Use of
Estimates
The preparation of financial statements and related disclosures in
conformity with 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, 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), lease
liabilities and right-of-use (“ROU”) assets, 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.
Liquidity
Our principal sources of cash have been sales of our common stock
through public equity offerings, proceeds from debt, project
financing and tax monetization transactions, proceeds from the sale
of our projects, as well as research and development and service
agreements with third parties. We have utilized this cash to
develop and construct project assets, perform research and
development on Advanced Technologies, pay down existing outstanding
indebtedness, and meet our other cash and liquidity needs.
As of April 30, 2022, unrestricted cash and cash equivalents
totaled $467.8 million compared to $432.2 million as of
October 31, 2021.
On June 11, 2021, the Company entered into an Open Market Sale
Agreement with Jefferies LLC and Barclays Capital Inc. with respect
to an at the market offering program under which the Company may,
from time to time, offer and sell shares of the Company’s common
stock having an aggregate offering price of up to $500 million.
From the date of the Open Market Sale Agreement through April 30,
2022, approximately 64.0 million shares were sold, resulting in
cumulative gross proceeds to the Company totaling approximately
$498.1 million before deducting expenses and sales commissions.
Cumulative net proceeds to the Company totaled approximately $488.1
million after deducting commissions and offering expenses totaling
approximately $10.0 million. During the three and six months ended
April 30, 2022 (which periods are included in the broader period
described in the preceding two sentences), approximately 19.9
million shares were sold under the Open Market Sale Agreement at an
average sales price of $6.07 per share, resulting in gross proceeds
of $120.8 million, before deducting expenses and sales commissions.
For the three and six months ended April 30, 2022, net proceeds to
the Company totaled approximately $118.3 million after deducting
commissions and offering expenses totaling approximately $2.4
million. The Company plans to use the net proceeds from this
offering to accelerate the development and commercialization of our
Advanced Technologies products, including our solid oxide platform,
for project development, for internal research and development, to
invest in capacity expansion for solid oxide and carbonate fuel
cell manufacturing, and for project financing, working capital
support, and general corporate purposes. The remaining availability
under the Open Market Sale Agreement as of the date of filing of
this report is approximately $1.9 million. See Note 13.
“Stockholders’ Equity and Warrant Liabilities” for additional
information regarding the Open Market Sale Agreement.
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 these financial
statements.
To date, we have not achieved profitable operations or sustained
positive cash flow from operations. The Company’s future liquidity,
in fiscal year 2022 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, (iv) obtain permanent financing for
its projects once constructed, (v) increase order and contract
volumes, which would lead to additional product sales, service
agreements and generation revenues, (vi) obtain funding for
and receive payment for research and development under current and
future Advanced Technologies contracts, (vii) successfully
commercialize its Advanced Technologies platforms, including its
solid oxide, hydrogen and carbon capture platforms,
(viii) implement the product cost reductions necessary to
achieve