SunPower Inc. (SPWR)

ITEM
2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

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

Overview

SunPower
Inc. is a residential solar and energy services company headquartered in Orem, Utah. We operate a technology-enabled platform that supports
a national network of sales partners, dealers, and installation professionals to deliver solar energy systems, battery storage solutions,
and related services to homeowners and homebuilders throughout the United States.

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

During
2025 and through the thirteen week period ended March 29, 2026 we significantly reshaped our business through a series of strategic acquisitions,
including the acquisition of Sunder Energy, LLC (“Sunder”), Ambia Energy LLC (“Ambia”) and Cobalt Power Systems,
Inc. (“Cobalt”). These acquisitions expanded our geographic footprint, dealer network, installation capacity, and national
sales presence. The operating results in the current quarter reflect the integration and ongoing operations of these acquired businesses.

As
further discussed below and in Note 16 – Segment Information to our unaudited condensed consolidated financial statements,
we have three reportable segments: Residential Solar Installation, New Homes Business and Dealer.

There
is substantial doubt about our ability to continue as a going concern within one year after the date that the unaudited condensed consolidated
financial statements are issued. The unaudited condensed consolidated financial statements included in this Quarterly Report on Form
10-Q have been prepared assuming our Company will continue to operate as a going concern, which contemplates the realization of assets
and settlement of liabilities in the normal course of business. They do not include any adjustments to reflect the possible future effects
on the recoverability and classification of assets or the amounts and classifications of liabilities that may result from uncertainty
related to our ability to continue as a going concern.

Recent
Developments

Acquisitions

We
continued the integration of recent acquisitions of Sunder and Ambia into our operating platform. In the thirteen week period ended March
29, 2026, we acquired Cobalt for $9.7 million. Cobalt focuses on large premium renewable energy systems across residential, new home,
multifamily and commercial projects and its operating results will be incorporated into the New Homes reportable segment.

Critical
accounting policies and estimates

See
“Management’s Discussion and Analysis of Financial Condition and Results of Operations – Critical Accounting Estimates”
and our consolidated financial statements and related notes included in our Annual Report on Form 10-K for the fiscal year ended December
28, 2025 for accounting policies and related estimates we believe are the most critical to understanding our consolidated financial statements,
financial condition and results of operations and which require complex management judgment and assumptions, or involve uncertainties.
These critical accounting estimates are revenue recognition accounting and accounting for business combinations. There have been no changes
to our critical accounting estimates or their application since the date of our Annual Report on Form 10-K for the fiscal year ended
December 28, 2025.

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Results
of operations

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

Thirteen-weeks
ended March 29, 2026 compared to the thirteen weeks ended March 30, 2025

The
following table sets forth our unaudited statements of operations from operations for the thirteen weeks ended March 29, 2026, and March
30, 2025 (in thousands):

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Revenues

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

The
decrease in Residential Solar Installation was driven primarily by lower installation volumes, reflecting softer consumer demand due
to higher interest rates as a result of an increase in financing costs for residential solar. In addition, the phase out of certain residential
Investment Tax Credits (“ITCs”) passed in 2025 as part of the One Big Beautiful Bill in conjunction with fewer customers
qualifying for financing makes it harder for a homeowner to make the decision quickly. The decrease also reflects fewer system activations
as we continued to optimize our sales channels and focus on streamlining our operations to enhance its customer experience.

New
Homes Business revenues decreased primarily due to lower construction activity and selective solar integration volumes from homebuilder
partners, due to higher interest rates and higher labor costs thus driving the overall costs of the home to increase. While regulatory
requirements force investments in solar in certain regions and communities, the pace has slowed down due to affordability. In states
and communities where regulatory requirements for new builds will not impact the demand of solar installation, homebuilders are not abandoning
solar they are offering it as an option versus a spec home. Additionally, there was a backlog of jobs from the SunPower Businesses acquisition
in 2024, for certain large homebuilder projects that contributed meaningfully to the prior-year quarter which did not recur in the current
period as we are rebuilding our pipeline. We are also building this business which we acquired out of bankruptcy in 2024 as part of the
SunPower Businesses acquisition.

Dealer
revenues and costs in the thirteen week period ended March 29, 2026 are attributable to the acquisition of Sunder on September 24, 2025.

Cost
of revenues and gross margins

Residential
Solar Installation cost of revenues decreased primarily attributable to lower installation activity resulting from softer consumer demand.
Higher interest rates increased financing costs for homeowners, and the expiration of certain ITCs reduced the economic incentive to
adopt residential solar. As a result, installation volumes declined, leading to lower associated material, labor, and subcontractor costs.

New
Homes Business cost of revenues decreased primarily driven by reduced solar installation option due to the demands of keeping home prices
down demanded by home buyers. Homebuilders slowed construction primarily reducing optional features due to elevated mortgage rates, affordability
pressures on buyers, and the reduced benefit of ITCs for solar-equipped new homes.

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Sales
commissions

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ITEM
7. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

You
should read the following discussion and analysis of our financial condition and results of operations together with the consolidated
financial statements and related notes included elsewhere in this 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 Annual Report on Form 10-K. Please also see the section titled “Special Note Regarding Forward-Looking
Statements.”

Overview

SunPower Inc. is the rebranded name of Complete Solaria, Inc. The rebranding
was effective April 22, 2025 and our legal name change became effective on October 16, 2025. We are headquartered in Orem, Utah.

40

Our
Company was originally incorporated in Delaware as Complete Solar, Inc. on February 22, 2010. In 2022, Complete Solar, Inc. implemented
a holding company reorganization creating Complete Solar Holding Corporation (“Complete Solar Holding”) as successor to Complete
Solar, Inc. Complete Solar Holding then acquired The Solaria Corporation in November 2022 and we changed our name to Complete Solaria,
Inc. We created a technology platform to offer clean energy products to homeowners by enabling a national network of sales partners and
build partners. Our sales partners generate solar installation contracts with homeowners on our behalf. To facilitate this process, we
provide the software tools, sales support and brand identity to our sales partners, making them competitive with national providers.
This turnkey solution makes it easy for anyone to sell solar.

On
July 18, 2023, we consummated a series of merger transactions contemplated by an Amended and Restated Business Combination Agreement
entered into with wholly-owned subsidiaries of Freedom Acquisition I Corp. (“FACT”) (“Mergers”), equating to
a reverse recapitalization for accounting purposes. Under the reverse recapitalization of accounting, FACT was treated as the acquired
company for financial statement reporting purposes. This determination was based on us having a majority of the voting power of the post-combination
company, our senior management comprising substantially all of the senior management of the post-combination company, and our operations
comprising the ongoing operations of the post-combination company. Accordingly, for accounting purposes, the Mergers were treated as
the equivalent of a capital transaction in which we issued stock for the net assets of FACT. The net assets of FACT were stated at historical
cost, with no goodwill or other intangible assets recorded.

In October 2023, we completed the sale of our solar panel business.
On September 30, 2024, we acquired certain assets relating to the Blue Raven Solar business, New Homes business and Non-Installing Dealer
network (collectively the “SunPower Businesses”) from the SunPower Debtors, the successor entity in bankruptcy to SunPower
Corporation and its direct and indirect subsidiaries. The acquired SunPower Businesses sell products to residential customers and home
builders through a network of installing and non-installing dealers and resellers and internal sales team. On September 24, 2025, we completed
the acquisition of Sunder Energy, LLC, (“Sunder”), which contracts with customers for solar installations performed by third-party
installation companies through a dealer network. On November 21, 2025, we completed the acquisition of Ambia Energy LLC, (“Ambia”)
a residential solar energy system installer.

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

There
is substantial doubt about our ability to continue as a going concern within one year after the date that the consolidated financial
statements are issued. The consolidated financial statements included in this Annual Report on Form 10-K have been prepared assuming
that we will continue to operate as a going concern, which contemplates the realization of assets and settlement of liabilities in the
normal course of business. They do not include any adjustments to reflect the possible future effects on the recoverability and classification
of assets or the amounts and classifications of liabilities that may result from uncertainty related to its ability to continue as a
going concern.

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Growth
Strategy and Outlook

Our
growth strategy contains the following elements:

The
Mergers

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

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

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Disposal
Transaction

In October 2023, we completed
the divestiture of our solar panel business to Maxeon (“Divestiture”), 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. We determined that the criteria
were met for discontinued operations classification as the divestiture represented a strategic shift in our business. In connection with
the Divestiture, we recognized a loss from discontinued operations of $1.1 million, $2.0 million and $173.4 million in the fiscal years
ended December 28, 2025, December 29, 2024 and December 31, 2023, respectively. We also sold all the Maxeon shares in the year ended
December 31, 2023, and recorded a $4.2 million loss on the sale of these shares in our consolidated statements of operations and comprehensive
loss.

Acquisitions

Certain
Assets of SunPower Debtors

On September 30, 2024, we acquired the SunPower Businesses for consideration
of $54.5 million which we financed through the issuance of $66.8 million of 7.0% senior unsecured convertible notes in September 2024.
These notes mature on July 1, 2029 and are convertible into shares of the Company’s common stock at the option of the holder at
a current conversion rate of $1.71 per share. The SunPower Businesses operated as a solar technology and energy services provider that
offered fully integrated solar, storage, and home energy solutions to customers in the United States through an array of hardware, software,
and “Smart Energy” solutions. This transaction was accounted for as a business combination under Accounting Standards Codification
(“ASC”) 805, Business Combinations.

Sunder
Energy LLC

On
September 24, 2025, we acquired all of the membership interests in Sunder Energy LLC (“Sunder”) for consideration of $57.8
million. We financed this transaction through (1) $20.7 million in cash, subject to certain working capital and other adjustments; (2)
a promissory note to the seller in the principal amount of $20.0 million (“Seller Note”); and (3) 10.0 million shares of
the Company’s common stock valued at $17.1 million (based on the $1.71 closing share price of the Company’s common stock
on September 24, 2025). We issued 3.3 million shares at the acquisition date and will issue the remining shares in two equal tranches
of 3.3 million shares at 12 months and 18 months following the date of acquisition. Sunder is a solar sales company. Sunder provides
a third-party solar energy sales force to initiate and execute contracts with customers throughout the United States. Sunder’s
sales force works with solar installation companies in which Sunder acts as the agent for each transaction entered. Sunder earns revenue
from contracts sold to customers for solar installations performed by third-party installation companies. We acquired Sunder as a strategic
acquisition to expand its overall market share and its penetration into more U.S. states. We accounted for this transaction as a business
combination under ASC 805.

Ambia
Energy

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