Note 5. Restructuring and Impairment

Restructuring

In September and November 2024, the Company undertook restructuring actions, which included reductions in force that collectively represented approximately 17% of the Company’s global workforce and also included reduced spending for product development, overhead and other costs. These restructuring actions sought to reduce operating costs and better align the Company’s workforce with the needs of the Company’s business and its customers. The workforce was reduced across our global operations including Calgary, Canada and at our North American production facility in Torrington, Connecticut, at our corporate offices in Danbury, Connecticut and at other remote locations.

On June 4, 2025, the Board of Directors of the Company (the “Board”) approved a global restructuring plan to further reduce operating costs, realign resources toward advancing the Company's core carbonate technologies, and protect the Company's competitive position amid slower-than-expected market investments in clean energy. This plan included: (i) a workforce reduction of 122 employees, or approximately 22% of our workforce across the U.S., Canada and Germany (which reduction was implemented on June 5, 2025), (ii) a significant reduction of discretionary overhead spending, (iii) recalibration of the Torrington manufacturing facility production schedule to align with contracted demand, rather than forecasted demand, which, without continued growth in our closed order book, would result in a decrease in our annualized

production rate, (iv) the deferral of certain compensation and benefit obligations, (v) the cessation of the majority of development efforts with respect to our solid oxide technology, and (vi) other targeted cost-saving measures.

Restructuring expense relating to severance for eliminated positions of $0.01 million and $1.5 million was recognized in the three and six months ended April 30, 2025, respectively, which has been presented under a separate caption in the Consolidated Statements of Operations. As of April 30, 2026, $0.6 million of restructuring expense which had yet to be paid out is included within Accrued liabilities on the accompanying Consolidated Balance Sheets. The following table summarizes the activity in accrued severance costs (in thousands):

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Impairment

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In April 2026, the Company identified indicators suggesting that the carrying value of the project assets associated with the Groton Project may not be recoverable. Due to performance issues encountered with the SureSource 4000 fuel cells at the Groton Project, the Company has elected to upgrade the equipment pursuant to the Groton Project’s PPA to utilize three of the Company’s standard 2.5 MW power blocks, with seven-year stack life design and high efficiency. In accordance with Accounting Standards Codification (“ASC”) Topic 360, Impairment or disposal of long lived assets (“ASC 360”), the Company tested for recoverability by comparing the carrying amount of the asset group to the fair value of the asset group, and determined that the carrying amount exceeded the fair value, and measured the impairment expense as the excess of carrying value over fair value. Fair value was estimated using a combination of expected future undiscounted cash flows under revised operating scenarios and estimated recoverable amounts through potential reuse or disposition of certain components. An impairment expense of $42.6 million was recorded for the three months ended April 30, 2026, which was comprised of $41.5 million of expense related to project assets and $1.1 million of expense related to inventories for the Groton Project. As of April 30, 2026 and as of the date of filing of this Quarterly Report on Form 10-Q, work related to the upgrade had not yet commenced.  It is expected that the upgrade will be completed in fiscal year 2027.