Table
of Contents
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington,
D.C. 20549
FORM 10-Q
(Mark One)
x
|
QUARTERLY
REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
|
FOR THE QUARTERLY PERIOD ENDED SEPTEMBER 30, 2009
OR
o
|
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: 0-27527
PLUG POWER INC.
(Exact name of registrant as specified in its charter)
|
|
|
Delaware
|
|
22-3672377
|
(State or Other Jurisdiction of
Incorporation or Organization)
|
|
(I.R.S. Employer
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)
Indicate
by check mark whether the registrant (1) has filed all reports required to
be filed by Sections 13 or 15(d) of the Securities Exchange Act of 1934 during
the preceding 12 months (or for such shorter period that the registrant was
required to file such reports), and (2) has been subject to such filing
requirements for the past 90 days. Yes
x
No
o
Indicate by check mark whether the registrant
has submitted electronically and posted on its corporate Web site, if any,
every Interactive Data File required to be submitted and posted 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 and post such files). Yes
o
No
o
Indicate
by check mark whether the registrant is a large accelerated filer, an
accelerated filer, a non-accelerated filer, or a smaller reporting company. See
the definitions of “large accelerated filer,” “accelerated
filer,” “non-accelerated filer,” and “smaller reporting
company” in Rule 12b-2 of the Exchange Act. (Check one):
|
|
|
|
|
|
|
Large
accelerated filer
o
|
|
Accelerated
filer
x
|
|
Non-accelerated
filer
o
|
|
Smaller
reporting company
o
|
Indicate
by check mark whether the registrant is a shell company (as defined in Rule 12b
2 of the Exchange Act). Yes
o
No
x
The
number of shares of common stock, par value of $.01 per share, outstanding as
of November 2, 2009 was 129,559,601.
PLUG POWER INC.
INDEX
to FORM 10-Q
2
PART
1. FINANCIAL INFORMATION
Item
1 – Interim Financial Statements (Unaudited)
|
Plug Power Inc. and
Subsidiaries
|
|
(A Development Stage Enterprise)
|
|
Condensed Consolidated Balance Sheets
|
|
(Unaudited)
|
|
|
|
|
|
|
|
|
|
|
|
September 30,
|
|
December 31,
|
|
|
|
|
2009
|
|
2008
|
|
|
|
Assets
|
|
Current assets:
|
|
|
|
|
|
Cash and cash equivalents
|
$
|
24,136,396
|
|
$
|
80,844,500
|
|
|
Trading securities -
auction rate debt securities
|
53,484,515
|
|
52,650,654
|
|
|
Available-for-sale
securities
|
46,975,230
|
|
23,843,950
|
|
|
Accounts receivable, less
allowance of $82,400 in 2009 and $75,148 in 2008
|
1,492,165
|
|
2,151,121
|
|
|
Inventory
|
6,920,583
|
|
6,264,372
|
|
|
Auction rate debt
securities repurchase agreement
|
6,090,485
|
|
-
|
|
|
Prepaid expenses and other
current assets
|
1,643,527
|
|
2,350,738
|
|
|
|
Total current assets
|
140,742,901
|
|
168,105,335
|
|
Restricted Cash
|
2,265,348
|
|
-
|
|
Property, plant and
equipment, net
|
15,185,702
|
|
17,769,974
|
|
Investment in leased
property
|
2,317,498
|
|
-
|
|
Auction rate debt
securities repurchase agreement
|
-
|
|
10,224,346
|
|
Intangible assets, net
|
12,126,568
|
|
12,843,182
|
|
Other assets
|
116
|
|
169,130
|
|
|
|
Total assets
|
$
|
172,638,133
|
|
$
|
209,111,967
|
|
|
|
|
|
|
|
|
|
|
Liabilities and Stockholders Equity
|
|
Current liabilities:
|
|
|
|
|
|
Accounts payable
|
$
|
1,334,415
|
|
$
|
3,274,972
|
|
|
Accrued expenses
|
5,411,586
|
|
9,945,316
|
|
|
Borrowings under line of
credit
|
59,575,000
|
|
62,875,000
|
|
|
Current portion long term
debt
|
295,087
|
|
-
|
|
|
Deferred revenue
|
3,212,273
|
|
5,425,270
|
|
|
Other current liabilities
|
482,505
|
|
413,837
|
|
|
|
Total current liabilities
|
70,310,866
|
|
81,934,395
|
|
|
Repayable government
assistance
|
-
|
|
173,138
|
|
|
Long term debt
|
1,217,607
|
|
-
|
|
|
Other liabilities
|
1,245,466
|
|
1,140,312
|
|
|
|
Total liabilities
|
72,773,939
|
|
83,247,845
|
|
Stockholders equity:
|
|
|
|
|
|
Common stock, $0.01 par
value per share; 245,000,000 shares authorized;
|
|
|
|
Issued (including
shares in treasury):
|
|
|
|
|
130,456,568 at
September 30, 2009 and 128,164,003 at December 31, 2008
|
1,304,566
|
|
1,281,640
|
|
|
Additional paid-in capital
|
767,618,807
|
|
765,347,706
|
|
|
Accumulated other
comprehensive income (loss)
|
458,903
|
|
(359,253)
|
|
|
Deficit accumulated during
the development stage
|
(668,240,078)
|
|
(639,662,385)
|
|
|
Less common stock in
treasury:
|
|
|
|
|
|
986,199 shares at
September 30, 2009 and 402,114 shares at December 31, 2008
|
(1,278,004)
|
|
(743,586)
|
|
|
|
Total stockholders equity
|
99,864,194
|
|
125,864,122
|
|
|
|
Total liabilities and
stockholders equity
|
$
|
172,638,133
|
|
$
|
209,111,967
|
The accompanying notes are an integral part of these
unaudited condensed consolidated financial statements.
3
Plug Power Inc. and
Subsidiaries
|
(A Development Stage Enterprise)
|
Condensed Consolidated Statement of Operations
|
(Unaudited)
|
|
|
|
Three months ended
|
|
Nine months ended
|
|
Cumulative Amounts
|
|
|
Sept 30,
|
|
Sept 30,
|
|
|
|
2009
|
|
2008
|
|
2009
|
|
2008
|
|
from Inception
|
Product
and service revenue
|
|
$
|
1,044,853
|
|
$
|
1,270,978
|
|
$
|
3,612,268
|
|
$
|
3,251,612
|
|
$
|
43,721,444
|
Research
and development contract revenue
|
|
1,497,400
|
|
2,783,302
|
|
4,772,600
|
|
9,372,293
|
|
93,473,855
|
|
|
|
|
|
|
|
|
|
|
|
Total
revenue
|
|
2,542,253
|
|
4,054,280
|
|
8,384,868
|
|
12,623,905
|
|
137,195,299
|
Cost
of product and service revenue
|
|
1,334,565
|
|
1,834,541
|
|
3,566,348
|
|
6,299,208
|
|
58,537,791
|
Cost
of research and development contract
|
|
|
|
|
|
|
|
|
|
|
revenue
|
|
2,814,876
|
|
3,794,321
|
|
7,762,465
|
|
14,525,986
|
|
137,101,876
|
In-process
research and development
|
|
-
|
|
-
|
|
-
|
|
-
|
|
12,026,640
|
Research
and development expense
|
|
4,387,231
|
|
7,703,000
|
|
12,809,762
|
|
26,597,599
|
|
418,293,021
|
Selling,
general and administrative expenses
|
|
3,973,651
|
|
4,754,655
|
|
11,666,567
|
|
19,637,165
|
|
140,097,758
|
Goodwill
Impairment
|
|
-
|
|
-
|
|
-
|
|
-
|
|
45,842,656
|
Amortization
of intangible assets
|
|
544,114
|
|
562,668
|
|
1,575,466
|
|
1,710,603
|
|
20,539,024
|
|
|
|
|
|
|
|
|
|
|
|
Operating
loss
|
|
(10,512,184)
|
|
(14,594,905)
|
|
(28,995,740)
|
|
(56,146,656)
|
|
(695,243,467)
|
Interest
and other income and net realized gains
|
|
|
|
|
|
|
|
|
|
|
from available-for-sale securities
|
|
627,357
|
|
1,860,206
|
|
1,317,805
|
|
4,637,990
|
|
48,809,689
|
Change
in fair value of auction rate securities repurchase agreement
|
|
(570,106)
|
|
-
|
|
(4,133,861)
|
|
-
|
|
6,090,485
|
Net
trading gain
|
|
570,106
|
|
-
|
|
4,133,861
|
|
-
|
|
4,133,861
|
Impairment
loss on available-for-sale securities
|
|
-
|
|
(789,117)
|
|
-
|
|
(5,282,117)
|
|
(10,224,346)
|
Interest
and other expense
|
|
(285,909)
|
|
(286,442)
|
|
(899,758)
|
|
(613,920)
|
|
(3,228,550)
|
|
|
|
|
|
|
|
|
|
|
|
Loss
before equity in losses of affiliates
|
|
(10,170,736)
|
|
(13,810,258)
|
|
(28,577,693)
|
|
(57,404,703)
|
|
(649,662,328)
|
Equity
in losses of affiliates
|
|
-
|
|
-
|
|
-
|
|
-
|
|
(18,577,750)
|
|
|
|
|
|
|
|
|
|
|
|
Net
loss
|
|
$
|
(10,170,736)
|
|
$
|
(13,810,258)
|
|
$
|
(28,577,693)
|
|
$
|
(57,404,703)
|
|
$
|
(668,240,078)
|
|
|
|
|
|
|
|
|
|
|
|
Loss
per share:
|
|
|
|
|
|
|
|
|
|
|
Basic
and diluted
|
|
$
|
(0.08)
|
|
$
|
(0.16)
|
|
$
|
(0.22)
|
|
$
|
(0.65)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Weighted
average number of common shares
|
|
|
|
|
|
|
|
|
|
|
outstanding
|
|
129,356,230
|
|
88,207,878
|
|
128,960,903
|
|
88,142,442
|
|
|
The accompanying notes are an integral part of these
unaudited condensed consolidated financial statements.
4
Table of Contents
Plug Power Inc. and Subsidiaries
(A Development Stage Enterprise)
Condensed
Consolidated Statements of Cash Flows
(Unaudited)
|
Nine months ended
|
|
|
September 30,
|
Cumulative Amounts
|
|
2009
|
|
2008
|
|
from Inception
|
Cash Flows From Operating Activities:
|
|
|
|
|
|
Net loss
|
$
|
(28,577,693)
|
|
$
|
(57,404,703)
|
|
$
|
(668,240,078)
|
Adjustments to reconcile net loss to net cash used in operating activities:
|
|
|
|
|
|
Depreciation and amortization
|
2,783,165
|
|
3,314,770
|
|
41,211,887
|
Equity in losses of affiliates
|
-
|
|
-
|
|
18,577,750
|
Amortization of intangible asset
|
1,575,466
|
|
1,710,603
|
|
20,539,024
|
Noncash prepaid development costs
|
-
|
|
-
|
|
10,000,000
|
Loss on disposal of property, plant and equipment
|
280,460
|
|
(2,912)
|
|
317,673
|
In-kind services
|
-
|
|
-
|
|
1,340,000
|
Stock-based compensation
|
1,780,715
|
|
4,147,154
|
|
45,089,146
|
Provision for bad debts
|
82,400
|
|
-
|
|
250,218
|
Amortization of deferred grant revenue
|
-
|
|
-
|
|
(1,000,000)
|
Amortization and write-off of deferred rent
|
-
|
|
-
|
|
2,000,000
|
Goodwill impairment charge
|
-
|
|
-
|
|
45,842,656
|
Impairment loss on available-for-sale securities
|
-
|
|
5,282,117
|
|
10,224,346
|
Net unrealized gains on trading securities
|
(4,133,861)
|
|
|
|
(4,133,861)
|
Change in fair value of auction rate debt securities repurchase agreement
|
4,133,861
|
|
-
|
|
(6,090,485)
|
Gain (loss) on repayable government assistance
|
324,300
|
|
(1,232,522)
|
|
(908,222)
|
In-process research and development
|
-
|
|
-
|
|
7,042,640
|
Changes in assets and liabilities, net of effects of acquisitions:
|
|
|
|
|
|
Accounts receivable
|
583,430
|
|
1,252,272
|
|
(582,080)
|
Inventory
|
(656,211)
|
|
(1,761,516)
|
|
(5,725,848)
|
Prepaid expenses and other current assets
|
886,636
|
|
1,565,499
|
|
(2,417,728)
|
Accounts payable and accrued expenses
|
(6,630,997)
|
|
(324,952)
|
|
(1,591,977)
|
Deferred revenue
|
(2,213,119)
|
|
782,303
|
|
4,213,789
|
Net cash used in operating activities
|
(29,781,448)
|
|
(42,671,887)
|
|
(484,041,150)
|
|
|
|
|
|
|
Cash Flows From Investing Activities:
|
|
|
|
|
|
Cash paid for acquisitions, net
|
-
|
|
-
|
|
(19,267,125)
|
Purchase of property, plant and equipment
|
(46,324)
|
|
(1,241,805)
|
|
(38,388,545)
|
Investment in leased property
|
(2,461,526)
|
|
-
|
|
(2,461,526)
|
Restricted cash
|
(2,265,348)
|
|
-
|
|
(2,265,348)
|
Proceeds from disposal of property, plant and equipment
|
-
|
|
17,177
|
|
344,216
|
Purchase of intangible asset
|
-
|
|
-
|
|
(9,624,500)
|
Investment in affiliate
|
-
|
|
-
|
|
(1,500,000)
|
Proceeds from trading securities
|
3,300,000
|
|
-
|
|
3,300,000
|
Proceeds from maturities and sales of available-for-sale securities
|
94,564,022
|
|
230,986,668
|
|
2,690,763,480
|
Purchases of available-for-sale securities
|
(117,838,809)
|
|
(179,291,394)
|
|
(2,800,530,113)
|
Net cash (used in) provided by investing activities
|
(24,747,985)
|
|
50,470,646
|
|
(179,629,461)
|
|
|
|
|
|
|
Cash Flows From Financing Activities:
|
|
|
|
|
|
Proceeds from issuance of common and preferred stock
|
-
|
|
-
|
|
428,529,602
|
Proceeds from initial public offering, net
|
-
|
|
-
|
|
201,911,705
|
Stock issuance costs
|
-
|
|
-
|
|
(5,548,027)
|
Purchase of treasury stock
|
(534,418)
|
|
(488,567)
|
|
(1,153,060)
|
Proceeds from stock option exercises and employee stock purchase plan
|
76,493
|
|
165,156
|
|
11,521,718
|
Repayment of loans due to General Hydrogen Shareholders
|
-
|
|
-
|
|
(400,000)
|
Proceeds from borrowings under line of credit
|
(3,300,000)
|
|
|
|
59,575,000
|
Proceeds from long term debt
|
1,652,445
|
|
-
|
|
1,652,445
|
Repayment of government assistance
|
-
|
|
-
|
|
(2,235,244)
|
Principal payments on long-term debt and borrowings under line of credit
|
(139,751)
|
|
-
|
|
(6,926,438)
|
Net cash (used in) provided by financing activities
|
(2,245,231)
|
|
(323,411)
|
|
686,927,701
|
|
|
|
|
|
|
Effect of exchange rate changes on cash
|
66,560
|
|
15,692
|
|
879,306
|
Increase (decrease) in cash and cash equivalents
|
(56,708,104)
|
|
7,491,040
|
|
24,136,396
|
Cash and cash equivalents, beginning of period
|
80,844,500
|
|
12,076,938
|
|
|
|
|
|
|
|
|
Cash and cash equivalents, end of period
|
$
|
24,136,396
|
|
$
|
19,567,978
|
|
$
|
24,136,396
|
The accompanying notes are an integral part of these
unaudited condensed consolidated financial statements.
5
Table of Contents
Plug Power Inc.
Notes
to Condensed Consolidated Financial Statements
(Unaudited)
1. Nature of
Operations
Description of
Business
Plug
Power Inc. is a development stage enterprise involved in the design,
development and manufacture of fuel cell systems for industrial off-road (forklift
or material handling) markets and stationary power markets worldwide. The
Company is a development stage enterprise because substantially all of the
Company’s resources and efforts are aimed at the discovery of new
knowledge that could lead to significant improvement in fuel cell reliability,
durability and affordability, and the establishment, expansion and stability of
markets for the Company’s products. The Company continues to experience
significant net outflows of cash from operations and devotes significant
efforts towards financial planning in order to forecast future cash spending
and the ability to continue product research and development activities and
expansion of markets for its products. Fuel cell technology within the
Company’s principle target markets, material handling power and remote
prime power, and our secondary markets, residential and backup power, is still
early in the technology adoption life cycle.
The
Company is focused on proton exchange membrane, or PEM, fuel cell and fuel processing
technologies and fuel cell/battery hybrid technologies, from which multiple
products are available. A fuel cell is an electrochemical device that combines
hydrogen and oxygen to produce electricity and heat without combustion.
Hydrogen is derived from hydrocarbon fuels such as natural gas, propane,
methanol, ethanol, gasoline or biofuels. Hydrogen can also be obtained from the
electrolysis of water. Hydrogen can be purchased directly from industrial gas
providers or can be produced on-site at consumer locations.
The
Company sells its products worldwide through a product sales force. The Company
sells to business, industrial and government customers.
The
Company was organized in the State of Delaware on June 27, 1997 and became
listed on the NASDAQ exchange on October 29, 1999. The Company was originally
formed as a joint venture between Edison Development Corporation and Mechanical
Technology Incorporated. In 2007 the Company merged with and acquired all the
assets, liabilities and equity of Cellex Power Products, Inc. (Cellex) and
General Hydrogen Corporation (General Hydrogen).
Unless
the context indicates otherwise, the terms “Company,” “Plug
Power,” “we,” “our” or “us” as used
herein refers to Plug Power Inc. (the registrant) and its subsidiaries.
Although
the Company has a significant amount of available-for-sale securities, as
described further below, as of September 30, 2009, neither the Company nor
any of its subsidiaries was an “investment company” pursuant to the
Investment Company Act of 1940, as amended.
Liquidity
The
Company anticipates incurring substantial additional losses over at least the
next several years and believes that its current cash, cash equivalents,
trading securities and available-for-sale securities balances will provide
sufficient liquidity to fund operations for at least the next twelve months.
The Company’s cash requirements depend on numerous factors, including
completion of our product development activities, our ability to commercialize
our energy products, market acceptance of our systems and other factors. The
Company expects to devote substantial capital resources to continue its
development
6
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programs directed at
commercializing our energy products for worldwide use, building a sales base
and expanding market channels, hiring and training production staff, developing
and expanding manufacturing capacity, production and research and development
activities. The Company expects to pursue the expansion of its operations
through internal growth and strategic acquisitions and expects that such
activities will be funded from existing cash, cash equivalents, trading
securities, available-for-sale securities, and the issuance of additional
equity or debt securities or additional borrowings subject to market and other
conditions. The failure to raise the funds necessary to finance future cash
requirements or consummate future acquisitions could adversely affect the
Company’s ability to pursue its strategy and could negatively affect its
operations in future periods.
Included
in trading securities and working capital at September 30, 2009 and December
31, 2008, respectively, is $53.5 million and $52.7 million of auction rate debt
securities. The auction rate debt securities are secured by student loans which
are generally guaranteed by the Federal government. These auction rate debt
securities are structured to be tendered at par, at the investor’s
option, at auctions occurring every 27-30 days. However, due to the liquidity
issues in the credit and capital markets, the market for auction rate debt
securities began experiencing auction failures in February 2008 and there have
been no successful auctions for the securities held in our portfolio since the
failures began. We continue to receive interest on these securities, subject to
an interest rate cap formula for each security as periodically adjusted in
accordance with the respective securities’ agreement. At September 30,
2009, the interest rates ranged from 0% to 1.75% on the auction rate debt
securities as compared to the interest rate range at December 31, 2008 from
1.55% to 3.43%.
In
December 2008, the Company entered into a Repurchase Agreement with a
third-party lender such that the Company may require the third-party lender to
repurchase the auction rate debt securities pledged as collateral for the
Credit Line Agreement (See Note 10, Credit Line Agreement and Auction Rate Debt
Securities Repurchase Agreement), at their par value, from June 30, 2010 through
July 2, 2012 as full settlement for the advances on the Credit Line Agreement.
The Company has elected to record this item at its fair value in accordance
with Accounting Standard Codification No. 825-10-25, previously referred to as SFAS
No. 159 to allow consistent treatment of this repurchase agreement and the
underlying collateral. At September 30, 2009 and December 31, 2008 the fair
value of this item is approximately $6.1 million and $10.2 million,
respectively, and is recorded as an asset on the condensed consolidated balance
sheets. The change in the fair value of the Repurchase Agreement for the nine
months ended September 30, 2009 was $4.1 million and is recorded as a net
unrealized loss on the condensed consolidated statements of operations.
2. Basis of
Presentation
Principles
of Consolidation:
The
accompanying unaudited condensed interim consolidated financial statements
include the accounts of the Company and its wholly-owned subsidiaries. All
significant intercompany transactions have been eliminated in consolidation. It
is the Company’s policy to reclassify prior period consolidated financial
statements to conform to current period presentation.
Interim Financial Statements
:
The unaudited condensed
interim consolidated financial statements have been prepared pursuant to the
rules and regulations of the Securities and Exchange Commission. 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, 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.
7
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Certain
information and footnote disclosures normally included in annual consolidated
financial statements prepared in accordance with U.S. generally accepted
accounting principles have been condensed or omitted. These unaudited 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, 2008.
The
information presented in the accompanying condensed consolidated balance sheet
as of December 31, 2008 has been derived from the Company’s
December 31, 2008 audited consolidated financial statements. All other
information has been derived from the Company’s unaudited condensed
consolidated financial statements for the periods as of and ending September
30, 2009 and 2008.
Use of Estimates:
The unaudited condensed interim consolidated financial
statements 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 financial
statements and the reported amounts of revenues and expenses during the
reporting period. Actual results could differ from those estimates.
Subsequent Events:
The
Company has evaluated subsequent events and transactions for potential
recognition or disclosure in the financial statements through November 9, 2009,
which was the date we filed this Form 10-Q with the SEC. No recognized or
non-recognized subsequent events were noted.
Recent Accounting Pronouncements:
In June 2009, the Financial
Accounting Standards Board (FASB) issued Accounting Standard Codification (ASC)
No. 105, Generally Accepted Accounting Principles (GAAP) (ASC 105 or FASB
Codification), previously referred to as Statement of Financial Accounting
Standard (SFAS) No. 168, The FASB Accounting Standards Codification and
the Hierarchy of Generally Accepted Accounting Principles - a
replacement of FASB Statement No 162 (SFAS 168). The FASB Codification is
the authoritative source of generally accepted
accounting principles in the United States. Rules and interpretive releases of
the SEC under federal securities laws are also sources of authoritative GAAP
for SEC registrants. The FASB will no longer issue new standards in the form of
Statements, FASB Staff Positions, or Emerging Issues Task Force Abstracts;
instead the FASB will issue Accounting Standards Updates. Accounting Standards
Updates will not be authoritative in their own right as they will only serve to
update the Codification. The issuance of the FASB Codification was not intended
to change or alter existing GAAP.
The effective date for use of the FASB Codification is
for interim and annual periods ending after September 15, 2009. Companies
should account for the adoption of the guidance on a prospective basis. The
Company adopted the FASB Codification during the quarter ended September 30,
2009 and it did not have a material effect on its condensed consolidated
financial position,
condensed
consolidated results of operations, or liquidity.
The Company has
appropriately updated its disclosures with the appropriate FASB
Codification references during the three months ended September 30, 2009.
As such, all the notes to the condensed consolidated financial statements below
as well as the critical accounting policies in the Management’s
Discussion and Analysis section have been updated with the appropriate FASB
Codification references.
8
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In
April 2009, the FASB issued ASC No. 825-10-65, Financial Instruments –
Transition and Open Effective Date Information (ASC 825-10-65), which was
previously discussed in the FASB Staff Position (FSP) No. FAS 107-1 and
Accounting Principles Board (APB) Opinion No. 28-1, Interim Disclosures about
Fair Value of Financial Instruments. ASC 825-10-65 amends FASB Statement No.
107, Disclosures about Fair Values of Financial Instruments, to require
disclosures about fair value of financial instruments in interim financial statements
as well as in annual financial statements. ASC 825-10-65 amends APB Opinion No.
28, Interim Financial Reporting, to require those disclosures in all interim
financial statements. ASC 825-10-65 is effective for interim periods ending
after June 15, 2009. The Company adopted the provisions of ASC 825-10-65 and
provided the additional disclosure requirements for the quarter ending June 30,
2009. See Note 3 – Fair Value Measurements.
In
April 2009, the FASB issued ASC No. 820-10-35, Fair Value Measurements and
Disclosures – Subsequent Measurement
(
ASC 820-10-35), which
discusses the provisions related to the determination of fair value when the
volume and level of activity for the asset or liability have significantly
decreased, which was previously discussed in the FASB Staff Position SFAS
157-4, Determining Fair Value When the Volume and Level of Activity for the
Asset or Liability Have Significantly Decreased and Identifying Transactions
That Are Not Orderly (FSP No. 157-4). ASC 820-10-35 provides additional
guidance for estimating fair value when the volume and level of transaction
activity for an asset or liability have significantly decreased in relation to
normal market activity for the asset or liability. ASC 820-10-35 also includes
guidance on identifying circumstances that may indicate a transaction is not
orderly. ASC 820-10-35 emphasizes that even if there has been a significant
decrease in the volume and level of activity for the asset or liability and
regardless of the valuation technique(s) used, the objective of a fair value
measurement remains the same. Fair value is the price that would be received to
sell an asset or paid to transfer a liability in an orderly transaction (that
is, not a forced liquidation or distressed sale) between market participants at
the measurement date under current market conditions. In accordance with FASB
ASC No. 820-10-65, Transition Related to FASB Statement No. 157-4, the above
provisions are effective for interim periods ending after June 15, 2009, and is
applied prospectively. The Company adopted the provisions of ASC 820-10-35
during the quarter ending June 30, 2009 and it did not have a material effect
on its condensed consolidated financial position, condensed consolidated
results of operations, or liquidity. See Note 3 – Fair Value
Measurements.
In
April 2009, the FASB issued ASC No. 320-10-65, Transition Related to
Recognition and Presentation of Other-Than-Temporary Impairments (ASC
320-10-65), previously referred to as FASB Staff Position SFAS 115-2 and
SFAS 124-2, Recognition and Presentation of Other-Than-Temporary Impairments
(FSP No. 115-2). ASC 320-10-65 amends the other-than-temporary impairment
guidance for debt securities to make the guidance more operational and to
improve the presentation and disclosure of other-than-temporary impairments in
the financial statements. The most significant change ASC 320-10-65 brings is a
revision to the amount of other-than-temporary loss of a debt security recorded
in earnings. ASC 320-10-65 is effective for interim and annual reporting
periods ending after June 15, 2009. The Company adopted the provisions of ASC
320-10-65 during the quarter ending June 30, 2009 and it did not have a
material effect on its condensed consolidated financial position, condensed
consolidated results of operations, or liquidity.
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In
May 2009, the FASB issued ASC No. 855, Subsequent Events
(ASC 855),
previously referred to as SFAS No. 165, Subsequent Events. ASC 855
should be applied to the accounting for and disclosure of subsequent events.
This Statement does not apply to subsequent events or transactions that are
within the scope of other applicable GAAP that provide different guidance on
the accounting treatment for subsequent events or transactions. ASC
855 would apply to both interim financial statements and annual financial
statements. The objective of ASC 855 is to establish general standards of
accounting for and disclosures of events that occur after the balance sheet
date but before financial statements are issued or are available to be issued.
In particular, this Statement sets forth: 1) The period after the balance sheet
date during which management of a reporting entity should evaluate events or
transactions that may occur for potential recognition or disclosure in the
financial statements; 2) The circumstances under which an entity should
recognize events or transactions occurring after the balance sheet date in its
financial statements; and, 3) The disclosures that an entity should make about
events or transactions that occurred after the balance sheet date. ASC 855 also
requires entities to disclose the date through which they have evaluated
subsequent events and whether the date corresponds with the release of their
financial statements. ASC 855 is effective for all interim and annual periods
ending after June 15, 2009. The Company adopted ASC 855 upon its issuance and
it had no material effect on its condensed consolidated financial position,
condensed consolidated results of operations, or liquidity. See Note 2 - Basis
of Presentation for this new disclosure.
In
June 2009, the FASB issued ASC No. 860, Transfers and Servicing (ASC 860),
previously referred to as FASB SFAS No. 166, Accounting for Transfers of
Financial Assets - an amendment of FASB Statement No. 140. ASC 860 will require
entities to provide more information about sales of securitized financial
assets and similar transactions, particularly if the seller retains some risk
with respect to the assets. ASC 860 is effective for fiscal years beginning
after November 15, 2009. The Company plans to adopt the provisions of ASC 860
on January 1, 2010 and does not believe adoption of this new standard will have
a material effect on its condensed consolidated financial position, condensed
consolidated results of operations, or liquidity.
In
June 2009, the FASB issued ASC No. 810, Consolidation (ASC 810), previously
referred to as FASB SFAS No. 167, Amendments to FASB Interpretation No. 46(R).
ASC 810 amends certain requirements of FASB Interpretation No. 46(R) to improve
financial reporting by companies involved with variable interest entities and
to provide more relevant and reliable information to users of financial
statements. ASC 810 is effective for fiscal years beginning after November 15,
2009. The Company plans to adopt the provisions of ASC 810 on January 1, 2010
and does not believe adoption of this new standard will have a material effect
on its condensed consolidated financial position, condensed consolidated
results of operations, or liquidity.
In
October 2009, the FASB issued Accounting Standard Update No. 2009-13 on Topic
605, Revenue Recognition– Multiple Deliverable Revenue Arrangements
– a consensus of the FASB Emerging Issues Task Force
.
The objective
of this Update is to address the accounting for multiple-deliverable
arrangements to enable vendors to account for products or services
(deliverables) separately rather than as a combined unit. Vendors often provide
multiple products or services to their customers. Those deliverables often are
provided at different points in time or over different time periods. This
Update provides amendments to the criteria in Subtopic 605-25 for separating
consideration in multiple-deliverable arrangements. The
10
Table of
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amendments in this
Update establish a selling price hierarchy for determining the selling price of
a deliverable. The selling price used for each deliverable will be based on
vendor specific objective evidence if available, third-party evidence if
vendor-specific objective evidence is not available, or estimated selling price
if neither vendor specific objective evidence nor third-party evidence is
available. The amendments in this Update also will replace the term fair value
in the revenue allocation guidance with selling price to clarify that the
allocation of revenue is based on entity-specific assumptions rather than
assumptions of a marketplace participant. This update is effective for fiscal
years beginning on or after June 15, 2010. The Company plans to adopt the
provisions of this Update on January 1, 2011. The Company is currently
evaluating the impact, if any, of this new accounting update on its
condensed consolidated financial position, condensed consolidated results of
operations, or liquidity.
3. Fair Value
Measurements
The Company complies with the provisions of FASB ASC
No. 820, Fair Value Measurements and Disclosures
(ASC 820), previously
referred to as SFAS No. 157, Fair Value Measurements in measuring fair value
and in disclosing fair value measurements. ASC 820 defines fair value,
establishes a framework for measuring fair value and expands disclosures about
fair value measurements required under other accounting pronouncements. FASB
ASC No. 820-10-35, Fair Value Measurements and Disclosures- Subsequent
Measurement (ASC 820-10-35), clarifies that fair value is an exit price,
representing the amount that would be received to sell an asset or paid to
transfer a liability in an orderly transaction between market participants. ASC
820-10-35-3 also requires that a fair value measurement reflect the assumptions
market participants would use in pricing an asset or liability based on the
best information available. Assumptions include the risks inherent in a
particular valuation technique (such as a pricing model) and/or the risks
inherent in the inputs to the model.
ASC
820-10-35 discusses valuation techniques, such as the market approach
(comparable market prices), the income approach (present value of future income
or cash flow), and the cost approach (cost to replace the service capacity of
an asset or replacement cost). The statement utilizes a fair value hierarchy
that prioritizes the inputs to valuation techniques used to measure fair value
into three broad levels. The following is a brief description of those three
levels:
Level
1 Inputs – Level 1 inputs are unadjusted quoted prices in active markets
for assets or liabilities identical to those to be reported at fair value. An active
market is a market in which transactions occur for the item to be fair valued
with sufficient frequency and volume to provide pricing information on an
ongoing basis.
Level
2 Inputs – Level 2 inputs are inputs other than quoted prices included
within Level 1. Level 2 inputs are observable either directly or indirectly.
These inputs include: (a) Quoted prices for similar assets or liabilities
in active markets; (b) Quoted prices for identical or similar assets or
liabilities in markets that are not active, such as when there
are few transactions for the asset or liability, the
prices are not current, price quotations vary substantially over time or in
which little information is released publicly; (c) Inputs other than
quoted prices that are observable for the asset or liability; and
(d) Inputs that are derived principally from or corroborated by observable
market data by correlation or other means.
Level
3 Inputs – Level 3 inputs are unobservable inputs for an asset or
liability. These inputs 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.
11
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When
determining the fair value measurements for assets or liabilities required or
permitted to be recorded at and/or marked to fair value, the Company considers
the principal or most advantageous market in which it would transact and
considers assumptions that market participants would use when pricing the asset
or liability. When possible, the Company looks to active and observable markets
to price identical assets. When identical assets are not traded in active
markets, the Company looks to market observable data for similar assets.
Nevertheless, certain assets are not actively traded in observable markets and
the Company must use alternative valuation techniques to derive a fair value
measurement.
The
following table summarizes the basis used to measure certain financial assets
at fair value on a recurring basis in the consolidated balance sheet:
Basis of Fair Value
Measurements
|
|
|
Quoted Prices in Active
Markets for Identical
Items
|
Significant Other
Observable Inputs
|
Significant
Unobservable Inputs
|
Balance at September
30, 2009
|
Total
|
(Level 1)
|
(Level 2)
|
(Level 3)
|
Trading securities – auction
rate debt securities
|
|
$
|
53,484,515
|
|
—
|
|
—
|
|
$
|
53,484,515
|
Available-for-sale securities
|
|
$
|
46,975,230
|
|
$
|
46,975,230
|
|
—
|
|
—
|
Auction rate debt securities
repurchase agreement
|
|
$
|
6,090,485
|
|
—
|
|
—
|
|
$
|
6,090,485
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
The
following tables show reconciliations of the beginning and ending balances for
assets measured at fair value on a recurring basis using significant
unobservable inputs (i.e. Level 3) for the nine months ended September 30,
2009:
Auction
Rate Debt Securities
|
|
Fair Value
Measurements Using
Significant
Unobservable Inputs
|
Beginning of period
|
|
$
|
52,650,654
|
|
|
|
|
Sale of trading securities
for the nine months ended September 30, 2009
|
|
|
(3,300,000)
|
|
|
|
|
Net realized gains on trading securities for the nine months ended
September 30, 2009
|
|
|
4,133,861
|
|
|
|
|
Fair value of trading securities - auction rate debt securities at
September 30, 2009
|
|
$
|
53,484,515
|
|
|
|
|
12
Table of Contents
Auction
Rate Debt Securities Repurchase Agreement
|
|
Fair Value
Measurements Using
Significant
Unobservable Inputs
|
|
Beginning of period
|
|
$
|
10,224,346
|
|
|
|
|
|
|
Change in fair value of auction rate securities repurchase agreement
for the nine months ended September 30, 2009
|
|
|
(4,133,861
|
)
|
|
|
|
|
|
Fair value of auction rate debt securities repurchase agreement at
September 30, 2009
|
|
$
|
6,090,485
|
|
|
|
|
|
|
The
following summarizes the valuation technique for assets measured and recorded
at fair value:
Available-for-sale
securities: For our level 1 securities, which represent Federal treasury
securities, fair value is based on quoted market prices.
Trading
securities – auction rate debt securities and auction rate debt
securities repurchase agreement: The securities valued using unobservable
inputs were the auction rate debt securities and auction rate debt securities
repurchase agreement as the financial and capital markets have experienced
significant dislocation and illiquidity in regard to these types of instruments
and there is currently no secondary market for these types of securities. There
have been no successful auctions since early 2008. The valuation of these
auction rate debt securities and auction rate debt securities repurchase
agreement is an estimate based upon factors specific to these securities,
including duration, tax status (taxable or tax-exempt), credit quality, the
existence of insurance wraps, and the composition of the underlying student
loans (Federal Family Education Loan Program or private loans). Assumptions were
made about future cash flows based upon interest rate formulas as described
above. Also, the valuation included estimates of market data including yields
or spreads of similar trading instruments, when available, or assumptions
believed to be reasonable for non-observable inputs such as likelihood of
redemption. Actual transactions involving these securities and/or future
valuations could differ from the estimated fair value of these securities at
September 30, 2009.
4.
Earnings Per Share
The
Company reports net loss per basic and diluted common share in accordance with
the provisions of FASB ASC No. 260, Earnings Per Share
(ASC 206),
previously referred to as SFAS No. 128, Earnings Per Share, which establishes
standards for computing and presenting loss per share. Basic earnings per
common share are computed by dividing net loss available to common stockholders
by the weighted average number of common shares outstanding during the
reporting period. Diluted earnings per share reflects the potential dilution
that could occur if securities or other contracts to issue common stock (such
as convertible preferred stock, stock options, unvested restricted stock, and
warrants) 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, computed by dividing net earnings by the
combination of dilutive common share equivalents, comprised of shares issuable
under outstanding warrants and the Company’s share-based compensation
plans, and the weighted average number of common shares outstanding during the
reporting period. 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.
13
Table of
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The
following table provides the components of the calculations of basic and
diluted earnings per share:
|
|
Three Months Ended
|
|
|
|
|
|
Nine Months Ended
|
|
|
|
|
|
|
September 30,
|
|
|
|
|
|
September 30,
|
|
|
|
|
|
|
2009
|
|
|
2008
|
|
|
2009
|
|
|
2008
|
|
Numerator:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net
loss
|
|
$
|
(10,170,736
|
)
|
|
$
|
(13,810,258
|
)
|
|
$
|
(28,577,693
|
)
|
|
$
|
(57,404,703
|
)
|
Denominator:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Weighted
average number of common shares
|
|
|
129,356,230
|
|
|
|
88,207,878
|
|
|
|
128,960,903
|
|
|
|
88,142,442
|
|
The
dilutive potential common shares are summarized as follows:
|
|
|
|
|
|
|
Nine Months Ended
September 30,
|
|
|
2009
|
|
2008
|
Stock options
|
|
6,944,861
|
|
6,228,772
|
Unvested restricted stock
|
|
15,000
|
|
416,437
|
Preferred stock
(1)
|
|
-
|
|
39,500,000
|
Warrants
(2)
|
|
571,429
|
|
571,429
|
|
|
|
|
|
|
|
7,531,290
|
|
46,716,638
|
|
|
|
|
|
(1)
|
The preferred stock amount represents the dilutive potential
common shares of the 395,000 shares of Class B capital stock issued on
June 29, 2006, which were converted into 39,500,000 shares of common
stock in December 2008.
|
(2)
|
The warrants were granted to the shareholders of General
Hydrogen as part of the acquisition of that company.
|
14
Table of
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5. Intangible Assets
The
gross carrying amount and accumulated amortization of the Company’s
acquired identifiable intangible assets related to Cellex and General Hydrogen
as of September 30, 2009 are as follows:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Weighted
Average
Amortization
Period
|
|
Gross
Carrying
Amount
|
|
Accumulated
Amortization
|
|
|
Effect of
Foreign
Currency
Translation
|
|
Total
|
Acquired Technology
|
|
8 years
|
|
$
|
15,900,000
|
|
$
|
(5,112,440
|
)
|
|
$
|
641,091
|
|
$
|
11,428,651
|
Customer Relationships
|
|
8 years
|
|
|
1,000,000
|
|
|
(302,083
|
)
|
|
|
—
|
|
|
697,917
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
$
|
16,900,000
|
|
$
|
(5,414,523
|
)
|
|
$
|
641,091
|
|
$
|
12,126,568
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
6.
Stockholders’ Equity
Changes
in stockholders’ equity for the nine months ended September 30, 2009 are
as follows:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Common Stock
|
|
|
|
|
|
Treasury Stock
|
|
|
|
|
|
|
|
Shares
|
|
Amount
|
|
Additional Paid-in-
Capital
|
|
Accumulated
Other
Comprehensive
Income (Loss)
|
|
Shares
|
|
Amount
|
|
Deficit Accumulated
During the
Development Stage
|
|
Total
Stockholders'
Equity
|
|
Total
Comprehensive
Loss
|
December 31, 2008
|
128,164,003
|
|
$
|
1,281,640
|
|
$
|
765,347,706
|
|
$
|
(359,253)
|
|
402,114
|
|
$
|
(743,586)
|
|
$
|
(639,662,385)
|
|
$
|
125,864,122
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net loss
|
-
|
|
-
|
|
-
|
|
-
|
|
-
|
|
-
|
|
(28,577,693)
|
|
(28,577,693)
|
|
(28,577,693)
|
Foreign currency translation gain
|
-
|
|
-
|
|
-
|
|
961,663
|
|
-
|
|
-
|
|
-
|
|
961,663
|
|
961,663
|
Unrealized loss on available-for-sale
securities, net of reclassification
adjustments for realized net losses and
gains
|
-
|
|
-
|
|
-
|
|
(143,507)
|
|
-
|
|
-
|
|
-
|
|
(143,507)
|
|
(143,507)
|
Total comprehensive loss
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(27,759,537)
|
Stock based compensation
|
2,084,325
|
|
20,843
|
|
2,075,093
|
|
-
|
|
-
|
|
-
|
|
-
|
|
2,095,936
|
|
|
Stock issued under employee stock
purchase plan
|
208,240
|
|
2,083
|
|
196,008
|
|
-
|
|
-
|
|
-
|
|
-
|
|
198,091
|
|
|
Treasury stock
|
-
|
|
-
|
|
-
|
|
-
|
|
584,085
|
|
(534,418)
|
|
-
|
|
(534,418)
|
|
|
September 30, 2009
|
130,456,568
|
|
$
|
1,304,566
|
|
$
|
767,618,807
|
|
$
|
458,903
|
|
986,199
|
|
$
|
(1,278,004)
|
|
$
|
(668,240,078)
|
|
$
|
99,864,194
|
|
|
15
Table of
Contents
7. Supplemental
Disclosures of Cash Flows Information
The
following represents required supplemental disclosures of cash flows
information and non-cash financing and investing activities which occurred
during the nine months ended September 30, 2009 and 2008:
|
|
|
|
|
|
|
|
|
|
|
Sept 30,
2009
|
|
|
Sept 30,
2008
|
|
Stock-based compensation accrual impact
|
|
$
|
436,819
|
|
|
$
|
124,519
|
|
Change in unrealized gain/loss on available-for-sale securities
|
|
|
(143,507
|
)
|
|
|
115,304
|
|
Settlement of repayable government assistance
|
|
|
-
|
|
|
|
2,716,598
|
|
Restricted shares forfeited
|
|
|
-
|
|
|
|
(99,226
|
)
|
8.
Repayable Government Assistance
During
the year ended December 31, 2000, the Company’s wholly-owned
subsidiary, Plug Power Canada Inc., formerly known as Cellex Power Products
Inc., entered into an Industrial Research Assistance Program (IRAP) Repayable
Contribution Agreement with the National Research Council of Canada (NRC) under
which it received contributions totaling Cdn$500,000 for certain development
activities. The agreement with the NRC provides for payment of royalties of up
to 170% of the contributions received subject to certain conditions, payable
quarterly, calculated at 3.5% of gross revenues. Plug Power Canada’s
repayment obligation to the NRC existed from July 1, 2002 to
March 31, 2009. At April 1, 2009, if the total amount repaid to the
NRC was less than the Cdn$500,000 contribution, then Plug Power Canada would
continue to make payments to the NRC until either the full Cdn$500,000 is
repaid or until July 1, 2012, whichever comes first. The maximum liability
under this repayment obligation is Cdn$850,000. If at any point Plug Power Canada’s repayments reach this amount, the obligation shall cease.
At
April 1, 2009, the total amount repaid to the NRC was less than the Cdn$500,000
contribution, therefore Plug Power Canada will continue to make payments to the
NRC until either the full Cdn$500,000 is repaid or until July 1, 2012,
whichever comes first. The Company has recorded the estimate of amounts owed
under this arrangement as a debt, with royalty payments recorded as a reduction
of the debt.
Accordingly,
liabilities relating to this agreement in the amount of $0 and $149,204 have
been recorded as repayable government assistance and current portion of
repayable government assistance (other current liabilities), respectively, in
the condensed consolidated balance sheets as of September 30, 2009 and $173,138
and $369,331 have been recorded as repayable government assistance and current
portion of repayable government assistance (other current liabilities),
respectively, in the consolidated balance sheets as of December 31, 2008.
General
Hydrogen Corporation and its wholly owned subsidiary General Hydrogen (Canada) Corporation, and Cellex Power Products, Inc. each entered into agreements with
Technology Partnerships Canada (TPC) during the year ended December 31,
2005 for the development of early market fuel cell applications. On
December 31, 2007, General Hydrogen Corporation merged with Plug Power
Inc. and, subsequently, Plug Power Inc. contributed the wholly owned subsidiary
General Hydrogen (Canada) Corporation to Plug Power Canada Inc. On
January 1, 2008, General Hydrogen (Canada) Corporation, Plug Power Canada
Inc. and Cellex Power Products, Inc. amalgamated as Plug Power Canada
Inc.
16
Table of
Contents
On
September 30, 2008, Plug Power Inc., Plug Power Canada Inc., and TPC
entered into Assumption and Termination Agreements related to both the Cellex
TPC Agreement and the General Hydrogen TPC Agreement. In consideration of the
Assumption and Termination Agreements, Plug Power Inc. and Plug Power Canada
Inc agreed to pay $2,235,244 to TPC. As a result of this agreement,
during the third quarter of 2008, the Company recorded a gain on the
termination of these agreements in the amount of $1,232,522 in interest and
other income and net realized gains from available-for-sale securities in the
consolidated statements of operations.
9. Restructuring
Charges
On
June 10, 2008, the Company undertook a restructuring as part of its plan
to become a market and sales driven organization. The Company has refocused on
the GenDrive motive power product where there has been significant customer
interest in fuel cell power units. As part of the restructuring, the Company
has reduced its workforce, cut back discretionary spending, and deferred non
strategic projects. The Company recorded an adjustment to accrued restructuring
charges in the amount of $322,499 within selling, general and administrative
expenses in the condensed consolidated statement of operations for the nine
months ended September 30, 2009. At September 30, 2009, $698,135 remains in
accrued expenses on the condensed consolidated balance sheets.
The
accrued restructuring charges relating to the June 2008 restructuring are
comprised of the following at September 30, 2009:
|
|
Accrued
restructuring
|
|
Adjustments to
accrued
|
|
|
|
|
Accrued
restructuring
|
|
|
charges at
January 1, 2009
|
|
restructuring
charges
|
|
Cash Payments
|
|
charges at
Sept 30, 2009
|
Personnel Related
|
|
$
|
38,621
|
|
$
|
(22,737)
|
|
$
|
(15,884)
|
|
$
|
—
|
Contract Cancellation
|
|
|
364,100
|
|
|
—
|
|
|
—
|
|
|
364,100
|
Net Lease Obligations
|
|
|
—
|
|
|
345,236
|
|
|
(11,201)
|
|
|
334,035
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total
|
|
$
|
402,721
|
|
$
|
322,499
|
|
$
|
(27,085)
|
|
$
|
698,135
|
|
|
|
|
|
|
|
|
|
|
|
|
|
On
December 18, 2008, the Company adopted a restructuring plan intended to focus
the Company on revenue growth, improve organizational efficiency and position
the Company for long-term profitability. As part of this plan, the
Company implemented a reduction in workforce by eliminating 90 positions in
addition to terminating purchase commitments and charging off inventory related
to lapsed product lines. The Company recorded an adjustment to accrued
restructuring charges in the amount of $156,603 within selling, general and
administrative expenses in the condensed consolidated statement of operations
for the nine months ended September 30, 2009. At September 30, 2009, $1,077,707
remains in accrued expenses on the condensed consolidated balance sheets.
17
Table of
Contents
The
accrued restructuring charges related to the December 2008 restructuring are
comprised of the following at September 30, 2009:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Accrued
restructuring
|
|
Adjustments to
accrued
|
|
|
|
|
Accrued
restructuring
|
|
|
charges at
January 1, 2009
|
|
restructuring
charges
|
|
Cash Payments
|
|
charges at
Sept 30, 2009
|
Personnel Related
|
|
$
|
2,653,597
|
|
$
|
(116,805)
|
|
$
|
(2,520,792)
|
|
$
|
16,000
|
Contract Cancellation
|
|
|
1,336,767
|
|
|
(39,798)
|
|
|
(235,262)
|
|
|
1,061,707
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total
|
|
$
|
3,990,364
|
|
$
|
(156,603)
|
|
$
|
(2,756,054)
|
|
$
|
1,077,707
|
|
|
|
|
|
|
|
|
|
|
|
|
|
10. Credit Line Agreement and Auction Rate Debt
Securities Repurchase Agreement
In
December 2008, the Company entered into a Credit Line Agreement with a
third-party lender with a maximum availability of $62.9 million. The
Company’s auction rate debt securities included in trading securities on
the condensed consolidated balance sheets are pledged as collateral for the Credit
Line Agreement. As of December 31, 2008, the Company had drawn down $62.9
million on this line of credit. During the nine months ended September 30,
2009, $3.3 million of auction rate debt securities were sold by the third-party
lender holding the collateral which resulted in a corresponding reduction in
amounts outstanding under the Credit Line Agreement. The fair value of the
auction rate debt securities is $53.5 million and $52.7 million at September
30, 2009 and December 31, 2008, respectively. The Credit Line Agreement bears
interest at a variable rate equal to the average rate of interest earned by the
Company on the auction rate debt securities pledged as collateral for the
Credit Line Agreement. The interest rate on the line of credit advances was
1.3% and 2.4% at September 30, 2009 and December 31, 2008, respectively.
Interest expense on the advances on the Credit Line Agreement was approximately
$652,000 for the nine months ended September 30, 2009.
The
advances on the Credit Line Agreement are repayable on demand by the
third-party lender. If the third-party lender exercises its right to demand
repayment of the advances under the Credit Line Agreement prior to June 30,
2010 (the date upon which the Company can first exercise its rights under the
Repurchase Agreement discussed below), the third-party lender is required to
arrange alternative financing on terms substantially the same as the Credit
Line Agreement or the third party lender must repurchase the auction rate debt
securities pledged as collateral for the Credit Line Agreement at their par
value, which is $59.6 million and $62.9 million at September 30, 2009 and
December 31, 2008, respectively.
In
December 2008, the Company also entered into a Repurchase Agreement with the
third-party lender such that the Company may require the third-party lender to
repurchase the auction rate debt securities pledged as collateral for the
Credit Line Agreement, at their par value, from June 30, 2010 through July 2,
2012 as full settlement for the advances on the Credit Line Agreement. The
Company has elected to record this item at its fair value in accordance with
Accounting Standard Codification No. 825-
18
Table of
Contents
10-25, previously
referred to as SFAS No. 159 to allow consistent treatment of this repurchase
agreement and the underlying collateral. At September 30, 2009 and December 31,
2008 the fair value of this item is approximately $6.1 million and $10.2
million, respectively, and is recorded as an asset on the condensed
consolidated balance sheets. The change in the fair value of the Repurchase
Agreement for the nine months ended September 30, 2009 was $4.1 million
and is recorded as a net unrealized loss on the condensed consolidated
statements of operations.
11. Debt and Lease
Arrangement
In
March, 2009, the Company signed a $1.7 million promissory note issued by
Key Equipment Finance Inc. for the purpose of financing its investment in
equipment that was leased to its customer, Central Grocers, beginning on
April 1, 2009. Monthly installments of $32,900 are due through March 2014 and
the note bears interest at a fixed rate of 7.23% per annum on a 360-day year.
The Company was required to pledge $1.8 million in cash to collateralize the
debt. This note is also secured by the equipment that is leased to Central
Grocers as described in the Master Security Agreement and Collateral Schedule
No. 01 dated as of March 20, 2009, together known as the Master Security
Agreement.
The
outstanding balance of the debt as of September 30, 2009 is $1.5 million and is
recorded as current portion of long term debt and long term debt in the
condensed consolidated balance sheets. Restricted cash and the amount of the
corresponding pledge requirement as of September 30, 2009 was $1.7 million and
is recorded as restricted cash in the condensed consolidated balance sheets.
Principal payments due on long-term debt over the next five fiscal years are as
follows: 2010, $300,000; 2011, $323,000; 2012, $347,000; 2013, $373,000; and
2014 $98,000.
On
April 1, 2009, the Company began leasing this same equipment to its customer,
Central Grocers. The terms of the arrangement are 60 monthly installments of
$32,900. Upon expiration of the 60 months (initial term of the lease), Central
Grocers has the option to renew the lease for an additional five years at
mutually agreed upon pricing, to purchase all equipment for a purchase price
equal to the then fair market value thereof, or to return the equipment to the
Company. The Company shall provide maintenance in accordance with the lease
agreement.
In
July 2009, the Company signed a letter of credit with Key Bank in the amount of
$525,000. The standby letter of credit is required by the contract currently
being negotiated between Air Products and the Company to supply hydrogen
infrastructure and hydrogen to Central Grocers at their distribution center.
The beneficiary of the standby letter of credit
is Air Products and Chemicals, Inc. and it is to be paid out if the Company fails
to fulfill its obligations as stated in the contract.
12.
Available-For-Sale Securities
The
amortized cost and estimated fair value of the Company’s
available-for-sale securities as of September 30, 2009 were as follows:
|
Amortized
Cost
|
|
Gross
Unrealized
Gains
|
|
Gross
Unrealized
Losses
|
|
Estimated
Fair Value
|
|
|
|
|
|
|
|
|
|
|
|
|
U.S.
Treasury
Securities
|
$
|
46,891,632
|
|
$
|
83,598
|
|
$
|
—
|
|
$
|
46,975,230
|
|
|
|
|
|
|
|
|
|
|
|
|
19
Table of Contents
The
amortized cost and estimated fair value of the Company’s
available-for-sale securities as of December 31, 2008 were as follows:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Amortized
Cost
|
|
Gross Unrealized
Gains
|
|
Gross Unrealized
Losses
|
|
|
Estimated
Fair Value
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
U.S.
Treasury Securities
|
|
$
|
23,616,845
|
|
$
|
227,105
|
|
$
|
—
|
|
|
$
|
23,843,950
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
There
were no unrealized losses in the securities available-for-sale portfolio at
September 30, 2009. The contractual maturities of securities
available-for-sale are within the next eleven months.
|
Nine months ended
Sept 30, 2009
|
Nine months ended
Sept 30, 2008
|
|
|
|
|
|
Proceeds on Sales
|
$
|
2,699,181
|
$
|
148,515,834
|
Proceeds on
Maturities
|
$
|
91,864,841
|
$
|
82,470,834
|
Gross Realized
Gains
|
$
|
-
|
$
|
404,074
|
Gross Realized
Losses
|
$
|
-
|
$
|
12,390
|
13. Fair Value of
Financial Instruments
The
following disclosure of the estimated fair value of financial instruments is made
in accordance with the provision of ASC 825-10-65, Financial Instruments
– Transition and Open Effective Date Information, which was previously
discussed in FSP No. FAS 107-1 and APB Opinion No. 28-1, Interim Disclosures
about Fair Value of Financial Instruments. ASC 825-10-65 requires disclosures
about fair value of financial instruments in interim financial statements as
well as in annual financial statements. Although the estimated fair value
amounts have been determined by the Company using available market information
and appropriate valuation methodologies, the estimates presented are not
necessarily indicative of the amounts that the Company could realize in current
market exchanges.
The
following methods and assumptions were used by the Company in estimating its
fair value disclosures for financial instruments:
Cash and cash equivalents, accounts receivable,
accrued interest receivable and payable, notes receivable and borrowings under
line of credit:
The carrying amounts
reported in the condensed consolidated balance sheets approximate fair value
because of the short maturities of these instruments.
Long term debt:
The carrying amount reported in the condensed consolidated balance sheets
approximates fair value as the debt was negotiated at market rates during the
first quarter 2009 and there have not been any significant changes since that
time.
20
Table
of Contents
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 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, 2008. In addition to historical
information, this 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
Exchange Act. These forward-looking statements contain projections of our
future results of operations or of our financial position or state other
forward-looking information. In some cases you can identify these statements by
forward-looking words such as “anticipate,” “believe,”
“could,” “estimate,” “expect,”
“intend,” “may,” “should,”
“will” and “would” or similar words. 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 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 unit orders will not ship, be installed and/or convert to revenue, in
whole or in part; our ability to develop commercially viable energy products;
the cost and timing of developing our energy products; market acceptance of our
energy products; our ability to manufacture energy products on a large-scale
commercial basis; competitive factors, such as price competition and
competition from other traditional and alternative energy companies; the cost
and availability of components and parts for our energy products; the cost and
availability of fuel and fueling infrastructures for our energy products; our
ability to raise the necessary capital to develop, manufacture and market our
energy products; our ability to establish relationships with third parties with
respect to product development, manufacturing, distribution and servicing and
the supply of key product components; our ability to protect our intellectual
property; our ability to lower the cost of our energy products and
demonstrate their reliability; the cost of complying with current and future
governmental regulations; fluctuations in the trading price and volume of our
common stock; and other risks and uncertainties discussed, but are not limited
to, those set forth in Item 1A “Risk Factors” in our Annual
Report on Form 10-K for the fiscal year ended December 31, 2008, as filed
on March 16, 2009 as updated by Part II, Item 1A of this Form
10-Q. Readers should not place undue reliance on our forward-looking
statements. These forward-looking statements speak only as of the date on which
the statements were made and are not guarantees of future performance. 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 Form 10-Q.
Overview
We
design, develop and manufacture fuel cell systems for industrial off-road (forklift
or material handling) markets and stationary power markets worldwide. We are
focused on proton exchange membrane, or PEM, fuel cell and fuel processing
technologies and fuel cell/battery hybrid technologies, from which multiple
products are available.
Fuel cell
technology within our principle target markets, material handling power and
remote prime power, and our secondary markets, residential and backup power, are
still early in the technology adoption life cycle.
Accordingly, we are a development stage enterprise
because substantially all of our resources and efforts are aimed at the
discovery of new knowledge that could lead to significant improvements in system
reliability, durability and affordability, and the establishment, expansion and
stability of markets for our products. Our two primary product lines are our
GenDrive solution for the industrial off-road (forklift or material handling)
market and our Gensys solution for prime power applications.
21
Table of Contents
We continue to experience significant net outflows of
cash from operations and devote significant efforts towards financial planning
in order to forecast future cash spending and the ability to continue product
research and development activities and expansion of markets for our products.
We continue to survey the market to determine the most solid path to
profitability for Plug Power.
We
currently offer our hydrogen fueled GenDrive power unit for sale on commercial terms
for industrial off-road (forklift or material handling) applications, with a
focus on multi-shift high volume manufacturing and high throughput distribution
sites. We have sold, on commercial terms, products to target customers
including Wal-Mart, Bridgestone Firestone and Nestle Waters. Our shipments to
Central Grocers and Sysco Foods involve greenfield sites for new facilities.
Greenfield sites offer the potential for the greatest financial benefits
to our customers by eliminating the need for customers to make capital
investments in batteries and the associated chargers, storage and changing
systems.
We currently
also offer our low-temperature remote-prime, and high-temperature residential
GenSys continuous power products. Our low-temperature GenSys unit successfully
completed a field trial in rural India in 2008. It is offered for sale on
commercial terms to remote telecommunications providers whose sites are located
where the grid is unreliable or non-existent. In May 2009, we entered into an
agreement for the purchase, installation and maintenance of 200 GenSys prime
power fuel cell systems to be installed at cell towers owned and operated by
Wireless TT Info Services Limited (WTTIL) in India. In response to the
magnitude of this business opportunity, we recently formed Plug Power Energy
India Private Limited (Plug Power India), an Indian entity offering sales of
our GenSys product to commercial customers. Plug Power India will leverage our
core strengths in product development, sales and marketing, and project
management, while outsourcing non-core activities.
We
continue to develop our high-temperature GenSys unit, which is being tested by
the U.S. Department of Energy and National Grid during field trials in 2009.
Learning from the trial will help determine system refinements for
incorporation into the next-generation system design.
In
2008, manufacturing and sales support was given to our GenCore product which
provides backup power to businesses and government in critical infrastructure,
specifically in the wireless and wireline telecommunications market. We
continue to work with certain established customers on future initiatives
related to this product.
Many
of our initial sales of GenCore, GenDrive and GenSys products are
contract-specific arrangements containing multiple obligations that may include
a combination of fuel cell systems, continued service, maintenance, a supply of
hydrogen and other support. The multiple obligations within our contractual
arrangements are not accounted for separately based on our limited commercial
experience and lack of evidence of fair value for the separate elements. As a
result, we defer recognition of product and service revenue and recognize
revenue on a straight-line basis over the contractual terms as the continued
service, maintenance and other support obligations expire, which are generally
for periods of twelve (12) to thirty (30) months or in some cases as long as
eight (8) years. See “Critical Accounting Policies and
Estimates—Revenue Recognition.” Our customers have no special right
of return, price protection allowances or other sales incentives. We do offer a
discount from our manufacturer’s suggested retail price to resellers to
allow for the mark-up of the reseller.
22
Table of Contents
As we
gain experience, including field experience relative to service and warranty of
our initial products, the fair values for the multiple elements within our
future contracts may become determinable and we may, in future periods,
recognize product revenue upon delivery or installation of the product, or we
may continue to defer recognition, based on application of appropriate guidance
within
the
Financial Accounting Standards Board (FASB) Accounting Standard Codification
(ASC) No. 105, Generally Accepted Accounting Principles (GAAP) (ASC 105 or FASB
Codification), previously referred to as Statement of Financial Accounting
Standard (SFAS) No. 168, The FASB Accounting Standards Codification and
the Hierarchy of Generally Accepted Accounting Principles - a
replacement of FASB Statement No 162 (SFAS 168).
FASB ASC No. 605-25-25, Multiple-Element Arrangements
Revenue Recognition, previously discussed in Emerging Issues Task Force
(EITF) 00-21, Revenue Arrangements with Multiple Deliverables, EITF 00-21,
Accounting for Revenue Arrangements with Multiple Deliverables, or changes in
the manner in which we structure contractual agreements, including our
agreements with distribution partners.
Results of
Operations
Product
and service revenue.
We defer
recognition of product and service revenue at the time of shipment and
recognize revenue as the continued service, maintenance and other support obligations
expire.
Many of our initial sales of product contain multiple
obligations that may include a combination of fuel cell systems, continued
service, maintenance, fueling and other support. While contract terms generally
require payment shortly after shipment or delivery and installation of the fuel
cell system and are not contingent on the achievement of specific milestones or
other substantive performance, the multiple obligations within our contractual
arrangements are generally not accounted for separately based on our limited
experience and lack of evidence of fair value of the different components. As a
result, we defer recognition of product and service revenue and recognize
revenue on a straight-line basis as the continued service, maintenance and
other support obligations expire, which are generally for periods of twelve to
thirty months, or in some cases as long as eight years. In the case of our
limited consignment sales, we do not begin recognizing revenue on a deferred
basis until the customer has accepted the product, at which time the risks and
rewards of ownership have transferred, the price is fixed and we have a
reasonable expectation of collecting upon billing.
Product
and service revenue for the three months ended September 30, 2009 decreased
approximately $226,000, or 17.8%, to $1.0 million from $1.3 million for the
three months ended September 30, 2008. The decrease is primarily related to
fewer current period system shipments partially offset by an increase in
non-deferred revenue as well as an increase in revenue from prior period system
shipments now being recognized. The non-deferred revenue represents revenue
associated with replacement parts or services not covered by service agreements
or other similar types of sales where the Company has no continuing obligation
after the parts are shipped or delivered or after services are rendered.
In the
product and service revenue category, during the three months ended September
30, 2009, we shipped 6 fuel cell systems as compared to 59 fuel cell systems
shipped during the three months ended September 30, 2008. In the three months
ended September 30, 2009, we recognized approximately $407,000 of revenue for
products shipped or delivered or services rendered in the three months ended
September 30, 2009, which includes approximately $357,000 of non-deferred
revenue as compared to approximately $710,000 of revenue recognized in the
three months ended September 30, 2008 for products shipped or delivered or
services rendered in the three months ended September 30, 2008, which includes
approximately $317,000 of non-deferred revenue. Additionally, in the three
months ended September 30, 2009 we recognized approximately $638,000 of product
and services revenue from fuel cell shipments made prior to 2009, whereas in
the three months ended September 30, 2008 we recognized approximately $561,000
of product and service revenue from fuel cell shipments made prior to 2008.
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Product
and service revenue for the nine months ended September 30, 2009 increased
approximately $361,000, or 11.1%, to $3.6 million from $3.3 million for the
nine months ended September 30, 2008. The increase is primarily related to
increased revenue from prior period system shipments now being recognized as
well as an increase in non-deferred revenue partially offset by decreased
revenue related to fewer system shipments. The non-deferred revenue represents
revenue associated with replacement parts or services not covered by service
agreements or other similar types of sales where the Company has no continuing
obligation after the parts are shipped or delivered or after services are
rendered.
In
the product and service revenue category, during the nine months ended
September 30, 2009, we shipped 172 fuel cell systems (32 are related to sales
to end customers and 140 were delivered to Central Grocers under a lease
arrangement whereby Plug Power retains title and ownership of the equipment and
revenue recognition began in the second quarter of 2009) as compared to 207
fuel cell systems shipped during the nine months ended September 30, 2008. In
the nine months ended September 30, 2009, we recognized approximately $1.0
million of revenue for products shipped or delivered or services rendered in
the
nine months ended September 30, 2009, which includes approximately $934,000 of
non-deferred revenue as compared to approximately $1.5 million of revenue
recognized in the nine months ended September 30, 2008 for products shipped or
delivered or services rendered in the nine months ended September 30, 2008,
which includes approximately $690,000 of non-deferred revenue. Additionally, in
the nine months ended September 30, 2009 we recognized approximately $2.6
million of product and services revenue from fuel cell shipments made prior to
2009, whereas in the nine months ended September 30, 2008 we recognized
approximately $1.7 million of product and service revenue from fuel cell
shipments made prior to 2008.
Research and development contract revenue.
Research and development contract revenue primarily
relates to cost reimbursement research and development contracts associated
with the development of PEM fuel cell technology. We generally share in the
cost of these programs with our cost-sharing percentages generally ranging from
20% to 50% of total project costs. Revenue from time and material contracts is
recognized on the basis of hours expended plus other reimbursable contract
costs incurred during the period. Revenue from fixed fee contracts is
recognized on the basis of percentage of completion. We expect to continue
certain research and development contract work that is directly related to our
current product development efforts.
Research
and development contract revenue for the three months ended September 30, 2009
was $1.5 million compared to $2.8 million for the three months ended September
30, 2008. The decrease of $1.3 million or 46.2% is primarily related to the
completion and near completion of funded projects in both the United States and Canada as well as a delay in the timing of deliverables in new programs.
Research
and development contract revenue for the nine months ended September 30, 2009
was $4.8 million compared to $9.4 million for the nine months ended September
30, 2008. The decrease of $4.6 million or 49.1% is primarily related to the
completion and near completion of funded projects in both the United States and Canada as well as a delay in the timing of deliverables in new programs.
Cost
of product and service revenue.
Cost
of product and service revenue includes the direct material cost incurred in
the manufacture of the products we sell as well as the labor and material costs
incurred for product maintenance, replacement parts and service under our
contractual obligations.
Cost
of product and service revenue for the three months ended September 30, 2009
decreased $500,000, or 27.3%, to $1.3 million compared to $1.8 million in the
three months ended September 30, 2008. The decrease is related to decreased
product and service fuel cell system shipments. There were 6 shipments for the
three months ended September 30, 2009 as compared to 59 for the three months
ended September 30, 2008.
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Cost
of product and service revenue for the nine months ended September 30, 2009
decreased $2.7 million, or 43.4%, to $3.6 million compared to $6.3 million in
the nine months ended September 30, 2008. Although product and service fuel
cell system shipments were 172 for the nine months ended September 30, 2009 as
compared to 207 for the nine months ended September 30, 2008, 140 of the 172
shipments are being accounted for under a lease arrangement which commenced in
the second quarter of 2009. Therefore, the cost of product and service
revenue recognized on those 140 shipments consists of depreciation.
Cost
of research and development contract revenue
. Cost of research and development contract revenue includes costs
associated with research and development contracts including: cash and non-cash
compensation and benefits for engineering and related support staff, fees paid
to outside suppliers for subcontracted components and services, fees paid to
consultants for services provided, materials and supplies used and other
directly allocable general overhead costs allocated to specific research and
development contracts.
Cost of research and development contract revenue for the three months
ended September 30, 2009 decreased $1.0 million, or 25.8%, to $2.8 million
compared to $3.8 million in the three months ended September 30, 2008.
This decrease reflects a reduced effort on funded contracts due to the
completion or near completion of several major contracts in the United States and Canada as well as a delay in the timing of deliverables for new programs.
Cost
of research and development contract revenue for the nine months ended
September 30, 2009 decreased $6.8 million, or 46.6%, to $7.8 million
compared to $14.5 million in the nine months ended September 30, 2008.
This decrease reflects a reduced effort on funded contracts due to the
completion or near completion of several major contracts in the United States and Canada as well as a delay in the timing of deliverables for new programs.
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 outside suppliers
for subcontracted components and services, fees paid to consultants for
services provided, materials and supplies consumed, facility related costs such
as computer and network services, and other general overhead costs associated
with our research and development activities.
Research
and development expense decreased to $4.4 million for the three months ended
September 30, 2009 compared to $7.7 million in the three months ended September
30, 2008. This decrease was a direct result of the corporate restructuring
plans announced in June and December of 2008, which included a reduced
workforce and a reduction in non-strategic research and development projects.
Research
and development expense decreased to $12.8 million for the nine months ended
September 30, 2009 compared to $26.6 million in the nine months ended September
30, 2008. This decrease was a direct result of the corporate restructuring
plans announced in June and December of 2008, which included a reduced
workforce and a reduction in non-strategic research and development projects.
Selling,
general and administrative expenses.
Selling, general and administrative expenses includes cash and non-cash
compensation, benefits and related costs in support of our general corporate
functions, including general management, finance and accounting, human
resources, selling and marketing, information technology and legal services.
Selling,
general and administrative expenses for the three months ended September 30,
2009 decreased to $4.0 million compared to $4.8 million in the three months ended
September 30, 2008. This decrease was a direct result of the corporate
restructuring plans announced in June and December of 2008.
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Table of Contents
Selling,
general and administrative expenses for the nine months ended September 30,
2009 decreased to $11.7 million compared to $19.6 million in the nine months
ended September 30, 2008. This decrease was a direct result of the corporate
restructuring plans announced in June and December of 2008.
Amortization
of intangible assets.
Amortization of
intangible assets represents the amortization associated with the
Company’s acquired identifiable intangible assets from Cellex and General
Hydrogen, including acquired technology and customer relationships, which are
being amortized over eight years.
Amortization
of intangible assets was approximately $544,000 for the three months ended
September 30, 2009, compared to $563,000 for the three months ended September
30, 2008. The decrease is related to foreign currency fluctuations.
Amortization
of intangible assets was $1.6 million for the nine months ended September 30,
2009, compared to $1.7 million for the nine months ended September 30, 2008.
The decrease is related to foreign currency fluctuations.
Interest
and other income and net realized gains from available-for-sale securities.
Interest and other income and net realized gains from
available-for-sale securities consists primarily of interest earned on our
cash, cash equivalents, available-for-sale and trading securities, other
income, and the net realized gain/loss from the sale of available-for-sale
securities.
Interest
and other income and net realized gains from available-for-sale securities
decreased to approximately $627,000 for the three months ended September 30,
2009 from approximately $1.9 million for the three months ended September 30,
2008. This decrease is primarily related to lower cash balances coupled with
lower yields on our investments due to a declining rate environment. Total net
realized gains/losses from the sale of available-for-sale securities was $0 for
the three months ended September 30, 2009 and $0 for the three months ended
September 30, 2008. Interest income on trading securities and
available-for-sale securities for the three months ended September 30, 2009 and
2008 was approximately $284,000 and $525,000, respectively. Also included in
the three months ended September 30, 2008 is a $1.3 million gain relating to
the termination of Technology Partnerships Canada (TPC) agreements as discussed
in Note 8, Repayable Government Assistance.
Interest
and other income and net realized gains from available-for-sale securities
decreased to approximately $1.3 million for the nine months ended September 30,
2009 from $4.6 million for the nine months ended September 30, 2008. This
decrease is primarily related to lower cash balances coupled with lower yields
on our investments due to a declining rate environment. Total net realized
gains/losses from the sale of available-for-sale securities was $0 for the nine
months ended September 30, 2009 and a net gain of approximately $392,000 for
the nine months ended September 30, 2008. Interest income on trading securities
and available-for-sale securities for the nine months ended September 30, 2009
was approximately $964,000 and $2.8 million, respectively. Also included in the
nine months ended September 30, 2008 is a $1.3 million gain relating to the
termination of Technology Partnerships Canada (TPC) agreements as discussed in
Note 8, Repayable Government Assistance.
Impairment
loss on available-for-sale securities.
Due to the liquidity issues in the credit and capital markets, the market for
auction rate debt securities began experiencing auction failures in February
2008, and there have been no successful auctions for the securities held in our
portfolio since the failures began. Given the lack of liquidity in the market
for auction rate debt securities, the Company concluded that the estimated fair
value of these securities had become lower than the cost of these securities,
and, based on an analysis of the other than temporary impairment factors,
management determined that this difference represented a decline in fair value
that was other than temporary. Accordingly, the Company recorded an other than
temporary impairment charge of approximately $789,000 and $5.3 million in the
three and nine months ended September 30, 2008, respectively, in the condensed
consolidated statements of operations.
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Table of Contents
As a result
of the Repurchase Agreement entered into with a third-party lender in December
2008, the Company reclassified the auction rate debt securities from
available-for-sale securities to trading securities. The net realized
gains on trading securities for the three and nine months ended September 30,
2009 was approximately $570,000 and $4.1 million, respectively.
Interest
and other expense.
Interest and other
expense consists of interest on repayable government assistance amounts related
to the activities of Cellex and General Hydrogen, interest related to the
Credit Line Agreement, and foreign currency exchange gain/(loss).
Interest
and other expense for the three months ended September 30, 2009 and 2008 was
approximately $286,000. Interest expense related to the Credit Line Agreement
was approximately $216,000 and $0, respectively, for the three months ended
September 30, 2009 and 2008.
Interest
and other expense for the nine months ended September 30, 2009 was
approximately $900,000, compared to approximately $614,000 for the nine months
ended September 30, 2008. Interest expense related to the Credit Line Agreement
was approximately $652,000 and $0, respectively, for the nine months ended
September 30, 2009 and 2008.
Income
taxes.
We did not report a benefit
for federal and state income taxes in the condensed consolidated financial
statements for the three and nine months ended September 30, 2009 and 2008 as
the deferred tax asset generated from our 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.
Liquidity and
Capital Resources
Our
cash requirements depend on numerous factors, including completion of our
product development activities, our ability to commercialize our energy
products, market acceptance of our systems and other factors. We expect to
devote substantial capital resources to continue our development programs
directed at commercializing our energy products for worldwide use, hiring and
training our sales and service staff, developing and expanding our
manufacturing capacity and continuing to expand our research and development
activities. We expect to pursue the expansion of our operations through internal
growth and strategic acquisitions and expect that such activities will be
funded from existing cash, cash equivalents, trading securities,
available-for-sale securities, and the issuance of additional equity or debt
securities or additional borrowings subject to market and other conditions. The
failure to raise the funds necessary to finance our future cash requirements or
consummate future acquisitions could adversely affect our ability to pursue our
strategy and could negatively affect our operations in future periods. We
anticipate incurring substantial additional losses over at least the next
several years and believe that our current cash, cash equivalents, trading
securities and available-for-sale securities balances will provide sufficient
liquidity to fund operations for at least the next twelve months.
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Several key indicators of liquidity are summarized in
the following table:
(in thousands)
|
|
Nine
months
ended or at
September 30,
2009
|
|
Nine
months
ended or at
September 30,
2008
|
|
Year
ended or at
December 31,
2008
|
Cash and cash equivalents at end of period
|
|
$
|
24,136
|
|
$
|
19,568
|
|
$
|
80,845
|
Trading securities – auction rate debt securities at end of
period
|
|
|
53,485
|
|
|
—
|
|
|
52,651
|
Available-for-sale securities at end of period
|
|
|
46,975
|
|
|
96,762
|
|
|
23,844
|
Working capital at end of period
|
|
|
70,432
|
|
|
110,672
|
|
|
86,171
|
Net loss
|
|
|
28,578
|
|
|
57,405
|
|
|
121,700
|
Net cash used in operating activities
|
|
|
29,781
|
|
|
42,672
|
|
|
56,596
|
Purchase of property, plant and equipment
|
|
|
46
|
|
|
1,242
|
|
|
1,419
|
Included
in trading securities and working capital at September 30, 2009 and December
31, 2008 and in available-for-sale securities and working capital at September
30, 2008, respectively, is $53.5 million, $52.7 million and $57.6 million of
auction rate debt securities. The auction rate debt securities are secured by
student loans which are generally guaranteed by the Federal government. These
auction rate debt securities are structured to be tendered at par, at the
investor’s option, at auctions occurring every 27-30 days. However, due
to the liquidity issues in the credit and capital markets, the market for
auction rate debt securities began experiencing auction failures in February
2008, and there have been no successful auctions for the securities held in our
portfolio since the failures began. We continue to receive interest on these
securities, subject to an interest rate cap formula for each security as
periodically adjusted in accordance with the respective securities agreement.
At September 30, 2009, the interest rates ranged from 0% to 1.75% on the
auction rate debt securities. See Note 10, Credit Line Agreement and Auction
Rate Debt Securities Repurchase Agreement.
The
Company has pledged these securities as collateral to a third-party lender for
a Credit Line Agreement (See Note 10, Credit Line Agreement and Auction Rate
Debt Securities Repurchase Agreement) entered into in December 2008. Given the
lack of liquidity in the market for auction rate debt securities, the estimated
fair value of these auction rate debt securities have become lower than their
cost and, based on an analysis of other than temporary impairment factors, management
has determined, beginning in the first quarter of 2008, that this difference
represents a decline in value that is other than temporary. Accordingly, the
Company recorded an other than temporary impairment charge of approximately
$789,000 and $5.3 million for the three and nine months ended September 30,
2008, respectively, in the condensed consolidated statements of operations.
In December 2008, the Company entered into a
Repurchase Agreement with a third-party lender such that the Company may require
the third-party lender to repurchase the auction rate debt securities pledged
as collateral for the Credit Line Agreement (See Note 10, Credit Line Agreement
and Auction Rate Debt Securities Repurchase Agreement), at their par value,
from June 30, 2010 through July 2, 2012. The fair value of the Repurchase
Agreement at its origination was $10.2 million and was recorded as income in
the 2008 condensed consolidated statement of operations. The fair value of the
Repurchase Agreement at September 30, 2009 was $6.1 million. The change in fair
value of approximately $570,000 and $4.1 million during the three and nine
months ended September 30, 2009, respectively, was recorded as expense in the
condensed consolidated statements of operations which is offset by the change
in fair value of the auction rate debt securities held as collateral of
approximately $570,000 and $4.1 million that is recorded as income for the
three and nine months ended September 30, 2009, respectively.
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Table of Contents
We
continue to monitor the market for auction rate debt securities and will be
required to mark the securities to fair value which could negatively affect our
financial condition, liquidity and reported operating results. We will also be
monitoring and marking to fair value the auction rate debt securities
repurchase agreement. The Company expects that the fair value
adjustments of the auction rate debt securities will generally be offset by the
fair value adjustments of the auction rate debt securities repurchase
agreement.
In
May 2008, the Company filed a lawsuit against UBS Financial Services Inc. and
UBS AG in the United States District Court, Northern District of New York, the
financial advisor that placed the Company in certain auction rate debt
securities held in the Company's investment portfolio. The lawsuit sought a
return of the $62.9 million of Company funds UBS invested in auction rate debt
securities in contravention to the Company's investment policy, among other damages.
On
December 15, 2008, Plug Power Inc. (Plug or the Company) accepted an offer
by UBS AG (UBS) of certain rights to cause UBS to purchase, at a future date,
auction rate debt securities owned by the Company. The repurchase rights are
offered in connection with UBS’s obligations under settlement agreements
with the U.S. Securities and Exchange Commission and other federal and state
regulatory authorities. The offering, the settlement agreements, and the
respective rights and obligations of the parties, are described in a prospectus
issued by UBS dated October 7, 2008, File No. 333-153882 (the
Prospectus). As a result of accepting UBS’s offer, the Company can
require UBS to repurchase at par value all of the auction rate debt securities
held by the Company at any time during the period from June 30, 2010
through July 2, 2012 (if the Company’s auction rate debt securities
have not previously been sold by the Company or by UBS on its behalf), and
pending litigation between the parties has been dismissed with prejudice.
In
connection with the Prospectus offering, the Company also entered into a loan
agreement with UBS Credit Corp. that provides the Company with a credit line of
up to $62.875 million with the Company’s auction rate debt securities
pledged as collateral. The Company has drawn down the full amount of the credit
line. In accordance with the offering by UBS, the loan will be treated as a
“no net cost loan” as defined in the Prospectus. The loan will bear
interest at a rate equal to the average rate of interest paid to Plug Power on
the pledged auction rate debt securities such that the net interest cost to
Plug Power will be zero. Though the loan is payable on demand, if UBS Credit
Corp. should exercise its right to demand repayment of any portion of the loan
prior to the date the Company can exercise its repurchase rights, UBS and
certain of its affiliates will arrange for alternative financing on terms and
conditions substantially the same as those contained in the loan. If
alternative financing cannot be established, then UBS or one of its affiliates
will purchase the Company’s pledged auction rate debt securities at par.
As a result, the loan and any alternative financing will not be payable by the
Company prior to the time that the Company can require UBS to repurchase the
pledged auction rate debt securities. Proceeds of sales of the Company’s
auction rate debt securities will first be applied to repayment of the credit
line with the balance, if any, for the Company’s account. UBS has
previously provided investment management services for a portion of the
Company’s investment portfolio.
Debt and Lease Arrangement.
In March, 2009, the Company signed a $1.7 million
promissory note issued by Key Equipment Finance Inc. for the purpose of
financing its investment in property that was leased to Central Grocers
beginning on April 1, 2009. Monthly installments of $32,900 are due through
March 2014 and the note bears interest at a fixed rate of 7.23% per annum on a
360-day year. The Company was required to pledge $1.8 million in cash to
collateralize the debt. This note is also secured by the
equipment that is leased to Central Grocers as described in the Master Security
Agreement and Collateral Schedule No. 01 dated as of March 20, 2009, together
known as the Master Security Agreement.
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Table of Contents
The
outstanding balance of the debt as of September 30, 2009 is $1.5 million and is
recorded as current portion of long term debt and long term debt in the condensed
consolidated balance sheets. Restricted cash and the amount of the
corresponding pledge requirement as of September 30, 2009 was $1.7 million and
is recorded as restricted cash in the condensed consolidated balance sheets.
Principal payments due on long-term debt over the next five fiscal years are as
follows: 2010, $300,000; 2011, $323,000; 2012, $347,000; 2013, $373,000; and
2014 $98,000.
On
April 1, 2009, the Company began leasing this same equipment to its customer,
Central Grocers. The terms of the arrangement are 60 monthly installments of
$32,900. Upon expiration of the 60 months (initial term of the lease), Central
Grocers has the option to renew the lease for an additional five years at
mutually agreed upon pricing, to purchase all equipment for a purchase price
equal to the then fair market value thereof, or to return the equipment to the
Company. The Company shall provide maintenance in accordance with the lease
agreement.
In
July 2009, the Company signed a letter of credit with Key Bank in the amount of
$525,000. The standby letter of credit is required by the contract currently
being negotiated between Air Products and the Company to supply hydrogen
infrastructure and hydrogen to Central Grocers at their distribution center.
The beneficiary of the standby letter of credit
is Air Products and Chemicals, Inc. and it is to be paid out if the Company fails
to fulfill its obligations as stated in the contract.
Our
cash requirements depend on numerous factors, including completion of our
product development activities, ability to commercialize our fuel cell systems,
market acceptance of our systems and other factors. We expect to pursue the
expansion of our operations through internal growth and strategic acquisitions.
As of September 30, 2009, we had cash and cash equivalents of
$24.1 million, trading securities of $53.5 million, available-for-sale
securities of $47.0 million and working capital of $70.4 million.
During
the nine months ended September 30, 2009, cash used for operating activities
was $29.8 million, consisting primarily of a net loss of $28.6 million offset,
in part, by non-cash expenses in the amount of $6.5 million, including $4.4
million for amortization and depreciation, $1.8 million for stock based
compensation, $280,000 for disposals of property, plant and equipment and
$82,000 in bad debt expense. Cash used in investing activities for the nine
months ended September 30, 2009 was $24.7 million, consisting of $3.3 million
in proceeds from trading securities offset by $23.3 million of maturities, net
of purchases, of available-for-sale securities, $46,000 used to purchase
property, plant and equipment, $2.5 million used as an investment in leased
property, and $2.3 million in restricted cash. Cash used in financing
activities for the nine months ended September 30, 2009 was $2.2 million
consisting primarily of proceeds from borrowings of long term debt of $1.7
million offset by $3.3 million in proceeds from borrowings under line of
credit, $534,000 for the purchase of treasury stock and $140,000 in principal
payments on long-term debt and line of credit.
We
have financed our operations from inception through September 30, 2009
primarily from the sale of equity (including those related to stock-based
compensation), which has provided cash in the amount of $634.9 million since
inception. Also since inception, cumulative net cash used in operating
activities has been $484.0 million, and cash used in investing activities has
been $179.6 million, including our purchase of property, plant and equipment of
$38.4 million, our net investments in available-for-sale securities in the
amount of $109.8 million, and cash used for acquisitions of $19.3 million, net
of cash received.
30
Table of Contents
Critical
Accounting Policies and Estimates
Management’s
discussion and analysis of our financial condition and results of operations
are based upon our consolidated financial statements, which have been prepared
in accordance with U.S. generally accepted accounting principles. The
preparation of these consolidated financial statements requires us to make
estimates and judgments that affect the reported amounts of assets,
liabilities, revenues and expenses, and related disclosure of contingent assets
and liabilities at the date of and during the reporting period. On an on-going
basis, we evaluate our estimates and judgments, including those related to bad
debts, inventories, intangible assets, equity investments, unbilled revenue,
income taxes and contingencies. We base our estimates and judgments on
historical experience and on various other factors and assumptions that are
believed to be reasonable under the circumstances, the results of which form
the basis for making judgments about the carrying values of assets and
liabilities 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 Policies and Estimates” of our
Annual Report on Form 10-K for the fiscal year ended December 31,
2008. There have been no material changes or modifications to the policies
since December 31, 2008, other than the adoption of ASC 105 which is the single source of authoritative
nongovernmental GAAP. All existing accounting standard documents, such as FASB,
American Institute of Certified Public Accountants, Emerging Issues Task Force
and other related literature, excluding guidance from the Securities and
Exchange Commission (SEC), have been superseded by the FASB Codification. All
other non-grandfathered, non-SEC accounting literature not included in the FASB
Codification has become nonauthoritative. The FASB Codification did not change
GAAP, but instead introduced a new structure that combines all authoritative
standards into a comprehensive, topically organized online database. The FASB
Codification is effective for interim or annual periods ending after
September 15, 2009, and impacts the Company’s financial statements
as all future references to authoritative accounting literature will be
referenced in accordance with the FASB Codification. There have been no changes
to the content of the Company’s financial statements or disclosures as a
result of implementing the FASB Codification during the quarter ended
September 30, 2009.
As a result of the
Company’s implementation of the FASB Codification during the quarter
ended September 30, 2009, previous references to new accounting standards and
literature are no longer applicable. In the current quarter financial
statements, the Company will provide reference to both new and old guidance to
assist in understanding the impacts of recently adopted accounting literature,
particularly for guidance adopted since the beginning of the current fiscal
year but prior to the FASB Codification.
Recent Accounting
Pronouncements
A
discussion of recently accounting pronouncements is included in Note 2, Basis
of Presentation of the unaudited condensed consolidated financial statements in
Part I, Item 1 of this Form 10-Q.
31
Table of Contents
Item
3 – Quantitative and Qualitative Disclosures about Market Risk
We
invest our excess cash in government, government backed 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 or other market risk sensitive
instruments, positions or transactions in any material fashion. Accordingly,
other than with respect to auction rate debt securities, we believe that, while
the investment-grade securities we hold are subject to changes in the financial
standing of the issuer of such securities, 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.
A portion of the Company’s total financial
performance was attributable to our operations in Canada. Our exposure to
changes in foreign currency rates primarily arises from short-term
inter-company transactions with our Canadian subsidiaries and from client
receivables in different currencies. Foreign sales are mostly made by our
Canadian subsidiary in Canada and are typically denominated in Canadian
dollars. Our foreign subsidiaries incur most of their expenses in their local
currency as well, which helps minimize our risk of exchange rate fluctuations.
Accordingly, the Company’s financial results are affected by risks such
as currency fluctuations, particularly between the U.S. dollar and the Canadian
dollar. As exchange rates vary, the Company’s results can be materially
affected.
In
addition, the Company may source inventory among its worldwide operations. This
practice can give rise to foreign exchange risk resulting from the varying cost
of inventory to the receiving location as well as from the revaluation of
intercompany balances. The Company mitigates this risk through local sourcing
efforts.
Item 4
– Controls and Procedures
(a) Evaluation of
disclosure controls and procedures
As required by Rule 13a-15(b)
under the Securities and Exchange Act of 1934, our management, including the
Chief Executive Officer and Chief Financial Officer, conducted an evaluation as
of the end of the period covered by this report, of the effectiveness of the
Company’s disclosure controls and procedures as defined in Exchange Act
Rule 13a-15(e). Based on that evaluation, the Chief Executive Officer and Chief
Financial Officer concluded that the Company’s disclosure controls and
procedures were effective as of the end of the period covered by this report.
(b) Changes in
internal controls over financial reporting
As required by Rule
13a-15(d) under the Securities Exchange Act of 1934, our management, including
the Chief Executive Officer and Chief Financial Officer, also conducted an
evaluation of the Company’s internal control over financial reporting to
determine whether any changes occurred during the period covered by this report
that have materially affected, or are reasonably likely to materially affect,
the Company’s internal control over financial reporting. Based on that
evaluation, there has been no such change during the period covered by this
report.
32
Table of Contents
PART
II. OTHER INFORMATION
Item 1 – Legal Proceedings
There
have been no material developments with respect to the information previously
reported under Part 1 Item 3 of our Annual Report on Form 10-K for the year
ended December 31, 2008.
Item 1A - Risk Factors
Part
II, Item 1A, “Risk Factors” of our most recently filed Annual
Report on Form 10-K with the Securities and Exchange Commission, filed on March
16, 2009, sets forth information relating to important risks and uncertainties
that could materially adversely affect our business, financial condition and
operating results. Except as set forth below or previously updated, or to the
extent additional information disclosed elsewhere in this Quarterly Report on
Form 10-Q relates to such risk factors (including, without limitation, the
matters described in Part I, Item 2, “Management’s Discussion and
Analysis of Financial Condition and Results of Operations”), there have
been no material changes to our risk factors disclosed in our most recently
filed Annual Report on Form 10-K. However, those risk factors continue to
be relevant to an understanding of our business, financial condition and
operating results and, accordingly, you should review and consider such risk factors
in making any investment decision with respect to our securities.
A failure to
comply with NASDAQ’s listing standards could result in the delisting of
our common stock by NASDAQ from the NASDAQ Global Market and severely limit the
ability to trade our common stock.
Our
common stock is currently traded on the NASDAQ Global Market. Under
NASDAQ’s listing maintenance standards, if the closing bid price of our
common stock is under $1.00 per share for 30 consecutive trading days, NASDAQ
will notify us that we may be delisted from the NASDAQ Global Market. If the
closing bid price of our common stock does not thereafter regain compliance for
a minimum of ten consecutive trading days during the 180 days following
notification by NASDAQ, NASDAQ may delist our common stock from trading on the
NASDAQ Global Market. On September 15, 2009, we were notified by NASDAQ that we
were not in compliance with the minimum bid price listing requirement and
therefore had 180 days within which to regain compliance. As of October
21, 2009 we regained compliance since our stock price traded above $1.00 for ten
consecutive trading days. On November 5, 2009, the per share price of our
common stock closed at $0.86 on the NASDAQ Global Market. There can be no
assurance that our common stock will continue to remain eligible for trading on
the NASDAQ Global Market. If our common stock is delisted and we are unable to
list on another exchange, the ability to trade in our common stock would be
severely, if not completely, limited.
33
Table of Contents
Provisions in
our charter documents, shareholder rights agreement and Delaware law may
prevent or delay an acquisition of us, which could decrease the value of our
common stock.
Our
certificate of incorporation, bylaws and Delaware law contain provisions that
could make it harder for a third party to acquire us without the consent of our
board of directors. These provisions include those that:
-
authorize the issuance of up to
5,000,000 shares of preferred stock in one or more series without a stockholder
vote;
-
limit stockholders’ ability
to call special meetings;
-
establish advance notice
requirements for nominations for election to our board of directors or for
proposing matters that can be acted on by stockholders at stockholder meetings;
and
-
provide for staggered terms for
our directors.
In addition, in certain circumstances, Delaware law also imposes restrictions on mergers and other business combinations between
us and any holder of 15% or more of our outstanding common stock.
In June 2009, we adopted a shareholder rights agreement
effectively implementing what is commonly known as a “poison pill.”
This poison pill significantly increases the costs that would be incurred by an
unwanted third party acquirer if such party owns or announces its intent to
commence a tender offer for more than 15% of our outstanding Common Stock or
otherwise “triggers” the poison pill by exceeding the applicable
stock ownership threshold. The existence of this poison pill could delay, deter
or prevent a takeover of the Company.
Item 2 -
Unregistered Sales of Equity Securities and Use of Proceeds
(a)
During the three months ended September 30, 2009, we issued 160,397 shares of
our common stock in connection with matching contributions under our 401(k)
Savings & Retirement Plan. The issuance of these shares is exempt from
registration under Section 3(a)(2) of the Securities Act of 1933, as
amended.
(b)
Not applicable.
(c)
None.
Item 3 – Default Upon Senior Securities
None.
Item 4 – Submission of Matters to a Vote of Security Holders
None.
Item 5
– Other Information
(a)
None.
(b)
None.
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Table of Contents
Item 6 – Exhibits
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3.1
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Amended
and Restated Certificate of Incorporation of Plug Power Inc. (1)
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3.2
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Third
Amended and Restated By-laws of Plug Power Inc. (3)
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3.3
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Certificate
of Amendment to Amended and Restated Certificate of Incorporation of Plug
Power Inc. (1)
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3.4
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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. (2)
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4.1
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Shareholder
Rights Agreement, dated as of June 23, 2009, between Plug Power Inc. and
Registrar and American Stock Transfer & Trust Company, LLC, as Rights
Agent. (2)
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31.1 and 31.2
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Certifications
pursuant to Section 302 of the Sarbanes-Oxley Act of 2002 (4)
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32.1 and 32.2
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Certifications
pursuant to 18 U.S.C. Section 1350, adopted pursuant to Section 906
of the Sarbanes-Oxley Act of 2002. (4)
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(1)
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Incorporated
by reference to the Company’s Form 10-K for the period ending
December 31, 2008.
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(2)
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Incorporated
by reference to the Company’s Registration Statement on Form 8-A dated
June 24, 2009.
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(3)
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Incorporated
by reference to the Company’s Form 8-K dated October 28, 2009.
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(4)
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Furnished
herewith
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35
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.
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PLUG
POWER INC.
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Date:
November 9, 2009
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By:
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/s/
Andrew Marsh
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Andrew
Marsh
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Chief
Executive Officer
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By:
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/s/
Gerald A. Anderson
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Gerald
A. Anderson
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Chief
Financial Officer
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36