Orion Energy Systems (OESX) Risk Analysis

We have never paid or declared any cash dividends on our common stock. We currently intend to retain all available funds and any future earnings to fund the continued development and expansion of our business, and we do not anticipate paying any cash dividends on our common stock in the foreseeable future. In addition, the terms of our existing revolving credit agreement restrict the payment of cash dividends on our common stock. Any future determination to pay dividends will be at the discretion of our board of directors and will depend on our financial condition, results of operations, capital requirements, contractual restrictions and other factors that our board of directors deems relevant. The restrictions on, and decision not to, pay dividends on our common stock may impact our ability to attract certain investors and raise funds, if necessary, in the capital markets.

Our existing liquidity and capital resources may not be sufficient to allow us to effectively fund or sustain our growth initiatives. If we require additional capital resources, we may not be able to obtain sufficient equity capital and/or debt financing on acceptable terms or conditions, or at all. Factors affecting the availability to us of additional equity capital or debt financing on acceptable terms and conditions, or in sufficient amounts, include: - Our recent operating losses;- Our history of operating losses prior to our fiscal 2020;- Our current and future financial results and condition;- Our limited collateral availability;- Our current customer concentration;- The market's, investors' and lenders' view of our company, industry and products;- The perception in the equity and debt markets of our ability to execute and sustain our business plan or achieve our operating results expectations; and - The price, volatility and trading volume and history of our common stock. Our inability to obtain the equity capital or debt financing necessary to fund our operations could force us to scale back our growth initiatives or take action to restructure or reduce our operations. If we are unable to pursue our growth initiatives, our results of operations, financial condition and cash flows could be materially adversely affected.

We may explore additional potential business acquisitions which could more quickly add expanded and different capabilities to our product and services offerings, including potential acquisitions that could significantly change, or even transform, the nature of our business. There can be no assurance that we will identify or successfully complete transactions with suitable acquisition candidates in the future. Similarly, there can be no assurance that our recently completed acquisitions will be successful. Acquisitions may involve significant cash expenditures, debt incurrence, stock issuances, operating losses and expenses that would otherwise be directed to investments in our existing business and could have a material adverse effect on our financial condition, results of operations and cash flows. To pursue acquisitions and other strategic transactions, we may need to raise additional debt and/or equity capital in the future, which may not be available on acceptable terms, in sufficient amounts or at all. In addition, we may issue new shares of our common stock as consideration in such transactions, which may have a dilutive impact on our existing shareholders and may also result in a reduction in the market price of our shares once those newly issued shares are resold in the market. In addition, acquisitions involve numerous other risks, including: - the failure of the acquired business to achieve its revenue or profit forecasts;- the business culture of the acquired business may not match well with our culture;- our business strategies and focus may change in ways that adversely affect our results of operations;- technological and product synergies, economies of scale and cost reductions from the acquisition may not occur as expected;- unforeseen expenses, delays or conditions may result from the acquisition, including required regulatory approvals or consents;- potential changes may result to our management team and/or board of directors;- we may acquire or assume unexpected liabilities or be subject to unexpected penalties or other enforcement actions or legal consequences;- faulty assumptions may be made regarding the macroeconomic environment or the integration process that form a basis for the acquisition;- unforeseen difficulties, delays and costs may arise in integrating the acquired business's operations, processes and systems;- higher than expected investments may be required to implement necessary compliance processes and related systems, including information technology systems, accounting systems and internal controls over financial reporting;- we may fail to retain, motivate and integrate key management and other employees of the acquired business;- higher than expected costs may arise due to unforeseen changes in tax, trade, environmental, labor, safety, payroll or pension policies in any jurisdiction in which the acquired business conducts its operations;- we may adversely impact our sales channels and our sales channel partners; and - we may experience problems in retaining customers and integrating customer bases. Many of these factors will be outside of our control and any one of them could result in increased costs and reduced profitability, decreases in the amount of expected revenues and diversion of our management's time and attention. They may also delay, decrease or eliminate the realization of some or all of the benefits we anticipate when we enter into the transaction. Our management team has limited experience in, and limited time to dedicate to, pursuing, negotiating or integrating acquisitions. If we do identify suitable candidates, we may not be able to negotiate or consummate such acquisitions on favorable terms or at all. Any acquisitions we complete may not achieve their initially intended results and benefits, and may be viewed negatively by investors and other stakeholders. We may undertake acquisitions financed in part through public offerings or private placements of debt or equity securities, including through the new issuance of our common stock or debt securities as consideration in an acquisition transaction. Such acquisition financing could result in dilution to our current shareholders, a decrease in our earnings and/or adversely affect our financial condition, liquidity or other leverage measures. In addition to committing additional capital resources to complete any acquisitions, substantial additional capital may be required to operate the acquired businesses following their acquisition. Moreover, these acquisitions may result in significant financial losses if the intended objectives of the transactions are not achieved. Some of the businesses we may acquire may have significant operating and financial challenges, requiring significant additional capital commitments to overcome such challenges and adversely affecting our financial condition and liquidity. Failure to implement our acquisition strategy, including successfully integrating acquired businesses, could have a material adverse effect on our results of operations, financial condition and cash flows.