FuelCell Energy, Inc. engages in the provision of contract research and development. Its products include suresource 1500, suresource 3000, and suresource 4000. The company was founded in 1969 and is headquartered in Danbury, CT.
We have incurred losses and anticipate continued losses and negative cash flow.
Our cost reduction strategy may not succeed or may be significantly delayed, which may result in our inability to deliver improved margins.
We have debt outstanding and may incur additional debt in the future, which may adversely affect our financial condition and future financial results.
We are required to maintain effective internal control over financial reporting. Our management has identified a material weakness in our internal control over financial reporting. If we are unable to remediate the material weakness or other control deficiencies are identified in the future, we may not be able to report our financial results accurately, prevent fraud or file our periodic reports in a timely manner, which may adversely affect investor confidence in our company and, as a result, the value of our common stock.
Our products compete with products using other energy sources, and if the prices of the alternative sources are lower than energy sources used by our products, sales of our products will be adversely affected.
Our contracted projects may not convert to revenue, and our project pipeline may not convert to contracts, which may have a material adverse effect on our revenue and cash flow.
We have signed product sales contracts, engineering, procurement and construction contracts, PPAs and long-term service agreements with customers subject to contractual, technology and operating risks as well as market conditions that may affect our operating results.
We extend product warranties, which could affect our operating results.
Our products are complex and could contain defects and may not operate at expected performance levels which could impact sales and market adoption of our products or result in claims against us.
We currently face and will continue to face significant competition.
Unanticipated increases or decreases in business growth may result in adverse financial consequences for us.
Our plans are dependent on market acceptance of our products.
We are substantially dependent on a concentrated number of customers and the loss of any one of these customers could adversely affect our business, financial condition and results of operations.
We have risks associated with high levels of inventory.
Our advanced technologies contracts are subject to the risk of termination by the contracting party and we may not realize the full amounts allocated under the contracts due to the lack of Congressional appropriations.
A negative government audit could result in an adverse adjustment of our revenue and costs and could result in civil and criminal penalties.
We depend on third party suppliers for the development and supply of key raw materials and components for our products.
We may be affected by environmental and other governmental regulation.
Utility companies may resist the adoption of distributed generation and could impose customer fees or interconnection requirements on our customers that could make our products less desirable.
We could be liable for environmental damages resulting from our research, development or manufacturing operations.
We are subject to risks inherent in international operations.
Exports of certain of our products are subject to various export control regulations and may require a license or permission from the U.S. Department of State, the U.S. Department of Energy or other agencies.
We depend on strategic relationships with third parties, and the terms and enforceability of many of these relationships are not certain.
We are increasingly dependent on information technology, and disruptions, failures or security breaches of our information technology infrastructure could have a material adverse effect on our operations. In addition, increased information technology security threats and more sophisticated computer crime pose a risk to our systems, networks, products and services.
Litigation could expose us to significant costs and adversely affect our business, financial condition, and results of operations.
Our stock price has been and could remain volatile.
Provisions of Delaware and Connecticut law and of our certificate of incorporation and by-laws and our outstanding securities may make a takeover more difficult.
The implementation of our business plan and strategy will require additional capital.
We will need to raise additional capital, and such capital may not be available on acceptable terms, if at all. If we do raise additional capital utilizing equity, existing stockholders will suffer dilution. If we do not raise additional capital, our business could fail or be materially and adversely affected.
Future sales of substantial amounts of our common stock could affect the market price of our common stock.
We may be subject to actions for rescission or damages or other penalties in connection with certain sales of shares of our common stock in the open market.
We may not be able to make cash payments to redeem the Series D Preferred Shares.
Holders of the Series D Preferred Shares have rights that may restrict our ability to operate our business.
This Quarterly Report on Form 10-Q (including exhibits and any information incorporated by reference herein) contains both historical and forward-looking statements that involve risks, uncertainties and assumptions. The statements contained in this report that are not purely historical are forward-looking statements that are subject to the safe harbors created under the Securities Act of 1933, as amended, and the Securities Exchange Act of 1934, as amended, including statements regarding our expectations, beliefs, intentions and strategies for the future. When used in this report, the words “expects,” “anticipates,” “estimates,” “projects,” “intends,” “plans,” “believes,” “predicts,” “should,” “will,” “could,” “would,” “may,” “forecast,” and similar expressions and variations of such words are intended to identify forward-looking statements. Such statements relate to, among other things, the following: (i) the development and commercialization by FuelCell Energy, Inc. and its subsidiaries of fuel cell technology and products and the market for such products; (ii) expected operating results such as revenue growth and earnings; (iii) future funding under Advanced Technologies contracts; (iv) future financing for projects including publicly issued bonds, equity and debt investments by investors and commercial bank financing; (v) the expected cost competitiveness of our technology; and (vi) our ability to achieve our sales plans and cost reduction targets and execute on our backlog.