UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q

(Mark One)

☒

QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

FOR THE QUARTERLY PERIOD ENDED ~~September 30, 2020~~March 31, 2021

☐

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: 1-34392

PLUG POWER INC.

(Exact name of registrant as specified in its charter)



Delaware		22-3672377
(State or Other Jurisdiction of		(I.R.S. Employer
Incorporation or Organization)		Identification Number)

968 ALBANY SHAKER ROAD, LATHAM, NEW YORK 12110

(Address of Principal Executive Offices, including Zip Code)

(518) 782-7700

(Registrant’s telephone number, including area code)

Securities registered pursuant to Section 12(b) of the Act:




Title of ~~each class~~Each Class	Trading Symbol(s)	Trading Symbol(s)	Name of ~~each exchange~~Each Exchange on ~~which registered~~ Which Registered
Common Stock, par value ~~$0.01~~ $.01 per share	~~PLUG~~	PLUG	The ~~Nasdaq~~NASDAQ Capital Market

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 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 ☒☐ No ☐☒

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes ☒☐ No ☐☒

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non- accelerated filer, smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.

Large accelerated filer ☐☒

Accelerated filer ☒☐

Non-accelerated filer ☐

Smaller reporting company ☐

Emerging growth company ☐

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐

Indicate by check mark whether the registrant is a shell company (as defined in Rule ~~12b 2~~12b-2 of the Exchange Act). Yes ☐ No ☒

The number of shares of common stock, par value of $0.01 per share, outstanding as of ~~November 6, 2020~~June 7, 2021 was ~~415,598,288.~~568,317,504.

Table of Contents

INDEX to FORM 10-Q

	Page

PART I. FINANCIAL INFORMATION

Item 1 – Interim Condensed Consolidated Financial Statements (Unaudited)	3

Condensed Consolidated Balance Sheets	3

Condensed Consolidated Statements of Operations	4

Condensed Consolidated Statements of Comprehensive Loss	5

Condensed Consolidated Statements of Stockholders’ ~~(Deficit)~~ Equity	6

Condensed Consolidated Statements of Cash Flows	7

Notes to Interim Condensed Consolidated Financial Statements	8

Item 2 – Management’s Discussion and Analysis of Financial Condition and Results of Operations	4234

Item 3 – Quantitative and Qualitative Disclosures About Market Risk	6755

Item 4 – Controls and Procedures	6855

PART II. OTHER INFORMATION

Item 1 – Legal Proceedings	6856

Item 1A – Risk Factors	6958

Item 2 – Unregistered Sales of Equity Securities and Use of Proceeds	6958

Item 3 – Defaults Upon Senior Securities	6959

Item 4 – Mine Safety Disclosures	6959

Item 5 – Other Information	6959

Item 6 – Exhibits	6960

Signatures	7161

Table of Contents

PART 1. FINANCIAL INFORMATION

Item 1 — Interim Financial Statements (Unaudited)

Plug Power Inc. and Subsidiaries

Condensed Consolidated Balance Sheets

(In thousands, except share and per share amounts)

(Unaudited)

September 30,

December 31,

2020

2019
Assets

Current assets:

Cash and cash equivalents

$
448,140

$
139,496
Restricted cash

55,704

54,813
Accounts receivable

113,133

25,448
Inventory

134,306

72,391
Prepaid expenses and other current assets

26,731

21,192
Total current assets

778,014

313,340

Restricted cash

227,528

175,191
Property, plant, and equipment, net of accumulated depreciation of $20,661 and $17,417, respectively

64,820

14,959
Leased property, net

309,475

244,740
Goodwill

71,962

8,842
Intangible assets, net

39,169

5,539
Other assets

9,661

8,573
Total assets

$
1,500,629

$
771,184

Liabilities, Redeemable Preferred Stock, and Stockholders’ Equity

Current liabilities:

Accounts payable

$
58,793

$
40,376
Accrued expenses

32,031

14,213
Deferred revenue

17,226

11,691
Finance obligations

63,692

49,507
Current portion of long-term debt

74,829

26,461
Other current liabilities

17,280

8,543
Total current liabilities

263,851

150,791
Deferred revenue

29,648

23,369
Finance obligations

337,150

265,228
Convertible senior notes, net

105,088

110,246
Long-term debt

120,380

85,708
Other liabilities

27,068

13
Total liabilities

883,185

635,355

Redeemable preferred stock:

Series C redeemable convertible preferred stock, $0.01 par value per share (aggregate involuntary liquidation preference $16,664); 10,431 shares authorized; Issued and outstanding: 0 at September 30, 2020 and 2,620 at December 31, 2019

—

709
Series E redeemable preferred stock, $0.01 par value per share; Shares authorized: 35,000 at both September 30, 2020 and December 31, 2019; Issued and outstanding: 0 at September 30, 2020 and 500 at December 31, 2019

—

441
Stockholders’ equity:

Common stock, $0.01 par value per share; 750,000,000 shares authorized; Issued (including shares in treasury): 406,123,816 at September 30, 2020 and 318,637,560 at December 31, 2019

4,061

3,186
Additional paid-in capital

2,083,199

1,507,116
Accumulated other comprehensive income

1,958

1,400
Accumulated deficit

(1,431,340)

(1,345,807)
Less common stock in treasury: 15,926,068 at September 30, 2020 and 15,259,045 at December 31, 2019

(40,434)

(31,216)
Total stockholders’ equity

617,444

134,679
Total liabilities, redeemable preferred stock, and stockholders’ equity

$
1,500,629

$
771,184


	March 31,		December 31,
	2021		2020
Assets
Current assets:
Cash and cash equivalents	$	4,349,066	$	1,312,404
Restricted cash		62,397		64,041
Available-for-sale securities, at fair value (amortized cost $405,168 and allowance for credit losses of $0 at March 31, 2021)		405,260		—
Accounts receivable		42,632		43,041
Inventory		187,732		139,386
Prepaid expenses and other current assets		49,097		44,324
Total current assets		5,096,184		1,603,196

Restricted cash		281,665		257,839
Property, plant, and equipment, net		82,823		74,549
Right of use assets related to finance leases, net		11,270		5,724
Right of use assets related to operating leases, net		124,503		117,016
Equipment related to power purchase agreements and fuel delivered to customers, net		74,214		75,807
Goodwill		71,964		72,387
Intangible assets, net		38,393		39,251
Other assets		5,225		5,513
Total assets	$	5,786,241	$	2,251,282

Liabilities and Stockholders’ Equity
Current liabilities:
Accounts payable	$	47,168	$	50,198
Accrued expenses		28,595		46,083
Deferred revenue		16,948		23,275
Operating lease liabilities		18,778		14,314
Finance lease liabilities		1,794		903
Finance obligations		32,144		32,717
Current portion of long-term debt		21,389		25,389
Other current liabilities		24,997		29,487
Total current liabilities		191,813		222,366
Deferred revenue		40,611		32,944
Operating lease liabilities		103,533		99,624
Finance lease liabilities		8,507		4,493
Finance obligations		150,647		148,836
Convertible senior notes, net		191,768		85,640
Long-term debt		139,870		150,013
Other liabilities		40,429		40,447
Total liabilities		867,178		784,363

Stockholders’ equity:
Common stock, $0.01 par value per share; 750,000,000 shares authorized; Issued (including shares in treasury): 582,312,020 at March 31, 2021 and 473,977,469 at December 31, 2020		5,823		4,740
Additional paid-in capital		6,949,938		3,446,650
Accumulated other comprehensive income		1,420		2,451
Accumulated deficit		(1,997,684)		(1,946,488)
Less common stock in treasury: 15,926,068 at both March 31, 2021 and December 31, 2020		(40,434)		(40,434)
Total stockholders’ equity		4,919,063		1,466,919
Total liabilities and stockholders’ equity	$	5,786,241	$	2,251,282

The accompanying notes are an integral part of these unaudited interim condensed consolidated financial statements

Table of Contents

Plug Power Inc. and Subsidiaries

Condensed Consolidated Statements of Operations

(In thousands, except share and per share amounts)

(Unaudited)


	Three Months Ended				Nine Months Ended				Three Months Ended
	September 30,				September 30,				March 31,
	2020		2019		2020		2019		2021		2020
Net revenue:
Sales of fuel cell systems and related infrastructure	$	83,528	$	38,877	$	151,661	$	80,117	$	46,772	$	20,468
Services performed on fuel cell systems and related infrastructure		6,829		6,205		19,586		17,889		6,045		6,521
Power Purchase Agreements		6,704		6,595		19,854		19,114		7,826		6,421
Fuel delivered to customers		9,831		7,649		24,536		21,320		11,127		7,333
Other		97		135		235		135		188		76
Net revenue		106,989		59,461		215,872		138,575		71,958		40,819
Cost of revenue:
Sales of fuel cell systems and related infrastructure		68,509		24,990		115,929		50,440		28,974		13,974
Services performed on fuel cell systems and related infrastructure		7,074		6,461		21,746		18,802		13,086		10,347
Provision for loss contracts related to service		4,306		—		4,306		—		1,485		95
Power Purchase Agreements		14,087		10,353		42,034		28,064		18,343		14,771
Fuel delivered to customers		14,172		9,160		32,267		25,935		22,143		11,254
Other		131		150		275		150		98		81
Total cost of revenue		108,279		51,114		216,557		123,391		84,129		50,522

Gross (loss) profit		(1,290)		8,347		(685)		15,184
Gross loss										(12,171)		(9,703)

Operating expenses:
Research and development		11,964		8,028		32,133		24,334		9,742		4,774
Selling, general and administrative		14,277		10,400		46,948		33,351		25,579		11,109
Change in fair value of contingent consideration										790		—
Total operating expenses		26,241		18,428		79,081		57,685		36,111		15,883

Operating loss		(27,531)		(10,081)		(79,766)		(42,501)		(48,282)		(25,586)

Interest and other expense, net		(17,241)		(7,972)		(42,022)		(24,178)
Change in fair value of common stock warrant liability		—		427		—		7
Change in fair value of contingent consideration		(1,130)		—		(1,130)		—
Gain (loss) on extinguishment of debt		—		(518)		13,222		(518)
Interest										(12,266)		(11,789)
Other expense, net										(198)		(57)

Loss before income taxes	$	(45,902)	$	(18,144)	$	(109,696)	$	(67,190)	$	(60,746)	$	(37,432)

Income tax benefit		6,523		—		24,182		—		—		—

Net loss attributable to the Company	$	(39,379)	$	(18,144)	$	(85,514)	$	(67,190)	$	(60,746)	$	(37,432)

Preferred stock dividends declared and accretion of discount		—		(13)		(19)		(39)
Preferred stock dividends declared										—		(13)

Net loss attributable to common stockholders	$	(39,379)	$	(18,157)	$	(85,533)	$	(67,229)	$	(60,746)	$	(37,445)

Net loss per share:
Basic and diluted	$	(0.11)	$	(0.08)	$	(0.26)	$	(0.29)	$	(0.12)	$	(0.12)

Weighted average number of common stock outstanding		371,010,544		236,759,521		330,949,265		229,519,323		513,458,287		305,192,201

The accompanying notes are an integral part of these unaudited interim condensed consolidated financial statements

Table of Contents

Plug Power Inc. and Subsidiaries

Condensed Consolidated Statements of Comprehensive Loss

(In thousands)

(Unaudited)


	Three months ended				Nine months ended				Three months ended
	September 30,				September 30,				March 31,
	2020		2019		2020		2019		2021		2020

Net loss attributable to the Company	$	(39,379)	$	(18,144)	$	(85,514)	$	(67,190)	$	(60,746)	$	(37,432)
Other comprehensive gain (loss) - foreign currency translation adjustment		687		(531)		558		(655)
Comprehensive loss	$	(38,692)	$	(18,675)	$	(84,956)	$	(67,845)
Other comprehensive gain (loss):
Foreign currency translation loss										(1,123)		(236)
Change in net unrealized gain on available-for-sale securities										92		—
Comprehensive loss attributable to the Company									$	(61,777)	$	(37,668)

Preferred stock dividends declared										—		(13)
Comprehensive loss attributable to common stockholders									$	(61,777)	$	(37,681)

The accompanying notes are an integral part of these unaudited interim condensed consolidated financial statements

Table of Contents

Plug Power Inc. and Subsidiaries

Condensed Consolidated Statements of Stockholders’ ~~(Deficit)~~ Equity

(In thousands, except share amounts)

(Unaudited)

Accumulated










Additional

Other

Total

Common Stock

Paid-in

Comprehensive

Treasury Stock

Accumulated

Stockholders’


Shares

Amount

Capital

Income

Shares

Amount

Deficit

(Deficit) Equity
December 31, 2019

318,637,560

$
3,186

$
1,507,116

$
1,400

15,259,045

$
(31,216)

$
(1,345,807)

$
134,679
Net loss attributable to the Company

—

—

—

—

—

—

(85,514)

(85,514)
Other comprehensive loss

—

—

—

558

—

—

—

558
Stock-based compensation

402,003

4

9,254

—

—

—

—

9,258
Stock dividend

5,156

—

19

—

—

—

(19)

—
Public offerings, common stock, net

35,276,250

353

344,045

—

—

—

—

344,398
Stock option exercises

13,736,265

137

32,416

—

667,023

(9,218)

—

23,335
Equity component of 3.75% Convertible Senior Notes issued, net of issuance costs and income tax expense

—

—

108,347

—

—

—

—

108,347
Purchase of capped calls

—

—

(16,253)

—

—

—

—

(16,253)
Termination of capped calls

—

—

24,158

—

—

—

—

24,158
Provision for common stock warrants

—

—

32,529

—

—

—

—

32,529
Accretion of discount, preferred stock

—

—

(29)

—

—

—

—

(29)
Conversion of preferred stock

2,998,526

30

1,148

—

—

—

—

1,178
Conversion of 7.5% Convertible Senior Note

16,000,000

160

42,713

—

—

—

—

42,873
Repurchase of 5.5% Convertible Senior Notes, net of income tax benefit

9,409,591

94

(51,840)

—

—

—

—

(51,746)
Shares issued for acquisitions

9,658,465

97

49,576

—

—

—

—

49,673
September 30, 2020

406,123,816

$
4,061

$
2,083,199

$
1,958

15,926,068

$
(40,434)

$
(1,431,340)

$
617,444

December 31, 2018

234,160,661

$
2,342

$
1,289,714

$
1,584

15,002,663

$
(30,637)

$
(1,260,290)

$
2,713
Net loss attributable to the Company

—

—

—

—

—

—

(67,190)

(67,190)
Other comprehensive loss

—

—

—

(655)

—

—

—

(655)
Stock-based compensation

1,715,454

17

7,910

—

—

—

—

7,927
Stock dividend

15,067

—

39

—

—

—

(39)

—
Issuance of common stock, net

16,333,585

163

37,935

—

—

—

—

38,098
Stock option exercises

258,409

3

460

—

256,382

(579)

—

(116)
Provision for common stock warrants

—

—

10,244

—

—

—

—

10,244
Accretion of discount, preferred stock

—

—

(772)

—

—

—

—

(772)
Conversion of preferred stock

1,499,402

15

1,868

—

—

—

—

1,883
September 30, 2019

253,982,578

$
2,540

$
1,347,398

$
929

15,259,045

$
(31,216)

$
(1,327,519)

$
(7,868)


						Accumulated
				Additional		Other							Total
	Common Stock			Paid-in		Comprehensive		Treasury Stock			Accumulated		Stockholders’
	Shares	Amount		Capital		Income		Shares	Amount		Deficit		Equity
December 31, 2020	473,977,469	$	4,740	$	3,446,650	$	2,451	15,926,068	$	(40,434)	$	(1,946,488)	$	1,466,919
Net loss attributable to the Company	—		—		—		—	—		—		(60,746)		(60,746)
Cumulative impact of Accounting Standards Update 2020-06 adoption	—		—		(130,249)		—	—		—		9,550		(120,699)
Other comprehensive loss	—		—		—		(1,031)	—		—		—		(1,031)
Stock-based compensation	15,166		—		9,695		—	—		—		—		9,695
Public offerings, common stock, net	32,200,000		322		2,022,866		—	—		—		—		2,023,188
Private offerings, common stock, net	54,966,188		549		1,564,088		—	—		—		—		1,564,637
Stock option exercises	1,758,375		18		4,691		—	—		—		—		4,709
Exercise of warrants	16,308,978		163		15,282		—	—		—		—		15,445
Provision for common stock warrants	—		—		1,601		—	—		—		—		1,601
Conversion of 3.75% Convertible Senior Notes	3,016,036		30		15,155		—	—		—		—		15,185
Conversion of 5.5% Convertible Senior Notes	69,808		1		159		—	—		—		—		160
March 31, 2021	582,312,020	$	5,823	$	6,949,938	$	1,420	15,926,068	$	(40,434)	$	(1,997,684)	$	4,919,063

December 31, 2019	318,637,560	$	3,186	$	1,506,953	$	1,288	15,259,045	$	(31,216)	$	(1,350,307)	$	129,904
Net loss attributable to the Company	—		—		—		—	—		—		(37,432)		(37,432)
Other comprehensive loss	—		—		—		(236)	—		—		—		(236)
Stock-based compensation	156,416		2		3,051		—	1,962		(8)		—		3,045
Stock dividend	3,857		—		13		—	—		—		(13)		—
Stock option exercises	3,206,185		32		6,072		—	—		—		—		6,104
Provision for common stock warrants	—		—		2,566		—	—		—		—		2,566
Accretion of discount, preferred stock	—		—		(28)		—	—		—		—		(28)
Conversion of preferred stock	216,451		2		467		—	—		—		—		469
March 31, 2020	322,220,469	$	3,222	$	1,519,094	$	1,052	15,261,007	$	(31,224)	$	(1,387,752)	$	104,392

The accompanying notes are an integral part of these unaudited interim condensed consolidated financial statements

Table of Contents

Plug Power Inc. and Subsidiaries

Condensed Consolidated Statements of Cash Flows

(In thousands)

(Unaudited)


	Nine months ended				Three months ended
	September 30,				March 31,
	2020		2019		2021		2020
Operating Activities
Net loss attributable to the Company	$	(85,514)	$	(67,190)	$	(60,746)	$	(37,432)
Adjustments to reconcile net loss to net cash used in operating activities:
Depreciation of property, plant and equipment, and leased property		9,381		8,944
Depreciation of long-lived assets						5,514		2,991
Amortization of intangible assets		835		518		364		175
Stock-based compensation		9,258		7,927		9,695		3,045
Gain on extinguishment of debt		(13,222)		—
Provision for bad debts and other assets		—		1,253
Amortization of debt issuance costs and discount on convertible senior notes		12,183		6,257		1,092		2,716
Provision for common stock warrants		25,198		3,706		1,705		2,566
Loss on disposal of leased assets		—		212
Benefit on service contracts						(361)		(128)
Fair value adjustment to contingent consideration		1,130		—		(790)		—
Provision for loss contracts related to service		4,306		—
Change in fair value of common stock warrant liability		—		(7)
Income tax benefit		(24,182)		—
Changes in operating assets and liabilities that provide (use) cash:
Accounts receivable		(86,004)		11,702		109		1,034
Inventory		(57,718)		(32,691)		(46,791)		(20,581)
Prepaid expenses, and other assets		(4,956)		427		(4,641)		(10,794)
Accounts payable, accrued expenses, and other liabilities		35,748		13,293		(23,516)		(3,374)
Deferred revenue		16,647		(6,152)		1,267		(620)
Net cash used in operating activities		(156,910)		(51,801)		(117,099)		(60,402)

Investing Activities
Purchases of property, plant and equipment		(11,265)		(4,635)		(9,879)		(2,507)
Purchase of intangible assets		(1,638)		(1,860)
Purchases for construction of leased property		(13,699)		(2,851)
Net cash paid for acquisitions		(45,113)		—
Proceeds from sale of leased assets		—		375
Purchases of equipment related to Power Purchase Agreements and equipment related to fuel delivered to customers						(3,332)		(3,848)
Purchase of available-for-sale securities						(405,168)		—
Net cash used in investing activities		(71,715)		(8,971)		(418,379)		(6,355)

Financing Activities
Proceeds from issuance of preferred stock, net of transaction costs		—		(37)
Proceeds from public offerings, net of transaction costs		344,398		38,098
Proceeds from exercise of warrants, net of transaction costs						15,445		—
Proceeds from public and private offerings, net of transaction costs						3,587,825		—
Proceeds from exercise of stock options		23,335		(116)		4,709		6,104
Payments for redemption of preferred stock		—		(4,040)
Proceeds from issuance of convertible senior notes, net		205,098		39,052
Repurchase of convertible senior notes		(90,238)		—
Purchase of capped calls		(16,253)		—
Proceeds from termination of capped calls		24,158		—
Proceeds from borrowing of long-term debt						—		(5,315)
Principal payments on long-term debt		(27,845)		(21,186)		(14,461)		—
Proceeds from long-term debt, net		99,000		99,496
Repayments of finance obligations		(18,634)		(59,461)		(9,806)		(5,343)
Proceeds from finance obligations		47,568		57,249		10,661		9,024
Net cash provided by financing activities		590,587		149,055		3,594,373		4,470
Effect of exchange rate changes on cash		(90)		(119)		(51)		1
Increase in cash, cash equivalents and restricted cash		361,872		88,164
Increase/(decrease) in cash, cash equivalents and restricted cash						3,058,844		(62,286)
Cash, cash equivalents, and restricted cash beginning of period		369,500		110,153		1,634,284		369,500
Cash, cash equivalents, and restricted cash end of period	$	731,372	$	198,317	$	4,693,128	$	307,214

Supplemental disclosure of cash flow information
Cash paid for interest	$	16,975	$	8,673	$	2,608	$	5,155

Summary of non-cash investing and financing activity
Recognition of right of use asset	$	56,377	$	78,626
Summary of non-cash activity
Recognition of right of use asset - finance leases					$	5,292	$	—
Recognition of right of use asset - operating leases						12,720		340
Conversion of preferred stock to common stock		—		1,883		—		441
Conversion of convertible notes to common stock		42,873		—

Conversion of convertible senior notes to common stock						15,345		—

The accompanying notes are an integral part of these unaudited interim condensed consolidated financial statements

Table of Contents

~~Notes to Interim Condensed Consolidated Financial Statements~~1.

~~(unaudited)~~Nature of Operations

~~Unless the context indicates, the terms “Company,” “Plug Power,” “we,” “our” or “us” as used herein refers to~~ Plug Power ~~Inc. and its subsidiaries.~~

1.	~~Nature of Operations~~

~~Description of Business~~

~~As a leading provider of comprehensive hydrogen fuel cell turnkey solutions, Plug Power Inc., or~~is facilitating the ~~Company, is seeking~~paradigm shift to ~~build a green hydrogen economy. The Company is focused on~~an increasingly electrified world by innovating cutting-edge hydrogen and fuel cell ~~systems that are used~~solutions. In our core business, we provide and continue to power electric motors primarily in the electric mobility and stationary power markets, given the ongoing paradigm shift in the power, energy, and transportation industries to address climate change, energy security, and meet sustainability goals. Plug Power created the firstdevelop commercially viable ~~market for~~ hydrogen and fuel cell orproduct solutions to replace lead-acid batteries in electric material handling vehicles and industrial trucks for some of the ~~HFC technology. As a result, the Company has deployed over 38,000 fuel cell systems,~~world’s largest retail-distribution and ~~has become the largest buyer of liquid hydrogen, having built and operated a hydrogen network across North America.~~

manufacturing businesses. We are ~~focused~~focusing our efforts on ~~proton exchange membrane, or PEM, fuel cell~~industrial mobility applications, including electric forklifts and ~~fuel processing technologies, fuel cell/battery hybrid technologies,~~electric industrial vehicles, at multi-shift high volume manufacturing and ~~associated hydrogen storage~~high throughput distribution sites where we believe our products and ~~dispensing infrastructure from which multiple products are available. A fuel cell is an electrochemical device that combines hydrogen~~services provide a unique combination of productivity, flexibility, and oxygen to produce electricity and heat without combustion. Hydrogen is derived from multiple sources. The majority of liquid hydrogen in the United States is produced using the steam methane reforming process and utilizing by-product hydrogen from chlor alkali production. By-product hydrogen from a chlor alkali plant is considered to be low carbon hydrogen and in some cases, considered green hydrogen, depending on the source of electricity and geographic location. We source a significant amount of liquid hydrogen based on the chlor alkali process today.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.

We provide and continue to develop commercially-viable hydrogen and fuel cell solutions for 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. In June of 2020, Plug Power completed the acquisitions of United Hydrogen Group, Inc. and Giner ELX, Inc. in line with the Company’s hydrogen vertical integration strategy, with plans to have more than 50% of the hydrogen used by the Company to be green by 2024. These acquisitions further enhance Plug Power’s position in the hydrogen industry with capabilities in generation, liquefaction and distribution of hydrogen fuel complementing its industry-leading position in the design, construction, and operation of customer-facing hydrogen fueling stations. These acquisitions establish a pathway for Plug Power to transition from low-carbon to zero-carbon hydrogen solutions.

Our current products and services include:

GenDrive: GenDrive is our hydrogen fueled ~~PEM~~Proton Exchange Membrane (“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; ~~and~~

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 Power ~~MEA (membrane~~membrane electrode ~~assembly)~~assembly (“MEA”), a critical component of the fuel cell stack used in zero-emission fuel cell electric vehicle ~~engines, in which Plug Power~~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 ~~the largest producer in North America.~~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 original equipment manufacturers (“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~~commercially viable products in Latham, ~~NY,~~New York, Rochester, NYNew York and Spokane, WAWashington and support liquid hydrogen generation and logistics in Charleston, ~~TN.~~

~~Liquidity~~

Our cash requirements relate primarily to working capital needed to operate and grow our business, including funding operating expenses, growth in inventory to support both shipments of new units and servicing the installed base, growth in equipment leased to customers under long-term arrangements, funding the growth in our GenKey “turn-key” solution, which includes the installation of our customers’ hydrogen infrastructure as well as production and delivery of the hydrogen fuel, continued development and expansion of our products, payment of lease/financing obligations under sale/leaseback financings, and the repayment or refinancing of our long-term debt. Our ability to achieve profitability and meet future liquidity needs and capital requirements will depend upon numerous factors, including the timing and quantity of product orders and shipments; attaining and expanding positive gross margins across all product lines; the timing and amount of our operating expenses; the timing and costs of working capital needs; the timing and costs of developing marketing and distribution channels; the ability of our customers to obtain financing to support commercial transactions; our ability to obtain financing arrangements to support the sale or leasing of our products and services to customers and to repay or refinance our long-term debt, and the terms of such agreements that may require us to pledge or restrict substantial amounts of our cash to support these financing arrangements; the timing and costs of developing marketing and distribution channels; the timing and costs of product service requirements; the timing and costs of hiring and training product staff; the timing and costs of product development and introductions; the extent of our ongoing and new research and development programs; and changes in our strategy or our planned activities. If we are unable to fund our operations with positive cash flows and cannot obtain external financing, we may not be able to sustain future operations. As a result, we may be required to delay, reduce and/or cease our operations and/or seek bankruptcy protection.

We have experienced and continue to experience negative cash flows from operations and net losses. The Company incurred net losses attributable to common stockholders of $85.5 million and $67.2 million for the nine months ended September 30, 2020 and 2019, respectively, and had an accumulated deficit of $1.4 billion at September 30, 2020.

We have historically funded our operations primarily through public and private offerings of equity and debt, as well as short-term borrowings, long-term debt and project financings. The Company believes that its current working capital and cash anticipated to be generated from future operations, as well as borrowings from lending and project financing sources and proceeds from equity and debt offerings, including our at-the-market offering, will provide sufficient liquidity to fund operations for at least one year after the date the financial statements are issued. There is no guarantee that future funding will be available if and when required or at terms acceptable to the Company. This projection is based on our current expectations regarding new project financing and product sales and service, cost structure, cash burn rate and other operating assumptions.

During the nine months ended September 30, 2020, net cash used in operating activities was $156.9 million, consisting primarily of a net loss attributable to the Company of $85.5 million, and net outflows from fluctuations in working capital and other assets and liabilities of $96.3 million. The changes in working capital primarily were related to increases and decreases in various current asset and liability accounts. As of September 30, 2020, we had cash and cash equivalents of $448.1 million and net working capital of $514.2 million. By comparison, at December 31, 2019, we had cash and cash equivalents of $139.5 million and net working capital of $162.5 million.

Net cash used in investing activities for the nine months ended September 30, 2020 totaled $71.7 million and included net cash paid for acquisitions, purchases of intangible assets, purchases of property, plant and equipment, and outflows associated with materials, labor, and overhead necessary to construct new leased property. Cash outflows related to equipment that we lease directly to customers are included in net cash used in investing activities.

Net cash provided by financing activities for the nine months ended September 30, 2020 totaled $590.6 million and primarily resulted from the issuance of shares of common stock and convertible senior notes, and proceeds from borrowing on long-term debt, offset by the repurchase of convertible senior notes and purchase of related capped calls.

~~Public and Private Offerings of Equity and Debt~~

~~Common Stock Issuances~~

In August 2020, the Company issued and sold in a registered direct 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 an At Market Issuance Sales Agreement (ATM), with B. Riley FBR, Inc., as sales agent, or FBR, pursuant to which the Company may offer and sell, from time to time through FBR, 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 ATM.

In December 2019, the Company issued and sold in a registered public offering an aggregate of 46 million shares of its common stock at a purchase price of $2.75 per share for net proceeds of approximately $120.4 million.

Prior to December 31, 2019, the Company entered into a previous ATM with FBR, which was terminated in the fourth quarter of 2019. Under this ATM, for the nine months ended September 30, 2019, the Company issued 6.3 million shares of common stock, resulting in net proceeds of $14.6 million.

In March 2019, the Company issued and sold in a registered direct offering an aggregate of 10 million shares of its common stock at a purchase price of $2.35 per share for net proceeds of approximately $23.5 million.

~~Convertible Senior Notes~~

In May 2020, the Company issued $212.8 million in aggregate principal amount of 3.75% convertible senior notes due 2025, which we refer to herein as the 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 5.5% Convertible Senior Notes due 2023, which we refer to herein as 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 October 2020, $28.0 million of the remaining 5.5% Convertible Senior Notes converted into 12.2 million shares of common stock.~~

In September 2019, the Company issued a $40.0 million in aggregate principal amount of 7.5% convertible senior note due 2023, which we refer to herein as the 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.

~~Operating and Finance Leases~~

as operating leases and therefore the sales of the fuel cell systems and hydrogen infrastructure are recognized as revenue. In connection with certain sale/leaseback transactions, the financial institutions require the Company to maintain cash balances in restricted accounts securing the Company’s finance obligations. Cash received from customers under the PPAs is used to make payments against the Company’s finance obligations. As the Company performs under these agreements, the required restricted cash balances are released, according to a set schedule. The total remaining lease payments to financial institutions under these agreements at September 30, 2020 was $332.8 million, $286.2 million of which were secured with restricted cash, security deposits backing letters of credit, and pledged service escrows.

The Company has varied master lease agreements with Wells Fargo Equipment Finance, Inc., or Wells Fargo, to finance the Company’s commercial transactions with various customers. The Wells Fargo lease agreements were entered into during 2017, 2018, 2019 and 2020. Pursuant to the lease agreements, the Company sells fuel cell systems and hydrogen infrastructure to Wells Fargo and then leases them back and operates them at Walmart sites. The Company has a customer guarantee for a large portion of the transactions entered into in connection with such lease agreements. The Wells Fargo lease agreements required letters of credit totaling approximately $78.8 million for the unguaranteed portion as of September 30, 2020. The total remaining lease liabilities owed to Wells Fargo were $114.3 million at September 30, 2020.

Over recent years, including in 2019, the Company has entered into master lease agreements with multiple institutions such as Key Equipment Finance (KeyBank), SunTrust Equipment Finance & Lease Corp. (now known as Truist Bank), First American Bancorp, Inc. (First American), Crestmark Equipment Finance (Crestmark) and U.S. Bank. During the nine months ended September 30 2020, the Company entered into additional lease agreements with KeyBank, First American, Truist Bank, Crestmark and U.S. Bank. Similar to the Wells Fargo lease agreements, the primary purpose of these agreements is to finance commercial transactions with varied customers. Most of the transactions with these financial institutions required cash collateral for the unguaranteed portions totaling $189.9million as of September 30, 2020. Similar to the Wells Fargo lease agreements, in many cases the Company has a customer guarantee for a large portion of the transactions. The total remaining lease liabilities owed to these financial institutions were $218.5 million at September 30, 2020.

~~Long-Term Debt~~

In March 2019, the Company entered into a loan and security agreement (Loan Agreement) with Generate Lending, LLC (Generate Capital) pursuant to which the Company borrowed $85.0 million (Term Loan Facility). The initial proceeds of the loan were used to pay in full the Company’s long-term debt and accrued interest of $17.6 million under the loan agreement with NY Green Bank, a Division of the New York State Energy Research & Development Authority, and terminate approximately $50.3 million of certain equipment leases with Generate Plug Power SLB II, LLC as well as repurchase the associated leased equipment. In April 2019 and November 2019, the Company borrowed an additional $15.0 million and $20.0 million, respectively, under the Term Loan Facility with Generate Capital at 12% interest to fund working capital for ongoing deployments and other general corporate purposes. On March 31, 2020, the outstanding balance was $107.5 million. The principal and interest payments are paid primarily by restricted cash.

On May 6, 2020, the Company and Generate amended the Loan Agreement to, among other things, (i) provide an incremental term loan facility in the amount of $50.0 million, which has been fully funded, (ii) provide for additional, incremental term loans in an aggregate amount not to exceed $50.0 million, which are available to the Company in Generate Capital’s sole discretion, (iii) reduce the interest rate on all loans to 9.50% from 12.00% per annum, and (iv) extend the maturity date to October 31, 2025 from October 6, 2022. In the third quarter of 2020, the Company borrowed an additional $50.0 million under the amended Loan Agreement. See Note 8, Long-Term Debt, for additional information. Based on the amortization schedule as September 30, 2020, the outstanding balance of $185.0 million under the Term Loan Facility must be fully paid by October 31, 2025.Tennessee.

Table of Contents

2. Summary of Significant Accounting Policies

Restatement

As previously disclosed in the Explanatory Note to the Company’s Annual Report on Form 10-K for the fiscal year ended December 31, 2020 (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 quarterly consolidated financial statements as of and for each of the quarterly periods ended March 31, 2020 and 2019, 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 this quarterly report on Form 10-Q, we will include in our quarterly reports for fiscal 2021 restated results for the corresponding interim periods of fiscal 2020.

Principles of Consolidation

The unaudited interim condensed consolidated financial statements include the financial statements of the Company and its wholly-owned subsidiaries. Intercompany balances and transactions have been eliminated in consolidation.

Interim Financial Statements

The accompanying unaudited interim condensed consolidated financial statements have been prepared pursuant to the rules and regulations of the Securities and Exchange Commission ~~(SEC)~~(“SEC”). In the opinion of management, all adjustments, which consist solely of normal recurring adjustments, necessary to present fairly, in accordance with U.S. generally accepted accounting principles ~~(GAAP)~~(“GAAP”), the financial position, results of operations and cash flows for 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 annual consolidated financial statements prepared in accordance with GAAP have been condensed or omitted. These unaudited interim condensed consolidated financial statements should be read in conjunction with the Company’s audited consolidated financial statements and notes thereto included in the Company’s ~~Annual Report on Form 10-K, filed for the fiscal year ended December 31, 2019.~~2020 10-K.

The information presented in the accompanying unaudited interim condensed consolidated balance sheets as of December 31, ~~2019~~2020 has been derived from the Company’s December 31, ~~2019~~2020 audited consolidated financial statements.

~~Leases~~

~~The Company is a lessee~~There have been no changes in ~~noncancelable (1) operating leases, primarily related to sale/leaseback transactions with financial institutions~~our accounting policies from those reported in our 2020 10-K, except for ~~deployment~~the adoption of the Company’s products at certain customer sites, and (2) finance leases, also primarily related to sale/leaseback transactions with financial institutions for similar commercial purposes. The Company accounts for leases in accordance with Accounting Standards ~~Codification (ASC) Topic 842,~~ ~~Leases~~ ~~(ASC Topic 842)~~Update (“ASU”) 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), as ~~amended.~~

The Company determines if an arrangement is or contains a lease at contract inception. The Company recognizes a right of use (ROU) asset and a lease liability (i.e. finance obligation) at the lease commencement date. For operating leases, the lease liability is initially measured at the present value of the unpaid lease payments at the lease commencement date. For finance leases, the lease liability is initially measureddescribed in the ~~same manner~~Recently Adopted Accounting Guidance section. We have also expanded our accounting policy relating to cash equivalents, and ~~date~~available-for-sale securities as ~~for operating leases, and is subsequently measured at amortized cost using the effective interest method.~~

~~Key estimates and judgments include how the Company determines (1) the discount rate it uses to discount the unpaid lease payments to present value, (2) the lease term and (3) the lease payments.~~

●

ASC Topic 842 requires a lessee to discount its unpaid lease payments using the interest rate implicit in the lease or, if that rate cannot be readily determined, its incremental borrowing rate. Generally, the Company cannot determine the interest rate implicit in the lease because it does not have access to the lessor’s estimated residual value or the amount of the lessor’s deferred initial direct costs. Therefore, the Company generally uses its incremental borrowing rate as the discount rate for the lease. The Company’s incremental borrowing rate for a lease is the rate of interest it would have to pay on a collateralized basis to borrow an amount equal to the lease payments under similar terms.

●

The lease term for all of the Company’s leases includes the noncancelable period of the lease, plus any additional periods covered by either a Company option to extend (or not to terminate) the lease that the Company is reasonably certain to exercise, or an option to extend (or not to terminate) the lease controlled by the lessor.

●

Lease payments included in the measurement of the lease liability comprise fixed payments, and the exercise price of a Company option to purchase the underlying asset if the Company is reasonably certain to exercise the option.

follows:

The ROU asset is initially measured at cost, which comprises the initial amount of the lease liability adjusted for lease payments made at or before the lease commencement date, plus any initial direct costs incurred less any lease incentives received. For operating leases, the ROU asset is subsequently measured throughout the lease term at the carrying amount of the lease liability, plus initial direct costs, plus (minus) any prepaid (accrued) lease payments, less the unamortized balance of lease incentives received. Lease expense for lease payments is recognized on a straight-line basis over the lease term.

For finance leases, the ROU asset is subsequently amortized using the straight-line method from the lease commencement date to the earlier of the end of the useful life of the underlying asset or the end of the lease term unless the lease transfers ownership of the underlying asset to the Company or the Company is reasonably certain to exercise an option to purchase the underlying asset. In those cases, the ROU asset is amortized over the useful life of the underlying asset. Amortization of the ROU asset is recognized and presented separately from interest expense on the lease liability. The Company’s leases do not contain variable lease payments.

~~ROU assets for operating and finance leases are periodically reviewed for impairment losses. The Company uses the long-lived assets impairment guidance in ASC Subtopic 360-10,~~ ~~Property, Plant, and Equipment – Overall~~Cash Equivalents~~, to determine whether an ROU asset is impaired, and if so, the amount of the impairment loss to recognize. NaN impairment losses have been recognized to date.~~

The Company monitors for events or changes in circumstances that require a reassessment of its leases. When a reassessment results in the remeasurement of a lease liability, a corresponding adjustment is made to the carrying amount of the corresponding ROU asset.

Operating and finance lease ROU assets are presented within leased property, net on the unaudited interim condensed consolidated balance sheets. The current portion of operating and finance lease liabilities is included in finance obligations within current liabilities and the long-term portion is presented in finance obligations within noncurrent liabilities on the unaudited interim condensed consolidated balance sheets.

The Company has elected not to recognize ROU assets and lease liabilities for short-term leases that have a lease term of 12 months or less. The Company has elected to apply the short-term lease recognition and measurement exemption for other classes of leased assets. The Company recognizes the lease payments associated with its short-term leases as an expense on a straight-line basis over the lease term.

~~Revenue Recognition~~

The Company enters into contracts that may contain one or a combination of fuel cell systems and infrastructure, installation, maintenance, spare parts, fuel delivery and other support services. Contracts containing fuel cell systems and related infrastructure may be sold or provided to customers under a PPA, discussed further below.

The Company does not include a right of return on its products other than rights related to standard warranty provisions that permit repair or replacement of defective goods. The Company accrues for anticipated standard warranty costs at the same time that revenue is recognized for the related product, or when circumstances indicate that warranty costs will be incurred, as applicable.

Revenue is measured based on the transaction price specified in a contract with a customer, subject to the allocation of the transaction price to distinct performance obligations as discussed below. The Company recognizes revenue when it satisfies a performance obligation by transferring a product or service to a customer.

The Company accounts for each distinct performance obligation within its arrangements as a separate unit of accounting if the items under the performance obligation have value to the customer on a standalone basis. The Company considers a performance obligation to be distinct and have a standalone value if the customer can benefit from the good or service either on its own or together with other resources readily available to the customer and the Company’s promise to transfer the goods or service to the customer is separately identifiable from other promises in the contract. The Company allocates revenue to each distinct performance obligation based on relative standalone selling prices.

Payment terms for sales of fuel cells, infrastructure and service to customers are typically 30 to 90 days. Sale/leaseback transactions with financial institutions are invoiced and collected upon transaction closing. Service is prepaid upfront in a majority of the arrangements. The Company does not adjust the transaction price for a significant financing component when the performance obligation is expected to be fulfilled within a year.

In 2017, in separate transactions, the Company issued to each of Amazon and Walmart warrants to purchase shares of the Company’s common stock. The Company presents the provision for common stock warrants within each revenue-related line item on the unaudited interim consolidated statements of operations. This presentation reflects a discount that those common stock warrants represent, and therefore revenue is net of these non-cash charges. The provision of common stock warrants is allocated to the relevant revenue-related line items based upon the expected mix of the revenue for each respective contract. See Note 12, Warrant Transaction Agreements, for more details.

~~Nature of goods and services~~

~~The following is a description of principal activities from which the Company generates its revenue.~~

~~(i)~~

~~Sales of Fuel Cell Systems and Related Infrastructure~~

~~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.~~

The Company considers comparable list prices, as well as historical average pricing approaches to determine standalone selling prices for GenDrive fuel cells. The Company uses observable evidence from similar products in the market to determine standalone selling prices for GenSure stationary backup power units and hydrogen fueling infrastructure. The determination of standalone selling prices of the Company’s performance obligations requires significant judgment, including continual assessment of pricing approaches and available observable evidence in the market. Once relative standalone selling prices are determined, the Company proportionately allocates the transaction price to each performance obligation within the customer arrangement. The allocated transaction price related to fuel cell systems and spare parts is recognized as revenue at a point in time which usually occurs at shipment (and occasionally upon delivery). Revenue on hydrogen infrastructure installations is generally recognized at the point at which transfer of control passes to the customer, which usually occurs upon customer acceptance of the hydrogen infrastructure. In certain instances, control of hydrogen infrastructure installations transfers to the customer over time, and the related revenue is recognized over time as the performance obligation is satisfied. The Company uses an input method to determine the amount of revenue to recognize during each reporting period based on the Company’s efforts to satisfy the performance obligation.

~~(ii)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. The transaction price allocated to services as discussed above is generally recognized as revenue over time on a straight-line basis over the expected service period.

~~In substantially all of its commercial transactions, the Company sells extended maintenance contracts that generally provide for a~~ ~~five~~ to ten year service period from the date of product installation in exchange for an up-front payment. Services include monitoring, technical support, maintenance and services that provide for 97% to 98% uptime of the fleet. These services are accounted for as a separate performance obligation, and accordingly, revenue generated from these transactions, subject to the proportional allocation of transaction price, is deferred and recognized as revenue

over the term of the contract, generally on a straight-line basis. Additionally, the Company may enter into annual service and extended maintenance contracts that are billed monthly. Revenue generated from these transactions is recognized as revenue on a straight-line basis over the term of the contract. Costs are recognized as incurred over the term of the contract. Sales of spare parts are included within service revenue on the unaudited interim consolidated statements of operations. When costs are projected to exceed revenues over the life of the extended maintenance contract, an accrual for loss contracts is recorded. Costs are estimated based upon historical experience and consider the estimated impact of the Company’s cost reduction initiatives. The actual results may differ from these estimates.

~~Upon expiration of the extended maintenance contracts, customers either choose to extend the contract or switch to purchasing spare parts and maintaining the fuel cell systems on their own.~~

~~(iii)Power Purchase Agreements~~

~~Revenue from PPAs primarily represents payments received from customers who make monthly payments to access the Company’s GenKey solution.~~

When fuel cell systems and related infrastructure are provided to customers through a PPA, revenues associated with these agreements are treated as rental income and recognized on a straight-line basis over the life of the agreements.

In conjunction with entering into a PPA with a customer, the Company may enter into sale/leaseback transactions with third-party financial institutions, whereby the fuel cells, a majority of the related infrastructure and, in some cases, service are sold to the third-party financial institution and leased back to the Company through either an operating or finance lease.

Certain of the Company’s sale/leaseback transactions with third-party financial institutions are required to be accounted for as finance leases. As a result, 0 upfront revenue was recognized at the closing of these transactions and a finance obligation for each lease was established. The fuel cell systems and related infrastructure that are provided to customers through these PPAs are classified as leased property, net in the unaudited interim condensed consolidated balance sheets. Costs to service the leased property, depreciation of the leased property, and other related costs are included in cost of PPA revenue in the unaudited interim condensed consolidated statements of operations. Interest cost associated with finance leases is presented within interest and other expense, net in the unaudited interim condensed consolidated statements of operations.

The Company also has sale/leaseback transactions with financial institutions, which were required to be accounted for as operating leases. The Company has lease obligations associated with these sale/leaseback agreements with financial institutions paid over the term of the agreements. At inception of these sale/lease transactions, the Company records a right of use asset value which is amortized over the term of the lease and recognized in conjunction with the interest expense on the obligation collectively as rental expense. Rental expense is recognized on a straight-line basis over the life of the agreements and is characterized as cost of PPA revenue on the unaudited interim condensed consolidated statements of operations.

~~The Company includes all lease and non-lease components (i.e., maintenance services) related to PPAs within PPA revenue.~~

To recognize revenue, the Company, as lessee, is required to determine whether each sale/leaseback arrangement meets operating lease criteria. As part of the assessment of these criteria, the Company estimates certain key inputs to the associated calculations such as: 1) discount rate it uses to discount the unpaid lease payments to present value and 2) useful life of the underlying asset(s):

●

ASC Topic 842 requires a lessee to discount its unpaid lease payments using the interest rate implicit in the lease or, if that rate cannot be readily determined, its incremental borrowing rate. Generally, the Company cannot determine the interest rate implicit in its leases because it does not have access to the lessor’s estimated residual value or the amount of the lessor’s deferred initial direct costs. Therefore, the Company generally uses its incremental borrowing rate to estimate the discount rate for each lease.

●

In order for a lease to be classified as an operating lease, the lease term cannot exceed 75% (major part) of the estimated useful life of the leased asset. The average estimated useful life of the fuel cells is 10 years, and the average estimated useful life of the hydrogen infrastructure is 20 years. These estimated useful lives are compared to the term of each lease to ensure that 75% of the estimated useful life of the assets is not exceeded which allows the Company to meet the operating lease criteria.

~~(iv)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. Fuel is delivered to customers under stand-ready arrangement, with no long-term commitment.

The Company purchases hydrogen fuel from suppliers in certain cases (and produces hydrogen onsite) and sells to its customers upon delivery. Revenue and cost of revenue related to this fuel is recorded as dispensed and is included in the respective “Fuel delivered to customers” lines on the unaudited interim consolidated statements of operations.

~~Contract costs~~

~~The Company expects that incremental commission fees paid to employees as a result of obtaining sales contracts are recoverable and therefore the Company capitalizes them as contract costs.~~

Capitalized commission fees are amortized on a straight-line basis over the period of time which the transfer of goods or services to which the assets relate occur, typically ranging from 5 to 10 years. Amortization of the capitalized commission fees is included in selling, general and administrative expenses.

The Company recognizes the incremental costs of obtaining contracts as an expense when incurred if the amortization period of the assets that the Company otherwise would have recognized is one year or less. These costs are included in selling, general and administrative expenses.

~~Cash Equivalents~~

~~For purposes of the unaudited interim condensed consolidated statements of cash flows, the Company considers~~ all highly-liquid debt ~~instruments~~securities with original maturities of three months or less to be cash equivalents. At ~~September 30, 2020,~~March 31, 2021, cash equivalents ~~consisted~~consist of ~~money market accounts. The Company’s cash and cash equivalents are deposited~~commercial paper with ~~financial institutions located~~original maturities of three months or less. Due to their short-term nature, the carrying amounts reported in ~~the United States and may at times exceed insured limits.~~

~~Equity Instruments – Common Stock Warrants~~

~~Common stock warrants that meet certain applicable requirements of ASC Subtopic 815-40,~~ ~~Derivatives and Hedging – Contracts in Entity’s Own Equity~~, and other related guidance, including the ability of the Company to settle the warrants without the issuance of registered shares or the absence of rights of the grantee to require cash settlement, are accounted for as equity instruments. The Company classifies these equity instruments within additional paid-in capital on the unaudited interim condensed consolidated balance ~~sheets.~~

Common stock warrants accounted for as equity instruments represent the warrants issued to Amazon and Walmart as discussed in Note 12, Warrant Transaction Agreements. The Company adopted Financial Accounting Standards Board (FASB) Accounting Standards Update 2019-08, ~~Compensation – Stock Compensation (Topic 718) and Revenue from Contracts with Customers (Topic 606)~~ (ASU 2019-08), which requires entities to measure and classify share-based payment awards granted to a customer by applying the guidance under Topic 718, as of January 1, 2019. As a result, the amount recorded as a reduction of revenue is measured based on the grant-date fair value of the warrants. Except for the third tranche,sheets approximate the fair value of ~~all warrants was measured at January 1, 2019, the adoption date of ASU 2019-08.~~cash and cash equivalents.

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In order to calculate warrant charges, the Company uses the Black-Scholes pricing model, which requires key inputs including volatility and risk-free interest rate and certain unobservable inputs for which there is little or no market data, requiring the Company to develop its own assumptions. The Company estimates the fair value of unvested warrants, considered to be probable of vesting. Based on this estimated fair value, the Company determines warrant charges, which are recorded as a reduction of revenue in the unaudited interim condensed consolidated statement of operations.Available-for-sale securities

~~Use~~Available-for-sale securities is comprised of ~~Estimates~~commercial paper with original maturities greater than three months and corporate bonds. We consider these securities to be available for use in our current year operations, and therefore classify them as current even if we do not dispose of the securities in the following year.

~~The unaudited interim condensed consolidated financial statements~~Available-for-sale securities are recorded at fair value as of the Company have been prepared in conformity with U.S. generally accepted accounting principles, which require management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the unaudited interim condensed consolidated financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates.

~~Reclassifications~~

~~Reclassifications are made, whenever necessary, to prior period financial statements to conform to the current period presentation.~~each balance sheet date. As of ~~September 30, 2020, there have been no such reclassifications.~~each balance sheet date, unrealized gains and losses, with the exception of credit related losses, are recorded to Accumulated Other Comprehensive Income. Any credit related losses are recognized as a credit loss allowance on the balance sheet with a corresponding adjustment to operations.

Recent Accounting Pronouncements

Recently Adopted Accounting ~~Pronouncements~~Guidance

~~In June 2016,~~ ~~Accounting Standards Update (ASU) 2016-13, Financial Instruments – Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments~~~~, was issued. Also, In April 2019,~~ ~~Accounting Standards Update (ASU) 2019-04, Codification Improvements to Topic 326, Financial Instruments—Credit Losses, Topic 815, Derivatives and Hedging, and Topic 825, Financial Instruments~~~~, was issued to make improvements to updates 2016-01,~~ ~~Financial Instruments – Overall~~ ~~(Subtopic 825-10), 2016-13,~~ ~~Financial Instruments – Credit Losses~~ ~~(Topic 326) and 2017-12,~~ ~~Derivatives and Hedging~~ (Topic 815). ASU 2016-13 significantly changes how entities account for credit losses for financial assets and certain other instruments, including trade receivables and contract assets, that are not measured at fair value through net income. The ASU requires a number of changes toOther than the assessment of credit losses, including the utilization of an expected credit loss model, which requires consideration of a broader range of information to estimate expected credit losses over the entire lifetimeadoption of the ~~asset, including losses where probability is considered remote. Additionally,~~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 ~~standard requires the estimation~~adoption of lifetime expected losses for trade receivables and contract assets that are classified as current. The Company adopted these standards effective January 1, 2020 and determined the impact of the standards to be immaterial to the consolidated financial statements.new accounting pronouncements.

~~In April 2019,~~ ~~Accounting Standards Update (ASU) 2019-04, Codification Improvements to Topic 326, Financial Instruments—Credit Losses, Topic 815, Derivatives and Hedging, and Topic 825, Financial Instruments~~~~, was issued to make improvements to updates 2016-01,~~ ~~Financial Instruments – Overall~~ ~~(Subtopic 825-10), 2016-13,~~ ~~Financial Instruments – Credit Losses~~ ~~(Topic 326) and 2017-12,~~ ~~Derivatives and Hedging~~ ~~(Topic 815). The Company adopted this standard effective~~On January 1, ~~2020 and determined the impact of this standard to be immaterial to the consolidated financial statements.~~

~~In January 2017,~~ ~~Accounting Standards Update (ASU) 2017-04, Intangibles – Goodwill and Other (Topic 350)~~, was issued to simplify how an entity is required to test goodwill for impairment by eliminating Step 2 from the goodwill impairment test. Step 2 measures a goodwill impairment loss by comparing the implied fair value of a reporting unit’s goodwill2021, we early adopted ASU No. 2020-06, Debt—Debt with ~~the carrying amount of that goodwill. The Company adopted this standard effective January 1, 2020.~~

~~In August 2016,~~ ~~Accounting Standards Update (ASU) 2016-15, Statement of Cash Flows (Topic 230)s:~~ ~~Classification of Certain Cash Receipts and Cash Payments~~, was issued to reduce the existing diversity in practice in how certain cash receipts and cash payments are presented and classified in the statement of cash flows. The Company adopted this standard in 2019 and determined the impact of this standard to be immaterial to the consolidated financial statements.

~~Recently Issued and Not Yet Adopted Accounting Pronouncements~~

~~In August 2020,~~ ~~Accounting Standards~~ ~~Update (ASU) 2020-06~~~~, Debt – Debt With~~ Conversion and Other Options (Subtopic 470-20) and Derivatives and ~~Hedging –~~ Hedging—Contracts in Entity’s Own Equity (Subtopic 815-40)~~: Accounting~~ using the modified retrospective approach. Consequently, the Company’s 3.75% Convertible Senior Notes due 2025, which is referred to herein as the 3.75% Convertible Senior Notes, is now accounted for ~~Convertible Instruments~~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 ~~Contracts in an Entity’s Own Equity,~~ ~~was issued to address issues identified~~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 ~~complexity associated with applying GAAP~~if-converted method for ~~certain financial instruments with characteristics~~convertible instruments. The cumulative effect of ~~liabilities~~the accounting change upon adoption on January 1, 2021 increased the carrying amount of the 3.75% Convertible Senior Notes by $120.7 million, reduced accumulated deficit by $9.6 million and ~~equity. This update is effective after December 15, 2021. The Company is evaluating the adoption method as well as the impact this update will have on the consolidated financial statements.~~reduced additional paid-in capital by $130.2 million.

Recent Accounting Guidance Not Yet Effective

InAll issued but not yet effective accounting and reporting standards as of March ~~2020,~~ ~~Accounting Standards Update (ASU) 2020-04, Reference Rate Reform (Topic 848): Facilitation of the Effects of Reference Rate Reform on Financial Reporting~~~~, was issued to provide temporary optional expedients and exceptions~~31, 2021 are either not applicable to the ~~GAAP guidance on contract modifications and hedge accounting~~Company or are not expected to ease the financial reporting burdens related to the expected market transition from the London Interbank Offered Rate (LIBOR) and other interbank offered rates to alternative reference rates. This update is effective starting March 12, 2020 and the Company may elect to apply the amendments prospectively through December 31, 2022. The Company is evaluating the adoption method as well as thehave a material impact ~~this update will have~~ on the ~~consolidated financial statements.~~

Company.

~~In March 2020,~~ ~~Accounting Standards Update (ASU) 2020-03, Codification Improvements to Financial Instruments~~, was issued to make various codification improvements to financial instruments to make the standards easier to understand and apply by eliminating inconsistencies and providing clarifications. This update will be effective at various dates as described in this ASU. The Company is evaluating the adoption method as well as the impact this update will have on the consolidated financial statements.

~~In December 2019,~~ ~~Accounting Standards Update (ASU) 2019-12, Simplifying the Accounting for Income Taxes~~, was issued to identify, evaluate, and improve areas of GAAP for which cost and complexity can be reduced while maintaining or improving the usefulness of the information provided to users of financial statements. This update will be effective beginning after December 15, 2020. The Company is evaluating the adoption method as well as the impact this update will have on the consolidated financial statements.

3. Acquisitions

Giner ELX Inc. Acquisition

On June 22, 2020, the Company acquired 100% of the outstanding shares of Giner ELX, Inc. ~~(Giner ELX)~~(“Giner ELX”). Giner ELX is a developer of electrolysis hydrogen generators which iscan be used for a variety of applications, including on-site refueling of hydrogen fuel cells.

The fair value of consideration paid by the Company in connection with the Giner ELX acquisition was as follows (in thousands):


Cash	$	25,820	$	25,820
Plug Power Stock		19,263
Plug Power common stock				19,263
Contingent consideration		7,790		7,790
Total consideration		52,873	$	52,873

The contingent consideration represents the estimated ~~preliminary~~ fair value associated with earn-out payments of up to $16.0 million that the sellers are eligible to receive. Of the total earnout consideration, $8.0 million is related to the achievement

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of the Allagash earn-out, $2.0 million is associated with the receipt of certain customer opportunities (purchase orders or other contracts) by December 31, 2021, and $6.0 million is associated with the achievement of certain revenue targets for years 2021 through 2023. The Allagash earn-out is achieved when the Company has produced at least 2 PEM electrolyzer stacks of one megawatt each, utilizing the dry build process and meets certain technical specifications as more fully described in the merger agreement. To be fully paid, the Allagash earn-out needs to be satisfied by July 31, 2023 and iswill be reduced by approximately 8.33% each month beyond this date. In addition, ~~to the above,~~ should the earn-out revenue exceed 150% of the 2023 target, the sellers will receive warrants with a value of $5.0 million and if

the earn-out revenue exceeds 200% of the 2023 revenue target, the sellers will receive warrants with a value of $10.0 million. The warrants ~~are~~will be exercisable within two years of issuance.

In connection with the Giner ELX acquisition, the Company revised the acquisition-date fair value of contingent consideration liabilities which were determined to be measurement period adjustments and resulted in an increase in other liabilities and goodwill of $0.7 million for the ~~three months~~year ended ~~September 30,~~December 31, 2020.

The following table summarizes the ~~preliminary~~final allocation of the purchase price to the estimated fair value of the net assets acquired, excluding goodwill (in thousands):


Accounts receivable	$	1,237	$	1,237
Inventory		4,108		4,108
Prepaid expenses and other assets, net of deferred tax liability		(4,707)
Prepaid expenses and other assets				669
Property, plant and equipment		596		596
Identifiable intangibles		29,930		29,930
Accounts payable, accrued expenses and other liabilities		(2,136)		(1,621)
Deferred revenue		(2,348)		(2,350)
Deferred tax liability, net				(5,889)
Total net assets acquired, excluding goodwill		26,680	$	26,680

~~The preliminary fair value of acquired identified intangible assets were calculated with the assistance of an independent valuator and were determined through a variety of valuation techniques.~~

Identifiable intangibles consisted of developed technology, non-compete agreements, estimated in-process research and development ~~(IPR&D)~~(“IPR&D”), and customer relationships.

The fair value of acquired ~~developed technology~~backlog and non-complete agreements was nominal.

The fair value of the acquired IPR&D related to the dry stack technology totaling $29.0 million was calculated using the multi-period excess earnings method ~~(MPEEM)~~(“MPEEM”) approach which is a variant of the income approach. The basic principle of the MPEEM approach is that a single asset, in isolation, is not capable of generating cash flow for an enterprise. Several assets are brought together and exploited to generate cash flow. Therefore, to determine cash flow from the exploitation of IPR&D, one must deduct the related expenses incurred for the exploitation of other assets used for the generation of overall cash flow and revenues. The fair value of IPR&D was estimated by discounting the net cash flow derived from the expected revenues attributable to the acquired IPR&D. The fair value of the acquired customer relationships totaling $0.4 million was calculated using a distributor method approach, which is a variant of the ~~MPEEM under the~~ income approach. The fair value of wet stack technology totaling $0.4 million was determined using the relief from royalty method.

In addition to identifiable intangible ~~asset,~~assets, the fair value of acquired work in process and finished goods inventory was estimated based on the estimated selling price less costs to be incurred and a market participant profit rate. Additionally, the fair value of the deferred revenue was determined using a cost build-up approach. The direct cost of fulfilling the obligation plus a normal profit margin was used to determine the value of the assumed deferred revenue liability.

Included in the purchase consideration are three contingent earn-out payments (as described above): the Allagash earn-out, the customer opportunities, and the revenue targets. Due to the nature of the Allagash and customer opportunities, as outlined in the purchase agreement, a ~~scenario based~~scenario-based method ~~(SBM)~~ was used to value these contingent payments as the payments are milestone based in nature. These fair value measurements were based on unobservable inputs and are considered to be level 3 financial instruments. The revenue targets are achieved when certain revenue thresholds are met,

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and the catch-up provision creates path-dependency. As such, the revenue ~~targets were~~earn-out was valued using a Monte Carlo Simulation.

In connection with the acquisition, the Company recorded on its consolidated balance sheet a liability of $7.8 million representing the fair value of contingent consideration payable. The fair value of this contingent consideration was remeasured as of March 31, 2021 and December 31, 2020, and was estimated to be $10.4 million and $9.6 million, respectively. The increase in fair value of $0.8 million and $1.8 million was primarily due to a change in the discount rate offset by a decrease in the discount period, and was recorded as an expense in the consolidated statement of operations at March 31, 2021 and December 31, 2020, respectively.

Included in Giner ELX’s net assets acquired are net deferred tax liabilities of ~~$6.1~~$5.9 million. In connection of the acquisition of these net deferred tax liabilities, the Company reduced its valuation allowance by $5.2 million and recognized a tax benefit of $5.2 million during the ~~nine months~~year ended ~~September 30,~~December 31, 2020.

Goodwill associated with the Giner ELX acquisition was calculated as follows (in thousands):


Consideration paid	$	52,873	$	52,873
Less: net assets acquired		(26,680)		(26,680)
Total goodwill recognized		26,193	$	26,193

The goodwill consists of the Company’s increased capabilities in green hydrogen supply through the production of electrolyzers. ~~The synergies with the Company’s production of hydrogen storage and dispensing equipment is important to the Company as the demand for green hydrogen increases.~~

United Hydrogen Group Inc. Acquisition

On June 18, 2020, the Company acquired 100% of the outstanding shares of United Hydrogen Group Inc. ~~(UHG)~~(“UHG”). UHG produces and sells liquid hydrogen.

The fair value of consideration paid by the Company in connection with the UHG acquisition was as follows (in thousands):


Cash	$	19,293	$	19,293
Plug Power Stock		30,410		30,410
Contingent consideration		1,110		1,110
Total consideration		50,813	$	50,813

Included in cash and common stock in the above table is $1.0 million of cash and $6.5 million of common stock that was paid in April 2020 to purchase a convertible note in UHG. This convertible note included terms that allowed for the reduction of the purchase price if the Company ~~was~~were to complete the ~~acquisitions.~~acquisition of UHG. As such, this note was cancelled in conjunction with the closing of ~~this~~the UHG acquisition.

A portion of the purchase price of UHG was in the form of contingent consideration. The contingent consideration is contingent on future performance related to two discrete milestones associated with the expansion of the liquefication capacity of the Charleston, Tennessee liquid hydrogen plant (the ~~Charleston Plant)~~“Charleston Plant”). The Company’s liability for this contingent consideration was measured at fair value based on the Company’s expectations of achieving the expansion milestone. The expected performance was assessed by management which was discounted to present value in order to derive a fair value of the contingent consideration.

In accordance with the merger agreement, the Company is obligated to pay $1.5 million by June 30, 2021 once the liquefication capacity of the Charleston Plant is complete to the UHG’s stockholders. Due to the level of progress made as of the reporting date, it is estimated that a payout will be made. As a result, the Company has recorded $1.1 million as the This fair value ~~of the contingent consideration.~~

~~The Company’s liability for contingent consideration~~measurement was ~~preliminarily measured and estimated at fair value~~ based on unobservable inputs and ~~was~~is considered a level 3 financial instrument. Due to the milestone nature of the payments, a scenario-based method was used to value these contingent payments.

The estimated fair value of the ~~liability determined~~contingent consideration as of the acquisition date was ~~primarily driven by~~$1.1 million. Subsequently, a payment of $300 thousand was made to the ~~Company’s expectations~~sellers as a result of ~~reaching~~achieving the ~~performance milestone. The expected~~first milestone ofrelated to the expansion of the liquefication capacity of the Charleston ~~Plant was discounted to present value in order to derive a fair value~~Plant. A reduction of the contingent ~~consideration. The primary inputs~~consideration liability of $610 thousand was also recorded subsequent to the ~~calculation were~~acquisition due to a reduction in the ~~probabilities~~probability assessment that the second expansion

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milestone will be met. As of March 31, 2021 and December 31, 2020, the ~~milestone and a discount rate.~~

~~In connection with~~remaining contingent consideration liability related to the UHG acquisition the Company finalized the valuation of an existing customer contract and long-term debt which resulted in an increase in other liabilities of $1.9 million, a decrease in long-term debt of $1.7 million, and an increase in goodwill of $0.2 million for the three months ended September 30, 2020.

was $200 thousand.

The following table summarizes the ~~preliminary~~final allocation of the purchase price to the estimated fair value of the net assets acquired, excluding goodwill (in thousands):


~~Accounts receivable~~		~~444~~
~~Inventory~~		89
~~Prepaid expenses and other assets~~		~~1,152~~
~~Property, plant and equipment~~		~~41,244~~
~~Leased property~~		~~796~~
~~Identifiable intangibles~~		~~2,338~~
~~Long-term debt~~		~~(11,336)~~
~~Other liabilities~~		~~(15,757)~~
~~Accounts payable, accrued expenses, deferred revenue and finance obligations~~		~~(4,631)~~
~~Total net assets acquired, excluding goodwill~~		~~14,339~~


Accounts receivable	$	444
Inventory		89
Prepaid expenses and other assets		1,152
Property, plant and equipment		41,244
Leased property		796
Identifiable intangible asset		2,338
Long-term debt		(11,336)
Unfavorable customer contract		(15,757)
Accounts payable, accrued expenses, deferred revenue and finance obligations		(4,631)
Total net assets acquired, excluding goodwill	$	14,339

The ~~preliminary fair value of acquired identified~~identifiable intangible ~~assets were calculated with the assistance of an independent valuation firm and were determined through a variety of valuation techniques.~~

~~Identifiable intangibles~~asset consisted of developed technology, as described below in Note ~~7, Intangible Assets.~~9, “Intangible Assets and Goodwill.” The fair value of the developed technology totaling $2.3 million was calculated using the relief from royalty approach which is a variant of the income approach. The application of the relief from royalty approach involves estimating the value of an intangible asset by quantifying the present value of the stream of market derived royalty payments that the owner of the intangible asset is exempted or ‘relieved’ from paying.

Additionally, the Company estimated the fair value of an unfavorable customer contract. The fair value of the acquired unfavorable customer contract was calculated using a with and with-out analysis which is a variant of the income approach. Cash flows were calculated using pricing per terms of the existing contract and then compared to cash flows using expected market pricing. The difference between the two cash flows was used to determine the fair value of the contract. Further, the Company assumed interest-bearing debt. The fair value of the assumed debt was calculated using the discounted cash flow method.

In connection with the UHG ~~is eligible to receive earn-out payments, contingent on~~acquisition, the ~~company achieving certain milestones (successful completion~~Company finalized the valuation of ~~construction~~an unfavorable customer contract and ~~achieving~~long-term debt which resulted in an increase in other liabilities of $1.9 million, a ~~defined capacity/production level). Due to the milestone nature~~decrease in long-term debt of ~~the payments, a scenario based method (SBM) was used to value these contingent payments.~~$1.7 million, and an increase in goodwill of $0.2 million.

Goodwill associated with the UHG acquisition was calculated as follows (in thousands):


Consideration paid	$	50,813	$	50,813
Less: net assets acquired		(14,339)		(14,339)
Total goodwill recognized		36,474	$	36,474

Goodwill consists of the Company’s ability to expand liquid hydrogen manufacturing capability with an established management team. The Company now has capabilities in liquid hydrogen generation, liquefaction and distribution logistics, which is important in a growing hydrogen market.

~~For both UHG and~~Goodwill recorded in connection with the Giner ELX ~~the above estimates are preliminary in nature~~ and subject to adjustments. Any necessary adjustments will be finalized within one year from the date of acquisition. Substantially all the receivables acquired are expected to be collectible. We have not identified any material unrecorded pre-acquisition contingencies where the related asset or liability, or an impairment is probable and the amount can be reasonably estimated. Purchased goodwillUHG acquisitions is not ~~expected to be~~ deductible for tax purposes.

The change in the estimate of fair value of contingent consideration obligations during the third quarter of 2020 was primarily due to a change in the discount rate and a decrease in the discount period. The Company considers the impact to be immaterial to the unaudited interim condensed consolidated financial statements.

The results of the Giner ELX and UHG are included in the Company’s ~~results~~consolidated financial statements for the three months ended ~~September 30,~~March 31, 2021 and the year ended December 31, 2020 from their respective dates of acquisition.

Neither the Giner ELX acquisition nor the UHG acquisition was material to our consolidated results of operations or financial position and, ~~are also included~~therefore, pro forma financial information is not presented. Purchase accounting related to the Giner ELX and UHG acquisitions has been completed as of Q1 2021.

4. 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 impairment losses at the customer contract level. The

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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 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 ~~results~~initiatives related to increasing stack life, achieving better economies of scale for service labor, and improvements in design and operations of infrastructure. If the ~~nine months ended 2020.~~expected cost saving initiatives are not realized, this will increase the costs of providing services and could adversely affect our estimated contract loss accrual.

The following table shows the rollforward of balance in the accrual for loss contracts, including changes due to the passage of time, additions, and changes in estimates (in thousands):


	March 31,		December 31,
	2021		2020
Beginning Balance	$	24,013	$	3,702
Provision for Loss Accrual		1,485		35,473
Released to Service Cost of Sales		(1,846)		(2,348)
Released to Provision for Warrants		—		(12,814)
Ending Balance	$	23,652	$	24,013

4.5. Earnings Per Share

Basic earnings per common stock are computed by dividing net loss attributable to common stockholders by the weighted average number of common stock outstanding during the reporting period. ~~Diluted~~After January 1, 2021, the date of the adoption of ASU 2020-06, in periods when we have net income, the shares of our common stock subject to the convertible notes outstanding during the period will be included in our diluted earnings per share ~~reflects~~under the potential dilution that could occur if securities or other contracts to issue common stock (such as stock options, unvested restricted stock, common stock warrants, and preferred stock) were exercised or converted into common stock or resulted in the issuance of common stock (net of any assumed repurchases) that then shared in the earnings of the Company, if any. This is computed by dividing net earnings by the combination of dilutive common stock equivalents, which is comprised of shares issuable under outstanding warrants, the conversion of preferred stock, and the Company’s share-based compensation plans, and the weighted average number of common stock outstanding during the reporting period.if-converted method. Since the Company is in a net loss position, all common stock equivalents would be considered to be anti-dilutive, and are therefore not included in the determination of diluted earnings per share. Accordingly, basic and diluted loss per share are the same.

The potentially dilutive securities are summarized as follows:


	At September 30,		At March 31,
	2020	2019	2021	2020
Stock options outstanding (1)	14,434,983	23,597,871	9,020,891	19,803,872
Restricted stock outstanding (2)	5,992,974	4,333,560	6,416,308	4,600,227
Common stock warrants (3)	110,573,392	115,824,142	88,264,726	110,573,392
Preferred stock (4)	—	15,019,838	—	2,782,075
Convertible Senior Notes (5)	56,872,730	59,133,896	39,170,766	59,133,896
Number of dilutive potential shares of common stock	187,874,079	217,909,307	142,872,691	196,893,462

(1)

During the three months ended ~~September 30,~~March 31, 2021 and 2020, ~~and 2019,~~ the Company granted ~~3,192,400~~581,000 and ~~2,572,500 stock options, respectively. During the nine months ended September 30, 2020 and 2019, the Company granted 3,367,049 and 2,936,892~~85,000 stock options, respectively.

(2)

During the three months ended ~~September 30,~~March 31, 2021 and 2020, ~~and 2019,~~ the Company granted ~~3,095,000~~555,000 and ~~2,562,500 shares of restricted stock, respectively. During the nine months ended September 30, 2020 and 2019, the Company granted 3,189,649 and 2,926,892~~0 shares of restricted stock, respectively.

(3)

In April 2017, the Company issued ~~warrants~~a warrant to acquire up to 55,286,696 of the Company’s common stock as part of a transaction agreement with Amazon, subject to certain vesting events, as described in Note ~~12, Warrant~~13, “Warrant Transaction Agreements. ~~Of these warrants issued, NaN have~~The warrant had been exercised with respect to 9,214,449 shares as of ~~September 30, 2020.~~March 31, 2021.

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In July 2017, the Company issued ~~warrants~~a warrant to acquire up to 55,286,696 of the Company’s common stock as part of a transaction agreement with Walmart, subject to certain vesting events, as described in Note ~~12, Warrant~~13, “Warrant Transaction Agreements. ~~Of these warrants issued, NaN have~~” The warrant had been exercised with respect to 13,094,217 shares as of ~~September 30, 2020.~~March 31, 2021.

(4)

The preferred stock amount at March 31, 2020 represents the dilutive potential on the shares of common stock as a result of the conversion of the Series C Redeemable Convertible Preferred Stock (Series C Preferred Stock) ~~and Series E Redeemable Preferred Stock (Series E Preferred Stock),~~ based on the conversion price ~~of each preferred stock~~ as of ~~September 30, 2020, and 2019, respectively.~~March 31, 2020. Of the 10,431 shares of Series C Preferred Stock issued on May 16, 2013, all shares had been converted to common stock as of ~~September 30, 2020. On November 1, 2018, the Company issued 35,000 shares of Series E Preferred Stock. As of~~ December 31, 2019, 30,462 shares of the Series E Preferred Stock had been converted to common stock and 4,038 shares were redeemed for cash. The remaining 500 shares of Series E Preferred Stock were converted to common stock in January 2020.

(5)

In March 2018, the Company issued the 5.5% Convertible Senior Notes due 2023, which is referred to herein as the 5.5% Convertible Senior Notes. In September 2019, the Company issued the ~~$7.5%~~7.5% Convertible Senior Note due 2023, which we refer to herein as the 7.5% Convertible Senior Note, which was fully converted into 16.0 million shares of common stock on July 1, 2020. In May 2020, the Company issued the ~~3.5%~~3.75% Convertible Senior Notes and repurchased $66.3 million of the 5.5% Convertible Senior Notes. ~~See Note 9,~~In the fourth quarter of 2020, $33.5 million of the remaining 5.5% Convertible Senior ~~Notes.~~Notes converted into 14.6 million shares of common stock. The remaining $160 thousand aggregate principal amount of the 5.5% Convertible Senior Notes were converted in January 2021. During the first quarter of 2021, $15.2 million of the 3.75% Convertible Senior Notes were converted, resulting in the issuance of 3,016,036 shares of common stock.

5.6. Inventory

Inventory as of ~~September 30, 2020~~March 31, 2021 and December 31, ~~2019~~2020 consisted of the following (in thousands):


	September 30,		December 31,		March 31,		December 31,
	2020		2019		2021		2020
Raw materials and supplies - production locations	$	85,924	$	48,011	$	123,450	$	92,221
Raw materials and supplies - customer locations		10,007		9,241		12,538		12,405
Work-in-process		30,421		12,529		46,118		29,349
Finished goods		7,954		2,610		5,626		5,411
Inventory	$	134,306	$	72,391	$	187,732	$	139,386

7. Equipment Related to Power Purchase Agreements and Fuel Delivered to Customers, net

Leased property at March 31, 2021 and December 31, 2020 consisted of the following (in thousands):


	March 31,		December 31,
	2021		2020
Equipment related to power purchase agreements and fuel delivered to customers	$	90,878	$	92,736
Less: accumulated depreciation		(16,664)		(16,929)
Equipment related to power purchase agreements and fuel delivered to customers, net		74,214		75,807

As of March 31, 2021, the Company had deployed long-lived assets at customer sites that had associated Power Purchase Agreements (“PPAs”). These PPAs expire over the next one to ten years. PPAs contain termination clauses with associated penalties, the amount of which cause the likelihood of cancellation to be remote.

Depreciation expense is $1.8 million and $2.1 million for the three months ended March 31, 2021 and 2020 respectively.

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~~6. Leased~~8. Property, Plant and Equipment

~~Leased property~~Property, plant and equipment at ~~September 30, 2020~~March 31, 2021 and December 31, ~~2019 consisted~~2020 consists of the following (in thousands):


	September 30,		December 31,		March 31, 2021		December 31, 2020
	2020		2019
Right of use assets - operating	$	275,211	$	198,068
Right of use assets - finance		42,161		41,475
Capitalized costs of lessor assets		51,814		41,465
Land						1,165		1,165
Leasehold improvements					$	1,378	$	1,121
Software, machinery and equipment						104,071		94,449
Property, plant, and equipment						106,614		96,735
Less: accumulated depreciation		(59,711)		(36,268)		(23,791)		(22,186)
Leased property, net	$	309,475	$	244,740
Property, plant, and equipment, net					$	82,823	$	74,549

Depreciation expense related to property, plant and equipment was $1.6 million and $0.9 million for the periods ended March 31, 2021 and 2020, respectively.

7.9. Intangible Assets and Goodwill

The gross carrying amount and accumulated amortization of the Company’s acquired identifiable intangible assets as of ~~September 30, 2020~~March 31, 2021 were as follows (in thousands):


	Weighted Average	Gross Carrying		Accumulated				Weighted Average	Gross Carrying		Accumulated
	Amortization Period	Amount		Amortization		Total		Amortization Period	Amount		Amortization		Total
Acquired technology	10 years	$	13,138	$	(3,601)	$	9,537	10 years	$	13,092	$	(4,260)	$	8,832
Customer relationships, Backlog & Trademark	6 years		890		(258)		632
In process R&D	Indefinite		29,000		—		29,000
Customer relationships, Non-compete agreements, Backlog & Trademark								6 years		890		(329)		561
In process research and development								Indefinite		29,000		—		29,000
		$	43,028	$	(3,859)	$	39,169		$	42,982	$	(4,589)	$	38,393

The gross carrying amount and accumulated amortization of the Company’s acquired identifiable intangible assets as of December 31, ~~2019~~2020 were as follows (in thousands):


	Weighted Average	Gross Carrying		Accumulated				Weighted Average	Gross Carrying		Accumulated
	Amortization Period	Amount		Amortization		Total		Amortization Period	Amount		Amortization		Total
Acquired technology	9 years	$	8,244	$	(2,815)	$	5,429	10 years	$	13,697	$	(4,042)	$	9,655
Customer relationships & Trademark	9 years		320		(210)		110
Customer relationships, Non-compete agreements, Backlog & Trademark								6 years		890		(294)		596
In process research and development								Indefinite		29,000		—		29,000
		$	8,564	$	(3,025)	$	5,539		$	43,587	$	(4,336)	$	39,251

The change in the gross carrying amount of the acquired technology from December 31, ~~2019~~2020 to ~~September 30, 2020~~March 31, 2021 was primarily due to ~~changes in~~ foreign currency ~~translation, acquisitions of UHG and Giner ELX, and accrual for American Fuel Cell (AFC) milestone payment payments, as discussed below.~~

In the second quarter of 2020, the Company’s in-process research and development was related to the development of the dry build process associated with electrolyzer stacks, as part of acquisition of Giner ELX. The related intangible asset is not currently amortized, as research and development is ongoing. Upon completion of the dry build process, amortization will commence based upon the estimated useful life of the underlying asset. See Note 3 – Acquisitions, for more details.

Also, in the second quarter of 2020, the Company acquired technology as part of the acquisition of UHG. The technology relates to the chemical process of manufacturing liquid hydrogen from chlor-alkali waste stream. See Note 3 – Acquisitions, for more details.

In the second quarter of 2019, the Company acquired intellectual property from EnergyOr for $1.5 million. In addition, the Company agreed to pay the sellers a royalty based on future sales of relevant applications, not to exceed $3.0 million, by May 22, 2025. These royalties are added to the intangible asset balance, as incurred.

As part of the agreement to acquire the intellectual property from AFC, the Company shall pay AFC milestone payments not to exceed $2.9 million in total, if certain milestones associated with the production of components related to the acquired technology are met before April 2021. As of September 30, 2020, the Company paid $1.6 million and accrued $0.9 million in relation to the aforementioned milestones.translation.

Amortization expense for acquired identifiable intangible assets ~~was $0.3 million~~ for the three months ended ~~September 30,~~March 31, 2021 and 2020 ~~and $0.8~~was $0.4 million ~~for the nine months ended September 30, 2020. Amortization expense for the acquired identifiable assets was~~and $0.2 million, ~~for the three months ended September 30, 2019 and $0.5 million for the nine months ended September 30, 2019.~~respectively.

~~Estimated~~

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The estimated amortization expense for subsequent years ~~was~~is as follows (in thousands):


Remainder of 2020	$	366
2021		1,464
Remainder of 2021			$	1,093
2022		1,464		1,458
2023		1,464		1,458
2024 and thereafter		5,411
2024				1,436
2025 and thereafter				3,948
Total	$	10,169	$	9,393

Goodwill was $72.0 million and $72.4 million as of March 31, 2021 and December 31, 2020 respectively, which decreased $400 thousand due to currency translation loss for HyPulsion S.A.S., our French subsidiary goodwill. There were 0 impairments during the three months ended March 31, 2021 or the year ended December 31, 2020.

8.10. Long-Term Debt

In March 2019, the Company ~~and its subsidiaries Emerging Power Inc. and Emergent Power Inc.,~~ entered into a loan and security agreement, as amended (the ~~Loan Agreement)~~“Loan Agreement”), with Generate Lending, LLC ~~(Generate Capital)~~(“Generate Capital”), providing for a secured term loan facility in the amount of ~~$100.0~~$100 million (the ~~Term~~“Term Loan ~~Facility)~~Facility”). The Company borrowed $85.0 million under the Loan Agreement on the date of closing and borrowed an additional $15.0 million in April 2019 and $20 million in November 2019. A portion of the initial proceeds of the loan was used to pay in full the Company’s long-term debt with NY Green Bank, a Division of the New York State Energy Research & Development Authority, including accrued interest of $17.6 million (the Green Bank Loan), and terminate approximately $50.3 million of certain equipment leases with Generate Plug Power SLB II, LLC and repurchase the associated leased equipment. In connection with this transaction, the Company recognized a loss on extinguishment of debt of approximately $0.5 million during the nine months ended September 30, 2019. This loss was recorded in gain (loss) on extinguishment of debt, in the Company’s unaudited interim condensed consolidated statement of operations. Additionally, $1.7 million was paid to an escrow account related to additional fees due in connection with the Green Bank Loan if the Company does not meet certain New York State employment and fuel cell deployment targets by March 2021. Amount escrowed is recorded in short-term other assets on the Company’s unaudited interim condensed consolidated balance sheets as of September 30, 2020. The Company presently expects to meet the targets as required under the arrangement. During the nine months

~~ended September 30, 2020, the Company received $250 thousand from escrow related to the New York state employment targets.~~

~~Additionally, on May 6,~~During the year ended December 31, 2020, the Company, ~~and its subsidiaries, Emerging Power, Inc. and Emergent Power, Inc., entered into a Fifth Amendment (the Amendment)~~under another series of amendments to the Loan Agreement, ~~and Security Agreement, dated as~~borrowed an incremental $100.0 million. As part of ~~March 29, 2019, as amended (the Loan Agreement) with Generate Lending, LLC (Generate Capital). The Amendment amends~~the amendment to the Loan Agreement, ~~to, among other things, (i) provide for an incremental term loan in~~ the amount of $50.0 million, (ii) provide for additional, uncommitted incremental term loans in an aggregate amount not to exceed $50.0 million, which may become available to the Company in Generate Capital’s sole discretion, (iii) reduce theCompany’s interest rate on ~~all loans~~the secured term loan facility was reduced to 9.50% from 12.00% per annum, and ~~(iv) extend~~ the maturity date was extended to October 31, 2025 from October 6, 2022. The $50 million incremental term loan has been fully funded. In connection with the restructuring, the Company capitalized $1.0 million of origination fees and expensed $300 thousand in legal fees. In the third quarter of 2020, the Company borrowed an additional $50.0 million, under the amended Loan Agreement.

On ~~September 30, 2020,~~March 31, 2021, the outstanding balance under the Term Loan Facility was ~~$185.0 million with a 9.5% annual interest rate.~~$151.5 million.

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 ~~will be~~are funded in part by releases of restricted cash, as described in Note ~~16, Commitments~~20, “Commitments and Contingencies.” Based on the amortization schedule as of ~~September 30, 2020,~~March 31, 2021, the ~~outstanding~~aforementioned loan balance ~~of $185.0 million~~ under the Term Loan Facility ~~must~~will be fully paid by October 31, 2025. The Company is in compliance with, or has obtained waivers for, all debt covenants.

~~All obligations under the Loan Agreement are unconditionally guaranteed by Emerging Power Inc. and Emergent Power Inc.~~ 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 contains covenants, including, among others, (i) the provision of annual and quarterly financial statements, management rights and insurance policies and (ii) restrictions on incurring debt, granting liens, making acquisitions, making loans, paying dividends, dissolving, and entering into leases and asset sales and (iii) compliance with a collateral coverage covenant. The Loan Agreement also provides for events of default, including, among others, payment, bankruptcy, covenant, representation and warranty, change of control, judgment and material adverse effect defaults at the discretion of the lender. As of September 30, 2020, the Company was in compliance with all the covenants.

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, 2020,~~March 31, 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, 2020
$
164,017
December 31, 2021

127,317
December 31, 2022

93,321
December 31, 2023

62,920
December 31, 2024

33,692
December 31, 2025

—


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

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9.11. Convertible Senior Notes

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, ~~which is referred to herein as the 3.75% Convertible Senior Notes,~~ in a private placement to qualified institutional buyers pursuant to Rule 144A under the Securities Act of 1933, as amended, or (“the Securities ~~Act.~~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:


	Amount
	(in thousands)
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 ~~5.5% Convertible Senior Notes due 2023, which is referred to herein as~~ 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:

during any calendar quarter commencing after ~~September 30, 2020,~~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;

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;

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

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

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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 ~~will be~~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 of March 31, 2021, $15.2 million of the 3.75% Convertible Senior Notes were converted and the Company issued 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 41^st 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.

~~In accounting~~The Company accounts for ~~the issuance of~~ the 3.75% Convertible Senior Notes the Company separated the notes into liability and equity components. The initial carrying amount of the liability component of approximately $75.2 million, net of costs incurred, was calculated by measuring the fair value ofas a similar liability that does not have an associated convertible feature. The carrying amount of the equity component of approximately $130.3 million, net of costs incurred, representing the conversion option, was determined by deducting the fair value of the liability component from the par value of the 3.75% Convertible Senior Notes. The difference between the principal amount of the 3.75% Convertible Senior Notes and the liability component (the debt discount) is amortized to interest expense using the effective interest method over the term of the 3.75% Convertible Senior Notes. The effective interest rate is approximately 29.0%. The equity component of the 3.75% Convertible Senior Notes is included in additional paid-in capital in the unaudited interim condensed consolidated balance sheets and is not remeasured as long as it continues to meet the conditions for equity classification.

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. In accounting for the transaction costs, we allocated the total amount incurred to the liability and equity components using the same proportions as the proceeds from the 3.75% Convertible Senior Notes. Transaction costs attributable to the liability component were approximately $2.6 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 transaction costs attributable to the equity component were approximately $4.4 million and were netted with the equity component in stockholders’ equity.~~

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


	September 30,		March 31,
	2020		2021
Principal amounts:
Principal	$	212,463	$	197,278
Unamortized debt discount (1)		(129,101)
Unamortized debt issuance costs (1)		(2,425)		(5,510)
Net carrying amount	$	80,937	$	191,768
Carrying amount of the equity component (2)	$	130,249

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.

Included in the unaudited interim condensed consolidated balance sheets within additional paid-in capital, net of $4.4 million in equity issuance costs and associated income tax benefit of $19.0 million.

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


	March 31,
	2021
Interest Expense	$	1,897
Amortization of Debt Issuance Costs		1,258
Total		3,155

Effective Interest Rate		4.5%

Based on the closing price of the Company’s common stock of ~~$13.41~~$35.84 on ~~September 30, 2020,~~March 31, 2021, the if-converted value of the notes was greater than the principal amount. The estimated fair value of the note at ~~September 30, 2020~~March 31, 2021 was approximately ~~$532.3 million.~~$1.3 billion. The ~~Company utilized~~fair value estimation was primarily based on an active stock exchange trade on March 30, 2021 of the 3.75% Senior Convertible Note. See Note 16, “Fair Value Measurements” for a ~~Monte Carlo simulation model to estimate~~description of the fair value of the convertible debt. The simulation model is designed to capture the potential settlement features of the convertible debt, in conjunction with simulated changes in the Company’s stock price over the term of the note, incorporating a volatility assumption of 75%. This is considered a Level 3 fair value measurement.hierarchy.

Capped Call

In conjunction with the pricing of the 3.75% Convertible Senior Notes, the Company entered into privately negotiated capped call transactions ~~(3.75%~~(the “3.75% Notes Capped ~~Call)~~Call”) with certain counterparties at a price of $16.2 million. The 3.75% Notes Capped Call ~~cover,~~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 ~~has been~~were recorded as a reduction to additional paid-in capital in the unaudited interim condensed consolidated balance ~~sheet.~~

~~7.5% Convertible Senior Note~~

In September 2019, the Company issued $40.0 million aggregate principal amount of 7.5% Convertible Senior Note due on January 5, 2023, which is referred to herein as the 7.5% Convertible Senior Note, in exchange for net proceeds of $39.1 million, in a private placement to an accredited investor pursuant to Rule 144A under the Securities Act. There were no required principal payments prior to the maturity of the 7.5% Convertible Senior Note. Upon maturity of the 7.5% Convertible Senior Note, the Company was required to repay 120% of $40.0 million, or $48.0 million. The 7.5% Convertible Senior Note bore interest at 7.5% per year, payable quarterly in arrears on January 5, April 5, July 5 and October 5 of each year beginning on October 5, 2019 and was to mature on January 5, 2023 unless earlier converted or repurchased in accordance with its terms. The 7.5% Convertible Senior Note was unsecured and did not contain any financial covenants or any restrictions on the payment of dividends, or the issuance or repurchase of common stock by the Company.

~~On July 1, 2020, the 7.5% Convertible Senior Note automatically converted into 16.0 million shares of common stock.~~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, which is referred to herein as the 5.5% Convertible Senior Notes 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. ~~Of the $128.9 million in aggregate consideration~~, $35.5 million and $93.4 million were allocated to the debt and equity components, respectively, utilizing an effective discount rate of 29.8% to determine the fair value of the liability component. As of the repurchase date, the carrying value of the 5.5% Convertible Senior Notes that were repurchased, net of unamortized debt discount and issuance costs, was $48.7 million. The partial repurchase of the 5.5% Convertible Senior Notes resulted in a $13.2 million gain on early debt extinguishment. AsIn the fourth quarter of ~~September 30,~~ 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 ~~$33.7~~$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 ~~remained outstanding. In October 2020, $28.0 million of the remaining 5.5% Convertible Senior Notes~~were converted into ~~12.2 million~~69,808 shares of common stock.

~~At issuance in March 2018,~~ Interest expense and amortization for the ~~total net proceeds from the 5.5% Convertible Senior Notes~~period were ~~as follows:~~immaterial.

Amount

(in thousands)
Principal amount
$
100,000
Less initial purchasers' discount

(3,250)
Less cost of related capped call and common stock forward

(43,500)
Less other issuance costs

(894)
Net proceeds
$
52,356

The 5.5% Convertible Senior Notes bear interest at 5.5%, payable semi-annually in cash on March 15 and September 15 of each year. The 5.5% Convertible Senior Notes will mature on March 15, 2023, unless earlier converted or repurchased in accordance with their terms. The 5.5% Convertible Senior Notes are unsecured and do not contain any financial covenants or any restrictions on the payment of dividends, or the issuance or repurchase of common stock by the Company.

Each $1,000 principal amount of the 5.5% Convertible Senior Notes is convertible into 436.3002 shares of the Company’s common stock, which is equivalent to a conversion price of approximately $2.29 per share, subject to adjustment upon the occurrence of specified events. Holders of these 5.5% Convertible Senior Notes may convert their 5.5% Convertible Senior Notes at their option at any time prior to the close of the last business day immediately preceding September 15, 2022, only under the following circumstances:

during any calendar quarter (and only during such calendar quarter), if the last reported sale price of the Company’s common stock for 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 is greater than or equal to 130% of the conversion price on each applicable trading day;

~~during the~~ ~~five~~ ~~business day period after any~~ ~~five~~ consecutive trading day period (the measurement period) in which the trading price (as defined in the indenture governing the 5.5% Convertible Senior Notes) per $1,000 principal amount of 5.5% 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 for the 5.5% Convertible Senior Notes on each such trading day;~~

if the Company calls any or all of the 5.5% Convertible Senior Notes for redemption, at any time prior to the close of business on the second scheduled trading day immediately preceding the redemption date; or

upon the occurrence of certain specified corporate events, such as a beneficial owner acquiring more than 50% of the total voting power of the Company’s common stock, recapitalization of the Company, dissolution or liquidation of the Company, or the Company’s common stock ceases to be listed on an active market exchange.

On or after September 15, 2022, holders may convert all or any portion of their 5.5% Convertible Senior 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.

Upon conversion of the 5.5% Convertible Senior Notes, the Company will pay or deliver, as the case may be, 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. While the Company plans to settle the principal amount of the 5.5% Convertible Senior Notes in cash subject to available funding at time of settlement, we currently use the if-converted method for calculating any potential dilutive effect of the conversion option on diluted net income per share, subject to meeting the criteria for using the treasury stock method in future periods.

The conversion rate will be subject to adjustment in some events but will not be adjusted for any accrued or unpaid interest. Holders who convert their 5.5% Convertible Senior Notes in connection with certain corporate events that constitute a “make-whole fundamental change” per the indenture governing the 5.5% Convertible Senior Notes or in connection with a redemption will be, under certain circumstances, entitled to an increase in the conversion rate. In addition, if the Company undergoes a fundamental change prior to the maturity date, holders may require the Company to repurchase for cash all or a portion of its 5.5% Convertible Senior Notes at a repurchase price equal to 100% of the principal amount of the repurchased 5.5% Convertible Senior Notes, plus accrued and unpaid interest.

The Company may not redeem the 5.5% Convertible Senior Notes prior to March 20, 2021. The Company may redeem for cash all or any portion of the 5.5% Convertible Senior Notes, at the Company’s option, on or after March 20, 2021 if the last reported sale price of the Company’s common stock has been at least 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 on which the Company provides notice of redemption, during any 30 consecutive trading day period ending on, and including, the trading day immediately preceding the date on which the Company provides notice of redemption at a redemption price equal to 100% of the principal amount of the 5.5% Convertible Senior Notes to be redeemed, plus accrued and unpaid interest to, but excluding, the redemption date.

In accounting for the issuance of the notes, the Company separated the 5.5% Convertible Senior Notes into liability and equity components. The initial carrying amount of the liability component of approximately $58.2 million, net of costs incurred, was calculated by measuring the fair value of a similar liability that does not have an associated convertible feature. The carrying amount of the equity component of approximately $37.7 million, net of costs incurred, representing the conversion option, was determined by deducting the fair value of the liability component from the par value of the 5.5% Convertible Senior Notes. The difference between the principal amount of the 5.5% Convertible Senior Notes and the liability component (the debt discount) is amortized to interest expense using the effective interest method over the term of the 5.5% Convertible Senior Notes. The effective interest rate is approximately 16.0%. The equity component of the 5.5% Convertible Senior Notes is included in additional paid-in capital in the unaudited interim condensed consolidated balance sheets and is not remeasured as long as it continues to meet the conditions for equity classification.

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component were approximately $2.4 million, 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 5.5% Convertible Senior Notes. The transaction costs attributable to the equity component were approximately $1.7 million and were netted with the equity component in stockholders’ equity.

~~The 5.5% Convertible Senior Notes consisted of the following (in thousands):~~

September 30,

December 31,

2020

2019
Principal amounts:

Principal
$
33,660

$
100,000
Unamortized debt discount (1)

(7,477)

(27,818)
Unamortized debt issuance costs (1)

(403)

(1,567)
Net carrying amount
$
25,780

$
70,615
Carrying amount of the equity component (2)
$
—

$
37,702

Included in the unaudited interim condensed consolidated balance sheets within the 5.5% Convertible Senior Notes, net and amortized over the remaining life of the 5.5% Convertible Senior Notes using the effective interest rate method.

Included in the unaudited interim condensed consolidated balance sheets within additional paid-in capital, net of $1.7 million in equity issuance costs and associated income tax benefit of $9.2 million, at December 31, 2019.

Based on the closing price of the Company’s common stock of $13.41 on September 30, 2020, the if-converted value of the 5.5% Convertible Senior Notes was greater than the principal amount. The estimated fair value of the 5.5% Convertible Senior Notes at September 30, 2020 and December 31, 2019 was approximately $195.3 million and $135.3 million, respectively. The Company utilized a Monte Carlo simulation model to estimate the fair value of the convertible debt. The simulation model is designed to capture the potential settlement features of the convertible debt, in conjunction with simulated changes in the Company’s stock price over the term of the 5.5% Convertible Senior Notes, incorporating a volatility assumption of 75%. This is considered a Level 3 fair value measurement.

Capped Call

In conjunction with the pricing of the 5.5% Convertible Senior Notes, the Company entered into privately negotiated capped call transactions ~~(5.5%~~(the “5.5% Notes Capped ~~Call)~~Call”) with certain counterparties at a price of $16.0 million. The 5.5% Notes Capped Call cover, subject to anti-dilution adjustments, the aggregate number of shares of the Company’s common stock that underlie the initial 5.5% Convertible Senior Notes and is generally expectedmillion 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, with such reduction and/or offset subject to a cap based on the cap price. The cap price of the 5.5% Notes Capped Call is initially $3.82 per share, which represents a premium of 100% over the last then-reported sale price of the Company’s common stock of $1.91 per share on the date of the transaction and is subject to certain adjustments under the terms of the 5.5% Notes Capped Call. The 5.5% Notes Capped Call becomes exercisable if the conversion option is exercised.

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 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 is recorded in additional paid-in capital.

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, or (“the Common Stock ~~Forward,~~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 ~~has been~~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.

~~In conjunction with the partial payoff of the 5.5% Convertible Senior Notes, the Common Stock Forward’s expiration date was extended to June 1, 2025.~~

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

During ~~October~~the fourth quarter of 2020, the Common Stock Forward was partially settled and, as a result, the Company received ~~3.5~~4.4 million shares of its common stock. During the first quarter of 2021, 5.9 million shares settled and were received by the Company, with an additional 2.2 million that settled and were received by the company in April 2021.

~~10.~~12. Stockholders’ Equity

Preferred Stock

The Company has authorized 5.0 million shares of preferred stock, par value $0.01 per share. The Company’s certificate of incorporation provides that shares of preferred stock may be issued from time to time in one or more series. The Company’s Board of Directors is authorized to fix the voting rights, if any, designations, powers, preferences, qualifications, limitations and restrictions thereof, applicable to the shares of each series.

The Company has authorized Series A Junior Participating Cumulative Preferred Stock, par value $0.01 per share. As of ~~September 30, 2020~~March 31, 2021 and December 31, ~~2019,~~2020, there were 0 shares of Series A Junior Participating Cumulative Preferred Stock issued and outstanding. ~~See Note 11, Redeemable Convertible Preferred Stock, for a description of the Company’s Series C Preferred Stock and Series E Preferred Stock.~~

Common Stock and Warrants

The Company has one class of common stock, par value $.01 per share. Each share of the Company’s common stock is entitled to 1 vote on all matters submitted to stockholders.

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.

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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 $1.8 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 ~~direct~~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.

In March 2019, the Company issued and sold in a registered direct offering an aggregate of 10 million shares of the Company’s common stock at a purchase price of $2.35 per share. The net proceeds to the Company were approximately $23.5 million.

There were ~~390,197,748~~566,385,952 and ~~303,378,515~~458,051,920 shares of common stock outstanding as of ~~September 30, 2020~~March 31, 2021 and December 31, ~~2019,~~2020, respectively.

During 2017, warrants to purchase up to 110,573,392 shares of common stock were issued in connection with transaction agreements with Amazon and Walmart, as discussed in Note ~~12, Warrant~~13, “Warrant Transaction Agreements.” At ~~September 30, 2020~~both March 31, 2021 and December 31, ~~2019, 40,737,564 and 26,188,434~~2020, a total of 68,380,913 warrants had vested. Warrants were exercised with respect to 5,819,652 shares during the ~~warrant~~fourth quarter of 2020. Warrants were exercised with respect to an additional 16,489,014 shares ~~had vested, respectively, and are therefore exercisable.~~during the three months ended March 31, 2021. These warrants are measured at fair value asat the time of ~~January 1, 2019~~grant or modification and are classified as equity instruments on the unaudited interim condensed consolidated balance sheets.

At Market Issuance Sales Agreement

On April 13, 2020, the Company entered into the at Market Issuance Sales ~~Agreement~~agreement with ~~FBR~~B. Riley Financial (“B. Riley”) as sales agent, pursuant to which the Company may offer and sell, from time to time through ~~FBR,~~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.~~agreement.

~~11. Redeemable Convertible Preferred Stock~~

~~Series E Preferred Stock~~

In November 2018, the Company issued an aggregate of 35,000 shares of the Company’s Series E Preferred Stock in a private placement to certain accredited investors in reliance on Section 4(a)(2) of the Securities Act. The Company received net proceeds of approximately $30.9 million, after deducting placement agent fees and expenses payable by the Company. The Company is required to redeem the Series E Preferred Stock in 13 monthly installments in the amount of $2.7 million each from May 2019 through May 2020. The Company had 0 and 500 shares of Series E Preferred Stock outstanding at September 30, 2020 and 2019, respectively. The remaining 500 shares were converted to common stock in January 2020.

~~Series C Preferred Stock~~

In April 2020, 870 shares of Series C Preferred Stock were converted to 923,819 shares of common stock. In May 2020, the remaining the 1,750 shares of Series C Preferred Stock were converted into 1,858,256 shares of common stock.

~~12.~~13. Warrant Transaction Agreements

Amazon Transaction Agreement

On April 4, 2017, the Company and Amazon entered into a Transaction Agreement (the ~~Amazon~~“Amazon Transaction ~~Agreement)~~Agreement”), pursuant to which the Company agreed to issue to Amazon.com NV Investment Holdings LLC, a wholly owned subsidiary of Amazon, ~~warrants~~a warrant (the “Amazon Warrant”) to acquire up to 55,286,696 shares of the Company’s common stock (the ~~Amazon~~“Amazon Warrant ~~Shares)~~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 ~~is linked to~~was conditioned upon payments made by Amazon or its affiliates (directly or indirectly through third parties) pursuant to the existing commercial agreements.

~~The majority~~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 ~~will~~ 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 ~~first tranche of 5,819,652 Amazon Warrant Shares vested upon the execution of the Amazon Transaction Agreement. Accordingly,~~ $6.7 million ~~the~~ fair value of the first tranche of the Amazon Warrant Shares, was recognized as selling, general and administrative expense ~~during 2017. All future provision~~upon execution of the Amazon Warrant.

Provision for ~~common stock warrants~~the second and third tranches of Amazon Warrant Shares is ~~measured based on their grant-date fair value and~~ recorded as a ~~charge against revenue.~~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 4 equal installments, ~~of 7,274,565 Amazon Warrant Shares each time~~as Amazon or its affiliates, directly or indirectly through third parties, ~~make~~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 ~~exercise price for~~last installment of the ~~first~~second tranche vested on November 2, 2020. Revenue reductions of $9.0 million, $4.1 million and $9.8 million associated with

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the second ~~tranches~~tranche of Amazon Warrant Shares ~~is $1.1893 per share. The~~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 ~~will vest~~vests in 8 equal installments, ~~of 2,546,098 Amazon~~ ~~Warrant Shares~~

~~each time~~as Amazon or its affiliates, directly or indirectly through third parties, ~~make~~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. The total amount of provision for common stock warrants recorded as a reduction of revenue for the Amazon Warrant during the three months ended March 31, 2021 and 2020 was $104 thousand and $1.3 million, respectively. During the three months ended March 31, 2021, the Amazon Warrant was exercised with respect to 9,214,449 shares of common stock. On June 11, 2021, an additional 4,534,130 warrants were exercised.

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 iswas $13.81 per share, which iswas determined pursuant to the terms of the Amazon Warrant as an amount ~~per share~~ equal to ~~ninety~~90 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 ~~Shares are~~was exercisable through April 4, 2027. The Amazon Warrant ~~Shares provide~~provides for net share settlement that, if elected by the ~~holders,~~holder, will reduce the number of shares issued upon exercise to reflect net settlement of the exercise price. The Amazon Warrant ~~Shares provide~~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. ~~These warrants are~~The Amazon Warrant is classified as an equity ~~instruments.~~instrument.

~~At September 30, 2020 and December 31, 2019, 27,643,347 and 20,368,782~~Fair value of the Amazon Warrant ~~Shares had vested, respectively. The amount of provision for common stock warrants recorded as a reduction of revenue for the Amazon Warrant during the three months ended September 30,~~at December 31, 2020 and ~~2019~~November 2, 2020 was ~~$17.3 million and $1.0 million, respectively. The amount of provision~~based on the Black Scholes Option Pricing Model, which is based, in part, upon level 3 unobservable inputs for ~~common stock warrants recorded as a reduction of revenue for~~which there is little or no market data, requiring the ~~Amazon Warrant during the nine months ended September 30, 2020 and 2019 was $22.0 million and $2.0 million, respectively.~~Company to develop its own assumptions.

~~During~~

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The Company used the ~~third quarter of 2020, approximately $23.8 million of recorded revenue from~~following assumptions for its Amazon was constrained by the tranche 3 of the Amazon Warrant Shares. An additional 7,274,565 Amazon Warrant Shares vested on November 2, 2020, representing the final vesting of tranche 2, resulting in cumulative vesting in 34,917,912 Warrant Shares since the execution of the Amazon Transaction Agreement. In accordance with terms of the Amazon Transaction Agreement as described above, upon final vesting of tranche 2, the tranche 3 Amazon Warrant Shares exercise price was determined to be $13.81 per share. Based on the exercise price of the third tranche of the Amazon Warrant Shares, among other things, the fair value of the 20,368,784 tranche 3 Amazon Warrant Shares is estimated to be $10.60 each, compared to the fair value of tranche 2 Amazon Warrant Shares of $1.05 each.Warrant:

The Company also recorded a provision for losses of $4.3 million in the third quarter of 2020 related to Amazon service contracts, caused primarily by the increase in the value of the tranche 3 warrants, driven by recent increases in the Company’s stock price.


	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~~“Walmart Transaction ~~Agreement)~~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~~“Walmart Warrant ~~Shares)~~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 ~~is linked to~~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 ~~Transaction Agreement.~~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 ~~unaudited interim condensed~~ 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 ~~will vest~~vests in 4 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 8 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 ~~Shares are~~is exercisable through July 20, 2027.

The Walmart Warrant ~~Shares provide~~provides for net share settlement that, if elected by the ~~holders,~~holder, will reduce the number of shares issued upon exercise to reflect net settlement of the exercise price. The Walmart Warrant ~~Shares provide~~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. ~~These warrants are~~The Walmart Warrant is classified as an equity ~~instruments.~~instrument.

At ~~September 30, 2020~~both March 31, 2021 and December 31, ~~2019,~~2020, 13,094,217 ~~and 5,819,652~~ of the Walmart Warrant Shares had ~~vested, respectively.~~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,~~March 31, 2021 and 2020 ~~and 2019~~ was ~~$1.3~~$1.6 million and ~~$0.5~~$0.9 million, respectively. ~~The amount of provision for common stock warrants recorded as a reduction of revenue for~~During the three months ended March 31, 2021 and December 31, 2020, the Walmart Warrant ~~during the nine months ended September 30, 2020~~had been exercised with respect to 7,274,565 and ~~2019 was $3.2 million and $1.7 million,~~5,819,652 shares of common stock, respectively.

~~13. Revenue~~

~~Disaggregation of revenue~~

~~The following table provides information about disaggregation of revenue (in thousands):~~

Major products/services lines

Three months ended September 30,

Nine months ended September 30,

2020

2019

2020

2019
Sales of fuel cell systems

$
51,864

$
29,775

$
107,779

$
67,566
Sale of hydrogen installations and other infrastructure

31,664

9,102

43,882

12,551
Services performed on fuel cell systems and related infrastructure

6,829

6,205

19,586

17,889
Power Purchase Agreements

6,704

6,595

19,854

19,114
Fuel delivered to customers

9,831

7,649

24,536

21,320
Other

97

135

235

135
Net revenue

$
106,989

$
59,461

$
215,872

$
138,575

~~Contract balances~~

~~The following table provides information about receivables, contract assets and contract liabilities from contracts with customers (in thousands):~~

September 30,

December 31,

2020

2019
Accounts receivable

$
113,133

$
25,448
Contract assets

12,029

13,251
Contract liabilities

76,526

43,480

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14. Revenue

Disaggregation of revenue

The following table provides information about disaggregation of revenue (in thousands):


Major products/services lines
	Three months ended March 31,
	2021		2020
Sales of fuel cell systems	$	26,419	$	14,732
Sale of hydrogen installations and other infrastructure		20,353		5,736
Services performed on fuel cell systems and related infrastructure		6,045		6,521
Power Purchase Agreements		7,826		6,421
Fuel delivered to customers		11,127		7,333
Other		188		76
Net revenue	$	71,958	$	40,819

Contract balances

The following table provides information about receivables, contract assets and contract liabilities from contracts with customers (in thousands):


	March 31,		December 31,
	2021		2020
Accounts receivable	$	42,632	$	43,041
Contract assets		17,009		18,189
Contract liabilities		72,897		76,285

Contract assets relate to contracts for which revenue is recognized on a straight-line basis, however billings escalate over the life of a contract. Contract assets also include amounts recognized as revenue in advance of billings to customers, which are dependent upon the satisfaction of another performance obligation. These amounts are included within prepaid expenses and other current assets on the accompanying unaudited interim condensed consolidated balance sheets.

The contract liabilities relate to the advance consideration received from customers for services that will be recognized over time (primarily fuel cell and related infrastructure services)~~. Contract liabilities also include~~ and advance consideration received from customers prior to delivery of products. ~~These amounts are~~As of March 31, 2021, the amount of contract liabilities included within deferred revenue was $57.6 million and the amount of contract liabilities within other current liabilities was $15.3 million on the accompanying unaudited interim condensed consolidated ~~interim~~ balance sheets. As of December 31, 2020, the amount of contract liabilities included within deferred revenue was $56.2 million and the amount of contract liabilities within other current liabilities was $20.1 million.

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Significant changes in the contract assets and the contract liabilities balances during the period are as follows (in thousands):



Contract assets	~~Nine~~Three months ended
	~~September 30, 2020~~March 31, 2021
Transferred to receivables from contract assets recognized at the beginning of the period	$	~~(10,249)~~(2,625)
Revenue recognized and not billed as of the end of the period		~~9,027~~1,445
Net change in contract assets		~~(1,222)~~(1,180)


Contract liabilities	Nine months ended		Three months ended
	September 30, 2020		March 31, 2021
Increases due to cash received, net of amounts recognized as revenue during the period	$	58,732	$	13,045
Contract liabilities assumed as part of acquisitions		18,107
Revenue recognized that was included in the contract liability balance as of the beginning of the period		(43,793)		(16,433)
Net change in contract liabilities	$	33,046	$	(3,388)

Estimated future revenue

The following table includes estimated revenue included in the backlog expected to be recognized in the future (sales of fuel cell systems and hydrogen installations are expected to be recognized as revenue within one year; sales of services and PPAs are expected to be recognized as revenue over five to seven years) related to performance obligations that are unsatisfied (or partially unsatisfied) at the end of the reporting period, ~~excluding~~including provision for common stock warrants ~~as it is not readily estimable as it depends on the valuation of the common stock warrants when revenue is recognized~~ (in thousands):



	September 30,		March 31,
	2020		2021
Sales of fuel cell systems	$	50,285	$	66,033
Sale of hydrogen installations and other infrastructure		62,705		69,678
Services performed on fuel cell systems and related infrastructure		86,536		105,852
Power Purchase Agreements		177,721		185,431
UHG molecule		20,680
Fuel delivered to customers				64,555
Other rental income		3,705		2,894
Total estimated future revenue	$	401,632	$	494,443

Contract costs

Contract costs consist of capitalized commission fees and other expenses related to obtaining or fulfilling a contract.

Capitalized contract costs at ~~September 30, 2020~~March 31, 2021 and December 31, ~~2019~~2020 were ~~$1.3~~$1.7 million and ~~$0.5,~~$1.5 million, respectively. ~~Expense related to the amortization of capitalized contract costs was not significant for the three or nine months ended September 30, 2020 and 2019.~~

~~14.~~15. Income Taxes

The Company ~~recognized an~~did 0t record any income tax expense or benefit for the three ~~and nine~~ months ended September 30, 2020 of $6.5 million and $24.2 million, respectively. Income tax benefit for the three and nine months ended September 30, 2020 included $6.5 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 $5.2 million of income tax benefit for the nine months ended September 30, 2020 related to the recognition of net deferred tax liabilities in connection with the Giner ELX acquisition, which resulted in a corresponding reduction in our deferred tax asset valuation allowance.March 31, 2021 or 2020. 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 ~~remaining~~ net deferred tax asset generated from the Company’s ~~current period~~ 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 ~~also~~ recognizes accrued interest and penalties related to unrecognized tax benefits, if any, as a component of income tax expense.

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~~15. Fair Value Measurements~~

~~During 2020, the Company had no financial instruments measured at fair value on a recurring basis.~~

The following table summarizes the amounts recorded on the unaudited interim condensed consolidated statement of operations for financial instruments measured at fair value on a recurring basis for the three and nine months ended September 30, 2019 (in thousands):

Quoted Prices

Significant

Significant

in Active

Other

Other

Markets for

Observable

Unobservable

Identical Items

Inputs

Inputs

Total

(Level 1)

(Level 2)

(Level 3)

Common stock warrant liability

$
7

$
—

$
—

$
7

The Company’s common stock warrant liability represents the only asset or liability classified financial instrument measured at fair value on a recurring basis in the unaudited interim condensed consolidated balance sheets. The fair value measurement is determined by using Level 3 inputs due to the lack of active and observable markets that can be used to price identical assets. Level 3 inputs are unobservable inputs and should be used to determine fair value only when observable inputs are not available. Unobservable inputs should be developed based on the best information available in the circumstances, which might include internally generated data and assumptions being used to price the asset or liability.

Fair value of the common stock warrant liability is based on the Black-Scholes pricing model which is based, in part, upon 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 to measure the fair value of its liability-classified common stock warrants:~~


	~~Nine months ended~~
	~~September 30, 2019~~
~~Risk-free interest rate~~	~~1.99% - 2.51%~~
~~Volatility~~	~~22.62% - 74.93%~~
~~Expected average term~~	~~0.03 - 0.53~~

~~There was 0 expected dividend yield for the warrants granted.~~

~~16. Commitments and Contingencies~~

~~Lessor Obligations~~

~~As of September 30, 2020, the Company had noncancelable operating leases (as lessor), primarily associated with assets deployed at customer sites. These leases expire over the next~~ ~~one~~ ~~to nine years. Leases contain termination clauses with associated penalties, the amount of which cause the likelihood of cancellation to be remote.~~

~~Future minimum lease payments under noncancelable operating leases (with initial or remaining lease terms in excess of one year) as of September 30, 2020 were as follows (in thousands):~~

Remainder of 2020

$
8,272
2021

34,436
2022

32,665
2023

30,043
2024

26,660
2025 and thereafter

$
49,351
Total future minimum lease payments

$
181,427

~~Lessee Obligations~~

As of September 30, 2020, the Company had operating and finance 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 eight years. Minimum rent payments under operating and finance 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.

In prior periods, the Company entered into sale/leaseback transactions that were accounted for as finance leases and reported as part of finance obligations. The outstanding balance of finance obligations related to sale/leaseback transactions at September 30, 2020 and December 31, 2019 was $25.9 million and $31.7 million, respectively. The fair value of the finance obligation approximated the carrying value as of both September 30, 2020 and December 31, 2019.

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, 2020 was $144.3 million, of which $22.2 million and $122.1 million were classified as short-term and long-term, respectively, on the unaudited interim condensed consolidated balance sheets. The outstanding balance of this obligation at December 31, 2019 was $109.4 million, of which $15.5 million and $93.9 million were 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, 2020.

The Company has a finance lease associated with its property and equipment in Latham, New York. A liability relating to this lease of $2.8 million has been recorded as a finance obligation in the unaudited interim condensed

~~consolidated balance sheet~~16. Fair Value Measurements

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 ~~September 30, 2020.~~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 0 transfers betweenLevel1, Level 2, or Level3 during the three months ended March 31, 2021.

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


		As of March 31, 2021
		Carrying		Fair		Fair Value Measurements
		Amount		Value		Level 1		Level 2		Level 3
Assets
Cash equivalents (1)	$	93,941	$	93,941	$	—	$	93,941	$	—
Corporate bonds		99,171		99,171		—		99,171		—
Commercial paper		306,089		306,089		—		306,089		—

Liabilities
Contingent consideration		10,550		10,550		—		—		10,550
Convertible senior notes		191,768		1,320,952		—		1,320,952		—
Long-term debt		161,259		161,259		—		—		161,259
Finance obligations		182,791		182,791		—		—		182,791


		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 unaudited interim condensed consolidated balance sheets as of March 31, 2021, in addition to cash of $4.3 billion.

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The fair values for available-for-sale securities are based on prices obtained from an independent pricing service. Available-for-sale securities are characterized as Level 2 assets, as their fair values are determined using observable market inputs.

17. Operating and Finance Lease Liabilities

As of March 31, 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 20, “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, 2020.~~March 31, 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, 2020~~March 31, 2021 were as follows (in thousands):


					Other		Total				Finance		Total
	Operating		Finance		Leased		Finance			Operating Lease	Lease		Lease
	Leases		Leases		Property		Obligations			Liability	Liability		Liabilities
Remainder of 2020	$	14,639	$	2,546	$	186	$	17,371
2021		58,505		9,276		590		68,371
Remainder of 2021									$	24,082	$	1,874	$	25,956
2022		58,480		4,975		573		64,028		29,050		2,471		31,521
2023		55,655		3,149		549		59,353		29,107		2,446		31,553
2024		54,203		16,154		632		70,989		29,097		2,529		31,626
2025 and thereafter		71,304		—		1,174		72,478		56,232		3,103		59,335
Total future minimum lease payments		312,786		36,100		3,704		352,590
Less imputed lease interest		(84,903)		(10,190)		(947)		(96,040)
Sale of future services		144,292		—		—		144,292
Total lease liabilities	$	372,175	$	25,910	$	2,757	$	400,842
Total future minimum payments										167,568		12,423		179,991
Less imputed interest										(45,257)		(2,122)		(47,379)
Total									$	122,311	$	10,301	$	132,612

Rental expense for all operating leases was ~~$14.6~~$8.0 million and ~~$7.8~~$4.8 million for the three months ended ~~September 30,~~March 31, 2021 and 2020, ~~and 2019,~~ respectively. ~~Rental expense for all operating leases was $40.1 million and $19.9 million for the nine months ended September 30, 2020 and 2019, respectively.~~

The gross profit on sale/leaseback transactions for all operating leases was ~~$24.5~~$16.0 million and ~~$44.2~~$5.3 million for the three ~~and nine~~ months ended ~~September 30,~~March 31, 2021 and 2020, ~~respectively, and $14.8 million and $30.9 million for the three and nine months ended September 30, 2019,~~ respectively. Right of use assets for sale/leaseback transactions obtained in exchange for new operating lease liabilities was ~~$41.1~~$11.9 million and ~~$86.5~~$5.2 million for the three ~~and nine~~ months ended ~~September 30,~~March 31, 2021 and 2020, ~~respectively, and $38.4 million and $72.9 million for the three and nine months ended September 30, 2019.~~respectively.

At ~~both September 30, 2020~~March 31, 2021 and December 31, ~~2019,~~2020, the right of use assets associated with operating leases was $124.5million and $117.0 million, respectively. The accumulated depreciation for these right of use assets was $50.3 million and $48.6 million at March 31, 2021 and December 31, 2020, respectively.

At March 31, 2021 and December 31, 2020, the right of use assets associated with finance leases was $11.3 million and $5.7 million, respectively. The accumulated depreciation for these right of use assets was $143 thousand and $102 thousand at March 31, 2021 and December 31, 2020, respectively.

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At March 31, 2021 and December 31, 2020, security deposits associated with sale/leaseback transactions were $2.4 million and $5.8 million, respectively, and were included in other assets in the ~~unaudited interim condensed~~ consolidated balance sheets.

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


		Nine months ended		Nine months ended		Three months ended		Three months ended
		September 30, 2020		September 30, 2019		March 31,2021		March 31, 2020
Cash payments (in thousands)	$	40,500	$	19,222	$	6,734	$	8,199
Weighted average remaining lease term (years)						5.77		4.22
Weighted average discount rate						11.6%		12.0%

Right of use assets obtained in exchange for new finance lease liabilities were $5.6 million and 0 for the three months ended March 31, 2021 and 2020, respectively.

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


		Three months ended		Three months ended
		March 31, 2021		March 31, 2020
Cash payments (in thousands)	$	433	$	78
Weighted average remaining lease term (years)		5.1		7.51
Weighted average discount rate		7.2%		8.8%

18. Finance Obligation

September 30,

2020

2019
Weighted average remaining lease term (years)

5.5

5.25
Weighted average discount rate

12.1%

12.1%

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 March 31, 2021 was $161.0 million, $24.7 million and $136.3 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 March 31, 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 March 31, 2021 was $21.8 million, $7.4 million and $14.4 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 March 31, 2021 and December 31, 2020.

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~~Finance lease costs include amortization~~Future minimum payments under finance obligations notes above as of the right of use assets (i.e., depreciation expense) and interest on lease liabilities (i.e., interest and other expense, net in the unaudited interim consolidated statement of operations). Finance lease costsMarch 31, 2021 were as follows (in thousands):

Nine months ended

Nine months ended

September 30, 2020

September 30, 2019
Amortization of right of use asset
$
2,655

$
2,308
Interest on finance obligations

1,778

3,194
Total finance lease cost
$
4,433

$
5,502

Right of use assets obtained in exchange for new finance lease liabilities was $41.1 million and $86.5 million for the three and nine months ended September 30, 2020, respectively, and $38.4 million and $72.9 million for the three and nine months ended September 30, 2019, respectively.


					Total
		Sale of Future		Sale/leaseback	Finance
		revenue - debt		financings	Obligations
Remainder of 2021	$	31,738	$	6,795	$	38,533
2022		41,554		4,976		46,530
2023		41,554		3,149		44,703
2024		41,554		16,154		57,708
2025 and thereafter		59,449		—		59,449
Total future minimum payments		215,849		31,074		246,923
Less imputed interest		(54,827)		(9,305)		(64,132)
Total	$	161,022	$	21,769	$	182,791

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


		Nine months ended		Nine months ended		Three months ended		Three months ended
		September 30, 2020		September 30, 2019		March 31, 2021		March 31, 2020
Cash payments (in thousands)	$	7,847	$	57,659	$	12,816	$	9,879
Weighted average remaining term (years)						4.9		4.3
Weighted average discount rate						11.2%		11.1%

As of September 30,

2020

2019
Weighted average remaining lease term (years)

3.36

3.09
Weighted average discount rate

7.8%

11.1%

19. Investments

The gross unrealized gains and losses, and the amortized cost, allowance for credit losses, and fair value of those investments classified as available-for-sale at March 31, 2021 are summarized as follows (in thousands):


		Amortized	Gross		Gross		Fair		Allowance for
		Cost	Unrealized Gains		Unrealized Losses		Value		Credit Losses
Corporate bonds	$	99,239	$	—	$	(68)	$	99,171	$	—
Commercial paper		305,929		160		—		306,089		—
Totals	$	405,168	$	160	$	(68)	$	405,260	$	—

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


	March 31, 2021
		Amortized	Fair
Maturity:		Cost	Value
Within one year	$	375,804	$	375,927
After one through five years		29,364		29,333
Totals	$	405,168	$	405,260

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20. Commitments and Contingencies

Restricted Cash

~~As security for~~In connection with certain of the above noted sale/leaseback agreements, cash of ~~$133.4~~$198.6 million was required to be restricted as security as of ~~September 30, 2020,~~March 31, 2021, which restricted cash will be released over the lease term. As of ~~September 30, 2020,~~March 31, 2021, the Company also had certain letters of credit backed by ~~security deposits~~restricted cash totaling ~~$149.3~~$144.4 million that are security for the above noted sale/leaseback agreements.

In addition, as of September 30, 2020, the Company also had letters of credit in the aggregate amount of $0.5 million associated with a finance obligation from the sale/leaseback of its building. We consider cash collateralizing this letter of credit as restricted cash.

Litigation

Legal matters are defended and handled in the ordinary course of business. Liabilities for loss contingencies arising from claims, assessments, litigation, fines, and penalties and other sources are recorded when it is probable that a liability has been incurred and the amount can be reasonably estimated. Legal costs incurred in connection with loss contingencies are expensed as incurred. The Company has ~~established~~not recorded any accruals ~~for matters for which management considers a loss~~related to be probable and reasonably estimable. It is the opinion of management that facts known at the present time do not indicate that such litigation, after taking into account insurance coverage and the aforementioned accruals, will have a material adverse impact on our results of operations, financial position, or cash flows.any legal matters.

Concentrations of Credit Risk

Financial instruments that potentially subject the Company to credit risk consist principally of cash, cash equivalents, restricted cash, accounts receivable and marketable securities. Cash and restricted cash are maintained in accounts with financial institutions, which, at times may exceed the Federal depository insurance coverage of $0.25 million. The Company has not experienced losses on these accounts and management believes, based upon the quality of the financial institutions, that the credit risk with regard to these deposits is not significant. The Company’s available-for-sale securities consists primarily of investments in commercial paper and short-term high credit quality corporate debt securities.

Concentrations of credit risk with respect to receivables exist due to the limited number of select customers with whom the Company has ~~initial~~ commercial sales arrangements. To mitigate credit risk, the Company performs appropriate evaluation of a prospective customer’s financial condition.

At ~~September 30, 2020, 1 customer~~March 31, 2021, 2 customers comprised approximately ~~84.5%~~67.7% of the total accounts receivable balance. At December 31, ~~2019, 2~~2020, 3 customers comprised approximately ~~63.4%~~73.9% of the total accounts receivable balance.

For the ~~nine~~three months ended ~~September 30, 2020, 71.8%~~March 31, 2021, 71.2% of total consolidated revenues were associated primarily with ~~two~~3 customers. For the ~~nine~~three months ended ~~September 30, 2019, 62.3%~~March 31, 2020 65.9% of total consolidated revenues were associated primarily with 32 customers. For purposes of assigning a customer to a sale/leaseback transaction completed with a financial institution, the Company considers the end user of the assets to be the ultimate customer.

21. Employee Benefit Plans

2011 Stock Option and Incentive Plan

On May 12, 2011, the Company’s stockholders approved the 2011 Stock Option and Incentive Plan (the “2011 Plan”). The 2011 Plan provided for the issuance of up to a maximum number of shares of common stock equal to the sum of (i) 1,000,000, plus (ii) the number of shares of common stock underlying any grants pursuant to the 2011 Plan or the Plug Power Inc. 1999 Stock Option and Incentive Plan that are forfeited, canceled, repurchased or are terminated (other than by exercise). The shares may be issued pursuant to stock options, stock appreciation rights, restricted stock awards and certain other equity-based awards granted to employees, directors and consultants of the Company. NaN further grants may be made under the 2011 Plan after May 12, 2021. Through various amendments to the 2011 Plan approved by the Company’s stockholders, the number of shares of the Company’s common stock authorized for issuance under the 2011 Plan has been increased to 42.4 million. The Company recorded expense of approximately $8.5 million and $2.5 million, for the three months ended March 31, 2021 and 2020, respectively, in connection with the 2011 Plan.

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At March 31, 2021, there were outstanding options to purchase approximately 9.0 million shares of common stock. Options for employees issued under this plan generally vest in equal annual installments over three years and expire ten years after issuance. Options granted to members of the Board generally vest one year after issuance. To date, options granted under the 2011 Plan have vesting provisions ranging from one to three years in duration and expire ten years after issuance.

Compensation cost associated with employee stock options represented approximately $3.3 million and $1.4 million of the total share-based payment expense recorded for the three months ended March 31, 2021 and March 31, 2020, respectively. The Company estimates the fair value of stock options using a Black-Scholes valuation model, and the resulting fair value is recorded as compensation cost on a straight-line basis over the option vesting period. Key inputs and assumptions used to estimate the fair value of stock options include the grant price of the award, the expected option term, volatility of the Company’s stock, an appropriate risk-free rate, and the Company’s dividend yield. Estimates of fair value are not intended to predict actual future events or the value ultimately realized by employees who receive equity awards, and subsequent events are not indicative of the reasonableness of the original estimates of fair value made by the Company. The assumptions made for purposes of estimating fair value under the Black-Scholes model for the 581,000 and 85,000 options granted during the three months ended March 31, 2021 and 2020, respectively, were as follows:


	March 31,	March 31,
	2021	2020
Expected term of options (years)	6	6
Risk free interest rate	0.61% - 0.73%	0.69% - 1.37%
Volatility	72.46%	64.19%

There was 0 expected dividend yield for the employee stock options granted.

The Company used the simplified method in determining its expected term of all its stock option grants in all periods presented. The simplified method was used because the Company does not believe historical exercise data provides a reasonable basis for the expected term of its grants, primarily as a result of the limited number of stock option exercises that have historically occurred. The Company expects to cease using the simplified method to determine its expected term for stock option grants in the second quarter of 2021. The estimated stock price volatility was derived from the Company’s actual historic stock prices over the past six years, which represents the Company’s best estimate of expected volatility.

A summary of stock option activity for the quarter ended March 31, 2021 is as follows (in thousands except share amounts):


				Weighted
		Weighted		Average
		Average		Remaining	Aggregate
		Exercise		Contractual	Intrinsic
	Shares	Price		Terms	Value
Options outstanding at December 31, 2020	10,284,498	$	5.78	7.8	$	289,316
Granted	581,000		65.72	—		—
Exercised	(1,811,274)		2.65	—		—
Forfeited	(33,333)		1.74	—		—
Expired	—		—	—		—
Options outstanding at March 31, 2021	9,020,891	$	15.18	8.1	$	247,964
Options exercisable at March 31, 2021	2,284,519		2.07	5.7		77,143
Options unvested at March 31, 2021	6,736,372	$	11.73	8.9	$	170,820

The weighted average grant-date fair value of options granted during the three months ended March 31, 2021 and 2020 was $31.78 and $2.80, respectively. As of March 31, 2021, there was approximately $40.5 million of unrecognized compensation cost related to stock option awards to be recognized over the next three years. The total fair value of stock options that vested during the three months ended March 31, 2021 and 2020 was approximately $2.9 million and $1.2 million, respectively.

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Restricted stock awards generally vest in equal installments over a period of one to three years. Restricted stock awards are valued based on the closing price of the Company’s common stock on the date of grant, and compensation cost is recorded on a straight-line basis over the share vesting period. The Company recorded expense associated with its restricted stock awards of approximately $5.2 million and $1.0 million, for the three months ended March 31, 2021 and 2020, respectively. Additionally, for the three months ended March 31, 2021 and 2020, there was $64.1 million and $7.4million respectively, of unrecognized compensation cost related to restricted stock awards to be recognized over the next three years.

A summary of restricted stock activity for the year ended March 31, 2021 is as follows (in thousands except share amounts):


		Aggregate
		Intrinsic
	Shares	Value
Unvested restricted stock at December 31, 2020	5,874,642	$	—
Granted	555,000		—
Vested	(10,001)		—
Forfeited	(3,333)		—
Unvested restricted stock at March 31, 2021	6,416,308	$	229,960

401(k) Savings & Retirement Plan

The Company offers a 401(k) Savings & Retirement Plan to eligible employees meeting certain age and service requirements. This plan permits participants to contribute 100% of their salary, up to the maximum allowable by the Internal Revenue Service regulations. Participants are immediately vested in their voluntary contributions plus actual earnings or less actual losses thereon. Participants are vested in the Company’s matching contribution based on years of service completed. Participants are fully vested upon completion of three years of service. During 2018, the Company began funding its matching contribution in a combination of cash and common stock. The Company issued 12,513 shares of common stock and 133,250 shares of common stock pursuant to the Plug Power Inc. 401(k) Savings & Retirement Plan during the three months ended March 31, 2021 and 2020, respectively.

The Company’s expense for this plan was approximately $1.3 million, and $529 thousand for the three months ended March 31, 2021 and 2020, respectively.

Non-Employee Director Compensation

Each non-employee director is paid an annual retainer for their services, in the form of either cash or stock compensation. The Company granted 2,653 shares of common stock and 14,833 shares of common stock to non-employee directors as compensation for the three months ended March 31, 2021 and 2020, respectively. All common stock issued is fully vested at the time of issuance and is valued at fair value on the date of issuance. The Company’s share-based compensation expense in connection with non-employee director compensation was approximately $85 thousand and $56 thousand for the three months ended March 31, 2021 and 2020, respectively.

4122. Subsequent Events

On June 3, 2021, the Company, Plug Power France, a wholly-owned subsidiary of the Company (“Plug Power France”), Renault SAS (“Renault”) and HyVia, a French société par actions simplifiée (“HyVia”), entered into a definitive Joint Venture Agreement and related agreements to consummate the parties’ previously announced joint venture based in France (the “France JV”). HyVia, the joint venture entity, plans to manufacture and sell fuel cell powered electric light commercial vehicles (“FCE-LCVs”) and to supply hydrogen fuel and fueling stations to support the FCE-LCV market, in each case primarily in Europe. HyVia will be owned 50% by Plug Power France and 50% by Renault. The Company and Renault will make investments into HyVia to support necessary funding and growth, and the Company and Renault expect to invest on a pro rata basis not less than €65 million through 2022.

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Item 2 — Management’s Discussion and Analysis of Financial Condition and Results of Operations

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 ~~consolidated financial statements~~ and notes thereto included in our ~~Annual Report on Form 10-K, filed for the fiscal year ended December 31, 2019.~~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 and Section 21E of the Securities Exchange Act of 1934, as amended ~~(the~~“the Exchange ~~Act)~~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;

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the risk that unit orders may not ship, be installed and/or converted to revenue, in whole or in part;

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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;

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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;

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●

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~~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

~~As a leading provider of comprehensive hydrogen fuel cell turnkey solutions,~~ Plug Power ~~Inc., or~~is facilitating the ~~Company, is seeking~~paradigm shift to ~~build a green hydrogen economy. The Company is focused on~~an increasingly electrified world by innovating cutting-edge hydrogen and fuel cell ~~systems that are used~~solutions. In our core business, we provide and continue to power electric motors primarily in the electric mobility and stationary power markets, given the ongoing paradigm shift in the power, energy, and transportation industries to address climate change, energy security, and meet sustainability goals. Plug Power created the firstdevelop commercially viable ~~market for~~ hydrogen and fuel cell orproduct solutions to replace lead-acid batteries in electric material handling vehicles and industrial trucks for some of the ~~HFC technology. As a result, the Company has deployed over 38,000 fuel cell systems,~~world’s largest retail-distribution and ~~has become the largest buyer of liquid hydrogen, having built and operated a hydrogen network across North America.~~

We provide and continue to develop commercially-viable hydrogen and fuel cell solutions for industrial mobility applications (including electric forklifts and electric industrial vehicles) at multi-shift high volume manufacturing and high throughput distribution sites where we believePart of our ~~products and services provide a unique combination of productivity, flexibility and environmental benefits. In June of 2020,~~long-term plan includes Plug Power ~~completed~~penetrating the ~~acquisitions of United Hydrogen Group, Inc.~~on-road vehicle market and Giner ELX, Inc. in line with the Company’s hydrogen vertical integration strategy, with plans to have more than 50% of the hydrogen used by the Company to be green by 2024. These acquisitions further enhancelarge-scale stationary market. Plug Power’s ~~position~~announcements to form joint ventures with Renault in ~~the hydrogen industry~~Europe and SK Group in Asia not only support this goal but are expected to provide us with ~~capabilities in generation, liquefaction~~a more global footprint. Plug has been successful with acquisitions, strategic partnerships, and ~~distribution of hydrogen fuel complementing its~~

43joint 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.

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industry-leading position in the design, construction, and operation of customer-facing hydrogen fueling stations. These acquisitions establish a pathway for Plug Power to transition from low-carbon to zero-carbon hydrogen solutions.

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;

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 ~~Power MEA (membrane electrode assembly)~~“MEA”, a critical component of the fuel cell stack used in zero-emission fuel cell electric vehicle ~~engines, in which Plug Power~~engines; and

We provide our products worldwide through our direct product sales force, and by leveraging relationships with ~~original equipment manufacturers~~“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~~commercially viable products in Latham, ~~NY,~~New York, Rochester, NYNew York and Spokane, WAWashington and support liquid hydrogen generation and logistics in Charleston, ~~TN.~~Tennessee.

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—~~have~~ issued orders requiring businesses that do not conduct essential services to temporarily close their physical workplaces to employees and customers. ~~We are currently deemed an essential business and, as~~As a result, ~~are exempt from these state orders, in their current form. In March 2020,~~ we had put in place a number of protective measures in response to the COVID-19 ~~outbreak. These measures include~~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 ~~enables~~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.

44 In May 2021, the Centers for Disease Control and Prevention (the “CDC”) revised guidance for fully vaccinated individuals regarding no longer needing to wear a mask indoors or practicing social distancing, which was subsequently adopted by the state of New York on May 19, 2021.

As a result, effective in June 2021 and in accordance with new CDC guidelines and where permitted by state law, employees who are fully vaccinated against COVID-19 and have been through Plug Power’s validation process may enter

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Plug Power facilities without a face mask. Individuals inside Plug Power facilities who are not fully vaccinated are required to wear proper face coverings and continue to maintain social distancing of 6 feet or greater. In states where the guidelines for face coverings is still government mandated, Plug Power will comply with the state and local jurisdictions and enforce face mask usage, as well as social distancing at our sites.

Plug Power will continue to conduct health screening upon entrance to our facilities, 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. Although as of the date hereof, we have not observed any material impacts to our supply of components, the situation is fluid. 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. ~~Some~~Certain of our customers, such as certain automotive manufacturers, have suspended operations at their facilities due to COVID-19. Accordingly, while those customers continue to pay for the leasing and servicing of our products, they are not purchasing hydrogen fuel. Other customers are essential businesses and remain in operation. Certain of these customers, such as Walmart, significantly increased their use of units and hydrogen fuel consumption as a result of COVID-19. In the ~~nine~~three months ended ~~September 30,~~March 31, 2021 and the twelve months ended December 31, 2020, our services and ~~power purchase agreement~~PPA margins were negatively impacted by incremental service costs associated with increased usage of units at some of our primary customer sites. In addition, future changes in applicable government orders or regulations, or changes in the interpretation of existing orders or regulations, could result in further disruptions to our business that may materially and adversely affect our financial condition and results of operations.

~~Borrowings/August 2020 Equity Raise~~Capital Raises and Strategic Activities

~~In the third quarter of 2020, the Company borrowed an additional $50.0 million, under an amended loan agreement with Generate Lending, LLC.~~

~~Also,~~On June 3, 2021, the Company, Plug Power France, a wholly-owned subsidiary of the Company, Renault SAS (“Renault”) and HyVia, a French société par actions simplifiée, entered into a definitive Joint Venture Agreement and related agreements to consummate the parties’ previously announced joint venture based in ~~August 2020,~~France. HyVia, the joint venture entity, plans to manufacture and sell “FCE-LCVs” and to supply hydrogen fuel and fueling stations to support the FCE-LCV market, in each case primarily in Europe. HyVia will be owned 50% by Plug Power France and 50% by Renault. The Company and Renault will make investments into HyVia to support necessary funding and growth, and the Company and Renault expect to invest on a pro rata basis not less than €65 million through 2022.

On February 24, 2021, the Company completed the previously announced sale of its common stock in connection with a strategic partnership with SK Holdings Co., Ltd. (“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 ~~direct~~equity offering an aggregate of ~~35,276,250~~32.2 million shares of its common stock at a purchase price of ~~$10.25~~$65.00 per share for net proceeds of approximately ~~$344.4 million.~~$1.8 billion.

~~Amazon Warrants~~Explanatory Note

~~At September~~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 quarterly consolidated financial statements of and for each of the quarterly periods ended March 31, 2020, June 30, 2020 and ~~December 31,~~ 2019, 27,643,347 and 20,368,782 of the Amazon Warrant Shares had vested, respectively. The amount of provision for common stock warrants recorded as a reduction of revenue for the Amazon Warrant during the three months ended September 30, 2020 and 2019 ~~was $17.3 million~~ and $1.0 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, 2020 and 2019 was $22.0 million and $2.0 million, respectively.December 31, 2019.

~~During~~Previously filed annual reports on Form 10-K and quarterly reports on Form 10-Q for the ~~third quarter of 2020, approximately $23.8 million of recorded revenue from Amazon was constrained~~periods affected by the ~~tranche 3 of~~restatement have not been amended. Accordingly, investors should not rely upon the Amazon Warrant Shares. An additional 7,274,565 Amazon Warrant Shares vested on November 2, 2020, representing the final vesting of tranche 2, resulting in cumulative vesting in 34,917,912 Warrant Shares since the execution of the Amazon Transaction Agreement. In accordance with terms of the Amazon Transaction Agreement as described above, upon final vesting of tranche 2, the tranche 3 Amazon Warrant Shares exercise price was determinedCompany’s previously released financial statements for these periods and any earnings releases or other communications relating to ~~be $13.81 per share. Based~~these periods, and, for these periods, investors should rely solely on the ~~exercise price of~~financial statements and other financial data for the third tranche of the Amazon Warrant Shares, among other things, the fair value of the 20,368,784 tranche 3 Amazon Warrant Shares is estimated to be $10.60 each, compared to the fair value of tranche 2 Amazon Warrant Shares of $1.05 each.

~~The Company also recorded a provision for losses of $4.3 million~~relevant periods included in the ~~third quarter~~2020 10-K. Commencing with this quarterly report on Form 10-Q, we will include in our quarterly reports for fiscal 2021 restated results for the corresponding interim periods of ~~2020 related to Amazon service contracts, caused primarily by the increase in the value of the tranche 3 warrants, driven by recent increases in the Company’s stock price.~~

fiscal 2020.

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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.

In 2017, in separate transactions, the Company issued to each of Amazon and Walmart warrants to purchase shares of the Company’s common stock. The Company recorded a portion of the estimated fair value of the warrants as a reductionNet revenue, cost of revenue, ~~based upon the projected number of shares of common stock expected to vest under the warrants, the proportion of purchases by Amazon, Walmart~~gross profit (loss) and their affiliates within the period relative to the aggregate purchase levels required for vesting of the respective warrants, and the then-current fair value of the warrants. During the fourth quarter of 2019, the Company adopted ASU 2019-08, with retrospective adoption as of January 1, 2019. As a result, the amount recorded as a reduction of revenue was measured based on the grant-date fair value of the warrants. Previously, this amount was measured based on vesting date fair value with estimates of fair value determined at each financial reporting date for unvested warrant shares considered to be probable of vesting. Exceptgross margin for the ~~third tranche, all existing unvested warrants are using a measurement date of January 1, 2019, the adoption date, in accordance ASU 2019-08.~~three months ended March 31, 2021 and 2020, were as follows (in thousands):


			Cost of		Gross		Gross
	Net Revenue		Revenue		Profit/(Loss)		Margin
For the period ended March 31, 2021:
Sales of fuel cell systems and related infrastructure	$	46,772	$	28,974	$	17,798	38.1	%
Services performed on fuel cell systems and related infrastructure		6,045		13,086		(7,041)	(116.5)	%
Provision for loss contracts related to service		—		1,485		(1,485)	N/A
Power Purchase Agreements		7,826		18,343		(10,517)	(134.4)	%
Fuel delivered to customers		11,127		22,143		(11,016)	(99.0)	%
Other		188		98		90	47.9	%
Total	$	71,958	$	84,129	$	(12,171)	(16.9)	%
For the period ended March 31, 2020:
Sales of fuel cell systems and related infrastructure	$	20,468	$	13,974	$	6,494	31.7	%
Services performed on fuel cell systems and related infrastructure		6,521		10,347		(3,826)	(58.7)	%
Provision for loss contracts related to service		—		95		(95)	N/A
Power Purchase Agreements		6,421		14,771		(8,350)	(130.0)	%
Fuel delivered to customers		7,333		11,254		(3,921)	(53.5)	%
Other		76		81		(5)	(6.6)	%
Total	$	40,819	$	50,522	$	(9,703)	(23.8)	%

The amount of provision for common stock warrants recorded as a reduction of revenue during the three ~~and nine~~ months ended ~~September 30,~~March 31, 2021 and 2020, ~~and 2019,~~ respectively, is shown in the table below (in thousands):

Three months ended September 30,
Nine months ended September 30,

2020

2019

2020

2019

Sales of fuel cell systems and related infrastructure

$
(16,146)

$
(478)

$
(19,287)

$
(993)

Services performed on fuel cell systems and related infrastructure

(688)

(191)

(1,412)

(397)

Power Purchase Agreements

(758)

(325)

(1,887)

(1,032)

Fuel delivered to customers

(1,034)

(503)

(2,612)

(1,284)

Total

$
(18,626)

$
(1,497)

$
(25,198)

$
(3,706)

~~Net revenue, cost of revenue, gross profit (loss) and gross margin for the three and nine months ended September 30, 2020 and 2019, were as follows (in thousands):~~


	Three Months Ended									Nine Months Ended								Three months ended March 31,
	September 30,									September 30,								2021		2020
			Cost of			Gross		Gross				Cost of		Gross		Gross
	Net Revenue		Revenue			Profit/(Loss)		Margin		Net Revenue		Revenue		Profit/(Loss)		Margin
For the period ended September 30, 2020:
Sales of fuel cell systems and related infrastructure	$	83,528	$	68,509		$	15,019	18.0	%	$	151,661	$	115,929	$	35,732	23.6	%	$	(27)	$	(644)
Services performed on fuel cell systems and related infrastructure		6,829		7,074			(245)	(3.6)	%		19,586		21,746		(2,160)	(11.0)	%		(140)		(258)
Power Purchase Agreements		6,704		14,087			(7,383)	(110.1)	%		19,854		42,034		(22,180)	(111.7)	%		(900)		(551)
Fuel delivered to customers		9,831		14,172			(4,341)	(44.2)	%		24,536		32,267		(7,731)	(31.5)	%		(638)		(754)
Other		97		131			(34)	(35.1)	%		235		275		(40)	(17.0)	%
Total	$	106,989	$	103,973		$	3,016	2.8	%	$	215,872	$	212,251	$	3,621	1.7	%	$	(1,705)	$	(2,207)
For the period ended September 30, 2019:
Sales of fuel cell systems and related infrastructure	$	38,877	$	24,990		$	13,887	35.7	%	$	80,117	$	50,440	$	29,677	37.0	%
Services performed on fuel cell systems and related infrastructure		6,205		6,461			(256)	(4.1)	%		17,889		18,802		(913)	(5.1)	%
Power Purchase Agreements		6,595		10,353			(3,758)	(57.0)	%		19,114		28,064		(8,950)	(46.8)	%
Fuel delivered to customers		7,649		9,160			(1,511)	(19.8)	%		21,320		25,935		(4,615)	(21.6)	%
Other		135		150	��		(15)	(11.1)	%		135		150		(15)	(11.1)	%
Total	$	59,461	$	51,114		$	8,347	14.0	%	$	138,575	$	123,391	$	15,184	11.0	%

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.

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Revenue from sales of fuel cell systems and related infrastructure for the three months ended ~~September 30, 2020~~March 31, 2021 increased ~~$44.7~~$26.3 million, or ~~114.9%~~128.5%, to ~~$83.5~~$46.8 million from ~~$38.9~~$20.5 million for the three months ended ~~September 30, 2019.~~March 31, 2020. Included within revenue was provision for common stock warrants of ~~$16.1 million~~$27 thousand and ~~$0.5~~$0.6 million for the three months ended ~~September 30,~~March 31, 2021 and 2020, ~~and 2019,~~ respectively. The main drivers for the increase in revenue were the increase in GenDrive units recognized as revenue, ~~change in product mix, variations in customer programs, and~~ an increase in hydrogen installations, ~~offset partially by the~~and an increase in the provision for common stock warrants. There were ~~3,709~~1,308 GenDrive units recognized as revenue during the three months ended ~~September 30, 2020,~~March 31, 2021, compared to ~~1,513~~825 for the three months ended ~~September 30, 2019.~~March 31, 2020. There was hydrogen infrastructure revenue associated with 13six hydrogen sites during the three months ended ~~September 30, 2020,~~March 31, 2021, compared to ~~zero~~one during the three months ended ~~September 30, 2019.~~March 31, 2020.

Revenue from sales of fuel cell systems and related infrastructure for the nine months ended September 30, 2020 increased $71.5 million, or 89.3%, to $151.7 million from $80.1 million for the nine months ended September 30, 2019. Included within revenue was provision for common stock warrants of $19.3 million and $1.0 million for the nine months ended September 30, 2020 and 2019, respectively. The main drivers for the increase in revenue were the increase in GenDrive units recognized as revenue, change in product mix, variations in customer programs, and an increase in hydrogen installations, offset partially by the increase in the provision for common stock warrants. There were 7,217 GenDrive units recognized as revenue during the nine months ended September 30, 2020, compared to 6,058 for the nine months ended September 30, 2019. There was hydrogen infrastructure revenue associated with 18 hydrogen sites during the nine months ended September 30, 2020, compared to two during the nine months ended September 30, 2019.

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 March 31, 2021, there were 14,189 fuel cell units and 60 hydrogen installations under extended maintenance contracts, an increase from 10,662 fuel cell units and 45 hydrogen installations at March 31, 2020. Revenue from services performed on fuel cell systems and related infrastructure for the three months ended ~~September 30, 2020 increased $0.6~~March 31, 2021 decreased $0.5 million, or ~~10.1%~~7.3%, to ~~$6.8~~$6.0 million as compared to ~~$6.2~~$6.5 million for the three months ended ~~September 30, 2019.~~March 31, 2020. Included within revenue was provision for common stock warrants of ~~$0.7~~$0.1 million and ~~$0.2~~$0.3 million for the three months ended ~~September 30,~~March 31, 2021 and 2020, ~~and 2019,~~ respectively. The main drivers ~~for the increase~~in decrease in revenue was ~~additional contractual revenue associated with higher utilization of GenDrive units~~a reduction in billings for run time hours that exceeded certain levels given certain changes in the overall contract and ~~an increase in units under service maintenance contracts,~~commercial relationship, partially offset by the ~~increase in the provision for common stock warrants.~~

Revenue from services performed on fuel cell systems and related infrastructure for the nine months ended September 30, 2020 increased $1.7 million, or 9.5%, to $19.6 million as compared to $17.9 million for the nine months ended September 30, 2019. Included within revenue was provision for common stock warrants of $1.4 million and $0.4 million for the nine months ended September 30, 2020 and 2019, respectively. The main drivers for the increase in revenue was additional contractual revenue associated with higher utilization of GenDrive units and an increase in units under service maintenance contracts, partially offset by the increasedecrease in the provision for common stock warrants.

Revenue – Power Purchase Agreements. Revenue from PPAs represents payments received from customers for power generated through the provision of equipment and service. At March 31, 2021, there were 50 GenKey sites associated with PPAs, as compared to 34 at March 31, 2020. Revenue from PPAs for the three months ended ~~September 30, 2020~~March 31, 2021 increased ~~$0.1~~$1.4 million, or ~~1.7%~~21.9%, to ~~$6.7~~$7.8 million from ~~$6.6~~$6.4 million for the three months ended ~~September 30, 2019.~~March 31, 2020. Included within revenue was provision for common stock warrants of ~~$0.8~~$0.9 million and ~~$0.3~~$0.6 million for the three months ended ~~September 30,~~March 31, 2021 and 2020, ~~and 2019,~~ respectively. The increase in revenue from PPAs for the three months ended ~~September 30, 2020~~March 31, 2021 as compared to the three months ended ~~September 30, 2019~~March 31, 2020 was primarily attributable to the ~~increase in units associated with PPAs,~~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 from PPAs for the nine months ended September 30, 2020 increased $0.8 million, or 3.9%, to $19.9 million from $19.1 million for the nine months ended September 30, 2019. Included within revenue was provision for common stock warrants of $1.9 million and $1.0 million for the nine months ended September 30, 2020 and 2019, respectively. The increase in revenue from PPAs for the nine months ended September 30, 2020 as compared to the nine months ended September 30, 2019 was primarily attributable to the increase in units associated with PPAs, 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, 2020~~March 31, 2021 increased ~~$2.2~~$3.8 million, or

~~28.5%~~ 51.7%, to ~~$9.8~~$11.1 million from ~~$7.6~~$7.3 million for the three months ended ~~September 30, 2019.~~March 31, 2020. Included within revenue was provision for common stock warrants of ~~$1.0~~$0.6 million and ~~$0.5~~$0.8 million for the three months ended ~~September 30,~~March 31, 2021 and 2020, ~~and 2019,~~ respectively. The increase in revenue was due to an increase in the number of sites with fuel contracts infrom 77 as of March 31, 2020 ~~compared~~ to ~~2019,~~109 as of March 31, 2021, and ~~an increase in the price of fuel, partially offset by the increase~~a slight decrease in the provision for common stock warrants.

Revenue associated with fuel delivered to customers for the nine months ended September 30, 2020 increased $3.2 million, or 15.1%, to $24.5 million from $21.3 million for the nine months ended September 30, 2019. Included within revenue was provision for common stock warrants of $2.6 million and $1.3 million for the nine months ended September 30, 2020 and 2019, respectively. The increase in revenue was due to an increase in the number of sites with fuel contracts in 2020, compared to 2019, an increase in the price of fuel and an increase in the provision for common stock warrants.

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, ~~as well as~~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, 2020~~March 31, 2021 increased ~~174.1%~~107.3%, or ~~$43.5~~$15.0 million, to ~~$68.5~~$29.0 million, compared to ~~$25.0~~$14.0 million for the three months ended ~~September 30, 2019.~~March 31, 2020. This increase was driven by the increase in GenDrive deployment volume and increase in hydrogen installations. There were ~~3,709~~1,308 GenDrive units recognized as revenue during the three months ended ~~September 30, 2020,~~March 31, 2021, compared to ~~1,513~~825 for the three months ended ~~September 30, 2019.~~March 31, 2020. Revenue associated with 13six hydrogen installations was recognized during the three months ended ~~September 30, 2020,~~March 31, 2021, compared to ~~zero~~one during the three months ended ~~September 30, 2019.~~March 31, 2020. Gross ~~margin~~profit generated from sales of fuel cell systems and related infrastructure ~~decreased~~increased to ~~18.0%~~38.1% for the three months ended ~~September 30, 2020,~~March 31, 2021, compared to ~~35.7%~~31.7% for the three months ended ~~September 30, 2019,~~March 31, 2020 primarily due to the ~~increase in~~mix impact of the ~~provision for common stock warrants.~~units sold and customer profile.

~~Cost~~39

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 March 31, 2021, there were 14,189 fuel cell units and 60 hydrogen installations under extended maintenance contracts, an increase from 10,662 fuel cell units and 45 hydrogen installations at March 31, 2020, respectively. Cost of revenue from services performed on fuel cell systems and related infrastructure for the three months ended ~~September 30, 2020~~March 31, 2021 increased ~~9.5%~~26.5%, or ~~$0.6~~$2.7 million, to ~~$7.1~~$13.1 million, compared to ~~$6.5~~$10.4 million for the three months ended ~~September 30, 2019.~~March 31, 2020. Gross ~~margin~~loss increased to ~~(3.6)~~(116.5)% for the three months ended ~~September 30, 2020,~~March 31, 2021, compared to ~~(4.1)~~(58.7)% for the three months ended ~~September 30, 2019,~~March 31, 2020, primarily due to ~~program investments targeting performance improvements,~~a lower of cost or market adjustment associated with remanufactured parts. This was partially offset by ~~the increase~~a change in the ~~provision for common stock warrants.~~release of the previously recorded loss accrual from $224 thousand in the first quarter of 2020 to $1.8 million in the first quarter of 2021.

Cost of revenue from services performed on fuel cell systems and related infrastructure for the nine months ended September 30, 2020 increased 15.7%, or $2.9 million, to $21.7 million, compared to $18.8 million for the nine months ended September 30, 2019. Gross margin decreased to (11.0) % for the nine months ended September 30, 2020, compared

~~to (5.1)% for the nine months ended September 30, 2019, primarily due to the increase in the provision for common stock warrants.~~

Cost of revenue – provision for loss contracts related to service. The Company also recorded a provision for loss contracts related to service of ~~$4.3~~$1.5 million for the three months ended March 31, 2021, compared to $95 thousand for the three months ended March 31, 2020. The provision increased as a result of changes in the ~~third quarter of 2020, caused by~~estimated projected future costs due to the ~~increase~~realization that certain cost initiatives were not occurring as quickly as initially expected, as well changes in the ~~value~~number of ~~tranche 3 warrants as compared to the value of tranche 2 warrants.~~service contracts.

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 March 31, 2021, there were 50 GenKey sites associated with PPAs, as compared to 34 at March 31, 2020. Cost of revenue from PPAs for the three months ended ~~September 30, 2020~~March 31, 2021 increased ~~36.1%~~24.2%, or ~~$3.7~~$3.6 million, to ~~$14.1~~$18.3 million from ~~$10.4~~$14.8 million for the three months ended ~~September 30, 2019.~~March 31, 2020 primarily due to the increase in units and sites under PPA contract. Gross ~~margin decreased~~loss increased slightly to ~~(110.1)~~(134.4)% for the three months ended ~~September 30, 2020,~~March 31, 2021, as compared to ~~(57.0)~~(130.0)% for the three months ended ~~September 30, 2019,~~March 31, 2020 primarily due to program investments targeting performance improvements, as well as incremental service costs during the quarter associated with increased usage of units at some of our primary customer sites caused by the COVID-19 pandemic and an increasea change in ~~the provision for~~ common stock ~~warrants.~~

Cost of revenue from PPAs for the nine months ended September 30, 2020 increased 49.8%, or $14.0 million, to $42.0 million from $28.1 million for the nine months ended September 30, 2019. Gross margin decreased to (111.7)% for the nine months ended September 30, 2020, as compared to (46.8)% for the nine months ended September 30, 2019, primarily due to program investments targeting performance improvements, as well as incremental service costs during the nine months ended September 30, 2020 associated with increased usage of units at some of our primary customer sites caused by the COVID-19 pandemic and an increase in the provision for common stock warrants.warrants provision.

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, 2020~~March 31, 2021 increased ~~54.7%~~96.8%, or ~~$5.0~~$10.9 million, to ~~$14.2~~$22.1 million from ~~$9.2~~$11.3 million for the three months ended ~~September 30, 2019.~~March 31, 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. Gross ~~margin decreased~~loss increased to ~~(44.2)~~(99.0)% during the three months ended ~~September 30, 2020,~~March 31, 2021, compared to ~~(19.8)~~(53.5)% during the three months ended ~~September 30, 2019, primarily due to an increase~~March 31, 2020. The rate increases stem from a certain supplier in ~~cost of fuel paid to suppliers and an increase in the provision for common stock warrants.~~

Cost of revenue from fuel delivered to customers for the nine months ended September 30, 2020 increased 24.4%, or $6.3 million, to $32.3 million from $25.9 million for the nine months ended September 30, 2019. The increase was primarily due to higher volume of hydrogen delivered to customer siteswhich we have commenced a transition, as a result of an increase in the number of hydrogen installations completed under GenKey agreements and higher fuel costs. Gross margin decreased to (31.5)% during the nine months ended September 30, 2020, compared to (21.6)% during the nine months ended September 30, 2019, primarily due to an increase in cost of fuel paid to suppliers and an increase in the provision for common stock warrants.well as certain force majeure issues.

Expenses

Research and development expense. Research and development 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, 2020~~March 31, 2021 increased ~~$4.0~~$5.0 million, or ~~49.0%~~104.1%, to ~~$12.0~~$9.7 million, from ~~$8.0~~$4.8 million for the three months ended ~~September 30, 2019.~~March 31, 2020. The ~~increase was primarily due to additional~~overall growth in R&D ~~program investments such as programs associated~~investment is commensurate with ~~improvement of fuel efficiency, GenDrive unit performance and~~the Company’s future expansion into new markets, new product ~~development such as on-road delivery trucks, drone applications,~~lines, and ~~increase in headcount.~~

~~Research and development expense for the nine months ended September 30,~~varied vertical integrations. The number of R&D employees was 113 at March 31, 2020 ~~increased $7.8 million, or 32.0%,~~compared to ~~$32.1 million, from $24.3 million for the nine months ended September 30, 2019. The increase was primarily~~

due to additional R&D program investments such as programs associated with improvement of fuel efficiency, GenDrive unit performance and new product development such as on-road delivery trucks, drone applications, and increase in headcount.202 at March 31, 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.

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Selling, general and administrative expenses for the three months ended ~~September 30, 2020,~~March 31, 2021, increased ~~$3.9~~$14.5 million, or ~~37.3%~~130.3%, to ~~$14.3~~$25.6 million from ~~$10.4~~$11.1 million for the three months ended ~~September 30, 2019.~~March 31, 2020. This increase was primarily related to ~~acquisition~~increases in salaries and ~~debt restructuring charges~~stock-based compensation due to increased headcount, in addition to ~~increases in salaries, employee bonuses, stock-based compensation and headcount.~~

~~Selling, general and administrative expenses for~~costs associated with the nine months ended September 30, 2020, increased $13.6 million, or 40.8%, to $46.9 million from $33.4 million for the nine months ended September 30, 2019. This increase was primarily related to acquisition and debt restructuring charges in addition to increases in salaries, employee bonuses, stock-based compensation and headcount.restatement of our previous years’ financial statements.

~~Interest~~Contingent Consideration. The fair value of the contingent consideration related to Giner ELX and ~~other expense, net~~UHG was remeasured as of March 31, 2021, which resulted in $790 thousand charge that is reflected in the unaudited interim consolidated statement of operations for the three months ended March 31, 2021.

Interest. Interest ~~and other expense, net~~ consists of interest ~~and other expenses~~expense related to our long-term debt, convertible senior notes, obligations under finance leases and our finance ~~obligations, as well as~~obligations. Interest increased $500 thousand, or 4% from $11.8 million for the three months ended March 31, 2020 to $12.3 million for the three months ended March 31, 2021. Since March 2020, the Company assumed approximately $100.0 million of additional long-term debt at 12% interest (which interest was reduced to 9.5% on May 6, 2020), issued $212.5 million convertible senior notes at 3.75% interest, and entered into additional sale/leaseback finance obligation arrangements. This was offset by the exchange and conversion during 2020 of the 5.5% Convertible Senior Notes, the conversion on July 1, 2020 of the 7.5% 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 ~~foreign currency exchange gains~~ and other income. Since September 30, 2019, the Company assumed approximately $170.0 million of additional long-term debt at 12% interest (which interest was reduced to 9.5% on May 6, 2020), issued a 7.5% Convertible Senior Note at 7.5% interest, issued $212.5 million convertible senior notes at 3.75% interest, and entered into additional sale/leaseback finance obligation arrangements.

~~Net interest and other expense for the three months ended September 30, 2020~~available-for-sale securities. This increased ~~$9.3 million, or 116.3%, as compared~~$140 thousand in comparison to the three months ended September 30, 2019. This increase was attributable to an increase in interest expense associated with the Company’s finance obligations, long-term debt and the issuance of the convertible senior note, as mentioned above.

Net interest and other expense for the nine months ended September 30, 2020 increased $17.8 million, or 73.8%, as compared to the nine months ended September 30, 2019. This increase was attributable to an increase in finance obligations, long-term debt and the issuance of the convertible senior note, as mentioned above.

~~Common Stock Warrant Liability~~

The Company accounts for common stock warrants as common stock warrant liability with changes in the fair value reflected in the unaudited interim condensed consolidated statement of operations as change in the fair value of common stock warrant liability.

~~All remaining common stock warrants were fully exercised in the fourth quarter of 2019. As such, there was no change in fair value as of September 30,~~March 31, 2020.

~~Contingent Consideration~~

In the second quarter of 2020 the Company recorded a provisional amount of $7.8 million in contingent consideration, related to the valuation of Giner ELX’s earnout payments that the sellers are eligible to receive. In the third quarter of 2020, the Company assessed the fair value of the contingent consideration to be $8.9 million. The $1.1 million change in fair value of the contingent consideration is reflected in the unaudited interim condensed consolidated statement of operations for the three and nine months ended September 30, 2020.

~~Gain (Loss) on Extinguishment of Debt~~

In May 2020, the Company used a portion of the net proceeds from the issuance of the 3.75% Convertible Senior Notes to repurchase approximately $66.3 million of the 5.5% Convertible Senior Notes which resulted in a $13.2 million gain on early debt extinguishment.

~~In March of 2019, the Company restructured its long-term debt with New York Green Bank, which resulted in a loss on early debt extinguishment of $0.5 million.~~

Income Tax

The Company ~~recognized an~~did not record any income tax expense or benefit for the three ~~and nine~~ months ended September 30, 2020 of $6.5 million and $24.2 million, respectively. Income tax benefit for the three and nine months ended September 30, 2020 included $6.5 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 $5.2 million of income tax benefit for the nine months ended September 30, 2020 related to the recognition of net deferred tax liabilities in connection with the Giner ELX acquisition, which resulted in a corresponding reduction in our deferred tax asset valuation allowance.March 31, 2021 or 2020. 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.

Liquidity and Capital Resources

Liquidity

~~Our~~As of March 31, 2021 and December 31, 2020, the Company had $4.3 billion and $1.3 billion of cash ~~requirements relate primarily~~and cash equivalents and $344.1 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 $1.8 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 ~~working capital needed~~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 ~~operate and grow our business, including funding operating expenses, growth in inventory to support both shipments~~a subsidiary of new units and servicing the installed base, growth in equipment leased to customers under long-term arrangements, funding the growth in our GenKey “turn-key” solution, which includes the installationSK Holdings at a purchase price of ~~our customers’ hydrogen infrastructure as well as production and delivery~~$29.2893 per share, or an aggregate purchase price of the hydrogen fuel, continued development and expansion of our products, payment of lease/financing obligations under sale/leaseback financings, and the repayment or refinancing of our long-term debt. Our ability to achieve profitability and meet future liquidity needs and capital requirements will depend upon numerous factors, including the timing and quantity of product orders and shipments; attaining and expanding positive gross margins across all product lines; the timing and amount of our operating expenses; the timing and costs of working capital needs; the timing and costs of developing marketing and distribution channels; the ability of our customers to obtain financing to support commercial transactions; our ability to obtain financing arrangements to support the sale or leasing of our products and services to customers and to repay or refinance our long-term debt, and the terms of such agreements that may require us to pledge or restrict substantial amounts of our cash to support these financing arrangements; the timing and costs of developing marketing and distribution channels; the timing and costs of product service requirements; the timing and costs of hiring and training product staff; the timing and costs of product development and introductions; the extent of our ongoing and new research and development programs; and changes in our strategy or our planned activities. If we are unable to fund our operations with positive cash flows and cannot obtain external financing, we may not be able to sustain future operations. As a result, we may be required to delay, reduce and/or cease our operations and/or seek bankruptcy protection.approximately $1.6 billion.

~~We have experienced and continue~~The Company has continued to experience negative cash flows from operations and net losses. The Company incurred net losses attributable to common stockholders of ~~$85.5~~$60.7 million and ~~$67.2~~$37.4 million for the ~~nine~~three months ended ~~September 30,~~March 31, 2021 and 2020, ~~and 2019,~~ respectively, and had an accumulated deficit of ~~$1.4~~$2.0 billion at ~~September 30, 2020.~~March 31, 2021.

51The Company’s significant obligations consisted of the following as of March 31, 2021:

(i)

Operating and finance leases totaling $122.3 million and $10.3 million, respectively, of which $18.8 million and $1.8 million, respectively, are due within the next 12 months. These leases are primarily

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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 $182.8 million of which approximately $32.1 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.

~~We have historically funded our operations primarily through public and private offerings of equity and debt, as well as short-term borrowings, long-term debt and project financings.~~

(iii)

Long-term debt, primarily related to the Company’s Loan Agreement with Generate Capital totaling $161.3 million of which $21.4 million is classified as short term on our consolidated balance sheets. See Note 10, “Long-Term Debt”, for more details.

(iv)

Convertible senior notes totaling $191.8 million at March 31, 2021. See Note 11, “Convertible Senior Notes” for more details.

The Company believes that its current working capital of $4.9 billion at March 31, 2021, which includes unrestricted cash and cash ~~anticipated to be generated from future operations, as well as borrowings from lending and project financing sources and proceeds from equity and debt offerings, including our at-the-market offering,~~equivalents of $4.3 billion, will provide sufficient liquidity to fund operations for ata least one year after the date the financial statements are issued. There is no guarantee that future funding will be available if and when required or at terms acceptable to the Company. This projection is based on our current expectations regarding new project financing and product sales and service, cost structure, cash burn rate and other operating assumptions.

~~During~~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. Future use of the ~~nine months ended September 30, 2020, net cash used in operating activities was $156.9 million, consisting primarily of a net loss attributable to~~Company’s funds is discretionary and the Company ~~of $85.5 million, and net outflows from fluctuations in~~believes that its working capital and ~~other assets and liabilities of $96.3 million. The changes in working capital primarily were related~~cash position will be sufficient to increases and decreases in various current asset and liability accounts. As of September 30, 2020, we had cash and cash equivalents of $448.1 million and net working capital of $514.2 million. By comparison, at December 31, 2019, we had cash and cash equivalents of $139.5 million and net working capital of $162.5 million.

~~Net cash used in investing activities~~fund its operations for the nine months ended September 30, 2020 totaled $71.7 million and included net cash paid for acquisitions, purchases of intangible assets, purchases of property, plant and equipment, and outflows associated with materials, labor, and overhead necessary to construct new leased property. Cash outflows related to equipment that we lease directly to customers are included in net cash used in investing activities.

Public and Private Offerings of Equity and Debt

Common Stock Issuances

On April 13, 2020, the Company entered into an the At Market Issuance Sales Agreement ~~(ATM),~~ with B. Riley ~~FBR, Inc.~~Financial (“B. Riley”), as sales agent, ~~or FBR,~~ pursuant to which the Company may offer and sell, from time to time through ~~FBR,~~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 ~~ATM.~~

Convertible Senior Notes

In May 2020, the Company issued ~~$212.8~~$212.5 million in aggregate principal amount of ~~3.75% convertible senior notes due 2025, which we refer to herein as the~~ 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 ~~5.5% Convertible Senior Notes due 2023, which we refer to herein as~~ 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 ~~October~~the fourth quarter of 2020, ~~$28.0~~$33.5 million of the remaining 5.5%

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Convertible Senior Notes were converted into ~~12.2~~14.6 million shares of common ~~stock.~~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 a $40.0 million in aggregate principal amount of ~~7.5% convertible senior note due 2023, which we refer to herein as the~~ 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.

~~Operating and Finance Leases~~

The Company enters into sale/leaseback agreements with various financial institutions to facilitate the Company’s commercial transactions with key customers. The Company sells certain fuel cell systems and hydrogen infrastructure to the financial institutions and leases the equipment back to support certain customer locations and to fulfill its varied Power Purchase Agreements (PPAs). Transactions completed under the sale/leaseback arrangements are generally accounted for as operating leases and therefore the sales of the fuel cell systems and hydrogen infrastructure are recognized as revenue. In connection with certain sale/leaseback transactions, the financial institutions require the Company to maintain cash balances in restricted accounts securing the Company’s finance obligations. Cash received from customers under the PPAs is used to make payments against the Company’s finance obligations. As the Company performs under these agreements, the required restricted cash balances are released, according to a set schedule. The total remaining lease payments to financial institutions under these agreements at September 30, 2020 was $332.8 million, $286.2 million of which were secured with restricted cash, security deposits backing letters of credit, and pledged service escrows.

Over recent years, including in 2019, the Company has entered into master lease agreements with multiple institutions such as Key Equipment Finance (KeyBank), SunTrust Equipment Finance & Lease Corp. (now known as Truist Bank), First American Bancorp, Inc. (First American), Crestmark Equipment Finance (Crestmark) and U.S. Bank. During the nine months ended September 30 2020, the Company entered into additional lease agreements with KeyBank, First American, Truist Bank, Crestmark and U.S. Bank. Similar to the Wells Fargo lease agreements, the primary purpose of these agreements is to finance commercial transactions with varied customers. Most of the transactions with these financial institutions required cash collateral for the unguaranteed portions totaling $189.9 million as of September 30, 2020. Similar to the Wells Fargo lease agreements, in many cases the Company has a customer guarantee for a large portion of the transactions. The total remaining lease liabilities owed to these financial institutions were $218.5 million at September 30, 2020.

~~Restricted Cash~~

As security for the above noted sale/leaseback agreements, cash of $133.4 million was required to be restricted as of September 30, 2020, which restricted cash will be released over the lease term. As of September 30, 2020, the Company also had letters of credit backed by security deposits totaling $149.3 million for the above noted sale/leaseback agreements.

Secured Debt

In March 2019, the Company ~~and its subsidiaries Emerging Power Inc. and Emergent Power Inc.,~~ entered into ~~a loan and security agreement, as amended (the Loan Agreement)~~the “Loan Agreement”, with Generate Lending, ~~LLC (Generate Capital),~~ providing for a secured term loan facility in the amount of $100.0 million (the Term Loan Facility). The Company borrowed $85.0 million under the Loan Agreement on the date of closing and borrowed an additional $15.0 million in April 2019 and $20 million in November 2019. A portion of the initial proceeds of the loan was used to pay in full the Company’s long-term debt with NY Green Bank, a Division of the New York State Energy Research & Development Authority, including accrued interest of $17.6 million (the Green Bank Loan), and terminate approximately $50.3 million of certain equipment leases with Generate Plug Power SLB II, LLC and repurchase the associated leased equipment. In connection with this transaction, the Company recognized a loss on extinguishment of debt of approximately $0.5 million during the nine months ended September 30, 2019. This loss was recorded in gain (loss) on extinguishment of debt, in the Company’s unaudited interim condensed consolidated statement of operations. Additionally, $1.7 million was paid to an escrow account related to additional fees due in connection with the Green Bank Loan if the Company does not meet certain New York State employment and fuel cell deployment targets by March 2021. Amount escrowed is recorded in short-term other assets on the Company’s unaudited interim condensed consolidated balance sheets as of September 30, 2020. The Company presently expects to meet the targets as required under the arrangement. $100 million.

During the ~~nine months~~year ended ~~September 30,~~December 31, 2020, the Company, ~~received $250 thousand from escrow related to the New York state employment targets.~~

~~Additionally, on May 6, 2020, the Company and its subsidiaries, Emerging Power, Inc. and Emergent Power, Inc., entered into a Fifth Amendment (the Amendment)~~under another series of amendments to the Loan Agreement, ~~and Security Agreement, dated as~~borrowed an incremental $100.0 million. As part of ~~March 29, 2019, as amended (the Loan Agreement) with Generate Lending, LLC (Generate Capital). The Amendment amends~~the amendment to the Loan Agreement, ~~to, among other things, (i) provide for an incremental term loan in~~ the amount of $50.0 million, (ii) provide for additional, uncommitted incremental term loans in an aggregate amount not to exceed $50.0 million, which may become available to the Company in Generate Capital’s sole discretion, (iii) reduce theCompany’s interest rate on ~~all loans~~the secured term loan facility was reduced to 9.50% from 12.00% per annum, and ~~(iv) extend~~ the maturity date was extended to October 31, 2025 from October 6, 2022. The $50 million incremental term loan has been fully funded. In connection with the restructuring, the Company capitalized $1.0 million of origination fees and expensed $300 thousand in legal fees. In the third quarter of 2020, the Company borrowed an additional $50.0 million, under the amended Loan Agreement.

On ~~September 30, 2020,~~March 31, 2021, the outstanding balance under the Term Loan Facility was ~~$185.0 million with a 9.5% annual interest rate.~~$151.5 million.

~~All obligations under the Loan Agreement are unconditionally guaranteed by Emerging Power Inc. and Emergent Power Inc.~~

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.

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, 2020,~~March 31, 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, 2020	$	164,017
December 31, 2021		127,317	$	127,317
December 31, 2022		93,321		93,321
December 31, 2023		62,920		62,920
December 31, 2024		33,692		33,692
December 31, 2025		—		—

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


	Nine months		Year		Three months		Year
	ended or at		ended or at		ended or at		ended or at
	September 30, 2020		December 31, 2019		March 31, 2021		December 31, 2020
Cash and cash equivalents at end of period	$	448,140	$	139,496	$	4,349,066	$	1,312,404
Restricted cash at end of period		283,232		230,004		344,062		321,880
Working capital at end of period		514,163		162,549		4,904,371		1,380,830
Net loss attributable to common stockholders		(85,533)		(85,517)		(60,746)		(596,181)
Net cash used in operating activities		(156,910)		(51,522)		(117,099)		(155,476)
Net cash used in investing activities		(71,715)		(14,244)		(418,379)		(95,334)
Net cash provided by financing activities		590,587		325,060		3,594,373		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, ~~which is referred to herein as the 3.75% Convertible Senior Notes,~~ in a private placement to qualified institutional buyers pursuant to Rule 144A under ~~the Securities Act of 1933, as amended, or~~ the Securities Act. On May 29, 2020, the Company issued an additional $12.5 million in aggregate principal amount of the 3.75% Convertible Senior Notes.

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


	Amount
	(in thousands)
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

~~3.75% Convertible Senior Notes~~

herein as 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.

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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;

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

The initial conversion rate for the 3.75% Convertible Senior Notes ~~will be~~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 first quarter of 2021, $15.2 million of the 3.75% Convertible Senior Notes were converted and the Company issued 3.0 million shares of common stock in conjunction with these conversions.

~~In accounting~~The Company accounts for ~~the issuance of~~ the 3.75% Convertible Senior Notes ~~the Company separated the notes into liability and equity components. The initial carrying amount of the liability component of approximately $75.2 million,~~

~~net of costs incurred, was calculated by measuring the fair value of~~as a similar liability that does not have an associated convertible feature. The carrying amount of the equity component of approximately $130.3 million, net of costs incurred, representing the conversion option, was determined by deducting the fair value of the liability component from the par value of the 3.75% Convertible Senior Notes. The difference between the principal amount of the 3.75% Convertible Senior Notes and the liability component (the debt discount) is amortized to interest expense using the effective interest method over the term of the 3.75% Convertible Senior Notes. The effective interest rate is approximately 29.0%. The equity component of the 3.75% Convertible Senior Notes is included in additional paid-in capital in the unaudited interim condensed consolidated balance sheets and is not remeasured as long as it continues to meet the conditions for equity classification.

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


	September 30,		March 31,
	2020		2021
Principal amounts:
Principal	$	212,463	$	197,278
Unamortized debt discount (1)		(129,101)
Unamortized debt issuance costs (1)		(2,425)		(5,510)
Net carrying amount	$	80,937	$	191,768
Carrying amount of the equity component (2)	$	130,249

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 expense and effective interest rate related to the 3.75% Convertible Senior Notes (in thousands, except for effective interest rate):


	March 31,
	2021
Interest Expense	$	1,897
Amortization of Debt Issuance Costs		1,258
Total		3,155

Effective Interest Rate		4.5%

Based on the closing price of the Company’s common stock of ~~$13.41~~$35.84 on ~~September 30, 2020,~~March 31, 2021, the if-converted value of the notes was greater than the principal amount. The estimated fair value of the note at ~~September 30, 2020~~March 31, 2021 was approximately ~~$532.3 million. The Company utilized~~$1.3 billion. Fair value estimation was primarily based on a ~~Monte Carlo simulation model to estimate~~stock exchange, active trade on March 30, 2021 of the 3.75% Senior Convertible Note. See Note 16, “Fair Value Measurements” for a description of the fair value of the convertible debt. The simulation model is designed to capture the potential settlement features of the convertible debt, in conjunction with simulated changes in the Company’s stock price over the term of the note, incorporating a volatility assumption of 75%. This is considered a Level 3 fair value measurement.hierarchy.

Capped Call

In conjunction with the pricing of the 3.75% Convertible Senior Notes, the Company entered into ~~privately negotiated capped call transactions (3.75%~~the “3.75% Notes Capped ~~Call)~~Call” with certain counterparties at a price of $16.2 million. The 3.75% Notes Capped Call ~~cover,~~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 ~~has been~~was recorded as a reduction to additional paid-in capital in the ~~unaudited interim condensed~~ consolidated balance ~~sheet.~~sheets.

~~7.5% Convertible Senior Note~~

~~On July 1, 2020, the 7.5% Convertible Senior Note automatically converted into 16.0 million shares of common stock.~~

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, ~~which is referred to herein as the 5.5% Convertible Senior Notes~~ in a private placement to qualified institutional buyers pursuant to Rule 144A under the Securities Act.

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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. ~~Of the $128.9 million in aggregate consideration~~, $35.5 million and $93.4 million were allocated to the debt and equity components, respectively, utilizing an effective discount rate of 29.8% to determine the fair value of the liability component. As of the repurchase date, the carrying value of the 5.5% Convertible Senior Notes that were repurchased, net of unamortized debt discount and issuance costs, was $48.7 million. The partial repurchase of the 5.5% Convertible Senior Notes resulted in a $13.2 million gain on early debt extinguishment. AsIn the fourth quarter of ~~September 30,~~ 2020, ~~approximately $33.7 million aggregate principal amount of the 5.5% Convertible Senior Notes remained outstanding. In October 2020, $28.0~~$33.5 million of the remaining 5.5% Convertible Senior Notes converted into ~~12.2~~14.6 million shares of common ~~stock.~~

~~At issuance~~stock which resulted in ~~March 2018,~~a gain of approximately $4.5 million which was recorded on the ~~total net proceeds from~~consolidated statement of operations on the ~~5.5% Convertible Senior Notes were as follows:~~gain (loss) on extinguishment of debt line.

~~The 5.5% Convertible Senior Notes bear interest at 5.5%, payable semi-annually in cash on March 15 and September 15~~On January 7, 2021, the remaining aggregate principal of ~~each year. The 5.5% Convertible Senior Notes will mature on March 15, 2023, unless earlier converted~~

or repurchased in accordance with their terms. The 5.5% Convertible Senior Notes are unsecured and do not contain any financial covenants or any restrictions on the payment of dividends, or the issuance or repurchase of common stock by the Company.

~~Each $1,000~~$160 thousand aggregate principal amount of the 5.5% Convertible Senior Notes ~~is convertible~~were converted into ~~436.3002~~69,808 shares of ~~the Company’s~~ common stock, which is equivalent to a conversion price of approximately $2.29 per share, subject to adjustment upon the occurrence of specified events. Holders of these 5.5% Convertible Senior Notes may convert their 5.5% Convertible Senior Notes at their option at any time prior to the close of the last business day immediately preceding September 15, 2022, only under the following circumstances:

during the five business day period after any five consecutive trading day period (the measurement period) in which the trading price (as defined in the indenture governing the 5.5% Convertible Senior Notes) per $1,000 principal amount of 5.5% 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 for the 5.5% Convertible Senior Notes on each such trading day;

~~Upon conversion of the 5.5% Convertible Senior Notes, the Company will pay or deliver, as the case may be, cash, shares of the Company’s common stock or a combination of cash~~stock. Interest expense and shares of the Company’s common stock, at the Company’s election. While the Company plans to settle the principal amount of the 5.5% Convertible Senior Notes in cash subject to available funding at time of settlement, we currently use the if-converted method for calculating any potential dilutive effect of the conversion option on diluted net income per share, subject to meeting the criteria for using the treasury stock method in future periods.

The Company may not redeem the 5.5% Convertible Senior Notes prior to March 20, 2021. The Company may redeem for cash all or any portion of the 5.5% Convertible Senior Notes, at the Company’s option, on or after March 20, 2021 if the last reported sale price of the Company’s common stock has been at least 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 on which the Company provides notice of redemption, during any 30 consecutive trading day period ending on, and including, the trading day immediately preceding the date on which the Company provides

notice of redemption at a redemption price equal to 100% of the principal amount of the 5.5% Convertible Senior Notes to be redeemed, plus accrued and unpaid interest to, but excluding, the redemption date.

~~In accounting~~amortization for the issuance of the notes, the Company separated the 5.5% Convertible Senior Notes into liability and equity components. The initial carrying amount of the liability component of approximately $58.2 million, net of costs incurred, was calculated by measuring the fair value of a similar liability that does not have an associated convertible feature. The carrying amount of the equity component of approximately $37.7 million, net of costs incurred, representing the conversion option, was determined by deducting the fair value of the liability component from the par value of the 5.5% Convertible Senior Notes. The difference between the principal amount of the 5.5% Convertible Senior Notes and the liability component (the debt discount) is amortized to interest expense using the effective interest method over the term of the 5.5% Convertible Senior Notes. The effective interest rate is approximately 16.0%. The equity component of the 5.5% Convertible Senior Notes is included in additional paid-in capital in the unaudited interim condensed consolidated balance sheets and is not remeasured as long as it continues to meet the conditions for equity classification.period were immaterial.

We incurred transaction costs related to the issuance of the 5.5% Convertible Senior Notes of approximately $4.1 million, consisting of initial purchasers’ discount of approximately $3.3 million and other issuance costs of $0.9 million. In accounting for the transaction costs, we allocated the total amount incurred to the liability and equity components using the same proportions as the proceeds from the 5.5% Convertible Senior Notes. Transaction costs attributable to the liability component were approximately $2.4 million, 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 5.5% Convertible Senior Notes. The transaction costs attributable to the equity component were approximately $1.7 million and were netted with the equity component in stockholders’ equity.

~~The 5.5% Convertible Senior Notes consisted of the following (in thousands):~~

Capped Call

In conjunction with the pricing of the 5.5% Convertible Senior Notes, the Company entered into ~~privately negotiated capped call transactions (5.5%~~“5.5% Notes Capped ~~Call)~~Call” with certain counterparties at a price of $16.0 ~~million. The 5.5% Notes Capped Call cover, subject to anti-dilution adjustments, the aggregate number of shares of the Company’s common stock~~

~~that underlie the initial 5.5% Convertible Senior Notes and is generally expected~~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, with such reduction and/or offset subject to a cap based on the cap price. The cap price of the 5.5% Notes Capped Call is initially $3.82 per share, which represents a premium of 100% over the last then-reported sale price of the Company’s common stock of $1.91 per share on the date of the transaction and is subject to certain adjustments under the terms of the 5.5% Notes Capped Call. The 5.5% Notes Capped Call becomes exercisable if the conversion option is exercised.

be. The net cost incurred in connection with the 5.5% Notes Capped Call ~~has been~~was recorded as a reduction to 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, or~~ 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 payoff 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.

~~In conjunction with the partial payoff of the 5.5% Convertible Senior Notes, the Common Stock Forward’s expiration date was extended to June 1, 2025.~~

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

During ~~October~~the fourth quarter of 2020, the Common Stock Forward was partially settled and, as a result, the Company received ~~3.5~~4.4 million shares of its common stock. During the first quarter of 2021, 5.9 million shares settled, with an additional 2.2 million that settled in April 2021.

Amazon Transaction Agreement

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the Company’s fuel cell technology. The vesting of the Amazon Warrant Shares ~~is linked to~~was conditioned upon payments made by Amazon or its affiliates (directly or indirectly through third parties) pursuant to the existing commercial agreements.

61 upon execution of the Amazon Warrant.

~~during 2017. All future provision~~Provision for ~~common stock warrants~~the second and third tranches of Amazon Warrant Shares is ~~measured based on their grant-date fair value and~~ recorded as a ~~charge against revenue.~~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, ~~of 7,274,565 Amazon Warrant Shares each time~~as Amazon or its affiliates, directly or indirectly through third parties, ~~make~~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 ~~exercise price for~~last installment of the ~~first~~second tranche vested on November 2, 2020. Revenue reductions of $9.0 million, $4.1 million and $9.8 million associated with the second ~~tranches~~tranche of Amazon Warrant Shares ~~is $1.1893 per share. The~~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 ~~will vest~~vests in eight equal installments, ~~of 2,546,098 Amazon Warrant Shares each time~~as Amazon or its affiliates, directly or indirectly through third parties, ~~make~~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.

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terms of the Amazon Warrant as an amount ~~per share~~ 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 ~~Shares are~~was exercisable through April 4, 2027. The Amazon Warrant ~~Shares provide~~provides for net share settlement that, if elected by the ~~holders,~~holder, will reduce the number of shares issued upon exercise to reflect net settlement of the exercise price. The Amazon Warrant ~~Shares provide~~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. ~~These warrants are~~The Amazon Warrant is classified as an equity ~~instruments.~~instrument.

~~At September 30, 2020 and December 31, 2019, 27,643,347 and 20,368,782~~Fair value of the Amazon Warrant ~~Shares had vested, respectively. The amount of provision for common stock warrants recorded as a reduction of revenue for the Amazon Warrant during the three months ended September 30,~~at December 31, 2020 and 2019 was $17.3 million and $1.0 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, 2020 and 2019 was $22.0 million and $2.0 million, respectively.

During the third quarter of 2020, approximately $23.8 million of recorded revenue from Amazon was constrained by the tranche 3 of the Amazon Warrant Shares. An additional 7,274,565 Amazon Warrant Shares vested on November 2, 2020 representing the final vesting of tranche 2, resulting in cumulative vesting in 34,917,912 Warrant Shares since the execution of the Amazon Transaction Agreement. In accordance with terms of the Amazon Transaction Agreement as described above, upon final vesting of tranche 2, the tranche 3 Amazon Warrant Shares exercise price was ~~determined to be $13.81 per share. Based~~based on the ~~exercise price of~~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 ~~third tranche of the Amazon Warrant Shares, among other things, the fair value of the 20,368,784 tranche 3 Amazon Warrant Shares is estimated~~Company to ~~be $10.60 each, compared to the fair value of tranche 2 Amazon Warrant Shares of $1.05 each.~~develop its own assumptions.

The Company ~~also recorded a provision~~used the following assumptions for ~~losses of $4.3 million in the third quarter of 2020 related to~~its Amazon ~~service contracts, caused primarily by the increase in the value of the tranche 3 warrants, driven by recent increases in the Company’s stock price.~~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

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 ~~Shares are~~is exercisable through July 20, 2027.

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At ~~September 30, 2020~~both March 31, 2021 and December 31, ~~2019,~~2020, 13,094,217 ~~and 5,819,652~~ of the Walmart Warrant Shares had ~~vested, respectively.~~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,~~March 31, 2021 and 2020 ~~and 2019~~ was ~~$1.3~~$1.6 million and ~~$0.5~~$0.9 million, respectively. ~~The amount of provision for common stock warrants recorded as a reduction of revenue for~~During the three months ended March 31, 2021, the Walmart Warrant ~~during the nine months ended September 30, 2020 and 2019 was $3.2 million and $1.7 million, respectively.~~had been exercised with respect to 13,094,217 shares of common stock.

~~Lessor Obligations~~Operating and Finance Lease Liabilities

As of ~~September 30, 2020,~~March 31, 2021, the Company had ~~noncancelable~~ operating leases (as lessor), primarily associated with assets deployed at customer sites. These leases expire over the next one to nine years. Leases contain termination clauses with associated penalties, the amount of which cause the likelihood of cancellation to be remote.

~~Future minimum lease payments under noncancelable operating leases (with initial or remaining lease terms in excess of one year) as of September 30, 2020 were as follows (in thousands):~~

Remainder of 2020

$
8,272
2021

34,436
2022

32,665
2023

30,043
2024

26,660
2025 and thereafter

$
49,351
Total future minimum lease payments

$
181,427

~~Lessee Obligations~~

~~As of September 30, 2020, the Company had operating and finance~~ 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~~“Nature of ~~Operations)~~Operations”) as summarized below. These leases expire over the next one to ~~eight~~nine years. Minimum rent payments under operating ~~and finance~~ 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 20, “Commitments and Contingencies” for a description of cash held as security associated with the leases.

~~In prior periods, the~~The Company ~~entered into sale/leaseback transactions that were accounted for as~~has finance leases associated with its property and ~~reported as part of finance obligations. The outstanding balance of finance obligations related to sale/leaseback~~

~~transactions~~equipment in Latham, New York and at ~~September 30, 2020 and December 31, 2019 was $25.9 million and $31.7 million, respectively.~~fueling customer locations. The fair value of ~~the~~this finance obligation approximated the carrying value as of ~~both September 30,~~March 31, 2021.

Future minimum lease payments under operating and finance leases (with initial or remaining lease terms in excess of one year) as of March 31, 2021 were as follows (in thousands):


			Finance		Total
		Operating Lease	Lease		Lease
		Liability	Liability		Liabilities
Remainder of 2021	$	24,082	$	1,874	$	25,956
2022		29,050		2,471		31,521
2023		29,107		2,446		31,553
2024		29,097		2,529		31,626
2025 and thereafter		56,232		3,103		59,335
Total future minimum payments		167,568		12,423		179,991
Less imputed interest		(45,257)		(2,122)		(47,379)
Total	$	122,311	$	10,301	$	132,612

Rental expense for all operating leases was $8.0 million and $4.8 million for the three months ended March 31, 2021 and 2020, respectively.

The gross profit on sale/leaseback transactions for all operating leases was $16.0 million and $5.3 million for the three months ended March 31, 2021 and 2020, respectively. Right of use assets for sale/leaseback transactions obtained in exchange for new operating lease liabilities was $11.9 million and $5.2 million for the three months ended March 31, 2021 and 2020, respectively.

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At March 31, 2021 and December 31, ~~2019.~~2020, the right of use assets associated with operating leases was $124.5million and $117.0 million, respectively. The accumulated depreciation for these right of use assets was $50.3 million and $48.6 million at March 31, 2021 and December 31, 2020, respectively.

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


		Three months ended		Three months ended
		March 31,2021		March 31, 2020
Cash payments (in thousands)	$	6,734	$	8,199
Weighted average remaining lease term (years)		5.77		4.22
Weighted average discount rate		11.6%		12.0%

Right of use assets obtained in exchange for new finance lease liabilities were $5.6 million and zero for the three months ended March 31, 2021 and 2020, respectively.

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


		Three months ended		Three months ended
		March 31, 2021		March 31, 2020
Cash payments (in thousands)	$	433	$	78
Weighted average remaining lease term (years)		5.1		7.51
Weighted average discount rate		7.2%		8.8%

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, 2020~~March 31, 2021 was ~~$144.3~~$161.0 million, $24.7 million and $136.3 million of which ~~$22.2 million and $122.1 million were~~was classified as short-term and long-term, respectively, on the ~~unaudited interim condensed~~accompanying consolidated balance ~~sheets.~~sheet. The outstanding balance of this obligation at December 31, ~~2019~~2020 was ~~$109.4~~$157.7 million, $24.2 million and $133.5 million of which ~~$15.5 million and $93.9 million were~~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,~~March 31, 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 ~~Company has a~~outstanding balance of finance ~~lease associated with its property~~obligations related to sale/leaseback transactions at March 31, 2021 was $21.8 million, $7.4 million and ~~equipment in Latham, New York. A liability relating to this lease~~$14.4 million of ~~$2.8 million has been recorded~~which was classified as ~~a finance obligation in~~short-term and long-term, respectively on the ~~unaudited interim condensed~~accompanying consolidated balance ~~sheet~~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 ~~of September 30.~~short-term and long-term, respectively on the accompanying consolidated balance sheet. The fair value of this finance obligation approximated the carrying value as of ~~September 30,~~both March 31, 2021 and December 31, 2020.

~~Future minimum lease payments under operating and finance leases (with initial or remaining lease terms in excess of one year) as of September 30, 2020 were as follows (in thousands):~~

Other

Total

Operating

Finance

Leased

Finance

Leases

Leases

Property

Obligations
Remainder of 2020

$
14,639

$
2,546

$
186

$
17,371
2021

58,505

9,276

590

68,371
2022

58,480

4,975

573

64,028
2023

55,655

3,149

549

59,353
2024

54,203

16,154

632

70,989
2025 and thereafter

71,304

—

1,174

72,478
Total future minimum lease payments

312,786

36,100

3,704

352,590
Less imputed lease interest

(84,903)

(10,190)

(947)

(96,040)
Sale of future services

144,292

—

—

144,292
Total lease liabilities

$
372,175

$
25,910

$
2,757

$
400,842

Rental expense for all operating leases was $14.6 million and $7.8 million for the three months ended September 30, 2020 and 2019, respectively. Rental expense for all operating leases was $40.1 million and $19.9 million for the nine months ended September 30, 2020 and 2019, respectively.

The gross profit on sale/leaseback transactions for all operating leases was $24.5 million and $44.2 million for the three and nine months ended September 30, 2020, respectively, and $14.8 million and $30.9 million for the three and nine months ended September 30, 2019, respectively. Right of use assets obtained in exchange for new operating lease liabilities was $41.1 million and $86.5 million for the three and nine months ended September 30, 2020, respectively, and $38.4 million and $72.9 million for the three and nine months ended September 30, 2019.

At both September 30, 2020 and December 31, 2019, security deposits associated with sale/leaseback transactions were $5.8 million and were included in other assets in the unaudited interim condensed consolidated balance sheets.

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

Nine months ended

Nine months ended

September 30, 2020

September 30, 2019
Cash payments (in thousands)
$
40,500

$
19,222

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September 30,

2020

2019
Weighted average remaining lease term (years)

5.5

5.25
Weighted average discount rate

12.1%

12.1%


					Total
		Sale of Future		Sale/leaseback	Finance
		revenue - debt		financings	Obligations
Remainder of 2021	$	31,738	$	6,795	$	38,533
2022		41,554		4,976		46,530
2023		41,554		3,149		44,703
2024		41,554		16,154		57,708
2025 and thereafter		59,449		—		59,449
Total future minimum payments		215,849		31,074		246,923
Less imputed interest		(54,827)		(9,305)		(64,132)
Total	$	161,022	$	21,769	$	182,791

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

Nine months ended

Nine months ended

September 30, 2020

September 30, 2019
Cash payments (in thousands)
$
7,847

$
57,659


	As of September 30,				Three months ended		Three months ended
		2020	2019		March 31, 2021		March 31, 2020
Weighted average remaining lease term (years)		3.36	3.09
Cash payments (in thousands)				$	12,816	$	9,879
Weighted average remaining term (years)					4.9		4.3
Weighted average discount rate		7.8%	11.1%		11.2%		11.1%

Restricted Cash

~~Legal matters are defended~~The Company records the fair value of assets and ~~handled~~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 ~~ordinary course~~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 ~~business.~~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 3 — unobservable inputs reflecting management’s own assumptions about the inputs used in pricing the asset or liability at fair value.

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The fair values of the Company’s investments are based upon prices provided by an independent pricing service. The Company has ~~established accruals~~reviewed these prices for ~~matters~~reasonableness 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 ~~which management considers~~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 three months ended March 31, 2021.

Assets and liabilities measured at fair value on a loss to be probable and reasonably estimable. It is the opinion of management that facts known at the present time do not indicate that such litigation, after taking into account insurance coverage and the aforementioned accruals, will have a material adverse impactrecurring basis are summarized below (in thousands):


		As of March 31, 2021
		Carrying		Fair		Fair Value Measurements
		Amount		Value		Level 1		Level 2		Level 3
Assets
Cash equivalents (1)	$	93,941	$	93,941	$	—	$	93,941	$	—
Corporate bonds		99,239		99,171		—		99,171		—
Commercial paper		305,929		306,089		—		306,089		—

Liabilities
Contingent consideration		10,550		10,550		—		—		10,550
Convertible senior notes		191,768		1,320,952		—		1,320,952		—
Long-term debt		161,259		161,259		—		—		161,259
Finance obligations		182,790		182,790		—		—		182,790


		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 March 31, 2021, in addition to cash of $4.3 billion.

The fair values for available-for-sale securities are based on ~~our results of operations, financial position, or cash flows.~~prices obtained from an independent pricing service. These securities are characterized as Level 2 assets, as their fair values are determined using observable market inputs.

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Available-for-sale securities

~~Concentrations~~


		Amortized	Gross		Gross		Fair		Allowance for
		Cost	Unrealized Gains		Unrealized Losses		Value		Credit Losses
Corporate bonds	$	99,239	$	—	$	(68)	$	99,171	$	—
Commercial paper		305,929		160		—		306,089		—
Totals	$	405,168	$	160	$	(68)	$	405,260	$	—

A summary of ~~Credit Risk~~the amortized cost and fair value of investments classified as available-for-sale, by contractual maturity, is as follows (in thousands):


	March 31, 2021
		Amortized	Fair
Maturity:		Cost	Value
Within one year	$	375,804	$	375,927
After one through five years		29,364		29,333
Totals	$	405,168	$	405,260

Off-Balance Sheet Arrangements

Concentrations of credit risk with respect to receivables exist due to the limited number of select customers with whom the Company has initial commercial sales arrangements. To mitigate credit risk, the Company performs appropriate evaluation of a prospective customer’s financial condition.

At September 30, 2020, one customer comprised approximately 84.5% of the total accounts receivable balance. At December 31, 2019, two customers comprised approximately 63.4% of the total accounts receivable balance.

For the nine months ended September 30, 2020, 71.8% of total consolidated revenues were associated primarily with two customers. For the nine months ended September 30, 2019, 62.3% of total consolidated revenues were associated primarily with three customers. For purposes of assigning a customer to a sale/leaseback transaction completed with a financial institution, the Company considers the end user of the assets to be the ultimate customer.

~~Off-Balance Sheet Arrangements~~

~~As of September 30, 2020, the~~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 ~~unaudited interim condensed~~ consolidated financial statements, which have been prepared in accordance with ~~U.S.~~ GAAP. The preparation of these ~~unaudited interim condensed~~ 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, ~~for~~ bad debts, inventories, intangible assets, ~~valuation~~impairment of long-lived assets and PPA executory contract consideration, accrual for loss ~~contracts~~ on ~~service,~~extended maintenance contracts, operating and finance leases, product warranty reserves, unbilled revenue, common stock warrants, income taxes, stock-based compensation, ~~contingencies,~~ and ~~purchase accounting.~~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.

We refer to the policies and estimates set forth in the section “Management’s Discussion and Analysis of Financial Condition and Results of Operations—Critical Accounting Estimates”, as well as a discussion of significant accounting policies included in Note 2, Summary of Significant Accounting Policies, of the consolidated financial statements, both of which are included

There have been no changes in our ~~Annual Report on Form 10-K for the fiscal year ended December 31, 2019.~~critical accounting estimates from those reported in our 2020 10-K.

Recent Accounting Pronouncements

Recently Adopted Accounting ~~Pronouncements~~Guidance

~~In June 2016,~~ ~~Accounting Standards Update (ASU) 2016-13, Financial Instruments – Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments~~~~, was issued. Also, In April 2019,~~ ~~Accounting Standards Update (ASU) 2019-04, Codification Improvements to Topic 326, Financial Instruments—Credit Losses, Topic 815, Derivatives and Hedging, and Topic 825, Financial Instruments~~~~, was issued to make improvements to updates 2016-01,~~ ~~Financial Instruments – Overall~~ ~~(Subtopic 825-10), 2016-13,~~ ~~Financial Instruments – Credit Losses~~ ~~(Topic 326) and 2017-12,~~ ~~Derivatives and Hedging~~ (Topic 815). ASU 2016-13 significantly changes how entities account for credit losses for financial assets and certain other instruments, including trade receivables and contract assets, that are not measured at fair value through net income. The ASU requires a number of changes toOther than the assessment of credit losses, including the utilization of an expected credit loss model, which requires consideration of a broader range of information to estimate expected credit losses over the entire lifetimeadoption of the ~~asset, including losses where probability is considered remote. Additionally,~~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 ~~standard requires the estimation~~adoption of ~~lifetime expected losses for trade receivables and contract assets that~~

66new accounting pronouncements.

~~are classified as current. The Company adopted these standards effective~~On January 1, ~~2020 and determined the impact of the standards to be immaterial to the consolidated financial statements.~~

~~In April 2019,~~ ~~Accounting Standards Update (ASU) 2019-04, Codification Improvements to Topic 326, Financial Instruments—Credit Losses, Topic 815, Derivatives and Hedging, and Topic 825, Financial Instruments~~~~, was issued to make improvements to updates 2016-01,~~ ~~Financial Instruments – Overall~~ ~~(Subtopic 825-10), 2016-13,~~ ~~Financial Instruments – Credit Losses~~ ~~(Topic 326) and 2017-12,~~ ~~Derivatives and Hedging~~ ~~(Topic 815). The Company~~2021, we early adopted ~~this standard effective January 1, 2020 and determined the impact of this standard to be immaterial to the consolidated financial statements.~~

~~In January 2017,~~ ~~Accounting Standards Update (ASU) 2017-04, Intangibles – Goodwill and Other (Topic 350)~~, was issued to simplify how an entity is required to test goodwill for impairment by eliminating Step 2 from the goodwill impairment test. Step 2 measures a goodwill impairment loss by comparing the implied fair value of a reporting unit’s goodwillASU No. 2020-06, Debt—Debt with ~~the carrying amount of that goodwill. The Company adopted this standard effective January 1, 2020.~~

~~Recently Issued and Not Yet Adopted Accounting Pronouncements~~

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retrospective approach. Consequently, the Company’s 3.75% Convertible Senior Notes is now accounted for ~~Convertible Instruments~~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 ~~Contracts in an Entity’s Own Equity,~~ ~~was issued to address issues identified~~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 ~~complexity associated with applying GAAP~~if-converted method for ~~certain financial instruments with characteristics~~convertible instruments. The cumulative effect of ~~liabilities~~the accounting change upon adoption on January 1, 2021 increased the carrying amount of the convertible notes by $120.7 million, reduced accumulated deficit by $9.6 million and ~~equity. This update is effective after December 15, 2021. The Company is evaluating the adoption method as well as the impact this update will have on the consolidated financial statements.~~reduced additional paid-in capital by $130.2 million.

InRecent Accounting Guidance Not Yet Effective

All issued but not yet effective accounting and reporting standards as of March ~~2020,~~ ~~Accounting Standards Update (ASU) 2020-04, Reference Rate Reform (Topic 848): Facilitation of the Effects of Reference Rate Reform on Financial Reporting~~~~, was issued to provide temporary optional expedients and exceptions~~31, 2021 are either not applicable to the ~~GAAP guidance on contract modifications and hedge accounting~~Company or are not expected to ease the financial reporting burdens related to the expected market transition from the London Interbank Offered Rate (LIBOR) and other interbank offered rates to alternative reference rates. This update is effective starting March 12, 2020 and the Company may elect to apply the amendments prospectively through December 31, 2022. The Company is evaluating the adoption method as well as thehave a material impact ~~this update will have~~ on the ~~consolidated financial statements.~~

Company.

Item 3 — Quantitative and Qualitative Disclosures about Market Risk

~~From time to time, we may invest our cash~~There has been no material change from the information provided in ~~government, government backed~~the 2020 10-K “Item 7A: Quantitative and interest-bearing investment-grade securities that we generally hold for the duration of the term of the respective instrument. We do not utilize derivative financial instruments, derivative commodity instruments orQualitative Disclosures About Market Risk,” other ~~market risk sensitive instruments, positions or~~

67than those described below.

~~transactions~~In March 2021, the Company purchased corporate bonds and commercial paper, in ~~any material fashion, except for~~which the ~~5.5% Notes Capped Call and Common Stock Forward purchased in March 2018 related to the issuance~~major components of 5.5% Convertible Senior Notes and the 3.75% Notes Capped Call purchased in May 2020 related to the issuance of 3.75% Convertible Senior Notes. We are not subject to any material risks arising from changes in interest rates, foreign currency exchange rates, commodity prices, equity prices or other market changes that affect market risk ~~sensitive instruments.~~affecting us are credit risk and interest rate 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~~.market. This practice can give rise to foreign exchange risk resulting from the varying cost of inventory to the receiving location. 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.

Item 4 — Controls and Procedures

(a) Disclosure controls and procedures.

~~The chief executive officer and chief financial officer, based on their evaluation of~~We maintain disclosure controls and procedures ~~(as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) as of the end of the period covered by this Quarterly Report on Form 10-Q, have concluded~~ that ~~the Company’s disclosure controls and procedures~~ are ~~effective for ensuring~~designed to ensure that information required to be disclosed in ~~the~~our reports that ~~it files~~we file or ~~submits~~submit under the Exchange Act, is recorded, processed, summarized and reported within the time periods specified in ~~the Commission’s~~SEC rules and ~~forms. Disclosure controls~~forms, and ~~procedures include, without limitation, controls and procedures designed to ensure~~ that such information ~~required to be disclosed in filed or submitted reports~~ is accumulated and communicated to ~~the Company’s~~our management, including ~~its~~our Chief Executive Officer (our principal executive ~~officer~~officer) and Chief Financial Officer (our principal financial ~~officer~~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 because of the material weakness in internal control over financial reporting described in Part II, Item 9A “Controls and Procedures” of our 202010-K. The material weakness has not been remediated as of March 31, 2021.

Material Weakness identified as of December 31, 2020

Management identified the following deficiency in internal control over financial reporting as of December 31, 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:

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(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:

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.

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.

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

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.

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

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.

~~There~~Exclusive of the steps taken in remediation activities, there were no changes in the Company’s internal control over financial reporting ~~that~~(as defined in Rules 13a-15(f) and 15d-15(f) under the Exchange Act) occurred during the ~~last fiscal~~ quarter ended March 31, 2021 that ~~have~~has materially affected, or are reasonably likely to materially affect, the Company’s internal control over financial reporting.

PART II. OTHER INFORMATION

Item 1 — Legal Proceedings

On August 28, 2018, a lawsuit was filed on behalf of multiple individuals against the Company and five corporate co-defendants in the 9th Judicial District Court, Rapides Parish, Louisiana. The lawsuit relates to the previously disclosed May 2018 accident involving a forklift powered by the Company’s fuel cell at a Procter & Gamble facility in Louisiana. The lawsuit alleges claims against the Company and co-defendants, including Structural Composites Industries, Deep South Equipment Co., Air Products and Chemicals, Inc., and Hyster-Yale Group, Inc. for claims under the Louisiana Product Liability Act ~~or LPLA,~~(“LPLA”) including defect in construction and/or composition, design defect, inadequate warning, breach of express warranty and negligence for wrongful death and personal injuries, among other damages. Procter & Gamble has intervened in that suit to recover worker’s compensation benefits paid to or for the employees/dependents.

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Procter & Gamble has also filed suit for property damage, business interruption, loss of revenue, expenses, and other damages. Procter & Gamble alleges theories under the LPLA, breach of warranty and quasi-contractual claims under Louisiana law. Defendants include the Company and several of the same co-defendants from the August 2018 lawsuit, including Structural Composites Industries, ~~(“SCI”), an affiliate of Worthington Industries,~~ Deep South Equipment Co., and Hyster-Yale Group, Inc. ~~Fact~~

On March 8, 2021, Company stockholder Dawn Beverly, individually and ~~expert discovery among~~on behalf of all persons who purchased or otherwise acquired Plug securities between November 9, 2020 and March 1, 2021 (the “Class”), filed a complaint in the ~~parties is ongoing,~~U.S. District Court for the Southern District of New York against the Company, Plug Chief Executive Officer Andrew Marsh, and Plug Chief Financial Officer Paul Middleton (together, the “Defendants”), captioned Dawn Beverly et al. v. Plug Power Inc. et al., Case No. 1:21-cv-02004 (S.D.N.Y.) (the “Class Action Complaint”). The Class Action Complaint includes two claims, for (1) violation of Section 10(b) of the Exchange Act and Rule 10b5 promulgated thereunder (against all Defendants); and (2) violation of Section 20(a) of the Exchange Act (against Mr. Marsh and Mr. Middleton). The Class Action Complaint alleges that Defendants failed to disclose that the Company (i) “would be unable to timely file its 2020 annual report due to delays related to the review of classification of certain costs and the ~~former~~recoverability of the ~~two cases was~~right to use assets with certain leases”; and (ii) “was reasonably likely to report material weaknesses in its internal control over financial reporting[.]” The Class Action Complaint alleges that, a result, “positive statements about the Company’s business, operations, and prospects were materially misleading and/or lacked a reasonable basis,” causing Class members losses and damages. The Class Action Complaint seeks compensatory damages “in an amount to be proven at trial, including interest thereon”; “reasonable costs and expenses incurred in th[e] action”; and “[s]uch other and further relief as the [c]ourt may deem just and proper.”

On March 18, 2021, Company stockholder Branislav Smolíček, individually and on behalf of all persons who purchased or otherwise acquired Plug securities between November 9, 2020 and March 1, 2021, filed in U.S. District Court for the Central District of California a complaint captioned Smolíčekv. Plug Power Inc. et al., Case No. 2:21-cv-02402 (C.D. Cal.) (the “Smolíček Complaint”). The Smolíček Complaint is substantially similar to the Class Action Complaint, asserting the same claims, for the same damages, against the same Defendants as the Class Action Complaint. The Company anticipates that the Smolíček Complaint will be consolidated with the Class Action Complaint under the Private Securities Litigation Reform Act of 1995.

On March 31, 2021, Company stockholder Junwei Liu, derivatively and on behalf of nominal defendant Plug, filed a complaint in the U.S. District Court for the Southern District of New York against certain Company directors and officers (the “Derivative Defendants”), captioned Liu v. Marsh et al., Case No. 1:21-cv-02753 (S.D.N.Y.) (the “Liu Derivative Complaint”). The Liu Derivative Complaint alleges that, between November 9, 2020 and March 1, 2021, the Derivative Defendants “made, or caused the Company to make, materially false and misleading statements concerning Plug Power’s business, operations, and prospects” by “issu[ing] positive financial information and optimistic guidance, and made assurances that the Company’s internal controls were effective,” when, “[i]n reality, the Company’s internal controls suffered from material deficiencies that rendered them ineffective.” The Liu Derivative Complaint asserts claims for (1) breach of fiduciary duties, (2) unjust enrichment, (3) abuse of control, (4) gross mismanagement, (5) waste of corporate assets, and (6) contribution under Sections 10(b) and 21D of the Exchange Act (as to the named officer defendants). The Liu Derivative Complaint seeks a judgment “[d]eclaring that Plaintiff may maintain this action on behalf of Plug”; “[d]eclaring that the [Derivative] Defendants have breached and/or aided and abetted the breach of their fiduciary duties”; “awarding to Plug Power the damages sustained by it as a result of the violations” set forth in the Liu Derivative Complaint, “together with pre-judgment and post-judgment interest thereon”; “[d]irecting Plug Power and the [Derivative] Defendants to take all necessary actions to reform and improve Plug Power’s corporate governance and internal procedures to comply with applicable laws”; and “[a]warding Plaintiff the costs and disbursements of this action, including reasonable attorneys’ and experts’ fees, costs, and expenses”; and “[s]uch other and further relief as the [c]ourt may deem just and proper.”

On April 5, 2021, Company stockholders Elias Levy and Camerohn X. Withers, derivatively and on behalf of nominal defendant Plug, filed a complaint in the U.S. District Court for ~~mediation for early~~the Southern District of New York against the Derivative Defendants named in the Liu Derivative Complaint, captioned Levy et al. v. McNamee et al., Case No. 1:21-cv-02891 (S.D.N.Y.) (the “Levy Derivative Complaint”). The Levy Derivative Complaint alleges that, from November 9, 2020 ~~until it was postponed~~to April 5, 2021, the Derivative Defendants “breached their duties of loyalty and good faith” by failing to disclose “(1) that the Company would be unable to timely file its 2020 annual report due to ~~further discovery requests by~~delays related to the ~~parties and delays caused by the impact~~review of COVID-19. We continue to defend against these lawsuits vigorously. We are unable to estimate the possible loss or range of loss, if any, associated with these lawsuits, but the Company does not expect the

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~~lawsuits~~classification of certain costs and the recoverability of the right to ~~have~~use assets with certain leases; (2) that the Company was reasonably likely to report material weaknesses in its internal control over financial reporting; and (3) that, as a ~~material impact on~~result of the foregoing, Defendants’ positive statements about the Company’s ~~financial position, liquidity~~ business, operations, and prospects were materially misleading and/or ~~results~~lacked a reasonable basis.” The Levy Derivative Complaint asserts claims for (1) breach of ~~operations, or~~fiduciary duty (as to ~~otherwise have~~the named director defendants), (2) unjust enrichment (as to certain named director defendants), (3) waste of corporate assets (as to the named director defendants), and (4) violations of Sections 10(b) and 21D of the Exchange Act (as to the named officer defendants). The Levy Derivative Complaint seeks a ~~material adverse effect~~judgment “declaring that Plaintiffs may maintain this action on behalf of the ~~Company.~~ Company”; finding the Derivative Defendants “liable for breaching their fiduciary duties owed to the Company”; directing the Derivative Defendants “to take all necessary actions to reform and improve the Company’s corporate governance, risk management, and internal operating procedures to comply with applicable laws”; “awarding damages to the Company for the harm the Company suffered as a result of Defendants’ wrongful conduct”; “awarding damages to the Company for [the named officer Derivative Defendants’] violations of Sections 10(b) and 21D of the Exchange Act”; “awarding Plaintiffs the costs and disbursements of this action, including attorneys’, accountants’, and experts’ fees”; and “awarding such other and further relief as is just and equitable.”

On May 4, 2021, Company stockholder Laxman Tank, individually and on behalf of all persons who purchased or otherwise acquired Plug securities between November 9, 2020 and March 16, 2021, filed in U.S. District Court for the Southern District of New York a complaint captioned Tank v. Plug Power Inc. et al., Case No. 1:21-cv-03985 (S.D.N.Y.) (the “Tank Complaint”). The Tank Complaint is substantially similar to the Class Action Complaint, asserting the same claims, for the same damages, against the same Defendants as the Class Action Complaint. The Company anticipates that the Tank Complaint will be consolidated with the Class Action Complaint under the Private Securities Litigation Reform Act of 1995.

On May 13, 2021, Company stockholder Romario St. Clair, derivatively and on behalf of nominal defendant Plug, filed a complaint in the Supreme Court of the State of New York, County of New York against the Derivative Defendants named in the Liu Derivative Complaint, captioned St. Clair v. Plug Power Inc. et al., Index No. 653167/2021 (N.Y. Sup. Ct., N.Y. Cty.) (the “St. Clair Derivative Complaint”). The St. Clair Derivative Complaint alleges that, for approximately two years beginning on March 13, 2019, the Company “failed to disclose and misrepresented the following material, adverse facts, which the [Derivative] Defendants knew, consciously disregarded, or were reckless in not knowing,” including: “(a) that the Company was experiencing known but undisclosed material weaknesses in its internal controls over financial reporting; (b) the Company was overstating the carrying amount of certain right of use assets and finance obligations associated with leases; (c) the Company was understating its loss accrual on certain service contracts; (d) the Company would need to take impairment charges relating to certain long-lived assets; (e) the Company was improperly classifying research [and] development costs versus costs of goods sold; and (f) the Company would be unable to file its Annual Report for the 2020 fiscal year due to these errors.” The St. Clair Derivative Complaint asserts claims for (1) breach of fiduciary and (2) unjust enrichment. The St. Clair Derivative Complaint seeks a judgment “for the amount of damages sustained by the Company” as a result of the Derivative Defendants’ breaches of fiduciary duties and unjust enrichment; “[d]irecting Plug Power to take all necessary actions to reform and improve its corporate governance and internal procedures to comply with applicable laws”; for “equitable and/or injunctive relief as permitted by law, equity, and state statutory provisions”; “awarding to Plug Power restitution” and “ordering disgorgement of all profits, benefits, and other compensation obtained” by the Derivative Defendants; “awarding to plaintiff the costs and disbursements of the action, including reasonable attorneys’ fees, accountants’ and experts’ fees, costs, and expenses”; and “granting such other and further relief as the [c]ourt deems just and proper.”

Item 1A – Risk Factors

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, ~~2019 and Quarterly Report on Form 10-Q for the quarter ended June 30,~~ 2020 continue to apply to our business.

Item 2 - Unregistered Sales of Equity Securities and Use of Proceeds

(a) Not applicable.

(b) Not applicable.

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Item 3 — Defaults Upon Senior Securities

None.

Item 4 — Mine Safety Disclosures

None.

Item 5 — Other Information

~~(a) None.~~On June 17, 2021, the Board of Directors of the Company set July 30, 2021 as the date for the Company’s 2021 Annual Meeting of Stockholders (the “Annual Meeting”). The record date, time and location of the Annual Meeting will be set forth in the proxy statement for the Annual Meeting to be distributed to the stockholders prior to the meeting. Because the date of the Annual Meeting is changing by more than 30 days from the anniversary date of the Company’s 2020 Annual Meeting of Stockholders, the Company is providing this information in accordance with Rule 14a−8 under the Exchange Act. Any stockholder proposal submitted pursuant to Rule 14a-8 under the Exchange Act for inclusion in the Company’s proxy materials for the 2021 Annual Meeting must have been received by our Secretary at our principal executive offices no later than the close of business on June 5, 2021, which is 30 days before the Company expects to begin to print and send proxy materials in connection with the Annual Meeting. The Company has determined June 5, 2021 to be a reasonable time before it expects to begin to print and send its proxy materials.

~~(b) None.~~In addition, any stockholder seeking to nominate a director or to bring other business before the Annual Meeting outside of Rule 14a-8 under the advance notice provisions included in the Company’s Amended and Restated Bylaws (the “Bylaws”) must have provided timely notice, as set forth in the Bylaws. Specifically, written notice of any such proposed business or nomination must have been received by the Company’s Secretary at our principal executive offices no later than the close of business on March 7, 2021. The Company’s Bylaws specify certain requirements regarding the form and content of such a notice.

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Item 6 — Exhibits


~~1.1~~3.1	~~Underwriting~~Amended and Restated Certificate of Incorporation of Plug Power Inc. (filed as Exhibit 3.1 to Plug Power Inc.’s Annual Report on Form 10-K for the year ended December 31, 2008 and incorporated by reference herein).
3.2	Certificate of Amendment to Amended and Restated Certificate of Incorporation of Plug Power Inc. (filed as Exhibit 3.3 to Plug Power Inc.’s Annual Report on Form 10-K for the year ended December 31, 2008 and incorporated by reference herein).
3.3	Second Certificate of Amendment of Amended and Restated Certificate of Incorporation of Plug Power Inc. (filed as Exhibit 3.1 to Plug Power Inc.’s Current Report on Form 8-K filed on May 19, 2011 and incorporated by reference herein).
3.4	Third Certificate of Amendment of Amended and Restated Certificate of Incorporation of Plug Power Inc. (filed as Exhibit 3.1 to Plug Power Inc.’s Current Report on Form 8-K filed on July 25, 2014 and incorporated by reference herein).
3.5	Certificate of Correction to Third Certificate of Amendment of Amended and Restated Certificate of Incorporation of Plug Power Inc. (filed as Exhibit 3.9 to Plug Power Inc.’s Annual Report on Form 10-K for the year ended December 31, 2016 and incorporated by reference herein).
3.6	Fourth Certificate of Amendment of Amended and Restated Certificate of Incorporation of Plug Power Inc. (filed as Exhibit 3.1 to Plug Power Inc.’s Current Report on Form 8-K filed on June 30, 2017 and incorporated by reference herein).
3.7	Certificate of Designations, Preferences and Rights of a Series of Preferred Stock of Plug Power Inc. classifying and designating the Series A Junior Participating Cumulative Preferred Stock. (filed as Exhibit 3.1 to Plug Power Inc.’s Registration Statement on Form 8-A filed on June 24, 2009 and incorporated by reference herein).
3.8	Certificate of Designations, Preferences and Rights of a Series of Preferred Stock of Plug Power Inc. classifying and designating the Series C Redeemable Convertible Preferred Stock. (filed as Exhibit 3.1 to Plug Power Inc.’s Current Report on Form 8-K filed on May 20, 2013 and incorporated by reference herein).
3.9	Fourth Amended and Restated By-laws of Plug Power Inc. (filed as Exhibit 3.9 to Plug Power Inc.’s Annual Report on Form 10-K for the year ended December 31, 2020 and incorporated by reference herein).
10.1 (1)	Consent and Tenth Amendment to the Loan and Security Agreement, dated ~~August 11, 2020,~~June 2, 2021, by and among Plug Power Inc., Emerging Power Inc., Emergent Power Inc., the other borrowers from time to time party thereto, and ~~Morgan Stanley & Co.~~Generate PPL SPV I, LLC, as ~~representative~~assignee of ~~the several underwriters named in Schedule I thereto~~Generate Lending, LLC.
31.1 (1)	Certification pursuant to 18 U.S.C. Section 1350, adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.

31.2 (1)	Certification pursuant to 18 U.S.C. Section 1350, adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.

32.1 (1)	Certification pursuant to 18 U.S.C. Section 1350, adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.

32.2 (1)	Certification pursuant to 18 U.S.C. Section 1350, adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.

101.INS*	Inline XBRL Instance Document (1)
101.SCH*	XBRL Taxonomy Extension Schema Document (1)
101.CAL*	XBRL Taxonomy Extension Calculation Linkbase Document (1)
101.DEF*	XBRL Taxonomy Extension Definition Linkbase Document (1)
101.LAB*	XBRL Taxonomy Extension Labels Linkbase Document (1)

101.PRE*	XBRL Taxonomy Extension Presentation Linkbase Document (1)
104	Cover Page Interactive Data File (embedded within the Inline XBRL document) (1)

(1)	Filed herewith.

*	Submitted electronically herewith.

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Signatures

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: ~~November 09, 2020~~June 21, 2021	By:	/s/ Andrew Marsh
		Andrew Marsh
		President, Chief Executive Officer and Director (Principal Executive Officer)

Date: ~~November 09, 2020~~June 21, 2021	By:	/s/ Paul B. Middleton
		Paul B. Middleton
		Chief Financial Officer (Principal Financial Officer)


Major products/services lines
	Three months ended September 30,				Nine months ended September 30,
	2020		2019		2020		2019
Sales of fuel cell systems	$	51,864	$	29,775	$	107,779	$	67,566
Sale of hydrogen installations and other infrastructure		31,664		9,102		43,882		12,551
Services performed on fuel cell systems and related infrastructure		6,829		6,205		19,586		17,889
Power Purchase Agreements		6,704		6,595		19,854		19,114
Fuel delivered to customers		9,831		7,649		24,536		21,320
Other		97		135		235		135
Net revenue	$	106,989	$	59,461	$	215,872	$	138,575


Remainder of 2020	$	8,272
2021		34,436
2022		32,665
2023		30,043
2024		26,660
2025 and thereafter	$	49,351
Total future minimum lease payments	$	181,427