Plug Power said it found accounting errors in results for 2018, 2019, and the first three quarters of 2020 and that it will restate earnings for those periods. The company, a maker of hydrogen fuel cells, had been flying high, with its stock up nearly 1,400 percent is just the last year alone.
“In consultation with KPMG LLP, the Company’s independent registered public accounting firm, management and the audit committee of Plug Power’s board of directors determined that the company’s prior period financial statements need to be restated due to errors in accounting,” the company said in a statement.
The accounting errors were primarily related to several non-cash items, including:
- The reported book value of right of use assets and related finance obligations;
- Loss accruals for certain service contracts;
- The impairment of certain long-lived assets; and
- The classification of certain costs, resulting in a decrease in research and development expense and a corresponding increase in cost of revenue.
“The accounting related to the restatement is complex and technical and involves significant judgments in how to apply U.S. GAAP, given the innovative nature of the company’s business and its leading position in a new and rapidly developing industry,” the company noted in the statement. “The revised accounting will change how the company accounts for certain transactions and items, but is not expected to impact the company’s cash position, business operations or economics of commercial arrangements. The company continues to expect to achieve its previously stated gross billings targets of $475 million in 2021, $750 million in 2022 and $1.7 billion in 2024.”
“Since our founding nearly 25 years ago, Plug Power has prided itself on operating with transparency and integrity, and we are working to resolve this matter quickly,” said Andy Marsh, CEO of Plug Power. “Importantly, there is no expected impact to our cash position, business operations or economics of commercial arrangements. We continue to execute on our mission to provide customers with state-of-the-art fuel cell and green hydrogen solutions. We remain confident in our ability to leverage our strong business momentum and market leading technologies, independently and alongside our joint venture partners, to capture the significant business opportunities in this rapidly growing industry.”
The statement went on to say:
“As part of the company’s normal process, prior to releasing its 2020 fourth quarter and year end preliminary results and prior to completion of the audit, on February 24, 2021, the company and the Audit Committee discussed those results with KPMG, and at that time, no material issues were raised. However, after the Company reported its 2020 fourth quarter and year end results, and in the course of finalizing the audit, the Company and KPMG identified the restatement items cited above. The Company has since reevaluated its accounting and determined that it needed to correct the previous accounting for those items.
“It is important to note that the changes being recorded did not result from any override of controls or misconduct, and KPMG has not informed the Audit Committee of any issues related to an override of controls or misconduct.
“The Company will not be able to file its Form 10-K for 2020 by the March 16, 2021 deadline and is working diligently to finalize the restated financials and file its Form 10-K as soon as possible. As disclosed in the Company’s Current Report on Form 8-K filed today with the SEC, the Prior Period Financial Statements should no longer be relied upon and the fourth quarter and full year 2020 financial results and related discussion in the Company’s shareholder letter issued on February 25, 2021 should no longer be relied upon.” 