Cash Buyout Removes Dilution Risk From SUNE Series A Warrants

Rhea-AI Filing Summary

SUNation Energy (Nasdaq:SUNE) filed an 8-K announcing the termination of its Series A Warrants issued under the February 27 2025 Purchase Agreement. The warrants, exercisable for up to 652,174 common shares, were cancelled on June 26 2025 in exchange for $267,392 in cash.

The warrant holders agreed to delete Section 4.11 of the Purchase Agreement, lifting prior restrictions on the Company’s at-the-market (ATM) facility and other equity sales. They retained a right, until April 21 2026, to participate in up to 50 % of any future equity offering at terms set by the Company.

The action removes a potentially dilutive overhang, restores financing flexibility, and costs less than 2 % of the original $15 million financing.

Positive

• Cancellation of 652,174-share Series A Warrants removes a near-term dilution overhang.
• Elimination of Section 4.11 restores unrestricted access to the ATM facility, enhancing capital-raising flexibility.

Negative

• Company paid $267,392 in cash, reducing near-term liquidity.
• Holders retain a right to participate in up to 50 % of future equity offerings, leaving some dilution risk.

Insights

Capital Markets Expert

TL;DR: Dilution removed, financing doors reopen, minor cash cost.

Cancelling 652 k-share Series A Warrants eliminates an overhang that could have pressured SUNE’s stock and cap table. Management paid only $0.41 per underlying share, materially below market, to secure the cancellation. More importantly, scrapping Section 4.11 restores unfettered use of the Company’s ATM, a cost-efficient capital source in a volatile solar market. Although holders retain a 50 % participation right through April 2026, that option is discretionary and does not mandate issuance. Overall, the Company gains strategic funding flexibility and reduces dilution risk for a modest cash outlay.

Risk Analyst

TL;DR: Dilution risk falls, but future participation right still lingers.

The warrant cancellation is positive for existing shareholders, yet it introduces subtler risks. The cash payment, while small, reduces liquidity. More importantly, the investors’ right to take up to 50 % of future equity deals could crowd out new investors or force pricing concessions, especially if SUNE relies heavily on equity to fund growth. Management must balance newfound ATM flexibility against the possibility of continued dilution via participation rights. Net effect is moderately favorable but not game-changing.

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United States
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549

FORM 8-K

CURRENT REPORT
PURSUANT TO SECTION 13 OR 15(d) OF
THE SECURITIES EXCHANGE ACT OF 1934

Date of Report (date of earliest event reported): June 26, 2025

SUNation Energy, Inc.

(Exact name of Registrant as Specified in its Charter) 

Delaware

(State Or Other Jurisdiction Of Incorporation) 

001-31588		41-0957999
(Commission File Number)		(I.R.S. Employer Identification No.)

171 Remington Boulevard Ronkonkoma, NY		11779
(Address of Principal Executive Offices)		(Zip Code)

(631) 750-9454

Registrant’s Telephone Number, Including Area Code 

Securities registered pursuant to Section 12(b) of the Act

Title of Each Class		Trading Symbol		Name of each exchange on which registered
Common Stock, par value, $.05 per share		SUNE		The Nasdaq Stock Market, LLC

Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions (see General Instruction A.2. below):

☐ Written communications pursuant to Rule 425 under the Securities Act

☐ Soliciting material pursuant to Rule 14a-12 under the Exchange Act

☐ Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act

☐ Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act

Indicate by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933 (17 CFR §230.405) or Rule 12b-2 of the Securities Exchange Act of 1934 (17 CFR §240.12b-2).

Emerging growth company ☐

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐

Item 1.02  Termination of a Material Definitive Agreement.

As previously reported, on February 27, 2025, SUNation Energy, Inc. (the “Company”) entered into a securities purchase agreement (the “Purchase Agreement”) with certain institutional investors for the purchase and sale of an aggregate of $15 million in securities in a first closing consisting of shares of common stock and pre-funded warrants. On April 7, 2025, at the second closing related to the Purchase Agreement, the Company issued an aggregate of $5 million in securities consisting of shares of Common Stock, Series A warrants to purchase shares of common stock (the “Series A Warrants”), and Series B warrants to purchase shares of common stock (the “Series B Warrants”) in a registered direct offering.

Subsequent to the second closing, the Series B Warrants were fully exercised and are no longer outstanding. The Series A Warrants, exercisable for up to an aggregate 652,174 shares of Common Stock, have not been exercised to date. On June 26, 2025, the Company and the holders of the Series A Warrants mutually agreed to terminate and cancel the Series A Warrants pursuant to the terms thereof in exchange for an aggregate payment to the Series A Warrant holders of approximately $267,392. In addition, the holders of the Series A Warrants have agreed to amend the Purchase Agreement by eliminating Section 4.11 thereof, which contained prohibitions on the Company’s utilization of its existing ATM Facility and certain subsequent equity sales. In connection therewith, the parties mutually agreed to retain the holders’ right until April 21, 2026 to participate, in their discretion and without obligation, in equity offerings, if any, by the Company for up to an aggregate of 50% of such offering, on the terms determined and offered by the Company. As a result of the foregoing, the Series A Warrants are immediately null and void and of no further force or effect.

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SIGNATUREs

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.

	SUNATION ENERGY, INC.
	By:	/s/ James Brennan
		James Brennan
		Chief Financial Officer
Date: June 26, 2025

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FAQ

Why did SUNE cancel its Series A Warrants?

To eliminate potential dilution and regain flexibility to use its ATM facility; the warrants were cancelled for a $267,392 cash payment.

How many shares were tied to the cancelled warrants for SUNE?

The Series A Warrants could have been exercised for up to 652,174 common shares.

What did SUNE pay to terminate the Series A Warrants?

SUNation Energy paid approximately $267,392 to the warrant holders on June 26 2025.

What restrictions were removed from SUNE's Purchase Agreement?

Section 4.11, which limited use of the existing ATM facility and certain equity sales, was deleted.

Do investors still have rights after the warrant termination?

Yes. Until April 21 2026, they may elect to participate in up to 50 % of any future SUNE equity offering.

Will SUNE now be able to use its ATM program?

Yes. With Section 4.11 removed, SUNE can resume ATM issuances without the prior contractual restrictions.