Shoals Technologies Group, Inc. 10-Q

Item 1A. Risk Factors There have been no material changes, except as discussed below, with respect to our risk factors disclosed in our Annual Report on Form 10-K for the year ended December 31, 2020. ConnectPV Acquisition Risks Acquisitions, joint ventures and/or investments, including our most recently announced acquisition of ConnectPV, and the failure to integrate acquired businesses, could disrupt our business and/or dilute or adversely affect the price of our common stock. Our success will depend, in part, on our ability to expand our product offerings and grow our business in response to changing technologies, customer demands and competitive pressures. In some circumstances, we may pursue growth through the acquisition of complementary businesses, solutions or technologies or through joint ventures or investments rather than through internal development. The identification of suitable acquisition or joint venture candidates can be difficult, time-consuming and costly, and we may not be able to successfully complete identified acquisitions or joint ventures. For example, on August 26, 2021, we acquired 100% of the stock of ConnectPV, with cash and the issuance of Class A common stock (the “Acquisition”). We completed the acquisition with the belief that the Acquisition will result in certain benefits, including certain operational synergies related to the Company’s EBOS solutions and components business and cost efficiencies, and drive product innovations synergies. Achieving these anticipated benefits will depend on successfully combining our and ConnectPV LLC’s businesses together. It is not certain that ConnectPV LLC’s business can be successfully integrated with our business in a timely manner or at all, or that any of the anticipated benefits will be realized for a variety of reasons, including, but not limited to: our inability to integrate or benefit from ConnectPV LLC’s acquired technologies or services in a profitable manner; diversion of capital and other resources, including management’s attention; unanticipated costs or liabilities related to the Acquisition; failure to leverage the 40 Table of Contents increased scale of the combined businesses quickly and effectively; the potential impact of the Acquisition on our relationships with employees, vendors, suppliers and customers; the impairment of relationships with, or the loss of, ConnectPV LLC’s employees, vendors, suppliers or customers; adverse changes in general economic conditions in regions in which we operate; potential litigation associated with the Acquisition; difficulties in the assimilation of employees and culture; difficulties in managing the expanded operations of a larger and more complex company; and challenges in attracting and retaining key personnel. Many of these factors will be outside of our control and any one of them could result in increased costs, decrease in expected revenues and diversion of management’s time and attention, which could materially impact the combined company. In addition, even if the operations of the businesses are integrated successfully, the full benefits of the Acquisition may not be realized within the anticipated time frame or at all. All of these factors could decrease or delay the expected accretive effect of the Acquisition and negatively impact the combined company. Item 2. Unregistered Sale of Equity Securities and Use of Proceeds Recent Sales of Unregistered Equity Securities (a) Unregistered Sales of Equity Securities On August 26, 2021, in connection with the acquisition of ConnectPV, we issued 209,437 shares of Class A common stock valued at $6,500,000, which were used as part of the purchase price in the acquisition. The foregoing securities were issued and sold in reliance upon the exemption from the registration requirements of the Securities Act of 1933, as amended, provided by Rule 506(b) of Regulation D. (b) Use of Proceeds The issuance described above was made in connection with our acquisition of ConnectPV. No proceeds were received in connection with the above transactions. Item 3. Defaults Upon Senior Securities None. Item 4. Mine Safety Disclosures Not applicable.