PLUG POWER INC (Form: 10-Q, Received: 05/08/2019 17:32:21)

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UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q

(Mark One)

☒ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

FOR THE QUARTERLY PERIOD ENDED March 31, 2019

☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

FOR THE TRANSITION PERIOD FROM TO

Commission File Number: 1-34392

PLUG POWER INC.

(Exact name of registrant as specified in its charter)


Delaware		22-3672377
(State or Other Jurisdiction of		(I.R.S. Employer
Incorporation or Organization)		Identification Number)

968 ALBANY SHAKER ROAD, LATHAM, NEW YORK 12110

(Address of Principal Executive Offices, including Zip Code)

(518) 782-7700

(Registrant’s telephone number, including area code)

Securities registered pursuant to Section 12(b) of the Act:

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

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes ☒ No ☐

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

Large accelerated filer ☐

Accelerated filer ☒

Non-accelerated filer ☐

Smaller reporting company ☐

Emerging growth company ☐

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

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


Title of each class	Trading Symbol(s)	Name of each exchange on which registered
Common Stock, par value $0.01 per share	PLUG	The Nasdaq Capital Market
Series A Junior Participating Cumulative Preferred Stock, par value $.01 per share		The Nasdaq Capital Market

The number of shares of common stock, par value of $0.01 per share, outstanding as of May 8, 2019 was 245,414,688.

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INDEX to FORM 10-Q

	Page

PART I. FINANCIAL INFORMATION

Item 1 – Interim Consolidated Financial Statements (Unaudited)	3

Consolidated Balance Sheets	3

Consolidated Statements of Operations	4

Consolidated Statements of Comprehensive Loss	5

Consolidated Statements of Stockholders’ (Deficit) Equity	6

Consolidated Statements of Cash Flows	7

Notes to Interim Consolidated Financial Statements	8

Item 2 – Management’s Discussion and Analysis of Financial Condition and Results of Operations	34

Item 3 – Quantitative and Qualitative Disclosures About Market Risk	50

Item 4 – Controls and Procedures	50

PART II. OTHER INFORMATION

Item 1 – Legal Proceedings	51

Item 1A – Risk Factors	51

Item 2 – Unregistered Sales of Equity Securities and Use of Proceeds	51

Item 3 – Defaults Upon Senior Securities	51

Item 4 – Mine Safety Disclosures	52

Item 5 – Other Information	52

Item 6 – Exhibits	52

Signatures	53

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PART 1. FINANCIAL INFORMATION

Item 1 — Interim Financial Statements (Unaudited)

Plug Power Inc. and Subsidiaries

Consolidated Balance Sheet s

(In thousands, except share and per share amounts)

(Unaudited)


	March 31,		December 31,
	2019		2018
Assets
Current assets:
Cash and cash equivalents	$	39,336	$	38,602
Restricted cash		19,297		17,399
Accounts receivable		32,062		37,347
Inventory		65,474		47,910
Prepaid expenses and other current assets		10,296		14,357
Total current assets		166,465		155,615

Restricted cash		50,598		54,152
Property, plant, and equipment, net of accumulated depreciation of $15,125 and $14,403, respectively		13,615		12,869
Leased property, net		141,889		146,751
Goodwill		8,886		9,023
Intangible assets, net		3,677		3,890
Other assets		11,069		8,026
Total assets	$	396,199	$	390,326

Liabilities, Redeemable Preferred Stock, and Stockholders’ (Deficit) Equity
Current liabilities:
Accounts payable	$	31,688	$	34,824
Accrued expenses		6,509		7,864
Deferred revenue		11,736		12,055
Finance obligations		23,997		74,264
Current portion of long-term debt		12,559		16,803
Other current liabilities		2,271		560
Total current liabilities		88,760		146,370
Deferred revenue		25,835		28,021
Common stock warrant liability		2,231		105
Finance obligations		111,195		118,076
Convertible senior notes, net		65,025		63,247
Long-term debt		72,676		133
Other liabilities		17		18
Total liabilities		365,739		355,970

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 both March 31, 2019 and December 31, 2018		709		709
Series E redeemable convertible preferred stock, $0.01 par value per share (aggregate involuntary liquidation preference $35,000 at both March 31, 2019 and December 31, 2018); Shares authorized: 35,000 at both March 31, 2019 and December 31, 2018; Issued and outstanding: 35,000 at March 31, 2019 and December 31, 2018		30,931		30,934
Stockholders’ (deficit) equity:
Common stock, $0.01 par value per share; 750,000,000 shares authorized; Issued (including shares in treasury): 244,537,235 at March 31, 2019 and 234,160,661 at December 31, 2018		2,445		2,342
Additional paid-in capital		1,319,879		1,289,714
Accumulated other comprehensive income		1,374		1,584
Accumulated deficit		(1,294,241)		(1,260,290)
Less common stock in treasury: 15,002,663 at March 31, 2019 and December 31, 2018		(30,637)		(30,637)
Total stockholders’ (deficit) equity		(1,180)		2,713
Total liabilities, redeemable preferred stock, and stockholders’ (deficit) equity	$	396,199	$	390,326

The accompanying notes are an integral part of these unaudited interim consolidated financial statements.

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Plug Power Inc. and Subsidiaries

Consolidated Statements of Operations

(In thousands, except share and per share amounts)

(Unaudited)


	Three Months Ended
	March 31,
	2019		2018
Net revenue:
Sales of fuel cell systems and related infrastructure	$	2,220	$	10,613
Services performed on fuel cell systems and related infrastructure		6,213		5,483
Power Purchase Agreements		4,707		5,372
Fuel delivered to customers		5,453		4,950
Net revenue		18,593		26,418
Cost of revenue:
Sales of fuel cell systems and related infrastructure		2,321		10,122
Services performed on fuel cell systems and related infrastructure		6,123		5,734
Power Purchase Agreements		8,998		8,650
Fuel delivered to customers		7,921		5,896
Total cost of revenue		25,363		30,402

Gross loss		(6,770)		(3,984)

Operating expenses:
Research and development		7,373		8,648
Selling, general and administrative		9,324		8,309
Total operating expenses		16,697		16,957

Operating loss		(23,467)		(20,941)

Interest and other expense, net		(8,345)		(3,105)
Change in fair value of common stock warrant liability		(2,126)		1,258

Loss before income taxes	$	(33,938)	$	(22,788)

Income tax benefit		—		2,953

Net loss attributable to the Company	$	(33,938)	$	(19,835)

Preferred stock dividends declared and accretion of discount		(52)		(13)
Net loss attributable to common shareholders	$	(33,990)	$	(19,848)
Net loss per share:
Basic and diluted	$	(0.15)	$	(0.09)
Weighted average number of common shares outstanding		220,605,068		226,985,762

The accompanying notes are an integral part of these unaudited interim consolidated financial statements.

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Plug Power Inc. and Subsidiaries

Consolidated Statements of Comprehensive Loss

(In thousands)

(Unaudited)


	Three months ended
	March 31,
	2019		2018

Net loss attributable to the Company	$	(33,938)	$	(19,835)
Other comprehensive (loss) income - foreign currency translation adjustment		(210)		412
Comprehensive loss	$	(34,148)	$	(19,423)

The accompanying notes are an integral part of these unaudited interim consolidated financial statements.

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Plug Power Inc. and Subsidiaries

Consolidated Statements of Stockholders’ (Deficit) Equity

(In thousands, except share amounts)

(Unaudited)


						Accumulated
				Additional		Other							Total
	Common Stock			Paid-in		Comprehensive		Treasury Stock			Accumulated		Stockholders’
	Shares	Amount		Capital		Income		Shares	Amount		Deficit		(Deficit) Equity
December 31, 2018	234,160,661	$	2,342	$	1,289,714	$	1,584	15,002,663	$	(30,637)	$	(1,260,290)	$	2,713
Net loss attributable to the Company	—		—		—		—	—		—		(33,938)		(33,938)
Other comprehensive loss	—		—		—		(210)	—		—		—		(210)
Stock-based compensation	324,073		3		2,494		—	—		—		—		2,497
Stock dividend	5,034		—		13		—	—		—		(13)		—
Issuance of common stock, net	10,000,000		100		23,398		—	—		—		—		23,498
Stock option exercises	47,467		—		81		—	—		—		—		81
Provision for common stock warrants	—		—		4,179		—	—		—		—		4,179
March 31, 2019	244,537,235	$	2,445	$	1,319,879	$	1,374	15,002,663	$	(30,637)	$	(1,294,241)	$	(1,180)

December 31, 2017	229,073,517	$	2,291	$	1,250,899	$	2,194	587,151	$	(3,102)	$	(1,178,636)	$	73,646
Net loss attributable to the Company	—		—		—		—	—		—		(19,835)		(19,835)
Other comprehensive income	—		—		—		412	—		—		—		412
Stock-based compensation	21,292		—		2,005		—	—		—		—		2,005
Stock dividend	6,721		—		13		—	—		—		(13)		—
Stock option exercises	91,001		1		49		—	—		—		—		50
Equity component of convertible senior notes, net of issuance costs and income tax benefit	—		—		34,829		—	—		—		—		34,829
Purchase of capped call	—		—		(16,000)		—	—		—		—		(16,000)
Purchase of common stock forward	—		—		—		—	14,397,906		(27,500)		—		(27,500)
Exercise of warrants	100		—		—		—	—		—		—		—
Provision for common stock warrants	—		—		1,885		—	—		—		—		1,885
March 31, 2018	229,192,631	$	2,292	$	1,273,680	$	2,606	14,985,057	$	(30,602)	$	(1,198,484)	$	49,492

The accompanying notes are an integral part of these unaudited interim consolidated financial statements.

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Plug Power Inc. and Subsidiaries

Consolidated Statements of Cash Flows

(In thousands)

(Unaudited)


	Three months ended
	March 31,
	2019		2018
Operating Activities
Net loss attributable to the Company	$	(33,938)	$	(19,835)
Adjustments to reconcile net loss to net cash used in operating activities:
Depreciation of property, plant and equipment, and leased property		2,776		2,780
Amortization of intangible assets		175		158
Stock-based compensation		2,497		2,005
Provision for bad debts and other assets		307		—
Amortization of debt issuance costs and discount on convertible senior notes		2,469		379
Provision for common stock warrants		4,179		1,885
Change in fair value of common stock warrant liability		2,126		(1,258)
Income tax benefit		—		(2,953)
Changes in operating assets and liabilities that provide (use) cash:
Accounts receivable		4,978		(7,655)
Inventory		(17,564)		1,428
Prepaid expenses, and other assets		1,018		1,376
Accounts payable, accrued expenses, and other liabilities		(2,781)		(2,066)
Deferred revenue		(2,505)		(272)
Net cash used in operating activities		(36,263)		(24,028)
Investing Activities
Purchases of property, plant and equipment		(1,468)		(1,026)
Purchases for construction of leased property		(806)		(3,277)
Net cash used in investing activities		(2,274)		(4,303)
Financing Activities
Proceeds from exercise of warrants, net of transaction costs		—		50
Proceeds from issuance of preferred stock, net of transaction costs		(3)		—
Proceeds from public offerings, net of transaction costs		23,498		—
Proceeds from exercise of stock options		81		—
Proceeds from issuance of convertible senior notes, net		—		96,057
Purchase of capped call and common stock forward		—		(43,500)
Principal payments on long-term debt		(17,153)		(4,649)
Proceeds from long-term debt		84,761		—
Repayments of finance obligations		(53,534)		—
Increase in finance obligations		—		1,241
Net cash provided by financing activities		37,650		49,199
Effect of exchange rate changes on cash		(35)		46
(Decrease) increase in cash, cash equivalents and restricted cash		(922)		20,914
Cash, cash equivalents, and restricted cash beginning of period		110,153		68,055
Cash, cash equivalents, and restricted cash end of period	$	109,231	$	88,969

Supplemental disclosure of cash flow information
Cash paid for interest	$	4,858	$	2,554

The accompanying notes are an integral part of these unaudited interim consolidated financial statements.

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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 system;

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.

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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 developing marketing and distribution channels; 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 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 $34.0 million for the three months ended March 31, 2019 and $78.2 million, $130.2 million and $57.6 million for the years ended December 31, 2018, 2017, and 2016, respectively, and had an accumulated deficit of $1.3 billion at March 31, 2019.

During the three months ended March 31, 2019, cash used in operating activities was $36.3 million, consisting of a net loss attributable to the Company of $33.9 million, net outflows from fluctuations in working capital and other assets and liabilities of $16.9 million, and offset by the impact of non-cash charges/gains of $14.5 million. The changes in working capital were related to an increase in inventory, and decreases in deferred revenue, accounts payable, accrued expenses and other liabilities offset by decreases in accounts receivable and prepaid expenses, and other assets. As of March 31, 2019, we had cash and cash equivalents of $39.3 million and net working capital of $77.7 million. By comparison, at December 31, 2018, we had cash and cash equivalents of $38.6 million and net working capital of $9.2 million.

Net cash used in investing activities for the three months ended March 31, 2019, totaled $2.3 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 three months ended March 31, 2019 totaled $37.7 million and primarily resulted from net proceeds of $23.5 million from the sale of our common stock, as well as $85.0 million from a new debt facility some of which was used to pay approximately $50.3 million of finance obligations and $17.6 million of previously outstanding long-term debt, including accrued interest.

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 $95.9 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. See Note 8, Convertible Senior notes for more details.

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require the Company to maintain cash balances in restricted accounts securing the Company’s finance obligations. Cash received from customers under the PPAs is used to make payments against our finance obligations. 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 at March 31, 2019 is $77.5 million, which have been secured with restricted cash, security deposits and pledged service escrows of $78.2 million.

The Company has a master lease agreement with Wells Fargo (Wells Fargo MLA) to finance the Company’s commercial transactions with Walmart. The Wells Fargo MLA was entered into in 2017 and amended in 2018. 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 $64.9 million at March 31, 2019. Transactions completed under the Wells Fargo MLA in 2018 were accounted for as operating leases and therefore the sales of the fuel cell systems and hydrogen infrastructure were recognized as revenue for the year ended December 31, 2018. Transactions completed under the Wells Fargo MLA in 2017 were accounted for as capital leases. The difference in lease classification is due to changes in financing terms and their bearing on lease assessment criteria. Also included in the remaining lease payments to Wells Fargo is a sale/leaseback transaction in 2015 that was accounted for as an operating lease. In connection with the Wells Fargo MLA, the Company has a customer guarantee for a majority of the transactions. The Wells Fargo transactions in 2018 required a letter of credit for the unguaranteed portion totaling $20.1 million. No sale/leaseback transactions under the Wells Fargo MLA were entered into during the three months ended March 31, 2019.

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 $30.9 million. See Note 10, Redeemable Preferred Stock for additional information.

In March 2019 the Company entered into a loan and security agreement with Generate Lending, LLC (Generate Capital) borrowing $85.0 million. The initial proceeds of the loan were used to pay in full the Company’s long-term debt and accrued interest of $17.6 million, under the loan agreement with NY Green Bank, a Division of the New York State Energy Research & Development Authority (NY Green Bank) and terminate approximately $50.3 million of certain equipment leases with Generate Plug Power SLB II, LLC as well as repurchase of the associated leased equipment. During April 2019, the Company borrowed an additional $15.0 million under this debt facility. See Note 7, Long-Term Debt for additional information.

In March 2019 the Company sold 10 million shares of common stock for an issue price of $2.35 per share resulting in net proceeds of $23.5 million.

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 financings, and 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 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.

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.

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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, 2018.

The information presented in the accompanying unaudited interim consolidated balance sheet as of December 31, 2018, has been derived from the Company’s December 31, 2018 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 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).

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

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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 the useful life of the underlying asset 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, and Equipment – Overall , to determine whether an ROU asset is impaired, and if so, the amount of the impairment loss to recognize. No impairment 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.

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 Power Purchase Agreement (PPA), discussed further below.

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 transaction price specified in a contract with a customer, subject to the allocation of the transaction price to distinct 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 distinct performance obligation of within its arrangements as a distinct unit of accounting if the items under the performance obligation 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 distinct performance obligation based on relative standalone selling prices.

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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) Sales of Fuel Cell Systems and Related Infrastructure

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 for GenDrive fuel cells. The Company uses observable evidence from similar products in the market to determine standalone selling prices for GenSure stationary backup power units and hydrogen fueling infrastructure. Once relative standalone selling prices are determined, the Company proportionately allocates the transaction price to each performance obligation within the customer arrangement. The allocated transaction price related to fuel cell systems, spare parts and hydrogen infrastructure is recognized as revenue at a point in time which usually occurs at shipment (and occasionally upon delivery) for fuel cells and spare parts and upon customer acceptance for hydrogen infrastructure, depending on the terms of the arrangement, the point at which transfer of control passes to the customer and the performance obligation has been satisfied.

(ii) Services performed on fuel cell systems and related infrastructure

Revenue from services performed on fuel cell systems and related infrastructure represents revenue earned on our service and maintenance contracts and sales of spare parts. The transaction price 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 transaction price, 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 consolidated statements of operations. When costs are projected to exceed revenues over the life of the 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) Power Purchase Agreements

Revenue from PPAs primarily represents payments received from customers who make monthly payments to access the Company’s GenKey solution.

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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 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 consolidated statements of operations. Interest cost associated with finance leases is presented within interest and other expense, net on the accompanying 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 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) Fuel Delivered to Customers

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 in certain cases (and produces hydrogen onsite) 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 consolidated statements of operations.

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.

Cash Equivalents

Cash equivalents consist of money market accounts with an initial term of less than three months. 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.

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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 Subtopic 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. Common stock warrants accounted for as equity instruments represent the warrants issued to Amazon and Walmart as discussed in Note 11, Warrant Transaction Agreements. 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.

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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 our 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 previous presentation resulted in a gross up of these line items and had no impact on our gross profit (loss) or net loss. The Company corrected prior period 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 months ended March 31, 2018 was $0.8 million. 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 months ended March 31, 2018 was $1.1 million. 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 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 adopted this update on January 1, 2019 and it did not have a material effect on the consolidated financial statements.

Recently Issued and Not Yet Adopted Accounting Pronouncements

In November 2018, an accounting update was issued to clarify the interaction between ASC Topic 808, Collaborative Arrangements, and Topic 606. Adoption of this update is effective for all reporting periods beginning after December 15, 2019. The Company is evaluating the impact this update will have on the consolidated financial statements.

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 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

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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.

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, and preferred stock) were exercised or converted into common stock or resulted in the issuance of common stock (net of any assumed repurchases) that then shared in the earnings of the Company, if any. 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, and the weighted average number of common shares outstanding during the reporting period. Since the Company is in a net loss position, all common stock equivalents would be considered to be anti-dilutive and are, therefore, not included in the determination of diluted earnings per share. Accordingly, basic and diluted loss per share are the same.

The dilutive potential common shares are summarized as follows:


	At March 31,
	2019	2018
Stock options outstanding (1)	21,109,998	19,733,986
Restricted stock outstanding (2)	2,372,347	234,744
Common stock warrants (3)	115,824,142	115,824,142
Preferred stock (4)	17,933,591	2,782,075
Convertible Senior Notes (5)	43,630,020	43,630,020
Number of dilutive potential common shares	200,870,098	182,204,967

(1)

During the three months ended March 31, 2019 and 2018, the Company granted 25,000, and zero stock options, respectively.

(2)

During the three months ended March 31, 2019 and 2018, the Company granted 25,000 and zero shares of restricted stock, respectively.

(3)

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 March 31, 2019.

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 March 31, 2019.

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 March 31, 2019.

(4)

The preferred stock amount represents the dilutive potential common shares of the Series C and E redeemable convertible preferred stock, based on the conversion price of the preferred stock as of March 31, 2019 and 2018, respectively. Of the 10,431 Series C redeemable preferred stock issued on May 16, 2013, 7,811 had been

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converted to common stock through March 31, 2019 and 2018, with the remainder still outstanding. On November 1, 2018, the Company issued 35,000 shares of Series E redeemable convertible preferred stock. As of March 31, 2019, all Series E redeemable convertible preferred stock are outstanding.

(5)

In March 2018, the Company issued $100.0 million in aggregate principal amount of 5.5% Convertible Senior Notes. See Note 8, Convertible Senior Notes.

4. Inventory

Inventory as of March 31, 2019 and December 31, 2018 consists of the following (in thousands):


	March 31,		December 31,
	2019		2018
Raw materials and supplies - production locations	$	39,834	$	32,941
Raw materials and supplies - customer locations		7,401		6,755
Work-in-process		11,992		5,589
Finished goods		6,247		2,625
Inventory	$	65,474	$	47,910

5. Leased Property

Leased property at March 31, 2019 and December 31, 2018 consists of the following (in thousands):


	March 31,		December 31,
	2019		2018
Right of use assets - operating	$	76,647	$	76,747
Right of use assets - finance		35,950		39,905
Capitalized costs of lessor assets		45,594		41,040
Less: accumulated depreciation		(16,302)		(10,941)
Leased property, net	$	141,889	$	146,751

6. Intangible Assets

The gross carrying amount and accumulated amortization of the Company’s acquired identifiable intangible assets as of March 31, 2019 are as follows (in thousands):


	Weighted Average	Gross Carrying		Accumulated
	Amortization Period	Amount		Amortization		Total
Acquired technology	9 years	$	5,861	$	(2,314)	$	3,547
Customer relationships	10 years		260		(130)		130
Trademark	5 years		60		(60)		—
		$	6,181	$	(2,504)	$	3,677

The gross carrying amount and accumulated amortization of the Company’s acquired identifiable intangible assets as of December 31, 2018 are as follows (in thousands):


	Weighted Average	Gross Carrying		Accumulated
	Amortization Period	Amount		Amortization		Total
Acquired technology	9 years	$	5,926	$	(2,176)	$	3,750
Customer relationships	10 years		260		(123)		137
Trademark	5 years		60		(57)		3
		$	6,246	$	(2,356)	$	3,890

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The change in the gross carrying amount and accumulated amortization of the acquired technology from December 31, 2018 to March 31, 2019 is due to changes attributed to foreign currency translation.

As part of the agreement to acquire the intellectual property from American Fuel Cell, the Company shall pay American Fuel Cell LLC milestone payments not to exceed $2.9 million in total, if certain milestones associated with the production of components related to the acquired technology are met before April 2021. As of March 31, 2019 these milestones have not yet been reached.

Amortization expense for acquired identifiable intangible assets was $0.2 million for both the three months ended March 31, 2019 and 2018. Estimated amortization expense for subsequent years is as follows (in thousands):


Remainder of 2019	$	410
2020		546
2021		546
2022		546
2023		546
2024 and thereafter		1,083
Total	$	3,677

7. Long-Term Debt

In March 2019 the Company, and its subsidiaries Emerging Power Inc. and Emergent Power Inc., entered in to a loan and security agreement, as amended (the “Loan Agreement”) with Generate Lending, LLC (“Generate Capital”), providing for a secured term loan facility in the amount of $100.0 million (the “Term Loan Facility”). The Company borrowed $85.0 million under the Loan Agreement on the date of closing and borrowed an additional $15.0 million in April 2019. A portion of the initial proceeds of the loan were used to pay in full the Company’s long-term debt, including accrued interest of $17.6 million under the loan and security agreement, dated as of July 21, 2017, by and among the Company, Emerging, Emergent and NY Green Bank, a Division of the New York State Energy Research & Development Authority (the “Green Bank Loan”) and terminate approximately $50.3 million of certain equipment leases with Generate Plug Power SLB II, LLC and repurchase the associated leased equipment. In connection with this transaction, the Company recognized a loss on extinguishment of debt of approximately $0.5 million. This loss was recorded in interest and other expenses, net in the Company’s unaudited interim consolidated statement of operations. Additionally, $1.7 million was paid to an escrow account related to additional fees for the Green Bank Loan if the Company does not meet certain New York State employment and fuel cell deployment targets by March 2021. This amount paid to an escrow account is recorded in long-term other assets on the Company’s unaudited interim consolidated balance sheet as of March 31, 2019. On March 31, 2019, the outstanding principal balance under the Term Loan Facility was $85.0 million. The collective balance of $32.1 million in loan proceeds will be used to fund working capital for ongoing deployments and other general corporate purposes of the Company.

Advances under the Term Loan Facility bear interest of 12.00% per annum. The Loan Agreement includes covenants, limitations, and events of default customary for similar facilities. The term of the loan is three years, with a maturity date of December 13, 2022. Principal payments will be funded in part by releases of restricted cash, as described in Note 15, Commitments and Contingencies.

Interest and a 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 of December 13, 2022. The Company may also be required to pay Generate Capital additional fees of up to $1.5 million if the Company is unable to provide $50.0 million of structured project financing arrangements with Generate Capital prior to December 31, 2021.

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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 Loan Agreement contains covenants, including, among others, (i) the provision of annual and quarterly financial statements, management rights and insurance policies and (ii) restrictions on incurring debt, granting liens, making acquisitions, making loans, paying dividends, dissolving, and entering into leases and asset sales and (iii) compliance with a collateral coverage covenant that is first measured on December 31, 2019 and is based on certain factors that are yet to be determined and on a third party valuation that has yet to be completed. The Loan Agreement also provides for events of default, including, among others, payment, bankruptcy, covenant, representation and warranty, change of control, judgment and material adverse effect defaults at the discretion of the lender.

The Loan Agreement 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 Generate Capital has the right to cause Proton Services Inc., a wholly owned subsidiary of the Company, to replace the Company in performing the maintenance services under such customer agreement.

The Term Loan Facility requires the principal balance at the end of each of the following years may not exceed (in thousands):


December 31, 2019	$	79,638
December 31, 2020		58,034
December 31, 2021		36,106
December 31, 2022		—

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:

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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;

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;

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

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

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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 approximately $3.2 million and other issuance costs of $0.9 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 at March 31, 2019 (in thousands):


Principal amounts:
Principal	$	100,000
Unamortized debt discount (1)		(33,049)
Unamortized debt issuance costs (1)		(1,926)
Net carrying amount	$	65,025
Carrying amount of the equity component (2)	$	37,702

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.

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 $9.2 million.

As of March 31, 2019 the remaining life of the Convertible senior notes is approximately 48 months.

Based on the closing price of the Company’s common stock of $2.40 on March 31, 2019, the if-converted value of the Convertible Senior Notes was approximately $104.7 million. At March 31, 2019, the carrying value of the Convertible Senior Notes, excluding unamortized debt issue costs, approximates the fair value.

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.

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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.

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 March 31, 2019 and December 31, 2018, 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 E redeemable preferred stock.

Common Stock and Warrants

The Company has one class of common stock, par value $.01 per share. Each share of the Company’s common stock is entitled to one vote on all matters submitted to stockholders. In March 2019, the Company issued and sold in a registered direct offering an aggregate of 10 million shares of the Company’s common stock at a purchase price of $2.35 per share. The net proceeds to the Company were approximately $23.5 million. There were 229,534,572 and 219,157,998 shares of common stock outstanding as of March 31, 2019 and December 31, 2018, 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 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. The warrants are subject to anti-dilution provisions in the event of issuance of additional shares of common stock and certain other conditions, as further described in the warrant agreement.

During 2013, the Company completed a series of underwritten public offerings. One of the underwritten public offerings included accompanying warrants to purchase common stock. As of December 31, 2017 and 2016, 100 warrants with an exercise price of $0.15 per share, remained outstanding. During February 2018, the remaining 100 warrants were exercised.

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, Warrant Transaction Agreements. At March 31, 2019 and 2018, in connection with these agreements, warrants to acquire 18,913,869 shares of

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common stock have vested and are therefore exercisable. 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. 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. The Company has raised $30.2 million to date during the term of the Sales Agreement. During the three months ended March 31, 2019 the Company did not issue any shares pursuant to the Sales Agreement.

10. Redeemable Convertible Preferred Stock

In November 2018, the Company completed an offering of an aggregate of 35,000 shares of the Company’s Series E Redeemable Preferred Stock, par value $0.01 per share (Series E Stock), resulting in aggregate net proceeds of approximately $30.9 million, after deducting underwriting discounts and commissions and expenses payable by the Company. The Company is required to redeem the Series E Stock in thirteen monthly installments in the amount of $2.7 million each from May 2019 through May 2020.

Each share of Series E Stock was issued with an initial stated value of $1,000 per share. The Company is required to elect, on a monthly basis, whether it will redeem or convert the installment. Should the Company elect to redeem, the shares are valued at the stated value. Should the Company elect to convert, the holder of the shares will receive common stock, with a conversion price discounted by 15% from the then current market value. The holders of the shares may elect to convert all or any whole amount of shares, at any time at a conversion price of $2.31 per share. Conversion prices are discounted upon a change in control, certain triggering events, or failure to make a redemption payment.

Except for our Series C Redeemable Convertible Preferred Stock (Series C Stock), which shall rank senior to the Series E Stock as to dividends, distributions and payments upon liquidation, dissolution and winding up, all shares of the Company’s capital stock, including common stock, rank junior in rank to the Series E Stock with respect to dividends, distributions and payments upon liquidation, dissolution and winding up.

Holders of the Series E Stock are not entitled to receive dividends except in connection with certain purchase rights and other corporate events, as described in the certificate of designations, or in connection with certain distributions of assets, as described in the certificate of designations, or as, when and if declared by the Company’s Board of Directors acting in its sole and absolute discretion. Holders of the Series E Stock have no voting rights, except on matters required by law or under the certificate of designations to be submitted to a class vote of the Series E Stock.

In the event of any voluntary or involuntary liquidation, dissolution or winding up of the Company or other deemed liquidation event, the holders of the Series E Stock are entitled to receive, after any amount that is required to be paid to the Series C Stock and before any amount is paid to the holders of any of capital stock ranking junior to the Series E Stock, an amount per share equal to the greater of (i) 125% of the sum of the stated value plus any declared and unpaid dividends and late charges as provided in the certificate of designations, on the date of such payment and (ii) the amount per share such holder would receive if such holder converted such Series E Stock into common stock immediately prior to the date of such payment.

The Company had 2,620 shares of Series C Stock outstanding at March 31, 2019 and 2018. The holder of the Series C 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 three months ended March 31, 2019 and 2018, respectively, all dividends have been paid in shares of common stock. Each share of Series C 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

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effect at the time the shares are converted. The conversion price of the Series C Stock as of March 31, 2019 and December 31, 2018 was $0.2343. The Series C Stock votes together with the common stock on an as-converted basis on all matters.

In the event of any voluntary or involuntary liquidation, dissolution or winding up of the Company, or other deemed liquidation event, the holder of the Series C 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 Stock been converted to shares of common stock immediately prior to such liquidation event. The Series C Stock is redeemable at the election of the holder of the Series C Stock or the Company.

11. Warrant Transaction Agreements

Amazon Transaction Agreement

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 2017 consolidated statements of operations. 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

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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 March 31, 2019 and December 31, 2018, 20,368,782 of the Amazon Warrant Shares had vested. The amount of provision for common stock warrants recorded as a reduction of revenue for the Amazon Warrant during the three months ended March 31, 2019 and 2018 was $1.2 million and $1.7 million, respectively.

Walmart Transaction Agreement

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 2017 consolidated statements of operations. 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.

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At March 31, 2019 and December 31, 2018, 5,819,652 of the Walmart Warrant Shares had vested. The amount of provision for common stock warrants recorded as a reduction of revenue for the Walmart Warrant during the three months ended March 31, 2019 and 2018 was $3.0 million and $0.2 million, respectively.

12. Revenue

Disaggregation of revenue


Major products/services lines
	Three months ended March 31,
	2019		2018
Sales of fuel cell systems	$	2,220	$	5,983
Sale of hydrogen installations and other infrastructure		—		4,630
Services performed on fuel cell systems and related infrastructure		6,213		5,483
Power Purchase Agreements		4,707		5,372
Fuel delivered to customers		5,453		4,950
Net revenue	$	18,593	$	26,418

Contract balances

The following table provides information about receivables, contract assets and contract liabilities from contracts with customers (in thousands):


	March 31,		December 31,
	2019		2018
Accounts receivable	$	32,062	$	37,347
Contract assets		3,521		3,328
Contract liabilities		38,104		40,476

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.

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Significant changes in the contract assets and the contract liabilities balances during the period are as follows (in thousands):



Contract assets	Three months ended
	March 31, 2019
Transferred to receivables from contract assets recognized at the beginning of the period	$	(94)
Revenue recognized and not billed as of the end of the period		287
Net change in contract assets	$	193


Contract liabilities	Three months ended
	March 31, 2019
Revenue recognized that was included in the contract liability balance as of the beginning of the period	$	2,819
Increases due to cash received, net of amounts recognized as revenue during the period		(447)
Net change in contract liabilities	$	2,372

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):



	March 31,
	2019		2018
Sales of fuel cell systems	$	26,354	$	17,318
Sale of hydrogen installations and other infrastructure		9,072		9,141
Services performed on fuel cell systems and related infrastructure		68,878		73,381
Power Purchase Agreements		105,441		111,533
Other rental income		6,427		6,633
Total estimated future revenue	$	216,171	$	218,005

Contract costs

Contract costs consists of capitalized commission fees and other expenses related to obtaining or fulfilling a contract.

Capitalized contract costs at March 31, 2019 and December 31, 2018 were $0.3 million and $0.2, respectively. Expense related to the amortization of capitalized contract costs was not significant for the three ended March 31, 2019.

13. Income Taxes

The Company recognized an income tax benefit for the three months ended March 31, 2018 of $3.0 million 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, Convertible Senior Notes. The Company did not record any income tax expense or benefit for the three months ended March 31, 2019. 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.

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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.

14. Fair Value Measurements

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:


	Three months ended
	March 31, 2019	March 31, 2018
Risk-free interest rate	2.51%	1.64% - 2.28%
Volatility	74.93%	18.40% - 81.95%
Expected average term	0.53	0.01 - 1.53

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):


	Three months ended
	March 31, 2019		March 31, 2018
Beginning of period	$	105	$	4,391
Change in fair value of common stock warrants		2,126		(1,258)
End of period	$	2,231	$	3,133

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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 for the three months ended March 31, 2019 and 2018:


	Three months ended
	March 31, 2019	March 31, 2018
Risk-free interest rate	2.32% - 2.33%	2.72% - 2.73%
Volatility	85.00%	85.00%
Expected average term	8.01- 8.30	9.01 - 9.30

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, the vesting dates, if applicable, and as of March 31, 2019 and 2018 for those warrants for which vesting is considered probable.


		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 vesting date - second tranche, second installment		1.54		—
As of March 2019 - second tranche		2.05		1.94
As of March 2018 - second tranche		1.57		1.71

15. Commitments and Contingencies

Lessor Obligations

As of March 31, 2019, the Company has noncancelable operating leases (as lessor), primarily associated with assets deployed at customer sites. These leases expire over the next one 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 March 31, 2019 are (in thousands):


Remainder of 2019	$	21,892
2020		27,172
2021		22,450
2022		13,713
2023		9,815
2024 and thereafter		12,706
Total future minimum lease payments	$	107,748

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Lessee Obligations

As of March 31, 2019, the Company has operating and finance leases, as lessee, primarily associated with sale/leaseback transactions that are partially secured by restricted cash (see also Note 1, Nature of Operations) as summarized below. These leases expire over the next one to nine years. Minimum rent payments under operating and finance leases are recognized on a straight‑line basis over the term of the lease. Leases contain termination clauses with associated penalties, the amounts of which cause the likelihood of cancelation to be remote.

In prior periods, the Company entered into sale/leaseback transactions, that were accounted for as finance leases and reported as part of finance obligations. The outstanding balance of finance obligations related to sale/leaseback transactions at March 31, 2019 was $29.9 million. The fair value of the finance obligation approximates the carrying value as of March 31, 2019.

The Company has sold 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 March 31, 2019 is $35.6 million, $6.0 million and $29.6 million of which is classified as short-term and long-term, respectively, on the accompanying unaudited interim consolidated balance sheet. The outstanding balance of this obligation at March 31, 2018 was $9.8 million, $2.6 million and $7.2 million of which was classified as short-term and long-term, respectively. The amount is amortized using the effective interest method. The fair value of this finance obligation approximates the carrying value as of March 31, 2019.

The Company has a finance lease associated with its property and equipment in Latham, New York. Liabilities relating to this agreement of $2.4 million has been recorded as a finance obligation, in the accompanying unaudited interim consolidated balance sheet as of March 31, 2019. The fair value of this finance obligation approximates the carrying value as of March 31, 2019.

Future minimum lease payments under operating and finance leases (with initial or remaining lease terms in excess of one year) as of March 31, 2019 are (in thousands):


					Other		Total
	Operating		Finance		Leased		Finance
	Leases		Leases		Property		Obligations
Remainder of 2019	$	17,498	$	5,041	$	325	$	22,864
2020		22,068		6,722		418		29,208
2021		17,134		6,722		391		24,247
2022		11,070		4,975		374		16,419
2023		10,328		3,175		363		13,866
2024 and thereafter		13,353		16,154		1,528		31,035
Total future minimum lease payments		91,451		42,789		3,399		137,639
Less imputed lease interest		(24,150)		(12,898)		(1,022)		(38,070)
Sale of future services		—		35,623		—		—
Total finance obligations	$	67,301	$	65,514	$	2,377	$	135,192

Rental expense for all operating leases was $6.0 million and $3.5 million for the three months ended March 31, 2019 and 2018, respectively.

The gross profit on sale/leaseback transactions for all operating leases was zero for the three months ended March 31, 2019 and 2018. Right of use assets obtained in exchange for new operating lease liabilities was zero for the three months ended March 31, 2019 and $0.6 million for the three months ended March 31, 2018, respectively.

At March 31, 2019 and 2018, security deposits associated with sale/leaseback transactions were $6.8 million and $8.3 million, respectively, and are included in other assets on the unaudited interim consolidated balance sheet.

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Other information related to the operating leases are presented in the following table.


		Three months ended		Three months ended
		March 31, 2019		March 31, 2018
Cash payments (in thousands)	$	5,728	$	3,313
Weighted average remaining lease term (years)		4.92		3.60
Weighted average discount rate		12.1%		12.0%

Finance lease costs include amortization of the right of use assets (i.e. depreciation expense) and interest on lease liabilities (i.e. interest and other expense, net in the unaudited interim consolidated statement of operations). Finance lease costs for the three months ended March 31, 2019 and 2018, respectively are (in thousands):


	Three months ended		Three months ended
	March 31, 2019		March 31, 2018
Amortization of right of use asset	$	808	$	1,624
Interest on finance obligations		2,091		1,510
Total finance lease cost	$	2,899	$	3,134

Right of use assets obtained in exchange for new finance lease liabilities were zero for three months ended March 31, 2019 and $0.3 million for the three months ended March 31, 2018.

Other information related to the finance leases are presented in the following table.


		Three months ended		Three months ended
		March 31, 2019		March 31, 2018
Cash payments (in thousands)	$	54,170	$	9,390
Weighted average remaining lease term (years)		3.53		3.90
Weighted average discount rate		10.8%		9.6%

Restricted Cash

In connection with certain of the above noted sale/leaseback agreements, cash of $34.3 million is required to be restricted as security and will be released over the lease term. The Company also has certain letters of credit backed by security deposits totaling $35.1 million that are security for the above noted sale/leaseback agreements.

The Company also has letters of credit in the aggregate amount of $0.5 million at March 31, 2019 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.

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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 March 31, 2019, two customers comprise approximately 83.2% of the total accounts receivable balance. At December 31, 2018, three customers comprised approximately 52.3% of the total accounts receivable balance.

For the three months ended March 31, 2019, 56.2% of total consolidated revenues were associated primarily with two customers. For the three months ended March 31, 2018, 74.2% of total consolidated revenues were associated primarily with two customers. For purposes of assigning a customer to a sale/leaseback transaction completed with a financial institution, the Company considers the end user of the assets to be the ultimate customer.

Vendor Reimbursement

During the first quarter of 2019, the Company received $3.5 million from a vendor to help facilitate a field replacement program for certain composite fuel tanks that do not meet the supply contract standard, as determined by the Company and the manufacturer. The Company is working with its customers to ensure an efficient, minimally disruptive process for the exchange. Amounts received under this arrangement are being accounted for as a reduction of costs. Such costs included labor and materials to replace the tanks, the manufacture of temporary replacement units used while tanks are being replaced, and other miscellaneous costs.

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Item 2 — Management’s Discussion and Analysis of Financial Condition and Results of Operations

The following discussion should be read in conjunction with our accompanying unaudited interim consolidated financial statements and notes thereto included within this report, and our audited consolidated financial statements and notes thereto included in our Annual Report on Form 10-K, filed for the fiscal year ended December 31, 2018. In addition to historical information, this Form 10-Q and the following discussion contain statements that are not historical facts and are considered forward-looking within the meaning of Section 27A of the Securities Act and Section 21E of the Exchange Act. These forward-looking statements contain projections of our future results of operations or of our financial position or state other forward-looking information. In some cases you can identify these statements by forward-looking words such as “anticipate,” “believe,” “could,” “continue,” “estimate,” “expect,” “intend,” “may,” “should,” “will,” “would,” “plan,” “projected” or the negative of such words or other similar words or phrases. We believe that it is important to communicate our future expectations to our investors. However, there may be events in the future that we are not able to accurately predict or control and that may cause our actual results to differ materially from the expectations we describe in our forward-looking statements. Investors are cautioned not to unduly rely on forward-looking statements because they involve risks and uncertainties, and actual results may differ materially from those discussed as a result of various factors, including, but not limited to: the risk that we continue to incur losses and anticipate continuing to incur losses; the risk that we will need to raise additional capital to fund our operations and such capital may not be available to us; our ability to obtain financing arrangements to support the sale or leasing of our products and services to customers; risk of our convertible debt securities that may be settled in cash, such as our Convertible Senior Notes, will have a material effect on our reported financial results; that our convertible note hedges may affect the value of the Convertible Senior Notes and our common stock; the volatility of the market price of our common stock; the risk that a loss of one or more of our major customers, or if one of our major customers delays payment of or is unable to pay their receivables, a material adverse effect could result on our financial condition; the cost and availability of fuel and fueling infrastructures for our products; the risk of delays in or not completing our product development goals; the risk of elimination of government subsidies and economic incentives for alternative energy products; the risk of potential losses related to any product liability claims or contract disputes; competitive factors, such as price competition and competition from other traditional and alternative energy companies; the cost and availability of components and parts for our products; possible new tariffs could have a material adverse effect on our business our ability to establish and maintain relationships with third parties with respect to product development, manufacturing, distribution and servicing and the supply of key product components; the risk that unit orders may not ship, be installed and/or converted to revenue, in whole or in part; the risk of dependency on information technology in our operations and the failure of such technology; the risks related to the use of flammable fuels in our products; our subjectivity to legal proceedings and legal compliance risks; our ability to protect our intellectual property; the risk that our lack of extensive experience in manufacturing and marketing products may impact our ability to manufacture and market products on a profitable and large‑scale commercial basis; the risk of loss related to an inability to maintain an effective system of internal controls; our ability to attract and maintain key personnel; the risks associated with potential future acquisitions; the cost of complying with current and future federal, state and international governmental regulations; our provisions in our charter documents and Delaware law may discourage or delay an acquisition of the Company by a third party that stockholders may consider favorable and other risks and uncertainties discussed under Item IA—Risk Factors in our Annual Report on Form 10-K for the fiscal year ended December 31, 2018, as filed March 13, 2019. Readers should not place undue reliance on our forward-looking statements. These forward-looking statements speak only as of the date on which the statements were made and are not guarantees of future performance. Except as may be required by applicable law, we do not undertake or intend to update any forward-looking statements after the date of this Form 10-Q.

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Overview

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 system;

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;

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.

To promote fuel cell adoption and maintain post‑sale customer satisfaction, we offer a range of service and support options through extended maintenance contracts. Additionally, customers may waive our service option, and choose to service their systems independently. A high percentage of fuel cells sold in recent years were bundled with maintenance contracts. As a result, only approximately 1.0% of fuel cells deployed are still under standard warranty that is not a part of an extended maintenance contract.

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Recent Developments

Common Stock Offering

On March 20, 2019, the Company issued and sold in a registered direct offering an aggregate of 10,000,000 shares of the Company’s Common Stock at a purchase price of $2.35 per share. The net proceeds to the Company were approximately $23.5 million.

Term Loan Facility

On March 29, 2019, the Company and its subsidiaries Emerging Power Inc. and Emergent Power Inc., entered into a loan and security agreement with Generate Lending, LLC providing for a $100 million secured term loan facility. The Company has borrowed the entire $100 million.

Results of Operations

Our primary sources of revenue are from sales of fuel cell systems and related infrastructure, services performed on fuel cell systems and related infrastructure, Power Purchase Agreements (PPAs), and fuel delivered to customers. 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. Revenue from services performed on fuel cell systems and related infrastructure represents revenue earned on our service and maintenance contracts and sales of spare parts. Revenue from PPAs primarily represents payments received from customers who make monthly payments to access the Company’s GenKey solution. 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.

In the third quarter of 2018, it was determined that the presentation in our 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 previous presentation resulted in a gross up of these line items and had no impact on our gross profit (loss) or net loss. The Company corrected the prior period 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 months ended March 31, 2018 was $0.8 million. 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 months ended March 31, 2018 was $1.1 million. The Company does not consider the impact of the prior period correction to be material to the prior period consolidated financial statements.

In 2017, in separate transactions, the Company issued to each of Amazon and Walmart warrants to purchase shares of the Company’s common stock. The Company recorded a portion of the estimated fair value of the warrants as a reduction of revenue based upon the projected number of shares of common stock expected to vest under the warrants, the proportion of purchases by Amazon, Walmart and their affiliates within the period relative to the aggregate purchase levels required for vesting of the respective warrants, and the then-current fair value of the warrants. Beginning in September 2018, the provision for common stock warrants is allocated to our individual revenue line items based on estimated contractual cash flows by revenue stream. Prior period amounts have been reclassified to be consistent with current period presentation. The amount of provision for common stock warrants recorded as a reduction of revenue during the three months ended March 31, 2019 and 2018, respectively, is shown in the table below (in thousands):


	Three months ended March 31,
	2019		2018

Sales of fuel cell systems and related infrastructure	$	(597)	$	(845)
Services performed on fuel cell systems and related infrastructure		(239)		(338)
Power Purchase Agreements		(1,791)		(117)
Fuel delivered to customers		(1,552)		(585)
Total	$	(4,179)	$	(1,885)

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Revenue, cost of revenue, gross profit (loss) and gross margin for the three months ended March 31, 2019 and 2018, were as follows (in thousands):


			Cost of		Gross		Gross
	Net Revenue		Revenue		Profit/(Loss)		Margin
For the year ended March 31, 2019:
Sales of fuel cell systems and related infrastructure	$	2,220	$	2,321	$	(101)	(4.5)	%
Services performed on fuel cell systems and related infrastructure		6,213		6,123		90	1.4	%
Power Purchase Agreements		4,707		8,998		(4,291)	(91.2)	%
Fuel delivered to customers		5,453		7,921		(2,468)	(45.3)	%
Total	$	18,593	$	25,363	$	(6,770)	(36.4)	%
For the year ended March 31, 2018:
Sales of fuel cell systems and related infrastructure	$	10,613	$	10,122	$	491	4.6	%
Services performed on fuel cell systems and related infrastructure		5,483		5,734		(251)	(4.6)	%
Power Purchase Agreements		5,372		8,650		(3,278)	(61.0)	%
Fuel delivered to customers		4,950		5,896		(946)	(19.1)	%
Total	$	26,418	$	30,402	$	(3,984)	(15.1)	%

Revenue – sales of fuel cell systems and related infrastructure . Revenue from sales of fuel cell systems and related infrastructure represents revenue from the sale of our fuel cells, such as GenDrive units and GenSure stationary backup power units, as well as hydrogen fueling infrastructure referred to at the site level as hydrogen installations.

Revenue from sales of fuel cell systems and related infrastructure for the three months ended March 31, 2019 decreased $8.4 million, or 79.1%, to $2.2 million from $10.6 million for the three months ended March 31, 2018. Included within revenue was provision for common stock warrants of $0.6 million and $0.8 million for the three months ended March 31, 2019 and 2018, respectively, positively impacting the change in revenue. The main drivers for the decrease in revenue were decreases in GenDrive and infrastructure site deployment. There were 94 units recognized as revenue during the three months ended March 31, 2019, compared to 304 for the three months ended March 31, 2018. Zero hydrogen installations during the three months ended March 31, 2019, were recognized as revenue, compared to three during the three months ended March 31, 2018.

Revenue – services performed on fuel cell systems and related infrastructure . Revenue from services performed on fuel cell systems and related infrastructure represents revenue earned on our service and maintenance contracts and sales of spare parts. At March 31, 2019, there were 11,760 fuel cell units and 42 hydrogen installations under extended maintenance contracts, an increase from 9,999 fuel cell units and 35 hydrogen installations at March 31, 2018, respectively.

Revenue from services performed on fuel cell systems and related infrastructure for the three months ended March 31, 2019 increased $0.7 million, or 13.3%, to $6.2 million from $5.5 million for the three months ended March 31, 2018. Included within revenue was provision for common stock warrants of $0.2 million and $0.3 million for the three months ended March 31, 2019 and 2018, respectively, positively impacting the change in revenue. The increase in service revenues was primarily due to the increase in units under service contracts. The average number of units under extended maintenance contracts during the three months ended March 31, 2019 was 11,921, compared to 9,883 during the three months ended March 31, 2018. This 20.6% increase in average units serviced throughout the three months is directionally consistent with the increase in revenue, as compared to the prior year period.

Revenue – Power Purchase Agreements. Revenue from PPAs represents payments received from customers for power generated through the provision of equipment and service. The equipment and service can be associated with sale/leaseback transactions in which the Company sells fuel cell systems and related infrastructure to a third-party, leases them back and operates them at customers’ locations who are parties to PPAs with the Company. Alternatively, the Company can retain the equipment as leased property and provide it to customers under PPAs. At March 31, 2019, there were 37 GenKey sites associated with PPAs, as compared to 33 at March 31, 2018.

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Revenue from PPAs for the three months ended March 31, 2019 decreased $0.7 million, or 12.4%, to $4.7 million from $5.4 million for the three months ended March 31, 2018. Included within revenue was provision for common stock warrants of $1.8 million and $0.1 million for the three months ended March 31, 2019 and 2018. The decrease in revenue from PPAs for the three months ended March 31, 2019 as compared to the three months ended March 31, 2018 is attributable to the increase in provision for common stock warrants offset by the increase in PPA sites.

Revenue – fuel delivered to customers . 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. As part of the GenKey solution, the Company contracts with fuel suppliers to purchase liquid hydrogen, which is then sold to its customers. At March 31, 2019, there were 72 sites associated with fuel contracts, as compared to 61 at March 31, 2018. The sites generally are the same as those which had purchased hydrogen installations within the GenKey solution.

Revenue associated with fuel delivered to customers for the three months ended March 31, 2019 increased $0.5 million, or 10.2%, to $5.5 million from $5.0 million for the three months ended March 31, 2018. Included within revenue was provision for common stock warrants of $1.6 million and $0.6 million for the three months ended March 31, 2019 and 2018, respectively, adversely impacting the change in revenue. The increase in revenue is due to an increase in sites taking fuel deliveries in 2019, compared to 2018, as well as increases in fuel prices, offset by the aforementioned increase in common stock warrant provision. The average number of sites receiving fuel deliveries was 72 during the three months ended March 31, 2019, as compared to 60 during the three months ended March 31, 2018.

Cost of revenue – sales of fuel cell systems and related infrastructure . Cost of revenue from sales of fuel cell systems and related infrastructure includes direct materials, labor costs, and allocated overhead costs related to the manufacture of our fuel cells such as GenDrive units and GenSure stationary backup power units, as well as hydrogen fueling infrastructure referred to at the site level as hydrogen installations.

Cost of revenue from sales of fuel cell systems and related infrastructure for the three months ended March 31, 2019 decreased 77.1%, or $7.8 million, to $2.3 million, compared to $10.1 million the three months ended March 31, 2018 . This decrease is driven by the previously stated decrease in GenDrive deployment volume . Gross margin generated from sales of fuel cell systems and related infrastructure declined to (4.5)% for the three months ended March 31, 2019, compared to 4.6% for the three months ended March 31, 2018 primarily due to the amount of provision for common stock warrants recorded. The provision for common stock warrants from sales of fuel cells and related infrastructure for the three months ended March 31, 2019 and 2018 had a 21.2% and 7.4% negative impact on revenue, respectively.

Cost of revenue – services performed on fuel cell systems and related infrastructure . Cost of revenue from services performed on fuel cell systems and related infrastructure includes the labor, material costs and allocated overhead costs incurred for our product service and hydrogen site maintenance contracts and spare parts. At March 31, 2019, there were 11,760 fuel cell units and 42 hydrogen installations under extended maintenance contracts, an increase from 9,999 fuel cell units and 35 hydrogen installations at March 31, 2018, respectively.

Cost of revenue from services performed on fuel cell systems and related infrastructure for the three months ended March 31, 2019 increased 6.8%, or $0.4 million, to $6.1 million, compared to $5.7 million for the three months ended March 31, 2018. Gross margin improved to 1.4% for the three months ended March 31, 2019, compared to (4.6)% for the three months ended March 31, 2018 primarily due to reductions in costs from changes in product configuration, and improved leverage as the number of units in the field increases.

Cost of revenue – Power Purchase Agreements . Cost of revenue from PPAs includes payments made to financial institutions for leased equipment and service used to fulfill the PPAs, and depreciation of leased property. Leased units are associated with sale/leaseback transactions in which the Company sells fuel cell systems and related infrastructure to a third-party, leases them back, and operates them at customers’ locations who are parties to PPAs with the Company. Alternatively, the Company can hold the equipment for investment and recognize the depreciation and service cost of the assets as cost of revenue from PPAs. At March 31, 2019, there were 37 GenKey sites associated with PPAs, as compared to 33 at March 31, 2018.

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Cost of revenue from PPAs for the three months ended March 31, 2019 increased $0.3 million, or 4.0%, to $9.0 million from $8.7 million for the three months ended March 31, 2018. The increase was a result of the increase in the number of customer sites under these agreements. Gross margin declined to (91.2)% for the three months ended March 31, 2019, as compared to (61.0)% for the three months ended March 31, 2018 primarily due to the increase in the level of provision for common stock warrants. The provision for common stock warrants from services performed on fuel cells systems and related infrastructure for the three months ended March 31, 2019 and 2018 had a 27.6% and 2.1% negative impact on revenue, respectively.

Cost of revenue – fuel delivered to customers . Cost of revenue from fuel delivered to customers represents the purchase of hydrogen from suppliers that ultimately is sold to customers. As part of the GenKey solution, the Company contracts with fuel suppliers to purchase liquid hydrogen and separately sells to its customers when delivered or dispensed. At March 31, 2019, there were 72 sites associated with fuel contracts, as compared to 61 at March 31, 2018. The sites generally are the same as those which had purchased hydrogen installations within the GenKey solution.

Cost of revenue from fuel delivered to customers for the three months ended March 31, 2019 increased $2.0 million, or 34.3%, to $7.9 million from $5.9 million for the three months ended March 31, 2018. Gross margin declined to (45.3)% during the three months ended March 31, 2019, compared to (19.1)% during the three months ended March 31, 2018 primarily due to the increase in the amount of provision for common stock warrants, as well as increase in depreciation on tanks and related fuel equipment due to investments made to improve fuel system efficiency. The provision for common stock warrants from fuel delivered to customers for the three months ended March 31, 2019 and 2018 had a 22.2% and 10.6% negative impact on revenue, respectively.

Research and development expense. Research and development expense includes: materials to build development and prototype units, cash and non-cash compensation and benefits for the engineering and related staff, expenses for contract engineers, fees paid to consultants for services provided, materials and supplies consumed, facility related costs such as computer and network services, and other general overhead costs associated with our research and development activities.

Research and development expense for the three months ended March 31, 2019 decreased $1.3 million, or 14.7%, to $7.4 million, from $8.6 million for the three months ended March 31, 2018. The decrease was primarily related to a cost reimbursement from a vendor associated with a field replacement program for certain composite fuel tanks that did not meet the supply contract standard as determined by the Company and manufacturer.

Selling, general and administrative expenses. Selling, general and administrative expenses includes cash and non-cash compensation, benefits, amortization of intangible assets and related costs in support of our general corporate functions, including general management, finance and accounting, human resources, selling and marketing, information technology and legal services.

Selling, general and administrative expenses for the three months ended March 31, 2019, increased $1.0 million, or 12.2%, to $9.3 million from $8.3 million for the three months ended March 31, 2018. This increase is primarily related to decrease in legal accruals during the three months ended March 31, 2018.

Interest and other expense, net . Interest and other expense, net consists of interest and other expenses related to our long-term debt, convertible senior notes, obligations under finance leases and our finance obligations, as well as foreign currency exchange losses, offset by interest and other income consisting primarily of interest earned on our cash and cash equivalents, foreign currency exchange gains and other income. The Company entered into a series of finance leases with Generate Lending LLC during 2018. Approximately $50.0 million of these finance leases were terminated and replaced with long-term debt with Generate Lending LLC in March 2019. Additionally, in March of 2018, the Company issued convertible senior notes in a private placement to qualified institutional buyers pursuant to Rule 144A under the Securities Act of 1933, as amended.

Net interest and other expense for the three months ended March 31, 2019 increased $5.2 million, or 168.8%, as compared to the three months ended March 31, 2018. This increase is attributed to the increase in finance leases/long-term debt and the issuance of convertible senior notes, as mentioned above.

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Change in fair value of common stock warrant liability. The Company accounts for common stock warrants as common stock warrant liability with changes in the fair value reflected in the consolidated statement of operations as change in the fair value of common stock warrant liability.

The change in fair value of common stock warrant liability for the three months ended March 31, 2019 resulted in an increase in the associated warrant liability of $2.1 million as compared to a decrease of $1.3 million for the three months ended March 31, 2018. These variances are primarily due to changes in the average remaining term, the increase Company’s common stock share price, and changes in volatility of our common stock, which are significant inputs to the Black-Scholes valuation model used to calculate this fair value change.

Income taxes. The Company recognized an income tax benefit for the three months ended March 31, 2018 of $3.0 million 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, Convertible Senior Notes. The Company did not record any income tax expense or benefit for the three months ended March 31, 2019. 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.

Liquidity and Capital Resources

Liquidity

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working capital were related to an increase in inventory, and decreases in deferred revenue, accounts payable, accrued expenses and other liabilities offset by decreases in accounts receivable and prepaid expenses, and other assets. As of March 31, 2019, we had cash and cash equivalents of $39.3 million and net working capital of $77.7 million. By comparison, at December 31, 2018, we had cash and cash equivalents of $38.6 million and net working capital of $9.2 million.

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 require the Company to maintain cash balances in restricted accounts securing the Company’s finance obligations. Cash received from customers under the PPAs is used to make payments against our finance obligations. 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 at March 31, 2019 is $77.5 million, which have been secured with restricted cash, security deposits and pledged service escrows of $78.2 million.

In March 2019 the Company entered into a loan and security agreement with Generate Lending, LLC borrowing $85.0 million. The initial proceeds of the loan were used to pay in full the Company’s long-term debt and accrued interest of $17.6 million, under the loan agreement with NY Green Bank, a Division of the New York State Energy Research & Development Authority (NY Green Bank) and terminate approximately $50.3 million of certain equipment leases with Generate Plug Power SLB II, LLC as well as repurchase of the associated leased equipment. During April 2019, the Company borrowed an additional $15.0 million under this debt facility.

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In March 2019 the Company sold 10 million shares of common stock for an issue price of $2.35 per share resulting in net proceeds of $23.5 million.

Several key indicators of liquidity are summarized in the following table (in thousands):


	Three months		Year
	ended or at		ended or at
	March 31, 2019		December 31, 2018
Cash and cash equivalents at end of period	$	39,336	$	38,602
Restricted cash at end of period		69,895		71,551
Working capital at end of period		77,705		9,245
Net loss attributable to common shareholders		33,990		78,167
Net cash used in operating activities		36,263		57,617
Net cash used in investing activities		2,274		19,572
Net cash provided by financing activities		37,650		119,344

Long-Term Debt

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$1.5 million if the Company is unable to provide $50.0 million of structured project financing arrangements with Generate Capital prior to December 31, 2021.

All obligations under the Loan Agreement are unconditionally guaranteed by Emerging Power Inc. and Emergent Power Inc. 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 requires the principal balance at the end of each of the following years may not exceed (in thousands):


December 31, 2019	$	79,638
December 31, 2020		58,034
December 31, 2021		36,106
December 31, 2022		—

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

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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.


Principal amounts:
Principal	$	100,000
Unamortized debt discount (1)		(33,049)
Unamortized debt issuance costs (1)		(1,926)
Net carrying amount	$	65,025
Carrying amount of the equity component (2)	$	37,702

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 $9.2 million.

As of March 31, 2019 the remaining life of the Convertible senior notes is approximately 48 months.

Capped Call

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Common Stock Forward

The fair values of the Capped Call and Common Stock Forward are not remeasured each reporting period..

Common Stock Issuance

In March 2019, the Company issued and sold in a registered direct offering an aggregate of 10 million shares of the Company’s common stock at a purchase price of $2.35 per share. The net proceeds to the Company were approximately $23.5 million.

At Market Issuance Sales Agreement

Lessor Obligations

Future minimum lease payments under noncancelable operating leases (with initial or remaining lease terms in excess of one year) as of March 31, 2019 are (in thousands):


Remainder of 2019	$	21,892
2020		27,172
2021		22,450
2022		13,713
2023		9,815
2024 and thereafter		12,706
Total future minimum lease payments	$	107,748

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Lessee Obligations

Future minimum lease payments under operating and finance leases (with initial or remaining lease terms in excess of one year) as of March 31, 2019 are (in thousands):


					Other		Total
	Operating		Finance		Leased		Finance
	Leases		Leases		Property		Obligations
Remainder of 2019	$	17,498	$	5,041	$	325	$	22,864
2020		22,068		6,722		418		29,208
2021		17,134		6,722		391		24,247
2022		11,070		4,975		374		16,419
2023		10,328		3,175		363		13,866
2024 and thereafter		13,353		16,154		1,528		31,035
Total future minimum lease payments		91,451		42,789		3,399		137,639
Less imputed lease interest		(24,150)		(12,898)		(1,022)		(38,070)
Sale of future services		—		35,623		—		—
Total finance obligations	$	67,301	$	65,514	$	2,377	$	135,192

Rental expense for all operating leases was $6.0 million and $3.5 million for the three months ended March 31, 2019 and 2018, respectively.

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Other information related to the operating leases are presented in the following table.


		Three months ended		Three months ended
		March 31, 2019		March 31, 2018
Cash payments (in thousands)	$	5,728	$	3,313
Weighted average remaining lease term (years)		4.92		3.60
Weighted average discount rate		12.1%		12.0%


	Three months ended		Three months ended
	March 31, 2019		March 31, 2018
Amortization of right of use asset	$	808	$	1,624
Interest on finance obligations		2,091		1,510
Total finance lease cost	$	2,899	$	3,134

Right of use assets obtained in exchange for new finance lease liabilities were zero for three months ended March 31, 2019 and $0.3 million for the three months ended March 31, 2018.

Other information related to the finance leases are presented in the following table.


		Three months ended		Three months ended
		March 31, 2019		March 31, 2018
Cash payments (in thousands)	$	54,170	$	9,390
Weighted average remaining lease term (years)		3.53		3.90
Weighted average discount rate		10.8%		9.6%

Restricted Cash

Contractual Obligations

Contractual obligations as of March 31, 2019, under agreements with non-cancelable terms are as follows (in thousands):


	Total		<1 year		1 - 3 Years		3 - 5 Years		> 5 Years
Operating lease obligations(A)	$	67,301	$	13,093	$	30,489	$	14,649		9,070
Finance lease obligations(B)		32,268		4,885		11,326		6,690		9,367
Other finance obligations(C)		35,623		6,019		12,674		10,446		6,484
Purchase obligations(D)		34		10		16		8		—
Convertible senior notes(E)		100,000		—		—		100,000		—
Long-term debt(F)		85,235		12,559		43,296		29,380		—
	$	320,461	$	36,566	$	97,801	$	31,793	$	24,921

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(A)

The Company has non‑cancelable operating leases that generally have one to nine year terms, primarily associated with sale/leaseback transactions and are partially secured with restricted cash. The liability recognized on the consolidated balance sheet is presented within finance obligations . See Note 15, Commitments and Contingencies, to the Consolidated Financial Statements for more detail.

(B)

During the years ended December 31, 2017 and 2016, the Company entered into a series of project financings, which are accounted for as finance leases and reported as part of the finance obligations on the Company’s consolidated balance sheet. The Company also has a finance obligation related to a sale/leaseback transaction involving its building.

(C)

The Company has received cash for future services to be performed associated with certain sale/leaseback transactions, which was treated as a finance obligation.

(D)

The Company has purchase obligations related to the maintenance of its building and storage of documents.

(E)

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. See Note 8, Convertible Senior Notes to the unaudited interim consolidated financial statements for more detail.

(F)

In March 2019, the Company has entered into a long-term debt agreement with Generate Capital. Principal and interest payments will be made using the proceeds from the release of restricted cash.

Critical Accounting Estimates

Management’s discussion and analysis of our financial condition and results of operations are based upon our unaudited interim consolidated financial statements, which have been prepared in accordance with U.S. generally accepted accounting principles. The preparation of these unaudited interim consolidated financial statements requires us to make estimates and judgments that affect the reported amounts of assets, liabilities, revenues and expenses, and related disclosure of contingent assets and liabilities at the date of and during the reporting period. On an on-going basis, we evaluate our estimates and judgments, including those related to revenue recognition for multiple element arrangements, bad debts, inventories, intangible assets, valuation of long-lived assets, accrual for loss contracts on service, operating and finance leases, product warranty reserves, unbilled revenue, common stock warrants, income taxes, stock-based compensation, contingencies, and purchase accounting. We base our estimates and judgments on historical experience and on various other factors and assumptions that are believed to be reasonable under the circumstances, the results of which form the basis for making judgments about (1) the carrying values of assets and liabilities and (2) the amount of revenue and expenses realized that are not readily apparent from other sources. Actual results may differ from these estimates under different assumptions or conditions.

We refer to the policies and estimates set forth in the section “Management’s Discussion and Analysis of Financial Condition and Results of Operations—Critical Accounting Estimates”, as well as a discussion of significant accounting policies included in Note 2, Summary of Significant Accounting Policies, of the consolidated financial statements, both of which are included in our Annual Report on Form 10-K for the fiscal year ended December 31, 2018.

Recent Accounting Pronouncements

Recently Adopted Accounting Pronouncements

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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 adopted this update on January 1, 2019 and it did not have a material effect on the consolidated financial statements.

Recently Issued and Not Yet Adopted Accounting Pronouncements

Item 3 — Quantitative and Qualitative Disclosures about Market Risk

From time to time, we may invest our cash in government, government backed and interest-bearing investment-grade securities that we generally hold for the duration of the term of the respective instrument. We do not utilize derivative financial instruments, derivative commodity instruments or other market risk sensitive instruments, positions or transactions in any material fashion, except for a capped call and common stock forward purchased in March 2018 related to the issuance of Convertible Senior Notes. We are not subject to any material risks arising from changes in interest rates, foreign currency exchange rates, commodity prices, equity prices or other market changes that affect market risk sensitive instruments.

Our exposure to changes in foreign currency rates is primarily related to sourcing inventory from foreign locations and operations of HyPulsion. This practice can give rise to foreign exchange risk resulting from the varying cost of inventory to the receiving location. The Company reviews the level of foreign content as part of its ongoing evaluation of overall sourcing strategies and considers the exposure to be not significant. Our HyPulsion exposure presently is mitigated by low levels of operations and its sourcing is primarily intercompany in nature and denominated in U.S. dollar.

Item 4 — Controls and Procedures

(a) Disclosure controls and procedures.

The chief executive officer and chief financial officer, based on their evaluation of disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) as of the end of the period covered by this

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Quarterly Report on Form 10-Q, have concluded that the Company’s disclosure controls and procedures are effective for ensuring that information required to be disclosed in the reports that it files or submits under the Securities Exchange Act of 1934 is recorded, processed, summarized and reported within the time periods specified in the Commission’s rules and forms. Disclosure controls and procedures include, without limitation, controls and procedures designed to ensure that information required to be disclosed in filed or submitted reports is accumulated and communicated to the Company’s management, including its principal executive officer and principal financial officer as appropriate, to allow timely decisions regarding required disclosure.

(b) Changes in internal control over financial reporting.

There were no changes in the Company’s internal control over financial reporting that occurred during the last fiscal quarter that have materially affected, or are reasonably likely to materially affect, the Company’s internal control over financial reporting.

PART II. OTHER INFORMATION

Item 1 — Legal Proceedings

On August 28, 2018, a lawsuit was filed on behalf of eight individuals against the Company and five corporate co-defendants in the 9 th Judicial District Court, Rapides Parish, Louisiana. The lawsuit relates to the previously disclosed May 2018 accident involving a forklift powered by the Company’s fuel cell at a Procter & Gamble facility in Louisiana. The lawsuit alleges claims against the Company and the co-defendants for defect in construction and/or composition, design defect, inadequate warning, breach of express warranty and negligence. The lawsuit claims an unspecified amount of damages for wrongful death and personal injuries, among other damages. The Company intends to vigorously defend the litigation. Given the early stage of this matter, the Company is unable to determine the likelihood of an adverse outcome. However, the Company does not expect the lawsuit to have a material impact on the Company’s financial position, liquidity or results of operations, or to otherwise have a material adverse effect on the Company.

Item 1A - Risk Factors

Part I, Item 1A, “Risk Factors” of our most recently filed Annual Report on Form 10-K, filed with the Securities and Exchange Commission for the fiscal year ended December 31, 2018, sets forth information relating to important risks and uncertainties that could materially adversely affect our business, financial condition and operating results. Except to the extent that information disclosed elsewhere in this Quarterly Report on Form 10-Q relates to such risk factors (including, without limitation, the matters described in Part I, Item 2, “Management’s Discussion and Analysis of Financial Condition and Results of Operations”), there have been no material changes to our risk factors disclosed in our most recently filed Annual Report on Form 10-K. However, those risk factors continue to be relevant to an understanding of our business, financial condition and operating results and, accordingly, you should review and consider such risk factors in making any investment decision with respect to our securities.

Item 2 - Unregistered Sales of Equity Securities and Use of Proceeds

(a) None.

(b) Not applicable.

Item 3 — Defaults Upon Senior Securities

None.

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Item 4 — Mine Safety Disclosures

None.

Item 5 — Other Information

(a) None.

(b) None.

Item 6 — Exhibits



10.1	Form of Securities Purchase Agreement dated as of March 20, 2019 by and between Plug Power Inc., and the purchaser party thereto (filed as Exhibit 10.1 to Plug Power Inc.’s Current Report on Form 8-K filed on March 20, 2019 and incorporated by reference herein).

10.2	Loan and Security Agreement dated as of March 29, 2019 by and among Plug Power Inc., Emerging Power Inc., Emergent Power Inc. and Generate Lending, LLC (filed as Exhibit 10.1 to Plug Power Inc.’s Current Report on Form 8-K filed on April 3, 2019 and incorporated by reference herein).

10.3	First Amendment to Loan and Security Agreement dated as of March 29, 2019 by and among Plug Power Inc., Emerging Power Inc., Emergent Power Inc. and Generate Lending, LLC (filed as Exhibit 10.2 to Plug Power Inc.’s Current Report on Form 8-K filed on April 3, 2019 and incorporated by reference herein).

10.4	First Amended and Restated Master Lease Agreement dated as of July 30, 2018 by and between Plug Power Inc. and Wells Fargo Equipment Finance, Inc. (1)

31.1	Certification pursuant to 18 U.S.C. Section 1350, adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.

31.2	Certification pursuant to 18 U.S.C. Section 1350, adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.

32.1	Certification pursuant to 18 U.S.C. Section 1350, adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.

32.2	Certification pursuant to 18 U.S.C. Section 1350, adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.

101.INS*	XBRL Instance Document (1)
101.SCH*	XBRL Taxonomy Extension Schema Document (1)
101.CAL*	XBRL Taxonomy Extension Calculation Linkbase Document (1)
101.DEF*	XBRL Taxonomy Extension Definition Linkbase Document (1)
101.LAB*	XBRL Taxonomy Extension Labels Linkbase Document (1)
101.PRE*	XBRL Taxonomy Extension Presentation Linkbase Document (1)

(1)

Filed herewith.

* Submitted electronically herewith. Attached as Exhibit 101 are the following materials from the Company’s Quarterly Report on Form 10-Q for the quarter ended March 31, 2019, formatted in eXtensible Business Reporting Language (XBRL) and tagged as blocks of text: (i) Interim Consolidated Balance Sheets at March 31, 2019 and December 31, 2018; (ii) Interim Consolidated Statements of Operations for the Three Months Ended March 31, 2019 and 2018; (iii)

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Interim Consolidated Statements of Comprehensive Loss for the Three and Nine Months Ended March 31, 2019 and 2018; (iv) Interim Consolidated Statements of Stockholders’ Equity for the Three Months Ended March 31, 2019; (v) Interim Consolidated Statements of Cash Flows for the Three Months Ended March 31, 2019 and 2018; and (vi) related notes, tagged as blocks of text.

Signatures

Pursuant to requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.


	PLUG POWER INC.

Date: May 8, 2019	By:	/s/ Andrew Marsh
		Andrew Marsh
		President, Chief Executive Officer and Director (Principal Executive Officer)

Date: May 8, 2019	By:	/s/ Paul B. Middleton
		Paul B. Middleton
		Chief Financial Officer (Principal Financial Officer)

Exhibit 10.4

Execution Copy

FIRST AMENDED AND RESTATED MASTER LEASE AGREEMENT

This First Amended and Restated Master Lease Agreement (this " Agreement "), dated as of July 30, 2018, is made between Wells Fargo Equipment Finance, Inc., a Minnesota corporation (together with its successors and assigns, the " Lessor "), and Plug Power Inc., a corporation incorporated under the laws of Delaware (the " Lessee "). Lessor and Lessee are referred to in this Agreement individually as a " Party " and, collectively, as the " Parties ". Capitalized terms used but not defined herein shall have the meaning set forth for such terms in the Master Purchase Agreement (as defined below).

WHEREAS, Lessor is in the business of owning and leasing equipment and has purchased and plans to continue to purchase, from time to time, certain fuel cell equipment from Lessee pursuant to the Master Purchase and Sale Agreement, dated as of June 30, 2017, between Lessor and Lessee (as the same may be amended, supplemented or otherwise modified from time to time, the " Master Purchase Agreement ");

WHEREAS, the Parties entered into that certain Master Lease Agreement, dated as of June 30, 2017 (the " Original MLA "), pursuant to which Lessor leased to Lessee the fuel cell equipment purchased by Lessor prior to the date hereof under the Master Purchase Agreement, and Lessee desires to continue to lease such fuel cell equipment from Lessor, and Lessor desires to continue to lease such fuel cell equipment to Lessee under the terms of this Agreement and the 2017 Leases (as defined below);

WHEREAS, with respect to fuel cell equipment purchased by Lessor under the Master Purchase Agreement on and after the date hereof, Lessee desires to lease such fuel cell equipment from Lessor, and Lessor desires to lease such fuel cell equipment to Lessee, under the terms and conditions of this Agreement and the New Leases (as defined below), when and as the conditions to each of such New Leases are met as provided herein; and

WHEREAS, the Parties now wish to amend and restate the Original MLA to, among other things, reflect certain terms relating to the New Leases.

NOW, THEREFORE, in consideration of the mutual covenants, representations, warranties and agreements hereinafter set forth, and intending to be legally bound hereby, the Parties agree as follows:

1. LEASE. Lessor agrees to lease to Lessee and Lessee agrees to lease from Lessor certain fuel cell equipment (the " Equipment ") (a) in accordance with (i) Rental Schedule 001- 0472186-101 dated as of June 30, 2017, (ii) Rental Schedule 001-0472186-102 dated as of June 30, 2017, (iii) Rental Schedule 001-0472186-104 dated as of June 30, 2017, (iv) Rental Schedule 001-0472186-103 dated as of August 29, 2017, and (v) Rental Schedule 001-0472186-105 dated as of November 30, 2017 (each such Rental Schedules referenced in this Section l(a) being a separate " 2017 Lease " and, collectively, the " 2017 Leases "), and (b) as further described in one or more schedules to this Agreement, each in the form attached hereto as Exhibit A (each such

schedule referenced in this Section l(b) being a separate " New Lease " and collectively, the " New Leases "). Each of the 2017 Leases and the New Leases shall be referred to herein as a separate " Lease " and collectively as the " Leases ". The terms of this Agreement shall control and be effective as to each Lease, unless expressly amended or modified in writing. Equipment shall be installed and placed in service at various locations as indicated in each Lease (each such location, and each location to which any Equipment is relocated pursuant Section 8(b) , a " Site "). The entering into by Lessor of any New Lease shall be subject to the satisfaction (or waiver by Lessor in its sole discretion) of the conditions precedent set forth in Section 11 .

2. TERM AND RENT. The initial term (" Initial Term ") for each Lease shall be for the initial period specified in such Lease, and Lessee shall pay Lessor the Rent specified in such Lease throughout the Initial Term for the use of the Equipment leased under such Lease. The Initial Term and Rent with respect to each item of Equipment shall commence on, and Lessee will be obligated to pay Rent from, the Rental Commencement Date of the Lease under which such Equipment is leased. For purposes of this Agreement, the term " Rent " shall mean and include all amounts payable by Lessee to Lessor for the lease of the Equipment. As used in this Agreement, the term " Lease Term " of any Lease means the Initial Term of such Lease, plus (a) in the case of the 2017 Leases, any Initial Renewal Term (as defined in Section 14 ) and any 2017 Lease Subsequent Renewal Terms (as defined in Section 15 ) and (b) in the case of the New Leases, any New Lease Renewal Terms (as defined in Section 15A ). All Rent payable under each Lease shall be paid to the account of Lessor in U.S. dollar same day funds to the account specified in such Lease (or such other account as Lessor shall notify to Lessee upon 10 business days prior written notice), and Lessee shall permit Lessor to debit the account of Lessee at M&T Bank (Account Name: Plug Power Inc., Account Number: XXXXXXXXXX, ABA Number: XXX XXX XXX) to make any payment of Rent when due under a Lease.

3. LATE CHARGES. If any Rent or other amount due hereunder is not paid within ten (10) days after the due date thereof, Lessor shall have the right to receive and collect, and Lessee agrees to pay, in addition to such unpaid Rent or other amount due hereunder, an amount equal to 1.5% of such unpaid Rent or other amount due hereunder for each month or part thereof that such Rent or other amount due hereunder remains unpaid.

4. DISCLAIMER OF WARRANTIES. Lessee acknowledges that Lessor is not the manufacturer of the Equipment, nor manufacturer's agent, and Lessee agrees that as between Lessor and Lessee, the Equipment leased hereunder is of a design, size, fitness and capacity selected by Lessee and that Lessee is satisfied that the same is suitable and fit for its intended purpose. LESSEE FURTHER ACKNOWLEDGES THAT THE EQUIPMENT IS LEASED UNDER THIS AGREEMENT AND EACH LEASE ON AN 'AS-IS,' 'WHERE IS' BASIS AND THAT LESSOR MAKES NO REPRESENTATION OR WARRANTY OF ANY KIND, EXPRESS OR IMPLIED, WITH RESPECT TO ANY OF THE EQUIPMENT, ITS MERCHANTABILITY, OR ITS FITNESS FOR A PARTICULAR PURPOSE. LESSOR SHALL NOT BE LIABLE TO LESSEE OR ANY OTHER PERSON FOR DIRECT, INDIRECT, SPECIAL, INCIDENTAL OR CONSEQUENTIAL DAMAGES ARISING FROM LESSEE'S USE OF THE EQUIPMENT, ANY DEFECT OR MALFUNCTION OF THE EQUIPMENT, OR FOR DAMAGES BASED ON STRICT OR ABSOLUTE TORT LIABILITY

OR LESSOR'S NEGLIGENCE. No defect or unfitness of the Equipment shall relieve Lessee of the obligation to timely pay Rent, or to perform any other obligation under this Agreement.

5. ASSIGNMENT OF WARRANTIES. Notwithstanding the foregoing, so long as no Default (as defined in Section 19 ) has occurred hereunder and is continuing, Lessee shall be entitled to the benefit of any applicable manufacturer's warranties received or held by Lessor or from which Lessor otherwise benefits, and to the extent assignable, Lessor hereby assigns such warranties to Lessee for the Lease Term for each Lease. In the event that any warranty is not assignable to Lessee, Lessor hereby appoints Lessee as Lessor's agent and attorney-in-fact with respect to such warranty, which appointment is coupled with an interest, to assert and enforce, from time to time, in the name of and for the account of the Lessor and the Lessee, as their interests may appear, but in all cases at the sole cost and expense of the Lessee, any such warranty, and so long as no Default shall have occurred and be continuing, Lessee may retain any recovery from such claim.

6. USE, OPERATION AND MAINTENANCE. Lessee shall use the Equipment in the manner for which it was designed and intended, solely for Lessee's business purposes, substantially in accordance with all manufacturer manuals and instructions and in compliance with Applicable Law. As used herein, " Applicable Law " means all applicable laws, statutes, regulations, ordinances, orders and other requirements of any governmental authority (including such requirements necessary to ensure that the Equipment qualifies for all tax benefits and environmental attributes, in each case, to the extent available by law to the owner of the Equipment as of the date of the applicable Lease). Lessee, at Lessee's own cost and expense, shall keep the Equipment in good repair, condition and working order, ordinary wear and tear excepted, sufficient to perform according to the requirements of this Agreement and each Project Document, and shall furnish or otherwise obtain all parts, mechanisms, devices and servicing required therefor in the ordinary course. Lessee shall also make, at Lessee's own cost and expense, all modifications to the Equipment as are required from time to time for the Equipment to comply with Applicable Law and each Project Document, provided no such modifications shall diminish the current or estimated residual value, utility, function, operation or remaining useful life of the Equipment (or any portion thereof) or cause the Equipment (or any portion thereof) to constitute "limited use property" within the meaning of Rev. Proc. 2001-28, 2001-19 I.R.B. 1156 or Rev. Proc. 2001-29, 2001-19 I.R.B. 1160 (or any successors thereto). All replacement parts and repairs at any time made to or placed upon the Equipment shall become the property of Lessor at no cost to Lessor and with no adjustment to the schedules of any Lease. Lessee may, with Lessor's prior written consent (at no cost to Lessor and with no adjustment to the schedules of any Lease), which shall not be unreasonably withheld, make such alterations, modifications or additions to the Equipment as Lessee may deem desirable in the conduct of its business; provided the same shall not diminish the current or estimated residual value, utility, function, operation or remaining useful life of the Equipment (or any portion thereof), cause the loss of any warranty thereon or any certification necessary for the maintenance thereof, or cause the Equipment (or any portion thereof) to constitute "limited use property" within the meaning of Rev. Proc. 2001-28, 2001-19 I.R.B. 1156 or Rev. Proc. 2001-29, 2001-19 I.R.B. 1160 (or any successors thereto). All such alterations, modifications or additions to the Equipment shall be

readily removable without causing damage to the Equipment (or any portion thereof). Upon return to Lessor of the Equipment as to which such alterations, modifications or additions have been made, Lessee, if requested to do so by Lessor, shall remove the same and restore the Equipment to its original condition, ordinary wear and tear excepted, and, if not so removed, title thereto shall automatically vest in Lessor (at no cost to Lessor). Lessor acknowledges that any data files or software developed or installed by Lessee which is resident or otherwise installed on the Equipment shall be and remain the property of Lessee; provided , however , that the Lessor shall have no obligation or responsibility to remove or return same to Lessee.

7. NET LEASE. This Agreement is a "net lease", and Lessee's obligation to pay all Rent and other amounts due and owing hereunder is absolute and unconditional and shall not be terminated, extinguished, diminished, setoff or otherwise impaired by any circumstance whatsoever, including by (a) any claim, setoff, counterclaim, defense or other right which Lessee may have against Lessor or any affiliate of Lessor; (b) any defect in the title, condition, design, operation, merchantability or fitness for use of the Equipment, or any eviction of the Equipment by paramount title or otherwise from the Site, or any unavailability of access to the Equipment at the Site; (c) any loss, theft or destruction of, or damage to, the Equipment or any portion thereof or interruption or cessation in the use or possession thereof or any part thereof for any reason whatsoever and of whatever duration; (d) the condemnation, requisitioning, expropriation, seizure or other taking of title to or use of the Equipment or the Site by any governmental entity or otherwise; (e) any ineligibility of the Equipment or any portion thereof for any particular use, whether or not due to any failure of Lessee to comply with any Applicable Law; (f) any event of "force majeure" or any frustration of purpose; (g) any insolvency, bankruptcy, reorganization or similar proceeding by or against Lessee; (h) any default under or termination of, a Project Document, or the failure of any Project Document to be in full force and effect; (i) any defect in the title to, or the existence of any lien with respect to, the Equipment; or (j) the upgrading, conversion or relocation of any Equipment, including any relocation made pursuant to Section 8(b) , it being the intention of the Parties hereto that all Rent and other amounts payable under this Agreement shall continue to be payable in the manner and at times provided for herein. If for any reason whatsoever this Agreement is terminated in whole or in part by operation of law or otherwise, Lessee nonetheless agrees, to the extent permitted by Applicable Law, to pay to Lessor an amount equal to each installment of Rent and all other amounts due and owing hereunder, at the time such payment would have become due and payable in accordance with the terms hereof had this Agreement not been so terminated.

8. NO LIENS; REMOVAL; ABANDONMENT; QUIET ENJOYMENT. (a) Lessee shall keep the Equipment free and clear from all liens, charges, encumbrances, legal process and claims other than Permitted Liens (as defined in the Master Purchase Agreement). Lessee shall promptly notify Lessor of the imposition of any lien (other than Permitted Liens) of which the Lessee becomes aware and shall promptly use commercially reasonable efforts, at Lessee's own cost and expense, to fully discharge and release any such lien.

(b) Lessee shall not move the Equipment from the location specified in the Lease therefor without the prior written consent of Lessor; provided , however , that Lessee may relocate

any item of Equipment (each such item being " Relocated Equipment "), so long as the following conditions are satisfied:

(i) at least five (5) business days prior to effectuating such relocation, Lessee shall have provided Lessor written notice specifying in reasonable detail: (A) each item of Equipment comprising the Relocated Equipment, (B) the Site from and to which such Relocated Equipment is being relocated and (c) each item of fuel cell equipment being substituted for such Relocated Equipment (the " Replacement Equipment ") and the owner thereof;

(ii) the Relocated Equipment shall consist solely of individual fuel cells (as opposed to fueling Equipment);

(iii) the Relocated Equipment shall be relocated to a site operated by Walmart (as defined below) and located in the continental United States;

(iv) as a result of such relocation, there is no suspension in use of any Equipment, including the Relocated Equipment and any fueling Equipment;

(v) the Relocated Equipment is packed into appropriate shipping containers and the shipment thereof is insured for the fair market value of such Relocated Equipment at such time; and

(vi) the Replacement Equipment is integrated with the fueling Equipment at the applicable Site.

(c) Lessee agrees not to waive its right to use and possess the Equipment in favor of any party other than Lessor and further agrees not to abandon the Equipment to any party other than Lessor.

(d) So long as Lessee faithfully performs and meets each and every term and condition to be performed or met by Lessee under this Agreement, Lessee's quiet and peaceful possession and use of the Equipment will not be disturbed by Lessor or anyone claiming by, through or on behalf of Lessor.

9. TITLE. (a) Lessor and Lessee agree that the Equipment (including any Equipment that is upgraded, converted, or otherwise modified, or relocated pursuant to Section 8(b) ) is and at all times shall remain the sole and exclusive personal property of Lessor (subject to Section 25 ), and Lessee covenants that it will at all times treat the Equipment as such and that no part of the Equipment shall be considered or treated as a fixture. No right, title or interest in the Equipment shall pass to Lessee other than the right to maintain possession and use of the Equipment for the Lease Term, conditioned upon Lessee's compliance with the terms and conditions of this Agreement. If requested by Lessor, Lessee shall affix to or place on the Equipment, at Lessor's expense, plates or markings indicating Lessor's ownership.

(b) The Parties agree that this Agreement will be a "true lease," and the Lessor will be treated as owner of the Equipment and Lessee will be treated as lessee and, accordingly, the Parties agree that the Lessor will be entitled to claim any and all benefits available to an owner of the Equipment, including (i) all Tax Benefits (as defined in Section 18 ), and (ii) all rights and interests in and to any environmental attributes associated with the energy output from the Equipment that, as a matter of law, belong to the owner rather than the user of the Equipment (all such attributes in this clause (ii), specifically excluding any Tax Benefits, the " Environmental Attributes "). Lessor hereby assigns to Lessee, solely for the duration of the Lease Term, all of its rights and interests in and to any and all Environmental Attributes currently available by law to an owner of the Equipment as of the date hereof. For the avoidance of doubt, Lessor does not assign to Lessee any Environmental Attributes that, due to any future change in law, may become available to an owner of the Equipment (including, but not limited to, any carbon credits). In the event that this Agreement or any Lease is deemed to be a lease intended for security, Lessee hereby grants Lessor a purchase money security interest in the Equipment (including any replacements, substitutions, additions, attachments and proceeds).

10. TAXES. Lessee shall promptly reimburse Lessor, or shall pay directly if so requested by Lessor, as additional Rent, all taxes, charges and fees (including any interest, additions to tax and penalties) that may now or hereafter be imposed or levied by any governmental body or agency upon or in connection with the purchase, ownership, lease, sublease, possession, use or location of the Equipment or otherwise in connection with the transactions contemplated by this Agreement or any Lease, including, without limitation, sales, use, property (real or personal and tangible or intangible), value added or other transfer taxes on (i) the initial sale of Equipment to Lessor, (ii) the Rents, (iii) the sale of power to, or the use of the Equipment by, the offtaker under the Amended and Restated Power Purchase Agreement, dated as of September 1, 2015 between Lessee and Wal-Mart Stores East, LP (solely to the extent of each of the addendums thereto, each being a separate agreement, and as the same may be amended, amended and restated, modified or supplemented from time to time, the " Power Purchase Agreement "), or otherwise with respect to any Project Document, (iv) any payment of Termination Value (as defined in Section 12 ) and (v) upon any exercise of the 2017 Lease Purchase Option (as defined in Section 14 ) and the New Lease Purchase Option (as defined in Section 14A ), but excluding any and all taxes, charges and fees (including any interest, additions to tax and penalties) (A) on or measured by the net income of Lessor, but excluding taxes that are in the nature of sales, use, property (real or personal and tangible or intangible), value added or other transfer taxes, (B) resulting from Lessor's negligence, or (C) resulting from or arising out of any failure on the part of Lessor to file any tax returns or pay any taxes owing on a timely basis or any errors or omissions on Lessor's tax returns unless the Lessee is responsible under this Agreement for filing the returns, Lessee has not provided information requested by Lessor that is necessary to file such tax returns or Lessor's failure to file any tax returns or any errors or omissions on such tax returns is attributable to Lessee's fraud, negligence or misrepresentation. Lessee shall file, in a timely manner and in the name of the Lessor as owner, any personal property tax returns relating to the Equipment that are required to be filed covering periods during the Lease Term, pay the amounts shown on the returns and provide copies of such returns and proof of payment to the Lessor. Failure of Lessee to pay promptly amounts due hereunder

shall be treated the same as failure to pay any installment of Rent pursuant to Section 3 . If Lessee is requested by Lessor to file any other returns or remit payments directly to any governmental body or agency, Lessee shall timely file such returns and remit such payments and shall provide proof of said timely filing or payment to Lessor.

11. CONDITIONS PRECEDENT TO NEW LEASES. Lessor and Lessee hereby agree that the entering into by Lessor of any New Lease is expressly conditioned on the following:

(a) in the case of the first such New Lease to be entered into on and after the date of this Agreement, the execution and delivery of the following, each in form and substance reasonably satisfactory to Lessor: (i) this Agreement; (ii) First Amendment to Assumed Amended and Restated Master Lease, which amends that certain Amended and Restated Master Lease, dated as of July 5, 2017, between Lessor, as lessor, and Walmart Inc. f/k/a/ Wal-Mart Stores, Inc. (" Walmart "), as lessee (as so amended, and as the same may be further amended, supplemented or otherwise modified from time to time, the " RML "); (iii) First Amendment to CAAA and Consent, which (A) amends that certain Conditional Assignment and Assumption Agreement, dated as of July 5, 2017 between Lessee, Walmart and Lessor (as so amended, and as the same may be further amended, amended and restated, supplemented or otherwise modified from time to time, the " CAAA ") and (B) provides Walmart's consent to this Agreement;

(b) there not having occurred any material adverse condition or material adverse change in or affecting the business, operations, properties, condition (financial or otherwise) or prospects of Lessee, Walmart or SunTrust Bank (" SunTrust "), since December 31, 2017;

(d) there not having occurred any material adverse change in the business reputation of Seller, Walmart or SunTrust since December 31, 2017;

(e) there not having occurred an event that would, in the reasonable opinion of Lessor, make it illegal or commercially impractical for Lessor to enter into any of the Lease Documents (as defined below);

(f) all fees and expenses of the Appraiser and of counsel to Lessor shall have been paid (or shall be paid in conjunction with the payment by Lessor of the Purchase Price of the Equipment to be leased under such New Lease); and

(g) the execution and delivery of such other documents, certificates and items and the satisfaction of such other conditions, in each case, as are set forth in Exhibit B attached hereto, as each may be amended, amended and restated, modified or supplemented from time to time, and including any replacement or supplementary agreements thereof or thereto (together with the Lease Documents (as defined in the Master Purchase Agreement), collectively, the " Lease Documents ").

12. LOSS OF OR DAMAGE TO EQUIPMENT. Lessee hereby assumes and shall bear the risk of loss for destruction of or damage to the Equipment from any and every cause whatsoever, whether or not insured, until the Equipment is returned to Lessor. No such loss or damage shall impair any obligation of Lessee under this Agreement, which shall continue in full force and effect. In event of damage to or theft, loss or destruction of the Equipment (or any item thereof), Lessee shall promptly notify Lessor in writing of such fact and of all details with respect thereto, and shall, within thirty (30) days of such event, at Lessee's option, (a) place the same in good repair, condition and working order, (b) at Lessee's expense, dispose of any Equipment in accordance with Applicable Law, substitute such Equipment (or any item thereof) with equipment of equivalent or superior manufacture, make, model and features, unless this option is expressly prohibited in the Lease related to such Equipment, in good repair, condition and working order and transfer clear title to such replacement property to Lessor whereupon such property shall be subject to this Agreement and the applicable other Lease Documents and be deemed Equipment for purposes hereof and thereof, or (c) pay Lessor an amount equal to the sum of (i) all Rent accrued but unpaid to the date of such payment, plus (ii) the then "Termination Value" of the Equipment as set forth in attachment #3 to each Lease (the " Termination Value "), whereupon such Lease shall terminate, subject to Section 22 , solely with respect to the Equipment (or any item thereof) for which such payment is received by Lessor. Any insurance proceeds received with respect to the Equipment (or any item thereof) shall be applied, in the event option (c) is elected, in reduction of the then unpaid obligations, including the Termination Value, of Lessee to Lessor, if not already paid by Lessee, or, if already paid by Lessee, to reimburse Lessee for such payment, or, in the event option (a) or (b) is elected, to reimburse Lessee for the costs of repairing, restoring or replacing the Equipment (or any item thereof) upon receipt by Lessor of evidence, satisfactory to Lessor, that such repair, restoration or replacement has been completed, and an invoice has been provided therefor.

13. INSURANCE. (a) Lessee shall keep the Equipment insured against theft and all risks of loss or damage, subject to policy limitations or exclusions reasonably acceptable to Lessor, from every cause whatsoever for an amount equal to the higher of the replacement value of the Equipment and the Termination Value of the Equipment and shall carry general liability insurance, both for personal injury and property damage, and Lessee shall be liable for all deductible portions of all required insurance. All such insurance shall be maintained with insurance companies rated A-X or better by Best's Insurance Guide and Key Ratings (or an equivalent rating by another nationally recognized insurance rating agency of similar standing if Best's Insurance Guide and Key Ratings shall no longer be published) or with other insurance companies of recognized responsibility satisfactory to Lessor. All insurance for theft, loss or damage shall provide that losses, if any, shall be payable to Lessor, and all such liability insurance shall name Lessor (or Lessor's assignee as appropriate) as additional insured and shall be endorsed to state that it shall be primary insurance as to Lessor. Lessee shall pay the premiums therefor and deliver to Lessor a certificate of insurance or other evidence satisfactory to Lessor that such insurance coverage is in effect; provided , however , that Lessor shall be under no duty either to ascertain the existence of or to examine such insurance policies or to advise Lessee in the event such insurance coverage shall not comply with the requirements hereof. Each insurer shall agree by endorsement upon the policy or policies issued by it or by

independent instrument furnished to Lessor, that it will give Lessor at least ten (10) days' prior written notice of cancellation of the policy for nonpayment of premiums and at least thirty (30) days' prior written notice for alteration or cancellation due to any other reason or for non-renewal of the policy. The proceeds of such insurance payable as a result of loss of or damage to the Equipment shall be applied as set forth in Section 12 .

(b) If Lessee fails to obtain insurance or provide evidence thereof to Lessor, Lessee agrees that Lessor may, but shall not be obligated to, obtain such insurance on Lessee's behalf and charge Lessee for all costs and expenses associated therewith. Without limiting the forgoing, Lessee specifically agrees that if Lessor obtains insurance on Lessee's behalf, Lessee will be required to pay a monthly insurance charge. The insurance charge will include reimbursement for premiums advanced to the insurer, finance charges (which will typically be at a rate higher than the rate used to determine the Rent), billing and tracking fees, administrative expenses and other related fees. Lessor shall receive a portion of the insurance charges, which may include a profit from such finance charges, billing, tracking, administrative and other charges.

Except as provided in the immediately preceding paragraph, any other insurance obtained by or available to Lessor shall be secondary insurance, and Lessor shall be solely liable for all costs associated therewith.

14. END OF LEASE TERM OPTIONS (2017 LEASES). (a) Not later than ninety (90) days prior to the expiration of the Initial Term of a 2017 Lease, Lessee shall notify the Lessor in writing whether it intends at the expiration of such term to (i) renew such 2017 Lease (the " Initial Renewal Option "), or (ii) purchase the Equipment leased under such 2017 Lease in accordance with Section 16 of this Agreement (the " 2017 Lease Purchase Option "); provided that Lessee may only exercise the 2017 Lease Purchase Option so long as no Default under this Agreement has occurred and is continuing. If Lessee does not provide this notice at the end of the Initial Term of a 2017 Lease, then Lessee will be deemed to have elected the Initial Renewal Option with respect to such 2017 Lease. If Lessee elects, or is deemed to elect, the Initial Renewal Option for a 2017 Lease, then such 2017 Lease (with respect to all, but not less than all, of the Equipment leased under such 2017 Lease) shall be extended for a term of thirty-six (36) months, commencing on the day following the last day of the Initial Term (each, an " Initial Renewal Term "). The amounts that are payable during an Initial Renewal Term of any 2017 Lease as Rent and as Termination Value shall be as set forth in attachment #3 to such 2017 Lease.

(b) Not later than ninety (90) days prior to the expiration of any Initial Renewal Term or any 2017 Lease Subsequent Renewal Term (as defined below) of a 2017 Lease, Lessee shall notify the Lessor in writing whether it intends at the expiration of such term to (i) renew such 2017 Lease in accordance with Section 15 of this Agreement (the " 2017 Lease Subsequent Renewal Option "), (ii) elect the 2017 Lease Purchase Option, or (c) return the Equipment leased under such 2017 Lease to Lessor (the " 2017 Lease Return Option "); provided that Lessee may only exercise the 2017 Lease Subsequent Renewal Option or the 2017 Lease Purchase Option so

long as no Default under this Agreement has occurred and is then continuing. If Lessee does not provide this notice at the end of an Initial Renewal Term or any 2017 Lease Subsequent Renewal Term, then such Initial Renewal Term or 2017 Lease Subsequent Renewal Term (as applicable) shall be automatically extended on a month-to-month basis at the monthly rental rate equal to the final Rent payment due immediately prior to the end of such Initial Renewal Term or 2017 Subsequent Renewal Term and such month-to-month renewal term (the " 2017 Lease Month-to Month Renewal Term ") shall be terminable by Lessee or Lessor by giving the other Party not less than ninety (90) days prior written notice (the " 2017 Lease Month-to-Month Renewal Term Termination Notice "). If such 2017 Lease Month-to-Month Renewal Term Termination Notice is given by either Party, the Lessee shall be deemed to have elected the 2017 Lease Return Option at the end of such 2017 Lease Month-to-Month Renewal Term. If the Equipment leased under such 2017 Lease is not then in good repair, condition and working order, ordinary wear and tear excepted, or has not been maintained in accordance with Section 6 hereof, Lessee shall promptly reimburse Lessor for all reasonable costs incurred to restore such Equipment to such condition. If, at the end of any Lease Term or any 2017 Lease Month-to-Month Renewal Term for a 2017 Lease, Lessee has elected or is deemed to have elected the 2017 Lease Return Option, then Lessee shall, within sixty (60) days of the end of such Lease Term or 2017 Lease Month-to Month Renewal Term (as applicable), at Lessee's expense, (i) reimburse Lessor for the costs to restore such Equipment as provided above and (ii) remove all of such Equipment from the relevant Site, repair any damage to the relevant location caused by such removal so the Site is restored to its original condition at the time such Equipment was installed, pack such Equipment into appropriate shipping containers, insure the shipment for the fair market value of such Equipment at such time, and cause such Equipment to be delivered to such location within the United States as Lessor may specify, free of any hazardous materials or environmental concerns.

14A. END OF LEASE TERM OPTIONS (NEW LEASES). Not later than ninety

(90) days prior to the expiration of the Initial Term or any New Lease Renewal Term (as defined below) of a New Lease, Lessee shall notify the Lessor in writing whether it intends at the expiration of such term to (i) renew such New Lease in accordance with Section 15A of this Agreement (the " New Lease Renewal Option "), (ii) purchase the Equipment leased under such New Lease in accordance with Section 16A of this Agreement (the " New Lease Purchase Option "), or (c) return the Equipment leased under such New Lease to Lessor (the " New Lease Return Option "); provided that the New Lease Renewal Option or the New Lease Purchase Option may only be exercised so long as (x) no Default under this Agreement has occurred and is then continuing and (y) Lessor provides its consent to Lessee's exercise of the New Lease Renewal Option or the New Lease Purchase Option (as applicable), which consent may be given or withheld by Lessor in its sole discretion. If Lessee does not provide this notice at the end of an Initial Term or any New Lease Renewal Term, then such Initial Term or New Lease Renewal Term (as applicable) shall be automatically extended on a month-to-month basis at the monthly rental rate equal to the final Rent payment due immediately prior to the end of such Initial Term or New Lease Renewal Term and such month-to-month renewal term (the " New Lease Month to-Month Renewal Term ") shall be terminable by Lessee or Lessor by giving the other Party not less than ninety (90) days prior written notice (the " New Lease Month-to-Month Renewal Term Termination Notice "). If such New Lease Month-to-Month Renewal Term Termination Notice

is given by either Party, the Lessee shall be deemed to have elected the New Lease Return Option at the end of such New Lease Month-to-Month Renewal Term. If the Equipment leased under such New Lease is not then in good repair, condition and working order, ordinary wear and tear excepted, or has not been maintained in accordance with Section 6 hereof, Lessee shall promptly reimburse Lessor for all reasonable costs incurred to restore such Equipment to such condition. If, at the end of any Lease Term or any New Lease Month-to Month Renewal Term for a New Lease, Lessee has elected or is deemed to have elected the New Lease Return Option, then Lessee shall, within sixty (60) days of the end of such Lease Term or New Lease Month-to Month Renewal Term (as applicable), at Lessee's expense, (i) reimburse Lessor for the costs to restore such Equipment as provided above and (ii) remove all of such Equipment from the relevant Site, repair any damage to the relevant location caused by such removal so the Site is restored to its original condition at the time such Equipment was installed, pack such Equipment into appropriate shipping containers, insure the shipment for the fair market value of such Equipment at such time, and cause such Equipment to be delivered to such location within the United States as Lessor may specify, free of any hazardous materials or environmental concerns.

15. LEASE RENEWAL (2017 LEASES). (a) If Lessee elects, or is deemed to elect, the 2017 Lease Subsequent Renewal Option for a 2017 Lease, then such 2017 Lease (with respect to all, but not less than all, of the Equipment leased under such 2017 Lease) shall be extended for such term as Lessor and Lessee mutually agree, but not less than the greater of (x) twelve (12) months and (y) the remaining term of the Power Purchase Agreement (each such term, a " 2017 Lease Subsequent Renewal Term "), commencing on the day following the last day of the Initial Renewal Term or the prior 2017 Lease Subsequent Renewal Term of such 2017 Lease, as applicable. Rent payable during any 2017 Lease Subsequent Renewal Term shall be the Fair Market Rental Value for the Equipment leased under such 2017 Lease, as determined below. The commencement of any Initial Renewal Term and any 2017 Lease Subsequent Renewal Term for a 2017 Lease is conditioned upon the counterparty to any Project Document (including the Power Purchase Agreement) renewing (or having renewed) the terms of such Project Document with respect to the Equipment leased under such 2017 Lease, upon the CAAA remaining in full force and effect, and otherwise upon mutually agreeable lease terms between Lessor and Lessee and any credit enhancements as may be required by Lessor.

(b) The Fair Market Rental Value (as defined below) of the Equipment leased under a 2017 Lease, as of the commencement of the 2017 Lease Subsequent Renewal Term of such 2017 Lease, shall be determined by agreement of Lessor and Lessee within sixty (60) days after receipt by Lessor of the irrevocable notice from the Lessee of its election to renew such 2017 Lease, or, if they shall fail to agree within such sixty (60) day period, shall be determined by a qualified, independent appraiser that is a member of the American Society of Appraisers and that is selected by Lessee and approved by Lessor, such approval not to be unreasonably withheld or delayed (the " Appraisal Procedure "), with the fair market rental value as determined by such appraiser to be binding and conclusive on the Parties as the " Fair Market Rental Value " for purposes of such 2017 Lease, and the fees and expenses of the appraiser shall be borne by Lessee. The Rent payable during any 2017 Lease Subsequent Renewal Term shall be equal to the average of the Rent payable during the twelve (12) month period immediately preceding such

2017 Lease Subsequent Renewal Term until the Fair Market Rental Value is determined, at which time the prior Rent payments shall be adjusted to take into account such determination.

(c) The amounts that are payable during any 2017 Lease Subsequent Renewal Term for a 2017 Lease as Termination Value shall be determined on the basis of the fair market sales value of the Equipment leased under such 2017 Lease as of the commencement of such 2017 Lease Subsequent Renewal Term and shall be set forth in a schedule to be mutually agreed by Lessor and Lessee prior to the commencement of such 2017 Lease Subsequent Renewal Term. If Lessor and Lessee cannot agree on the fair market sales value, such amount shall be determined by the Appraisal Procedure, and the fees and expenses of the appraiser shall be borne by Lessee.

15A. LEASE RENEWAL (NEW LEASES). (a) If the New Lease Renewal Option is elected in accordance with Section 14A of this Agreement with respect to a New Lease, then such New Lease (with respect to all, but not less than all, of the Equipment leased under such New Lease) shall be extended for such term as Lessor and Lessee mutually agree, but not less than the greater of (x) twelve (12) months and (y) the remaining term of the Power Purchase Agreement (each such term, a " New Lease Renewal Term "), commencing on the day following the last day of the Initial Term or the prior New Lease Renewal Term of such New Lease, as applicable. Rent payable during any New Lease Renewal Term shall be the Fair Market Rental Value for the Equipment leased under such New Lease, as determined below. The commencement of any New Lease Renewal Term for a New Lease is conditioned upon the counterparty to any Project Document (including the Power Purchase Agreement) renewing (or having renewed) the terms of such Project Document with respect to the Equipment leased under such New Lease, upon the CAAA remaining in full force and effect, and otherwise upon mutually agreeable lease terms between Lessor and Lessee and any credit enhancements as may be required by Lessor.

(b) The Fair Market Rental Value of the Equipment leased under a New Lease, as of the commencement of the New Lease Renewal Term of such New Lease, shall be determined by agreement of Lessor and Lessee within sixty (60) days after receipt by Lessor of the irrevocable notice from the Lessee of its election to renew such New Lease, or, if they shall fail to agree within such sixty (60) day period, shall be determined by the Appraisal Procedure, and the fees and expenses of the appraiser shall be borne by Lessee. The Rent payable during any New Lease Renewal Term shall be equal to the average of the Rent payable during the twelve (12) month period immediately preceding such New Lease Renewal Term until the Fair Market Rental Value is determined, at which time the prior Rent payments shall be adjusted to take into account such determination.

(c) The amounts that are payable during any New Lease Renewal Term for a New Lease as Termination Value shall be determined on the basis of the fair market sales value of the Equipment leased under such New Lease as of the commencement of such New Lease Renewal Term and shall be set forth in a schedule to be mutually agreed by Lessor and Lessee prior to the commencement of such New Lease Renewal Term. If Lessor and Lessee cannot agree on the

fair market sales value, such amount shall be determined by the Appraisal Procedure, and the fees and expenses of the appraiser shall be borne by Lessee.

16. PURCHASE OPTION (2017 LEASES). (a) If Lessee elects the 2017 Lease Purchase Option in accordance with Section 14 of this Agreement with respect to a 2017 Lease, Lessee shall have the option to purchase all but not less than all of the Equipment leased under such 2017 Lease from Lessor for an amount equal to (i) in the case of the 2017 Lease Purchase Option elected pursuant to Section 14(a) , the greater of (A) the Termination Value of such Equipment or (B) the then fair market value of such Equipment as agreed by Lessee and Lessor, or if they shall fail to agree, as determined by the Appraisal Procedure, or (ii) in the case of the 2017 Lease Purchase Option elected pursuant to Section 14(b) , the then fair market value of such Equipment as agreed by Lessee and Lessor, or if they fail to so agree, as determined by the Appraisal Procedure (any such amount, the " Lessee 2017 Lease Purchase Option Amount "). The 2017 Lease Purchase Option shall be consummated (x) in the case of the 2017 Lease Purchase Option elected pursuant to Section 14(a) , on the date of expiry of the Initial Term or (y) in the case of the 2017 Lease Purchase Option elected pursuant to Section 14(b) , as of the close of business on the closing date set forth in Lessee's notice (which shall be no earlier than, and no later than three (3) business days following, the end of the Lease Term for such 2017 Lease), or on such other date the Parties may otherwise agree (any such date being the " Lessee 2017 Lease Purchase Date ").

(b) If Lessee elects to exercise the 2017 Lease Purchase Option with respect to a 2017 Lease, then on the Lessee 2017 Lease Purchase Date for such 2017 Lease, Lessee shall pay to Lessor (i) the Lessee 2017 Lease Purchase Option Amount for such 2017 Lease and all sales, use, value added and other taxes required to be indemnified by the Lessee pursuant to Sections 10 and 18 , plus (ii) any unpaid Rent and any other outstanding amount due under this Agreement and such 2017 Lease on or before such date.

(c) Upon payment of all sums specified in this Section 16 , the applicable 2017 Lease shall terminate and, at the request of Lessee, Lessor shall transfer its rights in the Equipment leased under such 2017 Lease to the Lessee on an "as is," "where is" basis without representation or warranty.

16A. PURCHASE OPTION (NEW LEASES). (a) If the New Lease Purchase Option is elected in accordance with Section 14A of this Agreement with respect to a New Lease, Lessee shall have the option to purchase all but not less than all of the Equipment leased under such New Lease from Lessor for an amount equal to the then fair market value of such Equipment as agreed by Lessee and Lessor, or if they fail to so agree, as determined by the Appraisal Procedure (any such amount, the " New Lease Purchase Option Amount "). The New Lease Purchase Option for a New Lease shall be consummated as of the close of business on the closing date set forth in Lessee's notice (which shall be no earlier than, and no later than three (3) business days following, the end of the Lease Term for such New Lease), or on such other date the Parties may otherwise agree (any such date being the " New Lease Purchase Date ").

(b) If Lessee elects to exercise the New Lease Purchase Option with respect to a New Lease, then on the New Lease Purchase Date for such New Lease, Lessee shall pay to Lessor (i) the New Lease Purchase Option Amount for such New Lease and all sales, use, value added and other taxes required to be indemnified by the Lessee pursuant to Sections 10 and 18 , plus (ii) any unpaid Rent and any other outstanding amount due under this Agreement and such New Lease on or before such date.

(c) Upon payment of all sums specified in this Section 16 , the applicable New Lease shall terminate and, at the request of Lessee, Lessor shall transfer its rights in the Equipment leased under such New Lease to the Lessee on an "as is," "where is" basis without representation or warranty.

17. LESSEE INDEMNITY. Lessee assumes liability for and shall indemnify, save, and hold harmless Lessor and Lessor's officers, directors, employees, agents and assignees from and against any and all third party claims, actions, suits or proceedings of any kind and nature whatsoever, including all damages, liabilities, penalties, costs, expenses and reasonable consultant and legal fees (hereinafter " Claim(s) ") based on, arising out of, connected with or resulting from the Equipment, Lessee's obligations under this Agreement, or Lessee's possession, use or operation of the Equipment including, without limitation, Claims relating to ownership, use, possession or disposal of the Equipment, Claims arising in contract or tort (including negligence, strict liability or otherwise), Claims arising out of latent defects of the Equipment (regardless of whether the same are discoverable by Lessor or Lessee), Claims arising out of or relating to the violation of applicable law, including environmental law, or the existence or release of hazardous materials at the site where the Equipment is located, or Claims arising out of any trademark, patent or copyright infringement, but excluding (a) any Claims that accrue in respect of circumstances that occur after Lessor has taken possession of the Equipment after termination of this Agreement, provided that such Claims do not relate to Lessee's use, possession or operation of the Equipment, (b) any Claims that result from the gross negligence or willful misconduct of Lessor, and (c) Claims for Taxes (it being agreed that Lessee's indemnification obligations with respect to Taxes are set forth in Sections 10 and 18 ). If any Claim is made against Lessee or Lessor, the Party receiving notice of such Claim shall promptly notify the other, but the failure of such person receiving notice to notify the other shall not relieve Lessee of any obligation hereunder.

18. TAX INDEMNITY.

(a) Lessee acknowledges that the Rent in each Lease has been calculated on the assumption that the Lessor will be the owner of the Equipment for federal, state and local income tax purposes on the date it acquires the Equipment pursuant to the Master Purchase Agreement, that it will remain the sole owner after entering into the applicable Lease and that, for federal, state and local income tax purposes, it will be able to (i) claim an investment tax credit (for federal income tax purposes) under section 48(a)(3)(iv) of the Code on the Rental Commencement Date equal to 30% of the appraised fair market value of the Equipment on the Rental Commencement Date (as determined by the Appraiser), (ii) with respect to (A)

Equipment placed in service on or before September 27, 2017, claim cost recovery reductions (1) of fifty percent (50%) of Lessor's Depreciable Cost, under section 168(k)(l) of the Code, in the taxable year that includes the Rental Commencement Date with respect thereto and (2) with respect to the remaining amount of Lessor's Depreciable Cost not recovered under clause (1) above, under section 168(e)(3)(B) of the Code, on the basis that the Equipment is one hundred percent (100%) "5-year property", commencing in the taxable year that includes such Rental Commencement Date, using the 200% declining balance method over a five-year recovery period, switching to the straight line method at such time when such method results in a larger allowance, based upon the application of the half year convention and assuming such Equipment's salvage value is zero and (B) Equipment placed in service after September 27, 2017 and before January 1, 2023, cost recovery reductions of one hundred percent (100%) of Lessor's Depreciable Cost, under section 168(k)(l) of the Code, in the taxable year that includes the Rental Commencement Date with respect thereto and assuming such Equipment's salvage value is zero, (iii) in the case of the New Leases, amortize the excess of the purchase price for the Equipment over its appraised fair market value as of the Rental Commencement Date (as determined by the Appraiser) ratably over the applicable Initial Term and (iv) amortize transaction expenses incurred in connection with each Lease ratably over the applicable Initial Term. The foregoing investment tax credit, depreciation deductions and amortization deductions are referred to herein as the " Tax Benefits ." " Lessor's Depreciable Cost " means (1) for state and local income tax purposes, the appraised fair market value of the Equipment on the Rental Commencement Date (as determined by the Appraiser) and (2) for federal income tax purposes, the appraised fair market value of the Equipment on the Rental Commencement Date (as determined by the Appraiser), reduced by 50% of the investment tax credit in clause (i) above. The " Appraiser " for purposes of this Section 18 has the meaning given to such term in Exhibit B to this Agreement. Lessee acknowledges further that the Rent in each Lease has been calculated on the assumption that Lessor will have to report the Rent as income in the periods and amounts shown on the Rent schedule to such Lease.

(b) Lessee represents, warrants and covenants to Lessor the following: (i)(A) for purposes of the investment tax credit, the Equipment will be treated as "placed in service" for federal income tax purposes and the original use of the Equipment will be deemed to commence for federal income tax purposes on the applicable Rental Commencement Date and (B) for purposes of the depreciation deductions, (1) the Equipment will be treated as "placed in service" on the applicable Rental Commencement Date, (2) in the case of Equipment placed in service after September 27, 2017 and before January 1, 2023, the acquisition retirements set forth in section 168(k)(2)(E)(ii) of the Code have been met, and (3) in the case of Equipment placed in service on or before September 27, 2017, the original use of the Equipment will be deemed to commence on the applicable Rental Commencement Date, (ii) with respect to Equipment placed in service after September 27, 2017 and before January 1, 2023, there was no binding contract in place for the Equipment as of September 27, 2017, (iii) all of the Equipment was originally placed in service by the Lessee on a date that is no more than three (3) months before the closing on the purchase of the Equipment by the Lessor and lease back of such Equipment under this Agreement to the Lessee (the " Original Placed-in-Service Date "), (iv) during the period

beginning on the Original Placed-in-Service Date and ending on the date of the purchase of the Equipment by the Lessor and lease back of such Equipment under this Agreement to the Lessee, no person or entity other than the Lessee has had any ownership interest in the Equipment or any part thereof, (v) all of the Equipment was new when it was originally placed in service by the Lessee, (vi) all of the Equipment will be considered "qualified fuel cell property" within the meaning of Section 48(c)(l) of the Code, (vii) the Lessor will be able to claim a 30% investment tax credit under section 48(a)(3)(iv) of the Code based on the appraised fair market value of the Equipment as of the Rental Commencement Date (as determined by the Appraiser), (viii) all of the Equipment qualifies as "5-year property" within the meaning of Section 168(e)(3)(B)(vi)(l) of the Code, (ix) the Lessor will have a tax basis for purposes of calculating the investment tax credit equal to the appraised fair market value of the Equipment as of the Rental Commencement Date (as determined by the Appraiser), (x) the Lessor will have a tax basis for (A) state and local income tax depreciation purposes equal to the appraised fair market value of the Equipment on the Rental Commencement Date (as determined by the Appraiser) and (B) for federal income tax depreciation purposes equal to 85% of the appraised fair market value of the Equipment as of the Rental Commencement Date (as determined by the Appraiser), which takes into account a reduction in basis equal to 50% of the 30% investment tax credit amount, (xi) in the case of the New Leases, the Lessor will be able to amortize the excess of the purchase price of the Equipment over its appraised fair market value as of the Rental Commencement Date (as determined by the Appraiser) ratably over the applicable Initial Term, (xii) the Equipment will not be considered "tax-exempt use property" within the meaning of section 168(h) of the Code during the Lease Term other than solely due to the fact that the Lessor (or any member of the Lessor) is or becomes a tax-exempt entity within the meaning of section 168(h)(2) of the Code, (xiii) the Equipment will not be considered used by a tax-exempt entity within the meaning of section 50(b)(3) of the Code or governmental unit or foreign person or entity within the meaning of section 50(b)(4) of the Code during the Lease Term (in each case, other than as a result of the status of the Lessor or any member of the Lessor), (xiv) as of the applicable Rental Commencement Date, no portion of the Equipment is, and at no time during the Lease Term will any portion of the Equipment become, tax-exempt bond financed property within the meaning of Section 168(g)(5) of the Code or financed with "subsidized energy financing" within the meaning of Section 48(a)(4) of the Code, other than as a result of the status of the Lessor or any member of the Lessor or actions taken by the Lessor, (xv) the Equipment will be used solely in the United States, (xvi) the Equipment will not be subject to the alternative depreciation system under section 168(g) of the Code (assuming no election by Lessor under section 168(g)(l)(E) of the Code), (xvii) the Power Purchase Agreement will be treated as a service contract under Section 7701(e) of the Code and not as a lease for income tax purposes, (xviii) the Lessee has not claimed and will not claim, or cause to be claimed, an investment tax credit under section 48(a)(3)(iv) of the Code, other federal tax credit or a cash grant under Section 1603 of the American Recovery and Reinvestment Act of 2009, as amended, in each case with respect to the Equipment or any portion thereof, (xix) on the Rental Commencement Date applicable to the Equipment, the Equipment will not require any improvements, modifications or additions (other than ancillary items of a kind customarily selected and furnished by lessees of property of the same kind as the Equipment) in order for the Equipment to be rendered complete for its intended

use by the Lessee, (xx) the Lessee will not take a position for U.S. federal or state income tax purposes that it is the owner of any portion of the Equipment during the Lease Term or that is inconsistent with any of the tax assumptions set forth in this Section 18 , (xxi) at no time during the period beginning on the applicable Rental Commencement Date and ending on the fifth anniversary of such date (the " Recapture Period ") will the Equipment or any portion thereof be disposed of or otherwise cease to be (in each case within the meaning of section 50 of the Code) "qualified fuel cell property" within the meaning of Section 48(c)(l) of the Code, other than as a result of the status of the Lessor or any member of the Lessor or actions taken by the Lessor and

(xxii) all written information provided by or on behalf of the Lessee to the Appraiser was accurate and complete in all material respects and remains accurate and complete on the applicable Rental Commencement Date.

(c) Lessee covenants that it has not, and will not at any time from such delivery through the term of this Agreement, take any action or omit to take any action (whether or not the same is permitted or required hereunder) that is inconsistent with the tax assumptions in Section 18(a) , that could contribute to loss by Lessor of all or any part of the Tax Benefits or that could require the Lessor to report Rent as income ahead of the periods to which the Rent is allocated in the applicable Rent schedule. Lessee covenants that it will provide Lessor promptly upon request any information that Lessor requires in connection with claiming any Tax Benefits and responding to questions from the Internal Revenue Service.

(d) If as a result of any act, omission, breach of warranty or covenant or misrepresentation by Lessee, the Tax Benefits are lost, disallowed, eliminated, reduced, delayed, recaptured, compromised or are otherwise unavailable to Lessor (any of the foregoing being a " Loss ") or the Lessor is required to report Rent as income ahead of the periods to which the Rent is allocated in the applicable Rent schedule (an " Inclusion "), then Lessee will pay the Lessor promptly on demand an amount that will compensate the Lessor fully for the Loss or Inclusion (including any interest, penalties or additions to tax) on an after-tax basis, subject to the last sentence of this Section 18(d) . For this purpose, "after-tax basis" means an amount determined by dividing the amount of the Loss or Inclusion by one minus the maximum composite federal, state and local corporate income tax rates in effect at time of payment. Upon payment of the full indemnity amount by Lessee, the act, omission, breach of warranty or covenant or misrepresentation of Lessee that caused a Loss will not be deemed a Default hereunder. If requested by Lessee, Lessor agrees to attempt in good faith to challenge any assertion by the Internal Revenue Service that will lead to a Loss; provided, however, Lessee has first paid to Lessor the amount of such Loss and agreed in writing to indemnify Lessor for all reasonable expenses (including attorneys' fees), liabilities or losses that Lessor may incur in the contest. Lessor will have the sole discretion to determine whether or not to undertake judicial or administrative proceedings beyond the level of an Internal Revenue Service auditing agent and to select counsel to handle the contest; provided that if the claim must be paid before the matter can be heard in court, Lessee will advance the funds necessary to do so on an interest-free basis. For purposes of this Section 18 , the term "Lessor" shall include the entity or entities, if any, with which Lessor files a consolidated income tax return.

19. DEFAULT AND REMEDIES. (a) Lessee shall be in default under this Agreement if: (i) Lessee fails to pay Rent or any other payment due and owing hereunder, including an tax indemnity set forth in Section 18 , within five (5) business days of the due date thereof; (ii) any representation or warranty made by Lessee herein or in any document delivered to Lessor in connection herewith shall prove to be false or misleading and the false or misleading nature of such representation or warranty is not corrected within thirty (30) days following receipt of written notice thereof from Lessor; (iii) a breach of the covenant set forth in Section 18(b) or Section 26(c) shall have occurred; (iv) a Lease fails to be considered a "true lease" for federal income tax purposes as a result of any act, omission, breach of warranty or covenant or misrepresentation by Lessee; (v) Lessee becomes insolvent, dissolves, or assigns its assets for the benefit of creditors, or enters any bankruptcy or reorganization proceeding; (vi) unless the CAAA is in full force and effect, (A) any Project Document (including the Power Purchase Agreement) has been terminated without the prior written approval of Lessor or (B) any default has occurred and is continuing under any provision of a Project Document (including the Power Purchase Agreement) and any cure period provided thereunder has terminated without such default having been cured, in each case, relating to any Equipment subject to a Lease; (vii) Lessee fails to observe, keep or perform any other term or condition of this Agreement or any other Lease Document and such failure continues for thirty (30) days following receipt of written notice from Lessor; (viii) Lessee undergoes a Change in Control (as defined below) without the prior written approval of Lessor, where " Change in Control " means any reorganization, recapitalization, consolidation or merger (or similar transaction or series of related transactions) of Lessee in which the holders of Lessee's outstanding shares immediately before consummation of such transaction or series of related transactions do not, immediately after consummation of such transaction or series of related transactions, retain shares representing more than fifty percent (50%) of the voting power of the surviving entity or such transaction or series of related transactions (or the parent of such surviving entity if such surviving entity is wholly owned by such parent), in each case without regard to whether Lessee is the surviving entity; (ix) the CAAA is no longer in full force and effect other than as a result of the Buyout Option (as defined in the CAAA) or the Assumption Option (as defined in the CAAA) having been effectuated pursuant to the CAAA; and/or (x) any payment default has occurred and is continuing under any master lease agreement that currently or may hereinafter exist between Lessor and Lessee or any affiliate of Lessee (after giving effect to any applicable grace or cure periods therein) (each of (i) through (x), a " Default ").

(b) If a Default shall have occurred and be continuing, Lessor shall have the right to take any one or more of the following actions: (i) cancel or terminate this Agreement and/or each Lease and repossess the Equipment; (ii) proceed by appropriate court action or actions at law or in equity to enforce performance by Lessee of the terms and conditions of this Agreement and each Lease and/or recover damages for the breach thereof; (iii) accelerate all of the amounts due hereunder by requiring Lessee to pay Lessor an amount equal to the sum of (A) all Rent and any other amounts accrued to the date of such payment, plus (B) the aggregate Termination Value for all Equipment; (iv) take any other action as provided for in the Security Agreement (as defined in the Master Purchase Agreement) and/or the DACA (as defined in the Master Purchase

Agreement); (v) deliver a Default Notice (as defined in the CAAA) under and pursuant to the terms of the CAAA; and/or (vi) exercise any other right or remedy available at law or in equity.

(c) Upon payment in full to Lessor of the amounts set forth in Section 19(b)(iii) , from or on behalf of the Lessee, the applicable Lease shall terminate (except as set forth in Section 22 ) solely with respect to the Equipment (or any item thereof) leased under such Lease for which such payment is received by Lessor and, at the request of Lessee, Lessor shall transfer its rights in such Equipment to Lessee or Lessee's designee on an "as is," "where is" basis without representation or warranty.

20. REPORTS. (a) Within sixty (60) days after the end of each quarterly period during the Lease Term, Lessee shall deliver to Lessor unaudited quarterly financial statements for the Lessee as of the end of such quarterly period, prepared in accordance with generally accepted accounting principles in the United States (" GAAP "), it being understood that this Section 20(a) shall be deemed satisfied if such quarterly financial statements are timely filed by Lessee with the Securities and Exchange Commission in compliance with applicable law.

(b) Within one hundred twenty (120) days after the end of each calendar year during the Lease Term, Lessee shall deliver to Lessor audited annual financial statements for the Lessee as of the end of such calendar year, prepared in accordance with GAAP; provided that if audited annual financial statements are not prepared for Lessee in the ordinary course for any year then unaudited annual financial statements for Lessee for such year may be provided if they are certified by the chief financial officer of Lessee as prepared in accordance with GAAP, it being understood that this Section 20(b) shall be deemed satisfied if such annual financial statements are timely filed by Lessee with the Securities and Exchange Commission in compliance with applicable law.

(c) Promptly, but in any event within ten (10) business days after receipt thereof, a copy of each periodic report received by the Lessee during the Lease Term from each maintenance provider for the Equipment and, if requested by Lessor, each periodic report and other notice sent to or received by a counterparty to a Project Document.

(d) Promptly upon, but no later than ten (10) business days after, Lessor's request from time to time, such data, certificates, reports, statements, documents and further information regarding the business, assets, liabilities, financial condition, or results of operations of the Lessee as the Lessor may reasonably request.

(e) On July 31 and January 31 of each calendar year, an update to the schedule delivered by Lessee pursuant to item 8 of Exhibit B to this Agreement, reflecting all Leases then in effect and all Equipment then being leased thereunder.

21. FURTHER ASSURANCES. Lessee agrees (a) at the written request of Lessor, to execute and deliver to Lessor any Uniform Commercial Code financing statements, fixture filings or other instruments Lessor reasonably deems necessary for expedient filing, recording or perfecting the interest and title of Lessor in this Agreement, any Lease and the Equipment, (b)

that a copy of this Agreement and any Lease may be filed in accordance with clause (a), provided the economic terms not necessary for filing shall have been deleted therefrom, (c) that all reasonable and documented costs incurred in connection with any actions taken in accordance with clause (a), including, without limitation, costs for filing fees and taxes, shall be paid by Lessee, and (d) to promptly, at Lessee's expense, deliver such other reasonable documents and assurances, and take such further action as Lessor may reasonably request in writing, in order to effectively carry out the intent and purpose of this Agreement and each Lease.

22. SURVIVAL. Lessee's covenants, representations, warranties and indemnities contained in Sections 8, 10 14 , 17 , 18 , 19(b) and 26 hereof are made for the benefit of Lessor and shall survive, remain in full force and effect and be enforceable after the expiration or termination of this Agreement for any reason. Each other provision set forth in the Lease Documents that, by its terms, survives termination of this Agreement shall also survive, remain in full force and effect and be enforceable after the expiration or termination of this Agreement for any reason.

23. INSPECTION. During the Lease Term and subject to any applicable Project Document, Lessor may, during normal business hours, on reasonable prior written notice to Lessee, inspect the Equipment and the records with respect to the operations and maintenance thereof, in Lessee's custody or to which Lessee has access. Lessee may be present at such inspection. Any such inspection will not unreasonably disturb or interfere with the normal operation or maintenance of the Equipment or the conduct by Lessee of its business and will be in accordance with Lessee's health, safety and insurance programs. In no event shall Lessor have any duty or obligation to make any such inspection and Lessor shall not incur any liability or obligation by reason of not making any such inspection.

24. ACCEPTANCE OF EQUIPMENT; NON CANCELABLE. Lessee's acceptance of the Equipment shall be conclusively and irrevocably evidenced by Lessee signing the Certificate of Acceptance in the form attached hereto and upon acceptance, each Lease shall be noncancelable for the Lease Term thereof unless otherwise provided in such Lease.

25. ASSIGNMENT; STATUS OF LESSEE. (a) Lessee acknowledges and agrees that Lessor may, at any time, without prior notice to or consent of Lessee, assign its rights and obligations under this Agreement in whole or in part and/or mortgage, or pledge or sell the Equipment subject to Lessee's rights under this Agreement. Such assignee or mortgagee may re assign this Agreement and/or mortgage without notice to Lessee. To the extent so assigned or transferred, any such assignee, buyer, transferee, grantee or mortgagee shall have and be entitled to exercise any and all rights and powers of, and shall perform all obligations of, Lessor under this Agreement. If any such Lessor assignment is a partial assignment of this Agreement by Wells Fargo Equipment Finance, Inc. (for purposes of this Section 25 , " WFEF "), (i) so long as no Default shall have occurred, WFEF shall maintain its administrative role under this Agreement with Lessee and shall act as an intermediary between Lessee and any WFEF partial assignee, and (ii) unless Lessee receives notice from WFEF or WFEF's assignee to the contrary,

Lessee's satisfaction of its obligations under the Lease Documents to WFEF shall be deemed to satisfy such obligations to all Lessors.

(b) Without limiting the foregoing, Lessee further acknowledges and agrees that upon written notice of an assignment from Lessor, Lessee will pay all Rent and any and all other amounts payable by Lessee under any Lease to such assignee or mortgagee or as instructed by Lessor in writing upon at least ten (10) business days' prior notice. Lessor agrees to provide prompt notice of any such assignment or mortgage, and Lessee agrees to confirm in writing receipt of any such notice of assignment as may be reasonably requested by Lessor and such assignee or mortgagee; provided that Lessor's failure to provide prompt notice of any such assignment or mortgage shall not affect or otherwise impact the effectiveness of such assignment or mortgage; provided , however , that Lessee will be deemed to have performed a Rent payment obligation if Lessee makes such Rent payment to the assigning Lessor before receiving notice of the related assignment.

(c) Except (i) as otherwise set forth in this Agreement and any Lease, (ii) for the lease or any other right to use the Equipment granted under a Project Document (including the Power Purchase Agreement) and (iii) pursuant to the CAAA, Lessee shall not assign, sublet, hypothecate, sell or transfer the Equipment or any interest in this Agreement or any Lease, and any attempt to do so shall be null and void and shall constitute a Default hereunder.

(d) Lessee shall not allow a Blocked Person (as defined below) or Blocked Persons to have a fifty percent (50%) or greater ownership interest in or control of Lessee. " Blocked Person " means any person or entity that is now or at any time (i) on a list of Specially Designated Nationals issued by the Office of Foreign Assets Control (" OFAC ") of the United States Department of the Treasury or any sectoral sanctions identification list; or (ii) whose property or interests in property are blocked by OFAC or who is subject to sanctions imposed by law, including any executive order or any branch or department of the United States government; or (c) otherwise designated by the United States or any regulator having jurisdiction or regulatory oversight over Lessor, to be a person to whom Lessor is not permitted to extend credit or with regard to whom a debtor relationship may result in penalties against Lessor or limitations on a secured party's ability to enforce a transaction.

26. REPRESENTATIONS, WARRANTIES AND COVENANTS. (a) Lessee represents and warrants to Lessor that: (i) the execution and delivery by Lessee of this Agreement, any Lease and any Certificate of Acceptance are duly authorized on the part of Lessee and constitute valid obligations binding upon, and enforceable against, Lessee; (ii) neither the execution and delivery of this Agreement, any Lease or any Certificate of Acceptance, nor the due performance thereof by Lessee, including the commitment to pay (and payment of) Rent, will result in any breach of, or constitute a default under, or violation of, Lessee's constitutive documents, or any material agreement to which Lessee is a party or by which Lessee is bound that relates to the subject matter hereof, including without limitation that certain Loan and Security Agreement dated as of December 23, 2016 by and among Plug Power Inc., NY Green Bank, as lender, and certain other parties thereto, as the same may be amended, amended and

restated, supplemented or otherwise modified from time to time; (iii) Lessee is duly incorporated, validly existing and in good standing in its state of incorporation and in any jurisdiction where the Equipment is located; and (iv) no material approval, consent or withholding of objection is required from any governmental authority or entity with respect to the entering into, or performance of this Agreement, any Lease or any Certificate of Acceptance by Lessee.

(b) Lessee has provided to Lessor true and correct copies of its constitutive documents, authorizing resolutions for the transactions contemplated hereby, and a certificate of incumbency, each certified by a duly appointed officer of Lessee.

(c) Lessee shall not amend, modify, supplement, assign, transfer or terminate any Project Document (including the Power Purchase Agreement), in each case, that affects any Equipment subject to a Lease or enter into any agreement with respect to any Equipment after the date of the applicable Lease, in each case, in a manner materially adverse to Lessor without the prior written consent of Lessor (which consent shall not be unreasonably withheld), it being understood and agreed that Lessee shall not renew (or request renewal of or consent to a renewal of) the term of any Project Document (including the Power Purchase Agreement), that affects any Equipment subject to a Lease without the prior written consent of Lessor (which consent shall not been unreasonably withheld).

(d) Lessee will use its commercially reasonable efforts to enforce its rights under each Project Document (including the Power Purchase Agreement) and shall take or omit to take any action thereunder as directed by Lessor from time to time.

27. NOTICES. Any notice required or given hereunder shall be deemed properly given when provided in writing (a) three (3) business days after mailed first class, overnight, or certified mail, return receipt requested, postage prepaid, addressed to the designated recipient at its address set forth below or such other address as such Party may advise by notice given in accordance with this provision or (b) upon receipt by the Party to whom addressed in writing by personal delivery, commercial courier service, fax or other means which provides a permanent record of the delivery of such notice. Notices shall be delivered to the Parties at the following addresses:

If to Lessee:

Plug Power Inc.

968 Albany Shaker Road

Latham, NY 12110

Attn: Paul Middleton

If to Lessor:

Wells Fargo Equipment Finance, Inc.
600 South Fourth Street
Minneapolis, MN 55415
Attn: Account Services
Facsimile: (866) 687-5578
Email: WFEFI@wellsfargo.com

28. DOCUMENTATION. Except for the payment of Rent set forth in the applicable Leases, for which invoices are provided as an accommodation to Lessee and not as a condition precedent to payment,

Lessor shall use its best efforts to provide Lessee with reasonable documentation, including, statements, tax bills and/or invoices, evidencing payment obligations or reimbursement due to Lessor pursuant to the terms of this Agreement.

29. ANTI-MONEY LAUNDERING; INTERNATIONAL TRADE LAW COMPLIANCE. Lessee represents and warrants to Lessor, as of the date of this Agreement, the date of each advance of proceeds pursuant to this Agreement, the date of any renewal, extension or modification of this Agreement or any Lease, and at all times until this Agreement and each Lease has been terminated and all amounts thereunder have been indefeasibly paid in full, that: (a) no Covered Entity (i) is a Sanctioned Person; (ii) has any of its assets in a Sanctioned Country or in the possession, custody or control of a Sanctioned Person; or (iii) does business in or with, or derives any of its operating income from investments in or transactions with, any Sanctioned Country or Sanctioned Person in violation of any law, regulation, order or directive enforced by any Compliance Authority; (b) the proceeds of any Lease will not be used to fund any operations in, finance any investments or activities in, or, make any payments to, a Sanctioned Country or Sanctioned Person in violation of any law, regulation, order or directive enforced by any Compliance Authority; (c) the funds used to repay any Lease are not derived from any unlawful activity; and (d) each Covered Entity is in compliance with, and no Covered Entity engages in any dealings or transactions prohibited by, any laws of the United States, including but not limited to any Anti-Terrorism Laws. Lessee covenants and agrees that it shall immediately notify Lessor in writing upon the occurrence of a Reportable Compliance Event.

As used herein: "Anti-Terrorism Laws" means any laws relating to terrorism, trade sanctions programs and embargoes, import/export licensing, money laundering, or bribery, all as amended, supplemented or replaced from time to time; "Compliance Authority" means each and all of the (a) U.S. Treasury Department/Office of Foreign Assets Control, (b) U.S. Treasury Department/Financial Crimes Enforcement Network, (c) U.S. State Department/Directorate of Defense Trade Controls, (d) U.S. Commerce Department/Bureau of Industry and Security, (e) U.S. Internal Revenue Service, (f) U.S. Justice Department, and (g) U.S. Securities and Exchange Commission; "Covered Entity" means Lessee, its affiliates and subsidiaries, all guarantors, pledgors of collateral, all owners of the foregoing, and all brokers or other agents of Lessee acting in any capacity in connection with this Agreement or any Lease; "Reportable Compliance Event" means that any Covered Entity becomes a Sanctioned Person, or is indicted, arraigned, investigated or custodially detained, or receives an inquiry from regulatory or law enforcement officials, in connection with any Anti-Terrorism Law or any predicate crime to any

Anti-Terrorism Law, or self-discovers facts or circumstances implicating any aspect of its operations with the actual or possible violation of any Anti-Terrorism Law; "Sanctioned Country" means a country subject to a sanctions program maintained by any Compliance Authority; and "Sanctioned Person" means any individual person, group, regime, entity or thing listed or otherwise recognized as a specially designated, prohibited, sanctioned or debarred person or entity, or subject to any limitations or prohibitions (including but not limited to the blocking of property or rejection of transactions), under any order or directive of any Compliance Authority or otherwise subject to, or specially designated under, any sanctions program maintained by any Compliance Authority.

30. USA PATRIOT ACT NOTICE. To help the government fight the funding of terrorism and money laundering activities, Federal law requires all financial institutions to obtain, verify and record information that identifies each lessee that opens an account. What this means: when Lessee opens an account, Lessor will ask for the business name, business address, taxpayer identifying number and other information that will allow Lessor to identify Lessee, such as organizational documents. For some businesses and organizations, Lessor may also need to ask for identifying information and documentation relating to certain individuals associated with the business or organization.

31. GOVERNING LAW. This Agreement and each Lease are entered into, under and shall be construed in accordance with, and governed by, the laws of the State of New York, without giving effect to conflict of laws principles. Each Party consents to the exclusive jurisdiction of any state or federal court in the State of New York over any action or proceeding brought in connection with this Agreement. LESSEE AND LESSOR EXPRESSLY WAIVE ANY RIGHT TO TRIAL BY JURY IN ANY ACTION OR PROCEEDING TO WHICH LESSOR AND/OR LESSEE MAY BE PARTIES ARISING OUT OF OR IN ANY WAY PERTAINING TO THIS AGREEMENT.

32. FINANCE LEASE STATUS. Lessee agrees that if Article 2A-Leases of the Uniform Commercial Code of the State of New York (the " Uniform Commercial Code " or " UCC ") applies to this Agreement and any Lease, this Agreement and each such Lease shall be considered a "Finance Lease" as that term is defined in Article 2A. TO THE EXTENT PERMITTED BY APPLICABLE LAW, LESSEE WAIVES ANY AND ALL RIGHTS AND REMEDIES CONFERRED UPON A LESSEE BY SECTIONS 508-522 OF ARTICLE 2A OF THE UCC.

33. BUSINESS DAY. For all purposes hereof, the term "business day" means any day which is not a Saturday, Sunday or other day on which banks are required to close for business in the State of New York.

34. MISCELLANEOUS. The captions of this Agreement are for convenience only and shall not be read to define or limit the intent of the provision that follows such captions. This Agreement contains the entire agreement and understanding between Lessor and Lessee relating to the subject matter hereof. Any variation or modification hereof and any waiver of any of the provisions or conditions hereof shall not be valid unless in writing signed by an authorized

representative of the Parties hereto. Any provision of this Agreement that is unenforceable in any jurisdiction shall, as to such jurisdiction, be ineffective to the extent of such prohibition or unenforceability without invalidating the remaining provisions hereof and any such prohibition or unenforceability in any jurisdiction shall not invalidate or render unenforceable such provision in any other jurisdiction. Lessor's failure at any time to require strict performance by Lessee or any of the provisions hereof shall not waive or diminish Lessor's right thereafter to demand strict compliance therewith or with any other provision. This Agreement may be executed in separate counterparts, each of which shall constitute an original, but all of which, when taken together shall constitute a single contract. Delivery of an executed counterpart of a signature page of this Agreement or any Lease by telecopy, emailed pdf or any other electronic means shall be effective as delivery of a manually executed counterpart of this Agreement or such Lease.

35. AMENDMENT AND RESTATEMENT. The Parties agree that the Original MLA is hereby amended and restated in its entirety pursuant to the terms hereof; provided that this Agreement is in no way intended to constitute a novation of any obligations owed by Lessee under or in respect of the Original MLA, all of which are hereby reaffirmed, ratified and confirmed.

IN WITNESS WHEREOF, the Parties hereto have duly executed this Agreement as of the date first above written.


LESSOR:

WELLS FARGO EQUIPMENT FINANCE, INC.

By:	/s/ Kristi Ellis
	Name:	Kristi Ellis
	Title:	Authorized Signer

LESSEE:

PLUG POWER INC.

By:
	Paul Middleton
	Chief Financial Officer

IN WITNESS WHEREOF, the Parties hereto have duly executed this Agreement as of the date first above written.


LESSOR:

WELLS FARGO EQUIPMENT FINANCE, INC.

By:
	Name:
	Title:

LESSEE:

PLUG POWER INC.

By:	/s/ Paul Middleton
	Paul Middleton
	Chief Financial Officer

Exhibit 31.1

I, Andrew Marsh, certify that:

1. I have reviewed this quarterly report on Form 10-Q of Plug Power Inc.;

2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

4. The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:

(a) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

(b) Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

(c) Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

(d) Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and

5. The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):

(a) All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and

(b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

Date: May 8, 2019



by:	/s/ Andrew Marsh
	Andrew Marsh
	Chief Executive Officer

Exhibit 31.2

I, Paul B. Middleton, certify that:

1. I have reviewed this quarterly report on Form 10-Q of Plug Power Inc.;

(b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

Date: May 8, 2019



by:	/s/ Paul B. Middleton
	Paul B. Middleton
	Chief Financial Officer

Exhibit 32.1

CERTIFICATION PURSUANT TO

18 U.S.C. SECTION 1350,

AS ADOPTED PURSUANT TO

SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002

In connection with the Quarterly Report of Plug Power Inc. (the “Company”) on Form 10-Q for the period ending March 31, 2019 as filed with the Securities and Exchange Commission (the “SEC”) on the date hereof (the “Report”), I, Andrew Marsh, Chief Executive Officer of the Company, certify, solely pursuant to 18 U.S.C. § 1350, as adopted pursuant to § 906 of the Sarbanes-Oxley Act of 2002, that to my knowledge:

(1) The Report fully complies with the requirements of Section 13(a) or 15(d), as applicable, of the Securities Exchange Act of 1934, as amended; and

(2) The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.

This certification is being furnished and not filed, and shall not be incorporated into any documents for any other purpose, under the Securities Exchange Act of 1934, as amended or the Securities Act of 1933, as amended. A signed original of this written statement required by § 906 has been provided to the Company and will be retained by the Company and furnished to the SEC or its staff upon request.

ay

/s/ Andrew Marsh
Andrew Marsh
Chief Executive Officer

May 8, 2019

Exhibit 32.2

CERTIFICATION PURSUANT TO

18 U.S.C. SECTION 1350,

AS ADOPTED PURSUANT TO

SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002

In connection with the Quarterly Report of Plug Power Inc. (the “Company”) on Form 10-Q for the period ending March 31, 2019 as filed with the Securities and Exchange Commission (the “SEC”) on the date hereof (the “Report”), I, Paul B. Middleton, Interim Chief Financial Officer of the Company, certify, solely pursuant to 18 U.S.C. § 1350, as adopted pursuant to § 906 of the Sarbanes-Oxley Act of 2002, that to my knowledge:

(1) The Report fully complies with the requirements of Section 13(a) or 15(d), as applicable, of the Securities Exchange Act of 1934, as amended; and

(2) The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.

Ay
/s/ Paul B. Middleton
Paul B. Middleton
Chief Financial Officer

May 8, 2019