<SEC-DOCUMENT>0000950123-11-092924.txt : 20120314
<SEC-HEADER>0000950123-11-092924.hdr.sgml : 20120314
<ACCEPTANCE-DATETIME>20111028145848
<PRIVATE-TO-PUBLIC>
ACCESSION NUMBER:		0000950123-11-092924
CONFORMED SUBMISSION TYPE:	CORRESP
PUBLIC DOCUMENT COUNT:		2
FILED AS OF DATE:		20111028

FILER:

	COMPANY DATA:	
		COMPANY CONFORMED NAME:			FUELCELL ENERGY INC
		CENTRAL INDEX KEY:			0000886128
		STANDARD INDUSTRIAL CLASSIFICATION:	MISCELLANEOUS ELECTRICAL MACHINERY, EQUIPMENT & SUPPLIES [3690]
		IRS NUMBER:				060853042
		STATE OF INCORPORATION:			DE
		FISCAL YEAR END:			1031

	FILING VALUES:
		FORM TYPE:		CORRESP

	BUSINESS ADDRESS:	
		STREET 1:		3 GREAT PASTURE RD
		CITY:			DANBURY
		STATE:			CT
		ZIP:			06813
		BUSINESS PHONE:		2038256000

	MAIL ADDRESS:	
		STREET 1:		3 GREAT PASTURE ROAD
		CITY:			DANBURY
		STATE:			CT
		ZIP:			06813

	FORMER COMPANY:	
		FORMER CONFORMED NAME:	ENERGY RESEARCH CORP /NY/
		DATE OF NAME CHANGE:	19930328
</SEC-HEADER>
<DOCUMENT>
<TYPE>CORRESP
<SEQUENCE>1
<FILENAME>filename1.htm
<TEXT>
<HTML>
<HEAD>
<TITLE>Correspondence</TITLE>
</HEAD>
<BODY bgcolor="#FFFFFF">
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<DIV style="font-family: 'Times New Roman',Times,serif; margin-left: .25in; width: 7.50in">

<DIV align="justify" style="font-size: 10pt; margin-top: 10pt"><IMG src="c23820c2382001.gif" alt="(FUELCELL ENERGY LOGO)">
</DIV>


<DIV align="justify" style="font-size: 10pt; margin-top: 10pt">October&nbsp;28, 2011
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 10pt">Mr.&nbsp;Brian Cascio<BR>
Accounting Branch Chief<BR>
United States Securities and Exchange Commission<BR>
450 Fifth Street, N.W.<BR>
Washington, D.C. 20549

</DIV>


<DIV align="justify" style="font-size: 10pt; margin-top: 10pt; margin-left: 4%"><B>Re: FuelCell Energy, Inc. File No.&nbsp;001-14204</B>
</DIV>


<DIV align="justify" style="font-size: 10pt; margin-top: 0pt; margin-left: 8%"><B>Form&nbsp;10-K for the Fiscal Year Ended October&nbsp;31, 2010</B>
</DIV>


<DIV align="justify" style="font-size: 10pt; margin-top: 00pt; margin-left: 12%"><B>Filed January&nbsp;14, 2011</B>
</DIV>


<DIV align="justify" style="font-size: 10pt; margin-top: 00pt; margin-left: 8%"><B>Form&nbsp;10-Q for the Fiscal Quarter Ended July&nbsp;31, 2011</B>
</DIV>


<DIV align="justify" style="font-size: 10pt; margin-top: 00pt; margin-left: 12%"><B>Filed September&nbsp;9, 2011</B>
</DIV>


<DIV align="justify" style="font-size: 10pt; margin-top: 0pt; margin-left: 8%"><B>Form&nbsp;8-K Dated September&nbsp;6, 2011</B>
</DIV>


<DIV align="justify" style="font-size: 10pt; margin-top: 0pt; margin-left: 12%"><B>Filed September&nbsp;8, 2011</B>
</DIV>

<DIV align="justify" style="font-size: 10pt; margin-top: 10pt">Dear Mr.&nbsp;Cascio:
</DIV>

<DIV align="justify" style="font-size: 10pt; margin-top: 10pt">This correspondence is in response to your letter dated September&nbsp;29, 2011, to Michael Bishop,
Senior Vice-President and Chief Financial Officer of FuelCell Energy, Inc. (&#147;FuelCell&#148;, &#147;FCE&#148; or
the &#147;Company&#148;). In that letter, you requested that FuelCell respond to your comments following a
review of its 2010 Annual Report on Form 10-K filed on January&nbsp;14, 2011. We will respond to the
comments in the order presented.
</DIV>

<DIV align="justify" style="font-size: 10pt; margin-top: 10pt">For the Staff&#146;s reference, we have included, in this response letter, the original Staff comment in
italics which is followed by FuelCell&#146;s response.
</DIV>

<DIV align="justify" style="font-size: 10pt; margin-top: 10pt"><U>Form&nbsp;10-K for the fiscal year ended October&nbsp;31, 2010</U>
</DIV>


<DIV align="justify" style="font-size: 10pt; margin-top: 10pt"><U>Product Sales and Revenues, pages 56 and 59</U>
</DIV>


<DIV align="justify" style="font-size: 10pt; margin-top: 10pt"><I>1.&nbsp;Please revise future filings to discuss and quantify each of the underlying reasons for the
significant decrease in revenues each period. Please also discuss whether this trend is expected to
continue.</I>
</DIV>

<DIV align="justify" style="font-size: 10pt; margin-top: 10pt"><B><I>FuelCell Response:</I></B>
</DIV>

<DIV align="justify" style="font-size: 10pt; margin-top: 10pt">We acknowledge the Staff&#146;s comment and will enhance our disclosures in future filings related to
significant changes in revenues for each period and whether we expect the trend to continue.
</DIV>

<DIV style="font-size: 24pt; border-bottom: 1px solid #000000">&nbsp;</DIV>


<DIV align="center">
<TABLE style="font-size: 8pt" cellspacing="0" border="0" cellpadding="0" width="100%">
<!-- Begin Table Head --><TR valign="bottom">
    <TD width="15%">&nbsp;</TD>
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<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">&nbsp;
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top"><I>FuelCell Energy. Inc
</I></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top"><I>phone 203 825 6000</I></TD>
</TR>
<TR valign="bottom" style="padding-top: 1px">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">&nbsp;
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top"><I>3 Great Pasture Road
</I></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top"><I>fax 203 825 6100</I></TD>
</TR>
<TR valign="bottom" style="padding-top: 1px">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">&nbsp;
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top"><I>Danbury, CT 06813 1305
</I></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top"><I>www.fuelcellenergy.com</I></TD>
</TR>
<!-- End Table Body --></TABLE>
</DIV>

<P align="center" style="font-size: 10pt">&nbsp;

<P align="center" style="font-size: 10pt"><!-- Folio -->&nbsp;<!-- /Folio -->
</DIV>

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<DIV style="font-family: 'Times New Roman',Times,serif; margin-left: .25in; width: 7.50in">


<DIV align="left" style="font-size: 10pt; margin-top: 10pt">Mr.&nbsp;Cascio<BR>
Securities and Exchange Commission<BR>
October&nbsp;28, 2011<BR>
Page 2

</DIV>

<DIV align="justify" style="font-size: 10pt; margin-top: 10pt"><U>Liquidity and Capital Resources, page 61</U>
</DIV>


<DIV align="justify" style="font-size: 10pt; margin-top: 10pt"><I>2.&nbsp;We reference the disclosure that you plan to increase capacity from 70 MW to 90 MW of annual
production by investing $5&nbsp;million to $7&nbsp;million. In addition, you estimate that the further
expansion to 150 MW of annual production will require additional capital investments of $35&nbsp;million
to $45&nbsp;million. Given your limited cash flows, please revise future filings to disclose how you
plan to raise the capital required to increase production. Please also include a discussion of the
timeframe for when you expect the investments to occur.</I>
</DIV>

<DIV align="justify" style="font-size: 10pt; margin-top: 10pt"><B><I>FuelCell Response:</I></B>
</DIV>

<DIV align="justify" style="font-size: 10pt; margin-top: 10pt">We acknowledge the Staff&#146;s comment. It is our expectation that the Company would finance this
expansion through a combination of;
</DIV>

<DIV style="margin-top: 10pt">
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">
<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="4%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left">(a)</TD>
    <TD width="1%">&nbsp;</TD>
    <TD><DIV style="text-align: justify">Cash flows from operations; the Company expects positive cash flows at an
annual production rate of 80 MW to 90 MW based on sales mix.</DIV></TD>
</TR>

</TABLE>
</DIV>

<DIV style="margin-top: 10pt">
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">
<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="4%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left">(b)</TD>
    <TD width="1%">&nbsp;</TD>
    <TD><DIV style="text-align: justify">Debt financing; with improving operating results as the business grows, the
Company would expect to have access to the debt markets to finance capital expansion.</DIV></TD>
</TR>

</TABLE>
</DIV>

<DIV style="margin-top: 10pt">
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">
<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="4%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left">(c)</TD>
    <TD width="1%">&nbsp;</TD>
    <TD><DIV style="text-align: justify">Equity or strategic investments; the Company will also pursue equity and
strategic investments to finance growth as necessary.</DIV></TD>
</TR>

</TABLE>
</DIV>

<DIV style="margin-top: 10pt">
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">
<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="4%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left">(d)</TD>
    <TD width="1%">&nbsp;</TD>
    <TD><DIV style="text-align: justify">Potential local or state Government loans or grants in return for manufacturing
job creation.</DIV></TD>
</TR>

</TABLE>
</DIV>

<DIV align="justify" style="font-size: 10pt; margin-top: 10pt">The Company will include these considerations in future filings as well as a timeframe for
potential investments.
</DIV>

<DIV align="justify" style="font-size: 10pt; margin-top: 10pt"><I>3.&nbsp;We see that revenue has decreased 20% from fiscal year 2009 to fiscal year 2010. During that
same period, inventories have increased 30%. Please revise future filings to discuss the reasons
for the investment in inventory in light of declining revenues.</I>
</DIV>

<DIV align="justify" style="font-size: 10pt; margin-top: 10pt"><B><I>FuelCell Response:</I></B>
</DIV>

<DIV align="justify" style="font-size: 10pt; margin-top: 10pt">We acknowledge the Staff&#146;s comment and will include additional disclosure around changes in
inventory compared to changes in revenue for the periods referenced in future filings.
</DIV>

<DIV align="justify" style="font-size: 10pt; margin-top: 10pt"><U>Consolidated Financial Statements</U>
</DIV>


<DIV align="justify" style="font-size: 10pt; margin-top: 10pt"><I>4.&nbsp;We see that you recognized revenue of $6.9&nbsp;million related to service agreements during fiscal
year 2010. Please revise future filings to separately present revenue and related cost of service
revenues, as required by Rule&nbsp;5-03 of Regulation&nbsp;S-X.</I>
</DIV>
<P align="center" style="font-size: 10pt">&nbsp;

<P align="center" style="font-size: 10pt"><!-- Folio -->&nbsp;<!-- /Folio -->
</DIV>

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<DIV style="font-family: 'Times New Roman',Times,serif; margin-left: .25in; width: 7.50in">
<DIV align="left" style="font-size: 10pt; margin-top: 10pt">Mr.&nbsp;Cascio<BR>
Securities and Exchange Commission<BR>
October&nbsp;28, 2011<BR>
Page  3

</DIV>


<DIV align="justify" style="font-size: 10pt; margin-top: 10pt"><B><I>FuelCell Response:</I></B>
</DIV>

<DIV align="justify" style="font-size: 10pt; margin-top: 10pt">We acknowledge the Staff&#146;s comment and have considered Rule&nbsp;5-03 of Regulation&nbsp;S-X when preparing
the consolidated financial statements. The Company&#146;s revenues from services were not more than 10
percent of the sum of all classes identified within Rule&nbsp;5-03 of Regulation&nbsp;S-X. Total revenue for
all classes for fiscal year 2010 was $69.8&nbsp;million. Rule&nbsp;5-03 identifies subcaptions which should
appear separately on the face of the income statement, unless income is derived from more than one
of the subcaptions described under 210.5-03.1 which is not more than 10&nbsp;percent of the sum of the
items and therefore may be combined with another class. The subcaptions under 210.5-03.1 are (a)
net sales of tangible products (gross sales less discounts, returns and allowances), (b)&nbsp;revenues
from operating revenues of public utilities or others, (c)&nbsp;income from rentals, (d)&nbsp;revenues from
services; and (e)&nbsp;other revenues.
</DIV>

<DIV align="justify" style="font-size: 10pt; margin-top: 10pt">The Company disclosed the following on page 56 of its Form 10-K for the fiscal year ended October
31, 2010 within Management&#146;s Discussion and Analysis of Financial Condition and Results of
Operations:
</DIV>


<DIV align="justify" style="font-size: 10pt; margin-top: 10pt; margin-left: 4%">Revenue in fiscal 2010 included $46.5&nbsp;million of product sales (complete power plants,
modules and components), $3.6&nbsp;million related to the sale of stack module assembly and
conditioning equipment to POSCO and for site engineering and construction work for projects
where we are responsible for complete power plant system installation, $6.9&nbsp;million related
to service agreements and component sales and $2.2&nbsp;million related to PPAs.
</DIV>

<DIV align="justify" style="font-size: 10pt; margin-top: 10pt">The $6.9&nbsp;million related to service agreements and component sales includes only $6.8&nbsp;million from
services and $0.1&nbsp;million from sales of tangible products (component sales). The Company
categorizes these component sales separate from product sales because they are subsequent to the
original power plant equipment sale, but they are distinct individual sales not captured by revenue
under long-term service agreements with customers. Accordingly, revenues from services do not meet
the 10&nbsp;percent threshold under Rule&nbsp;5-03.
</DIV>

<DIV align="justify" style="font-size: 10pt; margin-top: 10pt">The Company notes that revenue related to services has declined in fiscal year 2011 as a percentage
of total revenues and is expected to continue to do so given the growth in revenue from product
sales. The Company will continue to monitor and report its various sources of revenues as defined
within the subcaptions outlined in Rule&nbsp;5-03 to ensure compliance with Regulation&nbsp;S-X and revise
disclosures in future filings as necessary.
</DIV>

<DIV align="justify" style="font-size: 10pt; margin-top: 10pt"><U>Note 1. Nature of Business and Significant Accounting Policies</U>
</DIV>


<DIV align="justify" style="font-size: 10pt; margin-top: 10pt"><U>Nature of Business, page 80</U>
</DIV>


<DIV align="justify" style="font-size: 10pt; margin-top: 10pt"><I>5.&nbsp;In future filings please clarify if the subsidiaries included in the first sentence of the
second paragraph on page 80 are 100% owned or otherwise disclose the ownership percentages.</I>
</DIV>

<DIV align="justify" style="font-size: 10pt; margin-top: 10pt"><B><I>FuelCell Response:</I></B>
</DIV>

<DIV align="justify" style="font-size: 10pt; margin-top: 10pt">We acknowledge the Staff&#146;s comment and will include additional disclosure in future filings to
clarify ownership percentages for each of our subsidiaries.
</DIV>
<P align="center" style="font-size: 10pt">&nbsp;

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</DIV>

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<DIV style="font-family: 'Times New Roman',Times,serif; margin-left: .25in; width: 7.50in">
<DIV align="left" style="font-size: 10pt; margin-top: 10pt">Mr.&nbsp;Cascio<BR>
Securities and Exchange Commission<BR>
October&nbsp;28, 2011<BR>
Page 4

</DIV>


<DIV align="justify" style="font-size: 10pt; margin-top: 10pt"><U>Inventories and Advanced Payments to Vendors, page 80</U>
</DIV>


<DIV align="justify" style="font-size: 10pt; margin-top: 10pt"><I>6.&nbsp;We reference the disclosure that prior to November&nbsp;1, 2009, you provided for a lower of cost or
market reserve to the cost basis of inventory, including advance payments to vendors, at the time
of purchase. Please clarify your basis in the accounting literature for this treatment and tell us
how you considered the guidance in FASB ASC 330-10-35-7 in determining your accounting policy for
inventory prior to November&nbsp;1, 2009. Your response should also discuss the timing of the purchase
of your inventory in relation to entering into a customer contract and whether there is a contract
in place at the time you record the lower of cost or market reserve.</I>
</DIV>

<DIV align="justify" style="font-size: 10pt; margin-top: 10pt"><B><I>FuelCell Response:</I></B>
</DIV>

<DIV align="justify" style="font-size: 10pt; margin-top: 10pt">As background, the Company&#146;s complete power plants have two primary components (a)&nbsp;the fuel cell
module and (b)&nbsp;the balance of plant (&#147;BOP&#148;) equipment further described as follows:
</DIV>

<DIV style="margin-top: 10pt">
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">
<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="4%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left">(a)</TD>
    <TD width="1%">&nbsp;</TD>
    <TD><DIV style="text-align: justify">Completed fuel cell modules consist of either one 300 kilowatt fuel cell stack
for the sub-megawatt DFC300 power plant (SubMW) or four 350 kilowatt fuel cell stacks
for the megawatt-class power plants (MW). The fuel cell components are manufactured at
our production facility in Torrington, Connecticut and fuel cell kits are then exported
from this facility to Asia for local fuel cell stacking or the fuel cell components are
stacked in the Torrington facility for fuel cell modules designated for the United
States market. Completed fuel cell modules manufactured in Torrington are then shipped
to our facility in Danbury, Connecticut for conditioning, the final process that heats
up the module to operating temperature. Raw materials purchased from vendors become
work-in-process during the manufacturing process. Individual fuel cell components are
interchangeable between a SubMW fuel cell stack and a MW fuel cell stack. Upon
completion of production, the fuel cell module will either be (i)&nbsp;maintained in
inventory, (ii)&nbsp;assigned to a power plant product sale contract, or (iii)&nbsp;assigned to a
service contract, dependent on timing of production for existing sales contracts and
timing of stack failures in power plants under service contracts.</DIV></TD>
</TR>

<TR style="font-size: 8pt">
    <TD>&nbsp;</TD>
</TR> <TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="4%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left">(b)</TD>
    <TD width="1%">&nbsp;</TD>
    <TD><DIV style="text-align: justify">In addition to the fuel cell module, the power plant includes mechanical and
electrical balance of plant (&#147;BOP&#148;) equipment to monitor the flow of fuel into the
power plant and convert energy produced from the fuel cell stack into usable electrical
power. Certain BOP components are based on proprietary Company designs and the Company
procures fully assembled BOP equipment from vendors who often require advance payments
prior to production. BOP&#146;s include a degree of customization dependent on the
customers&#146; application and fuel source. Upon completion of production, the BOP will
either be (i)&nbsp;maintained in inventory or (ii)&nbsp;assigned to a power plant product sale
contract.</DIV></TD>
</TR>

</TABLE>
</DIV>

<DIV align="justify" style="font-size: 10pt; margin-top: 10pt">Given the nature of the Company&#146;s production process we have maintained inventory not specifically
identifiable to a customer contract primarily consisting of fuel cell raw materials, work in
process and stacks and modules.
</DIV>
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<DIV style="font-family: 'Times New Roman',Times,serif; margin-left: .25in; width: 7.50in">
<DIV align="left" style="font-size: 10pt; margin-top: 10pt">Mr.&nbsp;Cascio<BR>
Securities and Exchange Commission<BR>
October&nbsp;28, 2011<BR>
Page 5

</DIV>


<DIV align="justify" style="font-size: 10pt; margin-top: 10pt">As further background, prior to November&nbsp;1, 2009 the Company was working to commercialize its fuel
cell products. This activity included developing and penetrating markets for its product,
reengineering and redesigning its products to decrease the cost to manufacture and also introducing
new larger scale products to meet market demand and take advantage of economies of scale to further
reduce costs. Additionally, product design changes and the long-term nature of customer contracts
impacted not only the manufacturing process for internally produced components but also the design,
cost and timing for fulfillment of externally produced components. As a result, the Company&#146;s
customer contracts were sold at losses as pricing was consistent with the marketplace to enable
market development. As the Company procured raw materials or made advance payments to vendors for
BOP components prior to allocation of the inventory/advance payments to sales contracts and the
Company&#146;s business model was based on selling product at a loss given market pricing, the Company
provided for a lower of cost or market reserve to the cost basis of inventory at the time of
purchase.
</DIV>

<DIV align="justify" style="font-size: 10pt; margin-top: 10pt">While the Company considered FASB ASC 330-10-35-7, which states that &#147;if a business is expected to
lose money for a sustained period, the inventory shall not be written down to offset a loss
inherent in the subsequent operations&#148;, the Company believes that the earliest and most appropriate
time to begin recording a loss was at the time inventory was procured which would ultimately
fulfill a contract. As a result of this write-down of inventory, the inventory reserve resulted in
no further need for a contract loss reserve. The Company does not believe that recording a lower
of cost or market reserve was offsetting a loss inherent in subsequent operations as stated in ASC
330-10-35-7, but essentially recording a loss or portion thereof which under contract loss
accounting would have been recorded, and in substance is consistent with the requirements to record
a contract loss reserve under FASB ASC 605-35-25-46.
</DIV>

<DIV align="justify" style="font-size: 10pt; margin-top: 10pt"><U>Revenue Recognition, pages 68 and 81</U>
</DIV>


<DIV align="justify" style="font-size: 10pt; margin-top: 10pt"><I>7.&nbsp;We see that you recognize revenue from the sale and installation of fuel cell power plants under
the percentage of completion method. We also note the disclosure that prior to fiscal 2010, you did
not provide for a contract loss reserve on product sales contracts as products were in their early
stages of development and market acceptance, and the total costs and timing of production for
product sales contracts as well as installation and commissioning of these units could not be
reasonably estimated. Please tell us how you applied the percentage of completion method of revenue
recognition prior to fiscal year 2010. We reference FASB ASC 605-35-25-56 which states that the use
of the percentage of completion method depends on the ability to make reasonably dependable
estimates such as the extent of progress toward completion, contract revenues and contract costs.
In addition, FASB ASC 605-35-25-90 states that when lack of dependable estimates cause forecasts to
be doubtful, the completed contract method is preferable. Please provide us your analysis of how
you considered the accounting literature and explain to us why you believe the percentage of
completion method was appropriate for revenue recognition prior to fiscal 2010.</I>
</DIV>
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<DIV style="font-family: 'Times New Roman',Times,serif; margin-left: .25in; width: 7.50in">
<DIV align="left" style="font-size: 10pt; margin-top: 10pt">Mr.&nbsp;Cascio<BR>
Securities and Exchange Commission<BR>
October&nbsp;28, 2011<BR>
Page 6

</DIV>


<DIV align="justify" style="font-size: 10pt; margin-top: 10pt"><B><I>FuelCell Response:</I></B>
</DIV>

<DIV align="justify" style="font-size: 10pt; margin-top: 10pt">Prior
to fiscal 2010, the Company did not provide for a contract loss reserve at the time customer
sales orders were entered into given the long term nature of the contracts and uncertainty over
certain of the future fulfillment costs. As described on the answer to comment 6, the Company&#146;s
accounting model included a write-down of inventory upon receipt and production of inventory.
</DIV>

<DIV align="justify" style="font-size: 10pt; margin-top: 10pt">Under the Company&#146;s application of percentage-of-completion accounting prior to fiscal 2010,
revenue was recognized over the period that the <B><I>&#147;hard costs&#148; </I></B>associated with a project were
incurred, with an estimate of installation and commissioning costs of less than 10% of the total
contract costs. These <B>&#147;hard costs&#148; </B>include direct materials, direct labor, and estimates of
overhead applied to the direct costs. These costs were generally straight forward from an
estimation standpoint once production for a particular contract commenced because the latest design
was known and costs of the power plant could be reasonably estimated. The estimate of installation
costs, herein referred to as &#147;normal&#148; installation costs, were based on the Company&#146;s estimate of
costs that would be incurred to install and commission the fuel cell units absent the
identification of any problems during installation.
</DIV>

<DIV align="justify" style="font-size: 10pt; margin-top: 10pt">Revenue associated with installation and commissioning was recognized when the installation and
commissioning costs were incurred. As installation and commissioning costs had historically
exceeded the expected &#147;normal&#148; installation costs to perform these procedures and were
characterized more comparable to development costs under ASC 730-10-15-3, these costs were expensed
when incurred, at most times near the end of completion of the contract. The majority of the
installation/commissioning costs were resolved within the quarter they were identified, and to the
extent they were not, management estimated and accrued a loss for these additional costs in the
quarter identified, using the actual experience gained subsequent to the quarter, prior to issuance
of its financial statements.
</DIV>

<DIV align="justify" style="font-size: 10pt; margin-top: 10pt">Given the developmental stages associated with the Company&#146;s products, significant effort had been
undertaken by the Company to refine its understanding of the technology. Some of this research and
development could only be accomplished through actual interactions / applications with customers
and field units (e.g., environmental impact on the power plant, impact from different fuel
sources). As a result, the Company incurred certain costs during the installation and
commissioning contract phase that it considered to be developmental in nature, although they were
incurred during actual installations of customer units and recorded as cost of sales because the
costs were incurred as part of the customer contract. Management characterized these costs in this
manner because there was value being obtained that was not quantifiable and only realized during
future manufacture and installation of products. As a result of the nature of these costs, they
were difficult to estimate until incurred or upon completion and the Company had not included these
costs in its estimation of loss accruals or total estimates of costs to complete for the related
contacts. These research and development-type costs were expensed as incurred consistent with FASB
ASC 730-10-25-1. Also, FASB ASC 730-10-15-3 notes that research and development activities within
the scope of ASC Topic 730, <I>Research and Development</I>, include &#147;activities aimed at developing or
significantly improving a product or service...&#148; It is the Company&#146;s belief that the costs
referred to above were specifically incurred for the benefit of significantly improving the
Company&#146;s technology and products. Acccordingly, they were not included in the Company&#146;s estimates
at completion for percentage-of-completion accounting or the overall
determination of whether the percentage-of-completion or completed contract method is the
appropriate model. Utilizing those costs only benefiting the individual contracts (that being the
&#147;hard costs&#148; and &#147;normal&#148; installation costs), the Company recorded revenue matching the hard costs
(which reflect the impact of inventory write-downs for lower of cost or market as discussed in
question 6 above) incurred resulting in an approximate break-even margin (i.e. the &#147;zero profit
margin&#148; approach as discussed in ASC 605-35-25-67 through 25-69).
</DIV>
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<DIV align="left" style="font-size: 10pt; margin-top: 10pt">Mr.&nbsp;Cascio<BR>
Securities and Exchange Commission<BR>
October&nbsp;28, 2011<BR>
Page 7

</DIV>


<DIV align="justify" style="font-size: 10pt; margin-top: 10pt">Given the above, the following were management&#146;s considerations when determining whether revenue
under these long-term contracts should be recognized under the percentage-of-completion method or
the completed contract method. FASB ASC 605-35-25-56 and 57 note the following:
</DIV>


<DIV align="justify" style="font-size: 10pt; margin-top: 10pt; margin-left: 4%">&#147;The use of the percentage-of-completion method depends on the ability to make reasonably
dependable estimates, which, for purposes of this Subtopic, relates to estimates of the
extent of progress toward completion, contract revenues, and contract costs.
</DIV>


<DIV align="justify" style="font-size: 10pt; margin-top: 10pt; margin-left: 4%">The percentage-of-completion method is considered preferable as an accounting policy in
circumstances in which reasonably dependable estimates can be made and in which all the
following conditions exist:
</DIV>


<DIV align="justify" style="font-size: 10pt; margin-top: 10pt; margin-left: 8%">a. Contracts executed by the parties normally include provisions that clearly
specify the enforceable rights regarding goods or services to be provided and received
by the parties, the consideration to be exchanged, and the manner and terms of
settlement.
</DIV>


<DIV align="justify" style="font-size: 10pt; margin-top: 10pt; margin-left: 8%">b. The buyer can be expected to satisfy all obligations under the contract.
</DIV>


<DIV align="justify" style="font-size: 10pt; margin-top: 10pt; margin-left: 8%">c. The contractor can be expected to perform all contractual obligations.&#148;
</DIV>

<DIV align="justify" style="font-size: 10pt; margin-top: 10pt">Excluding those costs considered by management to be research and developmental in nature, the
Company had the ability to reasonably estimate extent of progress toward completion, contract
revenues, and contract costs. The &#147;hard costs&#148; described above were relatively consistently priced
and the information used by management was consistent from contract to contract even though the
contracts are designed to meet each customer&#146;s specific application and specifications. Progress
toward completion and total hard costs were generally objective determinations that management had
the ability to estimate. The Company&#146;s contracts with its customers include terms that support the
existence of conditions a through c above. Based on the evaluation of the conditions and guidance
in ASC Subtopic 605-35 above, it was determined that the percentage-of-completion method was more
appropriate and meaningful for investors when compared to the completed contract method.
</DIV>
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<DIV align="left" style="font-size: 10pt; margin-top: 10pt">Mr.&nbsp;Cascio<BR>
Securities and Exchange Commission<BR>
October&nbsp;28, 2011<BR>
Page 8

</DIV>


<DIV align="justify" style="font-size: 10pt; margin-top: 10pt"><I>8.&nbsp;Please also tell us whether prior to fiscal 2010 you were unable to estimate all costs related
to the fuel cell power plant projects or just costs related to the installation and commissioning
phases. Please tell us your estimate of the percentage of the total costs that relate to the
installation and commissioning phases.</I>
</DIV>

<DIV align="justify" style="font-size: 10pt; margin-top: 10pt"><B><I>FuelCell Response:</I></B>
</DIV>

<DIV align="justify" style="font-size: 10pt; margin-top: 10pt">As discussed above, the Company was able to estimate &#147;hard costs&#148; at the time we began recognizing
revenue. The Company was also able to reasonably estimate &#147;normal&#148; installation and commissioning
costs, which were less than 10% of the total contract costs. However, for certain customer
contracts, installation and commissioning costs had historically exceeded the expected &#147;normal&#148;
installation costs to perform these procedures and in these circumstances were characterized as
more comparable to development costs as discussed in the response to question 7. The Company has
also included, in the response to question 10, information on the various applications in which its
power plants were used, which helps explain the reasons why installation and commission costs have
historically exceeded the expected &#147;normal&#148; costs to perform these procedures. As products were
introduced to the marketplace, the Company was gaining knowledge on installation costs associated
with each different type of fuel source, customer application and installation.
</DIV>

<DIV align="justify" style="font-size: 10pt; margin-top: 10pt"><I>9.&nbsp;We reference the disclosure on pages 68 and 81 that revenue is recognized from sales of your DFC
power plants and modules proportionately as costs are incurred and assigned to a customer contract
by comparing total expected costs for each contract to the total contract value. Please tell us how
this practice is consistent with the guidance in FASB ASC 605-35-25-52.</I>
</DIV>

<DIV align="justify" style="font-size: 10pt; margin-top: 10pt"><B><I>FuelCell Response:</I></B>
</DIV>

<DIV align="justify" style="font-size: 10pt; margin-top: 10pt">The Company acknowledges the Staff&#146;s comment and will clarify below for the Staff and in its
disclosures for future filings its application of the percentage of completion revenue recognition
method. The Company applies the percentage of completion method consistent with ASC 605-35-25-52,
which states:
</DIV>


<DIV align="justify" style="font-size: 10pt; margin-top: 10pt; margin-left: 4%">Income recognized shall be that percentage of estimated total income, either:
</DIV>


<DIV align="justify" style="font-size: 10pt; margin-top: 10pt; margin-left: 8%">a. That incurred costs to date bear to estimated total costs after giving
effect to estimates of costs to complete based on most recent
information.
</DIV>


<DIV align="justify" style="font-size: 10pt; margin-top: 10pt; margin-left: 8%">b. That may be indicated by such other measure of progress toward completion as may
be appropriate having due regard to work performed.
</DIV>

<DIV align="justify" style="font-size: 10pt; margin-top: 10pt">The Company compares total costs incurred related to a customer contract with the total estimated
costs of fulfilling that customer contract. On a quarterly basis, the Company performs a review
process to help ensure that total estimated contract costs include estimates of costs to complete
that are based on the most recent available information. The percentage of completion for the
customer contract based on
this cost analysis is then applied to the total customer contract value to determine the total
revenue to be recognized to date.
</DIV>
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<DIV align="left" style="font-size: 10pt; margin-top: 10pt">Mr.&nbsp;Cascio<BR>
Securities and Exchange Commission<BR>
October&nbsp;28, 2011<BR>
Page 9

</DIV>


<DIV align="justify" style="font-size: 10pt; margin-top: 10pt"><I>10.&nbsp;Please tell us the average length of time for each phase of your contracts for each of your DFC
products. Please also tell us how the base products are modified to accommodate the end user. Under
FASB ASC 605-35-05 and 35-15, the revenue recognition models for Construction-Type and
Production-Type Contracts are appropriate for performance of contracts for which specifications are
provided by the customer for the construction of facilities or the production of goods or the
provision of related services. In this regard, please demonstrate that FASB ASC 605-35 is the
appropriate revenue recognition model for your DFC products.</I>
</DIV>

<DIV align="justify" style="font-size: 10pt; margin-top: 10pt"><B><I>FuelCell Response:</I></B>
</DIV>

<DIV align="justify" style="font-size: 10pt; margin-top: 10pt">Currently, the average length of time for completion of the Company&#146;s customer contracts is
approximately twelve to eighteen months from date of agreement to installation and final acceptance
by the customer. The Company&#146;s power plants consist of two primary components: the module and the
balance of plant. The balance of plant consists of the electrical balance of plant (EBOP)&nbsp;and the
mechanical balance of plant (MBOP). In addition to these components, there is also site
construction involved which is dependent upon the specific application for which the power plant is
being utilized. The module is manufactured internally by the Company at its facility in
Torrington, Connecticut. The MBOP and EBOP are manufactured by separate third party vendors. The
timing for production of the module, MBOP and EBOP depend on the Company&#146;s internal manufacturing
run rate and order flow as well as production timing at its vendors. The expected lead time is
approximately six to twelve months. Once the module is completed at the Company&#146;s Torrington
facility, it is shipped to the Company&#146;s Danbury, Connecticut facility to be conditioned. This
process takes approximately three weeks to one month. The conditioned module is then shipped to
the installation site to be integrated with the MBOP and EBOP. Site construction occurs
simultaneously to production of the primary components of the power plant and typically involves
(i)&nbsp;engineering design work, which can take from two to three months, and (ii)&nbsp;site construction
(e.g., piping for fuels and water, electrical work, concrete slab for power plant, etc.), which may
take two to three months. Upon completion of the module, production of the MBOP and EBOP and site
construction, the power plant is installed at the site which typically takes six weeks. After
installation is complete, the power plant is then commissioned in preparation for final acceptance
by the customer. This commissioning and final acceptance stage typically takes one month, although
it has taken longer with certain installations.
</DIV>

<DIV align="justify" style="font-size: 10pt; margin-top: 10pt">Although our core DFC technology within our power plants is consistent from a technology and
manufactured perspective, each customer contract typically has a unique application and thereby
requires additional equipment to be added to the base product. For example, some of our power
plants run on waste byproducts from the customers manufacturing process (e.g., waste water
treatment facilities, breweries, food processing facilities), and some customers want to take
advantage of the heat byproduct from our power plants in a combined heat and power installation to
heat a pool, greenhouse or turn a turbine for additional power generation efficiency. Each of
these different applications impacts the design of the power plant. Each customer contract is
typically a different application and therefore
the Company believes that percentage of completion revenue recognition model under ASC 605-35 is
the appropriate model on customer contracts for complete power plants.
</DIV>
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<DIV align="left" style="font-size: 10pt; margin-top: 10pt">Mr.&nbsp;Cascio<BR>
Securities and Exchange Commission<BR>
October&nbsp;28, 2011<BR>
Page 10

</DIV>


<DIV align="justify" style="font-size: 10pt; margin-top: 10pt">As disclosed in our 2010 Form 10-K, the Company has transitioned to selling more component kits to
our South Korean partner as that partner has assumed responsibility for much of the manufacturing
and installation process for power plants in South Korea. Under this type of contract, the Company
is only selling its core manufactured fuel cell intellectual property in the form of a component
kit, so the kits are exactly the same. Accordingly, revenue from component part kits and spare
parts sales is recognized upon shipment and title transfer under the terms of the customer
contract.
</DIV>

<DIV align="justify" style="font-size: 10pt; margin-top: 10pt"><I>11.&nbsp;Please tell us how your inability to provide for a contract loss reserve is consistent with the
guidance in FASB ASC 605-35-25-45 through 50 which states that for a contract on which a loss is
anticipated, GAAP requires recognition of the entire anticipated loss as soon as the loss becomes
evident.</I>
</DIV>

<DIV align="justify" style="font-size: 10pt; margin-top: 10pt"><B><I>FuelCell Response:</I></B>
</DIV>

<DIV align="justify" style="font-size: 10pt; margin-top: 10pt">For the reasons outlined in the Company&#146;s response to question 6, the Company recorded losses at
the earliest time they were identifiable and able to be reasonably estimated through the write down
of inventory. The Company has historically provided disclosure in its Critical Accounting Policies
regarding revenue recognition and reserves for inventory.
</DIV>

<DIV align="justify" style="font-size: 10pt; margin-top: 10pt"><U>Warranty and Service Expense Recognition, pages 69 and 82</U>
</DIV>


<DIV align="justify" style="font-size: 10pt; margin-top: 10pt"><I>12.&nbsp;We see that you provide a standard warranty on your products for a term of 15&nbsp;months after
shipment or 12&nbsp;months after installation and that you estimate the accrual for warranty obligations
based on historical experience. We also note disclosure in your </I><I>Form 10-K</I><I> for December&nbsp;31, 2009
that you accrue for warranty costs on products that have sufficient operating experience to allow
for management to reasonably estimate warranty obligations and that for newer products where you
have limited operating experience, warranty costs are currently expensed as incurred. Please tell
us what changed from 2009 such that you are now able to estimate the warranty reserve based on
historical experience. If you are unable to estimate warranty obligations, please tell us why it is
appropriate to record a sale prior to the expiration of the warranty period or until a reasonable
estimate of the obligation can be made.</I>
</DIV>

<DIV align="justify" style="font-size: 10pt; margin-top: 10pt"><B><I>FuelCell Response:</I></B>
</DIV>

<DIV align="justify" style="font-size: 10pt; margin-top: 10pt">The typical warranty period for the Company&#146;s product sales contacts is 12 to 18&nbsp;months. Beginning
in fiscal 2009, the Company had gained sufficient knowledge of the operating characteristics of its
new designs and new products and a reserve estimate for warranty costs was recorded across all
product lines as of October&nbsp;31, 2009. The Company&#146;s disclosure in its Form 10-K for the fiscal
year ended October&nbsp;31, 2009 stating that &#147;for newer products where we have limited operating
experience, warranty costs are currently expensed as incurred&#148; was intended to provide a general
policy statement covering
multiple periods, however the Company did actually have a warranty reserve estimate for all product
lines as of October&nbsp;31, 2009. Accordingly, the transition to recording an estimate of warranty
costs actually occurred in fiscal 2009 and was due to a slow down in product design changes and
more operating experience with the new products and product designs. The Company did not include
the above cited disclosure from fiscal year 2009 in its Form 10-K for fiscal year 2010 because it
does not expect significant product design changes or the introduction of new products in the near
future and therefore such a disclosure was no longer deemed meaningful to investors.
</DIV>
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<DIV align="left" style="font-size: 10pt; margin-top: 10pt">Mr.&nbsp;Cascio<BR>
Securities and Exchange Commission<BR>
October&nbsp;28, 2011<BR>
Page 11

</DIV>


<DIV align="justify" style="font-size: 10pt; margin-top: 10pt">With regard to the last portion of the Staff&#146;s question 12 &#151; &#147;<I>if you are unable to estimate
warranty obligations, please tell us why it is appropriate to record a sale prior to the expiration
of the warranty period or until a reasonable estimate of the obligation can be made.&#148;, </I>prior to
fiscal 2009 the Company did not believe its warranty costs were considered material to the overall
customer contract value (based on review of average actual historical warranty costs for the two
fiscal years prior to 2009, they were less than 2% of product sales and revenues). As a result,
the Company believes it was still appropriate and more meaningful for users of its financial
statements to record revenue utilizing percentage of completion accounting.
</DIV>

<DIV align="justify" style="font-size: 10pt; margin-top: 10pt"><I>13.&nbsp;We see that you issue LTSA contracts with certain customers ranging up to 20&nbsp;years and that you
provide a reserve for the guarantees based upon historical fleet performance. Please revise future
filings to clarify how you use historical fleet performance to estimate long-term warranty
liabilities, considering your limited history of claims with these contracts. Please tell us if you
have sufficient historical data to estimate the liability for 20&nbsp;years into the future.</I>
</DIV>

<DIV align="justify" style="font-size: 10pt; margin-top: 10pt"><B><I>FuelCell Response:</I></B>
</DIV>

<DIV align="justify" style="font-size: 10pt; margin-top: 10pt">We acknowledge the Staff&#146;s comment and will clarify in future filings the disclosure related to our
reserve for performance guarantees under our LTSA contracts. As background, the Company enters
into LTSAs with customers to provide routine maintenance on the power plant and to also provide the
customer with assurance that the power plant will produce a certain level of power during the term
of the LTSA. As disclosed in our 10-K, if minimum output (as defined in our LTSA customer
contracts) falls below our contractual requirement, we may be subject to performance penalties or
may be required to repair or replace the customer&#146;s fuel cell stack. The Company expects that its
power plants will produce the minimum output during the term of the LTSA and has not incurred a
significant amount of performance penalties based on the number of plants operating in the field
and compared to overall LTSA revenue. Therefore, we do not record an estimate for a potential
performance guarantee liability until a performance issue has occurred on a particular power plant.
At that point, we analyze the actual power plant&#146;s output against the minimum output guarantee and
record a reserve accordingly. This review of power plant performance is updated each reporting
period to incorporate the most recent performance of the power plant and minimum output guarantee
payments made to customers, if any. Therefore, as of the balance sheet date, the Company&#146;s
estimate of its LTSA contract performance guarantee obligation is based on an analysis of actual
historical data. We do not estimate LTSA performance guarantee liabilities for future plant
performance. This will be clarified in future filings.
</DIV>
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<DIV align="left" style="font-size: 10pt; margin-top: 10pt">Mr.&nbsp;Cascio<BR>
Securities and Exchange Commission<BR>
October&nbsp;28, 2011<BR>
Page 12

</DIV>


<DIV align="justify" style="font-size: 10pt; margin-top: 10pt"><U>Deferred Revenue, Royalty Income and Customer Deposits, page 83</U>
</DIV>


<DIV align="justify" style="font-size: 10pt; margin-top: 10pt"><I>14.&nbsp;With regard to the 2009 License Agreement, in future filings please disclose the amount of
royalty revenue recognized during fiscal year 2010. In addition, tell us the terms of the upfront
license fee, including whether the fee is refundable. Discuss your basis for recognizing the
revenue ratably over the term of the License Agreement. Refer to FASB ASC 605-10-25 and SAB Topic
13A3.</I>
</DIV>

<DIV align="justify" style="font-size: 10pt; margin-top: 10pt"><B><I>FuelCell Response:</I></B>
</DIV>

<DIV align="justify" style="font-size: 10pt; margin-top: 10pt">We acknowledge the Staff&#146;s comment and will disclose in future filings the amount of royalty
revenue recognized during fiscal year 2010. The Company filed the Stack Technology Transfer and
License Agreement (the &#147;Agreement&#148;) as exhibit 10.1 of Form 8-K on November&nbsp;2, 2009. The Agreement
provided that POSCO make an up-front royalty payment to the Company in the amount of $10,000,000 on
the effective date of the Agreement. Of that amount, the Company recorded license fee income, in
interest and other income, net in the amount of $1&nbsp;million for fiscal year 2010.
</DIV>

<DIV align="justify" style="font-size: 10pt; margin-top: 10pt">The terms of the upfront license fee obligate the Company in various ways, including license and
protection of the FCE Technology and Trademarks, transfer of Technical Data and developing plans
for the manufacture and development of the FCE Technology in Korea. The Agreement also provides
that in the event FCE fails to perform any obligation under the Agreement and such breach or
failure is not cured within sixty days after notice from POSCO Power, then POSCO Power shall have
the right to terminate the Agreement after complying with the procedures set forth in the Agreement
and among numerous other remedies outlined in the Agreement, FCE shall pay actual damages to POSCO
Power.
</DIV>

<DIV align="justify" style="font-size: 10pt; margin-top: 10pt">While the license agreement does not explicitly refer to a refund of the upfront license fee, the
terms do provide POSCO Power with a means to obtain damages back from the Company in the event of
material breach of contract. The Company considered the numerous activities that both FCE and
POSCO Power were jointly responsible to perform over the term of the license agreement to develop
the fuel cell market in South Korea and enable POSCO Power to meet the potential demand. This
includes, among other things, transfer of technical data, localization of manufacturing in South
Korea, exchanging technical data to assist in the development of new products and improvement of
existing products. The Company does not believe that these multiple deliverables had standalone
value, but were part of an ongoing collaborative arrangement between the parties. As a result of
these deliverables, the unknown exact timing for performance and the ability for POSCO Power to
seek damages if they determined FCE is in material breach, the Company determined that the upfront
license fee was not earned or realized at the time of receipt as outlined in ASC 605-10-25 and
should be recognized over the life of the license agreement as delivery and performance occurred.
The Company believes that ratable recognition of the license fee over the term of the license
agreement was appropriate as there was no other identifiable pattern of recognition that was deemed
more appropriate, and the general nature of the agreement was providing POSCO with a license that
they would benefit from ratably over the term.
</DIV>
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<DIV align="left" style="font-size: 10pt; margin-top: 10pt">Mr.&nbsp;Cascio<BR>
Securities and Exchange Commission<BR>
October&nbsp;28, 2011<BR>
Page 13

</DIV>


<DIV align="justify" style="font-size: 10pt; margin-top: 10pt"><U>Note 12. Segment Information, page 98</U>
</DIV>


<DIV align="justify" style="font-size: 10pt; margin-top: 10pt"><I>15.&nbsp;Please tell us how you concluded that research and development activities and the production
and sale of fuel cell products are one &#147;activity&#148; such that you operate in one business segment.
Please refer to the provisions of FASB ASC 280-10-50 and explain to us how you determined your
reportable segments.</I>
</DIV>

<DIV align="justify" style="font-size: 10pt; margin-top: 10pt"><B><I>FuelCell Response:</I></B>
</DIV>

<DIV align="justify" style="font-size: 10pt; margin-top: 10pt">The Company has reviewed FASB ASC 280-10-50 in determining its reportable segments and it applies
the management approach to determine what information to report to shareholders. The management
approach is based on the way that management organizes the segments within the public entity for
making operating decisions and assessing performance. Consequently, the segments are evident from
the structure of the public entity&#146;s internal organization. Section&nbsp;280-10-50 defines an operating
segment of a public entity as one that has all of the following characteristics:
</DIV>


<DIV align="justify" style="font-size: 10pt; margin-top: 10pt; margin-left: 8%">a. It engages in business activities from which it may earn revenues and incur expenses
(including revenues and expenses relating to transactions with other components of the same
public entity).
</DIV>


<DIV align="justify" style="font-size: 10pt; margin-top: 10pt; margin-left: 8%">b. Its operating results are regularly reviewed by the public entity&#146;s chief operating
decision maker to make decisions about resources to be allocated to the segment and assess
its performance.
</DIV>


<DIV align="justify" style="font-size: 10pt; margin-top: 10pt; margin-left: 8%">c. Its discrete financial information is available.
</DIV>

<DIV align="justify" style="font-size: 10pt; margin-top: 10pt">The Company&#146;s internal financial and operational reports reviewed by the chief operating decision
maker (&#147;CODM&#148;) are consistent with how information is presented externally. Discrete financial
information for research and development activities is not available to any greater extent than
that presented in our public filings. This includes revenue from research and development
contracts and cost of research and development contracts. Allocations of other expenses below the
gross margin level are not made and presented to the CODM and there is no balance sheet or cash
flows developed for research and development activities. Furthermore, the overhead rates (selling,
general and administrative (&#147;SG&#038;A&#148;) rate, engineering rate and manufacturing rate) used for billing
purposes under research and development contracts is based on financial information for the Company
as a whole. There is no segregation of these functions to enable separate billing rates.
Accordingly, the CODM is not provided with financial information at a discrete enough level to be
able to assess performance of research and development activities as if it operated as a standalone
business segment. Other business operational practices considered were:
</DIV>

<DIV style="margin-top: 10pt">
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">
<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="4%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left"><B>&#149;</B></TD>
    <TD width="1%">&nbsp;</TD>
    <TD><DIV style="text-align: justify">The CODM moves employees and other resources to various tasks from time to time based
on the overall needs of the Company (e.g., fuel cell power plant performance issues,
progress on other internally funded research and development activities, etc.).</DIV></TD>
</TR>

<TR style="font-size: 8pt">
    <TD>&nbsp;</TD>
</TR> <TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="4%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left"><B>&#149;</B></TD>
    <TD width="1%">&nbsp;</TD>
    <TD><DIV style="text-align: justify">The CODM reviews and approves all contracts the Company enters into, including product
sales contracts, long-term service agreements and contracts to conduct research and
development
activities. The CODM views each contract on the basis of how it will contribute to the
Company&#146;s overall development, design, production and sale of fuel cells.</DIV></TD>
</TR>

</TABLE>
</DIV><P align="center" style="font-size: 10pt">&nbsp;

<P align="center" style="font-size: 10pt"><!-- Folio -->&nbsp;<!-- /Folio -->
</DIV>

<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always">&nbsp;</H5><P>

<DIV style="font-family: 'Times New Roman',Times,serif; margin-left: .25in; width: 7.50in">

<DIV align="left" style="font-size: 10pt; margin-top: 10pt">Mr.&nbsp;Cascio<BR>
Securities and Exchange Commission<BR>
October&nbsp;28, 2011<BR>
Page 14

</DIV>


<DIV style="margin-top: 10pt"><TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">


</TABLE>
</DIV>

<DIV align="justify" style="font-size: 10pt; margin-top: 10pt">Based on the above, the Company views research and development activities as another product line
that contributes to the development, design, production and sale of fuel cell products, but does
not consider it a separate operating segment. As the business continues to grow and evolve, the
Company will continue to evaluate whether it is appropriate to report additional operating segments
and revise future filings accordingly.
</DIV>

<DIV align="justify" style="font-size: 10pt; margin-top: 10pt"><U>Form&nbsp;10-Q for the fiscal quarter ended July&nbsp;31, 2011 </U>
</DIV>


<DIV align="justify" style="font-size: 10pt; margin-top: 10pt"><U>Note 11. Registered Direct Offering, page 14</U>
</DIV>


<DIV align="justify" style="font-size: 10pt; margin-top: 10pt"><I>16.&nbsp;We note that you entered into an agreement to sell units consisting of shares of common stock
and warrants in January&nbsp;2011 pursuant to a registered direct offering. Please provide us with a
summary of the terms of the warrants and tell us your consideration of the accounting for the
warrants under ASC 815-40-25 (formerly paragraphs 14 &#151; 18 of EITF 00-19). Your analysis should
also address how you considered any further registration and prospectus delivery requirements that
are outside of the control of the company.</I>
</DIV>

<DIV align="justify" style="font-size: 10pt; margin-top: 10pt"><B><I>FuelCell Response:</I></B>
</DIV>

<DIV align="justify" style="font-size: 10pt; margin-top: 10pt">For the Staff&#146;s information, there was only one investor in the referenced transaction so only one
warrant was ultimately issued. As background and in response to the Staff&#146;s request, we are
providing the following <U><I>Summary of Material Terms of Warrants.</I></U>
</DIV>

<DIV align="justify" style="font-size: 10pt; margin-top: 10pt; margin-left: 4%"><I>Exercisability. </I>The holder may exercise the warrant beginning on the date that is six months and
one day after the date of original issuance and at any time up to the date that is twenty-one
months after such date of issuance. The warrant is exercisable, at the option of the holder, in
whole or in part by delivering to us a duly executed exercise notice accompanied by payment in
full for the number of shares of our common stock purchased upon such exercise (except in the
case of a cashless exercise as discussed below). The exercise price per share of common stock
purchasable upon exercise of the warrants is $2.29 per share of common stock being purchased.
</DIV>

<DIV align="justify" style="font-size: 10pt; margin-top: 10pt; margin-left: 4%"><I>Cashless Exercise. </I>If at any time during the warrant exercisability period either (x)&nbsp;a
registration statement covering the shares of common stock issuable upon exercise of the warrant
that are the subject of such exercise notice (the &#147;Unavailable Warrant Shares&#148;), or an exemption
from registration, is not available for the resale of such Unavailable Warrant Shares and the
warrant holder so elects or (y)&nbsp;an exercise notice is delivered during a &#147;cashless exercise
period&#148; (as such term is defined below), then in lieu of making the cash payment otherwise
contemplated to be made to the Company upon such exercise in payment of the aggregate exercise
price, the holder will instead receive upon such exercise the &#147;net number&#148; of shares of common
stock determined according to a formula. The &#147;cashless exercise period&#148; is the period following
written notice from
the Company to the warrant holder that the Company requires that the exercise of the warrant be
pursuant to a cashless exercise. The Company must provide such notice no later than the
180<SUP style="font-size: 85%; vertical-align: text-top">th</SUP> day prior to the expiration of the warrant.
</DIV>
<P align="center" style="font-size: 10pt">&nbsp;

<P align="center" style="font-size: 10pt"><!-- Folio -->&nbsp;<!-- /Folio -->
</DIV>

<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always">&nbsp;</H5><P>

<DIV style="font-family: 'Times New Roman',Times,serif; margin-left: .25in; width: 7.50in">

<DIV align="left" style="font-size: 10pt; margin-top: 10pt">Mr.&nbsp;Cascio<BR>
Securities and Exchange Commission<BR>
October&nbsp;28, 2011<BR>
Page 15

</DIV>


<DIV align="justify" style="font-size: 10pt; margin-top: 10pt; margin-left: 4%"><I>Insufficient Authorized Shares. </I>If at any time from and after the one hundred and eightieth
(180th) day following the warrant issuance date and while the warrant remains outstanding the
Company does not have a sufficient number of authorized and unreserved shares of common stock to
satisfy its obligation to reserve for issuance upon exercise of the warrant at least 100% of the
maximum number of shares of common stock as shall from time to time be necessary to effect the
exercise of the warrant (without regard to any limitations on exercise) (the &#147;Required Reserve
Amount&#148;), then the Company shall immediately deliver a notice to the warrant holder specifying
the number of shares unavailable to satisfy its obligations under the warrant and shall take all
action necessary to increase the Company&#146;s authorized shares of common stock to an amount
sufficient to allow the Company to reserve the Required Reserve Amount for the warrant. In the
event that at the time of exercise of the warrant there are insufficient shares of common stock
issuable under such warrant, then the Company shall hold a meeting of its stockholders for the
approval of an increase in the number of authorized shares of Common Stock. In the event that
upon any exercise of the warrant at any time from and after the 180<SUP style="font-size: 85%; vertical-align: text-top">th</SUP> day following
the warrant issuance date, the Company does not have sufficient authorized shares to deliver in
satisfaction of such exercise, then unless the warrant holder elects to void such exercise, the
Company shall pay to the warrant holder a cash value as described in the agreement within three
(3)&nbsp;trading days of the applicable exercise.
</DIV>

<DIV align="justify" style="font-size: 10pt; margin-top: 10pt"><U>Our Accounting Considerations for Warrants are as follows: </U>
</DIV>


<DIV align="justify" style="font-size: 10pt; margin-top: 10pt">Paragraph&nbsp;11(a) of Statement No.&nbsp;133 (ASC 815-10-15-74) specifies that a contract that would
otherwise meet the definition of a derivative under that Statement issued or held by the reporting
entity that is both (a)&nbsp;indexed to its own stock and (b)&nbsp;classified in stockholders&#146; equity in its
statement of financial position shall not be considered a derivative financial instrument for
purposes of applying that Statement. If a freestanding financial instrument meets the scope
exception in paragraph 11(a) of Statement No.&nbsp;133, it is classified as an equity instrument and is
not accounted for as a derivative instrument.
</DIV>

<DIV align="justify" style="font-size: 10pt; margin-top: 10pt">The warrant is (a)&nbsp;indexed to the Company&#146;s own stock and are (b)&nbsp;classified in stockholders&#146;
equity (per discussion below). Therefore, the warrant meets the scope exception in paragraph 11(a)
of Statement No.&nbsp;133 and is not considered a derivative financial instrument. The Company has
considered the following guidance to determine whether the warrant is indexed to the Company&#146;s own
stock:
</DIV>

<DIV align="justify" style="font-size: 10pt; margin-top: 10pt"><I>Step 1 (Exercise Contingencies) Analysis:</I>
</DIV>

<DIV align="justify" style="font-size: 10pt; margin-top: 10pt">The Company believes that there are no exercise contingencies as described as allowable under Step
1 of EITF 07-5 (ASC 815-40). Therefore, the analysis should proceed to Step 2.
</DIV>
<P align="center" style="font-size: 10pt">&nbsp;

<P align="center" style="font-size: 10pt"><!-- Folio -->&nbsp;<!-- /Folio -->
</DIV>

<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always">&nbsp;</H5><P>

<DIV style="font-family: 'Times New Roman',Times,serif; margin-left: .25in; width: 7.50in">

<DIV align="left" style="font-size: 10pt; margin-top: 10pt">Mr.&nbsp;Cascio<BR>
Securities and Exchange Commission<BR>
October&nbsp;28, 2011<BR>
Page 16

</DIV>


<DIV align="justify" style="font-size: 10pt; margin-top: 10pt"><I>Step 2 (Settlement Provisions) Analysis:</I>
</DIV>

<DIV align="justify" style="font-size: 10pt; margin-top: 10pt">Adjustments to the settlement provisions were analyzed under Step 2:
</DIV>

<DIV style="margin-top: 10pt">
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">
<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="4%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left"><B>&#149;</B></TD>
    <TD width="1%">&nbsp;</TD>
    <TD><DIV style="text-align: justify">Anti-dilution Provisions</DIV></TD>
</TR>

</TABLE>
</DIV>

<DIV style="margin-top: 10pt">
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">
<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="8%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left"><B>&#149;</B></TD>
    <TD width="1%">&nbsp;</TD>
    <TD><DIV style="text-align: justify">Adjustment for stock split, stock dividend, recapitalization, reorganization,
scheme, arrangement, etc. (Section&nbsp;2)</DIV></TD>
</TR>

</TABLE>
</DIV>

<DIV style="margin-top: 10pt">
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">
<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="8%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left"><B>&#149;</B></TD>
    <TD width="1%">&nbsp;</TD>
    <TD><DIV style="text-align: justify">Adjustment for the
distribution of shares of capital stock, evidences of the
Company&#146;s indebtedness, other assets or property, or rights or warrants to acquire the
Company&#146;s capital stock to all or substantially all holders of the Company&#146;s common
stock. (Section&nbsp;3)</DIV></TD>
</TR>

</TABLE>
</DIV>

<DIV style="margin-top: 10pt">
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">
<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="8%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left"><B>&#149;</B></TD>
    <TD width="1%">&nbsp;</TD>
    <TD><DIV style="text-align: justify">Adjustment for any cash dividend or distribution to all or substantially all
holders of the Company&#146;s common stock. (Section&nbsp;3)</DIV></TD>
</TR>

</TABLE>
</DIV>

<DIV style="margin-top: 10pt">
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">
<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="8%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left"><B>&#149;</B></TD>
    <TD width="1%">&nbsp;</TD>
    <TD><DIV style="text-align: justify">Adjustment for the issuance of any rights or warrants to common stockholders to
subscribe for or purchase shares of the Company&#146;s common stock at a price per share
below the sales price of the stock. (Section&nbsp;4)</DIV></TD>
</TR>

</TABLE>
</DIV>

<DIV align="justify" style="font-size: 10pt; margin-top: 10pt">Anti-dilution Provisions: The adjustments to the exercise price of the warrants to afford standard
anti-dilution protection does not preclude the Warrants from being considered indexed to the
Company&#146;s own stock under EITF 07-5 when similar adjustments are made.
</DIV>

<DIV align="justify" style="font-size: 10pt; margin-top: 10pt">Based on the above analysis, the Company considers the Warrants to be considered indexed to the
Company&#146;s own stock under EITF 07-5 (ASC 815-40). The Warrants were also assessed to determine
whether or not it should be classified within stockholders&#146; equity pursuant to EITF 00-19 (ASC
815-40).
</DIV>

<DIV align="justify" style="font-size: 10pt; margin-top: 10pt">The assessment is below.
</DIV>
<DIV align="center">
<TABLE style="font-size: 10pt" cellspacing="0" border="0" cellpadding="0" width="100%">
<!-- Begin Table Head --><TR valign="bottom">
    <TD width="15%">&nbsp;</TD>
    <TD width="2%">&nbsp;</TD>
    <TD width="30%">&nbsp;</TD>
    <TD width="2%">&nbsp;</TD>
    <TD width="30%">&nbsp;</TD>
</TR>
<TR style="font-size: 10pt" valign="bottom">
    <TD nowrap align="left"><B>ASC 815-40-25</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 10pt" valign="bottom">
    <TD nowrap align="left"><B>(00-19</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 10pt" valign="bottom">

<TD nowrap align="left" style="border-bottom: 1px solid #000000"><B>Paragraph)</B></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" style="border-bottom: 1px solid #000000"><B>00-19 Requirement</B></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" style="border-bottom: 1px solid #000000"><B>Application to the Warrants</B></TD>
</TR>


<!-- End Table Head -->
<!-- Begin Table Body -->

<TR>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">ASC 815-40-25-7 and
25-9 (par. 12 EITF <BR>
00-19)
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">An instrument that
includes any
provision that
could require
net-cash settlement
cannot be accounted
for as equity
(except in those
limited
circumstances in
which holders of
the underlying
shares also would
receive cash &#151;
e.g., liquidation).
For SEC
registrants, any
provision that
could require
physical settlement
by a cash payment
to the counter
party in exchange
for the company&#146;s
shares cannot be
accounted for as
permanent equity
(temporary equity
classification is
required).
</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">It is within the Company&#146;s
control to avoid cash
payment to settle this
instrument (refer to last
paragraph of this response
for discussion of the
cashless exercise option
that the Company
controls). The Company
believes that this
provision would not
preclude equity
classification.</TD>
</TR>
<!-- End Table Body --></TABLE>
</DIV>

<P align="center" style="font-size: 10pt">&nbsp;

<P align="center" style="font-size: 10pt"><!-- Folio -->&nbsp;<!-- /Folio -->
</DIV>

<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always">&nbsp;</H5><P>

<DIV style="font-family: 'Times New Roman',Times,serif; margin-left: .25in; width: 7.50in">

<DIV align="left" style="font-size: 10pt; margin-top: 10pt">Mr.&nbsp;Cascio<BR>
Securities and Exchange Commission<BR>
October&nbsp;28, 2011<BR>
Page 17

</DIV>

<DIV align="center">
<TABLE style="font-size: 10pt" cellspacing="0" border="0" cellpadding="0" width="100%">
<!-- Begin Table Head --><TR valign="bottom">
    <TD width="15%">&nbsp;</TD>
    <TD width="2%">&nbsp;</TD>
    <TD width="30%">&nbsp;</TD>
    <TD width="2%">&nbsp;</TD>
    <TD width="30%">&nbsp;</TD>
</TR>
<TR style="font-size: 10pt" valign="bottom">
    <TD nowrap align="left"><B>ASC 815-40-25</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 10pt" valign="bottom">
    <TD nowrap align="left"><B>(00-19</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 10pt" valign="bottom">

<TD nowrap align="left" style="border-bottom: 1px solid #000000"><B>Paragraph)</B></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" style="border-bottom: 1px solid #000000"><B>00-19 Requirement</B></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" style="border-bottom: 1px solid #000000"><B>Application to the Warrants</B></TD>
</TR>


<!-- End Table Head -->
<!-- Begin Table Body -->

<TR>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">ASC 815-40-25-10
through 25-18 (par.
<font style="white-space: nowrap">13-18</FONT>  EITF 00-19)
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">In order to be
equity classified,
an instrument must
permit the company
to settle in
unregistered
shares. Related
considerations: (1)
the contract
permits a company
to net-share settle
by delivery of
unregistered
shares; (2)&nbsp;if (a)
a derivative
contract requires
physical or
net-share
settlement by
delivery of
registered shares
and does not
specify any
circumstances under
which net-cash
settlement would be
permitted or
required and (b)
the contract does
not specify how the
contract would be
settled in the
event that the
company is unable
to deliver
registered shares,
then net-cash
settlement is
assumed if the
company is unable
to deliver
registered shares
and the instruments
fails equity
classification; (3)
If a settlement
alternative
includes a penalty
that would be
avoided by a
company under other
settlement
alternatives, the
uneconomic
settlement
alternative should
be disregarded in
classifying the
contract, 4) if an
instrument involves
delivery of shares
at settlement that
are registered at
inception of the
transaction and
there are no
further timely
filing or
registration
requirements, share
delivery is within
the control of the
company.
</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">The Company may settle the
warrants in unregistered
shares. Therefore, equity
classification is not
precluded.</TD>
</TR>
<TR valign="bottom" style="padding-top: 1px"><!-- Blank Space -->
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
</TR>
<TR valign="bottom" style="padding-top: 1px">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">ASC 815-40-25-19
and 25-22 through
25-24 (par. 19 EITF
00-19)
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">The Issuer must
have sufficient
authorized and
unissued shares
available to settle
the contract after
considering all
other commitments
that may require
the issuance of
stock during the
maximum period the
derivative contract
could remain
outstanding. If a
company could be
required to obtain
shareholder
approval to
increase the
company&#146;s
authorized shares
in order to
net-share or
physically settle a
contract, share
settlement is not
controlled by the
company and asset
or liability
classification is
required.
</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">The Company has sufficient
authorized and unissued
shares available to settle
the transaction with
consideration given to all
other outstanding
share-settled contracts.
The Company expects to
fully keep an amount
reserved for possible
exercise. Therefore,
equity classification is
not precluded.</TD>
</TR>
<!-- End Table Body --></TABLE>
</DIV>

<P align="center" style="font-size: 10pt">&nbsp;

<P align="center" style="font-size: 10pt"><!-- Folio -->&nbsp;<!-- /Folio -->
</DIV>

<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always">&nbsp;</H5><P>

<DIV style="font-family: 'Times New Roman',Times,serif; margin-left: .25in; width: 7.50in">

<DIV align="left" style="font-size: 10pt; margin-top: 10pt">Mr.&nbsp;Cascio<BR>
Securities and Exchange Commission<BR>
October&nbsp;28, 2011<BR>
Page 18

</DIV>

<DIV align="center">
<TABLE style="font-size: 10pt" cellspacing="0" border="0" cellpadding="0" width="100%">
<!-- Begin Table Head --><TR valign="bottom">
    <TD width="15%">&nbsp;</TD>
    <TD width="2%">&nbsp;</TD>
    <TD width="30%">&nbsp;</TD>
    <TD width="2%">&nbsp;</TD>
    <TD width="30%">&nbsp;</TD>
</TR>

<TR style="font-size: 10pt" valign="bottom">
    <TD nowrap align="left"><B>ASC 815-40-25</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 10pt" valign="bottom">
    <TD nowrap align="left"><B>(00-19</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 10pt" valign="bottom">

<TD nowrap align="left" style="border-bottom: 1px solid #000000"><B>Paragraph)</B></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" style="border-bottom: 1px solid #000000"><B>00-19 Requirement</B></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" style="border-bottom: 1px solid #000000"><B>Application to the Warrants</B></TD>
</TR>


<!-- End Table Head -->
<!-- Begin Table Body -->

<TR>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">ASC 815-40-25-26
through 25-28 (par.
<font style="white-space: nowrap">20-24</FONT> EITF <font style="white-space: nowrap">00-19)</FONT>
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">An instrument must
contain an explicit
limit on the number
of shares to be
delivered in a
share settlement.
For certain
contracts, the
number of shares
that could be
required to be
delivered upon
net-share
settlement is
essentially
indeterminate. If
the number of
shares that could
be required to be
delivered to
net-share settle
the contract is
indeterminate, a
company will be
unable to conclude
that it has
sufficient
available
authorized and
unissued shares
and, therefore,
net-share
settlement is not
within the control
of the company. If
a contract limits
or caps the number
of shares to be
delivered upon
expiration of the
contract to a fixed
number, then that
fixed maximum
number can be
compared to the
available
authorized and
unissued shares to
determine if
net-share
settlement is
within the control
of the company.
</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">The number of shares
issuable in the Warrant
transaction is no greater
than 10,160,428 shares.
Therefore, equity
classification is not
precluded.</TD>
</TR>
<TR valign="bottom" style="padding-top: 1px"><!-- Blank Space -->
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
</TR>
<TR valign="bottom" style="padding-top: 1px">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">ASC 815-40-25-29
(par. 25 EITF
00-19)
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">An instrument must
not require cash
payment to the
counter-party in
the event the
company fails to
make timely filings
with the SEC, as
this is not within
the control of the
company.
Accordingly, if a
contract permits
share settlement
but requires
net-cash settlement
in the event that
the company does
not make timely
filings with the
SEC, that contract
must be classified
as an asset or a
liability.
</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">No such terms exist. The
Company is only required
to deliver cash in the
event that they do not
deliver unregistered
shares. Therefore, equity
classification is not
precluded.</TD>
</TR>
<TR valign="bottom" style="padding-top: 1px"><!-- Blank Space -->
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
</TR>
<TR valign="bottom" style="padding-top: 1px">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">ASC 815-40-25-30
(par. 26 EITF
00-19)
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">An instrument
cannot require cash
payments to the
counter-party if
the shares
initially delivered
upon settlement of
the warrants are
subsequently sold
and the sales
proceeds are
insufficient to
provide the
counter-party with
full return of the
amount due (that
is, there are no
cash settled
&#147;top-off&#148; or
&#147;make-whole&#148;
provisions).
Top-off or make
whole provisions
that are net share
settled and are
also subject to the
share cap would not
preclude equity
classification.
</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">The terms allow for
delivery of unregistered
shares. Therefore, equity
classification is not
precluded.</TD>
</TR>
<TR valign="bottom" style="padding-top: 1px"><!-- Blank Space -->
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
</TR>
<TR valign="bottom" style="padding-top: 1px">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">ASC 815-40-55-8 and
ASC 815-40-55-2
through 55-6 (par.
27-28 EITF 00-19)
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">An instrument may
require net cash
settlement in
specific
circumstances in
which the holders
of the shares
underlying the
contract also would
receive cash.
</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">The Warrants do not
provide for net-cash
settlement upon the
occurrence of a merger
event or tender offer.
Therefore, equity
classification is not
precluded.</TD>
</TR>
<!-- End Table Body --></TABLE>
</DIV>

<P align="center" style="font-size: 10pt">&nbsp;

<P align="center" style="font-size: 10pt"><!-- Folio -->&nbsp;<!-- /Folio -->
</DIV>

<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always">&nbsp;</H5><P>

<DIV style="font-family: 'Times New Roman',Times,serif; margin-left: .25in; width: 7.50in">

<DIV align="left" style="font-size: 10pt; margin-top: 10pt">Mr.&nbsp;Cascio<BR>
Securities and Exchange Commission<BR>
October&nbsp;28, 2011<BR>
Page 19

</DIV>

<DIV align="center">
<TABLE style="font-size: 10pt" cellspacing="0" border="0" cellpadding="0" width="100%">
<!-- Begin Table Head --><TR valign="bottom">
    <TD width="15%">&nbsp;</TD>
    <TD width="2%">&nbsp;</TD>
    <TD width="30%">&nbsp;</TD>
    <TD width="2%">&nbsp;</TD>
    <TD width="30%">&nbsp;</TD>
</TR>
<TR style="font-size: 10pt" valign="bottom">
    <TD nowrap align="left"><B>ASC 815-40-25</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 10pt" valign="bottom">
    <TD nowrap align="left"><B>(00-19</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 10pt" valign="bottom">

<TD nowrap align="left" style="border-bottom: 1px solid #000000"><B>Paragraph)</B></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" style="border-bottom: 1px solid #000000"><B>00-19 Requirement</B></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" style="border-bottom: 1px solid #000000"><B>Application to the Warrants</B></TD>
</TR>


<!-- End Table Head -->
<!-- Begin Table Body -->

<TR>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">ASC 815-40-25-31
through ASC
815-40-25-34 (par.
<font style="white-space: nowrap">29-31</FONT>  EITF <font style="white-space: nowrap">00-19)</FONT>
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">An instrument must
not contain
provisions that
indicate that the
counterparty to the
transaction has
rights that rank
higher than those
of a shareholder of
the stock
underlying the
contract. To be
classified as
equity, a contract
cannot give the
counter-party any
of the rights of a
creditor in the
event of the
company&#146;s
bankruptcy.
</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">The rights of the warrant
holders rank no higher
than those of the
underlying shareholders in
the event of bankruptcy.
Therefore, equity
classification is not
precluded.</TD>
</TR>
<TR valign="bottom" style="padding-top: 1px"><!-- Blank Space -->
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
</TR>
<TR valign="bottom" style="padding-top: 1px">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">ASC 815-40-25-35
(par. 32 EITF
00-19)
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">An instrument must
not require the
issuer to post
collateral at any
point or for any
reason as this is
inconsistent with
the concept of
equity and,
therefore, would
preclude equity
classification of
the contract.
</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">There is no requirement to
post collateral, nor are
there any setoff
provisions. Therefore,
equity classification is
not precluded.</TD>
</TR>
<!-- End Table Body --></TABLE>
</DIV>


<DIV align="justify" style="font-size: 10pt; margin-top: 10pt">As described above, the Company has sufficient authorized and unissued shares available to settle
the transaction with consideration given to all other outstanding share-settled contracts.
</DIV>

<DIV align="justify" style="font-size: 10pt; margin-top: 10pt">Per the terms of the agreement, if the Company has not issued a cashless exercise notice prior to
April&nbsp;2012 and the holder exercises the warrant and does not choose a cashless exercise under the
terms of the warrant, and the Company does not have the ability to issue registered shares, then
the Company may be required to settle the obligation in cash for failing to timely deliver
securities. However, as described below, in the event that the Company cannot deliver registered
shares upon exercise, there is a cashless exercise alternative that the Company currently has the
option to elect. The Company controls the cashless exercise provisions from the time of issuance
until April&nbsp;2012 (180&nbsp;days before expiration) through its ability to provide a notice to the
holder. The Company may provide this cashless exercise notice up to 180&nbsp;days prior to expiration
of the warrant instrument (October&nbsp;2012). If for any reason, registered shares are not available
for issuance upon exercise of the warrants, the Company plans to promptly provide a cashless
exercise notice. Additionally, it is the Company&#146;s intent to issue a cashless exercise notice
immediately prior to April&nbsp;2012 and does not anticipate settling this instrument in cash. As a
result, once the Company issues the cashless exercise notice, the Company may issue unregistered
shares as settlement for the warrant obligation if registered shares are not available. During
this period the Company cannot be required to settle in cash if unregistered shares are delivered
timely.
</DIV>
<P align="center" style="font-size: 10pt">&nbsp;

<P align="center" style="font-size: 10pt"><!-- Folio -->&nbsp;<!-- /Folio -->
</DIV>

<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always">&nbsp;</H5><P>

<DIV style="font-family: 'Times New Roman',Times,serif; margin-left: .25in; width: 7.50in">
<DIV align="left" style="font-size: 10pt; margin-top: 10pt">Mr.&nbsp;Cascio<BR>
Securities and Exchange Commission<BR>
October&nbsp;28, 2011<BR>
Page 20

</DIV>


<DIV align="justify" style="font-size: 10pt; margin-top: 10pt"><U>Form&nbsp;8-K Dated September&nbsp;6, 2011</U>
</DIV>


<DIV align="justify" style="font-size: 10pt; margin-top: 10pt"><U>Exhibit&nbsp;99.1</U>
</DIV>


<DIV align="justify" style="font-size: 10pt; margin-top: 10pt"><I>17.&nbsp;We reference your disclosure of the non-GAAP product sales cost ratio before repair and upgrade
charges. In future filings, provide all disclosures required by Item</I><I>10(e)(1)(i)</I><I> of Regulation&nbsp;S-K,
including an explanation why you believe this non-GAAP measure provides useful information to
investors.</I>
</DIV>

<DIV align="justify" style="font-size: 10pt; margin-top: 10pt"><B><I>FuelCell Response:</I></B>
</DIV>

<DIV align="justify" style="font-size: 10pt; margin-top: 10pt">The Company acknowledges the Staff&#146;s comment and will expand disclosure in future filings to
clarify why it believes presentation of the non-GAAP product sales cost ratio before the repair and
upgrade charges as well as any other non-GAAP measures provide useful information to investors.
</DIV>

<DIV align="justify" style="font-size: 10pt; margin-top: 10pt"><I>18.&nbsp;Please tell us how your presentation titled &#147;Reconciliation of GAAP to Non-GAAP Consolidated
Statements of Operations&#148; considers the guidance from Compliance &#038; Disclosure Interpretation
102.10. Under the cited guidance, presentation of a non-GAAP statement of operations is not
generally appropriate.</I>
</DIV>

<DIV align="justify" style="font-size: 10pt; margin-top: 10pt"><B><I>FuelCell Response:</I></B>
</DIV>

<DIV align="justify" style="font-size: 10pt; margin-top: 10pt">The Company acknowledges the Staff&#146;s comment. For the earnings release filed as part of the 8-K
dated September&nbsp;6, 2011, the Company did not believe that undue prominence was provided to the
non-GAAP consolidated statement of operations due to (i)&nbsp;it was included at the end of the earnings
release following the GAAP consolidated balance sheet and the three and nine month consolidated
statements of operations and (ii)&nbsp;the non-GAAP reconciliation was prominently titled as such and
was followed by notes to explain the reconciliation. The Company intended to provide investors
with an understanding of the specific line items impacted and believed the most straightforward
presentation was using a reconciliation of the statement of operations.
</DIV>

<DIV align="justify" style="font-size: 10pt; margin-top: 10pt">The Company will nonetheless consider the Compliance &#038; Disclosure Interpretation 102.10 prior to
future presentation of any non-GAAP information and revise future filings as necessary.
</DIV>
<P align="center" style="font-size: 10pt">&nbsp;

<P align="center" style="font-size: 10pt"><!-- Folio -->&nbsp;<!-- /Folio -->
</DIV>

<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always">&nbsp;</H5><P>

<DIV style="font-family: 'Times New Roman',Times,serif; margin-left: .25in; width: 7.50in">
<DIV align="left" style="font-size: 10pt; margin-top: 10pt">Mr.&nbsp;Cascio<BR>
Securities and Exchange Commission<BR>
October&nbsp;28, 2011<BR>
Page 21

</DIV>


<DIV align="justify" style="font-size: 10pt; margin-top: 10pt">The Company believes that it has addressed the Staff&#146;s comments. FuelCell acknowledges the
following:
</DIV>

<DIV style="margin-top: 10pt">
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">
<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="4%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left"><B>&#149;</B></TD>
    <TD width="1%">&nbsp;</TD>
    <TD><DIV style="text-align: justify">The company is responsible for the adequacy and accuracy of the disclosure in the
filing;</DIV></TD>
</TR>

</TABLE>
</DIV>

<DIV style="margin-top: 10pt">
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">
<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="4%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left"><B>&#149;</B></TD>
    <TD width="1%">&nbsp;</TD>
    <TD><DIV style="text-align: justify">Staff comments or changes to disclosure in response to staff comments do not foreclose
the Commission from taking any action with respect to the filing; and</DIV></TD>
</TR>

</TABLE>
</DIV>

<DIV style="margin-top: 10pt">
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">
<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="4%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left"><B>&#149;</B></TD>
    <TD width="1%">&nbsp;</TD>
    <TD><DIV style="text-align: justify">The Company may not assert staff comments as a defense in any proceeding initiated by
the Commission or any person under the federal securities laws of the United States.</DIV></TD>
</TR>

</TABLE>
</DIV>

<DIV align="justify" style="font-size: 10pt; margin-top: 10pt">Sincerely,
</DIV>

<DIV align="center">
<TABLE style="font-size: 10pt" cellspacing="0" border="0" cellpadding="0" width="100%">
<!-- Begin Table Head --><TR valign="bottom">
    <TD width="35%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="11%">&nbsp;</TD>
</TR>

<!-- End Table Head -->
<!-- Begin Table Body -->
<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">/s/ Michael S. Bishop
<DIV style="font-size: 1pt; border-top: 1px solid #000000">&nbsp;</DIV>
Michael S. Bishop
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
</TR>
<TR valign="bottom" style="padding-top: 1px">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">Sr. Vice President &#038; CFO</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
</TR>
<!-- End Table Body --></TABLE>
</DIV>


<DIV align="left" style="margin-top: 10pt">
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt; background: transparent; color: #000000">
<TR>
    <TD width="7%"></TD>
    <TD width="1%"></TD>
    <TD></TD>
</TR>
<TR valign="top">
    <TD nowrap align="left">cc:</TD>
    <TD>&nbsp;</TD>
    <TD><DIV style="text-align: justify">Arthur A. Bottone, President &#038; CEO, FuelCell Energy, Inc.<BR>
Richard Krantz, Partner, Robinson &#038; Cole</DIV></TD>
</TR>
</TABLE>
</DIV>



<P align="center" style="font-size: 10pt">&nbsp;

<P align="center" style="font-size: 10pt"><!-- Folio -->&nbsp;<!-- /Folio -->
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`
end
</TEXT>
</DOCUMENT>
</SEC-DOCUMENT>
