BLOOM ENERGY CORP MANAGEMENT REPORT OF FINANCIAL POSITION AND RESULTS OF OPERATIONS (Form 10-Q)

This Quarterly Report on Form 10-Q contains "forward-looking statements" within
the meaning of the safe harbor provisions of the Private Securities Litigation
Reform Act of 1995. These forward-looking statements are based on current
expectations, estimates, and projections about our industry, management's
beliefs, and certain assumptions made by management. For example,
forward-looking statements include, but are not limited to, our expectations
regarding our products, services, business strategies, impact of COVID-19, our
expanded strategic partnership with SK ecoplant, operations, supply chain
(including any direct or indirect effects from the Russia-Ukraine conflict), new
markets, government incentive programs, growth of the hydrogen market and the
sufficiency of our cash and our liquidity. Forward-looking statements can also
be identified by words such as "future," "anticipates," "believes," "estimates,"
"expects," "intends," "plans," "predicts," "targets," "forecasts," "will,"
"would," "could," "can," "may" and similar terms. These statements are based on
the beliefs and assumptions of our management based on information currently
available to management at the time they are made. Such forward-looking
statements are subject to risks, uncertainties and other factors that could
cause actual results and the timing of certain events to differ materially from
future results expressed or implied by such forward-looking statements. Factors
that could cause or contribute to such differences include, but are not limited
to, those identified below, and those discussed in the section titled "Risk
Factors" included in Part II, Item 1A of this Quarterly Report on Form 10-Q and
in our other filings with the Securities and Exchange Commission, including our
Annual Report on Form 10-K for the fiscal year ended December 31, 2021 filed on
February 25, 2022. Such forward-looking statements speak only as of the date of
this report. We disclaim any obligation to update any forward-looking statements
to reflect events or circumstances after the date of such statements. You should
review these risk factors for a more complete understanding of the risks
associated with an investment in our securities. The following discussion and
analysis should be read in conjunction with our condensed consolidated financial
statements and notes thereto included elsewhere in this Quarterly Report on Form
10-Q.

Overview

Description of Bloom energy

Our mission is to make clean, reliable energy affordable for everyone in the
world. We created the first large-scale, commercially viable solid oxide
fuel-cell based power generation platform that empowers businesses, essential
services, critical infrastructure and communities to responsibly take charge of
their energy.

Our technology, invented in the United States, is one of the most advanced
electricity and hydrogen producing technologies on the market today. Our
fuel-flexible Bloom Energy Servers can use biogas, hydrogen, natural gas, or a
blend of fuels to create resilient, sustainable and cost-predictable power at
significantly higher efficiencies than traditional, combustion-based resources.
In addition, our same solid oxide platform that powers our fuel cells can be
used to create hydrogen, which is increasingly recognized as a critically
important tool necessary for the full decarbonization of the energy economy. Our
enterprise customers include some of the largest multinational corporations in
the world. We also have strong relationships with some of the largest utility
companies in the United States and the Republic of Korea.

At Bloom Energy, we look forward to a net-zero future. Our technology is
designed to help enable this future in order to deliver reliable, low-carbon,
electricity in a world facing unacceptable levels of power disruptions. Our
resilient platform has kept electricity available for our customers through
hurricanes, earthquakes, typhoons, forest fires, extreme heat and grid failures.
Unlike traditional combustion power generation, our platform is
community-friendly and designed to significantly reduce emissions of criteria
air pollutants. We have made tremendous progress making renewable fuel
production a reality through our biogas, hydrogen and electrolyzer programs, and
we believe that we are well-positioned as a core platform and fixture in the new
energy paradigm to help organizations and communities achieve their net-zero
objectives.

We market and sell our Energy Servers primarily through our direct sales
organization in the United States, and also have direct and indirect sales
channels internationally. Recognizing that deploying our solutions requires a
material financial commitment, we have developed a number of financing options
to support sales of our Energy Servers to customers who lack the financial
capability to purchase our Energy Servers directly, who prefer to finance the
acquisition using third-party financing or who prefer to contract for our
services on a pay-as-you-go model.

Our typical target commercial or industrial customer has historically been
either an investment-grade entity or a customer with investment-grade attributes
such as size, assets and revenue, liquidity, geographically diverse operations
and general financial stability. We have also expanded our product and financing
options to the below-investment-grade customers
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and have also expanded internationally to target customers with deployments on a
wholesale grid. Given that our customers are typically large institutions with
multi-level decision making processes, we generally experience a lengthy sales
process.

Strategic Investment

On October 23, 2021, we entered into the SPA with SK ecoplant in connection with
a strategic partnership. Pursuant to the SPA, on December 29, 2021, we sold to
SK ecoplant 10 million shares of zero coupon, non-voting redeemable convertible
Series A preferred stock in us, par value $0.0001 per share ("RCPS"), at a
purchase price of $25.50 per share for an aggregate purchase price of $255
million (the "Initial Investment").

Simultaneous with the execution of the SPA, we and SK ecoplant executed an
amendment to the Joint Venture Agreement ("JVA"), an amendment and restatement
to our Preferred Distribution Agreement ("PDA Restatement") and a new Commercial
Cooperation Agreement regarding initiatives pertaining to the hydrogen market
and general market expansion for the Bloom Energy Server and Bloom Energy
Electrolyzer. For additional details about the transaction with SK ecoplant,
please see Note 18 - SK ecoplant Strategic Investment, and for more information
about our joint venture with SK ecoplant, please see Note 12 - Related Party
Transactions in Part I, Item 1, Financial Statements.

Covid-19 pandemic

General

We continue to monitor and adjust as appropriate our operations in response to
the COVID-19 pandemic, including the Omicron and Delta variants. We maintain
protocols to minimize the risk of COVID-19 transmission within our facilities,
including enhanced cleaning and masking if required by the local authorities, as
well as providing testing for all employees. We will continue to follow CDC and
local guidelines when notified of possible exposures. For more information
regarding the risks posed to our company by the COVID-19 pandemic, refer to Part
I, Item 1A, Risk Factors - Risks Related to Our Products and Manufacturing - Our
business has been and continues to be adversely affected by the COVID-19
pandemic.

Cash and capital resources

COVID-19 created disruptions throughout various aspects of our business as noted
herein. While we improved our liquidity in 2021, we increased our working
capital spend in the first quarter of 2022. We have entered into new leases to
maintain sufficient manufacturing facilities to meet anticipated demand in 2022,
including new product line expansion. In addition, we also increased our working
capital spend and resources to enhance our marketing efforts and to expand into
new geographies both domestically and internationally.

We believe we have the sufficient capital to run our business over the next 12
months, including the completion of the build out of our manufacturing
facilities. Our working capital was strengthened with the Initial Investment by
SK ecoplant as described above. In addition, we may still enter the equity or
debt market as need to support the expansion of our business. Please refer to
Note 7 - Outstanding Loans and Security Agreements in Part I, Item 1, Financial
Statements; and Part II, Item 1A, Risk Factors - Risks Related to Our Liquidity
- Our substantial indebtedness, and restrictions imposed by the agreements
governing our and our PPA Entities' outstanding indebtedness, may limit our
financial and operating activities and may adversely affect our ability to incur
additional debt to fund future needs, and We may not be able to generate
sufficient cash to meet our debt service obligations, for more information
regarding the terms of and risks associated with our debt.

Sales

We have not experienced a material impact on our sales activity related to COVID-19 in the three months ended March 31, 2022.

Customer financing

The ongoing COVID-19 pandemic resulted in a significant drop in the ability of
many financiers (particularly financing institutions) to monetize tax credits,
primarily the result of a potential drop in taxable income stemming from the
pandemic. However, during the second half of 2021 and the first three months of
2022, we have seen this constraint improving. Our ability to obtain financing
for our Energy Servers partly depends on the creditworthiness of our customers,
and a few of our customers' credit ratings have fallen during the pandemic,
which can impact the financing for their use of an Energy Server. We continue to
work on obtaining the financing required for our 2022 installations but if we
are unable to secure such financing our revenue, cash flow and liquidity will be
materially impacted.

Installation and maintenance of energy servers

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Our installation and maintenance operations were impacted by the COVID-19
pandemic and supply chain shortages in general during the first three months of
2022. Our installation projects have experienced some delays relating to, among
other things, shortages in available parts and labor for design, installation
and other work; and the inability or delay in our ability to access customer
facilities due to shutdowns or other restrictions. Despite the impact on
installations during the three months ended March 31, 2022 and given our
mitigation strategies, we only had one instance in the first quarter of 2022 of
a significant delay in the installation of our Energy Servers as a result of
supply chain issues that pushed an installation out a quarter.

As to maintenance, if we are delayed in or unable to perform scheduled or
unscheduled maintenance, our previously-installed Energy Servers will likely
experience adverse performance impacts including reduced output and/or
efficiency, which could result in warranty and/or guaranty claims by our
customers. Further, due to the nature of our Energy Servers, if we are unable to
replace worn parts in accordance with our standard maintenance schedule, we may
be subject to increased costs in the future. During the three months ended March
31, 2022, we experienced no delays in servicing our Energy Servers due to
COVID-19.

Supply chain

During the three months ended March 31, 2022, we continued to experience supply
chain disruptions due to direct and indirect COVID-19 impacts although we were
able to mitigate the impact so that we did not experience delays in the
manufacture of our Energy Servers. We have a global supply chain and obtain
components from Asia, Europe and India. In many cases, the components we obtain
are jointly developed with our suppliers and unique to us, which makes it
difficult to obtain and qualify alternative suppliers should our suppliers be
impacted by the COVID-19 pandemic or related effects. The Russia-Ukraine war
impact so far has been limited to increased freight cost due to the rise in oil
and related fuel prices. If the direct or indirect effects from this conflict
spread, this could impact our supply base ability to provide the materials we
need to meet our planned build and shipment plans. Although we were able to find
alternatives for many component shortages, we experienced cost increases with
respect to container shortages, ground transport, ocean shipping and air
freight. We have put actions in place to mitigate the disruptions by booking
alternate sea routes, limiting our use of air shipments, creating virtual hubs
and consolidating shipments coming from the same region. During the three months
ended March 31, 2022, we continued to manage disruptions from an increase in
lead times for most of our components due to a variety of factors, including
supply shortages, shipping delays and labor shortages, and we expect this to
continue through 2022. We are experiencing raw material pricing pressures and
component shortages especially for semiconductors and specialty metals that we
expect to persist through the remainder of the calendar year. In addition, the
impact of inflation on the price of components, raw materials and labor have
increased. In the event we are unable to mitigate the impact of delays and/or
price increases in raw materials, electronic components and freight, it could
delay the manufacturing and installation of our Energy Servers and increase the
cost of our Energy Server, which would adversely impact our cash flows and
results of operations, including revenue and gross margin.

If spikes in COVID-19 occur in regions in which our supply chain operates we
could experience a delay in components and incur further freight price
increases, which could in turn impact production and installations and our cash
flow and results of operations, including revenue and gross margin.

Manufacturing

Although we have experienced labor shortages due to COVID-19 absences and the
relative shortage of labor, overall this has not impacted our production given
the safety protocols we have put in place augmented by our ability to increase
our shifts and obtain a contingent work force for some of the manufacturing
activities. We have incurred additional labor expense due to enhanced safety
protocols designed to minimize exposure and risk of COVID-19 transmission as
well as increased wages in general. If COVID-19 materially impacts our supply
chain or if we experience a significant COVID-19 outbreak that affects our
manufacturing workforce, our production could be adversely impacted which could
adversely impact our cash flow and results of operation, including revenue.

Purchase and financing options

Insight

In order to please the widest variety of customers, we make several options available to our customers. Both in United States and abroad, we sell energy servers directly to customers. In United Stateswe also allow customers to use energy servers through a pay-as-you-go offering, made possible through third-party ownership financing agreements.

Often our offerings take advantage of local incentives. In the United States,
our financing arrangements are structured to optimize both federal and local
incentives, including the ITC and accelerated depreciation. Internationally, our
sales are made primarily to distributors who on-sell to, and install for,
customers; these deals are also structured to use local incentives
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applicable to our energy servers. Increasingly, we use trusted installers and other sourcing collaborations in United States to generate transactions.

Whichever option is selected by a customer in the Unites States or
internationally, the contract structure will include obligations on our part to
operate and maintain the Energy Server ("O&M Obligations"). The O&M Obligations
may either be (i) for a one-year period, subject to annual renewal at the
customer's option, which historically are almost always renewed year over year,
or (ii) for a fixed term. In the United States, the contract structure often
includes obligations on our part to install the Energy Servers ("Installation
Obligations"). Consequently, our transactions may generate revenue from the sale
of Energy Servers and electricity, performance of O&M Obligations, and
performance of Installation Obligations.

In addition to customary workmanship and materials warranties, as part of the
O&M Obligations we provide warranties and guaranties regarding the efficiency
and output of our Energy Servers to the customer and, in certain financing
structures, to the financing parties too. We refer to a "performance warranty"
as an obligation to repair or replace the Energy Servers as necessary to return
performance of an Energy Server to the warranted performance level. We refer to
a "performance guaranty" as an obligation to make a payment to compensate for
the failure of the Energy Server to meet the guaranteed performance level. Our
obligation to make payments under the performance guaranty is always
contractually capped.

Energy server sales

There are customers who purchase our Energy Servers directly from us pursuant to
customary equipment sales contracts. In connection with the purchase of Energy
Servers, the customers also enter into a contract with us for the O&M
Obligations. The customer may elect to engage us to provide the Installation
Obligations or engage a third-party provider. Internationally, sales often occur
through distribution arrangements pursuant to which local construction services
providers perform the Installation Obligations, as is the case in the Republic
of Korea where we contract directly with the customer to provide O&M
Obligations.

A customer may enter into a contract for the sale of our Energy Servers and
finance that acquisition through a sale-leaseback with a financial institution.
In most cases, the financial institution completes its purchase from us
immediately after commissioning. We both (i) facilitate this financing
arrangement between the financial institution and the customer and (ii) provide
ongoing operations and maintenance services for the Energy Servers (such
arrangement, a "Traditional Lease").

Customer financing options

With regard to third-party financing options in United Statesa customer can choose a contract for the use of the energy servers in exchange for a lump sum payment based on capacity (a “managed services contract”) or a contract for the purchase of the electricity produced by the servers of energy in exchange for a programmed dollar amount per kilowatt-hour (a “power purchase agreement” or “PPA”).

Certain customer payments in a Managed Services Agreement are required
regardless of the level of performance of the Energy Server; in some cases it
may also include a variable payment based on the Energy Server's performance or
a performance-related set-off. Managed Services Agreements are then financed
pursuant to a sale-leaseback with a financial institution (a "Managed Services
Financing").

PPAs are generally funded on a portfolio basis. We have funded portfolios through tax equity partnerships, acquisition financings and direct sales to investors (each, a “Portfolio Financing”).

In the United States, our capacity to offer our Energy Servers through either of
these financed arrangements depends in large part on the ability of financing
parties to optimize the tax benefits associated with a fuel cell, such as the
ITC or accelerated depreciation. Interest rate fluctuations, and
internationally, currency exchanges fluctuations, may also impact the
attractiveness of any financing offerings for our customers. Our ability to
finance a Managed Services Agreement or a PPA is also related to, and may be
limited by, the creditworthiness of the customer. Additionally, the Managed
Services Financing option is limited by a customer's willingness to commit to
making payments to a financing party regardless of the level of performance of
the Energy Server.

In each of our financing options, we typically perform the functions of a
project developer, including identifying end customers and financiers, leading
the negotiations of the customer agreements and financing agreements, securing
all necessary permitting and interconnections approvals, and overseeing the
design and construction of the project up to and including commissioning the
Energy Servers. Increasingly, however, we are making sales to third-party
developers.

Each of our financing transaction structures is described in more detail below.

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Funding for managed services

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*Compensation received from customers is recorded as electricity revenue or service
revenue, according to ASC 840 and ASC 842, as applicable. For additional
information, see Note 2 - Summary of Significant Accounting Policies in Part 1,
Item 1, Financial Statements.


Under our Managed Services Financing option, we enter into a Managed Services
Agreement with a customer for a certain term. The fixed capacity-based payments
made by the customer under the Managed Services Agreement are applied toward our
obligation to pay down our periodic rent liability under a sale-leaseback
transaction with a financier. We assign all our rights to such fixed payments
made by the customer to the financier, as lessor.

Once we enter into a Managed Services Agreement with the customer, and a
financier is identified, we sell the Energy Server to the financier, as lessor,
who then leases it back to us, as lessee, pursuant to a sale-leaseback
transaction. Certain of our sale-leaseback transactions failed to achieve all of
the criteria for sale accounting. For such failed sale-and-leaseback
transactions, the proceeds from the transaction are recognized as a financing
obligation within our condensed consolidated balance sheet. For successful
sale-and-leaseback transactions, the financier of a Managed Services Agreement
typically pays the purchase price for an Energy Server at or around acceptance,
and we recognize the fair value of the Energy Servers sold within product and
install revenue and recognize a right-of-use ("ROU") asset and a lease liability
on our condensed consolidated balance sheet. Any proceeds in excess of the fair
value of the Energy Servers are recognized as a financing obligation.

The terms of our current managed service contract offerings range from five to ten years.

Our Managed Services Agreements typically provide for performance warranties of
both the efficiency and output of the Energy Server and may include other
warranties depending on the type of deployment. We often structure payments from
the customer as a dollars per kilowatt-hour payment and our pricing assumes
revenue at the 95% output level. This means that our
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revenue may be lower than expected if output is less than 95% and higher if
output exceeds 95%. As of March 31, 2022, we had incurred no liabilities due to
failure to repair or replace our Energy Servers pursuant to these performance
warranties and the fleet of our Energy Servers deployed pursuant to the Managed
Services Financings was performing at a lifetime average output of approximately
84%.

Portfolio Financings

In the past, we financed the Energy Servers subject to our PPAs through two
types of Portfolio Financings. In one type of transaction, we sold a portfolio
of PPAs to a tax equity partnership in which we held a managing member interest
(such partnership in which we hold an interest, a "PPA Entity"). In these
transactions, we sold the portfolio of Energy Servers to a limited liability
project company of which the PPA Entity was the sole member (such portfolio
owner, a "Portfolio Company"). Whether an investor, a tax equity partnership, or
a single member limited liability company, the Portfolio Company is the entity
that directly owns the portfolio. The Portfolio Company sells the electricity
generated by the Energy Servers contemplated by the PPAs to the customers. We
recognize revenue as the electricity is produced. Our current practices no
longer contemplate these types of transactions.

We also finance PPAs through a second type of Portfolio Financing pursuant to
which we (i) directly sell a portfolio of PPAs and the Energy Servers or (ii)
sell a Portfolio Company, in each case to an investor or tax equity partnership
in which we do not have an equity interest (a "Third-Party PPA"). Like the other
Portfolio Financing structure, the investor or tax equity partnership owns the
Portfolio Company or the Energy Servers directly, and in each case, sells the
electricity generated by the Energy Servers contemplated by the PPAs to the
customers. For further discussion, see Note 11 - Portfolio Financings in Part I,
Item 1, Financial Statements.

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When we finance a portfolio of Energy Servers and PPAs through a Portfolio
Financing, we typically enter into a sale, engineering and procurement and
construction agreement ("EPC Agreement") and an O&M Agreement, with the
Portfolio Company. As owner of the portfolio of PPAs and related Energy Servers,
the Portfolio Company receives all customer payments generated under the PPAs,
the benefits of the ITC and accelerated tax depreciation, and any other
available state or local benefits arising out of the ownership or operation of
the Energy Servers, to the extent not already allocated to the customer under
the PPA.
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The sales of our Energy Servers in connection with a Portfolio Financing have
many of the same terms and conditions as a direct sale. Payment of the purchase
price is generally broken down into multiple installments, which may include
payments prior to shipment, upon shipment or delivery of the Energy Server, and
upon acceptance of the Energy Server.

Under an O&M Agreement, a one-year service package is provided with the initial
sale that includes performance warranties and performance guaranties. After the
expiration of the initial standard one-year package, the Portfolio Company has
the option to extend our services under the O&M Agreement on an annual basis at
a price determined at the time of purchase of our Energy Server. After the
standard one-year service package, the Portfolio Company has almost always
exercised the option to renew our services under the O&M Agreement.

As of March 31, 2022, we had incurred no liabilities to investors in Portfolio
Financings due to failure to repair or replace Energy Servers pursuant to these
performance warranties. Our obligation to make payments for underperformance
against the performance guaranties was capped at an aggregate total of
approximately $114.6 million (including payments both for low output and for low
efficiency) and our aggregate remaining potential liability under this cap was
approximately $97.2 million.

Obligations to portfolio companies

Our Portfolio Financings involve many obligations on our part to the Portfolio
Company. These obligations are set forth in the applicable EPC Agreement and O&M
Agreement, and may include some or all of the following obligations:

• design, manufacture and install the energy servers, and sell these energy servers to the Holding company;

•obtain all necessary permits and other government approvals required to install and operate the energy servers, and maintain such permits and approvals for the duration of the EPC agreements and O&M agreements;

•operating and maintaining the Energy Servers in accordance with all applicable laws, permits and regulations;

•meet performance warranties and warranties set forth in applicable operating and maintenance agreements; and

•comply with any other specific requirements contained in PPAs with customers.

In some cases, the EPC Agreement obligates us to repurchase the Energy Server in
the event of certain IP Infringement claims. In others, a repurchase of the
Energy Server is only one optional remedy we have to cure an IP Infringement
claim. The O&M Agreement grants a Portfolio Company the right to obligate us to
repurchase the Energy Servers in the event the Energy Servers fail to comply
with the performance warranties and guaranties in the O&M Agreement and we do
not cure such failure in the applicable time period, or that a PPA terminates as
a result of any failure by us to perform the obligations in the O&M Agreement.
In some of our Portfolio Financings, our obligation to repurchase Energy Servers
under the O&M extends to the entire fleet of Energy Servers sold in the event a
systemic failure that affects more than a specified number of Energy Servers.

In some Portfolio Financings, we have also agreed to pay liquidated damages to
the applicable Portfolio Company in the event of delays in the manufacture and
installation of our Energy Servers, either in the form of a cash payment or a
reduction in the purchase price for the applicable Energy Servers.

Administration of portfolio companies

In each of our Portfolio Financings in which we hold an equity interest in the
PPA Entity, we perform certain administrative services as managing member,
including invoicing the end customers for amounts owed under the PPAs,
administering the cash receipts of the Portfolio Company in accordance with the
requirements of the financing arrangements, interfacing with applicable
regulatory agencies, and other similar obligations. We are compensated for these
services on a fixed dollar-per-kilowatt basis.

For those Portfolio Financings with project debt, the Portfolio Company owned by
each of our PPA Entities (with the exception of one PPA Entity) incurred debt in
order to finance the acquisition of the Energy Servers. The lenders for these
transactions are a combination of banks and/or institutional investors. In each
case, the debt is secured by all of the assets of the applicable Portfolio
Company, such assets being primarily comprised of the Energy Servers and a
collateral assignment of each of the contracts to which the Portfolio Company is
a party, including the O&M Agreement and the PPAs. As further collateral, the
lenders receive a security interest in 100% of the membership interest of the
Portfolio Company. The lenders have no
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reliance on us or one of the other equity investors (the “Equity investors“) in the Holding company for liabilities arising from the portfolio.

We have determined that we are the primary beneficiary in the PPA Entities,
subject to reassessments performed as a result of upgrade transactions.
Accordingly, we consolidate 100% of the assets, liabilities and operating
results of these PPA Entities, including the Energy Servers and lease income, in
our condensed consolidated financial statements. We recognize the Equity
Investors' share of the net assets of the investment entities as noncontrolling
interests in subsidiaries in our condensed consolidated balance sheet. We
recognize the amounts that are contractually payable to these investors in each
period as distributions to noncontrolling interests in our condensed
consolidated statements of redeemable convertible preferred stock, redeemable
noncontrolling interest, stockholders' (deficit) equity and noncontrolling
interest.

Our condensed consolidated statements of cash flows reflect cash received from
the Equity Investors as proceeds from investments by noncontrolling interests in
subsidiaries. Our condensed consolidated statements of cash flows also reflect
cash paid to these investors as distributions paid to noncontrolling interests
in subsidiaries. We reflect any unpaid distributions to these Equity Investors
as distributions payable to noncontrolling interests in subsidiaries on our
condensed consolidated balance sheets. However, the PPA Entities are separate
and distinct legal entities, and Bloom Energy Corporation may not receive cash
or other distributions from the PPA Entities except in certain limited
circumstances and upon the satisfaction of certain conditions, such as
compliance with applicable debt service coverage ratios and the achievement of a
targeted internal rates of return to the Equity Investors, or otherwise.

For more information on our portfolio financings, see Note 11 – Portfolio financings in Part I, Item 1, Financial statements.

Delivery and installation

The transfer of control of our product to our customer based on the delivery and
installations of our products has a significant impact on the timing of the
recognition of product and installation revenue. Many factors can cause a lag
between the time that a customer signs a contract and our recognition of product
revenue. These factors include the number of Energy Servers installed per site,
local permitting and utility requirements, environmental, health and safety
requirements, weather, customer facility construction schedules, customers'
operational considerations and the timing of financing. Many of these factors
are unpredictable and their resolution is often outside of our or our customers'
control. Customers may also ask us to delay an installation for reasons
unrelated to the foregoing, such as, for sales contracts, delays in their
obtaining financing. Further, due to unexpected delays, deployments may require
unanticipated expenses to expedite delivery of materials or labor to ensure the
installation meets the timing objectives. These unexpected delays and expenses
can be exacerbated in periods in which we deliver and install a larger number of
smaller projects. In addition, if even relatively short delays occur, there may
be a significant shortfall between the revenue we expect to generate in a
particular period and the revenue that we are able to recognize.

International distribution partners

India. In India, sales activities are currently conducted by Bloom Energy
(India) Pvt. Ltd., our wholly-owned subsidiary; however, we continue to evaluate
the Indian market to determine whether the use of channel partners would be a
beneficial go-to-market strategy to grow our India market sales.

Japan. In Japan, sales were previously conducted pursuant to a Japanese joint
venture established between us and subsidiaries of SoftBank Corp., called Bloom
Energy Japan Limited ("Bloom Energy Japan"). Under this arrangement, we sold
Energy Servers to Bloom Energy Japan and we recognized revenue once the Energy
Servers left the port in the United States. Bloom Energy Japan then entered into
the contract with the end customer and performed all installation work as well
as some of the operations and maintenance work. As of July 1, 2021, we acquired
Softbank Corp.'s interest in Bloom Energy Japan for a cash payment and are now
the sole owner of Bloom Energy Japan.

The Republic of Korea. In 2018, Bloom Energy Japan consummated a sale of Energy
Servers in the Republic of Korea to Korea South-East Power Company. Following
this sale, we entered into a Preferred Distributor Agreement in November 2018
with SK ecoplant for the marketing and sale of Bloom Energy Servers for the
stationary utility and commercial and industrial South Korean power market.

As part of our expanded strategic partnership with SK ecoplant, the parties executed the PDA Restatement in October 2021, which incorporates the previously amended terms and establishes: (i) SK ecoplant’s purchase commitments for the next three years (on a buy or pay basis) for Bloom Energy Servers; (ii) shift procedures; (iii) higher pricing for the product and

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services; (iv) termination procedures for material breaches; and (v) procedures
if there are material changes to the Republic of Korea Hydrogen Portfolio
Standard. For additional details about the transaction with SK ecoplant, please
see Note 18 - SK ecoplant Strategic Investment in Part I, Item 1, Financial
Statements.

Under the terms of the PDA Restatement, we (or our subsidiary) contract directly
with the customer to provide operations and maintenance services for the Energy
Servers. We have established a subsidiary in the Republic of Korea, Bloom Energy
Korea, LLC, to which we subcontract such operations and maintenance services.
The terms of the operations and maintenance are negotiated on a case-by-case
basis with each customer, but are generally expected to provide the customer
with the option to receive services for at least 10 years, and for up to the
life of the Energy Servers.

SK ecoplant Joint Venture Agreement. In September 2019, we entered into a joint
venture agreement with SK ecoplant to establish a light-assembly facility in the
Republic of Korea for sales of certain portions of our Energy Server for the
stationary utility and commercial and industrial market in the Republic of
Korea. The joint venture is majority controlled and managed by us, with the
facility, which became operational in July 2020. Other than a nominal initial
capital contribution by Bloom Energy, the joint venture will be funded by SK
ecoplant. SK ecoplant, who currently acts as a distributor for our Energy
Servers for the stationary utility and commercial and industrial market in the
Republic of Korea, is our primary customer for the products assembled by the
joint venture. In October 2021, as part of our expanded strategic partnership
with SK ecoplant, the parties agreed to amend the JVA, which increases the scope
of the assembly work done in the joint venture facility.

Distributed Generation Community Programs

In July 2015, the state of New York introduced its Community Distributed
Generation ("CDG") program, which extends New York's net metering program in
order to allow utility customers to receive net metering credits for electricity
generated by distributed generation assets located on the utility's grid but not
physically connected to the customer's facility. This program allows for the use
of multiple generation technologies, including fuel cells. Since then other
states have instituted similar programs and we expect that other states may do
so as well in the future. In June 2020, the New York Public Service Commission
issued an Order that limited the CDG compensation structure for "high capacity
factor resources," including fuel cells, in a way that will make the economics
for these types of projects more challenging in the future. However, projects
already under contract were grandfathered into the program under the previous
compensation structure.

We have entered into sales, installation, operations and maintenance agreements
with three developers for the deployment of our Energy Servers pursuant to the
New York CDG program for a total of 441 systems. As of March 31, 2022, we have
recognized revenue associated with 271 systems. We continue to believe that
these types of subscriber-based programs could be a source of future revenue and
will continue to look to generate sales through these programs in the future.


                                       49
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Key Operating Metrics – Three Months Ended Comparison March 31, 2022 and 2021

For a description of the key operating metrics we use to evaluate business
activity, to measure performance, to develop financial forecasts and to make
strategic decisions, see Part II, Item 7 of our Annual Report on Form 10-K for
the year ended December 31, 2021 under the subheading "Key Operation Metrics".

Purchase options

100% of acceptances in three months ended March 31, 2022 were attributable to
the direct pay option. The portion of revenue in the three months ended March
31, 2022 attributable to each payment option was as follows: direct purchase
87%, traditional lease 1%, managed services 7% and Bloom Electrons 5%. The
portion of acceptances in the three months ended March 31, 2021 attributable to
each payment option was as follows: direct purchase 98% and managed services 2%.
The portion of revenue in the three months ended March 31, 2021 attributable to
each payment option was as follows: direct purchase 87%, traditional lease 1%,
managed services 6% and Bloom Electrons 6%.

Product Acceptances

                                                    Three Months Ended               Change
                                                        March 31,
                                                  2022              2021       Amount         %

        Product accepted during the period
        (in 100 kilowatt systems)                375               359             16       4.5  %

Product accepted increased approximately 16 systems, or 4.5%, for the three months ended March 31, 2022 compared to the three months ended March 31, 2021. Acceptance volume increased as demand grew for the Bloom energy waiters.

Megawatts accepted, net, increased approximately 179 megawatts, or 29.6%, for
the three months ended March 31, 2022 compared to the three months ended March
31, 2021. Acceptances achieved from March 31, 2021 to March 31, 2022 were added
to our installed base and therefore, increased our megawatts accepted, net, from
604 megawatts to 783 megawatts.

Costs related to our products

Total product related costs for the three Months Ended March 31, 2022 and 2021
was as follows:

                                                                         Three Months Ended                             Change
                                                                             March 31,
                                                                      2022                 2021                Amount                %

Product costs of product accepted in the period                        $2,561/kW           $2,284/kW               $277/kW          12.1  %

Period Costs of Manufacturing Expenses Not Included in Product Costs (000s)

                        $    9,687             $    5,428              $4,259               78.5  %
Installation costs on product accepted in the period                     $341/kW             $129/kW               $212/kW         164.3  %


Product costs of product accepted increased approximately $277 per kilowatt, or
12.1%, for the three months ended March 31, 2022 compared to the three months
ended March 31, 2021. This increase in cost is primarily driven by some of the
cost pressures seen in the external environment with commodity pricing and
logistics increasing significantly from one year ago. Our ongoing cost reduction
efforts to reduce material costs, labor and overhead through improved automation
of our manufacturing facilities, our better facility utilization and our ongoing
material cost reduction programs with our vendors continued but were more than
offset by the temporary increases that we experienced.

Period costs of manufacturing related expenses increased approximately $4.3
million, or 78.5%, for the three months ended March 31, 2022 compared to the
three months ended March 31, 2021. Our period costs of manufacturing related
expenses increased primarily as a result of costs incurred to support capacity
expansion efforts which will be brought online in future periods.
                                       50
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Installation costs on product accepted increased approximately $212 per
kilowatt, or 164.3%, for the three months ended March 31, 2022 as compared to
the three months ended March 31, 2021. This increase in cost is primarily driven
by an increase in the mix of sites requiring Bloom installation. Each customer
site is different and installation costs can vary due to a number of factors,
including site complexity, size, location of gas, etc. As such, installation on
a per kilowatt basis can vary significantly from period-to-period. In addition,
some customers do their own installation for which we have little to no
installation cost.

Operating results

A discussion regarding the comparison of our financial condition and results of
operations for the three months ended March 31, 2022 and 2021 is presented
below.

Revenue

                       Three Months Ended
                           March 31,                     Change
                      2022           2021          Amount          %
                                  (dollars in thousands)
Product            $ 133,547      $ 137,930      $ (4,383)       (3.2) %
Installation          13,553          2,659        10,894       409.7  %
Service               35,239         36,417        (1,178)       (3.2) %
Electricity           18,700         17,001         1,699        10.0  %
Total revenue      $ 201,039      $ 194,007      $  7,032         3.6  %


Total Revenue

Total revenue increased by $7.0 million, or 3.6%, for the three months ended
March 31, 2022 as compared to the prior year period. This increase was primarily
driven by a $10.9 million increase in installation revenue and a $1.7 million
increase in electricity revenue partially offset by a $4.4 million decrease in
product revenue and a $1.2 million decrease in service revenue.

Product revenue

Product revenue decreased by $4.4 million, or 3.2%, for the three months ended
March 31, 2022 as compared to the prior year period. The product revenue
decrease was driven primarily by price reductions to expand our addressable
market, partially offset by a 4.5% increase in product acceptances resulting
from expansion in existing markets.

Installation revenue

Installation revenue increased by $10.9 million, or 409.7%, for the three months
ended March 31, 2022 as compared to the prior year period. This increase in
installation revenue was driven by an increase in the mix of product acceptances
requiring installations by Bloom.

Service revenue

Service revenue decreased by $1.2 million, or 3.2%, for the three months ended
March 31, 2022 as compared to the prior year period. This decrease was primarily
due to delays in execution of long-term service agreements and the impact of
product performance guarantees, partially offset by an increase in new
acceptances and renewal of existing service contracts. We expect our service
revenue growth as we continue to expand our install base.

Electricity revenue

Electricity revenue increased by $1.7 million, or 10.0%, for the three months
ended March 31, 2022 as compared to the prior year period due to the increase in
installed units as a result of the increase in Managed Services transactions
recorded in the second half of fiscal year 2021.
                                       51
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Cost of Revenue

                               Three Months Ended
                                   March 31,                     Change
                              2022           2021         Amount           %
                                          (dollars in thousands)
Product                    $ 105,742      $  87,294      $ 18,448        21.1  %
Installation                  12,773          4,625         8,148       176.2  %
Service                       41,826         36,118         5,708        15.8  %
Electricity                   12,761         11,319         1,442        12.7  %
Total cost of revenue      $ 173,102      $ 139,356      $ 33,746        24.2  %


Total Cost of Revenue

Total cost of revenue increased by $33.7 million, or 24.2%, for the three months
ended March 31, 2022 as compared to the prior year period primarily driven by a
$18.4 million increase in cost of product revenue, $8.1 million increase in
costs of installation revenue, $5.7 million increase in cost of service revenue,
increased freight charges and other supply chain-related pricing pressures and
costs incurred to support capacity expansion efforts which will be brought
online in future periods. This increase was partially offset by our ongoing cost
reduction efforts to reduce material costs in conjunction with our suppliers and
our reduction in labor and overhead costs through increased volume, improved
processes and automation at our manufacturing facilities.

Product revenue cost

Cost of product revenue increased by $18.4 million, or 21.1%, for the three
months ended March 31, 2022 as compared to the prior year period. The cost of
product revenue increase was driven primarily by a 4.5% increase in product
acceptances, increased freight charges and other supply chain-related pricing
pressures and costs incurred in support of upcoming capacity expansion efforts
which will be brought online in future periods. This increase was partially
offset by our ongoing cost reduction efforts to reduce material costs in
conjunction with our suppliers and our reduction in labor and overhead costs
through increased volume, improved processes and automation at our manufacturing
facilities.

Cost of Installation Revenue

Cost of installation revenue increased by $8.1 million, or 176.2%, for the three
months ended March 31, 2022 as compared to the prior year period. This increase
was driven by an increase in the mix of product acceptances requiring Bloom
installations.

Service revenue cost

Cost of service revenue increased by $5.7 million, or 15.8%, for the three
months ended March 31, 2022 as compared to the prior year period. This increase
was primarily due to the 4.5% increase in acceptances plus the maintenance
contract renewals associated with the increase in our fleet of Energy Servers,
partially offset by the significant improvements in power module life, cost
reductions and our actions to proactively manage fleet optimizations.

Electricity revenue cost

Cost of electricity revenue increased by $1.4 million, or 12.7%, for the three
months ended March 31, 2022 as compared to the prior year period, primarily due
to the increase in installed units as a result of the increase in Managed
Services recorded in the second half of fiscal year 2021.
                                       52
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Gross profit and gross margin

                                             Three Months Ended
                                                 March 31,
                                             2022                2021         Change
                                                  (dollars in thousands)
            Gross profit:
            Product                 $               27,805    $   50,636    $ (22,831)
            Installation                               780       (1,966)        2,746
            Service                                (6,587)           299       (6,886)
            Electricity                              5,939         5,682          257
            Total gross profit      $               27,937    $   54,651    $ (26,714)

            Gross margin:
            Product                                  21  %        37   %
            Installation                              6  %       (74)  %
            Service                                 (19) %         1   %
            Electricity                              32  %        33   %
            Total gross margin                       14  %        28   %

Total gross profit

Gross profit decreased by $26.7 million in the three months ended March 31, 2022
as compared to the prior year period primarily driven by the $22.8 million
decrease in product gross profit resulting from price reductions to expand our
addressable market, increased freight charges and other supply chain-related
pricing pressures and costs incurred to support capacity expansion efforts which
will be brought online in future periods. This decrease was partially offset by
the 4.5% increase in acceptances and our ongoing cost reduction efforts to
reduce material costs in conjunction with our suppliers and our reduction in
labor and overhead costs through increased volume, improved processes and
automation at our manufacturing facilities.

Gross profit of product

Product gross profit decreased by $22.8 million in the three months ended March
31, 2022 as compared to the prior year period. The decrease is primarily driven
by price reductions to expand our addressable market, increased freight charges
and other supply chain-related pricing pressures and costs incurred to support
capacity expansion efforts which will be brought online in future periods. This
decrease was partially offset by a 4.5% increase in product acceptances and our
ongoing cost reduction efforts to reduce material costs in conjunction with our
suppliers and our reduction in labor and overhead costs through increased
volume, improved processes and automation at our manufacturing facilities.

Gross installation profit (loss)

Installation gross profit improved by $2.7 million in the three months ended
March 31, 2022 as compared to the prior year period driven by the site mix, as
more of the acceptances required installation in the current time period, and
other site related factors such as site complexity, size, local ordinance
requirements and location of the utility interconnect.

Gross service profit (loss)

Service gross loss worsened by $6.9 million in the three months ended March 31,
2022 as compared to the prior year period. This was primarily due to unfavorable
timing of long-term service agreement and impact of product performance
guarantees offset by improvements in power module life, cost reductions and our
actions to proactively manage fleet optimizations.

Gross electricity profit

Electricity gross profit increased by $0.3 million in the three months ended
March 31, 2022 as compared to the prior year period mainly due to the increase
in Managed Services transactions recorded in the second half of fiscal year
2021.
                                       53
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Operating Expenses

                                    Three Months Ended
                                        March 31,                     Change
                                    2022           2021        Amount           %
                                               (dollars in thousands)
Research and development        $   34,526      $ 23,295      $ 11,231        48.2  %
Sales and marketing                 21,334        19,952         1,382         6.9  %
General and administrative          37,736        25,801        11,935        46.3  %
Total operating expenses        $   93,596      $ 69,048      $ 24,548        35.6  %


Total Operating Expenses

Total operating expenses increased by $24.5 million in the three months ended
March 31, 2022 as compared to the prior year period. This increase was primarily
attributable to our investment in business development and front-end sales both
in the United States and internationally, investment in brand and product
management, and our continued investment in our R&D capabilities to support our
technology roadmap.

Research and Development

Research and development expenses increased by $11.2 million in the three months
ended March 31, 2022 as compared to the prior year period. This increase was
primarily driven by increases in employee compensation and benefits to expand
our employee base in order to support our technology roadmap, including our
hydrogen, electrolyzer, carbon capture, marine and biogas solutions.

Sales and Marketing

Sales and marketing expenses increased by $1.4 million in the three months ended
March 31, 2022 as compared to the prior year period. This increase was primarily
driven by increases in employee compensation and benefits to expand our U.S. and
international sales force, as well as increased investment in brand and product
management, partially offset by a decrease in outside services.

General and administrative

General and administrative expenses increased by $11.9 million in the three
months ended March 31, 2022 as compared to the prior year period. This increase
was primarily driven by increases in employee compensation and benefits and
outside services.

Stock-Based Compensation

                                        Three Months Ended
                                            March 31,                     Change
                                        2022           2021        Amount          %
                                                   (dollars in thousands)
Cost of revenue                     $    3,860      $  2,999      $   861        28.7  %
Research and development                 7,082         4,908        2,174        44.3  %
Sales and marketing                      4,775         4,085          690        16.9  %
General and administrative              10,591         5,218        5,373       103.0  %
Total stock-based compensation      $   26,308      $ 17,210      $ 9,098        52.9  %



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Total stock-based compensation for the three months ended March 31, 2022
compared to the prior year period increased by $9.1 million primarily driven by
the efforts to expand our employee base across all of the Company's functions.

Other Income and Expense
                                                            Three Months Ended
                                                                March 31,
                                                           2022           2021          Change
                                                                     (in thousands)
Interest income                                         $      59      $      74      $    (15)
Interest expense                                          (14,087)       (14,731)          644

Other income (expense), net                                (3,027)           (85)       (2,942)

Gain (loss) on revaluation of embedded derivatives            531           (518)        1,049
Total                                                   $ (16,524)     $ (15,260)     $ (1,264)


Interest Income

Interest income is derived from investment income on our cash balances primarily from money market funds.

Interest income for the three months ended March 31, 2022 compared to the prior year period was essentially unchanged.

Interest charges

Interest expense is from our debt held by third parties. Interest expense for
the three months ended March 31, 2022 as compared to the prior year period
decreased by $0.6 million. This decrease was primarily due to lower interest
expense as a result of refinancing our notes at a lower interest rate, and the
elimination of the amortization of the debt discount associated with notes that
have been converted to equity.

Other income (expenses), net

Other income (expense), net, is primarily derived from investments in joint
ventures, the impact of foreign currency translation, and adjustments to fair
value for derivatives. Other income (expense), net for the three months ended
March 31, 2022 as compared to the prior year period was less by $2.9 million due
primarily as a result of the revaluation of the Option to purchase Class A
common stock.

Gain (loss) on revaluation of embedded derivatives

Gain (loss) on revaluation of embedded derivatives is derived from the change in
fair value of our sales contracts of embedded EPP derivatives valued using
historical grid prices and available forecasts of future electricity prices to
estimate future electricity prices.

Gain (loss) on revaluation of embedded derivatives for the three months ended
March 31, 2022 as compared to the prior year period improved by $1.0 million due
to the change in fair value of our embedded EPP derivatives in our sales
contracts.

Provision for income taxes

                                Three Months Ended
                                     March 31,                      Change
                                  2022             2021       Amount         %
                                           (dollars in thousands)
Income tax provision      $      564              $ 124      $  440       354.8  %

The provision for income taxes primarily includes income taxes in the foreign jurisdictions where we operate. We maintain a full valuation allowance for domestic deferred tax assets, including net operating loss and certain tax credit carryforwards.

                                       55
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Increase in provision for income taxes for the three months ended March 31, 2022 compared to the prior year period was primarily due to fluctuations in effective tax rates on income earned by international entities.

Net Loss Attributable to Noncontrolling Interests and Redeemable Noncontrolling
Interests

                                                                       Three Months Ended
                                                                            March 31,                            Change
                                                                     2022               2021             Amount             %
                                                                           

(in thousands of dollars) Net loss attributable to non-controlling interests and refundable non-controlling interests

                              $   (4,388)         $ (4,892)         $   504             10.3  %


Net loss attributable to noncontrolling interests is the result of allocating
profits and losses to noncontrolling interests under the hypothetical
liquidation at book value ("HLBV") method. HLBV is a balance sheet-oriented
approach for applying the equity method of accounting when there is a complex
structure, such as the flip structure of the PPA Entities.

Net loss attributable to noncontrolling interests and redeemable noncontrolling
interests for the three months ended March 31, 2022 as compared to the prior
year period changed by $0.5 million due to decreased losses in our PPA Entities,
which are allocated to our noncontrolling interests.


Cash and capital resources

As of March 31, 2022, we had cash and cash equivalents of $286.0 million. Our
cash and cash equivalents consist of highly liquid investments with maturities
of three months or less, including money market funds. We maintain these
balances with high credit quality counterparties, continually monitor the amount
of credit exposure to any one issuer and diversify our investments in order to
minimize our credit risk.

As of March 31, 2022, we had $292.4 million of total outstanding recourse debt,
$230.4 million of non-recourse debt and $18.4 million of other long-term
liabilities. For a complete description of our outstanding debt, please see Note
7 -   Outstanding Loans and Security Agreements   in Part I, Item 1, Financial
Statements.

The combination of our existing cash and cash equivalents is expected to be
sufficient to meet our anticipated cash flow needs for the next 12 months and
thereafter for the foreseeable future. If these sources of cash are insufficient
to satisfy our near-term or future cash needs, we may require additional capital
from equity or debt financings to fund our operations, in particular, our
manufacturing capacity, product development and market expansion requirements,
to timely respond to competitive market pressures or strategic opportunities, or
otherwise. We may, from time to time, engage in a variety of financing
transactions for such purposes, including factoring our accounts receivable. We
may not be able to secure timely additional financing on favorable terms, or at
all. The terms of any additional financings may place limits on our financial
and operating flexibility. If we raise additional funds through further
issuances of equity or equity-linked securities, our existing stockholders could
suffer dilution in their percentage ownership of us, and any new securities we
issue could have rights, preferences and privileges senior to those of holders
of our common stock.

Our future capital requirements will depend on many factors, including our rate
of revenue growth, the timing and extent of spending on research and development
efforts and other business initiatives, the rate of growth in the volume of
system builds and the need for additional manufacturing space, the expansion of
sales and marketing activities both in domestic and international markets,
market acceptance of our products, our ability to secure financing for customer
use of our Energy Servers, the timing of installations, and overall economic
conditions including the impact of COVID-19 on our ongoing and future
operations. In order to support and achieve our future growth plans, we may need
or seek advantageously to obtain additional funding through an equity or debt
financing. Failure to obtain this financing or financing in future quarters will
affect our results of operations, including revenue and cash flows.
                                       56
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As of March 31, 2022, the current portion of our total debt is $30.3 million, of
which $17.9 million is outstanding non-recourse debt. We expect a certain
portion of the non-recourse debt will be refinanced by the applicable PPA Entity
prior to maturity.

The following is a summary of our consolidated sources and uses of cash, cash equivalents and restricted cash (in thousands):

                                         Three Months Ended
                                             March 31,
                                        2022           2021

Net cash provided by (used in):
Operating activities                 $ (92,443)     $ (89,035)
Investing activities                   (18,510)       (12,932)
Financing activities                   (10,112)        51,150


Net cash provided by (used in) our PPA Entities, which are incorporated into the
condensed consolidated statements of cash flows, was as follows (in thousands):

                                                                    Three Months Ended
                                                                         March 31,
                                                                     2022            2021

  PPA Entities ¹
  Net cash provided by PPA operating activities                $    7,658   

$5,976

Net cash provided by (used in) PPA financing activities (8,114)

(9,506)


1 The PPA Entities' operating and financing cash flows are a subset of our
consolidated cash flows and represent the stand-alone cash flows prepared in
accordance with U.S. GAAP. Operating activities consist principally of cash used
to run the operations of the PPA Entities, the purchase of Energy Servers from
us and principal reductions in loan balances. Financing activities consist
primarily of changes in debt carried by our PPAs, and payments from and
distributions to noncontrolling partnership interests. We believe this
presentation of net cash provided by (used in) PPA activities is useful to
provide the reader with the impact to consolidated cash flows of the PPA
Entities in which we have only a minority interest.

Operational activities

Our operating activities have consisted of net loss adjusted for certain
non-cash items plus changes in our operating assets and liabilities or working
capital. The increase in cash used in operating activities during the three
months ended March 31, 2022 as compared to the prior year period was primarily
the result of an increase in our net loss and an increase in our net working
capital of $56.0 million in the three months ended March 31, 2022 due to the
timing of revenue transactions and corresponding collections and the increase in
inventory levels to support future demand.

Investing activities

Our investing activities have consisted of capital expenditures that include
investment to increase our production capacity. We expect to continue such
activities as our business grows. Cash used in investing activities of $18.5
million during the three months ended March 31, 2022 was primarily the result of
expenditures on tenant improvements for a newly leased engineering building in
Fremont, California. We expect to continue to make capital expenditures over the
next few quarters to prepare our new manufacturing facility in Fremont,
California for production, which includes the purchase of new equipment and
other tenant improvements. We intend to fund these capital expenditures from
cash on hand as well as cash flow to be generated from operations. We may also
evaluate and arrange equipment lease financing to fund these capital
expenditures.
                                       57
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Fundraising activities

Historically, our financing activities have consisted of borrowings and
repayments of debt including to related parties, proceeds and repayments of
financing obligations, distributions paid to noncontrolling interests and
redeemable noncontrolling interests, and the proceeds from the issuance of our
common stock. Net cash used in financing activities during the three months
ended March 31, 2022 was $(10.1) million, an increase of $61.3 million compared
to the prior year period, primarily due to the proceeds in 2022 from stock
option exercises and the sale of shares under our 2018 Employee Stock Purchase
Plan.

Off-balance sheet arrangements

We include in our condensed consolidated financial statements all assets and
liabilities and results of operations of our PPA Entities that we have entered
into and over which we have substantial control. For additional information, see
Note 13 -   Portfolio Financings   in Part II, Item 8, Financial Statements and
Supplementary Data.

We have not entered into any other transactions that have generated relationships with non-consolidated entities or financial partnerships or special purpose entities. Consequently, from March 31, 2022 and 2021, we had no off-balance sheet arrangements.

Significant Accounting Policies and Estimates

The condensed consolidated financial statements have been prepared in accordance
with generally accepted accounting principles as applied in the United States
("U.S. GAAP") The preparation of the condensed consolidated financial statements
requires us to make estimates and assumptions that affect the reported amounts
of assets, liabilities, revenues, costs and expenses and related disclosures.
Our discussion and analysis of our financial results under Results of Operations
above are based on our audited results of operations, which we have prepared in
accordance with U.S. GAAP. In preparing these condensed consolidated financial
statements, we make assumptions, judgments and estimates that can affect the
reported amounts of assets, liabilities, revenues and expenses, and net income.
On an ongoing basis, we base our estimates on historical experience, as
appropriate, and on various other assumptions that we believe to be reasonable
under the circumstances. Changes in the accounting estimates are representative
of estimation uncertainty, and are reasonably likely to occur from period to
period. Accordingly, actual results could differ significantly from the
estimates made by our management. We evaluate our estimates and assumptions on
an ongoing basis. To the extent that there are material differences between
these estimates and actual results, our future financial statement presentation,
financial condition, results of operations and cash flows will be affected. We
believe that the following critical accounting policies involve a greater degree
of judgment and complexity than our other accounting policies. Accordingly,
these are the policies we believe are the most critical to understanding and
evaluating the consolidated financial condition and results of operations.

The accounting policies that most frequently require us to make assumptions,
judgments and estimates, and therefore are critical to understanding our results
of operations, include:

• Discussion on the first year of changes in financial position and results of operations;

•Revenue Recognition;

• Leases: incremental borrowing rate;

•Assessment of escalator protection plan (“PPE”) agreements;

•Valuation of certain financial instruments and customer financing receivables;

• Valuation of the assets and liabilities of the SK eco-factory Strategic investment;

• Incremental Borrowing Rate (“IBR”) by rental class;

•Stock-based compensation;

•Income taxes;

•Principles of Consolidation; and

•Allocation of profits and losses of consolidated entities to non-controlling interests and refundable non-controlling interests.

                                       58

————————————————– ——————————

Management's Discussion and Analysis of Financial Condition and Results of
Operations contained in Part II, Item 7 of our Annual Report on Form 10-K for
our fiscal year ended December 31, 2021 provides a more complete discussion of
our critical accounting policies and estimates. During the three months ended
March 31, 2022, there were no significant changes to our critical accounting
policies and estimates.

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