Related Party Transactions

6 Months Ended

Jun. 30, 2024

Related Party Transactions [Abstract]

Related Party Transactions

(19) Related Party Transactions

From October 2022 through June 2023, the Company issued convertible promissory notes (“2022 Convertible Notes”) of approximately $33.3 million to various investors, out of which $12.1 million was issued to five related parties. Additionally, the Company acquired a related party convertible note, on the same terms as the 2022 Convertible Notes as part of the acquisition of Solaria, with a fair value of $6.7 million at the time of the acquisition. The related party debt is presented as convertible notes, net, due to related parties, noncurrent in the accompanying unaudited condensed consolidated balance sheets. The principal amount of the outstanding balance on the 2022 Convertible Notes accrues at 5.0%, compounded annually. For the thirteen week periods ended June 30, 2024 and July 2, 2023, the Company has recognized zero and $0.2 million, respectively, in interest expense related to the related party 2022 Convertible Notes. For the twenty-six week periods ended June 30, 2024 and July 2, 2023, the Company has recognized zero and $0.4 million, respectively, in interest expense related to the related party 2022 Convertible Notes.

In June 2023, the Company received $3.5 million of prefunded PIPE proceeds from a related party investor in conjunction with the Company’s merger with Freedom Acquisition I Corp. In July 2023, in connection with the Mergers, in addition to the $3.5 million of related party PIPE proceeds noted above, the Company received additional PIPE proceeds from related parties of $12.1 million. In July 2023, in connection with the Mergers, the Company issued 120,000 shares to a related party as a transaction bonus. Refer to Note 1(a) – Description of Business and Note 4 – Reverse Recapitalization for further discussion.

In July 2023, the Company entered into a series of FPAs as described in Note 5 – Forward Purchase Agreements. In connection with the FPAs, the Company recognized other expense of $30.7 million for the fiscal year ended December 31, 2023 in connection with the issuance of 5,670,000 shares of Complete Solaria Common Stock to the related party FPA Sellers. The Company also recognized other income of $0.3 million in connection with the issuance of the FPAs with related parties. The Company has recognized a liability associated with the FPAs of $5.6 million and $3.2 million due to related parties in its unaudited condensed consolidated balance sheets as of June 30, 2024 and December 31, 2023, respectively. The Company recognized $2.4 million of other income in the thirteen week period ended June 30, 2024 and $2.4 million of other expense in the twenty-six week period ended June 30, 2024 in its unaudited condensed consolidated statements of operations and comprehensive loss.

In September 2023, in connection with the Mergers, the Company entered into a settlement and release agreement with a related party for the settlement of a working capital loan made to the Sponsor, prior to the closing of the Mergers. As part of the settlement agreement, the Company agreed to pay the related party $0.5 million as a return of capital, which is paid in ten equal monthly installments and does not accrue interest. The Company paid $0.2 million in 2023 and the remaining balance of $0.3 million was paid in the thirteen-week period ended March 31, 2024.

In October 2023, the Company entered into an Assignment 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, (collectively “Kline Hill”) and Rodgers Massey Revocable Living Trust, a related party, for a total purchase price of $5.0 million. The SCI Revolving Loan continued to remain outstanding as of June 30, 2024 and is currently being renegotiated. Interest expense

Three SAFEs, as described in Note 14 –SAFE Agreements, entered into during the twenty-six weeks ended June 30, 2024 were with the Rodgers Massey Freedom and Free Markets Charitable Trust, a related party. The Company received proceeds from the SAFEs totaling $6.0 million in exchange for debt that may be converted into shares of the Company’s common stock. The SAFEs issued in the first quarter of 2024, totaling $5.0 million were converted into 13,888,889 share of the Company’s common stock during the 13 weeks ended June 30, 2024. The Company recognized a loss of $1.3 million in connection with the conversion of the two SAFEs.

In June 2024, Rodgers made a good faith deposit of $2.0 million to the Company to prefund the July 2024 Rodgers Note that subsequently was issued by the Company in July 2024 in connection with the Exchange Agreement entered after the period end. Refer to Note 20 - Subsequent Events for further details.

There were no other material related party transactions during the thirteen and twenty-six week periods ended June 30, 2024 and July 2, 2023.