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What changed in FUELCELL ENERGY INC's 10-K — 2023 vs 2024

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Paragraph-level year-over-year comparison of FUELCELL ENERGY INC's 2023 and 2024 10-K annual filings, covering the Business, Risk Factors, Legal Proceedings, Cybersecurity, MD&A and Market Risk sections. Every new, removed and edited paragraph is highlighted side-by-side so you can see exactly what management changed in the 2024 report.

+498 added−567 removedSource: 10-K (2024-12-27) vs 10-K (2023-12-19)

Top changes in FUELCELL ENERGY INC's 2024 10-K

498 paragraphs added · 567 removed · 351 edited across 7 sections

Item 1. Business

Business — how the company describes what it does

114 edited+44 added−139 removed87 unchanged
Biggest changeScale — Scale Our Existing Platform to Support Growth ​ ● Invest: Investing in our current manufacturing capabilities and building new capacity as we advance commercialization of our solid oxide and carbon capture technologies, enhancing our commercial organization and creating distribution partnerships, and investing in marketing to ensure the various audiences of our message have a clear understanding of the potential value propositions and benefits of our platforms and solutions, including customers, regulatory and legislative bodies in each of our target markets, and investors. ​ ● Extend process leadership : Building on our legacy and over twenty years of commercial platform process experience, so that we can scale our new platforms and solution capabilities with the same degree of quality as our current footprint. ​ ● Broaden and deepen our team: Implementing the next phase of our plan for developing our team to support our growth and enable our future, including building an even more diverse, inclusive, intellectually curious, engaged, and purpose-driven workforce that embodies the culture of the Company and its core values.
Biggest changeHaving made progress in achieving key initiatives under the original three pillars of our strategy, in fiscal year 2022, we updated the three key pillars of our strategy to “Grow, Scale and Innovate.” In conjunction with the restructuring and revised strategic plan that our Board of Directors approved, and we announced, in November 2024, we have refined and updated certain aspects of this strategy and have further updated the three key pillars of our strategy to “Focus, Scale and Innovate.” Focus — Penetrate Significant Market Opportunities ​ ● Streamline business operations: Advancing our commercial and technical capabilities, but with focus on and discipline regarding cost structure, capital deployment and cash management. ​ ● Optimize the core business: Capitalizing on our core technological strengths across targeted customer segments and delivering applications, including, but not limited to, microgrids, carbon capture, carbon recovery, and distributed hydrogen. ​ ● Drive commercial excellence: Strengthening customer relationships and building a customer-centric reputation; building our sales pipeline by increasing focus on targeted differentiated applications, product sales, energy-as-a-service financing options, and geographic market and customer segment expansion; and building a broader network of channel and go-to-market relationships. ​ Scale — Scale Our Existing Platform to Support Growth ​ ● Invest: Investing in our current manufacturing capabilities and building new capacity as we advance commercialization of our carbon capture and solid oxide technologies, enhancing our commercial organization, creating distribution partnerships, and investing in marketing to ensure the various audiences of our message have a clear understanding of the potential value propositions and benefits of our platforms and solutions, including customers, regulatory and legislative bodies in each of our target markets, and investors. ​ ● Extend process leadership : Building on our legacy and over twenty years of commercial platform process experience, so that we can scale our new platforms and solution capabilities with the same degree of quality as our current footprint. ​ ● Strengthen our team: Continuing development of our team to support our growth and enable our future, including building an even more diverse, inclusive, intellectually curious, engaged, and purpose-driven workforce that embodies the culture of the Company and its core values. ​ ● Expand geographically: Targeting growth opportunities in our traditional markets of North America, Korea, and Europe, while also positioning the Company to capitalize on emerging opportunities in the Middle East, Africa, the Asia Pacific region, and South America.
The Series B Preferred Stock ranks senior to our common stock with respect to payments upon liquidation, dividends, and distributions. ● Litigation could expose us to significant costs and adversely affect our business, financial condition, and results of operations. ● Weakness in the economy and other conditions affecting the financial stability of our customers could negatively impact future sales of our products and our results of operations. ● Our results of operations could be adversely affected by economic and political conditions globally and the effects of these conditions on our customers’ businesses and levels of business activity. ● Our future success will depend on our ability to attract and retain qualified management, technical and other personnel. ● We are subject to risks inherent in international operations. ​ General Information Information contained in this report concerning the electric power supply industry and the distributed generation market, the distributed hydrogen market, the energy storage market and the carbon capture market, our general expectations concerning these industries and markets, and our position within these industries and markets are based on market research, industry publications, other publicly available information and assumptions made by us based on this information and our 7 Table of Contents knowledge of these industries and markets, which we believe to be reasonable.
The Series B Preferred Stock ranks senior to our common stock with respect to payments upon liquidation, dividends, and distributions. ● Litigation could expose us to significant costs and adversely affect our business, financial condition, and results of operations. ● Weakness in the economy and other conditions affecting the financial stability of our customers could negatively impact future sales of our products and our results of operations. ● Our results of operations could be adversely affected by economic and political conditions globally and the effects of these conditions on our customers’ businesses and levels of business activity. ● Our future success will depend on our ability to attract and retain qualified management, technical and other personnel. ● We are subject to risks inherent in international operations. ​ 7 Table of Contents General Information Information contained in this report concerning the electric power supply industry and the distributed generation market, the distributed hydrogen market, the energy storage market and the carbon capture market, our general expectations concerning these industries and markets, and our position within these industries and markets are based on market research, industry publications, other publicly available information and assumptions made by us based on this information and our knowledge of these industries and markets, which we believe to be reasonable.
Customers and developers generally have the option to either purchase our fuel cell platforms outright or enter into a PPA under which the customer or developer (i.e. the end-user of the power) commits to purchase power as it is produced for an extended period of time, typically 10 to 20 years.
Customers and developers generally have the option to either purchase our fuel cell platforms outright or to enter into a PPA under which the customer or developer (i.e. the end-user of the power) commits to purchase power as it is produced for an extended period of time, typically 10 to 20 years.
We have a manufacturing and service facility in Taufkirchen, Germany that has the capability to perform final module assembly for up to 20 MW per year of carbonate sub-megawatt fuel cell power platforms to service the European market. Our European service activities are also operated out of this location.
We have a manufacturing and service facility in Taufkirchen, Germany that has the capability to perform final module assembly for up to 20 MW per year of sub-megawatt fuel cell power platforms to service the European market. Our European service activities are also operated out of this location.
In addition, we are also investing in the commercialization of our patented technologies, such as carbon capture and separation, solid oxide fuel cells, and solid oxide electrolysis cells for hydrogen production and energy storage as we believe these technologies represent significant future market opportunities.
In addition, we are also investing in our commercialization of our patented technologies, such as carbon capture and separation, solid oxide fuel cells, and solid oxide electrolysis cells for hydrogen production and energy storage as we believe these technologies represent significant future market opportunities.
Our carbon separation technology allows carbon dioxide to be extracted and purified to the appropriate level for utilization or sequestration, significantly reducing the carbon footprint of the generated power from our fuel cell platforms.
Our carbon separation technology allows carbon dioxide to be easily extracted and purified to the appropriate level for utilization or sequestration, significantly reducing the carbon footprint of the generated power from our fuel cell platforms.
Our decision to retain certain projects is based in part on the recurring, predictable cash flows these projects can offer us, the proliferation of PPAs in the industry and the potential access to capital.
Our decision to retain ownership of certain projects is based in part on the recurring, predictable cash flows these projects can offer us, the proliferation of PPAs in the industry and the potential access to capital.
Through the capabilities of our platforms, we provide clean, reliable baseload, or prime, power generation (baseload or prime power generation is power generated over a period of time at a steady rate), hydrogen production, high grade heat, carbon recovery from the fuels utilized by our platforms, isolation and removal of CO 2 from exhaust streams, and the ability to use biofuels, renewable natural gas (“RNG”), and a hydrogen-hydrocarbon fuel blend for power generation feedstock.
Through the capabilities of our platforms, we provide clean, reliable baseload, or primary power generation (baseload, or primary, power generation is power generated over a period of time at a steady rate), hydrogen production, high grade heat, carbon recovery from the fuels utilized by our platforms, isolation and removal of CO 2 from exhaust streams, and the ability to use biofuels, renewable natural gas (“RNG”), and a hydrogen-hydrocarbon fuel blend for power generation feedstock.
Our operations in Europe are certified under both ISO 9001:2015 and ISO 14001:2015. ​ As we continue our focus on business in international markets such as Europe and Asia, we plan to explore manufacturing and assembly opportunities in those markets to achieve more efficient product manufacturing and supply chain operations, as well as meet the increasing government requirements for the inclusion of locally sourced content and components in order to benefit from enhanced clean energy investment incentives. ​ ​ 23 Table of Contents ​ Raw Material Sourcing and Supplier Relationships We use various commercially available raw materials and components to construct a fuel cell module, including nickel and stainless steel, which are key inputs in our manufacturing process.
Our operations in Europe are certified under both ISO 9001:2015 and ISO 14001:2015. ​ As we continue our focus on business in international markets such as Europe and Asia, we plan to explore manufacturing and assembly opportunities in those markets to achieve more efficient product manufacturing and supply chain operations, as well as meet the increasing government requirements for the inclusion of locally sourced content and components in order to benefit from enhanced clean energy investment incentives. ​ ​ ​ Raw Material Sourcing and Supplier Relationships We use various commercially available raw materials and components to construct a fuel cell module, including nickel and stainless steel, which are key inputs in our manufacturing process.
He is a certified public accountant and began his professional career at McGladrey and Pullen, LLP (now RSM US LLP). Mr. Bishop also served four years in the United States Marine Corps. 33 Table of Contents NAME AGE PRINCIPAL OCCUPATION ​ ​ ​ ​ ​ Mr.
He is a certified public accountant and began his professional career at McGladrey and Pullen, LLP (now RSM US LLP). Mr. Bishop also served four years in the United States Marine Corps. 25 Table of Contents ​ ​ ​ ​ ​ NAME AGE PRINCIPAL OCCUPATION ​ ​ ​ ​ ​ Mr.
Applications for this technology include centralized large scale hydrogen production from grid-scale renewables or nuclear power, and decentralized hydrogen production for industrial, transportation, repowered combustion generation assets, and synthetic or sustainable fuels for use in aviation and other applications. ​ We have operated a sub scale demonstration project of our solid oxide electrolysis technology in our Danbury test facility, which demonstrated the high electrical efficiency discussed above.
Applications for this technology include centralized large scale hydrogen production from grid-scale 13 Table of Contents renewables or nuclear power, and decentralized hydrogen production for industrial, transportation, repowered combustion generation assets, and synthetic or sustainable fuels for use in aviation and other applications. ​ We have operated a sub scale demonstration project of our solid oxide electrolysis technology in our Danbury test facility, which demonstrated the high electrical efficiency discussed above.
Dolger received a Bachelor of Arts Degree from the State University of New York at Albany and Juris Doctor from Pace University School of Law. ​ ​ ​ ​ ​ Mark Feasel Executive Vice President, Chief Commercial Officer ​ 53 ​ Mr. Feasel was appointed Executive Vice President and Chief Commercial Officer in April 2022. Mr.
Dolger received a Bachelor of Arts Degree from the State University of New York at Albany and Juris Doctor from Pace University School of Law. ​ ​ ​ ​ ​ Mark Feasel Executive Vice President, Chief Commercial Officer ​ 54 ​ Mr. Feasel was appointed Executive Vice President and Chief Commercial Officer in April 2022. Mr.
Our conflict mineral disclosure filed with the Securities and Exchange Commission (“SEC”) on Form SD contains specific information on the actions we are taking to avoid the use of conflict minerals. ​ Overall, as we continue to grow our business, we remain focused on improving quality, increasing the competitive supply landscape, maintaining existing supplier relationships, as well as building strong new key supplier relationships to expand our supply chain options. ​ Engineerin g, Procurement and Construction We provide customers with complete turn-key solutions, including development, engineering, procurement, construction, interconnection and operations for our fuel cell projects.
Our conflict mineral disclosure filed with the Securities and Exchange Commission (“SEC”) on Form SD contains specific information on the actions we are taking to avoid the use of conflict minerals. ​ As we continue to grow our business, we remain focused on improving quality, increasing the competitive supply landscape, maintaining existing supplier relationships, as well as building strong new key supplier relationships to expand our supply chain options. ​ ​ 21 Table of Contents Engineerin g, Procurement and Construction We provide customers with complete turn-key solutions, including development, engineering, procurement, construction, interconnection and operations for our fuel cell projects.
Health and safety is both a bottom-up and top-down priority as the Company’s Board of Directors is actively engaged in ongoing review of our polices, protocols and performance. ​ Our EH&S core principles are: 31 Table of Contents ● Zero injuries / incidents; ● Compliance with all legal obligations; ● Pollution prevention; ● Waste reduction; and ● Continual improvement. ​ We are also in the process of performing life cycle analyses on our products, as well as our production and office locations, and developing a roadmap to net zero carbon emissions. ​ Our safety performance is excellent and is demonstrated by experience modification rates below the industry average of 1.0 for the last 7 fiscal years: 2017: 0.65, 2018: 0.62, 2019: 0.65, 2020: 0.59, 2021: 0.68, 2022: 0.088 and 2023: 0.89.
Health and safety is both a bottom-up and top-down priority as the Company’s Board of Directors is actively engaged in ongoing review of our polices, protocols and performance. ​ Our EH&S core principles are: ● Zero injuries / incidents; ● Compliance with all legal obligations; ● Pollution prevention; ● Waste reduction; and ● Continual improvement. ​ We are also in the process of performing life cycle analyses on our products, as well as our production and office locations, and developing a roadmap to net zero carbon emissions. ​ Our safety performance is excellent and is demonstrated by experience modification rates below the industry average of 1.0 for the last 7 fiscal years: 2018: 0.62, 2019: 0.65, 2020: 0.59, 2021: 0.68, 2022: 0.088, 2023: 0.89 and 2024: 0.83.
Under our robust environmental, health and safety (“EH&S”) program, we strongly encourage the reporting of near misses to identify opportunities for improvement and we are constantly evaluating our EH&S protocols in an effort to keep our facilities and workspaces environmentally friendly and safe for our team members, stakeholders, customers, and visitors. ​ We are committed to EH&S excellence.
Under our robust environmental, health and safety (“EH&S”) program, we strongly encourage the reporting of near misses to identify opportunities for 23 Table of Contents improvement and we are constantly evaluating our EH&S protocols in an effort to keep our facilities and workspaces environmentally friendly and safe for our team members, stakeholders, customers, and visitors. ​ We are committed to EH&S excellence.
Few also served on the board of directors of Marathon Oil (NYSE: MRO) from April 2019 to May 2022. ​ Mr. Few received his Bachelor’s Degree in Computer Systems in Business from Ohio University, and a MBA from Northwestern University’s J.L. Kellogg Graduate School of Management. ​ ​ ​ ​ ​ Michael S.
Few also served on the board of directors of Marathon Oil (NYSE: MRO) from April 2019 to May 2022. ​ Mr. Few received his Bachelor’s Degree in Computer Systems in Business from Ohio University, and a Masters of Business Administration from Northwestern University’s J.L. Kellogg Graduate School of Management. ​ ​ ​ ​ ​ Michael S.
This platform will allow for component testing, with the goal of accelerating the integration of alternate suppliers, and will allow prospective customers to observe demonstrated capabilities of the fuel cell platform, such as carbon separation, including for the sampling and testing of separated CO 2 to verify quantity, quality or purity requirements for food and beverage companies.
This platform allows for component testing, with the goal of accelerating the integration of alternate suppliers and allows prospective customers to observe demonstrated capabilities of the fuel cell platform, such as carbon separation, including for the sampling and testing of separated CO 2 to verify quantity, quality or purity requirements for food and beverage companies.
This facility includes equipment for the manufacturing of solid oxide cells and stacks, including an advanced automated stack manufacturing line which has been developed to ensure that the labor and overhead which are required to produce these technologies are optimized for efficiency and complement the low direct material cost of the stack.
This facility includes equipment for the manufacturing of solid oxide cells and stacks, including an advanced automated stack manufacturing line which has been developed to ensure that the labor and overhead which are required to produce these 20 Table of Contents technologies are optimized for efficiency and complement the low direct material cost of the stack.
In the event that interest rates continue to rise or there are changes in tax policy, our financial results could be harmed. ● Unanticipated increases or decreases in business growth may result in adverse financial consequences for us. ● If our goodwill and other indefinite-lived intangible assets and long-lived assets (including project assets) become impaired, we may be required to record a significant charge to operations. ● Our Advanced Technologies contracts are subject to the risk of termination by the contracting party and we may not realize the full amounts allocated under some contracts due to the lack of Congressional appropriations or early termination. ● Utility companies may resist the adoption of distributed generation and could impose customer fees or interconnection requirements on our customers that could make our products less desirable. ● We depend on third party suppliers for the development and timely supply of key raw materials and components for our products. ● An increase in energy costs, including as a result of the ongoing conflict between Russia and Ukraine, may materially adversely affect our business, financial condition, and results of operations. ● Failure to meet Environmental, Social, and Governance (“ESG”) expectations or standards or to achieve our ESG goals could adversely affect our business, results of operations, financial condition, and stock price. ● We derive significant revenue from contracts awarded through competitive bidding processes involving substantial costs and risks.
In the event that interest rates continue to rise or there are changes in tax policy, our financial results could be harmed. ● Unanticipated increases or decreases in business growth have resulted and may continue to result in adverse consequences to our financial condition and business strategy. ● If our goodwill and other indefinite-lived intangible assets and long-lived assets (including project assets) become impaired, we may be required to record a significant charge to operations. ● Our Advanced Technologies contracts are subject to the risk of termination by the contracting party and we may not realize the full amounts allocated under some contracts due to the lack of Congressional appropriations or early termination. ● Utility companies may resist the adoption of distributed generation and could impose customer fees or interconnection requirements on our customers that could make our products less desirable. ● We depend on third party suppliers for the development and timely supply of key raw materials and components for our products. ● An increase in energy costs may materially adversely affect our business, financial condition, and results of operations. ● Failure to meet Environmental, Social, and Governance (“ESG”) expectations or standards or to achieve our ESG goals could adversely affect our business, results of operations, financial condition, and stock price. ● We derive significant revenue from contracts awarded through competitive bidding processes involving substantial costs and risks.
The reactions producing CO 2 happen before the fuel is mixed with air, and the CO 2 is concentrated and therefore easy to recover and capture. Both our carbonate and solid oxide platforms are enabled to recover and capture their own CO 2 for use or sequestration before it is emitted into the air.
The reactions producing CO 2 happen before the fuel is mixed with air, and the CO 2 is concentrated and therefore easy to recover and capture. Our carbonate platforms are enabled to recover and capture their own CO 2 for use or sequestration before it is emitted into the air.
Bishop Executive Vice President, Chief Financial Officer and Treasurer ​ 55 ​ Mr. Bishop was appointed Executive Vice President in June 2019 and has served as the Company’s Chief Financial Officer since June 2011. Mr.
Bishop Executive Vice President, Chief Financial Officer and Treasurer ​ 56 ​ Mr. Bishop was appointed Executive Vice President in June 2019 and has served as the Company’s Chief Financial Officer since June 2011. Mr.
We undertake both privately funded and publicly funded research and development to develop and grow these 21 Table of Contents opportunities, reduce product and output costs, and expand our technology portfolio. Our Advanced Technologies programs are currently focused on the continued development and commercialization of our solutions that advance solid oxide fuel cells, distributed hydrogen, and carbon capture.
We undertake both privately funded and publicly funded research and development to develop and grow these opportunities, reduce product and output costs, and expand our technology portfolio. Our Advanced Technologies programs are currently focused on continued development and commercialization of our solutions that advance solid oxide fuel cells, distributed hydrogen, and carbon capture.
The SEC also maintains an Internet website that contains reports and other information regarding issuers that file electronically with the SEC located at http://www.sec.gov. 32 Table of Contents Information about our Executive Officers ​ NAME AGE PRINCIPAL OCCUPATION ​ ​ ​ ​ ​ Jason B. Few President, Chief Executive Officer ​ 57 ​ Mr.
The SEC also maintains an Internet website that contains reports and other information regarding issuers that file electronically with the SEC located at http://www.sec.gov. 24 Table of Contents Information about our Executive Officers ​ ​ ​ ​ ​ ​ NAME AGE PRINCIPAL OCCUPATION ​ ​ ​ ​ ​ Jason B. Few President, Chief Executive Officer ​ 58 ​ Mr.
Such statements relate to, among other things, the following: ● the development and commercialization by FuelCell Energy, Inc. and its subsidiaries (“FuelCell Energy,” “Company,” “we,” “us” and “our”) of fuel cell technology and products and the market for such products, ● the expected timing of completion of our ongoing projects, ● our business plans and strategies, ● the markets in which we expect to operate, ● expected operating results such as revenue growth and earnings, ● our belief that we have sufficient liquidity to fund our business operations for the next 12 months, ● future funding under Advanced Technologies contracts, ● future financing for projects, including equity and debt investments by investors and commercial bank financing, as well as overall financial market conditions, ● the expected cost competitiveness of our technology, and ● our ability to achieve our sales plans, manufacturing capacity expansion plans, market access and market expansion goals, and cost reduction targets.
Such statements relate to, among other things, the following: ● the development and commercialization by FuelCell Energy, Inc. and its subsidiaries (“FuelCell Energy,” “Company,” “we,” “us” and “our”) of fuel cell technology and products and the market for such products, ● the expected timing of completion of our ongoing projects, ● our business plans and strategies, ● the markets in which we expect to operate, ● expected operating results such as revenue growth and earnings, ● our belief that we have sufficient liquidity to fund our business operations for the next 12 months, ● future funding under Advanced Technologies contracts, ● future financing for projects, including equity and debt investments by investors and commercial bank financing, as well as overall financial market conditions, ● the expected cost competitiveness of our technology, ● our ability to successfully implement our restructuring plan during the expected timeframe and the expected effects and impacts of the Company’s restructuring plan, and ● our ability to achieve our sales plans, manufacturing capacity expansion plans, market access and market expansion goals, and cost reduction targets.
Dolger oversees all the Company’s legal and governmental affairs, as well as provides leadership in all aspects of the Company’s business, including commercial matters, compliance, corporate governance and board activities. Prior to joining the Company, 34 Table of Contents Mr.
Dolger oversees all the Company’s legal and governmental affairs, as well as provides leadership in all aspects of the Company’s business, including commercial matters, compliance, corporate governance and board activities. Prior to joining the Company, Mr.
In addition, increased information technology security threats and more sophisticated computer crime pose a risk to our systems, networks, products and services. 6 Table of Contents ● We are required to maintain effective internal control over financial reporting. In a prior fiscal year, our management identified a material weakness in our internal control over financial reporting.
In addition, increased information technology security threats and more sophisticated computer crime pose a risk to our systems, networks, products and services. ● We are required to maintain effective internal control over financial reporting. In a prior fiscal year, our management identified a material weakness in our internal control over financial reporting.
The fuel cells utilized in these platforms react fuel electrochemically, without combusting the fuel, 8 Table of Contents which avoids emissions produced by combustion such as nitrogen oxides (“NOx”), sulfur oxides (“SOx”) and particulates. In the electrochemical process, fuel and air are reacted in separate chambers in the fuel cell stack.
The fuel cells utilized in these platforms react fuel electrochemically, without combusting the fuel, which avoids emissions produced by combustion such as nitrogen oxides (“NOx”), sulfur oxides (“SOx”) and particulates. In the electrochemical process, fuel and air are reacted in separate chambers in the fuel cell stack.
We plan to continue to grow this portfolio prudently and in a balanced manner, while also selling projects to customers or project investors when selling presents the best value and opportunity for our capital needs or meets the customer’s desired ownership structure.
We plan to continue to grow our operating portfolio of retained projects prudently and in a balanced manner, while also selling projects to customers or project investors when selling presents the best value and opportunity for our capital needs or meets the customer’s desired ownership structure.
The forward-looking statements contained in this report are subject to risks and uncertainties, known and unknown, that could cause actual results and future events to differ materially from those set forth in or contemplated by the forward-looking statements, including, without limitation, the risks described under Item 1A - Risk Factors of this report and the following factors: ● general risks associated with product development and manufacturing, ● general economic conditions, ● changes in interest rates, which may impact project financing, ● supply chain disruptions, ● changes in the utility regulatory environment, ● changes in the utility industry and the markets for distributed generation, distributed hydrogen, and fuel cell power plants configured for carbon capture or carbon separation, ● potential volatility of commodity prices that may adversely affect our projects, ● availability of government subsidies and economic incentives for alternative energy technologies, ● our ability to remain in compliance with U.S. federal and state and foreign government laws and regulations and the listing rules of The Nasdaq Stock Market (“Nasdaq”), ● rapid technological change, ● competition, ● the risk that our bid awards will not convert to contracts or that our contracts will not convert to revenue, 4 Table of Contents ● market acceptance of our products, ● changes in accounting policies or practices adopted voluntarily or as required by accounting principles generally accepted in the United States (“U.S.
The forward-looking statements contained in this report are subject to risks and uncertainties, known and unknown, that could cause actual results and future events to differ materially from those set forth in or contemplated by the forward-looking statements, including, without limitation, the risks described under Item 1A - Risk Factors of this report and the following factors: ● general risks associated with product development and manufacturing, ● general economic conditions, ● changes in interest rates, which may impact project financing, ● supply chain disruptions, ● changes in the utility regulatory environment, ● changes in the utility industry and the markets for distributed generation, distributed hydrogen, and fuel cell power plants configured for carbon capture or carbon separation, ● potential volatility of commodity prices that may adversely affect our projects, ● availability of government subsidies and economic incentives for alternative energy technologies, ● risks that our restructuring plan will not result in the intended benefits or savings or will result in unanticipated costs, including but not limited to additional charges and/or higher than expected costs, ● our ability to remain in compliance with U.S. federal and state and foreign government laws and regulations, 4 Table of Contents ● our ability to maintain compliance with the listing rules of The Nasdaq Stock Market (“Nasdaq”), ● rapid technological change, ● competition, ● the risk that our bid awards will not convert to contracts or that our contracts will not convert to revenue, ● market acceptance of our products, ● changes in accounting policies or practices adopted voluntarily or as required by accounting principles generally accepted in the United States (“U.S.
Recurring revenue is delivered through recurring electricity, capacity, and renewable energy credit sales under power purchase agreements (“PPAs”) and tariffs for projects we retain in our generation operating portfolio, as well as service 20 Table of Contents revenue, mainly through long-term service agreements.
Recurring revenue is delivered through recurring electricity, capacity, and renewable energy credit sales under power purchase agreements (“PPAs”) and tariffs for projects we retain in our generation operating portfolio, as well as service revenue, mainly through long-term service agreements.
Pricing for LTSAs is based upon the value of service assurance and the markets in 24 Table of Contents which we compete and includes all future maintenance and fuel cell module exchanges. Each carbonate model of our power platform has a target design life of 25-to-30 years.
Pricing for LTSAs is based upon the value of service assurance and the markets in which we compete and includes all future maintenance and fuel cell module exchanges. Each model of our carbonate electrochemical platform has a target design life of 25-to-30 years.
Prior to that, he served Schneider Electric as Vice President, Electric Utility Segment & Smart Grid from July 2012 to December 2019, as Vice President, Sales and Marketing from November 2010 through July 2012, and as Director, Sales and Marketing from March 2005 to November 2010. As President, Smart Grid – North America, Mr.
Prior to that, he served Schneider Electric as Vice President, Electric 26 Table of Contents Utility Segment & Smart Grid from July 2012 to December 2019, as Vice President, Sales and Marketing from November 2010 through July 2012, and as Director, Sales and Marketing from March 2005 to November 2010. As President, Smart Grid – North America, Mr.
We also develop projects and sell equipment directly to customers, providing a complete solution of engineering, installing, and servicing the fuel cell power plant under an EPC agreement and a long-term maintenance and service agreement.
We also develop projects and sell equipment directly to customers, providing a complete solution of engineering, installing, and servicing the fuel cell power plant under an engineering, procurement, and construction agreement (“EPC”) and a long-term maintenance and service agreement.
We target for expansion and development markets and geographic regions that: ● Benefit from and value clean distributed generation; ● Are located where there are high energy costs, poor grid reliability, and/or challenged transmission and distribution lines; ● Have a need for distributed hydrogen for transportation or industry; ● Can leverage the multiple value streams delivered by our platforms (electricity, hydrogen, thermal, water, and carbon recovery); 19 Table of Contents ● Are aligned with regulatory frameworks that harmonize energy, economic and environmental policies; and ● Are committed to reducing their Scope 1 and Scope 2 emissions.
We target for expansion and development markets and geographic regions that benefit from and value clean distributed generation; are located where there are high energy costs, poor grid reliability, and/or challenged transmission and distribution lines; can leverage the multiple value streams delivered by our platforms (electricity, hydrogen, thermal, water, and carbon recovery); are aligned with regulatory frameworks that harmonize energy, economic and environmental policies; and are committed to reducing their Scope 1 and Scope 2 emissions.
This facility also houses our SOFC and SOEC stack research and development effort and includes equipment for the manufacturing of solid oxide cells and stacks, including advanced manufacturing capabilities. We are making additional investments in the Calgary facility to establish a center of competence and excellence for solid oxide cell and stack research and manufacturing.
This facility also houses our SOFC and SOEC stack research and development effort and includes equipment for the manufacturing of solid oxide cells and stacks, including advanced manufacturing capabilities. Beginning in fiscal year 2022, we started making additional investments in the Calgary facility to establish a center of competence and excellence for solid oxide cell and stack research and manufacturing.
By weight, approximately 93% of the entire power plant can be re-used or recycled at the end of its useful life. ​ Our manufacturing and research and development facility in Calgary, Alberta, Canada is focused on the engineering and development of our solid oxide fuel cell (“SOFC”) and SOEC technologies.
By weight, approximately 93% of the entire power plant can be re-used or recycled at the end of its useful life. ​ Our manufacturing and research and development facility in Calgary, Alberta, Canada is focused on the engineering and development of our SOFC and SOEC technologies.
Mr. Few also has served as a Senior Advisor to Verve Industrial Protection, an industrial cybersecurity software company, since 2016. Mr. Few was elected to the board of directors of Enbridge Inc. (NYSE: ENB) effective May 4, 2022, and serves on the Safety & Reliability and Sustainability Committees. Mr.
Mr. Few also previously served as a Senior Advisor to Verve Industrial Protection, an industrial cybersecurity software company, since 2016. Mr. Few was elected to the board of directors of Enbridge Inc. (NYSE: ENB) effective May 4, 2022, and serves on the Audit, Finance and Risk and Sustainability Committees. Mr.
Our plans are dependent on market acceptance of our products and we must complete development of our new products and develop additional commercially viable products in order to achieve our long-term revenue targets. ● Our products use inherently dangerous, flammable fuels, operate at high temperatures and use corrosive carbonate material, each of which could subject our business to product liability claims. ● We are increasingly dependent on information technology, and disruptions, failures or security breaches of our information technology infrastructure could have a material adverse effect on our operations and the operations of our power plant platforms.
Our plans are dependent on market acceptance of our products, and we must develop additional commercially viable products in order to achieve profitability. ● Our products use inherently dangerous, flammable fuels, operate at high temperatures and use corrosive carbonate material, each of which could subject our business to product liability claims. ● We are increasingly dependent on information technology, and disruptions, failures or security breaches of our information technology infrastructure could have a material adverse effect on our operations and the 6 Table of Contents operations of our power plant platforms.
As of October 31, 2023, Versa also had 9 pending U.S. patent applications and 26 patent applications pending in other jurisdictions. In addition, as of October 31, 2023, our subsidiary, FuelCell Energy Solutions, GmbH, had license rights to 2 U.S. patents and 7 patents outside the U.S.
As of October 31, 2024, Versa also had 13 pending U.S. patent applications and 30 patent applications pending in other jurisdictions. In addition, as of October 31, 2024, our subsidiary, FuelCell Energy Solutions, GmbH, had license rights to 2 U.S. patents and 7 patents outside the U.S.
We also constructed a SureSource 1500 in Torrington during fiscal year 2022, which operates as a testing facility for qualifying 22 Table of Contents new supplier components and performance testing and validation of continued platform innovations. Additionally, we expect to complete the construction of an additional on-site fuel cell demonstration and test unit in fiscal year 2024.
We also constructed a SureSource 1500 in Torrington during fiscal year 2022, which operates as a testing facility for qualifying new supplier components and performance testing and validation of continued platform innovations. Additionally, we completed the construction of an on-site fuel cell demonstration and test unit in fiscal year 2024.
For the year ended October 31, 2023, the Torrington facility was operating at a 32.7 MW per year annualized production rate on a single production shift. Maximum annualized capacity (module manufacturing, final assembly, testing and conditioning) is 100 MW per year under the Torrington facility’s current configuration when being fully utilized.
As of October 31, 2024, the Torrington facility was operating at a 27.7 MW per year annualized production rate on a single production shift. Maximum annualized capacity (module manufacturing, final assembly, testing and conditioning) is 100 MW per year under the Torrington facility’s current configuration when being fully utilized.
Government funding, principally from the DOE, provided 3%, 6% and 9% of our revenue for the fiscal years ended October 31, 2023, 2022, and 2021, respectively.
Government funding, principally from the DOE and DOS, provided 4%, 3% and 6% of our revenue for the fiscal years ended October 31, 2024, 2023, and 2022, respectively.
Pursuant to the EMTEC License Agreement, we granted EMTEC and its affiliates a non-exclusive, worldwide, fully-paid, perpetual, irrevocable, non-transferable license and right to use our patents, data, know-how, improvements, equipment designs, methods, processes and the like to the extent it is useful to research, develop and commercially exploit carbonate fuel cells in applications in which the fuel cells concentrate carbon dioxide from external industrial and power sources and for any other purpose attendant thereto or associated therewith, in 26 Table of Contents exchange for a $10 million payment.
Pursuant to the EMTEC License Agreement, we granted EMTEC and its affiliates a non-exclusive, worldwide, fully-paid, perpetual, irrevocable, non-transferable license and right to use our patents filed on or before April 30, 2021, and any data, know-how, improvements, equipment designs, methods, processes and the like provided directly by the Company or its affiliates to EMTEC or its affiliates under any agreement or otherwise, on or before April 30, 2021, to the extent it is useful to research, develop and commercially exploit carbonate fuel cells in applications in which the fuel cells concentrate carbon dioxide from external industrial and power sources and for any other purpose attendant thereto or associated therewith, in exchange for a $10 million payment.
As of October 31, 2023, we also had 34 patent applications pending in the U.S. and 98 patent applications pending in other jurisdictions. ​ As of October 31, 2023, our subsidiary, Versa Power Systems, Ltd. (“Versa”), had 24 U.S. patents and 86 international patents covering SOFC technology (in certain cases covering the same technology in multiple jurisdictions).
As of October 31, 2024, we also had 28 patent applications pending in the U.S. and 86 patent applications pending in other jurisdictions. ​ As of October 31, 2024, our subsidiary, Versa Power Systems, Ltd. (“Versa”), had 19 U.S. patents and 68 international patents covering SOFC technology (in certain cases covering the same technology in multiple jurisdictions).
If we do raise additional capital utilizing equity, existing stockholders will suffer dilution. If we do not raise additional capital, our business could fail or be materially and adversely affected. ● We depend on our intellectual property, and our failure to protect that intellectual property could adversely affect our future growth and success.
If we do not raise additional capital, our business could fail or be materially and adversely affected. ● We depend on our intellectual property, and our failure to protect that intellectual property could adversely affect our future growth and success.
Additionally, we may monetize certain environmental and incentive tax credits through lending institutions and tax investors, including through entering into sale-leaseback and partnership-flip structures that reduce our required net capital investment in a project while still allowing us to retain ownership of the project.
Additionally, we may monetize certain environmental and incentive tax credits through lending institutions and tax investors, including through entering into sale-leaseback and partnership-flip structures that reduce our required net capital investment in a project while still allowing us to retain ownership of the project. 11 Table of Contents We operate and maintain our project platforms for the life of the project regardless of the ownership structure.
We are equally committed to reducing our environmental impact and have therefore developed and begun implementing a plan to reduce our carbon emissions to net zero by 2050.
As a company, we are committed to helping our customers reduce their environmental impact. We are equally committed to reducing our environmental impact and have developed and begun implementing a plan to reduce our carbon emissions to net zero by 2050.
BUSINESS Page ​ ​ ​ Forward-Looking Statement Disclaimer ​ 4 ​ ​ ​ Risk Factor Summary ​ 6 ​ ​ ​ General Information ​ 7 ​ ​ ​ Business Overview ​ 8 ​ ​ ​ Our History ​ 8 ​ ​ ​ Product Platforms and Applications Overview ​ 8 ​ ​ ​ Our Commitment to Sustainability ​ 10 ​ ​ ​ Our Market Opportunity ​ 11 ​ ​ ​ Our Business Strategy ​ 11 ​ ​ ​ Our Durable Competitive Advantages ​ 12 ​ ​ ​ Product Platforms and Applications ​ 14 ​ ​ ​ Our Product Platforms and Applications – Current and Future ​ 16 ​ ​ ​ Our Markets ​ 18 ​ ​ ​ Our Business Model ​ 20 ​ ​ ​ Advanced Technologies Programs ​ 21 ​ ​ ​ Company Funded Research and Development ​ 22 ​ ​ ​ Manufacturing and Service Facilities ​ 22 ​ ​ ​ Raw Material Sourcing and Supplier Relationships ​ 24 ​ ​ ​ Engineering, Procurement and Construction ​ 24 ​ ​ ​ Services and Warranty Agreements ​ 24 ​ ​ ​ Competition ​ 25 ​ ​ ​ Backlog ​ 26 ​ ​ ​ License and Joint Development Agreements with EMTEC ​ 26 ​ ​ ​ Regulatory and Legislative Environment ​ 28 ​ ​ ​ Government Regulation ​ 30 ​ ​ ​ Proprietary Rights and Licensed Technology ​ 30 ​ ​ ​ Significant Customers and Information about Geographic Areas ​ 30 ​ ​ ​ People and Organizational Development ​ 31 ​ ​ ​ Available Information ​ 32 ​ ​ 3 Table of Contents Forward-Looking Statement Disclaimer This Annual Report on Form 10-K contains statements that the Company believes to be “forward-looking statements” within the meaning of the Private Securities Litigation Reform Act of 1995 (the “PSLRA”).
BUSINESS Page ​ ​ ​ Forward-Looking Statement Disclaimer ​ 4 ​ ​ ​ Risk Factor Summary ​ 6 ​ ​ ​ General Information ​ 8 ​ ​ ​ Business Overview ​ 9 ​ ​ ​ Our Market Opportunity ​ 9 ​ ​ ​ Our Business Strategy ​ 10 ​ ​ ​ Our Business Model and Competitive Advantages ​ 11 ​ ​ ​ Product Platforms and Applications ​ 12 ​ ​ ​ Our Product Platform Applications – Current and Future ​ 13 ​ ​ ​ Our Markets ​ 14 ​ ​ ​ Levelized Cost of Energy ​ 15 ​ ​ ​ Competition ​ 15 ​ ​ ​ Our Commitment to Sustainability ​ 16 ​ ​ ​ Advanced Technologies Programs ​ 17 ​ ​ ​ License and Joint Development Agreements with EMTEC ​ 17 ​ ​ ​ Company Funded Research and Development ​ 19 ​ ​ ​ Proprietary Rights and Licensed Technology ​ 19 ​ ​ ​ Manufacturing and Service Facilities ​ 20 ​ ​ ​ Raw Material Sourcing and Supplier Relationships ​ 21 ​ ​ ​ Engineering, Procurement and Construction ​ 22 ​ ​ ​ Services and Warranty Agreements ​ 22 ​ ​ ​ Significant Developments in Government Activity ​ 22 ​ ​ ​ Government Regulation ​ 23 ​ ​ ​ Significant Customers ​ 23 ​ ​ ​ People and Organizational Development ​ 23 ​ ​ ​ Available Information ​ 24 ​ ​ 3 Table of Contents Forward-Looking Statement Disclaimer This Annual Report on Form 10-K contains statements that the Company believes to be “forward-looking statements” within the meaning of the Private Securities Litigation Reform Act of 1995 (the “PSLRA”).
GAAP”), ● factors affecting our liquidity position and financial condition, ● government appropriations, ● the ability of the government and third parties to terminate their development contracts at any time, ● the ability of the government to exercise “march-in” rights with respect to certain of our patents, ● our ability to successfully market and sell our products internationally, ● our ability to develop new products to achieve our long-term revenue targets, ● our ability to implement our strategy, ● our ability to reduce our levelized cost of energy and deliver on our cost reduction strategy generally, ● our ability to protect our intellectual property, ● litigation and other proceedings, ● the risk that commercialization of our new products will not occur when anticipated or, if it does, that we will not have adequate capacity to satisfy demand, ● our need for and the availability of additional financing, ● our ability to generate positive cash flow from operations, ● our ability to service our long-term debt, ● our ability to increase the output and longevity of our platforms and to meet the performance requirements of our contracts, ● our ability to expand our customer base and maintain relationships with our largest customers and strategic business allies, and ● concerns with, threats of, or the consequences of, pandemics, contagious diseases or health epidemics, including the novel coronavirus (“COVID-19”), and resulting supply chain disruptions, shifts in clean energy demand, impacts to our customers’ capital budgets and investment plans, and impacts on the demand for our products.
GAAP”), ● factors affecting our liquidity position and financial condition, ● government appropriations, ● the ability of the government and third parties to terminate their development contracts at any time, ● the ability of the government to exercise “march-in” rights with respect to certain of our patents, ● our ability to successfully market and sell our products internationally, ● our ability to develop additional commercially viable products, ● our ability to implement our strategy, ● our ability to reduce our levelized cost of energy and deliver on our cost reduction strategy generally, ● our ability to protect our intellectual property, ● litigation and other proceedings, ● the risk that commercialization of our new products will not occur when anticipated or, if it does, that we will not have adequate capacity to satisfy demand, ● our need for and the availability of additional financing, ● our ability to generate positive cash flow from operations, ● our ability to service our long-term debt, ● our ability to increase the output and longevity of our platforms and to meet the performance requirements of our contracts, and ● our ability to expand our customer base and maintain relationships with our largest customers and strategic business allies.
Our objective is to continue to improve our competitive position, including innovating in areas such as offering multiple 25 Table of Contents platform solutions, and methods for producing clean hydrogen, solid oxide, and carbon separation and carbon capture in order to add value for customers looking for clean and renewable energy and to aid in their decarbonization goals. ​ ​ Backlog Backlog represents definitive agreements executed by the Company and our customers.
Our objective is to continue to improve our competitive position, including innovating in areas such as offering multiple platform solutions, and methods for producing clean hydrogen, solid oxide, and carbon separation and carbon capture in order to add value for customers looking for clean and renewable energy and to aid in their decarbonization goals.
This experience cannot be easily or quickly replicated and, combined with our trade secrets, proprietary processes and patents, safeguards our intellectual property rights. ​ As of October 31, 2023, we (excluding our subsidiaries) had 139 U.S. patents and 282 patents in other jurisdictions covering our fuel cell technology (in certain cases covering the same technology in multiple jurisdictions), with patents directed to various aspects of our carbonate technology, SOFC technology, PEM fuel cell technology and applications thereof.
This experience cannot be easily or quickly replicated and, combined with our trade secrets, proprietary processes and patents, safeguards our intellectual property rights. ​ As of October 31, 2024, we (excluding our subsidiaries) had 148 U.S. patents and 307 patents in other jurisdictions covering our fuel cell technology (in certain cases covering the same technology in multiple jurisdictions), with patents directed to various aspects of our carbonate technology, solid oxide fuel cell (“SOFC”) technology, proton exchange membrane (“PEM”) fuel cell technology and applications thereof.
For perspective, total shipments in fiscal year 2022 weighed approximately 6.2 million pounds, of which only 38.0 pounds, or 0.000908%, represented 3TG minerals, so the presence of these minerals is negligible.
For perspective, total shipments in fiscal year 2023 weighed approximately 4.6 million pounds, of which only 14.0 pounds, or 0.000299%, represented 3TG minerals, so the presence of these minerals is negligible.
The hydrogen can be stored as compressed gas, creating the ability to produce a virtually limitless supply. ​ The largest factor in the cost of electrolysis-produced hydrogen is the cost of electricity. Consequently, efficiency is one of the most effective ways to lower cost.
The hydrogen can be stored as compressed gas, creating the ability to produce a virtually limitless supply. ​ The largest factor in the cost of electrolysis-produced hydrogen is the cost of electricity. Consequently, efficiency is one of the most effective ways to lower cost. We believe our solid oxide platform is among the most efficient available electrolysis technologies.
As it relates to our fuel cell modules, these improvements center around delivering more uniform temperature distribution within the cell stack within the modules with the intent of improving output over the life of the modules to achieve the product’s expected design life.
As it relates to our fuel cell modules, these improvements center around delivering more uniform temperature distribution within the stack modules with the intent of improving output over the life of the modules to achieve the product’s expected design life. Continued extension of design life and output of our modules over time is a core research and development focus.
We report the revenue earned under these programs as Advanced Technologies contract revenues in our Consolidated Statements of Operations and Comprehensive Loss. ​ We have historically worked on technology development with various U.S. government departments and agencies, including the DOE, the Department of Defense, the Environmental Protection Agency, the Defense Advanced Research Projects Agency, the Office of Naval Research, and the National Aeronautics and Space Administration.
We report the revenue earned under these programs as Advanced Technologies contract revenues in our Consolidated Statements of Operations and Comprehensive Loss. ​ We have historically worked on technology development with various U.S. government departments and agencies, including the U.S.
We operate and maintain our project platforms for the life of the project regardless of the ownership structure. For all operating fuel cell platforms not operating under a PPA, customers enter into long-term service agreements with us, some of which have terms of up to 20 years.
For all operating fuel cell platforms not operating under a PPA, customers enter into long-term service agreements with us, some of which have terms of up to 20 years.
Lisowski received his Bachelor’s Degree in Communications and Business Administration at Western New England University and a Master’s Degree in Management, Global Supply Chain Integrations from Rensselaer Polytechnic Institute. ​ ​ ​ ​ ​ Anthony Leo Executive Vice President, Chief Technology Officer ​ 66 ​ Mr.
Lisowski received his Bachelor’s Degree in Communications and Business Administration at Western New England University and a Master’s Degree in Management, Global Supply Chain Integrations from Rensselaer Polytechnic Institute. ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Joshua Dolger Executive Vice President, General Counsel and Corporate Secretary ​ 50 ​ Mr.
We continue to innovate, and no patent expiration, either individually or in the aggregate, is expected to have any material impact on our current or anticipated operations. ​ Certain of our U.S. patents are the result of government-funded research and development programs, including our DOE programs.
(in certain cases covering the same technology in multiple jurisdictions) for carbonate fuel cell technology licensed from Fraunhofer IKTS. ​ 19 Table of Contents We continue to innovate, and no patent expiration, either individually or in the aggregate, is expected to have any material impact on our current or anticipated operations. ​ Certain of our U.S. patents are the result of government-funded research and development programs, including our DOE programs.
There are several primary elements to LCOE for our fuel cell projects, including: ● Capital cost; ● Operations and maintenance cost; and ● Fuel expense. Given the level of integration in our business model of manufacturing, installing and operating fuel cell power platforms, there are multiple areas and opportunities for cost reductions.
Given the level of integration in our business model of manufacturing, installing and operating fuel cell power platforms, there are multiple areas and opportunities for cost reductions.
(See the sections below entitled “Engineering, Procurement and Construction” and “Service and Warranty Agreements” for more information.) We maintain the long-term recurring service obligation and associated revenues running conterminous with the life of such projects. Historically, in the United States, customers or developers typically purchased our fuel cell power plants outright.
(See the sections below entitled “Engineering, Procurement and Construction” and “Service and Warranty Agreements” for more information.) We maintain the long-term recurring service obligation and associated revenues running conterminous with the life of such projects.
Our platforms are based on a range of technologies and target a variety of applications, each of which have incumbent and developing competitors. Several companies in the U.S. are engaged in fuel cell development, although, to our knowledge, we are the only domestic company engaged in manufacturing and deployment of stationary natural gas or biogas fueled carbonate fuel cells.
Several companies in the U.S. are engaged in fuel cell development, although, to our knowledge, we are the only domestic company engaged in manufacturing and deployment of stationary natural gas or biogas fueled carbonate fuel cells.
Finally, all of these other technologies are currently significant contributors to landfill waste following their useful life. ​ ​ 13 Table of Contents Product Platforms and Applications We are focused on using our proprietary technology to pursue the following five significant applications, each of which we believe is important to the global energy transition and to limiting climate change, reducing NOx, SOx, and particulate pollution, limiting noise pollution associated with traditional power generation and fostering more efficient utilization of land compared to traditional power generation and intermittent renewable energy platforms: • Distributed generation from carbonate and solid oxide platforms (commercially available); • Distributed hydrogen production using carbonate-based Tri-gen to co-produce power, hydrogen, and water (commercially available); • Distributed and large-scale hydrogen production using high efficiency solid oxide electrolysis cell (“SOEC”) systems (commercially available); • Carbon capture from external sources (under development) and carbon recovery and utilization enabling carbon capture utilization and sequestration (“CCUS”) (commercially available); and • Long duration energy storage utilizing reversible solid oxide fuel cells (“RSOFC”) which alternate between electrolysis mode (to produce and store hydrogen using input power) and fuel cell mode, regenerating power from the stored hydrogen (under development). ​ The attributes of our products include: ​ ● Sustainable : With the commercialization of our solid oxide platform, we are able to offer two highly differentiated high temperature electrochemical platforms.
We are focused on using our proprietary technology to pursue the following four significant applications, each of which we believe is important to the global energy transition and to limiting climate change, reducing NOx, SOx, and particulate pollution, limiting noise pollution associated with traditional power generation and fostering more efficient utilization of land compared to traditional power generation and intermittent renewable energy platforms: ​ ● Distributed generation from carbonate platforms (commercially available) and solid oxide modules (under development); ● Distributed and large-scale hydrogen production using high efficiency solid oxide electrolysis cell (“SOEC”) systems (under development) or our Tri-gen carbonate-based platform (commercially available); ● Carbon capture from external sources (under development) and carbon recovery and utilization enabling carbon capture utilization and sequestration (commercially available); and ● Long duration energy storage utilizing reversible solid oxide fuel cells, which alternate between electrolysis mode (to produce and store hydrogen using input power) and fuel cell mode, regenerating power from the stored hydrogen (under development). ​ 12 Table of Contents Product Efficiency and Effectiveness The electrical efficiency of our carbonate fuel cell solutions ranges from approximately 47% to 60% upon initial operations of our platforms depending on the configuration.
Clean energy sources that customers may consider beyond our solutions include products such as wind turbines, solar arrays, and hydro facilities, as well as a range of hydrogen and fuel cell solutions from both incumbent and developing competitors.
Clean energy sources that customers may consider beyond our solutions include products such as wind turbines, solar arrays, linear generators and hydro facilities, as well as a range of hydrogen and fuel cell solutions from both incumbent and developing competitors. 15 Table of Contents Our platforms are based on a range of technologies and target a variety of applications, each of which have incumbent and developing competitors.
Levelized Cost of Energy Our fuel cell projects deliver power at a rate comparable to pricing from the grid in our targeted markets. Policy programs that help to support adoption of clean distributed power generation often lead to below-grid pricing. We measure power costs by calculating the Levelized Cost of Energy (“LCOE”) over the life of the project.
Our patented power platforms are unique in their ability to run on biogas. ​ ​ Levelized Cost of Energy Our fuel cell projects deliver power at a rate comparable to pricing from the grid in our targeted markets. Policy programs that help to support adoption of clean distributed power generation often lead to below-grid pricing.
Additionally, through the deployment of our megawatt and sub-megawatt power generation platform solutions, we can deliver the benefits of clean, distributed power generation, including the desirable value stream of thermal energy, and avoid the need for massive, expensive, difficult to permit, long distance transmission infrastructure and the above ground risks that the traditional transmission grid creates. ​ CO 2 is also a valuable input ingredient in many products and processes.
In addition, we are focused on advancing the commercialization of our platform technologies to enable the use of pure hydrogen for baseload power generation, to perform electrolysis to convert water and electricity into hydrogen, and to isolate and remove CO 2 from external exhaust streams. ​ Additionally, through the deployment of our power generation platform solutions, we can deliver the benefits of clean, distributed power generation, including the desirable value stream of thermal energy, and avoid the need for massive, 9 Table of Contents expensive, difficult to permit, long distance transmission infrastructure and the above ground risks that the traditional transmission grid creates. ​ CO 2 is also a valuable input ingredient in many products and processes.
Our platforms are capable of delivering CO 2 for food and beverage use, pH balancing of water supply, extending the shelf life of food vital to global food supply and food security, as a binder in a number of materials from concrete to sustainable building materials and the production of synthetic fuels, polymers and other minerals. ​ See the section below entitled “Our Markets” for information regarding our existing and target markets . ​ Our Business Strategy ​ In 2019, we launched our “Powerhouse” strategy to strengthen our business, maximize operational efficiencies and position us for future growth.
Our platforms are capable of delivering CO 2 for food and beverage use, pH balancing of water supply, extending the shelf life of food vital to global food supply and food security, as a binder in a number of materials from concrete to sustainable building materials and the production of synthetic fuels, polymers and other minerals.
Our platforms have a direct impact on reducing our customers’ Scope 1 and Scope 2 emissions, thus lowering the global environmental footprint of baseload, or primary, power generation. However, our platforms are designed to go beyond power generation, delivering hydrogen, carbon recovery, carbon capture, water, and thermal energy in various applications.
Our platforms have a direct impact on reducing our customers’ Scope 1 and Scope 2 emissions, thus lowering the global environmental footprint of baseload, or primary, power generation.
Our carbon capture system is being designed to separate and concentrate CO 2 from the flue gases of natural gas, biomass or coal-fired power plants or other 17 Table of Contents industrial facilities as a side reaction that extracts and purifies the CO 2 in the flue gas during the power generation process and destroys approximately 70% of NOx emissions during the power generation process. ​ The production of additional baseload power during the carbon capture process, as opposed to consuming power, differentiates our carbon capture system from other forms of carbon capture offerings.
The carbon capture system is being designed to separate and concentrate CO 2 from the flue gases of natural gas, biomass or coal-fired power plants or other industrial facilities as a side reaction that extracts and purifies the CO 2 in the flue gas during the power generation process and destroys approximately 70% of NOx emissions during the power generation process. ​ ● Carbon Recovery and Utilization – In addition to the ability to capture carbon dioxide from an external source, we are adding the capability to our platforms to extract and purify carbon dioxide produced by the fuel cell power generation process.
For example, at a cost of $0.10/kWh for electricity, that difference results in a savings of approximately $1 to $1.50 per kg of hydrogen with our SOEC platform. We believe our solid oxide platform offers one of the best chances of achieving the $1 per kg levelized cost of hydrogen targeted by the U.S. Department of Energy by 2050.
We believe our solid oxide platform offers one of the best chances of achieving the $1 per kg levelized cost of hydrogen targeted by the U.S. Department of Energy by 2050.
Furthermore, recent regulatory changes are beginning to allow for distributed generation to directly inject power into distribution grids which we believe will serve to improve the availability and sustainability of power. ​ 29 Table of Contents Government Regulation Our Company and our products are subject to various federal, provincial, state and local laws and regulations relating to, among other things, land use, safe working conditions, handling and disposal of hazardous and potentially hazardous substances and emissions of pollutants into the atmosphere.
Government Regulation Our Company and our products are subject to various federal, provincial, state and local laws and regulations relating to, among other things, land use, safe working conditions, handling and disposal of hazardous and potentially hazardous substances and emissions of pollutants into the atmosphere.
Retaining PPAs affords us the full benefit of future cash flows under the PPAs, which are expected to be higher than if we sell the projects, although it requires more upfront capital investment and financing. As of October 31, 2023, our operating portfolio of retained projects totaled 43.7 MW with an additional 19.4 MW under development or construction.
Retaining ownership of PPAs affords us the full benefit of future cash flows under the PPAs, which are expected to be higher than if we sell the projects, although retaining ownership requires more upfront capital investment and financing.
Our proprietary technology also allows us to utilize on-site biogas, renewable natural gas or a hydrogen and natural gas blend, the application of which is rapidly expanding around the world, to fuel our platforms. ​ We market different configurations and applications of our platform to meet specific market needs, including: ​ • On-Site Power (also known as “Behind the Meter”): Customers benefit from improved power resilience, energy security from on-site power that reduces reliance on the electric grid in an environmentally responsible manner, and long-term electric and other value stream price certainty.
For harder to capture streams, such as natural gas power generation or industrial boiler capture, we can achieve similarly high capture levels but with reduced power output. ​ ​ Our Product Platform Applications – Current and Future Carbonate-Based Distributed Generation ​ Our proprietary, patented platforms generate electricity directly from fuel, such as hydrogen, hydrogen and natural gas blends, biogas, renewable natural gas, and natural gas. ​ We market different configurations and applications of our platform to meet specific market needs, including: ​ ● On-Site Power (also known as “Behind the Meter”): Customers benefit from improved power resilience, energy security from on-site power that reduces reliance on the electric grid in an environmentally responsible manner, and long-term electric and other value stream price certainty.
Financial markets worldwide have experienced heightened volatility and instability which may have a material adverse impact on our Company, our customers and our suppliers. ● Provisions of Delaware and Connecticut law and of our certificate of incorporation and by-laws may make a takeover more difficult.
Financial markets worldwide have experienced heightened volatility and instability which may have a material adverse impact on our Company, our customers and our suppliers. ● Our failure to meet the continued listing standards of The Nasdaq Global Market could result in a delisting of our common stock, which could limit investors’ ability to make transactions in our common stock and subject us to additional trading restrictions. ● Provisions of Delaware and Connecticut law and of our certificate of incorporation and by-laws may make a takeover more difficult.
This requires a simple modification to the fuel cell module that can be incorporated into new platforms as well as retrofitted for existing systems during stack replacements. Over time, as we replace fuel cell stacks in our deployed modules, we intend to integrate our carbon separation technology, making every platform receiving a module upgrade carbon separation ready.
This requires a simple modification to the fuel cell module that can be incorporated into new platforms as well as retrofitted for existing systems during stack replacements.
The ability to rapidly and safely execute installations minimizes high-cost construction period financing and can assist customers in certain situations when the commercial operations date for a project is time sensitive. ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Services and Warr anty Agreements We offer a comprehensive portfolio of services, including engineering, project management and installation, and long-term operating and maintenance programs, including trained technicians that remotely monitor and operate our platforms around the world, 24 hours a day and 365 days a year.
We offer a comprehensive portfolio of services, including engineering, project management and installation, and long-term operating and maintenance programs, including trained technicians that remotely monitor and operate our platforms around the world, 24 hours a day and 365 days a year.
Lisowski has served as the Company’s Vice President of Global Operations since 2018, and, from 2001 to 2018, held various other positions within the Company, including Vice President of Supply Chain from 2010 to 2018. Mr. Lisowski is a senior global operations leader with 27 years of progressive operations experience in technology-driven businesses.
Lisowski had served as the Company’s Executive Vice President and Chief Operating Officer since June 2019, and as the Company’s Vice President of Global Operations from January 2018 to June 2019. From 2001 to 2018, Mr. Lisowski held various other operations management positions within the Company, including Vice President of Supply Chain from 2010 to 2018. Mr.
Carbonate platforms use a mixture of reforming and electrolysis, while solid oxide platforms can be used for zero emission pure hydrogen electrolysis. ​ Our multi-featured platforms can be configured to provide a number of value streams, including electricity, hydrogen, high grade heat (including steam), water and CO 2 upgradable to food and beverage grade and/or usable in cement or other industrial products, and to concentrate and separate CO 2 from fossil-fueled industrial applications allowing the sequestration and/or utilization of the CO 2 . ​ See the section below entitled “Product Platforms and Applications” for more information. 9 Table of Contents Our Commitment to Sustainability As a company, we are committed to helping our customers reduce their environmental impact.
Our solid oxide platform can be used in electrolysis, which is the reverse of fuel cell operation – producing hydrogen from power and water. ​ Our multi-featured platforms can be configured to provide a number of value streams, including electricity, hydrogen, high grade heat (including steam), water and CO 2 upgradable to food and beverage grade and/or usable in cement or other industrial products, and to concentrate and separate CO 2 from fossil-fueled industrial applications allowing the sequestration and/or utilization of the CO 2 .
The warranty term in the U.S. is typically 15 months after shipment or 12 months after acceptance of our products. We accrue for estimated future warranty costs based on historical experience. ​ ​ ​ ​ ​ Competition The market for clean energy is highly competitive.
The warranty term in the U.S. is typically 15 months after shipment or 12 months after acceptance of our products. We accrue for estimated future warranty costs based on historical experience. ​ ​ Significant Developments in Government Activity For many countries around the world, 2024 has proven to be more tumultuous than the prior year.
Bishop received a Bachelor of Science in Accounting from Boston University and a MBA from the University of Connecticut. ​ ​ ​ ​ ​ Michael Lisowski Executive Vice President, Chief Operating Officer ​ 54 ​ Mr. Lisowski was appointed Executive Vice President and Chief Operating Officer in June 2019. Mr.
Bishop received his Bachelor of Science in Accounting from Boston University and a Masters of Business Administration from the University of Connecticut. ​ ​ ​ ​ ​ Michael Lisowski Executive Vice President, Strategic Partnerships ​ 55 ​ Mr. Lisowski was appointed Executive Vice President, Strategic Partnerships in April 2024. Prior to this, Mr.
The utilities and independent power producer market has historically been our largest market with customers that include utilities on the East and West coasts of the United States, such as UIL Holdings Corporation, Inc. (owned by Avangrid, Inc., a wholly owned subsidiary of Iberdrola), the Long Island Power Authority (“LIPA”) and Southern California Edison.
We market our clean energy solutions worldwide, with a longstanding presence in the United States, Europe and Korea, the largest developed fuel cell market. The utilities and independent power producer market has historically been our largest market with customers that include utilities on the East and West coasts of the United States, such as UIL Holdings Corporation, Inc.

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Item 1A. Risk Factors

Risk Factors — what could go wrong, per management

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Biggest changeIf we, or our intermediaries, fail to comply with the requirements of these laws and regulations, or similar laws of other countries, governmental authorities in the United States or elsewhere, as applicable, could seek to impose civil and/or criminal penalties, which could damage our reputation and have a material adverse effect on our business, financial condition and results of operations. 45 Table of Contents The Paycheck Protection Program loan received by us in 2020 and subsequently repaid by us in 2021 has resulted in an informal SEC inquiry into our financial disclosures and may subject us to challenges regarding qualification for the loan, enforcement actions, fines and penalties. ​ On April 20, 2020, we entered into a Paycheck Protection Program Promissory Note, dated April 16, 2020 (the “PPP Note”), evidencing a loan to the Company from Liberty Bank under the Coronavirus Aid, Relief, and Economic Security Act (the “ CARES Act”).
Biggest changeIf we, or our intermediaries, fail to comply with the requirements of these laws and regulations, or similar laws of other countries, governmental authorities in the United States or elsewhere, as applicable, could seek to impose civil and/or criminal penalties, which could damage our reputation and have a material adverse effect on our business, financial condition and results of operations. 37 Table of Contents Risks Related to Our Need for Additional Capital We will need to raise additional capital, and such capital may not be available on acceptable terms, if at all.
Provisions in our Certificate of Incorporation, as amended (“Certificate of Incorporation”), and Second Amended and Restated By-Laws (“By-laws”) and in Delaware and Connecticut corporate law may make it difficult and expensive for a third-party to pursue a tender offer, change in control or takeover attempt that is opposed by our management and board of directors.
Provisions in our Certificate of Incorporation, as amended (“Certificate of Incorporation”), and Third Amended and Restated By-Laws (“By-laws”) and in Delaware and Connecticut corporate law may make it difficult and expensive for a third-party to pursue a tender offer, change in control or takeover attempt that is opposed by our management and board of directors.
Given our commitment to ESG, we actively manage these issues and have established and publicly announced certain goals, commitments, and targets which we may refine or even expand further in the future. These goals, commitments, and targets reflect our current plans and aspirations and are not guarantees that we will be able to achieve them.
Given our commitment to ESG matters, we actively manage these issues and have established and publicly announced certain goals, commitments, and targets which we may refine or even expand further in the future. These goals, commitments, and targets reflect our current plans and aspirations and are not guarantees that we will be able to achieve them.
Evolving stakeholder expectations and our efforts to manage these issues, report on them, and accomplish our goals present numerous operational, regulatory, reputational, financial, legal, and other risks, any of which could have a material adverse impact, including on our reputation and stock price. ​ Such risks and uncertainties include: ​ • reputational harm, including damage to our relationships with customers, suppliers, investors, governments, or other stakeholders; • adverse impacts on our ability to sell and manufacture products; • the success of our collaborations with third parties; • increased risk of litigation, investigations, or regulatory enforcement action; • unfavorable ESG ratings or investor sentiment; • diversion of resources and increased costs to control, assess, and report on ESG metrics; • our ability to achieve our goals, commitments, and targets within the timeframes announced; • access to and increased cost of capital; and • adverse impacts on our stock price. ​ Any failure, or perceived failure, to meet evolving stakeholder expectations and industry standards or achieve our ESG goals, commitments, and targets could have an adverse effect on our business, results of operations, financial condition, and stock price. 39 Table of Contents ​ Risks Related to Sales of our Products We derive significant revenue from contracts awarded through competitive bidding processes involving substantial costs and risks.
Evolving stakeholder expectations and our efforts to manage these issues, report on them, and accomplish our goals present numerous operational, regulatory, reputational, financial, legal, and other risks, any of which could have a material adverse impact, including on our reputation and stock price. ​ Such risks and uncertainties include: ​ • reputational harm, including damage to our relationships with customers, suppliers, investors, governments, or other stakeholders; • adverse impacts on our ability to sell and manufacture products; • the success of our collaborations with third parties; • increased risk of litigation, investigations, or regulatory enforcement action; • unfavorable ESG ratings or investor sentiment; • diversion of resources and increased costs to control, assess, and report on ESG metrics; • our ability to achieve our goals, commitments, and targets within the timeframes announced; • access to and increased cost of capital; and • adverse impacts on our stock price. ​ Any failure, or perceived failure, to meet evolving stakeholder expectations and industry standards or achieve our ESG goals, commitments, and targets could have an adverse effect on our business, results of operations, financial condition, and stock price. ​ Risks Related to Sales of our Products We derive significant revenue from contracts awarded through competitive bidding processes involving substantial costs and risks.
Our European service activities are also operated out of this location. ​ Our manufacturing and research and development facility in Calgary, Alberta, Canada is focused on the engineering and development of the Company’s SOFC and SOEC technologies.
Our European service activities are also operated out of this location. ​ Our manufacturing and research and development facility in Calgary, Alberta, Canada is focused on the engineering and development of our SOFC and SOEC technologies.
Higher energy costs result in increases in operating expenses at our manufacturing facilities, in the expense of shipping materials to our facilities, and in the expense of operating our projects for which we procure natural gas, all of which may in turn adversely affect our business, financial condition, and results of operations. ​ Failure to meet Environmental, Social, and Governance (“ESG”) expectations or standards or to achieve our ESG goals could adversely affect our business, results of operations, financial condition, and stock price. ​ In recent years, there has been an increased focus from stakeholders on ESG matters, including greenhouse gas emissions and climate-related risks, renewable energy, water stewardship, waste management, diversity, equality and inclusion, responsible sourcing and supply chain, human rights, and social responsibility.
Higher energy costs result in increases in operating expenses at our manufacturing facilities, in the expense of shipping materials to our facilities, and in the expense of operating our projects for which we procure natural gas, all of which may in turn adversely affect our business, financial condition, and results of operations. ​ 30 Table of Contents Failure to meet Environmental, Social, and Governance (“ESG”) expectations or standards or to achieve our ESG goals could adversely affect our business, results of operations, financial condition, and stock price. ​ In recent years, there has been an increased focus from stakeholders on ESG matters, including greenhouse gas emissions and climate-related risks, renewable energy, water stewardship, waste management, diversity, equality and inclusion, responsible sourcing and supply chain, human rights, and social responsibility.
Our growing portfolio of project assets used to generate and sell power under PPAs and utility tariff programs exposes us to operational risks and uncertainties, including, among other things, lost revenues due to prolonged outages, replacement equipment costs, risks 40 Table of Contents associated with facility start-up operations, failures in the availability or acquisition of fuel (including natural gas and renewable natural gas), the impact of severe adverse weather conditions, natural disasters, terrorist attacks, cybersecurity attacks, risks of property damage or injury from energized equipment, availability of adequate water resources and ability to intake and discharge water, use of new or unproven technology, fuel commodity price risk and fluctuating market prices, and lack of alternative available fuel sources.
Our growing portfolio of project assets used to generate and sell power under PPAs and utility tariff programs exposes us to operational risks and uncertainties, including, among other things, lost revenues due to prolonged outages, replacement equipment costs, risks associated with facility start-up operations, failures in the availability or acquisition of fuel (including natural gas and renewable natural gas), the impact of severe adverse weather conditions, natural disasters, terrorist attacks, cybersecurity attacks, risks of property damage or injury from energized equipment, availability of adequate water resources and ability to intake and discharge water, use of new or unproven technology, fuel commodity price risk and fluctuating market prices, and lack of alternative available fuel sources.
The development of a market for our products may be affected by many factors that are out of our control, including: ● the cost competitiveness of our fuel cell products including availability and output expectations and total cost of ownership; ● the future costs of natural gas, renewable natural gas (biofuels), and other fuels used by our fuel cell products; ● customer reluctance to try a new product; ● the market for distributed generation, hydrogen, carbon capture and storage and government policies that affect those markets; ● government incentives, mandates or other programs favoring zero carbon energy sources; ● local permitting and environmental requirements; ● customer preference for non-fuel based technologies; and ● the emergence of newer, more competitive technologies and products.
The development of a market for our products may be affected by many factors that are out of our control, including: ● the cost competitiveness of our fuel cell products including availability and output expectations and total cost of ownership; ● the future costs of natural gas, renewable natural gas (biofuels), and other fuels used by our fuel cell products; ● customer reluctance to try a new product; ● the market for distributed generation, hydrogen, carbon capture and storage and government policies that affect those markets; ● government incentives, mandates or other programs favoring zero carbon energy sources; ● local permitting and environmental requirements; ● customer preference for non-fuel based technologies; and 33 Table of Contents ● the emergence of newer, more competitive technologies and products.
We also contract with private sector companies under certain Advanced Technologies contracts to develop strategically important and complementary offerings. ​ Generally, our privately funded Advanced Technologies contracts, including our EMTEC Joint Development Agreement, contracted demonstration projects undertaken with EMTEC or other ExxonMobil affiliates, and our government research and development contracts are subject to the risk of termination at the convenience of the contracting party and may contain certain milestones and deliverables which we may not be able to meet if actual results or the timing of deliverables differ materially from our original estimates or contractually agreed timelines.
We also contract with private sector companies under certain Advanced Technologies contracts to develop strategically important and complementary offerings. ​ Generally, our privately funded Advanced Technologies contracts, including our EMTEC Joint Development Agreement, contracted demonstration projects undertaken with EMTEC or other ExxonMobil affiliates, and our government research and development contracts are subject to the risk of termination at the convenience of the contracting party and may contain 29 Table of Contents certain milestones and deliverables which we may not be able to meet if actual results or the timing of deliverables differ materially from our original estimates or contractually agreed timelines.
If any of our project assets are not considered commercially viable or costs are not deemed to be recoverable, we would be required to record a charge reflecting the impairment of such project assets. ​ Our Advanced Technologies contracts are subject to the risk of termination by the contracting party and we may not realize the full amounts allocated under some contracts due to the lack of Congressional appropriations or early termination. ​ 37 Table of Contents A portion of our revenues has been derived from long-term cooperative agreements and other contracts with the DOE and other U.S. government agencies.
If any of our project assets are not considered commercially viable or costs are not deemed to be recoverable, we would be required to record a charge reflecting the impairment of such project assets. ​ Our Advanced Technologies contracts are subject to the risk of termination by the contracting party and we may not realize the full amounts allocated under some contracts due to the lack of Congressional appropriations or early termination. ​ A portion of our revenues has been derived from long-term cooperative agreements and other contracts with the DOE and other U.S. government agencies.
We face numerous challenges in our international expansion, including the strain any future growth may place on our management, service and operations teams and financial infrastructure, unexpected changes in regulatory requirements and other geopolitical risks, fluctuations in currency exchange rates, longer accounts receivable requirements and collections, greater bonding and security requirements, difficulties in managing international operations, potentially adverse tax consequences, restrictions on repatriation of any earnings and the burdens of complying 51 Table of Contents with a wide variety of international laws.
We face numerous challenges in our international expansion, including the strain any future growth may place on our management, service and operations teams and financial infrastructure, unexpected changes in regulatory requirements and other geopolitical risks, fluctuations in currency exchange rates, longer accounts receivable requirements and collections, greater bonding and security requirements, difficulties in managing international operations, potentially adverse tax consequences, restrictions on repatriation of any earnings and the burdens of complying with a wide variety of international laws.
Our results of operations could be adversely affected by economic and political conditions globally and the effects of these conditions on our customers’ businesses and levels of business activity. ​ Economic and political events in 2022 and 2023 have altered the landscape in which we and other U.S. companies operate in a variety of ways.
Our results of operations could be adversely affected by economic and political conditions globally and the effects of these conditions on our customers’ businesses and levels of business activity. ​ Economic and political events in 2023 and 2024 have altered the landscape in which we and other U.S. companies operate in a variety of ways.
This could have an adverse impact on our revenue and cash flow and our ability to complete construction of a project. We have signed product sales contracts, EPCs, PPAs and long-term service agreements with customers subject to contractual, technology, operating, commodity (i.e. natural gas) and fuel pricing risks as well as market conditions that may affect our operating results.
This could have an adverse impact on our revenue and cash flow and our ability to complete construction of a project. 31 Table of Contents We have signed product sales contracts, EPCs, PPAs and long-term service agreements with customers subject to contractual, technology, operating, commodity (i.e. natural gas) and fuel pricing risks as well as market conditions that may affect our operating results.
Other than fuel cell developers, we must also compete with companies that manufacture combustion-based distributed power equipment, including various engines and turbines, and have well-established manufacturing, distribution, operating 41 Table of Contents and cost features. Electrical efficiency of these products can be competitive with our power plants in certain applications.
Other than fuel cell developers, we must also compete with companies that manufacture combustion-based distributed power equipment, including various engines and turbines, and have well-established manufacturing, distribution, operating and cost features. Electrical efficiency of these products can be competitive with our power plants in certain applications.
As a result, we are subject to currency translation and transaction risk. Changes in exchange rates between foreign currencies and the U.S. dollar could affect our net sales and cost of sales and could result in exchange gains or losses. We cannot accurately predict the impact of future exchange rate fluctuations on our results of operations.
As a result, we are subject to currency translation and transaction risk. Changes in exchange 43 Table of Contents rates between foreign currencies and the U.S. dollar could affect our net sales and cost of sales and could result in exchange gains or losses. We cannot accurately predict the impact of future exchange rate fluctuations on our results of operations.
We have, from time to time, sought financing in the public markets in order to fund operations and will continue to do so. Our future ability to obtain such financing could be impaired by a variety of factors, including, but not limited to, the price of our common stock, our lack of available shares and general market conditions.
We have, from time to time, sought financing in the public markets in order to fund operations and will continue to do so. Our future ability to obtain such financing could be impaired by a variety of factors, including, but not limited to, the price of our common stock and general market conditions.
The significant volatility in the U.S. and international stock 50 Table of Contents markets causes significant uncertainty and may result in an increase in the return required by investors in relation to the risk of such projects. ● If we, our customers or our suppliers cannot obtain financing under favorable terms, our business may be negatively impacted.
The significant volatility in the U.S. and international stock markets causes significant uncertainty and may result in an increase in the return required by investors in relation to the risk of such projects. ● If we, our customers or our suppliers cannot obtain financing under favorable terms, our business may be negatively impacted.
In such cases, the market price of our common stock could decline, and you may lose all or part of your investment. ​ 35 Table of Contents Risks Related to Our Business, Industry and Supply Chain We have incurred losses and anticipate continued losses and negative cash flows.
In such cases, the market price of our common stock could decline, and you may lose all or part of your investment. ​ Risks Related to Our Business, Industry and Supply Chain We have incurred losses and anticipate continued losses and negative cash flows.
Project assets and property, plant and equipment impairment charges totaled approximately $2.4 million, $1.8 million and $5.0 million for the fiscal years ended October 31, 2023, 2022 and 2021, respectively. ​ As required by accounting rules, we review our goodwill for impairment at least annually as of July 31 or more frequently if facts and circumstances indicate that it is more likely than not that the fair value of a reporting unit that has goodwill is less than its carrying value.
Project assets and property, plant and equipment impairment charges totaled approximately $1.3 million, $2.4 million and $1.8 million for the fiscal years ended October 31, 2024, 2023 and 2022, respectively. ​ As required by accounting rules, we review our goodwill for impairment at least annually as of July 31 or more frequently if facts and circumstances indicate that it is more likely than not that the fair value of a reporting unit that has goodwill is less than its carrying value.
The occurrence of defects has also caused and may continue to cause us to incur significant warranty, support and repair costs in excess of our estimates, could divert the attention of our engineering personnel from our product development efforts, and could harm our relationships with our customers.
The occurrence of defects has also caused and may continue to cause us to incur significant warranty, support and repair costs in excess of our estimates, could divert the 32 Table of Contents attention of our engineering personnel from our product development efforts, and could harm our relationships with our customers.
Given that some of our product configurations run on fossil fuels, we may be negatively impacted by CO2-related changes in applicable laws, regulations, ordinances, rules or the requirements of the incentive programs on which we and our customers currently rely.
Given that some of our product configurations run on fossil fuels, we may be negatively impacted by CO 2- related changes in applicable laws, regulations, ordinances, rules or the requirements of the incentive programs on which we and our customers currently rely.
Although we incorporate a robust design and redundant safety features 42 Table of Contents in our power plants, have established comprehensive safety, maintenance, and training programs, follow third-party certification protocols, codes and standards, and do not store natural gas or hydrogen at our power plants, we cannot guarantee that there will not be accidents.
Although we incorporate a robust design and redundant safety features in our power plants, have established comprehensive safety, maintenance, and training programs, follow third-party certification protocols, codes and standards, and do not store natural gas or hydrogen at our power plants, we cannot guarantee that there will not be accidents.
Such right and license is sublicensable to third parties performing work for or with EMTEC or its affiliates, but shall not otherwise be sublicensable.
Such right and license is sublicensable to third parties performing work for or with EMTEC or its affiliates, but is not otherwise sublicensable.
We cannot assure you that 47 Table of Contents these agreements will not be breached, that we will have adequate remedies for any breach or that such persons or institutions will not assert rights to intellectual property arising out of these relationships.
We cannot assure you that these agreements will not be breached, that we will have adequate remedies for any breach or that such persons or institutions will not assert rights to intellectual property arising out of these relationships.
Furthermore, the conversion rate applicable to the Series B Preferred Stock is subject to additional adjustment upon the occurrence of certain events. The Series B Preferred Stock ranks senior to our common stock with respect to payments upon liquidation, dividends, and distributions.
Furthermore, the conversion rate applicable to the Series B Preferred Stock is subject to additional adjustment upon the occurrence of certain events. 41 Table of Contents The Series B Preferred Stock ranks senior to our common stock with respect to payments upon liquidation, dividends, and distributions.
We believe that our businesses are operating in compliance in all material respects with applicable environmental laws; however, these laws and regulations have changed frequently in the past and it is reasonable to expect additional and more stringent changes in the future.
We believe that our businesses are operating in compliance in all material respects with applicable environmental laws; however, these laws and regulations have changed frequently 36 Table of Contents in the past and it is reasonable to expect additional and more stringent changes in the future.
These regulations could 44 Table of Contents limit the growth in the use of carbonate fuel cell products, decrease the acceptance of fuel cells as a commercial product and increase our costs and, therefore, the price of our products.
These regulations could limit the growth in the use of carbonate fuel cell products, decrease the acceptance of fuel cells as a commercial product and increase our costs and, therefore, the price of our products.
(in certain cases covering the same technology in multiple jurisdictions) for carbonate fuel cell technology licensed from Fraunhofer IKTS. ​ Some of our intellectual property is not covered by any patent or patent application and includes trade secrets and other know-how that is not able to be patented, particularly as it relates to our manufacturing processes and engineering design.
(in certain cases covering the same technology in multiple jurisdictions) for carbonate fuel cell technology licensed from Fraunhofer IKTS. ​ Some of our intellectual property is not covered by any patent or patent application and includes trade secrets and other confidential and/or proprietary know-how, particularly as it relates to our manufacturing processes and engineering design.
We depend on POSCO Energy and EMTEC to also protect our intellectual property rights, but we cannot assure you that POSCO Energy or EMTEC will do so . ​ As of October 31, 2023, we (excluding our subsidiaries) had 139 U.S. patents and 282 patents in other jurisdictions covering our fuel cell technology (in certain cases covering the same technology in multiple jurisdictions) , with patents directed to various aspects of our SureSource technology, SOFC technology, PEM fuel cell technology and applications thereof.
We depend on POSCO Energy and EMTEC to also protect our intellectual property rights, but we cannot assure you that POSCO Energy or EMTEC will do so . ​ As of October 31, 2024, we (excluding our subsidiaries) had 148 U.S. patents and 307 patents in other jurisdictions covering our fuel cell technology (in certain cases covering the same technology in multiple jurisdictions), with patents directed to various aspects of our carbonate technology, SOFC technology, PEM fuel cell technology and applications thereof.
Risks Related to Our Common and Preferred Stock Our stock price has been and could remain volatile. ​ The market price for our common stock has been and may continue to be volatile and subject to extreme price and volume fluctuations in response to market and other factors, including the following, some of which are beyond our control: ● failure to meet commercialization milestones; ● failure to win contracts through competitive bidding processes, or the loss of project awards previously announced or anticipated prior to entering into definitive contracts; ● the loss of a major customer or a contract; ● variations in our quarterly operating results from the expectations of securities analysts or investors; ● downward revisions in securities analysts’ estimates or changes in general market conditions; ● changes in the securities analysts that cover us or failure to regularly publish reports; ● announcements of technological innovations or new products or services by us or our competitors; ● announcements by us or our competitors of significant acquisitions, strategic partnerships, joint ventures or capital commitments; 48 Table of Contents ● additions or departures of key personnel; ● investor perception of our industry or our prospects; ● insider selling or buying; ● demand for our common stock; ● dilution from issuances of our common stock; ● general market trends or preferences for non-fueled resources; ● pandemics, or any public health or safety issues in the regions where we operate; ● general technological or economic trends; and ● changes in the United States or foreign political environment and the passage of laws, including, tax, environmental or other laws, affecting the product development business.
These “march-in” rights permit the U.S. government to take title to these patents and license the patented technology to third parties if the contractor fails to utilize the patents. 39 Table of Contents Risks Related to Our Common and Preferred Stock Our stock price has been and could remain volatile. ​ The market price for our common stock has been and may continue to be volatile and subject to extreme price and volume fluctuations in response to market and other factors, including the following, some of which are beyond our control: ● failure to meet commercialization milestones; ● failure to win contracts through competitive bidding processes, or the loss of project awards previously announced or anticipated prior to entering into definitive contracts; ● the loss of a major customer or a contract; ● variations in our quarterly operating results from the expectations of securities analysts or investors; ● downward revisions in securities analysts’ estimates or changes in general market conditions; ● changes in the securities analysts that cover us or failure to regularly publish reports; ● announcements of technological innovations or new products or services by us or our competitors; ● announcements by us or our competitors of significant acquisitions, strategic partnerships, joint ventures or capital commitments; ● additions or departures of key personnel; ● investor perception of our industry or our prospects; ● insider selling or buying; ● demand for our common stock; ● dilution from issuances of our common stock; ● general market trends or preferences for non-fueled resources; ● pandemics or any public health or safety issues in the regions where we operate; ● general technological or economic trends; and ● changes in the United States or foreign political environment and the passage of laws, including, tax, environmental or other laws, affecting the product development business.
If a sufficient market fails to develop or develops more slowly than we anticipate, we may be unable to recover the losses we will have incurred in the development of our products, and we may never achieve profitability. We must complete development of our new products and develop additional commercially viable products in order to achieve our long-term revenue targets.
If a sufficient market fails to develop or develops more slowly than we anticipate, we may be unable to recover the losses we will have incurred in the development of our products, and we may never achieve profitability. We must develop additional commercially viable products in order to achieve profitability.
A share of our Series B Preferred Stock may be converted at any time, at the option of the holder, into 0.5910 shares of our common stock (which is equivalent to an initial conversion price of $1,692 per share), plus cash in lieu of fractional shares.
A share of our Series B Preferred Stock may be converted at any time, at the option of the holder, into 0.0197 shares of our common stock (which is equivalent to an initial conversion price of $50,760 per share), plus cash in lieu of fractional shares.
If we are unable to enter into tax equity financing agreements with attractive pricing terms, or at all, we may not be able to obtain the capital needed to finance the build out of our generation assets which would impact our overall liquidity and our business, financial condition and results of operations. ​ 36 Table of Contents Unanticipated increases or decreases in business growth may result in adverse financial consequences for us.
If we are unable to enter into tax equity financing agreements with attractive pricing terms, or at all, we may not be able to obtain the capital needed to finance the build out of our generation assets which would impact our overall liquidity and our business, financial condition and results of operations. ​ Unanticipated increases or decreases in business growth have resulted and may continue to result in adverse consequences to our financial condition and business strategy.
As of October 31, 2023, Versa also had 9 pending U.S. patent applications and 26 patent applications pending in other jurisdictions. In addition, as of October 31, 2023, our subsidiary, FuelCell Energy Solutions, GmbH, had license rights to 2 U.S. patents and 7 patents outside the U.S.
As of October 31, 2024, Versa also had 13 pending U.S. patent applications and 30 patent applications pending in other jurisdictions. In addition, as of October 31, 2024, our subsidiary, FuelCell Energy Solutions, GmbH, had license rights to 2 U.S. patents and 7 patents outside the U.S.
If we do not raise additional capital, our business could fail or be materially and adversely affected. The implementation of our business plan and strategy requires additional capital to fund operations as well as investment by us in project assets.
If we do raise additional capital utilizing equity, existing stockholders will suffer dilution. If we do not raise additional capital, our business could fail or be materially and adversely affected. The implementation of our business plan and strategy requires additional capital to fund operations as well as investment by us in project assets.
If we experience delays in meeting our development goals (including manufacturing expansion) for these products, these products exhibit technical defects, or we are unable to meet cost or performance goals with respect to these products, including goals for power output, hydrogen production, rates of carbon capture, useful life and reliability, then our ability to generate revenue and achieve profitability from sales of these new products will be delayed or may not occur at all.
If we are unable to meet cost or performance goals with respect to these products once commercialized, including goals for power output, hydrogen production, rates of carbon capture, useful life and reliability, then our ability to generate revenue and achieve profitability from sales of these new products will be delayed or may not occur at all.
Violation or non-compliance with any of these laws or regulations, contractual requirements relating to data security and privacy, or our own privacy and security policies, either intentionally or unintentionally, or through the acts of intermediaries could have a material adverse effect on our brand, reputation, 43 Table of Contents business, financial condition and results of operations, as well as subject us to significant fines, litigation losses, third-party damages and other liabilities.
Violation or non-compliance with any of these laws or regulations, contractual requirements relating to data security and privacy, or our own privacy and security policies, either intentionally or unintentionally, or through the acts of intermediaries could have a material adverse effect on our brand, reputation, business, financial condition and results of operations, as well as subject us to significant fines, litigation losses, third-party damages and other liabilities. 35 Table of Contents Tax, Accounting, Compliance and Regulatory Risks We are required to maintain effective internal control over financial reporting.
The closing price of our common stock on December 14, 2023 was $1.56 per share. There can be no assurance that the current stock price will be maintained, and it is possible that our stock price could drop significantly.
The closing price of our common stock on December 23, 2024 was $11.18 per share. There can be no assurance that the current stock price will be maintained, and it is possible that our stock price could drop significantly.
In addition, our supply chain has been, and in the future could be, adversely affected by the COVID-19 pandemic or other pandemics, which may create global shipping and logistics challenges.
In addition, our supply chain was adversely affected by the COVID-19 pandemic, and in the future could be adversely affected by pandemics or other widespread adverse public health events, which may create global shipping and logistics challenges.
The profitable commercialization of our products depends on our ability to reduce the costs of our products, and we cannot assure you that we will be able to sufficiently reduce these costs to achieve profitability.
The profitable commercialization of our products depends on our ability to reduce the costs of our products, and there can be no assurance that we will be able to sufficiently reduce these costs to achieve profitability.
As of October 31, 2023, we also had 34 patent applications pending in the U.S. and 98 patent applications pending in other jurisdictions. As of October 31, 2023, our subsidiary, Versa Power Systems, Ltd. (“Versa”), had 24 U.S. patents and 86 international patents covering SOFC technology (in certain cases covering the same technology in multiple jurisdictions) .
As of October 31, 2024, we also had 28 patent applications pending in the U.S. and 86 patent applications pending 38 Table of Contents in other jurisdictions. As of October 31, 2024, our subsidiary, Versa Power Systems, Ltd. (“Versa”), had 19 U.S. patents and 68 international patents covering SOFC technology (in certain cases covering the same technology in multiple jurisdictions).
The terms of our Series B Preferred Stock also provide rights to their holders that could negatively impact us. Holders of the Series B Preferred Stock are entitled to receive cumulative dividends at the rate of $50 per share per year, payable either in cash or in shares of our common stock.
Holders of the Series B Preferred Stock are entitled to receive cumulative dividends at the rate of $50 per share per year, payable either in cash or in shares of our common stock.
Any accidents involving our products or other hydrogen-using products could materially impede widespread market acceptance and demand for our products. In addition, we might be held responsible for damages beyond the scope of our insurance coverage. We also cannot predict whether we will be able to maintain adequate insurance coverage on acceptable terms.
Any accidents involving our products or other hydrogen-using products could materially impede widespread market acceptance and demand for our products. In addition, we might be held responsible for damages beyond the scope of our insurance coverage.
Alternatively, if a court were to find the choice of forum provision contained in our By-laws to be inapplicable or unenforceable in such an action, we may incur additional costs associated with resolving such action in other jurisdictions, which could adversely affect our business and financial condition. 49 Table of Contents The rights of our Series B Preferred Stock could negatively impact our cash flows and dilute the ownership interest of our stockholders.
Alternatively, if a court were to find the choice of forum provision contained in our By-laws to be inapplicable or unenforceable in such an action, we may incur additional costs associated with resolving such action in other jurisdictions, which could adversely affect our business and financial condition.
Risks Related to Privacy, Data Protection and Cybersecurity We are increasingly dependent on information technology, and disruptions, failures or security breaches of our information technology infrastructure could have a material adverse effect on our operations and the operations of our power plant platforms.
We also cannot predict whether we will be able to maintain adequate insurance coverage on acceptable terms. 34 Table of Contents Risks Related to Privacy, Data Protection and Cybersecurity We are increasingly dependent on information technology, and disruptions, failures or security breaches of our information technology infrastructure could have a material adverse effect on our operations and the operations of our power plant platforms.
In addition, effective as of June 11, 2019, we entered into the EMTEC License Agreement, pursuant to which we agreed, subject to the terms of the EMTEC License Agreement, to grant EMTEC and its affiliates a non-exclusive, worldwide, fully paid, perpetual, irrevocable, non-transferrable license and right to use our patents, data, know-how, improvements, equipment designs, methods, processes and the like to the extent it is useful to research, develop, and commercially exploit carbonate fuel cells in applications in which the fuel cells concentrate carbon dioxide from industrial and power sources and for any other purpose attendant thereto or associated therewith.
Pursuant to the EMTEC License Agreement, we granted EMTEC and its affiliates a non-exclusive, worldwide, fully-paid, perpetual, irrevocable, non-transferable license and right to use our patents filed on or before April 30, 2021, and any data, know-how, improvements, equipment designs, methods, processes and the like provided directly by us or our affiliates to EMTEC or its affiliates under any agreement or otherwise, on or before April 30, 2021, to the extent it is useful to research, develop and commercially exploit carbonate fuel cells in applications in which the fuel cells concentrate carbon dioxide from external industrial and power sources and for any other purpose attendant thereto or associated therewith.
In addition, our cost reduction strategy relies on advancements in our manufacturing process, global competitive sourcing, engineering design, reducing the cost of capital and technology improvements (including stack life and projected power output). Failure to achieve our cost reduction targets could have a material adverse effect on our results of operations and financial condition.
In addition, our cost reduction strategy relies on advancements in our manufacturing process, global competitive sourcing, engineering design, reducing the cost of capital and technology improvements (including stack life and projected power output).
If our business does not grow as quickly as we expect, our existing and planned manufacturing facilities would, in part, represent excess capacity for which we may not recover the cost.
For more information about our restructuring plan, please see Part II, Item 8, Note 4 — Restructuring and Note 22 — Subsequent Events. ​ If our business does not grow as quickly as we expect, our existing and planned manufacturing facilities would, in part, represent excess capacity for which we may not recover the cost.
In that circumstance, our revenues may be inadequate to support our committed costs and our planned growth, and our gross margins and business strategy would be adversely affected. ​ If our goodwill and other indefinite-lived intangible assets and long-lived assets (including project assets) become impaired, we may be required to record a significant charge to operations. ​ We have recorded significant impairment charges, and may in the future be required to record significant impairment charges, to operations in our financial statements should we determine that our goodwill, other indefinite-lived intangible assets (i.e., in process research and development (“IPR&D”)) and other long-lived assets (i.e., project assets, property, plant and equipment and amortizing intangible assets) are impaired.
If our business grows more quickly than we anticipate, our existing and planned manufacturing facilities may become inadequate and we may need to seek out new or additional space, or retrofit or further equip our existing facilities, at considerable cost to us. ​ If our goodwill and other indefinite-lived intangible assets and long-lived assets (including project assets) become impaired, we may be required to record a significant charge to operations. ​ We have recorded significant impairment charges, and may in the future be required to record significant impairment charges, to operations in our financial statements should we determine that our goodwill, other indefinite-lived intangible assets (i.e., in process research and development (“IPR&D”)) and other long-lived assets (i.e., project assets, property, plant and equipment and amortizing intangible assets) are impaired.
In addition, our SureSource products operate at high temperatures and use corrosive carbonate material, which could expose us to potential liability claims.
Although our platforms do not combust fuels for the generation of electricity, the fuels we use are combustible and may be toxic. In addition, our SureSource products operate at high temperatures and use corrosive carbonate material, which could expose us to potential liability claims.
In addition, downturns in the worldwide economy, due to inflation, geopolitics, major central bank policy actions including interest rate increases, public health crises, or other factors could also adversely affect our business.
Should our customers be impacted by these pressures, it could result in delays in purchasing decisions which could impact future sales of our products and our results of operations. 42 Table of Contents In addition, downturns in the worldwide economy, due to inflation, geopolitics, major central bank policy actions including interest rate increases, public health crises, or other factors could also adversely affect our business.
Failure to protect our existing intellectual property rights may result in the loss of our exclusivity or the right to use our technologies.
Risks Related to our Intellectual Property and Technology Licenses We depend on our intellectual property, and our failure to protect that intellectual property could adversely affect our future growth and success. Failure to protect our existing intellectual property rights may result in the loss of our exclusivity or the right to use our technologies.
Tax, Accounting, Compliance and Regulatory Risks We are required to maintain effective internal control over financial reporting. In a prior fiscal year, our management identified a material weakness in our internal control over financial reporting.
In a prior fiscal year, our management identified a material weakness in our internal control over financial reporting.
If we become involved in securities class action litigation in the future, it could result in substantial costs and diversion of management’s attention and resources and could harm our stock price, business prospects, results of operations and financial condition.
If we become involved in securities class action litigation in the future, it could result in substantial costs and diversion of management’s attention and resources and could harm our stock price, business prospects, results of operations and financial condition. 40 Table of Contents Our failure to meet the continued listing standards of The Nasdaq Global Market could result in a delisting of our common stock, which could limit investors’ ability to make transactions in our common stock and subject us to additional trading restrictions.
In fiscal year 2022, we established new target revenues to be met by the end of fiscal year 2025 and the end of fiscal year 2030. In developing these revenue targets, we assumed the successful commercialization of our SOEC, SOFC and carbon capture products.
In fiscal year 2022, we provided aspirational long-term revenue targets to be met by the end of fiscal year 2025 and fiscal year 2030. In developing these revenue targets, we made certain timing assumptions regarding, among other things, the development, commercialization and market adoption timelines of our SOEC, SOFC and carbon capture products.
If such events occur and we are unable to pass these costs on to our customers or timely complete projects, we may experience reduced revenue and other adverse impacts on our business, results of operations and financial condition. ​ 38 Table of Contents Our business and operations may be adversely affected by new outbreaks of COVID-19 variants or other outbreaks of contagious diseases.
If such events occur and we are unable to pass these costs on to our customers or timely complete projects, we may experience reduced revenue and other adverse impacts on our business, results of operations and financial condition. ​ An increase in energy costs may materially adversely affect our business, financial condition, and results of operations. ​ Our results of operations can be directly affected by volatility in the cost and availability of energy, which is subject to global supply and demand and other factors beyond our control.
In addition, if additional funds are not secured in the future, we will have to modify, reduce, defer or eliminate parts of our present and anticipated future projects, or sell some or all of our assets. 46 Table of Contents Risks Related to our Intellectual Property and Technology Licenses We depend on our intellectual property, and our failure to protect that intellectual property could adversely affect our future growth and success.
If we cannot raise additional funds when we need them, our business and prospects could fail or be materially and adversely affected. In addition, if additional funds are not secured in the future, we will have to modify, reduce, defer or eliminate parts of our present and anticipated future projects, or sell some or all of our assets.
Our ability to make scheduled payments of principal and interest and other required repayments depends on our future performance, which is subject to economic, financial, competitive and other factors beyond our control. Our business may not generate cash flows from operations in the future sufficient to service our debt and make necessary capital expenditures.
Our business may not generate cash flows from operations in the future sufficient to service our debt and make necessary capital expenditures.
Our products use inherently dangerous, flammable fuels, operate at high temperatures and use corrosive carbonate material, each of which could subject our business to product liability claims. Our business exposes us to potential product liability claims that are inherent in products that use hydrogen.
For more information about our restructuring plan, please see Part II, Item 8, Note 4 — Restructuring and Note 22 — Subsequent Events . ​ Our products use inherently dangerous, flammable fuels, operate at high temperatures and use corrosive carbonate material, each of which could subject our business to product liability claims.
Our products utilize fuels such as natural gas and convert these fuels internally to hydrogen that is used by our products to generate electricity. Although our platforms do not combust fuels for the generation of electricity, the fuels we use are combustible and may be toxic.
Our business exposes us to potential product liability claims that are inherent in products that use hydrogen. Our products utilize fuels such as natural gas and convert these fuels internally to hydrogen that is used by our products to generate electricity.
This facility also houses our SOFC and SOEC stack research and development effort and includes equipment for the manufacturing of solid oxide cells and stacks, including advanced manufacturing capabilities. As of October 31, 2023, this facility is capable of producing 1 MW per year of SOFC or approximately 4 MW per year of SOEC.
This facility also houses our SOFC and SOEC stack research and development effort and includes equipment for the manufacturing of solid oxide cells and stacks, including advanced manufacturing capabilities. Beginning in fiscal year 2022, we started making additional investments in the Calgary facility to establish a center of competence and excellence for solid oxide cell and stack research and manufacturing.
We have debt and finance obligations outstanding and may incur additional debt in the future, which may adversely affect our financial condition and future financial results. As of October 31, 2023, our total consolidated debt and finance obligations outstanding (“indebtedness”) was $123.0 million ($119.5 million, net of deferred finance costs).
Failure to achieve our cost reduction targets could have a material adverse effect on our results of operations and financial condition. 27 Table of Contents We have debt and finance obligations outstanding and may incur additional debt in the future, which may adversely affect our financial condition and future financial results.
Removed
We are investing in expanding this facility with the goal of increasing its production capacity to 10 MW per year of SOFC or 40 MW per year of SOEC, and we expect this expansion to be complete in fiscal year 2024.
Added
As of October 31, 2024, our total consolidated debt and finance obligations outstanding (“indebtedness”) was $135.9 million ($131.7 million, net of deferred finance costs). Our ability to make scheduled payments of principal and interest and other required repayments depends on our future performance, which is subject to economic, financial, competitive and other factors beyond our control.
Removed
If this expansion is delayed, our ability to timely fulfill future orders to meet anticipated demand and our future revenues and ability to achieve profitability will be negatively impacted. ​ If our business grows more quickly than we anticipate, our existing and planned manufacturing facilities may become inadequate and we may need to seek out new or additional space, or retrofit or further equip our existing facilities, at considerable cost to us.
Added
This facility includes equipment for the manufacturing of solid oxide cells and stacks, including an advanced automated stack manufacturing line which has been developed to ensure that the labor and overhead which are required to produce these technologies are optimized for efficiency and complement the low direct material cost of the stack.
Removed
Any outbreaks of contagious diseases, including new outbreaks of COVID-19 variants, and other adverse public health developments in countries where we and our suppliers operate, could have a material and adverse effect on our business, financial condition and results of operations.
Added
The current annualized production capacity of the Calgary facility is 6 MW of SOEC production based on currently installed equipment.
Removed
These effects could include disruptions to or restrictions on our employees’ ability to travel, as well as temporary or prolonged closures of our facilities or the facilities of our customers, suppliers, or other vendors in our supply chain.
Added
During the fiscal years ended October 31, 2024 and 2023, we entered into lease expansions, extensions and amending agreements which expanded the space leased in Calgary to include an additional approximately 68,000 square feet, for a total of 28 Table of Contents approximately 100,000 square feet of space.
Removed
Any of these events, which may result in disruptions to our supply chain or customer demand, could materially and adversely affect our business and our financial results. The extent to which new outbreaks of COVID-19 variants may impact our business and our financial results will depend on future developments, which are highly uncertain and cannot be predicted.
Added
In addition, long-lead process equipment has been ordered to facilitate the expansion of manufacturing capacity for the solid oxide platforms in Calgary. Upon the completion of the Calgary capacity expansion, we believe that the total annualized SOEC manufacturing capacity could potentially be increased to up to 80 MW per year.
Removed
Such developments may include new mutations of the virus, the continued efficacy of vaccines and the actions that may be taken by various governmental authorities in response to a new outbreak, such as periodic quarantine or “shelter-in-place” orders and business closures imposed by various states within the United States, and the impact on the U.S. or global economy.
Added
However, in November 2024, we announced a global restructuring of our operations in the U.S., Canada, and Germany that aims to reduce operating costs, realign resources toward advancing the Company’s core technologies, and protect the Company’s competitive position amid slower-than-expected-investments in clean energy. This restructuring plan also includes the deferment and cancelation of certain previously planned capital and project expenditures.
Removed
At this time, it is impossible to predict the future impact of COVID-19 or other public health crises that could emerge in the future, including other pandemics or epidemics, on our business, liquidity, capital resources, supply chain and financial results or its effect on clean energy demand, capital budgets of our customers, or demand for our products. ​ An increase in energy costs, including as a result of the ongoing conflict between Russia and Ukraine, may materially adversely affect our business, financial condition, and results of operations. ​ Our results of operations can be directly affected by volatility in the cost and availability of energy, which is subject to global supply and demand and other factors beyond our control.
Added
As a result of this restructuring plan, we have deferred the capital spending required to complete the Calgary expansion and do not currently have an estimated completion date for this project.
Removed
The ongoing conflict between Russia and Ukraine has impacted global energy markets, particularly in Europe, leading to higher volatility in prices for crude oil, natural gas and other energy supplies.
Added
If our restructuring plan does not result in the intended benefits or savings or results in unanticipated costs, including but not limited to additional charges and/or higher than expected costs, or if we are unable to successfully implement our restructuring plan during the expected timeframe, our results of operations and financial condition could be materially adversely affected.
Removed
Pursuant to the PPP Note, we received total proceeds of approximately $6.5 million on April 24, 2020 (the “PPP Loan”).
Added
In that circumstance, our revenues may be inadequate to support our committed costs and our planned growth, and our gross margins and business strategy would be adversely affected.

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Item 2. Properties

Properties — owned and leased real estate

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Biggest changePROPERTIES The following is a summary of our offices and locations: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Square Lease Expiration Location ​ Business Use ​ Footage ​ Dates Danbury, Connecticut Corporate Headquarters, Research and Development, Sales, Marketing, Service, Purchasing and Administration 72,000 Company owned Torrington, Connecticut Manufacturing and Administrative 167,000 December 2030 (1) Taufkirchen, Germany Manufacturing and Administrative 20,000 June 2024 Calgary, Alberta, Canada Manufacturing, Research and Development 48,308 September 2028 Calgary, Alberta, Canada Storage 18,627 July 2024 (1) In November 2015, this lease was extended until December 2030, with the option to extend for three additional five-year periods thereafter. ​
Biggest changePROPERTIES The following is a summary of our offices and locations: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Square Lease Expiration Location ​ Business Use ​ Footage ​ Dates Danbury, Connecticut Corporate Headquarters, Research and Development, Sales, Marketing, Service, Purchasing and Administration 72,000 Company owned Torrington, Connecticut Manufacturing and Administrative 167,000 December 2030 (1) Taufkirchen, Germany Manufacturing and Administrative 20,000 June 2025 Calgary, Alberta, Canada Manufacturing, Research and Development 80,000 September 2028 Calgary, Alberta, Canada Storage 18,627 September 2028 (1) In November 2015, this lease was extended until December 2030, with the option to extend for three additional five-year periods thereafter. ​

Item 3. Legal Proceedings

Legal Proceedings — active lawsuits and investigations

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Biggest changeLEGAL PROCEEDINGS From time to time, the Company is involved in legal proceedings, including, but not limited to, regulatory proceedings, claims, mediations, arbitrations and litigation, arising out of the ordinary course of its business (“Legal Proceedings”). 52 Table of Contents Although the Company cannot assure the outcome of such Legal Proceedings, management presently believes that the result of such Legal Proceedings, either individually, or in the aggregate, will not have a material adverse effect on the Company’s consolidated financial statements, and no material amounts have been accrued in the Company’s consolidated financial statements with respect to these matters. ​
Biggest changeAlthough the Company cannot assure the outcome of such Legal Proceedings, management presently believes that the result of such Legal Proceedings, either individually, or in the aggregate, will not have a material adverse effect on the Company’s consolidated financial statements, and no material amounts have been accrued in the Company’s consolidated financial statements with respect to these matters. ​
Added
Item 3. LEGAL PROCEEDINGS From time to time, the Company is involved in legal proceedings, including, but not limited to, regulatory proceedings, claims, mediations, arbitrations and litigation, arising out of the ordinary course of its business (“Legal Proceedings”).

Item 5. Market for Registrant's Common Equity

Market for Common Equity — stock, dividends, buybacks

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Biggest change“Redeemable Preferred Stock” of the Notes to the Consolidated Financial Statements. ​ 54 Table of Contents Performance Graph The following graph compares the annual change in the Company’s cumulative total stockholder return on its common stock for the five fiscal years ended October 31, 2023 with the cumulative stockholder total return on the Russell 2000 Index, a peer group consisting of Standard Industry Classification Group Code 3690 companies listed on the Nasdaq Global Market and New York Stock Exchange and a customized 14 company peer group.
Biggest change“Redeemable Preferred Stock” of the Notes to the Consolidated Financial Statements. ​ 47 Table of Contents Performance Graph The following graph compares the annual change in the Company’s cumulative total stockholder return on its common stock for the five fiscal years ended October 31, 2024 with the cumulative stockholder total return on (i) the Russell 2000 Index, (ii) our fiscal year 2024 peer group consisting of Standard Industry Classification Group Code 3690 companies listed on the Nasdaq Global Market and New York Stock Exchange and a customized 15 company peer group (“2024 Peer Group”), and (iii) our fiscal year 2023 peer group consisting of Standard Industry Classification Group Code 3690 companies listed on the Nasdaq Global Market and New York Stock Exchange and a customized 14 company peer group (“2023 Peer Group”).
It assumes $100.00 invested on October 31, 2018 with dividends reinvested.
It assumes $100.00 invested on October 31, 2019 with dividends reinvested.
Equity Compensation Plan Information See Part III, Item 12 for information regarding securities authorized for issuance under our equity compensation plans. 55 Table of Contents Stock Repurchases The following table sets forth information with respect to purchases made by us or on our behalf of our common stock during the periods indicated: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Period Total Number of Shares Purchased (1) Average Price Paid per Share Total Number of Shares Purchased as Part of Publicly Announced Programs Maximum Number of Shares that May Yet be Purchased Under the Plans or Programs August 1, 2023 - August 31, 2023 ​ — ​ $ — ​ — ​ — September 1, 2023 - September 30, 2023 ​ 356,581 ​ ​ 1.33 ​ — ​ — October 1, 2023 - October 31, 2023 ​ 242 ​ ​ 1.29 ​ — ​ — Total ​ 356,823 ​ $ 1.33 ​ — ​ — (1) Includes only shares that were surrendered by employees to satisfy statutory tax withholding obligations in connection with the vesting of stock-based compensation awards. ​
Equity Compensation Plan Information See Part III, Item 12 for information regarding securities authorized for issuance under our equity compensation plans. 48 Table of Contents Stock Repurchases The following table sets forth information with respect to purchases made by us or on our behalf of our common stock during the periods indicated: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Period Total Number of Shares Purchased (1) Average Price Paid per Share Total Number of Shares Purchased as Part of Publicly Announced Programs Maximum Number of Shares that May Yet be Purchased Under the Plans or Programs August 1, 2024 - August 31, 2024 ​ — ​ $ — ​ — ​ — September 1, 2024 - September 30, 2024 ​ 70 ​ ​ 14.43 ​ — ​ — October 1, 2024 - October 31, 2024 ​ 147 ​ ​ 9.87 ​ — ​ — Total ​ 217 ​ $ 11.35 ​ — ​ — (1) Includes only shares that were surrendered by employees to satisfy statutory tax withholding obligations in connection with the vesting of stock-based compensation awards. ​
On December 14, 2023, the closing price of our common stock on the Nasdaq Global Market was $1.56 per share. As of December 14, 2023, there were 118 holders of record of our common stock. This does not include the number of persons whose stock is in nominee or “street” name accounts through brokers.
On December 23, 2024, the closing price of our common stock on the Nasdaq Global Market was $11.18 per share. As of December 23, 2024, there were 20 holders of record of our common stock. This does not include the number of persons whose stock is in nominee or “street” name accounts through brokers.
FuelCell Preferred Stock Information concerning the Company’s Series B Preferred Stock is incorporated herein by reference to Note 13.
All share and per share amounts, exercise prices, conversion rates and conversion prices presented herein have been adjusted retroactively to reflect these changes. FuelCell Preferred Stock Information concerning the Company’s Series B Preferred Stock is incorporated herein by reference to Note 14.
Added
At 5:00 p.m. Eastern Time on November 8, 2024, we effected a 1-for-30 reverse stock split, reducing the number of our common shares outstanding on that date from 611,278,662 shares to approximately 20,375,932 shares.
Added
The number of authorized shares of common stock remains unchanged at 1,000,000,000 shares and the number of authorized shares of preferred stock remains unchanged at 250,000 shares. The number of shares of common stock issuable upon settlement of outstanding restricted stock unit, performance stock unit and deferred stock unit awards were reduced proportionately in connection with the reverse stock split.
Added
Additionally, the conversion rate of our Series B Preferred Stock (as defined elsewhere herein), the exercise price of all outstanding options, the number of shares of common stock issuable upon the exercise of all outstanding options, and the number of shares reserved for future issuance pursuant to our equity compensation plans and employee stock purchase plan were all adjusted proportionately in connection with the reverse stock split.
Added
The peer group was updated for fiscal year 2024 to align with the peer group selected by the Compensation and Leadership Development Committee of the Board for the purposes of benchmarking executive compensation. The 2024 Peer Group is consistent with the peer group expected to be disclosed in the Company’s Proxy Statement for the 2025 Annual Meeting of Stockholders.

Item 7. Management's Discussion & Analysis

Management's Discussion & Analysis (MD&A) — revenue / margin commentary

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Biggest changeOur generation operating portfolio provides us with the full benefit of future cash flows, net of any debt service requirements. 67 Table of Contents The following table summarizes our generation operating portfolio as of October 31, 2023: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Project Name Location Power Off - Taker Rated Capacity (MW) (1) Actual Commercial Operation Date (FuelCell Energy Fiscal Quarter) PPA Term (Years) Central CT State University (“CCSU”) ​ New Britain, CT ​ CCSU (CT University) ​ 1.4 ​ Q2 ‘12 ​ 15 Riverside Regional Water Quality Control Plant ​ Riverside, CA ​ City of Riverside (CA Municipality) ​ 1.4 ​ Q4 '16 ​ 20 Pfizer, Inc. ​ Groton, CT ​ Pfizer, Inc. ​ 5.6 ​ Q4 '16 ​ 20 Santa Rita Jail ​ Dublin, CA ​ Alameda County, California ​ 1.4 ​ Q1 '17 ​ 20 Bridgeport Fuel Cell Project ​ Bridgeport, CT ​ Connecticut Light and Power Company (CT Utility) ​ 14.9 ​ Q1 '13 ​ 15 Tulare BioMAT ​ Tulare, CA ​ Southern California Edison (CA Utility) ​ 2.8 ​ Q1 '20 ​ 20 San Bernardino ​ San Bernardino, CA ​ City of San Bernardino Municipal Water Department ​ 1.4 ​ Q3'21 ​ 20 LIPA Yaphank Project ​ Long Island, NY ​ PSEG / LIPA, LI NY (Utility) ​ 7.4 ​ Q1'22 ​ 18 Groton Project ​ Groton, CT ​ CMEEC (CT Electric Co-op) ​ 7.4 (2) ​ Q1'23 ​ 20 ​ ​ ​ ​ Total MW Operating: ​ 43.7 ​ ​ ​ ​ ​ (1) Rated capacity is the platform’s design rated output as of the date of initiation of commercial operations, except with respect to the Groton Project.
Biggest changeThe following table summarizes our generation operating portfolio as of October 31, 2024: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Project Name Location Power Off - Taker Rated Capacity (MW) (1) Actual Commercial Operation Date (FuelCell Energy Fiscal Quarter) PPA Term (Years) Central CT State University (“CCSU”) ​ New Britain, CT ​ CCSU (CT University) ​ 1.4 ​ Q2 ‘12 ​ 15 Riverside Regional Water Quality Control Plant ​ Riverside, CA ​ City of Riverside (CA Municipality) ​ 1.4 ​ Q4 '16 ​ 20 Pfizer, Inc. ​ Groton, CT ​ Pfizer, Inc. ​ 5.6 ​ Q4 '16 ​ 20 Santa Rita Jail ​ Dublin, CA ​ Alameda County, California ​ 1.4 ​ Q1 '17 ​ 20 Bridgeport Fuel Cell Project ​ Bridgeport, CT ​ Connecticut Light and Power Company (CT Utility) ​ 14.9 ​ Q1 '13 ​ 15 Tulare BioMAT ​ Tulare, CA ​ Southern California Edison (CA Utility) ​ 2.8 ​ Q1 '20 ​ 20 San Bernardino ​ San Bernardino, CA ​ City of San Bernardino Municipal Water Department ​ 1.4 ​ Q3 '21 ​ 20 LIPA Yaphank Project ​ Long Island, NY ​ PSEG / LIPA, LI NY (Utility) ​ 7.4 ​ Q1 '22 ​ 20 Groton Project ​ Groton, CT ​ CMEEC (CT Electric Co-op) ​ 7.4 (2) ​ Q1 '23 ​ 20 Toyota ​ Long Beach, CA ​ Southern California Edison; Toyota ​ 2.3 ​ Q1 '24 ​ 20 Derby - CT RFP-2 ​ Derby, CT ​ Eversource/United Illuminating (CT Utilities) ​ 14.0 ​ Q1 '24 ​ 20 SCEF - Derby ​ Derby, CT ​ Eversource/United Illuminating (CT Utilities) ​ 2.8 ​ Q1 '24 ​ 20 ​ ​ ​ ​ Total MW Operating: ​ 62.8 ​ ​ ​ ​ ​ (1) Rated capacity is the platform’s design rated output as of the date of initiation of commercial operations, except with respect to the Groton Project.
(2) Future minimum lease payments on finance and operating leases. (3) Represents payments due under sale-leaseback transactions and related financing agreements between certain of our wholly-owned subsidiaries and Crestmark Equipment Finance (“Crestmark”). Lease payments for each lease under these financing agreements are generally payable in fixed quarterly installments over a 10-year period.
(2) Future minimum lease payments on operating leases. (3) Represents payments due under sale-leaseback transactions and related financing agreements between certain of our wholly-owned subsidiaries and Crestmark Equipment Finance (“Crestmark”). Lease payments for each lease under these financing agreements are generally payable in fixed quarterly installments over a 10-year period.
The Company’s future liquidity, for fiscal year 2024 and in the long-term, will depend on its ability to (i) timely complete current projects in process within budget, (ii) increase cash flows from its generation operating portfolio, including by meeting conditions required to timely commence operation of new projects, operating its generation operating portfolio in compliance with minimum performance guarantees and operating its generation operating portfolio in accordance with revenue expectations, (iii) obtain financing for project construction and manufacturing expansion, (iv) obtain permanent financing for its projects once constructed, (v) increase order and contract volumes, which would lead to additional product sales, service agreements and generation revenues, (vi) obtain funding for and receive payment for research and development under current and future Advanced Technologies contracts, (vii) successfully commercialize its solid oxide, hydrogen and carbon capture platforms, (viii) implement capacity expansion for solid oxide product manufacturing, (ix) implement the product cost reductions necessary to achieve profitable operations, (x) manage working capital and the Company’s unrestricted cash balance and (xi) access the capital markets to raise funds through the sale of debt and equity securities, convertible notes, and other equity-linked instruments. ​ We are continually assessing different means by which to accelerate the Company’s growth, enter new markets, commercialize new products, and enable capacity expansion.
The Company’s future liquidity, for fiscal year 2025 and in the long-term, will depend on its ability to (i) timely complete current projects in process within budget, (ii) increase cash flows from its generation operating portfolio, including by meeting conditions required to timely commence operation of new projects, operating its generation operating portfolio in compliance with minimum performance guarantees and operating its generation operating portfolio in accordance with revenue expectations, (iii) obtain financing for project construction and manufacturing expansion, (iv) obtain permanent financing for its projects once constructed, (v) increase order and contract volumes, which would lead to additional product sales, service agreements and generation revenues, (vi) obtain funding for and receive payment for research and development under current and future Advanced Technologies contracts, (vii) successfully commercialize its solid oxide, hydrogen and carbon capture platforms, (viii) implement capacity expansion for solid oxide product manufacturing, (ix) implement the product cost reductions necessary to achieve profitable operations, (x) manage working capital and the Company’s unrestricted cash balance and (xi) access the capital markets to raise funds through the sale of debt and equity securities, convertible notes, and other equity-linked instruments. ​ We are continually assessing different means by which to accelerate the Company’s growth, enter new markets, commercialize new products, and enable capacity expansion.
Net cash provided by financing activities during fiscal year 2022 resulted from $183.6 million of net proceeds from sales of common stock and $11.9 million of net contributions received from the sale of a noncontrolling interest in the LIPA Yaphank Project, partially offset by debt repayments of $9.5 million, payment for taxes related to net share settlement of equity awards of $1.9 million, payment of $3.2 million of preferred dividends to the holders of our Series B Preferred Stock and distribution to noncontrolling interest of $0.3 million.
Net cash provided by financing activities during fiscal year 2022 resulted from $183.6 million of net proceeds from sales of common stock and $11.9 million of net contributions received from the sale of a noncontrolling interest in the LIPA Yaphank Project, partially offset by debt repayments of $9.5 million, payment for taxes related to net share settlement of equity awards of $1.9 million, payment of $3.2 million of preferred dividends to the holders of our Series B Preferred Stock and distribution to noncontrolling interests of $0.3 million.
If the sum of the undiscounted cash flows is less than the carrying value, the impairment to be recognized is measured by the amount by which the carrying amount of the asset group exceeds the fair value of the asset group. During the years ended October 31, 2023 and 2022, the Company recorded certain project asset impairment charges .
If the sum of the undiscounted cash flows is less than the carrying value, the impairment to be recognized is measured by the amount by which the carrying amount of the asset group exceeds the fair value of the asset group. During the years ended October 31, 2024, 2023 and 2022, the Company recorded certain project asset impairment charges .
Cost-share terms require that participating contractors share the total cost of the project based on an agreed upon ratio. In many cases, we are reimbursed only a portion of the costs incurred or to be incurred on the contract.
Cost-share terms require that participating contractors share the total cost of the project based on an agreed upon ratio. In many cases, we are reimbursed only a portion of the costs incurred or to be incurred under the contract.
If financing is not available to us on acceptable terms if and when needed, or on terms acceptable to us or our lenders, if we do not satisfy the conditions of our financing arrangements, if we spend more than the financing approved for projects, if project costs exceed an amount that the Company can finance, or if we do not generate sufficient revenues or obtain capital sufficient for our corporate needs, we may be required to reduce or slow planned spending, reduce staffing, sell assets, seek alternative financing and take other measures, any of which could have a material adverse effect on our financial condition and operations. ​ Generation Operating Portfolio, Project Assets and Backlog To grow our generation operating portfolio, the Company will invest in developing and building turn-key fuel cell projects, which will be owned by the Company and classified as project assets on the Consolidated Balance Sheets.
If financing is not available to us on acceptable terms if and when needed, or on terms acceptable to us or our lenders, if we do not satisfy the conditions of our financing arrangements, if we spend more than the financing approved for projects, if project costs exceed an amount that the Company can finance, or if we do not generate sufficient revenues or obtain capital sufficient for our corporate needs, we may be required to further reduce or slow planned spending, further reduce staffing, sell assets, seek alternative financing and take other measures, any of which could have a material adverse effect on our financial condition and operations. ​ Generation Operating Portfolio, Project Assets and Backlog To grow our generation operating portfolio, the Company expects to continue to invest in developing and building turn-key fuel cell projects, which will be owned by the Company and classified as project assets on the Consolidated Balance Sheets.
Treasury Securities, and release of short-term restricted cash less expected disbursements over the next twelve months will be sufficient to allow the Company to meet its obligations for at least one year from the date of issuance of the financial statements included in this Annual Report on Form 10-K. ​ 65 Table of Contents To date, we have not achieved profitable operations or sustained positive cash flow from operations.
Treasury Securities, and release of short-term restricted cash less expected disbursements over 59 Table of Contents the next twelve months will be sufficient to allow the Company to meet its obligations for at least one year from the date of issuance of the financial statements included in this Annual Report on Form 10-K. ​ To date, we have not achieved profitable operations or sustained positive cash flow from operations.
“Debt” to our Consolidated Financial Statements for the year ended October 31, 2023 included in this Annual Report on Form 10-K for a more detailed discussion of the Company’s restricted cash balance . ​ Power purchase agreements Under the terms of our PPAs, customers agree to purchase power or other value streams delivered such as hydrogen, steam, water, and/or carbon from the Company’s fuel cell power platforms at negotiated rates.
“Debt” to our Consolidated Financial Statements for the year ended October 31, 2024 included in this Annual Report on Form 10-K for a more detailed discussion of the Company’s restricted cash balance . ​ Power purchase agreements Under the terms of our PPAs, customers agree to purchase power or other value streams delivered such as hydrogen, steam, water, and/or carbon from the Company’s fuel cell power platforms at negotiated rates.
This review includes analyzing inventory levels of individual parts considering the current design of our products and production requirements as well as the expected inventory requirements for maintenance on installed power platforms. 81 Table of Contents Service Expense Recognition We have entered into service agreements with certain customers to provide monitoring, maintenance and repair services for fuel cell power platforms.
This review includes analyzing inventory levels of individual parts considering the current design of our products and production requirements as well as the expected inventory requirements for maintenance on installed power platforms. 74 Table of Contents Service Expense Recognition We have entered into service agreements with certain customers to provide monitoring, maintenance and repair services for fuel cell power platforms.
The gross profit is a direct result of the product revenues recognized in the year ended October 31, 2023 related to the expiration without exercise of KFC’s module purchase option, the release of previously constrained product revenue and the fact that there were no corresponding costs associated with the recognition of these revenues.
The gross profit for the year ended October 31, 2023 is a direct result of the product revenues recognized related to the expiration without exercise of KFC’s module purchase option, the release of previously constrained product revenue and the fact that there were no corresponding costs associated with the recognition of these revenues.
Series B preferred stock dividends Dividends recorded on our 5% Series B Cumulative Convertible Perpetual Preferred Stock (“Series B Preferred Stock”) were $3.2 million for each of the years ended October 31, 2023 and 2022. ​ Net loss attributable to common stockholders and loss per common share Net loss attributable to common stockholders represents the net loss for the period less the preferred stock dividends on the Series B Preferred Stock.
Series B preferred stock dividends Dividends recorded on our 5% Series B Cumulative Convertible Perpetual Preferred Stock (“Series B Preferred Stock”) were $3.2 million for each of the years ended October 31, 2024 and 2023. ​ Net loss attributable to common stockholders and loss per common share Net loss attributable to common stockholders represents the net loss for the period less the preferred stock dividends on the Series B Preferred Stock.
The Company completed its annual impairment analysis of goodwill and in-process research and development assets as of July 31, 2023. The Company performed a qualitative assessment for fiscal year 2023 and determined that it was more likely than not that there was no impairment of goodwill or the in-process research and development assets.
The Company completed its annual impairment analysis of goodwill and in-process research and development assets as of July 31, 2024. The Company performed a qualitative assessment for fiscal year 2024 and determined that it was more likely than not that there was no impairment of goodwill or the in-process research and development assets.
Also, during fiscal year 2023, the Company entered into (a) a 6-year natural gas contract for the Company’s 14.0 MW Derby project, under which service began on June 1, 2023, and (b) a 6-year natural gas contract for the Company’s SCEF Derby project, under which service began in November 2023.
Also, during fiscal year 2023, the Company entered into (a) a 6-year natural gas contract for the Company’s 14.0 MW Derby project, under which service began on June 1, 2023, and (b) a 6-year natural gas contract for the Company’s 2.8 MW SCEF Derby project, under which service began in November 2023.
Under this partnership flip structure, a partnership, in this case YTBFC Holdco, LLC (the “Yaphank Partnership”), was organized to acquire from FuelCell Energy Finance II, LLC, a wholly-owned subsidiary of the Company, all outstanding equity interests in Yaphank Fuel Cell Park, LLC, which in turn owns the LIPA 80 Table of Contents Yaphank Project and is the party to the power purchase agreement and all project agreements.
Under this partnership flip structure, a partnership, in this case YTBFC Holdco, LLC (the “Yaphank Partnership”), was organized to acquire from FuelCell Energy Finance II, LLC, a wholly-owned subsidiary of the Company, all outstanding equity interests in Yaphank Fuel Cell Park, LLC, which in turn owns the LIPA Yaphank Project and is the party to the power purchase agreement and all project agreements.
Work in process inventory can generally be deployed rapidly while the balance of our inventory requires further 70 Table of Contents manufacturing prior to deployment. To execute on our business plan, we must produce fuel cell modules and procure balance of plant (“BOP”) components in required volumes to support our planned construction schedules and potential customer contractual requirements.
Work in process inventory can generally be deployed rapidly while the balance of our inventory requires further manufacturing prior to deployment. To execute on our business plan, we must produce fuel cell modules and procure balance of plant (“BOP”) components in required volumes to support our planned construction schedules and potential customer contractual requirements.
“Debt” for additional information regarding the Senior Back Leverage Loan Facility and the Subordinated Back Leverage Loan Facility . ​ During the fourth quarter of fiscal year 2023, the Company closed on a tax equity financing transaction with Franklin Park 2023 FCE Tax Equity Fund, LLC (“Franklin Park”), a subsidiary of Franklin Park Infrastructure, LLC, for two fuel cell power plant installations -- the 14.0 MW Derby Fuel Cell Project and the 2.8 MW SCEF Fuel Cell Project, both located in Derby, Connecticut (collectively, the “Derby Projects”).
“Debt” for additional information regarding the Derby Senior Back Leverage Loan Facility and the Derby Subordinated Back Leverage Loan Facility. ​ During the fourth quarter of fiscal year 2023, the Company closed on a tax equity financing transaction with Franklin Park, a subsidiary of Franklin Park Infrastructure, LLC, for two fuel cell power plant installations -- the 14.0 MW Derby Fuel Cell Project and the 2.8 MW SCEF Fuel Cell Project, both located in Derby, Connecticut (collectively, the “Derby Projects”).
We have utilized this cash to accelerate the commercialization of our solid oxide platforms, develop new capabilities to separate and capture carbon, develop and construct project assets, invest in capital improvements and expansion of our operations, perform research and development, pay down existing outstanding indebtedness, and meet our other cash and liquidity needs. ​ As of October 31, 2023, unrestricted cash and cash equivalents totaled $250.0 million compared to $458.1 million as of October 31, 2022.
We have utilized this cash to accelerate the commercialization of our solid oxide platforms, develop new capabilities to separate and capture carbon, develop and construct project assets, invest in capital improvements and expansion of our operations, perform research and development, pay down existing outstanding indebtedness, and meet our other cash and liquidity needs. ​ As of October 31, 2024, unrestricted cash and cash equivalents totaled $148.1 million compared to $250.0 million as of October 31, 2023.
The provision for income tax recorded for the years ended October 31, 2023 and 2022 reflects the realization of withholding taxes on customer deposits. ​ Net loss attributable to noncontrolling interests Net loss attributable to noncontrolling interests is the result of allocating profits and losses to noncontrolling interests under the hypothetical liquidation at book value (“HLBV”) method.
The provision for income tax recorded for the year ended October 31, 2023 reflects the realization of withholding taxes on customer deposits. ​ Net loss attributable to noncontrolling interests Net loss attributable to noncontrolling interests is the result of allocating profits and losses to noncontrolling interests under the hypothetical liquidation at book value (“HLBV”) method.
The costs of the contracts are expected to be offset by generation revenues. (5) We pay $3.2 million in annual dividends on our Series B Preferred Stock, if and when declared.
The costs of the contracts are expected to be offset by generation revenues. 68 Table of Contents (5) We pay $3.2 million in annual dividends on our Series B Preferred Stock, if and when declared.
The Company also constructed a SureSource 1500 in Torrington during fiscal year 2022, which operates as a testing facility for qualifying new supplier components and performance testing and validation of continued platform innovations. During fiscal year 2023, the Company made investments to add engineered carbon separation capability to the onsite SureSource 1500.
The Company also constructed a SureSource 1500 in Torrington during fiscal year 2022, which operates as a testing facility for qualifying new supplier components and performance testing and validation of continued platform innovations, including carbon recovery. During fiscal years 2023 and 2024, the Company made investments to add engineered carbon separation capability to the onsite SureSource 1500.
Our power generation platform can operate on natural gas, biogas, hydrogen, or fuel blends, and is capable of combined heat and power operation at up to 80% efficiency (based on lower heating value). ​ During the year ended October 31, 2023, Versa Power Systems Ltd.
Our power generation platform can operate on natural gas, biogas, hydrogen, or fuel blends, and is capable of combined heat and power operation at up to 80% efficiency (based on lower heating value). ​ During the fiscal years ended October 31, 2024 and 2023, Versa Power Systems Ltd.
To achieve this core principle, the Company applies the following five-step approach: (1) identify the contract with the customer; (2) identify the performance obligations in the contract; (3) determine the transaction price; (4) allocate 77 Table of Contents the transaction price to performance obligations in the contract; and (5) recognize revenue when or as a performance obligation is satisfied.
To achieve this core principle, the Company applies the following five-step approach: (1) identify the contract with the customer; (2) identify the performance obligations in the contract; (3) determine the transaction price; (4) allocate the transaction price to performance obligations in the contract; and (5) recognize revenue when or as a performance obligation is satisfied.
As a result, we may manufacture modules or acquire BOP components in advance of receiving payment for such activities. This may result in fluctuations in inventory and cash as of any given balance sheet date . ● The amount of total project assets as of October 31, 2023 and 2022 was $258.1 million and $232.9 million, respectively.
As a result, we may manufacture modules or acquire BOP components in advance of receiving payment for such activities. This may result in fluctuations in inventory and cash as of any given balance sheet date. ● The amount of total project assets as of October 31, 2024 and 2023 was $242.1 million and $258.1 million, respectively.
This transaction was structured as a “partnership flip,” which is a structure commonly used by tax equity investors in the financing of renewable energy projects.
This transaction was structured as a “partnership flip,” which is a structure commonly used by tax equity investors in the 73 Table of Contents financing of renewable energy projects.
Revenue is recognized over time as the customer simultaneously receives and consumes the benefits provided by the Company, and the Company satisfies its performance obligation. Revenue is recognized based on the output method as there is a directly observable output to the customer-electricity delivered to the customer and immediately consumed.
Revenue is recognized over time as the customer simultaneously receives and consumes the benefits provided by the Company, and the Company satisfies its performance obligation. Revenue is recognized based on the output method as 72 Table of Contents there is a directly observable output to the customer-electricity delivered to the customer and immediately consumed.
We seek to mitigate our fuel risk using strategies including: (i) fuel cost reimbursement mechanisms in our PPAs to allow for pass through of fuel costs (full or partial) where possible, which we have done with our 14.9 MW operating project in Bridgeport, CT; (ii) procuring fuel under fixed price physical supply contracts with investment grade counterparties, which we have done for twenty years for our Tulare BioMAT project, the initial seven years of the eighteen year PPA for our LIPA Yaphank Project, six years of the twenty year PPA for our 14.0 MW Derby project, and the initial two years of the twenty year hydrogen power purchase agreement for our Toyota project; and (iii) potentially entering into future financial hedges with investment grade counterparties to offset potential negative market fluctuations.
We seek to mitigate our fuel risk using strategies including: (i) fuel cost reimbursement mechanisms in our PPAs to allow for pass through of fuel costs (full or partial) where possible, which we have done with our 14.9 MW operating project in Bridgeport, CT; (ii) procuring fuel under fixed price physical supply contracts with investment grade counterparties, which we have done for twenty years for our Tulare BioMAT project, the initial seven years of the twenty-year PPA for our LIPA Yaphank Project (through September of 2028), six years of the twenty-year PPA for our 14.0 MW and 2.8 MW Derby projects (through October of 2029), and the initial two years of the twenty-year hydrogen power purchase agreement for our Toyota project (through May of 2025); and (iii) potentially entering into future financial hedges with investment grade counterparties to offset potential negative market fluctuations.
Our estimates are performed on a contract by contract basis and include cost assumptions based on what we anticipate the service requirements will be to fulfill obligations for each contract. As of October 31, 2023 and 2022, our loss accruals on service agreements totaled $9.5 million and $7.3 million, respectively.
Our estimates are performed on a contract by contract basis and include cost assumptions based on what we anticipate the service requirements will be to fulfill obligations for each contract. As of October 31, 2024 and 2023, our loss accruals on service agreements totaled $9.0 million and $9.5 million, respectively.
Together, the service and generation portion of backlog had a weighted average term of approximately 17 years, with weighting based on the dollar amount of backlog and utility service contracts of up to 20 years in duration at inception . ​ Factors that may impact our liquidity Factors that may impact our liquidity in fiscal year 2024 and beyond include: ● The Company’s cash on hand and access to additional liquidity.
Together, the service and generation portion of backlog had a weighted average term of approximately 16 years as of October 31, 2024, with weighting based on the dollar amount of backlog and utility service contracts of up to 20 years in duration at inception . ​ Factors that may impact our liquidity Factors that may impact our liquidity in fiscal year 2025 and beyond include: ● The Company’s cash on hand and access to additional liquidity.
Cost of service agreements includes maintenance and operating costs and module exchanges. ​ Overall gross profit from service agreements revenues was $4.1 million for the year ended October 31, 2023 which increased from a gross loss of $4.4 million for the year ended October 31, 2022.
Cost of service agreements includes maintenance and operating costs and module exchanges. ​ Overall gross loss from service agreements revenues was $(1.1) million for the year ended October 31, 2024 which decreased from a gross profit of $4.1 million for the year ended October 31, 2023.
In fiscal years 2023 and 2022, we reviewed our cost estimates relating to our service contracts and identified higher estimated costs than those that were previously estimated.
In fiscal year 2023, we reviewed our cost estimates relating to our service contracts and identified higher estimated costs than those that were previously estimated.
The outstanding finance obligations under our sale-leaseback transactions, which totaled $18.8 million as October 31, 2023, include an embedded gain of $9.1 million representing the current carrying value of finance obligations less future required payments, which will be recognized at the end of the applicable lease terms should the Company repurchase the assets at the end of the term.
The outstanding finance obligations under our sale-leaseback transactions, which totaled $18.8 million as of October 31, 2024, include an embedded gain of $10.5 million representing the current carrying value of finance obligations less future required payments, which will be recognized at the end of the applicable lease terms should the Company repurchase the assets at the end of the term.
The lower net loss per common share for the year ended October 31, 2023 as compared to the year ended October 31, 2022 is primarily due to the lower net loss attributable to common stockholders and the higher number of weighted average shares outstanding due to share issuances since October 31, 2022. ​ LIQUIDITY AND CAPITAL RESOURCES Overview, Cash Position, Sources and Uses Our principal sources of cash have been proceeds from the sale of our products and projects, electricity generation revenues, research and development and service agreements with third parties, sales of our common stock through public equity offerings, and proceeds from debt, project financing and tax monetization transactions.
The net loss per common share for the year ended October 31, 2024 benefited from the higher number of weighted average shares outstanding due to share issuances since October 31, 2023. ​ LIQUIDITY AND CAPITAL RESOURCES Overview, Cash Position, Sources and Uses Our principal sources of cash have been proceeds from the sale of our products and projects, electricity generation revenues, research and development and service agreements with third parties, sales of our common stock through public equity offerings, and proceeds from debt, project financing and tax monetization transactions.
These amounts include development costs, interconnection costs, costs associated with posting of letters of credit, bonding or other forms of security, and engineering, permitting, legal, and other expenses. ● The amount of accounts receivable and unbilled receivables as of October 31, 2023 and 2022 was $45.9 million ($25.8 million of which is classified as “Other assets”) and $25.6 million ($9.7 million of which is classified as “Other assets”), respectively.
These amounts include development costs, interconnection costs, costs associated with posting of letters of credit, bonding or other forms of security, and engineering, permitting, legal, and other expenses. ● The amount of accounts receivable and unbilled receivables as of October 31, 2024 and 2023 was $76.9 million ($28.3 million of which is classified as “Other assets”) and $45.9 million ($25.8 million of which is classified as “Other assets”), respectively.
Gain on extinguishment of finance obligations and debt, net ​ The gain on extinguishment of finance obligations and debt, net was $15.3 million for the year ended October 31, 2023 and represents the gain on the payoff of the PNC Energy Capital, LLC (“PNC”) finance obligations (which occurred in May 2023), offset by the write-off of debt issuance costs upon the repayment of the loans associated with the Bridgeport Fuel Cell Project and the extinguishment of the PNC sale-leaseback transactions . ​ Other income, net Other income, net was $4.7 million and $0.3 million for the years ended October 31, 2023 and 2022, respectively.
Gain on extinguishment of finance obligations and debt, net ​ The gain on extinguishment of finance obligations and debt, net was $15.3 million for the year ended October 31, 2023 and represents the gain on the payoff of the PNC Energy Capital, LLC (“PNC”) finance obligations (which occurred in May 2023), offset by the write-off of debt issuance costs upon the repayment of the loans associated with the Bridgeport Fuel Cell Project and the extinguishment of the PNC sale-leaseback transactions.
Our accounts receivable balances may fluctuate as of any balance sheet date depending on the timing of individual contract milestones and progress on completion of our projects. ● The amount of total inventory as of October 31, 2023 and 2022 was $91.8 million ($7.3 million is classified as long-term inventory) and $98.5 million ($7.5 million is classified as long-term inventory), respectively, which includes work in process inventory totaling $55.6 million and $67.8 million, respectively.
Our accounts receivable balances may fluctuate as of any balance sheet date depending on the timing of individual contract milestones and progress on completion of our projects. ● The amount of total inventory as of October 31, 2024 and 2023 was $116.4 million ($2.7 million is classified as long-term inventory) and $91.8 million ($7.3 million is classified as long-term inventory), respectively, which includes work in process inventory totaling $80.5 million and $55.6 million, respectively.
Projects for which we have an executed PPA are included in generation backlog, which represents future revenue under long-term PPAs. The Company’s ability to recognize revenue in the future under a PPA is subject to the Company’s completion of construction of the project covered by such PPA.
Backlog represents definitive agreements executed by the Company and our customers. Projects for which we have an executed PPA are included in generation backlog, which represents future revenue under long-term PPAs. The Company’s ability to recognize revenue in the future under a PPA is subject to the Company’s completion of construction of the project covered by such PPA.
The Company does not take a fundamental view on natural gas or other commodity pricing and seeks commercially available means to reduce commodity exposure .
The Company does not take a fundamental view on natural gas or other commodity pricing and seeks commercially available means to 64 Table of Contents reduce commodity exposure.
Restricted Cash As of October 31, 2023, we have pledged approximately $49.6 million of our cash and cash equivalents as performance security and for letters of credit for certain banking requirements and contracts. As of October 31, 2023, outstanding letters of credit totaled $14.2 million. These expire on various dates through October 2029.
Restricted Cash As of October 31, 2024, we have pledged approximately $60.8 million of our cash and cash equivalents as performance security and for letters of credit for certain banking requirements and contracts. As of October 31, 2024, outstanding letters of credit totaled $14.2 million. These expire on various dates through October 2029.
As of October 31, 2023, service agreements backlog totaled $140.8 million compared to $114.0 million as of October 31, 2022. This backlog is for service agreements of up to 20 years at inception and is expected to generate positive margins and cash flows based on current estimates.
As of October 31, 2024, service agreements backlog totaled $174.2 million compared to $140.8 million as of October 31, 2023. This backlog is for service agreements of up to 20 years at inception and is expected to generate positive margins and cash flows based on current estimates.
The restricted cash balance as of October 31, 2023 also included $2.9 million primarily to support obligations under the power purchase and service agreements related to Crestmark sale-leaseback transactions, $9.3 million relating to future obligations associated with the Senior Back Leverage Loan Facility and the Subordinated Back Leverage Loan Facility and $19.7 million relating to future obligations associated with the OpCo Financing Facility.
The restricted cash balance as of October 31, 2024 also included $2.9 million primarily to support obligations under the power purchase and service agreements related to Crestmark sale-leaseback transactions, $12.9 million relating to future obligations associated with the Groton Senior Back Leverage Loan Facility, the Derby Senior Back Leverage Loan Facility, the Groton Subordinated Back Leverage Loan Facility, and the Derby Subordinated Back Leverage Loan Facility, and $24.7 million relating to future obligations associated with the OpCo Financing Facility.
We may, at our option, convert these shares into the number of shares of our common stock that are issuable at the then 75 Table of Contents prevailing conversion rate if the closing price of our common stock exceeds 150% of the then prevailing conversion price ($1,692 per share as of October 31, 2023) for 20 trading days during any consecutive 30 trading day period. ​ Outstanding Loans as of October 31, 2023 A discussion of the key terms and conditions of the loans outstanding as of October 31, 2023 is included in Note 11.
We may, at our option, convert these shares into the number of shares of our common stock that are issuable at the then prevailing conversion rate if the closing price of our common stock exceeds 150% of the then prevailing conversion price ($50,760 per share as of October 31, 2024) for 20 trading days during any consecutive 30 trading day period. ​ Outstanding Loans as of October 31, 2024 A discussion of the key terms and conditions of the loans outstanding as of October 31, 2024 is included in Note 12.
For the year ended October 31, 2023, we operated at an annualized production rate of approximately 32.7 MW, which is a decrease from the annualized production rate of 39.3 MW for the year ended October 31, 2022.
For the year ended October 31, 2024, we operated at an annualized production rate of approximately 27.7 MW, which is a decrease from the annualized production rate of 32.7 MW for the year ended October 31, 2023.
Government-unfunded. 76 Table of Contents Off-Balance Sheet Arrangements We have no off-balance sheet debt or similar obligations which are not classified as debt. We do not guarantee any third-party debt. See Note 19. “Commitments and Contingencies” to our consolidated financial statements for the year ended October 31, 2023 included in this Annual Report on Form 10-K for further information.
Off-Balance Sheet Arrangements We have no off-balance sheet debt or similar obligations which are not classified as debt. We do not guarantee any third-party debt. See Note 20. “Commitments and Contingencies” to our consolidated financial statements for the year ended October 31, 2024 included in this Annual Report on Form 10-K for further information.
“Debt” to the consolidated financial statements and is incorporated by reference herein. The information included under the headings “OpCo Financing Facility,” “Back-Leverage Financing,” “State of Connecticut Loan,” and “Finance obligations for sale-leaseback agreements” in Note 11. “Debt” to the consolidated financial statements is incorporated herein by reference.
“Debt” to the consolidated financial statements and is incorporated by reference herein. The information included under the headings “EXIM Financing,” “OpCo Financing Facility,” “Derby Back Leverage Financing,” “Groton Back Leverage Financing,” “State of Connecticut Loan,” and “Finance obligations for sale-leaseback agreements” in Note 12. “Debt” to the consolidated financial statements is incorporated herein by reference.
Interest income for the year ended October 31, 2023 represents $12.0 million of interest earned on money market investments and $3.8 million of interest earned on U.S. Treasury Securities. Interest income earned for the year ended October 31, 2022 reflects interest earned on money market investments.
Interest income for the year ended October 31, 2024 represents $8.1 million of interest earned on money market investments and $5.6 million of interest earned on U.S. Treasury Securities. Interest income for the year ended October 31, 2023 represents $12.0 million of interest earned on money market investments and $3.8 million of interest earned on U.S. Treasury Securities.
While government research and development contracts may extend for many years, funding is often provided incrementally on a year-by-year basis if contract terms are met and Congress authorizes the funds. As of October 31, 2023, Advanced Technologies contract backlog totaled $15.3 million, of which $10.7 million is non-U.S. Government-funded, $4.3 million is U.S. Government-funded and $0.3 million is U.S.
While government research and development contracts may extend for many years, funding is often provided incrementally on a year-by-year basis if contract terms are met and Congress authorizes the funds. As of 69 Table of Contents October 31, 2024, Advanced Technologies contract backlog totaled $36.0 million, of which $27.3 million is non-U.S. Government-funded and $8.7 million is U.S. Government-funded.
Payments are based on actual power output and the contractual rate for electricity generated. 79 Table of Contents Variable Interest Entities and Noncontrolling Interests The Company closed on a tax equity financing transaction on October 31, 2023 with Franklin Park 2023 FCE Tax Equity Fund, LLC (“Franklin Park”), a subsidiary of Franklin Park Infrastructure, LLC, for two fuel cell power plant installations - the 14.0 MW Derby Fuel Cell Project and the 2.8 MW SCEF Fuel Cell Project, both located in Derby, Connecticut (collectively, the “Derby Projects”).
Variable Interest Entities and Noncontrolling Interests The Company closed on a tax equity financing transaction on October 31, 2023 with Franklin Park 2023 FCE Tax Equity Fund, LLC (“Franklin Park”), a subsidiary of Franklin Park Infrastructure, LLC, for two fuel cell power plant installations - the 14.0 MW Derby Fuel Cell Project and the 2.8 MW SCEF Fuel Cell Project, both located in Derby, Connecticut (collectively, the “Derby Projects”).
During the year ended October 31, 2023, the Company invested in United States (U.S.) Treasury Securities. The amortized cost of the U.S. Treasury Securities outstanding totaled $103.8 million as of October 31, 2023 64 Table of Contents (compared to $0 as of October 31, 2022) and is classified as Investments – short-term on the Consolidated Balance Sheets.
During the years ended October 31, 2024 and 2023, the Company invested in United States (U.S.) Treasury Securities. The amortized cost of the U.S. Treasury Securities outstanding totaled $109.1 million as of October 31, 2024, compared to $103.8 million as of October 31, 2023 and is classified as Investments – short-term on the 58 Table of Contents Consolidated Balance Sheets.
These higher estimated costs are due to our expectation that supply chain costs will remain high relative to prior years and that our production volumes will remain low, resulting in an increase in expected module costs. ​ For the year ended October 31, 2023, accrued performance penalties under our service agreements totaled approximately $1.0 million compared to approximately $0.7 million for the year ended October 31, 2022.
These higher estimated costs in fiscal year 2023 were due to the expectation that supply chain costs would remain high relative to prior years and that our production volumes would remain low, resulting in an increase in expected module costs. ​ For the year ended October 31, 2024, accrued performance penalties under our service agreements totaled approximately $1.5 million compared to approximately $1.2 million for the year ended October 31, 2023.
Advanced Technologies contracts for the year ended October 31, 2023 generated a gross profit of $4.0 million compared to a gross profit of $6.3 million for the year ended October 31, 2022.
Advanced Technologies contracts for the year ended October 31, 2024 generated a gross profit of $9.0 million compared to a gross profit of $4.0 million for the year ended October 31, 2023.
Net cash used in investing activities during fiscal year 2023 included $299.1 million for the purchase of U.S. Treasury Securities, $53.0 million of project asset expenditures and $39.4 million of capital expenditures, offset by funds received from the maturity of U.S. Treasury Securities of $199.1 million.
Treasury Securities, $53.0 million of project asset expenditures and $39.4 million of capital expenditures, partially offset by funds received from the maturity of U.S. Treasury Securities of $199.1 million. Net cash used in investing activities during fiscal year 2022 included $25.6 million of project asset expenditures and $21.1 million of capital expenditures.
Generation revenues for the years ended October 31, 2023 and 2022 reflect revenue from electricity generated under our power purchase agreements (“PPAs”) and the sale of renewable energy credits.
Generation revenues for the years ended October 31, 2024 and 2023 reflect revenue from electricity generated under our power purchase agreements (“PPAs”), the sale of renewable energy credits, and additionally, for the year ended October 31, 2024, the sale of hydrogen from the Toyota project.
The following table summarizes our consolidated cash flows: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Year Ended October 31, (dollars in thousands) 2023 ​ 2022 2021 Consolidated Cash Flow Data: ​ ​ ​ ​ ​ ​ ​ ​ ​ Net cash used in operating activities ​ $ (140,250) ​ $ (112,167) ​ $ (70,438) Net cash used in investing activities ​ ​ (192,365) ​ ​ (46,651) ​ ​ (73,230) Net cash provided by financing activities ​ ​ 151,067 ​ ​ 180,583 ​ ​ 411,908 Effects on cash from changes in foreign currency rates ​ ​ 80 ​ ​ (933) ​ ​ (80) Net (decrease) increase in cash, cash equivalents and restricted cash ​ $ (181,468) ​ $ 20,832 ​ $ 268,160 ​ The key components of our cash inflows and outflows were as follows: Operating Activities – Net cash used in operating activities was $140.3 million during fiscal year 2023, compared to net cash used in operating activities of $112.2 million in fiscal year 2022 and net cash used in operating activities of $70.4 million in fiscal year 2021.
The following table summarizes our consolidated cash flows: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Year Ended October 31, (dollars in thousands) 2024 ​ 2023 2022 Consolidated Cash Flow Data: ​ ​ ​ ​ ​ ​ ​ ​ ​ Net cash used in operating activities ​ $ (152,906) ​ $ (140,250) ​ $ (112,167) Net cash used in investing activities ​ ​ (60,049) ​ ​ (192,365) ​ ​ (46,651) Net cash provided by financing activities ​ ​ 122,151 ​ ​ 151,067 ​ ​ 180,583 Effects on cash from changes in foreign currency rates ​ ​ 111 ​ ​ 80 ​ ​ (933) Net (decrease) increase in cash, cash equivalents and restricted cash ​ $ (90,693) ​ $ (181,468) ​ $ 20,832 ​ The key components of our cash inflows and outflows were as follows: Operating Activities – Net cash used in operating activities was $152.9 million during fiscal year 2024, compared to net cash used in operating activities of $140.3 million in fiscal year 2023 and net cash used in operating activities of $112.2 million in fiscal year 2022.
HLBV is a balance sheet-oriented approach for applying the equity method of accounting when there is a complex structure, such as the flip structure of our tax equity financings with East West Bancorp, Inc.
HLBV is a balance sheet-oriented approach for applying the equity method of accounting when there is a complex structure, such as the flip structure of our tax equity financings with Franklin Park 2023 FCE Tax Equity Fund, LLC (“Franklin Park”), East West Bancorp, Inc.
(“Versa Ltd.”), a subsidiary of FuelCell Energy, entered into a lease expansion, extension and amending agreement which expanded the space leased by Versa Ltd. in Calgary, Alberta, Canada to include an additional approximately 48,000 square feet, for a total of approximately 80,000 square feet of space.
(“Versa Ltd.”), a subsidiary of FuelCell Energy, entered into lease expansions, extensions and amending agreements which expanded the space leased by Versa Ltd. in Calgary, Alberta, Canada to include an additional approximately 68,000 square feet, for a total of approximately 100,000 square feet of space.
The overall gross margin was 8.4% for the year ended October 31, 2023 compared to a gross margin loss of 34.8% in the comparable prior year period.
The overall gross margin was (11.3)% for the year ended October 31, 2024 compared to a gross margin of 8.4% in the comparable prior year period.
Project assets consist of capitalized costs for fuel cell projects that are operating and producing revenue or are under construction. Project assets as of October 31, 2023 consisted of $167.5 million of completed, operating installations and $90.6 million of projects in development.
Project assets consist of capitalized costs for fuel cell projects that are operating and producing revenue or are under construction. Project assets as of October 31, 2024 consisted of $242.0 million of completed, operating installations and $0.2 million of projects in development.
Both periods also included a reduction in service agreements revenues – specifically, a $2.1 million reduction in the fourth quarter of fiscal year 2023 and a $3.8 million reduction in the fourth quarter of fiscal year 2022, in each case as a result of higher future cost estimates related to future module exchanges compared to our prior estimates.
The year ended October 31, 2023 also included a reduction in service agreements revenues – specifically, a $2.1 million reduction in the fourth quarter of fiscal year 2023 as a result of higher future cost estimates related to future module exchanges compared to our prior estimates.
Provision for income tax recorded for the years ended 63 Table of Contents October 31, 2023 and 2022 was $0.6 million and $0.8 million, respectively.
Provision for income tax recorded for the years ended 57 Table of Contents October 31, 2024 and 2023 was $25 thousand and $0.6 million, respectively.
The Company may also seek to undertake private placements of debt securities to finance its project asset portfolio. The proceeds of any such financing, if obtained, may allow the Company to reinvest capital back into the business and to fund other projects. We may also seek to obtain additional financing in both the debt and equity markets in the future.
The proceeds of any such financing, if obtained, may allow the Company to reinvest capital back into the business and to fund other projects. We also expect to seek additional financing in both the debt and equity markets in the future.
As of October 31, 2023, net debt outstanding related to project assets was $112.6 million. Future required payments, inclusive of principal and interest, totaled $138.8 million as of October 31, 2023.
As of October 31, 2024, net debt outstanding related to project assets was $116.5 million. Future required payments, inclusive of principal and interest, totaled $139.8 million as of October 31, 2024.
Loss from operations Loss from operations for the year ended October 31, 2023 was $136.1 million compared to $143.7 million for the year ended October 31, 2022.
Loss from operations Loss from operations for the year ended October 31, 2024 was $158.5 million compared to $136.1 million for the year ended October 31, 2023.
The Company allocates profits and losses to REI’s noncontrolling interest under the HLBV method. ​ See Note. 3 “Tax Equity Financing” for additional information regarding the tax equity financing transactions with Franklin Park, East West Bank and REI. ​ Sale-Leaseback Accounting The Company, through certain wholly-owned subsidiaries, has entered into sale-leaseback transactions for commissioned project assets where we have entered into a PPA with a customer who is both the site host and end user of the power.
“Tax Equity Financings and Investment Tax Credit Sale” for additional information regarding the tax equity financing transactions with Franklin Park, East West Bank and REI. ​ Sale-Leaseback Accounting The Company, through certain wholly-owned subsidiaries, has entered into sale-leaseback transactions for commissioned project assets where we have entered into a PPA with a customer who is both the site host and end user of the power.
Accrued performance guarantees represent variable consideration for service contracts and accordingly are recorded as an offset to service agreements revenues. ​ Cost of service agreements revenues increased $27.7 million to $45.0 million for the year ended October 31, 2023 from $17.2 million for the year ended October 31, 2022.
Accrued performance guarantees represent variable consideration for service contracts and accordingly are recorded as an offset to service agreements revenues. ​ Cost of service agreements revenues decreased $33.9 million to $11.1 million for the year ended October 31, 2024 from $45.0 million for the year ended October 31, 2023.
Such securities have maturity dates ranging from November 9, 2023 to January 23, 2023. ● We bid on large projects in diverse markets that can have long decision cycles and uncertain outcomes. ● We manage production rate based on expected demand and project schedules. Changes to production rate take time to implement.
Such securities matured between November 5, 2024 and November 29, 2024. ● We bid on large projects in diverse markets that can have long decision cycles and uncertain outcomes. ● We manage production rate based on expected demand and project schedules. Changes to production rate take time to implement.
In 2021, we examined data related to module field performance, identified improvement opportunities and invested in improvement initiatives with respect to our core molten carbonate technology. We continue to invest in such improvement initiatives.
We examine data related to module field performance, identify improvement opportunities and invest in improvement initiatives with respect to our core molten carbonate technology.
Gross margin was higher during the year ended October 31, 2023 primarily due to the fact that 15 new module exchanges were completed during the year ended October 31, 2023 (compared to fewer module exchanges during the year ended October 31, 2022) and that such module exchanges were performed pursuant to service agreements with higher margins.
Gross margin was lower during the year ended October 31, 2024, primarily due to the fact that only 2 new module exchanges were completed during the year, compared to the 15 new module exchanges completed during the year ended October 31, 2023 under service agreements with higher margins.
This obligation was relieved in conjunction with the execution of the new long-term service agreement with Noeul Green Energy . ​ Cost of product revenues decreased $51.6 million for the year ended October 31, 2023 to $12.9 million, compared to $64.5 million in the same period in the prior year.
This obligation was relieved in conjunction with the execution of the new long-term service agreement with Noeul Green Energy. ​ Cost of product revenues increased $26.7 million for the year ended October 31, 2024 to $39.6 million, compared to $12.9 million in the same period in the prior year, primarily due to the higher product sales in fiscal year 2024.
(“East West Bank”) and Renewable Energy Investors, LLC (“REI”) . ​ For the year ended October 31, 2023, net income attributable to noncontrolling interest totaled $2.0 million for the LIPA Yaphank project tax equity financing transaction with REI.
(“East West Bank”) and Renewable Energy Investors, LLC (“REI”) . ​ For the years ended October 31, 2024 and 2023, net income attributable to noncontrolling interest totaled $0.9 million and $2.0 million, respectively, for the LIPA Yaphank project tax equity financing transaction with REI. ​ For the years ended October 31, 2024 and 2023, net loss attributable to noncontrolling interest totaled $(3.5) million and ($2.5) million for the Groton Project tax equity financing transaction with East West Bank. ​ For the year ended October 31, 2024, net loss attributable to noncontrolling interest totaled $(28.3) million for the Derby Projects tax equity financing transaction with Franklin Park.
These amounts are in addition to the capital expenditures and commitments made by the Company in fiscal year 2023 to upgrade our manufacturing facilities, including the expansion of solid oxide manufacturing capacity at our Calgary facility to 40 MW which is expected to be completed in fiscal year 2024.
These amounts are in addition to the capital expenditures and commitments made by the Company in fiscal year 2024 to upgrade our manufacturing facilities, including payments for certain equipment necessary for the expansion of solid oxide manufacturing capacity at our Calgary facility.
As of October 31, 2023, unrestricted cash and cash equivalents was $250.0 million compared to $458.1 million of unrestricted cash and cash equivalents as of October 31, 2022.
As of October 31, 2024, unrestricted cash and cash equivalents was $148.1 66 Table of Contents million compared to $250.0 million of unrestricted cash and cash equivalents as of October 31, 2023.
Results of Operations are presented in accordance with U.S. GAAP. ​ The following discussion and analysis of our Results of Operations and Liquidity and Capital Resources includes a comparison of the fiscal year ended October 31, 2023 (“fiscal year 2023”) to the fiscal year ended October 31, 2022 (“fiscal year 2022”).
GAAP. ​ The following discussion and analysis of our Results of Operations and Liquidity and Capital Resources includes a comparison of the fiscal year ended October 31, 2024 (“fiscal year 2024”) to the fiscal year ended October 31, 2023 (“fiscal year 2023”).
Payment terms for module sales are generally based on milestones achieved through the manufacturing timeline of the module. Service agreements Service agreements represent a single performance obligation whereby the Company performs all required maintenance and monitoring functions, including replacement of modules, to ensure the power platform(s) under the service agreement generate a minimum power output.
Service agreements Service agreements represent a single performance obligation whereby the Company performs all required maintenance and monitoring functions, including replacement of modules, to ensure the power platform(s) under the service agreement generate a minimum power output.
As of October 31, 2023, restricted cash and cash equivalents was $49.6 million, of which $5.2 million was classified as current and $44.5 million was classified as non-current, compared to $23.0 million of restricted cash and cash equivalents as of October 31, 2022, of which $4.4 million was classified as current and $18.6 million was classified as non-current.
As of October 31, 2024, restricted cash and cash equivalents was $60.8 million, of which $12.2 million was classified as current and $48.6 million was classified as non-current, compared to $49.6 million of restricted cash and cash equivalents as of October 31, 2023, of which $5.2 million was classified as current and $44.5 million was classified as non-current.
Total costs of revenues for the year ended October 31, 2023 decreased by $26.1 million, or 16%, to $133.9 million from $160.1 million for the year ended October 31, 2022. The Company’s gross margin was (8.5)% in fiscal year 2023, as compared to a gross margin of (22.7)% in fiscal year 2022.
Total costs of revenues for the year ended October 31, 2024 increased by $14.1 million, or 11%, to $148.1 million from $133.9 million for the year ended October 31, 2023. The Company’s gross margin was (32.0)% in fiscal year 2024, as compared to a gross margin of (8.5)% in fiscal year 2023.
As of October 31, 2023, unrestricted cash and cash equivalents totaled $250.0 million and short-term investments in U.S. Treasury Securities totaled $103.8 million.
As of October 31, 2024, unrestricted cash and cash equivalents totaled $148.1 million and short-term investments in U.S. Treasury Securities totaled $109.1 million.
We expect generation revenue to continue to grow as additional projects 66 Table of Contents achieve commercial operation, but this revenue amount may also fluctuate from year to year depending on platform output, operational performance and management and site conditions. The Company plans to continue to grow this portfolio while also selling projects to investors.
Our generation operating portfolio totaled 62.8 MW as of October 31, 2024. We expect generation revenue to continue to grow as additional projects achieve commercial operation, but this revenue amount may also fluctuate from year to year depending on platform output, operational performance and management and site conditions.
Compared to the year ended October 31, 2022, Advanced Technologies contract revenues recognized under the Joint Development Agreement between the Company and ExxonMobil Technology and Engineering Company f/k/a ExxonMobil Research and Engineering Company (“EMTEC”) (which was originally effective as of October 31, 2019) (as amended, the “EMTEC Joint Development Agreement”) were approximately $0.3 million higher during the year ended October 31, 2023 and Advanced Technologies contract revenues recognized under government and other contracts were approximately $4.6 million lower for the year ended October 31, 2023 as a result of the allocation of engineering resources during the year based on the scope of the contracts in the year.
Advanced Technologies contract revenues recognized under the Joint Development Agreement between the Company and ExxonMobil Technology and Engineering Company f/k/a ExxonMobil Research and Engineering Company (“EMTEC”) (which was originally effective as of October 31, 2019) (as amended, the “EMTEC Joint Development Agreement”) were approximately $8.8 million during the year ended October 31, 2024, which was a decrease of $1.7 million compared to the year ended October 31, 2023.
If the Company is unable to secure fuel on favorable economic terms, it may result in impairment charges to the Derby project assets and further charges for the Toyota project asset. ​ ● Expenditures for property, plant and equipment are expected to range between $60.0 million and $75.0 million for fiscal year 2024.
If the Company is unable to secure fuel on favorable economic terms, the Company may incur impairment charges. ● Expenditures for property, plant and equipment are expected to range between $20.0 million and $25.0 million for fiscal year 2025.

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Item 7A. Quantitative and Qualitative Disclosures About Market Risk

Market Risk — interest-rate, FX, commodity exposure

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Biggest changeThe Company recorded a derivative gain during the year ended October 31, 2023 of $4.1 million as a result of net settling certain natural gas purchases under a previous normal purchase normal sale contract designation, which resulted in a change to mark-to-market accounting. ​ 84 Table of Contents
Biggest changeThe Company net settled certain natural gas purchases under previous normal purchase normal sale contract designations during the fiscal year ended October 31, 2023 for one contract and during the second quarter of fiscal year 2024 for other contracts, and recorded a mark-to-market derivative net loss during the year ended October 31, 2024 of $6.9 million, and a mark-to-market derivative gain during the year ended October 31, 2023 of $4.1 million, as a result of the change to mark-to-market accounting. ​ 77 Table of Contents
If the Company is unable to secure fuel on favorable economic terms, it may result in impairment charges to the Derby project assets and further charges for the Toyota project asset. ​ Historically, this risk has not been material to our financial statements as our operating projects prior to October 31, 2023 either did not have fuel price risk exposure, had fuel cost reimbursement mechanisms in our related PPAs to allow for pass through of fuel costs (full or partial), or had established long term fixed price fuel physical contracts.
If the Company is unable to secure fuel on favorable economic terms, it may result in impairment charges to the Derby Project assets or the Yaphank Project assets and further charges for the Toyota project asset. ​ Historically, this risk has not been material to our financial statements as our operating projects prior to October 31, 2024 either did not have fuel price risk exposure, had fuel cost reimbursement mechanisms in our related PPAs to allow for pass through of fuel costs (full or partial), or had established long term fixed price fuel physical contracts.
Item 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK Interest Rate Exposure Risk We have invested in U.S. Treasury Securities with maturities of less than three months. We expect to hold these investments until maturity and accordingly, these investments are carried at amortized cost and not subject to mark-to-market accounting. At October 31, 2023, our U.S.
Item 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK Interest Rate Exposure Risk We have invested in U.S. Treasury Securities with maturities of less than three months. We expect to hold these investments until maturity and accordingly, these investments are carried at amortized cost and not subject to mark-to-market accounting. As of October 31, 2024, our U.S.
This interest rate swap agreement was terminated during fiscal year 2023 in connection with the payoff of the senior and subordinated indebtedness of the Company to Liberty Bank, Fifth Third Bank and Connecticut Green Bank related to the Bridgeport Fuel Cell Project. ​ On May 19, 2023, in connection with the closing of the OpCo Financing Facility, the Company entered into an ISDA 2002 Master Agreement (the “Investec Master Agreement”) and an ISDA Schedule to the 2002 Master Agreement (the “Investec Schedule”) with Investec Bank plc as a hedge provider, and an ISDA 2002 Master Agreement (the “BMO Master Agreement”) and an ISDA Schedule to the 2002 Master Agreement (the “BMO Schedule”) with Bank of Montreal (Chicago Branch) as a hedge provider.
This interest rate swap agreement was terminated during fiscal year 2023 in connection with the payoff of the senior and subordinated indebtedness of the Company to Liberty Bank, Fifth Third Bank and Connecticut Green Bank related to the Bridgeport Fuel Cell Project. ​ On May 19, 2023, in connection with the closing of the OpCo Financing Facility, the Company entered into an ISDA 2002 Master Agreement and an ISDA Schedule to the 2002 Master Agreement with Investec Bank plc as a hedge provider, and an ISDA 2002 Master Agreement and an ISDA Schedule to the 2002 Master Agreement with Bank of Montreal (Chicago Branch) as a hedge provider.
Based on our overall interest rate exposure as of October 31, 2023, including all interest rate sensitive instruments, a change in interest rates of 1% would not have a material impact on our results of operations.
Based on our overall interest rate exposure as of October 31, 2024, including all interest rate sensitive instruments, a change in interest rates of 1% would not have a material impact on our results of operations.
Foreign Currency Exchange Risk As of October 31, 2023, approximately 0.5% of our total cash and cash equivalents were in currencies other than U.S. dollars (primarily the Euro, Canadian dollars and Korean Won) and we have no plans of repatriation. We make purchases from certain vendors and receive payment from certain customers in currencies other than U.S. dollars.
Foreign Currency Exchange Risk As of October 31, 2024, approximately 1% of our total cash and cash equivalents were in currencies other than U.S. dollars (primarily the Euro, Canadian dollars and Korean Won) and we have no plans of repatriation. We make purchases from certain vendors and receive payment from certain customers in currencies other than U.S. dollars.
We seek to mitigate our fuel risk using strategies including: (i) fuel cost reimbursement mechanisms in our PPAs to allow for pass through of fuel costs (full or partial) where possible, which we have done with our 14.9 MW operating project in Bridgeport, CT; (ii) procuring fuel under fixed price physical supply contracts with investment grade counterparties, which we have done for twenty years for our Tulare BioMAT project, the initial seven years of the eighteen year PPA for our LIPA Yaphank Project, six of the twenty year PPA for our 14.0 MW Derby project, and the initial two years of the twenty year hydrogen power purchase agreement for our Toyota project; and (iii) potentially entering into future financial hedges with investment grade counterparties to offset potential negative market fluctuations.
We seek to mitigate our fuel risk using strategies including: (i) fuel cost reimbursement mechanisms in our PPAs to allow for pass through of fuel costs (full or partial) where possible, which we have done with our 14.9 MW operating project in Bridgeport, CT; (ii) procuring fuel under fixed price physical supply contracts with investment grade counterparties, which we have done for twenty years for our Tulare BioMAT project, the initial seven years of the twenty year PPA for our LIPA Yaphank Project (through September of 2028), six years of the twenty year PPA for our 14.0 MW and 2.8 MW Derby Projects (through October of 2029), and the initial two years of the twenty year hydrogen power purchase agreement for our Toyota project (through May of 2025); and (iii) potentially entering into future financial hedges with investment grade counterparties to offset potential negative market fluctuations.
On August 1, 2022, the Company entered into an amendment to its interest rate swap agreement that replaced LIBOR with Term Secured Overnight Financing Rate (“SOFR”) effective as of June 2023. The fair value adjustment for the years ended October 31, 2023 and October 31, 2022 resulted in a $0.1 million loss and a $0.9 million gain, respectively.
On August 1, 2022, the Company entered into an amendment to its interest rate swap agreement that replaced LIBOR with Term Secured Overnight Financing Rate (“SOFR”) effective as of June 2023. The fair value adjustment for the year ended October 31, 2023 resulted in a $0.1 million loss.
The Company has not elected hedge accounting treatment and, as a result, the 83 Table of Contents derivative will be remeasured to fair value quarterly with the resulting gains/losses recorded to other income/expense.
The Company has not elected hedge accounting treatment and, as a result, the derivative will be remeasured to fair value quarterly with the resulting gains/losses recorded to other income/expense.
The fair value adjustments for the year ended October 31, 2023 resulted in a gain of $3.3 million. ​ Project Fuel Price Exposure Risk Certain of our PPAs for project assets in our generation operating portfolio and project assets under construction expose us to fluctuating fuel price risks as well as the risk of being unable to procure the required amounts of fuel and the lack of alternative available fuel sources.
The fair value adjustments for the years ended October 31, 2024 and 2023 resulted in a loss of $3.1 million and a gain of $3.3 million, respectively. 76 Table of Contents Project Fuel Price Exposure Risk Certain of our PPAs for project assets in our generation operating portfolio and, at times, project assets under construction expose us to fluctuating fuel price risks as well as the risk of being unable to procure the required amounts of fuel and the lack of alternative available fuel sources.
A two-year (through May of 2025) fuel supply contract has been executed for the Toyota project. Six-year (through October 2029) fuel supply contracts have been executed for the 14.0 MW and 2.8 MW projects in Derby, CT. The Company will look to extend the duration of these contracts should market and credit conditions allow.
Six-year (through October 2029) fuel supply contracts have been executed for the 14.0 MW and 2.8 MW Derby Projects. We are currently in the midst of a seven-year fuel supply contract (through September 2028) for our 7.4 MW Yaphank Project. The Company will look to extend the duration of these contracts should market and credit conditions allow.
The Company does not take a fundamental view on natural gas or other commodity pricing and seeks commercially available means to reduce commodity exposure. ​ There are currently three projects with fuel sourcing risk, which are the Toyota project, which requires procurement of RNG, and our Derby, CT 14.0 MW and 2.8 MW projects, both of which require natural gas for which there is no pass-through mechanism.
The Company does not take a fundamental view on natural gas or other commodity pricing and seeks commercially available means to reduce commodity exposure. If the Company is unable to secure fuel on favorable economic terms, it may result in impairment charges. ​ We currently have four projects with fuel sourcing risk for which there is no pass-through mechanism.
Treasury Securities had a carrying value of $103.8 million, which approximated fair value. These investments have maturity dates ranging from November 2023 to January 2024 and a weighted average yield to maturity of 5.45%.
Treasury Securities had a carrying value of $109.1 million, which approximated fair value. These U.S. Treasury Securities matured between November 5, 2024 and November 29, 2024, and had a weighted average yield to maturity of 4.78% as of October 31, 2024.
Added
The Toyota project requires procurement of RNG, and our Derby, CT 14.0 MW project, our Derby, CT 2.8 MW project, and our 7.4 MW project in Yaphank Long Island (the “Yaphank Project”) require natural gas. A two-year (through May of 2025) fuel supply contract has been executed for the Toyota project.

Other FCEL 10-K year-over-year comparisons