Solar and Solaria was consummated in November 2022. As Complete Solar determined that it was the primary beneficiary of Solaria, the merger was accounted for as a business combination in accordance with ASC 805.
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The merger between Complete Solaria and FACT washas been accounted for as a reverse recapitalization. Under this method of accounting, FACT was be treated as the acquired company for financial statement reporting purposes. This determination was primarily based on the Company having a majority of the voting power of the post-combination company, the Company’s senior management comprising substantially all of the senior management of the post-combination company, and the Company’s operations comprising the ongoing operations of the post-combination company. Accordingly, for accounting purposes, the Mergers have been treated as the equivalent of a capital transaction in which Complete Solaria is issuing stock for the net assets of FACT. The most significant change innet assets of FACT have been stated at historical cost, with no goodwill or other intangible assets recorded.
Disposal Transaction
On August 18, 2023, we entered into a Non-Binding Letter of Intent to sell certain of our North American solar panel assets, inclusive of certain intellectual property and customer contracts, to Maxeon Solar Technologies, Ltd. (“Maxeon”). Subsequent to the successor’s future reported financial position and results are expectedexecution of the Non-Binding Letter of Intent, on September 20, 2023, we entered into an asset purchase agreement (the “Disposal Agreement”) for the sale of certain assets to be an estimated increase in cash (as comparedMaxeon. The Disposal Agreement also includes a supply agreement for Maxeon to supply its premium, high-performance, high-efficiency solar panels to Complete Solaria’s balance sheet at December 31, 2022). SeeSolaria. The transaction closed on October 6, 2023. Under the terms of the Disposal Agreement, Maxeon agreed to acquire the identified assets and certain employees of Complete Solaria for an aggregate purchase price consisting of 1,100,000 Maxeon Common Shares (the “Unaudited Pro Forma Condensed Combined Financial InformationDisposal Transaction”).”
As part of the Disposal Transaction, we determined that the criteria were met for held for sale and discontinued operations classification as of the end of our third fiscal quarter as the divestiture represents a strategic shift in our business. We recorded an impairment of $147.5 million associated with the recording of the assets as held for sale during the thirty-nine weeks ended October 1, 2023 and loss on disposal of $1.8 million during the fourth quarter.
Below, we have discussed our historical results of continuing operations, which excludes our product revenues and related metrics, as all results of operations associated with the solar panel business have been presented as discontinued operations, unless otherwise noted.
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Key Financial Definitions/Components of Results of Operations
Service Revenues
We generate service revenue by providing customer solar solutions through a standardized platform to our residential solar providers and companies to facilitate the sale and installation of solar energy systems. Our contracts consist of two performance obligations, which include solar installation services and post-installation services that are performed prior to inspection by the authority having jurisdiction. The significant majority of our service revenue is recognized at a point in time upon the completion of the installation and the remainder is recognized upon inspection. Service revenueRevenue is recognized net of a reserve for the performance guarantee of solar output.
We enter into three types of customer contracts for solar energy installations. The majority of our service revenue is recognized through contracts where the homeowner enters into a power purchase agreement with our distribution partner. We perform the solar energy installation services on behalf of our distribution partner, who owns the solar energy system upon installation. Additionally, we enter into a Solar Purchase and Installation Agreement directly with homeowners, whereby the homeowner either pays cash or obtains financing through a third-party loan partner. In cash contracts with homeowners, we recognize service revenue based on the price we charge to the homeowner. We record service revenue in the amount received from the financing partner, net of any financing fees charged to the homeowner, which we consider to be a customer incentive.
As part of our service revenue, we also enter into contracts to provide our software enhanced service offerings, including design and proposal services, to customers that include solar installers and solar sales organizations. We perform these leveraging our HelioQuoteTM platform and other software tools to create computer aided drawings, structural letters, and electrical reviews for installers and proposals for installers. We charge a fixed fee per service offering, which we recognize in the period the service is performed.
Product Revenues
We generate product revenue by selling solar panels through distributors, who are identified as the customer, under non-cancellable arrangements. We recognize revenue from sales of products as control is transferred to the customer, generally upon delivery to the customer’s premises.
Operating Expenses
Cost of Service Revenues
Cost of service revenues consists primarily of the cost of solar energy systems, and installation and other subcontracting costs. Cost of revenue also includes associated warranty costs, shipping and handling, allocated overhead costs, depreciation, and amortization of internally developed software.
Cost of Product Revenues
Cost of product revenues consists primarily of direct production costs, including labor, materials, and subcontractor costs, indirect labor and overhead costs related to manufacturing activities; depreciation of production equipment, amortization of developed technologies, and allocated facilities costs.
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Sales Commissions
Sales commissions are direct and incremental costs of obtaining customer contracts. These costs are paid to third-party vendors who source residential customer contracts for the sale of solar energy systems.
Sales and Marketing
Sales and marketing expenses primarily consist of personnel related costs, including salaries and employee benefits, stock-based compensation, and other promotional and advertising expenses. We expense certain sales and marketing, including promotional expenses, as incurred. With the additional resources that come from the business combination, we expect to increase our investment in sales and marketing.
General and Administrative
General and administrative expenses consist primarily of personnel and related expenses for our employees, in our finance, research, engineering and administrative teams including salaries, bonuses, payroll taxes, and stock-based compensation. It also consists of legal, consulting, and professional fees, rent expenses pertaining to our offices, business insurance costs and other costs. We expect an increase in audit, tax, accounting, legal and other costs related to compliance with applicable securities and other regulations, as well as additional insurance, investor relations, and other costs associated with being a public company.
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Interest Expense
Interest expense primarily relates to interest expense on the issuance of debt and convertible notes and the amortization of debt issuance costs.
Other Expense,Income (Expense), Net
Other expense,income (expense), net consists of changes in the fair value of our convertible notes, the impact of debt extinguishment, and changes in the fair value of our redeemable convertible preferred stock warrant liabilities.liabilities and forward purchase agreements.
Income Tax Expense
Income tax expense primarily consists of income taxes in certain foreign and state jurisdictions in which we conduct business.
Supply Chain Constraints and Risk; COVID-19Risk
We rely on a small number of suppliers of solar energy systems and other equipment. If any of our suppliers was unable or unwilling to provide us with contracted quantities in a timely manner at prices, quality levels and volumes acceptable to us, we would have very limited alternatives for supply, and we may not be able find suitable replacements for our customers, or at all. Such an event could materially adversely affect our business, prospects, financial condition and results of operations.
The ongoing COVID-19 pandemic has resulted and may continue to result in widespread adverse effects on the global and U.S. economies. Ongoing government and business responses to COVID-19, along with COVID-19 variants and the resurgence of related disruptions, could have a continued material adverse impact on economic and market conditions and trigger a period of continued global and U.S. economic slowdown.
In addition, the global supply chain and our industry have experienced significant disruptions in recent periods. We have seen supply chain challenges and logistics constraints increase, including shortages of panels, inverters, batteries and associated component parts for inverters and solar energy systems available for purchase,
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which materially impacted our results of operations. In an effort to mitigate unpredictable lead times, we experienced substantial build up in inventory on hand commencing in early 2022 in response to global supply chain constraints. In certain cases, this has caused delays in critical equipment and inventory, longer lead times, and has resulted in cost volatility. These shortages and delays can be attributed in part to the COVID-19 pandemic and resulting government action, as well as broader macroeconomic conditions that may persist once the immediate effects of the COVID-19 pandemic have subsided, and have been exacerbated by the ongoing conflict between Russiaconflicts in Ukraine and Ukraine. IfIsrael. While we believe that a majority of our suppliers have secured sufficient supply to permit them to continue delivery and installations through the end of 2023, if these shortages and delays persist into 2023,2024, they could adversely affect the timing of when battery energy storage systems can be delivered and installed, and when (or if) we can begin to generate revenue from those systems. If any of our suppliers of solar modules experienced disruptions in the supply of the modules’ component parts, for example semiconductor solar wafers or investors, this may decrease production capabilities and restrict our inventory and sales. In addition, we have experienced and are experiencing varying levels of volatility in costs of equipment and labor resulting in part from disruptions caused by general global economic conditions, including inflationary pressures and the COVID-19 pandemic.conditions. While inflationary pressures have resulted in higher costs of products, in part due to an increase in cost of the materials and wage rates, these additional costs have been offset by the related rise in electricity rates.
We cannot predict the full effects the COVID-19 pandemicsupply chain constraints will have on our business, cash flows, liquidity, financial condition and results of operations at this time due to numerous uncertainties. Given the dynamic nature of these circumstances on our ongoing business, results of operations and overall financial performance, the full impact of COVID-19 and other macroeconomic factors, including the conflictconflicts in Ukraine and Israel, cannot be reasonably estimated at this time. In the event we are unable to mitigate the impact of delays or price volatility in solar energy systems, raw materials, and freight, it could materially adversely affect our business, prospects, financial condition and results of operations. For additional information on risk factors that could impact our results, please refer to “Risk Factors” located elsewhere in this proxy statement/prospectus.
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Critical Accounting Policies and Estimates
Our discussion and analysis of our financial condition and results of operations are based upon our financial statements, which have been prepared in accordance with generally accepted accounting principles in the United States (“GAAP”). GAAP requires us to make estimates and assumptions that affect the reported amounts of assets, liabilities, revenue, expenses and related disclosures. We base our estimates on historical experience and on various other assumptions that we believe to be reasonable under the circumstances. In many instances, we could have reasonably used different accounting estimates, and in other instances, changes in the accounting estimates are reasonably likely to occur from period-to-period. Actual results could differ significantly from our estimates. Our future financial statements will be affected to the extent that our actual results materially differ from these estimates. For further information on all of our significant accounting policies, see Note 2, Summary of Significant Accounting Policies, to our consolidated financial statements included elsewhere in this proxy statement/prospectus.
We believe that policies associated with our revenue recognition, goodwill, impairment of long-lived assets, provision for income taxes, business combinationsproduct warranties, inventory excess and calculation of noncontrolling interestsobsolescence and redeemable noncontrolling interestsstock-based compensation have the greatest impact on our consolidated financial statements. Therefore, we consider these to be our critical accounting policies and estimates.
Revenue Recognition
We recognize revenue when control of goods or services is transferred to customers, in an amount that reflects the consideration we expect to be entitled to in exchange for those services.
Service Revenue – Solar Energy System Installations
The majority of our revenue is generated from the installation of solar energy systems. We identify two performance obligations, which include installation services and post-installation services, and we recognize
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revenue when control transfers to the customer, upon the completion of the installation and upon the solar energy system passes inspection by the authority having jurisdiction, respectively. We apply judgment in allocating the transaction price between the installation and post-installation performance obligations, based on the estimated costs to perform our services. Changes in such estimates could have a material impact on the timing of our revenue recognition.
Our contracts with customers generally contain a performance guarantee of system output, and we will issue payments to customers if output falls below contractually stated thresholds over the performance guarantee period, which is typically 10 years. We apply judgment in estimating the reduction in revenue associated with the performance guarantee, which is historically not material. However, due to the long-term nature of the guarantee, changes in future estimates could have a material impact on the estimate of our revenue reserve.
Service Revenue – Software Enhanced Services
We recognize revenue from software enhanced services, which include proposals generated from our HelioQuoteTM platform and design services performed using internally developed and external software applications. We contract with solar installers to generate proposals and we contract with solar sales entities to perform design services for their potential customers. Under each type of customer contract, we generate a fixed number of proposals or designs for the customer in the month the services are contracted. Contracts with customers are enforceable on a month-to-month basis and we recognize revenue each month based on the volume of services performed.
Product Revenue
We generate product revenue from the sale of solar panels direct to customers. We sign master purchase agreements with customers that are cancellable at any time, and contracts are evidenced by noncancellable purchase orders placed under the terms of the master purchase agreement. Each purchase order is a contract with a customer, which defines the price and quantity of panels purchased. We recognize revenue based on the contract price, net of incentives, such as volume-based rebates and price protection. We recognize revenue from the sale of solar panels when control is transferred to the customer, which is generally upon delivery to the customer’s premises, and our panel sales do not provide for a right of return.
Product Warranties
We typically provide a 10-year, warranty on our solar energy system installations, which provides assurance over the workmanship in performing the installation, including roof leaks caused by our performance. For solar
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panel sales, recognized prior to the Disposal Transaction we provide a 30-year warranty that the products will be free from defects in material and workmanship. We record a liability for estimated future warranty claims based on historical trends and new installations. To the extent that warranty claim behavior differs from historical trends, we may experience a material change in our warranty liability.
Inventory Excess and Obsolescence
Our inventory consists of completed solar energy systems and related components, which we classify as finished costs.goods. We record a reserve for inventory which is considered obsolete or in excess of anticipated demand based on a consideration of marketability and product life cycle stage, component cost trends, demand forecasts, historical revenues, and assumptions about future demand and market conditions. We apply judgment in estimating the excess and obsolete inventory, and changes in demand for our inventory components could have a material impact on our inventory reserve balance.
Stock-Based Compensation
We recognize stock-based compensation expense over the requisite service period on a straight-line basis for all stock-based payments that are expected to vest to employees, non-employees and directors, including
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grants of employee stock options and other stock-based awards. Equity-classified awards issued to employees, non-employees such as consultants and non-employee directors are measured at the grant-date fair value of the award. Forfeitures are recognized as they occur. For accounting purposes, we estimate grant-date fair value of stock options using the Black-Scholes option pricing model. The Black-Scholes option pricing model requires the input of highly subjective assumptions, including the fair value of the underlying common stock prior to the Business Combination, the expected term of the option the expected volatility of the price of our common stock and expected dividend yield. We determine these inputs as follows:
| • | Expected Term - Expected term represents the period that our stock-based awards are expected to be outstanding and is determined using the simplified method. |
| • | Expected Volatility - Expected volatility is estimated by studying the volatility of comparable public companies for similar terms. |
| • | Expected Dividend -The Black-Scholes valuation model calls for a single expected dividend yield as an input. We have never paid dividends and have no plans to pay dividends. |
| • | Risk-free Interest Rate - We derive the risk-free interest rate assumption from the U.S. Treasury’s rates for the U.S. Treasury zero-coupon bonds with maturities similar to those of the expected term of the awards being valued. |
| • | Forfeitures - We recognize forfeitures as they occur. |
If any assumptions used in the Black-Scholes option pricing model change significantly, stock-based compensation for future awards may differ materially compared to the awards granted previously. For the first quarterthirty-nine weeks ended October 1, 2023, stock-based compensation expense was $1.0 million.$4.2 million, of which $1.8 million, related to discontinued operations. As of April 2,October 1, 2023, we had approximately $11.3$16.6 million of total unrecognized stock-based compensation expense related to stock options, including stock options assumed in the acquisition of Solaria.
Common Stock Valuations
Prior to the Business Combination, our common stock was not publicly traded, therefore, our board of directors exercised significant judgment in determining the fair value of our common stock on the date of each option grant, with input from management, based on several objective and subjective factors. Factors considered by our board of directors include:
company performance, our growth rate and financial condition at the approximate time of the option grant;options.
the value of companies that we consider peers based on several factors including, but not limited to, similarity to us with respect to industry, business model, stage of growth, financial risk or other factors;
changes in our company and our prospects since the last time the board approved option grants and determined fair value;
amounts recently paid by investors for our redeemable convertible preferred stock in arm’s-length transactions;
the rights, preferences and privileges of our redeemable convertible preferred stock relative to those of our common stock;
the likelihood of achieving a liquidity event, such as an initial public offering or sale of all or a portion of our company;
future financial projections; and
valuations completed near the time of the grant.
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Since our inception, we have prepared valuations in a manner consistent with the method outlined in the AICPA Practice Guide, Valuation of Privately-Held-Company Equity Securities Issued as Compensation. Certain of these valuations relied on a fundamental analysis of the business, using a discounted cash flow model, to derive an estimate of our total equity. The estimated equity value was then allocated to each class of equity, based on the respective rights and preferences, using an Option-Pricing Methodology, or OPM. Certain other valuations relied on recent transactions in our preferred and/or common stock. For dates near a recent preferred stock financing, we assessed the value of common stock implied by the price paid for the preferred, primarily using an OPM to backsolve the common stock value.
We believe that we have used reasonable methodologies, approaches and assumptions consistent with the AICPA Practice Guide, Valuation of Privately-Held-Company Equity Securities Issued as Compensation, to determine the fair value of our common stock. We have reviewed key factors and events between each date below and have determined that the combination of the factors and events described above reflect a true measurement of the fair value of our common stock over an extended period.
Business Combinations, Including Intangible Assets, and Goodwill
The results of the acquisition of Solaria are included in our consolidated financial statements from the date of the acquisition. Purchase accounting results in assets and liabilities of the acquired business being recorded at their estimated fair values on the acquisition date, which may be considered preliminary and subject to adjustment during the measurement period, which is up to one year from the acquisition date. Any excess consideration over the fair value of assets acquired and liabilities assumed is recognized as goodwill.
We perform valuations of assets acquired and liabilities assumed and allocate the purchase price to the respective assets and liabilities. Determining the fair value of assets acquired and liabilities assumed requires significant judgment and estimates, including the selection of valuation methodologies, estimates of future revenue, costs and cash flows, discount rates, royalty rates and selection of comparable companies. We engage the assistance of third-party valuation specialists in concluding fair value measurements in connection with determining fair values of assets acquired and liabilities assumed in a business combination. The resulting fair values and useful lives assigned to acquisition-related intangible assets impact the amount and timing of future amortization expense.
These estimates are inherently uncertain and unpredictable, and if different estimates were used the purchase price for the acquisition could be allocated to the acquired assets and liabilities differently from the allocation that we have made. In addition, unanticipated events and circumstances may occur, which may affect the accuracy or validity of such estimates, and if such events occur, we may be required to record a charge against the value ascribed to an acquired asset, an increase in the amounts recorded for assumed liabilities, or an impairment of some or all of the goodwill.
Goodwill recognized in connection with our 2022 acquisition was $119.4 million. We are integrating the Solaria business into our existing operations and therefore, it is included in our single reporting unit.
Based upon the date of acquisition of our goodwill on November 4, 2022, we concluded that the estimated fair value of our reporting unit significantly exceeded its carrying value.
The largest identified intangible asset recognized was customer relationships. We determined a fair value of $24.7 million using a multi-period excess earning and estimated useful lives of 22 years.
We evaluate our intangible assets for indications of impairment whenever events or changes in circumstances indicate that the carrying value may not be recoverable. Our intangible assets consist of trademarks, developed technology and customer relationships. Factors that could trigger an impairment analysis include significant under-performance relative to historical or projected future operating results, significant changes in the manner of our use of the acquired assets or the strategy for our overall business or significant
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negative industry or economic trends. If this evaluation indicates that the value of the intangible asset may be impaired, we assess the likelihood of recoverability of the net carrying value of the asset over its remaining useful life. If this assessment indicates that the intangible asset is not recoverable, based on the estimated undiscounted future cash flows of the technology or customer relationships over its remaining useful life, we reduce the net carrying value of the related intangible asset to an estimated fair value.
Recent Accounting Pronouncements
A discussion of recently issued accounting standards applicable to Complete SolarSolaria is described in Note 2, Summary of Significant Accounting Policies in the Notes to Consolidated Financial Statements and in Note 2, Summary of Significant Accounting Policies.Policies in the Notes to Unaudited Condensed Consolidated Financial Statements.
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Results of Operations
Thirteen weeks ended April 2,October 1, 2023 compared to three months ended March 31,September 30, 2022
The following table sets forth our unaudited statements of operations data for the thirteen weeks ended April 2,October 1, 2023 and the three months ended March 31,September 30, 2022, respectively. We have derived this data from our unaudited condensed consolidated financial statements included elsewhere in this prospectus. This information should be read in conjunction with our unaudited condensed consolidated financial statements and related notes included elsewhere in this prospectus. The results of historical periods are not necessarily indicative of the results of operations for any future period.
(In thousands) | Thirteen Weeks Ended April 2, 2023 | Three Months Ended March 31, 2022 | $ Change | % Change | ||||||||||||||||||||||||||||
Product revenues | $ | 18,721 | $ | — | $ | 18,721 | 100 | % | ||||||||||||||||||||||||
Service revenue | 16,677 | 20,302 | (3,625 | ) | (18 | %) | ||||||||||||||||||||||||||
(in thousands) | Thirteen Weeks Ended October 1, 2023 | Three Months Ended September 30, 2022 | $ Change | % Change | ||||||||||||||||||||||||||||
Revenues | $ | 24,590 | $ | 12,260 | $ | 12,330 | 101 | % | ||||||||||||||||||||||||
Cost of revenues(1) | 18,354 | 8,266 | 10,088 | 122 | % | |||||||||||||||||||||||||||
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Total revenues | 35,398 | 20,302 | 15,096 | 74 | % | |||||||||||||||||||||||||||
Cost of product revenues(1) | 19,489 | — | 19,489 | 100 | % | |||||||||||||||||||||||||||
Cost of service revenues(1) | 13,818 | 13,410 | 408 | 3 | % | |||||||||||||||||||||||||||
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Total cost of revenue | 33,307 | 13,410 | 19,897 | 148 | % | |||||||||||||||||||||||||||
Gross profit | 2,091 | 6,892 | (4,801 | ) | (70 | %) | 6,236 | 3,994 | 2,242 | 56 | % | |||||||||||||||||||||
Gross margin % | 6 | % | 34 | % | (28 | %) | ||||||||||||||||||||||||||
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Sales commissions | 5,677 | 7,114 | (1,437 | ) | (20 | %) | 8,755 | 3,572 | 5,183 | 145 | % | |||||||||||||||||||||
Sales and marketing(1) | 3,549 | 1,470 | 2,079 | 141 | % | 2,214 | 1,604 | 610 | 38 | % | ||||||||||||||||||||||
General and administrative(1) | 13,098 | 2,012 | 11,086 | 551 | % | 6,345 | 2,027 | 4,318 | 213 | % | ||||||||||||||||||||||
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Total operating expenses | 22,324 | 10,596 | 11,728 | 111 | % | 17,314 | 7,203 | 10,111 | 140 | % | ||||||||||||||||||||||
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Loss from operations | (20,233 | ) | (3,704 | ) | (16,529 | ) | 446 | % | (11,078 | ) | (3,209 | ) | (7,869 | ) | 245 | % | ||||||||||||||||
Interest expense(2) | (3,611 | ) | (706 | ) | (2,905 | ) | 411 | % | (1,902 | ) | (941 | ) | (961 | ) | 102 | % | ||||||||||||||||
Interest income | 8 | — | 8 | 100 | % | 9 | — | 9 | — | |||||||||||||||||||||||
Other income (expense), net(3) | 317 | 3,205 | (2,888 | ) | (90 | )% | (38,003 | ) | 4 | (38,007 | ) | * | ||||||||||||||||||||
|
|
|
|
|
|
| ||||||||||||||||||||||||||
Loss before income taxes | (23,519 | ) | (1,205 | ) | (22,314 | ) | 1,852 | % | ||||||||||||||||||||||||
Provision for income taxes | 5 | (1 | ) | 6 | (600 | %) | ||||||||||||||||||||||||||
Loss from continuing operations before taxes | (50,974 | ) | (4,146 | ) | (46,828 | ) | * | |||||||||||||||||||||||||
Income tax benefit (provision) | 1 | — | 1 | — | ||||||||||||||||||||||||||||
|
|
|
| |||||||||||||||||||||||||||||
Net loss from continuing operations | (50,973 | ) | (4,146 | ) | (46,827 | ) | * | |||||||||||||||||||||||||
Loss on discontinued operations, net of tax | (155,909 | ) | — | (155,909 | ) | * | ||||||||||||||||||||||||||
|
|
|
|
|
|
| ||||||||||||||||||||||||||
Net loss | $ | (23,514 | ) | $ | (1,206 | ) | $ | (22,308 | ) | 1,850 | % | $ | (206,882 | ) | $ | (4,146 | ) | $ | (202,736 | ) | * | |||||||||||
|
|
|
|
|
|
| ||||||||||||||||||||||||||
| * | Percentage change not meaningful |
44
| (1) | Includes stock-based compensation expense as |
(In thousands) | Thirteen Weeks Ended April 2, 2023 | Three Months Ended March 31, 2022 | ||||||||||||||
Cost of sales | $ | 11 | $ | 3 | ||||||||||||
| Thirteen Weeks Ended October 1, 2023 | Three Months Ended September 30, 2022 | |||||||||||||||
Cost of revenues | $ | 20 | $ | 1 | ||||||||||||
Sales and marketing | 168 | 18 | 143 | 37 | ||||||||||||
General and administrative | 843 | 27 | 1,416 | 47 | ||||||||||||
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|
| |||||||||||||
Total stock-based compensation expense | $ | 1,022 | $ | 48 | $ | 1,579 | $ | 85 | ||||||||
|
|
|
| |||||||||||||
| (2) | Includes interest expense to related party of |
42
| (3) |
|
Product Revenues
Total product revenues for the thirteen weeks ended April 2, 2023 was $18.7 million, all of which is attributable to the November 2022 acquisition of Solaria.
Service Revenues
We disaggregate our service revenues based on the following types of services:services (in thousands):
(In thousands) | Thirteen Weeks Ended April 2, 2023 | Three Months Ended March 31, 2022 | $ Change | % Change | ||||||||||||||||||||||||||||
| Thirteen Weeks Ended October 1, 2023 | Three Months Ended September 30, 2022 | $ Change | % Change | |||||||||||||||||||||||||||||
Solar energy system installations | $ | 15,843 | $ | 19,728 | $ | (3,885 | ) | (20 | %) | $ | 23,915 | $ | 11,120 | $ | 12,795 | 115 | % | |||||||||||||||
Software enhanced services | 834 | 574 | 260 | 45 | % | 675 | 1,140 | (465 | ) | (41 | )% | |||||||||||||||||||||
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| ||||||||||||||||||||||||||||||
Total service revenues | $ | 16,677 | $ | 20,302 | $ | (3,625 | ) | (18 | %) | |||||||||||||||||||||||
Total revenue | $ | 24,590 | $ | 12,260 | $ | 12,330 | 101 | % | ||||||||||||||||||||||||
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|
| ||||||||||||||||||||||||||||||
Revenues from solar energy system installations for the thirteen weeks ended April 2,October 1, 2023 was $15.8$23.9 million compared to $19.7$11.1 million for the three months ended March 31,September 30, 2022. The decreaseincrease in solar energy system installation revenues of $3.9$12.8 million iswas primarily due to a decreasean increase in the volume of solar energy system installations, driven largely by unusual inclement California weather during the first quarter of 2023, partially offset byas well as an increase in average selling price of solar energy system installations.
Revenues from software enhanced services for the thirteen weeks ended April 2,October 1, 2023 was $.8$0.7 million compared to $0.6$1.1 million for the three months ended March 31,September 30, 2022. The increasedecrease of $0.5 million was the result of a shift in software enhanced services revenues is primarily due to increased sales and marketing for proposal and design services.focus towards solar energy installations.
Cost of Product Revenues
Cost of product revenues for the thirteen weeks ended April 2,October 1, 2023 was $19.5 million, all of which is attributable to the November 2022 acquisition of Solaria.
Cost of Service Revenues
Cost of service revenues for the thirteen weeks ended April 2, 2023 was $13.8$18.4 million compared to $13.4$8.3 million for the three months ended March 31,September 30, 2022. The increase in cost of service revenues of $0.4$10.1 million, or 122%, was primarily due to the increase in revenue of 101%, coupled with rising costs period over period, partially offset byassociated with supply chain constraints, and a smallersmall increase in excess and obsolete inventory reserves during the thirteen weeks ended April 2, 2023 as compared to the three months ended March 31, 2022.reserves.
45
Gross ProfitMargin
Gross margin decreased 28%8% year over year, from 34%33% for the three months ended March 31,September 30, 2022 to 6%25% for the thirteen weeks ended April 2,October 1, 2023. The decrease in gross margin iswas primarily dueattributed to the increase in productincreasing cost of revenues as a result of the acquisition of Solaria, which has lower margins than service revenues, and the impact of rising costs associated with service revenues.described above.
Sales Commissions
Sales commissions for the thirteen weeks ended April 2,October 1, 2023 decreased by $1.4was $8.8 million or 20%, compared to $3.6 million for the three months ended March 31,September 30, 2022. The decrease in commissions isincrease of $5.2 million, or 145%, was primarily due to the diversificationincrease in revenue of our sales partner channels to deliver greater services and capture more contribution margin by reducing sales commissions.101%.
Sales and Marketing
Sales and marketing expense for the thirteen weeks ended April 2,October 1, 2023 increased by $2.1$0.6 million, or 141%38%, compared to the three months ended March 31,September 30, 2022. The increase is attributable to an increase of $0.3 million in related to office and operating related expenses, an increase of $0.1 million in travel related expenses, an increase of $0.1 million in stock-based compensation expenses due to options issued during the acquisitionthirteen weeks ended October 1, 2023, and an increase of Solaria$0.1 million in November 2022.outside services, offset by decrease in payroll of $0.1 million.
43
General and Administrative
General and administrative costs for the thirteen weeks ended April 2,October 1, 2023 increased by $11.1$4.3 million, or 551%213%, compared to the three months ended March 31,September 30, 2022. The increase was primarily attributed to $9.1increase in payroll of $1.7 million, increase of $1.0 million in generalstock-based compensation expenses due to options and administrativeRSUs issued in the thirteen weeks ended October 1, 2023, increase in travel costs associated with the acquisition of Solaria$0.5 million, increase in November 2022, along with additionaloffice occupancy related costs of $0.5 million, and increases in bad debt expense of $1.9 millioncontractors and outside services costs of $0.1$0.4 million related to the deSPAC transaction.Mergers.
Interest Expense
Interest expense for the thirteen weeks ended April 2,October 1, 2023 increased by $2.9$1.0 million, or 411%102%, compared to the three months ended March 31,September 30, 2022. The increase was primarily attributed to accretion$0.5 million of $2.2 million and the amortization of issuance costs of $0.6 millioninterest related to long term debt acquired as part of the acquisition of Solaria in CS Solis LLC that occurred in FebruaryNovember 2022, which was retained upon the divestiture from the business, as well as an increase of 2022, and a $0.1$0.3 million increase in interest expense related to the 2022 Convertible Notes.convertible notes and long-term debt in CS Solis for the thirteen weeks ended October 1, 2023.
Other Income (Expense), Net
Other income (expense), net for the thirteen weeks ended April 2,October 1, 2023 decreasedincreased by $2.9$38.0 million or 90%, compared to the three months ended March 31,September 30, 2022. The decreaseincrease was primarily attributed to $3.2an increase of $35.5 million prior year conversion costsin other expense related to the issuance of our convertiblecommon stock in connection with the FPAs, the loss on extinguishment of debt in CS Solis of $10.3 million, an increase of $6.7 million in other expense associated with the change in fair value of the FPAs, and SAFE agreementsan increase of $2.4 million driven by Company’s issuance of bonus shares in March 2022 which did not occur in 2023, partiallyconnection with the Mergers, offset by $0.2 million increasedecreases in the fair value of Series D-7 Preferred Stock warrants.the Company’s warrant liabilities of $16.9 million.
Net Loss from Continuing Operations
As a result of the factors discussed above, our net loss from continuing operations for the thirteen weeks ended April 2,October 1, 2023 was $23.5$51.0 million, an increase of $22.3$46.8 million, or 1,850%, as compared to a net loss from continuing operations of $1.2$4.1 million for the three months ended September 30, 2022.
Loss of Discontinued Operations, Net of Tax
As a result of the disposition of the Solaria business as described above, we recognized a loss on discontinued operations of $155.9 million for the thirteen weeks ended October 1, 2023. Loss on discontinued operations was comprised of revenues of $3.8 million, offset by cost of revenues of $4.1 million, selling and marketing expenses of $2.4 million, general and administrative expenses of $5.7 million, and impairment of goodwill and intangible assets assigned to Solaria of $119.4 million and $28.1 million, respectively.
Thirty-nine weeks ended October 1, 2023 compared to nine months ended September 30, 2022
The following table sets forth our unaudited statements of operations data for the thirty-nine weeks ended October 1, 2023 and the nine months ended September 30, 2022, respectively. We have derived this data from our unaudited condensed consolidated financial statements included elsewhere in this prospectus. This information should be read in conjunction with our unaudited condensed consolidated financial statements and
44
related notes included elsewhere in this prospectus. The results of historical periods are not necessarily indicative of the results of operations for any future period.
(In thousands) | Thirty-Nine Weeks Ended October 1, 2023 | Nine Months Ended September 30, 2022 | $ Change | % Change | ||||||||||||
Revenues | $ | 66,887 | $ | 48,974 | $ | 17,913 | 37 | % | ||||||||
Cost of revenues(1) | 51,788 | 33,792 | 17,996 | 53 | % | |||||||||||
|
|
|
|
|
|
|
| |||||||||
Gross profit | 15,099 | 15,182 | (83 | ) | (1 | %) | ||||||||||
Gross margin % | 23 | % | 31 | % | ||||||||||||
Operating expenses: | ||||||||||||||||
Sales commissions | 23,221 | 15,694 | 7,527 | 48 | % | |||||||||||
Sales and marketing(1) | 5,216 | 4,607 | 609 | 13 | % | |||||||||||
General and administrative(1) | 22,965 | 6,194 | 16,771 | 271 | % | |||||||||||
|
|
|
|
|
|
|
| |||||||||
Total operating expenses | 51,402 | 26,495 | 24,907 | 94 | % | |||||||||||
|
|
|
|
|
|
|
| |||||||||
Loss from operations | (36,303 | ) | (11,313 | ) | (24,990 | ) | 221 | % | ||||||||
Interest expense(2) | (8,870 | ) | (2,672 | ) | (6,198 | ) | 232 | % | ||||||||
Interest income | 26 | — | 26 | — | ||||||||||||
Other income (expense), net(3) | (28,302 | ) | 3,180 | (31,482 | ) | * | ||||||||||
|
|
|
|
|
|
|
| |||||||||
Loss from continuing operations before income taxes | (73,449 | ) | (10,805 | ) | (62,644 | ) | 580 | % | ||||||||
Income tax benefit (provision) | 1 | (4 | ) | 5 | (125 | %) | ||||||||||
|
|
|
|
|
|
|
| |||||||||
Net loss from continuing operations | (73,448 | ) | (10,809 | ) | (62,639 | ) | * | |||||||||
Loss on discontinued operations, net of tax | (168,458 | ) | — | (168,458 | ) | * | ||||||||||
|
|
|
|
|
|
|
| |||||||||
Net loss | $ | (241,906 | ) | $ | (10,809 | ) | $ | (237,097 | ) | * | ||||||
|
|
|
|
|
|
|
| |||||||||
| * | Percentage change not meaningful |
| (1) | Includes stock-based compensation expense as follows: |
(In thousands) | Thirty-Nine Weeks ended October 1, 2023 | Nine Months Ended September 30, 2022 | ||||||
Cost of sales | $ | 51 | $ | 6 | ||||
Sales and marketing | 337 | 91 | ||||||
General and administrative | 1,933 | 120 | ||||||
|
|
|
| |||||
Total stock-based compensation expense | $ | 2,321 | $ | 217 | ||||
|
|
|
| |||||
| (2) | Includes interest expense to related party of $0.4 million and $0.1 million during the thirty-nine weeks ended October 1, 2023 and the nine months ended September 30, 2022, respectively. |
| (3) | Includes other income (expense), net from related parties of $36.9 million and $1.4 million during the thirty-nine weeks ended October 1, 2023 and the nine months ended September 30, 2022, respectively. |
45
Revenues
We disaggregate our revenues based on the following types of services:
(In thousands) | Thirty-Nine Weeks ended October 1, 2023 | Nine Months Ended September 30, 2022 | $ Change | % Change | ||||||||||||
Solar energy system installations | $ | 64,511 | $ | 46,214 | $ | 18,297 | 40 | % | ||||||||
Software enhanced services | 2,376 | 2,760 | (384 | ) | (14 | %) | ||||||||||
|
|
|
|
|
| |||||||||||
Total service revenues | $ | 66,887 | $ | 48,794 | $ | 17,913 | 37 | % | ||||||||
|
|
|
|
|
| |||||||||||
Revenues from solar energy system installations for the thirty-nine weeks ended October 1, 2023 was $64.5 million compared to $46.2 million for the nine months ended September 30, 2022. The increase in solar energy system installation revenues of $18.3 million, or 40%, was primarily due to an increase in the volume of solar energy systems installations, a portion of which related to the fulfillment of delayed installations experienced in the first quarter of 2023 due to unusual inclement California weather, as well as an increase in average selling price of solar energy system installations.
Revenues from software enhanced services for the thirty-nine weeks ended October 1, 2023 was $2.4 compared to $2.8 million for the nine months ended September 30, 2022. The decrease of $0.4 million was the result of a shift in focus towards solar energy installations.
Cost of Revenues
Cost of revenues for the thirty-nine weeks ended October 1, 2023 was $51.8 million compared to $33.8 million for the nine months ended September 30, 2022. The increase in cost of revenues of $18.0 million, or 53%, was primarily due to the increase in revenues of 37%, coupled with rising costs associated with supply chain constraints.
Gross Margin
Gross margin decreased 8% year over year, from 31% for the nine months ended September 30, 2022 to 23% for the thirty-nine weeks ended October 1, 2023. The decrease in gross margin is primarily attributed to increasing cost of revenues as described above.
Sales Commissions
Sales commissions for the thirty-nine weeks ended October 1, 2023, increased by $7.5 million, or 48%, compared to the nine months ended September 30, 2022. The increase in sales commissions is primarily due to the increase in solar system installation revenue of 40%.
Sales and Marketing
Sales and marketing expense for the thirty-nine weeks ended October 1, 2023 increased by $0.6 million, or 13%, compared to the nine months ended September 30, 2022. The increase is primarily attributable to an increase of $0.4 million in office and operating related expense, increase of $0.2 million in stock-based compensation expenses due to options issued in the thirty-nineteen weeks ended October 1, 2023, an increase of $0.2 million in outside services, and an increase of $0.1 million in travel related expenses, offset by decrease in payroll of $0.4 million.
46
General and Administrative
General and administrative costs for the thirty-nine weeks ended October 1, 2023 increased by $16.8 million, or 271%, compared to the nine months ended September 30, 2022. The increase was primarily attributed to increases in contractors and outside services costs of $6.6 million related to the Business Combination, increase in payroll of $3.9 million, an increase in bad debt expense of $3.4 million, increase of $1.8 million in stock-based compensation expenses due to options and RSUs issued, and increase in office occupancy related costs of $1.1 million for the thirty-nine weeks ended October 1, 2023.
Interest Expense
Interest expense for the thirty-nine weeks ended October 1, 2023 increased by $6.2 million, or 232%, compared to the nine months ended September 30, 2022. The increase was primarily attributed $4.6 million of interest related to debt acquired as part of the acquisition of Solaria in November 2022, which was retained upon the divestiture from the business, as well as an increase of $1.4 million in interest expense related to the convertible notes and long-term debt in CS Solis for the thirty-nine weeks ended October 1, 2023.
Other Income (Expense), Net
Other income (expense), net for the thirty-nine weeks ended October 1, 2023 increased by $31.5 million compared to the nine months ended September 30, 2022. The increase was primarily attributed to an increase of $35.5 million in other expense related to the issuance of common stock in connection with the FPAs, the loss on extinguishment of debt in CS Solis of $10.3 million, an increase of $6.7 million in other expense associated with the change in fair value of FPAs, an increase of $2.4 million driven by Company’s issuance of bonus shares in connection with the Business Combination, and $3.2 million related to the conversion of convertible debts and SAFE agreements in March 31,2022, offset by decreases in the change in fair value of the Company’s warrant liabilities of $26.5 million.
Net Loss from Continuing Operations
As a result of the factors discussed above, our net loss from continuing operations for the thirty-nine weeks ended October 1, 2023 was $73.4 million, an increase of $62.6 million, as compared to a net loss from continuing operations of $10.8 million for the nine months ended September 30, 2022.
Loss of Discontinued Operations, Net of Tax
As a result of the disposition of the Solaria business as described above, we recognized a loss on discontinued operations of $168.5 million for the thirty-nine weeks ended October 1, 2023. Loss on discontinued operations was comprised of revenues of $29.0 million, offset by cost of revenues of $30.6 million, selling and marketing expenses of $6.8 million, general and administrative expenses of $12.6 million, and impairment of goodwill and intangible assets assigned to Solaria of $119.4 million and $28.1 million, respectively.
47
Results of Operations
Year ended December 31, 2022 compared to year ended December 31, 2021
The following table sets forth our unaudited statements of operations data for the years ended December 31, 2022 and 2021, respectively. We have derived this data from our audited annual financial statements included
46
elsewhere in this prospectus. This information should be read in conjunction with our audited annual financial statements and related notes included elsewhere in this prospectus. The results of historical periods are not necessarily indicative of the results of operations for any future period.
| Years Ended December 31, | Years Ended December 31 | |||||||||||||||||||||||||||||||
| (In thousands) | 2022 | 2021 | $ Change | % Change | 2022 | 2021 | $ Change | % Change | ||||||||||||||||||||||||
Product revenues | $ | 13,325 | $ | — | $ | 13,325 | 100 | % | ||||||||||||||||||||||||
Service revenue | 66,475 | 68,816 | (2,341 | ) | (3 | %) | ||||||||||||||||||||||||||
Revenues | $ | 66,475 | $ | 68,816 | $ | (2,341 | ) | (3 | %) | |||||||||||||||||||||||
Cost of revenues(1) | 46,647 | 40,123 | 6,524 | 16 | % | |||||||||||||||||||||||||||
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|
| ||||||||||||||||||||||||||
Total revenues | 79,800 | 68,816 | 10,984 | 16 | % | |||||||||||||||||||||||||||
Cost of product revenues(1) | 12,847 | — | 12,847 | 100 | % | |||||||||||||||||||||||||||
Cost of service revenues(1) | 46,647 | 40,123 | 6,524 | 16 | % | |||||||||||||||||||||||||||
|
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| ||||||||||||||||||||||||||||||
Total cost of revenue | 59,494 | 40,123 | 19,371 | 48 | % | |||||||||||||||||||||||||||
Gross profit | 20,306 | 28,693 | (8,387 | ) | (29 | %) | 19,828 | 28,693 | (8,865 | ) | (31 | %) | ||||||||||||||||||||
Gross margin % | 25 | % | 42 | % | (17 | %) | ||||||||||||||||||||||||||
Operating expenses: | ||||||||||||||||||||||||||||||||
Sales commissions | 21,195 | 25,061 | (3,866 | ) | (15 | %) | 21,195 | 25,061 | (3,866 | ) | (15 | %) | ||||||||||||||||||||
Sales and marketing(1) | 7,471 | 5,179 | 2,292 | 44 | % | 6,156 | 5,179 | 977 | 19 | % | ||||||||||||||||||||||
General and administrative(1) | 14,251 | 5,780 | 8,471 | 147 | % | 13,634 | 5,780 | 7,854 | 136 | % | ||||||||||||||||||||||
|
|
|
|
|
|
| ||||||||||||||||||||||||||
Total operating expenses | 42,917 | 36,020 | 6,897 | 19 | % | 40,985 | 36,020 | 4,965 | 14 | % | ||||||||||||||||||||||
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|
|
|
|
|
| ||||||||||||||||||||||||||
Loss from operations | (22,611 | ) | (7,327 | ) | (15,284 | ) | 209 | % | (21,157 | ) | (7,327 | ) | (13,830 | ) | 189 | % | ||||||||||||||||
Interest expense(2) | (4,986 | ) | (1,712 | ) | (3,274 | ) | 191 | % | (4,986 | ) | (1,712 | ) | (3,274 | ) | 191 | % | ||||||||||||||||
Interest income | 5 | — | 5 | 100 | % | 5 | — | 5 | 100 | % | ||||||||||||||||||||||
Other income (expense), net(3) | (1,858 | ) | (240 | ) | (1,618 | ) | 674 | % | (1,858 | ) | (240 | ) | (1,618 | ) | * | |||||||||||||||||
|
|
|
|
|
|
| ||||||||||||||||||||||||||
Loss before income taxes | (29,450 | ) | (9,279 | ) | (20,171 | ) | 217 | % | ||||||||||||||||||||||||
Provision for income taxes | (27 | ) | (3 | ) | (24 | ) | 800 | % | ||||||||||||||||||||||||
Loss from continuing operations before income taxes | (27,996 | ) | (9,279 | ) | (18,717 | ) | 202 | % | ||||||||||||||||||||||||
Income tax benefit (provision) | (27 | ) | (3 | ) | (24 | ) | * | |||||||||||||||||||||||||
|
|
|
| |||||||||||||||||||||||||||||
Net loss from continuing operations | (28,023 | ) | (9,282 | ) | (18,741 | ) | 202 | % | ||||||||||||||||||||||||
Loss on discontinued operations, net of tax | (1,454 | ) | — | (1,454 | ) | * | ||||||||||||||||||||||||||
|
|
|
|
|
|
| ||||||||||||||||||||||||||
Net loss | $ | (29,477 | ) | $ | (9,282 | ) | $ | (20,195 | ) | 218 | % | $ | (29,477 | ) | $ | (9,282 | ) | $ | (20,195 | ) | * | |||||||||||
|
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|
|
|
| ||||||||||||||||||||||||||
| * | Percentage change not meaningful |
| (1) | Includes stock-based compensation expense as follows (in thousands): |
| Years Ended December 31, | Years Ended December 31, | |||||||||||||||
| 2022 | 2021 | 2022 | 2021 | |||||||||||||
Cost of sales | $ | 22 | $ | 19 | $ | 22 | $ | 19 | ||||||||
Sales and marketing | 232 | 68 | 168 | 68 | ||||||||||||
General and administrative | 649 | 113 | 243 | 113 | ||||||||||||
|
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|
| |||||||||||||
Total stock-based compensation expense | $ | 903 | $ | 200 | $ | 433 | $ | 200 | ||||||||
|
|
|
| |||||||||||||
| (2) | Includes interest expense to related parties of $0.3 million and $0.7 million during the year ended December 31, 2022 and 2021, respectively |
| (3) | Includes other income from related parties of $1.4 million, |
Product Revenues
Total product revenues for the year ended December 31, 2022 was $13.3 million, all of which is attributable to the November 2022 acquisition of Solaria.
4748
Service Revenues
The Company disaggregates its service revenues based on the following types of services:
| Years Ended December 31, | Change $ | Change % | Years Ended December 31, | Change $ | Change % | |||||||||||||||||||||||||||
| (In thousands) | 2022 | 2021 | 2022 | 2021 | ||||||||||||||||||||||||||||
Solar energy system installations | $ | 62,896 | $ | 66,958 | $ | (4,062 | ) | (6 | %) | $ | 62,896 | $ | 66,958 | $ | (4,062 | ) | (6 | %) | ||||||||||||||
Software enhanced services | 3,579 | 1,858 | 1,721 | 93 | % | 3,579 | 1,858 | 1,721 | 93 | % | ||||||||||||||||||||||
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|
| ||||||||||||||||||||||||||||||
Total service revenues | $ | 66,475 | $ | 68,816 | $ | (2,341 | ) | (3 | %) | |||||||||||||||||||||||
Total revenues | $ | 66,475 | $ | 68,816 | $ | (2,341 | ) | (3 | %) | |||||||||||||||||||||||
|
|
| ||||||||||||||||||||||||||||||
Revenues from solar energy system installations for the year ended December 31, 2022 was $62.9 million compared to $67.0 million for the year ended December 31, 2021. The decrease in solar energy system installation revenues of $4.1 million is primarily due to constraints on the supply of solar panels available to purchase for fulfillment of our customer contracts. These supply constraints resulted from economic sanctions such as the Dec 21, 2021 Uyghur Forced Labor Prevention Act and supplier reactions to the Auxin Solar Tariff Petition. Without the necessary equipment to fulfill customer contracts, our projects were pushed into subsequent quarters.
Revenues from software enhanced services for the year ended December 31, 2022 was $3.6 million compared to $1.9 million for the year ended December 31, 2021. The increase in software enhanced services revenues is primarily due to increased sales and marketing for proposal and design services.
Cost of Product Revenues
Cost of product revenues for the year ended December 31, 2022 was $12.8 million, all of which is attributable to the November 2022 acquisition of Solaria.
Cost of Service Revenues
Cost of service revenues for the year ended December 31, 2022 was $46.6 million compared to $40.1 million for the year ended December 31, 2021. The increase of cost of service revenues of $6.5 million was primarily driven by an increase in the reserve for excess and obsolete inventory of $3.6 million, an increase in warranty costs of $0.9 million and the effect of increasing materials prices for our solar energy systems. The increase in the reserve was a result of a substantial build up in inventory on hand commencing in early 2022 in response to global supply chain constraints, a general product shift relating to market demand for higher voltage solar panels, and certain inventory management adjustments associated with inventories maintained by inactive installers.
Gross ProfitMargin
Gross margin decreased 17%12% year over year, from 42% for the year ended December 31, 2021 to 25%30% for the year ended December 31, 2022. The decrease in margin is primarily due to increased product revenues as a result of the acquisition of Solaria, which has lower margins than service revenues, and the increases in cost of service revenuerevenues as described above.
Sales Commissions
Sales commission decreased by $3.8 million, or 15%, from $25.0 million in the year ended December 31, 2021 to $21.2 million in the year ended December 31, 2022. The decrease in commissions is due to the diversification of our sales partner channels to deliver greater services and value it is able to capture more contribution margin by reducing sales commissions.
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Sales and Marketing
Sales and marketing expense increased by $2.3$1.0 million, or 44%19%, from $5.2 million in the year ended December 31, 2021 to $7.5$6.2 million in the year ended December 31, 2022. The increase was due to a $1.4 millionan increase in personnel-related costs, a $0.7 million increase in outside sales and marketing services associated with marketing our proposal and design services, and a $0.1 million increase in stock-based compensation expense. Of these cost increases, $1.3 million is attributable to the acquisition of Solaria in November 2022.costs.
General and Administrative
General and administrative expense increased by $8.5$7.9 million, or 147%136%, from $5.8 million in the year ended December 31, 2021 to $14.3$13.6 million in the year ended December 31, 2022. The increase was primarily attributed
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outside services for finance and legal costs of $3.5 million related to the deSPAC transaction,Mergers, an increase in bad debt expense of $1.7 million, an increase in payroll related costs of $1.3 million, an increase in office and occupancy related costs due to new offices for $0.8 million, an increase in, and an increase in stock-based compensation for $0.5 million, and an increase in outside service costs associated with maintaining our internal use software of $0.4 million. Of these cost increases, $3.0 million is attributable to acquisition of Solaria in November 2022.
Interest Expense
Interest expense increased by $3.3 million, or 191%, from $1.7 million in the year ended December 31, 2021 to $5.0 million in the year ended December 31, 2022. The increase was primarily attributed to accretion of $2.4 million and the amortization of issuance costs of $1.2 million related to long term debt in CS Solis LLC that occurred in February of 2022 and a $0.2 million increase in interest expense related to the 2022 Convertible Notes. The increase was offset by a $0.8 million reduction in interest expense, as we repaid or converted debt instruments in February 2022, which were outstanding during 2021.
Other Income (Expense), Net
Other income (expense), net increased by $1.6 million, or 674%, from $0.2 million in the year ended December 31, 2021 to $1.8 million in the year ended December 31, 2022. The increase was primarily attributed to an increase in the fair value of preferred stock warrants of $5.2 million, partially offset by a gain on the extinguishment of our convertible debt and safe agreements in March 2022 of $3.2 million.
Net lossLoss from Continuing Operations
As a result of the factors discussed above, our net loss for the year ended December 31, 2022 was $29.5$28.0 million, an increase of $20.2$18.7 million, or 218%202%, as compared to $9.3 million for the year ended December 31, 2021.
Loss of Discontinued Operations, Net of Tax
49As a result of the disposition of the Solaria business as described above, we recognized a loss on discontinued operations of $1.5 million for the year ended December 31, 2022. Loss on discontinued operations was comprised of revenues of $13.3 million, offset by cost of revenues of $12.9 million, selling and marketing expenses of $1.3 million and general and administrative expenses of $0.6 million.
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Year ended December 31, 2021 compared to year ended December 31, 2020
The following table sets forth our statement of operations data for 2021 and 2020. We have derived this data from our audited annual financial statements included elsewhere in this prospectus. This information should be read in conjunction with our audited annual financial statements and related notes included elsewhere in this prospectus. The results of historical periods are not necessarily indicative of the results of operations for any future period.
| Years Ended December 31, | Years Ended December 31 | |||||||||||||||||||||||||||||||
| (In thousands) | 2021 | 2020 | $ Change | % Change | 2021 | 2020 | $ Change | % Change | ||||||||||||||||||||||||
Product revenues, net | $ | — | $ | — | $ | — | — | |||||||||||||||||||||||||
Service revenue, net | 68,816 | 29,378 | 39,438 | 134 | % | |||||||||||||||||||||||||||
Revenues | $ | 68,816 | $ | 29,378 | $ | 39,438 | 134 | % | ||||||||||||||||||||||||
Cost of revenues(1) | 40,123 | 17,097 | 23,026 | 135 | % | |||||||||||||||||||||||||||
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Total revenues | 68,816 | 29,378 | 39,438 | 134 | % | |||||||||||||||||||||||||||
Cost of product revenue(1) | — | — | — | — | ||||||||||||||||||||||||||||
Cost of service revenue(1) | 40,123 | 17,097 | 23,026 | 135 | % | |||||||||||||||||||||||||||
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Total cost of revenue | 40,123 | 17,097 | 23,026 | 135 | % | |||||||||||||||||||||||||||
Gross profit | 28,693 | 12,281 | 16,412 | 134 | % | 28,693 | 12,281 | 16,412 | 134 | % | ||||||||||||||||||||||
Gross margin % | 42 | % | 42 | % | (0 | %) | ||||||||||||||||||||||||||
Operating expenses: | ||||||||||||||||||||||||||||||||
Sales commissions | 25,061 | 10,410 | 14,651 | 141 | % | 25,061 | 10,410 | 14,651 | 141 | % | ||||||||||||||||||||||
Research and engineering(1) | — | — | — | — | ||||||||||||||||||||||||||||
Sales and marketing(1) | 5,179 | 3,185 | 1,994 | 63 | % | 5,179 | 3,185 | 1,994 | 63 | % | ||||||||||||||||||||||
General and administrative(1) | 5,780 | 3,801 | 1,979 | 52 | % | 5,780 | 3,801 | 1,979 | 52 | % | ||||||||||||||||||||||
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Total operating expenses | 36,020 | 17,396 | 18,624 | 107 | % | 36,020 | 17,396 | 18,624 | 107 | % | ||||||||||||||||||||||
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Loss from operations | (7,327 | ) | (5,115 | ) | (2,212 | ) | 43 | % | (7,327 | ) | (5,115 | ) | (2,212 | ) | 43 | % | ||||||||||||||||
Interest expense(2) | (1,712 | ) | (523 | ) | (1,189 | ) | 227 | % | (1,712 | ) | (523 | ) | (1,189 | ) | 227 | % | ||||||||||||||||
Interest income | — | — | — | — | — | — | — | — | ||||||||||||||||||||||||
Other income (expense), net | (240 | ) | (41 | ) | (199 | ) | 485 | % | (240 | ) | (41 | ) | (199 | ) | 485 | % | ||||||||||||||||
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Loss before income taxes | (9,279 | ) | (5,679 | ) | (3,600 | ) | 63 | % | ||||||||||||||||||||||||
Provision for income taxes | (3 | ) | (3 | ) | — | 0 | % | |||||||||||||||||||||||||
Loss from continuing operations before income taxes | (9,279 | ) | (5,679 | ) | (3,600 | ) | 63 | % | ||||||||||||||||||||||||
Income tax benefit (provision) | (3 | ) | (3 | ) | — | 0 | % | |||||||||||||||||||||||||
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Net loss | $ | (9,282 | ) | $ | (5,682 | ) | $ | (3,600 | ) | 63 | % | |||||||||||||||||||||
Net loss from continuing operations | $ | (9,282 | ) | $ | (5,682 | ) | $ | (3,600 | ) | 63 | % | |||||||||||||||||||||
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| (1) | Includes stock-based compensation expense as follows: |
| Years Ended December 31, | ||||||||
(In thousands) | 2021 | 2020 | ||||||
Cost of sales | $ | 19 | $ | 8 | ||||
Sales and marketing | 68 | 37 | ||||||
General and administrative | 113 | 64 | ||||||
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Total stock-based compensation expense | $ | 200 | $ | 109 | ||||
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| (2) | Includes interest expense to related party of $0.7 million and $0.2 million during the years ended December 31, 2021 and 2020, respectively. |
Revenues
Total revenue for the year ended December 31, 2021 was $68.8 million which compares with total revenue of $29.4 million for the year ended December 31, 2020. The increase in 2021 revenue is significantly impacted by the change in the business coming out of the COVID-19 pandemic. Solar revenue (including the installation
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and completion of solar systems) increased by $37.0 million. The increase is driven primarily by the volume of transactions in 2021. Other revenues, including design services and proposal services, increased by $1.6 million, the increase in revenues is driven by greater internal focus on performing such services in 2021.
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Cost of Revenues and Gross Profit
Cost of revenues for the year ended December 31, 2021 was $40.1 million compared to $17.1 million for the year ended December 31, 2020. The 135% increase in cost of revenue for the year ended December 31, 2021 over for the year ended December 31, 2020 grew proportionately with the increase in revenue during the same comparable periods, as well as slight increase in raw material costs.
Gross Profit
Our gross profits for the year ended December 31, 2021 increased by $16.4 million, or 134%, as compared to the year ended December 31, 2020. Gross margins of 42% remained flat year-over-year.
Sales Commission
Sales commissions for the year ended December 31, 2021 increased by $14.7 million, or 141%, compared to the year ended December 31, 2020. The increase in sales commissions expenses is primarily attributable to a corresponding increase of 134% in service revenue.
Sales and Marketing
Sales and marketing expense for the year ended December 31, 2021 increased by $2.0 million, or 63%, compared to the year ended December 31, 2020. The increase was primarily attributable to an increase of $1.4 million in personnel-related expenses as a result of increased headcount in our sales and marketing organization, $0.2 million increase in office supplies, and $0.1 million increase in due and subscription expense.
General and Administrative
General and administrative expense for the year ended December 31, 2021 increased by $2.0 million, or 52%, compared to the year ended December 31, 2020. The increase was primarily attributable to an increase of $0.5 million in accounting, legal, and other contract labor costs, $0.3 million in personnel-related expenses, as a result of increased headcount, $0.2 million increase in office and occupancy related costs, $0.2 million increase in customer support, $0.2 million increase in amortization of internal software, a $0.1 million increase in stock-based compensation expense related to additional stock-based awards granted in fiscal year 2022, and a $0.1 million increase in recruitment and reallocation expenses.
Interest Expense
Interest expense for the year ended December 31, 2021 increased by $1.2 million, or 227%, compared to the year ended December 31, 2020. The increase is attributable to a $0.6 million increase in interest expense related to amortization of debt discount primarily due to the 2020-A and 2021-A notes, a $0.3 million increase in interest expense related to our SVB operating loan, and a $0.3 million increase in financing costs associated with a 2021 short-term bridge loan.
Other Income (Expense), Net
Other income (expense), net for the year ended December 31, 2021 increased by $0.2 million, or 485%, compared to the year ended December 31, 2020. The increase was primarily due to increase of $1.3 million related to the fair value measurement of the SAFEs, $0.3 million related to revaluation of derivative liabilities of 2019-A 2020-A and 2021-A notes, and $0.3 million related to fair value remeasurement of Series B and Series C preferred stock warrants. These expenses were partially offset by other income relating to PPP loan forgiveness of approximately $1.7 million.
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Net Loss from Continuing Operations
As a result of the factors discussed above, our net loss from continuing operations for the year ended December 31, 2021 was $9.3 million, an increase of $3.6 million, or 63%, as compared to $5.7 million for the year ended December 31, 2020.
Liquidity and Capital Resources
Since our inception, we have financed our operations primarily through sales of equity securities, issuance of convertible notes and cash generated from operations. Our principal uses of cash in recent periods have been funding our operations and investing in capital expenditures. As of April 2,October 1, 2023, our principal sources of liquidity were cash and cash equivalents of $3.3$1.7 million, which were held for working capital purposes. Our cash equivalents are on deposit with major financial institutions. Our cash position raises substantial doubt regarding our ability to continue as a going concern for twelve months following the issuance of the condensed consolidated financial statements. To meet
We will receive the proceeds from any cash exercise of any Warrants. The aggregate amount of proceeds could be up to $254.1 million if all the Warrants are exercised for cash. However, to the extent the Warrants are exercised on a “cashless basis,” the amount of cash we would receive from the exercise of the Warrants will decrease. The Private Warrants and Working Capital Warrants may be exercised for cash or on a “cashless basis.” The Public Warrants and the Merger Warrants may only be exercised for cash provided there is then an effective registration statement registering the shares of common stock issuable upon the exercise of such warrants. If there is not a then-effective registration statement, then such warrants may be exercised on a “cashless basis,” pursuant to an available exemption from registration under the Securities Act. We expect to use any such proceeds for general corporate and working capital purposes, which would increase our short-term financing needs,liquidity. As of December 21, 2023, the price of our common stock was $1.52 per share. We believe the likelihood that warrant holders will exercise their Warrants, and therefore the amount of cash proceeds that we have raised $11.0 million in convertible note financing and an additional $14.1 million in other debt financing inwould receive, is dependent upon the thirteen weeks ended April 2, 2023 withmarket price of our common stock. If the potentialmarket price for our common stock is less than $11.50 per share, we believe warrant holders will be unlikely to raise an additional convertible notes to meet short-term liquidity requirements.
Although weexercise. We do not have significant purchase commitments, we believe that our existing capital resources may not be sufficientexpect to rely on the cash exercise of Warrants to fund our operationsoperations. Instead, we intend to rely on other sources of cash discussed elsewhere in this prospectus to continue to fund our operations.
The Resale Securities represent a substantial percentage of our shares of outstanding commons stock. The number of Resale Securities exceeds the number of shares of common stock constituting our public float, and represents approximately 190% of our public float and approximately 105% of outstanding common stock (after giving effect to the issuance of shares of common stock upon exercise of the Warrants) as of December 21, 2023. Any of these resales, or the perception in the near term without regard to the transaction contemplated within this proxy statement/prospectus. To the extentmarket that the transaction contemplatedholders of a large number of shares intend to resell shares, could cause the market price of our shares of common stock to decline or increase the volatility in the market price of our shares of common stock.
Given the substantial number of shares of common stock being registered for potential resale by the selling securityholders pursuant to this proxy statement/prospectus, does not occur,the sale of Resale Securities by the selling securityholders, or the perception in the market that the selling securityholders intend to sell a large number of shares, could increase the volatility of the market price of common stock or result in a significant decline in the public trading price of our common stock.
While we mayreceived cash of $19.8 million from the completion of the Business Combination in July 2023, and despite results of the closing of the Disposal Transaction and our recent cost cutting measures, additional capital infusion will be requirednecessary in order to seek additional equity or debt financing. While there can be no assurances, we anticipate raising additional required capital from newfund planned operations while meeting obligations as they come due. It is currently unlikely that warrant holders will exercise their warrants based on the current price of our common stock, and existing investors. In the event that additional financing is required from outside sources, wesources. We may not be able to raise it on terms acceptable to us or at all. If we are unablenot able to raisesecure adequate additional capitalfunding when desired, we may be required to reduce planned spending, which could have a material adverse effect on our operations.
Debt Financings
2022 Convertible Notes
In connection withneeded, the Business Combination Agreement, we raised the 2022 Convertible Notes in November 2022, December 2022, and February 2023 with additional investors, with an aggregate purchase price of $23.0 million. Additionally, as part of the acquisition of Solaria, we assumed a note from an existing investor for $6.7 million, which was modified as of the close of the business combination to contain the same terms as the other 2022 Convertible Notes. We did not incur significant issuance costs associated with the 2022 Convertible Notes. The 2022 Convertible Notes converted to common shares of Complete Solaria, Inc. at the close of the deSPAC transaction. The 2022 Convertible Notes accrued interest at a rate of 5% per annum. Immediately prior to the closing of the expected deSPAC transaction, the 2022 Convertible Notes converted into that number of shares of common stock of Complete Solaria equal to (x) the principal amount together with all accrued interest of the 2022 Convertible Notes divided by 0.75, divided by (y) the price of a share of common stock of Complete Solaria used to determine the conversion ratio in the Business Combination Agreement. As of April 2, 2023 and December 31, 2022, the 2022 Convertible Notes accrued $0.5 million and $0.2 million in interest, respectively. As of April 2, 2023 and December 31, 2022, the carrying values of the 2022 Convertible Notes represent the only balances in the convertible notes, net, noncurrent and convertible notes, net due to related parties, noncurrent financial statement captions.Company
Upon the Closing of the Business Combination, the Sponsor transferred to the holders of 2022 Convertible Notes a pro rata percentage of (i) 500,000 shares of Complete Solaria Common Stock in exchange for payment by such investor to FACT of $0.0001 per share and (ii) 363,285 FACT Private Placement Warrants held by the Sponsor. In addition, holders of 2022 Convertible Notes are entitled to receive, on a pro rata basis, up to an additional (i) 250,000 shares of Complete Solaria Common Stock, at a purchase price of $0.0001 per share, if within the first 12 months following the Closing Date, the volume weighted average price of Complete Solaria Common Stock equals or exceeds $12.50 per share for a period of at least 20 days out of 30 consecutive days on
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which the shares of Complete Solaria Common Stock are traded on a stock exchange,will need to reevaluate its operating plan and (ii) 250,000 shares of Complete Solaria Common Stock, at a purchase price of $0.0001 per share, if within the first 12 months following the Closing Date, the volume weighted average price of Complete Solaria Common Stock equalsmay be forced to make reductions in spending, extend payment terms with suppliers, liquidate assets where possible, or exceeds $15.00 per share for a period of at least 20 days out of 30 consecutive days on which the shares of Complete Solaria Common Stock are traded on a stock exchange.suspend or curtail planned programs or cease operations entirely.
Debt Financings
2018 Bridge Notes
In December 2018, Solaria Corporation issued senior subordinated convertible secured notes (“2018 Notes”Notes”) totaling approximately $3.4 million in exchange for cash. The notes bear interest at the rate of 8% per annum and the investors are entitled to receive twice of the face value of the notes at maturity. The 2018 Notes were assumed in the acquisition by Complete Solaria and are secured by substantially all of the assets of Complete Solaria. In 2021, the 2018 Notes were amended extending the maturity date to December 13, 2022. In connection with the 2021 amendment, Solaria had issued warrants to purchase shares of Series E-1 redeemable convertible preferred stock of Solaria. The warrants were exercisable immediately in whole or in part at and expire on December 13, 2031. As part of the merger with Complete Solar, all the outstanding warrants issued to the lenders were assumed by the parent company, Complete Solaria.
In December 2022, we entered into an amendment to the 2018 Notes extending the maturity date from December 13, 2022 to December 13, 2023. In connection with the amendment, the notes will continue to bear interest at 8% per annum and are entitled to an increased repayment premium from 110% to 120% of the principal and accrued interest at the time of repayment.
The Company concluded that the modification was a troubled debt restructuring as the Company was experiencing financial difficulty and the amended terms resulted in a concession to the Company. As the future undiscounted cash payments under the modified terms exceeded the carrying amount of the Solaria Bridge Notes on the date of modification, the modification was accounted for prospectively. The incremental repayment premium is being amortized to interest expense using the effective interest rate method. As of April 2,October 1, 2023 and December 31, 2022, the carrying value of the 2018 Notes was $10.1$10.7 million and $9.8 million, respectively. Interest expense recognized for the thirteenthirty-nine weeks ended April 2,October 1, 2023 was $0.3$1.0 million.
SCI Term Loan and Revolver Loan
In October 2020, Solaria entered into a loan agreement (“Loan Agreement”Agreement”) with Structural Capital Investments III, LP (“SCI”) to obtain. The Loan Agreement with SCI comprises of two facilities, a term loan (the “Term Loan”) and a revolving loan (the “Revolving Loan”) for $5.0 million each with a maturity date of $5.0 million.October 31, 2023. Both the Term Loan and the Revolving Loan were fully drawn upon closing. The debtTerm Loan was assumed by Complete Solaria uponrepaid prior to the acquisition of Solaria by Complete Solar and recorded at its fair value of $5.0 million. was not included in the business combination.
The Revolving Loan has a term of thirty-six months, principal repayments at the end of the term and an annual interest rate of 7.75% or Prime rate plus 4.5%, whichever is higher. The loan is due and payable as of October 31, 2023. Interest expense recognized for the thirteenthirty-nine weeks ended April 2,October 1, 2023 was $0.1$0.5 million. In October 2023, the Company entered into an Assignment and Acceptance Agreement whereby Structural Capital Investments III, LP assigns the SCI debt to Kline Hill Partners Fund LP, Kline Hill Partners IV SPV LLC, Kline Hill Partners Opportunity IV SPV LLC, and Rodgers Massey Revocable Living Trust for a total purchase price of $5.0 million, as discussed in Note 22 – Subsequent Events of the accompanying notes to the unaudited condensed consolidated financial statements.
Secured Credit Facility
In December 2022, we entered into a secured credit facility agreement with Kline Hill Partners IV SPV LLC and Kline Hill Partners Opportunity IV SPV LLC. The secured credit facility agreement, which matures in April 2023, allows us to borrow up to 70% of the net amount of our eligible vendor purchase orders with a maximum amount of $10.0 million at any point in time. The purchase orders are backed by relevant customer sales orders
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which serve as a collateral. The amounts drawn under the secured credit facility may be reborrowed provided that the aggregate borrowing does not exceed $20.0 million. The repayment under the secured credit facility is the borrowed amount multiplied by 1.15x if repaid within 75 days and borrowed amount multiplied by 1.175x if repaid after 75 days. We may prepay any borrowed amount without premium or penalty. Under the original terms, the secured credit facility agreement was due to mature in April 2023. We are in the process of amending the secured credit facility agreement to extend its maturity date.
At April 2,October 1, 2023, the outstanding net debt amounted to $10.4$11.7 million, including accrued financing cost of $2.8$4.1 million, compared to December 31, 2022, where the outstanding net debt amounted to $5.6 million, including accrued financing cost of $0.1 million.
Long-Term Debt in CS Solis
In February 2022, we received an investment from CRSEF Solis Holdings, LLC (“CRSEF”). The investment was made pursuant to a subscription agreement, under which CRSEF contributed $25.6 million in exchange for 100 Class B Membership Units of CS Solis. The Class B Membership Units are mandatorily redeemable by us on the three-year anniversary of the effective date of the CS Solis amended and restated LLC agreement. The Class B Membership Units accrue interest that is payable upon redemption at a rate of 10.5% which is accrued as an unpaid dividend, compounded annually, and subject to increases in the event we declare any dividends. In July 2023, we amended the debt of with CSREF as part of the closing of the Business Combination. The modification did not change the interest rate. The modification accelerates the redemption date of the investment, which was previously February 14, 2025, and is March 31, 2024 subsequent to the modification. As of April 2,October 1, 2023 and December 31, 2022, we have recorded a liability of $26.3$29.2 million and
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$25.2 zero, respectively, included in short-term debt in CS Solis on the unaudited condensed consolidated balance sheets. As of October 1, 2023 and December 31, 2022, we have recorded a liability of zero and $25.2 million, respectively, included in net long-term debt in CS Solis on the unaudited condensed consolidated balance sheets. For the thirteenthirty-nine weeks ended April 2,October 1, 2023, we have recorded accretion of the liability as interest expense of $0.80$2.7 million, and we have recorded the amortization of issuance costs as interest expense of $0.3$0.7 million.
Cash Flows for the ThirteenThirty-Nine Weeks Ended April 2,October 1, 2023 and the ThreeNine Months Ended March 31,September 30, 2022
The following table summarizes Complete Solaria’s cash flows from operating, investing, and financing activities for the thirteenthirty-nine weeks ended April 2,October 1, 2023 and the threenine months ended March 31,September 30, 2022:
(in thousands) | Thirteen Weeks Ended April 2, 2023 | Three Months Ended March 31, 2022 | ||||||
Net cash used in operating activities | $ | (16,278 | ) | $ | (7,446 | ) | ||
Net cash used in investing activities | $ | (486 | ) | $ | (304 | ) | ||
Net cash provided by financing activities | $ | 15,554 | $ | 14,993 | ||||
(in thousands) | Thirty-Nine Weeks Ended October 1, 2023 | Nine Months Ended September 30, 2022 | ||||||
Net cash used in operating activities from continuing operations | $ | (47,152 | ) | $ | (17,197 | ) | ||
Net cash used in investing activities from continuing operations | $ | (1,534 | ) | $ | (1,048 | ) | ||
Net cash provided by financing activities from continuing operations | $ | 45,575 | $ | 13,704 | ||||
Cash Flows from Operating Activities
Net cash used in operating activities from continuing operations of $16.3$47.2 million for the thirteenthirty-nine weeks ended April 2,October 1, 2023 was primarily due to the net loss from continuing operations, net of $23.5tax of $73.4 million and net cash outflows of $0.4$18.8 million from changes in our operating assets and liabilities, adjusted for non-cash charges of $7.7$45.1 million. Non-cash charges primarily consisted of $35.5 million for the issuance of common stock in connection with FPAs, $10.3 million loss on CS Solis debt extinguishment, $6.7 million change in fair value of FPAs, $4.3 million change in allowance for credit losses, $4.0 million interest expense, $2.5 million
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accretion of long-term debt in CS Solis, $2.4 million related to the issuance of bonus common stock shares in connection with the Business Combination $2.3 million of stock-based compensation expense, and $2.1 million relating to the change in reserve for excess and obsolete inventory, partially offset by a decrease in the fair value of warrant liabilities of $26.3 million. The main drivers of net cash inflows derived from the changes in operating assets and liabilities were related to an increase in accounts receivable, net of $11.8 million, an increase in prepaid expenses and other current assets of $8.3 million, an increase in inventory of $3.9 million, and a decrease in deferred revenue of $0.8 million, partially offset by an increase in accounts payable of $4.4 million, an increase in accrued expenses and other current liabilities of $1.6 million and a decrease in other noncurrent assets of $1.1 million.
Net cash used in operating activities from continuing operations of $17.2 million for the nine months ended September 30, 2022 was primarily due to the net loss from continuing operations, net of tax of $10.8 million and net cash outflows of $10.6 million from changes in operating assets and liabilities, adjusted for non-cash charges of $4.2 million. The main drivers of net cash outflows derived from the changes in operating assets and liabilities were related to an increase in accounts receivableinventory of $3.2$5.0 million, an increase in prepaid expenses and other current assetsaccounts receivable, net of $2.0$3.0 million, a decrease in accrued expenses and other current liabilities of $1.2$2.1 million and a decrease in deferred revenuewarranty provision, noncurrent of $1.2 million, partially offset by decrease in inventories of $5.3 million, and an increase in accounts payable of $2.7$0.6 million. Non-cash charges primarily consisted of $2.8 million change in allowance for doubtful accounts, interest expense primarily related to long-term debt in CS Solis of $1.2 million, stock-based compensation expense of $1.0 million, depreciation and amortization expense of $1.0 million,a change in reserve for obsolete inventory of $0.8$3.1 million, and accretion of long-term debt in CS Solis of $0.8$2.6 million, $0.7 million change in allowance for credit losses, and $0.5 million in depreciation and amortization expense, partially offset by a gain on extinguishment of convertible notes and SAFEs of $3.2 million.
NetThe net increase in cash, used in operating activitiescash equivalents and restricted cash from discontinued operations of $7.4$0.2 million for the three monthsthirty-nine weeks ended March 31, 2022October 1, 2023 was entirely attributable to net cash provided by operating activities from discontinued operations. This increase was primarily due to the net loss from discontinued operations, net of tax of $168.5 million, adjusted for non-cash charges of $152.9 million and net cash outflowsinflows of $6.4$15.8 million from changes in our operating assets and liabilities,liabilities. Non-cash charges primarily consisted of impairment of goodwill of $119.4 million, impairment of intangible assets of $28.1 million, depreciation and the net lossamortization expense of $1.2$2.4 million, adjustedstock-based compensation expense of $1.8 million and a $1.1 million change in allowance for non-cash charges of $0.2 million.credit losses. The main drivers of net cash outflowsinflows derived from the changes in operating assets and liabilities were related to an increasea decrease in accounts receivable, net of $3.3$8.2 million an increase in inventory of $2.0 million, and a decrease in accrued expenses and other current liabilities of $1.7$6.0 million, a decrease of long-term deposits of $2.8 million and a decrease in inventories of $2.3 million, partially offset by a decrease of $2.9 million in prepaid expenses and other current assets of $1.8 million. Non-cash charges primarily consisted of non-cash equity expense of $3.2 million, partially offset by change in reserve for obsolete inventory of $2.1 million.accounts payable.
Cash Flows from Investing Activities
Net cash used in investing activities of $1.5 million for the thirty-nine weeks ended October 1, 2023 was primarily due to additions to internal-use-software.
Net cash used in investing activities of $0.5$1.0 million for the thirteen weeks ended April 2, 2023, was primarily due to additions to internal-use-software.
Net cash used in investing activities of $0.3 million for the threenine months ended March 31,September 30, 2022 was due to additions to internal-use-software.
Cash Flows from Financing Activities
Net cash provided by financing activities of $45.6 million for the thirty-nine weeks ended October 1, 2023 was primarily due to $21.3 million in net proceeds from the issuance of convertible notes, $19.8 million in proceeds from the Business Combination and PIPE Financing and $14.1 million in net proceeds from the issuance of notes payable, partially offset by repayment of notes payable of $9.7 million.
Net cash provided by financing activities of $15.6$13.7 million for the thirteen weeks ended April 2, 2023 was primarily due to proceeds from the issuance of notes payable, net of $14.1 million, and proceeds from the issuance of the 2022 Convertible Notes of $11.0 million, partially offset by repayment of notes payable of $9.6 million.
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Net cash provided by financing activities of $15.0 million for the threenine months ended March 31,September 30, 2022 was primarily due to net proceeds from the issuance of long-term debt in CS Solis of $25.0 million, partially offset by repayment of notes payable of $9.5 million, payments for issuance of Series D redeemable convertible preferred stock of $1.3 million and the repayment of convertible notes payable to related parties of $0.5 million.
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Cash Flows for the Years Ended December 31, 2022 and 2021
The following table summarizes Complete Solaria’s cash flows from operating, investing, and financing activities for the years ended December 31, 2022 and 2021:
| Years Ended December 31, | ||||||||
| (in thousands) | 2022 | 2021 | ||||||
Net cash used in operating activities | $ | (31,513 | ) | $ | (10,995 | ) | ||
Net cash provided by (used in) investing activities | $ | 3,335 | $ | (1,063 | ) | |||
Net cash provided by financing activities | $ | 31,191 | $ | 16,895 | ||||
| Years Ended December 31, | ||||||||
| (in thousands) | 2022 | 2021 | ||||||
Net cash used in operating activities from continuing operations | $ | (25,217 | ) | $ | 10,995 | |||
Net cash used in investing activities from continuing operations | $ | 3,335 | $ | (1,063 | ) | |||
Net cash provided by financing activities from continuing operations | $ | 31,191 | $ | 16,895 | ||||
Cash Flows from Operating Activities
Net cash used in operating activities from continuing operations of $31.5$25.2 million for the year ended December 31, 2022 was primarily due the net loss from continuing operations of $29.5$28.0 million, and net cash outflows of $17.0$11.2 million from changes in our operating assets and liabilities, adjusted for non-cash charges of $15.0$13.8 million. The main drivers of net cash outflows derived from the changes in operating assets and liabilities were related to an increase in accounts receivable of $16.2$9.7 million, and an increase in inventories of $8.2$4.9 million, and an increasedecrease in prepaid expenses and other current assets of $1.1$1.6 million, partially offset by an increase in accounts as payable of $5.7$3.3 million and a decrease in prepaid expenses and other current assets of $3.3$1.2 million. Non-cash charges primarily consisted of $5.2 million change in the fair value of warrant liability, interest expense primarily related to long-term debt in CS Solis of $4.8 million, reserve for obsolete inventory of $3.6 million, increase in the allowance for doubtful accounts of $2.2$2.1 million, and depreciation and amortization expense of $1.2$0.6 million, partially offset by non-cash income recognized upon conversion of convertible notes and SAFE agreements of $3.2 million.
Net cash used in operating activities of $11.0 million for the year ended December 31, 2021 was primarily due to the net loss of $9.3 million, and net cash outflows of $5.4 million from changes in our operating assets and liabilities, adjusted for non-cash charges of $3.7 million. The main drivers of net cash outflows derived from the changes in operating assets and liabilities were related to an increase in accounts receivable of $4.8 million, an increase in inventory of $3.0 million and an increase in prepaid expenses and other current assets of $3.0 million, partially offset by an increase in accounts payable of $3.0 million, and an increase in accrued expenses and other current liabilities of $2.9 million. Non-cash charges primarily consisted of non-cash interest expense of $1.3 million, change in fair value of convertible notes of $1.3 million, change in reserve for obsolete inventory of $0.8 million, depreciation and amortization of $0.5 million, change in the allowance of allowance of doubtful accounts of $0.4 million, non-cash lease expense of $0.3 million, and change in fair value of warrant liabilities of $0.3 million, partially offset by $1.8 million in forgiveness of PPP loan.
Cash Flows from Investing Activities
Net cash provided by investing activities of $3.3 million for the year ended December 31, 2022, was primarily due to cash acquired in the acquisition of Solaria of $4.8 million, partially offset by additions to internal-use-software of $1.5 million.
Net cash used in investing activities of $1.1 million for the year ended December 31, 2021, was due to additions to internal-use-software.
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Cash Flows from Financing Activities
Net cash provided by financing activities of $31.2 million for the year ended December 31, 2022 was primarily due to net proceeds from issuance of long-term debt in CS Solis of $25.0 million, proceeds from the issuance of the 2022 Convertible Notes of $12.0 million, and proceeds from the issuance of notes payable of $5.5 million. This was partially offset by the repayment of notes payable of $9.5 million, payments for issuance costs
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of Series D redeemable convertible preferred shares of $1.4 million, and repayment of convertible notes payable to related parties of $0.5 million.
Net cash provided by financing activities of $16.9 million for fiscal year 2021 was primarily related to net proceeds from the issuance of notes payable of $7.2 million, the issuance of SAFE agreements of $5.0 million, issuance of our convertible promissory notes to related parties of $3.6 million and proceeds from the issuance of convertible promissory notes of $1.2 million.
Cash Flows for the Years Ended December 31, 2021 and 2020
The following table summarizes Complete Solaria’s cash flows from operating, investing, and financing activities for the years ended December 31, 2021 and 2020:
| Years Ended December 31, | ||||||||
| (in thousands) | 2021 | 2020 | ||||||
Net cash used in operating activities | $ | (10,995 | ) | $ | (6,189 | ) | ||
Net cash provided by (used in) investing activities | (1,063 | ) | (584 | ) | ||||
Net cash provided by financing activities | 16,895 | 6,355 | ||||||
| Years Ended December 31, | ||||||||
| (in thousands) | 2021 | 2020 | ||||||
Net cash used in operating activities from continuing operations | $ | (10,995 | ) | $ | (6,189 | ) | ||
Net cash used in investing activities from continuing operations | (1,063 | ) | (584 | ) | ||||
Net cash provided by financing activities from continuing operations | 16,895 | 6,355 | ||||||
Cash Flows from Operating Activities
Net cash used in operating activities of $11.0 million for the year ended December 31, 2021 was primarily due to the net loss of $9.3 million, and net cash outflows of $5.4 million from changes in our operating assets and liabilities, adjusted for non-cash charges of $3.7 million. The main drivers of net cash outflows derived from the changes in operating assets and liabilities were related to an increase in accounts receivable of $4.8 million, an increase in inventory of $3.0 million, and an increase in prepaid expenses and other current assets of $3.0 million, partially offset by an increase in accounts payable of $3.0 million and an increase in accrued expenses and other current liabilities of $2.9 million. Non-cash charges primarily consisted of non-cash interest expense of $1.3 million, change in fair value of convertible notes of $1.3 million, change in reserve for obsolete inventory of $0.8 million, depreciation and amortization of $0.5 million, change in the allowance of doubtful accounts of $0.4 million, non-cash lease expense of $0.3 million, and change in fair value of warrant liabilities of $0.3 million, partially offset by $1.8 million in forgiveness of PPP loan.
Net cash used in operating activities of $6.2 million for year ended December 31, 2020 was primarily related to our net loss of $5.6 million, and net cash outflows of $1.9 million provided by changes in our operating assets and liabilities, adjusted for non-cash charges of $1.3 million. The main drivers of net cash outflows were derived from the changes in operating assets and liabilities and were related to an increase in accounts receivable of $2.0 million, an increase in inventory of $1.3 million, a decrease in accounts payable of $1.1 million, an increase in prepaid expenses and other current assets of $0.9 million, partially offset by an increase in accrued expenses and other current liabilities of $2.4 million, and an increase in deferred revenue of $1.5 million. Non-cash charges primarily consisted of non-cash interest of $0.5 million, increase in the allowance for doubtful accounts of $0.3 million, and depreciation and amortization of $0.3 million.
Cash Flows from Investing Activities
Net cash used in investing activities of $1.1 million for the year ended December 31, 2021 was due to additions to internal-use software.
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Net cash used in investing activities of $0.6 million for fiscal year 2020 was due to additions to internal-use software.
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Cash Flows from Financing Activities
Net cash provided by financing activities of $16.9 million for the year ended December 31, 2021 was primarily related to net proceeds from the issuance of notes payable of $7.2 million, the issuance of SAFE agreements of $5.0 million, issuance of our convertible promissory notes to related parties of $3.6 million, and proceeds from the issuance of convertible promissory notes of $1.2 million.
Net cash provided by financing activities of $6.4 million for the year ended December 31, 2020 was primarily related to net proceeds from issuance of notes payable of $4.0 million, proceeds from the issuance of convertible promissory notes to related parties of $3.3 million, and proceeds from the issuance of convertible promissory notes of $0.7 million, partially offset by repayment of convertible notes of $1.5 million.
Proceeds from Warrants
We will not receive any of the proceeds from sales of Warrants, except with respect to amounts we may receive upon the cash exercise of the Warrants. Whether warrantholders will exercise their Warrants, and therefore the amount of cash proceeds we would receive upon exercise, is dependent upon the trading price of the common stock, the last reported sales price for which was $1.52 per share on December 21, 2023. Each Warrant is exercisable for one share of common stock at an exercise price of $11.50. Therefore, if and when the trading price of the common stock is less than $11.50 per share, we expect that warrantholders would not exercise their Warrants. To the extent the Warrants are exercised on a “cashless basis,” the amount of cash we would receive from the exercise of the Warrants will decrease. The Private Warrants and Working Capital Warrants may be exercised for cash or on a “cashless basis.” The Public Warrants and the Merger Warrants may only be exercised for cash provided there is then an effective registration statement registering the shares of common stock issuable upon the exercise of such warrants. If there is not a then-effective registration statement, then such warrants may be exercised on a “cashless basis,” pursuant to an available exemption from registration under the Securities Act.
We could receive up to an aggregate of approximately $254.1 million if all of the Warrants are exercised for cash, but we would only receive such proceeds if and when the warrantholders exercise their Warrants, which, based on the current trading price of our common stock, is unlikely unless there is a significant increase in the trading price of our common stock. The Warrants may not be, or remain, in the money during the period they are exercisable and prior to their expiration and, therefore, it is possible that the Warrants may not be exercised prior to their maturity, even if they are in the money, and as such, may expire worthless with minimal proceeds received by us, if any, from the exercise of the Warrants. To the extent that any of the Warrants are exercised on a “cashless basis,” we will not receive any proceeds upon such exercise. As a result, we do not expect to rely on the cash exercise of Warrants to fund our operations. Instead, we intend to rely on other sources of cash discussed elsewhere in this prospectus to continue to fund our operations.
Forward Purchase Agreements
On and around July 13, FACT entered into multiple forward purchase agreements with certain FPA Investors, pursuant to which FACT (now to Complete Solaria following the Closing) agreed to purchase in the aggregate, up to 5,618,488 shares of common stock then held by the FPA Investors (subject to certain conditions and purchase limits set forth in the forward purchase agreements). Pursuant to the terms of the forward purchase agreements, each FPA Investor further agreed not to redeem any of the FACT Class A Ordinary Shares owned by it at such time. The per price at which the FPA Investors have the right to sell the shares to us on the Maturity Date is not less than $5.00 per share.
If the FPA Investors hold some 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 is 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 expect that the FPA Investors will exercise this repurchase right with respect to such shares. In the event that we are required to repurchase these forward purchase
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agreement shares, or in the event that the forward purchase agreements are terminated the amount of cash arising from the Business Combination that would ultimately be available to fund our liquidity and capital resource requirements would reduce accordingly, which would adversely affect our ability to fund our growth plan in the manner we had contemplated when entering into the forward purchase agreements.
Off Balance Sheet Arrangements
As of the date of this proxy statement/prospectus, Complete Solaria does not have any off-balance sheet arrangements that have or are reasonably likely to have a current or future effect on our financial condition, changes in financial condition, revenues or expenses, results of operations, liquidity, capital expenditures, or capital resources that are material to investors. The term “off-balance sheet arrangement” generally means any transaction, agreement, or other contractual arrangement to which an entity unconsolidated with Complete Solaria is a party, under which it has any obligation arising under a guaranteed contract, derivative instrument, or variable interest or a retained or contingent interest in assets transferred to such entity or similar arrangement that serves as credit, liquidity, or market risk support for such assets.
Currently, Complete Solaria does not engage in off-balance sheet financing arrangements.
Emerging Growth Company Status
Section 102(b)(1) of the Jumpstart Our Business Startups Act of 2012, or the JOBS Act, exempts emerging growth companies from being required to comply with new or revised financial accounting standards until private companies are required to comply with the new or revised financial accounting standards. The JOBS Act provides that a company can choose not to take advantage of the extended transition period and comply with the requirements that apply to non-emerging growth companies, and any such election to not take advantage of the extended transition period is irrevocable.
Complete Solaria is an “emerging growth company” as defined in Section 2(a) of the Securities Act, and has elected to take advantage of the benefits of the extended transition period for new or revised financial accounting standards. Following the closing of the Merger, our Post-Combination Company will remain an emerging growth company until the earliest of (i) the last day of the fiscal year in which the market value of common stock that is held by non-affiliates exceeds $700 million as of the end of that year’s second fiscal quarter, (ii) the last day of the fiscal year in which we has total annual gross revenue of $1.235 billion or more during such fiscal year (as indexed for inflation), (iii) the date on which we have issued more than $1.0 billion in non-convertible debt in the prior three-year period, or (iv) December 31, 2025. Complete Solaria expects to continue to take advantage of the benefits of the extended transition period, although it may decide to early adopt such new or revised accounting standards to the extent permitted by such standards. This may make it difficult or impossible to compare our financial results with the financial results of another public company that is either not an emerging growth company or is an emerging growth company that has chosen not to take advantage of the extended transition period exemptions because of the potential differences in accounting standards used.
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Quantitative and Qualitative Disclosures About Market Risk
Complete Solaria’s operations expose Complete Solaria to a variety of market risks. Complete Solaria monitors and manages these financial exposures as an integral part of its overall risk management program.
Interest Rate Risk
We do not have significant exposure to interest rate risk that could affect the balance sheet, statement of operations, and the statement of cash flows, as we do not have any outstanding variable rate debt as of April 2,October 1, 2023.
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Concentrations of Credit Risk and Major Customers
Our customer base consists primarily of residential homeowners. We do not require collateral on our accounts receivable. Further, our accounts receivable are with individual homeowners and we are exposed to normal industry credit risks. We continually evaluate our reserves for potential credit losses and establish reserves for such losses.
As of April 2,October 1, 2023, five customers had outstanding balances that represented 21%, 19%, 16%, 15%, and 15%, respectively,one customer accounted for 10% or more of the total accounts receivable, net balance, compared to March 31,balance. As of September 30, 2022, as two customers had outstanding balances that represented 54%, andone customer accounted for 10%, or more of the total accounts receivable, net balance.
For the thirteen-week periodthirty-nine weeks ended April 2,October 1, 2023, three customers represented approximately 32%, 17%, and 11% of net revenues, respectively, compared to March 31, 2022, as one customer represented approximately 45%accounted for 10% or more of netthe total revenues. For the nine months ended September 30, 2022, two customers accounted for 10% or more of total revenues.
Recent Developments
SubsequentIn October 2023, the Company entered into an Assignment and Acceptance Agreement (“Assignment Agreement”), whereby Structural Capital Investments III, LP assigns the SCI debt to March 31, 2023, we issued additional 2022 Convertible Notes with an aggregateKline Hill Partners Fund LP, Kline Hill Partners IV SPV LLC, Kline Hill Partners Opportunity IV SPV LLC, and Rodgers Massey Revocable Living Trust for a total purchase price of $10.25$5.0 million. The Company has identified this as a related party transaction.
In October 2023, in connection with the Assignment Agreement, the Company also entered into the First Amendment to Warrant to Stock Purchase Agreements with the holders of the Series D-7 warrants. Pursuant to the terms of the agreement, the warrants to purchase 1,376,414 shares of Series D-7 preferred stock converted into warrants to purchase 656,630 shares of common stock (the “replacement warrants”). As a result of the warrant amendment, the Company reclassified the replacement warrants from equity to liability. The replacement warrants were remeasured to the fair value on the amendment effective date and the Company will record subsequent changes in fair value in other income (expense), net on the unaudited condensed consolidated statements of operations and comprehensive income (loss).
As noted above, in October 2023, we completed the sale of our solar panel business to Maxeon, pursuant to the terms of the Disposal Agreement.
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BUSINESS OF COMPLETE SOLARIA, INC.
Our Mission
Our mission is to deliver energy-efficient solutions to homeowners and small to medium size businesses that allow them to lower their energy bills while reducing their carbon footprint. With a strong technology platform, financing solutions, and aesthetically pleasing high-performance solar modules, Complete Solaria has created a unique, end-to-end offering that delivers a best-in-class customer experience. With installation partners in 47 states in the United States and 13 countries in Europe, Complete Solaria is building an international brand for solar energy. Complete Solaria’s relentless drive to expand the accessibility of solar energy is underpinned by its vision: to create a global society powered by the sun.
Business Overview
InComplete Solaria was formed in November 2022 through the merger of Complete Solar Inc. (“Complete Solar”) and The Solaria Corporation (“Solaria”) merged to form Complete Solaria. Complete Solaria combines two complementary businesses: Solaria, a seller of premium solar modules through a national network of installers, and Complete Solar, a residential solar sales and fulfillment company. The combination of these two companies establishes Complete Solaria as a full, renewable energy system operator with compelling customer offerings, advanced technology, financing solutions, and project fulfillment that enables Complete Solaria to sell more products across more geographies in the United States and Europe.
Solaria Overview
Founded in 2000, Solaria is a provider of premium residential solar modules. Solaria was one of the early innovators of next-generation solar modules and has more than 250 issued patents and pending patent applications. Solaria’s patented module layout connects solar cell strips into shingled, high density sub-strings and modules, eliminating gaps and busbars. This results in increased power output and reliability, better shade tolerance, and superb aesthetics. Solaria’s business model leverages asset-light manufacturing with third-party contract manufacturers, to produce its solar modules utilizing Solaria’s proprietary intellectual property. This scalable model produces Solaria’s differentiated solar modules but also limits total capital expenditures, enables Solaria to quickly expand its capacity to respond to changes in demand, and benefits from the cost structure of its partners, who operate at scales greater than one gigawatt of module manufacturing capacity. While Complete Solaria has one gigawatt of module manufacturing capacity distributed across its third-party manufacturers, this manufacturing capacity is not exclusively devoted to Complete Solaria. Complete Solaria’s contract manufacturers may produce products for other companies, provided that the manufacturers do not use Complete Solaria’s panel specifications or intellectual property when working with other parties.
Solaria’s aesthetically pleasing premium solar modules drive a strong brand and loyalty among solar installers, Solaria’s customers. Solaria sells its modules through distributers to a network of 1,000+ installers, called the Pro Partner Network (“PPN”), who in turn contract with residential customers to “go solar” using Solaria modules. The PPN is present in 47 states in the United States and 13 countries in Europe.
Complete Solar Overview
Founded in 2010, Complete Solar created a technology platform to offer clean energy products to homeowners by enabling a national network of sales partners and build partners. Complete Solar’sOur sales partners generate solar installation contracts with homeowners on behalf of Complete Solar.our behalf. To facilitate this process, Complete Solar provideswe provide the software tools, sales support financing products, and brand identity to its sales partners, making them competitive with national providers. This turnkey solution makes it easy for anyone to sell solar.
Complete Solar fulfills its We fulfill our customer contracts by engaging with local construction specialists. Complete Solar managesWe manage the customer experience and completescomplete all pre-construction activities prior to delivering build-ready projects including hardware, engineering plans, and building permits to its builder partners. Complete Solar managesWe manage and coordinatescoordinate this process through itsour proprietary HelioTrackTMHelioTrackTM software system.
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In addition to its core business, Complete Solar began selling design, proposal, and engineering services. Powered by its HelioQuoteTM software system. Complete SolarSolaria provides residential solar system designs, proposals, and CAD drawing sets to existing sales partners as well as other residential solar companies regardless of whether they participate as either sales partners or builder partners. In doing so, Complete SolarSolaria seeks to power the entire solar power industry.
Complete Solaria
The combined scalable operating platform of Solaria together with Complete Solar creates a number of unique advantages. First, Solaria’s PPN has the opportunity to become builder partners for Complete Solar, thereby enhancing Complete Solaria’s installation capacity and geographic coverage. Second, Solaria plans to increase its offerings to the PPN by bundling software, design, and engineering services with its premium hardware products for greater revenue and increased share of customer spending. Third, Complete Solar has more reliable access to high-quality Solaria modules at lower cost. Complete Solaria will control the end-to-end customer experience from hardware design and production, to sales and installation, long term system maintenance, and future product sales.
Revenue Model
Complete Solaria aligns its current products into three general categories: Solar System Sales Solar Module Sales, and Software Enhanced Services.
| • | Solar System Sales: Complete Solaria sells solar systems to homeowners and small commercial customers through third party sales partners. Complete Solaria manages every aspect of project management for those contracts before ultimately contracting with builder partners to complete the construction of the solar systems. This residential solar platform provides homeowners with simple pricing for solar energy that provides significant savings to traditional utility energy. Homeowners are given flexibility to choose from a wide array of system features and financing options that best meet their needs. By delivering the best matched products and a best-in-class customer experience, Complete Solaria establishes valuable customer relationships that can extend beyond the initial purchase of the solar energy system and provides the company with opportunities to offer additional products and services in the future. |
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| • | Software Enhanced Services: The HelioQuoteTM software system is provided to existing sales partners and other participants in the solar industry and powers our sales of residential solar designs, proposals, and engineering services. |
Certain future revenue opportunities may also exist for Complete Solaria, particularly for products or services promoted through the Pro Partner Network. One such product of particular interest to the company is a solar financing vehicle for consumers called a power purchase agreement, also known as a “PPA.” By partnering with a PPA provider such as Sunrun or Sunnova or by raising capital and administering an independent PPA program, Complete Solaria could potentially bundle its solar modules with the PPA financing that would then be sold through the Pro Partner Network to homeowners. Complete Solaria would earn a revenue and margin from the module sales as well as from the facilitation of the PPA. While the company currently offers PPAs from SunRun and other providers through its Solar System Sales revenue category, it does not currently have an agreement with any PPA providers to offer PPAs to or through the Pro Partner Network. Furthermore, the company does not have an executed agreement with any PPA investors to administer an independent PPA program.
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Technology Innovation
Since inception, Complete Solaria has continued to invest in a platform of services and tools to enable large scale operations for Sales and builder partners. The platform incorporates processes and software solutions that simplify and streamline design, proposals, and project management throughout the lifecycle of a residential solar project. The platform empowers new market entrants and smaller industry participants with its plug-and-play
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capabilities. The ecosystem Complete Solaria has built provides broad reach, positioning Complete Solaria for sustained and rapid growth through a capital efficient business model. The network of partners continues to expand today.
Differentiation and Operating Results
Delivering a differentiated customer experience is core to Complete Solaria’s strategy. It emphasizes a customized solution, including a design specific to each customer’s home and pricing configurations that typically drive both customer savings and value. Developing a trusted brand and providing a customized solar service offering resonates with customers who are accustomed to a traditional residential power market that is often overpriced and lacking in customer choice.
Financing Solutions
Complete Solaria provides financing solutions to its end customers through third-party lease providers, power purchase agreement providers and loan providers.
Customers may lease a Complete Solaria solar system. The lease provider will purchase the solar system and the property owner will rent the solar system in exchange for the electricity the system produces.
Through a power purchase agreement, a third-party developer installs, owns, and operates a solar system on a customer’s property. The customer then purchases the system’s electric output for a predetermined period. A power purchase agreement allows the customer to receive stable and often low-cost electricity with no upfront cost, while also enabling the owner of the system to take advantage of tax credits and receive income from the sale of electricity.
Lastly, loan providers offer Complete Solaria’s end customers a loan to purchase solar systems, and then the customers will pay off the loan over a period of time.
Our Strategy
Complete Solaria’s strategy focuses on growingproviding the software tools, sales support and brand identity to its revenues and expanding its margins by executing on the opportunities created from the merger of Complete Solar and Solaria. These opportunities are manifest in Complete Solaria’s three product categories: Solar System Sales, Solar Module Sales, and Software Enhanced Services.sales partners, making them competitive with national providers. This turnkey solution makes it easy for anyone to sell solar.
Solar System Sales
Solar System Sales are full systems sold to homeowners and small to medium sized commercial businesses through Complete Solaria’s Sales Partner channels and fulfilled and installed by Complete Solaria and its builder partners.
| • | Increase revenue by expanding installation capacity and developing new geographic markets through Solaria pro partners—Select Solaria pro partners will become builder partners who will install Complete Solaria systems resulting from sales generated by Complete Solaria’s sales partners. By leveraging this network of skilled builders, Complete Solaria aims to increase its installation capacity in its traditional markets and expand its offering into new geographies throughout the United States. This will enable greater sales growth in existing markets and create new revenue in expansion markets. |
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| • | Increase revenue and margin by engaging national-scale sales partners—Prior to the formation of Complete Solaria, Complete Solar operated in 16 states. By expanding operations nationally, Complete Solaria will be able to offer a turnkey solar solution to prospective sales partners with a national footprint. These include electric vehicle manufacturers, national home security providers, and real estate brokerages. Complete Solaria expects to create a consistent offering with a single execution process for such sales partners throughout their geographic territories. These national accounts have |
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unique customer relationships that will facilitate meaningful sales opportunities and low cost of acquisition to both increase revenue and improve margin. |
Solar Module Sales
Solar modules are sold to pro partners throughout the United States, who in turn contract with residential customers to build solar systems utilizing Complete Solaria modules.
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Software and Services
Software and services sales include access to Complete Solaria’s HelioQuoteTM sales proposal and system design software; proposal writing services that support field sales agents; and design, engineering, and permitting services that improve the operational effectiveness and cost efficiency of subscale solar companies. See “Increase revenue and margin by bundling software enhanced services with solar module sales” above. Complete Solaria believes the PPN would benefit from Complete Solaria’s software enhanced services offerings and is the ideal customer segment for Complete Solaria to grow these high margin offerings.
In support of Complete Solaria’s strategy to increase revenue and expand margin opportunities in its threetwo core products, Complete Solaria also considers the following activities to be key elements of its strategy:
| • | Expand Partnerships with Solar Partners, Strategic Partners, and Attractive New Market Participants. Complete Solaria’s platform of services and tools allows it to engage with a wide variety of solar industry partners, as well as new industry participants such as retailers and service providers who would like to offer solar to new and existing customers. Complete Solaria plans to continue to invest in its ability to attract, convert, grow, and retain promising partners in order to facilitate capital-efficient growth. |
| • | Continue to Invest in the digital platform. Complete Solaria plans to continue to invest in and develop complementary software, services, and technologies to enhance the scalability of its platform and |
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support an automated, highly efficient operational structure that delivers a world-class customer experience. Complete Solaria expects to continue to make significant investments in automating the end-to-end solar process through improved workflow management, electronic site-audit, and electronic permitting capabilities. Additionally, Complete Solaria plans to further develop consumer facing software to enhance consumers’ ability to manage their solar systems and integrate other energy efficient products and services into their homes. |
| • | Continue to Deliver a Differentiated Customer Experience. Complete Solaria makes the customer experience its top priority. Complete Solaria’s systems enable fast project fulfillment, direct customer communication, and facilitation of third-party sales, installation, and finance partners for a seamless customer experience. These systems also enable a broad service offering with customized configurations and pricing. Further development of these systems will enable future product offerings and increasingly optimized solar and energy efficient configurations for Complete Solaria’s customers. |
| • | Offer New |
Our Products
All of Complete Solaria’s monocrystalline silicon solar panels achieve at least 20% efficiency, have aesthetically pleasing all-black appearance, require minimal dead space between panels, and resist potential-induced degradation. Complete Solaria relies on a number of contract manufacturers to produce its solar cell products.
Complete Solaria offers several different solar panels and module configurations for customers to choose from, with the PowerXT module as the flagship panel. The Pure BlackTM technology has no visible circuitry and delivers more power and better shade tolerance with an industry-leading warranty.
Our Strengths
The following strengths position Complete Solaria to drive the mass adoption of residential solar in a manner that maximizes the value of its growing customer base over the long term:
| • | Platform of Services and Tools: A diversified and multi-pronged customer acquisition approach. This infrastructure underpins the ability to enjoy broad customer reach with a low system-wide cost structure and positions Complete Solaria for expansion to every market where distributed solar energy generation can offer homeowners savings versus traditional utility retail power. |
| • | Differentiated Customer Experience: A leading customer offering and experience through various methods: customer-friendly solar service features; tailored designs and customizable pricing for each homeowner; a highly consultative sales process; and a focus on customer savings. This differentiated customer acquisition strategy attracts a large group of high-quality customers who support strong unit margins. |
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| • | Unique access to customers through third-party sales channels: The turn-key solar product offering, best-in-class customer service, and a national footprint supports third-party sales channels and strategic national partnerships. Complete Solaria provides solutions for sales channels that are seeking to expand their geographic reach and strengthen their relationships with their own customers. |
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Technology Suite
HelioSuite is an innovative, end-to-end software platform designed to manage every aspect of a residential solar project. HelioSuite was originally designed to support its internal sales partners and build partners in assuring a seamless customer experience. In 2021, Complete Solaria commercialized the software solutions through Helio Proposal Services in order to provide proposal services for residential solar sales companies outside of Complete Solar’s existing network of sales partners. Features of the Technology Suite include the following capabilities, some of which are planned for roll-out in the future:
| • | HelioQuoteTM: an automated solar design tool that rapidly generates optimized proposals and executable contracts. Proposal generation is enabled by software innovations that automate system design and layout while optimizing homeowner economics. The average turnaround time for a proposal is only five minutes, which we believe is much faster than our competitors. |
| • | HelioTrackTM: an AI-driven project management software that streamlines the installation process and coordinates interactions between Complete Solaria, homeowners, sales partners and build partners. It includes a customer relationship management tool that provides payroll, commissions tracking, and project progression to all partners. The equipment management module coordinates bill of materials, ordering process, and tracks and manages all inventory for a project. The construction module assigns projects, calculates commissions and payments, and serves as quality control. The Complete Solar Project Management tools automates task assignment, times, and tracks progress. |
| • | Share The Sun: the online customer engagement platform. Customers can make referrals and share this information on social networks. In the near future, Complete Solaria intends to launch services that allow customers to view their energy generation, pay their bills, contact the customer service team, and assess their positive environmental impact. |
Customer Service and Operations
Solar System Sales
Complete Solaria has made significant investments to create a platform of services and tools that addresses customer origination, system design and installation, and general customer support. Before a sales representative conducts a consultation, homeowners are pre-qualified based on a preliminary evaluation which considers a homeowner’s credit, home ownership, electricity usage and suitability of the roof based on age, condition, shading and pitch. Once a homeowner is pre-qualified, all necessary data is collected and a proposal is generated for the homeowner. If a homeowner is interested in moving forward, a customer contract is automatically generated for electronic execution. This contract then undergoes a final review and verification of credit before it is countersigned.
Once an agreement is fully executed, a service tech performs a site audit at the home to inspect the roof and measure shading. This audit is followed by a final system design plan and an application for any required building permits. The plans are reviewed to ensure they conform to the executed contract or to process a change order if required. A second production estimate is generated at this time and if the expected energy production exceeds or falls below the original estimate by certain thresholds, the homeowner agreement is modified accordingly. In order to reduce installation costs and operational risk, there are defined design and installation quality standards designed to ensure that homeowners receive a quality product, regardless of who installs the system.
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After the solar panels are installed, the customer care team follows up with the homeowner with a survey on their experience. If a system requires maintenance, Complete Solaria or a partner or dedicated service-only contractor will visit the customer’s home and perform any necessary repairs or maintenance at no additional cost to the customer.
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Solar Module Sales
Complete Solaria supports the PPN with its high-touch sales and marketing team. The sales team provides training to pro partners and works with distribution vendors to fulfill orders. The marketing team generates residential solar leads and sends them to applicable pro partners who then connect directly with the end customer, generating positive demand for modules. Additionally, the marketing team structures partner incentive promotions to increase demand among the PPN. The service team answers any technical questions a pro partner may have but does not participate in conversations between the pro partner and the end customer.
Complete Solaria enters into master sales agreements with its distributors which cover the transfer of title of modules to the distributor and the commercial terms of the relationship.
Complete Solaria does not enter into sales agreements with pro partners. Compete Solaria provides the following to its pro partners: Complete Solaria pro partner seal for use on their websites, social media and proposals, homeowner brochures, benefits fliers, product data sheets, product demo samples including mini Solaria panels, Complete Solaria warranty certificates, branded gear, pro partner certificates and sales videos. Complete Solaria also promotes its pro partners on its own social media platforms and website.
Software Enhanced Services
Complete Solaria’s customers are third-party Sales organizations that use the design and proposal services for their residential solar projects. Complete Solaria staffs a sales support desk six days a week to provide live customer support for sales representatives who need a design or proposal for a potential homeowner sale. These customer support teams rapidly produce proposals answer questions, and offer other forms of support for sales personnel.
Suppliers
The main components of a residential solar energy system are the solar modules, inverters, and racking systems. Complete Solaria generally purchases these components for build partners from select distributors which are then shipped to build partners for use in an installation. There is a running list of approved suppliers in the event any of the sources for modules, inverters or other components became unavailable. If Complete Solaria fails to develop, maintain, and expand relationships with these or other suppliers, the ability to meet anticipated demand for solar energy systems may be adversely affected, or at higher costs or delayed. If one or more of the suppliers ceases or reduces production due to its financial condition, acquisition by a competitor or otherwise, it may be difficult to quickly identify alternate suppliers or to qualify alternative products on commercially reasonable terms, and the ability to satisfy this demand may be adversely affected.
Complete Solaria screens all suppliers and components based on expected cost, reliability, warranty coverage, ease of installation and other factors. The declining cost of solar modules and the raw materials necessary to manufacture them has been a key driver in the prices charged for electricity and homeowner adoption of solar energy. If solar module and raw material prices do not continue to decline at the same rate as they have over the past several years, the resulting prices could slow growth and cause financial results to suffer. If Complete Solaria is required to pay higher prices for supplies, accept less favorable terms, or purchase solar modules or other system components from alternative, higher-priced sources, financial results may be adversely affected.
Complete Solaria’s build partners are responsible for and source the other products related to solar energy systems, such as fasteners, wiring and electrical fittings. For Complete Solaria’s own installation business, Complete Solaria procures from time to time these other products related to solar energy systems. Complete Solaria manages inventory through local warehouses and as segregated inventory at build partners.
The main components of a residential solar module are the solar cells. Complete Solaria’s solar modules are generally manufactured by third-party select manufacturers. As of December 31, 2022, the primary solar module
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suppliers were Waaree Energies Ltd., Goldi Solar Pvt. Ltd., and GCL System Integration Technology Co., Ltd. If Complete Solaria fails to develop, maintain, and expand relationships with these or other suppliers, the ability to meet anticipated demand for modules may be adversely affected, or at higher costs or delayed. If one or more of the suppliers ceases or reduces production due to its financial condition, acquisition by a competitor or otherwise, it may be difficult to quickly identify alternate suppliers or to qualify alternative products on commercially reasonable terms, and the ability to satisfy this demand may be adversely affected.
Complete Solaria screens all suppliers and components based on expected cost, reliability, warranty coverage, ease of installation and other factors. Complete Solaria typically enters into master contract arrangements with major suppliers that define the general terms and conditions of purchases, including warranties, product specifications, indemnities, delivery and other customary terms.
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Competition
Solar System Sales
Complete Solaria’s primary competitors are the traditional utilities that supply electricity to potential customers. Complete Solaria competes with these traditional utilities primarily based on price (cents per kilowatt hour), predictability of future prices (by providing pre-determined annual price escalations) and the ease by which homeowners can switch to electricity generated by solar energy systems. Complete Solaria competes favorably with traditional utilities based on these factors.
Complete Solaria competes for homeowner customers with other solar sales and installation companies and with solar companies with business models that are similar to Complete Solaria’s. Complete Solaria’s main competitors can be grouped broadly into (a) national, vertically integrated companies with established brands and proprietary consumer financing products; (b) small, local solar contractors who operate with relatively low-fixed overhead expenses but who may lack systems, tools, and sophisticated product offerings; and (c) sales aggregators who engage with third-party sales companies to generate installation contracts. Complete Solaria competes favorably with these companies, with (a) better customer experience and better Sales Partner experience than the national vertically integrated companies; (b) better pricing and broader customer offerings than smaller local solar contractors; and (c) a better build partner experience than sales aggregators.
Complete Solaria also faces competition from purely finance-driven organizations that acquire homeowners and then subcontract out the installation of solar energy systems, from installation businesses that seek financing from external parties, from large construction companies and utilities and from sophisticated electrical and roofing companies. At the same time, the open platform provides opportunities for these competitors to become partners, and the open platform offers these new market participants a cost-effective way to enter the market and compelling process, technology and supply chain services over the long term.
Solar Module Sales
Complete Solaria faces competition from other solar module manufacturers. Complete Solaria’s solar power products and systems compete with many competitors in the solar power market and face competition from resellers that have developed related offerings that compete with current product and service offerings or have entered into strategic relationships with other existing solar power system providers.
The key competitive factors in the market for solar power systems include:
total system price;
levelized cost of electricity evaluation;
customer cost of energy evaluation;
power, reliability and performance;
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aesthetic appearance of solar modules and systems;
strength of distribution relationships;
availability of third-party financing and investments;
established sales channels to customers;
timeliness of new product introductions;
bankability, strength, and reputation of Complete Solaria; and
warranty protection, quality, and customer service.
Complete Solaria believes that it can compete favorably with respect to each of these elements, although it may be at a disadvantage in comparison to larger companies with broader product lines, greater technical service and support capabilities, and financial resources.
Research and Development
Complete Solaria engages in research and development efforts to improve solar module efficiency through the enhancement of existing products, development of new techniques, and by reductions in manufacturing cost and complexity. The research and development group works closely with manufacturing facilities, equipment suppliers, and customers to improve solar module design and to lower solar cell, solar module and system product manufacturing and assembly costs. In addition, Complete Solaria has dedicated employees who work closely with current and potential suppliers throughout the supply chain used in the manufacture of solar modules, to develop specifications that meet standards and ensure the high quality Complete Solaria requires, while at the same time controlling costs.
Intellectual Property
Complete Solaria seeks to protect its intellectual property rights by relying on federal, state and common law rights in the United States and other countries, as well as contractual restrictions. It generally enters into confidentiality and invention assignment agreements with employees and contractors, and confidentiality agreements with other third parties, in order to limit access to, and disclosure and use of, confidential information and proprietary technology. In addition to these contractual arrangements, Complete Solaria also relies on a combination of trademarks, trade dress, domain names, copyrights, trade secrets and patents to help protect the brand and other intellectual property.
As of December 31, 2022, Complete Solaria had 244 issued patents and 29 filed patent applications in the United States and foreign countries relating to a variety of aspects of its solar solutions. Issued United States patents will expire 20 years from their respective filing dates, with the earliest utility patent expiring on August 29, 2029, and the earliest design patent expiring on March 17, 2023. Complete Solaria intends to file additional patent applications as it innovates through research and development efforts.
Government Regulations and Incentives
Different public policy mechanisms have been used by governments to accelerate the adoption and use of solar power. Examples of customer focused financial mechanisms include capital cost rebates, performance-based incentives, feed-in tariffs, tax credits, renewable portfolio standards, net metering, and carbon regulations. Some of these government mandates and economic incentives are scheduled to be reduced or to expire, or could be eliminated altogether. Capital cost rebates provide funds to customers based on the cost and size of a customer’s solar power system. Performance-based incentives provide funding to a customer based on the energy produced by their solar power system. Feed-in tariffs pay customers for solar power system generation based on energy produced, at a rate generally guaranteed for a period of time. Tax credits reduce a customer’s taxes at the
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time the taxes are due. Renewable portfolio standards mandate that a certain percentage of electricity delivered to customers come from eligible renewable energy resources. Net metering allows customers to deliver to the electric grid any excess electricity produced by their on-site solar power systems, and to be credited for that excess electricity at or near the full retail price of electricity. Carbon regulations, including cap-and-trade and carbon pricing programs, increase the cost of fossil fuels, which release climate-altering carbon dioxide and other greenhouse gas emissions during combustion.
In addition to the mechanisms described above, there are various incentives for homeowners and businesses to adopt solar power in The Inflation Reduction Act of 2022. Moreover, in Europe, the European Commission has mandated that its member states adopt integrated national climate and energy plans aimed at increasing their renewable energy targets to be achieved by 2030, which could benefit the deployment of solar. However, the US and European Union, among others, have imposed tariffs or are in the process of evaluating the imposition of tariffs on solar panels, solar cells, polysilicon, and potentially other components. These and any other tariffs or similar taxes or duties may offset the incentives described above and increase the price of the solar products of Complete Solaria.
Employees and Human Capital Resources
As of December 31, 2022, Complete Solaria had over 151 employees. Complete Solaria also engages independent contractors and consultants. No employees are covered by collective bargaining agreements. There have not been any work stoppages.
Complete Solaria’s human capital resources objectives include identifying, recruiting, retaining, incentivizing and integrating its existing and new employees. The principal purposes of Complete Solaria’s equity incentive plans are to attract, retain and motivate personnel through the granting of equity-based compensation awards, in order to increase stockholder value and the success of Complete Solaria by motivating such individuals to perform to the best of their abilities and achieve Complete Solaria’s objectives.
Facilities
Complete Solaria’s corporate headquarters and executive offices are located in Fremont, California. Complete Solaria also maintains an office in Lehi, Utah.
Complete Solaria leases all of the facilities and does not own any real property. Complete Solaria believes that current facilities are adequate to meet ongoing needs. If additional space is required, Complete Solaria believes that it will be able to obtain additional facilities on commercially reasonable terms.
Legal Proceedings
Complete Solaria is from time to time subject to, and is presently involved in, litigation and other legal proceedings that arise in the ordinary course of business.
In January 2023, SolarPark has demanded approximately $80.0 million during discussions between the Company and SolarPark. In February 2023, the Company submitted its statement of claim seeking approximately $26.4 million in damages against Solar Park. In May 2023, Solar Park filed its Statement of Defence and Counterclaim alleging damages that total approximately $160.0 million. The ultimate outcome of this arbitration is currently unknown and could result in a material liability to the Company. However, the Company believes that the allegations lack merit and intends to vigorously defend all claims asserted. No liability has been recorded in the Company’s consolidated financial statements as the likelihood of a loss is not probable at this time.
On March 16, 2023, SolarPark Korea Co., LTD filed a complaint against Solaria and the Company in the United States District Court for the Northern District of California. The complaint alleges a civil conspiracy
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involving misappropriation of trade secrets, defamation, tortious interference with contractual relations, inducement to breach of contract, and violation of California’s Unfair Competition Law. The complaint indicates that SolarPark Korea Co., LTD has suffered in excess of $220 million in damages. The ultimate outcome of this litigation is currently unknown and could result in a material liability to the Company. However, the Company believes that the allegations lack merit and intends to vigorously defend all claims asserted. In MayAugust 2023, SolarPark filed a motion forthe Court granted SolarPark’s preliminary injunction against Solaria andmotion relating to SolarPark’s alleged trade secrets allegations. In August 2023, the Company in the United States District Court for the Northern District of California. The preliminary injunction seeks to stay manufacturing of certain products. The Company subsequently filed a motion for partial dismissal and stay. Both SolarPark’s motion for preliminary injunction andgranted the Company’s motion to dismiss are scheduled to be heard bystay and stayed the courtlitigation pending the outcome of the arbitration in June 2023.Singapore. No liability has been recorded in the Company’s consolidated financial statements as the likelihood of a loss is not probable at this time.
Complete Solaria is not presently a party to any other legal proceedings that in the opinion of its management, if determined adversely to Complete Solaria, would have a material adverse effect on its business, financial condition, operating results, or cash flows. Regardless of the outcome, litigation can have an adverse impact on Complete Solaria because of defense and settlement costs, diversion of management resources, and other factors.
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MANAGEMENT
Our directors and executive officers and their ages as of August 7,December 21, 2023
Name | Age | Position | |||
| Chief Executive Officer and Director | |||||
| Brian Wuebbels | 51 | Chief Financial Officer | |||
| David J. Anderson | 45 | Chief Marketing Officer & Strategic Partnerships | |||
| Thurman J. Rodgers(3) | 74 | Executive Chairman | |||
| Devin Whatley(2) | 54 | Director | |||
| Tidjane Thiam(1) | 61 | Director | |||
| Adam Gishen(1)(3) | 48 | Director | |||
| Ronald Pasek(1)(2) | 62 | Director | |||
| Antonio R. Alvarez(2) | 67 | Director | |||
| William J. Anderson | 47 | Director |
| (1) | Member of the Audit Committee. |
| (2) | Member of the Compensation Committee. |
| (3) | Member of the Nominating and Corporate Governance Committee. |
Executive Officers
William J. AndersonChris Lundell
William J. Anderson has served asChris Lundell is the Chief Executive OfficerFounder of Complete Solaria sinceCMO Grow, a marketing consultancy firm. Prior to that, he was the mergerCMO at Vivint Solar, the President of Complete Solarthe Americas at NEXThink, and Solaria in November 2022. From 2010 to 2022, he served as the Chief Executive Officer of Complete Solar. From 2007 to 2009, Mr. Anderson served as CEO of Risk Allocation Systems, Inc., a lending platform connecting automobile dealershipsCMO and credit unions in order to offer point of sale automobile loans to car buyers. From 2009 to 2010, Mr. Anderson served as PartnerCOO at SVE Partners, a boutique consulting firm serving technology start-ups and venture capital investors. Mr. AndersonDomo. He holds a B.S. in Managerial Sciences from the Massachusetts Institute of Technology and an M.B.A. from the Stanford University Graduate School of Business.Brigham Young University.
Brian Wuebbels
Brian Wuebbels has served as the Chief Financial Officer of Complete Solaria since February 2023. From 2021 to 2022, Mr. Wuebbels served as the President of Control & Elevator at the Nidec Motor Corporation where he led a global team of executives in Sales, Marketing, Engineering and Operations. From 2019 to 2021, Mr. Wuebbels served as Chief Financial Officer and Head of Operations for Motion & Control. From 2017 to 2018, Mr. Wuebbels served as Chief Financial Officer and Head of Operations for GCL, a solar power company. From 2010 to 2016, Mr. Wuebbels served as the Executive Vice President, Chief Financial Officer and Chief Administrative Officer at SunEdison. From 2003 to 2007, Mr. Wuebbels served as a finance executive at Honeywell. From 1993 to 2003, Mr. Wuebbels served in various roles at General Electric. Mr. Wuebbels holds an M.B.A. from the University of Southern California and a Bachelor of Science in mechanical engineering from University of Illinois Urbana-Champaign.
Vikas Desai
Mr. Desai has served as the President & General Manager, Business Units of Complete Solaria since the merger of Complete Solar and Solaria in November 2022. From 2021 to 2022, Mr. Desai served as the President of Solaria. From 2018 to 2021, Mr. Desai served as Chief Executive Officer of Powerside, a power analytics provider. From 2016 to 2018, he served as the Senior Vice President and Global General Manager of Flextronics.
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From 2010 to 2016, Mr. Desai served as the CEO of EchoFirst, which was acquired by SunEdison, where he served as Senior Vice President and GM of the Residential and Light Commercial Business Unit. From 2004 to 2010, Mr. Desai served as the Senior Vice President and General Manager of SunPower Corporation’s residential and light commercial business unit. Mr. Desai holds and a B. Eng. in Electrical Engineering from Lalbhai Dalpatbhai College of Engineering, M.Sc. in Power Electronics Engineering from Loughborough University, and an M.B.A. from the University of California, Berkeley.
David J. Anderson
David J. Anderson has served as the Chief Marketing Officer of Complete Solaria since the merger of Complete Solar and Solaria in November 2022. From 2010 to 2022, Mr. Anderson served as a Co-Founder and the Chief Marketing Officer of Complete Solar. From 2003 to 2007, Mr. Anderson owned and operated his own marketing consulting company serving businesses with a focus on residential services. Mr. Anderson holds a B.S. in Economics from the University of Utah.
Arnaud Lepert
Arnaud Lepert was appointed as Chief Operating Officer of Complete Solaria in June 2023. Mr. Lepert served as the Senior Vice President of Product and Technology Development of Complete Solaria since the merger of Complete Solar and Solaria in November 2022. From 2020 to 2022, Mr. Lepert served as the Senior Vice President of Product and Technology Development of Solaria. From 2017 to 2020, Mr. Lepert was the Chief Product Officer of Energy Everywhere. From 2006 to 2016, Mr. Lepert served as General Manager of the Optically Pumped Laser Business Unit at Coherent. From 1992 to 2006, Mr. Lepert worked in the semiconductor industry where he held senior management positions at STMicroelectronics Crolles and was the General Manager of the Gate Module Business Unit at Applied Materials. Mr. Lepert holds a B.S. in Materials Science from Ecole Polytechnique, France and an M.S. in Electrical Engineering from Telecom Paris.70
Non-Employee Directors
Thurman J. Rodgers
Thurman J. (T.J.) Rodgers has served as a member of the Complete Solaria Board since November 2022 and as Executive Chairman since June 2023. Mr. Rodgers founded Cypress Semiconductor in 1982 and served as Cypress’ Chief Executive Officer from 1982 to 2016. Mr. Rodgers currently serves on the boards of other energy-related companies: including Enovix, Enphase Energy Inc. (energy and storage technologies), and FTC Solar (single-axis tracking for solar). From 2004 to 2012, he served as a member of Dartmouth’s board of trustees. Mr. Rodgers was a Sloan scholar at Dartmouth, where he graduated in 1970 as the Salutatorian with a double major in Physics and Chemistry. He won the Townsend Prize and the Haseltine Chemistry-Physics Prize as the top physics and chemistry student in his class. Mr. Rodgers holds a master’s degree and a Ph.D. in Electrical Engineering from Stanford University, where he attended on a Hertz fellowship.
Devin Whatley
Devin Whatley has served as a member of the Complete Solaria Board since November 2022. Since 2010, Mr. Whatley has served as the Managing Partner at the Ecosystem Integrity Fund. Mr. Whatley serves as a member of the board of directors of several private companies focused on renewable energy. Mr. Whatley was a CFA Charterholder and holds a B.A. in East Asian Studies with a Business Emphasis from the University of California, Los Angeles and an M.B.A. from the Wharton School at the University of Pennsylvania.
Tidjane Thiam
Mr. Thiam served as a member of the FACT Board and as Executive Chairman of FACT since inception until the Business Combination in July 2023. In 2021, Mr. Thiam was appointed Chairman of Rwanda Finance
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Limited. He also serves as a Director and Chair of the Audit Committee of Kering S.A., the French luxury group. Mr. Thiam is also a Special Envoy on Covid 19 for the African Union. From 2015 to 2020, Mr. Thiam was Chief Executive Officer of Credit Suisse Group AG. From 2014 to 2019, Mr. Thiam was a Director of 21st Century Fox and served on its Nominating and Corporate Governance Committee. Mr. Thiam previously served at Prudential plc, a global insurance company based on London, as the Group Chief Executive from 2009 to 2015, a Director from 2008 to 2015 and Group Chief Financial Officer from 2008 to 2009. Mr. Thiam holds an M.B.A. from INSEAD and graduated from École Nationale Supérieure des Mines de Paris in 1986 and from École Polytechnique in Paris in 1984.
Adam Gishen
Mr. Gishen served as FACT’s Chief Executive Officer from February until the Business Combination in July 2023, and served as one of FACT’s initial board observers. From 2015 to 2020, Mr. Gishen served in several senior roles at Credit Suisse Group AG, including Global Head of Investor Relations, Corporate Communications and Marketing and Branding. Prior to 2015, Mr. Gishen was a partner at Ondra Partners, a financial advisory firm and previous to this worked as a Managing Director at Nomura and at Lehman Brothers in the area of equity capital markets. Mr. Gishen graduated from the University of Leeds.
Ronald Pasek
Ronald Pasek has served as a member of the Complete Solaria Board since February 2023. Since 2015, Mr. Pasek has served as the chairman of the board of directors of Spectra7 Microsystems Inc., a Canadian publicly-traded consumer connectivity company. From 2016 to 2020, Mr. Pasek was Chief Financial Officer of NetApp. From 2009 until its acquisition by Intel in December 2015, Mr. Pasek served as Senior Vice President, Finance and Chief Financial Officer of Altera Corporation, a worldwide provider of programmable logic devices. Mr. Pasek was previously employed by Sun Microsystems, in a variety of roles including Vice President, Corporate Treasurer and Vice President of worldwide field finance, worldwide manufacturing and U.S. field finance. Mr. Pasek holds a B.S. degree from San Jose State University and an M.B.A. degree from Santa Clara University.
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Antonio R. Alvarez
Antonio R. Alvarez has served as a member of the Complete Solaria Board since November 2022. Mr. Alvarez served as the President of Complete Solaria since the merger of Complete Solar and Solaria in November 2022 until March 2023. From 2020 to 2022, Mr. Alvarez served as Solaria’s Chief Executive Officer. Prior to 2020, Mr. Alvarez served in various executive roles at Altierre Corporation, Aptina Imaging, Advanced Analogic Technologies, Leadis Technology and Cypress Semiconductor. Currently, Mr. Alvarez serves on the board of directors of NexGen Power Systems and previously served as a board member of SunEdison, SunEdison Semiconductor, ChipMOS Technology, and Validity Sensors. Mr. Alvarez holds a B.S. and an M.S. in Electrical Engineering from the Georgia Institute of Technology.
Employee Director
William J. Anderson
William J. Anderson served as the Chief Executive Officer of Complete Solaria from November 2022 to December 2023 when he transitioned into a new role at the Company. From 2010 to 2022, he served as the Chief Executive Officer of Complete Solar. From 2007 to 2009, Mr. Anderson served as CEO of Risk Allocation Systems, Inc., a lending platform connecting automobile dealerships and credit unions in order to offer point of sale automobile loans to car buyers. From 2009 to 2010, Mr. Anderson served as Partner at SVE Partners, a boutique consulting firm serving technology start-ups and venture capital investors. Mr. Anderson holds a B.S. in Managerial Sciences from the Massachusetts Institute of Technology and an M.B.A. from the Stanford University Graduate School of Business.
Role of Board in Risk Oversight
One of the key functions of the Complete Solaria Board is the informed oversight of Complete Solaria’s risk management process. The Complete Solaria Board does not anticipate having a standing risk management committee, but rather anticipates administering this oversight function directly through the Complete Solaria Board as a whole, as well as through various standing committees of the Complete Solaria Board that address risks inherent in their respective areas of oversight. In particular, the Complete Solaria Board is responsible for monitoring and assessing strategic risk exposure and Complete Solaria’s audit committee is responsible for considering and discussing Complete Solaria’s major financial risk exposures and the steps its management will take to monitor and control such exposures, including guidelines and policies to govern the process by which risk assessment and management is undertaken. The audit committee monitors compliance with legal and regulatory
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requirements. Complete Solaria’s compensation committee assesses and monitors whether Complete Solaria’s compensation plans, policies and programs comply with applicable legal and regulatory requirements.
Board Committees
Upon the Closing of the Business Combination, our Board formed an audit committee, a compensation committee, and a nominating and corporate governance committee. The Complete Solaria Board may from time to time establish other committees.
Complete Solaria’s Chief Executive Officer and other executive officers will regularly report to the non-executive directors and each standing committee to ensure effective and efficient oversight of its activities and to assist in proper risk management and the ongoing evaluation of management controls.
Audit Committee
The audit committee consists of Adam Gishen,Ronald Pasek, who serves as the chairperson, Ronald PasekAdam Gishen and Tidjane Thiam. Each member of the audit committee qualifies as an independent director under the Nasdaq corporate governance standards and the independence requirements of Rule 10A-3 under the Exchange Act. Ronald Pasek qualifies as an “audit committee financial expert” as such term is defined in Item 407(d)(5) of Regulation S-K and possesses the requisite financial expertise required under the applicable requirements of Nasdaq.
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The responsibilities of the audit committee include, among other things:
helping the board of directors oversee corporate accounting and financial reporting processes;
managing the selection, engagement and qualifications of a qualified firm to serve as the independent registered public accounting firm to audit Complete Solaria’s financial statements;
helping to ensure the independence and performance of the independent registered public accounting firm;
| • | discussing the scope and results of the audit with the independent registered public accounting firm, and reviewing, with management and the independent accountants, Complete Solaria’s interim and year-end operating results; |
developing procedures for employees to submit concerns anonymously about questionable accounting or audit matters;
reviewing policies on financial risk assessment and financial risk management;
reviewing related party transactions;
obtaining and reviewing a report by the independent registered public accounting firm at least annually, that describes Complete Solaria’s internal quality-control procedures, any material issues with such procedures, and any steps taken to deal with such issues when required by applicable law; and
| • | approving (or, as permitted, pre-approving) all audit and all permissible non-audit service to be performed by the independent registered public accounting firm. |
The Complete Solaria Board adopted a written charter of the audit committee which is available on Complete Solaria’s website.
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Compensation Committee
The Compensation Committee consists of Antonio R. Alvarez, who serves as the chairperson, Ronald Pasek and Devin Whatley. Each committee member a “non-employee director” as defined in Rule 16b-3 promulgated under the Exchange Act. Although Mr. Alvarez is not an independent director, Section 5605(d)(2)(B) of the Nasdaq listing standards nonetheless permits the appointment of a non-independent director to the compensation committee if the board of directors, under exceptional and limited circumstances, determines that the non-independent director’s membership is required by the best interests of the company and its stockholders. Based on Mr. Alvarez’s extensive experience with Complete Solaria and familiarity with the industry, the Complete Solaria Board concluded that Mr. Alvarez’s appointment to, and membership on, the compensation committee was in the best interests of Complete Solaria and its stockholders. Further, a majority of the members of the compensation committee are independent directors. Mr. Alvarez is permitted to serve on the Compensation Committee for a maximum of two years.
The responsibilities of the compensation committee are:
reviewing and approving, or recommending that the Complete Solaria Board approve, the compensation of Complete Solaria’s executive officers and senior management;
reviewing and recommending to the Complete Solaria Board the compensation of Complete Solaria’s directors;
reviewing and approving, or recommending that the Complete Solaria Board approve, the terms of compensatory arrangements with Complete Solaria’s executive;
administering Complete Solaria’s stock and equity incentive plans;
selecting independent compensation consultants and assessing whether there are any conflicts of interest with any of the committee’s compensation advisors;
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| • | reviewing, approving, amending and terminating, or recommending that the Complete Solaria Board approve, amend or terminate, incentive compensation and equity plans, severance agreements, change-of-control protections and any other compensatory arrangements for Complete Solaria’s executive officers and other senior management, as appropriate; |
reviewing and establishing general policies relating to compensation and benefits of Complete Solaria’s employees; and
reviewing Complete Solaria’s overall compensation.
The Complete Solaria Board adopted a written charter for the compensation committee which is available on Complete Solaria’s website.
Nominating and Corporate Governance Committee
The nominating and corporate governance committee consists of Adam Gishen,Thurman J. Rodgers, who serves as the chairperson, and Devin Whatley.Adam Gishen. The responsibilities of the nominating and corporate governance committee are:
identifying, evaluating and selecting, or recommending that the Complete Solaria Board approve, nominees for election to the Complete Solaria Board;
evaluating the performance of the Complete Solaria Board and of individual directors;
evaluating the adequacy of Complete Solaria’s corporate governance practices and reporting;
reviewing management succession plans; and
developing and making recommendations to the Complete Solaria Board regarding corporate governance guidelines and matters.
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Code of Ethical Business Conduct
Complete Solaria has adopted a code of ethical business conduct that applies to all of its directors, officers and employees, including its principal executive officer, principal financial officer and principal accounting officer, which was by Complete Solaria at the closing and is available on Complete Solaria’s website. Complete Solaria’s code of business conduct is a “code of ethics,” as defined in Item 406(b) of Regulation S-K. Please note that Complete Solaria’s Internet website address is provided as an inactive textual reference only. Complete Solaria will make any legally required disclosures regarding amendments to, or waivers of, provisions of its code of ethics on its internet website.
Compensation Committee Interlocks and Insider Participation
No member of the compensation committee was at any time during 2022, or at any other time, one of Complete Solaria’s officers or employees, except Mr. Alvarez who served as Complete Solaria’s president until March 2023. None of Complete Solaria’s executive officers has served as a director or member of a compensation committee (or other committee serving an equivalent function) of any entity, one of whose executive officers served as a director of our board of directors or member of the compensation committee.
Independence of the Board of Directors
Nasdaq rules generally require that independent directors must comprise a majority of a listed company’s board of directors. Based upon information requested from and provided by each proposed director concerning his or her background, employment and affiliations, including family relationships, we have determined that Messrs. Rodgers, Whatley, Thiam, Gishen and Pasek, representing a majority of Complete Solaria’s proposed directors, are “independent” as that term is defined under the applicable rules and regulations of the SEC and the listing requirements and rules of Nasdaq.
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EXECUTIVE COMPENSATION
FACT
Employment Agreements
Prior to the closing of the Business Combination, FACT did not enter into any employment agreements with its executive officers and did not make any agreements to provide benefits upon termination of employment.
Executive Officers and Director Compensation
No FACT executive officers or directors received any cash compensation for services rendered to FACT. FACT paid its sponsor or an affiliate thereof up to $10,000 per month for office space, utilities, secretarial and administrative support services provided to members of our management team and other expenses and obligations of our sponsor. Executive officers and directors, or any of their respective affiliates were reimbursed for any out-of-pocket expenses incurred in connection with activities on FACT’s behalf such as identifying potential target businesses and performing due diligence on suitable business combinations.
Complete Solaria
Complete Solaria has opted to comply with the executive compensation disclosure rules applicable to emerging growth companies, as FACT is an emerging growth company. The scaled down disclosure rules are those applicable to “smaller reporting companies,” as such term is defined in the rules promulgated under the Securities Act, which require compensation disclosure for Complete Solaria’s principal executive officer and its two most highly compensated executive officers other than the principal executive officer whose total compensation for 2022 exceeded $100,000 and who were serving as executive officers as of December 31, 2022. Complete Solaria refers to these individuals as “named executive officers.” For 2022, Complete Solaria’s named executive officers were:
William J. Anderson, Complete Solaria’s former Chief Executive Officer;
Antonio R. Alvarez, Complete Solaria’s former President; and
Vikas Desai, Complete Solaria’s former President & General Manager, Business Units.
Complete Solaria believes its compensation program should promote the success of the company and align executive incentives with the long-term interests of its stockholders. Complete Solaria’s current compensation programs reflect its startup origins in that they consist primarily of salary and stock option awards. As Complete Solaria’s needs evolve, Complete Solaria intends to continue to evaluate its philosophy and compensation programs as circumstances require.
Summary Compensation Table
The following table shows information regarding the compensation of Complete Solaria’s named executive officers for services performed in the year ended December 31, 2022.
Name and Principal Position | Year | Salary | Bonus | Option Awards(1) | All Other Compensation | Total | ||||||||||||||||||
William J. Anderson Chief Executive Officer | 2022 | $ | 300,000 | $ | 18,000 | $ | 103,444 | — | $ | 421,444 | ||||||||||||||
Antonio R. Alvarez Former President(2) | 2022 | $ | 331,000 | — | — | — | $ | 331,000 | ||||||||||||||||
Vikas Desai President & General Manager, | 2022 | $ | 305,000 | — | $ | 423,055 | — | $ | 728,055 | |||||||||||||||
Name and Principal Position | Year | Salary | Bonus | Option Awards(1) | All Other Compensation | Total | ||||||||||||||||||
William J. Anderson Former Chief Executive Officer(2) | 2022 | $ | 300,000 | $ | 18,000 | $ | 103,444 | — | $ | 421,444 | ||||||||||||||
Antonio R. Alvarez Former President(3) | 2022 | $ | 331,000 | — | — | — | $ | 331,000 | ||||||||||||||||
Vikas Desai(4) Former President & General Manager, | 2022 | $ | 305,000 | — | $ | 423,055 | — | $ | 728,055 | |||||||||||||||
| (1) | Amounts reported in this column do not reflect the amounts actually received by Complete Solaria’s named executive officers. Instead, these amounts reflect the aggregate grant-date fair value of awards granted to each |
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| named executive officer, computed in accordance with the FASB ASC Topic 718, Stock-based Compensation. See Note 14 to Complete Solar’s audited financial statements and Note 13 to Solaria’s audited consolidated financial statements included elsewhere in this prospectus for discussion of assumptions made in determining the grant date fair value of its equity awards. As required by SEC rules, the amounts shown exclude the impact of estimated forfeitures related to service-based vesting conditions. The shares underlying these options vest in 48 equal monthly installments, subject to the named executive officer’s continued service at each vesting date. |
| (2) | Mr. Anderson stepped down as the Chief Executive Officer in December 2023. |
| (3) | Mr. Alvarez left the company in March 2023. |
| (4) | Mr. Desai left the Company in October 2023. |
Outstanding Equity Awards at December 31, 2022
The following table presents information regarding the outstanding option awards held by each of the named executive officers as of December 31, 2022:
Name | Grant Date (1) | Vesting Commencement Date | Number of Securities Underlying Unexercised Options (#) Exercisable | Number of Securities Underlying Unexercised Options (#) Unexercisable | Option Exercise Price $ | Option Expiration Date | ||||||||||||||||||
William J. Anderson | 10/18/2016 | 10/18/2016 | 579,564 | — | 0.19 | 10/17/2026 | ||||||||||||||||||
| 6/12/2020 | 6/1/2020 | 308,563 | 61,713 | (2) | 0.83 | 6/11/2030 | ||||||||||||||||||
| 6/12/2020 | 6/1/2020 | 13,416 | 2,683 | (2) | 0.83 | 6/11/2030 | ||||||||||||||||||
| 9/9/2022 | 3/1/2022 | 24,148 | 72,445 | (2) | 1.87 | 9/8/2032 | ||||||||||||||||||
Antonio R. Alvarez | 7/30/2020 | 5/11/2020 | 31,465 | 29,435 | (3) | 8.22 | 7/29/2030 | |||||||||||||||||
| 7/30/2020 | 5/11/2020 | 151,283 | 141,524 | (3) | 8.22 | 7/29/2030 | ||||||||||||||||||
Vikas Desai | 6/22/2018 | 2/28/2018 | 4,244 | — | 10.03 | 6/21/2028 | ||||||||||||||||||
| 10/28/2021 | 10/11/2021 | 25,284 | 83,080 | (3) | 4.62 | 10/27/2031 | ||||||||||||||||||
| 10/28/2021 | 10/11/2021 | 40,477 | 132,995 | (3) | 4.62 | 10/27/2031 | ||||||||||||||||||
| 9/28/2022 | 10/27/2022 | — | 50,204 | (4) | 11.45 | 9/27/2032 | ||||||||||||||||||
| 9/28/2022 | 10/27/2022 | — | 8,746 | (4) | 11.45 | 9/27/2032 | ||||||||||||||||||
| (1) | All option awards were granted pursuant to the 2022 Plan, Complete Solaria’s 2011 Stock Plan (the “2011 Plan”), Complete Solaria’s 2016 Stock Plan (the “2016 Plan”) and Complete Solaria’s 2006 Stock Plan (the “2006 Plan”). As is described in greater detail below in the “Employee Benefit Plans” section, the 2016 Plan and 2006 Plan were assumed by Complete Solaria from Solaria in connection with the Complete Solar and Solaria Merger. |
| (2) | The total shares underlying the option award vest in 36 equal monthly installments, subject to the named executive officer’s continued service at each vesting date. |
| (3) | The total shares underlying the option award vest in 60 equal monthly installments, subject to the named executive officer’s continued service at each vesting date. |
| (4) | 20% of the total shares underlying the option award vest on the one-year anniversary of the vesting commencement date, thereafter 1/60th of the total shares underlying the option award vest in 60 equal monthly installments. |
Subsequent to December 31, 2022, the named executive officers were granted the following equity awards:
In May 2023, William Anderson was granted an additional option to purchase 627,861 shares at an exercise price of $2.50 per share. The total shares underlying the option award vest in 60 equal monthly installments, subject to Mr. Anderson’s continued service at each vesting date.
In May 2023, Vikas Desai was granted an additional option to purchase 289,782 shares at an exercise price of $2.50 per share. The total shares underlying the option award vest in 60 equal monthly installments, subject to Mr. Desai’s continued service at each vesting date.
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In June 2023, William Anderson was granted 8,978 restricted stock units (“RSUs”). The RSUs will fully vest on June 9, 2024 only if the Company meets its revenue target for the second quarter of 2023, subject to Mr. Anderson’s continued service at the vesting date. These RSUs expired unvested pursuant to their terms on July 3, 2023.
In June 2023, Vikas Desai was granted 8,506 RSUs. The RSUs will fully vest on June 9, 2024 only if the Company meets its revenue target for the second quarter of 2023, subject to Mr. Desai’s continued service at the vesting date. These RSUs expired unvested pursuant to their terms on July 3, 2023.
Employment Arrangements with Named Executive Officers
Each of Complete Solaria’s named executive officers is an at-will employee. Each officer is currently party to an employment agreement setting forth their terms of employment. The employment agreements with each named executive officer provides that if such officer’s employment is terminated for any reason other than cause (as defined in the employment agreement), death or disability, or if such officer resigns for good reason (as defined in the employment agreement), and provided that in either case such termination constitutes a separation from service (as defined in the employment agreement) and the separation is not on or within 12 months following a change of control, then subject to such officer executing a release agreement in Complete Solaria’s favor, and continuing to comply with all of his obligations to Complete Solaria and its affiliates, he will receive the following benefits: (a) payment of such officer’s earned but unpaid base salary; (b) payment of such officer of any unpaid bonus, with respect to the fiscal year immediately preceding the fiscal year in which such termination or such resignation occurs; (c) payment to such officer of any vested benefits to which he may be entitled under any applicable plans and programs of the Company; (d) a severance payment equal to six months of such officer’s then base salary plus a pro rata portion of such officer’s bonus with respect to the fiscal year in which such termination or such resignation occurs; (e) if such officer timely and properly elects to continue group health care coverage under the Consolidated Omnibus Budget Reconciliation Act of 1985 (“COBRA”), payment of such officer’s COBRA premium expenses until the earliest of (i) the six-month anniversary of the termination date; (ii) the date such officer is no longer eligible to receive COBRA continuation coverage; and (iii) the date on which such officer becomes eligible to receive substantially similar coverage from another employer; and (f) the applicable post-termination exercised period for any vested options will extend to the earlier of (i) the six-month anniversary of the termination date, (ii) the expiration date of the option or (iii) earlier termination upon a corporate transaction.
In addition, the employment agreements with each named executive officer provide that if such officer’s employment is terminated for any reason other than cause (as defined in the employment agreement), death or disability, or if such officer resigns for good reason (as defined in the employment agreement), and provided that in either case such termination constitutes a separation from service (as defined in the employment agreement) and the separation is on or within 12 months following a change of control, then subject to such officer executing a release agreement in Complete Solaria’s favor, and continuing to comply with all of his obligations to Complete Solaria and its affiliates, he will receive the following benefits: (a) payment of such officer’s earned but unpaid base salary; (b) payment of such officer of any unpaid bonus, with respect to the fiscal year immediately preceding the fiscal year in which such termination or such resignation occurs; (c) payment to such officer of any vested benefits to which he may be entitled under any applicable plans and programs of the Company; (d) a severance payment equal to 12 months of such officer’s then base salary plus a pro rata portion of such officer’s bonus with respect to the fiscal year in which such termination or such resignation occurs; (e) if such officer timely and properly elects to continue group health care coverage under COBRA, payment of such officer’s COBRA premium expenses until the earliest of (i) the 12-month anniversary of the termination date; (ii) the date such officer is no longer eligible to receive COBRA continuation coverage; and (iii) the date on which such officer becomes eligible to receive substantially similar coverage from another employer; (f) the applicable post-termination exercised period for any vested options will extend to the earlier of (i) the 12-month anniversary of the termination date, (ii) the expiration date of the option or (iii) earlier termination upon a corporate transaction; and (g) acceleration of 50% of such officer’s remaining unvested outstanding stock options subject to time-based vesting.
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Base Salary
Base salaries are intended to provide a level of compensation sufficient to attract and retain an effective management team, when considered in combination with the other components of the executive compensation program. In general, Complete Solaria seeks to provide a base salary level designed to reflect each executive officer’s scope of responsibility and accountability.
Bonuses
Beginning January 1, 2023, each of our named executive officers was eligible for an annual bonus of 50% of such officer’s annual gross salary, based on criteria determined by our board of directors, including, but not limited to, the satisfaction of minimum performance standards, and the achievement of budgetary and other objectives, set by our board of directors in its sole and absolute discretion.
Director Compensation
None of Complete Solaria’s directors received compensation in 2022 for services rendered to Complete Solaria with the exception of William J. Anderson, Antonio R. Alvarez, and David J. Anderson for their compensation as Chief Executive Officer, former President, and Chief Marketing Officer, respectively, of Complete Solaria. William J. Anderson and Antonio R. Alvarez are named executive officers and their compensation is given in the “Summary Compensation Table” above. As of December 31, 2022, David J. Anderson held 838,750 shares of Complete Solaria’s Common Stock and an option to purchase 700,000 shares of Complete Solaria’s Common Stock.
Executive Compensation
Complete Solaria’s compensation committee oversees the compensation policies, plans and programs and reviews and determines compensation to be paid to executive officers, directors and other senior management, as appropriate. The compensation policies followed by Complete Solaria are intended to provide for compensation that is sufficient to attract, motivate and retain executives of Complete Solaria and potential other individuals and to establish an appropriate relationship between executive compensation and the creation of stockholder value.
Nonqualified Deferred Compensation
Complete Solaria’s named executive officers did not participate in, or earn any benefits under, any nonqualified deferred compensation plan sponsored by Complete Solaria during 2022. Complete Solaria’s board of directors may elect to provide officers and other employees with nonqualified deferred compensation benefits in the future if it determines that doing so is in the company’s best interests.
Pension Benefits
Complete Solaria’s named executive officers did not participate in, or otherwise receive any benefits under, any pension or retirement plan sponsored by Complete Solaria during 2022.
Employee Benefit Plans
Equity-based compensation has been and will continue to be an important foundation in executive compensation packages as Complete Solaria believes it is important to maintain a strong link between executive incentives and the creation of stockholder value. Complete Solaria believes that performance and equity-based compensation can be an important component of the total executive compensation package for maximizing stockholder value while, at the same time, attracting, motivating and retaining high-quality executives. In July 2023, our board of directors adopted the 2023 Incentive Equity Plan (the “2023 Plan”) and the Employee Stock Purchase Plan (the “ESPP). The 2023 Plan and the ESPP became effective immediately upon the Closing of the Business Combination. Below is a description of the 2023 Plan, the ESPP, 2022 Plan, the 2011 Plan, the 2016 Plan and the 2006 Plan. The 2022 Plan is the successor of the Complete Solar 2021 Stock Plan, which was amended and assumed by Complete Solaria in connection with the Required Transaction. The 2011 Plan is the Complete Solar 2011 Stock Plan that was assumed by Complete Solaria in the Required Transaction.
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The 2016 Plan and the 2006 Plan are the Solaria stock plans that were assumed by Complete Solaria in the Required Transaction.
Complete Solaria 2023 Incentive Equity Plan
In July 2023, our board of directors adopted and our stockholders approved the 2023 Incentive Equity Plan (the “2023 Plan”). The 2023 Plan became effective immediately upon the closing.
Eligibility. Any individual who is an employee of Complete Solaria or any of its affiliates, or any person who provides services to Complete Solaria or its affiliates, including consultants and members of Complete Solaria’s Board, is eligible to receive awards under the 2023 Plan at the discretion of the plan administrator.
Awards. The 2023 Plan provides for the grant of incentive stock options (“ISOs”), within the meaning of Section 422 of the Code to employees, including employees of any parent or subsidiary, and for the grant of nonstatutory stock options (“NSOs”), stock appreciation rights, restricted stock awards, restricted stock unit awards, performance awards and other forms of awards to employees, directors and consultants, including employees and consultants of Complete Solaria’s affiliates.
Authorized Shares. Initially, a maximum number of 8,763,322 of shares of Complete Solaria Common Stock may be issued under the 2023 Plan. In addition, the number of shares of Complete Solaria Common Stock reserved for issuance under the 2023 Plan will automatically increase on January 1 of each year, starting on January 1, 2024 and ending on January 1, 2033, in an amount equal to the lesser of (1) 4% of the total number of shares of Complete Solaria’s Common Stock outstanding on December 31 of the preceding year, or (2) a lesser number of shares of Complete Solaria Common Stock determined by Complete Solaria’s Board prior to the date of the increase. The maximum number of shares of Complete Solaria Common Stock that may be issued on the exercise of ISOs under the 2023 Plan is three times the number of shares available for issuance upon the 2023 Plan becoming effective (or 26,289,966 shares).
The unused shares subject to stock awards granted under the 2023 Plan that expire, lapse or are terminated, exchanged for or settled in cash, surrendered, repurchased, canceled without having been fully exercised or forfeited, in any case, in a manner that results in Complete Solaria acquiring shares covered by the stock award at a price not greater than the price (as adjusted pursuant to the 2023 Plan) paid by the participant for such shares or not issuing any shares covered by the stock award, will, as applicable, become or again be available for stock award grants under the 2023 Plan.
Non-Employee Director Compensation Limit. The aggregate value of all compensation granted or paid to any non-employee director with respect to any calendar year, including awards granted and cash fees paid to such non-employee director, will not exceed (1) $1,000,000 in total value or (2) if such non-employee director is first appointed or elected to Complete Solaria’s Board during such calendar year, $1,500,000 in total value, in each case, calculating the value of any equity awards based on the grant date fair value of such equity awards for financial reporting purposes.
Plan Administration. Complete Solaria’s Board, or a duly authorized committee thereof, will administer the 2023 Plan and is referred to as the “plan administrator” herein. Complete Solaria’s Board may also delegate to one or more of Complete Solaria’s officers the authority to (1) designate employees (other than officers) to receive specified stock awards and (2) determine the number of shares subject to such stock awards. Under the 2023 Plan, the Complete Solaria Board has the authority to determine award recipients, grant dates, the numbers and types of stock awards to be granted, the applicable fair market value, and the provisions of each stock award, including the period of exercisability and the vesting schedule applicable to a stock award.
Stock Options. ISOs and NSOs are granted under stock option agreements adopted by the plan administrator. The plan administrator determines the exercise price for stock options, within the terms and
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conditions of the 2023 Plan, provided that the exercise price of a stock option generally cannot be less than 100% of the fair market value of a share of Complete Solaria Common Stock on the date of grant. Options granted under the 2023 Plan vest at the rate specified in the stock option agreement as determined by the plan administrator.
The plan administrator determines the term of stock options granted under the 2023 Plan, up to a maximum of 10 years. Unless the terms of an optionholder’s stock option agreement provide otherwise or as otherwise provided by the plan administrator, if an optionholder’s service relationship with Complete Solaria or any of Complete Solaria’s affiliates ceases for any reason other than disability, death, or cause, the optionholder may generally exercise any vested options for a period of three months following the cessation of service. This period may be extended in the event that exercise of the option is prohibited by applicable securities laws. Unless the terms of an optionholder’s stock option agreement provide otherwise or as otherwise provided by the plan administrator, if an optionholder’s service relationship with Complete Solaria or any of Complete Solaria’s affiliates ceases due to death or disability, or an optionholder dies within a certain period following cessation of service, the optionholder or a beneficiary may generally exercise any vested options for a period of 18 months following the date of death, or 12 months following the date of disability. In the event of a termination for cause, options generally terminate upon the termination date. In no event may an option be exercised beyond the expiration of its term.
Acceptable consideration for the purchase of Complete Solaria Common Stock issued upon the exercise of a stock option will be determined by the plan administrator and may include (1) cash, check, bank draft or money order, (2) a broker-assisted cashless exercise, (3) the tender of shares of Complete Solaria Common Stock previously owned by the optionholder, (4) a net exercise of the option if it is an NSO or (5) other legal consideration approved by the plan administrator.
Unless the plan administrator provides otherwise, options and stock appreciation rights generally are not transferable except by will or the laws of descent and distribution. Subject to approval of the plan administrator or a duly authorized officer, an option may be transferred pursuant to a domestic relations order.
Tax Limitations on ISOs. The aggregate fair market value, determined at the time of grant, of Complete Solaria’s Common Stock with respect to ISOs that are exercisable for the first time by an award holder during any calendar year under all of Complete Solaria’s stock plans may not exceed $100,000. Options or portions thereof that exceed such limit will generally be treated as NSOs. No ISO may be granted to any person who, at the time of the grant, owns or is deemed to own stock possessing more than 10% of Complete Solaria’s total combined voting power or that of any of Complete Solaria’s parent or subsidiary corporations unless (1) the option exercise price is at least 110% of the fair market value of the stock subject to the option on the date of grant and (2) the term of the ISO does not exceed five years from the date of grant.
Restricted Stock Unit Awards. Restricted stock unit awards are granted under restricted stock unit award agreements adopted by the plan administrator. Restricted stock unit awards will generally be granted in consideration for a participant’s services, but may be granted in consideration for any form of legal consideration that may be acceptable to the plan administrator and permissible under applicable law. A restricted stock unit award may be settled by cash, delivery of shares of Complete Solaria Common Stock, a combination of cash and shares of Complete Solaria Common Stock as determined by the plan administrator, or in any other form of consideration set forth in the restricted stock unit award agreement. Additionally, dividend equivalents may be credited in respect of shares covered by a restricted stock unit award. Except as otherwise provided in the applicable award agreement or by the plan administrator, restricted stock unit awards that have not vested will be forfeited once the participant’s continuous service ends for any reason.
Restricted Stock Awards. Restricted stock awards are granted under restricted stock award agreements adopted by the plan administrator. A restricted stock award may be awarded in consideration for cash, check, bank draft or money order, services to us, or any other form of legal consideration that may be acceptable to the
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plan administrator and permissible under applicable law. The plan administrator determines the terms and conditions of restricted stock awards, including vesting and forfeiture terms. If a participant’s service relationship with Complete Solaria ends for any reason, Complete Solaria may receive any or all of the shares of Complete Solaria Common Stock held by the participant that have not vested as of the date the participant terminates service with Complete Solaria through a forfeiture condition or a repurchase right.
Stock Appreciation Rights. Stock appreciation rights are granted under stock appreciation right agreements adopted by the plan administrator. The plan administrator determines the strike price for a stock appreciation right, which generally cannot be less than 100% of the fair market value of Complete Solaria Common Stock on the date of grant. A stock appreciation right granted under the 2023 Plan vests at the rate specified in the stock appreciation right agreement as determined by the plan administrator. Stock appreciation rights may be settled in cash or shares of Complete Solaria Common Stock or in any other form of payment, as determined by the plan administrator and specified in the stock appreciation right agreement.
The plan administrator determines the term of stock appreciation rights granted under the 2023 Plan, up to a maximum of 10 years. Unless the terms of a participant’s stock appreciation rights agreement provide otherwise or as otherwise provided by the plan administrator, if a participant’s service relationship with Complete Solaria or any of its affiliates ceases for any reason other than cause, disability, or death, the participant may generally exercise any vested stock appreciation right for a period of three months following the cessation of service. This period may be further extended in the event that exercise of the stock appreciation right following such a termination of service is prohibited by applicable securities laws. Unless the terms of a participant’s stock appreciation rights agreement provide otherwise or as otherwise provided by the plan administrator, if a participant’s service relationship with Complete Solaria or any of its affiliates, ceases due to disability or death, or a participant dies within a certain period following cessation of service, the participant or a beneficiary may generally exercise any vested stock appreciation right for a period of 12 months in the event of disability and 18 months in the event of death. In the event of a termination for cause, stock appreciation rights generally terminate immediately upon the occurrence of the event giving rise to the termination of the individual for cause. In no event may a stock appreciation right be exercised beyond the expiration of its term.
Performance Awards. The 2023 Plan permits the grant of performance awards that may be settled in stock, cash or other property. Performance awards may be structured so that the stock or cash will be issued or paid only following the achievement of certain pre-established performance goals during a designated performance period. Performance awards that are settled in cash or other property are not required to be valued in whole or in part by reference to, or otherwise based on, Complete Solaria Common Stock.
Other Stock Awards. The plan administrator may grant other awards based in whole or in part by reference to New
Complete Solaria’s Common Stock. The plan administrator will set the number of shares under the stock award (or cash equivalent) and all other terms and conditions of such awards.
Changes to Capital Structure. In the event there is a specified type of change in the capital structure of Complete Solaria, such as a stock split, reverse stock split, or recapitalization, appropriate adjustments will be made to (1) the class and maximum number of shares subject to the 2023 Plan, (2) the class(es) and maximum number of shares that may be issued pursuant to the exercise of incentive stock options, and (3) the class and number of shares and exercise price, strike price, or purchase price, if applicable, of all outstanding stock awards.
Corporate Transactions. The following applies to stock awards under the 2023 Plan in the event of a corporate transaction (as defined in the 2023 Plan), unless otherwise provided in a participant’s stock award agreement or other written agreement with Complete Solaria or one of its affiliates or unless otherwise expressly provided by the plan administrator at the time of grant.
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In the event of a corporate transaction, any stock awards outstanding under the 2023 Plan may be assumed, or continued by any surviving or acquiring corporation (or its parent company), or new awards may be issued by such surviving or acquiring corporation (or its parent company) in substitution of such awards, and any reacquisition or repurchase rights held by Complete Solaria with respect to the stock award may be assigned to Complete Solaria’s successor (or its parent company). If the surviving or acquiring corporation (or its parent company) does not assume, continue or substitute such stock awards, then with respect to any such stock awards that are held by participants whose continuous service has not terminated prior to the effective time of the corporate transaction, or current participants, the vesting (and exercisability, if applicable) of such stock awards will be accelerated in full (or, in the case of performance awards with multiple vesting levels depending on the level of performance, vesting will accelerate at 100% of the target level) to a date prior to the effective time of the corporate transaction (contingent upon the effectiveness of the corporate transaction), and such stock awards will terminate if not exercised (if applicable) at or prior to the effective time of the corporate transaction, and any reacquisition or repurchase rights held by Complete Solaria with respect to such stock awards will lapse (contingent upon the effectiveness of the corporate transaction). Any such stock awards that are held by persons other than current participants will terminate if not exercised (if applicable) prior to the effective time of the corporate transaction, except that any reacquisition or repurchase rights held by Complete Solaria with respect to such stock awards will not terminate and may continue to be exercised notwithstanding the corporate transaction.
In the event a stock award will terminate if not exercised prior to the effective time of a corporate transaction, the plan administrator may provide, in its sole discretion, that the holder of such stock award may not exercise such stock award but instead will receive a payment equal in value to the excess (if any) of (i) the per share amount payable to holders of Complete Solaria Common Stock in connection with the corporate transaction, over (ii) if applicable, any per share exercise price payable by such holder.
Plan Amendment or Termination. Complete Solaria’s Board has the authority to amend, suspend, or terminate the 2023 Plan at any time, provided that such action does not materially impair the existing rights of any participant without such participant’s written consent. Certain material amendments also require approval of Complete Solaria’s stockholders. No ISOs may be granted after the tenth anniversary of the date the Board adopts the 2023 Plan. No stock awards may be granted under the 2023 Plan while it is suspended or after it is terminated
Complete Solaria 2023 Employee Stock Purchase Plan
In July 2023, our board of directors adopted and our stockholders approved the 2023 Employee Stock Purchase Plan (the “ESPP”). The ESPP became effective immediately upon the closing.
Administration. Complete Solaria’s Board, or a duly authorized committee thereof, will administer the ESPP.
Limitations. Complete Solaria’s employees and the employees of any of its designated affiliates, as designated by Complete Solaria’s Board, will be eligible to participate in the ESPP, provided they may have to satisfy one or more of the following service requirements before participating in the ESPP, as determined by the administrator: (1) customary employment with Complete Solaria or one of its affiliates for more than 20 hours per week and five or more months per calendar year or (2) continuous employment with Complete Solaria or one of its affiliates for a minimum period of time, not to exceed two years, prior to the first date of an offering. In addition, Complete Solaria’s Board may also exclude from participation in the ESPP or any offering, employees who are “highly compensated employees” (within the meaning of Section 423(b)(4)(D) of the Code) or a subset of such highly compensated employees. If this proposal is approved by the stockholders, all the employees of Complete Solaria and its related corporations will be eligible to participate in the ESPP following the Closing. An employee may not be granted rights to purchase stock under the ESPP (a) if such employee immediately after the grant would own stock possessing 5% or more of the total combined voting power or value of all classes of Complete Solaria’s capital stock or (b) to the extent that such rights would accrue at a rate that exceeds $25,000 worth of Complete Solaria capital stock for each calendar year that the rights remain outstanding.
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The ESPP is intended to qualify as an employee stock purchase plan under Section 423 of the Code. The administrator may specify offerings with a duration of not more than 27 months and may specify one or more shorter purchase periods within each offering. Each offering will have one or more purchase dates on which shares of Complete Solaria’s Common Stock will be purchased for the employees who are participating in the offering. The administrator, in its discretion, will determine the terms of offerings under the ESPP. The administrator has the discretion to structure an offering so that if the fair market value of a share of Complete Solaria’s stock on any purchase date during the offering period is less than or equal to the fair market value of a share of Complete Solaria’s stock on the first day of the offering period, then that offering will terminate immediately, and the participants in such terminated offering will be automatically enrolled in a new offering that begins immediately after such purchase date.
A participant may not transfer purchase rights under the ESPP other than by will, the laws of descent and distribution, or as otherwise provided under the ESPP.
Payroll Deductions. The ESPP permits participants to purchase shares of Complete Solaria Common Stock through payroll deductions. Unless otherwise determined by the administrator, the purchase price of the shares will be 85% of the lower of the fair market value of Complete Solaria Common Stock on the first day of an offering or on the date of purchase. Participants may end their participation at any time during an offering and will be paid their accrued contributions that have not yet been used to purchase shares, without interest. Participation ends automatically upon termination of employment with Complete Solaria and its related corporations.
Withdrawal. Participants may withdraw from an offering by delivering a withdrawal form to Complete Solaria and terminating their contributions. Such withdrawal may be elected at any time prior to the end of an offering, except as otherwise provided by the Plan Administrator. Upon such withdrawal, Complete Solaria will distribute to the employee his or her accumulated but unused contributions without interest, and such employee’s right to participate in that offering will terminate. However, an employee’s withdrawal from an offering does not affect such employee’s eligibility to participate in any other offerings under the ESPP.
Termination of Employment. A participant’s rights under any offering under the ESPP will terminate immediately if the participant either (i) is no longer employed by Complete Solaria or any of its parent or subsidiary companies (subject to any post-employment participation period required by law) or (ii) is otherwise no longer eligible to participate. In such event, Complete Solaria will distribute to the participant his or her accumulated but unused contributions, without interest.
Corporate Transactions. In the event of certain specified significant corporate transactions, such as a merger or change in control, a successor corporation may assume, continue, or substitute each outstanding purchase right. If the successor corporation does not assume, continue, or substitute for the outstanding purchase rights, the offering in progress will be shortened and the participants’ accumulated contributions will be used to purchase shares of Complete Solaria Common Stock within ten business days (or such other period specified by the plan administrator) prior to the corporate transaction, and the participants’ purchase rights will terminate immediately thereafter.
Amendment and Termination. Complete Solaria’s Board has the authority to amend, suspend, or terminate the ESPP, at any time and for any reason, provided certain types of amendments will require the approval of Complete Solaria’s stockholders. Any benefits, privileges, entitlements and obligations under any outstanding purchase rights granted before an amendment, suspension or termination of the ESPP will not be materially impaired by any such amendment, suspension or termination except (i) with the consent of the person to whom such purchase rights were granted, (ii) as necessary to facilitate compliance with any laws, listing requirements, or governmental regulations, or (iii) as necessary to obtain or maintain favorable tax, listing, or regulatory treatment. The ESPP will remain in effect until terminated by Complete Solaria’s Board in accordance with the terms of the ESPP.
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Complete Solaria 2022 Stock Plan
Complete Solaria’s board of directors adopted, and Complete Solaria’s stockholders approved, the 2022 Plan in October 2022 in connection with the Required Transaction. The 2022 Plan amends and restates Complete Solar’s 2021 Stock Plan.
Stock Awards. The 2022 Plan provides for the grant of incentive stock options (“ISOs”) and nonstatutory stock options to purchase shares of Complete Solaria common stock and restricted stock awards (collectively, “stock awards”). ISOs may be granted only to Complete Solaria employees and the employees of any parent corporation or subsidiary corporation. All other awards may be granted to Complete Solaria employees, non-employee directors and consultants and the employees and consultants of Complete Solaria affiliates. Complete Solaria has granted stock options and restricted stock awards under the 2022 Plan. As of December 31, 2022, 1,413,851 shares of Complete Solaria common stock were issuable pursuant to outstanding options, restricted stock awards, and other purchase rights and 918,55 shares of Complete Solaria common stock were available for future issuance under the 2022 Plan.
The 2022 Plan will terminate when the 2023 Plan becomes effective upon the consummation of the Business Combination. However, any outstanding awards granted under the 2022 Plan will remain outstanding, subject to the terms of Complete Solaria’s 2022 Plan and award agreements, until such outstanding options are exercised or until any awards terminate or expire by their terms.
If a stock award granted under the 2022 Plan expires or otherwise terminates without being exercised in full, or is settled in cash, the shares of Complete Solaria common stock not acquired pursuant to the stock award again will become available for subsequent issuance under the 2022 Plan (in the event that the 2023 Plan does not become effective as described in the preceding paragraph). In addition, the following types of shares of Complete Solaria common stock under the 2022 Plan may become available for the grant of new stock awards under the 2022 Plan: (1) shares that are forfeited to or repurchased by Complete Solaria prior to becoming fully vested; (2) shares retained to satisfy income or employment withholding taxes; (3) shares retained to pay the exercise or purchase price of a stock award; or (4) shares surrendered pursuant to an option exchange program.
Administration. Complete Solaria’s board of directors, or a duly authorized committee thereof, has the authority to administer the 2022 Plan. Complete Solaria’s board of directors may also delegate to one or more officers the authority to (1) designate employees (other than other officers or directors) to be recipients of certain stock awards, and (2) grant stock awards to such individuals within parameters specified by the Board. Subject to the terms of the 2022 Plan, the plan administrator determines the award recipients, dates of grant, the numbers and types of stock awards to be granted and the applicable fair market value and the provisions of the stock awards, including the period of their exercisability, the vesting schedule applicable to a stock award and any repurchase rights that may apply. The plan administrator has the authority to modify outstanding awards, including reducing the exercise, purchase or strike price of any outstanding stock award, canceling any outstanding stock award in exchange for new stock awards, cash or other consideration or taking any other action that is treated as a repricing under generally accepted accounting principles, with the consent of any adversely affected participant.
Stock Options. ISOs and NSOs are granted pursuant to stock option agreements adopted by the plan administrator. The plan administrator determines the exercise price for a stock option, provided that the exercise price of a stock option generally cannot be less than 100% of the fair market value of Complete Solaria common stock on the date of grant. Options granted under the 2022 Plan vest at the rate specified by the plan administrator.
The plan administrator determines the term of stock options granted under the 2022 Plan, up to a maximum of ten years. Unless the terms of an optionholder’s stock option agreement provide otherwise, if an optionholder’s service relationship with us, or any of Complete Solaria’s affiliates, ceases for any reason other
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than disability, death or cause, the optionholder may generally exercise any vested options for a period of three months following the cessation of service. The option term may be extended in the event that the exercise of the option following such a termination of service is prohibited by applicable securities laws. If an optionholder’s service relationship with Complete Solaria or any of its affiliates ceases due to disability or death, or an optionholder dies within 3 months following cessation of service, the optionholder or a beneficiary may generally exercise any vested options for a period of 12 months following such disability or death. In the event of a termination for cause, options generally terminate immediately upon the termination of the individual for cause. In no event may an option be exercised beyond the expiration of its term.
Acceptable consideration for the purchase of common stock issued upon the exercise of a stock option will be determined by the plan administrator and may include: (1) cash; (2) check; (3) to the extent permitted under applicable laws, a promissory note; (4) cancellation of indebtedness; (5) other previously owned Complete Solaria shares; (6) a cashless exercise; (7) such other consideration and method of payment permitted under applicable laws; or (8) any combination of the foregoing methods of payment.
Tax Limitations on Incentive Stock Options. The aggregate fair market value, determined at the time of grant, of Complete Solaria common stock with respect to ISOs that are exercisable for the first time by an optionholder during any calendar year under all Complete Solaria stock plans may not exceed $100,000. Options or portions thereof that exceed such limit will generally be treated as NSOs. No ISO may be granted to any person who, at the time of the grant, owns or is deemed to own stock possessing more than 10% of the total combined voting power of Complete Solaria or that of any of its affiliates unless (1) the option exercise price is at least 110% of the fair market value of the stock subject to the option on the date of grant and (2) the term of the ISO does not exceed five years from the date of grant.
Incentive Stock Option Limit. The maximum number of shares of Complete Solaria common stock that may be issued upon the exercise of ISOs under the 2022 Plan is 6,677,960 shares plus, to the extent permitted by applicable law, any shares that again become available for issuance under the 2022 Plan.
Restricted Stock Awards. Restricted stock awards are granted pursuant to restricted stock award agreements adopted by the plan administrator. The permissible consideration for restricted stock awards are the same as apply to stock options. Common stock acquired under a restricted stock award may, but need not, be subject to a share repurchase option in Complete Solaria’s favor in accordance with a vesting schedule to be determined by the plan administrator. A restricted stock award may be transferred only upon such terms and conditions as set by the plan administrator. Except as otherwise provided in the applicable award agreement, restricted stock awards that have not vested may be forfeited or repurchased by Complete Solaria upon the participant’s cessation of continuous service for any reason.
Changes to Capital Structure. In the event that there is a specified type of change in Complete Solaria’s capital structure, including without limitation a stock split or recapitalization, extraordinary divided payable in a form other than shares in an amount that has a material effect on the fair market value of the common stock, or any increase or decrease in the number of issued shares effected without receipt of consideration by Complete Solaria, appropriate adjustments will be made to (1) the class and maximum number of shares reserved for issuance under the 2022 Plan, and (2) the class and number of shares and price per share of stock (including any repurchase price per share) subject to outstanding stock awards.
Corporate Transactions. The 2022 Plan provides that in the event of certain specified significant corporate transactions, unless otherwise provided in an award agreement or other written agreement between Complete Solaria and the award holder, each outstanding award (vested or unvested) will be treated as the plan administrator determines, including (without limitation) taking one or more of the following actions with respect to each stock award, contingent upon the closing or completion of the transaction: (1) arranging for the assumption, continuation or substitution of the stock award by a successor corporation, (2) arranging for the assignment of any reacquisition or repurchase rights held by Complete Solaria in respect of Complete Solaria
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common stock issued pursuant to the stock award to a successor corporation, or (3) canceling the stock award in exchange for a cash payment, or no payment, as determined by the plan administrator (including a payment equal to the excess, if any, of the fair market value of the shares as of the closing date of such corporate transaction over any exercise or purchase price payable by the holder (which payment may be delayed to the same extent that payment of consideration to the holders of Complete Solaria common stock in connection with the transaction is delayed as a result of any escrow, holdback, earnout or similar contingencies). The plan administrator is not obligated to treat all stock awards or portions thereof in the same manner, and the plan administrator may take different actions with respect to the vested and unvested portions of a stock award.
Under the 2022 Plan, a significant corporate transaction is generally the consummation of (1) a transfer of all or substantially all of Complete Solaria’s assets, (2) the consummation of a transaction, or series of related transactions, in which any person becomes the beneficial owners of more than 50% of Complete Solaria’s then-outstanding capital stock, or (3) a merger, consolidation or other capital reorganization or business combination transaction of Complete Solaria with our into another corporation, entity or person .
Transferability. A participant generally may not transfer stock awards under the 2022 Plan other than by will, the laws of descent and distribution or as otherwise provided under the 2022 Plan.
Amendment and Termination. Complete Solaria’s board of directors has the authority to amend, suspend or terminate the 2022 Plan, provided that, with certain exceptions, such action does not impair the existing rights of any participant without such participant’s written consent. Certain material amendments also require the approval of Complete Solaria’s stockholders. Unless terminated sooner by Complete Solaria’s board of directors, the 2022 Plan will automatically terminate in October, 2032. No stock awards may be granted under the 2022 Plan while it is suspended or terminated.
Complete Solar 2011 Stock Plan
Complete Solar’s board of directors adopted the 2011 Plan in January 2011 and was amended from to time by Complete Solar’s board of directors and its stockholders. The 2011 Plan was terminated in November, 2021 in connection with Complete Solaria’s adoption of the 2022 Plan, and no new awards may be granted under it. The 2011 Plan was assumed by Complete Solaria in connection with the Required Transaction. Outstanding awards granted under the 2011 Plan remain outstanding, subject to the terms of the 2011 Plan and award agreements, until such outstanding options are exercised or terminate or expire by their terms. As of December 31, 2022, options to purchase 3,542,418 shares of Complete Solaria’s common stock were outstanding under the 2011 Plan.
Plan Administration. Complete Solaria’s board of directors or a duly authorized committee of the board of directors administers the 2011 Plan and the awards granted under it.
Capitalization Adjustments. In the event that any change is made in, or other events occur with respect to, our common stock subject to the 2011 Plan or any stock award, such as certain mergers, consolidations, reorganizations, recapitalizations, dividends, stock splits, or other similar transactions, appropriate adjustments will be made to the classes, number of shares subject to, and price per share and repurchase price, if applicable, of any outstanding stock awards.
Corporate Transactions. In the event of a sale of all or substantially all of our assets or our merger, consolidation or other capital reorganization or business combination transaction with or into another corporation, entity or person, our 2011 Plan provides that any surviving or acquiring corporation (or parent thereof) may assume or substitute such outstanding awards and any reacquisition or repurchase rights may be assigned to such surviving or acquiring corporation (or parent thereof), or such awards may be terminated in exchange for a payment of cash, securities and/or other property equal to the excess of the fair market value of the portion of the stock subject to such awards vested and exercisable as of immediately prior to the consummation of such corporate transaction. If the surviving or acquiring corporation (or parent thereof) does
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not assume or substitute outstanding awards in the corporate transaction, or exchange such awards for a payment, then each such outstanding award shall terminate upon consummation of the corporate transaction.
Change in Control. In the event of a change in control (as defined in the 2011 Plan), a stock award may be subject to additional acceleration of vesting and exercisability upon or after a change in control, as may be provided in the stock award agreement or in any other written agreement between us and a participant. In the absence of such a provision, no such acceleration will occur.
Amendment of Awards. The plan administrator has the authority to modify outstanding stock awards under our 2011 Plan; provided that no such amendment or modification may impair the rights of any participant with respect to awards granted prior to such action without such participant’s written consent.
Solaria 2016 Stock Plan
Solaria’s board of directors adopted, and Solaria’s stockholders approved, the 2016 Plan, in May 2016 and July 2016, respectively. Complete Solaria assumed the 2016 Plan in connection with the Required Transaction. The 2016 Plan was terminated in November 2022 in connection with the Required Transaction, and no new awards may be granted under it. Outstanding awards granted under the 2016 Plan remain outstanding, subject to the terms of the 2016 Plan and award agreements, until such outstanding options are exercised or terminate or expire by their terms. As of December 31, 2022, options to purchase 34,212 shares of Complete Solaria’s common stock were outstanding under the 2016 Plan.
Plan Administration. Complete Solaria’s board of directors or a duly authorized committee administers the 2016 Plan and the awards granted under it.
Capitalization Adjustments. In the event that any change is made in, or other events occur with respect to, Complete Solaria’s common stock subject to the 2016 Plan or any stock award, such as certain mergers, consolidations, reorganizations, recapitalizations, dividends, stock splits, or other similar transactions, appropriate adjustments will be made to the classes, number of shares subject to, and the price per share, if applicable, of any outstanding stock awards.
Change in Control. In the event of a Change in Control (as defined in the 2016 Plan), our 2016 Plan provides that unless otherwise provided in a written agreement between us and any participant or unless otherwise expressly provided by the board of directors at the time of grant of an award, any surviving or acquiring corporation (or parent thereof) may assume, continue or substitute such outstanding awards and any reacquisition or repurchase rights may be assigned to such surviving or acquiring corporation (or parent thereof). If the surviving or acquiring corporation (or parent thereof) does not assume, continue or substitute outstanding awards in the corporate transaction, then the board of directors may provide for the accelerated vesting (in whole or in part) of any or all awards or may cancel any award for such consideration, if any, as the board of directors may consider appropriate.
Amendment of Awards. The plan administrator has the authority to modify outstanding stock awards under our 2016 Plan; provided that no such amendment or modification may impair the rights of any participant with respect to awards granted prior to such action without such participant’s written consent.
Solaria 2006 Stock Plan
Solaria’s board of directors adopted, and Solaria’s stockholders approved, the 2006 Plan, in February 2006 and August 2006, respectively, and it was amended and restated from to time by Solaria’s board of directors and its stockholders. The 2006 Plan was terminated in February 2016 in connection with Solaria’s adoption of the 2016 Plan, and no new awards may be granted under it. Complete Solaria assumed the outstanding awards granted pursuant to the 2006 Plan in connection with the Required Transaction. Outstanding awards granted under the 2006 Plan remain outstanding, subject to the terms of the 2006 Plan and award agreements, until such outstanding options are exercised or terminate or expire by their terms. As of December 31, 2022, options to purchase 34,212 shares of Complete Solaria’s common stock were outstanding under the 2006 Plan.
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Plan Administration. Complete Solaria’s board of directors or a duly authorized committee administers the 2006 Plan and the awards granted under it.
Capitalization Adjustments. In the event that any change is made in, or other events occur with respect to, our common stock subject to the 2006 Plan or any stock award, such as certain mergers, consolidations, reorganizations, recapitalizations, dividends, stock splits, or other similar transactions affecting the shares subject to the 2006 Plan, appropriate adjustments will be made to the class and number of shares subject to, and the price per share, if applicable, of any outstanding stock awards.
Change in Control. In the event of a change in control (as defined in the 2006 Plan), our 2006 Plan provides that any successor corporation (or parent thereof) will assume or substitute such outstanding awards and any reacquisition or repurchase rights may be assigned to such surviving or acquiring corporation (or parent thereof). If the surviving or acquiring corporation (or parent thereof) does not assume or substitute outstanding awards in the corporate transaction, then the vesting of outstanding awards held by participants will accelerate in full and any repurchase rights held by us with respect to such awards will lapse, contingent upon the effectiveness of such transaction. Notwithstanding the foregoing, to the extent that stock awards will terminate if not exercised prior to the effective time of a corporate transaction, our board may provide that such awards will be canceled for a payment equal to the excess, if any, of the value of the property the holder would have received upon exercise of such award over any exercise price payable.
In addition, with respect to awards (and, if applicable, shares of restricted stock acquired pursuant to such awards) granted to non-employee directors that are assumed or substituted for, if on or following the date of such assumption or substitution such individual’s status as a director is involuntarily terminated, such individual shall fully vest in and have the right to exercise awards as to all of the shares subject thereto.
Also, with respect to awards (and, if applicable, shares of restricted stock acquired pursuant to such awards) granted to participants that are assumed or substituted for, if either (x) such participant remains continuously employed by us or our successor through the one-year anniversary of such change in control or (y) such participant’s employment is involuntarily terminated without cause (as such term is defined in the 2006 Plan), or such participant’s duties are material diminished, in either case at any time prior to the one-year anniversary of such change in control, such individual will vest into such awards on an accelerated basis as if such individual had provided an additional 12 months of continuous service, such individual shall fully vest in and have the right to exercise awards as to all of the shares subject thereto.
Amendment of Awards. The plan administrator has the authority to modify outstanding stock awards under our 2006 Plan; provided that no such amendment or modification may impair the rights of any participant with respect to awards granted prior to such action without such participant’s written consent.
Health and Welfare Benefits
Complete Solaria provides benefits to its named executive officers on the same basis as provided to all of its employees, including health, dental and vision insurance; life and disability insurance; and a tax-qualified Section 401(k) plan. Complete Solaria does not maintain any executive-specific benefit or perquisite programs.
Rule 10b5-1 Sales Plans
Complete Solaria’s directors and executive officers may adopt written plans, known as Rule 10b5-1 plans, in which they will contract with a broker to buy or sell shares of common stock on a periodic basis. Under a Rule 10b5-1 plan, a broker executes trades pursuant to parameters established by the director or executive officer when entering into the plan, without further direction from them. The director or executive officer may amend a Rule 10b5-1 plan in some circumstances and may terminate a plan at any time. Complete Solaria’s directors and executive officers also may buy or sell additional shares outside of a Rule 10b5-1 plan when they are not in possession of material nonpublic information, subject to compliance with the terms of our insider trading policy.
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Emerging Growth Company Status
Complete Solaria is an “emerging growth company,” as defined in the JOBS Act. As an emerging growth company it is exempt from certain requirements related to executive compensation, including the requirements to hold a nonbinding advisory vote on executive compensation and to provide information relating to the ratio of total compensation of its chief executive officer to the median of the annual total compensation of all of its employees, each as required by the Investor Protection and Securities Reform Act of 2010, which is part of the Dodd-Frank Wall Street Reform and Consumer Protection Act.
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CERTAIN RELATIONSHIPS AND RELATED PARTY TRANSACTIONS
FACT Related Party Transactions
Private Placement Warrants
On March 2, 2021, simultaneously with the closing of the IPO, FACT completed the private sale of an aggregate of 6,266,667 FACT Private Placement Warrants to the Sponsor at a purchase price of $1.50 per FACT Private Placement Warrant, generating gross proceeds to FACT of $9.4 million.
Each FACT Private Placement Warrant is exercisable for one whole share of Complete Solaria Common Stock at a price of $11.50 per share, subject to adjustment. A portion of the proceeds from the sale of the private placement warrants to the Sponsor was added to the proceeds from the IPO held in the Trust Account. The FACT Private Placement Warrants are non-redeemable for cash and exercisable on a cashless basis so long as they are held by the Sponsor or its permitted transferees.
Sponsor Support Agreement
In connection with the execution of the Business Combination Agreement, FACT entered into a Sponsor Support Agreement with the Sponsor, the parties thereto, including the FACT Initial Shareholders (together, the “Sponsor Signatories”, and Complete Solaria, pursuant to which the Sponsor Signatories agreed to, among other things:
vote in favor of the Business Combination Agreement and the transactions contemplated thereby;
not redeem their FACT Ordinary Shares;
from the Closing, at each of the first three annual meetings of the stockholders of Complete Solaria vote all of their shares of Complete Solaria Common Stock in favor of Mr. Thiam for election to the board of directors of Complete Solaria; and
be bound by certain other agreements and covenants related to the Business Combination, including vesting and forfeiture restrictions with respect to certain shares held by the Sponsor.
The Sponsor Support Agreement was entered into as an inducement for FACT and Complete Solaria to enter into the Business Combination Agreement, and consideration was not provided to the Sponsor Signatories in exchange for entering into the Sponsor Support Agreement.
Lock-Up Agreement
At Closing, Complete Solaria, the Sponsor, the Sponsor Key Holders (as defined in the Lock-Up Agreement) and Complete Solaria Key Holders (as defined in the Lock-Up Agreement), entered into the Lock-Up Agreement.
The Lock-Up Agreement contains certain restrictions on transfer with respect to securities of Complete Solaria held by the Sponsor, Sponsor Key Holders and Complete Solaria Key Holders immediately following the Closing (including shares of Complete Solaria Common Stock, Complete Solaria Private Warrants and any shares of Complete Solaria Common Stock issuable upon the exercise, conversion or settlement of derivative securities and promissory notes). Such restrictions began at the Closing and end on the earlier of (x) the twelve month anniversary of the Closing and (y) the date on which the volume weighted average price of Complete Solaria Common Stock equals or exceeds $12.00 per share (as adjusted for stock splits, stock dividends, reorganizations, recapitalizations and the like) for any twenty trading days within any thirty consecutive trading day period beginning after the date that is 180 calendar days after the Closing and ending 365 calendar days following the Closing.
In connection with working capital lending arrangements between the Sponsor and third party investors, certain restrictions on transfer on the Class B Ordinary Shares (or shares into which such Class B Ordinary
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Shares convert), solely to be transferred by the Sponsor to such investors, were or shall be reduced to the three month anniversary of the Closing.
Advisory Fees to China Bridge Capital
In May 2021, FACT entered into an agreement with CBC, an affiliate of Edward Zeng, who is a member of the FACT board of directors, pursuant to which CBC agreed to provide advisory and investment banking services to FACT in connection with a potential business combination. Under amendment subsequent agreement, dated June 3, 2022, which supersedes the previous agreement among the parties, FACT agreed to pay CBC a customary advisory fee that would be negotiated at the time of the business combination. Mr. Gishen, on behalf of FACT, Mr. Zeng, in his capacity as a representative of CBC, are holding ongoing negotiations regarding the amount of the advisory fee payable to CBC under its June 2022 letter agreement with FACT. Prior the execution of the Original Business Combination Agreement, the FACT Special Committee and FACT Board approved a potential fee arrangement between FACT and CBC. The June 2022 agreement between FACT and CBC may be terminated by FACT or CBC at any time, with or without cause.
Related Party Loans
In order to finance transaction costs in connection with an intended business combination, the Sponsor, or an affiliate of the Sponsor, orand certain of FACT’s officers and directors, may, but are not obligated to, loanloaned FACT funds as may be required (“Working Capital Loans”). If FACT completes aAfter the closing of the business combination, FACT would repay the Working Capital Loans. In the event that a business combination does not close, FACT may use a portion of the working capital held outside the Trust Account to repay the Working Capital Loans but no proceeds held in the Trust Account would be used to repayrepaid the Working Capital Loans. After giving effect to the April 2022 FACT Note, June 2022 FACT Note and December 2022 FACT Note described below, up to $1.325 million of additional Working Capital Loans may bewere convertible into Private Placement Warrants of the post business combination entity at a price of $1.50 per warrant at the option of the lender. Such warrants would beare identical to the Private Placement Warrants. Prior to the completion of the initial business combination, FACT does not expect to seek loans from parties other than the Sponsor or an affiliate of the Sponsor as FACT does not believe third parties will be willing to loan such funds and provide a waiver against any and all rights to seek access to funds in FACT’s Trust Account. As of December 31, 2021 and 2020, FACT had no borrowings under the Working Capital Loans.
On April 1, 2022, FACT issued the April 2022 FACT Note. The proceeds of the April 2022 FACT Note, which may bewas drawn down from time to time until FACT consummatesconsummated the initial business combination, were used for general working capital purposes. The April 2022 FACT Note bearsbore no interest and was payable in full upon the earlier to occur of (i) 24 months from the closing of the IPO (or such later date as may be extended in accordance with the terms of our amended and restated memorandum and articles of association) or (ii) the closing of the business combination. A failure to pay the principal within five business days of the date specified above or the commencement of a voluntary or involuntary bankruptcy action would have been deemed an event of default, in which case the April 2022 FACT Note may have been accelerated. Prior to FACT’s first payment of all or any portion of the principal balance of the April 2022 FACT Note in cash, the Sponsor had the option to convert all, but not less than all, of the principal balance of the April 2022 FACT Note into Working Capital Warrants, each warrant exercisable for one ordinary share of FACT at an exercise price of $1.50 per share. The terms of the Working Capital Warrants are identical to the warrants issued by FACT to the Sponsor in a private placement that was consummated in connection with the IPO. The Sponsor is entitled to certain registration rights relating to the Working Capital Warrants. The issuance of the April 2022 FACT Note was made pursuant to the exemption from registration contained in Section 4(a)(2) of the Securities Act.
On June 6, 2022, FACT issued the June 2022 FACT Note. The proceeds of the June 2022 FACT Note, which was drawn down from time to time until FACT consummated the initial business combination, were used for general working capital purposes. The June 2022 FACT Note bore no interest and is payable in full upon the earlier to occur of (i) 24 months from the closing of the IPO (or such later date as may be extended in accordance with the terms of our amended and restated memorandum and articles of association) or (ii) the closing of the business combination. A failure to pay the principal within five business days of the date specified above or the commencement of a voluntary or involuntary bankruptcy action shall be deemed an event of default, in which case the April 2022 FACT Note may be accelerated. Prior to FACT’s first payment of all or any portion of the principal balance of the April 2022 FACT Note in cash, the Sponsor has the option to convert all, but not less than all, of the principal balance of the April 2022 FACT Note into Conversion Warrants, each warrant exercisable for one ordinary share of FACT at an exercise price of $1.50 per share. The terms of the Conversion Warrants would be identical to the warrants issued by FACT to the Sponsor in a private placement that was consummated in connection with the IPO. The Sponsor shall be entitled to certain registration rights relating to the Conversion Warrants. The issuance of the April 2022 FACT Note was made pursuant to the exemption from registration contained in Section 4(a)(2) of the Securities Act.
On June 6, 2022, FACT issued the June 2022 FACT Note. The proceeds of the June 2022 FACT Note, which may be drawn down from time to time until FACT consummates the initial business combination, will be used for general working capital purposes. The June 2022 FACT Note bears no interest and is payable in full upon the earlier to occur of (i) 24 months from the closing of the IPO (or such later date as may be extended in
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accordance with the terms of our amended and restated memorandum and articles of association) or (ii) the closing of the business combination. A failure to pay the principal within five business days of the date specified above or the commencement of a voluntary or involuntary bankruptcy action shall behave been deemed an event of default, in which case the June 2022 FACT Note may bewould have been accelerated. Prior to FACT’s first payment of all or any portion of the principal balance of the June 2022 FACT Note in cash, the Sponsor hashad the option to convert all, but not less than all, of the principal balance of the June 2022 FACT Note into ConversionWorking Capital Warrants, each
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warrant exercisable for one ordinary share of FACT at an exercise price of $1.50 per share. The terms of the ConversionWorking Capital Warrants would bewere identical to the warrants issued by FACT to the Sponsor in a private placement that was consummated in connection with the IPO. The Sponsor shall beis entitled to certain registration rights relating to the ConversionWorking Capital Warrants. The issuance of the June 2022 FACT Note was made pursuant to the exemption from registration contained in Section 4(a)(2) of the Securities Act.
On December 14, 2022, FACT issued the December 2022 FACT Note. The proceeds of the December 2022 FACT Note, which may bewere drawn down from time to time until FACT consummatesconsummated the initial business combination, will bewere used for general working capital purposes. The December 2022 FACT Note bearsbore no interest and iswas payable in full upon the earlier to occur of (i) 24 months from the closing of our IPO (or such later date as may be extended in accordance with the terms of our Articles of Association) or (ii) the closing of the business combination. A failure to pay the principal within five business days of the date specified above or the commencement of a voluntary or involuntary bankruptcy action shall bewould have been deemed an event of default, in which case the December 2022 FACT Note may behave been accelerated. Prior to FACT’s first payment of all or any portion of the principal balance of the December 2022 FACT Note in cash, the payees thereunder havehad the option to convert all, but not less than all, of the principal balance of the December 2022 FACT Note into ConversionWorking Capital Warrants, each warrant exercisable for one ordinary share of FACT at an exercise price of $1.50 per share. The terms of the ConversionWorking Capital Warrants would beare identical to the warrants issued by FACT to the Sponsor in a private placement that was consummated in connection with the IPO. The payees under the December 2022 FACT Note shall beare entitled to certain registration rights relating to the ConversionWorking Capital Warrants. The issuance of the December 2022 FACT Note was made pursuant to the exemption from registration contained in Section 4(a)(2) of the Securities Act.
On February 28, 2023, FACT issued the February 2023 FACT Note. The proceeds of the February 2023 FACT Note, $1,600,000 of which was drawn down on or about the date thereof, $400,000 of which may bewas drawn down, at the discretion of the Sponsor, in accordance with the schedule set forth therein ifwhen FACT wisheschose to extend the date by which it willwould consummate the initial business combination beyond June 2, 2023, and $100,000 of which may bewas drawn down on an as-needed basis with the mutual consent of FACT and the Sponsor, will bewas used for general working capital purposes. The February 2023 FACT Note bearsbore no interest and iswas payable in full upon the consummation of a business combination. A failure to pay the principal within five business days of the date specified above or the commencement of a voluntary or involuntary bankruptcy action shall bewould have been deemed an event of default, in which case the February 2023 FACT Note may behave been accelerated. The February 2023 FACT Note shall be forgiven by the Sponsor if FACT is unable to consummate a business combination within the time frame specified in its amended and restated memorandum and articles of association, except to the extent of any funds held outside of the Trust Account. The issuance of the February 2023 FACT Note was made pursuant to the exemption from registration contained in Section 4(a)(2) of the Securities Act.
On May 31, 2023, FACT issued the May 2023 FACT Note. The proceeds of the May 2023 FACT Note will bewere used for general working capital purposes. The May 2023 FACT Note bearsbore no interest and iswas payable in full upon the consummation of a business combination. A failure to pay the principal within five business days of the date specified above or the commencement of a voluntary or involuntary bankruptcy action shall bewould have been deemed an event of default, in which case the May 2023 FACT Note may behave been accelerated. The May 2023 FACT Note shall be forgiven by the Sponsor if FACT is unable to consummate a business combination within the time frame specified in its amended and restated memorandum and articles of association (as amended from time to time), except to the extent of any funds held outside of the Trust Account. The issuance of the May 2023 FACT Note was made pursuant to the exemption from registration contained in Section 4(a)(2) of the Securities Act.
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Administrative Support Service
Commencing on the date of the IPO, FACT agreed to pay the Sponsor up to $10,000 per month for office space and administrative support services. These arewere paid on a monthly basis via invoices, and there was no amount due under the Administrative Services Agreement as of December 31, 2021. For the years ended December 31, 2021 and 2022, FACT paid the Sponsor $2,114 and $0, respectively, in expenses in connection with such services.
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Complete Solaria Related Party Transactions
Complete Solaria 2022 Note Financing
Beginning on October 3, 2022, Complete Solar entered into the Complete Solaria Subscription Agreements with certain investors pursuant to which such investors purchased the 2022 Convertible Notes. In addition, the Rodgers Massey Revocable Living Trust purchased a convertible note from Complete Solaria in an amount equal to approximately $6.7 million (the “RMRLT Rollover Note”), in consideration for Rodgers Massey Revocable Living Trust’s former investment in Solaria, which were assumed and cancelled by Complete Solaria. The RMRLT Rollover Note and the 2022 Convertible Notes accrue interest at a rate of 5% per annum. Immediately prior to the Closing, the RMRLT Rollover Note and the 2022 Convertible Notes converted into that number of shares of common stock of Complete Solaria equal to (x) the principal amount together with all accrued interest of the 2022 Notes divided by 0.75, divided by (y) the price of a share of common stock of Complete Solaria used to determine the conversion ratio in the Business Combination Agreement. In addition, the Sponsor transferred to the holders of 2022 Convertible Notes a pro rata percentage of (i) 666,667 Founder Shares and (ii) 484,380 Private Placement Warrants held by the Sponsor.
The following table summarizes the RMRLT Rollover Note and the 2022 Convertible Notes with related persons.
Name | Purchase Amount | Number of Shares | Private Placement Warrants | |||||||||
Rodgers Massey Revocable Living Trust(1) | $ | 6,723,179 | 1,039,988 | (6) | 81,468 | |||||||
Rodgers Massey Revocable Living Trust(1) | $ | 4,000,000 | 616,482 | (7) | 48,470 | |||||||
Rodgers Massey Revocable Living Trust(1) | $ | 3,500,000 | 543,449 | (8) | 42,411 | |||||||
Rodgers Massey Revocable Living Trust(1) | $ | 3,500,000 | 528,490 | (9) | 42,411 | |||||||
Edward Zeng(2). | $ | 2,400,000 | 372,237 | (10) | 29,081 | |||||||
Tidjane Thiam(3) | $ | 1,000,000 | 155,270 | (11) | 12,177 | |||||||
NextG Tech Limited(4) | $ | 900,000 | 135,897 | (12) | 10,905 | |||||||
Adam Gishen(5) | $ | 100,000 | 15,526 | (13) | 1,211 | |||||||
| (1) | Thurman J. “TJ” Rodgers is a member of Complete Solaria’s board of directors, and trustee of the Rodgers Massey Revocable Living Trust. The Rodgers Massey Revocable Living Trust is a 5% holder of Complete Solaria’s capital Stock. |
| (2) | Edward Zeng was a director of FACT until the Closing of the Business Combination. |
| (3) | Tidjane Thiam was the Executive Chairman of FACT until the Closing of the Business Combination and is a director of Complete Solaria. |
| (4) | NextG is an affiliate of Edward Zeng, a former director of FACT. |
| (5) | Adam Gishen was the Chief Executive Officer of FACT and is a director of Complete Solaria. |
| (6) | Includes 927,860 shares of Complete Solaria common stock and 112,128 Founder Shares. |
| (7) | Includes 549,771 shares of Complete Solaria common stock and 66,711 Founder Shares. |
| (8) | Includes 485,077 shares of Complete Solaria common stock and 58,372 Founder Shares. |
| (9) | Includes 470,118 shares of Complete Solaria common stock and 58,372 Founder Shares. |
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| (10) | Includes 332,211 shares of Complete Solaria common stock and 40,026 Founder Shares. |
| (11) | Includes 138,593 shares of Complete Solaria common stock and 16,677 Founder Shares. |
| (12) | Includes 120,887 shares of Complete Solaria common stock and 15,010 Founder Shares. |
| (13) | Includes 13,859 shares of Complete Solaria common stock and 1,667 Founder Shares. |
In addition, holders of 2022 Convertible Notes are entitled to receive, on a pro rata basis, up to an additional (i) 333,333 shares of Complete Solaria Common Stock, at a purchase price of $0.0001 per share, if within the first 12 months following the Closing Date, the volume weighted average price of Complete Solaria Common
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Stock equals or exceeds $12.50 per share for a period of at least 20 days out of 30 consecutive days on which the shares of Complete Solaria Common Stock are traded on a stock exchange, and (ii) 333,333 shares of Complete Solaria Common Stock, at a purchase price of $0.0001 per share, if within the first 12 months following the Closing Date, the volume weighted average price of Complete Solaria Common Stock equals or exceeds $15.00 per share for a period of at least 20 days out of 30 consecutive days on which the shares of Complete Solaria Common Stock are traded on a stock exchange,
Stockholder Support Agreement
On October 3, 2022, FACT, Complete Solar and certain stockholders of Complete Solar, entered into the Complete Solar Stockholder Support Agreement, whereby each of the parties thereto agreed to, among other things, vote to adopt and approve, upon the effectiveness of the Registration Statement, the Business Combination and all other documents and transactions contemplated thereby. Additionally, certain stockholders of Complete Solar agreed, among other things, to effect the Complete Solar Preferred Conversion, not to transfer any of their shares of Complete Solar common stock and Complete Solar preferred stock (or enter into any arrangement with respect thereto), subject to certain customary exceptions, or enter into any voting arrangement that is inconsistent with the Complete Solar Stockholder Support Agreement.
Complete Solar and Solaria Merger
On October 3, 2022, Complete Solar and Solaria entered into a Required Transaction Merger Agreement to form Complete Solaria. Pursuant to the Required Transaction Merger Agreement, Solaria was acquired by Complete Solar Holding Corporation and Complete Solar Midco, LLC, by means of a statutory merger of Complete Solar Merger Sub, Inc., with and into Solaria, pursuant to which Solaria would survive and become a wholly-owned subsidiary of Complete Solar Midco, LLC an indirect wholly-owned Subsidiary of Complete Solar Holding Corporation.
As a result of the Required Transaction, certain stockholders of Complete Solar who were formerly holders of securities of Solaria have a right to appoint Antonio R. Alvarez, Thurman J. Rodgers and Steven J. Gomo to the Board of Directors of Complete Solaria. Thurman J. Rodgers is trustee of the Rodgers Massey Revocable Living Trust, which is a 5% holder of Complete Solaria Capital Stock. Further, Vikas Desai and Arnaud Lepert were offered employment with Complete Solaria. Equity and other compensation, termination, change in control and other arrangements for these individuals are described in the section titled “Executive and Director Compensation.”
As a result of the Required Transaction, the following Solaria security holders, entities affiliated with Park West Asset Management LLC; Rodgers Massey Revocable Living Trust; South Lake One, LLC; and Eastern Win Development Holdings Limited, received equity consideration such that each currently holds more than 5% of Complete Solaria’s outstanding capital stock.
As a result of the Required Transaction, the following Complete Solar stockholders, Ecosystem Integrity Fund II, L.P. and The Libra Foundation, each holds more than 5% of Complete Solaria’s outstanding capital stock.
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Complete Solar Preferred Stock Financings
From March 2022 through April 2022, Complete Solar issued and sold an aggregate of 2,660,797 shares of its Series D-1 Preferred Stock for a cash purchase price of $4.9733 per share, 62,498 shares of its Series D-2 Preferred Stock for a cash purchase price of $1.8650 per share, and 48,256 shares of its Series D-3 Preferred Stock for a cash purchase price of $1.5542 per share (together, the “Complete Solar Series D Preferred Stock”), for aggregate gross proceeds of $13.4 million. Each share of Complete Solar’s Series D Preferred Stock was cancelled in exchange for the right to receive shares of the Complete Solaria’s Common Stock upon the Closing.
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In January 2020, Complete Solar issued and sold an aggregate of 2,800,283 shares of its Series C-1 Preferred Stock for a cash purchase price of $2.6497 per share for aggregate gross proceeds of $7.4 million (the “Complete Solar Series C Preferred Stock”). Each share of Complete Solar’s Series C-1 Preferred Stock was cancelled in exchange for the right to receive shares of the Complete Solaria’s Common Stock upon the Closing.
The following table summarizes the participation in the foregoing transactions by Complete Solaria’s directors, executive officers, and holders of more than 5% of any class of Complete Solaria’s capital stock as of the date of such transactions:
Complete Solar Preferred Stock Transactions
Name of Stockholder | Shares of Series C-1 Preferred Stock | Shares of Series D-1 Preferred Stock | Aggregate Purchase Price | |||||||||
The Libra Foundation(1) | 1,301,791 | 158,448 | $ | 3,947,507 | ||||||||
Ecosystem Integrity Fund II, L.P.(2) | 628,524 | 672,280 | $ | 4,675,791 | ||||||||
| (1) | The Libra Foundation is a 5% holder of Complete Solaria capital stock. |
| (2) | Ecosystem Integrity Fund II, L.P. is a 5% holder of Complete Solaria capital stock. |
Solaria Preferred Stock Financings
From June 2019 through July 2020, Solaria issued and sold an aggregate of 5,367,134 shares of its Series E-1 Preferred Stock for a cash purchase price of $9.17 per share (the “Solaria Series E Preferred Stock”), for aggregate gross proceeds of $47.5 million. Shares of Solaria’s Series E Preferred Stock were exchanged for shares in Complete Solaria pursuant to the terms of the Required Transaction.
Solaria Preferred Stock Transactions
Name of Stockholder | Shares of Series E-1 Preferred Stock | Aggregate Purchase Price | ||||||
Rodgers Massey Revocable Living Trust(1) | 2,363,776 | $ | 20,000,000 | |||||
| (1) | Rodgers Massey Revocable Living Trust is a 5% holder of Complete Solaria capital stock. |
Simple Agreements For Future Equity
Solaria previously entered into certain Simple Agreements for Future Equity (“SAFEs”) to raise funding. In connection with the Required Transaction, the outstanding Solaria SAFEs were assumed by and assigned to Complete Solaria and converted into Complete Solaria stock. The SAFE dated December 24, 2020 and amended February 23, 2021, by and between Solaria and Rodgers Massey Revocable Living Trust, for a purchase amount of $2,000,000, converted to 453,981 shares of Complete Solaria stock at a price per share of $4.405464. The SAFE dated March 3, 2022 and amended March 11, 2022, by and between Solaria and Rodgers Massey
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Revocable Living Trust, for a purchase amount of $2,000,000, converted to 453,981 shares of Complete Solaria stock at a price per share of $4.405464. Thurman J. “TJ” Rodgers is a member of Complete Solaria’s board of directors, and trustee of the Rodgers Massey Revocable Living Trust. The Rodgers Massey Revocable Living Trust is a 5% holder of Complete Solaria’s capital Stock. The SAFE dated March 12, 2021, by and between Solaria and entities affiliated with Park West Asset Management LLC, for a total purchase amount of $17,500,000. Park West Investors Master Fund, Limited invested $15,500,000, which converted into 3,518,358 shares Complete Solaria stock at a price per share of $4.405464. Park West Partners International, Limited invested $2,000,000, which converted into 453,981 shares of Complete Solaria stock at a price per share of $4.405464. The entities affiliated with Park West Asset Management LLC are a 5% holder of Complete Solaria’s capital Stock.
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Warrants
Complete SolarSolaria issued warrants (the “Warrants”) to purchase shares of its capital stock to certain holders of 5% of its capital stock. The following table summarizes the participation in the foregoing transactions by Complete Solaria’s holders of more than 5% of any class of Complete Solaria’s capital stock as of the date of such transactions:
Name of Stockholder | Common Stock Warrants | Series C Preferred Stock Warrants | ||||||||||||
The Libra Foundation(1) | 358,341 | — | ||||||||||||
Ecosystem Integrity Fund II, L.P.(2) | — | 1,000,000 | ||||||||||||
| (1) | The Libra Foundation is a 5% holder of Complete Solaria capital stock. |
| (2) | Ecosystem Integrity Fund II, L.P. is a 5% holder of Complete Solaria capital stock. |
Assignment Agreement
On October 5, 2023, Complete Solaria entered into an assignment and acceptance agreement (the “Assignment Agreement”) with Rodgers Massey Revocable Living Trust and other parties. Pursuant to the terms of the Assignment Agreement, among other things, Rodgers Massey Revocable Living Trust assumed $1,500,000 of the aggregate $5,000,000 in revolving loans outstanding for Complete Solaria under that certain Loan Agreement. Thurman J. “TJ” Rodgers is the Executive Chairman of Complete Solaria’s board of directors, and trustee of the Rodgers Massey Revocable Living Trust. The Rodgers Massey Revocable Living Trust is a 5% holder of Complete Solaria’s capital Stock.
Common Stock Purchase Agreements
On December 18, 2023, the Company entered into separate common stock purchase agreements (the “Purchase Agreements”) with the Rodgers Massey Freedom and Free Markets Charitable Trust and the Rodgers Massey Revocable Living Trust (each a “Purchaser”, and together, the “Purchasers”). Pursuant to the terms of the Purchase Agreements, each Purchaser purchased 1,838,235 shares of common stock of the Company, par value $0.0001, (the “Shares”), at a price per share of $1.36, representing an aggregate purchase price of $4,999,999.20. The Purchasers paid for the Shares in cash. Thurman J. “TJ” Rodgers is the Executive Chairman of Complete Solaria’s board of directors and is a trustee of the Rodgers Massey Freedom and Free Markets Charitable Trust and the Rodgers Massey Revocable Living Trust. Rodgers Massey Revocable Living Trust is a 5% holder of Complete Solaria’s capital Stock.
Employment Arrangements
Complete Solaria has entered into employment agreements with certain of its executive officers. For more information regarding these agreements with Complete Solaria’s named executive officers, see the section titled “Executive and Director Compensation—Employment Arrangements with Named Executive Officers.”
Stock Option Grants to Directors and Executive Officers
Complete Solaria has granted stock options to certain of its directors and executive officers. For more information regarding the stock options and stock awards granted to Complete Solaria’s directors and named executive officers, see the section titled “Executive and Director Compensation.”
Indemnification Agreements
Complete Solaria entered into new indemnification agreements with the directors and officers of New Complete Solaria following the Business Combination.
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Complete Solaria’s certificate of incorporation contains provisions limiting the liability of directors, and Complete Solaria’s amended and restated bylaws provide that Complete Solaria will indemnify each of its directors and officers to the fullest extent permitted under Delaware law. Complete Solaria’s amended and restated certificate of incorporation and amended and restated bylaws also provide the Complete Solaria’s Board with discretion to indemnify Complete Solaria’s employees and other agents when determined appropriate by Complete Solaria’s Board.
Policies and Procedures for Related Person Transactions
The Complete Solaria Board adopted a written related person transactions policy that sets forth Complete Solaria’s policies and procedures regarding the identification, review, consideration and oversight of “related person transactions.” For purposes of the Complete Solaria policy only, a “related person transaction” is a transaction, arrangement or relationship (or any series of similar transactions, arrangements or relationships) in which the Complete Solaria or any of its subsidiaries are participants involving an amount that exceeds $120,000,
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including purchases of goods or services by or from the related person or entities in which the related person has a material interest, indebtedness and guarantees of indebtedness, subject to certain exceptions set forth in Item 404 of Regulation S-K under the Securities Act.
Under the policy, the related person in question or, in the case of transactions with a holder of more than 5% of any class Complete Solaria’s voting securities, an officer with knowledge of a proposed transaction, must present information regarding the proposed related person transaction to the Complete Solaria’s audit committee (or, where review by the Complete Solaria’s audit committee would be inappropriate, to another independent body of the Board) for review. To identify related person transactions in advance, the Complete Solaria will rely on information supplied by Complete Solaria’s executive officers, directors and certain significant stockholders. In considering a related person transaction, Complete Solaria’s audit committee will take into account the relevant available facts and circumstances, which may include, but are not limited to:
the risks, costs, and benefits to Complete Solaria;
the impact on a director’s independence in the event the related person is a director, immediate family member of a director or an entity with which a director is affiliated;
the extent of the related person’s interest in the transaction;
the purpose and terms of the transaction;
management’s recommendation with respect to the proposed related person transaction;
the availability of other sources for comparable services or products; and
whether the transaction is on terms comparable to those that could be obtained in an arm’s length transaction.
Complete Solaria’s audit committee will approve only those transactions that it determines are fair to us and in Complete Solaria’s best interests. All of the transactions described above were entered into prior to the adoption of such policy.
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PRINCIPAL STOCKHOLDERS
The following table sets forth information regarding the beneficial ownership of shares of our common stock as of August 7,December 21, 2023 by:
each person known to be the beneficial owner of more than 5% of the outstanding shares of common stock;
each executive officer and director; and
all executive officers and directors of Complete Solaria as a group.
The SEC has defined “beneficial ownership” of a security to mean the possession, directly or indirectly, of voting power and/or investment power over such security. A stockholder is also deemed to be, as of any date, the beneficial owner of all securities that such stockholder has the right to acquire within 60 days after that date through (a) the exercise of any option, warrant or right, (b) the conversion of a security, (c) the power to revoke a trust, discretionary account or similar arrangement, or (d) the automatic termination of a trust, discretionary account or similar arrangement. In computing the number of shares beneficially owned by a person and the percentage ownership of that person, ordinary shares subject to options or other rights (as set forth above) held by that person that are currently exercisable, or will become exercisable within 60 days, are deemed outstanding, while such shares are not deemed outstanding for purposes of computing percentage ownership of any other person.
This table is based upon information supplied by officers, directors and principal stockholders and Schedules 13G or 13D filed with the SEC. Unless otherwise indicated in the footnotes to this table and subject to community property laws where applicable, we believe that all persons named in the table have sole voting and investment power with respect to all shares of our common stock beneficially owned by them. Applicable percentages are based on 45,290,553 shares of common stock outstanding as of August 7,December 22, 2023, adjusted as required by rules promulgated by the SEC.
Name and Address of Beneficial Owner(1) | Number of Shares | Percentage of Common Stock Outstanding | Number of Shares | Percentage of Common Stock Outstanding | ||||||||||||
5% or Greater Stockholders: | ||||||||||||||||
Ecosystem Integrity Fund II, L.P.(2) | 8,399,653 | 17.6 | 8,399,653 | 17.6 | ||||||||||||
Thurman J. (T.J.) Rodgers(3) | 7,082,187 | 15.4 | 7,082,187 | 15.4 | ||||||||||||
Entities affiliated with Edward Zeng(4) | 5,523,612 | 11.3 | 5,523,612 | 11.3 | ||||||||||||
Entities affiliated with Park West Asset Management LLC(5) | 3,518,624 | 7.7 | 3,518,624 | 7.7 | ||||||||||||
Entities affiliated with Polar Asset Management Partners Inc.(6) | 4,113,506 | 9.1 | 4,113,506 | 9.1 | ||||||||||||
Entities Affiliated with Meteora(7) | 4,300,000 | 9.5 | 4,300,000 | 9.5 | ||||||||||||
Executive Officers and Directors: | ||||||||||||||||
William J. Anderson(8) | 1,651,297 | 3.6 | 1,651,297 | 3.6 | ||||||||||||
Antonio R. Alvarez(9) | 235,804 | * | 235,804 | * | ||||||||||||
Vikas Desai(10) | 141,425 | * | ||||||||||||||
Thurman J. (T.J.) Rodgers(3) | 7,082,187 | 15.4 | 7,082,187 | 15.4 | ||||||||||||
Devin Whatley(2) | 8,339,653 | 17.6 | 8,339,653 | 17.6 | ||||||||||||
Tidjane Thiam(11) | 3,733,573 | 7.9 | ||||||||||||||
Adam Gishen(12) | 908,284 | 2.0 | ||||||||||||||
Brian Wuebbels(13) | 44,291 | * | ||||||||||||||
Arnaud Lepert(14) | 35,282 | * | ||||||||||||||
David Anderson(15) | 901,084 | 2.0 | ||||||||||||||
Tidjane Thiam(10) | 3,733,573 | 7.9 | ||||||||||||||
Adam Gishen(11) | 908,284 | 2.0 | ||||||||||||||
Brian Wuebbels(12) | 44,291 | * | ||||||||||||||
David Anderson(13) | 901,084 | 2.0 | ||||||||||||||
Ronald Pasek | — | — | — | — | ||||||||||||
All current directors and executive officers as a group (11 persons) | 22,152,222 | 47.3 | ||||||||||||||
Chris Lundell | — | — | ||||||||||||||
All current directors and executive officers as a group (12 persons) | 21,975,515 | 46.9 | ||||||||||||||
| * | Less than one percent. |
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| (1) | Unless otherwise indicated, the business address of each of the directors and executive officers of the Company is c/o Complete Solaria, Inc., 45700 Northport Loop East, Fremont, CA 94538. |
| (2) | Includes (i) 5,832,054 shares held by Ecosystem Integrity Fund II, L.P. of which Mr. Devin Whatley is the managing member of the general partner, (ii) 198,346 shares held by EIF CS SPV LLC and (iii) 2,369,253 shares issuable pursuant to Complete Solaria Warrants exercisable within 60 days of the Closing Date. The business address of each of Ecosystem Integrity Fund II, L.P., EIF CS SPV LLC and Mr. Whatley is 20 Richelle Court, Lafayette, California 94549. |
| (3) | Includes (i) 485,562 shares held by Rodgers Capital, LLC, (ii) 8,842 shares held by Thurman Rodgers, (iii) 5,863,367 shares held by Rodgers Massey Revocable Living Trust and (iv) 724,416 shares issuable pursuant to Complete Solaria Warrants exercisable within 60 days of the Closing Date. |
| (4) | Represents shares held by NextG Tech Limited, an affiliate of Edward Zeng, a director of FACT until the Closing of the Business Combination. Includes (i) 1,909,140 shares of common stock and (ii) 3,614,472 shares issuable pursuant to Complete Solaria Warrants exercisable within 60 days of the Closing Date. |
| (5) | Represents shares held by Park West Asset Management LLC, Park West Investors Master Fund, Limited, Park West Partners International, Limited and Peter S. Park. Park West Asset Management LLC is the investment manager to Park West Investors Master Fund, Limited and Park West Partners International, Limited, and Peter S. Park, through one or more affiliated entities, is the controlling manager of Park West Asset Management LLC. The principal business address is c/o Park West Asset Management LLC, 1 Letterman Drive, Building C, Suite C5-900, San Francisco, CA 94129. |
| (6) | Represents shares held by Polar |
| (7) | Represents shares held by by Meteora Capital, LLC, a Delaware limited liability company (“Meteora”) and Mr. Vik Mittal (“Mr. Mittal”), with respect to the shares of common stock held by certain funds and managed accounts to which Meteora Capital serves as investment manager (collectively, the “Meteora Funds”). Mr. Mittal serves as the Managing Member of Meteora Capital. The address of the business office of each of the Meteora and Mr. Mittal is 840 Park Drive East, Boca Raton, FL 33444. |
| (8) | Includes (i) 453,386 shares of common stock, (ii) 1,056,094 shares issuable pursuant to stock options exercisable within 60 days of the Closing Date and (iii) 141,817 shares issuable pursuant to Complete Solaria Warrants exercisable within 60 days of the Closing Date. |
| (9) | Includes 235,804 shares issuable pursuant to stock options exercisable within 60 days of the Closing Date. |
| (10) |
|
Includes (i) 1,656,348 shares of common stock and (ii) 2,077,225 shares issuable pursuant to Complete Solaria Warrants exercisable within 60 days of the Closing Date. |
Includes (i) 390,796 shares of common stock and (ii) 517,488 shares issuable pursuant to Complete Solaria Warrants exercisable within 60 days of the Closing Date. |
Includes 44,291 shares issuable pursuant to stock options exercisable within 60 days of the Closing Date. |
|
Includes 453,386 shares of common stock (ii) 141,817 shares issuable pursuant to Complete Solaria Warrants exercisable within 60 days of the Closing Date and (ii) 305,881 shares issuable pursuant to stock options exercisable within 60 days of the Closing Date. |
10099
SELLING SECURITYHOLDERS
The selling securityholders may offer and sell, from time to time, any or all of the shares of common stock or warrants being offered for resale by this prospectus, which consists of:
up to 10,966,6359,028,488 PIPE Shares;
up to 8,625,000 Founder Shares;
up to 6,266,667 shares of common stock issuable upon the exercise of the Private Warrants;
up to 13,080,99416,505,459 shares of common stock pursuant to the Registration Rights Agreement (including shares of common stock issuable upon exercise of convertible securities);
up to 6,266,667 Private Warrants;
up to 716,668 Working Capital Warrants;
up to 716,668 shares of common stock issuable upon exercise of Working Capital Warrants;
up to 6,266,572 Merger Warrants; and
up to 6,266,572 shares of common stock issuable upon the exercise of Merger Warrants.
Certain of the selling securityholders listed below entered into agreements that restrict the transfer of the shares of our common stock that otherwise may be sold from time to time pursuant to the registration statement of which this prospectus forms part. See the section titled “Certain Relationships and Related Party Transactions—Lock-Up Agreement” for further discussion.
As used in this prospectus, the term “selling securityholders” includes the selling securityholders listed in the table below, together with any additional selling securityholders listed in a subsequent amendment to this prospectus, and their donees, pledgees, assignees, transferees, distributees and successors-in-interest that receive shares in any non-sale transfer after the date of this prospectus.
The following table provides, as of the date of this prospectus, information regarding the beneficial ownership of our common stock of each selling securityholder, the number of shares of common stock that may be sold by each selling securityholder under this prospectus and that each selling securityholder will beneficially own assuming all securities that may be offered pursuant to this prospectus are sold. Because each selling securityholder may dispose of all, none or some portion of their securities, no estimate can be given as to the number of securities that will be beneficially owned by a selling securityholder upon termination of this offering. For purposes of the table below, however, we have assumed that after termination of this offering none of the securities covered by this prospectus will be beneficially owned by the selling securityholders and further assumed that the selling securityholders will not acquire beneficial ownership of any additional securities during the offering. In addition, the selling securityholders may have sold, transferred or otherwise disposed of, or may sell, transfer or otherwise dispose of, at any time and from time to time, our securities in transactions exempt from the registration requirements of the Securities Act after the date on which the information in the table is presented.
Except as set forth in the footnotes below, (i) the following table does not include up to 8,625,000 shares of common stock issuable upon exercise of the Public Warrants and (ii) the address of each selling securityholder is 45700 Northport Loop East, Fremont, CA 94538.
Please see the section titled “Plan of Distribution” for further information regarding the stockholders’ method of distributing these shares.
100
| Shares of Common Stock | Warrants to Purchase Common Stock | |||||||||||||||||||||||||||||||
Name | Number Beneficially Owned Prior to Offering | Number Registered for Sale Hereby | Number Beneficially Owned After Offering | Percent Owned After Offering | Number Beneficially Owned Prior to Offering | Number Registered for Sale Hereby | Number Beneficially Owned After Offering | Percent Owned After Offering | ||||||||||||||||||||||||
PIPE Investors |
| |||||||||||||||||||||||||||||||
Entities Affiliated with Park West Asset Management LLC(1) | 2,918,519 | 1,600,105 | 1,318,414 | 2.9 | % | 600,105 | 600,105 | — | — | |||||||||||||||||||||||
Bonomi 2001 Trust(2) | 60,177 | 21,955 | 38,222 | * | 11,955 | 11,955 | — | — | ||||||||||||||||||||||||
David Robinov | 37,953 | 16,186 | 21,767 | * | 5,325 | 5,325 | — | — | ||||||||||||||||||||||||
Shares Owned by Thurman John Rodgers(3) | 7,806,603 | 3,019,999 | 4,786,654 | 10.6 | % | 724,416 | 724,416 | — | — | |||||||||||||||||||||||
Shares Owned By Elias Antoun(4) | 167,729 | 48,425 | 119,304 | * | 28,425 | 28,425 | — | — | ||||||||||||||||||||||||
Jon D and Linda W Gruber Trust(5) | 100,000 | 100,000 | — | * | — | — | — | — | ||||||||||||||||||||||||
Entities Affiliated with Meteora(6) | 4,300,000 | 2,238,488 | 2,061,512 | 4.6 | % | — | — | — | ||||||||||||||||||||||||
Polar Multi-Strategy Master Fund(7) | 4,423,506 | 4,091,753 | 331,753 | * | 132,600 | — | 132,600 | * | ||||||||||||||||||||||||
Entities Affilaited with Sandia(8) | 1,350,000 | 1,200,000 | 150,000 | * | — | — | — | |||||||||||||||||||||||||
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Total—PIPE Investors | 21,164,487 | 12,336,911 | 8,827,626 | 19.5 | % | 1,502,826 | 1,370,226 | 132,600 | ||||||||||||||||||||||||
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Holders of Registration Rights Pursuant to Registration Rights Agreement |
| |||||||||||||||||||||||||||||||
CRSEF Solis Holdings, L.L.C.(9) | 2,745,879 | 2,745,879 | — | * | — | — | — | — | ||||||||||||||||||||||||
Entities Affiliated Ecosystem Integrity Fund(10) | 8,399,653 | 1,886,284 | 6,513,369 | 14. | % | 2,369,253 | 1,886,284 | 482,969 | 1.1 | % | ||||||||||||||||||||||
William J. Anderson(11) | 595,203 | 141,817 | 453,386 | 1.0 | % | 141,817 | 141,817 | — | — | |||||||||||||||||||||||
David J. Anderson | 405,090 | 126,710 | 453,386 | 1.0 | % | 126,710 | 126,710 | — | — | |||||||||||||||||||||||
Adam Gishen | 908,284 | 539,938 | 368,346 | * | 517,488 | 517,488 | — | — | ||||||||||||||||||||||||
Abhishek Bhatia | 568,262 | 355,570 | 212,692 | * | 343,100 | 343,100 | — | — | ||||||||||||||||||||||||
Edward Zeng(12) | 5,523,612 | 3,747,098 | 1,776,514 | 3.9 | % | 3,614,472 | 39,986 | 3,574,486 | 7.9 | % | ||||||||||||||||||||||
Tidjane Thiam | 3,733,573 | 2,177,035 | 1,556,538 | 3.4 | % | 2,077,225 | 2,077,225 | — | — | |||||||||||||||||||||||
Entities Affiliated with Structural Capital Investments(13) | 1,579,325 | 1,508,440 | 70,885 | * | 1,508,440 | 22,172 | 1,486,268 | * | ||||||||||||||||||||||||
Li Hua Yeh | 35,000 | 35,000 | — | * | — | — | — | — | ||||||||||||||||||||||||
Joseph Wagman | 90,000 | 90,000 | — | * | — | — | — | — | ||||||||||||||||||||||||
Brener International Group, LLC | 150,000 | 150,000 | — | * | — | — | — | * | ||||||||||||||||||||||||
Rustom Jokhi | 125,000 | 125,000 | — | * | — | — | — | * | ||||||||||||||||||||||||
Paul Hastings LLP(14) | 440,000 | 440,000 | — | * | — | — | — | * | ||||||||||||||||||||||||
| LNQ Advisors, LLC | 340,000 | 340,000 | — | * | — | — | — | * | ||||||||||||||||||||||||
Benjamin Securities, Inc. | 75,556 | 75,556 | — | * | — | — | — | * | ||||||||||||||||||||||||
Interest Solutions, LLC | 15,000 | 15,000 | — | * | — | — | — | * | ||||||||||||||||||||||||
Noreen Doyle | 25,000 | 25,000 | — | * | — | — | — | — | ||||||||||||||||||||||||
William Janetschek | 25,000 | 25,000 | — | * | — | — | — | — | ||||||||||||||||||||||||
Nell Cady-Kruse | 25,000 | 25,000 | — | * | — | — | — | — | ||||||||||||||||||||||||
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Total—Holders of Registration Rights | 25,994,550 | 14,589,434 | 11,405,116 | 25.0 | % | 10,713,612 | 5,169,889 | 5,543,723 | 9.0 | % | ||||||||||||||||||||||
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Holders of Common Stock Warrants |
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South Lake One, LLC | 1,357,395 | 323,422 | 1,033,973 | 2.3 | % | 323,422 | 323,422 | — | — | |||||||||||||||||||||||
The Libra Foundation(15) | 1,345,633 | 320,620 | 1,025,013 | 2.3 | % | 493,687 | 320,620 | 173,067 | * | |||||||||||||||||||||||
Eastern Win Development Holdings Limited | 1,295,922 | 308,775 | 987,147 | 2.2 | % | 308,775 | 308,775 | — | — | |||||||||||||||||||||||
Floodgate Fund III, L.P., on behalf of itself and as nominee for certain other individuals and entities | 641,794 | 152,918 | 488,876 | 1.1 | % | 152,918 | 152,918 | — | — | |||||||||||||||||||||||
John Bertuzzi | 623,600 | 148,583 | 475,017 | 1.0 | % | 148,583 | 148,583 | — | — | |||||||||||||||||||||||
Aequanimitas LP | 503,725 | 120,021 | 383,704 | * | 120,021 | 120,021 | — | — | ||||||||||||||||||||||||
Saperstein Family Revocable Trust u/t/d 8/3/1989 | 493,965 | 117,695 | 376,270 | * | 117,695 | 117,695 | — | — | ||||||||||||||||||||||||
Entities Affilitated with Presidio Partners 2007 LP(16) | 402,408 | 95,880 | 306,528 | * | 95,880 | 95,880 | — | — | ||||||||||||||||||||||||
Suvi Sharma | 228,638 | 54,477 | 174,161 | * | 56,624 | 54,477 | 2,147 | * | ||||||||||||||||||||||||
101
| Shares of Common Stock | Warrants to Purchase Common Stock | |||||||||||||||||||||||||||||||
Name | Number Beneficially Owned Prior to Offering | Number Registered for Sale Hereby | Number Beneficially Owned After Offering | Percent Owned After Offering | Number Beneficially Owned Prior to Offering | Number Registered for Sale Hereby | Number Beneficially Owned After Offering | Percent Owned After Offering | ||||||||||||||||||||||||
PIPE Investors |
| |||||||||||||||||||||||||||||||
Entities Affiliated with Park West Asset Management LLC(1) | 2,918,519 | 1,600,105 | 1,318,414 | 2.9 | % | 600,105 | 600,105 | — | — | |||||||||||||||||||||||
Bonomi 2001 Trust(2) | 60,177 | 21,955 | 38,222 | * | 11,955 | 11,955 | — | — | ||||||||||||||||||||||||
David Robinov | 37,953 | 16,186 | 21,767 | * | 5,325 | 5,325 | — | — | ||||||||||||||||||||||||
Shares Owned by Thurman John Rodgers(3) | 7,082,187 | 3,019,949 | 4,062,238 | 9.0 | % | 724,416 | 724,416 | — | — | |||||||||||||||||||||||
Shares Owned By Elias Antoun(4) | 132,688 | 48,425 | 84,263 | * | 28,425 | 28,425 | — | — | ||||||||||||||||||||||||
Jon D and Linda W Gruber Trust(5) | 100,000 | 100,000 | — | * | — | — | — | — | ||||||||||||||||||||||||
Entities Affiliated with Meteora(6) | 4,300,000 | 2,238,48 | 2,061,512 | 4.6 | % | — | — | — | ||||||||||||||||||||||||
Polar Multi-Strategy Master Fund(7) | 4,113,506 | 3,781,753 | 331,753 | * | 132,600 | — | 132,600 | * | ||||||||||||||||||||||||
Entities Affilaited with Sandia(8) | 1,350,000 | 1,200,000 | 150,000 | * | — | — | — | |||||||||||||||||||||||||
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Total—PIPE Investors | 20,095,030 | 12,026,861 | 8,068,169 | 17.8 | % | 1,502,826 | 1,370,226 | 132,600 | ||||||||||||||||||||||||
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Holders of Registration Rights Pursuant to Registration Rights Agreement |
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CRSEF Solis Holdings, L.L.C.(9) | 2,745,879 | 2,745,879 | — | * | — | — | — | — | ||||||||||||||||||||||||
Entities Affiliated Ecosystem Integrity Fund(10) | 8,399,653 | 1,886,284 | 6,513,369 | 14. | % | 2,369,253 | 1,886,284 | 482,969 | 1.1 | % | ||||||||||||||||||||||
William J. Anderson(11) | 595,203 | 141,817 | 453,386 | 1.0 | % | 141,817 | 141,817 | — | — | |||||||||||||||||||||||
David J. Anderson | 405,090 | 126,710 | 453,386 | 1.0 | % | 126,710 | 126,710 | — | — | |||||||||||||||||||||||
Adam Gishen | 908,284 | 539,938 | 368,346 | * | 517,488 | 517,488 | — | — | ||||||||||||||||||||||||
Abhishek Bhatia | 568,262 | 355,570 | 212,692 | * | 343,100 | 343,100 | — | — | ||||||||||||||||||||||||
Edward Zeng(12) | 5,523,612 | 3,747,098 | 1,776,514 | 3.9 | % | 3,614,472 | 39,986 | 3,574,486 | 7.9 | % | ||||||||||||||||||||||
Tidjane Thiam | 3,733,573 | 2,177,035 | 1,556,538 | 3.4 | % | 2,077,225 | 2,077,225 | — | — | |||||||||||||||||||||||
Li Hua Yeh | 35,000 | 35,000 | — | * | — | — | — | — | ||||||||||||||||||||||||
Joseph Wagman | 90,000 | 90,000 | — | * | — | — | — | — | ||||||||||||||||||||||||
Brener International Group, LLC | 150,000 | 150,000 | — | * | — | — | — | * | ||||||||||||||||||||||||
Rustom Jokhi | 125,000 | 125,000 | — | * | — | — | — | * | ||||||||||||||||||||||||
Paul Hastings LLP(13) | 440,000 | 440,000 | — | * | — | — | — | * | ||||||||||||||||||||||||
| LNQ Advisors, LLC | 340,000 | 340,000 | — | * | — | — | — | * | ||||||||||||||||||||||||
Benjamin Securities, Inc. | 75,556 | 75,556 | — | * | — | — | — | * | ||||||||||||||||||||||||
Interest Solutions, LLC | 15,000 | 15,000 | — | * | — | — | — | * | ||||||||||||||||||||||||
Noreen Doyle | 25,000 | 25,000 | — | * | — | — | — | — | ||||||||||||||||||||||||
William Janetschek | 25,000 | 25,000 | — | * | — | — | — | — | ||||||||||||||||||||||||
Nell Cady-Kruse | 25,000 | 25,000 | — | * | — | — | — | — | ||||||||||||||||||||||||
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Total—Holders of Registration Rights | 24,415,225 | 13,080,994 | 11,334,231 | 25.0 | % | 9,205,172 | 5,147,717 | 4,057,455 | 9.0 | % | ||||||||||||||||||||||
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Holders of Common Stock Warrants |
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South Lake One, LLC | 1,357,395 | 323,422 | 1,033,973 | 2.3 | % | 323,422 | 323,422 | — | — | |||||||||||||||||||||||
The Libra Foundation(14) | 1,345,633 | 320,620 | 1,025,013 | 2.3 | % | 493,687 | 320,620 | 173,067 | * | |||||||||||||||||||||||
Eastern Win Development Holdings Limited | 1,295,922 | 308,775 | 987,147 | 2.2 | % | 308,775 | 308,775 | — | — | |||||||||||||||||||||||
Floodgate Fund III, L.P., on behalf of itself and as nominee for certain other individuals and entities | 641,794 | 152,918 | 488,876 | 1.1 | % | 152,918 | 152,918 | — | — | |||||||||||||||||||||||
John Bertuzzi | 623,600 | 148,583 | 475,017 | 1.0 | % | 148,583 | 148,583 | — | — | |||||||||||||||||||||||
Aequanimitas LP | 503,725 | 120,021 | 383,704 | * | 120,021 | 120,021 | — | — | ||||||||||||||||||||||||
Saperstein Family Revocable Trust u/t/d 8/3/1989 | 493,965 | 117,695 | 376,270 | * | 117,695 | 117,695 | — | — | ||||||||||||||||||||||||
Entities Affilitated with Presidio Partners 2007 LP(15) | 402,408 | 95,880 | 306,528 | * | 95,880 | 95,880 | — | — | ||||||||||||||||||||||||
Suvi Sharma | 228,638 | 54,477 | 174,161 | * | 56,624 | 54,477 | 2,147 | * | ||||||||||||||||||||||||
Serious Change, LP | 205,738 | 49,020 | 156,718 | * | 49,020 | 49,020 | — | — | ||||||||||||||||||||||||
| Shares of Common Stock | Warrants to Purchase Common Stock | |||||||||||||||||||||||||||||||
Name | Number Beneficially Owned Prior to Offering | Number Registered for Sale Hereby | Number Beneficially Owned After Offering | Percent Owned After Offering | Number Beneficially Owned Prior to Offering | Number Registered for Sale Hereby | Number Beneficially Owned After Offering | Percent Owned After Offering | ||||||||||||||||||||||||
Serious Change, LP | 205,738 | 49,020 | 156,718 | * | 49,020 | 49,020 | — | — | ||||||||||||||||||||||||
UNIVERSE SOLAR ENERGY HOLDINGS INC. | 201,072 | 47,909 | 153,163 | * | 47,909 | 47,909 | — | — | ||||||||||||||||||||||||
Petunia LLC | 189,608 | 45,177 | 144,431 | * | 45,177 | 45,177 | — | — | ||||||||||||||||||||||||
Katerra, Inc. | 182,231 | 43,419 | 138,812 | * | 43,419 | 43,419 | — | — | ||||||||||||||||||||||||
GCL SYSTEM INTEGRATION TECHNOLOGY PTE. LTD. | 156,389 | 37,262 | 119,127 | * | 37,262 | 37,262 | — | — | ||||||||||||||||||||||||
Orama Investments, LLC | 143,920 | 34,291 | 109,629 | * | 34,291 | 34,291 | — | — | ||||||||||||||||||||||||
Eric Bowen & Co, LLC | 131,504 | 31,333 | 100,171 | * | 31,333 | 31,333 | — | — | ||||||||||||||||||||||||
William S Price III Revocable Trust | 129,292 | 30,806 | 98,486 | * | 30,806 | 30,806 | — | — | ||||||||||||||||||||||||
Dinwoodie-Meservey Family Living Trust | 119,137 | 28,386 | 90,751 | * | 28,386 | 28,386 | — | — | ||||||||||||||||||||||||
| Carl Jasper | 187,057 | 44,569 | 142,488 | * | 44,569 | 44,569 | — | — | ||||||||||||||||||||||||
IRAR Trust FBO John Colton Account # 35-38969 | 111,537 | 26,575 | 84,962 | * | 26,575 | 26,575 | — | — | ||||||||||||||||||||||||
Peter Vandermark Trust UA 9-15-05 | 102,866 | 24,509 | 78,357 | * | 24,509 | 24,509 | — | — | ||||||||||||||||||||||||
Dustin Dunaway | 97,626 | 23,261 | 74,365 | * | 23,261 | 23,261 | — | — | ||||||||||||||||||||||||
Leon Saperstein | 86,214 | 20,542 | 65,672 | * | 20,542 | 20,542 | — | — | ||||||||||||||||||||||||
Sheridan Dose Investment Company LLC | 83,818 | 19,971 | 63,847 | * | 19,971 | 19,971 | — | — | ||||||||||||||||||||||||
Jacobus Saperstein | 80,507 | 19,182 | 61,325 | * | 19,182 | 19,182 | — | — | ||||||||||||||||||||||||
Unmi Abkin | 80,507 | 19,182 | 61,325 | * | 19,182 | 19,182 | — | — | ||||||||||||||||||||||||
Five Stones Investments II, LLC | 71,959 | 17,145 | 54,814 | * | 17,145 | 17,145 | — | — | ||||||||||||||||||||||||
Michael P McCormick Rev Trust | 71,959 | 17,145 | 54,814 | * | 17,145 | 17,145 | — | — | ||||||||||||||||||||||||
Mary Wheeler | 70,398 | 16,773 | 53,625 | * | 16,773 | 16,773 | — | — | ||||||||||||||||||||||||
Entities Affilitated with Atika Capital Partners, LP(17) | 86,350 | 20,574 | 65,776 | * | 20,574 | 20,574 | — | — | ||||||||||||||||||||||||
Genine McCormick Rev Trust | 64,763 | 15,431 | 49,332 | * | 15,431 | 15,431 | — | — | ||||||||||||||||||||||||
Fenice Investment Group, LLC | 63,295 | 15,081 | 48,214 | * | 15,081 | 15,081 | — | — | ||||||||||||||||||||||||
Jusong Wang | 58,978 | 14,052 | 44,926 | * | 14,052 | 14,052 | — | — | ||||||||||||||||||||||||
Crossroads Partners, LP | 57,567 | 13,716 | 43,851 | * | 13,716 | 13,716 | — | — | ||||||||||||||||||||||||
Entities Affiliated with Venture Lending & Leasing(18) | 97,794 | 23,300 | 74,494 | * | 23,300 | 23,300 | — | — | ||||||||||||||||||||||||
Alp Saul | 42,269 | 10,071 | 32,198 | * | 10,071 | 10,071 | — | — | ||||||||||||||||||||||||
Shanghai Sunwise Investment Center (Limited Partnership) | 40,864 | 9,736 | 31,128 | * | 9,736 | 9,736 | — | — | ||||||||||||||||||||||||
The Jim and Patty Rouse Charitable Foundation | 37,146 | 8,850 | 28,296 | * | 8,850 | 8,850 | — | — | ||||||||||||||||||||||||
Abhay Maheshwari | 36,447 | 8,684 | 27,763 | * | 8,684 | 8,684 | — | — | ||||||||||||||||||||||||
Alex Derbes | 35,979 | 8,572 | 27,407 | * | 8,572 | 8,572 | — | — | ||||||||||||||||||||||||
David Miller | 35,979 | 8,572 | 27,407 | * | 8,572 | 8,572 | — | — | ||||||||||||||||||||||||
| JDV Consulting | 35,979 | 8,572 | 27,407 | * | 8,572 | 8,572 | — | — | ||||||||||||||||||||||||
Lynyard Investments, LP | 35,979 | 8,572 | 27,407 | * | 8,572 | 8,572 | — | — | ||||||||||||||||||||||||
McCormick Descendants Trust | 35,979 | 8,572 | 27,407 | * | 8,572 | 8,572 | — | — | ||||||||||||||||||||||||
SBSW Partners | 35,979 | 8,572 | 27,407 | * | 8,572 | 8,572 | — | — | ||||||||||||||||||||||||
Stavros Ginnakopoulos | 35,979 | 8,572 | 27,407 | * | 8,572 | 8,572 | — | — | ||||||||||||||||||||||||
Steven N. Stein 2012 Irrevocable Trust | 35,979 | 8,572 | 27,407 | * | 8,572 | 8,572 | — | — | ||||||||||||||||||||||||
McOuat-Young 2011 Trust | 35,760 | 8,520 | 27,240 | * | 8,520 | 8,520 | — | — | ||||||||||||||||||||||||
Nidnudim Israel LTD | 35,741 | 8,516 | 27,225 | * | 8,516 | 8,516 | — | — | ||||||||||||||||||||||||
Malik Franklin | 34,663 | 8,259 | 26,404 | * | 8,259 | 8,259 | — | — | ||||||||||||||||||||||||
Osman Nalbantoglu | 30,897 | 7,361 | 23,536 | * | 7,361 | 7,361 | — | — | ||||||||||||||||||||||||
Albert Luu | 12,928 | 3,080 | 9,848 | * | 3,080 | 3,080 | — | — | ||||||||||||||||||||||||
Sunstarter Capital LLC | 29,489 | 7,026 | 22,463 | * | 7,026 | 7,026 | — | — | ||||||||||||||||||||||||
102
| Shares of Common Stock | Warrants to Purchase Common Stock | |||||||||||||||||||||||||||||||
Name | Number Beneficially Owned Prior to Offering | Number Registered for Sale Hereby | Number Beneficially Owned After Offering | Percent Owned After Offering | Number Beneficially Owned Prior to Offering | Number Registered for Sale Hereby | Number Beneficially Owned After Offering | Percent Owned After Offering | ||||||||||||||||||||||||
UNIVERSE SOLAR ENERGY HOLDINGS INC. | 201,072 | 47,909 | 153,163 | * | 47,909 | 47,909 | — | — | ||||||||||||||||||||||||
Petunia LLC | 189,608 | 45,177 | 144,431 | * | 45,177 | 45,177 | — | — | ||||||||||||||||||||||||
Katerra, Inc. | 182,231 | 43,419 | 138,812 | * | 43,419 | 43,419 | — | — | ||||||||||||||||||||||||
GCL SYSTEM INTEGRATION TECHNOLOGY PTE. LTD. | 156,389 | 37,262 | 119,127 | * | 37,262 | 37,262 | — | — | ||||||||||||||||||||||||
Orama Investments, LLC | 143,920 | 34,291 | 109,629 | * | 34,291 | 34,291 | — | — | ||||||||||||||||||||||||
Eric Bowen & Co, LLC | 131,504 | 31,333 | 100,171 | * | 31,333 | 31,333 | — | — | ||||||||||||||||||||||||
William S Price III Revocable Trust | 129,292 | 30,806 | 98,486 | * | 30,806 | 30,806 | — | — | ||||||||||||||||||||||||
Dinwoodie-Meservey Family Living Trust | 119,137 | 28,386 | 90,751 | * | 28,386 | 28,386 | — | — | ||||||||||||||||||||||||
| Carl Jasper | 187,057 | 44,569 | 142,488 | * | 44,569 | 44,569 | — | — | ||||||||||||||||||||||||
IRAR Trust FBO John Colton Account # 35-38969 | 111,537 | 26,575 | 84,962 | * | 26,575 | 26,575 | — | — | ||||||||||||||||||||||||
Peter Vandermark Trust UA 9-15-05 | 102,866 | 24,509 | 78,357 | * | 24,509 | 24,509 | — | — | ||||||||||||||||||||||||
Dustin Dunaway | 97,626 | 23,261 | 74,365 | * | 23,261 | 23,261 | — | — | ||||||||||||||||||||||||
Leon Saperstein | 86,214 | 20,542 | 65,672 | * | 20,542 | 20,542 | — | — | ||||||||||||||||||||||||
Sheridan Dose Investment Company LLC | 83,818 | 19,971 | 63,847 | * | 19,971 | 19,971 | — | — | ||||||||||||||||||||||||
Jacobus Saperstein | 80,507 | 19,182 | 61,325 | * | 19,182 | 19,182 | — | — | ||||||||||||||||||||||||
Unmi Abkin | 80,507 | 19,182 | 61,325 | * | 19,182 | 19,182 | — | — | ||||||||||||||||||||||||
Five Stones Investments II, LLC | 71,959 | 17,145 | 54,814 | * | 17,145 | 17,145 | — | — | ||||||||||||||||||||||||
Michael P McCormick Rev Trust | 71,959 | 17,145 | 54,814 | * | 17,145 | 17,145 | — | — | ||||||||||||||||||||||||
Structural Capital Investments III, L.P. | 71,959 | 17,145 | 54,814 | * | 149,349 | 17,145 | 132,204 | * | ||||||||||||||||||||||||
Mary Wheeler | 70,398 | 16,773 | 53,625 | * | 16,773 | 16,773 | — | — | ||||||||||||||||||||||||
Entities Affilitated with Atika Capital Partners, LP(16) | 86,350 | 20,574 | 65,776 | * | 20,574 | 20,574 | — | — | ||||||||||||||||||||||||
Genine McCormick Rev Trust | 64,763 | 15,431 | 49,332 | * | 15,431 | 15,431 | — | — | ||||||||||||||||||||||||
Fenice Investment Group, LLC | 63,295 | 15,081 | 48,214 | * | 15,081 | 15,081 | — | — | ||||||||||||||||||||||||
Jusong Wang | 58,978 | 14,052 | 44,926 | * | 14,052 | 14,052 | — | — | ||||||||||||||||||||||||
Crossroads Partners, LP | 57,567 | 13,716 | 43,851 | * | 13,716 | 13,716 | — | — | ||||||||||||||||||||||||
Entities Affiliated with Venture Lending & Leasing(17) | 97,794 | 23,300 | 74,494 | * | 23,300 | 23,300 | — | — | ||||||||||||||||||||||||
Alp Saul | 42,269 | 10,071 | 32,198 | * | 10,071 | 10,071 | — | — | ||||||||||||||||||||||||
Shanghai Sunwise Investment Center (Limited Partnership) | 40,864 | 9,736 | 31,128 | * | 9,736 | 9,736 | — | — | ||||||||||||||||||||||||
The Jim and Patty Rouse Charitable Foundation | 37,146 | 8,850 | 28,296 | * | 8,850 | 8,850 | — | — | ||||||||||||||||||||||||
Abhay Maheshwari | 36,447 | 8,684 | 27,763 | * | 8,684 | 8,684 | — | — | ||||||||||||||||||||||||
Alex Derbes | 35,979 | 8,572 | 27,407 | * | 8,572 | 8,572 | — | — | ||||||||||||||||||||||||
David Miller | 35,979 | 8,572 | 27,407 | * | 8,572 | 8,572 | — | — | ||||||||||||||||||||||||
| JDV Consulting | 35,979 | 8,572 | 27,407 | * | 8,572 | 8,572 | — | — | ||||||||||||||||||||||||
Lynyard Investments, LP | 35,979 | 8,572 | 27,407 | * | 8,572 | 8,572 | — | — | ||||||||||||||||||||||||
McCormick Descendants Trust | 35,979 | 8,572 | 27,407 | * | 8,572 | 8,572 | — | — | ||||||||||||||||||||||||
SBSW Partners | 35,979 | 8,572 | 27,407 | * | 8,572 | 8,572 | — | — | ||||||||||||||||||||||||
Stavros Ginnakopoulos | 35,979 | 8,572 | 27,407 | * | 8,572 | 8,572 | — | — | ||||||||||||||||||||||||
Steven N. Stein 2012 Irrevocable Trust | 35,979 | 8,572 | 27,407 | * | 8,572 | 8,572 | — | — | ||||||||||||||||||||||||
McOuat-Young 2011 Trust | 35,760 | 8,520 | 27,240 | * | 8,520 | 8,520 | — | — | ||||||||||||||||||||||||
Nidnudim Israel LTD | 35,741 | 8,516 | 27,225 | * | 8,516 | 8,516 | — | — | ||||||||||||||||||||||||
Malik Franklin | 34,663 | 8,259 | 26,404 | * | 8,259 | 8,259 | — | — | ||||||||||||||||||||||||
Osman Nalbantoglu | 30,897 | 7,361 | 23,536 | * | 7,361 | 7,361 | — | — | ||||||||||||||||||||||||
Albert Luu | 12,928 | 3,080 | 9,848 | * | 3,080 | 3,080 | — | — | ||||||||||||||||||||||||
103
| Shares of Common Stock | Warrants to Purchase Common Stock | |||||||||||||||||||||||||||||||
Name | Number Beneficially Owned Prior to Offering | Number Registered for Sale Hereby | Number Beneficially Owned After Offering | Percent Owned After Offering | Number Beneficially Owned Prior to Offering | Number Registered for Sale Hereby | Number Beneficially Owned After Offering | Percent Owned After Offering | ||||||||||||||||||||||||
Entities Affiliated with Sigma Partners 7, LP(19) | 31,076 | 7,404 | 23,672 | * | 7,404 | 7,404 | — | — | ||||||||||||||||||||||||
Fortify Capital Investments, LLC | 28,783 | 6,858 | 21,925 | * | 6,858 | 6,858 | — | — | ||||||||||||||||||||||||
Harvey Felman | 28,783 | 6,858 | 21,925 | * | 6,858 | 6,858 | — | — | ||||||||||||||||||||||||
The Chandoha and Anderson Revocable Trust | 26,203 | 6,243 | 19,960 | * | 6,243 | 6,243 | — | — | ||||||||||||||||||||||||
Hitesh Shah | 25,185 | 6,000 | 19,185 | * | 6,000 | 6,000 | — | — | ||||||||||||||||||||||||
Li Biao | 25,123 | 5,986 | 19,137 | * | 5,986 | 5,986 | — | — | ||||||||||||||||||||||||
Marc Suidan and Marie Bathiche Living Trust | 24,758 | 5,899 | 18,859 | * | 5,899 | 5,899 | — | — | ||||||||||||||||||||||||
Future Dreams LP | 23,827 | 5,677 | 18,150 | * | 5,677 | 5,677 | — | — | ||||||||||||||||||||||||
Alan Anderson | 85,132 | 20,284 | 64,848 | * | 20,284 | 20,284 | — | — | ||||||||||||||||||||||||
Kireker Family Ventures, LLC | 43,976 | 8,979 | 34,997 | * | 6,478 | 6,478 | — | — | ||||||||||||||||||||||||
Kevin Gibson | 82,823 | 19,734 | 63,089 | * | 19,734 | 19,734 | — | — | ||||||||||||||||||||||||
Williams Trading LLC | 41,589 | 9,909 | 31,680 | * | 9,909 | 9,909 | — | — | ||||||||||||||||||||||||
H & L Wenger 2002 Family Trust Dated June 21, 2002 | 183,244 | 41,646 | 141,598 | * | 42,362 | 38,311 | 4,051 | * | ||||||||||||||||||||||||
Robert Zapotosky | 123,474 | 29,420 | 94,054 | * | 31,445 | 29,420 | 2,025 | * | ||||||||||||||||||||||||
Briz Trading Corporation | 41,700 | 7,198 | 34,502 | * | 3,029 | 3,029 | — | — | ||||||||||||||||||||||||
Executive Financing Ltd | 41,700 | 7,198 | 34,502 | * | 3,029 | 3,029 | — | — | ||||||||||||||||||||||||
Golden Heritage Investments Ltd | 41,700 | 7,198 | 34,502 | * | 3,029 | 3,029 | — | — | ||||||||||||||||||||||||
Philippe Steffan | 41,700 | 7,198 | 34,502 | * | 3,029 | 3,029 | — | — | ||||||||||||||||||||||||
Bronfman Family Investment Partnership LLLP | 24,465 | 4,318 | 20,147 | * | 1,817 | 1,817 | — | — | ||||||||||||||||||||||||
Jeffrey Bronfman Revocable Living Trust | 24,465 | 4,318 | 20,147 | * | 1,817 | 1,817 | — | — | ||||||||||||||||||||||||
The Rosalinde and Arthur Gilbert Foundation | 81,555 | 14,396 | 67,159 | * | 6,058 | 6,058 | — | — | ||||||||||||||||||||||||
The RSZ Trust | 16,309 | 2,878 | 13,431 | * | 1,211 | 1,211 | — | — | ||||||||||||||||||||||||
Charles Edgar Haldeman, Jr. | 326,229 | 57,590 | 268,639 | * | 24,235 | 24,235 | — | — | ||||||||||||||||||||||||
HNVR Technology Investment Partners, L.P. | 163,113 | 28,794 | 134,319 | * | 12,117 | 12,117 | — | — | ||||||||||||||||||||||||
HNVR II, LP | 165,159 | 28,794 | 136,365 | * | 12,117 | 12,117 | — | — | ||||||||||||||||||||||||
Foris Ventures, LLC(20) | 1,649,597 | 287,954 | 1,361,643 | 3.0 | % | 121,176 | 121,176 | — | — | |||||||||||||||||||||||
Entities Affiliated with Kline Hill Partners Fund | 883,534 | 195,412 | 688,122 | 1.5 | % | 170,396 | 170,396 | — | — | |||||||||||||||||||||||
Kyra Robinov | 27,953 | 6,158 | 21,795 | * | 5,325 | 5,325 | — | — | ||||||||||||||||||||||||
Georgina Asset Management LLC | 10,000 | 10,000 | — | — | — | — | — | — | ||||||||||||||||||||||||
Great Point Capital, LLC | 20,000 | 20,000 | — | — | — | — | — | — | ||||||||||||||||||||||||
Atlas Merchant Capital SPAC Fund I LP | 60,000 | 60,000 | — | — | — | — | — | — | ||||||||||||||||||||||||
Rachelle Du Rocher | 12,500 | 12,500 | — | * | — | — | — | — | ||||||||||||||||||||||||
Other stockholders cumulatively holding less than 1% of Common Stock | 492,329 | 117,286 | 375,043 | * | 117,286 | 117,286 | — | — | ||||||||||||||||||||||||
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Total—Holders Merger Warrants | 15,438,720 | 3,571,577 | 11,867,143 | 26.3 | % | 3,351,487 | 3,172,222 | 179,265 | * | |||||||||||||||||||||||
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Total | 62,597,757 | 30,497,872 | 32,099,885 | 69.2 | % | 15,567,925 | 9,712,337 | 5,855,588 | 9.9 | % | ||||||||||||||||||||||
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| Shares of Common Stock | Warrants to Purchase Common Stock | |||||||||||||||||||||||||||||||
Name | Number Beneficially Owned Prior to Offering | Number Registered for Sale Hereby | Number Beneficially Owned After Offering | Percent Owned After Offering | Number Beneficially Owned Prior to Offering | Number Registered for Sale Hereby | Number Beneficially Owned After Offering | Percent Owned After Offering | ||||||||||||||||||||||||
Sunstarter Capital LLC | 29,489 | 7,026 | 22,463 | * | 7,026 | 7,026 | — | — | ||||||||||||||||||||||||
Entities Affiliated with Sigma Partners 7, LP(18) | 31,076 | 7,404 | 23,672 | * | 7,404 | 7,404 | — | — | ||||||||||||||||||||||||
Fortify Capital Investments, LLC | 28,783 | 6,858 | 21,925 | * | 6,858 | 6,858 | — | — | ||||||||||||||||||||||||
Harvey Felman | 28,783 | 6,858 | 21,925 | * | 6,858 | 6,858 | — | — | ||||||||||||||||||||||||
The Chandoha and Anderson Revocable Trust | 26,203 | 6,243 | 19,960 | * | 6,243 | 6,243 | — | — | ||||||||||||||||||||||||
Hitesh Shah | 25,185 | 6,000 | 19,185 | * | 6,000 | 6,000 | — | — | ||||||||||||||||||||||||
Li Biao | 25,123 | 5,986 | 19,137 | * | 5,986 | 5,986 | — | — | ||||||||||||||||||||||||
Marc Suidan and Marie Bathiche Living Trust | 24,758 | 5,899 | 18,859 | * | 5,899 | 5,899 | — | — | ||||||||||||||||||||||||
Future Dreams LP | 23,827 | 5,677 | 18,150 | * | 5,677 | 5,677 | — | — | ||||||||||||||||||||||||
Alan Anderson | 85,132 | 20,284 | 64,848 | * | 20,284 | 20,284 | — | — | ||||||||||||||||||||||||
Kireker Family Ventures, LLC | 43,976 | 8,979 | 34,997 | * | 6,478 | 6,478 | — | — | ||||||||||||||||||||||||
Kevin Gibson | 82,823 | 19,734 | 63,089 | * | 19,734 | 19,734 | — | — | ||||||||||||||||||||||||
Williams Trading LLC | 41,589 | 9,909 | 31,680 | * | 9,909 | 9,909 | — | — | ||||||||||||||||||||||||
H & L Wenger 2002 Family Trust Dated June 21, 2002 | 183,244 | 41,646 | 141,598 | * | 42,362 | 38,311 | 4,051 | * | ||||||||||||||||||||||||
Robert Zapotosky | 123,474 | 29,420 | 94,054 | * | 31,445 | 29,420 | 2,025 | * | ||||||||||||||||||||||||
Briz Trading Corporation | 41,700 | 7,198 | 34,502 | * | 3,029 | 3,029 | — | — | ||||||||||||||||||||||||
Executive Financing Ltd | 41,700 | 7,198 | 34,502 | * | 3,029 | 3,029 | — | — | ||||||||||||||||||||||||
Golden Heritage Investments Ltd | 41,700 | 7,198 | 34,502 | * | 3,029 | 3,029 | — | — | ||||||||||||||||||||||||
Philippe Steffan | 41,700 | 7,198 | 34,502 | * | 3,029 | 3,029 | — | — | ||||||||||||||||||||||||
Bronfman Family Investment Partnership LLLP | 24,465 | 4,318 | 20,147 | * | 1,817 | 1,817 | — | — | ||||||||||||||||||||||||
Jeffrey Bronfman Revocable Living Trust | 24,465 | 4,318 | 20,147 | * | 1,817 | 1,817 | — | — | ||||||||||||||||||||||||
The Rosalinde and Arthur Gilbert Foundation | 81,555 | 14,396 | 67,159 | * | 6,058 | 6,058 | — | — | ||||||||||||||||||||||||
The RSZ Trust | 16,309 | 2,878 | 13,431 | * | 1,211 | 1,211 | — | — | ||||||||||||||||||||||||
Charles Edgar Haldeman, Jr. | 326,229 | 57,590 | 268,639 | * | 24,235 | 24,235 | — | — | ||||||||||||||||||||||||
HNVR Technology Investment Partners, L.P. | 163,113 | 28,794 | 134,319 | * | 12,117 | 12,117 | — | — | ||||||||||||||||||||||||
HNVR II, LP | 165,159 | 28,794 | 136,365 | * | 12,117 | 12,117 | — | — | ||||||||||||||||||||||||
Foris Ventures, LLC | 1,649,597 | 287,954 | 1,361,643 | 3.0 | % | 121,176 | 121,176 | — | — | |||||||||||||||||||||||
Entities Affiliated with Kline Hill Partners Fund | 883,534 | 195,412 | 688,122 | 1.5 | % | 170,396 | 170,396 | — | — | |||||||||||||||||||||||
Kyra Robinov | 27,953 | 6,158 | 21,795 | * | 5,325 | 5,325 | — | — | ||||||||||||||||||||||||
Georgina Asset Management LLC | 10,000 | 10,000 | — | — | — | — | — | — | ||||||||||||||||||||||||
Great Point Capital, LLC | 20,000 | 20,000 | — | — | — | — | — | — | ||||||||||||||||||||||||
Atlas Merchant Capital SPAC Fund I LP | 60,000 | 60,000 | — | — | — | — | — | — | ||||||||||||||||||||||||
Rachelle Du Rocher | 12,500 | 12,500 | — | * | — | — | — | — | ||||||||||||||||||||||||
Other stockholders cumulatively holding less than 1% of Common Stock | 492,329 | 117,286 | 375,043 | * | 117,286 | 117,286 | — | — | ||||||||||||||||||||||||
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Total—Holders Merger Warrants | 15,510,679 | 3,588,722 | 11,921,957 | 26.3 | % | 3,500,836 | 3,189,367 | 311,469 | * | |||||||||||||||||||||||
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Total | 60,020,934 | 28,696,577 | 31,324,357 | 69.2 | % | 14,208,834 | 9,707,310 | 4,501,524 | 9.9 | % | ||||||||||||||||||||||
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| * | Represents less than 1%. |
| (1) | Consists of (i) 51,470 PIPE Shares, 270,729 shares of common stock, 68,583 shares of common stock issuable upon exercise of common stock warrants, and 68,583 common stock warrants held by Park West Partners International, Limited, and (ii) 448,530 PIPE Shares, 2,147,790 shares of common stock, 531,522 shares of common stock issuable upon exercise of common stock wrarants, and 531,522 shares of common stock warrants held by Park West Investors Master Fund, Limited. Park West Asset Management LLC, and |
104103
| Peter S. Park, through one or more affiliated entities, is the controlling manager of Park West Asset Management LLC. The principal business address is c/o Park West Asset Management LLC, 1 Letterman Drive, Building C, Suite C5-900, San Francisco, CA 94129. |
| (2) | Consists of 5,000 PIPE Shares, 43,222 shares of common stock, 11,955 shares of common stock issuable upon exercise of warrants, and 11,955 common stock warrants held by Bonomi 2001 Trust. |
| (3) | Consists of (i) 1,000,000 PIPE Shares, 4,863,367 shares of common stock, 569,770 shares of common stock issuable upon exercise of warrants, and 569,770 common stock warrants held by Rodgers Massey Revocable Living Trust, (ii) 485,562 shares of common stock, 151,881 shares of common stock issuable upon exercise of warrants and 151,881 common stock warrants held by Rodgers Capital, LLC, and (iii) 8,842 shares of common stock, 2,765 shares of common stock issuable upon exercise of warrants, and 2,765 common stock warrants held by Thurman John Rodgers. Voting and investment power over the securities held by the foregoing entities resides with Thurman John Rodgers, who may be deemed to be the beneficial owner of the shares. Thurman John Rodgers is a member of the Company’s Board of Directors and Chariman of the Board. |
| (4) | Consists of (i) 15,938 shares of common stock, 4,985 shares of common stock issuable upon exercise of warrants, and 4,985 common stock warrants held by Elias Antoun, (ii) 5,216 shares of common stock, 1,631 shares of common stock issuable upon exercise of warrants and 1,631 common stock warrants held by IRA Services Trust Company CFBO: Elias Antoun IRA292175, (iii) 69,725 shares of common stock, 21,809 shares of common stock issuable upon exercise of warrants and 21,809 warrants held by Etched Media Corporation, and (vi) 10,000 PIPE Shares and 10,000 shares transfered by the Sponsor for no additional consideration held by Antoun Family Trust. Voting and investment power over the securities held by the foregoing entities resides with Elias Antoun, who may be deemed to be the beneficial owner of the shares. |
| (5) | Voting and investment power over the securities held by the foregoing entities resides with Jon and Linda Gruber, who may be deemed to be the beneficial owner of the shares. |
| (6) | Consists of (i) 445,916 PIPE Shares, and 413,784 shares of common stock held by Meteora Special Opportunity Fund i, LP, (“ |
| (7) | Represents shares held by Polar Multi-Strategy Master Fund, a Cayman Islands exempted company (“ |
| (8) | Consists of (i) 127,440 PIPE shares held by Diametric True Alpha Market Neutral Master Fund, LP (ii) 697,680 PIPE shares held by Diametric True Alpha Enhanced Market Neutral Master Fund, LP and (iii) 374,880 PIPE shares held by Pinebridge Partners Master Fund, LP. Voting and investment power over the securities held by the foregoing entities resides with Sandia Investment Management LP (“ |
| (9) | CRSEF Solis Holdings, L.L.C. holds up to 2,745,879 shares of common stock issuable upon exercise of the warrants in the securities registrable under the Registration Rights Agreement directly. The managing |
105104
| member of CRSEF Solis Holdings, L.L.C., with respect to the common shares held by CRSEF Solis Holdings, L.L.C., is Carlyle CRSEF Solis Aggregator, S.C.Sp., and its general partner is CRSEF Lux GP S.à r.l. The address of these entities is One Vanderbilt Avenue, Suite 3400, New York, NY 10017. |
| (10) | Consists of (i) 5,832,054 shares of outstanding common stock held by Ecosystem Integrity Fund II, L.P. (“Fund |
| (11) | Consists of (i) 405,090 shares of common stock, 126,710 shares of common stock issuable upon exercise of warrants, and 126,710 common stock warrants held by William Anderson, and (ii) 48,296 shares of common stock, 15,107 shares of common stock issuable upon exercise of warrants and 15,107 common stock warrants held by Risk Allocations Systems, Inc. Voting and investment power over the securities held by Risk Allocations Systems, Inc. resides with William Anderson, who may be deemed to be the beneficial owner of the shares. William Anderson is a member of the Company’s Board of Directors and the Company’s Chief Executive Officer. |
| (12) | Consists of (i) 372,237 shares of common stock, and 29,081 common stock warrants held by Edward Zeng, and (ii) 135,897 shares of common stock, and 694,239 common stock warrants held by NextG Tech Limited. Voting and investment power over the securities held by NextG Tech Limited resides with Edward Zeng, who may be deemed to be the beneficial owner of the shares. |
| (13) | Consists of (i) 54,814 shares of common stock, 390,097 common stock warrants and 390,097 shares of common stock issuable upon exercise of warrants held by Structural Capital Investments III, L.P., (ii) 16,071 shares of common stock, 380,351 common stock warrants, and 380,351 shares of common stock issuable upon exercise of warrants held by Structural Capital Investors II, LP, (iii) 93,713 common stock warrants and 93,713 shares of common stock issuable upon exercise of warrants held by Structural Capital Holdings III, L.P., (iv) 166,345 common stock warrants and 166,345 shares of common stock issuable upon exercise of warrants held by Structural Capital Investors II-C, L.P, (v) 172,170 common stock warrants and 172,170 shares of common stock issuable upon exercise of warrants held by Diversified Credit Opportunities Fund I Offshore Investors LP, and (vi) 305,764 common stock warrants and 305,764 shares of common stock issuable upon exercise of warrants held by El Dorado Investment Company. |
| (14) | Voting and investment power over the securities is held by Chris Davis, Chief Operations Officer of Paul Hastings LLP, and Brian Sakala, Managing Director, Head of Finance, Paul Hastings LLP, who may be deemed to be the beneficial owners of the shares. The address of the foregoing entity is MetLife Building, 200 Park Ave, New York, NY 10166. |
Each of Lori D. Mills, Vice President; James Schwaba, Secretary; Amy Freidinger, Treasurer (collectively, |
Consists of (i) 298,866 shares of common stock, and 93,484 common stock warrants held by Presidio Partners 2007 LP, and (ii) 7,662 shares of common stock, and 2,396 common stock warrants held by Presidio Partners 2007 (Parallel) LP. |
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Consists of (i) 50,429 shares of common stock, and 15,774 common stock warrants held by Atika Capital Partners, LP, and (ii) 15,347 shares of common stock, and 4,800 common stock warrants held by Atika Offshore Master Fund, Ltd. |
Consists of (i) 37,247 shares of common stock, and 11,650 common stock warrants held by Venture Lending & Leasing V, LLC, and (ii) 37,247 shares of common stock, and 11,650 common stock warrants held by Venture Lending & Leasing VI, LLC. |
Consists of (i) 22,059 shares of common stock, and 6,900 common stock warrants held by Sigma Partners 7, LP, (ii) 1,351 shares of common stock, and 422 common stock warrants held by Sigma Associates 7, LP, and (iii) 626 shares of common stock, and 82 common stock warrants held by Sigma Investors 7, LP. |
| (20) | Barbara Hager, the manager of Foris Ventures (“Foris”), may be deemed to have sole power to vote and dispose of these securities. The Vallejo Ventures Trust U/T/A 2/12/96 (“VVT”), the sole member of Foris, may be deemed to have sole power to vote and dispose of these securities, and L. John Doerr and Ann Doerr, the trustees of VVT, and Barbara Hager, the special trustee of VVT, may be deemed to have shared power to vote and dispose of these securities. Each of L. John Doerr, Ann Doerr, Barbara Hager and VVT disclaim beneficial ownership of the securities held by Foris except to the extent of their pecuniary interest therein. The address for Foris and each other person named in this footnote is c/o Foris Ventures, LLC, 1180 San Carlos Avenue, #717, San Carlos, California 94070. |
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DESCRIPTION OF CAPITAL STOCK
The following summary of certain provisions of Complete Solaria’s securities does not purport to be complete and is subject to the Certificate of Incorporation, the Bylaws and the provisions of the DGCL.
Authorized and Outstanding Stock
The Certificate of Incorporation authorizes the issuance of 1,010,000,000 shares, consisting of 1,000,000,000 shares of Complete Solaria Common Stock, $0.0001 par value per share, and 10,000,000 shares of Complete Solaria Preferred Stock, $0.0001 par value. As of the Closing Date, there were 43,779,577 shares of Common Stock issued and outstanding and no preferred shares of outstanding.
Common Stock
Voting Power
Except as otherwise required by law or as otherwise provided in any certificate of designation for any series of preferred stock, the holders of Complete Solaria Common Stock possess all voting power for the election of Complete Solaria’s directors and all other matters requiring stockholder action. Holders of Complete Solaria Common Stock are entitled to one vote per share on matters to be voted on by stockholders.
Dividends
Holders of Complete Solaria Common Stock are entitled to receive such dividends, if any, as may be declared from time to time by Complete Solaria’s Board in its discretion out of funds legally available therefor. In no event will any stock dividends or stock splits or combinations of stock be declared or made on Complete Solaria Common Stock unless the shares of Complete Solaria Common Stock at the time outstanding are treated equally and identically.
Liquidation, Dissolution and Winding Up
In the event of Complete Solaria’s voluntary or involuntary liquidation, dissolution, distribution of assets or winding-up, the holders of Complete Solaria Common Stock will be entitled to receive an equal amount per share of all of Complete Solaria’s assets of whatever kind available for distribution to stockholders, after the rights of the holders of Complete Solaria Preferred Stock have been satisfied.
Preemptive or Other Rights
The holders of Complete Solaria Common Stock have no preemptive rights or other subscription rights and there are no sinking fund or redemption provisions applicable to Complete Solaria Common Stock.
Election of Directors
Complete Solaria’s Board has one class of directors and each director generally serves for a term of one year. Unless required by applicable law at the time of election, there is no cumulative voting with respect to the election of directors, with the result that the holders of more than 50% of the shares voted for the election of directors can elect all of the directors.
Preferred Stock
Complete Solaria’s Board has authority to issue shares of Complete Solaria Preferred Stock in one or more series, to fix for each such series such voting powers, designations, preferences, qualifications, limitations or
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restrictions thereof, including dividend rights, conversion rights, redemption privileges and liquidation preferences for the issue of such series all to the fullest extent permitted by the DGCL. The issuance of Complete Solaria Preferred Stock could have the effect of decreasing the trading price of the Complete Solaria Common Stock, restricting dividends on Complete Solaria’s capital stock, diluting the voting power of Complete Solaria Common Stock, impairing the liquidation rights of Complete Solaria’s capital stock, or delaying or preventing a change in control of Complete Solaria.
Warrants
Each whole Public Warrant and Merger Warrant entitles the registered holder to purchase one share of Complete Solaria Common Stock at a price of $11.50 per share, subject to adjustment as discussed below. The warrantsPublic Warrants will become exercisable on the later of 30 days after the Closing and will expire five years after the Closing at 5:00 p.m., Eastern Time or earlier upon redemption or liquidation. The Merger Warrants will become exercisable on the later of 60 days after the Closing and will expire five years after the Closing at 5:00 p.m., Eastern Time or earlier upon redemption or liquidation. However, no Public Warrants or Merger Warrants will be exercisable for cash unless Complete Solaria has an effective and current registration statement covering the shares of Complete Solaria Common Stock issuable upon exercise of the Public Warrants and Merger Warrants and a current prospectus relating to such shares of Complete Solaria Common Stock. Notwithstanding the foregoing, if a registration statement covering the shares of Complete Solaria Common Stock issuable upon exercise of the Public Warrants is not effective within 60 days from the Closing, warrant holders may, until such time as there is an effective registration statement and during any period when it shall have failed to maintain an effective registration statement, exercise Public Warrants and Merger Warrants on a cashless basis pursuant to an available exemption from registration under the Securities Act.
Pursuant to the warrant agreement,agreements, no fractional warrants will be issued upon separation of the units and only whole warrants will trade. Upon the Closing, Complete Solaria separated the units into shares of Complete Solaria Common Stock and Public Warrants, and the Units stopped trading and were delisted from the NYSE.
The Private Placement Warrants are identical to the Public Warrants underlying the Units except that (i) each Private Placement Warrant is exercisable for one share of Complete Solaria Common Stock at an exercise price of $11.50 per share, and (ii) such Private Placement Warrants will be exercisable for cash (even if a registration statement covering the shares of Solaria Common Stock issuable upon exercise of such warrants is not effective) or on a cashless basis, at the holder’s option, and will not be redeemable by us, in each case so long as they are still held by the initial purchasers or their affiliates.
The Working Capital Warrants are identical to the Private Warrants.
Once the warrants become exercisable, Complete Solaria may redeem the outstanding warrants (except as described herein with respect to the Private PlacementWarrants and Working Capital Warrants):
in whole and not in part;
at $0.10 per warrant upon a minimum of 30 days’ prior written notice of redemption, provided that holders will be able to exercise their warrants on a cashless basis prior to redemption and receive the number of shares determined by reference to the table set forth below based on the redemption date and the “fair market value” of Complete Solaria Common Stock;
| • | if, and only if, the Reference Value equals or exceeds $10.00 per share (as adjusted for share sub-divisions, share capitalizations, reorganizations, recapitalizations and the like); and |
| • | if the Reference Value is less than $18.00 per share (as adjusted for share sub-divisions, share capitalizations, reorganizations, recapitalizations and the like and as described above adjacent to the caption “Exercise Price”), the |
The right to exercise will be forfeited unless the Public Warrants are exercised prior to the date specified in the notice of redemption. On and after the redemption date, a record holder of a Public Warrant will have no further rights except to receive the redemption price for such holder’s warrant upon surrender of such warrant.
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We have established the last of the redemption criteria discussed above to prevent a redemption call unless there is at the time of the call a significant premium to the warrant exercise price. If the foregoing conditions are satisfied and we issue a notice of redemption of the warrants, each warrant holder will be entitled to exercise his, her or its warrant prior to the scheduled redemption date. Any such exercise would not be done on a “cashless” basis and would require the exercising warrant holder to pay the exercise price for each warrant being exercised. However, the price of the Complete Solaria Common Stock may fall below the $18.00 redemption trigger price (as adjusted for share sub-divisions, share capitalizations, reorganizations, recapitalizations and the like and as described below) as well as the $11.50 (for whole shares) warrant exercise price after the redemption notice is issued.
The numbers in the table below represent the number of shares of Complete Solaria Common Stock that a warrant holder will receive upon such cashless exercise in connection with a redemption by us pursuant to this redemption feature, based on the “fair market value” of shares of Complete Solaria Common Stock on the corresponding redemption date (assuming holders elect to exercise their warrants and such warrants are not redeemed for $0.10 per warrant), determined for these purposes based on volume-weighted average price of shares of Complete Solaria Common Stock during the 10 trading days immediately following the date on which the notice of redemption is sent to the holders of warrants, and the number of months that the corresponding redemption date precedes the expiration date of the warrants, each as set forth in the table below. We will provide our warrant holders with the final fair market value no later than one business day after the 10-trading day period described above ends.
The share prices set forth in the column headings of the table below will be adjusted as of any date on which the number of shares issuable upon exercise of a warrant or the exercise price of the warrant is adjusted as set forth below. If the number of shares issuable upon exercise of a warrant is adjusted, the adjusted share prices in the column headings will equal the share prices immediately prior to such adjustment, multiplied by a fraction, the numerator of which is the exercise price of the warrant after such adjustment and the denominator of which is the price of the warrant immediately prior to such adjustment. In such an event, the number of shares in the table below shall be adjusted by multiplying such share amounts by a fraction, the numerator of which is the number of shares deliverable upon exercise of a warrant immediately prior to such adjustment and the denominator of which is the number of shares deliverable upon exercise of a warrant as so adjusted.
| Fair Market Value of Common Stock | ||||||||||||||||||||||||||||||||||||
Redemption Date (period to expiration of | ≤$10.00 | $11.00 | $12.00 | $13.00 | $14.00 | $15.00 | $16.00 | $17.00 | ≥$18.00 | |||||||||||||||||||||||||||
60 months | 0.261 | 0.281 | 0.297 | 0.311 | 0.324 | 0.337 | 0.348 | 0.358 | |0.361 | |||||||||||||||||||||||||||
57 months | 0.257 | 0.277 | 0.294 | 0.310 | 0.324 | 0.337 | 0.348 | 0.358 | 0.361 | |||||||||||||||||||||||||||
54 months | 0.252 | 0.272 | 0.291 | 0.307 | 0.322 | 0.335 | 0.347 | 0.357 | 0.361 | |||||||||||||||||||||||||||
51 months | 0.246 | 0.268 | 0.287 | 0.304 | 0.320 | 0.333 | 0.346 | 0.357 | 0.361 | |||||||||||||||||||||||||||
48 months | 0.241 | 0.263 | 0.283 | 0.301 | 0.317 | 0.332 | 0.344 | 0.356 | 0.361 | |||||||||||||||||||||||||||
45 months | 0.235 | 0.258 | 0.279 | 0.298 | 0.315 | 0.330 | 0.343 | 0.356 | 0.361 | |||||||||||||||||||||||||||
42 months | 0.228 | 0.252 | 0.274 | 0.294 | 0.312 | 0.328 | 0.342 | 0.355 | 0.361 | |||||||||||||||||||||||||||
39 months | 0.221 | 0.246 | 0.269 | 0.290 | 0.309 | 0.325 | 0.340 | 0.354 | 0.361 | |||||||||||||||||||||||||||
36 months | 0.213 | 0.239 | 0.263 | 0.285 | 0.305 | 0.323 | 0.339 | 0.353 | 0.361 | |||||||||||||||||||||||||||
33 months | 0.205 | 0.232 | 0.257 | 0.280 | 0.301 | 0.320 | 0.337 | 0.352 | 0.361 | |||||||||||||||||||||||||||
30 months | 0.196 | 0.224 | 0.250 | 0.274 | 0.297 | 0.316 | 0.335 | 0.351 | 0.361 | |||||||||||||||||||||||||||
27 months | 0.185 | 0.214 | 0.242 | 0.268 | 0.291 | 0.313 | 0.332 | 0.350 | 0.361 | |||||||||||||||||||||||||||
24 months | 0.173 | 0.204 | 0.233 | 0.260 | 0.285 | 0.308 | 0.329 | 0.348 | 0.361 | |||||||||||||||||||||||||||
21 months | 0.161 | 0.193 | 0.223 | 0.252 | 0.279 | 0.304 | 0.326 | 0.347 | 0.361 | |||||||||||||||||||||||||||
18 months | 0.146 | 0.179 | 0.211 | 0.242 | 0.271 | 0.298 | 0.322 | 0.345 | 0.361 | |||||||||||||||||||||||||||
15 months | 0.130 | 0.164 | 0.197 | 0.230 | 0.262 | 0.291 | 0.317 | 0.342 | 0.361 | |||||||||||||||||||||||||||
12 months | 0.111 | 0.146 | 0.181 | 0.216 | 0.250 | 0.282 | 0.312 | 0.339 | 0.361 | |||||||||||||||||||||||||||
9 months | 0.090 | 0.125 | 0.162 | 0.199 | 0.237 | 0.272 | 0.305 | 0.336 | 0.361 | |||||||||||||||||||||||||||
6 months | 0.065 | 0.099 | 0.137 | 0.178 | 0.219 | 0.259 | 0.296 | 0.331 | 0.361 | |||||||||||||||||||||||||||
3 months | 0.034 | 0.065 | 0.104 | 0.150 | 0.197 | 0.243 | 0.286 | 0.326 | 0.361 | |||||||||||||||||||||||||||
0 months | — | — | 0.042 | 0.115 | 0.179 | 0.233 | 0.281 | 0.323 | 0.361 | |||||||||||||||||||||||||||
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A holder of a warrant may notify us in writing in the event it elects to be subject to a requirement that such holder will not have the right to exercise such warrant, to the extent that after giving effect to such exercise, such person (together with such person’s affiliates), to the warrant agent’s actual knowledge, would beneficially own in excess of 4.9% or 9.8% (as specified by the holder) of the Complete Solaria shares outstanding immediately after giving effect to such exercise.
Registration Rights
At the Closing, Complete Solaria, the Sponsor, certain equityholders of Complete Solaria and certain of their respective affiliates, as applicable, and the other parties thereto, entered into the A&R Registration Rights Agreement, pursuant to which Complete Solaria granted customary registration rights to the other parties thereto, including to register for resale, pursuant to Rule 415 under the Securities Act, certain securities of Complete Solaria held by the other parties thereto.
Pursuant to the A&R Registration Rights Agreement, the parties agreed that, within 15 business days following the Closing, Complete Solaria will file with the SEC a registration statement registering the resale of such Registrable Securities (as defined therein) and use commercially reasonable efforts to have such registration statement declared effective by the SEC as soon as reasonably practicable after the filing thereof. The parties to the A&R Registration Rights Agreement have been granted certain demand underwritten offering registration rights and piggyback registration rights.
Anti-Takeover Provisions
Certificate of Incorporation and Bylaws
Among other things, the Governing Documents:
authorize the Complete Solaria Board to issue up to 10,000,000 shares of preferred stock, with any rights, preferences and privileges as they may designate, including the right to approve an acquisition or other change of control;
provide that the authorized number of directors may be changed only by resolution of the Complete Solaria Board;
provide that all vacancies, including newly created directorships, may, except as otherwise required by law, be filled by the affirmative vote of a majority of directors then in office, even if less than a quorum;
provide that stockholders seeking to present proposals before a meeting of stockholders or to nominate candidates for election as directors at a meeting of stockholders must provide advance notice in writing, and also specify requirements as to the form and content of a stockholder’s notice;
provide that Special Meetings of Complete Solaria’s stockholders may be called by the chairperson of the New Complete Solaria Board, the chief executive officer or by the Complete Solaria Board pursuant to a resolution adopted by a majority of the total number of authorized directors; and
not provide for cumulative voting rights, therefore allowing the holders of a majority of the shares of common stock entitled to vote in any election of directors to elect all of the directors standing for election, if they should so choose.
The amendment of any of these provisions would require approval by the holders of at least 66 2/3% of all of the then-outstanding capital stock entitled to vote generally in the election of directors. The combination of these provisions will make it more difficult for the existing stockholders to replace the Complete Solaria Board as well as for another party to obtain control of Complete Solaria by replacing the Complete Solaria Board. Because the Complete Solaria Board has the power to retain and discharge its officers, these provisions could
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also make it more difficult for existing stockholders or another party to effect a change in management. In addition, the authorization of undesignated preferred stock makes it possible for the Complete Solaria Board to issue preferred stock with voting or other rights or preferences that could impede the success of any attempt to change our control.
These provisions are intended to enhance the likelihood of continued stability in the composition of the Complete Solaria Board and its policies and to discourage coercive takeover practices and inadequate takeover bids. These provisions are also designed to reduce Complete Solaria’s vulnerability to hostile takeovers and to discourage certain tactics that may be used in proxy fights. However, such provisions could have the effect of discouraging others from making tender offers for Complete Solaria’s shares and may have the effect of delaying changes in our control or management. As a consequence, these provisions may also inhibit fluctuations in the market price of Complete Solaria Common Stock.
Delaware Anti-Takeover Law
Complete Solaria opted out of Section 203 of the DGCL. However, the Certificate of Incorporation contains similar provisions providing that Complete Solaria may not engage in certain “business combinations” with any “interested stockholder” for a three-year period following the time that the stockholder became an interested stockholder, unless:
prior to the date of the transaction, the Complete Solaria Board approved either the business combination or the transaction which resulted in the stockholder becoming an interested stockholder;
the interested stockholder owned at least 85% of Complete Solaria’s voting stock outstanding upon consummation of the transaction, excluding for purposes of determining the number of shares outstanding (1) shares owned by persons who are directors and also officers and (2) shares owned by employee stock plans in which employee participants do not have the right to determine confidentially whether shares held subject to the plan will be tendered in a tender or exchange offer; or
on or subsequent to the consummation of the transaction, the business combination is approved by the Complete Solaria Board and authorized at an annual or special meeting of stockholders, and not by written consent, by the affirmative vote of at least 66 2/3% of the outstanding voting stock which is not owned by the interested stockholder.
Generally, a “business combination” includes a merger, asset or stock sale or other transaction resulting in a financial benefit to the interested stockholder. An interested stockholder is a person who, together with its affiliates and associates, owns or, within three years prior to the determination of interested stockholder status, did own 20% or more of Complete Solaria’s outstanding voting stock. These provisions may encourage companies interested in acquiring Complete Solaria to negotiate in advance with the Complete Solaria Board because the stockholder approval requirement would be avoided if the board of directors approves either the business combination or the transaction which results in the stockholder becoming an interested stockholder. These provisions also may have the effect of preventing changes in the Complete Solaria Board and may make it more difficult to accomplish transactions which stockholders may otherwise deem to be in their best interests.
Choice of Forum
The Certificate of Incorporation provides that the Court of Chancery of the State of Delaware (or, if and only if the Court of Chancery of the State of Delaware lacks subject matter jurisdiction, any state court located within the State of Delaware or, if and only if all such state courts lack subject matter jurisdiction, the federal district court for the District of Delaware) is the sole and exclusive forum for the following types of actions or proceedings under Delaware statutory or common law:
any derivative action or proceeding brought on Complete Solaria’s behalf;
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any action or proceeding asserting a claim of breach of a fiduciary duty owed by any of Complete Solaria’s directors, officers, or other employees to Complete Solaria or its stockholders;
any action or proceeding asserting a claim against Complete Solaria or any of Complete Solaria’s directors, officers or other employees arising out of or pursuant to any provision of the DGCL, the Certificate of Incorporation or the Bylaws;
any action or proceeding to interpret, apply, enforce or determine the validity of the Certificate of Incorporation or the Bylaws (including any right, obligation, or remedy thereunder);
any action or proceeding as to which the DGCL confers jurisdiction to the Court of Chancery of the State of Delaware; and
any action or proceeding asserting a claim against Complete Solaria or any of Complete Solaria’s directors, officers, or other employees that is governed by the internal affairs doctrine, in all cases to the fullest extent permitted by law and subject to the court’s having personal jurisdiction over the indispensable parties named as defendants.
This choice of forum provision would not apply to suits brought to enforce a duty or liability created by the Exchange Act or any other claim for which the federal courts have exclusive jurisdiction, or the Securities Act. The Certificate of Incorporation further provides that, unless Complete Solaria consents in writing to the selection of an alternative forum, to the fullest extent permitted by law, the federal district courts of the United States of America will be the exclusive forum for resolving any complaint asserting a cause of action arising under the Securities Act. However, Section 22 of the Securities Act creates concurrent jurisdiction for federal and state courts over all suits brought to enforce any duty or liability created by the Securities Act or the rules and regulations thereunder. Accordingly, both state and federal courts have jurisdiction to entertain such claims. As noted above, the Certificate of Incorporation provides that the federal district courts of the United States will be the exclusive forum for the resolution of any complaint asserting a cause of action under the Securities Act. Due to the concurrent jurisdiction for federal and state courts created by Section 22 of the Securities Act over all suits brought to enforce any duty or liability created by the Securities Act or the rules and regulations thereunder, there is uncertainty as to whether a court would enforce the exclusive form provision. Additionally, the Certificate of Incorporation provides that any person or entity holding, owning or otherwise acquiring any interest in any of Complete Solaria’s securities shall be deemed to have notice of and consented to these provisions. Investors also cannot waive compliance with the federal securities laws and the rules and regulations thereunder.
Transfer Agent
Continental Stock Transfer & Trust Company is the transfer agent for Complete Solaria Common Stock and the warrant agent for Complete Solaria Warrants.
Listing of Common Stock and Warrants
Our common stock and Public Warrants are listed on Nasdaq under the symbols “CSLR” and CSLRW,” respectively
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MATERIAL U.S. FEDERAL INCOME TAX CONSEQUENCES
The following discussion is a summary of certain material U.S. federal income tax considerations generally applicable to the ownership and disposition of our common stock and the exercise, disposition and lapse of our Warrants. The common stock and the Warrants are referred to collectively herein as our securities. All prospective holders of our securities should consult their tax advisors with respect to the U.S. federal, state, local and non-U.S. tax consequences of the ownership and disposition of our securities.
This discussion is not a complete analysis of all potential U.S. federal income tax consequences relating to the ownership and disposition of our securities. This summary is based upon current provisions of the Code, existing U.S. Treasury Regulations promulgated thereunder, published administrative pronouncements and rulings of the U.S. Internal Revenue Service (the “IRS”), and judicial decisions, all as in effect as of the date of this prospectus. These authorities are subject to change and differing interpretation, possibly with retroactive effect. Any change or differing interpretation could alter the tax consequences to holders described in this discussion. There can be no assurance that a court or the IRS will not challenge one or more of the tax consequences described herein, and we have not obtained, nor do we intend to obtain, a ruling with respect to the U.S. federal income tax consequences to a holder of the ownership or disposition of our securities.
We assume in this discussion that a holder holds our securities as a “capital asset” within the meaning of Section 1221 of the Code (generally, property held for investment). This discussion does not address all aspects of U.S. federal income taxation that may be relevant to a particular holder in light of that holder’s individual circumstances, nor does it address the special tax accounting rules under Section 451(b) of the Code, any alternative minimum, Medicare contribution, estate or gift tax consequences, or any aspects of U.S. state, local or non-U.S. taxes or any non-income U.S. tax laws. This discussion also does not address consequences relevant to holders subject to special tax rules, such as holders that own, or are deemed to own, more than 5% of our capital stock (except to the extent specifically set forth below), corporations that accumulate earnings to avoid U.S. federal income tax, tax-exempt organizations, governmental organizations, banks, financial institutions, investment funds, insurance companies, brokers, dealers or traders in securities, commodities or currencies, regulated investment companies or real estate investment trusts, persons that have a “functional currency” other than the U.S. dollar, tax-qualified retirement plans, holders who hold or receive our securities pursuant to the exercise of employee stock options or otherwise as compensation, holders holding our securities as part of a hedge, straddle or other risk reduction strategy, conversion transaction or other integrated investment, holders deemed to sell our securities under the constructive sale provisions of the Code, passive foreign investment companies, controlled foreign corporations, S corporations, and certain former U.S. citizens or long-term residents.
In addition, this discussion does not address the tax treatment of partnerships (or entities or arrangements that are treated as partnerships for U.S. federal income tax purposes) or persons that hold our securities through such partnerships. If a partnership, including any entity or arrangement treated as a partnership for U.S. federal income tax purposes, holds our securities, the U.S. federal income tax treatment of a partner in such partnership generally will depend upon the status of the partner and the activities of the partnership. Such partners and partnerships should consult their tax advisors regarding the tax consequences of the ownership and disposition of our securities.
For purposes of this discussion, a “U.S. Holder” means a beneficial owner of our securities (other than a partnership or an entity or arrangement treated as a partnership for U.S. federal income tax purposes) that is, for U.S. federal income tax purposes:
an individual who is a citizen or resident of the United States;
a corporation, or an entity treated as a corporation for U.S. federal income tax purposes, created or organized in the United States or under the laws of the United States or of any state thereof or the District of Columbia;
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an estate, the income of which is subject to U.S. federal income tax regardless of its source; or
a trust if (a) a U.S. court can exercise primary supervision over the trust’s administration and one or more U.S. persons have the authority to control all of the trust’s substantial decisions or (b) the trust has a valid election in effect under applicable U.S. Treasury Regulations to be treated as a U.S. person.
For purposes of this discussion, a “non-U.S. Holder” is a beneficial owner of our securities that is neither a U.S. Holder nor a partnership or an entity or arrangement treated as a partnership for U.S. federal income tax purposes.
Tax Considerations Applicable to U.S. Holders
Taxation of Distributions
If we pay distributions or make constructive distributions (other than certain distributions of our stock or rights to acquire our stock) to U.S. Holders of shares of our common stock, such distributions generally will constitute dividends for U.S. federal income tax purposes to the extent paid or deemed paid from our current or accumulated earnings and profits, as determined under U.S. federal income tax principles. Distributions in excess of our current and accumulated earnings and profits will constitute a return of capital that will be applied against and reduce (but not below zero) the U.S. Holder’s adjusted tax basis in our common stock. Any remaining excess will be treated as gain realized on the sale or other disposition of the common stock and will be treated as described under “ — Tax Considerations Applicable to U.S. Holders — Gain or Loss on Sale, Taxable Exchange or Other Taxable Disposition of Common Stock” below.
Dividends we pay to a U.S. Holder that is a taxable corporation generally will qualify for the dividends received deduction if the requisite holding period is satisfied. Provided certain holding period requirements are met, dividends we pay to a non-corporate U.S. Holder generally will constitute “qualified dividends” that under current law will be subject to tax at long-term capital gains rates. If the holding period requirements are not satisfied, a corporation may not be able to qualify for the dividends received deduction and would have taxable income equal to the entire dividend amount, and non-corporate holders may be subject to tax on such dividend at ordinary income tax rates instead of the preferential rates that apply to qualified dividend income.
Gain or Loss on Sale, Taxable Exchange or Other Taxable Disposition of Common Stock
A U.S. Holder generally will recognize gain or loss on the sale, taxable exchange or other taxable disposition of our common stock. Any such gain or loss will be capital gain or loss, and will be long-term capital gain or loss if the U.S. Holder’s holding period for the common stock disposed of exceeds one year at the time of disposition. The amount of gain or loss recognized generally will be equal to the difference between (1) the sum of the amount of cash and the fair market value of any property received in such disposition and (2) the U.S. Holder’s adjusted tax basis in its common stock disposed of. A U.S. Holder’s adjusted tax basis in its common stock generally will equal the U.S. Holder’s acquisition cost for such common stock (or, in the case of common stock received upon exercise of a Warrant, the U.S. Holder’s initial basis for such common stock, as discussed below), less any prior distributions treated as a return of capital. Long-term capital gains recognized by non-corporate U.S. Holders generally are eligible under current law for reduced rates of tax. If the U.S. Holder’s holding period for the common stock disposed of is one year or less at the time of disposition, any gain on a taxable disposition of our common stock would be subject to short-term capital gain treatment and would be taxed at ordinary income tax rates. The deductibility of capital losses is subject to limitations.
Exercise of a Warrant
Except as discussed below with respect to the cashless exercise of a Warrant, a U.S. Holder generally will not recognize taxable gain or loss upon the exercise of a Warrant for cash. The U.S. Holder’s initial tax basis in
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the shares of our common stock received upon exercise of the Warrant generally will be an amount equal to the sum of the U.S. Holder’s acquisition cost of the Warrant and the exercise price of such Warrant. It is unclear whether a U.S. Holder’s holding period for the common stock received upon exercise of the Warrant would commence on the date of exercise of the Warrant or the day following the date of exercise of the Warrant; however, in either case the holding period will not include the period during which the U.S. Holder held the Warrants.
In certain circumstances, the Warrants may be exercised on a cashless basis. The U.S. federal income tax treatment of an exercise of a warrant on a cashless basis is not clear, and could differ from the consequences described above. It is possible that a cashless exercise could be a taxable event, a non-realization event, or a tax-free recapitalization. U.S. holders are urged to consult their tax advisors as to the consequences of an exercise of a Warrant on a cashless basis, including with respect to their holding period and tax basis in the common stock received upon exercise of the Warrant.
Sale, Exchange, Redemption or Expiration of a Warrant
Upon a sale, exchange (other than by exercise), redemption, or expiration of a Warrant, a U.S. Holder will recognize taxable gain or loss in an amount equal to the difference between (1) the amount realized upon such disposition and (2) the U.S. Holder’s adjusted tax basis in the Warrant. A U.S. Holder’s adjusted tax basis in its Warrants generally will equal the U.S. Holder’s acquisition cost of the Warrant, increased by the amount of any constructive distributions included in income by such U.S. Holder (as described below under “Tax Considerations Applicable to U.S. Holders — Possible Constructive Distributions”). Such gain or loss generally will be treated as long-term capital gain or loss if the Warrant is held by the U.S. Holder for more than one year at the time of such disposition or expiration.
If a Warrant expires unexercised, a U.S. Holder generally will recognize a capital loss equal to such holder’s adjusted tax basis in the Warrant. Any such loss generally will be a capital loss and will be long-term capital loss if the Warrant is held for more than one year. The deductibility of capital losses is subject to certain limitations.
Possible Constructive Distributions
The terms of each Warrant provide for an adjustment to the number of shares of common stock for which the Warrant may be exercised or to the exercise price of the Warrant in certain events, as discussed in the section of this prospectus captioned “Description of Capital Stock — Warrants.” An adjustment which has the effect of preventing dilution generally should not be a taxable event. Nevertheless, a U.S. Holder of Warrants would be treated as receiving a constructive distribution from us if, for example, the adjustment increases the holder’s proportionate interest in our assets or earnings and profits (e.g., through an increase in the number of shares of common stock that would be obtained upon exercise or an adjustment to the exercise price of the Warrant) as a result of a distribution of cash to the holders of shares of our common stock that is taxable to such holders as a distribution. Such constructive distribution would be subject to tax as described above under “Tax Considerations Applicable to U.S. Holders — Taxation of Distributions” in the same manner as if such U.S. Holder received a cash distribution from us on common stock equal to the fair market value of such increased interest.
Information Reporting and Backup Withholding
In general, information reporting requirements may apply to distributions paid to a U.S. Holder and to the proceeds of the sale or other disposition of our shares of our securities, unless the U.S. Holder is an exempt recipient. Backup withholding may apply to such payments if the U.S. Holder fails to provide a taxpayer identification number (or furnishes an incorrect taxpayer identification number) or a certification of exempt status or has been notified by the IRS that such U.S. Holder is subject to backup withholding (and such notification has not been withdrawn). Backup withholding is not an additional tax. Any amounts withheld under
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the backup withholding rules will be allowed as a credit against a U.S. Holder’s U.S. federal income tax liability and may entitle such holder to a refund, provided the required information is timely furnished to the IRS. Taxpayers should consult their tax advisors regarding their qualification for an exemption from backup withholding and the procedures for obtaining such an exemption.
Tax Considerations Applicable to Non-U.S. Holders
Taxation of Distributions
In general, any distributions (including constructive distributions) we make to a non-U.S. Holder of shares on our common stock, to the extent paid or deemed paid out of our current or accumulated earnings and profits (as determined under U.S. federal income tax principles), will constitute dividends for U.S. federal income tax purposes and, provided such dividends are not effectively connected with the non-U.S. Holder’s conduct of a trade or business within the United States, we will be required to withhold tax from the gross amount of the dividend at a rate of 30%, unless such non-U.S. Holder is eligible for a reduced rate of withholding tax under an applicable income tax treaty and provides proper certification of its eligibility for such reduced rate (usually on an IRS Form W-8BEN or W-8BEN-E, as applicable). In the case of any constructive dividend (as described below under “ — Tax Considerations Applicable to Non-U.S. Holders — Possible Constructive Distributions”), it is possible that this tax would be withheld from any amount owed to a non-U.S. Holder by the applicable withholding agent, including cash distributions on other property or sale proceeds from Warrants or other property subsequently paid or credited to such holder. Any distribution not constituting a dividend will be treated first as reducing (but not below zero) the non-U.S. Holder’s adjusted tax basis in its shares of our common stock and, to the extent such distribution exceeds the non-U.S. Holder’s adjusted tax basis, as gain realized from the sale or other disposition of the common stock, which will be treated as described under “—Tax Considerations Applicable to Non-U.S. Holders — Gain on Sale, Exchange or Other Taxable Disposition of Common Stock and Warrants” below. In addition, if we determine that we are likely to be classified as a “United States real property holding corporation” (see the section entitled “—Tax Considerations Applicable to Non-U.S. Holders — Gain on Sale, Exchange or Other Taxable Disposition of Common Stock and Warrants” below), we will withhold 15% of any distribution that exceeds our current and accumulated earnings and profits.
Dividends we pay to a non-U.S. Holder that are effectively connected with such non-U.S. Holder’s conduct of a trade or business within the United States (or, if a tax treaty applies, are attributable to a U.S. permanent establishment or fixed base maintained by the non-U.S. Holder) generally will not be subject to U.S. withholding tax, provided such non-U.S. Holder complies with certain certification and disclosure requirements (generally by providing an IRS Form W-8ECI). Instead, such dividends generally will be subject to U.S. federal income tax, net of certain deductions, at the same individual or corporate rates applicable to U.S. Holders. If the non-U.S. Holder is a corporation, dividends that are effectively connected income may also be subject to a “branch profits tax” at a rate of 30% (or such lower rate as may be specified by an applicable income tax treaty).
Exercise of a Warrant
The U.S. federal income tax treatment of a non-U.S. Holder’s exercise of a Warrant generally will correspond to the U.S. federal income tax treatment of the exercise of a Warrant by a U.S. Holder, as described under “ — Tax Considerations Applicable to U.S. Holders — Exercise of a Warrant” above, although to the extent a cashless exercise results in a taxable exchange, the tax consequences to the non-U.S. Holder would be the same as those described below in “ — Tax Considerations Applicable to Non-U.S. Holders — Gain on Sale, Exchange or Other Taxable Disposition of Common Stock and Warrants.”
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Gain on Sale, Exchange or Other Taxable Disposition of Common Stock and Warrants
A non-U.S. Holder generally will not be subject to U.S. federal income or withholding tax in respect of gain recognized on a sale, taxable exchange or other taxable disposition of our common stock or Warrants or an expiration or redemption of our Warrants, unless:
| • | the gain is effectively connected with the conduct of a trade or business by the non-U.S. Holder within the United States (and, if an applicable tax treaty so requires, is attributable to a U.S. permanent establishment or fixed base maintained by the non-U.S. Holder); |
| • | the non-U.S. Holder is an individual who is present in the United States for 183 days or more in the taxable year of disposition and certain other conditions are met; or |
| • | we are or have been a “United States real property holding corporation” for U.S. federal income tax purposes at any time during the shorter of the five-year period ending on the date of disposition or the period that the non-U.S. Holder held our common stock or Warrants and, in the case where shares of our common stock are regularly traded on an established securities market, (i) the non-U.S. Holder has owned, actually or constructively, more than 5% of our common stock at any time within the relevant period or (ii) provided that our Warrants are regularly traded on an established securities market, the non-U.S. Holder has owned, actually or constructively, more than 5% of our Warrants at any time within the within the relevant period. It is unclear how a non-U.S. Holder’s ownership of Warrants will affect the determination of whether the non-U.S. Holder owns more than 5% of our common stock. In addition, special rules may apply in the case of a disposition of warrants if our common stock is considered to be regularly traded, but our Warrants are not considered to be regularly traded. There can be no assurance that our common stock or Warrants will or will not be treated as regularly traded on an established securities market for this purpose. |
Gain described in the first bullet point above will be subject to tax at generally applicable U.S. federal income tax rates as if the non-U.S. Holder were a U.S. resident. Any gains described in the first bullet point above of a non-U.S. Holder that is a foreign corporation may also be subject to an additional “branch profits tax” at a 30% rate (or lower applicable treaty rate). Gain described in the second bullet point above generally will be subject to a flat 30% U.S. federal income tax. Non-U.S. Holders are urged to consult their tax advisors regarding possible eligibility for benefits under income tax treaties.
If the third bullet point above applies to a non-U.S. Holder and applicable exceptions are not available, gain recognized by such holder on the sale, exchange or other disposition of our common stock or Warrants, as applicable, will be subject to tax at generally applicable U.S. federal income tax rates. In addition, a buyer of our common stock or Warrants may be required to withhold U.S. income tax at a rate of 15% of the amount realized upon such disposition. We will be classified as a United States real property holding corporation if the fair market value of our “United States real property interests” equals or exceeds 50% of the sum of the fair market value of our worldwide real property interests plus our other assets used or held for use in a trade or business, as determined for U.S. federal income tax purposes. We do not believe we currently are or will become a United States real property holding corporation; however, there can be no assurance in this regard. Non-U.S. Holders are urged to consult their tax advisors regarding the application of these rules.
Possible Constructive Distributions
The terms of each Warrant provide for an adjustment to the number of shares of common stock for which the Warrant may be exercised or to the exercise price of the Warrant in certain events, as discussed in the section of this prospectus captioned “Description of Capital Stock — Warrants.” An adjustment that has the effect of preventing dilution generally should not be a taxable event. Nevertheless, a non-U.S. Holder of Warrants would be treated as receiving a constructive distribution from us if, for example, the adjustment increases the holder’s proportionate interest in our assets or earnings and profits (e.g., through an increase in the number of shares of
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common stock that would be obtained upon exercise or an adjustment to the exercise price of the Warrant) as a result of a distribution of cash to the holders of shares of our common stock that is taxable to such holders as a distribution. A non-U.S. Holder would be subject to U.S. federal income tax withholding as described above under “Tax Considerations Applicable to Non-U.S. Holders — Taxation of Distributions” under that section in the same manner as if such non-U.S. Holder received a cash distribution from us on common stock equal to the fair market value of such increased interest.
Foreign Account Tax Compliance Act
Sections 1471 through 1474 of the Code (commonly referred to as the “Foreign Account Tax Compliance Act” or “FATCA”) and Treasury Regulations and administrative guidance promulgated thereunder impose a U.S. federal withholding tax of 30% on certain payments paid to a foreign financial institution (as specifically defined by applicable rules) unless such institution enters into an agreement with the U.S. government to withhold on certain payments and to collect and provide to the U.S. tax authorities substantial information regarding U.S. account holders of such institution (which includes certain equity holders of such institution, as well as certain account holders that are foreign entities with U.S. owners). FATCA also generally imposes a federal withholding tax of 30% on certain payments to a non-financial foreign entity unless such entity provides the withholding agent with either a certification that it does not have any substantial direct or indirect U.S. owners or provides information regarding substantial direct and indirect U.S. owners of the entity. An intergovernmental agreement between the United States and an applicable foreign country may modify these requirements. The withholding tax described above will not apply if the foreign financial institution or non-financial foreign entity otherwise qualifies for an exemption from the rules.
FATCA withholding currently applies to payments of dividends. The U.S. Treasury Department has released proposed regulations which, if finalized in their present form, would eliminate the federal withholding tax of 30% applicable to the gross proceeds of a disposition of our securities. In its preamble to such proposed regulations, the U.S. Treasury Department stated that taxpayers may generally rely on the proposed regulations until final regulations are issued. Non-U.S. Holders are encouraged to consult with their own tax advisors regarding the possible implications of FATCA on their investment in our securities.
Information Reporting and Backup Withholding.
Information returns will be filed with the IRS in connection with payments of distributions and the proceeds from a sale or other disposition of our securities. A non-U.S. Holder may have to comply with certification procedures to establish that it is not a United States person in order to avoid information reporting and backup withholding requirements. The certification procedures required to claim a reduced rate of withholding under a treaty generally will satisfy the certification requirements necessary to avoid the backup withholding as well. Backup withholding is not an additional tax. The amount of any backup withholding from a payment to a non-U.S. Holder will be allowed as a credit against such holder’s U.S. federal income tax liability and may entitle such holder to a refund, provided that the required information is timely furnished to the IRS.
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PLAN OF DISTRIBUTION
We are registering the issuance by us of up to 21,874,907 shares of common stock consisting of (i) up to 6,266,667 shares of common stock that are issuable upon the exercise of Private Warrants, (ii) up to 8,625,000 shares of common stock that are issuable upon the exercise of Public Warrants, (iii) up to 716,668 shares of common stock that are issuable upon the exercise of Working Capital Warrants, and (vi) up to 6,266,572 shares of common stock that are issuable upon the exercise of Merger Warrants.
We are registering the resale by the selling securityholders named in this prospectus, or their permitted transferees, of (i) up to an aggregate of 45,922,53647,408,854 shares of common stock, consisting of: (a) up to 10,966,6359,028,488 PIPE Shares, (b) up to 8,625,000 Founder Shares, (c) up to 6,266,667 shares of common stock issuable upon the exercise of the Private Warrants, (d) up to 13,080,99416,505,459 shares of common stock pursuant to the Registration Rights Agreement (including shares issuable upon exercise of convertible securities), (e) up to 716,668 shares of common stock issuable upon the exercise of Working Capital Warrants, and (f) up to 6,266,572 shares of common stock issuable upon the exercise of Merger Warrants and (ii) up to 13,249,907 Warrants, consisting of (a) up to 6,266,667 Private Warrants, (b) up to 716,668 Working Capital Warrants and (c) up to 6,266,572 Merger Warrants.
We are required to pay all fees and expenses incident to the registration of the securities to be offered and sold pursuant to this prospectus. The selling securityholders will bear all commissions and discounts, if any, attributable to their sale of securities.
We will not receive any of the proceeds from the sale of the securities by the selling securityholders. We will receive proceeds from Warrants exercised in the event that such Warrants are exercised for cash. The aggregate proceeds to the selling securityholders will be the purchase price of the securities less any discounts and commissions borne by the selling securityholders.
The shares of common stock beneficially owned by the selling securityholders covered by this prospectus may be offered and sold from time to time by the selling securityholders. The term “selling securityholders” includes donees, pledgees, transferees or other successors in interest selling securities received after the date of this prospectus from a selling securityholder as a gift, pledge, partnership distribution or other transfer. The selling securityholders will act independently of us in making decisions with respect to the timing, manner and size of each sale. Such sales may be made on one or more exchanges or in the over-the-counter market or otherwise, at prices and under terms then prevailing or at prices related to the then current market price or in negotiated transactions. The selling securityholders may sell their securities by one or more of, or a combination of, the following methods:
purchases by a broker-dealer as principal and resale by such broker-dealer for its own account pursuant to this prospectus;
ordinary brokerage transactions and transactions in which the broker solicits purchasers;
block trades in which the broker-dealer so engaged will attempt to sell the shares as agent but may position and resell a portion of the block as principal to facilitate the transaction;
an over-the-counter distribution in accordance with the rules of Nasdaq;
through trading plans entered into by a selling securityholder pursuant to Rule 10b5-1 under the Exchange Act, that are in place at the time of an offering pursuant to this prospectus and any applicable prospectus supplement hereto that provide for periodic sales of their securities on the basis of parameters described in such trading plans;
short sales;
distribution to employees, members, limited partners or stockholders of the selling securityholders; through the writing or settlement of options or other hedging transaction, whether through an options exchange or otherwise;
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by pledge to secured debts and other obligations;
delayed delivery arrangements;
to or through underwriters or broker-dealers;
in “at the market” offerings, as defined in Rule 415 under the Securities Act, at negotiated prices, at prices prevailing at the time of sale or at prices related to such prevailing market prices, including sales made directly on a national securities exchange or sales made through a market maker other than on an exchange or other similar offerings through sales agents;
in privately negotiated transactions;
in options transactions;
through a combination of any of the above methods of sale; or
any other method permitted pursuant to applicable law.
In addition, any securities that qualify for sale pursuant to Rule 144 may be sold under Rule 144 rather than pursuant to this prospectus.
In addition, a selling securityholder that is an entity may elect to make a pro rata in-kind distribution of securities to its members, partners or stockholders pursuant to the registration statement of which this prospectus is a part by delivering a prospectus with a plan of distribution. Such members, partners or stockholders would thereby receive freely tradeable securities pursuant to the distribution through a registration statement. To the extent a distributee is an affiliate of ours (or to the extent otherwise required by law), we may, at our option, file a prospectus supplement in order to permit the distributees to use the prospectus to resell the securities acquired in the distribution.
To the extent required, this prospectus may be amended or supplemented from time to time to describe a specific plan of distribution. In connection with distributions of the securities or otherwise, the selling securityholders may enter into hedging transactions with broker-dealers or other financial institutions. In connection with such transactions, broker-dealers or other financial institutions may engage in short sales of the securities in the course of hedging the positions they assume with selling securityholders. The selling securityholders may also sell the securities short and redeliver the securities to close out such short positions. The selling securityholders may also enter into option or other transactions with broker-dealers or other financial institutions which require the delivery to such broker-dealer or other financial institution of securities offered by this prospectus, which securities such broker-dealer or other financial institution may resell pursuant to this prospectus (as supplemented or amended to reflect such transaction). The selling securityholders may also pledge securities to a broker-dealer or other financial institution, and, upon a default, such broker- dealer or other financial institution, may effect sales of the pledged securities pursuant to this prospectus (as supplemented or amended to reflect such transaction).
In effecting sales, broker-dealers or agents engaged by the selling securityholders may arrange for other broker-dealers to participate. Broker-dealers or agents may receive commissions, discounts or concessions from the selling securityholders in amounts to be negotiated immediately prior to the sale.
In offering the securities covered by this prospectus, the selling securityholders and any broker-dealers who execute sales for the selling securityholders may be deemed to be “underwriters” within the meaning of the Securities Act in connection with such sales. Any profits realized by the selling securityholders and the compensation of any broker-dealer may be deemed to be underwriting discounts and commissions.
In order to comply with the securities laws of certain states, if applicable, the securities must be sold in such jurisdictions only through registered or licensed brokers or dealers. In addition, in certain states the securities may not be sold unless they have been registered or qualified for sale in the applicable state or an exemption from the registration or qualification requirement is available and is complied with.
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We have advised the selling securityholders that the anti-manipulation rules of Regulation M under the Exchange Act may apply to sales of securities in the market and to the activities of the selling securityholders and their affiliates. In addition, we will make copies of this prospectus available to the selling securityholders for the purpose of satisfying the prospectus delivery requirements of the Securities Act. The selling securityholders may indemnify any broker-dealer that participates in transactions involving the sale of the securities against certain liabilities, including liabilities arising under the Securities Act.
At the time a particular offer of securities is made, if required, a prospectus supplement will be distributed that will set forth the number of securities being offered and the terms of the offering, including the name of any underwriter, dealer or agent, the purchase price paid by any underwriter, any discount, commission and other item constituting compensation, any discount, commission or concession allowed or reallowed or paid to any dealer, and the proposed selling price to the public.
A holder of Warrants may exercise its Warrants in accordance with the Warrant Agreement on or before the expiration date set forth therein by surrendering, at the office of the Warrant Agent, Continental Stock Transfer & Trust Company, the certificate evidencing such Warrant, with the form of election to purchase set forth thereon, properly completed and duly executed, accompanied by full payment of the exercise price and any and all applicable taxes due in connection with the exercise of the Warrant, subject to any applicable provisions relating to cashless exercises in accordance with the Warrant Agreement.
We have agreed to indemnify the selling securityholders against certain liabilities, including liabilities under the Securities Act and state securities laws, relating to the registration of the Warrants or shares offered by this prospectus.
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LEGAL MATTERS
The validity of the securities offered hereby will be passed upon for us by Cooley LLP, Palo Alto, California.
EXPERTS
The consolidated financial statements of Freedom Acquisition I Corp. as of December 31, 2022 and 2021 and for each of the two years in the period ended December 31, 2022, appearing in this prospectus have been audited by Marcum LLP, an independent registered accounting firm, as stated in their report thereon and included in this prospectus (which report expresses an unqualified opinion and contains an explanatory paragraph as to Freedom Acquisition I Corp.’s ability to continue as a going concern), in reliance upon such report and upon the authority of such firm as experts in accounting and auditing.
The consolidated financial statements of Complete Solaria, Inc. as of December 31, 2022 and 2021, and for each of the three years in the period ended December 31, 2022, included in this Prospectus, have been audited by Deloitte & Touche LLP, an independent registered public accounting firm, as stated in their report. Such financial statements are included in reliance upon the report of such firm given their authority as experts in accounting and auditing.
The consolidated financial statements of The Solaria Corporation as of December 31, 2021 and 2020, and for each of the two years in the period ended December 31, 2021, included in this Prospectus, have been audited by Deloitte & Touche&Touche LLP, an independent auditor, as stated in their report. Such financial statements are included in reliance upon the report of such firm given their authority as experts in accounting and auditing.
CHANGES IN REGISTRANT’S CERTIFYING ACCOUNTANT
On July 18, 2023, the Audit Committee of the Company’s board of directors approved the engagement of Deloitte &Touche LLP (“Deloitte”) as the Company’s independent registered public accounting firm to audit the Company’s consolidated financial statements for the year ending December 31, 2023. Deloitte previously served as the independent registered public accounting firm of Legacy Complete Solaria prior to the Business Combination. Accordingly, Marcum LLP (“Marcum”), FACT’s independent registered public accounting firm prior to the Business Combination, was informed that it would be replaced by Deloitte as the Company’s independent registered public accounting firm, following the filing of the Company’s Quarterly Report on Form 10-Q for the quarter ended June 30, 2023.
Marcum’s report of independent registered public accounting firm dated April 6, 2023 on the FACT balance sheet as of December 31, 2022, the related statements of operations, changes in shareholders’ deficit and cash flows for each of the two years in the period ended December 31, 2022, and the related notes to the financial statements did not contain any adverse opinion or disclaimer of opinion, and were not qualified or modified as to uncertainties, audit scope or accounting principles, except for an explanatory paragraph in such report regarding substantial doubt about FACT’s ability to continue as a going concern. FACT determined that a material weakness exists in its internal control over financial reporting related to the accounting for complex financial instruments, accrued expenses and accounts payable, and foreign exchange transactions.
During the period from December 23, 2020 (FACT’s inception) through December 31, 2022 and the subsequent interim period through March 31, 2023, there were no “disagreements” (as such term is defined in Item 304(a)(1)(iv) of Regulation S-K) with Marcum on any matter of accounting principles or practices, financial statement disclosure, or auditing scope or procedures, which disagreements, if not resolved to the satisfaction of Marcum, would have caused Marcum to make reference thereto in its reports on FACT’s financial statements for such periods. During the period from December 23, 2020 (FACT’s inception) through December 31, 2022 and the subsequent interim period through March 31, 2023, there have been no “reportable events” (as such term is defined in Item 304(a)(1)(v) of Regulation S-K).
During the period from December 23, 2020 (FACT’s inception) through December 31, 2022 and the subsequent interim period through March 31, 2023, (i) the Company did not both (a) consult with Deloitte as to the application of accounting principles to a specified transaction, either completed or proposed, or the type of
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audit opinion that might be rendered on the Company’s consolidated financial statements and (b) receive a written report or oral advice that Deloitte concluded was an important factor considered by the Company in reaching a decision as to such accounting, auditing, or financial reporting issue; and (ii) the Company did not consult Deloitte on any matter that was either the subject of a “disagreement” (as that term is defined in Item 304(a)(1)(iv) of Regulation S-K and the related instructions) or a “reportable event” (as that term is defined in Item 304(a)(1)(v) of Regulation S-K).
The Company has provided Marcum with a copy of the disclosures made by the registrant in this Item 4.01 in response to Item 304(a) of Regulation S-K under the Exchange Act and requested that Marcum furnish the Company with a letter addressed to the SEC stating whether it agrees with the statements made by the registrant in this Item 4.01 in response to Item 304(a) of Regulation S-K under the Exchange Act and, if not, stating the respects in which it does not agree. A letter from Marcum is attached hereto as Exhibit 16.1.
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WHERE YOU CAN FIND MORE INFORMATION
We have filed with the SEC a registration statement on Form S-1 under the Securities Act, with respect to the securities being offered by this prospectus. This prospectus, which constitutes part of the registration statement, does not contain all of the information in the registration statement and its exhibits. For further information with respect to Complete Solaria and the securities offered by this prospectus, we refer you to the registration statement and its exhibits. Statements contained in this prospectus as to the contents of any contract or any other document referred to are not necessarily complete, and in each instance, we refer you to the copy of the contract or other document filed as an exhibit to the registration statement. Each of these statements is qualified in all respects by this reference. You can read our SEC filings, including the registration statement, over the internet at the SEC’s website at www.sec.gov.
We are subject to the information reporting requirements of the Exchange Act, and we file reports, proxy statements and other information with the SEC. These reports, proxy statements and other information will be available for review at the SEC’s website at www.sec.gov. We also maintain a website at https://www.completesolaria.com/, at which you may access these materials free of charge as soon as reasonably practicable after they are electronically filed with, or furnished to, the SEC. The information contained in, or that can be accessed through, our website is not part of this prospectus.
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UNAUDITED PRO FORMA CONDENSED COMBINED FINANCIAL INFORMATION
Defined terms included below shall have the same meaning as terms defined and included elsewhere in the Form 8-K dated July 18, 2023 and, if not defined in the Form 8-K dated July 18, 2023, the definitive proxy statement/prospectus filed with the Securities and Exchange Commission (the “SEC”) on June 30, 2023, as supplemented by the supplement to the proxy statement/prospectus filed with the SEC on July 10, 2023 (the “Proxy Statement”).
The following unaudited pro forma condensed combined financial information has been prepared in accordance with Article 11 of Regulation S-X. The unaudited pro forma condensed combined financial information presents the pro forma effects of the Business Combination, inclusive of the Mergers and the Domestication of FACT, as described below and the pro forma effects of the Disposal Transaction, as described below. The Business Combination and related transactions, as further described elsewhere in the unaudited pro forma financial information, were completed on or around July 18, 2023. The unaudited pro forma condensed combined financial information also includes the impact of the following transactions:
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The issuance of the 2022 Convertible Notes.
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Forward Purchase Agreements
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Pursuant to the terms of the Forward Purchase Agreements, the Sellers intended, but were not obligated, to purchase up to a number of shares of FACT Class A Ordinary Shares in the aggregate amount equal to up to 6,720,000, concurrently with the Closing pursuant to each Seller’s respective FPA Funding Amount PIPE Subscription Agreement (as defined below), less, in the case of Meteora and Sandia, the number of FACT Class A Ordinary Shares purchased by each Seller separately from third parties through a broker in the open market (“Recycled Shares”). No Seller was required to purchase an amount of FACT Class A Ordinary Shares such that following such purchase, that Seller’s ownership would exceed 9.9% of the total FACT Class A Ordinary Shares outstanding immediately after giving effect to such purchase, unless such Seller, at its sole discretion, waived such 9.9% ownership limitation. The Number of Shares subject to a Forward Purchase Agreement was subject to reduction following a termination of the Forward Purchase Agreements with respect to such shares as described under “Optional Early Termination” in the respective Forward Purchase Agreements. Meteora and Sandia intended to purchase FACT Class A Ordinary Shares pursuant to their respective FPA Funding Amount PIPE Subscription Agreement and from third parties (other than Counterparty) through a broker in the open market (other than through Counterparty), and Polar intended to purchase FACT Class A Ordinary Shares solely through its FPA Funding Amount PIPE Subscription Agreement.
Each Forward Purchase Agreement provided that a Seller be paid directly an aggregate cash amount (the “Prepayment Amount”) equal to the product of (i) the Number of Shares as set forth in each Pricing Date Notice and (ii) the redemption price per share as defined in Article 49.5 of FACT’s Amended and Restated Article of Association, as amended (the “Initial Price”).
The Counterparty paid to each Seller separately the Prepayment Amount required under the respective Forward Purchase Agreement directly from the Counterparty’s Trust Account maintained by Continental Stock Transfer and Trust Company holding the net proceeds of the sale of the units in the Counterparty’s initial public offering and the sale of private placement warrants (the “Trust Account”) no later than the earlier of (a) one business day after the Closing Date and (b) the date any assets from the Trust Account are disbursed in connection with the Business Combination, except that to the extent the Prepayment Amount payable to a Seller is to be paid from the purchase of Additional Shares by such Seller pursuant to the terms of its FPA Funding Amount PIPE Subscription Agreement, such amount was netted against such proceeds, with such Seller reducing the purchase price for the Additional Shares by the Prepayment Amount. For the avoidance of doubt, any Additional Shares purchased by a Seller are included in the Number of Shares for its respective Forward Purchase Agreement for all purposes, including for determining the Prepayment Amount.
Following the Closing, the reset price (the “Reset Price”) is initially the Initial Price and is subject to a $5.00 floor (the “Reset Floor Price”). The Reset Price will be subject to reset on a monthly basis (each a “Reset Date”) with the first such Reset Date occurring 180 days after the Closing Date to be the lowest of (a) the then-current Reset Price, (b) the Initial Price and (c) the 30-day VWAP Price of the Shares immediately preceding such Reset Date; provided, however, that the Reset Price may be reduced immediately to any lower price at which the Counterparty sells, issues or grants any FACT Class A Ordinary Shares or securities convertible or exchangeable into FACT Class A Ordinary Shares (other than, among other things, grants or issuances under the Counterparty’s equity compensation plans, any securities issued in connection with the Business Combination or any securities issued in connection with the PIPE Subscription Agreements (as defined below)), subject to certain exceptions, in which case the Reset Price Floor would be eliminated.
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From time to time and on any date following the Business Combination (any such date, an “OET Date”), any Seller may, in its absolute discretion, terminate its Forward Purchase Agreement in whole or in part by providing written notice to the Counterparty (the “OET Notice”), no later than the next Payment Date following the OET Date (which shall specify the quantity by which the Number of Shares shall be reduced (such quantity, the “Terminated Shares”)). The effect of an OET Notice shall be to reduce the Number of Shares by the number of Terminated Shares specified in such OET Notice with effect as of the related OET Date. As of each OET Date, the Counterparty shall be entitled to an amount from the Seller, and the Seller shall pay to the Counterparty an amount, equal to the product of (x) the number of Terminated Shares and (y) the Reset Price in respect of such OET Date. The payment date may be changed within a quarter at the mutual agreement of the parties.
The valuation date will be the earliest to occur of (a) the second anniversary of the Closing Date, (b) the date specified by a Seller in a written notice to be delivered to the Counterparty at a Seller’s discretion (which Valuation Date shall not be earlier than the day such notice is effective) after the occurrence of any of (w) a VWAP Trigger Event (x) a Delisting Event, (y) a Registration Failure or (z) unless otherwise specified therein, upon any Additional Termination Event and (c) 90 days after delivery by the Counterparty of a written notice in the event that for any 20 trading days during a 30 consecutive trading day-period that occurs at least six months after the Closing Date, the VWAP Price is less than the then applicable Reset Price, provided that a Registration Statement was effective and available for the entire measurement period and remains continuously effective and available during the entire 90 day notice period (the “Valuation Date”).
On the Cash Settlement Payment Date, which is the tenth business day following the last day of the valuation period commencing on the Valuation Date, a Seller shall pay the Counterparty a cash amount equal to (1) (A) the Number of Shares as of the Valuation Date less the number of Unregistered Shares, multiplied by (B) the volume-weighted daily VWAP Price over the Valuation Period less (2) if the Settlement Amount Adjustment is less than the cash amount to be paid, the Settlement Amount Adjustment. The Settlement Amount Adjustment is equal to (1) the Number of Shares as of the Valuation Date multiplied by (2) $2.00 per share, and the Settlement Amount Adjustment will be automatically netted from the Settlement Amount. If the Settlement Amount Adjustment exceeds the Settlement Amount, the Counterparty will pay the Seller in FACT Class A Ordinary Shares or, at the Counterparty’s election, in cash.
Each Seller has agreed to waive any redemption rights under FACT’s Amended and Restated Articles of Association, as amended, with respect to any FACT Class A Ordinary Shares purchased through the FPA Funding Amount PIPE Subscription Agreement and (in the case of the Sellers other than Polar) any Recycled Shares in connection with the Business Combination, that would require redemption by FACT of the Shares. Such reduced the number of FACT Class A Ordinary Shares redeemed in connection with the Business Combination, and such reduction could alter the perception of the potential strength of the Business Combination. Each Forward Purchase Agreement has been structured, and all activity in connection with such agreement has been undertaken, to comply with the requirements of all tender offer regulations applicable to the Business Combination, including Rule 14e-5 under the Securities Exchange Act of 1934, as amended.
FPA Funding Amount PIPE Subscription Agreements
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New Money PIPE Subscription Agreements
On or around the Closing Date, pursuant to the New Money PIPE Subscription Agreements, the New Money PIPE Investors agreed to subscribe for and purchase, and Complete Solaria agreed to issue and sell to the New Money PIPE Investors, on the Closing Date, an aggregate of 120,000 shares of Complete Solaria Common Stock for a purchase price of $5.00 per share, for aggregate gross proceeds of $0.6 million. Pursuant to its New Money PIPE Subscription Agreement, Complete Solaria issued an additional 60,000 shares of Complete Solaria Common Stock in consideration of certain services provided by it in the structuring of its Forward Purchase Agreement and the transactions described therein.
PIPE Financing (Private Placement)
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FACT is a blank check company incorporated as a Cayman Islands exempted company in December 2020. FACT was formed for the purpose of effecting a merger, amalgamation, share exchange, asset acquisition, share purchase, reorganization or similar business combination with one or more businesses. On March 2, 2021, FACT consummated its initial public offering (the “IPO”) generating gross proceeds of $345.0 million. Simultaneously with the closing of the IPO, FACT consummated the sale of 6,266,667 Private Placement Warrants at a purchase price of $1.50 per warrant in a private placement to FACT’s sponsor, Freedom Acquisition I LLC, a Delaware limited liability company (the “Sponsor”), generating gross proceeds of $9.4 million. Following the Extension Amendment Redemptions on March 2, 2023, 11,243,496 Class A Ordinary Shares remained outstanding. As of the Closing Date, holders of 7,784,739 shares of Class A Ordinary Shares had validly elected to redeem their Class A Ordinary Shares for a full pro rata portion of the trust account holding the proceeds from FACT’s initial public offering, or approximately $10.56 per share and $82.2 million in the aggregate.
Complete Solar, Inc., a Delaware corporation (“Complete Solar”), was incorporated in the State of Delaware in 2010 and provides solar services such as sales enablement, project management, partner coordination and customer communication. Legacy Complete Solaria is the result of the business combination of Complete Solar and The Solaria Corporation, which was consummated on November 4, 2022.
Solaria, a Delaware corporation, is a solar technology brand that sells performance solar panels to its customers. Following As discussed below, the consummationdisposition of its business combination with Complete Solar on November 4, 2022, The Solaria Corporation is now(“Solaria”) was consummated in October 2023. Complete Solaria’s unaudited condensed consolidated balance sheet as of October 1, 2023 and unaudited condensed consolidated statement of operations and comprehensive income (loss) for the thirty-nine week period ended October 1, 2023 have been recast to give effect to the disposition.
The unaudited pro forma condensed combined financial information also includes the impact of the following:
| • | The final disposition, which was consummated on October 6, 2023, of certain North American solar panel assets, inclusive of certain intellectual property and customer contracts, not reflected in Compete Solaria’s unaudited condensed consolidated balance sheet as of October 1, 2023 (the “Disposal Transaction”). In connection with the Disposal Transaction, Maxeon agreed to hire certain employees of Complete Solaria who, upon closing, became employees of Maxeon. |
In conjunction with the Disposal Transaction, on October 5, 2023, Complete Solaria amended certain warrants, dated November 2, 2022, originally issued by the Complete Solaria to six warrant holders, which warrants are exercisable for (a) an aggregate of 1,486,268 shares of Complete Solaria’s common stock, par value $0.001 per share, or (b) if designated and issued, a wholly-owned subsidiaryfuture series of Legacypreferred stock of Complete Solaria.
With respect
Complete Solaria, Inc. previously announced in its Current Report on Form 8-K filed with the SEC on July 14, 2023 that the Company and Freedom Acquisition I Corp. entered into separate agreements (each a “Forward Purchase Agreement”, and together, the “Forward Purchase Agreements”) with each of (i) Meteora; (ii) Polar, and (iii) Sandia (each of Meteora, Polar, and Sandia, individually, a “Seller”, and together, the “Sellers”) for OTC Equity Prepaid Forward Transactions.
On December 18, 2023, Complete Solaria and each Seller entered into separate amendments to the Required Transaction, Legacy Complete Solaria determined that Complete Solar wasForward Purchase Agreements (the “Amendments”). The Amendments lower the primary beneficiaryreset price of Solaria, and, as such, the merger was accounted for as a business combination in accordance with ASC 805. Complete Legacy Solaria recorded the fair value of assets acquired and liabilities assumed from Solaria. Following the Required Transaction, Complete Solar changed its name to “Complete Solaria, Inc.”each
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Forward Purchase Agreement from $5.00 to $3.00 and allow the Company to raise up to $10,000,000 of equity from existing stockholders without triggering certain anti-dilution provisions contained in the Forward Purchase Agreements.
| • | On December 19, 2023, the Complete Solaria entered into separate common stock purchase agreements (the “Purchase Agreements”) with the Rodgers Massey Freedom and Free Markets Charitable Trust and the Rodgers Massey Revocable Living Trust (each a “Purchaser”, and together, the “Purchasers”). Pursuant to the terms of the Purchase Agreements, each Purchaser purchased 1,838,235 shares of Complete Solaria Common Stock, par value $0.001, (the “Shares”), at a price per share of $1.36, representing an aggregate purchase price of $5.0 million. The Purchasers paid for the Shares in cash. Thurman J. Rodgers is a trustee of each Purchaser and is the Executive Chairman of the board of directors of Complete Solaria. |
Description of the Business Combination
The Domestication – As part of the Business Combination, FACT affected a deregistration under the Cayman Islands Companies Act and a domestication under Section 388 of the DGCL (the “Domestication”). Upon the effectiveness of the Domestication, FACT changed its name to Complete Solaria, Inc. (“New Complete Solaria”).
In connection with the Domestication, (i) each issued and outstanding FACT Class A Ordinary Share and each issued and outstanding FACT Class B Ordinary Share converted into one share of Complete Solaria Common Stock. Additionally, each issued and outstanding whole warrant to purchase one FACT Class A Ordinary Share at an exercise price of $11.50 per share converted, on a one-for-one basis, to purchase one share of Complete Solaria Common Stock at an exercise price of $11.50 per share.
The Mergers – On July 18, 2023 (the “Closing Date”) and following the approval at an extraordinary general meeting of the shareholders of FACT held on July 11, 2023, as contemplated by the Business Combination Agreement, the parties consummated the closing of the transactions contemplated by the Business Combination Agreement (collectively, the “Business Combination”), whereby (i) First Merger Sub merged with and into Legacy Complete Solaria, with Legacy Complete Solaria surviving as a wholly-owned subsidiary of the Company (the “First Merger”), (ii) immediately thereafter and as part of the same overall transaction, Legacy Complete Solaria merged with and into Second Merger Sub, with Second Merger Sub surviving as a wholly-owned subsidiary of the Company (the “Second Merger”), and Second Merger Sub changed its name to “CS, LLC”, and (iii) immediately after the consummation of the Second Merger and as part of the same overall transaction, Solaria merged with and into a newly formed Delaware limited liability company and wholly-owned subsidiary of the Company and changed its name to “SolarCA LLC” (“Third Merger Sub”), with Third Merger Sub surviving as a wholly-owned subsidiary of the Company (the “Additional Merger”, and together with the First Merger and the Second Merger, the “Mergers”).
As a condition to the closing of the Business Combination, Complete Solar was required to consummate a merger with Solaria. On October 3, 2022, Complete Solar entered into the Required Transaction Merger Agreement, pursuant to which, and on the terms and subject to the conditions of which, Complete Solar would acquire all of the outstanding shares of capital stock of Solaria. The merger between Complete Solar and Solaria was consummated on November 4, 2022. As a result, Solaria became a wholly-owned subsidiary of Complete Solar, forming Legacy Complete Solaria. As discussed below, the disposition of Solaria was consummated in October 2023. Complete Solaria’s unaudited condensed consolidated balance sheet as of October 1, 2023 and unaudited condensed consolidated statement of operations and comprehensive income (loss) for the thirty-nine week period ended October 1, 2023 have been recast to give effect to the disposition.
The equity exchange and financing related matters associated with the Business Combination are summarized as follows:
| i. |
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| $6.7 million, which was modified as of the close of the |
| ii. | At the Closing, each share of Legacy Complete Solaria Capital Stock, inclusive of the 2022 Convertible Note Conversion Shares, issued and outstanding immediately prior to the Closing were cancelled and exchanged into an aggregate of 33,805,245 shares of Complete Solaria Common Stock (at a deemed value of $10.00 per share) equal to the Aggregate Merger Consideration. Additionally, each holder of Legacy Complete Solaria Capital Stock received Complete Solaria Warrants equal to a portion of the Aggregate Warrant Consideration, calculated on a pro rata basis based on the percentage interest of issued and |
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| outstanding shares of Legacy Complete Solaria Capital Stock held by the holder of such share of Legacy Complete Solaria Capital Stock. |
| iii. | At the Closing, all Legacy Complete Solaria Options and Legacy Complete Solaria Warrants outstanding as of immediately prior to such time were converted into options of Complete Solaria (“Complete Solaria Options”) and Complete Solaria Warrants, respectively. Each such Complete Solaria Option and Complete Solaria Warrant relates to a number of whole shares of Complete Solaria Common Stock (rounded down to the nearest whole share) equal to (i) the number of shares of Legacy Complete Solaria Common Stock subject to the applicable Legacy Complete Solaria Option or Legacy Complete Solaria Warrant multiplied by (ii) the Merger Consideration Per Fully Diluted Share. The exercise price for each Complete Solaria Option and Complete Solaria Warrant equals (i) the exercise price per share of the applicable Complete Solaria Option or Complete Solaria Warrant divided by (ii) the Merger Consideration Per Fully Diluted Share (rounded up to the nearest full cent). |
| iv. | At the Closing, the Sponsor transferred to the convertible note investors a pro rata percentage of (i) 666,651 shares of Complete Solaria Common Stock in exchange for payment by such investor to FACT of $0.0001 per share and (ii) 484,364 FACT Private |
| v. | On or around the Closing, Complete Solaria entered into New Money PIPE Subscription Agreements with certain investors to subscribe for and purchase 120,000 FACT Class A Ordinary Shares for a purchase price of $5.00 and aggregate proceeds of $0.6 million. Additionally, Complete Solaria issued an additional 60,000 shares of Complete Solaria Common Stock in consideration for certain services provided in the structuring of the Forward Purchase Agreements. |
| vi. | On or around the Closing Date, Complete Solaria entered into Subscription Agreements with certain PIPE Investors who purchased 1,570,000 shares of Complete Solaria Common Stock for aggregate proceeds of $15.7 million, including $3.5 million that was funded prior to the Closing Date. |
| vii. | On or around the Closing Date, the Sponsor transferred 4,333,333 FACT Class B Ordinary Shares to certain third parties pursuant to working capital lending arrangements, non-redemption agreements, PIPE Investments and the settlement of FACT’s accrued expenses associated with the Business Combination. Additionally, Complete Solaria issued and transferred 193,976 shares of Complete Solaria Common Stock |
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| to the Sponsor, |
| viii. | On July 17 and July 18, and in connection with obtaining consent for the Business Combination, Legacy Complete Solaria, FACT and CSREF Solis Holdings, LLC (“Carlyle”) entered into an amended and restated consent to the Business Combination Agreement and an amended and restated warrant agreement, which modified the terms of the mandatorily redeemable investment made by Carlyle in Legacy Complete Solaria. |
The Carlyle investment of $25.6 million was mandatorily redeemable on the three-year anniversary of the effective date of the CS Solis amended and restated LLC agreement (February 14, 2025) and accrued interest at a rate of 10.5%, which was structured as a a dividend payable based on 25% of the investment amount measured quarterly, compounded annually, and subject to increases in the event Legacy Complete Solaria declared any dividend. In connection with the investment, Legacy Complete Solaria issued a warrant to purchase up to 5,978,960 shares of its common stock at a price of $0.01 per share, of which, 4,132,513 shares were immediately exercisable and, were outstanding as of the date of modification. At Closing, the Legacy Complete Solaria warrants were exchanged for 1,995,879 warrants to purchase shares of Complete Solaria Common Stock. Legacy Complete Solaria accounted for the mandatorily redeemable investment from Carlyle in accordance with ASC 480 — Distinguishing Liabilities from Equity and recorded the investment as a liability, which was accreted to its redemption value under the effective interest method.
Among other changes to the investment agreement, the modification accelerates the redemption date of the investment, which was previously February 14, 2025 and is March 31, 2024 subsequent to the modification. Additionally, as part of the amendment, the parties entered into an amended and restated warrant agreement. As part of the warrant agreement, Complete Solaria will issue Carlyle a warrant to purchase up to 2,745,879 shares of Complete Solaria Common Stock at a price per share of $0.01, which is inclusive of the outstanding warrant to purchase 1,995,879 shares at the time of modification. The warrant, which expires on July 18, 2030, provides Carlyle with the right to purchase shares of Complete Solaria Common Stock based on (a) the greater of (i) 1,995,879 shares and (ii) the number of shares equal to 2.795% of the Complete Solaria’s issued and outstanding shares of common stock, on a fully-diluted basis; plus (b) on and after the date that is ten (10) days after the date of the agreement, an additional 350,000 shares; plus (c) on and after the date that is thirty (30) days after the date of the agreement, if the original investment amount has not been repaid, an additional 150,000 shares; plus (d) on and after the date that is ninety (90) days after the date of the agreement, if the original investment amount has not been repaid, an additional 250,000 shares, in each case, of Complete Solaria Common Stock at a price of $0.01 per share.
Description of the Disposal Transaction
On August 18, 2023, Complete Solaria entered into a Non-Binding Letter of Intent to sell certain of Complete Solaria’s North American solar panel assets, inclusive of certain intellectual property and customer contracts, to Maxeon. Subsequent to the execution of the Non-Binding Letter of Intent, on September 20, 2023, Complete Solaria entered into an asset purchase agreement with Maxeon for the sale of certain assets to Maxeon. . The agreement also includes a supply agreement for Maxeon to supply its premium, high-performance, high- efficiency solar panels to Complete Solaria. On October 6, 2023, Complete Solaria completed the sale of its solar panel business to Maxeon, pursuant to the terms of the Disposal Agreement. Under the terms of the Disposal Agreement, Maxeon agreed to acquire certain assets and employees of Complete Solaria, for an aggregate purchase price of approximately $11.0 million, consisting of 1,100,000 shares of Maxeon ordinary shares.
In conjunction with the Disposal Transaction, on October 5, 2023, Complete Solaria amended certain warrants, dated November 2, 2022, originally issued by the Complete Solaria to six warrant holders (the “Holders”), which warrants are exercisable for (a) an aggregate of 1,486,268 shares of Complete Solaria’s common stock, par value $0.001 per share, or (b) if designated and issued, a future series of preferred stock of Complete Solaria (the “Amendments”). The Amendments were made in connection with the Holders assigning loans they previously made to SolarCA LLC, a Delaware limited liability company (successor in interest to The Solaria Corporation and a wholly owned subsidiary of Complete Solaria) in order to provide the Holders with the
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benefits of the protective provisions of the original warrants to fix at a set number the number of shares of Common Stock issuable thereunder, as well as the exercise price per share. Pursuant to the Amendments, the warrants may be exercised for (a) Common Stock, at an exercise price of $0.75 per share, or (b) if designated and issued, a future series of preferred stock, at an exercise of 25% of the lowest price Complete Solaria receives for such share of future series of preferred stock. In connection with the Amendments, Complete Solaria agreed to provide the warrant holders with certain registration rights pursuant to that certain A&R Registration Rights Agreement, dated July 18, 2023, which the was previously filed by Complete Solaria as Exhibit 4.1 to the Complete Solaria’s Current Report on Form 8-K filed on July 24, 2023.
Accounting for the Business Combination
This unaudited pro forma condensed combined financial information should be read together with the historical financial statements and related notes of FACT, Legacy Complete Solaria and Solaria and other financial information included the Proxy Statement.
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Legacy Complete Solaria has been determined to be the accounting acquirer of FACT and Solaria based on the following facts and circumstances:
Legacy Complete Solaria’s existing shareholders are expected to have the greatest voting interest in the combined entity. Excluding warrant and option holders, Legacy Complete Solaria’s existing shareholders have an approximately 57.8% voting interest. On a fully diluted basis, Legacy Complete Solaria’s existing shareholders have approximately 56.4% ownership.
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Legacy Complete Solaria’s existing shareholders have the ability to control decisions regarding election and removal of the majority of the combined entity’s executive board of directors.
Legacy Complete Solaria’s senior management is the senior management of the combined entity.
The combined company name is Complete Solaria, Inc., i.e. the combined entity assumed Legacy Complete Solaria’s name.
The weighting of evidence as described above is indicative that Legacy Complete Solaria is the accounting acquirer of FACT. Accordingly, the merger between Legacy Complete Solaria and FACT has been accounted for as a reverse recapitalization, with FACT being treated as the “acquired” company for financial reporting purposes. For accounting purposes, the reverse recapitalization is the equivalent of Legacy Complete Solaria issuing stock for the net assets of FACT, accompanied by a recapitalization. As a result of the Business Combination being an in-substance capital transaction, Legacy Complete Solaria’s qualifying transaction costs are treated as an equivalent to equity issuance costs, reflected as a reduction in additional paid-in capital, rather than as an expense, in the unaudited pro forma condensed combined financial information. The net assets of FACT have been stated at historical cost, with no goodwill or other intangible assets recorded. Operations prior to the reverse recapitalization are those of Legacy Complete Solaria.
Outstanding vested and unvested share-based awards of Legacy Complete Solaria (including options and RSUs) were converted into the right to receive upon vesting or exercise such awards for common shares of Complete Solaria Common Stock after applying the Merger Consideration Per Fully Diluted Share. Because no terms of such share-based awards are modified upon consummation of the Business Combination, no accounting impact for such outstanding awards was recognized.
Public and private warrants of FACT were not modified as a result of the Business Combination and continue to be liabilities in the New Complete Solaria’s financial statements. The shares of New Complete Solaria Common Stock issuable upon the achievement of trading targets are expected to be classified in equity of New Complete Solaria pursuant to guidance in ASC 815-40.
With respectComplete Solaria has accounted for the modification of the long-term debt in CS Solis as debt extinguishment in accordance with ASC 480 and ASC 470. As a result of the extinguishment, Complete Solaria has recorded a loss on extinguishment and adjusted the value of the debt in CS Solis to its fair value.
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Additionally, the modification of the warrant resulted in the reclassification of previously equity classified warrants to liability classification, which was accounted for in accordance with ASC 815 and ASC 718. Complete Solaria recorded a reduction in additional paid-in capital for the value of the warrants prior to the Requiredmodification, recorded a warrant liability for the value of the warrants after the modification and recorded other expense equal to the different between the reduction in additional paid-in capital and the warrant liability.
Accounting for the Disposal Transaction
On October 6, 2023, Complete Solaria completed the sale of certain assets to Maxeon, pursuant to the terms of the Disposal Agreement. During the third fiscal quarter of 2023, Complete Solaria determined that it was the primary beneficiaryDisposal Transaction met the criteria for held-for-sale and discontinued operations classification. Complete Solaria concluded that the disposition of Solaria, and, as such, such merger has been accounted forthe solar panel business qualifies as a business combination in accordance with ASC 805.disposal of a business. Complete Solaria has recorded an impairment of $147.5 million, predominately related to Complete Solaria’s intangible assets and goodwill, in the third fiscal quarter of 2023 which is equal to the difference between the carrying value of the disposal group and the fair value of assets acquiredthe disposal group less costs to sell. Based on Complete Solaria’s assessment of the Disposal Transaction, Complete Solaria has presented Solaria as held-for-sale and liabilities assumed from Solaria.discontinued operations in its Quarterly Report on Form 10-Q for the quarterly period ended October 1, 2023. During the fourth fiscal quarter of 2023, upon consummation of the Disposal Transaction, Complete Solaria recognized a loss on disposal of $1.8 million.
In conjunction with the Disposal Transaction, on October 5, 2023, Complete Solaria amended certain warrants, dated November 2, 2022, originally issued by the Complete Solaria to six warrant holders. The warrants that were amended were historically liability classified and were subsequently reclassified to equity as part of the close of the Business Combination. Upon the modification of the warrants, the warrants are liability classified in accordance with the guidance of ASC 815. In accordance with ASC 718, Complete Solaria will account for the modification of the warrants by reducing additional paid-in capital by the value of the warrants immediately before the modification, recording a warrant liability for the value of the warrants immediately after the modification, and recording the difference as an expense in the consolidated statements of operations.
Complete Solaria has included the adjustments as of December 22, 2023 in the Pro Forma Accounting Adjustments column of the unaudited pro forma condensed combined statements of operations for the thirty-nine weeks ended October 1, 2023 and the year ended December 31, 2022 and the unaudited pro forma condensed combined balance sheet as of October 1, 2023.
Basis of Pro Forma Presentation
The adjustments in the unaudited pro forma condensed combined financial information have been identified and presented to provide relevant information of Complete Solaria upon consummation of the Business Combination and other events contemplated by the Business Combination.Combination as well as the effects of the Disposal Transaction. Assumptions and estimates underlying the unaudited pro forma adjustments set forth in the unaudited pro forma condensed combined financial information are described in the accompanying notes.
The unaudited pro forma condensed combined financial information has been presented for illustrative purposes only and is not necessarily indicative of the operating results and financial position that would have been achieved had the Business Combination and Disposal Transaction occurred on the dates indicated. The Business Combination proceeds remaining after the payment for the redemption of public shares, and payment of transaction costs related to the Merger are expected to be used for other general corporate purposes. The consideration shares received for the Disposal Transaction are expected to be classified as investment in equity securities. Further, the unaudited pro forma condensed combined financial information does not purport to project the future operating results or financial position of New Complete Solaria following the completion of the Business Combination.Combination and Disposal Transaction. The unaudited pro forma adjustments represent management’s estimates based on information available as of the date of this unaudited pro forma condensed combined financial information and are subject to change as additional information becomes available and analyses are performed.
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Other than certain ordinary course of business sale and purchase transactions between Complete Solar and Solaria, FACT, Complete Solar, and Solaria have not had any historical relationship prior to the transactions.
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The following table presents the pro forma New Complete Solaria common stock issued and outstanding immediately after the Business Combination, which does not give effect to the potential exercise of any warrants:
| Number of Shares | Percentage of Outstanding Shares | |||||||
FACT Public Stockholders(4) | 3,458,757 | 7.6 | % | |||||
Founder Shares (1), (2), (3), (4) | 8,152,325 | 18.0 | % | |||||
Complete Solaria shareholders | 20,034,257 | 44.3 | % | |||||
Complete Solaria convertible noteholders (3) | 6,126,726 | 13.5 | % | |||||
PIPE Investors | 7,518,488 | 16.6 | % | |||||
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Total | 45,290,553 | 100.0 | % | |||||
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| (1) | The above table includes 122,500 FACT Class B Ordinary Shares transferred to FACT directors, employees and consultants. |
| (2) | The table excludes the transfer of 4,333,333 shares of FACT Class B Ordinary Shares from the Sponsor to certain third parties pursuant to working capital lending arrangements, non-redemption agreements and PIPE Investments and the settlement of FACT’s accrued expenses |
| (3) | The above table includes the transfer of 666,651 shares of New Complete Solaria Common Stock from the Sponsor to Complete Solaria convertible noteholders and excludes up to 666,666 shares of New Complete Solaria Common Stock issuable by the New Complete Solaria to convertible noteholders based on the trading price of New Complete Solaria Common Stock. The issuance of New Complete Solaria Common Stock to the Complete Solaria convertible noteholders would further increase the ownership percentages of Complete Solaria convertible noteholders and would dilute the ownership of all stockholders. |
| (4) | The above table excludes the transfer of shares of a number FACT Class A Ordinary Shares held by Sponsor as of the Closing equal the difference of (i) 3,300,000 minus (ii) the number of shares, if any, of FACT Class A Ordinary Shares transferred by Sponsor to holders of 2022 Convertible Notes minus (iii) the number of shares, if any, of FACT Class A Ordinary Shares transferred by Sponsor to certain counterparties in consideration for loans and other amounts paid to finance the working capital loans due to the Sponsor and extension fees as consideration for such holders agreeing to enter into non-redemption agreements and/or such FACT PIPE Investment investors agreeing to make FACT PIPE Investment, as applicable. |
Of the 666,666 shares of Complete Solaria Common Stock issuable by Complete Solaria to convertible noteholders based on the trading price of Complete Solaria Common Stock, 333,333 shares will vest if, from Closing of the Business Combination until the 12 month anniversary thereof, the average price of Complete Solaria Common Stock exceeds $12.50 for any 20 trading days within any 30 trading day period and 333,333 will vest if, from the Closing of the Business Combination until the 12 month anniversary thereof, the average price of Complete Solaria Common Stock exceeds $15.00 for any 20 trading days within any 30 trading day period. The issuance of such shares would dilute the value of all shares of Complete Solaria Common Stock outstanding at that time. Assuming the current capitalization structure, the 666,666 shares that would become vested upon meeting the price threshold would represent approximately 1.5% of total shares outstanding.
The management of New Complete Solaria has concluded that the contingently issuable shares are equity-classified instruments, which do not have an impact on the unaudited pro forma condensed combined statement of operations for the periods ended December 31, 2022 and March 31,October 1, 2023.
If the actual facts are different than these assumptions, the ownership percentage retained by the FACT’s public stockholders in the post-combination company will be different from the above-stated ownership percentage.
132131
UNAUDITED PRO FORMA CONDENSED COMBINED BALANCE SHEET
As of March 31,October 1, 2023
(in thousands)
| Freedom Acquisition Corp (Historical) | Complete Solaria | Pro Forma Adjustments (Actual Redemptions) | Pro Forma Combined (Actual Redemption) | Complete Solaria (Historical) | Pro Forma Accounting Adjustments | Pro Forma Complete Solaria | ||||||||||||||||||||||||||||||
ASSETS | ||||||||||||||||||||||||||||||||||||
Current Assets: | ||||||||||||||||||||||||||||||||||||
Cash and cash equivalents | $ | 48 | $ | 3,349 | $ | 32,163 | A | $ | 35,560 | $ | 1,661 | $ | 5,000 | A | $ | 6,661 | ||||||||||||||||||||
Investment in equity securities | — | 10,989 | B | 10,989 | ||||||||||||||||||||||||||||||||
Accounts receivable, net | — | 28,139 | — | 28,139 | 26,003 | — | 26,003 | |||||||||||||||||||||||||||||
Inventory | — | 6,955 | — | 6,955 | ||||||||||||||||||||||||||||||||
Inventories | 12,503 | — | 12,503 | |||||||||||||||||||||||||||||||||
Prepaid expenses and other current assets | — | 12,035 | — | 12,035 | 9,947 | — | 9,947 | |||||||||||||||||||||||||||||
|
|
|
|
|
|
| ||||||||||||||||||||||||||||||
Total current assets | 48 | 50,478 | 32,163 | 82,689 | 50,114 | 15,989 | 66,103 | |||||||||||||||||||||||||||||
Cash held in Trust Account | 116,572 | — | (116,572 | ) | B | — | ||||||||||||||||||||||||||||||
Restricted cash | — | 3,758 | — | 3,758 | 3,758 | — | 3,758 | |||||||||||||||||||||||||||||
Property and equipment, net | — | 3,706 | — | 3,706 | 4,185 | — | 4,185 | |||||||||||||||||||||||||||||
Operating lease right-of-use assets | — | 1,934 | — | 1,934 | 1,465 | — | 1,465 | |||||||||||||||||||||||||||||
Intangible assets | — | 41,859 | — | 41,859 | ||||||||||||||||||||||||||||||||
Other noncurrent assets | — | 2,177 | (1,979 | ) | K | 198 | 198 | — | 198 | |||||||||||||||||||||||||||
Acquisition related intangible assets | — | — | — | — | ||||||||||||||||||||||||||||||||
Goodwill | — | 119,422 | — | 119,422 | ||||||||||||||||||||||||||||||||
Long-term assets held for sale – discontinued operations | 12,299 | (12,299 | ) | C | — | |||||||||||||||||||||||||||||||
|
|
|
|
|
|
| ||||||||||||||||||||||||||||||
Total Assets | $ | 116,620 | $ | 223,334 | $ | (86,388 | ) | $ | 253,566 | |||||||||||||||||||||||||||
Total assets | $ | 72,019 | $ | (3,690 | ) | $ | 75,709 | |||||||||||||||||||||||||||||
|
|
|
|
|
|
| ||||||||||||||||||||||||||||||
LIABILITIES AND STOCKHOLDERS’ EQUITY (DEFICIT) | ||||||||||||||||||||||||||||||||||||
Current liabilities: | ||||||||||||||||||||||||||||||||||||
Accounts payable | $ | 5,832 | $ | 17,183 | $ | (6,997 | ) | L | $ | 16,018 | $ | 14,571 | $ | — | $ | 14,571 | ||||||||||||||||||||
Accrued expenses and other current liabilities | — | 18,643 | — | 18,643 | 26,674 | 450 | D | 27,124 | ||||||||||||||||||||||||||||
Promissory Note - Related Party | 1,600 | — | (1,600 | ) | M | — | ||||||||||||||||||||||||||||||
Convertible Promissory Note – Related Party | 1,174 | — | (1,174 | ) | N | — | ||||||||||||||||||||||||||||||
Notes payable, net | — | 25,496 | — | 25,496 | 27,934 | — | 27,934 | |||||||||||||||||||||||||||||
Deferred Revenue | — | 4,257 | — | 4,257 | ||||||||||||||||||||||||||||||||
Deferred Revenue, current | 2,421 | — | 2,421 | |||||||||||||||||||||||||||||||||
Short-term debt with CS Solis | 29,194 | — | 29,194 | |||||||||||||||||||||||||||||||||
Forward purchase agreement liabilities | 6,586 | 403 | E | 6,989 | ||||||||||||||||||||||||||||||||
|
|
|
|
|
|
| ||||||||||||||||||||||||||||||
Total current liabilities | 8,606 | 65,579 | (9,771 | ) | 64,414 | 107,380 | 853 | 108,233 | ||||||||||||||||||||||||||||
Warranty provision, noncurrent | — | 3,338 | — | 3,338 | 3,416 | — | 3,416 | |||||||||||||||||||||||||||||
Warrant liabilities | 3,747 | 13,943 | (12,868 | ) | D | 4,822 | ||||||||||||||||||||||||||||||
Deferred underwriters’ discount payable | 3,019 | — | — | 3,019 | ||||||||||||||||||||||||||||||||
Operating lease liabilities, long-term | — | 1,076 | — | 1,076 | ||||||||||||||||||||||||||||||||
Long-term convertible notes, net | — | 14,560 | (14,560 | ) | C | — | ||||||||||||||||||||||||||||||
Long-term convertible notes, net due to related parties | — | 15,703 | (15,703 | ) | C | — | ||||||||||||||||||||||||||||||
Long-term debt in CS Solis | — | 26,290 | — | 26,290 | ||||||||||||||||||||||||||||||||
Warrant liability | 10,240 | 1,464 | F | 11,704 | ||||||||||||||||||||||||||||||||
Deferred revenue, noncurrent | 976 | — | 976 | |||||||||||||||||||||||||||||||||
Operating lease liabilities, net of current portion | 790 | — | 790 | |||||||||||||||||||||||||||||||||
|
|
|
|
|
|
| ||||||||||||||||||||||||||||||
Total liabilities | $ | 15,372 | $ | 140,489 | $ | (52,902 | ) | $ | 102,959 | 122,802 | 2,317 | 125,119 | ||||||||||||||||||||||||
|
|
|
|
|
|
| ||||||||||||||||||||||||||||||
Common Stock | 7 | — | 7 | |||||||||||||||||||||||||||||||||
Additional paid-in capital | 276,438 | 4,632 | G | 281,070 | ||||||||||||||||||||||||||||||||
Accumulated other comprehensive income (loss) | 51 | — | 51 | |||||||||||||||||||||||||||||||||
Retained earnings (accumulated deficit) | (327,279 | ) | (3,259 | ) | H | (330,538 | ) | |||||||||||||||||||||||||||||
|
|
| ||||||||||||||||||||||||||||||||||
Total stockholders’ equity (deficit) | (50,783 | ) | 1,373 | (49,410 | ) | |||||||||||||||||||||||||||||||
|
|
| ||||||||||||||||||||||||||||||||||
Total liabilities and stockholders’ equity (deficit) | $ | 72,019 | $ | 3,690 | $ | 75,709 | ||||||||||||||||||||||||||||||
|
|
| ||||||||||||||||||||||||||||||||||
133
Redeemable convertible preferred stock | — | 155,630 | (155,630 | ) | E | — | ||||||||||||
Common shares subject to possible redemption | 116,572 | — | (116,572 | ) | F | — | ||||||||||||
Freedom Acquisition Corp Class A Ordinary Shares | — | — | — | — | ||||||||||||||
Freedom Acquisition Corp Class B Ordinary Shares | 1 | — | (1 | ) | G | — | ||||||||||||
Solaria, Inc. Common stock | — | — | — | — | ||||||||||||||
Complete Solaria, Inc. Common Stock | — | — | 5 | H | 5 | |||||||||||||
Complete Solar Holding Corp common stock | — | — | — | — | ||||||||||||||
Additional paid-in capital | 2,053 | 36,074 | 221,334 | I | 259,461 | |||||||||||||
Accumulated other comprehensive income (loss) | — | 28 | — | 28 | ||||||||||||||
Retained earnings (accumulated deficit) | (17,378 | ) | (108,887 | ) | 17,378 | J | (108,887 | ) | ||||||||||
|
|
|
|
|
|
|
| |||||||||||
Total stockholders’ equity (deficit) | (15,324 | ) | (72,785 | ) | 238,716 | 150,607 | ||||||||||||
|
|
|
|
|
|
|
| |||||||||||
Total liabilities and stockholders’ equity (deficit) | $ | 116,620 | $ | 223,334 | $ | (86,388 | ) | $ | 253,566 | |||||||||
|
|
|
|
|
|
|
| |||||||||||
134132
UNAUDITED PRO FORMA CONDENSED COMBINED STATEMENT OF OPERATIONS
For the three monthsthirty-nine weeks ended March 31,October 1, 2023
(in thousands, except per share amounts)
| Legacy Complete Solaria (Historical) | Freedom Acquisition Corp (Historical) | Transaction Accounting Adjustments | Pro Forma Combined | Complete Solaria (Historical) | Freedom Acquisition Corp (Historical Adjustments) | Complete Solaria Combined | Pro Forma Accounting Adjustments | Pro Forma Combined | |||||||||||||||||||||||||||||||||||
Product revenue, net | $ | 18,721 | $ | — | $ | — | $ | 18,721 | |||||||||||||||||||||||||||||||||||
Service revenue, net | 16,677 | — | — | 16,677 | |||||||||||||||||||||||||||||||||||||||
Cost of product revenue | 19,489 | — | — | 19,489 | |||||||||||||||||||||||||||||||||||||||
Cost of service revenue | 13,818 | — | — | 13,818 | |||||||||||||||||||||||||||||||||||||||
Revenues | $ | 66,887 | $ | — | $ | 66,887 | $ | — | $ | 66,887 | |||||||||||||||||||||||||||||||||
Cost of revenues | 51,788 | — | 51,788 | — | 51,788 | ||||||||||||||||||||||||||||||||||||||
|
|
|
|
|
|
|
|
| |||||||||||||||||||||||||||||||||||
Gross Profit | 2,091 | — | — | 2,091 | 15,099 | — | 15,099 | — | 15,099 | ||||||||||||||||||||||||||||||||||
|
|
|
|
|
|
|
|
| |||||||||||||||||||||||||||||||||||
Operating Expenses | |||||||||||||||||||||||||||||||||||||||||||
Operating Expenses: | |||||||||||||||||||||||||||||||||||||||||||
Sales commissions | 5,677 | — | — | 5,677 | 23,221 | — | 23,221 | — | 23,221 | ||||||||||||||||||||||||||||||||||
Operating costs | — | 1,620 | — | 1,620 | — | 7,002 | 7,002 | — | 7,002 | ||||||||||||||||||||||||||||||||||
Sales and marketing | 3,549 | — | — | 3,549 | 5,216 | — | 5,216 | — | 5,216 | ||||||||||||||||||||||||||||||||||
General and administrative | 13,098 | — | — | 13,098 | 22,965 | — | 22,965 | — | 22,965 | ||||||||||||||||||||||||||||||||||
|
|
|
|
|
|
|
|
| |||||||||||||||||||||||||||||||||||
Total operating expenses | 22,324 | 1,620 | — | 23,944 | 51,402 | 7,002 | 58,404 | — | 58,404 | ||||||||||||||||||||||||||||||||||
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|
|
|
|
|
|
|
| |||||||||||||||||||||||||||||||||||
Loss from operations | (20,233 | ) | (1,620 | ) | — | (21,853 | ) | (36,303 | ) | (7,002 | ) | (43,305 | ) | — | (43,305 | ) | |||||||||||||||||||||||||||
|
|
|
|
|
|
|
|
| |||||||||||||||||||||||||||||||||||
Foreign currency exchange gain (loss) | — | — | — | — | — | ||||||||||||||||||||||||||||||||||||||
Interest income on marketable securities held in Trust Account | — | 2,817 | (2,817 | ) | DD | — | — | 4,225 | 4,225 | (4,225 | ) | AA | — | ||||||||||||||||||||||||||||||
Change in fair value of warrant liabilities | — | (769 | ) | — | (769 | ) | — | (3,440 | ) | (3,440 | ) | — | (3,440 | ) | |||||||||||||||||||||||||||||
Change in fair value of convertible note | — | (258 | ) | 258 | GG | — | — | (273 | ) | (273 | ) | 273 | BB | — | |||||||||||||||||||||||||||||
Offering expenses related to warrant issuance | — | — | — | — | — | ||||||||||||||||||||||||||||||||||||||
Interest expense | (3,611 | ) | — | 319 | FF | (3,292 | ) | (8,870 | ) | — | (8,870 | ) | 742 | CC | (8,128 | ) | |||||||||||||||||||||||||||
Interest income | 8 | — | — | 8 | 26 | — | 26 | — | 26 | ||||||||||||||||||||||||||||||||||
Other income (expense), net | 317 | — | (209 | ) | EE | 108 | (28,302 | ) | — | (28,302 | ) | (9,455 | ) | DD | (37,757 | ) | |||||||||||||||||||||||||||
|
|
|
|
|
|
|
|
| |||||||||||||||||||||||||||||||||||
Loss before income taxes | (23,519 | ) | 170 | (2,449 | ) | (25,798 | ) | (73,449 | ) | (6,490 | ) | (79,939 | ) | (12,665 | ) | (92,604 | ) | ||||||||||||||||||||||||||
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|
|
|
|
|
|
|
| |||||||||||||||||||||||||||||||||||
Income tax provision, net | (5 | ) | — | — | (5 | ) | |||||||||||||||||||||||||||||||||||||
Income tax (benefit) provision, net | (5 | ) | — | (5 | ) | — | (5 | ) | |||||||||||||||||||||||||||||||||||
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|
|
|
|
|
|
|
| |||||||||||||||||||||||||||||||||||
Net income (loss) | $ | (23,514 | ) | $ | 170 | $ | (2,449 | ) | $ | (25,793 | ) | ||||||||||||||||||||||||||||||||
Net income (loss) from continuing operations | $ | (73,444 | ) | $ | (6,490 | ) | $ | (79,934 | ) | $ | (12,665 | ) | $ | (92,599 | ) | ||||||||||||||||||||||||||||
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|
|
|
|
|
|
|
| |||||||||||||||||||||||||||||||||||
Weighted average shares outstanding, used in computing net loss per share attributable to common stockholders, basic and diluted | 16,969,979 | 51,160,118 | |||||||||||||||||||||||||||||||||||||||||
Net loss per share attributable to common stockholders, basis and diluted | (4.33 | ) | (1.81 | ) | |||||||||||||||||||||||||||||||||||||||
135133
UNAUDITED PRO FORMA CONDENSED COMBINED STATEMENT OF OPERATIONS
For the year ended December 31, 2022
(in thousands, except per share amounts)
| Legacy Complete Solaria Combined | Solaria Corp (Historical adjustments) | Solaria PPA Transaction Accounting Adjustments | Legacy Complete Solaria Combined (Historical) | Freedom Acquisition Corp (Historical) | Pro Forma Accounting Adjustments | Pro Forma Combined | Complete Solaria (Historical) | Freedom Acquisition Corp (Historical) | Complete Solaria Combined | Pro Forma Accounting Adjustments | Pro Forma Combined | ||||||||||||||||||||||||||||||||||||||||||||||||
Product revenue, net | $ | 13,325 | $ | 33,975 | $ | — | $ | 47,300 | $ | — | $ | — | $ | 47,300 | |||||||||||||||||||||||||||||||||||||||||||||
Service revenue, net | 66,475 | — | — | 66,475 | — | — | 66,475 | ||||||||||||||||||||||||||||||||||||||||||||||||||||
Cost of product revenue | 12,847 | 35,415 | — | 48,262 | — | — | 48,262 | ||||||||||||||||||||||||||||||||||||||||||||||||||||
Cost of service revenue | 46,647 | — | 1,141 | AA | 47,788 | — | — | 47,788 | |||||||||||||||||||||||||||||||||||||||||||||||||||
Revenues | $ | 66,475 | $ | — | $ | 66,475 | $ | — | $ | 66,475 | |||||||||||||||||||||||||||||||||||||||||||||||||
Cost of revenues | 46,647 | — | 46,647 | — | 46,647 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||
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|
|
|
|
|
|
|
|
|
|
| ||||||||||||||||||||||||||||||||||||||||||||||||
Gross Profit | 20,306 | (1,440 | ) | (1,141 | ) | 17,725 | — | — | 17,725 | 19,828 | — | 19,828 | — | 19,828 | |||||||||||||||||||||||||||||||||||||||||||||
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|
|
|
|
|
|
|
|
|
|
| ||||||||||||||||||||||||||||||||||||||||||||||||
Operating Expenses | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Operating Expenses: | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Sales commissions | 21,195 | — | — | 21,195 | — | — | 21,195 | 21,195 | — | 21,195 | — | 21,195 | |||||||||||||||||||||||||||||||||||||||||||||||
Operating costs | — | — | — | — | 4,407 | — | 4,407 | — | 4,407 | 4,407 | — | 4,407 | |||||||||||||||||||||||||||||||||||||||||||||||
Sales and marketing | 7,471 | 5,229 | 1,640 | BB | 14,340 | — | — | 14,340 | 6,156 | — | 6,156 | — | 6,156 | ||||||||||||||||||||||||||||||||||||||||||||||
General and administrative | 14,251 | 10,912 | 1,249 | CC | 26,412 | — | — | 26,412 | 13,634 | — | 13,634 | — | 13,634 | ||||||||||||||||||||||||||||||||||||||||||||||
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|
|
|
|
|
|
|
|
|
|
| ||||||||||||||||||||||||||||||||||||||||||||||||
Total operating expenses | 42,917 | 16,141 | 2,889 | 61,947 | 4,407 | — | 66,354 | 40,985 | 4,407 | 45,392 | — | 45,392 | |||||||||||||||||||||||||||||||||||||||||||||||
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|
|
|
|
|
|
|
|
|
| ||||||||||||||||||||||||||||||||||||||||||||||||
Loss from operations | (22,611 | ) | (17,581 | ) | (4,030 | ) | (44,222 | ) | (4,407 | ) | — | (48,629 | ) | (21,157 | ) | (4,407 | ) | (25,564 | ) | — | (25,564 | ) | |||||||||||||||||||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
| ||||||||||||||||||||||||||||||||||||||||||||||||
Foreign currency exchange gain (loss) | — | — | — | — | (18 | ) | — | (18 | ) | — | (18 | ) | (18 | ) | — | (18 | ) | ||||||||||||||||||||||||||||||||||||||||||
Interest income on marketable securities held in Trust Account | — | — | — | — | 4,822 | (4,822 | ) | DD | — | — | 4,822 | 4,822 | (4,822 | ) | AA | — | |||||||||||||||||||||||||||||||||||||||||||
Change in fair value of warrant liabilities | — | — | — | — | 5,510 | — | 5,510 | — | 5,510 | 5,510 | — | 5,510 | |||||||||||||||||||||||||||||||||||||||||||||||
Change in fair value of convertible note | — | — | — | — | (196 | ) | 196 | GG | — | — | (196 | ) | (196 | ) | 196 | BB | — | ||||||||||||||||||||||||||||||||||||||||||
Interest expense | (4,986 | ) | (3,235 | ) | — | (8,221 | ) | — | 221 | FF | (8,000 | ) | (4,986 | ) | — | (4,986 | ) | 221 | CC | (4,765 | ) | ||||||||||||||||||||||||||||||||||||||
Interest income | 5 | 13 | — | 18 | — | — | 18 | 5 | — | 5 | — | 5 | |||||||||||||||||||||||||||||||||||||||||||||||
Forgiveness of debt | — | — | — | — | 272 | — | 272 | — | 272 | 272 | — | 272 | |||||||||||||||||||||||||||||||||||||||||||||||
Other income (expense), net | (1,858 | ) | (14,438 | ) | — | (16,296 | ) | — | 5,211 | EE | (11,085 | ) | (1,858 | ) | — | (1,858 | ) | 5,211 | DD | 3,353 | |||||||||||||||||||||||||||||||||||||||
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|
|
|
|
|
|
|
|
|
|
| ||||||||||||||||||||||||||||||||||||||||||||||||
Loss before income taxes | (29,450 | ) | (35,241 | ) | (4,030 | ) | (68,721 | ) | 5,983 | 806 | (61,932 | ) | (27,996 | ) | 5,983 | (22,013 | ) | 806 | (21,207 | ) | |||||||||||||||||||||||||||||||||||||||
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|
|
|
|
|
|
|
|
|
|
| ||||||||||||||||||||||||||||||||||||||||||||||||
Income tax provision, net | 27 | 3 | — | 30 | — | — | 30 | ||||||||||||||||||||||||||||||||||||||||||||||||||||
Income tax (benefit) provision, net | 27 | — | 27 | — | 27 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
| ||||||||||||||||||||||||||||||||||||||||||||||||
Net income (loss) | $ | (29,477 | ) | $ | (35,244 | ) | $ | (4,030 | ) | $ | (68,751 | ) | $ | 5,983 | $ | 806 | $ | (61,962 | ) | ||||||||||||||||||||||||||||||||||||||||
Net income (loss) from continuing operations | $ | (28,023 | ) | $ | 5,983 | $ | (22,040 | ) | $ | 806 | $ | (21,234 | ) | ||||||||||||||||||||||||||||||||||||||||||||||
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Weighted average shares outstanding, used in computing net loss per share attributable to common stockholders, basic and diluted, | 8,366,296 | 51,160,118 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Net loss per share attributable to common stockholders, basis and diluted | (3.35 | ) | (0.42 | ) | |||||||||||||||||||||||||||||||||||||||||||||||||||||||
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NOTES TO UNAUDITED PRO FORMA CONDENSED COMBINED FINANCIAL INFORMATION
Note 1 — Basis of Presentation
The merger between Legacy Complete Solaria and FACT will behas been accounted for as a reverse recapitalization, with FACT being treated as the “acquired” company for financial reporting purposes. For accounting purposes, the reverse recapitalization will bewas the equivalent of Legacy Complete Solaria issuing stock for the net assets of FACT, accompanied by a recapitalization. The net assets of FACT will bewere stated at historical cost, with no goodwill or other intangible assets recorded. Operations prior to the reverse recapitalization will be those of Legacy Complete Solaria.
The unaudited pro forma condensed combined statement of operations of Complete Solaria for the three monthsthirty-nine weeks ended March 31,October 1, 2023 and for the year ended December 31, 2022, gives pro forma effect to the Business Combination and Required Transaction as if eachit had been consummated on January 1, 2022.
On October 6, 2023, Complete Solaria completed the sale of certain of Complete Solaria’s North American solar panel assets, inclusive of certain intellectual property and customer contracts, to Maxeon, pursuant to the terms of the Disposal Agreement. The RequiredDisposal Transaction was accounted for as discontinued operations for financial reporting purposes.
In July 2023, Complete Solaria and Freedom Acquisition I Corp. entered into separate agreements (each a business combination, as“Forward Purchase Agreement”, and together, the “Forward Purchase Agreements”) with each of (i) Meteora; (ii) Polar, and (iii) Sandia (each of Meteora, Polar, and Sandia, individually, a “Seller”, and together, the “Sellers”) for OTC Equity Prepaid Forward Transactions.On December 18, 2023, Complete Solar was concludedSolaria and each Seller entered into separate amendments to be the accounting acquirerForward Purchase Agreements (the “Amendments”). The Amendments lower the reset price 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 stockholders without triggering certain anti-dilution provisions contained in the Forward Purchase Agreements.
On December 18, 2023, the Complete Solaria onentered into separate common stock purchase agreements (the “Purchase Agreements”) with the basis that Solaria wasRodgers Massey Freedom and Free Markets Charitable Trust and the Rodgers Massey Revocable Living Trust (each a Variable Interest Entity (“VIE”)“Purchaser”, and that Complete Solar wastogether, the primary beneficiary“Purchasers”). Pursuant to the terms of the VIE. Solaria was determined to be a VIE in accordance with Subtopic 810-10 based on the following characteristics at the timePurchase Agreements, each Purchaser purchased 1,838,235 shares of acquisition:
Solaria was a legal entity;
Solaria did not have sufficient equity to finance its operations without additional subordinated financing, absent the acquisition by Complete Solar, and;
Solaria’s equity holders had a controlling financial interest.
Complete Solar, as the legal acquirer of Solaria, was determined to be the primary beneficiarycommon stock of the VIE as it hasCompany, par value $0.0001, (the “Shares”), at a price per share of $1.36, representing an aggregate purchase price of $5.0 million. The Purchasers paid for the power to direct the activities that most significantly impact Solaria’s economic performance and the right to receive benefits and obligation to absorb losses of Solaria, that could be potentially significant. As specified by ASC Subtopic 810-10, the initial consolidation of a VIE thatShares in cash. Thurman J. Rodgers is a business by a reporting entitytrustee of each Purchaser and is a business combination and the acquisition methodExecutive Chairman of accounting is applied.the board of directors of the Company.
The unaudited pro forma combined balance sheet of Complete Solaria as of March 31,October 1, 2023, gives pro forma effect to the Business Combinationthese transactions as if itthey had been consummated on March 31, 2023. The Required Transaction is reflected in the historical balance sheet of Complete Solaria as of April 2,October 1, 2023. The unaudited pro forma condensed combined statements of operations of Complete Solaria for the year ended December 31, 2022, and for the three monthsthirty-nine weeks ended March 31,October 1, 2023, presents pro forma effect to the transactions as if it had been completed on January 1, 2022. As the Disposal Transaction was consummated in October 2023. Complete Solaria’s unaudited condensed consolidated balance sheet as of October 1, 2023 and unaudited condensed consolidated statement of operations and comprehensive income (loss) for the thirty-nine week period ended October 1, 2023 have been recast to give effect to the disposition. Further, as the Disposal Transaction is related to the disposition of certain assets acquired in the Required Transaction, which occurred on November 4, 2022, there is is no pro forma impact associated with periods prior to the year ended December 31, 2022.
The unaudited pro forma combined balance sheet as of March 31,October 1, 2023, and unaudited pro forma condensed combined statement of operations for the three monthsthirty-nine weeks ended March 31,October 1, 2023, have been prepared using, and should be read in conjunction with, the following:
unaudited condensed consolidated financial statements of FACTComplete Solaria as of and for three monthsthirty-nine weeks ended March 31,October 1, 2023, and the related notes, included in the Proxy Statement;
unaudited condensed consolidated financial statements of Complete Solaria as of and for thirteen weeks ended April 2, 2023, and the related notes, included in the Proxy Statement;135
The unaudited pro forma condensed combined statement of operations for the year ended December 31, 2022 has been prepared using, and should be read in conjunction with, the following:
audited statements of operations of FACT for the fiscal year ended December 31, 2022 included in the Proxy Statement; and
audited statements of operations of Legacy Complete Solaria for the fiscal year ended December 31, 2022 included in the Proxy Statement.
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Additionally, in giving pro forma effect to the RequiredDisposal Transaction as if it had been consummated on January 1, 2022, the unaudited pro forma condensed combined statement of operations was prepared using the unaudited statement of operations of Solaria for the period from January 1, 2022 through the close of the RequiredDisposal Transaction.
Effective January 1, 2023, Legacy Complete Solaria changed its fiscal quarters to four thirteen-week periods within a standard calendar year. Each annual reporting period begins on January 1 and ends on December 31. The unaudited pro forma condensed combined statement of operations of Complete Solaria for the three months ended March 31, 2023 includes the Legacy Complete Solaria unaudited condensed consolidated statement of operations for the thirteen weeks ended April 2, 2023, and the unaudited pro forma condensed consolidated balance sheet of Complete Solaria as of March 31, 2023 includes the unaudited condensed consolidated balance sheet of Legacy Complete Solaria as of April 2, 2023. As the difference between the fiscal quarter end dates of Legacy Complete Solaria and FACT is two days, and there were no intervening events or transactions materially impacting the unaudited pro forma statement of operations or the unaudited pro forma balance sheet, no additional adjustments are made to align the reporting dates. March 31, 2023 is the reporting date of all pro forma adjustments in Note 3.
Management has made significant estimates and assumptions in its determination of the pro forma TransactionPro Forma Accounting Adjustments. As the unaudited pro forma condensed combined financial information has been prepared based on these preliminary estimates, the final amounts recorded may differ materially from the information presented.
The following unaudited pro forma condensed combined financial information has been prepared in accordance with Article 11 of Regulation S-X. The pro forma adjustments reflecting the consummation of the Business Combination and the RequiredDisposal Transaction are based on certain currently available information and certain assumptions and methodologies that FACTLegacy Complete Solaria believes are reasonable under the circumstances. The unaudited pro forma TransactionPro Forma Accounting Adjustments, which are described in the accompanying notes, may be revised as additional information becomes available and is evaluated. Therefore, it is likely that the actual adjustments will differ from the TransactionPro Forma Accounting Adjustments and it is possible such differences may be material. Complete Solaria believes that these assumptions and methodologies provide a reasonable basis for presenting all of the significant effects of the Business Combination and the RequiredDisposal Transaction are based on information available to management at the time and that the pro forma TransactionPro Forma Accounting Adjustments give appropriate effect to those assumptions and are properly applied in the unaudited pro forma combined financial information.
The unaudited pro forma condensed combined financial information does not give effect to any anticipated synergies, operating efficiencies, tax savings, or cost savings that may be associated with the Business Combination and the Requiredor Disposal Transaction.
The unaudited pro forma condensed combined financial information is not necessarily indicative of what the actual results of operations and financial position would have been had the Business Combination and Disposal Transaction taken place on the dates indicated, nor are they indicative of the future consolidated results of operations or financial position of Complete Solaria. They should be read in conjunction with the historical financial statements and notes thereto of FACT and Legacy Complete Solaria.
Note 2 — Accounting Policies
Upon completion of the Business Combination, management will performperformed a comprehensive review of FACT’s and Legacy Complete Solaria’s accounting policies. As a result of the review, management may identify differences between the accounting policies of the companies which, when conformed, could have a material impact on the combined financial statements. Based on its initial analysis, management has not identified any material differences in accounting policies that would have a material impact on the unaudited pro forma condensed combined financial information.
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Note 3 — Adjustments to Unaudited Pro Forma Condensed Combined Financial Information
Article 11 of Regulation S-X allows for the presentation of reasonably estimable synergies and other transaction effects that have occurred or are reasonably expected to occur (“Management’s Adjustments”). Complete Solaria has elected not to present Management’s Adjustments and will only be presenting TransactionPro Forma Accounting Adjustments in the following unaudited pro forma condensed combined financial information.
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The unaudited pro forma condensed combined financial information has been prepared to illustrate the effect of the TransactionsBusiness Combination and Disposal Transaction and has been prepared for informational purposes only.
The pro forma condensed combined provision for income taxes does not necessarily reflect the amounts that would have resulted had Complete Solaria filed consolidated income tax returns during the periods presented.
The unaudited pro forma basic and diluted net loss per share amounts presented in the unaudited pro forma condensed combined statement of operations are based upon the number of shares of Complete Solaria outstanding, assuming the Business Combination occurred on January 1, 2022.
Adjustments to Unaudited Pro Forma Combined Balance Sheet
The pro forma Transaction Accounting Adjustments, based on preliminary estimates that could change materially as additional information is obtained, are as follows:
(A) Represents pro forma Transaction Accounting Adjustments to cash to reflect the following (in thousands):
Investment held in Trust Account | $ | 116,572 | (1) | |
Proceeds from the issuance of 2022 Convertible Notes | 10,250 | (2) | ||
Payment of transaction related fees | (7,809 | )(3) | ||
Proceeds from PIPE financings | 16,300 | (4) | ||
Payment made to redeeming FACT public stockholders | (103,150 | )(5) | ||
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| $ | 32,163 | |||
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| (A) | Reflects the |
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The payment for expenses incurred by Legacy Complete Solaria in conjunction with the business combination are reflected as corresponding adjustment of $1.6 million to accounts payable for amounts which had been incurred prior to and unpaid as of March 31, 2023.
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The payment for expenses incurred by FACT in conjunction with the Business Combination is reflected as a corresponding adjustment of $2.5 million to accounts payable for amounts which had been incurred prior to and unpaid as of March 31, 2023.
Reflects |
| (C) | Reflects the |
| (D) | Reflects |
|
Reflects the conversion of principal and accrued interest related to the 2022 Convertible Notes, which converted into Legacy Complete Solaria Common Stock immediately prior to the Closing | $ | (14,560 | ) | |
Reflects the conversion of principal and accrued interest related to the 2022 Convertible Notes due to related parties, which converted into Legacy Complete Solaria Common Stock immediately prior to the Closing | (15,703 | ) | ||
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| |||
Total | $ | (30,263 | ) | |
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The 2022 Convertible Notes converted into 6,126,726 shares of Complete Solaria Common Stock and are recorded as additional paid in capital as described in Note I.
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Reflects the exchange of Legacy Complete Solaria Preferred Stock warrants into Complete Solaria Warrants, pursuant to terms of the Business Combination. Legacy Complete Solaria Preferred Stock warrants were previously contingently puttable or redeemable, resulting in Legacy Complete Solaria classifying such warrants as liabilities in its historical financial statements. Complete Solaria has concluded that the Complete Solaria Warrants exchanged for Complete Solaria Preferred Stock warrants are equity-classified warrants and the adjustment reflects reclassification of the warrants from liability to additional paid-in capital, as noted in Note I below | $ | (13,943 | ) | |
Reflects the conversion of FACT promissory note into 716,667 shares of private placement warrants upon the Business Combination | 1,075 | |||
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Total | $ | (12,868 | ) | |
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| (E) |
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The unaudited pro forma condensed combined balance sheet reflects the conversion with a corresponding increase of $155.6 million to additional paid-in capital, as noted in Note I below.
Reflects the |
| (F) |
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| (G) | Represents |
Recapitalization of Legacy Complete Solaria Preferred Stock and Legacy Complete Solaria Common Stock to Complete Solaria Common Stock | $ | 3 | ||
Reclassification of FACT Class A Ordinary Shares subject to redemption, assuming no redemption, to permanent equity | 1 | |||
Conversion of FACT Class B Ordinary Share to Complete Solaria Common Stock in connection with the Business Combination | 1 | |||
Conversion of 2022 Convertible Notes to Complete Solaria Common Stock in connection with the Business Combination | 1 | |||
Redemption of FACT Class A Ordinary Shares | (1 | ) | ||
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Total | $ | 5 | ||
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Reclassification of warrants upon the modification from equity classified to liability classified in accordance with the guidance of ASC 815 | $ | (368 | ) | |
Issuance of 3,676,470 shares of Complete Solaria Common Stock to a related-party investor | 5,000 | |||
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| |||
Total | $ | 4,632 | ||
|
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| (H) | Represents |
Conversion of Legacy Complete Solaria Preferred Stock to Complete Solaria Common Stock | $ | 155,627 | ||
Reclassification of FACT Class A Ordinary Shares subject to redemption, assuming no redemptions, to permanent equity | 116,571 | |||
Reduction in additional paid-in capital for SPAC related expenses | (2,730 | ) | ||
Elimination of FACT’s historical accumulated deficit | (17,241 | ) | ||
2022 Convertible Notes(1) | 40,512 | |||
Reclassification of Legacy Complete Solaria liability classified warrants to Complete Solaria equity classified warrants | 13,943 | |||
Redemption of FACT Class A Ordinary Shares in connection with the Special Meeting held on July 11, 2023 | (103,148 | ) | ||
Conversion of FACT convertible promissory note at closing pursuant to working capital lending arrangements | 1,500 | |||
PIPE financing | 16,300 | |||
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Total | $ | 221,334 | ||
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Reclassification of FACT’s historical accumulated deficit to additional paid-in capital in connection with the consummation of the Business Combination | $ | 17,241 | ||
Estimated transaction costs of FACT to be incurred subsequent to March 31, 2023 | (2,938 | ) | ||
Reflects the gain upon extinguishment of transaction costs incurred by FACT as of March 31, 2023 | 3,376 | |||
Reflects the repayment of the Sponsor working capital loans of $1.3 million, which had a fair value of $1.2 million as of March 31, 2023. The difference between the fair value and the repayment amount is recorded within accumulated deficit | (151 | ) | ||
Reflects the transaction costs of FACT incurred subsequent to March 31, 2023, financed through FACT promissory notes | (150 | ) | ||
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Total | $ | 17,378 | ||
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Reflects transaction costs that were incurred from October 2, 2023 through the closing date of the Disposal Transaction | $ | (450 | ) | |
Reflects the loss on disposal associated with the Disposal Transaction | (1,310 | ) | ||
Amendments of Forward Purchase Agreements | (403 | ) | ||
Reclassification of warrants upon the modification from equity classified to liability classified in accordance with the guidance of ASC 815 | (1,096 | ) | ||
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Total | $ | (3,259 | ) | |
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Represents the Transaction Accounting Adjustments to accounts payable for $4.1 million of transaction costs paid at the Closing. Amounts include $1.6 million and $2.5 million recorded as of March 31, 2023 by Complete Solaria and FACT, respectively, as described in Note A above | $ | (4,121 | ) | |
Reflects the extinguishment of transaction costs incurred by FACT as of March 31, 2023 as described in Note J above | (3,376 | ) | ||
Reflect the reclassification of FACT promissory notes to Accounts Payable in connection with the consummation of the Business Combination | 500 | |||
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Total | $ | (6,997 | ) | |
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Adjustments to Unaudited Pro Forma Condensed Combined Statement of Operations
The pro forma adjustments included in the unaudited pro forma condensed combined statement of operations for the year ended December 31, 2022, and the three monthsthirty-nine weeks ended March 31,October 1, 2023 are as follows:
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(AA) Represents pro forma adjustments to cost of sales to reflect the following (in thousands):
Reflects the intangible assets amortization expense resulting from the fair value adjustments recognized for intangible assets of developed technology acquired in the Required Transaction for the year ended December 31, 2022 | $ | 1,058 | ||
Represents change in stock-based compensation expense, related to stock options replaced by Complete Solaria to Solaria employees, that are recognized ratably over the post-combination period | 83 | |||
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Total | $ | 1,141 | ||
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Reflects the intangible assets amortization expense resulting from the fair value adjustments recognized for intangible assets of customer relationships and trademarks acquired in the Required Transaction for the year ended December 31, 2022 | $ | 1,411 | ||
Represents change in stock-based compensation expense, related to stock options replaced by Legacy Complete Solaria to Solaria employees, that are recognized ratably over the post-combination period | 229 | |||
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Total | $ | 1,640 | ||
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Reflects the elimination of historical investment income earned on FACT’s Trust Account. The pro forma Transaction Accounting Adjustments are |
| (BB) | Reflects change in fair value on FACT promissory note. The pro forma adjustments are $0.3 million and $0.2 million for the thirty-nine weeks ended October 1, 2023, and the year ended December 31, 2022, respectively. |
| (CC) | Reflects interest expense of $0.7 million and $0.2 million associated with the 2022 Convertible Notes for the thirty-nine weeks ended October 1, 2023, and the year ended December 31, 2022, respectively, which was assumed in the acquisition of Solaria and converted into Complete Solaria Common Stock upon the Close of the Business Combination. |
| (DD) | Reflects the elimination of change in fair value of Legacy Complete Solaria’s Preferred Stock warrant liability. The pro forma Transaction Accounting Adjustments are |
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Note 4 – In-process Accounting Analysis
The transactions discussed below are presented in the Company’s unaudited pro forma condensed combined financial information, however the Company’s accounting analysis on such transactions is incomplete as of the date of this filing. The Company discussed the implications of certain items where the accounting is incomplete.
Forward Purchase Agreements
On July 13, 2023, FACT and Legacy Complete Solaria, Inc. entered into separate agreements (each a “Forward Purchase Agreement”, and together, the “Forward Purchase Agreements”) with each of (i) Meteora Special Opportunity Fund I, LP (“MSOF”), Meteora Capital Partners, LP (“MCP”) and Meteora Select Trading Opportunities Master, LP (“MSTO”) (with MSOF, MCP, and MSTO collectively as “Meteora”); (ii) Polar Multi-Strategy Master Fund (“Polar”), and (iii) Sandia Investment Management L.P. (“Sandia”, and each of Meteora, Polar, and Investor, individually, a “Seller”, and together, the “Sellers”) for OTC Equity Prepaid Forward
144
Transactions. Pursuant to the terms of the Forward Purchase Agreements, the Sellers intended, but were not obligated, to purchase up to a number of shares of FACT Class A Ordinary Shares in the aggregate amount equal to up to 6,300,000, concurrently with the Closing pursuant to each Seller’s respective FPA Funding Amount PIPE Subscription Agreement, less, in the case of Meteora and Sandia, the number of FACT Class A Ordinary Shares purchased by each Seller separately from third parties through a broker in the open market (“Recycled Shares”).
As of the date of this filing, Complete Solaria has not concluded on the accounting analysis for and has not yet determined an estimate of initial fair value of the Forward Purchase Agreements. Complete Solaria expects that an evaluation will be required to consider, but not necessarily limited to, the guidance in ASC 480 — Distinguishing Liabilities from Equity and ASC 815 — Derivatives and Hedging.
The results of this accounting analysis may have material implications on Complete Solaria’s financial statements including the subsequent fair value of the Forward Purchase Agreements and ongoing remeasurement effects which will impact Complete Solaria’s earnings. If, based on Complete Solaria’s analysis, the Forward Purchase Agreements meet the criteria to be classified as equity, the fair value of the Forward Purchase Agreements will be recognized as a component of equity. If, however, the Forward Purchase Agreements do not meet the criteria to be recognized as a component of equity, the Forward Purchase Agreements will be recognized as an asset or liability at fair value upon issuance, and remeasured each reporting period, with changes in fair value recorded as a component of income.
Long-Term Debt with CS Solis
On July 17 and July 18, and in connection with obtaining consent for the Business Combination, Legacy Complete Solaria, FACT and CSREF Solis Holdings, LLC (“Carlyle”) entered into an amended and rested consent to the Business Combination Agreement and an amended and restated warrant agreement, which modify the terms of the mandatorily redeemable investment made by Carlyle in Legacy Complete Solaria.
The Carlyle investment of $25.6 million was mandatorily redeemable on the three-year anniversary of the effective date of the CS Solis amended and restated LLC agreement (February 14, 2025) and accrued interest at a rate of 10.5%, which was structured as a a dividend payable based on 25% of the investment amount measured quarterly, compounded annually, and subject to increases in the event Legacy Complete Solaria declared any dividend. In connection with the investment, Legacy Complete Solaria issued a warrant to purchase up to 5,978,960 shares of its common stock at a price of $0.01 per share, of which, 4,132,513 shares were immediately exercisable and, were outstanding as of the date of modification. At Closing, the Legacy Complete Solaria warrants were exchanged for 1,995,879 warrants to purchase shares of Complete Solaria Common Stock. Legacy Complete Solaria accounted for the mandatorily redeemable investment from Carlyle in accordance with ASC 480 —Distinguishing Liabilities from Equity and recorded the investment as a liability, which was accreted to its redemption value under the effective interest method.
Among other changes to the investment agreement, the modification accelerates the redemption date of the investment, which was previously February 14, 2025 and is March 31, 2024 subsequent to the modification. Additionally, as part of the amendment, the parties entered into an amended and restated warrant agreement. As part of the warrant agreement, Complete Solaria will issue Carlyle a warrant to purchase up to 2,745,879 shares of Complete Solaria Common Stock at a price per share of $0.01, which is inclusive of the outstanding warrant to purchase 1,995,879 shares at the time of modification. The warrant, which expires on July 18, 2030, provides Carlyle with the right to purchase shares of Complete Solaria Common Stock based on (a) the greater of (i) 1,995,879 shares and (ii) the number of shares equal to 2.795% of the Complete Solaria’s issued and outstanding shares of common stock, on a fully-diluted basis; plus (b) on and after the date that is ten (10) days after the date of the agreement, an additional 350,000 shares; plus (c) on and after the date that is thirty (30) days after the date of the agreement, if the original investment amount has not been repaid, an additional 150,000 shares; plus (d) on and after the date that is ninety (90) days after the date of the agreement, if the original investment amount has not been repaid, an additional 250,000 shares, in each case, of Complete Solaria Common Stock at a price of $0.01 per share.
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As of the date of this filing, Complete Solaria has not concluded on the accounting analysis for the modification of the Carlyle investment agreement. Due to the acceleration of the maturity date and issuance of additional warrants, Complete Solaria will analyze the transaction to assess the modification of a mandatorily redeemable financial instrument in accordance with the modification and extinguishment guidance included in ASC 470, Debt, and Complete Solaria will assess the classification and measurement of the warrants issued in connection with the modification ASC 480 —Distinguishing Liabilities from Equity, ASC 815 — Derivatives and Hedging, and ASC 718 — Compensation-Stock Compensation.
The results of this accounting analysis may have material implications on Complete Solaria’s financial statements.
Complete Solaria intends to conclude on the accounting analysis and disclose the accounting impacts of the above transactions on the consolidated financial statements of the post-combination entity.
Note 5 — Net Loss Per Share
Represents the net loss per share calculated using the historical weighted average shares outstanding and the issuance of additional shares in connection with the Business Combination, and other related events, assuming such additional shares were outstanding since January 1, 2022. As the Business Combination and other related events are being reflected as if they had occurred as of January 1, 2022, the calculation of weighted average shares outstanding for basic and diluted net loss per share assumes the shares issued in connection with the Business Combination, other related events have been outstanding for the entire periods presented.
(in thousands, except for share and per share data) | For the year ended December 31, 2022 | For the Three Months ended March 31, 2023 | For the year ended December 31, 2022 | For the thirty-nine | ||||||||||||
Pro forma loss attributable to common stockholders – Complete Solaria | $ | (61,962 | ) | $ | (25,793 | ) | $ | (21,234 | ) | $ | (92,599 | ) | ||||
Complete Solaria common stock Weighted average shares outstanding – basic and diluted | 47,483,649 | 47,483,649 | ||||||||||||||
Pro forma weighted-average shares outstanding, basic and diluted | 51,160,118 | 51,160,118 | ||||||||||||||
Net loss per share – basic and diluted | $ | (1.30 | ) | $ | (0.54 | ) | $ | (0.42 | ) | $ | (1.81 | ) | ||||
The following summarizes the number of shares of Complete Solaria Common Stock outstanding used for pro forma presentation purposes for the year ended December 31, 2022, and for the three monthsthirty-nine weeks ended March 31,October 1, 2023:
| |||||||
Public Shareholders | 3,458,757 | ||||||
Founder Shares | 8,152,325 | ||||||
PIPE Investors | 7,518,488 | ||||||
Legacy Complete Solaria Shareholders | |||||||
Legacy Complete Solaria – equity classified penny warrants | |||||||
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Pro forma | |||||||
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| (1) | Excludes approximately 7,624,716 shares of Complete Solaria Common Stock which remain reserved for options and restricted stock units outstanding. At the Closing, Legacy Complete Solaria options and restricted stock units will be converted into Complete Solaria options and restricted stock units, upon substantially the same terms and conditions as in effect with respect to the corresponding Complete Solaria option and restricted stock units. |
| (2) | Excludes approximately |
| (3) | Includes 7,518,488 shares related to PIPE investors, which, prior to the Closing, will convert into Legacy Complete Solaria Common Stock, and will convert into Complete Solaria Common Stock upon the Closing. |
| (4) | The table excludes the transfer of 4,333,333 shares of FACT Class B Ordinary Shares from the Sponsor to certain third parties pursuant to working capital lending arrangements, non-redemption agreements, PIPE Investments, and the settlement of accrued expenses related to the Business Combination. |
| (5) | Excludes the transfer of shares of a number FACT Class A Ordinary Shares held by Sponsor as of the Closing equal the difference of (i) 3,300,000 minus (ii) the number of shares, if any, of FACT Class A Ordinary Shares transferred by Sponsor to holders of 2022 Convertible Notes minus (iii) the number of shares, if any, of FACT Class A Ordinary Shares transferred by Sponsor to certain counterparties in consideration for loans and other amounts paid to finance the working capital loans due to the Sponsor and extension fees as consideration for such holders agreeing to enter into non-redemption agreements and/or such FACT PIPE Investment investors agreeing to make FACT PIPE Investment, as applicable. |
| (6) | Does not reflect the transfer of 666,651 shares of Complete Solaria Common Stock from the Sponsor to Legacy Complete Solaria convertible noteholders upon Closing. |
The following potential outstanding securities were excluded from the computation of pro forma net loss per share, basic and diluted, because their effect would have been anti-dilutive or issuance of such shares is contingent upon the satisfaction of certain conditions which are not satisfied as of the period end for pro forma presentation purposes.
Share Type | Shares | ||||||
Public Warrants | 8,625,000 | ||||||
Private | 6,266,667 | ||||||
Private | 716,667 | ||||||
Aggregate Warrant Consideration | 6,266,572 | ||||||
Shares issuable upon achievement of trading price targets | 666,666 | ||||||
Options (unvested and vested) | 7,624,716 | ||||||
Warrants (non-penny warrants) | |||||||
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CONSOLIDATED FINANCIAL STATEMENTS AS OF AND FOR THE YEARS ENDED DECEMBER 31, 2021 and 2020: | |||||||
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UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS AS OF SEPTEMBER 30, 2022 and DECEMBER 31, 2021 AND FOR THE NINE MONTHS ENDED SEPTEMBER 30, 2022 AND 2021: | |||||||
As of December 31, | As of December 31, | |||||||||||||||
2022 | 2021 | 2022 | 2021 | |||||||||||||
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Current assets: | ||||||||||||||||
Cash and cash equivalents | ||||||||||||||||
Cash and cash equivalents | ||||||||||||||||
Cash and cash equivalents | ||||||||||||||||
Cash and cash equivalents | $ | 4,409 | $ | 5,276 | $ | 4,409 | $ | 5,276 | ||||||||
Accounts receivable, net | 27,717 | 9,037 | 27,717 | 9,037 | ||||||||||||
Inventories | 13,059 | 4,409 | 13,059 | 4,409 | ||||||||||||
Prepaid expenses and other current assets | 10,071 | 4,955 | 10,071 | 4,955 | ||||||||||||
Total current assets | 55,256 | 23,677 | 55,256 | 23,677 | ||||||||||||
Long-term deposits | — | 70 | — | 70 | ||||||||||||
Restricted cash | 3,907 | — | 3,907 | — | ||||||||||||
Property and equipment, net | 3,476 | 1,758 | 3,476 | 1,758 | ||||||||||||
Operating lease right-of-use | 2,182 | 826 | 2,182 | 826 | ||||||||||||
Intangible assets, net | 42,610 | 72 | — | 72 | ||||||||||||
Goodwill | 119,422 | — | ||||||||||||||
Other noncurrent assets | 1,330 | — | 1,330 | — | ||||||||||||
Long-term assets held for sale - discontinued operations | 162,032 | — | ||||||||||||||
Total assets | $ | 228,183 | $ | 26,403 | $ | 228,183 | $ | 26,403 | ||||||||
Liabilities, redeemable convertible preferred stock and stockholders’ deficit | ||||||||||||||||
Current liabilities | ||||||||||||||||
Accounts payable | $ | 14,474 | $ | 5,190 | $ | 14,474 | $ | 5,190 | ||||||||
Accrued expenses and other current liabilities | 19,830 | 9,347 | 19,830 | 9,347 | ||||||||||||
SAFE agreements | — | 6,397 | — | 6,397 | ||||||||||||
Convertible notes, net | — | 1,890 | — | 1,890 | ||||||||||||
Convertible notes, net due to related parties | — | 6,820 | — | 6,820 | ||||||||||||
Notes payable, net | 20,403 | 9,507 | 20,403 | 9,507 | ||||||||||||
Deferred revenue | 5,407 | 3,852 | 5,407 | 3,852 | ||||||||||||
Total current liabilities | 60,114 | 43,003 | 60,114 | 43,003 | ||||||||||||
Warranty provision, noncurrent | 3,214 | 1,681 | 3,214 | 1,681 | ||||||||||||
Redeemable convertible preferred stock warrant liability | 14,152 | 1,129 | ||||||||||||||
Warrant liability | 14,152 | 1,129 | ||||||||||||||
Derivative liability | — | 1,481 | — | 1,481 | ||||||||||||
Long-term debt with CS Solis | 25,204 | — | 25,204 | — | ||||||||||||
Convertible notes, net, noncurrent | 3,434 | — | 3,434 | — | ||||||||||||
Convertible notes, net due to related parties, noncurrent | 15,510 | — | 15,510 | — | ||||||||||||
Operating lease liabilities, net of current portion | 1,274 | 499 | 1,274 | 499 | ||||||||||||
Total liabilities | 122,902 | 47,793 | 122,902 | 47,793 | ||||||||||||
Commitments and contingencies (Note 15) | ||||||||||||||||
Redeemable convertible preferred stock: | ||||||||||||||||
Redeemable convertible preferred stock, $0.0001 par value. Authorized 36,698,015, and 20,528,975 shares as of December 31, 2022 and 2021, respectively; issued and outstanding 34,311,133 and 16,564,370 shares as of December 31, 2022 and 2021, respectively; liquidation preference of $158,007 and $31,910 as of December 31, 2022 and 2021, respectively | 155,630 | 31,401 | ||||||||||||||
Total redeemable convertible preferred stock | 155,630 | 31,401 | ||||||||||||||
Stockholders’ deficit: | ||||||||||||||||
Common stock, $0.0001 par value. Authorized 60,000,000 and 28,051,328 shares as of | ||||||||||||||||
December 31, 2022 and 2021, respectively; issued and outstanding 6,959,618 and 3,739,572 shares as of December 31, 2022 and 2021, respectively | — | — | ||||||||||||||
Commitments and contingencies (Note 17) | ||||||||||||||||
Stockholders’ equity (deficit): | ||||||||||||||||
Common stock, $0.0001 par value. Authorized 28,978,185 and 13,547,943 shares as of | ||||||||||||||||
December 31, 2022 and 2021, respectively; issued and outstanding 19,932,429 and 9,806,143 shares as of December 31, 2022 and 2021, respectively | 3 | 1 | ||||||||||||||
Additional paid-in capital | 34,997 | 3,105 | 190,624 | 34,504 | ||||||||||||
Accumulated other comprehensive income | 27 | — | 27 | — | ||||||||||||
Accumulated deficit | (85,373 | ) | (55,896 | ) | (85,373 | ) | (55,896 | ) | ||||||||
Total stockholders’ deficit | (50,349 | ) | (52,791 | ) | ||||||||||||
Total stockholders’ equity (deficit) | 105,281 | (21,390 | ) | |||||||||||||
Total liabilities, mezzanine equity and stockholders’ deficit | $ | 228,183 | $ | 26,403 | ||||||||||||
Total liabilities and stockholders’ deficit | $ | 228,183 | $ | 26,403 | ||||||||||||
For the Years Ended December 31, | For the Years Ended December 31, | |||||||||||||||||||||||
2022 | 2021 | 2020 | 2022 | 2021 | 2020 | |||||||||||||||||||
Product revenues | $ | 13,325 | $ | — | $ | — | ||||||||||||||||||
Service revenues | 66,475 | 68,816 | 29,378 | |||||||||||||||||||||
Total revenues | 79,800 | 68,816 | 29,378 | |||||||||||||||||||||
Cost of product revenues | 12,847 | — | — | |||||||||||||||||||||
Cost of service revenues | 46,647 | 40,123 | 17,097 | |||||||||||||||||||||
Total cost of revenues | 59,494 | 40,123 | 17,097 | |||||||||||||||||||||
Revenues | $ | 66,475 | $ | 68,816 | $ | 29,378 | ||||||||||||||||||
Cost of revenues | 46,647 | 40,123 | 17,097 | |||||||||||||||||||||
Gross profit | 20,306 | 28,693 | 12,281 | 19,828 | 28,693 | 12,281 | ||||||||||||||||||
Operating expenses: | ||||||||||||||||||||||||
Sales commissions | 21,195 | 25,061 | 10,410 | 21,195 | 25,061 | 10,410 | ||||||||||||||||||
Sales and marketing | 7,471 | 5,179 | 3,185 | 6,156 | 5,179 | 3,185 | ||||||||||||||||||
General and administrative | 14,251 | 5,780 | 3,801 | 13,634 | 5,780 | 3,801 | ||||||||||||||||||
Operating expenses | 42,917 | 36,020 | 17,396 | 40,985 | 36,020 | 17,396 | ||||||||||||||||||
Loss from operations | (22,611 | ) | (7,327 | ) | (5,115 | ) | (21,157 | ) | (7,327 | ) | (5,115 | ) | ||||||||||||
Interest expense 1 | (4,986 | ) | (1,712 | ) | (523 | ) | (4,986 | ) | (1,712 | ) | (523 | ) | ||||||||||||
Interest income | 5 | — | — | 5 | — | — | ||||||||||||||||||
Other income (expense), net 2 | (1,858 | ) | (240 | ) | (41 | ) | (1,858 | ) | (240 | ) | (41 | ) | ||||||||||||
Loss before income taxes | (29,450 | ) | (9,279 | ) | (5,679 | ) | ||||||||||||||||||
Loss from continuing operations before income taxes | (27,996 | ) | (9,279 | ) | (5,679 | ) | ||||||||||||||||||
Income tax provision | (27 | ) | (3 | ) | (3 | ) | (27 | ) | (3 | ) | (3 | ) | ||||||||||||
Net loss from continuing operations | $ | (28,023 | ) | $ | (9,282 | ) | $ | (5,682 | ) | |||||||||||||||
Loss on discontinued operations, net of tax | (1,454 | ) | — | — | ||||||||||||||||||||
Net loss | $ | (29,477 | ) | $ | (9,282 | ) | $ | (5,682 | ) | $ | (29,477 | ) | $ | (9,282 | ) | $ | (5,682 | ) | ||||||
Comprehensive income (loss): | ||||||||||||||||||||||||
Foreign currency translation adjustment | 27 | — | — | 27 | — | — | ||||||||||||||||||
Comprehensive loss (net of tax) | $ | (29,450 | ) | $ | (9,282 | ) | $ | (5,682 | ) | $ | (29,450 | ) | $ | (9,282 | ) | $ | (5,682 | ) | ||||||
Net loss attributable per share attributable to common stockholders, basic and diluted | $ | (3.73 | ) | $ | (2.26 | ) | $ | (2.96 | ) | |||||||||||||||
Net loss from continuing operations per share attributable to common stockholders, basic and diluted | $ | (1.24 | ) | $ | (0.77 | ) | $ | (0.58 | ) | |||||||||||||||
Weighted-average shares used to compute net loss per share attributable to common stockholders, basic and diluted | 7,907,929 | 4,104,927 | 1,921,106 | |||||||||||||||||||||
Net loss from discontinued operations per share attributable to common stockholders, basic and diluted | $ | (0.07) | $ | — | $ | — | ||||||||||||||||||
Net loss per share attributable to common stockholders, basic and diluted | $ | (1.31) | $ | (0.77 | ) | $ | (0.58 | ) | ||||||||||||||||
Weighted-average shares used to compute net loss per share attributable to common stockholders’, basic and diluted | 22,524,400 | 11,990,015 | 9,760,018 | |||||||||||||||||||||
| 1. | Includes interest expense to related parties of $0.3 million, $0.7 million and $0.2 million during the years ended December 31, 2022, 2021 and 2020, respectively. |
| 2. | Other income (expense), net includes other income from related parties of $1.4 million, zero and zero during the years ended December 31, 2022, 2021 and 2020, respectively. |
Redeemable Convertible Preferred Stock | Common Stock | Additional Paid-in-Capital | Accumulated Deficit | Accumulated OCI | Total Stockholders’ Deficit | Redeemable Convertible Preferred Stock | Common Stock | Additional Paid-in-Capital | Accumulated Deficit | Accumulated Other Comprehensive Income | Total Stockholders’ Equity (Deficit) | |||||||||||||||||||||||||||||||||||||||||||||||||||||
Shares | Amount | Shares | Amount | Shares | Amount | Shares | Amount | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Balance at January 1, 2020 | 13,090,720 | $ | 22,788 | 1,103,289 | $ | — | $ | 180 | $ | (40,932 | ) | $ | — | $ | (40,752 | ) | 13,090,720 | $ | 22,788 | 1,103,289 | $ | — | $ | 180 | $ | (40,932 | ) | $ | — | $ | (40,752 | ) | ||||||||||||||||||||||||||||||||
Retroactive application of recapitalization (Note 3) | (13,090,720 | ) | (22,788 | ) | 5,751,955 | 2 | 22,786 | — | — | 22,788 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||
Balance at January 1, 2020, as adjusted | — | — | 6,855,244 | 2 | 22,966 | (40,932 | ) | — | (17,964 | ) | ||||||||||||||||||||||||||||||||||||||||||||||||||||||
Issuances of Series C-1 redeemable convertible preferred Stock upon conversion of2017-A convertible note and 2019 SAFE | 2,800,283 | 7,419 | — | — | — | — | — | — | 2,800,283 | 7,419 | — | — | — | — | — | — | ||||||||||||||||||||||||||||||||||||||||||||||||
Issuance of Series C redeemable convertible preferred stock upon conversion of convertible notes | 2,322,150 | 3,661 | — | — | — | — | — | — | 2,322,150 | 3,661 | — | — | — | — | — | — | ||||||||||||||||||||||||||||||||||||||||||||||||
Conversion of redeemable convertible preferred stock to common stock | (1,648,783 | ) | (2,330 | ) | 1,648,783 | — | 2,330 | — | — | 2,330 | (1,648,783 | ) | (2,330 | ) | 1,648,783 | — | 2,330 | — | — | 2,330 | ||||||||||||||||||||||||||||||||||||||||||||
Issuance of common stock warrant | — | (137 | ) | — | — | 137 | — | — | 137 | — | (137 | ) | — | — | 137 | — | — | 137 | ||||||||||||||||||||||||||||||||||||||||||||||
Exercise of common stock options | — | — | 942,500 | — | 84 | — | — | 84 | — | — | 942,500 | — | 84 | — | — | 84 | ||||||||||||||||||||||||||||||||||||||||||||||||
Stock-based compensation | — | — | — | — | 109 | — | — | 109 | — | — | — | — | 109 | — | — | 109 | ||||||||||||||||||||||||||||||||||||||||||||||||
Net loss | — | — | — | — | — | (5,682 | ) | — | (5,682 | ) | — | — | — | — | — | (5,682 | ) | — | (5,682 | ) | ||||||||||||||||||||||||||||||||||||||||||||
Balance as of December 31, 2020, as previously reported | 3,473,650 | 8,613 | 2,591,893 | — | 2,660 | (5,682 | ) | — | (3,022 | ) | ||||||||||||||||||||||||||||||||||||||||||||||||||||||
Retroactive application of recapitalization (Note 3) | (3,473,650 | ) | (8,613 | ) | 2,929,165 | — | 8,613 | — | — | 8,613 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||
Balance as of December 31, 2020 | 16,564,370 | $ | 31,401 | 3,694,572 | $ | — | $ | 2,840 | $ | (46,614 | ) | $ | — | $ | (43,774 | ) | — | $ | — | 9,784,409 | $ | 2 | $ | 34,239 | $ | (46,614 | ) | $ | — | $ | (12,373 | ) | ||||||||||||||||||||||||||||||||
Issuance of common stock upon asset acquisition of assembled workforce | — | — | 30,000 | — | 17 | — | — | 17 | — | — | 30,000 | — | 17 | — | — | 17 | ||||||||||||||||||||||||||||||||||||||||||||||||
Issuance of common stock warrant | — | — | — | — | 42 | — | — | 42 | — | — | — | — | 42 | — | — | 42 | ||||||||||||||||||||||||||||||||||||||||||||||||
Exercise of common stock options | — | — | 15,000 | — | 6 | — | — | 6 | — | — | 15,000 | — | 6 | — | — | 6 | ||||||||||||||||||||||||||||||||||||||||||||||||
Stock-based compensation | — | — | — | — | 200 | — | — | 200 | — | — | — | — | 200 | — | — | 200 | ||||||||||||||||||||||||||||||||||||||||||||||||
Net loss | — | — | — | — | — | (9,282 | ) | — | (9,282 | ) | — | — | — | — | — | (9,282 | ) | — | (9,282 | ) | ||||||||||||||||||||||||||||||||||||||||||||
Balance as of December 31, 2021, as previously reported | — | — | 45,000 | — | 265 | (9,282 | ) | — | (9,017 | ) | ||||||||||||||||||||||||||||||||||||||||||||||||||||||
Retroactive application of recapitalization (Note 3) | — | — | 21,734 | — | — | — | — | — | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Balance as of December 31, 2021 | 16,564,370 | $ | 31,401 | 3,739,572 | $ | — | $ | 3,105 | $ | (55,896 | ) | $ | — | $ | (52,791 | ) | — | $ | — | 9,806,143 | $ | 2 | $ | 34,504 | $ | (55,896 | ) | $ | — | $ | (21,390 | ) | ||||||||||||||||||||||||||||||||
Issuance of Series D-1, D-2, andD-3 redeemable convertible preferred stock upon conversion of convertible notes and SAFEs1 | 2,771,551 | 11,558 | — | — | — | — | — | — | 2,771,551 | 11,558 | — | — | — | — | — | — | ||||||||||||||||||||||||||||||||||||||||||||||||
Issuance of Series D-4, D-5, D-6 andD-7 redeemable convertible preferred stock upon acquisition2 | 6,803,550 | 52,201 | — | — | — | — | — | — | 6,803,550 | 52,201 | — | — | — | — | — | — | ||||||||||||||||||||||||||||||||||||||||||||||||
Issuance of Series D-8 redeemable convertible preferred stock upon conversion of SAFE3 | 8,171,662 | 60,470 | — | — | — | — | — | — | 8,171,662 | 60,470 | — | — | — | — | — | — | ||||||||||||||||||||||||||||||||||||||||||||||||
Issuance of common stock in connection with business combination | — | — | 2,884,550 | — | 27,295 | — | — | 27,295 | — | — | 2,884,550 | — | 27,295 | — | — | 27,295 | ||||||||||||||||||||||||||||||||||||||||||||||||
Issuance of common stock warrants | — | — | — | — | 3,589 | — | — | 3,589 | — | — | — | — | 3,589 | — | — | 3,589 | ||||||||||||||||||||||||||||||||||||||||||||||||
Exercise of common stock options | — | — | 335,496 | — | 105 | — | — | 105 | — | — | 335,496 | — | 105 | — | — | 105 | ||||||||||||||||||||||||||||||||||||||||||||||||
Stock-based compensation | — | — | — | — | 903 | — | — | 903 | — | — | — | — | 903 | — | — | 903 | ||||||||||||||||||||||||||||||||||||||||||||||||
Net loss | — | — | — | — | — | (29,477 | ) | — | (29,477 | ) | — | — | — | — | — | (29,477 | ) | — | (29,477 | ) | ||||||||||||||||||||||||||||||||||||||||||||
Foreign currency translation adjustment | — | — | — | — | — | — | 27 | 27 | — | — | — | — | — | — | 27 | 27 | ||||||||||||||||||||||||||||||||||||||||||||||||
Balance as of December 31, 2022, as previously reported | 17,746,763 | 124,229 | 3,220,046 | — | 31,892 | (29,477 | ) | 27 | 27 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||
Retroactive application of recapitalization (Note 3) | (17,746,763 | ) | (124,299 | ) | 10,126,286 | 1 | 124,228 | — | — | — | ||||||||||||||||||||||||||||||||||||||||||||||||||||||
Balance as of December 31, 2022 | 34,311,133 | $ | 155,630 | 6,959,618 | $ | — | $ | 34,997 | $ | (85,373 | ) | $ | 27 | $ | (50,349 | ) | — | $ | — | 19,932,429 | $ | 3 | $ | 190,624 | $ | (85,373 | ) | $ | 27 | $ | 105,281 | |||||||||||||||||||||||||||||||||
| (1) | Includes 1,315,287 shares of Series D-1 redeemable convertible preferred stock with a carrying value of $6.3 million, issued to related parties. |
| (2) | Includes 2,007,556 shares of Series D-4 redeemable convertible preferred stock with a carrying value of $14.3 million, 127,472 shares of SeriesD-5 redeemable convertible preferred stock with a carrying value of $1.0 million, and 3,105,837 shares of SeriesD-7 redeemable convertible preferred stock with a carrying value of $24.9 million, respectively, issued to related parties. |
| (3) | Includes 4,426,320 shares of Series D-8 redeemable convertible preferred stock with a carrying value of $32.8 million issued to related parties. |
For the Years Ended December 31, | For the Years Ended December 31, | |||||||||||||||||||||||
2022 | 2021 | 2020 | 2022 | 2021 | 2020 | |||||||||||||||||||
Cash flows from operating activities | ||||||||||||||||||||||||
Net loss | $ | (29,477 | ) | $ | (9,282 | ) | $ | (5,682 | ) | $ | (29,477 | ) | $ | (9,282 | ) | $ | (5,682 | ) | ||||||
Less: Net loss from discontinued operations, net of tax | $ | (1,454 | ) | $ | — | $ | — | |||||||||||||||||
Net loss from continuing operations, net of tax | $ | (28,023 | ) | $ | (9,282 | ) | $ | (5,682 | ) | |||||||||||||||
Adjustments to reconcile net loss to net cash used in operating activities: | ||||||||||||||||||||||||
Non-cash interest expense(1) | 4,810 | 1,330 | 462 | 4,810 | 1,330 | 462 | ||||||||||||||||||
Gain on extinguishment of convertible notes and SAFEs (2) | (3,235 | ) | — | — | (3,235 | ) | — | — | ||||||||||||||||
Stock-based compensation expense | 903 | 200 | 109 | 433 | 200 | 109 | ||||||||||||||||||
Provision for doubtful accounts | 2,243 | 364 | 337 | 2,074 | 364 | 337 | ||||||||||||||||||
Change in reserve for excess and obsolete inventory | 3,631 | 798 | 100 | 3,631 | 798 | 100 | ||||||||||||||||||
Depreciation and amortization | 1,188 | 463 | 298 | 648 | 463 | 298 | ||||||||||||||||||
Change in fair value of warrant liability | 5,211 | 330 | (24 | ) | 5,211 | 330 | (24 | ) | ||||||||||||||||
Change in fair value of derivative liability | — | 336 | 50 | — | 336 | 50 | ||||||||||||||||||
Change in fair value of convertible notes | — | 1,306 | 15 | — | 1,306 | 15 | ||||||||||||||||||
Forgiveness of Paycheck Protection Plan loans | — | (1,754 | ) | — | — | (1,754 | ) | — | ||||||||||||||||
Non-cash lease expense | 468 | 334 | — | 468 | 334 | — | ||||||||||||||||||
Non-cash inventory changes | (217 | ) | — | — | ||||||||||||||||||||
Changes in operating assets and liabilities: | ||||||||||||||||||||||||
Accounts receivable, net | (16,150 | ) | (4,789 | ) | (2,044 | ) | (9,683 | ) | (4,789 | ) | (2,044 | ) | ||||||||||||
Inventories | (8,247 | ) | (3,047 | ) | (1,315 | ) | (4,953 | ) | (3,047 | ) | (1,315 | ) | ||||||||||||
Prepaid expenses and other current assets | 3,288 | (3,038 | ) | (930 | ) | 1,600 | (3,038 | ) | (930 | ) | ||||||||||||||
Long-term deposits | (15 | ) | 19 | (29 | ) | (15 | ) | 19 | (29 | ) | ||||||||||||||
Other noncurrent assets | (1,132 | ) | — | — | (1,132 | ) | — | — | ||||||||||||||||
Accounts payable | 5,695 | 3,009 | (1,062 | ) | 3,252 | 3,009 | (1,062 | ) | ||||||||||||||||
Accrued expenses and other current liabilities | (1,328 | ) | 2,946 | 2,472 | (1,154 | ) | 2,946 | 2,472 | ||||||||||||||||
Operating lease right-of-use | (662 | ) | (409 | ) | — | (617 | ) | (409 | ) | — | ||||||||||||||
Warranty provision, noncurrent | 32 | 526 | (484 | ) | 157 | 526 | (484 | ) | ||||||||||||||||
Deferred revenue | 1,481 | (637 | ) | 1,521 | 1,311 | (637 | ) | 1,521 | ||||||||||||||||
Deferred rent | — | — | 17 | — | — | 17 | ||||||||||||||||||
Net cash used in operating activities from continuing operations | (25,217 | ) | (10,995 | ) | (6,189 | ) | ||||||||||||||||||
Net cash used in operating activities from discontinued operations | (6,296 | ) | — | — | ||||||||||||||||||||
Net cash used in operating activities | (31,513 | ) | (10,995 | ) | (6,189 | ) | (31,513 | ) | (10,995 | ) | (6,189 | ) | ||||||||||||
Cash flows from investing activities | ||||||||||||||||||||||||
Purchase of property and equipment | — | (9 | ) | (61 | ) | — | (9 | ) | (61 | ) | ||||||||||||||
Capitalization of internal-use software costs | (1,513 | ) | (1,054 | ) | (523 | ) | (1,513 | ) | (1,054 | ) | (523 | ) | ||||||||||||
Payments for acquisition of business, net of cash acquired | 4,848 | — | — | 4,848 | — | — | ||||||||||||||||||
Net cash provided by (used in) investing activities | 3,335 | (1,063 | ) | (584 | ) | |||||||||||||||||||
Net cash provided by (used in) investing activities from continuing operations | 3,335 | (1,063 | ) | (584 | ) | |||||||||||||||||||
Cash flows from financing activities | ||||||||||||||||||||||||
Proceeds from exercise of common stock options | 128 | 6 | 84 | 128 | 6 | 84 | ||||||||||||||||||
Proceeds from issuance of convertible notes, net, noncurrent | 3,400 | 1,150 | 510 | 3,400 | 1,150 | 510 | ||||||||||||||||||
Proceeds from issuance of convertible notes to related parties, net, noncurrent | 8,600 | 3,600 | 3,274 | 8,600 | 3,600 | 3,274 | ||||||||||||||||||
Proceeds from issuance of SAFE agreements | — | 5,000 | — | — | 5,000 | — | ||||||||||||||||||
Proceeds from issuance of notes payable, net | 5,501 | 7,239 | 3,987 | 5,501 | 7,239 | 3,987 | ||||||||||||||||||
Payments for issuance costs of Series D-1, D-2 andD-3 redeemable convertible preferred stock | (1,431 | ) | — | — | (1,431 | ) | — | — | ||||||||||||||||
Proceeds from issuance of long-term debt with CS Solis, net of issuance costs | 25,000 | — | — | 25,000 | — | — | ||||||||||||||||||
Principal repayment of notes payable | (9,507 | ) | — | — | (9,507 | ) | — | — | ||||||||||||||||
Principal repayment of convertible notes | — | (100 | ) | (1,500 | ) | — | (100 | ) | (1,500 | ) | ||||||||||||||
Repayment of convertible notes to related parties | (500 | ) | — | — | (500 | ) | — | — | ||||||||||||||||
Net cash provided by financing activities | 31,191 | 16,895 | 6,355 | |||||||||||||||||||||
Net cash provided by financing activities from continuing operations | 31,191 | 16,895 | 6,355 | |||||||||||||||||||||
Effect of exchange rate changes | 27 | — | — | |||||||||||||||||||||
Net increase (decrease) in cash, cash equivalents and restricted cash | 3,040 | 4,837 | (418 | ) | ||||||||||||||||||||
Cash, cash equivalents and restricted cash at beginning of period | 5,276 | 439 | 857 | |||||||||||||||||||||
Cash, cash equivalents and restricted cash at end of period | $ | 8,316 | $ | 5,276 | $ | 439 | ||||||||||||||||||
For the Years Ended December 31, | For the Years Ended December 31, | |||||||||||||||||||||||
2022 | 2021 | 2020 | 2022 | 2021 | 2020 | |||||||||||||||||||
Effect of exchange rate changes | 27 | — | — | |||||||||||||||||||||
Net increase (decrease) in cash, cash equivalents and restricted cash | 3,040 | 4,837 | (418 | ) | ||||||||||||||||||||
Cash, cash equivalents and restricted cash at beginning of period | 5,276 | 439 | 857 | |||||||||||||||||||||
Cash, cash equivalents and restricted cash at end of period | $ | 8,316 | $ | 5,276 | $ | 439 | ||||||||||||||||||
Supplemental disclosures of cash flow information: | ||||||||||||||||||||||||
Cash paid during the year for income taxes | 6 | — | — | 6 | — | — | ||||||||||||||||||
Cash paid during the year for interest | 162 | 365 | 150 | 162 | 365 | 150 | ||||||||||||||||||
Supplemental schedule of noncash investing and financing activities: | ||||||||||||||||||||||||
Issuance of common stock warrants | 3,589 | 42 | 137 | 3,589 | 42 | 137 | ||||||||||||||||||
Issuance of Series C redeemable convertible preferred stock upon conversion of convertible debt | — | — | 1,330 | — | — | 1,330 | ||||||||||||||||||
Issuance of Series C-1 redeemable convertible preferred stock upon conversion of convertible debt | — | — | 7,420 | — | — | 7,420 | ||||||||||||||||||
Fair value of debt derivative liabilities related to issuance of convertible notes | — | 1,754 | — | — | 1,754 | — | ||||||||||||||||||
Common stock issued in asset purchase | — | 17 | — | — | 17 | — | ||||||||||||||||||
Notes payable issued in asset purchase | — | 120 | — | — | 120 | — | ||||||||||||||||||
Operating lease right-of-use | 245 | 1,157 | — | 245 | 1,157 | — | ||||||||||||||||||
Issuance of Series D-1, D-2 andD-3 redeemable convertible preferred stock upon conversion of convertible debt, net of issuance costs of $1,431 | 11,558 | — | — | 11,558 | — | — | ||||||||||||||||||
Acquisition of business through issuance of common stock and stock options | 27,295 | — | — | 27,295 | — | — | ||||||||||||||||||
Acquisition of business through issuance of Series D redeemable convertible preferred stock | 52,201 | — | — | 52,201 | — | — | ||||||||||||||||||
Acquisition of business through issuance of Series D redeemable convertible preferred stock warrants | 7,812 | — | — | 7,812 | — | — | ||||||||||||||||||
Issuance of Series D redeemable convertible preferred stock upon conversion of SAFE | 60,470 | — | — | 60,470 | — | — | ||||||||||||||||||
| 1. | Non-cash interest expense to related parties of $0.3 million, $0.7 million and $0.2 million during the years ended December 31, 2022, 2021 and 2020, respectively. |
| 2. | Gain on extinguishment of convertible notes and SAFEs includes other income from related parties of $1.4 million, zero and zero during the years ended December 31, 2022, 2021 and 2020, respectively. |
(1) | Organization |
(a) | Description of Business |
MSTO collectively as “Meteora”); (ii) Polar Multi-Strategy Master Fund (“Polar”), and (iii) Diametric True Alpha Market Neutral Master Fund, LP, Diametric True Alpha Enhanced Market Neutral Master Fund, LP, and Pinebridge Partners Master Fund, LP (collectively, “Sandia”) (together, the “FPA Funding PIPE Investors”) entered into separate subscription agreements (the “FPA Funding Amount PIPE Subscription Agreements”) pursuant to which, the FPA Funding PIPE Investors subscribed for on the Closing Date, an aggregate of 6,300,000 shares of FACT Class A Ordinary Shares, less, in the case of Meteora, 1,161,512 FACT Class A Ordinary Shares purchased by Meteora separately from third parties through a broker in the open market (“Recycled Shares”) in connection with the Forward Purchase Agreements (“FPAs”). Subsequent to the Closing Date, Complete Solaria entered into an additional FPA Funding PIPE Subscription Agreement with Meteora, to subscribe for and purchase, and Complete Solaria agreed to issue and sell, an aggregate of 420,000 shares of Complete Solaria Common Stock. The Company issued shares of Complete Solaria Common Stock underlying the FPAs as of the latter of the closing of the Mergers or execution of the FPAs. |
(b) | Divestiture |
(c) | Liquidity and Going Concern |
Basis of Presentation |
(2) | Summary of Significant Accounting Policies |
(a) | Use of Estimates |
(b) | Supply Chain Constraints and Risk; COVID-19 |
(c) | Segment Information |
(d) | Concentration of Risks |
(e) | Cash and Cash Equivalents |
(f) | Restricted Cash |
As of December 31, | ||||||||
2022 | 2021 | |||||||
Cash and cash equivalents | $ | 4,409 | $ | 5,276 | ||||
Restricted cash | 3,907 | — | ||||||
Total cash, cash equivalents and restricted cash | $ | 8,316 | $ | 5,276 | ||||
Accounts Receivable, Net |
As of December 31, | ||||||||||||
2022 | 2021 | 2020 | ||||||||||
Balance at beginning of period | $ | (2,569 | ) | $ | (2,288 | ) | $ | (1,965 | ) | |||
Provision charged to earnings | (2,243 | ) | (364 | ) | (337 | ) | ||||||
Amounts written off, recoveries and other adjustments | — | 83 | 14 | |||||||||
Balance at end of period | $ | (4,812 | ) | $ | (2,569 | ) | $ | (2,288 | ) | |||
Inventories |
Revenue Recognition |
Years Ended December 31, | Years Ended December 31, | |||||||||||||||||||||||
2022 | 2021 | 2020 | 2022 | 2021 | 2020 | |||||||||||||||||||
Solar energy system installations | $ | 62,896 | $ | 66,958 | $ | 29,378 | $ | 62,896 | $ | 66,958 | $ | 29,378 | ||||||||||||
Solar panel sales | 13,325 | — | — | |||||||||||||||||||||
Software enhanced services | 3,579 | 1,858 | — | 3,579 | 1,858 | — | ||||||||||||||||||
Total revenue | $ | 79,800 | $ | 68,816 | $ | 29,378 | $ | 66,475 | $ | 68,816 | $ | 29,378 | ||||||||||||
Year-ended December 31, | ||||||||||||
2022 | 2021 | 2020 | ||||||||||
United States | $ | 78,283 | $ | 68,816 | $ | 29,378 | ||||||
Other | 1,517 | — | — | |||||||||
Total revenue | $ | 79,800 | $ | 68,816 | $ | 29,378 | ||||||
Property and Equipment, Net |
Useful Lives | |||||||
Manufacturing equipment | 1-3 years | ||||||
Developed software | 5 years | ||||||
Furniture & equipment | 3-5 years | ||||||
Leasehold improvements | 3-5 years | ||||||
Internal-Use Software |
Cost of Revenues |
Advertising and Promotional Expenses |
Income Taxes |
Foreign Currency |
Comprehensive Loss |
Impairment of Long-Lived Assets |
Business Combinations |
Estimated Useful Life | |||||||
Assembled workforce | 2 years | ||||||
Deferred Transaction Costs |
Redeemable Convertible Preferred Stock Warrants |
Stock-Based Compensation |
Fair Value Measurements |
Net Loss Per Share |
Convertible Debt Embedded Derivative Liabilities |
Leases |
Recently Adopted Accounting Pronouncements |
Accounting Pronouncements Not Yet Adopted |
(3) | Reverse Recapitalization |
Recapitalization | ||||
FACT Class A Ordinary Shares, outstanding prior to Mergers | 34,500,000 | |||
FACT Class B Ordinary Shares, outstanding prior to Mergers | 8,625,000 | |||
Bonus shares issued to sponsor | 193,976 | |||
Bonus shares issued to PIPE investors | 120,000 | |||
Bonus shares issued to FPA investors | 150,000 | |||
Shares issued from PIPE financing | 1,690,000 | |||
Shares issued from FPA agreements, net of recycled shares | 5,558,488 | |||
Less: redemption of FACT Class A Ordinary Shares | (31,041,243 | ) | ||
Total shares from the Mergers and PIPE Financing | 19,796,221 | |||
Legacy Complete Solaria shares | 20,034,257 | |||
2022 Convertible Note Shares | 5,460,075 | |||
Shares of Complete Solaria Common stock immediately after Mergers | 45,290,553 | |||
(4) | Business Combination |
Cash, cash equivalents and restricted cash | $ | 5,402 | ||
Accounts receivable | 4,822 | |||
Inventories | 5,354 | |||
Prepaid expenses and other current assets | 8,569 | |||
Property and equipment | 830 | |||
Operating lease right-of-use | 1,619 | |||
Intangible assets | 43,100 | |||
Other non-current assets | 112 | |||
Total identifiable assets acquired | 69,808 | |||
Accounts payable | 4,210 | |||
Accrued expenses and other current liabilities | 11,845 | |||
Notes payable | 20,823 | |||
Deferred revenue | 73 | |||
Operating lease liabilities, net of current portion | 1,132 | |||
Warranty provision, noncurrent | 1,566 | |||
SAFE agreements | 60,470 | |||
Total identifiable liabilities assumed | 100,119 | |||
Net identifiable liabilities assumed | 30,311 | |||
Goodwill | 119,422 | |||
Total aggregate consideration paid | $ | 89,111 | ||
Trademarks | $ | 5,700 | ||
Developed technology | 12,700 | |||
Customer relationships | 24,700 | |||
Total intangible asset | $ | 43,100 | ||
(5) | Divestiture |
December 31, 2022 | ||||
Revenues | $ | 13,325 | ||
Cost of revenues | 12,847 | |||
Gross profit | 478 | |||
Operating expenses: | ||||
Sales and marketing | 1,315 | |||
General and administrative | 617 | |||
Total operating expenses | 1,932 | |||
Net loss from discontinued operations | $ | (1,454 | ) | |
December 31, 2022 | ||||
Intangible assets, net | $ | 42,610 | ||
Goodwill | 119,422 | |||
Long-term assets held for sale | $ | 162,032 | ||
As of December 31, | ||||||||
2022 | 2021 | |||||||
Revenues | $ | 113,775 | $ | 128,650 | ||||
Net loss | $ | (64,872 | ) | $ | (60,442 | ) | ||
Prepaid Expenses and Other Current Assets |
As of December 31, | ||||||||
2022 | 2021 | |||||||
Inventory deposits. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . | $ | 6,255 | $ | — | ||||
Prepaid sales commissions . . . . . . . . . . . . . . . . . . . . . . . | 2,838 | 4,771 | ||||||
Other . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . | 978 | 184 | ||||||
Total prepaid expenses and other current assets . . . | $ | 10,071 | $ | 4,955 | ||||
Property and Equipment, Net |
As of December 31, | ||||||||
2022 | 2021 | |||||||
Developed software | $ | 5,054 | $ | 3,540 | ||||
Manufacturing equipment. | 102 | 70 | ||||||
Furniture & equipment | 90 | — | ||||||
Leasehold improvements | 708 | — | ||||||
Total property and equipment | 5,954 | 3,610 | ||||||
Less accumulated depreciation and amortization | (2,478 | ) | (1,852 | ) | ||||
Total property and equipment, net | $ | 3,476 | $ | 1,758 | ||||
Intangible Assets, Net |
Balance at December 31, 2021 | $ | — | ||
Additions from acquisition | 119,422 | |||
Balance at December 31, 2022 | $ | 119,422 | ||
As of December 31, 2022 | As of December 31, 2021 | |||||||||||||||||||||||||||
Weighted- Average Remaining Life (Years) | Gross Carrying Amount | Accumulated Amortization | Net Amount | Gross Carrying Amount | Accumulated Amortization | Net Amount | ||||||||||||||||||||||
Assembled workforce | 0.1 | $ | 137 | $ | (133 | ) | $ | 4 | $ | 137 | $ | (65 | ) | $ | 72 | |||||||||||||
Trademarks | 9.8 | 5,700 | (95 | ) | 5,605 | — | — | — | ||||||||||||||||||||
Customer relationship | 21.8 | 24,700 | (187 | ) | 24,513 | — | — | — | ||||||||||||||||||||
Developed technology | 9.8 | 12,700 | (212 | ) | 12,488 | — | — | — | ||||||||||||||||||||
Total intangible assets | $ | 43,237 | $ | (627 | ) | $ | 42,610 | $ | 137 | $ | (65 | ) | $ | 72 | ||||||||||||||
As of December 31, 2022 | As of December 31, 2021 | |||||||||||||||||||||||||||
Weighted- Average Remaining Life (Years) | Gross Carrying Amount | Accumulated Amortization | Net Amount | Gross Carrying Amount | Accumulated Amortization | Net Amount | ||||||||||||||||||||||
Assembled workforce | 0.1 | $ | 137 | $ | (133 | ) | $ | 4 | $ | 137 | $ | (65 | ) | $ | 72 | |||||||||||||
As of December 31, | ||||||||||||
2022 | 2021 | 2020 | ||||||||||
Assemble workforce | $ | 68 | $ | 65 | $ | — | ||||||
Trademarks | 95 | — | — | |||||||||
Customer relationship | 187 | — | — | |||||||||
Developed technology | 212 | — | — | |||||||||
Total amortization expense | $ | 562 | $ | 65 | $ | — | ||||||
2023 | $ | 2,967 | ||
2024 | 2,963 | |||
2025 | 2,963 | |||
2026 | 2,963 | |||
2027 and thereafter | 30,754 | |||
Total | $ | 42,610 | ||
Accrued Expenses and Other Current Liabilities |
December 31, | ||||||||
2022 | 2021 | |||||||
Accrued compensation and benefits | $ | 3,940 | $ | 3,498 | ||||
Accrued term loan and revolving loan amendment and final payment fees | 2,400 | — | ||||||
Uninvoiced contract costs | 1,914 | 2,180 | ||||||
Accrued legal settlements | 1,853 | — | ||||||
Accrued taxes | 1,245 | — | ||||||
Accrued rebates and credits | 1,076 | — | ||||||
Inventory received but not invoiced | 972 | — | ||||||
Operating lease liabilities, current | 958 | 390 | ||||||
Customer deposits | 930 | 1,375 | ||||||
Warranty provision, current | 767 | 600 | ||||||
Other accrued liabilities | 3,775 | 1,304 | ||||||
Total accrued expenses and other current liabilities | $ | 19,830 | $ | 9,347 | ||||
Fair Value Measurements |
Warrant | Convertible Debt Embedded Derivatives | SAFEs | ||||||||||
Balance as of December 31, 2020 | $ | 799 | $ | 579 | $ | 91 | ||||||
Issuance of 2021-A Convertible Notes | — | 566 | — | |||||||||
Issuance of 2021-Rogers SAFE | — | — | 5,000 | |||||||||
Change in fair value | 330 | 336 | 1,306 | |||||||||
Warrant | Convertible Debt Embedded Derivatives | SAFEs | ||||||||||||||||||||||
Balance as of December 31, 2020 | $ | 799 | $ | 579 | $ | 91 | ||||||||||||||||||
Issuance of 2021-A Convertible Notes | — | 566 | — | |||||||||||||||||||||
Issuance of 2021-Rogers SAFE | — | — | 5,000 | |||||||||||||||||||||
Change in fair value | 330 | 336 | 1,306 | |||||||||||||||||||||
Warrant | Convertible Debt Embedded Derivatives | SAFEs | ||||||||||||||||||||||
Balance as of December 31, 2021 | $ | 1,129 | $ | 1,481 | $ | 6,397 | $ | 1,129 | $ | 1,481 | $ | 6,397 | ||||||||||||
Conversion of debt into preferred shares | — | (1,481 | ) | — | — | (1,481 | ) | — | ||||||||||||||||
Conversion of SAFEs into preferred shares | — | — | (6,397 | ) | — | — | (6,397 | ) | ||||||||||||||||
Assumption of SAFEs in Solaria acquisition | — | — | 60,470 | — | — | 60,470 | ||||||||||||||||||
Conversion of SAFEs from Solaria acquisition into preferred shares | — | — | (60,470 | ) | — | — | (60,470 | ) | ||||||||||||||||
Issuance of Series D Warrants Tranche A | 6,527 | — | — | 6,527 | — | — | ||||||||||||||||||
Issuance of Series D Warrants Tranche B | 1,285 | — | — | 1,285 | — | — | ||||||||||||||||||
Change in fair value | 5,211 | — | — | 5,211 | — | — | ||||||||||||||||||
Balance as of December 31, 2022 | $ | 14,152 | $ | — | $ | — | $ | 14,152 | $ | — | $ | — | ||||||||||||
As of December 31, 2022 | ||||||||||||||||
Level 1 | Level 2 | Level 3 | Total | |||||||||||||
Financial Liabilities | ||||||||||||||||
Redeemable convertible preferred stock warrant liability | $ | — | $ | — | $ | 14,152 | $ | 14,152 | ||||||||
Total | $ | — | $ | — | $ | 14,152 | $ | 14,152 | ||||||||
As of December 31, 2021 | ||||||||||||||||
Level 1 | Level 2 | Level 3 | Total | |||||||||||||
Financial Liabilities | ||||||||||||||||
Redeemable convertible preferred stock warrant liability | $ | — | $ | — | $ | 1,129 | $ | 1,129 | ||||||||
Convertible debt embedded derivatives | — | — | 1,481 | 1,481 | ||||||||||||
SAFE agreements | — | — | 6,397 | 6,397 | ||||||||||||
Total | $ | — | $ | — | $ | 9,007 | $ | 9,007 | ||||||||
December 31, | ||||||||
2022 | 2021 | |||||||
Expected term | 3.1 years | 4.1 years | ||||||
Expected volatility | 72.5 | % | 73.0 | % | ||||
Risk-free interest rate | 4.2 | % | 1.1 | % | ||||
Expected dividend yield | 0.0 | % | 0.0 | % | ||||
December 31, | ||||||||
2022 | 2021 | |||||||
Expected term | 3.6 years | 4.6 years | ||||||
Expected volatility | 72.5 | % | 73.0 | % | ||||
Risk-free interest rate | 4.0 | % | 1.2 | % | ||||
Expected dividend yield | 0.0 | % | 0.0 | % | ||||
December 31, | ||||||||
2022 | 2021 | |||||||
Expected term | 1.5 years | — | ||||||
Expected volatility | 78.5 | % | — | |||||
Risk-free interest rate | 4.7 | % | — | |||||
Expected dividend yield | 0.0 | % | — | |||||
Series B Warrants | Series C Warrants | Series D Tranche A Warrants | Series D Tranche B Warrants | Total | ||||||||||||||||
Balance as of December 31, 2020 | $ | 5 | $ | 794 | $ | — | $ | — | $ | 799 | ||||||||||
Change in fair value | 3 | 327 | — | — | 330 | |||||||||||||||
Balance as of December 31, 2021 | 8 | 1,121 | — | — | 1,129 | |||||||||||||||
Change in fair value | 42 | 5,169 | — | — | 5,211 | |||||||||||||||
Issuance of warrants in connection with acquisition of Solaria (Note 3) | — | — | 6,527 | 1,285 | 7,812 | |||||||||||||||
Balance as of December 31, 2022 | $ | 50 | $ | 6,290 | $ | 6,527 | $ | 1,285 | $ | 14,152 | ||||||||||
2019-A Convertible Notes | 2020-A Convertible Notes | 2021-A Convertible Notes | Totals | |||||||||||||
Balance as of December 31, 2020 | $ | 18 | $ | 561 | $ | — | $ | 579 | ||||||||
Issuance of 2021-A Convertible Notes | — | — | 566 | 566 | ||||||||||||
Change in fair value | 17 | 234 | 85 | 366 | ||||||||||||
Balance as of December 31, 2021 | 35 | 795 | 651 | 1,481 | ||||||||||||
Extinguishment upon Series D issuance | (35 | ) | (795 | ) | (651 | ) | (1,481 | ) | ||||||||
Balance as of December 31, 2022 | $ | — | $ | — | $ | — | $ | — | ||||||||
December 31, | ||||||
2022 | 2021 | |||||
Expected fair value of preferred stock | N/A | $ | 4.84 | |||
Expected term | N/A | 0.2 years | ||||
Volatility | N/A | 76.4 | % | |||
Risk-free interest rate | N/A | 0.1 | % | |||
Employee Benefit Plan |
Other Income (Expense), Net |
Years Ended December 31, | ||||||||||||
2022 | 2021 | 2020 | ||||||||||
Change in fair value of SAFE agreements | $ | — | $ | (1,306 | ) | $ | (15 | ) | ||||
Change in fair value of derivative liabilities | — | (336 | ) | (50 | ) | |||||||
Change in fair value of warrant liabilities | (5,211 | ) | (330 | ) | 24 | |||||||
Gain on extinguishment of convertible notes and SAFE agreements (1) | 3,235 | — | — | |||||||||
Forgiveness of Paycheck Protection Plan loan | — | 1,754 | — | |||||||||
Other, net | 118 | (22 | ) | — | ||||||||
Total other income (expense), net | $ | (1,858 | ) | $ | (240) | $ | (41 | ) | ||||
| (1) | Includes $1.4 million of other income recognized upon the conversion of related party convertible notes and SAFEs |
Common Stock |
As of December 31, | ||||||||
2022 | 2021 | |||||||
Series A redeemable convertible preferred stock | 15,278 | 15,278 | ||||||
Series A-2 redeemable convertible preferred stock | 6,667 | 6,667 | ||||||
Series B redeemable convertible preferred stock | 1,024,617 | 1,024,617 | ||||||
Series C redeemable convertible preferred stock | 12,717,525 | 12,717,525 | ||||||
Series C-1 redeemable convertible preferred stock | 2,800,283 | 2,800,283 | ||||||
Series D-1 redeemable convertible preferred stock | 2,660,797 | — | ||||||
Series D-2 redeemable convertible preferred stock | 62,498 | — | ||||||
Series D-3 redeemable convertible preferred stock | 48,256 | — | ||||||
Series D-4 redeemable convertible preferred stock | 2,139,030 | — | ||||||
Series D-5 redeemable convertible preferred stock | 479,370 | — | ||||||
Series D-6 redeemable convertible preferred stock | 921,250 | — | ||||||
Series D-7 redeemable convertible preferred stock | 3,263,900 | — | ||||||
Series D-8 redeemable convertible preferred stock | 8,171,662 | — | ||||||
Common stock warrants | 4,630,168 | 418,692 | ||||||
Redeemable convertible preferred stock warrants | 2,386,879 | 1,010,465 | ||||||
Stock options, issued and outstanding | 10,291,367 | 4,421,528 | ||||||
Stock options, authorized for future issuance | 765,904 | 293,279 | ||||||
SAFE agreement | — | 707,302 | ||||||
Convertible notes | — | 3,356,953 | ||||||
Total shares reserved | 52,385,451 | 26,772,589 | ||||||
As of December 31, | ||||||||
2022 | 2021 | |||||||
Common stock warrants | 3,389,005 | 690,236 | ||||||
Stock options, issued and outstanding | 4,970,395 | 2,135,454 | ||||||
Stock options, authorized for future issuance | 369,907 | 141,644 | ||||||
SAFE agreement | — | 341,604 | ||||||
Convertible notes | — | 1,621,299 | ||||||
Total shares reserved | 8,729,307 | 4,930,237 | ||||||
(14) |
Years Ended December 31, | ||||
| 2022 | 2021 | |||
Expected term | 1.5 - 7.0 years | 10.0 - 12.0 years | ||
Expected volatility | 73.0 - 78.5% | 73.0% | ||
Risk-free interest rate | 1.9 - 4.7% | 1.3% - 1.7% | ||
Expected dividends | 0.0% | 0.0% | ||
As of December 31, 2022 | ||||||||||||||||
Shares designated as: | Authorized shares | Shares issued and outstanding | Proceed, net of issuance costs | Aggregate liquidation preference | ||||||||||||
Series A redeemable convertible preferred stock | 15,278 | 15,278 | $ | 30 | $ | 26 | ||||||||||
Series A-2 redeemable convertible preferred stock | 6,667 | 6,667 | 4 | 10 | ||||||||||||
Series B redeemable convertible preferred stock | 1,035,082 | 1,024,617 | 4,347 | 4,406 | ||||||||||||
Series C redeemable convertible preferred stock | 13,717,525 | 12,717,525 | 19,737 | 20,048 | ||||||||||||
Series C-1 redeemable convertible preferred stock | 2,800,283 | 2,800,283 | 7,283 | 7,420 | ||||||||||||
Series D-1 redeemable convertible preferred stock | 2,660,797 | 2,660,797 | 11,342 | 13,233 | ||||||||||||
Series D-2 redeemable convertible preferred stock | 62,498 | 62,498 | 127 | 117 | ||||||||||||
Series D-3 redeemable convertible preferred stock | 48,256 | 48,256 | 88 | 75 | ||||||||||||
Series D-4 redeemable convertible preferred stock | 2,139,030 | 2,139,030 | 15,102 | 15,102 | ||||||||||||
Series D-5 redeemable convertible preferred stock | 479,370 | 479,370 | 3,576 | 3,576 | ||||||||||||
Series D-6 redeemable convertible preferred stock | 921,250 | 921,250 | 7,315 | 7,315 | ||||||||||||
Series D-7 redeemable convertible preferred stock | 4,640,314 | 3,263,900 | 26,209 | 26,209 | ||||||||||||
Series D-8 redeemable convertible preferred stock | 8,171,665 | 8,171,662 | 60,470 | 60,470 | ||||||||||||
| 36,698,015 | 34,311,133 | $ | 155,630 | $ | 158,007 | |||||||||||
As of December 31, 2021 | ||||||||||||||||
Shares designated as: | Authorized shares | Shares issued and outstanding | Proceed, net of issuance costs | Aggregate liquidation preference | ||||||||||||
Series A redeemable convertible preferred stock | 258,796 | 15,278 | $ | 30 | $ | 26 | ||||||||||
Series A-1 redeemable convertible preferred stock | 833,935 | — | — | — | ||||||||||||
Series A-2 redeemable convertible preferred stock | 340,001 | 6,667 | 4 | 10 | ||||||||||||
Series B redeemable convertible preferred stock | 1,173,256 | 1,024,617 | 4,347 | 4,406 | ||||||||||||
Series C redeemable convertible preferred stock | 14,000,000 | 12,717,525 | 19,737 | 20,048 | ||||||||||||
Series C-1 redeemable convertible preferred stock | 3,922,987 | 2,800,283 | 7,283 | 7,420 | ||||||||||||
| 20,528,975 | 16,564,370 | $ | 31,401 | $ | 31,910 | |||||||||||
Borrowing Arrangements |
As of December 31, | ||||||||
2022 | 2021 | |||||||
Convertible notes, net | ||||||||
2019-A Convertible Notes | $ | — | $ | 115 | ||||
2020-A Convertible Notes | — | 630 | ||||||
2021-A Convertible Notes | — | 1,145 | ||||||
Convertible notes, net | — | 1,890 | ||||||
Convertible notes, net due to related parties | ||||||||
2020-A Convertible Notes | — | 3,260 | ||||||
2021-A Convertible Notes | — | 3,050 | ||||||
Convertible Promissory Notes with Ecosystem Integrity Fund II, LP. | — | 510 | ||||||
Convertible notes, net due to related parties | — | 6,820 | ||||||
Convertible notes, net, noncurrent | ||||||||
2022 Convertible Notes | 3,434 | — | ||||||
Convertible notes, net, noncurrent | 3,434 | — | ||||||
Convertible notes, net due to related parties, noncurrent | ||||||||
2022 Convertible Notes | 15,510 | — | ||||||
Convertible notes, net due to related parties, noncurrent | 15,510 | — | ||||||
Total convertible notes | $ | 18,944 | $ | 8,710 | ||||
As of December 31, | ||||||||
2022 | 2021 | |||||||
Principal | $ | 100 | $ | 100 | ||||
Unamortized debt discount | — | — | ||||||
PIK interest added to principal balance | 16 | 15 | ||||||
Conversion to Series D-2 redeemable convertible preferred stock | (116 | ) | — | |||||
Net carrying amount | $ | — | $ | 115 | ||||
As of December 31, | ||||||||||||
2022 | 2021 | 2020 | ||||||||||
Amortization of debt discount | $ | — | $ | — | $ | 4 | ||||||
PIK interest | 1 | 12 | 3 | |||||||||
Total non-cash interest expense | $ | 1 | $ | 12 | $ | 7 | ||||||
As of December 31, | ||||||||
2022 | 2021 | |||||||
Principal | $ | 3,784 | $ | 3,784 | ||||
Unamortized debt discount | — | — | ||||||
PIK interest added to principal balance | 122 | 106 | ||||||
Conversion to Series D-1 redeemable convertible preferred stock | (3,906 | ) | — | |||||
Net carrying amount | $ | — | $ | 3,890 | ||||
As of December 31, | ||||||||||||
2022 | 2021 | 2020 | ||||||||||
Amortization of debt discount . . . . . . . . . . . . . . . . . . . . . . . . . | $ | — | $ | 281 | $ | 235 | ||||||
PIK interest . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . | 16 | 74 | 32 | |||||||||
Total non-cash interest expense . . . . . . . . . . . . . . . . . . . . . . . . | $ | 16 | $ | 355 | $ | 267 | ||||||
As of December 31, | ||||||||
2022 | 2021 | |||||||
Principal | $ | 4,250 | $ | 4,250 | ||||
Unamortized debt discount | — | (112 | ) | |||||
PIK interest added to principal balance | 74 | 57 | ||||||
Conversion to Series D-1 redeemable convertible preferred stock | (4,324 | ) | — | |||||
Net carrying amount | $ | — | $ | 4,195 | ||||
As of December 31, | ||||||||||||
2022 | 2021 | 2020 | ||||||||||
Amortization of debt discount . . . . . . . . . . . . . . . . . . . . . . . . . | $ | 112 | $ | 454 | $ | — | ||||||
PIK interest . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . | 17 | 57 | — | |||||||||
Total non-cash interest expense . . . . . . . . . . . . . . . . . . . . . . . . | $ | 129 | $ | 511 | $ | — | ||||||
As of December 31, | ||||||||
2022 | 2021 | |||||||
Principal | $ | 500 | $ | 500 | ||||
Unamortized debt discount | — | — | ||||||
PIK interest added to principal balance | 10 | 10 | ||||||
Repayment of principal and accrued interest | (510 | ) | — | |||||
Net carrying amount | $ | — | $ | 510 | ||||
As of December 31, | ||||||||||||
2022 | 2021 | 2020 | ||||||||||
Amortization of debt discount | $ | — | $ | — | $ | — | ||||||
PIK interest | — | 10 | — | |||||||||
Total non-cash interest expense | $ | — | $ | 10 | $ | — | ||||||
As of December 31, | ||||||||
2022 | 2021 | |||||||
Loan and Security Agreement | $ | — | $ | 6,987 | ||||
2021 Promissory Notes | — | 2,500 | ||||||
Current Insight Promissory Note | — | 20 | ||||||
| — | 9,507 | |||||||
Less: Unamortized debt issuance costs and discounts | — | — | ||||||
| $ | — | $ | 9,507 | |||||
Stock-Based Compensation |
Options outstanding | Options outstanding | |||||||||||||||||||||||||||||||
Number of shares | Weighted average exercise price per share | Weighted average contractual term (in years) | Aggregate intrinsic value (in thousands) | Number of shares | Weighted average exercise price per share | Weighted average contractual term (in years) | Aggregate intrinsic value (in thousands) | |||||||||||||||||||||||||
Outstanding—January 1, 2021 | 4,076,010 | $ | 0.28 | 7.87 | $ | 1,044 | 1,968,580 | $ | 0.58 | 7.87 | $ | 1,044 | ||||||||||||||||||||
Options granted | 439,851 | 0.43 | ||||||||||||||||||||||||||||||
Options exercised | (15,000 | ) | 0.40 | |||||||||||||||||||||||||||||
Options canceled | (79,333 | ) | 0.30 | |||||||||||||||||||||||||||||
Outstanding—December 31, 2021 | 4,421,528 | $ | 0.30 | 6.99 | $ | 2,263 | 2,135,454 | $ | 0.62 | 6.99 | $ | 2,263 | ||||||||||||||||||||
Options granted | 6,394,531 | 3.60 | ||||||||||||||||||||||||||||||
Options exercised | (335,496 | ) | 0.23 | |||||||||||||||||||||||||||||
Options canceled | (189,196 | ) | 0.40 | |||||||||||||||||||||||||||||
Outstanding—December 31, 2022 | 10,291,367 | $ | 2.35 | 6.99 | $ | 34,180 | 4,970,395 | $ | 4.87 | 6.99 | $ | 34,180 | ||||||||||||||||||||
Vested and expected to vest—December 31, 2022 | 10,291,367 | $ | 2.35 | 6.99 | $ | 34,180 | 4,970,395 | $ | 4.87 | 6.99 | $ | 34,180 | ||||||||||||||||||||
Vested and exercisable—December 31, 2022 | 5,786,854 | $ | 2.10 | 6.29 | $ | 22,204 | 2,794,862 | $ | 4.35 | 6.29 | $ | 22,204 | ||||||||||||||||||||
Years Ended December 31, | ||||
2022 | 2021 | |||
Expected term | 1.0 – 7.5 years | 5.0 – 6.1 years | ||
Expected volatility | 60.0% – 78.5% | 52.6% – 56.7% | ||
Risk-free interest rate | 3.4% – 4.8% | 0.8% – 1.3% | ||
Expected dividends | 0.0% | 0.0% | ||
Years Ended December 31, | Years Ended December 31, | |||||||||||||||||||||||
2022 | 2021 | 2020 | 2022 | 2021 | 2020 | |||||||||||||||||||
Cost of revenues | $ | 22 | $ | 19 | $ | 8 | $ | 22 | $ | 19 | $ | 8 | ||||||||||||
Sales and marketing | 232 | 68 | 37 | 168 | 68 | 37 | ||||||||||||||||||
General and administrative | 649 | 113 | 64 | 243 | 113 | 64 | ||||||||||||||||||
Loss from discontinued operations, net of tax | 470 | — | — | |||||||||||||||||||||
Total stock-based compensation expense | $ | 903 | $ | 200 | $ | 109 | $ | 903 | $ | 200 | $ | 109 | ||||||||||||
Commitments and Contingencies |
December 31, 2022 | |||||||
Remaining average remaining lease term (years) | 3.24 | ||||||
Weighted average discount rate | 14.47 | % | |||||
2023 | $ | 1,048 | ||
2024 | 743 | |||
2025 | 592 | |||
2026 | 477 | |||
2027 and thereafter | — | |||
Total undiscounted liabilities | 2,860 | |||
Less imputed interest | (628 | ) | ||
Present value of operation lease liabilities | $ | 2,232 | ||
Years Ended December 31, | Years Ended December 31, | |||||||||||||||||||||||
2022 | 2021 | 2020 | 2022 | 2021 | 2020 | |||||||||||||||||||
Warranty provision, beginning of period | $ | 2,281 | $ | 1,652 | $ | 1,816 | $ | 2,281 | $ | 1,652 | $ | 1,816 | ||||||||||||
Warranty liability from business combination | 1,943 | |||||||||||||||||||||||
Warranty liability from the Business Combination | ||||||||||||||||||||||||
Accruals for new warranties issued | 1,492 | 1,516 | 607 | 1,492 | 1,516 | 607 | ||||||||||||||||||
Settlements | (1,735 | ) | (887 | ) | (771 | ) | (1,735 | ) | (887 | ) | (771 | ) | ||||||||||||
Warranty provision, end of period | $ | 3,981 | $ | 2,281 | $ | 1,652 | $ | 3,981 | $ | 2,281 | $ | 1,652 | ||||||||||||
Warranty provision, current | $ | 767 | $ | 600 | $ | 497 | $ | 767 | $ | 600 | $ | 497 | ||||||||||||
Warranty provision, noncurrent | $ | 3,214 | $ | 1,681 | $ | 1,155 | $ | 3,214 | $ | 1,681 | $ | 1,155 | ||||||||||||
Income Taxes |
Years Ended December 31, | ||||||||||||
2022 | 2021 | 2020 | ||||||||||
Current: | ||||||||||||
Federal | $ | — | $ | — | $ | — | ||||||
State | 27 | 3 | 3 | |||||||||
Foreign | — | — | — | |||||||||
Total current | $ | 27 | $ | 3 | $ | 3 | ||||||
Deferred: | ||||||||||||
Federal | $ | — | $ | — | $ | — | ||||||
State | — | — | — | |||||||||
Foreign | — | — | — | |||||||||
Total deferred | — | — | — | |||||||||
Total provision | $ | 27 | $ | 3 | $ | 3 | ||||||
Years Ended December 31, | ||||||||||||
2022 | 2021 | 2020 | ||||||||||
Statutory federal income tax | $ | (6,184 | ) | $ | (1,918 | ) | $ | (1,454 | ) | |||
State income taxes, net of federal tax benefits | (1,207 | ) | (353 | ) | (336 | ) | ||||||
Stock compensation | 64 | 42 | 22 | |||||||||
Non-deductible interest expense | 78 | 689 | 257 | |||||||||
Mark to market adjustments | 397 | — | — | |||||||||
Nondeductible Expenses | 279 | 2 | 4 | |||||||||
PPP Loan | — | (368 | ) | — | ||||||||
Foreign earnings taxed at different rates | 157 | — | — | |||||||||
Other | (8 | ) | — | — | ||||||||
Valuation allowance | 6,451 | 1,910 | 1,510 | |||||||||
Tax Provision | $ | 27 | $ | 4 | $ | 3 | ||||||
Years Ended December 31, | ||||||||
2022 | 2021 | |||||||
NOL carryforwards | $ | 60,710 | $ | 7,931 | ||||
Credits | 195 | — | ||||||
Bad debt reserve | 1,382 | 946 | ||||||
Inventory reserve | 2,724 | 680 | ||||||
Warranty reserve | 651 | 631 | ||||||
Revenue warranty | 155 | 111 | ||||||
Interest expense carryover | 3,445 | 170 | ||||||
Accrued compensation | 678 | 687 | ||||||
Deferred revenue | 195 | 639 | ||||||
ASC 842 leases | 12 | 17 | ||||||
Assembled workforce | — | 15 | ||||||
Fixed assets | 328 | — | ||||||
Capitalized research and development | 509 | — | ||||||
Other | 2,837 | 28 | ||||||
Total | 73,821 | 11,855 | ||||||
Valuation allowance | (63,737 | ) | (11,348 | ) | ||||
Net deferred tax assets | $ | 10,084 | $ | 507 | ||||
Deferred Tax Liabilities | ||||||||
Accounting method change | (18 | ) | (38 | ) | ||||
Capitalized software | (234 | ) | (468 | ) | ||||
Fixed assets | — | (1 | ) | |||||
Intangibles | (9,084 | ) | — | |||||
Convertible debt | (748 | ) | — | |||||
Refundable and deferred income taxes | $ | — | $ | — | ||||
Years Ended December 31, | ||||||||
2022 | 2021 | |||||||
Unrecognized tax benefits as of beginning of year | $ | — | $ | — | ||||
Increases related to prior year tax positions | 1,335 | — | ||||||
Increases related to current year tax positions | — | — | ||||||
Decreases related to prior year tax positions | — | — | ||||||
Unrecognized tax benefits as of end of year | — | — | ||||||
| $ | 1,335 | $ | — | |||||
Basic and Diluted Net Loss Per Share |
Years Ended December 31, | Years Ended December 31, | |||||||||||||||||||||||
2022 | 2021 | 2020 | 2022 | 2021 | 2020 | |||||||||||||||||||
Numerator: | ||||||||||||||||||||||||
Net loss attributable to common stockholder, basic and diluted | $ | (29,477 | ) | $ | (9,282 | ) | $ | (5,682 | ) | |||||||||||||||
Net loss from continuing operations | $ | (28,023 | ) | $ | (9,282 | ) | $ | (5,682 | ) | |||||||||||||||
Net loss from discontinued operations | (1,454 | ) | — | — | ||||||||||||||||||||
Net loss | $ | (29,477 | ) | $ | (9,282 | ) | $ | (5,682 | ) | |||||||||||||||
Denominator: | ||||||||||||||||||||||||
Weighted average common shares outstanding, basic and diluted | 7,907,929 | 4,104,927 | 1,921,106 | 22,524,400 | 11,990,015 | 9,760,018 | ||||||||||||||||||
Net loss per share attributable to common stockholder, basic and diluted | $ | (3.73 | ) | $ | (2.26 | ) | $ | (2.96 | ) | |||||||||||||||
Net loss per share: | ||||||||||||||||||||||||
Continuing operations – basic and diluted | $ | (1.24 | ) | $ | (0.77 | ) | $ | (0.58 | ) | |||||||||||||||
Discontinued operations – basic and diluted | $ | (0.07 | ) | $ | — | $ | — | |||||||||||||||||
Net loss per share – basic and diluted | $ | (1.31 | ) | $ | (0.77 | ) | $ | (0.58 | ) | |||||||||||||||
As of December 31, | As of December 31, | |||||||||||||||||||||||
2022 | 2021 | 2020 | 2022 | 2021 | 2020 | |||||||||||||||||||
Convertible preferred stock | 34,311,133 | 16,564,370 | 16,564,370 | |||||||||||||||||||||
Stock options issued and outstanding | 10,291,367 | 4,421,528 | 4,076,010 | 4,970,419 | 2,135,464 | 1,968,590 | ||||||||||||||||||
Convertible notes | 3,959,860 | 3,351,317 | 1,682,364 | 1,912,493 | 1,618,585 | 812,531 | ||||||||||||||||||
Preferred stock warrants | 2,386,879 | 1,010,465 | 1,010,465 | 1,152,790 | 488,024 | 488,024 | ||||||||||||||||||
SAFE agreements | — | 804,988 | 40,503 | — | 388,785 | 19,562 | ||||||||||||||||||
Common stock warrants | 89,313 | 10,351 | — | 43,135 | 4,999 | — | ||||||||||||||||||
Potential common shares excluded from diluted net loss per share | 51,038,552 | 26,163,019 | 23,373,712 | 8,078,837 | 4,635,857 | 3,288,706 | ||||||||||||||||||
Related Party Transactions |
Subsequent Events |
April 2, | December 31, | As of | ||||||||||||||
2023 | 2022 | October 1, 2023 | December 31, 2022 | |||||||||||||
Assets | ||||||||||||||||
Current assets: | ||||||||||||||||
Cash and cash equivalents | $ | 3,349 | $ | 4,409 | $ | 1,661 | $ | 4,409 | ||||||||
Accounts receivable, net of allowance for doubtful accounts of $8,192 and $5,396 as of April 2, 2023 and December 31, 2022, respectively | 28,139 | 27,717 | ||||||||||||||
Accounts receivable, net of allowance for credit losses of $10,425 and $5,396 as of October 1, 2023 and December 31, 2022, respectively | 26,003 | 27,717 | ||||||||||||||
Inventories | 6,955 | 13,059 | 12,503 | 13,059 | ||||||||||||
Prepaid expenses and other current assets | 12,035 | 10,071 | 9,947 | 10,071 | ||||||||||||
Total current assets | 50,478 | 55,256 | 50,114 | 55,256 | ||||||||||||
Restricted cash | 3,758 | 3,907 | 3,758 | 3,907 | ||||||||||||
Property and equipment, net | 3,706 | 3,476 | 4,185 | 3,476 | ||||||||||||
Operating lease right-of-use | 1,934 | 2,182 | 1,465 | 2,182 | ||||||||||||
Intangible assets, net | 41,859 | 42,610 | ||||||||||||||
Goodwill | 119,422 | 119,422 | ||||||||||||||
Other noncurrent assets | 2,177 | 1,330 | 198 | 1,330 | ||||||||||||
Long-term assets held for sale – discontinued operations | 12,299 | 162,032 | ||||||||||||||
Total assets | $ | 223,334 | $ | 228,183 | $ | 72,019 | $ | 228,183 | ||||||||
Liabilities, mezzanine equity and stockholders’ deficit | ||||||||||||||||
Current liabilities | ||||||||||||||||
Liabilities and stockholders’ (deficit) equity | ||||||||||||||||
Current liabilities: | ||||||||||||||||
Accounts payable | $ | 17,183 | $ | 14,474 | $ | 14,571 | $ | 14,474 | ||||||||
Accrued expenses and other current liabilities | 18,643 | 19,830 | 26,674 | 19,830 | ||||||||||||
Notes payable, net | 25,496 | 20,403 | ||||||||||||||
Deferred revenue | 4,257 | 5,407 | ||||||||||||||
Notes payable, net (1) | 27,934 | 20,403 | ||||||||||||||
Deferred revenue, current | 2,421 | 5,407 | ||||||||||||||
Short-term debt with CS Solis | 29,194 | — | ||||||||||||||
Forward purchase agreement liabilities (2) | 6,586 | — | ||||||||||||||
Total current liabilities | 65,579 | 60,114 | 107,380 | 60,114 | ||||||||||||
Warranty provision, noncurrent | 3,338 | 3,214 | 3,416 | 3,214 | ||||||||||||
Redeemable convertible preferred stock warrant liability | 13,943 | 14,152 | ||||||||||||||
Warrant liability | 10,240 | 14,152 | ||||||||||||||
Long-term debt with CS Solis | 26,290 | 25,204 | — | 25,204 | ||||||||||||
Convertible notes, net, noncurrent | 14,560 | 3,434 | — | 3,434 | ||||||||||||
Convertible notes due related parties, noncurrent | 15,703 | 15,510 | ||||||||||||||
Convertible notes due to related parties, noncurrent | — | 15,510 | ||||||||||||||
Deferred revenue, noncurrent | 976 | — | ||||||||||||||
Operating lease liabilities, net of current portion | 1,076 | 1,274 | 790 | 1,274 | ||||||||||||
Total liabilities | 140,489 | 122,902 | 122,802 | 122,902 | ||||||||||||
Commitments and contingencies (Note 14) | ||||||||||||||||
Redeemable convertible preferred stock: | ||||||||||||||||
Redeemable convertible preferred stock, $0.0001 par value. Authorized 36,698,015 shares as of April 2, 2023 and December 31, 2022, respectively; issued and outstanding 34,311,133 shares as of April 2, 2023 and December 31, 2022, respectively; liquidation preference of $158,007 as of April 2, 2023 and December 31, 2022, respectively | 155,630 | 155,630 | ||||||||||||||
Total redeemable convertible preferred stock | 155,630 | 155,630 | ||||||||||||||
Stockholders’ deficit: | ||||||||||||||||
Common stock, $0.0001 par value. Authorized 60,000,000 shares as of April 2, 2023 and December 31, 2022, respectively; issued and outstanding 7,097,070 and 6,959,618 shares as of April 2, 2023 and December 31, 2022, respectively | — | — | ||||||||||||||
Commitments and contingencies (Note 19) | ||||||||||||||||
Stockholders’ (deficit) equity: | ||||||||||||||||
Common stock, $0.0001 par value. 1,000,000,000 shares and 60,000,000 shares authorized at October 1, 2023 and December 31, 2022, respectively; 45,312,243 shares and 19,932,429 shares issued and outstanding at October 1, 2023 and December 31, 2022, respectively | 7 | 3 | ||||||||||||||
Additional paid-in capital | 36,074 | 34,997 | 276,438 | 190,624 | ||||||||||||
Accumulated other comprehensive income | 28 | 27 | 51 | 27 | ||||||||||||
Accumulated deficit | (108,887 | ) | (85,373 | ) | (327,279 | ) | (85,373 | ) | ||||||||
Total stockholders’ deficit | (72,785 | ) | (50,349 | ) | ||||||||||||
Total stockholders’ (deficit) equity | (50,783 | ) | 105,281 | |||||||||||||
Total liabilities, mezzanine equity and stockholders’ deficit | $ | 223,334 | $ | 228,183 | ||||||||||||
Total liabilities and stockholders’ deficit | $ | 72,019 | $ | 228,183 | ||||||||||||
| (1) | Includes $0.5 million and zero due to related parties as of October 1, 2023 and December 31, 2022, respectively. |
| (2) | Includes $5.6 million and zero of liabilities due to related parties as of October 1, 2023 and December 31, 2022, respectively. |
Thirteen Weeks Ended | Three Months Ended | |||||||
April 2, 2023 | March 31, 2022 | |||||||
Product revenues | $ | 18,721 | $ | — | ||||
Service revenues | 16,677 | 20,302 | ||||||
Total revenues | 35,398 | 20,302 | ||||||
Cost of product revenues | 19,489 | — | ||||||
Cost of service revenues | 13,818 | 13,410 | ||||||
Total cost of revenues | 33,307 | 13,410 | ||||||
Gross profit | 2,091 | 6,892 | ||||||
Operating expenses: | ||||||||
Sales commissions | 5,677 | 7,114 | ||||||
Sales and marketing | 3,549 | 1,470 | ||||||
General and administrative | 13,098 | 2,012 | ||||||
Operating expenses | 22,324 | 10,596 | ||||||
Loss from operations | (20,233 | ) | (3,704 | ) | ||||
Interest expense 1 | (3,611 | ) | (706 | ) | ||||
Interest income | 8 | — | ||||||
Other income (expense), net 2 | 317 | 3,205 | ||||||
Loss before income taxes | (23,519 | ) | (1,205 | ) | ||||
Income tax benefit (provision) | 5 | (1 | ) | |||||
Net loss | $ | (23,514) | $ | (1,206 | ) | |||
Comprehensive income (loss): | ||||||||
Foreign currency translation adjustment | $ | 1 | $ | — | ||||
Comprehensive loss (net of tax) | $ | (23,513 | ) | $ | (1,206 | ) | ||
Net loss attributable per share attributable to common stockholders, basic and diluted | $ | (2.72) | $ | (0.19) | ||||
Weighted-average shares used to compute net loss per share attributable to common stockholders, basic and diluted | 8,656,515 | 6,260,086 | ||||||
Thirteen Weeks Ended October 1, 2023 | Three Months Ended September 30, 2022 | Thirty-Nine Weeks Ended October 1, 2023 | Nine Months Ended September 30, 2022 | |||||||||||||
Revenues | $ | 24,590 | $ | 12,260 | $ | 66,887 | $ | 48,974 | ||||||||
Cost of revenues | 18,354 | 8,266 | 51,788 | 33,792 | ||||||||||||
Gross profit | 6,236 | 3,994 | 15,099 | 15,182 | ||||||||||||
Operating expenses: | ||||||||||||||||
Sales commissions | 8,755 | 3,572 | 23,221 | 15,694 | ||||||||||||
Sales and marketing | 2,214 | 1,604 | 5,216 | 4,607 | ||||||||||||
General and administrative | 6,345 | 2,027 | 22,965 | 6,194 | ||||||||||||
Total operating expenses | 17,314 | 7,203 | 51,402 | 26,495 | ||||||||||||
Loss from continuing operations | (11,078 | ) | (3,209 | ) | (36,303 | ) | (11,313 | ) | ||||||||
Interest expense (1) | (1,902 | ) | (941 | ) | (8,870 | ) | (2,672 | ) | ||||||||
Interest income | 9 | — | 26 | — | ||||||||||||
Other income (expense), net (2) | (38,003 | ) | 4 | (28,302 | ) | 3,180 | ||||||||||
Loss from continuing operations before income taxes | (50,974 | ) | (4,146 | ) | (73,449 | ) | (10,805 | ) | ||||||||
Income tax benefit (provision) | 1 | — | 1 | (4 | ) | |||||||||||
Net loss from continuing operations | (50,973 | ) | (4,146 | ) | (73,448 | ) | (10,809 | ) | ||||||||
Discontinued operations (Note 8): | ||||||||||||||||
Loss from discontinued operations, net of tax | (8,404 | ) | — | (20,953 | ) | — | ||||||||||
Impairment loss from discontinued operations | (147,505 | ) | — | (147,505 | ) | — | ||||||||||
Net loss from discontinued operations | (155,909 | ) | — | (168,458 | ) | — | ||||||||||
Net loss | $ | (206,882 | ) | $ | (4,146 | ) | $ | (241,906 | ) | $ | (10,809 | ) | ||||
Comprehensive income (loss): | ||||||||||||||||
Foreign currency translation adjustment | 10 | — | 24 | — | ||||||||||||
Comprehensive income (loss), net of tax | $ | (206,872 | ) | $ | (4,146 | ) | $ | (241,882 | ) | $ | (10,809 | ) | ||||
Net loss from continuing operations per share attributable to common stockholders, basic and diluted | $ | (1.28 | ) | $ | (0.31 | ) | $ | (4.33 | ) | $ | (0.83 | ) | ||||
Net loss from discontinued operations per share attributable to common stockholders, basic and diluted | $ | (3.92 | ) | — | $ | (9.92 | ) | — | ||||||||
Net loss per share attributable to common stockholders, basic and diluted | $ | (5.20 | ) | $ | (0.31 | ) | $ | (14.25 | ) | $ | (0.83 | ) | ||||
Weighted-average shares used to compute net loss per share attributable to common stockholders, basic and diluted | 39,821,078 | 13,431,410 | 16,969,979 | 13,053,367 | ||||||||||||
Includes interest expense to related parties of |
Other income (expense), net includes other |
Redeemable Convertible Preferred Stock | Common Stock | Additional Paid-in-Capital | Accumulated Deficit | Accumulated Other Comprehensive Income/(Loss) | Total Stockholders’ Deficit | |||||||||||||||||||||||||||||||
Shares | Amount | Shares | Amount | |||||||||||||||||||||||||||||||||
Balance as of January 1, 2022 | 16,564,370 | $ | 31,401 | 3,739,572 | $ | — | $ | 3,105 | $ | (55,896 | ) | $ | — | $ | (52,791 | ) | ||||||||||||||||||||
Issuance of Series D-1, D-2, andD-3 redeemable convertible preferred stock upon conversion of convertible notes and SAFEs(1) | 2,771,551 | 11,558 | — | — | — | — | — | — | ||||||||||||||||||||||||||||
Issuance of common stock warrants | — | — | — | — | 3,447 | — | — | 3,447 | ||||||||||||||||||||||||||||
Stock-based compensation | — | — | — | — | 48 | — | — | 48 | ||||||||||||||||||||||||||||
Net loss | — | — | — | — | — | (1,206 | ) | — | (1,206 | ) | ||||||||||||||||||||||||||
Balance as of March 31, 2022 | 19,335,921 | $ | 42,959 | 3,739,572 | $ | — | $ | 6,600 | $ | (57,102 | ) | $ | — | $ | (50,502 | ) | ||||||||||||||||||||
Balance as of January 1, 2023 | 34,311,133 | $ | 155,630 | 6,959,618 | $ | — | $ | 34,997 | $ | (85,373 | ) | $ | 27 | $ | (50,349 | ) | ||||||||||||||||||||
Exercise of common stock options | — | — | 137,452 | — | 55 | — | — | 55 | ||||||||||||||||||||||||||||
Stock-based compensation | — | — | — | — | 1,022 | — | — | 1,022 | ||||||||||||||||||||||||||||
Foreign currency translation | — | — | — | — | — | — | 1 | 1 | ||||||||||||||||||||||||||||
Net loss | — | — | — | — | — | (23,514 | ) | — | (23,514 | ) | ||||||||||||||||||||||||||
Balance as of April 2, 2023 | 34,311,133 | $ | 155,630 | 7,097,070 | $ | — | $ | 36,074 | $ | (108,887 | ) | $ | 28 | $ | (72,785 | ) | ||||||||||||||||||||
Thirteen Week Period Ended October 1, 2023 | ||||||||||||||||||||||||||||||||
Redeemable Convertible Preferred Stock | Common Stock | Additional Paid-in Capital | Accumulated Deficit | Accumulated Other Comprehensive Income | Total Stockholders’ (Deficit) Equity | |||||||||||||||||||||||||||
Shares | Amount | Shares | Amount | |||||||||||||||||||||||||||||
Balance as of July 2, 2023, as previously reported | 34,311,133 | $ | 155,630 | 7,089,948 | $ | — | $ | 37,096 | $ | (120,397 | ) | $ | 41 | $ | (83,260 | ) | ||||||||||||||||
Retroactive application of recapitalization (Note 4) | (34,311,133 | ) | (155,630 | ) | 12,909,773 | 3 | 155,627 | — | — | 155,630 | ||||||||||||||||||||||
Balance as of July 2, 2023, as adjusted | — | — | 19,999,721 | 3 | 192,723 | (120,397 | ) | 41 | 72,370 | |||||||||||||||||||||||
Conversion of 2022 Convertible Notes into common stock | — | — | 5,460,075 | 2 | 40,950 | — | — | 40,952 | ||||||||||||||||||||||||
Issuance of common stock upon the reverse capitalization, net of offering costs | — | — | 13,458,293 | 2 | 5,218 | — | — | 5,220 | ||||||||||||||||||||||||
Reclassification of prepaid PIPE (2) | — | — | 350,000 | — | 3,500 | — | — | 3,500 | ||||||||||||||||||||||||
Reclassification of warrant liabilities to equity | — | — | — | — | 4,697 | — | — | 4,697 | ||||||||||||||||||||||||
Reclassification of Legacy Complete Solaria common stock into Complete Solaria Common Stock | — | — | — | (1 | ) | 2 | — | — | 1 | |||||||||||||||||||||||
Issuance of common stock in connection with forward purchase agreements (3) | — | — | 5,558,488 | 1 | 35,489 | — | — | 35,490 | ||||||||||||||||||||||||
Issuance of common stock bonus shares in connection with Mergers (4) | — | — | 463,976 | — | 2,394 | — | — | 2,394 | ||||||||||||||||||||||||
Residual Mergers proceeds | — | — | — | — | 161 | — | — | 161 | ||||||||||||||||||||||||
Modification of Carlyle warrant | — | — | — | — | (10,862 | ) | — | — | (10,862 | ) | ||||||||||||||||||||||
Stock-based compensation | — | — | — | — | 2,114 | — | — | 2,114 | ||||||||||||||||||||||||
Vesting of restricted stock units | — | — | 21,690 | — | 52 | — | — | 52 | ||||||||||||||||||||||||
Foreign currency translation | — | — | — | — | — | — | 10 | 10 | ||||||||||||||||||||||||
Net loss | — | — | — | — | — | (206,882 | ) | — | (206,882 | ) | ||||||||||||||||||||||
Balance as of October 1, 2023 | — | $ | — | 45,312,243 | $ | 7 | $ | 276,438 | $ | (327,279 | ) | $ | 51 | $ | (50,783 | ) | ||||||||||||||||
Thirteen Weeks Ended April 2, 2023 | Three Months Ended March 31, 2022 | |||||||
Cash flows from operating activities | ||||||||
Net loss | $ | (23,514 | ) | $ | (1,206 | ) | ||
Adjustments to reconcile net loss to net cash used in operating activities: | ||||||||
Non-cash interest expense(1) | 1,248 | 303 | ||||||
Gain on extinguishment of convertible notes and SAFEs (2) | — | (3,235 | ) | |||||
Stock-based compensation expense | 1,022 | 48 | ||||||
Provision for doubtful accounts | 2,795 | 306 | ||||||
Change in reserve for excess and obsolete inventory | 791 | 2,092 | ||||||
Depreciation and amortization | 1,008 | 143 | ||||||
Change in fair value of redeemable convertible preferred stock warrant liability | (209 | ) | 116 | |||||
Accretion of long-term debt in CS Solis | 752 | 336 | ||||||
Non-cash lease expense | 248 | 90 | ||||||
Changes in operating assets and liabilities: | ||||||||
Accounts receivable, net | (3,218 | ) | (3,271 | ) | ||||
Inventories | 5,313 | (2,031 | ) | |||||
Prepaid expenses and other current assets | (1,964 | ) | 1,772 | |||||
Accounts payable | 2,709 | (619 | ) | |||||
Accrued expenses and other current liabilities | (1,149 | ) | (1,734 | ) | ||||
Other noncurrent assets | (848 | ) | 20 | |||||
Operating lease right-of-use | (212 | ) | (106 | ) | ||||
Warranty provision, noncurrent | 100 | (53 | ) | |||||
Deferred revenue | (1,150 | ) | (417 | ) | ||||
Net cash used in operating activities | (16,278 | ) | (7,446 | ) | ||||
Cash flows from investing activities | ||||||||
Purchase of property and equipment | (30 | ) | — | |||||
Proceeds from sale of property and equipment | 1 | — | ||||||
Capitalization of internal-use software costs | (457 | ) | (304 | ) | ||||
Net cash used in investing activities | (486 | ) | (304 | ) | ||||
Cash flows from financing activities | ||||||||
Proceeds from exercise of common stock options | 55 | — | ||||||
Proceeds from issuance of convertible notes, net of issuance cost | 11,000 | — | ||||||
Proceeds from issuance of notes payable, net | 14,102 | — | ||||||
Proceeds from issuance of long-term debt with CS Solis, net of issuance cost | — | 25,000 | ||||||
Principal repayment of notes payable | (9,603 | ) | (9,507 | ) | ||||
Repayment of convertible notes to related parties | — | (500 | ) | |||||
Net cash provided by financing activities | 15,554 | 14,993 | ||||||
Effect of exchange rate changes | 1 | — | ||||||
Net increase (decrease) in cash, cash equivalents, and restricted cash | (1,209 | ) | 7,243 | |||||
Cash, cash equivalents, and restricted cash at beginning of period | 8,316 | 5,276 | ||||||
Cash, cash equivalents, and restricted cash at end of period | $ | 7,107 | $ | 12,519 | ||||
Supplemental disclosures of cash flow information: | ||||||||
Cash paid during the year for interest | 1,608 | 52 | ||||||
Supplemental schedule of noncash investing and financing activities: | ||||||||
Issuance of common stock warrants | — | 3,447 | ||||||
Issuance of Series D-1, D-2 andD-3 redeemable convertible preferred stock upon conversion of convertible debt, net of issuance costs of $1,431 | — | 11,558 | ||||||
Thirty-Nine Week Period Ended October 1, 2023 | ||||||||||||||||||||||||||||||||
Redeemable Convertible Preferred Stock | Common Stock | Additional Paid-in Capital | Accumulated Deficit | Accumulated Other Comprehensive Income | Total Stockholders’ (Deficit) Equity | |||||||||||||||||||||||||||
Shares | Amount | Shares | Amount | |||||||||||||||||||||||||||||
Balance as of December 31, 2022, as previously reported | 34,311,133 | $ | 155,630 | 6,959,618 | $ | — | $ | 34,997 | $ | (85,373 | ) | $ | 27 | $ | (50,349 | ) | ||||||||||||||||
Retroactive application of recapitalization (Note 4) | (34,311,133 | ) | (155,630 | ) | 12,972,811 | 3 | 155,627 | — | — | 155,630 | ||||||||||||||||||||||
Balance as of December 31, 2022, as adjusted | — | — | 19,932,429 | 3 | 190,624 | (85,373 | ) | 27 | 105,281 | |||||||||||||||||||||||
Conversion of 2022 Convertible Notes into common stock | — | — | 5,460,075 | 2 | 40,950 | — | — | 40,952 | ||||||||||||||||||||||||
Issuance of common stock upon the reverse capitalization, net of offering costs | — | — | 13,458,293 | 2 | 5,218 | — | — | 5,220 | ||||||||||||||||||||||||
Reclassification of prepaid PIPE (2) | — | — | 350,000 | — | 3,500 | — | — | 3,500 | ||||||||||||||||||||||||
Reclassification of warrant liabilities to equity | — | — | — | — | 4,697 | — | — | 4,697 | ||||||||||||||||||||||||
Reclassification of Legacy Complete Solaria common stock into Complete Solaria Common Stock | — | — | — | (1 | ) | 2 | — | — | 1 | |||||||||||||||||||||||
Issuance of common stock in connection with forward purchase agreements (3) | — | — | 5,558,488 | 1 | 35,489 | — | — | 35,490 | ||||||||||||||||||||||||
Issuance of common stock bonus shares in connection with Mergers (4) | — | — | 463,976 | — | 2,394 | — | — | 2,394 | ||||||||||||||||||||||||
Residual Mergers proceeds | — | — | — | — | 161 | — | — | 161 | ||||||||||||||||||||||||
Modification of Carlyle warrant | — | — | — | — | (10,862 | ) | — | — | (10,862 | ) | ||||||||||||||||||||||
Exercise of common stock options | — | — | 67,292 | — | 57 | — | — | 57 | ||||||||||||||||||||||||
Stock-based compensation | — | — | — | — | 4,156 | — | — | 4,156 | ||||||||||||||||||||||||
Vesting of restricted stock units | — | — | 21,690 | — | 52 | — | — | 52 | ||||||||||||||||||||||||
Foreign currency translation | — | — | — | — | — | — | 24 | 24 | ||||||||||||||||||||||||
Net loss | — | — | — | — | — | (241,906 | ) | — | (241,906 | ) | ||||||||||||||||||||||
Balance as of October 1, 2023 | — | $ | — | 45,312,243 | $ | 7 | $ | 276,438 | $ | (327,279 | ) | $ | 51 | $ | (50,783 | ) | ||||||||||||||||
Three Month Period Ended September 30, 2022 | ||||||||||||||||||||||||||||||||
Redeemable Convertible Preferred Stock | Common Stock | Additional Paid-in Capital | Accumulated Deficit | Accumulated Other Comprehensive Income | Total Stockholders’ (Deficit) Equity | |||||||||||||||||||||||||||
Shares | Amount | Shares | Amount | |||||||||||||||||||||||||||||
Balance as of June 30, 2022, as previously reported | 19,335,921 | $ | 42,959 | 3,931,068 | $ | — | $ | 6,703 | $ | (62,559 | ) | $ | — | $ | (55,856 | ) | ||||||||||||||||
Retroactive application of recapitalization (Note 4) | (19,335,921 | ) | (42,959 | ) | 7,306,130 | 1 | 42,958 | — | — | 42,959 | ||||||||||||||||||||||
Balance as of June 30, 2022, as adjusted | — | — | 11,237,198 | 1 | 49,661 | (62,559 | ) | — | (12,897 | ) | ||||||||||||||||||||||
Exercise of common stock options | — | — | 10,867 | — | 9 | — | — | 9 | ||||||||||||||||||||||||
Stock-based compensation | — | — | — | — | 85 | — | — | 85 | ||||||||||||||||||||||||
Net loss | — | — | — | — | — | (4,146 | ) | — | (4,146 | ) | ||||||||||||||||||||||
Balance as of September 30, 2022, as adjusted | — | $ | — | 11,248,065 | $ | 1 | $ | 49,755 | $ | (66,705 | ) | $ | — | $ | (16,949 | ) | ||||||||||||||||
Nine Month Period Ended September 30, 2022 | ||||||||||||||||||||||||||||||||
Redeemable Convertible Preferred Stock | Common Stock | Additional Paid-in Capital | Accumulated Deficit | Accumulated Other Comprehensive Income | Total Stockholders’ (Deficit) Equity | |||||||||||||||||||||||||||
Shares | Amount | Shares | Amount | |||||||||||||||||||||||||||||
Balance as of December 31, 2021, as previously reported | 16,564,370 | $ | 31,401 | 3,739,572 | $ | — | $ | 3,105 | $ | (55,896 | ) | $ | — | $ | (52,791 | ) | ||||||||||||||||
Retroactive application of recapitalization (Note 4) | (16,564,370 | ) | (31,401 | ) | 6,066,571 | 1 | 31,400 | — | — | 31,401 | ||||||||||||||||||||||
Balance at December 31, 2021, as adjusted | — | — | 9,806,143 | 1 | 34,505 | (55,896 | ) | — | (21,390 | ) | ||||||||||||||||||||||
Issuance of Series D-1, D-2, and D-3 redeemable convertible preferred stock upon conversion of convertible notes and SAFEs (1) | 2,771,551 | 11,558 | — | — | — | — | — | — | ||||||||||||||||||||||||
Issuance of common stock options | — | — | 103,353 | — | 28 | — | — | 28 | ||||||||||||||||||||||||
Issuance of common stock warrants | — | — | — | — | 3,447 | — | — | 3,447 | ||||||||||||||||||||||||
Stock-based compensation | — | — | — | — | 217 | — | — | 217 | ||||||||||||||||||||||||
Net loss | — | — | — | — | — | (10,809 | ) | — | (10,809 | ) | ||||||||||||||||||||||
Balance as of September 30, 2022, as previously reported | 2,771,551 | 11,558 | 9,909,496 | 1 | 38,197 | (66,705 | ) | — | (28,507 | ) | ||||||||||||||||||||||
Retroactive application of recapitalization (Note 4) | (2,771,551 | ) | (11,558 | ) | 1,338,569 | — | 11,558 | — | — | 11,558 | ||||||||||||||||||||||
Balance as of September 30, 2022, as adjusted | — | $ | — | 11,248,065 | $ | 1 | $ | 49,755 | $ | (66,705 | ) | $ | — | $ | (16,949 | ) | ||||||||||||||||
| (1) | Includes 1,315,287 shares of Series D-1 redeemable convertible preferred stock with a carrying value of $6.3 million, issued to related parties. |
| (2) | Reclassification of pre-funded PIPE was transacted with a related party. |
| (3) | Includes 4,508,488 shares of Complete Solaria Common Stock issued to related parties. |
| (4) | Includes 120,000 shares of Complete Solaria Common Stock issued to related parties. |
Thirty-Nine Weeks Ended October 1, 2023 | Nine Months Ended September 30, 2022 | |||||||
Cash flows from operating activities from continuing operations | ||||||||
Net loss | $ | (241,906 | ) | $ | (10,809 | ) | ||
Loss from discontinued operations, net of income taxes | (168,458 | ) | — | |||||
Net loss from continuing operations, net of tax | (73,448 | ) | (10,809 | ) | ||||
Adjustments to reconcile net loss from continuing operations to net cash used in operating activities: | ||||||||
Stock-based compensation expense | 2,321 | 217 | ||||||
Non-cash interest expense (1) | 4,009 | (76 | ) | |||||
Non-cash lease expense | 717 | 304 | ||||||
Gain on extinguishment of convertible notes and SAFEs (2) | — | (3,235 | ) | |||||
Depreciation and amortization | 622 | 463 | ||||||
Provision for credit losses | 4,269 | 716 | ||||||
Change in reserve for excess and obsolete inventory | 2,144 | 3,091 | ||||||
Issuance of forward purchase agreements (3) | (76 | ) | — | |||||
Change in fair value of forward purchase agreement liabilities (4) | 6,661 | — | ||||||
Loss on CS Solis debt extinguishment | 10,338 | — | ||||||
Change in fair value of warrant liabilities | (26,314 | ) | 142 | |||||
Accretion of debt in CS Solis | 2,493 | 2,581 | ||||||
Issuance of common stock in connection with forward purchase agreements (5) | 35,490 | — | ||||||
Issuance of common stock bonus shares in connection with the Mergers (6) | 2,394 | — | ||||||
Issuance of restricted stock units in connection with vendor services | 52 | — | ||||||
Changes in operating assets and liabilities: | ||||||||
Accounts receivable, net | (11,823 | ) | (3,036 | ) | ||||
Inventories | (3,896 | ) | (5,047 | ) | ||||
Prepaid expenses and other current assets | (8,326 | ) | 504 | |||||
Other noncurrent assets | 1,132 | (15 | ) | |||||
Accounts payable | 4,372 | 190 | ||||||
Accrued expenses and other current liabilities | 1,587 | (2,056 | ) | |||||
Operating lease liabilities | (359 | ) | (316 | ) | ||||
Warranty provision, noncurrent | 255 | (584 | ) | |||||
Deferred revenue | (1,766 | ) | (231 | ) | ||||
Net cash used in operating activities from continuing operations | (47,152 | ) | (17,197 | ) | ||||
Net cash provided by operating activities from discontinued operations | 190 | — | ||||||
Net cash used in operating activities | (46,962 | ) | (17,197 | ) | ||||
Cash flows from investing activities from continuing operations | ||||||||
Purchase of property and equipment | (29 | ) | — | |||||
Capitalization of internal-use software costs | (1,505 | ) | (1,048 | ) | ||||
Net cash used in investing activities from continuing operations | (1,534 | ) | (1,048 | ) | ||||
Cash flows from financing activities from continuing operations | ||||||||
Proceeds from issuance of notes payable, net | 14,102 | — | ||||||
Principal repayment of notes payable | (9,653 | ) | (9,507 | ) | ||||
Proceeds from issuance of convertible notes, net of issuance cost | 17,750 | — | ||||||
Proceeds from issuance of convertible notes, net of issuance cost, due to related parties | 3,500 | — | ||||||
Repayment of convertible notes to related parties | — | (500 | ) | |||||
Proceeds from issuance of long-term debt with CS Solis, net of issuance cost | — | 25,000 | ||||||
Proceeds from exercise of common stock options | 57 | 28 | ||||||
Proceeds from Mergers and PIPE Financing | 4,219 | — | ||||||
Proceeds from Mergers and PIPE Financing from related parties | 15,600 | — | ||||||
Payments for issuance of Series D redeemable convertible preferred stock | — | (1,317 | ) | |||||
Net cash provided by financing activities from continuing operations | 45,575 | 13,704 | ||||||
Effect of exchange rate changes | 24 | — | ||||||
Net decrease in cash, cash equivalents and restricted cash | (2,897 | ) | (4,541 | ) | ||||
Cash, cash equivalents, and restricted cash at beginning of period | 8,316 | 5,276 | ||||||
Cash, cash equivalents, and restricted cash at end of period | $ | 5,419 | $ | 735 | ||||
Thirty-Nine Weeks Ended October 1, 2023 | Nine Months Ended September 30, 2022 | |||||||
Supplemental disclosures of cash flow information: | ||||||||
Cash paid during the year for interest | 1,602 | 1 | ||||||
Cash paid during the year for income taxes | — | 38 | ||||||
Supplemental schedule of noncash investing and financing activities: | ||||||||
Operating lease right-of-use assets obtained in exchange for new operating lease liabilities | — | 245 | ||||||
Carlyle warrant modification | (10,862 | ) | — | |||||
Reclassification of liability-classified warrants to equity-classified warrants | 30,625 | — | ||||||
Issuance of common stock warrants | 202 | 3,447 | ||||||
Issuance of Series D redeemable convertible preferred stock upon conversion of SAFE | — | 6,550 | ||||||
Issuance of Series D redeemable convertible preferred stock upon conversion of convertible debt | — | 10,680 | ||||||
Conversion of 2022 Convertible Notes into common stock | 21,561 | — | ||||||
Conversion of 2022 Convertible Notes issued to related parties into common stock | 19,390 | — | ||||||
Conversion of preferred stock into common stock | 155,630 | — | ||||||
Issuance of common stock in connection with forward purchase agreements (5) | 35,490 | — | ||||||
Issuance of common stock bonus shares in connection with the Mergers (6) | 2,394 | — | ||||||
Recapitalization of Legacy Complete Solaria Common stock into Complete Solaria Common Stock | 1 | — | ||||||
Reclassification of investor related to PIPE funds | 3,500 | — | ||||||
| (1) | Non-cash interest expense to related parties of |
| (2) | Gain on extinguishment of convertible notes and SAFEs includes other income from related parties of zero during each of the thirteen and thirty-nine weeks ended October 1, 2023, and zero and $1.4 million during the |
| (3) | Issuance of forward purchase agreements includes other income from related parties of $0.3 million for each of the thirteen and thirty-nine weeks ended October 1, 2023, and zero for each of the three and nine months ended September 30, 2022. |
| (4) | Change in fair value of forward purchase agreement liabilities includes other expense from related parties of $5.9 million for each of the thirteen and thirty-nine weeks ended October 1, 2023, and zero for each of the three and nine months ended September 30, 2022. |
| (5) | Issuance of common stock in connection with forward purchase agreements includes other expense from related parties of $30.7 million for each of the thirteen and thirty-nine weeks ended October 1, 2023, and zero for each of the three and nine months ended September 30, 2022. |
| (6) | Issuance of common stock bonus shares to related parties in connection with the Mergers includes other expense of $0.7 million for each of the thirteen and thirty-nine weeks ended October 1, 2023, and zero for each of the three and nine months ended September 30, 2022. |
(1) | Organization |
(a) | Description of Business |
(b) | Basis of Presentation of Unaudited Interim Condensed Consolidated Financial Statements |
(c) | Divestiture |
(d) | Liquidity and Going Concern |
(e) | Immaterial Correction of |
(2) | Summary of Significant Accounting Policies |
(a) | Use of Estimates |
(b) | Supply Chain Constraints and |
(c) | Segment Information |
(d) | Restricted Cash |
As of | ||||||||||||||||
As of April 2, 2023 | As of December 31, 2022 | October 1, 2023 | December 31, 2022 | |||||||||||||
Cash and cash equivalents | $ | 3,349 | $ | 4,409 | $ | 1,661 | $ | 4,409 | ||||||||
Restricted cash | 3,758 | 3,907 | 3,758 | 3,907 | ||||||||||||
Total cash, cash equivalents, and restricted cash | $ | 7,107 | $ | 8,316 | $ | 5,419 | $ | 8,316 | ||||||||
(e) | Revenue Recognition |
Thirteen Weeks Ended | Three Months Ended | |||||||
April 2, 2023 | March 31, 2022 | |||||||
Solar energy system installations | $ | 15,843 | $ | 19,728 | ||||
Solar panel sales | 18,721 | — | ||||||
Software enhanced services | 834 | 574 | ||||||
Total revenue | $ | 35,398 | $ | 20,302 | ||||
Thirteen Weeks Ended October 1, 2023 | Three Months Ended September 30, 2022 | Thirty-Nine Weeks Ended October 1, 2023 | Nine Months Ended September 30, 2022 | |||||||||||||
Solar energy system installations | $ | 23,915 | $ | 11,120 | $ | 64,511 | $ | 46,214 | ||||||||
Software enhanced services | 675 | 1,140 | 2,376 | 2,760 | ||||||||||||
Total revenue | $ | 24,590 | $ | 12,260 | $ | 66,887 | $ | 48,974 | ||||||||
Thirteen Weeks Ended | Three Months Ended | |||||||
April 2, 2023 | March 31, 2022 | |||||||
United States | $ | 32,874 | $ | 20,302 | ||||
Other | 2,524 | — | ||||||
Total revenue | $ | 35,398 | $ | 20,302 | ||||
(f) | Fair Value Measurements |
(g) | Direct Offering Costs |
(h) | Warrant Liabilities |
(i) | Forward Purchase Agreements |
(j) | Net Loss Per Share |
(k) | Recently Adopted Accounting Pronouncements |
(3) | Fair Value Measurements |
As of October 1, 2023 | ||||||||||||||||
Level 1 | Level 2 | Level 3 | Total | |||||||||||||
Financial Liabilities | ||||||||||||||||
Carlyle warrants | $ | — | $ | — | $ | 7,683 | $ | 7,683 | ||||||||
Public warrants | 1,413 | — | — | 1,413 | ||||||||||||
Private placement warrants | — | 1,027 | — | 1,027 | ||||||||||||
Working capital warrants | — | 117 | — | 117 | ||||||||||||
Forward purchase agreement liabilities | — | — | 6,586 | 6,586 | ||||||||||||
Total | $ | 1,413 | $ | 1,144 | $ | 14,269 | $ | 16,826 | ||||||||
As of December 31, 2022 | ||||||||||||||||
Level 1 | Level 2 | Level 3 | Total | |||||||||||||
Financial Liabilities | ||||||||||||||||
Redeemable convertible preferred stock warrant liability | $ | — | $ | — | $ | 14,152 | $ | 14,152 | ||||||||
Total | $ | — | $ | — | $ | 14,152 | $ | 14,152 | ||||||||
October 1, 2023 | December 31, 2022 | |||||||
Expected term | 7.0 years | — | ||||||
Expected volatility | 77.0 | % | — | |||||
Risk-free interest rate | 3.92 | % | — | |||||
Expected dividend yield | 0.0 | % | — | |||||
October 1, 2023 | December 31, 2022 | |||||||
Common stock trading price | $ | 2.10 | — | |||||
Simulation period | 1.8 years | — | ||||||
Risk-free rate | 5.12 | % | — | |||||
Volatility | 178.0 | % | — | |||||
October 1, 2023 | December 31, 2022 | |||||||
Expected term | — | 3.1 years | ||||||
Expected volatility | — | 72.5 | % | |||||
Risk-free interest rate | — | 4.2 | % | |||||
Expected dividend yield | — | 0.0 | % | |||||
October 1, 2023 | December 31, 2022 | |||||||
Expected term | — | 3.6 years | ||||||
Expected volatility | — | 72.5 | % | |||||
Risk-free interest rate | — | 4.0 | % | |||||
Expected dividend yield | — | 0.0 | % | |||||
October 1, 2023 | December 31, 2022 | |||||||
Expected term | — | 1.5 years | ||||||
Expected volatility | — | 78.5 | % | |||||
Risk-free interest rate | — | 4.7 | % | |||||
Expected dividend yield | — | 0.0 | % | |||||
(4) | Reverse Recapitalization |
Recapitalization | ||||
Cash proceeds from FACT, net of redemptions | $ | 36,539 | ||
Cash proceeds from PIPE Financing | 12,800 | |||
Less: cash payment of FACT transaction costs and underwriting fees | (10,680 | ) | ||
Less: cash payment to FPA investors for rebates and recycled shares | (17,831 | ) | ||
Less: cash payment for Promissory Note | (1,170 | ) | ||
Net cash proceeds upon the closing of the Mergers and PIPE financing | 19,658 | |||
Less: non-cash net liabilities assumed from FACT | (10,135 | ) | ||
Net contributions from the Mergers and PIPE financing upon closing | $ | 9,523 | ||
Recapitalization | ||||
FACT Class A Ordinary Shares, outstanding prior to Mergers | 34,500,000 | |||
FACT Class B Ordinary Shares, outstanding prior to Mergers | 8,625,000 | |||
Bonus shares issued to sponsor | 193,976 | |||
Bonus shares issued to PIPE investors | 120,000 | |||
Bonus shares issued to FPA investors | 150,000 | |||
Shares issued from PIPE financing | 1,690,000 | |||
Shares issued from FPA agreements, net of recycled shares | 5,558,488 | |||
Less: redemption of FACT Class A Ordinary Shares | (31,041,243 | ) | ||
Total shares from the Mergers and PIPE Financing | 19,796,221 | |||
Legacy Complete Solaria shares | 20,034,257 | |||
2022 Convertible Note Shares | 5,460,075 | |||
Shares of Complete Solaria Common stock immediately after Mergers | 45,290,553 | |||
(5) | Forward Purchase Agreements |
FPA Seller pursuant to the FPA, less the number of Terminated Shares multiplied by (2) the VWAP Price over the valuation period. The Settlement amount will be reduced by the Settlement Adjustment, an amount equal to the product of (1) Number of shares in the Pricing Date Notice, less the number of Terminated Shares multiplied by $2.00. |
(6) | Business Combination |
Amount | ||||||||
Cash, cash equivalents and restricted cash | $ | 5,402 | $ | 5,402 | ||||
Accounts receivable | 4,822 | 4,822 | ||||||
Inventories | 5,354 | 5,354 | ||||||
Prepaid expenses and other current assets | 8,569 | 8,569 | ||||||
Property and equipment | 830 | 830 | ||||||
Operating lease right-of-use | 1,619 | 1,619 | ||||||
Intangible assets | 43,100 | 43,100 | ||||||
Other non-current assets | 112 | 112 | ||||||
Total identifiable assets acquired | 69,808 | 69,808 | ||||||
Accounts payable | 4,210 | 4,210 | ||||||
Accrued expenses and other current liabilities | 11,845 | 11,845 | ||||||
Notes payable | 20,823 | 20,823 | ||||||
Deferred revenue | 73 | 73 | ||||||
Operating lease liabilities, net of current portion | 1,132 | 1,132 | ||||||
Warranty provision, noncurrent | 1,566 | 1,566 | ||||||
SAFE agreements | 60,470 | 60,470 | ||||||
Total identifiable liabilities assumed | 100,119 | 100,119 | ||||||
Net identifiable liabilities assumed | 30,311 | 30,311 | ||||||
Goodwill | 119,422 | 119,422 | ||||||
Total aggregate consideration paid | $ | 89,111 | $ | 89,111 | ||||
Amount | ||||||||
Trademarks | $ | 5,700 | $ | 5,700 | ||||
Developed technology | 12,700 | 12,700 | ||||||
Customer relationships | 24,700 | 24,700 | ||||||
Total intangible asset | $ | 43,100 | ||||||
Total intangible assets | $ | 43,100 | ||||||
Three Months Ended | ||||||||||||
March 31, 2022 | Three Months Ended September 30, 2022 | Nine Months Ended September 30, 2022 | ||||||||||
Revenues | $ | 29,321 | $ | 22,267 | $ | 79,800 | ||||||
Net loss | $ | (8,732 | ) | $ | (26,498 | ) | $ | (49,935 | ) | |||
Prepaid Expenses and Other Current Assets |
As of | As of | |||||||||||||||
April 2, 2023 | December 31, 2022 | October 1, 2023 | December 31, 2022 | |||||||||||||
Inventory deposits | $ | 6,388 | $ | 6,255 | $ | 3,497 | $ | 6,255 | ||||||||
Prepaid sales commissions | 4,382 | 2,838 | 5,509 | 2,838 | ||||||||||||
Other | 1,265 | 978 | 941 | 978 | ||||||||||||
Total prepaid expenses and other current assets | $ | 12,035 | $ | 10,071 | $ | 9,947 | $ | 10,071 | ||||||||
Divestiture |
Thirteen Weeks Ended October 1, 2023 | Thirty-Nine Weeks Ended October 1, 2023 | |||||||
Revenues | $ | 3,774 | $ | 29,048 | ||||
Cost of revenues | 4,102 | 30,609 | ||||||
Gross loss | (328 | ) | (1,561 | ) | ||||
Operating expenses: | ||||||||
Sales and marketing | 2,425 | 6,855 | ||||||
General and administrative | 5,681 | 12,572 | ||||||
Total operating expenses | 8,106 | 19,427 | ||||||
Loss from discontinued operations | (8,434 | ) | (20,988 | ) | ||||
Other income (expense), net | 31 | 32 | ||||||
Loss from discontinued operations before income taxes | (8,403 | ) | (20,956 | ) | ||||
Income tax benefit (provision) | (1 | ) | 3 | |||||
Impairment loss from discontinued operations | (147,505 | ) | (147,505 | ) | ||||
Net loss from discontinued operations | $ | (155,909 | ) | $ | (168,458 | ) | ||
As of | ||||||||
October 1, 2023 | December 31, 2022 | |||||||
Intangible assets, net | $ | 12,299 | $ | 42,610 | ||||
Goodwill | — | 119,422 | ||||||
Long-term assets held for sale | $ | 12,299 | $ | 162,032 | ||||
(9) | Property and Equipment, Net |
As of | Estimated | As of | ||||||||||||||||||
April 2, 2023 | December 31, 2022 | Useful Lives (Years) | October 1, 2023 | December 31, 2022 | ||||||||||||||||
Developed software | $ | 5,511 | $ | 5,054 | 5 | $ | 6,559 | $ | 5,054 | |||||||||||
Manufacturing equipment | 131 | 102 | 3 | 131 | 102 | |||||||||||||||
Furniture & equipment | 90 | 90 | ||||||||||||||||||
Furniture and equipment | 3 | 90 | 90 | |||||||||||||||||
Leasehold improvements | 708 | 708 | 5 | 708 | 708 | |||||||||||||||
Total property and equipment | 6,440 | 5,954 | 7,488 | 5,954 | ||||||||||||||||
Less accumulated depreciation and amortization | (2,734 | ) | (2,478 | ) | ||||||||||||||||
Less: accumulated depreciation and amortization | (3,303 | ) | (2,478 | ) | ||||||||||||||||
Total property and equipment, net | $ | 3,706 | $ | 3,476 | $ | 4,185 | $ | 3,476 | ||||||||||||
Goodwill and Intangible Assets |
As of April 2, 2023 | As of December 31, 2022 | |||||||||||||||||||||||||||
Weighted- Average Remaining Life (Years) | Gross Carrying Amount | Accumulated Amortization | Net Amount | Gross Carrying Amount | Accumulated Amortization | Net Amount | ||||||||||||||||||||||
Assembled workforce. . . | 0.0 | 137 | (137 | ) | — | 137 | (133 | ) | $ | 4 | ||||||||||||||||||
Trademarks. . . . . . . . . . . | 9.6 | 5,700 | (239 | ) | 5,461 | 5,700 | (95 | ) | 5,605 | |||||||||||||||||||
Customer relationship. . . | 21.6 | 24,700 | (470 | ) | 24,230 | 24,700 | (187 | ) | 24,513 | |||||||||||||||||||
Developed technology. . . | 9.6 | 12,700 | (532 | ) | 12,168 | 12,700 | (212 | ) | 12,488 | |||||||||||||||||||
Total intangible assets. . . | 43,237 | (1,378 | ) | 41,859 | 43,237 | (627 | ) | 42,610 | ||||||||||||||||||||
As of October 1, 2023 | ||||||||||||||||||||
Gross Carrying Amount | Impairment | Held for Sale | Accumulated Amortization | Net Amount | ||||||||||||||||
Assembled workforce | $ | 137 | $ | — | $ | — | (137 | ) | $ | — | ||||||||||
Trademarks | 5,700 | (3,714 | ) | (1,463 | ) | (523 | ) | — | ||||||||||||
Customer relationship | 24,700 | (16,094 | ) | (7,577 | ) | (1,029 | ) | — | ||||||||||||
Developed technology | 12,700 | (8,275 | ) | (3,259 | ) | (1,166 | ) | — | ||||||||||||
Total intangible assets | $ | 43,237 | $ | (28,083 | ) | $ | (12,299 | ) | $ | (2,855 | ) | $ | — | |||||||
As of December 31, 2022 | ||||||||||||||||
Weighted- Average Remaining Life (Years) | Gross Carrying Amount | Accumulated Amortization | Net Amount | |||||||||||||
Assembled workforce | 0.1 | $ | 137 | $ | (133 | ) | $ | 4 | ||||||||
Trademarks | 9.8 | 5,700 | (95 | ) | 5,605 | |||||||||||
Customer relationship | 21.8 | 24,700 | (187 | ) | 24,513 | |||||||||||
Developed technology | 9.8 | 12,700 | (212 | ) | 12,488 | |||||||||||
Total intangible assets | $ | 43,237 | $ | (627 | ) | $ | 42,610 | |||||||||
Thirteen Weeks Ended April 2, 2023 | Three Months Ended March 31, 2022 | Thirteen Weeks Ended October 1, 2023 | Three Months Ended September 30, 2022 | Thirty-Nine Weeks Ended October 1, 2023 | Nine Months Ended September 30, 2022 | |||||||||||||||||||
Assembled workforce | $ | 4 | $ | 17 | $ | — | $ | 17 | $ | 4 | $ | 51 | ||||||||||||
Trademarks | 144 | — | 142 | — | 428 | — | ||||||||||||||||||
Customer relationship | 284 | — | 279 | — | 843 | — | ||||||||||||||||||
Developed technology | 320 | — | 317 | — | 953 | — | ||||||||||||||||||
Total amortization expense | $ | 752 | $ | 17 | $ | 738 | $ | 17 | $ | 2,228 | $ | 51 | ||||||||||||
2023 | $ | 2,215 | ||
2024 | 2,963 | |||
2025 | 2,963 | |||
2026 | 2,963 | |||
2027 and thereafter | 30,755 | |||
Total amortization expense | $ | 41,859 | ||
Accrued Expenses and Other Current Liabilities |
As of | ||||||||||||||||
April 2, 2023 | December 31, 2022 | October 1, 2023 | December 31, 2022 | |||||||||||||
Accrued compensation and benefits | $ | 3,492 | $ | 3,940 | $ | 3,666 | $ | 3,940 | ||||||||
Customer deposits | 1,167 | 930 | ||||||||||||||
Uninvoiced contract costs | 3,554 | 1,914 | ||||||||||||||
Inventory received but not invoiced | 1,391 | 972 | ||||||||||||||
Accrued term loan and revolving loan amendment and final payment fees | 2,400 | 2,400 | 2,175 | 2,400 | ||||||||||||
Uninvoiced contract costs | 1,841 | 1,914 | ||||||||||||||
Accrued legal settlements | 1,515 | 1,853 | 2,955 | 1,853 | ||||||||||||
Customer deposits | 965 | 930 | ||||||||||||||
Accrued taxes | 962 | 1,245 | 931 | 1,245 | ||||||||||||
Accrued rebates and credits | 880 | 1,076 | ||||||||||||||
Operating lease liabilities, current | 906 | 958 | 720 | 958 | ||||||||||||
Accrued rebates and credits | 675 | 1,076 | ||||||||||||||
Warranty provision, current | 557 | 767 | ||||||||||||||
Inventory received but not invoiced | 248 | 972 | ||||||||||||||
Revenue warranty | 918 | — | ||||||||||||||
Deferred underwriters’ discount payable | 3,019 | — | ||||||||||||||
Accrued warranty, current | 605 | 767 | ||||||||||||||
Other accrued liabilities | 5,082 | 3,775 | 4,693 | 3,775 | ||||||||||||
Total accrued expenses and other current liabilities | $ | 18,643 | $ | 19,830 | $ | 26,674 | $ | 19,830 | ||||||||
Employee Benefit Plan |
F-81 |
Thirteen Weeks Ended April 2, 2023 | Three Months Ended March 31, 2021 | Thirteen Weeks Ended October 1, 2023 | Three Months Ended September 30, 2022 | Thirty-Nine Weeks Ended October 1, 2023 | Nine Months Ended September 30, 2022 | |||||||||||||||||||
Change in fair value of redeemable convertible preferred stock warrant liability | $ | 209 | $ | (116 | ) | $ | 39 | $ | 3 | $ | 9,455 | $ | (142 | ) | ||||||||||
Change in fair value of Carlyle warrants | 12,689 | — | 12,689 | — | ||||||||||||||||||||
Change in fair value of FACT public, private placement and working capital warrants | 4,170 | — | 4,170 | — | ||||||||||||||||||||
Gain on extinguishment of convertible notes and SAFE agreements (1) | — | 3,236 | — | — | — | 3,235 | ||||||||||||||||||
Loss on CS Solis debt extinguishment | (10,338 | ) | — | (10,338 | ) | — | ||||||||||||||||||
Bonus shares issued in connection with the Mergers (2) | (2,394 | ) | — | (2,394 | ) | — | ||||||||||||||||||
Issuance of forward purchase agreements (3) | 76 | — | 76 | — | ||||||||||||||||||||
Change in fair value of forward purchase agreement liabilities (4) | (6,661 | ) | — | (6,661 | ) | — | ||||||||||||||||||
Issuance of shares in connection with the forward purchase agreements (5) | (35,490 | ) | — | (35,490 | ) | — | ||||||||||||||||||
Other, net | 108 | 85 | (94 | ) | 1 | 191 | 87 | |||||||||||||||||
Total other income (expense), net | $ | 317 | $ | 3,205 | $ | (38,003 | ) | $ | 4 | $ | (28,302 | ) | $ | 3,180 | ||||||||||
| (1) | Includes zero and $1.4 million of other income for the three and nine months ended September 30, 2022, respectively, recognized upon the conversion of related party convertible notes and SAFEs. |
| (2) | Includes $0.7 million of other expense for each of the thirteen and thirty-nine weeks ended October 1, 2023 for bonus shares issued to related parties in connection with the Mergers. |
| (3) | Includes $0.3 million of other income for each of the thirteen and thirty-nine weeks ended October 1, 2023 for forward purchase agreements entered into with related parties. |
| (4) | Includes $5.9 million of other expense for each of the thirteen and thirty-nine weeks ended October 1, 2023 for forward purchase agreements entered into with related parties. |
| (5) | Includes $30.7 million of other expense for each of the thirteen and thirty-nine weeks ended October 1, 2023 for shares issued to related parties in connection with the forward purchase agreements. |
Common Stock |
As of April 2, 2023 | As of December 31, 2022 | |||||||
Series A redeemable convertible preferred stock | 15,278 | 15,278 | ||||||
Series A-2 redeemable convertible preferred stock | 6,667 | 6,667 | ||||||
Series B redeemable convertible preferred stock . . . . | 1,024,617 | 1,024,617 | ||||||
Series C redeemable convertible preferred stock . . . . | 12,717,525 | 12,717,525 | ||||||
Series C-1 redeemable convertible preferred stock . . | 2,800,283 | 2,800,283 | ||||||
Series D-1 redeemable convertible preferred stock . . | 2,660,797 | 2,660,797 | ||||||
Series D-2 redeemable convertible preferred stock . . | 62,498 | 62,498 | ||||||
Series D-3 redeemable convertible preferred stock . . | 48,256 | 48,256 | ||||||
Series D-4 redeemable convertible preferred stock . . | 2,139,030 | 2,139,030 | ||||||
Series D-5 redeemable convertible preferred stock . . | 479,370 | 479,370 | ||||||
Series D-6 redeemable convertible preferred stock . . | 921,250 | 921,250 | ||||||
Series D-7 redeemable convertible preferred stock . . | 3,263,900 | 3,263,900 | ||||||
Series D-8 redeemable convertible preferred stock . . | 8,171,662 | 8,171,662 | ||||||
Common stock warrants . . . . . . . . . . . . . . . . . . . . . . . | 4,630,168 | 4,630,168 | ||||||
Redeemable convertible preferred stock warrants . . . | 2,386,879 | 2,386,879 | ||||||
Stock options, issued and outstanding . . . . . . . . . . . . | 9,714,894 | 10,291,367 | ||||||
Stock options, authorized for future issuance . . . . . . . | 1,204,925 | 765,904 | ||||||
Total shares reserved . . . . . . . . . . . . . . . . . . . . . . | 52,247,999 | 52,385,451 | ||||||
As of October 1, 2023 | ||||
Common stock warrants | 27,637,266 | |||
Employee stock purchase plan | 2,628,996 | |||
Stock options and RSUs, issued and outstanding | 7,013,514 | |||
Stock options and RSUs, authorized for future issuance | 8,625,023 | |||
Total shares reserved | 45,904,799 | |||
| April 2, 2023 | December 31, 2022 | |||
Expected term | 1.5-7.0 years | 10.0 – 12.0 years | ||
Expected volatility | 73.0-78.5% | 73.0% | ||
Risk-free interest rate | 1.9% – 4.7% | 1.3% – 1.7% | ||
Expected dividends | 0.0% | 0.0% |
Warrants |
As of April 2, 2023 and December 31, 2022 | ||||||||||||||||
Shares designated as: | Authorized shares | Shares issued and outstanding | Proceed, net of issuance costs | Aggregate liquidation preference | ||||||||||||
Series A redeemable convertible preferred stock | 15,278 | 15,278 | $ | 30 | $ | 26 | ||||||||||
Series A-2 redeemable convertible preferred stock | 6,667 | 6,667 | 4 | 10 | ||||||||||||
Series B redeemable convertible preferred stock | 1,035,082 | 1,024,617 | 4,347 | 4,406 | ||||||||||||
Series C redeemable convertible preferred stock | 13,717,525 | 12,717,525 | 19,737 | 20,048 | ||||||||||||
Series C-1 redeemable convertible preferred stock | 2,800,283 | 2,800,283 | 7,283 | 7,420 | ||||||||||||
Series D-1 redeemable convertible preferred stock | 2,660,797 | 2,660,797 | 11,342 | 13,233 | ||||||||||||
Series D-2 redeemable convertible preferred stock | 62,498 | 62,498 | 127 | 117 | ||||||||||||
Series D-3 redeemable convertible preferred stock | 48,256 | 48,256 | 88 | 75 | ||||||||||||
Series D-4 redeemable convertible preferred stock | 2,139,030 | 2,139,030 | 15,102 | 15,102 | ||||||||||||
Series D-5 redeemable convertible preferred stock | 479,370 | 479,370 | 3,576 | 3,576 | ||||||||||||
Series D-6 redeemable convertible preferred stock | 921,250 | 921,250 | 7,315 | 7,315 | ||||||||||||
Series D-7 redeemable convertible preferred stock | 4,640,314 | 3,263,900 | 26,209 | 26,209 | ||||||||||||
Series D-8 redeemable convertible preferred stock | 8,171,665 | 8,171,662 | 60,470 | 60,470 | ||||||||||||
| 36,698,015 | 34,311,133 | $ | 155,630 | $ | 158,007 | |||||||||||
Borrowing Arrangements |
April 2, 2023 | December 31, 2022 | |||||||
Convertible notes, net, noncurrent 2022 Convertible Notes | $ | 14,560 | $ | 3,434 | ||||
Convertible notes, net, noncurrent | 14,560 | 3,434 | ||||||
Convertible notes, net due to related parties, noncurrent 2022 Convertible Notes | 15,703 | 15,510 | ||||||
Convertible notes, net due to related parties, noncurrent | 15,703 | 15,510 | ||||||
Total convertible notes | $ | 30,263 | $ | 18,944 | ||||
As of | ||||||||
October 1, 2023 | December 31, 2022 | |||||||
Convertible notes, net, noncurrent | ||||||||
2022 Convertible Notes | $ | — | $ | 3,434 | ||||
2022 Convertible Notes due to related parties | — | 15,510 | ||||||
Total convertible notes | $ | — | $ | 18,944 | ||||
Thirteen Weeks Ended April 2, 2023 | Three Months Ended March 31, 2022 | |||||||
Amortization of debt discount | $ | — | $ | — | ||||
PIK interest | — | 1 | ||||||
Total non-cash interest expense | $ | — | $ | 1 | ||||
Thirteen Weeks Ended April 2, 2023 | Three Months Ended March 31, 2022 | |||||||
Amortization of debt discount | $ | — | $ | — | ||||
PIK interest | — | 16 | ||||||
Total non-cash interest expense | $ | — | $ | 16 | ||||
Thirteen Weeks Ended April 2, 2023 | Three Months Ended March 31, 2022 | |||||||
Amortization of debt discount | $ | — | $ | 112 | ||||
PIK interest | — | 17 | ||||||
Total non-cash interest expense | $ | — | $ | 129 | ||||
Thirteen Weeks Ended April 2, 2023 | Three Months Ended March 31, 2022 | |||||||
Amortization of debt discount | $ | — | $ | — | ||||
PIK interest | — | 10 | ||||||
Total non-cash interest expense | $ | — | $ | 10 | ||||
Stock-Based Compensation |
Options outstanding | Options Outstanding | |||||||||||||||||||||||||||||||
Number of shares | Weighted average exercise price per share | Weighted average contractual term (in years) | Aggregate intrinsic value (in thousands) | Number of Shares | Weighted Average Exercise Price per Share | Weighted Average Contractual Term (Years) | Aggregate Intrinsic Value (in thousands) | |||||||||||||||||||||||||
Outstanding—December 31, 2022 | 10,291,367 | $ | 2.35 | 6.99 | $ | 34,180 | 4,970,419 | $ | 4.86 | 6.99 | $ | 34,180 | ||||||||||||||||||||
Options granted | — | — | ||||||||||||||||||||||||||||||
Options exercised | (137,452 | ) | 0.40 | |||||||||||||||||||||||||||||
Options canceled | (439,021 | ) | 4.32 | |||||||||||||||||||||||||||||
Outstanding—April 2, 2023 | 9,714,894 | $ | 2.29 | 7.42 | $ | 33,151 | ||||||||||||||||||||||||||
Outstanding—October 1, 2023 | 6,925,855 | $ | 4.91 | 7.80 | $ | 2,727 | ||||||||||||||||||||||||||
Vested and expected to vest—April 2 2023 | 9,714,894 | $ | 2.29 | 7.42 | $ | 33,151 | ||||||||||||||||||||||||||
Vested and expected to vest—October 1, 2023 | 6,925,855 | $ | 4.91 | 7.80 | $ | 2,727 | ||||||||||||||||||||||||||
Vested and exercisable—April 2, 2023 | 5,865,613 | $ | 2.33 | 6.82 | $ | 21,746 | ||||||||||||||||||||||||||
Vested and exercisable—October 1, 2023 | 3,037,856 | $ | 5.16 | 6.40 | $ | 2,245 | ||||||||||||||||||||||||||
Number of RSUs | Weighted Average Grant Date Fair Value | |||||||
Unvested at December 31, 2022 | — | |||||||
Granted | 728,600 | $ | 5.00 | |||||
Vested and released | (155,473 | ) | $ | 4.84 | ||||
Cancelled or forfeited | (485,468 | ) | $ | 5.07 | ||||
Unvested at October 1, 2023 | 87,659 | $ | 5.07 | |||||
Thirteen Weeks Ended April 2, 2023 | Three Months Ended March 31, 2022 | |||||||
Cost of revenues | $ | 11 | $ | 3 | ||||
Sales and marketing | 168 | 18 | ||||||
General and administrative | 843 | 27 | ||||||
Total stock-based compensation expense | $ | 1,022 | $ | 48 | ||||
Thirteen Weeks Ended October 1, 2023 | Three Months Ended September 30, 2022 | Thirty-Nine Weeks Ended October 1, 2023 | Nine Months Ended September 30, 2022 | |||||||||||||
Cost of revenues | $ | 20 | $ | 1 | $ | 51 | $ | 6 | ||||||||
Sales and marketing | 143 | 37 | 337 | 91 | ||||||||||||
General and administrative | 1,416 | 47 | 1,933 | 120 | ||||||||||||
Loss from discontinued operations, net of tax | 535 | — | 1,835 | — | ||||||||||||
Total stock-based compensation expense | $ | 2,114 | $ | 85 | $ | 4,156 | $ | 217 | ||||||||
Employee Stock Purchase Plan |
(19) | Commitments and Contingencies |
2023 | |||||
Remaining average remaining lease term | 2.61 years | ||||
Weighted average discount rate |
2023 | $ | 780 | ||||||
2023 (excluding the thirty-nine weeks ended October 1, 2023) | $ | 263 | ||||||
2024 | 743 | 743 | ||||||
2025 | 592 | 592 | ||||||
2026 | 477 | 477 | ||||||
2027 and thereafter | — | — | ||||||
Total undiscounted liabilities | 2,592 | 2,075 | ||||||
Less imputed interest | (610 | ) | ||||||
Less: imputed interest | (565 | ) | ||||||
Present value of operation lease liabilities | $ | 1,982 | ||||||
Present value of operating lease liabilities | $ | 1,510 | ||||||
April 2, 2023 | December 31, 2022 | Thirty-Nine Weeks Ended October 1, 2023 | Year Ended December 31, 2022 | |||||||||||||
Warranty provision, beginning of period | $ | 3,981 | $ | 2,281 | $ | 3,981 | $ | 2,281 | ||||||||
Warranty liability from business combination | — | 1,943 | ||||||||||||||
Warranty liability from Business Combination | — | 1,943 | ||||||||||||||
Accruals for new warranties issued | 713 | 1,492 | 2,100 | 1,492 | ||||||||||||
Settlements | (799 | ) | (1,735 | ) | (2,060 | ) | (1,735 | ) | ||||||||
Warranty provision, end of period | $ | 3,895 | $ | 3,981 | $ | 4,021 | $ | 3,981 | ||||||||
Warranty provision, current | $ | 557 | $ | 767 | $ | 605 | $ | 767 | ||||||||
Warranty provision, noncurrent | $ | 3,338 | $ | 3,214 | $ | 3,416 | $ | 3,214 | ||||||||
Basic and Diluted Net Loss Per Share |
Thirteen Weeks Ended April 2, 2023 | Three Months Ended March 31, 2023 | Thirteen Weeks Ended October 1, 2023 | Three Months Ended September 30, 2022 | Thirty-Nine Weeks Ended October 1, 2023 | Nine Months Ended September 30, 2022 | |||||||||||||||||||
Numerator: | ||||||||||||||||||||||||
Net loss attributable to common stockholder, basic and diluted | $ | (23,514 | ) | $ | (1,206 | ) | ||||||||||||||||||
Net loss from continuing operations | $ | (50,973 | ) | $ | (4,146 | ) | $ | (73,448 | ) | $ | (10,809 | ) | ||||||||||||
Net loss from discontinued operations | (155,909 | ) | — | (168,458 | ) | — | ||||||||||||||||||
Net loss | $ | (206,882 | ) | $ | (4,146 | ) | $ | (241,906 | ) | $ | (10,809 | ) | ||||||||||||
Denominator: | ||||||||||||||||||||||||
Weighted average common shares outstanding, basic and diluted | 8,656,515 | 6,260,086 | 39,821,078 | 13,431,410 | 16,969,979 | 13,053,367 | ||||||||||||||||||
Net loss per share attributable to common stockholder, basic and diluted | $ | (2.72 | ) | $ | (0.19 | ) | ||||||||||||||||||
Net loss per share: | ||||||||||||||||||||||||
Continuing operations – basic and diluted | $ | (1.28 | ) | $ | (0.31 | ) | $ | (4.33 | ) | $ | (0.83 | ) | ||||||||||||
Discontinued operations – basic and diluted | $ | (3.92 | ) | $ | — | $ | (9.92 | ) | $ | — | ||||||||||||||
Net loss per share – basic and diluted | $ | (5.20 | ) | $ | (0.31 | ) | $ | (14.25 | ) | $ | (0.83 | ) | ||||||||||||
April 2, 2023 | March 31, 2022 | As of | ||||||||||||||
Convertible preferred stock | 34,311,133 | 19,335,923 | ||||||||||||||
Stock options issued and outstanding | 9,714,894 | 4,354,499 | ||||||||||||||
Convertible notes | 6,325,952 | — | ||||||||||||||
October 1, 2023 | December 31, 2022 | |||||||||||||||
Common stock warrants | 23,626,132 | 2,000,878 | ||||||||||||||
Preferred stock warrants | 2,386,879 | 1,010,465 | — | 488,024 | ||||||||||||
Common stock warrants | 89,313 | 10,351 | ||||||||||||||
Stock options and RSUs issued and outstanding | 7,013,514 | 2,430,949 | ||||||||||||||
Potential common shares excluded from diluted net loss per share | 52,828,171 | 24,711,238 | 30,639,646 | 4,919,851 | ||||||||||||
Related Party Transactions |
December 31, | December 31, | |||||||
2021 | 2020 | |||||||
ASSETS | ||||||||
CURRENT ASSETS: | ||||||||
Cash and cash equivalents | $ | 9,113 | $ | 9,802 | ||||
Accounts receivable, net | 6,288 | 13,318 | ||||||
Inventory, net | 16,928 | 10,448 | ||||||
Prepaid expenses and other current assets | 2,053 | 9,160 | ||||||
Total current assets | 34,382 | 42,728 | ||||||
Restricted cash | 4,802 | 3,747 | ||||||
Operating lease right-of-use | 1,755 | 2,534 | ||||||
Property and equipment, net | 999 | 4,928 | ||||||
TOTAL ASSETS | $ | 41,938 | $ | 53,937 | ||||
LIABILITIES, MEZZANINE EQUITY AND STOCKHOLDERS’ DEFICIT | ||||||||
CURRENT LIABILITIES: | ||||||||
Accounts payable | $ | 5,489 | $ | 4,459 | ||||
Accrued expenses and other current liabilities | 11,713 | 9,975 | ||||||
Deferred revenue | 75 | 2,070 | ||||||
Notes payable, net | 10,912 | 5,938 | ||||||
Operating lease liability | 283 | 390 | ||||||
Total current liabilities | 28,472 | 22,832 | ||||||
NONCURRENT LIABILITIES: | ||||||||
Redeemable convertible preferred stock warrants liability | 4,955 | 1,725 | ||||||
Operating lease liability, net of current portion | 1,674 | 2,139 | ||||||
Other liabilities, noncurrent | 2,341 | 2,280 | ||||||
Notes payable, net of current portion | 41,197 | 11,171 | ||||||
Total liabilities | 78,639 | 40,147 | ||||||
COMMITMENTS AND CONTINGENCIES (NOTE 14) | ||||||||
MEZZANINE REDEEMABLE CONVERTIBLE PREFERRED STOCK | ||||||||
Redeemable convertible preferred stock: par value of $0.001 per share; 13,500,285 shares authorized as of December 31, 2021 and 2020; issued and outstanding of 11,147,927 shares and 10,920,447 shares as of December 31, 2021 and 2020, respectively; aggregate liquidation value of $71.7 million and $71.3 million as of December 31, 2021 and 2020, respectively | 72,061 | 71,152 | ||||||
STOCKHOLDERS’ DEFICIT | ||||||||
Common stock; par value $0.001 per share; 27,000,000 shares authorized as of December 31, 2021 and 2020; issued and outstanding of 2,001,357 shares and 1,841,452 shares as of December 31, 2021 and 2020, respectively | 521 | 521 | ||||||
Class B common stock; par value $0.001 per share; 815 shares authorized as of December 31, 2021 and 2020; 815 shares issued and outstanding as of December 31, 2021 and 2020 | 1 | 1 | ||||||
Additional paid-in capital | 178,309 | 175,285 | ||||||
Accumulated other comprehensive loss | (55 | ) | (68 | ) | ||||
Accumulated deficit | (287,538 | ) | (233,101 | ) | ||||
Total stockholders’ deficit | (108,762 | ) | (57,362 | ) | ||||
TOTAL LIABILITIES, MEZZANINE EQUITY AND STOCKHOLDERS’ DEFICIT | $ | 41,938 | $ | 53,937 | ||||
Years Ended December 31, | ||||||||
2021 | 2020 | |||||||
Product revenue, net | $ | 59,763 | $ | 48,328 | ||||
Cost of revenue | 61,144 | 47,950 | ||||||
Gross profit (loss) | (1,381 | ) | 378 | |||||
Operating expenses | ||||||||
Research and engineering | 4,345 | 2,964 | ||||||
Sales and marketing | 7,244 | 7,349 | ||||||
General and administrative | 9,789 | 9,905 | ||||||
Litigation-related costs | 5,485 | 2,311 | ||||||
Impairment and related charges (Note 3) | 17,052 | 395 | ||||||
Total operating expenses | 43,915 | 22,924 | ||||||
Loss from operations | (45,296 | ) | (22,546 | ) | ||||
Interest expense | (5,221 | ) | (2,763 | ) | ||||
Interest income | 6 | 130 | ||||||
Loss on extinguishment of debt (Note 7) | (5,384 | ) | — | |||||
Other income (expense), net | 1,458 | 1,404 | ||||||
Total other expenses, net | (9,141 | ) | (1,229 | ) | ||||
Loss before provision for income taxes | (54,437 | ) | (23,775 | ) | ||||
Provision for income taxes | — | 80 | ||||||
Net loss | (54,437 | ) | (23,855 | ) | ||||
OTHER COMPREHENSIVE INCOME (LOSS): | ||||||||
Currency translation adjustment, net of tax effect of $0, for the years ended December 31, 2021 and 2020 | 13 | (68 | ) | |||||
Net loss and comprehensive loss | (54,424 | ) | (23,923 | ) | ||||
Redeemable convertible preferred stock accretion | 21 | 36 | ||||||
Net loss and comprehensive loss to common stockholders | $ | (54,403 | ) | $ | (23,887 | ) | ||
Accumulated Other Comprehensive Loss | ||||||||||||||||||||||||||||||||||||||||||||
Total Stockholders’ | ||||||||||||||||||||||||||||||||||||||||||||
Redeemable Convertible | Additional Paid-in | Accumulated | ||||||||||||||||||||||||||||||||||||||||||
Preferred Stock | Common Stock | Class B Common Stock | Capital | Deficit | Deficit | |||||||||||||||||||||||||||||||||||||||
Shares | Amount | Shares | Amount | Shares | Amount | Amount | Amount | Amount | Amount | |||||||||||||||||||||||||||||||||||
Balance at December 29, 2019 | 10,151,638 | $ | 64,193 | 1,816,452 | $ | 521 | 815 | $ | 1 | $ | 172,469 | $ | — | $ | (209,246 | ) | $ | (36,255 | ) | |||||||||||||||||||||||||
Exercise of options | — | — | 25,000 | — | — | — | 10 | — | — | 10 | ||||||||||||||||||||||||||||||||||
Issuance of Series E-1 redeemable convertible preferred stock | 768,809 | 6,748 | — | — | — | — | — | — | — | — | ||||||||||||||||||||||||||||||||||
Stock-based compensation | — | 175 | — | — | — | — | 2,842 | — | — | 2,842 | ||||||||||||||||||||||||||||||||||
Currency translation adjustment | — | — | — | — | — | — | — | (68 | ) | — | (68 | ) | ||||||||||||||||||||||||||||||||
Redeemable convertible preferred stock accretion | — | 36 | — | — | — | — | (36 | ) | — | — | (36 | ) | ||||||||||||||||||||||||||||||||
Net loss | — | — | — | — | — | — | — | — | (23,855 | ) | (23,855 | ) | ||||||||||||||||||||||||||||||||
Balance at December 31, 2020 | 10,920,447 | $ | 71,152 | 1,841,452 | $ | 521 | 815 | $ | 1 | $ | 175,285 | $ | (68 | ) | $ | (233,101 | ) | $ | (57,362 | ) | ||||||||||||||||||||||||
Exercise of warrants | 246,564 | 762 | 25,000 | — | — | — | 2 | — | — | 2 | ||||||||||||||||||||||||||||||||||
Exercise of options | — | — | 159,583 | — | — | — | 370 | — | — | 370 | ||||||||||||||||||||||||||||||||||
Repurchase of common stock | — | — | (24,678 | ) | — | — | — | — | — | — | — | |||||||||||||||||||||||||||||||||
Rescission of Series E-1 redeemable convertible preferred stock | (19,084 | ) | — | — | — | — | — | — | — | — | — | |||||||||||||||||||||||||||||||||
Stock-based compensation | — | 126 | — | — | — | — | 2,673 | — | — | 2,673 | ||||||||||||||||||||||||||||||||||
Currency translation adjustment | — | — | — | — | — | — | — | 13 | — | 13 | ||||||||||||||||||||||||||||||||||
Redeemable convertible preferred stock accretion | — | 21 | — | — | — | — | (21 | ) | — | — | (21 | ) | ||||||||||||||||||||||||||||||||
Net loss | — | — | — | — | — | — | — | — | (54,437 | ) | (54,437 | ) | ||||||||||||||||||||||||||||||||
Balance at December 31, 2021 | 11,147,927 | $ | 72,061 | 2,001,357 | $ | 521 | 815 | $ | 1 | $ | 178,309 | $ | (55 | ) | $ | (287,538 | ) | $ | (108,762 | ) | ||||||||||||||||||||||||
Accumulated Other Comprehensive Loss | ||||||||||||||||||||||||||||||||||||||||||||
Total Stockholders’ | ||||||||||||||||||||||||||||||||||||||||||||
Redeemable Convertible | Additional Paid-in | Accumulated | ||||||||||||||||||||||||||||||||||||||||||
Preferred Stock | Common Stock | Class B Common Stock | Capital | Deficit | Deficit | |||||||||||||||||||||||||||||||||||||||
Shares | Amount | Shares | Amount | Shares | Amount | Amount | Amount | Amount | Amount | |||||||||||||||||||||||||||||||||||
Balance at December 29, 2019 | 10,151,638 | $ | 64,193 | 1,816,452 | $ | 521 | 815 | $ | 1 | $ | 172,469 | $ | — | $ | (209,246 | ) | $ | (36,255 | ) | |||||||||||||||||||||||||
Exercise of options | — | — | 25,000 | — | — | — | 10 | — | — | 10 | ||||||||||||||||||||||||||||||||||
Issuance of Series E-1 redeemable convertible preferred stock | 768,809 | 6,748 | — | — | — | — | — | — | — | — | ||||||||||||||||||||||||||||||||||
Stock-based compensation | — | 175 | — | — | — | — | 2,842 | — | — | 2,842 | ||||||||||||||||||||||||||||||||||
Currency translation adjustment | — | — | — | — | — | — | — | (68 | ) | — | (68 | ) | ||||||||||||||||||||||||||||||||
Redeemable convertible preferred stock accretion | — | 36 | — | — | — | — | (36 | ) | — | — | (36 | ) | ||||||||||||||||||||||||||||||||
Net loss | — | — | — | — | — | — | — | — | (23,855 | ) | (23,855 | ) | ||||||||||||||||||||||||||||||||
Balance at December 31, 2020 | 10,920,447 | $ | 71,152 | 1,841,452 | $ | 521 | 815 | $ | 1 | $ | 175,285 | $ | (68 | ) | $ | (233,101 | ) | $ | (57,362 | ) | ||||||||||||||||||||||||
Exercise of warrants | 246,564 | 762 | 25,000 | — | — | — | 2 | — | — | 2 | ||||||||||||||||||||||||||||||||||
Exercise of options | — | — | 159,583 | — | — | — | 370 | — | — | 370 | ||||||||||||||||||||||||||||||||||
Repurchase of common stock | — | — | (24,678 | ) | — | — | — | — | — | — | — | |||||||||||||||||||||||||||||||||
Rescission of Series E-1 redeemable convertible preferred stock | (19,084 | ) | — | — | — | — | — | — | — | — | — | |||||||||||||||||||||||||||||||||
Stock-based compensation | — | 126 | — | — | — | — | 2,673 | — | — | 2,673 | ||||||||||||||||||||||||||||||||||
Currency translation adjustment | — | — | — | — | — | — | — | 13 | — | 13 | ||||||||||||||||||||||||||||||||||
Redeemable convertible preferred stock accretion | — | 21 | — | — | — | — | (21 | ) | — | — | (21 | ) | ||||||||||||||||||||||||||||||||
Net loss | — | — | — | — | — | — | — | — | (54,437 | ) | (54,437 | ) | ||||||||||||||||||||||||||||||||
Balance at December 31, 2021 | 11,147,927 | $ | 72,061 | 2,001,357 | $ | 521 | 815 | $ | 1 | $ | 178,309 | $ | (55 | ) | $ | (287,538 | ) | $ | (108,762 | ) | ||||||||||||||||||||||||
Years Ended | ||||||||
December 31, | December 31, | |||||||
2021 | 2020 | |||||||
Cash Flows from Operating Activities | ||||||||
Net loss | $ | (54,437 | ) | $ | (23,855 | ) | ||
Adjustments to reconcile net loss to net cash used in operating activities: | ||||||||
Debt amortization and non-cash interest expense | 3,555 | 2,036 | ||||||
Loss on extinguishment of debt | 5,384 | — | ||||||
Stock-based compensation | 2,799 | 3,017 | ||||||
Change in fair value of redeemable convertible preferred stock warrant liability | (358 | ) | (1,085 | ) | ||||
Depreciation expense | 1,290 | 451 | ||||||
Allowance for doubtful accounts expense | — | 183 | ||||||
Impairment and related charges | 17,052 | 395 | ||||||
Impairment of investment in privately held company | 250 | — | ||||||
Noncash operating lease expense | 283 | 336 | ||||||
Forgiveness of Paycheck Protection Plan (PPP) Loan | (1,433 | ) | — | |||||
Other | 13 | 135 | ||||||
Changes in operating assets and liabilities: | ||||||||
Accounts receivable, net | 7,030 | (501 | ) | |||||
Inventory, net | (15,168 | ) | 2,393 | |||||
Prepaid expenses and other current assets | 2,970 | (4,413 | ) | |||||
Accounts payable | 1,030 | (2,189 | ) | |||||
Accrued expenses and other current liabilities | (1 | ) | 3,216 | |||||
Deferred revenue | (1,995 | ) | (1,582 | ) | ||||
Operating lease liability | (309 | ) | (52 | ) | ||||
Other liabilities, noncurrent | 60 | 1,629 | ||||||
Net cash used in operating activities | (31,985 | ) | (19,886 | ) | ||||
Cash Flows from Investing Activities | ||||||||
Purchases of property and equipment | (1,827 | ) | (2,935 | ) | ||||
Proceeds from sale of property and equipment | 248 | — | ||||||
Net cash used in investing activities | (1,579 | ) | (2,935 | ) | ||||
Cash Flows from Financing Activities | ||||||||
Proceeds from issuance of notes payable, net | 33,415 | 21,933 | ||||||
Repayment of notes payable, net | (382 | ) | (15,835 | ) | ||||
Proceeds from issuance of preferred stock, net | — | 6,748 | ||||||
Proceeds from exercise of redeemable convertible preferred stock warrants | 512 | — | ||||||
Proceeds from exercise of stock options | 372 | 10 | ||||||
Net cash provided by financing activities | 33,917 | 12,856 | ||||||
Effect of Exchange Rate Changes | 13 | (67 | ) | |||||
Net Change in Cash, Cash Equivalents and Restricted Cash | 366 | (10,032 | ) | |||||
Cash, Cash Equivalents and Restricted Cash, beginning of year | 13,549 | 23,581 | ||||||
Cash, Cash Equivalents and Restricted Cash, end of year | $ | 13,915 | $ | 13,549 | ||||
Years Ended | ||||||||
December 31, | December 31, | |||||||
2021 | 2020 | |||||||
Supplemental Cash Flow Information | ||||||||
Taxes paid | $ | 73 | $ | 98 | ||||
Interest paid | $ | 860 | $ | 353 | ||||
Non-Cash Investing and Financing Activities | ||||||||
Preferred stock warrants issued in connection with the 2018 Bridge notes modification | $ | (731 | ) | $ | — | |||
Forgiveness of PPP Loan | $ | (1,433 | ) | $ | — | |||
1. | ORGANIZATION |
2. | SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES |
As of December 31, | ||||||||
2021 | 2020 | |||||||
Cash and cash equivalents | $ | 9,113 | $ | 9,802 | ||||
Restricted cash | 4,802 | 3,747 | ||||||
Total cash, cash equivalents and restricted cash | $ | 13,915 | $ | 13,549 | ||||
As of December 31, | ||||||||
2021 | 2020 | |||||||
Beginning balance | $ | 1,248 | $ | 929 | ||||
Warranty settlements | (135 | ) | (224 | ) | ||||
Additions to warranty accrual | 625 | 543 | ||||||
Ending balance | $ | 1,738 | $ | 1,248 | ||||
Warranty cost, current | $ | 87 | $ | 62 | ||||
Warranty cost, noncurrent | 1,651 | 1,186 | ||||||
Total warranty cost | $ | 1,738 | $ | 1,248 | ||||
3. | SOLAR PARK RELATED COSTS |
Description | Amount | |||
Inventory and related advances write-down | $ | 9,123 | ||
Equipment and related advances write-down | 7,928 | |||
Total | $ | 17,052 | ||
4. | REVENUE |
Years Ended December 31, | ||||||||
2021 | 2020 | |||||||
Primary geographical markets | ||||||||
U.S. | $ | 56,577 | $ | 46,158 | ||||
International | 3,186 | 2,170 | ||||||
Total | $ | 59,763 | $ | 48,328 | ||||
Product sales | $ | 59,737 | $ | 48,098 | ||||
Royalty | 26 | 230 | ||||||
Total revenue | $ | 59,763 | $ | 48,328 | ||||
Years Ended December 31, | ||||||||
2021 | 2020 | |||||||
Deferred revenue—beginning balance | $ | 2,070 | $ | 2,246 | ||||
Additions | 1,494 | 5,624 | ||||||
Revenue recognized | (3,489 | ) | (5,800 | ) | ||||
Deferred revenue—ending balance | $ | 75 | $ | 2,070 | ||||
5. | FINANCIAL STATEMENT COMPONENTS |
As of December 31, | ||||||||
2021 | 2020 | |||||||
Finished goods | $ | 16,928 | $ | 5,029 | ||||
Work in progress | — | 1,712 | ||||||
Raw materials | — | 3,707 | ||||||
Total inventory, net | $ | 16,928 | $ | 10,448 | ||||
As of December 31, | ||||||||
2021 | 2020 | |||||||
Manufacturing equipment | $ | 3,195 | $ | 7,316 | ||||
Leasehold improvement | 864 | 1,080 | ||||||
Furniture, fixtures and office equipment | 66 | 100 | ||||||
| $4,125 | $8,496 | |||||||
Less: Accumulated depreciation | (3,126 | ) | (3,568 | ) | ||||
Total property and equipment, net | $ | 999 | $ | 4,928 | ||||
As of December 31, | ||||||||
2021 | 2020 | |||||||
Accrued purchases | $ | 2,657 | $ | 1,400 | ||||
Accrued rebates and credits | 1,967 | 2,313 | ||||||
Warranty cost, current | 87 | 62 | ||||||
Other taxes payable | 1,053 | 2,275 | ||||||
Customer deposits | 773 | 452 | ||||||
Accrued payroll | 784 | 1,099 | ||||||
Current portion of amount payable to a vendor (Note 14) | 1,699 | 1,252 | ||||||
SCI Term Loan and Revolving Loan amendment fees (Note 7) | 1,700 | — | ||||||
Other accrued liabilities | 993 | 1,122 | ||||||
Total accrued expenses and other current liabilities | $ | 11,713 | $ | 9,975 | ||||
Years Ended December 31, | ||||||||
2021 | 2020 | |||||||
Forgiveness of Paycheck Protection Program Loan (Note 7) | $ | 1,433 | $ | — | ||||
Change in fair value of redeemable convertible preferred stock warrant liability (Note 8) | 358 | 1,085 | ||||||
Write-off of Investment in Privately Held Company | (250 | ) | — | |||||
Others | (83 | ) | 319 | |||||
Total other income (expense), net | $ | 1,458 | $ | 1,404 | ||||
6. | LEASES |
As of December 31, | ||||||||
2021 | 2020 | |||||||
Operating lease right-of-use | $ | 1,642 | $ | 2,156 | ||||
Lease liabilities: | ||||||||
Current | $ | 283 | $ | 390 | ||||
Noncurrent | 1,674 | 2,139 | ||||||
Total lease liabilities | $ | 1,957 | $ | 2,529 | ||||
As of December 31, | ||||||||
2021 | 2020 | |||||||
Cash payments included in the measurement of operating lease liability – operating cash flows | $ | 991 | $ | 441 | ||||
Future Operating Lease Payments | Amount | |||
2022 | $ | 512 | ||
2023 | 528 | |||
2024 | 548 | |||
2025 | 559 | |||
Thereafter | 477 | |||
Reasonably certain future lease payments | 2,624 | |||
Less imputed interest | (667 | ) | ||
Total operating lease liability | 1,957 | |||
Less current portion | 283 | |||
Operating lease liability, noncurrent | $ | 1,674 | ||
As of December 31, | ||||||||
2021 | 2020 | |||||||
Weighted-average remaining lease term | 4.4 Years | 5.3 Years | ||||||
Weighted-average lease discount rate | 12.75 | % | 12.75 | % | ||||
7. | NOTES PAYABLE, NET |
As of December 31, | ||||||||
2021 | 2020 | |||||||
2018 Bridge Notes | $ | 7,076 | $ | 4,422 | ||||
Payroll Protection Program Loan | 1,414 | 1,433 | ||||||
Simple Agreement for Future Equity Note | 34,001 | 2,000 | ||||||
Term and Revolver Loan | 9,618 | 9,254 | ||||||
Total notes payable, net | 52,109 | 17,109 | ||||||
Less current portion | (10,912 | ) | (5,938 | ) | ||||
Notes payable, net of current portion | $ | 41,197 | $ | 11,171 | ||||
As of December 31, | ||||||||
2021 | 2020 | |||||||
Principal | $ | 7,777 | $ | 5,555 | ||||
Less: unamortized debt discount | (701 | ) | (1,133 | ) | ||||
Net carrying value | 7,076 | 4,422 | ||||||
Less: current portion | (7,076 | ) | (4,422 | ) | ||||
Total noncurrent portion | $ | — | $ | — | ||||
As of December 31, | ||||||||
2021 | 2020 | |||||||
Amortization of debt discount | $ | 1,160 | $ | 643 | ||||
Contractual interest expense | 2,223 | 1,335 | ||||||
Total interest expense | $ | 3,383 | $ | 1,978 | ||||
Effective interest rate of the liability component | 32.6 | % | 32.6 | % | ||||
As of December 31, | ||||||||
2021 | 2020 | |||||||
Principal | $ | 9,618 | $ | 10,000 | ||||
Less: unamortized debt discount | — | (746 | ) | |||||
Net carrying value | 9,618 | 9,254 | ||||||
Less: current portion | (2,421 | ) | (83 | ) | ||||
Total noncurrent portion | $ | 7,197 | $ | 9,171 | ||||
As of December 31, | ||||||||
2021 | 2020 | |||||||
Amortization of debt discount | $ | 170 | $ | 49 | ||||
Contractual interest expense | 860 | 151 | ||||||
Total interest expense | $ | 1,030 | $ | 200 | ||||
Year | Amount | |||
2022 | $ | 2,421 | ||
2023 | 7,197 | |||
Total term and revolver loan | $ | 9,618 | ||
8. | REDEEMABLE CONVERTIBLE PREFERRED STOCK WARRANTS |
Amount | ||||
Balance, December 31, 2019 | $ | 2,810 | ||
Change in Fair Value included in Other income (expense), net | (1,085 | ) | ||
Balance, December 31, 2020 | $ | 1,725 | ||
Series E-1 warrants issued in connection with SCI Second amendment—included in Loss on debt extinguishment | $ | 1,191 | ||
Series E-1 warrants issued in connection with 2018 Bridge notes amendment—included in Notes payable, net of discounts | 731 | |||
Exercise of warrant | (251 | ) | ||
Change in Fair Value included in Loss on debt extinguishment relating to SCI Third amendment | 1,917 | |||
Change in Fair Value included in Other income (expense), net | (358 | ) | ||
Balance, December 31, 2021 | $ | 4,955 | ||
As of December 31, 2021 | ||||||||||||||||
Level 1 | Level 2 | Level 3 | Total | |||||||||||||
Financial liabilities: | ||||||||||||||||
Simple Agreement for Future Equity Note | $ | — | $ | — | $ | 34,001 | $ | 34,001 | ||||||||
Redeemable convertible preferred stock warrants liability | — | — | 4,955 | 4,955 | ||||||||||||
Total financial liabilities | $ | — | $ | — | $ | 38,956 | $ | 38,956 | ||||||||
As of December 31, 2020 | ||||||||||||||||
Level 1 | Level 2 | Level 3 | Total | |||||||||||||
Financial liabilities: | ||||||||||||||||
SAFE Note | $ | — | $ | — | $ | 2,000 | $ | 2,000 | ||||||||
Redeemable convertible preferred stock warrants liability | — | — | 1,725 | 1,725 | ||||||||||||
Total financial liabilities | $ | — | $ | — | $ | 3,725 | $ | 3,725 | ||||||||
Years Ended December 31, | ||||||||
2021 | 2020 | |||||||
Expected term (in years) | 5.98 -9.95 | 0.25 - 6.98 | ||||||
Expected volatility | 54.0% - 57.7% | 65.4% - 67.1% | ||||||
Risk-free interest rate | 1.35% - 1.52% | 0.09% - 0.65% | ||||||
Expected dividend yield | 0% | 0% | ||||||
As of December 31, 2021 | ||||||||||||||||||||
Shares Authorized | Shares Issued and Outstanding | Net Carrying Value | Conversion Price Per Share | Aggregate Liquidation Preference | ||||||||||||||||
Series E-1 | 7,324,607 | 5,348,050 | $ | 49,186 | $ | 9.17 | $ | 49,042 | ||||||||||||
Series D-1 | 375,801 | — | — | — | — | |||||||||||||||
Series C-1 | 1,509,508 | 1,509,508 | 13,060 | 8.66 | 13,072 | |||||||||||||||
Series B-1 | 785,471 | 785,471 | 4,237 | 5.40 | 4,242 | |||||||||||||||
Series A-1 | 3,504,898 | 3,504,898 | 5,578 | 1.52 | 5,327 | |||||||||||||||
| 13,500,285 | 11,147,927 | $ | 72,061 | $ | 71,683 | |||||||||||||||
As of December 31, 2020 | ||||||||||||||||||||
Shares Authorized | Shares Issued and Outstanding | Net Carrying Value | Conversion Price Per Share | Aggregate Liquidation Preference | ||||||||||||||||
Series E-1 | 7,324,607 | 5,367,134 | $ | 49,054 | $ | 9.17 | $ | 49,217 | ||||||||||||
Series D-1 | 375,801 | — | — | — | — | |||||||||||||||
Series C-1 | 1,509,508 | 1,509,508 | 13,055 | 8.66 | 13,072 | |||||||||||||||
Series B-1 | 785,471 | 750,177 | 4,037 | 5.40 | 4,051 | |||||||||||||||
Series A-1 | 3,504,898 | 3,293,628 | 5,006 | 1.52 | 5,006 | |||||||||||||||
| 13,500,285 | 10,920,447 | $ | 71,152 | $ | 71,346 | |||||||||||||||
10. | COMMON STOCK |
11. | RELATED PARTY TRANSACTIONS |
12. | INCOME TAXES |
Years Ended December 31, | ||||||||
2021 | 2020 | |||||||
Domestic | $ | (53,282 | ) | $ | (23,452 | ) | ||
Foreign | (1,155 | ) | (323 | ) | ||||
Total | $ | (54,437 | ) | $ | (23,775 | ) | ||
Years Ended December 31, | ||||||||
2021 | 2020 | |||||||
Income tax provision at statutory rate | 21.0 | % | 21.0 | % | ||||
State income taxes, net of federal benefit | 5.0 | % | 3.2 | % | ||||
Non-deductible expenses and other | -0.4 | % | -0.2 | % | ||||
Non-deductible warrant expense | 0.2 | % | 1.0 | % | ||||
Share-based compensation | -0.8 | % | -1.3 | % | ||||
Change in valuation allowance, net | -24.5 | % | -23.3 | % | ||||
Research and development credits | 0.1 | % | 0.1 | % | ||||
Foreign rate differential | -0.4 | % | -0.4 | % | ||||
Forgiveness PPP loan | 0.6 | % | 0.0 | % | ||||
Expired loss carry forward | -0.6 | % | -0.5 | % | ||||
Effective tax rate | 0.0 | % | -0.3 | % | ||||
As of December 31, | ||||||||
2021 | 2020 | |||||||
Deferred tax assets: | ||||||||
Net operating loss carryforwards | $ | 72,714 | $ | 61,488 | ||||
Operating lease liability | 508 | 647 | ||||||
Property and equipment, net | 430 | — | ||||||
Research and development credit carryforward | 672 | 597 | ||||||
Inventory reserve | 1,499 | 1,506 | ||||||
Accrued expenses and other reserves | 2,652 | 1,325 | ||||||
Stock-based compensation | 2,086 | 1,876 | ||||||
Total deferred tax assets | 80,561 | 67,439 | ||||||
Deferred tax liabilities: | ||||||||
Property and equipment, net | — | 85 | ||||||
Operating lease right-of-use | 426 | 552 | ||||||
Total deferred tax liabilities | 426 | 637 | ||||||
Gross deferred tax assets | 80,135 | 66,802 | ||||||
Less valuation allowance | (80,135 | ) | (66,802 | ) | ||||
Net deferred tax asset | $ | — | $ | — | ||||
Years Ended December 31, | ||||||||
2021 | 2020 | |||||||
Unrecognized tax benefits as of beginning of year | $ | 2,649 | $ | 2,635 | ||||
Increases related to current year tax positions | 20 | 14 | ||||||
| $ | 2,669 | $ | 2,649 | |||||
13. | STOCK-BASED COMPENSATION |
Years Ended December 31, | ||||||||
2021 | 2020 | |||||||
Grant date fair value | $ | 1.00 | $ | 1.56 | ||||
Expected term (in years) | 6.04 | 5.97 | ||||||
Expected volatility | 60 | % | 56 | % | ||||
Risk-free interest rate | 1.19 | % | 0.85 | % | ||||
Expected dividend yield | 0 | % | 0 | % | ||||
Options outstanding | Restricted stock units | |||||||||||||||||||||||
Number of shares | Weighted average exercise price | Weighted average remaining contractual term (years) | Aggregate intrinsic values ($‘000s) | Number of plan shares outstanding | Weighted average grant date fair value per share | |||||||||||||||||||
Balances, December 29, 2019 | 4,397,782 | $ | 3.60 | 8.46 | $ | 3,802 | — | $ | — | |||||||||||||||
Options granted | 3,042,592 | 3.01 | 120,000 | 3.91 | ||||||||||||||||||||
Options exercised | (25,000 | ) | 0.40 | |||||||||||||||||||||
Options forfeited | (1,290,613 | ) | 4.42 | |||||||||||||||||||||
Balances, December 31, 2020 | 6,124,761 | 3.15 | 8.30 | 942 | 120,000 | 3.91 | ||||||||||||||||||
Options granted | 2,700,752 | 1.78 | ||||||||||||||||||||||
Options exercised | (159,583 | ) | 2.31 | |||||||||||||||||||||
Options forfeited | (1,781,017 | ) | 3.20 | |||||||||||||||||||||
Balances, December 31, 2021 | 6,884,913 | 2.62 | 8.01 | 288 | 120,000 | 3.91 | ||||||||||||||||||
Options vested and exercisable — December 31, 2020 | 2,633,335 | 3.19 | 7.25 | 942 | ||||||||||||||||||||
Options vested and exercisable — December 31, 2021 | 3,727,228 | 2.85 | 7.31 | 288 | ||||||||||||||||||||
Years Ended December 31, | ||||||||
2021 | 2020 | |||||||
Cost of revenues | $ | 119 | $ | 147 | ||||
Research and development | 456 | 539 | ||||||
Sales and marketing | 638 | 684 | ||||||
General and administrative | 1,586 | 1,647 | ||||||
Total stock-based compensation | $ | 2,799 | $ | 3,017 | ||||
14. | COMMITMENTS AND CONTINGENCIES |
15. | EMPLOYEE BENEFIT PLAN |
16. | GEOGRAPHIC INFORMATION |
Years Ended December 31, | ||||||||||||||||
2021 | 2020 | |||||||||||||||
Amount | Percent | Amount | Percent | |||||||||||||
Total revenue, net | ||||||||||||||||
United States | $ | 56,577 | 94.7 | % | $ | 46,158 | 95.5 | % | ||||||||
Europe | 2,888 | 4.8 | % | 1,262 | 2.6 | % | ||||||||||
Australia | 298 | 0.5 | % | 908 | 1.9 | % | ||||||||||
Total | $ | 59,763 | 100.0 | % | $ | 48,328 | 100.0 | % | ||||||||
17. | SUBSEQUENT EVENTS |
September 30, 2022 | December 31, 2021 | |||||||
ASSETS | ||||||||
CURRENT ASSETS: | ||||||||
Cash and cash equivalents | $ | 2,107 | $ | 9,113 | ||||
Accounts receivable, net | 3,885 | 6,288 | ||||||
Inventory, net | 4,010 | 16.928 | ||||||
Prepaid expenses and other current assets | 10,442 | 2,053 | ||||||
Total current assets | 20,444 | 34,382 | ||||||
Restricted cash | 3,742 | 4,802 | ||||||
Operating lease right-of-use | 1,571 | 1,755 | ||||||
Property and equipment, net | 836 | 999 | ||||||
TOTAL ASSETS | $ | 26,593 | $ | 41,938 | ||||
LIABILITIES, MEZZANINE EQUITY AND STOCKHOLDERS’ DEFICIT | ||||||||
CURRENT LIABILITIES: | ||||||||
Accounts payable | $ | 2,386 | $ | 5,489 | ||||
Accrued expenses and other current liabilities | 11,383 | 11,713 | ||||||
Deferred revenue | 73 | 75 | ||||||
Notes payable, net | 15,760 | 10,912 | ||||||
Operating lease liability | 324 | 283 | ||||||
Total current liabilities | 29,926 | 28,472 | ||||||
NONCURRENT LIABILITIES: | ||||||||
Redeemable convertible preferred stock warrants liability | 4,180 | 4,955 | ||||||
Operating lease liability, net of current portion | 1,427 | 1,674 | ||||||
Other liabilities, noncurrent | 3,374 | 2,341 | ||||||
Notes payable, net of current portion | 55,187 | 41,197 | ||||||
Total liabilities | 94,094 | 78,639 | ||||||
COMMITMENTS AND CONTINGENCIES (NOTE 13) | ||||||||
MEZZANINE REDEEMABLE CONVERTIBLE PREFERRED STOCK | ||||||||
Redeemable convertible preferred stock: par value of $0.001 per share; 13,500,285 shares authorized as of September 30, 2022 and December 31, 2021; 11,147,927 issued and outstanding as of September 30, 2022 and December 31, 2021; aggregate liquidation value of $71.7 million as of September 30, 2022 and December 31, 2021 | 72,070 | 72,061 | ||||||
STOCKHOLDERS’ DEFICIT | ||||||||
Common stock; par value $0.001 per share; 27,000,000 shares authorized as of September 30, 2022 and December 31, 2021; 3,412,907 and 2,001,357 shares issued and outstanding as of September 30, 2022 and December 31, 2021, respectively | 523 | 521 | ||||||
Class B common stock; par value $0.001 per share; 815 shares authorized as of September 30, 2022 and December 31, 2021; 815 shares issued and outstanding as of September 30, 2022 and December 31, 2021 | 1 | 1 | ||||||
Additional paid-in capital | 179,388 | 178,309 | ||||||
Accumulated other comprehensive loss | 71 | (55 | ) | |||||
Accumulated deficit | (319,554 | ) | (287,538 | ) | ||||
Total stockholders’ deficit | (139,571 | ) | (108,762 | ) | ||||
TOTAL LIABILITIES, MEZZANINE EQUITY AND STOCKHOLDERS’ DEFICIT | $ | 26,593 | $ | 41,938 | ||||
Nine Months Ended September 30, | ||||||||
2022 | 2021 | |||||||
Product revenue, net | $ | 30,826 | $ | 47,961 | ||||
Cost of revenue | 31,504 | 48,664 | ||||||
Gross loss | (678 | ) | (703 | ) | ||||
Operating expenses | ||||||||
Research and engineering | 3,180 | 3,332 | ||||||
Sales and marketing | 4,517 | 5,571 | ||||||
General and administrative | 7,284 | 6,695 | ||||||
Litigation-related costs | 451 | 5,395 | ||||||
Transaction-related costs | 1,893 | — | ||||||
Total operating expenses | 17,325 | 20,993 | ||||||
Loss from operations | (18,003 | ) | (21,696 | ) | ||||
Interest expense | (2,941 | ) | (3,735 | ) | ||||
Interest income | 10 | 4 | ||||||
Change in fair value of Simple Agreement for Future Equity (SAFE) Notes | (14,229 | ) | — | |||||
Loss on extinguishment of debt (Note 6) | — | (2,967 | ) | |||||
Other income, net | 2,096 | 1,725 | ||||||
Total other expense, net | (15,064 | ) | (4,973 | ) | ||||
Loss before provision for income taxes | (33,067 | ) | (26,669 | ) | ||||
Provision for income taxes | — | — | ||||||
Net loss | (33,067 | ) | (26,669 | ) | ||||
OTHER COMPREHENSIVE INCOME (LOSS): | ||||||||
Currency translation adjustment, net of tax effect of $0, for the nine months ended September 30, 2022 and 2021 | 126 | (42 | ) | |||||
Net loss and comprehensive loss | (32,941 | ) | (26,711 | ) | ||||
Redeemable convertible preferred stock accretion | (9 | ) | (16 | ) | ||||
Net loss and comprehensive loss to common stockholders | $ | (32,950 | ) | $ | (26,727 | ) | ||
Redeemable Convertible Preferred Stock | Common Stock | Class B Common Stock | Additional Paid- in Capital | Accumulated Other Comprehensive Loss | Accumulated Deficit | Total Stockholders’ Deficit | ||||||||||||||||||||||||||||||||||
Shares | Amount | Shares | Amount | Shares | Amount | Amount | Amount | Amount | Amount | |||||||||||||||||||||||||||||||
Balance at December 31, 2020 | 10,920,447 | $ | 71,152 | 1,841,452 | $ | 521 | 815 | $ | 1 | $ | 175,285 | $ | (68 | ) | $ | (233,101) | $ | (57,362 | ) | |||||||||||||||||||||
Exercise of warrants | 246,564 | 762 | 25,000 | — | — | — | 2 | — | — | 2 | ||||||||||||||||||||||||||||||
Exercise of options | — | — | 89,583 | — | — | — | 255 | — | — | 255 | ||||||||||||||||||||||||||||||
Repurchase of common stock | — | — | (24,678 | ) | — | — | — | — | — | — | — | |||||||||||||||||||||||||||||
Rescission of Series E-1 redeemable convertible preferred stock | (19,084 | ) | — | — | — | — | — | — | — | — | — | |||||||||||||||||||||||||||||
Stock- based compensation | — | — | — | — | — | — | 1,947 | — | — | 1,947 | ||||||||||||||||||||||||||||||
Currency translation adjustment | — | — | — | — | — | — | — | (42 | ) | — | (42 | ) | ||||||||||||||||||||||||||||
Redeemable convertible preferred stock accretion | — | 16 | — | — | — | — | (16 | ) | — | — | (16 | ) | ||||||||||||||||||||||||||||
Net loss | — | — | — | — | — | — | — | — | (26,669 | ) | (26,669 | ) | ||||||||||||||||||||||||||||
Balance at September 30, 2021 | 11,147,927 | $ | 71,930 | 1,931,357 | $ | 521 | 815 | $ | 1 | $ | 177,473 | $ | (110 | ) | $ | (259,770) | $ | (81,885 | ) | |||||||||||||||||||||
Balance at December 31, 2021 | 11,147,927 | $ | 72,061 | 2,001,357 | $ | 521 | 815 | $ | 1 | $ | 178,309 | $ | (55 | ) | $ | (287,538) | $ | (108,762 | ) | |||||||||||||||||||||
Adoption of ASU 2020-06 | — | — | — | — | — | — | (1,051 | ) | — | 1,051 | — | |||||||||||||||||||||||||||||
Exercise of warrants | — | — | 1,311,651 | 2 | — | — | 128 | — | — | 130 | ||||||||||||||||||||||||||||||
Repurchase of common stock | — | — | (101 | ) | — | — | — | — | — | — | — | |||||||||||||||||||||||||||||
Stock- based compensation | — | — | 100,000 | — | — | — | 2,011 | — | — | 2,011 | ||||||||||||||||||||||||||||||
Currency translation adjustment | — | — | — | — | — | — | — | 126 | — | 126 | ||||||||||||||||||||||||||||||
Redeemable convertible preferred stock accretion | — | 9 | — | — | — | — | 9 | — | — | (9 | ) | |||||||||||||||||||||||||||||
Net loss | — | — | — | — | — | — | — | — | (33,067 | ) | (33,067 | ) | ||||||||||||||||||||||||||||
Balance at September 30, 2022 | 11,147,927 | $ | 72,070 | 3,412,907 | $ | 523 | 815 | $ | 1 | $ | 179,388 | $ | 71 | $ | (319,554) | $ | (139,571 | ) | ||||||||||||||||||||||
Nine Months Ended September 30, | ||||||||
2022 | 2021 | |||||||
Cash Flows from Operating Activities | ||||||||
Net loss | $ | (33,067 | ) | $ | (26,669 | ) | ||
Adjustments to reconcile net loss to net cash used in operating activities: | ||||||||
Debt amortization and non- cash interest expense | 2,337 | 2,742 | ||||||
Loss on extinguishment of debt | — | 2,967 | ||||||
Stock- based compensation | 2,011 | 1,947 | ||||||
Change in fair value of redeemable convertible preferred stock warrant liability | (775 | ) | (339 | ) | ||||
Bad debt expense | 472 | — | ||||||
Depreciation expense | 219 | 918 | ||||||
Change in fair value of SAFE Notes | 14,229 | — | ||||||
Forgiveness of Paycheck Protection Plan Loan | (1,414 | ) | (1,433 | ) | ||||
Noncash operating lease expense | 184 | 261 | ||||||
Other | 44 | 23 | ||||||
Changes in operating assets and liabilities: | — | |||||||
Accounts receivable, net | 1,930 | 1,121 | ||||||
Inventory, net | 12,918 | (10,759 | ) | |||||
Prepaid expenses and other current assets | (8,388 | ) | 3,923 | |||||
Accounts payable | (3,103 | ) | (162 | ) | ||||
Accrued expenses and other current liabilities | (572 | ) | 1,714 | |||||
Deferred revenue | (1 | ) | (1,995 | ) | ||||
Operating lease liability | (207 | ) | (286 | ) | ||||
Other liabilities, noncurrent | 1,035 | 401 | ||||||
Net cash used in operating activities | (12,148 | ) | (25,626 | ) | ||||
Cash Flows from Investing Activities | ||||||||
Purchases of property and equipment | (207 | ) | (1,436 | ) | ||||
Proceeds from sale of property and equipment | 151 | 248 | ||||||
Net cash used in investing activities | (56 | ) | (1,188 | ) | ||||
Cash Flows from Financing Activities | ||||||||
Proceeds from issuance of notes payable, net | 8,500 | 33,415 | ||||||
Repayment of notes payable, net | (4,618 | ) | — | |||||
Proceeds from exercise of redeemable convertible preferred stock warrants | — | 515 | ||||||
Proceeds from exercise of stock options | 130 | 255 | ||||||
Net cash provided by financing activities | 4,012 | 34,185 | ||||||
Effect of Exchange Rate Changes | 126 | (42 | ) | |||||
Net Change in Cash, Cash Equivalents and Restricted Cash | (8,066 | ) | 7,329 | |||||
Cash, Cash Equivalents and Restricted Cash, beginning of year | 13,915 | 13,549 | ||||||
Cash, Cash Equivalents and Restricted Cash, end of year | $ | 5,849 | $ | 20,878 | ||||
Non- Cash Investing and Financing Activities | ||||||||
Forgiveness of Paycheck Protection Plan Loan | $ | (1,414 | ) | $ | (1,433 | ) | ||
1. | ORGANIZATION |
2. | SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES |
Nine months ended September 30, | ||||||||
2022 | 2021 | |||||||
Primary geographical markets | ||||||||
U.S. | $ | 26,566 | $ | 46,159 | ||||
International | 4,260 | 1,802 | ||||||
Total | $ | 30,826 | $ | 47,961 | ||||
Product sales | $ | 30,817 | $ | 47,938 | ||||
Royalty | 9 | 23 | ||||||
Total revenue | $ | 30,826 | $ | 47,961 | ||||
September 30, | December 31, | |||||||
2022 | 2021 | |||||||
Deferred revenue—beginning balance | $ | 75 | $ | 2,070 | ||||
Additions | 291 | 1,494 | ||||||
Revenue recognized | (293 | ) | (3,489 | ) | ||||
Deferred revenue—ending balance | $ | 73 | $ | 75 | ||||
September 30, | December 31, | |||||||
2022 | 2021 | |||||||
Cash and cash equivalents | $ | 2,107 | $ | 9,113 | ||||
Restricted cash | 3,742 | 4,802 | ||||||
Total cash, cash equivalents and restricted cash | $ | 5,849 | $ | 13,915 | ||||
September 30, | December 31, | |||||||
2022 | 2021 | |||||||
Finished goods | $ | 4,010 | $ | 16,928 | ||||
Work in progress | — | — | ||||||
Raw materials | — | — | ||||||
Total inventory, net | $ | 4,010 | $ | 16,928 | ||||
September 30, | December 31, | |||||||
2022 | 2021 | |||||||
Manufacturing equipment | $ | 3,227 | $ | 3,195 | ||||
Leasehold improvement | 875 | 864 | ||||||
Furniture, fixtures and office equipment | 79 | 66 | ||||||
| 4,181 | 4,125 | |||||||
Less: Accumulated depreciation | (3,345 | ) | (3,126 | ) | ||||
Total property and equipment, net | $ | 836 | $ | 999 | ||||
September 30, | December 31, | |||||||
2022 | 2021 | |||||||
Accrued purchases | $ | 3,950 | $ | 2,657 | ||||
Accrued rebates and credits | 696 | 1,967 | ||||||
Warranty cost, current | 93 | 87 | ||||||
Other taxes payable | 956 | 1,053 | ||||||
Customer deposits | 786 | 773 | ||||||
Accrued payroll | 629 | 784 | ||||||
Accrued interest | 150 | — | ||||||
Current portion of amount payable to a vendor (Note 13) | 1,420 | 1,699 | ||||||
SCI Term Loan and Revolving Loan amendment fees (Note 6) | 1,700 | 1,700 | ||||||
Other accrued liabilities | 1,003 | 993 | ||||||
Total accrued expenses and other current liabilities | $ | 11,383 | $ | 11,713 | ||||
September 30, | December 31, | |||||||
2022 | 2021 | |||||||
Beginning balance | $ | 1,738 | $ | 1,248 | ||||
Warranty settlements | (148 | ) | (135 | ) | ||||
Additions to warranty accrual | 277 | 625 | ||||||
Ending balance | $ | 1,867 | $ | 1,738 | ||||
Warranty cost, current | $ | 93 | $ | 87 | ||||
Warranty cost, noncurrent | 1,774 | 1,651 | ||||||
Total warranty cost | $ | 1,867 | $ | 1,738 | ||||
Nine Months Ended September 30, | ||||||||
2022 | 2021 | |||||||
Forgiveness of Paycheck Protection Program Loan (Note 6) | $ | 1,414 | 1,433 | |||||
Change in fair value of preferred stock warrants liability (Note 7) | 775 | 339 | ||||||
Others | (93 | ) | (47 | ) | ||||
Total other income, net | $ | 2,096 | $ | 1,725 | ||||
September 30, | December 31, | |||||||
2022 | 2021 | |||||||
2018 Bridge Notes | $ | 9,086 | $ | 7,076 | ||||
Payroll Protection Program Loan | — | 1,414 | ||||||
Simple Agreement for Future Equity Note | 50,230 | 34,001 | ||||||
Term and Revolver Loan | 4,957 | 9,618 | ||||||
Promissory Note | 6,674 | — | ||||||
Total notes payable, net | 70,947 | 52,109 | ||||||
Less current portion | (15,760 | ) | (10,912 | ) | ||||
Notes payable, net of current portion | $ | 55,187 | $ | 41,197 | ||||
September 30, | December 31, | As of December 31, | ||||||||||||||
2022 | 2021 | 2021 | 2020 | |||||||||||||
Principal | $ | 9,258 | $ | 7,777 | $ | 9,618 | $ | 10,000 | ||||||||
Less: unamortized debt discount | (172 | ) | (701 | ) | — | (746 | ) | |||||||||
Net carrying value | 9,086 | 7,076 | 9,618 | 9,254 | ||||||||||||
Less: current portion | (9,086 | ) | (7,076 | ) | (2,421 | ) | (83 | ) | ||||||||
Total noncurrent portion | $ | — | $ | — | $ | 7,197 | $ | 9,171 | ||||||||
September 30, | September 30, | As of December 31, | ||||||||||||||
2022 | 2021 | 2021 | 2020 | |||||||||||||
Amortization of debt discount | $ | 467 | $ | 1,160 | $ | 170 | $ | 49 | ||||||||
Contractual interest expense | 1,482 | 2,223 | 860 | 151 | ||||||||||||
Total interest expense | $ | 1,949 | $ | 3,383 | $ | 1,030 | $ | 200 | ||||||||
Effective interest rate of the liability component | 32.6 | % | 32.6 | % | ||||||||||||
Year | Amount | |||
2022 | $ | 2,421 | ||
2023 | 7,197 | |||
Total term and revolver loan | $ | 9,618 | ||
8. | REDEEMABLE CONVERTIBLE PREFERRED STOCK WARRANTS |
Amount | ||||
Balance, December 31, 2019 | $ | 2,810 | ||
Change in Fair Value included in Other income (expense), net | (1,085 | ) | ||
Balance, December 31, 2020 | $ | 1,725 | ||
Series E-1 warrants issued in connection with SCI Second amendment—included in Loss on debt extinguishment | $ | 1,191 | ||
Series E-1 warrants issued in connection with 2018 Bridge notes amendment—included in Notes payable, net of discounts | 731 | |||
Exercise of warrant | (251 | ) | ||
Change in Fair Value included in Loss on debt extinguishment relating to SCI Third amendment | 1,917 | |||
Change in Fair Value included in Other income (expense), net | (358 | ) | ||
Balance, December 31, 2021 | $ | 4,955 | ||
As of December 31, 2021 | ||||||||||||||||
Level 1 | Level 2 | Level 3 | Total | |||||||||||||
Financial liabilities: | ||||||||||||||||
Simple Agreement for Future Equity Note | $ | — | $ | — | $ | 34,001 | $ | 34,001 | ||||||||
Redeemable convertible preferred stock warrants liability | — | — | 4,955 | 4,955 | ||||||||||||
Total financial liabilities | $ | — | $ | — | $ | 38,956 | $ | 38,956 | ||||||||
As of December 31, 2020 | ||||||||||||||||
Level 1 | Level 2 | Level 3 | Total | |||||||||||||
Financial liabilities: | ||||||||||||||||
SAFE Note | $ | — | $ | — | $ | 2,000 | $ | 2,000 | ||||||||
Redeemable convertible preferred stock warrants liability | — | — | 1,725 | 1,725 | ||||||||||||
Total financial liabilities | $ | — | $ | — | $ | 3,725 | $ | 3,725 | ||||||||
Years Ended December 31, | ||||||||
2021 | 2020 | |||||||
Expected term (in years) | 5.98 -9.95 | 0.25 - 6.98 | ||||||
Expected volatility | 54.0% - 57.7% | 65.4% - 67.1% | ||||||
Risk-free interest rate | 1.35% - 1.52% | 0.09% - 0.65% | ||||||
Expected dividend yield | 0% | 0% | ||||||
As of December 31, 2021 | ||||||||||||||||||||
Shares Authorized | Shares Issued and Outstanding | Net Carrying Value | Conversion Price Per Share | Aggregate Liquidation Preference | ||||||||||||||||
Series E-1 | 7,324,607 | 5,348,050 | $ | 49,186 | $ | 9.17 | $ | 49,042 | ||||||||||||
Series D-1 | 375,801 | — | — | — | — | |||||||||||||||
Series C-1 | 1,509,508 | 1,509,508 | 13,060 | 8.66 | 13,072 | |||||||||||||||
Series B-1 | 785,471 | 785,471 | 4,237 | 5.40 | 4,242 | |||||||||||||||
Series A-1 | 3,504,898 | 3,504,898 | 5,578 | 1.52 | 5,327 | |||||||||||||||
| 13,500,285 | 11,147,927 | $ | 72,061 | $ | 71,683 | |||||||||||||||
As of December 31, 2020 | ||||||||||||||||||||
Shares Authorized | Shares Issued and Outstanding | Net Carrying Value | Conversion Price Per Share | Aggregate Liquidation Preference | ||||||||||||||||
Series E-1 | 7,324,607 | 5,367,134 | $ | 49,054 | $ | 9.17 | $ | 49,217 | ||||||||||||
Series D-1 | 375,801 | — | — | — | — | |||||||||||||||
Series C-1 | 1,509,508 | 1,509,508 | 13,055 | 8.66 | 13,072 | |||||||||||||||
Series B-1 | 785,471 | 750,177 | 4,037 | 5.40 | 4,051 | |||||||||||||||
Series A-1 | 3,504,898 | 3,293,628 | 5,006 | 1.52 | 5,006 | |||||||||||||||
| 13,500,285 | 10,920,447 | $ | 71,152 | $ | 71,346 | |||||||||||||||
10. | COMMON STOCK |
11. | RELATED PARTY TRANSACTIONS |
12. | INCOME TAXES |
Years Ended December 31, | ||||||||
2021 | 2020 | |||||||
Domestic | $ | (53,282 | ) | $ | (23,452 | ) | ||
Foreign | (1,155 | ) | (323 | ) | ||||
Total | $ | (54,437 | ) | $ | (23,775 | ) | ||
Years Ended December 31, | ||||||||
2021 | 2020 | |||||||
Income tax provision at statutory rate | 21.0 | % | 21.0 | % | ||||
State income taxes, net of federal benefit | 5.0 | % | 3.2 | % | ||||
Non-deductible expenses and other | -0.4 | % | -0.2 | % | ||||
Non-deductible warrant expense | 0.2 | % | 1.0 | % | ||||
Share-based compensation | -0.8 | % | -1.3 | % | ||||
Change in valuation allowance, net | -24.5 | % | -23.3 | % | ||||
Research and development credits | 0.1 | % | 0.1 | % | ||||
Foreign rate differential | -0.4 | % | -0.4 | % | ||||
Forgiveness PPP loan | 0.6 | % | 0.0 | % | ||||
Expired loss carry forward | -0.6 | % | -0.5 | % | ||||
Effective tax rate | 0.0 | % | -0.3 | % | ||||
As of December 31, | ||||||||
2021 | 2020 | |||||||
Deferred tax assets: | ||||||||
Net operating loss carryforwards | $ | 72,714 | $ | 61,488 | ||||
Operating lease liability | 508 | 647 | ||||||
Property and equipment, net | 430 | — | ||||||
Research and development credit carryforward | 672 | 597 | ||||||
Inventory reserve | 1,499 | 1,506 | ||||||
Accrued expenses and other reserves | 2,652 | 1,325 | ||||||
Stock-based compensation | 2,086 | 1,876 | ||||||
Total deferred tax assets | 80,561 | 67,439 | ||||||
Deferred tax liabilities: | ||||||||
Property and equipment, net | — | 85 | ||||||
Operating lease right-of-use | 426 | 552 | ||||||
Total deferred tax liabilities | 426 | 637 | ||||||
Gross deferred tax assets | 80,135 | 66,802 | ||||||
Less valuation allowance | (80,135 | ) | (66,802 | ) | ||||
Net deferred tax asset | $ | — | $ | — | ||||
Years Ended December 31, | ||||||||
2021 | 2020 | |||||||
Unrecognized tax benefits as of beginning of year | $ | 2,649 | $ | 2,635 | ||||
Increases related to current year tax positions | 20 | 14 | ||||||
| $ | 2,669 | $ | 2,649 | |||||
13. | STOCK-BASED COMPENSATION |
Years Ended December 31, | ||||||||
2021 | 2020 | |||||||
Grant date fair value | $ | 1.00 | $ | 1.56 | ||||
Expected term (in years) | 6.04 | 5.97 | ||||||
Expected volatility | 60 | % | 56 | % | ||||
Risk-free interest rate | 1.19 | % | 0.85 | % | ||||
Expected dividend yield | 0 | % | 0 | % | ||||
Options outstanding | Restricted stock units | |||||||||||||||||||||||
Number of shares | Weighted average exercise price | Weighted average remaining contractual term (years) | Aggregate intrinsic values ($‘000s) | Number of plan shares outstanding | Weighted average grant date fair value per share | |||||||||||||||||||
Balances, December 29, 2019 | 4,397,782 | $ | 3.60 | 8.46 | $ | 3,802 | — | $ | — | |||||||||||||||
Options granted | 3,042,592 | 3.01 | 120,000 | 3.91 | ||||||||||||||||||||
Options exercised | (25,000 | ) | 0.40 | |||||||||||||||||||||
Options forfeited | (1,290,613 | ) | 4.42 | |||||||||||||||||||||
Balances, December 31, 2020 | 6,124,761 | 3.15 | 8.30 | 942 | 120,000 | 3.91 | ||||||||||||||||||
Options granted | 2,700,752 | 1.78 | ||||||||||||||||||||||
Options exercised | (159,583 | ) | 2.31 | |||||||||||||||||||||
Options forfeited | (1,781,017 | ) | 3.20 | |||||||||||||||||||||
Balances, December 31, 2021 | 6,884,913 | 2.62 | 8.01 | 288 | 120,000 | 3.91 | ||||||||||||||||||
Options vested and exercisable — December 31, 2020 | 2,633,335 | 3.19 | 7.25 | 942 | ||||||||||||||||||||
Options vested and exercisable — December 31, 2021 | 3,727,228 | 2.85 | 7.31 | 288 | ||||||||||||||||||||
Years Ended December 31, | ||||||||
2021 | 2020 | |||||||
Cost of revenues | $ | 119 | $ | 147 | ||||
Research and development | 456 | 539 | ||||||
Sales and marketing | 638 | 684 | ||||||
General and administrative | 1,586 | 1,647 | ||||||
Total stock-based compensation | $ | 2,799 | $ | 3,017 | ||||
14. | COMMITMENTS AND CONTINGENCIES |
15. | EMPLOYEE BENEFIT PLAN |
16. | GEOGRAPHIC INFORMATION |
Years Ended December 31, | ||||||||||||||||
2021 | 2020 | |||||||||||||||
Amount | Percent | Amount | Percent | |||||||||||||
Total revenue, net | ||||||||||||||||
United States | $ | 56,577 | 94.7 | % | $ | 46,158 | 95.5 | % | ||||||||
Europe | 2,888 | 4.8 | % | 1,262 | 2.6 | % | ||||||||||
Australia | 298 | 0.5 | % | 908 | 1.9 | % | ||||||||||
Total | $ | 59,763 | 100.0 | % | $ | 48,328 | 100.0 | % | ||||||||
17. | SUBSEQUENT EVENTS |
September 30, 2022 | December 31, 2021 | |||||||
ASSETS | ||||||||
CURRENT ASSETS: | ||||||||
Cash and cash equivalents | $ | 2,107 | $ | 9,113 | ||||
Accounts receivable, net | 3,885 | 6,288 | ||||||
Inventory, net | 4,010 | 16.928 | ||||||
Prepaid expenses and other current assets | 10,442 | 2,053 | ||||||
Total current assets | 20,444 | 34,382 | ||||||
Restricted cash | 3,742 | 4,802 | ||||||
Operating lease right-of-use | 1,571 | 1,755 | ||||||
Property and equipment, net | 836 | 999 | ||||||
TOTAL ASSETS | $ | 26,593 | $ | 41,938 | ||||
LIABILITIES, MEZZANINE EQUITY AND STOCKHOLDERS’ DEFICIT | ||||||||
CURRENT LIABILITIES: | ||||||||
Accounts payable | $ | 2,386 | $ | 5,489 | ||||
Accrued expenses and other current liabilities | 11,383 | 11,713 | ||||||
Deferred revenue | 73 | 75 | ||||||
Notes payable, net | 15,760 | 10,912 | ||||||
Operating lease liability | 324 | 283 | ||||||
Total current liabilities | 29,926 | 28,472 | ||||||
NONCURRENT LIABILITIES: | ||||||||
Redeemable convertible preferred stock warrants liability | 4,180 | 4,955 | ||||||
Operating lease liability, net of current portion | 1,427 | 1,674 | ||||||
Other liabilities, noncurrent | 3,374 | 2,341 | ||||||
Notes payable, net of current portion | 55,187 | 41,197 | ||||||
Total liabilities | 94,094 | 78,639 | ||||||
COMMITMENTS AND CONTINGENCIES (NOTE 13) | ||||||||
MEZZANINE REDEEMABLE CONVERTIBLE PREFERRED STOCK | ||||||||
Redeemable convertible preferred stock: par value of $0.001 per share; 13,500,285 shares authorized as of September 30, 2022 and December 31, 2021; 11,147,927 issued and outstanding as of September 30, 2022 and December 31, 2021; aggregate liquidation value of $71.7 million as of September 30, 2022 and December 31, 2021 | 72,070 | 72,061 | ||||||
STOCKHOLDERS’ DEFICIT | ||||||||
Common stock; par value $0.001 per share; 27,000,000 shares authorized as of September 30, 2022 and December 31, 2021; 3,412,907 and 2,001,357 shares issued and outstanding as of September 30, 2022 and December 31, 2021, respectively | 523 | 521 | ||||||
Class B common stock; par value $0.001 per share; 815 shares authorized as of September 30, 2022 and December 31, 2021; 815 shares issued and outstanding as of September 30, 2022 and December 31, 2021 | 1 | 1 | ||||||
Additional paid-in capital | 179,388 | 178,309 | ||||||
Accumulated other comprehensive loss | 71 | (55 | ) | |||||
Accumulated deficit | (319,554 | ) | (287,538 | ) | ||||
Total stockholders’ deficit | (139,571 | ) | (108,762 | ) | ||||
TOTAL LIABILITIES, MEZZANINE EQUITY AND STOCKHOLDERS’ DEFICIT | $ | 26,593 | $ | 41,938 | ||||
Nine Months Ended September 30, | ||||||||
2022 | 2021 | |||||||
Product revenue, net | $ | 30,826 | $ | 47,961 | ||||
Cost of revenue | 31,504 | 48,664 | ||||||
Gross loss | (678 | ) | (703 | ) | ||||
Operating expenses | ||||||||
Research and engineering | 3,180 | 3,332 | ||||||
Sales and marketing | 4,517 | 5,571 | ||||||
General and administrative | 7,284 | 6,695 | ||||||
Litigation-related costs | 451 | 5,395 | ||||||
Transaction-related costs | 1,893 | — | ||||||
Total operating expenses | 17,325 | 20,993 | ||||||
Loss from operations | (18,003 | ) | (21,696 | ) | ||||
Interest expense | (2,941 | ) | (3,735 | ) | ||||
Interest income | 10 | 4 | ||||||
Change in fair value of Simple Agreement for Future Equity (SAFE) Notes | (14,229 | ) | — | |||||
Loss on extinguishment of debt (Note 6) | — | (2,967 | ) | |||||
Other income, net | 2,096 | 1,725 | ||||||
Total other expense, net | (15,064 | ) | (4,973 | ) | ||||
Loss before provision for income taxes | (33,067 | ) | (26,669 | ) | ||||
Provision for income taxes | — | — | ||||||
Net loss | (33,067 | ) | (26,669 | ) | ||||
OTHER COMPREHENSIVE INCOME (LOSS): | ||||||||
Currency translation adjustment, net of tax effect of $0, for the nine months ended September 30, 2022 and 2021 | 126 | (42 | ) | |||||
Net loss and comprehensive loss | (32,941 | ) | (26,711 | ) | ||||
Redeemable convertible preferred stock accretion | (9 | ) | (16 | ) | ||||
Net loss and comprehensive loss to common stockholders | $ | (32,950 | ) | $ | (26,727 | ) | ||
Redeemable Convertible Preferred Stock | Common Stock | Class B Common Stock | Additional Paid- in Capital | Accumulated Other Comprehensive Loss | Accumulated Deficit | Total Stockholders’ Deficit | ||||||||||||||||||||||||||||||||||
Shares | Amount | Shares | Amount | Shares | Amount | Amount | Amount | Amount | Amount | |||||||||||||||||||||||||||||||
Balance at December 31, 2020 | 10,920,447 | $ | 71,152 | 1,841,452 | $ | 521 | 815 | $ | 1 | $ | 175,285 | $ | (68 | ) | $ | (233,101) | $ | (57,362 | ) | |||||||||||||||||||||
Exercise of warrants | 246,564 | 762 | 25,000 | — | — | — | 2 | — | — | 2 | ||||||||||||||||||||||||||||||
Exercise of options | — | — | 89,583 | — | — | — | 255 | — | — | 255 | ||||||||||||||||||||||||||||||
Repurchase of common stock | — | — | (24,678 | ) | — | — | — | — | — | — | — | |||||||||||||||||||||||||||||
Rescission of Series E-1 redeemable convertible preferred stock | (19,084 | ) | — | — | — | — | — | — | — | — | — | |||||||||||||||||||||||||||||
Stock- based compensation | — | — | — | — | — | — | 1,947 | — | — | 1,947 | ||||||||||||||||||||||||||||||
Currency translation adjustment | — | — | — | — | — | — | — | (42 | ) | — | (42 | ) | ||||||||||||||||||||||||||||
Redeemable convertible preferred stock accretion | — | 16 | — | — | — | — | (16 | ) | — | — | (16 | ) | ||||||||||||||||||||||||||||
Net loss | — | — | — | — | — | — | — | — | (26,669 | ) | (26,669 | ) | ||||||||||||||||||||||||||||
Balance at September 30, 2021 | 11,147,927 | $ | 71,930 | 1,931,357 | $ | 521 | 815 | $ | 1 | $ | 177,473 | $ | (110 | ) | $ | (259,770) | $ | (81,885 | ) | |||||||||||||||||||||
Balance at December 31, 2021 | 11,147,927 | $ | 72,061 | 2,001,357 | $ | 521 | 815 | $ | 1 | $ | 178,309 | $ | (55 | ) | $ | (287,538) | $ | (108,762 | ) | |||||||||||||||||||||
Adoption of ASU 2020-06 | — | — | — | — | — | — | (1,051 | ) | — | 1,051 | — | |||||||||||||||||||||||||||||
Exercise of warrants | — | — | 1,311,651 | 2 | — | — | 128 | — | — | 130 | ||||||||||||||||||||||||||||||
Repurchase of common stock | — | — | (101 | ) | — | — | — | — | — | — | — | |||||||||||||||||||||||||||||
Stock- based compensation | — | — | 100,000 | — | — | — | 2,011 | — | — | 2,011 | ||||||||||||||||||||||||||||||
Currency translation adjustment | — | — | — | — | — | — | — | 126 | — | 126 | ||||||||||||||||||||||||||||||
Redeemable convertible preferred stock accretion | — | 9 | — | — | — | — | 9 | — | — | (9 | ) | |||||||||||||||||||||||||||||
Net loss | — | — | — | — | — | — | — | — | (33,067 | ) | (33,067 | ) | ||||||||||||||||||||||||||||
Balance at September 30, 2022 | 11,147,927 | $ | 72,070 | 3,412,907 | $ | 523 | 815 | $ | 1 | $ | 179,388 | $ | 71 | $ | (319,554) | $ | (139,571 | ) | ||||||||||||||||||||||
Nine Months Ended September 30, | ||||||||
2022 | 2021 | |||||||
Cash Flows from Operating Activities | ||||||||
Net loss | $ | (33,067 | ) | $ | (26,669 | ) | ||
Adjustments to reconcile net loss to net cash used in operating activities: | ||||||||
Debt amortization and non- cash interest expense | 2,337 | 2,742 | ||||||
Loss on extinguishment of debt | — | 2,967 | ||||||
Stock- based compensation | 2,011 | 1,947 | ||||||
Change in fair value of redeemable convertible preferred stock warrant liability | (775 | ) | (339 | ) | ||||
Bad debt expense | 472 | — | ||||||
Depreciation expense | 219 | 918 | ||||||
Change in fair value of SAFE Notes | 14,229 | — | ||||||
Forgiveness of Paycheck Protection Plan Loan | (1,414 | ) | (1,433 | ) | ||||
Noncash operating lease expense | 184 | 261 | ||||||
Other | 44 | 23 | ||||||
Changes in operating assets and liabilities: | — | |||||||
Accounts receivable, net | 1,930 | 1,121 | ||||||
Inventory, net | 12,918 | (10,759 | ) | |||||
Prepaid expenses and other current assets | (8,388 | ) | 3,923 | |||||
Accounts payable | (3,103 | ) | (162 | ) | ||||
Accrued expenses and other current liabilities | (572 | ) | 1,714 | |||||
Deferred revenue | (1 | ) | (1,995 | ) | ||||
Operating lease liability | (207 | ) | (286 | ) | ||||
Other liabilities, noncurrent | 1,035 | 401 | ||||||
Net cash used in operating activities | (12,148 | ) | (25,626 | ) | ||||
Cash Flows from Investing Activities | ||||||||
Purchases of property and equipment | (207 | ) | (1,436 | ) | ||||
Proceeds from sale of property and equipment | 151 | 248 | ||||||
Net cash used in investing activities | (56 | ) | (1,188 | ) | ||||
Cash Flows from Financing Activities | ||||||||
Proceeds from issuance of notes payable, net | 8,500 | 33,415 | ||||||
Repayment of notes payable, net | (4,618 | ) | — | |||||
Proceeds from exercise of redeemable convertible preferred stock warrants | — | 515 | ||||||
Proceeds from exercise of stock options | 130 | 255 | ||||||
Net cash provided by financing activities | 4,012 | 34,185 | ||||||
Effect of Exchange Rate Changes | 126 | (42 | ) | |||||
Net Change in Cash, Cash Equivalents and Restricted Cash | (8,066 | ) | 7,329 | |||||
Cash, Cash Equivalents and Restricted Cash, beginning of year | 13,915 | 13,549 | ||||||
Cash, Cash Equivalents and Restricted Cash, end of year | $ | 5,849 | $ | 20,878 | ||||
Non- Cash Investing and Financing Activities | ||||||||
Forgiveness of Paycheck Protection Plan Loan | $ | (1,414 | ) | $ | (1,433 | ) | ||
1. | ORGANIZATION |
2. | SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES |
As of December 31, | ||||||||
2021 | 2020 | |||||||
Principal | $ | 9,618 | $ | 10,000 | ||||
Less: unamortized debt discount | — | (746 | ) | |||||
Net carrying value | 9,618 | 9,254 | ||||||
Less: current portion | (2,421 | ) | (83 | ) | ||||
Total noncurrent portion | $ | 7,197 | $ | 9,171 | ||||
As of December 31, | ||||||||
2021 | 2020 | |||||||
Amortization of debt discount | $ | 170 | $ | 49 | ||||
Contractual interest expense | 860 | 151 | ||||||
Total interest expense | $ | 1,030 | $ | 200 | ||||
Year | Amount | |||
2022 | $ | 2,421 | ||
2023 | 7,197 | |||
Total term and revolver loan | $ | 9,618 | ||
8. | REDEEMABLE CONVERTIBLE PREFERRED STOCK WARRANTS |
Amount | ||||
Balance, December 31, 2019 | $ | 2,810 | ||
Change in Fair Value included in Other income (expense), net | (1,085 | ) | ||
Balance, December 31, 2020 | $ | 1,725 | ||
Series E-1 warrants issued in connection with SCI Second amendment—included in Loss on debt extinguishment | $ | 1,191 | ||
Series E-1 warrants issued in connection with 2018 Bridge notes amendment—included in Notes payable, net of discounts | 731 | |||
Exercise of warrant | (251 | ) | ||
Change in Fair Value included in Loss on debt extinguishment relating to SCI Third amendment | 1,917 | |||
Change in Fair Value included in Other income (expense), net | (358 | ) | ||
Balance, December 31, 2021 | $ | 4,955 | ||
As of December 31, 2021 | ||||||||||||||||
Level 1 | Level 2 | Level 3 | Total | |||||||||||||
Financial liabilities: | ||||||||||||||||
Simple Agreement for Future Equity Note | $ | — | $ | — | $ | 34,001 | $ | 34,001 | ||||||||
Redeemable convertible preferred stock warrants liability | — | — | 4,955 | 4,955 | ||||||||||||
Total financial liabilities | $ | — | $ | — | $ | 38,956 | $ | 38,956 | ||||||||
As of December 31, 2020 | ||||||||||||||||
Level 1 | Level 2 | Level 3 | Total | |||||||||||||
Financial liabilities: | ||||||||||||||||
SAFE Note | $ | — | $ | — | $ | 2,000 | $ | 2,000 | ||||||||
Redeemable convertible preferred stock warrants liability | — | — | 1,725 | 1,725 | ||||||||||||
Total financial liabilities | $ | — | $ | — | $ | 3,725 | $ | 3,725 | ||||||||
Years Ended December 31, | ||||||||
2021 | 2020 | |||||||
Expected term (in years) | 5.98 -9.95 | 0.25 - 6.98 | ||||||
Expected volatility | 54.0% - 57.7% | 65.4% - 67.1% | ||||||
Risk-free interest rate | 1.35% - 1.52% | 0.09% - 0.65% | ||||||
Expected dividend yield | 0% | 0% | ||||||
As of December 31, 2021 | ||||||||||||||||||||
Shares Authorized | Shares Issued and Outstanding | Net Carrying Value | Conversion Price Per Share | Aggregate Liquidation Preference | ||||||||||||||||
Series E-1 | 7,324,607 | 5,348,050 | $ | 49,186 | $ | 9.17 | $ | 49,042 | ||||||||||||
Series D-1 | 375,801 | — | — | — | — | |||||||||||||||
Series C-1 | 1,509,508 | 1,509,508 | 13,060 | 8.66 | 13,072 | |||||||||||||||
Series B-1 | 785,471 | 785,471 | 4,237 | 5.40 | 4,242 | |||||||||||||||
Series A-1 | 3,504,898 | 3,504,898 | 5,578 | 1.52 | 5,327 | |||||||||||||||
| 13,500,285 | 11,147,927 | $ | 72,061 | $ | 71,683 | |||||||||||||||
As of December 31, 2020 | ||||||||||||||||||||
Shares Authorized | Shares Issued and Outstanding | Net Carrying Value | Conversion Price Per Share | Aggregate Liquidation Preference | ||||||||||||||||
Series E-1 | 7,324,607 | 5,367,134 | $ | 49,054 | $ | 9.17 | $ | 49,217 | ||||||||||||
Series D-1 | 375,801 | — | — | — | — | |||||||||||||||
Series C-1 | 1,509,508 | 1,509,508 | 13,055 | 8.66 | 13,072 | |||||||||||||||
Series B-1 | 785,471 | 750,177 | 4,037 | 5.40 | 4,051 | |||||||||||||||
Series A-1 | 3,504,898 | 3,293,628 | 5,006 | 1.52 | 5,006 | |||||||||||||||
| 13,500,285 | 10,920,447 | $ | 71,152 | $ | 71,346 | |||||||||||||||
10. | COMMON STOCK |
11. | RELATED PARTY TRANSACTIONS |
12. | INCOME TAXES |
Years Ended December 31, | ||||||||
2021 | 2020 | |||||||
Domestic | $ | (53,282 | ) | $ | (23,452 | ) | ||
Foreign | (1,155 | ) | (323 | ) | ||||
Total | $ | (54,437 | ) | $ | (23,775 | ) | ||
Years Ended December 31, | ||||||||
2021 | 2020 | |||||||
Income tax provision at statutory rate | 21.0 | % | 21.0 | % | ||||
State income taxes, net of federal benefit | 5.0 | % | 3.2 | % | ||||
Non-deductible expenses and other | -0.4 | % | -0.2 | % | ||||
Non-deductible warrant expense | 0.2 | % | 1.0 | % | ||||
Share-based compensation | -0.8 | % | -1.3 | % | ||||
Change in valuation allowance, net | -24.5 | % | -23.3 | % | ||||
Research and development credits | 0.1 | % | 0.1 | % | ||||
Foreign rate differential | -0.4 | % | -0.4 | % | ||||
Forgiveness PPP loan | 0.6 | % | 0.0 | % | ||||
Expired loss carry forward | -0.6 | % | -0.5 | % | ||||
Effective tax rate | 0.0 | % | -0.3 | % | ||||
As of December 31, | ||||||||
2021 | 2020 | |||||||
Deferred tax assets: | ||||||||
Net operating loss carryforwards | $ | 72,714 | $ | 61,488 | ||||
Operating lease liability | 508 | 647 | ||||||
Property and equipment, net | 430 | — | ||||||
Research and development credit carryforward | 672 | 597 | ||||||
Inventory reserve | 1,499 | 1,506 | ||||||
Accrued expenses and other reserves | 2,652 | 1,325 | ||||||
Stock-based compensation | 2,086 | 1,876 | ||||||
Total deferred tax assets | 80,561 | 67,439 | ||||||
Deferred tax liabilities: | ||||||||
Property and equipment, net | — | 85 | ||||||
Operating lease right-of-use | 426 | 552 | ||||||
Total deferred tax liabilities | 426 | 637 | ||||||
Gross deferred tax assets | 80,135 | 66,802 | ||||||
Less valuation allowance | (80,135 | ) | (66,802 | ) | ||||
Net deferred tax asset | $ | — | $ | — | ||||
Years Ended December 31, | ||||||||
2021 | 2020 | |||||||
Unrecognized tax benefits as of beginning of year | $ | 2,649 | $ | 2,635 | ||||
Increases related to current year tax positions | 20 | 14 | ||||||
| $ | 2,669 | $ | 2,649 | |||||
13. | STOCK-BASED COMPENSATION |
Years Ended December 31, | ||||||||
2021 | 2020 | |||||||
Grant date fair value | $ | 1.00 | $ | 1.56 | ||||
Expected term (in years) | 6.04 | 5.97 | ||||||
Expected volatility | 60 | % | 56 | % | ||||
Risk-free interest rate | 1.19 | % | 0.85 | % | ||||
Expected dividend yield | 0 | % | 0 | % | ||||
Options outstanding | Restricted stock units | |||||||||||||||||||||||
Number of shares | Weighted average exercise price | Weighted average remaining contractual term (years) | Aggregate intrinsic values ($‘000s) | Number of plan shares outstanding | Weighted average grant date fair value per share | |||||||||||||||||||
Balances, December 29, 2019 | 4,397,782 | $ | 3.60 | 8.46 | $ | 3,802 | — | $ | — | |||||||||||||||
Options granted | 3,042,592 | 3.01 | 120,000 | 3.91 | ||||||||||||||||||||
Options exercised | (25,000 | ) | 0.40 | |||||||||||||||||||||
Options forfeited | (1,290,613 | ) | 4.42 | |||||||||||||||||||||
Balances, December 31, 2020 | 6,124,761 | 3.15 | 8.30 | 942 | 120,000 | 3.91 | ||||||||||||||||||
Options granted | 2,700,752 | 1.78 | ||||||||||||||||||||||
Options exercised | (159,583 | ) | 2.31 | |||||||||||||||||||||
Options forfeited | (1,781,017 | ) | 3.20 | |||||||||||||||||||||
Balances, December 31, 2021 | 6,884,913 | 2.62 | 8.01 | 288 | 120,000 | 3.91 | ||||||||||||||||||
Options vested and exercisable — December 31, 2020 | 2,633,335 | 3.19 | 7.25 | 942 | ||||||||||||||||||||
Options vested and exercisable — December 31, 2021 | 3,727,228 | 2.85 | 7.31 | 288 | ||||||||||||||||||||
Years Ended December 31, | ||||||||
2021 | 2020 | |||||||
Cost of revenues | $ | 119 | $ | 147 | ||||
Research and development | 456 | 539 | ||||||
Sales and marketing | 638 | 684 | ||||||
General and administrative | 1,586 | 1,647 | ||||||
Total stock-based compensation | $ | 2,799 | $ | 3,017 | ||||
14. | COMMITMENTS AND CONTINGENCIES |
15. | EMPLOYEE BENEFIT PLAN |
16. | GEOGRAPHIC INFORMATION |
Years Ended December 31, | ||||||||||||||||
2021 | 2020 | |||||||||||||||
Amount | Percent | Amount | Percent | |||||||||||||
Total revenue, net | ||||||||||||||||
United States | $ | 56,577 | 94.7 | % | $ | 46,158 | 95.5 | % | ||||||||
Europe | 2,888 | 4.8 | % | 1,262 | 2.6 | % | ||||||||||
Australia | 298 | 0.5 | % | 908 | 1.9 | % | ||||||||||
Total | $ | 59,763 | 100.0 | % | $ | 48,328 | 100.0 | % | ||||||||
17. | SUBSEQUENT EVENTS |
September 30, 2022 | December 31, 2021 | |||||||
ASSETS | ||||||||
CURRENT ASSETS: | ||||||||
Cash and cash equivalents | $ | 2,107 | $ | 9,113 | ||||
Accounts receivable, net | 3,885 | 6,288 | ||||||
Inventory, net | 4,010 | 16.928 | ||||||
Prepaid expenses and other current assets | 10,442 | 2,053 | ||||||
Total current assets | 20,444 | 34,382 | ||||||
Restricted cash | 3,742 | 4,802 | ||||||
Operating lease right-of-use | 1,571 | 1,755 | ||||||
Property and equipment, net | 836 | 999 | ||||||
TOTAL ASSETS | $ | 26,593 | $ | 41,938 | ||||
LIABILITIES, MEZZANINE EQUITY AND STOCKHOLDERS’ DEFICIT | ||||||||
CURRENT LIABILITIES: | ||||||||
Accounts payable | $ | 2,386 | $ | 5,489 | ||||
Accrued expenses and other current liabilities | 11,383 | 11,713 | ||||||
Deferred revenue | 73 | 75 | ||||||
Notes payable, net | 15,760 | 10,912 | ||||||
Operating lease liability | 324 | 283 | ||||||
Total current liabilities | 29,926 | 28,472 | ||||||
NONCURRENT LIABILITIES: | ||||||||
Redeemable convertible preferred stock warrants liability | 4,180 | 4,955 | ||||||
Operating lease liability, net of current portion | 1,427 | 1,674 | ||||||
Other liabilities, noncurrent | 3,374 | 2,341 | ||||||
Notes payable, net of current portion | 55,187 | 41,197 | ||||||
Total liabilities | 94,094 | 78,639 | ||||||
COMMITMENTS AND CONTINGENCIES (NOTE 13) | ||||||||
MEZZANINE REDEEMABLE CONVERTIBLE PREFERRED STOCK | ||||||||
Redeemable convertible preferred stock: par value of $0.001 per share; 13,500,285 shares authorized as of September 30, 2022 and December 31, 2021; 11,147,927 issued and outstanding as of September 30, 2022 and December 31, 2021; aggregate liquidation value of $71.7 million as of September 30, 2022 and December 31, 2021 | 72,070 | 72,061 | ||||||
STOCKHOLDERS’ DEFICIT | ||||||||
Common stock; par value $0.001 per share; 27,000,000 shares authorized as of September 30, 2022 and December 31, 2021; 3,412,907 and 2,001,357 shares issued and outstanding as of September 30, 2022 and December 31, 2021, respectively | 523 | 521 | ||||||
Class B common stock; par value $0.001 per share; 815 shares authorized as of September 30, 2022 and December 31, 2021; 815 shares issued and outstanding as of September 30, 2022 and December 31, 2021 | 1 | 1 | ||||||
Additional paid-in capital | 179,388 | 178,309 | ||||||
Accumulated other comprehensive loss | 71 | (55 | ) | |||||
Accumulated deficit | (319,554 | ) | (287,538 | ) | ||||
Total stockholders’ deficit | (139,571 | ) | (108,762 | ) | ||||
TOTAL LIABILITIES, MEZZANINE EQUITY AND STOCKHOLDERS’ DEFICIT | $ | 26,593 | $ | 41,938 | ||||
Nine Months Ended September 30, | ||||||||
2022 | 2021 | |||||||
Product revenue, net | $ | 30,826 | $ | 47,961 | ||||
Cost of revenue | 31,504 | 48,664 | ||||||
Gross loss | (678 | ) | (703 | ) | ||||
Operating expenses | ||||||||
Research and engineering | 3,180 | 3,332 | ||||||
Sales and marketing | 4,517 | 5,571 | ||||||
General and administrative | 7,284 | 6,695 | ||||||
Litigation-related costs | 451 | 5,395 | ||||||
Transaction-related costs | 1,893 | — | ||||||
Total operating expenses | 17,325 | 20,993 | ||||||
Loss from operations | (18,003 | ) | (21,696 | ) | ||||
Interest expense | (2,941 | ) | (3,735 | ) | ||||
Interest income | 10 | 4 | ||||||
Change in fair value of Simple Agreement for Future Equity (SAFE) Notes | (14,229 | ) | — | |||||
Loss on extinguishment of debt (Note 6) | — | (2,967 | ) | |||||
Other income, net | 2,096 | 1,725 | ||||||
Total other expense, net | (15,064 | ) | (4,973 | ) | ||||
Loss before provision for income taxes | (33,067 | ) | (26,669 | ) | ||||
Provision for income taxes | — | — | ||||||
Net loss | (33,067 | ) | (26,669 | ) | ||||
OTHER COMPREHENSIVE INCOME (LOSS): | ||||||||
Currency translation adjustment, net of tax effect of $0, for the nine months ended September 30, 2022 and 2021 | 126 | (42 | ) | |||||
Net loss and comprehensive loss | (32,941 | ) | (26,711 | ) | ||||
Redeemable convertible preferred stock accretion | (9 | ) | (16 | ) | ||||
Net loss and comprehensive loss to common stockholders | $ | (32,950 | ) | $ | (26,727 | ) | ||
Redeemable Convertible Preferred Stock | Common Stock | Class B Common Stock | Additional Paid- in Capital | Accumulated Other Comprehensive Loss | Accumulated Deficit | Total Stockholders’ Deficit | ||||||||||||||||||||||||||||||||||
Shares | Amount | Shares | Amount | Shares | Amount | Amount | Amount | Amount | Amount | |||||||||||||||||||||||||||||||
Balance at December 31, 2020 | 10,920,447 | $ | 71,152 | 1,841,452 | $ | 521 | 815 | $ | 1 | $ | 175,285 | $ | (68 | ) | $ | (233,101) | $ | (57,362 | ) | |||||||||||||||||||||
Exercise of warrants | 246,564 | 762 | 25,000 | — | — | — | 2 | — | — | 2 | ||||||||||||||||||||||||||||||
Exercise of options | — | — | 89,583 | — | — | — | 255 | — | — | 255 | ||||||||||||||||||||||||||||||
Repurchase of common stock | — | — | (24,678 | ) | — | — | — | — | — | — | — | |||||||||||||||||||||||||||||
Rescission of Series E-1 redeemable convertible preferred stock | (19,084 | ) | — | — | — | — | — | — | — | — | — | |||||||||||||||||||||||||||||
Stock- based compensation | — | — | — | — | — | — | 1,947 | — | — | 1,947 | ||||||||||||||||||||||||||||||
Currency translation adjustment | — | — | — | — | — | — | — | (42 | ) | — | (42 | ) | ||||||||||||||||||||||||||||
Redeemable convertible preferred stock accretion | — | 16 | — | — | — | — | (16 | ) | — | — | (16 | ) | ||||||||||||||||||||||||||||
Net loss | — | — | — | — | — | — | — | — | (26,669 | ) | (26,669 | ) | ||||||||||||||||||||||||||||
Balance at September 30, 2021 | 11,147,927 | $ | 71,930 | 1,931,357 | $ | 521 | 815 | $ | 1 | $ | 177,473 | $ | (110 | ) | $ | (259,770) | $ | (81,885 | ) | |||||||||||||||||||||
Balance at December 31, 2021 | 11,147,927 | $ | 72,061 | 2,001,357 | $ | 521 | 815 | $ | 1 | $ | 178,309 | $ | (55 | ) | $ | (287,538) | $ | (108,762 | ) | |||||||||||||||||||||
Adoption of ASU 2020-06 | — | — | — | — | — | — | (1,051 | ) | — | 1,051 | — | |||||||||||||||||||||||||||||
Exercise of warrants | — | — | 1,311,651 | 2 | — | — | 128 | — | — | 130 | ||||||||||||||||||||||||||||||
Repurchase of common stock | — | — | (101 | ) | — | — | — | — | — | — | — | |||||||||||||||||||||||||||||
Stock- based compensation | — | — | 100,000 | — | — | — | 2,011 | — | — | 2,011 | ||||||||||||||||||||||||||||||
Currency translation adjustment | — | — | — | — | — | — | — | 126 | — | 126 | ||||||||||||||||||||||||||||||
Redeemable convertible preferred stock accretion | — | 9 | — | — | — | — | 9 | — | — | (9 | ) | |||||||||||||||||||||||||||||
Net loss | — | — | — | — | — | — | — | — | (33,067 | ) | (33,067 | ) | ||||||||||||||||||||||||||||
Balance at September 30, 2022 | 11,147,927 | $ | 72,070 | 3,412,907 | $ | 523 | 815 | $ | 1 | $ | 179,388 | $ | 71 | $ | (319,554) | $ | (139,571 | ) | ||||||||||||||||||||||
Nine Months Ended September 30, | ||||||||
2022 | 2021 | |||||||
Cash Flows from Operating Activities | ||||||||
Net loss | $ | (33,067 | ) | $ | (26,669 | ) | ||
Adjustments to reconcile net loss to net cash used in operating activities: | ||||||||
Debt amortization and non- cash interest expense | 2,337 | 2,742 | ||||||
Loss on extinguishment of debt | — | 2,967 | ||||||
Stock- based compensation | 2,011 | 1,947 | ||||||
Change in fair value of redeemable convertible preferred stock warrant liability | (775 | ) | (339 | ) | ||||
Bad debt expense | 472 | — | ||||||
Depreciation expense | 219 | 918 | ||||||
Change in fair value of SAFE Notes | 14,229 | — | ||||||
Forgiveness of Paycheck Protection Plan Loan | (1,414 | ) | (1,433 | ) | ||||
Noncash operating lease expense | 184 | 261 | ||||||
Other | 44 | 23 | ||||||
Changes in operating assets and liabilities: | — | |||||||
Accounts receivable, net | 1,930 | 1,121 | ||||||
Inventory, net | 12,918 | (10,759 | ) | |||||
Prepaid expenses and other current assets | (8,388 | ) | 3,923 | |||||
Accounts payable | (3,103 | ) | (162 | ) | ||||
Accrued expenses and other current liabilities | (572 | ) | 1,714 | |||||
Deferred revenue | (1 | ) | (1,995 | ) | ||||
Operating lease liability | (207 | ) | (286 | ) | ||||
Other liabilities, noncurrent | 1,035 | 401 | ||||||
Net cash used in operating activities | (12,148 | ) | (25,626 | ) | ||||
Cash Flows from Investing Activities | ||||||||
Purchases of property and equipment | (207 | ) | (1,436 | ) | ||||
Proceeds from sale of property and equipment | 151 | 248 | ||||||
Net cash used in investing activities | (56 | ) | (1,188 | ) | ||||
Cash Flows from Financing Activities | ||||||||
Proceeds from issuance of notes payable, net | 8,500 | 33,415 | ||||||
Repayment of notes payable, net | (4,618 | ) | — | |||||
Proceeds from exercise of redeemable convertible preferred stock warrants | — | 515 | ||||||
Proceeds from exercise of stock options | 130 | 255 | ||||||
Net cash provided by financing activities | 4,012 | 34,185 | ||||||
Effect of Exchange Rate Changes | 126 | (42 | ) | |||||
Net Change in Cash, Cash Equivalents and Restricted Cash | (8,066 | ) | 7,329 | |||||
Cash, Cash Equivalents and Restricted Cash, beginning of year | 13,915 | 13,549 | ||||||
Cash, Cash Equivalents and Restricted Cash, end of year | $ | 5,849 | $ | 20,878 | ||||
Non- Cash Investing and Financing Activities | ||||||||
Forgiveness of Paycheck Protection Plan Loan | $ | (1,414 | ) | $ | (1,433 | ) | ||
1. | ORGANIZATION |
2. | SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES |
3. | REVENUE |
Nine months ended September 30, | ||||||||
2022 | 2021 | |||||||
Primary geographical markets | ||||||||
U.S. | $ | 26,566 | $ | 46,159 | ||||
International | 4,260 | 1,802 | ||||||
Total | $ | 30,826 | $ | 47,961 | ||||
Product sales | $ | 30,817 | $ | 47,938 | ||||
Royalty | 9 | 23 | ||||||
Total revenue | $ | 30,826 | $ | 47,961 | ||||
September 30, | December 31, | |||||||
2022 | 2021 | |||||||
Deferred revenue—beginning balance | $ | 75 | $ | 2,070 | ||||
Additions | 291 | 1,494 | ||||||
Revenue recognized | (293 | ) | (3,489 | ) | ||||
Deferred revenue—ending balance | $ | 73 | $ | 75 | ||||
4. | FINANCIAL STATEMENT COMPONENTS |
September 30, | December 31, | |||||||
2022 | 2021 | |||||||
Cash and cash equivalents | $ | 2,107 | $ | 9,113 | ||||
Restricted cash | 3,742 | 4,802 | ||||||
Total cash, cash equivalents and restricted cash | $ | 5,849 | $ | 13,915 | ||||
September 30, | December 31, | |||||||
2022 | 2021 | |||||||
Finished goods | $ | 4,010 | $ | 16,928 | ||||
Work in progress | — | — | ||||||
Raw materials | — | — | ||||||
Total inventory, net | $ | 4,010 | $ | 16,928 | ||||
September 30, | December 31, | |||||||
2022 | 2021 | |||||||
Manufacturing equipment | $ | 3,227 | $ | 3,195 | ||||
Leasehold improvement | 875 | 864 | ||||||
Furniture, fixtures and office equipment | 79 | 66 | ||||||
| 4,181 | 4,125 | |||||||
Less: Accumulated depreciation | (3,345 | ) | (3,126 | ) | ||||
Total property and equipment, net | $ | 836 | $ | 999 | ||||
September 30, | December 31, | |||||||
2022 | 2021 | |||||||
Accrued purchases | $ | 3,950 | $ | 2,657 | ||||
Accrued rebates and credits | 696 | 1,967 | ||||||
Warranty cost, current | 93 | 87 | ||||||
Other taxes payable | 956 | 1,053 | ||||||
Customer deposits | 786 | 773 | ||||||
Accrued payroll | 629 | 784 | ||||||
Accrued interest | 150 | — | ||||||
Current portion of amount payable to a vendor (Note 13) | 1,420 | 1,699 | ||||||
SCI Term Loan and Revolving Loan amendment fees (Note 6) | 1,700 | 1,700 | ||||||
Other accrued liabilities | 1,003 | 993 | ||||||
Total accrued expenses and other current liabilities | $ | 11,383 | $ | 11,713 | ||||
September 30, | December 31, | |||||||
2022 | 2021 | |||||||
Beginning balance | $ | 1,738 | $ | 1,248 | ||||
Warranty settlements | (148 | ) | (135 | ) | ||||
Additions to warranty accrual | 277 | 625 | ||||||
Ending balance | $ | 1,867 | $ | 1,738 | ||||
Warranty cost, current | $ | 93 | $ | 87 | ||||
Warranty cost, noncurrent | 1,774 | 1,651 | ||||||
Total warranty cost | $ | 1,867 | $ | 1,738 | ||||
Nine Months Ended September 30, | ||||||||
2022 | 2021 | |||||||
Forgiveness of Paycheck Protection Program Loan (Note 6) | $ | 1,414 | 1,433 | |||||
Change in fair value of preferred stock warrants liability (Note 7) | 775 | 339 | ||||||
Others | (93 | ) | (47 | ) | ||||
Total other income, net | $ | 2,096 | $ | 1,725 | ||||
5. | LEASES |
6. | NOTES PAYABLE, NET |
September 30, | December 31, | |||||||
2022 | 2021 | |||||||
2018 Bridge Notes | $ | 9,086 | $ | 7,076 | ||||
Payroll Protection Program Loan | — | 1,414 | ||||||
Simple Agreement for Future Equity Note | 50,230 | 34,001 | ||||||
Term and Revolver Loan | 4,957 | 9,618 | ||||||
Promissory Note | 6,674 | — | ||||||
Total notes payable, net | 70,947 | 52,109 | ||||||
Less current portion | (15,760 | ) | (10,912 | ) | ||||
Notes payable, net of current portion | $ | 55,187 | $ | 41,197 | ||||
September 30, | December 31, | |||||||
2022 | 2021 | |||||||
Principal | $ | 9,258 | $ | 7,777 | ||||
Less: unamortized debt discount | (172 | ) | (701 | ) | ||||
Net carrying value | 9,086 | 7,076 | ||||||
Less: current portion | (9,086 | ) | (7,076 | ) | ||||
Total noncurrent portion | $ | — | $ | — | ||||
September 30, | September 30, | |||||||
2022 | 2021 | |||||||
Amortization of debt discount | $ | 467 | $ | 1,160 | ||||
Contractual interest expense | 1,482 | 2,223 | ||||||
Total interest expense | $ | 1,949 | $ | 3,383 | ||||
Effective interest rate of the liability component | 32.6 | % | 32.6 | % | ||||
September 30, | December 31, | |||||||
2022 | 2021 | |||||||
Principal | $ | 5,000 | $ | 9,618 | ||||
Less: unamortized debt discount | (43 | ) | — | |||||
Net carrying value | 4,957 | 9,618 | ||||||
Less: current portion | — | (2,421 | ) | |||||
Total noncurrent portion | $ | 4,957 | $ | 7,197 | ||||
September 30, | September 31, | |||||||
2022 | 2021 | |||||||
Amortization of debt discount | $ | 64 | $ | 170 | ||||
Contractual interest expense | 692 | 664 | ||||||
Total interest expense | $ | 756 | $ | 834 | ||||
7. | REDEEMABLE PREFERRED STOCK WARRANTS |
Nine Months Ended September 30, | ||||||||
2022 | 2021 | |||||||
Beginning Balance—January 1 | $ | 4,955 | $ | 1,725 | ||||
Change in Fair Value included in Other income (expense), net | (775 | ) | (339 | ) | ||||
Exercise of warrant | — | (250 | ) | |||||
Series E-1 warrants issued in connection with SCI Second amendment—included in Loss on debt extinguishment | — | 1,191 | ||||||
Ending Balance—September 30 | $ | 4,180 | $ | 2,327 | ||||
As of September 30, 2022 | ||||||||||||||||
Level 1 | Level 2 | Level 3 | Total | |||||||||||||
Financial liabilities: | ||||||||||||||||
SAFE Note | $ | — | $ | — | $ | 50,230 | $ | 50,230 | ||||||||
Redeemable convertible preferred stock warrants liability | — | — | 4,180 | 4,180 | ||||||||||||
Total financial liabilities | $ | — | $ | — | $ | 54,410 | $ | 54,410 | ||||||||
As of December 31, 2021 | ||||||||||||||||
Level 1 | Level 2 | Level 3 | Total | |||||||||||||
Financial liabilities: | ||||||||||||||||
SAFE Note | $ | — | $ | — | $ | 34,001 | $ | 34,001 | ||||||||
Redeemable convertible preferred stock warrants liability | — | — | 4,955 | 4,955 | ||||||||||||
Total financial liabilities | $ | — | $ | — | $ | 38,956 | $ | 38,956 | ||||||||
Fair Value (in thousands) | Valuation Technique | Unobservable Input | Input | |||||
| $50,230 | Scenario-based analysis | Discount rate | 20 | % | ||||
Probability of SPAC business combination | 80 | % | ||||||
Probability of continuing business under non | ||||||||
merger scenario | 20 | % | ||||||
September 30, | December 31, | |||
2022 | 2021 | |||
Expected term (in years) | 5.23 - 9.20 | 5.98 - 9.95 | ||
Expected volatility | 55.4% - 58.6% | 54.0% - 57.7% | ||
Risk-free interest rate | 3.83% - 4.06% | 1.35% - 1.52% | ||
Expected dividend yield | 0% | 0% |
8. | REDEEMABLE CONVERTIBLE PREFERRED STOCK |
As of September 30, 2022 | ||||||||||||||||||||
Shares Authorized | Shares Issued and Outstanding | Net Carrying Value | Conversion Price Per Share | Aggregate Liquidation Preference | ||||||||||||||||
Series E-1 | 7,324,607 | 5,348,050 | $ | 49,191 | $ | 9.17 | $ | 49,042 | ||||||||||||
Series D-1 | 375,801 | — | — | — | — | |||||||||||||||
Series C-1 | 1,509,508 | 1,509,508 | 13,063 | 8.66 | 13,072 | |||||||||||||||
Series B-1 | 785,471 | 785,471 | 4,238 | 5.40 | 4,242 | |||||||||||||||
Series A-1 | 3,504,898 | 3,504,898 | 5,578 | 1.52 | 5,327 | |||||||||||||||
| 13,500,285 | 11,147,927 | $72,070 | $ 71,683 | |||||||||||||||||
As of December 31, 2021 | ||||||||||||||||||||
Shares Authorized | Shares Issued and Outstanding | Net Carrying Value | Conversion Price Per Share | Aggregate Liquidation Preference | ||||||||||||||||
Series E-1 | 7,324,607 | 5,348,050 | $ | 49,186 | $ | 9.17 | $ | 49,042 | ||||||||||||
Series D-1 | 375,801 | — | — | — | — | |||||||||||||||
Series C-1 | 1,509,508 | 1,509,508 | 13,060 | 8.66 | 13,072 | |||||||||||||||
Series B-1 | 785,471 | 785,471 | 4,237 | 5.40 | 4,242 | |||||||||||||||
Series A-1 | 3,504,898 | 3,504,898 | 5,578 | 1.52 | 5,327 | |||||||||||||||
| 13,500,285 | 11,147,927 | $72,061 | $ 71,683 | |||||||||||||||||
9. | COMMON STOCK |
10. | RELATED PARTY TRANSACTIONS |
11. | INCOME TAXES |
12. | STOCK-BASED COMPENSATION |
Nine Months Ended September 30, | ||||||||
2022 | 2021 | |||||||
Grant date fair value | $ | 1.03 | $ | 1.34 | ||||
Expected term (in years) | 6.21 | 6.13 | ||||||
Expected volatility | 60 | % | 60 | % | ||||
Risk- free interest rate | 1.98 | % | 1.01 | % | ||||
Expected dividend yield | 0 | % | 0 | % | ||||
Options outstanding | Restricted stock units | |||||||||||||||||||||||
Number of shares | Weighted average exercise price | Weighted average remaining contractual term (years) | Aggregate intrinsic values ($‘000s) | Number of plan shares outstanding | Weighted average grant date fair value per share | |||||||||||||||||||
Balances, December 31, 2021 | 6,884,913 | $ | 2.62 | 8.01 | $ | 288 | 120,000 | $ | 3.91 | |||||||||||||||
Options granted | 756,060 | 1.78 | ||||||||||||||||||||||
Options exercised | — | — | ||||||||||||||||||||||
Options forfeited | (702,426 | ) | 3.39 | (120,000 | ) | |||||||||||||||||||
Balances, September 30, 2022 | 6,938,547 | 2.18 | 7.94 | 9,441 | — | |||||||||||||||||||
Options vested and exercisable - | ||||||||||||||||||||||||
September 30, 2022 | 3,770,809 | 2.43 | 7.27 | 4,332 | ||||||||||||||||||||
Nine Months Ended September 30, | ||||||||
2022 | 2021 | |||||||
Cost of revenues | $ | 37 | $ | 93 | ||||
Research and development | 339 | 347 | ||||||
Sales and marketing | 466 | 477 | ||||||
General and administrative | 1,169 | 1,030 | ||||||
Total stock- based compensation | $ | 2,011 | $ | 1,947 | ||||
13. | COMMITMENTS AND CONTINGENCIES |
14. | EMPLOYEE BENEFIT PLAN |
15. | GEOGRAPHIC INFORMATION |
Nine Months Ended September 30, | ||||||||||||||||
2022 | 2021 | |||||||||||||||
Amount | Percent | Amount | Percent | |||||||||||||
Total revenue, net | ||||||||||||||||
United States | $ | 26,566 | 86.2 | % | $ | 46,159 | 96.2 | % | ||||||||
Europe | 4,260 | 13.8 | % | 1,674 | 3.5 | % | ||||||||||
Australia | — | 0.0 | % | 128 | 0.3 | % | ||||||||||
Total | $ | 30,826 | 100.0 | % | $ | 47,961 | 100.0 | % | ||||||||
16. | SUBSEQUENT EVENTS |
December 31, | ||||||||
2022 | 2021 | |||||||
Assets | ||||||||
Current assets: | ||||||||
| Cash | $ | 72,923 | $ | 277,583 | ||||
| Prepaid expenses - short term | 120,677 | 724,066 | ||||||
Total current assets | 193,600 | 1,001,649 | ||||||
| Prepaid expenses - long term | — | 113,073 | ||||||
| Cash and marketable securities held in Trust Account | 349,927,313 | 345,105,681 | ||||||
Total Assets | $ | 350,120,913 | $ | 346,220,403 | ||||
Liabilities, Redeemable Ordinary Shares and Shareholders’ Deficit | ||||||||
Current liabilities: | ||||||||
| Accounts payable and accrued expenses | $ | 4,858,215 | $ | 2,579,641 | ||||
| Convertible promissory note - related party | 828,600 | — | ||||||
Total current liabilities | 5,686,815 | 2,579,641 | ||||||
| Warrant liabilities | 2,978,333 | 8,488,250 | ||||||
| Deferred underwriters’ discount payable | 3,018,750 | 12,075,000 | ||||||
Total Liabilities | 11,683,898 | 23,142,891 | ||||||
Commitments and Contingencies (See Note 7) | ||||||||
| Class A Ordinary shares subject to possible redemption 34,500,000 shares subject to possible redemption at redemption value at December 31, 2022 and 2021, respectively | 349,927,313 | 345,000,000 | ||||||
Shareholders’ Deficit: | ||||||||
| Preference shares, $0.0001 par value; 1,000,000 shares authorized; none issued or outstanding at December 31, 2022 and 2021 | — | — | ||||||
| Class A, $0.0001 par value; 200,000,000 shares authorized at December 31, 2022 and 2021 | — | — | ||||||
| Class B, $0.0001 par value; 20,000,000 shares authorized; 8,625,000 shares issued and outstanding at December 31, 2022 and 2021 | 863 | 863 | ||||||
Additional paid-in capital | 6,057,438 | — | ||||||
| Accumulated deficit | (17,548,599 | ) | (21,923,351 | ) | ||||
Total Shareholders’ Deficit | (11,490,298 | ) | (21,922,488 | ) | ||||
Total Liabilities, Redeemable Ordinary Shares and Shareholders’ Deficit | $ | 350,120,913 | $ | 346,220,403 | ||||
For the Year Ended December 31, | ||||||||
2022 | 2021 | |||||||
| Operating costs | $ | 4,407,058 | $ | 3,782,028 | ||||
Loss from operations | (4,407,058 | ) | (3,782,028 | ) | ||||
Other income (expense): | ||||||||
| Foreign currency exchange loss | (17,638 | ) | (1,475 | ) | ||||
| Interest income on marketable securities held in Trust Account | 4,821,632 | 105,681 | ||||||
| Reduction of transaction costs incurred in connection with IPO | 271,687 | — | ||||||
| Change in fair value of warrant liabilities | 5,509,917 | 9,381,750 | ||||||
| Change in fair value of convertible note | (196,200 | ) | — | |||||
| Offering expenses related to warrant issuance | — | (575,278 | ) | |||||
Total other income, net | 10,389,398 | 8,910,678 | ||||||
Net income | $ | 5,982,340 | $ | 5,128,650 | ||||
| Weighted average shares outstanding, Class A ordinary shares subject to possible redemption | 34,500,000 | 28,828,767 | ||||||
| Basic and diluted net income per share, Class A ordinary shares subject to possible redemption | $ | 0.14 | $ | 0.14 | ||||
| Weighted average shares outstanding, Class B ordinary shares | 8,625,000 | 8,440,068 | ||||||
| Basic and diluted net income per share, Class B ordinary shares | $ | 0.14 | $ | 0.14 | ||||
Class A Ordinary Shares | Class B Ordinary Shares | Additional Paid-in Capital | Accumulated Deficit | Total Shareholders’ Equity (Deficit) | ||||||||||||||||||||||||
Shares | Amount | Shares | Amount | |||||||||||||||||||||||||
Balance – December 31, 2020 | — | $ | — | 8,625,000 | $ | 863 | $ | 24,137 | $ | (5,494 | ) | $ | 19,506 | |||||||||||||||
| Sale of 34,500,000 Units on March 2, 2021 through public offering | 34,500,000 | 3,450 | — | — | — | — | 3,450 | |||||||||||||||||||||
| Excess of the fair value of private placement warrants over cash received | — | — | — | — | 1,880,000 | — | 1,880,000 | |||||||||||||||||||||
| Class A ordinary shares subject to possible redemption | (34,500,000 | ) | (3,450 | ) | — | — | — | — | (3,450 | ) | ||||||||||||||||||
| Remeasurement of Class A ordinary shares subject to redemption | — | — | — | — | (1,904,137 | ) | (27,046,507 | ) | (28,950,644 | ) | ||||||||||||||||||
| Net income | — | — | — | — | — | 5,128,650 | 5,128,650 | |||||||||||||||||||||
Balance – December 31, 2021 | — | — | 8,625,000 | 863 | — | (21,923,351 | ) | (21,922,488 | ) | |||||||||||||||||||
| Proceeds received on convertible note less than fair value | — | — | — | — | 592,600 | — | 592,600 | |||||||||||||||||||||
Accretion portion net against additional paid-in-capital | — | — | — | — | (592,600 | ) | — | (592,600 | ) | |||||||||||||||||||
| Accretion of Class A ordinary shares subject to possible redemption | — | — | — | — | (2,727,125 | ) | (1,607,588 | ) | (4,334,713 | ) | ||||||||||||||||||
| Reduction of deferred underwriting fee payable | — | — | — | — | 8,784,563 | — | 8,784,563 | |||||||||||||||||||||
| Net income | — | — | — | — | — | 5,982,340 | 5,982,340 | |||||||||||||||||||||
Balance – December 31, 2022 | — | $ | — | 8,625,000 | $ | 863 | $ | 6,057,483 | $ | (17,548,599 | ) | $ | (11,490,298 | ) | ||||||||||||||
For the Years Ended December 31. | ||||||||
2022 | 2021 | |||||||
Cash Flows from Operating Activities: | ||||||||
| Net income | $ | 5,982,340 | $ | 5,128,650 | ||||
Adjustments to reconcile net income to net cash used in operating activities: | ||||||||
| Interest earned on marketable securities held in Trust Account | (4,821,632 | ) | (105,681 | ) | ||||
| Change in fair value of warrant liabilities | (5,509,917 | ) | (9,381,750 | ) | ||||
| Change in fair value of convertible note | 196,200 | — | ||||||
| Change in deferred underwriting fee | (271,687 | ) | — | |||||
| Offering costs allocated to warrants | — | 575,278 | ||||||
| Changes in current assets and current liabilities: | ||||||||
| Prepaid expenses | 716,462 | (837,139 | ) | |||||
| Accounts payable and accrued expenses | 2,278,574 | 2,579,641 | ||||||
Net cash used in operating activities | (1,429,660 | ) | (2,041,001 | ) | ||||
Cash Flows from Investing Activities: | ||||||||
| Investment of cash into Trust Account | — | (345,000,000 | ) | |||||
| Net cash used in investing activities | — | (345,000,000 | ) | |||||
Cash Flows from Financing Activities: | ||||||||
| Proceeds from Initial Public Offering, net of underwriters’ discount | — | 338,595,000 | ||||||
| Proceeds from issuance of Private Placement Warrants | — | 9,400,000 | ||||||
| Proceeds from issuance of Convertible Promissory Note | 1,225,000 | — | ||||||
| Repayment of promissory note to related party | — | (90,996 | ) | |||||
| Payments of offering costs | — | (585,420 | ) | |||||
Net cash provided by financing activities | 1,225,000 | 347,318,584 | ||||||
Net Change in Cash | (204,660 | ) | 277,583 | |||||
| Cash – Beginning | 277,583 | — | ||||||
Cash – Ending | $ | 72,923 | $ | 277,583 | ||||
Supplemental disclosure of noncash financing activities: | ||||||||
| Initial value of Class A ordinary shares subject to possible redemption | $ | — | $ | 345,000,000 | ||||
| Initial value of warrant liabilities | $ | — | $ | 17,870,000 | ||||
Deferred underwriters’ discount payable charged to additional paid-in capital | $ | — | $ | 12,075,000 | ||||
| Accretion of Class A ordinary shares subject to possible redemption | $ | 4,927,313 | $ | 28,950,644 | ||||
| Deferred offering costs paid under promissory note | $ | — | $ | 90,996 | ||||
As Previously Reported | Adjustment | As Revised | ||||||||||
Balance Sheet as of June 30, 2022 (unaudited) | ||||||||||||
| Total Liabilities | $ | 19,737,596 | $ | (205,869 | ) | $ | 19,531,727 | |||||
| Total Shareholders’ Equity (Deficit) | $ | (18,781,440 | ) | $ | 205,869 | $ | (18,575,571 | ) | ||||
Balance Sheet as of September 30, 2022 (unaudited) | ||||||||||||
| Total Liabilities | $ | 17,298,967 | $ | (205,869 | ) | $ | 17,093,098 | |||||
| Total Shareholders’ Equity (Deficit) | $ | (16,803,964 | ) | $ | 205,869 | $ | (16,598,095 | ) | ||||
As Previously Reported | Adjusted | As Revised | ||||||||||
Condensed Statement of Operations for the Three Months Ended June 30, 2022 (unaudited) | ||||||||||||
| Operational Costs | $ | 824,081 | $ | (205,869 | ) | $ | 618,212 | |||||
| Net Income (Loss) | $ | 2,025,986 | $ | 205,869 | $ | 2,231,855 | ||||||
| Basic and Diluted Net Income (Loss) per shares, Class A Ordinary Shares | $ | 0.05 | $ | — | $ | 0.05 | ||||||
| Basic and Diluted Net Income (Loss) per shares, Class B Ordinary Shares | $ | 0.05 | $ | — | $ | 0.05 | ||||||
Condensed Statement of Operations for the Six Months Ended June 30, 2022 (unaudited) | ||||||||||||
| Operational Costs | $ | 2,022,164 | $ | (205,869 | ) | $ | 1,816,295 | |||||
| Net Income (Loss) | $ | 3,321,266 | $ | 205,869 | $ | 3,527,135 | ||||||
| Basic and Diluted Net Income (Loss) per shares, Class A Ordinary Shares | $ | 0.08 | $ | — | $ | 0.08 | ||||||
| Basic and Diluted Net Income (Loss) per shares, Class B Ordinary Shares | $ | 0.08 | $ | — | $ | 0.08 | ||||||
Condensed Statement of Operations for the Nine Months Ended September 30, 2022 (unaudited) | ||||||||||||
| Operational Costs | $ | 2,508,476 | $ | (205,869 | ) | $ | 2,302,607 | |||||
| Net Income (Loss) | $ | 6,726,111 | $ | 205,869 | $ | 6,931,980 | ||||||
| Basic and Diluted Net Income (Loss) per shares, Class A Ordinary Shares | $ | 0.16 | $ | — | $ | 0.16 | ||||||
| Basic and Diluted Net Income (Loss) per shares, Class B Ordinary Shares | $ | 0.16 | $ | — | $ | 0.16 | ||||||
As Previously Reported | Adjusted | As Revised | ||||||||||
Condensed Statement of Cash Flows for the Six Months Ended June 30, 2022 (unaudited) | ||||||||||||
| Net Income (Loss) | $ | 3,321,266 | $ | 205,869 | $ | 3,527,135 | ||||||
| Accounts payable and accrued expenses | $ | 884,539 | $ | (205,869 | ) | $ | 678,670 | |||||
Condensed Statement of Cash Flows for the Nine Months Ended September 30, 2022 (unaudited) | ||||||||||||
| Net Income (Loss) | $ | 6,726,111 | $ | 205,869 | $ | 6,931,980 | ||||||
| Accounts payable and accrued expenses | $ | 226,411 | $ | (205,869 | ) | $ | 20,542 | |||||
Amortized Cost and Carrying Value | Gross Unrealized Gains | Gross Unrealized Losses | Fair Value as of December 31, 2022 | |||||||||||||
| Cash | $ | — | $ | — | $ | — | $ | — | ||||||||
| Money Market Funds | 349,927,313 | — | — | 349,927,313 | ||||||||||||
| $ | 349,927,313 | $ | — | $ | — | $ | 349,927,313 | |||||||||
Amortized Cost and Carrying Value | Gross Unrealized Gains | Gross Unrealized Losses | Fair Value as of December 31, 2021 | |||||||||||||
| Cash | $ | 484 | $ | — | $ | — | $ | 484 | ||||||||
| U.S. Treasury Securities | 345,105,197 | — | (6,065 | ) | 345,099,132 | |||||||||||
| $ | 345,105,681 | $ | — | $ | (6,065 | ) | $ | 345,099,616 | ||||||||
For the Years Ended December 31, | ||||||||||||||||
2022 | 2021 | |||||||||||||||
Class A | Class B | Class A | Class B | |||||||||||||
Basic and diluted net income per share: | ||||||||||||||||
| Numerator: | ||||||||||||||||
| Allocation of net income | $ | 4,785,872 | $ | 1,196,468 | $ | 3,967,193 | $ | 1,161,457 | ||||||||
| Denominator: | ||||||||||||||||
| Weighted average shares outstanding | 34,500,000 | 8,625,000 | 28,828,767 | 8,440,068 | ||||||||||||
| Basic and diluted net income per share | $ | 0.14 | $ | 0.14 | $ | 0.14 | $ | 0.14 | ||||||||
| Gross proceeds from IPO | $ | 345,000,000 | ||
| Less: | ||||
| Proceeds allocated to Public Warrants | (10,350,000 | ) | ||
| Ordinary share issuance costs | (18,600,644 | ) | ||
| Plus: | ||||
| Accretion of carrying value to redemption value | 28,950,644 | |||
Contingently redeemable ordinary share as of December 31, 2021 | 345,000,000 | |||
| Plus: | ||||
| Accretion of carrying value to redemption value | 4,927,313 | |||
Contingently redeemable ordinary share as of December 31, 2022 | $ | 349,927,313 | ||
December 31, | Quoted Prices In Active Markets | Significant Other Observable Inputs | Significant Other Unobservable Inputs | |||||||||||||
2022 | (Level 1) | (Level 2) | (Level 3) | |||||||||||||
| Description | ||||||||||||||||
| Investments held in trust account- U.S. Treasury Securities | 349,927,313 | 349,927,313 | — | — | ||||||||||||
| Total Investments held in Trust Account | $ | 349,927,313 | $ | 349,927,313 | $ | — | $ | — | ||||||||
| Warrant liabilities — Public warrants | $ | 1,725,000 | $ | 1,725,000 | $ | — | ||||||||||
| Warrant liabilities — Private warrants | 1,253,333 | — | — | 1,253,333 | ||||||||||||
| Convertible Note — April 1, 2022 | 338,200 | — | — | 338,200 | ||||||||||||
| Convertible Note — June 6, 2022 | 338,200 | — | — | 338,200 | ||||||||||||
| Convertible Note — December 14, 2022 | 152,200 | — | — | 152,200 | ||||||||||||
| Total Warrant liabilities | $ | 3,806,933 | $ | 1,725,000 | $ | 2,081,933 | ||||||||||
December 31, | Quoted Prices In Active Markets | Significant Other Observable Inputs | Significant Other Unobservable Inputs | |||||||||||||
2021 | (Level 1) | (Level 2) | (Level 3) | |||||||||||||
| Description | ||||||||||||||||
| Investments held in trust account- U.S. Money Market Fund | $ | 484 | $ | 484 | $ | — | $ | — | ||||||||
| Investments held in trust account- U.S. Treasury Securities | 345,105,197 | 345,105,197 | — | — | ||||||||||||
| Total Investments held in Trust Account | $ | 345,105,681 | $ | 345,105,681 | $ | — | $ | — | ||||||||
| Warrant liabilities — Public warrants | $ | 4,916,250 | $ | 4,916,250 | $ | — | $ | — | ||||||||
| Warrant liabilities — Private warrants | 3,572,000 | — | — | 3,572,000 | ||||||||||||
| Total Warrant liabilities | $ | 8,488,250 | $ | 4,916,250 | $ | — | $ | 3,572,000 | ||||||||
At December 31, | At December 31, | |||||||
2022 | 2021 | |||||||
| Share price | $ | 10.10 | $ | 9.68 | ||||
| Strike price | $ | 11.50 | $ | 11.50 | ||||
| Term (in years) | 0.38 | 0.50 | ||||||
| Volatility | de minimis | 10.50 | % | |||||
| Risk-free rate | 3.98 | % | 1.30 | % | ||||
| Dividend yield | 0.00 | % | 0.00 | % | ||||
Public | Private Placement | Warrant Liabilities | ||||||||||
| Fair value as of January 1, 2022 | $ | 4,916,250 | $ | 3,572,000 | $ | 8,488,250 | ||||||
| Change in valuation inputs or other assumptions | (3,191,250 | ) | (2,318,667 | ) | (5,509,917 | ) | ||||||
| Fair value as of December 31, 2022 | $ | 1,725,000 | $ | 1,253,333 | $ | 2,978,333 | ||||||
Public | Private Placement | Warrant Liabilities | ||||||||||
| Fair value as of January 1, 2021 | $ | — | $ | — | $ | — | ||||||
| Initial measurement on March 2, 2021 | 10,350,000 | 7,520,000 | 17,870,000 | |||||||||
| Change in valuation inputs or other assumptions | (5,433,750 | ) | (3,948,000 | ) | (9,381,750 | ) | ||||||
| Fair value as of December 31, 2021 | $ | 4,916,250 | $ | 3,572,000 | $ | 8,488,250 | ||||||
Private Placement | Public | Total Warrant Liabilities | ||||||||||
| Fair value as of January 1, 2022 | $ | 3,572,000 | $ | — | $ | 3,572,000 | ||||||
| Change in fair value | (2,318,667 | ) | — | (2,318,667 | ) | |||||||
| Fair value as of December 31, 2022 | $ | 1,253,333 | $ | — | $ | 1,253,333 | ||||||
Private Placement | Public | Total Warrant Liabilities | ||||||||||
| Fair value as of January 1, 2021 | $ | — | $ | — | $ | — | ||||||
| Initial measurement on March 2, 2021 | 7,520,000 | 10,350,000 | 17,870,000 | |||||||||
| Transfer to Level 1 | — | (10,350,000 | ) | (10,350,000 | ) | |||||||
| Change in fair value | (3,948,000 | ) | — | (3,948,000 | ) | |||||||
| Fair value as of December 31, 2021 | $ | 3,572,000 | $ | — | $ | 3,572,000 | ||||||
For | Against | Abstain | ||
| 35,047,305 | 326,543 | 0 |
For | Against | Abstain | ||
| 35,047,305 | 326,543 | 0 |
March 31, 2023 (Unaudited) | December 31, 2022 | |||||||
Assets | ||||||||
Current assets: | ||||||||
| Cash | $ | 47,541 | $ | 72,923 | ||||
| Prepaid expenses — short term | — | 120,677 | ||||||
Total current assets | 47,541 | 193,600 | ||||||
| Cash and marketable securities held in Trust Account | 116,571,577 | 349,927,313 | ||||||
Total Assets | $ | 116,619,118 | $ | 350,120,913 | ||||
Liabilities, Redeemable Ordinary Shares and Shareholders’ Deficit | ||||||||
Current liabilities: | ||||||||
| Accounts payable and accrued expenses | $ | 5,832,437 | $ | 4,858,215 | ||||
| Promissory Note — Related Party | 1,600,000 | — | ||||||
| Convertible Promissory Note — Related Party | 1,174,127 | 828,600 | ||||||
Total current liabilities | 8,606,564 | 5,686,815 | ||||||
| Warrant liabilities | 3,747,388 | 2,978,333 | ||||||
| Deferred underwriters’ discount payable | 3,018,750 | 3,018,750 | ||||||
Total Liabilities | 15,372,702 | 11,683,898 | ||||||
Commitments and Contingencies (See Note 6) | ||||||||
| Class A Ordinary shares subject to possible redemption 11,243,496 and 34,500,000 shares subject to possible redemption at redemption value at March 31, 2023 and December 31, 2022, respectively | 116,571,577 | 349,927,313 | ||||||
Shareholders’ Deficit: | ||||||||
| Preference shares, $0.0001 par value; 1,000,000 shares authorized; none issued or outstanding at March 31, 2023 and December 31, 2022 | — | — | ||||||
| Class A ordinary shares, $0.0001 par value; 200,000,000 shares authorized at March 31, 2023 and December 31, 2022 | — | — | ||||||
| Class B ordinary shares, $0.0001 par value; 20,000,000 shares authorized; 8,625,000 shares issued and outstanding at March 31, 2023 and December 31, 2022 | 863 | 863 | ||||||
Additional paid-in capital | 2,052,420 | 6,057,438 | ||||||
| Accumulated deficit | (17,378,444 | ) | (17,548,599 | ) | ||||
Total Shareholders’ Deficit | (15,325,161 | ) | (11,490,298 | ) | ||||
Total Liabilities, Redeemable Ordinary Shares and Shareholders’ Deficit | $ | 116,619,118 | $ | 350,120,913 | ||||
For the Three Months Ended March 31, | ||||||||
2023 | 2022 | |||||||
| Operating costs | $ | 1,620,336 | $ | 1,198,082 | ||||
Loss from operations | (1,620,336 | ) | (1,198,082 | ) | ||||
Other income (expense): | ||||||||
| Foreign currency exchange gain | 22 | 833 | ||||||
| Interest income on operating accounts | 33 | — | ||||||
| Interest income on marketable securities held in Trust Account | 2,817,216 | 109,863 | ||||||
| Change in fair value of warrant liabilities | (769,055 | ) | 2,382,667 | |||||
| Change in fair value of convertible note | (257,725 | ) | — | |||||
Total other income, net | 1,790,491 | 2,493,363 | ||||||
Net income | $ | 170,155 | $ | 1,295,281 | ||||
| Weighted average shares outstanding, Class A ordinary shares subject to possible redemption | 26,489,426 | 34,500,000 | ||||||
Basic and diluted net income per share, Class A ordinary shares subject to possible redemption | $ | 0.00 | $ | 0.03 | ||||
| Weighted average shares outstanding, Class B ordinary shares | 8,625,000 | 8,625,000 | ||||||
Basic and diluted net income per share, Class B ordinary shares | $ | 0.00 | $ | 0.03 | ||||
Ordinary Shares | Additional Paid-in Capital | Accumulated Deficit | Total Shareholders’ Deficit | |||||||||||||||||||||||||
Class A | Class B | |||||||||||||||||||||||||||
Shares | Amount | Shares | Amount | |||||||||||||||||||||||||
Balance as of December 31, 2022 | — | $ | — | 8,625,000 | $ | 863 | $ | 6,057,438 | $ | (17,548,599 | ) | $ | (11,490,298 | ) | ||||||||||||||
| Proceeds received on convertible note less than fair value | — | — | — | — | 12,198 | — | 12,198 | |||||||||||||||||||||
| Accretion of Class A ordinary shares subject to possible redemption | — | — | — | — | (4,017,216 | ) | — | (4,017,216 | ) | |||||||||||||||||||
| Net income | — | — | — | — | — | 170,155 | 170,155 | |||||||||||||||||||||
Balance as of March 31, 2023 | — | $ | — | 8,625,000 | $ | 863 | $ | 2,052,420 | $ | (17,378,444 | ) | $ | (15,325,161 | ) | ||||||||||||||
Ordinary Shares | Additional Paid-In Capital | Accumulated Deficit | Total Shareholders’ Deficit | |||||||||||||||||||||||||
Class A | Class B | |||||||||||||||||||||||||||
Shares | Amount | Shares | Amount | |||||||||||||||||||||||||
Balance as of December 31, 2021 | — | $ | — | 8,625,000 | $ | 863 | $ | — | $ | (21,923,351 | ) | $ | (21,922,488 | ) | ||||||||||||||
| Net income | — | — | — | — | — | 1,295,281 | 1,295,281 | |||||||||||||||||||||
Balance as of March 31, 2022 | — | $ | — | 8,625,000 | $ | 863 | $ | — | $ | (20,628,070 | ) | $ | (20,627,207 | ) | ||||||||||||||
For the Three Months Ended March 31, | ||||||||
2023 | 2022 | |||||||
Cash Flows from Operating Activities: | ||||||||
| Net income | $ | 170,155 | $ | 1,295,281 | ||||
| Adjustments to reconcile net income to net cash used in operating activities: | ||||||||
| Interest earned on marketable securities held in Trust Account | (2,817,216 | ) | (109,863 | ) | ||||
| Change in fair value of warrant liabilities | 769,055 | (2,382,667 | ) | |||||
| Change in fair value of convertible note | 257,725 | — | ||||||
| Changes in current assets and current liabilities: | ||||||||
| Prepaid expenses | 120,677 | 178,536 | ||||||
| Accounts payable and accrued expenses | 974,222 | 819,534 | ||||||
Net cash used in operating activities | (525,382 | ) | (199,179 | ) | ||||
Cash Flows from Investing Activities: | ||||||||
| Cash withdrawn from Trust Account in connection with redemptions | 236,172,952 | — | ||||||
Net cash provided by investing activities | 236,172,952 | — | ||||||
Cash Flows from Financing Activities: | ||||||||
| Proceeds from issuance of Convertible Promissory Note — Related Party | 100,000 | — | ||||||
| Proceeds from issuance of Promissory Note — Related Party | 1,600,000 | — | ||||||
| Redemption of ordinary shares | (237,372,952 | ) | — | |||||
Net cash used in financing activities | (235,672,952 | ) | — | |||||
Net Change in Cash | (25,382 | ) | (199,179 | ) | ||||
| Cash — Beginning | 72,923 | 277,583 | ||||||
Cash — Ending | $ | 47,541 | $ | 78,404 | ||||
Supplemental disclosure of noncash financing activities: | ||||||||
| Accretion of carrying value to redemption value | $ | 4,017,216 | $ | — | ||||
Fair Value as of March 31, 2023 | ||||
| Cash | $ | 116,571,577 | ||
| $ | 116,571,577 | |||
Fair Value as of December 31, 2022 | ||||
| Money Market Funds | $ | 349,927,313 | ||
| $ | 349,927,313 | |||
For the Three Months Ended March 31, | ||||||||||||||||
2023 | 2022 | |||||||||||||||
Class A | Class B | Class A | Class B | |||||||||||||
| Basic and diluted net income per share: | ||||||||||||||||
| Numerator: | ||||||||||||||||
| Allocation of net income | $ | 128,361 | $ | 41,794 | $ | 1,036,225 | $ | 259,056 | ||||||||
| Denominator: | ||||||||||||||||
| Weighted average shares outstanding | 26,489,426 | 8,625,000 | 34,500,000 | 8,625,000 | ||||||||||||
| Basic and diluted net income per share | $ | 0.00 | $ | 0.00 | $ | 0.03 | $ | 0.03 | ||||||||
| Gross proceeds from IPO | $ | 345,000,000 | ||
| Less: | ||||
| Proceeds allocated to Public Warrants | (10,350,000 | ) | ||
| Ordinary share issuance costs | (18,600,644 | ) | ||
| Plus: | ||||
| Accretion of carrying value to redemption value | 33,877,957 | |||
Contingently redeemable ordinary shares as of December 31, 2022 | $ | 349,927,313 | ||
| Less: | ||||
| Redemptions | (237,372,952 | ) | ||
| Plus: | ||||
| Accretion of carrying value to redemption value | 4,017,216 | |||
Contingently redeemable ordinary shares as of March 31, 2023 | $ | 116,571,577 | ||
March 31, 2023 | Quoted Prices In Active Markets (Level 1) | Significant Other Observable Inputs (Level 2) | Significant Other Unobservable Inputs (Level 3) | |||||||||||||
| Description | ||||||||||||||||
| Warrant liabilities — Public warrants | $ | 2,164,013 | — | $ | 2,164,013 | $ | — | |||||||||
| Warrant liabilities — Private warrants | 1,583,375 | — | — | 1,583,375 | ||||||||||||
| Convertible Note — April 1, 2022 | 443,067 | — | — | 443,067 | ||||||||||||
| Convertible Note — June 6, 2022 | 443,067 | — | — | 443,067 | ||||||||||||
| Convertible Note — December 14, 2022 | 287,993 | — | — | 287,993 | ||||||||||||
| Total Warrant liabilities | $ | 4,921,515 | — | $ | 2,164,013 | $ | 2,757,502 | |||||||||
December 31, 2022 | Quoted Prices In Active Markets (Level 1) | Significant Other Observable Inputs (Level 2) | Significant Other Unobservable Inputs (Level 3) | |||||||||||||
| Description | ||||||||||||||||
| Investments held in trust account- Money Market Funds | 349,927,313 | 349,927,313 | — | — | ||||||||||||
| Total Investments held in Trust Account | $ | 349,927,313 | $ | 349,927,313 | $ | — | $ | — | ||||||||
| Warrant liabilities — Public warrants | $ | 1,725,000 | $ | 1,725,000 | $ | — | ||||||||||
| Warrant liabilities — Private warrants | 1,253,333 | — | — | 1,253,333 | ||||||||||||
| Convertible Note — April 1, 2022 | 338,200 | — | — | 338,200 | ||||||||||||
| Convertible Note — June 6, 2022 | 338,200 | — | — | 338,200 | ||||||||||||
| Convertible Note — December 14, 2022 | 152,200 | — | — | 152,200 | ||||||||||||
| Total Warrant liabilities | $ | 3,806,933 | $ | 1,725,000 | $ | 2,081,933 | ||||||||||
At March 31, | At December 31, | |||||||
2023 | 2022 | |||||||
| Share price | $ | 10.32 | $ | 10.10 | ||||
| Strike price | $ | 11.50 | $ | 11.50 | ||||
| Term (in years) | 5.96 | 0.38 | ||||||
| Volatility | 12.50 | % | de minimis | |||||
| Risk-free rate | 4.66 | % | 3.98 | % | ||||
| Dividend yield | 0.00 | % | 0.00 | % | ||||
At March 31, | At December 31, | |||||||
2023 | 2022 | |||||||
| Share price | $ | 10.32 | $ | 10.10 | ||||
| Strike price | $ | 11.50 | $ | 11.50 | ||||
| Term (in years) | 0.33 | 0.38 | ||||||
| Risk-free rate | 4.88 | % | 4.54 | % | ||||
| Dividend yield | 0.00 | % | 0.00 | % | ||||
March 31, 2023 | ||||
| Fair value as of January 1, 2023 | $ | 828,600 | ||
| Borrowing during the quarter ended March 31, 2023 | 100,000 | |||
| Proceeds received in excess of initial fair value of convertible promissory note | (12,198 | ) | ||
| Change in fair value | 257,725 | |||
Fair value as of March 31, 2023 | $ | 1,174,127 | ||
Public | Private Placement | Warrant Liabilities | ||||||||||
| Fair value as of January 1, 2022 | $ | 4,916,250 | $ | 3,572,000 | $ | 8,488,250 | ||||||
| Change in valuation inputs or other assumptions | (3,191,250 | ) | (2,318,667 | ) | (5,509,917 | ) | ||||||
| Fair value as of December 31, 2022 | $ | 1,725,000 | $ | 1,253,333 | $ | 2,978,333 | ||||||
| Change in valuation inputs or other assumptions | 439,013 | 330,042 | 769,055 | |||||||||
| Fair value as of March 31, 2023 | $ | 2,164,013 | $ | 1,583,375 | $ | 3,747,388 | ||||||
Private Placement | Public | Total Warrant Liabilities | ||||||||||
| Fair value as of January 1, 2022 | $ | 3,572,000 | $ | — | $ | 3,572,000 | ||||||
| Change in fair value | (2,318,667 | ) | — | (2,318,667 | ) | |||||||
| Fair value as of December 31, 2022 | $ | 1,253,333 | $ | — | $ | 1,253,333 | ||||||
| Change in fair value | 330,042 | — | 330,042 | |||||||||
| Fair value as of March 31, 2023 | $ | 1,583,375 | $ | — | $ | 1,583,375 | ||||||
PART II
INFORMATION NOT REQUIRED IN PROSPECTUS
Item 13. Other Expenses of Issuance and Distribution.
The following table sets forth all costs and expenses, other than underwriting discounts and commissions, payable by us in connection with the sale of the securities being registered. All amounts shown are estimates except for the SEC registration fee.
| Amount | Amount | |||||||
SEC registration fee | $ | 18,547 | $ | |||||
Accountants’ fees and expenses | 75,000 | 75,000 | ||||||
Legal fees and expenses | 150,000 | 150,000 | ||||||
Printing fees | 75,000 | 75,000 | ||||||
Miscellaneous | 56,453 | 56,453 | ||||||
|
| |||||||
Total expenses | $ | 375,000 | $ | 375,000 | ||||
|
| |||||||
Discounts, concessions, commissions and similar selling expenses attributable to the sale of shares of common stock covered by this prospectus will be borne by the selling securityholders. We will pay all expenses (other than discounts, concessions, commissions and similar selling expenses) relating to the registration of the shares with the Securities and Exchange Commission, as estimated in the table above.
Item 14. Indemnification of Directors and Officers.
Section 145 of the Delaware General Corporation Law authorizes a court to award, or a corporation’s board of directors to grant, indemnity to directors and officers in terms sufficiently broad to permit such indemnification under certain circumstances for liabilities, including reimbursement for expenses incurred, arising under the Securities Act of 1933, as amended, or the Securities Act.
Our Charter provides for indemnification of our directors, officers, employees and other agents to the maximum extent permitted by the Delaware General Corporation Law, and our Bylaws provide for indemnification of our directors, officers, employees and other agents to the maximum extent permitted by the Delaware General Corporation Law.
In addition, we have entered into indemnification agreements with our directors, officers, and some employees containing provisions which are in some respects broader than the specific indemnification provisions contained in the Delaware General Corporation Law. The indemnification agreements will require us, among other things, to indemnify our directors against certain liabilities that may arise by reason of their status or service as directors and to advance their expenses incurred as a result of any proceeding against them as to which they could be indemnified.
Item 15. Recent Sales of Unregistered Securities.
The following list sets forth information regarding all unregistered securities sold by Freedom Acquisition I Corp. (“FACT”) since January 1, 2020:
(1) In December 30, 2020, the Freedom Acquisition I, LLC (the “Sponsor”) purchased 7,187,500 shares of FACT Class B common stock for an aggregate purchase price of $25,000, or approximately $0.003 per share, in connection with FACT’s organization. Upon the Closing of the Business Combination, each share of FACT Class B Common Stock automatically converted into a share of FACT Class A Common Stock in accordance with FACT’s certificate of incorporation, and all shares of Class A common stock were renamed common stock.
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(2) On March 2, 2021, FACT consummated the sale of 6,266,667 private placement warrants at a price of $1.50 per private placement warrant in a private placement to the Sponsor, generating gross proceeds of $9,400,000. Each private warrant is exercisable for one share of common stock of the combined company.
(3) In July 2023, upon the Closing of the Business Combination, we issued an aggregate of 5,598,488 shares of common stock of the combined company to qualified institutional buyers and accredited investors.
(4) In July 2023, upon the Closing of the Business Combination, we issued an aggregate of 716,668 warrants to purchase shares of common stock of the combined company to qualified institutional buyers and accredited investors.
(5) In July 2023, upon the Closing of the Business Combination, we issued an aggregate of 6,266,572 warrants to purchase shares of common stock of the combined company to qualified institutional buyers and accredited investors.
None of the foregoing transactions involved any underwriters, underwriting discounts or commissions, or any public offering. We believe each of these transactions was exempt from registration under the Securities Act in reliance on Section 4(a)(2) of the Securities Act (and Regulation D promulgated thereunder) as transactions by an issuer not involving any public offering or Rule 701 promulgated under Section 3(b) of the Securities Act as transactions by an issuer under benefit plans and contracts relating to compensation as provided under Rule 701. The recipients of the securities in each of these transactions represented their intentions to acquire the securities for investment only and not with a view to or for sale in connection with any distribution thereof, and appropriate legends were placed on the share certificates issued in these transactions. All recipients had adequate access, through their relationships with us, to information about us. The sales of these securities were made without any general solicitation or advertising.
Item 16. Exhibits and Financial Statement Schedules
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| * | Filed herewith. |
| ** | To be filed by amendment. |
| † | Certain of the exhibits and schedules to this Exhibit have been omitted in accordance with Regulation S-K Item 601. The Company agrees to furnish a copy of all omitted exhibits and schedules to the SEC upon its request. |
| # | Indicates a management contract or compensatory plan, contract or arrangement. |
Item 17. Undertakings
The undersigned Registrant hereby undertakes:
| (a) | To file, during any period in which offers or sales are being made, a post-effective amendment to this Registration Statement: |
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| (i) | To include any prospectus required by section 10(a)(3) of the Securities Act of 1933; |
| (ii) | To reflect in the prospectus any facts or events arising after the effective date of this Registration Statement (or the most recent post-effective amendment thereof) which, individually or in the aggregate, represent a fundamental change in the information set forth in this Registration Statement. Notwithstanding the foregoing, any increase or decrease in volume of securities offered (if the total dollar value of securities offered would not exceed that which was registered) and any deviation from the low or high end of the estimated maximum offering range may be reflected in the form of prospectus filed with the Commission pursuant to Rule 424(b) if, in the aggregate, the changes in volume and price represent no more than 20% change in the maximum aggregate offering price set forth in the “Calculation of Registration Fee” table in the effective registration statement; and |
| (iii) | To include any material information with respect to the plan of distribution not previously disclosed in this Registration Statement or any material change to such information in this Registration Statement. |
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| (b) | That, for the purpose of determining any liability under the Securities Act of 1933, each such post-effective amendment that contains a form of prospectus shall be deemed to be a new registration statement relating to the securities offered therein, and the offering of such securities at that time shall be deemed to be the initial bona fide offering thereof. |
| (c) | To remove from registration by means of a post-effective amendment any of the securities being registered which remain unsold at the termination of the offering. |
| (d) | That, for the purpose of determining liability under the Securities Act of 1933 to any purchaser, each prospectus filed pursuant to Rule 424(b) as part of a registration statement relating to an offering, other than registration statements relying on Rule 430B or other than prospectuses filed in reliance on Rule 430A, shall be deemed to be part of and included in the registration statement as of the date it is first used after effectiveness. Provided, however, that no statement made in a registration statement or prospectus that is part of the registration statement or made in a document incorporated or deemed incorporated by reference into the registration statement or prospectus that is part of the registration statement will, as to a purchaser with a time of contract of sale prior to such first use, supersede or modify any statement that was made in the registration statement or prospectus that was part of the registration statement or made in any such document immediately prior to such date of first use. |
| (e) | That, for the purpose of determining liability of the registrant under the Securities Act of 1933 to any purchaser in the initial distribution of the securities, the undersigned registrant undertakes that in a primary offering of securities of the undersigned registrant pursuant to this registration statement, regardless of the underwriting method used to sell the securities to the purchaser, if the securities are offered or sold to such purchaser by means of any of the following communications, |
| (i) | Any preliminary prospectus or prospectus of the undersigned registrant relating to the offering required to be filed pursuant to Rule 424; |
| (ii) | Any free writing prospectus relating to the offering prepared by or on behalf of the undersigned registrant or used or referred to by the undersigned registrant; |
| (iii) | The portion of any other free writing prospectus relating to the offering containing material information about the undersigned registrant or its securities provided by or on behalf of the undersigned registrant; and |
| (iv) | Any other communication that is an offer in the offering made by the undersigned registrant to the purchaser. |
Insofar as indemnification for liabilities arising under the Securities Act of 1933 may be permitted to directors, officers and controlling persons of the Registrant pursuant to the foregoing provisions, or otherwise, the Registrant has been advised that in the opinion of the SEC such indemnification is against public policy as expressed in the
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Securities Act of 1933 and is, therefore, unenforceable. In the event that a claim for indemnification against such liabilities (other than the payment by the Registrant of expenses incurred or paid by a director, officer or controlling person of the Registrant in the successful defense of any action, suit or proceeding) is asserted by such director, officer or controlling person in connection with the securities being registered, the Registrant will, unless in the opinion of its counsel the matter has been settled by controlling precedent, submit to a court of appropriate jurisdiction the question whether such indemnification by them is against public policy as expressed in the Securities Act of 1933 and will be governed by the final adjudication of such issue.
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SIGNATURES
Pursuant to the requirements of the Securities Act, the registrant has duly caused this registration statement to be signed on its behalf by the undersigned, thereunto duly authorized, in Fremont, California, on the day of August 8,December 22, 2023.
| COMPLETE SOLARIA, INC. | ||
| By: | /s/ | |
| Name: | ||
| Title: Chief Executive Officer | ||
POWER OF ATTORNEY
KNOW ALL BY THESE PRESENTS, that each person whose signature appears below hereby constitutes and appoints William J. Anderson and Brian Wuebbels, and each of them, as his true and lawful agents, proxies and attorneys-in-fact, with full power of substitution and resubstitution, for him or her and in his or her name, place and stead, in any and all capacities, to (i) act on, sign and file with the Securities and Exchange Commission any and all amendments (including post-effective amendments) to this registration statement together with all schedules and exhibits thereto and any subsequent registration statement filed pursuant to Rule 462(b) under the Securities Act of 1933, as amended, together with all schedules and exhibits thereto, (ii) act on, sign and file such certificates, instruments, agreements and other documents as may be necessary or appropriate in connection therewith, (iii) act on and file any supplement to any prospectus included in this registration statement or any such amendment or any subsequent registration statement filed pursuant to Rule 462(b) under the Securities Act of 1933, as amended, and (iv) take any and all actions which may be necessary or appropriate to be done, as fully for all intents and purposes as he might or could do in person, hereby approving, ratifying and confirming all that such agent, proxy and attorney-in-fact or any of his substitutes may lawfully do or cause to be done by virtue thereof.
Pursuant to the requirements of the Securities Act of 1933, this registration statement has been signed by the following persons in the capacities and on the dates indicated.
Signature | Title | Date | ||
/S/
| Chief Executive Officer (Principal Executive Officer) | |||
/S/ BRIAN WUEBBELS Brian Wuebbels | Chief Financial Officer (Principal Financial and Accounting Officer) | |||
Thurman J. Rodgers | Executive Chairman | |||
Antonio R. Alvarez | Director | |||
Adam Gishen | Director | |||
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|
|
| ||||
Ronald Pasek | Director | |||||
Tidjane Thiam | Director | |||||
Devin Whatley | Director | December 22, 2023 | ||||
* William J. Anderson | Director | December 22, 2023 | ||||
*By: /s/ Brian Wuebbels | ||
Brian Wuebbels | ||
| Attorney-in-Fact | ||
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