FCEL Fuelcell Energy Inc

Risks

• If we do not meet the continued listing standards of The Nasdaq Global Market, our common stock could be delisted from trading, which could limit investors’ ability to make transactions in our common stock, subject us to additional trading restrictions, and trigger repurchase rights under the Amended Certificate of Designation for our 5% Series B Cumulative Convertible Perpetual Preferred Stock.
• We have a limited number of shares of common stock available for issuance, which limits our ability to raise capital.
• We have incurred losses and anticipate continued losses and negative cash flow.
• Our cost reduction strategy may not succeed or may be significantly delayed, which may result in our inability to deliver improved margins.
• Our workforce reduction may cause undesirable consequences and our results of operations may be harmed.
• We are required to maintain effective internal control over financial reporting. Our management previously identified a material weakness in our internal control over financial reporting. If we are unable to remediate the material weakness or other control deficiencies are identified in the future, we may not be able to report our financial results accurately, prevent fraud or file our periodic reports in a timely manner, which may adversely affect investor confidence in our company and, as a result, the value of our common stock.
• Our products compete with products using other energy sources, and if the prices of the alternative sources are lower than energy sources used by our products or attributes of other energy sources are favored over our products, sales of our products will be adversely affected.
• Our contracted projects may not convert to revenue, and our project pipeline may not convert to contracts, which may have a material adverse effect on our revenue and cash flow.
• We have signed product sales contracts, engineering, procurement and construction contracts (EPC), power purchase agreements (PPAs) and long-term service agreements with customers subject to contractual, technology and operating risks as well as market conditions that may affect our operating results.
• We extend product warranties, which could affect our operating results.
• Our products are complex and could contain defects and may not operate at expected performance levels which could impact sales and market adoption of our products or result in claims against us.
• We derive significant revenue from contracts awarded through competitive bidding processes involving substantial costs and risks. Due to this competitive pressure, we may be unable to grow revenue and achieve profitability.
• Unanticipated increases or decreases in business growth may result in adverse financial consequences for us.
• We are substantially dependent on a concentrated number of customers and the loss of any one of these customers could adversely affect our business, financial condition and results of operations.
• If our goodwill and other intangible assets, long-lived assets, inventory or project assets become impaired, we may be required to record a significant charge to earnings.
• We have risks associated with high levels of inventory.
• Our advanced technologies contracts are subject to the risk of termination by the contracting party and we may not realize the full amounts allocated under some contracts due to the lack of Congressional appropriations.
• A negative government audit could result in an adverse adjustment of our revenue and costs and could result in civil and criminal penalties.
• The U.S. government has certain rights relating to our intellectual property, including the right to restrict or take title to certain patents.
• Our future success and growth is dependent on our market strategy.
• We depend on third party suppliers for the development and supply of key raw materials and components for our products.
• Our future success will depend on our ability to attract and retain qualified management, technical, and other personnel.
• We may be affected by environmental and other governmental regulation.
• Utility companies may resist the adoption of distributed generation and could impose customer fees or interconnection requirements on our customers that could make our products less desirable.
• We could be liable for environmental damages resulting from our research, development or manufacturing operations.
• Our products use inherently dangerous, flammable fuels, operate at high temperatures and use corrosive carbonate material, each of which could subject our business to product liability claims.
• We are subject to risks inherent in international operations.
• Exports of certain of our products are subject to various export control regulations and may require a license or permission from the U.S. Department of State, the U.S. Department of Energy or other agencies.
• We depend on strategic relationships with third parties, and the terms and enforceability of many of these relationships are not certain.
• Litigation could expose us to significant costs and adversely affect our business, financial condition, and results of operations.
• Our stock price has been and could remain volatile.
• Our By-Laws provide that the Court of Chancery of the State of Delaware is the exclusive forum for substantially all disputes between us and our stockholders, which could limit our stockholders’ ability to obtain a judicial forum deemed favorable by the stockholder for disputes with us or our directors, officers or employees.
• The implementation of our business plan and strategy will require additional capital.
• We will need to raise additional capital, and such capital may not be available on acceptable terms, if at all. If we do raise additional capital utilizing equity, existing stockholders will suffer dilution. If we do not raise additional capital, our business could fail or be materially and adversely affected.
• The rights of the Series 1 Preferred Shares and our Series B Preferred Stock could negatively impact our cash flows and the rights of our Series B Preferred Stock could dilute the ownership interest of our stockholders.
• The Series B Preferred Stock ranks senior to our common stock with respect to payments upon liquidation, dividends, and distributions.