PLUG POWER : Management's Discussion and Analysis of Financial Condition and Results of Operations (form 10-Q)

The following discussion should be read in conjunction with our accompanying
unaudited interim condensed consolidated financial statements and notes thereto
included within this report, and our audited and notes thereto included in our
2020 19-K. In addition to historical information, this Quarterly Report on Form
10-Q and the following discussion contain statements that are not historical
facts and are considered forward-looking within the meaning of Section 27A of
the Securities Act of 1933, as amended (the "Securities Act"), and Section 21E
of the Securities Exchange Act of 1934, as amended (the "Exchange Act"). These
forward-looking statements contain projections of our future results of
operations or of our financial position or state other forward-looking
information. In some cases, you can identify these statements by forward-looking
words such as "anticipate," "believe," "could," "continue," "estimate,"
"expect," "intend," "may," "should," "will," "would," "plan," "projected" or the
negative of such words or other similar words or phrases. We believe that it is
important to communicate our future expectations to our investors. However,
there may be events in the future that we are not able to accurately predict or
control and that may cause our actual results to differ materially from the
expectations we describe in our forward-looking statements. Investors are
cautioned not to unduly rely on forward-looking statements because they involve
risks and uncertainties, and actual results may differ materially from those
discussed as a result of various factors, including, but not limited to:

? the risk that we continue to incur losses and might never achieve or maintain

profitability;

? the risk that we will need to raise additional capital to fund our operations

and such capital may not be available to us;

? the risk of dilution to our stockholders and/or stock price should we need to

raise additional capital;

the risk that our lack of extensive experience in manufacturing and marketing

? products may impact our ability to manufacture and market products on a

profitable and large-scale commercial basis;

? the risk that unit orders may not ship, be installed and/or converted to

revenue, in whole or in part;

the risk that a loss of one or more of our major customers, or if one of our

? major customers delays payment of or is unable to pay its receivables, a

material adverse effect could result on our financial condition;

? the risk that a sale of a significant number of shares of stock could depress

the market price of our common stock;

? the risk that our convertible senior notes, if settled in cash, could have a

material effect on our financial results;

? the risk that our convertible note hedges may affect the value of our

convertible senior notes and our common stock;

? the risk that negative publicity related to our business or stock could result

in a negative impact on our stock value and profitability;

? the risk of potential losses related to any product liability claims or

contract disputes;

the risk of loss related to an inability to remediate the material weakness

? identified in internal control over financial reporting as of December 31,

2020, or inability to otherwise maintain an effective system of internal

control;

the risk that the determination to restate the prior period financial

? statements could negatively affect investor confidence and raise reputational

issues;

? the risk of loss related to an inability to maintain an effective system of

internal controls;

? our ability to attract and maintain key personnel;

? the risks related to the use of flammable fuels in our products;

? the risk that pending orders may not convert to purchase orders, in whole or in

part;

? the cost and timing of developing, marketing and selling our products;

? the risks of delays in or not completing our product development goals;

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? the risks involved with participating in joint ventures;

? our ability to obtain financing arrangements to support the sale or leasing of

our products and services to customers;

? our ability to successfully pursue new business ventures;

? our ability to achieve the forecasted gross margin on the sale of our products;

? the cost and availability of fuel and fueling infrastructures for our products;

? the risks, liabilities, and costs related to environmental, health and safety

matters;

? the risk of elimination of government subsidies and economic incentives for

alternative energy products;

? market acceptance of our products and services, including GenDrive, GenSure and

GenKey systems;

our ability to establish and maintain relationships with third parties with

? respect to product development, manufacturing, distribution and servicing, and

the supply of key product components;

? the cost and availability of components and parts for our products;

? the risk that possible new tariffs could have a material adverse effect on our

business;

? our ability to develop commercially viable products;

? our ability to reduce product and manufacturing costs;

? our ability to successfully market, distribute and service our products and

services internationally;

? our ability to improve system reliability for our products;

? competitive factors, such as price competition and competition from other

traditional and alternative energy companies;

? our ability to protect our intellectual property;

? the risk of dependency on information technology on our operations and the

failure of such technology;

? the cost of complying with current and future federal, state and international

governmental regulations;

? our subjectivity to legal proceedings and legal compliance;

? the risks associated with past and potential future acquisitions; and

? the volatility of our stock price.

The risks included here are not exhaustive, and additional factors could
adversely affect our business and financial performance, including factors and
risks discussed in the section titled "Risk Factors" included under Part I, Item
1A, below. Moreover, we operate in a very competitive and rapidly changing
environment. New risk factors emerge from time to time, and it is not possible
for management to predict all such risk factors, nor can we assess the impact of
all such risk factors on our business or the extent to which any factor, or
combination of factors, may cause actual results to differ materially from these
contained in any forward-looking statements. While forward-looking statements
reflect our good faith beliefs, they are not guarantees of future performance.
These forward-looking statements speak only as of the date on which the
statements were made. Except as may be required by applicable law, we do not
undertake or intend to update any forward-looking statements after the date of
this Quarterly Report on Form 10-Q.



References in this Quarterly Report on Form 10-Q to "Plug Power," the "Company,"
"we," "our" or "us" refer to Plug Power Inc., including as the context requires,
its subsidiaries.



Overview



Plug Power is facilitating the paradigm shift to an increasingly electrified
world by innovating cutting-edge hydrogen and fuel cell solutions.  In our core
business, we provide and continue to develop commercially viable hydrogen and
fuel cell product solutions to replace lead-acid batteries in electric material
handling vehicles and industrial trucks for some of the world's largest
retail-distribution and manufacturing businesses. We are focusing our efforts on
industrial mobility applications, including electric forklifts and electric
industrial vehicles, at multi-shift high volume manufacturing and high
throughput distribution sites where we believe our products and services provide
a unique combination of productivity, flexibility, and environmental benefits.
Additionally, we manufacture and sell fuel cell products to replace batteries
and diesel generators in stationary backup power applications. These products
have proven valuable with telecommunications, transportation, and utility
customers as robust, reliable, and sustainable power solutions.

Part of our long-term plan includes Plug Power penetrating the on-road vehicle market and large-scale stationary market. Plug Power's formation of a joint venture with Renault in Europe and the announced future joint venture with SK

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Group in Asia not only support this goal but are expected to provide us with a
more global footprint. Plug has been successful with acquisitions, strategic
partnerships, and joint ventures, and we plan to continue this mix.  For
example, we expect our relationships with Brookfield and Apex to provide us
access to low-cost renewable energy, which is critical to produce low-cost

green
hydrogen.

Our current products and services include:

GenDrive: GenDrive is our hydrogen fueled PEM fuel cell system providing power
to material handling electric vehicles, including class 1, 2, 3 and 6 electric
forklifts, Automated Guided Vehicles ("AGVs") and ground support equipment;

GenFuel: GenFuel is our liquid hydrogen fueling delivery, generation, storage, and dispensing system;

GenCare: GenCare is our ongoing 'internet of things'-based maintenance and on-site service program for GenDrive fuel cell systems, GenSure fuel cell systems, GenFuel hydrogen storage and dispensing products and ProGen fuel cell engines;

GenSure:  GenSure is 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;
GenSure High Power Fuel Cell Platform will support large scale stationary power
and data center markets;

GenKey: GenKey is our vertically integrated "turn-key" solution combining either
GenDrive or GenSure fuel cell power with GenFuel fuel and GenCare aftermarket
service, offering complete simplicity to customers transitioning to fuel cell
power;

ProGen:  ProGen is our fuel cell stack and engine technology currently used
globally in mobility and stationary fuel cell systems, and as engines in
electric delivery vans. This includes the Plug "MEA", a critical component of
the fuel cell stack used in zero-emission fuel cell electric vehicle engines;
and

GenFuel Electrolyzers: GenFuel electrolyzers are modular, scalable hydrogen generators optimized for clean hydrogen production. Electrolyzers generate hydrogen from water using electricity and a special membrane and "green" hydrogen is generated by using renewable energy inputs, such as solar or wind power.

We provide our products worldwide through our direct product sales force, and by
leveraging relationships with "OEMs" and their dealer networks. Plug Power is
targeting Asia and Europe for expansion in adoption. Europe has rolled out
ambitious targets for the hydrogen economy and Plug Power is executing on its
strategy to become one of the European leaders. This includes a targeted account
strategy for material handling as well as securing strategic partnerships with
European OEMs, energy companies, utility leaders and accelerating our
electrolyzer business. We manufacture our commercially viable products in
Latham, New York, Rochester, New York and Spokane, Washington and support liquid
hydrogen generation and logistics in Charleston, Tennessee.

Our wholly-owned subsidiary, Plug Power France, has created a joint venture with
Renault SAS ("Renault") named HyVia, a French société par actions simplifiée
("HyVia").  HyVia plans to manufacture and sell fuel cell powered electric light
commercial vehicles ("FCELCVs") and to supply hydrogen fuel and fueling stations
to support the FCE-LCV market, in each case primarily in Europe. HyVia is owned
50% by Plug Power France and 50% by Renault.



Recent Developments

COVID-19 Update

As a result of the COVID-19 pandemic outbreak in March 2020, state
governments-including those in New York and Washington, where our manufacturing
facilities are located-issued orders requiring businesses that do not conduct
essential services to temporarily close their physical workplaces to employees
and customers.  As a result, we had

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put in place a number of protective measures in response to the COVID-19
outbreak, which included the canceling of all commercial air travel and all
other non-critical travel, requesting that employees limit non-essential
personal travel, eliminating all but essential third-party access to our
facilities, enhancing our facilities' janitorial and sanitary procedures,
encouraging employees to work from home to the extent their job function enabled
them to do so, encouraging the use of virtual employee meetings, and providing
staggered shifts and social distancing measures for those employees associated
with manufacturing and service operations.  In May 2021, the Centers for Disease
Control and Prevention (the "CDC") revised guidance for fully vaccinated
individuals regarding no longer needing to wear a mask indoors or practicing
social distancing, which was subsequently adopted by the state of New York

on
May 19, 2021.



As a result, effective in June 2021 and in accordance with new CDC guidelines
and where permitted by state law, employees who are fully vaccinated against
COVID-19 and have been through Plug Power's certification process may enter Plug
Power facilities without a face covering. Individuals inside Plug Power
facilities who do not wish to go through the certification process are required
to wear proper face coverings and continue to maintain social distancing of 6
feet or greater.  In states where the guidelines for face coverings is still
government mandated, Plug Power will comply with the state and local
jurisdictions and enforce face mask usage, as well as social distancing at our
sites.

Plug Power will continue to provide enhanced janitorial and sanitary procedures,
encourage employees to work from home to the extent their job function enables
them to do so, and encourage the use of virtual employee meetings.

We cannot predict at this time the full extent to which COVID-19 will impact our
business, results, and financial condition, which will depend on many factors.
We are staying in close communication with our manufacturing facilities,
employees, customers, suppliers, and partners, and acting to mitigate the impact
of this dynamic and evolving situation, but there is no guarantee that we will
be able to do so. Although as of the date hereof, we have not observed any
material impacts to our supply of components, the situation is fluid. Many of
the parts for our products are sourced from suppliers in China and the
manufacturing situation in China remains variable. Supply chain disruptions
could reduce the availability of key components, increase prices or both.
Certain of our customers, such as Walmart, significantly increased their use of
units and hydrogen fuel consumption as a result of COVID-19. In the three and
six months ended June 30, 2021 and the twelve months ended December 31, 2020,
our services and PPA margins were negatively impacted by incremental service
costs associated with increased usage of units at some of our primary customer
sites. In addition, future changes in applicable government orders or
regulations, or changes in the interpretation of existing orders or regulations,
could result in further disruptions to our business that may materially and
adversely affect our financial condition and results of operations.



Strategic Activities

On June 3, 2021, our wholly-owned subsidiary, Plug Power France, created a joint
venture with Renault named HyVia. HyVia plans to manufacture and sell FCELCVs
and to supply hydrogen fuel and fueling stations to support the FCE-LCV market,
in each case primarily in Europe. HyVia is owned 50% by Plug Power France and
50% by Renault. We include our share of the results of HyVia using the equity
method based on our economic ownership interest and our ability to exercise
significant influence over the operating and financial decisions of HyVia. We do
not control this entity as our ownership is 50%, and as such HyVia is not
included within our consolidated financial results for any period presented.



Charter Amendment

On July 30, 2021, our stockholders, upon recommendation of our Board of
Directors, approved an amendment to our Amended and Restated Certificate of
Incorporation (the "Charter Amendment") to increase the number of authorized
shares of common stock from 750,000,000 shares to 1,500,000,000 shares.  The
Charter Amendment became effective upon the filing of the Charter Amendment with
the Secretary of the State of the State of Delaware on August 2, 2021.













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Explanatory Note



As previously disclosed in the Explanatory Note to the 2020 10-K, the Company
restated its previously issued audited consolidated financial statements as of
and for the years ended December 31, 2019 and 2018 and its unaudited interim
condensed consolidated quarterly financial statements of and for each of the
quarterly periods ended March 31, 2020, June 30, 2020 and 2019, September 30,
2020 and 2019 and December 31, 2019.



Previously filed annual reports on Form 10-K and quarterly reports on Form 10-Q
for the periods affected by the restatement have not been amended. Accordingly,
investors should not rely upon the Company's previously released financial
statements for these periods and any earnings releases or other communications
relating to these periods, and, for these periods, investors should rely solely
on the financial statements and other financial data for the relevant periods
included in the 2020 10-K. Commencing with our Quarterly Report on Form 10-Q for
the quarterly period ended March 31, 2021, we are including in our quarterly
reports for fiscal 2021 restated results for the corresponding interim periods
of fiscal 2020.



Results of Operations





Our primary sources of revenue are from sales of fuel cell systems and related
infrastructure, services performed on fuel cell systems and related
infrastructure, Power Purchase Agreements (PPAs), and fuel delivered to
customers.  Revenue from sales of fuel cell systems and related infrastructure
represents sales of our GenDrive units, GenSure stationary backup power units,
as well as hydrogen fueling infrastructure. Revenue from services performed on
fuel cell systems and related infrastructure represents revenue earned on our
service and maintenance contracts and sales of spare parts.  Revenue from PPAs
primarily represents payments received from customers who make monthly payments
to access the Company's GenKey solution.  Revenue associated with fuel delivered
to customers represents the sale of hydrogen to customers that has been
purchased by the Company from a third party or generated on site.



Net revenue, cost of revenue, gross profit (loss) and gross margin for the three
and six months ended June 30, 2021 and 2020, were as follows (in thousands):





                                                         Three Months Ended                                            Six Months Ended
                                                              June 30,                                                     June 30,
                                                       Cost of          Gross          Gross                        Cost of          Gross          Gross
                                      Net Revenue      Revenue      Profit/(Loss)     Margin       Net Revenue      Revenue      Profit/(Loss)     Margin
For the period ended June 30, 2021:
Sales of fuel cell systems and
related infrastructure               $      99,278    $  79,913    $        19,365       19.5 %   $     146,050    $ 108,887    $        37,163       25.4 %
Services performed on fuel cell
systems and related infrastructure           5,675       15,475            (9,800)    (172.7) %          11,720       28,561           (16,841)    (143.7) %
Provision for loss contracts related
to service                                       -        6,694            (6,694)        N/A                 -        8,179            (8,179)        N/A
Power Purchase Agreements                    8,361       22,234           (13,873)    (165.9) %          16,187       40,577           (24,390)    (150.7) %
Fuel delivered to customers                 11,121       40,331           (29,210)    (262.6) %          22,248       62,474           (40,226)    (180.8) %
Other                                          122          208               (86)     (70.5) %             310          306                  4        1.3 %
Total                                $     124,557    $ 164,855    $      (40,298)     (32.4) %   $     196,515    $ 248,984    $      (52,469)     (26.7) %
For the period ended June 30, 2020:
Sales of fuel cell systems and
related infrastructure               $      47,746    $  33,888    $        13,858       29.0 %   $      68,214    $  47,862    $        20,352       29.8 %
Services performed on fuel cell
systems and related infrastructure           6,236        7,773            (1,537)     (24.6) %          12,757       18,120            (5,363)     (42.0) %
Provision for loss contracts related
to service                                       -          706              (706)        N/A                 -          801              (801)        N/A
Power Purchase Agreements                    6,579       14,504            (7,925)    (120.5) %          13,000       29,275           (16,275)    (125.2) %

Fuel delivered to customers                  7,372       11,076           

(3,704)     (50.2) %          14,705       22,330            (7,625)     (51.9) %
Other                                           62           63                (1)      (1.6) %             138          144                (6)      (4.3) %
Total                                $      67,995    $  68,010    $          (15)      (0.0) %   $     108,814    $ 118,532    $       (9,718)      (8.9) %


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The amount of provision for common stock warrants recorded as a reduction of revenue during the three and six months ended June 30, 2021 and 2020, respectively, is shown in the table below (in thousands):

                                          Three months ended June 30,        Six months ended June 30,
                                            2021              2020            2021             2020

Sales of fuel cell systems and
related infrastructure                 $            -    $      (2,497)   $        (27)    $     (3,141)
Services performed on fuel cell
systems and related infrastructure              (131)             (466)    

      (271)            (724)
Power Purchase Agreements                       (902)             (578)         (1,802)          (1,129)
Fuel delivered to customers                     (714)             (824)         (1,352)          (1,578)
Total                                  $      (1,747)    $      (4,365)   $     (3,452)    $     (6,572)




Net Revenue



Revenue - sales of fuel cell systems and related infrastructure.  Revenue from
sales of fuel cell systems and related infrastructure represents revenue from
the sale of our fuel cells, such as GenDrive units and GenSure stationary backup
power units, as well as hydrogen fueling infrastructure referred to at the site
level as hydrogen installations. Revenue from sales of fuel cell systems and
related infrastructure for the three months ended June 30, 2021 increased $51.5
million, or 107.9%, to $99.3 million from $47.8 million for the three months
ended June 30, 2020. Included within revenue was provision for common stock
warrants of zero and $2.5 million for the three months ended June 30, 2021 and
2020, respectively. The main drivers for the increase in revenue were the
increase in GenDrive units recognized as revenue, an increase in hydrogen
installations and a decrease in the provision for common stock warrants. There
were 3,666 GenDrive units recognized as revenue during the three months ended
June 30, 2021, compared to 2,683 for the three months ended June 30, 2020. There
was hydrogen infrastructure revenue associated with 16 hydrogen sites during the
three months ended June 30, 2021, compared to four during the three months

ended
June 30, 2020.

Revenue from sales of fuel cell systems and related infrastructure for the six
months ended June 30, 2021 increased $77.8 million, or 114.1%, to $146.1 million
from $68.2 million for the six months ended June 30, 2020. Included within
revenue was provision for common stock warrants of $27 thousand and $3.1 million
for the three months ended June 30, 2021 and 2020, respectively. The main
drivers for the increase in revenue were the increase in GenDrive units
recognized as revenue, an increase in hydrogen installations and a decrease in
the provision for common stock warrants. There were 4,974 GenDrive units
recognized as revenue during the six months ended June 30, 2021, compared to
3,508 for the six months ended June 30, 2020. There was hydrogen infrastructure
revenue associated with 22 hydrogen sites during the six months ended June 30,
2021, compared to five during the six months ended June 30, 2020.



Revenue - services performed on fuel cell systems and related infrastructure.
Revenue from services performed on fuel cell systems and related infrastructure
represents revenue earned on our service and maintenance contracts and sales of
spare parts. At June 30, 2021, there were 15,723 fuel cell units and 71 hydrogen
installations under extended maintenance contracts, an increase from 11,557 fuel
cell units and 47 hydrogen installations at June 30, 2020. Revenue from services
performed on fuel cell systems and related infrastructure for the three months
ended June 30, 2021 decreased $0.6 million, or 9.0%, to $5.7 million as compared
to $6.2 million for the three months ended June 30, 2020. Included within
revenue was provision for common stock warrants of $131 thousand and $466
thousand for the three months ended June 30, 2021 and 2020, respectively. The
main drivers in decrease in revenue was a reduction in billings for run time
hours that exceeded certain levels given certain changes in the overall
contract, partially offset by the decrease in the provision for common stock
warrants.  Although the number of units and sites grew year over year, many of
the units and sites deployed in the second quarter of 2021 were deployed late in
the quarter and hence the full impact of associated service revenues will
commence in the third quarter of 2021.



Revenue from services performed on fuel cell systems and related infrastructure
for the six months ended June 30, 2021 decreased $1.0 million, or 8.1%, to $11.7
million as compared to $12.8 million for the six months ended June 30, 2020.
Included within revenue was provision for common stock warrants of $271 thousand
and $724 thousand for the six months ended June 30, 2021 and 2020, respectively.
The main drivers in decrease in revenue was a reduction in billings for run time
hours that exceeded certain levels given certain changes in the overall
contract, partially offset by the decrease

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in the provision for common stock warrants. Although the number of units and
sites grew year over year, many of the units and sites deployed in the second
quarter of 2021 were deployed late in the quarter and hence the full impact of
associated service revenues will commence in the third quarter of quarter 2021.



Revenue - Power Purchase Agreements.  Revenue from PPAs represents payments
received from customers for power generated through the provision of equipment
and service. At June 30, 2021, there were 52 GenKey sites associated with PPAs,
as compared to 32 at June 30, 2020. Revenue from PPAs for the three months ended
June 30, 2021 increased $1.8 million, or 27.1%, to $8.4 million from $6.6
million for the three months ended June 30, 2020. Included within revenue was
provision for common stock warrants of $902 thousand and $578 thousand for the
three months ended June 30, 2021 and 2020, respectively. The increase in revenue
from PPAs for the three months ended June 30, 2021 as compared to the three
months ended June 30, 2020 was primarily attributable to the new sites for
existing customers and new customers accessing the PPA subscription solution,
offset in part by the increase in the provision for common stock warrants.



Revenue from PPAs for the six months ended June 30, 2021 increased $3.2 million,
or 24.5%, to $16.2 million from $13.0 million for the six months ended June 30,
2020. Included within revenue was provision for common stock warrants of $1.8
million and $1.1 million for the six months ended June 30, 2021 and 2020,
respectively. The increase in revenue from PPAs for the six months ended June
30, 2021 as compared to the six months ended June 30, 2020 was primarily
attributable to the new sites for existing customers and new customers accessing
the PPA subscription solution, offset in part by the increase in the provision
for common stock warrants.



Revenue - fuel delivered to customers.  Revenue associated with fuel delivered
to customers represents the sale of hydrogen to customers that has been
purchased by the Company from a third party or generated on site. Revenue
associated with fuel delivered to customers for the three months ended June 30,
2021 increased $3.7 million, or 50.9%, to $11.1 million from $7.4 million for
the three months ended June 30, 2020. Included within revenue was provision for
common stock warrants of $714 thousand and $824 thousand for the three months
ended June 30, 2021 and 2020, respectively. The increase in revenue was due to
an increase in the number of sites with fuel contracts from 81 as of June 30,
2020 to 125 as of June 30, 2021, and a slight decrease in the provision for
common stock warrants.



Revenue associated with fuel delivered to customers for the six months ended
June 30, 2021 increased $7.5 million, or 51.3%, to $22.3 million from $14.7
million for the six months ended June 30, 2020. Included within revenue was
provision for common stock warrants of $1.4 million and $1.6 million for the six
months ended June 30, 2021 and 2020, respectively. The increase in revenue was
due to an increase in the number of sites with fuel contracts from 81 as of June
30, 2020 to 125 as of June 30, 2021, and a slight decrease in the provision

for
common stock warrants.



Cost of Revenue



Cost of revenue - sales of fuel cell systems and related infrastructure.  Cost
of revenue from sales of fuel cell systems and related infrastructure includes
direct materials, labor costs, and allocated overhead costs related to the
manufacture of our fuel cells such as GenDrive units and GenSure stationary
backup power units, and hydrogen fueling infrastructure referred to at the site
level as hydrogen installations. Cost of revenue from sales of fuel cell systems
and related infrastructure for the three months ended June 30, 2021 increased
135.8%, or $46.0 million, to $79.9 million, compared to $33.9 million for the
three months ended June 30, 2020. This increase was driven by the increase in
GenDrive deployment volume and increase in hydrogen installations. There were
3,666 GenDrive units recognized as revenue during the three months ended June
30, 2021, compared to 2,683 for the three months ended June 30, 2020. Revenue
associated with 16 hydrogen installations was recognized during the three months
ended June 30, 2021, compared to four during the three months ended June 30,
2020. Gross profit generated from sales of fuel cell systems and related
infrastructure decreased to 19.5% for the three months ended June 30, 2021,
compared to 29.0% for the three months ended June 30, 2020 primarily due to the
mix impact of the equipment sold with varying margin profiles, including a
higher mix of  infrastructure and other new products, and mix of customer
profiles with varying pricing structures.



Cost of revenue from sales of fuel cell systems and related infrastructure for
the six months ended June 30, 2021 increased 127.5%, or $61.0 million, to $108.9
million, compared to $47.9 million for the six months ended June 30, 2020. This
increase was driven by the increase in GenDrive deployment volume and increase
in hydrogen installations. There

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were 4,974 GenDrive units recognized as revenue during the six months ended June
30, 2021, compared to 3,508 for the six months ended June 30, 2020. Revenue
associated with 22 hydrogen installations was recognized during the six months
ended June 30, 2021, compared to five during the six months ended June 30, 2020.
Gross profit generated from sales of fuel cell systems and related
infrastructure decreased to 25.4% for the six months ended June 30, 2021,
compared to 29.8% for the six months ended June 30, 2020 primarily due to the
mix impact of the equipment sold with varying margin profiles, including a
higher mix of infrastructure and other new products, and mix of customer
profiles with varying pricing structures.



Cost of revenue - services performed on fuel cell systems and related
infrastructure. Cost of revenue from services performed on fuel cell systems and
related infrastructure includes the labor, material costs and allocated overhead
costs incurred for our product service and hydrogen site maintenance contracts
and spare parts. At June 30, 2021, there were 15,723 fuel cell units and 71
hydrogen installations under extended maintenance contracts, an increase from
11,557 fuel cell units and 47 hydrogen installations at June 30, 2020,
respectively. Cost of revenue from services performed on fuel cell systems and
related infrastructure for the three months ended June 30, 2021 increased 99.1%,
or $7.7 million, to $15.5 million, compared to $7.8 million for the three months
ended June 30, 2020. The increase in cost of revenue was due primarily to
increase in volume and certain unexpected costs, including varied COVID related
issues such as increased freight costs, certain vendor transition and force
majeure issues that impacted hydrogen infrastructure service costs, and scrap
charges associated with certain parts. Gross loss increased to (172.7)% for the
three months ended June 30, 2021, compared to (24.6)% for the three months ended
June 30, 2020, primarily due to certain unexpected costs, including varied COVID
related issues, certain vendor transition and force majeure issues that impacted
hydrogen infrastructure service costs, and scrap charges associated with certain
parts, partially offset by a change in the release of the previously recorded
loss accrual from $300 thousand during the three months ended June 30, 2020 to
$1.9 million during the three months ended June 30, 2021.



Cost of revenue from services performed on fuel cell systems and related
infrastructure for the six months ended June 30, 2021 increased 57.6%, or $10.4
million, to $28.6 million, compared to $18.1 million for the six months ended
June 30, 2020. The increase in cost of revenue was due primarily to certain
unexpected costs, including varied COVID related issues such as increased
freight costs, certain vendor transition and force majeure issues that impacted
hydrogen infrastructure service costs, and scrap charges associated with certain
parts. Gross loss increased to (143.7)% for the six months ended June 30, 2021,
compared to (42.0)% for the six months ended June 30, 2020, primarily due to
certain unexpected costs including varied COVID related issues, certain vendor
transition and force majeure issues that impacted hydrogen infrastructure
service costs, and a lower of cost or market adjustment associated with certain
parts. This was partially offset by a release of the previously recorded loss
accrual from $524 thousand during the six months ended June 30, 2020 to $3.8
million during the six months ended June 30, 2021.



Cost of revenue - provision for loss contracts related to service.  The Company
also recorded a provision for loss contracts related to service of $6.7 million
for the three months ended June 30, 2021, compared to $0.7 million for the three
months ended June 30, 2020. The provision increased as a result of 16 new sites
under service contract during the three months ended June 30, 2021 as compared
to four sites for the three months ended June 30, 2020.



The Company also recorded a provision for loss contracts related to service of
$8.2 million for the six months ended June 30, 2021, compared to $0.8 million
for the six months ended June 30, 2020. The provision increased as a result of
22 new sites under service contract during the six months ended June 30, 2021 as
compared to five sites during the six months ended June 30, 2020.



Cost of revenue - Power Purchase Agreements.  Cost of revenue from PPAs includes
depreciation of assets utilized and service costs to fulfill PPA obligations and
interest costs associated with certain financial institutions for leased
equipment.  At June 30, 2021, there were 52 GenKey sites associated with PPAs,
as compared to 32 at June 30, 2020. Cost of revenue from PPAs for the three
months ended June 30, 2021 increased 53.3%, or $7.7 million, to $22.2 million
from $14.5 million for the three months ended June 30, 2020 due to the increase
in units and sites under PPA contract as well as certain COVID related issues
such as increased freight costs, certain force majeure issues that impacted
hydrogen infrastructure service costs, and scrap charges associated with certain
parts. Gross loss increased to (165.9)% for the three months ended June 30,
2021, as compared to (120.5)% for the three months ended June 30, 2020 primarily
due to certain

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COVID related issues, certain force majeure issues that impacted hydrogen infrastructure service costs, and a lower of cost or market adjustment associated with certain parts.

Cost of revenue from PPAs for the six months ended June 30, 2021 increased
38.6%, or $11.3 million, to $40.6 million from $29.3 million for the six months
ended June 30, 2020 primarily due to the increase in units and sites under PPA
contract as well as certain COVID related issues such as increased freights
costs, certain force majeure issues that impacted hydrogen infrastructure
service costs, and scrap charges associated with certain parts. Gross loss
increased to (150.7)% for the six months ended June 30, 2021, as compared to
(125.2)% for the six months ended June 30, 2020 primarily due to certain COVID
related issues, certain force majeure issues that impacted hydrogen
infrastructure service costs, and a lower of cost or market adjustment
associated with certain parts.



Cost of revenue - fuel delivered to customers.  Cost of revenue from fuel
delivered to customers represents the purchase of hydrogen from suppliers that
ultimately is sold to customers and costs for onsite generation. Cost of revenue
from fuel delivered to customers for the three months ended June 30, 2021
increased 264.1%, or $29.3 million, to $40.3 million from $11.1 million for the
three months ended June 30, 2020. The increase was primarily due to higher
volume of hydrogen delivered to customer sites as a result of an increase in the
number of hydrogen installations completed under GenKey agreements and higher
fuel costs. The increase in fuel costs was due primarily to vendor transition
and force majeure events primarily related to hydrogen plant shutdowns that
impacted the cost of fuel. Gross loss increased to (262.6)% during the three
months ended June 30, 2021, compared to (50.2)% during the three months ended
June 30, 2020. The increased gross loss is primarily due to the vendor
transition and force majeure issues mentioned above. The costs associated with
vendor transition issues amounted to approximately $14.6 million for the three
months ended June 30, 2021, and are recorded in the Company's unaudited interim
condensed consolidated statement of operations as cost of revenue - fuel
delivered to customers for the three months ended June 30, 2021. The Company
also purchased certain fuel tanks from the fuel provider during the three months
ended June 30, 2021.



Cost of revenue from fuel delivered to customers for the six months ended June
30, 2021 increased 179.8%, or $40.1 million, to $62.5 million from $22.3 million
for the six months ended June 30, 2020. The increase was primarily due to higher
volume of hydrogen delivered to customer sites as a result of an increase in the
number of hydrogen installations completed under GenKey agreements and higher
fuel costs. The increase in fuel costs was primarily due to vendor transition
and force majeure events primarily related to hydrogen plant shutdowns that
impacted the cost of fuel. Gross loss increased to (180.8)% during the six
months ended June 30, 2021, compared to (51.9)% during the six months ended June
30, 2020. The increased gross loss is primarily due to the vendor transition and
force majeure issues mentioned above. The cost associated with the vendor
transition amounted to approximately $16.0 million for the six months ended June
30, 2021, which are recorded in the Company's unaudited interim condensed
consolidated statement of operations as cost of revenue - fuel delivered to
customers for the six months ended June 30, 2021. The Company also purchased
certain fuel tanks from the fuel provider during the six months ended June

30,
2021.



Expenses

Research and development expense. Research and development ("R&D") expense
includes: materials to build development and prototype units, cash and non-cash
compensation and benefits for the engineering and related staff, expenses for
contract engineers, fees paid to consultants for services provided, materials
and supplies consumed, facility related costs such as computer and network
services, and other general overhead costs associated with our research and
development activities.



Research and development expense for the three months ended June 30, 2021
increased $6.4 million, or 130.8%, to $11.2 million, from $4.9 million for the
three months ended June 30, 2020.  The overall growth in R&D investment is
commensurate with the Company's future expansion into new markets, new product
lines, and varied vertical integrations. The average number of R&D employees was
119 at June 30, 2020 compared to 216 at June 30, 2021.



Research and development expense for the six months ended June 30, 2021
increased $11.3 million, or 117.6%, to $21.0 million, from $9.6 million for the
six months ended June 30, 2020.  The overall growth in R&D investment is
commensurate with the Company's future expansion into new markets, new product
lines, and varied vertical integrations. The average number of R&D employees was
117 at June 30, 2020 compared to 191 at June 30, 2021.

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Selling, general and administrative expenses.  Selling, general and
administrative expenses includes cash and non-cash compensation, benefits,
amortization of intangible assets and related costs in support of our general
corporate functions, including general management, finance and accounting, human
resources, selling and marketing, information technology and legal services.



Selling, general and administrative expenses for the three months ended June 30,
2021, increased $17.0 million, or 78.6%, to $38.7 million from $21.6 million for
the three months ended June 30, 2020. This increase was primarily related to
increases in salaries and stock-based compensation due to increased headcount
and branding expenses, in addition to costs associated with the restatement of
our previous years' financial statements.



Selling, general and administrative expenses for the six months ended June 30,
2021, increased $31.5 million, or 96.1%, to $64.2 million from $32.8 million for
the six months ended June 30, 2020. This increase was primarily related to
increases in salaries and stock-based compensation due to increased headcount
and branding expenses, in addition to costs associated with the restatement of
our previous years' financial statements.



Contingent Consideration.  The fair value of the contingent consideration
related to Giner ELX, Inc. and United Hydrogen Group Inc. was remeasured as of
June 30, 2021, which resulted in a $560 thousand benefit for the three months
ended June 30, 2021 and a $230 thousand charge for the six months ended June 30,
2021, both of which are reflected in the unaudited interim condensed
consolidated statement of operations for the three and six months ended June 30,
2021, respectively.



Interest. Interest consists of interest expense related to our long-term debt,
convertible senior notes, obligations under finance leases and our finance
obligations. Interest decreased $3.1 million, or 23.2%, from $13.4 million for
the three months ended June 30, 2020 to $10.3 million for the three months ended
June 30, 2021. Interest decreased $2.6 million, or 10.4%, from $25.2 million for
the six months ended June 30, 2020 to $22.5 million for the six months ended
June 30, 2021. Since June 2020, the Company borrowed approximately $50.0 million
of additional long-term debt at a 9.5% interest rate, and entered into
additional sale/leaseback finance obligation arrangements. This was offset by
the exchange and conversion during 2020 of both the 7.5% Convertible Senior
Notes and 5.5% Convertible Senior Notes, and the adoption of ASU 2020-06 which
reduced the noncash interest expense on convertible notes.



Other expense, net. Other expense, net consists of other expenses related to our
foreign currency exchange losses, offset by interest and other income consisting
primarily of interest earned on our cash and cash equivalents, restricted cash
and available-for-sale securities. This decreased $24 thousand for the three
months ended June 30, 2021 in comparison to the three months ended June 30,
2020. This increased $117 thousand for the six months ended June 30, 2021 in
comparison to the six months ended June 30, 2020.



Net realized gain (loss) on investments. Net realized gain (loss) on investments
consists of the sales and maturities related to available-for-sale debt
securities. This increased $18 thousand for both the three and six months ended
June 30, 2021 in comparison to the three and six months ended June 30, 2020.



Change in fair value of equity securities. Change in fair value of equity
securities consists of the changes in fair value for equity securities from the
purchase date to the end of the period.  This increased $323 thousand for the
three and six months ended June 30, 2021 in comparison to the three and six

months ended June 30, 2020.



Income Tax

The Company did not record any income tax expense or benefit for the three or
six months ended June 30, 2021. The Company recognized an income tax benefit for
the three and six months ended June 30, 2020 of $17.4 million.  Income tax
benefit for the three and six months ended June 30, 2020 included $12.2 million
resulting from the intraperiod tax allocation rules under ASC Topic 740-20,
Intraperiod Tax Allocation, under which the Company recognized an income tax
benefit resulting from a source of future taxable income attributable to the net
credit to additional paid-in capital related to the issuance of the 3.75%
Convertible Senior Notes, offset by the partial extinguishment of the 5.5%
Convertible Senior Notes. In addition, the Company recorded $5.2 million of
income tax benefit for the three and six months ended June 30,

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2020 related to the recognition of net deferred tax liabilities in connection
with the Giner ELX, Inc. acquisition, which resulted in a corresponding
reduction in our deferred tax asset valuation allowance. The Company has not
changed its overall conclusion with respect to the need for a valuation
allowance against its net deferred tax assets, which remain fully reserved.

The net deferred tax asset generated from the Company's 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 carry forward will not be
realized. The Company recognizes accrued interest and penalties related to
unrecognized tax benefits, if any, as a component of income tax expense.

Liquidity and Capital Resources

Liquidity

As of June 30, 2021 and December 31, 2020, the Company had $3.2 billion and $1.3
billion of cash and cash equivalents and $429.4 million and $321.9 million of
restricted cash, respectively. In January and February 2021, the Company issued
and sold in a registered equity offering an aggregate of 32.2 million shares of
its common stock at a purchase price of $65.00 per share for net proceeds of
approximately $1.8 billion. Furthermore, in February 2021, the Company completed
the previously announced sale of its common stock in connection with a strategic
partnership with SK Holdings to accelerate the use of hydrogen as an alternative
energy source in Asian markets. The Company sold 54,996,188 shares of its common
stock to a subsidiary of SK Holdings at a purchase price of $29.2893 per share,
or an aggregate purchase price of approximately $1.6 billion.



The Company has continued to experience negative cash flows from operations and
net losses. The Company incurred net losses attributable to common stockholders
of $160.4 million and $46.9 million for the six months ended June 30, 2021 and
2020, respectively, and had an accumulated deficit of $2.1 billion at June

30,
2021.

The Company's significant obligations consisted of the following as of June 30, 2021:

Operating and finance leases totaling $142.1 million and $15.1 million,

respectively, of which $19.9 million and $2.7 million, respectively, are due

(i) within the next 12 months. These leases are primarily related to

sale/leaseback agreements entered into with various financial institutions to

     facilitate the Company's commercial transactions with key customers.

Finance obligations totaling $195.8 million of which approximately $33.8

(ii) million is due within the next 12 months. Finance obligations consist

primarily of debt associated with the sale of future revenues and failed

      sale/leaseback transactions.




       Long-term debt, primarily related to the Company's Loan Agreement with

(iii) Generate Capital totaling $160.5 million of which $30.4 million is

classified as short term on our consolidated balance sheets. See Note 9,

       "Long-Term Debt", for more details.

(iv) Convertible senior notes totaling $192.0 million at June 30, 2021. See Note

      10, "Convertible Senior Notes" for more details.




The Company's working capital was $4.7 billion at June 30, 2021, which included
unrestricted cash and cash equivalents of $3.2 billion. The Company plans to
invest a portion of its available cash to expand its current production and
manufacturing capacity and to fund strategic acquisitions and partnerships and
capital projects. Future use of the Company's funds is discretionary and the
Company believes that its working capital and cash position will be sufficient
to fund its operations for at least one year after the date the financial
statements are issued.



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Public and Private Offerings of Equity and Debt

Common Stock Issuances



In February 2021, the Company completed the previously announced sale of its
common stock in connection with a strategic partnership with SK Holdings to
accelerate the use of hydrogen as an alternative energy source in Asian markets.
The Company sold 54,966,188 shares of its common stock to a subsidiary of SK
Holdings at a purchase price of $29.2893 per share, or an aggregate purchase
price of approximately $1.6 billion.



In January and February 2021, the Company issued and sold in a registered equity
offering an aggregate of 32.2 million shares of its common stock at a purchase
price of $65.00 per share for net proceeds of approximately $1.8 billion.



In November 2020, the Company issued and sold in a registered equity offering an
aggregate of 43,700,000 shares of its common stock at a purchase price of $22.25
per share for net proceeds of approximately $927.3 million.



In August 2020, the Company issued and sold in a registered equity offering an
aggregate of 35,276,250 shares of its common stock at a purchase price of $10.25
per share for net proceeds of approximately $344.4 million.



On April 13, 2020, the Company entered into the At Market Issuance Sales
Agreement with B. Riley Financial ("B. Riley"), as sales agent, pursuant to
which the Company may offer and sell, from time to time through B. Riley, shares
of Company common stock having an aggregate offering price of up to $75.0
million. As of the date of this filing, the Company has not issued any shares of
common stock pursuant to the At Market Issuance Sales Agreement.



Convertible Senior Notes



In May 2020, the Company issued $212.5 million in aggregate principal amount of
3.75% Convertible Senior Notes. The total net proceeds from this offering, after
deducting costs of the issuance, were $205.1 million. The Company used $90.2
million of the net proceeds from the offering of the 3.75% Convertible Senior
Notes to repurchase $66.3 million of the $100 million in aggregate principal
amount of the 5.5% Convertible Senior Notes. In addition, the Company used
approximately $16.3 million of the net proceeds from the offering of the 3.75%
Convertible Senior Notes to enter into privately negotiated capped called
transactions.  In the fourth quarter of 2020, $33.5 million of the remaining
5.5% Convertible Senior Notes were converted into 14.6 million shares of common
stock, resulting in a gain of approximately $4.5 million which was recorded on
the consolidated statement of operations on the gain (loss) on extinguishment of
debt line. As of December 31, 2020, approximately $160 thousand aggregate
principal amount of the 5.5% Convertible Senior Notes remained outstanding, all
of which were converted to common stock in January 2021.



In September 2019, the Company issued $40.0 million in aggregate principal
amount of 7.5% Convertible Senior Note. The Company's total obligation, net of
interest accretion, due to the holder was $48.0 million. The total net proceeds
from this offering, after deducting costs of the issuance, were $39.1 million.
On July 1, 2020, the note automatically converted fully into 16.0 million shares
of common stock.



Secured Debt



In March 2019, the Company entered into a loan and security agreement, as
amended (the "Loan Agreement"), with Generate Lending, LLC ("Generate Capital"),
providing for a secured term loan facility in the amount of $100 million (the
"Term Loan Facility").

During the year ended December 31, 2020, the Company, under another series of
amendments to the Loan Agreement, borrowed an incremental $100.0 million. As
part of the amendment to the Loan Agreement, the Company's interest rate on the
secured term loan facility was reduced to 9.50% from 12.00% per annum, and the
maturity date was extended to October 31, 2025 from October 6, 2022. On June 30,
2021, the outstanding balance under the Term Loan Facility was $150.8 million.
In addition to the Generate Capital Loan, on June 30, 2021, there was
approximately $10.0 million of debt related to the United Hydrogen Group
acquisition.



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The Loan Agreement includes covenants, limitations, and events of default
customary for similar facilities. Interest and a portion of the principal amount
is payable on a quarterly basis. Principal payments are funded in part by
releases of restricted cash, as described in Note 19, "Commitments and
Contingencies." Based on the amortization schedule as of June 30, 2021, the
aforementioned loan balance under the Term Loan Facility will be fully paid by
October 31, 2025. The Company is in compliance with, or has obtained waivers
for, all debt covenants.

The Term Loan Facility is secured by substantially all of the Company's and the
guarantor subsidiaries' assets, including, among other assets, all intellectual
property, all securities in domestic subsidiaries and 65% of the securities in
foreign subsidiaries, subject to certain exceptions and exclusions.



The Loan Agreement provides that if there is an event of default due to the
Company's insolvency or if the Company fails to perform in any material respect
the servicing requirements for fuel cell systems under certain customer
agreements, which failure would entitle the customer to terminate such customer
agreement, replace the Company or withhold the payment of any material amount to
the Company under such customer agreement, then Generate Capital has the right
to cause Proton Services Inc., a wholly owned subsidiary of the Company, to
replace the Company in performing the maintenance services under such customer
agreement.

As of June 30, 2021, the Term Loan Facility requires the principal balance as of each of the following dates not to exceed the following (in thousands):

December 31, 2021 $ 127,317
December 31, 2022    93,321
December 31, 2023    62,920
December 31, 2024    33,692
December 31, 2025         -




Several key indicators of liquidity are summarized in the following table (in
thousands):




                                                  Six months             Year
                                                 ended or at          ended or at
                                                June 30, 2021      December 31, 2020

Cash and cash equivalents at end of period      $    3,160,170    $         1,312,404
Restricted cash at end of period                       429,393             

321,880

Working capital at end of period                     4,715,333             

1,380,830

Net loss attributable to common stockholders         (160,380)             

(596,181)

Net cash used in operating activities                (246,635)             

(155,476)

Net cash used in investing activities              (1,405,217)             

(95,334)

Net cash provided by financing activities            3,607,294             

1,515,529

3.75% Convertible Senior Notes

On May 18, 2020, the Company issued $200.0 million in aggregate principal amount
of 3.75% Convertible Senior Notes due June 1, 2025, in a private placement to
qualified institutional buyers pursuant to Rule 144A under the Securities Act.
On May 29, 2020, the Company issued an additional $12.5 million in aggregate
principal amount of 3.75% Convertible Senior Notes.



At issuance in May 2020, the total net proceeds from the 3.75% Convertible
Senior Notes were as follows:






                                       Amount
                                   (in thousands)
Principal amount                  $        212,463

Less initial purchasers' discount (6,374)

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Less cost of related capped calls   (16,253)
Less other issuance costs              (617)
Net proceeds                      $  189,219




The 3.75% Convertible Senior Notes bear interest at a rate of 3.75% per year,
payable semi-annually in arrears on June 1 and December 1 of each year,
beginning on December 1, 2020.  The notes will mature on June 1, 2025, unless
earlier converted, redeemed or repurchased in accordance with their terms.



The 3.75% Convertible Senior Notes are senior, unsecured obligations of the
Company and rank senior in right of payment to any of the Company's indebtedness
that is expressly subordinated in right of payment to the notes, equal in right
of payment to any of the Company's existing and future liabilities that are not
so subordinated, including the Company's $100 million in aggregate principal
amount of the 5.5% Convertible Senior Notes, effectively junior in right of
payment to any of the Company's secured indebtedness to the extent of the value
of the collateral securing such indebtedness, and structurally subordinated to
all indebtedness and other liabilities, including trade payables, of its current
or future subsidiaries.



Holders of the 3.75% Convertible Senior Notes may convert their notes at their
option at any time prior to the close of the business day immediately preceding
December 1, 2024 in the following circumstances:

during any calendar quarter commencing after March 31, 2021 if the last

reported sale price of the Company's common stock exceeds 130% of the

1) conversion price for each of at least 20 trading days (whether or not

consecutive) during a period of 30 consecutive trading days ending on, and

including, the last trading day of the immediately preceding calendar quarter;

during the five business days after any five consecutive trading day period

(such five consecutive trading day period, the measurement period) in which

2) the trading price per $1,000 principal amount of the 3.75% Convertible Senior

Notes for each trading day of the measurement period was less than 98% of the

product of the last reported sale price of the Company's common stock and the

    conversion rate on each such trading day;

if the Company calls any or all of the 3.75% Convertible Senior Notes for

3) redemption, any such notes that have been called for redemption may be

converted at any time prior to the close of business on the second scheduled

    trading day immediately preceding the redemption date; or

4) upon the occurrence of specified corporate events, as described in the

indenture governing the 3.75% Convertible Senior Notes.

On or after December 1, 2024, the holders of the 3.75% Convertible Senior Notes
may convert all or any portion of their notes at any time prior to the close of
business on the second scheduled trading day immediately preceding the maturity
date regardless of the foregoing conditions.



The initial conversion rate for the 3.75% Convertible Senior Notes is 198.6196
shares of the Company's common stock per $1,000 principal amount of notes, which
is equivalent to an initial conversion price of approximately $5.03 per share of
the Company's common stock, subject to adjustment upon the occurrence of
specified events. Upon conversion, the Company will pay or deliver, as
applicable, cash, shares of the Company's common stock or a combination of cash
and shares of the Company's common stock, at the Company's election. During the
three months ended June 30, 2021, certain conditions allowing holders of the
3.75% Convertible Senior Notes to convert were met. The 3.75% Convertible Senior
Notes are therefore convertible during the calendar quarter ending September 30,
2021 at the conversion rate discussed above. During the six months ended June
30, 2021, $15.2 million of the 3.75% Convertible Senior Notes were converted and
the Company issued 3.0 million shares of common stock in conjunction with these
conversions.

In addition, following certain corporate events or following issuance of a
notice of redemption, the Company will increase the conversion rate for a holder
who elects to convert its notes in connection with such a corporate event or
convert its notes called for redemption during the related redemption period in
certain circumstances.

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The 3.75% Convertible Senior Notes will be redeemable, in whole or in part, at
the Company's option at any time, and from time to time, on or after June 5,
2023 and before the 41st scheduled trading day immediately before the maturity
date, at a cash redemption price equal to 100% of the principal amount of the
notes to be redeemed, plus accrued and unpaid interest, if any, but only if the
last reported sale price per share of the Company's common stock exceeds 130% of
the conversion price then in effect for at least 20 trading days (whether or not
consecutive), including at least one of the three trading days immediately
preceding the date the Company sends the related redemption notice, during any
30 consecutive trading day period ending on, and including, the trading day
immediately preceding the date on which the Company sends such redemption
notice.



If the Company undergoes a "fundamental change" (as defined in the Indenture),
holders may require the Company to repurchase their notes for cash all or any
portion of their notes at a fundamental change repurchase price equal to 100% of
the principal amount of the notes to be repurchased, plus accrued and unpaid
interest, to, but excluding, the fundamental change repurchase date.



The Company accounts for the 3.75% Convertible Senior Notes as a liability. We
incurred transaction costs related to the issuance of the 3.75% Convertible
Senior Notes of approximately $7.0 million, consisting of initial purchasers'
discount of approximately $6.4 million and other issuance costs of $0.6 million
which were recorded as debt issuance cost (presented as contra debt in the
unaudited interim condensed consolidated balance sheets) and are being amortized
to interest expense over the term of the 3.75% Convertible Senior Notes.

The 3.75% Convertible Senior Notes consisted of the following (in thousands):




                                    June 30,
                                      2021
Principal amounts:
Principal                           $ 197,278
Unamortized debt issuance costs (1)   (5,267)
Net carrying amount                 $ 192,011

Included in the unaudited interim condensed consolidated balance sheets within

1) the 3.75% Convertible Senior Notes, net and amortized over the remaining life

    of the notes using the effective interest rate method.

The following table summarizes the total interest expense, the amortization of debt issuance costs and the effective interest rate related to the 3.75% Convertible Senior Notes (in thousands, except for effective interest rate):

                                     June 30,
                                       2021
Interest expense                    $    1,850
Amortization of debt issuance costs        306
Total                                    2,156

Effective interest rate                  4.50%

Based on the closing price of the Company's common stock of $34.19 on June 30,
2021, the if-converted value of the notes was greater than the principal amount.
The estimated fair value of the note at June 30, 2021 was approximately $1.3
billion. The fair value estimation was primarily based on an active stock
exchange trade on June 24, 2021 of the 3.75% Senior Convertible Note. See Note
15, "Fair Value Measurements" for a description of the fair value hierarchy.



Capped Call

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In conjunction with the pricing of the 3.75% Convertible Senior Notes, the
Company entered into privately negotiated capped call transactions (the "3.75%
Notes Capped Call") with certain counterparties at a price of $16.2 million. The
3.75% Notes Capped Call covers, subject to anti-dilution adjustments, the
aggregate number of shares of the Company's common stock that underlie the
initial 3.75% Convertible Senior Notes and is generally expected to reduce
potential dilution to the Company's common stock upon any conversion of the
3.75% Convertible Senior Notes and/or offset any cash payments the Company is
required to make in excess of the principal amount of the converted notes, as
the case may be, with such reduction and/or offset subject to a cap based on the
cap price. The cap price of the 3.75% Notes Capped Call is initially $6.7560 per
share, which represents a premium of approximately 60% over the last
then-reported sale price of the Company's common stock of $4.11 per share on the
date of the transaction and is subject to certain adjustments under the terms of
the 3.75% Notes Capped Call. The 3.75% Notes Capped Call becomes exercisable if
the conversion option is exercised.

The net cost incurred in connection with the 3.75% Notes Capped Call was recorded as a reduction to additional paid-in capital in the unaudited interim condensed consolidated balance sheets.

5.5% Convertible Senior Notes

In March 2018, the Company issued $100.0 million in aggregate principal amount of the 5.5% Convertible Senior Notes due on March 15, 2023, in a private placement to qualified institutional buyers pursuant to Rule 144A under the Securities Act.

In May 2020, the Company used a portion of the net proceeds from the issuance of
the 3.75% Convertible Senior Notes to finance the cash portion of the partial
repurchase of the 5.5% Convertible Senior Notes, which consisted of a repurchase
of approximately $66.3 million in aggregate principal amount of the 5.5%
Convertible Senior Notes in privately-negotiated transactions for aggregate
consideration of $128.9 million, consisting of approximately $90.2 million in
cash and approximately 9.4 million shares of the Company's common stock. The
partial repurchase of the 5.5% Convertible Senior Notes resulted in a $13.2
million gain on early debt extinguishment. In the fourth quarter of 2020, $33.5
million of the remaining 5.5% Convertible Senior Notes converted into 14.6
million shares of common stock which resulted in a gain of approximately $4.5
million and was recorded on the unaudited interim condensed consolidated
statement of operations on the gain (loss) on extinguishment of debt line.



On January 7, 2021, the remaining aggregate principal of $160 thousand aggregate
principal amount of the 5.5% Convertible Senior Notes were converted into 69,808
shares of common stock. Interest expense and amortization for the period were
immaterial.



Capped Call



In conjunction with the pricing of the 5.5% Convertible Senior Notes, the
Company entered into privately negotiated capped call transactions (the "5.5%
Notes Capped Call") with certain counterparties at a price of $16.0 million to
reduce the potential dilution to the Company's common stock upon any conversion
of the 5.5% Convertible Senior Notes and/or offset any cash payments the Company
is required to make in excess of the principal amount of the converted 5.5%
Convertible Senior Notes, as the case may be. The net cost incurred in
connection with the 5.5% Notes Capped Call has been recorded as a reduction to
additional paid-in capital in the unaudited interim condensed consolidated
balance sheets.



In conjunction with the pricing of the partial repurchase of the 5.5%
Convertible Senior Notes, the Company terminated 100% of the 5.5% Notes Capped
Call on June 5, 2020. As a result of the termination, the Company received $24.2
million, which was recorded in additional paid-in capital in the unaudited
interim condensed consolidated balance sheets.



Common Stock Forward



In connection with the issuance of the 5.5% Convertible Senior Notes, the
Company also entered into a forward stock purchase transaction, ("the Common
Stock Forward"), pursuant to which the Company agreed to purchase 14,397,906
shares of its common stock for settlement on or about March 15, 2023. In
connection with the issuance of the

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3.75% Convertible Senior Notes and the partial repurchase of the 5.5%
Convertible Senior Notes, the Company amended and extended the maturity of the
Common Stock Forward to June 1, 2025.  The number of shares of common stock that
the Company will ultimately repurchase under the Common Stock Forward is subject
to customary anti-dilution adjustments. The Common Stock Forward is subject to
early settlement or settlement with alternative consideration in the event of
certain corporate transactions.



The net cost incurred in connection with the Common Stock Forward of $27.5
million was recorded as an increase in treasury stock in the unaudited interim
condensed consolidated balance sheets. The related shares were accounted for as
a repurchase of common stock.

The book value of the 5.5% Notes Capped Call and Common Stock Forward are not remeasured.

During the fourth quarter of 2020, the Common Stock Forward was partially
settled and, as a result, the Company received 4.4 million shares of its common
stock. During the first quarter of 2021, 5.9 million shares settled and were
received by the Company. During the second quarter of 2021, an additional 2.2
million shares were settled and received by the Company.

Amazon Transaction Agreement

On April 4, 2017, the Company and Amazon entered into a Transaction Agreement
(the "Amazon Transaction Agreement"), pursuant to which the Company agreed to
issue to Amazon.com NV Investment Holdings LLC, a wholly owned subsidiary of
Amazon, a warrant (the "Amazon Warrant") to acquire up to 55,286,696 shares of
the Company's common stock (the "Amazon Warrant Shares"), subject to certain
vesting events described below. The Company and Amazon entered into the Amazon
Transaction Agreement in connection with existing commercial agreements between
the Company and Amazon with respect to the deployment of the Company's GenKey
fuel cell technology at Amazon distribution centers. The existing commercial
agreements contemplate, but do not guarantee, future purchase orders for the
Company's fuel cell technology. The vesting of the Amazon Warrant Shares was
conditioned upon payments made by Amazon or its affiliates (directly or
indirectly through third parties) pursuant to the existing commercial
agreements.



Under the terms of the original Amazon Warrant, the first tranche of the
5,819,652 Amazon Warrant Shares vested upon execution of the Amazon Warrant, and
the remaining Amazon Warrant Shares vest based on Amazon's payment of up to
$600.0 million to the Company in connection with Amazon's purchase of goods and
services from the Company. The $6.7 million fair value of the first tranche of
the Amazon Warrant Shares, was recognized as selling, general and administrative
expense upon execution of the Amazon Warrant.



Provision for the second and third tranches of Amazon Warrant Shares is recorded
as a reduction of revenue, because they represent consideration payable to

a
customer.

The fair value of the second tranche of Amazon Warrant Shares was measured at
January 1, 2019, upon adoption of ASU 2019-08. The second tranche of 29,098,260
Amazon Warrant Shares vested in four equal installments, as Amazon or its
affiliates, directly or indirectly through third parties, made an aggregate of
$50.0 million in payments for goods and services to the Company, up to payments
totaling $200.0 million in the aggregate. The last installment of the second
tranche vested on November 2, 2020.  Revenue reductions of $9.0 million, $4.1
million and $9.8 million associated with the second tranche of Amazon Warrant
Shares were recorded in 2020, 2019 and 2018, respectively, under the terms of
the original Amazon Warrant.



Under the terms of the original Amazon Warrant, the third tranche of 20,368,784
Amazon Warrant Shares vests in eight equal installments, as Amazon or its
affiliates, directly or indirectly through third parties, made an aggregate of
$50.0 million in payments for goods and services to the Company, up to payments
totaling $400.0 million in the aggregate. The measurement date for the third
tranche of Amazon Warrant Shares was November 2, 2020, when their exercise price
was determined, as discussed further below. The fair value of the third tranche
of Amazon Warrant Shares was determined to be $10.57 each. During 2020, revenue
reductions of $24.1 million associated with the third tranche Amazon Warrant
Shares were recorded under the terms of the original Amazon Warrant, prior to
the December 31, 2020 waiver described below.

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On December 31, 2020, the Company waived the remaining vesting conditions under
the Amazon Warrant, which resulted in the immediate vesting of all the third
tranche of the Amazon Warrant Shares and recognition of an additional $399.7
million reduction to revenue.



The $399.7 million reduction to revenue resulting from the December 31, 2020
waiver was determined based upon a probability assessment of whether the
underlying shares would have vested under the terms of the original Amazon
Warrant. Based upon the Company's projections of probable future cash
collections from Amazon (i.e., a Type I share based payment modification), a
reduction of revenue associated with 5,354,905 Amazon Warrant Shares was
recognized at their previously measured November 2, 2020 fair value of $10.57
per warrant.  A reduction of revenue associated with the remaining 12,730,490
Amazon Warrant Shares was recognized at their December 31, 2020 fair value of
$26.95 each, based upon the Company's assessment that associated future cash
collections from Amazon were not deemed probable (i.e., a Type III share based
payment modification).



The $399.7 million reduction to revenue was recognized during the year ended
December 31, 2020 because the Company concluded such amount was not recoverable
from the margins expected from future purchases by Amazon under the Amazon
Warrant, and no exclusivity or other rights were conferred to the Company in
connection with the December 31, 2020 waiver. Additionally, for the year ended
December 31, 2020, the Company recorded a reduction to the provision for
warrants of $12.8 million in connection with the release of the service loss
accrual.



At December 31, 2020, all 55,286,696 of the Amazon Warrant Shares had vested,
however for service contracts entered into prior to December 31, 2020, the
warrant charge associated with that revenue was capitalized and is subsequently
amortized over the life of the service contract. The total amount of provision
for common stock warrants recorded as a reduction of revenue for the Amazon
Warrant during the three months ended June 30, 2021 and 2020 was $105 thousand
and $3.4 million, respectively. The amount of provision for common stock
warrants recorded as a reduction of revenue for the Amazon Warrant during the
six months ended June 30, 2021 and 2020 was $209 thousand and $4.7 million,
respectively. During the three months ended March 31, 2021 and June 30, 2021,
the Amazon Warrant was exercised with respect to 9,214,449 shares of common
stock and 4,745,905 shares of common stock, respectively. In July 2021, the
Amazon Warrant was exercised with respect to an additional 3,501,640 shares

of
common stock.



The exercise price for the first and second tranches of Amazon Warrant Shares
was $1.1893 per share.  The exercise price of the third tranche of Amazon
Warrant Shares was $13.81 per share, which was determined pursuant to the terms
of the Amazon Warrant as an amount equal to ninety percent (90%) of the 30-day
volume weighted average share price of the Company's common stock as of November
2, 2020, the final vesting date of the second tranche of Amazon Warrant Shares.
The Amazon Warrant was exercisable through April 4, 2027. The Amazon Warrant
provides for net share settlement that, if elected by the holder, will reduce
the number of shares issued upon exercise to reflect net settlement of the
exercise price. The Amazon Warrant provides for certain adjustments that may be
made to the exercise price and the number of shares of common stock issuable
upon exercise due to customary anti-dilution provisions based on future events.
The Amazon Warrant is classified as an equity instrument.



Fair value of the Amazon Warrant at December 31, 2020 and November 2, 2020 was
based on the Black Scholes Option Pricing Model, which is based, in part, upon
level 3 unobservable inputs for which there is little or no market data,
requiring the Company to develop its own assumptions.

The Company used the following assumptions for its Amazon Warrant:

                          December 31, 2020   November 2, 2020
Risk-free interest rate         0.58%              0.58%
Volatility                     75.00%              75.00%
Expected average term           6.26                6.42
Exercise price                 $13.81              $13.81
Stock price                    $33.91              $15.47


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Walmart Transaction Agreement

On July 20, 2017, the Company and Walmart entered into a Transaction Agreement
(the "Walmart Transaction Agreement"), pursuant to which the Company agreed to
issue to Walmart a warrant (the "Walmart Warrant") to acquire up to 55,286,696
shares of the Company's common stock, subject to certain vesting events (the
"Walmart Warrant Shares"). The Company and Walmart entered into the Walmart
Transaction Agreement in connection with existing commercial agreements between
the Company and Walmart with respect to the deployment of the Company's GenKey
fuel cell technology across various Walmart distribution centers. The existing
commercial agreements contemplate, but do not guarantee, future purchase orders
for the Company's fuel cell technology. The vesting of the warrant shares
conditioned upon payments made by Walmart or its affiliates (directly or
indirectly through third parties) pursuant to transactions entered into after
January 1, 2017 under existing commercial agreements.



The majority of the Walmart Warrant Shares will vest based on Walmart's payment
of up to $600.0 million to the Company in connection with Walmart's purchase of
goods and services from the Company. The first tranche of 5,819,652 Walmart
Warrant Shares vested upon the execution of the Walmart Warrant and was fully
exercised as of December 31, 2020. Accordingly, $10.9 million, the fair value of
the first tranche of Walmart Warrant Shares, was recorded as a provision for
common stock warrants and presented as a reduction to revenue on the
consolidated statements of operations during 2017. All future provision for
common stock warrants is measured based on their grant-date fair value and
recorded as a charge against revenue. The second tranche of 29,098,260 Walmart
Warrant Shares vests in four installments of 7,274,565 Walmart Warrant Shares
each time Walmart or its affiliates, directly or indirectly through third
parties, make an aggregate of $50.0 million in payments for goods and services
to the Company, up to payments totaling $200.0 million in the aggregate. The
exercise price for the first and second tranches of Walmart Warrant Shares is
$2.1231 per share. After Walmart has made payments to the Company totaling
$200.0 million, the third tranche of 20,368,784 Walmart Warrant Shares will vest
in eight installments of 2,546,098 Walmart Warrant Shares each time Walmart or
its affiliates, directly or indirectly through third parties, make an aggregate
of $50.0 million in payments for goods and services to the Company, up to
payments totaling $400.0 million in the aggregate. The exercise price of the
third tranche of Walmart Warrant Shares will be an amount per share equal to
ninety percent (90%) of the 30-day volume weighted average share price of the
common stock as of the final vesting date of the second tranche of Walmart
Warrant Shares, provided that, with limited exceptions, the exercise price for
the third tranche will be no lower than $1.1893. The Walmart Warrant is
exercisable through July 20, 2027.



The Walmart Warrant provides for net share settlement that, if elected by the
holder, will reduce the number of shares issued upon exercise to reflect net
settlement of the exercise price. The Walmart Warrant provides for certain
adjustments that may be made to the exercise price and the number of shares of
common stock issuable upon exercise due to customary anti-dilution provisions
based on future events. The Walmart Warrant is classified as an equity
instrument.



At both June 30, 2021 and December 31, 2020, 13,094,217 of the Walmart Warrant
Shares had vested. The total amount of provision for common stock warrants
recorded as a reduction of revenue for the Walmart Warrant during the three
months ended June 30, 2021 and 2020 was $1.6 million and $1.0 million,
respectively. The amount of provision for common stock warrants recorded as a
reduction of revenue for the Walmart Warrant during the six months ended June
30, 2021 and 2020 was $3.2 million and $1.9 million, respectively. During the
three months ended March 31, 2021, the Walmart Warrant had been exercised with
respect to 7,274,565 shares of common stock. There were no exercises during the
three months ended June 30, 2021.

Operating and Finance Lease Liabilities

As of June 30, 2021, the Company had operating leases, as lessee, primarily
associated with sale/leaseback transactions that are partially secured by
restricted cash, security deposits and pledged escrows (see also Note 1, "Nature
of Operations") as summarized below.  These leases expire over the next one to
nine years. Minimum rent payments under operating leases are recognized on a
straight-line basis over the term of the lease.

Leases contain termination clauses with associated penalties, the amount of which cause the likelihood of cancellation to be remote. At the end of the lease term, the leased assets may be returned to the lessor by the Company, the Company may negotiate with the lessor to purchase the assets at fair market value, or the Company may negotiate with

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the lessor to renew the lease at market rental rates.  No residual value
guarantees are contained in the leases.  No financial covenants are contained
within the lease, however there are customary operational covenants such as
assurance the Company properly maintains the leased assets and carries
appropriate insurance, etc.  The leases include credit support in the form of
either cash, collateral or letters of credit.  See Note 19, "Commitments and
Contingencies" for a description of cash held as security associated with the
leases.

The Company has finance leases associated with its property and equipment in Latham, New York and at fueling customer locations. The fair value of this finance obligation approximated the carrying value as of June 30, 2021.

Future minimum lease payments under operating and finance leases (with initial
or remaining lease terms in excess of one year) as of June 30, 2021 were as
follows (in thousands):




                                                     Finance         Total
                                  Operating Lease     Lease          Lease
                                     Liability      Liability     Liabilities
Remainder of 2021               $          17,298   $    1,826   $      19,124
2022                                       34,579        3,731          38,310
2023                                       34,636        3,708          38,344
2024                                       34,636        3,715          38,351
2025 and thereafter                        73,276        4,921          78,197
Total future minimum payments             194,425       17,901         212,326
Less imputed interest                    (52,307)      (2,793)        (55,100)
Total                           $         142,118   $   15,108   $     157,226




Rental expense for all operating leases was $8.2 million and $7.8 million for
the three months ended June 30, 2021 and 2020, respectively. Rental expense for
all operating leases was $16.3 million and $12.5 million for the six months
ended June 30, 2021 and 2020, respectively.



The gross profit on sale/leaseback transactions for all operating leases was
$19.5 million and $14.4 million for the three months ended June 30, 2021 and
2020, respectively. The gross profit on sale/leaseback transactions for all
operating leases was $35.4 million and $19.7 million for the six months ended
June 30, 2021 and 2020, respectively.



Right of use assets for sale/leaseback transactions obtained in exchange for new
operating lease liabilities was $24.0 million and $2.9 million for the three
months ended June 30, 2021 and 2020, respectively. Right of use assets for
sale/leaseback transactions obtained in exchange for new operating lease
liabilities was $35.9 million and $8.1 million for the six months ended June 30,
2021 and 2020, respectively.



At June 30, 2021 and December 31, 2020, the right of use assets associated with
operating leases was $172.3 million and $136.9 million, respectively. The
accumulated depreciation for these right of use assets was $26.5 million and
$19.9 million at June 30, 2021 and December 31, 2020, respectively.



At June 30, 2021 and December 31, 2020, the right of use assets associated with
finance leases was $17.3 million and $5.7 million, respectively. The accumulated
depreciation for these right of use assets was $380 thousand and $102 thousand
at June 30, 2021 and December 31, 2020, respectively.

At June 30, 2021 and December 31, 2020, security deposits associated with sale/leaseback transactions were $3.1 million and $5.8 million, respectively, and were included in other assets in the consolidated balance sheets.

Other information related to the operating leases are presented in the following
table:




                               Six months ended     Six months ended
                                June 30, 2021        June 30, 2020
Cash payments (in thousands) $           16,081   $            9,674


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Weighted average remaining lease term (years) 5.82 4.34 Weighted average discount rate

                  11.4%     12.1%




Right of use assets obtained in exchange for new finance lease liabilities were
$6.5 million and $0.7 million for the three months ended June 30, 2021 and 2020,
respectively. Right of use assets obtained in exchange for new finance lease
liabilities were $12.1 million and $0.7 million for the six months ended June
30, 2021 and 2020, respectively.



Other information related to the finance leases are presented in the following
table:




                                                 Six months ended     Six months ended
                                                  June 30, 2021        June 30, 2020
Cash payments (in thousands)                   $            1,166   $              132

Weighted average remaining lease term (years)                4.86          

6.74

Weighted average discount rate                               6.9%          

      9.6%




Finance Obligation

The Company has sold future services to be performed associated with certain sale/leaseback transactions and recorded the balance as a finance obligation.

 The outstanding balance of this obligation at June 30, 2021 was $176.3 million,
$27.3 million and $149.0 million of which was classified as short-term and
long-term, respectively, on the accompanying consolidated balance sheet. The
outstanding balance of this obligation at December 31, 2020 was $157.7 million,
$24.2 million and $133.5 million of which was classified as short-term and
long-term, respectively. The amount is amortized using the effective interest
method. The fair value of this finance obligation approximated the carrying
value as of June 30, 2021 and December 31, 2020.



In prior periods, the Company entered into sale/leaseback transactions that were
accounted for as financing transactions and reported as part of finance
obligations. The outstanding balance of finance obligations related to
sale/leaseback transactions at June 30, 2021 was $19.5 million, $6.5 million and
$13.0 million of which was classified as short-term and long-term, respectively
on the accompanying consolidated balance sheet.  The outstanding balance of this
obligation at December 31, 2020 was $23.9 million, $8.0 million and $15.9
million of which was classified as short-term and long-term, respectively on the
accompanying consolidated balance sheets. The fair value of this finance
obligation approximated the carrying value as of both June 30, 2021 and December
31, 2020.

Future minimum payments under finance obligations notes above as of June 30, 2021 were as follows (in thousands)

                                                                         Total
                                  Sale of Future     Sale/leaseback     Finance
                                  revenue - debt       financings     Obligations
Remainder of 2021               $         23,525   $         4,212   $      27,737
2022                                      46,165             4,975          51,140
2023                                      46,165             3,148          49,313
2024                                      46,165            16,154          62,319
2025 and thereafter                       72,708                 -          72,708
Total future minimum payments            234,728            28,489         263,217
Less imputed interest                   (58,461)           (8,951)        (67,412)
Total                           $        176,267   $        19,538   $     195,805




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Other information related to the above finance obligations are presented in the
following table:




                                          Six months ended     Six months ended
                                           June 30, 2021        June 30, 2020
Cash payments (in thousands)            $           26,508   $           20,148

Weighted average remaining term (years)                4.9                 

4.3

Weighted average discount rate                       11.3%                11.2%




Restricted Cash



In connection with certain of the above noted sale/leaseback agreements, cash of
$243.5 million was required to be restricted as security as of June 30, 2021,
which restricted cash will be released over the lease term. As of June 30, 2021,
the Company also had certain letters of credit backed by restricted cash
totaling $143.7 million that are security for the above noted sale/leaseback
agreements.



Fair Value

The Company records the fair value of assets and liabilities in accordance with
ASC 820, Fair Value Measurement ("ASC 820"). ASC 820 defines fair value as the
price received to sell an asset or paid to transfer a liability in an orderly
transaction between market participants at the measurement date and in the
principal or most advantageous market for that asset or liability. The fair
value should be calculated based on assumptions that market participants would
use in pricing the asset or liability, not on assumptions specific to the
entity.



In addition to defining fair value, ASC 820 expands the disclosure requirements
around fair value and establishes a fair value hierarchy for valuation inputs.
The hierarchy prioritizes the inputs into three levels based on the extent to
which inputs used in measuring fair value are observable in the market. Each
fair value measurement is reported in one of the three levels, which is
determined by the lowest level input that is significant to the fair value

measurement in its entirety.



These levels are:

? Level 1 - quoted prices (unadjusted) in active markets for identical assets or

liabilities.

Level 2 - quoted prices for similar assets and liabilities in active markets or

? inputs that are observable for the asset or liability, either directly or

indirectly through market corroboration, for substantially the full term of the

financial instrument.

? Level 3 - unobservable inputs reflecting management's own assumptions about the

inputs used in pricing the asset or liability at fair value.

The fair values of the Company's investments are based upon prices provided by
an independent pricing service. Management has assessed and concluded that these
prices are reasonable and has not adjusted any prices received from the
independent provider. Securities reported at fair value utilizing Level 1 inputs
represent assets whose fair value is determined based upon observable unadjusted
quoted market prices for identical assets in active markets. Level 2 securities
represent assets whose fair value is determined using observable market
information such as previous day trade prices, quotes from less active markets
or quoted prices of securities with similar characteristics. There were no
transfers between Level 1, Level 2, or Level 3 during the six months ended June
30, 2021.

Assets and liabilities measured at fair value on a recurring basis are summarized below (in thousands):

                                     As of June 30, 2021
                       Carrying    Fair       Fair Value Measurements
                        Amount     Value    Level 1   Level 2   Level 3
Assets
Cash equivalents (1) $  141,313 $ 141,313 $  87,573 $  53,740 $       -
Corporate bonds         705,084   705,084         -   705,084         -
Commercial paper        329,722   329,722         -   329,722         -
U.S. Treasuries         170,477   170,477   170,477         -         -
Municipal debt            9,984     9,984         -     9,984         -


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Certificates of deposit      27,454      27,454         -      27,454         -
Equity securities           120,302     120,302   120,302           -         -

Liabilities
Contingent consideration      9,990       9,990         -           -     9,990
Convertible senior notes    192,011   1,320,194         -   1,320,194         -
Long-term debt              160,484     160,484         -           -   160,484
Finance obligations         195,805     195,805         -           -   195,805


                                         As of December 31, 2020
                           Carrying     Fair         Fair Value Measurements
                            Amount      Value     Level 1    Level 2    Level 3
Liabilities
Contingent consideration      9,760       9,760         -           -     9,760
Convertible senior notes     85,640   1,272,766         -   1,272,766         -
Long-term debt              175,402     175,402         -           -   175,402
Finance obligations         181,553     181,553         -           -   181,553

(1) Included in "Cash and cash equivalents" in our consolidated balance sheets as

of June 30, 2021.

The fair values for available-for-sale and equity securities are based on prices
obtained from independent pricing services. Available-for-sale securities are
characterized as Level 2 assets, as their fair values are determined using
observable market inputs. Equity securities are characterized as Level 1 assets,
as their fair values are determined using active markets for identical assets.



Available-for-sale securities

The amortized cost, gross unrealized gains and losses, fair value of those investments classified as available-for-sale securities, and allowance for credit losses at June 30, 2021 are summarized as follows (in thousands):

                         Amortized          Gross                 Gross             Fair        Allowance for
                           Cost        Unrealized Gains     Unrealized Losses       Value       Credit Losses
Corporate bonds         $   707,022   $               51   $           (1,989)   $   705,084                 -
Commercial paper            329,471                  253                   (2)       329,722                 -
Certificates of deposit      27,460                    -                   (6)        27,454                 -
U.S. Treasuries             170,672                    -                 (195)       170,477                 -
Municipal debt                9,993                    -                   (9)         9,984                 -
Total                   $ 1,244,618   $              304   $           (2,201)   $ 1,242,721   $             -




A summary of the amortized cost and fair value of investments classified as
available-for-sale, by contractual maturity, at June 30, 2021 is as follows (in
thousands):






                                   June 30, 2021
                               Amortized      Fair
Maturity:                        Cost         Value
Within one year              $   717,531   $   717,285

After one through five years 527,087 525,436 Total

$ 1,244,618   $ 1,242,721

The cost, gross unrealized gains, gross unrealized losses, and fair value of those investments classified as equity securities at June 30, 2021 are summarized as follows (in thousands):

                        June 30, 2021
                 Gross                Gross           Fair
    Cost   Unrealized Gains     Unrealized Losses    Value


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Fixed income mutual funds $ 89,962 $ 17 $ (81) $ 89,898 Exchange traded mutual funds 30,016 388 - 30,404 Total

$ 119,978   $ 405   $ (81)   $ 120,302

Off-Balance Sheet Arrangements

The Company does not have off-balance sheet arrangements that are likely to have
a current or future significant effect on the Company's financial condition,
changes in financial condition, revenues or expenses, results of operations,
liquidity, capital expenditures or capital resources that is material to
investors.



Critical Accounting Estimates

Management's discussion and analysis of our financial condition and results of
operations are based upon our consolidated financial statements, which have been
prepared in accordance with GAAP. The preparation of these consolidated
financial statements requires us to make estimates and judgments that affect the
reported amounts of assets, liabilities, revenues and expenses, and related
disclosure of contingent assets and liabilities at the date of and during the
reporting period. On an on-going basis, we evaluate our estimates and judgments,
including those related to revenue recognition, bad debts, inventories,
intangible assets, impairment of long-lived assets and PPA executory contract
consideration, accrual for loss on extended maintenance contracts, operating and
finance leases, product warranty reserves, unbilled revenue, common stock
warrants, income taxes, stock-based compensation, and contingencies. We base our
estimates and judgments on historical experience and on various other factors
and assumptions that are believed to be reasonable under the circumstances, the
results of which form the basis for making judgments about (1) the carrying
values of assets and liabilities and (2) the amount of revenue and expenses
realized that are not readily apparent from other sources. Actual results may
differ from these estimates under different assumptions or conditions.

There have been no changes in our critical accounting estimates from those reported in our 2020 10-K.

Recent Accounting Pronouncements

Recently Adopted Accounting Guidance

Other than the adoption of the accounting guidance mentioned in our 2020 10-K
and ASU 2020-06, there have been no other significant changes in our reported
financial position or results of operations and cash flows resulting from the
adoption of new accounting pronouncements.

On January 1, 2021, we early adopted ASU No. 2020-06, Debt-Debt with Conversion
and Other Options (Subtopic 470-20) and Derivatives and Hedging-Contracts in
Entity's Own Equity (Subtopic 815-40) using the modified retrospective approach.
Consequently, the Company's 3.75% Convertible Senior Notes is now accounted for
as a single liability measured at its amortized cost. This accounting change
removed the impact of recognizing the equity component of the Company's
convertible notes at issuance and the subsequent accounting impact of additional
interest expense from debt discount amortization. Future interest expense of the
convertible notes will be lower as a result of adoption of this guidance and net
loss per share will be computed using the if-converted method for convertible
instruments. The cumulative effect of the accounting change upon adoption on
January 1, 2021 increased the carrying amount of the 3.75% Convertible Senior
Notes by $120.6 million, reduced accumulated deficit by $9.6 million and reduced
additional paid-in capital by $130.2 million.

Recent Accounting Guidance Not Yet Effective

All issued but not yet effective accounting and reporting standards as of June
30, 2021 are either not applicable to the Company or are not expected to have a
material impact on the Company.

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