889423--3/12/2009--SATCON_TECHNOLOGY

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Risks Related to Our Company We have a history of operating losses, may not be able to achieve profitability and may require additional capital in order to sustain our businesses. We could issue additional common stock, which might dilute the book value of our common stock. The sale or issuance of a large number of shares of our common stock could depress our stock price. We have not consistently complied with Nasdaq's Marketplace Rules for continued listing, which exposes us to the risk of delisting from the Nasdaq Stock Market. We expect to generate a significant portion of our future revenues from sales of our power control products and cannot assure market acceptance or commercial viability of our power control products. If we are unable to maintain our technological expertise in design and manufacturing processes, we will not be able to successfully compete. Our contracts with the U.S. government are subject to audit by the Defense Contract Audit Agency and other agencies of the government, which may challenge our treatment of direct and indirect costs and reimbursements, resulting in a material adjustment and adverse impact on our financial condition. The U.S. government has certain rights relating to our intellectual property. Our business could be adversely affected if we are unable to protect our patents and proprietary technology. We may not be able to maintain confidentiality of our proprietary knowledge. Others may assert that our technology infringes their intellectual property rights. Our success is dependent upon attracting and retaining highly qualified personnel and the loss of key personnel could significantly hurt our business. We expect significant competition for our products and services. We are dependent on third-party suppliers for the supply of key components for our products. On occasion, we agree to fixed price engineering contracts, which exposes us to losses. If we experience a period of significant growth or expansion, it could place a substantial strain on our resources. Our business could be subject to product liability claims. We are subject to a variety of environmental laws that expose us to potential financial liability. Businesses and consumers might not adopt alternative energy solutions as a means for obtaining their electricity and power needs. Our quarterly operating results are subject to fluctuations, and if we fail to meet the expectations of securities analysts or investors, our share price may decrease significantly. Provisions in our charter documents and Delaware law may delay, deter or prevent the acquisition of Satcon, which could decrease the value of your shares. We are subject to stringent export laws and risks inherent in international operations. We are exposed to credit risks with respect to some of our customers. Our loan agreement with Silicon Valley Bank subjects us to various restrictions, which may limit our ability to pursue business opportunities. The holders of our Series B Preferred Stock are entitled to receive liquidation payments in preference to the holders of our common stock. The holders of our certain of our outstanding warrants have the right to put those warrants to us for cash if we issue common stock or common stock equivalents at a price per share less than $1.65. Risks Related to Our Private Placement of Series C Preferred Stock and Related Warrants The holders of our Series C Preferred Stock are entitled to receive liquidation payments in preference to the holders of our common stock. We are responsible for having the resale of shares of common stock underlying the Series C Preferred Stock and related warrants registered with the SEC within defined time periods and will incur liquidated damages if the shares are not registered with the SEC within those defined time periods. The certificate of designation governing the Series C Preferred Stock contains various covenants and restrictions which may limit our ability to operate our business. The holders of the Series C Preferred Stock will have substantial voting power on matters submitted to a vote of stockholders. The Series C Preferred Stock is redeemable at the option of the holders under certain circumstances. The investors in our private placement of Series C Preferred Stock will have the right to designate up to four individuals to be elected to our board of directors. We have agreed to give the holders of Series C Preferred Stock the right to participate in subsequent stock issuances. The Series C Preferred Stock private placement had a substantial dilutive effect on our common stock, and subsequent anti-dilution adjustments could increase the dilutive effect.

Full 10-K form ▸

889423--3/12/2009--SATCON_TECHNOLOGY_CORP