In the past, we and our third-party equity investors (together, the “Equity Investors”) contributed funds into a limited liability investment entity (the “Investment Company”) that owns and is parent to the Operating Company (together, the “PPA Entities”). The contributed funds were restricted for use by the Operating Company to the purchase of our Energy Servers manufactured by us in our normal course of operations. All six PPA Entities established in the past utilized their entire available financing capacity and have completed the purchase of their Energy Servers. Any debt incurred by the Operating Companies was non-recourse to us. Under these structures, each Investment Company was treated as a partnership for U.S. federal income tax purposes. Equity Investors received investment tax credits and accelerated tax depreciation benefits.

In June 2022 and November 2022, we sold PPA IIIa and PPA IV, respectively, which were accounted as our consolidated VIEs, as a result of the repowering of the Energy Servers. In August 2023, we paid off the outstanding balance and related accrued interest of the PPA V debt and released related debt service reserve. For details, please see Note 7 — Outstanding Loans and Security Agreements, Non-recourse Debt Facilities section. In August 2023, we sold PPA V, our last consolidated PPA Entity. The other three PPA Entities — PPA II, PPA IIIb and PPA VI — are not considered VIEs.

PPA IIIa was established in 2012 and we, through a special purpose subsidiary (the “Project Company”), had previously entered into certain agreements for the purpose of developing, financing, owning, operating, maintaining and managing a portfolio of 9.8 megawatts of the Energy Servers.

Following the PPA IIIa Buyout and prior to June 14, 2022, we repaid all outstanding debt of the Project Company of $30.6 million, and recognized loss on extinguishment of debt in an amount of $4.2 million, which includes the write-off of the debt discount related to warrants of $1.8 million and a make-whole payment of $2.4 million associated with the debt extinguishment. Refer to Note 7 — Outstanding Loans and Security Agreements, Non-recourse Debt Facilities section.

On June 14, 2022, we sold our 100% interest in the Project Company to the financier through the MIPA. Simultaneously, we entered into an agreement with the Project Company to upgrade the old 9.8 megawatts of the old PPA IIIa Energy Servers by replacing them with the new PPA IIIa Energy Servers and providing related installation services, which was financed by the financier (the “EPC Agreement”). The plan was to remove the old PPA IIIa Energy Servers prior to installing the new PPA IIIa Energy Servers and return the old PPA IIIa Energy Servers to Bloom. We also amended and restated our operations and maintenance agreement with the Project Company to cover all the new PPA IIIa Energy Servers and the old PPA IIIa Energy Servers prior to their upgrade (“the O&M Agreement”). The operations and maintenance fees under the O&M Agreement are paid on a fixed dollar per kilowatt basis.

Certain power purchase agreements within the PPA IIIa portfolio were classified as sales-type leases under ASC 840, while some were classified as operating leases. We elected the practical expedient package with the adoption of ASC 842, which allowed us to carry forward the lease classification upon adoption of ASC 842 on January 1, 2020. The leases were modified prior to the sale of PPA IIIa to the financier. Such modified leases were reassessed and determined to not be leases under ASC 842 because customers have no control over the identified assets. Accordingly, on the date of modification, the customer financing receivables were derecognized and recognized as property, plant, and equipment (the “PPA IIIa PP&E”).

Due to our repurchase option on the old PPA IIIa Energy Servers, we concluded there was no transfer of control of the old PPA IIIa Energy Servers upon sale of the membership interest to the financier. Accordingly, we continued to recognize the old PPA IIIa Energy Servers, despite the legal ownership of such assets under the MIPA. Upon reclassification of the lease assets to property, plant and equipment, net, we assessed the recorded assets for impairment. The carrying amount of the PPA IIIa PP&E was determined to be not recoverable as the net undiscounted cash flows were less than the carrying amounts for PPA IIIa PP&E. Therefore, we recognized the asset impairment charge as electricity cost, consistent with depreciation expense classification for property, plant and equipment under leases.

The PPA IIIa Upgrade was complete in the fourth quarter of fiscal 2022. It resulted in the following summarized impacts on our consolidated statements of operations for the year ended December 31, 2023: (i) service revenue recognized of $3.5 million related to the O&M Agreements, (ii) installation revenue recognized of $0.4 million, and (iii) cost of installation revenue of $0.1 million. The PPA IIIa Upgrade had the following impacts on our consolidated statements of operations for the year ended December 31, 2022: (i) product, installation and service revenue recognized of $49.8 million, $4.6 million, and $0.7 million, respectively, as a result of the sale of the new PPA IIIa Energy Servers; (ii) cost of electricity revenue of $45.0 million, including the impairment of the old PPA IIIa Energy Servers of $44.8 million and accelerated depreciation of $0.2 million prior to the completion of installation; (iii) cost of product and installation revenue of $21.8 million and $3.2 million, respectively, due to the sale of the new PPA IIIa Energy Servers; and (iv) $4.2 million of loss on extinguishment of debt.

Impacts on our consolidated statements of cash flows for the year ended December 31, 2022, are summarized as follows: net cash provided by financing activities decreased by $32.6 million due to the repayment of debt of $30.2 million and cash fee of $2.4 million associated with debt extinguishment. There was no impact on cash flows from financing activities for the year ended December 31, 2023.

Following the PPA IV Buyout and prior to November 22, 2022, we repaid all outstanding debt of the Project Company of $70.9 million and recognized a loss on extinguishment of debt in an amount of $4.7 million, which includes the write-off of the debt discount of $0.6 million and a make-whole payment of $4.1 million associated with the debt extinguishment. Refer to Note 7 — Outstanding Loans and Security Agreements, Non-recourse Debt Facilities section.

On November 22, 2022, we sold our 100% interest in the Project Company to the financier through the MIPA. Simultaneously, we entered into an agreement with the Project Company to upgrade the 19.3 megawatts of the old PPA IV Energy Servers by replacing them with the new PPA IV Energy Servers and providing related installation services, which was financed by the financier under the EPC Agreement. The old PPA IV Energy Servers were be removed prior to installing the new PPA IV Energy Servers, whereby upon completion of installation the old PPA IV Energy Servers are returned to Bloom. We also amended and restated our O&M Agreement with the Project Company to cover all the new PPA IV Energy Servers and the old PPA IV Energy Servers prior to their upgrade. The operations and maintenance fees under the O&M Agreement are paid on a fixed dollar per kilowatt basis.

The power purchase agreements within the PPA IV portfolio were classified as operating leases under ASC 840. We elected the practical expedient package with the adoption of ASC 842, which allowed us to carry forward the lease classification upon adoption of ASC 842 on January 1, 2020. The leases were modified prior to the sale of PPA IV to the financier. Such modified leases were reassessed and determined to not be leases under ASC 842 because customers have no

Due to our repurchase option on the old PPA IV Energy Servers, we concluded there was no transfer of control of the old PPA IV Energy Servers upon sale of the membership interest to the financier. Accordingly, we continued to recognize the old PPA IV Energy Servers, despite the legal ownership of such assets under the MIPA. We assessed the recorded assets for impairment. The carrying amount of the PPA IV PP&E was determined to be not recoverable as the net undiscounted cash flows are less than the carrying amounts for the PPA IV PP&E. Therefore, we recognized the asset impairment charge as electricity cost, consistent with depreciation expense classification for property, plant and equipment under leases.

The PPA IV Upgrade was substantially complete as of December 31, 2023. The Upgrade resulted in the following summarized impacts on our consolidated statements of operations for the year ended December 31, 2023: (i) installation revenue recognized of $10.0 million, (ii) service revenue recognized of $1.8 million related to the O&M Agreements, (iii) electricity revenue recognized of $6.1 million (iv) product revenue decreased by $3.4 million due to the revenue adjustment, (v) cost of installation revenue of $6.6 million, and (vi) cost of product revenue of $0.1 million. The PPA IV Upgrade had the following impacts on our consolidated statements of operations for the year ended December 31, 2022: (i) product and electricity revenue recognized of $102.3 million and $1.4 million, respectively, as a result of the sale of new Energy Servers; (ii) cost of electricity revenue of $64.3 million, including the impairment of old Energy Servers of $64.0 million and accelerated depreciation of $0.3 million prior to the completion of installation; (iii) cost of product revenue of $37.4 million, due to the sale of the new PPA IV Energy Servers; (iv) general and administrative expenses of $4.7 million primarily due to the impairment of prepaid insurance, and; (v) $4.7 million of loss on extinguishment of debt.

Impacts on our consolidated statements of cash flows for the year ended December 31, 2022, are summarized as follows: net cash provided by financing activities decreased by $74.6 million due to the repayment of debt of $70.5 million and cash fee of $4.1 million associated with debt extinguishment. There was no impact on cash flows from financing activities for the year ended December 31, 2023.

On November 2, 2022, we acquired all of Constellation Energy Generation, LLC’s (“Constellation”) interest in PPA V (the “2022 PPA V Buyout”), as set forth in the Purchase and Sale Agreement. The aggregate purchase price of the transaction amounted to $8.0 million. After the acquisition our interest in PPA V increased from 10% to 70%.

On August 10, 2023, we acquired all of Solar TC Corp’s (“Intel”) interest in PPA V, as set forth in the Purchase and Sale Agreement (the “2023 PPA V Buyout”). The aggregate purchase price of the transaction amounted to $6.9 million. After the acquisition, PPA V became wholly owned by us.

The changes in our ownership interest in PPA V were accounted for as equity transactions in accordance with ASC 810, Consolidations (“ASC 810”). The carrying amounts of the noncontrolling interest were eliminated to reflect the changes in our ownership interest in PPA V, and the differences between the fair values of the considerations paid and the carrying amounts of the noncontrolling interest immediately prior to the 2022 PPA V Buyout on November 2, 2022 and immediately prior to the 2023 PPA V Buyout on August 10, 2023 of $48.1 million and $11.5 million, respectively, were recognized as additional paid-in capital in our consolidated statements of stockholders’ equity (deficit).

On August 24, 2023, we entered into the MIPA with the financier. Following the 2023 PPA V Buyout and prior to signing the MIPA, we repaid all of the outstanding debt of the Project Company of $119.0 million, including accrued interest of $0.5 million, and recognized a loss on extinguishment of debt in an amount of $1.4 million, represented in its entirety by the derecognition of the related debt issuance costs. Refer to Note 7 — Outstanding Loans and Security Agreements, Non-recourse Debt Facilities section.

On August 25, 2023, we sold our 100% interest in the Project Company to the financier through the MIPA. Simultaneously, we entered into an agreement with the Project Company to upgrade the 37.1 megawatts of the old PPA V Energy Servers by replacing them with the new PPA V Energy Servers and to provide related installation services, which was financed by the financier (i.e., EPC Agreement). We also amended and restated our O&M Agreement with the Project Company to cover all the new PPA V Energy Servers and the old PPA V Energy Servers prior to their upgrade. The operations and maintenance fees under the O&M Agreement are paid on a fixed dollar per kilowatt basis.

Due to our repurchase option on the old PPA V Energy Servers, we concluded there was no transfer of control of the old PPA V Energy Servers upon sale of the membership interest to the financier. Accordingly, we continued to recognize the old PPA Energy Servers, despite the legal ownership of such assets having been transferred under the MIPA. We assessed the recorded assets for impairment. The carrying amount of the PPA V property, plant and equipment was determined to be not recoverable as the net undiscounted cash flows were less than the carrying amounts for PPA V property. plant and equipment. Therefore, we recognized the asset impairment charge as electricity cost, consistent with our depreciation expense classification for property, plant and equipment under leases.

The PPA V Upgrade was complete in the first quarter of fiscal 2024, and resulted in the following summarized impacts on our consolidated statements of operations for the year ended December 31, 2023: (i) product revenue and installation revenue recognized of $176.2 million and $14.8 million, respectively, as a result of the sale of the new PPA V Energy Servers; (ii) electricity revenue recognized of $6.1 million related to the old PPA V Energy Servers and the release of deferred incentive revenue of $5.0 million, (iii) service revenue recognized of $2.6 million related to the O&M Agreements (iv) cost of electricity revenue of $125.6 million, primarily including the impairment of the old PPA V Energy Servers of $123.7 million and accelerated depreciation of $0.4 million prior to the completion of installation; (v) cost of product revenue and cost of installation revenue of $75.3 million and $13.2 million, respectively, due to the sale of the new PPA V Energy Servers; (vi) general and administrative expenses of $6.4 million due to the impairment of non-recoverable production insurance; (vii) loss on extinguishment of debt of $1.4 million, (viii) interest expense of $0.3 million, and (ix) net loss attributable to noncontrolling interest of $1.0 million.

Impacts on our consolidated statements of cash flows for the year ended December 31, 2023, are summarized as follows: net cash provided by financing activities decreased by $118.5 million due to the repayment of debt related to PPA V, and acquisition of all of interest in PPA V from Intel for $6.9 million net of distributions to Intel’s noncontrolling interest of $2.3 million.

The table below shows the details of the one Investment Company VIEs that was active during the year ended December 31, 2023 and its cumulative activities from inception to the years indicated (dollars in thousands):


	PPA V
Overview:
Maximum size of installation (in megawatts)	40
Installed size (in megawatts)	37
Term of power purchase agreements (in years)	15
First system installed	Jun-15
Last system installed	Dec-16
Initial income (loss) and tax benefits allocation to Equity Investor	99%
Initial cash allocation to Equity Investor	90%
Income (loss), tax and cash allocations to Equity Investor after the flip date	No flip
Equity Investors1	Constellation2 and Intel
Company cash contributions	$	27,932
Equity Investor cash contributions	227,344
Debt financing	131,237
Activity as of December 31, 2023:
Distributions to Equity Investor	227,344
Debt repayment—principal	267,226
Activity as of December 31, 2022:
Distributions to Equity Investor	30,786
Debt repayment—principal	139,795
Activity as of December 31, 2021:
Distributions to Equity Investor	26,601
Debt repayment—principal	132,587

1 Investor names represent ultimate parents of subsidiary financing the project. Bloom purchased the equity interest in PPA V from Equity Investors in fiscal 2022 and 2023. Refer to the sections entitled PPA V Interest Buyout and PPA V Repowering of the Energy Servers for further details.
2 Formerly known as Exelon Corporation.

Generally, the assets of an operating company owned by an Investment Company can be used to settle only the operating company obligations, and the operating company creditors do not have recourse to us. The following were the aggregate carrying values of our VIE’s assets and liabilities in our consolidated balance sheets, after eliminations of intercompany transactions and balances, including PPA V in the PPA V transaction as of December 31, 2022 (in thousands):


	December 31,
	2022
Assets
Current assets:
Cash and cash equivalents	$	5,008
Restricted cash	550
Accounts receivable	2,072
Prepaid expenses and other current assets	1,927
Total current assets	9,557
Property and equipment, net	133,285
Restricted cash	8,000
Other long-term assets	1,869
Total assets	$	152,711
Liabilities
Current liabilities:
Accrued expenses and other current liabilities	$	1,037
Deferred revenue and customer deposits	662
Non-recourse debt	13,307
Total current liabilities	15,006
Deferred revenue and customer deposits	4,748
Non-recourse debt	112,480
Total liabilities	$	132,234