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New words:
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absolute, accompanied, accumulated, acquired, acquisition, adequate, assumed, assure, ASU, audit, award, background, began, beneficiary, Black, broad, budget, Capitalization, capitalize, Carlo, carried, case, CDU, ceasing, ceiling, CEO, CFO, check, classified, collect, combination, combined, communicated, compliance, comprise, consideration, consolidate, constructing, continuation, converted, cover, cumulative, decommissioned, deepen, deficiency, deficit, degree, demonstration, detected, deteriorate, determine, developing, disproportionate, disrupt, division, documentation, downgrade, effecting, effectively, eliminate, employee, EMS, enable, environmentally, escrow, exercised, expanded, expensed, exposed, FASB, flexible, foreseeable, forfeiture, formal, forward, friendly, functional, furnished, goodwill, group, heading, hire, hybrid, improve, inadequate, incorporated, incremental, input, integrated, intended, intermittence, June, Legacy, lifetime, Lugano, maximize, maximum, meeting, misconduct, misstatement, modified, modular, Monte, multiple, NCCII, nominate, NRGV, offering, opportunity, pairing, pandemic, par, performed, personnel, pervasive, PIPE, placement, portfolio, powering, preferred, preparing, presented, prevalent, prevented, processed, properly, purpose, recessionary, redeemed, relation, remeasurement, remediate, remediated, remediation, renamed, represented, requirement, requiring, requisite, resulted, retroactively, retrospective, return, roadmap, RSA, scalability, scheduled, served, shorter, simulation, solution, solving, source, SOX, specific, Specifically, spectrum, sponsor, structured, submitted, summarized, supplemented, surviving, Switzerland, threshold, timely, Topic, tower, track, treated, treatment, trust, turn, turnkey, ultimately, underwriting, unit, unobservable, upgrade, utilized, varied, VIE, window, WS, York
Financial report summary
?Risks
- Our limited operating history and our rapidly evolving industry make it difficult to evaluate our business, the risks and challenges we may face and future prospects.
- Our projections are subject to significant risks, assumptions, estimates and uncertainties. As a result, our projected revenues, market share, expenses and profitability may differ materially from our expectations.
- Our business model depends on acceptance of our technology by our customers, retaining existing customers, and the success of our business model .
- We depend on a limited number of customers for the majority of our revenue, and the loss of any one of these customers could substantially reduce our revenue and impact our liquidity.
- The engineering of our systems is in continuous refinement to improve system cost and efficiency. There is no guarantee that we will be successful in implementing all improvements under the expected schedule.
- Operational costs can be difficult to predict and may include costs from requirements related to the decommissioning of our systems.
- Our energy storage systems have significant upfront costs, and our customers may need to obtain financing to help finance purchases. If our customers are unable to procure third-party financing or if the cost of such financing exceeds our estimates, our business would be adversely affected.
- The economic benefit of our energy storage systems to our customers depends on the cost of electricity available from alternative sources, including local electric utility companies, which cost structure is subject to change.
- Our energy storage systems’ performance may not meet our customers’ expectations or needs.
- If our estimates of the useful life for our energy storage systems are inaccurate or we do not meet service and warranties and performance guarantees, our business and financial results could be adversely affected.
- We intend to explore alternative, co-active use case opportunities for our systems, but there is no assurance that such opportunities exist or that they would be as beneficial to us as we expect.
- There is no assurance that non-binding letters of intent and other indications of interest, including awards, submitted proposals or short-lists, will result in binding orders or sales. Customers may cancel or delay the non-binding letters of intent and other indications of interest in our sales pipeline. As a result, our operating results and cash flows may be materially lower than our expected results of operations.
- Our future growth depends upon our ability to maintain relationships with third parties, and the terms and enforceability of many of these relationships are not certain.
- We depend upon component and product manufacturing and logistical services provided by third parties, many of whom are located outside of the U.S.
- Our systems often rely on interconnections to distribution and transmission facilities that are owned and operated by third parties, and as a result, are exposed to interconnection and transmission facility development and curtailment risks.
- Our business is subject to risks associated with construction, cost overruns and delays, including those related to obtaining government permits and approvals, electrical interconnection, and other contingencies that may arise in the course of completing installations.
- The size of our GESSs may negatively impact our ability to enter into contracts with customers or obtain government permits and approvals.
- Our GESSs are based on established principles that are deployed in a novel way to create new technologies to store energy and potential customers may be hesitant to make a significant investment in our technology or abandon the technology they are currently using.
- We face additional risks to the extent that customers choose to purchase energy storage and dispatch of electricity from systems we build and in which we retain an ownership interest rather than purchase an energy storage system.
- Increasing attention to, and scrutiny of, ESG matters could increase our costs, harm our reputation, impact our share price or access to or cost of capital, or otherwise adversely impact our business.
- Should we pursue acquisitions in the future, it would be subject to risks associated with acquisitions.
- Our operations are international, and expanding operations in some international markets could expose us to additional risks.
- Our future growth is dependent upon the pace and depth of renewable energy adoption and energy storage technologies, which are emerging industries, as well as our competition. If the markets for renewable energy and energy storage do not develop as we expect, or if they develop more slowly than we expect, our business, prospects, financial condition and operating results could be adversely affected.
- Even if renewable energy and energy storage become more widely adopted, our energy storage technology may not achieve widespread market acceptance or may be less cost-effective as compared to competing technologies.
- We operate in highly competitive energy industries and there is increasing competition. Many of our competitors and future competitors may have significantly more financial and other resources than we do and if we do not compete effectively, our competitive positioning and our operating results will be harmed.
- If we are unable to attract and retain key employees and hire qualified management, technical, engineering, and sales personnel, including a highly skilled and diverse management team with experience in the energy storage sectors, our ability to compete and successfully grow our business could be harmed.
- Labor disputes could disrupt our ability to serve our customers and/or lead to higher labor costs.
- Our management has limited experience in operating a public company.
- Changes in business, economic, or political conditions, including overall changes in demand, are beyond our control and could impact our business, resulting in lower revenues and other adverse effects to our results of operations.
- The productivity of our or our customers’ facilities, the operation of our supply chain, the demand, performance and availability of our products, our services, our systems and our business in general may be affected by factors outside of our control, which could result in harm to our business and financial results.
- We are subject to a series of risks related to climate change.
- Fuel prices, including volatility in the cost of diesel or natural gas or a prolonged period of low gasoline and natural gas costs, could decrease incentives to transition to renewable energy.
- Our insurance coverage, customer indemnifications or other liability protections may be unavailable or inadequate to cover all of our significant risks, which could adversely affect our profitability and overall financial position.
- Material weaknesses in our internal control over financial reporting could have a significant adverse effect on our business and the price of our common stock.
- We are an early stage company with a history of losses, and expect to incur significant expenses and continuing losses for the foreseeable future, and we may not be able to achieve profitability in the future.
- The implementation of our business plan and strategy may require additional capital. If we are then unable to achieve sufficient sales to generate that capital or otherwise raise capital, it may create substantial doubt about our ability to pursue our business objectives and achieve profitability or to continue as a going concern. If adequate capital is not available to us, including due to the cost and availability of funding in the capital markets, our business, operating results and financial condition may be harmed.
- Our energy storage systems involve a lengthy sales and installation cycle, and if we fail to close sales on a regular and timely basis it could harm our business. Moreover, the long sales cycles for our energy storage systems and other factors may result in significant fluctuations in our results from period to period.
- Our total backlog and bookings may not be indicative of our future revenue, which could have a material adverse impact on our business, financial condition, and results of operations.
- Our ability to use net operating losses and other tax attributes to offset future taxable income may be subject to certain limitations.
- Changes in tax laws and regulations may have a material adverse effect on our business, financial condition, and result of operations.
- We may be required to take write-downs or write-offs, restructuring and impairment or other charges that could have a significant negative effect on our financial condition, results of operations and stock price, which could cause you to lose some or all of your investment.
- Incorrect estimates or assumptions by management in connection with the preparation of our consolidated financial statements could adversely affect our reported assets, liabilities, income, revenue or expenses.
- We may be unable to protect, defend, maintain or enforce intellectual property rights on which our business depends, including as against existing or future competitors, which may adversely affect our growth and success.
- Our patents and patent applications, if issued, may not provide adequate protection to create a barrier to entry. The provisional and non-provisional patent applications that we own may not issue as patents or provide adequate protection to create a barrier to entry, which may hinder our ability to prevent competitors from selling products similar to ours.
- We may be subject to third-party claims of infringement, misappropriation or other violation of intellectual property rights, or other claims challenging our agreements related to intellectual property, which may be time-consuming and costly to defend, and could result in substantial liability.
- We may be subject to claims that our employees, consultants, or advisors have wrongfully used or disclosed proprietary information or know-how of their current or former employers or claims asserting ownership of what we regard as our own intellectual property rights.
- Cyberattacks and other security breaches affecting, or significant interruptions to, information technology systems on which we rely could have an adverse effect on our business, operations and financial condition, including through harm to our reputation and exposure to liability.
- Our systems include complex software and technology systems and do not have a meaningful history of operation, and there can be no assurance such systems and technology will perform as expected or that software, engineering or other technical defects will not be discovered until after a system is installed and operated by a customer. If our energy storage systems contain engineering or construction defects, our business and financial results could be harmed. In addition, the development and updating of these systems will require us to incur potentially significant costs and expenses.
- Any failure to offer high-quality technical support services may adversely affect our relationships with our customers and adversely affect our financial results.
- If any of our products are or are alleged to be defective in design or manufacturing or experience other failures, we may be compelled to undertake corrective actions, which could adversely affect our business, prospects, operating results, reputation and financial condition.
- Our future financial performance may depend on the continued availability of rebates, tax credits and other financial incentives. The reduction, modification, or elimination of government economic incentives could cause our revenue to decline and harm our financial results.
- Action by governmental authorities and local residents to restrict construction or use of our systems or the projects/facilities that rely on our systems in their localities could substantially harm our business and financial results.
- Any actual or perceived failure to comply with laws, regulations and rules relating to privacy, information security, and data protection could subject us to liability, damage our reputation, increase our costs and otherwise adversely affect our business opportunities, results of operations and financial condition. In addition, the ongoing costs of complying with such laws, regulations and rules could be significant.
- We are subject to anti-bribery, anti-corruption, including the U.S. Foreign Corrupt Practices Act, as well as export control laws, customs laws, sanctions laws and other laws governing our operations. If we fail to comply with these laws, we could be subject to civil or criminal penalties, other remedial measures and legal expenses, any of which would adversely affect our business, financial condition and results of operations.
- Changes in regulatory enforcement policies and priorities may negatively impact the management of our business, results of operations, and ability to compete.
- We are subject to licensing, permitting, and operational requirements that result in substantial compliance costs, and our business would be adversely affected if we fail to obtain or maintain required licenses or if our licenses are impaired.
- Litigation, regulatory actions and compliance issues could subject us to significant fines, penalties, judgments, remediation costs, negative publicity and requirements resulting in increased expenses.
- Government reviews, inquiries, investigations, and actions could harm our business or reputation.
- Concentration of ownership among our executive officers, directors, and their affiliates may prevent new investors from influencing significant corporate decisions.
- The Company qualifies as an “emerging growth company” within the meaning of the Securities Act, and in reliance on SEC guidance, takes advantage of certain exemptions from disclosure requirements available to emerging growth companies, as well as “smaller reporting companies,” which could make our securities less attractive to investors and may make it more difficult to compare our performance to the performance of other public companies.
- There can be no assurance that our common stock will be able to continue to comply with the continued listing standards of the NYSE.
- We expect to continue incurring significant increased expenses and administrative burdens as a public company, which could negatively impact our business, financial condition and results of operations.
- If, securities or industry analysts cease publishing research or reports about the Company, its business, or its market, or if they change their recommendations regarding the Company’s securities adversely, the price and trading volume of the Company’s securities could decline.
- Because we have no current plans to pay cash dividends on the Company’s common stock for the foreseeable future, you may not receive any return on investment unless you sell the Company’s common stock for a price greater than that which you paid for it.
- The Company may issue additional shares of common stock or other equity securities without your approval, which would dilute your ownership interests and may depress the market price of the Company’s common stock.
- Our stock price may be volatile or may decline regardless of our operating performance. You may lose some or all of your investment.
- If we fail to maintain proper and effective internal control over financial reporting as a public company, our ability to produce accurate and timely financial statements could be impaired, investors may lose confidence in our financial reporting and the trading price of our common stock may decline.
- Activist stockholders may attempt to effect changes to our company, which could adversely affect our corporate governance, results of operations, and financial condition.
- Anti-takeover provisions in our certificate of incorporation, our bylaws and under Delaware law could make an acquisition of the Company, which may be beneficial to our stockholders, more difficult and may prevent attempts by our stockholders to replace or remove the Company’s current management.
Management Discussion
- The Company recognized revenue for the product and service categories as follows for the three and three months ended March 31, 2024 and 2023.
- Revenue for the three months ended March 31, 2024 decreased by $3.7 million to $7.8 million compared to $11.4 million for the three months ended March 31, 2023. The decrease in revenue was primarily attributable to a $3.9 million decrease in revenue from building and transferring energy storage products due to a reduction in revenue from battery energy storage projects. Revenue from two customers accounted for 80% and 14% of total revenue for the three months ended March 31, 2024 and revenue from three different customers accounted for 43%, 39%, and 16% of total revenue for the three months ended March 31, 2023.
- Cost of revenue for the three months ended March 31, 2024 decreased by $3.3 million to $5.7 million compared to $9.0 million for the three months ended March 31, 2023. Cost of revenue decreased as a result of the Company’s BESS projects