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Changed Risks for WILLDAN GROUP INC (WLDN)

If we are unable to accurately estimate and control our contract costs, then we may incur losses on our contracts, which could decrease our operating margins and reduce our profits In particular, our fixed-price contracts could increase the unpredictability of our earnings

Our financial results may suffer if we do not effectively manage our expanded operations following our acquisition of Lime Energy We have incurred, and will incur, significant integration costs related to those efforts

Our substantial leverage and significant debt service obligations due to debt incurred in connection with our acquisition of Lime Energy could adversely affect our business, results of operations and financial condition

Restrictive covenants in our Credit Agreement may restrict our ability to pursue certain business strategies

We operate in a highly competitive and fragmented industry, and we may not be able to compete effectively with our larger competitors If we are unable to compete successfully, our business, results of operations and financial condition will be adversely affected

We are subject to various routine and non-routine governmental reviews, audits and investigations, and unfavorable government audit results could force us to adjust previously reported operating results, could affect future operating results, could subject us to a variety of penalties and sanctions, and could result in harm to our reputation

We may be subject to liabilities under environmental laws and regulations For example, our retrofitting process frequently involves responsibility for the removal and disposal of components containing hazardous materials and at times requires that our contractors or subcontractors work in hazardous conditions, either of which could give rise to a claim against us

We are susceptible to risks relating to the energy services industry, which represented 72% of our consolidated contract revenue in fiscal year 2018, and a loss of customers or other downturn in demand for those services could have a material impact on our revenues, profitability and financial condition

Cyber security breaches or other improper disclosure of confidential and personal data could result in liability, harm our reputation and impact our ability to operate

Our actual business and financial results could differ from the estimates and assumptions that we use to prepare our consolidated financial statements, which may significantly reduce or eliminate our profits

Changes in banks’ inter-bank lending rate reporting practices or the method pursuant to which LIBOR is determined may adversely affect our business, results of operations and financial condition

We operate in a changing environment that involves numerous known and unknown risks and uncertainties that could materially adversely affect our operations Set forth below and elsewhere in this report and in other documents we file with the SEC are descriptions of risks and uncertainties that could cause our actual results to differ materially from the results and expectations contained in this report Additional risks we do not yet know of or that we currently think are immaterial may also affect our business operations If any of the events or circumstances described in the following risks actually occurs, our business, financial condition or results of operations could be materially adversely affected

Our bylaws, our certificate of incorporation and Delaware law contain provisions that could discourage another company from acquiring us and may prevent attempts by our stockholders to replace or remove our current management

may have a material adverse effect on our business, results of operations and financial condition In particular, changes in the local and regional economies of New York, California and North Carolina could have a material adverse effect on our business, results of operations and financial condition

and Integral Analytics, may underperform relative to our expectations

Our acquired businesses, including Lime Energy

We often rely on subcontractors The quality of our service and our ability to perform under some of our contracts would be adversely affected if qualified subcontractors are unavailable for us to engage, if our subcontractors fail to satisfy their obligations to us or other parties, or if we are unable to maintain these relationships which, in each case, could adversely affect our business, results of operations and financial condition

If our reports and opinions are not in compliance with professional standards and other regulations or without the appropriate disclaimers or in a misleading or incomplete manner, we could be subject to monetary damages and penalties

Demand for our services is cyclical and vulnerable to economic downturns If economic growth slows, government fiscal conditions worsen, public and private construction/renovation activity slows, or client spending declines, it

Each year, client funding for some of our government contracts rely on government appropriations or public‑supported financing If adequate public funding is delayed or is not available, then we may not be able to realize all of our anticipated revenue and profits from such contracts, which could adversely affect our business, results of operations and financial condition

Our failure to win new contracts and renew existing contracts with private and public sector clients could adversely affect our business, results of operations and financial condition