SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 ---------------------- FORM 10-Q X - QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 FOR THE QUARTERLY PERIOD ENDED SEPTEMBER 30, 2000 OR TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 FOR THE TRANSITION PERIOD FROM ________ TO _________ Commission File Number: 00027527 PLUG POWER INC. (Exact name of registrant as specified in its charter) 968 ALBANY-SHAKER ROAD, LATHAM, NEW YORK 12110 (Address of registrant's principal executive office) (518) 782-7700 (Registrant's telephone number, including area code) DELAWARE 22-3672377 (State or other jurisdiction (I.R.S. Employer of Incorporation) Identification Number) Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Sections 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes [X] No [_] The number of shares of common stock outstanding as of October 31, 2000 was 43,699,960 with a par value of $.01 per share.
PLUG POWER INC. INDEX to FORM 10-Q PART I. FINANCIAL INFORMATION Page ---- Item 1 - Financial Statements Condensed Consolidated Balance Sheets - September 30, 2000 and December 31, 1999 3 Condensed Consolidated Statements of Operations - Three Month and Nine Month Periods ended September 30, 2000 and September 30, 1999 and Cumulative Amounts from Inception 4 Condensed Consolidated Statements of Cash Flows - Nine Month Periods ended September 30, 2000 and September 30, 1999 and Cumulative Amounts from Inception 5 Notes to Condensed Consolidated Financial Statements 6-10 Item 2 - Management's Discussion and Analysis of Financial Condition and Results of Operations 11-19 PART II. OTHER INFORMATION Item 1 - Legal Proceedings 20 Item 2 - Changes in Securities and Use of Proceeds 20 Item 6 - Exhibits and Reports on Form 8-K 20-23 Signature 23
PLUG POWER INC. (A Development Stage Enterprise) Condensed Consolidated Balance Sheets <TABLE> <CAPTION> (Unaudited) September 30, 2000 December 31, 1999 ------------------ ------------------ <S> <C> <C> ASSETS Current assets: Cash and cash equivalents $ 92,316,916 $ 171,496,286 Restricted cash 275,000 275,000 Marketable securities 12,819,410 -- Accounts receivable 2,368,243 5,212,943 Inventory 2,156,781 304,711 Prepaid development costs 2,416,668 -- Other current assets 543,606 124,380 ------------- -------------- Total current assets 112,896,624 177,413,320 Restricted cash 5,600,274 5,600,274 Property, plant and equipment, net 30,607,690 23,333,791 Intangible assets 7,666,298 - Investment in affiliates 10,204,677 9,778,250 Prepaid development costs 3,021,318 -- ------------- -------------- Total assets $ 169,996,881 $ 216,125,635 ============= ============= LIABILITIES AND STOCKHOLDERS' EQUITY Current liabilities: Accounts payable $ 4,208,363 $ 4,644,496 Accrued expenses 4,855,428 3,004,126 Deferred grant revenue 200,000 200,000 Current portion of capital lease obligation and long-term debt 354,230 353,175 ------------- -------------- Total current liabilities 9,618,021 8,201,797 Long-term debt 5,600,274 5,600,274 Deferred grant revenue 650,000 800,000 Capital lease obligation 52,596 117,030 ------------- -------------- Total liabilities 15,920,891 14,719,101 ------------- -------------- Commitments and contingencies (see footnote 9) Stockholders' equity: Preferred stock, $0.01 par value per share; 5,000,000 shares authorized; none issued and outstanding -- -- Common stock, $0.01 par value per share; 245,000,000 shares authorized at September 30, 2000 and 95,000,000 shares authorized at December 31, 1999; 43,651,682 shares issued and outstanding, September 30, 2000 and 43,015,508 shares issued and outstanding, December 31, 1999 436,517 430,155 Paid-in capital 266,557,506 249,964,994 Deficit accumulated during the development stage (112,918,033) (48,988,615) ------------- -------------- Total stockholders' equity 154,075,990 201,406,534 ------------- -------------- Total liabilities and stockholders' equity $ 169,996,881 $ 216,125,635 ============= ============= </TABLE> The accompanying notes are an integral part of the consolidated financial statements. 3
PLUG POWER INC. (A Development Stage Enterprise) Condensed Consolidated Statements of Operations (Unaudited) <TABLE> <CAPTION> Three months ended September 30, Nine months ended Septemeber 30, Cumulative --------------------------------- ------------------------------------ Amounts 2000 1999 2000 1999 from Inception --------------- --------------- -------------- --------------- --------------- <S> <C> <C> <C> <C> <C> Contract revenue $ 1,547,791 $ 3,006,061 $ 6,898,348 $ 6,701,596 $ 25,633,262 Cost of contract revenue 3,041,964 4,731,854 10,432,264 9,849,688 36,020,389 ----------- ----------- ----------- ----------- ------------- Loss on contracts (1,494,173) (1,725,793) (3,533,916) (3,148,092) (10,387,127) In-process research and development - - 4,984,000 - 9,026,640 Research and development expense 18,525,509 6,106,389 46,902,343 13,886,635 73,342,105 General and administrative expense 2,113,631 1,656,644 5,303,231 4,925,980 15,174,391 Interest expense 110,824 - 265,439 - 455,025 Stock-based compensation 7,450,233 31,700 7,513,633 2,362,100 10,954,433 ----------- ----------- ----------- ----------- ------------- Operating loss (29,694,370) (9,520,526) (68,502,562) (24,322,807) (119,339,721) Interest income 1,981,989 149,550 6,474,467 367,583 9,794,761 Loss before equity in losses of affiliates (27,712,381) (9,370,976) (62,028,095) (23,955,224) (109,544,960) Equity in losses of affiliates (938,019) (411,802) (1,901,323) (912,250) (3,373,073) ----------- ----------- ----------- ----------- ------------- Net loss $ (28,650,400) $ (9,782,778) $ (63,929,418) $ (24,867,474) $(112,918,033) =========== =========== =========== =========== ============= Loss per share: Basic and diluted $ (0.66) $ (0.38) $ (1.48) $ (1.10) =========== =========== =========== =========== Weighted average number of common shares outstanding 43,433,561 25,423,078 43,181,442 22,688,822 =========== =========== =========== =========== </TABLE> The accompanying notes are an integral part of the consolidated financial statements. 4
PLUG POWER INC. (A Development Stage Enterprise) Condensed Consolidated Statements of Cash Flows (Unaudited) <TABLE> <CAPTION> Nine months ended September 30, Cumulative ------------------------------------ Amounts from 2000 1999 Inception ---------------- --------------- ----------------- <S> <C> <C> <C> CASH FLOWS FROM OPERATING ACTIVITIES: Net loss $ (63,929,418) $(24,867,474) $(112,918,033) Adjustments to reconcile net loss to net cash used in operating activities: Depreciation and amortization 2,251,156 988,668 4,290,192 In-process research and development - - 4,042,640 Equity in losses of affiliate 1,901,323 912,250 3,373,073 Amortization of intangible assets 1,958,202 - 1,958,202 Amortization of deferred rent - 100,000 150,000 Write-off of deferred rent - 1,850,000 1,850,000 In-kind services - - 500,000 Stock based compensation 253,924 2,250,000 2,503,924 Compensatory options 7,513,633 112,100 8,704,433 Changes in assets and liabilities: Accounts receivable 2,844,700 (1,982,978) (2,368,243) Inventory (1,852,070) - (2,156,781) Due from investor - 461,774 286,492 Prepaid development costs (437,986) - (437,986) Other current assets (419,226) (92,945) (521,692) Accounts payable and accrued expenses 1,415,169 3,541,713 9,015,683 Deferred grant revenue (150,000) - 850,000 Due to investor - 236,387 (286,492) ------------ ------------ ------------- Net cash used in operating activities (48,650,593) (16,490,505) (81,164,588) ------------ ------------ ------------- Cash Flows From Investing Activities: Purchase of property, plant and equipment (9,525,055) (8,536,633) (23,045,104) Purchase of intangible assets (9,624,500) - (9,624,500) Investment in affiliate (1,500,000) - (1,500,000) Marketable securities (12,819,410) - (12,819,410) ------------ ------------ ------------- Cash used in investing activities (33,468,965) (8,536,633) (46,989,014) ------------ ------------ ------------- CASH FLOWS FROM FINANCING ACTIVITIES: Proceeds from issuance of common stock - 30,367,787 130,742,782 Proceeds from initial public offering, net - - 94,611,455 Stock issuance costs - - (1,639,577) Proceeds from stock option exercises 3,003,567 - 3,045,474 Cash placed in escrow - (6,160,274) (5,875,274) Principal payments on capital lease obligations (63,379) - (129,342) Principal payments on long-term debt - - (285,000) ------------ ------------ ------------- Net cash provided by financing activities 2,940,188 24,207,513 220,470,518 ------------ ------------ ------------- (Decrease) increase in cash and cash equivalents (79,179,370) (819,625) 92,316,916 Cash and cash equivalents, beginning of period 171,496,286 3,993,122 - ------------ ------------ ------------- Cash and cash equivalents, end of period $ 92,316,916 $ 3,173,497 $ 92,316,916 ============ ============ ============= </TABLE> 5 The accompanying notes are an integral part of the consolidated financial statements.
PLUG POWER INC. Notes to Condensed Consolidated Financial Statements 1. NATURE OF OPERATIONS Plug Power Inc. (Company) was originally formed as a joint venture between Edison Development Corporation (EDC) and Mechanical Technology Incorporated (MTI) on June 27, 1997 and succeeded by merger to all of the assets, liabilities and equity of Plug Power, L.L.C. in November 1999. The Company is a development stage enterprise formed to research, develop, manufacture and distribute fuel cells for electric power generation. 2. LIQUIDITY Our cash requirements depend on numerous factors, including completion of our product development activities, ability to commercialize our residential fuel cell systems, market acceptance of our systems and other factors. We expect to devote substantial capital resources to continue our development programs directed at commercializing our fuel cell systems for worldwide residential use, to hire and train our production staff, develop and expand our manufacturing capacity, begin production activities and expand our research and development activities. We will pursue the expansion of our operations through internal growth and strategic acquisitions and expect such activities will be funded from existing cash and cash equivalents, issuance of additional equity or debt securities or additional borrowings subject to market and other conditions. There can be no assurance that such additional financing will be available on terms acceptable to the Company or at all. Failure to raise the funds necessary to finance future cash requirements or consummate future acquisitions could adversely affect the Company's ability to pursue its strategy and could negatively affect operations in future periods. We anticipate incurring substantial additional losses over at least the next several years and believe that our current cash balances will provide us with sufficient capital to fund operations for at least the next 12 months. 3. BASIS OF PRESENTATION The condensed consolidated balance sheet as of September 30, 2000, the condensed consolidated statements of operations for the three and nine month periods ended September 30, 2000 and 1999 and the condensed consolidated statements of cash flows for the nine month periods ended September 30, 2000 and 1999 have been prepared by the Company without audit. In the opinion of management, all adjustments, which consist solely of normal recurring adjustments, necessary to present fairly in accordance with generally accepted accounting principles, the financial position, results of operations and cash flows for all periods presented, have been made. The results of operations for the interim periods presented are not necessarily indicative of the results that may be expected for the full year. Certain information and footnote disclosures normally included in financial statements prepared in accordance with generally accepted accounting principles have been condensed or omitted. These condensed consolidated financial statements should be read in conjunction with the Company's audited financial statements and notes thereto included in the Company's Annual Report on Form 10-K filed for the fiscal year ended December 31, 1999. Marketable Securities: Marketable securities includes investments in corporate debt securities which are carried at fair value. These investments are considered available for sale, and the difference between the cost and the fair value of these securities would be reflected in other comprehensive income and as a separate component of stockholders' equity. There was no significant difference between cost and fair value of these investments at September 30, 2000. Recent Accounting Pronouncements: In March 2000, the Financial Accounting Standards Board issued FASB Interpretation No. 44 ("FIN 44"), "Accounting for Certain Transactions Involving Stock Compensation -- an Interpretation of APB Opinion No. 25". FIN 44 clarifies the application of APB Opinion No. 25 including the following: the definition of an employee for purposes of applying APB Opinion No. 25; the criteria for determining whether a plan qualifies as a non compensatory plan; the accounting consequence of various modifications to the terms of previously fixed stock options or awards; and the accounting for an exchange of stock compensation awards in a business combination. FIN 44 is generally effective July 1, 2000. In December, 1999, the SEC issued Staff Accounting Bulletin No. 101, "Revenue Recognition in Financial Statements" ("SAB 101"). SAB 101 summarizes certain of the SEC's views in applying generally accepted accounting principles to revenue recognition. The Company is required to apply the provisions of SAB 101 in the fourth quarter of 2000, however, the Company does not expect the application of SAB 101 to have a material impact on the Company's financial position or results of operations. In September 1998, the Financial Accounting Standards Board ("FASB") issued Statement of Financial Accounting Standards No. 133, "Accounting for Derivative Instruments and Hedging Activities" ("Statement 133") and subsequently issued Statement of Financial Accounting Standards No. 138, "Accounting for Certain Derivative Instruments and Certain Hedging Activities - an Amendment of FAS 133" ("Statement 138"). These statements, which are effective for the Company for the year beginning January 1, 2001, establish accounting and reporting standards for derivative instruments and for hedging activities. Management believes that Statements 133 and 138 will not have a material impact on the Company's Consolidated Financial Statements. 6
4. LOSS PER SHARE Loss per share for the Company is as follows: <TABLE> <CAPTION> Three Months Three Months Nine Months Nine Months Ended Ended Ended Ended September 30, September 30, September 30, September 30, 2000 1999 2000 1999 ---------------- ---------------- ---------------- ---------------- Numerator <S> <C> <C> <C> <C> Net loss $(28,650,400) $(9,782,778) $(63,929,418) $(24,867,474) Denominator Weighted average number of Common shares 43,433,561 25,423,078 43,181,442 22,688,822 </TABLE> No options or warrants outstanding were included in the calculation of diluted loss per share because their impact would have been anti-dilutive. The calculation also excludes 111,851 contingently returnable shares. 5. INCOME TAXES The Company accounts for income taxes in accordance with Statement of Financial Accounting Standards No. 109 (SFAS 109), "Accounting for Income Taxes." No benefit for federal or state income taxes has been reported in these condensed consolidated statements of operations as they have been offset by a full valuation allowance because it is more likely than not that the tax benefits of the net operating loss carryforward may not be realized. 6. INVESTMENTS IN AFFILIATES In February 1999, the Company entered into an agreement with GE MicroGen, Inc. (formerly GE On-Site Power, Inc.) a wholly owned subsidiary of General Electric Co. to create GE Fuel Cell Systems, L.L.C. (GEFCS) a limited liability company created to market and distribute fuel cell systems world- wide. GE MicroGen owns 75% of GEFCS and the Company owns 25% of GEFCS. The Company accounts for its interest in GEFCS on the equity method of accounting and adjusts its investment by its proportionate share of income or losses. During the nine months ended September 30, 2000, GEFCS had net revenues (fee income) of approximately $1,379,000 and an operating and net loss of approximately $2,465,000. For this same period, the Company has recorded equity in losses of this affiliate of approximately $1,460,000, including goodwill amortization of $844,000. The Company recently completed an amendment to its distribution agreement with GE Fuel Cell Systems that defines product specifications and delivery schedules for pre-commercial and commercial model introductions. The new agreement allows GE to extend the existing 10-year agreement by an additional 5 years. Given the Company's revised product introduction schedule, which is expected to be during the first half of 2002, it does not expect any significant sales to GE before the first half of 2002. In March 2000, the Company acquired a 28% ownership interest in Advanced Energy Systems, Inc. (AES) in exchange for a combination of $1.5 million cash and Plug Power common stock valued at approximately $828,000. The Company accounts for its interest in AES on the equity method of accounting and adjusts its investment by its proportionate share of income or losses. During the nine months ended September 30, 2000, AES had sales of approximately $1,443,000 and an 7
operating and net loss of approximately $521,000. For this same period, the Company has recorded equity in losses of this affiliate of approximately $441,000, including goodwill amortization of $295,000. 7. GASTEC TRANSACTION In February 2000, Plug Power acquired all of Gastec's intellectual property, and certain fixed assets, related to fuel processor development for fuel cell systems capable of producing up to 100 kW of electricity. The total purchase price was $14,800,000, paid in cash. In connection with the transaction, the Company recorded in-process research and development expense in the amount of $4,984,000, fixed assets in the amount of $192,000 and intangible assets in the amount of $9,624,000 (including a trained workforce for $357,000). The in-process research and development was valued using an income approach which reflects the present value of future avoided costs the Company estimates it would otherwise have spent if it were to acquire the exclusive rights to this technology, for its remaining useful life, from another entity. The Company then discounted the net avoided cost using a 40% discount rate which the Company believes to be consistent with the risk associated with this early stage technology. This amount was further adjusted to reflect the technology's stage of completion, of approximately 30%, in order to reflect the value of the in-process research and development attributable to the efforts of the seller up to the date of the transaction. Fixed assets were capitalized at their fair value and will be depreciated over their useful life. In connection with the transaction, the Company acquired the services of employees experienced in the fuel cell industry. Accordingly, the Company has capitalized the estimated cost savings associated with recruiting, relocating and training a similar workforce. The remaining $9,267,000 has been capitalized as an intangible asset. This amount together with the value attributable to the trained workforce has been capitalized and is being amortized over the next 36 months. 8. STOCKHOLDERS' EQUITY Changes in stockholders' equity for the nine months ended September 30, 2000 is as follows: <TABLE> <CAPTION> Deficit Accumulated During the Total Common stock Additional Development Stockholders' Shares Amount Paid-in Capital Stage Equity -------------------------------------------------------------------------------------------- <S> <C> <C> <C> <C> <C> BALANCE, JANUARY 1, 2000 43,015,508 $430,155 $249,964,994 $(48,988,615) $201,406,534 Stock issued for equity in 7,000 70 827,680 827,750 affiliate Stock issued for development 104,869 1,048 4,998,952 5,000,000 agreement Stock issued to employees 3,041 31 253,893 253,924 Compensatory stock options 7,513,633 7,513,633 Stock option exercises 521,264 5,213 2,998,354 3,003,567 Net loss (63,929,418) (63,929,418) -------------------------------------------------------------------------------------------- BALANCE, SEPTEMBER 30, 2000 43,651,682 $436,517 $266,557,506 $(112,918,033) $154,075,990 ========================================================================================= </TABLE> During the quarter ended September 30, 2000, the Company recorded a one-time, non-cash charge in the amount of $7.4 million related to stock-based compensation for the Company's former President and CEO. 8
9. COMMITMENTS AND CONTINGENCIES Development agreements: In April, 2000, the Company finalized a joint development agreement with AXIVA GmbH, to develop a high temperature membrane electrode unit (MEU). Under the agreement, Plug Power and Axiva will exclusively work together on the development of a high temperature MEU for Plug Power's stationary fuel cell system applications. As part of the agreement Plug Power will contribute an estimated $4.1 million (not to exceed $4.5 million) to fund its share of the development efforts over the next twelve months. As of September 30, 2000, the Company has contributed $1.5 million under the terms of the agreement. In connection with the transaction, the Company has recorded $1.5 million under the balance sheet caption "Prepaid development costs". Through September 30, 2000, the Company has expensed $750,000 of such costs. In June 2000, the Company finalized a joint development agreement with Engelhard Corporation for development and supply of advanced catalysts to increase the overall performance and efficiency of Plug Power's fuel processor - the front end of the fuel cell system. As part of the agreement, over the next three years, Plug Power will contribute $10 million to fund Engelhard's development efforts and Engelhard will purchase $10 million of Plug Power's common stock. The agreements also specify rights and obligations for Engelhard to supply product to Plug Power over the next 10 years. As of September 30, 2000, the Company has contributed $5 million under the terms of the agreement while Engelhard has purchased $5 million of Plug Power common stock. In connection with the transaction, the Company has recorded $5 million under the balance sheet caption "Prepaid development costs". Through September 30, 2000, the Company has expensed $312,000 of such costs. In September 2000, the Company finalized a joint development agreement with Torrington Research Company for development and supply of auxiliary components within Plug Power's fuel cell system. As part of the agreement, Plug Power will contribute $750,000 to fund Torrington's development efforts through year-end 2000. In connection with the transaction, the Company will receive a specified number of development units which it will integrate into the Plug Power fuel cell system. Through September 30, 2000, the Company has funded development activities in the amount of approximately $350,000, which has been recorded as research and development expense. Litigation: The Company has disclosed on a Form 8-K filed January 25, 2000, with the Securities and Exchange Commission, that a legal complaint was filed against the Company, The Detroit Edison Company and EDC alleging the entities misappropriated business and technical trade secrets, ideas, know-how and strategies relating to fuel cell systems and breached certain contractual obligations owed to DCT, Inc. The Company believes that the allegations in the complaint are without merit and is vigorously contesting the litigation. The Company does not believe that the outcome of these actions will have will a material adverse effect upon its financial position, results of operations or liquidity; however, 9
litigation is inherently uncertain and there can be no assurances as to the ultimate outcome or effect of this action. On or about September 14, 2000, a purported shareholder class action complaint was filed in the federal district court for the Eastern District of New York alleging that Plug Power and various of its officers and directors violated certain federal securities laws by failing to disclose certain information concerning its products and future prospects. The action is entitled Plumbing Solutions v. Plug Power Inc., et al., CV-00-5553. The action was brought on behalf of a purported class of purchasers of Plug Power, Inc. stock who purchased the stock between February 14, 2000 and August 2, 2000. Subsequently, thirteen additional complaints with similar allegations and class periods were filed. By order dated October 30, 2000, the court consolidated the complaints into one action, CV-00-5553. Plug Power believes that the allegations in the complaints are without merit and intends to vigorously defend the claims. Plug Power does not believe that the outcome of these actions will have a material adverse effect upon its financial position, results of operations or liquidity; however, litigation is inherently uncertain and there can be no assurances as to the ultimate outcome or effect of these actions. 10
MANAGEMENT'S DISCUSSION AND ANAYLSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS The following discussion should be read in conjunction with the accompanying Condensed Consolidated Financial Statements and Notes thereto included within this report, and our audited financial statements and notes thereto included in our Annual Report on Form 10-K filed for the fiscal year ended December 31, 1999. In addition to historical information, this Form 10-Q and the following discussion contain forward-looking statements that reflect our plans, estimates, intentions, expectations and beliefs. Our actual results could differ materially from those discussed in the forward-looking statements. Factors that could cause or contribute to such differences include, but are not limited to, those set forth under the caption "Risk Factors" in our Annual Report on Form 10-K filed for the fiscal year ended December 31, 1999. OVERVIEW Plug Power is a designer and developer of on-site, electricity generation systems utilizing proton exchange membrane (PEM) fuel cells for residential applications. GE Fuel Cell Systems, LLC, a joint venture 75% owned by General Electric's GE Power Systems business and 25% owned by Plug Power, will market, sell, service, and install our product. We recently completed an amendment to our distribution agreement with GE Fuel Cell Systems that defines product specifications and delivery schedules for pre-commercial and commercial model introductions. The new agreement also allows GE to extend the existing 10-year agreement by an additional 5 years. Plug Power was formed in June 1997 as a joint venture to further the development of fuel cells for electric power generation in residential and other applications. We are a development stage company and expect that we will have full commercial product availability during the first half of 2002. While the Company has certain best efforts obligations to GE in 2001 with respect to pre- commercial and first generation commercial products, we do not expect significant product sales to GE before full commercial product availability during the first half of 2002. We continue to advance the development of our product. Through the first nine months of 2000 we have produced 91 pre-commercial systems for both onsite and offsite testing. These systems have accumulated over 100,000 hours of system run time. While these systems are not our final commercial design they have enabled us to gather meaningful data that is critical to the design of our initial commercial product. During the fourth quarter, the company will manufacture initial prototype RU1 (Residential Unit 1) systems. Since inception, we have devoted substantially all of our resources toward the development of the PEM fuel cell systems and have derived substantially all of our revenue from government research and development contracts. Through September 30, 2000, our stockholders in the aggregate have contributed $225.4 million in cash, including $93.0 million in net proceeds from our initial public offering of common stock, which closed on November 3, 1999 and $31.3 million in other contributions, consisting of in-process research and development, real estate, other in-kind contributions and a 25% interest in GE Fuel Cell Systems. From inception through September 30, 2000, we have incurred losses of $112.9 million and expect to continue to incur losses as we expand our product development and commercialization program and prepare for the commencement of manufacturing operations. We expect that losses 11
will fluctuate from quarter to quarter and that such fluctuations may be substantial as a result of, among other factors, the number of systems we produce and install for internal and external testing, the related service requirements necessary to monitor those systems and potential design changes required as a result of field testing. There can be no assurance that we will manufacture or sell residential fuel cell systems successfully or achieve or sustain product revenues or profitability. ALLIANCES AND DEVELOPMENT AGREEMENTS Since our inception in June 1997, we have formed strategic alliances with suppliers of key components, developed distributor and customer relationships, and entered into development and demonstration programs with electric utilities, government agencies and other energy providers. GASTEC: In February 2000, Plug Power acquired all of Gastec's intellectual property, and certain fixed assets, related to fuel processor development for fuel cell systems capable of producing up to 100 kW of electricity. The total purchase price was $14,800,000, paid in cash. In connection with the transaction, the Company recorded in-process research and development expense in the amount of $4,984,000, fixed assets in the amount of $192,000 and intangible assets in the amount of $9,624,000 (including a trained workforce for $357,000). The in-process research and development was valued using an income approach which reflects the present value of future avoided costs the Company estimates it would otherwise have spent if it were to acquire the exclusive rights to this technology, for its remaining useful life, from another entity. The Company then discounted the net avoided cost using a 40% discount rate which the Company believes to be consistent with the risk associated this early stage technology. This amount was further adjusted to reflect the technology's stage of completion, of approximately 30%, in order to reflect the value of the in- process research and development attributable to the efforts of the seller up to the date of the transaction. Fixed assets were capitalized at their fair value and will be depreciated over their useful life. In connection with the transaction, the Company acquired the services of employees experienced in the fuel cell industry. Accordingly, the Company has capitalized the estimated cost savings associated with recruiting, relocating and training a similar workforce. The remaining $9,267,000 has been capitalized as an intangible asset. This amount together with the value attributable to the trained workforce has been capitalized and is being amortized over the next 36 months. AXIVA: In April, 2000, the Company finalized a joint development agreement with AXIVA GmbH, to develop a high temperature membrane electrode unit (MEU). Under the agreement, Plug Power and Axiva will exclusively work together on the development of a high temperature MEU for Plug Power's stationary fuel cell system applications. As part of the agreement Plug Power will contribute an estimated $4.1 million (not to exceed $4.5 million) to fund its share of the development efforts over the next twelve months. As of September 30, 2000, the Company has contributed $1.5 million under the terms of the agreement. In connection with the transaction, the Company has recorded $1.5 million under the balance sheet caption "Prepaid development costs". Through September 30, 2000, the Company has expensed $750,000 of such costs. ENGELHARD: In June 2000, the Company finalized a joint development agreement with Engelhard Corporation for development and supply of advanced catalysts to increase the overall 12
performance and efficiency of Plug Power's fuel processor -the front end of the fuel cell system. As part of the agreement, over the next three years, Plug Power will contribute $10 million to fund Engelhard's development efforts and Engelhard will purchase $10 million of Plug Power's common stock. The agreements also specify rights and obligations for Engelhard to supply product to Plug Power over the next 10 years. As of September 30, 2000, the Company has contributed $5 million under the terms of the agreement while Engelhard has purchased $5 million of Plug Power common stock. In connection with the transaction, the Company has recorded $5 million under the balance sheet caption "Prepaid development costs". Through September 30, 2000, the Company expensed $312,000 of such costs. ADVANCED ENERGY SYSTEMS: In March 2000, the Company acquired a 28% ownership interest in Advanced Energy Systems, Inc. (AES) in exchange for a combination of $1.5 million cash and Plug Power stock valued at approximately $828,000. The Company accounts for its interest in AES on the equity method of accounting and adjusts its investment by its proportionate share of income or losses. During the nine months ended September 30, 2000, AES had sales of approximately $1,443,000 and an operating and net loss of approximately $521,000. TORRINGTON RESEARCH COMPANY: In September 2000, the Company finalized a joint development agreement with Torrington Research Company for development and supply of auxiliary components within Plug Power's fuel cell system. As part of the agreement, Plug Power will contribute $750,000 to fund Torrington's development efforts through year-end 2000. In connection with the transaction, the Company will receive a specified number of development units which it will integrate into the Plug Power fuel cell system. Through September 30, 2000, the Company has funded development activities in the amount of approximately $350,000, which has been recorded as research and development expense. RESULTS OF OPERATIONS Comparison of the Three Months Ended September 30, 2000 and September 30, 1999. Revenues. Our revenues during this period were derived primarily from cost reimbursement government contracts relating to the development of PEM fuel cell technology and contract revenue generated from the delivery of PEM fuel cells and related engineering and testing support services for other customers. Our government contracts provide for the partial recovery of direct and indirect costs from the specified government agency, generally requiring us to absorb from 25% to 50% of contract costs incurred. As a result of these cost sharing requirements, we will report losses on these contracts as well as any future government contracts awarded. Total revenues for the third quarter ended September 30, 2000, were $1.5 million as compared to $3.0 million for the third quarter of 1999. The decrease is the result of completion of government contracts with the U.S. Department of Energy. Although we intend to continue certain government contract work, we expect future quarterly contract revenue will continue to decrease on a comparable basis with prior periods, as we focus on bringing the RU1 (Residential Unit 1) to the commercial marketplace. During the third quarter of 2000, the Company manufactured 30 pre-commercial residential fuel cell systems. The specifications of our current pre-commercial systems do not conform to the 13
specifications originally agreed upon with GE in February 1999. As a result, GE is no longer contractually obligated to purchase the 485 units under its take or pay commitment and we no longer anticipate the projected $10.3 million in revenue from GE in 2000. Additionally, while the Company has certain best efforts obligations to GE in 2001 with respect to pre-commercial and first generation commercial products, we do not expect significant product sales to GE before full commercial product availability during the first half of 2002. Cost of revenues. Cost of contract revenue includes compensation and benefits for the engineering and related support staff, fees paid to outside suppliers for subcontracted components and services, fees paid to consultants for services provided, materials and supplies used and other directly allocable general overhead costs. Cost of contract revenue was $3.0 million for the three months ended September 30, 2000, as compared to $4.7 million for the same period last year. While contract costs have decreased as a result of our reduced government contract activity, the percentage of contract cost compared to contract revenue has increased due to greater cost sharing requirements on those contracts currently in place. The result was a loss on contracts of $1.5 million for the three months ended September 30, 2000 compared to a loss on contracts of $1.7 million last year. We expect the cost to produce our initial systems will be higher than their sales price under the terms of our arrangements with our two distributors, GE Fuel Cell Systems and Edison Development and expect to continue to experience costs in excess of product revenues until we achieve higher production levels, which we do not anticipate until after 2003. Research and Development. Research and development expense includes compensation and benefits for the engineering and related staff, expenses for contract engineers, materials to build development and prototype units, fees paid to outside suppliers for subcontracted components and services, supplies used, facility related costs, such as computer and network services and other general overhead costs. Research and development expenses increased to $18.5 million for the three months ended September 30, 2000 from $6.1 million for the three months ended September 30, 1999. The increase of $12.4 million was primarily attributable to the growth of our research and development activities, which included a 40% increase in the labor base, 30 test and evaluation residential PEM fuel cell systems, amortization of capitalized development expenses in the amount of $900,000 under our joint development programs with Engelhard and Axiva, recorded on our balance sheet under the caption "Prepaid development costs" and amortization in the amount of $800,000 related to the portion of the Gastec purchase price which has been capitalized and recorded on our balance sheet under the caption "Intangible assets." General and Administrative. General and administrative expense includes compensation, benefits and related costs in support of our general corporate functions, including general management, finance and accounting, human resources, marketing, information technology and legal services. General and administrative expenses increased to $2.1 million for the three months ended September 30, 2000 from $1.7 million for the three months ended September 30, 1999. The increase is due to an increased personnel cost and general expenses associated with expanding business operations. 14
Interest Expense. Interest expense of $111,000 for the three months ended September 30, 2000 consists of interest on a long-term obligation related to a real estate purchase agreement with Mechanical Technology in June, 1999, and interest paid on capital lease obligations. Stock-based Compensation. During the quarter ended September 30, 2000, we recorded a one-time, non-cash charge in the amount of $7.4 million related to stock-based compensation for the Company's former President and CEO. Interest Income. Interest income consists of interest earned on our cash and cash equivalents and increased to $2.0 million for the three months ended September 30, 2000 from $150,000 for the same period last year. The increase was due to interest earned on higher balances of cash and cash equivalents available throughout the third quarter of 2000, which is result of our initial public offering of common stock and the exercise of warrants and stock purchase commitments by our existing stockholders. Equity in losses of affiliates. Equity in losses of affiliates increased to $938,000 for the three months ended September 30, 2000 from $412,000 last year. Equity in losses of affiliates for the period ended September 30, 2000 in the amount of $938,000 is our proportionate share of the losses of GE Fuel Cell Systems and Advanced Energy Systems in the amount of $509,000 and goodwill amortization on those investments in the amount of $429,000. Income Taxes. No benefit for federal and state income taxes has been reported in the financial statements as the deferred tax asset generated from our net operating has been offset by a full valuation allowance because it is more likely than not that the tax benefits of the net operating loss carryforward may not be realized. We were taxed as a partnership prior to November 3, 1999, the effective date of our merger into a C corporation, and the federal and state income tax benefits of our losses were recorded by our stockholders. Effective on November 3, 1999, we began accounting for income taxes in accordance with Statement of Financial Accounting Standards No. 109 (SFAS 109), ''Accounting for Income Taxes.'' Comparison of the Nine Months Ended September 30, 2000 and September 30, 1999. Revenues. Our revenues during this period were derived primarily from cost reimbursement government contracts relating to the development of PEM fuel cell technology and contract revenue generated from the delivery of PEM fuel cells and related engineering and testing support services for other customers. Our government contracts provide for the partial recovery of direct and indirect costs from the specified government agency, generally requiring us to absorb from 25% to 50% of contract costs incurred. As a result of these cost sharing requirements, we will report losses on these contracts as well as any future government contracts awarded. Total revenues for the nine months ended September 30, 2000 were $6.9 million as compared to $6.7 million for the same period in 1999. We have substantially completed certain government contracts with the U.S. Department of Energy. Although we intend to continue 15
certain government contract work, we expect future quarterly contract revenue will continue to decrease on a comparable basis with prior periods, as we focus on bringing the RU1 (Residential Unit 1) to the commercial marketplace. During the first nine months of 2000, the Company manufactured 91 pre- commercial residential fuel cell systems. The specifications of our current pre-commercial systems do not conform to the specifications originally agreed upon with GE in February 1999. The company recently completed an amendment to its distribution agreement with GE Fuel Cell Systems that defines product specifications and delivery schedules for pre-commercial and commercial model introductions. The new agreement allows GE to extend the existing 10-year agreement by an additional 5 years. As a result, GE is no longer contractually obligated to purchase the 485 units under its take or pay commitment and we no longer anticipate the projected $10.3 million in revenue from GE in 2000. Additionally, while the Company has certain best efforts obligations to GE in 2001 with respect to pre-commercial and first generation commercial products, we do not expect significant product sales to GE before full commercial product availability during the first half of 2002. Cost of revenues. Cost of contract revenue includes compensation and benefits for the engineering and related support staff, fees paid to outside suppliers for subcontracted components and services, fees paid to consultants for services provided, materials and supplies used and other directly allocable general overhead costs allocated to specific government contracts. Cost of contract revenue was $10.4 million for the nine months ended September 30, 2000, as compared to $9.8 million for the same period last year. The increase in contract costs are related to increased effort on those contracts with greater cost sharing requirements. We have recently completed government contracts with the U.S. Department of Energy which had more favorable cost sharing requirements. The result was a loss on contracts of $3.5 million for the nine months ended September 30, 2000 compared to a loss on contracts of $3.1 million last year. We expect the cost to produce our initial systems will be higher than their sales price under the terms of our arrangements with our two distributors, GE Fuel Cell Systems and Edison Development and expect to continue to experience costs in excess of product revenues until we achieve higher production levels, which we do not anticipate until after 2003. Research and Development. Research and development expense includes compensation and benefits for the engineering and related staff, expenses for contract engineers, materials to build development and prototype units, fees paid to outside suppliers for subcontracted components and services, supplies used, facility related costs, such as computer and network services and other general overhead costs. Research and development expenses increased to $46.9 million for the nine months ended September 30, 2000 from $13.9 million for the nine months ended September 30, 1999. The increase of $33.0 million was primarily attributable to the growth of our research and development activities, which included a 40% increase in the labor base, 91 test and evaluation residential PEM fuel cell systems, amortization of capitalized development expenses in the amount of $1.0 million under our joint development programs with Engelhard and Axiva, recorded on our balance sheet under the caption "Prepaid development costs" and amortization in the amount of $2.0 million related to the portion of the Gastec purchase price which has been capitalized and recorded on our balance sheet under the caption "Intangible assets." General and Administrative. General and administrative expense includes compensation, benefits and related costs in support of our general corporate functions, including general 16
management, finance and accounting, human resources, business development, information and legal services. General and administrative expenses increased to $5.3 million for the nine months ended September 30, 2000 from $4.9 million for the nine months ended September 30, 1999. The increase is due to an increased personnel cost and general expenses associated with expanding business operations. The 1999 amount includes a one-time charge in the amount of $1.9 million charge for the write-off of deferred rent expense, further explained below. In June 1999, the Company entered into a real estate purchase agreement with Mechanical Technology to acquire our current facility, a portion of which we previously leased from them. As a result, we wrote off deferred rent expense in the amount of $1.9 million during the quarter ended June 30, 1999. Interest Expense. Interest expense of $265,000 for the nine months ended September 30, 2000 consists of interest on a long-term obligation related to a real estate purchase agreement with Mechanical Technology in June, 1999, and interest paid on capital lease obligations. Stock-based Compensation. During the nine months ended September 30, 2000, we recorded a one-time, non-cash charge in the amount of $7.4 million related to stock-based compensation expense for the Company's former President and CEO. Additionally, we have recorded $87,000 related to compensatory options issued to employees. During the nine months ended September 30, 1999, we recognized $2.3 million in non-cash stock-based compensation expense in connection with our original formation agreements which provided Mechanical Technology the right to earn non- cash credits relating to services it rendered prior to our formation in connection with securing future government contracts. Upon our formation, Mechanical Technology contributed its fuel cell operations to us and we received the right to these government contracts if ever awarded in the future. When these contracts were awarded to us, Mechanical Technology earned the non-cash credits, entitling it to receive 2,250,000 shares of common stock with a fair value at the time of grant of $2.3 million. Additionally, we have recorded $112,000 related to compensatory options issued to employees. Interest Income. Interest income consists of interest earned on our cash and cash equivalents and increased to $6.5 million for the nine months ended September 30, 2000 from $368,000 for the same period last year. The increase was due to interest earned on higher balances of cash and cash equivalents available throughout the first nine months of 2000, which is result of our initial public offering of common stock and the exercise of warrants and stock purchase commitments by our existing stockholders. Equity in losses of affiliates. Equity in losses of affiliates increased to $1.9 million for the nine months ended September 30, 2000 from $912,000 last year. Equity in losses of affiliates during the nine months ended September 30, 2000 in the amount of $1.9 million is our proportionate share of the losses of GE Fuel Cell Systems and Advanced Energy Systems in the 17
amount of $762,000 combined with goodwill amortization on those investments in the amount of $1.1 million which we account for under the equity method of accounting. Income Taxes. No benefit for federal and state income taxes has been reported in the financial statements because the deferred tax asset generated from our net operating loss has been offset by a full valuation allowance because it is more likely than not that the tax benefits of the net operating loss carryforward may not be realized. We were taxed as a partnership prior to November 3, 1999, the effective date of our merger into a C corporation, and the federal and state income tax benefits of our losses were recorded by our stockholders. Effective on November 3, 1999, we began accounting for income taxes in accordance with Statement of Financial Accounting Standards No. 109 (SFAS 109), ''Accounting for Income Taxes.'' LIQUIDITY AND CAPITAL RESOURCES Summary Our cash requirements depend on numerous factors, including completion of our product development activities, ability to commercialize our residential fuel cell systems, market acceptance of our systems and other factors. We expect to devote substantial capital resources to continue our development programs directed at commercializing our fuel cell systems for worldwide residential use, to hire and train our production staff, develop and expand our manufacturing capacity, begin production activities and expand our research and development activities. We will pursue the expansion of our operations through internal growth and strategic acquisitions and expect such activities will be funded from existing cash and cash equivalents, issuance of additional equity or debt securities or additional borrowings subject to market and other conditions. There can be no assurance that such additional financing will be available on terms acceptable to the Company or at all. Failure to raise the funds necessary to finance future cash requirements or consummate future acquisitions could adversely affect the Company's ability to pursue its strategy and could negatively affect operations in future periods. We anticipate incurring substantial additional losses over at least the next several years and believe that our current cash balances will provide us with sufficient capital to fund operations for at least the next 12 months. We have financed our operations through September 30, 2000, primarily from the sale of equity, which has provided cash in the amount of $226.8 million. As of September 30, 2000, we had unrestricted cash, cash equivalents and marketable securities totaling $105.1 million and working capital was approximately $103.3 million. As a result of our purchase of real estate from Mechanical Technology, we have escrowed $5.8 million in cash to collateralize the debt assumed on the purchase. During the nine months ended September 30, 2000, net cash used in operating activities was $48.7 million, including $5.0 million related to the write off of in-process research and development related to our acquisition of intellectual property acquired from Gastec. Cash used in investing activities during the nine months ended September 30, 2000, was $33.5 million, including $12.8 million for the purchase of marketable securities. Excluding the purchase of marketable securities, cash used in investing activities was $20.7 million consisting of $9.5 18
million for the purchase of property, plant and equipment, $9.7 million representing the purchase of intangible assets related to the acquisition of intellectual property from Gastec and $1.5 million for the purchase of a 28% ownership interest in Advanced Energy Systems. Since inception, net cash used in operating activities has been $81.2 million and cash used in investing activities has been $47.0 million, including $12.8 million for the purchase of marketable securities. IMPACT OF YEAR 2000 In late 1999, we completed a review and evaluation of the potential impact that the change in the date to the Year 2000 will have on our computer systems and concluded that all of our major computer systems were able to recognize and appropriately process dates commencing in the Year 2000. As a result of those planning and implementation efforts, the Company experienced no significant disruptions in mission critical information technology and non-information technology systems and believes those systems successfully responded to the Year 2000 date change. Our historical cost to assess our Year 2000 readiness has been negligible. The Company is not aware of any material problems resulting from Year 2000 issues, either with its internal systems, or the products and services of third parties. We will continue to monitor our mission critical computer applications and those of our suppliers and vendors throughout the year 2000 to ensure that any latent Year 2000 matters that may arise are addressed promptly. 19
PART II - OTHER INFORMATION ITEM 1 - LEGAL PROCEEDINGS - -------------------------- The Company has disclosed on a Form 8-K filed January 25, 2000, with the Securities and Exchange Commission, that a legal complaint was filed against the Company, The Detroit Edison Company and EDC alleging the entities misappropriated business and technical trade secrets, ideas, know-how and strategies relating to fuel cell systems and breached certain contractual obligations owed to DCT, Inc. The Company believes that the allegations in the complaint are without merit and is vigorously contesting the litigation. The Company does not believe that the outcome of these actions will have will a material adverse effect upon its financial position, results of operations or liquidity; however, litigation is inherently uncertain and there can be no assurances as to the ultimate outcome or effect of this action. On or about September 14, 2000, a purported shareholder class action complaint was filed in the federal district court for the Eastern District of New York alleging that Plug Power and various of its officers and directors violated certain federal securities laws by failing to disclose certain information concerning its products and future prospects. The action is entitled Plumbing Solutions v. Plug Power Inc., et al., CV-00-5553. The action was brought on behalf of a purported class of purchasers of Plug Power, Inc. stock who purchased the stock between February 14, 2000 and August 2, 2000. Subsequently, thirteen additional complaints with similar allegations and class periods were filed. By order dated October 30, 2000, the court consolidated the complaints into one action, CV-00-5553. Plug Power believes that the allegations in the complaints are without merit and intends to vigorously defend the claims. Plug Power does not believe that the outcome of these actions will have a material adverse effect upon its financial position, results of operations or liquidity; however, litigation is inherently uncertain and there can be no assurances as to the ultimate outcome or effect of these actions. ITEM 2 - CHANGES IN SECURITIES AND USE OF PROCEEDS - -------------------------------------------------- Plug Power has issued securities that were not registered under the Securities Act of 1933, as amended (the "Securities Act") in the following transactions. The shares of common stock issued in each of the transactions were offered and sold in reliance upon Section 4(2) of the Securities Act relative to sales by an issuer not involving a public offering. On March 13, 2000, in connection with a stock purchase agreement, we issued and sold 7,000 shares of our common stock, in combination with $1.5 million in cash, to Advanced Energy Systems, Inc., in consideration of our receipt of a 28% equity interest in Advanced Energy Systems, Inc., a developer of power electronics for fuel cell applications. On June 9, 2000, in connection with a joint development agreement, we issued and sold 104,869 shares of our common stock to Engelhard Corporation, for an aggregate purchase price of $5.0 million. As part of the transaction, Plug Power contributed $5.0 million to fund Engelhard's development efforts related to advanced catalyst. ITEM 6 - EXHIBITS AND REPORTS ON FORM 8-K - ----------------------------------------- A) Exhibits. 2.1 Agreement and Plan of Merger by and between Plug Power and Plug Power, LLC, a Delaware limited liability company, dated as of October 7, 1999. * 3.1 Amended and Restated Certificate of Incorporation of Plug Power. * 3.2 Amended and Restated By-laws of Plug Power. * 4.1 Specimen certificate for shares of common stock, $.01 par value, of Plug Power. * 10.1 Amended and Restated Limited Liability Company Agreement of GE Fuel Cell Systems, LLC, dated February 3, 1999, between GE On-Site Power, Inc. and Plug Power, LLC * 10.2 Contribution Agreement, dated as of February 3, 1999, by and between GE On-Site Power, Inc. and Plug Power, LLC. * 10.3 Trademark and Trade Name Agreement, dated as of February 2, 1999, between General Electric Company and GE Fuel Cell Systems, LLC. * 20
10.4 Trademark Agreement, dated as of February 2, 1999, between Plug Power LLC and GE Fuel Cell Systems, LLC. * 10.5 Distributor Agreement, dated as of February 2, 1999, between GE Fuel Cell Systems, LLC and Plug Power, LLC. * 10.6 Side letter agreement, dated February 3, 1999, between General Electric Company and Plug Power LLC. * 10.7 Mandatory Capital Contribution Agreement, dated as of January 26, 1999, between Edison Development Corporation, Mechanical Technology Incorporated and Plug Power, LLC and amendments thereto, dated August 25, 1999 and August 26, 1999. * 10.8 LLC Interest Purchase Agreement, dated as of February 16, 1999, between Plug Power, LLC and Michael J. Cudahy. * 10.9 Warrant Agreement, dated as of February 16, 1999, between Plug Power, LLC and Michael J. Cudahy and amendment thereto, dated July 26, 1999. * 10.10 LLC Interest Purchase Agreement, dated as of February 16, 1999, between Plug Power, LLC and Kevin Lindsey. * 10.11 LLC Interest Purchase Agreement, dated as of April 1, 1999, between Plug Power, LLC and Antaeus Enterprises, Inc. * 10.12 LLC Interest Purchase Agreement, dated as of April 9, 1999, between Plug Power, LLC and Southern California Gas Company. * 10.13 Warrant Agreement, dated as of April 9, 1999, between Plug Power, LLC and Southern California Gas Company and amendment thereto, dated August 26, 1999. * 10.14 Agreement, dated as of June 26, 1997, between the New York State Energy Research and Development Authority and Plug Power LLC, and amendments thereto dated as of December 17, 1997 and March 30, 1999. * 10.15 Agreement, dated as of January 25, 1999, between the New York State Energy Research and Development Authority and Plug Power LLC. * 10.16 Agreement, dated as of September 30, 1997, between Plug Power LLC and the U.S. Department of Energy. * 10.17 Cooperative Agreement, dated as of September 30, 1998, between the National Institute of Standards and Technology and Plug Power, LLC, and amendment thereto dated May 10, 1999. * 10.18 Joint venture agreement, dated as of June 14, 1999 between Plug Power, LLC, Polyfuel, Inc., and SRI International. * 10.19 Cooperative Research and Development Agreement, dated as of February 12, 1999, between Plug Power, LLC and U.S. Army Benet Laboratories. * 21
10.20 Nonexclusive License Agreement, dated as of April 30, 1993, between Mechanical Technology Incorporated and the Regents of the University of California. * 10.21 Development Collaboration Agreement, dated as of July 30, 1999, by and between Joh. Vaillant GMBH. U. CO. and Plug Power, LLC. * 10.22 Agreement of Sale, dated as of June 23, 1999, between Mechanical Technology, Incorporated and Plug Power LLC. * 10.23 Assignment and Assumption Agreement, dated as of July 1, 1999, between the Town of Colonie Industrial Development Agency, Mechanical Technology, Incorporated, Plug Power, LLC, KeyBank, N.A., and First Albany Corporation. * 10.24 Replacement Reimbursement Agreement, dated as of July 1, 1999, between Plug Power, LLC and KeyBank, N.A. * 10.25 1997 Membership Option Plan and amendment thereto dated September 27, 1999. * 10.26 Trust Indenture, dated as of December 1, 1998, between the Town of Colonie Industrial Development Agency and Manufacturers and Traders Trust Company, as trustee. * 10.27 Distribution Agreement, dated as of June 27, 1997, between Plug Power, LLC and Edison Development Corporation and amendment thereto dated September 27, 1999. * 10.28 Agreement, dated as of June 27, 1999, between Plug Power, LLC and Gary Mittleman. * 10.29 Agreement, dated as of June 8, 1999, between Plug Power, LLC and Louis R. Tomson. * 10.30 Agreement, dated as of August 6, 1999, between Plug Power, LLC and Gregory A. Silvestri. * 10.31 Agreement, dated as of August 12, 1999, between Plug Power, LLC and William H. Largent. * 10.32 Agreement, dated as of August 20, 1999, between Plug Power, LLC and Dr. Manmohan Dhar.* 10.33 1999 Stock Option and Incentive Plan. * 10.34 Employee Stock Purchase Plan. * 10.35 Agreement, dated as of August 27, 1999, by Plug Power, LLC, Plug Power Inc., GE On-Site Power, Inc., GE Power Systems Business of General Electric Company, and GE Fuel Cell Systems, L.L.C. * 10.36 Registration Rights Agreement to be entered into by the Registrant and the stockholders of the Registrant. * 10.37 Registration Rights Agreement to be entered into by Plug Power, L.L.C. and GE On-Site Power, Inc. * 10.38 Agreement dated September 11, 2000, between Plug Power Inc. and Gary Mittleman. 10.39 Amendment No. 1 to Distributor Agreement dated February 2, 1999, between GE Fuel Cell Systems, L.L.C. and Plug Power Inc. 10.40 Amendment to the Distributor Agreement dated February 2, 1999, made as of July 31, 2000 between GE Fuel Cell Systems, L.L.C. and Plug Power Inc. (Portions of this exhibit have been omitted pursuant to a request for confidential treatment.) 23.1 Consent of Goodwin, Procter & Hoar LLP (included in Exhibit 5.1 hereto).* 24.1 Powers of Attorney (included on signature page). * * Incorporated by reference to the Company's Registration Statement on Form S-1 (File Number 333-86089) 27.1 Financial Data Schedule 22
B) Reports on Form 8-K. On August 4, 2000, we filed a Form 8-K with the Securities and Exchange Commission announcing the issuance of a press release announcing second quarter results and product development update, including an amendment to our distribution agreement with GE Fuel Cell Systems. On August 25, 2000, we filed a Form 8-K with the Secutities and Exchange Commission announcing the issuance of a press release announcing the resignation of Gary Mittleman, President, Chief Executive Officer and Director, and appointment of Greg Silvestri, Executive Vice President of Operations, to Chief Operating Officer. SIGNATURE __________ Pursuant to requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized. PLUG POWER INC. DATE: NOVEMBER 14, 2000 BY: /S/ WILLIAM H. LARGENT -------------------------- William Largent CHIEF FINANCIAL OFFICER 23