SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
----------------------
FORM 10-Q
X - QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934 FOR THE
QUARTERLY PERIOD ENDED JUNESEPTEMBER 30, 2001 OR
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934 FOR THE
TRANSITION PERIOD FROM ________ TO _________
Commission File Number: 00027527
PLUG POWER INC.
(Exact name of registrant as specified in its charter)
968 ALBANY-SHAKER ROAD, LATHAM, NEW YORK 12110
(Address of registrant's principal executive office)
(518) 782-7700
(Registrant's telephone number, including area code)
DelawareDELAWARE 22-3672377
(State or other jurisdiction (I.R.S. Employer
of Incorporation) Identification Number)
Indicate by check mark whether the registrant (1) has filed all reports required
to be filed by Sections 13 or 15(d) of the Securities Exchange Act of 1934
during the preceding 12 months (or for such shorter period that the registrant
was required to file such reports), and (2) has been subject to such filing
requirements for the past 90 days. Yes X[X] No ___
---[ ]
The number of shares of common stock outstanding as of JulyOctober 31, 2001 was
50,069,30550,128,417 with a par value of $.01 per share.
1
PLUG POWER INC.
INDEX to FORM 10-Q
PART I. FINANCIAL INFORMATION Page
Item 1 - Financial Statements
Condensed Consolidated Balance Sheets - June 30, 2001
and December 31, 2000
and September 30, 2001 3
Condensed Consolidated Statements of Operations - Three Month
and SixNine Month Periods ended JuneSeptember 30, 20012000 and
JuneSeptember 30, 20002001 and Cumulative Amounts from Inception 4
Condensed Consolidated Statements of Cash Flows - SixNine Month
Periods ended JuneSeptember 30, 20012000 and JuneSeptember 30, 20002001 and
Cumulative Amounts from Inception 5
Notes to Condensed Consolidated Financial Statements 6 - 9
Item 2 - Management's Discussion and Analysis of Financial
Condition and Results of Operations 910 - 1716
PART II. OTHER INFORMATION
Item 1 - Legal Proceedings 1817
Item 42 - SubmissionChanges in Securities and Use of Matters to a Vote of Security Holders 18Proceeds 17
Item 6 - Exhibits and Reports on Form 8-K 18 - 21
Signature 21
2
Plug Power Inc. and SubsidiaryPLUG POWER INC. AND SUBSIDIARY
(A Development Stage Enterprise)
Condensed Consolidated Balance Sheets
(Unaudited)
Assets December 31, 2000 JuneSeptember 30, 2001
------------------- ------------------------------------ ------------------
ASSETS
Current assets:
Cash and cash equivalents $ 58,511,563 $ 35,118,44970,743,594
Marketable securities 28,221,852 33,362,433
Restricted cash 290,000 290,000
Marketable securities 28,221,852 19,967,447
Accounts receivable 1,415,049 1,625,873856,705
Inventory 2,168,006 3,690,3582,690,156
Prepaid development costs 2,041,668 3,672,4752,968,708
Other current assets 694,178 419,417
------------------- -------------------300,637
------------- -------------
Total current assets 93,342,316 64,784,019111,212,233
Restricted cash 5,310,274 5,310,274
Property, plant and equipment, net 32,290,492 32,335,08031,497,525
Intangible asset 6,827,066 5,148,6024,309,370
Investment in affiliates 9,778,784 8,139,13511,847,788
Prepaid development costs 2,513,093 -
Other assets 767,193 683,624
------------------- -------------------641,840
------------- -------------
Total assets $ 150,829,218 $ 116,400,734
=================== ===================
Liabilities and Stockholders' Equity164,819,030
============= =============
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Accounts payable $ 3,479,031 $ 2,978,0041,767,232
Accrued expenses 5,934,529 3,614,9933,572,078
Deferred grant revenue 200,000 200,0002,067,250
Current portion of capital lease obligation
and long-term debt 377,201 354,646
------------------- -------------------330,382
------------- -------------
Total current liabilities 9,990,761 7,147,6437,736,942
Long-term debt 5,310,274 5,310,274
Deferred grant revenue 600,000 500,000450,000
Capital lease obligation 30,346 10,4666,771
Other liabilities 767,193 767,193
------------------- -------------------------------- -------------
Total liabilities 16,698,574 13,735,576
------------------- -------------------14,271,180
------------- -------------
Commitments and contingencies
Stockholders' equity:
Preferred stock, $0.01 par value per share; 5,000,000
shares authorized; none issued and outstanding - -
Common stock, $0.01 par value per share; 245,000,000
shares authorized at June 30, 2001 and
245,000,000 shares authorized at December 31, 2000;
44,564,813 shares issued2000 and outstanding, Juneat
September 30, 2001 and2001; 43,795,513 shares issued
and outstanding at December 31, 2000 and
50,121,485 shares issued and outstanding,
September 30, 2001 437,955 445,648501,214
Paid-in capital 268,923,203 274,784,228341,318,905
Deficit accumulated during the development stage (135,230,514) (172,564,718)
------------------- -------------------(191,272,269)
------------- -------------
Total stockholders' equity 134,130,644 102,665,158
------------------- -------------------150,547,850
------------- -------------
Total liabilities and stockholders' equity $ 150,829,218 $ 116,400,734
=================== ===================164,819,030
============= =============
The accompanying notes are an integral part of the condensed consolidated
financial statements.3
Plug Power Inc. and SubsidiaryPLUG POWER INC. AND SUBSIDIARY
(A Development Stage Enterprise)
Condensed Consolidated Statements of Operations
(Unaudited)
Three months ended JuneSeptember 30, SixNine months ended JuneSeptember 30, Cumulative
------------------------------- --------------------------------------------------------------- -------------------------------- Amounts from
2000 2001 2000 2001 Inception
-------------- ------------- -------------- --------------------------- ------------- ------------- --------------
ContractREVENUE
Product and service revenue $ 2,417,764- $ 1,289,077436,976 $ 5,350,557- $ 2,316,326436,976 $ 29,429,440436,976
Research and development contracts 1,547,791 483,249 6,898,348 2,799,575 29,912,689
------------ ------------ ------------ ------------ -------------
Total revenue 1,547,791 920,225 6,898,348 3,236,551 30,349,665
COST OF REVENUE AND EXPENSES
Cost of contract revenue 3,491,553 2,198,345 7,390,300 4,169,143 42,812,705
-------------- -------------- -------------- -------------- --------------
Loss on contracts (1,073,789) (909,268) (2,039,743) (1,852,817) (13,383,265)revenues 3,041,964 2,409,624 10,432,264 6,578,767 45,222,329
In-process research and development - - 4,984,000 - 9,026,640
Research and development expense:
Noncash stock-based compensation - 375,000- - 375,000 622,782
Other research and development 16,932,662 14,870,054 28,376,834 31,620,347 123,716,71318,525,509 15,069,212 46,902,343 46,689,559 138,785,925
General and administrative expense:
Noncash stock-based compensation 31,700 311,000 63,4007,450,233 - 7,513,633 311,000 11,346,873
Other general and administrative 1,664,870 1,627,616 3,189,600 3,517,153 21,960,5692,113,631 1,758,540 5,303,231 5,275,693 23,719,109
Interest expense 59,145 76,278 154,615 154,203 706,785
-------------- -------------- -------------- -------------- --------------110,824 55,061 265,439 209,264 761,846
------------ ------------ ------------ ------------ -------------
Operating loss (19,762,166) (18,169,216) (38,808,192) (37,830,520) (180,763,627)(29,694,370) (18,372,212) (68,502,562) (56,202,732) (199,135,839)
Interest income 2,184,312 843,171 4,492,478 2,135,965 13,637,524
-------------- -------------- -------------- -------------- --------------1,981,989 956,007 6,474,467 3,091,972 14,593,531
------------ ------------ ------------ ------------ -------------
Loss before equity in losses of (27,712,381) (17,416,205) (62,028,095) (53,110,760) (184,542,308)
affiliates (17,577,854) (17,326,045) (34,315,714) (35,694,555) (167,126,103)
Equity in losses of affiliates (455,304) (993,636) (963,304) (1,639,649) (5,438,615)
-------------- -------------- -------------- -------------- --------------(938,019) (1,291,346) (1,901,323) (2,930,995) (6,729,961)
------------ ------------ ------------ ------------ -------------
Net loss $ (18,033,158) $ (18,319,681) $ (35,279,018) $ (37,334,204) $ (172,564,718)
============== ============== ============== ============== ==============$(28,650,400) $(18,707,551) $(63,929,418) $(56,041,755) $(191,272,269)
============ ============ ============ ============ =============
Loss per share:
Basic and diluted $ (0.42)(0.66) $ (0.41)(0.38) $ (0.82)(1.48) $ (0.85)
============== ============== ============== ==============(1.23)
============ ============ ============ ============
Weighted average number of common
shares outstanding 43,151,810 44,239,208 43,053,998 44,080,352
============== ============== ============== ==============43,433,561 48,920,871 43,181,442 45,711,589
============ ============ ============ ============
The accompanying notes are an integral part of the condensed consolidated
financial statements.4
Plug Power Inc. and SubsidiaryPLUG POWER INC. AND SUBSIDIARY
(A Development Stage Enterprise)
Condensed Consolidated Statements of Cash Flows
(Unaudited)
SixNine months ended JuneSeptember 30, Cumulative
------------------------------------------------------------------ Amounts from
2000 2001 Inception
--------------- ---------------------------- ------------- ---------------
Cash Flows From Operating Activities:CASH FLOWS FROM OPERATING ACTIVITIES:
Net loss $ (35,279,018)(63,929,418) $ (37,334,204)(56,041,755) $ (172,564,718)(191,272,269)
Adjustments to reconcile net loss to net cash
used in operating activities:
Depreciation and amortization 1,770,000 2,088,555 7,165,4092,251,156 3,181,479 8,258,333
Equity in losses of affiliates 963,304 1,639,649 5,438,6161,901,323 2,930,995 6,729,961
Amortization of intangible asset 1,118,971 1,678,465 4,475,8991,958,202 2,517,696 5,315,130
Amortization of deferred grant revenue (100,000) (100,000) (300,000)(150,000) (150,000) (350,000)
Amortization of other assetsdeferred pension - 83,569 83,569125,354 125,354
In-kind services - - 1,340,000
Stock based compensation 317,3247,767,557 686,000 12,223,579
Amortization of deferred rent - - 150,000
Write-off of deferred rent - - 1,850,000
In-process research and development - - 4,042,640
Changes in assets and liabilities :
Accounts receivable 580,089 (210,824) (1,625,873)2,844,700 558,344 (856,705)
Inventory (2,301,624) (1,522,352) (3,690,358)(1,852,070) (522,150) (2,690,156)
Prepaid development costs (1,375,000) 3,882,286 4,327,525(437,986) 4,586,053 5,031,292
Due from investor - - 286,492
Other assets (342,518) 274,761 (122,503)(419,226) 393,540 (3,724)
Accounts payable and accrued expenses 1,911,022 (2,610,562) 6,754,8891,415,169 (3,864,250) 5,501,202
Deferred grant revenue - - 1,000,0001,867,250 2,867,250
Due to investor - - (286,492)
--------------- --------------- ---------------------------- -------------- --------------
Net cash used in operating activities (32,737,450) (31,444,657) (129,451,326)
--------------- --------------- ---------------
Cash Flows From Investing Activities:(48,650,593) (43,731,444) (141,738,113)
------------- -------------- --------------
CASH FLOWS FROM INVESTING ACTIVITIES:
Purchase of property, plant and equipment (7,183,771) (2,133,143) (27,647,711)(9,525,055) (2,388,512) (27,903,080)
Purchase of intangible asset (9,624,500) - (9,624,500)
Investment in affiliate (1,500,000) - (1,500,000)
Marketable securities (11,242,180) 8,254,405 (19,967,447)
--------------- --------------- ---------------(12,819,410) (5,140,581) (33,362,433)
------------- -------------- --------------
Cash provided by (used in)used in investing activities (29,550,451) 6,121,262 (58,739,658)
--------------- --------------- ---------------
Cash Flows From Financing Activities:(33,468,965) (7,529,093) (72,390,013)
------------- -------------- --------------
CASH FLOWS FROM FINANCING ACTIVITIES:
Proceeds from issuance of common stockprivate placement, net - - 130,742,7829,600,000 140,342,782
Proceeds from initial public offering, net - - 94,611,455
Proceeds from secondary public offering, net - 52,017,750 52,017,750
Stock issuance costs - - (1,639,577)(429,199) (2,068,776)
Proceeds from stock option exercises 1,636,796 1,972,716 6,216,1033,003,567 2,374,411 6,617,798
Cash placed in escrow - - (5,875,274)
Principal payments on capital lease obligations (47,558) (42,435) (186,056)(63,379) (70,394) (214,015)
Principal payments on long-term debt - - (560,000)
--------------- --------------- ---------------------------- -------------- --------------
Net cash provided by financing activities 1,589,238 1,930,281 223,309,433
--------------- --------------- ---------------2,940,188 63,492,568 284,871,720
------------- -------------- --------------
(Decrease) increase in cash and cash equivalents (60,698,663) (23,393,114) 35,118,449
Cash and cash equivalents, beginning of period(79,179,370) 12,232,031 70,743,594
CASH AND CASH EQUIVALENTS, BEGINNING OF PERIOD 171,496,286 58,511,563 -
--------------- --------------- ---------------
Cash and cash equivalents, end of period------------- -------------- --------------
CASH AND CASH EQUIVALENTS, END OF PERIOD $ 110,797,62392,316,916 $ 35,118,44970,743,594 $ 35,118,449
=============== ==============- ===============70,743,594
============= ============== ==============
The accompanying notes are an integral part of the condensed consolidated
financial statements.5
Plug Power Inc.PLUG POWER INC.
Notes to Condensed Consolidated Financial Statements
1. Nature of OperationsNATURE OF OPERATIONS
Plug Power Inc. (Company) was originally formed as a joint venture between
Edison Development Corporation (EDC) and Mechanical Technology Incorporated
(MTI) on June 27, 1997.1997 and succeeded by merger to all of the assets,
liabilities and equity of Plug Power, L.L.C. in November 1999. The Company
is a development stage enterprise formed to research, develop, manufacture
and distribute fuel cells for electric power generation.
2. Liquidity and Equity Offerings
OurLIQUIDITY
The Company's cash requirements depend on numerous factors, including completion of
our product
development activities, ability to commercialize our
residentialits fuel cell systems,
market acceptance of ourits systems and other factors. We expectThe Company expects to
devote substantial capital resources to continue ourits development programs
directed at commercializing our fuel cell systems for
worldwide, residential use, to hire and train our
production staff, develop and expand our manufacturing capacity begin production activities and expand ourcontinue
research and development activities. WeThe Company will pursue the
expansion of ourits
operations through internal growth and strategic acquisitionsalliances and expectexpects such
activities will be funded from existing cash and cash equivalents, issuance
of additional equity or debt securities or additional borrowings subject to
market and other conditions. In July 2001, wethe Company completed a public
equity financing raising an additional $51.3$51.6 million in net proceeds after fees and
expenses. Simultaneous with the closing of the public financing wethe Company
closed a private equity financing raising an additional $9.6 million in net
proceeds. We believeThe Company believes that ourits current cash balances, combined withincluding the
recently completed financingfinancings are sufficient to fund operations intothrough 2003.
3. Basis of PresentationBASIS OF PRESENTATION
The condensed consolidated balance sheet as of JuneSeptember 30, 2001, the
condensed consolidated statements of operations for the three and sixnine month
periods ended JuneSeptember 30, 20012000 and 20002001 and the condensed consolidated
statements of cash flows for the sixnine month periods ended JuneSeptember 30, 20012000
and 20002001 have been prepared by the Company without audit. In the opinion of
management, the
accompanying balance sheets and related statements of operations and of
cash flows include all adjustments, which consist solely of normal recurring
adjustments, necessary to present fairly in accordance with generally
accepted accounting principles, the financial position, results of operations
and cash flows for their fair presentation.all periods presented, have been made. The results of
operations for the interim periods presented are not necessarily indicative
of the results that may be expected for the full year.
Certain information and footnote disclosures normally included in financial
statements prepared in accordance with generally accepted accounting
principles have been condensed or omitted. These condensed consolidated
financial statements should be read in conjunction with the Company's audited
financial statements and notes thereto included in the Company's Annual
Report on Form 10-K filed for the fiscal year ended December 31, 2000.
Deferred Revenue: Product and service revenue excludes revenue which has been
deferred and is being recognized over the life of a related service
obligation under a commercial agreement for the delivery of fuel cell
systems. We have deferred recognition of product and service revenue where
all of the criteria for revenue recognition in SEC Staff Accounting Bulletin
101 have not yet been achieved. As of September 30, 2001 we have recorded
deferred product and service revenue in the amount of $1.9 million.
6
Marketable Securities: Marketable securities includes investments in
corporate debt securities which are carried at fair value. These investments
are considered available for sale, and the difference between the cost and
the fair value of these securities willwould be reflected in other comprehensive
income and as a separate component of stockholders' equity. There was no
significant difference between cost and fair value of these investments at
JuneSeptember 30, 2001 and 2000.
6
2001.
Recent Accounting Pronouncements: In JulyAugust 2001, the FASB issued Statements
of Financial Accounting Standards No. 141 (SFAS No. 141), "Business
Combinations". SFAS No.
141 eliminates the pooling-of-interests method of
accounting143, Accounting for business combinations except for qualifying business
combinations that were initiated prior to July 1, 2001.Asset Retirement Obligations. SFAS No. 141
further clarifies143 requires the
criteriafair value of a liability for an asset retirement obligation to recognize intangible assets separately
from goodwill.be recognized
in the period in which it is incurred if a reasonable estimate of fair value
can be made. The requirementsassociated asset retirement costs are capitalized as part of
the carrying amount of the long-lived asset. SFAS No. 141 are143 is effective for
any
business combination accounted for by the purchase method that is completedfiscal years beginning after June 30, 2001 (i.e.,15, 2002. The Company is currently
reviewing this statement to determine its effect on the acquisition date is July 1, 2001 or after).Company's financial
statements.
In JuneAugust 2001, the FASB issued Statements of Financial Accounting Standards
No. 142 (SFAS No. 142), "Goodwill and Other Intangible Assets," which will
be effective as of January 1, 2002. Under SFAS No. 142, goodwill144, Accounting for the Impairment
or Disposal of Long-Lived Assets, which supersedes SFAS No. 121, Accounting
for the Impairment of Long-Lived Assets and indefinite lived intangible assets are no longer amortized but are reviewed
annually (or more frequently if impairment indicators arise) for impairment. Separable intangible assets that are not deemed to have an
indefinite life will continueLong-Lived Assets to be
amortized over their useful lives. The
amortizationDisposed of, and the accounting and reporting provisions of APB No. 30. SFAS
No. 142 apply144 addresses financial accounting and reporting for the impairment or
disposal of long-lived assets and is effective for fiscal years beginning
after December 15, 2001, and interim periods within those fiscal years. The
Company is currently reviewing this statement to goodwill and intangible
assets acquired after June 30, 2001. With respect to goodwill and
intangible assets acquired prior to July 1, 2001, we are required to adopt
SFAS No. 142determine its effect on January 1, 2002.the
Company's financial statements.
4. Loss Per ShareLOSS PER SHARE
Loss per share for the Company is as follows:
Three Months Three Months SixNine Months SixNine Months
Ended JuneEnded Ended Ended
September 30, Ended JuneSeptember 30, Ended JuneSeptember 30, Ended JuneSeptember 30,
2000 2001 2000 2001
------------------- ------------------ ------------------ ---------------------------------- ---------------- ---------------- ----------------
Numerator:Numerator
Net loss $(18,033,158) $ (18,319,681) $ (35,279,018) $ (37,334,204)
Denominator:$(28,650,400) $(18,707,551) $(63,929,418) $(56,041,755)
Denominator
Weighted average number of
commonCommon shares 43,151,810 44,239,208 43,053,998 44,080,35243,433,561 48,920,871 43,181,442 45,711,589
No options or warrants outstanding were included in the calculation of
diluted loss per share because their impact would have been anti-dilutive.
The calculation also excludes 111,851 contingently returnable shares in 2000.
5. Income TaxesINCOME TAXES
The Company accounts for income taxes in accordance with Statement of
Financial Accounting Standards No. 109 (SFAS 109), "Accounting for Income
Taxes." No benefit for federal or state income taxes has been reported in
these condensed consolidated statements of operations as they have been
offset by a full valuation allowance because it is more likely than not
that the tax benefits of the net operating loss carryforward may not be
realized.valuation.
6. INVESTMENTS IN AFFILIATES
7
6. Investments in AffiliatesGE Entities: In February 1999, the Company entered into an agreement with GE
MicroGen, Inc. (formerly GE On-Site Power, Inc.), a wholly owned subsidiary
of General Electric Co.Company that operates within the GE Power Systems
business, to create GE Fuel Cell Systems, L.L.C. (GEFCS) a limited liability
company created to market and distribute fuel cell systems world-
wide.worldwide.
The Company recently completed an amendment to its distribution agreement
with GEFCS to extend the term of the agreement through the end of 2014 and
expand GEFCS' distribution rights to include PEM fuel cell systems of any
electric power output, for use in any stationary power application. The
Company also granted GE MicroGen owns 75%Power Systems Equities (GEPS Equities) an option to
purchase 725,000 shares of Plug Power common stock. Additionally, the
Company's percentage ownership in GEFCS andincreased from 25% to 40%. In
connection with these transactions, the Company owns 25%capitalized $5 million, the
fair value of GEFCS.the option to purchase 725,000 shares of Plug Power common
stock, under the caption "Investment in Affiliates" in its financial
statements.
The Company accounts for its interest in GEFCS on the equity method of
accounting and adjusts its investment by its proportionate share of income or
losses. During the sixnine months ended JuneSeptember 30, 2001, GEFCS had an
operating and net loss of approximately $1.5$2.6 million. For this same period,
the Company has recorded equity in losses of this affiliate of approximately
$935,000,$1.7 million, including goodwill amortization of $563,000.an intangible asset in the amount of
$955,000.
Advanced Energy Incorporated: In March 2000, the Company acquired a 28%
ownership interest in Advanced Energy Incorporated (AEI) in exchange for a
combination of $1.5 million cash and Plug Power common stock valued at
approximately $828,000. The Company accounts for its interest in AEI on the
equity method of accounting and adjusts its investment by its proportionate
share of income or losses. During the sixnine months ended JuneSeptember 30, 2001,
AEI had sales of approximately $851,000$1.9 million and an operating and net loss of
approximately $583,000.$860,000. For this same period, the Company has recorded equity
in losses of this affiliate of approximately $705,000,$1.2 million, including goodwill
amortization of $542,000.an intangible asset in the amount of $936,000.
7. Stockholders' EquitySTOCKHOLDERS' EQUITY
Changes in stockholders' equity for the sixnine months ended JuneSeptember 30, 2001
is as follows:
Deficit
Accumulated
Common stock During the Total
Stock Additional Development Stockholders'
Shares Amount Paid-in Capital Stage Equity
----------------------------------------------------------------------------------------------------------------------------------------------------------------------------
Balance, JanuaryBALANCE, JANUARY 1, 2001 43,795,513 $ 437,955$437,955 $268,923,203 $(135,230,514) $ 134,130,644$134,130,644
Public offering, net 4,575,000 45,750 51,972,000 52,017,750
Stock issuance cost (429,199) (429,199)
Private placement proceeds, 833,332 8,333 9,591,667 9,600,000
net
Stock issued for development 96,336 963 2,999,037 3,000,000
agreement
Stock-basedStock based compensation 59,030 590 895,409 896,000
Stock option exercises 391,275 3,913 1,033,802 1,037,7155,895,410 5,896,000
Stock issued under employee 36,745 367 459,906 460,273
stock purchase plan
Stock option exercises 725,529 7,256 1,906,881 1,914,137
Net loss (37,334,204) (18,319,681)
-----------------------------------------------------------------------------------
Balance, June(56,041,755) (56,041,755)
----------------------------------------------------------------------------------------
BALANCE, SEPTEMBER 30, 2001 44,564,813 $ 445,648 $274,784,228 $(172,564,718) $ 102,665,158
===================================================================================50,121,485 $501,214 $341,318,905 $(191,272,269) $150,547,850
========================================================================================
8. Commitments and Contingencies
Litigation:
In January 25, 2000, a legal complaint was filed against us, The Detroit
Edison Company and Edison Development Company in the Wayne County, Michigan
Circuit Court alleging that the entities misappropriated business and
technical trade secrets, ideas, know-how and strategies relating to fuel
cell systems and breached certain contractual obligations owed to DCT, Inc.
The
8
allegations against us with respect to breach of contractual obligations
were subsequently dismissed. We believe that the remaining allegations
against us in the complaint are without merit and are vigorously contesting
the litigation. We do not believe that the outcome of these actions will
have a material adverse effect upon our financial position, results of
operations or liquidity; however, litigation is inherently uncertain and
there can be no assurances as to the ultimate outcome or effect of this
action.
In September, 2000, a shareholder class action complaint was filed in the
federal district court for the Eastern District of New York alleging that
we and various of our officers and directors violated certain federal
securities laws by failing to disclose certain information concerning our
products and future prospects. The action was brought on behalf of a class
of purchasers of our stock who purchased the stock between February 14,
2000 and August 2, 2000. Subsequently, 14 additional complaints with
similar allegations and class periods were filed. By order dated October
30, 2000, the court consolidated the complaints into one action, entitled
Plug Power Inc. Securities Litigation, CV-00-5553(ERK)(RML). By order dated
January 25, 2001, the court appointed lead plaintiffs and lead plaintiffs'
counsel. Subsequently, the plaintiffs served a consolidated amended
complaint. The consolidated amended complaint extends the class period to
begin on October 29, 1999 and alleges claims under the Securities Act of
1933 and the Exchange Act of 1934, and Rule 10b-5 promulgated under the
Exchange Act of 1934. Plaintiffs allege that the defendants made misleading
statements and omissions regarding the state of development of our
technology in a registration statement issued in connection with our
initial public offering and in subsequent press releases. We served our
motion to dismiss these claims in May 2001. We believe that the allegations
in the consolidated amended complaint are without merit and intend to
vigorously defend against the claims. We do not believe that the outcome of
these actions will have a material adverse effect upon our financial
position, results of operations or liquidity. However, litigation is
inherently uncertain and there can be no assurances as to the ultimate
outcome or effect of these actions. If the plaintiffs were to prevail, such
an outcome would have a material adverse effect on our financial condition,
results of operations and liquidity.
9
MANAGEMENT'S DISCUSSION8. COMMITMENTS AND ANAYLSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
The following discussion should be read in conjunction with the
accompanying Condensed Consolidated Financial Statements and Notes thereto
included within this report, and our audited financial statements and notes
thereto included in our Annual Report on Form 10-K filed for the fiscal year
ended December 31, 2000. In addition to historical information, this Form 10-Q
and the following discussion contain forward-looking statements that reflect our
plans, estimates, intentions, expectations and beliefs. Our actual results could
differ materially from those discussed in the forward-looking statements.
Factors that could cause or contribute to such differences include, but are not
limited to, those set forth under the caption "Risk Factors" in our Annual
Report on Form 10-K filed for the fiscal year ended December 31, 2000.
Overview
We design and develop on-site electric power generation systems utilizing proton
exchange membrane fuel cells for stationary applications. We were formed in June
1997 as a joint venture to further the development of fuel cells for electric
power generation in stationary applications. We are a development stage company
and expect to deliver our initial product during the third quarter of 2001. We
continue to advance the development of our initial commercial product.
Since inception, we have devoted substantially all of our resources toward the
development of PEM fuel cell systems and have derived substantially all of our
revenue from government research and development contracts. Through June 30,
2001, our stockholders in the aggregate have contributed $229.9 million in cash,
including $93.0 million in net proceeds from our initial public offering of
common stock, which closed on November 3, 1999, and $32.4 million in other
contributions, consisting of in-process research and development, real estate,
other in-kind contributions and equity interests in affiliates, including a 25%
interest in GE Fuel Cell Systems.
From inception through June 30, 2001, we have incurred losses of $172.6 million
and expect to continue to incur losses as we expand our product development and
commercialization program and prepare for the commencement of manufacturing
operations. We expect that losses will fluctuate from quarter to quarter and
that such fluctuations may be substantial as a result of, among other factors,
the number of systems we produce and install for internal and external testing,
the related service requirements necessary to monitor those systems and
potential design changes required as a result of field testing. There can be no
assurance that we will manufacture or sell fuel cell systems successfully or
achieve or sustain product revenues or profitability.
Acquisitions, Strategic Relationships and Development Agreements
Since our inception in June 1997, we have formed strategic relationships with
suppliers of key components, developed distributor and customer relationships,
and entered into development and demonstration programs with electric utilities,
government agencies and other energy providers.
GE Entities: In 1999, we and GE MicroGen, Inc. formed GE Fuel Cell Systems to
serve as the distributor worldwide (other than in Illinois, Indiana, Michigan
and Ohio) of our PEM fuel cell systems under 35 kW designed for use in
residential, commercial and industrial stationary power applications. GE
MicroGen, Inc. is a wholly owned subsidiary of General Electric Company that
operates within the GE Power Systems business. Under the terms of our
distribution agreement with GE Fuel Cell Systems, we will serve as GE Fuel Cell
Systems' exclusive supplier of the PEM fuel cell systems and related components
meeting the specifications set forth in the distribution agreement. Under the
agreement, we will sell our systems directly to GE Fuel Cell Systems, which will
then seek to sell the systems to sub-distributors. The
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systems sold by GE Fuel Cell Systems will be co-branded with both the General
Electric and Plug Power names and trademarks.
Our distribution agreement with GE Fuel Cell Systems generally does not cover
PEM fuel cell systems designed for transportation or vehicle applications,
certain extended run uninterruptible power supply for data center applications,
rack-mounted equipment in telecommunications, cellular or cable television
applications and other applications in which the fuel cell system is integrated
with another device that consumes 100% of the fuel cell system's output.
However, we recently entered into a memorandum of understanding with GE Fuel
Cell Systems to extend the term of the agreement through the end of 2014 and to
amend the distribution agreement to replace the product specifications, prices
and delivery schedule in our current distribution agreement with a high-level,
multi-generation product plan with subsequent modifications subject to mutual
agreement. Under the memorandum of understanding, GE Fuel Cell Systems'
distribution rights would be expanded to include PEM fuel cell systems of any
electric power output, including greater than 35 kW, for use in any stationary
power application. We would also issue GEPS Equities for no additional cash
consideration $5.0 million worth of common stock at a price per share equal to
the per share offering price in the recently completed public offering. Finally,
our percentage ownership in GE Fuel Cell Systems would be increased from 25% to
40%. We expect to execute definitive amendments to the distribution and
operating agreements in the third quarter of this year.
We have secured resources of GE MicroGen, Inc. and its affiliates to assist us
in our product development effort, and we have committed to purchase a minimum
of $12.0 million of technical support services, including engineering, testing,
manufacturing and quality control services from GE Power Systems over a
three-year period, which began September 30, 1999. In July, 2001 GEPS Equities
invested $5.0 million in a private placement concurrent with the closing of our
public offering. We have also entered into a separate agreement with General
Electric Company under which General Electric acts as our agent in procuring
fuel cell equipment, parts and components. In addition, General Electric has
agreed to provide training services to our employees regarding procurement
activities. These services are made available to us essentially at General
Electric's cost.
Gastec: In February 2000, we acquired from Gastec, NV, a Netherlands-based
company, certain fixed assets and all of its intellectual property related to
fuel processor development for fuel cell systems capable of producing up to 100
kW of electric power. The total purchase price was $14.8 million, paid in cash.
In connection with the transaction, we recorded in-process research and
development expense in the amount of $5.0 million, fixed assets in the amount of
$192,000 which were capitalized at their fair value and will be depreciated over
their useful life, and intangible assets in the amount of $9.6 million which has
been capitalized and is being amortized over 36 months. Through June 30, 2001,
we have expensed $4.5 million related to the intangible assets.
Vaillant: In March 2000, we finalized a development agreement with Vaillant GmbH
of Remscheid, Germany, Europe's leading heating appliance manufacturer, to
develop a combination furnace, hot water heater and fuel cell system that will
provide both heat and electricity for the home. Under the agreement, Vaillant
will obtain fuel cells and gas-processing components from GE Fuel Cell Systems
and then will produce the fuel cell heating appliances for its customers in
Germany, Austria, Switzerland and the Netherlands, and for GE Fuel Cell Systems
customers throughout Europe.
Celanese: In April 2000, we finalized a joint development agreement with
Celanese GmbH, to develop a high temperature membrane electrode unit. Under the
agreement, we and Celanese will exclusively work together on the development of
a high temperature membrane electrode unit for our stationary fuel cell system
applications. As part of the agreement we will contribute an estimated $4.1
million (not to exceed $4.5 million) to fund our share of the development
efforts over the course of the agreement. As of June
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30, 2001, we have contributed $1.5 million under the terms of the agreement and
have expensed all of such costs.
Engelhard: In June 2000, we finalized a joint development agreement and a supply
agreement with Engelhard Corporation for development and supply of advanced
catalysts to increase the overall performance and efficiency of our fuel
processor. Over the course of the agreements we will contribute $10.0 million to
fund Engelhard's development efforts, and Engelhard will purchase $10.0 million
of our common stock. The agreements also specify rights and obligations for
Engelhard to supply products to us over the next 10 years. As of June 30, 2001,
we have contributed $8.0 million under the terms of the agreement while
Engelhard has purchased $8.0 million of our common stock. In connection with the
transaction, we have recorded $8.0 million under the balance sheet caption
"Prepaid development costs." Through June 30, 2001, we have expensed $4.3
million of such costs.
Advanced Energy Incorporated: In March 2000, we acquired a 28% ownership
interest in Advanced Energy Incorporated, in exchange for a combination of $1.5
million in cash and our common stock valued at approximately $828,000. We
account for our interest in Advanced Energy Incorporated on the equity method of
accounting and adjust our investment by our proportionate share of income or
losses.
Results of Operations
Comparison of the Three Months Ended June 30, 2001 and June 30, 2000.
Revenues. Total revenues for the second quarter ended June 30, 2001, were
$1.3 million as compared to $2.4 million for the second quarter of 2000. The
decrease is primarily the result of reduced government contract activity with
the U.S. Department of Energy, as we complete our largest contract with them.
Our revenues since inception have been derived primarily from cost reimbursement
government contracts relating to the development of PEM fuel cell technology and
contract revenue generated from the delivery of PEM fuel cells and related
engineering and testing support services for other customers.
Our government contracts provide for the partial recovery of direct and
indirect costs from the specified government agency, generally requiring us to
absorb from 25% to 50% of contract costs incurred. As a result of our cost
sharing requirements we will report losses on these contracts as well as any
future government contracts awarded.
Cost of revenues. Cost of contract revenue includes compensation and benefits
for the engineering and related support staff, fees paid to outside suppliers
for subcontracted components and services, fees paid to consultants for services
provided, materials and supplies used and other directly allocable general
overhead costs allocated to specific government contracts. Cost of contract
revenue was $2.2 million for the three months ended June 30, 2001, as compared
to $3.5 million for the same period last year. The decrease in contract costs
was related to reduced government contract activity. The result was a loss on
contracts of $909,000 for the three months ended June 30, 2001 compared to a
loss on contracts of $1.1 million last year.
Research and Development. Research and development expense includes
compensation and benefits for the engineering and related staff, expenses for
contract engineers, materials to build prototype units, fees paid to outside
suppliers for subcontracted components and services, supplies used, facility
related costs, such as computer and network services and other general overhead
costs. Research and development expenses decreased to $15.2 million for the
three months ended June 30, 2001 from $16.9 million for the three months ended
June 30, 2000. The decrease is primarily the result of increased focus cash
conservation. We produced 33 PEM fuel cell systems during the second quarter
ended June 30,
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2001 compared to 39 PEM fuel cell systems during the same period last year.
Additionally we have reduced the direct material cost of our PEM fuel cell
systems by 27 percent since January 1, 2001.
General and Administrative. General and administrative expense includes
compensation, benefits and related costs in support of our general corporate
functions, including general management, finance and accounting, human
resources, business development, information and legal services. General and
administrative expenses increased to $1.9 million for the three months ended
June 30, 2001 from $1.7 million for the three months ended June 30, 2000, due to
higher general expenses in support of operations.
Interest Expense. Interest expense of $76,000 for the three months ended
June 30, 2001 consists of interest on a long-term obligation related to a real
estate purchase agreement with Mechanical Technology in June, 1999, and interest
paid on capital lease obligations.
Interest Income. Interest income consisting of interest earned on our cash
and cash equivalents and marketable securities decreased to $843,000 for the
three months ended June 30, 2001 from $2.2 million for the same period last
year.
Equity in losses of affiliates. Equity in losses of affiliates,
representing our minority interest in GE Fuel Cell Systems and Advanced Energy
Incorporated, increased to $994,000 for the three months ended June 30, 2001
from $455,000 for the same period last year. Equity in losses of affiliates for
the three month period ended June 30, 2001 is our proportionate share of the
losses of GE Fuel Cell Systems and Advanced Energy Systems, which we account for
under the equity method of accounting, in the amount of $675,000 and goodwill
amortization on those investments in the amount of $318,000.
Income Taxes. No benefit for federal and state income taxes has been
reported in the financial statements because the deferred tax asset generated
from our net operating has been offset by a full valuation allowance.
We were taxed as a partnership prior to November 3, 1999, the effective
date of our merger into a C corporation, and the federal and state income tax
benefits of our losses were recorded by our stockholders. Effective on November
3, 1999, and began accounting for income taxes in accordance with Statement of
Financial Accounting Standards No. 109 (SFAS 109), "Accounting for Income
Taxes."
Comparison of the Six Months Ended June 30, 2001 and June 30, 2000.
Revenues. Total revenues for the six months ended June 30, 2001, were $2.3
million as compared to $5.4 million for the same period of last year. The
decrease is primarily the result of reduced government contract activity with
the U.S. Department of Energy, as we complete our largest contract with them.
Our revenues since inception have been derived primarily from cost reimbursement
government contracts relating to the development of PEM fuel cell technology and
contract revenue generated from the delivery of PEM fuel cells and related
engineering and testing support services for other customers.
Our government contracts provide for the partial recovery of direct and
indirect costs from the specified government agency, generally requiring us to
absorb from 25% to 50% of contract costs incurred. As a result of our cost
sharing requirements we will report losses on these contracts as well as any
future government contracts awarded.
Cost of revenues. Cost of contract revenue includes compensation and
benefits for the engineering and related support staff, fees paid to outside
suppliers for subcontracted components and services, fees paid to consultants
for services provided, materials and supplies used and other directly allocable
general overhead costs allocated to specific government contracts. Cost of
contract revenue was $4.2 million for
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the six months ended June 30, 2001, as compared to $7.4 million for the same
period last year. The decrease in contract costs was related to reduced
government contract activity. The result was a loss on contracts of $1.9 million
for the six months ended June 30, 2001 compared to a loss on contracts of $2.0
million for the same period last year.
Research and Development. Research and development expense includes compensation
and benefits for the engineering and related staff, expenses for contract
engineers, materials to build prototype units, fees paid to outside suppliers
for subcontracted components and services, supplies used, facility related
costs, such as computer and network services and other general overhead costs.
Research and development expenses decreased to $32.0 million for the six months
ended June 30, 2001 from $33.4 million for the six months ended June 30, 2000.
The amount in 2000 includes a one-time charge of $5.0 million related to the
write off of in-process research and development expenses related to our
acquisition of intellectual property in the first quarter of 2000. Excluding the
write-off, research and development expenses increased by $3.6 million which is
the result of increased research and development activities, including $3.8
million of additional amortization of our of joint development agreements with
Engelhard and Celanese and is offset by a reduction in the direct material cost
of our PEM fuel cell systems. Year to date we have reduced the direct material
cost of our PEM fuel cell systems by 27 percent. Additionally we have produced a
total of 52 PEM fuel cell systems compared to 61 PEM fuel cell systems during
the same period last.
General and Administrative. General and administrative expense includes
compensation, benefits and related costs in support of our general corporate
functions, including general management, finance and accounting, human
resources, business development, information and legal services. General and
administrative expenses increased to $3.8 million for the six months ended June
30, 2001 from $3.3 million for the six months ended June 30, 2000. The increase
was primarily due to higher general expenses in support of operations.
Interest Expense. Interest expense of $154,000 for the six months ended
June 30, 2001 includes interest on a long-term obligation related to a real
estate purchase agreement with Mechanical Technology in June, 1999, and interest
paid on capital lease obligations.
Interest Income. Interest income consisting of interest earned on our cash,
cash equivalents and marketable securities decreased to $2.1 million for the six
months ended June 30, 2001 from $4.5 million for the same period last year.
Equity in losses of affiliates. Equity in losses of affiliates,
representing our minority interest in GE Fuel Cell Systems and Advanced Energy
Incorporated, increased to $1.6 million for the six months ended June 30, 2001
from $963,000 last year. Equity in losses of affiliates during the six months
ended June 30, 2001 includes our proportionate share of the losses of GE Fuel
Cell Systems and Advanced Energy Incorporated, which we account for under the
equity method of accounting, in the amount of $535,000 and goodwill amortization
on those investments in the amount of $1.1 million.
Income Taxes. No benefit for federal and state income taxes has been
reported in the financial statements because the deferred tax asset generated
from our net operating has been offset by a full valuation allowance.
We were taxed as a partnership prior to November 3, 1999, the effective date of
our merger into a C corporation, and the federal and state income tax benefits
of our losses were recorded by our stockholders. Effective on November 3, 1999,
and began accounting for income taxes in accordance with Statement of Financial
Accounting Standards No. 109 (SFAS 109), "Accounting for Income Taxes."
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Liquidity and Capital Resources
Summary
Our cash requirements depend on numerous factors, including completion of our
product development activities, ability to commercialize our residential fuel
cell systems, market acceptance of our systems and other factors. We expect to
devote substantial capital resources to continue our development programs
directed at commercializing our fuel cell systems for worldwide residential use,
to hire and train our production staff, develop and expand our manufacturing
capacity, begin production activities and expand our research and development
activities. We will pursue the expansion of our operations through internal
growth and strategic acquisitions and expect such activities will be funded from
existing cash and cash equivalents, issuance of additional equity or debt
securities or additional borrowings subject to market and other conditions. In
July, 2001 we completed a public equity financing raising an additional $51.3
million in net proceeds after fees and expenses. Simultaneous with the closing
of the public financing we closed a private equity financing raising an
additional $9.6 million in net proceeds. We believe that our current cash
balances combined with the recently completed financing are sufficient to fund
operations into 2003.
We have financed our operations through June 30, 2001, primarily from the sale
of equity, which has provided cash in the amount of $229.9 million. As of June
30, 2001, we had unrestricted cash, cash equivalents and marketable securities
totaling $55.1 million and working capital was approximately $57.6 million. As a
result of our purchase of real estate from Mechanical Technology, we have
escrowed $5.6 million in cash to collateralize the debt assumed on the purchase.
Since inception, net cash used in operating activities has been $129.4 million
and cash used in investing activities has been $58.7 million.
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Part II - Other Information
ITEM 1 - LEGAL PROCEEDINGS
- --------------------------
InCONTINGENCIES
Litigation: On January 25, 2000, a legal complaint was filed against us, The
Detroit Edison Company and Edison Development Company in the Wayne County,
Michigan Circuit Court alleging that the entities misappropriated business
and technical trade secrets, ideas, know-how and strategies relating to fuel
cell systems and breached certain contractual obligations owed to DCT, Inc.
The allegations against us with respect to breach of contractual obligations
were subsequently dismissed. We believe that the remaining allegations
against us in the complaint are without merit and are vigorously contesting
the litigation. We do not believe that the outcome of these actions will have
a material adverse effect upon our financial position, results of operations
or liquidity; however, litigation is inherently uncertain and there can be no
assurances as to the ultimate outcome or effect of this action.
In September, 2000, a shareholder class action complaint was filed in the
federal district court for the Eastern District of New York alleging that we
and various of our officers and directors violated certain federal securities
laws by failing to disclose certain information concerning our products and
future prospects. The action was brought on behalf of a class of purchasers
of our stock who purchased the stock between February 14, 2000 and August 2,
2000. Subsequently, 14 additional complaints with similar allegations and
class periods were filed. By order dated October 30, 2000, the court
consolidated the complaints into one action, entitled Plug Power Inc.
Securities Litigation, CV-00-5553(ERK)(RML). By order dated January 25, 2001,
the court appointed lead plaintiffs and lead plaintiffs' counsel. Subsequently, theThe
plaintiffs then served a consolidated amended complaint. The consolidated amended complaint, which extends the
class period to begin on October 29, 1999 and alleges claims under the
Securities Act of 1933 and the Exchange Act of 1934, and Rule 10b-5
promulgated under the Exchange Act of 1934. Subsequently, plaintiffs withdrew
their claims under the Securities Act of 1933. Plaintiffs allege that the
defendants made misleading statements and omissions regarding the state of
development of our technology in a registration statement issued in
connection with our initial public offering and in subsequent press releases.
We served ourOur motion to dismiss these claims is pending before the court. We believe
that the allegations in Maythe consolidated amended complaint are without merit
and intend to vigorously defend against the claims. We do not believe that
the outcome of these actions will have a material adverse effect upon our
financial position, results of operations or liquidity. However, litigation
is inherently uncertain and there can be no assurances as to the ultimate
outcome or effect of these actions. If the plaintiffs were to prevail, such
an outcome would have a material adverse effect on our financial condition,
results of operations and liquidity.
9
MANAGEMENT'S DISCUSSION AND ANAYLSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
The following discussion should be read in conjunction with the accompanying
Condensed Consolidated Financial Statements and Notes thereto included within
this report, and our audited financial statements and notes thereto included in
our Annual Report on Form 10-K filed for the fiscal year ended December 31,
2000. In addition to historical information, this Form 10-Q and the following
discussion contain forward-looking statements that reflect our plans, estimates,
intentions, expectations and beliefs. Our actual results could differ materially
from those discussed in the forward-looking statements. Factors that could
cause or contribute to such differences include, but are not limited to, those
set forth under the caption "Risk Factors" in our Annual Report on Form 10-K
filed for the fiscal year ended December 31, 2001.
OVERVIEW
Plug Power designs and develops on-site electric power generation systems
utilizing proton exchange membrane (PEM) fuel cells for stationary applications.
We are a development stage company formed in June 1997 to further the
development of fuel cells for electric power generation in stationary
applications.
Since inception, we have devoted substantially all of our resources toward the
development of PEM fuel cell systems and have derived substantially all of our
revenue from government research and development contracts. Through September
30, 2001, our stockholders in the aggregate have contributed $291.5 million in
cash, including $93.0 million in net proceeds from our initial public offering
of common stock, $51.6 million in net proceeds from our follow-on public
offering and $9.6 million in net proceeds from a private placement which closed
on July 25, 2001 simultaneously with the public offering, and $40.1 million in
other contributions, consisting of in-process research and development, real
estate, other in-kind contributions and equity interests in affiliates,
including our interest in GE Fuel Cell Systems.
From inception through September 30, 2001, we have incurred losses of $191.3
million and expect to continue to incur losses as we expand our product
development and commercialization program and prepare for the commencement of
manufacturing operations. We expect that losses will fluctuate from quarter to
quarter and that such fluctuations may be substantial as a result of, among
other factors, the number of systems we produce and install for internal and
external testing, the related service requirements necessary to monitor those
systems and potential design changes required as a result of field testing.
There can be no assurance that we will manufacture or sell fuel cell systems
successfully or achieve or sustain product revenues or profitability.
RECENT DEVELOPMENTS
Public Financing: In July 2001, we completed a public offering of 4,575,000
shares of common stock which includes additional shares purchased pursuant to
exercise of underwriters overallotment option. We received net proceeds of
$51.6 million after underwriting discounts, fees and expenses.
Private Placements: Simultaneous with the closing of the public offering in July
2001, we closed a private equity financing of 416,666 shares to GEPS Equities,
Inc., an indirect wholly-owned subsidiary of General Electric Company, and
416,666 shares to Edison Development Corporation, an indirect wholly-owned
subsidiary of DTE Energy Company, raising an additional $9.6 million in net
proceeds.
Amendments to GE Fuel Cell Systems and DTE Energy Agreements: We recently
completed an amendment to our distribution agreement with GEFCS to extend the
term of the agreement through the end of 2014 and expand GEFCS' distribution
rights to include PEM fuel cell systems of any electric power output, for use in
any stationary power application. The Company also granted GE Power Systems
Equities (GEPS Equities) an option to purchase 725,000 shares of Plug Power
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common stock. Additionally, the Company's percentage ownership in GEFCS
increased from 25% to 40%.
We also completed a separate agreement with DTE Energy Technologies expanding
their exclusive distribution rights within the states of Michigan, Illinois,
Ohio and Indiana. Under the agreement, they will market and distribute all sizes
of Plug Power's stationary PEM fuel cell systems for use in any power
application, except for propulsion
ALLIANCES, STRATEGIC RELATIONSHIPS AND DEVELOPMENT AGREEMENTS
Since our inception in June 1997, we have formed strategic relationships with
suppliers of key components, developed distributor and customer relationships,
and entered into development and demonstration programs with electric utilities,
government agencies and other energy providers.
GE ENTITIES: In February 1999, the Company entered into an agreement with GE
MicroGen, Inc. (formerly GE On-Site Power, Inc.), a wholly owned subsidiary of
General Electric Company that operates within the GE Power Systems business, to
create GE Fuel Cell Systems, L.L.C. (GEFCS) a limited liability company created
to market and distribute fuel cell systems worldwide.
The Company recently completed an amendment to its distribution agreement with
GEFCS to extend the term of the agreement through the end of 2014 and expand
GEFCS' distribution rights to include PEM fuel cell systems of any electric
power output, for use in any stationary power application. The Company also
granted GE Power Systems Equities (GEPS Equities) an option to purchase 725,000
shares of Plug Power common stock. Additionally, the Company's percentage
ownership in GEFCS increased from 25% to 40%. In connection with the amendment,
the Company capitalized $5 million, the fair value of the option to purchase
725,000 shares of Plug Power common stock, under the caption "Investment in
Affiliates" in its financial statements.
We have secured resources of GE MicroGen, Inc. and its affiliates to assist us
in our product development effort, and we have committed to purchase a minimum
of $12.0 million of technical support services, including engineering, testing,
manufacturing and quality control services from GE Power Systems over a three-
year period, which began September 30, 1999. We have also entered into a
separate agreement with General Electric Company under which General Electric
acts as our agent in procuring fuel cell equipment, parts and components. In
addition, General Electric has agreed to provide training services to our
employees regarding procurement activities. These services are made available to
us essentially at General Electric's cost.
In July, 2001 GEPS Equities invested $5.0 million in a private placement of
common stock.
GASTEC: In February 2000, we acquired from Gastec, NV, a Netherlands-based
company, certain fixed assets and all of its intellectual property related to
fuel processor development for fuel cell systems capable of producing up to 100
kW of electric power. The total purchase price was $14.8 million, paid in cash.
In connection with the transaction, we recorded in-process research and
development expense in the amount of $5.0 million, fixed assets in the amount of
$192,000 which were capitalized at their fair value and will be depreciated over
their useful life, and intangible assets in the amount of $9.6 million which has
been capitalized and is being amortized over 36 months. Through September 30,
2001, we have expensed $5.3 million related to the intangible assets.
VAILLANT: In March 2000, we finalized a development agreement with Vaillant
GmbH of Remscheid, Germany, Europe's leading heating appliance manufacturer, to
develop a combination furnace, hot water heater and fuel cell system that will
provide both heat and electricity for the home. Under the agreement, Vaillant
will obtain fuel cells and gas-processing components from GE Fuel Cell Systems
and then will produce the fuel cell heating appliances for its customers in
11
Germany, Austria, Switzerland and the Netherlands, and for GE Fuel Cell Systems
customers throughout Europe.
CELANESE: In April 2000, we finalized a joint development agreement with
Celanese GmbH, to develop a high temperature membrane electrode unit. Under the
agreement, we and Celanese will exclusively work together on the development of
a high temperature membrane electrode unit for our stationary fuel cell system
applications. As part of the agreement we will contribute an estimated $4.1
million (not to exceed $4.5 million) to fund our share of the development
efforts over the course of the agreement. As of September 30, 2001, we have
contributed $1.5 million under the terms of the agreement and have expensed all
of such costs.
ENGELHARD: In June 2000, we finalized a joint development agreement and a
supply agreement with Engelhard Corporation for development and supply of
advanced catalysts to increase the overall performance and efficiency of our
fuel processor. Over the course of the agreements we will contribute $10.0
million to fund Engelhard's development efforts, and Engelhard will purchase
$10.0 million of our common stock. The agreements also specify rights and
obligations for Engelhard to supply products to us over the next 10 years. As
of September 30, 2001, we have contributed $8.0 million under the terms of the
agreement while Engelhard has purchased $8.0 million of our common stock. In
connection with the transaction, we have recorded $8.0 million under the balance
sheet caption "Prepaid development costs." Through September 30, 2001, we have
expensed $5.0 million of such costs.
ADVANCED ENERGY INCORPORATED: In March 2000, we acquired a 28% ownership
interest in Advanced Energy Incorporated, in exchange for a combination of $1.5
million in cash and our common stock valued at approximately $828,000. We
account for our interest in Advanced Energy Incorporated on the equity method of
accounting and adjust our investment by our proportionate share of income or
losses.
RESULTS OF OPERATIONS
Comparison of the Three Months Ended September 30, 2001 and September 30, 2000.
PRODUCT AND SERVICE REVENUE. Product and service revenue was $437,000 in the
third quarter ended September 30, 2001 compared to none during the same period
last year. During the quarter we began delivering fuel cell systems under
commercial agreements. We have recognized product and service revenue in the
amount of $437,000 and have deferred recognition of product and service revenue
in the amount of $1.9 million as we are recognizing the revenue over the life of
a related service obligation.
RESEARCH AND DEVELOPMENT CONTRACT REVENUE. Research and development contract
revenue decreased to $483,000, for the quarter ended September 30, 2001, as
compared to $1.5 million last year. Since inception, substantially all of our
revenue has been derived from cost reimbursement research and development
contracts with various government agencies promoting the development of PEM fuel
cell technology and other contract revenue generated from the delivery of PEM
fuel cells and related engineering and testing support services for other
customers. The decrease is the result of reduced government research and
development contract activity, primarily with the U.S. Department of Energy, as
we complete our largest contract with them.
Our government contracts provide for the partial recovery of direct and indirect
costs from the specified government agency, generally requiring us to absorb
from 25% to 50% of contract costs incurred. As a result of our cost sharing
requirements we will report losses on these contracts as well as any future
government contracts awarded.
COST OF REVENUES. Cost of revenues for the three months ended September 30,
2001, decreased to $2.4 million from $3.0 million during the same period last
year. Cost of revenues includes costs associated with research and development
12
contracts including; compensation and benefits for engineering and related
support staff, fees paid to outside suppliers for subcontracted components and
services, fees paid to consultants for services provided, materials and supplies
used and other directly allocable general overhead costs allocated to specific
government contracts.
Cost of revenues also includes the direct costs incurred in the manufacture of
our products as well as costs incurred for warranty obligations on our products.
These costs consist primarily of product materials and fees paid to outside
suppliers for subcontracted components and services. We expense the costs
associated with the manufacture of our products and the costs for service and
other obligations as they are incurred.
RESEARCH AND DEVELOPMENT EXPENSES. Research and development expenses decreased
to $15.1 million for the three months ended September 30, 2001 from $18.5
million for the three months ended September 30, 2000. Research and development
expenses include; materials to build development and prototype units,
compensation and benefits for the engineering and related staff, expenses for
contract engineers, fees paid to outside suppliers for subcontracted components
and services, 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. The decrease is primarily the result of
increased focus on cost reduction including a reduction in the direct material
cost of our PEM fuel cell systems by 37 percent since January 1, 2001.
GENERAL AND ADMINISTRATIVE. General and administrative expenses decreased to
$1.8 million for the three months ended September 30, 2001 from $2.1 million for
the three months ended September 30, 2000. General and administrative expense
includes compensation, benefits and related costs in support of our general
corporate functions, including general management, finance and accounting, human
resources, marketing, information technology and legal services.
During last years quarter ended September 30, 2000, we recorded a one-time, non-
cash charge in the amount of $7.4 million related to stock-based compensation
for the Company's former President and CEO. There have been no such expenses in
2001.
INTEREST EXPENSE. Interest expense of $55,000 for the three months ended
September 30, 2001 consists of interest on a long-term obligation related to a
real estate purchase agreement with Mechanical Technology Inc in June, 1999, and
interest paid on capital lease obligations.
INTEREST INCOME. Interest income consists of interest earned on our cash, cash
equivalents and marketable securities and decreased to $1.0 million for the
three months ended September 30, 2001 from $2.0 million for the same period last
year. The decrease is the result of lower average balances of cash, cash
equivalents and marketable securities during the third quarter of 2001 combined
with reduced interest rates on our investments.
EQUITY IN LOSSES OF AFFILIATES. Equity in losses of affiliates increased to
$1.3 million for the three months ended September 30, 2001 from $938,000 last
year. Equity in losses of affiliates is our proportionate share of the losses
of GE Fuel Cell Systems (including our pro-rata share of increased ownership in
GEFCS from 25% to 40%) and Advanced Energy Incorporated in the amount of
$505,000 and amortization of intangible assets in the amount of $786,000.
INCOME TAXES. No benefit for federal and state income taxes has been reported
in the financial statements as the deferred tax asset generated from our net
operating losses has been offset by a full valuation allowance.
13
COMPARISON OF THE NINE MONTHS ENDED SEPTEMBER 30, 2001 AND SEPTEMBER 30, 2000.
PRODUCT AND SERVICE REVENUE. Product and service revenue was $437,000 in the
nine months ended September 30, 2001 compared to none during the same period
last year. During the third quarter we began delivering fuel cell systems under
commercial agreements. We have recognized product and service revenue in the
amount of $437,000 and have deferred recognition of product and service revenue
in the amount of $1.9 million as we are recognizing the revenue over the life of
a related service obligation.
RESEARCH AND DEVELOPMENT CONTRACT REVENUE. Research and development contract
revenue decreased to $2.8 million, for the nine months ended September 30, 2001,
as compared to $6.9 million last year. Since inception, substantially all of
our revenue has been derived from cost reimbursement research and development
contracts with various government agencies promoting the development of PEM fuel
cell technology and other contract revenue generated from the delivery of PEM
fuel cells and related engineering and testing support services for other
customers. The decrease is the result of reduced government research and
development contract activity, primarily with the U.S. Department of Energy, as
we complete our largest contract with them.
Our government contracts provide for the partial recovery of direct and indirect
costs from the specified government agency, generally requiring us to absorb
from 25% to 50% of contract costs incurred. As a result of our cost sharing
requirements we will report losses on these contracts as well as any future
government contracts awarded.
COST OF REVENUES. Cost of revenues for the nine months ended September 30,
2001, decreased to $6.6 million from $10.4 million during the same period last
year. Cost of revenues includes costs associated with research and development
contracts including; compensation and benefits for engineering and related
support staff, fees paid to outside suppliers for subcontracted components and
services, fees paid to consultants for services provided, materials and supplies
used and other directly allocable general overhead costs allocated to specific
government contracts.
Cost of revenues also includes the direct costs incurred in the manufacture of
our products as well as costs incurred for warranty obligations on our products.
These costs consist primarily of product materials and fees paid to outside
suppliers for subcontracted components and services. We expense the costs
associated with the manufacture of our products and the costs for service and
other obligations as they are incurred.
RESEARCH AND DEVELOPMENT EXPENSES. Research and development expenses, including
in-process research and development decreased to $47.1 million for the nine
months ended September 30, 2001 from $51.9 million for the nine months ended
September 30, 2000. The amount in 2000 includes a one-time charge of $5.0
million for in-process research and development expenses related to the purchase
of intellectual property related to fuel processor development. Excluding this
one-time charge, research and development expenses increased by $200,000. The
increase is the result of an increased amortization of prepaid development
expenses in the amount of $4.7 million under our joint development programs with
Engelhard and Celanese, and an increase of approximately $500,000 in
amortization related to the portion of the Gastec purchase price which has been
capitalized and recorded on our balance sheet under the caption "Intangible
assets." These increases are offset by a focus on cost reduction, including a
reduction in the direct material cost of our PEM fuel cell systems of 37 percent
since January 1, 2001.
Research and development expenses include; materials to build development and
prototype units, compensation and benefits for the engineering and related
staff, expenses for contract engineers, fees paid to outside suppliers for
14
subcontracted components and services, 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.
GENERAL AND ADMINISTRATIVE. General and administrative expenses remained
constant at $5.3 million for the nine months ended September 30, 2001 and the
nine months ended September 30, 2000. General and administrative expense
includes compensation, benefits and related costs in support of our general
corporate functions, including general management, finance and accounting, human
resources, marketing, information technology and legal services.
During the nine months ended September 30, 2000, we recorded a one-time, non-
cash charge in the amount of $7.4 million related to stock-based compensation
expense for the Company's former President and CEO. There have been no such
expenses in 2001.
INTEREST EXPENSE. Interest expense of $209,000 for the nine months ended
September 30, 2001 consists of interest on a long-term obligation related to a
real estate purchase agreement with Mechanical Technology Inc in June, 1999, and
interest paid on capital lease obligations.
INTEREST INCOME. Interest income consists of interest earned on our cash, cash
equivalents and marketable securities and decreased to $3.1 million for the nine
months ended September 30, 2001 from $6.5 million for the same period last year.
The decrease is the result of lower average balances of cash, cash equivalents
and marketable securities during the first nine months of 2001 combined with
reduced interest rates on our investments.
EQUITY IN LOSSES OF AFFILIATES. Equity in losses of affiliates increased to
$2.9 million for the nine months ended September 30, 2001 from $1.9 million last
year. Equity in losses of affiliates for the nine month period ended September
30, 2001 in the amount of $2.9 million is our proportionate share of the losses
of GE Fuel Cell Systems (including our pro-rata share of increased ownership in
GEFCS from 25% to 40%) and Advanced Energy Incorporated in the amount of $1.0
million and amortization of intangible assets in the amount of $1.9 million.
INCOME TAXES. No benefit for federal and state income taxes has been reported
in the financial statements as the deferred tax asset generated from our net
operating losses has been offset by a full valuation allowance because it is
more likely than not that the tax benefits of the net operating loss
carryforward may not be realized.
LIQUIDITY AND CAPITAL RESOURCES
Summary
The Company's cash requirements depend on numerous factors, including product
development activities, ability to commercialize its fuel cell systems, market
acceptance of its systems and other factors. The Company expects to devote
substantial capital resources to continue its development programs directed at
commercializing fuel cell systems worldwide, to hire and train production staff,
develop and expand manufacturing capacity and continue research and development
activities. The Company will pursue expansion of its operations through internal
growth and strategic acquisitions and expects such activities will be funded
from existing cash and cash equivalents, issuance of additional equity or debt
securities or additional borrowings subject to market and other conditions. In
July 2001, the Company completed a public equity financing raising $51.6 million
in net proceeds after fees and expenses. Simultaneous with the closing of the
public financing the Company closed a private equity financing raising an
additional $9.6 million in net proceeds. The Company believes that its current
cash balances, including the recently completed financings are sufficient to
fund operations through 2003.
15
We have financed our operations through September 30, 2001, primarily from the
sale of equity, which has provided cash in the amount of $291.5 million. As of
September 30, 2001, we had unrestricted cash, cash equivalents and marketable
securities totaling $104.1 million and working capital was approximately $103.5
million. As a result of our purchase of real estate from Mechanical Technology
Inc, we have escrowed $5.6 million in cash to collateralize the debt assumed on
the purchase.
During the nine months ended September 30, 2001, net cash used in operating
activities was $43.7 million. Cash used in investing activities during the nine
months ended September 30, 2001, was $7.5 million, including $5.1 million for
the purchase of marketable securities. Excluding the purchase of marketable
securities, cash used in investing activities was $2.4 million for the purchase
of property, plant and equipment.
Since inception, net cash used in operating activities has been $141.7 million
and cash used in investing activities has been $72.4 million, including $33.4
million for the purchase of marketable securities.
16
PART II - OTHER INFORMATION
ITEM 1 - LEGAL PROCEEDINGS
- --------------------------
On January 25, 2000, a legal complaint was filed against us, The Detroit Edison
Company and Edison Development Company in the Wayne County, Michigan Circuit
Court alleging that the entities misappropriated business and technical trade
secrets, ideas, know-how and strategies relating to fuel cell systems and
breached certain contractual obligations owed to DCT, Inc. The allegations
against us with respect to breach of contractual obligations were subsequently
dismissed. We believe that the remaining allegations against us in the complaint
are without merit and are vigorously contesting the litigation. We do not
believe that the outcome of these actions will have a material adverse effect
upon our financial position, results of operations or liquidity; however,
litigation is inherently uncertain and there can be no assurances as to the
ultimate outcome or effect of this action.
In September, 2000, a shareholder class action complaint was filed in the
federal district court for the Eastern District of New York alleging that we and
various of our officers and directors violated certain federal securities laws
by failing to disclose certain information concerning our products and future
prospects. The action was brought on behalf of a class of purchasers of our
stock who purchased the stock between February 14, 2000 and August 2, 2000.
Subsequently, 14 additional complaints with similar allegations and class
periods were filed. By order dated October 30, 2000, the court consolidated the
complaints into one action, entitled Plug Power Inc. Securities Litigation, CV-
00-5553(ERK)(RML). By order dated January 25, 2001, the court appointed lead
plaintiffs and lead plaintiffs' counsel. The plaintiffs then served a
consolidated amended complaint, which extends the class period to begin on
October 29, 1999 and alleges claims under the Securities Act of 1933 and the
Exchange Act of 1934, and Rule 10b-5 promulgated under the Exchange Act of 1934.
Subsequently, plaintiffs withdrew their claims under the Securities Act of 1933.
Plaintiffs allege that the defendants made misleading statements and omissions
regarding the state of development of our technology in a registration statement
issued in connection with our initial public offering and in subsequent press
releases. Our motion to dismiss these claims is pending before the court. We
believe that the allegations in the consolidated amended complaint are without
merit and intend to vigorously defend against the claims. We do not believe that
the outcome of these actions will have a material adverse effect upon our
financial position, results of operations or liquidity. However, litigation is
inherently uncertain and there can be no assurances as to the ultimate outcome
or effect of these actions. If the plaintiffs were to prevail, such an outcome
would have a material adverse effect on our financial condition, results of
operations and liquidity.
ITEM 42 - SUBMISSIONCHANGES IN SECURITIES AND USE OF MATTERS TO A VOTE OF SECURITY HOLDERSPROCEEDS
- ------------------------------------------------------------
At--------------------------------------------------
Plug Power has issued securities that were not registered under the Company's Annual MeetingSecurities
Act of Shareholders ("Annual Meeting"1933, as amended (the "Securities Act") held on May
16, 2001, the Company's shareholders approved the following:
(1) To electin the following directors as Class II Directors,transactions.
The shares of common stock issued in each of the transactions were offered and
sold in reliance upon Section 4(2) of the Securities Act relative to serve untilsales by an
issuer not involving a public offering.
On June 9, 2001, in connection with a joint development agreement, we issued and
sold 96,336 shares of our common stock to Engelhard Corporation, for an
aggregate purchase price of $3.0 million. As part of the Company's 2004 annual meeting of stockholders and until his successor
is duly elected and qualified:
Against/ Broker
Nominee For Withheld Abstain Non-Votes
------- ----------------------------------------------------------------
George C. McNamee 43,781,423 48,893 -- --
Douglas T. Hickey 43,781,261 49,055 -- --
(2) To approve an amendmenttransaction, Plug
Power contributed $3.0 million to the
1999 Stock Option and Incentive
16fund Engelhard's development efforts related
to advanced catalyst.
17
Plan to increase the number of
shares authorized to be issued: 42,869,545 853,834 106,937 --
ITEM 6 - EXHIBITS AND REPORTS ON FORM 8-K
- -----------------------------------------
A) Exhibits.
Certain exhibits indicated below are incorporated by reference to documents of
Plug Power on file with the Commission. Exhibits nos. 10.25, 10.28, 10.29,
10.30, 10.31, 10.32, 10.33, 10.34, 10.41, 10.38, 10.42 and 10.43 represent the
management contracts or compensation plans filed pursuant to Item 14(c) of the
Form 10-K.
Exhibit No. and DescriptionEXHIBIT NO. AND DESCRIPTION
2.1 Agreement and Plan of Merger by and between Plug Power and Plug Power,
LLC, a Delaware limited liability company, dated as of October 7, 1999. (1)
3.1 Amended and Restated Certificate of Incorporation of Plug Power. (2)
3.2 Amended and Restated By-laws of Plug Power. (2)
3.3 Certificate of Amendment to Amended and Restated Certificate of
Incorporation of Plug Power.Power (3)
4.1 Specimen certificate for shares of common stock, $.01 par value, of
Plug Power. (1)
10.1 Amended and Restated Limited Liability Company Agreement of GE Fuel
Cell Systems, LLC, dated February 3, 1999, between GE On-Site Power, Inc.
and Plug Power, LLC. (1)
10.2 Contribution Agreement, dated as of February 3, 1999, by and between
GE On-Site Power, Inc. and Plug Power, LLC. (1)
10.3 Trademark and Trade Name Agreement, dated as of February 2, 1999,
between General Electric Company and GE Fuel Cell Systems, LLC. (1)
10.4 Trademark Agreement, dated as of February 2, 1999, between Plug Power
LLC and GE Fuel Cell Systems, LLC. (1)
10.5 Distributor Agreement, dated as of February 2, 1999, between GE Fuel
Cell Systems, LLC and Plug Power, LLC. (1)
10.6 Side letter agreement, dated February 3, 1999, between General
Electric Company and Plug Power LLC. (1)
10.7 Mandatory Capital Contribution Agreement, dated as of January 26,
1999, between Edison Development Corporation, Mechanical Technology
Incorporated and Plug Power, LLC and amendments thereto, dated August 25,
1999 and August 26, 1999. (1)
10.8 LLC Interest Purchase Agreement, dated as of February 16, 1999,
between Plug Power, LLC and Michael J. Cudahy. (1)
10.9 Warrant Agreement, dated as of February 16, 1999, between Plug Power,
LLC and Michael J. Cudahy and amendment thereto, dated July 26, 1999. (1)
1718
10.10 LLC Interest Purchase Agreement, dated as of February 16, 1999,
between Plug Power, LLC and Kevin Lindsey. (1)
10.11 LLC Interest Purchase Agreement, dated as of April 1, 1999, between
Plug Power, LLC and Antaeus Enterprises, Inc. (1)
10.12 LLC Interest Purchase Agreement, dated as of April 9, 1999, between
Plug Power, LLC and Southern California Gas Company. (1)
10.13 Warrant Agreement, dated as of April 9, 1999, between Plug Power, LLC
and Southern California Gas Company and amendment thereto, dated August 26,
1999. (1)
10.14 Agreement, dated as of June 26, 1997, between the New York State
Energy Research and Development Authority and Plug Power LLC, and
amendments thereto dated as of December 17, 1997 and March 30, 1999. (1)
10.15 Agreement, dated as of January 25, 1999, between the New York State
Energy Research and Development Authority and Plug Power LLC. (1)
10.16 Agreement, dated as of September 30, 1997, between Plug Power LLC and
the U.S. Department of Energy. (1)
10.17 Cooperative Agreement, dated as of September 30, 1998, between the
National Institute of Standards and Technology and Plug Power, LLC, and
amendment thereto dated May 10, 1999. (1)
10.18 Joint venture agreement, dated as of June 14, 1999 between Plug
Power, LLC, Polyfuel, Inc., and SRI International. (1)
10.19 Cooperative Research and Development Agreement, dated as of February
12, 1999, between Plug Power, LLC and U.S. Army Benet Laboratories. (1)
10.20 Nonexclusive License Agreement, dated as of April 30, 1993, between
Mechanical Technology Incorporated and the Regents of the University of
California. (1)
10.21 Development Collaboration Agreement, dated as of July 30, 1999, by
and between Joh. Vaillant GMBH. U. CO. and Plug Power, LLC. (1)
10.22 Agreement of Sale, dated as of June 23, 1999, between Mechanical
Technology, Incorporated and Plug Power LLC. (1)
10.23 Assignment and Assumption Agreement, dated as of July 1, 1999,
between the Town of Colonie Industrial Development Agency, Mechanical
Technology, Incorporated, Plug Power, LLC, KeyBank, N.A., and First Albany
Corporation. (1)
10.24 Replacement Reimbursement Agreement, dated as of July 1, 1999,
between Plug Power, LLC and KeyBank, N.A. (1)
10.25 1997 Membership Option Plan and amendment thereto dated September 27,
1999. (1)
10.26 Trust Indenture, dated as of December 1, 1998, between the Town of
Colonie Industrial Development Agency and Manufacturers and Traders Trust
Company, as trustee. (1)
1819
10.27 Distribution Agreement, dated as of June 27, 1997, between Plug
Power, LLC and Edison Development Corporation and amendment thereto dated
September 27, 1999. (1)
10.28 Agreement, dated as of June 27, 1999, between Plug Power, LLC and
Gary Mittleman. (1)
10.29 Agreement, dated as of June 8, 1999, between Plug Power, LLC and
Louis R. Tomson. (1)
10.30 Agreement, dated as of August 6, 1999, between Plug Power, LLC and
Gregory A. Silvestri. (1)
10.31 Agreement, dated as of August 12, 1999, between Plug Power, LLC and
William H. Largent. (1)
10.32 Agreement, dated as of August 20, 1999, between Plug Power, LLC and
Dr. Manmohan Dhar. (1)
10.33 1999 Stock Option and Incentive Plan. (1)
10.34 Employee Stock Purchase Plan. (1)
10.35 Agreement, dated as of August 27, 1999, by Plug Power, LLC, Plug
Power Inc., GE On-Site Power, Inc., GE Power Systems Business of General
Electric Company, and GE Fuel Cell Systems, L.L.C. (1)
10.36 Registration Rights Agreement to be entered into by the Registrant
and the stockholders of the Registrant. (2)
10.37 Registration Rights Agreement to be entered into by Plug Power,
L.L.C. and GE On-Site Power, Inc. (2)
10.38 Agreement dated September 11, 2000, between Plug Power Inc. and Gary
Mittleman. (3)
10.39 Amendment No. 1 to Distributor Agreement dated February 2, 1999,
between GE Fuel Cell Systems L.L.C. and Plug Power Inc. (3)
10.40 Amendment to Distributor Agreement dated February 2, 1999, made as of
July 31, 2000, between GE Fuel Cell Systems L.L.C. and Plug Power Inc. (3)
10.41 Agreement, dated as of December 15, 2000, between Plug Power Inc. and
Roger Saillant. (3)
10.42 Agreement dated February 13, 2001, between Plug Power Inc. and
William H. Largent. (3)
10.43 Amendment dated September 19, 2000 to agreement, dated as of August
6, 1999, between Plug Power Inc. and Gregory A. Silvestri. (3)
10.44 Joint Development Agreement, dated as of June 2, 2000, between Plug
Power Inc. and Engelhard Corporation. (3)
1920
(1) Incorporated by reference to the Company's Registration Statement on
Form S-1 (File Number 333-86089).
(2) Incorporated by reference to the Company's Form 10-K for the period
ending December 31, 1999.
(3) Incorporated by reference to the Company's Form 10-K for the period
ending December 31, 2000.
B) Reports on Form 8-K.
On June 14, 2001, we filed a Form 8-K with the Securities and Exchange
Commission announcing that on June 8, 2001, Plug Power Inc. filed a
Registration Statement on Form S-3 (Registration Statement No. 333-
62686) in which we, among other things, updated the risk factors
disclosed in our Form 10-K filed with the SEC on March 30, 2001. Such
risk factors as updated are set forth below. Investors should carefully
consider the risk factors set forth below prior to investing in our
common stock.
On June 27, 2001, we filed a Form 8-K with the Securities and Exchange
Commission announcing the issuance of a press release announcing the
Company had entered into a non-binding Memorandum of Understanding (MOU)
with GE Fuel Cell Systems, L.L.C. (GEFCS), GE MicroGen, Inc. (GEMG), and
GEPS Equities Inc., and a separate non-binding MOU with DTE Energy
Technologies, Inc., a subsidiary of DTE Energy (NYSE: DTE). These MOU's
define expanded distribution agreements for Plug Power's Proton Exchange
Membrane (PEM) fuel cell systems for stationary power applications and
confirm new cash equity investments in Plug Power.
Signature
- ----------None.
SIGNATURE
__________
Pursuant to requirements of the Securities Exchange Act of 1934, the Registrant
has duly caused this report to be signed on its behalf by the undersigned
thereunto duly authorized.
PLUG POWER INC.
Date: August 13,DATE: NOVEMBER 14, 2001 by: /S//s/ Roger Saillant
----------------------
Roger Saillant
Chief Executive Officer-----------------------
ROGER SAILLANT
CHIEF EXECUTIVE OFFICER
by: /S//s/ W. Mark Schmitz
--------------------
Mark Schmitz
Chief Financial Officer
20-----------------------
W. MARK SCHMITZ
CHIEF FINANCIAL OFFICER
21