Nature of Operations	9 Months Ended
Sep. 30, 2016
Nature of Operations.
Nature of Operations	Notes to Interim Consolidated Financial Statements (Unaudited) 1. Nature of Operations Description of Business Plug Power Inc., or the Company, is a leading provider of alternative energy technology focused on the design, development, commercialization and manufacture of hydrogen fuel cell systems used primarily for the material handling and stationary power market. We are focused on proton exchange membrane, or PEM, fuel cell and fuel processing technologies, fuel cell/battery hybrid technologies, and associated hydrogen storage and dispensing infrastructure from which multiple products are available. A fuel cell is an electrochemical device that combines hydrogen and oxygen to produce electricity and heat without combustion. Hydrogen is derived from hydrocarbon fuels such as liquid petroleum gas, or LPG, natural gas, propane, methanol, ethanol, gasoline or biofuels. Plug Power develops complete hydrogen delivery, storage and refueling solutions for customer locations. Hydrogen can also be obtained from the electrolysis of water, or produced on-site at consumer locations through a process known as reformation. Currently the Company obtains hydrogen by purchasing it from fuel suppliers for resale to customers. We provide and continue to develop fuel cell product solutions to replace lead-acid batteries in material handling vehicles and industrial trucks for some of the world’s largest distribution and manufacturing businesses. We are focusing our efforts on material handling applications (forklifts) at multi-shift high volume manufacturing and high throughput distribution sites where our products and services provide a unique combination of productivity, flexibility and environmental benefits. Our current product line includes: GenDrive, our hydrogen fueled PEM fuel cell system providing power to material handling vehicles; GenFuel, our hydrogen fueling delivery system; GenCare, our ongoing maintenance program for both the GenDrive fuel cells and GenFuel products; GenSure (formerly ReliOn), our stationary fuel cell solution providing scalable, modular PEM fuel cell power to support the backup and grid-support power requirements of the telecommunications, transportation, and utility sectors; GenKey, our turn-key solution combining either GenDrive or GenSure with GenFuel and GenCare, offering complete simplicity to customers transitioning to fuel cell power; and GenFund, a collaboration with leasing organizations to provide cost efficient and seamless financing solutions to customers. We provide our products worldwide through our direct product sales force, and by leveraging relationships with original equipment manufacturers, or OEMs, and their dealer networks. We were organized as a corporation in the State of Delaware on June 27, 1997. Unless the context indicates otherwise, the terms “Company,” “Plug Power,” “we,” “our” or “us” as used herein refers to Plug Power Inc. and its subsidiaries. Liquidity Our cash requirements relate primarily to working capital needed to operate and grow our business, including funding operating expenses, growth in inventory to support both shipments of new units and servicing the installed base, growth in equipment leased to customers under long-term arrangements, funding the growth in our GenKey “turn-key” solution, which includes the installation of our customers’ hydrogen infrastructure as well as delivery of the hydrogen fuel, continued development and expansion of our products, payment of lease obligations under sale/leaseback financings, and the repayment or refinancing of our long-term debt. Our ability to achieve profitability and meet future liquidity needs and capital requirements will depend upon numerous factors, including the timing and quantity of product orders and shipments; attaining positive gross margins; the timing and amount of our operating expenses; the timing and costs of working capital needs; the timing and costs of building a sales base; the ability of our customers to obtain financing to support commercial transactions; our ability to obtain financing arrangements to support the sale or leasing of our products and services to customers, including financing arrangements to repay or refinance our long-term debt, and the terms of such agreements that may require us to pledge or restrict substantial amounts of our cash to support these financing arrangements; the timing and costs of developing marketing and distribution channels; the timing and costs of product service requirements; the timing and costs of hiring and training product staff; the extent to which our products gain market acceptance; the timing and costs of product development and introductions; the extent of our ongoing and new research and development programs; and changes in our strategy or our planned activities. If we are unable to fund our operations with positive cash flows and cannot obtain external financing, we may not be able to sustain future operations. As a result, we may be required to delay, reduce and/or cease our operations and/or seek bankruptcy protection. We have experienced and continue to experience negative cash flows from operations and net losses. The Company incurred net losses attributable to common shareholders of $38.4 million for the nine months ended September 30, 2016 and $55.8 million, $88.6 million and $62.8 million for the years ended December 31, 2015, 2014, and 2013, respectively. During the nine months ended September 30, 2016, cash used in operating activities was $29.7 million, consisting primarily of a net loss attributable to the Company of $38.3 million, offset by the impact of noncash charges/gains of $4.8 million and net inflows from fluctuations in working capital and other assets and liabilities of $3.8 million. The changes in working capital primarily were related to collections of accounts receivable and managing of accounts payable offset by an investment in inventory procured to meet our backlog requirements, as well as increases in prepaid expenses and consumption against the accrual for loss contracts related to service. As of September 30, 2016, we had cash and cash equivalents of $42.5 million and net working capital of $50.4 million. By comparison, at December 31, 2015, we had cash and cash equivalents of $64.0 million and net working capital of $88.5 million. Additionally, a portion of the cash and cash equivalents on hand at September 30, 2016, is required to be maintained at all times under a covenant requirement associated with the Company’s secured term loan facility that requires a minimum unencumbered cash and cash equivalents balance equal to or greater than 75% of the outstanding principal balance plus accounts payable aged more than 150 days. Net cash used in investing activities for the nine months ended September 30, 2016 included purchases of property, plant and equipment and outflows associated with materials, labor, and overhead necessary to construct new leased property of $45.1 million. Cash outflows related to equipment that we sell and equipment we lease directly to customers are included in net cash used in operating activities and net cash used in investing activities, respectively. Net cash provided by financing activities for the nine months ended September 30, 2016 primarily resulted from increases in finance obligations and borrowings against a long-term secured term loan facility, as described in Note 8. During 2014 and 2015, the Company signed sale/leaseback agreements with Manufacturers and Traders Trust Company (M&T Bank or the Bank) to facilitate the Company’s commercial transactions with key customers. The Company then sold certain fuel cell systems and hydrogen infrastructure to the Bank, and leased the equipment back from the Bank to support certain customer locations and to fulfill its varied Power Purchase Agreements (PPAs). In connection with these operating leases, the Bank requires the Company to maintain cash balances in restricted accounts securing its lease obligations to the Bank. Cash added to these restricted accounts was $14.2 million during 2015. (No additional cash was added during the three and nine months ended September 30, 2016, other than interest earned on restricted cash balances.) Cash received from customers under the PPAs is used to make lease payments to the Bank. As the Company performs under these agreements, the required restricted cash balances are released, according to a set schedule. At September 30, 2016, the Company had seven PPA deployments related to these sale/leaseback agreements. At September 30, 2016, the total remaining lease payments to the Bank under these agreements were $22.3 million which has been fully secured with restricted cash and pledged service escrows. The master lease agreement with the Bank required the Company to maintain a minimum of $40.0 million of unrestricted cash. The Company’s remaining contractual lease payments to the Bank are fully secured through a combination of restricted cash, unrestricted cash and pledges on funds escrowed for future service by the Company. The covenant is maintained in association with the residual exposure of the Bank, which stems from tax benefits taken by the Bank that could be recaptured should the underlying assets not be deployed for five years. This residual exposure at September 30, 2016 amounted to approximately $12.0 million, and the exposure decreases with the passage of time. In the event that the Company’s unrestricted cash balance fell below the minimum threshold, the Bank is entitled to cure the failure by transferring additional restricted cash to secure the outstanding residual tax exposure of the Bank at that time. Subsequent to September 30, 2016, the Company elected to pledge additional cash collateral of approximately $12.0 million to eliminate the minimum cash requirement. In addition to the financing activities described above, we have historically funded our operations primarily through public and private offerings of common and preferred stock, as well as short-term borrowings, long-term debt and project financing, as described in Notes 7 and 8. The Company believes that its current working capital and cash anticipated to be generated from future operations, as well as borrowings from lending and project financing sources that are currently being evaluated, will provide sufficient liquidity to fund operations for at least the next twelve months. There is no guarantee that such funding will be available if and when required or at terms acceptable to the Company. This projection is based on our current expectations regarding new project financing and product sales and service, cost structure, cash burn rate and other operating assumptions.

Notes to Interim Consolidated Financial Statements (Unaudited)

1. Nature of Operations

Description of Business

Plug Power Inc., or the Company, is a leading provider of alternative energy technology focused on the design, development, commercialization and manufacture of hydrogen fuel cell systems used primarily for the material handling and stationary power market.

We are focused on proton exchange membrane, or PEM, fuel cell and fuel processing technologies, fuel cell/battery hybrid technologies, and associated hydrogen storage and dispensing infrastructure from which multiple products are available. A fuel cell is an electrochemical device that combines hydrogen and oxygen to produce electricity and heat without combustion. Hydrogen is derived from hydrocarbon fuels such as liquid petroleum gas, or LPG, natural gas, propane, methanol, ethanol, gasoline or biofuels. Plug Power develops complete hydrogen delivery, storage and refueling solutions for customer locations. Hydrogen can also be obtained from the electrolysis of water, or produced on-site at consumer locations through a process known as reformation. Currently the Company obtains hydrogen by purchasing it from fuel suppliers for resale to customers.

We provide and continue to develop fuel cell product solutions to replace lead-acid batteries in material handling vehicles and industrial trucks for some of the world’s largest distribution and manufacturing businesses. We are focusing our efforts on material handling applications (forklifts) at multi-shift high volume manufacturing and high throughput distribution sites where our products and services provide a unique combination of productivity, flexibility and environmental benefits. Our current product line includes: GenDrive, our hydrogen fueled PEM fuel cell system providing power to material handling vehicles; GenFuel, our hydrogen fueling delivery system; GenCare, our ongoing maintenance program for both the GenDrive fuel cells and GenFuel products; GenSure (formerly ReliOn), our stationary fuel cell solution providing scalable, modular PEM fuel cell power to support the backup and grid-support power requirements of the telecommunications, transportation, and utility sectors; GenKey, our turn-key solution combining either GenDrive or GenSure with GenFuel and GenCare, offering complete simplicity to customers transitioning to fuel cell power; and GenFund, a collaboration with leasing organizations to provide cost efficient and seamless financing solutions to customers.

We provide our products worldwide through our direct product sales force, and by leveraging relationships with original equipment manufacturers, or OEMs, and their dealer networks.

We were organized as a corporation in the State of Delaware on June 27, 1997.

Unless the context indicates otherwise, the terms “Company,” “Plug Power,” “we,” “our” or “us” as used herein refers to Plug Power Inc. and its subsidiaries.

Liquidity

Our cash requirements relate primarily to working capital needed to operate and grow our business, including funding operating expenses, growth in inventory to support both shipments of new units and servicing the installed base, growth in equipment leased to customers under long-term arrangements, funding the growth in our GenKey “turn-key” solution, which includes the installation of our customers’ hydrogen infrastructure as well as delivery of the hydrogen fuel, continued development and expansion of our products, payment of lease obligations under sale/leaseback financings, and the repayment or refinancing of our long-term debt. Our ability to achieve profitability and meet future liquidity needs and capital requirements will depend upon numerous factors, including the timing and quantity of product orders and shipments; attaining positive gross margins; the timing and amount of our operating expenses; the timing and costs of working capital needs; the timing and costs of building a sales base; the ability of our customers to obtain financing to support commercial transactions; our ability to obtain financing arrangements to support the sale or leasing of our products and services to customers, including financing arrangements to repay or refinance our long-term debt, and the terms of such agreements that may require us to pledge or restrict substantial amounts of our cash to support these financing arrangements; the timing and costs of developing marketing and distribution channels; the timing and costs of product service requirements; the timing and costs of hiring and training product staff; the extent to which our products gain market acceptance; the timing and costs of product development and introductions; the extent of our ongoing and new research and development programs; and changes in our strategy or our planned activities. If we are unable to fund our operations with positive cash flows and cannot obtain external financing, we may not be able to sustain future operations. As a result, we may be required to delay, reduce and/or cease our operations and/or seek bankruptcy protection.

We have experienced and continue to experience negative cash flows from operations and net losses. The Company incurred net losses attributable to common shareholders of $38.4 million for the nine months ended September 30, 2016 and $55.8 million, $88.6 million and $62.8 million for the years ended December 31, 2015, 2014, and 2013, respectively.

During the nine months ended September 30, 2016, cash used in operating activities was $29.7 million, consisting primarily of a net loss attributable to the Company of $38.3 million, offset by the impact of noncash charges/gains of $4.8 million and net inflows from fluctuations in working capital and other assets and liabilities of $3.8 million. The changes in working capital primarily were related to collections of accounts receivable and managing of accounts payable offset by an investment in inventory procured to meet our backlog requirements, as well as increases in prepaid expenses and consumption against the accrual for loss contracts related to service. As of September 30, 2016, we had cash and cash equivalents of $42.5 million and net working capital of $50.4 million. By comparison, at December 31, 2015, we had cash and cash equivalents of $64.0 million and net working capital of $88.5 million. Additionally, a portion of the cash and cash equivalents on hand at September 30, 2016, is required to be maintained at all times under a covenant requirement associated with the Company’s secured term loan facility that requires a minimum unencumbered cash and cash equivalents balance equal to or greater than 75% of the outstanding principal balance plus accounts payable aged more than 150 days.

Net cash used in investing activities for the nine months ended September 30, 2016 included purchases of property, plant and equipment and outflows associated with materials, labor, and overhead necessary to construct new leased property of $45.1 million. Cash outflows related to equipment that we sell and equipment we lease directly to customers are included in net cash used in operating activities and net cash used in investing activities, respectively. Net cash provided by financing activities for the nine months ended September 30, 2016 primarily resulted from increases in finance obligations and borrowings against a long-term secured term loan facility, as described in Note 8.

During 2014 and 2015, the Company signed sale/leaseback agreements with Manufacturers and Traders Trust Company (M&T Bank or the Bank) to facilitate the Company’s commercial transactions with key customers. The Company then sold certain fuel cell systems and hydrogen infrastructure to the Bank, and leased the equipment back from the Bank to support certain customer locations and to fulfill its varied Power Purchase Agreements (PPAs). In connection with these operating leases, the Bank requires the Company to maintain cash balances in restricted accounts securing its lease obligations to the Bank. Cash added to these restricted accounts was $14.2 million during 2015. (No additional cash was added during the three and nine months ended September 30, 2016, other than interest earned on restricted cash balances.) Cash received from customers under the PPAs is used to make lease payments to the Bank. As the Company performs under these agreements, the required restricted cash balances are released, according to a set schedule. At September 30, 2016, the Company had seven PPA deployments related to these sale/leaseback agreements. At September 30, 2016, the total remaining lease payments to the Bank under these agreements were $22.3 million which has been fully secured with restricted cash and pledged service escrows.

The master lease agreement with the Bank required the Company to maintain a minimum of $40.0 million of unrestricted cash. The Company’s remaining contractual lease payments to the Bank are fully secured through a combination of restricted cash, unrestricted cash and pledges on funds escrowed for future service by the Company. The covenant is maintained in association with the residual exposure of the Bank, which stems from tax benefits taken by the Bank that could be recaptured should the underlying assets not be deployed for five years. This residual exposure at September 30, 2016 amounted to approximately $12.0 million, and the exposure decreases with the passage of time. In the event that the Company’s unrestricted cash balance fell below the minimum threshold, the Bank is entitled to cure the failure by transferring additional restricted cash to secure the outstanding residual tax exposure of the Bank at that time. Subsequent to September 30, 2016, the Company elected to pledge additional cash collateral of approximately $12.0 million to eliminate the minimum cash requirement.

In addition to the financing activities described above, we have historically funded our operations primarily through public and private offerings of common and preferred stock, as well as short-term borrowings, long-term debt and project financing, as described in Notes 7 and 8. The Company believes that its current working capital and cash anticipated to be generated from future operations, as well as borrowings from lending and project financing sources that are currently being evaluated, will provide sufficient liquidity to fund operations for at least the next twelve months. There is no guarantee that such funding will be available if and when required or at terms acceptable to the Company. This projection is based on our current expectations regarding new project financing and product sales and service, cost structure, cash burn rate and other operating assumptions.