Uncertain about its ability to raise more investment capital, Plug Power, currently building a hydrogen fuel cell plant in WNY STAMP informed the Security and Exchange Commission in a filing on Friday that it may not have the ability to remain a "going concern" over the next 12 months.
The Latham-based company started selling public stock in 1999 and has never reported a profit, which is not unusual for early-stage start-ups.
The company is working on several options to raise more capital, such as "various financing solutions from third parties with a particular focus on corporate level debt solutions, investment tax credit related project financings and loan guarantee programs, and/or large scale hydrogen generation infrastructure project financing."
The net losses for Plug Power in the third quarter were $0.47 per share for the third quarter, steeper than the $0.30-per-share loss expected by analysts.
In the filing, the company emphasizes the uncertainty of the effort.
"Those plans are not final and are subject to market and other conditions not within the Company’s control," the company stated in the filing. "As such, there can be no assurance that the Company will be successful in obtaining sufficient funding. Accordingly, management has concluded under the accounting standards that these plans do not alleviate substantial doubt about the Company’s ability to continue as a going concern.
News of the weaker-than-expected earnings report and the liquity problems drove Plug Power's stock price down from $5.93 per share to $3.53 per share.
Plug Power's chief financial officer, Paul Middleton, according to Yahoo Finance, characterized the wording of SEC filing as language required by standard accounting principles but the company remains confident about its future.
"It's a lot more conservative obviously than what we feel like," Middleton added. "But I have a $5 billion balance sheet that's unlevered. I mean, I really don't have any debt. So, we still are extremely confident about the range of parties and solutions that we're working with."
The Company’s working capital was $1.3 billion as of Sept. 30, In addition, the company has available-for-sale securities and equity securities of $388.8 million and $67.8 million, respectively.
The company stated that it "expects to generate operating losses for the foreseeable future as it continues to devote significant resources to expand its current production and manufacturing capacity, construct hydrogen plants, and fund the acquisition of additional inventory to deliver our end-products and related services."
CEO said in an earnings call that the third quarter was difficult.
"Over the past several months, there have been enormous challenges associated with the availability of hydrogen, primarily due to downed plants, including our Tennessee facility, and temporary plant outages across the entire hydrogen network," he said.
According to reports in early October, Plug Power is considered a strong contender for a portion of $7 billion in federal grants for alternative energy projects. In 2019, the federal government committed $4 million to the company.
Plug Power is building a $290 million fuel cell plant at STAMP in the Town of Alabama. The company is being (most of the funding is contingent on completion of the project) financially backed by the Genesee County Economic Development Center and New York State.
A GCEDC official did not immediately respond to a request for comment on the SEC filing.
Here is the full paragraph of a key statement in the filing:
These conditions and events raise substantial doubt about the Company’s ability to continue as a going concern. In accordance with Accounting Standards Update ("ASU") No. 2014-15, “Disclosure of Uncertainties about an Entity’s Ability to Continue as a Going Concern (Subtopic 205-40),” management has evaluated whether there are conditions and events, considered in the aggregate, that raise substantial doubt about the Company’s ability to continue as a going concern within one year after the date of the condensed consolidated financial statements are issued and has determined that the Company’s ability to continue as a going concern is dependent on its ability to raise additional capital. To alleviate the conditions and events that raise substantial doubt about the Company’s ability to continue as a going concern, management is currently evaluating several different options to enhance the Company’s liquidity position, including the sale of securities, the incurrence of debt, or other financing alternatives. The Company’s plan includes various financing solutions from third parties with a particular focus on corporate-level debt solutions, investment tax credit-related project financings and loan guarantee programs, and/or large-scale hydrogen generation infrastructure project financing. Those plans are not final and are subject to market and other conditions not within the Company’s control. As such, there can be no assurance that the Company will be successful in obtaining sufficient funding. Accordingly, management has concluded under the accounting.