SUNation Energy, Inc.

Below is a summary of the material risks to our business, operations and the investment in our common stock. Additional discussion of the risks summarized in this risk factor summary, and other risks that we face, can be found below under Part I, Item 1A. “Risk Factors” and should be carefully considered, together with other information in this Annual Report on Form 10-K in its entirety before making investment decisions regarding our common stock.

Risks Related to the Company’s Common Stock

Our shares will be subject to potential delisting if we do not maintain the listing requirements of the Nasdaq Capital Market.

Shareholders may be diluted if additional capital stock is issued to raise capital, including to finance acquisitions, repay debt or in connection with strategic transactions.

There is no public market for the common warrants or pre-funded warrants issued and outstanding.

Holders of our common warrants and pre-funded warrants will have no rights as a common stockholder until they acquire our common stock.

We may be required to repurchase the common warrants issued in February 2025, which may prevent or deter a third party from acquiring us.

Future sales of Company shares or securities exercisable for shares could cause the Company’s stock price to decline.

Our management concluded that our disclosure controls and procedures and our internal control over financial reporting were not effective as of December 31, 2024 and 2023 due to material weaknesses in internal control over financial reporting. If we are unable to remediate these material weaknesses and maintain an effective system of disclosure controls and procedures and internal control over financial reporting, we may not be able to accurately report our financial results in a timely manner, which may adversely affect investor confidence in us and materially and adversely affect our business and financial results.

The price of the Company’s common stock and trading volume may be volatile and may negatively impact shareholders’ value of their investment.

The Company may issue additional common stock resulting in significant existing stock ownership dilution.

Anti-Takeover Effects of Delaware Law, the Certificate of Incorporation and the Bylaws may discourage or prevent a change in control, even if beneficial to our shareholders and could cause our stock price to decline.

The Company’s board of directors is authorized to issue and designate shares of preferred stock without further shareholder approval.

Risks Relating to the Company’s Business

The Company’s growth strategy depends on the continued origination of solar installation agreements.

If the Company fails to manage its operations and growth effectively, it may be unable to execute its business plan, maintain high levels of customer service or adequately address competitive challenges.

The Company needs to raise additional capital to fund its operations and repay its obligations, which funding may not be available on favorable terms or at all and may lead to substantial dilution to the Company’s existing shareholders. Further, there is substantial doubt about the Company’s ability to continue as a going concern, which conditions may adversely affect the Company’s stock price and its ability to raise capital.

The Company depends on a limited number of suppliers of solar energy system components and technologies to adequately meet demand for its solar energy systems.

Increases in the cost of the Company’s solar energy systems due to tariffs and other trade restrictions imposed by the U.S. and foreign governments could have a material adverse effect on its business, financial condition and results of operations.

The Company’s operating results and its ability to grow may fluctuate from quarter to quarter and year to year, which could make its future performance difficult to predict and could cause its operating results for a particular period to fall below expectations.

The Company may be required to record an impairment charge on our goodwill in the future.

If the Company is unable to make net profitable acquisitions and on economically acceptable terms, its future growth would be limited, and any acquisitions it may make could reduce, rather than increase, its cash flows.

Product liability and property damage claims against the Company or accidents could result in adverse publicity and potentially significant monetary damages.

Changes in our business strategy or restructuring of our businesses may increase our costs or otherwise affect our businesses.

We may not fully realize the anticipated benefits from our restructuring efforts begun in 2024, which continue into 2025.

The Company will not be able to insure against all potential risks and it may become subject to higher insurance premiums.

Damage to the Company’s brand and reputation or change or loss of use of its brand could harm its business and results of operations.

The loss of one or more members of the Company’s senior management or key employees may adversely affect its ability to implement its strategy.

The Company’s inability to protect its intellectual property could adversely affect its business. The Company may also be subject to intellectual property rights claims by third parties, which are extremely costly to defend, could require it to pay significant damages and could limit its ability to use certain technologies.

The Company may be subject to interruptions or failures in its information technology systems.

The Company’s information technology systems may be exposed to various cybersecurity risks and other disruptions that could impair its ability to operate, adversely affect its business, and damage its brand and reputation.

A failure to hire and retain a sufficient number of key employees, such as installers and electricians, would constrain our growth and our ability to timely complete projects.

Our business is concentrated in certain markets, putting us at risk of region-specific disruptions.

Litigation brought by third parties claiming breach of contract, contractual defaults or other claims for may be costly and time consuming.

Risks Related to the Solar Industry

If sufficient additional demand for residential solar energy systems does not develop or takes longer to develop than the Company anticipates, its ability to originate solar installation agreements may decrease.

The Company’s business prospects are dependent in part on a continuing decline in the cost of solar energy system components and the Company’s business may be adversely affected to the extent the cost of these components stabilize or increase in the future, whether through international supply disruptions, conflicts, trade wars, new tariffs or otherwise.

The Company faces competition from centralized electric utilities, retail electric providers, independent power producers and renewable energy companies.

Developments in technology or improvements in distributed solar energy generation and related technologies or components may have a materially adverse effect on demand for the Company’s offerings.

A material reduction in the retail price of electricity charged by electric utilities or other retail electricity providers could harm the Company’s business, financial condition and results of operations.

Terrorist or cyberattacks, which are increasing, against centralized utilities could adversely affect the Company’s business.

Climate change may have long-term impacts on the Company’s business, industry, and the global economy.

Risks Related to Regulations

Increases in the cost of the Company’s solar energy systems due to tariffs imposed by the U.S. and foreign governments could have a material adverse effect on its business, financial condition and results of operations.

The Company is not currently regulated as an electric public utility under applicable law, but may be subject to regulation as an electric utility in the future.

Electric utility policies and regulations, including those affecting electric rates, may present regulatory and economic barriers to the purchase and use of solar energy systems that may significantly reduce demand for the Company’s solar energy systems and adversely impact its ability to originate new solar installation agreements.

The Company relies on net metering and related policies to sell solar systems to its customers in most of its current markets, and changes to policies governing net metering may significantly reduce demand for electricity from residential solar energy systems and thus for the Company’s installation services.

A customer’s decision to procure installation services from the Company depends in part on the availability of rebates, tax credits and other financial incentives. The expiration, elimination or reduction of these rebates, credits or incentives or its ability to monetize them could adversely impact its business.

Technical and regulatory limitations regarding the interconnection of solar energy systems to the electrical grid may significantly delay interconnections and customer in-service dates, harming the Company’s growth rate and customer satisfaction.

Compliance with occupational safety and health requirements and best practices can be costly, and noncompliance with such requirements may result in potentially significant monetary penalties, operational delays and adverse publicity.

Our business is subject to consumer protection laws. Such laws and regulatory enforcement policies and priorities are subject to change, which may negatively impact our business.

Risks Related to our Bitcoin Strategy

Our bitcoin acquisition strategy may expose us to various risks associated with bitcoin.

We may use the net proceeds from our offerings to purchase bitcoin, the price of which has been, and will likely continue to be, highly volatile.

Our intended bitcoin holdings may be less liquid than our existing cash and cash equivalents and may not be able to serve as a source of liquidity for us to the same extent as cash and cash equivalents.

‎