Plug Power Reports Progress Toward 2005 Public Corporate Milestones and Provides 3rd Q Financial Update

LATHAM, N.Y., Oct. 26  /PRNewswire-FirstCall/ -- Plug Power Inc. (NASDAQ: PLUG), a leading provider of clean, reliable on-site energy, today reported status against 2005 public corporate milestones and financial results for the quarter ended Sept. 30, 2005.  The Company remains on track to achieve its 2005 milestones.

"We are pleased with our progress during the third quarter and year to date and remain committed to achieving the 2005 milestones that we established for the Company earlier this year," said Roger Saillant, Plug Power's President and CEO.

  Current status against 2005 public corporate milestones:

  Triple the number of GenCore(R) orders received to at least 300:

  * Received 136 GenCore orders during the quarter bringing the year-to-date
    total GenCore orders received to 192.  The majority of the orders
    received this year were from end users in the targeted
    telecommunications and utility market segments.
  * Secured three new distribution partners for GenCore: Connect
    Telecommunications Solutions Inc., Zebotec GmbH and SmartLink Ltd. will
    market, distribute and sell Plug Power's backup fuel cell system to
    telecommunication providers throughout Canada; Germany, Austria and
    Switzerland; and Kuwait, respectively.  More than 75 percent of the
    Company's year-to-date GenCore orders have come via Plug Power's channel
    partners, which currently provide access to customers across five
    continents.
  * Lobbied for a 30 percent fuel cell tax credit of up to $1,000 per
    kilowatt that was included in the Energy Policy Act of 2005 and signed
    into law by President Bush in August.  Available in January 2006, this
    tax credit can be used in residential or commercial applications and
    specifically includes telecommunications carriers among the eligible end
    users.

  Begin field-testing the next-generation continuous-run product:


Completed commissioning and began testing the first 10 prototype next- generation GenSys(R) fuel cell systems at Robins Air Force Base in Georgia. This one-year field trial will be used to enhance product performance and improve system reliability throughout the duration of the program.

Reduce GenCore direct material cost by 25 percent from 2004 levels:

Remained on track to reduce GenCore direct material cost by 25 percent from 2004 levels.  Year-to-date GenCore direct material cost reduction is approximately 16 percent.

Secure a contract with Honda for Phase III of the Home Energy Station (HES) and proceed with development activities:

Completed the HES Phase III and fundamental research and development contracts with Honda R&D during the first quarter of this year.  Plug Power continues to execute and remains on track against its statement of work with Honda and is preparing to showcase the third generation design of the HES.

Financial results:

During the third quarter, Plug Power improved the Company's capitalization and strengthened the balance sheet by adding approximately $70.6 million net cash through the sale of shares of common stock offered under the Company's existing shelf registration statement filed with the Securities and Exchange Commission. As of Sept. 30, 2005 the Company had $110.9 million in cash, cash equivalents and marketable securities and $105.7 million in working capital.

Net cash used in operating activities for the third quarter ended Sept. 30, 2005 was $10.7 million, bringing year-to-date cash used in operating activities to $30.1 million compared to $25.8 million in 2004 (see attached financial highlights).  In 2005, the Company has increased its direct sales force focused on accelerating the commercialization of its GenCore product and has increased product development spending related to its next-generation GenSys fuel cell system.  The Company continues to expect that net cash used in operating activities will be less than $40.0 million in 2005.

Total revenue for the third quarter ended Sept. 30, 2005 was $3.9 million compared to $4.6 million for the third quarter in 2004.  Year-to-date total revenue was $10.8 million, compared to $11.6 million in the prior year. The decrease in revenue is primarily the result of the Company's focus on selling GenCore, its lower-priced commercial product, and phasing out sales of its older generation test and demonstration systems.  The Company continues to defer product and service revenue, a component of total revenue, at the time of sale and to amortize that revenue over the period of the underlying service and other contractual obligations.  Deferred revenue was $3.4 million at Sept. 30, 2005 compared to $6.5 million at Sept. 30, 2004.

Net loss for the quarter ended Sept. 30, 2005 was $11.9 million, or $0.15 per share, compared to $11.7 million, or $0.16 per share, for the same period in 2004. Year-to-date net loss was $35.3 million, or $0.47 per share, compared to $34.9 million or $0.48 per share for the same period last year.

Plug Power has scheduled a conference call today at 10:00 AM (EDT) to review its third quarter 2005 results.  Interested parties are invited to participate.  To listen to the conference call, please call 617-614-3923 and enter the passcode PLUG (7584). The live webcast can be accessed by logging onto http://www.plugpower.com/.  A playback of the call will be available on the Web site for a period following the call.  See the attached financial highlights for the third quarter 2005.

About Plug Power

Plug Power Inc. is an established leader in the deployment of clean, reliable, on-site energy products.  More than 500 Plug Power fuel cell systems have been delivered to customers worldwide in commercial, public sector, telecommunications, utility and uninterruptible power supply markets.  For more information about how to join Plug Power's energy revolution as an investor, customer, supplier or strategic partner, please visit http://www.plugpower.com/.

This press release may contain statements, which are not historical facts and are considered forward-looking within the meaning of the Private Securities Litigation Reform Act of 1995. These forward-looking statements contain projections of Plug Power's future results of operations, Plug Power's product development expectations or of Plug Power's 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," "estimate," "expect," "intend," "may," "should," "will" and "would" or similar words. You should not rely on forward-looking statements because Plug Power's actual results may differ materially from those indicated by these forward- looking statements as a result of a number of important factors. These factors include, but are not limited to, Plug Power's ability to develop commercially viable on-site energy products; the cost and timing of developing Plug Power's on-site energy products; market acceptance of Plug Power's on-site energy products; Plug Power's reliance on its relationship with certain affiliates of General Electric (GEFCS); Plug Power's ability to perform on its multi- generation product plan in a manner satisfactory to GEFCS; Plug Power's ability to manufacture on-site energy products on a large-scale commercial basis; competitive factors, such as price competition and competition from other traditional and alternative energy companies; the cost and availability of components and parts for Plug Power's on-site energy products; the ability to raise and provide the necessary capital to develop, manufacture and market Plug Power's on-site energy products; Plug Power's ability to establish relationships with third parties with respect to product development, manufacturing, distribution and servicing and the supply of key product components; Plug Power's ability to protect its intellectual property; Plug Power's ability to lower the cost of its on-site energy products and demonstrate their reliability; the cost of complying with current and future governmental regulations; the impact of deregulation and restructuring of the electric utility industry on demand for Plug Power's on-site energy products; fluctuations in the trading price and volume of Plug Power's common stock and other risks and uncertainties discussed under the heading "Factors Affecting Future Results" in Plug Power's annual report on Form 10-K for the fiscal year ended December 31, 2004, dated March 15, 2005, and filed with the Securities Exchange Commission on March 15, 2005, and the reports Plug Power files from time to time with the Securities and Exchange Commission. Plug Power does not intend to and undertakes no duty to update the information contained in this press release.

  Plug Power Inc.
  Financial Highlights

  Balance Sheet Data:                         September 30,     December 31,
  Assets                                          2005             2004
  Current assets:
   Cash and cash equivalents                  $  51,753,381    $  18,976,767
   Restricted cash                                  365,000          365,000
   Marketable securities                         54,820,787       47,872,662
   Accounts receivable                            1,697,973        2,989,481
   Inventory                                      4,616,846        3,527,140
   Other current assets                           1,610,183        1,230,713
     Total current assets                       114,864,170       74,961,763

  Restricted cash                                 3,965,274        3,965,274
  Property, plant and equipment, net             21,002,300       21,829,254
  Intangible asset                                       --          687,500
  Investment in affiliates                        4,438,355        5,785,358
  Goodwill                                       10,388,980       10,388,980
  Other assets                                      307,410          379,361
     Total assets                             $ 154,966,489    $ 117,997,490

  Liabilities and Stockholders' Equity
  Current liabilities:
   Accounts payable                           $   2,258,677    $   2,339,143
   Accrued expenses and other
    current liabilities                           3,488,077        2,874,554
   Deferred revenue                               3,408,073        5,675,227
     Total current liabilities                    9,154,827       10,888,924

  Long-term debt and other
   liabilities                                    5,038,894        4,995,740
     Total liabilities                           14,193,721       15,884,664

  Stockholders' equity                          140,772,768      102,112,826
     Total liabilities and
      stockholders' equity                    $ 154,966,489    $ 117,997,490


  Statements of Operations                     Three Months Ended
   Data:                                          September 30,
                                         2005                     2004
  Revenue
   Product and service
    revenue                        $   1,309,718            $   1,335,018
   Research and development
    contract revenue                   2,570,957                3,293,805
     Total revenue                     3,880,675                4,628,823

  Cost of revenue and expenses
   Cost of product and service
    revenue                              796,057                1,239,102
   Cost of research and
    development contract
    revenue                            3,364,876                4,260,544


   Research and development expense:
    Noncash stock-based
     compensation                        386,775                  663,748
    Other research and
     development                       9,121,133                7,932,783

   General and administrative expense:
    Noncash stock-based
     compensation                        274,739                  304,048
    Other general and
     administrative                    1,980,584                1,695,064
    Operating loss                   (12,043,489)             (11,466,466)

  Interest income, net                   623,925                  234,289
  Loss before equity in
   losses of affiliates              (11,419,564)             (11,232,177)

  Equity in losses of
   affiliates                           (448,273)                (451,142)
  Net loss                         $ (11,867,837)           $ (11,683,319)
  Loss per share -
   basic and diluted               $       (0.15)           $       (0.16)

  Weighted average number
   of shares outstanding              80,193,623               73,173,913


  Statements of Operations                     Nine Months Ended
   Data:                                          September 30,
                                         2005                     2004
  Revenue
   Product and service
    revenue                         $  3,839,757             $  4,194,145
   Research and development
    contract revenue                   6,918,289                7,405,297
     Total revenue                    10,758,046               11,599,442

  Cost of revenue and expenses
   Cost of product and service
    revenue                            2,479,038                3,887,000
   Cost of research and
    development contract
    revenue                            9,534,668                9,915,450

   Research and development expense:
    Noncash stock-based
     compensation                      1,136,129                1,659,069
    Other research and
     development                      25,934,317               24,528,128
   General and administrative expense:
    Noncash stock-based
     compensation                        878,688                1,035,323
    Other general and
     administrative                    5,855,418                5,176,628
    Operating loss                   (35,060,212)             (34,602,156)

  Interest income, net                 1,116,787                1,018,243
  Loss before equity in
   losses of affiliates              (33,943,425)             (33,583,913)

  Equity in losses of
   affiliates                         (1,347,002)              (1,350,483)
  Net loss                          $(35,290,427)            $(34,934,396)

  Loss per share
   - basic and diluted              $      (0.47)            $      (0.48)
  Weighted average number
   of shares outstanding              75,728,709               73,056,991


  Statements of Cash Flows                     Three Months Ended
   Data:                                          September 30,
                                         2005                     2004

  Net loss                          $(11,867,837)            $(11,683,319)
  Non - cash expense                   1,934,477                3,158,282
  Changes in assets
   and liabilities                      (775,333)               1,242,499
  Net cash used in
   operating activities             $(10,708,693)            $ (7,282,538)

  Purchase of property,
   plant and equipment                  (689,268)                (463,664)
  Proceeds from disposal of
   property, plant and
    equipment                              5,000                       --
  Marketable securities              (25,024,280)               4,463,585
  Net cash provided by
   (used in) investing
     activities                     $(25,708,548)            $  3,999,921

  Proceeds from issuance
   of common stock, net             $ 70,618,520             $         --
  Proceeds from stock
   options and employee
    stock purchase plan                  130,023                    2,900
  Other                                  (17,253)                 (18,959)
  Net cash provided by
   financing activities             $ 70,731,290             $    (16,059)


  Statements of Cash Flows                     Nine Months Ended
   Data:                                          September 30,
                                         2005                     2004

  Net loss                          $(35,290,427)            $(34,934,396)
  Non - cash expense                   7,075,585               10,368,168
  Changes in assets
   and liabilities                    (1,871,516)              (1,265,854)
  Net cash used in
   operating activities             $(30,086,358)            $(25,832,082)

  Purchase of property,
   plant and equipment                (1,630,159)              (1,171,495)
  Proceeds from disposal of
   property, plant and
    equipment                              5,000                       --
  Marketable securities               (6,765,913)             (25,001,176)
  Net cash provided by
   (used in) investing
     activities                      $(8,391,072)            $(26,172,671)

  Proceeds from issuance
   of common stock, net              $70,618,520             $         --
  Proceeds from stock
   options and employee
    stock purchase plan                  686,019                  695,847
  Other                                  (50,495)                 (51,651)
  Net cash provided by
   financing activities              $71,254,044             $    644,196


DATASOURCE: Plug Power Inc.



CONTACT:  David Neumann, Chief Financial Officer, [phone] ext.

1161, , or Cynthia Mahoney White, Manager, Public

Relations & Marketing, Phone: [phone] ext. 1973, Mobile:

[phone], , both of Plug Power Inc.



Web site:  http://www.plugpower.com/ 

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