SUNation Energy Announces $20 Million Registered Direct Offering Priced at the Market Under Nasdaq Rules

Rhea-AI Summary

SUNation Energy (SUNE) has announced a $20 million registered direct offering priced at-the-market under Nasdaq rules. The offering includes 17,391,306 shares of common stock at $1.15 per share, along with Series A and Series B warrants.

The offering will close in two parts: first closing of approximately $15 million for 13,043,480 shares expected around February 27, 2025, and a second closing of up to $5 million for 4,347,826 shares pending stockholder approval. Series A warrants will have an exercise price of $1.725 per share, while Series B warrants will be priced at $2.875 per share, both with 5-year terms.

The company plans to use the net proceeds for operations, working capital, potential strategic transactions, debt payment, and general corporate purposes. Roth Capital Partners is serving as the exclusive placement agent for this offering.

Positive

• Secured $20M in additional funding
• 5-year warrant terms provide long-term funding flexibility
• Series B warrants include alternative cashless exercise option

Negative

• Significant shareholder dilution with 17.4M new shares
• Second closing requires shareholder approval
• Potential further dilution from warrant exercises
• At-market pricing indicates urgency for capital raising

Insights

Financial Analyst

SUNation Energy's announced $20 million registered direct offering represents a massive capital infusion relative to the company's current $2.35 million market capitalization, raising significant dilution concerns for existing shareholders.

The offering structure reveals several critical points for investors:

• The issuance of 17.39 million shares at $1.15 per share would increase the outstanding share count substantially, potentially diluting existing shareholders by several hundred percent
• Additional Series A and B warrants could add another 34.78 million shares if fully exercised, creating even more significant dilution
• The Series B warrants' cashless exercise option (3 shares per warrant) represents a particularly dilutive mechanism
• The two-part closing structure, with the second part requiring shareholder approval, suggests potential investor resistance is anticipated

The company's intended use of proceeds for "working capital, potential strategic transactions, payment of certain debt obligations" indicates possible financial distress. The need to raise capital equal to approximately 8.5x its current market cap raises fundamental questions about SUNation's financial stability and future prospects.

The at-market pricing ($1.15) offers no premium to new investors, which is unusual for such a large offering relative to company size. This pricing strategy, combined with the scale of the offering, suggests urgency in securing funding rather than strategic opportunistic capital raising.

Existing shareholders should carefully evaluate the significant ownership dilution against potential business improvements this capital might enable.

RONKONKOMA, N.Y., Feb. 27, 2025 (GLOBE NEWSWIRE) -- SUNation Energy, Inc. (Nasdaq: SUNE), a leading provider of sustainable solar energy and backup power solutions for households, businesses, and municipalities, today announced that it has entered into a securities purchase agreement with certain institutional investors for the purchase and sale of 17,391,306 shares of the Company’s common stock (or common stock equivalents in lieu thereof) Series A warrants to purchase up to an aggregate 17,391,306 shares of the Company’s common stock and Series B warrants to purchase up to an aggregate 17,391,306 shares of the Company’s common stock at an effective purchase price of $1.15 per share (or common stock equivalents in lieu thereof) and associated warrants in a registered direct offering priced at-the-market under Nasdaq rules.

Roth Capital Partners, LLC is acting as the exclusive placement agent for the registered direct offering.

This registered direct offering will close in two parts. The first closing of the registered direct offering is expected to occur on or about February 27, 2025, subject to the satisfaction of customary closing conditions and the second closing of the registered direct offering is expected to occur upon the satisfaction of customary closing conditions, including receipt of approval by the Company’s stockholders in a specially called stockholder meeting to approve the issuance of the series A common stock warrants, series B common stock warrants and the shares of common stock underlying such warrants, in addition to other matters. The gross proceeds from the Offering are expected to be approximately $20 million before deducting placement agent fees and other offering expenses payable by the Company. This includes proceeds of approximately $15 million from the initial closing for 13,043,480 shares of common stock (or common stock equivalents) and proceeds of up to $5 million from the second closing for 4,347,826 shares of Common Stock (or common stock equivalents), Series A warrants to purchase up to 17,391,306 shares of common stock and for Series B warrants to purchase up to 17,391,306 shares of common stock.

The Company intends to use the net proceeds from this offering to fund its operations, including for working capital, potential strategic transactions, payment of certain debt obligations and for other general corporate purposes. 

The Series A warrants will have an exercise price of $1.725 per share subject to standard adjustments for dividends, splits and similar events; a one-time adjustment on the date of issuance (as described in the warrants), subject to a floor price described therein; and also subject to adjustment upon a Dilutive Issuance (as described in the warrants), subject to a floor price described therein. The Series A warrants will be issued at the second closing and will be exercisable immediately after issuance and have a term of exercise equal to 5 years from the date of issuance.

The Series B warrants will have an exercise price of $2.875 per share subject to standard adjustments for dividends, splits and similar events; a one-time adjustment on the date of issuance (as described in the warrants), subject to a floor price described therein; and also subject to adjustment upon a Dilutive Issuance (as described in the warrants), subject to a floor price described therein. The Series B warrants will be issued at the second closing and will be exercisable immediately after issuance and have a term of exercise equal to 5 years from the date of issuance. The Series B warrants may also be exercised on an alternative cashless basis pursuant to which the holder may exchange each warrant for 3 shares of common stock.

The securities in the offering described above are being offered by the Company pursuant to a “shelf” registration statement on Form S-3 (File No. 333-267066) previously filed with the Securities and Exchange Commission (the “SEC”) and declared effective by the SEC on September 2, 2022. The offering is being made only by means of a prospectus, including a prospectus supplement, forming a part of the effective registration statement, relating to the offering that will be filed with the SEC. Electronic copies of the final prospectus supplement and accompanying prospectus may be obtained, when available, on the SEC’s website at http://www.sec.gov or by contacting Roth Capital Partners, LLC at 888 San Clemente Drive, Newport Beach CA 92660, by email at rothecm@roth.com.

This press release shall not constitute an offer to sell or a solicitation of an offer to buy these securities, nor shall there be any sale of these securities in any state or other jurisdiction in which such offer, solicitation or sale would be unlawful prior to the registration or qualification under the securities laws of any such state or other jurisdiction.

About SUNation Energy, Inc.

SUNation Energy, Inc. is focused on growing leading local and regional solar, storage, and energy services companies nationwide. Our vision is to power the energy transition through grass-roots growth of solar electricity paired with battery storage. Our portfolio of brands (SUNation, Hawaii Energy Connection, E-Gear) provide homeowners and businesses of all sizes with an end-to-end product offering spanning solar, battery storage, and grid services. SUNation Energy, Inc.’s largest markets include New York, Florida, and Hawaii, and the company operates in three (3) states.

Forward Looking Statements 

This press release includes certain forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. These statements are based on the Company’s current expectations or beliefs and are subject to uncertainty and changes in circumstances. While the Company believes its plans, intentions, and expectations reflected in those forward-looking statements are reasonable, these plans, intentions, or expectations may not be achieved. For information about the factors that could cause such differences, please refer to the Company’s filings with the Securities and Exchange Commission, including, without limitation, the statements made under the heading “Risk Factors” in the Company's Annual Report on Form 10-K for the year ended December 31, 2023 and in subsequent filings. The Company does not undertake any obligation to update or revise these forward-looking statements for any reason, except as required by law.

Safe Harbor Statement

Our prospects here at SUNation Energy Inc. are subject to uncertainties and risks. This news release contains forward-looking statements within the meaning of Section 27A of the Securities Act of 1933 and Section 21E of the Securities Act of 1934. The Company intends that such forward-looking statements be subject to the safe harbor provided by the foregoing Sections. These forward-looking statements are based largely on the expectations or forecasts of future events, can be affected by inaccurate assumptions, and are subject to various business risks and known and unknown uncertainties, a number of which are beyond the control of management. Therefore, actual results could differ materially from the forward-looking statements contained in this presentation. The Company cannot predict or determine after the fact what factors would cause actual results to differ materially from those indicated by the forward-looking statements or other statements. The reader should consider statements that include the words "believes", "expects", "anticipates", "intends", "estimates", "plans", "projects", "should", or other expressions that are predictions of or indicate future events or trends, to be uncertain and forward-looking. We caution readers not to place undue reliance upon any such forward-looking statements. The Company does not undertake to publicly update or revise forward-looking statements, whether because of new information, future events or otherwise. Additional information respecting factors that could materially affect the Company and its operations are contained in the Company's filings with the SEC which can be found on the SEC's website at www.sec.gov.

Contacts:

Scott Maskin
Chief Executive Officer
+1 (631) 823-7131
smaskin@sunation.com

SUNation Energy Investor Relations
+1 (212) 836-9600
IR@sunation.com

FAQ

What is the price per share for SUNation Energy's (SUNE) new stock offering?

The effective purchase price is $1.15 per share and associated warrants in the registered direct offering.

How many shares is SUNation Energy (SUNE) offering in February 2025?

SUNation is offering 17,391,306 shares of common stock (or equivalents), split between 13,043,480 shares in the first closing and 4,347,826 shares in the second closing.

What are the terms of SUNE's Series A and B warrants in the 2025 offering?

Series A warrants have an exercise price of $1.725 per share, while Series B warrants are priced at $2.875 per share. Both have 5-year terms and will be exercisable immediately after issuance.

How will SUNation Energy use the proceeds from its $20 million offering?

The proceeds will fund operations, working capital, potential strategic transactions, payment of debt obligations, and general corporate purposes.