# Plug Power Inc: Form 10-Q for the period ended Sep 30, 2021

- Company: [Plug Power Inc](/companies/plug.md) (CIK 1093691)
- Form: 10-Q
- Filed: 2021-11-09
- Accepted by EDGAR: Nov 9, 2021, 21:37 ET
- Period: 2021-09-30
- Accession: 0001558370-21-015317
- Inline XBRL: yes
- Main document: https://www.sec.gov/Archives/edgar/data/1093691/000155837021015317/plug-20210930x10q.htm
- All documents and exhibits: https://www.sec.gov/Archives/edgar/data/1093691/000155837021015317/

## Figures reported in this filing

Standardized XBRL line items for the period ended 2021-09-30.

| Line item | Period | Value | XBRL concept |
| --- | --- | ---: | --- |
| Revenue | 3 months, 2021-07-01 to 2021-09-30 | $143.9m | us-gaap:Revenues |
| Revenue | 9 months, 2021-01-01 to 2021-09-30 | $340.4m | us-gaap:Revenues |
| Gross profit | 3 months, 2021-07-01 to 2021-09-30 | −$31.1m | us-gaap:GrossProfit |
| Gross profit | 9 months, 2021-01-01 to 2021-09-30 | −$83.5m | us-gaap:GrossProfit |
| Research and development | 3 months, 2021-07-01 to 2021-09-30 | $16.6m | us-gaap:ResearchAndDevelopmentExpense |
| Research and development | 9 months, 2021-01-01 to 2021-09-30 | $37.6m | us-gaap:ResearchAndDevelopmentExpense |
| Selling, general and administrative | 3 months, 2021-07-01 to 2021-09-30 | $42.4m | us-gaap:SellingGeneralAndAdministrativeExpense |
| Selling, general and administrative | 9 months, 2021-01-01 to 2021-09-30 | $106.7m | us-gaap:SellingGeneralAndAdministrativeExpense |
| Operating income | 3 months, 2021-07-01 to 2021-09-30 | −$98.7m | us-gaap:OperatingIncomeLoss |
| Operating income | 9 months, 2021-01-01 to 2021-09-30 | −$236.6m | us-gaap:OperatingIncomeLoss |
| Interest expense | 3 months, 2021-07-01 to 2021-09-30 | $5.4m | us-gaap:InterestExpense |
| Interest expense | 9 months, 2021-01-01 to 2021-09-30 | $27.9m | us-gaap:InterestExpense |
| Income tax | 3 months, 2021-07-01 to 2021-09-30 | $0 | us-gaap:IncomeTaxExpenseBenefit |
| Income tax | 9 months, 2021-01-01 to 2021-09-30 | $0 | us-gaap:IncomeTaxExpenseBenefit |
| Net income | 3 months, 2021-07-01 to 2021-09-30 | −$106.7m | us-gaap:NetIncomeLoss |
| Net income | 9 months, 2021-01-01 to 2021-09-30 | −$267.1m | us-gaap:NetIncomeLoss |
| Operating cash flow | 9 months, 2021-01-01 to 2021-09-30 | −$348.5m | us-gaap:NetCashProvidedByUsedInOperatingActivities |
| Capital expenditure | 9 months, 2021-01-01 to 2021-09-30 | $91.4m | us-gaap:PaymentsToAcquirePropertyPlantAndEquipment |
| Cash and equivalents | at 2021-09-30 | $3.37bn | us-gaap:CashAndCashEquivalentsAtCarryingValue |
| Current assets | at 2021-09-30 | $4.79bn | us-gaap:AssetsCurrent |
| Total assets | at 2021-09-30 | $5.74bn | us-gaap:Assets |
| Current liabilities | at 2021-09-30 | $269.9m | us-gaap:LiabilitiesCurrent |
| Total liabilities | at 2021-09-30 | $1.03bn | us-gaap:Liabilities |
| Current portion of debt | at 2021-09-30 | $23.5m | us-gaap:LongTermDebtCurrent |
| Shareholders' equity | at 2021-09-30 | $4.71bn | us-gaap:StockholdersEquity |

## Management's discussion and analysis

As filed, 113,052 characters.

The following discussion should be read in conjunction with our accompanying unaudited interim condensed consolidated financial statements and notes thereto included within this report, and our audited and notes thereto included in our 2020 19-K. In addition to historical information, this Quarterly Report on Form 10-Q and the following discussion contain statements that are not historical facts and are considered forward-looking within the meaning of Section 27A of the Securities Act of 1933, as amended (the “Securities Act”), and Section 21E of the Securities Exchange Act of 1934, as amended (the “Exchange Act”). These forward-looking statements contain projections of our future results of operations or of our financial position or state other forward-looking information. In some cases, you can identify these statements by forward-looking words such as “anticipate,” “believe,” “could,” “continue,” “estimate,” “expect,” “intend,” “may,” “should,” “will,” “would,” “plan,” “projected” or the negative of such words or other similar words or phrases. We believe that it is important to communicate our future expectations to our investors. However, there may be events in the future that we are not able to accurately predict or control and that may cause our actual results to differ materially from the expectations we describe in our forward-looking statements. Investors are cautioned not to unduly rely on forward-looking statements because they involve risks and uncertainties, and actual results may differ materially from those discussed as a result of various factors, including, but not limited to:

- the risk that we continue to incur losses and might never achieve or maintain profitability;
- the risk that we will need to raise additional capital to fund our operations and such capital may not be available to us;
- the risk of dilution to our stockholders and/or stock price should we need to raise additional capital;
- the risk that our lack of extensive experience in manufacturing and marketing products may impact our ability to manufacture and market products on a profitable and large-scale commercial basis;
- the risk that unit orders may not ship, be installed and/or converted to revenue, in whole or in part;
- the risk that a loss of one or more of our major customers, or if one of our major customers delays payment of or is unable to pay its receivables, a material adverse effect could result on our financial condition;
- the risk that a sale of a significant number of shares of stock could depress the market price of our common stock;
- the risk that our convertible senior notes, if settled in cash, could have a material effect on our financial results;
- the risk that our convertible note hedges may affect the value of our convertible senior notes and our common stock;
- the risk that negative publicity related to our business or stock could result in a negative impact on our stock value and profitability;
- the risk of potential losses related to any product liability claims or contract disputes;
- the risk of loss related to an inability to remediate the material weakness identified in internal control over financial reporting as of December 31, 2020, or inability to otherwise maintain an effective system of internal control;
- the risk that the determination to restate the prior period financial statements could negatively affect investor confidence and raise reputational issues;
- the risk of loss related to an inability to maintain an effective system of internal controls;
- our ability to attract and maintain key personnel;
- the risks related to the use of flammable fuels in our products;
- the risk that pending orders may not convert to purchase orders, in whole or in part;
- the cost and timing of developing, marketing and selling our products;
- the risks of delays in or not completing our product development goals;
- the risks involved with participating in joint ventures;
- our ability to obtain financing arrangements to support the sale or leasing of our products and services to customers;
- our ability to successfully pursue new business ventures;
- our ability to achieve the forecasted gross margin on the sale of our products;
- the cost and availability of fuel and fueling infrastructures for our products;
- the risks, liabilities, and costs related to environmental, health and safety matters;
- the risk of elimination of government subsidies and economic incentives for alternative energy products;
- market acceptance of our products and services, including GenDrive, GenSure and GenKey systems;
- our ability to establish and maintain relationships with third parties with respect to product development, manufacturing, distribution and servicing, and the supply of key product components;
- the cost and availability of components and parts for our products;
- the risk that possible new tariffs could have a material adverse effect on our business;
- our ability to develop commercially viable products;
- our ability to reduce product and manufacturing costs;
- our ability to successfully market, distribute and service our products and services internationally;
- our ability to improve system reliability for our products;
- competitive factors, such as price competition and competition from other traditional and alternative energy companies;
- our ability to protect our intellectual property;
- the risk of dependency on information technology on our operations and the failure of such technology;
- the cost of complying with current and future federal, state and international governmental regulations;
- our subjectivity to legal proceedings and legal compliance;
- the risks associated with past and potential future acquisitions; and
- the volatility of our stock price.

The risks included here are not exhaustive, and additional factors could adversely affect our business and financial performance, including factors and risks discussed in the section titled “Risk Factors” included under Part I, Item 1A, below. Moreover, we operate in a very competitive and rapidly changing environment. New risk factors emerge from time to time, and it is not possible for management to predict all such risk factors, nor can we assess the impact of all such risk factors on our business or the extent to which any factor, or combination of factors, may cause actual results to differ materially from these contained in any forward-looking statements. While forward-looking statements reflect our good faith beliefs, they are not guarantees of future performance. These forward-looking statements speak only as of the date on which the statements were made. Except as may be required by applicable law, we do not undertake or intend to update any forward-looking statements after the date of this Quarterly Report on Form 10-Q.

References in this Quarterly Report on Form 10-Q to “Plug Power,” the “Company,” “we,” “our” or “us” refer to Plug Power Inc., including as the context requires, its subsidiaries.

### Overview

Plug Power is facilitating the paradigm shift to an increasingly electrified world by innovating cutting-edge hydrogen and fuel cell solutions. In our core business, we provide and continue to develop commercially viable hydrogen and fuel cell product solutions to replace lead-acid batteries in electric material handling vehicles and industrial trucks for some of the world’s largest retail-distribution and manufacturing businesses. We are focusing our efforts on industrial mobility applications, including electric forklifts and electric industrial vehicles, at multi-shift high volume manufacturing and high throughput distribution sites where we believe our products and services provide a unique combination of productivity, flexibility, and environmental benefits. Additionally, we manufacture and sell fuel cell products to replace batteries and diesel generators in stationary backup power applications. These products have proven valuable with telecommunications, transportation, and utility customers as robust, reliable, and sustainable power solutions.

Part of our long-term plan includes Plug Power penetrating the on-road vehicle market and large-scale stationary market. Plug Power’s formation of a joint venture with Renault in Europe and the announced future joint venture with SK Group in Asia not only support this goal but are expected to provide us with a more global footprint. Plug has been successful with acquisitions, strategic partnerships, and joint ventures, and we plan to continue this mix. For example, we expect our relationships with Brookfield and Apex to provide us access to low-cost renewable energy, which is critical to produce low-cost green hydrogen.

Our current products and services include:

GenDrive: GenDrive is our hydrogen fueled PEM fuel cell system providing power to material handling electric vehicles, including class 1, 2, 3 and 6 electric forklifts, Automated Guided Vehicles (“AGVs”) and ground support equipment;

GenFuel: GenFuel is our liquid hydrogen fueling delivery, generation, storage, and dispensing system;

GenCare: GenCare is our ongoing ‘internet of things’-based maintenance and on-site service program for GenDrive fuel cell systems, GenSure fuel cell systems, GenFuel hydrogen storage and dispensing products and ProGen fuel cell engines;

GenSure: GenSure is our stationary fuel cell solution providing scalable, modular PEM fuel cell power to support the backup and grid-support power requirements of the telecommunications, transportation, and utility sectors; GenSure High Power Fuel Cell Platform will support large scale stationary power and data center markets;

GenKey: GenKey is our vertically integrated “turn-key” solution combining either GenDrive or GenSure fuel cell power with GenFuel fuel and GenCare aftermarket service, offering complete simplicity to customers transitioning to fuel cell power;

ProGen: ProGen is our fuel cell stack and engine technology currently used globally in mobility and stationary fuel cell systems, and as engines in electric delivery vans. This includes the Plug “MEA”, a critical component of the fuel cell stack used in zero-emission fuel cell electric vehicle engines; and

GenFuel Electrolyzers: GenFuel electrolyzers are modular, scalable hydrogen generators optimized for clean hydrogen production. Electrolyzers generate hydrogen from water using electricity and a special membrane and “green” hydrogen is generated by using renewable energy inputs, such as solar or wind power.

We provide our products worldwide through our direct product sales force, and by leveraging relationships with “OEMs” and their dealer networks. Plug Power is targeting Asia and Europe for expansion in adoption. Europe has rolled out ambitious targets for the hydrogen economy and Plug Power is executing on its strategy to become one of the European leaders. This includes a targeted account strategy for material handling as well as securing strategic partnerships with European OEMs, energy companies, utility leaders and accelerating our electrolyzer business. We manufacture our commercially viable products in Latham, New York, Rochester, New York and Spokane, Washington and support liquid hydrogen generation and logistics in Charleston, Tennessee.

Our wholly-owned subsidiary, Plug Power France, created a joint venture with Renault SAS (“Renault”) named HyVia, a French société par actions simplifiée (“HyVia”) in the second quarter of 2021. HyVia plans to manufacture and sell fuel cell powered electric light commercial vehicles (“FCELCVs”) and to supply hydrogen fuel and fueling stations to support the FCE-LCV market, in each case primarily in Europe. HyVia is owned 50% by Plug Power France and 50% by Renault.

### Recent Developments

### COVID-19 Update

As a result of the COVID-19 pandemic outbreak in March 2020, state governments—including those in New York and Washington, where our manufacturing facilities are located—issued orders requiring businesses that do not conduct essential services to temporarily close their physical workplaces to employees and customers. As a result, we had put in place a number of protective measures in response to the COVID-19 outbreak, which included the canceling of all commercial air travel and all other non-critical travel, requesting that employees limit non-essential personal travel, eliminating all but essential third-party access to our facilities, enhancing our facilities’ janitorial and sanitary procedures, encouraging employees to work from home to the extent their job function enabled them to do so, encouraging the use of virtual employee meetings, and providing staggered shifts and social distancing measures for those employees associated with manufacturing and service operations.

In June 2021, in accordance with revised CDC guidelines and where permitted by state law, employees who were fully vaccinated against COVID-19 and have been through Plug Power’s certification process, were permitted to enter Plug Power facilities without a face covering. Individuals inside Plug Power facilities who did not wish to go through the certification process were required to wear proper face coverings and continued to maintain social distancing of six feet or greater. In states where the guidelines for face coverings was still government mandated, Plug Power complied with the state and local jurisdictions and enforced face mask usage, as well as social distancing at our sites. In early August 2021, we adjusted our guidance as a result of an influx of COVID-19 cases and began requiring all employees and visitors regardless of vaccination status to wear a face-covering at all times while within a Plug Power facility, and strongly encouraged social distancing. We continue to provide enhanced janitorial and sanitary procedures, encourage employees to work from home to the extent their job function enables them to do so, and encourage the use of virtual employee meetings.

We cannot predict at this time the full extent to which COVID-19 will impact our business, results, and financial condition, which will depend on many factors. We are staying in close communication with our manufacturing facilities, employees, customers, suppliers, and partners, and acting to mitigate the impact of this dynamic and evolving situation, but there is no guarantee that we will be able to do so. Many of the parts for our products are sourced from suppliers in China and the manufacturing situation in China remains variable. Supply chain disruptions could reduce the availability of key components, increase prices or both, as the COVID-19 pandemic has caused significant challenges for global supply chains resulting primarily in transportation delays. These transportation delays have caused incremental freight charges, which have negatively impacted our results of operations. We expect that these challenges will continue to have an impact on our businesses for the foreseeable future.

We continue to take proactive steps to limit the impact of these challenges and are working closely with our suppliers and transportation vendors to ensure availability of products and implement other cost savings initiatives. In addition, we continue to invest in our supply chain to improve its resilience with a focus on automation, dual sourcing of critical components and localized manufacturing when feasible. To date, there has been limited disruption to the availability of our products, though it is possible that more significant disruptions could occur if these supply chain challenges continue.

### Strategic and Other Activities

#### Entry into Definitive Agreement

In November 2021, the Company entered into a signing protocol to acquire Frames Group (“Frames”), a leader in engineering, process and systems integration serving the energy sector. The purchase price is approximately €115 million, of which €30 million is based on future earnouts over the next four years from the completion date. Plug Power will leverage Frames’ capabilities as well as its existing network of suppliers and contract manufacturing facilities to deliver electrolyzer solutions of all sizes, from one megawatt (MW) containerized solutions to solutions for 100 MW-1,000 MW standalone plants or integrated into customers’ processes. The acquisition is expected to be completed by the end of the year, and is subject to customary closing conditions, including receipt of Dutch works council advice.

On October 14, 2021, the Company and its wholly-owned subsidiary Plug Power Hydrogen Holdings, Inc. entered into a definitive agreement for the acquisition of Applied Cryo Technologies, Inc. for a purchase price of approximately $170 million, of which $40 million will be in stock and $30 million will be based on future earnouts over the next two and half years. Applied Cryo Technologies, Inc. is a leading provider of technology, equipment and services for the transportation, storage and distribution of liquified hydrogen, oxygen, argon, nitrogen and other cryogenic gases. The acquisition is expected to close during the fourth quarter of 2021 and is subject to customary closing conditions, including receipt of all approvals or the termination or expiration of all waiting periods required under applicable antitrust laws.

In October 2021, the Company and SK E&S Co., Ltd., an energy company affiliated with SK Holdings Co., Ltd., formed H2A, which is a joint venture designed to accelerate the use of hydrogen as an alternative energy source in Asian markets.

#### Performance Stock Option Awards

In September 2021, the Compensation Committee approved the grant of performance stock options to the Company’s Chief Executive Officer and certain other executive officers. These performance stock options are subject to both performance-based conditions tied to the achievement of stock price hurdles and time-based vesting; therefore, a Monte Carlo Simulation was utilized to determine the grant date fair value with the associated expense recognized over the requisite service period. The design of the performance options was developed with input from the Company’s independent compensation consultant. The performance stock options are strongly aligned with the Company’s culture of pay for performance and will ensure the executive team’s commitment and focus on delivering significant increases in stockholder value over the three-year performance period. Up to one-third (1/3) the performance stock options will vest and become exercisable on each of the first three anniversaries of the grant date, provided that the volume weighted average price of the Company’s common stock during any 30 consecutive trading day period in the three year performance period following the grant date of the stock options (“VWAP”) equals or exceeds certain levels. For the Company’s Chief Executive Officer, 25% of his performance stock options will be deemed to have satisfied the performance-based conditions and will be eligible to be exercised over time if the VWAP equals or exceeds $35; an additional 25% of his options will be deemed to have satisfied the performance-based condition and will be eligible to be exercised if the VWAP equals or exceeds $50; an additional 16.675% of the options will be deemed to have satisfied the performance-based condition and will be eligible to be exercised if the VWAP equals or exceeds $65; an additional 16.65% of the options will be deemed to have satisfied the performance-based condition and will be eligible to be exercised if the VWAP equals or exceeds $80; and the remaining 16.675% of the options will be deemed to have satisfied the performance-based condition and will be eligible to be exercised if the VWAP equals or exceeds $100. There will be no interpolation for the Chief Executive Officer’s performance stock option if the VWAP falls between any two stock price hurdles, unless in the event of a change in control. For executive officers other than the Chief Executive Officer, 25% of the performance stock options will be deemed to have satisfied the performance-based condition and will be eligible to be exercised if the VWAP equals $35; an additional 25% of the options will be deemed to have satisfied the performance-based condition and will be eligible to be exercised if the VWAP equals $50; and the remaining 50% of the options will be deemed to have satisfied the performance-based condition and will be eligible to be exercised if the VWAP equals or exceeds $100. If the VWAP falls between two of the stock price hurdles, an incremental number of options will become exercisable based on linear interpolation in $1 increments. Failure to achieve any of the stock price hurdles applicable to a performance stock option during the three-year performance period will result in the applicable options not becoming exercisable. The performance-based stock options have a maximum term of seven years from the grant date.

### Explanatory Note

As previously disclosed in the Explanatory Note to the 2020 10-K, the Company restated its previously issued audited consolidated financial statements as of and for the years ended December 31, 2019 and 2018 and its unaudited interim condensed consolidated quarterly financial statements of and for each of the quarterly periods ended March 31, 2020, June 30, 2020 and 2019, September 30, 2020 and 2019 and December 31, 2019.

Previously filed annual reports on Form 10-K and quarterly reports on Form 10-Q for the periods affected by the restatement have not been amended. Accordingly, investors should not rely upon the Company’s previously released financial statements for these periods and any earnings releases or other communications relating to these periods, and, for these periods, investors should rely solely on the financial statements and other financial data for the relevant periods included in the 2020 10-K. Commencing with our Quarterly Report on Form 10-Q for the quarterly period ended March 31, 2021, we are including in our quarterly reports for fiscal 2021 restated results for the corresponding interim periods of fiscal 2020.

### Results of Operations

Our primary sources of revenue are from sales of fuel cell systems and related infrastructure, services performed on fuel cell systems and related infrastructure, Power Purchase Agreements (PPAs), and fuel delivered to customers. Revenue from sales of fuel cell systems and related infrastructure represents sales of our GenDrive units, GenSure stationary backup power units, as well as hydrogen fueling infrastructure. Revenue from services performed on fuel cell systems and related infrastructure represents revenue earned on our service and maintenance contracts and sales of spare parts. Revenue from PPAs primarily represents payments received from customers who make monthly payments to access the Company’s GenKey solution. Revenue associated with fuel delivered to customers represents the sale of hydrogen to customers that has been purchased by the Company from a third party or generated on site.

Net revenue, cost of revenue, gross profit (loss) and gross margin for the three and nine months ended September 30, 2021 and 2020, were as follows (in thousands):

| ​ ​ ​ ​ ​ ​ For the period ended September 30, 2021: | ​ ​ ​ ​ Three Months Ended September 30, ​ ​ Net Revenue ​ ​ | ​ ​ ​ ​ | ​ ​ ​ ​ Cost of Revenue ​ ​ | ​ ​ ​ ​ | ​ ​ ​ ​ Gross Profit/(Loss) ​ ​ | ​ ​ ​ ​ | ​ ​ ​ ​ Gross ​ Margin ​ ​ | ​ ​ ​ ​ ​ ​ ​ | ​ ​ ​ ​ Nine Months Ended September 30, ​ ​ Net Revenue ​ ​ | ​ ​ ​ ​ | ​ ​ ​ ​ Cost of Revenue ​ ​ | ​ ​ ​ ​ | ​ ​ ​ ​ Gross Profit/(Loss) ​ ​ | ​ ​ ​ ​ | ​ ​ ​ ​ Gross ​ Margin ​ ​ |
| --- | ---: | --- | ---: | --- | ---: | --- | ---: | --- | ---: | --- | ---: | --- | ---: | --- | ---: |
| Sales of fuel cell systems and related infrastructure | $115,999 | ​ | $89,235 | ​ | $26,764 |  | 23.1% | ​ | $262,049 | ​ | $198,122 | ​ | $63,927 |  | 24.4% |
| Services performed on fuel cell systems and related infrastructure | 6,677 | ​ | 18,697 | ​ | (12,020) |  | (180.0)% | ​ | 18,397 | ​ | 47,258 | ​ | (28,861) |  | (156.9)% |
| Provision for loss contracts related to service | ​ — | ​ | ​ 7,462 | ​ | ​ (7,462) | ​ | N/A ​ | ​ | ​ — | ​ | ​ 15,641 | ​ | ​ (15,641) | ​ | N/A ​ |
| Power Purchase Agreements | 9,321 | ​ | 31,199 | ​ | (21,878) |  | (234.7)% | ​ | 25,508 | ​ | 71,776 | ​ | (46,268) |  | (181.4)% |
| Fuel delivered to customers | 11,556 | ​ | 27,857 | ​ | (16,301) |  | (141.1)% | ​ | 33,804 | ​ | 90,331 | ​ | (56,527) |  | (167.2)% |
| Other | 369 | ​ | 550 | ​ | (181) |  | (49.1)% | ​ | 679 | ​ | 856 | ​ | (177) |  | (26.1)% |
| Total | $143,922 | ​ | $175,000 | ​ | $(31,078) |  | (21.6)% | ​ | $340,437 | ​ | $423,984 | ​ | $(83,547) |  | (24.5)% |
| **For the period ended September 30, 2020:** | ​ ​ | ​ | ​ ​ | ​ | ​ ​ | ​ | ​ ​ | ​ | ​ ​ | ​ | ​ ​ | ​ | ​ ​ | ​ | ​ ​ |
| Sales of fuel cell systems and related infrastructure | $83,662 | ​ | $69,428 | ​ | $14,234 |  | 17.0% | ​ | $151,876 | ​ | $117,290 | ​ | $34,586 |  | 22.8% |
| Services performed on fuel cell systems and related infrastructure | 6,829 | ​ | 9,180 | ​ | (2,351) |  | (34.4)% | ​ | 19,586 | ​ | 27,300 | ​ | (7,714) |  | (39.4)% |
| Provision for loss contracts related to service | ​ — | ​ | ​ 25,147 | ​ | ​ (25,147) | ​ | N/A ​ | ​ | ​ — | ​ | ​ 25,948 | ​ | ​ (25,948) | ​ | N/A ​ |
| Power Purchase Agreements | 6,629 | ​ | 14,744 | ​ | (8,115) |  | (122.4)% | ​ | 19,629 | ​ | 44,019 | ​ | (24,390) |  | (124.3)% |
| Fuel delivered to customers | 9,831 | ​ | 17,002 | ​ | (7,171) |  | (72.9)% | ​ | 24,536 | ​ | 39,332 | ​ | (14,796) |  | (60.3)% |
| Other | 97 | ​ | 131 | ​ | (34) |  | (35.1)% | ​ | 235 | ​ | 275 | ​ | (40) |  | (17.0)% |
| Total | $107,048 | ​ | $135,632 | ​ | $(28,584) |  | (26.7)% | ​ | $215,862 | ​ | $254,164 | ​ | $(38,302) |  | (17.7)% |

The amount of provision for common stock warrants recorded as a reduction of revenue during the three and nine months ended September 30, 2021 and 2020, respectively, is shown in the table below (in thousands):

| ​ ​ ​ ​ | ​ ​ ​ ​ | ​ ​ Three months ended September 30, 2021 ​ ​ | ​ ​ ​ | ​ ​ 2020 ​ ​ | ​ ​ ​ | ​ ​ Nine months ended September 30, 2021 ​ ​ | ​ ​ ​ | ​ ​ 2020 ​ ​ | ​ ​ ​ |
| --- | --- | ---: | --- | ---: | --- | ---: | --- | ---: | --- |
| Sales of fuel cell systems and related infrastructure | ​ | $— | ​ | $(16,146) | ​ | $(27) | ​ | $(19,287) | ​ |
| Services performed on fuel cell systems and related infrastructure | ​ | (69) | ​ | (688) | ​ | (340) | ​ | (1,412) | ​ |
| Power Purchase Agreements | ​ | (652) | ​ | (758) | ​ | (2,454) | ​ | (1,887) | ​ |
| Fuel delivered to customers | ​ | (573) | ​ | (1,034) | ​ | (1,925) | ​ | (2,612) | ​ |
| Total | ​ | $(1,294) | ​ | $(18,626) | ​ | $(4,746) | ​ | $(25,198) | ​ |

### Net Revenue

*Revenue – sales of fuel cell systems and related infrastructure*. Revenue from sales of fuel cell systems and related infrastructure represents revenue from the sale of our fuel cells, such as GenDrive units and GenSure stationary backup power units, as well as hydrogen fueling infrastructure referred to at the site level as hydrogen installations. Revenue from sales of fuel cell systems and related infrastructure for the three months ended September 30, 2021 increased $32.3 million, or 38.7%, to $116.0 million from $83.7 million for the three months ended September 30, 2020. Included within revenue was a provision for common stock warrants of $0 and $16.1 million for the three months ended September 30, 2021 and 2020, respectively. The main drivers for the increase in revenue were the increase in GenDrive units recognized as revenue, an increase in hydrogen installations and a decrease in the provision for common stock warrants. There were 4,559 GenDrive units recognized as revenue during the three months ended September 30, 2021, compared to 3,709 for the three months ended September 30, 2020. There was hydrogen infrastructure revenue associated with 16 hydrogen sites during the three months ended September 30, 2021, compared to 13 during the three months ended September 30, 2020.

Revenue from sales of fuel cell systems and related infrastructure for the nine months ended September 30, 2021 increased $110.2 million, or 72.5%, to $262.1 million from $151.9 million for the nine months ended September 30, 2020. Included within revenue was a provision for common stock warrants of $27 thousand and $19.3 million for the nine months ended September 30, 2021 and 2020, respectively. The main drivers for the increase in revenue were the increase in GenDrive units recognized as revenue, an increase in hydrogen installations and a decrease in the provision for common stock warrants. There were 9,533 GenDrive units recognized as revenue during the nine months ended September 30, 2021, compared to 7,217 for the nine months ended September 30, 2020. There was hydrogen infrastructure revenue associated with 38 hydrogen sites during the nine months ended September 30, 2021, compared to 18 during the nine months ended September 30, 2020.

*Revenue – services performed on fuel cell systems and related infrastructure.* Revenue from services performed on fuel cell systems and related infrastructure represents revenue earned on our service and maintenance contracts and sales of spare parts. At September 30, 2021, there were 18,685 fuel cell units and 78 hydrogen installations under extended maintenance contracts, an increase from 13,421 fuel cell units and 56 hydrogen installations at September 30, 2020. Revenue from services performed on fuel cell systems and related infrastructure for the three months ended September 30, 2021 decreased $0.2 million, or 2.2%, to $6.7 million as compared to $6.8 million for the three months ended September 30, 2020. Included within revenue was provision for common stock warrants of $69 thousand and $688 thousand for the three months ended September 30, 2021 and 2020, respectively. The main drivers in decrease in revenue was a reduction in billings for run time hours that exceeded certain levels given certain changes in the overall contract, partially offset by the decrease in the provision for common stock warrants. Although the number of units and sites grew year over year, many of the units and sites deployed in the third quarter of 2021 were deployed late in the quarter and hence the full impact of associated service revenues will commence in the fourth quarter of 2021.

Revenue from services performed on fuel cell systems and related infrastructure for the nine months ended September 30, 2021 decreased $1.2 million, or 6.1%, to $18.4 million as compared to $19.6 million for the nine months ended September 30, 2020. Included within revenue was provision for common stock warrants of $340 thousand and $1.4 million for the nine months ended September 30, 2021 and 2020, respectively. The main drivers in decrease in revenue was a reduction in billings for run time hours that exceeded certain levels given certain changes in the overall contract, partially offset by the decrease in the provision for common stock warrants. Although the number of units and sites grew year over year, many of the units and sites deployed in the third quarter of 2021 were deployed late in the quarter and hence the full impact of associated service revenues will commence in the fourth quarter of 2021.

*Revenue – Power Purchase Agreements.* Revenue from PPAs represents payments received from customers for power generated through the provision of equipment and service. At September 30, 2021, there were 61 GenKey sites associated with PPAs, as compared to 36 at September 30, 2020. Revenue from PPAs for the three months ended September 30, 2021 increased $2.7 million, or 40.6%, to $9.3 million from $6.6 million for the three months ended September 30, 2020. Included within revenue was provision for common stock warrants of $652 thousand and $758 thousand for the three months ended September 30, 2021 and 2020, respectively. The increase in revenue from PPAs for the three months ended September 30, 2021 as compared to the three months ended September 30, 2020 was primarily attributable to the new sites for existing customers and new customers accessing the PPA subscription solution, and a slight decrease in the provision for common stock warrants.

Revenue from PPAs for the nine months ended September 30, 2021 increased $5.9 million, or 30.0%, to $25.5 million from $19.6 million for the nine months ended September 30, 2020. Included within revenue was provision for common stock warrants of $2.5 million and $1.9 million for the nine months ended September 30, 2021 and 2020, respectively. The increase in revenue from PPAs for the nine months ended September 30, 2021 as compared to the nine months ended September 30, 2020 was primarily attributable to the new sites for existing customers and new customers accessing the PPA subscription solution, offset in part by the increase in the provision for common stock warrants.

*Revenue – fuel delivered to customers.* Revenue associated with fuel delivered to customers represents the sale of hydrogen to customers that has been purchased by the Company from a third party or generated on site. Revenue associated with fuel delivered to customers for the three months ended September 30, 2021 increased $1.7 million, or 17.5%, to $11.6 million from $9.8 million for the three months ended September 30, 2020. Included within revenue was provision for common stock warrants of $573 thousand and $1.0 million for the three months ended September 30, 2021 and 2020, respectively. The increase in revenue was due to an increase in the number of sites with fuel contracts from 94 as of September 30, 2020 to 141 as of September 30, 2021, and a slight decrease in the provision for common stock warrants. A number of the new sites had not received fuel as of September 30, 2021, and therefore the increase in revenue from the third quarter of 2021 was not proportionate to the increase in new sites.

Revenue associated with fuel delivered to customers for the nine months ended September 30, 2021 increased $9.3 million, or 37.8%, to $33.8 million from $24.5 million for the nine months ended September 30, 2020. Included within revenue was provision for common stock warrants of $1.9 million and $2.6 million for the nine months ended September 30, 2021 and 2020, respectively. The increase in revenue was due to an increase in the number of sites with fuel contracts from 94 as of September 30, 2020 to 141 as of September 30, 2021, and a slight decrease in the provision for common stock warrants. A number of the new sites had not received fuel as of September 30, 2021, and therefore the increase in revenue from the third quarter of 2021 was not proportionate to the increase in new sites.

### Cost of Revenue

*Cost of revenue – sales of fuel cell systems and related infrastructure.* Cost of revenue from sales of fuel cell systems and related infrastructure includes direct materials, labor costs, and allocated overhead costs related to the manufacture of our fuel cells such as GenDrive units and GenSure stationary backup power units, and hydrogen fueling infrastructure referred to at the site level as hydrogen installations. Cost of revenue from sales of fuel cell systems and related infrastructure for the three months ended September 30, 2021 increased 28.5%, or $19.8 million, to $89.2 million, compared to $69.4 million for the three months ended September 30, 2020. This increase was driven by the increase in GenDrive deployment volume and increase in hydrogen installations, as well as certain unexpected costs, including varied COVID related issues such as increased freight and material costs and higher labor costs given staffing and coverage issues. There were 4,559 GenDrive units recognized as revenue during the three months ended September 30, 2021, compared to 3,709 for the three months ended September 30, 2020. Revenue associated with 16 hydrogen installations was recognized during the three months ended September 30, 2021, compared to 13 during the three months ended September 30, 2020. Gross profit generated from sales of fuel cell systems and related infrastructure increased to 23.1% for the three months ended September 30, 2021, compared to 17.0% for the three months ended September 30, 2020 primarily due to a decrease in the reduction of revenue for warrants for sales of fuel cell systems and related infrastructure of $16.1 million. For the three months ended September 30, 2021 and 2020, the reduction of revenue for warrants was $0 and $16.1 million, respectively. We expect these cost trends will continue into the end of 2021, but begin to abate once the global supply chain has normalized.

Cost of revenue from sales of fuel cell systems and related infrastructure for the nine months ended September 30, 2021 increased 68.9%, or $80.8 million, to $198.1 million, compared to $117.3 million for the nine months ended September 30, 2020. This increase was driven by the increase in GenDrive deployment volume and increase in hydrogen installations, as well as certain unexpected costs, including varied COVID related issues such as increased freight and material costs and higher labor costs given staffing and coverage issues. There were 9,533 GenDrive units recognized as revenue during the nine months ended September 30, 2021, compared to 7,217 for the nine months ended September 30, 2020. Revenue associated with 38 hydrogen installations was recognized during the nine months ended September 30, 2021, compared to 18 during the nine months ended September 30, 2020. Gross profit generated from sales of fuel cell systems and related infrastructure increased to 24.4% for the nine months ended September 30, 2021, compared to 22.8% for the nine months ended September 30, 2020 primarily due to a decrease in the reduction of revenue for warrants for sales of fuel cell systems and related infrastructure of $19.3 million. For the nine months ended September 30, 2021 and 2020, the reduction of revenue for warrants was $0 and $19.3 million, respectively. We expect these cost trends will continue into the end of 2021, but begin to abate once the global supply chain has normalized.

*Cost of revenue – services performed on fuel cell systems and related infrastructure*. Cost of revenue from services performed on fuel cell systems and related infrastructure includes the labor, material costs and allocated overhead costs incurred for our product service and hydrogen site maintenance contracts and spare parts. At September 30, 2021, there were 18,685 fuel cell units and 78 hydrogen installations under extended maintenance contracts, an increase from 13,421 fuel cell units and 56 hydrogen installations at September 30, 2020, respectively. Cost of revenue from services performed on fuel cell systems and related infrastructure for the three months ended September 30, 2021 increased 103.7%, or $9.5 million, to $18.7 million, compared to $9.2 million for the three months ended September 30, 2020. The increase in cost of revenue was due primarily to increase in volume and certain unexpected costs, including varied COVID related issues such as increased freight and material costs, higher labor costs given staffing and coverage issues, and scrap charges associated with certain parts. Gross loss increased to (180.0)% for the three months ended September 30, 2021, compared to (34.4)% for the three months ended September 30, 2020, primarily due to certain unexpected costs, including varied COVID related issues, scrap charges associated with certain parts as well as a reduction in billings for run time hours that exceeded certain levels given certain changes in the overall contract, partially offset by a change in the release of the previously recorded loss accrual from $314 thousand during the three months ended September 30, 2020 to $2.3 million during the three months ended September 30, 2021. We expect these cost trends will continue into the end of 2021, but begin to abate once the global supply chain has normalized.

Cost of revenue from services performed on fuel cell systems and related infrastructure for the nine months ended September 30, 2021 increased 73.1%, or $20.0 million, to $47.3 million, compared to $27.3 million for the nine months ended September 30, 2020. The increase in cost of revenue was due primarily to certain unexpected costs, including varied COVID related issues such as increased freight costs, certain vendor transition and force majeure issues that impacted hydrogen infrastructure service costs, and scrap charges associated with certain parts. At September 30, 2021, there were 18,685 fuel cell units and 78 hydrogen installations under extended maintenance contracts, an increase from 13,421 fuel cell units and 56 hydrogen installations at September 30, 2020, respectively. Gross loss increased to (156.9)% for the nine months ended September 30, 2021, compared to (39.4)% for the nine months ended September 30, 2020, primarily due to certain unexpected costs including varied COVID related issues, certain vendor transition and force majeure issues that impacted hydrogen infrastructure service costs, and scrap charges associated with certain parts, as well as a reduction in billings for run time hours that exceeded certain levels given certain changes in the overall contract. This was partially offset by a release of the previously recorded loss accrual from $839 thousand during the nine months ended September 30, 2020 to $6.1 million during the nine months ended September 30, 2021. We expect these cost trends will continue into the end of 2021, but begin to abate once the global supply chain has normalized.

*Cost of revenue – provision for loss contracts related to service.* The Company also recorded a provision for loss contracts related to service of $7.5 million for the three months ended September 30, 2021, compared to $25.2 million for the three months ended September 30, 2020. The decrease in the provision for loss contracts related to service was primarily a function of a higher provision in 2020, due to an increase in estimated projected cost to service fuel cell systems and related infrastructure, as the Company determined in the third quarter of 2020 that certain cost down initiatives were taking longer to achieve than originally estimated. This was offset by the increase in the provision as a result of more new sites under service contract during the three months ended September 30, 2021 as compared to number of sites for the three months ended September 30, 2020. In addition, the Company determined during the third quarter of 2020 that the projected provision for the Amazon Warrant would be significantly higher than previously estimated.

The Company also recorded a provision for loss contracts related to service of $15.6 million for the nine months ended September 30, 2021, compared to $26.0 million for the nine months ended September 30, 2020. The decrease in the provision for loss contracts related to service was primarily a function of a higher provision in 2020, due to an increase in estimated projected cost to service fuel cell systems and related infrastructure, as the Company determined in the third quarter of 2020 that certain cost down initiatives were taking longer to achieve than originally estimated. This was offset by the increase in the provision as a result of more new sites under service contract during the nine months ended September 30, 2021 as compared to number of sites for the three months ended September 30, 2020. In addition, the Company determined during the third quarter of 2020 that the projected provision for the Amazon Warrant would be significantly higher than previously estimated.

*Cost of revenue – Power Purchase Agreements.* Cost of revenue from PPAs includes depreciation of assets utilized and service costs to fulfill PPA obligations and interest costs associated with certain financial institutions for leased equipment. At September 30, 2021, there were 61 GenKey sites associated with PPAs, as compared to 36 at September 30, 2020. Cost of revenue from PPAs for the three months ended September 30, 2021 increased 111.6%, or $16.5 million, to $31.2 million from $14.7 million for the three months ended September 30, 2020 due to the increase in units and sites under PPA contract as well as certain COVID related issues such as increased freight costs, scrap charges associated with certain parts and an impairment charge of $1.3 million. Gross loss increased to (234.7)% for the three months ended September 30, 2021, as compared to (122.4)% for the three months ended September 30, 2020 primarily due to certain COVID related issues, scrap charges associated with certain parts, and an impairment charge of $1.3 million.

Cost of revenue from PPAs for the nine months ended September 30, 2021 increased 63.1%, or $27.8 million, to $71.8 million from $44.0 million for the nine months ended September 30, 2020 primarily due to the increase in units and sites under PPA contract as well as certain COVID related issues such as increased freights costs, certain force majeure issues that impacted hydrogen infrastructure service costs, scrap charges associated with certain parts and an impairment charge of $1.3 million. Gross loss increased to (181.4)% for the nine months ended September 30, 2021, as compared to (124.3)% for the nine months ended September 30, 2020 primarily due to certain COVID related issues, certain force majeure issues that impacted hydrogen infrastructure service costs, scrap charges associated with certain parts, and an impairment charge of $1.3 million.

*Cost of revenue – fuel delivered to customers.* Cost of revenue from fuel delivered to customers represents the purchase of hydrogen from suppliers that ultimately is sold to customers and costs for onsite generation. Cost of revenue from fuel delivered to customers for the three months ended September 30, 2021 increased 63.8%, or $10.9 million, to $27.9 million from $17.0 million for the three months ended September 30, 2020. The increase was primarily due to higher volume of hydrogen delivered to customer sites as a result of an increase in the number of hydrogen installations completed under GenKey agreements, costs associated with managing availability of molecule in the supply chain as well as a shortage of delivery capability (both drivers and delivery assets), and higher fuel costs. As a result of these higher costs, gross loss increased to (141.1)% during the three months ended September 30, 2021, compared to (72.9)% during the three months ended September 30, 2020. We expect higher hydrogen molecule costs to continue at least through 2021.

Cost of revenue from fuel delivered to customers for the nine months ended September 30, 2021 increased 129.7%, or $51.0 million, to $90.3 million from $39.3 million for the nine months ended September 30, 2020. The increase was primarily due to higher volume of hydrogen delivered to customer sites as a result of an increase in the number of hydrogen installations completed under GenKey agreements, and higher fuel costs. Also significantly impacting the cost of fuel for the nine months ended September 30, 2021 was a vendor transition and force majeure events primarily related to hydrogen plant shutdowns. Gross loss increased to (167.2)% during the nine months ended September 30, 2021, compared to (60.3)% during the nine months ended September 30, 2020. The increased gross loss is primarily due to the vendor transition and force majeure issues mentioned above. The cost associated with the vendor transition amounted to approximately $16.3 million for the nine months ended September 30, 2021, which were recorded in the Company’s unaudited interim condensed consolidated statement of operations as cost of revenue – fuel delivered to customers. The Company also purchased certain fuel tanks from the fuel provider during the nine months ended September 30, 2021. We expect higher hydrogen molecule costs to continue at least through 2021.

### Expenses

*Research and development expense.* Research and development (“R&D”) expense includes: materials to build development and prototype units, cash and non-cash compensation and benefits for the engineering and related staff, expenses for contract engineers, fees paid to consultants for services provided, materials and supplies consumed, facility related costs such as computer and network services, and other general overhead costs associated with our research and development activities.

Research and development expense for the three months ended September 30, 2021 increased $9.2 million, or 125.2%, to $16.6 million, from $7.4 million for the three months ended September 30, 2020. The overall growth in R&D investment is commensurate with the Company’s future expansion into new markets, new product lines, and varied vertical integrations. The average number of R&D employees was 139 at September 30, 2020 compared to 264 at September 30, 2021.

Research and development expense for the nine months ended September 30, 2021 increased $20.6 million, or 120.9%, to $37.6 million, from $17.0 million for the nine months ended September 30, 2020. The overall growth in R&D investment is commensurate with the Company’s future expansion into new markets, new product lines, and varied vertical integrations. The average number of R&D employees was 132 at September 30, 2020 compared to 227 at September 30, 2021.

*Selling, general and administrative expenses.* Selling, general and administrative expenses includes cash and non-cash compensation, benefits, amortization of intangible assets and related costs in support of our general corporate functions, including general management, finance and accounting, human resources, selling and marketing, information technology and legal services.

Selling, general and administrative expenses for the three months ended September 30, 2021, increased $25.2 million, or 146.5%, to $42.4 million from $17.2 million for the three months ended September 30, 2020. This increase was primarily related to increases in salaries and stock-based compensation due to increased headcount and branding expenses.

Selling, general and administrative expenses for the nine months ended September 30, 2021, increased $56.7 million, or 113.5%, to $106.7 million from $50.0 million for the nine months ended September 30, 2020. This increase was primarily related to increases in salaries and stock-based compensation due to increased headcount and branding expenses, in addition to costs associated with the restatement of our previous years’ financial statements.

*Contingent Consideration.* The fair value of the contingent consideration related to the Giner ELX, Inc. and United Hydrogen Group Inc. acquisitions was remeasured as of September 30, 2021, which resulted in a $8.5 million charge for the three months ended September 30, 2021 and a $8.8 million charge for the nine months ended September 30, 2021, both of which are reflected in the unaudited interim condensed consolidated statement of operations for the three and nine months ended September 30, 2021, respectively, primarily due to an increase in projected revenues associated with electrolyzers.

*Interest, net*. Interest, net consists of interest expense related to our long-term debt, convertible senior notes, obligations under finance leases and our finance obligations, as well as interest income. Interest decreased $11.9 million, or (68.9)%, from $17.2 million for the three months ended September 30, 2020 to $5.4 million for the three months ended September 30, 2021. Interest decreased $14.5 million, or (34.2)%, from $42.4 million for the nine months ended September 30, 2020 to $27.9 million for the nine months ended September 30, 2021. This decrease was primarily driven by the exchange and conversion during both 2020 and 2021 of the 7.5% Convertible Senior Note and 5.5% Convertible Senior Notes, and the adoption of ASU 2020-06 which reduced the noncash interest expense on convertible notes.

*Other expense, net*. Other expense, net consists of other expenses related to our foreign currency exchange losses, offset by interest and other income consisting primarily of interest earned on our cash and cash equivalents, restricted cash and available-for-sale securities. Other expense, net decreased $253 thousand for the three months ended September 30, 2021 in comparison to the three months ended September 30, 2020 and decreased $134 thousand for the nine months ended September 30, 2021 in comparison to the nine months ended September 30, 2020.

*Realized loss on investments, net.* Realized loss on investments, net consists of the sales and maturities related to available-for-sale debt securities. For the three months and nine months ended September 30, 2021, the Company had $254 thousand and $236 thousand, respectively, of net realized loss on investments. The Company did not have an investment portfolio in 2020, and as such there were no realized gains or losses.

*Change in fair value of equity securities*. Change in fair value of equity securities consists of the changes in fair value for equity securities from the purchase date to the end of the period. For the three months and nine months ended September 30, 2021, the Company had $607 thousand and $284 thousand, respectively, of change in the fair value of equity securities. The Company did not have an investment portfolio in 2020, and as such there were no realized gains or losses.

*Loss on equity method investments.* Loss on equity method investments consists of our interest in Hyvia, which is our 50/50 joint venture with Renault. For both the three and nine months ended September 30, 2021, the Company recorded a loss of $1.7 million on equity method investments as HyVia had not yet started commercial operations. The Company did not have any equity method investments in 2020, and as such there were no realized gains or losses.

### Income Tax

The Company did not record any income tax expense or benefit for the three or nine months ended September 30, 2021. The Company recognized an income tax benefit for the three and nine months ended September 30, 2020 of $6.6 million and $24.0 million, respectively. Income tax benefit for the three and nine months ended September 30, 2020 included $6.6 million and $19.0, million, respectively, resulting from the intraperiod tax allocation rules under ASC Topic 740-20, *Intraperiod Tax Allocation*, under which the Company recognized an income tax benefit resulting from a source of future taxable income attributable to the net credit to additional paid-in capital related to the issuance of the 3.75% Convertible Senior Notes, offset by the partial extinguishment of the 5.5% Convertible Senior Notes. In addition, the Company recorded $5.0 million of income tax benefit for the three and nine months ended September 30, 2020 related to the recognition of net deferred tax liabilities in connection with the Giner ELX, Inc. acquisition, which resulted in a corresponding reduction in our deferred tax asset valuation allowance. The Company has not changed its overall conclusion with respect to the need for a valuation allowance against its net deferred tax assets, which remain fully reserved.

The net deferred tax asset generated from the Company’s net operating loss has been offset by a full valuation allowance because it is more likely than not that the tax benefits of the net operating loss carry forward will not be realized. The Company recognizes accrued interest and penalties related to unrecognized tax benefits, if any, as a component of income tax expense.

### Liquidity and Capital Resources

### Liquidity

As of September 30, 2021 and December 31, 2020, the Company had $3.4 billion and $1.3 billion of cash and cash equivalents and $481.2 million and $321.9 million of restricted cash, respectively. In January and February 2021, the Company issued and sold in a registered equity offering an aggregate of 32.2 million shares of its common stock at a purchase price of $65.00 per share for net proceeds of approximately $2.0 billion. Furthermore, in February 2021, the Company completed the previously announced sale of its common stock in connection with a strategic partnership with SK Holdings to accelerate the use of hydrogen as an alternative energy source in Asian markets. The Company sold 54,996,188 shares of its common stock to a subsidiary of SK Holdings at a purchase price of $29.2893 per share, or an aggregate purchase price of approximately $1.6 billion.

The Company has continued to experience negative cash flows from operations and net losses. The Company incurred net losses attributable to common stockholders of $267.1 million and $112.1 million for the nine months ended September 30, 2021 and 2020, respectively, and had an accumulated deficit of $2.2 billion at September 30, 2021.

The Company’s significant obligations consisted of the following as of September 30, 2021:

(i) Operating and finance leases totaling $162.7 million and $19.8 million, respectively, of which $23.3 million and $2.8 million, respectively, are due within the next 12 months. These leases are primarily related to sale/leaseback agreements entered into with various financial institutions to facilitate the Company’s commercial transactions with key customers.

(ii) Finance obligations totaling $207.8 million, of which approximately $35.6 million is due within the next 12 months. Finance obligations consist primarily of debt associated with the sale of future revenues and failed sale/leaseback transactions.

(iii) Long-term debt, primarily related to the Company’s Loan Agreement with Generate Capital totaling $147.3 million, of which $23.5 million is classified as short term on our consolidated balance sheets. See Note 9, “Long-Term Debt”, for more details.

(iv) Convertible senior notes totaling $192.3 million at September 30, 2021. See Note 10, “Convertible Senior Notes” for more details.

The Company’s working capital was $4.5 billion at September 30, 2021, which included unrestricted cash and cash equivalents of $3.4 billion. The Company plans to invest a portion of its available cash to expand its current production and manufacturing capacity and to fund strategic acquisitions and partnerships and capital projects. In the fourth quarter of 2021, the Company expects to invest approximately €5 million, of which €2.5 million will be in the form of a shareholder loan. Future use of the Company’s funds is discretionary and the Company believes that its working capital and cash position will be sufficient to fund its operations for at least one year after the date the financial statements are issued.

### Public and Private Offerings of Equity and Debt

#### Common Stock Issuances

In February 2021, the Company completed the previously announced sale of its common stock in connection with a strategic partnership with SK Holdings to accelerate the use of hydrogen as an alternative energy source in Asian markets. The Company sold 54,966,188 shares of its common stock to a subsidiary of SK Holdings at a purchase price of $29.2893 per share, or an aggregate purchase price of approximately $1.6 billion.

In January and February 2021, the Company issued and sold in a registered equity offering an aggregate of 32.2 million shares of its common stock at a purchase price of $65.00 per share for net proceeds of approximately $2.0 billion.

In November 2020, the Company issued and sold in a registered equity offering an aggregate of 43,700,000 shares of its common stock at a purchase price of $22.25 per share for net proceeds of approximately $927.3 million.

In August 2020, the Company issued and sold in a registered equity offering an aggregate of 35,276,250 shares of its common stock at a purchase price of $10.25 per share for net proceeds of approximately $344.4 million.

On April 13, 2020, the Company entered into the At Market Issuance Sales Agreement with B. Riley Financial (“B. Riley”), as sales agent, pursuant to which the Company may offer and sell, from time to time through B. Riley, shares of Company common stock having an aggregate offering price of up to $75.0 million. As of the date of this filing, the Company has not issued any shares of common stock pursuant to the At Market Issuance Sales Agreement.

#### Convertible Senior Notes

In May 2020, the Company issued $212.5 million in aggregate principal amount of 3.75% Convertible Senior Notes. The total net proceeds from this offering, after deducting costs of the issuance, were $205.1 million. The Company used $90.2 million of the net proceeds from the offering of the 3.75% Convertible Senior Notes to repurchase $66.3 million of the $100 million in aggregate principal amount of the 5.5% Convertible Senior Notes. In addition, the Company used approximately $16.3 million of the net proceeds from the offering of the 3.75% Convertible Senior Notes to enter into privately negotiated capped called transactions. In the fourth quarter of 2020, $33.5 million of the remaining 5.5% Convertible Senior Notes were converted into 14.6 million shares of common stock, resulting in a gain of approximately $4.5 million which was recorded on the consolidated statement of operations on the gain (loss) on extinguishment of debt line. As of December 31, 2020, approximately $160 thousand aggregate principal amount of the 5.5% Convertible Senior Notes remained outstanding, all of which were converted to common stock in January 2021.

In September 2019, the Company issued $40.0 million in aggregate principal amount of 7.5% Convertible Senior Note. The Company’s total obligation, net of interest accretion, due to the holder was $48.0 million. The total net proceeds from this offering, after deducting costs of the issuance, were $39.1 million. On July 1, 2020, the note automatically converted fully into 16.0 million shares of common stock.

### Secured Debt

In March 2019, the Company entered into a loan and security agreement, as amended (the “Loan Agreement”), with Generate Lending, LLC (“Generate Capital”), providing for a secured term loan facility in the amount of $100 million (the “Term Loan Facility”).

During the year ended December 31, 2020, the Company, under another series of amendments to the Loan Agreement, borrowed an incremental $100.0 million. As part of the amendment to the Loan Agreement, the Company’s interest rate on the secured term loan facility was reduced to 9.50% from 12.00% per annum, and the maturity date was extended to October 31, 2025 from October 6, 2022. On September 30, 2021, the outstanding balance under the Term Loan Facility was $137.7 million. In addition to the Term Loan Facility, on September 30, 2021 there was approximately $9.5 million of debt outstanding related to the United Hydrogen Group, Inc. acquisition.

The Loan Agreement includes covenants, limitations, and events of default customary for similar facilities. Interest and a portion of the principal amount is payable on a quarterly basis. Principal payments are funded in part by releases of restricted cash, as described in Note 19, “Commitments and Contingencies.” Based on the amortization schedule as of September 30, 2021, the aforementioned loan balance under the Term Loan Facility will be fully paid by October 31, 2025. The Company is in compliance with, or has obtained waivers for, all debt covenants.

The Term Loan Facility is secured by substantially all of the Company’s and the guarantor subsidiaries’ assets, including, among other assets, all intellectual property, all securities in domestic subsidiaries and 65% of the securities in foreign subsidiaries, subject to certain exceptions and exclusions.

The Loan Agreement provides that if there is an event of default due to the Company’s insolvency or if the Company fails to perform in any material respect the servicing requirements for fuel cell systems under certain customer agreements, which failure would entitle the customer to terminate such customer agreement, replace the Company or withhold the payment of any material amount to the Company under such customer agreement, then Generate Capital has the right to cause Proton Services Inc., a wholly owned subsidiary of the Company, to replace the Company in performing the maintenance services under such customer agreement.

As of September 30, 2021, the Term Loan Facility requires the principal balance as of each of the following dates not to exceed the following (in thousands):

| ​ | ​ ​ |
| --- | --- |
| December 31, 2021 | $127,317 |
| December 31, 2022 | ​ 93,321 |
| December 31, 2023 | ​ 62,920 |
| December 31, 2024 | ​ 33,692 |
| December 31, 2025 | ​ — |

Several key indicators of liquidity are summarized in the following table (in thousands):

| ​ ​ ​ ​ | ​ ​ ​ | ​ ​ Nine months ended or at September 30, 2021 | ​ ​ ​ | ​ ​ Year ended or at December 31, 2020 |
| --- | --- | ---: | --- | ---: |
| Cash and cash equivalents at end of period | ​ | $3,371,962 | ​ | $1,312,404 |
| Restricted cash at end of period | ​ | 481,230 | ​ | 321,880 |
| Working capital at end of period | ​ | 4,518,052 | ​ | 1,380,830 |
| Net loss attributable to common stockholders | ​ | (267,051) | ​ | (596,181) |
| Net cash used in operating activities | ​ | (348,501) | ​ | (155,476) |
| Net cash used in investing activities | ​ | (1,014,294) | ​ | (95,334) |
| Net cash provided by financing activities | ​ | 3,581,762 | ​ | 1,515,529 |

### 3.75% Convertible Senior Notes

On May 18, 2020, the Company issued $200.0 million in aggregate principal amount of 3.75% Convertible Senior Notes due June 1, 2025, in a private placement to qualified institutional buyers pursuant to Rule 144A under the Securities Act. On May 29, 2020, the Company issued an additional $12.5 million in aggregate principal amount of 3.75% Convertible Senior Notes.

At issuance in May 2020, the total net proceeds from the 3.75% Convertible Senior Notes were as follows:

*(in thousands)*

| ​ ​ ​ | ​ ​ Amount |
| --- | --- |
| Principal amount | $212,463 |
| Less initial purchasers' discount | ​ (6,374) |
| Less cost of related capped calls | ​ (16,253) |
| Less other issuance costs | ​ (617) |
| Net proceeds | $189,219 |

The 3.75% Convertible Senior Notes bear interest at a rate of 3.75% per year, payable semi-annually in arrears on June 1 and December 1 of each year, beginning on December 1, 2020. The notes will mature on June 1, 2025, unless earlier converted, redeemed or repurchased in accordance with their terms.

The 3.75% Convertible Senior Notes are senior, unsecured obligations of the Company and rank senior in right of payment to any of the Company’s indebtedness that is expressly subordinated in right of payment to the notes, equal in right of payment to any of the Company’s existing and future liabilities that are not so subordinated, including the Company’s $100 million in aggregate principal amount of the 5.5% Convertible Senior Notes, effectively junior in right of payment to any of the Company’s secured indebtedness to the extent of the value of the collateral securing such indebtedness, and structurally subordinated to all indebtedness and other liabilities, including trade payables, of its current or future subsidiaries.

Holders of the 3.75% Convertible Senior Notes may convert their notes at their option at any time prior to the close of the business day immediately preceding December 1, 2024 in the following circumstances:

1\) during any calendar quarter commencing after March 31, 2021 if the last reported sale price of the Company’s common stock exceeds 130% of the conversion price for each of at least 20 trading days (whether or not consecutive) during a period of 30 consecutive trading days ending on, and including, the last trading day of the immediately preceding calendar quarter;

2\) during the five business days after any five consecutive trading day period (such five consecutive trading day period, the measurement period) in which the trading price per $1,000 principal amount of the 3.75% Convertible Senior Notes for each trading day of the measurement period was less than 98% of the product of the last reported sale price of the Company’s common stock and the conversion rate on each such trading day;

3\) if the Company calls any or all of the 3.75% Convertible Senior Notes for redemption, any such notes that have been called for redemption may be converted at any time prior to the close of business on the second scheduled trading day immediately preceding the redemption date; or

4\) upon the occurrence of specified corporate events, as described in the indenture governing the 3.75% Convertible Senior Notes.

On or after December 1, 2024, the holders of the 3.75% Convertible Senior Notes may convert all or any portion of their notes at any time prior to the close of business on the second scheduled trading day immediately preceding the maturity date regardless of the foregoing conditions.

The initial conversion rate for the 3.75% Convertible Senior Notes is 198.6196 shares of the Company’s common stock per $1,000 principal amount of notes, which is equivalent to an initial conversion price of approximately $5.03 per share of the Company’s common stock, subject to adjustment upon the occurrence of specified events. Upon conversion, the Company will pay or deliver, as applicable, cash, shares of the Company’s common stock or a combination of cash and shares of the Company’s common stock, at the Company’s election. During the three months ended September 30,

2021, certain conditions allowing holders of the 3.75% Convertible Senior Notes to convert were met. The 3.75% Convertible Senior Notes are therefore convertible during the calendar quarter ending September 30, 2021 at the conversion rate discussed above. During the nine months ended September 30, 2021, $15.2 million of the 3.75% Convertible Senior Notes were converted and the Company issued approximately 3.0 million shares of common stock in conjunction with these conversions.

In addition, following certain corporate events or following issuance of a notice of redemption, the Company will increase the conversion rate for a holder who elects to convert its notes in connection with such a corporate event or convert its notes called for redemption during the related redemption period in certain circumstances.

The 3.75% Convertible Senior Notes will be redeemable, in whole or in part, at the Company’s option at any time, and from time to time, on or after June 5, 2023 and before the 41st scheduled trading day immediately before the maturity date, at a cash redemption price equal to 100% of the principal amount of the notes to be redeemed, plus accrued and unpaid interest, if any, but only if the last reported sale price per share of the Company’s common stock exceeds 130% of the conversion price then in effect for at least 20 trading days (whether or not consecutive), including at least one of the three trading days immediately preceding the date the Company sends the related redemption notice, during any 30 consecutive trading day period ending on, and including, the trading day immediately preceding the date on which the Company sends such redemption notice.

If the Company undergoes a “fundamental change” (as defined in the Indenture), holders may require the Company to repurchase their notes for cash all or any portion of their notes at a fundamental change repurchase price equal to 100% of the principal amount of the notes to be repurchased, plus accrued and unpaid interest, to, but excluding, the fundamental change repurchase date.

The Company accounts for the 3.75% Convertible Senior Notes as a liability. We incurred transaction costs related to the issuance of the 3.75% Convertible Senior Notes of approximately $7.0 million, consisting of initial purchasers’ discount of approximately $6.4 million and other issuance costs of $0.6 million which were recorded as debt issuance cost (presented as contra debt in the unaudited interim condensed consolidated balance sheets) and are being amortized to interest expense over the term of the 3.75% Convertible Senior Notes.

The 3.75% Convertible Senior Notes consisted of the following (in thousands):

| ​ ​ ​ Principal amounts: | ​ ​ September 30, 2021 ​ ​ |
| --- | ---: |
| Principal | $197,278 |
| Unamortized debt issuance costs (1) | ​ (4,958) |
| Net carrying amount | $192,320 |

1\) Included in the unaudited interim condensed consolidated balance sheets within the 3.75% Convertible Senior Notes, net and amortized over the remaining life of the notes using the effective interest rate method.

The following table summarizes the total interest expense, the amortization of debt issuance costs and the effective interest rate related to the 3.75% Convertible Senior Notes (in thousands, except for effective interest rate):

| ​ ​ ​ | ​ ​ September 30, 2021 |
| --- | --- |
| Interest expense | $1,849 |
| Amortization of debt issuance costs | ​ 306 |
| Total | ​ 2,155 |

49

| ​ | ​ | ​ |
| --- | --- | ---: |
| Effective interest rate | **​** | 4.50% |

Based on the closing price of the Company’s common stock of $25.54 on September 30, 2021, the if-converted value of the notes was greater than the principal amount. The estimated fair value of the note at September 30, 2021 was approximately $1.0 billion. The fair value estimation was primarily based on an active stock exchange trade on September 30, 2021 of the 3.75% Convertible Senior Notes. See Note 15, “Fair Value Measurements,” for a description of the fair value hierarchy.

### Capped Call

In conjunction with the pricing of the 3.75% Convertible Senior Notes, the Company entered into privately negotiated capped call transactions (the “3.75% Notes Capped Call”) with certain counterparties at a price of $16.2 million. The 3.75% Notes Capped Call covers, subject to anti-dilution adjustments, the aggregate number of shares of the Company’s common stock that underlie the initial 3.75% Convertible Senior Notes and is generally expected to reduce potential dilution to the Company’s common stock upon any conversion of the 3.75% Convertible Senior Notes and/or offset any cash payments the Company is required to make in excess of the principal amount of the converted notes, as the case may be, with such reduction and/or offset subject to a cap based on the cap price. The cap price of the 3.75% Notes Capped Call is initially $6.7560 per share, which represents a premium of approximately 60% over the last then-reported sale price of the Company’s common stock of $4.11 per share on the date of the transaction and is subject to certain adjustments under the terms of the 3.75% Notes Capped Call. The 3.75% Notes Capped Call becomes exercisable if the conversion option is exercised.

The net cost incurred in connection with the 3.75% Notes Capped Call were recorded as a reduction to additional paid-in capital in the unaudited interim condensed consolidated balance sheets.

### 5.5% Convertible Senior Notes

In March 2018, the Company issued $100.0 million in aggregate principal amount of the 5.5% Convertible Senior Notes due on March 15, 2023, in a private placement to qualified institutional buyers pursuant to Rule 144A under the Securities Act.

In May 2020, the Company used a portion of the net proceeds from the issuance of the 3.75% Convertible Senior Notes to finance the cash portion of the partial repurchase of the 5.5% Convertible Senior Notes, which consisted of a repurchase of approximately $66.3 million in aggregate principal amount of the 5.5% Convertible Senior Notes in privately-negotiated transactions for aggregate consideration of $128.9 million, consisting of approximately $90.2 million in cash and approximately 9.4 million shares of the Company’s common stock. The partial repurchase of the 5.5% Convertible Senior Notes resulted in a $13.2 million gain on early debt extinguishment. In the fourth quarter of 2020, $33.5 million of the remaining 5.5% Convertible Senior Notes were converted into 14.6 million shares of common stock which resulted in a gain of approximately $4.5 million which was recorded on the consolidated statement of operations on the gain (loss) on extinguishment of debt line.

On January 7, 2021, the remaining aggregate principal of $160 thousand aggregate principal amount of the 5.5% Convertible Senior Notes were converted into 69,808 shares of common stock. Interest expense and amortization for the period were immaterial.

### Capped Call

In conjunction with the pricing of the 5.5% Convertible Senior Notes, the Company entered into privately negotiated capped call transactions (the “5.5% Notes Capped Call”) with certain counterparties at a price of $16.0 million to reduce the potential dilution to the Company’s common stock upon any conversion of the 5.5% Convertible Senior Notes and/or offset any cash payments the Company is required to make in excess of the principal amount of the converted 5.5% Convertible Senior Notes, as the case may be. The net cost incurred in connection with the 5.5% Notes Capped Call has been recorded as a reduction to additional paid-in capital in the unaudited interim condensed consolidated balance sheets.

In conjunction with the pricing of the partial repurchase of the 5.5% Convertible Senior Notes, the Company terminated 100% of the 5.5% Notes Capped Call on June 5, 2020. As a result of the termination, the Company received $24.2 million, which was recorded in additional paid-in capital in the unaudited interim condensed consolidated balance sheets.

### Common Stock Forward

In connection with the issuance of the 5.5% Convertible Senior Notes, the Company also entered into a forward stock purchase transaction (the “Common Stock Forward”), pursuant to which the Company agreed to purchase 14,397,906 shares of its common stock for settlement on or about March 15, 2023. In connection with the issuance of the 3.75% Convertible Senior Notes and the partial repurchase of the 5.5% Convertible Senior Notes, the Company amended and extended the maturity of the Common Stock Forward to June 1, 2025. The number of shares of common stock that the Company will ultimately repurchase under the Common Stock Forward is subject to customary anti-dilution adjustments. The Common Stock Forward is subject to early settlement or settlement with alternative consideration in the event of certain corporate transactions.

The net cost incurred in connection with the Common Stock Forward of $27.5 million was recorded as an increase in treasury stock in the unaudited interim condensed consolidated balance sheets. The related shares were accounted for as a repurchase of common stock.

The book value of the 5.5% Notes Capped Call and Common Stock Forward are not remeasured.

During the fourth quarter of 2020, the Common Stock Forward was partially settled and, as a result, the Company received 4.4 million shares of its common stock. During the three 0 shares were settled and received by the Company. During the nine months ended September 30, 2021, 8.1 million shares were settled and received by the Company.

### Amazon Transaction Agreement

On April 4, 2017, the Company and Amazon entered into a Transaction Agreement (the “Amazon Transaction Agreement”), pursuant to which the Company agreed to issue to Amazon.com NV Investment Holdings LLC, a wholly owned subsidiary of Amazon, a warrant (the “Amazon Warrant”) to acquire up to 55,286,696 shares of the Company’s common stock (the “Amazon Warrant Shares”), subject to certain vesting events described below. The Company and Amazon entered into the Amazon Transaction Agreement in connection with existing commercial agreements between the Company and Amazon with respect to the deployment of the Company’s GenKey fuel cell technology at Amazon distribution centers. The existing commercial agreements contemplate, but do not guarantee, future purchase orders for the Company’s fuel cell technology. The vesting of the Amazon Warrant Shares was conditioned upon payments made by Amazon or its affiliates (directly or indirectly through third parties) pursuant to the existing commercial agreements.

Under the terms of the original Amazon Warrant, the first tranche of the 5,819,652 Amazon Warrant Shares vested upon execution of the Amazon Warrant, and the remaining Amazon Warrant Shares vest based on Amazon’s payment of up to $600.0 million to the Company in connection with Amazon’s purchase of goods and services from the Company. The $6.7 million fair value of the first tranche of the Amazon Warrant Shares was recognized as selling, general and administrative expense upon execution of the Amazon Warrant.

Provision for the second and third tranches of Amazon Warrant Shares is recorded as a reduction of revenue because they represent consideration payable to a customer.

The fair value of the second tranche of Amazon Warrant Shares was measured at January 1, 2019, upon adoption of ASU 2019-08. The second tranche of 29,098,260 Amazon Warrant Shares vested in four equal installments, as Amazon or its affiliates, directly or indirectly through third parties, made an aggregate of $50.0 million in payments for goods and services to the Company, up to payments totaling $200.0 million in the aggregate. The last installment of the second tranche vested on November 2, 2020. Revenue reductions of $9.0 million, $4.1 million and $9.8 million associated with the second tranche of Amazon Warrant Shares were recorded in 2020, 2019 and 2018, respectively, under the terms of the original Amazon Warrant.

Under the terms of the original Amazon Warrant, the third tranche of 20,368,784 Amazon Warrant Shares vests in eight equal installments, as Amazon or its affiliates, directly or indirectly through third parties, made an aggregate of $50.0 million in payments for goods and services to the Company, up to payments totaling $400.0 million in the aggregate. The measurement date for the third tranche of Amazon Warrant Shares was November 2, 2020, when their exercise price was determined, as discussed further below. The fair value of the third tranche of Amazon Warrant Shares was determined to be $10.57 each. During 2020, revenue reductions of $24.1 million associated with the third tranche Amazon Warrant Shares were recorded under the terms of the original Amazon Warrant, prior to the December 31, 2020 waiver described below.

On December 31, 2020, the Company waived the remaining vesting conditions under the Amazon Warrant, which resulted in the immediate vesting of all the third tranche of the Amazon Warrant Shares and recognition of an additional $399.7 million reduction to revenue.

The $399.7 million reduction to revenue resulting from the December 31, 2020 waiver was determined based upon a probability assessment of whether the underlying shares would have vested under the terms of the original Amazon Warrant. Based upon the Company’s projections of probable future cash collections from Amazon (i.e., a Type I share based payment modification), a reduction of revenue associated with 5,354,905 Amazon Warrant Shares was recognized at their previously measured November 2, 2020 fair value of $10.57 per warrant. A reduction of revenue associated with the remaining 12,730,490 Amazon Warrant Shares was recognized at their December 31, 2020 fair value of $26.95 each, based upon the Company’s assessment that associated future cash collections from Amazon were not deemed probable (i.e., a Type III share based payment modification).

The $399.7 million reduction to revenue was recognized during the year ended December 31, 2020 because the Company concluded such amount was not recoverable from the margins expected from future purchases by Amazon under the Amazon Warrant, and no exclusivity or other rights were conferred to the Company in connection with the December 31, 2020 waiver. Additionally, for the year ended December 31, 2020, the Company recorded a reduction to the provision for warrants of $12.8 million in connection with the release of the service loss accrual.

At December 31, 2020, all 55,286,696 of the Amazon Warrant Shares had vested. For service contracts entered into prior to December 31, 2020, the warrant charge associated with that revenue was capitalized and is subsequently amortized over the life of the service contract. The total amount of provision for common stock warrants recorded as a reduction of revenue for the Amazon Warrant during the three months ended September 30, 2021 and 2020 was $106 thousand and $17.3 million, respectively. The amount of provision for common stock warrants recorded as a reduction of revenue for the Amazon Warrant during the nine months ended September 30, 2021 and 2020 was $315 thousand and $22.0 million, respectively. During the three and nine months ended September 30, 2021, the Amazon Warrant was exercised with respect to 3,501,640 and 17,461,994 shares of common stock, respectively.

The exercise price for the first and second tranches of Amazon Warrant Shares was $1.1893 per share. The exercise price of the third tranche of Amazon Warrant Shares was $13.81 per share, which was determined pursuant to the terms of the Amazon Warrant as an amount equal to ninety percent (90%) of the 30-day volume weighted average share price of the Company’s common stock as of November 2, 2020, the final vesting date of the second tranche of Amazon Warrant Shares. The Amazon Warrant is exercisable through April 4, 2027. The Amazon Warrant provides for net share settlement that, if elected by the holder, will reduce the number of shares issued upon exercise to reflect net settlement of the exercise price. The Amazon Warrant provides for certain adjustments that may be made to the exercise price and the number of shares of common stock issuable upon exercise due to customary anti-dilution provisions based on future events. The Amazon Warrant is classified as an equity instrument.

Fair value of the Amazon Warrant at December 31, 2020 and November 2, 2020 was based on the Black Scholes Option Pricing Model, which is based, in part, upon level 3 unobservable inputs for which there is little or no market data, requiring the Company to develop its own assumptions.

The Company used the following assumptions for its Amazon Warrant:

| ​ ​ ​ | ​ ​ ​ | ​ ​ December 31, 2020 | ​ ​ ​ | ​ ​ November 2, 2020 |
| --- | --- | ---: | --- | ---: |
| Risk-free interest rate | ​ | 0.58% | ​ | 0.58% |
| Volatility | ​ | 75.00% | ​ | 75.00% |
| Expected average term | ​ | 6.26 | ​ | 6.42 |
| Exercise price | ​ | $13.81 | ​ | $13.81 |
| Stock price | ​ | $33.91 | ​ | $15.47 |

### Walmart Transaction Agreement

On July 20, 2017, the Company and Walmart entered into a Transaction Agreement (the “Walmart Transaction Agreement”), pursuant to which the Company agreed to issue to Walmart a warrant (the “Walmart Warrant”) to acquire up to 55,286,696 shares of the Company’s common stock, subject to certain vesting events (the “Walmart Warrant Shares”). The Company and Walmart entered into the Walmart Transaction Agreement in connection with existing commercial agreements between the Company and Walmart with respect to the deployment of the Company’s GenKey fuel cell technology across various Walmart distribution centers. The existing commercial agreements contemplate, but do not guarantee, future purchase orders for the Company’s fuel cell technology. The vesting of the warrant shares conditioned upon payments made by Walmart or its affiliates (directly or indirectly through third parties) pursuant to transactions entered into after January 1, 2017 under existing commercial agreements.

The majority of the Walmart Warrant Shares will vest based on Walmart’s payment of up to $600.0 million to the Company in connection with Walmart’s purchase of goods and services from the Company. The first tranche of 5,819,652 Walmart Warrant Shares vested upon the execution of the Walmart Warrant and was fully exercised as of December 31, 2020. Accordingly, $10.9 million, the fair value of the first tranche of Walmart Warrant Shares, was recorded as a provision for common stock warrants and presented as a reduction to revenue on the consolidated statements of operations during 2017. All future provision for common stock warrants is measured based on their grant-date fair value and recorded as a charge against revenue. The second tranche of 29,098,260 Walmart Warrant Shares vests in four installments of 7,274,565 Walmart Warrant Shares each time Walmart or its affiliates, directly or indirectly through third parties, make an aggregate of $50.0 million in payments for goods and services to the Company, up to payments totaling $200.0 million in the aggregate. The exercise price for the first and second tranches of Walmart Warrant Shares is $2.1231 per share. After Walmart has made payments to the Company totaling $200.0 million, the third tranche of 20,368,784 Walmart Warrant Shares will vest in eight installments of 2,546,098 Walmart Warrant Shares each time Walmart or its affiliates, directly or indirectly through third parties, make an aggregate of $50.0 million in payments for goods and services to the Company, up to payments totaling $400.0 million in the aggregate. The exercise price of the third tranche of Walmart Warrant Shares will be an amount per share equal to ninety percent (90%) of the 30-day volume weighted average share price of the common stock as of the final vesting date of the second tranche of Walmart Warrant Shares, provided that, with limited exceptions, the exercise price for the third tranche will be no lower than $1.1893. The Walmart Warrant is exercisable through July 20, 2027.

The Walmart Warrant provides for net share settlement that, if elected by the holder, will reduce the number of shares issued upon exercise to reflect net settlement of the exercise price. The Walmart Warrant provides for certain adjustments that may be made to the exercise price and the number of shares of common stock issuable upon exercise due to customary anti-dilution provisions based on future events. The Walmart Warrant is classified as an equity instrument.

At both September 30, 2021 and December 31, 2020, 13,094,217 of the Walmart Warrant Shares had vested. The total amount of provision for common stock warrants recorded as a reduction of revenue for the Walmart Warrant during the three months ended September 30, 2021 and 2020 was $1.2 million and $1.3 million, respectively. The amount of provision for common stock warrants recorded as a reduction of revenue for the Walmart Warrant during the nine months ended September 30, 2021 and 2020 was $4.4 million and $3.2 million, respectively. During the three months ended March

31, 2021, the Walmart Warrant had been exercised with respect to 7,274,565 shares of common stock. There were no exercises during the second or third quarter of 2021.

### Operating and Finance Lease Liabilities

As of September 30, 2021, the Company had operating leases, as lessee, primarily associated with sale/leaseback transactions that are partially secured by restricted cash, security deposits and pledged escrows (see also Note 1, “Nature of Operations”) as summarized below. These leases expire over the next one to nine years. Minimum rent payments under operating leases are recognized on a straight-line basis over the term of the lease.

Leases contain termination clauses with associated penalties, the amount of which cause the likelihood of cancellation to be remote. At the end of the lease term, the leased assets may be returned to the lessor by the Company, the Company may negotiate with the lessor to purchase the assets at fair market value, or the Company may negotiate with the lessor to renew the lease at market rental rates. No residual value guarantees are contained in the leases. No financial covenants are contained within the lease; however there are customary operational covenants such as assurance the Company properly maintains the leased assets and carries appropriate insurance, etc. The leases include credit support in the form of either cash, collateral or letters of credit. See Note 19, “Commitments and Contingencies” for a description of cash held as security associated with the leases.

The Company has finance leases associated with its property and equipment in Latham, New York and at fueling customer locations. The fair value of this finance obligation approximated the carrying value as of September 30, 2021.

Future minimum lease payments under operating and finance leases (with initial or remaining lease terms in excess of one year) as of September 30, 2021 were as follows (in thousands):

| ​ ​ ​ ​ | ​ ​ ​ ​ | ​ ​ ​ ​ ​ Operating Lease ​ Liability | ​ ​ ​ ​ | ​ ​ Finance Lease Liability | ​ ​ ​ ​ | ​ ​ Total Lease Liabilities |
| --- | --- | --- | --- | ---: | --- | --- |
| Remainder of 2021 | ​ | $9,929 | ​ | $1,019 | ​ | $10,948 |
| 2022 | ​ | ​ 39,932 | ​ | 4,012 | ​ | ​ 43,944 |
| 2023 | ​ | ​ 39,989 | ​ | 3,989 | ​ | ​ 43,978 |
| 2024 | ​ | ​ 39,957 | ​ | 3,996 | ​ | ​ 43,953 |
| 2025 and thereafter | ​ | ​ 90,241 | ​ | ​ 10,843 | ​ | ​ 101,084 |
| Total future minimum payments | ​ | ​ 220,048 | ​ | 23,859 | ​ | ​ 243,907 |
| Less imputed interest | ​ | ​ (57,364) | ​ | ​ (4,074) | ​ | ​ (61,438) |
| Total | ​ | $162,684 | ​ | $19,785 | ​ | $182,469 |

Rental expense for all operating leases was $9.6 million and $8.1 million for the three months ended September 30, 2021 and 2020, respectively. Rental expense for all operating leases was $25.8 million and $20.6 million for the nine months ended September 30, 2021 and 2020, respectively.

The gross profit on sale/leaseback transactions for all operating leases was $30.7 million and $25.2 million for the three months ended September 30, 2021 and 2020, respectively. The gross profit on sale/leaseback transactions for all operating leases was $66.1 million and $44.9 million for the nine months ended September 30, 2021 and 2020, respectively.

Right of use assets for sale/leaseback transactions obtained in exchange for new operating lease liabilities was $26.6 million and $24.6 million for the three months ended September 30, 2021 and 2020, respectively. Right of use assets for sale/leaseback transactions obtained in exchange for new operating lease liabilities was $62.5 million and $32.7 million for the nine months ended September 30, 2021 and 2020, respectively.

At September 30, 2021 and December 31, 2020, the right of use assets associated with operating leases was $200.2 million and $136.9 million, respectively. The accumulated depreciation for these right of use assets was $32.3 million and $19.9 million at September 30, 2021 and December 31, 2020, respectively.

At September 30, 2021 and December 31, 2020, the right of use assets associated with finance leases was $22.8 million and $5.7 million, respectively. The accumulated depreciation for these right of use assets was $757 thousand and $102 thousand at September 30, 2021 and December 31, 2020, respectively.

At September 30, 2021 and December 31, 2020, security deposits associated with sale/leaseback transactions were $3.3 million and $5.8 million, respectively, and were included in other assets in the consolidated balance sheets

Other information related to the operating leases are presented in the following table:

| ​ ​ ​ | ​ ​ Nine months ended September 30, 2021 | ​ ​ ​ | ​ ​ Nine months ended September 30, 2020 |
| --- | --- | --- | --- |
| Cash payments (in thousands) | $25,726 | ​ | $14,954 |
| Weighted average remaining lease term (years) | ​ 5.72 | ​ | ​ 4.55 |
| Weighted average discount rate | ​ 11.2% | ​ | ​ 11.8% |

Right of use assets obtained in exchange for new finance lease liabilities were $5.8 million and $0 for the three months ended September 30, 2021 and 2020, respectively. Right of use assets obtained in exchange for new finance lease liabilities were $17.9 million and $686 thousand for the nine months ended September 30, 2021 and 2020, respectively.

Other information related to the finance leases are presented in the following table:

| ​ ​ ​ | ​ ​ Nine months ended September 30, 2021 | ​ ​ ​ | ​ ​ Nine months ended September 30, 2020 |
| --- | --- | --- | --- |
| Cash payments (in thousands) | $2,128 | ​ | $252 |
| Weighted average remaining lease term (years) | ​ 4.57 | ​ | ​ 6.51 |
| Weighted average discount rate | ​ 6.9% | ​ | ​ 9.6% |

### Finance Obligation

The Company has sold future services to be performed associated with certain sale/leaseback transactions and recorded the balance as a finance obligation. The outstanding balance of this obligation at September 30, 2021 was $190.5 million, $30.5 million and $160.0 million of which was classified as short-term and long-term, respectively, on the accompanying consolidated balance sheet. The outstanding balance of this obligation at December 31, 2020 was $157.7 million, $24.2 million and $133.5 million of which was classified as short-term and long-term, respectively. The amount is amortized using the effective interest method. The fair value of this finance obligation approximated the carrying value as of September 30, 2021 and December 31, 2020.

In prior periods, the Company entered into sale/leaseback transactions that were accounted for as financing transactions and reported as part of finance obligations. The outstanding balance of finance obligations related to sale/leaseback transactions at September 30, 2021 was $17.3 million, $5.1 million and $12.2 million of which was classified as short-term and long-term, respectively on the accompanying consolidated balance sheet. The outstanding balance of this obligation at December 31, 2020 was $23.9 million, $8.0 million and $15.9 million of which was classified as short-term and long-term, respectively on the accompanying consolidated balance sheets. The fair value of this finance obligation approximated the carrying value as of both September 30, 2021 and December 31, 2020.

Future minimum payments under finance obligations notes above as of September 30, 2021 were as follows (in thousands)

| ​ ​ ​ ​ | ​ ​ ​ ​ | ​ ​ ​ ​ ​ Sale of Future ​ revenue - debt | ​ ​ ​ ​ | ​ ​ ​ ​ ​ Sale/leaseback ​ financings | ​ ​ | ​ ​ Total Finance Obligations |
| --- | --- | --- | --- | --- | --- | --- |
| Remainder of 2021 | ​ | $12,788 | ​ | $1,680 | ​ | $14,468 |
| 2022 | ​ | ​ 50,632 | ​ | ​ 4,975 | ​ | ​ 55,607 |
| 2023 | ​ | ​ 50,632 | ​ | ​ 3,148 | ​ | ​ 53,780 |
| 2024 | ​ | ​ 50,632 | ​ | ​ 16,154 | ​ | ​ 66,786 |
| 2025 and thereafter | ​ | ​ 86,614 | ​ | ​ — | ​ | ​ 86,614 |
| Total future minimum payments | ​ | ​ 251,298 | ​ | ​ 25,957 | ​ | ​ 277,255 |
| Less imputed interest | ​ | ​ (60,760) | ​ | ​ (8,658) | ​ | ​ (69,418) |
| Total | ​ | $190,538 | ​ | $17,299 | ​ | $207,837 |

Other information related to the above finance obligations are presented in the following table:

| ​ ​ ​ | ​ ​ ​ Nine months ended ​ September 30, 2021 | ​ ​ ​ | ​ ​ ​ Nine months ended ​ September 30, 2020 |
| --- | --- | --- | --- |
| Cash payments (in thousands) | $41,325 | ​ | $31,693 |
| Weighted average remaining term (years) | ​ 4.88 | ​ | ​ 4.74 |
| Weighted average discount rate | ​ 11.3% | ​ | ​ 11.3% |

### Restricted Cash

In connection with certain of the above noted sale/leaseback agreements, cash of $301.3 million was required to be restricted as security as of September 30, 2021, which restricted cash will be released over the lease term. As of September 30, 2021, the Company also had certain letters of credit backed by restricted cash totaling $137.7 million that are security for the above noted sale/leaseback agreements.

### Fair Value

The Company records the fair value of assets and liabilities in accordance with ASC 820, *Fair Value Measurement (“*ASC 820”). ASC 820 defines fair value as the price received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date and in the principal or most advantageous market for that asset or liability. The fair value should be calculated based on assumptions that market participants would use in pricing the asset or liability, not on assumptions specific to the entity.

In addition to defining fair value, ASC 820 expands the disclosure requirements around fair value and establishes a fair value hierarchy for valuation inputs. The hierarchy prioritizes the inputs into three levels based on the extent to which inputs used in measuring fair value are observable in the market. Each fair value measurement is reported in one of the three levels, which is determined by the lowest level input that is significant to the fair value measurement in its entirety.

These levels are:

- Level 1 — quoted prices (unadjusted) in active markets for identical assets or liabilities.
- Level 2 — quoted prices for similar assets and liabilities in active markets or inputs that are observable for the asset or liability, either directly or indirectly through market corroboration, for substantially the full term of the financial instrument.
- Level 3 — unobservable inputs reflecting management’s own assumptions about the inputs used in pricing the asset or liability at fair value.

The fair values of the Company’s investments are based upon prices provided by an independent pricing service. Management has assessed and concluded that these prices are reasonable and has not adjusted any prices received from the independent provider. Securities reported at fair value utilizing Level 1 inputs represent assets whose fair value is determined based upon observable unadjusted quoted market prices for identical assets in active markets. Level 2 securities represent assets whose fair value is determined using observable market information such as previous day trade prices, quotes from less active markets or quoted prices of securities with similar characteristics. There were no transfers between Level 1, Level 2, or Level 3 during the nine months ended September 30, 2021.

Assets and liabilities measured at fair value on a recurring basis are summarized below (in thousands):

| ​ ​ ​ ​ Assets | ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ As of September 30, 2021 ​ Carrying ​ Fair ​ Fair Value Measurements ​ Amount ​ Value ​ Level 1 ​ Level 2 ​ Level 3 ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ |
| --- | --- |
| Cash equivalents (1) | $610,651 $610,651 $140,574 $470,077 $— |
| Corporate bonds | ​ 530,089 ​ 530,089 ​ — ​ 530,089 ​ — |
| Commercial paper | ​ 35,795 ​ 35,795 ​ — ​ 35,795 ​ — |
| U.S. Treasuries | ​ 169,878 ​ 169,878 ​ 169,878 ​ — ​ — |
| Certificates of deposit | ​ 17,004 ​ 17,004 ​ — ​ 17,004 ​ — |
| Equity securities | ​ 147,649 ​ 147,649 ​ 147,649 ​ — ​ — |
| ​ | ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ |
| **Liabilities** | ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ |
| Contingent consideration | ​ 18,520 ​ 18,520 ​ — ​ — ​ 18,520 |
| Convertible senior notes | ​ 192,320 ​ 1,006,639 ​ — ​ 1,006,639 ​ — |
| Long-term debt | ​ 147,255 ​ 147,255 ​ — ​ — ​ 147,255 |
| Finance obligations | ​ 207,837 ​ 207,837 ​ — ​ — ​ 207,837 |
| ​ | ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ |
| ​ | ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ |
| ​ | ​ **As of December 31, 2020** |
| ​ | ​ **Carrying** **​** **Fair** **​** **Fair Value Measurements** |
| **​** | **​** **Amount** **​** **Value** **​** **Level 1** **​** **Level 2** **​** **Level 3** |
| **Liabilities** | **​** **​** **​** **​** **​** **​** **​** **​** **​** **​** |
| Contingent consideration | ​ 9,760 ​ 9,760 ​ — ​ — ​ 9,760 |
| Convertible senior notes | ​ 85,640 ​ 1,272,766 ​ — ​ 1,272,766 ​ — |
| Long-term debt | ​ 175,402 ​ 175,402 ​ — ​ — ​ 175,402 |
| Finance obligations | ​ 181,553 ​ 181,553 ​ — ​ — ​ 181,553 |

(1) Included in “Cash and cash equivalents” in our consolidated balance sheets as of September 30, 2021.

The fair values for available-for-sale and equity securities are based on prices obtained from independent pricing services. Available-for-sale securities are characterized as Level 2 assets, as their fair values are determined using observable market inputs. Equity securities are characterized as Level 1 assets, as their fair values are determined using active markets for identical assets.

#### Available-for-sale securities

The amortized cost, gross unrealized gains and losses, fair value of those investments classified as available-for-sale securities, and allowance for credit losses at September 30, 2021 are summarized as follows (in thousands):

| ​ ​ ​ | ​ ​ Amortized Cost | ​ ​ ​ | ​ ​ Gross Unrealized Gains | ​ ​ ​ | ​ ​ Gross Unrealized Losses | ​ ​ ​ | ​ ​ Fair Value | ​ ​ ​ | ​ ​ Allowance for Credit Losses |
| --- | --- | --- | --- | --- | --- | --- | --- | --- | --- |
| Corporate bonds | $533,691 | ​ | $93 | ​ | $(3,695) | ​ | $530,089 | ​ | ​ — |
| Commercial paper | ​ 35,719 | ​ | ​ 76 | ​ | ​ — | ​ | ​ 35,795 | ​ | ​ — |
| Certificates of deposit | ​ 17,017 | ​ | ​ — | ​ | ​ (13) | ​ | ​ 17,004 | ​ | ​ — |
| U.S. Treasuries | ​ 170,414 | ​ | ​ 1 | ​ | ​ (537) | ​ | ​ 169,878 | ​ | ​ — |
| Total | $756,841 | ​ | $170 | ​ | $(4,245) | ​ | $752,766 | ​ | $— |

A summary of the amortized cost and fair value of investments classified as available-for-sale, by contractual maturity, at September 30, 2021 is as follows (in thousands):

| ​ ​ ​ Maturity: | ​ ​ September 30, 2021 ​ Amortized ​ Cost | ​ ​ ​ | ​ ​ Fair Value |
| --- | ---: | --- | ---: |
| Within one year | $447,479 |  | $446,011 |
| After one through five years | 309,362 | ​ | 306,755 |
| Total | $756,841 | ​ | $752,766 |

The cost, gross unrealized gains, gross unrealized losses, and fair value of those investments classified as equity securities at September 30, 2021 are summarized as follows (in thousands):

| ​ ​ ​ ​ | ​ ​ September 30, 2021 ​ ​ ​ Cost | ​ ​ ​ | ​ ​ Gross Unrealized Gains | ​ ​ ​ | ​ ​ Gross Unrealized Losses | ​ ​ ​ | ​ ​ Fair Value |
| --- | ---: | --- | ---: | --- | ---: | --- | ---: |
| Fixed income mutual funds | $77,766 |  | $— | ​ | $(132) | ​ | $77,634 |
| Exchange traded mutual funds | ​ 70,167 | ​ | ​ — | ​ | ​ (152) | ​ | ​ 70,015 |
| Total | $147,933 | ​ | $— | ​ | $(284) | ​ | $147,649 |

### Extended Maintenance Contracts

On a quarterly basis, we evaluate any potential losses related to our extended maintenance contracts for fuel cell systems and related infrastructure that has been sold. We measure loss accruals at the customer contract level. The expected revenues and expenses for these contracts include all applicable expected costs of providing services over the remaining term of the contracts and the related unearned net revenue. A loss is recognized if the sum of expected costs of providing services under the remaining term of the contract exceeds related unearned net revenue and is recorded as a provision for loss contracts related to service in the consolidated statements of operations. A key component of these estimates is the expected future service costs. In estimating the expected future costs, the Company considers its current service cost level and applies significant judgment related to expected cost saving initiatives. The expected future cost savings will be primarily dependent upon the success of the Company’s initiatives related to increasing stack life, achieving better economies of scale for service labor, and improvements in design and operations of infrastructure. If the expected cost saving initiatives are not realized, this will increase the estimated costs of providing services and will adversely affect our estimated contract loss accrual. Further, we continue to work to improve quality and reliability; however, unanticipated additional quality issues or warranty claims may arise and additional material charges may be incurred in the future. These quality issues could also adversely affect our contract loss accrual. Service costs during 2021 have been higher than previously estimated. The Company has undertaken or will soon undertake several initiatives to extend the life and improve the reliability of its equipment. As a result of these initiatives and our additional expectation that the increase in certain costs attributable to the global pandemic will abate, the Company believes that its contract loss accrual is sufficient. However, if elevated service costs persist, the Company will adjust its estimated future service costs and increase its contract loss accrual estimate.

### Off-Balance Sheet Arrangements

The Company does not have off-balance sheet arrangements that are likely to have a current or future significant effect on the Company’s financial condition, changes in financial condition, revenues or expenses, results of operations, liquidity, capital expenditures or capital resources that is material to investors.

### Critical Accounting Estimates

Management’s discussion and analysis of our financial condition and results of operations are based upon our consolidated financial statements, which have been prepared in accordance with GAAP. The preparation of these consolidated financial statements requires us to make estimates and judgments that affect the reported amounts of assets, liabilities, revenues and expenses, and related disclosure of contingent assets and liabilities at the date of and during the reporting period. On an on-going basis, we evaluate our estimates and judgments, including those related to revenue recognition, bad debts, inventories, intangible assets, impairment of long-lived assets and PPA executory contract consideration, accrual for loss on extended maintenance contracts, operating and finance leases, product warranty accruals, unbilled revenue, common stock warrants, income taxes, stock-based compensation, and contingencies. We base our estimates and judgments on historical experience and on various other factors and assumptions that are believed to be reasonable under the circumstances, the results of which form the basis for making judgments about (1) the carrying values of assets and liabilities and (2) the amount of revenue and expenses realized that are not readily apparent from other sources. Actual results may differ from these estimates under different assumptions or conditions.

There have been no changes in our critical accounting estimates from those reported in our 2020 10-K, other than the addition of stock-based compensation.

#### Stock-based compensation

Stock-based compensation represents the cost related to stock-based awards granted to employees and directors. In September 2021, the Company issued performance stock option awards that include a market condition for certain executives. The Company uses the Monte Carlo simulation model to determine the fair value of performance stock option awards that include a market condition. In estimating fair value, management is required to make certain assumptions and estimates such as the expected term, volatility of the Company’s future share price, risk-free rate, and future dividend yield. Changes in assumptions used to estimate fair value could result in materially different results.

### Recent Accounting Pronouncements

#### Recently Adopted Accounting Guidance

Other than the adoption of the accounting guidance mentioned in our 2020 10-K and ASU 2020-06, there have been no other significant changes in our reported financial position or results of operations and cash flows resulting from the adoption of new accounting pronouncements.

On January 1, 2021, we early adopted ASU No. 2020-06, Debt—Debt with Conversion and Other Options (Subtopic 470-20) and Derivatives and Hedging—Contracts in Entity’s Own Equity (Subtopic 815-40) using the modified retrospective approach. Consequently, the Company’s 3.75% Convertible Senior Notes is now accounted for as a single liability measured at its amortized cost. This accounting change removed the impact of recognizing the equity component of the Company’s convertible notes at issuance and the subsequent accounting impact of additional interest expense from debt discount amortization. Future interest expense of the convertible notes will be lower as a result of adoption of this guidance and net loss per share will be computed using the if-converted method for convertible instruments. The cumulative effect of the accounting change upon adoption on January 1, 2021 increased the carrying amount of the 3.75% Convertible Senior Notes by $120.6 million, reduced accumulated deficit by $9.6 million and reduced additional paid-in capital by $130.2 million as of September 30, 2021.

#### Recent Accounting Guidance Not Yet Effective

All issued but not yet effective accounting and reporting standards as of September 30, 2021 are either not applicable to the Company or are not expected to have a material impact on the Company.

## Market risk

As filed, 1,629 characters.

There has been no material change from the information provided in the 2020 10-K “Item 7A: Quantitative and Qualitative Disclosures About Market Risk,” other than those described below.

During the first nine months of 2021, the Company purchased U.S. Treasury securities, corporate bonds, commercial paper, certificates of deposit and money market funds, in which the major components of market risk affecting us are credit risk and interest rate risk. We also purchased equity securities, in which the major component of market risk affecting us is equity risk.

Our exposure to changes in foreign currency rates is primarily related to sourcing inventory from foreign locations and operations of HyPulsion, S.A.S., our French subsidiary that develops and sells hydrogen fuel cell systems for the European material handling market. In addition, we also have an investment in HyVia, a joint venture with Renault that plans to manufacture and sell FCE-LCVs and to supply hydrogen fuel and fueling stations to support the FCE-LCV market primarily in Europe. Our exposure to foreign currency can give rise to foreign exchange risk resulting from our equity method investment with HyVia, which operates in Europe. The Company reviews the level of foreign content as part of its ongoing evaluation of overall sourcing strategies and considers the exposure to be not significant. Our HyPulsion exposure presently is mitigated by low levels of operations and its sourcing is primarily intercompany in nature and denominated in U.S. dollars. Our HyVia exposure presently is immaterial as we have not yet commenced commercial activities.

## Controls and procedures

As filed, 4,834 characters.

(a) Disclosure controls and procedures.

We maintain disclosure controls and procedures that are designed to ensure that information required to be disclosed in our reports that we file or submit under the Exchange Act, is recorded, processed, summarized and reported within the time periods specified in SEC rules and forms, and that such information is accumulated and communicated to our management, including our Chief Executive Officer (our principal executive officer) and Chief Financial Officer (our principal financial officer) as appropriate, to allow for timely decisions regarding required disclosure.

Our management, with the participation of our Chief Executive Officer and Chief Financial Officer, has evaluated the effectiveness of our disclosure controls and procedures (as defined in Rules 13a-15(e) and 15d-15(e) under the Exchange Act), as of the end of the period covered by this report. Based on such evaluation, our Chief Executive Officer and Chief Financial Officer have concluded that our disclosure controls and procedures were not effective in 2018, 2019 and 2020 because of the material weakness in internal control over financial reporting described in Part II, Item 9A “Controls and Procedures” of our 2020 10-K. The material weakness has not been remediated as of September 30, 2021.

Material Weakness

Management identified that the following deficiency existed in internal control over financial reporting in 2018, 2019 and 2020: the Company did not maintain a sufficient complement of trained, knowledgeable resources to execute its responsibilities with respect to internal control over financial reporting for certain financial statement accounts and disclosures. As a consequence, the Company did not conduct an effective risk assessment process that was responsive to changes in the Company's operating environment and did not design and implement effective process-level controls activities in the following areas:

(a) Presentation of operating expenses;

(b) Accounting for lease-related transactions;

(c) Identification and evaluation of impairment, accrual for loss contracts, certain expense accruals, and deemed dividends; and

(d) Timely identification of adjustments to physical inventory in interim periods.

As reported on our 2020 10-K, we continue to take steps to remediate this material weakness and will continue to take further steps until such remediation is complete. These steps include the following:

a) Hiring additional resources, including third-party resources, with the appropriate technical accounting expertise, and strengthening internal training, to assist us in identifying and addressing any complex technical accounting issues that affect our consolidated financial statements.

b) We will design and implement a comprehensive and continuous risk assessment process to identify and assess risks of material misstatements and ensure that the impacted financial reporting processes and related internal controls are properly designed, maintained, and documented to respond to those risks in our financial reporting.

c) We will implement more structured analysis and review procedures and documentation for the application of GAAP, complex accounting matters, and key accounting policies.

d) We will augment our current estimation policies and procedures to be more robust and in-line with overall market dynamics including an evaluation of our operating environment in order to ensure operating effectiveness of certain process-level control activities.

e) We also intend to deploy new tools and tracking mechanisms to help enhance and maintain the appropriate documentation surrounding our classification of operating expenses.

f) We will report regularly to the Company’s Audit Committee on the progress and results of the remediation plan, including the identification, status, and resolution of internal control deficiencies.

As we work to improve our internal control over financial reporting, we may modify our remediation plan and may implement additional measures as we continue to review, optimize and enhance our financial reporting controls and procedures in the ordinary course. The material weakness will not be considered remediated until the remediated controls have been operating for a sufficient period of time and can be evidenced through testing that they are operating effectively.

(b) Changes in internal control over financial reporting.

Exclusive of the steps taken in remediation activities, there were no changes in the Company’s internal control over financial reporting (as defined in Rules 13a-15(f) and 15d-15(f) under the Exchange Act) occurred during the quarter ended September 30, 2021 that has materially affected, or are reasonably likely to materially affect, the Company’s internal control over financial reporting.

## Risk factors

As filed, 189 characters.

The risk factors discussed under the heading “Risk Factors” and elsewhere in the Company’s Annual Report on Form 10-K for the year ended December 31, 2020 continue to apply to our business.

Filed Nov 9, 2021.
Source: SEC EDGAR, the filing index for accession 0001558370-21-015317. Last ingested by Listed: Oct 24, 2026, 15:02 ET. No prices; not investment advice.