SUNation Energy (SUNE) Risk Analysis

The Company's business differs from that of Suniva, and certain adjustments will be made to the Company's operations assuming that the consummation of the proposed Merger and such related transactions occur. Accordingly, the results of operations of the combined company and the market price of the Company's common stock after the assumed consummation of the proposed Merger and such related transactions may be affected by factors different from those currently affecting the independent results of operations of the Company.

Assuming that the proposed Merger closing occurs, the Company will issue the shares of its Common Stock at the Exchange Ratio, which involves a) each then-outstanding share of Suniva capital stock (including shares of Suniva common stock and shares of Suniva preferred stock) will be converted into the right to receive a number of shares of the Company's common stock calculated in accordance with the Merger Agreement; (b) each then-outstanding Suniva warrant will be cancelled at the Effective Time, with each warrantholder entitled to receive for each warrant share a number of shares of the Company's common stock equal to the Exchange Ratio, the per share exercise price of the warrant; and (c) each then-outstanding Suniva restricted stock unit will be fully vested and converted into shares of the Company's common stock at the Exchange Ratio. Under the Exchange Ratio in the Merger Agreement, upon the closing of the proposed Merger, on a pro forma basis and based upon the number of shares of the Company's common stock expected to be issued in the proposed Merger, pre-Merger Suniva stockholders are expected to own approximately 98.2% of the combined company and pre-Merger SUNation stockholders are expected to own approximately 1.8% of the combined company. Therefore, the Exchange Ratio is anticipated to result in an immediate and substantial increase in the number of outstanding shares of Company Common Stock, and substantial dilution of existing Company stockholders' ownership of and voting power in the Company. As such, existing Company stockholders should assume that their ownership stake and influence will be severely reduced upon the closing of the proposed Merger based on the Exchange Ratio. Additionally, if the Company successfully registers the resale of the Company Common Stock issuable pursuant to any existing restricted shares or such future financing involving registration rights or pursuant to an exemption from registration and satisfaction of applicable holding periods related thereto, a substantial number of additional shares may become freely tradable. The presence of these newly registered or tradeable shares, as wel as the perception that they may be sold, could create an "overhang" in the market. Specifically, if the trading volume of the Company's common stock cannot absorb the sales of these newly registered or tradeable shares, the price per share may decline.

The completion of the Company's proposed Merger transaction with Suniva is subject to the receipt of necessary consents, clearance, and/or review by the SEC and approval of our application for listing on the Nasdaq Stock Market. We cannot assure you that the SEC will timely clear the Company's filings, including the Registration statement on Form S-4 relating to the Merger, or at all, including the financial statements related thereto and incorporated therein, or that Nasdaq will approve our listing application on a timely basis, or at all.

If the Company does not obtain the necessary stockholder approval for the proposals related to the proposed Merger as set forth in the Merger Agreement or as otherwise related thereto, then the Company will be required to unwind the proposed Merger transactions. Any such unwinding of the proposed Merger transactions may have significant and adverse effects on the Company's business operations and could result in the loss of key assets and personnel, the threat of litigation over disagreements between the parties on how to implement the unwinding, and many or all of the negative consequences discussed throughout this document that would apply to the Company if it is unable to successfully consummate the proposed Merger and the transactions contemplated thereunder or that may apply regardless of whether the Company is able to successfully consummate the proposed Merger and the transactions contemplated thereby. The inability to secure the requisite stockholder approval could also undermine investor confidence, which may further negatively influence the Company's stock price and market reputation.

Upon (and assuming) the consummation of the proposed Merger, the Company's executive officers, directors and principal stockholders and their affiliates will own less than 1% of the outstanding shares of the Company Common Stock, after giving effect to the Exchange Ratio related to the proposed Merger, with the Company's existing stockholders owning approximately 1.8% of the outstanding shares of the Company common stock. This significant concentration of ownership may have a negative impact on the trading price of the Company's common stock because investors often perceive disadvantages in owning stock in companies with controlling stockholders. In addition, these stockholders will be able to exercise a significant level of control over all matters requiring stockholder approval, including the election of directors and the approval of mergers, acquisitions or other extraordinary transactions. They may also have interests that differ from other stockholders of the Company and may vote in a way with which other stockholders of the Company disagree, and which may be adverse to the Company's interests. This concentration of ownership may have the effect of delaying, preventing or deterring a change of control of the Company, could deprive the Company's stockholders of an opportunity to receive a premium for their common stock as part of a sale of the Company and might ultimately affect the market price of the Company Common Stock.

The anticipated pro formas of the combined consolidated financial information of the Company and Suniva are currently preliminary and indicative and may not necessarily and ultimately prove to be what the combined company's actual financial conditions or results of operations will be in the future. The pro forma combined consolidated financial information will reflect potential adjustments, which are based upon preliminary estimates. Among other things, the actual value of the consideration that the Company receives upon the consummation of the proposed Merger, assuming that it occurs, may vary significantly from the value used in preparing the unaudited pro forma combined consolidated financial information provided in tandem with these risk factors and the SEC filings of which they form a part. Accordingly, the final acquisition accounting adjustments may differ materially from the pro formas and any adjustments which may be reflected in the pro formas combined consolidated financial information.

Assuming that the consummation of the proposed Merger occurs, the result will be the combination of companies of significantly differing sizes, geographic bases, and operations. The success of the proposed Merger will depend, in part, on the ability to realize the anticipated benefits from integrating the businesses of the Company and Suniva. To achieve these benefits, the Company and Suniva must effectively merge and align their operations in a manner that permits the realization of those benefits and cost savings without adversely affecting current revenues and future growth. If the Company and Suniva do not successfully integrate their operations, the anticipated benefits of the consummation of the Merger may not be realized fully or at all, or they may take longer to realize than expected. In addition, the actual cost savings achieved could be less than anticipated, and integration may result in additional or unforeseen expenses. An inability to realize the full extent of the anticipated benefits, or any delays in integrating the businesses, could adversely affect the revenues, expense levels, and operating results of the combined company, which may negatively impact the value of the Company's common stock. It is also possible that combining the two businesses could result in the disruption of ongoing operations or inconsistencies in standards, controls, procedures, and policies that adversely affect the ability to maintain relationships with customers, clients, and employees, or to achieve the anticipated benefits and cost savings of the proposed Merger. Moreover, integration efforts may divert management's attention and resources, further impacting the combined company's performance both during and after the integration period. Furthermore, the board of directors and executive leadership of the combined company will consist of individuals from Suniva or at its section, which could require reconciling differing priorities and philosophies from those anticipated or which the Company's employees, key personnel or shareholders are accustomed to. Any difficulties in effectively unifying these teams may also delay or prevent realization of the anticipated benefits of the Merger and any related transactions.

The Company and Suniva have incurred and expect to incur a number of non-recurring costs in furtherance of the consummation of the proposed Merger and transactions related thereto, including legal, financial advisory, accounting, consulting, and other advisory fees; regulatory filing fees; financial printing and other transaction-related costs. Some of these costs are payable by either the Company or Suniva whether the proposed Merger or the transactions related thereto are completed or not. Additionally, the integration costs following the proposed Merger's completion may be substantial, and may include expenses related to facilities and systems consolidation, employment-related obligations, and efforts to maintain employee morale and retain key personnel. These costs may stem from the complex integration of numerous processes, policies, operations, technologies, and systems across areas such as purchasing, accounting, finance, payroll, compliance, treasury and vendor management, risk management, business operations, pricing, and employee benefits. While the Company and Suniva estimate a certain level of integration costs, many factors beyond their control could increase the total amount and timing of these expenses. Additionally, many of these costs are inherently difficult to estimate with precision. As a result, assuming that the proposed Merger and related transactions are consummated, the combined company may need to take charges against earnings following the Merger's consummation, and the amount and timing of such charges are uncertain. There can be no assurance that the transaction and integration costs will not outweigh any benefits of the consummation of the proposed Merger and related transactions, assuming that they occur.

Uncertainty about the success of consummation and the effect of consummation of the proposed Merger and such related transactions on employees and customers may have an adverse effect on the Company and Suniva. These uncertainties may impair the Company's or Suniva's ability to attract, retain, and motivate key personnel until the proposed Merger and such related transactions are completed, and could cause suppliers, business partners, and other parties that deal with the Company or Suniva to seek to change existing business relationships with the Company or Suniva. In addition, subject to certain exceptions, the Company and Suniva have each agreed to operate their businesses in the ordinary course in all material respects and to refrain from taking certain actions that may adversely affect their ability to consummate the proposed Merger and such related transactions on a timely basis without the consent of the other party. These restrictions may prevent the Company and Suniva from pursuing attractive business opportunities that may arise prior to the completion of the proposed Merger and such related transactions. If any of the aforementioned risks were to materialize, they could lead to significant costs which may negatively impact each party's results of operations and financial condition if the parties are not successful in consummating the proposed Merger and such related transactions, and which may also cause material adverse effects on the Company if the Merger and such related transactions are not consummated.

Consummation of the proposed Merger is subject to certain closing conditions, including, among other things, (a) approval by the Company's stockholders of the matters being put to their vote, (b) approval by the requisite Suniva stockholders of the adoption and approval of the Merger Agreement and the transactions contemplated thereby, (c) Nasdaq's approval of the listing of the shares of the Company's common stock to be issued in connection with the Merger, (d) the effectiveness of the Registration Statement, and (e) the Company's net cash not being less than negative $1,500,000. Each party's obligation to consummate the Merger is also subject to other specified customary conditions, including regarding the accuracy of the representations and warranties of the other party, subject to the applicable materiality standard, and the performance in all material respects by the other party of its obligations under the Merger Agreement required to be performed on or prior to the date of the closing of the proposed Merger. The Merger Agreement also contains customary termination rights of each of the Company and Suniva. Upon termination of the Merger Agreement under specified circumstances, the Company may be required to pay Suniva a termination fee of $1,000,000, and Suniva may be required to pay the Company a termination fee of $1,000,000. The Merger Agreement may be terminated if the proposed Merger has not been consummated on or before January 30, 2027, subject to a potential sixty (60)-day extension in certain circumstances, as set forth in the Merger Agreement. The failure to meet the material conditions requisite to the closing of the proposed Merger may prevent the consummation of the Merger, and the consequent negative effects of such failure to meet these conditions and successfully close the transaction related thereto.

If the Merger and such other transactions related thereto are not completed for any reason, there may be various adverse consequences, and the Company may experience negative reactions from the financial markets, as well as from its investors, customers and employees. For example, the Company's business may have been adversely impacted by the failure to pursue other beneficial opportunities due to management's focus on the proposed Merger and such other transactions related thereto, without realizing any of the anticipated benefits of completing the proposed Merger and such other transactions related thereto. Additionally, the market price of the Company's Common Stock could decline to the extent that current market prices reflect a market assumption that the proposed Merger and such other transactions related thereto will be completed. The Company could also be subject to litigation related to the failure to consummate the proposed Merger and such other transactions related thereto or to proceedings commenced against the Company to perform its obligations pursuant to the Merger Agreement. Additionally, the Company has incurred and may continue to incur substantial expenses in connection with the negotiation and completion of the transactions contemplated by the Merger Agreement, as well as the costs and expenses of preparing, filing, printing, and mailing any necessary joint proxy statement/prospectus, and all filing and other fees paid in connection with the proposed Merger and such other transactions related thereto. If the proposed Merger and such other transactions related thereto are not consummated, the Company would have paid these expenses without realizing the expected benefits of the proposed Merger and such other transactions related thereto.