Complete Solaria Inc

Previous wording

You should read the following discussion and analysis of our financial condition and results of operations together with the unaudited condensed consolidated financial statements and related notes included elsewhere in this Quarterly Report on Form 10-Q and with our unaudited condensed consolidated financial statements and related notes included in our Annual Report on Form 10-K filed with the Securities and Exchange Commission on March 31, 2024, and related management’s discussion and analysis in Item 7 of the Annual Report on Form 10-K. This discussion contains forward-looking statements that involve risks and uncertainties. Our actual results could differ materially from those discussed below. Factors that could cause or contribute to such differences include those identified below and those discussed in the section titled “Risk Factors” included elsewhere in this Quarterly Report on Form 10-Q. Please also see the section titled “Special Note Regarding Forward-Looking Statements.”

Current wording

You should read the following discussion and analysis of our financial condition and results of operations together with the unaudited condensed consolidated financial statements and related notes included elsewhere in this Quarterly Report on Form 10-Q and with our audited consolidated financial statements and related notes included in our Annual Report on Form 10-K filed with the Securities and Exchange Commission on April 1, 2024, and related management’s discussion and analysis in Item 7 of the Annual Report on Form 10-K. This discussion contains forward-looking statements that involve risks and uncertainties. Our actual results could differ materially from those discussed below. Factors that could cause or contribute to such differences include those identified below and those discussed in the section titled “Risk Factors” included elsewhere in this Quarterly Report on Form 10-Q. Please also see the section titled “Special Note Regarding Forward-Looking Statements.”

Previous wording

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.

Current wording

Our fiscal quarters are thirteen-week periods within a standard calendar year. Each annual reporting period begins on January 1 and ends on December 31.

Previous wording

Cost of revenues consists primarily of the cost of solar energy systems, installation and other subcontracting costs. Cost of revenues also includes associated warranty costs, shipping and handling, allocated overhead costs, depreciation, and amortization of internally developed software.

Current wording

Cost of revenues consists primarily of the cost of solar energy systems, installation and other subcontracting costs. Cost of revenues also includes associated warranty costs, shipping and handling and allocated overhead costs.

Previous wording

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.

Current wording

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, depreciation and amortization of internally developed software, investor relations 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.

Previous wording

Other income (expense), net consists of changes in the fair value of our convertible notes, the impact of debt extinguishment, changes in the fair value of stock warrant liabilities and forward purchase agreements and other costs.

Current wording

Other (expense) income, net consists of changes in the fair value of our convertible notes, the impact of debt extinguishment, changes in the fair value of stock warrant liabilities and forward purchase agreements and other costs.

Previous wording

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 thirteen-week periods ended March 31, 2024 and April 2, 2023, stock-based compensation expense was $1.3 million and $1.0 million, respectively, of which zero and $0.7 million, respectively, related to discontinued operations. As of March 31, 2024, we had approximately $18.8 million of total unrecognized stock-based compensation expense related to stock options.

Current wording

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 thirteen-week periods ended June 30, 2024 and July 2, 2023, stock-based compensation expense was $1.2 million and $1.0 million, respectively, of which zero and $0.5 million, respectively, related to discontinued operations. For the twenty-six-week periods ended June 30, 2024 and July 2, 2023, stock-based compensation expense was $2.6 million and $2.0 million, respectively, of which zero and $1.3 million, respectively, related to discontinued operations. As of June 30, 2024, we had approximately $13.8 million of total unrecognized stock-based compensation expense related to stock options.

Previous wording

Revenues from solar energy system installations for the thirteen-weeks ended March 31, 2024 was $9.9 million compared to $15.8 million for the thirteen-weeks ended April 2, 2023. The decrease in solar energy system installation revenues of $5.9 million was primarily due to a decrease in the volume of solar energy system installations.

Current wording

Revenues from solar energy system installations for the thirteen weeks ended June 30, 2024 was $4.5 million compared to $24.8 million for the thirteen weeks ended July 2, 2023. The decrease in solar energy system installation revenues of $20.3 million was primarily due to a decrease in the volume of solar energy system installations.

Previous wording

Revenues from software enhanced services for the thirteen-weeks ended March 31, 2024 was $0.1 million compared to $0.8 million for the thirteen-weeks ended April 2, 2023. The decrease was the result of a shift in focus towards solar energy installations.

Current wording

Revenues from software enhanced services for the thirteen weeks ended June 30, 2024 was $0.02 million compared to $0.9 million for the thirteen weeks ended July 2, 2023. The decrease was the result of a shift in focus towards solar energy installations.

Previous wording

Cost of revenues for the thirteen-weeks ended March 31, 2024 was $7.8 million compared to $13.8 million for the thirteen-weeks ended April 2, 2023. The decrease in cost of revenues of $6.0 million, or 44%, was primarily due to the decrease in revenue of 40% and emphasis on managing costs.

Current wording

Cost of revenues for the thirteen weeks ended June 30, 2024 was $5.4 million compared to $19.6 million for the thirteen weeks ended July 2, 2023. The decrease in cost of revenues of $14.2 million, or 73%, was primarily due to the decrease in revenue of 82% and emphasis on managing costs.

Previous wording

Sales commissions for the thirteen-weeks ended March 31, 2024 was $3.1 million compared to $5.7 million for the thirteen-weeks ended April 2, 2023. The decrease of $2.6 million, or 45%, was primarily due to the decrease in revenues.

Current wording

Sales commissions for the thirteen weeks ended June 30, 2024 was $1.3 million compared to $8.8 million for the thirteen weeks ended July 2, 2023. The decrease of $7.5 million, or 85%, was primarily due to the decrease in revenues.

Previous wording

Sales and marketing expense for the thirteen-weeks ended March 31, 2024 was $1.6 million compared to $0.7 million for the thirteen-weeks ended April 2, 2023. The increase is attributable to an increase of $0.6 million in payroll, an increase of $0.2 million in travel related expenses.*** ***

Current wording

Sales and marketing expense for the thirteen weeks ended June 30, 2024 was $1.1 million compared to $2.3 million for the thirteen weeks ended July 2, 2023. The decrease is attributable to a reduction in workforce.

Previous wording

General and administrative costs for the thirteen-weeks ended March 31, 2024 was $5.1 million compared to $8.9 million for the thirteen-weeks ended April 2, 2023. The decrease was primarily attributed to decrease in bad debt expense of $2.4 million, decrease of $2.1 million in Outside Services, and an increase in stock-based compensation costs of $0.6 million.

Current wording

General and administrative costs for the thirteen weeks ended June 30, 2024 was $6.2 million compared to $7.7 million for the thirteen weeks ended July 2, 2023. The decrease was primarily attributed to a decrease in workforce and reductions in legal expenses previously incurred through negotiations of final payments with various law firms.

Previous wording

Other income, net for the thirteen-weeks ended March 31, 2024 increased by $1.2 million compared to the thirteen-weeks ended April 2, 2023. Other income, net in the thirteen-weeks ended March 31, 2024 was income of $1.5 million and was comprised of $7.2 million of income arising partially offset by $5.6 million of expense relating to changes in the fair value of our forward purchase agreements and $0.1 million relating to the residual costs of the disposed Solaria business.

Current wording

Other income, net for the thirteen weeks ended June 30, 2024, decreased by $11.5 million compared to the thirteen weeks ended July 2, 2023. Other income, net in the thirteen weeks ended June 30, 2024 was expense of $2.1 million and was comprised of $3.3 million of expense arising from changes in the fair value of warrants issued for our common stock, $1.3 million loss incurred on the conversion of two SAFE Agreements to shares of our common stock and $0.3 million of other costs, partially offset by $2.8 million of expense relating to changes in the fair value of our forward purchase agreements.

Previous wording

Other income, net for the thirteen-weeks ended April 2, 2023 was income of $0.3 million and was comprised of $0.2 million change in the fair value of liability-classified warrants and $.1 million related to the Solaria discontinued operations.

Current wording

Other income, net for the thirteen weeks ended July 2, 2023 was income of $9.4 million and was principally comprised of $9.2 million change in the fair value of liability-classified warrants and $0.2 million of net other income.

Previous wording

As a result of the factors discussed above, our net loss from continuing operations for the thirteen-weeks ended March 31, 2024 was $9.6 million, a decrease of $6.1 million, as compared to a net loss from continuing operations of $15.7 million for the thirteen-weeks ended April 2, 2023.

Current wording

As a result of the factors discussed above, our net loss from continuing operations for the thirteen-weeks ended June 30, 2024 was $13.9 million, an increase in loss by $7.1 million, as compared to a net loss from continuing operations of $6.8 million for the thirteen-weeks ended July 2, 2023.

Previous wording

Gross margin for the thirteen-weeks ended March 31, 2024 was 23% compared to 17% for the thirteen-weeks ended April 2, 2023. The improvement in gross margin was principally attributable to managing costs.

Current wording

Gross margin for the twenty-six weeks ended June 30, 2024 was 10% compared to 21% for the twenty-six weeks ended July 2, 2023. The decrease in gross margin was principally attributable to a decrease in revenues.

Previous wording

Since our inception, we have incurred losses and negative cash flows from operations. We incurred a net loss of $9.6 million during the thirteen-weeks ended March 31, 2024, and had an accumulated deficit of $364.5 million and current debt of $65.2 million as of March 31, 2024. We had cash and cash equivalents of $1.8 million as of March 31, 2024, which were held for working capital expenditures. We believe our operating losses and negative operating cash flows will continue into the foreseeable future. We have financed our operations primarily through sales of equity securities, issuance of convertible notes and cash generated from operations. Our cash equivalents are on deposit with major financial institutions. Our cash position raises substantial doubt regarding our ability to continue as a going concern for 12 months following the issuance of the unaudited condensed consolidated financial statements.

Current wording

Since our inception, we have incurred losses and negative cash flows from operations. We incurred a net loss from continuing operations of $13.9 million and $23.5 million during the thirteen and twenty-six weeks ended June 30, 2024, respectively, and had an accumulated deficit of $380.4 million and current debt of $67.5 million as of June 30, 2024. We had cash and cash equivalents of $1.8 million as of June 30, 2024, which were held for working capital expenditures. We believe our operating losses and negative operating cash flows will continue into the foreseeable future. We have financed our operations primarily through sales of equity securities, issuances of convertible notes and other convertible securities and cash generated from operations. Our cash equivalents are on deposit with major financial institutions. Our cash position raises substantial doubt regarding our ability to continue as a going concern for 12 months following the issuance of these unaudited condensed consolidated financial statements.

Previous wording

We will receive the proceeds from any cash exercise of warrants for shares of our common stock. The aggregate amount of proceeds could be up to $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 those warrants will decrease. The Private Warrants and Working Capital Warrants, as so identified in our unaudited condensed consolidated financial statements, may be exercised for cash or on a “cashless basis.” The Public Warrants and the Mergers 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 liquidity. As of May 13, 2024, the price of our common stock was $0.55 per share. The weighted average exercise price of the warrants was $8.70 as of March 31, 2024. We believe the likelihood that warrant holders will exercise their warrants, and therefore the amount of cash proceeds that we would receive, is dependent upon the market price of our common stock. If the market price for our common stock remains less than the exercise price, we believe warrant holders will be unlikely to exercise.

Current wording

We will receive the proceeds from any cash exercise of warrants for shares of our common stock. The aggregate amount of proceeds could be up to $252.2 million if all the warrants are exercised for cash. However, to the extent the warrants are exercised on a “cashless basis,” the amount of cash we would receive from the exercise of those warrants will decrease. The Private Warrants and Working Capital Warrants, as so identified in our unaudited condensed consolidated financial statements, may be exercised for cash or on a “cashless basis.” The Public Warrants and the Mergers 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 liquidity. As of August 13, 2024, the price of our common stock was $1.60 per share. The weighted average exercise price of the warrants was $7.80 as of June 30, 2024. We believe the likelihood that warrant holders will exercise their warrants, and therefore the amount of cash proceeds that we would receive, is dependent upon the market price of our common stock. If the market price for our common stock remains less than the exercise price, we believe warrant holders will be unlikely to exercise.

Previous wording

We concluded that the amendment represented was a troubled debt restructuring as we were experiencing financial difficulty, and the amended terms resulted in a concession to us. As the future undiscounted cash payments under the modified terms exceeded the carrying amount of the 2018 Notes on the date of modification, the modification was accounted for prospectively. The incremental repayment premium is being amortized to interest expense using the effective interest rate method. As of March 31, 2024 and December 31, 2023, the carrying value of the 2018 Notes was $11.4 million and $11.0 million, respectively. Interest expense recognized for the thirteen-weeks ended March 31, 2024 was $0.3 million. The terms of the 2018 Notes are currently being renegotiated.

Current wording

We concluded that the amendment represented was a troubled debt restructuring as we were experiencing financial difficulty, and the amended terms resulted in a concession to us. As the future undiscounted cash payments under the modified terms exceeded the carrying amount of the 2018 Notes on the date of modification, the modification was accounted for prospectively. The incremental repayment premium is being amortized to interest expense using the effective interest rate method. As of June 30, 2024 and December 31, 2023, the carrying value of the 2018 Notes was $11.7 million and $11.0 million, respectively. Interest expense recognized for the thirteen and twenty-six weeks ended June 30, 2024 was $0.4 million and $0.7 million, respectively. The terms of the 2018 Notes are currently being renegotiated.

Previous wording

The Revolving Loan has a term of thirty-six months, with the principal due at the end of the term and an annual interest rate of 7.75% or Prime rate plus 4.5%, whichever is higher. Interest expense recognized for the thirteen-weeks ended March 31, 2024 was $0.1 million. In October 2023, the Company entered into an Assignment and Acceptance Agreement whereby Structural Capital Investments III, LP assigned 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. The SCI Revolving Loan continued to remain outstanding as of March 31, 2024 and is currently being renegotiated.

Current wording

The Revolving Loan has a term of thirty-six months, with the principal due at the end of the term and an annual interest rate of 7.75% or Prime rate plus 4.5%, whichever is higher. Interest expense recognized for the thirteen and twenty-six weeks ended June 30, 2024 was $0.2 million and $0.4 million, respectively. In October 2023, the Company entered into an Assignment and Acceptance Agreement whereby Structural Capital Investments III, LP assigned 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. The SCI Revolving Loan was outstanding as of June 30, 2024 and was subsequently exchanged for equity securities and other consideration on July 1, 2024 as described in Note 20 – Subsequent Events of the notes to the condensed consolidated financial statements included in Part I, Item 1 of this Quarterly Report on Form 10-Q.

Previous wording

At March 31, 2024, the outstanding net debt amounted to $12.7 million, including accrued financing cost of $5.0 million compared to December 31, 2023, the balance outstanding was $12.2 million, including accrued financing cost of $4.5 million. We recognized interest expense of $0.5 million related to the Secured Credit Facility during the thirteen-weeks ended March 31, 2024.*** ***

Current wording

As of June 30, 2024, the outstanding net debt amounted to $13.1 million, including accrued financing cost of $5.5 million, and as of December 31, 2023, the balance outstanding was $12.2 million, including accrued financing cost of $4.5 million. We recognized interest expense of $0.4 million and $1.0 million related to the Secured Credit Facility during the thirteen weeks and twenty-six weeks ended June 30, 2024, respectively.*** ***

Previous wording

On May 1, 2024, we entered into a common stock purchase agreement (the “Common Stock Purchase Agreement”) with Kline Hill providing for (a) the cancellation of all indebtedness owed to Kline Hill by us, termination of all debt instruments by and between us and Kline Hill, and the satisfaction of all obligations owed to Kline Hill by us under the terminated debt instruments, (b) the issuance of 9,800,000 shares of our common stock to Kline Hill, (c) the issuance of warrants (the “Kline Hill Warrants” and the shares issuable therefrom, the “Warrant Shares”) to Kline Hill to purchase up to 3,700,000 shares of the our common stock, with an exercise price per share of $0.62 (the closing price per share of the our common stock as reported on the Nasdaq Capital Market of the date of the Agreement), and (d) a one-time $3,750,000 cash payment to Kline Hill upon the earlier of (i) us achieving $100,000,000 of trailing twelve month revenue, or (ii) us achieving $10,000,000 of trailing twelve month EBITDA. The Kline Hill Warrants will be sold to Kline Hill at a price of $0.125 per Warrant Share. The closing of the foregoing transactions will occur when the following conditions are met: Carlyle executes an agreement to cancel all debt owed to Carlyle by us, and all debt owed to Carlyle and its affiliates by the Company is no longer outstanding.

Current wording

On May 1, 2024, we entered into a common stock purchase agreement (the “Common Stock Purchase Agreement”) with Kline Hill providing for (a) the cancellation of all indebtedness owed to Kline Hill by us, termination of all debt instruments by and between us and Kline Hill, and the satisfaction of all obligations owed to Kline Hill by us under the terminated debt instruments, (b) the issuance of 9,800,000 shares of our common stock to Kline Hill, (c) the issuance of warrants (the “Kline Hill Warrants” and the shares issuable therefrom, the “Warrant Shares”) to Kline Hill to purchase up to 3,700,000 shares of the our common stock, with an exercise price per share of $0.62 (the closing price per share of the our common stock as reported on the Nasdaq Capital Market of the date of the Agreement), and (d) a one-time $3,750,000 cash payment to Kline Hill upon the earlier of (i) us achieving $100,000,000 of trailing twelve month revenue, or (ii) us achieving $10,000,000 of trailing twelve month EBITDA. The Kline Hill Warrants will be sold to Kline Hill at a price of $0.125 per Warrant Share. The closing of the foregoing transactions will occur when the following conditions are met: Carlyle executes an agreement to cancel all debt owed to Carlyle by us, and all debt owed to Carlyle and its affiliates by the Company is no longer outstanding. As of June 30, 2024, the Carlyle debt remained outstanding.

Previous wording

As of March 31, 2024 and December 31, 2023, we have recorded a liability of $35.8 million and $33.3 million, respectively, included in short-term debt in CS Solis on our unaudited condensed consolidated balance sheets. For the thirteen-weeks ended March 31, 2024, we have recorded accretion of the liability as interest expense of $2.5 million.

Current wording

As of June 30, 2024 and December 31, 2023, we have recorded a liability of $37.2 million and $33.3 million, respectively, included in short-term debt in CS Solis on our unaudited condensed consolidated balance sheets. For the thirteen and twenty-six weeks ended June 30, 2024, we have recorded accretion of the liability as interest expense of $1.3 million and $3.9 million, respectively.

Previous wording

We entered into four separate FPAs, three of which, associated with the obligation to issue 6,300,000 Shares, were entered into prior to the closing of the Mergers. Upon signing the FPAs, we incurred an obligation to issue a fixed number of shares to the FPA Sellers contingent upon the closing of the Mergers in addition to the terms and conditions associated with the settlement of the FPAs. We accounted for the contingent obligation to issue shares in accordance with ASC 815, Derivatives and Hedging, and recorded a liability and other income (expense), net based on the fair value upon of the obligation upon the signing of the FPAs. The liability was extinguished in July 2023 upon the issuance of Complete Solaria Common Stock to the FPA sellers.

Current wording

We entered into four separate FPAs, three of which, associated with the obligation to issue 6,300,000 Shares, were entered into prior to the closing of the Mergers. Upon signing the FPAs, we incurred an obligation to issue a fixed number of shares to the FPA Sellers contingent upon the closing of the Mergers in addition to the terms and conditions associated with the settlement of the FPAs. We accounted for the contingent obligation to issue shares in accordance with ASC 815, Derivatives and Hedging, and recorded a liability and other (expense) income, net based on the fair value upon of the obligation upon the signing of the FPAs. The liability was extinguished in July 2023 upon the issuance of Complete Solaria Common Stock to the FPA sellers.

Previous wording

Through the date of issuance of the Complete Solaria Common Stock in satisfaction of our obligation to issue shares around the closing of the Mergers, we recorded $35.5 million to other income (expense), net associated with the issuance of 6,720,000 shares of Complete Solaria Common Stock.

Current wording

Through the date of issuance of the Complete Solaria Common Stock in satisfaction of our obligation to issue shares around the closing of the Mergers, we recorded $35.5 million to other (expense) income, net associated with the issuance of 6,720,000 shares of Complete Solaria Common Stock.

Previous wording

As of the closing of the Mergers and issuance of the Complete Solaria Common Stock underlying the FPAs, the fair value of the prepaid FPAs was an asset balance of $0.1 million and was recorded on the Company’s consolidated balance sheets and within other income (expense), net on the unaudited condensed consolidated statements of operations and comprehensive loss. Subsequently, the change of fair value of the forward purchase liability amounted to an expense of $3.9 million for the fiscal year ended December 31, 2023. As of December 31, 2023, the forward purchase liabilities amounted to $3.8 million.

Current wording

As of the closing of the Mergers and issuance of the Complete Solaria Common Stock underlying the FPAs, the fair value of the prepaid FPAs was an asset balance of $0.1 million and was recorded on our unaudited condensed consolidated balance sheets and within other (expense) income, net on the unaudited condensed consolidated statements of operations and comprehensive loss. Subsequently, the change of fair value of the forward purchase liabilities amounted to income of $2.8 million for the thirteen weeks ended June 30, 2024, and expense of $2.8 million for the twenty-six weeks ended June 30, 2024, respectively. As of June 30, 2024, and December 31, 2023, the forward purchase liabilities amounted to $6.7 million and $3.8 million, respectively. Of the balances as of June 30, 2024 and December 31, 2023, $5.6 million and $3.2 million, respectively, are due to related parties. Refer to Note 19 – Related Party Transactions in our unaudited condensed consolidated financial statements for further details.

Previous wording

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

Current wording

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

Previous wording

On April 21, 2024, we entered into an amendment for each of our First SAFE and Second SAFE to convert the invested amounts into shares of the our common stock. The conversion share price was $0.36, calculated as the product of (i) $0.45, the closing price of our common stock on April 19, 2024, multiplied by (ii) 80%. The First SAFE and Second SAFE converted into 4,166,667 and 9,722,222 shares of our common stock, respectively.

Current wording

On April 21, 2024, we entered into an amendment for each of our First SAFE and Second SAFE to convert the invested amounts into shares of our common stock. The conversion share price was $0.36, calculated as the product of (i) $0.45, the closing price of our common stock on April 19, 2024, multiplied by (ii) 80%. The First SAFE and Second SAFE converted into 4,166,667 and 9,722,222 shares of our common stock, respectively.

Previous wording

Cash Flows for the -Thirteen-Weeks Ended March 31, 2024 and April 2, 2023

Current wording

Cash Flows for the Twenty-Six Weeks Ended June 30, 2024 and July 2, 2023

Previous wording

The following table summarizes Complete Solaria’s cash flows from operating, investing, and financing activities for the thirteen-weeks ended March 31, 2024 and April 2, 2023 (in thousands):

Current wording

The following table summarizes Complete Solaria’s cash flows from operating, investing, and financing activities for the twenty-six weeks ended June 30, 2024 and July 2, 2023 (in thousands):

Previous wording

Net cash used in operating activities from continuing operations of $4.9 million for the thirteen-weeks ended March 31, 2024 was primarily due to the net loss from continuing operations, net of tax of $9.6 million partially offset by non-cash charges of $3.5 million and net cash inflows of $1.1 million from changes in our operating assets and liabilities. Non-cash charges in our operating results consisted of a $5.6 million adjustment to our forward purchase agreement liabilities, $1.3 million stock-based compensation expense, $2.5 in million accretion of interest attributable to the CS Solis Debt, $1.0 million of other non-cash interest, $0.4 million of depreciation and amortization and $0.2 million of non-cash lease costs, partially offset by $7.2 million of income from the change in the fair value of our warrant liabilities and a $0.3 million decrease in our reserve for excess and obsolete inventory. The main drivers of net cash inflows derived from the changes in operating assets and liabilities were related to a decrease in accounts receivable, net of $5.3 million and a decrease in inventories of $0.6 million, partially offset by a decrease in accounts payable of $2.6 million, a decrease in accrued expenses and other liabilities of $1.6 million, a decrease in operating lease liabilities of $0.2 million and a decrease in deferred revenue of $0.4 million.

Current wording

Net cash used in operating activities from continuing operations of $7.6 million for the twenty-six weeks ended June 30, 2024 was primarily due to the net loss from continuing operations, net of tax of $23.5 million partially offset by non-cash charges of $12.3 million and net cash inflows of $3.6 million from changes in our operating assets and liabilities. Non-cash charges in our operating results consisted of $1.6 million of non-cash expense in connection with warrants issued for vendor services, a $2.8 million adjustment to our forward purchase agreement liabilities, $2.6 million stock-based compensation expense, $3.9 in million accretion of interest attributable to the CS Solis Debt, $2.0 million of other non-cash interest, $1.3 million loss arising from the loss on conversion of two SAFE Agreements to shares of our common stock, $0.7 million of depreciation and amortization, $0.3 million of non-cash lease costs, and $0.9 million of provision for credit losses, partially offset by $2.6 million of income from the change in the fair value of our warrant liabilities and a $1.2 million decrease in our reserve for excess and obsolete inventory. The main drivers of net cash inflows derived from the changes in operating assets and liabilities were related to a decrease in accounts receivable, net of $12.4 million and a decrease in inventories of $2.3 million, partially offset by an increase in prepaid and other current assets of $1.4 million, a decrease in accounts payable of $2.1 million, a decrease in accrued expenses and other liabilities of $6.1 million, a decrease in operating lease liabilities of $0.3 million and a decrease in deferred revenue of $1.2 million.

Previous wording

Net cash used in operating activities from continuing operations of $16.1 million for the thirteen-weeks ended April 2, 2023 was primarily due to the net loss from continuing operations, net of tax of $15.7 million and net cash outflows of $5.8 million from changes in operating assets and liabilities, adjusted for non-cash charges of $5.4 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, net of $3.2 million, an increase in prepaid and other current assets of $1.9 million, a decrease in deferred revenue of $0.9 million, an increase in other noncurrent assets of $0.8 million, a decrease in accrued expenses and other current liabilities of $0.6 million and an increase in inventories of $0.6 million, partially offset by an increase in accounts payable of $2.1 million and other of $0.1 million. Non-cash charges primarily consisted of a provision for credit losses of $2.1 million, non-cash interest expense of $1.2 million, a change in reserve for obsolete inventory of $0.8 million, accretion of long-term debt in CS Solis of $0.8 million, stock-based compensation of $0.3 million, and other changes, net of $0.2 million.

Current wording

Net cash used in operating activities from continuing operations of $27.8 million for the twenty-six weeks ended July 2, 2023 was primarily due to the net loss from continuing operations, net of tax of $22.5 million and net cash outflows of $5.3 million arising from $8.8 million in changes in operating assets and liabilities adjusted for non-cash charges of $3.5 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, net of $8.0 million, an increase in prepaid and other current assets of $2.7 million, an increase in inventories of $1.9 million, an increase in other noncurrent assets of $4.0 million and net other increase of $0.3 million. These cash outflows were partially offset by a $4.8 million increase in accounts payable and a $3.3 million increase in accrued expenses and other current liabilities. Non-cash adjustments of $3.5 million consisted of a provision for credit losses of $4.7 million, non-cash interest expense of $3.7 million, a change in reserve for obsolete inventory of $1.4 million, accretion of long-term debt in CS Solis of $1.5 million, stock-based compensation of $0.7 million, and other changes, depreciation and amortization of $0.4 million and non-cash lease expense of $0.5 million, partially offset by a $9.4 million decrease in the fair value of warrant liabilities.

Previous wording

The net decrease in cash, cash equivalents and restricted cash from discontinued operations of $0.2 million for the thirteen-weeks ended April 2, 2023 was entirely attributable to net cash provided by operating activities from discontinued operations. This decrease was primarily due to the net loss from discontinued operations, net of tax of $7.8 million, adjusted for non-cash charges of $2.2 million and net cash inflows of $5.4 million from changes in our operating assets and liabilities. Non-cash charges primarily consisted of depreciation and amortization expense of $0.8 million, stock-based compensation expense of $0.7 million and a $0.7 million change in allowance for credit losses. The main drivers of net cash inflows derived from the changes in operating assets and liabilities were related to a decrease in inventories of $5.9 million and an increase in accounts payable of $0.6 million, partially offset by a decrease in accrued expenses of $0.6 million, a decrease in deferred revenue of $0.2 million and changes in other operating assets and liabilities, net of $0.3 million.

Current wording

The net increase in cash, cash equivalents and restricted cash from discontinued operations of $1.0 million for the twenty-six weeks ended July 2, 2023 was entirely attributable to net cash provided by operating activities from discontinued operations. This decrease was primarily due to the net loss from discontinued operations, net of tax of $12.5 million, adjusted for non-cash charges of $3.6 million and net cash inflows of $9.9 million from changes in our operating assets and liabilities. Non-cash charges primarily consisted of depreciation and amortization expense of $1.6 million, stock-based compensation expense of $1.3 million and a $0.7 million change in allowance for credit losses. The main drivers of net cash inflows derived from the $9.9 million change in operating assets and liabilities were related to a decrease in accounts receivable of $6.1 million, a decrease in inventories of $5.6 million and an increase in accrued expenses and other current liabilities of $5.2 million partially offset by a decrease in accounts payable of $4.2 million, an increase in prepaid expenses and other current assets of $2.3 million and a decrease in other liabilities of $0.5 million.

Previous wording

Net cash used in investing activities was $0.5 million and $0.5 million for the thirteen-weeks ended March 31, 2024, and April 2, 2023, respectively, and attributable to additions to internal-use-software.

Current wording

Net cash used in investing activities was $0.9 million and $1.0 million for the twenty-six weeks ended June 30, 2024, and July 2, 2023, respectively, and attributable to additions to internal-use-software.

Previous wording

Net cash provided by financing activities of $5.0 million for the thirteen-weeks ended March 31, 2024 was primarily due to $5.0 million in net proceeds from the issuance of SAFE agreements to a related party and $0.3 million final payment on the settlement of the amount due to Polar Multi-Strategy Master Fund.

Current wording

Net cash provided by financing activities of $7.8 million for the twenty-six weeks ended June 30, 2024 was primarily due to $6.0 million in net proceeds from the issuance of SAFE agreements to a related party, $2.0 million deposit received from a related party in connection with a financing transaction, and $0.1 million in net proceeds from the exercise of stock options, partially offset by a $0.3 million final payment on the settlement of the amount due to Polar Multi-Strategy Master Fund.

Previous wording

Net cash provided by financing activities of $15.6 million for the thirteen-weeks ended April 2, 2023 was due to proceeds of $11.0 million in from the issuance of convertible notes and draws of $14.1 million, net of $9.6 million in repayments on our Secured Credit Facility and $0.1 million of proceeds from the issuance of shares of our common stock from the exercise of common stock options.

Current wording

Net cash provided by financing activities of $25.8 million for the twenty-six weeks ended July 2, 2023 was due to proceeds of $21.3 million in from the issuance of convertible notes, $14.1 million from the issuance of notes payable and $0.1 million from the issuance of shares of our common stock from the exercise of common stock options, partially offset by repayments of notes payable of $9.7 million.