PLUG POWER INC

Previous wording

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, in our 2023 Form 10-K and supplemented by Part II, Item 1A of this Quarterly Report on Form 10-Q. 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.

Current wording

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, in our 2023 Form 10-K and supplemented by Part II, Item 1A of the Quarterly Report on Form 10-Q for the quarter ended March 31, 2024 and Part II, Item 1A of this Quarterly Report on Form 10-Q. 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.

Previous wording

The amount of provision for the Amazon and Walmart Warrants recorded as a reduction of revenue during the three months ended March 31, 2024 and 2023, respectively, is shown in the table below (in thousands):

Current wording

The amount of provision for the Amazon and Walmart Warrants recorded as a reduction of revenue during the three and six months ended June 30, 2024 and 2023, respectively, is shown in the table below (in thousands):

Previous wording

Net revenue, cost of revenue, gross profit/(loss) and gross margin/(loss) for the three months ended March 31, 2024 and 2023 were as follows (in thousands):

Current wording

Net revenue, cost of revenue, gross profit/(loss) and gross margin/(loss) for the three and six months ended June 30, 2024 and 2023 were as follows (in thousands):

Previous wording

Revenue – sales of equipment, related infrastructure and other. Revenue from sales of equipment, related infrastructure and other represents sales of our GenDrive units, GenSure stationary backup power units, cryogenic stationary and on road storage, hydrogen liquefaction systems, electrolyzers and hydrogen fueling infrastructure referred to at the site level as hydrogen installations. Revenue from sales of equipment, related infrastructure and other for the three months ended March 31, 2024 decreased $113.8 million, or 62.5%, to $68.3 million from $182.1 million for the three months ended March 31, 2023. The revenue related to electrolyzers decreased $38.7 million, primarily due to a decrease in 1MW electrolyzer stack sales during the three months ended March 31, 2024 compared to the three months ended March 31, 2023. The decrease in hydrogen infrastructure revenue of $36.6 million was due to three hydrogen site installations for the three months ended March 31, 2024 compared to 14 for the three months ended March 31, 2023. Additionally, revenue from cryogenic storage equipment and liquefiers decreased $25.2 million for the three months ended March 31, 2024 primarily due to a slower rate of progress on existing projects as they near completion compared to the rate of progress for three months ended March 31, 2023. The decrease in revenue related to fuel cell systems of $9.8 million was due to the mix of class types sold during the three months ended March 31, 2024 as well as a higher concentration of direct sales compared to the three months ended March 31, 2023. Additionally, there was a decrease in revenue of $3.5 million related to decreased sales of engineered equipment from the Frames acquisition, for which sales are not expected to continue beyond current commitments. Included in the above, there was an increase in the provision for common stock warrants recorded as a reduction of revenue, which increased to $2.3 million for the three months ended March 31, 2024 compared to $0.4 million for the three months ended March 31, 2023.

Current wording

Revenue – sales of equipment, related infrastructure and other. Revenue from sales of equipment, related infrastructure and other represents sales of our GenDrive units, GenSure stationary backup power units, cryogenic stationary and on road storage, hydrogen liquefaction systems, electrolyzers and hydrogen fueling infrastructure referred to at the site level as hydrogen installations. Revenue from sales of equipment, related infrastructure and other for the three months ended June 30, 2024 decreased $139.5 million, or 64.5%, to $76.8 million from $216.3 million for the three months ended June 30, 2023. The decrease in revenue from sales of hydrogen infrastructure of $45.4 million was due to five hydrogen site installations for the three months ended June 30, 2024 compared to 17 for the three months ended June 30, 2023. Additionally, revenue from sales of cryogenic storage equipment and liquefiers decreased $38.7 million for the three months ended June 30, 2024 primarily due to fewer projects and a slower rate of progress on existing projects as they near completion compared to the three months ended June 30, 2023. The decrease in revenue related to sales of fuel cell systems of $59.0 million was due primarily to a decrease in volume of GenDrive units sold, with 725 units sold for the three months ended June 30, 2024 compared to 2,680 units sold for the three months ended June 30, 2023. Additionally, there was a decrease in revenue of $4.4 million related to decreased sales of engineered equipment from the Frames acquisition, for which sales are not expected to continue beyond current commitments. Partially offsetting these decreases, revenue from sales of electrolyzers increased $8.1 million, primarily due to a large-scale electrolyzer project with revenue recognized over time during the three months ended June 30, 2024.

Previous wording

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. Revenue from services performed on fuel cell systems and related infrastructure for the three months ended March 31, 2024 increased $3.9 million, or 43.2%, to $13.0 million from $9.1 million for the three months ended

Current wording

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. Revenue from services performed on fuel cell systems and related infrastructure for the three months ended June 30, 2024 increased $4.3 million, or 49.8%, to $13.0 million from $8.7 million for the three months ended June 30, 2023. The increase in revenue from services performed on fuel cell systems and related infrastructure was primarily related to the increase in number of units in service, with the number of GenDrive units under maintenance contracts during the three months ended June 30, 2024 of 21,940 compared to 20,019 for the three months ended June 30, 2023, coupled with an increase in service rates negotiated with certain customers.

Previous wording

March 31, 2023. The increase in revenue from services performed on fuel cell systems and related infrastructure was primarily related to the increase in number of units in service, with the number of GenDrive units under maintenance contracts during the three months ended March 31, 2024 of 21,948 compared to 20,154 for the three months ended March 31, 2023, coupled with an increase in service rates negotiated with certain customers.

Current wording

Revenue from services performed on fuel cell systems and related infrastructure for the six months ended June 30, 2024 increased $8.3 million, or 46.4%, to $26.1 million from $17.8 million for the six months ended June 30, 2023. The increase in revenue from services performed on fuel cell systems and related infrastructure was primarily related to the increase in number of units in service during the six months ended June 30, 2024 compared to the six months ended June 30, 2023, as discussed above, coupled with an increase in service rates negotiated with certain customers.

Previous wording

Revenue – power purchase agreements. Revenue from Power Purchase Agreements (“PPAs”) represents payments received from customers for power generated through the provision of equipment and service. Revenue from PPAs for the three months ended March 31, 2024 increased $10.4 million, or 130.6%, to $18.3 million from $7.9 million for the three months ended March 31, 2023. The increase in revenue was a result of an increase in the number of units and customer sites party to these agreements. There were 32,026 GenDrive units under PPA arrangements during the three months ended March 31, 2024 compared to 28,253 during the three months ended March 31, 2023. In addition, there were 146 hydrogen sites under PPA arrangements during the three months ended March 31, 2024 compared to 117 during the three months ended March 31, 2023. Also, both pricing rates and mix of units to new customer sites were favorable in the first quarter of 2024 compared to the first quarter of 2023. In addition, there was a decrease in the provision for common stock warrants recorded as a reduction of revenue, which decreased to $1.1 million for the three months ended March 31, 2024 compared to $7.2 million for the three months ended March 31, 2023.

Current wording

Revenue – power purchase agreements. Revenue from Power Purchase Agreements (“PPAs”) represents payments received from customers for power generated through the provision of equipment and service. Revenue from PPAs for the three months ended June 30, 2024 increased $3.5 million, or 22.0%, to $19.7 million from $16.1 million for the three months ended June 30, 2023. The increase in revenue was a result of an increase in the number of units and customer sites party to these agreements. There were 31,850 GenDrive units under PPA arrangements during the three months ended June 30, 2024 compared to 30,702 during the three months ended June 30, 2023. In addition, there were 146 hydrogen sites under PPA arrangements during the three months ended June 30, 2024 compared to 129 during the three months ended June 30, 2023. Furthermore, both pricing rates and mix of units to new customer sites were favorable in the second quarter of 2024 compared to the second quarter of 2023. Partially offsetting the increase in revenue was an increase in the provision for common stock warrants recorded as a reduction of revenue, which increased to $1.7 million for the three months ended June 30, 2024 compared to a negative provision of $0.8 million for the three months ended June 30, 2023.

Previous wording

Revenue – fuel delivered to customers and related equipment. Revenue associated with fuel and related equipment delivered to customers represents the sale of hydrogen that has been purchased by the Company from a third party or generated at our hydrogen production plant. Revenue associated with fuel delivered to customers for the three months ended March 31, 2024 increased $8.1 million, or 80.3%, to $18.3 million from $10.1 million for the three months ended March 31, 2023. The increase in revenue was primarily due to a decrease in the provision for common stock warrants recorded as a reduction of revenue, which decreased to $0.7 million for the three months ended March 31, 2024 compared to $6.2 million for the three months ended March 31, 2023. Additionally, there was an increase in the number of sites with fuel contracts, with 253 sites receiving fuel delivery as of March 31, 2024 compared to 210 sites as of March 31, 2023.

Current wording

ended June 30, 2024 increased $12.0 million, or 67.2%, to $29.9 million from $17.9 million for the three months ended June 30, 2023. The increase in revenue was primarily due to an increase in the number of sites with fuel contracts, with 257 sites receiving fuel delivery as of June 30, 2024 compared to 229 sites as of June 30, 2023. Furthermore, favorable fuel rates were negotiated with certain customers in the second quarter of 2024. Partially offsetting the increase in revenue was an increase in the provision for common stock warrants recorded as a reduction of revenue, which increased to $2.9 million for the three months ended June 30, 2024 compared to a negative provision of $0.1 million for the three months ended June 30, 2023.

Previous wording

*Cost of revenue – sales of equipment, related infrastructure and other.*Cost of revenue from sales of equipment, related infrastructure and other includes direct materials, labor costs, and allocated overhead costs related to the manufacture of our fuel cells such as GenDrive units and GenSure stationary back-up power units, cryogenic stationary and on road storage, and electrolyzers, as well as hydrogen fueling infrastructure referred to at the site level as hydrogen installations. Cost of revenue from sales of equipment, related infrastructure and other for the three months ended March 31, 2024 decreased $23.2 million, or 14.7%, to $135.1 million from $158.3 million for the three months ended March 31, 2023. The cost of revenue related to hydrogen infrastructure decreased $17.9 million due to the decrease in the number of hydrogen site installations, with three hydrogen site installations for the three months ended March 31, 2024 compared to 14 for the three months ended March 31, 2023. The cost of revenue related to electrolyzer stacks and systems decreased $14.8 million, which was due to one 1MW equivalent units sold for the three months ended March 31, 2024 compared to 62 1MW equivalent units sold for the three months ended March 31, 2023. The decrease in cryogenic storage equipment and liquefiers cost of revenue of $13.6 million for the three months ended March 31, 2024 is primarily due to a slower rate of progress on existing projects as they near completion compared to the rate of progress for the three months ended March 31, 2023. Additionally, there was a decrease in cost of revenue of $1.9 million related to decreased sales of engineered equipment from the Frames acquisition, for which sales are not expected to continue beyond current commitments. Partially offsetting these decreases was an increase in the cost of revenue related to fuel cell systems of $25.0 million due to an increase in the volume of GenDrive units sold, with 1,298 units sold for the three months ended March 31, 2024 compared to 1,035 units sold for the three months ended March 31, 2023. Gross loss generated from sales of equipment, related infrastructure and other was (97.9%) for the three months ended March 31, 2024 compared to a gross margin of 13.1% for the three months ended March 31, 2023. The decrease from gross margin to gross loss was primarily due to: customer mix, lower margins on new product offerings, inventory valuation adjustments and decline in volume due to timing of deployments which impacted leveraging of labor and overhead in the first quarter of 2024.

Current wording

*Cost of revenue – sales of equipment, related infrastructure and other.*Cost of revenue from sales of equipment, related infrastructure and other includes direct materials, labor costs, and allocated overhead costs related to the manufacture of our fuel cells such as GenDrive units and GenSure stationary back-up power units, cryogenic stationary and on road storage, and electrolyzers, as well as hydrogen fueling infrastructure referred to at the site level as hydrogen installations. Cost of revenue from sales of equipment, related infrastructure and other for the three months ended June 30, 2024 decreased $57.5 million, or 30.7%, to $129.9 million from $187.4 million for the three months ended June 30, 2023. The cost of revenue related to sales of hydrogen infrastructure decreased $24.2 million due to the decrease in the number of hydrogen site installations, with five hydrogen site installations for the three months ended June 30, 2024 compared to 17 for the three months ended June 30, 2023. The decrease in cost of revenue related to sales of cryogenic storage equipment and liquefiers of $29.6 million for the three months ended June 30, 2024 is primarily due to fewer projects and a slower rate of progress on existing projects as they near completion compared to the three months ended June 30, 2023. Cost of revenue related to sales of fuel cell systems decreased by $25.6 million primarily due to a decrease in volume of GenDrive units sold, with 725 units sold for the three months ended June 30, 2024 compared to 2,680 units sold for the three months ended June 30, 2023. Additionally, there was a decrease in cost of revenue of $3.7 million related to a decrease in sales of engineered equipment from the Frames acquisition, for which sales are not expected to continue beyond current commitments. Partially offsetting these decreases was an increase in cost of revenue related to sales of electrolyzer stacks and systems of $25.6 million, which was primarily due to a large-scale electrolyzer project with revenue recognized over time during the three months ended June 30, 2024. Gross loss generated from sales of equipment, related infrastructure and other was (69.2%) for the three months ended June 30, 2024 compared to a gross margin of 13.4% for the three months ended June 30, 2023. The decrease from gross margin to gross loss was primarily due to customer mix, lower margins on new product offerings, inventory valuation adjustments and decline in volume which impacted leveraging of labor and overhead in the second quarter of 2024.

Previous wording

costs incurred for our product service and hydrogen site maintenance contracts and spare parts. Cost of revenue from services performed on fuel cell systems and related infrastructure for the three months ended March 31, 2024 increased $0.7 million, or 6.0%, to $13.0 million from $12.2 million for the three months ended March 31, 2023. The increase in cost of revenue was primarily due to the increase in number of units and sites in service. There were 21,948 fuel cell units and 106 hydrogen installations under extended maintenance contracts as of March 31 2024, an increase from 20,154 fuel cell units and 95 hydrogen installations as of March 31, 2023. Gross margin increased to 0.5% for the three months ended March 31, 2024 compared to gross loss of (34.3%) for the three months ended March 31, 2023. The increase in gross margin was primarily due to an increase in negotiated rates discussed above, as well as an increase in the release of the loss accrual during the three months ended March 31, 2024.

Current wording

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. Cost of revenue from services performed on fuel cell systems and related infrastructure for the three months ended June 30, 2024 decreased $9.7 million, or 41.4%, to $13.7 million from $23.4 million for the three months ended June 30, 2023. The decrease in cost of revenue was primarily due to an increase in the release of the loss accrual. Gross loss decreased to (5.3%) for the three months ended June 30, 2024 compared to gross loss of (169.5%) for the three months ended June 30, 2023. The decrease in gross loss was primarily due to an increase in negotiated contract rates discussed above, as well as an increase in the release of the loss accrual during the three months ended June 30, 2024.

Previous wording

Cost of revenue – provision for loss contracts related to service. The Company also recorded a provision for loss contracts related to service of $15.7 million for the three months ended March 31, 2024 compared to $6.9 million for the three months ended March 31, 2023. The Company increased the provision due to continued cost and inflationary increases of labor, parts and related overhead coupled with the timing of the remaining period of service required. Accordingly, the Company increased its estimated projected costs to service fuel cell systems and related infrastructure.

Current wording

Cost of revenue – provision for loss contracts related to service. The Company also recorded a provision for loss contracts related to service of $16.5 million for the three months ended June 30, 2024 compared to $7.3 million for the three months ended June 30, 2023. The Company increased the provision due to continued cost and inflationary increases of labor, parts and related overhead coupled with the timing of the remaining period of service required, partially offset by an increase in negotiated contract rates with certain customers. Accordingly, the Company increased its estimated projected costs to service fuel cell systems and related infrastructure.

Previous wording

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. Cost of revenue from PPAs for the three months ended March 31, 2024 increased $8.4 million, or 18.0%, to $55.2 million from $46.8 million for the three months ended March 31, 2023. The increase in cost was primarily a result of an increase in units and sites under PPA contracts as well as increased freight costs. There were 32,026 GenDrive units under PPA arrangements during the three months ended March 31, 2024 compared to 28,253 during the three months ended March 31, 2023. In addition, there were 146 hydrogen sites under PPA arrangements during the three months ended March 31, 2024 compared to 117 during the three months ended March 31, 2023. Gross loss decreased to (201.7%) for the three months ended March 31, 2024 compared to (489.8%) for the three months ended March 31, 2023. The decrease in gross loss was primarily due to improved pricing and mix of units as well as a decrease in provision for common stock warrants.

Current wording

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. Cost of revenue from PPAs for the three months ended June 30, 2024 increased $0.3 million, or 0.6%, to $54.3 million from $54.0 million for the three months ended June 30, 2023. The increase in cost was primarily a result of an increase in units and sites under PPA contracts, partially offset by a decrease in scrap events during the three months ended June 30, 2024. There were 31,850 GenDrive units under PPA arrangements during the three months ended June 30, 2024 compared to 30,702 during the three months ended June 30, 2023. In addition, there were 146 hydrogen sites under PPA arrangements during the three months ended June 30, 2024 compared to 129 during the three months ended June 30, 2023. Gross loss decreased to (176.1%) for the three months ended June 30, 2024 compared to (234.6%) for the three months ended June 30, 2023. The decrease in gross loss was primarily due to improved pricing and mix of units and a reduction of scrap events, partially offset by an increase in provision for common stock warrants.

Previous wording

Cost of revenue – fuel delivered to customers and related equipment. Cost of revenue from fuel delivered to customers and related equipment represents the purchase of hydrogen from suppliers and internally produced hydrogen that is ultimately sold to customers. Cost of revenue from fuel delivered to customers for the three months ended March 31, 2024 increased $4.1 million, or 7.5%, to $58.6 million from $54.5 million for the three months ended March 31, 2023. 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, inefficiencies in fueling systems, and increased logistics costs to cover the hydrogen network while our Georgia plant was ramping to full production. There were 253 sites receiving fuel delivery as of March 31, 2024 compared to 210 sites as of March 31, 2023. Gross loss decreased to (220.3%) during the three months ended March 31, 2024 compared to (437.4%) during the three months ended March 31, 2023. The decrease in gross loss was primarily due to lower provision for warrants for the period ending March 31, 2024 compared to 2023.

Current wording

Cost of revenue – fuel delivered to customers and related equipment. Cost of revenue from fuel delivered to customers and related equipment represents the purchase of hydrogen from suppliers and internally produced hydrogen that is ultimately sold to customers. Cost of revenue from fuel delivered to customers for the three months ended June 30, 2024 decreased $6.1 million, or 9.5%, to $58.3 million from $64.5 million for the three months ended June 30, 2023. The decrease was primarily due to lower costs of purchased fuel, an increase in fuel internally produced by the Company, which is inherently lower in cost, as well as a recognition of the clean hydrogen production tax credit (“PTC”). Gross loss decreased to (95.1%) during the three months ended June 30, 2024 compared to (260.5%) during the three months ended June 30, 2023. The decrease in gross loss was primarily due to favorable fuel rates negotiated with certain customers, lower costs of purchased fuel, an increase in fuel internally produced by the Company and recognition of the PTC.

Previous wording

Research and development expense. Research and development expenses include: 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 March 31, 2024 decreased $1.2 million, or 4.5%, to $25.3 million from $26.5 million for the three months ended March 31, 2023. The decrease was primarily related to a decrease in component materials.

Current wording

Research and development expense. Research and development expenses include: 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 June 30, 2024 decreased $10.3 million, or 35.2%, to $18.9 million from $29.3 million for the three months ended June 30, 2023. The decrease was primarily related to headcount reductions.

Previous wording

Selling, general and administrative expenses. Selling, general and administrative expenses include 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

Current wording

Selling, general and administrative expenses. Selling, general and administrative expenses include cash and non-cash compensation, benefits, amortization of intangible assets and related costs in support of our general corporate functions, including general management, finance and accounting, human resources, selling and marketing, information technology and legal services. Selling, general and administrative expenses for the three months ended June 30, 2024 decreased $16.0 million, or 15.8%, to $85.1 million from $101.2 million for the three months ended June 30, 2023. The decrease was primarily due a decrease in stock compensation, as certain performance awards nearing the end of their vesting period.

Previous wording

technology and legal services. Selling, general and administrative expenses for the three months ended March 31, 2024 decreased $26.1 million, or 25.1%, to $78.0 million from $104.0 million for the three months ended March 31, 2023. The decrease was primarily due to a decrease in stock compensation of $29.2 million, of which $17.2 million was related to forfeitures resulting from the Restructuring Plan announced in February 2024.

Current wording

Selling, general and administrative expenses for the six months ended June 30, 2024 decreased $42.1 million, or 20.5%, to $163.1 million from $205.2 million for the six months ended June 30, 2023. The decrease was primarily due to a decrease in stock compensation expense, of which $17.2 million is related to stock compensation forfeitures resulting from the Restructuring Plan announced in February 2024, as well as certain performance awards nearing the end of their vesting period.

Previous wording

Restructuring. Expenses related to the Restructuring Plan for the three months ended March 31, 2024 was $6.0 million. The increase was due to severance and benefits related to the Restructuring Plan the Company announced in February 2024.

Current wording

Restructuring. Expenses related to the Restructuring Plan for the three months ended June 30, 2024 was $1.6 million. The increase was due to severance and benefits related to the Restructuring Plan the Company announced in February 2024.

Previous wording

Impairment. Impairment for the three months ended March 31, 2024 decreased $0.8 million, or 73.8%, to $0.3 million from $1.1 million for the three months ended March 31, 2023. The decrease was primarily related to the Company recording a lower impairment charge on long-lived assets during the three months ended March 31, 2024.

Current wording

Impairment. Impairment for the three months ended June 30, 2024 decreased $6.0 million, or 60.6%, to $3.9 million from $10.0 million for the three months ended June 30, 2023. The decrease was primarily related to the Company recording a lower impairment charge on long-lived assets during the three months ended June 30, 2024, partially offset by a $3.0 million impairment charge to a non-marketable equity security.

Previous wording

*Change in fair value of contingent consideration.*The change in fair value of contingent consideration is related to earnouts for the Joule, Frames, Giner and UHG acquisitions. The change in fair value of contingent consideration for the three months ended March 31, 2024 and 2023 was $(9.2) million and $8.8 million, respectively. The decrease was primarily due to changes in assumptions related to future earnout payments due primarily to renegotiated agreements during the first quarter of 2024.

Current wording

The change in fair value of contingent consideration for the six months ended June 30, 2024 and 2023 was ($5.4) million and $24.1 million, respectively. The decrease was primarily due to changes in assumptions related to future earn-out payments due to renegotiated agreements during the first half of 2024 as well as the settlement of the UHG and Giner earn-outs.

Previous wording

Interest income. Interest income primarily consists of income generated by our investment holdings, restricted cash escrow accounts, and money market accounts. Interest income for the three months ended March 31, 2024 decreased $8.3 million compared to the three months ended March 31, 2023. The decrease during the three months ended March 31, 2024 compared to March 31, 2023 was primarily due to the maturities and sale of the Company’s available-for-sale portfolio of higher-yielding U.S. treasury securities during 2023.

Current wording

Interest income. Interest income primarily consists of income generated by our investment holdings, restricted cash escrow accounts, and money market accounts. Interest income for the three months ended June 30, 2024 decreased $8.5 million compared to the three months ended June 30, 2023. The decrease during the three months ended June 30, 2024 compared to June 30, 2023 was primarily due to the maturities and sale of the Company’s available-for-sale portfolio of higher-yielding U.S. treasury securities during 2023.

Previous wording

Interest expense. Interest expense consists of interest expense related to our long-term debt, convertible senior notes, obligations under finance leases and our finance obligations. Interest expense for the three months ended March 31, 2024 was commensurate with interest expense for the three months ended March 31, 2023.

Current wording

Interest expense. Interest expense consists of interest expense related to our long-term debt, convertible senior notes, obligations under finance leases and our finance obligations. Interest expense for the three months ended June 30, 2024 decreased $1.8 million compared to the three months ended June 30, 2023 primarily due to an increase in capitalized interest during the second quarter of 2024.

Previous wording

Other expense, net. Other expense, net primarily consists of gains and losses related to energy contracts and foreign currency. Other expense, net for the three months ended March 31, 2024 increased $2.2 million compared to the three months ended March 31, 2023. The increase was primarily due to foreign currency losses.

Current wording

Other expense, net. Other expense, net primarily consists of gains and losses related to energy contracts and foreign currency. Other expense, net for the three months ended June 30, 2024 increased $4.0 million compared to the three months ended June 30, 2023. The increase was primarily due losses related to energy contracts.

Previous wording

Change in fair value of equity securities. Change in fair value of equity securities consists of the changes in fair value for equity securities from the purchase date to the end of the period. The change in fair value of equity securities was $0 for the three months ended March 31, 2024 compared to a gain of $5.1 million for the three months ended March 31, 2023. The decrease in the change in fair value of equity securities is due to the Company selling its remaining equity securities during the fourth quarter of 2023.

Current wording

Change in fair value of equity securities. Change in fair value of equity securities consists of the changes in fair value for equity securities from the purchase date to the end of the period. The change in fair value of equity securities was $0 for the three months ended June 30, 2024 compared to a gain of $3.8 million for the three months ended June 30, 2023. The decrease in the change in fair value of equity securities is due to the Company selling its remaining equity securities during the fourth quarter of 2023.

Previous wording

*Loss on equity method investments.*Loss on equity method investments consists of our interest in HyVia, which is our 50/50 joint venture with Renault, AccionaPlug, which is our 50/50 joint venture with Acciona, SK Plug Hyverse, which is our 49/51 joint venture with SK E&S, and Clean H2 Infra Fund. For the three months ended March 31, 2024, the Company recorded a loss of $13.1 million on equity method investments compared to a loss of $5.3 million for the three months ended March 31, 2023. These losses are driven from the start-up activities for commercial and production operations of the aforementioned investments.

Current wording

*Loss on equity method investments.*Loss on equity method investments consists of our interest in HyVia, which is our 50/50 joint venture with Renault, AccionaPlug, which is our 50/50 joint venture with Acciona, SK Plug Hyverse, which is our 49/51 joint venture with SK E&S, and Clean H2 Infra Fund. For the three months ended June 30, 2024, the Company recorded a loss of $7.2 million on equity method investments compared to a loss of $7.6 million for the three months ended June 30, 2023. These losses are driven from the start-up activities for commercial and production operations of the aforementioned investments.

Previous wording

*Loss on extinguishment of debt.*Loss on extinguishment of debt arises from the difference between the net carrying amount of the Company’s debt and the fair value of the assets transferred to extinguish the debt. For the three months ended March 31, 2024, the Company recorded a loss of $14.0 million on extinguishment of debt. These losses are driven from the exchange of $138.8 million in aggregate principal amount of the Company’s 3.50% Convertible Senior Notes for $140.4 million in aggregate principal amount of the Company’s new 7.00% Convertible Senior Notes during the first quarter of 2024.

Current wording

For the six months ended June 30, 2024, the Company recorded a loss of $14.0 million on extinguishment of convertible senior notes. These losses are driven from the exchange of $138.8 million in aggregate principal amount of the Company’s 3.50% Convertible Senior Notes for $140.4 million in aggregate principal amount of the Company’s new 7.00% Convertible Senior Notes during the first quarter of 2024.

Previous wording

The Company recorded $0.2 million of income tax expense and $1.3 million of income tax benefit for the three months ended March 31, 2024 and 2023, respectively. The income tax expense for the three months ended March 31, 2024 was due to an incremental change to the valuation allowance recorded in foreign jurisdictions. The Company has not changed its overall conclusion with respect to the need for a valuation allowance against its domestic net deferred tax assets, which remain fully reserved, and its valuation allowances recorded in foreign jurisdictions.

Current wording

The Company recorded $0.4 million of income tax benefit and $0.9 million of income tax benefit for the three months ended June 30, 2024 and 2023, respectively. The Company recorded $0.2 million of income tax benefit and $2.2 million of income tax benefit for the six months ended June 30, 2024 and 2023, respectively. The income tax benefit for the six months ended June 30, 2024 was due to an incremental change to the valuation allowance recorded in foreign jurisdictions. The Company has not changed its overall conclusion with respect to the need for a valuation allowance against its domestic net deferred tax assets, which remain fully reserved, and its valuation allowances recorded in foreign jurisdictions.

Previous wording

As of March 31, 2024 and December 31, 2023, the Company had $172.9 million and $135.0 million, respectively, of cash and cash equivalents and $1.0 billion of restricted cash.

Current wording

As of June 30, 2024 and December 31, 2023, the Company had $62.4 million and $135.0 million, respectively, of cash and cash equivalents and $956.5 million of restricted cash.

Previous wording

The Company has continued to experience negative cash flows from operations and net losses. The Company incurred net losses of $295.8 million and $206.6 million for the three months ended March 31, 2024 and 2023, respectively, and had an accumulated deficit of $4.8 billion as of March 31, 2024.

Current wording

The Company has continued to experience negative cash flows from operations and net losses. The Company incurred net losses of $558.2 million and $443.0 million for the six months ended June 30, 2024 and 2023, respectively, and had an accumulated deficit of $5.0 billion as of June 30, 2024.

Previous wording

The net cash used in operating activities for the three months ended March 31, 2024 and 2023 was $167.7 million and $276.9 million, respectively. This decrease in net cash used in operating activities was primarily due to a larger decrease in accounts receivable and a smaller increase in inventory, partially offset by an increase in net loss and an increase in inventory valuation adjustments. The Company’s working capital was $855.1 million as of March 31, 2024, which included unrestricted cash and cash equivalents of $172.9 million. The net cash (used in)/provided by investing activities for the three months ended March 31, 2024 and 2023 was ($120.6) million and $95.8 million, respectively. The change from cash inflow to cash outflow from investing activities is primarily due to a decrease in proceeds from maturities of available-for-sale securities during the three months ended March 31, 2024 as the Company no longer holds available-for-sale securities. The net cash provided by financing activities for the three months ended March 31, 2024 and 2023 was $283.1 million and $7.2 million, respectively. The increase in cash provided by financing activities was primarily driven by proceeds from the At Market Issuance Sales Agreement during the three months ended March 31, 2024, partially offset by a decrease in proceeds from finance obligations.

Current wording

The net cash used in operating activities for the six months ended June 30, 2024 and 2023 was $422.5 million and $625.0 million, respectively. This decrease in net cash used in operating activities was primarily due to a larger decrease in accounts receivable and a smaller increase in inventory, partially offset by an increase in net loss and an increase in inventory valuation adjustments. The Company’s working capital was $862.8 million as of June 30, 2024, which included unrestricted cash and cash equivalents of $62.4 million.

Previous wording

On January 17, 2024, the Company entered into the At Market Issuance Sales Agreement (the “Original ATM Agreement”) with B. Riley Securities, Inc. (“B. Riley”), pursuant to which the Company may, from time to time, offer and sell through or to B. Riley, as sales agent or principal, shares of the Company’s common stock, having an aggregate offering price of up to $1.0 billion. As of February 23, 2024, the Company had $697.9 million remaining authorized for issuance under the Original ATM Agreement. On February 23, 2024, the Company and B. Riley entered into Amendment No. 1 to the Original ATM Agreement (the “Amendment” and, together with the Original ATM Agreement, the “ATM Agreement”) to increase the aggregate offering price of shares of the Company’s common stock available for future issuance under the Original ATM Agreement to $1.0 billion. Under the ATM Agreement, for a period of 18 months, the Company has the right at its sole discretion to direct B. Riley to act on a principal basis and purchase directly from the Company up to $11.0 million of shares of its common stock on any trading day (the “Maximum Commitment Advance

Current wording

The Company’s working capital was $862.8 million as of June 30, 2024, which included unrestricted cash and cash equivalents of $62.4 million and restricted cash of $956.5 million. On January 17, 2024, the Company entered into the At Market Issuance Sales Agreement (the “Original ATM Agreement”) with B. Riley Securities, Inc. (“B. Riley”), pursuant to which the Company may, from time to time, offer and sell through or to B. Riley, as sales agent or principal, shares of the Company’s common stock, having an aggregate offering price of up to $1.0 billion. As of February 23, 2024, the Company had $697.9 million remaining authorized for issuance under the Original ATM Agreement. On February 23, 2024, the Company and B. Riley entered into Amendment No. 1 to the Original ATM Agreement (the “Amendment” and, together with the Original ATM Agreement, the “ATM Agreement”) to increase the aggregate offering price of shares of the Company’s common stock available for future issuance under the Original ATM Agreement to $1.0 billion. Under the ATM Agreement, for a period of 18 months, the Company has the right at its sole discretion to direct B. Riley to act on a

Previous wording

Purchase Amount”) and up to $55.0 million of shares in any calendar week (the “Maximum Commitment Advance Purchase Amount Cap”). On and after June 1, 2024, so long as the Company’s market capitalization is no less than $1.0 billion, the Maximum Commitment Advance Purchase Amount will remain $11.0 million and the Maximum Commitment Advance Purchase Amount Cap will remain $55.0 million. If the Company’s market capitalization is less than $1.0 billion on and after June 1, 2024, the Maximum Commitment Advance Purchase Amount will be decreased to $10.0 million and the Maximum Commitment Advance Purchase Amount Cap will be decreased to $30.0 million. Through the date of filing of the Quarterly Report on Form 10-Q, the Company sold 135,354,467 shares of common stock at a weighted-average sales price of $3.38 per share for gross proceeds of $457.1 million with related issuance costs of $6.5 million. The Company believes that its working capital and cash position, together with its right to direct B. Riley to purchase shares directly from the Company under the ATM Agreement, will be sufficient to fund its on-going operations for a period of at least 12 months subsequent to the issuance of the accompanying condensed consolidated financial statements.

Current wording

principal basis and purchase directly from the Company up to $11.0 million of shares of its common stock on any trading day (the “Maximum Commitment Advance Purchase Amount”) and up to $55.0 million of shares in any calendar week (the “Maximum Commitment Advance Purchase Amount Cap”). On and after June 1, 2024, so long as the Company’s market capitalization is no less than $1.0 billion, the Maximum Commitment Advance Purchase Amount will remain $11.0 million and the Maximum Commitment Advance Purchase Amount Cap will remain $55.0 million. If the Company’s market capitalization is less than $1.0 billion on and after June 1, 2024, the Maximum Commitment Advance Purchase Amount will be decreased to $10.0 million and the Maximum Commitment Advance Purchase Amount Cap will be decreased to $30.0 million. Since January 17, 2024, the Company has sold 189,411,442 shares of common stock for gross proceeds of $611.5 million. As of the date of filing of this Quarterly Report on Form 10-Q, the Company has a remaining $690.6 million available under the ATM Agreement.

Previous wording

As described above, on January 17, 2024, the Company entered into an At Market Issuance Sales Agreement with B. Riley, pursuant to which the Company may, from time to time, offer and sell through or to B. Riley, as sales agent or principal, shares of the Company’s common stock, having an aggregate offering price of up to $1.0 billion. As of February 23, 2024, the Company had $697.9 million remaining authorized for issuance under the ATM Agreement. On February 23, 2024, the Company amended the ATM Agreement to increase the amount of shares of the Company’s common stock available for sale under the ATM Agreement to $1.0 billion. During the three months ended March 31, 2024, the Company sold 79,553,175 shares of common stock at a weighted-average sales price of $3.89 per share for gross proceeds of $309.3 million with related issuance costs of $3.9 million.

Current wording

As described above, on January 17, 2024, the Company entered into an At Market Issuance Sales Agreement with B. Riley, pursuant to which the Company may, from time to time, offer and sell through or to B. Riley, as sales agent or principal, shares of the Company’s common stock, having an aggregate offering price of up to $1.0 billion. As of February 23, 2024, the Company had $697.9 million remaining authorized for issuance under the ATM Agreement. On February 23, 2024, the Company amended the ATM Agreement to increase the amount of shares of the Company’s common stock available for sale under the ATM Agreement to $1.0 billion. During the three months ended June 30, 2024, the Company sold 96,812,695 shares of common stock at a weighted-average sales price of $2.80 per share for gross proceeds of $271.5 million with related issuance costs of $4.8 million. During the six months ended June 30, 2024, the Company sold 176,365,870 shares of common stock at a weighted-average sales price of $3.29 per share for gross proceeds of $580.8 million with related issuance costs of $8.7 million.

Previous wording

In June 2020, the Company acquired debt as part of its acquisition of United Hydrogen Group Inc. During the three months ended March 31, 2024, the Company repaid $0.3 million of principal related to this outstanding debt. The outstanding carrying value of the debt was $3.8 million as of March 31, 2024. The remaining outstanding principal on the debt was $5.2 million and the unamortized debt discount was $1.4 million, bearing varying interest rates ranging from 7.3% to 7.6%. The debt is scheduled to mature in 2026. As of March 31, 2024, the principal balance is due at each of the following dates as follows (in thousands):

Current wording

In June 2020, the Company acquired debt as part of its acquisition of United Hydrogen Group Inc. During the three months ended June 30, 2024 and 2023, the Company repaid $0.3 million and $5.1 million of principal related to this outstanding debt. During the six months ended June 30, 2024 and 2023, the Company repaid $0.6 million and $5.4 million of principal related to this outstanding debt. The outstanding carrying value of the debt was $3.7 million as of June 30, 2024. The remaining outstanding principal on the debt was $4.9 million and the unamortized debt discount was $1.2 million, bearing varying interest rates ranging from 7.3% to 7.6%. The debt is scheduled to mature in 2026. As of June 30, 2024, the principal balance is due at each of the following dates as follows (in thousands):

Previous wording

On March 20, 2024, the Company entered into separate, privately negotiated exchange agreements with certain holders of the Company’s outstanding 3.75% Convertible Senior Notes pursuant to which the Company exchanged $138.8 million in aggregate principal amount of the 3.75% Convertible Senior Notes, and accrued and unpaid interest of $1.6 million on such notes to, but excluding, March 20, 2024, for $140.4 million in aggregate principal amount of the Company’s new 7.00% Convertible Senior Notes due 2026, in each case, pursuant to the exemption from registration provided by Section 4(a)(2) under the Securities Act of 1933, as amended (the “Securities Act”). Following the exchange, approximately $58.5 million in aggregate principal amount of the 3.75% Convertible Senior Notes remained outstanding with terms unchanged.

Current wording

On March 20, 2024, the Company entered into separate, privately negotiated exchange agreements with certain holders of the Company’s outstanding 3.75% Convertible Senior Notes pursuant to which the Company exchanged $138.8 million in aggregate principal amount of the 3.75% Convertible Senior Notes, and accrued and unpaid interest of $1.6 million on such notes to, but excluding, March 20, 2024, for $140.4 million in aggregate principal amount of the Company’s new 7.00% Convertible Senior Notes due 2026, in each case, pursuant to the exemption from registration provided by Section 4(a)(2) under the Securities Act of 1933, as amended (the “Securities Act”). Following the exchange,

Previous wording

This transaction was accounted for as an extinguishment of debt. As a result, the Company recorded a loss on extinguishment of debt of $14.0 million in the unaudited interim condensed consolidated statement of operations for the three months ended March 31, 2024. Loss on extinguishment of debt arises from the difference between the net carrying amount of the Company’s debt and the fair value of the assets transferred to extinguish the debt.

Current wording

This transaction was accounted for as an extinguishment of debt. As a result, the Company recorded a loss on extinguishment of debt of $14.0 million in the unaudited interim condensed consolidated statement of operations during the first quarter of 2024. Loss on extinguishment of debt arises from the difference between the net carrying amount of the Company’s debt and the fair value of the assets transferred to extinguish the debt.

Previous wording

Subject to certain exceptions and subject to certain conditions, holders of the 7.00% Convertible Senior Notes may require the Company to repurchase their 7.00% Convertible Senior Notes upon the occurrence of a “Fundamental Change” (as defined in the Indenture) prior to maturity for cash at a repurchase price equal to 100% of the principal amount

Current wording

Subject to certain exceptions and subject to certain conditions, holders of the 7.00% Convertible Senior Notes may require the Company to repurchase their 7.00% Convertible Senior Notes upon the occurrence of a “Fundamental Change” (as defined in the Indenture) prior to maturity for cash at a repurchase price equal to 100% of the principal amount of the 7.00% Convertible Senior Notes to be repurchased plus accrued and unpaid interest, if any, to, but excluding, the repurchase date.

Previous wording

In certain circumstances, conversions of 7.00% Convertible Senior Notes in connection with “Make-Whole Fundamental Changes” (as defined in the Indenture) or conversions of 7.00% Convertible Senior Notes called for redemption may result in an increase to the conversion rate, provided that the conversion rate will not exceed 282.4859 shares of the Company’s common stock per $1,000 principal amount of 7.00% Convertible Senior Notes, subject to adjustment. In such circumstance, a maximum of 39,659,890 shares of common stock, subject to adjustment, may be issued upon conversion of the 7.00% Convertible Senior Notes. There were no conversions of the 7.00% Convertible Senior Notes during the three months ended March 31, 2024.

Current wording

In certain circumstances, conversions of 7.00% Convertible Senior Notes in connection with “Make-Whole Fundamental Changes” (as defined in the Indenture) or conversions of 7.00% Convertible Senior Notes called for redemption may result in an increase to the conversion rate, provided that the conversion rate will not exceed 282.4859 shares of the Company’s common stock per $1,000 principal amount of 7.00% Convertible Senior Notes, subject to adjustment. In such circumstance, a maximum of 39,659,890 shares of common stock, subject to adjustment, may be issued upon conversion of the 7.00% Convertible Senior Notes. There were no conversions of the 7.00% Convertible Senior Notes during the three and six months ended June 30, 2024.

Previous wording

The following table summarizes the total interest expense and effective interest rate related to the 7.00% Convertible Senior Notes for the three months ended March 31, 2024 (in thousands, except for the effective interest rate):

Current wording

The following table summarizes the total interest expense and effective interest rate related to the 7.00% Convertible Senior Notes for the three and six months ended June 30, 2024 (in thousands, except for the effective interest rate):

Previous wording

The estimated fair value of the 7.00% Convertible Senior Notes at March 31, 2024 was approximately $153.2 million. The fair value estimation was primarily based on a quoted price in an active market.

Current wording

The estimated fair value of the 7.00% Convertible Senior Notes as of June 30, 2024 was approximately $126.3 million. The fair value estimation was primarily based on a quoted price in an active market.

Previous wording

On May 18, 2020, the Company issued $200.0 million in aggregate principal amount of 3.75% Convertible Senior Notes due June 1, 2025 in a private placement to qualified institutional buyers pursuant to Rule 144A under the Securities Act. On May 29, 2020, the Company issued an additional $12.5 million in aggregate principal amount of 3.75% Convertible Senior Notes. On March 12, 2024, the Company exchanged $138.8 million in aggregate principal amount of the 3.75% Convertible Senior Notes for $140.4 million in aggregate principal amount of the Company’s new 7.00% Convertible Senior Notes due 2026. Following the exchange, approximately $58.5 million in aggregate principal amount of the 3.75% Convertible Senior Notes remained outstanding with terms unchanged. There were no conversions of the 3.75% Convertible Senior Notes during the three months ended March 31, 2024 and 2023.

Current wording

On May 18, 2020, the Company issued $200.0 million in aggregate principal amount of 3.75% Convertible Senior Notes due June 1, 2025 in a private placement to qualified institutional buyers pursuant to Rule 144A under the Securities Act. On May 29, 2020, the Company issued an additional $12.5 million in aggregate principal amount of 3.75% Convertible Senior Notes. On March 12, 2024, the Company exchanged $138.8 million in aggregate principal amount of the 3.75% Convertible Senior Notes for $140.4 million in aggregate principal amount of the Company’s new 7.00% Convertible Senior Notes due 2026. Following the exchange, approximately $58.5 million in aggregate principal amount of the 3.75% Convertible Senior Notes remained outstanding with terms unchanged. There were no conversions of the 3.75% Convertible Senior Notes during the three and six months ended June 30, 2024 and 2023.