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UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

FORM 10-Q

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

For the quarterly period ended July 31, 2023

OR

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

For the transition period from             to

Commission file number: 1-14204

Graphic

FUELCELL ENERGY, INC.

(Exact name of registrant as specified in its charter)

Delaware

06-0853042

(State or other jurisdiction of

incorporation or organization)

(I.R.S. Employer

Identification No.)

3 Great Pasture Road

Danbury, Connecticut

06810

(Address of principal executive offices)

(Zip Code)

Registrant’s telephone number, including area code: (203825-6000

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

Title of each class

Trading Symbol(s)

Name of each exchange on which registered

Common stock, par value $0.0001 per share

FCEL

The Nasdaq Stock Market LLC

(Nasdaq Global Market)

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

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

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

Large accelerated filer

Accelerated filer

Non-accelerated filer

Smaller reporting company

Emerging growth company

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

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

Number of shares of common stock, par value $0.0001 per share, outstanding as of September 5, 2023:  450,626,333

FUELCELL ENERGY, INC.

FORM 10-Q

Table of Contents

    

    

Page

PART I - FINANCIAL INFORMATION

Item 1.

Financial Statements.

3

Consolidated Balance Sheets as of July 31, 2023 and October 31, 2022.

3

Consolidated Statements of Operations and Comprehensive Loss for the three months ended July 31, 2023 and 2022.

4

Consolidated Statements of Operations and Comprehensive Loss for the nine months ended July 31, 2023 and 2022.

5

Consolidated Statements of Changes in Equity for the three and nine months ended July 31, 2023.

6

Consolidated Statements of Changes in Equity for the three and nine months ended July 31, 2022.

7

Consolidated Statements of Cash Flows for the nine months ended July 31, 2023 and 2022.

8

Notes to Consolidated Financial Statements.

9

Item 2.

Management’s Discussion and Analysis of Financial Condition and Results of Operations.

32

Item 3.

Quantitative and Qualitative Disclosures about Market Risk.

62

Item 4.

Controls and Procedures.

64

PART II - OTHER INFORMATION

Item 1.

Legal Proceedings.

65

Item 1A.

Risk Factors.

65

Item 2.

Unregistered Sales of Equity Securities and Use of Proceeds.

65

Item 3.

Defaults Upon Senior Securities.

66

Item 4.

Mine Safety Disclosures.

66

Item 5.

Other Information.

66

Item 6.

Exhibits.

67

Signatures

70

2

PART I. FINANCIAL INFORMATION

ITEM 1. FINANCIAL STATEMENTS

FUELCELL ENERGY, INC.

Consolidated Balance Sheets

(Unaudited)

(Amounts in thousands, except share and per share amounts)

July 31,

October 31,

    

2023

    

2022

ASSETS

Current assets:

Cash and cash equivalents, unrestricted

$

303,679

$

458,055

Restricted cash and cash equivalents - short-term

6,078

4,423

Investments - short-term

77,431

-

Accounts receivable, net

10,102

4,885

Unbilled receivables

18,986

11,019

Inventories

85,561

90,909

Other current assets

12,832

10,989

Total current assets

514,669

580,280

Restricted cash and cash equivalents - long-term

26,665

18,566

Inventories - long-term

7,549

7,549

Project assets, net

248,223

232,886

Property, plant and equipment, net

79,533

58,137

Operating lease right-of-use assets, net

8,690

7,189

Goodwill

4,075

4,075

Intangible assets, net

16,400

17,373

Other assets

39,449

13,662

Total assets (1)

$

945,253

$

939,717

LIABILITIES AND STOCKHOLDERS' EQUITY

Current liabilities:

Current portion of long-term debt

$

9,763

$

13,198

Current portion of operating lease liabilities

668

650

Accounts payable

22,404

28,196

Accrued liabilities

23,046

27,415

Deferred revenue

3,114

16,341

Total current liabilities

58,995

85,800

Long-term deferred revenue and customer deposits

-

9,095

Long-term operating lease liabilities

9,277

7,575

Long-term debt and other liabilities

109,130

82,863

Total liabilities (1)

177,402

185,333

Redeemable Series B preferred stock (liquidation preference of $64,020 as of
July 31, 2023 and October 31, 2022)

59,857

59,857

Redeemable noncontrolling interest

-

3,030

Total equity:

Stockholders’ equity:

Common stock ($0.0001 par value); 500,000,000 shares authorized as of July 31, 2023 and October 31, 2022; 444,704,081 and 405,562,988 shares issued and outstanding as of July 31, 2023 and October 31, 2022, respectively

44

41

Additional paid-in capital

2,186,405

2,094,076

Accumulated deficit

(1,485,177)

(1,407,973)

Accumulated other comprehensive loss

(1,620)

(1,752)

Treasury stock, Common, at cost (206,544 and 142,837 shares as of July 31, 2023
and October 31, 2022, respectively)

(1,026)

(855)

Deferred compensation

1,026

855

Total stockholder's equity

699,652

684,392

Noncontrolling interests

8,342

7,105

Total equity

707,994

691,497

Total liabilities, redeemable Series B preferred stock, redeemable noncontrolling interest and total equity

$

945,253

$

939,717

(1)As of July 31, 2023 and October 31, 2022, the combined assets of the variable interest entities (“VIEs”) were $126,041 and $119,223, respectively, that can only be used to settle obligations of the VIEs.  These assets include cash of $3,222, unbilled accounts receivable of $1,865, operating lease right of use assets of $1,176, other current assets of $21,289, restricted cash and cash equivalents of $500, project assets of $96,852 and other assets of $1,138 as of July 31, 2023, and cash of $2,149, unbilled accounts receivable of $1,070, other current assets of $14,373, operating lease right of use assets of $1,184 and project assets of $100,448 as of October 31, 2022. The combined liabilities of the VIEs as of July 31, 2023 include short-term operating lease liabilities of $157, accounts payable of $88,384, long-term operating lease liability of $1,476 and other non-current liabilities of $184 and, as of October 31, 2022, include short-term operating lease liabilities of $157, accounts payable of $76,050, accrued liabilities of $824 and long-term operating lease liability of $1,478.

See accompanying notes to consolidated financial statements.

3

FUELCELL ENERGY, INC.

Consolidated Statements of Operations and Comprehensive Loss

(Unaudited)

(Amounts in thousands, except share and per share amounts)

Three Months Ended July 31,

    

2023

    

2022

Revenues:

Product

$

-

$

18,000

Service

9,841

9,049

Generation

10,982

10,877

Advanced Technologies

4,687

5,178

Total revenues

25,510

43,104

Costs of revenues:

Product

2,910

17,919

Service

9,575

7,718

Generation

17,483

18,136

Advanced Technologies

3,757

3,511

Total costs of revenues

33,725

47,284

Gross loss

(8,215)

(4,180)

Operating expenses:

Administrative and selling expenses

17,560

14,158

Research and development expenses

15,620

9,659

Total costs and expenses

33,180

23,817

Loss from operations

(41,395)

(27,997)

Interest expense

(1,912)

(1,622)

Interest income

3,966

932

Gain on extinguishment of finance obligations and debt, net

15,337

-

Other income, net

403

204

Loss before provision for income taxes

(23,601)

(28,483)

Provision for income taxes

-

(494)

Net loss

(23,601)

(28,977)

Net income attributable to noncontrolling interests

678

437

Net loss attributable to FuelCell Energy, Inc.

(24,279)

(29,414)

Series B preferred stock dividends

(800)

(800)

Net loss attributable to common stockholders

$

(25,079)

$

(30,214)

Loss per share basic and diluted:

Net loss per share attributable to common stockholders

$

(0.06)

$

(0.08)

Basic and diluted weighted average shares outstanding

415,867,594

387,465,758

Three Months Ended July 31,

    

2023

    

2022

Net loss

$

(23,601)

$

(28,977)

Other comprehensive loss:

Foreign currency translation adjustments

(164)

(86)

Total comprehensive loss

$

(23,765)

$

(29,063)

Comprehensive income attributable to noncontrolling interests

678

437

Comprehensive loss attributable to FuelCell Energy, Inc.

$

(24,443)

$

(29,500)

4

FUELCELL ENERGY, INC.

Consolidated Statements of Operations and Comprehensive Loss

(Unaudited)

(Amounts in thousands, except share and per share amounts)

Nine Months Ended July 31,

    

2023

    

2022

    

Revenues:

Product

$

9,095

$

36,000

Service

49,913

13,855

Generation

28,979

27,423

Advanced Technologies

12,945

14,005

Total revenues

100,932

91,283

Costs of revenues:

Product

7,425

39,159

Service

40,633

13,123

Generation

51,166

42,978

Advanced Technologies

10,779

10,408

Total costs of revenues

110,003

105,668

Gross loss

(9,071)

(14,385)

Operating expenses:

Administrative and selling expenses

47,637

64,357

Research and development expenses

43,000

22,316

Total costs and expenses

90,637

86,673

Loss from operations

(99,708)

(101,058)

Interest expense

(4,926)

(4,757)

Interest income

11,064

1,025

Gain on extinguishment of finance obligations and debt, net

15,337

-

Other income, net

216

61

Loss before provision for income taxes

(78,017)

(104,729)

Provision for income taxes

(581)

(494)

Net loss

(78,598)

(105,223)

Net loss attributable to noncontrolling interests

(1,394)

(4,968)

Net loss attributable to FuelCell Energy, Inc.

(77,204)

(100,255)

Series B preferred stock dividends

(2,400)

(2,400)

Net loss attributable to common stockholders

$

(79,604)

$

(102,655)

Loss per share basic and diluted:

Net loss per share attributable to common stockholders

$

(0.19)

$

(0.27)

Basic and diluted weighted average shares outstanding

409,361,826

375,638,293

Nine Months Ended July 31,

    

2023

    

2022

    

Net loss

$

(78,598)

$

(105,223)

Other comprehensive income (loss):

Foreign currency translation adjustments

132

(326)

Total comprehensive loss

$

(78,466)

$

(105,549)

Comprehensive loss attributable to noncontrolling interests

(1,394)

(4,968)

Comprehensive loss attributable to FuelCell Energy, Inc.

$

(77,072)

$

(100,581)

See accompanying notes to consolidated financial statements.

5

FUELCELL ENERGY, INC.

Consolidated Statements of Changes in Equity

(Unaudited)

(Amounts in thousands, except share amounts)

Common Stock

    

Shares

    

Amount

    

Additional
Paid-in
Capital

    

Accumulated
Deficit

    

Accumulated
Other
Comprehensive
Loss

    

Treasury
Stock

    

Deferred
Compensation

Total Stockholder's Equity

Noncontrolling Interests

    

Total
Equity

Balance, October 31, 2022

405,562,988

$

41

$

2,094,076

$

(1,407,973)

$

(1,752)

$

(855)

$

855

$

684,392

$

7,105

$

691,497

Common stock issued, non-employee compensation

21,106

68

68

68

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

169,065

(314)

(314)

(314)

Share based compensation

2,637

2,637

2,637

Preferred dividends — Series B

(800)

(800)

(800)

Effect of foreign currency translation

447

447

447

Adjustment for deferred compensation

(21,106)

(68)

68

Reclass of redeemable non-controlling interest

3,030

3,030

Distribution to non-controlling interest

(106)

(106)

Net loss attributable to noncontrolling interests

2,464

2,464

(2,464)

Net Loss

(21,086)

(21,086)

(21,086)

Balance, January 31, 2023

405,732,053

$

41

$

2,095,667

$

(1,426,595)

$

(1,305)

$

(923)

$

923

$

667,808

$

7,565

$

675,373

Sale of common stock, net of fees

949,438

2,663

2,663

2,663

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

57,222

Share based compensation

3,194

3,194

3,194

Preferred dividends — Series B

(800)

(800)

(800)

Effect of foreign currency translation

(151)

(151)

(151)

Distribution to non-controlling interest

(143)

(143)

Net loss attributable to noncontrolling interests

(392)

(392)

392

Net Loss

(33,911)

(33,911)

(33,911)

Balance, April 30, 2023

406,738,713

$

41

$

2,100,724

$

(1,460,898)

$

(1,456)

$

(923)

$

923

$

638,411

$

7,814

$

646,225

Sale of common stock, net of fees

37,931,204

3

83,268

83,271

83,271

Common stock issued, non-employee compensation

42,601

105

105

105

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

34,164

(58)

(58)

(58)

Share based compensation

3,166

3,166

3,166

Preferred dividends — Series B

(800)

(800)

(800)

Adjustment for deferred compensation

(42,601)

(103)

103

Effect of foreign currency translation

(164)

(164)

(164)

Distribution to non-controlling interest

(150)

(150)

Net loss attributable to noncontrolling interests

(678)

(678)

678

Net Loss

(23,601)

(23,601)

(23,601)

Balance, July 31, 2023

444,704,081

$

44

$

2,186,405

$

(1,485,177)

$

(1,620)

$

(1,026)

$

1,026

$

699,652

$

8,342

$

707,994

6

FUELCELL ENERGY, INC.

Consolidated Statements of Changes in Equity

(Unaudited)

(Amounts in thousands, except share amounts)