Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act. Yes ☐☒ No ☒☐

Indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or Section 15(d) of the Exchange Act. Yes ☐ No ☒

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes ☒ No ☐

Indicate by check mark whether the registrant has submitted electronically ~~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 ☒ No ☐

Indicate by check mark if disclosure of delinquent filers pursuant to Item 405 of Regulation S-K is not contained herein, and will not be contained, to the best of registrant’s knowledge, in definitive proxy or information statements incorporated by reference in Part III of this Form 10-K or any amendment to this Form 10-K. ☒

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

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

Indicate by check mark whether the registrant has filed a report on and attestation to its management’s assessment of the effectiveness of its internal control over financial reporting under Section 404(b) of the Sarbanes-Oxley Act (15 U.S.C. 7262(b)) by the registered public accounting firm that prepared or issued its audit report. ☐

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

As of April ~~28, 2017,~~30, 2020, the aggregate market value of the registrant’s common stock held by non-affiliates of the registrant was ~~$54,054,838~~$426,040,826 based on the closing sale price of ~~$1.15~~$2.02 as reported on the NASDAQ Global Market.

Indicate the number of shares outstanding of each of the registrant’s classes of common stock, as of the latest practicable date.

This Annual Report on Form 10-K contains statements that the Company believes to be “forward-looking statements” within the meaning of the Private Securities Litigation Reform Act of ~~1995.~~1995 (the “PSLRA”). All statements other than statements of historical fact included in this Form 10-K, including statements regarding the Company’s future financial condition, results of operations, plans, objectives, expectations, future performance, business operations and business prospects, are forward-looking statements. Words such as “expects,” “anticipates,” “estimates,” “goals,” “projects,” “intends,” “plans,” “believes,” “predicts,” “should,” “seeks,” “will,” “could,” “would,” “may,” “forecast,” and similar expressions and variations of such words are intended to identify forward-looking ~~statements.~~statements and are included, along with this statement, for purposes of complying with the safe harbor provisions of the PSLRA. Forward-looking statements are neither historical facts, nor assurances of future performance. Instead, such statements are based only on our beliefs, expectations and assumptions regarding the future. As such, the realization of matters expressed in forward looking statements involves inherent risks and uncertainties. Such statements relate to, among other things, the following:

The forward-looking statements contained in this report are subject to risks and uncertainties, known and unknown, that could cause actual results and future events to differ materially from those set forth in or contemplated by the forward-looking statements, including, without limitation, the risks ~~contained~~described under Item 1A - Risk Factors of this report and the ~~following:~~following factors:

The forward-looking statements contained herein speak only as of the date of this ~~report.~~report and readers are cautioned not to place undue reliance on these forward-looking statements. Except for ongoing obligations to disclose material information under the federal securities laws, we expressly disclaim any obligation or undertaking to release publicly any updates or revisions to any such statement to reflect any change in our expectations or any change in events, conditions or circumstances on which any such statement is based.

Our business is subject to numerous risks and uncertainties, including those described in Item 1A “Risk Factors”. These risks include, but are not limited to the following:

Information contained in this report concerning the electric power supply industry and the ~~distributed generation~~Distributed Generation market, the Distributed Hydrogen market, the energy storage market and the Carbon Capture market, our general expectations concerning ~~this industry~~these industries and ~~this market,~~markets, and our position within ~~this industry~~these industries and markets are based on market research, industry publications, other publicly available information and assumptions made by us based on this information and our knowledge of ~~this industry~~these industries and ~~this market,~~markets, which we believe to be reasonable. Although we believe that the market research, industry publications and other publicly available information, including the sources that we cite in this report, are reliable, they have not been independently verified by us and,

accordingly, we cannot assure you that such information is accurate in all material respects. Our estimates, particularly as they relate to our general expectations concerning the electric power supply industry and the ~~distributed generation~~Distributed Generation market, the Distributed Hydrogen market, the energy storage market and the Carbon Capture market, involve risks and uncertainties and are subject to change based on various factors, including those discussed under Item 1A - Risk Factors of this report.

As used in this report, all degrees refer to Fahrenheit (“F”); kilowatt (“kW”) and megawatt (“MW”) numbers designate nominal or rated capacity of the referenced power plant; “efficiency” or “electrical efficiency” means the ratio of the electrical energy generated in the conversion of a fuel to the total energy contained in the fuel (lower heating value, the standard for power plant generation, assumes the water in the product is in vapor form; as opposed to higher heating value, which assumes the water in the product is in liquid form, net of parasitic load); kW means 1,000 watts; MW means 1,000,000 watts; “kilowatt hour” (“kWh”) is equal to 1kW of power supplied to or taken from an electric circuit steadily for one hour; and one British Thermal Unit (“Btu”) is equal to the amount of heat necessary to raise one pound of pure water from 59^oF to 60^oF at a specified constant pressure.

Advanced Technologies - Advanced Technologies projects involve the development of new products or applications based on existing carbonate ~~technology~~or solid oxide technologies or new electrochemical technologies. Examples are ~~carbon capture, distributed hydrogen, solid oxide fuel cells~~Carbon Capture, Distributed Hydrogen, Solid Oxide Fuel Cells and ~~solid oxide electrolysis cell~~Solid Oxide Electrolysis Cell technologies. Advanced Technologies projects are typically externally funded by government or private sources and executed by our Advanced Technologies Group.

Availability - A measure of the amount of time a system is available to operate, as a fraction of total calendar time. For power generation equipment, an industry standard (IEEE (The Institute of Electrical and Electronics Engineers) 762, “Definitions for Use in Reporting Electric Generating Unit Reliability, Availability and Productivity”) is used to compute ~~availability.~~Availability. “Availability percentage” is calculated as total period hours since Commercial Operations Date less hours not producing electricity due to planned and unplanned maintenance divided by total period hours. Grid disturbances, force majeure events and ~~site specific~~site-specific issues such as a lack of available fuel supply or customer infrastructure repair do not penalize the calculation of ~~availability~~Availability according to this standard.

Carbonate Fuel Cell ~~(“CFC”)~~- Carbonate ~~fuel cells,~~Fuel Cells, such as the fuel cell power plants produced and sold by FuelCell Energy, are high-temperature fuel cells that use an electrolyte composed of a carbonate salt mixture suspended in a porous, chemically inert ceramic-based matrix. ~~CFCs~~Carbonate Fuel Cells operate at high temperatures, enabling the use of a nickel-based catalyst, a lower cost alternative to precious metal catalysts used in some other fuel cell technologies.

Carbon Capture – The process of extracting dilute carbon dioxide from the flue gas exhaust of fossil or Biogas fueled power plants or thermal processes and purifying the carbon dioxide to the purity required for sequestration or utilization. Carbon Capture is conventionally done using absorption systems that require energy to produce high purity carbon dioxide. Carbon Capture can also be done with Carbonate Fuel Cell systems while they produce power. To our knowledge, this ability to capture carbon dioxide from a power plant or boiler while producing additional power is unique to Carbonate Fuel Cell systems.

Carbon Separation – The process of extracting carbon dioxide from a Carbonate Fuel Cell system or Solid Oxide Fuel Cell system to reduce or eliminate carbon dioxide emissions. Carbon Separation does not involve carbon dioxide from an external source, as in Carbon Capture, but is the extraction and purification of carbon dioxide produced internally by the fuel cell from a fossil or Biogas fuel. Extracted carbon dioxide can be sequestered or used in industrial or food and beverage applications.

Combined Heat & Power ~~(“CHP”)~~- A power plant configuration or mode of operation featuring simultaneous on-site generation from the same unit of fuel of both electricity and heat with the heat used to produce steam, hot water or heated air for both heating and cooling applications.

Commercial Operations Date ~~(“COD”)~~ - The date that testing and commissioning of a fuel cell project is completed, and the fuel cell power plant is operational with power being generated and sold to the end-user.

Distributed Generation - Electric power that is generated where it is needed (distributed throughout the power grid) rather than from a central location. Centrally generated power requires extensive transmission networks that require maintenance and experience efficiency losses during transmission while ~~distributed generation~~Distributed Generation does not. Distributed ~~generation~~Generation is typically classified as small to mid-size power plants, typically generating 75 MW or less. Central generation is typically classified as large power plants generating hundreds or even thousands of MW.

~~Micro-grids~~Distributed Hydrogen – Hydrogen that is produced near the end user or users of the hydrogen, rather than from a central location. Large central hydrogen production plants create emissions in their operations and add cost and additional emissions by needing to deliver the gas over long distances to end users. Distributed Hydrogen can be provided by Carbonate Fuel Cell based Trigeneration systems or Solid Oxide Electrolysis Cell based systems.

Hydrogen Based Long Duration Energy Storage – Energy storage involving the production of hydrogen from power by electrolysis, where hydrogen is stored to be used later to produce power. The storage duration can be extended to long periods of time by providing sufficient hydrogen storage. High round trip storage efficiency can be achieved if the electrolysis and power generation processes are each high efficiency processes, such as Solid Oxide Electrolysis Cell based systems and Solid Oxide Fuel Cell based systems, or systems using Reversible Solid Oxide Fuel Cell stacks that alternate between fuel cell and electrolysis mode.

Microgrids - ~~Micro-grids~~Microgrids are localized electric grids that can disconnect from the traditional electric grid to operate autonomously and strengthen grid resiliency. ~~Micro-grids~~Microgrids can be composed only of SureSource power plants due to their continual power output or combine a variety of power generation types such as fuel cells and solar arrays.

Nitrogen Oxides (“NOx”) - Generic term for a group of highly reactive gases, all of which contain nitrogen and oxygen in varying amounts. Many of the NOx are colorless and odorless; however, they are a major precursor to smog production and acid rain. One common pollutant, Nitrogen Dioxide, along with particles in the air, can often be seen as a reddish-brown layer over ~~many~~an urban ~~areas.~~area. NOx form when fuel is burned at high temperatures, as in a combustion process. The primary manmade sources of NOx are motor vehicles, traditional ~~fossil-fuel~~fossil fuel fired electric utility generation, and other industrial, commercial and residential sources that burn fuels.

Particulate Matter(“PM”) - Solid or liquid particles emitted into the air that are generally caused by the combustion of materials or dust generating activities. Particulate ~~matter~~Matter caused by combustion can be harmful to humans as the fine particles of chemicals, acids and metals may get lodged in lung tissue.

Power Purchase Agreement (“PPA”) - A Power Purchase Agreement is a contract that enables a power user to purchase energy under a long-term contract where the user agrees to pay a predetermined rate for the kilowatt-hours delivered from a power generating asset while avoiding the need to own the equipment and pay the upfront capital cost. The PPA rate is typically fixed (with an escalation clause tied to a consumer price index or similar index), or pegged to a floating index that is on par with or below the current electricity rate being charged by the local utility ~~company~~company. A PPA is typically for a term of 10 to 20 years.

Reformer / Electrolyzer / Purifier (“REP”) – A system which uses a Carbonate Fuel Cell stack (or stacks) in reverse mode (consuming power instead of producing power) to produce hydrogen by electrolysis simultaneous with production of hydrogen from a hydrocarbon fuel by reforming. The Carbonate Fuel Cell reactions also purify the hydrogen by transferring carbon dioxide from the hydrogen stream.

Renewable Biogas or Biogas - Renewable ~~biogas~~Biogas is fuel produced by biological breakdown of organic material. Biogas is commonly produced in biomass digesters employing bacteria in a heated and controlled oxygen environment. These digesters are typically used at wastewater treatment facilities or food processors to break down solid waste and the ~~biogas~~Biogas produced is a byproduct of the waste digestion. Biogas can be used as a renewable fuel source for SureSource fuel cell plants located on site where the ~~biogas~~Biogas is produced with gas cleanup, or it can be processed further to meet pipeline fuel standards and injected into a gas pipeline network, which is termed “Directed Biogas”. Directed ~~Biogas.~~Biogas requires additional processing to increase the Btu content of the gas, which increases cost and consumes power. Use of Biogas at the point of production (on-site) is more efficient and more economical.

Reversible Solid Oxide Fuel Cell (“RSOFC”) – Reversible Solid Oxide Fuel Cell systems use solid oxide cell stacks that alternate between operation in electrolysis mode (as SOEC stacks) or power generation mode (as SOFC stacks). The ability to use one stack set for both processes reduces cost in Hydrogen Based Long Duration Energy Storage systems.

Solid Oxide Electrolysis Cell (“SOEC”) - Solid Oxide Electrolysis Cells are electrochemical cells with the same cell and stack structure as Solid Oxide Fuel Cells, but are operated in reverse – instead of producing power from fuel and oxygen, SOEC cells produce hydrogen and oxygen from steam when supplied with power.

Solid Oxide Fuel Cell (“SOFC”) - Solid Oxide Fuel Cells are electrochemical cells with a non-porous ceramic material as the electrolyte. SOFCs operate at high temperatures (slightly higher than Carbonate Fuel Cells) eliminating the need for costly precious-metal catalysts, thereby reducing cost. Like Carbonate Fuel Cells, the high operating temperature enables internal reforming of the hydrogen rich fuel source. The Solid Oxide Fuel Cell platform can be operated in fuel cell mode (producing power from fuel) or electrolysis mode (producing hydrogen from power) and can alternate between the two.

~~Solid Oxide Fuel Cell (“SOFC”)~~ - Solid Oxide Fuel Cells are electrochemical cells with a non-porous ceramic material as the electrolyte. SOFCs operate at high temperatures (slightly higher than carbonate) eliminating the need for costly precious-metal catalysts, thereby reducing cost. Like carbonate, the high operating temperature enables internal reforming of the hydrogen rich fuel source.

Sulfur Oxide (“SOx”) - Sulfur oxide refers to any one of the following: sulfur monoxide, sulfur dioxide (“SO₂”) and sulfur trioxide. SO₂ is a byproduct of various industrial processes. Coal and petroleum contain sulfur compounds and generate SO₂ when burned. SOx compounds are particulate and acid rain precursors.

We deliver proprietary fuel cell power solutions for the clean and affordable supply, recovery and storage of energy. We serve utilities and industry and municipal power users on three continents with megawatt-class scalable solutions that include utility-scale and on-site power generation, carbon capture, local hydrogen production for transportation and industry, and energy storage. With more than 7.0 million megawatt hours of ultra-clean power produced,At a Glance

Today, FuelCell Energy is a global leader in ~~designing, manufacturing, installing, operating~~sustainable clean energy technologies that address some of the world’s most critical challenges around energy, safety and ~~maintaining environmentally responsible~~global urbanization. In the future, FuelCell Energy plans to commercialize our hydrogen and carbon capture technologies intended to drive next generation solutions as the world strives for a smaller carbon footprint.

~~We provide comprehensive turn-key power generation~~technology platforms, we are uniquely positioned to serve customers worldwide with sustainable products and solutions for businesses, utilities, governments, and municipalities. FuelCell Energy’s solutions are designed to ~~our customers, including power plant installation, operations and maintenance under multi-year service agreements. We develop projects and also sell direct to customers, providing either~~enable a ~~complete solution~~world empowered by clean energy, enhancing the quality of ~~developing, installing and servicing~~life for people around the fuel cell power plant, or selling the power plant equipment only. For projects that we develop, the end user of the power typically enters into a PPA and we either identify a project investor to purchase the power plant and assume the PPA, or we retain the project and recognize electricity revenue ratably over the term of the PPA.globe. We target large-scale power users with our megawatt-class ~~installations.~~installations globally, and currently offer sub-megawatt solutions for smaller power consumers in Europe. To provide a frame of reference, one megawatt is adequate to continually power approximately 1,000 average sized U.S. homes. Our customer base includes utility companies, municipalities, universities, hospitals, government ~~entities~~entities/military bases and a variety of industrial and commercial enterprises. Our leading geographic markets are currently the United States and South ~~Korea. We~~Korea, and we are pursuing ~~expanding~~ opportunities in other ~~countries.~~countries around the world.

Our value proposition is to enable economic value with clean and affordable fuel cell power plants that supply power where consumed. Our products can also be configured for recovery and storage applications. Our solutions are easy-to-site in populated areas as they are clean, operate quietly and without vibrations, and have only modest space requirements. Fuel cells use an electrochemical process to convert a fuel source into electricity and heat in a highly efficient process that emits virtually no pollutants as the fuel is not burned, generating power that is almost wholly absent of criteria pollutants such as NOx that causes smog, SOx that contributes to acid rain, and particulate matter that can aggravate asthma. Locating power generation near the point of use reduces reliance on the transmission grid, leading to enhanced energy security and power reliability. Utilities can minimize or even avoid the cost of transmission or other infrastructure by adopting distributed generation, which saves their customers the cost of installing and maintaining transmission and also avoids the losses associated with transmitting electricity over great distances. Our power plants provide electricity priced competitively to grid-delivered electricity in certain high cost regions and our strategy is to continue to reduce costs, which we believe will lead to wider adoption.

FuelCell Energy, based in Connecticut, was founded ~~as a Connecticut corporation~~ in 1969 as ana New York corporation to provide applied research ~~organization, providing~~and development services on a contract ~~research and development. The Company went~~basis. We completed our initial public offering in 1992 and reincorporated in Delaware in 1999. We began selling stationary fuel cell power plants commercially in 2003. ~~Today, we develop turn-key distributed power generation solutions, operating~~

Webelieveourleadershipincleanenergyhassignificantbenefitsforourcustomersandthesustainability ofourplanet.

Ourseniorleadershipteamiscomprisedofindustryveterans,representingover200yearsofcollective experienceinthepowerindustry,alternativeenergy,advancedmanufacturing anddisruptivetechnologies.

Ourbusinessmodelisbasedonmultiplerevenuestreams,includingpowerplatform andcomponent sales;recurringservice ~~for~~ revenue,mainlythrough long-termservice agreements;recurringelectricity,capacity andrenewableattribute salesunderPPAsandtariffsforprojectswe retaininourgenerationportfolio;andrevenuefrompublicandprivateindustryresearchcontractsunderAdvanced Technologies.

Weareacompletesolutionsprovider, controlling thedesign,manufacturing, sales,installation, operationsandmaintenanceofourpatentedfuelcelltechnologyunderlong-termpowerpurchaseand service agreements.Whenutilizinglong-termPPAs,theend-userofthepowerorutilityhoststhe installationandonlypaysforpowerasitisdelivered,avoidingup-frontcapitalinvestment.Wealsodevelopprojectsandsellequipment directlytocustomers,providingacompletesolutionofengineering, installingandservicingthefuelcellpowerplantunderanengineering,procurementandconstruction agreement (“EPC”)andalong-termmaintenanceandservice agreement.FuelCellEnergymaintainsthelong-term recurringservice obligationandassociatedrevenuesrunningconterminouswiththe life of ~~the asset.~~such projects.

FuelCellEnergyisfocusedonusingourproprietarytechnologytopursuefoursignificantenergy opportunities,eachofwhichwebelieveisimportanttotheachievement of the global energytransition currently underway, and which promote desiredsustainabilityandenvironmentalstewardship outcomes.

a.Capture carbonwhilesimultaneouslyproducing powertooffsetthecostsofCarbonCapture

FuelCellEnergy’stechnologyacrossthesefouropportunitiescreatessignificantoptionalityfortheCompany.

To date, the Company has delivered commercial Distributed Generation solutions to ~~address power generation challenges with versatile, efficient~~our customers. As further described below, we are in the process of commercializing solutions for Distributed Hydrogen, HydrogenEnergyStorage, Hydrogen PowerGeneration and ~~economical fuel cell solutions.~~ Carbon Capture.

Wemarketdifferentconfigurations andapplicationsofourSureSourceplatformtomeetspecific marketneeds,including:

Consistentwithouroverallstrategy,ourengineersandscientistsfocusourinnovationondevelopingsophisticated technicalsolutionsthatmeetcustomerneeds.Oursalesandmarketing teams focusonpresentingsolutionsthatwe expectwillleadtolongtermandrepeatable salesopportunities.We havestructuredoursaleseffortsalongourdifferentiatedcapabilitiesandmajorend-usermarketofferings.

In2019, welaunchedour“Powerhouse”strategytostrengthen ourbusiness,maximizeoperational efficienciesandpositionusforfuturegrowth.Lookingahead,wehaveupdated and may continue to update thepillarsofourPowerhouse Strategytoreflectourfuturefocusandtoaffirmourcommitmenttoleadershipinsustainability.

Continuingfromthetransformationalgroundworkoriginallylaidoutin2019, buildingbalancesheet strength(including enhancing liquidity) isanongoingfocusasFuelCellEnergygrows:

Thepillars and goals ofourPowerhouse Strategy will continue to evolve over time as goals are ~~leveraging~~met and the Company and market dynamics change.

Given the long history of investment in and deployment of our ~~common~~solutions, we believe the Company has competitive advantages including:

Our core fuel cell products offer clean, highly efficient and affordable power generation for customers. The plants are scalable for multi-megawatt utility applications, Microgrid applications, Distributed Hydrogen, or use of the ‘platforms’ thermal attributes for on-site heat and chilling applications for a broad range of applications.

Our proprietary, patented Carbonate Fuel Cell technology generates electricity directly from a hydrogen-rich fuel, such as natural gas or Renewable Biogas, by reforming the fuel inside the fuel cell to produce the needed hydrogen. This internal, proprietary “one-step” reforming process results in a simpler, more efficient, and cost-effective energy conversion system compared with external reforming fuel cells. Additionally, we benefit from multi-fuel capability,

which enables the SureSource platform to leverage the established natural gas infrastructure that is readily available in our existing and target markets, compared to some types of fuel cells that can only operate on high purity hydrogen. In addition, our proprietary gas clean-up skid technology allows us to utilize on-site Biogas as production of on-site Biogas is rapidly growing around the world. Our fuel-flexible platforms mainly utilize clean natural gas and Renewable Biogas generated by the customer on-site or Directed Biogas generated at a distant location and transported via the existing common carrier gas pipeline networks.

Our global SureSource product line is uniformly based on the same Carbonate Fuel Cell technology, and ~~products~~offers the following advantages:

Fuel cell technologies are generally classified according to the electrolyte used by each fuel cell type. Our SureSource technology utilizes a carbonate electrolyte. Carbonate-based fuel cells are well-suited for megawatt-class applications, offering a number of advantages over other types of fuel cells in our target ~~global markets including~~markets.

SureSource Attributes, Benefits and utility-scale projects for the supply, recovery and storage of energy. We selectively utilize strategic business alliances and collaboration agreements for market development, financing and cost reductions. Our extensive intellectual property portfolio consists of patents, trade secrets and collective experience, which actsEmissions Profile

Fuel cells are non-combustion devices that directly convert chemical energy in fuel into electricity. Because fuel cells generate power electrochemically rather than by burning fuels, they are more efficient than combustion-based power sources (and as a ~~foundation~~result they produce less CO₂per kWh of power generated because they use less fuel), and they produce only trace levels of criteria pollutants (e.g., NO_X, SO_X, and Particulate Matter). In addition to the low emissions profile, FuelCell Energy’s fuel cell platforms offer additional benefits such as ease of siting, cogeneration heat, fuel flexibility, and compact footprint. The following table illustrates our view of some of the key attributes and benefits of our SureSource power plants:

Intermittent renewables, such as solar- and wind-based power, offer near zero emissions, but only for ~~expanding~~a small percentage of time and ~~maximizing~~not reliably. To address capacity needs, solar and wind need to be backed up with conventional power generation, battery storage or, ideally, clean baseload fuel cells.

The high efficiency of our ~~solutions portfolio. Our business model is based on multiple revenue streams, including~~products results in significantly less CO₂ per unit of power production compared to the average U.S. fossil fuel power plant, and ~~component sales; engineering, procurement~~carbon emissions are reduced even further when configured for CHP applications or biofuels. When our power platforms are operating on Renewable Biogas, government agencies and ~~construction~~regulatory bodies generally classify them as carbon neutral due to the renewable nature of the fuel source. In addition, we have developed the Carbon Separation feature which can be added to a SureSource power plant, allowing CO_2, which would otherwise be emitted to be captured and purified for on site use or sequestration.

The low CO₂ emissions and low criteria pollutants from SureSource power plants have a significant impact on sustainability and air quality because they avoid emissions 24 hours a day. The high capacity factor of baseload SureSource platforms maximizes the impact of their environmental benefits. While wind and solar renewable power sources may completely avoid these emissions while operating, they avoid fewer emissions than fuel cells because they operate for fewer hours per day. When wind and solar renewable power sources are not operating, higher emission resources may be required to operate, thus diluting the benefits. Additionally, all renewable power sources have life cycle emissions associated with manufacture and disposal.

The following table and figures illustrate how the high capacity factor of our SureSource solutions, combined with their low emissions, result in more avoided emissions on an annual basis than wind and solar per MW of installed capacity. Avoided emissions are calculated based on how much lower in emissions each source is relative to the grid, and the percentage of time the source operates.

We are also actively developing other technologies, which are discussed below in the “Advanced Technologies Programs” section.

Our Advanced Technologies programs, including our Carbon Separation, Carbon Capture, Solid Oxide Fuel Cells, and Solid Oxide Electrolysis Cells for hydrogen production and energy storage represent future market, product and revenue opportunities for the Company beyond our current product line. We undertake both privately funded and publicly funded research and development to develop these opportunities, reduce costs, and expand our technology portfolio. One of our Advanced Technologies programs, Distributed Hydrogen, is transitioning from being categorized as Advanced Technologies to being categorized as a commercial product as we execute our first commercial project with Toyota at the Port of Long Beach, California, which will produce hydrogen for the fueling of passenger vehicles and heavy duty trucks while providing power to Toyota’s facilities and the local grid.

Our multi-featured power plant platforms can be configured to provide a number of value streams, including clean electricity, high quality usable heat, water and hydrogen suitable for vehicle fueling, industrial purposes or power generation, and to concentrate and separate CO₂ from coal, biomass and natural gas fired power plants and industrial applications.

Our Advanced Technologies programs are currently focused on commercializing solutions within four strategic areas:

Distributed Hydrogen Production - On-site or distributed hydrogen generation, produced cleanly, represents an attractive and expansive market. Our high temperature fuel cells generate electricity directly from a fuel by reforming the fuel inside the fuel cell to supply hydrogen for the electrical generation process. We have developed a process by which gas separation technology can be added to our core fuel cell to capture hydrogen that is not used by the electrical generation process, and we refer to this configuration as SureSource Hydrogen^TM.

The SureSource Hydrogen product has the potential to be a compelling solution for industrial users of hydrogen and in transportation fueling applications. The 2.3 MW SureSource Hydrogen plant is expected to have a hydrogen output of approximately 1,200 kg per day, in addition to the electricity, thermal energy and water generated by the fuel cell. Hydrogen is typically made from natural gas in large central steam methane reforming (“~~EPC”~~SMR”) ~~revenue; royalty~~plants. The conventional SMR reforming process involves burning fossil fuel to produce steam and ~~license revenue; recurring~~to heat a fuel/steam mixture to a high temperature, which is then passed over a catalyst that converts the methane/water mixture to carbon dioxide and hydrogen. The need to burn fossil fuel to provide thermal energy for the SMR process produces additional carbon dioxide and criteria pollutant emissions, and SMRs are significant water consumers. A similar, but environmentally sustainable, process happens in SureSource internal reforming: methane (from natural gas or Biogas) reacts with water to produce hydrogen, but, in the internal reforming process, the water and the heat are byproducts of the fuel cell reaction. There is no need to burn fuel to supply heat, and there is no need to supply water. In fact, a SureSource Hydrogen plant is designed to be a net water producer, not a water consumer. When operated on Biogas, SureSource Hydrogen systems produce renewable hydrogen, also known as Green Hydrogen, but, even when fueled with natural gas, they produce hydrogen with a lower carbon and criteria pollutant impact than conventional SMR because of the use of internal heat instead of burning fuel. Adding Carbon Separation or Carbon Capture to the SureSource Hydrogen platform when fueled with natural gas will deliver Blue Hydrogen (i.e., hydrogen produced with Carbon Capture). The following figure illustrates the concept of the SureSource Hydrogen platform and identifies typical applications for Distributed Hydrogen.

SOFC/SOEC/RSOFC and Hydrogen Based Long Duration Energy Storage – We are developing a solution for long duration energy storage using our proprietary solid oxide technology. Our solid oxide stacks are designed to be capable of alternating between electrolysis and power generation mode. Instead of producing power from fuel and air, a Solid Oxide Fuel Cell stack in electrolysis mode splits water into hydrogen and oxygen using supplied electricity. A storage system based on SOFC/SOEC/RSOFC technology will start with stored water, which will be converted to hydrogen during charging by electrolysis in the solid oxide stacks. The hydrogen will be stored as compressed gas in cylinders, pipelines, or underground, creating the ability to produce a virtually limitless supply. When discharge power is needed, the stored hydrogen will be sent back to the solid oxide stacks, which react it with air to produce power and to regenerate the water, which will be stored for the next cycle.

The key aspect of this approach is that the reactant (water) is inexpensive and plentiful, consisting of an initial charge of water that will be regenerated with each discharge cycle. Except for a small amount of makeup water, the system will operate in closed loop mode without continuous water consumption during electrolysis. Long duration storage can be achieved by adding water and hydrogen storage capacity, without the need to add excessive amounts of conventional battery reactants (e.g. Lithium, Cobalt, etc.), which have supply constraints for broad adoption and which present disposal challenges. Long duration energy storage is expected to be required at large scale during time periods ranging from hourly to seasonal in order to manage the forecasted high penetration of intermittent renewable resources globally, and this water/hydrogen based approach of our SOFC/SOEC/RSOFC technology has the potential to be a key enabler of long duration storage.

SOFC power platform design and manufacturing will be complementary to our carbonate-based megawatt-scale platforms and will afford us the opportunity to leverage our field operating history, our existing expertise in power platform design, fuel processing and high volume manufacturing capabilities, and our existing installation and service ~~revenue, including long term service agreements; recurring electricity sales~~infrastructure. Additionally, the primary market for storage applications is electric utilities, which is a market in which we are already active.

The following figure shows the basic reactions of a solid oxide cell in fuel cell power generation mode. Hydrogen is reacted with oxygen ions at the anode electrodes to produce water and electrons, which flow to the cathode to produce the electrical circuit. The cathode reaction consumes the electrons and oxygen (from air) and produces oxygen ions which migrate to the anode to complete the circuit.

We perform SOFC/SOEC/RSOFC research and development at our Danbury, Connecticut headquarters, as well as at our dedicated SOFC/SOEC/RSOFC facility in Calgary, Alberta, Canada. We are working under ~~PPAs~~a variety of awards from the DOE for development and ~~tariffs for projects~~commercialization of both SOFC and SOEC. Our solid oxide development activities are focused on three applications: power generation from hydrogen or other fuels (SOFC), electrolysis-hydrogen production (SOEC), and Hydrogen Based Long Duration Energy Storage (which is a combination of the first two). During fiscal year 2019, we ~~retain~~conducted our first prototype field test of a 250kW natural gas fueled SOFC power plant at the Clearway Energy Center in downtown Pittsburgh, Pennsylvania. We are currently operating an advanced electrolysis system in our Danbury, Connecticut headquarters, and during fiscal year 2020, we were awarded funding from the DOE to convert the electrolysis system to a reversible storage facility after the electrolysis testing is complete in late 2021.

FuelCell Energy Hydrogen Technologies – Our Distributed Hydrogen Trigeneration platform produces clean power, heat, and hydrogen from natural gas or Biogas near the point of use without water consumption. We are building the first full scale commercial system for Toyota at the Port of Long Beach for onsite vehicle fueling. Our Solid Oxide Electrolysis technology is expected to produce hydrogen from water and power with high electrical efficiency and have the ability to increase efficiency further by using waste heat. We are currently commissioning a sub scale demonstration of this technology in our Danbury test facility and have been awarded a project to provide a packaged 150 kg/day system for demonstration at Idaho National Laboratory. We have also been developing a hybrid reforming/electrolysis technology which uses Carbonate Fuel Cell stacks in electrolysis mode, combined with in-stack reforming of natural gas or Biogas to produce hydrogen while extracting CO₂from the hydrogen stream. This technology, called Reformer / Electrolysis / Purification, or REP, is particularly amenable to Blue Hydrogen production. This portfolio of technologies addresses a broad range of applications with the ability to maximize value depending on factors such as fuel availability and cost, power cost, and water consumption concerns. In addition to these approaches to hydrogen production, our Solid Oxide Fuel Cell platform is capable of power generation ~~portfolio;~~with pure hydrogen fuel, and our Carbonate Fuel Cell platforms are capable of operation with a blend of hydrogen and natural gas or Biogas.

Carbon Capture – Power generation and industrial applications are the source of two-thirds of the world’s carbon emissions. Coal and natural gas are abundant, low-cost resources that are widely used to generate electricity in developed and developing countries, but burning these fuels, as well as burning biomass, results in the emission of criteria pollutants and CO₂. Cost effective and efficient Carbon Capture from power generation and industrial applications globally represents a large market because it could enable clean use of all available fuels. The SureSource Capture^TM system is being designed to separate and concentrate CO₂ from the flue gases of natural gas,

biomass or coal-fired power plants or industrial facilities as a side reaction that extracts and purifies the CO₂ in the flue gas during the power generation process and destroys approximately 70% of NOx emissions during the power generation process.

The production of additional power during the Carbon Capture process, as opposed to consuming power, differentiates the SureSource Capture system from other forms of Carbon Capture. This could make the SureSource Capture system more cost effective than other systems which are being considered for Carbon Capture. SureSource Capture systems can be implemented in increments, managing capital outlay to match decarbonization objectives and regulatory requirements. Since our solution generates a return on capital resulting from the fuel cell's production of electricity rather than an increase in operating expense required by other Carbon Capture technologies, it can extend the life of existing power plants and be economically applied to industrial thermal systems. We have a joint development agreement with EMRE, which was effective as of October 31, 2019, to develop and commercialize this application of our core technology. See additional discussion concerning our relationship with EMRE under the section below entitled “License Agreements and Royalty Income; Relationship with POSCO Energy”. During fiscal year 2020, we completed a Carbon Capture project study with Drax Power Station, the largest single-site renewable power generator in the United Kingdom.

We believe there are significant market opportunities for Distributed Hydrogen production, Carbon Capture, Solid Oxide Fuel Cell solutions and energy storage that represent potential future revenue ~~from public~~opportunities for the Company. The projects described above allow us to leverage third-party resources and ~~private industry research contracts under Advanced Technologies.~~ funding to accelerate the commercialization and realize the market potential of each of these solutions and virtually eliminate the need to rely on and use limited supply minerals.

Carbon Separation – In addition to the ability to capture carbon dioxide from an external source, our platforms have the ability to extract and purify carbon dioxide produced by the fuel cell power generation process. Because the fuel is not pre-mixed with air, the depleted fuel gas leaving the fuel electrode chambers contains the carbon dioxide reaction product before it is diluted with large amounts of air. Our Carbon Separation technology allows carbon dioxide to be easily extracted from this stream and purified to the appropriate level for utilization or sequestration, significantly reducing the carbon footprint of the generated power. This requires a simple modification to the fuel cell module which can be provided with new systems and retrofitted for existing systems.

One attractive application for this technology is the on-site production of carbon dioxide for use in beverage and food production, in addition to industrial uses. A 1.8 MW SureSource system can produce 20 tons high purity carbon dioxide per day, and the power and carbon dioxide production levels can be optimized (e.g., to produce more power and less carbon dioxide) depending on the needs of the application. The system can also provide more than 2 million Btu/hour of useful thermal energy, offsetting fuel consumption in on-site boilers (if not eliminating the need for on-site boilers) and further avoiding carbon dioxide emissions. Additional beverage, food, and/or industrial carbon can be produced by capturing the carbon emissions from on-site boilers through the carbon concentration and capture capabilities of our platform, reducing the carbon footprint of onsite boilers even further.

The ability to provide clean power, heat, and useable carbon dioxide is a unique feature profile that we believe is only available with our SureSource platform. Our systems are modular and scalable, so they can be deployed in a wide variety of applications where on-site carbon dioxide is consumed as a product solution, or carbon dioxide is delivered to multiple nearby consumers. Distributed power and heat generation combined with carbon dioxide production, which has the potential to drive significant reductions in carbon emissions, is a compelling product offering built on our current Carbonate Fuel Cell platform. An illustration of the Carbon Separation application is shown in the following figure, which also shows potential applications for locally produced carbon dioxide.

We believe there are significant market opportunities for Distributed Hydrogen production, Solid Oxide Fuel Cell solutions and energy storage, Carbon Capture and Carbon Separation. With Distributed Generation and Carbon Separation available now, and Carbon Capture and Solid Oxide Fuel Cell solutions in advanced stages of development, these platforms represent potential future revenue opportunities for the Company.

We have historically worked on technology development with various U.S. government departments and agencies, including the DOE, the Department of Defense (“DOD”), the Environmental Protection Agency (“EPA”), the Defense Advanced Research Projects Agency (“DARPA”), the Office of Naval Research (“ONR”), and the National Aeronautics and Space Administration (“NASA”). Government funding, principally from the DOE, provided 9%, 6% and 8% of our revenue for the fiscal years ended October 31, 2020, 2019, and 2018, respectively. Beyond the DOE programs, the Company intends to prudently invest capital to accelerate SOFC/SOEC/RSOFC commercialization.

Access to clean, affordable and reliable power has transformed how most of the world lives today. The ability to provide power cleanly and efficiently is taking on greater importance and urgency in many regions of the world. FuelCell Energy’s products and services are specifically designed to deliver such clean, efficient power globally.

Central generation and its associated transmission requirements and distribution grid are difficult to site, costly, prone to interruption and generally take many years to permit and build. Some types of power generation that were widely adopted in the past, such as nuclear and coal power, are no longer welcome in certain regions of the world. The cost and impact to public health and the environment of pollutants and greenhouse gas emissions impact the siting of new power generation. The attributes of our SureSource power platforms address these challenges by providing virtually Particulate Matter-free baseload power and, where desired, thermal energy at the point of use in a highly efficient process that is affordable to consumers.

The utilities and independent power producers market is our largest vertical market with customers that include utilities on the East and West coasts of the United States, such as UIL Holdings Corporation, Inc. (owned by Avangrid, Inc.), the Long Island Power Authority (“LIPA”), Southern California Edison and Pacific Gas & Electric. In Europe, utility customers include E.ON Connecting Energies, one of the largest utilities in the world. In South Korea, we are contracted to operate and maintain a 20 MW power plant project (comprised of five SureSource 3000 plants) for Korea Southern Power Company (“KOSPO”).

Our SureSource power platforms are producing power for a variety of industrial, commercial, municipal and government customers, including manufacturing facilities, pharmaceutical processing facilities, universities, healthcare facilities and wastewater treatment facilities. These institutions desire efficient, clean and continuous power to reduce operating expenses, reduce greenhouse gas emissions and avoid pollutant emissions to meet their sustainability goals, while boosting resiliency and limiting dependence on the distribution grid. CHP applications further support economic and sustainability initiatives by minimizing or avoiding the use of combustion-based boilers for heat. Our SureSource power platforms are unique in their ability to run on Biogas.

With the growing market for anaerobic digestion (the production of Biogas from the breakdown of biodegradable materials in the absence of oxygen) and increasingly stringent regulations regarding air quality, we see a growing market opportunity that is perfectly suited for our fuel cell design. SureSource power platforms operating on Renewable Biogas are an especially compelling value proposition as they convert a waste product into clean electricity and heat, while reducing or eliminating flaring, which addresses certain economic, environmental justice, and sustainability challenges faced by our customers and the communities in which they operate. Biogas is generated by the decay of organic material (i.e., biomass). This decaying organic material releases methane, or Biogas. As a harmful greenhouse gas, Biogas cannot be released directly into the atmosphere. Flaring creates pollutants and wastes this potential fuel source. Capturing and using Biogas as a fuel addresses these challenges and provides a carbon-neutral renewable fuel source. Our patented, proprietary clean-up skid, SureSource Treatment^TM, provides an economical and reliable system for treating Biogas for use on-site at the Biogas production facility.

Wastewater treatment facilities, food and beverage processors and agricultural operations produce Biogas as a byproduct of their operations. Disposing of this greenhouse gas can be harmful to the environment if released into the atmosphere or flared. Our SureSource power platforms convert this Biogas into electricity and heat efficiently and economically. Wastewater facilities with anaerobic digesters are an attractive market for our SureSource solution including the power platform as well as treatment of the Biogas. Many wastewater treatment plants currently flare Biogas produced in the anaerobic digestion process, emitting NOx, SOx and Particulate Matter into the atmosphere, which does not meet many air quality regulations. Since our fuel cells operate on the Renewable Biogas produced by the wastewater treatment process and the heat is used to support daily operations at the wastewater treatment facility, the overall thermal efficiency of these installations is high, supporting economics and sustainability. In addition, the fuel cell does not emit the harmful NOx, SOx and Particulate Matter that come out of a flare or that would result from the use of traditional combustion-based power generation. On-site Biogas projects are more efficient and more economical than Directed Biogas projects because less gas processing is required compared to the processing needed to get the on-site Biogas to pipeline quality. Also, on-site Biogas projects avoid the potential cost of constructing pipelines if the source of the Biogas is not located near an existing natural gas pipeline. The unique chemistry of Carbonate Fuel Cells allows them to use low Btu on-site Biogas with no reduction in output or efficiency compared

to operation on natural gas. We have developed proprietary Biogas cleanup and contaminant monitoring equipment which, combined with the inherent suitability of the Carbonate Fuel Cell chemistry, gives us an advantage in on-site Biogas applications. Our SureSource 1500 and SureSource 3000 power platforms are the only systems certified to CARB emissions standards under the Distributed Generation Certification Program for operation with on-site Biogas.

Our fuel cell solutions are also well suited for Microgrid applications, either as the sole source of power generation or integrated with other forms of power generation. We have fuel cells operating as Microgrids at universities and municipalities, including one university Microgrid owned by Clearway Energy and a municipal-based Microgrid owned by UIL Holdings Corporation, in addition to the Microgrids at the University of California, San Diego and the Santa Rita Jail (as discussed below). For the municipal-based system owned by UIL Holdings Corporation, under normal operation, the fuel cell supplies power to the grid. If the grid is disrupted, the fuel cell plant will automatically disconnect from the grid and power a number of critical municipal buildings. Heat from this municipal-based fuel cell platform is used by the local high school. As mentioned below, our fuel cell based Microgrids have continued operating during Public Safety Power Shutoffs events in California.

We target for expansion and development vertical markets and geographic regions ~~that value clean distributed generation, are located where there are high energy costs, and are aligned with regulatory frameworks that harmonize energy, economic and environmental policies.~~ that:

Our business model ~~addresses all three of~~focuses on providing these ~~policy areas~~vertical markets and geographic regions with highly efficient and affordable ~~distributed generation~~Distributed Generation that delivers de-centralized power in a low-carbon, virtually pollutant-free manner. Geographic markets that meet these criteria and where we are already well established include ~~South Korea,~~ the ~~Northeast U.S.~~Northeastern United States and California. We have also installed and are operating plants in ~~the United Kingdom, Germany, and Switzerland, have contracts and awards to install and operate plants in New York, and are pursuing further opportunities in Western~~ Europe and ~~certain other states~~Asia, mainly South Korea, in ~~the United States as well as certain countries in Asia. We selectively develop strategic business relationships with some of the leading energy and power generation companies in our target markets~~addition to ~~facilitate demand and deploy our projects.~~North America.

~~While the~~The Company has made significant progress with reducing costs and creating markets since the commercialization of our products in 2003, with more than 255 MW of our SureSource technology currently installed and operating.

We believe that we ~~face two primary challenges in growing~~can accelerate and expand the adoption of our distributed power generation solutions which are (1) the need to further reduce the total cost of ownership, and (2) the continued education and acknowledgment of the value that our solutions provide. The business model for the generation and delivery of electricity for over a century has been central generation, which is large scale power generation in distant locations away from urban areas with transmission and distribution to the end users. Distributed generation enhances existing utility models and it is being embraced in an increasing number of markets to improve grid operations. through:

We work with utilities and power generators to demonstrate how our solutions complement central generation by incrementally adding clean power generation when and where needed. One example of this is a 40 megawatt fuel-cell only program by Long Island Power Authority (“LIPA”) to address load pockets or power needs in specific areas of its service territory. LIPA operates in an area with high population density, scarce and expensive land, the need for resiliency to ensure power during storms, and vocal citizens that may not welcome new transmission lines in their neighborhoods. The structure of the program reflected the unique value drivers of fuel cells to cleanly, efficiently and economically supply power where it is needed, which for LIPA is near existing electrical substations. LIPA awarded the entire 40 MW program to FuelCell Energy through a competitive bidding process after a review of more than 375 MW of proposals from multiple developers.

Fuel ~~cell power plant ownership structures~~Cell Power Plant Ownership Structures

InHistorically, in the United States, ~~historically,~~ customers ~~generally~~or developers typically purchased our fuel cell power plants outright. As the size of our fuel cell projects has grown and the availability of project capital has improved, project structures in the U.S. have transitioned to predominantly PPAs.

Under a PPA, the utility or end-user of the power commits to purchase power as it is produced for an

extended period of time, typically ~~10 to 20~~10-to-20 years. ~~End-users may be~~Examples of customers that have previously entered into PPAs include universities, a ~~university,~~ pharmaceutical company, ~~hospital or utility.~~hospitals and utilities. A primary advantage for the ~~end-user~~customer under a PPA structure is that it does not need to commit its own capital toor own a power generating asset, yet it enjoys the ~~multiple~~ benefits of fuel cell power generation.

~~Once the PPA is executed, construction of the fuel cell project can begin. At or around the COD, the~~The project may be sold to a project investor or retained by the Company. If the project is sold, revenue from the product sale is ~~recognized.~~recognized, and the Company recognizes revenue separately for the long-term maintenance and service agreement over the term of that agreement. If the project is retained, electricity, ~~sales~~capacity and/or renewable energy credits are recognized monthly over the term of the PPA. We report the financial performance of retained projects as generation revenue and cost of generation revenues.

Our business model is continuing to evolve to meet the needs and opportunities of the market and to best situate ourselves for success. In 2016, we began to retain ownership of certain projects through sale-leasebacks and retaining the related PPAs, thus keeping them on our balance sheet instead of selling them to an end-user customer, investor, or utility. Our decision to retain certain projects is based in part on the ~~strong~~recurring, predictable cash flows these projects can offer to us, the proliferation of ~~power purchase agreements~~PPAs in the industry and the potential access to capital. Retaining PPAs affords the Company ~~with~~ the full benefit of future cash flows under the PPAs, which isare higher than if we sell the ~~projects.~~projects, although it requires more upfront capital investment and financing. As of October 31, ~~2017,~~2020, our operating portfolio of retained projects totaled ~~11.2~~32.6 MW with an additional ~~19.5~~40.7 MW under development or construction.

The Company plans to continue to grow this portfolio prudently and in a balanced manner, while also selling projects to investors when ~~that~~selling presents the best ~~opportunity.~~value and opportunity for the Company’s capital or meets the customer’s desired ownership structure.

Our fuel cell projects deliver power at a rate comparable to pricing from the grid in our targeted markets. Policy programs that help to support adoption of clean distributed power generation often lead to below-grid pricing. We measure power costs by calculating the Levelized Cost of Energy (“LCOE”) over the life of the project.

We innovate, design and own our proprietary fuel cell technology. We develop and execute comprehensive fuel cell turn-key projects or sell direct. We manufacture and install the fuel cell power plants and we then operate and maintain the plants for our customers under long term service agreements, or selectively retain projects in our generation portfolio. Given this level of integration, there are multiple areas and opportunities for cost reductions. There are several primary elements to LCOE for our fuel cell projects, ~~including (1) Capital Cost, (2)~~ including:

Given the level of integration in our business model of manufacturing, installing and ~~Maintenance, (3) Fuel,~~operating fuel cell power plants, there are multiple areas and ~~(4) Cost of Capital.~~opportunities for cost reductions. We are actively managing and reducing costs in all ~~four~~three LCOE areas as follows:

~~An additional~~differentiating factor that benefits fuel cells when comparing LCOE to other forms of power generation is that our solutions provide delivered electricity that minimizes or even avoids the costs of high voltage and distributed transmission.

~~Our distributed generation solutions minimize or entirely avoid~~Energy can be produced right at the ~~need for transmission.~~ point of use.

When comparing LCOE across different forms of power generation, transmission ~~needs to~~should be ~~considered in the evaluation.~~considered. Power generation far from where the power is used requires transmission, which is a cost to ratepayers, creates risk of system outages, increases cybersecurity attack risk, and is inefficient due to line losses of power in the transmission process.

~~We believe that our strong business model~~ Events, including hurricanes along the Gulf Coast and ~~strategy, demonstrated project development execution, plant operating performance,~~Puerto Rico, wildfires in California, and ~~strategic relationships will support accelerated adoption of our fuel cell solutions.~~

~~Access to clean, affordable~~significant snow and reliable power defines modern lifestyles. The ability to provide power cleanly and efficiently is taking on greater importance and urgency in many regions of the world. Central generation and its associated transmission and distribution grid are difficult to site, costly, and generally take many years to permit and build. Some types of power generation that were widely adoptedice storms in the ~~past, such as nuclear power,~~Northeastern U.S., prove that transmission systems are ~~no longer welcome~~more vulnerable to storm-related and other interruptions than locally generated energy.

California has been affected by Public Safety Power Shutoffs (“PSPS”), a preemptive effort by utility companies in ~~certain regions. The cost~~the state to prevent wildfires from being started by electrical equipment during strong and ~~impact to public health and the environment of pollutants and greenhouse gas emissions impact the siting of new power generation. The attributes of SureSource power plants address these challenges~~dry wind conditions by ~~providing virtually particulate emission-free power and heat at the point of use in a highly efficient process that is affordable to consumers.~~

~~Our solutions are installed on both sides of the electric meter, meaning that we serve on-site markets supplying power directly to the end user, as well as utility-scale projects that supply~~shutting off the power to ~~the electric grid. We target seven distinct markets including:~~

~~The Utilities~~targeted neighborhoods and ~~Independent Power Producers segment is our largest vertical market with customers that include utilities on the East~~substations. Two FuelCell Energy platforms, installed in Microgrids and ~~West coast~~operated by FuelCell Energy, remained operational as part of ~~the United States such as Dominion (NYSE: D), one of the largest utilities~~their respective Microgrids in the United States: Avangrid Holdings (NYSE: AGR), Long Island Power & Light and NRG Energy (NYSE: NRG), one of the largest Independent Power Producers (“IPP”) in the United States. Our carbon capture demonstration installation will be located at a power plant ownedareas impacted by a subsidiary of Southern Company (NYSE: SO). In Europe, utility customers include E.ON Connecting Energies (DAX: EOAN), one of the largest utilities in the world, and Switzerland-based ewz. The greatest number of installed fuel cell plants is in South Korea, primarily supplying that nation's electric grid, with the fuel cells' heat typically used in district heating systems to heat and cool nearby facilities. Our technology licensee in South Korea is POSCO Energy Co., Ltd. (“POSCO Energy”), a subsidiary of South Korean-based POSCO (NYSE: PKX), one of the world's largest steel manufacturers.

Our SureSource power plants are producing power for a variety of industrial, commercial, municipal and government customers, including manufacturing facilities, pharmaceutical processing facilities, universities, healthcare facilities and wastewater treatment facilities.PSPS. These institutions desire efficient, ultra-clean continuous power to reduce operating expenses, reduce greenhouse gas emissions and avoid pollutant emissions to meet their sustainability goals, while achieving secure andplatforms provided steady, reliable ~~on-site power. Combined heat and power fuel cell applications further support economic and sustainability initiatives by minimizing or avoiding use of combustion based boilers for heat.~~

Our products are fuel flexible, utilizing clean natural gas and renewable biogas generated by the customer on-site or directed biogas generated at a distant location and transported via the existing gas network. In addition, we have demonstrated other fuel sources including coal syngas and propane.

As renewable technologies such as wind and solar power are deployed more widely, the need for a clean, continuous power generation that complements and balances these intermittent sources becomes greater to maintain grid stability and consistent power supply for on-site applications. Our installed base includes a number of locations where our customers use SureSource plants for meeting power needs that complements intermittent wind and/or solar power generation.

Our fuel cell solutions are well suited for micro-grid applications, either as the sole source of power, or integrated with other forms of power generation. We can model, install and operate the micro-grid, which is a differentiator in the power industry. We have fuel cells operating as micro-grids at universities and municipalities, including one university micro-grid owned by a wholly owned subsidiary of NRG Yield (NYSE: NYLD) and a town-based micro-grid owned by Avangrid. Under normal operation, the fuel cells supply power to the ~~grid. If the grid is disrupted, the fuel cell plant will automatically disconnect from the grid and power a number~~University of ~~critical buildings.~~

Wastewater treatment facilities, food and beverage processors, and agricultural operations produce biogas as a byproduct of their operations. Disposing of this greenhouse gas can be harmful to the environment if released into the atmosphere or flared. Our SureSource power plants convert this biogas into electricity and heat efficiently and economically. Wastewater facilities with anaerobic digesters are an attractive market for our SureSource solution including the power plant as well as treatment of the biogas. Since our fuel cells operate on the renewable biogas produced by the wastewater treatment processCalifornia, San Diego and the ~~heat is used~~Santa Rita Jail during a time when over 3 million people were generally without power due to ~~support daily operations at~~PSPS, demonstrating the ~~wastewater treatment facility, the overall thermal efficiency of these installations is high, supporting economics and sustainability.~~

We estimate that the addressable distributed generation market and geographies in which we compete for the supply of energy, including distributed hydrogen production, is approximately a $22 billion opportunity, with approximately 40-45% consisting of power plant sales and the remainder representing associated service agreements. We estimate that the addressable market for the recovery of energy, including our fuel cell carbon capture solution and our gas pipeline application, is approximately $28 billion, assuming only a 1% penetration rate of addressable coal and gas-fired central generation power plant facilities within the geographies where we do business, and only 25% carbon capture at these coal or gas-fired plants. We believe there are additional market opportunities for capture from

industrial thermal sources, such as boilers, in industries like steel and cement production. The addressable energy storage market is still developing as different technologies are beginning to come to market with different approaches to storage and different storage durations. We estimate that the addressable market for long duration storage may be in the range of tens of billions of dollars.

We leverage our core capabilities by forging strategic alliances with carefully selected third parties that bring power generation experience, financial resources, and market access. Our strategic allies typically have extensive experience in developing and selling power generation products. We believe our strength in the development of fuel cell products, coupled with our strategic allies’ understanding of a broad range of markets and customers, products and services, enhances the sales and development of our products, as well as provides endorsement of our power generation solutions. Our global business alliances include:

~~NRG Energy:~~ NRG Energy (“NRG”) owns approximately 1.4 million shares of our common stock (or approximately 2% of our outstanding common stock), extends a $40.0 million revolving construction and term financing facility to FuelCell Energy Finance, LLC ("FuelCell Finance"), our wholly-owned subsidiary, and is represented on the FuelCell Energy Board of Directors by the CEO of NRG Yield (NYSE: NYLD). NRG is one of the largest IPPs in the U.S. with approximately 50,000 MW of generation capacity and almost three million retail and commercial customers.

~~POSCO Energy~~: We entered into manufacturing and technology transfer agreements in 2007, 2009 and 2012 with POSCO Energy, which provide POSCO Energy with the technology rights to manufacture SureSource power plants in South Korea and the right to sell power plants throughout Asia. POSCO Energy owns 2.6 million shares of our common stock (or approximately 4% of our outstanding shares of common stock). POSCO Energy is one of the largest IPPs in South Korea.

In March 2017, we entered into a memorandum of understanding (“2017 MOU”) with POSCO Energy to permit us to directly develop the Asian fuel cell business, including the right for us to sell SureSource solutions in South Korea and the broader Asian market. We and POSCO Energy also agreed to undertake to amend certain technology transfer and other agreements by a target date of September 30, 2017 to reflect our new relationship. Although these agreements have not yet been amended, we continue to engage in discussions with POSCO Energy regarding our relationship and the direction of the fuel cell business in the South Korean and Asian markets.

~~Pursuant to the 2017 MOU, we have commenced marketing the entire suite of SureSource solutions in South Korea. In June 2017, an EPC contractor was awarded a 20~~ ~~megawatt~~ project utilizing our SureSource technology by a Korean utility after a competitive bidding process. On August 29, 2017, we entered into a definitive agreement for this 20 MW project with the EPC contractor, Hanyang Industrial Development Co., Ltd (“HYD”), pursuant to which we provided equipment to HYD for the fuel cell project with Korea Southern Power Co., Ltd. ~~(“KOSPO”). The SureSource 3000~~^TM power plants will cleanly produce electricity and thermal energy to supply the electric grid and support a district heating system. Construction began in 2017 and the installation is expected to be operational in 2018. The value of ~~the equipment sale contract to the Company is in excess of $60 million.~~FuelCell Energy’s Distributed Generation platforms.

In accordance with the 2017 MOU, we are collaborating with POSCO Energy to pursue investor opportunities in the Korean fuel cell business to further develop and advance the Korean market for fuel cells.

~~E.ON Connecting Energies GmbH:~~ E.ON Connecting Energies (“E.ON”) specializes in integrated energy solutions for industrial, commercial and public sector customers. E.ON has purchased two SureSource fuel cell power plants to serve E.ON end user customers. The first sale announced was a CHP-configured megawatt-class fuel cell plant installation at a German manufacturing company and the second sale was a CHP-configured fuel cell power plant for a German hotel owned by an international hotel chain.

~~ExxonMobil:~~ We entered into a joint development agreement in 2016 with ExxonMobil for advancing fuel cell carbon capture with applications for gas-fired power stations. ExxonMobil is supporting a demonstration fuel cell carbon capture plant to be installed at the Plant Barry power station, owned by an affiliate of Southern Company.

~~Our core fuel cell products offer ultra-clean, highly efficient power generation for customers, including the 1.4 MW SureSource 1500~~^TM~~, the 2.8 MW SureSource 3000~~^TM~~, and the recently introduced 3.7 MW SureSource 4000~~^TM. The plants are scalable for multi-megawatt utility scale applications or on-site CHP generation for a broad range of applications. We provide a comprehensive and complete turn-key fuel cell project that includes project development, EPC services, O&M, and project finance.

Our proprietary carbonate fuel cell technology generates electricity directly from a fuel, such as natural gas or renewable biogas, by reforming the fuel inside the fuel cell to produce hydrogen. This internal “one-step” reforming process results in a simpler, more efficient, and cost-effective energy conversion system compared with external reforming fuel cells. Additionally, natural gas has an established infrastructure and is readily available in our existing and target markets compared to some types of fuel cells that require high purity hydrogen. The fuel cells operate at approximately 1,100° F. An advantage of high temperature fuel cells is that they do not require the use of precious metal electrodes required by lower temperature fuel cells, such as proton-exchange membrane (“PEM”) fuel cells. As a result, we are able to use less expensive and readily available industrial metals as catalysts for our fuel cell components.

The SureSource product line is a global platform based on carbonate fuel cell technology. Using a standard design globally enables volume-based cost reduction and optimal resource utilization. Our power plants utilize a variety of available fuels to produce electricity electrochemically, in a process that is highly efficient, quiet, and due to the avoidance of combustion, produces virtually no particulate pollutants. Thus, our plants generate more power and fewer emissions for a given unit of fuel than combustion-based power generation of a similar size, making them economical and environmentally responsible power generation solutions. In addition to electricity, our standard configuration produces high quality heat (approximately 700° F), suitable for heating facilities or water, or steam for industrial processes or absorption cooling. Our system’s efficiencies can reach up to 90%, depending on the application, when configured for CHP.

~~We market different configurations of the SureSource plants to meet specific market needs for the supply, recovery and storage of energy, including:~~

~~We are developing our long-duration SureSource Storage~~^TM solution, creating a system that utilizes both SOFC and SOEC technology and using hydrogen as the energy storage medium. Our solid oxide stacks are capable of alternating between electrolysis and power generation mode. Instead of producing power from fuel and air, a solid oxide fuel cell stack in electrolysis mode splits water into hydrogen and oxygen using supplied electricity. Hydrogen is an energy carrier that can be compressed and stored for long durations in storage tubes or underground.

This allows us to configure efficient and cost effective energy storage solutions where hydrogen is produced from electricity in electrolysis mode and stored until power is needed, at which point the stored hydrogen is used in the same stacks to produce electricity. Storage capacity is easily expanded by adding additional storage tanks, a low cost approach for storage applications requiring many hours or days of storage capacity. The need for long duration energy storage behind the meter and on the utility grid will increase as the penetration of intermittent renewable sources on the grid expands. This solution can be sited adjacent to an electric substation, avoiding the need for transmission.

~~Fuel cells are devices that directly convert chemical energy (fuel) into electricity, heat~~manufacturing, final assembly, testing and ~~water. Because fuel cells generate power electrochemically rather than by combusting (burning) fuels, they are more efficient in extracting energy from fuels, and produce less CO~~₂ ~~and only trace levels~~conditioning) is 100 MW per year under the Torrington facility’s current configuration when being fully utilized. The Torrington facility is sized to accommodate eventual annual production capacity of ~~pollutants compared to combustion-type power generation. The following table illustrates the favorable emission profile of our SureSource power plants:~~

~~For power plants operating on natural gas, higher electrical efficiency results in lower CO~~₂~~, and also results in less fuel needed~~200 MW per ~~kWh of electricity generated and Btu of heat produced. The high efficiency of our products results in significantly less CO~~₂ per unit of power production compared to the average U.S. fossil fuel power plant, and the carbon emissions are reduced even further when configured for combined heat and power. When operating on renewable biogas, government agencies and regulatory bodies generally classify our power plants as carbon neutral due to the renewable nature of the fuel source.

High electrical efficiency reduces customers' exposure to volatile fuel costs, minimizes operating costs, and provides maximum electrical output from a finite fuel source. Our power plants achieve electrical efficiencies of 47% to 60% or higher depending on configuration, location, and application, and even higher total efficiency in a CHP configuration, depending on the application. This represents delivered efficiency as our distributed solutions generate power near the point of use, avoiding the line losses inherent in transmission. The electric grid in the United States is only approximately 35% electrically efficient and typically does not support CHP configurations.

We design and manufacture the core SureSource fuel cell components that are stacked on top of each other to build a fuel cell stack. For ~~MW-size~~megawatt-scale power plants, four fuel cell stacks are combined to build a fuel cell module. To complete the power ~~plant,~~platform, the fuel cell module or modules are combined with the BOP. The mechanical BOP processes the incoming fuel such as natural gas or ~~renewable biogas~~Renewable Biogas and includes various fuel handling and processing equipment such as pipes and blowers. The electrical BOP processes the power generated for use by the customer and includes electrical interface equipment such as an inverter. The BOP components are either purchased directly from suppliers or the manufacturing is outsourced based on our designs and specifications. This strategy allows us to leverage our manufacturing capacity, focusing on the critical aspects of the power plant where we have specialized knowledge and expertise and possess extensive intellectual property. BOP components are shipped directly to a ~~customer's~~project site and are then assembled with the fuel cell module into a complete power plant.

~~North America:~~ We operate a 167,000 square-foot manufacturing facility in Torrington, Connecticut where we produce the individual cell packages and assemble the fuel cell modules. The completed modules are then conditioned at our facility in Danbury, Connecticut for the final step in the manufacturing process and shipped to customer sites. Annual capacity (module manufacturing, final assembly, testing and conditioning) is 100 MW per year, with full utilization under its current configuration. The building is sized to accommodate annual production capacity of 200 MW per year.

The expansion of the facility was recently completed, representing the first phase of a two phase capacity expansion. This expansion has enabled the consolidation of warehousing and service facilities, which will lead to reduced leasing expenses. The additional space is also expected to lead to additional manufacturing efficiencies by providing the needed space to re-configure the manufacturing lines without interrupting production. As demand

supports, the second phase will be undertaken to add manufacturing equipment to increase annual capacity to 200 MW. The State of Connecticut is extending two low interest long term loans to us (one for each of the two phases) and up to $10.0 million of tax credits. Each loan is $10.0 million, with an interest rate of 2.0% and a term of 15 years. Up to 50% of the principal is forgivable if certain job creation and retention targets are met.We previously received the proceeds of the first $10 million loan to support the first phase of the expansion and have received an extension from the State of Connecticut to meet the required job targets.

The Torrington production and service facility and the Danbury corporate headquarters and research and development facility are ISO 9001:2015 and ISO 14001:2015 certified and our Field Service ~~Operations~~operation (which maintains the installed fleet ~~for~~of our ~~plants) are~~platforms) is ISO 9001:2015 certified, reinforcing the tenets of ~~the~~ FuelCell ~~Energy Quality Management System~~Energy’s quality management system and our core values of continual improvement and commitment to ~~quality.~~

~~South Korea:~~ ~~To meet Asian demand, POSCO Energy built a cell manufacturing facility~~quality, environmental stewardship, and customer satisfaction. Sustainability is promoted throughout our organization. We manufacture SureSource products and manage them through end-of-life using environmentally friendly business processes and practices, certified to ISO 14001:2015. We continually strive to improve how we plan and execute across the entire product life cycle. We strive for “cradle-to-cradle” sustainable business practices, incorporating sustainability in ~~Pohang, Korea which became operational in late 2015. Annual production capability is 100 MW and the building is sized to accommodate up to 200 MW of annual production to support future growth~~our corporate culture. We utilize “Design for Environment” principles in the ~~Asian market.~~design, manufacture, installation and servicing of our power platforms. “Design for Environment” principles aim to reduce the overall human health and environmental impact of a product, process or service, when such impacts are considered across the product’s lifecycle. We ~~collaborate with POSCO Energy to manage~~maintain a chain of custody and responsibility of our SureSource products throughout the ~~supply chain~~product life cycle. When our platforms reach the end of their useful lives, we can refurbish and ~~production volumes between~~re-use certain parts and then recycle most of what we cannot re-use. By weight, approximately 93% of the ~~U.S. and South Korean facilities.~~entire power plant can be re-used or recycled at the end of its useful life.

~~Europe:~~We have a manufacturing and service facility in Taufkirchen, Germany that has the capability to perform final module assembly for up to 20 MW per year of sub-megawatt fuel cell power ~~plants for~~platforms to service the fuel cell demand in the European market. Our European service activities are also operated out of this location. Our operations in Europe are certified under both ISO 9001:2015 and ISO 14001:2015.

We have a research and development facility in Calgary, Alberta, Canada that is focused on the engineering and development of the Company’s SOFC and SOEC technology. This facility includes equipment for the manufacturing of solid oxide cells and stacks, including advanced automated stack manufacturing processes which have been developed to ensure that the low material cost of the stack is matched with low labor and overhead cost. The images below show our automated printing line used for solid oxide cells and our robotic cell-stack assembly facility. The automated system performs the stack build at ~12 seconds per repeat layer, including optical part inspection, cell leak test and thickness measurement, interconnect spot weld and leak test, and part-marking for stack quality assurance.

Part inspection, leak test, thickness measurements, and stacking are done in this robot-based system

We use various commercially available raw materials and components to construct a fuel cell module, including nickel and stainless steel, which are key inputs toin our manufacturing process. Our fuel cell stack raw materials are sourced from multiple vendors and are not considered precious metals. We have a global integrated supply chain ~~that serves North American, European,~~with qualified sources of supply, many of which are located locally in the regions in which we have established manufacturing and ~~the POSCO Energy-owned Asian production facilities. In addition to manufacturing~~service operations including Europe and Asia. While we manufacture the fuel ~~cell module~~cells in our Torrington facility, the electrical and mechanical BOPs are assembled by and procured from several suppliers. All of our suppliers must undergo a stringent and rigorous qualification process. We continually evaluate and qualify new suppliers as we diversify our supplier base in our pursuit of lower costs and consistent quality. We purchase mechanical and electrical BOP ~~componentry~~components from third party vendors, based on our own proprietary designs.

We provide customers with complete turn-key solutions, including ~~the~~ development, engineering, procurement, construction, interconnection and operations for our fuel cell projects. From an EPC standpoint, we have an extensive history of safe and timely delivery of turn-key projects. We have developed relationships with many design firms and licensed general contractors and have a repeatable, safe, and efficient execution philosophy that has been successfully demonstrated in numerous jurisdictions, both domestically and abroad, all with an exemplary safety record. The ability to rapidly and safely execute installations minimizes ~~high cost~~high-cost construction period financing and can assist customers in certain situations when the ~~commercial operating date~~Commercial Operations Date is time sensitive.

We offer a comprehensive portfolio of services, including engineering, project management and installation, and long-term operating and maintenance programs, including trained technicians that remotely monitor and operate ~~the plants~~our platforms around the world, 24 hours a day and 365 days a year. We directly employ field technicians to service the power ~~plants~~platforms and maintain service centers near our customers to ~~ensure~~support the high ~~availability~~Availability of our ~~plants. All of our~~platforms.

For all operating fuel cell platforms not under a PPA, customers purchase long-term service agreements, some of which have terms of up to 20 years. Pricing for service contracts is based upon the value of service assurance and the markets in which we compete and includes all future maintenance and fuel cell module exchanges. ~~While the electrical and mechanical BOP in~~Each model of our SureSource power ~~plants is designed to last about 25 years, the current~~platform has a design life of 25-to-30 years. The fuel cell modules, ~~must be replaced approximately every five years.~~with legacy modules having a 5-year cell design life and current production modules having a 7-year cell design life, go through periodic replacement, while the BOP systems, which consist of conventional mechanical and electrical equipment, are maintained over the life of the project.

Under the typical provisions of both our service agreements and PPAs, we provide services to monitor, operate and maintain ~~customer~~ power ~~plants~~platforms to meet specified performance levels. Operations and maintenance is a key driver for power ~~plants~~platforms to deliver their projected revenue and cash flows. Many of our service agreements include guarantees for system performance, including electrical output and heat rate. Should the power plant not meet the minimum performance levels, we may be required to replace the fuel cell module with a new or used replacement and/or pay performance penalties. The service aspects of our business model provide a recurring and predictable revenue stream for the Company. We have committed future production for scheduled fuel cell module exchanges under service agreements and PPAs through the year 2038. The pricing structure of the service agreements incorporates these scheduled fuel cell module exchanges and the committed nature of this production facilitates our production planning. Many of our PPAs and service agreements include guarantees for system performance, including electrical output and heat rate. Should the power platform not meet the minimum performance levels, we may be required to replace the fuel cell module with a new or used replacement module and/or pay performance penalties. Our goal is to optimize ~~our customers’~~the power ~~plants~~platforms to meet expected operating parameters throughout their contracted ~~project~~service term.

In addition to our service agreements, we provide a warranty for our products against manufacturing or performance defects for a specific period of ~~time against manufacturing or performance defects.~~time. The warranty term in the U.S. is typically 15 months after shipment or 12 months after acceptance of our products. We accrue for estimated future warranty costs based on historical experience.

Retained projects in the generation portfolio do not have service agreements with the off-takers but we maintain the power plants through long-term service agreements with our project level subsidiaries. Under the PPAs for these retained projects, we are obligated to deliver a certain contractual level of power. We operate and maintain the plants in our generation portfolio in a manner intended to maximize power output, just as we do for our customers who own their plants.

EMRE and FuelCell Energy began working together in 2016 under an initial joint development agreement with a focus on better understanding the fundamental science behind Carbonate Fuel Cells for use in advanced applications and specifically how to increase efficiency in separating and concentrating carbon dioxide from the exhaust of natural gas-fueled power generation.

In June 2019, we entered into a license agreement with EMRE, a wholly-owned subsidiary of ExxonMobil Corporation, to facilitate the further development of our SureSource Capture^TM product (the “EMRE License Agreement”). Pursuant to the EMRE License Agreement, the Company granted EMRE and its affiliates a non-exclusive, worldwide, fully-paid, perpetual, irrevocable, non-transferable license and right to use our patents, data, know-how, improvements, equipment designs, methods, processes and the like to the extent it is useful to research, develop and commercially exploit Carbonate Fuel Cells in applications in which the fuel cells concentrate carbon dioxide from industrial and power sources and for any other purpose attendant thereto or associated therewith, in exchange for a $10 million payment. Such right and license is sublicenseable to third parties performing work for or with EMRE or its affiliates, but shall not otherwise be sublicenseable.

The EMRE License Agreement facilitated the execution of a new Joint Development Agreement with EMRE, effective October 31, 2019 and executed in fiscal year 2020 (the “EMRE Joint Development Agreement”), pursuant to which we are continuing exclusive research and development efforts with EMRE to evaluate and develop new and/or improved Carbonate Fuel Cells to reduce carbon dioxide emissions from industrial and power sources, in exchange for (a) payment of (i) an exclusivity and technology access fee of $5.0 million, (ii) up to $45.0 million for research and development efforts, and (iii) milestone-based payments of up to $10.0 million after certain technological milestones are met, and (b) certain licenses. As a result of the execution of the EMRE Joint Development Agreement in fiscal year 2020, the associated backlog was recorded in fiscal year 2020 and the related revenue is expected to be recognized through fiscal year 2021.

From approximately 2007 through 2015, we relied on POSCO Energy to develop and grow the South Korean and Asian markets for our products and services.

Through June of 2020, we recorded license fees and were entitled to receive ~~license fees and~~ royalty income from POSCO Energy ~~related~~pursuant to manufacturing and technology transfer agreements entered into inwith POSCO Energy, including the Alliance Agreement dated February 7, 2007 (and amendments thereto), the Technology Transfer, License and Distribution Agreement dated February 7, 2007 (and amendments thereto), the Stack Technology Transfer and License Agreement dated October 27, 2009 (and amendments thereto), and ~~2012.~~the Cell Technology Transfer and License Agreement dated October 31, 2012 (and amendments thereto) (collectively, the “License Agreements”). The Cell Technology Transfer and License Agreement ~~("CTTA"~~(“CTTA”)~~, executed in October 2012, provides~~ provided POSCO Energy with the exclusive technology rights to manufacture, sell, distribute and service our SureSource ~~power plants~~300, SureSource 1500 and SureSource 3000 fuel cell technology in the South Korean and broader Asian markets. POSCO Energy built a cell manufacturing facility in Pohang, South Korea ~~and the right to sell power plants throughout Asia.~~ which became operational in late 2015, but is no longer operating.

In October 2016, the Company and POSCO Energy extended the terms of certain of the ~~2007 and 2009 license agreements~~License Agreements to be consistent with the term of the CTTA, which ~~expires~~was to expire on October 31, 2027. The ~~term of these agreements may be extended beyond 2027 through future extensions by mutual agreement of the Company and~~CTTA required POSCO ~~Energy. In conjunction with the CTTA, the Company is entitled~~Energy to ~~receive~~pay us a 3.0% royalty on POSCO Energy net product sales, as well as a royalty on ~~each~~ scheduled fuel cell module ~~replacement~~replacements under service agreements for modules that were built by POSCO Energy and installed at ~~any plant~~plants in Asia under the terms of ~~the Master Service Agreement~~long-term service agreements between POSCO Energy and its customers. Due to certain actions and inactions of POSCO Energy, the Company has not realized any new material revenues, royalties or new projects developed by POSCO Energy since late 2015.

In March 2017, we entered into a memorandum of understanding (“MOU”) with POSCO Energy to permit us to directly develop the Asian fuel cell business, including the right for us to sell SureSource solutions in South Korea and the broader Asian market. In June 2018, POSCO Energy advised us in writing that it was terminating the MOU effective July 15, 2018. Pursuant to the terms of the MOU, notwithstanding its termination, we continued to execute on sales commitments in Asia secured in writing prior to July 15, 2018, including the 20 MW power plant installed for KOSPO.

In November 2019, POSCO Energy spun-off its fuel cell business into a new entity, Korea Fuel Cell Co., Ltd. (“KFC”), without our consent. As part of the spin-off, POSCO Energy transferred manufacturing and service rights under the License Agreements to KFC, but retained distribution rights and severed its own liability under the License Agreements. We formally objected to POSCO Energy’s spin-off, and POSCO Energy posted a bond to secure any liabilities to FuelCell Energy arising out of the spin-off. In September 2020, the Korean Electricity Regulatory Committee found that POSCO Energy’s spin-off of the fuel cell business to KFC may have been done in violation of South Korean law.

On February 19, 2020, we notified POSCO Energy in writing that it was in material breach of the License Agreements by (i) its actions in connection with the spin-off of the fuel cell business to KFC, (ii) its suspension of performance through its cessation of all sales activities since late 2015 and its abandonment of its fuel cell business in Asia, and (iii) its disclosure of material nonpublic information to third parties and its public pronouncements about the fuel cell business on television and in print media that have caused reputational damage to the fuel cell business, the Company and its products. We also notified POSCO Energy that, under the terms of the License Agreements, it had 60 days to fully cure its breaches to our satisfaction and that failure to so cure would lead to termination of the License Agreements. Further, on March 27, 2020, we notified POSCO Energy of additional instances of its material breach of the License Agreements based on POSCO Energy’s failure to pay royalties required to be paid in connection with certain module replacements.

On April 27, 2020, POSCO Energy initiated a series of three arbitration demands against us at the International Court of Arbitration of the International Chamber of Commerce seated in Singapore alleging certain warranty defects in a sub-megawatt conditioning facility at its facility in Pohang, South Korea and seeking combined damages of approximately $3.3 million. Prior to filing the arbitrations, POSCO Energy obtained provisional attachments from the Seoul Central District Court attaching certain revenues owed to us by KOSPO as part of such warranty claims, which has delayed receipt of certain payments owed to us. POSCO Energy subsequently sought additional provisional attachments on KOSPO revenues from the Seoul Central District Court based on unspecified warranty claims not yet filed in an additional amount of approximately $7 million, and additional provisional attachments on KOSPO revenues from the Seoul Central District Court based on its alleged counterclaims in the license termination arbitration described below in an additional amount of approximately $110 million. As of October 31, 2020, outstanding accounts receivable due from KOSPO were $4.8 million.

On June 28, 2020, we terminated the License Agreements with POSCO Energy and filed a demand for arbitration against POSCO Energy and KFC in the International Court of Arbitration of the International Chamber of Commerce based on POSCO Energy’s (i) failure to exercise commercially reasonable efforts to sell our technology in the South Korean and Asian markets, (ii) disclosure of our proprietary information to third parties, (iii) attack on our stock price and (iv) spin-off of POSCO Energy’s fuel cell business into KFC without our consent. We have requested that the arbitral tribunal (a) confirm through declaration that POSCO Energy’s exclusive license to market our technology and products in South Korea and Asia is null and void as a result of the breaches of the License Agreements and that we have the right to pursue direct sales in these markets, (b) order POSCO Energy and KFC to compensate us for losses and damages suffered in the amount of more than $200 million, and (c) order POSCO Energy and KFC to pay our arbitration costs, including counsel fees and expenses. We have retained outside counsel on a contingency basis to pursue our claims, and outside counsel has entered into an agreement with a litigation finance provider to fund the legal fees and expenses of the arbitration. In October 2020, POSCO Energy filed a counterclaim in the arbitration (x) seeking approximately $880 million in damages based on allegations that we misrepresented the capabilities of our fuel cell technology to induce POSCO Energy to enter into the License Agreements and failed to turn over know-how sufficient for POSCO Energy to successfully operate its business; (y) seeking a declaration that the License Agreements remain in full force and effect and requesting the arbitral tribunal enjoin us from interfering in POSCO Energy’s exclusive rights under the License Agreements and (z) seeking an order that we pay POSCO Energy’s arbitration costs, including counsel fees and expenses.

On August 28, 2020, POSCO Energy filed a complaint in the Court of Chancery of the State of Delaware (the “Court”) purportedly seeking to enforce its rights as a stockholder of the Company to inspect and make copies and extracts of certain books and records of the Company and/or the Company’s subsidiaries pursuant to Section 220 of the Delaware General Corporation Law and/or Delaware common law. POSCO Energy alleges that it is seeking to inspect these documents for a proper purpose reasonably related to its interests as a stockholder of the Company, including investigating whether the Company’s Board of Directors and its management breached their fiduciary duties of loyalty, due care, and good faith. POSCO Energy seeks an order of the Court permitting POSCO Energy to inspect and copy the demanded books and records, awarding POSCO Energy reasonable costs and expenses,

including reasonable attorney’s fees incurred in connection with the matter, and granting such other and further relief as the Court deems just and proper.

On September 14, 2020, POSCO Energy filed a complaint in the United States District Court for the Southern District of New York alleging that the Company delayed the removal of restrictive legends on certain share certificates held by POSCO Energy in 2018, thus precluding POSCO Energy from selling the shares and resulting in claimed losses in excess of $1,000,000.

The Company does not believe that any of the arbitrations or legal proceedings brought against the Company by POSCO Energy are for a proper purpose. Further, the Company believes that all such arbitrations and legal proceedings are in fact simply fulfillment of POSCO Energy’s prior threats to file a series of actions against the Company and are attempts to obtain leverage over the Company and, in certain proceedings, gain advantage in the pending arbitration filed by the Company against POSCO Energy. The Company ~~has contracted directly with~~will vigorously defend itself against POSCO ~~Energy for equipment~~Energy’s claims in all forums and ~~services for its first direct order in the Korean market.~~

~~Advanced Technologies Programs (Third Party Funded Research and Development)~~

We undertake both privately-funded and public research and development to expand the markets for our power plants, reduce costs, and expand our technology portfolio in complementary high-temperature fuel cell systems. This research builds on our expertise and the versatility of our fuel cell power plants and contributes to the development of potentially new end markets for our commercial product solution portfolio. Our power plants can be configured to provide a number of value streams including clean electricity, high quality usable heat, hydrogen suitable for vehicle fueling or industrial purposes as well as configuration to concentrate CO₂ from coal and natural gas fired power plants. Our Advanced Technologies Programs are focused on commercializing solutions within three strategic areas: (1) carbon capture for emissions reduction and power generation; (2) distributed hydrogen production, compression, and recovery; and (3) SOFC/SOEC for stationary power generation and energy storage. The revenue and associated costs from government and third party sponsored research and development is classified as “Advanced Technologies contract revenues” and “Cost of Advanced Technologies contract revenues”, respectively, in our consolidated financial statements.

We have historically worked on technology development with various U.S. government departments and agencies, including the Department of Energy (DOE), the Department of Defense (DOD), the Environmental Protection Agency (EPA), the Defense Advanced Research Projects Agency (DARPA), the Office of Naval Research (ONR),

and the National Aeronautics and Space Administration (NASA). Government funding, principally from the DOE, provided 9%, 8% and 6% of our revenue for the fiscal years ended 2017, 2016, and 2015, respectively.

~~Significant commercialization programs on which we are currently working include:~~

~~Carbon Capture~~ - Coal and natural gas are abundant, low cost resources that are widely used to generate electricity in developed and developing countries, but burning these fuels results in the emission of criteria pollutants and CO₂~~. Cost effective and efficient carbon capture from coal-fired and gas-fired power plants potentially represents a large global market because~~believes it ~~could enable clean use of these fuels. Our carbonate fuel cell technology separates and concentrates CO~~₂ ~~as a side reaction during the power generation process. Capturing CO~~₂~~as a side reaction while generating additional valuable power is an approach that could be more cost effective than other systems which are being considered for carbon capture.~~

We announced an agreement with ExxonMobil (NYSE: XOM) in 2016 to pursue fuel cell carbon capture for central generation gas-fired power plants. We are working on the installation of a megawatt-class fuel cell power plant at a mixed coal/gas-fired power station owned by Alabama Power, a subsidiary of Southern Company. This project is being supported by an award from the U.S. Department of Energy to design and build the first MW-scale carbon capture system for coal fired power, and by ExxonMobil through a joint development agreement for evaluating carbon capture from gas-fired power generation. Successful demonstration may then lead to additional fuel cell power plant installations at this site and/or other central generation coal or gas-fired sites globally. In addition, in 2017, we conducted two engineering studies: one with Alberta Innovates, a consortium of Canadian oil sands producers, and one with Cenovus Energy, as lead partner of a joint industry project, to evaluate the feasibility of fuel cell carbon capture for gas-fired boilers used in oil sands processing. These oil and gas and power producers are interested in the fuel cell carbon capture value proposition, and these studies are evaluating the application of our carbon capture system at specific sites, which could be future MW-scale carbon capture project opportunities.

~~Distributed Hydrogen production, compression, and recovery -~~ On-site or distributed hydrogen generation, produced cleanly, represents an attractive market. Our high temperature fuel cells generate electricity directly from a fuel by reforming the fuel inside the fuel cell to supply hydrogen for the electrical generation process. Gas separation technology can be added to capture hydrogen that is not used by the electrical generation process, and we term this configuration SureSource Hydrogen. This value-added proposition may be compelling for industrial users of hydrogen and transportation applications, further summarized as follows:

~~Fueling Applications: We recently announced a renewable hydrogen generation project under a hydrogen power purchase agreement with Toyota. The multi-megawatt SureSource Hydrogen plant~~ will be ~~located~~apparent at the ~~Port~~conclusion of ~~Long Beach, California and will use renewable directed biogas~~each matter that each action was filed for fuel. Toyota will purchase the hydrogen output of approximately 1,200 kg per day to fuel its fuel cell cars that arrive at the Port from overseas as well as fuel a Class 8 fuel cell truck located at the Port. Toyota will also purchase a portion of the renewable electricity generated with the remainder of the electricity to be sold to the local utility under the California BioMAT program. an improper purpose.

We previously demonstrated renewable hydrogen generation under a three year project at the Orange County Wastewater Treatment Facility in Irvine, California, utilizing renewable biogas to supply hydrogen for use in fuel cell vehicle fueling and produce clean renewable electricity. The demonstration was performed under a sub-contract to Air Products (NYSE: APD), with funding provided by the DOE, California Air Resources Board, South Coast Air Quality Management District, Orange County Sanitation District, and Southern California Gas Company.

~~SOFC/SOEC development and commercialization~~: We are working towards commercialization of solid oxide fuel cell technology to target long-duration storage applications utilizing hydrogen as an energy carrier and storage medium. SOFC power plant design and manufacturing is complementary to our carbonate technology-based MW scale product line and affords us the opportunity to leverage our field operating history, existing expertise in power plant design, fuel processing and high volume manufacturing capabilities, and our existing installation and service infrastructure. Additionally, the target market for storage application is electric utilities, which is a market in which we are already active.

We perform SOFC/SOEC research and development at our Danbury facility as well as at our dedicated SOFC/SOEC facility in Calgary, Canada. We are working under a variety of awards from the DOE for development and commercialization of both SOFC and SOEC. We are currently installing a demonstration SOFC power plant at the NRG Energy Center in Pittsburgh, Pennsylvania.

We believe there are significant market opportunities for distributed hydrogen production, carbon capture, solid oxide fuel cell solutions and energy storage. The demonstration projects described above are steps on the commercialization road map as we leverage third-party resources and funding to accelerate the commercialization and realize the market potential for each of these solutions.

In addition to research and development performed under research contracts, including as described under the heading “Advanced Technologies Programs” above, we also fund our own research and development ~~projects including extending module~~activities to support the commercial fleet with product enhancements and improvements. During fiscal year 2018, we launched our seven-year life ~~increasing the power output of~~stacks, which extended our ~~modules and reducing the cost of our products. Current initiatives include increasing the net power output of the fuel cell stacks to 375 kW from 350 kW, and extending the~~ stack life from five years to seven ~~years from five-year life modules produced in fiscal 2017. The Company’s seven-year module design will enter production in fiscal 2018.~~years. Greater power output and improved longevity are expected to lead to improved gross margin profitability on a per-unit basis for each power plant sold and improved profitability of service contracts, which ~~will~~are expected to support expanding gross margins for the Company.

In addition to output and life enhancements, we designed and ~~are now introducing~~introduced the 3.7 ~~megawatt~~MW SureSource 4000 configuration with increased electrical efficiency, and we continually invest in cost reduction and improving the performance, quality and serviceability of our plants. These efforts ~~continually~~are intended to improve our value proposition.

Company-funded research and development is included in Research and development expenses (operating expenses) in our consolidated financial statements. The total research and development expenditures in the consolidated statement of operations, including third party and Company-funded expenditures, are as follows:

~~The~~Backlog represents definitive agreements executed by the Company ~~had a contract backlog totaling approximately $554.2 million~~and our customers.

Backlog as of October 31, ~~2017 compared to $432.3 million as~~2020 and 2019 consisted of ~~October 31, 2016. At October 31, 2017~~the following (in thousands):

Service and ~~2016, backlog included approximately $182.3 million and $204.8 million, respectively, of service agreements. Service~~generation backlog as of October 31, ~~2017~~2020 had ana weighted average term of approximately 1718 years, ~~weighted~~with weighting based on dollar backlog and utility service contracts of up to ~~twenty~~20 years in ~~duration. Generation backlog as~~duration at inception. Generally, our government funded and privately funded research and development contracts are subject to the risk of ~~October 31, 2017 and 2016 was $296.3 million and $142.5 million, respectively. As~~termination at the convenience of October 31, 2017, product sales backlog totaled approximately $31.3 million compared to $24.9 million as of October 31, 2016. As of October 31, 2017, Advanced Technologies contracts backlog totaled $44.3 million, of which $24.5 million was funded compared to $60.1 million as of October 31, 2016, of which $39.6 million was funded.the contract counterparty.

Our backlog amount outstanding is not indicative of amounts to be earned in the upcoming fiscal year. The specific elements of backlog may vary in terms of timing and revenue recognition from less than one year to up to ~~twenty~~20 years. ~~In addition, the~~

The Company may choose to sell or retain operating power plants on the balance sheet, ~~rather than selling them,~~ thus creating variability in timing of revenue recognition. Accordingly, the timing and the nature of our business makes it difficult to predict what portion of our backlog will be filled in the next fiscal year.

Backlog represents firm definitive agreements executed by the Company and our customers. As of October 31, 2017, we also had project awards totaling between $600.0 million and $1.0 billion, with the rangeCompetition

Our platforms are based on ~~whether the projects are sold or retained as part~~a range of ~~our Generation portfolio.~~ ~~Project awards referenced by the Company are~~

~~notifications that the Company has been selected, typically through~~technologies and target a ~~competitive bidding process, to enter into definitive agreements. These awards~~variety of applications, each of which have ~~been publicly disclosed. Negotiations are in process~~incumbent and ~~if successfully completed, project awards will become backlog.~~

Fuel cell technologies are classified according to the electrolyte used by each fuel cell type. Our SureSource technology utilizes a carbonate electrolyte. Carbonate-based fuel cells are well-suited for megawatt-class applications, offering a number of advantages over other types of fuel cells in the markets we are pursuing. These advantages include carbonate fuel cells' ability to generate electricity directly from readily available fuels such as natural gas or renewable biogas, lower raw material costs as the high temperature of the fuel cell enables the use of commodity metals rather than precious metals, and high-quality heat suitable for CHP applications. We are also actively developing ~~SOFC technology, as discussed in the prior “Advanced Technologies Programs” section. Other fuel cell types that may be used for commercial applications include phosphoric acid and PEM.~~

The following table illustrates the four principal types of fuel cells, highlighting typical market applications, industry estimates of the electrical efficiency, expected capacity range, and versatility for applications in addition to power generation:competitors.

Our SureSource Carbonate Fuel Cell power plants compete in the marketplace for stationary ~~distributed generation.~~ Distributed Generation fueled by natural gas or Biogas. Several companies in the U.S. are engaged in fuel cell development, although, to our knowledge, we are the only domestic company engaged in manufacturing and deployment of stationary natural gas or Biogas fueled Carbonate Fuel Cells. Other suppliers of stationary fuel cell systems include Doosan Fuel Cell Co. Ltd, which manufactures medium-temperature phosphoric acid fuel cell systems and is developing solid oxide systems, and Bloom Energy, a supplier of solid oxide based systems. Other companies are developing solid oxide systems and other hydrogen-based fuel cell systems for small residential or vehicle auxiliary power units, which are applications we are not pursing. Examples of these developers include Ceres Power Holdings, Ceramic Fuel Cells Ltd, SOLIDPower, Aris Energy, Plug Power, Altergy and Cummins, Inc.

In addition to different types of stationary fuel cells, some other technologies that compete in ~~this~~the Distributed Generation marketplace include micro-turbines, turbines, and reciprocating gas engines.

Several companies in the U.S. are engaged in fuel cell development, although we are the only domestic company engaged in manufacturing and deployment of stationary carbonate fuel cells. Other emerging fuel cell technologies (and the companies developing them) include small or portable PEM fuel cells (Ballard Power Systems, Plug Power, and increasing activity by numerous automotive companies including Toyota, Hyundai, Honda and GM), stationary phosphoric acid fuel cells (Doosan), stationary solid oxide fuel cells (LG/Rolls Royce partnership and Bloom Energy), and small residential solid oxide fuel cells (Ceres Power Holdings and Ceramic Fuel Cells Ltd.). Each of these competitors with stationary fuel cell applications has the potential to capture market share in our target markets.

~~Other than fuel cell developers,~~ Companies we may compete with ~~companies such as~~that offer this type of equipment include Caterpillar, Cummins, ~~Wartsilla, MTU Friedrichshafen GmbH (MTU),~~Wartsila, MTU/Rolls Royce, and Detroit Diesel, which manufacture ~~more mature~~ combustion-based distributed power generation equipment, including various engines and turbines, and have ~~well-established~~established manufacturing and distribution operations along with product operating and cost features. Competition on larger MW projects may also come from gas turbine companies like General Electric, Caterpillar Solar Turbines and Kawasaki.

We also compete against the electric grid, which is readily available to prospective customers. The electric grid is supplied by traditional centralized power plants, including coal, gas and nuclear, with transmission lines used to transport the electricity to the point of use.

Our stationary fuel cell power plants also compete against large scale solar and wind technologies, although we ~~can~~ complement the unreliable intermittent nature of solar and wind ~~intermittency~~power with the continuous, reliable power output of the fuel cells. Solar and wind power require specific geographies and weather profiles, ~~and~~ require transmission for utility-scale applications, ~~as well as~~and require a source of back up capacity for when the sun or wind is not available. They also require a significant amount of land compared to our fuel cell power plants, making it difficult to site ~~MW-class~~megawatt-class solar and wind projects in urban areas, unlike our solutions. While fuel cells emit negligible amounts of NOx, SOx and Particulate Matter, fuel cells do emit some carbon dioxide when fueled with natural gas, but less per kWh compared to other less-efficient systems. In many markets, baseload fuel cells avoid more emissions than wind or solar systems of similar capacity because they operate for many more hours of the day compared to these intermittent resources.

We ~~believe that only carbonate fuel cells~~ are ~~suitable~~also developing distributed power generation systems based on our Solid Oxide Fuel Cell technology, and these systems will have the same competition described above.

Our solid oxide systems can operate on pure hydrogen, but we are not developers of hydrogen fueled systems for ~~fuel cell carbon capture~~mobility or material handling applications, such as the PEM-based systems developed by Ballard Power Systems, Plug Power, Toyota, Hyundai, Honda and GM, so ~~our fuel cell carbon capture solution does~~we do not compete with these companies for those applications. However, Ballard Power Systems and Plug Power have developed stationary hydrogen fueled systems in the past, and we could compete against ~~fuel cells~~some of these developers in the future if a market for hydrogen fueled stationary power generation systems develops.

In addition to distributed power generation, we are also developing systems for hydrogen production. Our Distributed Hydrogen solution, with co-production of power and hydrogen from ~~manufacturers utilizing other fuel cell technologies.~~

~~Our distributed hydrogen solution~~natural gas or Biogas, competes against traditional centralized hydrogen generation as well as conventional electrolyzers used for distributed applications. Hydrogen is typically generated at a central location in large quantities by combustion-based steam reforming and is then distributed to end users by diesel truck. ~~Besides utilizing tri-generation SureSource plants~~As such, centralized hydrogen production systems produce more emissions per kg of hydrogen than our Distributed Hydrogen platform and have added transportation costs and emissions.

Electrolysis can compete with our Distributed Hydrogen solution if the cost of power is low. Low-cost power reduces the cost of hydrogen produced by electrolysis, and it reduces the revenue from power sales for ~~distributed~~a Distributed Hydrogen system. In areas with high power cost, the added revenue for the power sales from a Trigeneration Distributed Hydrogen platform reduces the price of hydrogen. Companies providing electrolysis systems for hydrogen ~~electrolyzers~~production include NEL, ITM Power, Plug Power and Cummins, Inc.

We are also developing advance electrolysis systems based on our Solid Oxide Electrolysis platform, which can operate at higher electrical efficiency than currently available electrolysis technologies. Applications for this technology include hydrogen for production for mobility or industrial users as well as large scale hydrogen production from curtailed renewable or nuclear power. We will compete with conventional electrolysis providers in these applications but will have the advantage of the higher electrical efficiency and the ability to increase electrical efficiency even higher by using waste heat from industrial systems or nuclear plants. Other companies are also developing solid oxide-based electrolysis systems, including Bloom Energy and Sunfire GmbH.

Our Reversible Solid Oxide Fuel Cell technology can also be used ~~that are~~ in ~~essence, reverse~~energy storage applications, since our fuel ~~cells. Electrolyzers take electricity~~cell stacks can alternate between electrolysis mode (using power to produce hydrogen which is stored) and ~~convert it to hydrogen. The~~fuel cell mode (producing power from stored hydrogen). Our competition in this application will be conventional battery energy storage (e.g., lead-acid or lithium) or developing storage systems such as flow batteries. Hydrogen based energy storage offers an advantage for long duration applications because the cost of the reactant (an initial fill of water) is very low. Sunfire GmbH is also developing reversible solid oxide systems, and Bloom Energy has recently discussed hydrogen ~~can be used as~~storage concepts with separate systems for hydrogen production and consumption (i.e., not with reversible stacks).

Our Carbonate Fuel Cell based Carbon Capture solution is unique in that it is ~~generated, compressed~~the only Carbon Capture approach that, to our knowledge, can capture CO2 from a power plant or boiler while simultaneously producing power. Our competition in this application will be conventional Amine-based absorption systems, and ~~stored,~~systems under development using solid adsorbents or ~~injected into~~membrane CO2 separation. All these alternatives have power requirements that will decrease the ~~natural gas pipeline. Companies using fuel cell-based electrolyzer technology~~output of a host power plant or add cost to capture from industrial boilers. Our co-production of power provides a revenue stream that reduces the cost of Carbon Capture and is unique among the technologies being considered for ~~transportation applications include NEL and Hydrogenics Corporation.~~this application.

Hydrogen is an energy carrier and energy storage utilizing hydrogen is a growing market opportunity that we are pursuing with our SOFC/SOEC technology. Companies using PEM-based fuel cell electrolyzer technology for storage include Hydrogenics Corporation and ITM Power PLC.

Distributed ~~generation~~Generation addresses certain power generation issues that central generation does not and legal, government and regulatory policy can impact deployment of ~~distributed generation.~~Distributed Generation. The policies that affect our products are not always the same as those imposed on our competitors, and while some policies can make our products less competitive, others may provide an advantage. Certain utility policies may also pose barriers to our installation or interconnection with the utility grid, such as backup, standby or departing load charges that make installation of our products not economically attractive for our customers. Regulatory and legislative support encompasses policy, incentive programs, and defined sustainability initiatives such as Renewable Portfolio Standards (“RPS”).

Various states and municipalities in the U.S. have adopted programs for which our products qualify, including programs supporting self-generation, clean air power generation, combined heat and power applications, carbon reduction, grid ~~resiliency / micro-grids~~resiliency/Microgrids and utility ownership of fuel cell projects.

Many states in the U.S. have enacted legislation adopting Clean Energy Standards (“CES”) or RPS mechanisms. Under these standards, regulated utilities and other load serving entities are required to procure a specified percentage of their total electricity sales to end-user customers from eligible resources. CES and RPS legislation and implementing regulations vary significantly from state to state, particularly with respect to the percentage of renewable energy required to achieve the state’s mandate, the definition of eligible clean and

renewable energy resources, and the extent to which renewable energy credits (certificates representing the generation of renewable energy) qualify for CES or RPS compliance. Fuel cells using ~~biogas~~Biogas qualify as renewable power generation technology in all of the CES and RPS states in the U.S., and ~~eight~~some states ~~(Connecticut, Delaware, Indiana, New York, Ohio, Oklahoma, Pennsylvania and Maine)~~ specify that fuel cells operating on natural gas are also eligible for these initiatives in recognition of the high efficiency and low pollutants of fuel cells. ~~Massachusetts has recently promulgated regulations that will qualify certain~~Other states are moving away from generation utilizing fossil fuels in favor of zero carbon resources.

In February 2018, the U.S. Congress reinstated the 30% Investment Tax Credit (“ITC”) for fuel cells ~~under its Alternative Portfolio Standard.~~and also extended and significantly expanded the existing Carbon Oxide Sequestration Credit. The ITC phased down to 26% in 2020 and was scheduled to phase down to 22% by 2022 and expire in 2023. The reinstatement of the ITC for fuel cells provided equal access to tax incentives for U.S. fuel cell manufacturers when compared with other clean energy solutions. The ITC phase down was extended by two years pursuant to the Consolidated Appropriations Act, 2021 passed by Congress in December 2020 and signed by the President on December 27, 2020, thus extending the 26% ITC until 2022 and the expiration to 2025.

Internationally, South Korea has an RPS to promote clean energy, reduce carbon emissions, and develop local manufacturing of clean energy generation products to accelerate economic growth. The RPS is designed to increase new and renewable power generation to 10% of total power generation by 2023 from 2% when the RPS began in 2012. ~~Eighteen~~Twenty-two of the largest power generators are obligated to achieve the RPS requirements in their generation or purchase offsetting renewable energy certificates. Financial penalties are levied by the government for non-compliance. European governments are supportive of hydrogen-based generation and efficient CHP applications, and some European governments such as Germany, the UK and the Netherlands, provide incentives in the form of tax incentives, grants and waivers of regulatory fees for such installations.

Our Company and ~~its~~our products are subject to various federal, provincial, state and local laws and regulations relating to, among other things, land use, safe working conditions, handling and disposal of hazardous and potentially hazardous substances and emissions of pollutants into the atmosphere. Negligible emissions of SOx and NOx from our power plants are substantially lower than conventional combustion-based generating stations and are far below existing and proposed regulatory limits. The primary emissions from our power plants, assuming no cogeneration application, are humid flue gas that is discharged at temperatures of 700-800° F, water that is discharged at temperatures of 10-20° F above ambient air temperatures, and CO₂ in per kW hour amounts that are much less than conventional fossil fuel central generation power plants due to the high efficiency of fuel cells. The discharge of water from our power plants requires permits that depend on whether the water is to be discharged into a storm drain or into the local wastewater system.

We are also subject to federal, state, provincial and/or local regulation with respect to, among other things, ~~emissions and~~ siting. In addition, utility companies and several states in the U.S. have created and adopted, or are in the process of creating and adopting, interconnection regulations covering both technical and financial requirements for interconnection of fuel cell power plants to utility grids. Our power plants are designed to meet all applicable laws, regulations and industry standards for use in ~~their~~the international ~~markets.~~markets in which we operate. Our SureSource solutions are CARB 2007 certified, and our SureSource 1500 and SureSource 3000, when operating on ~~biogas, is~~Biogas, are certified for the CARB 2013 ~~biogas standards.~~Biogas standard.

We are committed to providing a safe and healthy environment for our employees, and we are dedicated to seeing that safety and health hazards are adequately addressed through appropriate work practices, training and procedures. All of our employees must observe the proper safety rules and environmental practices in work situations, consistent with these work practices, training and procedures, and consistent with all applicable health, safety and environmental laws and regulations.

Our intellectual property consists of patents, trade secrets and institutional knowledge and know-how that we believe is a competitive advantage and represents a ~~significant~~ barrier to entry for potential competitors. Our Company was founded in 1969 as an applied research company and began focusing on ~~carbonate fuel cells~~Carbonate Fuel Cells in the 1980s, with our first ~~fully commercialized~~fully-commercialized SureSource power plant sold in 2003. Over this time, we have gained extensive experience in designing, manufacturing, operating and maintaining fuel cell power plants. This experience cannot be easily or quickly replicated and, combined with our trade secrets, proprietary processes and patents, safeguards our intellectual property rights.

As of October 31, ~~2017,~~2020, we (excluding our ~~Company, excluding its subsidiaries,~~subsidiaries) had 92102 U.S. patents ~~in the U.S.~~ and ~~106~~186 patents in other jurisdictions covering our fuel cell technology (in certain cases covering the same technology in multiple jurisdictions), with patents directed to various aspects of our SureSource technology, SOFC technology, PEM fuel cell technology and applications thereof. As of October 31, ~~2017,~~2020, we also had 3055 patent applications pending in the U.S. and 93107 patent applications pending in other jurisdictions. Our U.S. patents will expire between ~~2018~~2020 and ~~2035,~~2039, and the current average remaining life of our U.S. patents is approximately ~~9.2~~9.5 years.

~~Our~~As of October 31, 2020, our subsidiary, Versa Power Systems, Ltd. (“Versa”), ~~as of October 31, 2017,~~ had 3532 U.S. patents and 7593 international patents covering ~~the~~ SOFC technology (in certain cases covering the same technology in multiple jurisdictions), with an average remaining U.S. patent life of approximately ~~6.8~~4.7 years. As of October 31, ~~2017,~~2020, Versa ~~Power Systems, Ltd.~~ also had ~~four~~3 pending U.S. patent applications and 14 patent applications pending in other jurisdictions. In addition, as of October 31, 2020, our subsidiary, FuelCell Energy Solutions, GmbH, ~~has~~had license rights to ~~use FuelCell Energy's carbonate fuel cell technology, and, as of October 31, 2017, had two~~2 U.S. patents and ~~nine~~7 patents outside the U.S. for ~~carbonate fuel cell~~Carbonate Fuel Cell technology licensed from Fraunhofer IKTS.

NoFive patents ~~have~~ expired in 2019 and 6 patents expired in 2020 for FuelCell Energy and Versa, but none of these expirations, individually or ~~will expire~~ in ~~2018 that would~~the aggregate, is expected to have any material impact on our current or anticipated operations. As has historically been the case, we are continually innovating and have a significant number of invention disclosures that we are reviewing that may result in additional patent applications.

Certain of our U.S. patents are the result of government-funded research and development programs, including our ~~Department of Energy (DOE)~~DOE programs. U.S. patents we own that resulted from government-funded research are subject to the government potentially exercising “march-in” rights. We believe that the likelihood of the U.S. government exercising these rights is remote and would only occur if we ceased our commercialization efforts and there was a compelling national need to use the patents.

We contract with a concentrated number of customers for the sale of our products and for research and ~~development contracts.~~development. For the years ended October 31, ~~2017, 2016~~2020, 2019 and ~~2015,~~2018, our top customers, EMRE, UIL Holdings Corporation, Connecticut Light and Power, the DOE, Clearway Energy (formerly NRG Yield, Inc.), Pfizer, Inc., Dominion Bridgeport Fuel Cell, LLC, POSCO Energy, Hanyang Industrial Development Co., Ltd, ~~Dominion Bridgeport Fuel Cell,~~and AEP Onsite Partners, LLC, ~~the Department of Energy, ExxonMobil, POSCO Energy (which owns approximately 4% of the outstanding shares of common stock of the Company), and Avangrid Holdings (through its various subsidiaries),~~ accounted for an aggregate of ~~78%~~86%, ~~75%~~81% and ~~90%~~88%, respectively, of our total annual consolidated revenue. Revenue percentage by major customer for the last three fiscal years is as follows:

See Item 7 – “Management's Discussion and Analysis of Financial Condition and Results of Operations” and Item 8 – ~~“Consolidated Financial~~“Financial Statements and Supplementary Data” for further information regarding our revenue and revenue recognition policies.

We have marketing and manufacturing operations both within and outside the United States. We source raw materials and BOP components from a diverse global supply chain. In ~~2017,~~2020, the foreign country with the greatest concentration risk was South Korea, accounting for ~~46%~~3% of our consolidated net ~~sales.~~revenues. The Company iswas entitled to receive royalties from POSCO Energy on the sale of power plants and module replacements related to service of fuel cell power plants in ~~Asia.~~Asia, and the Company received approximately $0.4 million in such royalties during the fiscal year ended October 31, 2019 as part of a net settlement of an arbitration brought by POSCO Energy in 2018. As part of our strategic plan, we are in the process of diversifying our sales mix from both a customer specific and geographic perspective. See Item ~~1A: Risk Factors~~1A “Risk Factors” - “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 depend on strategic relationships“The pending legal proceedings with ~~third parties, and the terms and enforceability of many of these relationships are not certain,” and “As our relationship with~~ POSCO Energy ~~changes, we may not be able~~could expose us to ~~succeed in our efforts to access the South Korean and Asian markets.~~costs of such legal proceedings or an adverse judgment.”

The international nature of our operations subjects us to a number of risks, including fluctuations in exchange rates, adverse changes in foreign laws or regulatory requirements and tariffs, taxes, and other trade restrictions. See Item

~~1A: Risk Factors~~ 1A “Risk Factors” – “We are subject to risks inherent in international operations.” See also Note 1417. “Segment Information,” to the consolidated financial statements in Part II, Item 8, ~~“Consolidated Financial~~“Financial Statements ~~And~~and Supplementary Data” of this Annual Report on Form 10-K for information about our net sales by geographic region for the years ended October 31, ~~2017, 2016,~~2020, 2019, and ~~2015.~~2018. See also Item 7, “Management’s Discussion and Analysis of Financial Condition and Results of Operations,” for other information about our operations and activities in various geographic regions.

FuelCell Energy’s ~~ultra-clean,~~clean, efficient and reliable fuel cell power ~~plants help~~platforms assist our customers ~~achieve~~in achieving their environmental and sustainability goals. ~~These~~Our patented FuelCell Energy products offer a sustainable alternative to traditional internal combustion-based power generation. Traditional power plants create harmful emissions, such as NOx, SOx and Particulate Matter, that are a serious public health concern. Alternatively, the FuelCell Energy power platforms use a combustion-free power generation process that is virtually free of pollutants. Our platforms are highly efficient and environmentally friendly products that support the “Triple Bottom Line” concept of sustainability, consisting of environmental, social and economic considerations. As an enterprise, we are proud that, in October 2018, we were certified ISO 14001:2015 compliant, having demonstrated the establishment of and adherence to an environmental management system standard. We believe that FuelCell Energy is the only fuel cell manufacturer to have received this certification.

The electrical efficiency of our ~~fuel cell~~Carbonate Fuel Cell solutions ranges from approximately 47% to 60% depending on the configuration. When configured for CHP, our system efficiencies can potentially reach up to 90%, depending on the application. This compares favorably to the average efficiency of the U.S. electrical grid of about ~~35%~~40%. Our solutions deliver this high electrical efficiency where the power is used, avoiding transmission. Transmission line losses average about ~~6% to 9%~~5% for the U.S. grid, which represents inefficiency and is a hidden cost to ratepayers. ~~In a combined heat~~

Our commitment to sustainability is evident in the design, manufacturing, installation and ~~power configuration, total thermal efficiency~~servicing of our fuel cell ~~solutions can potentially be up~~power platforms, which are engineered for recycling and reuse. We start with a commitment to ~~90% depending on the application.~~

~~We utilize our fuel cells to provide a portion of the electricity used at our corporate office and at our North American manufacturing facility.~~

Other examples of energy management include routing excess heat from production processes throughout the manufacturing facility to reduce both heating costs and associated emissions, utilizing the power produced by fuel cells undergoing R&D at our corporate office for a portion of the power needs of the facility, and installation of high efficiency lighting at our North American manufacturing facility and corporate office.

We have expanded our manufacturing facility in Torrington and consolidated other locations, reducing transportation emissions and transportation costs, incorporating energy efficient building standards and reducing leasing costs. We are pursuing additional consolidation initiatives in 2018 as we plan to relocate fuel cell module conditioning to Torrington from our Danbury facility, which will further reduce transportation emissions and costs. We recognize that there is more to be done and we are utilizing cross-functional teams to identify and evaluate additional areas for improvement.

~~We continue to incorporate~~ sustainability best practices ~~into~~as part of our corporate culture, ~~and into~~then apply this core belief to the design, manufacture, installation and servicing of our fuel cell power ~~plants.~~platforms. For example, atwhen our plants reach the ~~end-of-life~~end of ~~our power plants,~~their useful lives, we have the capability to refurbish and re-use certain parts ~~of the power plant~~ and ~~we are able to~~also recycle most of what we cannot re-use. ~~Some~~This is a departure from other power generation methods that typically produce a significant amount of ~~the parts in the fuel cell module can be re-furbished, such as end plates, while the individual fuel cell components are sent to a smelter for recycling.~~waste. The BOP has an operating life of ~~twenty to twenty-five~~25-to-30 years, at which time metals such as steel and copper are reclaimed for scrap value. ByFor context, by weight, approximately 93% of the entire power plant ~~is either~~can be re-used or ~~recycled.~~recycled at the end of its useful life.

Our manufacturing process has a very low carbon footprint, utilizing an ~~assembly oriented~~assembly-oriented production strategy. While we continue to enhance and adopt sustainable business practices, we recognize this is an ongoing effort with more to be accomplished, such as further reducing the direct and indirect aspects of our carbon footprint.

We work to continually improve what we feel is a robust safety program. This is demonstrated by an improving safety trend over each of the past 4 years. We have never had a workplace fatality at any of our facilities or power plant installations.

Sustainability also incorporates social risks and human rights and we will not knowingly support or do business with suppliers that treat workers improperly or unlawfully, including, without limitation, those that engage in child labor, human trafficking, slavery or other unlawful or morally reprehensible employment practices. We are continuing to implement comprehensive monitoring of our global supply chain to eliminate social risks and ensure respect for human rights. We contractually ensure that all qualified domestic suppliers in our supply chain comply with the Fair Labor Standards Act of 1938, as amended.

Assuring the absence of conflict minerals in our power plants is a continuing initiative. Our fuel cells, including the fuel cell components and completed fuel cell module, do not utilize any 3TG minerals (i.e., tin, tungsten, tantalum and gold) that are classified as conflict minerals. We do utilize componentry in the BOP such as computer circuit boards that utilize trace amounts of 3TG minerals. For perspective, total shipments in fiscal year ~~2016~~2019 weighed approximately ~~5.8~~1.8 million pounds, of which 38.0 pounds, or ~~0.000052%~~0.000450%, represented 3TG minerals, so the presence of these minerals is minimal. Our conflict mineral disclosure filed with the Securities and Exchange Commission (“SEC”) on Form SD contains specific information on the actions we are taking to avoid the use of conflict minerals.

As of October 31, ~~2017,~~2020, we had ~~458~~316 full-time ~~associates,~~employees, of whom ~~173~~121 were located at the Torrington, Connecticut manufacturing ~~plant, 246~~facility, 160 were located at the Danbury, Connecticut facility or other field offices within the U.S., and 3935 were located abroad. We did not have any part-time employees. None of our ~~associates~~U.S. employees are represented by a labor union or covered by a collective bargaining agreement. We believe our relations with our ~~associates~~employees are good.

We take workplace safety very seriously and are proud of the fact that we have never had a workplace fatality at any of our facilities or power plant installations. Our robust safety program, bolstered over the past five years, ensures that we are constantly evaluating our safety protocols in an effort to keep our facilities safe for our workers.

We work to continually improve what we believe is a robust safety program. This is demonstrated by an improving safety trend over each of the past 5 years. Our Experience Modification Rates (“EMR”) for the past 5 years are as follows:2015: 1.0, 2016: 0.81, 2017: 0.65, 2018: 0.62, 2019: 0.65, and 2020: 0.59. We have maintained an “A” rating since 2016 providing “Safety Tier 1” performance with ISNetworld, a database for online contractor safety management designed to streamline companies' and contractors' compliance pre-qualification processes.

During fiscal year 2020, the Company launched a proactive response to the escalating COVID-19 outbreak and temporarily suspended operations at its Torrington, Connecticut manufacturing facility in March 2020. The Company also commenced remote work protocol for those employees worldwide that were capable of working from home. The Company took these actions to secure the safety of the Company’s employees, our corporate community as a whole, and the communities in which our team members live, and to adhere to Center for Disease Control (CDC) recommendations of social distancing and limited public exposure in connection with the COVID-19 pandemic. All employees that were not able to work from home during the manufacturing facility shutdown due to their job function received full wages and benefits during such time. We did not implement any furlough, layoff or shared work program during such time. The Company resumed manufacturing in June 2020 and the Torrington, Connecticut manufacturing facility employees returned to work. The Company continues to encourage a remote work protocol for portions of the workforce due to the continuing pandemic. We continue to evaluate our ability to operate in light of recent resurgences of COVID-19 and the advisability of continuing operations based on federal, state and local guidance, evolving data concerning the pandemic and the best interests of our employees, customers and stockholders.

As part of our compensation philosophy, we believe that we must offer and maintain market competitive compensation and benefit programs for our employees in order to attract and retain superior talent. In addition to competitive base wages, additional programs include an annual Management Incentive Plan, Long-Term Equity Incentive Plans, a Company matched 401(k) Plan, healthcare and insurance benefits, health savings and flexible spending accounts, paid time off, family leave, and employee assistance programs.

We are committed to our continued efforts to increase diversity and foster an inclusive work environment that supports the global workforce and the communities we serve. We recruit the best qualified employees regardless of gender, ethnicity or other protected traits and it is our policy to fully comply with all laws (domestic and foreign) applicable to discrimination in the workplace. Our diversity, equity and inclusion principles are also reflected in our employee training and policies. We continue to enhance our diversity, equity and inclusion policies which are guided by our executive leadership team.

We file annual, quarterly and current reports, proxy statements and other information electronically with the SEC. Our annual reports on Form 10-K, quarterly reports on Form 10-Q, current reports on Form 8-K, and all

amendments to those reports are made available free of charge through the Investor Relations section of the Company’s ~~Internet~~ website (http://www.fuelcellenergy.com) as soon as practicable after such material is electronically filed with, or furnished to, the SEC. Material contained on our website is not incorporated by reference in this report. Our executive offices are located at 3 Great Pasture Road, Danbury, CT 06810. The public may also read and copy any materials that we file with the SEC at the SEC’s Public Reference Room at 100 F Street, NE, Washington, D.C. 20549. The public may obtain information on the operation of the Public Reference Room by calling the SEC at 1-800-SEC-0330. The SEC also maintains an Internet website that contains reports and other information regarding issuers that file electronically with the SEC located at http://www.sec.gov.

An investment in our common stock involves a high degree of risk. Prior to making a decision about investing in our securities, you should carefully consider the ~~following~~specific risk factors ~~before making an investment decision.~~discussed below. The risks and uncertainties we have described are not the only ones we face. Additional risks and uncertainties not presently known to us or that we currently deem immaterial may also affect our operations. If any ~~of the following~~such risks actually occur, our business, financial condition, or results of operations could be materially and adversely affected. In such cases, the trading price of our common stock could decline, and you may lose all or part of your investment.

Our business and operations may be adversely affected by the 2019 novel coronavirus (COVID-19) outbreak or other similar outbreaks.

Any outbreaks of contagious diseases, including the recent outbreak of the 2019 novel coronavirus (“COVID-19”) that was first detected in Wuhan, China in December 2019 and has since developed into a global pandemic, and other adverse public health developments in countries where we and our suppliers operate, could have a material and adverse effect on our business, financial condition and results of operations. These effects could include disruptions to or restrictions on our employees’ ability to travel, as well as temporary closures of our facilities or the facilities of our customers, suppliers, or other vendors in our supply chain. In addition, COVID-19 has resulted in a widespread health crisis that has adversely affected, and may continue to adversely affect, the economies and financial markets of many countries, resulting in an economic downturn that could affect demand for our products or our ability to obtain financing for our business or projects. COVID-19 may impact the health of our team members, directors or customers, reduce the availability of our workforce or those of companies with which we do business, or otherwise cause human impacts that may negatively impact our business. Any of these events, which may result in disruptions to our supply chain or customer demand, could materially and adversely affect our business and our financial results. The extent to which COVID-19 will impact our business and our financial results will depend on future developments, which are highly uncertain and cannot be predicted. Such developments may include the geographic spread of COVID-19, the severity of the disease, the duration of the outbreak, the actions that may be taken by various governmental authorities in response to the outbreak, such as quarantine or “shelter-in-place” orders and business closures imposed by various states within the United States, and the impact on the U.S. or global economy. For example, on March 18, 2020, in response to the escalating global COVID-19 outbreak, we temporarily

suspended operations at our Torrington, Connecticut manufacturing facility, and also ordered those employees that could work from home to do so. While we resumed operations in the manufacturing facility on June 22, 2020, we continue to evaluate our ability to operate in light of recent resurgences of COVID-19 and the advisability of continuing operations, based on federal, state and local guidance, evolving data concerning the pandemic and the best interests of our employees, customers and stockholders. Accordingly, there can be no assurance that any of our facilities will remain open (in full or in part), that our employees that continue to work remotely will return to the office or that our other operations will continue at full or limited capacity. If we again have to shut down production either due to a worsening of the COVID-19 pandemic or due to an outbreak in one of our facilities, our project schedules and associated financing could be adversely affected. An extended period of remote working by our employees could strain our technology resources and introduce operational risks, including heightened cybersecurity risk. Further, we have experienced, and may continue to experience, increased costs and expenses, including as a result of (i) conducting daily “fitness-for-duty” assessments for employees, including symptom checks and providing personal protective equipment, (ii) the expansion of benefits to our employees, including the provision of additional time off for employees who have contracted COVID-19 or are required to be quarantined or who are unable to obtain childcare to return to work, (iii) implementing increased health and safety protocols at all of our facilities, including increased cleaning/ sanitization of workspaces, restricting visitor access, mandating social distancing guidelines and increasing the availability of sanitization products, and (iv) the increased cost of personal protective equipment. Although we believe the Company is currently considered an “essential” business in its operating markets, if any of the applicable exceptions or exemptions are curtailed or revoked in the future, or any of these exemptions or exceptions do not extend to any of our key suppliers, our business, operating results and financial condition could be adversely impacted. While we have attempted to continue business development activities during the pandemic, state and local shutdowns, shelter-in-place orders and travel restrictions have impeded our ability to meet with customers and solicit new business, and certain bids and solicitations in which we typically participate have been postponed. As a result, at this time, it is impossible to predict the overall impact of COVID-19 on our business, liquidity, capital resources, supply chain and financial results or its effect on clean energy demand, capital budgets of our customers, or demand for our products. Additionally, while we have continued to prioritize the health and safety of our team members and customers as we continue to operate during the pandemic, we face an increased risk of litigation related to our operating environments. Even after the COVID-19 pandemic has subsided, we may continue to experience adverse impacts to our business as a result of any economic recession that has occurred or may occur in the future because of the pandemic, or because the pandemic worsens again. Additional public health crises could also emerge in the future, including other pandemics or epidemics. Any such public health crisis could pose further risks to us and could also have a material adverse effect on our business, results of operations and financial position.

Our PPP Loan may not be forgiven, may subject us to challenges regarding qualification for the PPP Loan, enforcement actions, fines and penalties, and has resulted in an informal SEC inquiry into our financial disclosures.

On April 20, 2020, we entered into a Paycheck Protection Program Promissory Note, dated April 16, 2020 (the “PPP Note”), evidencing a loan to the Company from Liberty Bank under the CARES Act. Pursuant to the PPP Note, we received total proceeds of approximately $6.5 million on April 24, 2020. In accordance with the requirements of the CARES Act, as amended by the Paycheck Protection Program Flexibility Act of 2020 (the “PPP Flexibility Act”), the PPP Loan may be fully forgiven if (i) proceeds are used to pay eligible payroll costs, rent, mortgage interest and utilities and (ii) full-time employee headcount and salaries are either maintained during the 24-week period following disbursement of the PPP Loan or restored by December 31, 2020. If not so maintained or restored, forgiveness of the PPP Loan will be reduced in accordance with regulations to be issued by the SBA. In order to obtain the consent of the Orion Agent and the lenders under the Orion Credit Agreement (each as defined below) to enter into the PPP Note, the Orion Agent and such lenders required us to apply for forgiveness within 30 days after the last day of the loan forgiveness period as designated under regulations in effect as of June 6, 2020. We used 100% of the proceeds of the PPP Loan to pay eligible payroll costs, and on October 29, 2020, we applied for forgiveness of the PPP Loan. While we believe we have met all of the requirements of the CARES Act, as amended by the PPP Flexibility Act, no assurance can be given that any portion of the PPP Loan will be forgiven. In addition, based on guidance from the United States Department of the Treasury, since the total PPP Loan proceeds exceeded $2.0 million, our forgiveness application will be subject to audit by the SBA, including with respect to our certification that the economic uncertainty at the time of our application made our request for a PPP Loan necessary to support our ongoing operations. Such certification does not contain any objective criteria and is subject to interpretation. If we are found to have been ineligible to receive the PPP Loan under the PPP Note, or in violation of any of the laws or regulations that may apply to us in connection with the PPP Note, including the False Claims Act, we may be subject to enforcement actions, fines and penalties, including significant civil, criminal and

administrative penalties, and could be required to repay the PPP Note. In addition, our receipt of the PPP Loan and our submission of a forgiveness application may result in adverse publicity and damage to our reputation, governmental investigations, inquiries, reviews and audits, such as the SEC inquiry described below, which could consume significant financial and management resources. Any of these events could harm our business, results of operations and financial condition.

On or about May 11, 2020, the Division of Enforcement of the SEC sent the Company an inquiry requesting that we voluntarily provide information to the SEC pertaining to our application and resulting PPP Loan and how the need for the PPP Loan compares with our filings, disclosures and financial condition. While this request for information is voluntary and the Company was not obligated to respond, we are cooperating and have provided information to the SEC.

We have incurred losses and anticipate continued losses and negative cash ~~flow.~~flows.

We have transitioned from a research and development company to a commercial products manufacturer, services provider and developer. We have not been profitable since our year ended October 31, 1997. We expect to continue to incur net losses and generate negative cash flows until we can produce sufficient revenues and ~~margins~~gross profit to cover our costs. We may never become profitable. Even if we do achieve profitability, we may be unable to sustain or increase our profitability in the future. For the reasons discussed in more detail below, there are ~~substantial~~ uncertainties associated with our achieving and sustaining profitability. We have, from time to time, sought financing in the public markets in order to fund operations and will continue to do so. Our future ability to obtain such financing could be impaired by a variety of factors, including, but not limited to, the price of our common stock, our lack of available shares and general market conditions.

Our cost reduction strategy may not succeed or may be significantly delayed, which may result in our inability to deliver improved margins.

Our cost reduction strategy is based on the assumption that increases in production will result in economies of scale. In addition, our cost reduction strategy relies on advancements in our manufacturing process, global competitive sourcing, engineering design, reducing the cost of capital and technology improvements (including stack life and projected power output). Failure to achieve our cost reduction targets could have a material adverse effect on our results of operations and financial condition.

We have debt outstanding and may incur additional debt in the future, which may adversely affect our financial condition and future financial results.

As of October 31, ~~2017. This includes approximately $46.9~~2020, our total consolidated debt outstanding (“indebtedness”) was $174.2 million ($165.1 million, net of finance costs and debt discounts), of which an aggregate of $80.0 million ($72.7 million, net of finance costs and debt discounts) was senior secured indebtedness under the Orion Credit Agreement with the Orion Agent (in each case as defined elsewhere herein) and certain of its affiliates, which was entered into in connection with our $200.0 million senior secured credit facility (which is referred to herein as the Orion Facility), and an aggregate of $94.2 million ($92.4 million, net of finance costs and debt discounts) was other secured indebtedness.

On December 7, 2020, the Company repaid all outstanding debt under the Orion Facility. Concurrently with the Orion Agent’s receipt of full payment pursuant to the Orion Payoff Letter (as defined elsewhere herein), the Orion Agent released all of the collateral from the liens granted under the security documents associated with the Orion Facility (which included the release of $11.2 million of ~~debt at our project finance~~restricted cash to the Company), and the Company and its subsidiaries were unconditionally released from their respective obligations under the Orion Credit Agreement (and related loan documents) and ~~$40.9 million at~~ the corporate level. The majority of our debt is long-term with $28.3 million due within twelve months as of October 31, 2017. We also have approximately $40.0 million of borrowing capacity under a revolving construction and term project financing facility. Orion Facility without further action.

Our ability to make scheduled payments of ~~the~~ principal and interest ~~or to refinance our indebtedness~~and other required repayments depends on our future performance, which is subject to economic, financial, competitive and other factors beyond our control. Our business may not generate cash ~~flow~~flows from operations in the future sufficient to service our debt and make necessary capital expenditures. If we are unable to generate such cash ~~flow,~~flows, we may be required to adopt one or more alternatives, such as selling assets, restructuring operations, restructuring debt or obtaining additional equity capital on terms that may be onerous or dilutive.

~~It is also possible that we~~We may incur additional indebtedness in the future in the ordinary course of ~~business.~~business, which could include onerous restrictions on us. If new debt is added to current debt levels, the risks described above could intensify.

agreements contain ~~customary~~ representations and warranties, affirmative and negative covenants, and events of default that entitle the lenders to cause our indebtedness under such debt agreements to become immediately due and payable. In addition, our Loan and Security Agreement with Hercules Capital, Inc. (“Hercules”), as amended, contains a financial covenant whereby we are required to maintain an unrestricted cash balance in accounts subject to an account control agreement in favor of Hercules of at least the greater of (x) (a) 75% of the outstanding loan balance plus (b) the amount of accounts payable not paid within 90 days of the invoice date, and (y) (a) at all times prior to the Stockholder Approval Date, $20.0 million and (b) at all times on and after the Stockholder Approval Date, $10.0 million (the Stockholder Approval Date was December 14, 2017, which was the date on which stockholder approval of the issuance of certain shares upon the conversion and/or redemption of our Series C Convertible Preferred Stock was obtained). ~~The Loan and Security Agreement, as amended, also contains an event of default in the event of the delivery of a notice by the holders to redeem the Series C Preferred~~

~~Shares following a triggering event pursuant to the certificate of designations governing the Series C Preferred Shares.~~ ~~As of October 31, 2017, the outstanding loan balance under the Loan and Security Agreement, as amended, was $21.5 million, including accretion of an end-of-term payment.~~

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. Volatility of electricity and fuel prices may impact sales of our products and services in the markets in which we compete.

Our power plants can operate on a variety of fuels including natural gas, renewable biogas, directed biogas and propane. If these fuels are not readily available or if their prices increase such that electricity produced by our products costs more than electricity provided by other generation sources, our products would be less economically attractive to potential customers. In addition, we have no control over the prices of several types of competitive energy sources such as oil, gas or coal or local utility electricity costs. Significant decreases (or short term increases) in the price of these fuels or grid delivered prices for electricity could also have a material adverse effect on our business because other generation sources could be more economically attractive to consumers than our products.

~~Financial markets worldwide have experienced heightened volatility and instability which may have a material adverse impact on our Company, our customers and our suppliers.~~

Financial market volatility can affect the debt, equity and project finance markets. This may impact the amount of financing available to all companies, including companies with substantially greater resources, better credit ratings and more successful operating histories than ours. It is impossible to predict future financial market volatility and instability and the impact on our Company, and it may have a materially adverse effect on us for a number of reasons, such as:

~~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.~~

Some of the orders we accept from customers require certain conditions or contingencies (such as permitting, interconnection or financing) to be satisfied, some of which are outside of our control. The time periods from receipt of a contract to installation may vary widely and are determined by a number of factors, including the terms of the customer contract and the customer’s site requirements. This could have an adverse impact on our revenue and cash flow.

We have signed product sales contracts, engineering, procurement and construction contracts (“EPC”), power purchase agreements 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.

The Company applies the percentage of completion revenue recognition method to certain product sales contracts which are subject to estimates. On a quarterly basis, the Company performs a review process to help ensure that total estimated contract costs include estimates of costs to complete that are based on the most recent available

information. The percentage of completion for the customer contracts based on this cost analysis is then applied to the total customer contract values to determine the total revenue to be recognized to date.

In certain instances, we have executed power purchase agreements (“PPA”) with the end-user of the power and site host of the fuel cell power plant. We may then sell the PPA to a project investor or retain the project and collect revenue from the sale of power over the term of the PPA, recognizing electricity revenue as power is generated and sold.

We have contracted under long-term service agreements with certain customers to provide service on our products over terms up to 20 years. Under the provisions of these contracts, we provide services to maintain, monitor, and repair customer power plants to meet minimum operating levels. Pricing for service contracts is based upon estimates of future costs including future stack replacements. While we have conducted tests to determine the overall life of our products, we have not run our products over their projected useful life prior to large-scale commercialization. As a result, we cannot be sure that our products will last to their expected useful life, which could result in warranty claims, performance penalties, maintenance and stack replacement costs in excess of our estimates and losses on service contracts.

Our ability to proceed with projects under development and complete construction of projects on schedule and within budget may be adversely affected by escalating costs for materials, labor and regulatory compliance, inability to obtain necessary permits, interconnections or other approvals on acceptable terms or on schedule and other factors. If any development project or construction is not completed, is delayed or is subject to cost overruns, we could become obligated to make delay or termination payments or become obligated for other damages under contracts, experience diminished returns or write off all or a portion of our investment in the project. Each of these events could have an adverse effect on our business, financial condition, results of operations and prospects.

~~Our growing generation portfolio of operating assets exposes us to operational risks and commodity market volatility.~~

We have a growing portfolio of generation assets selling power under PPAs and utility tariff programs that exposes us to operational risks and uncertainties, including, among other things, lost revenues due to prolonged outages, replacement equipment costs, risks associated with facility start-up operations, failures in the availability or acquisition of fuel, the impact of severe adverse weather conditions and natural disasters, risks of property damage or injury from energized equipment, availability of adequate water resources and ability to intake and discharge water, use of new or unproven technology, fuel commodity price risk and fluctuating market prices, and lack of alternative available fuel sources,

We provide for a warranty of our products for a specific period of time against manufacturing or performance defects. We accrue for warranty costs based on historical warranty claim experience, however, actual future warranty expenses may be greater than we have assumed in our estimates. As a result, operating results could be negatively impacted should there be product manufacturing or performance defects in excess of our estimates.

~~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 develop complex and evolving products, and we continue to advance the capabilities of the fuel cell stacks and are now producing stacks with a net rated power output of 350 kW and an expected five year life.

We are still gaining field operating experience with respect to our products, and despite experience gained from our growing installed base and testing performed by us, our customers and our suppliers, issues may be found in existing or new products. This could result in a delay in recognition or loss of revenues, loss of market share or failure to achieve broad market acceptance. The occurrence of defects could also cause us to incur significant warranty, support and repair costs, could divert the attention of our engineering personnel from our product development efforts, and could harm our relationships with our customers. The occurrence of these problems could result in the

delay or loss of market acceptance of our products and would likely harm our business. Defects or performance problems with our products could result in financial or other damages to our customers. From time to time, we have been involved in disputes regarding product warranty issues. Although we seek to limit our liability, a product liability claim brought against us, even if unsuccessful, would likely be time consuming and could be costly to defend. Our customers could also seek and obtain damages from us for their losses. We have accrued liabilities for potential damages related to performance problems, however, actual results may be different than the assumptions used in our accrual calculations.

We compete on the basis of our products’ reliability, efficiency, environmental considerations and cost. Technological advances in alternative energy products or improvements in the electric grid or other sources of power generation, or other fuel cell technologies may negatively affect the development or sale of some or all of our products or make our products non-competitive or obsolete prior to or after commercialization. Other companies, some of which have substantially greater resources than ours, are currently engaged in the development of products and technologies that are similar to, or may be competitive with, our products and technologies.

Several companies in the U.S. are engaged in fuel cell development, although we are the only domestic company engaged in manufacturing and deployment of stationary carbonate fuel cells. Other emerging fuel cell technologies (and the companies developing them) include small or portable PEM fuel cells (Ballard Power Systems, Plug Power, and increasing activity by numerous automotive companies including Toyota, Hyundai, Honda and GM), stationary phosphoric acid fuel cells (Doosan), stationary solid oxide fuel cells (LG/Rolls Royce partnership and Bloom Energy), and small residential solid oxide fuel cells (Ceres Power Holdings and Ceramic Fuel Cells Ltd.). Each of these competitors has the potential to capture market share in our target markets. There are also other potential fuel cell competitors internationally that could capture market share.

Other than fuel cell developers, we must also compete with companies that manufacture more mature combustion-based equipment, including various engines and turbines, and have well-established manufacturing, distribution, and operating and cost features. Electrical efficiency of these products can be competitive with our SureSource power plants in certain applications. Significant competition may also come from gas turbine companies and large scale solar and wind technologies.

We derive significant revenue from contracts awarded through a competitive bidding process involving substantial costs and risks. Due to this competitive pressure, we may be unable to grow revenue and achieve profitability.

We expect a significant portion of the business that we will seek in the foreseeable future will be awarded through competitive bidding versus other fuel cell technologies and other forms of power generation. The competitive bidding process involves substantial costs and a number of risks, including the significant cost and managerial time to prepare bids and proposals for contracts that may not be awarded to us and our failure to accurately estimate the resources and costs that will be required to fulfill any contract we win. In addition, following a contract award, we may encounter significant expense, delay or contract modifications as a result of our competitors protesting or challenging contracts awarded to us in competitive bidding. In addition, multi-award contracts require that we make sustained post-award efforts to obtain task orders under the contract. We may not be able to obtain task orders or recognize revenue under these multi-award contracts. Our failure to compete effectively in this procurement environment would adversely affect our revenue and/or profitability.

Unanticipated increases or decreases in business growth may result in adverse financial consequences for us.

If our business grows more quickly than we anticipate, our existing and planned manufacturing facilities may become inadequate and we may need to seek out new or additional space, or retrofit or further equip our existing facilities, at considerable cost to us. If our business does not grow as quickly as we expect, our existing and planned manufacturing facilities would, in part, represent excess capacity for which we may not recover the ~~cost~~cost. In that circumstance, our revenues may be inadequate to support our committed costs and our planned growth, and our gross margins and business strategy would be adversely affected.

Our plans are dependent upon market acceptance of, as well as enhancements to, our products. Fuel cell systems represent an emerging market, and we cannot be sure that potential customers will accept fuel cells as a replacement for traditional power sources. As is typical in a rapidly evolving industry, demand and market acceptance for recently introduced products and services are subject to a high level of uncertainty and risk. Since the distributed generation market is still evolving, it is difficult to predict with certainty the size of the market and its growth rate. The development of a market for our products may be affected by many factors that are out of our control, including:

If a sufficient market fails to develop or develops more slowly than we anticipate, we may be unable to recover the losses we will have incurred in the development of our products and may never achieve profitability.

As we continue to expand markets for our products, we intend to continue offering power production guarantees and other terms and conditions relating to our products that will be acceptable to the marketplace, and continue to develop a service organization that will aid in servicing our products and obtain self-regulatory certifications, if available, with respect to our products. Failure to achieve any of these objectives may also slow the development of a sufficient market for our products and, therefore, have a material adverse effect on our results of operations and financial condition.

~~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 contract with a concentrated number of customers for the sale of products and for research and development contracts. There can be no assurance that we will continue to achieve the current level of sales of our products to our largest customers. Even though our customer base is expected to increase and our revenue streams to diversify, a substantial portion of net revenues could continue to depend on sales to a limited number of customers. Our agreements with these customers may be canceled if we fail to meet certain product specifications or materially breach the agreements, and our customers may seek to renegotiate the terms of current agreements or renewals. The loss of, or a reduction in sales to, one or more of our larger customers could have a material adverse effect on our business, financial condition and results of operations.

~~As our relationship with POSCO Energy changes, we may not be able to succeed in our efforts to access the South Korean and Asian markets.~~

We have historically relied on POSCO Energy to develop and grow the South Korean and Asian markets for our products and services. We entered into manufacturing and technology transfer agreements with POSCO Energy in 2007, 2009 and 2012, each of which expires on October 31, 2027. The Cell Technology Transfer Agreement (“CTTA”) provides POSCO Energy with the technology rights to manufacture SureSource power plants in South Korea and the right to sell power plants throughout Asia. The CTTA requires POSCO Energy to pay to the Company a 3.0% royalty on POSCO Energy net product sales, as well as a royalty on scheduled fuel cell module replacements under service agreements for modules that were built by POSCO Energy and installed at plants in Asia under the terms of our Master Service Agreement with POSCO Energy. In March 2017, we entered into a memorandum of understanding with POSCO Energy to permit us to directly develop the Asian fuel cell business, including the right for us to sell SureSource solutions in South Korea and the broader Asian market. We and POSCO Energy also agreed to undertake to amend the CTTA and other agreements by a target date of September 30, 2017, to reflect our

new relationship. Although the CTTA and other agreements have not yet been amended, we continue to engage in discussions with POSCO Energy regarding our relationship and the direction of the fuel cell business in the South Korean and Asian markets. We cannot predict the outcome of such discussions, the future status or scope of our relationship with POSCO Energy, or whether our relationship with POSCO Energy will continue in the future. If we enter into new or amended agreements with POSCO Energy, those agreements may be on terms that are less favorable to us than our existing agreements. If our relationship with POSCO Energy ends, or continues on terms that are less favorable to us, our efforts to access the South Korean and Asian markets, which are complex markets, may not be successful or may be hindered or delayed.

If our goodwill and other intangible assets, long-lived assets, inventory or project assets become impaired, we may be required to record a significant charge to ~~earnings.~~operations.

We have in the past recorded charges and may in the future be required to record a significant charge to ~~earnings~~operations in our financial statements should we determine that our goodwill, other indefinite-lived intangible assets (i.e., in process research and development (“IPR&D”)), other long-lived assets (i.e., property, plant and ~~equipment)~~equipment and definite-lived intangible assets), inventory, or project assets are impaired. Such a charge might have a significant impact on our reported financial ~~position~~condition and results of operations.

As required by accounting rules, we review our goodwill for impairment at least annually as of July 31 or more frequently if facts and circumstances indicate that it is more likely than not that the fair value of a reporting unit that has goodwill is less than its carrying value. Factors that may be considered a change in circumstances indicating that the carrying value of our goodwill might not be recoverable include a significant decline in projections of future cash flows and lower future growth rates in our industry. We review IPR&D for impairment on an annual basis as of July 31 or more frequently if facts and circumstances indicate the fair value is less than the carrying value. If the technology has been determined to be abandoned or not recoverable, we would be required to ~~impair~~record a charge reflecting impairment of the asset. We review inventory, long-lived assets and project assets for impairment whenever events or changes in circumstances indicate ~~that~~ the carrying amount may not be recoverable. We consider a project commercially viable and recoverable if itsuch project is anticipated to be sellable for a profit, or generates positive cash flows, in excess of the cost of the project once it is either fully developed or fully constructed. If any of our projects are not considered commercially viable or costs are not deemed to be recoverable, we would be required to ~~impair the respective project assets.~~

The amount of total inventory as of October 31, 2017 and October 31, 2016 was $74.5 million and $73.8 million, respectively, which includes work in process inventory totaling $54.4 million and $48.5 million, respectively. We have recently reduced our production rate and expect to operate at a lower level for a period of time in order to deploy inventory to new projects and mitigate future increases in inventory. There is no guarantee, however, that we will be successful in deploying our existing inventory. In addition, there are risks that our inventory could lose some or all of its value due to technological obsolescence, shifts in market demand or other unexpected changes in industry conditions and circumstances. If we are unable to deploy our current inventory consistent with our business plan, we may be required to sell it at a loss, abandon it or recycle it onto different products. These actions would result in a significant charge to earnings. Suchrecord a charge ~~might have a significant impact on our financial position and results~~reflecting the impairment of ~~operations.~~such project assets.

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~~some contracts due to the lack of Congressional ~~appropriations.~~appropriations or early termination.

A portion of our ~~fuel cell~~ revenues ~~have~~has been derived from long-term cooperative agreements and other contracts with the ~~U.S. Department of Energy~~DOE and other U.S. government agencies. These agreements are important to the continued development of our technology and our products. We also contract ~~and partner~~ with private sector companies under certain Advanced Technologies contracts to develop strategically important and complementary offerings.

Generally, our privately funded Advanced Technologies contracts, including our EMRE Joint Development Agreement, and our government research and development contracts are subject to the risk of termination at the convenience of the contracting ~~agency.~~party and may contain certain milestones and deliverables which we may not be able to meet if actual results differ materially from our original estimates. Furthermore, ~~these~~with respect to government-funded contracts, irrespective of the amounts allocated by the contracting agency, such contracts are subject to annual Congressional appropriations and the results of government or agency sponsored reviews and audits of our cost reduction projections and efforts. We can only receive funds under ~~these~~government-funded contracts ultimately made available to us annually by Congress as a result of the appropriations process.

Accordingly, we cannot be sure whether we will receive the full amounts awarded under our privately funded, government research and development or other contracts. ~~Failure~~Termination of the contracts or failure to receive the full amounts under any of our ~~government research and development~~Advanced Technologies contracts could materially and adversely affect our business prospects, results of operations and financial condition.

~~A negative government audit could result in an adverse adjustment of our revenue and costs and could result in civil and criminal penalties.~~

Government agencies, such as the Defense Contract Audit Agency, routinely audit and investigate government contractors. These agencies review a contractor’s performance under its contracts, cost structure, and compliance with applicable laws, regulations, and standards. If the agencies determine through these audits or reviews that we improperly allocated costs to specific contracts, they will not reimburse us for these costs. Therefore, an audit could result in adjustments to our revenue and costs.

Further, although we have internal controls in place to oversee our government contracts, no assurance can be given that these controls are sufficient to prevent isolated violations of applicable laws, regulations and standards. If the agencies determine that we or one of our subcontractors engaged in improper conduct, we may be subject to civil or criminal penalties and administrative sanctions, payments, fines, and suspension or prohibition from doing business with the government, any of which could materially affect our results of operations and financial condition.

~~The U.S. government has certain rights relating to our intellectual property, including the right to restrict or take title to certain patents.~~

Multiple U.S. patents that we own have resulted from government-funded research and are subject to the risk of exercise of “march-in” rights by the government. March-in rights refer to the right of the U.S. government or a government agency to exercise its non-exclusive, royalty-free, irrevocable worldwide license to any technology developed under contracts funded by the government if the contractor fails to continue to develop the technology. These “march-in” rights permit the U.S. government to take title to these patents and license the patented technology to third parties if the contractor fails to utilize the patents.

We are, from time to time depending on our overall employee count, classified for government contracting as a “Large Business”, which could adversely affect our rights to own future patents under Department of Energy (“DOE”)-funded contracts.

We are, from time to time depending on our overall employee count, classified as a “large business” under DOE contracts. This allows us to own the patents that we develop under new DOE contracts if we obtain a waiver from the DOE. A “large business” under applicable government regulations generally consists of more than 500 employees averaged over a one year period. We will not own future patents we develop under new contracts, grants or cooperative agreements funded by the DOE, unless we obtain a patent waiver from the DOE. Should we not obtain a patent waiver and outright ownership, we would nevertheless retain exclusive rights to any such patents, so long as we continue to commercialize the technology covered by the patents.

We cannot assure you that we will enter into business relationships that are consistent with, or sufficient to support, our commercialization plans and our growth strategy or that these relationships will be on terms favorable to us. Even if we enter into these types of relationships, we cannot assure you that the business associates with which we form relationships will focus adequate resources on selling our products or will be successful in selling them. Some of these arrangements have required or will require that we grant exclusive rights to certain companies in defined territories. These exclusive arrangements could result in our being unable to enter into other arrangements at a time when the business associate with which we form a relationship is not successful in selling our products or has reduced its commitment to marketing our products. In addition, future arrangements may also include the issuance of equity and warrants to purchase our equity, which may have an adverse effect on our stock price. To the extent we enter into partnerships or other business relationships, the failure of these partners or other business associates to assist us with the deployment of our products may adversely affect our results of operations and financial condition.

~~We depend on third party suppliers for the development and supply of key raw materials and components for our products.~~

We use various raw materials and components to construct a fuel cell module, including nickel and stainless steel which are critical to our manufacturing process. We also rely on third-party suppliers for the balance-of-plant components in our products. Suppliers must undergo a qualification process, which takes four to twelve months. We continually evaluate new suppliers, and we are currently qualifying several new suppliers. There are a limited number of suppliers for some of the key components of our products. A supplier’s failure to develop and supply components in a timely manner or to supply components that meet our quality, quantity or cost requirements or our technical specifications, or our inability to obtain alternative sources of these components on a timely basis or on terms acceptable to us could harm our ability to manufacture our SureSource products. In addition, to the extent the processes that our suppliers use to manufacture components are proprietary, we may be unable to obtain comparable components from alternative suppliers.

We do not know whether we will be able to maintain long-term supply relationships with our critical suppliers or secure new long-term supply relationships, or whether such relationships will be on terms that will allow us to achieve our objectives. Our business prospects, results of operations and financial condition could be harmed if we fail to secure long-term relationships with entities that will supply the required components for our SureSource products.

~~We depend on our intellectual property, and our failure to protect that intellectual property could adversely affect our future growth and success.~~

Failure to protect our existing intellectual property rights may result in the loss of our exclusivity or the right to use our technologies. If we do not adequately ensure our freedom to use certain technology, we may have to pay others for rights to use their intellectual property, pay damages for infringement or misappropriation, or be enjoined from using such intellectual property. We rely on patent, trade secret, trademark and copyright law to protect our intellectual property. In addition, we have licensed our carbonate fuel cell manufacturing intellectual property to POSCO Energy, and we depend on POSCO Energy to also protect our intellectual property rights as licensed. As of October 31, 2017, we, excluding our subsidiaries, had 92 U.S. patents and 106 patents in other jurisdictions covering our fuel cell technology (in certain cases covering the same technology in multiple jurisdictions), with patents directed to various aspects of our SureSource technology, SOFC technology, PEM fuel cell technology and applications thereof. As of October 31, 2017, we also had 30 patent applications pending in the U.S. and 93 patent applications pending in other jurisdictions. Our U.S. patents will expire between 2018 and 2035, and the current average remaining life of our U.S. patents is approximately 9.2 years. Our subsidiary, Versa Power Systems, Ltd., as of October 31, 2017, had 35 U.S. patents and 75 international patents covering the SOFC technology (in certain cases covering the same technology in multiple jurisdictions), with an average remaining U.S. patent life of approximately 6.8 years. As of October 31, 2017, Versa Power Systems, Ltd. also had 4 pending U.S. patent applications and 14 patent applications pending in other jurisdictions. In addition, our subsidiary, FuelCell Energy Solutions, GmbH, has license rights to use FuelCell Energy’s carbonate fuel cell technology, and, as of October 31, 2017, had 2 U.S. patents and 9 patents outside the U.S. for carbonate fuel cell technology licensed from Fraunhofer IKTS.

Some of our intellectual property is not covered by any patent or patent application and includes trade secrets and other know-how that is not able to be patented, particularly as it relates to our manufacturing processes and engineering design. In addition, some of our intellectual property includes technologies and processes that may be similar to the patented technologies and processes of third parties. If we are found to be infringing third-party patents, we do not know whether we will be able to obtain licenses to use such patents on acceptable terms, if at all. Our patent position is subject to complex factual and legal issues that may give rise to uncertainty as to the validity, scope, and enforceability of a particular patent.

We cannot assure you that any of the U.S. or international patents owned by us or other patents that third parties license to us will not be invalidated, circumvented, challenged, rendered unenforceable or licensed to others, or that any of our pending or future patent applications will be issued with the breadth of claim coverage sought by us, if issued at all. In addition, effective patent, trademark, copyright and trade secret protection may be unavailable, limited or not applied for in certain foreign countries.

We also seek to protect our proprietary intellectual property, including intellectual property that may not be patented or able to be patented, in part by confidentiality agreements and, if applicable, inventors’ rights agreements with our subcontractors, vendors, suppliers, consultants, strategic partners and employees. We cannot assure you that these agreements will not be breached, that we will have adequate remedies for any breach or that such persons or institutions will not assert rights to intellectual property arising out of these relationships. Certain of our intellectual property has been licensed to us on a non-exclusive basis from third parties that may also license such intellectual property to others, including our competitors. If our licensors are found to be infringing third-party patents, we do not know whether we will be able to obtain licenses to use the intellectual property licensed to us on acceptable terms, if at all.

If necessary or desirable, we may seek extensions of existing licenses or further licenses under the patents or other intellectual property rights of others. However, we can give no assurances that we will obtain such extensions or further licenses or that the terms of any offered licenses will be acceptable to us. The failure to obtain a license from a third party for intellectual property that we use at present could cause us to incur substantial liabilities and to suspend the manufacture or shipment of products or our use of processes requiring the use of that intellectual property.

While we are not currently engaged in any intellectual property litigation, we could become subject to lawsuits in which it is alleged that we have infringed the intellectual property rights of others or commence lawsuits against others who we believe are infringing our rights or violating their agreements to protect our intellectual property. Our involvement in intellectual property litigation could result in significant expense to us, adversely affecting the development of sales of the challenged product or intellectual property and diverting the efforts of our technical and management personnel, whether or not that litigation is resolved in our favor.

~~Our future success will depend on our ability to attract and retain qualified management, technical, and other personnel.~~

Our future success is substantially dependent on the continued services and performance of our executive officers and other key management, engineering, scientific, manufacturing and operating personnel, particularly Arthur Bottone, our Chief Executive Officer. The loss of the services of any executive officer, including Mr. Bottone, or other key management, engineering, scientific, manufacturing and operating personnel, could materially adversely affect our business. Our ability to achieve our commercialization plans and to increase production at our manufacturing facility in the future will also depend on our ability to attract and retain additional qualified management, technical, manufacturing and operating personnel. Recruiting personnel for the fuel cell industry is competitive. We do not know whether we will be able to attract or retain additional qualified management, technical, manufacturing and operating personnel. Our inability to attract and retain additional qualified management, technical, manufacturing and operating personnel, or the departure of key employees, could materially and adversely affect our development, commercialization and manufacturing plans and, therefore, our business prospects, results of operations and financial condition. In addition, our inability to attract and retain sufficient management, technical, manufacturing and operating personnel to quickly increase production at our manufacturing facility when and if needed to meet increased demand may adversely impact our ability to respond rapidly to any new product, growth or revenue opportunities.

We may rapidly expand our facilities and manufacturing capabilities, accelerate the commercialization of our products and enter a period of rapid growth, which will place a significant strain on our senior management team and our financial and other resources. Any expansion may expose us to increased competition, greater overhead, marketing and support costs and other risks associated with the commercialization of a new product. We would need to obtain sufficient backlog in order to maintain the use of the expanded capacity. Our ability to manage rapid growth effectively will require us to continue to secure adequate sources of capital and financing, improve our operations, improve our financial and management information systems and train, motivate and manage our employees. Difficulties in effectively managing issues presented by such a rapid expansion could harm our business prospects, results of operations and financial condition.

We are subject to various federal, state and local laws and regulations relating to, among other things, land use, safe working conditions, handling and disposal of hazardous and potentially hazardous substances and emissions of pollutants into the atmosphere. In addition, it is possible that industry-specific laws and regulations will be adopted covering matters such as transmission scheduling, distribution, and the characteristics and quality of our products, including installation and servicing. These regulations could limit the growth in the use of carbonate fuel cell products, decrease the acceptance of fuel cells as a commercial product and increase our costs and, therefore, the price of our products. Accordingly, compliance with existing or future laws and regulations could have a material adverse effect on our business prospects, results of operations and financial condition.

Utility companies may resist the adoption of ~~distributed generation~~Distributed Generation and could impose customer fees or interconnection requirements on our customers that could make our products less desirable.

Investor-owned utilities may resist adoption of ~~distributed generation~~Distributed Generation fuel cell plants as such plants are disruptive to the utility business model that primarily utilizes large central generation power plants and associated transmission and distribution. On-site ~~distributed generation~~Distributed Generation that is on the customer-side of the electric meter competes with the utility. Distributed ~~generation~~Generation on the utility-side of the meter generally has power output that is significantly less than central generation power plants and may be perceived by the utility as too small to materially impact its business, limiting its interest. Additionally, perceived technology risk may limit utility interest in stationary fuel cell power plants.

Utility companies commonly charge fees to larger, industrial customers for disconnecting from the electric grid or for having the capacity to use power from the electric grid for back up purposes. These fees could increase the cost to our customers of using our SureSource products and could make our products less desirable, thereby harming our business prospects, results of operations and financial condition.

~~Several U.S. states~~We depend on third party suppliers for the development and supply of key raw materials and components for our products.

We use various raw materials and components to construct a fuel cell module, including nickel and stainless steel that are critical to our manufacturing process. We also rely on third-party suppliers for the BOP components in our products. Suppliers must undergo a qualification process, which takes four to twelve months. We continually evaluate new suppliers, and we are currently qualifying several new suppliers. There are a limited number of suppliers for some of the key components of our products. We do not know whether we will be able to maintain long-term supply relationships with our critical suppliers, or secure new long-term supply relationships on terms that will allow us to achieve our objectives, if at all. A supplier’s failure to develop and supply components in a timely manner or to supply components that meet our quality, quantity or cost requirements or our technical specifications, or our inability to obtain alternative sources of these components on a timely basis or on terms acceptable to us, could each harm our ability to manufacture our SureSource products. In addition, to the extent the processes that our suppliers use to manufacture components are proprietary, we may be unable to obtain comparable components from alternative suppliers, all of which could harm our business prospects, results of operations and financial condition.

We derive significant revenue from contracts awarded through competitive bidding processes involving substantial costs and risks. Our contracted projects may not convert to revenue, and our project awards and sales pipeline may not convert to contracts, which may have ~~created~~a material adverse effect on our revenue and ~~adopted, or are~~cash flows.

We expect a significant portion of the business that we will seek in the foreseeable future will be awarded through competitive bidding against other fuel cell technologies and other forms of power generation. The competitive bidding process involves substantial costs and a number of ~~creating, their own interconnection regulations covering both technical~~risks, including the significant cost and ~~financial requirements~~managerial time to prepare bids and proposals for ~~interconnection~~contracts that may not be awarded to ~~utility grids. Depending on~~us and our failure to accurately estimate the ~~complexities~~resources and costs that will be required to fulfill any contract we win. In addition, following a contract award, we may encounter significant expense, delay or contract modifications or award revocation as a result of our competitors protesting or challenging contracts awarded to us in competitive bidding. Our failure to compete effectively in this procurement environment could adversely affect our revenue and/or profitability.

Some of the ~~requirements, installation~~project awards we receive and orders we accept from customers require certain conditions or contingencies (such as permitting, interconnection, financing or regulatory approval) to be satisfied, some of which are outside of our ~~systems~~control. Certain awards are cancelable or revocable at any time prior to contract execution. The time periods from receipt of an award to execution of a contract, or receipt of a contract to installation may ~~become burdened with additional costs~~vary widely and are determined by a number of factors, including the terms of the award, governmental policies or regulations that ~~might~~go into effect after the award, the terms of the customer contract and the customer’s site requirements. These same or similar conditions and contingencies may be required by financiers in order to draw on financing to complete a project. If these conditions or contingencies are not satisfied, or changes in laws affecting project awards occur, or awards are revoked or cancelled, project awards may not convert to contracts, and installations may be delayed or canceled. This could have ~~a negative~~an adverse impact on our revenue and cash flow and our ability to ~~sell systems. The Institute~~complete construction of ~~Electrical~~a project.

We have signed product sales contracts, EPCs, PPAs and ~~Electronics Engineers has been working~~long-term service agreements with customers subject to ~~create an interconnection standard addressing~~contractual, technology, operating and commodity risks as well as market conditions that may affect our operating results.

We apply the ~~technical requirements for distributed generation~~transfer of control over time revenue recognition method under Accounting Standards Codification Topic 606: Revenue from Contracts with Customers to ~~interconnect~~certain service contracts which are subject to ~~utility grids. Many parties are hopeful that this standard will be adopted nationally~~estimates. On a quarterly basis, we perform a review process to help ~~reduce~~ensure that total estimated contract costs include estimates of costs to complete that are based on the ~~barriers~~most recent available information. The amount of costs incurred on a cumulative to ~~deployment~~date basis as a function of ~~distributed generation such~~estimated costs at completion is applied to contract consideration to determine the cumulative revenue that should be recognized to date.

In certain instances, we have executed PPAs with the utility, end-user of the power or site host of the fuel cell power plant. We may then sell the PPA and power plant to a project investor or retain the project and collect revenue from the sale of power over the term of the PPA, recognizing electricity revenue as power is generated and sold. Our growing portfolio of project assets used to generate and sell power under PPAs and utility tariff programs exposes us to operational risks and uncertainties, including, among other things, lost revenues due to prolonged outages, replacement equipment costs, risks associated with facility start-up operations, failures in the availability or acquisition of fuel, ~~cells; however, this standard~~the impact of severe adverse weather conditions, natural disasters, terrorist attacks, cybersecurity attacks, risks of property damage or injury from energized equipment, availability of adequate water resources and ability to intake and discharge water, use of new or unproven technology, fuel commodity price risk and fluctuating market prices, and lack of alternative available fuel sources.

We have contracted under long-term service agreements with certain customers to provide service on our products over terms up to 20 years. Under the provisions of these contracts, we provide services to maintain, monitor, and repair customer power plants to meet minimum operating levels. Pricing for service contracts is based upon estimates of future costs including future module replacements. While we have conducted tests to determine the overall life of our products, we have not run certain of our products over their projected useful life or in all potential conditions prior to large scale commercialization. As a result, we cannot be sure that these products will last to their expected useful life or perform as anticipated in all conditions, which could result in warranty claims, performance penalties, maintenance and module replacement costs in excess of our estimates, losses on service contracts and/or a negative perception of our products.

Our ability to proceed with projects under development and complete construction of projects on schedule and within budget may be adversely affected by escalating costs for materials, tariffs, labor and regulatory compliance, inability to obtain necessary permits, interconnections or other approvals on acceptable terms or on schedule and by other factors. If any development project or construction is not completed, is delayed or is subject to cost overruns, we could become obligated to make delay or termination payments or become obligated for other damages under contracts, experience diminished returns or write off all or a portion of our capitalized costs in the project. Each of these events could have an adverse effect on our business, financial condition, results of operations and prospects.

We extend product warranties for our products, which products are complex and could contain defects and may not ~~be adopted nationally thereby limiting~~operate at expected performance levels, which could impact sales and market adoption of our products, affect our operating results or result in claims against us.

We develop complex and evolving products and we continue to advance the ~~commercial prospects and profitability~~capabilities of our fuel cell ~~systems.~~

stacks and are now producing stacks in the United States with a net rated power output of 350 kilowatts and an expected seven-year life. We ~~could~~provide for a warranty of our products for a specific period of time against manufacturing or performance defects. We accrue for warranty costs based on historical warranty claim experience; however, actual future warranty expenses may be ~~liable for environmental damages resulting~~greater than we have assumed in our estimates. We are still gaining field operating experience with respect to our products, and despite experience gained from our ~~research, development~~growing installed base and testing performed by us, our customers and our suppliers, issues may be found in existing or ~~manufacturing operations.~~

~~Our business exposes us to the risk of harmful substances escaping into the environment, resulting~~new products. This could result in ~~personal injury~~a delay in recognition or loss of ~~life, damage~~revenues, loss of market share or failure to achieve broad market acceptance. The occurrence of defects could also cause us to incur significant warranty, support and repair costs in excess of our estimates, could divert the attention of our engineering personnel from our product development efforts, and could harm our relationships with our customers. Although we seek to limit our liability, a product liability claim brought against us, even if unsuccessful, would likely be time consuming, could be costly to defend, and may hurt our reputation in the marketplace. Our customers could also seek and obtain damages from us for their losses.

We currently face and will continue to face significant competition, including from products using other energy sources that may be lower priced or have preferred environmental characteristics.

We compete on the basis of our products’ reliability, efficiency, environmental considerations and cost. Technological advances in alternative energy products, improvements in the electric grid or other sources of power generation that use lower priced fuel or no fuel, or other fuel cell technologies may negatively affect the development or sale of some or all of our products or make our products less economically attractive, non- competitive or obsolete prior to or ~~destruction~~after commercialization. Significant decreases in the price of ~~property,~~alternative technologies or grid delivered electricity, or significant increases in the price of our fuels could have a material adverse effect on our business because other generation sources could be more economically attractive to consumers than our products. Additionally, in certain markets, consumers and ~~natural resource damage. Depending~~regulators have expressed a preference for zero-carbon generating resources over fueled resources, which could adversely affect sales of our products in such markets.

Other companies, some of which have substantially greater resources than ours, are currently engaged in the development of products and technologies that are similar to, or may be competitive with, our products and technologies. Several companies in the U.S. are engaged in fuel cell development, although we are the only domestic company engaged in manufacturing and deployment of stationary Carbonate Fuel Cells. Other emerging fuel cell technologies (and the companies developing them) include small or portable PEM fuel cells (Ballard Power Systems, Plug Power, and increasing activity by numerous automotive companies including Toyota, Hyundai, Honda and GM), stationary phosphoric acid fuel cells (Doosan), stationary Solid Oxide Fuel Cells (Bloom Energy and Doosan), and small residential Solid Oxide Fuel Cells (Ceres Power Holdings and Ceramic Fuel Cells Ltd.). Each of these competitors has the potential to capture market share in our target markets. There are also other potential fuel cell competitors internationally that could capture market share.

Other than fuel cell developers, we must also compete with companies that manufacture combustion-based distributed power equipment, including various engines and turbines, and have well-established manufacturing, distribution, operating and cost features. Electrical efficiency of these products can be competitive with our SureSource power plants in certain applications. Significant competition may also come from gas turbine companies and large scale solar and wind technologies.

Our plans are dependent upon market acceptance of, as well as enhancements to, our products. Fuel cell systems represent an emerging market, and we cannot be sure that potential customers will accept fuel cells as a replacement for traditional power sources or non-fuel based power sources, hydrogen generation sources or storage. As is typical in a rapidly evolving industry, demand and market acceptance for recently introduced products and services are subject to a high level of uncertainty and risk. Since the ~~nature~~Distributed Generation, hydrogen and storage markets are still evolving, it is difficult to predict with certainty the size of these markets and their growth rates. The development of a market for our products may be affected by many factors that are out of our control, including:

If a sufficient market fails to develop or develops more slowly than we anticipate, we may be unable to recover the ~~claim, our current insurance policies may not adequately reimburse us for costs~~losses we will have incurred in settling environmental damage claims, and in some instances, we may not be reimbursed at all. Our business is subject to numerous federal, state, and local laws and regulations that govern environmental protection and human health and safety. We believe thatthe development of our businesses are operating in compliance in all material respects with applicable environmental laws, however, these laws and regulations have changed frequently in the past and it is reasonable to expect additional and more stringent changes in the future.

~~Our operations may not comply with future laws and regulations~~products, and we may be required to make significant unanticipated capital and operating expenditures. If we fail to comply with applicable environmental laws and regulations, governmental authorities may seek to impose fines and penalties on us or to revoke or deny the issuance or renewal of operating permits and private parties may seek damages from us. Under those circumstances, we might be required to curtail or cease operations, conduct site remediation or other corrective action, or pay substantial damage claims.never achieve profitability.

Our products use inherently dangerous, flammable fuels, operate at high temperatures and use corrosive carbonate material, each of which could subject our business to product liability claims.

Our business exposes us to potential product liability claims that are inherent in products that use hydrogen. Our products utilize fuels such as natural gas and convert these fuels internally to hydrogen that is used by our products to generate electricity. ~~The~~Although our platforms do not combust fuels for the generation of electricity, the fuels we use are combustible and may be toxic. In addition, our SureSource products operate at high temperatures and use corrosive carbonate material, which could expose us to potential liability claims. Although we have incorporated a robust design and redundant safety features in our power plants, have established comprehensive safety, maintenance, and training programs, follow third-party certification protocols, codes and standards, and do not store natural gas or hydrogen at our power plants, we cannot guarantee that there will not be accidents. Any accidents involving our products or other hydrogen-using products could materially impede widespread market acceptance and demand for our products. In addition, we might be held responsible for damages beyond the scope of our insurance coverage. We also cannot predict whether we will be able to maintain adequate insurance coverage on acceptable terms.

~~We are subject~~Risks Related to ~~risks inherent in international operations.~~Privacy, Data Protection and Cybersecurity

Since we market our products both inside and outside the U.S., our success depends in part on our ability to secure international customers and our ability to manufacture products that meet foreign regulatory and commercial requirements in target markets. Sales to customers located outside the U.S. accounts for a significant portion of our consolidated revenue. Sales to customers in South Korea represent the majority of our international sales. We have limited experience developing and manufacturing our products to comply with the commercial and legal requirements of international markets. In addition, we are subject to tariff regulations and requirements for export licenses, particularly with respect to the export of some of our technologies. We face numerous challenges in our international expansion, including unexpected changes in regulatory requirements and other geopolitical risks, fluctuations in currency exchange rates, longer accounts receivable requirements and collections, difficulties in managing international operations, potentially adverse tax consequences, restrictions on repatriation of earnings and the burdens of complying with a wide variety of international laws. Any of these factors could adversely affect our results of operations and financial condition.

Although our reporting currency is the U.S. dollar, we conduct our business and incur costs in the local currency of most countries in which we operate. As a result, we are subject to currency translation and transaction risk. Joint ventures or other business arrangements with strategic partners outside of the United States have involved and are expected in the future to involve investments denominated in the local currency. Changes in exchange rates between foreign currencies and the U.S. dollar could affect our net sales and cost of sales and could result in exchange gains or losses. We cannot accurately predict the impact of future exchange rate fluctuations on our results of operations.

We could also expand our business into new and emerging markets, many of which have an uncertain regulatory environment relating to currency policy. Conducting business in such markets could cause our exposure to changes in exchange rates to increase, due to the relatively high volatility associated with emerging market currencies and potentially longer payment terms for our proceeds. Our ability to hedge foreign currency exposure is dependent on our credit profile with financial institutions that are willing and able to do business with us. Deterioration in our credit position or a significant tightening of the credit market conditions could limit our ability to hedge our foreign currency exposure, and therefore, result in exchange gains or losses.

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.

As an exporter, we must comply with various laws and regulations relating to the export of products, services and technology from the U.S. and other countries having jurisdiction over our operations. We are subject to export control laws and regulations, including the International Traffic in Arms Regulation (“ITAR”), the Export Administration Regulation (“EAR”), and the Specially Designated Nationals and Blocked Persons List, which generally prohibit U.S. companies and their intermediaries from exporting certain products, importing materials or supplies, or otherwise doing business with restricted countries, businesses or individuals, and require companies to maintain certain policies and procedures to ensure compliance. We are also subject to the Foreign Corrupt Practices Act which prohibits improper payments to foreign governments and their officials by U.S. and other business

entities. Under these laws and regulations, U.S. companies may be held liable for their actions and actions taken by their strategic or local partners or representatives. If we, or our intermediaries, fail to comply with the requirements of these laws and regulations, or similar laws of other countries, governmental authorities in the United States or elsewhere, as applicable, could seek to impose civil and/or criminal penalties, which could damage our reputation and have a material adverse effect on our business, financial condition and results of operations.

We are also subject to registration under the U.S. State Department’s Directorate of Defense Trade Controls (“DDTC”). Due to the nature of certain of our products and technology, we must obtain licenses or authorizations from various U.S. government agencies such as DDTC or DOE, before we are permitted to sell such products or license such technology outside of the U.S. We can give no assurance that we will continue to be successful in obtaining the necessary licenses or authorizations or that certain sales will not be prevented or delayed. Any significant impairment of our ability to sell products or license technology outside of the U.S. could negatively impact our results of operations, financial condition or liquidity.

~~We depend on strategic relationships with third parties, and the terms and enforceability of many of these relationships are not certain.~~

We have entered into strategic relationships with third parties for the design, product development, sale and service of our existing products and products under development, some of which may not have been documented by a definitive agreement. The terms and conditions of many of these relationships allow for termination by the third parties. Termination of any of these relationships could adversely affect our ability to design, develop and distribute these products to the marketplace. We cannot assure you that we will be able to successfully negotiate and execute definitive agreements with any of these third parties, and failure to do so may effectively terminate the relevant relationship.

~~If we fail to maintain an effective system of internal controls, we may not be able to accurately report our financial results or prevent fraud, which could harm our brand and operating results.~~

Effective internal controls are necessary for us to provide reliable and accurate financial reports and effectively prevent fraud. We have devoted significant resources and time to comply with the internal control over financial reporting requirements of the Sarbanes-Oxley Act of 2002. In addition, Section 404 under the Sarbanes-Oxley Act of 2002 requires that we assess, and that our auditors attest to, the design and operating effectiveness of our controls over financial reporting. Our compliance with the annual internal control report requirement for each fiscal year will depend on the effectiveness of our financial reporting and data systems and controls. Inferior internal controls could cause investors to lose confidence in our reported financial information, which could have a negative effect on the trading price of our stock and our access to capital.

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.

~~Information~~ and the operations of our power plant platforms. In addition, increased information technology ~~is critically important~~security threats and more sophisticated computer crime pose a risk to our ~~business operations.~~ systems, networks, products and services.

We rely on information technology networks and systems, including the Internet, to process, transmit and store electronic and financial information and to manage a variety of business processes and activities, including communication with power plants owned by us or our customers and production, manufacturing, financial, logistics, sales, marketing and administrative functions. Additionally, we collect and store data that is sensitive to us and to third parties. Operating these information technology networks and systems and processing and maintaining this data, in a secure manner, are critical to our business operations and strategy. We depend on our information technology infrastructure to communicate internally and externally with employees, customers, suppliers and others. We also use information technology networks and systems to comply with regulatory, legal and tax requirements and to operate our fuel cell power plants. These information technology systems, many of which are managed by third parties or used in connection with shared service centers, may be susceptible to damage, disruptions or shutdowns due to failures during the process of upgrading or replacing software, databases or components thereof, power outages, hardware failures, computer viruses, attacks by computer hackers or other cybersecurity risks, telecommunication failures, user errors, natural disasters, terrorist attacks or other catastrophic events. If any of our significant information technology systems suffer severe damage, disruption or shutdown, and our disaster recovery and business continuity plans do not effectively resolve the issues in a timely manner, our product sales, financial condition and results of operations may be materially and adversely affected, and we could experience delays in reporting our financial

results, or our fuel cell power plant operations may be disrupted, exposing us to performance penalties under our contracts with customers.

In addition, information technology security threats — from user error to cybersecurity attacks designed to gain unauthorized access to our systems, networks and data — are increasing in frequency and sophistication. Cybersecurity attacks may range from random attempts to coordinated and targeted attacks, including sophisticated computer crime and advanced persistent threats. These threats pose a risk to the security of our systems and networks and the confidentiality, availability and integrity of our data.

Cybersecurity attacks could also include attacks targeting customer data or the security, integrity and/or reliability of the hardware and software installed in our products. We have experienced, and may continue to experience in the future, cybersecurity attacks that have resulted in unauthorized parties gaining access to our information technology systems and networks and, in one instance, gaining control of the information technology system at one of our power plants. However, to date, no cybersecurity attack has resulted in any material loss of data, interrupted our day-

to-day operations or had a material impact on our financial condition, results of operations or liquidity. While we actively manage information technology security risks within our control, there can be no assurance that such actions will be sufficient to mitigate all potential risks to our systems, networks and data. In addition to the direct potential financial risk as we continue to build, own and operate generation assets, other potential consequences of a material cybersecurity attack include reputational damage, litigation with third parties, disruption to systems, unauthorized release of confidential or otherwise protected information, corruption of data, diminution in the value of our investment in research, development and engineering, and increased cybersecurity protection and remediation costs, which in turn could adversely affect our competitiveness, results of operations and financial condition. The amount of insurance coverage we maintain may be inadequate to cover claims or liabilities relating to a cybersecurity attack.

Additionally, the legal and regulatory environment surrounding information security and privacy in the U.S. and international jurisdictions is constantly evolving. Violation or non-compliance with any of these laws or regulations, contractual requirements relating to data security and privacy, or our own privacy and security policies, either intentionally or unintentionally, or through the acts of intermediaries could have a material adverse effect on our brand, reputation, business, financial condition and results of operations, as well as subject us to significant fines, litigation losses, third-party damages and other liabilities.

We are required to maintain effective internal control over financial reporting. Our management previously identified a material weakness in our internal control over financial reporting that has been remediated. If 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.

We are required, pursuant to Section 404 of the Sarbanes-Oxley Act (“Section 404”), to furnish a report by management on, among other things, the effectiveness of our internal control over financial reporting. Complying with Section 404 requires a rigorous compliance program as well as adequate time and resources. We may not be able to complete our internal control evaluation, testing and any required remediation in a timely fashion. Additionally, if we identify one or more material weaknesses in our internal control over financial reporting, we will not be able to assert that our internal controls are effective. A material weakness is a deficiency, or combination of deficiencies, in internal control over financial reporting, such that there is a reasonable possibility that a material misstatement of our annual or interim financial statements will not be prevented or detected on a timely basis.

We initially disclosed in our Form 10-Q for the quarter ended April 30, 2019 that we did not have resources to sufficiently address asset impairments on a timely basis or the accounting considerations and disclosures related to our amended credit facilities. As a result, we concluded that there was a material weakness in internal control over financial reporting, as we did not maintain effective controls over the accounting for and disclosures in the consolidated financial statements related to asset impairments and credit facilities. As disclosed in our Annual Report on Form 10-K for the fiscal year ended October 31, 2019, this control deficiency was not remediated as of October 31, 2019 and we further identified that we did not have resources to sufficiently address certain other non-routine transactions and disclosures. This material weakness resulted in material misstatements that were corrected in the 2019 consolidated financial statements prior to issuance. This material weakness was remediated as of October 31, 2020.

We cannot be certain that other material weaknesses and control deficiencies will not occur in the future. If other material weaknesses are identified in the future, or if we are not able to comply with the requirements of Section 404 in a timely manner, our reported financial results could be materially misstated and we could be subject to investigations or sanctions by regulatory authorities, which would require additional financial and management resources, and the value of our common stock could decline.

To the extent we identify future weaknesses or deficiencies, there could be material misstatements in our consolidated financial statements and we could fail to meet our financial reporting obligations. As a result, our ability to obtain additional financing on favorable terms or at all could be materially and adversely affected which, in turn, could materially and adversely affect our business, our financial condition and the value of our common stock. If we are unable to assert that our internal control over financial reporting is effective in the future, investor

confidence in the accuracy and completeness of our financial reports could be further eroded, which would have a material adverse effect on the price of our common stock.

Our results of operations could vary as a result of changes to our accounting policies or the methods, estimates and judgments we use in applying our accounting policies.

The methods, estimates and judgments we use in applying our accounting policies have a significant impact on our results of operations. Such methods, estimates and judgments are, by their nature, subject to substantial risks, uncertainties and assumptions, and factors may arise over time that could lead us to reevaluate our methods, estimates and judgments.

In future periods, management will continue to reevaluate its estimates for contract margins, service agreements, loss accruals, warranty, performance guarantees, liquidated damages and inventory valuation allowances. Changes in those estimates and judgments could significantly affect our results of operations and financial condition. We ~~may~~will also adopt changes required by the Financial Accounting Standards Board and the ~~Securities~~SEC.

We may be affected by environmental and ~~Exchange Commission.~~other governmental regulation.

~~The market price for our common stock has been and may continue to be volatile and~~We are subject to ~~extreme price~~various federal, state and ~~volume fluctuations~~local laws and regulations relating to, among other things, land use, safe working conditions, handling and disposal of hazardous and potentially hazardous substances and emissions of carbon dioxide and pollutants into the atmosphere. Our business exposes us to the risk of harmful substances escaping into the environment, resulting in ~~response to market and other factors, including the following, some of which are beyond our control:~~

In the past, following periods of volatility in the market price of their stock, many companies have been the subject of securities class action litigation. If we became involved in securities class action litigation in the future, it could result in substantial costs and diversion of management’s attention and resources and could harm our stock price, business prospects, results of operations and financial condition.

~~Provisions~~ If we fail to comply with applicable environmental laws and regulations, governmental authorities may seek to impose fines and penalties on us or to revoke or deny the issuance or renewal of ~~Delaware~~operating permits and ~~Connecticut law and~~private parties may seek damages from us. Under those circumstances, we might be required to curtail or cease operations, conduct site remediation or other corrective action, or pay substantial damage claims.

Given that some of our ~~charter and by-laws~~product configurations run on fossil fuels, we may be negatively impacted by CO₂-related changes in applicable laws, regulations, ordinances, rules or the requirements of the incentive programs on which we and our ~~outstanding securities may make a takeover more difficult.~~

~~Provisions~~customers currently rely. Changes in any of the laws, regulations, ordinances or rules that apply to our ~~certificate of incorporation~~installations and ~~by-laws and in Delaware and Connecticut corporate law may~~new technology could make it ~~difficult~~illegal or more costly for us or our customers to install and ~~expensive for~~operate our products at particular sites. Additionally, our customers and potential customers’ energy procurement policies may prohibit or limit their willingness to procure our products. Our business prospects may be negatively impacted if we are prevented from completing new installations or our installations become more costly as a ~~third-party~~result of laws, regulations, ordinances, or rules applicable to ~~pursue a tender offer, change in control~~our products, or ~~takeover attempt that is opposed~~ by our ~~management~~customers’ and ~~board of directors.~~ potential customers’ energy procurement policies.

In addition, certain ~~provisions~~ of ~~the FCE FuelCell Energy, Ltd. Series 1 Preferred Shares,~~ our Series B preferred stock and our Series C Preferred Shares could make it more difficult or more expensive for a third party to acquire us. Public stockholders who might desire to participate in such a transaction may not have an opportunity to do so. These anti-takeover provisions could substantially impede the ability of public stockholders toproducts benefit from federal, state and local governmental incentives, mandates or other programs promoting clean energy generation. Any changes to or termination of these programs could reduce demand for our products, impair sales financing, and adversely impact our business results.

A negative government audit could result in an adverse adjustment of our revenue and costs and could result in civil and criminal penalties.

Government agencies, such as the Defense Contract Audit Agency, routinely audit and investigate government contractors. These agencies review a ~~change~~contractor’s performance under its contracts, cost structure, and compliance

with applicable laws, regulations, and standards. If the agencies determine through these audits or reviews that we improperly allocated costs to specific contracts, they will not reimburse us for these costs. Therefore, an audit could result in ~~control~~adjustments to our revenue and costs.

Further, although we have internal controls in place to oversee our government contracts, no assurance can be given that these controls are sufficient to prevent isolated violations of applicable laws, regulations and standards. If the agencies determine that we or ~~change~~one of our subcontractors engaged in ~~our management~~improper conduct, we may be subject to civil or criminal penalties and ~~board~~administrative sanctions, payments, fines, and suspension or prohibition from doing business with the government, any of ~~directors.~~

~~Our amended and restated by-laws provide that the Court of Chancery of the State of Delaware is the exclusive forum for substantially all disputes between us and our stockholders,~~ which could ~~limit our stockholders’ ability to obtain a judicial forum deemed favorable by the stockholder for disputes with us or our directors, officers or employees.~~

Our amended and restated by-laws provide that the Court of Chancery of the State of Delaware is the exclusive forum for any derivative action or proceeding brought on our behalf, any action asserting a breach of fiduciary duty, any action asserting a claim against us arising pursuant to the Delaware General Corporation Law, our certificate of incorporation or our amended and restated by-laws, any action to interpret, apply, enforce, or determine the validity of our certificate of incorporation or amended and restated by-laws, or any action asserting a claim against us that is governed by the internal affairs doctrine. The choice of forum provision may limit a stockholder’s ability to bring a claim in a judicial forum that the stockholder finds favorable for disputes against us or our directors, officers or other employees, which may discourage such lawsuits against us and our directors, officers and other employees. Alternatively, if a court were to find the choice of forum provision contained in our amended and restated by-laws to be inapplicable or unenforceable in an action, we may incur additional costs associated with resolving such action in other jurisdictions, which could adverselymaterially affect our ~~business~~results of operations and financial condition.

~~The implementation~~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.

As an exporter, we must comply with various laws and regulations relating to the export of products, services and technology from the U.S. and other countries having jurisdiction over our operations. We are subject to export control laws and regulations, including the International Traffic in Arms Regulation, the Export Administration Regulation, and the Specially Designated Nationals and Blocked Persons List, which generally prohibit U.S. companies and their intermediaries from exporting certain products, importing materials or supplies, or otherwise doing business ~~plan~~with restricted countries, businesses or individuals, and ~~strategy will~~ require ~~additional capital.~~

~~The implementation~~companies to maintain certain policies and procedures to ensure compliance. We are also subject to the Foreign Corrupt Practices Act, which prohibits improper payments to foreign governments and their officials by U.S. and other business entities. Under these laws and regulations, U.S. companies may be held liable for their actions and actions taken by their strategic or local partners or representatives. If we, or our intermediaries, fail to comply with the requirements of these laws and regulations, or similar laws of other countries, governmental authorities in the United States or elsewhere, as applicable, could seek to impose civil and/or criminal penalties, which could damage our reputation and have a material adverse effect on our business, ~~plan~~financial condition and ~~strategy requires additional capital. If we are unable~~results of operations.

Risks Related to raise additional capital in the amounts required, or at all, we will not be able to successfully implement our business plan and strategy. There can be no guarantee that we will be able to raise such additional capital at the times required or in the amounts requiredOur Need for the implementation of our business plan and strategy. In addition, the recent change to a more capital-intensive business model increases the risks of our being able to successfully implement our plans, if we do not raise additional capital in the amounts required. If we are unable to raise additional capital, our business, operations and prospects could be materially and adversely affected.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.

~~We will need~~The implementation of our business plan and strategy requires additional capital to fund operations as well as investment by us in project assets. If we are unable to raise additional ~~funds~~capital in ~~debt and equity financings, and these funds may~~the amounts required, on terms acceptable to us, or at all, we will not be ~~available~~able to ~~us when~~successfully implement our business plan and strategy. Our capital-intensive business model increases the risks of our being able to successfully implement our plans, if we ~~need them or on acceptable terms,~~do not raise additional capital in the amounts required.

In addition, if ~~at all. Such additional financings could be significant. If~~ we raise additional funds through further issuances of our common stock, or securities convertible into or exchangeable ~~into~~for shares of our common stock, into the public market, including shares of our common stock issued upon exercise of options or warrants, ~~you~~holders of our common stock could suffer significant dilution, and any new equity securities we issue could have rights, preferences and privileges superior to those of our then-existing capital stock. Any debt financing secured by us in the future could involve restrictive covenants relating to our capital raising activities and other financial and operational matters, which may make it more difficult for us to obtain additional capital and to pursue business opportunities. If we cannot raise additional funds when we need them, our business and prospects could fail or be materially and adversely affected. In addition, if additional funds are not secured in the future, we will have to modify, reduce, defer or eliminate parts of our present and anticipated future ~~projects.~~projects, or sell some or all of our assets.

We depend on our intellectual property, and our failure to protect that intellectual property could adversely affect our future growth and success.

We previously licensed certain of our Carbonate Fuel Cell manufacturing intellectual property to POSCO Energy on an exclusive basis in the South Korean and broader Asian markets, but we terminated our license agreements with POSCO Energy on June 28, 2020, which termination POSCO Energy is disputing. In addition, effective as of June 11, 2019, we entered into the EMRE License Agreement, pursuant to which we agreed, subject to the terms of the EMRE License Agreement, to grant EMRE and its affiliates a non-exclusive, worldwide, fully paid, perpetual, irrevocable, non-transferrable license and right to use our patents, data, know-how, improvements, equipment designs, methods, processes and the like to the extent it is useful to research, develop, and commercially exploit Carbonate Fuel Cells in applications in which the fuel cells concentrate carbon dioxide from industrial and power sources and for any other purpose attendant thereto or associated therewith. Such right and license is sublicensable to third parties performing work for or with EMRE or its affiliates, but shall not otherwise be sublicensable. Furthermore, on November 5, 2019, we entered into the EMRE Joint Development Agreement, pursuant to which we agreed to grant EMRE and its affiliates a worldwide, non-exclusive, royalty- free, irrevocable, perpetual, sub-licensable, non-transferable (subject to certain exceptions) right and license to practice certain Company background intellectual property (to the extent not already licensed pursuant to the EMRE License Agreement) for new Carbonate Fuel Cell technology in Carbon Capture applications and hydrogen applications. We depend on POSCO Energy and EMRE to also protect our intellectual property rights, but we cannot assure you that POSCO Energy or EMRE will do so. For example, we have filed a demand for arbitration against POSCO Energy in the International Court of Arbitration of the International Chamber of Commerce based, in part, on POSCO Energy’s disclosure of our proprietary information to third parties.

As of October 31, 2020, we (excluding our subsidiaries) had 102 U.S. patents and 186 patents in other jurisdictions covering our fuel cell technology (in certain cases covering the same technology in multiple jurisdictions), with patents directed to various aspects of our SureSource technology, SOFC technology, PEM fuel cell technology and applications thereof. As of October 31, 2020, we also had 55 patent applications pending in the U.S. and 107 patent applications pending in other jurisdictions. Our U.S. patents will expire between 2021 and 2039, and the current average remaining life of our U.S. patents is approximately 9.5 years. As of October 31, 2020, our subsidiary, Versa Power Systems, Ltd., had 32 U.S. patents and 93 international patents covering SOFC technology (in certain cases covering the same technology in multiple jurisdictions), with an average remaining U.S. patent life of approximately 4.7 years. As of October 31, 2020, Versa Power Systems, Ltd. also had 3 pending U.S. patent applications and 14 patent applications pending in other jurisdictions. In addition, as of October 31, 2020, our subsidiary, FuelCell Energy Solutions, GmbH, had license rights to 2 U.S. patents and 7 patents outside the U.S. for Carbonate Fuel Cell technology licensed from Fraunhofer IKTS.

Some of our intellectual property is not covered by any patent or patent application and includes trade secrets and other know-how that is not able to be patented, particularly as it relates to our manufacturing processes and engineering design. In addition, some of our intellectual property includes technologies and processes that may be similar to the patented technologies and processes of third parties. If we are found to be infringing, misappropriating or otherwise violating third-party intellectual property, we do not know whether we will be able to obtain licenses to use such intellectual property on acceptable terms, if at all. Our patent position is subject to complex factual and legal issues that may give rise to uncertainty as to the validity, scope, and enforceability of a particular patent.

We cannot assure you that any of the U.S. or international patents owned by us (including our subsidiaries) or other patents that third parties license to us will not be invalidated, circumvented, challenged, rendered unenforceable or licensed to others, or that any of our owned or licensed pending or future patent applications will be issued with the breadth of claim coverage sought by us or our licensors, if issued at all. In addition, effective patent, trademark, copyright and trade secret protection may be unavailable, limited or not applied for in certain foreign countries.

We also seek to protect our proprietary intellectual property, including intellectual property that may not be patented or able to be patented, in part by confidentiality agreements and, if applicable, inventors’ rights agreements with our subcontractors, vendors, suppliers, consultants, strategic business associates and employees. We cannot assure you that these agreements will not be breached, that we will have adequate remedies for any breach or that such persons or institutions will not assert rights to intellectual property arising out of these relationships. Certain of our intellectual property has been licensed to us on a non-exclusive basis from third parties that may also license such intellectual property to others, including our competitors. If our licensors are found to be infringing, misappropriating or otherwise violating third-party intellectual property, we do not know whether we will be able to obtain licenses to use the intellectual property licensed to us on acceptable terms, if at all.

If necessary or desirable, we may seek extensions of existing licenses or further licenses under the patents or other intellectual property rights of others. However, we can give no assurances that we will obtain such extensions or further licenses or that the terms of any offered licenses will be acceptable to us. The failure to obtain a license from a third party for intellectual property that we use at present could cause us to incur substantial liabilities, and to suspend the manufacture or shipment of products or our use of processes requiring the use of that intellectual property.

While, other than with respect to claims we have made against POSCO Energy in the arbitration for disclosure of our proprietary information to third parties, we are not currently engaged in any intellectual property litigation, we could become subject to lawsuits in which it is alleged that we have infringed, misappropriated or otherwise violated the intellectual property rights of others or commence lawsuits against others who we believe are infringing, misappropriating or otherwise violating our rights or violating their agreements to protect our intellectual property. Our involvement in intellectual property litigation could result in significant expense to us, adversely affecting the development of sales of the challenged product or intellectual property and diverting the efforts of our technical and management personnel, whether or not that litigation is resolved in our favor.

The U.S. government has certain rights relating to our intellectual property, including the right to restrict or take title to certain patents.

The pending legal proceedings with POSCO Energy could expose us to costs of such legal proceedings or an adverse judgment.

From approximately 2007 through 2015, we relied on POSCO Energy to develop and grow the South Korean and Asian markets for our products and services. We entered into the License Agreements with POSCO Energy between February 2007 and October 2012. The License Agreements provided POSCO Energy with the exclusive technology

rights to manufacture, sell, distribute and service our SureSource 300, SureSource 1500 and SureSource 3000 fuel cell technology in the South Korean and broader Asian markets. Due to certain actions and inactions of POSCO Energy, we have not realized any new material revenues, royalties or new projects developed by POSCO Energy since late 2015.

In November 2019, POSCO Energy spun-off its fuel cell business into a new entity, KFC, without our consent. As part of the spin-off, POSCO Energy transferred manufacturing and service rights under the License Agreements to KFC, but retained distribution rights and severed its own liability under the License Agreements. We formally objected to POSCO Energy’s spin-off, and POSCO Energy posted a bond to secure any liabilities to the Company arising out of the spin-off. In September 2020, the Korean Electricity Regulatory Committee found that POSCO Energy’s spin-off of the fuel cell business to KFC may have been done in violation of South Korean law.

the Delaware General Corporation Law and/or Delaware common law. POSCO Energy alleges that it is seeking to inspect these documents for a proper purpose reasonably related to its interests as a stockholder of the Company, including investigating whether the Company’s Board of Directors and its management breached their fiduciary duties of loyalty, due care, and good faith. POSCO Energy seeks an order of the Court permitting POSCO Energy to inspect and copy the demanded books and records, awarding POSCO Energy reasonable costs and expenses, including reasonable attorney’s fees incurred in connection with the matter, and granting such other and further relief as the Court deems just and proper.

We cannot predict the outcome of the arbitration proceedings against POSCO Energy and KFC, the litigation and arbitration proceedings filed by POSCO Energy against us, or any future discussions with, or other actions or legal proceedings against or involving, POSCO Energy or KFC, if they occur, the future status or scope of our relationship with POSCO Energy or KFC, whether our relationship with POSCO Energy or KFC will continue in the future, whether we will become involved in additional mediations, arbitrations, litigation or other proceedings with POSCO Energy or KFC, what the costs of any such current or future proceedings will be or the effect of such current or future proceedings on the market. We also cannot predict collection timing of any receipts which are currently being delayed as a result of these proceedings. Any such current or future proceedings could result in significant expense to us, distract management’s attention from the operation of our business and adversely affect our business and financial condition and reputation in the market, whether or not such proceedings are resolved in our favor.

Additionally, although we believe that termination of the License Agreements affords us with the ability to market our products and services in South Korea and the broader Asian market, POSCO Energy is disputing the termination of the License Agreements, and we cannot predict whether our efforts to access the South Korean and Asian markets, which are complex markets, will be successful or will be limited, hindered or delayed.

The market price for our common stock has been and may continue to be volatile and subject to extreme price and volume fluctuations in response to market and other factors, including the following, some of which are beyond our control:

Our stock price has increased during the past thirteen months from an intra-day low price of $0.48 on December 10, 2019 to an intra-day high price of $20.94 on January 13, 2021. The closing price of our common stock on January 15, 2021 was $15.84. There can be no assurance that the current stock price will be maintained, and it is possible that our stock price could drop significantly. In the past, following periods of volatility in the market price of their stock, companies have been the subject of securities class action litigation. If we become involved in securities class action litigation in the future, it could result in substantial costs and diversion of management’s attention and resources and could harm our stock price, business prospects, results of operations and financial condition.

Future sales of substantial amounts of our common stock could affect the market price of our common stock.

Future sales of substantial amounts of our common stock, or securities convertible into or exchangeable ~~into~~for shares of our common stock, into the public market, including shares of our common stock issued upon exercise of options or warrants, or perceptions that those sales could occur, could adversely affect the prevailing market price of our common stock and our ability to raise capital in the future.

We have a limited number of shares of common stock available for issuance, which will limit our ability to raise equity capital in the future.

We have historically relied on the equity markets to raise capital to fund our business and operations. As of December 31, 2020, excluding 56,411 treasury shares which may be ~~subject~~issued, we had 15,093,242 shares of common stock available for issuance, of which 5,185,674 shares were reserved for issuance under various warrants and equity awards, upon conversion of preferred stock, and under our employee stock purchase and equity incentive plans. As of December 31, 2020, we had 322,406,758 shares of common stock outstanding. Though we may in the future seek stockholder approval to ~~actions for rescission or damages or other penalties~~increase the number of shares of common stock we are authorized to issue under our Certificate of Incorporation, as amended, there can be no assurance we will be successful in ~~connection with certain sales~~obtaining such approval. The limited number of shares of our common stock available for issuance will limit our ability to raise capital in the ~~open market.~~equity markets and satisfy obligations with shares instead of cash, which could adversely affect our business and operations.

~~Between August 2005~~Provisions of Delaware and ~~April 2017, we sold shares~~Connecticut law and of our ~~common stock pursuant~~certificate of incorporation and by-laws may make a takeover more difficult.

Provisions in our Certificate of Incorporation, as amended (“Certificate of Incorporation”), and Amended and Restated By-Laws (“By-laws”) and in Delaware and Connecticut corporate law may make it difficult and expensive for a third-party to pursue a ~~series~~tender offer, change in control or takeover attempt that is opposed by our management and board of ~~“at-the-market” sales plans. The shares sold pursuant~~directors. These anti-takeover provisions could substantially impede the ability of public stockholders to ~~these sales plans represented~~benefit from a ~~portion~~change in control or change in our management and board of directors.

Our By-laws provide that the Court of Chancery of the ~~shares registered~~State of Delaware is the exclusive forum for substantially all disputes between us and our stockholders, which could limit our stockholders’ ability to obtain a judicial forum deemed favorable by the stockholder for disputes with us ~~pursuant to shelf registration statements we filed with~~or our directors, officers or employees.

Our By-laws provide that the ~~SEC during this time period. While we reported~~Court of Chancery of the ~~actual shares sold and proceeds, net~~State of ~~fees,~~Delaware is the exclusive forum for any derivative action or proceeding brought on our behalf, any action asserting a breach of ~~sales made during each fiscal quarter~~fiduciary duty, any action asserting a claim against us arising pursuant to the ~~sales plans in~~Delaware General Corporation Law, our ~~annual and quarterly reports on Forms 10-K and 10-Q, we did not file~~Certificate of Incorporation or ~~deliver prospectus supplements at~~our By-laws, any action to interpret, apply, enforce, or determine the ~~time~~validity of our Certificate of Incorporation or ~~prior to making these sales. Accordingly, these sales may not have been in compliance with applicable federal and/~~By-laws, or ~~state securities laws, and the purchasers of such shares may have rescission rights or claims for damages. In addition, to the extent~~any action asserting a claim against us that ~~these sales were not in compliance with applicable federal and/or state securities laws, we may be subject to penalties imposed~~is governed by the ~~SEC and/or state securities agencies. If purchasers successfully seek rescission and/or damages, and/or~~internal affairs doctrine. The choice of forum

provision may limit a stockholder’s ability to bring a claim in a judicial forum that the ~~SEC and/or state securities agencies impose financial penalties on~~ ~~us which are not covered by insurance,~~ we may not have sufficient resources to make the necessary payments, and any such claims, damages or penalties could have a material adverse effect on our stock price, business prospects, results of operations, and financial condition. ~~Although we believe we would have defenses to such claims or actions if brought, we are unable to predict the likelihood of any claims or actions being brought~~stockholder finds favorable for disputes against us or our directors, officers or other employees, which may discourage such lawsuits against us and our directors, officers and other employees. Alternatively, if a court were to find the ~~amount~~choice of ~~any damages~~forum provision contained in our By-laws to be inapplicable or ~~financial penalties~~unenforceable in such an action, we may incur additional costs associated with resolving such action in other jurisdictions, which could ~~be sought against us, or the extent to which any such~~adversely affect our business and financial ~~exposure would be covered by insurance.~~condition.

The rights of ~~the Series 1 Preferred Shares and~~our Series B ~~preferred stock~~Preferred Stock could negatively impact our cash flows and ~~could~~ dilute the ownership interest of our stockholders.

The terms of ~~the Series 1 Preferred Shares issued by FCE FuelCell Energy, Ltd. (“FCE Ltd.”),~~ our ~~wholly-owned, indirect subsidiary, provide rights to the holder, Enbridge Inc. (“Enbridge”), which could negatively impact us.~~

The provisions of the Series 1 Preferred Shares require that FCE Ltd. make annual payments totaling Cdn. $1,250,000, including (i) annual dividend payments of Cdn. $500,000 and (ii) annual return of capital payments of Cdn. $750,000. These payments will end on December 31, 2020. Additional dividends accrue on cumulative unpaid dividends at a 1.25% quarterly rate, compounded quarterly, until payment thereof. On December 31, 2020, the amount of all accrued and unpaid dividends on the Series 1 Preferred Shares of Cdn. $21.1 million and the balance of the principal redemption price of Cdn. $4.4 million shall be paid to the holders of the Series 1 Preferred Shares. FCE Ltd. has the option of making dividend payments in the form of common stock or cash under the terms of the Series 1 Preferred Shares.

We are also required to issue common stock to the holder of the Series 1 Preferred Shares if and when the holder exercises its conversion rights. The number of shares of common stock that we may issue upon conversion could be significant and dilutive to our existing stockholders. For example, assuming the holder of the Series 1 Preferred Shares exercises its conversion rights after July 31, 2020 and assuming our common stock price is $2.19 (our common stock closing price on October 31, 2017) and an exchange rate of U.S. $1.00 to Cdn. $1.29 at the time of conversion, we would be required to issue approximately 1,657,928 shares of our common stock.

~~The terms of the~~ Series B ~~preferred stock~~Preferred Stock also provide rights to their holders that could negatively impact us. Holders of the Series B ~~preferred stock~~Preferred Stock are entitled to receive cumulative dividends at the rate of $50 per share per year, payable either in cash or in shares of our common stock. To the extent the dividend is paid in shares of our common stock, additional issuances could be dilutive to our existing stockholders and the sale of those shares could have a negative impact on the price of our common stock. A share of our Series B ~~preferred stock, after giving effect to the December 3, 2015 reverse stock split,~~Preferred Stock may be converted at any time, at the option of the holder, into ~~7.0922~~0.5910 shares of our common stock (which is equivalent to an initial conversion price of ~~$141~~$1,692 per share), plus cash in lieu of fractional shares.

Furthermore, the conversion rate applicable to the Series B ~~preferred stock~~Preferred Stock is subject to additional adjustment upon the occurrence of certain events.

~~We may not be able to make cash payments to redeem the Series C Preferred Shares.~~

We have the obligation to make bimonthly redemption payments on the Series C Preferred Shares commencing on November 1, 2017. These mandatory redemption payments may be made, at our option, in cash or in shares of our common stock or in a combination of cash and shares of our common stock, except that our right to make payment in shares of common stock is dependent upon our satisfying certain equity conditions. Among other things, these equity conditions include our continued listing on the NASDAQ Global Market or another permitted exchange and our stock maintaining certain minimum average prices and trading volumes during the applicable measurement period. If we cannot satisfy the equity conditions, we will not be able to make our bimonthly mandatory redemption payments in stock, and we would be forced to make such bimonthly payments in cash. We may not have sufficient cash resources at the applicable time to make those cash payments, or to make such cash payments in full. In addition, certain such cash payments may not permitted under the terms of our existing or future indebtedness or may cause us to fail to satisfy financial maintenance covenants.

Further, any failure to pay any amounts due to the holders of the Series C Preferred Shares, as well as certain other “triggering events,” including, without limitation, our failure to timely deliver shares, our suspension of trading, our failure to keep reserved for issuance an adequate number of shares of common stock to cover conversion of the Series C Preferred Shares, and breaches of certain covenants that are not timely cured, where a cure period is permitted, would permit the holders of the Series C Preferred Shares to require us to redeem such Series C Preferred Shares in cash at a price equal to the greater of (i) 125% of the stated value of the Series C Preferred Shares being redeemed plus accrued dividends, if any, and (ii) the market value of the number of shares issuable on conversion of the Series C Preferred Shares, valued at the greatest closing sales price during the period from the date immediately before the triggering event through the date we make the redemption payment. However, if we are actually delisted from The NASDAQ Global Market, without obtaining a listing on another national securities exchange, it would constitute a “triggering event” under the Certificate of Designations for the Series C Preferred Shares and would also cause a failure of the equity conditions. Thus, if we fail to maintain trading or listing, as applicable, or if for any other reason we are required to repurchase the Series C Preferred Shares in cash prior to maturity, no assurance can be given that we would have the cash or financial resources available to us to make such a payment, and such an acceleration could have a material adverse effect on our business, results of operations and financial condition.

The Series CB Preferred ~~Shares rank~~Stock ranks senior to our common stock with respect to ~~dividends, distributions and~~ payments upon ~~liquidation.~~liquidation, dividends, and distributions.

The rights of the holders of ~~the~~our Series CB Preferred ~~Shares~~Stock rank senior to ~~the~~our obligations to our common ~~stockholders and our other preferred~~ stockholders. Upon our liquidation, the holders of Series CB Preferred ~~Shares~~Stock are entitled to receive ~~an amount per Series C Preferred Share equal to the greater of (A) the stated value thereof on the date of such payment, plus accrued dividends, if any and (B) the amount~~$1,000.00 per share ~~such holder would receive if such holder converted such Series C Preferred Shares into common stock immediately prior to the date of such payment. Further,~~plus all accumulated and unpaid dividends (the “Liquidation Preference”). Until the holders of Series CB Preferred ~~Shares have~~Stock receive the ~~right~~Liquidation Preference with respect to ~~participate~~their shares of Series B Preferred Stock in full, no payment will be made on any ~~payment~~junior shares, including shares of ~~dividends or other distributions made to the holders of~~our common ~~stock to the same extent as if they had converted such Series C Preferred Shares.~~stock. The existence of senior securities such ~~a senior security~~as the Series B Preferred Stock could have an adverse effect on the value of our common stock.

Litigation could expose us to significant costs and adversely affect our business, financial condition, and results of operations.

We are, or may become, party to various lawsuits, arbitrations, mediations, regulatory proceedings and claims, which may include lawsuits, arbitrations, mediations, regulatory proceedings or claims relating to commercial liability, product recalls, product liability, product claims, employment matters, environmental matters, breach of contract, intellectual property, indemnification, stockholder suits, derivative actions or other aspects of our business. Litigation (including the ~~Series C Preferred Shares~~other types of proceedings identified above) is inherently unpredictable, and although we may believe we have ~~rights~~meaningful defenses in these matters, we may incur judgments or enter into settlements of claims that could have a material adverse effect on our business, financial condition, and results of operations. The costs of responding to or defending litigation may be significant and may divert the attention of management away from our strategic objectives. There may also be adverse publicity associated with litigation that may decrease customer confidence in our business or our management, regardless of whether the allegations are valid or whether we are ultimately found liable.

Financial markets worldwide have experienced heightened volatility and instability which may have a material adverse impact on our Company, our customers and our suppliers.

Our future success will depend on our ability to ~~operate~~attract and retain qualified management, technical, and other personnel.

Our future success is substantially dependent on the services and performance of our ~~business.~~

~~Under the Certificate of Designations establishing the terms~~executive officers and other key management, engineering, scientific, manufacturing and operating personnel. The loss of the ~~Series C Preferred Shares,~~services of any such personnel could materially adversely affect our business. Our ability to achieve our commercialization plans and to increase production at our manufacturing facility in the future will also depend on our ability to attract and retain additional qualified personnel, and we cannot assure you that we will be able to do so. Recruiting personnel for the fuel cell industry is competitive. Our inability to attract and retain additional qualified personnel, or the departure of key employees, could materially and adversely affect our development, commercialization and manufacturing plans and, therefore, our business prospects, results of operations and financial condition. In addition, our inability to attract and retain sufficient personnel to quickly increase production at our manufacturing facility when and if needed to meet increased demand may adversely impact our ability to respond rapidly to any new product, growth or revenue opportunities. Our inability to attract and retain sufficient qualified personnel to staff our government or third party funded research contracts may result in our inability to complete such contracts or terminations of such contracts, which may adversely impact financial conditions and results of operations.

Since we market our products both inside and outside the U.S., our success depends in part on our abilitytosecureinternationalcustomersandourabilitytomanufactureproductsthatmeetforeignregulatory and commercial requirements in target markets. We have limited experience developing and manufacturing our products to comply with the commercial and legal requirements of international markets. In addition, we are subject to ~~certain covenants that limit our ability to create new series of preferred stock, other than series junior~~tariff regulations and requirements for export licenses, particularly with respect to the ~~Series C Preferred Shares~~export of some of our technologies. We face numerous challenges in our international expansion, including unexpectedchangesinregulatoryrequirementsandothergeopoliticalrisks,fluctuationsincurrencyexchange rates, longer accounts receivable requirements and collections, greater bonding and security requirements, difficulties in managing international operations, potentially adverse tax consequences, restrictions on repatriation of earnings and the burdens of complying with ~~redemption occurring after~~ a wide variety of international laws. Any of these factors could adversely affect our results of operations and financialcondition.

Wesourcerawmaterialsandpartsforourproductsonaglobalbasis,whichsubjectsustoanumberof potentialrisks,includingtheimpactofexportdutiesandquotas,tradeprotectionmeasuresimposedbythe ~~maturity date of the Series C Preferred Shares,~~U.S. and ~~our ability~~other countries including tariffs, potential for labor unrest, changing global and regional economic conditions and current and changing regulatory environments. Changes to ~~incur certain indebtedness. Such restrictions~~ these factors may have an adverse effect on our ability to ~~operate~~source raw materials and parts in line with our current coststructure.

Although our reporting currency is the U.S. dollar, we conduct our business ~~while~~and incur costs in the ~~Series C Preferred Shares~~local currency of most countries in which we operate. As a result, we are ~~outstanding.~~subject to currency translation and transaction risk. Changes in exchange rates between foreign currencies and the U.S. dollar could affect our netsalesandcostofsalesandcouldresultinexchangegainsorlosses.Wecannotaccuratelypredicttheimpact of future exchange rate fluctuations on our results ofoperations.

Wecouldalsoexpandourbusinessintonewandemergingmarkets,manyofwhichhaveanuncertain regulatoryenvironmentrelatingtocurrencypolicy.Conductingbusinessinsuchmarketscouldcauseour exposuretochangesinexchangeratestoincrease,duetotherelativelyhighvolatilityassociatedwithemerging market currencies and potentially longer payment terms for our proceeds. Our ~~common stockholders may experience~~ability to hedge foreign currencyexposureisdependentonourcreditprofilewithfinancialinstitutionsthatarewillingandableto do business with us. Deterioration in our credit position or a significant ~~dilution upon the issuance of common stock upon conversion of or redemption payments under the Series C Preferred Shares.~~

~~The issuance of common stock as mandatory redemption payments or upon conversion of some or all~~tightening of the ~~Series C Preferred Shares will dilute the ownership interests of existing holders of shares of~~ credit market conditionscouldlimitour ~~common stock. If the initial aggregate stated value of the Series C Preferred Shares is converted into~~ abilitytohedgeour common stock at its initial conversion price, we would issue 18,206,522 shares of common stock upon their conversion (without giving effect to any limitation on conversions). This excludes the effect of any common stock we may issue foreigncurrencyexposureand,therefore,resultin lieu of paying bimonthly redemption amounts in cash, which may be made at a price lower than the initial conversion price. The initial conversion price of the Series C Preferred Shares is adjustable based on certain events, including in the event of a triggering event and in the event we effect a stock split, combinationexchange gains or ~~similar transaction, to reflect the proportionate (adjusted) trading prices of our common stock before and after the effective date.~~losses.

The discussion under the heading “SEC Proceedings” in Note 22. “Commitments and Contingencies” to the consolidated financial statements is incorporated herein by reference.

The discussion in Part I, Item 1. “Business–License Agreements and Royalty Income; Relationship with POSCO Energy—License Agreements with POSCO Energy” regarding the pending legal proceedings with POSCO Energy is incorporated herein by reference.

From time to time, the Company is involved in other legal proceedings, including, but not limited to, regulatory proceedings, claims, mediations, arbitrations and litigation, arising out of the ordinary ~~conduct~~course of ~~our business.~~its business (“Other Legal Proceedings”). Although wethe Company cannot assure the outcome of such Other Legal Proceedings, management presently believes that the result of such ~~legal proceedings,~~Other Legal Proceedings, either individually, or in the aggregate, will not have a material adverse effect on ~~our~~the Company’s consolidated financial statements, and no

material amounts have been accrued in ~~our~~the Company’s consolidated financial statements with respect to these matters.

Our common stock has been publicly traded since June 25, 1992. Our common stock trades under the symbol “FCEL” on the Nasdaq Global Market. ~~The following table sets forth the high and low sale prices for our common stock for the periods indicated as reported by the Nasdaq Global Market during the indicated quarters.~~

In December 2017, the number of authorized shares of the Company’s common stock was increased from approximately 125 million shares to 225 million shares by a vote of the holders of a majority of the outstanding shares of the Company’s common stock. In April 2017, the number of authorized shares of the Company’s common stock was increased from approximately 75 million to 125 million by vote of the holders of a majority of the outstanding shares of the Company’s common stock. In April 2016, the number of authorized shares of the Company's common stock was increased from approximately 39.6 million to 75 million by vote of the holders of a majority of the outstanding shares of the Company’s common stock.

On January ~~2, 2018,~~15, 2021, the closing price of our common stock on the Nasdaq Global Market was ~~$1.74~~$15.84 per share. As of January ~~2, 2018,~~15, 2021, there were ~~185~~109 holders of record of our common stock. This does not include the number of persons whose stock is in nominee or “street” name accounts through brokers.

We have never paid a cash dividend on our common stock and do not anticipate paying any cash dividends on our common stock in the foreseeable future. In addition, the terms of our Series B ~~preferred shares~~Preferred Stock prohibit the payment of dividends on our common stock unless all dividends on the Series B ~~preferred stock~~Preferred Stock have been paid in full.

On May 8, 2020, the Company obtained stockholder approval at the reconvened 2020 Annual Meeting of Stockholders to increase the number of shares of common stock we are authorized to issue under our Certificate of Incorporation, as amended. Our stockholders approved a 112.5 million increase in the number of authorized shares of common stock. Accordingly, on May 11, 2020, the Company filed a Certificate of Amendment of the Certificate of Incorporation of the Company with the Delaware Secretary of State increasing the total number of authorized shares of common stock from 225.0 million shares to 337.5 million shares.

Information concerning the Company’s Series B Preferred Stock and the Class A Preferred Shares issued by FCE FuelCell Energy Ltd. (also referred to herein as the Series 1 Preferred Shares) is incorporated herein by reference to Note 16. “Redeemable Preferred Stock” of the Notes to the Consolidated Financial Statements. All obligations under the Series 1 Preferred Shares were paid off and satisfied subsequent to October 31, 2020, as disclosed in Note 25. “Subsequent Events” of the Notes to the Consolidated Financial Statements.

The following graph compares the annual change in the Company's cumulative total stockholder return on its common stock for the five fiscal years ended October 31, ~~2017~~2020 with the cumulative stockholder total return on the Russell 2000 Index, a peer group consisting of Standard Industry Classification ~~("SIC)~~ Group Code 3690 companies listed on the Nasdaq Global Market and New York Stock Exchange and a customized 1219 company peer ~~group.~~group which includes FuelCell Energy, Inc. It assumes $100.00 invested on October 31, ~~2012~~2015 with dividends reinvested.

Between August 2005 and April 2017, we sold shares of our common stock pursuant to a series of “at-the-market” sales plans approved by our Audit and Finance Committee and/or our Board of Directors. The intended use of proceeds from the sale of these shares was for general corporate purposes, to pay dividend and interest payments on shares of preferred stock of the Company and its subsidiaries, and to pay interest on our convertible notes outstanding at the time of the sales. The shares sold pursuant to the sales plans represented a portion of the shares registered by us pursuant to shelf registration statements we filed with the SEC during this time period. We previously reported the actual shares sold and proceeds, net of fees, of such sales during each fiscal quarter pursuant to the sales plans in our annual and quarterly reports on Forms 10-K and 10-Q filed with the SEC. Between August 2005 and April 2017, we issued and sold a total of 17.7 million shares of our common stock, for aggregate gross proceeds of $148.5 million and aggregate net proceeds (after aggregate selling commissions of $0.9 million) of $147.6 million pursuant to the “at-the-market” sales plans.

The following table shows the average sale price per share, the average commission per share, and the average per share proceeds to us (with such averages based on all sales made pursuant to the sales plans between August 2005 and April 2017):

The following table provides information regarding the date of, and the maximum number of shares authorized for sale under, each sales plan approved by our Board of Directors and/or our Audit and Finance Committee:

Fidelity Capital Markets or one of its affiliated entities (“Fidelity”) served as our agent for these sales and was authorized, from time to time, to sell up to a specified number of shares of our common stock within certain parameters provided by us to Fidelity from time to time. These parameters included: (i) limitations on the aggregate number of shares to be sold during a particular period; (ii) a target number of shares to be sold on a daily basis, including, in some instances, target ranges of shares to be sold within specified price ranges; (iii) minimum per share prices below which sales could not be made; (iv) trading limits based on a specified percentage of the average daily trading volume or the average trading volume over the duration of the particular sales plan; (v) restrictions requiring Fidelity to cease sales on a day on which the stock price dropped by (or more than) a specified percentage; (vi) authority/discretion to exceed certain parameters upon the occurrence of specified events (e.g., authority to sell more than the target number of shares, up to a specified number of shares, on a day on which the stock price went up by (or more than) a specified percentage); (vii) authority/discretion to cease or otherwise adjust sales based on market conditions; and (viii) the dates or events upon which a particular plan would terminate. Sales under the sales plans could be terminated at any time by us or by Fidelity.

Fidelity was not required to sell any specific number of shares of our common stock during any particular period and was not required to purchase any shares of our common stock. Shares sold by Fidelity under the sales plans were sold on the open market (on or through The Nasdaq Stock Market) at the then-prevailing market prices for our common stock. In connection with these sales, we paid Fidelity commissions ranging from $0.01 per share to $0.36 per share, which were deducted from the proceeds we received from the sale of the shares. The number of shares sold and the commission per share we paid to Fidelity have been adjusted to reflect our 1 for 12 reverse stock split effective on December 3, 2015.

~~There was no arrangement for funds to be received in an escrow, trust or similar arrangement.~~

While we did not enter into a typical “at-the-market” sales agreement with Fidelity, we do have a custody agreement with Fidelity pursuant to which we have agreed, subject to certain limitations on liability, to provide indemnification to Fidelity, its affiliates, and their respective directors, officers, employees, members and agents, against losses and liabilities arising out of or attributable to, among other things, our breach or violation of applicable laws, rules or

regulations, any actions taken or omitted to be taken by Fidelity based on instructions received from us or our agents, or misstatements or omissions in documents filed by us with governmental authorities. We have also agreed to reimburse Fidelity for other out-of-pocket expenses incurred under the custody agreement. In connection with these sales of common stock on our behalf, Fidelity could nonetheless be deemed to have been an “underwriter” within the meaning of the Securities Act of 1933, as amended, and the compensation paid to Fidelity could be deemed to have been underwriting commissions or discounts.

Fidelity has provided, and may in the future provide, various other custody, recordkeeping, and financial services for us and our affiliates, for which services Fidelity has received, and may in the future receive, customary fees.

The Company is authorized to issue up to 250,000 shares of preferred stock, par value $0.01 per share, issuable in one or more series of which shares to date have been issued and designated as Series C Convertible Preferred Stock and 5% Series B Cumulative Convertible Perpetual Preferred Stock.

~~We issued an aggregate of 33,500 shares of our Series C Convertible Preferred Stock ( “Series C Preferred Stock”~~ ~~and, such shares, the “Series C Preferred Shares”~~), $0.01 par value and $1,000 stated value per share for net proceeds of $27.9 million on September 5, 2017. Each share of Series C Preferred Stock was sold at a price of $895.52 for gross proceeds of approximately $30.0 million. As of October 31, 2017, there were 33,300 shares of Series C Preferred Stock issued and outstanding.

The Series C Preferred Shares are convertible into shares of common stock, subject to the beneficial ownership limitations provided in the Certificate of Designations for the Series C Preferred Stock (the “Certificate of Designations”), at a conversion price equal to $1.84 per share of common stock (“Conversion Price”), subject to adjustment as provided in the Certificate of Designations. In the event of a triggering event, as defined in the Certificate of Designations, the Series C Preferred Shares are convertible into shares of common stock at a conversion price the lower of $1.84 per share and 85% of the lowest volume weighted average price (“VWAP”) of the common stock of the five Trading Days (as such term is defined in the Certificate of Designations) immediately prior to delivery of the applicable conversion notice. The holders will be prohibited from converting Series C Preferred Shares into shares of common stock if, as a result of such conversion, such holder, together with its affiliates, would own more than 8.99% of the total number of shares of common stock then issued and outstanding. Each holder has the right to increase its maximum percentage up to 9.99% upon 60 days’ notice to the Company.

On November 1, 2017 and on the sixteenth day and first day of each calendar month thereafter until March 1, 2019, subject to extension in certain circumstances (the “Maturity Date”), inclusive, the Company will redeem the stated value of Series C Preferred Shares in thirty-three equal installments of $1.0 million (each bimonthly amount, an “Installment Amount” and the date of each such payment, an “Installment Date”). The holders will have the ability to defer Installment payments, but not beyond the Maturity Date. In addition, during each period commencing on the 11th trading day prior to an Installment Date and prior to the immediately subsequent Installment Date, the holders may elect to accelerate the conversion of Series C Preferred Shares at then applicable installment conversion price, provided that the holders may not elect to effect any such acceleration during such installment period if either (x) in the aggregate, all the accelerations in such installment period exceeds the sum of three other Installment Amounts, or (y) the number of Series C Preferred Shares subject to prior accelerations exceeds in the aggregate twelve Installment Amounts.

Subject to certain conditions as provided in the Certificate of Designations, the Company may elect to pay the Installment Amounts in cash or shares of common stock or in a combination of cash and shares of common stock.

Installment Amounts paid in shares will be that number of shares of common stock equal to (a) the applicable Installment Amount, to be paid in common stock divided by (b) the least of (i) the then existing conversion price, (ii) 87.5% of the VWAP of the common stock on the trading day immediately prior to the applicable Installment Date, and (iii) 87.5% of the arithmetic average of the two lowest VWAPs of the common stock during the ten consecutive

Trading Day period ending and including the Trading Day immediately prior to the applicable Installment Date as applicable, provided that the Company meets standard equity conditions. The Company shall make such election no later than the eleventh trading day immediately prior to the applicable Installment Date.

~~If the Company elects or is required to effect an Installment Amount in whole or in part in cash, the amount paid will be equal to 108%of the applicable Installment Amount.~~

Each holder of the Series C Preferred Shares shall be entitled to receive dividends (i) if no triggering event, as defined in the Certificate of Designations, has occurred and is continuing when and as declared by the Board of Directors, in its sole and absolute discretion or (ii) if a triggering event has occurred and until such triggering event has been cured, a dividend of 15% per annum based on the holder’s outstanding number of Series C Preferred Shares multiplied by the stated value. There were no triggering events or dividends declared in fiscal year 2017.

In the event of a triggering event, as defined in the Certificate of Designations, the holders of the Series C Preferred Shares can force redemption at a price equal to the greater of (i) the conversion amount to be redeemed multiplied by 125% and (ii) the product of (X) the Conversion Rate with respect to the Conversion Amount in effect at such time as such Holder delivers a Triggering Event Redemption Notice multiplied by (Y) the greatest Closing Sale Price of the common stock on any Trading Day during the period commencing on the date immediately preceding such Triggering Event and ending on the date the Company makes the entire payment required.

In the event of the Company’s liquidation, dissolution, or winding up, prior to distribution to holders of securities ranking junior to the Series C Preferred Shares, holders of Series C Preferred Shares will be entitled to receive the amount of cash, securities or other property equal to the greater of (A) the stated value thereof on the date of such payment plus accrued dividends, if any and (B) the amount per share such holder would receive if such holder converted such Series C Preferred Shares into common stock immediately prior to the date of such payment.

~~Shares of Series C Preferred Stock rank with respect to dividend rights and rights upon our liquidation, winding up or dissolution:~~

The holders of the Series C Preferred Shares have no voting rights, except as required by law. Any amendment to the Company’s certificate of incorporation, bylaws or certificate of designation that adversely affects the powers, preferences and rights of the Series C Preferred Shares requires the approval of the holders of a majority of the Series C Preferred Shares then outstanding.

There is no established public trading market for the Series C Preferred Shares, and the Company does not expect a market to develop for the Series C Preferred Shares. The Series C Preferred Shares will not be listed on Nasdaq or any other exchange or trading market. The Company does not plan on making an application to list the Series C Preferred Shares on Nasdaq, any other national securities exchange or any other nationally recognized trading system.

~~Class A Cumulative Redeemable Exchangeable Preferred Shares (the “Series 1 Preferred Shares”)~~

We have 1,000,000 Class A Cumulative Redeemable Exchangeable Preferred Shares (the “Series 1 Preferred Shares”) issued and outstanding. The Series 1 Preferred Shares were issued by FCE Ltd., one of our wholly-owned subsidiaries. We have guaranteed the obligations of FCE Ltd. under the Series 1 Preferred Shares.

On March 31, 2011 and April 1, 2011, the Company entered into agreements with Enbridge to modify the provisions of the Series 1 Preferred Shares of FCE Ltd. Enbridge is the sole holder of the Series 1 Preferred Shares. Consistent

with the previous Series 1 Preferred Share agreement, FuelCell Energy continues to guarantee the return of principal and dividend obligations of FCE Ltd. to the holders of Series 1 Preferred Shares under the modified agreement.

The terms of the Series 1 Preferred Shares require (i) annual dividend payments of Cdn. $500,000 and (ii) annual return of capital payments of Cdn. $750,000. These payments commenced on March 31, 2011 and will end on December 31, 2020. Dividends accrue at a 1.25% quarterly rate on the unpaid principal balance, and additional dividends will accrue on the cumulative unpaid dividends (inclusive of the Cdn. $12.5 million unpaid dividend balance as of the modification date) at a rate of 1.25% per quarter, compounded quarterly. On December 31, 2020, the amount of all accrued and unpaid dividends on the Series 1 Preferred Shares of Cdn. $21.1 million and the balance of the principal redemption price of Cdn. $4.4 million shall be paid to the holders of the Series 1 Preferred Shares. FCE Ltd. has the option of making dividend payments in the form of common stock or cash under the terms of the Series 1 Preferred Shares.

~~In addition to the above, the significant terms of the Series 1 Preferred Shares include the following:~~

For example, assuming the holder of the Series 1 Preferred Shares exercises its conversion rights after July 31, 2020 and assuming our common stock price is $2.19 (our common stock closing price on October 31, 2017) and an exchange rate of U.S. $1.00 to Cdn. $1.29 (exchange rate on October 31, 2017) at the time of conversion, we would be required to issue approximately 1,657,928 shares of our common stock.

We have 105,875 shares of our 5% Series B Cumulative Convertible Perpetual Preferred Stock (Liquidation Preference $1,000.00 per share) (“Series B Preferred Stock”) authorized for issuance. As of October 31, 2017 and 2016, there were 64,020 shares of Series B Preferred Stock issued and outstanding. The shares of our Series B Preferred Stock and the shares of our common stock issuable upon conversion of the shares of our Series B Preferred Stock are covered by a registration rights agreement. The following is a summary of certain provisions of our Series B Preferred Stock.

~~Shares of Series B Preferred Stock rank with respect to dividend rights and rights upon our liquidation, winding up or dissolution:~~

The Series B Preferred Stock pays cumulative annual dividends of $50.00 per share which are payable quarterly in arrears on February 15, May 15, August 15 and November 15. Unpaid accumulated dividends do not bear interest.

The dividend rate is subject to upward adjustment as set forth in the Certificate of Designation if we fail to pay, or to set apart funds to pay, any quarterly dividend. The dividend rate is also subject to upward adjustment as set forth in the Registration Rights Agreement entered into with the Initial Purchasers if we fail to satisfy our registration obligations with respect to the Series B Preferred Stock (or the underlying common shares) under the Registration Rights Agreement.

No dividends or other distributions may be paid or set apart for payment on our common shares (other than a dividend payable solely in shares of a like or junior ranking) unless all accumulated and unpaid Series B Preferred Stock dividends have been paid or funds or shares of common stock have been set aside for payment of accumulated and unpaid Series B Preferred Stock dividends.

The dividend on the Series B Preferred Stock may be paid in cash; or at the option of the Company, in shares of our common stock, which will be registered pursuant to a registration statement to allow for the immediate sale of these common shares in the public market. Dividends of $3.2 million were paid in each of the years ended October 31, 2017, 2016 and 2015. There were no cumulative unpaid dividends as of October 31, 2017 and 2016.

The Series B Preferred Stock stockholders are entitled to receive, in the event that we are liquidated, dissolved or wound up, whether voluntarily or involuntarily, $1,000.00 per share plus all accumulated and unpaid dividends to the date of that liquidation, dissolution, or winding up (“Liquidation Preference”). Until the holders of Series B Preferred Stock receive their Liquidation Preference in full, no payment will be made on any junior shares, including shares of our common stock. After the Liquidation Preference is paid in full, holders of the Series B Preferred Stock will not be entitled to receive any further distribution of our assets. As of October 31, 2017 and 2016, the Series B Preferred Stock had a Liquidation Preference of $64.0 million.

Each Series B Preferred Stock share may be converted at any time, at the option of the holder, into 7.0922 shares of our common stock, which is equivalent to an initial conversion price of $141.00 per share plus cash in lieu of fractional shares. The conversion rate is subject to adjustment upon the occurrence of certain events as described in the Certificate of Designation. The conversion rate is not adjusted for accumulated and unpaid dividends. If converted, holders of Series B Preferred Stock do not receive a cash payment for all accumulated and unpaid dividends; rather, all accumulated and unpaid dividends are canceled.

We may, at our option, cause shares of Series B Preferred Stock to be automatically converted into that number of shares of our common stock that are issuable at the then prevailing conversion rate. We may exercise our conversion right only if the closing price of our common stock exceeds 150% of the then prevailing conversion price ($141.00 per share as of October 31, 2017) for 20 trading days during any consecutive 30 trading day period, as described in the Certificate of Designation.

We do not have the option to redeem the shares of Series B Preferred Stock. However, holders of the Series B Preferred Stock can require us to redeem all or part of their shares at a redemption price equal to the Liquidation Preference of the shares to be redeemed in the case of a “fundamental change” (as described in the Certificate of Designation).

We may, at our option, elect to pay the redemption price in cash or, in shares of our common stock valued at a discount of 5% from the market price of shares of our common stock, or any combination thereof. Notwithstanding the foregoing, we may only pay such redemption price in shares of our common stock that are registered under the Securities Act of 1933 and eligible for immediate sale in the public market by non-affiliates of the Company.

Holders of Series B Preferred Stock currently have no voting rights; however, holders may receive certain voting rights, as described in the Certificate of Designation, if (1) dividends on any shares of Series B Preferred Stock, or any other class or series of stock ranking on a parity with the Series B Preferred Stock with respect to the payment of dividends, shall be in arrears for dividend periods, whether or not consecutive, for six calendar quarters or (2) we fail to pay the redemption price, plus accrued and unpaid dividends, if any, on the redemption date for shares of Series B Preferred Stock following a fundamental change.

So long as any shares of Series B Preferred Stock remain outstanding, we will not, without the consent of the holders of at least two-thirds of the shares of Series B Preferred Stock outstanding at the time (voting separately as a class with all other series of preferred stock, if any, on parity with our Series B Preferred Stock upon which like voting rights have been conferred and are exercisable) issue or increase the authorized amount of any class or series of shares ranking senior to the outstanding shares of the Series B Preferred Stock as to dividends or upon liquidation. In addition, we will not, subject to certain conditions, amend, alter or repeal provisions of our certificate of incorporation, including the Certificate of Designation relating to the Series B Preferred Stock, whether by merger, consolidation or otherwise, so as to adversely amend, alter or affect any power, preference or special right of the outstanding shares of Series B Preferred Stock or the holders thereof without the affirmative vote of not less than two-thirds of the issued and outstanding Series B Preferred Stock shares.

See Part III, Item 12 for information regarding securities authorized for issuance under our equity compensation plans.

The following table sets forth information with respect to purchases made by us or on our behalf of our common stock during the periods indicated:

The selected consolidated financial data presented below as of the end of each of the years in the five-year period ended October 31, ~~2017~~2020 have been derived from our audited consolidated financial statements together with the notes thereto. ~~We have no discontinued operations.~~ The data set forth below is qualified by reference to, and should be read in conjunction with our consolidated financial statements and their notes and “Management’s Discussion and Analysis of Financial Condition and Results of Operations” included elsewhere in this Annual Report on Form 10-K.

	2017			2016			2015			2014			2013			2020			2019			2018			2017			2016
Revenues:
Product	$	43,047		$	62,563		$	128,595		$	136,842		$	145,071
Service and license		27,050			31,491			21,012			25,956			28,141
Generation		7,233			1,267			—			—			—
Advanced Technologies		18,336			12,931			13,470			17,495			14,446
Revenues (1):
Product sales																$	-		$	481		$	52,490		$	43,047		$	62,563
Service agreements and license revenues																	25,133			26,618			15,757			27,050			31,491
Generation revenues																	19,943			14,034			7,171			7,233			1,267
Advanced Technologies contract revenues																	25,795			19,619			14,019			18,336			12,931
Total revenues		95,666			108,252			163,077			180,293			187,658			70,871			60,752			89,437			95,666			108,252
Cost of revenues:
Product		49,843			63,474			118,530			126,866			136,989
Service and license		25,285			32,592			18,301			23,037			29,683
Generation		5,076			664			—			—			—
Advanced Technologies		12,728			11,879			13,470			16,664			13,864
Cost of product sales																	9,924			18,552			54,504			49,843			63,474
Cost of service agreements and license revenues																	24,545			18,943			15,059			25,285			32,592
Cost of generation revenues																	27,873			31,642			6,421			5,076			664
Cost of Advanced Technologies contract revenues																	16,254			12,884			10,360			12,728			11,879
Total cost of revenues		92,932			108,609			150,301			166,567			180,536			78,596			82,021			86,344			92,932			108,609
Gross profit (loss)		2,734			(357	)		12,776			13,726			7,122
Gross (loss) profit																	(7,725	)		(21,269	)		3,093			2,734			(357	)
Operating expenses:
Administrative and selling expenses		25,916			25,150			24,226			22,797			21,218			26,644			31,874			24,908			25,916			25,150
Research and development costs		20,398			20,846			17,442			18,240			15,717			4,797			13,786			22,817			20,398			20,846
Restructuring expense		1,355			—			—			—			—			—			—			—			1,355			—
Total costs and expenses		47,669			45,996			41,668			41,037			36,935			31,441			45,660			47,725			47,669			45,996
Loss from operations		(44,935	)		(46,353	)		(28,892	)		(27,311	)		(29,813	)		(39,166	)		(66,929	)		(44,632	)		(44,935	)		(46,353	)
Interest expense		(9,171	)		(4,958	)		(2,960	)		(3,561	)		(3,973	)		(15,294	)		(10,623	)		(9,055	)		(9,171	)		(4,958	)
Income from equity investments		—			—			—			—			46
Other income (expense), net		247			622			2,442			(7,523	)		(1,208	)
Provision for income tax		(44	)		(519	)		(274	)		(488	)		(371	)
Change in fair value of common stock warrant liability																	(37,086	)		—			—			—			—
Gain on extinguishment of financing obligation																	1,801			—			—			—			—
Other income, net																	684			93			3,338			247			622
Loss before (provision) benefit for income taxes																	(89,061	)		(77,459	)		(50,349	)		(53,859	)		(50,689	)
(Provision) benefit for income tax																	(46	)		(109	)		3,015			(44	)		(519	)
Net loss		(53,903	)		(51,208	)		(29,684	)		(38,883	)		(35,319	)		(89,107	)		(77,568	)		(47,334	)		(53,903	)		(51,208	)
Net loss attributable to noncontrolling interest		-			251			325			758			961			—			—			—			—			251
Net loss attributable to FuelCell Energy, Inc.		(53,903	)		(50,957	)		(29,359	)		(38,125	)		(34,358	)		(89,107	)		(77,568	)		(47,334	)		(53,903	)		(50,957	)
Preferred stock dividends		(3,200	)		(3,200	)		(3,200	)		(3,200	)		(3,200	)
Net loss to common stockholders	$	(57,103	)	$	(54,157	)	$	(32,559	)	$	(41,325	)	$	(37,558	)
Net loss to common stockholders
Series A warrant exchange																	—			(3,169	)		—			—			—
Series B Preferred stock dividends																	(3,331	)		(3,231	)		(3,200	)		(3,200	)		(3,200	)
Series C Preferred stock deemed dividends and redemption value adjustment, net																	—			(6,522	)		(9,559	)		—			—
Series D Preferred deemed dividends and redemption accretion																	—			(9,755	)		(2,075	)		—			—
Net loss attributable to common stockholders																$	(92,438	)	$	(100,245	)	$	(62,168	)	$	(57,103	)	$	(54,157	)
Net loss attributable to common stockholders
Basic	$	(1.14	)	$	(1.82	)	$	(1.33	)	$	(2.02	)	$	(2.42	)	$	(0.42	)	$	(1.82	)	$	(9.01	)	$	(13.73	)	$	(21.83	)
Diluted	$	(1.14	)	$	(1.82	)	$	(1.33	)	$	(2.02	)	$	(2.42	)	$	(0.42	)	$	(1.82	)	$	(9.01	)	$	(13.73	)	$	(21.83	)
Weighted average shares outstanding
Basic		49,915			29,774			24,514			20,474			15,544			221,960			55,081			6,896			4,160			2,481
Diluted		49,915			29,774			24,514			20,474			15,544			221,960			55,081			6,896			4,160			2,481

The following discussion should be read in conjunction with the information included in Item 8 of this ~~report.~~Annual Report on Form 10-K. Unless otherwise indicated, the terms “Company”, “FuelCell Energy”, “we”, “us”, and “our” refer to FuelCell Energy, Inc. and its subsidiaries. All tabular dollar amounts are in thousands.

In addition to historical information, this discussion and analysis contains forward-looking statements. All forward-looking statements are subject to risks and uncertainties that could cause actual results to differ materially from those projected. Please see the section of this Annual Report entitled “Forward-Looking Statement Disclaimer” for a discussion of the uncertainties, risks and assumptions associated with these statements, as well as the other risks set forth in our filings with the SEC including those set forth under ~~Item~~the section entitled “Item 1A — Risk ~~Factors~~Factors” in this ~~report.~~Annual Report.

FuelCell Energy ~~delivers efficient, affordable~~is a global leader in sustainable clean energy technologies that address some of the world’s most critical challenges around energy, safety, and ~~clean~~global urbanization. As a leading global manufacturer of proprietary fuel cell technology platforms, we are uniquely positioned to serve customers worldwide with sustainable products and solutions for businesses, utilities, governments, and municipalities. Our solutions are designed to enable a world empowered by clean energy, enhancing the ~~supply, recovery and storage~~quality of energy. We design, manufacture, undertake project development of, install, operate and maintain megawatt-scale fuel cell systems, serving utilities and industrial and large municipal power users with solutions that include both utility-scale and on-site power generation, carbon capture, local hydrogen productionlife for transportation and industrial users, and long duration energy storage. Our plants are operating in more than 50 locations on three continents and have generated more than 7.0 million megawatt hours (MWh) of electricity.

~~We provide comprehensive turn-key power generation solutions to our customers, including installation of~~people around the ~~power plants as well as operating and maintaining the plants under multi-year service agreements.~~globe. We target large-scale power users with our megawatt-class ~~installations. As~~installations globally, and currently offer sub-megawatt solutions for smaller power consumers in Europe. To provide a frame of reference, one megawatt is adequate to continually power approximately 1,000 average sized U.S. homes. Our customer base includes utility companies, municipalities, universities, hospitals, government ~~entities~~entities/military bases and ~~businesses in~~ a variety of industrial and commercial enterprises. Our leading geographic markets are ~~South Korea and~~currently the United States and South Korea, and we are pursuing ~~expanding~~ opportunities in ~~Asia~~other countries around the world.

FuelCell Energy, based in Connecticut, was founded in 1969 as a New York corporation to provide applied research and ~~Europe.~~

~~Our value proposition provides highly efficient~~development services on a contract basis. We completed our initial public offering in 1992 and ~~environmentally friendly power generation with easy-to-site~~reincorporated in Delaware in 1999. We began selling stationary fuel cell power ~~plants. The power~~ plants ~~are located~~commercially in populated areas as they are virtually particulate pollutant free, operate quietly and without vibrations, and have only modest space requirements. Locating the power generation near the point of use provides many advantages, including less reliance on or even avoidance of the transmission grid, leading to enhanced energy security and power reliability. Our power plants provide electricity priced competitively to grid-delivered electricity in certain high cost regions, and our strategy is to continue to reduce costs, which is expected to lead to wider adoption.2003.

We are developing Advanced Technologies which leverage our commercial platform and expertise. Our SureSource power plants utilize carbonate fuel cell technology, which is a very versatile type of fuel cell technology. Utilizing our core SureSource plants, we have developed and are commercializing both a tri-generation distributed hydrogen configuration that generates electricity, heat and hydrogen for industrial or transportation uses, and a carbon capture application for coal or gas-fired power plants. We also are developing and working to commercialize solid oxide fuel cells for adjacent sub-megawatt applications to the markets for our megawatt-class SureSource power plants as well as energy storage applications. These applications are complementary to our core products, leverage our existing customer base, project development, sales and service expertise, and are large markets.

The events described in this “Recent Developments” section relate, in part, to matters discussed in more detail below in this “Management’s Discussion and Analysis of Financial Condition and Results of Operations” section and/or in the Notes to the Consolidated Financial Statements. In ~~June~~certain instances, the capitalized terms used in this “Recent Developments” section are defined elsewhere in this Annual Report on Form 10-K, including in the Notes to the Consolidated Financial Statements.

On September 29, 2020, we announced multiple project awards by the local Connecticut electric distribution companies totaling 11.2 MW, as part of the state-sponsored Shared Clean Energy Facility program. After reaffirming the project selection process on multiple occasions, on November 16, 2020, the Public Utilities Regulatory Authority (“PURA”) inexplicably reversed itself and issued a ruling ordering one of the local electric distribution utilities to re-examine and re-evaluate the bids and submit any revisions to its selected winners on December 4, 2020. On December 4, 2020, we were notified by one of the electric distribution utilities that 3 of our 4 bid awards totaling 8.4 MW, would not be honored. On December 7, 2020, the electric distribution utility notified PURA that it had selected new winners, and our projects were not among those selected. We have filed a motion for reconsideration with PURA, a motion to stay confirmation of the new award selections, and we have filed an administrative appeal with the Connecticut Superior Court. While we believe PURA’s action to be unlawful and contrary to established precedent, there can be no assurance that we will prevail or have our project awards restored. In addition, there can be no assurance that any such project awards, if they are restored, will result in executed power purchase contracts.

In July 2017, ~~an EPC contractor, Hanyang Industrial Development Co., Ltd~~we were awarded three projects on Long Island totaling 39.8 MW. In December 2018, we executed a contract for one of the three awards, which is currently reflected in our backlog. The other two awards, which are not part of our backlog, do not yet have signed contracts as we have been progressing through the required interconnect process. Contrary to assertions made by Long Island Power Authority (“~~HYD”~~LIPA”), ~~was awarded~~we do not believe that the New York Climate Leadership and Community Protection Act negates the two project awards for which there are not signed contacts. We believe these projects should move forward and we have continued to pursue them in good faith, including with our advancement of the interconnect process. There can be no assurance that any project awards, including these two LIPA awards for which we do not have signed contracts, will result in executed PPAs.

In December of 2020, the Company and the lenders under the Orion Credit Agreement (the “Selling Stockholders”) (see Note 14. “Debt” for the names of the lenders/Selling Stockholders) completed a ~~20MW project by a utility in South Korea utilizing~~public offering of the Company’s ~~SureSource technology. On August 29, 2017, we~~common stock. In connection with this public offering, the Company and the Selling Stockholders entered into an underwriting agreement pursuant to which (i) the Company agreed to issue and sell to the underwriters 19,822,219 shares of the Company’s common stock, plus up to 5,177,781 shares of common stock pursuant to an option to purchase additional shares, and (ii) the Selling Stockholders agreed to sell to the underwriters 14,696,320 shares of common stock, in each case at a price to the public of $6.50 per share. The underwriters exercised their option to purchase additional shares, resulting in the issuance and sale by the Company at the closing of the offering of a total of 25,000,000 shares of common stock. The offering closed on December 4, 2020.

Gross proceeds from the sale of common stock by the Company in the offering were $162.5 million. The Company did not receive any proceeds from the sale of common stock in the offering by the Selling Stockholders. Upon closing of the offering, the number of shares of the Company’s common stock outstanding was 319,706,758.

The Company and the Selling Stockholders paid underwriting discounts and commissions of $0.2275 per share, and net proceeds to the Company were approximately $156.3 million after deducting such underwriting discounts and commissions and other estimated offering expenses.

In addition, in connection with the offering, the Company and its directors and officers entered into a ~~contract~~customary 90-day lock-up agreement with ~~HYD pursuant~~the underwriters party to ~~which we will provide equipment~~the underwriting agreement. As part of the offering, J.P. Morgan Securities LLC waived lock-up restrictions entered into in connection with the common stock offering consummated on October 2, 2020 with respect to ~~HYD for~~all of the shares sold in this ~~20MW fuel cell project. The SureSource 3000~~^TM ~~power plants will cleanly produce electricity and thermal energy to support a district heating system. Construction began in fall 2017~~offering by the Company and the ~~installation is expected to be operational in August 2018. The value of the equipment sale contract~~Selling Stockholders. J.P. Morgan Securities LLC also waived all remaining lock-up restrictions applicable to the ~~Company is expected to be in excess of $60 million, a portion of which has been included backlog as of October 31, 2017.~~

~~U.S. Market Developments.~~ ~~During 2017, the Company received notices of award on multiple projects in the U.S. and there have been favorable policy developments summarized as follows:~~

~~Production Rate Adjustment.~~ ~~In June 2017,~~2020, the Company, ~~reduced~~ its production to approximately fifteen MW on an annualized basis. This adjustment was made to manage inventory levels, prepare to transition to new product introductions and complete certain building expansion activities. From June through September 2017, approximately 110 manufacturing employees worked shortened work weeks. The Company participated in the State of Connecticut’s “Shared Work Program” allowing affected employees to collect unemployment benefits for days they did not work. Employees returned to work full time in October 2017subsidiary guarantors, and the ~~production rate is currently 25 MW on an annualized basis. The Company is evaluating an increase in the production rate during 2018 due to increased backlog and project awards.~~

~~Convertible Preferred Offering.~~ ~~On September 5, 2017, the Company priced an underwritten offering of 33,500 shares Series C Preferred Stock. The Series C Preferred Stock carries~~Orion Agent entered into a 0.0% dividend and a $1.84 conversion price. Each share of Series C Preferred Stock was sold at a price of $895.52 for gross proceeds of approximately $30.0 million. FuelCell Energy intends to use the net proceeds from this offering for working capital, project financing, and general corporate purposes. The offering closed on September 8, 2017.

~~The Certificate of Designations~~payoff letter with respect to the ~~Series C Preferred Stock describes certain triggering events~~Orion Credit Agreement (the “Orion Payoff Letter”). Pursuant to the ~~occurrence~~Orion Payoff Letter, on December 7, 2020, the Company paid a total of ~~which would give~~$87.3 million to the ~~holders~~Orion Agent, representing the outstanding principal, accrued but unpaid interest, prepayment premium, fees, costs and other expenses due and owing under the Orion Facility and the Orion Credit Agreement and related loan documents, in full repayment of the ~~Series C Preferred Stock (i)~~Company’s outstanding indebtedness under the Orion Facility and the Orion Credit Agreement and related loan documents. In accordance with the Orion Payoff Letter, the aggregate prepayment premium set forth in the Orion Credit Agreement was reduced from approximately $14.9 million to $4 million and the Orion Agent, on behalf of itself and the lenders, agreed that any portion of the prepayment premium that would otherwise be required to be paid pursuant to the Orion Credit Agreement in excess of $4 million was waived by the Orion Agent and the lenders.

Concurrently with the Orion Agent’s receipt of full payment pursuant to the Orion Payoff Letter, the Orion Agent released all of the collateral from the liens granted under the security documents associated with the Orion Facility (which included the release of $11.2 million of restricted cash to the Company, which became unrestricted cash), and the Company and its subsidiaries were unconditionally released from their respective obligations under the Orion Credit Agreement (and related loan documents) and the Orion Facility without further action. With the termination of the Orion Facility and the Orion Credit Agreement and related loan documents, the lenders no longer have the right to ~~convert~~appoint representatives to attend the Company’s Board of Director meetings as observers.

On December 7, 2020, all orremaining Orion Warrants (as defined elsewhere herein) were exercised to purchase a ~~portion~~total of ~~their~~2,700,000 shares of ~~Series C Preferred Stock into shares of our~~the Company’s common stock ~~and/or (ii)~~for an aggregate exercise price of $653,400 (or $0.242 per share). A discussion of the ~~right~~key terms and conditions of the Orion Warrants is included in Note 15. “Stockholders’ Equity and Warrant Liabilities” to ~~require~~the consolidated financial statements under the heading “Orion Warrants”.

In December 2020, the Company, FCE Ltd., and Enbridge (in each case as defined elsewhere herein) entered into a payoff letter (the “Enbridge Payoff Letter”) pursuant to redeem all or a portion of their shares of Series C Preferred Stock. One of the specified triggering events is the Company’s failure to receive certain payments under a sales contract on or prior to the earlier of (a) the Company’s public announcement of its fiscal 2017 fourth quarter earnings and (b) January 15, 2018. As of January 11, 2018 (the date of filing of this report and public announcement of fiscal 2017 fourth quarter earnings),which the Company ~~has received such payments and none of the triggering events described in the Certificate of Designations have occurred.~~

~~In connection with the offering of the Series C Preferred Stock, we amended our loan and security agreement with Hercules Capital, Inc. (“Hercules”)~~paid all amounts owed to ~~permit us to make certain cash payments that may be required pursuant to~~Enbridge under the terms of the Series C1 Preferred ~~Stock~~Shares. As of December 31, 2020, the amount owed to Enbridge under the Series 1 Preferred Shares totaled Cdn. $27.4 million, which included Cdn. $4.3 million of principal and ~~to adjust the cash covenant. Effective~~Cdn. $23.1 million of accrued dividends.

On December ~~14, 2017, the~~ ~~minimum cash covenant requires~~18, 2020, the Company remitted payment totaling Cdn. $27.4 million, or approximately $21.5 million U.S. dollars, to ~~maintain an unrestricted cash balance~~Enbridge. Concurrent with receipt of the payment from the Company, Enbridge surrendered its shares in ~~accounts subject~~FCE Ltd., and the Guarantee and the January 2020 Letter Agreement (in each case as defined elsewhere herein) were terminated. All obligations related to ~~an account control agreement~~the Series 1 Preferred Shares were extinguished upon payment. A discussion of the key terms and conditions of the Series 1 Preferred Shares is included in ~~favor~~Note 16. “Redeemable Preferred Stock” to the consolidated financial statements under the heading “Class A Preferred Shares (the “Series 1 Preferred Shares”) of ~~Hercules of at least $10.0 million.~~FCE FuelCell Energy Ltd”.

Management evaluates ~~the~~our results of operations and cash flows using a variety of key performance indicators, including revenues compared to prior periods and internal forecasts, costs of our products and results of our cost reduction initiatives, and operating cash use. These are discussed throughout the “Results of Operations” and “Liquidity and Capital Resources” sections. Results of Operations are presented in accordance with ~~accounting principles generally accepted~~GAAP.

The following discussion and analysis of our Results of Operations and Liquidity and Capital Resources includes a comparison of fiscal year 2020 to fiscal year 2019. A similar discussion and analysis that compares fiscal year 2019 to fiscal year 2018 may be found in Item 7, “Management’s Discussion and Analysis of Financial Condition and Results of Operations,” of our Form 10-K for the ~~United States (“GAAP”).~~fiscal year ended October 31, 2019.

Revenues and ~~cost~~costs of revenues for the years ended October 31, ~~2017~~2020 and ~~2016~~2019 were as follows:

Total revenues for the year ended October 31, ~~2017 decreased $12.6~~2020 increased $10.1 million, or ~~12%~~17%, to ~~$95.7~~$70.9 million from ~~$108.3~~$60.8 million ~~during~~for the year ended October 31, ~~2016, due primarily to decreased product sales as discussed below.~~2019. Total ~~cost~~costs of revenues for the year ended October 31, ~~2017~~2020 decreased by ~~$15.7~~$3.4 million, or ~~14%~~4%, to ~~$92.9~~$78.6 million from ~~$108.6~~$82.0 million ~~during~~for the year ended October 31, ~~2016.~~2019. The

Company's gross margin was ~~2.9%~~(10.9)% in fiscal year ~~2017,~~2020, as compared to ~~the prior year~~a gross margin ~~loss~~ of ~~0.3%.~~(35.0)% in fiscal year 2019. The increase in revenues is attributable to expanded generation and Advanced Technologies activities during fiscal year 2020. A discussion of the changes in product sales, service ~~agreement~~ and license revenues, generation revenues and Advanced Technologies contract revenues ~~and generation revenues~~ follows. ~~Refer to “Critical Accounting Policies and Estimates” for more information on revenue and cost of revenue classifications.~~

Product sales, cost of product sales and gross ~~profit~~loss from product sales for the years ended October 31, ~~2017~~2020 and ~~2016~~2019 were as follows:

Product sales for the year ended October 31, 2017 included $41.0 million of power plant revenue and $2.0 million of revenue primarily related to power plant component sales and engineering, procurement and construction services (“EPC services”). This is compared toThere were no product sales for the year ended October 31, ~~2016 which included $11.7~~2020 compared to product sales of $0.5 million of power plant revenue, $41.8 million of fuel cell kits revenue and $9.1 million of revenue primarily from power plant component sales and EPC services. Product sales decreased $19.5 million, or 31%, for the year ended October 31, ~~2017 to $43.0~~2019 which consisted solely of $0.5 million ~~from $62.5~~of power plant revenue.

ended October 31, 2020 to $9.9 million, compared to $18.6 million for the year ended October 31, 2019. Both periods were impacted by the under-absorption of fixed overhead costs due to low production volumes, but there were lower overall manufacturing costs for the year ended October 31, 2020 due to the Company’s reduction in workforce that was implemented during April of 2019 and the temporary shutdown of our Torrington manufacturing facility from March 18, 2020 to June 22, 2020 due to the COVID-19 pandemic. The ~~decline in revenue~~Company incurred approximately $2.1 million of manufacturing variances during the ~~period is due primarily to lower revenue from POSCO Energy~~year ended October 31, 2020 due to ~~(i)~~ the ~~lack~~manufacturing facility shutdown, which negatively impacted overall gross margin. Manufacturing variances, primarily related to low production volumes and unabsorbed overhead costs, totaled approximately $8.7 million (including the $2.1 million of ~~kit~~manufacturing variances mentioned above) for the year ended October 31, 2020 compared to approximately $14.5 million for the year ended October 31, 2019. Cost of product sales for the year ended October 31, ~~2017~~2019 also includes a charge for a specific construction in process asset related to automation equipment for use in manufacturing with a carrying value of $2.8 million, which was impaired due to uncertainty as to whether the asset would be completed as a result of our liquidity position and continued low level of production rates.

For the year ended October 31, 2020, we operated at an annualized production rate of approximately 17.0 MW, which is the same as the Company’s multi-year kit order with POSCO Energy concluded at the end of fiscal year 2016 and (ii) the transition to a royalty-only based model. The Company is entitled to receive a 3.0% royalty on POSCO Energy net product sales manufactured in South Korea as well as a royalty on each scheduled fuel cell module replacement under service agreements for modules that were built by POSCO Energy. Also contributing to the decline in revenue over the comparable period is the increase in instances in which the Company installs power plants for customers that have executed PPAs. The power plants are recognized as “Project assets” on the Consolidated Balance Sheets and generation revenue is recognized as earned over the life of the PPA or as a product sale in the event the Company sells the entire project (service agreement revenues would accompany a product sale). The decrease in kit revenue is partially offset by an increase in power plant revenue primarily relating to the 20 MW order from HYD of which a substantial portion of revenue has been recorded for the delivered components.

~~Cost of product sales decreased $13.7 million~~annualized production rate for the year ended October 31, ~~2017, to $49.8 million compared to $63.5 million in the prior year period.~~2019. The ~~decrease in cost of sales in~~ fiscal year ~~2017~~2020 production rate was ~~driven by lower overall product volume which included no kit sales during~~primarily a result of the manufacturing facility shutdown that was implemented in response to the COVID-19 pandemic, while the fiscal year and retention of project assets on balance sheet rather than sales to end customer or investors. Cost of product sales includes costs to design, engineer, manufacture and ship our power plants and power plant components to customers, site engineering and construction costs where we are responsible for power plant system installation, costs for assembly and conditioning equipment sold to POSCO Energy, warranty expense and inventory excess and obsolescence charges. The decrease2019 production rate was impacted primarily by the layoffs that occurred in ~~product sales gross margin is primarily due to lower manufacturing production for the year ended October 31, 2017 resulting in a higher level of under-absorbed fixed costs.~~April 2019.

As of October 31, ~~2017,~~2020 and 2019, there was no product sales ~~backlog totaled approximately $31.3 million compared to $24.9 million as of October 31, 2016.~~backlog.

Service agreements and license revenues and associated cost of revenues for the years ended October 31, ~~2017~~2020 and ~~2016~~2019 were as follows:

Revenues for the year ended October 31, ~~2017~~2020 from service agreements and license fee ~~and royalty~~ agreements ~~totaled $27.1~~decreased $1.5 million ~~compared~~ to ~~$31.5~~$25.1 million ~~for the prior year. The decrease relates primarily to fewer module exchanges under service agreements performed in 2017. Revenue for license fee and royalty agreements totaled $2.7~~from $26.6 million and $6.2 million for the years ended October 31, 2017 and 2016, respectively, due to lower royalties recognized. The Company’s license and royalty agreements with POSCO Energy included a minimum royalty which expired in December 2016.

~~Service agreements and license cost of revenues decreased to $25.3 million for fiscal year 2017 from $32.6 million for the prior year. Gross margin~~ for the year ended October 31, ~~2017~~2019. Service agreements and license revenues decreased primarily due to the fact that $10 million of license revenues were recorded during the year ended October 31, 2019 in connection with the EMRE License Agreement, whereas only $4 million of license revenues were recorded during the year ended October 31, 2020 in connection with the EMRE Joint Development Agreement. In addition, the year ended October 31, 2019 included revenue recorded for the Bridgeport Fuel Cell Project service agreement. As a result of the purchase by the Company of the Bridgeport Fuel Cell Project on May 9, 2019, revenue under this service agreement was ~~6.5%~~no longer recognized after May 9, 2019. In addition to the $4.0 million associated with the EMRE Joint Development Agreement noted above, service agreements and license revenues for the year ended October 31, 2020 also includes revenue recognized from routine maintenance and module replacements.

Cost of service agreements and license revenues increased $5.6 million to $24.5 million for the year ended October 31, 2020 from $18.9 million for the year ended October 31, 2019, due, in part, to a $2.2 million increase in our loss accrual during the year ended October 31, 2020 to reflect changes in the expected timing of future module replacements under one service agreement (with respect to the 2.8 MW project at the Tulare, California wastewater treatment facility, which was originally commissioned in fiscal year 2018 and is owned by Clearway Energy, Inc.) in order to improve operating performance. In addition, site specific issues at the Tulare facility required an earlier than expected module replacement and the Company opted to replace another module earlier than expected at the same site to maximize facility efficiencies. As a result, we incurred a charge, which is included in the loss accrual increase described above, during the year ended October 31, 2020, but which is expected to result in improved margins in the future through enhanced performance. Cost of service agreements and license revenues includes maintenance and operating costs and module replacements. The remaining increase in cost of service agreements and license revenues for the year ended October 31, 2020 compared to the year ended October 31, 2019 relates to planned maintenance at several plants during the year ended October 31, 2020.

Overall gross profit from service agreements and license revenues was $0.6 million for the year ended October 31, 2020, which represents a decrease of $7.1 million from a gross profit of $7.7 million for the year ended October 31, 2019. This decrease is primarily due to the fact that $10 million of license revenues were recorded during the year ended October 31, 2019 in connection with the EMRE License Agreement, whereas only $4 million of license revenues were recorded during the year ended October 31, 2020 in connection with the EMRE Joint Development Agreement. As a result of both decreased service agreements and license revenues and increased cost of service agreements and license revenues, the service agreements and license revenues gross margin decreased to 2.3% for the year ended October 31, 2020 from a gross margin ~~loss~~ of ~~3.5%. The improvement in gross margin over~~28.8% for the ~~prior~~ year was a result of the fact that the prior year included contract loss accruals recorded in connection with the extension of certain legacy contracts as well as due to changes in estimated costs for certain legacy contracts and charges which were incurred in connection with the termination of service agreements at certain sites. The fiscal year 2017 gross margin also included MW module replacements with favorable margins.ended October 31, 2019.

As of October 31, ~~2017,~~2020, service agreements and license backlog totaled ~~approximately $182.3~~$169.0 million compared to ~~$204.8~~$192.3 million as of October 31, ~~2016. Service backlog does not include future royalties or license revenues.~~2019. This backlog is for service agreements of up to ~~twenty~~20 years at inception and is expected to generate positive margins and cash flows based on current estimates. Service agreements and license backlog also includes future license revenue.

Revenues for the year ended October 31, 2017 from generation totaled $7.2 million, compared to $1.3 million for the prior year period. Revenues for the year ended October 31, 2017 reflects revenue from electricity generated pursuant to the Company’s PPAs. Cost of generation totaled $5.1 million for the year ended October 31, 2017, compared to $0.7 million for the prior year period. Gross profit from generationGeneration revenues increased to $2.2 million for the year ended October 31, 2017, compared to $0.6 million for the prior year period. The increases represent the growth in the Company’s operating portfolio. The reduction in generation revenues gross margin percentage is the result of higher costs and lower revenues from electricity generation on certain plants during the initial startup operation period. As of October 31, 2017, the Company had 11.2 MW of operating power plants in its portfolio.

~~As of October 31, 2017, generation backlog totaled approximately $296.3 million compared to $142.5 million as of October 31, 2016.~~

~~Advanced Technologies contracts revenue~~ and related costs for the years ended October 31, ~~2017~~2020 and ~~2016~~2019 were as follows:

Revenues from generation for the year ended October 31, ~~2017 was $18.3~~2020 totaled $19.9 million, ~~representing~~which represents an increase of ~~$5.4~~$5.9 million ~~compared to $12.9 million~~from revenues from generation recognized of ~~revenue for the year ended October 31, 2016. Cost of Advanced Technologies contracts increased to $12.7~~$14.0 million for the year ended October 31, ~~2017,~~2019. Generation revenues for the years ended October 31, 2020 and 2019 reflect revenue from electricity generated under our PPAs. Generation revenues increased for the year ended October 31, 2020 compared to ~~$11.9~~the year ended October 31, 2019 due to additional revenue that was recorded for the PPA associated with the Bridgeport Fuel Cell Project, which was acquired on May 9, 2019, and the Tulare BioMAT project, which commenced operations in December 2019.

Cost of generation revenues totaled $27.9 million in the year ended October 31, 2020, which represents a decrease from the year ended October 31, 2019. Cost of generation revenues included depreciation of approximately $12.9 million and $6.8 million for the ~~prior year. Gross profit~~years ended October 31, 2020 and 2019, respectively.

The decrease in Cost of generation revenues was primarily a result of the inclusion of an impairment charge in the year ended October 31, 2019 for each of (i) the Triangle Street Project and (ii) the Bolthouse Farms Project, which are described below. Cost of generation revenues for the year ended October 31, 2020 includes an impairment charge, which was recorded for the Triangle Street Project during the fourth quarter of fiscal year 2020 and is also described below:

In the fourth quarter of fiscal year 2020, the Company reviewed the Triangle Street Project and as a result of output and revenue projections given then-current development plans, recorded an additional impairment charge of $2.4 million. The Triangle Street Project is used by the Company as a development platform for the Company’s advanced applications. As a result, revenue generation is impacted by these activities.

The overall gross loss from generation revenues was $7.9 million for the year ended October 31, 2020, which represents an improvement of $9.7 million from a gross loss of $17.6 million for the year ended October 31, 2019. This improvement is primarily a result of the lower impairment charges in the year ended October 31, 2020, as discussed above.

Advanced Technologies contract revenues and related costs for the years ended October 31, 2020 and 2019 were as follows:

Advanced Technologies contract revenues for the year ended October 31, 2020 were $25.8 million, which reflects an increase of $6.2 million when compared to $19.6 million of Advanced Technologies contract revenues for the year ended October 31, 2019. Advanced Technologies contract revenues were higher for the year ended October 31, 2020 due to revenues recognized in connection with the EMRE Joint Development Agreement (which was entered into on November 5, 2019). The year ended October 31, 2019 also included revenues recognized in connection with the EMRE Joint Development Agreement. Cost of Advanced Technologies contract revenues increased $3.4 million to $16.3 million for the year ended October 31, 2020, compared to $12.9 million for the year ended October 31, 2019, primarily as a result of costs incurred in connection with the EMRE Joint Development Agreement. Advanced Technologies contracts for the year ended October 31, ~~2017 was $5.6~~2020 generated a gross margin of $9.5 million compared to ~~$1.1~~a gross margin of $6.7 million for the year ended October 31, ~~2016, and gross margin was 30.6% for the year ended October 31, 2017 compared to 8.1% during the prior year period.~~2019. The increase in Advanced Technologies contract gross margin is related to the timing and mix of contracts, ~~currently being performed, particularly a higher proportion related~~which were more heavily weighted to ~~private industry contracts.~~

Atrevenue recognized under the EMRE Joint Development Agreement during the year ended October 31, ~~2017,~~2020, compared to the year ended October 31, 2019 which had lower EMRE Joint Development Agreement-related revenue and gross margin.

As of October 31, 2020, Advanced Technologies contract backlog totaled ~~approximately $44.3~~$49.2 million compared to ~~$60.1~~$12.0 million at October 31, ~~2016.~~2019.

Administrative and selling expenses were ~~$25.9~~$26.6 million and $31.9 million for the year ended October 31, ~~2017 compared~~2020 and 2019, respectively. The decrease in the year ended October 31, 2020 primarily relates to ~~$25.2~~proceeds from a legal settlement of $2.2 million received during the year ended October 31, 2020, which was recorded as an offset to administrative and selling expenses, and higher legal and consulting costs incurred during the year ended October 31, 2019 in connection with the restructuring and refinancing initiatives undertaken by the Company in fiscal year 2019.

Research and development expenses decreased to $4.8 million for the year ended October 31, ~~2016. The increase results primarily from higher business development costs incurred. Business development costs may vary from period~~2020, compared to ~~period depending on the nature and frequency of customer and state-level requests for proposals.~~

~~Research and development expenses decreased $0.4 million to $20.4~~$13.8 million for the year ended October 31, ~~2017, compared~~2019. The decrease related to ~~$20.8 million during~~ the ~~year ended October 31, 2016.~~

~~Restructuring expense of $1.4 million was recorded for the year ended October 31, 2017, relating to personnel separation costs~~reduction in spending resulting from the ~~business~~ restructuring ~~that was undertaken~~initiatives implemented in fiscal year 2019 and the reduction in the resources being allocated to ~~reduce costs~~internal research and ~~align production levels with the level of production needs at the time.~~development (as resources were instead allocated to Advanced Technologies projects).

Loss from operations for the year ended October 31, ~~2017~~2020 was ~~$44.9~~$39.2 million compared to ~~$46.4~~$66.9 million for the year ended October 31, ~~2016,~~2019. The decrease in the loss from operations was primarily as a result of ~~higher~~the lower gross ~~margins~~loss for the year, which was primarily a result of impairment charges of $20.4 million recorded for the year ended October 31, 2019. The decrease is also a result of lower operating expenses for the year ended October 31, 2020 due to lower spending (personnel and overhead costs) resulting from the restructuring initiatives implemented in 2019, the legal settlement of $2.2 million received during fiscal year ~~2017,~~2020 which ~~were partially~~was an offset ~~by higher operating~~to administrative and selling expenses ~~primarily~~and the reduction in the resources being allocated to research and development for ~~restructuring expense.~~the year ended October 31, 2020.

Interest expense for the ~~years~~year ended October 31, ~~2017~~2020 and ~~2016~~2019 was ~~$9.2~~$15.3 million and ~~$5.0~~$10.6 million, respectively. ~~The increase results from borrowings under the Company's Loan and Security Agreement with Hercules and~~Interest expense for both periods includes interest expense related to sale-leaseback transactions ~~recorded under the finance method. The interest expense for the years ended October 31, 2017~~ and ~~2016 includes~~ interest for the amortization of the redeemable preferred stock of a subsidiary fair value ~~discount~~discount. The increase in interest expense during the year ended October 31, 2020 primarily represents additional interest on the $80.0 million outstanding during such period under the Orion Credit Agreement and interest on the loans made by Fifth Third Bank and Liberty Bank in connection with the acquisition of ~~$2.0~~the Bridgeport Fuel Cell Project. In addition, interest expense during the year ended October 31, 2019 also included interest on outstanding amounts during such period under our loan and security agreement with Hercules Capital, Inc. (“Hercules”) and a modification fee of $0.8 million ~~and $1.8~~that was recorded in connection with the amendment of our loan agreement with NRG Energy, Inc.

~~Other income, net, was $0.2 million~~expense for the year ended October 31, ~~2017~~2020 represents an adjustment to the estimated fair value of the warrants issued to the lenders under the Orion Credit Agreement. The expense is primarily a result of increases in the Company’s stock price during the year ended October 31, 2020, which were used as an input to remeasure the warrants to fair value on a quarterly basis using a Black-Scholes model at the dates of exercise and period-end for the remaining unexercised warrants, compared to ~~other income, net~~the stock price used in the Black-Scholes model upon the issuance of ~~$0.6~~the warrants.

The $1.8 million gain for the year ended October 31, ~~2016. Unrealized foreign exchange (losses) gains aggregated~~2020 represents the difference between the amount of the payoff of the lease with respect to, ~~($0.7)~~and the repurchase of the UCI Fuel Cell, LLC project asset and the carrying amount of the related financing obligation.

Other income, net of $0.7 million and $0.1 million in fiscal year 2017 and 2016, respectively, which primarily related to the preferred stock obligation of our Canadian subsidiary, FCE Ltd. FCE Ltd.'s functional currency is U.S. dollars, while the preferred stock obligation is payable in Canadian dollars. Refundable research and development tax creditswas recorded for the years ended October 31, ~~2017~~2020 and ~~2016 were $0.9~~2019, respectively. Other income, net for the year ended October 31, 2020 primarily relates to a net non-cash gain on the extinguishment accounting related to the modification of the Series 1 Preferred Stock and the extinguishment related to the embedded derivatives (refer to Note 16. “Redeemable Preferred Stock” for additional information). Other income, net for the year ended October 31, 2020 also included a foreign exchange gain of $0.2 million related to the remeasurement of the Canadian Dollar denominated preferred stock obligation of our U.S. Dollar functional currency Canadian subsidiary, offset by a loss of approximately $0.3 million related to the remeasurement of the interest rate swap on the Bridgeport Fuel Cell Project loans. Other income, net for the year ended October 31, 2019 includes income of $0.6 million for refundable research and ~~$0.4~~development tax credits and a foreign exchange gain related to the remeasurement of the Canadian Dollar denominated preferred stock obligation for our U.S. Dollar functional currency Canadian subsidiary, offset by expense of $0.6 million ~~respectively.~~for the remeasurement of the interest rate swap on the Bridgeport Fuel Cell Project loans.

We have not paid federal or state income taxes in several years due to our history of net operating losses, ~~(“NOLs”),~~ although we have paid foreign income and withholding taxes in South Korea. ~~For~~Income tax recorded for the years ended October 31, 2020 and 2019 was $0.0 million and $0.1 million, respectively.

On February 21, 2019, we entered into an Exchange Agreement (the “Exchange Agreement”) with the holder of the Series A Warrant to Purchase Common Stock issued by us on July 12, 2016 (the “Series A Warrant”). Pursuant to the Exchange Agreement, we agreed to issue to the warrant holder 500,000 shares of our common stock in exchange for the Series A Warrant. During the year ended October 31, ~~2017,~~2019, we recorded a charge to common stockholders for the difference between the fair value of the Series A Warrant prior to the modification of $0.3 million and the fair value of the common shares issuable at the date of the Exchange Agreement of $3.5 million.

Dividends recorded on our ~~provision~~Series B Preferred Stock were $3.3 million and $3.2 million for ~~income taxes was $0.04 million, compared to $0.5 million in~~ the prior year. We cannot estimate when production volumes will be sufficient to generate taxable domestic income. Accordingly, no tax benefit has been recognized for these NOLs or other deferred tax assets as significant uncertainty exists surrounding the recoverability of these deferred tax assets.

~~As of~~years ended October 31, ~~2017, we had $752.7 million of federal NOL carryforwards that expire in the years~~2020 and 2019, ~~through 2037~~respectively.

Series C preferred stock deemed contributions and $414.7 million in state NOL carryforwards that expire in the years 2018 through 2037. Additionally, we had $11.6 million of state tax credits available, of which $0.6 million expires in 2018. The remaining credits do not expire.redemption value adjustment, net

~~The net loss attributed to the noncontrolling interest for~~During the year ended October 31, 2016 was $0.3 million. During October 2016, the Company purchased the noncontrolling interest in FuelCell Energy Services, GmbH, from Fraunhofer IKTS, giving the Company sole ownership and eliminating future noncontrolling interest.

~~Dividends recorded~~(“Series C Preferred Stock”) resulted in a variable number of shares of our common stock being issued to settle the conversion amounts and ~~paid on~~were treated as a partial redemption of our Series C Preferred Stock. Conversions during the year ended October 31, 2019 that were settled in a variable number of shares and treated as partial redemptions resulted in deemed contributions of $1.6 million. The deemed contributions represent the difference between the fair value of the common shares issued to settle the conversion amounts and the carrying value of the Series BC Preferred Stock.

The Company also accounted for an extinguishment of the Series C Preferred Stock by recording a deemed contribution of $0.5 million during the year ended October 31, 2019. A charge to common stockholders of $8.6 million was recorded during the year ended October 31, 2019 because of equity conditions failures under the Certificate of Designations for the Series C Preferred Stock.

The last outstanding shares of Series C Preferred Stock were ~~$3.2 million in each~~converted into common stock on May 23, 2019, so there were no shares of Series C Preferred Stock outstanding during the ~~years~~year ended October 31, ~~2017~~2020.

During the year ended October 31, 2019, conversions of our Series D Convertible Preferred Stock (“Series D Preferred Stock”) in which the conversion price was below the initial conversion price (as adjusted for the reverse stock split that occurred in May 2019) of $16.56 per share resulted in a variable number of shares of our common stock being issued to settle the conversion amounts and were treated as a partial redemption of the shares of our Series D Preferred Stock. Conversions during the year ended October 31, 2019 that were settled in a variable number of shares and treated as redemptions resulted in deemed dividends of $6.0 million. The deemed dividends represent the difference between the fair value of the common shares issued to settle the conversion amounts and the carrying value of the Series D Preferred Stock.

Redemption accretion of $3.8 million was recorded during the year ended October 31, 2019 and reflects the accretion of the difference between the carrying value of the Series D Preferred Stock and the amount that would have been redeemed if stockholder approval had not been obtained for the issuance of common stock equal to 20% or more of our outstanding voting stock prior to the issuance of the Series D Preferred Stock. If we had been unable to obtain such stockholder approval and were therefore prohibited from issuing shares of common stock as a result of this limitation (the “Exchange Cap Shares”) to a holder of Series D Preferred Stock at any time after April 30, 2019, we would have been required to pay cash to such holder in exchange for the redemption of such number of Series D Preferred Shares held by such holder that would not have been convertible into such Exchange Cap Shares. Stockholder approval was obtained at the annual meeting of the Company’s stockholders on April 4, 2019 and no further accretion was required.

The last outstanding shares of Series D Preferred Stock were converted into common stock on October 1, 2019, so there were no shares of Series D Preferred Stock outstanding during the year ended October 31, 2020.

Net loss attributable to common stockholders for the year ended October 31, 2020 represents the net loss for the period ~~less the net loss attributable to noncontrolling interest and~~ less the preferred stock dividends on the Series B Preferred Stock. ~~For the years ended October 31, 2017 and 2016, net~~Net loss attributable to common stockholders ~~was $57.1 million and $54.2 million, respectively, and basic and diluted loss per common share was $1.14 and $1.82, respectively.~~

~~Our revenues and cost of revenues for the years ended October 31, 2016 and 2015 were as follows:~~

~~Total revenues~~ for the year ended October 31, ~~2016 decreased $54.8 million, or 34%, to $108.3 million from $163.1 million during the year ended October 31, 2015, due primarily to decreased product sales as discussed below.~~

Total cost of revenues for the year ended October 31, 2016 decreased by $41.7 million, or 28%, to $108.6 million from $150.3 million for the year ended October 31, 2015. The Company's gross margin was a loss of 0.3% in fiscal year 2016, as compared to the prior year margin of 7.8%. A discussion of the changes in product sales, service agreement and license revenues, and Advanced Technologies contract revenues follows. Refer to “Critical Accounting Policies and Estimates” for more information on revenue and cost of revenue classifications.

~~Our product sales, cost of product sales and gross profit for the years ended October 31, 2016 and 2015 were as follows:~~

Product sales for the year ended October 31, 2016 included $11.7 million of power plant revenue, $41.8 million from sales of fuel cell kits and $9.1 million of revenue primarily related to power plant component sales and EPC services. This is compared to product sales for the year ended October 31, 2015 which included $19.6 million of power plant revenue, $84.5 million of fuel cell kits and module revenue and $24.5 million of revenue primarily from power plant component sales and EPC services. Product sales decreased $66.0 million, or 51%, for the year ended October 31, 2016 to $62.6 million from $128.6 million for the prior year period.

The decline in revenue during the period as compared to the prior year period is due primarily to lower revenue from POSCO Energy due to the transition of the kit and module sales to POSCO Energy to a royalty based model.

Also contributing to the decline in revenue over the comparable prior year period is certain power plants that are being recognized as Project assets on the balance sheet, as product and EPC revenue is not recognized with respect to these Project assets when sales are made. As the Company's development business expands, it is installing power plants for customers that have executed PPAs. These assets generally are the subject of sale-leaseback transactions with PNC Energy Capital, LLC (“PNC”), which are recorded under the financing method of accounting for a sale-leaseback. Under the finance method, the Company does not recognize the proceeds received from the lessor as a sale of such assets. The power plants are recognized as Project assets on the balance sheet and revenue will be recognized as electricity revenue is earned over the life of the PPA or when a definitive sales agreement is executed.

Cost of product sales decreased $55.1 million for the year ended October 31, 2016, to $63.5 million compared to $118.5 million in the prior year period. The decrease in cost of sales in fiscal year 2016 was driven by lower overall product volume during the fiscal year and retention of project assets on the balance sheet rather than sales to end customers or investors.

~~As of October 31, 2016, product sales backlog totaled approximately $24.9 million compared to $90.7 million as of October 31, 2015.~~

~~Our service agreements and license revenues and associated cost of revenues for the years ended October 31, 2016 and 2015 were as follows:~~

Revenues for the year ended October 31, 2016 from service agreements and license fee and royalty agreements totaled $31.5 million, compared to $21.0 million for the prior year. The increase relates primarily to more module exchanges performed in 2016, some of which resulted from service contract extensions for certain projects. Revenue for license fee and royalty agreements totaled $6.2 million and $4.7 million for the years ended October 31, 2016 and 2015, respectively.

Service agreements and license cost of revenues increased to $32.6 million for the year ended October 31, 2016 from $18.3 million for the prior year, resulting in a decrease in gross margin to a loss of 3.5% from a profit of 12.9% during the prior year period. The decrease in gross margin over the prior year relates to an increase in performance guarantee accruals due to plant performance at certain sites, contract loss accruals recorded in connection with the extension of certain legacy contracts as well as due to changes in estimated costs for certain legacy contracts, and charges incurred in connection with termination of service agreements at certain sites.

As of October 31, 2016, service backlog totaled approximately $204.8 million compared to $254.1 million as of October 31, 2015. Service backlog does not include future royalties or license revenues. This backlog is for service agreements of up to twenty years.

Revenues for the year ended October 31, 2016 from generation totaled $1.3 million. Revenues are from electricity generated pursuant to the Company’s PPAs. Cost of generation totaled $0.7 million for the year ended October 31, 2016. The increases represent the growth in the Company’s operating portfolio. The Company did not have any operating assets in its generation portfolio during fiscal 2015.

~~Advanced Technologies contracts revenue and related costs for the years ended October 31, 2016 and 2015 were as follows:~~

Advanced Technologies contracts revenue for the year ended October 31, 2016 was $12.9 million, representing a decrease of $0.5 million when compared to $13.5 million of revenue for the year ended October 31, 2015. Cost of Advanced Technologies contracts decreased $1.6 million to $11.9 million for the year ended October 31, 2016, compared to $13.5 million for the prior year. Gross profit from Advanced Technologies contracts for the year ended October 31, 2016 was $1.1 million compared to breakeven for the year ended October 31, 2015, and gross margin was 8.1% compared to breakeven during the prior year period. The increase in gross margin is related to the timing and mix of contracts currently being performed, particularly the transition to a larger mix of private industry contracts.

~~As of October 31, 2016, Advanced Technologies contract backlog totaled approximately $60.1 million compared to $36.5 million as of October 31, 2015.~~

Administrative and selling expenses were $25.2 million for the year ended October 31, 2016 compared to $24.2 million for the year ended October 31, 2015. The increase results primarily from higher business development costs incurred early in the year. Business development costs may vary from period to period depending on the nature of customer and state-level requests for proposals.

Research and development expenses increased $3.4 million to $20.8 million for the year ended October 31, 2016, compared to $17.4 million during the year ended October 31, 2015. The increase in research and development expenses reflects increased research and development activity related to near-term product introductions, including the high efficiency fuel cell. This configuration has an overall electrical efficiency of approximately 60% and is designed for utility scale applications and data centers. The first power plant is currently being installed and is expected to be fully operational in fiscal year 2018.

Loss from operations for the year ended October 31, 2016 was $46.4 million compared to a loss of $28.9 million for the year ended October 31, 2015, primarily as a result of lower gross margins in fiscal year 2016.

Interest expense for the years ended October 31, 2016 and 2015 was $5.0 million and $3.0 million, respectively. The increase results from borrowings under the Company's Loan and Security Agreement with Hercules, the $10.0 million low-cost loan granted by the State of Connecticut in early 2016, and interest expense related to sales-leaseback transactions recorded under the finance method. The interest expense for both periods includes interest for the amortization of the redeemable preferred stock of a subsidiary fair value discount of $1.8 million.

Other income, net, was $0.6 million for the year ended October 31, 2016 compared to other income, net of $2.4 million for the year ended October 31, 2015. Unrealized foreign exchange gains aggregated to $0.1 million and $1.7 million in fiscal year 2016 and 2015, respectively, which primarily related to the preferred stock obligation of our Canadian subsidiary, FCE Ltd. FCE Ltd.'s functional currency is U.S. dollars, while the preferred stock obligation is payable in Canadian dollars. Refundable research and development tax credits for the years ended October 31, 2016 and 2015 were $0.4 million and $0.6 million, respectively.

We have not paid federal or state income taxes in several years due to our history of NOLs, although we have paid income taxes in South Korea. For the year ended October 31, 2016, our provision for income taxes was $0.5 million, compared to $0.3 million in the prior year. We cannot estimate when production volumes will be sufficient to generate taxable domestic income. Accordingly, no tax benefit has been recognized for these NOLs or other deferred tax assets as significant uncertainty exists surrounding the recoverability of these deferred tax assets.

The net loss attributed to the noncontrolling interest for each of the years ended October 31, 2016 and 2015 was $0.3 million. During October 2016, the Company purchased the noncontrolling interest in FuelCell Energy Services, GmbH, from Fraunhofer IKTS, giving the Company sole ownership and eliminating future noncontrolling interest in earnings.

~~Dividends recorded and paid on the Series B Preferred Stock were $3.2 million in each of the years ended October 31, 2016 and 2015.~~

~~Net loss attributable to common stockholders~~2019 represents the net loss for the period less the ~~net loss attributable to noncontrolling interest and less~~charge associated with the Series A Warrant exchange, the preferred stock dividends on the Series B Preferred ~~Stock.~~Stock, the preferred stock deemed contributions and redemption value adjustment, net on the Series C Preferred Stock and the Series D Preferred Stock deemed dividends and redemption accretion. For the years ended October 31, ~~2016~~2020 and ~~2015,~~2019, net loss attributable to common stockholders was ~~$54.2~~$92.2 million and ~~$32.6~~$100.2 million, respectively, and ~~basic and diluted~~ loss per common share was $0.42 and $1.82, respectively. The decrease in the net loss attributable to common stockholders for the year ended October 31, 2020 is primarily due to the lower gross loss due to lower impairment charges in fiscal year 2020 and ~~$1.33, respectively.~~lower operating expenses, partially offset by the change in fair value of the common stock warrant liability

discussed above and the fact that there were no amounts recorded for the Series A Warrants and the Series C and D Preferred Stock as none were outstanding during the year. The lower loss per common share for the year ended October 31, 2020 primarily is due to the higher weighted average shares outstanding due to share issuances since October 31, 2019.

Our principal sources of cash have been sales of our common stock through public equity offerings, proceeds from third party debt such as borrowings under our credit facilities, project financing and tax monetization transactions, proceeds from the sale of our projects as well as research and development and service and license agreements with third parties. We have utilized this cash to develop and construct power plants, develop Advanced Technologies, pay down existing outstanding indebtedness, and meet our other cash and liquidity needs.

As of October 31, ~~2017, we believe that our~~2020, unrestricted cash and cash equivalents ~~on hand, cash flows from operating activities, availability under our loan facilities and access~~totaled $149.9 million compared to ~~the capital markets will be sufficient to meet our working capital and capital expenditure needs for at least the next twelve months.~~

We intend to maintain appropriate cash and debt levels based upon our expected cash requirements for operations, capital expenditures, construction of project assets as well as principal, interest and dividend payments. In the future, we may also engage in additional debt or equity financings, including project specific debt financings. We believe that when necessary, we will have adequate access to the capital markets, although the timing and size of any financing will depend on multiple factors including market conditions, future order flow and the need to adjust production capacity. If we are unable to raise additional capital, our growth potential may be adversely affected and we may have to modify our plans.

~~Cash and cash equivalents including restricted cash, totaled $87.5~~$9.4 million as of October 31, ~~2017 compared~~2019.

Subsequent to ~~$118.3~~the end of fiscal year 2020, in December 2020, the Company closed an underwritten offering of 25.0 million shares of the Company’s common stock. Net proceeds to the Company were approximately $156.3 million after deducting underwriting discounts and commissions and other offering expenses. Proceeds from this offering have been utilized as ~~of October 31, 2016. As of October 31, 2017:~~follows:

During the third quarter of fiscal year 2017, the Company completed an equity capital raise netting $13.9 million of proceeds which included common stock and two tranches of warrants. Warrants to purchase 9.8 million shares of common stock were exercised in the third and fourth quarters of fiscal year 2017, yielding proceeds of $12.7 million. If all remaining warrants related to this equity offering are exercised in periods subsequent to October 31, 2017, the Company could receive additional cash proceeds of up to $19.6 million.

We believe that our unrestricted cash and cash equivalents, ~~described above,~~expected receipts from our contracted backlog, and release of short-term restricted cash less expected disbursements over the next twelve months will be sufficient to allow the Company ~~has $40.0 million~~to meet its obligations for at least one year from the date of availability under its project finance loan agreement with NRG Energy through FuelCell Finance, which can be used for project asset construction. Draws under the facility are subject to traditional project finance conditions precedent, including the existence of a PPA with the end-user of the power and customary project documentation, economic performance and compliance with applicable laws and regulations. Projects must be located in the United States.

~~We also have an effective shelf registration statement on file with the SEC for~~ issuance of ~~debt and equity securities.~~these financial statements.

To date, we have not achieved profitable operations or sustained positive cash flow from operations. The Company’s future liquidity will ~~be dependent~~depend on ~~obtaining a combination~~its ability to (i) timely complete current projects in process within budget, (ii) increase cash flows from its generation portfolio, including by meeting conditions required to timely commence operation of ~~increased~~new projects, operating its generation portfolio in compliance with minimum performance guarantees and operating its generation portfolio in accordance with revenue expectations, (iii) obtain financing for project construction, (iv) obtain permanent financing for its projects once constructed, (v) increase order and contract volumes, ~~increased cash flows from our~~which would lead to additional product sales, services agreements and generation revenues, (vi) obtain funding for and ~~service portfolios~~receive payment for research and development under current and future Advanced Technologies contracts, (vii) implement the cost reductions necessary to achieve profitable operations, (viii) manage working capital and the Company's unrestricted cash balance and (ix) access the capital markets to raise funds through the sale of equity securities, convertible notes, and other equity-linked instruments, all of which will require an increase in authorized shares, and/or other debt instruments.

Our business model requires substantial outside financing arrangements and satisfaction of the conditions of such financing arrangements to construct and deploy our projects and facilitate the growth of our business. We have obtained financing through the debt and equity markets during and subsequent to the fiscal year ended October 31, 2020. In future periods, the Company expects to seek lower-cost long-term debt and tax equity (e.g., sale-leaseback and partnership transactions) for its project asset portfolio as these projects commence commercial operations. ~~Our expanding development~~The proceeds of ~~large-scale turn-key projects~~any such financing, if obtained, may allow the Company to fund other projects. We may also seek to obtain additional financing in both the debt and equity markets in the ~~United States~~future. If financing is not available to us on acceptable terms if and when needed, or on terms acceptable to us or our lenders, if we do not satisfy the conditions of our financing arrangements, if we spend more than the financing approved for projects, if project costs exceed an amount that the Company can finance, or if we do not generate sufficient revenues or obtain capital sufficient for our corporate needs, we may be required to reduce or slow planned spending, reduce staffing, sell assets, seek alternative financing and take other measures, any of which could have a material adverse effect on our financial condition and operations.

As of December 31, 2020, we had 15,093,242 shares of common stock available for issuance, excluding treasury stock, of which 5,185,674 shares were reserved for issuance under various warrants and equity awards, upon conversion of preferred stock, and under our employee stock purchase and equity incentive plans. The limited number of shares of our common stock available for issuance will limit our ability to raise capital in the equity markets and satisfy obligations with shares instead of cash, which could adversely affect our business and operations. We plan to seek stockholder approval to increase the number of shares of common stock we are authorized to issue, but such approval may not be obtained.

To grow our generation portfolio, the Company will invest in developing and building turn-key fuel cell projects which will be owned by the Company and classified as project assets on the balance sheet. This strategy requires liquidity and ~~is expected~~the Company expects to continue to have increasing liquidity ~~requirements. A key element of our business model includes the development of turn-key~~requirements as project sizes increase and more projects ~~and we~~are added to backlog. We may commence ~~construction~~building project assets upon the award of a project or execution of a multi-year PPA with an end-user that has a strong credit profile. Project development and construction cycles, which span the time between securing a PPA and commercial ~~operations~~operation of the plant, vary substantially and can take years. As a result of these project cycles and strategic decisions to finance the construction of certain projects, we may need to make significant up-front investments of resources in advance of the receipt of any cash from the sale or long-term financing of such projects. ~~These~~To make these up-front investments, we may ~~include using~~use our working capital, ~~availability under our construction financing facility~~seek to raise funds through the sale of equity or debt securities, or seek other ~~project~~ financing arrangements. We may choose to substantially complete the construction of a project before it is sold to a project investor. Alternatively, we may choose to retain ownership of one or more of these projects after they become operational if we determine it would be of economic and strategic benefit to do so. If, for example, we cannot sell a project at economics that are attractive to us, we may instead elect to own and operate such project, generally until such time that we can sell such project on economically attractive terms. In markets where there is a compelling value proposition, we may also build one or more power plants on an uncontracted “merchant” basis in advance of securing long-term contracts for the project attributes (including energy, renewable energy credits and capacity). Delays in construction progress and completing current projects in process within budget, or in completing financing or the sale of our projects ~~which we are self-financing~~ may impact our ~~liquidity.~~liquidity in a material way.

Our operating portfolio ~~(11.2~~(32.6 MW as of October 31, ~~2017)~~2020) contributes higher long-term cash flows to the Company than if these projects had been sold. These projects generated $19.9 million in annual revenue for the fiscal year ended October 31, 2020, but this amount may fluctuate from year to year depending on plant output, operational performance and management and site conditions. The Company plans to continue to grow this portfolio while also selling projects to investors. As of October 31, ~~2017,~~2020, the Company had projects representing an additional ~~19.5~~40.7 MW ~~under~~in various stages of development and construction, ~~some of~~ which ~~would be~~projects are expected to generate operating cash flows in ~~fiscal 2018.~~future periods, if completed. Retaining long-term cash flow positive projects, combined with our service fleet, ~~reduces~~is expected to result in reduced reliance on new project sales to achieve cash flow positive ~~operations.~~operations, however, operations and performance issues could impact results. We have ~~partnered~~worked with and are continuing to work with lenders and financial institutions to secure construction financing, long-term debt, tax equity and sale-leasebacks for our project asset portfolio, ~~as well as NRG for construction period financing. Through October 31, 2017, we have financed four projects through sale-leaseback transactions.~~ but there can be no assurance that such financing can be attained, or that, if attained, it will be retained and sufficient.

As of October 31, ~~2017, total finance obligations and~~2020, net debt outstanding related to project assets was ~~$48.3~~$119.0 million. Future required payments totaled $99.9 million as of October 31, 2020. The outstanding financing obligation under our sale-leaseback transactions, which totaled $49.3 million as of October 31, 2020, includes an embedded gain of $29.0 million, which will be recognized at the end of the applicable lease terms. As noted above, subsequent to the end of fiscal year 2020, the Company repaid all amounts outstanding under the Orion Credit Agreement and terminated the Orion Facility.

Our ~~generation~~operating portfolio provides ~~the Company~~us with the full benefit of future cash ~~flows.~~ flows, net of any debt service requirements.

The ~~Company had a contract backlog totaling approximately $554.2 million~~following table summarizes our operating portfolio as of October 31, ~~2017. This backlog includes approximately $182.3 million~~2020:

The following table summarizes projects in process, all of service agreements and $296.3 million of PPAs, combined for an average term of approximately 17 years weighted based on dollar backlog and utility service contracts up to twenty years in duration, providing a committed source of revenue to the year 2037. Backlog also includes $31.3 million of product sales contracts, which are ~~expected to generate~~in backlog, as of October 31, 2020:

The projects listed in the above table are in various stages of development or on-site construction and installation. Current project updates are as follows:

Backlog by revenue ~~in 2018. Product sales are primarily related to the Korean utility market and complements the U.S. PPA market.~~ category is as follows:

Backlog represents ~~firm~~ definitive agreements executed by the Company and our customers. ~~This~~Projects for which we have a PPA are included in generation backlog, ~~excludes the following recent awards: LIPA for 39.8 MW projects, the Toyota hydrogen project and the Korean 20 MW twenty year service agreement. Backlog is expected~~which represents future revenue under long-term PPAs. Projects sold to ~~increase~~

~~by over $1.0 billion once these project awards are converted to definitive agreements.~~ ~~Project awards referenced~~customers (and not retained by the ~~Company~~Company) are ~~notifications that the Company has been selected, typically through a competitive bidding process, to enter into definitive agreements. These awards have been publicly disclosed. Negotiations are~~included in ~~process and if successfully completed, project awards will become backlog.~~

~~The Company also has a strong~~product sales and service ~~pipeline of potential projects in various stages of development in North America, Asia~~agreements and ~~Europe. This pipeline includes projects for on-site ‘behind-the-meter’ applications~~license backlog and for grid support multi-megawatt fuel cell parks. Behind-the-meter applications provide end users with predictable long-term economics, on-site power including micro-grid capabilities and reduced carbon emissions. In addition, a number of multi-megawatt utility grid support projects are being developed for utilities and independent power producers to support the ~~grid where power~~related generation backlog is ~~needed. These projects help both utilities and governments meet their renewable portfolio standards.~~removed upon sale.

Factors that may impact our liquidity in fiscal year ~~2018~~2021 and beyond include:

As the Company builds project assets and makes capital expenditures, depreciation and amortization expenses are expected to increase. For the years ended October 31, ~~2017 included $3.0~~2020 and 2019, depreciation and amortization totaled $19.4 million ~~of cash advanced by POSCO Energy~~and $12.4 million, respectively (of these totals, approximately $13.9 million and $7.4 million for ~~raw material purchases made on its behalf by FuelCell Energy. Under an inventory procurement agreement that ensures coordinated purchasing from~~ the global supply chain, FuelCell Energy provides procurement services for POSCO Energy and receives compensation for services rendered. While POSCO Energy makes payments to us in advance of supplier requirements, quarterly receipts may not match disbursements.

Cash and cash equivalents and restricted cash and cash equivalents totaled ~~$87.4~~$192.1 million as of October 31, ~~2017~~2020, compared to ~~$118.3~~$39.8 million as of October 31, ~~2016.~~2019. As of October 31, ~~2017,~~2020, restricted cash and cash equivalents was ~~$38.2~~$42.2 million, of which ~~$4.6~~$9.2 million was classified as current and ~~$33.5~~$33.0 million was classified as non-current, compared to ~~$34.1~~$30.3 million total restricted cash and cash equivalents as of October 31, ~~2016,~~2019, of which ~~$9.4~~$3.5 million was classified as current and ~~$24.7~~$26.9 million was classified as non-current.

Operating Activities – Net cash used in operating activities was ~~$71.8~~$36.8 million during fiscal year ~~2017~~2020 compared to ~~$46.6 million~~net cash used in operating activities ~~during~~of $30.6 million in fiscal year ~~2016.~~ 2019 and net cash provided by operating activities of $16.3 million in fiscal year 2018.

Net cash used in operating activities during fiscal year ~~2017 is~~2020 was primarily athe result of the net loss of ~~$53.9~~$89.1 million, increases in accounts ~~receivable~~receivables of ~~$51.3~~$6.3 million, unbilled receivables of $5.6 million and inventory of ~~$8.0~~$2.1 million and ~~decreases~~a decrease in accounts payable of $7.1 million. These amounts were partially offset by increases in accrued liabilities of ~~$2.3~~$5.5 million and deferred revenue of ~~$0.9 million. The decreases were offset by~~$1.7 million and net non-cash adjustments of ~~$20.2 million and an increase in accounts payable of $25.0~~$68.5 million.

Net cash used in operating activities during fiscal year ~~2016 is~~2019 was primarily the result of athe net loss of ~~$51.2~~$77.6 million and ~~a $26.6~~increases in inventory of $6.4 million ~~decrease~~and unbilled receivables of $4.5 million. These amounts were offset by increases in deferred revenue ~~partially~~of $6.0 million and accrued liabilities of $2.4 million, decreases in accounts receivable of $4.8 million and other assets of $2.1 million and net non-cash adjustments of $42.7 million.

Net cash provided by operating activities during fiscal year 2018 was primarily the result of decreases in accounts receivable of $48.7 million, inventories of $31.7 million, deferred revenue of $1.3 million and net non-cash activity of $15.4 million. Accounts receivable and inventory decreased primarily as a result of cash received and inventory delivered under the contract to deliver a 20 MW project to KOSPO in South Korea. These amounts were offset by ~~a $30.2~~the net loss of $47.3 million ~~decrease in accounts receivable. Cash used in operating activities also included a $3.0 million reduction~~for fiscal year 2018, decreases in accounts payable of $19.8 million and accrued liabilities of $11.3 million, and an ~~$8.1 million~~ increase in ~~inventories.~~other assets of $2.3 million.

Investing Activities – Net cash used in investing activities was ~~$31.4~~$32.5 million during fiscal year ~~2017~~2020 compared to ~~net cash used~~$69.3 million in ~~investing activities of $41.5 million during~~ fiscal year ~~2016.~~2019 and $31.4 million in fiscal year 2018.

Net cash used in investing activities during fiscal year ~~2017~~2020 included $31.5 million of project asset expenditures and a $0.6 million payment for a working capital adjustment for the May 2019 acquisition of the Bridgeport Fuel Cell Project.

Net cash used in investing activities during fiscal year 2019 included the purchase by the Company of all of the outstanding membership interests in Bridgeport Fuel Cell, LLC (“BFC”), the owner of the 14.9 MW Bridgeport Fuel Cell Project, for $35.5 million, $31.7 million invested in project assets to expand our operating portfolio and $2.2 million for capital expenditures.

Net cash used in investing activities during fiscal year 2018 included a ~~$19.7~~$41.2 million investment in project assets to expand our operating portfolio and ~~$12.4~~$10.0 million for capital expenditures which was primarily for the substantial completion of the Torrington facility expansion. Net cash used for the year was offset by cash received in connection with an asset acquisition of $0.6 million.expenditures.

Net cash used in investing activities during fiscal year 2016 consists of a $33.7 million investment in project assets as a result of expanding our portfolio to retain long-term positive cash flow projects (many under PPAs with contract durations of up to twenty years). Capital expenditures totaled $7.7 million and primarily related to the expansion of our Torrington facility.

Financing Activities - –Net cash provided by financing activities was ~~$72.3~~$221.7 million during fiscal year ~~2017~~2020 compared to ~~$120.7~~$59.7 million in fiscal year ~~2016.~~2019 and $27.7 million in fiscal year 2018.

Net cash provided by financing activities during fiscal year ~~2017 includes net proceeds received~~2020 resulted from the ~~issuance~~receipt of ~~preferred shares~~$63.9 million of ~~$27.9~~debt proceeds under the Orion Facility, which was net of a loan discount of $1.6 million, ~~cash received from a common stock offering~~$14.4 million of ~~$14.2 million, cash received from warrant exercises of $12.7 million, and net~~ proceeds from ~~open market sales~~the sale-leaseback transaction with Crestmark Equipment Finance, $6.5 million of ~~common stock~~debt proceeds from Liberty Bank under the PPP Note, $3.0 million of ~~$12.6 million. Net cash provided by financing activities also included $17.9~~debt proceeds from Connecticut Green Bank, $98.3 million of net proceeds from ~~debt primarily relating to a sale-leaseback transaction with PNC. Cash received was offset by the repayment~~an underwritten equity offering that closed in October 2020, $73.6 million of ~~debt of $8.6 million, the payment of preferred dividends and the return of capital of $4.2 million.~~

~~Net cash provided by financing activities during the year ended October 31, 2016 includes~~ net proceeds from ~~open market~~at-the-market sales of common stock (after deducting commissions), and $1.3 million of ~~$36.2 million and~~net proceeds from ~~a registered direct offering~~warrant conversions, offset by debt repayments of ~~common stock and warrants to a single institutional investor totaling $34.7 million. The Company also had net debt proceeds of $55.5~~$30.1 million, consisting of long-term debt issued to (i) the State of Connecticut for our facility expansion, (ii) Hercules pursuant to the loan and security agreement to support working capital and (iii) NRG Energy and PNC to support

~~long-term project financing. Proceeds of financing activities were partially offset primarily by~~ the payment of preferred dividends and return of capital ~~payments~~ of ~~$4.2~~$6.5 million, and the payment of deferred ~~finance~~financing costs of $2.7 million.

Net cash provided by financing activities during fiscal year 2019 resulted from the receipt of $69.6 million of debt proceeds, which included $26.7 million to acquire all of the membership interest in BFC, $14.5 million under the Orion Facility and the remainder related to project level financings, offset by debt repayments of $48.4 million, the payment of deferred financing costs of $3.3 million and the payment of preferred dividends and return of capital of $1.8 million. The sale of common stock during fiscal year 2019 resulted in proceeds, net of expenses, of $43.6 million.

Net cash provided by financing activities during fiscal year 2018 resulted from net proceeds of $25.3 million received in connection with the offering and issuance of the Series D Preferred Stock, the receipt of $13.1 million under the amended loan and security agreement with Hercules and net proceeds received of $10.5 million from warrant exercises and at the market sales of our common stock, offset by cash payments of $16.6 million primarily relating to repayments under the loan and security agreement with Hercules and the payment of preferred dividends and return of capital of $4.2 million.

A summary of our significant future commitments and contractual obligations as of October 31, ~~2017~~2020 and the related payments by fiscal year is summarized as follows:

In March 2017, the Connecticut Green Bank approved a $5.0 million credit facility for a 3.7 MW project under construction in Danbury, Connecticut. The credit facility will be funded after the power plant achieves commercial operations

Term and ~~is secured by the power plant and the underlying revenues from the sale of electricity, renewable energy credits (“RECs”), and capacity. The 20 year credit facility bears a fixed interest rate.~~ Construction is currently in process and commercial operation is expected in early 2018. The credit facility is subject to execution of definitive documentation and customary closing conditions. This project will distribute power to the Connecticut

~~grid and is expected to demonstrate electrical efficiency and the ability of utilities to affordably and cleanly solve power generation challenges in land-constrained areas.~~ Loans

In November 2016, the Company’s wholly-owned subsidiary, FuelCell Finance, entered into a membership interest purchase agreement with GW Power LLC (“Seller”) whereby FuelCell Finance purchased allA discussion of the ~~outstanding membership interests in New Britain Renewable Energy, LLC (“NBRE”) from Seller. Seller assigned~~key terms and conditions of the NBRE interest to FuelCell Finance free and clear of all liens other than a pledge in favor of Webster Bank, National Association (“Webster Bank”). FuelCell Finance assumed the debt outstanding with Webster Bank in the amount of $2.3 million. The term loan interest is 5.0% and payment due on a quarterly basis commenced in January 2017. The balanceloans outstanding as of October 31, ~~2017 was $1.7 million.~~2020 is included in Note 14. “Debt” to the consolidated financial statements. The information included under the headings “Orion Energy Partners Investment Agent, LLC Credit Agreement,” “Connecticut Green Bank Loans,” “Bridgeport Fuel Cell Project Loans,” “State of Connecticut Loan” and “Liberty Bank Promissory Note” in Note 14. “Debt” to the consolidated financial statements is incorporated herein by reference.

Subsequent to October 31, 2020, the Company ~~entered into a~~paid off all outstanding principal, accrued but unpaid interest, prepayment premium, fees, costs and other expenses due and owing to the Orion Agent and the lenders under the Orion Facility and the Orion Credit Agreement and the related loan ~~and security agreement (the “Hercules Agreement”) with Hercules for an aggregate principal amount of up~~documents. Refer to $25.0 million, subject to certain terms and conditions. The Hercules Agreement was subsequently amended in the fourth fiscal quarter of 2017. The Company received an initial term loan advance on the date of closing of $15.0 million and an additional $5.0 million in September 2016. As of October 31, 2017, drawdowns and accrued amortizationNote 25. “Subsequent Events” of the end of term payment on the facility aggregated $21.5 million. The loan is a 30 month secured facility and the term loan interest was previously 9.5% and increased to 9.75% resulting from the increase in the prime rate. Interest is paid on a monthly basis. Interest only payments were to be made for the first 18 months asfinancial statements. As a result of such repayment, the Company achieving certain milestones. In addition to interest, principal payments commenced on November 1, 2017 in equal monthly installments. The loan balance and all accrued and unpaid interest is due and payable by October 1, 2018. Per the terms of the Hercules Agreement, there is an end of term payment of $1.7 million which is being accreted using the effective interest rate method.

As collateral for obligations under the Hercules Agreement, the Company granted Hercules a security interest in FuelCell Energy, Inc.’s existing and hereafter-acquired assets except for intellectual property and certain other excluded assets. Collateral does not include assets held by FuelCell Finance or any project subsidiary thereof. The Company may continue to collateralize and finance its project subsidiaries through other lenders and partners. Under the Hercules Agreement, as amended, there is a minimum cash covenant which requires the Company to maintain an unrestricted cash balance in accounts subject to an account control agreement in favor of Hercules of at least the greater of (x) (a) 75% of the outstanding loan balance plus (b) the amount of accounts payable (as defined under GAAP) not paid within 90 days of the invoice date and (y) (a) at all times prior to the Stockholder Approval Date (as defined in the Certificate of Designations for the Series C Preferred Stock), $20.0 million and (b) at all times on and after the Stockholder Approval Date, $10.0 million (the Stockholder Approval Date was December 14, 2017, which was the date on which stockholder approval of the issuance of certain shares upon the conversion and/or redemption of the Company’s Series C Preferred Stock was obtained).

~~The second phase of our manufacturing expansion, for which we will~~following amounts would be ~~eligible to receive an additional $10.0 million in low-cost financing~~removed from the State of Connecticut, will commence as demand supports. This includes adding manufacturing equipment to increase annual capacity from the current 100 MW to at least 200 MW. Plans for this phase also include the installation of a megawatt scale tri-generation fuel cell plant to power and heat the facility as well as provide hydrogen for the manufacturing process of the fuel cell components, and the creation of an Advanced Technologies Center for technology testing and prototype manufacturing. In addition, the final stage of the fuel cell module manufacturing will be relocated to the Torrington facility from its current location at the Danbury, Connecticut headquarters, which will reduce logistics costs. The total cost of both phases of the expansion could be up to $65.0 million over a five year period, including the proposed Advanced Technologies Center and tri-generation fuel cell power plant.above table:

On July 30, 2014, the Company's subsidiary, FuelCell Finance, entered into a Loan Agreement with NRG. Pursuant to the Loan Agreement, NRG has extended a $40.0 million revolving construction and term financing facility to FuelCell Finance for the purpose of accelerating project development by the Company and its subsidiaries. FuelCell Finance and its subsidiaries may draw on the facility to finance the construction of projects through the commercial operating date of the power plants. FuelCell Finance has the option to continue the financing term for each project after the commercial operating date for a maximum term of five years per project. The interest rate is 8.5% per annum for construction-period financing and 8.0% thereafter. As of October 31, 2017, there was no outstanding balance on this facility.

In March 2013, we closed on a long-term loan agreement with Connecticut Green Bank totaling $5.9 million in support of the Bridgeport Fuel Cell Park Project. The loan agreement carries an interest rate of 5.0% and principal repayments will commence on the eighth anniversary of the project’s provisional acceptance date, which is in December 2021. Outstanding amounts are secured by future cash flows from the Bridgeport contracts. The outstanding balance on the Connecticut Green Bank Note as of October 31, 2017 was $6.1 million.

In April 2008, we entered into a 10-year loan agreement with the Connecticut Development Authority allowing for a maximum amount borrowed of $4.0 million. As of October 31, 2017, we had an outstanding balance of $2.3 million on this loan. The interest rate is 5%. Interest only payments commenced in January 2014 and the loan is collateralized by the assets procured under this loan as well as $4.0 million of additional machinery and equipment. Repayment terms require interest and principal payments through May 2018.Restricted Cash

We have pledged approximately ~~$38.2~~$42.2 million of our cash and cash equivalents as performance security and for letters of credit for certain banking requirements and contracts. As of October 31, ~~2017,~~2020, outstanding letters of credit totaled ~~$2.9~~$6.5 million. These letters of credit expire on various dates through ~~April 2019.~~August 2028. Under the terms of certain contracts, ~~the Company~~we will provide performance security for future contractual obligations. The restricted cash balance as of October 31, ~~2017 includes $15.0~~2020 also included $15.1 million which was placed in a Grantor’s Trust account to secure certain Company obligations under the 15-year service agreement for the Bridgeport Fuel Cell Park Project and is reflected as long-term restricted cash. The restrictions on the $15.0 million will be removed upon completion of the final module exchange at the Bridgeport Fuel Cell Park Project under the terms of the services agreement. The restricted cash balance as of October 31, 2017 also includes $17.0 millionprimarily to support obligations ofunder the power purchase and service agreements related to our sale-leaseback transactions with PNC Energy Capital, LLC (“PNC”), $0.4 million related to our sale-leaseback transaction with Crestmark Equipment Finance (“Crestmark”), $7.5 million relating to future obligations associated with the ~~PNC sale-leaseback transactions.~~

~~As of October 31, 2017, we have uncertain tax positions aggregating $15.7~~Bridgeport Fuel Cell Project, and $11.2 million ~~and have reduced our NOLs carryforwards by this amount. Because~~relating to the reserves established under the Orion Facility. Refer to Note 21. “Restricted Cash” for a detailed discussion of the ~~level~~Company’s restricted cash balance and refer to Note 25. “Subsequent Events” for the impact to restricted cash from the repayment of ~~NOLs and valuation allowances, unrecognized tax benefits, even if not resolved in our favor, would not result in any cash payment or obligation and therefore have not been included in~~all amounts owed under the ~~contractual obligation table above.~~Orion Credit Agreement.

~~In addition to the commitments listed in the table above, we have the following outstanding obligations:~~

Under the terms of our PPAs, customers agree to purchase power from our fuel cell power ~~plants~~platforms at negotiated rates. Electricity rates are generally a function of the customers’ current and estimated future electricity pricing available from the grid. We are responsible for all operating costs necessary to maintain, monitor and repair our fuel cell power ~~plants.~~platforms. Under certain agreements, we are also responsible for procuring fuel, generally natural gas or Biogas, to run our fuel cell power ~~plants. We~~platforms. In addition, under certain agreements, we are ~~typically not~~ required to produce

minimum amounts of power under our PPAs and we ~~typically~~ have the right to terminate PPAs by giving written notice to the customer, subject to certain exit costs. As of October 31, ~~2017,~~2020, our operating portfolio ~~is 11.2~~was 32.6 MW.

We ~~warranty~~warrant our products for a specific period of time against manufacturing or performance defects. Our standard U.S. warranty period is generally ~~fifteen~~15 months after shipment or ~~twelve~~12 months after acceptance of the product. In addition to the standard product warranty, we have contracted with certain customers to provide services to ensure the power plants meet minimum operating levels for terms of up to ~~twenty~~20 years. Pricing for service contracts is based upon estimates of future costs, which could be materially different from actual expenses. ~~Also see~~Refer to “Critical Accounting Policies and Estimates” for additional details.

We have contracted with various government agencies and certain companies from private industry to conduct research and development as either a prime contractor or sub-contractor under multi-year, cost-reimbursement and/or cost-share type contracts or cooperative agreements. Cost-share terms require that participating contractors share the total cost of the project based on an agreed upon ratio. In many cases, we are reimbursed only a portion of

the costs incurred or to be incurred on the contract. While government research and development contracts may extend for many years, funding is often provided incrementally on a year-by-year basis if contract terms are met and Congress authorizes the funds. As of October 31, ~~2017,~~2020, Advanced Technologies ~~contracts~~contract backlog totaled ~~$44.3~~$49.2 million, of which ~~$24.5~~$37.7 million is ~~funded. Should~~non-U.S. Government-funded, $11.3 million is U.S. Government-funded and $0.2 million is U.S. Government-unfunded. The amount that is non-U.S. Government-funded includes $10.0 million of milestone payments under the EMRE Joint Development Agreement that are contingent upon achieving technical milestones. If funding beis terminated or delayed or if business initiatives change, we may choose to devote resources to other activities, including internally funded research and development.

We have no off-balance sheet debt or similar obligations ~~other than operating leases,~~ which are not classified as debt. We do not guarantee any third-party debt. See Note 1822. “Commitments and Contingencies” to our consolidated financial statements for the year ended October 31, ~~2017~~2020 included in this Annual Report on Form 10-K for further information.

The preparation of financial statements and related disclosures requires management to make estimates and assumptions that affect the reported amounts of assets, liabilities, revenues and expenses and the disclosure of contingent assets and liabilities. Actual results could differ from those estimates. Estimates are used in accounting for, among other things, revenue recognition, lease right of use assets and liabilities, contract loss accruals, excess, slow-moving and obsolete inventories, product warranty accruals, loss accruals on service agreements, share-based compensation expense, allowance for doubtful accounts, depreciation and amortization, impairment of goodwill and in-process research and development intangible assets, impairment of long-lived assets (including project assets), and contingencies. Estimates and assumptions are reviewed periodically, and the effects of revisions are reflected in the consolidated financial statements in the period they are determined to be necessary.

Our critical accounting policies are those that are both most important to our financial condition and results of operations and may require the most difficult, subjective or complex judgments on the part of management in their application, often as a result of the need to make estimates about the effect of matters that are inherently uncertain. Our accounting policies are set forth below.

Goodwill represents the excess of the aggregate purchase price over the fair value of the net assets acquired in a purchase business combination and is reviewed for impairment at least annually. The intangible asset represents ~~indefinite lived~~indefinite-lived in-process research and development for cumulative research and development efforts associated with the development of ~~solid oxide fuel cells (SOFC)~~Solid Oxide Fuel Cell stationary power generation and is also reviewed at least annually for impairment.

Accounting Standards Codification Topic 350, "Intangibles - Goodwill and ~~Other," (ASC 350)~~Other" (“ASC 350”) permits the assessment of qualitative factors to determine whether events and circumstances lead to the conclusion that it is necessary to perform the ~~two-step~~ goodwill impairment test required under ASC 350.

The Company completed its annual impairment analysis of goodwill and in-process research and development assets as of July 31, ~~2017. The Company had performed a quantitative assessment in the prior year~~2020 and determined that the estimated fair value of the reporting unit and in-process research and development intangible asset exceeded the respective carrying value and therefore no impairment was recognized as of July 31, 2016.2019. The Company performed a qualitative assessment for fiscal year ~~2017~~2020 and determined that it was more likely than not that there was no impairment of goodwill or the ~~indefinite lived~~indefinite-lived intangible asset.

Long-lived assets are reviewed for impairment whenever events or changes in circumstances indicate that the carrying amount of an asset group may not be recoverable. If events or changes in circumstances indicate that the carrying amount of the asset group may not be recoverable, we compare the carrying amount of an asset group to future undiscounted net cash flows, excluding interest costs, expected to be generated by the asset group and their

ultimate disposition. If the sum of the undiscounted cash flows is less than the carrying value, the impairment to be recognized is measured by the amount by which the carrying amount of the asset group exceeds the fair value of the asset group. ~~Assets to be disposed of are reported at the lower of the carrying amount or fair value, less costs to sell. No impairment charges were recorded during any of~~During the years ~~presented.~~ended October 31, 2019 and 2020, the Company recorded certain project asset impairment charges. Refer to Note 7. “Project Assets” for details on these charges.

The Company adopted Accounting Standards Codification (“ASC”) Topic 606: Revenue from Contracts with Customers (“Topic 606”) effective as of November 1, 2018. Under Topic 606: Revenue from Contracts with Customers, the amount of revenue recognized for any goods or services reflects the consideration that the Company expects to be entitled to receive in exchange for those goods and services. To achieve this core principle, the Company applies the following five-step approach: (1) identify the contract with the customer; (2) identify the performance obligations in the contract; (3) determine the transaction price; (4) allocate the transaction price to performance obligations in the contract; and (5) recognize revenue when or as a performance obligation is satisfied.

A contract is accounted for when there has been approval and commitment from ~~(i)~~both parties, the rights of the parties are identified, payment terms are identified, the contract has commercial substance and collectability of consideration is probable. Performance obligations under a contract are identified based on the goods or services that will be transferred to the customer that are both capable of being distinct and are distinct in the context of the contract. In certain instances, the Company has concluded distinct goods or services should be accounted for as a single performance obligation that is a series of distinct goods or services that have the same pattern of transfer to the customer. To the extent a contract includes multiple promised goods or services, the Company must apply judgment to determine whether the customer can benefit from the goods or services either on their own or together with other resources that are readily available to the customer (the goods or services are distinct) and if the promise to transfer the goods or services to the customer is separately identifiable from other promises in the contract (the goods or services are distinct in the context of the contract). If these criteria are not met, the promised services are accounted for as a single performance obligation. The transaction price is determined based on the consideration that the Company will be entitled to in exchange for transferring goods or services to the customer. To the extent the transaction price includes variable consideration, the Company estimates the amount of variable consideration that should be included in the transaction price, generally utilizing the expected value method. Determining the transaction price requires judgment. If the contract contains a single performance obligation, the entire transaction price is allocated to the single performance obligation. Contracts that contain multiple performance obligations require an allocation of the transaction price to each performance obligation based on a relative standalone selling price basis. Standalone selling price is determined by the price at which the performance obligation is sold separately. If the standalone selling price is not observable through past transactions, the Company estimates the standalone selling price by taking into account available information such as market conditions and internally approved pricing guidelines related to the performance obligations. Performance obligations are satisfied either over time or at a point in time as discussed in further detail below. In addition, the Company’s contracts with customers generally do not include significant financing components or non-cash consideration. The Company has elected practical expedients in the accounting guidance that allow for revenue to be recorded in the amount that the Company has a right to invoice, if that amount corresponds directly with the value to the customer of the Company's performance to date, and that allow the Company not to disclose related unsatisfied performance obligations. The

Company records any amounts that are billed to customers in excess of revenue recognized as deferred revenue and revenue recognized in excess of amounts billed to customers as unbilled receivables.

Product. Includes the sale of completed project assets, sale and installation of fuel cell power ~~plants~~platforms including site engineering and construction services, (ii) equipment only sales (modules, BOPs, component part kits and spare parts to customers), (iii) performance under long-term service agreements, (iv) the sale of electricity and other value streams under PPAs and utility tariffs from project assets retained by the Company, (v) license fees and royalty income from manufacturing and technology transfer agreements, and (vi) government and customer-sponsored Advanced Technologies projects.

Given the growing revenue related to PPAs and project assets retained by the Company, beginning in the first quarter of 2017, the Company began classifying such revenues in a separate line item called Generation, and prior period amounts have been reclassified. As further clarification, revenue elements are classified as follows:

~~Product.~~ ~~Includes the sale and installation of fuel cell power plants and~~ site engineering and construction services, and the sale of ~~component part kits,~~ modules, ~~BOPs~~BOP components and spare parts to customers.

~~Service and license.~~Service. Includes performance under long-term service agreements for power ~~plants~~platforms owned by third ~~parties~~parties.

License and royalty. Includes license fees and royalty income from ~~manufacturing and technology transfer agreements.~~the licensure of intellectual property.

Generation. Includes the sale of electricity under PPAs and utility tariffs from project assets retained by the Company. This also includes revenue received from the sale of other value streams from these assets including the sale of heat, steam, capacity and renewable energy credits.

Advanced Technologies. Includes revenue from customer-sponsored and government-sponsored Advanced Technologies projects.

See below for discussion of revenue recognition under Topic 606 by disaggregated revenue stream.

Contracts for the sale of completed project assets include the sale of the project asset, the assignment of the service agreement, and the assignment of the PPA. The relative stand-alone selling price is estimated and is used as the basis for allocation of the contract consideration. Revenue is recognized upon the satisfaction of the performance obligations, which includes the transfer of control of the project asset to the customer, which is when the contract is signed and the PPA is assigned to the customer. See below for further discussion regarding revenue recognition for service agreements. The revenue recognition for completed project assets under Topic 606 is consistent with treatment under ASC 605, Revenue Recognition.

Contractual payments related to the sale of the project asset and assignment of the PPA are generally received up-front. Payment terms for service agreements are generally ratable over the term of the agreement.

Service agreements represent a single performance obligation whereby the Company performs all required maintenance and monitoring functions, including replacement of modules, to ensure the power platform(s) under the service agreement generate a minimum power output. To the extent the power platform(s) under service agreements do not achieve the minimum power output, certain service agreements include a performance guarantee penalty. Performance guarantee penalties represent variable consideration, which is estimated for each service agreement based on past experience, using the expected value method. The net consideration for each service agreement is recognized using costs incurred to date relative to total estimated costs at completion to measure progress.

The Company reviews its cost estimates on service agreements on a quarterly basis and records any changes in estimates on a cumulative catch-up basis.

Loss accruals for service agreements are recognized to the extent that the estimated remaining costs to satisfy the performance obligation exceed the estimated remaining unrecognized net consideration. Estimated losses are recognized in the period in which losses are identified.

Payment terms for service agreements are generally ratable over the term of the agreement.

Advanced Technologies contracts include the promise to perform research and development services and, as such, this represents one performance obligation. Revenue from most government sponsored Advanced Technologies projects is recognized as direct costs are incurred plus allowable overhead less cost share requirements, if any. Revenue is only recognized to the extent the contracts are funded. Revenue from previous fixed price Advanced Technologies projects is recognized using the cost to cost input method. Revenue recognition for research performed under the EMRE Joint Development Agreement (as defined elsewhere herein) also falls into the practical expedient category where revenue is ~~generated from customers located throughout~~recorded consistent with the ~~U.S., Europe~~amounts invoiced.

Payments are based on costs incurred for government sponsored Advanced Technologies projects and ~~Asia~~upon completion of milestones for previous fixed-price Advanced Technologies projects. Payments under the EMRE Joint Development Agreement are based on time spent and ~~from agencies~~material costs incurred.

The Company entered into the License Agreements (as defined elsewhere herein) with POSCO Energy in 2007, 2009 and 2012. These agreements were terminated by the Company in June 2020, which is subject to dispute by POSCO Energy (for more information, refer to Note 22. “Commitments and Contingencies”).

Prior to the date of termination, in connection with the adoption of Topic 606, several performance obligations were identified under the License Agreements, including previously satisfied performance obligations for the transfer of licensed intellectual property, two performance obligations for specified upgrades of the ~~U.S. government.~~previously licensed intellectual property, a performance obligation to deliver unspecified upgrades to the previously licensed intellectual property on a when-and-if-available basis, and a performance obligation to provide technical support for previously delivered intellectual property.

All fixed consideration for the License Agreements was previously collected. The Company has discontinued revenue recognition of the deferred license revenue related to the terminated POSCO Energy License Agreements given the pending arbitration and will continue to evaluate this deferred revenue in future periods.

The Company entered into the EMRE Joint Development Agreement on November 5, 2019. The Company recorded license revenue of $4.0 million in association with this agreement for the fiscal year ended October 31, 2020 which revenue was considered at a point-in-time upon the signing of the contract as the license is considered functional intellectual property because it has standalone functionality, the customer can use this intellectual property as it exists at a point in time and no further services are required from the Company.

Effective as of June 11, 2019, the Company entered into the EMRE License Agreement, pursuant to which the Company agreed, subject to the terms of the EMRE License Agreement, to grant EMRE and its affiliates a non-exclusive, worldwide, fully paid, perpetual, irrevocable, non-transferrable license and right to use the Company’s patents, data, know-how, improvements, equipment designs, methods, processes and the like to the extent it is useful to research, develop, and commercially exploit Carbonate Fuel Cells in applications in which the fuel cells concentrate carbon dioxide from industrial and power sources and for any other purpose attendant thereto or associated therewith. Such right and license is sublicensable to third parties performing work for or with EMRE or its affiliates, but shall not otherwise be sublicensable. Upon the payment by EMRE to the Company of $10.0 million, which was received by the Company on June 14, 2019, EMRE and its affiliates were fully vested in the rights and licenses granted in the EMRE License Agreement, and any further obligations under the EMRE License Agreement are considered by the Company to be minimal. As a result, the total contract value of $10.0 million was recorded as revenue for the year ended October 31, 2019.

For certain project assets where customers purchase electricity from the Company under PPAs, the Company has determined that these agreements should be accounted for as operating leases pursuant to ASC 842, Leases. Revenue is recognized when electricity has been delivered based on the amount of electricity delivered at rates specified under the contracts, assuming all other revenue recognition criteria are met. Generation sales, to the extent the related PPAs are within the scope of Topic 606, are recognized as revenue in the period in which the Company provides the electricity and completes the performance obligation, which is the same as the monthly amount billed to customers.

Prior to the implementation of Topic 606, the revenue recognition policy for the fiscal year ended October 31, 2018 was as follows:

The Company earned revenue from (i) the sale and installation of fuel cell power platforms including site engineering and construction services, (ii) the sale of completed project assets, (iii) equipment only sales (modules, BOP, component part kits and spare parts to customers), (iv) performance under long-term service agreements, (v) the sale of electricity and other value streams under PPAs and utility tariffs from project assets retained by the Company, (vi) license fees and royalty income from manufacturing and technology transfer agreements, and (vii) government and customer-sponsored Advanced Technologies projects.

For customer contracts where the Company iswas responsible for the supply of equipment and site construction (full turn-key construction project) and ~~has~~had adequate cost history and estimating experience, and with respect to which management ~~believes~~believed it ~~can~~could reasonably estimate total contract costs, revenue iswas recognized under the percentage of completion method of accounting. The use of percentage of completion accounting requires significant judgment relative to estimating total contract costs, including assumptions relative to the length of time to complete the contract, the nature and complexity of the work to be performed and total project costs. Our estimates ~~are~~were based upon the professional knowledge and experience of our engineers, project managers and other personnel, who ~~review~~reviewed each long-term contract on a quarterly basis to assess the contract’s schedule, performance, technical matters and estimated cost at completion. When changes in estimated contract costs ~~are~~were identified, such revisions ~~may~~could result in current period adjustments to operations applicable to performance in prior periods. Revenues ~~are~~were recognized based on the percentage of the contract value that had incurred costs to date ~~bear~~as compared to estimated total contract costs, after giving effect to estimates of costs to complete based on the most recent information. For customer contracts for new or significantly customized products, where management ~~does~~did not believe it ~~has~~had the ability to reasonably estimate total contract costs, revenue iswas recognized using the completed contract method and therefore all revenue and costs for the contract ~~are~~were deferred and not recognized until installation and acceptance of the power plant iswas complete. We ~~recognize~~recognized anticipated contract losses as soon as they ~~become~~became known and estimable. Actual results ~~could vary~~varied from initial estimates and estimates ~~will be~~were updated as conditions ~~change.~~changed.

Revenue from equipment only sales where the Company ~~does~~did not have the obligations associated with overall construction of the project (modules, BOPs, fuel cell kits and spare parts sales) ~~are~~was recognized upon shipment or title transfer under the terms of the customer contract. Terms for certain contracts ~~provide~~provided for a transfer of title and risk of loss to our customers at our factory locations and certain key suppliers upon completion of our contractual requirement to produce products and prepare the products for shipment. ~~A shipment in place may occur in the event that the customer is not ready to take delivery of the products on the contractually specified delivery dates.~~

Revenue from service agreements iswas generally recorded ratably over the term of the service agreement, as ~~our~~the Company’s performance of routine monitoring and maintenance under these service agreements iswas generally expected to be incurred on a straight-line basis. For service agreements where ~~we expect~~the Company expected to have a module ~~exchange~~exchanges at some point during the term (generally service agreements in excess of five years), the costs of performance ~~are~~were not expected to be incurred on a straight-line basis, and therefore, a portion of the initial contract value related to the module exchange(s) iswas deferred and iswas recognized upon such module replacement event(s).

The Company ~~receives~~recognized license fees and other revenue over the term of the associated agreement. The Company recorded license fees and royalty income from POSCO Energy as a result of ~~manufacturing and technology transfer agreements~~the License Agreements entered into in 2007, 2009 and 2012. The Cell Technology Transfer Agreement we entered into on October 31, 2012 provides POSCO Energy with a technology license to manufacture SureSource power plants in South Korea. On March 17, 2017, the Company entered into a Memorandum of Understanding (“2017 MOU”) with POSCO Energy to engage in discussions to further amend the above referenced agreements and other agreements between the parties, as well as to engage in discussions relating to entering into new agreements to further the parties’ mutual interests.

~~Pursuant to the 2017 MOU, the Company commenced marketing the entire suite of SureSource solutions in South Korea as well as the broader Asian markets for the supply, recovery and storage of energy.~~

Under PPAs and project assets retained by the Company, revenue from the sale of electricity and other value streams iswere recognized as electricity iswas provided to ~~the customer.~~customers. These revenues ~~are~~were classified as ~~a component of~~ generation revenues.

Advanced Technologies contracts ~~include~~were entered into with both private industry and government entities. Revenue from most government sponsored Advanced Technologies projects iswas recognized as direct costs ~~are~~were incurred plus allowable overhead less cost share requirements, if any. Revenue from fixed price Advanced Technologies projects iswas recognized using percentage of completion accounting. Advanced Technologies programs ~~are~~were often multi-year projects or structured in phases with subsequent phases dependent on reaching certain milestones prior to additional funding being authorized. Government contracts ~~are~~were typically structured with cost-reimbursement and/or cost-shared type contracts or cooperative agreements. We ~~are~~were reimbursed for reasonable and allocable costs up to the reimbursement limits set by the contract or cooperative agreement, and on certain contracts we ~~are~~were reimbursed only a portion of the costs incurred.

The Company, through acertain wholly-owned ~~subsidiary, enters~~subsidiaries, has entered into sale-leaseback transactions for commissioned ~~projects~~project assets where we have entered into a PPA with a customer who is both the site host and end user of the power. ~~The~~Due to the Company not meeting criteria to account for the transfer of the project assets as a sale, sale accounting is precluded. Accordingly, the Company uses the financing method to account for these transactions.

Under the financing method of accounting for a sale-leaseback, the Company does not derecognize the project assets and does not recognize as ~~income~~revenue any of the sale proceeds received from the lessor that contractually constitutes payment to acquire the assets subject to these arrangements. Instead, the sale proceeds received are accounted for as financing obligations and leaseback payments made by the Company are allocated between interest expense and a reduction to the financing obligation. Interest on the financing obligation is calculated using the Company’s incremental borrowing rate at the inception of the arrangement on the outstanding financing obligation. ~~Judgment is required to determine the appropriate borrowing rate for the arrangement and in determining any gain or loss on the transaction that would be recorded at the end of the lease term.~~ While we ~~have received~~receive financing for ~~the full value of~~ the related power plant ~~assets,~~asset, we have not recognized revenue on the ~~sale leaseback transaction.~~sale-leaseback transactions. Instead, revenue is recognized ~~through~~with respect to the ~~sale of electricity and energy credits which are generated as energy is produced.~~related PPAs in accordance with the Company’s policies for recognizing generation revenues.

Inventories consist principally of raw materials and work-in-process. Inventories are reviewed to determine if valuation adjustments are required for obsolescence (excess, obsolete, and slow-moving inventory). This review includes analyzing inventory levels of individual parts considering the current design of our products and production requirements as well as the expected inventory needs for maintenance on installed power ~~plants.~~platforms.

We warranty our products for a specific period of time against manufacturing or performance defects. Our U.S. warranty is limited to a term generally 15 months after shipment or 12 months after acceptance of our products. We accrue for estimated future warranty costs based on historical experience. We also provide for a specific accrual if there is a known issue requiring repair during the warranty period. Estimates used to record warranty accruals are updated as we gain further operating experience. As of October 31, 2017 and October 31, 2016, the warranty accrual, which is classified in accrued liabilities on the consolidated balance sheet, totaled $0.3 million and $0.5 million, respectively.

~~In addition to the standard product warranty, we~~ have entered into service agreements with certain customers to provide monitoring, maintenance and repair services for fuel cell power ~~plants.~~platforms. Under the terms of these service agreements, the power ~~plant~~platform must meet a minimum operating output during the term. If the minimum output falls below the contract requirement, we may be subject to performance penalties or may be required to repair and/or replace the customer's fuel cell module. ~~The Company has accrued for performance guarantees of $2.2 million and $3.3 million as of October 31, 2017 and October 31, 2016, respectively.~~

The Company ~~provides for~~records loss accruals ~~on all~~for service agreements when the estimated cost of future module exchanges and maintenance and monitoring activities ~~exceed~~exceeds the remaining unrecognized contract value. Estimates for future costs on service agreements are determined by a number of factors including the estimated remaining life of the module, used replacement modules available, ~~our limit of liability on service agreements~~ and future operating plans for the power ~~plant.~~platform. Our estimates are performed on a contract by contract basis and include cost assumptions based on what we anticipate the service requirements will be to fulfill obligations for each contract. As of October 31, ~~2017~~2020 and ~~October 31, 2016,~~2019, our loss accruals on service ~~agreement contracts~~agreements totaled ~~$1.1~~$5.5 million and ~~$2.7~~$3.3 million, respectively.

At the end of our service agreements, customers are expected to either renew the service agreement or, based on the Company's rights to title for the module, the module will be returned to the Company as the plant is no longer being monitored or having routine service performed. As of October 31, 2017, the related residual value asset was $1.0 million. As of October 31, 2016, the Company did not have a residual value asset recorded.

~~In August 2014, the Financial Accounting Standards Board (the “FASB”) issued~~The Company adopted Accounting Standards Update Codification (“~~ASU”~~ASC”), “Leases” (“Topic 842” or “ASC 842”) ~~2014-15, “Disclosure~~on November 1, 2019. ASC 842, including all the related amendments subsequent to its issuance, supersedes the prior guidance for lease accounting and requires lessees to recognize a right-of-use (“ROU”) asset representing the right to use an underlying asset and a lease liability representing the obligation to make lease payments over the lease term for substantially all leases, as well as disclose key quantitative and qualitative information about leasing arrangements. Upon adoption, the Company recognized an operating lease liability of ~~Uncertainties about an Entity’s Ability~~approximately $10.3 million and corresponding operating lease ROU assets of approximately $10.1 million. There was no cumulative effect of the adoption recorded to ~~Continue as a Going Concern,” which requires an entity~~accumulated deficit. There was no significant net effect on the Consolidated Statements of Operations and Comprehensive Loss. Refer to evaluate at each reporting period whether there are conditions or events, in the aggregate, that raise substantial doubt about the entity’s ability to continue as a going concern within one year from the date the financial statements are issued and to provide related footnote disclosures in certain circumstances. The Company adopted the provisions of this ASUNote 13. “Leases” for ~~the annual reporting period ended October 31, 2017. The adoption of this update did not have a significant impact~~additional information on the Company’s ~~consolidated financial statements.~~adoption of ASC 842.

In April 2015, the FASB issued ASU 2015-03, “Interest – Imputation of Interest (Subtopic 835-30): Simplifying the Presentation of Debt Issuance Costs.” This ASU simplifies the presentation of debt issuance costs by requiring that such costs be presented in the balance sheet as a direct deduction from the carrying value of the associated debt instrument, consistent with debt discounts. The Company has adopted ASU 2015-03 effective January 31, 2017 and retrospective application is required which resulted in a reclassification in our Consolidated Balance Sheet as of October 31, 2016 of $0.3 million of debt issuance costs from Current assets to be a direct deduction from “Current portion of long-term debt” and a reclassification of $1.1 million of debt issuance costs from “Other assets” to be a direct deduction from Long-term debt and other liabilities.

In January 2017, the FASB issued ASU 2017-01, “Business Combinations.” ASU 2017-01 was issued to clarify the definition of a business with the objective of adding guidance to assist entities with evaluating whether transactions should be accounted for as acquisitions (or disposals) of assets or businesses. The Company has elected to early

~~adopt ASU 2017-01 effective November 1, 2016 which did not have a significant impact on the Company’s consolidated financial statements.~~

~~In May 2014, the FASB issued ASU No. 2014-09, “Revenue from Contracts with Customers (Topic 606).” This topic provides for five principles which should be followed~~

There is no recent accounting guidance not yet effective that is expected to determine the appropriate amount and timing of revenue recognition for the transfer of goods and services to customers. The principles in this ASU should be applied to all contracts with customers regardless of industry. The amendments in this ASU are effective for fiscal years, and interim periods within those years beginning after December 15, 2016, with two transition methods of adoption allowed. Early adoption for reporting periods prior to December 15, 2016 is not permitted. In March 2015, the FASB voted to defer the effective date by one year to fiscal years, and interim periods within those fiscal years beginning after December 15, 2017 (first quarter of fiscal year 2019 for the Company), but allow adoption as of the original adoption date. The Company has numerous different revenue sources including the sale and installation of fuel cell power plants, site engineering and construction services, sale of modules and spare parts, extended warranty service agreements, sale of electricity under power purchase agreements, license fees and royalty income from manufacturing and technology transfer agreements and customer-sponsored Advanced Technologies projects. This requires application of various revenue recognition methods under current accounting guidance. Although we anticipate that, upon adoption of this new ASU the timing of revenue recognition for certain of our revenue sources might change, we are still evaluating the financial statement impacts of the guidance in this ASU and determining which transition method we will utilize. In May 2016, the FASB issued ASU 2016-12, “Revenue from Contracts with Customers (Topic 606).” This topic provides narrow-scope improvements and practical expedients regarding collectability, presentation of sales tax collected from customers, non-cash consideration, contract modifications at transition, completed contracts at transition and other technical corrections. We have ~~initiated~~ a ~~review of the contracts for our significant revenue streams to understand the~~material impact ~~of the adoption of this ASU.~~

In February 2016, the FASB issued ASU 2016-02, “Leases” which, for operating leases, requires a lessee to recognize a right-of-use asset and a lease liability, initially measured at the present value of the lease payments, in its balance sheet. The standard also requires a lessee to recognize a single lease cost, calculated so that the cost of the lease is allocated over the lease term, on a generally straight-line basis. This ASU is effective for public companies for fiscal years beginning after December 15, 2018, including interim periods within those fiscal years (first quarter of fiscal year 2020 for the Company). Early adoption is permitted. The Company has both operating and capital leases (refer to Note 18. Commitments and contingences) as well as sale-leasebacks accounted for under the finance method and may have other arrangements that contain embedded leases as characterized in this ASU. We expect that adoption of this ASU will result in the recognition of right-of-use assets and lease liabilities not currently recorded in our consolidated financial statements under existing accounting guidance. However, we are still evaluating all of the Company’s contractual arrangements and the impact that adoption of ASU 2016-02 will have on the Company’s ~~consolidated~~ financial ~~statements.~~statements when adopted.

Cash is invested overnight with high credit quality financial institutions and therefore we are not exposed to market risk on our cash holdings from changing interest rates. Based on our overall interest rate exposure as of October 31, ~~2017,~~2020, including all interest rate sensitive instruments, a change in interest rates of 1% would not have a material impact on our results of operations.

As of October 31, ~~2017,~~2020, approximately 4%0.4% of our total cash and cash equivalents ~~and investments~~ were in currencies other than U.S. dollars (primarily the Euro, Canadian dollars and South Korean Won) and we have no plans of repatriation. We make purchases from certain vendors in currencies other than U.S. dollars. Although we have not experienced significant foreign exchange rate losses to date, we may in the future, especially to the extent that we do not engage in currency hedging activities. The economic impact of currency exchange rate movements on our operating results is complex because such changes are often linked to variability in real growth, inflation, interest rates, governmental actions and other factors. These changes, if material, may cause us to adjust our financing and operating strategies.

On May 16, 2019, an interest rate swap agreement was entered into with Fifth Third Bank in connection with the BFC Credit Agreement for the term of the loan. The ~~conversion feature~~net interest rate across the BFC Credit Agreement and the ~~variable dividend obligation~~swap transaction results in a fixed rate of ~~our Series 1 Preferred Shares are embedded derivatives that require bifurcation from the host contract.~~5.09%. The ~~aggregate~~interest rate swap is adjusted to fair value on a quarterly basis. The estimated fair value is based on Level 2 inputs including primarily the forward LIBOR curve available to swap dealers. The valuation methodology involves comparison of ~~these derivatives included within long-term debt~~(i) the sum of the present value of all monthly variable rate payments based on a reset rate using the forward LIBOR curve and ~~other liabilities as~~(ii) the sum of ~~October 31, 2017 and 2016 was $0.8 million and $0.7 million, respectively.~~the present value of all monthly fixed rate payments on the notional amount, which is equivalent to the outstanding principal amount of the loan. The fair value ~~was based on valuation models using various assumptions, including historical stock price volatility, risk-free interest rate~~adjustment for the year ended October 31, 2020 and October 31, 2019 resulted in a ~~credit spread based on the yield indexes of technology high yield bonds, foreign exchange volatility as the Series 1 Preferred Shares are denominated in Canadian dollars,~~$0.3 million and ~~the closing price of our common stock. Changes in any of these assumptions would change the underlying fair value with a corresponding~~$0.6 million charge, ~~or credit to operations.~~respectively.

We have audited the accompanying consolidated balance sheets of FuelCell Energy, Inc. and subsidiaries (the Company) as of October 31, ~~2017~~2020 and ~~2016, and~~2019, the related consolidated statements of operations and comprehensive loss, changes in equity, and cash flows for each of the years in the three‑year period ended October 31, ~~2017. We also have audited FuelCell Energy, Inc.’s internal control over financial reporting as of October 31, 2017, based on criteria established in~~ ~~Internal Control - Integrated Framework (2013)~~ ~~issued by~~2020, and the Committee of Sponsoring Organizations of the Treadway Commission (COSO). FuelCell Energy, Inc.’s management is responsible for these consolidated financial statements, for maintaining effective internal control over financial reporting, and for its assessment of the effectiveness of internal control over financial reporting, included in the accompanying Management’s Annual Report on Internal Control over Financial Reporting. Our responsibility is to express an opinion on these consolidated financial statements and an opinion on the Company’s internal control over financial reporting based on our audits.

We conducted our audits in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audits to obtain reasonable assurance about whether the financial statements are free of material misstatement and whether effective internal control over financial reporting was maintained in all material respects. Our audits ofrelated notes (collectively, the consolidated financial statements included examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements, assessing the accounting principles used and significant estimates made by management, and evaluating the overall financial statement presentation. Our audit of internal control over financial reporting included obtaining an understanding of internal control over financial reporting, assessing the risk that a material weakness exists, and testing and evaluating the design and operating effectiveness of internal control based on the assessed risk. Our audits also included performing such other procedures as we considered necessary in the circumstances. We believe that our audits provide a reasonable basis for our opinions.

A company’s internal control over financial reporting is a process designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles. A company’s internal control over financial reporting includes those policies and procedures that (1) pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of the assets of the company; (2) provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with generally accepted accounting principles, and that receipts and expenditures of the company are being made only in accordance with authorizations of management and directors of the company; and (3) provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use, or disposition of the company’s assets that could have a material effect on the financial statements.

Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Also, projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate.

statements). In our opinion, the consolidated financial statements ~~referred to above~~ present fairly, in all material respects, the financial position of ~~FuelCell Energy, Inc. and subsidiaries~~the Company as of October 31, ~~2017~~2020 and ~~2016,~~2019, and the results of ~~their~~its operations and ~~their~~its cash flows for each of the years in the three‑year period ended October 31, ~~2017,~~2020, in conformity with U.S. generally accepted accounting principles. ~~Also~~

As discussed in Note 1 to the consolidated financial statements, the Company has changed its method of accounting for leases as of November 1, 2019 due to the adoption of Financial Accounting Standards Board Accounting Standards Codification Topic 842, Leases, and its method of accounting for revenue as of November 1, 2018 due to the adoption of Financial Accounting Standards Board Accounting Standards Codification Topic 606, Revenue from Contracts with Customers.

These consolidated financial statements are the responsibility of the Company’s management. Our responsibility is to express an opinion on these consolidated financial statements based on our ~~opinion, FuelCell Energy, Inc. maintained,~~audits. We are a public accounting firm registered with the Public Company Accounting Oversight Board (United States) (PCAOB) and are required to be independent with respect to the Company in ~~all~~accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.

We conducted our audits in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the consolidated financial statements are free of material ~~respects, effective~~misstatement, whether due to error or fraud. The Company is not required to have, nor were we engaged to perform, an audit of its internal control over financial reporting. As part of our audits, we are required to obtain an understanding of internal control over financial reporting asbut not for the purpose of ~~October 31, 2017, based~~expressing an opinion on ~~criteria established in~~ ~~Internal Control - Integrated Framework (2013)~~ ~~issued by~~ the ~~Committee of Sponsoring Organizations~~effectiveness of the ~~Treadway Commission (COSO).~~Company’s internal control over financial reporting. Accordingly, we express no such opinion.

Our audits included performing procedures to assess the risks of material misstatement of the consolidated financial statements, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the consolidated financial statements. Our audits also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the consolidated financial statements. We believe that our audits provide a reasonable basis for our opinion.

	2017			2016			2020			2019
ASSETS
Current assets:
Cash and cash equivalents	$	49,294		$	84,187
Cash and cash equivalents, unrestricted							$	149,867		$	9,434
Restricted cash and cash equivalents - short-term		4,628			9,437			9,233			3,473
Accounts receivable, net of allowance for doubtful accounts of $79 and $193 as of October 31, 2017 and 2016, respectively		68,521			24,593
Accounts receivable, net								9,563			3,292
Unbilled receivables								8,041			7,684
Inventories		74,496			73,806			50,971			54,515
Other current assets		6,571			10,181			6,306			5,921
Total current assets		203,510			202,204			233,981			84,319
Restricted cash and cash equivalents - long-term		33,526			24,692			32,952			26,871
Project assets noncurrent		73,001			47,111
Inventories - long-term								8,986			2,179
Project assets								161,809			144,115
Property, plant and equipment, net		43,565			36,640			36,331			41,134
Operating lease right-of-use assets, net								10,098			—
Goodwill		4,075			4,075			4,075			4,075
Intangible assets		9,592			9,592
Other assets, net		16,517			16,415
Intangible assets, net								19,967			21,264
Other assets								15,339			9,489
Total assets	$	383,786		$	340,729		$	523,538		$	333,446
LIABILITIES AND EQUITY
Current liabilities:
Current portion of long-term debt	$	28,281		$	5,010		$	21,366		$	21,916
Current portion of operating lease liabilities								939			—
Accounts payable		42,616			18,475			9,576			16,943
Accrued liabilities		18,381			20,900			15,681			11,452
Deferred revenue		7,964			6,811			10,399			11,471
Preferred stock obligation of subsidiary		836			802			938			950
Total current liabilities		98,078			51,998			58,899			62,732
Long-term deferred revenue		18,915			20,974			31,501			28,705
Long-term preferred stock obligation of subsidiary		14,221			12,649			18,265			16,275
Long-term operating lease liabilities								9,817			—
Long-term debt and other liabilities		63,759			80,855			150,651			90,140
Total liabilities		194,973			166,476			269,133			197,852
Redeemable preferred stock (liquidation preference of $64,020 as of October 31, 2017 and October 31, 2016)		59,857			59,857
Redeemable Series C preferred stock (liquidation preference of $33,300 as of October 31, 2017)		27,700			—
Redeemable Series B preferred stock (liquidation preference of $64,020 as of October 31, 2020 and 2019)								59,857			59,857
Total equity:
Stockholders’ equity
Common stock ($0.0001 par value; 125,000,000 and 75,000,000 shares authorized as of October 31, 2017 and 2016, respectively; 69,492,816 and 35,174,424 shares issued and outstanding as of October 31, 2017 and 2016, respectively)		7			4
Common stock ($0.0001 par value); 337,500,000 shares and 225,000,000 shares authorized as of October 31, 2020 and 2019, respectively; 294,706,758 and 193,608,684 shares issued and outstanding as of October 31, 2020 and 2019, respectively)								29			19
Additional paid-in capital		1,045,197			1,004,566			1,359,454			1,151,454
Accumulated deficit		(943,533	)		(889,630	)		(1,164,196	)		(1,075,089	)
Accumulated other comprehensive loss		(415	)		(544	)		(739	)		(647	)
Treasury stock, Common, at cost (88,861 and 21,527 shares as of October 31, 2017 and 2016, respectively)		(280	)		(179	)
Treasury stock, Common, at cost (56,411 and 42,496 shares as of October 31, 2020 and 2019, respectively)								(432	)		(466	)
Deferred compensation		280			179			432			466
Total stockholders’ equity		101,256			114,396			194,548			75,737
Total liabilities and stockholders’ equity	$	383,786		$	340,729		$	523,538		$	333,446

	2017			2016			2015			2020			2019			2018
Revenues:
Product sales (including $0.4 million, $43.6 million and $100.5 million of related party revenue)	$	43,047		$	62,563		$	128,595
Service agreements and license revenues (including $5.4 million, $8.5 million and $11.4 million of related party revenue)		27,050			31,491			21,012
Product sales										$	—		$	481		$	52,490
Service agreements and license revenues											25,133			26,618			15,757
Generation revenues		7,233			1,267			—			19,943			14,034			7,171
Advanced Technologies contract revenue (including $0, $0 and $0.6 million of related party revenue)		18,336			12,931			13,470
Advanced Technologies contract revenues											25,795			19,619			14,019
Total revenues		95,666			108,252			163,077			70,871			60,752			89,437
Costs of revenues:
Cost of product sales		49,843			63,474			118,530			9,924			18,552			54,504
Cost of service agreements and license revenues		25,285			32,592			18,301			24,545			18,943			15,059
Cost of generation revenues		5,076			664			—			27,873			31,642			6,421
Cost of Advanced Technologies contract revenues		12,728			11,879			13,470			16,254			12,884			10,360
Total cost of revenues		92,932			108,609			150,301			78,596			82,021			86,344
Gross profit (loss)		2,734			(357	)		12,776
Gross (loss) profit											(7,725	)		(21,269	)		3,093
Operating expenses:
Administrative and selling expenses		25,916			25,150			24,226			26,644			31,874			24,908
Research and development expenses		20,398			20,846			17,442			4,797			13,786			22,817
Restructuring expense		1,355			—			—
Total operating expenses		47,669			45,996			41,668			31,441			45,660			47,725
Loss from operations		(44,935	)		(46,353	)		(28,892	)		(39,166	)		(66,929	)		(44,632	)
Interest expense		(9,171	)		(4,958	)		(2,960	)		(15,294	)		(10,623	)		(9,055	)
Change in fair value of common stock warrant liability											(37,086	)		—			—
Gain on extinguishment of financing obligation											1,801			—			—
Other income, net		247			622			2,442			684			93			3,338
Loss before provision for income taxes		(53,859	)		(50,689	)		(29,410	)
Provision for income taxes		(44	)		(519	)		(274	)
Loss before (provision) benefit for income taxes											(89,061	)		(77,459	)		(50,349	)
(Provision) benefit for income taxes											(46	)		(109	)		3,015
Net loss		(53,903	)		(51,208	)		(29,684	)		(89,107	)		(77,568	)		(47,334	)
Net loss attributable to noncontrolling interest		—			251			325
Net loss attributable to FuelCell Energy, Inc.		(53,903	)		(50,957	)		(29,359	)
Preferred stock dividends		(3,200	)		(3,200	)		(3,200	)
Net loss to common stockholders	$	(57,103	)	$	(54,157	)	$	(32,559	)
Series A warrant exchange											—			(3,169	)		—
Series B Preferred stock dividends											(3,331	)		(3,231	)		(3,200	)
Series C Preferred stock deemed dividends and redemption value adjustment, net											—			(6,522	)		(9,559	)
Series D Preferred stock deemed dividends and redemption accretion											—			(9,755	)		(2,075	)
Net loss attributable to common stockholders										$	(92,438	)	$	(100,245	)	$	(62,168	)
Net loss to common stockholders per share
Basic	$	(1.14	)	$	(1.82	)	$	(1.33	)	$	(0.42	)	$	(1.82	)	$	(9.01	)
Diluted	$	(1.14	)	$	(1.82	)	$	(1.33	)	$	(0.42	)	$	(1.82	)	$	(9.01	)
Weighted average shares outstanding
Basic		49,914,904			29,773,700			24,513,731			221,960,288			55,081,266			6,896,189
Diluted		49,914,904			29,773,700			24,513,731			221,960,288			55,081,266			6,896,189

Common Stock

Shares

Amount

Additional
Paid-in
Capital

Accumulated
Deficit

Accumulated
Other
Comprehensive
Income (Loss)

Treasury
Stock

Deferred
Compensation

Noncontrolling
Interest in
Subsidiaries

Total
Equity

Balance, October 31, 2014

23,930,000

$
2

$
909,458

$
(809,314
)

$
(159
)

$
(95
)

$
95

$
(1,538
)

$
98,449

Sale of common stock

1,845,166

1

26,920

—

—

—

—

—

26,921

Share based compensation

—

—

3,157

—

—

—

—

—

3,157

Taxes paid upon vesting of restricted stock awards, net of stock
   issued under benefit plans

191,593

—

(539
)

—

—

—

—

—

(539
)
Reclassification of noncontrolling interest due to liquidation
   of subsidiary

—

—

(1,308
)

—

—

—

—

1,308

-

Noncontrolling interest in subsidiaries

—

—

—

—

—

—

—

(325
)

(325
)
Preferred dividends — Series B

—

—

(3,200
)

—

—

—

—

—

(3,200
)
Adjustment for deferred compensation

(2,049
)

—

—

—

—

17

(17
)

—

-

Effect of foreign currency translation

—

—

—

—

(350
)

—

—

—

(350
)
Net loss attributable to FuelCell Energy, Inc.

—

—

—

(29,359
)

—

—

—

—

(29,359
)
Balance, October 31, 2015

25,964,710

$
3

$
934,488

$
(838,673
)

$
(509
)

$
(78
)

$
78

$
(555
)

$
94,754

Sale of common stock, prepaid warrants and warrants,
   public offering

1,474,000

—

34,736

—

—

—

—

—

34,736

Exercise of prepaid warrants

1,100,000

—

—

—

—

—

—

—

-

Sale of common stock

6,023,372

1

36,055

—

—

—

—

—

36,056

Common stock issued, non-employee compensation

24,379

—

157

—

—

—

—

—

157

Share based compensation

—

—

3,425

—

—

—

—

—

3,425

Taxes paid upon vesting of restricted stock awards, net of
   stock issued under benefit plans

587,963

—

(286
)

—

—

—

—

—

(286
)
Noncontrolling interest in subsidiaries

—

—

—

—

—

—

—

(251
)

(251
)
Purchase of noncontrolling shares of subsidiary

—

—

(809
)

—

—

—

—

806

(3
)
Preferred dividends - Series B

—

—

(3,200
)

—

—

—

—

—

(3,200
)
Adjustment for deferred compensation

—

—

—

—

—

(101
)

101

—

-

Effect of foreign currency translation

—

—

—

—

(35
)

—

—

—

(35
)
Net loss attributable to FuelCell Energy, Inc.

—

—

—

(50,957
)

—

—

—

—

(50,957
)
Balance, October 31, 2016

35,174,424

$
4

$
1,004,566

$
(889,630
)

$
(544
)

$
(179
)

$
179

$
—

$
114,396

Sale of common stock, warrants and
   public offering

12,000,000

1

13,883

—

—

—

—

—

13,884

Exercise of prepaid warrants and warrants

13,660,926

1

12,721

—

—

—

—

—

12,722

Sale of common stock

7,245,430

1

12,430

—

—

—

—

—

12,431

Common stock issued, non-employee compensation

86,001

—

129

—

—

—

—

—

129

Share based compensation

—

—

4,585

—

—

—

—

—

4,585

Taxes paid upon vesting of restricted stock awards, net of
   stock issued under benefit plans

1,284,673

—

(84
)

—

—

—

—

—

(84
)
Series C convertible preferred stock conversions

108,696

167

167

Preferred dividends — Series B

—

—

(3,200
)

—

—

—

—

—

(3,200
)
Effect of foreign currency translation

—

—

—

—

129

—

—

—

129

Adjustment for deferred compensation

(67,334
)

—

—

—

—

(101
)

101

—

—

Net loss attributable to FuelCell Energy, Inc.

—

—

—

(53,903
)

—

—

—

—

(53,903
)
Balance, October 31, 2017

69,492,816

$
7

$
1,045,197

$
(943,533
)

$
(415
)

$
(280
)

$
280

$
—

$
101,256

	Common Stock
	Shares			Amount		Additional Paid-in Capital			Accumulated Deficit			Accumulated Other Comprehensive Income (Loss)			Treasury Stock			Deferred Compensation			Total Equity
Balance, October 31, 2017		5,791,068		$	1	$	1,045,203		$	(943,533	)	$	(415	)	$	(280	)	$	280		$	101,256
Sale of common stock, net of fees		476,265			—		7,129			—			—			—			—			7,129
Exercise of warrants		216,309			—		3,326			—			—			—			—			3,326
Common stock issued, non-employee compensation		13,226			—		282			—			—			—			—			282
Share based compensation		—			—		3,238			—			—			—			—			3,238
Taxes paid upon vesting of restricted stock awards, net of stock issued under benefit plans		(14,913	)		—		(660	)		—			—			—			—			(660	)
Series C convertible preferred stock conversions		1,496,368			—		20,220			—			—			—			—			20,220
Preferred dividends — Series B		—			—		(3,200	)		—			—			—			—			(3,200	)
Series D Preferred stock redemption accretion		—			—		(2,075	)		—			—			—			—			(2,075	)
Effect of foreign currency translation		—			—		—			—			12			—			—			12
Adjustment for deferred compensation		(5,637	)		—		—			—			—			(83	)		83			—
Net loss		—			—		—			(47,334	)		—			—			—			(47,334	)
Balance, October 31, 2018		7,972,686		$	1	$	1,073,463		$	(990,867	)	$	(403	)	$	(363	)	$	363		$	82,194
Sale of common stock, net of fees		119,128,677			12		43,654			—			—			—			—			43,666
Common stock issued, non-employee compensation		29,454			—		102			—			—			—			—			102
Share based compensation		—			—		2,804			—			—			—			—			2,804
Taxes paid upon vesting of restricted stock awards, net of stock issued under benefit plans		52,607			—		(200	)		—			—			—			—			(200	)
Series A Warrant Exchange		500,000			—		—			—			—			—			—			-
Series C convertible preferred stock conversions		3,914,218			—		15,489			—			—			—			—			15,489
Series C convertible preferred stock adjustment for beneficial conversion feature		—			—		6,586			—			—			—			—			6,586
Series C convertible stock redemption value adjustments		—			—		(14,597	)														(14,597	)
Preferred dividends — Series B		—			—		(3,231	)		—			—			—			—			(3,231	)
Series D convertible preferred stock conversions		62,040,496			6		31,177			—			—			—			—			31,183
Series D Preferred stock redemption accretion		—			—		(3,793	)		—			—			—			—			(3,793	)
Impact of the adoption of Topic 606		—			—		—			(6,654	)		—			—			—			(6,654	)
Effect of foreign currency translation		—			—		—			—			(244	)		—			—			(244	)
Adjustment for deferred compensation		(29,454	)		—		—			—			—			(103	)		103			-
Net loss		—			—		—			(77,568	)		—			—			—			(77,568	)
Balance, October 31, 2019		193,608,684		$	19	$	1,151,454		$	(1,075,089	)	$	(647	)	$	(466	)	$	466		$	75,737
Sale of common stock, net of fees		86,307,932			9		171,902			—			—			—			—			171,911
Orion warrant exercises		14,696,320			1		37,059			—			—			—			—			37,060
Common stock issued, non-employee compensation		58,303			—		104			—			—			—			—			104
Taxes paid upon vesting of restricted stock awards, net of stock issued under benefit plans		49,434			—		(3	)		—			—			—			—			(3	)
Reclassification of value of share based compensation upon approval of authorized shares for grant		—			—		401			—			—			—			—			401
Share based compensation		—			—		1,868			—			—			—			—			1,868
Preferred dividends — Series B		—			—		(3,331	)		—			—			—			—			(3,331	)
Effect of foreign currency translation		—			—		—			—			(92	)		—			—			(92	)
Adjustment for deferred compensation		(13,915	)		—		—			—			—			34			(34	)		-
Net loss		—			—		—			(89,107	)		—			—			—			(89,107	)
Balance, October 31, 2020		294,706,758		$	29	$	1,359,454		$	(1,164,196	)	$	(739	)	$	(432	)	$	432		$	194,548

	2017			2016			2015			2020			2019			2018
Cash flows from operating activities:
Net loss	$	(53,903	)	$	(51,208	)	$	(29,684	)	$	(89,107	)	$	(77,568	)	$	(47,334	)
Adjustments to reconcile net loss to net cash used in operating activities:
Adjustments to reconcile net loss to net cash (used in) provided by operating activities:
Share-based compensation		4,585			3,425			3,157			1,868			2,804			3,238
Loss (gain) from change in fair value of embedded derivatives		91			(14	)		(23	)
Depreciation		8,518			4,949			4,099
Amortization of non-cash interest expense		6,256			3,207			1,830
Foreign currency transaction losses (gains)		581			(324	)		(2,075	)
Depreciation and amortization											19,377			12,353			8,648
Change in fair value of common stock warrant liability											37,086			0			0
Gain on extinguishment of financing obligation											(1,801	)		0			0
Gain on Series 1 preferred stock extinguishment											(475	)		0			0
Non-cash interest expense on preferred stock and debt obligations											7,570			6,097			5,957
Deferred income taxes											0			0			(3,035	)
Operating lease costs											1,451			0			0
Operating lease payments											(1,016	)		0			0
Impairment of property, plant and equipment and project assets											2,417			20,360			0
Unrealized loss on derivative contract											314			624			0
Other non-cash transactions		165			451			412			674			511			597
Decrease (increase) in operating assets:
Accounts receivable		(51,276	)		30,235			3,173			(6,271	)		4,842			24,169
Unbilled receivables											(5,590	)		(4,488	)		24,562
Inventories		(7,972	)		(8,052	)		(10,100	)		(2,111	)		(6,427	)		31,714
Project assets		—			—			(11,398	)
Other assets		(714	)		(837	)		1,022			(1,297	)		2,120			(2,264	)
(Decrease) increase in operating liabilities:
Increase (decrease) in operating liabilities:
Accounts payable		25,020			(3,019	)		(7,224	)		(7,059	)		(173	)		(19,846	)
Accrued liabilities		(2,290	)		1,240			6,435			5,465			2,377			(11,345	)
Deferred revenue		(906	)		(26,648	)		(3,898	)		1,724			5,996			1,261
Net cash used in operating activities		(71,845	)		(46,595	)		(44,274	)
Net cash (used in) provided by operating activities											(36,781	)		(30,572	)		16,322
Cash flows from investing activities:
Capital expenditures		(12,351	)		(7,726	)		(6,930	)		(382	)		(2,151	)		(10,028	)
Expenditures for long-term project assets		(19,726	)		(33,726	)		—
Cash acquired from acquisition		633			—			—
Project asset expenditures											(31,527	)		(31,675	)		(41,232	)
Asset acquisition											(611	)		(35,474	)		0
Net cash used in investing activities		(31,444	)		(41,452	)		(6,930	)		(32,520	)		(69,300	)		(51,260	)
Cash flows from financing activities:
Repayment of debt		(8,571	)		(30,452	)		(1,535	)		(30,117	)		(48,395	)		(16,616	)
Proceeds from debt		17,877			85,935			6,763
Payments of deferred finance costs		(206	)		(1,758	)		—
Purchase of non-controlling shares of subsidiary		—			(3	)		—
Net proceeds from issuance of Series C preferred shares		27,866			—			—
Proceeds from common stock issuance and warrant exercises, net of registration fees		39,396			70,929			27,060
Proceeds from debt, net of debt discount											87,757			69,596			13,091
Common stock issued for stock plans and related expenses											5			23			0
Payment of deferred financing costs											(2,697	)		(3,302	)		(352	)
Net proceeds from issuance of Series D preferred shares											0			0			25,317
Proceeds from sale of common stock and warrant exercises, net											173,194			43,573			10,455
Payment of preferred dividends and return of capital		(4,156	)		(4,170	)		(4,202	)		(6,475	)		(1,840	)		(4,178	)
Common stock issued for stock plans and related expenses		86			177			133
Net cash provided by financing activities		72,292			120,658			28,219			221,667			59,655			27,717
Effects on cash from changes in foreign currency rates		129			(35	)		(108	)		(92	)		(244	)		12
Net (decrease) increase in cash, cash equivalents, and restricted cash		(30,868	)		32,576			(23,093	)
Net increase (decrease) in cash, cash equivalents, and restricted cash											152,274			(40,461	)		(7,209	)
Cash, cash equivalents, and restricted cash-beginning of year		118,316			85,740			108,833			39,778			80,239			87,448
Cash, cash equivalents, and restricted cash-end of year	$	87,448		$	118,316		$	85,740		$	192,052		$	39,778		$	80,239

Note 1. Nature of Business, Basis of ~~Presentation~~Presentation and Significant Accounting Policies

FuelCell Energy, Inc., together with its subsidiaries (the “Company”, “FuelCell Energy”, “we”, “us”, or “our”), is a leading integrated fuel cell ~~company with~~company. Founded in 1969, FuelCell Energy is a ~~growing global presence.~~manufacturer of fuel cell clean power platforms delivering power and thermal energy and capable of delivering hydrogen, long-duration hydrogen energy storage, and carbon capture applications. We ~~design, manufacture, install,~~develop turn-key distributed power generation solutions and operate and provide comprehensive service ~~ultra-clean, efficient~~for the life of the power plant. FuelCell Energy is focused on growing its global presence in delivering environmentally responsible distributed baseload power solutions through its proprietary, molten-carbonate and reliable stationary fuel cell power plants. Our SureSource power plants generate electricity and usable high quality heat for commercial, industrial, government and utility customers. We have commercialized our stationary carbonate fuel cells and are also pursuing the complementary development of planar solid oxide fuel ~~cells~~cell technologies. We are working to expand the proprietary technologies that we have developed over the past five decades into new product platforms, applications, markets and ~~other~~geographies. Our mission and purpose is to utilize our proprietary, state-of-the-art fuel cell ~~technologies.~~platforms to enable a world empowered by clean energy and contribute to climate change mitigation. FuelCell Energy’s platforms are capable of reducing the global environmental footprint of baseload power generation by providing environmentally responsible solutions for reliable electrical power, distributed hydrogen, electrolysis, long-duration hydrogen-based energy storage, Carbon Capture, Microgrid applications, hot water, steam, and chilling. Our ~~operations~~customer base includes utility companies, municipalities, universities, hospitals, government entities/military bases and a variety of industrial and commercial enterprises. Our leading geographic markets are ~~funded primarily through sales of equity instruments to strategic investors or~~currently the United States and South Korea, and we are pursuing opportunities in public markets, corporate and project level debt financing and local or state government loans or grants. In order to produce positive cash flow from operations, we need to be successful at increasing annual order volume and production and in our cost reduction efforts.other countries around the world.

The consolidated financial statements include our accounts and those of our wholly-owned subsidiaries. All intercompany accounts and transactions have been eliminated. ~~In October 2016,~~

On May 8, 2019, the Company ~~purchased~~effected a 1-for-12 reverse stock split, reducing the ~~noncontrolling interest~~number of the Company’s common shares outstanding on that date from 183,411,230 shares to 15,284,269 shares. The number of authorized shares of common stock remained unchanged at 225,000,000 shares and the number of authorized shares of preferred stock remained unchanged at 250,000 shares. Additionally, the conversion rate of our Series B Preferred Stock (as defined elsewhere herein), the conversion price of our Series C Preferred Stock and Series D Preferred Stock (each as defined elsewhere herein), the exchange price of the Series 1 Preferred Shares (as defined elsewhere herein), the exercise price of all then outstanding options and warrants, and the number of shares then-reserved for future issuance pursuant to our equity compensation plans were all adjusted proportionately in ~~FuelCell Energy Services, GmbH.~~

~~Certain reclassifications~~connection with the reverse stock split. All share and per share amounts, conversion prices, and exercise prices presented herein with respect to periods or dates prior to, or instruments in existence prior to, May 8, 2019 have been ~~made~~adjusted retroactively to ~~conform~~reflect these changes.

As of October 31, 2020, unrestricted cash and cash equivalents totaled $149.9 million compared to $9.4 million as of October 31, 2019.

Subsequent to the end of fiscal year 2020, in December 2020, the Company closed an underwritten offering of 25.0 million shares of the Company’s common stock. Net proceeds to the Company were approximately $156.3 million after deducting underwriting discounts and commissions and other offering expenses. Proceeds from this offering have been utilized as follows:

We believe that our unrestricted cash and cash equivalents, expected receipts from our contracted backlog, and release of short-term restricted cash less expected disbursements over the next twelve months will be sufficient to allow the Company to meet its obligations for at least one year from the date of issuance of these financial statements.

To date, we have not achieved profitable operations or sustained positive cash flow from operations. The Company’s future liquidity will depend on its ability to (i) timely complete current projects in process within budget, (ii) increase cash flows from its generation portfolio, including by meeting conditions required to timely commence operation of new projects, operating its generation portfolio in compliance with minimum performance guarantees and operating its generation portfolio in accordance with revenue expectations, (iii) obtain financing for project construction, (iv) obtain permanent financing for its projects once constructed, (v) increase order and contract volumes, which would lead to additional product sales, services agreements and generation revenues, (vi) obtain funding for and receive payment for research and development under current and future Advanced Technologies contracts, (vii) implement the cost reductions necessary to achieve profitable operations, (viii) manage working capital and the Company's unrestricted cash balance and (ix) access the capital markets to raise funds through the sale of equity securities, convertible notes, and other equity-linked instruments, all of which will require an increase in authorized shares, and/or other debt instruments.

Our business model requires substantial outside financing arrangements and satisfaction of the conditions of such financing arrangements to construct and deploy our projects and facilitate the growth of our business. We have obtained financing through the debt and equity markets during and subsequent to the fiscal year 2017 presentation. The Company has adopted Accounting Standards Update (“ASU”) 2015-03, Interest – Imputation of Interest effective January 31, 2017, and retrospective application is required which resulted in a reclassification in our Consolidated Balance Sheet as ofended October 31, ~~2016 of $0.3 million of debt issuance costs from Current assets~~2020. In future periods, the Company expects to ~~be a direct deduction from Current portion of~~seek lower-cost long-term debt and ~~a reclassification~~tax equity (e.g., sale-leaseback and partnership transactions) for its project asset portfolio as these projects commence commercial operations. The proceeds of ~~$1.1 million of debt issuance costs from Other assets, net~~any such financing, if obtained, may allow the Company to ~~be a direct deduction from Long-term~~fund other projects. We may also seek to obtain additional financing in both the debt and ~~other liabilities. The Company has also included an additional line item, “Generation,”~~equity markets in the ~~“Revenues”~~future. If financing is not available to us on acceptable terms if and ~~“Cost~~when needed, or on terms acceptable to us or our lenders, if we do not satisfy the conditions of ~~revenues” sections~~our financing arrangements, if we spend more than the financing approved for projects, if project costs exceed an amount that the Company can finance, or if we do not generate sufficient revenues or obtain capital sufficient for our corporate needs, we may be required to reduce or slow planned spending, reduce staffing, sell assets, seek alternative financing and take other measures, any of which could have a material adverse effect on our financial condition and operations.

As of December 31, 2020, we had 15,093,242 shares of common stock available for issuance, excluding treasury stock, of which 5,185,674 shares were reserved for issuance under various warrants and equity awards, upon conversion of preferred stock, and under our employee stock purchase and equity incentive plans. The limited number of shares of our common stock available for issuance will limit our ability to raise capital in the ~~Statements~~equity markets and satisfy obligations with shares instead of ~~Operations~~cash, which could adversely affect our business and operations. We plan to ~~include revenues generated from~~seek stockholder approval to increase the ~~Company’s project assets (refer~~number of shares of common stock we are authorized to ~~the Revenue Recognition section below for more information). The prior year amounts associated with power purchase agreements have been reclassified to the new “Generation” line item.~~issue, but such approval may not be obtained.

All cash equivalents consist of investments in money market funds with original maturities of three months or less at the date of acquisition. We place our temporary cash investments with high credit quality financial institutions. As of October 31, 2017, $38.2 million of cash and cash equivalents was pledged as collateral for letters of credit and for certain banking requirements and contractual commitments, compared to $34.1 million pledged as of October 31, 2016. The restricted cash balance includes $15.0 million as of October 31, 2017 and 2016, which has been placed in a Grantor's Trust account to secure certain obligations of the Company under a 15-year service agreement for the Bridgeport Fuel Cell Park project and has been classified as Restricted cash and cash equivalents - long-term. As of October 31, 2017 and 2016, we had outstanding letters of credit of $2.9 million and $7.9 million, respectively, which expire on various dates through April 2019. Cash and cash equivalents as of October 31, 2017 and 2016 also included $3.0 million and $5.3 million, respectively, of cash advanced by POSCO Energy for raw material purchases made on its behalf by FuelCell Energy. Under an inventory procurement agreement that ensures coordinated purchasing from the global supply chain, FuelCell Energy provides procurement services for POSCO Energy and receives compensation for services rendered. While POSCO Energy makes payments to us in advance of supplier requirements, quarterly receipts may not match disbursements.

Inventories consist principally of raw materials and work-in-process. Cost is determined using the first-in, first-out cost method. In certain circumstances, we will make advance payments to vendors for future inventory deliveries. These advance payments are recorded as Other current assets on the ~~consolidated balance sheets.~~Consolidated Balance Sheets.

Inventories are reviewed to determine if valuation allowances are required for obsolescence (excess, obsolete, and ~~obsolete)~~slow-moving inventory). This review includes analyzing inventory levels of individual parts considering the current design of our products

and production requirements as well as the expected inventory requirements for maintenance on installed power ~~plants.~~platforms.

Project assets consist of capitalized costs for fuel cell projects in various stages of development, ~~whereby~~including those projects with respect to which we have entered into power purchase agreements (“PPAs”), those projects with respect to which we expect to secure long-term contracts and those projects retained by the Company under a merchant model. Such development costs are generally incurred prior to entering into a definitive sales or long-term financing agreement for the ~~project, or of~~project. Project assets also includes capitalized costs for fuel cell projects which are the subject of a sale-leaseback transaction with PNC Energy Capital, LLC (“PNC”) or ~~projects in development for which we expect to secure long-term contracts. These projects are actively being marketed and intended to be sold, although we may choose to retain ownership~~Crestmark Equipment Finance, a division of one or more of these projects after they become operational if we determine it would be of economic and strategic benefit. Additionally, Project assets include capitalized costs for fuel cell projects which are the subject of a sale-leaseback transaction (see "Sale-Leaseback Facility" below)MetaBank (“Crestmark”). Project asset costs include costs for developing and constructing a complete turn-key fuel cell project. Development costs can include legal, consulting, permitting, interconnect, and other similar costs. ~~Once~~To the extent we enter into a definitive sales agreement, we expense project assets to cost of sales after the respective project asset is sold to a customer and all revenue recognition criteria have been met. We classify project assets as current if the expected commercial operation date is less than twelve months and long-term if it is greater than twelve months from the balance sheet date. There were no short-term project assets as of October 31, 2017. We review project assets for impairment whenever events or changes in circumstances indicate that the carrying amount may not be recoverable.

Property, plant and equipment are stated at cost, less accumulated depreciation ~~provided~~which is recorded based on the straight-line method over the estimated useful lives of the respective assets. Leasehold improvements are amortized on the straight-line method over the shorter of the estimated useful lives of the assets or the term of the lease. When property is sold or otherwise disposed of, the cost and related accumulated depreciation are removed from the accounts and any resulting gain or loss is reflected in operations for the period.

~~Intellectual property, including internally generated patents and know-how, is carried at no value.~~

Goodwill represents the excess of the aggregate purchase price over the fair value of the net assets acquired in a ~~purchase~~ business combination and is reviewed for impairment at least annually. The intangible asset represents indefinite-lived in-process research and development for cumulative research and development efforts associated with the development of Solid Oxide Fuel Cell stationary power generation and is also reviewed at least annually for impairment.

Accounting Standards Codification Topic 350, "Intangibles - Goodwill and Other", (“ASC 350”) permits the assessment of qualitative factors to determine whether events and circumstances lead to the conclusion that it is necessary to perform the ~~two-step~~ goodwill impairment test required under ASC 350.

The Company completed its annual impairment analysis of goodwill and the in-process research & development assets ~~(IPR&D)~~(“IPR&D”) as of July 31, ~~2017.~~2020 and 2019. The goodwill and IPR&D asset are both held by the Company’s Versa Power Systems, Inc. (“Versa”) reporting unit. Goodwill and the IPR&D asset are also reviewed for possible impairment whenever changes in conditions indicate that the fair value of a reporting unit or IPR&D asset ~~are~~is more likely than not below its carrying value. NoNaN impairment charges were recorded during ~~any of~~ the fiscal years ~~presented.~~ended October 31, 2020, 2019 and 2018.

recognized is measured by the amount by which the carrying amount of the asset group exceeds the fair value of the asset group. ~~Assets~~

The Company adopted Accounting Standards Codification (“ASC”) Topic 606: Revenue from Contracts with Customers (“Topic 606”) effective as of November 1, 2018. Under Topic 606: Revenue from Contracts with Customers, the amount of revenue recognized for any goods or services reflects the consideration that the Company expects to be ~~disposed of are reported at~~entitled to receive in exchange for those goods and services. To achieve this core principle, the ~~lower~~Company applies the following five-step approach: (1) identify the contract with the customer; (2) identify the performance obligations in the contract; (3) determine the transaction price; (4) allocate the transaction price to performance obligations in the contract; and (5) recognize revenue when or as a performance obligation is satisfied.

A contract is accounted for when there has been approval and commitment from both parties, the rights of the ~~carrying amount~~parties are identified, payment terms are identified, the contract has commercial substance and collectability of consideration is probable. Performance obligations under a contract are identified based on the goods or ~~fair value, less costs~~services that will be transferred to ~~sell. No impairment charges were recorded during any~~the customer that are both capable of being distinct and are distinct in the context of the ~~years presented.~~contract. In certain instances, the Company has concluded distinct goods or services should be accounted for as a single performance obligation that is a series of distinct goods or services that have the same pattern of transfer to the customer. To the extent a contract includes multiple promised goods or services, the Company must apply judgment to determine whether the customer can benefit from the goods or services either on their own or together with other resources that are readily available to the customer (the goods or services are distinct) and if the promise to transfer the goods or services to the customer is separately identifiable from other promises in the contract (the goods or services are distinct in the context of the contract). If these criteria are not met, the promised services are accounted for as a single performance obligation. The transaction price is determined based on the consideration that the Company will be entitled to in exchange for transferring goods or services to the customer. To the extent the transaction price includes variable consideration, the Company estimates the amount of variable consideration that should be included in the transaction price, generally utilizing the expected value method. Determining the transaction price requires judgment. If the contract contains a single performance obligation, the entire transaction price is allocated to the single performance obligation. Contracts that contain multiple performance obligations require an allocation of the transaction price to each performance obligation based on a relative standalone selling price basis. Standalone selling price is determined by the price at which the performance obligation is sold separately. If the standalone selling price is not observable through past transactions, the Company estimates the standalone selling price by taking into account available information such as market conditions and internally approved pricing guidelines related to the performance obligations. Performance obligations are satisfied either over time or at a point in time as discussed in further detail below. In addition, the Company’s contracts with customers generally do not include significant financing components or non-cash consideration. The Company has elected practical expedients in the accounting guidance that allow for revenue to be recorded in the amount that the Company has a right to invoice, if that amount corresponds directly with the value to the customer of the Company's performance to date, and that allow the Company not to disclose related unsatisfied performance obligations. The Company records any amounts that are billed to customers in excess of revenue recognized as deferred revenue and revenue recognized in excess of amounts billed to customers as unbilled receivables.

Product. Includes the sale of completed project assets, sale and installation of fuel cell power ~~plants~~platforms including site engineering and construction services, (ii) equipment only sales (modules, balance of plants (“BOP”), component part kits and spare parts to customers), (iii) performance under long-term service agreements, (iv) the sale of electricity and other value streams under power purchase agreements (“PPAs”) and utility tariffs from project assets retained by the Company, (v) license fees and royalty income from manufacturing and technology transfer agreements, and (vi) government and customer-sponsored Advanced Technologies projects.

Service. Includes performance under long-term service agreements for power ~~plants~~platforms owned by third ~~parties~~parties.

License and royalty. Includes license fees and royalty income from ~~manufacturing and technology transfer agreements.~~the licensure of intellectual property.

Advanced Technologies. Includes revenue from customer-sponsored and government-sponsored Advanced Technologies projects.

~~Our~~See below for discussion of revenue recognition under Topic 606 by disaggregated revenue stream.

The Company reviews its cost estimates on service agreements on a quarterly basis and records any changes in estimates on a cumulative catch-up basis.

Payment terms for service agreements are generally ratable over the term of the agreement.

Payments are based on costs incurred for government sponsored Advanced Technologies projects and upon completion of milestones for previous fixed-price Advanced Technologies projects. Payments under the EMRE Joint Development Agreement are based on time spent and material costs incurred.

The Company entered into the License Agreements (as defined elsewhere herein) with POSCO Energy Co., ~~Europe~~Ltd. (“POSCO Energy”) in 2007, 2009 and ~~Asia~~2012. These agreements were terminated by the Company in June 2020, which is subject to dispute by POSCO Energy (for more information, refer to Note 22. “Commitments and ~~from agencies~~Contingencies”).

Effective as of June 11, 2019, the Company entered into a License Agreement with EMRE (the “EMRE License Agreement”), pursuant to which the Company agreed, subject to the terms of the EMRE License Agreement, to grant EMRE and its affiliates a non-exclusive, worldwide, fully paid, perpetual, irrevocable, non-transferrable license and right to use the Company’s patents, data, know-how, improvements, equipment designs, methods, processes and the like to the extent it is useful to research, develop, and commercially exploit Carbonate Fuel Cells in applications in which the fuel cells concentrate carbon dioxide from industrial and power sources and for any other purpose attendant thereto or associated therewith. Such right and license is sublicensable to third parties performing work for or with EMRE or its affiliates, but shall not otherwise be sublicensable. Upon the payment by EMRE to the Company of $10.0 million, which was received by the Company on June 14, 2019, EMRE and its affiliates were fully vested in the rights and licenses granted in the EMRE License Agreement, and any further obligations under the EMRE License Agreement are considered by the Company to be minimal. As a result, the total contract value of $10.0 million was recorded as revenue for the year ended October 31, 2019.

Prior to the implementation of Topic 606, the revenue recognition policy for the fiscal year ended October 31, 2018 was as follows:

Revenue from equipment only sales where the Company ~~does~~did not have the obligations associated with overall construction of the project (modules, BOPs, fuel cell kits and spare parts sales) iswas recognized upon shipment or title transfer under the terms of the customer contract. Terms for certain contracts ~~provide~~provided for a transfer of title and risk of loss to our customers at our factory locations and certain key suppliers upon completion of our contractual requirement to produce products and prepare the products for shipment. ~~A shipment in place may occur in the event that the customer is not ready to take delivery of the products on the contractually specified delivery dates.~~

In June 2017, an EPC contractor, Hanyang Industrial Development Co., Ltd (“HYD”), was awarded a 20 MW project by a utility in South Korea (Korea Southern Power Company) utilizing the Company’s SureSource technology. On August 29, 2017, the Company entered into a contract with HYD pursuant to which the Company will provide equipment to HYD for this 20 MW fuel cell project as well as ancillary services including plant commissioning. Construction began in fall 2017 and the installation is expected to be operational in the summer of 2018. The value of the contract to the Company is in excess of $60 million. The Company assessed the contract using the multi-element revenue recognition guidance and determined that ~~each of the modules and BOPs as well as the ancillary services each represent separate deliverables with stand-alone value~~. The full contract value was allocated to each element based on estimated selling prices using cost plus expected margins and revenue recognition will occur upon completion of shipping and customer acceptance of each piece of equipment and the proportional performance method is being used for ancillary services as provided. Approximately $39 million of revenue was recognized in the fourth quarter of fiscal 2017 related to this contract. The contract includes performance penalties and partial termination rights if certain delivery dates are not met or if individual equipment deliverables do not pass final acceptance tests after three tries due to issues solely attributable to the Company.

Revenue from service agreements iswas generally recorded ratably over the term of the service agreement, as ~~our~~the Company’s performance of routine monitoring and maintenance under these service agreements iswas generally expected to be incurred on a straight-line basis. For service agreements where ~~we expect~~the Company expected to have module exchanges at some point during the term (generally service agreements in excess of five years), the costs of performance ~~are~~were not expected to be incurred on a straight-line basis, and therefore, a portion of the initial contract value related to the module exchange(s) iswas deferred and iswas recognized upon such module replacement event(s).

~~We generally recognize~~The Company recognized license fees and other revenue over the term of the associated agreement. ~~License fees and royalty income have been included within revenues on the consolidated statement of operations.~~ The Company ~~receives~~recorded license fees and royalty income from POSCO Energy as a result of ~~manufacturing and technology transfer agreements~~the License Agreements entered into in 2007, 2009 and 2012. The Cell Technology Transfer Agreement we entered into on October 31, 2012 provides POSCO Energy with the technology rights to manufacture SureSource power plants in South Korea. On March 17, 2017, the Company entered into a Memorandum of Understanding (“2017 MOU”) with POSCO Energy to permit us to directly develop the Asian fuel cell business, including the right for us to sell SureSource solutions in South Korea and the broader Asian market. We and POSCO Energy also agreed to undertake to amend certain technology transfer and other agreements by a target date of September 30, 2017 to reflect our new relationship. Although these agreements have not yet been amended, we continue to engage in discussions with POSCO Energy regarding our relationship and the direction of the fuel cell business in the South Korean and Asian markets.

the ~~power (the "Customer").~~power. Due to the ~~Company's continuing involvement with~~Company not meeting criteria to account for the transfer of the project ~~and because the projects are considered integral equipment,~~assets as a sale, sale accounting is ~~precluded by ASC 840-40.~~precluded. Accordingly, the Company uses the financing method to account for these transactions.

incremental borrowing rate at the inception of the arrangement on the outstanding financing obligation. ~~Judgment is required to determine the appropriate borrowing rate for the arrangement and in determining any gain or loss on the transaction that would be recorded at the end of the lease term.~~ While we receive financing for ~~the full value of~~ the related power plant asset, we have not recognized revenue on the ~~sale leaseback transaction.~~sale-leaseback transactions. Instead, revenue is recognized ~~through~~with respect to the ~~sale of electricity and energy credits which are generated as energy is produced.~~related PPAs in accordance with the Company’s policies for recognizing generation revenues.

We warranty our products for a specific period of time against manufacturing or performance defects. Our U.S. warranty is generally limited to a term ~~generally~~of 15 months after shipment or 12 months after acceptance of our products. We accrue for estimated future warranty costs based on historical experience. We also provide for a specific accrual if there is a known issue requiring repair during the warranty period. Estimates used to record warranty accruals are updated as we gain further operating experience. ~~As of October 31, 2017 and 2016, the warranty accrual, which is classified in accrued liabilities on the consolidated balance sheet, totaled $0.3 million and $0.5 million, respectively.~~

In addition to the standard product warranty, we have entered into service agreements with certain customers to provide monitoring, maintenance and repair services for fuel cell power ~~plants.~~platforms. Under the terms of these service agreements, the power ~~plant~~platform must meet a minimum operating output during the term. If the minimum output falls below the contract requirement, we may be subject to performance penalties or may be required to repair and/or replace the customer's fuel cell module. ~~The Company has accrued for performance guarantees of $2.2 million and $3.3 million as of October 31, 2017 and 2016, respectively.~~

The Company ~~provides for~~records loss accruals for ~~all~~ service agreements when the estimated cost of future module exchanges and maintenance and monitoring activities exceeds the remaining unrecognized contract value. Estimates for future costs on service agreements are determined by a number of factors including the estimated remaining life of the module, used replacement modules available ~~our limit of liability on service agreements~~ and future operating plans for the power ~~plant.~~platform. Our estimates are performed on a contract by contract basis and include cost assumptions based on what we anticipate the service requirements will be to fulfill obligations for each contract. ~~As of October 31, 2017, our loss accruals on service agreements totaled $1.1 million compared to $2.7 million as of October 31, 2016.~~

At the end of our service agreements, customers are expected to either renew the service agreement or, based on the Company's rights to title of the module, the module will be returned to the Company as the ~~plant~~platform is no longer being monitored or having routine service performed. As of October 31, 2016, the Company did not have an asset related to the residual value of replacement modules in power plants under service agreements compared to $1.0 million as of October 31, 2017. maintained.

The Cell Technology Transfer and License Agreement dated October 31, 2012 by and between the Company and POSCO Energy, Co., (the "CTTA") provides POSCO Energy with the technology to manufacture SureSource power plants in South Korea and the exclusive market access to sell power plants throughout Asia. In connection with the CTTA, fees totaling $18.0 million were paid between fiscal year 2012 and 2015 and are being amortized over the term of the CTTA.

The Company also receives royalties from POSCO Energy under the 2007 Technology Transfer, Distribution and Licensing Agreement ("TTA") and the 2009 Stack Technology Transfer and License Agreement ("STTA") at the rate

of 3.0% of POSCO Energy net sales. Additionally, under the STTA certain license fee income aggregating $7.0 million is being recognized ratably over fifteen years beginning November 1, 2012. Under the terms of the TTA, POSCO Energy manufactures BOP in South Korea using its design, procurement and manufacturing expertise. The STTA allows POSCO Energy to produce fuel cell modules which will be combined with BOP manufactured in South Korea to complete electricity-producing fuel cell power plants for sale in South Korea.

The Company has a Master Service Agreement with POSCO Energy, whereby POSCO Energy has more responsibility for servicing installations in Asia that utilize power plants manufactured by POSCO Energy. The Company performs engineering and support services for each unit in the installed fleet and receives quarterly fees as well as a 3.0% royalty on each fuel cell module replacement under service agreements that were built by POSCO Energy and installed at any plant in Asia.

In April 2014, the Company entered into an Integrated Global Supply Chain Plan Agreement ("IGSCP") with POSCO Energy. FuelCell Energy provides procurement services for POSCO Energy and receives fixed compensation for services rendered.

~~The Company recorded revenue of $2.7 million, $6.2 million and $3.9 million for the years ended October 31, 2017, 2016 and 2015, respectively, relating to the above agreements.~~

We receive payments from customers upon the acceptance of a purchase order and when contractual milestones are reached. These payments may be deferred based on the nature of the payment and status of the specific project. Deferred revenue is recognized as revenue in accordance with our revenue recognition policies summarized above.

We perform both customer-sponsored research and development projects based on contractual ~~agreement~~agreements with customers and company-sponsored research and development projects.

Costs incurred for customer-sponsored projects include manufacturing and engineering labor, applicable overhead expenses, materials to build and test prototype units and other costs associated with customer-sponsored research and development contracts. ~~These costs~~Costs incurred for customer-sponsored projects are recorded as cost of Advanced Technologies contract revenues in the ~~consolidated statements~~Consolidated Statements of ~~operations.~~Operations and Comprehensive Loss.

Costs incurred for company-sponsored research and development projects consist primarily of labor, overhead, materials to build and test prototype units and consulting fees. These costs are recorded as research and development expenses in the ~~consolidated statements~~Consolidated Statements of ~~operations.~~Operations and Comprehensive Loss.

We contract with a concentrated number of customers for the sale of our products, for service agreement contracts and for Advanced Technologies contracts. For the years ended October 31, ~~2017, 2016~~2020, 2019 and ~~2015,~~2018, our top customers accounted for ~~78%~~86%, ~~75%~~81% and ~~90%~~88%, respectively, of our total annual consolidated revenue.

The percent of consolidated revenues from each customer for the years ended October 31, ~~2017, 2016~~2020, 2019 and ~~2015,~~2018, respectively, are presented below.

We do not use derivatives for speculative ~~purposes and through fiscal year end 2017, have not used derivatives for hedging~~ or trading purposes. ~~Our derivative instruments consist~~The Company has an interest rate swap that is adjusted to fair value on a quarterly basis. The fair value adjustment is based on Level 2 inputs including primarily the forward LIBOR curve available to swap dealers. The fair value methodology involves comparison of ~~embedded derivatives in our Series 1 Preferred Shares. We account for these derivatives~~(i) the sum of the present value of all monthly variable rate payments based on a reset rate using the ~~fair-value method with changes in fair~~forward LIBOR curve and (ii) the sum of the present value ~~recorded~~of all monthly fixed rate payments on the notional amount which is equivalent to ~~operations.~~the outstanding principal amount of the loan. Refer to Note 1314. “Debt” for ~~additional information.~~further details.

The preparation of financial statements and related disclosures in conformity with accounting principles generally accepted in the U.S. (“GAAP”) requires management to make estimates and assumptions that affect the reported amounts of assets, liabilities, revenues and expenses and the disclosure of contingent assets and liabilities. Estimates are used in accounting for, among other things, revenue recognition, lease right-of-use assets and liabilities, contract loss accruals, excess, slow-moving and obsolete inventories, product warranty ~~costs,~~ accruals, ~~for~~loss accruals on service agreements, share-based compensation expense, allowance for ~~uncollectible receivables,~~doubtful accounts, depreciation and amortization, impairment of goodwill ~~indefinite-lived~~and in-process research and development intangible assets, ~~and~~impairment of long-lived assets ~~income taxes,~~(including project assets), and contingencies. Estimates and assumptions are reviewed periodically, and the effects of revisions are reflected in the consolidated financial statements in the period they are determined to be necessary. Due to the inherent uncertainty involved in making estimates, actual results in future periods may differ from those estimates.

The translation of the financial statements of ~~FuelCell~~FCE Korea ~~Ltd’s,~~Ltd., FCES ~~GmbH's~~GmbH and Versa Power Systems ~~Ltd’s.~~Ltd. results in translation gains or losses, which are recorded in accumulated other comprehensive loss within stockholders’ equity.

Our Canadian subsidiary, FCE FuelCell Energy Ltd., is financially and operationally integrated and the functional currency is the U.S. dollar. We are also subject to foreign currency transaction gains and losses as certain transactions are denominated in foreign currencies. We recognized net foreign currency transaction gains (losses) ~~gains~~ of ~~$(0.7)~~$0.2 million, ~~$0.3~~$(0.1) million and ~~$1.7~~$0.3 million for the years ended October 31, ~~2017, 2016~~2020, 2019 and ~~2015,~~2018, respectively. These amounts have been ~~classified as other~~included in Other income, net in the ~~consolidated statements~~Consolidated Statements of ~~operations.~~Operations and Comprehensive Loss.

The Company adopted ASC 842, “Leases” (“Topic 842” or “ASC 842”) on November 1, 2019. ASC 842, including all the ~~Financial~~related amendments subsequent to its issuance, supersedes the prior guidance for lease accounting and requires lessees to recognize a right-of-use (“ROU”) asset representing the right to use an underlying asset and a lease liability representing the obligation to make lease payments over the lease term for substantially all leases, as well as disclose key quantitative and qualitative information about leasing arrangements. Upon adoption, the Company recognized an operating lease liability of approximately $10.3 million and corresponding operating lease ROU assets of approximately $10.1 million. There was no cumulative effect of the adoption recorded to accumulated deficit. There was no significant net effect on the Consolidated Statements of Operations and Comprehensive Loss. Refer to Note 13. “Leases” for additional information on the Company’s adoption of ASC 842.

Recent Accounting ~~Standards Board (the “FASB”) issued Accounting Standards Update (“ASU”) 2014-15, “Disclosure~~Guidance Not Yet Effective

There is no recent accounting guidance not yet effective that is expected to have a material impact on the Company’s financial statements when adopted.

Certain amounts from the prior years have been reclassified to conform to the current year presentation.

Contract assets as of ~~Uncertainties about an Entity’s Ability~~October 31, 2020 and 2019 were $16.9 million and $11.3 million, respectively. The contract assets relate to ~~Continue~~the Company’s rights to consideration for work completed but not billed. These amounts are included on a separate line item as ~~a Going Concern,” which requires an entity~~Unbilled receivables, and balances expected to ~~evaluate at each reporting period whether there are conditions or events, in the aggregate, that raise substantial doubt about the entity’s ability to continue as a going concern within~~be billed later than one year from the balance sheet date are included within Other assets on the ~~financial statements are issued and to provide related footnote disclosures~~accompanying Consolidated Balance Sheets. The net change in ~~certain circumstances. The Company adopted~~contract assets represents amounts recognized as revenue offset by customer billings. For the ~~provisions of this ASU for the annual reporting period~~years ended October 31, ~~2017.~~2020 and 2019, a total of $5.9 million and $6.6 million, respectively, was transferred to accounts receivable from contract assets recognized at the beginning of the period and an additional adjustment was made to reduce contract assets as a result of the acquisition of the Bridgeport Fuel Cell Project (refer to Note 3. “Acquisition” for additional information).

Contract liabilities as of October 31, 2020 and 2019 were $41.9 million and $40.2 million, respectively. The ~~adoption~~contract liabilities relate to the advance billings to customers for services that will be recognized over time and in some instances for deferred revenue relating to license performance obligations that will be recognized at a future point in time. The Company has discontinued revenue recognition of the deferred license revenue related to the terminated POSCO Energy License Agreements given the pending arbitration and will continue to evaluate this ~~update did not have a significant impact~~deferred revenue in future periods. As of October 31, 2020, $22.2 million related to the terminated POSCO Energy License Agreements is included within Long-term deferred revenue on the accompanying Consolidated Balance Sheets. The net change in contract liabilities represents customer billings offset by revenue recognized.

Remaining performance obligations are the aggregate amount of total contract transaction price that is unsatisfied or partially unsatisfied. As of October 31, 2020, the Company’s total remaining performance obligations for service agreements was $146.8 million, for license agreements was $22.2 million and for Advanced Technologies contracts was $49.2 million. Service revenue in periods in which there are no module replacements is expected to be relatively consistent from period to period, whereas module replacements will result in an increase in revenue when replacements occur.

The following table summarizes the impacts of Topic 606 on the Company’s consolidated financial ~~statements.~~statements for the year ended October 31, 2019:

The impact of Topic 606 on Accumulated Deficit were a $9.3 million decrease and a $6.6 million decrease on the FASB issued ASU 2015-03, “Interest – Imputation of Interest (Subtopic 835-30): Simplifying the Presentation of Debt Issuance Costs.” This ASU simplifies the presentation of debt issuance costs by requiring that such costs be presented in the balance sheet as a direct deduction from the carrying value of the associated debt instrument, consistent with debt discounts. The Company has adopted ASU 2015-03 effective January 31, 2017 and retrospective application is required which resulted in a reclassification in our Consolidated Balance SheetAccumulated Deficit as of October 31, ~~2016~~2019 and November 1, 2018, respectively, and were primarily related to changes in Deferred revenue.

On October 31, 2018, FuelCell Energy Finance, LLC (“FuelCell Finance”) entered into a membership interest purchase agreement (the “Bridgeport Power Purchase Agreement”) with Dominion Generation, Inc., amended on January 15, 2019 and May 9, 2019, pursuant to which FuelCell Finance purchased (on May 9, 2019) all of ~~$0.3~~the outstanding membership interests in Dominion Bridgeport Fuel Cell, LLC (which is now known as Bridgeport Fuel Cell, LLC) (“BFC”). BFC owns a 14.9 MW fuel cell park in Bridgeport, Connecticut (the “Bridgeport Fuel Cell Project”), which the Company originally developed and constructed and has been operating for Dominion Generation, Inc. under a service agreement since December 2013.

On May 9, 2019, FuelCell Finance closed on the purchase of BFC for a total cash purchase price of $35.5 million, subject to a dollar-for-dollar post-closing adjustment to the extent that the closing working capital was greater or less than $1.0 million (the “BFC Purchase Price”). The Company recorded a working capital adjustment of $0.6 million, which has been included in the BFC Purchase Price. Certain balance sheet accounts as of the transaction date, May 9, 2019, relating to the Bridgeport Fuel Cell Project service agreement (accounts receivable of $2.7 million, unbilled receivables of $15.3 million and accrued performance guarantees of $1.3 million) were settled in connection with the acquisition and accordingly were included in the consideration for the acquisition.

The acquisition was funded by loans from Fifth Third Bank, Liberty Bank and Connecticut Green Bank (refer to Note 14. “Debt” for more information). The balance of the financing for the acquisition was funded by the $15 million of ~~debt issuance~~restricted cash on hand that was tied to the Bridgeport Fuel Cell Project and released at closing.

ASC Topic 805, “Business Combinations” states that a business is an integrated set of activities and assets that is capable of being conducted and managed for the purpose of providing a return in the form of dividends, lower costs, ~~from Current assets~~or other economic benefits directly to be a direct deduction from “Current portion of long-term debt” and a reclassification of $1.1 million of debt issuance costs from “Other assets” to be a direct deduction from Long-term debt andinvestors or other ~~liabilities.~~

~~In January 2017,~~owners, members, or participants. As the ~~FASB issued ASU 2017-01, “Business Combinations.” ASU 2017-01 was issued to clarify~~acquisition did not meet the definition of a business ~~with~~combination under ASC 805, the ~~objective of adding guidance to assist entities with evaluating whether transactions should be~~Company accounted for the transaction as ~~acquisitions (or disposals)~~an asset acquisition. In an asset acquisition, goodwill is not recognized, but rather any excess consideration transferred over the fair value of the net assets ~~or businesses.~~acquired is allocated on a relative fair value basis to the identifiable net assets. The Company determined the estimated fair values of net assets acquired using Level 3 inputs after review and consideration of relevant information, including discounted cash flows, quoted market prices and estimates made by management. The acquisition of BFC also included a PPA with Connecticut Light and Power that has ~~elected to early adopt ASU 2017-01 effective November 1, 2016 which did not have a significant impact on the Company’s consolidated financial statements.~~favorable

~~In May 2014,~~terms relative to market, a land lease with the ~~FASB issued ASU No. 2014-09, “Revenue from Contracts with Customers (Topic 606).” This topic provides for five principles which should~~City of Bridgeport, and working capital. A pre-existing service agreement was determined to be ~~followed~~priced similar to ~~determine~~current market rates and 0 gain or loss was recorded. A total of $38.8 million of consideration was allocated to the appropriate amount and timing of revenue recognition for the transfer of goods and services to customers. The principles in this ASU should be applied to all contracts with customers regardless of industry. The amendments in this ASU are effective for fiscal years, and interim periods within those years beginning after December 15, 2016, with two transition methods of adoption allowed. Early adoption for reporting periods prior to December 15, 2016 is not permitted. In March 2015, the FASB voted to defer the effective date by one year to fiscal years, and interim periods within those fiscal years beginning after December 15, 2017 (first quarter of fiscal year 2019 for the Company), but allow adoption as of the original adoption date. The Company has numerous different revenue sources including the sale and installation of fuel cell power ~~plants, site engineering~~platform installation which is recorded in Project Assets, a total of $12.3 million of consideration was allocated to the PPA which is recorded as an intangible asset, and ~~construction services, sale~~the remaining consideration was allocated to the acquired working capital. The project asset and PPA intangible asset will be depreciated and amortized over their respective useful lives. Additionally, the land lease with the City of modules, BOPs and spare parts, extended warranty service agreements, sale of electricity under power purchase agreements, license fees and royalty income from manufacturing and technology transfer agreements and customer-sponsored Advanced Technologies projects. This requires application of various revenue recognition methods under current accounting guidance. Although we anticipate that, upon adoption of this new ASU the timing of revenue recognition for certain of our revenue sources might change, we are still evaluating the financial statement impactsBridgeport was not assigned any consideration due to its insignificant value.

The major depreciable assets of the ~~guidance in this ASU~~Bridgeport Fuel Cell Project are the fuel cell modules, which are being depreciated over their estimated remaining useful lives of approximately one to seven years, and ~~determining~~BOP assets, which ~~transition method we will utilize. In May 2016,~~are being depreciated over their estimated remaining useful lives of approximately 15 years. The intangible asset is being amortized over its remaining useful life of approximately 10 years.

There were 0 restructuring activities during the FASB issued ASU 2016-12, “Revenue from Contracts with Customers (Topic 606).” This topic provides narrow-scope improvements and practical expedients regarding collectability, presentation of sales tax collected from customers, non-cash consideration, contract modifications at transition, completed contracts at transition and other technical corrections. We have initiated a review of the contracts for our significant revenue streams to understand the impact of the adoption of this ASU.

On April 12, 2019, the ~~Company). Early adoption is permitted. The~~ Company has both operating and capital leases (refer to Note 18. Commitments and contingences) as well as sale-leasebacks accounted for under the finance method and may have other arrangements that contain embedded leases as characterizedundertook a reorganization, which included a reduction in ~~this ASU. We expect that adoption~~force of this ASU will result in the recognition of right-of-use assets and lease liabilities not currently recorded in our consolidated financial statements under existing accounting guidance. However we are still evaluating all135 employees, which represented 30% of the Company’s ~~contractual arrangements and the impact that adoption of ASU 2016-02 will have on the Company’s consolidated financial statements.~~

On November 30, 2016, a business restructuring was announced to reduce costs and align production levels with current levels of demand in a manner that is consistent with the Company’s long-term strategic plan.

~~The Company reduced materials spend as well as implemented various cost control initiatives.~~global workforce. The workforce was reduced at ~~both~~ the North American production facility in Torrington, Connecticut, as well as at the corporate offices in Danbury, Connecticut and at remote locations. ~~A total of 96 positions, or approximately 17% of~~There was 0 restructuring expense recorded because no severance was provided in connection with the ~~Company’s global workforce,~~reduction in force.

There were ~~eliminated. The production rate was reduced to twenty-five MW annually, from~~0 restructuring activities during the prior rate of fifty MW annually, in order to position for delays in anticipated order flow. This production level is anticipated to be temporary and will be reevaluated as order flow dictates. Restructuring expense relating to eliminated positions of $1.4 million has been recorded and paid for thefiscal year ended October 31, ~~2017, which has been presented on a separate caption in the Consolidated Statement of Operations.~~2018.

Accounts receivable, net and unbilled receivables as of October 31, ~~2017~~2020 and ~~2016~~2019 consisted of the following (in thousands):

We bill customers for power ~~plant~~platform and power ~~plant~~platform component sales based on certain contractual milestones being reached. We bill service agreements based on the contract price and billing terms of the contracts. Generally, our Advanced Technologies contracts are billed based on actual ~~recoverable costs incurred,~~revenues recorded, typically in the ~~month~~ subsequent ~~to incurring costs.~~month. Some Advanced Technologies contracts are billed based on contractual milestones or costs incurred. Unbilled ~~recoverable costs~~receivables relate to revenue recognized on customer contracts that ~~has~~have not been billed. ~~Accounts receivable are presented net of an~~

The Company had 0 allowance for doubtful accounts ~~of $0.1 million and $0.2 million~~ as of October 31, ~~2017~~2020 and ~~2016, respectively.~~2019. Uncollectible accounts receivable are charged against the allowance for doubtful accounts when all collection efforts have failed and it is deemed unlikely that the amount will be recovered.

~~Accounts receivable from commercial customers (including unbilled recoverable costs) include amounts due from POSCO Energy of $6.2 million~~

Inventories (short and ~~$5.0 million, and amounts due from NRG of $0.1 million as of each of October 31, 2017 and 2016. The Company also had amounts due to POSCO Energy of $32.7 million and $0~~long-term) as of October 31, ~~2017~~2020 and ~~2016, respectively, for the purchase of inventory.~~

~~Inventories as of October 31, 2017 and 2016~~2019 consisted of the following (in thousands):

Raw materials consist mainly of various nickel powders and steels, various other components used in producing cell stacks and purchased components for ~~balance of plant.~~BOP. Work-in-process inventory is comprised of material, labor, and overhead costs incurred to build fuel cell stacks and modules, which are subcomponents of a power ~~plant.~~platform.

~~Raw materials~~The Company incurred costs associated with excess plant capacity and ~~work in process are net~~manufacturing variances of ~~a valuation allowance of approximately $0.2~~$8.4 million and ~~$0.8~~$14.5 million ~~as of~~for the years ended October 31, ~~2017~~2020 and ~~2016, respectively.~~2019, respectively, which were included within product cost of revenues on the Consolidated Statements of Operations and Comprehensive Loss.

Project assets as of October 31, ~~2017~~2020 and ~~2016 were $73.0 million~~2019 consisted of the following (in thousands):

The estimated useful lives of these project assets are 20 years for BOP and ~~$47.1 million, respectively.~~site construction, and 4 to 7 years for modules. The Bridgeport Fuel Cell Project is being depreciated based on similar useful lives adjusted for time elapsed prior to the acquisition. Project assets as of October 31, ~~2017 include $30.2 million which represents four~~2020 and 2019 included 8 and 6, respectively, completed, commissioned installations ~~where we have~~generating power with respect to which the Company has a PPA with the end-user of power and site ~~host. Project assets~~host with an aggregate value of $70.5 million and $59.2 million as of October 31, ~~2016 include $6.2 million which represents one completed, commissioned installation where we have a PPA with the end-user~~2020 and 2019, respectively. Certain of ~~power and site host. These~~these assets are the subject of sale-leaseback arrangements with PNC Energy Capital, LLC (“PNC”), which are recorded under the financing method of accounting for a sale-leaseback. Under the finance method, the Company does not recognize the proceeds received from the lessor as a sale of such assets. The and Crestmark.

Project assets ~~balance~~ as of October 31, ~~2017~~2020 and 2019 also ~~includes assets aggregating $40.9~~include installations with carrying values of $91.3 million and $84.9 million, respectively, which are being developed and constructed by the Company ~~under~~in connection with projects for which we have entered into PPAs or projects for which we expect to secure PPAs or otherwise recover the asset value and which have not yet been ~~executed~~ placed in service. Of this total, as of October 31, 2020 and 2019, approximately $4.8 million and $6.8 million, respectively, relates to projects for which we expect to secure long-term contracts and/or ~~are expected~~otherwise recover the asset value and which have not yet been placed in service.

In July 2020, the Company repurchased the equipment leased by the Company’s subsidiary, UCI Fuel Cell, LLC, from PNC and terminated the lease agreement. Refer to ~~be executed in~~Note 14. “Debt” for more information.

In the fourth quarter of fiscal year ~~2018.~~2020, the Company reviewed the Triangle Street Project and as a result of output and revenue projections given then-current development plans, recorded an additional impairment charge of $2.4 million. The Triangle Street Project is used by the Company as a development platform for the Company’s advanced applications. As a result, revenue generation is impacted by these activities.

During the year ended October 31, 2019, the Company recorded project asset impairment charges for (i) the Triangle Street Project and (ii) the Bolthouse Farms Project, which are further described as follows:

The Company recorded a $0.5 million impairment of a project asset during the year ended October 31, 2018 due to the termination of a project. The impairments for fiscal year 2020 and fiscal year 2019 were recorded as “Cost of generation revenues” in the Consolidation Statements of Operations.

Depreciation expense for project assets was ~~$4.1~~$12.9 million, $6.8 million and ~~$0.7~~$4.1 million for the years ended October 31, ~~2017~~2020, 2019 and ~~2016,~~2018, respectively. ~~There was no depreciation expense recorded for the year ended October 31, 2015 since there were no project assets in service.~~

In November 2016, the Company’s wholly-owned subsidiary, FuelCell Energy Finance, LLC (“FuelCell Finance”) entered into a membership interest purchase agreement with GW Power LLC (“Seller”) whereby FuelCell Finance purchased all of the outstanding membership interests in New Britain Renewable Energy, LLC (“NBRE”) from Seller. Seller assigned the NBRE interest to FuelCell Finance free and clear of all liens other than a pledge in favor of Webster Bank, National Association. The Company adopted ASU 2017-01 which resulted in the transaction being accounted for as an asset acquisition of a power plant for a relative fair value of $2.3 million (carrying amount of $1.9 million as of October 31, 2017) which has been classified as a long-term project asset in support of an Energy Purchase Agreement.

Project construction costs incurred for ~~the~~ long-term project assets are reported as investing activities in the Consolidated Statements of Cash Flows. The proceeds received from the sale and subsequent leaseback of project assets are classified as “Cash flows from financing activities” within the Consolidated Statements of Cash Flows and are classified as a financing obligation within “Current portion of long-term debt” and “Long-term debt and other liabilities” on the Consolidated Balance Sheets (refer to Note 1114. “Debt” for more information).

Property, plant and equipment as of October 31, ~~2017~~2020 and ~~2016~~2019 consisted of the following (in thousands):

The Company substantially completed the first phase of its project to expand the existing 65,000 square foot manufacturing facility in Torrington, Connecticut by approximately 102,000 square feet for a total size of 167,000 square feet during

During the year ended October 31, ~~2017.~~2019, the Company recorded a $2.8 million impairment of construction in process assets related to automation equipment for use in manufacturing which was recorded in Cost of product sales in the Consolidated Statements of Operations and Comprehensive Loss. There were 0 impairments of property, plant and equipment for the years ended October 31, 2020 and October 31, 2018.

Depreciation expense for property, plant and equipment was ~~$4.4~~$5.1 million, ~~$4.3~~$4.9 million and ~~$4.1~~$4.6 million for the years ended October 31, ~~2017, 2016~~2020, 2019 and ~~2015,~~2018, respectively.

As of October 31, ~~2017~~2020 and ~~2016,~~2019, the Company had goodwill of $4.1 million and intangible assets of ~~$9.6~~$20.0 million ~~associated~~and $21.3 million, respectively, that were recorded in connection with the Company’s 2012 acquisition of Versa Power Systems Inc. (“Versa”) and the 2019 Bridgeport Fuel Cell Project acquisition.

The Versa acquisition intangible asset represents ~~indefinite lived in-process research and development~~indefinite-lived IPR&D for cumulative research and development efforts associated with the development of ~~solid oxide fuel cells~~Solid Oxide Fuel Cell stationary power generation.

The Company completed its annual impairment analysis of goodwill and ~~in-process research and development~~IPR&D assets as of July 31, 2017. The Company performed a quantitative assessment in the prior year and determined that the estimated fair value of the reporting unit and in-process research and development intangible asset exceeded the respective carrying value and therefore no impairment was recognized as of July 31, 2016.2020. The Company performed a qualitative ~~assessment~~analysis for fiscal ~~year 2017~~years 2020, 2019 and 2018 and determined that ~~it was more likely than not that~~ there was no0 impairment of goodwill or the ~~indefinite lived~~indefinite-lived intangible asset.

Amortization expense for the Bridgeport Fuel Cell Project-related intangible asset for the years ended October 31, 2020 and 2019 was $1.3 million and $0.6 million, respectively.

The following tables summarize the Company’s intangible assets as of October 31, 2020 and 2019 (in thousands):

Amortization expense is recorded on a straight-line basis and future amortization expense will be $1.3 million per year until the Bridgeport PPA is fully amortized.

Other current assets as of October 31, ~~2017~~2020 and ~~2016~~2019 consisted of the following (in thousands):

Other assets ~~net~~ as of October 31, ~~2017~~2020 and ~~2016~~2019 consisted of the following (in thousands):

Accrued liabilities as of October 31, ~~2017~~2020 and ~~2016~~2019 consisted of the following (in thousands):

The Company adopted ASC 842 and its related amendments (collectively, the “New Lease Accounting Standard”) effective November 1, 2019 and elected the modified retrospective approach in which results and disclosures for periods before November 1, 2019 were not adjusted for the new standard and the cumulative effect of the change in accounting, if applicable, is recognized through accumulated deficit at the date of adoption.

The New Lease Accounting Standard establishes a right-of-use (ROU) model that requires a lessee to record a ROU asset and a lease liability on the Consolidated Balance Sheets for all leases. Leases are classified as either finance or operating, with classification affecting the pattern of expense recognition in the consolidated statement of operations.

The New Lease Accounting Standard provides entities with several practical expedient elections. Among them, the Company elected the package of practical expedients that permits the Company to not reassess prior conclusions related to its leasing arrangements, lease classifications and initial direct costs. In addition, the Company has elected the practical expedients to not separate lease and non-lease components, to use hindsight in determining the lease terms and impairment of ROU assets, and to not apply the New Lease Accounting Standard’s recognition requirements to short-term leases with a term of 12 months or less.

The adoption of the New Lease Accounting Standard did not have a material effect on the Company’s Consolidated Statements of Operations and Comprehensive Loss or Consolidated Statement of Cash Flows. Upon adoption, the Company recorded a $10.3 million operating lease ROU asset and a $10.1 million operating lease liability. The adoption of the New Lease Accounting Standard had 0 impact on accumulated deficit.

The Company enters into operating and finance lease agreements for the use of real estate, vehicles, information technology equipment, and certain otherequipment. We determine if an arrangement contains a lease at inception, which is the date on which the terms of the contract are agreed to and the agreement creates enforceable rights and obligations. The impacts of accounting for operating leases are included in Operating lease right-of-use assets, Operating lease liabilities, and Long-term operating lease liabilities in the Company’s Consolidated Balance Sheets. Finance leases are not considered significant to the Company’s Consolidated Balance Sheets or Consolidated Statements of Operations and Comprehensive Loss. Finance lease ROU assets at October 31, 2020 of $0.04 million are included in Property, plant and equipment, net in the Company’s Consolidated Balance Sheets. Finance lease liabilities at October 31, 2020 of $0.04 million are included in Current portion of long-term debt and Long-term debt and other liabilities in the Company’s Consolidated Balance Sheets.

ROU assets represent the Company’s right to use an underlying asset for the lease term and lease liabilities represent the present value of the Company’s obligation to make lease payments arising from the lease over the lease term at the commencement date of the lease (or November 1, 2019 for leases existing upon the adoption of ASC 842). As most of the Company’s leases do not provide an implicit rate, the Company estimated the incremental borrowing rate based on the information available at the date of adoption in determining the present value of lease payments and used the implicit rate when readily determinable. The Company determined incremental borrowing rates through market sources for secured borrowings including relevant industry rates. The Company’s operating lease ROU assets also include any lease pre-payments and exclude lease incentives. Certain of the Company’s leases include variable payments, which may vary based upon changes in facts or circumstances after the start of the lease. The Company excludes variable payments from lease ROU assets and lease liabilities, to the extent not considered in-substance fixed, and instead, expenses variable payments as incurred. Variable lease expense and lease expense for short term contracts are not material components of lease expense. The Company’s leases generally have remaining lease terms of 1 to 26 years, some of which include options to extend leases. The exercise of lease renewal options is at the Company’s sole discretion and the Company’s lease ROU assets and liabilities reflect only the options the Company is reasonably certain that it will exercise. We do not have leases with residual value guarantees or similar covenants.

Operating lease costs for the year ended October 31, 2020 was $1.5 million. As of October 31, 2020, the weighted average remaining lease term (in years) was approximately 20 years and the weighted average discount rate was 6.27%. Lease payments made during the year ended October 31, 2020 totaled $1.0 million.

Rent expense for operating leases of computer and office equipment and the manufacturing facilities in Torrington and Danbury, Connecticut under previous accounting guidance for leases was $1.0 million and $1.2 million for the years ended October 31, 2019 and 2018, respectively.

As of October 31, 2020, undiscounted maturities of operating lease and finance lease liabilities are as follows (in thousands):

On February 11, 2020, an indirect wholly-owned subsidiary of the Company, Central CA Fuel Cell 2, LLC (“CCFC2”), entered into a Purchase and Sale Agreement (the “Purchase Agreement”) and an Equipment Lease Agreement (the “Lease”) with Crestmark. Under these agreements, CCFC2 sold the 2.8 MW Biogas fueled fuel cell power plant (the “Plant”) located at the Tulare wastewater treatment plant in Tulare, California to Crestmark for a purchase price of $14.4 million and then leased the Plant back from Crestmark. CCFC2 sells the power produced by the Plant to a third party under a twenty-year PPA (the “Tulare PPA”). The Lease includes an end of term option for CCFC2 to repurchase the transferred assets. The repurchase clause precluded sale accounting since there are no alternative assets substantially the same as the transferred assets readily available in the marketplace. As such, the transaction is a failed sale-leaseback transaction that is accounted for as a financing transaction.

The Lease has an initial term of ten years but may be extended at the option of CCFC2. An initial rental down payment and one month’s rent totaling $2.9 million was paid using the proceeds from the sale of the Plant. Lease payments are due on a monthly basis in the amount of $0.1 million. Lease payments are expected to be funded with proceeds from the sale of power under the Tulare PPA. As a result of the sale-leaseback transaction, the remaining lease payments due over the term of the Lease were approximately $9.3 million immediately following the transaction and $8.6 million as of October 31, 2020.

CCFC2 and Crestmark entered into an Assignment Agreement on February 11, 2020 (the “Assignment Agreement”) and FuelCell Energy Finance, LLC (“FuelCell Finance”, a wholly-owned subsidiary of the Company and the direct parent of CCFC2) and Crestmark entered into a Pledge Agreement on February 11, 2020 (the “Pledge Agreement”) pursuant to which agreements collateral was provided to Crestmark to secure CCFC2’s obligations under the Lease which includes a security interest in (i) certain agreements relating to the sale-leaseback transaction, (ii) the revenues with respect to the Plant, (iii) two fuel cell replacement modules for the Plant, and (iv) FuelCell Finance’s equity interest in CCFC2. CCFC2 and the Company also entered into a Technology License and Access Agreement with Crestmark on February 11, 2020, which provides Crestmark with certain intellectual property license rights to have access to the Company’s proprietary fuel cell technology, but only for the purpose of maintaining and servicing the Plant in certain circumstances where the Company is not satisfying its obligations under its service agreement with regard to the maintenance and servicing of the Plant.

Pursuant to the Lease, CCFC2 has an obligation to indemnify Crestmark for the amount of any actual reduction in the U.S. Investment Tax Credit anticipated to be realized by Crestmark in connection with the foregoing sale-leaseback transaction. Such obligations would arise as a result of reductions to the value of the underlying fuel cell project as assessed by the U.S. Internal Revenue Service (“IRS”). The Company does not believe that any such obligation is probable based on the facts known as of October 31, 2020. The maximum potential future payments that CCFC2 could have to make under these obligations would depend on the difference between the fair values of

the fuel cell project sold or financed and the values the IRS would determine as the fair value for the system for purposes of claiming the Investment Tax Credit. The value of the Investment Tax Credit in the sale-leaseback agreements is based on guidelines provided by regulations from the IRS. The Company and Crestmark used fair values determined with the assistance of an independent third-party appraisal.

The Purchase Agreement and the Lease contain representations and warranties, affirmative and negative covenants, and events of default that entitle Crestmark to cause CCFC2’s indebtedness under the Lease to become immediately due and payable.

Pursuant to a Guaranty Agreement executed on February 11, 2020 by the Company for the benefit of Crestmark (the “Guaranty”), the Company has guaranteed the payment and performance of CCFC2’s obligations under the Lease.

Debt as of October 31, ~~2017~~2020 and ~~2016~~2019 consisted of the following (in thousands):

Aggregate annual principal payments under our loan agreements and ~~capital~~finance lease obligations for the years subsequent to October 31, ~~2017~~2020 are as follows (in thousands):

On October 31, 2019, the Company and certain of its affiliates as guarantors entered into a Credit Agreement (as amended from time to time, the “Orion Credit Agreement”) with Orion Energy Partners Investment Agent, LLC, as Administrative Agent and Collateral Agent (the “Orion Agent”), and certain lenders affiliated with the Orion Agent for a $200.0 million senior secured credit facility (the “Orion Facility”), structured as a delayed draw term loan to be provided by the lenders primarily to fund certain of the Company’s construction and ~~security agreement with Hercules Capital, Inc. (“Hercules”) subject to certain terms and conditions~~related costs for fuel cell projects meeting the requirements of ~~which~~the Orion Facility. Under the Orion Credit Agreement, each lender funded its commitments less 2.50% of the aggregate principal amount of the loans funded by such lender (the “Loan Discount).

On October 31, 2019, the Company drew down ~~$20.0~~$14.5 million ~~during~~(the “Initial Funding”) and received $14.1 million, after taking into account a Loan Discount of $0.4 million. On October 31, 2019, in connection with the Initial Funding, the Company issued warrants to the lenders under the Orion Credit Agreement to purchase up to a total of 6,000,000 shares of the Company’s common stock, at an exercise price of $0.310 per share (the “Initial Funding Warrants”).

On November 22, 2019, a second draw (the “Second Funding”) of $65.5 million, funded by Orion Energy Credit Opportunities Fund II, L.P., Orion Energy Credit Opportunities Fund II GPFA, L.P., Orion Energy Credit Opportunities Fund II PV, L.P., and Orion Energy Credit Opportunities FuelCell Co-Invest, L.P. (as the lenders under the Orion Credit Agreement), was made to fully repay certain outstanding third party debt of the Company, including the outstanding construction loan from Fifth Third Bank with respect to the Groton Project and the outstanding loan from Webster Bank with respect to the CCSU Project, as well as to fund remaining going forward construction costs and anticipated capital expenditures relating to the Groton Project (a 7.4 megawatt (MW) project), the LIPA Yaphank Solid Waste Management Project (a 7.4 MW project), and the Tulare BioMAT Project (a 2.8 MW project). The Company received $63.9 million in the Second Funding after taking into account a Loan Discount of $1.6 million as described above. Also in conjunction with the Second Funding, the Company issued to the lenders warrants to purchase up to a total of 14.0 million shares of the Company’s common stock, with an initial exercise price with respect to 8.0 million of such shares of $0.242 per share and with an initial exercise price with respect to 6.0 million of such shares of $0.620 per share (the “Second Funding Warrants”).

Under the Orion Credit Agreement, cash interest of 9.9% per annum was paid quarterly. In addition to the cash interest, payment-in-kind interest of 2.05% per annum accrued which was added to the outstanding principal balance of the Orion Facility but was paid quarterly in cash to the extent of available cash after payment of the Company’s operating expenses and the funding of certain reserves for the payment of outstanding indebtedness to the State of Connecticut and Connecticut Green Bank.

Outstanding principal under the Orion Facility was to be amortized on a straight-line basis over a seven-year term with the initial payment due 21 business days after the end of the first quarter of fiscal year ~~2016.~~2021. The ~~loan is a 30 month secured facility and~~maturity date of the ~~term loan interest~~Orion Facility was ~~previously 9.5 percent and increased to 9.75 percent resulting from the increase in the prime rate. Interest is~~October 31, 2027. The Orion Facility contained an administrative fee of $0.1 million per year paid on a ~~monthly basis. Interest only payments were~~quarterly basis and also included a prepayment premium of up to 35%. Such prepayment fee was to be ~~made for~~reduced over time based on the ~~first 18 months~~aggregate amount of principal and interest paid.

The issuance of the Initial Funding Warrants and recognition of the Second Funding Warrants resulted in $3.9 million being recorded as a ~~result~~liability as of October 31, 2019 with the offset recorded as a debt discount. Refer to Note 15. “Stockholders’ Equity and Warrant Liabilities” for additional information regarding the Initial Funding Warrants and Second Funding Warrants, including the accounting, terms and conversions during the year ended October 31, 2020.

During the year ended October 31, 2020, the Orion Credit Agreement was amended on five occasions including (a) to establish a debt reserve of $5.0 million to be released upon the occurrence of certain events and require the Company ~~achieving~~to enter into or modify certain ~~milestones. In addition~~commercial agreements in conjunction with the Second Funding, (b) to ~~interest, principal payments commenced on November~~require the Company to make certain payment and funding commitments related to the Series 1 ~~2017~~Preferred Shares in ~~equal monthly installments. The loan balance and all accrued and unpaid interest is due and payable by October 1, 2018. Per~~order to obtain consent from the lenders under the Orion Credit Agreement for modification of the terms of the Series 1 Preferred Shares, (c) to require the Company to pledge additional assets and to restrict the use of, or require the use in a specified manner of, the cash received from the Crestmark sale-leaseback transaction in order obtain consent from the lenders under the Orion Credit Agreement for the Crestmark sale-leaseback transaction, (d) to permit the release of a portion of restricted cash in exchange for additional collateral and performance commitments, and (e) to add additional covenants and security in conjunction with the establishment of a short-term secondary facility loan commitment of $35 million that expired unused. Upon entering into the secondary facility loan commitment, the Company owed the lenders under the Orion Credit Agreement an option premium of $1.0 million.

The Company paid the $1.0 million option premium during the year ended October 31, 2020 and recorded the amount as interest expense.

Subsequent to October 31, 2020, the Company paid off and extinguished the Orion Credit Agreement. Refer to Note 25 “Subsequent Events” for additional information.

As of October 31, 2019, the Company had a long-term loan agreement with the Connecticut Green Bank, providing the Company with a loan of $1.8 million (the “Green Bank Loan Agreement”). On and effective as of December 19, 2019, the Company and Connecticut Green Bank entered into an amendment to the Green Bank Loan Agreement (the “Green Bank Amendment”). Upon the execution of the Green Bank Amendment on December 19, 2019, Connecticut Green Bank made an additional loan to the Company in the aggregate principal amount of $3.0 million (the “December 2019 Loan”), which was to be used (i) first, to pay closing fees related to the May 9, 2019 acquisition of the Bridgeport Fuel Cell Project and the Subordinated Credit Agreement (as defined below), other fees and interest, and (ii) thereafter, for general corporate purposes.

The Green Bank Amendment provides that, until such time as the loan (which includes both the outstanding principal balance of the original loan under the Green Bank Loan Agreement and the outstanding principal amount of the December 2019 Loan) has been repaid in its entirety, interest on the outstanding balance of the loan shall accrue at a rate of 8% per annum, payable by the Company on a monthly basis in arrears. Interest payments made by the Company after the date of the Green Bank Amendment are to be applied first to interest that has accrued on the outstanding principal balance of the original loan under the Green Bank Loan Agreement and then to interest that has accrued on the December 2019 Loan.

The Green Bank Amendment also modifies the repayment and mandatory prepayment terms and extends the maturity date set forth in the original Green Bank Loan Agreement. Under the Green Bank Amendment, to the extent that excess cash flow reserve funds under the BFC Credit Agreement (as defined below) are eligible for disbursement to Bridgeport Fuel Cell, LLC pursuant to Section 6.23(c) of the BFC Credit Agreement, such funds are to be paid to Connecticut Green Bank until the loans are repaid in full. The Green Bank Amendment further provides that any unpaid balance of the loan and ~~security agreement, there is an end of term payment of $1.7 million which is being accreted over~~all other obligations due under the ~~30 month term using~~Green Bank Loan Agreement will be due and payable on May 9, 2026. Finally, with respect to mandatory prepayments, the ~~effective interest rate method.~~

~~As collateral for obligations under Hercules Agreement,~~Green Bank Amendment provides that, when the Company ~~granted Hercules~~has closed on the subordinated project term loan pursuant to the Commitment Letter, dated February 6, 2019, issued by Connecticut Green Bank to Groton Fuel Cell to provide a ~~security interest~~subordinated project term loan to Groton Fuel Cell in the amount of $5.0 million, the Company will be required to prepay to Connecticut Green Bank the lesser of any then outstanding amount of the December 2019 Loan and the amount of the subordinated project term loan actually advanced by Connecticut Green Bank. The balance under the original Green Bank Loan Agreement and the December 2019 Loan as of October 31, 2020 was $4.8 million.

On May 9, 2019, in connection with the closing of the purchase of the membership interests of Bridgeport Fuel Cell, LLC (“BFC”) (and the 14.9 MW Bridgeport Fuel Cell Project), BFC entered into a subordinated credit agreement with the Connecticut Green Bank whereby Connecticut Green Bank provided financing in the amount of $6.0 million (the “Subordinated Credit Agreement”). This $6.0 million consisted of $1.8 million in incremental funding that was received by BFC and $4.2 million of funding previously received by FuelCell Energy, Inc.~~’s existing~~ with respect to which BFC became the primary obligor. As security for the Subordinated Credit Agreement, Connecticut Green Bank received a perfected lien, subordinated and ~~hereafter-acquired~~second in priority to the liens securing the $25.0 million loaned under the BFC Credit Agreement (as defined below), in all of the same collateral securing the BFC Credit Agreement. The interest rate under the Subordinated Credit Agreement is 8% per annum. Principal and interest are due monthly in amounts sufficient to fully amortize the loan over an 84-month period ending in May 2026. The Subordinated Credit Agreement contains a debt coverage ratio which is required to be maintained and may not be less than 1.10 as of the end of each fiscal quarter, beginning with the quarter ended July 31, 2020. The balance under the Subordinated Credit Agreement as of October 31, 2020 was $5.1 million.

On May 9, 2019, in connection with the closing of the purchase of the Bridgeport Fuel Cell Project, BFC entered into a Credit Agreement with Liberty Bank, as administrative agent and co-lead arranger, and Fifth Third Bank as co-lead arranger and swap hedger (the “BFC Credit Agreement”), whereby (i) Fifth Third Bank provided financing in the amount of $12.5 million towards the purchase price for the BFC acquisition; and (ii) Liberty Bank provided financing in the amount of $12.5 million towards the purchase price for the BFC acquisition. As security for the BFC Credit Agreement, Liberty Bank and Fifth Third Bank were granted a first priority lien in (i) all assets ~~except~~of BFC, including BFC’s cash accounts, fuel cells, and all other personal property, as well as third party contracts including the Energy Purchase Agreement between BFC and Connecticut Light and Power Company dated July 10, 2009, as amended; (ii) certain fuel cell modules that are intended to be used to replace the Bridgeport Fuel Cell Project’s fuel cell modules as part of routine operation and maintenance; and (iii) FuelCell Finance’s (a wholly-owned subsidiary of the Company and the direct parent of BFC) ownership interest in BFC. The maturity date under the BFC Credit Agreement is May 9, 2025. Monthly principal and interest are to be paid in arrears in an amount sufficient to fully amortize the term loan over a 72-month period. BFC has the right to make additional principal payments or pay the balance due under the BFC Credit Agreement in full, provided that it pays any associated breakage fees with regard to the interest rate swap agreements fixing the interest rate. The interest rate under the BFC Credit Agreement fluctuates monthly at the 30-day LIBOR rate plus 275 basis points.

An interest rate swap agreement was required to be entered into with Fifth Third Bank in connection with the BFC Credit Agreement to protect against movements in the floating LIBOR index. Accordingly, on May 16, 2019, an interest rate swap agreement (the “Swap Agreement”) was entered into with Fifth Third Bank in connection with the BFC Credit Agreement for ~~intellectual property~~the term of the loan. The net interest rate across the BFC Credit Agreement and the swap transaction results in a fixed rate of 5.09%. The interest rate swap is adjusted to fair value on a quarterly basis. The estimated fair value is based on Level 2 inputs including primarily the forward LIBOR curve available to swap dealers. The valuation methodology involves comparison of (i) the sum of the present value of all monthly variable rate payments based on a reset rate using the forward LIBOR curve and (ii) the sum of the present value of all monthly fixed rate payments on the notional amount, which is equivalent to the outstanding principal amount of the loans. The fair value adjustments for the years ended October 31, 2020 and 2019 resulted in a $0.3 million and a $0.6 million charge, respectively. The fair value of the interest rate swap liability as of October 31, 2020 and 2019 was $0.9 million and $0.6 million, respectively.

The BFC Credit Agreement requires BFC to maintain a debt service reserve. Each of Liberty Bank and Fifth Third Bank also has an operation and module replacement reserve (“O&M Reserve”) under the BFC Credit Agreement. BFC is required to deposit $100,000 per month into each O&M Reserve for the first five years of the BFC Credit Agreement, with such funds to be released at the sole discretion of Liberty Bank and Fifth Third Bank, as applicable. BFC is also required to maintain excess cash flow reserve accounts at each of Liberty Bank and Fifth Third Bank. Excess cash flow consists of cash generated by BFC from the Bridgeport Fuel Cell Project after payment of all expenses (including after payment of intercompany service fees to the Company), debt service to Liberty Bank and Fifth Third Bank, the funding of all required reserves, and payments to Connecticut Green Bank for the subordinated facility. BFC is also required to maintain a debt service coverage ratio of not less than 1.20, measured for the trailing year based on fiscal quarters beginning with the quarter ended July 31, 2020. The Company has certain ~~other excluded assets. Collateral does~~quarterly and annual financial reporting requirements under the BFC Credit Agreement. The annual financial statements to be provided pursuant to such requirements are to be audited and accompanied by a report of an independent certified public accountant, which report shall not include ~~assets held by FuelCell Finance~~a “going concern” matter of emphasis or any qualification as to the scope of such audit.

Several of the Company’s project ~~subsidiary thereof.~~subsidiaries previously entered into sale-leaseback agreements with PNC for commissioned projects where the Company had entered into a PPA with the site host/end-user of produced power, and CCFC2 entered into a sale-leaseback with Crestmark on February 11, 2020 (refer to Note. 13. “Leases” for additional information). The Company ~~may continue~~did not recognize as revenue any of the proceeds received from the lessor that contractually constitute payments to ~~collateralize~~acquire the assets subject to these arrangements. Instead, the sale proceeds received were accounted for as financing obligations. The outstanding financing obligation balance as of October 31, 2020 was $49.3 million as compared to $45.2 million as of October 31, 2019. This change reflects the recording of the finance obligation with Crestmark and ~~finance its project subsidiaries through other lenders~~the recognition of interest expense, offset by lease payments and ~~partners. Under~~ the ~~Hercules Agreement,~~payoff of the UCI Fuel Cell, LLC lease with PNC. As noted in Note 7. “Project Assets”, the Company repurchased the equipment leased by UCI Fuel Cell, LLC from PNC. The difference between the financing obligation and the payoff was reflected as ~~amended, there is~~ a ~~minimum cash covenant~~Gain on extinguishment of financing obligation on the Consolidated Statement of Operations. The outstanding financing obligation for the remaining leases includes an embedded gain of $29.0 million which ~~requires~~will be recognized at the end of each 10-year lease term or upon early termination if applicable. The sale-leaseback arrangements with PNC allow the Company to ~~maintain an unrestricted cash balance in accounts subject to an account control agreement in favor of Hercules of~~repurchase the project assets at ~~least~~fair market value and

the sale-leaseback arrangement with Crestmark includes a purchase right for the greater of ~~(x) (a) 75%~~fair market value or 31% of the ~~outstanding loan balance plus (b) the amount~~purchase price.

State of accounts payable (as defined under GAAP) not paid within 90 days of the invoice date and (y) (a) at all times prior to the Stockholder Approval Date (as defined in the Certificate of Designations for the Series C Preferred Stock), $20.0 million and (b) at all times on and after the Stockholder Approval Date, $10.0 million (the Stockholder Approval Date was December 14, 2017, which was the date on which stockholder approval of the issuance of certain shares upon the conversion and/or redemption of the Company’s Series C Preferred Stock was obtained).Connecticut Loan

In ~~November~~October 2015, the Company closed on a definitive Assistance Agreement with the State of Connecticut (the “Assistance Agreement”) and received a disbursement of $10.0 million, which was used for the first phase of the expansion ~~project to expand~~of the ~~existing 65,000~~

~~square foot manufacturing facility in~~Company’s Torrington, Connecticut ~~by approximately 102,000 square feet for a total size of 167,000 square feet.~~manufacturing facility. In conjunction with this financing, the Company entered into a $10.0 million ~~Promissory Note~~promissory note and related security ~~agreement~~agreements securing the loan with equipment liens and a mortgage on its Danbury, Connecticut location. ~~Pursuant to the terms of the loan, payment of principal is deferred for the first four years.~~ Interest accrues at a fixed interest rate of ~~2.0 percent~~2.0%, and the loan is ~~payable beginning in December 2015. The financing is payable~~repayable over 15 years ~~and is predicated on certain terms and conditions, including~~from the ~~forgiveness of up to half~~date of the ~~loan principal if certain job retention~~first advance, which occurred in October of 2015. Principal payments were deferred for four years from disbursement and ~~job creation targets are reached. On April 17, 2017, the Company entered into an amendment to~~began on December 1, 2019. Under the Assistance Agreement, ~~extending certain of~~ the ~~job creation target dates~~Company was eligible for up to $5.0 million in loan forgiveness if the Company created 165 full-time positions and retained 538 full-time positions for two consecutive years (the “Employment Obligation”) as measured on October 28, 2017 (the “Target Date”). The Assistance Agreement was subsequently amended in April 2017 to extend the Target Date by two years to October 28, 2019.

In ~~2015,~~January 2019, the Company ~~entered into an agreement with PNC, whereby~~and the ~~Company’s project finance subsidiaries may enter into sale-leaseback agreements for commissioned projects where we have~~State of Connecticut entered into a ~~PPA with~~Second Amendment to the ~~site host/end-user~~Assistance Agreement (the “Second Amendment”). The Second Amendment extended the Target Date to October 31, 2022 and amended the Employment Obligation to require the Company to continuously maintain a minimum of ~~produced power. Under~~538 full-time positions for 24 consecutive months. If the ~~financing method~~Company meets the Employment Obligation, as modified by the Second Amendment, and creates an additional 91 full-time positions, the Company may receive a credit in the amount of ~~accounting~~$2.0 million to be applied against the outstanding balance of the loan. However, based on the Company’s current headcount and plans for ~~a sale-leaseback,~~fiscal year 2021 and beyond, it will not meet this requirement or receive this credit. A job audit will be performed within 90 days of the Target Date. If the Company does not ~~recognize~~meet the Employment Obligation, then an accelerated payment penalty will be assessed at a rate of $18,587.36 multiplied by the number of employees below the number of employees required by the Employment Obligation. Such penalty is immediately payable and will be applied first to accelerate the payment of any outstanding fees or interest due and then to accelerate the payment of outstanding principal.

In April of 2020, as ~~income any~~a result of the ~~sale proceeds received from~~COVID-19 pandemic, the ~~lessor that contractually constitute payment~~State of Connecticut agreed to ~~acquire~~defer three months of principal and interest payments under the ~~assets subject to these arrangements. Instead,~~Assistance Agreement, beginning with the sale proceeds received are accounted for as financing obligations. The outstanding finance obligation balance as of October 31, 2017 was $46.9 million and the increase from the October 31, 2016 balance of $41.6 million includes a sale-leaseback transaction of $5.4 million which was completed in December 2016 and the recognition of imputed interest expense offset by lease payments. New sale-leaseback transactions of $41.5 million were entered into during the year ended October 31, 2016. The sale-leaseback transactions include a fair value purchase optionMay 2020 payment. These deferred payments will be added at the end of the ~~lease term.~~loan, thus extending out the maturity date by three months.

On April 20, 2020, the Company ~~through its wholly-owned subsidiary, FuelCell Finance,~~ entered into the PPP Note, dated April 16, 2020, evidencing a ~~Loan Agreement with NRG.~~loan to the Company from Liberty Bank, under the CARES Act, administered by the Small Business Administration (“SBA”). Pursuant to the ~~Loan Agreement, NRG~~PPP Note, the Company received total proceeds of approximately $6.5 million on April 24, 2020.

The PPP Note is scheduled to mature on April 16, 2022, has ~~extended~~ a ~~$40.0 million revolving construction~~1.00% per annum interest rate, and ~~term financing facility~~is subject to the terms and conditions applicable to loans administered by the SBA under the CARES Act, as amended by the PPP Flexibility Act. Monthly principal and interest payments, less the amount of any potential forgiveness (as discussed below), commenced on November 16, 2020. The Company did not provide any collateral or guarantees for the ~~purpose~~PPP Note, nor did the Company pay any facility charge to obtain the PPP Note. The PPP Note may be prepaid at any time with 0 prepayment penalties.

Under the requirements of ~~accelerating project development~~the CARES Act, as amended by the PPP Flexibility Act, proceeds may only be used for the Company’s eligible payroll costs (with salary capped at $100,000 on an annualized basis for each employee), rent, mortgage interest and utilities, in each case paid during the 24-week period following disbursement. The loan may be fully forgiven if (i) proceeds are used to pay eligible payroll costs, rent, mortgage interest and utilities and (ii) full-time employee headcount and salaries are either maintained during the 24-week period following disbursement or restored by December 31, 2020. If not so maintained or restored, any forgiveness of the loan would be reduced in accordance with the regulations that were issued by the SBA. All of the proceeds of the PPP Note were used by the Company to pay eligible payroll costs and the Company maintained its ~~subsidiaries. We may draw on~~headcount and otherwise complied with the ~~facility to finance the construction of projects through the commercial operating date~~terms of the ~~power plants. The interest rate is 8.5 percent per annum~~PPP Note.

In October 2020, the Company applied for construction-period financing and 8.0 percent thereafter. Fees that were paid by FuelCell Finance to NRG for making the loan facility available and related legal fees incurred were capitalized and are being amortized straight-line over the lifeforgiveness of the ~~related loan agreement, which~~PPP Note. The forgiveness application is ~~five years. The term~~subject to approval by the SBA and Liberty Bank, and no assurance can be given that any portion of the ~~loans are up to five years but may~~PPP Note will be ~~repaid early should~~

forgiven. Based on guidance from the ~~projects be sold or refinanced at the option~~United States Department of the ~~Company.~~

~~The Company has a long-term loan agreement with~~Treasury, since the ~~Connecticut Green Bank totaling $5.9~~total PPP Note proceeds exceeded $2.0 million, ~~in support of~~ the ~~Bridgeport Fuel Cell Park project. The loan agreement carries an interest rate of 5.0 percent. Interest only payments commenced in January 2014 and principal payments~~forgiveness application will ~~commence on~~be subject to audit by the eighth anniversary of the project’s provisional acceptance date, which is December 20, 2021, payable in forty-eight equal monthly installments. Outstanding amounts are secured by future cash flows from the Bridgeport Fuel Cell Park service agreement.SBA.

The Company has a loan agreement with the Connecticut Development Authority to finance equipment purchases associated with manufacturing capacity expansion allowing for a maximum amount borrowed of $4.0 million. The interest rate is 5.0 percent and the loan is collateralized by the assets procured under this loan as well as $4.0 million of additional machinery and equipment. Repayment terms require monthly interest and principal payments through May 2018.New Britain Renewable Energy Term Loan

In November 2016, ~~in connection with~~ the ~~acquisition of NBRE,~~Company assumed debt with Webster Bank, ~~was assumed~~National Association as a part of ~~the transaction in the amount of $2.3 million.~~a project asset acquisition transaction. The term loan interest rate ~~is 5.0 percent and payments are due on a quarterly basis commencing in January 2017.~~was 5.0% per annum. The balance outstanding as of October 31, ~~2017~~2019was$0.5 million. The loan was ~~$1.7~~paid off and extinguished during the three months ended January 31, 2020.

On January 9, 2019, the Company, through its indirect wholly-owned subsidiary TRS Fuel Cell, LLC, entered into a loan with Enhanced Capital Connecticut Fund V, LLC (“Enhanced”) in the amount of $1.5 million. Interest accrued at a rate of 6.0% per annum. Under the terms of the loan, the Company was required to close on tax equity financing by January 14, 2020. Given that the Company did not secure tax equity financing on this project, on January 13, 2020, TRS Fuel Cell, LLC and Enhanced entered into a payoff letter pursuant to which the loan was paid off and extinguished on January 14, 2020.

On February 28, 2019, the Company, through its indirect wholly-owned subsidiary, Groton Fuel Cell, entered into a Construction Loan Agreement (as amended from time to time, the “Groton Agreement”) with Fifth Third Bank pursuant to which Fifth Third Bank agreed to make available to Groton Fuel Cell a construction loan facility in an aggregate principal amount of up to $23.0 million (the “Groton Facility”) to fund the manufacture, construction, installation, commissioning and start-up of the 7.4 MW fuel cell power plant located on the U.S. Navy submarine base in Groton, Connecticut (the “Groton Project”). The Company made an initial draw under the Groton Facility on the date of closing of $9.7 million and made an additional draw of $1.4 million in April 2019. The loan was amended during the year ended October 31, 2019 to, among other things, reduce the principal amount of the facility to $18.0 million, change the maturity date, require the Company to obtain financing for the Groton Project, and increase the interest rate if such financing was not obtained by specified dates.

The total outstanding balance under the Groton Facility as of October 31, 2019 was $11.1 million. This balance was paid off, the loan was extinguished and the Groton Facility was terminated during the three months ended January 31, 2020.

The Company ~~leases computer equipment~~paid off several loans during the fiscal year ended October 31, 2019, which included the loans provided under ~~master lease agreements. Lease payment terms are generally thirty-six months from~~ the ~~date~~following agreements or facilities: the loan and security agreement, as amended, with Hercules Capital, Inc., the loan facilities with Webster Bank, National Association, the construction loan facility, as amended, with Fifth Third Bank with respect to the project at the U.S. Navy submarine base in Groton, Connecticut, the construction loan agreement, as amended, with Generate Lending, LLC, and the loan agreement, as amended, with NRG Energy, Inc.

~~Direct~~October 31, 2020, deferred finance costs relate primarily to (i) sale-leaseback transactions entered into with PNC and Crestmark, which are being amortized over the ~~ten-year term and direct deferred finance costs relating~~10-year terms of the lease agreements, (ii) payments under the loans obtained to purchase the ~~Hercules loan and security agreement entered into~~membership interests in ~~April 2016 is~~BFC, which are being amortized over the ~~30 month life~~8-year term of the ~~loan.~~loans and (iii) payments to enter into the Orion Facility, which were being amortized over the 8-year term of the facility, prior to extinguishment of the Orion Facility subsequent to year end.

~~In April 2017,~~The Company obtained stockholder approval on May 8, 2020 at the reconvened 2020 Annual Meeting of Stockholders to increase the number of shares of common stock we are authorized to issue under our Certificate of Incorporation, as amended. Our stockholders approved a 112.5 million increase in the number of authorized shares of common stock. Accordingly, on May 11, 2020, the ~~Company's~~Company filed a Certificate of Amendment of the Certificate

of Incorporation of the Company with the Delaware Secretary of State increasing the total number of authorized shares of common stock ~~was increased~~ from ~~75,000,000~~225.0 million shares to ~~125,000,000, by vote~~337.5 million shares.

On June 16, 2020, the Company entered into an Open Market Sale Agreement with Jefferies LLC (“Jefferies”), with respect to an at the market offering program under which the Company could offer and sell up to $75 million of shares of its common stock from time to time. Pursuant to the Open Market Sale Agreement, the Company paid Jefferies a commission equal to 3.0% of the ~~holders~~aggregate gross proceeds it received from each sale of ~~a majority~~shares under the Open Market Sale Agreement. From the date of the ~~outstanding~~Open Market Sale Agreement through October 31, 2020, 28.3 million shares were sold under the Open Market Sale Agreement at an average sales price of $2.55 per share, resulting in gross proceeds of $72.3 million, before deducting expenses and sales commissions. Commissions of $2.2 million were paid to Jefferies in connection with these sales, resulting in net proceeds to the Company of approximately $70.1 million.

On October 4, 2019, the Company entered into an At Market Issuance Sales Agreement (the “Sales Agreement”) with B. Riley FBR, Inc. (“B. Riley FBR”) to create an at-the-market equity program under which the Company could offer and sell up to 38.0 million shares of its common stock through B. Riley FBR. However, to ensure that the Company had sufficient shares available for reservation and issuance upon exercise of all of the warrants to be issued to the lenders under the Orion Facility (as discussed in further detail below), the Company, effective as of October 31, 2019, reduced the number of shares reserved for future issuance and sale under the Sales Agreement from 27.9 million shares to 7.9 million shares (thus allowing for total aggregate issuances (past and future) of up to 18.0 million shares under the Sales Agreement) and reserved 20.0 million shares for issuance upon exercise of the warrants by the lenders under the Orion Facility. Under the Sales Agreement, B. Riley FBR was entitled to a commission in an amount equal to 3.0% of the gross proceeds from each sale of shares under the Sales Agreement.

During the year ended October 31, 2020, the Company issued and sold a total of 7.9 million shares of its common stock under the Sales Agreement at prevailing market prices, with an average sale price of $0.46 per share, and raised aggregate gross proceeds of approximately $3.6 million, before deducting expenses and commissions. Commissions of $0.1 million were paid to B. Riley FBR in connection with these sales, resulting in net proceeds to the Company of approximately $3.5 million.

During the year ended October 31, 2019, the Company sold a total of 10.1 million shares of its common stock at prevailing market prices under the Sales Agreement and received aggregate gross proceeds of $3.0 million and paid $0.1 million of fees and commissions, for net proceeds to the Company of $2.9 million.

The Company terminated the Sales Agreement in June 2020. As a result of the termination of the Sales Agreement, there have been and will be no further sales of the Company’s common stock thereunder.

On June 13, 2018, the Company entered into an At Market Issuance Sales Agreement (the “Previous Sales Agreement”) with B. Riley FBR, Inc. and Oppenheimer & Co. Inc. (together, the “Previous Agents”) to create an at-the-market equity program under which the Company could from time to time offer and sell shares of its common stock having an aggregate offering price of up to $50.0 million through the Previous Agents. Under the Previous Sales Agreement, the Previous Agent making the sales was entitled to a commission in an amount equal to 3.0% of the gross proceeds from such sales.

During the year ended October 31, 2019, the Company sold 109.1 million shares of the ~~Company's~~Company’s common ~~stock.~~stock under the Previous Sales Agreement at prevailing market prices, at an average sale price of $0.39 per share and received aggregate gross proceeds of $42.0 million and paid $1.3 million of fees and commissions.

During the year ended October 31, 2018, the Company sold 0.5 million shares of the Company’s common stock under the Previous Sales Agreement, at prevailing market prices, at an average sale price of $16.72 per share and received aggregate gross proceeds of $8.0 million and paid $0.2 million of fees and commissions.

In September 2020, the Company entered into an underwriting agreement with respect to an offering of its common stock. The offering closed in October 2020, with the Company’s sale of approximately 50.0 million shares of its common stock for gross and net proceeds of $105.1 million and $98.3 million, respectively.

The offering resulted in a Section 382 ownership change. Refer to Note 19. “Income Taxes” for more information regarding the impact of the Section 382 ownership change on net operating losses and carryforwards.

On May 3, 2017, the Company completed an underwritten public offering that included the offering and sale of ~~(i) 12,000,000 shares of its common stock, (ii)~~ Series C warrants to purchase ~~12,000,000~~1,000,000 shares of its common stock and ~~(iii)~~ Series D warrants to purchase ~~12,000,000~~1,000,000 shares of its common ~~stock, for gross proceeds of approximately $15.4 million, at a public offering price of $1.28~~stock.

July 2016 Public Offering and accompanying warrants. Total net proceeds to the Company were approximately $13.9 million. The Series C warrants have an exercise price of $1.60 per share and a term of five years. A total of 419,100 shares of common stock were issued during the fourth quarter of fiscal year 2017 upon the exercise of Series C warrants and the Company received total proceeds of $0.7 million. The Series D warrants have an exercise price of $1.28 per share and a term of one year. A total of 9,415,826 shares of common stock were issued during the third and fourth quarters of fiscal year 2017 upon the exercise of Series D warrants and the Company received total proceeds of $12.1 million.Related Warrants

On July 12, 2016, the Company closed on a registered public ~~offering of securities to a single institutional investor pursuant to a placement agent agreement with J.P. Morgan Securities LLC.~~offering. In conjunction with the offering, the Company issued ~~7,680,000~~640,000 Series A Warrants ~~all of which remained outstanding as of October 31, 2017, at~~with an exercise price of ~~$5.83~~$69.96 per share. ~~They are initially exercisable beginning on~~

On February 21, 2019, the ~~date that is six months and one day after~~Company entered into an Exchange Agreement (the “Exchange Agreement”) with the ~~issue date and will expire on the fifth anniversary~~holder of the ~~initial exercisability date. The Company also issued 4,926,000 prefunded~~ Series ~~B Warrants which are immediately exercisable. They have an exercise price of $0.0001 per share and will expire on~~A Warrants. Pursuant to the ~~fifth anniversary of the issue date. There were 3,826,000 prefunded Series B Warrants outstanding as of October 31, 2016, all of which were exercised during the year ended October 31, 2017.~~

~~On July 30, 2014,~~Exchange Agreement, the Company issued to the holder of the Series A Warrants 500,000 shares of the Company’s common stock in exchange for the transfer of the Series A Warrants back to the Company. Following the transfer of the Series A Warrants back to the Company, the Series A Warrants were cancelled and no further shares were issuable pursuant to the Series A Warrants. During fiscal year 2019, the Company recorded a ~~warrant~~charge to ~~NRG in conjunction~~common stockholders for the difference between the fair value of the Series A Warrants prior to the modification of $0.3 million and the fair value of the common shares issuable at the date of the Exchange Agreement of $3.5 million.

In connection with the ~~entry into a Securities Purchase~~closing of the Orion Credit Agreement ~~for~~and the ~~sale of common stock. Pursuant~~Initial Funding, on October 31, 2019, the Company issued warrants to the ~~warrant agreement, NRG had~~lenders under the ~~right~~Orion Credit Agreement to purchase up to ~~0.2 million~~a total of 6,000,000 shares of the Company’s common stock, at an exercise price of ~~$40.20~~$0.310 per ~~share.~~ share (the “Initial Funding Warrants”). In

addition, under the Orion Credit Agreement, on the date of the Second Funding (November 22, 2019), the Company issued warrants to the lenders under the Orion Credit Agreement to purchase up to a total of 14,000,000 shares of the Company’s common stock, with an exercise price with respect to 8,000,000 of such shares of $0.242 per share and with an exercise price with respect to 6,000,000 of such shares of $0.620 per share (the “Second Funding Warrants”, and together with the Initial Funding Warrants, the “Orion Warrants”). All of the Orion Warrants were exercised during or subsequent to the year ended October 31, 2020 (refer to Note 25. “Subsequent Events” for more information on the exercise of the remaining Orion Warrants subsequent to October 31, 2020).

The Company accounted for the Initial Funding Warrants as a liability since there was a change of control provision in the Initial Funding Warrants regarding the composition of the board of directors and, as such, the Company could have been required to repurchase the Initial Funding Warrants upon such change in control and therefore equity classification was precluded.The Company accounted for the Second Funding Warrants under ASC 815, Derivatives and Hedging (“ASC 815”) since the Second Funding Warrants were considered contingent vesting warrants ~~expired~~and therefore were considered to be an outstanding liability. Since the probability of vesting for the Second Funding Warrants was deemed to be 100% as there was no vesting period in the warrants, there was no impact on ~~July 30, 2017.~~the valuation. The Second Funding Warrants were accounted for as a liability since the Company might have been required to pay the holder under the same change of control provision as the Initial Funding Warrants and such event was outside the Company’s control and therefore equity classification was precluded.

As of October 31, 2019, the estimated fair value of the Orion Warrants was based on a Black-Scholes model using Level 2 inputs, including volatility of 96%, a risk free rate of 1.63%, the Company’s common stock price as of October 31, 2019 of $0.24 per share and the term of 8 years which resulted in a total value of $3.9 million.

On January 9, 2020, the lenders exercised, on a cashless basis, Orion Warrants (with cash exercise prices of $0.31 per share and $0.62 per share) representing the right to purchase, in the aggregate, 12,000,000 shares of the Company’s common stock. Because these warrants were exercised on a cashless basis pursuant to the formula set forth in the warrants, the lenders received 9,396,320 shares of the Company’s common stock in the aggregate upon the cashless exercise of Initial Funding Warrants representing the right to purchase 6,000,000 shares of the Company’s common stock and Second Funding Warrants representing the right to purchase 6,000,000 shares of the Company’s common stock. The cashless exercise resulted in 2,603,680 shares no longer being required to be reserved for issuance upon exercise of the Orion Warrants.

The Orion Warrants that were converted on January 9, 2020 were remeasured to fair value immediately preceding the conversion based upon volatility of 103.7%, a risk free rate of 1.81% and the Company’s common stock price of $2.29, which resulted in a $23.7 million charge for the three months ended January 31, 2020. The estimated fair value of the converted warrants as of the date of conversion of $26.0 million was reclassified from Long-term debt and other liabilities to Common stock and Additional paid-in capital.

On October 6, 2020, the lenders exercised Orion Warrants (with an exercise price of $0.242 per share) to purchase a total of 5,300,000 shares of the Company’s common stock for an aggregate purchase price of $1.3 million upon exercise, which was recorded to Common stock and Additional paid-in capital. The Orion Warrants were revalued immediately preceding the exercise based upon a volatility of 113.84%, a risk free rate of 0.55% and the Company’s common stock price of $1.92 per share which resulted in a gain of $2.4 million. The value of the converted warrants of $9.8 million was reclassified from Long-term debt and other liabilities to Common stock and Additional paid-in capital. Following this exercise and as of October 31, 2020, Orion Warrants to purchase 2,700,000 shares of the Company’s common stock, with an exercise price of $0.242 per share, were outstanding.

The Company remeasured the remaining Orion Warrants at October 31, 2020 based upon a volatility of 114.15%, a risk free rate of 0.64% and the Company’s common stock price of $2.00 per share, which resulted in a charge of $0.2 million. The estimated fair value of the remaining Orion Warrants outstanding was $5.2 million as of October 31, 2020 and is classified as Long-term debt and other liabilities on the Company’s Consolidated Balance Sheets.

The following table outlines the warrant activity during the ~~year ended October 31, 2017:~~

The Company may sell common stock on the open market from time to time. The proceeds of these sales may be used for general corporate purposes or to pay obligations related to the Company's outstanding Series 1 and Series B preferred shares. During thefiscal years ended October 31, ~~2017~~2020 and 2016, respectively, the Company sold 7.2 million shares and 6.0 million shares of the Company's common stock at prevailing market prices through periodic trades on the open market and raised approximately $12.6 million and $36.1 million, net of aggregate selling commissions of $0.1 million and $0.1 million, respectively.October 31, 2019:

The Company is authorized to issue up to 250,000 shares of preferred stock, par value $0.01 per share, ~~issuable~~ in one or more series, of which 105,875 shares ~~to date have been issued and~~were designated as ~~Series C Convertible Preferred Stock and~~ 5% Series B Cumulative Convertible Perpetual Preferred Stock (referred to herein as Series B Preferred Stock) in March 2005. Pursuant to our Certificate of Incorporation, as amended, our undesignated shares of preferred stock now include all of our shares of preferred stock that were previously designated as Series C Preferred Stock and Series D Preferred Stock, as all such shares have been retired and therefore have the status of authorized and unissued shares of preferred stock undesignated as to series. In addition to the above, a subsidiary of the Company had authorized and issued preferred stock as of October 31, 2020, as described below.

In August 2018, the Company issued 30,680 shares of Series D Preferred Stock, which were initially convertible into 1,852,657 shares of the Company’s common stock at an initial conversion price of $16.56 per share (“Series D Conversion Price”), subject to certain adjustments.

The net proceeds to the Company from the sale of the Series D Preferred Stock, after deducting the underwriting discounts and commissions and the offering expenses payable by the Company, were $25.3 million.

During the fiscal year ended October 31, 2019, holders of the Series D Preferred Stock converted all 30,680 shares of Series D Preferred Stock (the “Series D Preferred Shares”) into 62,040,496 shares of common stock, resulting in a reduction of $31.2 million to the carrying value being recorded to equity. Conversions in which the conversion price was below the fixed conversion price (the initial conversion price of the Series D Preferred Stock) resulted in a variable number of shares being issued to settle the conversion amounts and were treated as a partial redemption of the Series D Preferred Shares. Conversions during the year ended October 31, 2019 that were settled in a variable number of shares and treated as redemptions resulted in deemed dividends of $6.0 million. The deemed dividends represent the difference between the fair value of the shares of common stock issued to settle the conversion amounts and the carrying value of the Series D Preferred Shares.

The Series D Preferred Stock redemption accretion of $3.8 million for the fiscal year ended October 31, 2019 reflects the accretion of the difference between the carrying value and the amount that would have been redeemed if stockholder approval had not been obtained for the issuance of common stock equal to 20.0% or more of the Company’s outstanding voting stock prior to the issuance of the Series D Preferred Stock. Prior to receiving stockholder approval of the issuance of 20.0% or more of the Company’s outstanding voting stock prior to the issuance of the Series D Preferred Stock, the holders were prohibited from converting Series D Preferred Shares into shares of common stock if such conversion would have caused the Company to issue pursuant to the terms of the Series D Preferred Stock a number of shares in excess of the maximum number of shares permitted to be issued thereunder without breaching the Company’s obligations under the rules or regulations of the Nasdaq Global Market. The Company received stockholder approval of such issuance at the annual meeting of the Company’s stockholders on April 4, 2019.

During the week of June 10, 2019, the holders of the Series D Preferred Stock asserted that certain triggering events had occurred under the Certificate of Designations, Preferences and Rights of the Series D Preferred Stock of the Company (the “Series D Certificate of Designation”) and indicated their intent to exercise their rights to convert certain of their shares at a reduced conversion price. While the Company did not agree with the basis for their assertions or their characterization of such events, there were provisions under the Series D Certificate of Designation which could be interpreted as giving the holders the right to demand such conversion at a reduced conversion price. Accordingly, during the period beginning on June 11, 2019 and ending on July 3, 2019, the Company effected conversions at reduced conversion prices ranging from $0.14 to $0.61.

During the fiscal year ended October 31, 2017, the Company issued ~~an aggregate of~~ 33,500 shares of ~~its Series C Convertible Preferred Stock (“~~Series C Preferred ~~Stock” and such shares, the “Series C Preferred Shares”), $0.01 par value and $1,000 stated value per share,~~Stock for net proceeds of $27.9 ~~million on September 5, 2017. Each share of Series C Preferred Stock was sold at a price of $895.52 for gross proceeds of approximately $30.0~~ million.

As of October 31, ~~2017,~~2018, there were ~~33,300~~8,992 shares of Series C Preferred Stock issued and outstanding, with a carrying value of ~~$27.7~~$7.5 million.

On February 21, 2019, the Company entered into a Waiver Agreement (the “Waiver Agreement”) with the holder of the Series C Preferred Stock (such holder, the “Series C Holder”). Under the Waiver Agreement, the Series C Holder waived any equity conditions failures that may have occurred under the Certificate of Designations, Preferences and Rights of the Series C Preferred Stock of the Company (the “Series C Certificate of Designations”). The Series C Holder further waived any triggering event occurring after the date of the Waiver Agreement, as well as its right to demand, require or otherwise receive cash payments under the Series C Certificate of Designations, which waiver would have terminated upon the occurrence of certain key triggering events (failure to provide freely tradable shares, suspension from trading on the Nasdaq Global Market or another eligible market, or failure to convert or deliver shares under certain circumstances), the occurrence of a fundamental transaction, a breach of the Waiver Agreement, or the occurrence of a bankruptcy triggering event. In addition, the Company agreed in the Waiver Agreement, pursuant to Section 8(d) of the Series C Certificate of Designations, to adjust the conversion price of the Series C Preferred Stock in connection with future conversions, such that, when the Series C Holder converted its Series C Preferred Stock into common stock, it would receive approximately 25% more shares than it would have received upon conversion prior to the execution of the Waiver Agreement. Under the Waiver Agreement, the conversion price of the Series C Preferred Stock was stated to be the lowest of (i) $4.45, (ii) 85% of the lowest closing bid price of the Company’s common stock during the period beginning on and including the fifth trading day prior to the date on which the applicable conversion notice was delivered to the Company and ending on and including the date on which the applicable conversion notice was delivered to the Company, and (iii) 85% of the quotient of (A) the sum of the five lowest volume weighted average prices of the Company’s common stock during the 20 consecutive trading day period ending on and including the trading day immediately preceding the applicable conversion date divided by (B) five. To determine the number of shares of common stock to be issued upon conversion, 125% of the value of the Series C Preferred Shares being converted was divided by the applicable conversion price. The parties further agreed to waive the installment payment/conversion provisions in Section 9 of the Series C Certificate of Designations, which required installment conversions or payments to be made on the 1^st and 16^th of each month. Under the Waiver Agreement, conversions of Series C Preferred Stock were permitted to occur and did occur after the original March 1, 2019 maturity date, and the Company further agreed to reserve specific numbers of shares for issuance to the Series C Holder and the holders of the Series D Preferred Stock until the Company effected a reverse stock split, which occurred on May 8, 2019, or increased its authorized shares of common stock.

The Waiver Agreement was treated for accounting purposes to be an extinguishment of the Series C Preferred Stock instrument as of February 21, 2019. The Series C Preferred Stock remained classified in mezzanine equity, however, the carrying value was adjusted to reflect the estimated fair value of the post-modification Series C Preferred Shares which incorporated the new terms outlined in the Waiver Agreement. The valuation utilized a Binomial Lattice Model (“Lattice Model”) which is a commonly used methodology to value path-dependent options or stock units in order to capture their potential early conversion. The Lattice Model produces an estimated fair value based on changes in the underlying stock price over successive periods of time. The assumptions used in the model such as stock price, conversion price and conversion ratio were consistent with date of execution and terms in the Waiver Agreement. Other assumptions included the volatility of the Company’s stock which was assumed to be 75% and a discount rate of 20% which was estimated based on various indices consistent with the Company’s profile, venture capital rates of return and the Company’s borrowing rate. The Lattice Model resulted in an estimated fair value as of February 21, 2019 of $13.5 million whereby the Series C Preferred Stock carrying value was adjusted to this amount. As discussed below, a beneficial conversion feature was recorded during the three months ended January 31, 2019 due to reductions in the conversion price. Upon extinguishment during the three months ended April 30,

2019, the Company first allocated $6.6 million to the reacquisition of the embedded conversion option equal to the intrinsic value that was previously recognized during the three months ended January 31, 2019 for the embedded conversion option. Because the remaining estimated fair value of the instrument on February 21, 2019 was less than the carrying amount of the Series C Preferred Stock, the amount of the shortfall resulted in a decrease in loss available to common stockholders for purposes of computing loss per share of $0.6 million.

In order to resolve different interpretations of the provisions of the Series C Certificate of Designations that governed adjustments to the conversion price in connection with sales of common stock under the Company’s at-the-market stock sales plan below the initial conversion price of $22.08 and whether such sales constituted sales of variable priced securities under the Series C Certificate of Designations, the Company’s Board of Directors agreed to reduce the conversion price of the Series C Preferred Shares from $22.08 to $18.00 effective August 27, 2018 in exchange for a waiver of certain anti-dilution and price adjustment rights under the Series C Certificate of Designations for future at-the-market sales of common stock. The conversion price of the Series C Preferred Shares was adjusted again on December 3, 2018 to $6.96, on December 17, 2018 to $6.00 and on January 2, 2019 to $5.16. During the period from February 1, 2019 to May 23, 2019, the conversion price was further adjusted to prices ranging from $4.45 to $1.27, the conversion price as of the last conversion, which occurred on May 23, 2019. Conversions occurring fiscal year ended October 31, 2019 resulted in a variable number of shares being issued to settle the conversion amounts and were treated as a partial redemption of the Series C Preferred Shares. Conversions during the year ended October 31, 2019 that were settled in a variable number of shares and treated as partial redemptions resulted in deemed contributions $1.5 million. The deemed contributions represent the difference between the fair value of the common shares issued to settle the conversion amounts and the carrying value of the Series C Preferred Shares. Additionally, as discussed in more detail above, the net loss attributable to common stockholders for the fiscal year ended October 31, 2019 was impacted by a $0.5 million decrease in the loss resulting from accounting for the Waiver Agreement in February 2019, which was recorded during the three months ended April 30, 2019. The net loss attributable to common stockholders for the year ended October 31, 2019 also includes the $8.6 million redemption value adjustment recorded during the three months ended January 31, 2019.

The Series C Preferred Shares ~~are convertible into shares~~were classified outside of ~~common~~permanent equity. The decline in the Company’s stock ~~subject to~~price during the ~~beneficial ownership limitations provided~~three months ended January 31, 2019 and between January 31, 2019 and the execution of the Waiver Agreement in February 2019 resulted in equity conditions failures under the Series C Certificate of Designations, ~~for~~which were waived by the Series C ~~Preferred Stock (the “Certificate~~Holder in the Waiver Agreement, as described above. Prior to the execution of ~~Designations”), at a~~such Waiver Agreement, the conversion price ~~equal to $1.84 per share of common stock (“Conversion Price”), subject to adjustment~~was adjusted in December 2018 and January 2019 as ~~provided~~described above. This contingent beneficial conversion feature resulted in ~~the Certificate of Designations, at any time at the option of the holder. In the event of~~ a ~~triggering event, as defined~~$6.6 million reduction in ~~the Certificate of Designations,~~ the Series C Preferred Shares ~~are convertible into shares~~carrying value. Because the equity conditions failures were continuing as of ~~common stock at a conversion price~~January 31, 2019 (prior to the execution of the ~~lower~~Waiver Agreement), the Series C Preferred Shares were adjusted to 108% of ~~$1.84 per share and 85%~~stated redemption value as of January 31, 2019 with a corresponding charge to common stockholders of $8.6 million.

During the fiscal year ended October 31, 2019, holders of the lowest volume weighted average price (“VWAP”) of the common stock of the five Trading Days (as such term is defined in the Certificate of Designations) immediately prior to delivery of the applicable conversion notice. The holders will be prohibited from convertingSeries C Preferred Stock converted 8,992 Series C Preferred Shares into 3,914,218 shares of common stock, ~~if, as~~resulting in a ~~result~~reduction in carrying value of ~~such~~$15.5 million. Upon the conversion ~~such holder, together with its affiliates, would own more than 8.99%~~ of the ~~total number of shares of common stock then issued and outstanding. Each holder has the right to increase its maximum percentage up to 9.99% upon 60 days’ notice to the Company.~~

On November 1, 2017 and on the sixteenth day and first day of each calendar month thereafter until March 1, 2019, subject to extension in certain circumstances (the “Maturity Date”), inclusive, the Company will redeem the stated value oflast outstanding Series C Preferred Shares in thirty-three equal installments of $1.0 million (each bimonthly amount, an “Installment Amount” and the date of each such payment, an “Installment Date”). The holders will have the ability to defer Installment payments, but not beyond the Maturity Date. In addition, during each period commencing on ~~the 11th trading day prior to an Installment Date and prior to the immediately subsequent Installment Date, the holders may elect to accelerate the conversion of~~May 23, 2019, there were 0 further Series C Preferred Shares ~~at then applicable installment conversion price, provided that~~outstanding.

During the fiscal year ended October 31, 2018, holders ~~may not elect to effect any such acceleration during such installment period if either (x) in~~of the ~~aggregate, all the accelerations in such installment period exceeds the sum of three other Installment Amounts, or (y) the number of~~Series C Preferred Stock converted 24,308 Series C Preferred Shares ~~subject to prior accelerations exceeds in the aggregate twelve Installment Amounts.~~

~~Subject to certain conditions as provided in the Certificate of Designations, the Company may elect to pay the Installment Amounts in cash or~~into common shares ~~of common stock or~~through installment conversions resulting in a ~~combination~~reduction of ~~cash and shares~~$20.2 million to the carrying value being recorded to equity. Installment conversions occurring prior to August 27, 2018 in which the conversion price was below the initial conversion price of ~~common stock.~~

~~Installment Amounts paid~~$22.08 per share resulted in ~~shares will be that~~a variable number of shares being issued to settle the installment amount and were treated as a partial redemption of ~~common stock equal~~the Series C Preferred Shares. As discussed above, the Company’s Board of Directors agreed to ~~(a)~~reduce the ~~applicable Installment Amount, to be paid in common stock divided by (b) the least of (i) the then existing~~ conversion price (ii) 87.5% of the VWAP of the common stock on the trading day immediately prior to the applicable Installment Date, and (iii) 87.5% of the arithmetic average of the two lowest VWAPs of the common stock during the ten consecutive Trading Day period ending and including the Trading Day immediately prior to the applicable Installment Date as applicable, provided that the Company meets standard equity conditions. The Company shall make such election no later than the eleventh trading day immediately prior to the applicable Installment Date.

~~If the Company elects or is required to effect an Installment Amount in whole or in part in cash, the amount paid will be equal to the 108% of the applicable Installment Amount.~~

~~Each holder~~ of the Series C Preferred Shares ~~shall be entitled~~from $22.08 to ~~receive dividends (i) if no triggering event, as defined~~$18.00 effective August 27, 2018 in exchange for a waiver of certain anti-dilution and price adjustment rights under the Series C Certificate of Designations ~~has occurred~~for future at-the-market sales. Installment conversions occurring between August 27, 2018 and ~~is continuing when and as declared by~~October 31, 2018 in which the ~~Board~~installment conversion price was below the adjusted conversion price of ~~Directors,~~$18.00 per share resulted in ~~its sole and absolute discretion or (ii) if~~ a ~~triggering event has occurred and until such triggering event~~

~~has been cured, a dividend of 15% per annum based on the holder’s outstanding~~variable number of ~~Series C Preferred Shares multiplied by~~shares being issued to settle the ~~stated value. There~~installment amount and were ~~no triggering events or dividends declared in fiscal year 2017.~~

~~In the event of~~treated as a ~~triggering event, as defined in the Certificate of Designations, the holders~~partial redemption of the Series C Preferred Shares can force redemption at a price equal to the greater of (i) the conversion amount to be redeemed multiplied by 125% and (ii) the product of (X) the Conversion Rate with respect to the Conversion Amount in effect at such time as such Holder delivers a Triggering Event Redemption Notice multiplied by (Y) the greatest Closing Sale Price of the common stock on any Trading DayShares. Installment conversions during ~~the period commencing on the date immediately preceding such Triggering Event and ending on the date the Company makes the entire payment required.~~

~~Shares of Series C Preferred Stock rank with respect to dividend rights and rights upon our liquidation, winding up or dissolution:~~

~~Based on review of pertinent accounting literature including ASC 470 –~~ ~~Debt, ASC 480~~ ~~- Distinguishing Liabilities from Equity~~ ~~and ASC 815 -~~ ~~Derivative and Hedging~~, the Series C Preferred Shares are classified as temporary equity on the consolidated balance sheets and recorded at fair value on the issuance date (proceeds from the issuance, net of direct issuance cost). An assessment of the probability of the potential redemption features in the Series C Preferred instrument is performed at each reporting date to determine whether any changes in classification are required. As of October 31, 2017, the Company determined that none of the contingent redemption features were probable. As Series C Preferred Shares are converted to common shares, a proportional reduction in the carrying value will be recorded to equity. For the year ended October 31, ~~2017, 200 shares of the Series C Preferred Shares~~2018 that were ~~converted to common shares resulting~~settled in a ~~reduction~~variable number of ~~$0.2 million to the carrying value recorded~~shares and treated as partial redemptions resulted in ~~temporary equity.~~deemed dividends of $9.6 million.

The Company has designated 105,875 shares of ~~our 5% Series B Cumulative Convertible Perpetual Preferred Stock (Liquidation Preference $1,000.00 per share) (“~~its authorized preferred stock as Series B Preferred ~~Stock”) authorized for issuance.~~Stock (liquidation preference $1,000.00 per share). As of October 31, ~~2017~~2020 and ~~2016,~~2019, there were 64,020 shares of Series B Preferred Stock issued and outstanding, with a carrying value of $59.9 million. The shares of Series B Preferred Stock and the shares of common stock issuable upon conversion of the shares of Series B Preferred Stock are covered by a registration rights agreement. The following is a summary of certain provisions of ~~our~~the Series B Preferred Stock.

Dividends.The Series B Preferred Stock pays cumulative annual dividends of $50.00 per share, which are payable quarterly in arrears on February 15, May 15, August 15 and November 15. Dividends accumulate and are cumulative from the date of original issuance. Unpaid accumulated dividends do not bear interest.

The dividend rate is subject to upward adjustment as set forth in the Amended Certificate of Designation for the Series B Preferred Stock (the “Series B Certificate of Designation”)if ~~we fail~~the Company fails to pay, or to set apart funds to pay, any quarterly ~~dividend.~~dividend on the Series B Preferred Stock. The dividend rate is also subject to upward adjustment as set forth in the Registration Rights Agreement entered into with the ~~Initial Purchasers~~initial purchasers of the Series B Preferred Stock (the “Registration Rights Agreement”) if ~~we fail~~the Company fails to satisfy ~~our~~its registration obligations with respect to the Series B Preferred Stock (or the underlying shares of common ~~shares)~~stock) under the Registration Rights Agreement.

No dividends or other distributions may be paid or set apart for payment on the Company’s common stock (other than a dividend payable solely in shares of a like or junior ranking), nor may any stock junior to or on parity with the Series B Preferred Stock be redeemed, purchased or otherwise acquired for any consideration (or any money paid to or made available for a sinking fund for such stock) by the Company or on its behalf (except by conversion into or exchange for shares of a like or junior ranking), unless all accumulated and unpaid dividends on the Series B Preferred Stock have been paid or funds or shares of common stock have been set aside for payment of such accumulated and unpaid dividends.

The dividend on the Series B Preferred Stock may be paid in ~~cash;~~cash or, at the option of the ~~Company,~~holder, in shares of ~~our~~the Company’s common ~~stock, which will be registered pursuant to a registration statement to allow for the immediate sale~~stock. Dividends of ~~these common shares in the public market. Dividends of~~$4.8 million and $3.2 million were paid in cash ~~in each of~~during the fiscal years ended October 31, ~~2017, 2016~~2020 and ~~2015. There~~2018, respectively, and dividends of $1.6 million were ~~no cumulative~~paid in cash during the fiscal year ended October 31, 2019. Cumulative declared and unpaid dividends as of October 31, ~~2017~~2020 and ~~2016.~~2019 were $0.8 million and $2.4 million.

The Company may, at ~~our~~its option, cause shares of Series B Preferred Stock to be automatically converted into that number of shares of ~~our~~its common stock that are issuable at the ~~then prevailing~~then-prevailing conversion rate. WeThe Company may exercise ~~our~~its conversion right only if the closing price of ~~our~~its common stock exceeds 150% of the ~~then prevailing~~then-prevailing conversion price ($~~141.00~~1,692.00 per share as of October 31, ~~2017)~~2020) for 20 trading days during any consecutive 30 trading day period, as described in the Series B Certificate of Designation.

If the holders of Series B Preferred Stock elect to convert their shares in connection with certain ~~fundamental changes, as~~“fundamental changes” (as defined wein the Series B Certificate of Designation and described below), the Company will in certain circumstances increase the conversion rate by a number of additional shares of common stock upon conversion or, in lieu thereof, wethe Company may in certain circumstances elect to adjust the conversion rate and related conversion obligation so that shares of ~~our~~ Series B Preferred Stock are converted into shares of the acquiring or surviving company, in each case as described in the Series B Certificate of Designation.

The adjustment of the conversion price is to prevent dilution of the interests of the holders of the Series B Preferred Stock from certain dilutive transactions with holders of the Company’s common stock.

~~Redemption —~~ ~~We do~~

Redemption. The Company does not have the option to redeem the ~~shares of~~ Series B Preferred Stock. However, holders of the Series B Preferred Stock can require usthe Company to redeem all or ~~part~~a portion of their shares of Series B Preferred Stock at a redemption price equal to the Liquidation Preference of the shares to be redeemed in the case of a “fundamental change” (as further described in the Series B Certificate of Designation). A fundamental change ~~as defined.~~will be deemed to have occurred if any of the following occurs:

•

any “person” or “group” is or becomes the beneficial owner, directly or indirectly, of 50% or more of the total voting power of all classes of the Company’s capital stock then outstanding and normally entitled to vote in the election of directors;

•

during any period of two consecutive years, individuals who at the beginning of such period constituted the board of directors of the Company (together with any new directors whose election to the Company’s board of directors or whose nomination for election by the stockholders was approved by a vote of 66 2/3% of the Company’s directors then still in office who were either directors at the beginning of such period or whose election or nomination for election was previously so approved) cease for any reason to constitute a majority of the directors of the Company then in office;

•

the termination of trading of the Company’s common stock on The Nasdaq Stock Market and the common stock is not approved for trading or quoted on any other U.S. securities exchange or established over-the-counter trading market in the U.S.; or

•

the Company (i) consolidates with or merges with or into another person or another person merges with or into the Company or (ii) sells, assigns, transfers, leases, conveys or otherwise disposes of all or substantially all of the assets of the Company and certain of its subsidiaries, taken as a whole, to another person and, in the case of any such merger or consolidation described in clause (i), the securities that are

outstanding immediately prior to such transaction (and which represent 100% of the aggregate voting power of the Company’s voting stock) are changed into or exchanged for cash, securities or property, unless pursuant to the transaction such securities are changed into or exchanged for securities of the surviving person that represent, immediately after such transaction, at least a majority of the aggregate voting power of the voting stock of the surviving person.

Notwithstanding the foregoing, holders of shares of the Series B Preferred Stock will not have the right to require the Company to redeem their shares if:

•

the last reported sale price of shares of the Company’s common stock for any 5 trading days within the 10 consecutive trading days ending immediately before the later of the fundamental change or its announcement equaled or exceeded 105% of the conversion price of the Series B Preferred Stock immediately before the fundamental change or announcement;

•

at least 90% of the consideration (excluding cash payments for fractional shares and in respect of dissenters’ appraisal rights) in the transaction or transactions constituting the fundamental change consists of shares of capital stock traded on a U.S. national securities exchange or quoted on The Nasdaq Stock Market, or which will be so traded or quoted when issued or exchanged in connection with a fundamental change, and as a result of the transaction or transactions, shares of Series B Preferred Stock become convertible into such publicly traded securities; or

•

in the case of a merger or consolidation constituting a fundamental change (as described in the fourth bullet above), the transaction is affected solely to change the Company’s jurisdiction of incorporation.

Moreover, the Company will not be required to redeem any Series B Preferred Stock upon the occurrence of a fundamental change if a third party makes an offer to purchase the Series B Preferred Stock in the manner, at the price, at the times and otherwise in compliance with the requirements set forth above and such third party purchases all shares of Series B Preferred Stock validly tendered and not withdrawn.

The Company may, at ~~our~~its option, elect to pay the redemption price in cash, or in shares of ~~our~~the Company’s common stock valued at a discount of 5% from the market price of shares of ~~our~~the Company’s common stock, or in any combination thereof. Notwithstanding the foregoing, wethe Company may only pay such redemption price in shares of ~~our~~

the Company’s common stock that are registered under the Securities Act ~~of 1933~~ and eligible for immediate sale in the public market by non-affiliates of the Company.

Voting ~~Rights -~~ Rights.Holders of Series B Preferred Stock currently have no voting ~~rights.~~rights; however, holders may receive certain voting rights, as described in the Series B Certificate of Designation, if (a) dividends on any shares of Series B Preferred Stock, or any other class or series of stock ranking on parity with the Series B Preferred Stock with respect to the payment of dividends, shall be in arrears for dividend periods, whether or not consecutive, containing in the aggregate a number of days equivalent to six calendar quarters or (b) the Company fails to pay the redemption price, plus accrued and unpaid dividends, if any, on the redemption date for shares of Series B Preferred Stock following a fundamental change. In each such event, the holders of Series B Preferred Stock (voting separately as a class with all other classes or series of stock ranking on parity with the Series B Preferred Stock with respect to the payment of dividends and upon which like voting rights have been conferred and are exercisable) will be entitled to elect two directors to the Company’s board of directors in addition to those directors already serving on the Company’s board of directors at such time (the “Series B Directors”), at the next annual meeting of the Company’s stockholders (or at a special meeting of the Company’s stockholders called for such purpose, whichever is earlier). The right to elect the Series B Directors will continue for each subsequent annual meeting of the Company’s stockholders until all dividends accumulated on the shares of Series B Preferred Stock have been fully paid or set aside for payment or the Company pays in full or sets aside for payment such redemption price, plus accrued but unpaid dividends, if any, on the redemption date for the shares of Series B Preferred Stock following a fundamental change. The term of office of any Series B Directors will terminate immediately upon the termination of the right of holders of Series B Preferred Stock to elect such Series B Directors, as described in this paragraph. Each holder of Series B Preferred Stock will have one vote for each share of Series B Preferred Stock held in the election of Series B Directors. The Company previously failed to make timely payment of the accrued dividends on the Series B Preferred Stock with respect to the May 15, 2019 and August 15, 2019 dividend payment dates. Such amounts were fully paid on or about November 15, 2019.

So long as any shares of Series B Preferred Stock remain outstanding, the Company will not, without the consent of the holders of at least two-thirds of the shares of Series B Preferred Stock outstanding at the time (voting separately as a class with all other series of preferred stock, if any, on parity with the Series B Preferred Stock upon which like voting rights have been conferred and are exercisable) issue or increase the authorized amount of any class or series of shares ranking senior to the outstanding shares of the Series B Preferred Stock as to dividends or upon liquidation. In addition, the Company will not, subject to certain conditions, amend, alter or repeal provisions of the Company’s certificate of incorporation, including the Series B Certificate of Designation, whether by merger, consolidation or otherwise, so as to adversely amend, alter or affect any power, preference or special right of the outstanding shares of Series B Preferred Stock or the holders thereof without the affirmative vote of not less than two-thirds of the issued and outstanding shares of Series B Preferred Stock.

Class A ~~Cumulative Redeemable Exchangeable~~ Preferred Shares (the “Series 1 Preferred Shares”) of FCE FuelCell Energy Ltd.

As of October 31, 2020, FCE FuelCell Energy Ltd. (“FCE ~~Ltd”~~Ltd.”), one of the Company's ~~wholly owned subsidiary, has~~indirect subsidiaries, had 1,000,000 ~~Class A Cumulative Redeemable Exchangeable~~Series 1 Preferred Shares ~~(the “Series 1 Preferred Shares”)~~issued and outstanding, which ~~are~~were held solely by ~~Enbridge, Inc. ("Enbridge"). FuelCell guarantees~~Enbridge. The Company guaranteed the return of principal and dividend obligations of FCE Ltd. to Enbridge, as the holder of the Series 1 Preferred Shares, pursuant to the Guarantee, dated May 27, 2004, made by the Company in favor of Enbridge, as amended by the Guarantee Amending Agreement dated April 1, 2011 and effective as of January 1, 2011 between the Company and Enbridge (the “Guarantee”). Subsequent to the end of fiscal year 2020, the Company paid off these obligations to Enbridge. Refer to Note 25. “Subsequent Events” for additional information.

On January 20, 2020, the Company, FCE Ltd. and Enbridge entered into a letter agreement (the “January 2020 Letter Agreement”), pursuant to which they agreed to amend the articles of FCE Ltd. relating to and setting forth the terms of the Series 1 Preferred Shares to: (i) remove the provisions of the articles permitting or requiring the issuance of shares of the Company’s common stock in exchange for the Series 1 Preferred Shares or as payment of amounts due to the holders of the Series 1 Preferred ~~Shares.~~Shares, (ii) remove certain provisions of the articles relating to the redemption of the Series 1 Preferred Shares, (iii) increase the annual dividend rate, commencing on January 1, 2020, to 15%, (iv) extend the final payment date for all accrued and unpaid dividends and all return of capital payments (i.e., payments of the principal redemption price) from December 31, 2020 to December 31, 2021, (v) clarify when dividend and return of capital payments were to be made in the future and extend the quarterly dividend and return of capital payments through December 31, 2021 (which were previously to be paid each quarter through December 31, 2020), (vi) remove certain terms and provisions of the articles that are no longer applicable, and (vii) make other conforming changes to the articles. The articles of FCE Ltd. were amended and filed in accordance with the provisions of the January 2020 Letter Agreement on March 26, 2020. Under the amended articles, FCE Ltd. continued to be required to make (a) annual dividend payments of Cdn. $500,000 and (b) annual return of capital payments of Cdn. $750,000.

The amendment to the Series 1 Preferred Shares resulted in an extinguishment of the prior Series 1 Preferred Shares for accounting purposes. A revised fair value was estimated using a discounted cash flow model resulting in a revised carrying value being recorded for the amended Series 1 Preferred Shares of Cdn. $23.4 million (U.S. $17.7 million) as of January 20, 2020, which resulted in a loss of Cdn. $0.2 million (U.S. $0.2 million) recorded in Other income, net on the Consolidated Statements of Operations and Comprehensive Loss during the year ended October 31, 2020. On an undiscounted basis, the Company’s actual aggregate amount of all accrued and unpaid dividends to be paid on the Series 1 Preferred Shares as of October 31, 2020 totaled approximately Cdn. $23.2 million (U.S. $17.4 million) and the balance of the principal redemption price as of October 31, 2020 with respect to all of the Series 1 Preferred Shares totaled approximately Cdn. $4.3 million (U.S. $3.2 million).

Prior to the amendment, the Company bifurcated embedded derivatives related to the conversion feature and a variable dividend feature. As a result of the January 2020 Letter Agreement, both features were removed from the Series 1 Preferred Shares which resulted in the Company recognizing a gain of $0.6 million related to the extinguishment of the embedded derivatives.

The following summary of the terms of the Series 1 Preferred Shares describes such terms as they existed on October 31, 2019 (prior to any modification covered by the January 2020 Letter Agreement and the resulting amendment of the articles of FCE Ltd.). The terms of the Series 1 Preferred Shares ~~includes payments of~~required (i) annual dividend payments of Cdn. $500,000 and (ii) annual return of capital payments of Cdn. $750,000. ~~These payments commenced~~Dividends accrued at a 1.25% quarterly rate on ~~March 31, 2011~~the unpaid principal balance, and ~~will end~~additional dividends accrued on ~~December 31, 2020. On December 31, 2020,~~ the ~~amount of all accrued and~~cumulative unpaid dividends ~~on the Series 1 Preferred Shares of Cdn. $21.1 million and the balance~~(inclusive of the ~~principal redemption price~~Cdn. $12.5 million unpaid dividend balance as of ~~Cdn. $4.4 million shall be paid~~the modification date) at a rate of 1.25% compounded quarterly. FCE Ltd. had the option, subject to the ~~holders of the Series 1 Preferred Shares. FCE Ltd. has the option~~Company having sufficient authorized and unissued shares, of making dividend payments in the form of cash or shares of the Company’s common stock ~~or cash~~ under the terms of the Series 1 Preferred Shares.

Because the Series 1 Preferred Shares ~~are classified as~~represented a mandatorily redeemable financial instrument, they are presented as a liability on the ~~consolidated balance sheet.~~Consolidated Balance Sheets.

The Company made ~~its scheduled~~ payments of Cdn. $1.9 million (or USD $1.6 million), Cdn. $0.3 million (or USD $0.2 million) and Cdn. $1.3 million (or USD $1.0 million) during ~~each~~fiscal years 2020, 2019 and 2018, respectively. The Company’s return of capital and dividend payments were not made for the calendar quarters ended on March 31, 2019, June 30, 2019 and September 30, 2019. During fiscal year ~~2017, 2016~~2020, the Company made the return of capital and ~~2015, under~~dividend payments for the ~~terms~~obligations due as of ~~the agreement.~~March 31, 2019, June 30, 2019 and September 30, 2019. The Company ~~also~~ recorded interest expense, which reflects the amortization of the fair value discount of approximately Cdn. ~~$2.6~~$4.0 million (or USD $2.9 million), Cdn. ~~$2.4~~$3.0 million (or USD $2.3 million) and Cdn. ~~$2.3~~$2.8 million (or USD $2.2 million) in the fiscal years ended October 31, 2020, 2019 and 2018, respectively. As of October 31, ~~2017~~2020 and ~~2016,~~2019, the carrying value of the Series 1 Preferred ~~shares~~Shares was Cdn. ~~$19.4~~$25.6 million ($~~15.1~~19.2 million) and Cdn. ~~$18.0~~$22.7 million ($~~13.5~~17.2 million), respectively, and iswas classified as preferred stock obligation of subsidiary on the ~~consolidated balance sheets.~~Consolidated Balance Sheets.

~~In addition to the above, the significant terms of the Series 1 Preferred Shares include the following:~~

~~Voting Rights —The holders of the Series 1 Preferred Shares are not entitled to any voting rights.~~

~~Dividends~~ — Dividend payments can be made in cash or common stock of the Company, at the option of FCE Ltd., and if common stock is issued it may be unregistered. If FCE Ltd. elects to make such payments by issuing common stock of the Company, the number of common shares is determined by dividing the cash dividend obligation by 95% of the volume weighted average price in U.S. dollars at which board lots of the common shares have been traded on NASDAQ during the 20 consecutive trading days preceding the end of the calendar quarter for which such dividend in common shares is to be paid converted into Canadian dollars using the Bank of Canada’s noon rate of exchange on the day of determination.

~~Redemption —~~ The Series 1 Preferred Shares are redeemable by FCE Ltd. for Cdn. $25.00 per share less any amounts paid as a return of capital in respect of such share plus all unpaid dividends and accrued interest.

~~Liquidation or Dissolution —~~ In the event of the liquidation or dissolution of FCE Ltd., the holders of Series 1 Preferred Shares will be entitled to receive Cdn. $25.00 per share less any amounts paid as a return of capital in respect of such share plus all unpaid dividends and accrued interest. The Company has guaranteed any liquidation obligations of FCE Ltd.

~~Exchange Rights —~~ ~~A holder of Series 1 Preferred Shares has the right to exchange such shares for fully paid and non-assessable common stock of the Company at the following exchange prices:~~

~~Cdn. $1,664.52 per share of common stock after July 31, 2015 until July 31, 2020; and~~

~~at any time after July 31, 2020, at a price equal to 95% of the then current market price (in Cdn. $) of the Company’s common stock at the time of conversion.~~

The exchange rates set forth above shall be adjusted if the Company: (i) subdivides or consolidates the common stock; (ii) pays a stock dividend; (iii) issues rights, options or other convertible securities to the Company's common stockholders enabling them to acquire common stock at a price less than 95% of the then-current price; or (iv) fixes a record date to distribute to the Company's common stockholders shares of any other class of securities, indebtedness or assets.

Derivative liability related to Series 1 Preferred Shares

~~The~~

Prior to the amendment, the conversion feature and variable dividend contained in the terms of the Series 1 Preferred Shares ~~are~~were not clearly and closely related to the characteristics of the Series 1 Preferred Shares. Accordingly, these features ~~qualify~~qualified as embedded derivative instruments and ~~are~~were required to be bifurcated and recorded as derivative financial instruments at fair value.

The conversion feature is valued using a lattice model. Based on the pay-off profiles of the Series 1 Preferred Shares, it is assumed that we will exercise the call option to force conversion in 2020. Conversion after 2020 delivers a fixed pay-off to the investor, and is modeled as a fixed payment in 2020. The cumulative dividend is modeled as a quarterly cash dividend component (to satisfy minimum dividend payment requirement), and a one-time cumulative dividend payment in 2020.

The ~~variable dividend is valued using a Monte Carlo simulation model.~~

~~The assumptions used in these~~fair value was based on valuation models ~~include~~using various assumptions, including historical stock price volatility, risk-free interest rate and a credit spread based on the yield indexes of technology high yield bonds, foreign exchange volatility as the ~~security is~~Series 1 Preferred Shares are denominated in Canadian dollars, and the closing price of our common stock. The aggregate fair value of these derivatives included within long-term debt and other liabilities on the ~~consolidated balance sheets~~Consolidated Balance Sheets as of October 31, ~~2017 and 2016~~2019 was ~~$0.8 million and $0.7 million, respectively.~~$0.6 million.

Note ~~14.~~17. Segment Information

We are engaged in the development, design, production, construction and servicing of high temperature fuel cells for clean electric power generation. Critical to the success of our business is, among other things, our research and development efforts, both through customer-sponsored projects and Company-sponsored projects. The research and development activities are viewed as another product line that contributes to the development, design, production and sale of fuel cell products, however, it is not considered a separate operating segment. The chief operating decision maker does not review and assess financial information at a discrete enough level to be able to assess performance of research and development activities as if itthey operated as a standalone business segment, ~~we have~~therefore, the Company has identified ~~one~~1 business segment: fuel cell power plant production and research.

Revenues, by geographic location (based on the customer’s ordering location) for the years ended October 31, ~~2017, 2016~~2020, 2019 and ~~2015~~2018 were as follows (in thousands):

	2017		2016		2015		2020		2019		2018
United States	$	47,539	$	48,697	$	52,109	$	67,750	$	56,211	$	50,953
South Korea		44,217		52,007		109,953		2,059		2,686		36,279
England		368		277		142		25		1,496		387
Germany		2,740		7,147		764		414		359		1,795
Canada		729		124		—		—		—		23
Spain		73		—		109
Switzerland								623		—		—
Total	$	95,666	$	108,252	$	163,077	$	70,871	$	60,752	$	89,437

Service agreement revenue which is included within Service agreements and license revenues on the ~~consolidated statement~~Consolidated Statement of ~~operations~~Operations was ~~$24.4~~$20.4 million, ~~$26.6~~$15.1 million and ~~$16.3~~$13.5 million for the years ended October 31, ~~2017, 2016~~2020, 2019 and ~~2015,~~2018, respectively.

Long-lived assets located outside of the United States as of October 31, ~~2017~~2020 and ~~2016~~2019 are not significant individually or in the aggregate.

Note ~~15.~~18. Benefit Plans

We have stockholder approved equity incentive plans, a stockholder approved ~~Section 423~~Employee Stock Purchase Plan ~~(the “ESPP”)~~ and an employee tax-deferred savings plan, which are described in more detail below.

~~Equity~~

2018 Omnibus Incentive ~~Plans~~Plan

The ~~Company has a 2010 Equity Incentive Plan. In April 2017, the number of shares of common stock reserved for issuance under the 2010 Equity~~Company’s 2018 Omnibus Incentive Plan ~~was increased~~(as amended and restated from time to ~~4.5 million shares. The Board is authorized to grant incentive stock options, nonstatutory~~time, the “2018 Incentive Plan”) authorizes grants of stock options, stock appreciation rights (“SARs”), restricted stock awards (“RSAs”), restricted stock units ~~("RSUs"~~(“RSUs”), performance shares, performance units ~~performance shares, dividend equivalent rights~~ and ~~other stock based~~incentive awards to ~~our officers,~~ key employees, directors, consultants and ~~non-employee directors.~~advisors. Stock options, RSAs and SARs have restrictions as to transferability. Stock option exercise prices are fixed by the Company’s Board of Directors but shall not be less than the fair market value of our common stock on the date of the grant. SARs may be granted in conjunction with stock options. ~~Stock options generally vest ratably~~

At the May 8, 2020 reconvened 2020 Annual Meeting of Stockholders, the Company’s stockholders approved the amendment and restatement of the original 2018 Incentive Plan, which authorizes the Company to issue up to 4,000,000 additional shares of the Company’s common stock pursuant to awards granted under the 2018 Incentive Plan and provides for an increase in the annual limit on the grant-date fair value of awards to any non-employee director of the Company from $200,000 to $250,000.

Following the approval of the amended and restated 2018 Incentive Plan by the Company’s stockholders, the 2018 Incentive Plan provides the Company with the authority to issue a total of 4,333,333 shares of the Company’s common stock, 1,000,000 shares of which have been reserved for settlement of RSUs granted pursuant to an employment agreement, effective as of August 26, 2019, between the Company and Jason Few, our President and Chief Executive Officer (the “Sign-On Award”). The Sign-On Award was contingent upon obtaining stockholder approval of a sufficient number of additional shares under the 2018 Incentive Plan. The Company previously recorded the grants as a liability and, after obtaining such stockholder approval, reclassified the liability to additional paid-in capital. Of the 4,333,333 shares of the Company’s common stock authorized to be issued under the 2018 Incentive Plan, 2,013,563 remain available for grant as of October 31, 2020.

On August 24, 2020, the Company’s Board of Directors approved a Long Term Incentive Plan (the “LTI Plan”) as a sub-plan consisting of awards made under the 2018 Incentive Plan. The participants in the LTI Plan are members of senior management and include the Company’s named executive officers. The LTI Plan consists of three award components: (1) relative total shareholder return (“TSR”) performance shares, (2) absolute TSR performance shares, and (3) time-vesting restricted stock units. The performance shares granted in fiscal year 2020 will be earned over ~~4 years and expire 10 years from~~the performance period ending on October 31, 2022, but will remain subject to a continued service-based vesting requirement until the third anniversary of the date of grant. The ~~Company also has an international award program to provide RSUs~~performance goal for the ~~benefit~~relative TSR performance shares is the TSR of ~~certain employees outside~~ the ~~United States. As~~Company relative to the TSR of the Russell 2000 from May 8, 2020 through October 31,

2022. The performance goal for the absolute TSR performance shares is an increase in the Company’s stock price from May 8, 2020 through October 31, ~~2017, there were 0.2 million~~2022. The time-vesting RSUs granted in fiscal year 2020 will vest at a rate of one-third of the total number of RSUs on each of the first three anniversaries of the date of grant. None of the awards granted as part of the LTI Plan include any dividend equivalent or other stockholder rights. To the extent the awards are earned, they may be settled in shares ~~available for grant. At October 31, 2017, equity awards outstanding consisted~~or cash of ~~incentive stock options, nonstatutory stock options, RSAs and RSUs.~~an equivalent value at the Company’s option.

Other Equity Incentive Plans

The Company's ~~1998~~2006 and ~~2006~~2010 Equity Incentive Plans remain in effect only to the extent of awards outstanding under the ~~plan~~plans as of October 31, ~~2017.~~2020.

Share-based compensation was reflected in the ~~consolidated statements~~Consolidated Statements of ~~operations~~Operations and Comprehensive Loss as follows (in thousands):

	2017		2016		2015		2020		2019		2018
Cost of revenues	$	1,050	$	745	$	769	$	344	$	593	$	543
General and administrative expense		2,721		2,110		1,990		1,424		1,865		2,256
Research and development expense		679		504		360		54		272		355
	$	4,450	$	3,359	$	3,119	$	1,822	$	2,730	$	3,154

We account for stock options awarded to ~~employees and~~ non-employee directors under the fair value method. The fair value of stock options is estimated on the grant date using the Black-Scholes option valuation model ~~and the following weighted-average assumptions:~~as follows:

~~The expected life is the period over which our employees are expected to hold the~~There were 0 options and is based on historical data for similar grants. The risk free interest rate is based on the expected U.S. Treasury rate over the expected life. Expected volatility is based on the historical volatility of our stock. Dividend yield is based on our expected dividend payments over the expected life.granted in fiscal year 2020 or fiscal year 2019.

The following table summarizes our stock option activity for the year ended October 31, ~~2017:~~2020:

The weighted average grant-date fair value per share for options granted during the ~~years~~year ended October 31, ~~2017, 2016 and 2015~~2018 was ~~$1.50, $6.44 and $13.24, respectively.~~$21.36. There were no0 options exercised in fiscal ~~year 2017, 2016~~years 2020, 2019 or ~~2015.~~2018.

The following table summarizes information about stock options outstanding and exercisable as of October 31, ~~2017:~~2020:

~~The~~There was 0 intrinsic value for options outstanding and exercisable at October 31, ~~2017 was $0.07 million and $0.05 million, respectively.~~2020.

The following table summarizes our RSA and RSU activity for the year ended October 31, ~~2017:~~2020:

The RSUs granted (as noted above) include 1,000,000 RSUs granted as the Sign-On Award to Jason Few, the Company’s President and Chief Executive Officer (the “CEO”), pursuant to the August 26, 2019 employment agreement between the Company and the CEO. Pursuant to the terms of such Sign-On Award, 500,000 RSUs vest on August 26, 2022 and the remaining 500,000 RSUs, if earned, will vest on August 26, 2022 and the number earned, if any, will be based on the weighted average price of the Company’s common stock during the thirty day calendar period ending on the vesting date compared to pre-established price goals. The vesting of all RSUs is subject to the individual’s continuous employment with the Company through the vesting date. The RSUs granted also include awards made on August 24, 2020, under the LTI Plan, totaling 835,038 RSUs which include 668,030 performance awards and 167,008 time-based awards. Performance awards were issued assuming participants achieve 100% target performance. Should participants achieve the 200% performance level, they will receive up to 668,030 additional RSUs. The performance awards were valued based upon a Monte Carlo Simulation, and the 334,015 relative TSR performance shares are valued at $4.62 per share and the 334,015 absolute performance shares are valued at $5.17 per share. The performance shares and time-based awards will be expensed over a three-year period.

RSA and RSU expense is based on the fair value of the award at the date of grant and is amortized over the vesting period, which is generally over 3 or 4 years. ~~As of October 31, 2017, the 3.0 million outstanding RSAs and RSUs had an average remaining life of 2.5 years and an aggregate intrinsic value of $6.1 million.~~

As of October 31, ~~2017,~~2020, total unrecognized compensation cost related to RSAs ~~including~~and RSUs was ~~$6.0~~$5.3 million which is expected to be recognized over approximately the next ~~2.5~~two years on a weighted-average basis.

During the years ended October 31, ~~2017, 2016~~2020, 2019 and ~~2015,~~2018, we awarded ~~86,001, 24,379~~58,303, 29,454 and ~~2,399~~13,226 shares, respectively, of fully vested, unrestricted common stock to the independent members of our ~~board~~Board of ~~directors~~Directors as a component of ~~board~~Board of ~~director~~Director compensation which resulted in recognizing $0.1 million, ~~$0.2~~$0.1 million and ~~$0.1~~$0.3 million of expense, ~~for each of the respective years.~~respectively.

The 2018 Employee Stock Purchase Plan (the “ESPP”) was approved by the Company’s stockholders at the 2018 Annual Meeting of Stockholders. The adoption of the ESPP allows the Company to provide eligible employees of FuelCell Energy, Inc. and of certain of its designated subsidiaries with the opportunity to voluntarily participate in the ESPP, enabling such participants to purchase shares of the Company’s common stock at a discount to market price at the time of such purchase. The maximum number of the Company’s shares of common stock that may be issued under the ESPP is 30,248 shares.

Under the ESPP, eligible employees have the right to purchase shares of common stock at the lesser of (i) 85% of the last reported sale price of our common stock on the first business day of the offering period, or (ii) 85% of the last reported sale price of the common stock on the last business day of the offering period, in either case rounded up to avoid impermissible trading fractions. Shares issued pursuant to the ESPP contain a legend restricting the transfer or sale of such common stock for a period of 0.5 years after the date of purchase.

The ESPP activity for the year ended October 31, ~~2017~~2020, 2019 and 2018 was ~~as follows:~~de minimis.

~~The fair value of shares under the ESPP was determined at the grant date using the Black-Scholes option-pricing model with the following weighted average assumptions:~~

~~The weighted-average fair value of shares issued under the ESPP during fiscal year 2017 and 2016 was $1.76 and $6.86 per share, respectively.~~

~~The ESPP was suspended as of May 1, 2017 because we did not have sufficient shares of common stock available for issuance.~~

We offer a 401(k) plan (the ~~“Plan”~~“401(k) Plan”) to all full time employees that provides for tax-deferred salary deductions for eligible employees (beginning the first month following an employee’s hire date). Employees may choose to make voluntary contributions of their annual compensation to the 401(k) Plan, limited to an annual maximum amount as set periodically by the ~~Internal Revenue Service.~~IRS. Employee contributions are fully vested when made. Under the 401(k) Plan, there is no option available to the employee to receive or purchase our common stock. Matching contributions of 2% under the 401(k) Plan aggregated $0.3 million, $0.5 million ~~$0.6 million~~ and ~~$0.4~~$0.5 million for the years ended October 31, ~~2017, 2016,~~2020, 2019, and ~~2015,~~2018, respectively.

The components of loss before income taxes for the years ended October 31, ~~2017, 2016,~~2020, 2019, and ~~2015~~2018 were as follows (in thousands):

~~There was current~~The Company recorded an income tax ~~expense of $0.04 million, $0.5~~provision totaling $0.0 million and ~~$0.3~~$0.1 million ~~related to foreign withholding taxes and income taxes in South Korea and no deferred federal income tax expense (benefit)~~ for the years ended October 31, ~~2017, 2016~~2020 and ~~2015.~~ 2019, respectively, compared to income tax benefit of $3.0 million for the year ended October 31, 2018. The income tax expense for the years ended October 31, 2020 and 2019 primarily related to foreign taxes in South Korea and Canada. The income tax benefit for the year ended October 31, 2018 primarily related to the Tax Cuts and Jobs Act (the “TCJA”) that was enacted on December 22, 2017. The TCJA reduced the U.S. federal corporate tax rate from 34% to 21% effective January 1, 2018 which resulted in a deferred tax benefit of $1.0 million primarily related to a reduction of the Company’s deferred tax liability for IPR&D. The TCJA also established an unlimited carryforward period for the net operating loss (“NOL”) the Company generated after 2017. This provision of the TCJA resulted in a reduction of the valuation allowance attributable to deferred tax assets at the enactment date by $2.0 million based on the indefinite life of the resulting NOL as well as the deferred tax liability for IPR&D.

Franchise tax expense, which is included in administrative and selling expenses, was ~~$0.5~~$0.3 million, ~~$0.4~~$0.2 million and ~~$0.2~~$0.5 million for the years ended October 31, ~~2017, 2016~~2020, 2019 and ~~2015,~~2018, respectively.

The reconciliation of the federal statutory income tax rate to our effective income tax rate for the years ended October 31, ~~2017, 2016~~2020, 2019 and ~~2015~~2018 was as follows:

Our deferred tax assets and liabilities consisted of the following atas of October 31, ~~2017~~2020 and ~~2016~~2019 (in thousands):

We continually evaluate our deferred tax assets as to whether it is “more likely than not” that the deferred tax assets will be realized. In assessing the realizability of our deferred tax assets, management considers the scheduled reversal of deferred tax liabilities, projected future taxable income and tax planning strategies. Based on the projections for future taxable income over the periods in which the deferred tax assets are realizable, management

believes that significant uncertainty exists surrounding the recoverability of the deferred tax assets. As a result, we recorded a ~~full~~ valuation allowance against our net deferred tax assets. None of the valuation allowance will reduce additional paid in capital upon subsequent recognition of any related tax benefits. In connection with our fiscal year 2013 acquisition of Versa we recorded a deferred tax liability for IPR&D, which has an indefinite life. Accordingly, we do not consider it to be a source of taxable income in evaluating the recoverability of our deferred tax assets.

As of October 31, ~~2017,~~2020, we had $905.4 million of federal NOL carryforwards that expire in the years 2021 to 2038 and $457.1 million of state NOL carryforwards of $752.7 million and $414.7 million, respectively, a portion of which ($7.4 million and $6.3 million of federal and state NOL carryforwards, respectively) have not been recognized as they relate to windfall benefits arising from share-based compensation. The federal NOL carryforwardsthat expire in ~~varying amounts from 2019~~the years 2021 through ~~2037 while state NOL carryforwards expire in varying amounts from fiscal year 2018 through 2037.~~2038. Additionally, we had ~~$11.6~~$12.5 million of state tax credits available ~~of which $0.6 million expires in fiscal~~that will expire from tax years 2021 to 2040. During the year, ~~2018. The remaining credits do not expire.~~

~~Certain transactions involving~~ the ~~Company’s beneficial ownership occurred in fiscal year 2014 and prior years, which could have resulted in a stock ownership change for purposes of Section 382 of the~~Company experienced an “ownership change” as defined by Internal Revenue Code Section 382. As a result, the utilization of ~~1986, as amended. We completed a detailed Section 382 study in fiscal year 2017~~federal NOLs generated prior to ~~determine if any~~October of ~~our NOL and credit carryovers will be~~2020 is subject to limitation. ~~Based on that study we~~The Company has recorded an adjustment to its deferred tax asset to account for NOLs it will not be able to utilize due to the Section 382 limitation, reducing the amount of federal NOLs for which deferred taxes have ~~determined that there was no ownership change~~been recognized to $325.6 million, or a deferred tax asset of $68.4 million as of October 31, 2020 before being offset by a valuation allowance. The Company recorded a similar adjustment to its state NOL carryforward, reducing the ~~end~~amount of ~~our fiscal year 2017 under Section 382. The~~losses for which deferred taxes have been recognized in the financial statements to $431.8 million, or a deferred tax asset of $26.4 million before being offset by a valuation allowance.

In addition, the acquisition of Versa in fiscal year 2013 triggered a Section 382 ownership change at the level of Versa Power System which will limit the future usage of some of the federal and state ~~NOLs. The federal and state~~ NOLs that ~~are non 382-limited are included~~we acquired in that transaction. Accordingly, a valuation allowance has been recorded against the ~~NOL~~ deferred tax ~~assets as disclosed.~~asset associated with these attributes.

The Company’s financial statements reflect expected future tax consequences of uncertain tax positions that the Company has taken or expects to take on a tax return (including a decision whether to file or not file a return in a particular jurisdiction) presuming the taxing authorities’ full knowledge of the position and all relevant facts.

The liability for unrecognized tax benefits as of October 31, ~~2017~~2020 and ~~2016~~2019 was $0.0 and $15.7 ~~million.~~million, respectively. This amount iswas directly associated with a tax position taken in a year in which federal and state NOL carryforwards were generated. ~~Accordingly,~~Historically, the amount of unrecognized tax benefit has been presented as a reduction in the reported amounts of our federal and state NOL carryforwards. Due to the Section 382 ownership change discussed above, the underlying NOLs are no longer available for utilization, a deferred tax asset is not recorded on the Consolidated Balance Sheets and the uncertain tax position has been released. It is our policy to record interest and penalties on unrecognized tax benefits as income taxes; however, because of our significant NOLs, no0 provision for interest or penalties has been recorded.

We file income tax returns in the U.S. and certain states, primarily Connecticut and California, as well as income tax returns required internationally for South Korea and Germany. We are open to examination by the ~~Internal Revenue Service~~IRS and various states in which we file for fiscal year ~~2000~~2003 to the present. ~~Our~~During the fiscal year ended October 31, 2018, the Company underwent an IRS examination for its fiscal year 2016 ~~U.S. federal~~ tax ~~return is currently under examination by the Internal Revenue Service.~~year which was closed without material adjustment.

Basic earnings (loss) per common share (“EPS”) are generally calculated as income (loss) available to common stockholders divided by the weighted average number of common shares outstanding. Diluted EPS is generally calculated as income (loss) available to common stockholders divided by the weighted average number of common shares outstanding plus the dilutive effect of common share equivalents.

The calculation of basic and diluted EPS for the years ended October 31, ~~2017, 2016~~2020, 2019 and ~~2015~~2018 was as follows (amounts in thousands, except share and per share amounts):

As of October 31, 2020 and 2019, there was $42.2 million and $30.3 million, respectively, of restricted cash and cash equivalents pledged as performance security, reserved for future debt service requirements, reserved for letters of credit for certain banking requirements and contracts, and reserved to pay down the Orion Facility or be redeployed into other project financing at the option of the Orion Agent and the lenders under the Orion Facility. Refer to Note 25. “Subsequent Events” for additional information on the release of the restricted cash under the Orion Facility. The allocation of restricted cash is as follows (in thousands):

~~As of October 31, 2017 and 2016, we had capital lease obligations of $0.6 million and $0.7 million, respectively. Lease payment terms are thirty-six months from the date of lease.~~

We also lease certain computer and office equipment and manufacturing facilities in Torrington and Danbury, Connecticut under operating leases expiring on various dates through 2030. Rent expense was $1.6 million, $1.8 million and $1.7 million for the years ended October 2017, 2016 and 2015, respectively.

~~Non-cancelable minimum payments applicable to operating and capital leases at October 31, 2017 were as follows (in thousands):~~

Under the provisions of ~~our~~its service agreements, ~~we provide~~the Company provides services to maintain, monitor, and repair customer power plants to meet minimum operating levels. Under the terms of ~~our~~such service agreements, the particular power plant must meet a minimum operating output during defined periods of the term. If minimum output falls below the contract requirement, wethe Company may be subject to performance penalties and/or may be required to repair or replace the customer’s fuel cell module(s). An estimate is not recorded for a potential performance guarantee liability until a performance issue has occurred at a particular power plant. At that point, the actual power plant’s output is compared against the minimum output guarantee and an accrual is recorded. The review of power plant performance is updated for each reporting period to incorporate the most recent performance of the power plant and minimum output guarantee payments made to customers, if any. The Company has provided for an accrual for performance guarantees, based on actual fleet performance, which totaled $2.2 million and $3.3 million as of October 31, 2017 and 2016, respectively, and is recorded in “Accrued liabilities.”

Our loss accrual on service agreements, excluding the accrual for performance guarantees, totaled $1.1 million and $2.7 million as of October 31, 2017 and 2016, respectively, and is recorded in “Accrued liabilities.” Our accrual estimates are performed on a contract by contract basis and include cost assumptions based on what we anticipate the service requirements will be to fulfill obligations under each contract. The decrease primarily relates to module exchanges performed during the year ended October 31, 2017.

Under the terms of ~~our~~the Company’s PPAs, customers agree to purchase power from ~~our~~the Company’s fuel cell power plants at negotiated rates. Electricity rates are generally a function of the customers’ current and estimated future electricity pricing available from the grid. As owner or lessee of the power plants, ~~we are~~the Company is responsible for all operating costs necessary to maintain, monitor and repair the power plants. Under certain agreements, ~~we are~~the Company is also responsible for procuring fuel, generally natural gas or Biogas, to run the power plants.

~~Expansion~~ In addition, under the terms of ~~Torrington Facility and Related Low-Cost Financing~~

~~In December 2015,~~some of the PPAs, the Company ~~commenced the first phase of its project~~may be subject to ~~expand the existing 65,000 square foot manufacturing facility in Torrington, Connecticut by approximately 102,000 square feet for~~ a ~~total size of 167,000~~

square feet. Initially, this additional space will be used to enhance and streamline logistics functions through consolidation of satellite warehouse locations and will provide the space needed to reconfigure the existing production process to improve manufacturing efficiencies. The company has substantially completed the first phase of the expansion during the fourth quarter of fiscal year 2017.

~~On November 9, 2015,~~performance penalty if the Company ~~closed on a definitive Assistance Agreement with the State~~does not meet certain performance requirements.

As of ~~Connecticut and received a disbursement of $10.0 million that was used for the first phase of the expansion project. In conjunction with this financing,~~October 31, 2020, the Company entered into a $10.0 million Promissory Note and related security agreements. The second phase of our manufacturing expansion, for which we will be eligible, subject to certain conditions to receive an additional $10.0 million in low-cost financing from the State of Connecticut, will commence as demand supports.

~~At October 31, 2017, the Company has~~had unconditional purchase commitments aggregating ~~$29.1~~$34.7 million, for materials, supplies and services in the normal course of business.

Between August 2005 and April 2017, we sold shares of our common stock pursuant to a series of “at-the-market” sales plans. The shares sold pursuant to these sales plans represented a portion of the shares registered by us pursuant to shelf registration statements we filed with the SEC during this time period. While we reported the number of shares we had sold, along with the net proceeds earned by us from those sales made during each fiscal quarter pursuant to the sales plans in our annual and quarterly reports on Forms 10-K and 10-Q, we omittedfromthe shelf registration statements certain information about the offerings,including the specific plan of distribution and the nature and termsof compensation or other agreements with any underwriters, dealers, or agents, and for some offerings, also omitted the specific type and quantityof securities offered; and we did not file or deliver prospectus supplements at the time of or prior to making these sales or otherwise timely disclose the information that had been omitted from the shelf registration statements, as is required by SEC regulations.

In 2018, we reported to the SEC Staff these sales and ~~financing~~our failure to file or deliver prospectus supplements, and in response to our report, the SEC Staff opened an informal investigation of these sales. Following our self-report and the investigation by the SEC Staff and pursuant to our Offer of Settlement, on September 3, 2020, the SEC entered an order instituting cease-and-desist proceedings pursuant to Section 8A of the Securities Act, finding that we had violated Section 5(b)(2) of the Securities Act with respect to these sales and requiring us to cease and desist from committing or causing any violations and any future violations of Section 5(b)(2) but not imposing any civil penalties or disgorgement. Under the terms of the settlement, we consented to the entry of the order and neither admitted nor denied any of the SEC’s findings. Such a settlement, without a waiver by the SEC, would disqualify us from relying on the safe harbors from registration under the Securities Act set forth in Regulation A, Regulation D and Regulation Crowdfunding, following the effective date of the settlement. Accordingly, we submitted an application to the SEC for a waiver of disqualification under Regulation A and Regulation D. We did not seek a waiver under Regulation Crowdfunding as we do not expect to rely on crowdfunding in raising capital. On September 3, 2020, the SEC Staff granted the requested waivers with respect to Regulation A and Regulation D pursuant to delegated authority.

From approximately 2007 through 2015, we relied on POSCO Energy to develop and grow the South Korean and Asian markets for our products and services. We received upfront license payments and were entitled to receive royalty income from POSCO Energy pursuant to certain manufacturing and technology transfer agreements,

including the Alliance Agreement dated February 7, 2007 (and the amendments thereto), the Technology Transfer, License and Distribution Agreement dated February 7, 2007 (and the amendments thereto), the Stack Technology Transfer and License Agreement dated October 27, 2009 (and the amendments thereto), and the Cell Technology Transfer and License Agreement dated October 31, 2012 (and the amendments thereto), which are collectively referred to herein as the “License Agreements”. The License Agreements provided POSCO Energy with the exclusive technology rights to manufacture, sell, distribute and service our SureSource 300, SureSource 1500 and SureSource 3000 fuel cell technology in the South Korean and broader Asian markets. Due to certain actions and inactions of POSCO Energy, the Company ~~is contractually committed~~has not realized any new material revenues, royalties or new projects developed by POSCO Energy since late 2015.

In November 2019, POSCO Energy spun-off its fuel cell business into a new entity, Korea Fuel Cell Co., Ltd. (“KFC”), without the Company’s consent. As part of the spin-off, POSCO Energy transferred manufacturing and service rights under the License Agreements to ~~provide compensation for~~KFC, but retained distribution rights and severed its own liability under the License Agreements. The Company formally objected to POSCO Energy’s spin-off, and POSCO Energy posted a bond to secure any ~~losses~~liabilities to the Company arising out of the spin-off. In September 2020, the Korean Electricity Regulatory Committee found that ~~our customers~~POSCO Energy’s spin-off of the fuel cell business to KFC may have been done in violation of South Korean law.

On February 19, 2020, the Company notified POSCO Energy in writing that it was in material breach of the License Agreements by (i) its actions in connection with the spin-off of the fuel cell business to KFC, (ii) its suspension of performance through its cessation of all sales activities since late 2015 and ~~finance partners may suffer~~its abandonment of its fuel cell business in Asia, and (iii) its disclosure of material nonpublic information to third parties and its public pronouncements about the fuel cell business on television and in print media that have caused reputational damage to the fuel cell business, the Company and its products. The Company also notified POSCO Energy that, under the terms of the License Agreements, it had 60 days to fully cure its breaches to the Company’s satisfaction and that failure to so cure would lead to termination of the License Agreements. Further, on March 27, 2020, the Company notified POSCO Energy of additional instances of its material breach of the License Agreements based on POSCO Energy’s failure to pay royalties required to be paid in connection with certain ~~limited circumstances resulting~~module replacements.

On April 27, 2020, POSCO Energy initiated a series of three arbitration demands against the Company at the International Court of Arbitration of the International Chamber of Commerce seated in Singapore alleging certain warranty defects in a sub-megawatt conditioning facility at its facility in Pohang, South Korea and seeking combined damages of approximately $3.3 million. Prior to filing the arbitrations, POSCO Energy obtained provisional attachments from ~~reductions~~the Seoul Central District Court attaching certain revenues owed to the Company by Korea Southern Power Company (“KOSPO”) as part of such warranty claims, which has delayed receipt of certain payments owed to the Company. POSCO Energy subsequently sought additional provisional attachments on KOSPO revenues from the Seoul Central District Court based on unspecified warranty claims not yet filed in an additional amount of approximately $7 million, and additional provisional attachments on KOSPO revenues from the Seoul Central District Court based on its alleged counterclaims in the ~~U.S. Investment Tax Credit. Such obligations would arise~~license termination arbitration described below in an additional amount of approximately $110 million. As of October 31, 2020, outstanding accounts receivable due from KOSPO were $4.8 million.

On June 28, 2020, the Company terminated the License Agreements with POSCO Energy and filed a demand for arbitration against POSCO Energy and KFC in the International Court of Arbitration of the International Chamber of Commerce based on POSCO Energy’s (i) failure to exercise commercially reasonable efforts to sell the Company’s technology in the South Korean and Asian markets, (ii) disclosure of the Company’s proprietary information to third parties, (iii) attack on the Company’s stock price and (iv) spin-off of POSCO Energy’s fuel cell business into KFC without the Company’s consent. The Company has requested that the arbitral tribunal (a) confirm through declaration that POSCO Energy’s exclusive license to market the Company’s technology and products in South Korea and Asia is null and void as a result of ~~reductions~~the breaches of the License Agreements and that the Company has the right to pursue direct sales in these markets, (b) order POSCO Energy and KFC to compensate the Company for losses and damages suffered in the amount of more than $200 million, and (c) order POSCO Energy and KFC to pay the Company’s arbitration costs, including counsel fees and expenses. The Company has retained outside counsel on a contingency basis to pursue its claims, and outside counsel has entered into an agreement with a litigation finance provider to fund the legal fees and expenses of the arbitration. In October 2020, POSCO Energy filed a counterclaim in the arbitration (x) seeking approximately $880 million in damages based on allegations that the Company

misrepresented the capabilities of its fuel cell technology to induce POSCO Energy to enter into the License Agreements and failed to turn over know-how sufficient for POSCO Energy to successfully operate its business; (y) seeking a declaration that the License Agreements remain in full force and effect and requesting the arbitral tribunal enjoin the Company from interfering in POSCO Energy’s exclusive rights under the License Agreements and (z) seeking an order that the Company pay POSCO Energy’s arbitration costs, including counsel fees and expenses.

The Company has discontinued revenue recognition of the deferred license revenue related to the ~~value~~terminated POSCO Energy License Agreements given the pending arbitration and will continue to evaluate this deferred revenue in future periods.

On August 28, 2020, POSCO Energy filed a complaint in the Court of Chancery of the ~~underlying fuel cell projects~~State of Delaware (the “Court”) purportedly seeking to enforce its rights as ~~assessed~~a stockholder of the Company to inspect and make copies and extracts of certain books and records of the Company and/or the Company’s subsidiaries pursuant to Section 220 of the Delaware General Corporation Law and/or Delaware common law. POSCO Energy alleges that it is seeking to inspect these documents for a proper purpose reasonably related to its interests as a stockholder of the Company, including investigating whether the Company’s Board of Directors and its management breached their fiduciary duties of loyalty, due care, and good faith. POSCO Energy seeks an order of the Court permitting POSCO Energy to inspect and copy the demanded books and records, awarding POSCO Energy reasonable costs and expenses, including reasonable attorney’s fees incurred in connection with the matter, and granting such other and further relief as the Court deems just and proper.

On September 14, 2020, POSCO Energy filed a complaint in the United States District Court for the Southern District of New York alleging that the Company delayed the removal of restrictive legends on certain share certificates held by POSCO Energy in 2018, thus precluding POSCO Energy from selling the ~~U.S. Internal Revenue Service (the “IRS”).~~ shares and resulting in claimed losses in excess of $1,000,000.

The Company does not believe that any ~~payments under these contracts~~of the arbitrations or legal proceedings brought against the Company by POSCO Energy are ~~probable based on~~for a proper purpose. Further, the ~~facts known~~Company believes that all such arbitrations and legal proceedings are in fact simply fulfillment of POSCO Energy’s prior threats to file a series of actions against the Company and are attempts to obtain leverage over the Company and, in certain proceedings, gain advantage in the pending arbitration filed by the Company against POSCO Energy. The Company will vigorously defend itself against POSCO Energy’s claims in all forums and believes it will be apparent at the ~~reporting date. The maximum potential future payments~~conclusion of each matter that each action was filed for an improper purpose.

From time to time, the Company could have to make under this obligation would depend on the difference between the fair values of the fuel cell projects sold or financed and the values the IRS would determine as the fair value for the systems for purposes of claiming the Investment Tax Credit. The value of the Investment Tax Credit in the Company’s agreements is ~~based on guidelines provided by the statutory regulations from the IRS. The Company and its customers use fair values determined with the assistance of independent third-party appraisals.~~

~~We are~~ involved in other legal proceedings, including, but not limited to, regulatory proceedings, claims, mediations, arbitrations and litigation, arising out of the ordinary ~~conduct~~course of ~~our business.~~its business (“Other Legal Proceedings”). Although wethe Company cannot assure the outcome of such Other Legal Proceedings, management presently believes that the result of such ~~legal proceedings,~~Other Legal Proceedings, either individually, or in the aggregate, will not have a material adverse effect on ~~our~~the Company’s consolidated financial statements, and no material amounts have been accrued in ~~our~~the Company’s consolidated financial statements with respect to these matters.

On March 18, 2020, in response to the COVID-19 pandemic, we temporarily suspended operations at our Torrington, Connecticut manufacturing facility and also ordered those employees that could work from home to do so. The Company resumed operations in the manufacturing facility on June 22, 2020. All employees that were not able to work from home due to their job function during the manufacturing facility shutdown received full wages and benefits during such time. We did not implement any furlough, layoff or shared work program during such time. The Company continues to encourage a remote work protocol for portions of the workforce due to the continuing pandemic.

We continue to evaluate our ability to operate in light of recent resurgences of COVID-19 and the advisability of continuing operations based on federal, state and local guidance, evolving data concerning the pandemic and the best interests of our employees, customers and stockholders.

While we have attempted to continue business development activities during the pandemic, state and local shut downs, shelter in place orders and travel restrictions have impeded our ability to meet with customers and solicit new business, and certain bids and solicitations in which we typically participate have been postponed. We expect these impacts to continue until such shut downs, shelter in place orders and travel restrictions are fully lifted and bids and solicitations are allowed to proceed. We have not experienced any material impacts to our supply chain, construction or service activities to date.

The following represents supplemental cash flow information, including amounts effectively settled as described in Note 3. “Acquisitions” (dollars in thousands):

Selected unaudited financial data for each quarter of fiscal year ~~2017~~2020 and ~~2016~~2019 is presented below. We believe that the information reflects all normal recurring adjustments necessary for a fair presentation of the information for the periods presented.

(in thousands)	First Quarter			Second Quarter			Third Quarter			Fourth Quarter			Full Year			First Quarter			Second Quarter			Third Quarter			Fourth Quarter			Full Year
Year ended October 31, 2017
Year ended October 31, 2020
Revenues	$	17,002		$	20,417		$	10,358		$	47,889			95,666		$	16,264		$	18,880		$	18,728		$	16,999		$	70,871
Gross profit (loss)		1,813			383			(2,626	)		3,164			2,734			3,281			167			(3,128	)		(8,045	)		(7,725	)
Loss on operations		(10,928	)		(11,496	)		(14,330	)		(8,181	)		(44,935	)
Loss from operations																	(3,140	)		(8,142	)		(10,762	)		(17,122	)		(39,166	)
Net loss		(13,685	)		(13,238	)		(17,001	)		(9,979	)		(53,903	)		(40,151	)		(14,769	)		(15,331	)		(18,856	)		(89,107	)
Preferred stock dividends		(800	)		(800	)		(800	)		(800	)		(3,200	)
Series B preferred stock dividends																	(931	)		(800	)		(800	)		(800	)		(3,331	)
Net loss to common stockholders		(14,485	)		(14,038	)		(17,801	)		(10,779	)		(57,103	)		(41,082	)		(15,569	)		(16,131	)		(19,656	)		(92,438	)
Net loss to common stockholders per basic and diluted common share ⁽¹⁾	$	(0.39	)	$	(0.33	)	$	(0.31	)	$	(0.17	)		(1.14	)	$	(0.20	)	$	(0.07	)	$	(0.07	)	$	(0.08	)		(0.42	)
Year ended October 31, 2016
Year ended October 31, 2019
Revenues	$	33,482		$	28,581		$	21,716		$	24,473		$	108,252		$	17,783		$	9,216		$	22,712		$	11,041		$	60,752
Gross (loss) profit		(166	)		(157	)		434			(468	)		(357	)		(2,205	)		(3,640	)		7,965			(23,389	)		(21,269	)
Loss on operations		(11,517	)		(12,708	)		(10,323	)		(11,805	)		(46,353	)
Loss from operations																	(15,244	)		(17,623	)		(1,070	)		(32,992	)		(66,929	)
Net loss		(11,779	)		(15,414	)		(11,067	)		(12,948	)		(51,208	)		(17,548	)		(19,530	)		(5,311	)		(35,179	)		(77,568	)
Preferred stock dividends		(800	)		(800	)		(800	)		(800	)		(3,200	)
Series A warrant exchange																	-			(3,169	)		-			-			(3,169	)
Series B preferred stock dividends																	(800	)		(800	)		(810	)		(821	)		(3,231	)
Series C preferred stock deemed (dividends) contributions and redemption value adjustment																	(9,005	)		1,599			884			-			(6,522	)
Series D preferred stock deemed dividends and redemption accretion																	(5,685	)		(976	)		(3,091	)		(3	)		(9,755	)
Net loss to common stockholders		(12,512	)		(16,173	)		(11,810	)		(13,662	)		(54,157	)		(33,038	)		(22,876	)		(8,328	)		(36,003	)		(100,245	)
Net loss to common stockholders per basic and diluted common share ⁽¹⁾	$	(0.48	)	$	(0.56	)	$	(0.38	)	$	(0.41	)		(1.82	)	$	(3.97	)	$	(2.06	)	$	(0.18	)	$	(0.23	)	$	(1.82	)

In December ~~14, 2017,~~of 2020, the ~~number~~Company and the lenders under the Orion Credit Agreement (the “Selling Stockholders”) (see Note 14. “Debt” for the names of ~~authorized~~the lenders/Selling Stockholders) completed a public offering of the Company’s common stock. In connection with this public offering, the Company and the Selling Stockholders entered into an underwriting agreement pursuant to which (i) the Company agreed to issue and sell to the underwriters 19,822,219 shares of the Company’s common stock, ~~was increased from 125,000,000~~plus up to ~~225,000,000,~~5,177,781 shares of common stock pursuant to an option to purchase additional shares, and (ii) the Selling Stockholders agreed to sell to the underwriters 14,696,320 shares of common stock, in each case at a price to the public of $6.50 per share. The underwriters exercised their option to purchase additional shares, resulting in the issuance and sale by ~~a vote~~the Company at the closing of the ~~holders~~offering of a ~~majority~~total of 25,000,000 shares of common stock. The offering closed on December 4, 2020.

Gross proceeds from the sale of common stock by the Company in the offering were $162.5 million. The Company did not receive any proceeds from the sale of common stock in the offering by the Selling Stockholders. Upon closing of the ~~outstanding shares of~~offering, the ~~Company’s common stock.~~

~~On December 14, 2017, in accordance with NASDAQ Marketplace Rule 5635(d), the Company’s common stockholders approved the issuance~~number of shares of the Company’s common stock ~~exceeding 19.9%~~outstanding was 319,706,758.

In addition, in connection with the offering, the Company and its directors and officers entered into a customary 90-day lock-up agreement with the underwriters party to the underwriting agreement. As part of the ~~number~~offering, J.P. Morgan Securities LLC waived lock-up restrictions entered into in connection with the common stock offering consummated on October 2, 2020 with respect to all of the shares sold in this offering by the Company and the Selling Stockholders. J.P. Morgan Securities LLC also waived all remaining lock-up restrictions applicable to the Selling Stockholders, including with respect to the then-outstanding warrants held by the Selling Stockholders to purchase up to 2,700,000 shares of common stock (which warrants were issued pursuant to the Orion Credit Agreement), and the Selling Stockholders did not enter into new lock-up agreements in connection with the offering.

On November 30, 2020, the Company, its subsidiary guarantors, and the Orion Agent entered into a payoff letter with respect to the Orion Credit Agreement (the “Orion Payoff Letter”). Pursuant to the Orion Payoff Letter, on December 7, 2020, the Company paid a total of $87.3 million to the Orion Agent, representing the outstanding principal, accrued but unpaid interest, prepayment premium, fees, costs and other expenses due and owing under the Orion Facility and the Orion Credit Agreement and related loan documents, in full repayment of the Company’s outstanding indebtedness under the Orion Facility and the Orion Credit Agreement and related loan documents. In accordance with the Orion Payoff Letter, the aggregate prepayment premium set forth in the Orion Credit Agreement was reduced from approximately $14.9 million to $4 million and the Orion Agent, on ~~September 5, 2017, upon~~behalf of itself and the ~~conversion and/or redemption~~lenders, agreed that any portion of the prepayment premium that would otherwise be required to be paid pursuant to the Orion Credit Agreement in excess of $4 million was waived by the Orion Agent and the lenders.

Concurrently with the Orion Agent’s receipt of full payment pursuant to the Orion Payoff Letter, the Orion Agent released all of the collateral from the liens granted under the security documents associated with the Orion Facility (which included the release of $11.2 million of restricted cash to the Company, which became unrestricted cash), and the Company and its subsidiaries were unconditionally released from their respective obligations under the Orion Credit Agreement (and related loan documents) and the Orion Facility without further action. With the termination of the Orion Facility and the Orion Credit Agreement and related loan documents, the lenders no longer have the right to appoint representatives to attend the Company’s Board of Director meetings as observers.

On December 7, 2020, all remaining Orion Warrants were exercised to purchase a total of 2,700,000 shares of the Company’s common stock for an aggregate exercise price of $653,400 (or $0.242 per share).

In December 2020, the Company, FCE Ltd., and Enbridge entered into a payoff letter (the “Enbridge Payoff Letter”) pursuant to which the Company paid all amounts owed to Enbridge under the terms of the Series ~~C Convertible~~1 Preferred ~~Stock issued in an underwritten offering in September 2017.~~ Shares. As of December 31, 2020, the amount owed to Enbridge under the Series 1 Preferred Shares totaled Cdn. $27.4 million, which included Cdn. $4.3 million of principal and Cdn. $23.1 million of accrued dividends.

On December ~~22, 2017~~18, 2020, the ~~Tax Cuts and Jobs Act (the “Act”) was signed into law. While enacted subsequent~~Company remitted payment totaling Cdn. $27.4 million, or approximately $21.5 million U.S. dollars, to ~~this balance sheet date, the Act changes existing United States tax law and includes numerous provisions that will affect the Company. Specifically, the reduction~~Enbridge. Concurrent with receipt of the ~~U.S. federal tax rate~~payment from ~~34%~~the Company, Enbridge surrendered its Series 1 Preferred Shares in FCE Ltd., and the Guarantee and the January 2020 Letter Agreement (in each case as defined above) were terminated. All obligations related to ~~21% effective January~~the Series 1 2018 will reduce the Company’s deferred tax liability IPR&D by approximately $1.0 million with the benefit to be reflected in the first quarter of fiscal year 2018. The reduction in the federal tax rate will also reduce the value of the Company’s existing deferred tax assets, though an offsetting decrease to valuation allowance would be recorded.

The Company maintains disclosure controls and procedures, which are designed to provide reasonable assurance that information required to be disclosed in the Company’s periodic SEC reports is recorded, processed, summarized and reported within the time periods specified in the SEC’s rules and forms, and that such information is accumulated and communicated to its principal executive officer and principal financial officer, as appropriate, to allow timely decisions regarding required disclosure.

We carried out an evaluation, under the supervision and with the participation of our principal executive officer and principal financial officer, of the effectiveness of the design and operation of our disclosure controls and procedures as of the end of the period covered by this report. Based on that evaluation, the Company’s principal executive officer and principal financial officer have concluded that the Company’s disclosure controls and procedures were effective ~~to provide reasonable assurance that information required to be disclosed in~~as of the ~~Company’s periodic SEC reports is recorded, processed, summarized and reported within~~end of the time periods specified in the SEC’s rules and forms, and that such information is accumulated and communicated to its principal executive officer and principal financial officer, as appropriate, to allow timely decisions regarding required disclosure.period covered by this report.

Management of FuelCell Energy, Inc., and its subsidiaries (the “Company”), are responsible for establishing and maintaining adequate internal control over financial reporting. The Company’s internal control over financial reporting is a process designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles in the United States of America. Internal control over financial reporting includes those policies and procedures that:

Under the supervision and with the participation of management, including our principal executive and principal financial officers, we ~~assessed~~evaluated the Company’s internal control over financial reporting as of October 31, ~~2017,~~2020, based on criteria for effective internal control over financial reporting established in the Internal Control — Integrated Framework (2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission (“COSO”). Based on this assessment, we have concluded that the Company maintained effective internal control over financial reporting as of October 31, ~~2017~~2020 based on the specified criteria. ~~The Company's independent registered public accounting firm, KPMG LLP, has issued an audit report on the Company's~~

A material weakness is a deficiency, or combination of deficiencies, in internal control over financial reporting, ~~which appears~~such that there is a reasonable possibility that a material misstatement of our annual or interim financial statements will not be prevented or detected on a timely basis.

We initially disclosed in ~~Part II, Item 8 of this~~our Form ~~10-K.~~10-Q for the quarter ended April 30, 2019 that the Company did not have resources to sufficiently address asset impairments on a timely basis or the accounting considerations and disclosures related to the Company’s amended credit facilities. As a result, we concluded that there was a material

weakness in internal control over financial reporting, as we did not maintain effective controls over the accounting for and disclosures in the consolidated financial statements related to asset impairments and credit facilities. As disclosed in our Annual Report on Form 10-K for the fiscal year ended October 31, 2019, this control deficiency was not remediated as of October 31, 2019 and the Company further identified that it did not have resources to sufficiently address certain other non-routine transactions and disclosures. This material weakness resulted in material misstatements that were corrected in the 2019 consolidated financial statements prior to issuance.

During the fourth quarter of 2020, we completed the process of remediating the material weakness. We have reorganized the accounting department and hired additional resources to assist with the review of certain non-routine transactions and disclosures, we have held monthly meetings which include the entire Accounting staff to discuss non-routine accounting transactions and the steps required to account for them correctly, including whether third-party resources may be necessary to assist with reviewing of the accounting and disclosure of a transaction and we have engaged third-party resources to help evaluate the accounting and disclosure for significant matters.

Other than the ~~participation of our principal executive and principal financial officers, whether any~~changes discussed above related to non-routine transactions, there have been no changes in our internal control over financial reporting that occurred during ~~our last~~the fourth quarter of fiscal ~~quarter (the registrant’s fourth fiscal quarter in the case of an annual report)~~year 2020 that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting. ~~Based on the evaluation we conducted, our management has concluded that no such changes have occurred.~~

The information required by this Item 10, with respect to our executive officers, is included in Part I of ~~the~~this Annual Report on Form 10-K. The other information required by this Item 10 is incorporated by reference to the Company’s ~~2018~~2021 Proxy Statement to be filed with the SEC within 120 days ~~from~~after fiscal year end.

Our board of directors has adopted a Code of Ethics (the “Code”), which applies to the board of directors, named executive officers, and all employees. The Code provides a statement of certain fundamental principles and key policies and procedures that govern the conduct of our business. The Code covers all major areas of professional conduct, including employment policies, conflicts of interest, intellectual property and the protection of confidential information, as well as strict adherence to all laws and regulations applicable to the conduct of our business. As required by the Sarbanes-Oxley Act of 2002, our Audit and Finance Committee has procedures to receive, retain, investigate and resolve complaints received regarding our accounting, internal accounting controls or auditing matters and to allow for the confidential and anonymous submission by employees of concerns regarding questionable accounting or auditing matters. The Code can be found in the Corporate Governance sub-section of the section entitled “Investors” on our website at www.fuelcellenergy.com.We intend to disclose any changes in, or waivers from, the Code by posting such information on the same website or by filing a Current Report on Form 8-K, in each case to the extent such disclosure is required by rules of the SEC or ~~NASDAQ.~~Nasdaq.

Information required under this Item is incorporated by reference to the Company’s ~~2018~~2021 Proxy Statement to be filed with the SEC within 120 days ~~from~~after fiscal year end.

The following table sets forth information with respect to the Company’s equity compensation plans as of the end of the fiscal year ended October 31, 2020.

Information required under this Item is incorporated by reference to the Company’s ~~2018~~2021 Proxy Statement to be filed with the SEC within 120 days ~~from~~after fiscal year end.

Pursuant to the requirements of Section 13 or 15(d) 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.

Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed below by the following persons on behalf of the registrant and in the capacities and on the dates indicated.

Delaware		06-0853042
(State or other jurisdiction of		(I.R.S. Employer
incorporation or organization)		Identification No.)

3 Great Pasture Road
Danbury, Connecticut		06810
(Address of principal executive offices)		(Zip Code)

Title of each class		Trading Symbol (s)		Name of each exchange on which registered
Common Stock, $0.0001 par value per share		FCEL		The Nasdaq Stock Market LLC (Nasdaq Global Market)

Large accelerated filer ☐		Accelerated filer ☒☐		Non-accelerated filer ☐☒		Smaller reporting company ☐☒
				~~(Do not check if a smaller reporting company)~~		Emerging growth company ☐

Class		Outstanding at January ~~2, 2018~~15, 2021
Common Stock, $0.0001 par value per share		~~75,678,919~~ 322,412,341

Document		Parts Into Which Incorporated
Definitive Proxy Statement for the 2021 Annual Meeting of Stockholders ~~to be held April 5, 2018~~		Part III

		Page
Description		Number
Part I

Item 1 Business		3

Item 1A Risk Factors		2942

Item 1B Unresolved Staff Comments		4560

Item 2 Properties		4660

Item 3 Legal Proceedings		4660

Item 4 Mine Safety Disclosures		4661

Part II

Item 5 Market for ~~the~~ Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities		4762

Item 6 Selected Financial Data		5565

Item 7 Management’s Discussion and Analysis of Financial Condition and Results of Operations		5767

Item 7A Quantitative and Qualitative Disclosures About Market Risk		8091

Item 8 Consolidated Financial Statements and Supplementary Data		8192

Item 9 Changes in and Disagreements with Accountants on Accounting and Financial Disclosure		~~117~~146

Item 9A Controls and Procedures		~~117~~146

Item 9B Other Information		~~118~~147

Part III

Item 10 Directors, Executive Officers and Corporate Governance		~~118~~148

Item 11 Executive Compensation		~~118~~148

Item 12 Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters		~~118~~148

Item 13 Certain Relationships and Related Transactions, and Director Independence		~~118~~148

Item 14 Principal ~~Accountant~~Accounting Fees and Services		~~118~~149

Part IV

Item 15 Exhibits and Financial Statement Schedules		~~119~~149

Item 16 Form 10-K Summary		~~124~~158

Signatures		~~125~~159

Index to Item 1. BUSINESS		Page

Forward-Looking Statement Disclaimer		4

~~Background~~		5

~~Additional Technical Terms and Definitions~~Risk Factor Summary		6

~~Overview~~Background		7

~~Business Strategy~~Additional Technical Terms and Definitions		8

~~Markets~~At a Glance		10

~~Strategic Alliances~~Overview		1210

~~Products~~Business Model, Strategy and Competitive Advantages		1311

~~Manufacturing~~Products		1614

~~Services and Warranty Agreements~~		17

~~License Agreements and Royalty Income~~Advanced Technologies Programs		18

~~Advanced Technology Programs (Third Party Funded Research and Development)~~		18

~~Company Funded Research and Development~~		20

~~Backlog~~		20

~~Fuel Cell Technologies~~		21

~~Competition~~		21

~~Regulatory and Legislative Support~~		22

~~Government Regulation~~Markets		23

~~Proprietary Rights~~Growth and ~~Licensed Technology~~		23

~~Significant Customers and Information about Geographic Areas~~		24

~~Sustainability~~Market Adoption Targets		25

~~Associates~~Manufacturing and Service Facilities		2627

~~Available Information~~Raw Materials and Supplier Relationships		2629

Engineering, Procurement and Construction		29

Services and Warranty Agreements		29

License Agreements and Royalty Income; Relationship with POSCO Energy		30

Company Funded Research and Development		32

Backlog		33

Competition		33

Regulatory and Legislative Environment		35

Government Regulation		36

Proprietary Rights and Licensed Technology		36

Significant Customers and Information about Geographic Areas		37

Sustainability		38

Human Capital Resources		39

Available Information		39

	Emissions (Lbs. Per MWh)
	NO_X		SO₂		PM		CO₂		CO₂ with CHP
Average U.S. Fossil Fuel Plant		5.06		11.6		0.27		2,031	NA
Microturbine (60 kW)		0.44		0.008		0.09		1,596	520 - 680
Small Natural Gas Turbine		1.15		0.008		0.08		1,494	520 - 680
SureSource - natural gas		0.01		0.0001		0.00002		940	520 - 680
SureSource 4000 High Efficiency Plant		0.01		0.0001		0.00002		740	520 - 680
SureSource - utility scale carbon capture		0.01		0.0001		0.00002		80	n/a
SureSource - renewable biogas		0.01		0.0001		0.00002	< 0		< 0

	Years Ended October 31,						Years Ended October 31,
	2017		2016		2015
(dollars in thousands)							2020		2019		2018
Cost of Advanced Technologies contract revenues	$	12,728	$	11,879	$	13,470	$	16,254	$	12,884	$	10,360
Research and development expenses		20,398		20,846		17,442		4,797		13,786		22,817
Total research and development	$	33,126	$	32,725	$	30,912	$	21,051	$	26,670	$	33,177

	2020		2019
Commercial:
Product	$	—	$	—
Service		146,810		169,371
Generation		1,067,228		1,114,366
License		22,182		22,931
Total Commercial	$	1,236,220	$	1,306,668

Advanced Technologies
Non-U.S. Government		37,652		389
U.S. Government - Funded	$	11,281	$	11,369
U.S. Government - Unfunded		220		220
Total Advanced Technologies	$	49,153	$	11,978

Total Backlog	$	1,285,373	$	1,318,646


	~~MW- Class~~	~~Sub-MW- Class~~		~~Micro CHP~~	~~Mobile~~
~~System Size Range~~	~~Carbonate (CFC)~~	~~Solid Oxide (SOFC)~~	~~Phosphoric Acid (PAFC)~~	~~PEM / SOFC~~	~~Polymer Electrolyte Membrane (PEM)~~
~~Plant size~~	~~1.4 MW - 3.7 MW~~	~~up to 250 kW~~	~~up to 440 kW~~	~~< 10 kW~~	~~5 - 100 kW~~
~~Typical Application~~	~~Utilities, Universities, Industrial~~	~~Commercial Buildings & “Big-Box” Retail Stores Stores~~	~~Commercial Buildings & Grocery Stores~~	~~Residential and Small Commercial~~	~~Transportation~~
~~Fuel~~	~~Natural gas, On-site or Directed Biogas, Others~~	~~Natural Gas~~	~~Natural Gas~~	~~Natural Gas~~	~~Hydrogen~~
~~Advantages~~	~~High Efficiency, Scalable, Fuel Flexible & CHP~~	~~High Efficiency~~	~~CHP~~	~~Load Following & CHP~~	~~Load Following & Low Temperature~~
~~Electrical efficiency~~	~~43%-47 to 60%~~	~~50% - 60%~~	~~40% - 42%~~	~~25% - 35%~~	~~25% - 35%~~
~~Combined Heat & Power (CHP)~~	~~Yes, Steam & Chilling~~	~~Depends on Technology Used~~	~~Limited: Hot Water, Chilling~~	~~Suitable for Facility Heating~~	no
~~Carbon Capture~~	~~Yes~~	no	no	no	no
~~Distributed Hydrogen~~	~~Yes~~	~~Yes~~	no	no	no
~~Reversible for Storage~~	no	~~Yes~~	no	no	no

~~NAME~~	~~AGE~~			~~PRINCIPAL OCCUPATION~~
~~Anthony F. Rauseo~~ ~~Senior Vice President, Chief Operating Officer~~	58			Mr. Rauseo was appointed Chief Operating Officer in July 2010. In this position, Mr. Rauseo has responsibility for closely integrating the manufacturing operations with the supply chain, product development and quality initiatives. Mr. Rauseo is an organizational leader with a strong record of achievement in product development, business development, manufacturing, operations, and customer support. Mr. Rauseo joined the Company in 2005 as Vice President of Engineering and Chief Engineer. Prior to joining Fuel Cell Energy, Mr. Rauseo held a variety of key management positions in manufacturing, quality and engineering, including five years with CiDRA Corporation. Prior to joining CiDRA, Mr. Rauseo was with Pratt and Whitney for 17 years where he held various leadership positions in product development, production and customer support of aircraft turbines. Mr. Rauseo received a Bachelor of Science in Mechanical Engineering from Rutgers University in 1983 and received a Masters of Science in Mechanical Engineering from Rensselaer Polytechnic Institute in 1987.

Jennifer D. Arasimowicz, Esq. ~~Senior~~Executive Vice President, General Counsel, Chief Administrative Officer and Corporate Secretary	45	48		Ms. Arasimowicz was appointed ~~Senior~~Chief Administrative Officer in September 2019 and has served as Executive Vice President since June 2019, General Counsel since April 2017 and Corporate Secretary insince April 2017. In ~~this~~her current position (and in her prior positions), Ms. Arasimowicz, a licensed attorney in Connecticut, New York and Massachusetts, is (and was) the chief legal, ~~officer~~compliance and ~~chief compliance~~administrative officer of the Company, having responsibility for oversight of all of the Company’s legal and government affairs, and providing leadership in all aspects of the Company’s business, including compliance, corporate governance and board activities. Ms. Arasimowicz joined the Company in 2012 as Associate Counsel and was promoted to Vice President in ~~2014.~~2014, to General Counsel and Corporate Secretary in 2017 and to Senior Vice President also in 2017. Ms. Arasimowicz also previously served as Interim President from June 2019 to August 2019 and as Chief Commercial Officer from June 2019 to September 2019. Prior to joining the Company, Ms. Arasimowicz served as General Counsel of Total Energy Corporation, a New York based diversified energy products and service company providing a broad range of specialized services to utilities and industrial companies. Previously, Ms. Arasimowicz was a partner at Shipman & Goodwin in Hartford, Connecticut, chairing the Utility Law Practice Group and began her legal career as an associate at Murtha ~~Cullina.~~Cullina, LLP. Ms. Arasimowicz earned her Juris Doctor at Boston University School of Law and holds a ~~bachelor’s~~Bachelor’s degree in English from Boston University.

Michael Lisowski Executive Vice President, Chief Operating Officer	51		Mr. Lisowski was appointed Executive Vice President and Chief Operating Officer in June 2019. Mr. Lisowski has served as the Company’s Vice President of Global Operations since 2018, and, from 2001 to 2018, held various other positions within the Company, including Vice President of Supply Chain from 2010 to 2018. Mr. Lisowski is a senior global operations leader with 27 years of progressive operations experience in technology-driven businesses. In his position as the Company’s Chief Operating Officer (and in his prior position as the Company’s Vice President of Global Operations), Mr. Lisowski is (and was) responsible for the Supply Chain, Manufacturing, Quality, Project Management, Environmental Health and Safety, and Plant Engineering functions of the Company. Additionally, Mr. Lisowski and his team are responsible for the development and qualification of strategic suppliers for critical direct materials, as well as procurement of capital equipment in support of operations. Mr. Lisowski earned his Bachelor’s Degree in Communications and Business Administration at Western New England University and a Master’s Degree in Management, Global Supply Chain Integrations from Rensselaer Polytechnic Institute.

		Square		Lease Expiration
Location	Business Use	Footage		Dates
Danbury, Connecticut	Corporate Headquarters, Research and Development, Sales, Marketing, Service, Purchasing and Administration		72,000	Company owned
Torrington, Connecticut	Manufacturing and Administrative	167,000⁽¹⁾		December 2030⁽²⁾⁽¹⁾
Taufkirchen, Germany	Manufacturing and Administrative		20,000	June ~~2018~~2023
Calgary, Alberta, Canada	Research and Development		32,220	January ~~2020~~2023

	Common Stock Price
	High		Low
First quarter 2018 (through January 2, 2018)	$	2.31	$	1.50
Year Ended October 31, 2017
First Quarter	$	3.40	$	1.40
Second Quarter	$	1.98	$	1.00
Third Quarter	$	1.79	$	0.80
Fourth Quarter	$	2.49	$	1.33
Year Ended October 31, 2016
First Quarter	$	12.24	$	4.51
Second Quarter	$	8.08	$	4.56
Third Quarter	$	8.88	$	5.02
Fourth Quarter	$	5.67	$	3.35

	Per Share
Average sale price	$	8.38
Average commission	$	0.05
Average proceeds to us	$	8.33

~~Date of Board/Audit and Finance Committee Approval of Sales Plan~~	~~Maximum Number of Shares Authorized for Sale Pursuant to Sales Plan~~
~~6/17/2005~~		~~158,333~~
~~1/22/2007~~		~~500,000~~
~~1/11/2010~~		~~500,000~~
~~9/18/2013~~		~~583,333~~
~~3/26/2014~~		~~583,333~~
~~6/18/2014~~		~~833,333~~
~~9/23/2014~~		~~416,666~~
~~12/17/2014~~		~~416,666~~
~~4/1/2015~~		~~1,000,000~~
~~9/4/2015~~		~~1,000,000~~
~~12/16/2015~~		~~4,500,000~~
~~6/6/2016~~		~~8,700,000~~

Period	Total Number of Shares Purchased ⁽¹⁾		Average Price Paid per Share		Total Number of Shares Purchased as Part of Publicly Announced Programs		Maximum Number of Shares that May Yet be Purchased Under the Plans or Programs		Total Number of Shares Purchased ⁽¹⁾		Average Price Paid per Share		Total Number of Shares Purchased as Part of Publicly Announced Programs		Maximum Number of Shares that May Yet be Purchased Under the Plans or Programs
August 1 – August 31		1,296	$	1.53		—		—		739	$	2.23		—		—
September 1 – September 30	370		$	1.60		—		—		—		—		—		—
October 1 – October 31		29,392	$	2.19		—		—		—		—		—		—
Total		31,058	$	1.77		—		—		739	$	2.23		—		—

	Years Ended October 31,						Change						Years Ended October 31,						Change
(dollars in thousands)	2017			2016			$			%			2020			2019			$			%
Total revenues	$	95,666		$	108,252		$	(12,586	)		(12	)%	$	70,871		$	60,752		$	10,119			17	%
Total costs of revenues		92,932			108,609			(15,677	)		(14	)%		78,596			82,021			(3,425	)		(4	)%
Gross profit (loss)	$	2,734		$	(357	)	$	3,091			866	%
Gross loss													$	(7,725	)	$	(21,269	)	$	13,544			64	%
Gross margin		2.9	%		(0.3	)%								(10.9	)%		(35.0	)%

Project Name	Location	Power Off-Taker	Rated Capacity (MW)	Actual Commercial Operation Date (FuelCell Energy Fiscal Quarter)	PPA Term (Years)
Central CT State University (“CCSU”)	New Britain, CT	CCSU (CT University)	1.4	Q2 ‘12	10
UCI Medical Center (“UCI”)	Orange, CA	UCI (CA University Hospital)	1.4	Q1 '16	19
Riverside Regional Water Quality Control Plant	Riverside, CA	City of Riverside (CA Municipality)	1.4	Q4 '16	20
Pfizer, Inc.	Groton, CT	Pfizer, Inc.	5.6	Q4 '16	20
Santa Rita Jail	Dublin, CA	Alameda County, California	1.4	Q1 '17	20
Bridgeport Fuel Cell Project	Bridgeport, CT	Connecticut Light and Power Company (CT Utility)	14.9	Q1 '13	15
Tulare BioMAT	Tulare, CA	Southern California Edison (CA Utility)	2.8	Q1'20	20
Triangle St	Danbury, CT	Tariff - Eversource (CT Utility)	3.7	Q2'20	Tariff
		Total MW Operating:	32.6

											Payments Due by Period
(dollars in thousands)	Payments Due by Period												Less than		1 - 3		3 - 5		More Than
			Less than		1 - 3		3 - 5		More Than
Contractual Obligations	Total		1 year		years		years		5 years		Total		1 year		years		years		5 years
Purchase commitments ⁽¹⁾	$	29,107	$	25,909	$	3,043	$	155	$	—	$	34,660	$	29,136	$	5,524	$	—	$	—
Series 1 Preferred obligation ⁽²⁾		6,369		972		1,943		3,454		—		23,447		23,447		—		—		—
Term loans (principal and interest)		46,115		26,391		2,621		3,506		13,597
Capital and operating lease commitments ⁽³⁾		7,261		1,534		1,577		773		3,377
Sale-leaseback financing obligation ⁽⁴⁾		25,032		3,802		7,277		5,564		8,389
Option fee ⁽⁵⁾		950		400		400		150		—
Series B Preferred dividends payable ⁽⁶⁾		—		—		—		—		—
Term and Construction loans (principal and interest) ⁽⁸⁾												169,609		30,341		56,029		46,886		36,353
Finance and operating lease commitments ⁽³⁾												19,983		1,432		2,460		1,458		14,632
Sale-leaseback financing obligations ⁽⁴⁾												20,362		3,902		5,544		5,415		5,501
Natural gas supply contract ⁽⁵⁾												13,781		1,969		3,938		3,938		3,938
Option fee ⁽⁶⁾												150		150		—		—		—
Series B Preferred dividends payable ⁽⁷⁾												—		—		—		—		—
Total	$	114,834	$	59,008	$	16,861	$	13,602	$	25,363	$	281,992	$	90,377	$	73,495	$	57,696	$	60,423

Index to the Consolidated Financial Statements		Page

Report of Independent Registered Public Accounting Firm		8293

Consolidated Balance Sheets at October 31, ~~2017~~2020 and ~~2016~~2019		8394

Consolidated Statements of Operations and Comprehensive Loss for the Years Ended October 31, ~~2017, 2016~~2020, 2019 and ~~2015~~2018		8495

Consolidated Statements of Changes in Equity ~~(Deficit)~~ for the Years Ended October 31, ~~2017, 2016~~2020, 2019 and ~~2015~~2018		8596

Consolidated Statements of Cash Flows for the Years Ended October 31, ~~2017, 2016~~2020, 2019 and ~~2015~~2018		8697

Notes to Consolidated Financial Statements		8798

	For the Year Ended October 31, 2019
						Balances without
						adoption of
	As reported			Adjustments		Topic 606
Total revenues	$	60,752		$	4,085	$	64,837
Total cost of revenues		82,021			1,478		83,499
Gross loss		(21,269	)		2,607		(18,662	)
Administrative and selling expenses		31,874			-		31,874
Research and development expenses		13,786			-		13,786
Loss from operations		(66,929	)		2,607		(64,322	)
Interest expense		(10,623	)		-		(10,623	)
Other income, net		93			-		93
Loss before provision for income taxes		(77,459	)		2,607		(74,852	)
Provision for income taxes		(109	)		-		(109	)
Net loss	$	(77,568	)	$	2,607	$	(74,961	)

	2017		2016
Advanced Technologies (including U.S. Government ⁽¹⁾):
Amount billed	$	1,934	$	2,463
Unbilled recoverable costs		7,352		3,068
		9,286		5,531	2020		2019
Commercial customers:
Amount billed		41,073		5,411	$	7,329	$	2,227
Unbilled recoverable costs		18,162		13,651
Unbilled receivables ⁽¹⁾						7,063		6,139
		59,235		19,062		14,392		8,366
	$	68,521	$	24,593
Advanced Technologies (including U.S. Government⁽²⁾):
Amount billed						2,234		1,065
Unbilled receivables						978		1,545
						3,212		2,610
Accounts receivable, net and unbilled receivables					$	17,604	$	10,976

	2020			2019			Estimated Useful Life
Project Assets - Operating	$	99,351		$	75,075		5-20 years
Project Assets - Construction in progress		91,276			84,933		7-20 years
		190,627			160,008
Accumulated depreciation		(28,818	)		(15,893	)
Project Assets, net	$	161,809		$	144,115

As of October 31, 2020	Gross Amount		Accumulated Amortization			Net Amount
In-Process Research and Development	$	9,592		—		$	9,592
Bridgeport Power Purchase Agreement (PPA)		12,320		(1,945	)		10,375
Total		21,912		(1,945	)		19,967

As of October 31, 2019	Gross Amount		Accumulated Amortization			Net Amount
In-Process Research and Development	$	9,592		—		$	9,592
Bridgeport Power Purchase Agreement (PPA)		12,320		(648	)		11,672
Total		21,912		(648	)		21,264

	2017		2016
Advance payments to vendors ⁽¹⁾	$	1,035	$	1,247
Deferred finance costs ⁽²⁾		129		152
Notes receivable⁽³⁾		—		1,007
Prepaid expenses and other ⁽⁴⁾		5,407		7,775
	$	6,571	$	10,181

	2017		2016
Long-term accounts receivable ⁽¹⁾	$	—	$	8,353
Long-term unbilled recoverable costs ⁽²⁾		12,806		5,714
Deferred finance costs ⁽³⁾		97		225
Long-term stack residual value ⁽⁴⁾		987		—
Other ⁽⁵⁾		2,627		2,123
Other assets, net	$	16,517	$	16,415

	2020		2019
Long-term stack residual value ⁽¹⁾	$	890	$	987
Long-term unbilled receivables ⁽²⁾		8,856		3,588
Other ⁽³⁾		5,593		4,914
Other assets	$	15,339	$	9,489

	2017		2016
Accrued payroll and employee benefits	$	5,315	$	4,183
Accrued contract loss		37		—
Accrued product warranty costs ⁽¹⁾		348		516
Accrued material purchases ⁽²⁾		2,396		6,908
Accrued service agreement costs ⁽³⁾		3,319		6,030
Accrued legal, taxes, professional and other ⁽⁴⁾		6,966		3,263
	$	18,381	$	20,900

	Operating Leases			Finance Leases
2020	$	1,397		$	35
2021		1,397			5
2022		1,059			-
2023		752			—
2024		705			—
Thereafter		14,632			—
Total undiscounted lease payments		19,942			40
Less imputed interest		(9,186	)		(2	)
Total discounted lease payments	$	10,756		$	38

Year 1	$	28,583	$	22,708
Year 2		4,518		22,594
Year 3		4,863		20,832
Year 4		4,057		21,160
Year 5		4,089		19,753
Thereafter(1)		43,025		38,227
	$	89,135	$	145,274

	Series A Warrants		Series B Warrants			Series C Warrants			Series D Warrants			NRG Warrants
Balance as of October 31, 2016		7,680,000		3,826,000			—			—			166,000
Warrants issued on May 3, 2017							12,000,000			12,000,000			—
Warrants exercised		—		(3,826,000	)		(419,100	)		(9,415,826	)		—
Warrants expired		—		—			—			—			(166,000	)
Balance as of October 31, 2017		7,680,000		-			11,580,900			2,584,174			-

	Series A Warrants		Series C Warrants		Orion Warrants
Balance as of October 31, 2018		640,000		964,114		—
Warrants issued		—		—		6,000,000
Warrants exchanged		640,000		—		—
Balance as of October 31, 2019		—		964,114		6,000,000
Warrants issued		—		—		14,000,000
Warrants exercised		—		—		(17,300,000	)
Balance as of October 31, 2020		—		964,114		2,700,000

	2018
Expected life (in years)		7.0
Risk free interest rate		2.8	%
Volatility		72.7	%
Dividend yield		0	%

				Weighted- Average Option
Options	Shares			Price
Outstanding as of October 31, 2016		246,923		$	44.88
Granted		103,819		$	1.50
Canceled		(40,792	)	$	94.63
Outstanding as of October 31, 2017		309,950		$	23.81