Forward-Looking Statements
The following discussion should be read in conjunction with our audited consolidated financial statements and notes thereto included within this Annual Report on Form 10-K. In addition to historical information, this Annual Report on Form 10 K and the following discussion contain statements that are considered forward-looking within the meaning of Section 27A of the Securities Act of 1933, as amended (the “Securities Act”), and Section 21E of the Securities Exchange Act of 1934, as amended (the “Exchange Act”). We intend such forward-looking statements to be covered by the safe harbor provisions for forward-looking statements contained in the Private Securities Litigation Reform Act of 1995. These forward-looking statements relate to, among other things, our liquidity and capital resources; our ability to generate cash from operations and achieve profitability; the execution and timing of strategic initiatives, including asset monetization and capital optimization efforts; our ability to access and utilize financing arrangements, including the satisfaction of conditions precedent to, and timing and availability of funding under, such arrangements with governmental or commercial counterparties, and our continued compliance with the terms and covenants thereof; the timing, construction, commissioning and scaling of hydrogen production facilities; anticipated revenue growth, margin improvement and cost reductions; customer demand and order conversion; the development, commercialization, performance, reliability and cost competitiveness of electrolyzers, fuel cell systems, hydrogen storage and related technologies; expansion into new markets and applications, including stationary power, backup and distributed generation solutions and data center power applications, and the pace of adoption of hydrogen technologies in those markets; supply chain availability, component reliability, input cost volatility and electricity pricing trends; regulatory, environmental and trade policy developments, including the availability and impact of clean energy tax credits and other incentives and evolving administrative or interpretive guidance relating thereto; trade restrictions, tariffs, export controls and related geopolitical policy risks that could increase costs, limit market access or disrupt our supply chain; future capital expenditures and investment priorities; customer and counterparty concentration and counterparty credit risk; our expectations regarding the hydrogen economy and broader clean energy market; and our long-term growth strategy.
Forward-looking statements are typically identified by words such as “anticipate,” “believe,” “could,” “continue,” “estimate,” “expect,” “forecast,” “intend,” “may,” “plan,” “project,” “should,” “target,” “will,” “would,” and similar expressions, including the negatives thereof. These statements are based on our current expectations, assumptions and projections regarding future events and financial trends that we believe may affect our financial condition, results of operations, business strategy and financial needs. However, forward-looking statements involve known and unknown risks, uncertainties and other factors, many of which are outside out control, that may cause actual results, performance or achievements to differ materially from those expressed or implied by such statements.
Investors are cautioned not to unduly rely on forward-looking statements. Important factors that could cause actual results to differ materially include, among others:
| ● | our history of operating losses and negative cash flows and our ability to generate sufficient revenue and gross margin to achieve profitability; |
| ● | our need to raise additional capital and the availability of financing on acceptable terms; |
| ● | the timing and ability to complete strategic transactions, including infrastructure optimization initiatives, and the realization of expected liquidity benefits; |
| ● | our ability to successfully build, operate and optimize hydrogen production facilities at scale and within projected cost and schedule parameters, including achieving anticipated capacity utilization rates; |
| ● | supply chain constraints, component reliability issues and volatility in electricity and other input costs affecting the cost, performance and economics of our products and hydrogen production facilities; |
| ● | our ability to maintain and expand relationships with key customers and partners and the risks associated with customer or counterparty concentration (including reliance on a small number of large customers or partners); |
| ● | delays in customer adoption of hydrogen solutions or slower-than-expected development of hydrogen infrastructure or failure of the hydrogen economy to develop at the pace or scale anticipated; |
| ● | the impact of governmental incentives, including clean hydrogen production tax credits and investment tax credits, and potential changes in law, regulation or administrative guidance; |
| ● | risks associated with long-term service contracts, product performance, reliability, warranty costs and contract loss accruals; |
| ● | the safety risks inherent in hydrogen production, storage and transportation; |
| ● | our operational dependency on information technology systems and the risk of the failure of such technology, including failure to effectively prevent, detect, and recover from security compromises or breaches, including cyber-attacks; |
| ● | macroeconomic conditions, including inflation, interest rates, capital market volatility, supply chain disruption and geopolitical developments; |
| ● | trade policy risk (including tariffs and export/import controls) that could increase costs or limit access to critical components or markets; |
| ● | potential impairment charges, contract loss accrual adjustments or asset write-downs; |
| ● | dilution resulting from equity issuances or exercise of warrants and convertible instruments; |
| ● | competition from existing and emerging energy technologies and alternative clean energy solutions; |
| ● | environmental, health and safety regulations and permitting requirements; and |
| ● | the other risks described under Part I, Item 1A, “Risk Factors,” and elsewhere in this Annual Report on Form 10-K. |
The risks included here are not exhaustive, and additional factors could adversely affect our business and financial performance. We operate in a very competitive and rapidly evolving industry, and new risks and uncertainties may emerge from time to time. We cannot predict all such risks, nor can we assess the impact of all such factors on our business or the extent to which any factor, or combination of factors, may cause actual results to differ materially from those expressed or implied 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 undertake no obligation to update, revise or publicly release any revisions to forward-looking statements to reflect events or circumstances after the date of this Annual Report on Form 10 K*.*
Summary of Risk Factors
The risk factors detailed in Item 1A, “Risk Factors,” in this Annual Report on Form 10-K are the risks that we believe are material to our investors and a reader should carefully consider them. Those risks are not all of the risks we face and other factors not presently known to us or that we currently believe are immaterial may also affect our business if they occur. The following is a summary of the risk factors detailed in Item 1A:
| ● | Our ability to achieve our business objectives and to continue to meet our obligations is dependent upon our ability to maintain a sufficient level of liquidity and access capital; |
| ● | We have incurred losses and anticipate continuing to incur losses and may not achieve or sustain profitability; |
| ● | We may have to raise additional capital through public or private equity or debt transactions and/or complete one or more strategic transactions to continue our business and such capital may not be available to us or, if received, may not be available to us on favorable terms; |
| ● | We may not be able to expand our business or manage our future growth effectively; |
| ● | If we fail to maintain effective internal control over financial reporting, we may not be able to accurately report our financial results in a timely manner or prevent fraud and may be subject to fines, penalties or judgments, which can harm our reputation or otherwise cause a decline in investor confidence; |
| ● | We may be unable to successfully execute and operate our hydrogen production facilities and such facilities may cost more and take longer to complete than we expect or may underperform, be delayed or require additional capital; |
| ● | Delays in or not completing our product and project development goals may adversely affect our revenue and profitability; |
| ● | Our products and performance depend largely on the availability of hydrogen and insufficient supplies of hydrogen could negatively affect our sales and deployment of our products and services; |
| ● | Our investments in hydrogen production and infrastructure may be underutilized or may not generate expected returns; |
| ● | Our estimated future revenue may not be indicative of actual future revenue or profitability; |
| ● | Our purchase orders may not ship, be commissioned or installed, or convert to revenue, which could have an adverse impact on our revenue and cash flow; |
| ● | Our business may be adversely affected by customer concentration and the creditworthiness and purchasing decisions of significant customers; |
| ● | Inflationary trends, economic uncertainty, market trends, political instability and other conditions could negatively impact our sales growth and results of operations; |
| ● | Our ability to monetize clean energy tax credits and similar incentives may be limited, delayed or subject to challenge, which could adversely affect our liquidity and results of operations; |
| ● | Changes in U.S. or foreign trade policies, treaties, tariffs and taxes as well as geopolitical conditions and other factors could have a material adverse effect on our business; |
| ● | Volatile commodity prices and shortages may adversely affect our gross margins and financial results; |
| ● | The outcome of our discussions with the U.S. Department of Energy (the “DOE”) to reframe the nature of activities that would be executed under the DOE loan is uncertain and failure to achieve a mutually beneficial result could adversely affect our ability to access low-cost capital, delay project execution, and expose us to potential termination of the DOE loan guarantee; |
| ● | The reduction or elimination of government subsidies and economic incentives for alternative energy technologies, or the failure to renew such subsidies and incentives, could reduce demand for our products, lead to a reduction in our revenues, and adversely impact our operating results and liquidity; |
| ● | Our future plans could be harmed if we are unable to leverage, attract or retain key personnel; |
| ● | Changes in senior leadership, including our announced Chief Executive Officer transition, or difficulty executing management transitions could disrupt our operations and strategy execution; |
| ● | Our restructuring activities, including the 2024 Restructuring Plan (as defined below), the 2025 Restructuring Plan (as defined below) and any subsequent workforce reductions, may be disruptive to our operations and harm our business; |
| ● | We are subject to legal proceedings and legal compliance risks that could harm our business; |
| ● | We may incur significant costs and liabilities as a result of contract disputes, which could harm our business, financial condition and results of operations; |
| ● | Our ability to source parts and raw materials from our suppliers could be disrupted or delayed in our supply chain, which could adversely affect our results of operations; |
| ● | We face risks associated with our plans to market, distribute and service our products internationally; |
| ● | Our past and potential future investments in joint ventures and similar arrangements involve risks that could adversely affect our business and results of operations; |
| ● | If we cannot obtain financing to support the sale of our products and service to customers or our power purchase agreements with customers, such failure may adversely affect our liquidity and financial position; |
| ● | Our indebtedness could adversely affect our liquidity, financial condition, and our ability to fulfill our obligations and operate our business; |
| ● | The accounting method for convertible debt securities that may be settled in cash could have a material effect on our reported financial results; |
| ● | Unfavorable developments affecting the banking and financial services industry could adversely affect our business, liquidity and financial condition, and overall results of operations; |
| ● | We may be required to record impairment charges or other significant non-cash charges related to our long-lived assets, investments, or intangibles, which could adversely affect our results of operations and financial condition; |
| ● | Certain component quality issues have resulted in adjustments to our warranty reserves and the accrual for loss contracts; |
| ● | We are dependent on information technology in our operations and the failure of such technology may adversely affect our business. Security breaches of our information technology systems, including cyber-attacks, ransomware attacks, or use of malware or phishing or other malicious techniques by threat actors, have in the past, and could in the future impact our operations or lead to liability, or damage our reputation and financial results; |
| ● | Our products and services face competition; |
| ● | We may not be able to protect important intellectual property and we could incur substantial costs defending against claims that our products infringe on the proprietary rights of others; |
| ● | Our financial results may be adversely affected by changes in accounting principles generally accepted in the United States; |
| ● | If our estimates or judgments relating to our critical accounting policies are based on assumptions that change or prove to be incorrect, our operating results could fall below expectations of investors, resulting in a decline in our stock price; |
| ● | Our products use, or generate, flammable fuels that are inherently dangerous substances, which could subject our business to product safety, product liability, other claims, product recalls, negative publicity, or heightened regulatory scrutiny of our products; |
| ● | Our success depends on our ability to improve our financial and operational performance and execute our business strategy; |
| ● | We are subject to various federal, state, local and non-U.S. environmental and human health and safety laws and regulations that could impose significant costs and liabilities on us and impact our business practices, including climate change and environmental, social and governance (“ESG”) reporting requirements; |
| ● | Our business is subject to government regulation; |
| ● | Changes in tax laws or regulations or adverse outcomes resulting from examination of our income or other tax returns could adversely affect our operating results and financial condition; |
| ● | The changes in the carryforward/carryback periods as well as the new limitations on use of net operating losses may significantly impact our valuation allowance assessments for net operating losses; |
| ● | We will continue to be dependent on certain third-party key suppliers for components of our products, hydrogen generation facilities, and manufacturing facilities, and failure of a supplier to develop and supply components on mutually agreeable terms or at all, or our inability to substitute sources of these components on a timely basis or on terms acceptable to us, could impair our ability to manufacture our products, increase our cost of production, or affect our ability to generate hydrogen, which would in turn negatively affect our sales and deployment of our products and services; |
| ● | We may be unable to establish or maintain relationships with third parties for certain aspects of continued product developments, manufacturing, distribution, sale, servicing, and supply components for our products; |
| ● | We may be unable to make attractive acquisitions or successfully integrate acquired businesses, assets, or properties, and any inability to do so may disrupt our business and hinder our ability to grow, divert the attention of key personnel, disrupt our business, and impair our financial results; |
| ● | We may pursue asset monetizations or other strategic transactions to improve liquidity, and we may be unable to complete such transactions on the terms or timeline we expect, or at all; |
| ● | Our stock price and stock trading volume have been and could remain volatile, and the value of your investment could decline and if securities analysts do not maintain coverage of us or if they publish unfavorable or inaccurate research or reports about our business, our stock, or our industry, the price of our stock and the trading volume could decline; |
| ● | Sales of substantial amounts of our common stock in the public markets, or the perception that such sales might occur, could reduce the price that our common stock might otherwise attain and may dilute your voting power and your ownership interest in us; |
| ● | Provisions in our governing documents and Delaware law may discourage or delay an acquisition of the Company by a third party that stockholders may consider favorable and may limit a stockholder’s ability to bring a claim in a forum a stockholder finds favorable; |
| ● | We do not anticipate paying any dividends on our common stock; |
| ● | We are exposed to fluctuations in currency exchange rates, which could negatively affect our operating results. |
