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
twenty-six week period ended June 28, 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 Integration

We continued the integration
of our recent acquisitions of Sunder, Ambia, and Cobalt into our operating platform.

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Debt Transactions

On April 23, 2026, the Company
closed a private offering of $41.0 million aggregate principal amount of 10.0% Convertible Senior Secured Notes due 2029. The proceeds
and issuance of these notes were used in part to exchange and retire the outstanding Seller Note issued to Chicken Parm Pizza LLC during
the Sunder acquisition, convert outstanding Simple Agreements for Future Equity (SAFEs), prepay a portion of our existing bridge notes,
and fund our April 2026 settlement payment to Siemens. Subsequently, in May 2026, the Company issued an incremental $5.0 million principal
amount of the 10.0% Convertible Senior Secured Notes due 2029, bringing the total aggregate principal amount issued to $46.0 million to
provide increased intra-quarter liquidity for general corporate needs.

Concurrently with the issuance
of notes on April 23, 2026, the Company closed transactions under exchange agreements to repurchase $21.25 million aggregate principal
amount of our outstanding 7.0% Convertible Senior Notes in exchange for the issuance of 18,805,310 shares of common stock and the payment
of accrued interest.

Siemens Settlement Amendment

On April 9, 2026, the Company amended its global
Settlement Agreement with Siemens to, among other things, commit to a $4.75 million payment by the end of April 2026 and adjust the threshold
of the agreement’s fundraise acceleration provision. The Company successfully made the $4.75 million payment on April 23, 2026.

Management and Board Changes

During the second quarter and subsequent to the
balance sheet date, the Company experienced several leadership transitions. On May 7, 2026, Wendell Laidley resigned as Chief Financial
Officer. On June 30, 2026, the Company appointed Tom Kowalczuk as the new Chief Financial Officer and Principal Financial Officer. Additionally,
on May 8, 2026, Bernard Gutmann was appointed to the Board of Directors and as a member of the Audit Committee.

Subsequent to the quarter, Jeanne Nguyen, the
former Chief Accounting Officer, departed the Company on July 8, 2026.

Exchange Agreements for Interest

On June 29, 2026 and June 30, 2026, the Company
entered into Exchange Agreements with certain holders of its 12.0%, 10.0%, and 7.0% Convertible Senior Notes to exchange approximately
$10.7 million of cash interest obligations for 19,300,991 shares of common stock. The transactions closed and the shares were issued
on July 1, 2026.

FPA Settlement Agreements

On July 17, 2026, the Company entered into OTC
Equity Prepaid Forward Transaction Settlement Agreements to memorialize the settlement amounts payable by the Company under its 2023
Forward Purchase Agreements. The Company elected to pay the settlement amount adjustments by issuing an aggregate of 17,900,462 shares
of common stock, established mechanics for determining whether additional shares are issuable based on future trading prices, and, for
one seller, established an obligation to make monthly cash amortization payments of $50,000 beginning October 31, 2026, if such seller
has not realized its full settlement amount adjustment by that date.

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Nasdaq Delisting Notice

On July 21, 2026, the Company received written
notice (the “Notice”) from the Nasdaq Stock Market LLC (“Nasdaq”) notifying the Company that it is not in compliance
with the minimum bid price requirement set forth in Nasdaq Listing Rule 5450(a)(1) for continued listing on The Nasdaq Global Market.
Nasdaq Listing Rule 5450(a)(1) requires listed securities to maintain a minimum bid price of $1.00 per share, and Listing Rule 5810(c)(3)(A)
provides that a failure to meet the minimum bid price requirement exists if the deficiency continues for a period of 30 consecutive business
days.

The Notice does not impact the listing of the
Company’s common stock on The Nasdaq Global Market at this time. In accordance with Nasdaq Listing Rule 5810(c)(3)(A), the Company
has 180 days to regain compliance with the minimum bid price requirement. To regain compliance, the closing bid price of the Company’s
common stock must be at least $1.00 per share for a minimum of ten consecutive business days before January 19, 2027. In the event that
the Company does not regain compliance within this 180-day period, subject to compliance with certain further requirements, the Company
may be eligible to seek an additional compliance period of 180 calendar days if it meets the continued listing requirement for market
value of publicly held shares and all other initial listing standards for The Nasdaq Capital Market, with the exception of the minimum
bid price requirement, and provides written notice to Nasdaq of its intent to cure the deficiency during this second compliance period
by effecting a reverse stock split if necessary. However, if it appears to the Nasdaq staff that the Company will not be able to cure
the deficiency, or if the Company is otherwise not eligible, Nasdaq will provide notice to the Company that its common stock will be
subject to delisting.

The Company intends
to actively monitor the closing bid price of its common stock and will evaluate available options to regain compliance with the minimum
bid price requirement.

Goodwill Impairment

If the recent decline
in our stock price and market capitalization persists or further deteriorates during the third fiscal quarter of 2026, we may be required
to perform an interim quantitative goodwill impairment test under ASC 350. Any resulting non-cash impairment charge could have a material
adverse impact on our consolidated financial condition and results of operations.

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 June 28, 2026 compared to the thirteen weeks ended June 29, 2025

The following table sets
forth our unaudited statements of operations from operations for the thirteen weeks ended June 28, 2026, and June 29, 2025 (in thousands):

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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.

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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 LLC

On November 21, 2025, we acquired all of the membership interests in
Ambia Energy LLC (“Ambia”) for consideration of $33.4 million. We financed this acquisition through the issuance of 10.2 million
shares of our common stock with a fair value of $16.5 million on the date of acquisition and an agreement to issue an additional $16.9
million in shares of our common stock in two tranches with the final issuance on the 12-month anniversary of the Ambia closing. Ambia
is a residential solar energy system installer and operates in various markets throughout the United States.

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Supply
Chain Constraints and Risk

The
global supply chain and our industry have experienced significant disruptions in recent periods. We have seen supply chain challenges
and logistics const

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