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YoY shift: Neutral
Year-over-year tone shift - average net-tone change across Risk Factors and MD&A vs the prior 10-K. This filing is 0.01pp more bullish than last year's.
Why YoY instead of absolute: the LM lexicon has ~6.6× more negative words than positive (legal/risk-disclosure language is heavy on hedging), so every 10-K reads bearish on raw tone. Year-over-year change strips that bias and surfaces the actual shift in management's framing.
Tone shift by section
The two components the gauge averages: how Risk Factors and MD&A each shifted in net tone versus last year's 10-K. The headline above is their average, so a green needle over a soft section just means the other section carried it.
Risk Factors
+0.10pp
Flat
Net-tone change vs last year's 10-K.
MD&A
-0.08pp
Flat
Net-tone change vs last year's 10-K.
Per-snippet highlights
Sentence-level sentiment highlighting with category and subcategory filters is coming once the snippet-scoring pipeline lands. For now, dig into the actual section text on the Sections tab.
Language change vs prior 10-K
Risk Factors (Item 1A) - words with the biggest YoY frequency increase
Negative rising
ceased+3
delayed+2
harm+2
unintended+2
attrition+2
Positive rising
able+2
assure+2
effective+1
successful+1
opportunities+1
Risk Factors (Item 1A)
13,352 words
ITEM 1A. RISK FACTORS
An investment in our common stock involves a high degree of risk. Prior to making a decision about investing in our securities, you should carefully consider the specific risk factors discussed below, together with all of the other information in this Annual Report on Form 10-K, including the section titled “Management’s Discussion and Analysis of Financial Condition and Results of Operations” and our consolidated financial statements and related notes. The risks and uncertainties we have described are not the only ones we face. Additional risks and uncertainties not presently known to us or that we currently deem immaterial may also affect our business, financial condition, or results of operations. If any such risks actually occur, our business, financial condition, or results of operations could be materially and adversely affected. 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.
We have transitioned from a research and development company to a commercial products manufacturer, services provider and developer. We have not been since our year ended October 31, 1997. We expect to continue to incur net and generate cash flows until we can produce sufficient revenues and gross profit to cover our costs. We may never become . Even if we do , we may be to sustain or increase our in the future. For the reasons discussed in more detail below, there are uncertainties associated with our and sustaining . 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 by a variety of factors, including, but not limited to, the price of our common stock and general market conditions.
Language change vs prior 10-K
MD&A (Item 7) - words with the biggest YoY frequency increase
Negative rising
impairment+14
ceased+2
negative+1
terminate+1
impairments+1
Positive rising
effective+5
enhanced+1
greater+1
strengthen+1
enabling+1
MD&A (Item 7)
18,177 words
Item 7.
MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
The following discussion should be read in conjunction with the information included in Item 8 of this Annual Report on Form 10-K. Unless otherwise indicated, the terms “Company”, “FuelCell Energy”, “we”, “us”, and “our” refer to FuelCell Energy, Inc. and its subsidiaries. All tabular dollar amounts are in thousands. In certain instances, the capitalized terms used in this section are defined elsewhere in this Annual Report on Form 10-K, including in the Notes to the Consolidated Financial Statements.
In addition to historical information, this discussion and analysis contains forward-looking statements. All forward-looking statements are subject to risks and uncertainties that could cause actual results to differ materially from those projected. Please see the section of this Annual Report entitled “Forward-Looking Statement Disclaimer” for a discussion of the uncertainties, risks and assumptions associated with these statements, as well as the other risks set forth in our filings with the SEC including those set forth under the section entitled Item 1A. Risk Factors in this Annual Report.
Overview
FuelCell Energy is a clean energy technology company and a stationary fuel cell manufacturer with 22 years of operating experience in this field. Founded in 1969 and headquartered in Danbury, Connecticut, we manufacture and sell our proprietary molten carbonate fuel cell systems, which deliver large-scale, continuous clean power and advanced emissions management. Unlike traditional power generation methods that rely on combustion, our fuel cells generate electricity electrochemically through a chemical reaction rather than burning fuel, resulting in ultra-low emissions and high . Our carbonate fuel cell systems are fuel-flexible, with the ability to run on biofuels, renewable natural gas, or hydrogen-hydrocarbon blends, and provide reliable baseload power, carbon capture, and thermal energy for chilling, heating, and process steam. As global energy demand rises driven by artificial intelligence (“AI”), electrification, and the need for grid resiliency, we believe solutions like ours will be vital in addressing next-generation needs, helping to the grid, reducing pollution, and supporting decarbonization goals. We have proven utility-scale projects operating at 10 MW, 20 MW, and 58.8 MW, each with more than seven years of continuous run time. As a company, we are motivated by our purpose of a world by clean energy. We target a range of markets and applications with our products, including utilities and independent power producers, data centers, wastewater treatment, commercial and hospitality, and microgrids, among others. We market our products primarily in the U.S. and Canada, the European Union (the “EU”) and the United Kingdom (the “UK”), and priority Asian markets including South Korea, Singapore, Malaysia, and Thailand. We selectively pursue additional in other regions that align with our strategic priorities. We focus our expansion on markets and regions that value clean distributed generation, have grid reliability and/or transmission and distribution lines, and can from the value streams our products provide.
Our cost reduction strategy for manufacturing may not succeed or may be significantly delayed, which may result in our inability to deliver improved margins.
Our cost reduction strategy for manufacturing is based on the assumption that increases in production will result in economies of scale. In addition, our cost reduction strategy relies on advancements in our manufacturing process, global competitive sourcing, engineering design, reducing the cost of capital and technology improvements (including stack life and projected power output). Failure to achieve our cost reduction targets could have a material adverse effect on our results of operations and financial condition.
We have debt 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, 2025, our total consolidated debt and finance obligations outstanding (“indebtedness”) was $122.9 million ($119.6 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. Our business may not generate cash flows from operations in the future sufficient to service our debt and make necessary capital expenditures. If we are unable to generate such cash flows, we may be required to adopt one or more alternatives, such as selling assets, further restructuring our operations, restructuring our debt or obtaining additional equity capital on terms that may be onerous or dilutive.
We may incur additional indebtedness in the future in the ordinary course of business, which could include onerous restrictions on us. If new debt is added to current debt levels, the risks described above could intensify. Our debt agreements contain representations and warranties, affirmative and negative covenants, and events of default that entitle the lenders to cause our indebtedness under such debt agreements to become immediately due and payable.
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We rely on project financing for our generation operating portfolio, which includes debt and tax equity financing arrangements, to realize the benefits provided by investment tax credits and accelerated tax depreciation. In the event that interest rates rise or there are changes in tax policy, our financial results could be harmed.
Rising interest rates may increase our cost of capital. Part of our business strategy is to generate positive cash flows after debt service from our generation operating portfolio. Rising interest rates may have an adverse impact on the cost of debt and thus result in lower cash flows after debt service than we realize today. We also expect that projects we retain in our generation operating portfolio will receive capital from tax equity investors who derive a significant portion of their economic returns through tax benefits. Tax equity investors are generally entitled to substantially all of the project’s tax benefits, such as those provided by the U.S. investment tax credit (“ITC”) and Modified Accelerated Cost Recovery System or bonus depreciation. Our ability to obtain additional financing in the future depends on the continued confidence of financing sources in our business model and the continued availability of tax benefits applicable to our products. 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.
We operate a 167,000 square-foot manufacturing facility in Torrington, Connecticut where we produce the individual cell packages and assemble the fuel cell modules for our carbonate fuel cell products. The 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. We believe that the Torrington facility could accommodate an estimated annualized production capacity of up to 350 MW per year with additional capital investments in machinery, equipment, tooling, labor, outsourcing of certain processes and inventory.
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.
Prior to the implementation of the restructuring actions announced in November 2024 and June 2025, our manufacturing and research and development facility in Calgary, Alberta, Canada focused on the engineering and development of our solid oxide power generation and electrolysis technologies. This facility also housed our solid oxide power generation and electrolysis 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 and continuing in fiscal years 2023 and 2024, we made investments in the Calgary facility, including by increasing the total leased facility space and ordering long lead process equipment, with the goal of increasing solid oxide production capacity. However, in November 2024 and June 2025, we announced global restructuring plans relating to our operations in the U.S., Canada, and Germany that aim to reduce operating costs, realign resources toward advancing the Company’s core carbonate technologies, and protect the Company’s competitive position amid slower-than-expected market investments in clean energy. These restructuring plans also include the deferment and cancelation of certain previously planned capital and project expenditures related to solid oxide manufacturing in our facility in Calgary, Canada. As a result of these restructuring plans, we have deferred the capital spending required to complete the Calgary expansion and do not currently expect to complete this project. In addition, as part of these restructuring plans, we ceased development of the solid oxide power generation platform and began focusing on demonstrating the capabilities of our solid oxide electrolysis platform. We expect to seek partnerships for solid oxide product commercialization and manufacturing.
If our business grows more quickly than we anticipate, our existing and manufacturing facilities and plans to increase production may be inadequate to meet demand and we may need to seek out new or additional space, or retrofit or further equip our existing facilities, at considerable cost to us. If our business does not grow as quickly as we expect, our existing manufacturing facilities would, in part, represent excess capacity for which we may not be able to 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.
Our workforce reduction may cause unintended consequences and our results of operations may be harmed.
On June 5, 2025, we implemented a workforce reduction of approximately 22%, or 122 employees across our U.S., Canadian and German operations. While we believe this workforce reduction was necessary to help realign the Company’s
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cost structure, this reduction may yield unintended consequences, such as the loss of certain institutional knowledge and technical expertise, as well as attrition beyond our intended reduction in workforce and reduced employee morale, which may cause our employees who were not affected by the reduction in workforce to seek alternate employment. Additional attrition could impede our ability to meet our operational goals, which could have a material adverse effect on our financial performance. In addition, as a result of the reductions in our workforce, we may face an increased risk of employment litigation. Furthermore, employees whose positions were eliminated may seek employment with our competitors. Although all our employees are required to sign a confidentiality and non-competition agreement with us at the time of hire, we cannot assure you that the confidential nature of our proprietary information will be maintained in the course of such future employment.
If our restructuring plan and workforce reduction do not result in the intended benefits or savings or result in unanticipated costs, including, but not limited to, additional charges and/or higher than expected severance and employee termination benefits costs, or if we are unable to successfully implement our restructuring plan, our results of operations and financial condition could be materially adversely affected. We cannot assure you that we will not undertake additional reduction and/or restructuring activities, that any of our efforts will be successful, or that we will be able to realize the cost savings and other anticipated benefits from our current or any future restructuring or reduction plans. In addition, if we continue to reduce our workforce, it may adversely impact our ability to respond rapidly to any new product, growth or revenue opportunities and to execute on our backlog and business plans.
If our intangible assets and long-lived assets (including project assets) become impaired in the future, we may again be required to record a significant charge to operations.
We have recorded significant impairment charges to operations in our financial statements upon our determination, and we may in the future be required to record significant impairment charges to operations in our financial statements should we again determine, that our long-lived assets (i.e., project assets, property, plant and equipment and amortizing intangible assets) are impaired. Such charges have had and may continue to have a significant negative impact on our reported financial condition and results of operations. Project assets, property, plant and equipment, goodwill, indefinite-lived intangible assets and inventory impairment charges totaled approximately $65.8 million, $1.3 million and $2.4 million for the fiscal years ended October 31, 2025, 2024 and 2023, respectively.
As required by accounting rules, we review any goodwill and/or indefinite-lived intangible assets recorded on our balance sheet for impairment at least annually as of July 31 or more frequently if facts and circumstances indicate that it is more likely than not that the fair value of a reporting unit that has goodwill is less than its carrying value. Factors that may be considered a change in circumstances indicating that the carrying value of our goodwill might not be recoverable include a significant decline in projections of future cash flows and lower future growth rates in our industry. If the assets have been determined to be abandoned or not recoverable, we are required to record a charge reflecting impairment of the assets. We review long-lived assets for impairment whenever events or changes in circumstances indicate the carrying amount may not be recoverable. We consider a project asset commercially viable and recoverable if such project asset is anticipated to be sellable for a profit, or generates positive cash flows, in excess of the cost of the project asset once it is either fully developed or fully constructed. When a project asset is not considered commercially viable or costs are not deemed to be recoverable, we are required to record a charge reflecting the impairment of such project asset.
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. These agreements are important to the continued development of our technology and our 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 Joint Development Agreement with EMTEC, our 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. Furthermore, with respect to government-funded contracts, irrespective of the amounts allocated by the contracting agency, such contracts are subject
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to annual Congressional appropriations and the results of government or agency sponsored reviews and audits of our cost reduction projections and efforts. We can only receive funds under government-funded contracts ultimately made available to us annually by Congress as a result of the appropriations process. Accordingly, we cannot be sure whether we will receive the full amounts awarded under our privately funded, government research and development or other contracts. Termination of the contracts or failure to receive the full amounts under any of our Advanced Technologies contracts could materially and adversely affect our business prospects, results of operations and financial condition.
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.
Investor-owned utilities may resist adoption of distributed generation fuel cell plants as such plants are disruptive to the utility business model that primarily utilizes large central generation power plants and associated transmission and distribution. On-site distributed generation that is on the customer-side of the electric meter competes with the utility. Distributed generation on the utility-side of the meter generally has power output that is significantly less than central generation power plants and may be perceived by the utility as too small to materially impact its business, limiting its interest. Additionally, perceived technology risk may limit utility interest in stationary fuel cell power plants.
Utility companies commonly charge fees to larger, industrial customers for disconnecting from the electric grid or for having the capacity to use power from the electric grid for back up purposes. These fees could increase the cost to our customers of using our SureSource products and could make our products less desirable, thereby harming our business prospects, results of operations and financial condition.
We depend on third party suppliers for the development and timely supply of key raw materials and components for our products.
We use various raw materials and components to construct a fuel cell module, including nickel and stainless steel, that are critical to our manufacturing process. We also rely on third-party suppliers for the BOP components in our products. Suppliers must undergo a qualification process, which takes four to twelve months. We continually evaluate new suppliers, and we are currently qualifying several new suppliers. There are a limited number of suppliers for some of the key components of our products. In addition, to the extent the processes that our suppliers use to manufacture components are proprietary, we may be unable to obtain comparable components from alternative suppliers, all of which could harm our business prospects, results of operations and financial condition. We do not know whether we will be able to maintain long-term supply relationships with our critical suppliers, or secure new long-term supply relationships on terms that will allow us to achieve our objectives, if at all. A supplier’s failure to develop and supply components in a timely manner or to supply components that meet our quality, quantity or cost requirements or our technical specifications, or our inability to obtain alternative sources of these components on a timely basis or on terms acceptable to us, could each harm our ability to manufacture our products. 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. These challenges may include extended shipping lead times and pricing pressures on transportation and logistics that could adversely impact our ability to meet our production schedules and project deadlines, may result in additional and increased costs, or may otherwise adversely impact our business, results of operations and financial condition. 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. 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.
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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. 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.
Risks Related to Sales of our Products
We derive significant revenue from contracts awarded through competitive bidding processes involving substantial costs and risks. Our contracted projects may not convert to revenue, and our project awards and sales pipeline may not convert to contracts, which may have a material adverse effect on our revenue and cash flows.
We expect a significant portion of the business that we will seek in the foreseeable future will be awarded through competitive bidding against other fuel cell technologies and other forms of power generation. The competitive bidding process involves substantial costs and a number of risks, including the significant cost and managerial time to prepare bids and proposals for contracts that may not be awarded to us and our failure to accurately estimate the resources and costs that will be required to fulfill any contract we win. In addition, following a contract award, we may encounter significant expense, delay or contract modifications or award revocation as a result of our competitors protesting or challenging contracts awarded to us in competitive bidding. Our failure to compete effectively in this procurement environment could adversely affect our revenue and/or profitability.
Some of the project awards we receive and orders we accept from customers require certain conditions or contingencies (such as permitting, interconnection, financing or regulatory approval) to be satisfied, some of which are outside of our control. Certain awards are cancelable or revocable at any time prior to contract execution. The time periods from receipt of an award to execution of a contract, or receipt of a contract to installation may vary widely and are determined by a number of factors, including the terms of the award, governmental policies or regulations that go into effect after the award, the terms of the customer contract and the customer’s site requirements. These same or similar conditions and contingencies may be required by financiers in order for us to draw on financing to complete a project. If these conditions or contingencies are not satisfied, or changes in laws affecting project awards occur, or awards are revoked or cancelled, project awards may not convert to contracts, and installations may be delayed or canceled. This could have an adverse impact on our revenue and cash flow and our ability to complete construction of a project.
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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 negatively affect our operating results.
We apply the transfer of control over time revenue recognition method under Accounting Standards Codification Topic 606: Revenue from Contracts with Customers to certain service contracts which are subject to estimates. On an annual basis, we perform a review process to help ensure that total estimated contract costs include estimates of costs to complete that are based on the most recent available information. The amount of costs incurred on a cumulative to date basis as a function of estimated costs at completion is applied to contract consideration to determine the cumulative revenue that should be recognized to date.
We have contracted under long-term service agreements with certain customers to provide service on our products over terms of up to 20 years. Under the provisions of these contracts, we provide services to maintain, monitor, and repair customer power plants to meet minimum operating levels. Pricing for service contracts is based upon estimates of future costs including future module exchanges. While we have conducted tests to determine the overall life of our products, we have not run certain of our products over their projected useful life or in all potential conditions prior to large scale commercialization. As a result, we cannot be sure that these products will last to their expected useful life or perform as anticipated in all conditions, which could result in warranty claims, performance penalties, maintenance and module replacement costs in excess of our estimates, losses on service contracts and/or a negative perception of our products. As a result of our products’ lack of maturity, we have incurred and may continue to incur charges for warranty claims, performance penalties, maintenance and module replacement costs in excess of our estimates and losses on service contracts. Each of these risks may be material under these contracts and, as a result, we have experienced and may continue to experience diminished returns and we have been required to and may be required, in the future, to write off all or a portion of our capitalized costs in these project assets.
In certain instances, we have executed PPAs with the utility, end-user of the power or site host of the fuel cell power plant. We may then sell the PPA and power plant to a project investor or retain the project and collect revenue from the sale of power over the term of the PPA, recognizing electricity revenue as power is generated and sold. Our growing portfolio of project assets used to generate and sell power under PPAs and utility tariff programs exposes us to operational risks and uncertainties, including, among other things, lost revenues due to prolongedoutages, 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 severeadverse 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 ability to proceed with projects under development and complete construction of projects on schedule and within budget may be adversely affected by escalating costs for materials and fuel (including natural gas and renewable natural gas), supply chain and logistics challenges, tariffs, labor and regulatory compliance, inability to obtain necessary permits, interconnections or other approvals on acceptable terms or on schedule and by other factors. If any development project or construction is not completed, is delayed or is subject to cost overruns, we could become obligated to make delay or termination payments or become obligated for other damages under contracts, experience diminished returns or be required to write off all or a portion of our capitalized costs in the project. Each of these events could have an adverse effect on our business, financial condition, results of operations and prospects.
We extend product warranties for our products, which products are complex and could contain defects and may not operate at expected performance levels, which could impact sales and market adoption of our products, affect our operating results or result in claimsagainst us.
We develop complex and evolving products, and we continue to advance the capabilities of our fuel cell stacks. We produce carbonate fuel stacks with a 7-year cell design life. We provide product warranties for a specific period of time against manufacturing or performance defects. We accrue for warranty costs based on historical warranty claim experience; however, actual future warranty expenses may be greater than we have assumed in our estimates. Issues have been and may continue to be found in existing or new products including, but not limited to, module decay rates which have exceeded and may continue to exceed design expectations. This has resulted and may continue to result in a delay in recognition or loss of revenues and may result in loss of market share or failure to achieve broad market acceptance. The occurrence of defects has also caused and may continue to cause us to incur significant warranty, support and repair costs
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in excess of our estimates, could divert the attention of our engineering personnel from our product development efforts, and could harm our relationships with our customers. Although we seek to limit our liability, a product liability claim brought against us, even if unsuccessful, would likely be time consuming, could be costly to defend, and may hurt our reputation in the marketplace. Our customers could also seek and obtain damages from us for their losses .
We currently face and will continue to face significant competition, including from products using other energy sources that may be lower priced or have preferred environmental characteristics.
We compete on the basis of our products’ reliability, efficiency, environmental considerations and cost. Technological advances in alternative energy products, improvements in the electric grid or other sources of power generation that use lower priced fuel or no fuel, or other fuel cell technologies may negatively affect the development or sale of some or all of our products or make our products less economically attractive, non-competitive or obsolete prior to or after commercialization. Significant decreases in the price of alternative technologies or grid delivered electricity, or significant increases in the price of our fuels could have a material adverse effect on our business because other generation sources could be more economically attractive to consumers than our products. Additionally, in certain markets, consumers and regulators have expressed a preference for zero-carbon generating resources over fueled resources, which could adversely affect sales of our products in such markets.
Other companies, some of which have substantially greater resources than ours, are currently engaged in the development of products and technologies that are similar to, or may be competitive with, our products and technologies. Several companies in the U.S. are engaged in fuel cell development, although we are the only domestic company engaged in manufacturing and deployment of stationary carbonate fuel cells. Other emerging fuel cell technologies include small or portable proton exchange membrane fuel cells, stationary phosphoric acid fuel cells, stationary solid oxide fuel cells, and small residential solid oxide fuel cells. Any of these technologies and any of our competitors has the potential to capture market share in our target markets. There are also other potential fuel cell competitors internationally that could capture market share.
Other than fuel cell developers, we must also compete with companies that manufacture combustion-based distributed power equipment, including various engines and turbines, and have well-established manufacturing, distribution, operating and cost features. Electrical efficiency of these products can be competitive with our power plants in certain applications. Significant competition may also come from gas turbine companies and large scale solar and wind technologies.
Our plans are dependent on market acceptance of our products.
Our plans are dependent upon market acceptance of, as well as enhancements to, our products. Fuel cell systems represent an emerging market, and we cannot be sure that potential customers will accept fuel cells as a replacement for traditional power sources or non-fuel based power sources, hydrogen generation sources or storage. As is typical in a rapidly evolving industry, demand and market acceptance for recently introduced products and services are subject to a high level of uncertainty and risk. Since the distributed generation, hydrogen, carbon capture and storage markets are still evolving, it is difficult to predict with certainty the size of these markets and their growth rates. The development of a market for our products may be affected by many factors that are out of our control, including:
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.
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 achieveprofitability.
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Our development timeline for bringing our solid oxide electrolysis technology to market has shifted as a result of delays in adoption of clean energy technologies generally and implementation of our recent global restructuring actions, which have re-focused our business on our core carbonate technologies. In addition, our timeline for bringing our carbon capture technology to market will be subject to conditions outside of our control.
Due to changes in the pace of hydrogen adoption, uncertainty regarding large scale clean energy policies globally, and our global restructuring plans announced in November 2024 and June 2025, which aim to reduce operating costs, realign resources toward advancing the Company’s core carbonate technologies, and protect the Company’s competitive position amid slower-than-expected market investments in clean energy, we have reduced our workforce, reduced spending on product development, ceased our manufacturing capacity expansion efforts at our facility in Calgary, Canada, ceased the development of our solid oxide power generation platform and focused on demonstrating the capabilities of our solid oxide electrolysis product. With our renewed primary focus on our core carbonate technologies, the commercialization of our solid oxide electrolysis technology will be paced by market adoption of new clean energy products and our ability to contract with third-party partners to bring this solution to market. In addition, the commercialization of our carbon capture technology will be paced by the timing of the completion, commissioning and successful demonstration of the carbon capture and sequestration pilot project at the Port of Rotterdam, by our ability to negotiate and execute a definitive commercial agreement with EMTEC or another ExxonMobil affiliate with respect to the manufacture of the fuel cell modules and certain other equipment necessary for new carbon capture projects, and by market adoption of this technology. If we are unable to successfully commercialize our carbon capture technology, if the commercialization of our carbon capture technology is delayed, or if we are unable to negotiate a mutually agreeable commercial agreement with EMTEC or another ExxonMobil affiliate, then our ability to generate revenue and achieveprofitability 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 our solid oxide electrolysis product or our carbon capture products once commercialized, including goals for power output, hydrogen production, rates of carbon capture, useful life and reliability (as applicable), then our ability to generate revenue and achieveprofitability from sales of these new products will be delayed or may not occur at all. In addition, if we are unable to develop additional commercially viable products in the future, we may not be able to generate sufficient revenue to become profitable. 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 achieveprofitability.
Our products use inherently dangerous, flammable fuels, operate at high temperatures and use corrosive carbonate material, each of which could subject our business to product liability claims.
Our business exposes us to potential product liability claims that are inherent in products that use hydrogen. Our products utilize fuels such as natural gas and convert these fuels internally to hydrogen that is used by our products to generate electricity. 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 molten carbonate and solid oxide electrolysis products operate at high temperatures and use corrosive carbonate material, which could expose us to potential liability claims. 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. 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.
Risks Related to Privacy, Data Protection and Cybersecurity
Our reliance on information technology continues to grow, and disruptions, failures, or security breaches could materially impact both our operations and the operations of our power plant platforms. Furthermore, the rise in information technology security threats and increasingly sophisticated cybercrime presents ongoing risks to our systems, networks, products, and services.
Our operations depend on information technology networks and systems, including the Internet, for processing, transmitting, and storing electronic and financial data. These resources support a range of business processes and activities, such as monitoring and operating power plants owned by us or our customers, and managing production, manufacturing, financial, logistics, sales, marketing, and administrative functions. Furthermore, we collect and retain data that is sensitive both to our organization and to third parties. The secure operation of information technology networks and systems, as
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well as the responsible processing and maintenance of this data, are essential to our business operations and strategic objectives.
Our information technology infrastructure is essential for communication with employees, customers, suppliers, and other parties, as well as for meeting regulatory, legal, and tax obligations and operating our fuel cell power plants. Several of these information technology systems are managed by third-party vendors or involve shared service centers, making them potentially vulnerable to damage, disruption, or shutdown from events such as software or database upgrades, power outages, hardware malfunctions, computer viruses, cyberattacks, emerging technology risks, telecom failures, user mistakes, natural disasters, terrorist actions, or other catastrophicincidents. If any of our key information technology systems were severely affected and our disaster recovery or business continuity measures did not resolve the situation quickly, it may harm our product sales, financial health, and operational results. We may also face delays in reporting financial data or encounter disruptions in fuel cell plant operations, which could lead to performance penalties under our customer contracts.
Information technology security threats — from user error to cybersecurity attacks designed to gainunauthorized access to our systems, networks and data — are increasing in frequency and sophistication. Cybersecurity attacks may range from random attempts to coordinated and targeted attacks, including sophisticated computer crime and advanced persistentthreats. These threats pose a risk to the security of our systems and networks and the confidentiality, availability and integrity of our data. Cybersecurity attacks could also include attacks targeting customer data or the security, integrity and/or reliability of the hardware and software installed in our products. We could experience cybersecurity attacks that result in unauthorized parties gaining access to our information technology systems, our networks, and/or our power plants. However, to date, no cybersecurity attack has resulted in any material loss of data, interrupted our day-to-day operations or had a material impact on our financial condition, results of operations or liquidity. While we actively manage information technology security risks within our control, there can be no assurance that such actions will be sufficient to mitigate all potential risks to our systems, networks and data. In addition to the direct potential financial risk as we continue to build, own and operate generation assets, other potential consequences of a material cybersecurity attack include reputational damage, litigation with third parties, disruption to systems, unauthorized release of confidential or otherwise protected information, corruption of data, diminution in the value of our investment in research, development and engineering, and increased cybersecurity protection and remediation costs, which in turn could adversely affect our competitiveness, results of operations and financial condition. The amount of insurance coverage we maintain may be inadequate to cover claims or liabilities relating to a cybersecurity attack.
Additionally, the legal and regulatory environment surrounding information security and privacy in the U.S. and international jurisdictions is constantly evolving. Violation or non-compliance with any of these laws or regulations, contractual requirements relating to data security and privacy, or our own privacy and security policies, either intentionally or unintentionally, or through the acts of intermediaries could have a material adverse effect on our brand, reputation, business, financial condition and results of operations, as well as subject us to significant fines, litigationlosses, third-party damages and other liabilities.
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. If other control deficiencies are identified in the future, we may not be able to report our financial results accurately, prevent fraud or file our periodic reports in a timely manner, which may adversely affect investor confidence in our Company and, as a result, the value of our common stock.
We are required, pursuant to Section 404 of the Sarbanes-Oxley Act (“Section 404”), to furnish a report by management on, among other things, the effectiveness of our internal control over financial reporting. Complying with Section 404 requires a rigorous compliance program as well as adequate time and resources. We may not be able to complete our internal control evaluation, testing and any required remediation in a timely fashion. Additionally, if we identify one or more material weaknesses in our internal control over financial reporting, we will not be able to assert that our internal controls are effective. A material weakness is a deficiency, or combination of deficiencies, in internal control over financial reporting, such that there is a reasonable possibility that a material misstatement of our annual or interim financial statements will not be prevented or detected on a timely basis.
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In a prior fiscal year, our management identified a material weakness in our internal control over financial reporting, which has been remediated. We cannot be certain that other material weaknesses and control deficiencies will not occur in the future. If material weaknesses are identified in the future, or if we are not able to comply with the requirements of Section 404 in a timely manner, our reported financial results could be materially misstated and we could be subject to investigations or sanctions by regulatory authorities, which would require additional financial and management resources, and the value of our common stock could decline .
To the extent we identify future weaknesses or deficiencies, there could be material misstatements in our consolidated financial statements and we could fail to meet our financial reporting obligations. As a result, our ability to obtain additional financing on favorable terms or at all could be materially and adversely affected which, in turn, could materially and adversely affect our business, our financial condition and the value of our common stock. If we are unable to assert that our internal control over financial reporting is effective in the future, investor confidence in the accuracy and completeness of our financial reports could be further eroded, which would have a material adverse effect on the price of our common stock.
Our results of operations could vary as a result of changes to our accounting policies or the methods, estimates and judgments we use in applying our accounting policies.
The methods, estimates and judgments we use in applying our accounting policies have a significant impact on our results of operations. Such methods, estimates and judgments are, by their nature, subject to substantial risks, uncertainties and assumptions, and factors may arise over time that could lead us to reevaluate our methods, estimates and judgments.
In future periods, management will continue to reevaluate its estimates for contract margins, service agreements, loss accruals, warranty, performance guarantees, liquidateddamages, inventory valuation allowances and allowance for doubtful accounts. Changes in those estimates and judgments could significantly affect our results of operations and financial condition. We will also adopt changes required by the Financial Accounting Standards Board and the SEC.
We may be affected by environmental and other governmental regulation.
We are subject to various federal, state and local laws and regulations relating to, among other things, land use, safe working conditions, handling and disposal of hazardous and potentially hazardous substances and emissions of carbon dioxide and pollutants into the atmosphere. Our business exposes us to the risk of harmful substances escaping into the environment, resulting in personal injury or loss of life, damage to or destruction of property, and natural resource damage. Depending on the nature of the claim, our current insurance policies may not adequately reimburse us for costs incurred in settling environmental damageclaims, and in some instances, we may not be reimbursed at all. In addition, it is possible that industry-specific laws and regulations will be adopted covering matters such as transmission scheduling, distribution, emissions, and the characteristics and quality of our products, including installation and servicing. These regulations could limit the growth in the use of carbonate fuel cell products, decrease the acceptance of fuel cells as a commercial product and increase our costs and, therefore, the price of our products. 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. Accordingly, compliance with existing or future laws and regulations could have a material adverse effect on our business prospects, results of operations and financial condition. If we fail to comply with applicable environmental laws and regulations, governmental authorities may seek to impose fines and penalties on us or to revoke or deny the issuance or renewal of operating permits and private parties may seek damages from us. Under those circumstances, we might be required to curtail or cease operations, conduct site remediation or other corrective action, or pay substantial damageclaims.
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. Changes in any of the laws, regulations, ordinances or rules that apply to our installations and new technology could make it illegal or more costly for us or our customers to install and operate our products at particular sites. Additionally, our customers and potential customers’ energy procurement policies may prohibit or limit their willingness to procure our products. Our business prospects may be negatively impacted if we are prevented from completing new installations or our installations become more costly as a result of laws, regulations, ordinances, or rules applicable to our products, or by our customers’ and potential customers’ energy procurement policies.
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In addition, certain of our products benefit from federal, state and local governmental incentives, mandates or other programs promoting clean energy generation. Any changes to or termination of these programs could reduce demand for our products, impair sales financing, and adversely impact our business, financial condition and results of operations.
A negative government audit could result in an adverse adjustment of our revenue and costs and could result in civil and criminalpenalties.
Government agencies, such as the Defense Contract Audit Agency, routinely audit and investigate government contractors. These agencies review a contractor’s performance under its contracts, cost structure, and compliance with applicable laws, regulations, and standards. If the agencies determine through these audits or reviews that we improperly allocated costs to specific contracts, they will not reimburse us for these costs. Therefore, an audit could result in adjustments to our revenue and costs.
Further, although we have internal controls in place to oversee our government contracts, no assurance can be given that these controls are sufficient to prevent isolated violations of applicable laws, regulations and standards. If the agencies determine that we or one of our subcontractors engaged in improper conduct, we may be subject to civil or criminalpenalties and administrative sanctions, payments, fines, and suspension or prohibition from doing business with the government, any of which could materially affect our results of operations and financial condition.
Exports of certain of our products are subject to various export control regulations and may require a license or permission from the U.S. Department of State, the U.S. Department of Energy or other agencies.
As an exporter, we must comply with various laws and regulations relating to the export of products, services and technology from the U.S. and with the laws and regulations of other countries having jurisdiction over our operations. We are subject to export control laws and regulations, including the International Traffic in Arms Regulation, the Export Administration Regulation, and the Specially Designated Nationals and Blocked Persons List, which generally prohibit U.S. companies and their intermediaries from exporting certain products, importing materials or supplies, or otherwise doing business with restricted countries, businesses or individuals, and require companies to maintain certain policies and procedures to ensure compliance. We are also subject to the Foreign Corrupt Practices Act, which prohibits improper payments to foreign governments and their officials by U.S. and other business entities. Under these laws and regulations, U.S. companies may be held liable for their actions and actions taken by their strategic or local partners or representatives. If we, or our intermediaries, fail to comply with the requirements of these laws and regulations, or similar laws of other countries, governmental authorities in the United States or elsewhere, as applicable, could seek to impose civil and/or criminalpenalties, which could damage our reputation and have a material adverse effect on our business, financial condition and results of operations.
Our business currently benefits from the availability of rebates, tax credits and other financial programs and incentives, and changes to such benefits could cause our revenue to decline and harm our financial results.
We utilize governmental rebates, tax credits, and other financial incentives to lower the effective price of our products to customers including in the U.S. and South Korea. The U.S. federal government and some state and local governments provide incentives to current and future end users and purchasers of our solutions in the form of rebates, tax credits and other financial incentives, such as payments for renewable energy credits associated with renewable energy generation. Our solutions have qualified for tax exemptions, incentives, or other customer incentives in many states. Some states have utility procurement programs, Renewables Portfolio Standards (“RPSs”) or Clean Energy Standards (“CESs”) for which our technologies are eligible; however, our solutions may not be eligible for other RPSs and CESs, particularly when fueled in whole or in part with natural gas.
Under the Inflation Reduction Act of 2022 (the “IRA”), the U.S. federal government offers certain federal tax benefits, including the Production Tax Credit under Section 45 of the Internal Revenue Code (the “PTC”) and the ITC, both of which were succeeded by “technology-neutral” versions set forth in Sections 45Y and 48E, respectively. After December 31, 2024, new fuel cell systems operating on natural gas or a non-zero carbon fuel became ineligible for the ITC under the IRA, except to the extent eligible fuel cell projects or equipment were properly safe harbored prior to December 31, 2024, under the applicable federal tax guidance rules. On July 4, 2025, the U.S. federal government enacted the OBBBA, which restored the federal ITC, which was applicable prior to the enactment of the IRA, for fuel cell projects beginning construction after December 31, 2025, at a 30% rate through 2033, regardless of the level of emissions from the fuel cell facility. These federal tax benefits under both the IRA and the OBBBA have certain legal and operational requirements.
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There may be uncertainty as to how such requirements promulgated under the IRA and the OBBBA are interpreted. If IRS guidance regarding implementation of the IRA or the OBBBA is viewed by potential customers or investors as unclear, tax credit financing may be delayed or diminished, harming our ability to secure financing for customers. Changes in federal tax benefits over time also may affect our future performance.
Some countries outside the U.S. also provide incentives to current and future end users and purchasers of solutions like ours. For example, in South Korea, RPSs, Clean Hydrogen Portfolio Standard and CESs are in place to promote the use of renewable, low- or zero-carbon power generation. Changes in the availability of rebates, tax credits, and other financial programs and incentives could reduce demand for our products and adversely impact our business results. Additionally, these incentives and procurement programs or obligations may expire on a particular date, end when the allocated funding is exhausted, or be reduced or terminated as a matter of regulatory or legislative policy. The continuation of these programs and incentives depends upon continued political support of the fuel cell industry.
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. 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 are unable to raise additional capital in the amounts required, on terms acceptable to us, or at all, we will not be able to successfully implement our business plan and strategy. Our capital-intensive business model increases the risk that we will not be able to successfully implement our plans if we do not raise additional capital in the amounts required.
In addition, if we raise additional funds through further issuances of our common stock, or securities convertible into or exchangeable for shares of our common stock, into the public market, including shares of our common stock issued upon exercise of options or warrants, holders of our common stock could suffer significant dilution, and any new equity securities we issue could have rights, preferences and privileges superior to those of our then-existing capital stock. Any debt financing secured by us in the future could involve restrictive covenants relating to our capital raising activities and other financial and operational matters, which may make it more difficult for us to obtain additional capital and to pursue business opportunities. If we cannot raise additional funds when we need them, our business and prospects could fail or be materially and adversely affected. In addition, if additional funds are not secured in the future, we will have to modify, reduce, defer or eliminate parts of our present and anticipated future projects, or sell some or all of our assets.
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. If we do not adequately ensure our freedom to use certain technology, we may have to pay others for rights to use their intellectual property, pay damages for infringement, misappropriation, or other violation, or be enjoined from using such intellectual property. We rely on patent, trade secret, trademark and copyright law to protect our intellectual property.
We previously licensed certain of our carbonate fuel cell manufacturing intellectual property to POSCO Energy Co., Ltd. (“POSCO Energy”) on an exclusive basis in the South Korean and broader Asian markets, and pursuant to the terms of our Settlement Agreement with POSCO Energy, we have done so again, but this time on a limited, non-exclusive basis to enable module replacement to POSCO Energy’s existing long-term service agreement customers only. In addition, effective as of June 11, 2019, we entered into a license agreement with EMTEC to facilitate the further development of our carbon capture platform (the “EMTEC License Agreement”). 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
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other purpose attendant thereto or associated therewith. Such right and license is sublicensable to third parties performing work for or with EMTEC or its affiliates, but is not otherwise sublicensable. Furthermore, on November 5, 2019, we entered into the Joint Development Agreement, pursuant to which we agreed to grant EMTEC and its affiliates a worldwide, non-exclusive, royalty-free, irrevocable, perpetual, sub-licensable, non-transferable (subject to certain exceptions) right and license to practice certain Company background intellectual property (to the extent not already licensed pursuant to the EMTEC License Agreement) for new carbonate fuel cell technology in carbon capture applications and hydrogen applications. 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, 2025, we (excluding our subsidiaries) had 152 U.S. patents and 319 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 technology, proton exchange membrane fuel cell technology and applications thereof. As of October 31, 2025, we also had 29 patent applications pending in the U.S. and 79 patent applications pending in other jurisdictions. As of October 31, 2025, our subsidiary, Versa Power Systems, Ltd. (“Versa”), had 19 U.S. patents and 63 international patents covering solid oxide fuel cell technology (in certain cases covering the same technology in multiple jurisdictions). As of October 31, 2025, Versa also had 13 pending U.S. patent applications and 24 patent applications pending in other jurisdictions. In addition, as of October 31, 2025, our subsidiary, FuelCell Energy Solutions, GmbH, had license rights to 2 U.S. patents and 7 patents outside the U.S. (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. In addition, some of our intellectual property includes technologies and processes that may be similar to the patented technologies and processes of third parties. If we are found to be infringing, misappropriating or otherwise violating third-party intellectual property, we do not know whether we will be able to obtain licenses to use such intellectual property on acceptable terms, if at all. Our patent position is subject to complex factual and legal issues that may give rise to uncertainty as to the validity, scope, and enforceability of a particular patent.
We cannot assure you that any of the U.S. or international patents owned by us (including our subsidiaries) or other patents that third parties license to us will not be invalidated, circumvented, challenged, rendered unenforceable or licensed to others, or that any of our owned or licensed pending or future patent applications will be issued with the breadth of claim coverage sought by us or our licensors, if issued at all. In addition, effective patent, trademark, copyright and trade secret protection may be unavailable, limited or not applied for in certain foreign countries.
We also seek to protect our proprietary intellectual property, including intellectual property that may not be patented or able to be patented, in part by confidentiality agreements and, if applicable, inventors’ rights agreements with our subcontractors, vendors, suppliers, consultants, strategic business associates and employees. We cannot assure you that these agreements will not be breached, that we will have adequate remedies for any breach or that such persons or institutions will not assert rights to intellectual property arising out of these relationships. Certain of our intellectual property has been licensed to us on a non-exclusive basis from third parties that may also license such intellectual property to others, including our competitors. If our licensors are found to be infringing, misappropriating or otherwise violating third-party intellectual property, we do not know whether we will be able to obtain licenses to use the intellectual property licensed to us on acceptable terms, if at all.
If necessary or desirable, we may seek extensions of existing licenses or further licenses under the patents or other intellectual property rights of others. However, we can give no assurances that we will obtain such extensions or further licenses or that the terms of any offered licenses will be acceptable to us. The failure to obtain a license from a third party for intellectual property that we use at present could cause us to incur substantial liabilities, and to suspend the manufacture or shipment of products or our use of processes requiring the use of that intellectual property.
While we are not currently engaged in any material intellectual property litigation, we could become subject to lawsuits in which it is alleged that we have infringed, misappropriated or otherwise violated the intellectual property rights of others or commence lawsuits against others who we believe are infringing, misappropriating or otherwise violating our rights or violating their agreements to protect our intellectual property. Our involvement in intellectual property litigation could result in significant expense to us, adversely affecting the development of sales of the challenged product or intellectual property and diverting the efforts of our technical and management personnel, whether or not that litigation is resolved in our favor.
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The U.S. government has certain rights relating to our intellectual property, including the right to restrict or take title to certain patents.
Multiple U.S. patents that we own have resulted from government-funded research and are subject to the risk of exercise of “march-in” rights by the government. March-in rights refer to the right of the U.S. government or a government agency to exercise its non-exclusive, royalty-free, irrevocable worldwide license to any technology developed under contracts funded by the government if the contractor fails to continue to develop the technology. These “march-in” rights permit the U.S. government to take title to these patents and license the patented technology to third parties if the contractor fails to utilize the patents.
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.
The closing price of our common stock on December 15, 2025 was $8.36 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 the past, following periods of volatility in the market price of their stock, companies have been the subject of securities class action litigation. If we become involved in securities class action litigation in the future, it could result in substantial costs and diversion of management’s attention and resources and could harm our stock price, business prospects, results of operations and financial condition.
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.
Our common stock is listed on The Nasdaq Global Market, which imposes continued listing requirements with respect to listed securities, including a minimum bid price requirement. During fiscal year 2024, we received written notice from the Listing Qualifications Department of The Nasdaq Stock Market (“Nasdaq”) notifying us that we were not in compliance with Nasdaq’s continued listing standards. While we have subsequently regained compliance with such standards, there can be no assurance that we will be able to maintain compliance with the Nasdaq listing requirements, including the minimum bid price requirement. If we fail to maintain compliance with the minimum bid price requirement or to meet the other applicable continued listing requirements in the future and Nasdaq determines to delist our common stock, the
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delisting could adversely affect the market price and liquidity of our common stock, reduce our ability to raise additional capital and result in operational challenges and damage to investor relations and market reputation.
Future sales of substantial amounts of our common stock could affect the market price of our common stock.
Future sales of substantial amounts of our common stock, or securities convertible into or exchangeable for shares of our common stock, into the public market, including shares of our common stock issued upon exercise of options or warrants, or perceptions that those sales could occur, could adversely affect the prevailing market price of our common stock and our ability to raise capital in the future.
Provisions of Delaware and Connecticut law and of our certificate of incorporation and by-laws may make a takeover more difficult.
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. These anti-takeover provisions could substantially impede the ability of public stockholders to benefit from a change in control or change in our management and Board of Directors.
Our By-laws provide that the Court of Chancery of the State of Delaware is the exclusive forum for substantially all disputes between us and our stockholders, which could limit our stockholders’ ability to obtain a judicial forum deemed favorable by the stockholder for disputes with us or our directors, officers or employees.
Our By-laws provide that the Court of Chancery of the State of Delaware is the exclusive forum for any derivative action or proceeding brought on our behalf, any action asserting a breach of fiduciary duty, any action asserting a claim against us arising pursuant to the Delaware General Corporation Law, our Certificate of Incorporation or our By-laws, any action to interpret, apply, enforce, or determine the validity of our Certificate of Incorporation or By-laws, or any action asserting a claim against us that is governed by the internal affairs doctrine. The choice of forum provision may limit a stockholder’s ability to bring a claim in a judicial forum that the stockholder finds favorable for disputesagainst us or our directors, officers or other employees, which may discourage such lawsuits against us and our directors, officers and other employees. Alternatively, if a court were to find the choice of forum provision contained in our 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.
The rights of our Series B Preferred Stock could negatively impact our cash flows and dilute the ownership interest of our stockholders.
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. To the extent the dividend is paid in shares of our common stock, additional issuances could be dilutive to our existing stockholders and the sale of those shares could have a negative impact on the price of our common stock. A share of our Series B Preferred Stock 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. 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.
The rights of the holders of our Series B Preferred Stock rank senior to our obligations to our common stockholders. Upon our liquidation, the holders of Series B Preferred Stock are entitled to receive $1,000.00 per share plus all accumulated and unpaid dividends (the “Liquidation Preference”). Until the holders of Series B Preferred Stock receive the Liquidation Preference with respect to their shares of Series B Preferred Stock in full, no payment will be made on any junior shares, including shares of our common stock. The existence of senior securities such as the Series B Preferred Stock could have an adverse effect on the value of our common stock.
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General Risk Factors
Litigation could expose us to significant costs and adversely affect our business, financial condition, and results of operations.
We are, or may become, party to various lawsuits, arbitrations, mediations, regulatory proceedings and claims, which may include lawsuits, arbitrations, mediations, regulatory proceedings or claims relating to commercial liability, product recalls, product liability, product claims, employment matters, environmental matters, breach of contract, intellectual property, indemnification, stockholder suits, derivative actions or other aspects of our business. Litigation (including the other types of proceedings identified above) is inherently unpredictable, and although we may believe we have meaningful defenses in these matters, we may incur judgments or enter into settlements of claims that could have a material adverse effect on our business, financial condition, and results of operations. The costs of responding to or defendinglitigation may be significant and may divert the attention of management away from our strategic objectives. There may also be adverse publicity associated with litigation that may decrease customer confidence in our business or our management, regardless of whether the allegations are valid or whether we are ultimately found liable.
Financial markets worldwide have experienced heightened volatility and instability which may have a material adverse impact on our Company, our customers and our suppliers.
Financial market volatility can affect the debt, equity and project finance markets. This may impact the amount of financing available to all companies, including companies with substantially greater resources, better credit ratings and more successful operating histories than ours. It is impossible to predict future financial market volatility and instability and the impact on our Company, and it may have a materially adverse effect on us for a number of reasons, such as:
The long-term nature of our sales cycle can require long lead times between application design, order booking and product fulfillment. For such sales, we often require substantial cash down payments in advance of delivery. For our generation business, we must invest substantial amounts in application design, manufacture, installation, commissioning and operation, which amounts are returned through energy sales over long periods of time. Our growth strategy assumes that financing will be available for us to finance working capital or for our customers to provide down payments and to pay for our products. Financial market issues may delay, cancel or restrict the construction budgets and funds available to us or our customers for the deployment of our products and services.
Projects using our products are, in part, financed by equity investors interested in tax benefits, as well as by the commercial and governmental debt markets. 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.
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 products require a long-term investment from our customers. Global inflationary pressures, particularly in the United States, have increased recently to levels not seen in recent years. 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. 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.
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, 2024 and 2025 have altered the landscape in which we and other U.S. companies operate in a variety of ways. In response to inflationary pressures over the past several years, the U.S. Federal Reserve raised interest rates, which resulted in an increase in the cost of borrowing for us, our customers, our suppliers, and other companies relying on debt financing. World events, such as the institution of tariff measures between the U.S. and other countries and the ongoing war between Russia and Ukraine and the resulting economic sanctions, have impacted the global economy. Prolonged inflationary conditions, high and/or increased interest rates, and additional sanctions or retaliatory
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measures related to the Russia-Ukraine crisis, tariffs or other geo-political situations, could further negatively affect U.S. and international commerce and exacerbate or prolong the period of high energy prices and supply chain constraints. At this time, the extent and duration of these economic and political events and their effects on the economy and the Company are impossible to predict.
Our future success will depend on our ability to attract and retain qualified management, technical, and other personnel.
Our future success is substantially dependent on the services and performance of our executive officers and other key management, engineering, scientific, manufacturing and operating personnel. The loss of the services of any such personnel could materially adversely affect our business. Our ability to achieve our commercialization plans and to increase production at our manufacturing facility in the future will also depend on our ability to attract and retain additional qualified personnel, and we cannot assure you that we will be able to do so. Recruiting personnel for the fuel cell industry is competitive. Our inability to attract and retain additional qualified personnel, or the departure of key employees, could materially and adversely affect our development, commercialization and manufacturing plans and, therefore, our business prospects, results of operations and financial condition. In addition, our inability to attract and retain sufficient personnel to quickly increase production at our manufacturing facility when and if needed to meet increased demand may adversely impact our ability to respond rapidly to any new product, growth or revenue opportunities. Our inability to attract and retain sufficient qualified personnel to staff our government or third party funded research contracts may result in our inability to complete such contracts or terminations of such contracts, which may adversely impact financial conditions and results of operations.
We are subject to risks inherent in international operations.
Since we market our products both inside and outside the U.S., our success depends in part on our ability to secure international customers and our ability to manufacture products that meet foreign regulatory and commercial requirements in target markets, as well as the ability to provide service to our international customers. We have limited experience developing and manufacturing our products to comply with the commercial and legal requirements of international markets. In addition, we are subject to tariff regulations and requirements for export licenses, particularly with respect to the export of some of our technologies. We face numerous challenges in our international expansion, including 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. Any of these factors could adversely affect our results of operations and financial condition.
We source raw materials and parts for our products on a global basis, which subjects us to a number of potential risks, including the impact of export duties and quotas, trade protection measures imposed by the U.S. and other countries including tariffs, potential for labor unrest, changing global and regional economic conditions and current and changing regulatory environments. Changes to these factors may have an adverse effect on our ability to source raw materials and parts in line with our current cost structure.
Although our reporting currency is the U.S. dollar, we conduct our business and incur costs in the local currency of most countries in which we operate. As a result, we are subject to currency translation and transaction risk. Changes in exchange rates between foreign currencies and the U.S. dollar could affect our net sales and cost of sales and could result in exchange gains or losses. We cannot accurately predict the impact of future exchange rate fluctuations on our results of operations.
We could also expand our business into new and emerging markets, many of which have an uncertain regulatory environment relating to currency policy. Conducting business in such markets could cause our exposure to changes in exchange rates to increase, due to the relatively high volatility associated with emerging market currencies and potentially longer payment terms for our proceeds. Our ability to hedge foreign currency exposure is dependent on our credit profile with financial institutions that are willing and able to do business with us. Deterioration in our credit position or a significant tightening of the credit market conditions could limit our ability to hedge our foreign currency exposure and, therefore, result in exchange gains or losses.
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efficiency
enhanced
strengthen
enabling
empowered
opportunities
poor
challenged
benefit
In addition to our existing core molten carbonate-based commercial products, we engage strategically in research and development, both company-funded and carried out under grants from and commercial agreements with private companies and various government agencies through our Advanced Technologies programs. Our Advanced Technologies programs are currently focused on continued development and advancement of our core carbonate fuel cell technology as well as commercialization of our solid oxide electrolysis technology for distributed hydrogen. We focus on generating revenue from our core recurring and non-recurring revenue sources, while working to identify the next trends in clean energy we believe we can commercialize, take to market, and grow into future revenue streams.
Recent Developments
The events described in this “Recent Developments” section relate, in part, to matters discussed in more detail below in this “Management’s Discussion and Analysis of Financial Condition and Results of Operations” section and/or in the Notes to the Consolidated Financial Statements.
2025 EXIM Financing
On November 26, 2025, the Company closed on its second project debt financing transaction (the “2025 EXIM Financing”) with the Export-Import Bank of the United States (“EXIM”) to support the Company’s obligations under its long-term service agreement (“LTSA”) with Gyeonggi Green Energy Co., Ltd. (“GGE”), pursuant to which the Company is supplying GGE with upgraded carbonate fuel cell modules to replace existing units at GGE’s Hwaseong Baran Industrial
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Complex. In conjunction with this financing, the Company entered into a promissory note and related security agreements securing the loan with equipment liens, resulting in gross proceeds of approximately $25.0 million. Interest accrues at a fixed interest rate of 5.29%, and the note is repayable in monthly installments consisting of interest and principal over 7 years from the date of the first debt payment, which is due in December 2025. After payment of customary fees and transaction costs, net proceeds to the Company were approximately $23.1 million.
The credit agreement between the Company and EXIM with respect to the 2025 EXIM Financing contains certain reporting requirements and other affirmative and negative covenants which are customary for transactions of this type. In addition, under this credit agreement and through an amendment to the credit agreement for the 2024 EXIM Financing (as defined elsewhere herein), the Company is required to maintain, throughout the remaining term of the credit agreement for the 2024 EXIM Financing and the term of the credit agreement for the 2025 EXIM Financing, a total minimum cash balance of $55.0 million. The amendment to the credit agreement for the 2024 EXIM Financing, which was executed in conjunction with and at the same time as the credit agreement for the 2025 EXIM Financing, reduced the total minimum cash balance requirement from $100.0 million to $55.0 million. For the purposes of these credit agreements, cash is defined as the sum of unrestricted cash plus all short-term (but no longer than three months), marketable United States Treasury instruments (as measured based on the maturity amount of each instrument).
Results of Operations
Management evaluates our results of operations and cash flows using a variety of key performance indicators, including revenues compared to prior periods and internal forecasts, costs of our products and results of our cost reduction initiatives, and operating cash use. These are discussed throughout the “Results of Operations” and “Liquidity and Capital Resources” sections. Results of Operations are presented in accordance with 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, 2025 (“fiscal year 2025”) to the fiscal year ended October 31, 2024 (“fiscal year 2024”). A similar discussion and analysis that compares fiscal year 2024 to the fiscal year ended October 31, 2023 (“fiscal year 2023”) can be found in Item 7, “Management’s Discussion and Analysis of Financial Condition and Results of Operations,” of our Form 10-K for the fiscal year ended October 31, 2024.
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Comparison of the Years Ended October 31, 2025 and 2024
Revenues and Costs of revenues
Revenues and costs of revenues for the years ended October 31, 2025 and 2024 were as follows:
Year Ended October 31,
Change
(dollars in thousands)
Total revenues
Total costs of revenues
Gross loss
Gross margin
Total revenues for the year ended October 31, 2025 increased $46.0 million, or 41%, to $158.2 million from $112.1 million for the year ended October 31, 2024. Total costs of revenues for the year ended October 31, 2025 increased by $36.5 million, or 25%, to $184.6 million from $148.1 million for the year ended October 31, 2024. The Company’s gross margin was (16.7)% in fiscal year 2025, as compared to a gross margin of (32.0)% in fiscal year 2024. A discussion of the changes in product revenues, service agreements revenues, generation revenues and Advanced Technologies contract revenues follows.
Product revenues
Product revenues, cost of product revenues and gross loss from product revenues for the years ended October 31, 2025 and 2024 were as follows:
Year Ended October 31,
Change
(dollars in thousands)
Product revenues
Cost of product revenues
Gross loss from product revenues
Product revenues gross margin
Product revenues for the year ended October 31, 2025 were $69.1 million compared to $25.7 million for the year ended October 31, 2024. The increase in product revenues during the year ended October 31, 2025 was primarily driven by $66.0 million of revenue recognized under the Company’s LTSA with GGE for the replacement of 22 fuel cell modules for GGE’s 58.8 MW fuel cell power plant platform in Hwasong-si, South Korea, compared to the revenue recognized for the replacement of 6 fuel cell modules in the year ended October 31, 2024. Partially offsetting the increase in revenue recognized under the LTSA with GGE is the decrease in revenue recognized under the Company’s sales contract with Ameresco, Inc. $3.1 million of revenue was recognized under the Company’s sales contract with Ameresco, Inc. for the year ended October 31, 2025, compared to $7.7 million in the year ended October 31, 2024. The Company’s sales contract with Ameresco, Inc. was entered into during the second quarter of fiscal year 2024, pursuant to which the Company is to provide a 2.8 MW platform to the Sacramento Sewer District.
Cost of product revenues increased $43.3 million for the year ended October 31, 2025 to $82.9 million, compared to $39.6 million in the year ended October 31, 2024, primarily due to the higher product sales in fiscal year 2025. Manufacturing variances, primarily related to production volumes and unabsorbed overhead costs, totaled approximately $13.1 million for the year ended October 31, 2025 compared to approximately $11.9 million for the year ended October 31, 2024.
Product revenues for the year ended October 31, 2025 generated a gross loss of $(13.7) million compared to a gross loss of $(13.9) million for the year ended October 31, 2024. The gross loss for both of the years ended October 31, 2025 and 2024 was primarily due to the manufacturing variances discussed above.
For the year ended October 31, 2025, we operated at an annualized production rate of approximately 31.5 MW, which is an increase from the annualized production rate of 27.7 MW for the year ended October 31, 2024. The increase in the annualized production rate for fiscal year 2025 is primarily due to increasing our production levels in our Torrington facility as a result of market demand timing.
As of October 31, 2025 and 2024, there was $66.2 million and $111.3 million, respectively, of product backlog.
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Service agreements revenues
Service agreements revenues and associated cost of revenues for the years ended October 31, 2025 and 2024 were as follows:
Year Ended October 31,
Change
(dollars in thousands)
Service agreements revenues
Cost of service agreements revenues
Gross loss from service agreements revenues
Service agreements revenues gross margin
Revenues for the year ended October 31, 2025 from service agreements increased $10.4 million to $20.4 million from $10.0 million for the year ended October 31, 2024 primarily because more module exchanges were performed under long-term service agreements during the year ended October 31, 2025 than during the year ended October 31, 2024. The increase is also a result of revenue recognized under the Company’s LTSA with GGE for service provided by the Company to GGE’s 58.8 MW fuel cell power plant platform in Hwaseong-si, South Korea.
For the year ended October 31, 2025, performance penalties under our service agreements totaled approximately $0.8 million compared to approximately $0.4 million for the year ended October 31, 2024. 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 $11.5 million to $22.6 million for the year ended October 31, 2025 from $11.1 million for the year ended October 31, 2024. Cost of service agreements revenues were higher for the year ended October 31, 2025 than for the year ended October 31, 2024 primarily due to the costs associated with the greater number of module exchanges performed during the year, as well as the costs of commissioning GGE modules during the year. The increase was offset by a net decrease relating to the recognition of service agreement loss accruals during fiscal year 2025 of approximately $0.5 million. We record loss accruals for service agreements when the estimated cost of future module exchanges and maintenance and monitoring activities exceeds the remaining unrecognized consideration. Estimates for future costs under service agreements are determined by a number of factors including the estimated remaining life of the module(s), used replacement modules available, and future operating plans for the power platform.
We work to continuously improve and mature our products and implement lessons learned into our product designs and manufacturing process subsequent to introduction. We examine data related to module field performance, identify improvementopportunities and invest in improvement initiatives with respect to our core molten carbonate technology. We have identified improvementopportunities ranging from improved thermal management by reducing internal temperature to improving the performance of our electrical balance of plant and implemented design changes to our commercial platforms which are expected to improve overall product performance. As it relates to our fuel cell modules, these improvements center around delivering more uniform temperature distribution of 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.
Cost of service agreements revenues for both years includes planned maintenance activities, module exchanges and continued investment in the service fleet in order to improve performance. Cost of service agreements includes maintenance and operating costs and module exchanges.
Overall gross loss from service agreements revenues was $(2.2) million for the year ended October 31, 2025 which increased from a gross loss of $(1.1) million for the year ended October 31, 2024. The overall gross margin was (11.0)% for the year ended October 31, 2025, compared to a gross margin of (11.3)% in the year ended October 31, 2024.
As of October 31, 2025, service agreements backlog totaled $162.4 million compared to $174.2 million as of October 31, 2024. 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.
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Generation revenues
Generation revenues and related costs for the years ended October 31, 2025 and 2024 were as follows:
Year Ended October 31,
Change
(dollars in thousands)
Generation revenues
Cost of generation revenues
Gross loss from generation revenues
Generation revenues gross margin
Revenues from generation for the year ended October 31, 2025 totaled $48.0 million, which represents a decrease of $2.0 million from revenue recognized of $50.0 million for the year ended October 31, 2024. The decrease in generation revenues reflects lower output from plants in our generation operating portfolio resulting from routine maintenance activities. Generation revenues for the years ended October 31, 2025 and 2024 reflect revenue from electricity generated under our power purchase agreements (“PPAs”) and the sale of renewable energy credits from our generation operating portfolio.
Cost of generation revenues totaled $64.0 million for the year ended October 31, 2025 compared to $79.9 million for the year ended October 31, 2024. The overall decrease in cost of generation revenues is primarily related to the mark-to-market net gain recognized during the year ended October 31, 2025 of $4.7 million related to natural gas purchase contracts, compared to a mark-to-market net loss of $6.9 million for the year ended October 31, 2024, and partially due to a decrease in expensed construction and gas costs related to the Toyota project, which were $0.7 million for the year ended October 31, 2025, compared to $3.6 million for the year ended October 31, 2024.
Cost of generation revenues included depreciation and amortization of approximately $32.4 million and $28.2 million for the years ended October 31, 2025 and 2024, respectively. Cost of generation revenues for the year ended October 31, 2024 also included an impairment charge of $1.3 million relating to project assets that were then under construction relating to the PPAs for Trinity College and for UConn (as defined elsewhere herein). It was determined that expected project costs for these PPAs would exceed the expected cash flows under the PPAs and therefore an impairment charge was required. There were no impairment charges included in cost of generation revenues for the year ended October 31, 2025.
We currently have four projects with fuel sourcing risk, which are the Toyota project, our 14.0 MW Derby Fuel Cell Project and our 2.8 MW SCEF Fuel Cell Project, both located in Derby, Connecticut (collectively, the “Derby Projects”), and our 7.4 MW fuel cell project located in Yaphank Long Island (the “LIPA Yaphank Project”), all of which require natural gas for which there is no pass-through mechanism. A one-year fuel supply contract (through May of 2026) has been executed for the Toyota project. Six-year fuel supply contracts (through October 2029) have been executed for the 14.0 MW and 2.8 MW Derby Projects. We are currently in the midst of a seven-year contract (through September 2028) for our 7.4 MW LIPA Yaphank Project. The Company will look to extend the duration of these contracts should market and credit conditions allow. If the Company is unable to secure fuel on favorable economic terms, it may result in impairment charges to the Derby and Yaphank project assets and further charges for the Toyota project asset.
The overall gross loss from generation revenues was $(16.0) million for the year ended October 31, 2025, which represents a decrease in gross loss of $13.9 million, from a gross loss of $ (29.9) million for the year ended October 31, 2024. The decrease in gross loss from generation revenues is primarily related to the mark-to-market net gain of $4.7 million recorded for the year ended October 31, 2025 compared to a mark-to-market net loss of $6.9 million for the year ended October 31, 2024, and a decrease in construction and gas costs being expensed related to the Toyota project.
As of October 31, 2025 and 2024, generation backlog totaled $0.9 billion and $0.8 billion, respectively.
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Advanced Technologies contracts
Advanced Technologies contract revenues and related costs for the years ended October 31, 2025 and 2024 were as follows:
Year Ended October 31,
Change
(dollars in thousands)
Advanced Technologies contract revenues
Cost of Advanced Technologies contract revenues
Gross profit from Advanced Technologies contracts
Advanced Technologies contract gross margin
Advanced Technologies contract revenues decreased to $20.6 million for the year ended October 31, 2025 compared to $26.5 million for the year ended October 31, 2024. Advanced Technologies contract revenues recognized under the Joint Development Agreement (as amended, the “Joint Development Agreement”) between the Company and ExxonMobil Technology and Engineering Company f/k/a ExxonMobil Research and Engineering Company (“EMTEC”) were approximately $9.5 million during the year ended October 31, 2025, which was an increase of $0.7 million compared to the year ended October 31, 2024. Revenues arising from the purchase order received from Esso Nederland B.V. (“Esso”), an affiliate of EMTEC and Exxon Mobil Corporation, related to the Rotterdam project were approximately $8.1 million during the year ended October 31, 2025, which was a decrease of $2.5 million compared to the year ended October 31, 2024. Advanced Technologies contract revenues recognized under government and other contracts were approximately $3.0 million for the year ended October 31, 2025, which was a decrease of $4.1 million compared to the year ended October 31, 2024.
Cost of Advanced Technologies contract revenues decreased $2.4 million to $15.1 million for the year ended October 31, 2025, compared to $17.5 million for the year ended October 31, 2024. This decrease is primarily a result of the lower level of activity and the scope of work performed under the purchase order received from Esso and under government and other contracts during the year ended October 31, 2025, compared to the year ended October 31, 2024.
Advanced Technologies contracts for the year ended October 31, 2025 generated a gross profit of $5.5 million compared to a gross profit of $9.0 million for the year ended October 31, 2024. The decreased gross profit was primarily due to the lower margins recognized under the purchase order received from Esso and under government and other contracts during the year ended October 31, 2025, compared to the year ended October 31, 2024 .
As of October 31, 2025, Advanced Technologies contract backlog totaled $19.5 million compared to $36.0 million as of October 31, 2024.
Administrative and selling expenses
Administrative and selling expenses were $60.7 million for the year ended October 31, 2025, which decreased from $64.6 million for the year ended October 31, 2024, primarily due to lower compensation expense as a result of the restructuring actions in September of fiscal year 2024 and in November and June of fiscal year 2025.
Research and development expenses
Research and development expenses decreased to $34.1 million for the year ended October 31, 2025 compared to $55.4 million for the year ended October 31, 2024. The decrease is primarily due to a decrease in spending on the Company’s commercial development efforts related to our solid oxide power generation and electrolysis platforms and carbon separation and carbon recovery solutions compared to the year ended October 31, 2024.
Restructuring expense
Restructuring expense of $5.3 million for the year ended October 31, 2025 was a result of the Company’s workforce reductions in November 2024 and June 2025, which represented approximately 13% and 22% of the Company’s global workforce, respectively, and were intended to reduce operating costs, realign resources toward advancing the Company's core carbonate technologies, and protect the Company's competitive position amid slower-than-expected market investments in clean energy. The workforce was reduced across our global operations including Calgary, Canada and at
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our North American production facility in Torrington, Connecticut, at our corporate offices in Danbury, Connecticut and at other remote locations. For more information about the restructuring plans and the related workforce reductions that occurred in September 2024, November 2024, and June 2025, please see Part II, Item 8, Note 4 — Impairment and Restructuring.
Impairment expense
Impairment expense of $65.8 million for the year ended October 31, 2025 related to the Company's prior investments in solid oxide technology, including related goodwill and in-process research and development (“IPR&D”) intangible assets, property, plant and equipment and solid oxide inventory. Of the $65.8 million, approximately $42.1 million was related to property, plant and equipment, approximately $9.0 million was related to inventory, approximately $9.3 million was related to IPR&D intangible assets, approximately $4.1 million was related to goodwill and approximately $1.3 million was related to purchase order commitments. For more information about the impairment, please see Part II, Item 8, Note 4 — Impairment and Restructuring.
Loss from operations
Loss from operations for the year ended October 31, 2025 was $192.3 million compared to $158.5 million for the year ended October 31, 2024. This increase was driven primarily by the impairment and restructuring expenses recognized during the year ended October 31, 2025, partially offset by decreases in Administrative and selling expenses and Research and development expenses compared to the year ended October 31, 2024 and a decrease of $9.5 million in gross loss.
Interest expense
Interest expense for the years ended October 31, 2025 and 2024 was $10.4 million and $9.7 million, respectively. Interest expense for both periods includes interest on the OpCo Financing Facility (as defined elsewhere herein), which was entered into in May 2023, and interest on the Groton Senior Back Leverage Loan Facility and the Groton Subordinated Back Leverage Loan Facility (in each case, as defined elsewhere herein), which were entered into in August 2023. Interest expense increased for the year ended October 31, 2025, as this period also includes a full year of interest on the Derby Senior Back Leverage Loan Facility and the Derby Subordinated Back Leverage Loan Facility (in each case, as defined elsewhere herein), which were entered into in April 2024, and on the 2024 EXIM Financing (as defined elsewhere herein), which was entered into in October 2024 .
Interest income
Interest income was $8.3 million and $13.7 million for the years ended October 31, 2025 and 2024, respectively. The decrease in interest income during the year ended October 31, 2025 was primarily driven by lower money market investments compared to the year ended October 31, 2024, partially offset by interest of $0.5 million earned on employee retention credits from the Internal Revenue Service. These employee retention credits were earned during the COVID-19 pandemic and accrued interest until such credits were received by the Company during the year ended October 31, 2025. Interest income for the year ended October 31, 2025 represents interest earned on money market investments, interest earned on investments in U.S. Treasury Securities and interest earned on employee retention credits. Interest income for the year ended October 31, 2024 represented interest earned on money market investments and interest earned on investments in U.S. Treasury Securities.
Other income (expense), net
Other income (expense), net was $3.2 million and ($2.3) million for the years ended October 31, 2025 and 2024, respectively. Other income, net for the year ended October 31, 2025 primarily relates to employee retention credits of $3.4 million that were earned during the COVID-19 pandemic and received during year ended October 31, 2025 and a gain of $0.4 million related to refundable research and development tax credits, partially offset by an unrealized loss of $0.7 million on the OpCo Financing Facility interest rate swap derivative. Other expense, net for the year ended October 31, 2024 primarily relates to a loss on the OpCo Financing Facility interest rate swap derivative of $3.1 million, partially offset by a gain of $1.0 million relating to refundable research and development tax credits.
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Provision for income taxes
We have not paid federal or state income taxes in several years due to our history of net operating losses, although we have paid foreign income and withholding taxes in South Korea. Provision for income tax recorded for the years ended October 31, 2025 and 2024 was $0.1 million and $25 thousand, respectively.
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. 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. (“East West Bank”) and Renewable Energy Investors, LLC (“REI”) .
For the years ended October 31, 2025 and 2024, net loss attributable to noncontrolling interest totaled $(1.4) million and net income attributable to noncontrolling interest totaled $0.9 million, respectively, for the LIPA Yaphank Project tax equity financing transaction with REI.
For the years ended October 31, 2025 and 2024, net loss attributable to noncontrolling interest totaled $(3.6) million and $(3.5) million, respectively, for the Groton Project tax equity financing transaction with East West Bank.
For the years ended October 31, 2025 and 2024, net income attributable to noncontrolling interest totaled $1.5 million and net loss attributable to noncontrolling interest totaled $(28.3) million, respectively, for the Derby Projects tax equity financing transaction with Franklin Park. The loss in the year ended October 31, 2024 was primarily driven by the Investment Tax Credit (“ITC”) attributable to the noncontrolling interest for the 2023 tax year. The ITC reduces the noncontrolling interest’s claim on hypothetical liquidation proceeds in the HLBV waterfall and is nonrecurring. The loss is also a result of accelerated depreciation allocated to the noncontrolling interest under the HLBV method. The above noted items resulted in a reduction in liquidation proceeds which drove the loss in the year ended October 31, 2024.
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, 2025 and 2024.
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. For the years ended October 31, 2025 and 2024, net loss attributable to common stockholders was $191.1 million and $129.2 million, respectively, and loss per common share was $7.42 and $7.83, respectively. The increase in the net loss attributable to common stockholders for the year ended October 31, 2025 is primarily due to impairment and restructuring expenses recognized during the year ended October 31, 2025, partially offset by the decreased net loss attributable to noncontrolling interests for the year ended October 31, 2025 compared to the year ended October 31, 2024. The net loss per common share for the year ended October 31, 2025 benefited from the higher number of weighted average shares outstanding due to share issuances since October 31, 2024.
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. 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, 2025, unrestricted cash and cash equivalents totaled $278.1 million compared to $148.1 million as of October 31, 2024. During the years ended October 31, 2025 and 2024, the Company invested in United States (U.S.)
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Treasury Securities. The amortized cost of the U.S. Treasury Securities outstanding totaled $109.1 million as of October 31, 2024 and was classified as Investments - short-term on the Consolidated Balance Sheets. There were no outstanding U.S. Treasury Securities as of October 31, 2025 as all U.S. Treasury Securities that were outstanding during the year ended October 31, 2025 matured prior to October 31, 2025.
During fiscal year 2025, the Company received the second annual funding from East West Bank under the tax equity financing transaction between the Company and East West Bank and, as a result, the Company received a $4.0 million contribution during the year ended October 31, 2025 which is recorded as noncontrolling interest on the Consolidated Balance Sheets.
On April 10, 2024, the Company entered into Amendment No. 1 to the Open Market Sale Agreement, dated July 12, 2022 (as amended, the “Sales Agreement”), with Jefferies LLC, B. Riley Securities, Inc., Barclays Capital Inc., BMO Capital Markets Corp., BofA Securities, Inc., Canaccord Genuity LLC, Citigroup Global Markets Inc., J.P. Morgan Securities LLC and Loop Capital Markets LLC (each, an “Agent” and together, the “Agents”), with respect to an at the market offering program under which the Company may, from time to time, offer and sell shares of its common stock having an aggregate offering price of up to $300.0 million (exclusive of any amounts previously sold under the Sales Agreement prior to its amendment). On December 27, 2024, the Company entered into Amendment No. 2 to the Sales Agreement, which removed certain representations and warranties relating to the Company’s status as a well-known seasoned issuer. During the year ended October 31, 2025, approximately 25.6 million shares of the Company’s common stock were sold under the Sales Agreement at an average sale price of $7.44 per share, resulting in gross proceeds of approximately $190.4 million before deducting sales commissions and fees, and net proceeds to the Company of approximately $185.7 million after deducting sales commissions totaling approximately $3.8 million and fees totaling approximately $0.9 million. In the fourth quarter of fiscal year 2025, approximately 16.4 million shares of the Company’s common stock were sold under the Sales Agreement at an average sale price of $8.33 per share, resulting in gross proceeds of approximately $136.9 million before deducting sales commissions and fees, and net proceeds to the Company of approximately $134.1 million after deducting sales commissions totaling approximately $2.7 million and fees totaling approximately $0.1 million. See Note 13. “Stockholders’ Equity” to our Consolidated Financial Statements for additional information regarding the Sales Agreement.
Subsequent to October 31, 2025, approximately 1.6 million shares of the Company’s common stock were sold under the Sales Agreement, at an average sale price of $8.37 per share, resulting in gross proceeds of approximately $13.4 million before deducting sales commissions and fees, and net proceeds to the Company of approximately $13.1 million after deducting sales commissions and fees totaling approximately $0.3 million. Approximately $1.1 million of shares remained available for sale under the Sales Agreement following these sales.
As described above in the section entitled “Recent Developments”, on November 26, 2025, the Company closed on the 2025 EXIM Financing, resulting in gross proceeds of approximately $25.0 million before deducting customary fees and transaction costs, and net proceeds to the Company of approximately $23.1 million after deducting customary fees and transaction costs. Under the credit agreement for the 2025 EXIM Financing and through an amendment to the credit agreement for the 2024 EXIM Financing (as defined elsewhere herein), the Company is required to maintain, throughout the remaining term of the credit agreement for the 2024 EXIM Financing and the term of the credit agreement for the 2025 EXIM Financing, a total minimum cash balance of $55.0 million. The amendment to the credit agreement for the 2024 EXIM Financing, which was executed in conjunction with and at the same time as the credit agreement for the 2025 EXIM Financing, reduced the total minimum cash balance requirement from $100.0 million to $55.0 million.
On December 27, 2024, the Company filed Post-Effective Amendment No. 1 and Post-Effective Amendment No. 2 to the Registration Statement on Form S-3 (File No. 333-274971) (the “Registration Statement”), each including a base prospectus covering the offering, issuance and sale by the Company of up to $405.0 million of common stock, warrants and units (or any combination thereof) from time to time in one or more offerings and a prospectus supplement covering the offering, issuance and sale by the Company from time to time of up to approximately $204.9 million of the Company’s common stock, which was the amount remaining under the Sales Agreement as of December 27, 2024. On March 5, 2025, the Company filed Post-Effective Amendment No. 3 to the Registration Statement to update certain information, to provide an updated consent of its independent registered public accounting firm, and to provide an update about the amount of shares then remaining available for offer and sale by the Company under the Sales Agreement. The Registration Statement, as amended by the Post-Effective Amendments, was declared effective by the SEC on March 10, 2025. In the event that the Sales Agreement is terminated, any portion of the aggregate amount of shares of common stock included in the
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prospectus supplement that is not sold pursuant to the Sales Agreement will be available for sale in other offerings pursuant to the base prospectus and a corresponding prospectus supplement.
In addition, the Company has a universal shelf Registration Statement on Form S-3 (No. 333-286842) that was declared effective by the SEC on May 8, 2025. Under this universal shelf Registration Statement, the Company may offer and sell from time to time in one or more offerings up to $200.0 million in the aggregate of (1) shares of the Company’s common stock; (2) shares of the Company’s preferred stock; (3) debt securities; (4) warrants exercisable for common stock, preferred stock, debt securities, units, or other securities of the Company; and (5) units consisting of one or more shares of common stock, shares of preferred stock, debt securities, and/or warrants.
We believe that our unrestricted cash and cash equivalents, expected receipts from our contracted backlog, and release of short-term restricted cash less expected disbursements over the next twelve months will be sufficient to allow the Company to meet its obligations for at least one year from the date of issuance of the financial statements included in this Annual Report on Form 10-K.
To date, we have not achievedprofitable operations or sustained positive cash flow from operations. The Company’s future liquidity, for fiscal year 2026 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 advance the commercialization of its solid oxide and carbon capture platforms through partnerships with third parties, (viii) implement capacity expansion for its carbonate products when required, (ix) seek partnerships for solid oxide product commercialization and manufacturing, (x) implement the product cost reductions necessary to achieveprofitable operations, (xi) manage working capital and the Company’s unrestricted cash balance and (xii) 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. Therefore, from time to time, the Company may consider and enter into agreements for one or more of the following: negotiated financial transactions, minority investments, collaborative ventures, technology sharing, transfer or other technology license arrangements, joint ventures, partnerships, acquisitions or other business transactions for the purpose(s) of geographic or manufacturing expansion and/or new product or technology development and commercialization, including hydrogen production through our carbonate and solid oxide platforms and storage and carbon capture, sequestration and utilization technologies.
Our business model requires substantial outside financing arrangements and satisfaction of the conditions of such arrangements to construct and deploy our projects to facilitate the growth of our business. The Company has invested capital raised from sales of its common stock to build out its project portfolio. The Company has also utilized and expects to continue to utilize a combination of long-term debt and tax equity financing (e.g., sale-leaseback transactions, partnership flip transactions and the monetization and/or transfer of eligible investment and production tax credits) to finance its project asset portfolio as these projects commence commercial operations. The Company may also seek to undertake private placements of debt securities to finance its project asset portfolio. The Company is also pursuing financing to support its commercial efforts, which include deployment of modules to the repowering opportunities in the South Korean market including the GGE project (as defined elsewhere herein). 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. 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.
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Generation Operating Portfolio, Project Assets and Backlog
To grow our generation operating portfolio, the Company may 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. This strategy requires liquidity and the Company expects to continue to have increasing liquidity requirements as project sizes increase and more projects are added to backlog. We may commence building project assets upon the award of a project or execution of a multi-year PPA with an end-user that has a strong credit profile. Project development and construction cycles, which span the time between securing a PPA and commercial operation of the platform, vary substantially and can take years. As a result of these project cycles and strategic decisions to finance the construction of certain projects, we may need to make significant up-front investments of resources in advance of the receipt of any cash from the sale or long-term financing of such projects. To make these up-front investments, we may use our working capital, seek to raise funds through the sale of equity or debt securities, or seek other financing arrangements. Delays in construction progress and completing current projects in process within budget, or in completing financing or the sale of our projects may impact our liquidity in a material way.
Our generation operating portfolio totaled 62.8 MW as of October 31, 2025. 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. The Company actively markets its products in order to grow this portfolio; however, the Company may also sell certain projects to investors from time to time. As of October 31, 2025, the Company had one project representing an additional 7.4 MW in development, which is expected to generate operating cash flows in future periods, if completed. We have worked with and are continuing to work with lenders and financial institutions to secure construction financing, long-term debt, tax equity and sale-leasebacks for our project asset portfolio, but there can be no assurance that such financing can be attained, or that, if attained, it will be retained and sufficient.
As of October 31, 2025, net debt outstanding related to project assets was $106.1 million. Future required payments, inclusive of principal and interest, totaled $122.1 million as of October 31, 2025. The outstanding finance obligations under our sale-leaseback transactions, which totaled $18.8 million as of October 31, 2025, include an embedded gain of $12.0 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.
Generation Operating Portfolio
Our generation operating portfolio provides us with the full benefit of future cash flows, net of any debt service requirements.
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The following table summarizes our generation operating portfolio as of October 31, 2025:
Project Name
Location
Power Off - Taker
Rated
Capacity
Actual
Commercial
Operation Date
(FuelCell Energy
Fiscal Quarter)
PPA Term
(Years)
Central CT State University
(“CCSU”)
New Britain, CT
CCSU (CT University)
Riverside Regional Water
Quality Control Plant
Riverside, CA
City of Riverside (CA Municipality)
Pfizer, Inc.
Groton, CT
Pfizer, Inc.
Santa Rita Jail
Dublin, CA
Alameda County, California
Bridgeport Fuel Cell Project
Bridgeport, CT
Connecticut Light and Power Company (CT Utility)
Tulare BioMAT
Tulare, CA
Southern California Edison (CA Utility)
San Bernardino
San Bernardino, CA
City of San Bernardino Municipal Water Department
LIPA Yaphank Project
Long Island, NY
PSEG / LIPA, LI NY (Utility)
Groton Project
Groton, CT
CMEEC (CT Electric Co-op)
Toyota
Long Beach, CA
Southern California Edison; Toyota
Derby - CT RFP-2
Derby, CT
Eversource/United Illuminating (CT Utilities)
SCEF - Derby
Derby, CT
Eversource/United Illuminating (CT Utilities)
Total MW Operating:
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.
The Groton Project was previously operating (including as of the date of initiation of commercial operations) at a reduced output of approximately 6.0 MW. During the first quarter of fiscal year 2024, the Groton Project reached its design rated output of 7.4 MW.
Generation Projects in Process
In January 2025, we entered into a PPA with Eversource and United Illuminating in Hartford, Connecticut, for a 7.4 MW carbonate fuel cell power generation system. Power from this project will be sold to Eversource and United Illuminating through the 20-year term of the PPA. The current expectation is that we will complete construction in calendar year 2026 and commence commercial operations in December 2026, subject in each case to completing customary development steps and obtaining financing for the project.
Generation Projects No Longer in Process
During fiscal year 2022, we entered into a PPA with Trinity College in Hartford, Connecticut, for a 250 kW solid oxide fuel cell power generation system, and in March 2024, we entered into a PPA with the University of Connecticut (“UConn”), in Storrs, Connecticut, for four 250 kW solid oxide fuel cell power generation systems totaling 1 MW. As a result of our restructuring plans and the slowdown in the adoption of clean energy technology for the production of zero-carbon hydrogen and other energy transition solutions, we have ceased all work and spending on the Trinity and UConn projects and removed them from contracted backlog during the second quarter of fiscal year 2025. In addition, the Company and Trinity College mutually agreed to terminate the PPA for the 250 kW solid oxide fuel cell power generation system in May 2025, and the Company is currently in discussions with UConn regarding a modification of the PPA for the four 250 kW solid oxide fuel cell power generation systems to potentially convert this project into a carbonate fuel cell
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project. For more information about our restructuring plans, please see Part II, Item 8, Note 4 — Impairment and Restructuring .
Backlog
Backlog by revenue category is as follows:
Service agreements backlog totaled $162.4 million as of October 31, 2025, compared to $174.2 million as of October 31, 2024. Service agreements backlog includes future contracted revenue from maintenance and scheduled module exchanges for power plants under service agreements. During the year ended October 31, 2025, the Company entered into a LTSA with CGN-Yulchon Generation Co., Ltd. (“CGN”) for CGN’s Yulchon facility in South Korea (the “CGN Platform”). The contract value totaled approximately $31.7 million, of which approximately $7.7 million was allocated to service backlog at the time of the execution of the LTSA and will be recognized as revenue as the Company performs service at the CGN Platform over the term of the LTSA.
Generation backlog totaled $945.2 million and $841.4 million as of October 31, 2025 and October 31, 2024, respectively. Generation backlog represents future contracted energy sales under contracted PPAs or approved utility tariffs. During the year ended October 31, 2025, the Company entered into a 20-year PPA with Eversource and United Illuminating, pursuant to which the Company will build and operate a 7.4 MW carbonate fuel cell power plant in Hartford, Connecticut (the “Hartford Project”). The electricity generated by the plant will be sold to Eversource and United Illuminating. The revenue over the contract term is expected to total approximately $167.4 million, which has been added to Generation backlog.
Product backlog totaled $66.2 as of October 31, 2025, compared to $111.3 million as of October 31, 2024. Product backlog decreased during the year ended October 31, 2025 primarily as a result of the product backlog that was recognized as revenue as the Company completed commissioning of certain replacement modules for GGE’s 58.8 MW fuel cell power platform in Hwaseong-si, South Korea (the “GGE Platform”). Under the LTSA with GGE (the “GGE LTSA”), commissioning of the first six 1.4-MW replacement fuel cell modules was completed in the fourth quarter of fiscal year 2024, and commissioning of an additional 22 1.4-MW replacement fuel cell modules was completed in fiscal year 2025. The remaining 14 1.4-MW replacement fuel cell modules are expected to be commissioned in fiscal year 2026. Partially offsetting this decrease was the LTSA with CGN, which added $24.0 million to product backlog during fiscal year 2025.
Advanced Technologies contract backlog totaled $19.5 million as of October 31, 2025, compared to $36.0 million as of October 31, 2024. Advanced Technologies contract backlog primarily represents remaining revenue under our Joint Development Agreement with EMTEC and remaining revenue under our government contracts.
Overall, backlog increased by approximately 2.6% to $1.19 billion as of October 31, 2025, compared to $1.16 billion as of October 31, 2024, primarily as a result of the Hartford Project and the LTSA with CGN with respect to the CGN Platform.
The CGN Platform is comprised of four SureSource 3000 molten carbonate fuel cells (each a “CGN Plant”). Each CGN Plant is comprised of two carbonate fuel cell modules. Pursuant to the LTSA between CGN and the Company (the “CGN LTSA”), CGN and the Company have agreed that (i) CGN will purchase from the Company eight carbonate fuel cell modules to replace existing fuel cell modules at the CGN Platform, (ii) the Company will provide certain balance of plant replacement components if and to the extent the parties reasonably determine existing components should be replaced, and (iii) the Company will provide long term operations and maintenance services for the CGN Platform. The total amount payable by CGN under the CGN LTSA for the eight replacement fuel cell modules, balance of plant replacement components, and service is $31.7 million USD, with payments to be made over time as such replacement fuel cell modules are commissioned and the service obligations under the CGN LTSA for such CGN Plants commence. This amount was recorded as backlog concurrent with the execution of the CGN LTSA on July 30, 2025.
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
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covered by such PPA. Should the Company not complete the construction of the project covered by a PPA, it will forgo future revenues with respect to the project and may incur penalties and/or impairment charges related to the project. Projects sold to customers (and not retained by the Company) are included in product sales and service agreements backlog, and the related generation backlog is removed upon sale. Together, the service and generation portion of backlog had a weighted average term of approximately 15 years as of October 31, 2025, 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 2026 and beyond include:
The Company’s cash on hand and access to additional liquidity. As of October 31, 2025, unrestricted cash and cash equivalents totaled $278.1 million.
We bid on large projects in diverse markets that can have long decision cycles and uncertain outcomes.
We manage production rate based on contracted demand and project schedules. Changes to production rate take time to implement. We operated at an annualized production rate of 31.5 MW for the fiscal year ended October 31, 2025, compared to an annualized production rate of approximately 27.7 MW for the fiscal year ended October 31, 2024. This increase in annualized production rate is primarily due to increasing our production levels in our Torrington facility based on contracted demand.
As project sizes and the number of projects evolve, project cycle times may increase. We may need to make significant up-front investments of resources in advance of the receipt of any cash from the financing or sale of our projects. 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, 2025 and 2024 was $135.1 million ($82.1 million of which is classified as “Other assets”) and $76.9 million ($28.3 million of which is classified as “Other assets”), respectively. Unbilled accounts receivable represent revenue that has been recognized in advance of billing the customer under the terms of the underlying contracts. Such costs have been funded with working capital and the unbilled amounts are expected to be billed and collected from customers once we meet the billing criteria under the contracts. 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.
During the fiscal year ended October 31, 2024, the Company entered into the GGE LTSA with respect to the GGE Platform. The contract value totaled approximately $159.6 million, of which approximately $33.6 million was allocated to service at the time of the execution of the GGE LTSA and is being recognized as revenue as the Company performs service at the GGE Platform over the term of the GGE LTSA. The portion of the contract allocated to product sales was approximately $126.0 million at the time of the execution of the GGE LTSA, which equates to approximately $3.0 million per module for each of the 42 modules. The GGE LTSA was structured such that the total consideration for each module is payable over the seven-year term of the GGE LTSA with respect to such module. As a result, an unbilled asset value is created upon each module installation until such time as full payment is received over the seven-year term of the GGE LTSA with respect to such module. Thus, we expect the unbilled receivables to increase as the modules are installed. In return for extended payment terms related to the module product sales, the Company received security rights on each module which provides the opportunity for working capital financing.
In October 2024 and November 2025, we received working capital financing in an aggregate gross amount of $35.1 million from the Export-Import Bank of the United States to support the Company’s obligations under the GGE LTSA, and we entered into promissory notes and related security agreements securing the loans with equipment liens. As we continue to fulfill our obligations under the GGE LTSA, we continue to seek additional working capital financing from certain financing institutions. There can be no assurance that we will obtain such working capital financing on acceptable terms, when needed, or at all.
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The amount of total inventory as of October 31, 2025 and 2024 was $89.4 million ($3.2 million is classified as long-term inventory) and $116.4 million ($2.7 million is classified as long-term inventory), respectively, which includes work in process inventory totaling $54.2 million and $80.5 million, respectively. 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. 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.
During the fiscal year ended October 31, 2025, we utilized short term cash to build our inventory of modules to be shipped to South Korea under the GGE LTSA. We have recognized revenue for the 22 modules shipped during the fiscal year ended October 31, 2025, and we expect to continue to recognize revenue from additional module shipments during fiscal year 2026. During the fiscal year ended October 31, 2025, we also used short term cash to build our inventory of modules to be shipped to South Korea under the CGN LTSA.
The amount of total project assets as of October 31, 2025 and 2024 was $216.8 million and $242.1 million, respectively. 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, 2025 consisted of $216.1 million of completed, operating installations and $0.8 million of projects in development. As of October 31, 2025, we had 62.8 MW of operating project assets that generated $48.0 million of revenue for the year ended October 31, 2025.
As of October 31, 2025, the Company had one project - the 7.4 MW Hartford Project - under development, which is expected to be completed by the end of calendar year 2027. As of October 31, 2025, we estimate the total remaining investment in project assets to build out the Hartford Project to be in the range of approximately $34.0 million to $36.0 million through calendar year 2027, with the timing of the project being paced by the electrical interconnection with the utility. To fund expected remaining project expenditures, the Company expects to use unrestricted cash on hand and to seek sources of construction financing. In addition, once the project becomes operational, the Company will seek to obtain permanent financing (tax equity and debt), or to sell this project to a third party. As of October 31, 2025, capitalized project asset expenditures with respect to the Hartford Project were $0.8 million.
Certain of our PPAs for project assets in our generation operating portfolio 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. 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 (the “Bridgeport Fuel Cell Project”); (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, for the initial seven years of the twenty year PPA for our LIPA Yaphank Project (through September 2028), for six years of the twenty year PPA for our 14.0 MW and 2.8 MW Derby Projects (through October 2029), and for the initial three years of the twenty year hydrogen production and power purchase agreement for our Toyota project (through May 2026); and (iii) potentially entering into future financial hedges with investment grade counterparties to offset potential negative market fluctuations. 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.
Expenditures for property, plant and equipment are expected to range between $20.0 million and $30.0 million for fiscal year 2026. We are increasing carbonate manufacturing capacity for certain processes in our Torrington facility to prepare for expected demand from the growing data center market.
During the year ended October 31, 2025, cash payments for capital expenditures totaled approximately $18.6 million.
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Our current plans with respect to our carbonate platform and solid oxide platforms are as follows:
Carbonate Platform: At this time, the maximum annualized capacity (module manufacturing, final assembly, testing and conditioning) is 100 MW per year under the Torrington facility’s current configuration when fully utilized. We believe that the Torrington facility could accommodate an estimated annualized production capacity of up to 350 MW per year with additional capital investments in machinery, equipment, tooling, labor, outsourcing of certain processes, and inventory.
The Company continues to invest in capability with the goal of reducing production bottlenecks and driving productivity, including investments in automation, laser welding, and the construction of additional integrated conditioning capacity. 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. This addition was completed in fiscal year 2025. This product enhancement will allow potential customers to observe the operating plant and will allow for the sampling and testing of separated CO 2 to verify quantity, quality or purity requirements. In addition, the Company has begun manufacturing carbonate modules optimized for direct flue gas carbon capture at the Torrington facility.
Solid Oxide Platforms: Through fiscal year 2024, the Company invested in product development and manufacturing scale up for two solid oxide platforms: power generation and electrolysis. With the restructuring actions announced in November 2024 and June 2025, the Company has ceased development of the power generation platform and is focusing on demonstrating the capabilities of our electrolysis platform.
In November 2024 and June 2025, the Company announced global restructuring plans relating to our operations in the U.S., Canada, and Germany that aim to reduce operating costs, realign resources toward advancing the Company’s core carbonate technologies, and protect the Company’s competitive position amid slower-than-expected market investments in clean energy. These restructuring plans also include the deferment and cancelation of certain previously planned capital and project expenditures related to solid oxide manufacturing in our facility in Calgary, Canada. As a result of these restructuring plans, we have deferred the capital spending required to complete the Calgary expansion and do not currently expect to complete this project. For more information about our restructuring plans, please see Part II, Item 8, Note 4 — Impairment and Restructuring .
Lastly, the Company is in the process of examining or actively applying for various financial programs offered by the United States to provide subsidies, investment tax credits and other assistance with the goal of expanding capacity for clean energy manufacturing.
Company-funded research and development expenses are expected to be in the range between $35.0 million and $40.0 million for fiscal year 2026. During the year ended October 31, 2025, we reduced Company-funded research and development expenses from approximately $55.4 million incurred in fiscal year 2024 to a total of $34.1 million incurred in fiscal year 2025, as a result of restructuring plans implemented during fiscal year 2025. Company-funded research and development expenses continued to focus on accelerating the commercialization of our distributed hydrogen generation during fiscal year 2025. Demonstration of our solid oxide electrolysis platform is being undertaken at Idaho National Laboratory (“INL”) in conjunction with the U.S. Department of Energy and is intended as a steppingstone for a system level field demonstration of our solid oxide electrolysis platform. The demonstration unit was shipped to and arrived at INL in January 2025 and is fully installed. It is currently being tested by the Company and INL. We expect this solid oxide electrolysis platform will demonstrate its capabilities in the hydrogen generation market and are seeking partners to advance the commercialization and deployment of this technology. Finally, the Company will continue making targeted investments in product enhancements of our carbonate platform including advancingefficiency, power output and life as well as advancing commercial demonstrations of carbon capture and carbon recovery platforms.
Under the terms of certain contracts, the Company provides and will provide performance security for future contractual obligations. As of October 31, 2025, we had pledged approximately $63.7 million of our cash and
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cash equivalents as collateral for performance security and for letters of credit for certain banking requirements and contracts. This balance may increase with a growing backlog and installed fleet.
The Company’s ability to continue to implement cost saving measures if sales activities do not occur when expected. The Company made in fiscal year 2024 and continued to make in 2025 certain downward adjustments to expected spending as a result of the slower-than-expected pace of market developments, and in September 2024, November 2024 ,and June 2025, as part of its cost saving measures, the Company also eliminated jobs in certain areas, reducing its workforce by approximately 39% in the aggregate. The Company expects to continue to focus its strategy to respond to market conditions, which may result in additional spending and headcount reductions in future periods.
Depreciation and Amortization
As the Company builds project assets and makes capital expenditures, depreciation and amortization expenses are expected to increase. For the years ended October 31, 2025 and 2024, depreciation and amortization totaled $40.4 million and $36.2 million, respectively (of these totals, approximately $32.4 million and $28.2 million for the years ended October 31, 2025 and 2024, respectively, relate to depreciation of project assets in our generation operating portfolio and amortization of a generation intangible asset).
Cash Flows
Cash and cash equivalents and restricted cash and cash equivalents totaled $341.8 million as of October 31, 2025 compared to $208.9 million as of October 31, 2024. As of October 31, 2025, unrestricted cash and cash equivalents was $278.1 million compared to $148.1 million of unrestricted cash and cash equivalents as of October 31, 2024. As of October 31, 2025, restricted cash and cash equivalents was $63.7 million, of which $16.6 million was classified as current and $47.1 million was classified as non-current, compared to $60.8 million of restricted cash and cash equivalents as of October 31, 2024, of which $12.2 million was classified as current and $48.6 million was classified as non-current.
The following table summarizes our consolidated cash flows:
Year Ended October 31,
(dollars in thousands)
Consolidated Cash Flow Data:
Net cash used in operating activities
Net cash provided by (used in) investing activities
Net cash provided by financing activities
Effects on cash from changes in foreign currency rates
Net increase (decrease) in cash, cash equivalents and restricted cash
The key components of our cash inflows and outflows were as follows:
Operating Activities – Net cash used in operating activities was $125.3 million during fiscal year 2025, compared to net cash used in operating activities of $152.9 million in fiscal year 2024 and net cash used in operating activities of $140.3 million in fiscal year 2023.
Net cash used in operating activities during fiscal year 2025 was primarily a result of the net loss of $191.4 million, increases in unbilled receivables of $66.1 million, other assets of $5.9 million and decreases in accounts payable of $2.8 million, partially offset by decreases in accounts receivable of $7.8 million and inventories of $15.9 million, and non-cash adjustments of $117.2 million.
Net cash used in operating activities during fiscal year 2024 was primarily a result of the net loss of $156.8 million, increases in inventories of $29.2 million, unbilled receivables of $23.0 million, accounts receivable of $7.9 million and other assets of $5.4 million and a decrease in accounts payable of $1.0 million, partially offset by increases in accrued liabilities of $4.7 million and accounts payable of $4.1 million and non-cash adjustments of $63.0 million.
Net cash used in operating activities during fiscal year 2023 was primarily a result of the net loss of $108.1 million, increases in unbilled receivables of $21.9 million and other assets of $13.1 million and decreases in deferred revenue of
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$22.3 million and accrued liabilities of $4.5 million, partially offset by decreases in inventories of $4.7 million and accounts receivable of $1.1 million, an increase in accounts payable of $3.0 million and non-cash adjustments of $22.0 million.
Investing Activities – Net cash provided by investing activities was $88.9 million during fiscal year 2025, compared to net cash used in investing activities of $60.0 million in fiscal year 2024 and $192.4 million in fiscal year 2023.
Net cash provided by investing activities during fiscal year 2025 included $772.4 million received upon the maturity of U.S. Treasury Securities, partially offset by $661.0 million used for the purchase of U.S. Treasury Securities, $18.6 million of capital expenditures and $3.9 million of project asset expenditures.
Net cash used in investing activities during fiscal year 2024 included $835.7 million for the purchase of U.S. Treasury Securities, $47.7 million of capital expenditures and $11.8 million of project asset expenditures, partially offset by funds received from the maturity of U.S. Treasury Securities of $835.2 million.
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, partially offset by funds received from the maturity of U.S. Treasury Securities of $199.1 million.
Financing Activities – Net cash provided by financing activities was $169.3 million during fiscal year 2025, compared to $122.2 million in fiscal year 2024 and $151.1 million in fiscal year 2023.
Net cash provided by financing activities during fiscal year 2025 resulted from $185.7 million of net proceeds from sales of common stock and $4.0 million of contributions received from the sale of a noncontrolling interest, partially offset by debt repayments of $14.4 million, payments of debt issuance costs of $0.2 million, payments for taxes related to net share settlement of equity awards of $0.6 million, payment of $3.2 million in preferred dividends to the holders of our Series B Preferred Stock and distribution to noncontrolling interests of $2.1 million.
Net cash provided by financing activities during fiscal year 2024 resulted from $23.1 million of proceeds from debt financings, $92.6 million of net proceeds from sales of common stock and $25.1 million of contributions received from the sale of a noncontrolling interest, offset by debt repayments of $11.7 million, payments of debt issuance costs of $1.2 million, payments for taxes related to net share settlement of equity awards of $1.1 million, payment of $3.2 million in preferred dividends to the holders of our Series B Preferred Stock and distribution to noncontrolling interests of $1.6 million.
Net cash provided by financing activities during fiscal year 2023 resulted from $100.5 million of proceeds from debt financings, $97.4 million of net proceeds from sales of common stock and $9.1 million of contributions received from the sale of a noncontrolling interest, partially offset by debt repayments of $47.8 million, payments of debt issuance costs of $3.5 million, payments for taxes related to net share settlement of equity awards of $0.9 million, payment of $3.2 million in preferred dividends to the holders of our Series B Preferred Stock and distribution to noncontrolling interests of $0.6 million.
Sources and Uses of Cash and Investments
In order to consistently produce positive cash flow from operations, we need to increase order flow to support higher production levels, leading to lower costs on a per unit basis. We also continue to invest in new product and market development and, as a result, we are not generating positive cash flow from our operations. 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.
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Commitments and Significant Contractual Obligations
The following table provides a summary of our significant future commitments and contractual obligations as of October 31, 2025 and the related payments by fiscal year:
Payments Due by Period
(dollars in thousands)
Total
Less than
1 Year
Years
Years
More than
5 Years
Purchase commitments (1)
Term loans (principal and interest)
Operating lease commitments (2)
Sale-leaseback finance obligations (3)
Natural gas and biomethane gas supply contracts (4)
Series B Preferred dividends payable (5)
Totals
Purchase commitments with suppliers for materials, supplies and services incurred in the normal course of business.
Future minimum lease payments on operating leases.
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.
During fiscal year 2020, the Company entered into a 7-year natural gas contract for the Company’s LIPA Yaphank Project with an estimated annual cost per year of $2.0 million, under which service began on December 7, 2021. During fiscal year 2023, the Company entered into a 2-year Biomethane gas contract for the Company’s Toyota project, under which service began on May 1, 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. During fiscal year 2025, the Company entered into a 1-year natural gas contract for the Company’s Toyota project (due to the expiration of the initial 2-year Biomethane gas contract described above), under which service began on May 1, 2025. The costs of the contracts are expected to be offset by generation revenues.
We pay $3.2 million in annual dividends on our Series B Preferred Stock, if and when declared. The $3.2 million annual dividend payment, if dividends are declared, has not been included in this table as we cannot reasonably determine when or if we will be able to convert the Series B Preferred Stock into shares of our common stock. 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, 2025) for 20 trading days during any consecutive 30 trading day period.
Outstanding Loans as of October 31, 2025
A discussion of the key terms and conditions of the loans outstanding as of October 31, 2025 is included in Note 12. “Debt” to the consolidated financial statements and is incorporated by reference herein. The information included under the headings “2024 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.
Restricted Cash
As of October 31, 2025, we have pledged approximately $63.7 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, 2025, outstanding letters of credit totaled $12.7 million. These expire on various dates through October 2029. Under the terms of certain contracts, we will provide performance security for future contractual obligations. The restricted cash balance as of October 31, 2025 also included $2.9 million primarily to support obligations under the power purchase and service agreements related to Crestmark sale-leaseback transactions, $16.5 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 $22.5 million relating to future obligations associated with the OpCo Financing Facility. Refer to Note 12. “Debt” to our Consolidated Financial Statements for the
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year ended October 31, 2025 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, such as hydrogen, steam, water, and/or carbon, delivered from the Company’s fuel cell power platforms at negotiated rates. Electricity rates are generally a function of the customers’ current and estimated future electricity pricing available from the grid. We are responsible for all operating costs necessary to maintain, monitor and repair our fuel cell power platforms. Under certain agreements, we are also responsible for procuring fuel, generally natural gas or biogas, to run our fuel cell power platforms. In addition, under certain agreements, we are required to produce minimum amounts of power under our PPAs and we have the right to terminate PPAs by giving written notice to the customer, subject to certain exit costs. As of October 31, 2025, our generation operating portfolio was 62.8 MW.
Service and warranty agreements
We warranty our products for a specific period of time against manufacturing or performance defects. Our standard U.S. warranty period is generally 15 months after shipment or 12 months after acceptance of the product. In addition to the standard product warranty, we have contracted with certain customers to provide services to ensure the power plants meet minimum operating levels for terms of up to 20 years. Pricing for service contracts is based upon estimates of future costs, which could be materially different from actual expenses. Refer to “Critical Accounting Policies and Estimates” for additional details.
Advanced Technologies contracts
We have contracted with various government agencies and certain companies from private industry to conduct research and development as either a prime contractor or sub-contractor under multi-year, cost-reimbursement and/or cost-share type contracts or cooperative agreements. Cost-share terms require that participating contractors share the total cost of the project based on an agreed upon ratio. In many cases, we are reimbursed only a portion of the costs incurred or to be incurred under the contract. While government research and development contracts may extend for many years, funding is often provided incrementally on a year-by-year basis if contract terms are met and Congress authorizes the funds. As of October 31, 2025, Advanced Technologies contract backlog totaled $19.5 million, of which $13.8 million is non-U.S. Government-funded and $5.7 million is U.S. Government-funded.
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, 2025 included in this Annual Report on Form 10-K for further information.
CRITICAL ACCOUNTING POLICIES AND ESTIMATES
The preparation of financial statements and related disclosures in conformity with accounting principles generally accepted in the U.S. (“U.S. GAAP”) requires management to make estimates and assumptions that affect the reported amounts of assets, liabilities, revenues and expenses and the disclosure of contingent assets and liabilities. Estimates are used in accounting for, among other things, revenue recognition, lease right-of-use assets and liabilities, excess, slow-moving and obsolete inventories, product warranty accruals, loss accruals on service agreements, share-based compensation expense, allowance for doubtful accounts, depreciation and amortization, impairment of goodwill and in-process research and development intangible assets, impairment of long-lived assets (including project assets), valuation of derivatives, and contingencies. Estimates and assumptions are reviewed periodically, and the effects of revisions are reflected in the consolidated financial statements in the period they are determined to be necessary. Due to the inherent uncertainty involved in making estimates, actual results in future periods may differ from those estimates .
Our critical accounting policies are those that are both most important to our financial condition and results of operations and require the most difficult, subjective or complex judgments on the part of management in their application, often as a
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result of the need to make estimates about the effect of matters that are inherently uncertain. Our accounting policies are set forth below.
Goodwill and Indefinite-Lived Intangibles
Goodwill represents the excess of the aggregate purchase price over the fair value of the net assets acquired in a business combination and is reviewed for impairment at least annually. The intangible asset represents indefinite-lived in-process research and development for cumulative research and development efforts associated with the development of solid oxide fuel cell stationary power generation and is also reviewed at least annually for impairment.
Accounting Standards Codification Topic 350, "Intangibles - Goodwill and Other" (“ASC 350”) permits the assessment of qualitative factors to determine whether events and circumstances lead to the conclusion that it is necessary to perform the goodwill impairment test required under ASC 350.
The Company completed its annual impairment analysis of goodwill and in-process research and development assets as of July 31, 2025, determined that it was more likely than not that there was impairment of goodwill and the in-process research and development assets, and recognized an impairment expense as a result. For more information about the impairment, please see Part II, Item 8, Note 4 — Impairment and Restructuring .
Impairment of Long-Lived Assets (including Project Assets)
Long-lived assets are reviewed for impairment whenever events or changes in circumstances indicate that the carrying amount of an asset group which pertains to specific projects may not be recoverable. If events or changes in circumstances indicate that the carrying amount of the asset group may not be recoverable, we compare the carrying amount of an asset group to future undiscounted net cash flows, excluding debt service costs, expected to be generated by the asset group and its ultimate disposition. If the sum of the undiscounted cash flows is less than the carrying value, the impairment to be recognized is measured by the amount by which the carrying amount of the asset group exceeds the fair value of the asset group.
As part of the adjusted net asset value method, which was used to establish the fair value of the equity in the Versa reporting unit (consisting of our subsidiaries, Versa Power Systems, Ltd. and Versa Power Systems, Inc.) for the annual impairment analysis of goodwill and IPR&D intangible assets, impairments of certain inventory and property, plant and equipment assets were also identified as impaired as of July 31, 2025, as the carrying values of these assets exceeded their fair values. For more information about the impairment, please see Part II, Item 8, Note 4 — Impairment and Restructuring. During the years ended October 31, 2024 and 2023, the Company recorded certain project asset impairment charges .
Revenue Recognition
The Company recognizes revenue in accordance with the guidance in Accounting Standards Codification (“ASC”) Topic 606: Revenue from Contracts with Customers (“ASC 606”). Under ASC 606 , the amount of revenue recognized for any goods or services reflects the consideration that the Company expects to be entitled to receive in exchange for those goods and services. To achieve this core principle, the Company applies the following five-step approach: (1) identify the contract with the customer; (2) identify the performance obligations in the contract; (3) determine the transaction price; (4) allocate the transaction price to performance obligations in the contract; and (5) recognize revenue when or as a performance obligation is satisfied.
A contract is accounted for when there has been approval and commitment from both parties, the rights of the parties are identified, payment terms are identified, the contract has commercial substance and collectability of consideration is probable. Performance obligations under a contract are identified based on the goods or services that will be transferred to the customer that are both capable of being distinct and are distinct in the context of the contract. In certain instances, the Company has concluded distinct goods or services should be accounted for as a single performance obligation that is a series of distinct goods or services that have the same pattern of transfer to the customer. To the extent a contract includes multiple promised goods or services, the Company must apply judgment to determine whether the customer can benefit from the goods or services either on their own or together with other resources that are readily available to the customer (the goods or services are capable of being distinct) and if the promise to transfer the goods or services to the customer is separately identifiable from other promises in the contract (the goods or services are distinct in the context of the contract). If these criteria are not met, the promised goods or services are accounted for as a single performance obligation. The transaction price is determined based on the consideration that the Company will be entitled to in exchange for transferring
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goods or services to the customer. To the extent the transaction price includes variable consideration, the Company estimates the amount of variable consideration that should be included in the transaction price, generally utilizing the expected value method. Determining the transaction price requires judgment. If the contract contains a single performance obligation, the entire transaction price is allocated to the single performance obligation. Contracts that contain multiple performance obligations require an allocation of the transaction price to each performance obligation based on a relative standalone selling price basis. Standalone selling price is determined by the price at which the performance obligation is sold separately. If the standalone selling price is not observable through past transactions, the Company estimates the standalone selling price by taking into account available information such as market conditions and internally approved pricing guidelines related to the performance obligations. Performance obligations are satisfied either over time or at a point in time as discussed in further detail below. In addition, the Company’s contracts with customers generally do not include significant financing components or non-cash consideration. The Company has elected practical expedients in the accounting guidance that allow for revenue to be recorded in the amount that the Company has a right to invoice, if that amount corresponds directly with the value to the customer of the Company’s performance to date, and that allow the Company not to disclose related unsatisfied performance obligations. The Company records any amounts that are billed to customers in excess of revenue recognized as deferred revenue and revenue recognized in excess of amounts billed to customers as unbilled receivables.
Revenue streams are classified as follows:
Product. Includes the sale of completed project assets, sale and installation of fuel cell power platforms including site engineering and construction services, and the sale of modules, BOP components and spare parts to customers.
Service. Includes performance under long-term service agreements for power platforms owned by third parties.
Generation. Includes the sale of electricity under PPAs and utility tariffs from project assets retained by the Company. This also includes revenue received from the sale of other value streams from these assets including the sale of heat, steam, capacity and renewable energy credits.
Advanced Technologies. Includes revenue from customer-sponsored and government-sponsored Advanced Technologies projects.
See below for a discussion of revenue recognition under ASC 606 by disaggregated revenue stream.
Completed project assets
Contracts for the sale of completed project assets include the sale of the project asset, the assignment of the service agreement, and the assignment of the PPA. The relative stand-alone selling price is estimated and is used as the basis for allocation of the contract consideration. Revenue is recognized upon the satisfaction of the performance obligations, which includes the transfer of control of the project asset to the customer, which is when the contract is signed and the PPA is assigned to the customer. See below for further discussion regarding revenue recognition for service agreements.
Contractual payments related to the sale of the project asset and assignment of the PPA are generally received up-front. Payment terms for service agreements are generally ratable over the term of the agreement.
Module Sales
Contracts for module sales represent the sale of a completed fuel cell module at a contracted selling price. These contracts are on a per unit basis and revenue is recognized as each unit is completed and ready to ship and the performance obligation is satisfied. 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. To the extent the power platform(s) under service agreements do not achieve the minimum power output, certain service agreements include a performance guarantee penalty. Performance guarantee
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penalties represent variable consideration, which is estimated for each service agreement based on past experience, using the expected value method. The consideration for each service agreement is recognized over time using costs incurred to date relative to total estimated costs at completion to measure progress.
The Company reviews its cost estimates on service agreements on an annual basis and records any changes in estimates on a cumulative catch-up basis.
Loss accruals for service agreements are recognized to the extent that the estimated remaining costs to satisfy the performance obligation exceed the estimated remaining unrecognized consideration. Estimated losses are recognized in the period in which losses are identified.
Payment terms for service agreements are generally ratable over the term of the agreement.
Advanced Technologies contracts
Advanced Technologies contracts include the promise to perform research and development services and, as such, this represents one performance obligation. Revenue from most government sponsored Advanced Technologies projects is recognized as direct costs are incurred plus allowable overhead less cost share requirements, if any. Revenue is only recognized to the extent the contracts are funded. Revenue recognition for research performed under the Joint Development Agreement (as defined elsewhere herein) with EMTEC and for research performed under the purchase order received from Esso (as defined elsewhere herein) for the Rotterdam project also falls into the practical expedient category where revenue is recorded consistent with the amounts that are to be invoiced.
Payments are based on costs incurred for government sponsored Advanced Technologies. Payments under the Joint Development Agreement with EMTEC are based on time spent and material costs incurred.
Generation revenue
For certain project assets where customers purchase electricity from the Company under PPAs, the Company has determined that these agreements should be accounted for as operating leases pursuant to ASC 842, Leases . Revenue is recognized when electricity has been delivered based on the amount of electricity delivered at rates specified under the contracts. Generation revenue, to the extent the related PPAs are within the scope of ASC 606, include a performance obligation to provide 100% of the electricity output generated by the associated project asset to the customer. The promise to provide electricity over the term of the PPA represents a single performance obligation, as it is a promise to transfer a series of distinct goods or services that are substantially the same and that have the same pattern of transfer to the customer. 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. Payments are based on actual power output and the contractual rate for electricity generated.
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”).
Under this partnership flip structure, a partnership, in this case Derby Fuel Cell Holdco, LLC (the “Derby Partnership”), was organized to acquire from FuelCell Energy Finance II, LLC, a wholly-owned subsidiary of the Company, all outstanding equity interests in the Derby Projects. We have determined we are the primary beneficiary in the Derby Partnership for accounting purposes as a Variable Interest Entity (“VIE”) under U.S. GAAP. We have considered the provisions within the financing-related agreements (including the limited liability company agreement for the Derby Partnership ) which grant us power to manage and make decisions affecting the operations of the Derby Partnership. We consider the rights granted to Franklin Park under the agreements to be more protective in nature than participatory. Therefore, we have determined under the power and benefits criterion of ASC Topic 810, Consolidations (“ASC 810”) that we are the primary beneficiary of the Derby Partnership. As the primary beneficiary, we consolidate the financial position, results of operations and cash flows of the Derby Partnership in our consolidated financial statements, and all
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intercompany balances and transactions between us and the Derby Partnership are eliminated. We recognized Franklin Park’s share of the net assets of the Derby Partnership as nonredeemable noncontrolling interests in our Consolidated Balance Sheets. The income or loss allocations reflected in our Consolidated Statements of Operations and Comprehensive Loss may create volatility in our reported results of operations, including potentially changing net loss attributable to stockholders to net income attributable to stockholders, or vice versa, from quarter to quarter .
In addition, the Company closed on a tax equity financing transaction in August 2021 with East West Bank f or the 7.4 MW fuel cell project located on the U.S. Navy Submarine Base in Groton, CT (the “Groton Project”), which has been structured as a “partnership flip.” A partnership (the “Groton Partnership”) was organized with East West Bank to acquire from FuelCell Energy Finance II, LLC, a wholly-owned subsidiary of the Company, all of the outstanding equity interests in Groton Station Fuel Cell, LLC (the “Groton Project Company”). East West Bank has a conditional withdrawal right which they can exercise and which would require the Company to pay 101% of the amount contributed by East West Bank to date. In addition, under this partnership flip structure, the Company has an option to acquire all of the equity interests that East West Bank holds in the Groton Partnership starting approximately five and a half years after the Groton Project is operational. If the Company exercises this option, the exercise price to be paid by the Company will be the greater of (1) the fair market value of East West Bank’s equity interest at the time the option is exercised, (2) five percent of the $15 million tax equity commitment and (3) East West Bank’s claim in liquidation determined using the HLBV method.
The Groton Partnership is a VIE under U.S. GAAP. The Company has determined that it is the primary beneficiary in the Groton Partnership for accounting purposes. The Company has considered the provisions within the financing-related agreements (including the limited liability company agreement for the Groton Partnership) which grant the Company power to manage and make decisions affecting the operations of the Groton Partnership. The Company considers the rights granted to East West Bank under the agreements to be more protective in nature than participatory. Therefore, the Company has determined under the power and benefits criterion of ASC 810 that it is the primary beneficiary of the Groton Partnership. As the primary beneficiary, the Company consolidates in its consolidated financial statements the financial position, results of operations and cash flows of the Groton Partnership, and all intercompany balances and transactions between the Company and the Groton Partnership are eliminated in the consolidated financial statements. The Company recognized East West Bank’s share of the net assets of the Groton Partnership, which was $3.0 million as of October 31, 2022, as a redeemable noncontrolling interest in mezzanine equity on its Consolidated Balance Sheets and reclassified the amount to nonredeemable noncontrolling interest upon commencement of operations of the related project asset in December 2022. Upon commencement of operations, the Company began to allocate profits and losses to the noncontrolling interest under the HLBV method.
Finally, the Company closed on a tax equity financing transaction in November 2021 with REI for the 7.4 MW fuel cell project (the “LIPA Yaphank Project”) in Yaphank Long Island. REI’s tax equity commitment totaled $12.4 million. 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. 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. REI holds Class A Units in the Yaphank Partnership and a subsidiary of the Company holds the Class B Units . Under a partnership flip structure, tax equity investors agree to receive a minimum target rate of return, typically on an after-tax basis. Prior to receiving a contractual rate of return or a date specified in the contractual arrangements, REI will receive substantially all of the non-cash value attributable to the LIPA Yaphank Project, which includes accelerated depreciation and Section 48(a) investment tax credits; however, the Company will receive a majority of the cash distributions (based on the operating income of the LIPA Yaphank Project), which are paid quarterly. After REI receives its contractual rate of return, the Company will receive approximately 95% of the cash and tax allocations.
The Yaphank Partnership is a VIE under U.S. GAAP. The Company has considered the provisions within the financing-related agreements (including the limited liability company agreement for the Yaphank Partnership) which grant us power to manage and make decisions affecting the operations of the Yaphank Partnership. We consider the rights granted to REI under the agreements to be more protective in nature than participatory. Therefore, we have determined under the power and benefits criterion of ASC 810 that we are the primary beneficiary of the Yaphank Partnership. As the primary beneficiary, we consolidate the financial position, results of operations and cash flows of the Yaphank Partnership in our consolidated financial statements, and all intercompany balances and transactions between us and the Yaphank Partnership are eliminated. The Company recognized REI’s share of the net assets of the Yaphank Partnership as noncontrolling interests in its Consolidated Balance Sheets. The income or loss allocations reflected in our Consolidated Statements of
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Operations and Comprehensive Loss may create volatility in our reported results of operations, including potentially changing net loss attributable to stockholders to net income attributable to stockholders, or vice versa, from quarter to quarter. The Company allocates profits and losses to REI’s noncontrolling interest under the HLBV method.
See Note 3. “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. Due to the Company not meeting criteria to account for the transfer of the project assets as a sale since the leases include a repurchase right, sale accounting is precluded. Accordingly, the Company uses the financing method to account for these transactions.
Under the financing method of accounting for a sale-leaseback, the Company does not derecognize the project assets and does not recognize as revenue any of the sale proceeds received from the lessor that contractually constitutes payment to acquire the assets subject to these arrangements. Instead, the sale proceeds received are accounted for as finance obligations and leaseback payments made by the Company are allocated between interest expense and a reduction to the finance obligation. Interest on the finance obligation is calculated using the Company’s incremental borrowing rate at the inception of the arrangement on the outstanding finance obligation. While we receive financing for the related project asset, we have not recognized revenue on the sale-leaseback transactions. Instead, revenue is recognized with respect to the related PPAs in accordance with the Company’s accounting policies for recognizing generation revenues .
Inventories
Inventories consist principally of raw materials and work-in-process. Cost is determined using the first-in, first-out cost method. Included in our inventory balance are used modules that are brought back into inventory upon installation of new modules. When a new module is installed, a determination is made as to whether the used module has remaining useful life or should be scrapped and materials recycled. Modules that are deemed to have remaining useful life are put into inventory at an estimated value based on the expected remaining life of the module and its projected output. In certain circumstances, we will make advance payments to vendors for future inventory deliveries. These advance payments are recorded as Other current assets on the Consolidated Balance Sheets. Inventories are reviewed to determine net realizable value. 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.
Service Expense Recognition
We have entered into service agreements with certain customers to provide monitoring, maintenance and repair services for fuel cell power platforms. Under the terms of these service agreements, the power platform must meet a minimum operating output during the term. If the minimum output falls below the contract requirement, we may be subject to performance penalties or may be required to repair and/or replace the customer’s fuel cell module(s).
The Company records loss accruals for service agreements when the estimated cost of future module exchanges and maintenance and monitoring activities exceeds the remaining unrecognized contract value. Estimates for future costs on service agreements are determined by a number of factors, including the estimated remaining life of the module(s), used replacement modules available, and future operating plans for the power platform. Our estimates are performed on a contract by contract basis and include cost assumptions based on what we anticipate the service requirements will be to fulfill obligations for each contract. As of October 31, 2025 and 2024, our loss accruals on service agreements totaled $8.4 million and $9.0 million, respectively.
ACCOUNTING GUIDANCE UPDATE
Recently Adopted Accounting Guidance
In November 2023, the Financial Accounting Standards Board (“FASB”) issued guidance to improve reportable segment disclosure requirements, primarily through enhanced disclosures about significant segment expenses. In addition, the
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guidance enhances interim disclosure requirements, clarifies circumstances in which an entity can disclose multiple segment measures of profit or loss, provides new segment disclosure requirements for entities with a single reportable segment and contains other disclosure requirements. The purpose of the guidance is to enable investors to better understand an entity’s overall performance and assess potential future cash flows. The guidance is effective for fiscal years beginning after December 15, 2023, and interim periods within fiscal years beginning after December 15, 2024. Early adoption is permitted. The Company adopted the guidance during the year ended October 31, 2025. See Part II, Item 8, Note 15 — Segment Information for further detail.
Recent Accounting Guidance Not Yet Effective
In December 2023, the FASB issued guidance to enhance income tax disclosures by providing information to better assess how an entity’s operations, related tax risks, tax planning and operational opportunities affect its tax rate and prospects for future cash flows. Additional disclosures will be required to the annual effective tax rate reconciliation including specific categories and further disaggregated reconciling items that meet the quantitative threshold. Additionally, disclosures will be required relating to income tax expense and payments made to federal, state, local and foreign jurisdictions. This guidance is effective for fiscal years and interim periods beginning after December 15, 2024. We are currently evaluating the impact that the new guidance will have on our consolidated financial statements.
In November 2024, the FASB issued new guidance which requires enhanced disclosure of specified categories of expenses included in certain expense captions presented on the face of the income statement. This guidance will be effective for fiscal years beginning after December 15, 2026 and for interim periods beginning after December 15, 2027. The Company is currently evaluating the new guidance to determine its adoption approach and the impact on the presentation and disclosures of its consolidated statement of operations and comprehensive loss. The Company anticipates its processes will be enhanced to address the disaggregation and disclosure requirements, though it does not expect adoption to impact its overall results from operations.
