Document and Entity Information
Document and Entity Information - shares | 9 Months Ended | |
Sep. 30, 2018 | Nov. 09, 2018 | |
Document and Entity Information: | ||
Entity Registrant Name | PLUG POWER INC | |
Document Type | 10-Q | |
Document Period End Date | Sep. 30, 2018 | |
Amendment Flag | false | |
Entity Central Index Key | 1,093,691 | |
Current Fiscal Year End Date | --12-31 | |
Entity Common Stock, Shares Outstanding | 233,367,836 | |
Entity Filer Category | Accelerated Filer | |
Entity Current Reporting Status | Yes | |
Document Fiscal Year Focus | 2,018 | |
Document Fiscal Period Focus | Q3 |
Consolidated Balance Sheets
Consolidated Balance Sheets - USD ($) $ in Thousands | Sep. 30, 2018 | Dec. 31, 2017 |
Current assets: | ||
Cash and cash equivalents | $ 13,825 | $ 24,828 |
Restricted cash | 15,803 | 13,898 |
Accounts receivable | 24,721 | 15,331 |
Inventory | 53,428 | 48,776 |
Prepaid expenses and other current assets | 16,050 | 16,774 |
Total current assets | 123,827 | 119,607 |
Restricted cash | 32,424 | 29,329 |
Property, plant, and equipment, net of accumulated depreciation of $33,401 and $31,588, respectively | 13,155 | 10,414 |
Leased property, net of accumulated depreciation of $8,826 and $11,812, respectively | 130,015 | 87,065 |
Goodwill | 9,157 | 9,445 |
Intangible assets, net of accumulated amortization of $2,203 and $1,735, respectively | 4,058 | 3,785 |
Other assets | 6,642 | 11,165 |
Total assets | 319,278 | 270,810 |
Current liabilities: | ||
Accounts payable | 37,105 | 42,362 |
Accrued expenses | 8,553 | 10,595 |
Deferred revenue | 10,996 | 8,630 |
Finance obligations | 48,705 | 34,506 |
Current portion of long-term debt | 11,489 | 18,762 |
Other current liabilities | 247 | 866 |
Total current liabilities | 117,095 | 115,721 |
Deferred revenue | 28,525 | 25,809 |
Common stock warrant liability | 1,083 | 4,391 |
Finance obligations | 86,562 | 37,069 |
Convertible senior notes, net | 61,509 | |
Long-term debt | 9,372 | 13,371 |
Other liabilities | 18 | 94 |
Total liabilities | 304,164 | 196,455 |
Redeemable preferred stock: | ||
Series C redeemable convertible preferred stock, $0.01 par value per share (aggregate involuntary liquidation preference $16,664); 10,431 shares authorized; Issued and outstanding: 2,620 at September 30, 2018 and December 31, 2017 | 709 | 709 |
Stockholders' equity: | ||
Common stock, $0.01 par value per share; 750,000,000 shares authorized; Issued (including shares in treasury): 232,511,393 at September 30, 2018 and 229,073,517 at December 31, 2017 | 2,326 | 2,291 |
Additional paid-in capital | 1,284,384 | 1,250,899 |
Accumulated other comprehensive income | 1,762 | 2,194 |
Accumulated deficit | (1,243,430) | (1,178,636) |
Less common stock in treasury: 15,002,663 at September 30, 2018 and 587,151 at December 31, 2017 | (30,637) | (3,102) |
Total stockholders' equity | 14,405 | 73,646 |
Total liabilities, redeemable preferred stock, and stockholders' equity | $ 319,278 | $ 270,810 |
Consolidated Balance Sheets (Pa
Consolidated Balance Sheets (Parentheticals) - USD ($) $ in Thousands | Sep. 30, 2018 | Dec. 31, 2017 |
Property, plant, and equipment, accumulated depreciation | $ 33,401 | $ 31,588 |
Finance Lease Assets, Accumulated Depreciation | 8,826 | 11,812 |
Intangible assets, net of accumulated amortization | $ 2,203 | $ 1,735 |
Common Stock, par value (in dollars per share) | $ 0.01 | $ 0.01 |
Common Stock, shares authorized | 750,000,000 | 750,000,000 |
Common Stock, shares issued | 232,511,393 | 229,073,517 |
Common stock in treasury, shares | 15,002,663 | 587,151 |
Series C Redeemable Convertible Preferred Stock | ||
Redeemable convertible Preferred Stock, par value (in dollars per share) | $ 0.01 | $ 0.01 |
Redeemable convertible Preferred Stock, shares authorized | 10,431 | 10,431 |
Redeemable convertible Preferred Stock, shares issued | 2,620 | 2,620 |
Redeemable convertible Preferred Stock, shares outstanding | 2,620 | 2,620 |
Redeemable convertible Preferred Stock, aggregate involuntary liquidation preference (in dollars) | $ 16,664 | $ 16,664 |
Consolidated Statements of Oper
Consolidated Statements of Operations - USD ($) $ in Thousands | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2018 | Sep. 30, 2017 | Sep. 30, 2018 | Sep. 30, 2017 | |
Revenue: | ||||
Net revenue | $ 53,165 | $ 34,593 | $ 114,812 | $ 69,057 |
Cost of revenue: | ||||
Total cost of revenue | 48,756 | 54,003 | 116,697 | 96,489 |
Gross profit (loss) | 4,409 | (19,410) | (1,885) | (27,432) |
Operating expenses: | ||||
Research and development | 8,402 | 7,436 | 25,477 | 20,059 |
Selling, general and administrative | 8,652 | 9,535 | 29,202 | 36,584 |
Total operating expenses | 17,054 | 16,971 | 54,679 | 56,643 |
Operating loss | (12,645) | (36,381) | (56,564) | (84,075) |
Interest and other expense, net | (6,352) | (2,724) | (15,593) | (7,112) |
Change in fair value of common stock warrant liability | 1,716 | (1,878) | 3,308 | (16,454) |
Loss before income taxes | (17,281) | (40,983) | (68,849) | (107,641) |
Income tax benefit | 1,716 | 7,581 | ||
Net loss attributable to the Company | (15,565) | (40,983) | (61,268) | (107,641) |
Preferred stock dividends declared and accretion of discount | (13) | (25) | (39) | (3,086) |
Net loss attributable to common shareholders | $ (15,578) | $ (41,008) | $ (61,307) | $ (110,727) |
Net loss per share: | ||||
Basic and diluted (in dollars per share) | $ (0.07) | $ (0.18) | $ (0.28) | $ (0.52) |
Weighted average number of common shares outstanding | 218,953,106 | 225,762,535 | 218,930,891 | 212,419,634 |
Sales of fuel cell systems and related infrastructure | ||||
Revenue: | ||||
Gross revenue | $ 36,668 | $ 38,060 | $ 66,101 | $ 47,907 |
Cost of revenue: | ||||
Total cost of revenue | 27,428 | 35,671 | 52,927 | 44,398 |
Services performed on fuel cell systems and related infrastructure | ||||
Revenue: | ||||
Gross revenue | 5,156 | 2,217 | 16,330 | 10,496 |
Cost of revenue: | ||||
Total cost of revenue | 5,302 | 4,531 | 17,139 | 14,684 |
Power purchase agreements | ||||
Revenue: | ||||
Gross revenue | 5,555 | (1,663) | 16,365 | 7,593 |
Cost of revenue: | ||||
Total cost of revenue | 8,767 | 7,853 | 27,055 | 21,844 |
Fuel delivered to customers | ||||
Revenue: | ||||
Gross revenue | 5,786 | (4,149) | 16,016 | 2,782 |
Cost of revenue: | ||||
Total cost of revenue | $ 7,259 | 5,810 | $ 19,576 | 15,262 |
Other | ||||
Revenue: | ||||
Gross revenue | 128 | 279 | ||
Cost of revenue: | ||||
Total cost of revenue | $ 138 | $ 301 |
Consolidated Statements of Comp
Consolidated Statements of Comprehensive Loss - USD ($) $ in Thousands | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2018 | Sep. 30, 2017 | Sep. 30, 2018 | Sep. 30, 2017 | |
Consolidated Statements of Comprehensive Loss | ||||
Net loss attributable to the Company | $ (15,565) | $ (40,983) | $ (61,268) | $ (107,641) |
Other comprehensive (loss) income - foreign currency translation adjustment | (82) | 555 | (432) | 1,711 |
Comprehensive loss | $ (15,647) | $ (40,428) | $ (61,700) | $ (105,930) |
Consolidated Statements of Stoc
Consolidated Statements of Stockholders' Equity - 9 months ended Sep. 30, 2018 - USD ($) $ in Thousands | Common Stock | Additional Paid-in-Capital | Accumulated Other Comprehensive Income | Treasury Stock | Accumulated Deficit | Total |
Balance at Dec. 31, 2017 | $ 2,291 | $ 1,250,899 | $ 2,194 | $ (3,102) | $ (1,178,636) | $ 73,646 |
Balance (in shares) at Dec. 31, 2017 | 229,073,517 | 587,151 | 229,073,517 | |||
Increase (Decrease) in Stockholders' Equity | ||||||
Net loss attributable to the Company | (61,268) | $ (61,268) | ||||
Other comprehensive loss | (432) | (432) | ||||
Stock-based compensation | $ 5 | 6,384 | 6,389 | |||
Stock-based compensation (in shares) | 450,270 | |||||
Stock dividend | 39 | (39) | ||||
Stock dividend (in shares) | 20,245 | |||||
Public offerings, common stock, net | $ 26 | 4,886 | 4,912 | |||
Public offerings, common stock, net (in shares) | 2,560,849 | |||||
Stock option exercises | $ 4 | 123 | $ (35) | 92 | ||
Stock option exercises (in shares) | 406,412 | 17,606 | ||||
Equity component of convertible senior notes, net of issuance costs and income tax benefit | 30,121 | 30,121 | ||||
Purchase of capped call | (16,000) | (16,000) | ||||
Purchase of common stock forward | $ (27,500) | (27,500) | ||||
Purchase of common stock forward (in shares) | 14,397,906 | |||||
Exercise of warrants (in shares) | 100 | |||||
Provision for common stock warrants | 7,932 | 7,932 | ||||
Balance at Sep. 30, 2018 | $ 2,326 | $ 1,284,384 | $ 1,762 | $ (30,637) | (1,243,430) | $ 14,405 |
Balance (in shares) at Sep. 30, 2018 | 232,511,393 | 15,002,663 | 232,511,393 | |||
Increase (Decrease) in Stockholders' Equity | ||||||
Cumulative effect from adoption of accounting standard | $ (3,487) | $ (3,487) |
Consolidated Statements of Cash
Consolidated Statements of Cash Flows - USD ($) $ in Thousands | 9 Months Ended | |
Sep. 30, 2018 | Sep. 30, 2017 | |
Cash Flows From Operating Activities: | ||
Net loss attributable to the Company | $ (61,268) | $ (107,641) |
Adjustments to reconcile net loss to net cash used in operating activities: | ||
Depreciation of property, plant and equipment, and leased property | 8,592 | 6,596 |
Amortization of intangible assets | 511 | 443 |
Stock-based compensation | 6,389 | 7,288 |
Provision for bad debts | 746 | |
Amortization of debt issuance costs and discount on convertible senior notes | 4,436 | 496 |
Provision for common stock warrants | 7,932 | 34,570 |
Change in fair value of common stock warrant liability | (3,308) | 16,454 |
Income tax benefit | (7,581) | |
Changes in operating assets and liabilities that provide (use) cash: | ||
Accounts receivable | (9,390) | (40,946) |
Inventory | 12,554 | (14,747) |
Prepaid expenses and other assets | 1,272 | (590) |
Accounts payable, accrued expenses, and other liabilities | (7,609) | 6,524 |
Accrual for loss contracts related to service | (752) | |
Deferred revenue | 5,082 | 11,011 |
Net cash used in operating activities | (41,642) | (81,294) |
Cash Flows From Investing Activities: | ||
Purchases of property, plant and equipment | (3,268) | (1,820) |
Purchase of intangible asset | (879) | |
Purchases for construction of leased property | (13,381) | (26,471) |
Net cash used in investing activities | (17,528) | (28,291) |
Cash Flows From Financing Activities: | ||
Proceeds from exercise of warrants, net of transaction costs | 17,636 | |
Proceeds from exercise of stock options | 92 | 40 |
Payments for redemption of preferred stock | (3,700) | |
Proceeds from public offerings, net of transaction costs | 4,912 | 20,664 |
Proceeds from issuance of convertible senior notes, net | 95,856 | |
Purchase of capped call and common stock forward | (43,500) | |
Proceeds from borrowing of long-term debt, net of transaction costs | 20,147 | |
Principal payments on long-term debt | (11,944) | (4,261) |
Proceeds from sale/leaseback transactions accounted for as finance obligations | 32,938 | 26,280 |
Repayments of finance obligations | (25,138) | (11,616) |
Net cash provided by financing activities | 53,216 | 65,190 |
Effect of exchange rate changes on cash | (49) | 286 |
Decrease in cash, cash equivalents and restricted cash | (6,003) | (44,109) |
Cash, cash equivalents, and restricted cash beginning of period | 68,055 | 100,636 |
Cash, cash equivalents, and restricted cash end of period | 62,052 | 56,527 |
Other Supplemental Cash Flow Information: | ||
Cash paid for interest | 10,338 | 6,205 |
Summary of non-cash investing and financing activity: | ||
Recognition of right of use asset | 58,577 | |
Net transfers between inventory, leased assets and property, plant and equipment | 17,206 | |
Increase in property, plant and equipment financed as long-term debt or financing leases | $ 408 | |
Conversion of preferred stock to common stock | $ 8,222 |
Nature of Operations
Nature of Operations | 9 Months Ended |
Sep. 30, 2018 | |
Nature of Operations. | |
Nature of Operations | 1. Nature of Operations Description of Business Plug Power Inc., or the Company, is a leading provider of alternative energy technology focused on the design, development, commercialization and manufacture of hydrogen and fuel cell systems used primarily for the electric mobility and stationary power markets. As part of the global drive to electrification, the Company has recently leveraged product proven in the material handling vehicle space to enter new, adjacent, electric vehicle markets, specifically electric delivery vans. We are focused on proton exchange membrane, or PEM, fuel cell and fuel processing technologies, fuel cell/battery hybrid technologies, and associated hydrogen storage and dispensing infrastructure from which multiple products are available. A fuel cell is an electrochemical device that combines hydrogen and oxygen to produce electricity and heat without combustion. Hydrogen is derived from hydrocarbon fuels such as liquid petroleum gas (LPG), propane, methanol, ethanol, gasoline or biofuels. The Company develops complete hydrogen generation, delivery, storage and refueling solutions for customer locations. Currently the Company obtains the majority of its hydrogen by purchasing it from fuel suppliers for resale to customers. In our core business, we provide and continue to develop commercially-viable hydrogen and fuel cell product solutions to replace lead‑acid batteries in electric material handling vehicles and industrial trucks for some of the world’s largest retail-distribution and manufacturing businesses. We are focusing our efforts on industrial mobility applications (electric forklifts and electric industrial vehicles) at multi‑shift high volume manufacturing and high throughput distribution sites where our products and services provide a unique combination of productivity, flexibility and environmental benefits. Additionally, we manufacture and sell fuel cell products to replace batteries and diesel generators in stationary backup power applications. These products prove valuable with telecommunications, transportation and utility customers as robust, reliable and sustainable power solutions. Our current products and services include: GenDrive: GenDrive is our hydrogen fueled PEM fuel cell system providing power to material handling electric vehicles, including class 1, 2, 3 and 6 electric forklifts and ground support equipment; GenFuel: GenFuel is our hydrogen fueling delivery, generation, storage and dispensing systems; GenCare: GenCare is our ongoing ‘internet of things’-based maintenance and on-site service program for GenDrive fuel cells, GenSure products, GenFuel products and ProGen engines; GenSure: GenSure is our stationary fuel cell solution providing scalable, modular PEM fuel cell power to support the backup and grid-support power requirements of the telecommunications, transportation, and utility sectors; GenKey: GenKey is our turn-key solution combining either GenDrive or GenSure power with GenFuel fuel and GenCare aftermarket service, offering complete simplicity to customers transitioning to fuel cell power; and ProGen: ProGen is our fuel cell stack and engine technology currently used globally in mobility and stationary fuel cell systems, and as engines in electric delivery vans; We provide our products worldwide through our direct product sales force, and by leveraging relationships with original equipment manufacturers, or OEMs, and their dealer networks. We manufacture our commercially-viable products in Latham, NY. We were organized as a corporation in the State of Delaware on June 27, 1997. Unless the context indicates otherwise, the terms “Company,” “Plug Power,” “we,” “our” or “us” as used herein refers to Plug Power Inc. and its subsidiaries. Liquidity Our cash requirements relate primarily to working capital needed to operate and grow our business, including funding operating expenses, growth in inventory to support both shipments of new units and servicing the installed base, growth in equipment leased to customers under long-term arrangements, funding the growth in our GenKey “turn-key” solution, which includes the installation of our customers’ hydrogen infrastructure as well as delivery of the hydrogen fuel, continued development and expansion of our products, payment of lease/financing obligations under sale/leaseback financings, and the repayment or refinancing of our long-term debt. Our ability to achieve profitability and meet future liquidity needs and capital requirements will depend upon numerous factors, including the timing and quantity of product orders and shipments; attaining and expanding positive gross margins across all product lines; the timing and amount of our operating expenses; the timing and costs of working capital needs; the timing and costs of building a sales base; the ability of our customers to obtain financing to support commercial transactions; our ability to obtain financing arrangements to support the sale or leasing of our products and services to customers and to repay or refinance our long-term debt, and the terms of such agreements that may require us to pledge or restrict substantial amounts of our cash to support these financing arrangements; the timing and costs of developing marketing and distribution channels; the timing and costs of product service requirements; the timing and costs of hiring and training product staff; the extent to which our products gain market acceptance; the timing and costs of product development and introductions; the extent of our ongoing and new research and development programs; and changes in our strategy or our planned activities. If we are unable to fund our operations with positive cash flows and cannot obtain external financing, we may not be able to sustain future operations. As a result, we may be required to delay, reduce and/or cease our operations and/or seek bankruptcy protection. We have experienced and continue to experience negative cash flows from operations and net losses. The Company incurred net losses attributable to common shareholders of $61.3 million for the nine months ended September 30, 2018 and $130.2 million, $57.6 million, and $55.8 million for the years ended December 31, 2017, 2016, and 2015, respectively, and had an accumulated deficit of $1.2 billion at September 30, 2018. During the nine months ended September 30, 2018, cash used in operating activities was $41.6 million, consisting of a net loss attributable to the Company of $61.3 million, offset by net inflows from fluctuations in working capital and other assets and liabilities of $1.9 million, and by the impact of non-cash charges/gains of $17.7 million. The changes in working capital were related to decreases in inventory, prepaid expenses and other current assets and an increase in deferred revenue offset by an increase in accounts receivable and a decrease in accounts payable, accrued expenses and other liabilities. As of September 30, 2018, we had cash and cash equivalents of $13.8 million and net working capital of $6.7 million. By comparison, at December 31, 2017, we had cash and cash equivalents of $24.8 million and net working capital of $3.9 million. Net cash used in investing activities for the nine months ended September 30, 2018, totaled $17.5 million and included purchases of property, plant and equipment and outflows associated with materials, labor, and overhead necessary to construct new leased property. Cash outflows related to equipment that we sell and equipment we lease directly to customers are included in net cash used in operating activities and net cash used in investing activities, respectively. Net cash provided by financing activities for the nine months ended September 30, 2018 totaled $53.2 million and primarily resulted from net proceeds of $52.4 million from the issuance of Convertible Senior Notes, net of purchases of a capped call and a common stock forward, and a $7.8 million increase in finance obligations, offset by $11.9 million of principal payments on long-term debt. In March 2018, we issued $100.0 million in aggregate principal amount of 5.5% Convertible Senior Notes due in 2023 (Convertible Senior Notes). The total net proceeds from this offering, after considering costs of the issuance, were approximately $96.1 million. Approximately $43.5 million of the proceeds were used for the cost of a capped call and a common stock forward, both of which are hedges related to the Convertible Senior Notes. The remaining net proceeds from the Convertible Senior Notes will be used for general corporate purposes, including working capital. The Company enters into sale/leaseback agreements with various financial institutions to facilitate the Company’s commercial transactions with key customers. The Company sells certain fuel cell systems and hydrogen infrastructure to the financial institutions, and leases the equipment back to support certain customer locations and to fulfill its varied Power Purchase Agreements (PPAs). In connection with certain operating leases, the financial institutions required the Company to maintain cash balances in restricted accounts securing the Company’s lease obligations. Cash received from customers under the PPAs is used to make lease payments. As the Company performs under these agreements, the required restricted cash balances are released, according to a set schedule. The total remaining lease payments to financial institutions under these agreements was $53.5 million, which have been partially secured with restricted cash and pledged service escrows. Commencing in the third quarter of 2018, the Company has an amended and restated master lease agreement with Wells Fargo (Wells Fargo MLA) to finance the Company’s commercial transactions with Wal-Mart Stores, Inc. (Walmart). Pursuant to the Wells Fargo MLA, the Company sells fuel cell systems and hydrogen infrastructure to Wells Fargo and then leases them back and operates them at Walmart sites under lease agreements with Walmart. The total remaining lease payments to Wells Fargo was $51.9 million at September 30, 2018. Transactions completed in the three months ended September 30, 2018 were accounted for as operating leases and therefore recognized as revenue. In connection with the Wells Fargo MLA, the Company has a customer guarantee for a majority of the transaction. The Wells Fargo MLA requires a letter of credit for the unguaranteed portion. In November 2018, the Company completed a private placement of an aggregate of 35,000 shares of the Company’s Series E Convertible Preferred Stock, par value $0.01 per share (Series E Preferred Stock) resulting in net proceeds of approximately $31.0 million (see Note 16). We have historically funded our operations primarily through public and private offerings of common and preferred stock, as well as short-term borrowings, long-term debt and project financing, and recently with Convertible Senior Notes. The Company believes that its current working capital and cash anticipated to be generated from future operations, as well as borrowings from lending and project financing sources and proceeds from equity offerings, will provide sufficient liquidity to fund operations for at least one year after the date that the financial statements are issued. There is no guarantee that future funding will be available if and when required or at terms acceptable to the Company. This projection is based on our current expectations regarding new project financing and product sales and service, cost structure, cash burn rate and other operating assumptions. Additionally, the Company has other capital sources available, including the At Market Issuance Sales Agreement (see Note 9). |
Summary of Significant Accounti
Summary of Significant Accounting Policies | 9 Months Ended |
Sep. 30, 2018 | |
Summary of Significant Accounting Policies | |
Summary of Significant Accounting Policies | 2. Summary of Significant Accounting Policies Principles of Consolidation The accompanying unaudited interim consolidated financial statements include the financial statements of the Company and its wholly-owned subsidiaries. All significant intercompany balances and transactions have been eliminated in consolidation. Interim Financial Statements The accompanying unaudited interim consolidated financial statements have been prepared pursuant to the rules and regulations of the Securities and Exchange Commission (SEC). In the opinion of management, all adjustments, which consist solely of normal recurring adjustments, necessary to present fairly, in accordance with U.S. generally accepted accounting principles (GAAP), the financial position, results of operations and cash flows for all periods presented, have been made. The results of operations for the interim periods presented are not necessarily indicative of the results that may be expected for the full year. Certain information and footnote disclosures normally included in annual consolidated financial statements prepared in accordance with GAAP have been condensed or omitted. These unaudited interim consolidated financial statements should be read in conjunction with the Company’s audited consolidated financial statements and notes thereto included in the Company’s Annual Report on Form 10-K, filed for the fiscal year ended December 31, 2017. The information presented in the accompanying unaudited interim consolidated balance sheet as of December 31, 2017, has been derived from the Company’s December 31, 2017 audited consolidated financial statements. All other information has been derived from the unaudited interim consolidated financial statements of the Company. Leases The Company is a lessee in several noncancelable (1) operating leases, primarily related to sale/leaseback transactions with financial institutions for deployment of the Company’s products at certain customer sites, and (2) finance leases, also primarily related to sale/leaseback transactions with financial institutions for similar commercial purposes. The Company accounts for leases in accordance with ASC Topic 842, Leases (ASC Topic 842), (see Recently Adopted Accounting Standards, as the Company has early adopted ASC Topic 842 in 2018). The Company determines if an arrangement is or contains a lease at contract inception. The Company recognizes a right of use (ROU) asset and a lease liability (i.e. finance obligation) at the lease commencement date. For operating leases, the lease liability is initially measured at the present value of the unpaid lease payments at the lease commencement date. For finance leases, the lease liability is initially measured in the same manner and date as for operating leases, and is subsequently measured at amortized cost using the effective interest method. Key estimates and judgments include how the Company determines (1) the discount rate it uses to discount the unpaid lease payments to present value, (2) lease term and (3) lease payments. · ASC Topic 842 requires a lessee to discount its unpaid lease payments using the interest rate implicit in the lease or, if that rate cannot be readily determined, its incremental borrowing rate. Generally, the Company cannot determine the interest rate implicit in the lease because it does not have access to the lessor’s estimated residual value or the amount of the lessor’s deferred initial direct costs. Therefore, the Company generally uses its incremental borrowing rate as the discount rate for the lease. The Company’s incremental borrowing rate for a lease is the rate of interest it would have to pay on a collateralized basis to borrow an amount equal to the lease payments under similar terms. · The lease term for all of the Company’s leases includes the noncancelable period of the lease, plus any additional periods covered by either a Company option to extend (or not to terminate) the lease that the Company is reasonably certain to exercise, or an option to extend (or not to terminate) the lease controlled by the lessor. · Lease payments included in the measurement of the lease liability comprise fixed payments, and the exercise price of a Company option to purchase the underlying asset if the Company is reasonably certain to exercise the option. The ROU asset is initially measured at cost, which comprises the initial amount of the lease liability adjusted for lease payments made at or before the lease commencement date, plus any initial direct costs incurred less any lease incentives received. For operating leases, the ROU asset is subsequently measured throughout the lease term at the carrying amount of the lease liability, plus initial direct costs, plus (minus) any prepaid (accrued) lease payments, less the unamortized balance of lease incentives received. Lease expense for lease payments is recognized on a straight-line basis over the lease term. For finance leases, the ROU asset is subsequently amortized using the straight-line method from the lease commencement date to the earlier of the end of its useful life or the end of the lease term unless the lease transfers ownership of the underlying asset to the Company or the Company is reasonably certain to exercise an option to purchase the underlying asset. In those cases, the ROU asset is amortized over the useful life of the underlying asset. Amortization of the ROU asset is recognized and presented separately from interest expense on the lease liability. The Company’s leases do not contain variable lease payments. ROU assets for operating and finance leases are periodically reviewed for impairment losses. The Company uses the long-lived assets impairment guidance in ASC Subtopic 360-10, Property, Plant, , to determine whether an ROU asset is impaired, and if so, the amount of the impairment loss to recognize. No impairments losses have been recognized to date. The Company monitors for events or changes in circumstances that require a reassessment of one of its leases. When a reassessment results in the remeasurement of a lease liability, a corresponding adjustment is made to the carrying amount of the corresponding ROU asset. Operating and finance lease ROU assets are presented within leased property, net on the unaudited interim consolidated balance sheet. The current portion of operating and finance lease liabilities is included in finance obligations within current liabilities and the long-term portion is presented in finance obligations within noncurrent liabilities on the consolidated balance sheet. The Company has elected not to recognize ROU assets and lease liabilities for short-term leases that have a lease term of 12 months or less. The Company has elected to apply the short-term lease recognition and measurement exemption for other classes of leased assets. The Company recognizes the lease payments associated with its short-term leases as an expense on a straight-line basis over the lease term. Adoption of ASC Topic 842 - Transition Approach As discussed in Recent Accounting Pronouncements, effective January 1, 2018, the Company early adopted ASC Topic 842. Further, ASU 2018-11 was issued in July 2018, which allowed for a modified retrospective basis of accounting for the transition. The Company selected this transition method and therefore restatement of prior period consolidated financial statements or presentation of comparative disclosures is not necessary. While determining the impact from the transition, the Company elected the practical expedients allowed under ASC 842. The Company did not reassess (1) whether any expired or existing contracts are or contain leases, (2) the lease classification for any expired or existing leases, or (3) initial direct costs for any existing leases. No modifications to leases effective upon January 1, 2018 were noted where hindsight expedients were necessary to apply. Revenue Recognition The Company enters into contracts that may contain one or a combination of fuel cell systems and infrastructure, installation, maintenance, spare parts, fuel delivery and other support services. Contracts containing fuel cell systems and related infrastructure may be sold, or provided to customers under a PPA. The Company does not include a right of return on its products other than rights related to standard warranty provisions that permit repair or replacement of defective goods. The Company accrues for anticipated standard warranty costs at the same time that revenue is recognized for the related product, or when circumstances indicate that warranty costs will be incurred, as applicable. Only a limited number of fuel cell units are under standard warranty. Revenue is measured based on the consideration specified in a contract with a customer, subject to the allocation of consideration to individual performance obligations as discussed below. The Company recognizes revenue when it satisfies a performance obligation by transferring control over a product or service to a customer. The Company accounts for each separate performance obligation of multiple deliverable arrangements as a separate unit of accounting if the delivered item or items have value to the customer on a standalone basis. The Company considers a performance obligation to be distinct and have a standalone value if the customer can benefit from the good or service either on its own or together with other resources readily available to the customer and the Company’s promise to transfer the goods or service to the customer is separately identifiable from other promises in the contract. The Company allocates revenue to each separate performance obligation based on relative standalone selling prices. Payment terms for fuel cells, infrastructure and service are invoiced with terms ranging from 30 to 90 days. Service is prepaid upfront in a majority of the arrangements. The Company does not adjust the transaction price for a significant financing component when the performance obligation is expected to be fulfilled within a year. The Company presents the provision for common stock warrants within each revenue-related line item on the consolidated statements of operations. This presentation reflects a discount that those common stock warrants represent, and therefore revenue is net of these non-cash charges. The provision of common stock warrants is allocated to the relevant revenue-related line items based upon the expected mix of the revenue for each respective contract. Nature of goods and services The following is a description of principal activities from which the Company generates its revenue. (i) Revenue from sales of fuel cell systems and related infrastructure represents sales of our GenDrive units, GenSure stationary backup power units, as well as hydrogen fueling infrastructure. The Company considers comparable list prices, as well as historical average pricing approaches to determine standalone selling prices. Once relative standalone selling prices are determined, the Company proportionately allocates the sale consideration to each performance obligation within the customer arrangement. The allocated sales consideration related to fuel cell systems and infrastructure, spare parts, and hydrogen infrastructure is recognized at a point in time, when the performance obligation has been satisfied, which usually occurs at shipment if title and risk of loss have passed to the customer or upon commissioning. (ii) Revenue from services performed on fuel cell systems and related infrastructure represents revenue earned on our service and maintenance contracts and sales of spare parts. The sales consideration allocated to services as discussed above is generally recognized as revenue over time on a straight-line basis over the expected service period. In substantially all of its commercial transactions, the Company sells extended maintenance contracts that generally provide for a five to ten year service period from the date of product installation. Services include monitoring, technical support, maintenance and services that provide for 97-98% uptime of the fleet. These services are accounted for as a separate performance obligation, and accordingly, revenue generated from these transactions, subject to the proportional allocation of sale consideration, is deferred and recognized in income over the term of the contract, generally on a straight-line basis. Additionally, the Company may enter into annual service and extended maintenance contracts that are billed monthly. Revenue generated from these transactions is recognized in income on a straight-line basis over the term of the contract. Costs are recognized as incurred over the term of the contract. Sales of spare parts are included within service revenue on the accompanying unaudited interim consolidated statements of operations. When costs are projected to exceed revenues over the life of the contract, an accrual for loss contracts is recorded. Costs are estimated based upon historical experience and consider the estimated impact of the Company’s cost reduction initiatives. The actual results may differ from these estimates. When costs are projected to exceed revenues over the life of an extended maintenance contract, an accrual for loss contracts is recorded. Costs are estimated based upon historical experience and consider the estimated impact of the Company’s cost reduction initiatives. The actual results may differ from these estimates. Upon expiration of the extended maintenance contracts, customers either choose to extend the contract or switch to purchasing spare parts and maintaining the fuel cell systems on their own. (iii) Revenue from PPAs primarily represents payments received from customers who make monthly payments to access the Company’s GenKey solution. When fuel cell systems and related infrastructure are provided to customers through a PPA, revenues associated with these agreements are treated as rental income and recognized on a straight-line basis over the life of the agreements. In conjunction with entering into a PPA with a customer, the Company may enter into sale/leaseback transactions with third-party financial institutions, whereby the fuel cells, a majority of the related infrastructure, and, in some cases service are sold to the third-party financial institution and leased back to the Company through either an operating or finance lease. Certain of the Company’s sale/leaseback transactions with third-party financial institutions are required to be accounted for as financing leases. As a result, no upfront revenue was recognized at the closing of these transactions and a finance obligation for each lease was established. The fuel cell systems and related infrastructure that are provided to customers through these PPAs are considered leased property on the accompanying unaudited interim consolidated balance sheet. Costs to service the leased property, depreciation of the leased property, and other related costs are considered cost of PPA revenue on the accompanying unaudited interim consolidated statements of operations. Interest cost associated with finance leases is presented within interest and other expense, net on the accompanying unaudited interim consolidated statement of operations. The Company also has sale/leaseback transactions with financial institutions, which were required to be accounted for as an operating lease. The Company has rental expense associated with these sale/leaseback agreements with financial institutions. Rental expense is recognized on a straight-line basis over the life of the agreements and is characterized as cost of PPA revenue on the accompanying unaudited interim consolidated statements of operations. The Company adopted ASC Topic 842, effective January 1, 2018. As part of the adoption, the Company elected the practical expedient to not separate lease and non-lease components (i.e. maintenance services) within its rental income related to all PPA-related assets. (iv) Revenue associated with fuel delivered to customers represents the sale of hydrogen to customers that has been purchased by the Company from a third party or generated on site. The Company purchases hydrogen fuel from suppliers and sells to its customers upon delivery. Revenue and cost of revenue related to this fuel is recorded as dispensed, and is included in the respective “Fuel delivered to customers” lines on the unaudited interim consolidated statements of operations. (v) Other revenue primarily represents cost reimbursement research and development contracts associated with the development of PEM fuel cell technology. Contract accounting is used for research and development contract revenue. The Company generally shares in the cost of these programs with cost sharing percentages ranging from 30% to 50% of total project costs. Revenue from time and material contracts is recognized on the basis of hours expended plus other reimbursable contract costs incurred during the period and is included within the “other” revenue line on the unaudited interim consolidated statements of operations. All allowable work performed through the end of each calendar quarter is billed, subject to limitations in the respective contracts. Contract costs The Company expects that incremental commission fees paid to employees as a result of obtaining sales contracts are recoverable and therefore the Company capitalizes them as contract costs. Capitalized commission fees are amortized on a straight line basis over the period of time over which the transfer of goods or services to which the assets relate occur, typically ranging from 5 to 10 years. Amortization of the capitalized commission fees is included in selling, general, and administrative expenses. The Company recognizes the incremental costs of obtaining contracts as an expense when incurred if the amortization period of the assets that the Company otherwise would have recognized is one year or less. These costs are included in selling, general, and administrative expenses. During 2017, the Company issued warrants to Amazon.com, Inc. (Amazon) and Walmart. The fair value of warrants associated with each of these transactions are accounted for as revenue incentives as described in Note 11, Warrant Transaction Agreements. Adoption of ASC Topic 606 - Transition Approach As discussed in Recent Accounting Pronouncements, on January 1, 2018, the Company adopted ASC Topic 606, Revenue from Contracts with Customers (ASC Topic 606), which offers two transition approaches: full retrospective and modified retrospective. The Company chose the modified retrospective approach as its transition method and will not experience a significant effect on the timing and amount of revenue recognized or the amount of revenue allocated to the identified performance obligations. There was an insignificant amount of historical contract acquisition costs that were expensed and were not capitalized upon adoption of ASC Topic 606. However, upon adoption, contract acquisition costs of $0.1 million were capitalized and are being amortized as described above. Cash Equivalents Cash equivalents consist of money market accounts with an initial term of less than three months. At September 30, 2018 and December 31, 2017, cash equivalents consist of money market accounts. For purposes of the unaudited interim consolidated statements of cash flows, the Company considers all highly-liquid debt instruments with original maturities of three months or less to be cash equivalents. The Company’s cash and cash equivalents are deposited with financial institutions located in the U.S. and may at times exceed insured limits. Common Stock Warrant Accounting The Company accounts for common stock warrants as either derivative liabilities or as equity instruments depending on the specific terms of the warrant agreement. Derivative Liabilities Registered common stock warrants that require the issuance of registered shares upon exercise and do not sufficiently preclude an implied right to cash settlement are accounted for as derivative liabilities. We currently classify these derivative warrant liabilities on the accompanying unaudited interim consolidated balance sheet as a long-term liability, which are revalued at each balance sheet date subsequent to the initial issuance, using the Black-Scholes pricing model. This pricing model, which is based, in part, upon unobservable inputs for which there is little or no market data, requires the Company to develop its own assumptions. Changes in the fair value of the warrants are reflected in the accompanying unaudited interim consolidated statements of operations as change in fair value of common stock warrant liability. Equity Instruments Common stock warrants that meet certain applicable requirements of ASC Topic 815-40, Derivatives and Hedging – Contracts in Entity’s Own Equity, and other related guidance, including the ability of the Company to settle the warrants without the issuance of registered shares or the absence of rights of the grantee to require cash settlement, are accounted for as equity instruments. The Company classifies these equity instruments within additional paid-in capital on the accompanying unaudited interim consolidated balance sheet and the estimated fair value is presented as a reduction of the applicable revenue stream. Common stock warrants accounted for as equity instruments represent the warrants issued to Amazon and Walmart as discussed in Note 11. These warrants are remeasured at each financial reporting date prior to vesting, using the Monte Carlo pricing model. Once these warrants vest, they are no longer remeasured. This pricing model, which is based, in part, upon unobservable inputs for which there is little or no market data, requires the Company to develop its own assumptions. Changes in fair value resulting from remeasurement of common stock warrants issued in connection with the Amazon Transaction Agreement and the Walmart Transaction Agreement, as described in Note 11, Warrant Transaction Agreements, and are recorded as cumulative catch up adjustments as a reduction of revenue. Convertible Senior Notes The Company accounts for the issued Convertible Senior Notes with separate liability and equity components. The carrying amount of the liability component was initially determined by estimating the fair value of a similar debt instrument that does not have an associated convertible feature. The carrying amount of the equity component representing the conversion option was determined by deducting the estimated fair value of the liability component from the par value of the Convertible Senior Notes as a whole as of the date of issuance. This difference represents a debt discount that is amortized to interest expense, with a corresponding increase to the carrying amount of the liability component, over the term of the Convertible Senior Notes using the effective interest rate method. The equity component is not remeasured as long as it continues to meet the conditions for equity classification. The Company has allocated issuance costs incurred to the liability and equity components. Issuance costs attributable to the liability component are being amortized to expense over the respective term of the Convertible Senior Notes, and issuance costs attributable to the equity components were netted with the respective equity component in additional paid-in capital. Use of Estimates The unaudited interim consolidated financial statements of the Company have been prepared in conformity with GAAP, which require management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the unaudited interim consolidated financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates. Reclassifications and Correction of Immaterial Errors Reclassifications are made, whenever necessary, to prior period financial statements to conform to the current period presentation. The provision for common stock warrants presented historically as one line item on the consolidated statements of operations has been allocated to each of the relevant revenue line items. This reclassification did not have an impact on gross profit (loss) or net loss within the consolidated statements of operations or major categories within the consolidated statements of cash flows in the periods presented. In the third quarter of 2018, it was determined that the presentation in the consolidated statements of operations of certain service arrangements and the amortization of the associated finance obligations had not been appropriately accounted for resulting in an overstatement of our revenue and cost of revenue. This presentation resulted in a gross up of these line items and had no impact on gross profit (loss) or net loss. The Company corrected the 2017 unaudited interim consolidated financial statements to be consistent with the current period presentation and will correct comparable financial information in future filings. The amount reclassified from revenue on service performed on fuel cell systems and related infrastructure to cost of revenue on PPAs for the three and nine months ended September 30, 2017 was $0.8 million and $2.3 million, respectively. The amount reclassified from cost of revenue on service performed on fuel cell systems and related infrastructure to cost of revenue on PPAs for the three and nine months ended September 30, 2017 was $1.2 million and $2.7 million, respectively. The Company does not consider the impact of the prior period correction to be material to the prior period consolidated financial statements. Recent Accounting Pronouncements Recently Adopted Accounting Pronouncements In September 2018, the Company early adopted ASC Topic 842, as amended effective January 1, 2018 and elected the available practical expedients. The adoption of ASU 2016-02 had an insignificant impact on the Company’s unaudited interim consolidated statements of operations. The most significant impact was the recognition of right of use assets and finance obligations for operating leases on the consolidated unaudited interim balance sheet, as well as expanded disclosures. The table below summarizes the impact of this initial adoption to the consolidated balance sheet as of January 1, 2018 (in thousands). In addition, the unaudited interim consolidated statements of operations for the nine months ended September 30, 2018 was impacted by a decrease of depreciation expenses of $0.3 million. See Note 15, Commitments and Contingencies for gross profit recognized on sale/leaseback transactions accounted for under ASC Topic 842. Recognition of right of use asset $ 34,416 Decrease in accrued expenses 385 Recognition of finance obligation (34,161) Decrease in prepaid expenses and other assets (3,229) Decrease in leased property, net of accumulated depreciation (563) Increase in accumulated deficit 3,487 In June 2014, an accounting update was issued that replaces the existing revenue recognition framework regarding contracts with customers. The Company adopted this accounting update as of January 1, 2018. The standard outlines a five-step model whereby revenue is recognized as performance obligations within a contract are satisfied. The standard also requires new, expanded disclosures regarding revenue recognition. The Company did not experience a significant effect on the timing and amount of revenue recognized or the amount of revenue allocated to the identified performance obligations. There is an insignificant amount of historical contract acquisition costs that were expensed under prior guidance and were not capitalized upon adoption of ASC Topic 606. However, in subsequent periods, contract acquisition costs are capitalized in accordance with ASC Topic 606 (see Note 12). In October 2016, an accounting update was issued to simplify how an entity should recognize the income tax consequences of an intra-entity transfer of an asset other than inventory when the transfer occurs. Consequently, the amendments in this update eliminate the exception for an intra-entity transfer of an asset other than inventory. Two common examples of assets included in the scope of this update are intellectual property and property, plant, and equipment. The Company adopted this update on January 1, 2018 and it did not have any effect on the consolidated financial statements because our net tax position is zero. In November 2016, an accounting update was issued to reduce the existing diversity in the classification and presentation of changes in restricted cash on the statements of cash flows. This accounting update was adopted retrospectively by the Company on January 1, 2018. The adoption of this update impacts the cash flows from financing activities due to the change in the presentation of restricted cash within the consolidated statements of cash flows. Net cash flows from financing activities and change in cash and cash equivalents, which now includes restricted cash, increased by $5.0 million for the nine months ended September 30, 2018 and decreased by 6.1 million for the nine months ended September 30 2017. Recently Issued and Not Yet Adopted Accounting Pronouncements In August 2018, an accounting update was issued to help entities evaluate the accounting for fees paid by a customer in cloud computing arrangement (hosting arrangement) by providing guidance for determining when the arrangement includes a software license. The amendments in this update are effective for public companies beginning after December 15, 2019. Early adoption of the amendments in this update are permitted. The Company is evaluating the adoption method and impact this update will have on the consolidated financial statements. In June 2018, an accounting update was issued to simplify the accounting for nonemployee share-based payment transactions resulting from expanding the scope of ASC Topic 718, Compensation-Stock Compensation, to include share-based payment transactions for acquiring goods and services from nonemployees. An entity should apply the requirements of ASC Topic 718 to nonemployee awards except for specific guidance on inputs to an option pricing model and the attribution of cost (that is, the period of time over which share-based payment awards vest and the pattern of cost recognition over that period). The amendments specify that ASC Topic 718 applies to all share-based payment transactions in which a grantor acquires goods or services to be used or consumed in a grantor’s own operations by issuing share-based payment awards. The amendments also clarify that ASC Topic 718 does not apply to share-based payments used to effectively provide (1) financing to the issuer or (2) awards granted in conjunction with selling goods or services to customers as part of a contract accounted for under ASC Topic 606, Revenue from Contracts with Customers. The amendments in this accounting update are effective for public business entities for fiscal years beginning after December 15, 2018, including interim periods within that fiscal year. Early adoption is permitted, but no earlier than an entity’s adoption date of ASC Topic 606. The Company is evaluating the impact this update will have on the consolidated financial statements. In January 2017, an accounting update was issued to simplify how an entity is required to test goodwill for impairment by eliminating Step 2 from the goodwill impairment test. Step 2 measures a goodwill impairment loss by comparing the implied fair value of a reporting unit’s goodwill with the carrying amount of that goodwill. This accounting update is effective for years beginning after December 15, 2019. Early adoption is permitted for interim or annual goodwill impairment tests performed on testing dates after January 1, 2017. The Company is evaluating the impact this update will have on the consolidated financial statements. In August 2016, an accounting update was issued to reduce the existing diversity in practice in how certain cash receipts and cash payments are presented and classified in the statement of cash flows. This accounting update is effective for fiscal years beginning after December 15, 2018, and interim periods within fiscal years beginning after December 15, 2019. Early adoption is permitted, including adoption in an interim period. The Company is evaluating the impact this update will have on the consolidated financial statements. |
Earnings Per Share
Earnings Per Share | 9 Months Ended |
Sep. 30, 2018 | |
Earnings Per Share. | |
Earnings Per Share | 3. Earnings Per Share Basic earnings per common share are computed by dividing net loss attributable to common shareholders by the weighted average number of common shares outstanding during the reporting period. Diluted earnings per share reflects the potential dilution that could occur if securities or other contracts to issue common stock (such as stock options, unvested restricted stock, common stock warrants, preferred stock, and Convertible Senior Notes) were exercised or converted into common stock or resulted in the issuance of common stock (net of any assumed repurchases where applicable) that then shared in the earnings of the Company, if any. This is computed by dividing net earnings by the combination of dilutive common share equivalents, which is comprised of shares issuable under outstanding warrants, the conversion of preferred stock, and the Company’s share-based compensation plans, Convertible Senior Notes and the weighted average number of common shares outstanding during the reporting period. In general, when the Company is in a net loss position, most common stock equivalents would be considered to be anti-dilutive and are, therefore, not included in the determination of diluted earnings per share. Accordingly, basic and diluted loss per share are the same. While the Company plans to settle the principal amount of the Convertible Senior Notes in cash subject to available funding at time of settlement, we currently use the if-converted method for calculating any potential dilutive effect of the conversion option on diluted net income per share, subject to meeting the criteria for using the treasury stock method in future periods. As noted above, the Company is in a net loss position. The conversion option would have a dilutive impact on net loss per share of common stock when the average market price of the Company’s common stock for a given period exceeds the conversion price of the Convertible Senior Notes of $2.29 per share. During the nine months ended September 30, 2018, the Company's weighted average common stock price was below the conversion price of the Convertible Senior Notes. The shares of common stock purchased in connection with issuance of the Convertible Senior Notes are excluded from weighted-average shares outstanding for basic and diluted earnings per share purposes although they remain legally outstanding. See Note 8, Convertible Senior Notes, for a detailed description of their issuance. The dilutive potential common shares are summarized as follows: At September 30, 2018 2017 Stock options outstanding (1) 22,111,243 19,965,599 Restricted stock outstanding (2) 2,367,347 248,077 Common stock warrants (3) 115,824,142 115,824,242 Preferred stock (4) 2,782,075 2,782,075 Convertible Senior Notes 43,630,020 — Number of dilutive potential common shares 186,714,827 138,819,993 (1) During the three months ended September 30, 2018 and 2017, the Company granted 2,170,000 and 5,030,000 stock options, respectively. During the nine months ended September 30, 2018 and 2017, the Company granted 2,654,667 and 5,480,863 stock options, respectively. (2) During the three months ended September 30, 2018 and 2017, the Company granted 2,160,000 and zero shares of restricted stock, respectively. During the nine months ended September 30, 2018 and 2017, the Company granted 2,367,347 and 234,744 shares of restricted stock, respectively. (3) In February 2013, the Company issued 23,637,500 warrants as part of an underwritten public offering with an exercise price of $0.15 per warrant. Of these warrants issued in February 2013, zero and 100 were unexercised as of September 30, 2018 and 2017. In January 2014, the Company issued 4,000,000 warrants as part of an underwritten public offering with an exercise price of $4.00 per warrant. In December 2016, as a result of additional public offerings, and pursuant to the effect of the anti-dilution provisions of these warrants, the exercise price of the $4.00 warrants was reduced to $0.65. Of these warrants issued in January 2014, all 4,000,000 warrants were exercised during 2017, as described in Note 9, Stockholders’ Equity. In December 2016, the Company issued 10,501,500 warrants as part of two concurrent underwritten public offerings with an exercise price of $1.50 per warrant. Of these warrants issued in December 2016, all 10,501,500 warrants were exercised during 2017, as described in Note 9, Stockholders’ Equity. In April 2017, the Company issued 5,250,750 warrants with an exercise price of $2.69 per warrant, as described in Note 9, Stockholders’ Equity. Of these warrants issued in April 2017, none have been exercised as of September 30, 2018. In April 2017, the Company issued warrants to acquire up to 55,286,696 of the Company’s common stock as part of a transaction agreement, subject to certain vesting events, as described in Note 11, Warrant Transaction Agreements. Of these warrants issued, none have been exercised as of September 30, 2018. In July 2017, the Company issued warrants to acquire up to 55,286,696 of the Company’s common stock as part of a transaction agreement, subject to certain vesting events, as described in Note 11, Warrant Transaction Agreements. Of these warrants issued, none have been exercised as of September 30, 2018. (4) The preferred stock amount represents the dilutive potential common shares of the Series C redeemable convertible preferred stock, based on the conversion price of the preferred stock as of September 30, 2018 and 2017, respectively. Of the 10,431 Series C redeemable preferred stock issued on May 16, 2013, 7,811 and 5,200 had been converted to common stock through September 30, 2018 and 2017, respectively, with the remainder still outstanding. Of the 18,500 Series D redeemable convertible preferred stock issued on December 22, 2016, 3,700 shares were redeemed during the three months ended March 31, 2017 and the remaining 14,800 were converted to common stock during the nine months ended September 30, 2017. |
Inventory
Inventory | 9 Months Ended |
Sep. 30, 2018 | |
Inventory. | |
Inventory | 4. Inventory Inventory as of September 30, 2018 and December 31, 2017 consists of the following (in thousands): September 30, 2018 December 31, 2017 Raw materials and supplies $ 40,119 $ 42,851 Work-in-process 10,088 3,492 Finished goods 3,221 2,433 $ 53,428 $ 48,776 Raw materials and supplies include spare parts inventory held at service locations valued at $5.7 million and $5.5 million as of September 30, 2018 and December 31, 2017, respectively. |
Leased Property
Leased Property | 9 Months Ended |
Sep. 30, 2018 | |
Leased Property | |
Leased Property | 5. Leased Property Leased property at September 30, 2018 and December 31, 2017 consists of the following (in thousands): September 30, December 31, 2018 2017 Right of use assets - operating $ 55,582 $ — Right of use asset - finance 40,010 — Capitalized costs of lessor assets 43,249 98,877 Less: accumulated depreciation (8,826) (11,812) Leased property, net $ 130,015 $ 87,065 Depreciation expense related to leased property was $2.2 million and $1.9 million for the three months ended September 30, 2018 and 2017, respectively. Depreciation expense related to leased property was $6.8 million and $5.2 million for the nine months ended September 30, 2018 and 2017, respectively. Included in depreciation expense for the three and nine months ended September 30, 2018 was depreciation of the finance right of use asset of $1.6 million and $4.9 million, respectively. |
Intangible Assets
Intangible Assets | 9 Months Ended |
Sep. 30, 2018 | |
Intangible Assets. | |
Intangible Assets | 6. Intangible Assets The gross carrying amount and accumulated amortization of the Company’s acquired identifiable intangible assets as of September 30, 2018 are as follows (in thousands): Weighted Average Gross Carrying Accumulated Amortization Period Amount Amortization Total Acquired technology 9 years $ 5,941 (2,032) 3,909 Customer relationships 10 years 260 (117) 143 Trademark 5 years 60 (54) 6 $ 6,261 $ (2,203) $ 4,058 The gross carrying amount and accumulated amortization of the Company’s acquired identifiable intangible assets as of December 31, 2017 are as follows (in thousands): Weighted Average Gross Carrying Accumulated Amortization Period Amount Amortization Total Acquired technology 9 years $ 5,200 $ (1,593) $ 3,607 Customer relationships 10 years 260 (97) 163 Trademark 5 years 60 (45) 15 $ 5,520 $ (1,735) $ 3,785 The change in the gross carrying amount and accumulated amortization of the acquired technology from December 31, 2017 to September 30, 2018 is due to the acquisition of intellectual property from American Fuel Cell LLC in April 2018, as well as changes attributed to foreign currency translation. As part of the agreement to acquire the intellectual property, the Company shall pay American Fuel Cell LLC milestone payments not to exceed $2.9 million in total, if certain milestones are met by April 2021. Amortization expense for acquired identifiable intangible assets was $0.2 million and $0.1 million for the three months ended September 30, 2018 and 2017, respectively. Amortization expense for acquired identifiable intangible assets was $0.5 million for each of the nine month periods ended September 2018 and 2017. Estimated amortization expense for subsequent years is as follows (in thousands): Remainder of 2018 $ 175 2019 590 2020 554 2021 554 2022 554 2023 and thereafter 1,631 Total $ 4,058 |
Long-Term Debt
Long-Term Debt | 9 Months Ended |
Sep. 30, 2018 | |
Long-Term Debt | |
Long-Term Debt | 7. Long-Term Debt On December 23, 2016, the Company, and its subsidiaries Emerging Power Inc. and Emergent Power Inc. entered into a loan and security agreement with NY Green Bank, a Division of the New York State Energy Research & Development Authority (NY Green Bank), pursuant to which NY Green Bank made available to the Company a secured term loan facility in the amount of $25.0 million (Term Loan Facility), subject to certain terms and conditions. The Company borrowed $25.0 million upon closing and incurred costs of $1.2 million. On July 21, 2017, the Company and NY Green Bank entered into an amendment to the Term Loan Facility, which among other things, provided for an additional $20.0 million term loan, increasing the size of the total commitment to $45.0 million, amended the interest rate, prepayment penalty (for any prepayment in the calendar year 2017 or 2018, a prepayment charge equal to 7.5% of the advance amount being prepaid will apply) and product deployment and employment targets. As with the existing facility, the up-sized facility will be repaid primarily as the Company’s various restricted cash balances are released over the term of the facility. During the year ended December 31, 2017, the Company borrowed the additional $20.0 million of working capital financing and incurred closing costs of $0.5 million. In June 2018, the timing and amount of the remaining principal payments were modified. At September 30, 2018 and December 31, 2017, the outstanding principal balance under the Term Loan Facility was $21.2 million and $32.8 million, respectively. The fair value of the Term Loan Facility approximates the carrying value as of September 30, 2018 and December 31, 2017, due to the variable interest rate of the Term Loan Facility. Advances under the Term Loan Facility bear interest at a rate equal to the sum of the LIBOR rate for the applicable interest period, plus applicable margin of 9.5%. The interest rate at September 30, 2018 and 2017 was approximately 11.8% and 10.8%, respectively. The term of the loan is three years, with a maturity date of December 23, 2019. As of September 30, 2018, estimated remaining principal payments will be approximately $4.0 million for the remainder of 2018 and $17.2 million during the year ending 2019. These payments will be funded in part by restricted cash released, as described in Note 15, Commitments and Contingencies. Interest and a varying portion of the principal amount is payable on a quarterly basis and the entire then outstanding principal balance of the Term Loan Facility, together with all accrued and unpaid interest, is due and payable on the maturity date. On the maturity date, the Company may also be required to pay additional fees of up to $1.8 million if the Company is unable to meet certain goals related to the deployment of fuel cell systems in the State of New York and increasing the Company’s number of full-time employees in the State of New York. The Company currently believes that it will meet those goals. The Term Loan Facility is secured by substantially all of the Company’s and the guarantor subsidiaries’ assets, including, among other assets, all intellectual property, all securities in domestic subsidiaries and 65% of the securities in foreign subsidiaries, subject to certain exceptions and exclusions. The Term Loan Facility provides that if there is an event of default due to the Company’s insolvency or if the Company fails to perform, in any material respect, the servicing requirements for fuel cell systems under certain customer agreements, which failure would entitle the customer to terminate such customer agreement, replace the Company or withhold the payment of any material amount to the Company under such customer agreement, then the NY Green Bank has the right to cause a wholly owned subsidiary of the Company to replace the Company in performing the maintenance services under such customer agreement. |
Convertible Senior Notes
Convertible Senior Notes | 9 Months Ended |
Sep. 30, 2018 | |
Convertible Senior Notes | |
Convertible Senior Notes | 8. Convertible Senior Notes In March 2018, the Company issued $100.0 million in aggregate principal amount of 5.5% Convertible Senior Notes due on March 15, 2023, in a private placement to qualified institutional buyers pursuant to Rule 144A under the Securities Act of 1933, as amended. There are no required principal payments prior to maturity of the Convertible Senior Notes. The total net proceeds from the Convertible Senior Notes were as follows: Amount (in thousands) Principal amount $ 100,000 Less initial purchasers' discount (3,250) Less cost of related capped call and common stock forward (43,500) Less other issuance costs (894) Net proceeds $ 52,356 The Convertible Senior Notes bear interest at 5.5%, payable semi-annually in cash on March 15 and September 15 of each year. The Convertible Senior Notes will mature on March 15, 2023, unless earlier converted or repurchased in accordance with their terms. The Convertible Senior Notes are unsecured and do not contain any financial covenants or any restrictions on the payment of dividends, or the issuance or repurchase of common stock by the Company. Each $1,000 of principal of the Convertible Senior Notes will initially be convertible into 436.3002 shares of the Company’s common stock, which is equivalent to an initial conversion price of approximately $2.29 per share, subject to adjustment upon the occurrence of specified events. Holders of these Convertible Senior Notes may convert their Convertible Senior Notes at their option at any time prior to the close of the last business day immediately preceding September 15, 2022, only under the following circumstances: 1) during any calendar quarter (and only during such calendar quarter), if the last reported sale price of the Company’s common stock for at least 20 trading days (whether or not consecutive) during a period of 30 consecutive trading days ending on, and including, the last trading day of the immediately preceding calendar quarter is greater than or equal to 130% of the conversion price on each applicable trading day; 2) during the five business day period after any five consecutive trading day period (the “measurement period”) in which the trading price (as defined in the indenture governing the Convertible Senior Notes) per $1,000 principal amount of notes for each trading day of the measurement period was less than 98% of the product of the last reported sale price of the Company’s common stock and the conversion rate for the notes on each such trading day; 3) if the Company calls any or all of the Convertible Senior Notes for redemption, at any time prior to the close of business on the second scheduled trading day immediately preceding the redemption date; or 4) upon the occurrence of certain specified corporate events, such as a beneficial owner acquiring more than 50% of the total voting power of the Company’s common stock, recapitalization of the Company, dissolution or liquidation of the Company, or the Company’s common stock ceases to be listed on an active market exchange. On or after September 15, 2022, holders may convert all or any portion of their Convertible Senior Notes at any time prior to the close of business on the second scheduled trading day immediately preceding the maturity date regardless of the foregoing conditions. Upon conversion of the Convertible Senior Notes, the Company will pay or deliver, as the case may be, cash, shares of the Company’s common stock or a combination of cash and shares of the Company’s common stock, at the Company’s election. While the Company plans to settle the principal amount of the Convertible Senior Notes in cash subject to available funding at time of settlement, we currently use the if-converted method for calculating any potential dilutive effect of the conversion option on diluted net income per share, subject to meeting the criteria for using the treasury stock method in future periods. The conversion rate will be subject to adjustment in some events but will not be adjusted for any accrued or unpaid interest. Holders who convert their Convertible Senior Notes in connection with certain corporate events that constitute a “make-whole fundamental change” per the indenture governing the Convertible Senior Notes or in connection with a redemption will be, under certain circumstances, entitled to an increase in the conversion rate. In addition, if the Company undergoes a fundamental change prior to the maturity date, holders may require the Company to repurchase for cash all or a portion of its Convertible Senior Notes at a repurchase price equal to 100% of the principal amount of the repurchased Convertible Senior Notes, plus accrued and unpaid interest. The Company may not redeem the Convertible Senior Notes prior to March 20, 2021. The Company may redeem for cash all or any portion of the Convertible Senior Notes, at the Company’s option, on or after March 20, 2021 if the last reported sale price of the Company’s common stock has been at least 130% of the conversion price then in effect for at least 20 trading days (whether or not consecutive), including at least one of the three trading days immediately preceding the date on which the Company provides notice of redemption, during any 30 consecutive trading day period ending on, and including, the trading day immediately preceding the date on which the Company provides notice of redemption at a redemption price equal to 100% of the principal amount of the Convertible Senior Notes to be redeemed, plus accrued and unpaid interest to, but excluding, the redemption date. In accounting for the issuance of the Convertible Senior Notes, the Company separated the Convertible Senior Notes into liability and equity components. The initial carrying amount of the liability component of approximately $58.2 million, net of costs incurred, was calculated by measuring the fair value of a similar liability that does not have an associated convertible feature. The carrying amount of the equity component of approximately $37.7 million, net of costs incurred, representing the conversion option, was determined by deducting the fair value of the liability component from the par value of the Convertible Senior Notes. The difference between the principal amount of the Convertible Senior Notes and the liability component (the “debt discount”) is amortized to interest expense using the effective interest method over the term of the Convertible Senior Notes. The effective interest rate is approximately 16.0%. The equity component of the Convertible Senior Notes is included in additional paid-in capital in the unaudited interim consolidated balance sheet and is not remeasured as long as it continues to meet the conditions for equity classification. We incurred transaction costs related to the issuance of the Convertible Senior Notes of approximately $4.1 million, consisting of initial purchasers' discount of $3.3 million and other issuance costs of approximately $0.8 million. In accounting for the transaction costs, we allocated the total amount incurred to the liability and equity components using the same proportions as the proceeds from the Convertible Senior Notes. Transaction costs attributable to the liability component were approximately $2.4 million, were recorded as debt issuance cost (presented as contra debt in the unaudited interim consolidated balance sheet) and are being amortized to interest expense over the term of the Convertible Senior Notes. The transaction costs attributable to the equity component were approximately $1.7 million and were netted with the equity component in stockholders’ equity. The Convertible Senior Notes consist of the following Principal amounts: Principal $ 100,000 Unamortized debt discount (1) (36,324) Unamortized debt issuance costs (1) (2,167) Net carrying amount $ 61,509 Carrying amount of the equity component (2) $ 37,702 1) Included in the unaudited interim consolidated balance sheet within Convertible Senior Notes, net and amortized over the remaining life of the Convertible senior notes using the effective interest rate method. 2) Included in the unaudited interim consolidated balance sheet within additional paid-in capital, net of $1.7 million in equity issuance costs and associated income tax benefit of $7.6 million. As of September 30, 2018, the remaining life of the Convertible Senior Notes is approximately 54 months. Based on the closing price of the Company’s common stock of $1.92 on September 30, 2018, the if-converted value of the Convertible Senior Notes was less than the principal amount. Capped Call In conjunction with the issuance of the Convertible Senior Notes, the Company entered into capped call options (“Capped Call”) on the Company’s common stock with certain counterparties at a price of $16.0 million. The net cost incurred in connection with the Capped Call has been recorded as a reduction to additional paid-in capital in the unaudited interim consolidated balance sheet. The Capped Call is generally expected to reduce or offset the potential dilution to the Company’s common stock upon any conversion of the Convertible Senior Notes and/or offset any cash payments the Company is required to make in excess of the principal amount of converted Convertible Senior Notes, as the case may be, with such reduction and/or offset subject to a cap based on the cap price. The cap price of the Capped Call transactions will initially be $3.82 per share, which represents a premium of 100% over the last reported sale price of the Company’s common stock of $1.91 per share on the date of the transaction, and is subject to certain adjustments under the terms of the Capped Call. The Capped Call becomes exercisable if the conversion option is exercised. By entering into the Capped Call, the Company expects to reduce the potential dilution to its common stock (or, in the event the conversion is settled in cash, to provide a source of cash to settle a portion of its cash payment obligation) in the event that at the time of conversion its stock price exceeds the conversion price under the Convertible Senior Notes. Common Stock Forward In connection with the sale of the Convertible Senior Notes, the Company also entered into a forward stock purchase transaction (“Common Stock Forward”), pursuant to which the Company agreed to purchase 14,397,906 shares of its common stock for settlement on or about March 15, 2023. The number of shares of common stock that the Company will ultimately repurchase under the Common Stock Forward is subject to customary anti-dilution adjustments. The Common Stock Forward is subject to early settlement or settlement with alternative consideration in the event of certain corporate transactions. The net cost incurred in connection with the Common Stock Forward of $27.5 million has been recorded as an increase in treasury stock in the unaudited interim consolidated balance sheet. The related shares were accounted for as a repurchase of common stock. The fair values of the Capped Call and Common Stock Forward are not remeasured each reporting period. |
Stockholders' Equity
Stockholders' Equity | 9 Months Ended |
Sep. 30, 2018 | |
Consolidated Statements of Stockholders' Equity | |
Stockholders' Equity | 9. Stockholders’ Equity Preferred Stock The Company has authorized 5.0 million shares of preferred stock, par value $0.01 per share. The Company’s certificate of incorporation provides that shares of preferred stock may be issued from time to time in one or more series. The Company’s Board of Directors is authorized to fix the voting rights, if any, designations, powers, preferences, qualifications, limitations and restrictions thereof, applicable to the shares of each series. The Company has authorized Series A Junior Participating Cumulative Preferred Stock, par value $0.01 per share. As of September 30, 2018 and December 31, 2017, there were no shares of Series A Junior Participating Cumulative Preferred Stock issued and outstanding. See Note 10, Redeemable Preferred Stock, for a description of the Company’s Series C and D redeemable preferred stock. Common Stock and Warrants The Company has one class of common stock, par value $0.01 per share. Each share of the Company’s common stock is entitled to one vote on all matters submitted to stockholders. There were 217,508,730 and 228,486,366 shares of common stock outstanding as of September 30, 2018 and December 31, 2017, respectively. On December 22, 2016, the Company issued warrants to purchase 10,501,500 shares of common stock in connection with offerings of common stock and Series D Redeemable Preferred Stock at an exercise price of $1.50 per share. On April 12, 2017, the Company and Tech Opportunities LLC (“Tech Opps”) entered into an agreement, pursuant to which Tech Opps exercised in full its warrants to purchase an aggregate of 10,501,500 shares of common stock. The net proceeds received by the Company pursuant to the exercise of the existing warrants was $15.1 million and the Company issued to Tech Opps warrants to acquire up to 5,250,750 additional shares of common stock at an exercise price of $2.69 per share. The warrants were exercisable as of October 12, 2017 and will expire on October 12, 2019. During April 2017, warrants issued in January 2014 as part of an underwritten public offering with Heights Capital Management Inc., were exercised in full to purchase an aggregate of 4,000,000 shares of the Company’s common stock, at an exercise price of $0.65 per share. The aggregate cash exercise price paid to the Company pursuant to the exercise of the warrants was $2.6 million. Pursuant to the exercises of the above warrants in 2017, additional paid-in capital was increased $27.1 million and warrant liability reduced by $27.1 million. During 2013, the Company completed a series of underwritten public offerings. One of the underwritten public offerings included accompanying warrants to purchase common stock. During February 2018, the remaining 100 warrants with an exercise price of $0.15 per share were exercised. There were zero and 100 warrants outstanding as of September 30, 2018 and December 31, 2017, respectively. During 2017, additional warrants to purchase up to 110,573,392 shares of common stock were issued in connection with transaction agreements with Amazon and Walmart, as discussed in Note 11. In connection with these agreements, warrants to acquire 18,913,869 shares of common stock have vested and are therefore exercisable as of September 30, 2018 and December 31, 2017. These warrants are measured at fair value and are classified as equity instruments on the unaudited interim consolidated balance sheet. At Market Issuance Sales Agreement On April 3, 2017, the Company entered into an At Market Issuance Sales Agreement (the “Sales Agreement”) with FBR Capital Markets & Co., as sales agent (“FBR”), pursuant to which the Company may offer and sell, from time to time through FBR, shares of common stock par value $0.01 per share having an aggregate offering price of up to $75.0 million. The Company has raised $27.9 million to date. Under the Sales Agreement, in no event shall the Company issue or sell through FBR such a number of shares that exceeds the number of shares or dollar amount of common stock registered. |
Redeemable Preferred Stock
Redeemable Preferred Stock | 9 Months Ended |
Sep. 30, 2018 | |
Redeemable Preferred Stock | |
Redeemable Preferred Stock | 10. Redeemable Convertible Preferred Stock In December 2016, the Company completed an offering of an aggregate of 18,500 shares of the Company’s Series D Redeemable Preferred Stock, par value $0.01 per share (Series D Preferred Stock) and warrants to purchase 7,381,500 shares of the Company’s common stock, par value $0.01 per share (Common Stock), resulting in aggregate proceeds of approximately $15.6 million. During the three months ended March 31, 2017, the Company redeemed 3,700 shares of the Series D Preferred Stock, at an aggregate redemption price of approximately $3.7 million. On April 5, 2017, all of the remaining outstanding shares of the Series D Preferred Stock were converted into an aggregate of 9,548,393 shares of the Company’s common stock at a conversion price of $1.55. The conversion was done at the election of the holder in accordance with the terms of the offering. After the conversion, no shares of Series D Preferred Stock remain outstanding. In December 2017, the series was deauthorized by the Board of Directors. In November 2018, the Company completed a private placement of an aggregate of 35,000 shares of the Company’s Series E Convertible Stock, par value $0.01 per share (Series E Preferred Stock) resulting in net proceeds of approximately $31.0 million (see Note 16). During the third quarter of 2017, 2,611 shares of the Company’s Series C Redeemable Preferred Stock, par value $0.01 per share (Series C Preferred Stock) were converted to common stock. At September 30, 2018, there were 2,620 shares of Series C Preferred Stock outstanding. In the event of any voluntary or involuntary liquidation, dissolution or winding up of the Company, or other deemed liquidation event, as defined in the Securities Purchase Agreement, the holder of the Series C Redeemable Preferred Stock will be entitled to be paid an amount per share equal to the greater of (i) the original issue price, plus any accrued but unpaid dividends or (ii) the amount per share that would have been payable had all shares of the Series C Redeemable Preferred Stock been converted to shares of common stock immediately prior to such liquidation event. The Series C Redeemable Preferred Stock is redeemable at the election of the holder of the Series C Redeemable Preferred Stock or the Company. The holder of the Series C Redeemable Preferred Stock is entitled to receive dividends at a rate of 8% per annum, based on the original issue price per share of $248.794, payable in equal quarterly installments in cash or in shares of common stock, at the Company’s option. During the nine months ended September 30, 2018 and 2017, respectively, dividends have been paid in the form of shares of common stock. Each share of Series C Redeemable Preferred Stock is convertible into shares of common stock with the number of shares of common stock issuable upon conversion determined by dividing the original issue price per share of $248.794 by the conversion price in effect at the time the shares are converted. The conversion price of the Series C Redeemable Preferred Stock as of September 30, 2018 and December 31, 2017 was $0.2343. The Series C Redeemable Preferred Stock votes together with the common stock on an as-converted basis on all matters. |
Warrant Transaction Agreements
Warrant Transaction Agreements | 9 Months Ended |
Sep. 30, 2018 | |
Warrant Transaction Agreements | |
Warrant Transaction Agreements | 11. Warrant Transaction Agreements Amazon.com, Inc. On April 4, 2017, the Company and Amazon entered into a Transaction Agreement (the “Amazon Transaction Agreement”), pursuant to which the Company agreed to issue to Amazon.com NV Investment Holdings LLC, a wholly owned subsidiary of Amazon, warrants to acquire up to 55,286,696 shares of the Company’s common stock (the “Amazon Warrant Shares”), subject to certain vesting events described below. The Company and Amazon entered into the Amazon Transaction Agreement in connection with existing commercial agreements between the Company and Amazon with respect to the deployment of the Company’s GenKey fuel cell technology at Amazon distribution centers. The existing commercial agreements contemplate, but do not guarantee, future purchase orders for the Company’s fuel cell technology. Additionally, Amazon and the Company will begin working together on technology collaboration, exploring the expansion of applications for the Company’s line of ProGen fuel cell engines. The vesting of the Amazon Warrant Shares is linked to payments made by Amazon or its affiliates (directly or indirectly through third parties) pursuant to the existing commercial agreements. The majority of the Amazon Warrant Shares will vest based on Amazon’s payment of up to $600.0 million to the Company in connection with Amazon’s purchase of goods and services from the Company. The first tranche of 5,819,652 Amazon Warrant Shares vested upon the execution of the Amazon Transaction Agreement. Accordingly, $6.7 million, the fair value of the first tranche of Amazon Warrant Shares, was recognized as selling, general and administrative expense on the unaudited interim consolidated statements of operations during 2017 as this was considered to be marketing in nature and not a revenue incentive cost or contract acquisition cost. The second tranche of 29,098,260 Amazon Warrant Shares will vest in four installments of 7,274,565 Amazon Warrant Shares each time Amazon or its affiliates, directly or indirectly through third parties, make an aggregate of $50.0 million in payments for goods and services to the Company, up to payments totaling $200.0 million in the aggregate. The exercise price for the first and second tranches of Amazon Warrant Shares will be $1.1893 per share. After Amazon has made payments to the Company totaling $200.0 million, the third tranche of 20,368,784 Amazon Warrant Shares will vest in eight installments of 2,546,098 Amazon Warrant Shares each time Amazon or its affiliates, directly or indirectly through third parties, make an aggregate of $50.0 million in payments for goods and services to the Company, up to payments totaling $400.0 million in the aggregate. The exercise price of the third tranche of Amazon Warrant Shares will be an amount per share equal to ninety percent (90%) of the 30-day volume weighted average share price of the common stock as of the final vesting date of the second tranche of Amazon Warrant Shares. The Amazon Warrant Shares are exercisable through April 4, 2027. The Amazon Warrant Shares provide for net share settlement that, if elected by the holders, will reduce the number of shares issued upon exercise to reflect net settlement of the exercise price. The Amazon Warrant Shares provide for certain adjustments that may be made to the exercise price and the number of shares of common stock issuable upon exercise due to customary anti-dilution provisions based on future events. These warrants are classified as equity instruments. Because the Amazon Warrant Shares contain performance criteria (i.e. aggregate purchase levels), which Amazon must achieve for the Amazon Warrant Shares to vest, as detailed above, the final measurement date for the Amazon Warrant Shares is the date on which the Amazon Warrant Shares vest. Prior to the final measurement, when achievement of the performance criteria has been deemed probable, the estimated fair value of Amazon Warrant Shares is being recorded as a reduction to revenue and an addition to additional paid-in capital based on the projected number of Amazon Warrant Shares expected to vest, the proportion of purchases by Amazon and its affiliates within the period relative to the aggregate purchase levels required for the Amazon Warrant Shares to vest and the then-current fair value of the related Amazon Warrant Shares. To the extent that projections change in the future as to the number of Amazon Warrant Shares that will vest, as well as changes in the fair value of the Amazon Warrant Shares, a cumulative catch-up adjustment will be recorded in the period in which the estimates change. At September 30, 2018 and December 31, 2017, 13,094,217 of the Amazon Warrant Shares have vested. The amount of provision for common stock warrants recorded as a reduction of revenue during the three months ended September 30, 2018 and 2017 was $1.8 million and $14.2 million, respectively. The amount of provision for common stock warrants recorded as a reduction of revenue during the nine months ended September 30, 2018 and 2017 was $7.1 million and $16.1 million, respectively. Wal-Mart Stores, Inc. On July 20, 2017, the Company and Walmart entered into a Transaction Agreement (the “Walmart Transaction Agreement”), pursuant to which the Company agreed to issue to Walmart a warrant to acquire up to 55,286,696 shares of the Company’s common stock, subject to certain vesting events (the “Walmart Warrant Shares”). The Company and Walmart entered into the Walmart Transaction Agreement in connection with existing commercial agreements between the Company and Walmart with respect to the deployment of the Company’s GenKey fuel cell technology across various Walmart distribution centers. The existing commercial agreements contemplate, but do not guarantee, future purchase orders for the Company’s fuel cell technology. The vesting of the warrant shares, is linked to payments made by Walmart or its affiliates (directly or indirectly through third parties) pursuant to transactions entered into after January 1, 2017 under existing commercial agreements. The majority of the Walmart Warrant Shares will vest based on Walmart’s payment of up to $600.0 million to the Company in connection with Walmart’s purchase of goods and services from the Company. The first tranche of 5,819,652 Walmart Warrant Shares vested upon the execution of the Walmart Transaction Agreement. Accordingly, $10.9 million, the fair value of the first tranche of Walmart Warrant Shares, was recorded as a provision for common stock warrants and presented as a reduction to revenue on the unaudited interim consolidated statements of operations during 2017. The second tranche of 29,098,260 Walmart Warrant Shares will vest in four installments of 7,274,565 Walmart Warrant Shares each time Walmart or its affiliates, directly or indirectly through third parties, make an aggregate of $50.0 million in payments for goods and services to the Company, up to payments totaling $200.0 million in the aggregate. The exercise price for the first and second tranches of Walmart Warrant Shares will be $2.1231 per share. After Walmart has made payments to the Company totaling $200.0 million, the third tranche of 20,368,784 Walmart Warrant Shares will vest in eight installments of 2,546,098 Walmart Warrant Shares each time Walmart or its affiliates, directly or indirectly through third parties, make an aggregate of $50.0 million in payments for goods and services to the Company, up to payments totaling $400.0 million in the aggregate. The exercise price of the third tranche of Walmart Warrant Shares will be an amount per share equal to ninety percent (90%) of the 30-day volume weighted average share price of the common stock as of the final vesting date of the second tranche of Walmart Warrant Shares, provided that, with limited exceptions, the exercise price for the third tranche will be no lower than $1.1893. The Walmart Warrant Shares are exercisable through July 20, 2027. The Walmart Warrant Shares provide for net share settlement that, if elected by the holders, will reduce the number of shares issued upon exercise to reflect net settlement of the exercise price. The Walmart Warrant Shares provide for certain adjustments that may be made to the exercise price and the number of shares of common stock issuable upon exercise due to customary anti-dilution provisions based on future events. These warrants are classified as equity instruments. Because the Walmart Warrant Shares contain performance criteria (i.e. aggregate purchase levels), which Walmart must achieve for the Walmart Warrant Shares to vest, as detailed above, the final measurement date for the Walmart Warrant Shares is the date on which the Walmart Warrant Shares vest. Prior to the final measurement, when achievement of the performance criteria has been deemed probable, the estimated fair value of Walmart Warrant Shares is being recorded as a reduction to revenue and an addition to additional paid-in capital based on the projected number of Walmart Warrant Shares expected to vest, the proportion of purchases by Walmart and its affiliates within the period relative to the aggregate purchase levels required for the Walmart Warrant Shares to vest and the then-current fair value of the related Walmart Warrant Shares. To the extent that projections change in the future as to the number of Walmart Warrant Shares that will vest, as well as changes in the fair value of the Walmart Warrant Shares, a cumulative catch-up adjustment will be recorded in the period in which the estimates change. At September 30, 2018 and December 31, 2017, 5,819,652 of the Walmart Warrant Shares have vested. The amount of provision for common stock warrants recorded as a reduction to revenue during the three months ended September 30, 2018 and 2017 was $0.4 million and $11.8 million, respectively. The amount of provision for common stock warrants recorded as a reduction to revenue during the nine months ended September 30, 2018 and 2017 was $0.9 million and $11.8 million, respectively. |
Revenue
Revenue | 9 Months Ended |
Sep. 30, 2018 | |
Revenue | |
Revenue | 12. Revenue Disaggregation of revenue In the following table, revenue is disaggregated by major product line and timing of revenue recognition (in thousands): Major products/services lines Three months ended Nine months ended September 30, September 30, 2018 2017 2018 2017 Sales of fuel cell systems $ 21,595 $ 28,427 $ 40,948 $ 35,190 Sale of hydrogen installations and other infrastructure 15,073 9,633 25,153 12,717 Services performed on fuel cell systems and related infrastructure 5,156 2,217 16,330 10,496 Power Purchase Agreements 5,555 (1,663) 16,365 7,593 Fuel delivered to customers 5,786 (4,149) 16,016 2,782 Other — 128 — 279 Net revenue $ 53,165 $ 34,593 $ 114,812 $ 69,057 Contract balances The following table provides information about receivables, contract assets and contract liabilities from contracts with customers (in thousands): September 30, 2018 December 31, 2017 Accounts receivable $ 24,721 $ 15,331 Contract assets 7,727 9,316 Contract liabilities 39,605 35,171 The contract assets relate to the Company’s rights to consideration for work completed but not billed. These amounts are included within prepaid expenses and other current assets on the accompanying unaudited interim consolidated balance sheet. The contract liabilities relate to the advance consideration received from customers for services that will be recognized over time (primarily fuel cell and related infrastructure services). These amounts are included within deferred revenue on the accompanying unaudited interim consolidated interim balance sheet. Significant changes in the contract assets and the contract liabilities balances during the period are as follows (in thousands): Contract assets Nine months ended September 30, 2018 Transferred to receivables from contract assets recognized at the beginning of the period $ (6,032) Revenue recognized and not billed as of the end of the period 4,443 Net change in contract assets $ (1,589) Contract liabilities Nine months ended September 30, 2018 Revenue recognized that was included in the contract liability balance as the beginning of the period $ 7,882 Increases due to cash received, net of amounts recognized as revenue during the period (12,316) Net change in contract liabilities $ (4,434) Estimated future revenue The following table includes estimated revenue expected to be recognized in the future (sales of fuel cell systems and hydrogen installations are expected to be recognized as revenue within one year; sales of services and PPAs are expected to be recognized as revenue over five to seven years) related to performance obligations that are unsatisfied (or partially unsatisfied) at the end of the reporting period, excluding provision for common stock warrants as it is not readily estimable as it depends on the valuation of the common stock warrants when revenue is recognized (in thousands): September 30, 2018 December 31, 2017 Sales of fuel cell systems $ 21,029 $ 26,298 Sale of hydrogen installations and other infrastructure 6,705 15,512 Services performed on fuel cell systems and related infrastructure 75,416 77,453 Power Purchase Agreements 114,757 130,042 Total estimated future revenue $ 217,907 $ 249,305 Contract costs Contract costs consists of capitalized commission fees and other expenses related to obtaining or fulfilling a contract. Capitalized contract costs at September 30, 2018 and December 31, 2017 were $0.1 million and zero, respectively. Expense related to the amortization of capitalized contract costs was not significant for the three or nine months ended September 30, 2018. |
Income Taxes
Income Taxes | 9 Months Ended |
Sep. 30, 2018 | |
Income Taxes. | |
Income Taxes | 13. Income Taxes The Company recognized an income tax benefit for the three and nine months ended September 30, 2018 of $1.7 million and $7.6 million, respectively, as a result of the intraperiod tax allocation rules under ASC Topic 740-20, Intraperiod Tax Allocation , under which the Company recognized a benefit for current losses as a result of an entry to additional paid-in capital related to the issuance of the Convertible Senior Notes discussed in Note 8. The Company has not changed its overall conclusion with respect to the need for a valuation allowance against its net deferred tax assets, which remain fully reserved. The remaining net deferred tax asset generated from the Company’s net operating loss has been offset by a full valuation allowance because it is more likely than not that the tax benefits of the net operating loss carry forward will not be realized. The Company also recognizes accrued interest and penalties related to unrecognized tax benefits, if any, as a component of income tax expense. |
Fair Value Measurements
Fair Value Measurements | 9 Months Ended |
Sep. 30, 2018 | |
Fair Value Measurements. | |
Fair Value Measurements | 14. Fair Value Measurements Convertible Senior Notes The fair value of the Convertible Senior Notes was $60.6 million on issuance. The fair value was determined based on Level 3 inputs, including assumed volatility of 45.0%. The Company carries the Convertible Senior Notes at face value less an unamortized discount on its unaudited interim consolidated balance sheet, and presents the fair value for required disclosure purposes only. At September 30, 2018, the carrying value of the Convertible Senior Notes, excluding unamortized debt issue costs, approximates the fair value. For further information on the Convertible Senior Notes (see Note 8). Derivative Liabilities The Company’s common stock warrant liability represents the only asset or liability classified financial instrument measured at fair value on a recurring basis in the unaudited interim consolidated balance sheet. The fair value measurement is determined by using Level 3 inputs due to the lack of active and observable markets that can be used to price identical assets. Level 3 inputs are unobservable inputs and should be used to determine fair value only when observable inputs are not available. Unobservable inputs should be developed based on the best information available in the circumstances, which might include internally generated data and assumptions being used to price the asset or liability. Fair value of the common stock warrant liability is based on the Black-Scholes pricing model which is based, in part, upon unobservable inputs for which there is little or no market data, requiring the Company to develop its own assumptions. The Company used the following assumptions for its liability-classified common stock warrants: Nine months ended September 30, 2018 September 30, 2017 Risk-free interest rate 1.64% - 2.56% 1.01% - 2.01% Volatility 18.40% - 81.69% 62.0% - 108.77% Expected average term 0.01 - 1.53 0.39 - 5.23 There was no expected dividend yield for the warrants granted. If factors change and different assumptions are used, the warrant liability and the change in estimated fair value could be materially different. Generally, as the market price of our common stock increases, the fair value of the warrants increase, and conversely, as the market price of our common stock decreases, the fair value of the warrants decrease. Also, a significant increase in the volatility of the market price of the Company’s common stock, in isolation, would result in significantly higher fair value measurements; and a significant decrease in volatility would result in significantly lower fair value measurements. The following table shows the activity in the common stock warrant liability (in thousands): Nine months ended September 30, 2018 September 30, 2017 Beginning of period $ 4,391 $ 11,387 Change in fair value of common stock warrants (3,308) 16,454 Issuance of common stock warrants — 4,905 Exercise of common stock warrants — (27,089) End of period $ 1,083 $ 5,657 Equity Instruments The fair value measurement of the Company’s equity-classified common stock warrants further described in Note 11, Warrant Transaction Agreements, is determined by using Level 3 inputs due to the lack of active and observable markets that can be used to price identical instruments. Fair value of the equity-classified common stock warrants is based on the Monte Carlo pricing model which is based, in part, upon unobservable inputs for which there is little or no market data, requiring the Company to develop its own assumptions. The Company used the following assumptions for its equity-classified common stock warrants: Nine months ended September 30, 2018 September 30, 2017 Risk-free interest rate 2.72% - 2.99% 2.30% - 2.36% Volatility 75.00% - 85.00% 85.00% - 90.00% Expected average term 8.51 - 9.30 9.51 - 10.00 The Monte Carlo pricing models used in the determination of the fair value of the equity-classified warrants also incorporate assumptions involving future revenues associated with Amazon and Walmart, and related timing. The following table represents the fair value per warrant on the execution date of the transaction agreements and as of September 30, 2018: Amazon Warrant Shares Walmart Warrant Shares Issuance date - first tranche $ 1.15 $ 1.88 As of vesting date - second tranche, first installment 2.16 — As of period end - second tranche 1.55 1.45 |
Commitment and Contingencies
Commitment and Contingencies | 9 Months Ended |
Sep. 30, 2018 | |
Commitments and Contingencies. | |
Commitments and Contingencies | 15. Commitments and Contingencies Operating Leases – as Lessor As of September 30, 2018, the Company has several noncancelable operating leases (as lessor), primarily associated with assets deployed at customer sites. These leases expire over the next six to seven years. Leases contain termination clauses with associated penalties, the amount of which cause the likelihood of cancelation to be remote. Future minimum lease payments under noncancelable operating leases (with initial or remaining lease terms in excess of one year) as of September 30, 2018 are (in thousands): Remainder of 2018 $ 6,675 2019 26,569 2020 24,839 2021 20,117 2022 11,340 2023 and thereafter 13,594 Total future minimum lease payments $ 103,134 Operating Leases – as Lessee As of September 30, 2018, the Company has several noncancelable operating leases (as lessee), primarily associated with sale/leaseback transactions that are partially secured by restricted cash (see also Note 1) as summarized below. These leases expire over the next six to seven years. Minimum rent payments under operating leases are recognized on a straight‑line basis over the term of the lease. Leases contain termination clauses with associated penalties, the amount of which cause the likelihood of cancelation to be remote. Future minimum lease payments under noncancelable operating leases (with initial or remaining lease terms in excess of one year) as of September 30, 2018 are (in thousands): Remainder of 2018 $ 4,754 2019 17,675 2020 16,304 2021 11,562 2022 6,110 2023 and thereafter 11,472 Total future minimum lease payments 67,877 Less imputed lease interest (15,929) Total lease liabilities $ 51,948 Rental expense for all operating leases was $3.9 million and $3.4 million for the three months ended September 30, 2018 and 2017, respectively. Rental expense for all operating leases was $11.0 million and $10.0 million for the nine months ended September 30, 2018 and 2017, respectively. The gross profit on sale/leaseback transactions for all operating leases was $6.8 million for the three and nine months ended September 30, 2018. Right of use assets obtained in exchange for new operating lease liabilities were $21.7 million and $23.9 million for three and nine months ended September 30, 2018, respectively. At September 30, 2018 and December 31, 2017, security deposits associated with sale/leaseback transactions were $5.5 million and $8.3 million, respectively and are included in other assets on the unaudited interim consolidated balance sheet. Other information related to the operating leases are presented in the following table. Three months ended Nine months ended September 30, 2018 September 30, 2018 Cash payments $ 3,994 $ 10,617 Weighted average remaining lease term (years) Weighted average discount rate The Company has received cash for future services to be performed associated with certain sale/leaseback transactions and recorded the balance as a finance obligation. The outstanding balance of this obligation at September 30, 2018 and December 31, 2017 is $21.3 million and $10.4 million, respectively. The amount is amortized using the effective interest method. The fair value of this finance obligation approximates the carrying value as of September 30, 2018. Finance Leases – As Lessee During the three and nine months ended September 30, 2018, the Company entered into sale/leaseback transactions, which were accounted for as finance leases and reported as part of finance obligations on the Company’s unaudited interim consolidated balance sheet. In June 2018, the timing and amount of the lease payments from certain previous sale/leaseback transactions were amended to extend the due date. The outstanding balance of finance obligations related to sale/leaseback transactions at September 30, 2018 was $59.5 million. The fair value of the finance obligation approximates the carrying value as of September 30, 2018. Future minimum lease payments under noncancelable finance leases related to sale/leaseback transactions (with initial or remaining lease terms in excess of one year) as of September 30, 2018 are (in thousands): Remainder of 2018 $ 8,889 2019 30,030 2020 6,042 2021 6,042 2022 4,296 2023 and thereafter 17,025 Total future minimum lease payments 72,324 Less imputed lease interest (12,811) Total lease liabilities $ 59,513 Finance lease costs include amortization of the right of use assets (i.e. depreciation expense) and interest of lease liabilities (i.e. interest and other expense, net in the unaudited interim consolidated statement of operations). Finance lease costs for the three and nine months ended September 30, 2018, respectively are (in thousands): Three months ended Nine months ended September 30, 2018 September 30, 2018 Amortization of right of use asset $ 2,193 $ 6,776 Interest on finance obligations 1,837 4,781 Total finance lease cost $ 4,030 $ 11,557 Right of use assets obtained in exchange for new finance lease liabilities were zero and $0.2 million for three and nine months ended September 30, 2018, respectively. The Company has a finance lease associated with its property and equipment in Latham, New York. Liabilities relating to this agreement of $2.5 million and $2.4 million have been recorded as a finance obligation, in the accompanying unaudited interim consolidated balance sheet as of September 30, 2018 and December 31, 2017, respectively. The fair value of this finance obligation approximates the carrying value as of September 30, 2018. Other information related to the finance leases are presented in the following table. Three months ended Nine months ended September 30, 2018 September 30, 2018 Cash payments $ 6,986 $ 26,392 Weighted average remaining lease term (years) Weighted average discount rate Restricted Cash In connection with certain of the above noted sale/leaseback agreements, cash of $48.2 million at September 30, 2018 is required to be restricted as security and will be released over the lease term. The Company has additional letters of credit backed by security deposits as disclosed in the Operating Leases section above. The Company also has letters of credit in the aggregate amount of $0.5 million at September 30, 2018 associated with a finance obligation from the sale/leaseback of its building. Cash collateralizing this letter of credit is also considered restricted cash. Litigation Legal matters are defended and handled in the ordinary course of business. The Company has established accruals for matters for which management considers a loss to be probable and reasonably estimable. It is the opinion of management that facts known at the present time do not indicate that such litigation, after taking into account insurance coverage and the aforementioned accruals, will have a material adverse impact on our results of operations, financial position, or cash flows. Concentrations of credit risk Concentrations of credit risk with respect to receivables exist due to the limited number of select customers with whom the Company has initial commercial sales arrangements. To mitigate credit risk, the Company performs appropriate evaluation of a prospective customer’s financial condition. At September 30, 2018, two customers comprise approximately 75.3% of the total accounts receivable balance. At December 31, 2017, three customers comprised approximately 59.0% of the total accounts receivable balance. For the nine months ended September 30, 2018, 61.9% of total consolidated revenues were associated primarily with two customers, respectively. For the nine months ended September 30, 2017, 66.3% of total consolidated revenues were associated primarily with two customers. |
Subsequent Events
Subsequent Events | 9 Months Ended |
Sep. 30, 2018 | |
Subsequent Events | |
Subsequent Events | 16. Subsequent Events In November 2018, the Company completed a private placement to certain accredited investors of an aggregate of 35,000 shares of the Company’s Series E Convertible Preferred Stock, par value $0.01 per share (Series E Preferred Stock) The net proceeds to the Company were approximately $31.0 million after deducting placement agent fees and expenses payable by the Company. The Series E Preferred Stock is convertible into shares of the Company’s common stock at a conversion price of $2.31 per share. The Company is required to redeem the Series E Preferred Stock for cash (or, subject to certain conditions, at the Company’s option, in common stock or a combination of cash and common stock) in thirteen monthly installments of $2.693 million each from May 2019 through May 2020. Common stock used for redemptions will generally be valued based on a discounted volume weighted average price formula. |
Summary of Significant Accoun_2
Summary of Significant Accounting Policies (Policies) | 9 Months Ended |
Sep. 30, 2018 | |
Summary of Significant Accounting Policies | |
Principles of Consolidation | Principles of Consolidation The accompanying unaudited interim consolidated financial statements include the financial statements of the Company and its wholly-owned subsidiaries. All significant intercompany balances and transactions have been eliminated in consolidation. |
Interim Financial Statements | Interim Financial Statements The accompanying unaudited interim consolidated financial statements have been prepared pursuant to the rules and regulations of the Securities and Exchange Commission (SEC). In the opinion of management, all adjustments, which consist solely of normal recurring adjustments, necessary to present fairly, in accordance with U.S. generally accepted accounting principles (GAAP), the financial position, results of operations and cash flows for all periods presented, have been made. The results of operations for the interim periods presented are not necessarily indicative of the results that may be expected for the full year. Certain information and footnote disclosures normally included in annual consolidated financial statements prepared in accordance with GAAP have been condensed or omitted. These unaudited interim consolidated financial statements should be read in conjunction with the Company’s audited consolidated financial statements and notes thereto included in the Company’s Annual Report on Form 10-K, filed for the fiscal year ended December 31, 2017. The information presented in the accompanying unaudited interim consolidated balance sheet as of December 31, 2017, has been derived from the Company’s December 31, 2017 audited consolidated financial statements. All other information has been derived from the unaudited interim consolidated financial statements of the Company. |
Leases | Leases The Company is a lessee in several noncancelable (1) operating leases, primarily related to sale/leaseback transactions with financial institutions for deployment of the Company’s products at certain customer sites, and (2) finance leases, also primarily related to sale/leaseback transactions with financial institutions for similar commercial purposes. The Company accounts for leases in accordance with ASC Topic 842, Leases (ASC Topic 842), (see Recently Adopted Accounting Standards, as the Company has early adopted ASC Topic 842 in 2018). The Company determines if an arrangement is or contains a lease at contract inception. The Company recognizes a right of use (ROU) asset and a lease liability (i.e. finance obligation) at the lease commencement date. For operating leases, the lease liability is initially measured at the present value of the unpaid lease payments at the lease commencement date. For finance leases, the lease liability is initially measured in the same manner and date as for operating leases, and is subsequently measured at amortized cost using the effective interest method. Key estimates and judgments include how the Company determines (1) the discount rate it uses to discount the unpaid lease payments to present value, (2) lease term and (3) lease payments. · ASC Topic 842 requires a lessee to discount its unpaid lease payments using the interest rate implicit in the lease or, if that rate cannot be readily determined, its incremental borrowing rate. Generally, the Company cannot determine the interest rate implicit in the lease because it does not have access to the lessor’s estimated residual value or the amount of the lessor’s deferred initial direct costs. Therefore, the Company generally uses its incremental borrowing rate as the discount rate for the lease. The Company’s incremental borrowing rate for a lease is the rate of interest it would have to pay on a collateralized basis to borrow an amount equal to the lease payments under similar terms. · The lease term for all of the Company’s leases includes the noncancelable period of the lease, plus any additional periods covered by either a Company option to extend (or not to terminate) the lease that the Company is reasonably certain to exercise, or an option to extend (or not to terminate) the lease controlled by the lessor. · Lease payments included in the measurement of the lease liability comprise fixed payments, and the exercise price of a Company option to purchase the underlying asset if the Company is reasonably certain to exercise the option. The ROU asset is initially measured at cost, which comprises the initial amount of the lease liability adjusted for lease payments made at or before the lease commencement date, plus any initial direct costs incurred less any lease incentives received. For operating leases, the ROU asset is subsequently measured throughout the lease term at the carrying amount of the lease liability, plus initial direct costs, plus (minus) any prepaid (accrued) lease payments, less the unamortized balance of lease incentives received. Lease expense for lease payments is recognized on a straight-line basis over the lease term. For finance leases, the ROU asset is subsequently amortized using the straight-line method from the lease commencement date to the earlier of the end of its useful life or the end of the lease term unless the lease transfers ownership of the underlying asset to the Company or the Company is reasonably certain to exercise an option to purchase the underlying asset. In those cases, the ROU asset is amortized over the useful life of the underlying asset. Amortization of the ROU asset is recognized and presented separately from interest expense on the lease liability. The Company’s leases do not contain variable lease payments. ROU assets for operating and finance leases are periodically reviewed for impairment losses. The Company uses the long-lived assets impairment guidance in ASC Subtopic 360-10, Property, Plant, , to determine whether an ROU asset is impaired, and if so, the amount of the impairment loss to recognize. No impairments losses have been recognized to date. The Company monitors for events or changes in circumstances that require a reassessment of one of its leases. When a reassessment results in the remeasurement of a lease liability, a corresponding adjustment is made to the carrying amount of the corresponding ROU asset. Operating and finance lease ROU assets are presented within leased property, net on the unaudited interim consolidated balance sheet. The current portion of operating and finance lease liabilities is included in finance obligations within current liabilities and the long-term portion is presented in finance obligations within noncurrent liabilities on the consolidated balance sheet. The Company has elected not to recognize ROU assets and lease liabilities for short-term leases that have a lease term of 12 months or less. The Company has elected to apply the short-term lease recognition and measurement exemption for other classes of leased assets. The Company recognizes the lease payments associated with its short-term leases as an expense on a straight-line basis over the lease term. Adoption of ASC Topic 842 - Transition Approach As discussed in Recent Accounting Pronouncements, effective January 1, 2018, the Company early adopted ASC Topic 842. Further, ASU 2018-11 was issued in July 2018, which allowed for a modified retrospective basis of accounting for the transition. The Company selected this transition method and therefore restatement of prior period consolidated financial statements or presentation of comparative disclosures is not necessary. While determining the impact from the transition, the Company elected the practical expedients allowed under ASC 842. The Company did not reassess (1) whether any expired or existing contracts are or contain leases, (2) the lease classification for any expired or existing leases, or (3) initial direct costs for any existing leases. No modifications to leases effective upon January 1, 2018 were noted where hindsight expedients were necessary to apply. |
Revenue Recognition | Revenue Recognition The Company enters into contracts that may contain one or a combination of fuel cell systems and infrastructure, installation, maintenance, spare parts, fuel delivery and other support services. Contracts containing fuel cell systems and related infrastructure may be sold, or provided to customers under a PPA. The Company does not include a right of return on its products other than rights related to standard warranty provisions that permit repair or replacement of defective goods. The Company accrues for anticipated standard warranty costs at the same time that revenue is recognized for the related product, or when circumstances indicate that warranty costs will be incurred, as applicable. Only a limited number of fuel cell units are under standard warranty. Revenue is measured based on the consideration specified in a contract with a customer, subject to the allocation of consideration to individual performance obligations as discussed below. The Company recognizes revenue when it satisfies a performance obligation by transferring control over a product or service to a customer. The Company accounts for each separate performance obligation of multiple deliverable arrangements as a separate unit of accounting if the delivered item or items have value to the customer on a standalone basis. The Company considers a performance obligation to be distinct and have a standalone value if the customer can benefit from the good or service either on its own or together with other resources readily available to the customer and the Company’s promise to transfer the goods or service to the customer is separately identifiable from other promises in the contract. The Company allocates revenue to each separate performance obligation based on relative standalone selling prices. Payment terms for fuel cells, infrastructure and service are invoiced with terms ranging from 30 to 90 days. Service is prepaid upfront in a majority of the arrangements. The Company does not adjust the transaction price for a significant financing component when the performance obligation is expected to be fulfilled within a year. The Company presents the provision for common stock warrants within each revenue-related line item on the consolidated statements of operations. This presentation reflects a discount that those common stock warrants represent, and therefore revenue is net of these non-cash charges. The provision of common stock warrants is allocated to the relevant revenue-related line items based upon the expected mix of the revenue for each respective contract. Nature of goods and services The following is a description of principal activities from which the Company generates its revenue. (i) Revenue from sales of fuel cell systems and related infrastructure represents sales of our GenDrive units, GenSure stationary backup power units, as well as hydrogen fueling infrastructure. The Company considers comparable list prices, as well as historical average pricing approaches to determine standalone selling prices. Once relative standalone selling prices are determined, the Company proportionately allocates the sale consideration to each performance obligation within the customer arrangement. The allocated sales consideration related to fuel cell systems and infrastructure, spare parts, and hydrogen infrastructure is recognized at a point in time, when the performance obligation has been satisfied, which usually occurs at shipment if title and risk of loss have passed to the customer or upon commissioning. (ii) Revenue from services performed on fuel cell systems and related infrastructure represents revenue earned on our service and maintenance contracts and sales of spare parts. The sales consideration allocated to services as discussed above is generally recognized as revenue over time on a straight-line basis over the expected service period. In substantially all of its commercial transactions, the Company sells extended maintenance contracts that generally provide for a five to ten year service period from the date of product installation. Services include monitoring, technical support, maintenance and services that provide for 97-98% uptime of the fleet. These services are accounted for as a separate performance obligation, and accordingly, revenue generated from these transactions, subject to the proportional allocation of sale consideration, is deferred and recognized in income over the term of the contract, generally on a straight-line basis. Additionally, the Company may enter into annual service and extended maintenance contracts that are billed monthly. Revenue generated from these transactions is recognized in income on a straight-line basis over the term of the contract. Costs are recognized as incurred over the term of the contract. Sales of spare parts are included within service revenue on the accompanying unaudited interim consolidated statements of operations. When costs are projected to exceed revenues over the life of the contract, an accrual for loss contracts is recorded. Costs are estimated based upon historical experience and consider the estimated impact of the Company’s cost reduction initiatives. The actual results may differ from these estimates. When costs are projected to exceed revenues over the life of an extended maintenance contract, an accrual for loss contracts is recorded. Costs are estimated based upon historical experience and consider the estimated impact of the Company’s cost reduction initiatives. The actual results may differ from these estimates. Upon expiration of the extended maintenance contracts, customers either choose to extend the contract or switch to purchasing spare parts and maintaining the fuel cell systems on their own. (iii) Revenue from PPAs primarily represents payments received from customers who make monthly payments to access the Company’s GenKey solution. When fuel cell systems and related infrastructure are provided to customers through a PPA, revenues associated with these agreements are treated as rental income and recognized on a straight-line basis over the life of the agreements. In conjunction with entering into a PPA with a customer, the Company may enter into sale/leaseback transactions with third-party financial institutions, whereby the fuel cells, a majority of the related infrastructure, and, in some cases service are sold to the third-party financial institution and leased back to the Company through either an operating or finance lease. Certain of the Company’s sale/leaseback transactions with third-party financial institutions are required to be accounted for as financing leases. As a result, no upfront revenue was recognized at the closing of these transactions and a finance obligation for each lease was established. The fuel cell systems and related infrastructure that are provided to customers through these PPAs are considered leased property on the accompanying unaudited interim consolidated balance sheet. Costs to service the leased property, depreciation of the leased property, and other related costs are considered cost of PPA revenue on the accompanying unaudited interim consolidated statements of operations. Interest cost associated with finance leases is presented within interest and other expense, net on the accompanying unaudited interim consolidated statement of operations. The Company also has sale/leaseback transactions with financial institutions, which were required to be accounted for as an operating lease. The Company has rental expense associated with these sale/leaseback agreements with financial institutions. Rental expense is recognized on a straight-line basis over the life of the agreements and is characterized as cost of PPA revenue on the accompanying unaudited interim consolidated statements of operations. The Company adopted ASC Topic 842, effective January 1, 2018. As part of the adoption, the Company elected the practical expedient to not separate lease and non-lease components (i.e. maintenance services) within its rental income related to all PPA-related assets. (iv) Revenue associated with fuel delivered to customers represents the sale of hydrogen to customers that has been purchased by the Company from a third party or generated on site. The Company purchases hydrogen fuel from suppliers and sells to its customers upon delivery. Revenue and cost of revenue related to this fuel is recorded as dispensed, and is included in the respective “Fuel delivered to customers” lines on the unaudited interim consolidated statements of operations. (v) Other revenue primarily represents cost reimbursement research and development contracts associated with the development of PEM fuel cell technology. Contract accounting is used for research and development contract revenue. The Company generally shares in the cost of these programs with cost sharing percentages ranging from 30% to 50% of total project costs. Revenue from time and material contracts is recognized on the basis of hours expended plus other reimbursable contract costs incurred during the period and is included within the “other” revenue line on the unaudited interim consolidated statements of operations. All allowable work performed through the end of each calendar quarter is billed, subject to limitations in the respective contracts. Contract costs The Company expects that incremental commission fees paid to employees as a result of obtaining sales contracts are recoverable and therefore the Company capitalizes them as contract costs. Capitalized commission fees are amortized on a straight line basis over the period of time over which the transfer of goods or services to which the assets relate occur, typically ranging from 5 to 10 years. Amortization of the capitalized commission fees is included in selling, general, and administrative expenses. The Company recognizes the incremental costs of obtaining contracts as an expense when incurred if the amortization period of the assets that the Company otherwise would have recognized is one year or less. These costs are included in selling, general, and administrative expenses. During 2017, the Company issued warrants to Amazon.com, Inc. (Amazon) and Walmart. The fair value of warrants associated with each of these transactions are accounted for as revenue incentives as described in Note 11, Warrant Transaction Agreements. Adoption of ASC Topic 606 - Transition Approach As discussed in Recent Accounting Pronouncements, on January 1, 2018, the Company adopted ASC Topic 606, Revenue from Contracts with Customers (ASC Topic 606), which offers two transition approaches: full retrospective and modified retrospective. The Company chose the modified retrospective approach as its transition method and will not experience a significant effect on the timing and amount of revenue recognized or the amount of revenue allocated to the identified performance obligations. There was an insignificant amount of historical contract acquisition costs that were expensed and were not capitalized upon adoption of ASC Topic 606. However, upon adoption, contract acquisition costs of $0.1 million were capitalized and are being amortized as described above. |
Cash Equivalents | Cash Equivalents Cash equivalents consist of money market accounts with an initial term of less than three months. At September 30, 2018 and December 31, 2017, cash equivalents consist of money market accounts. For purposes of the unaudited interim consolidated statements of cash flows, the Company considers all highly-liquid debt instruments with original maturities of three months or less to be cash equivalents. The Company’s cash and cash equivalents are deposited with financial institutions located in the U.S. and may at times exceed insured limits. |
Common Stock Warrant Accounting | Common Stock Warrant Accounting The Company accounts for common stock warrants as either derivative liabilities or as equity instruments depending on the specific terms of the warrant agreement. |
Derivative Liabilities | Derivative Liabilities Registered common stock warrants that require the issuance of registered shares upon exercise and do not sufficiently preclude an implied right to cash settlement are accounted for as derivative liabilities. We currently classify these derivative warrant liabilities on the accompanying unaudited interim consolidated balance sheet as a long-term liability, which are revalued at each balance sheet date subsequent to the initial issuance, using the Black-Scholes pricing model. This pricing model, which is based, in part, upon unobservable inputs for which there is little or no market data, requires the Company to develop its own assumptions. Changes in the fair value of the warrants are reflected in the accompanying unaudited interim consolidated statements of operations as change in fair value of common stock warrant liability. |
Equity Instruments | Equity Instruments Common stock warrants that meet certain applicable requirements of ASC Topic 815-40, Derivatives and Hedging – Contracts in Entity’s Own Equity, and other related guidance, including the ability of the Company to settle the warrants without the issuance of registered shares or the absence of rights of the grantee to require cash settlement, are accounted for as equity instruments. The Company classifies these equity instruments within additional paid-in capital on the accompanying unaudited interim consolidated balance sheet and the estimated fair value is presented as a reduction of the applicable revenue stream. Common stock warrants accounted for as equity instruments represent the warrants issued to Amazon and Walmart as discussed in Note 11. These warrants are remeasured at each financial reporting date prior to vesting, using the Monte Carlo pricing model. Once these warrants vest, they are no longer remeasured. This pricing model, which is based, in part, upon unobservable inputs for which there is little or no market data, requires the Company to develop its own assumptions. Changes in fair value resulting from remeasurement of common stock warrants issued in connection with the Amazon Transaction Agreement and the Walmart Transaction Agreement, as described in Note 11, Warrant Transaction Agreements, and are recorded as cumulative catch up adjustments as a reduction of revenue. |
Convertible Senior Notes | Convertible Senior Notes The Company accounts for the issued Convertible Senior Notes with separate liability and equity components. The carrying amount of the liability component was initially determined by estimating the fair value of a similar debt instrument that does not have an associated convertible feature. The carrying amount of the equity component representing the conversion option was determined by deducting the estimated fair value of the liability component from the par value of the Convertible Senior Notes as a whole as of the date of issuance. This difference represents a debt discount that is amortized to interest expense, with a corresponding increase to the carrying amount of the liability component, over the term of the Convertible Senior Notes using the effective interest rate method. The equity component is not remeasured as long as it continues to meet the conditions for equity classification. The Company has allocated issuance costs incurred to the liability and equity components. Issuance costs attributable to the liability component are being amortized to expense over the respective term of the Convertible Senior Notes, and issuance costs attributable to the equity components were netted with the respective equity component in additional paid-in capital. |
Use of Estimates | Use of Estimates The unaudited interim consolidated financial statements of the Company have been prepared in conformity with GAAP, which require management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the unaudited interim consolidated financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates. |
Reclassifications and correction of Immaterial Errors | Reclassifications and Correction of Immaterial Errors Reclassifications are made, whenever necessary, to prior period financial statements to conform to the current period presentation. The provision for common stock warrants presented historically as one line item on the consolidated statements of operations has been allocated to each of the relevant revenue line items. This reclassification did not have an impact on gross profit (loss) or net loss within the consolidated statements of operations or major categories within the consolidated statements of cash flows in the periods presented. In the third quarter of 2018, it was determined that the presentation in the consolidated statements of operations of certain service arrangements and the amortization of the associated finance obligations had not been appropriately accounted for resulting in an overstatement of our revenue and cost of revenue. This presentation resulted in a gross up of these line items and had no impact on gross profit (loss) or net loss. The Company corrected the 2017 unaudited interim consolidated financial statements to be consistent with the current period presentation and will correct comparable financial information in future filings. The amount reclassified from revenue on service performed on fuel cell systems and related infrastructure to cost of revenue on PPAs for the three and nine months ended September 30, 2017 was $0.8 million and $2.3 million, respectively. The amount reclassified from cost of revenue on service performed on fuel cell systems and related infrastructure to cost of revenue on PPAs for the three and nine months ended September 30, 2017 was $1.2 million and $2.7 million, respectively. The Company does not consider the impact of the prior period correction to be material to the prior period consolidated financial statements. |
Recent Accounting Pronouncements | 2. Summary of Significant Accounting Policies Principles of Consolidation The accompanying unaudited interim consolidated financial statements include the financial statements of the Company and its wholly-owned subsidiaries. All significant intercompany balances and transactions have been eliminated in consolidation. Interim Financial Statements The accompanying unaudited interim consolidated financial statements have been prepared pursuant to the rules and regulations of the Securities and Exchange Commission (SEC). In the opinion of management, all adjustments, which consist solely of normal recurring adjustments, necessary to present fairly, in accordance with U.S. generally accepted accounting principles (GAAP), the financial position, results of operations and cash flows for all periods presented, have been made. The results of operations for the interim periods presented are not necessarily indicative of the results that may be expected for the full year. Certain information and footnote disclosures normally included in annual consolidated financial statements prepared in accordance with GAAP have been condensed or omitted. These unaudited interim consolidated financial statements should be read in conjunction with the Company’s audited consolidated financial statements and notes thereto included in the Company’s Annual Report on Form 10-K, filed for the fiscal year ended December 31, 2017. The information presented in the accompanying unaudited interim consolidated balance sheet as of December 31, 2017, has been derived from the Company’s December 31, 2017 audited consolidated financial statements. All other information has been derived from the unaudited interim consolidated financial statements of the Company. Leases The Company is a lessee in several noncancelable (1) operating leases, primarily related to sale/leaseback transactions with financial institutions for deployment of the Company’s products at certain customer sites, and (2) finance leases, also primarily related to sale/leaseback transactions with financial institutions for similar commercial purposes. The Company accounts for leases in accordance with ASC Topic 842, Leases (ASC Topic 842), (see Recently Adopted Accounting Standards, as the Company has early adopted ASC Topic 842 in 2018). The Company determines if an arrangement is or contains a lease at contract inception. The Company recognizes a right of use (ROU) asset and a lease liability (i.e. finance obligation) at the lease commencement date. For operating leases, the lease liability is initially measured at the present value of the unpaid lease payments at the lease commencement date. For finance leases, the lease liability is initially measured in the same manner and date as for operating leases, and is subsequently measured at amortized cost using the effective interest method. Key estimates and judgments include how the Company determines (1) the discount rate it uses to discount the unpaid lease payments to present value, (2) lease term and (3) lease payments. · ASC Topic 842 requires a lessee to discount its unpaid lease payments using the interest rate implicit in the lease or, if that rate cannot be readily determined, its incremental borrowing rate. Generally, the Company cannot determine the interest rate implicit in the lease because it does not have access to the lessor’s estimated residual value or the amount of the lessor’s deferred initial direct costs. Therefore, the Company generally uses its incremental borrowing rate as the discount rate for the lease. The Company’s incremental borrowing rate for a lease is the rate of interest it would have to pay on a collateralized basis to borrow an amount equal to the lease payments under similar terms. · The lease term for all of the Company’s leases includes the noncancelable period of the lease, plus any additional periods covered by either a Company option to extend (or not to terminate) the lease that the Company is reasonably certain to exercise, or an option to extend (or not to terminate) the lease controlled by the lessor. · Lease payments included in the measurement of the lease liability comprise fixed payments, and the exercise price of a Company option to purchase the underlying asset if the Company is reasonably certain to exercise the option. The ROU asset is initially measured at cost, which comprises the initial amount of the lease liability adjusted for lease payments made at or before the lease commencement date, plus any initial direct costs incurred less any lease incentives received. For operating leases, the ROU asset is subsequently measured throughout the lease term at the carrying amount of the lease liability, plus initial direct costs, plus (minus) any prepaid (accrued) lease payments, less the unamortized balance of lease incentives received. Lease expense for lease payments is recognized on a straight-line basis over the lease term. For finance leases, the ROU asset is subsequently amortized using the straight-line method from the lease commencement date to the earlier of the end of its useful life or the end of the lease term unless the lease transfers ownership of the underlying asset to the Company or the Company is reasonably certain to exercise an option to purchase the underlying asset. In those cases, the ROU asset is amortized over the useful life of the underlying asset. Amortization of the ROU asset is recognized and presented separately from interest expense on the lease liability. The Company’s leases do not contain variable lease payments. ROU assets for operating and finance leases are periodically reviewed for impairment losses. The Company uses the long-lived assets impairment guidance in ASC Subtopic 360-10, Property, Plant, , to determine whether an ROU asset is impaired, and if so, the amount of the impairment loss to recognize. No impairments losses have been recognized to date. The Company monitors for events or changes in circumstances that require a reassessment of one of its leases. When a reassessment results in the remeasurement of a lease liability, a corresponding adjustment is made to the carrying amount of the corresponding ROU asset. Operating and finance lease ROU assets are presented within leased property, net on the unaudited interim consolidated balance sheet. The current portion of operating and finance lease liabilities is included in finance obligations within current liabilities and the long-term portion is presented in finance obligations within noncurrent liabilities on the consolidated balance sheet. The Company has elected not to recognize ROU assets and lease liabilities for short-term leases that have a lease term of 12 months or less. The Company has elected to apply the short-term lease recognition and measurement exemption for other classes of leased assets. The Company recognizes the lease payments associated with its short-term leases as an expense on a straight-line basis over the lease term. Adoption of ASC Topic 842 - Transition Approach As discussed in Recent Accounting Pronouncements, effective January 1, 2018, the Company early adopted ASC Topic 842. Further, ASU 2018-11 was issued in July 2018, which allowed for a modified retrospective basis of accounting for the transition. The Company selected this transition method and therefore restatement of prior period consolidated financial statements or presentation of comparative disclosures is not necessary. While determining the impact from the transition, the Company elected the practical expedients allowed under ASC 842. The Company did not reassess (1) whether any expired or existing contracts are or contain leases, (2) the lease classification for any expired or existing leases, or (3) initial direct costs for any existing leases. No modifications to leases effective upon January 1, 2018 were noted where hindsight expedients were necessary to apply. Revenue Recognition The Company enters into contracts that may contain one or a combination of fuel cell systems and infrastructure, installation, maintenance, spare parts, fuel delivery and other support services. Contracts containing fuel cell systems and related infrastructure may be sold, or provided to customers under a PPA. The Company does not include a right of return on its products other than rights related to standard warranty provisions that permit repair or replacement of defective goods. The Company accrues for anticipated standard warranty costs at the same time that revenue is recognized for the related product, or when circumstances indicate that warranty costs will be incurred, as applicable. Only a limited number of fuel cell units are under standard warranty. Revenue is measured based on the consideration specified in a contract with a customer, subject to the allocation of consideration to individual performance obligations as discussed below. The Company recognizes revenue when it satisfies a performance obligation by transferring control over a product or service to a customer. The Company accounts for each separate performance obligation of multiple deliverable arrangements as a separate unit of accounting if the delivered item or items have value to the customer on a standalone basis. The Company considers a performance obligation to be distinct and have a standalone value if the customer can benefit from the good or service either on its own or together with other resources readily available to the customer and the Company’s promise to transfer the goods or service to the customer is separately identifiable from other promises in the contract. The Company allocates revenue to each separate performance obligation based on relative standalone selling prices. Payment terms for fuel cells, infrastructure and service are invoiced with terms ranging from 30 to 90 days. Service is prepaid upfront in a majority of the arrangements. The Company does not adjust the transaction price for a significant financing component when the performance obligation is expected to be fulfilled within a year. The Company presents the provision for common stock warrants within each revenue-related line item on the consolidated statements of operations. This presentation reflects a discount that those common stock warrants represent, and therefore revenue is net of these non-cash charges. The provision of common stock warrants is allocated to the relevant revenue-related line items based upon the expected mix of the revenue for each respective contract. Nature of goods and services The following is a description of principal activities from which the Company generates its revenue. (i) Revenue from sales of fuel cell systems and related infrastructure represents sales of our GenDrive units, GenSure stationary backup power units, as well as hydrogen fueling infrastructure. The Company considers comparable list prices, as well as historical average pricing approaches to determine standalone selling prices. Once relative standalone selling prices are determined, the Company proportionately allocates the sale consideration to each performance obligation within the customer arrangement. The allocated sales consideration related to fuel cell systems and infrastructure, spare parts, and hydrogen infrastructure is recognized at a point in time, when the performance obligation has been satisfied, which usually occurs at shipment if title and risk of loss have passed to the customer or upon commissioning. (ii) Revenue from services performed on fuel cell systems and related infrastructure represents revenue earned on our service and maintenance contracts and sales of spare parts. The sales consideration allocated to services as discussed above is generally recognized as revenue over time on a straight-line basis over the expected service period. In substantially all of its commercial transactions, the Company sells extended maintenance contracts that generally provide for a five to ten year service period from the date of product installation. Services include monitoring, technical support, maintenance and services that provide for 97-98% uptime of the fleet. These services are accounted for as a separate performance obligation, and accordingly, revenue generated from these transactions, subject to the proportional allocation of sale consideration, is deferred and recognized in income over the term of the contract, generally on a straight-line basis. Additionally, the Company may enter into annual service and extended maintenance contracts that are billed monthly. Revenue generated from these transactions is recognized in income on a straight-line basis over the term of the contract. Costs are recognized as incurred over the term of the contract. Sales of spare parts are included within service revenue on the accompanying unaudited interim consolidated statements of operations. When costs are projected to exceed revenues over the life of the contract, an accrual for loss contracts is recorded. Costs are estimated based upon historical experience and consider the estimated impact of the Company’s cost reduction initiatives. The actual results may differ from these estimates. When costs are projected to exceed revenues over the life of an extended maintenance contract, an accrual for loss contracts is recorded. Costs are estimated based upon historical experience and consider the estimated impact of the Company’s cost reduction initiatives. The actual results may differ from these estimates. Upon expiration of the extended maintenance contracts, customers either choose to extend the contract or switch to purchasing spare parts and maintaining the fuel cell systems on their own. (iii) Revenue from PPAs primarily represents payments received from customers who make monthly payments to access the Company’s GenKey solution. When fuel cell systems and related infrastructure are provided to customers through a PPA, revenues associated with these agreements are treated as rental income and recognized on a straight-line basis over the life of the agreements. In conjunction with entering into a PPA with a customer, the Company may enter into sale/leaseback transactions with third-party financial institutions, whereby the fuel cells, a majority of the related infrastructure, and, in some cases service are sold to the third-party financial institution and leased back to the Company through either an operating or finance lease. Certain of the Company’s sale/leaseback transactions with third-party financial institutions are required to be accounted for as financing leases. As a result, no upfront revenue was recognized at the closing of these transactions and a finance obligation for each lease was established. The fuel cell systems and related infrastructure that are provided to customers through these PPAs are considered leased property on the accompanying unaudited interim consolidated balance sheet. Costs to service the leased property, depreciation of the leased property, and other related costs are considered cost of PPA revenue on the accompanying unaudited interim consolidated statements of operations. Interest cost associated with finance leases is presented within interest and other expense, net on the accompanying unaudited interim consolidated statement of operations. The Company also has sale/leaseback transactions with financial institutions, which were required to be accounted for as an operating lease. The Company has rental expense associated with these sale/leaseback agreements with financial institutions. Rental expense is recognized on a straight-line basis over the life of the agreements and is characterized as cost of PPA revenue on the accompanying unaudited interim consolidated statements of operations. The Company adopted ASC Topic 842, effective January 1, 2018. As part of the adoption, the Company elected the practical expedient to not separate lease and non-lease components (i.e. maintenance services) within its rental income related to all PPA-related assets. (iv) Revenue associated with fuel delivered to customers represents the sale of hydrogen to customers that has been purchased by the Company from a third party or generated on site. The Company purchases hydrogen fuel from suppliers and sells to its customers upon delivery. Revenue and cost of revenue related to this fuel is recorded as dispensed, and is included in the respective “Fuel delivered to customers” lines on the unaudited interim consolidated statements of operations. (v) Other revenue primarily represents cost reimbursement research and development contracts associated with the development of PEM fuel cell technology. Contract accounting is used for research and development contract revenue. The Company generally shares in the cost of these programs with cost sharing percentages ranging from 30% to 50% of total project costs. Revenue from time and material contracts is recognized on the basis of hours expended plus other reimbursable contract costs incurred during the period and is included within the “other” revenue line on the unaudited interim consolidated statements of operations. All allowable work performed through the end of each calendar quarter is billed, subject to limitations in the respective contracts. Contract costs The Company expects that incremental commission fees paid to employees as a result of obtaining sales contracts are recoverable and therefore the Company capitalizes them as contract costs. Capitalized commission fees are amortized on a straight line basis over the period of time over which the transfer of goods or services to which the assets relate occur, typically ranging from 5 to 10 years. Amortization of the capitalized commission fees is included in selling, general, and administrative expenses. The Company recognizes the incremental costs of obtaining contracts as an expense when incurred if the amortization period of the assets that the Company otherwise would have recognized is one year or less. These costs are included in selling, general, and administrative expenses. During 2017, the Company issued warrants to Amazon.com, Inc. (Amazon) and Walmart. The fair value of warrants associated with each of these transactions are accounted for as revenue incentives as described in Note 11, Warrant Transaction Agreements. Adoption of ASC Topic 606 - Transition Approach As discussed in Recent Accounting Pronouncements, on January 1, 2018, the Company adopted ASC Topic 606, Revenue from Contracts with Customers (ASC Topic 606), which offers two transition approaches: full retrospective and modified retrospective. The Company chose the modified retrospective approach as its transition method and will not experience a significant effect on the timing and amount of revenue recognized or the amount of revenue allocated to the identified performance obligations. There was an insignificant amount of historical contract acquisition costs that were expensed and were not capitalized upon adoption of ASC Topic 606. However, upon adoption, contract acquisition costs of $0.1 million were capitalized and are being amortized as described above. Cash Equivalents Cash equivalents consist of money market accounts with an initial term of less than three months. At September 30, 2018 and December 31, 2017, cash equivalents consist of money market accounts. For purposes of the unaudited interim consolidated statements of cash flows, the Company considers all highly-liquid debt instruments with original maturities of three months or less to be cash equivalents. The Company’s cash and cash equivalents are deposited with financial institutions located in the U.S. and may at times exceed insured limits. Common Stock Warrant Accounting The Company accounts for common stock warrants as either derivative liabilities or as equity instruments depending on the specific terms of the warrant agreement. Derivative Liabilities Registered common stock warrants that require the issuance of registered shares upon exercise and do not sufficiently preclude an implied right to cash settlement are accounted for as derivative liabilities. We currently classify these derivative warrant liabilities on the accompanying unaudited interim consolidated balance sheet as a long-term liability, which are revalued at each balance sheet date subsequent to the initial issuance, using the Black-Scholes pricing model. This pricing model, which is based, in part, upon unobservable inputs for which there is little or no market data, requires the Company to develop its own assumptions. Changes in the fair value of the warrants are reflected in the accompanying unaudited interim consolidated statements of operations as change in fair value of common stock warrant liability. Equity Instruments Common stock warrants that meet certain applicable requirements of ASC Topic 815-40, Derivatives and Hedging – Contracts in Entity’s Own Equity, and other related guidance, including the ability of the Company to settle the warrants without the issuance of registered shares or the absence of rights of the grantee to require cash settlement, are accounted for as equity instruments. The Company classifies these equity instruments within additional paid-in capital on the accompanying unaudited interim consolidated balance sheet and the estimated fair value is presented as a reduction of the applicable revenue stream. Common stock warrants accounted for as equity instruments represent the warrants issued to Amazon and Walmart as discussed in Note 11. These warrants are remeasured at each financial reporting date prior to vesting, using the Monte Carlo pricing model. Once these warrants vest, they are no longer remeasured. This pricing model, which is based, in part, upon unobservable inputs for which there is little or no market data, requires the Company to develop its own assumptions. Changes in fair value resulting from remeasurement of common stock warrants issued in connection with the Amazon Transaction Agreement and the Walmart Transaction Agreement, as described in Note 11, Warrant Transaction Agreements, and are recorded as cumulative catch up adjustments as a reduction of revenue. Convertible Senior Notes The Company accounts for the issued Convertible Senior Notes with separate liability and equity components. The carrying amount of the liability component was initially determined by estimating the fair value of a similar debt instrument that does not have an associated convertible feature. The carrying amount of the equity component representing the conversion option was determined by deducting the estimated fair value of the liability component from the par value of the Convertible Senior Notes as a whole as of the date of issuance. This difference represents a debt discount that is amortized to interest expense, with a corresponding increase to the carrying amount of the liability component, over the term of the Convertible Senior Notes using the effective interest rate method. The equity component is not remeasured as long as it continues to meet the conditions for equity classification. The Company has allocated issuance costs incurred to the liability and equity components. Issuance costs attributable to the liability component are being amortized to expense over the respective term of the Convertible Senior Notes, and issuance costs attributable to the equity components were netted with the respective equity component in additional paid-in capital. Use of Estimates The unaudited interim consolidated financial statements of the Company have been prepared in conformity with GAAP, which require management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the unaudited interim consolidated financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates. Reclassifications and Correction of Immaterial Errors Reclassifications are made, whenever necessary, to prior period financial statements to conform to the current period presentation. The provision for common stock warrants presented historically as one line item on the consolidated statements of operations has been allocated to each of the relevant revenue line items. This reclassification did not have an impact on gross profit (loss) or net loss within the consolidated statements of operations or major categories within the consolidated statements of cash flows in the periods presented. In the third quarter of 2018, it was determined that the presentation in the consolidated statements of operations of certain service arrangements and the amortization of the associated finance obligations had not been appropriately accounted for resulting in an overstatement of our revenue and cost of revenue. This presentation resulted in a gross up of these line items and had no impact on gross profit (loss) or net loss. The Company corrected the 2017 unaudited interim consolidated financial statements to be consistent with the current period presentation and will correct comparable financial information in future filings. The amount reclassified from revenue on service performed on fuel cell systems and related infrastructure to cost of revenue on PPAs for the three and nine months ended September 30, 2017 was $0.8 million and $2.3 million, respectively. The amount reclassified from cost of revenue on service performed on fuel cell systems and related infrastructure to cost of revenue on PPAs for the three and nine months ended September 30, 2017 was $1.2 million and $2.7 million, respectively. The Company does not consider the impact of the prior period correction to be material to the prior period consolidated financial statements. Recent Accounting Pronouncements Recently Adopted Accounting Pronouncements In September 2018, the Company early adopted ASC Topic 842, as amended effective January 1, 2018 and elected the available practical expedients. The adoption of ASU 2016-02 had an insignificant impact on the Company’s unaudited interim consolidated statements of operations. The most significant impact was the recognition of right of use assets and finance obligations for operating leases on the consolidated unaudited interim balance sheet, as well as expanded disclosures. The table below summarizes the impact of this initial adoption to the consolidated balance sheet as of January 1, 2018 (in thousands). In addition, the unaudited interim consolidated statements of operations for the nine months ended September 30, 2018 was impacted by a decrease of depreciation expenses of $0.3 million. See Note 15, Commitments and Contingencies for gross profit recognized on sale/leaseback transactions accounted for under ASC Topic 842. Recognition of right of use asset $ 34,416 Decrease in accrued expenses 385 Recognition of finance obligation (34,161) Decrease in prepaid expenses and other assets (3,229) Decrease in leased property, net of accumulated depreciation (563) Increase in accumulated deficit 3,487 In June 2014, an accounting update was issued that replaces the existing revenue recognition framework regarding contracts with customers. The Company adopted this accounting update as of January 1, 2018. The standard outlines a five-step model whereby revenue is recognized as performance obligations within a contract are satisfied. The standard also requires new, expanded disclosures regarding revenue recognition. The Company did not experience a significant effect on the timing and amount of revenue recognized or the amount of revenue allocated to the identified performance obligations. There is an insignificant amount of historical contract acquisition costs that were expensed under prior guidance and were not capitalized upon adoption of ASC Topic 606. However, in subsequent periods, contract acquisition costs are capitalized in accordance with ASC Topic 606 (see Note 12). In October 2016, an accounting update was issued to simplify how an entity should recognize the income tax consequences of an intra-entity transfer of an asset other than inventory when the transfer occurs. Consequently, the amendments in this update eliminate the exception for an intra-entity transfer of an asset other than inventory. Two common examples of assets included in the scope of this update are intellectual property and property, plant, and equipment. The Company adopted this update on January 1, 2018 and it did not have any effect on the consolidated financial statements because our net tax position is zero. In November 2016, an accounting update was issued to reduce the existing diversity in the classification and presentation of changes in restricted cash on the statements of cash flows. This accounting update was adopted retrospectively by the Company on January 1, 2018. The adoption of this update impacts the cash flows from financing activities due to the change in the presentation of restricted cash within the consolidated statements of cash flows. Net cash flows from financing activities and change in cash and cash equivalents, which now includes restricted cash, increased by $5.0 million for the nine months ended September 30, 2018 and decreased by 6.1 million for the nine months ended September 30 2017. Recently Issued and Not Yet Adopted Accounting Pronouncements In August 2018, an accounting update was issued to help entities evaluate the accounting for fees paid by a customer in cloud computing arrangement (hosting arrangement) by providing guidance for determining when the arrangement includes a software license. The amendments in this update are effective for public companies beginning after December 15, 2019. Early adoption of the amendments in this update are permitted. The Company is evaluating the adoption method and impact this update will have on the consolidated financial statements. In June 2018, an accounting update was issued to simplify the accounting for nonemployee share-based payment transactions resulting from expanding the scope of ASC Topic 718, Compensation-Stock Compensation, to include share-based payment transactions for acquiring goods and services from nonemployees. An entity should apply the requirements of ASC Topic 718 to nonemployee awards except for specific guidance on inputs to an option pricing model and the attribution of cost (that is, the period of time over which share-based payment awards vest and the pattern of cost recognition over that period). The amendments specify that ASC Topic 718 applies to all share-based payment transactions in which a grantor acquires goods or services to be used or consumed in a grantor’s own operations by issuing share-based payment awards. The amendments also clarify that ASC Topic 718 does not apply to share-based payments used to effectively provide (1) financing to the issuer or (2) awards granted in conjunction with selling goods or services to customers as part of a contract accounted for under ASC Topic 606, Revenue from Contracts with Customers. The amendments in this accounting update are effective for public business entities for fiscal years beginning after December 15, 2018, including interim periods within that fiscal year. Early adoption is permitted, but no earlier than an entity’s adoption date of ASC Topic 606. The Company is evaluating the impact this update will have on the consolidated financial statements. In January 2017, an accounting update was issued to simplify how an entity is required to test goodwill for impairment by eliminating Step 2 from the goodwill impairment test. Step 2 measures a goodwill impairment loss by comparing the implied fair value of a reporting unit’s goodwill with the carrying amount of that goodwill. This accounting update is effective for years beginning after December 15, 2019. Early adoption is permitted for interim or annual goodwill impairment tests performed on testing dates after January 1, 2017. The Company is evaluating the impact this update will have on the consolidated financial statements. In August 2016, an accounting update was issued to reduce the existing diversity in practice in how certain cash receipts and cash payments are presented and classified in the statement of cash flows. This accounting update is effective for fiscal years beginning after December 15, 2018, and interim periods within fiscal years beginning after December 15, 2019. Early adoption is permitted, including adoption in an interim period. The Company is evaluating the impact this update will have on the consolidated financial statements. |
Summary of Significant Accoun_3
Summary of Significant Accounting Policies (Tables) | 9 Months Ended |
Sep. 30, 2018 | |
Summary of Significant Accounting Policies | |
Summary of impact due to adoption of new accounting pronouncements | Recognition of right of use asset $ 34,416 Decrease in accrued expenses 385 Recognition of finance obligation (34,161) Decrease in prepaid expenses and other assets (3,229) Decrease in leased property, net of accumulated depreciation (563) Increase in accumulated deficit 3,487 |
Earnings Per Share (Tables)
Earnings Per Share (Tables) | 9 Months Ended |
Sep. 30, 2018 | |
Earnings Per Share. | |
Schedule of potential dilutive common shares | At September 30, 2018 2017 Stock options outstanding (1) 22,111,243 19,965,599 Restricted stock outstanding (2) 2,367,347 248,077 Common stock warrants (3) 115,824,142 115,824,242 Preferred stock (4) 2,782,075 2,782,075 Convertible Senior Notes 43,630,020 — Number of dilutive potential common shares 186,714,827 138,819,993 (1) During the three months ended September 30, 2018 and 2017, the Company granted 2,170,000 and 5,030,000 stock options, respectively. During the nine months ended September 30, 2018 and 2017, the Company granted 2,654,667 and 5,480,863 stock options, respectively. (2) During the three months ended September 30, 2018 and 2017, the Company granted 2,160,000 and zero shares of restricted stock, respectively. During the nine months ended September 30, 2018 and 2017, the Company granted 2,367,347 and 234,744 shares of restricted stock, respectively. (3) In February 2013, the Company issued 23,637,500 warrants as part of an underwritten public offering with an exercise price of $0.15 per warrant. Of these warrants issued in February 2013, zero and 100 were unexercised as of September 30, 2018 and 2017. In January 2014, the Company issued 4,000,000 warrants as part of an underwritten public offering with an exercise price of $4.00 per warrant. In December 2016, as a result of additional public offerings, and pursuant to the effect of the anti-dilution provisions of these warrants, the exercise price of the $4.00 warrants was reduced to $0.65. Of these warrants issued in January 2014, all 4,000,000 warrants were exercised during 2017, as described in Note 9, Stockholders’ Equity. In December 2016, the Company issued 10,501,500 warrants as part of two concurrent underwritten public offerings with an exercise price of $1.50 per warrant. Of these warrants issued in December 2016, all 10,501,500 warrants were exercised during 2017, as described in Note 9, Stockholders’ Equity. In April 2017, the Company issued 5,250,750 warrants with an exercise price of $2.69 per warrant, as described in Note 9, Stockholders’ Equity. Of these warrants issued in April 2017, none have been exercised as of September 30, 2018. In April 2017, the Company issued warrants to acquire up to 55,286,696 of the Company’s common stock as part of a transaction agreement, subject to certain vesting events, as described in Note 11, Warrant Transaction Agreements. Of these warrants issued, none have been exercised as of September 30, 2018. In July 2017, the Company issued warrants to acquire up to 55,286,696 of the Company’s common stock as part of a transaction agreement, subject to certain vesting events, as described in Note 11, Warrant Transaction Agreements. Of these warrants issued, none have been exercised as of September 30, 2018. (4) The preferred stock amount represents the dilutive potential common shares of the Series C redeemable convertible preferred stock, based on the conversion price of the preferred stock as of September 30, 2018 and 2017, respectively. Of the 10,431 Series C redeemable preferred stock issued on May 16, 2013, 7,811 and 5,200 had been converted to common stock through September 30, 2018 and 2017, respectively, with the remainder still outstanding. Of the 18,500 Series D redeemable convertible preferred stock issued on December 22, 2016, 3,700 shares were redeemed during the three months ended March 31, 2017 and the remaining 14,800 were converted to common stock during the nine months ended September 30, 2017. |
Inventory (Tables)
Inventory (Tables) | 9 Months Ended |
Sep. 30, 2018 | |
Inventory. | |
Schedule of Inventory | Inventory as of September 30, 2018 and December 31, 2017 consists of the following (in thousands): September 30, 2018 December 31, 2017 Raw materials and supplies $ 40,119 $ 42,851 Work-in-process 10,088 3,492 Finished goods 3,221 2,433 $ 53,428 $ 48,776 |
Leased Property (Tables)
Leased Property (Tables) | 9 Months Ended |
Sep. 30, 2018 | |
Leased Property | |
Schedule of Leased Property | Leased property at September 30, 2018 and December 31, 2017 consists of the following (in thousands): September 30, December 31, 2018 2017 Right of use assets - operating $ 55,582 $ — Right of use asset - finance 40,010 — Capitalized costs of lessor assets 43,249 98,877 Less: accumulated depreciation (8,826) (11,812) Leased property, net $ 130,015 $ 87,065 |
Intangible Assets (Tables)
Intangible Assets (Tables) | 9 Months Ended |
Sep. 30, 2018 | |
Intangible Assets. | |
Schedule of Intangible assets | The gross carrying amount and accumulated amortization of the Company’s acquired identifiable intangible assets as of September 30, 2018 are as follows (in thousands): Weighted Average Gross Carrying Accumulated Amortization Period Amount Amortization Total Acquired technology 9 years $ 5,941 (2,032) 3,909 Customer relationships 10 years 260 (117) 143 Trademark 5 years 60 (54) 6 $ 6,261 $ (2,203) $ 4,058 The gross carrying amount and accumulated amortization of the Company’s acquired identifiable intangible assets as of December 31, 2017 are as follows (in thousands): Weighted Average Gross Carrying Accumulated Amortization Period Amount Amortization Total Acquired technology 9 years $ 5,200 $ (1,593) $ 3,607 Customer relationships 10 years 260 (97) 163 Trademark 5 years 60 (45) 15 $ 5,520 $ (1,735) $ 3,785 |
Schedule of future amortization of intangible assets | Estimated amortization expense for subsequent years is as follows (in thousands): Remainder of 2018 $ 175 2019 590 2020 554 2021 554 2022 554 2023 and thereafter 1,631 Total $ 4,058 |
Convertible Senior Notes (Table
Convertible Senior Notes (Tables) | 9 Months Ended |
Sep. 30, 2018 | |
Convertible Senior Notes | |
Schedule of net proceeds from the Convertible Senior Notes | Amount (in thousands) Principal amount $ 100,000 Less initial purchasers' discount (3,250) Less cost of related capped call and common stock forward (43,500) Less other issuance costs (894) Net proceeds $ 52,356 |
Schedule of Convertible Senior Notes | The Convertible Senior Notes consist of the following Principal amounts: Principal $ 100,000 Unamortized debt discount (1) (36,324) Unamortized debt issuance costs (1) (2,167) Net carrying amount $ 61,509 Carrying amount of the equity component (2) $ 37,702 1) Included in the unaudited interim consolidated balance sheet within Convertible Senior Notes, net and amortized over the remaining life of the Convertible senior notes using the effective interest rate method. 2) Included in the unaudited interim consolidated balance sheet within additional paid-in capital, net of $1.7 million in equity issuance costs and associated income tax benefit of $7.6 million. |
Revenue (Tables)
Revenue (Tables) | 9 Months Ended |
Sep. 30, 2018 | |
Revenue | |
Schedule of disaggregation of revenue | In the following table, revenue is disaggregated by major product line and timing of revenue recognition (in thousands): Major products/services lines Three months ended Nine months ended September 30, September 30, 2018 2017 2018 2017 Sales of fuel cell systems $ 21,595 $ 28,427 $ 40,948 $ 35,190 Sale of hydrogen installations and other infrastructure 15,073 9,633 25,153 12,717 Services performed on fuel cell systems and related infrastructure 5,156 2,217 16,330 10,496 Power Purchase Agreements 5,555 (1,663) 16,365 7,593 Fuel delivered to customers 5,786 (4,149) 16,016 2,782 Other — 128 — 279 Net revenue $ 53,165 $ 34,593 $ 114,812 $ 69,057 |
Schedule of receivables, contract assets and contract liabilities from contracts with customers | The following table provides information about receivables, contract assets and contract liabilities from contracts with customers (in thousands): September 30, 2018 December 31, 2017 Accounts receivable $ 24,721 $ 15,331 Contract assets 7,727 9,316 Contract liabilities 39,605 35,171 |
Schedule of changes in contract assets and the contract liabilities | Significant changes in the contract assets and the contract liabilities balances during the period are as follows (in thousands): Contract assets Nine months ended September 30, 2018 Transferred to receivables from contract assets recognized at the beginning of the period $ (6,032) Revenue recognized and not billed as of the end of the period 4,443 Net change in contract assets $ (1,589) Contract liabilities Nine months ended September 30, 2018 Revenue recognized that was included in the contract liability balance as the beginning of the period $ 7,882 Increases due to cash received, net of amounts recognized as revenue during the period (12,316) Net change in contract liabilities $ (4,434) |
Schedule of Estimated future revenue | The following table includes estimated revenue expected to be recognized in the future (sales of fuel cell systems and hydrogen installations are expected to be recognized as revenue within one year; sales of services and PPAs are expected to be recognized as revenue over five to seven years) related to performance obligations that are unsatisfied (or partially unsatisfied) at the end of the reporting period, excluding provision for common stock warrants as it is not readily estimable as it depends on the valuation of the common stock warrants when revenue is recognized (in thousands): September 30, 2018 December 31, 2017 Sales of fuel cell systems $ 21,029 $ 26,298 Sale of hydrogen installations and other infrastructure 6,705 15,512 Services performed on fuel cell systems and related infrastructure 75,416 77,453 Power Purchase Agreements 114,757 130,042 Total estimated future revenue $ 217,907 $ 249,305 |
Fair Value Measurements (Tables
Fair Value Measurements (Tables) | 9 Months Ended |
Sep. 30, 2018 | |
Fair Value Measurements. | |
Assumptions used to calculate common stock warrants | Nine months ended September 30, 2018 September 30, 2017 Risk-free interest rate 1.64% - 2.56% 1.01% - 2.01% Volatility 18.40% - 81.69% 62.0% - 108.77% Expected average term 0.01 - 1.53 0.39 - 5.23 |
Schedule of activity in the common stock warrant liability | The following table shows the activity in the common stock warrant liability (in thousands): Nine months ended September 30, 2018 September 30, 2017 Beginning of period $ 4,391 $ 11,387 Change in fair value of common stock warrants (3,308) 16,454 Issuance of common stock warrants — 4,905 Exercise of common stock warrants — (27,089) End of period $ 1,083 $ 5,657 |
Fair Value, Assets Measured on Recurring Basis, Unobservable Input Reconciliation | Nine months ended September 30, 2018 September 30, 2017 Risk-free interest rate 2.72% - 2.99% 2.30% - 2.36% Volatility 75.00% - 85.00% 85.00% - 90.00% Expected average term 8.51 - 9.30 9.51 - 10.00 |
Schedule of fair value of warrants | Amazon Warrant Shares Walmart Warrant Shares Issuance date - first tranche $ 1.15 $ 1.88 As of vesting date - second tranche, first installment 2.16 — As of period end - second tranche 1.55 1.45 |
Commitments and Contingencies (
Commitments and Contingencies (Tables) | 9 Months Ended |
Sep. 30, 2018 | |
Schedule of future minimum lease payments under noncancellable operating leases - as lessor | Future minimum lease payments under noncancelable operating leases (with initial or remaining lease terms in excess of one year) as of September 30, 2018 are (in thousands): Remainder of 2018 $ 6,675 2019 26,569 2020 24,839 2021 20,117 2022 11,340 2023 and thereafter 13,594 Total future minimum lease payments $ 103,134 |
Schedule of future minimum lease payments under noncancellable operating leases - as lessee | Future minimum lease payments under noncancelable operating leases (with initial or remaining lease terms in excess of one year) as of September 30, 2018 are (in thousands): Remainder of 2018 $ 4,754 2019 17,675 2020 16,304 2021 11,562 2022 6,110 2023 and thereafter 11,472 Total future minimum lease payments 67,877 Less imputed lease interest (15,929) Total lease liabilities $ 51,948 |
Schedule of finance leases other information | Three months ended Nine months ended September 30, 2018 September 30, 2018 Cash payments $ 3,994 $ 10,617 Weighted average remaining lease term (years) Weighted average discount rate |
Sale Leaseback Agreements | |
Schedule of future minimum lease payments under noncancellable finance leases | Future minimum lease payments under noncancelable finance leases related to sale/leaseback transactions (with initial or remaining lease terms in excess of one year) as of September 30, 2018 are (in thousands): Remainder of 2018 $ 8,889 2019 30,030 2020 6,042 2021 6,042 2022 4,296 2023 and thereafter 17,025 Total future minimum lease payments 72,324 Less imputed lease interest (12,811) Total lease liabilities $ 59,513 |
Schedule of finance lease cost | Finance lease costs for the three and nine months ended September 30, 2018, respectively are (in thousands): Three months ended Nine months ended September 30, 2018 September 30, 2018 Amortization of right of use asset $ 2,193 $ 6,776 Interest on finance obligations 1,837 4,781 Total finance lease cost $ 4,030 $ 11,557 |
Schedule of finance leases other information | Three months ended Nine months ended September 30, 2018 September 30, 2018 Cash payments $ 6,986 $ 26,392 Weighted average remaining lease term (years) Weighted average discount rate |
Nature of Operations (Details)
Nature of Operations (Details) - USD ($) $ / shares in Units, $ in Thousands | 1 Months Ended | 9 Months Ended | 12 Months Ended | ||||
Nov. 30, 2018 | Sep. 30, 2018 | Sep. 30, 2017 | Dec. 31, 2017 | Dec. 31, 2016 | Dec. 31, 2015 | Mar. 31, 2018 | |
Liquidity | |||||||
Net loss attributable to common shareholders | $ 130,200 | $ 57,600 | $ 55,800 | ||||
Accumulated deficit | $ 1,243,430 | 1,178,636 | |||||
Net cash used in operating activities | 41,642 | $ 81,294 | |||||
Net outflows from fluctuations in working capital and other assets and liabilities | 1,900 | ||||||
Non-cash gains | 17,700 | ||||||
Cash and cash equivalents | 13,825 | 24,828 | |||||
Net working capital | 6,700 | $ 3,900 | |||||
Net cash used in investing activities | (17,528) | (28,291) | |||||
Net cash provided by financing activities | 53,216 | 65,190 | |||||
Proceeds from Issuance of Debt | 95,856 | ||||||
Proceeds from borrowing of long-term debt | 20,147 | ||||||
Repayments of Long-term Debt | 11,944 | $ 4,261 | |||||
Purchase of capped call and common stock forward | 43,500 | ||||||
Convertible Senior Notes | |||||||
Liquidity | |||||||
Proceeds from Issuance of Debt | 52,356 | ||||||
Principal amount | 100,000 | ||||||
Interest rate (as a percent) | 5.50% | ||||||
Purchase of capped call and common stock forward | 43,500 | ||||||
Subsequent event | Series E Redeemable Convertible Preferred Stock | |||||||
Liquidity | |||||||
Shares issued (in shares) | 35,000 | ||||||
Redeemable stock issued, stated value (in dollars per share) | $ 0.01 | ||||||
Aggregate proceeds from issuance of preferred stock | $ 31,000 | ||||||
Sale or leaseback agreements | |||||||
Liquidity | |||||||
Remaining lease payments | 53,500 | ||||||
Amended sale or leaseback agreements | |||||||
Liquidity | |||||||
Remaining lease payments | $ 51,900 |
Summary of Significant Accoun_4
Summary of Significant Accounting Policies (Details) - USD ($) $ in Thousands | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2017 | Sep. 30, 2018 | Sep. 30, 2017 | Dec. 31, 2017 | |
Summary of Significant Accounting Policies | ||||
Upfront revenue recognized | $ 0 | |||
Capitalized contract costs | 100 | $ 0 | ||
Net cash flows from financing activities | 53,216 | $ 65,190 | ||
Impairment Loss | 0 | |||
ASU 2016-18 | ||||
Summary of Significant Accounting Policies | ||||
Net cash flows from financing activities | $ 5,000 | |||
Decrease in cash and cash equivalents | 6,100 | |||
Reclassified From Revenue | ||||
Summary of Significant Accounting Policies | ||||
Prior period amount reclassed | $ 800 | 2,300 | ||
Reclassified From Cost of Revenue | ||||
Summary of Significant Accounting Policies | ||||
Prior period amount reclassed | $ 1,200 | $ 2,700 | ||
Minimum | ||||
Summary of Significant Accounting Policies | ||||
Payment terms for fuel cells and its services | 30 days | |||
Extension period | 5 years | |||
Uptime of the fleet (as a percent) | 97.00% | |||
Total project costs (as a percent) | 30.00% | |||
Amortization period of capitalized commission fees | 5 years | |||
Maximum | ||||
Summary of Significant Accounting Policies | ||||
Payment terms for fuel cells and its services | 90 days | |||
Extension period | 10 years | |||
Uptime of the fleet (as a percent) | 98.00% | |||
Total project costs (as a percent) | 50.00% | |||
Amortization period of capitalized commission fees | 10 years |
Summary of Significant Accoun_5
Summary of Significant Accounting Policies - Recent Accounting Pronouncements (Details) - USD ($) $ in Thousands | 9 Months Ended | ||
Sep. 30, 2018 | Sep. 30, 2017 | Dec. 31, 2017 | |
Summary of Significant Accounting Policies | |||
Decrease of depreciation expenses | $ 8,592 | $ 6,596 | |
Decrease in accrued expenses | 8,553 | $ 10,595 | |
Recognition of finance obligation | 51,948 | ||
Decrease in prepaid expenses and other assets | 16,050 | 16,774 | |
Decrease in leased property, net of accumulated depreciation | 130,015 | 87,065 | |
Increase in accumulated deficit | (1,243,430) | $ (1,178,636) | |
ASU 2016-02 | Early adoption | Restatement adjustment | |||
Summary of Significant Accounting Policies | |||
Decrease of depreciation expenses | 300 | ||
Recognition of right of use asset | 34,416 | ||
Decrease in accrued expenses | 385 | ||
Recognition of finance obligation | (34,161) | ||
Decrease in prepaid expenses and other assets | (3,229) | ||
Decrease in leased property, net of accumulated depreciation | (563) | ||
Increase in accumulated deficit | $ 3,487 |
Earnings Per Share - Anti-dilut
Earnings Per Share - Anti-dilutive Shares (Details) - $ / shares | Apr. 12, 2017 | Apr. 05, 2017 | Dec. 22, 2016 | May 16, 2013 | Feb. 28, 2018 | Jul. 31, 2017 | Apr. 30, 2017 | Dec. 31, 2016 | Jan. 31, 2014 | Feb. 28, 2013 | Sep. 30, 2018 | Sep. 30, 2017 | Mar. 31, 2017 | Sep. 30, 2018 | Sep. 30, 2017 | Dec. 31, 2017 | Jul. 20, 2017 | Apr. 04, 2017 |
Earnings Per Share | ||||||||||||||||||
Number of dilutive potential common shares | 186,714,827 | 138,819,993 | ||||||||||||||||
Exercise price of warrants (in dollars per share) | $ 2.1231 | |||||||||||||||||
Convertible Senior Notes | ||||||||||||||||||
Earnings Per Share | ||||||||||||||||||
Conversion price, per share | $ 2.29 | $ 2.29 | ||||||||||||||||
Stock options | ||||||||||||||||||
Earnings Per Share | ||||||||||||||||||
Stock options granted | 2,170,000 | 5,030,000 | 2,654,667 | 5,480,863 | ||||||||||||||
Restricted stock | ||||||||||||||||||
Earnings Per Share | ||||||||||||||||||
Stock options granted | 2,160,000 | 0 | 2,367,347 | 234,744 | ||||||||||||||
Warrants issued in February, 2013 | ||||||||||||||||||
Earnings Per Share | ||||||||||||||||||
Number of warrants issued (in shares) | 23,637,500 | |||||||||||||||||
Exercise price of warrants (in dollars per share) | $ 0.15 | $ 0.15 | ||||||||||||||||
Number of warrants exercised (in shares) | 100 | |||||||||||||||||
Number of warrants unexercised (in shares) | 0 | 100 | ||||||||||||||||
Warrants issued in January, 2014 | ||||||||||||||||||
Earnings Per Share | ||||||||||||||||||
Number of warrants issued (in shares) | 4,000,000 | 4,000,000 | ||||||||||||||||
Exercise price of warrants (in dollars per share) | $ 0.65 | $ 0.65 | $ 4 | |||||||||||||||
Number of warrants exercised (in shares) | 4,000,000 | |||||||||||||||||
Warrants issued in December 2016 | ||||||||||||||||||
Earnings Per Share | ||||||||||||||||||
Number of warrants issued (in shares) | 10,501,500 | 10,501,500 | ||||||||||||||||
Exercise price of warrants (in dollars per share) | $ 1.50 | $ 1.50 | ||||||||||||||||
Number of warrants exercised (in shares) | 10,501,500 | 10,501,500 | ||||||||||||||||
Shares of common stock that can be purchased from warrants issued (in shares) | 5,250,750 | |||||||||||||||||
Warrants issued in April 2017 | ||||||||||||||||||
Earnings Per Share | ||||||||||||||||||
Number of warrants issued (in shares) | 5,250,750 | |||||||||||||||||
Exercise price of warrants (in dollars per share) | $ 2.69 | |||||||||||||||||
Number of warrants exercised (in shares) | 0 | |||||||||||||||||
Number of warrants unexercised (in shares) | 0 | |||||||||||||||||
Warrants issued in July 2017 | ||||||||||||||||||
Earnings Per Share | ||||||||||||||||||
Number of warrants exercised (in shares) | 0 | |||||||||||||||||
Warrants issued with the Amazon.com, Inc transaction agreement | ||||||||||||||||||
Earnings Per Share | ||||||||||||||||||
Shares of common stock that can be purchased from warrants issued (in shares) | 55,286,696 | |||||||||||||||||
Warrants issued with the Walmart Stores, Inc transaction agreement | ||||||||||||||||||
Earnings Per Share | ||||||||||||||||||
Shares of common stock that can be purchased from warrants issued (in shares) | 55,286,696 | |||||||||||||||||
Series C redeemable convertible preferred stock. | ||||||||||||||||||
Earnings Per Share | ||||||||||||||||||
Stock options granted | 10,431 | |||||||||||||||||
Shares issued upon conversion of redeemable stock (in shares) | 7,811 | 5,200 | ||||||||||||||||
Series D Redeemable Convertible Preferred Stock | ||||||||||||||||||
Earnings Per Share | ||||||||||||||||||
Shares of common stock that can be purchased from warrants issued (in shares) | 7,381,500 | |||||||||||||||||
Shares issued upon conversion of redeemable stock (in shares) | 9,548,393 | |||||||||||||||||
Shares issued (in shares) | 18,500 | 18,500 | ||||||||||||||||
Number of shares redeemed | 3,700 | |||||||||||||||||
Number of preferred shares that had been converted to common stock | 14,800 | |||||||||||||||||
Stock options | ||||||||||||||||||
Earnings Per Share | ||||||||||||||||||
Number of dilutive potential common shares | 22,111,243 | 19,965,599 | ||||||||||||||||
Restricted stock | ||||||||||||||||||
Earnings Per Share | ||||||||||||||||||
Number of dilutive potential common shares | 2,367,347 | 248,077 | ||||||||||||||||
Warrants | ||||||||||||||||||
Earnings Per Share | ||||||||||||||||||
Number of dilutive potential common shares | 115,824,142 | 115,824,242 | ||||||||||||||||
Preferred stock | ||||||||||||||||||
Earnings Per Share | ||||||||||||||||||
Number of dilutive potential common shares | 2,782,075 | 2,782,075 | ||||||||||||||||
Convertible Senior Notes | ||||||||||||||||||
Earnings Per Share | ||||||||||||||||||
Number of dilutive potential common shares | 43,630,020 | |||||||||||||||||
Maximum | Warrants issued in April 2017 | ||||||||||||||||||
Earnings Per Share | ||||||||||||||||||
Shares of common stock that can be purchased from warrants issued (in shares) | 55,286,696 | |||||||||||||||||
Maximum | Warrants issued in July 2017 | ||||||||||||||||||
Earnings Per Share | ||||||||||||||||||
Shares of common stock that can be purchased from warrants issued (in shares) | 55,286,696 |
Inventory (Details)
Inventory (Details) - USD ($) $ in Thousands | Sep. 30, 2018 | Dec. 31, 2017 |
Inventory. | ||
Raw materials and supplies | $ 40,119 | $ 42,851 |
Work-in-process | 10,088 | 3,492 |
Finished goods | 3,221 | 2,433 |
Total inventory | 53,428 | 48,776 |
Inventory held at service locations | $ 5,700 | $ 5,500 |
Leased Property (Details)
Leased Property (Details) - USD ($) $ in Thousands | 3 Months Ended | 9 Months Ended | |||
Sep. 30, 2018 | Sep. 30, 2017 | Sep. 30, 2018 | Sep. 30, 2017 | Dec. 31, 2017 | |
Leased Property | |||||
Right of use assets - operating | $ 55,582 | $ 55,582 | |||
Right of use asset - finance | 40,010 | 40,010 | |||
Capitalized costs of lessor assets | 43,249 | 43,249 | $ 98,877 | ||
Less: accumulated depreciation | (8,826) | (8,826) | (11,812) | ||
Leased property, net | 130,015 | 130,015 | $ 87,065 | ||
Depreciation | 2,200 | $ 1,900 | 6,800 | $ 5,200 | |
Right of use asset depreciation | $ 1,600 | $ 4,900 |
Intangible Assets - Gross Carry
Intangible Assets - Gross Carrying Amount (Details) - USD ($) $ in Thousands | 9 Months Ended | 12 Months Ended |
Sep. 30, 2018 | Dec. 31, 2017 | |
Gross carrying amount and accumulated amortization of acquired identifiable intangible assets | ||
Gross Carrying Amount | $ 6,261 | $ 5,520 |
Accumulated amortization | (2,203) | (1,735) |
Total | 4,058 | $ 3,785 |
Milestone payments | $ 2,900 | |
Acquired technology | ||
Gross carrying amount and accumulated amortization of acquired identifiable intangible assets | ||
Weighted Average Amortization Period | 9 years | 9 years |
Gross Carrying Amount | $ 5,941 | $ 5,200 |
Accumulated amortization | (2,032) | (1,593) |
Total | $ 3,909 | $ 3,607 |
Customer relationships | ||
Gross carrying amount and accumulated amortization of acquired identifiable intangible assets | ||
Weighted Average Amortization Period | 10 years | 10 years |
Gross Carrying Amount | $ 260 | $ 260 |
Accumulated amortization | (117) | (97) |
Total | $ 143 | $ 163 |
Trademark | ||
Gross carrying amount and accumulated amortization of acquired identifiable intangible assets | ||
Weighted Average Amortization Period | 5 years | 5 years |
Gross Carrying Amount | $ 60 | $ 60 |
Accumulated amortization | (54) | (45) |
Total | $ 6 | $ 15 |
Intangible Assets - Estimated A
Intangible Assets - Estimated Amortization Expense (Details) - USD ($) $ in Thousands | 3 Months Ended | 9 Months Ended | |||
Sep. 30, 2018 | Sep. 30, 2017 | Sep. 30, 2018 | Sep. 30, 2017 | Dec. 31, 2017 | |
Intangible Assets. | |||||
Amortization of Intangible Assets | $ 200 | $ 100 | $ 511 | $ 443 | |
Estimated amortization expense | |||||
Remainder of 2018 | 175 | 175 | |||
2,019 | 590 | 590 | |||
2,020 | 554 | 554 | |||
2,021 | 554 | 554 | |||
2,022 | 554 | 554 | |||
2023 and thereafter | 1,631 | 1,631 | |||
Total | $ 4,058 | $ 4,058 | $ 3,785 |
Long-Term Debt (Details)
Long-Term Debt (Details) - NY Green Bank - USD ($) $ in Millions | 9 Months Ended | 12 Months Ended | |||
Sep. 30, 2018 | Dec. 31, 2017 | Sep. 30, 2017 | Jul. 21, 2017 | Dec. 23, 2016 | |
Debt Instrument [Line Items] | |||||
Loan Amount | $ 45 | $ 25 | |||
Long-term borrowings | 25 | ||||
Debt issuance costs | $ 1.2 | ||||
Increase in term loan facility | $ 20 | ||||
Prepayment fee (as a percent) | 7.50% | 7.50% | |||
Percent of securities in foreign subsidiaries guaranteed to secure debt | 65.00% | ||||
Maximum | |||||
Debt Instrument [Line Items] | |||||
End of term charge | $ 1.8 | ||||
Secured term loan facility | |||||
Debt Instrument [Line Items] | |||||
Debt issuance costs | $ 0.5 | ||||
Long-term Line of Credit | $ 21.2 | 32.8 | |||
Additional amount borrowed | $ 20 | ||||
Effective interest rate (as a percent) | 11.80% | 10.80% | |||
Term of loan agreement | 3 years | ||||
2018 (Remainder of fiscal year) | $ 4 | ||||
2,019 | $ 17.2 | ||||
Secured term loan facility | LIBOR | |||||
Debt Instrument [Line Items] | |||||
Interest rate spread (as a percent) | 9.50% |
Convertible Senior Notes - Net
Convertible Senior Notes - Net proceeds (Details) - USD ($) $ in Thousands | 9 Months Ended | |
Sep. 30, 2018 | Mar. 31, 2018 | |
Convertible Senior Notes | ||
Less cost of related capped call and common stock forward | $ (43,500) | |
Net proceeds | 95,856 | |
Convertible Senior Notes | ||
Convertible Senior Notes | ||
Interest rate (as a percent) | 5.50% | |
Convertible Senior Notes | ||
Principal amount | 100,000 | |
Less initial purchasers' discount | (3,250) | |
Less cost of related capped call and common stock forward | (43,500) | |
Less other issuance costs | (894) | |
Net proceeds | $ 52,356 |
Convertible Senior Notes - Conv
Convertible Senior Notes - Conversion (Details) | 9 Months Ended |
Sep. 30, 2018USD ($)item$ / shares | |
Convertible Senior Notes | |
Ownership interest percentage | 50.00% |
Closing price of the company's stock | $ / shares | $ 1.92 |
Convertible Senior Notes | |
Convertible Senior Notes | |
Conversion ratio, principal amount | $ 1,000 |
Conversion rates for the notes (in shares) | 436.3002 |
Conversion price, per share | $ / shares | $ 2.29 |
Trading days | item | 20 |
Consecutive Trading days | item | 30 |
Conversion price (as a percent) | 130.00% |
Number of business days | 5 days |
Number of consecutive trading days | 5 days |
Principal amount (as a percent) | 98.00% |
Principal amount of the repurchased Convertible Senior Notes(as a percent) | 100.00% |
Percentage of principal amount to be redeemed | 100.00% |
Effective interest rate (as a percent) | 16.00% |
Transaction costs attributable to the liability component | $ 2,400,000 |
Transaction costs attributable to the equity component | 1,700,000 |
Income tax benefit on equity component | $ 7,600,000 |
Remaining life of the Convertible Senior Notes | 54 days |
Convertible Senior Notes (Detai
Convertible Senior Notes (Details) $ in Thousands | Sep. 30, 2018USD ($) |
Convertible Senior Notes | |
Net carrying amount | $ 61,509 |
Convertible Senior Notes | |
Convertible Senior Notes | |
Principal amount | 100,000 |
Unamortized debt discount | (36,324) |
Unamortized debt issuance costs | (2,167) |
Net carrying amount | 61,509 |
Carrying amount of the equity component | $ 37,702 |
Convertible Senior Notes - Capp
Convertible Senior Notes - Capped Call and Common Stock Forward (Details) $ / shares in Units, $ in Millions | 9 Months Ended |
Sep. 30, 2018USD ($)$ / sharesshares | |
Capped Call and Common Stock Forward | |
Share Price | $ 1.92 |
Capped Call | |
Capped Call and Common Stock Forward | |
Capped call options amount | $ | $ 16 |
Cap price | $ 3.82 |
Premium (as a percent) | 100.00% |
Share Price | $ 1.91 |
Common Stock Forward | |
Capped Call and Common Stock Forward | |
Common stock shares issued | shares | 14,397,906 |
Net cost incurred | $ | $ 27.5 |
Stockholders' Equity - Common S
Stockholders' Equity - Common Stock and Warrants (Details) - USD ($) | Apr. 12, 2017 | Apr. 03, 2017 | Dec. 22, 2016 | Feb. 28, 2018 | Apr. 30, 2017 | Dec. 31, 2016 | Jan. 31, 2014 | Feb. 28, 2013 | Sep. 30, 2018 | Sep. 30, 2017 | Dec. 31, 2017 | Jul. 20, 2017 |
Stockholders' equity | ||||||||||||
Preferred stock, Shares authorized | 5,000,000 | |||||||||||
Preferred stock, par value | $ 0.01 | |||||||||||
Common Stock Shares, Outstanding | 217,508,730 | 228,486,366 | ||||||||||
Common Stock, par value (in dollars per share) | $ 0.01 | $ 0.01 | ||||||||||
Exercise price of warrants (in dollars per share) | $ 2.1231 | |||||||||||
Proceeds from exercise of warrants, net of transaction costs | $ 17,636,000 | |||||||||||
Shares issued | $ 4,912,000 | |||||||||||
Series A Junior Participating Cumulative Preferred Stock | ||||||||||||
Stockholders' equity | ||||||||||||
Preferred stock, par value | $ 0.01 | |||||||||||
Common Stock Shares, Outstanding | 0 | 0 | ||||||||||
At Market Issuance Sales Agreement | ||||||||||||
Stockholders' equity | ||||||||||||
Common Stock, par value (in dollars per share) | $ 0.01 | |||||||||||
Authorized amount | $ 75,000,000 | |||||||||||
Shares issued | $ 27,900,000 | |||||||||||
Warrants issued in February, 2013 | ||||||||||||
Stockholders' equity | ||||||||||||
Class of Warrant or Right Issued | 23,637,500 | |||||||||||
Exercise price of warrants (in dollars per share) | $ 0.15 | $ 0.15 | ||||||||||
Warrants outstanding (in shares) | 0 | 100 | ||||||||||
Number of warrants exercised (in shares) | 100 | |||||||||||
Warrants issued in December 2016 | ||||||||||||
Stockholders' equity | ||||||||||||
Class of Warrant or Right Issued | 10,501,500 | 10,501,500 | ||||||||||
Exercise price of warrants (in dollars per share) | $ 1.50 | $ 1.50 | ||||||||||
Number of warrants exercised (in shares) | 10,501,500 | 10,501,500 | ||||||||||
Proceeds from exercise of warrants, net of transaction costs | $ 15.10 | |||||||||||
Shares of common stock that can be purchased from warrants issued | 5,250,750 | |||||||||||
Per share price of shares of common stock | $ 2.69 | |||||||||||
Warrants issued in January, 2014 | ||||||||||||
Stockholders' equity | ||||||||||||
Class of Warrant or Right Issued | 4,000,000 | 4,000,000 | ||||||||||
Exercise price of warrants (in dollars per share) | $ 0.65 | $ 0.65 | $ 4 | |||||||||
Number of warrants exercised (in shares) | 4,000,000 | |||||||||||
Proceeds from exercise of warrants, net of transaction costs | $ 2,600,000 | |||||||||||
Increase in additional paid-in capital | 27,100,000 | |||||||||||
Reduction of warrant liability | $ 27,100,000 | |||||||||||
Warrant Issued With Amazon And Walmart Stores Inc Transaction Agreement In 2017 | ||||||||||||
Stockholders' equity | ||||||||||||
Number of warrants exercised (in shares) | 18,913,869 | 18,913,869 | ||||||||||
Warrant Issued With Amazon And Walmart Stores Inc Transaction Agreement In 2017 | Maximum | ||||||||||||
Stockholders' equity | ||||||||||||
Class of Warrant or Right Issued | 110,573,392 |
Redeemable Preferred Stock (Det
Redeemable Preferred Stock (Details) - USD ($) | Apr. 05, 2017 | Dec. 22, 2016 | May 08, 2013 | Nov. 30, 2018 | Dec. 31, 2016 | Sep. 30, 2017 | Mar. 31, 2017 | Sep. 30, 2017 | Dec. 31, 2017 | Sep. 30, 2018 |
Redeemable preferred stock | ||||||||||
Payments for redemption of preferred stock | $ 3,700,000 | |||||||||
Series C Redeemable Convertible Preferred Stock | ||||||||||
Redeemable preferred stock | ||||||||||
Shares issued (in shares) | 2,611 | |||||||||
Redeemable stock issued, par value (in dollars per share) | $ 0.01 | $ 0.01 | ||||||||
Redeemable stock issued, stated value (in dollars per share) | $ 0.01 | $ 0.01 | ||||||||
Redeemable convertible Preferred Stock, shares outstanding | 2,620 | 2,620 | ||||||||
Series C Redeemable Convertible Preferred Stock | Air Liquide | ||||||||||
Redeemable preferred stock | ||||||||||
Dividend rate | 8.00% | |||||||||
Aggregate purchase price of shares issued | $ 248.794 | |||||||||
Adjusted conversion price per share | $ 0.2343 | $ 0.2343 | ||||||||
Series D Redeemable Convertible Preferred Stock | ||||||||||
Redeemable preferred stock | ||||||||||
Shares issued (in shares) | 18,500 | 18,500 | ||||||||
Redeemable stock issued, par value (in dollars per share) | $ 0.01 | |||||||||
Shares of common stock that can be purchased from warrants issued | 7,381,500 | |||||||||
Redeemable stock issued, stated value (in dollars per share) | $ 0.01 | |||||||||
Net proceeds from public offering | $ 15,600,000 | |||||||||
Shares redeemed (in shares) | 3,700 | |||||||||
Payments for redemption of preferred stock | $ 3,700,000 | |||||||||
Shares issued upon conversion of redeemable stock (in shares) | 9,548,393 | |||||||||
Conversion price per share | $ 1.55 | |||||||||
Redeemable convertible Preferred Stock, shares outstanding | 0 | |||||||||
Subsequent event | Series E Redeemable Convertible Preferred Stock | ||||||||||
Redeemable preferred stock | ||||||||||
Shares issued (in shares) | 35,000 | |||||||||
Redeemable stock issued, stated value (in dollars per share) | $ 0.01 | |||||||||
Net proceeds from public offering | $ 31,000,000 | |||||||||
Net proceeds, after fees and expenses | $ 31,000,000 |
Warrant Transaction Agreements
Warrant Transaction Agreements - Amazon.com, Inc. Transaction Agreement (Details) $ / shares in Units, $ in Thousands | Apr. 04, 2017USD ($)item$ / sharesshares | Sep. 30, 2018USD ($)shares | Sep. 30, 2017USD ($) | Sep. 30, 2018USD ($)shares | Sep. 30, 2017USD ($) | Dec. 31, 2017USD ($)shares | Jul. 20, 2017$ / shares |
Class of Warrant or Right [Line Items] | |||||||
Warrant shares vested (in shares) | shares | 5,819,652 | 5,819,652 | 5,819,652 | ||||
Selling, general and administrative | $ | $ 8,652 | $ 9,535 | $ 29,202 | $ 36,584 | |||
Exercise price of warrants (in dollars per share) | $ / shares | $ 2.1231 | ||||||
Warrants issued with the Amazon.com, Inc transaction agreement | |||||||
Class of Warrant or Right [Line Items] | |||||||
Shares of common stock that can be purchased from warrants issued (in shares) | shares | 55,286,696 | ||||||
Cash payments to be received under agreement | $ | $ 600,000 | ||||||
Warrant shares vested (in shares) | shares | 13,094,217 | 13,094,217 | 13,094,217 | ||||
Provision for common stock warrants | $ | $ 1,800 | $ 14,200 | $ 7,100 | $ 16,100 | |||
Tranche one of warrants issued with the Amazon.com, Inc transaction agreement | |||||||
Class of Warrant or Right [Line Items] | |||||||
Warrant shares vested (in shares) | shares | 5,819,652 | ||||||
Selling, general and administrative | $ | $ 6,700 | ||||||
Tranche two of warrants issued with the Amazon.com, Inc. Transaction Agreement | |||||||
Class of Warrant or Right [Line Items] | |||||||
Shares of common stock that can be purchased from warrants issued (in shares) | shares | 29,098,260 | ||||||
Number of installments | item | 4 | ||||||
Number of shares per installment | shares | 7,274,565 | ||||||
Cash receipt per installment | $ | $ 50,000 | ||||||
Aggregate cash receipts for all installments | $ | $ 200,000 | ||||||
Exercise price of warrants (in dollars per share) | $ / shares | $ 1.1893 | ||||||
Tranche three of warrants issued with the Amazon.com, Inc. Transaction Agreement | |||||||
Class of Warrant or Right [Line Items] | |||||||
Shares of common stock that can be purchased from warrants issued (in shares) | shares | 20,368,784 | ||||||
Number of installments | item | 8 | ||||||
Number of shares per installment | shares | 2,546,098 | ||||||
Cash receipt per installment | $ | $ 50,000 | ||||||
Aggregate cash receipts for all installments | $ | $ 400,000 | ||||||
Exercise price calculation | The exercise price of the third tranche of Amazon Warrant Shares will be an amount per share equal to ninety percent (90%) of the 30-day volume weighted average share price of the common stock as of the final vesting date of the second tranche of Amazon Warrant Shares |
Warrant Transaction Agreement_2
Warrant Transaction Agreements - Walmart Stores, Inc. Transaction Agreement (Details) $ / shares in Units, $ in Thousands | Jul. 20, 2017USD ($)item$ / sharesshares | Sep. 30, 2018USD ($)shares | Sep. 30, 2017USD ($) | Sep. 30, 2018USD ($)shares | Sep. 30, 2017USD ($) | Dec. 31, 2017USD ($)shares |
Class of Warrant or Right [Line Items] | ||||||
Warrant shares vested (in shares) | shares | 5,819,652 | 5,819,652 | 5,819,652 | |||
Selling, general and administrative | $ 8,652 | $ 9,535 | $ 29,202 | $ 36,584 | ||
Exercise price of warrants (in dollars per share) | $ / shares | $ 2.1231 | |||||
Warrants issued with the Walmart Stores, Inc transaction agreement | ||||||
Class of Warrant or Right [Line Items] | ||||||
Shares of common stock that can be purchased from warrants issued (in shares) | shares | 55,286,696 | |||||
Provision for common stock warrants | $ 400 | $ 11,800 | $ 900 | $ 11,800 | ||
Warrants issued with the Walmart Stores, Inc transaction agreement | Maximum | ||||||
Class of Warrant or Right [Line Items] | ||||||
Cash payments to be received under agreement | $ 600,000 | |||||
Tranche one of warrants issued with the Walmart Stores Inc transaction agreement | ||||||
Class of Warrant or Right [Line Items] | ||||||
Warrant shares vested (in shares) | shares | 5,819,652 | |||||
Provision for common stock warrants | $ 10,900 | |||||
Tranche two of warrants issued with the Walmart Stores, Inc. Transaction Agreement | ||||||
Class of Warrant or Right [Line Items] | ||||||
Warrant shares vested (in shares) | shares | 29,098,260 | |||||
Number of installments | item | 4 | |||||
Number of shares per installment | shares | 7,274,565 | |||||
Cash receipt per installment | $ 50,000 | |||||
Aggregate cash receipts for all installments | $ 200,000 | |||||
Tranche three of warrants issued with the Walmart Stores, Inc. Transaction Agreement | ||||||
Class of Warrant or Right [Line Items] | ||||||
Warrant shares vested (in shares) | shares | 20,368,784 | |||||
Number of installments | item | 8 | |||||
Number of shares per installment | shares | 2,546,098 | |||||
Cash receipt per installment | $ 50,000 | |||||
Aggregate cash receipts for all installments | $ 400,000 | |||||
Exercise price calculation | The exercise price of the third tranche of Walmart Warrant Shares will be an amount per share equal to ninety percent (90%) of the 30-day volume weighted average share price of the common stock as of the final vesting date of the second tranche of Walmart Warrant Shares | |||||
Exercise price of warrants (in dollars per share) | $ / shares | $ 1.1893 |
Revenue - Disaggregation of Rev
Revenue - Disaggregation of Revenue (Details) - USD ($) $ in Thousands | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2018 | Sep. 30, 2017 | Sep. 30, 2018 | Sep. 30, 2017 | |
Disaggregation of revenue | ||||
Net revenue | $ 53,165 | $ 34,593 | $ 114,812 | $ 69,057 |
Sales of fuel cell systems and related infrastructure | ||||
Disaggregation of revenue | ||||
Total gross revenue | 21,595 | 40,948 | ||
Sale of hydrogen installations and other infrastructure | ||||
Disaggregation of revenue | ||||
Total gross revenue | 15,073 | 25,153 | ||
Services performed on fuel cell systems and related infrastructure | ||||
Disaggregation of revenue | ||||
Total gross revenue | 5,156 | 16,330 | ||
Power purchase agreements | ||||
Disaggregation of revenue | ||||
Total gross revenue | 5,555 | 16,365 | ||
Fuel delivered to customers | ||||
Disaggregation of revenue | ||||
Total gross revenue | $ 5,786 | $ 16,016 | ||
Calculated under Revenue Guidance in Effect before Topic 606 | ||||
Disaggregation of revenue | ||||
Net revenue | 34,593 | 69,057 | ||
Calculated under Revenue Guidance in Effect before Topic 606 | Sales of fuel cell systems and related infrastructure | ||||
Disaggregation of revenue | ||||
Total gross revenue | 28,427 | 35,190 | ||
Calculated under Revenue Guidance in Effect before Topic 606 | Sale of hydrogen installations and other infrastructure | ||||
Disaggregation of revenue | ||||
Total gross revenue | 9,633 | 12,717 | ||
Calculated under Revenue Guidance in Effect before Topic 606 | Services performed on fuel cell systems and related infrastructure | ||||
Disaggregation of revenue | ||||
Total gross revenue | 2,217 | 10,496 | ||
Calculated under Revenue Guidance in Effect before Topic 606 | Power purchase agreements | ||||
Disaggregation of revenue | ||||
Total gross revenue | (1,663) | 7,593 | ||
Calculated under Revenue Guidance in Effect before Topic 606 | Fuel delivered to customers | ||||
Disaggregation of revenue | ||||
Total gross revenue | (4,149) | 2,782 | ||
Calculated under Revenue Guidance in Effect before Topic 606 | Other | ||||
Disaggregation of revenue | ||||
Total gross revenue | $ 128 | $ 279 |
Revenue - Contract balances (De
Revenue - Contract balances (Details) - USD ($) $ in Thousands | Sep. 30, 2018 | Dec. 31, 2017 |
Revenue, Initial Application Period Cumulative Effect Transition [Line Items] | ||
Accounts receivable | $ 24,721 | $ 15,331 |
Contract assets | 7,727 | |
Contract liabilities | $ 39,605 | |
Calculated under Revenue Guidance in Effect before Topic 606 | ||
Revenue, Initial Application Period Cumulative Effect Transition [Line Items] | ||
Accounts receivable | 15,331 | |
Contract assets | 9,316 | |
Contract liabilities | $ 35,171 |
Revenue - Changes in contract a
Revenue - Changes in contract assets and contract liabilities (Details) $ in Thousands | 9 Months Ended |
Sep. 30, 2018USD ($) | |
Contract assets | |
Transferred to receivables from contract assets recognized at the beginning of the period | $ (6,032) |
Revenue recognized and not billed as of the end of the period | 4,443 |
Net change in contract assets | (1,589) |
Contract liabilities | |
Revenue recognized that was included in the contract liability balance as the beginning of the period | 7,882 |
Increases due to cash received, net of amounts recognized as revenue during the period | (12,316) |
Net change in contract liabilities | $ (4,434) |
Revenue - Estimated future reve
Revenue - Estimated future revenue (Details) - USD ($) $ in Thousands | 9 Months Ended | |
Sep. 30, 2018 | Dec. 31, 2017 | |
Disaggregation of revenue | ||
Total estimated future revenue | $ 217,907 | |
Sales of fuel cell systems and related infrastructure | ||
Disaggregation of revenue | ||
Total estimated future revenue | 21,029 | |
Sale of hydrogen installations and other infrastructure | ||
Disaggregation of revenue | ||
Total estimated future revenue | 6,705 | |
Services performed on fuel cell systems and related infrastructure | ||
Disaggregation of revenue | ||
Total estimated future revenue | 75,416 | |
Power purchase agreements | ||
Disaggregation of revenue | ||
Total estimated future revenue | $ 114,757 | |
Maximum | Sales of fuel cell systems and related infrastructure | ||
Disaggregation of revenue | ||
Duration of estimated revenue expexted to be recognized in future (in years) | 1 year | |
Maximum | Services performed on fuel cell systems and related infrastructure | ||
Disaggregation of revenue | ||
Duration of estimated revenue expexted to be recognized in future (in years) | 7 years | |
Maximum | Power purchase agreements | ||
Disaggregation of revenue | ||
Duration of estimated revenue expexted to be recognized in future (in years) | 7 years | |
Minimum | Services performed on fuel cell systems and related infrastructure | ||
Disaggregation of revenue | ||
Duration of estimated revenue expexted to be recognized in future (in years) | 5 years | |
Minimum | Power purchase agreements | ||
Disaggregation of revenue | ||
Duration of estimated revenue expexted to be recognized in future (in years) | 5 years | |
Calculated under Revenue Guidance in Effect before Topic 606 | ||
Disaggregation of revenue | ||
Total estimated future revenue | $ 249,305 | |
Calculated under Revenue Guidance in Effect before Topic 606 | Sales of fuel cell systems and related infrastructure | ||
Disaggregation of revenue | ||
Total estimated future revenue | 26,298 | |
Calculated under Revenue Guidance in Effect before Topic 606 | Sale of hydrogen installations and other infrastructure | ||
Disaggregation of revenue | ||
Total estimated future revenue | 15,512 | |
Calculated under Revenue Guidance in Effect before Topic 606 | Services performed on fuel cell systems and related infrastructure | ||
Disaggregation of revenue | ||
Total estimated future revenue | 77,453 | |
Calculated under Revenue Guidance in Effect before Topic 606 | Power purchase agreements | ||
Disaggregation of revenue | ||
Total estimated future revenue | $ 130,042 |
Revenue - Others (Details)
Revenue - Others (Details) - USD ($) $ in Millions | Sep. 30, 2018 | Dec. 31, 2017 |
Revenue | ||
Capitalized contract costs | $ 0.1 | $ 0 |
Income Taxes (Details)
Income Taxes (Details) - USD ($) $ in Thousands | 3 Months Ended | 9 Months Ended |
Sep. 30, 2018 | Sep. 30, 2018 | |
Income Taxes. | ||
Income tax benefit | $ (1,716) | $ (7,581) |
Fair Value Measurements - Valua
Fair Value Measurements - Valuation Technique (Details) - USD ($) $ in Millions | 9 Months Ended | |
Sep. 30, 2018 | Sep. 30, 2017 | |
Derivative Liabilities | ||
Valuation technique for assets measured and recorded at fair value | ||
Expected dividend yield (as a percent) | 0.00% | |
Minimum | ||
Valuation technique for assets measured and recorded at fair value | ||
Risk-free interest rate (as a percent) | 1.64% | 1.01% |
Volatility (as a percent) | 18.40% | 62.00% |
Expected average term | 4 days | 4 months 21 days |
Minimum | Equity Instruments | ||
Valuation technique for assets measured and recorded at fair value | ||
Risk-free interest rate (as a percent) | 2.72% | 2.30% |
Volatility (as a percent) | 75.00% | 85.00% |
Expected average term | 8 years 6 months 4 days | 9 years 6 months 4 days |
Maximum | ||
Valuation technique for assets measured and recorded at fair value | ||
Risk-free interest rate (as a percent) | 2.56% | 2.01% |
Volatility (as a percent) | 81.69% | 108.77% |
Expected average term | 1 year 6 months 11 days | 5 years 2 months 23 days |
Maximum | Equity Instruments | ||
Valuation technique for assets measured and recorded at fair value | ||
Risk-free interest rate (as a percent) | 2.99% | 2.36% |
Volatility (as a percent) | 85.00% | 90.00% |
Expected average term | 9 years 3 months 18 days | 10 years |
Convertible Senior Notes | ||
Valuation technique for assets measured and recorded at fair value | ||
Fair value of Convertible Senior Notes | $ 60.6 | |
Convertible Senior Notes | Level 3 | ||
Valuation technique for assets measured and recorded at fair value | ||
Volatility (as a percent) | 45.00% |
Fair Value Measurements - Level
Fair Value Measurements - Level 3 Instruments Reconciliation (Details) - Warrants - USD ($) $ in Thousands | 9 Months Ended | |
Sep. 30, 2018 | Sep. 30, 2017 | |
Reconciliations of the beginning and ending balances for liabilities measured at fair value on a recurring basis using significant unobservable inputs (i.e. Level 3) | ||
Balance at the beginning of the period | $ 4,391 | $ 11,387 |
Change in fair value of common stock warrants | (3,308) | 16,454 |
Issuance of common stock warrants | 4,905 | |
Exercise of common stock warrants | (27,089) | |
Balance at the end of the period | $ 1,083 | $ 5,657 |
Fair Value Measurements - Fair
Fair Value Measurements - Fair Value of Warrants (Details) | 9 Months Ended |
Sep. 30, 2018$ / shares | |
Tranche one of warrants issued with the Amazon.com, Inc transaction agreement | |
Fair Value | |
Fair value per warrant | $ 1.15 |
Tranche two of warrants issued with the Amazon.com, Inc. Transaction Agreement | |
Fair Value | |
As of vesting date - second tranche, first installment | 2.16 |
As of period end - second tranche | 1.55 |
Tranche one of warrants issued with the Walmart Stores Inc transaction agreement | |
Fair Value | |
Fair value per warrant | 1.88 |
Tranche two of warrants issued with the Walmart Stores, Inc. Transaction Agreement | |
Fair Value | |
As of period end - second tranche | $ 1.45 |
Commitments and Contingencies -
Commitments and Contingencies - Operating Leases (Details) - USD ($) | 3 Months Ended | 9 Months Ended | |||
Sep. 30, 2018 | Sep. 30, 2017 | Sep. 30, 2018 | Sep. 30, 2017 | Dec. 31, 2017 | |
Future minimum lease payments under noncancellable operating leases - As Lessor | |||||
Remainder of 2018 | $ 6,675,000 | $ 6,675,000 | |||
2,019 | 26,569,000 | 26,569,000 | |||
2,020 | 24,839,000 | 24,839,000 | |||
2,021 | 20,117,000 | 20,117,000 | |||
2,022 | 11,340,000 | 11,340,000 | |||
2023 and thereafter | 13,594,000 | 13,594,000 | |||
Total future minimum lease payments | 103,134,000 | 103,134,000 | |||
Future minimum lease payments under noncancellable operating leases - As Lessee | |||||
Remainder of 2018 | 4,754,000 | 4,754,000 | |||
2,019 | 17,675,000 | 17,675,000 | |||
2,020 | 16,304,000 | 16,304,000 | |||
2,021 | 11,562,000 | 11,562,000 | |||
2,022 | 6,110,000 | 6,110,000 | |||
2023 and thereafter | 11,472,000 | 11,472,000 | |||
Total future minimum lease payments | 67,877,000 | 67,877,000 | |||
Less imputed lease interest | (15,929,000) | (15,929,000) | |||
Total lease liabilities | 51,948,000 | 51,948,000 | |||
Rental expense for all operating lease | 3,900,000 | $ 3,400,000 | 11,000,000 | $ 10,000,000 | |
Finance obligations | 21,300,000 | 21,300,000 | $ 10,400,000 | ||
Prepaid rent and security deposit | 5,500,000 | 5,500,000 | $ 8,300,000 | ||
Gross profit on sale leaseback transactions | 6,800,000 | ||||
Right of use assets obtained in exchange for new operating lease liabilities | 21,700,000 | 23,900,000 | |||
Other information of operating leases | |||||
Cash payments | $ 3,994 | $ 10,617 | |||
Weighted average remaining lease term (in years) | 4 years 15 days | 4 years 1 month 13 days | |||
Weighted average discount rate (as a percent) | 12.00% | 12.00% | |||
Maximum | |||||
Operating Leases | |||||
Lease Term - as Lessor | 7 years | ||||
Lease Term - as Lessee | 7 years | ||||
Minimum | |||||
Operating Leases | |||||
Lease Term - as Lessor | 6 years | ||||
Lease Term - as Lessee | 6 years | ||||
Sale Leaseback Agreements | |||||
Future minimum lease payments under noncancellable operating leases - As Lessee | |||||
Finance obligations | $ 72,324,000 | $ 72,324,000 |
Commitments and Contingencies_2
Commitments and Contingencies - Finance Leases (Details) - USD ($) $ in Thousands | 3 Months Ended | 9 Months Ended | |
Sep. 30, 2018 | Sep. 30, 2018 | Dec. 31, 2017 | |
Sale Leaseback Transaction [Line Items] | |||
Finance obligations | $ 21,300 | $ 21,300 | $ 10,400 |
Total Payments of future minimum lease payments | |||
Total future minimum lease payments | 21,300 | 21,300 | 10,400 |
Finance lease costs | |||
Right of use assets obtained in exchange for new finance lease liabilities | 200 | ||
Restricted Cash | |||
Restricted cash | 48,200 | 48,200 | |
Letter of credit | 500 | 500 | |
Sale Leaseback Agreements | |||
Sale Leaseback Transaction [Line Items] | |||
Finance obligations | 72,324 | 72,324 | |
Total Payments of future minimum lease payments | |||
Remainder of 2018 | 8,889 | 8,889 | |
2,019 | 30,030 | 30,030 | |
2,020 | 6,042 | 6,042 | |
2,021 | 6,042 | 6,042 | |
2,022 | 4,296 | 4,296 | |
2023 and thereafter | 17,025 | 17,025 | |
Total future minimum lease payments | 72,324 | 72,324 | |
Less imputed lease interest | (12,811) | (12,811) | |
Total lease liabilities | 59,513 | 59,513 | |
Finance lease costs | |||
Amortization of right of use asset | 2,193 | 6,776 | |
Interest on finance obligations | 1,837 | 4,781 | |
Total finance lease cost | 4,030 | 11,557 | |
Right of use assets obtained in exchange for new finance lease liabilities | 0 | ||
Other information | |||
Cash payments | $ 6,986 | $ 26,392 | |
Weighted average remaining lease term | 3 years 7 days | 3 years 6 months 22 days | |
Weighted average discount rate | 11.20% | 11.10% | |
Finance obligation | Property and equipment | |||
Sale Leaseback Transaction [Line Items] | |||
Finance obligations | $ 2,500 | $ 2,500 | 2,400 |
Total Payments of future minimum lease payments | |||
Total future minimum lease payments | $ 2,500 | $ 2,500 | $ 2,400 |
Commitments and Contingencies_3
Commitments and Contingencies - Concentrations of Credit Risk (Details) | 9 Months Ended | 12 Months Ended | |
Sep. 30, 2018customeritem | Sep. 30, 2017item | Dec. 31, 2017item | |
Accounts receivable. | Credit risk | |||
Customer Concentration | |||
Concentration Risk Number of Customers | 2 | 3 | |
Concentration risk (as a percent) | 75.30% | 59.00% | |
Revenues. | Customer concentration | |||
Customer Concentration | |||
Concentration Risk Number of Customers | 2 | 2 | |
Concentration risk (as a percent) | 61.90% | 66.30% |
Subsequent Events (Details)
Subsequent Events (Details) | 1 Months Ended | |
Nov. 30, 2018USD ($)$ / sharesshares | Sep. 30, 2018$ / shares | |
Subsequent Events | ||
Preferred stock, par value | $ 0.01 | |
Subsequent event | Series E Redeemable Convertible Preferred Stock | ||
Subsequent Events | ||
Shares issued (in shares) | shares | 35,000 | |
Preferred stock, par value | $ 0.01 | |
Proceeds from issuance of preferred stock, net | $ | $ 31,000,000 | |
Conversion price per share | $ 2.31 | |
Number of equal monthly installments | 13 | |
Amount of monthly installments from May 2019 through May 2020 | $ | $ 2.693 |