Tecogen (TGEN) risk factors, FY2024 10-K

Risks Relating to Our Business and Financial Condition

1. 01Our operating history is characterized by losses and there can be no assurance we will be able to increase our sales and sustain profitability in the future
2. 02During the year ended December 31, 2024, our revenues were negatively impacted due to supply chain issues, project deferrals and the reduced manufacturing capacity due to our plant relocation in 2024
3. 03If we experience a period of significant growth or expansion, it could place a substantial strain on our resources
4. 04We are dependent on a limited number of third-party suppliers for the supply of key components for our products
5. 05We depend on a small number of customers for a substantial portion of our product revenues. The loss of one or more of these customers, or our inability to collect outstanding receivables from such customers could have a material adverse effect on our financial results
6. 06The amount of our backlog is subject to fluctuation due to our customers’ experiencing unexpected delays in financing, permitting, or modifications in specifications of the equipment
7. 07We experience significant fluctuations in revenues and product mix from quarter to quarter on our product sales which may make period to period comparisons difficult
8. 08We expect significant competition for our products and services
9. 09We may not achieve production cost reductions necessary to competitively price our products, which would adversely affect our sales
10. 10Our products involve a lengthy sales cycle and we may not anticipate sales levels appropriately, which could impair our results of operations
11. 11The economic viability of our projects depends on the price spread between natural gas and other fuel and electricity, and the variability of these prices creates a risk that our projects will not be economically viable and that potential customers will avoid such energy price risks
12. 12We may make acquisitions or take other corporate strategic actions that could harm our financial performance
13. 13Expiring customer contracts may lead to decreases in revenue and increases in expenses
14. 14Our revenue from energy billing may be adversely impacted by increases in the price of natural gas, reductions in utility rates for electrical power, weather conditions, or by an increase in remote work and study environments, all of which could reduce our revenue
15. 15We may be affected by global climate change or by legal, regulatory, or market responses to such change
16. 16Our financial condition and results of operations could suffer if there is an impairment of goodwill or intangible assets
17. 17Increased costs of labor and employee health and welfare benefits may impact our results of operations
18. 18We are dependent on the continued contributions of our senior management and other key employees, and the loss of any of whom could adversely affect our business, operating results, and financial condition

Risks Related to Our Technologies

1. 19If we are unable to maintain our technological expertise in design and manufacturing processes, we will not be able to successfully compete

Legal, Regulatory and Compliance Risks

1. 20Our business is subject to product liability and warranty claims
2. 21Changes in regulations applicable to our businesses may impair the profitability of our businesses, and our failure to comply with applicable laws and regulations may increase our costs, reduce our earnings or limit our growth
3. 22Agreements with our customers may include potential liquidated damages relating to construction delays or performance guaranties
4. 23Utilities or governmental entities could hinder our entry into and growth in the marketplace, and we may not be able to effectively sell our products
5. 24The reduction, elimination or expiration of government and economic incentives for applications of our equipment could reduce demand for our equipment and harm our business
6. 25We may incorporate price reductions on equipment sold to customers based on the anticipated receipt of governmental economic incentive payments and apply and collect the incentives payments. If such incentives become unavailable to us our financial condition may be adversely affected
7. 26We may be exposed to substantial liability claims if we fail to fulfill our obligations to our customers or our on-site equipment malfunctions
8. 27Losses or unauthorized access to or releases of confidential information, including personal information, could subject us to significant reputational, financial, legal and operational consequences
9. 28We are exposed to credit risks with respect to some of our customers
10. 29We received short-term debt financing from directors and shareholders to fund our business and ongoing operations. If we are unable to generate sufficient funds from operations or obtain additional financing, we may not be able to repay the loans when they becomes due
11. 30See Note 11."Related Party Notes" of the Notes to the Consolidated Financial Statements

Risks Relating to Ownership of our Common Stock

1. 31Investment in our Common Stock is subject to price fluctuations and market volatility
2. 32If securities or industry analysts do not publish research or publish inaccurate or unfavorable research about our business, our share price and trading volume could decline
3. 33Because our directors and executive officers are among our largest stockholders, they can exert influence over our business and affairs and have actual or potential interests that may differ from other stockholders or investors
4. 34Current stock holdings may be diluted if we make future equity issuances or if outstanding options are exercised for shares of our common stock
5. 35Future sales of our shares by our existing stockholders may cause our stock price to fall
6. 36Because we have not and do not intend to pay cash dividends, our stockholders receive no current income from holding our stock
7. 37We incur substantial costs to operate as a public reporting company
8. 38Because our common stock is not traded on a national securities exchange, our stock has limited liquidity and our ability to raise capital is impaired
9. 39Delaware law and our certificate of incorporation and bylaws contain certain provisions, including anti-takeover provisions that limit the ability of stockholders to take certain actions and could delay or discourage takeover attempts that stockholders may consider favorable

General Business Risks

1. 40Our intellectual property may not be adequately protected
2. 41Others may assert that our technology infringes their intellectual property rights
3. 42Our business and financial performance may be adversely affected by information systems interruptions, cybersecurity attacks or other disruptions which could have a material adverse effect on our business and results from operations
4. 43Our success is dependent upon attracting and retaining highly qualified personnel and the loss of key personnel could significantly hurt our business
5. 44Our business may be impacted by political events, war, terrorism, public health issues, natural disasters and other circumstances that are not within our control
6. 45We may be subject to litigation, including securities class action litigation, which may harm our business and operating results