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Table of Contents
<br />revenues, even if such revenues are eventually received, may cause our operating results for a particular quarter to fall below our expectations.
<br />If we are not able to complete, perform or operate our projects on a profitable basis or as we have committed to our customers, we could become subject to liquidated
<br />damages, and our reputation and our results of operations could be adversely impacted
<br />Development, installation, and construction of our energy efficiency and renewable energy projects, and operation of our renewable energy projects, entails many risks,
<br />including:
<br />• failure or delays in receiving components and equipment that meet our requirements,
<br />• failure or delays in obtaining all necessary rights to land access and use,
<br />• failure or delays in receiving quality performance of contractors and other third -party service providers,
<br />• increases (including as a result of inflation) in the cost of labor, equipment, and commodities needed to construct or operate projects,
<br />• failure or delays in obtaining permitting and addressing other regulatory issues, license revocation, and changes in legal requirements,
<br />• failure or delays in obtaining other governmental support or approvals, or in overcoming objections from members of the public or adjoining landowners,
<br />• shortages of equipment or skilled labor,
<br />• unforeseen engineering problems,
<br />• failure of a customer to accept or pay for renewable energy that we supply,
<br />• weather interferences, catastrophic events including fires, explosions, earthquakes, droughts, and acts of terrorism; and accidents involving personal injury or the loss of
<br />life,
<br />• environmental, archaeological or geological conditions
<br />• health or similar issues, a pandemic, or epidemic, such as COVID-19,
<br />• labor disputes and work stoppages,
<br />• mishandling of hazardous substances and waste, and other events outside of our control.
<br />Any of these factors could give rise to construction delays, costs in excess of our expectations or cause us not to meet commitments given to our customers. We have, for
<br />example, experienced disruptions in development, installation and construction as a result of continued supply chain and logistics challenges, facility closures, and we may
<br />continue to experience such disruptions. In addition, the impacts of climate change have caused us to experience more frequent and severe weather interferences which has
<br />impacted our construction timelines, and this trend may continue. Furthermore, while the passage of the IRA may increase the demand for our service and project offerings, it
<br />has also increased demand and cost for labor, equipment and commodities needed for our projects. These factors and events could prevent us from completing construction of
<br />our projects, cause defaults under our financing agreements or under contracts that require completion of project construction by a certain time, give rise to liquidated damages
<br />or penalties, cause projects to be unprofitable for us, or otherwise impair our business, financial condition, and operating results.
<br />For example, our Turnkey Engineering, Procurement, Construction and Maintenance Agreement and the underlying purchase orders dated as of October 21, 2021 (the "SCE
<br />Agreement') with SCE obligated us to achieve certain substantial completion milestone dates for the facilities no later than August 1, 2022, and for at least two years thereafter
<br />meet specified availability and capacity guarantees. As previously disclosed, due to supply chain delays, weather and other events, we were unable to complete the projects by
<br />the guaranteed completion date of August 1, 2022 and made force majeure claims related to such delays. We have been working with SCE to analyze the applicability of force
<br />majeure relief to the project delays and SCE has notified us that they intend to withhold liquidated damages for at least one of the three projects. If we fail to satisfy certain
<br />milestone obligations, fail come to an agreement with SCE or otherwise resolve matters related to substantial completion or related force majeure relief, or fail to meet the
<br />availability and capacity guarantees, we may be subject to liquidated damages and under certain circumstances SCE may have a right to terminate the agreement. This could
<br />have a material adverse effect on our reputation, business or results of operations.
<br />A significant decline in the fiscal health of federal, state, provincial, and local governments could reduce demand for our energy efficiency and renewable energy projects.
<br />Historically, including for the years ended December 31, 2023 and 2022, 72% and 46%, respectively, of our revenues have been derived from sales to federal, state, provincial,
<br />or local governmental entities, including public housing authorities, public universities, and municipal utilities. We expect revenues from this market sector to continue to
<br />comprise a significant percentage of our revenues for the foreseeable future. A significant decline in the fiscal health of these existing and potential customers may make it
<br />difficult for them to enter into contracts for our services, to obtain financing necessary to fund such contracts, or may cause them to seek to renegotiate or terminate existing
<br />agreements with us. In addition, if there is a partial or full shutdown of any federal, state, provincial or local governing body this may adversely impact our financial
<br />performance.
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