Form 8-K - Current report

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): August 18, 2023

Sunlight Financial Holdings Inc.

(Exact name of registrant as specified in its charter)

Delaware

001-39739

85-2599566

(State or other jurisdiction of incorporation or organization)

(Commission File Number)

(I.R.S. Employer Identification No.)

101 North Tryon Street, Suite 1000, Charlotte, NC 28246

(Address of principal executive offices, including zip code)

(888) 315-0822

(Registrant’s telephone number, including area code)

Not Applicable

(Former name, former address and former fiscal year, if changed since last report)

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:

☐ Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)

☐ Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)

☐ Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))

☐ Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))

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

Title of each class:

Trading Symbol(s)

Name of each exchange on which registered:

Class A Common Stock, par value $0.0001 per share

SUNL

New York Stock Exchange

Warrants, each whole warrant exercisable for one share of Class A Common Stock at an exercise price of $230.00 per share

SUNL.WS

New York Stock Exchange

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

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 3.03. Material Modification to Rights of Security Holders.

To the extent required by Item 3.03 of Form 8-K, the information contained in Item 5.03 of this report is incorporated herein by reference.

Item 5.03. Amendments to Articles of Incorporation or Bylaws; Changes in Fiscal Year.

As previously disclosed, on August 11, 2023 at the Annual Meeting of Stockholders of Sunlight Financial Holdings Inc. (the “Company”), the stockholders approved a proposal to amend the Company’s Certificate of Incorporation to effect a reverse stock split of the Company’s outstanding Class A and Class C common stock at an exchange ratio of between 1-for-10 and 1-for-25, such ratio to be determined by the Company’s board of directors, at any time prior to December 31, 2023, the implementation and timing of which shall be subject to the discretion of the Company’s board of directors.

On August 22, 2023, the Company filed with the Secretary of State of the State of Delaware a Certificate of Amendment to its Certificate of Incorporation (the “Certificate of Amendment”) to effect a 1-for-20 reverse stock split of each of the Company’s issued and outstanding shares of Class A common stock and Class C common stock (the “Reverse Stock Split”). The Reverse Stock Split became effective as of 11:59 p.m. Eastern Time on August 22, 2023, and the Company’s Class A common stock is expected to begin trading on a split-adjusted basis when the New York Stock Exchange (“NYSE”) opens on August 23, 2023.

As a result of the Reverse Stock Split, every 20 shares of the Company’s issued and outstanding Class A common stock will be combined, automatically and without any action on the part of stockholders, into one share of the Company’s Class A common stock, without any change in the number of authorized shares or the par value per share. All outstanding NYSE-listed warrants to purchase the Company’s Class A Common Stock will be proportionately adjusted as a result of the Reverse Stock Split in accordance with the terms of the warrants, such that warrants representing the right to purchase 20 shares of the Company’s Class A common stock immediately prior to the Reverse Stock Split will represent the right to purchase one share of the Company’s Class A Common Stock immediately following the Reverse Stock Split. Correspondingly, the exercise price per share of the Company’s Class A common stock under such warrants has been proportionately increased to $230.00, which is equal to the product of 20 multiplied by $11.50, the exercise price per share immediately prior to the Reverse Stock Split. A proportionate adjustment will be made to the per share exercise price and the number of shares issuable upon the exercise of all outstanding stock options, restricted stock units and any other warrants to purchase shares of Class A common stock. Additionally, at the effective time, every 20 issued and outstanding shares of the Company’s Class C common stock, which is not listed on the NYSE, will be combined, automatically and without any action on the part of stockholders, into one share of the Company’s Class C common stock. No fractional shares will be issued in connection with the Reverse Stock Split and stockholders who would otherwise be entitled to a fractional share will receive an additional share of common stock. No stockholders will receive cash in lieu of fractional shares.

The trading symbol for the Company’s Class A common stock on the NYSE will remain “SUNL” and the new CUSIP number for the Company’s Class A common stock following the Reverse Stock Split will be 86738J 304.

For more information about the Reverse Stock Split, see the Company’s Definitive Proxy Statement on Schedule 14A, which was filed with the U.S. Securities and Exchange Commission and mailed to the Company’s stockholders on or about July 7, 2023 and supplemented on August 7, 2023 (together, the “Proxy Statement”), the relevant portions of which are incorporated herein by reference. The foregoing description of the Certificate of Amendment and the Reverse Stock Split set forth above does not purport to be complete and is qualified in its entirety by reference to the Proxy Statement. A copy of the Certificate of Amendment is attached as Exhibit 3.1 hereto and incorporated herein by reference.

Item 8.01. Other Events.

On August 18, 2023, the Company issued a press release announcing that the Board has approved the Reverse Stock Split. A copy of the press release is attached hereto as Exhibit 99.1, and is incorporated herein by reference.

Item 9.01. Financial Statements and Exhibits.

(d) Exhibits.


Exhibit Number						Description
3.1						Certificate of Amendment to Certificate of Incorporation of Sunlight Financial Holdings Inc.
99.1						Press Release issued by Sunlight Financial Holdings Inc. dated Au gu st 18 , 2023.
104						Cover Page Interactive Data File (embedded within the Inline XBRL document).

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 hereunto duly authorized.


SUNLIGHT FINANCIAL HOLDINGS INC.

By:			/s/ Matthew Potere
			Matthew Potere
			Chief Executive Officer
			(Principal Executive Officer)

Date: August 23, 2023

Exhibit 3.1

CERTIFICATE OF AMENDMENT
TO THE SECOND AMENDED AND RESTATED CERTIFICATE OF INCORPORATION OF
SUNLIGHT FINANCIAL HOLDINGS INC.

Sunlight Financial Holdings Inc. (the “Corporation”), a corporation organized and existing under the General Corporation Law of the State of Delaware (the “DGCL”), hereby certifies as follows:

FIRST. At 11:59 p.m. on August 22, 2023 (the “Split Effective Time”), every twenty (20) issued and outstanding shares of the Corporation’s Class A Common Stock, par value $.0001 per share, as of the date and time immediately preceding the Split Effective Time (the “Old Class A Shares”), shall automatically be reclassified as and converted into one (1) validly issued, fully paid and non-assessable share of Class A Common Stock the Corporation (the “New Class A Shares”) without any further action by the Corporation or the holder thereof, subject to the treatment of fractional share interests as described below (the “Reverse Stock Split”). Further, every right, option and warrant to acquire Old Class A Shares outstanding immediately prior to the Split Effective Time shall, as of the Split Effective Time and without any further action, automatically be reclassified into the right to acquire one (1) New Class A Share for every twenty (20) Old Class A Shares, but otherwise upon the terms of such right, option or warrant (except that the exercise or purchase price of such right, option or warrant shall be proportionately adjusted). No fractional shares shall be issued in connection with the Reverse Stock Split. Stockholders who otherwise would be entitled to receive fractional shares of Class A Common Stock shall receive that number of New Class A Shares based on the conversion ratio of their shares of Old Class A Shares to New Class A Shares set forth above, rounded up to the next whole share of Class A Common Stock.

SECOND. At the Split Effective Time, every twenty (20) issued and outstanding shares of the Corporation’s Class C Common Stock, par value $.0001 per share, as of the date and time immediately preceding the Split Effective Time (the “Old Class C Shares”), shall automatically be reclassified as and converted into one (1) validly issued, fully paid and non-assessable share of Class C Common Stock the Corporation (the “New Class C Shares”) without any further action by the Corporation or the holder thereof, subject to the treatment of fractional share interests as described below. Further, every right, option and warrant to acquire Old Class C Shares outstanding immediately prior to the Split Effective Time shall, as of the Split Effective Time and without any further action, automatically be reclassified into the right to acquire one (1) New Class C Share for every twenty (20) Old Class C Shares, but otherwise upon the terms of such right, option or warrant (except that the exercise or purchase price of such right, option or warrant shall be proportionately adjusted). No fractional shares shall be issued in connection with the Reverse Stock Split. Stockholders who otherwise would be entitled to receive fractional shares of Class C Common Stock shall receive that number of New Class C Shares based on the conversion ratio of their shares of Old Class C Shares to New Class C Shares set forth above, rounded up to the next whole share of Class C Common Stock.

THIRD. Each holder of record of a certificate which as of the last trading day preceding the Split Effective Time represents Old Class A Shares or Old Class C Shares (the “Old Certificates”) shall be entitled to receive upon surrender of such Old Certificates to the Corporation’s transfer agent for cancellation, a certificate (the “New Certificates”) representing the number of whole shares of Class A Common Stock or Class C Common Stock, as applicable, into and for which the shares formerly represented by such Old Certificates so surrendered are exchangeable. From and after the Split Effective Time, Old Certificates shall represent only the right to receive New Certificates pursuant to the provisions hereof.

FOURTH. That a resolution was duly adopted by the board of directors of the Corporation, pursuant to Section 242 of the General Corporation Law of the State of Delaware, setting forth the above mentioned amendment to the Certificate of Incorporation and declaring said amendment to be advisable.

FIFTH. That this amendment was duly authorized by the holders of 66 2/3% of the outstanding voting stock of the Corporation at a duly authorized meeting of the stockholders of the Corporation. Said amendment was duly adopted in accordance with the provisions of the General Corporation Law.

Exhibit 3.1

IN WITNESS WHEREOF, this Certificate of Amendment of the Certificate of Incorporation has been signed by the Chief Executive Officer of the Corporation this 22nd day of August, 2023.

SUNLIGHT FINANCIAL HOLDINGS INC.

By: /s/ Matthew Potere

Matthew Potere, Chief Executive Officer

Exhibit 99.1

Sunlight Financial Announces 1-for-20 Reverse Stock Split

NEW YORK, N.Y. and CHARLOTTE, N.C. – August 18, 2023 – Sunlight Financial Holdings Inc. (“Sunlight Financial”, "Sunlight" or the “Company”) (NYSE: SUNL), a premier, technology-enabled point-of-sale finance company, today announced that its Board of Directors approved a 1-for-20 reverse stock split of the Company’s common stock that will become effective at 11:59 p.m. Eastern Time on August 22, 2023. The Company’s common stock will begin trading on a split-adjusted basis on the New York Stock Exchange (NYSE) when the market opens on August 23, 2023. The reverse stock split was approved by the Company’s stockholders on August 11, 2023 at the Company’s annual meeting of stockholders, with authorization to determine the final ratio having been granted to the Company’s Board of Directors.

At the effective time, every 20 issued and outstanding shares of the Company’s Class A common stock will be converted into one share of the Company’s Class A common stock. Once effective, the reverse stock split will reduce the number of shares of the Company’s Class A common stock issued and outstanding from approximately 86 million to approximately 4.3 million. Additionally, at the effective time, every 20 issued and outstanding shares of the Company’s Class C common stock, which is not listed on the NYSE, will be converted into one share of the Company’s Class C common stock.

No fractional shares will be issued in connection with the reverse stock split and stockholders who would otherwise be entitled to a fractional share will receive an additional share of common stock. No stockholders will receive cash in lieu of fractional shares.

Holders of the Company’s common stock held in book-entry form or through a bank, broker or other nominee do not need to take any action in connection with the reverse stock split. Stockholders of record will be receiving information from Continental Stock Transfer and Trust Company, the Company’s transfer agent, regarding their stock ownership post-reverse stock split. Beneficial holders are encouraged to contact their bank, broker or other nominee with any procedural questions. All other questions can be directed to the transfer agent, which can be reached at (800) 509-5586. Additional information concerning the reverse stock split can be found in the Company’s definitive proxy statement on Schedule 14A filed with the Securities and Exchange Commission on July 7, 2023.

All outstanding public warrants to purchase the Company’s class A common stock will be proportionately adjusted as a result of the reverse stock split in accordance with the terms of the warrants, such that warrants representing the right to purchase 20 shares of the Company’s class A common stock immediately prior to the reverse stock split now represent the right to purchase one share of the Company’s class A common stock immediately following the reverse stock split. Correspondingly, the exercise price per share of the Company’s class A common stock attributable to such warrants immediately prior to the reverse stock split has been proportionately increased, such that the exercise price per share of the Company’s class A common stock attributable to such warrants immediately following the reverse stock split is $230.00, which equals the product of 20 multiplied by $11.50, the exercise price per share immediately prior to the reverse stock split. The number of shares of the Company’s class A common stock subject to the public warrants will be decreased by 20 times, to an aggregate of 862,500 shares. Proportionate adjustments will be made to the exercise prices, grant prices or purchase prices and the number of shares underlying the Company’s outstanding equity awards, as applicable, and private warrants exercisable for shares of the Company’s common stock, as well as to the number of shares issuable under the Company’s

Exhibit 99.1

equity incentive plans, as determined by the Compensation Committee of the Company’s Board of Directors and/or in accordance with the terms of certain existing agreements, as applicable.

The reverse stock split is intended to increase the market price per share of the Company’s Class A common stock to ensure the Company regains full compliance with the NYSE listing rule related to the minimum required average closing price of the common stock and maintains its listing on the NYSE. The Company anticipates that effects of the reverse stock split will be sufficient for the Company to regain compliance with the NYSE’s continued listing standards, however, there can be no assurance that the reverse split will have that effect, initially or in the future, or that it will enable the Company to maintain the listing of its Class A common stock on the NYSE.

The trading symbol for the Company’s Class A common stock will remain “SUNL” and the new CUSIP number for the Company’s Class A common stock following the reverse stock split will be 86738J 304. The trading symbol and CUSIP number for the Company’s warrants will remain unchanged.

About Sunlight Financial

Sunlight Financial is a premier, technology-enabled point-of-sale finance company. Sunlight partners with contractors nationwide to provide homeowners with financing for the installation of residential solar systems and other home improvements. Sunlight’s best-in-class technology and deep credit expertise simplify and streamline consumer finance, ensuring a fast and frictionless process for both contractors and homeowners. For more information, visit www.sunlightfinancial.com.

Contacts:

Investor Relations

Glenn Cummins

investors@sunlightfinancial.com

888.315.0822

Forward-Looking Statements

The information included herein and in any oral statements made in connection herewith may include “forward-looking statements” within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended. Forward-looking statements may generally be identified by the use of words such as “could,” “should,” “would,” “will,” “may,” “believe,” “anticipate,” “outlook,“ “intend,” “estimate,” “expect,” “project,” “plan,” “continue,” or the negative of such terms and other similar expressions are intended to identify forward-looking statements, although not all forward-looking statements contain such identifying words. These forward-looking statements are based on management’s current expectations and assumptions about future events and are based on currently available information as to the outcome and timing of future events. Except as otherwise required by applicable law, Sunlight disclaims any duty to update any forward-looking statements, all of which are expressly qualified by the statements in this section, to reflect events or circumstances after the date hereof. Sunlight cautions you that these forward-looking statements are subject to numerous risks and uncertainties, most of which are difficult to predict and many of which are beyond the control of Sunlight. Such risks and uncertainties include, among others: various factors including negative current market conditions resulting in lower loan volumes, sales of Indirect Channel Loans at losses, Sunlight’s potential inability to sell enough loans under current market conditions to enable Sunlight to comply with the total loan cap under the Bank Partner Agreements and Sunlight’s current expectations regarding the longevity of unfavorable market conditions are impacting our ability to generate cash flow and if not resolved in a timely manner, raise substantial doubt about our ability to continue as a going concern; while we have received a waiver from the Bank Partner regarding our compliance with the minimum cash held at Bank Partner covenant and certain nonfinancial covenants under the Secured Term Loan, we must continue to work through the Backbook Loans, rising interest rate environment, and unfavorable market conditions for loan sales to stabilize our business and return to profitability, generate sufficient cash flow to fund our business and achieve compliance with the Bank Partner Agreements and the Secured Term Loan; there is no assurance that the Bank Partner will further amend our agreements with them or provide additional waivers for noncompliance; we have incurred a net loss for the year ended December 31, 2022 and the six months ended June 30, 2023 and we expect this to continue throughout 2023 unless market conditions change significantly in the near term; under the supervision and oversight of its Board of Directors, Sunlight (with the assistance of a financial advisory firm) continues to explore all available strategic alternatives and other available options for the Company, and Sunlight’s Board is considering all available options, including selling the Company or a restructuring of the Company through a privately negotiated transaction or a court process; we cannot predict the impact that such strategic alternative might have on Sunlight’s operations or the prices of Sunlight’s securities; our limited liquidity is materially and adversely affecting our business operations; while we have consummated the Transactions contemplated by the Commitment & Transaction Support Agreement we will continue to implement cost saving measures and the Board is continuing to review additional actions to maximize value for shareholders; non-compliance on the part of third parties with whom we conduct business disrupts our business and adversely affects our financial conditions and operating results; we do not currently have an interest rate risk hedging program or seek to hedge interest rate risks associated with our Bank Partner Agreements, and therefore are not protected against significant increases in interest rates; worsening economic conditions from rising interest rates, a rising rate of inflation, or other potential causes of economic distress could raise Sunlight’s cost of capital and/or reduce or eliminate the willingness of Sunlight’s direct or indirect capital providers to continue funding loan volume at historical levels, thereby materially and adversely impacting Sunlight’s business, cash flows, financial condition and results of operations; the ongoing COVID-19 pandemic and other

health epidemics and outbreaks, including the rise of variants of COVID-19, could adversely affect Sunlight’s business, results of operations and financial condition; while Sunlight obtained amended terms under the Bank Partner Agreements in April 2023, if Sunlight is unable to facilitate the sale of loans held on its Bank Partner’s balance sheet to comply with the total loan cap and the Bank Partner is unwilling to further expand its loan capacity, Sunlight may be required to purchase all or a portion of these loans and/or may be unable to fund future Indirect Channel Loans; to the extent that Sunlight seeks to grow or strengthen its business and competitive position through future acquisitions, or other strategic investments, transactions or alliances, Sunlight may not be able to do so effectively; a material reduction in the retail price of electricity charged by electric utilities, other retail electricity providers or other energy sources as compared to potential savings for purchasing and using a solar system or an increase in pricing for purchasing and using a solar system above the cost of other energy sources could result in a lower demand for solar systems, which could have an adverse impact on Sunlight’s business, results of operations and financial condition; the reduction, modification or elimination of government incentives could cause our revenue to decline and harm our financial results; existing regulations and policies and changes to these regulations and policies may present technical, regulatory, and economic barriers to the purchase and use of solar power products, which may significantly reduce demand for our loan products and services; the industries that Sunlight operates in are highly competitive and are likely to become more competitive; additionally, if new entrants join these markets who have ready access to cheaper capital, competing successfully would become more difficult for Sunlight; Sunlight’s inability to compete successfully or maintain or improve Sunlight’s market share and margins could adversely affect its business; disruptions in the operation of Sunlight’s computer systems and those of its critical third-party service providers and capital providers could have an adverse effect on Sunlight’s business; Sunlight’s growth is dependent on its contractor network and in turn the quality of the products and services they provide to their customers, and Sunlight’s failure to retain or replace existing contractors, to grow its contractor network or the number of Sunlight loans offered through its existing network, or increases in loan delinquencies due to any deficiencies in Sunlight’s contractor underwriting practices, could adversely impact Sunlight’s business; the current electrician shortage adversely impacts our business, financial condition, and results of operations; Sunlight’s capital advance program exposes it to potential losses in the event that a contractor fails to fully perform under its agreements with Sunlight or becomes insolvent prior to completion of the underlying installation or construction, which losses could have an adverse impact on Sunlight’s business, results of operations and financial condition; if contractors fail to fulfill their obligations to consumers or fail to comply with applicable law, Sunlight may incur remediation costs; Sunlight’s revenue is impacted, to a significant extent, by the general economy, including supply chain disruptions, and the financial performance of its capital providers and contractors; our results of operations could be adversely affected by economic and political conditions globally and the effects of these conditions on our clients’ businesses and levels of business activity; Sunlight has never paid cash dividends on its capital stock, and does not anticipate paying dividends in the foreseeable future; Sunlight cannot guarantee that it will repurchase its common stock pursuant to Sunlight’s share repurchase program or that Sunlight’s share repurchase program will enhance long-term shareholder value; share repurchases could also increase the volatility of the price of Sunlight’s common stock and could diminish Sunlight’s cash reserves; if assumptions or estimates Sunlight uses in preparing its financial statements are incorrect or are required to change, Sunlight’s reported results of operations, liquidity and financial condition may be adversely affected; and such other risks and uncertainties discussed in the “Risk Factors” section of Sunlight’s Form 10-K as filed with the Securities and Exchange Commission (“SEC”) on May 4, 2023 and Sunlight's most recent 10-Q as filed with the SEC on August 9, 2023. Should one or more of the risks or uncertainties described

herein occur, or should underlying assumptions prove incorrect, actual results and plans could differ materially from those expressed in any forward-looking statements. Sunlight’s SEC filings are available publicly on the SEC’s website at www.sec.gov.

Cover	Aug. 18, 2023
Document Information [Line Items]
Document Type	8-K
Document Period End Date	Aug. 18, 2023
Entity Registrant Name	Sunlight Financial Holdings Inc.
Entity Incorporation, State or Country Code	DE
Entity File Number	001-39739
Entity Tax Identification Number	85-2599566
Entity Address, Address Line One	101 North Tryon Street
Entity Address, Address Line Two	Suite 1000
Entity Address, City or Town	Charlotte
Entity Address, State or Province	NC
Entity Address, Postal Zip Code	28246
City Area Code	888
Local Phone Number	315-0822
Written Communications	false
Soliciting Material	false
Pre-commencement Tender Offer	false
Pre-commencement Issuer Tender Offer	false
Entity Emerging Growth Company	true
Entity Ex Transition Period	false
Entity Central Index Key	0001821850
Amendment Flag	false
Current Fiscal Year End Date	--12-31
Class A Common Stock, par value $0.0001 per share
Document Information [Line Items]
Title of 12(b) Security	Class A Common Stock, par value $0.0001 per share
Trading Symbol	SUNL
Security Exchange Name	NYSE
Warrants, each whole warrant exercisable for one share of Class A Common Stock at an exercise price of $230.00 per share
Document Information [Line Items]
Title of 12(b) Security	Warrants, each whole warrant exercisable for one share of Class A Common Stock at an exercise price of $230.00 per share
Trading Symbol	SUNL.WS
Security Exchange Name	NYSE