What changed in this filing

/stocks — the workspaceLOADING

Item 9A. Controls and Procedures

2026-06-25 compared with 2025-06-27 · 1063 added, 981 removed, 433 unchanged (83% of the section changed)

4 unchanged sentences

In connection with the preparation of this Form 10-K for the fiscal year ended March 31, 2026, an evaluation was performed under the supervision and with the participation of our management, including the CEO and CFO, of the effectiveness of the design and operation of our disclosure controls and procedures (as defined in and pursuant to Rules 13a-15(e) and 15d-15(e) under the Exchange Act).

Based on this evaluation, our CEO and CFO have concluded that, as of March 31, 2025, due to the material weakness in our internal control over financial reporting described below, our disclosure controls and procedures were not effective.

Notwithstanding the identified material weakness, management believes the consolidated financial statements included in this Annual Report on Form 10-K fairly present, in all material respects, our consolidated financial position and consolidated results from operations and cash flows for the fiscal years ended March 31, 2025 and March 31, 2024, and our financial condition as of each such date and have been prepared in conformity with U.S.

Based on this evaluation, our CEO and CFO have concluded that, as of March 31, 2026, our disclosure controls and procedures were effective.

Management’s Report on Internal Control Over Financial Reporting

7 unchanged sentences

We conducted an evaluation of the effectiveness of our internal control over financial reporting based on the framework in Internal Control—Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission (2013 framework).

Based on this evaluation, management concluded that our internal control over financial reporting was not effective as of March 31, 2025 because of the material weakness described below.

A material weakness is a deficiency, or combination of deficiencies, in internal control over financial reporting, such that there is a reasonable possibility that a material misstatement of a company’s annual and interim financial statements will not be detected or prevented on a timely basis.

The following material weakness was identified:

● We did not design and maintain effective controls over financial reporting related to the proper accounting, presentation and disclosure for FPP service contracts, including controls relating to the relevant information technology systems used in this process.

Management’s Remediation Plan

Management, with the direction and oversight of the Audit Committee and the Board of Directors, is engaged in remediation actions to address the material weakness described above.

The Company’s remediation actions include, but are not limited to the following:

● Management has reviewed and refined the Company’s current accounting memorandums related to FPP service contracts to address the proper financial reporting considerations.

Additionally, management is enhancing the design of and implementing controls over financial reporting for FPP service contracts, including controls over the Information Technology systems specifically used in Company’s process for receiving notice of FPP claims.

We believe these measures will remediate the material weakness, but management is assessing the need for any additional steps to remediate the underlying causes that gave rise to this weakness.

The material weakness will not be considered remediated until the applicable controls operate for a sufficient period of time and management has concluded, through testing, that these controls are operating effectively.

There is no assurance that additional remediation steps will not be necessary.

Changes in Internal Control over Financial Reporting

Throughout the year ended March 31, 2025, the Company undertook remediation measures related to certain previously reported material weaknesses in internal control over financial reporting.

We completed these remediation

measures in the quarter ended March 31, 2025, including testing of the design and operating effectiveness of the related controls.

Specifically, we undertook the following remediation measures:

● We reinforced the Company’s tone at the top through employee meetings, CEO letters, management training and enhanced communication of the Company’s values and expected business conduct to Company personnel directly from senior leadership;

● We enhanced our quarterly disclosure committee meetings to require additional communication of business activities to the appropriate finance and accounting personnel and to our Board and Audit Committee as required;

● We hired additional accounting and compliance personnel as necessary to maintain an effective control environment commensurate with our financial reporting requirements;

Based on this evaluation, management concluded that our internal control over financial reporting was effective as of March 31, 2026.

Remediation of Previously Reported Material Weakness As previously disclosed in our Annual Report on Form 10-K for the fiscal year ended March 31, 2025, management identified a material weakness in internal control over financial reporting related to the proper accounting, presentation, and disclosure for FPP service contracts, including controls relating to the relevant information technology systems used in this process.

During fiscal year 2026, management, under the direction and oversight of the Audit Committee and the Board, undertook the following remediation actions to address this material weakness:

● Management enhanced the design of and implemented controls over financial reporting for FPP service contracts, including controls over the Company's process for receiving and validating notice of FPP claims;

● We reinforced the Company's tone at the top through employee meetings, CEO letters, management training, and enhanced communication of the Company's values and expected business conduct directly from senior leadership;

● We hired additional accounting and compliance personnel to maintain an effective control environment commensurate with our financial reporting requirements;

● We implemented a process to periodically review and update accounting policies.

● We reviewed and refined our accounting memorandums related to product, parts, and accessories sales to address the proper financial reporting considerations.

Additionally, we enhanced the design of and implemented controls over financial reporting for systems, products, parts, and accessories sales subject to bill and hold arrangements with customers.

As a result, we have concluded that the previously reported material weaknesses related to the above items have been remediated.

However, the completion of remediation procedures for these material weaknesses does not provide assurance that our modified controls will continue to operate properly or that our financial statements will be free from error.

We continue to undertake remediation measures related to the remaining material weakness disclosed in the Management’s Report on Internal Control over Financial Reporting section above.

As of March 31, 2026, management has concluded, through testing of the design and operating effectiveness of the related controls, that the previously reported material weakness has been fully remediated.

There are no remaining material weaknesses in our internal control over financial reporting.

Changes in Internal Control over Financial Reporting

Except as described above, there were no changes in our internal control over financial reporting during the most recent fiscal quarter that were identified in connection with management’s evaluation required by paragraph (d) of Rules 13d-15 and 15d-15 under the Exchange Act that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.

Inherent limitations of the Effectiveness of Internal Control

Inherent limitations of Internal Control

A control system, no matter how well conceived and operated, can provide only reasonable, not absolute, assurance that the objectives of the internal control system are met.

3 unchanged sentences

During the year ended March 31, 2026, none of our directors or officers adopted or terminated any contract , instruction or written plan for the purchase or sale of our securities to satisfy the affirmative defense conditions of “Rule 10b5-1 trading arrangement” or any “non-Rule 10b5-1 trading arrangement.”

Goldman NPA Liquidity Covenant Waiver Letter

Pursuant to a waiver letter dated June 23, 2025 (the “Waiver Letter”), the Purchaser and the Collateral Agent under the Exit Purchase Agreement agreed to defer the minimum liquidity increase from $2.5 million to $3.0 million from June 20, 2025 to July, 31, 2025.

The foregoing description of the Waiver Letter does not purport to be complete and is subject to, and qualified in its entirety by, the full text of the Waiver Letter, which is filed herewith as Exhibit 10.24 and is incorporated by reference herein.

Disclosure Regarding Foreign Jurisdictions that Prevent Inspections.

Disclosure Regarding F oreign Jurisdictions that Prevent Inspections.

Not applicable.

Directors, Executive Officers and Corporate Governance.

The information required by this Item is incorporated by reference from our proxy statement for our 2025 Annual Meeting of Stockholders under the captions “Proposal No.

1 Election of Directors to the Board of Directors,” “Executive Officers of the Company,” “Governance of the Company and Practices of the Board of Directors,” “Insider Trading Policies and Procedures,” and “Code of Business Conduct and Code of Ethics.” With regard to the information required by this Item regarding compliance with Section 16(a) of the Exchange Act, we will provide disclosure of delinquent Section 16(a) reports, if any, in our Proxy Statement related to the 2025 Annual Meeting of Shareholders in a section entitled “Additional Information—Delinquent Section 16(a) Reports,” and such disclosure, if any, is incorporated herein by reference.

The information required by this Item is incorporated by reference from our proxy statement for our 2026 Annual Meeting of Stockholders under the captions “Election of Directors to the Board of Directors,” “Executive Officers of the Company,” “Governance of the Company and Practices of the Board of Directors,” “Insider Trading Policies and Procedures,” and “Code of Business Conduct and Code of Ethics.” With regard to the information required by this Item regarding compliance with Section 16(a) of the Exchange Act, we will provide disclosure of delinquent Section 16(a) reports, if any, in our Proxy Statement related to the 2026 Annual Meeting of Shareholders in a section entitled “Additional Information—Delinquent Section 16(a) Reports,” and such disclosure, if any, is incorporated herein by reference.

Executive Compensation.

5 unchanged sentences

Principal Accountant Fees and Services.

The information required by this Item is incorporated by reference from our proxy statement for our 2025 Annual Meeting of Stockholders under the caption “Proposal No.

4 Ratification of Appointment of Independent Registered Public Accounting Firm.”

The information required by this Item is incorporated by reference from our proxy statement for our 2026 Annual Meeting of Stockholders under the caption “Ratification of Appointment of Independent Registered Public Accounting Firm.”

Exhibits and Financial Statement Schedules.

6 unchanged sentences

Not applicable.

CAPSTONE GREEN ENERGY HOLDINGS, INC.

CAPSTONE ENERGY+, INC.

INDEX TO CONSOLIDATED FINANCIAL STATEMENTS

2 unchanged sentences

, Los Angeles, CA

Report of Independent Registered Public Accounting Firm (PCAOB 00 688 );

Marcum , Los Angeles, CA

Consolidated Financial Statements:

2 unchanged sentences

Consolidated Statements of Operations

Consolidated Statements of Changes in Temporary Equity and Stockholders’ Deficiency

Consolidated Statements of Changes in Temporary Equity and Stockholders’ Deficit

Consolidated Statements of Cash Flows

3 unchanged sentences

To the Stockholders and Board of Directors of

Capstone Green Energy Holdings, Inc.

Capstone Energy +, Inc.

Opinion on the Financial Statements

We have audited the accompanying consolidated balance sheet of Capstone Green Energy Holdings, Inc.

and Subsidiaries (the “Company”) as of March 31, 2025, the related consolidated statements of operations, temporary equity and stockholders’ deficiency, and cash flows for the year ended March 31, 2025, and the related notes (collectively referred to as the “financial statements”).

In our opinion, the financial statements present fairly, in all material respects, the financial position of the Company as of March 31, 2025, and the results of its operations and its cash flows for the year ended March 31, 2025, in conformity with accounting principles generally accepted in the United States of America.

Explanatory Paragraph – Going Concern

The accompanying consolidated financial statements have been prepared assuming that the Company will continue as a going concern.

As more fully described in Note 2, the Company has a significant working capital deficiency, has incurred significant losses and needs to raise additional funds to meet its obligations and sustain its operations.

These conditions raise substantial doubt about the Company's ability to continue as a going concern.

Management's plans in regard to these matters are also described in Note 2.

The consolidated financial statements do not include any adjustments that might result from the outcome of this uncertainty.

We have audited the accompanying consolidated balance sheets of Capstone Energy+, Inc.

(the “Company”) as of March 31, 2026 and 2025, the related consolidated statements of operations, temporary equity and stockholders’ deficit, and cash flows for each of the two years in the period ended March 31, 2026 and 2025, and the related notes (collectively referred to as the “financial statements”).

In our opinion, the financial statements present fairly, in all material respects, the financial position of the Company as of March 31, 2026 and 2025, and the results of its operations and its cash flows for each of the two years in the period ended March 31, 2026, in conformity with accounting principles generally accepted in the United States of America.

Basis for Opinion

3 unchanged sentences

federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.

We conducted our audit in accordance with the standards of the PCAOB.

Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement, whether due to error or fraud.

The Company is not required to have, nor were we engaged to perform, an audit of its internal control over financial reporting.

As part of our audit we are required to obtain an understanding of internal control over financial reporting but not for the purpose of expressing an opinion on the effectiveness of the Company's internal control over financial reporting.

Accordingly, we express no such opinion.

Our audit included performing procedures to assess the risks of material misstatement of the financial statements, whether due to error or fraud, and performing procedures that respond to those risks.

Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the financial statements.

Our audit also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the financial statements.

We believe that our audit provide a reasonable basis for our opinion.

Critical Audit Matter

The critical audit matter communicated below is a matter arising from the current period audit of the financial statements that were communicated or required to be communicated to the audit committee and that:

(1) relate to accounts or disclosures that are material to the financial statements and (2) involved our especially challenging, subjective, or complex judgments.

The communication of critical audit matters does not alter in any way our opinion on the financial statements, taken as a whole, and we are not, by communicating the critical audit matter below, providing separate opinions on the critical audit matter or on the accounts or disclosures to which they relate.

Net Realizable Value of Inventories

Description of the Matter

The Company’s inventories totaled approximately $20.1 million as of March 31, 2025.

In addition, approximately $3.5 million of inventories were classified as long-term on the Company’s consolidated balance sheet.

As described in Note 2 to the consolidated financial statements, management values inventories at the lower of cost (determined on a first-in-first-out basis) or net realizable value.

In determining this estimate, the Company will both (a) perform a monthly analysis to compare the previous 36-month usage of its inventories to the current quantities on hand and (b) judgmentally review their inventories for any non-recurring adjustments that may be necessary based on their knowledge of the business.

Changes in the assumptions used could have a significant impact on the net realizable value of inventories.

The principal considerations for our determination that performing procedures relating to the net realizable value of inventories is a critical audit matter are (i) the significant judgement required by management when determining the net realizable value;

and (ii) a high degree of auditor judgment, subjectivity, and effort in performing procedures to evaluate management’s estimate and significant assumptions in determining the net realizable value.

How We Addressed the Matter

Addressing the matter involved performing procedures and evaluating audit evidence in connection with forming our overall opinion on the consolidated financial statements.

These procedures included:

● Obtained an understanding of the Company’s financial reporting processes in place to estimate the net realizable value of inventories;

● Compared the assumptions made by management in evaluating its-slow moving or obsolete goods to prior years to ensure such estimates and policies have remained consistent;

● Tested management’s calculation and significant assumptions made in determining its current year net realizable value of inventories, which included substantively testing the inventory usage and movement used in such calculations;

● Performed an independent sensitivity analysis to determine whether or not material differences in the net realizable value of inventories existed if management were to use a different look-back time period in their calculation;

● Performed a retrospective analysis of the Company’s net realizable value of inventories by comparing the Company’s historical write-downs in prior periods to the actual current period usage and movement.

/s/ CBIZ CPAs P.C.

CBIZ CPAs P.C.

We have served as the Company’s auditor since 2017 (such date takes into account the acquisition of the attest business of Marcum LLP by CBIZ CPAs P.C.

effective November 1, 2024)

Los Angeles, CA

June 26, 2025

REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

To the Stockholders and Board of Directors of

Capstone Green Energy Holdings, Inc.

Opinion on the Financial Statements

We have audited the accompanying consolidated balance sheet of Capstone Green Energy Holdings, Inc.

and Subsidiaries (the “Company”) as of March 31, 2024, the related consolidated statements of operations, temporary equity and stockholders’ deficiency and cash flows for the year ended March 31, 2024, and the related notes (collectively referred to as the “financial statements”).

In our opinion, the financial statements present fairly, in all material respects, the financial position of the Company as of March 31, 2024, and the results of its operations and its cash flows for the year ended March 31, 2024, in conformity with accounting principles generally accepted in the United States of America.

Explanatory Paragraph – Going Concern

The accompanying consolidated financial statements have been prepared assuming that the Company will continue as a going concern.

As more fully described in Note 2, the Company has a significant working capital deficiency, has incurred significant operating losses and needs to raise additional funds to meet its obligations and sustain its operations.

These conditions raise substantial doubt about the Company's ability to continue as a going concern.

Management's plans in regard to these matters are also described in Note 2.

The consolidated financial statements do not include any adjustments that might result from the outcome of this uncertainty.

Basis for Opinion

These financial statements are the responsibility of the Company's management.

Our responsibility is to express an opinion on the Company's financial statements based on our audits.

We are a public accounting firm registered with the Public Company Accounting Oversight Board (United States) ("PCAOB") and are required to be independent with respect to the Company in accordance with the U.S.

federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.

We conducted our audits in accordance with the standards of the PCAOB.

7 unchanged sentences

We believe that our audits provide a reasonable basis for our opinion.

Critical Audit Matter

The critical audit matter communicated below is a matter arising from the current period audit of the financial statements that was communicated or required to be communicated to the audit committee and that:

Critical Audit Matters

The critical audit matters communicated below are matters arising from the current period audit of the financial statements that were communicated or required to be communicated to the audit committee and that:

(1) relate to accounts or disclosures that are material to the financial statements and (2) involved our especially challenging, subjective, or complex judgments.

The communication of critical audit matters does not alter in any way our opinion on the financial statements, taken as a whole, and we are not, by communicating the critical audit matters below, providing separate opinions on the critical audit matters or on the accounts or disclosures to which they relate.

Net Realizable Value of Inventories

Description of the Matter

The Company’s inventories totaled approximately $24.6 million as of March 31, 2024.

In addition, approximately $3.9 million of inventories were classified as long-term on the Company’s consolidated balance sheet.

The Company’s inventories totaled approximately $24.8 million as of March 31, 2026 and approximately $2.7 million of inventories were classified as long-term on the Company’s consolidated balance sheet.

As described in Note 2 to the consolidated financial statements, management values inventories at the lower of cost (determined on a first-in-first-out basis) or net realizable value.

inventories for any non-recurring adjustments that may be necessary based on their knowledge of the business.

Changes in the assumptions used could have a significant impact on the net realizable value of inventories.

3 unchanged sentences

Addressing the matter involved performing procedures and evaluating audit evidence in connection with forming our overall opinion on the consolidated financial statements.

These procedures included:

These procedures included, among others:

◾ Obtained an understanding of the Company’s financial reporting processes in place to estimate the net realizable value of inventories;

3 unchanged sentences

◾ Performed a retrospective analysis of the Company’s net realizable value of inventories by comparing the Company’s historical write-downs in prior periods to the actual current period usage and movement.

/s/ Marcum llp

We served as the Company’s auditor from 2017 through 2025

Los Angeles, CA

September 26, 2024

CAPSTONE GREEN ENERGY HOLDINGS, INC.

Valuation of Intangible Assets Acquired in a Business Combination

Description of the Matter

As described in Note 20 to the consolidated financial statements, the Company completed the acquisition of Cal Microturbine on August 13, 2025.

The Company accounted for this transaction under the acquisition method for business combinations in accordance with ASC 805.

Accordingly, the purchase price was allocated to the assets acquired and liabilities assumed based on their respective fair values, including identified customer relationship related intangible assets.

We identified the valuation of the customer relationship related intangible asset as a critical audit matter due to (i) the significant estimates and assumptions made by management, (ii) high degree of auditor judgment when performing audit procedures to evaluate the reasonableness of management's forecast of future cash flows, and (iii) use of significant unobservable inputs and assumptions, including the need to involve our fair value specialists.

How We Addressed the Matter

Addressing the matter involved performing procedures and evaluating audit evidence in connection with forming our overall opinion on the consolidated financial statements.

These procedures included, among others:

◾ Obtained an understanding of management's process over the valuation of customer relationship related intangible asset;

◾ Evaluated the reasonableness of forecasted future cash flows used in valuation of the customer relationship related intangible asset by comparing to contracts, historical results, and other metrics;

◾ With the assistance of our fair value specialists, evaluated the reasonableness of the valuation methodology, and significant unobservable inputs and assumptions by:

o testing the source information underlying the determination of certain significant unobservable inputs and assumptions,

o developing a range of independent estimates for other unobservable assumptions and comparing them to the assumptions used by management, and

o testing the mathematical accuracy of the calculations.

/s/ CBIZ CPAs P.C.

CBIZ CPAs P.C.

We have served as the Company’s auditor since 2017 (such date takes into account the acquisition of the attest business of Marcum LLP by CBIZ CPAs P.C.

effective November 1, 2024)

Los Angeles, California

June 25, 2026

CAPSTONE ENERGY+, INC.

AND SUBSIDIARIES

2 unchanged sentences

Current Assets:

Cash and cash equivalents

Restricted cash

Accounts receivable, net of allowances of $ 1,337 at March 31, 2026 and $ 607 at March 31, 2025

3 unchanged sentences

Property, plant, equipment and rental assets, net

Intangible assets, net

Finance lease right-of-use assets

2 unchanged sentences

Lease receivable, non-current

Liabilities, Temporary Equity and Stockholders’ Deficiency

Liabilities, Temporary Equity and Stockholders’ Deficit

Current Liabilities:

4 unchanged sentences

Deferred revenue

Deferred acquisition costs, current

Finance lease liability, current

1 unchanged sentence

Factory protection plan liability

Exit new money notes, net of discount, current

Exit notes, net of discount, current

Total current liabilities

Deferred revenue, non-current

Deferred acquisition costs, non-current

Finance lease liability, non-current

Operating lease liability, non-current

Exit new money notes, net of discount, non-current

Other non-current liabilities

Exit notes, net of discount, non-current

Total liabilities

2 unchanged sentences

Redeemable noncontrolling interests

Stockholders’ deficiency:

Preferred stock, $ .001 par value;

1,000,000 shares authorized;

Redeemable preferred stock, $ 0.001 par value;

1,000,000 shares authorized, 80,000 shares issued and outstanding at March 31, 2026;

1,000,000 shares authorized, zero shares issued and outstanding at March 31, 2025 (Note 13)

Total temporary equity

Stockholders’ deficit:

Common stock, $ .001 par value;

2 unchanged sentences

Non-voting common stock, $ .001 par value;

600,000 shares authorized, 508,475 shares issued and outstanding at March 31, 2025 and March 31, 2024

600,000 shares authorized, 333,120 shares issued and outstanding at March 31, 2026;

600,000 shares authorized, 508,475 shares issued and outstanding at March 31, 2025

Additional paid-in capital

2 unchanged sentences

269,603 shares at March 31, 2026 and 57,202 shares at March 31, 2025

Total stockholders’ deficiency

Total liabilities, temporary equity and stockholders' deficiency

Total stockholders’ deficit

Total liabilities, temporary equity and stockholders' deficit

See accompanying notes to consolidated financial statements.

CAPSTONE GREEN ENERGY HOLDINGS, INC.

CAPSTONE ENERGY+, INC.

AND SUBSIDIARIES

14 unchanged sentences

Total operating expenses

Loss from operations

Income (loss) from operations

Interest income

Reorganization items, net

Interest expense

Income (loss) before provision for income taxes

Provision for income taxes

Provision (benefit) for income taxes

Net income (loss)

Net income (loss) per share of common stock and non-voting common stock—basic and diluted

Net loss per share of common stock and non-voting common stock—basic and diluted

Weighted average shares used to calculate basic and diluted net income (loss) per common stock and non-voting common stock

See accompanying notes to consolidated financial statements.

CAPSTONE GREEN ENERGY HOLDINGS, INC.

CAPSTONE ENERGY+, INC.

AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF TEMPORARY EQUITY AND STOCKHOLDERS’ DEFICIENCY

CONSOLIDATED STATEMENTS OF TEMPORARY EQUITY AND STOCKHOLDERS’ DEFICIT

(In thousands, except share amounts)

2 unchanged sentences

Noncontrolling Interest

Preferred Stock

Treasury Stock

1 unchanged sentence

Balance, April 1, 2024

Purchase of treasury stock

Vested restricted stock units

Stock awards to Board of Directors

Cancellation of Capstone Green Energy Corporation stock

( 18,670,392 )

Issuance of Capstone Green Energy Holdings, Inc.

Issuance of non-voting stock

Redeemable noncontrolling interests

Stock-based compensation

2 unchanged sentences

Vested restricted stock units

Net proceeds from the issuance of common stock

Issuance of prefunded warrants

Stock-based compensation

Settlement of redeemable noncontrolling interests

( 10,449,863 )

Issuance of redeemable preferred stock

Conversion of non-voting common stock to voting common stock

Accretion to redemption value of redeemable equity

Balance, March 31, 2026

1 unchanged sentence

See accompanying notes to consolidated financial statements.

CAPSTONE GREEN ENERGY HOLDINGS, INC.

CAPSTONE ENERGY+, INC.

AND SUBSIDIARIES

8 unchanged sentences

Paid-in-kind interest expense

Interest related to deferred acquisition costs

Non-cash lease expense

1 unchanged sentence

Inventory write-down

Provision for warranty expenses

Provision (benefit) for warranty expenses

Loss on disposal of equipment

Stock-based compensation

Non-cash reorganization items, net

Stock-based compensation (excludes $ 11 thousand recorded directly to equity;

Changes in operating assets and liabilities:

9 unchanged sentences

Factory protection plan liability

Net cash provided (used) in operating activities

Net cash (used in) provided by operating activities

Cash Flows from Investing Activities:

Cash acquired in acquisitions, net of cash paid

Payment of deferred acquisition costs

Expenditures for property, plant, equipment and rental assets

1 unchanged sentence

Cash Flows from Financing Activities:

Proceeds from debtors-in-process facility

Proceeds from three-year term note

Proceeds from exit new money note

Debt issuance costs

Proceeds from the issuance of common stock and warrants

Shares withheld related to employee tax withholding obligations

Payment of Exit Note, net

Settlement of redeemable noncontrolling interests

Issuance of new redeemable preferred stock

Repayment of finance lease obligations

Net cash provided (used) by financing activities

Net increase (decrease) in Cash

Cash, Beginning of Period

Cash, End of Period

Net cash provided by (used in) financing activities

Net increase in cash, cash equivalents, and restricted cash

Cash, cash equivalents, and restricted cash, Beginning of Period

Cash, cash equivalents, and restricted cash, End of Period

Supplemental Disclosures of Cash Flow Information:

1 unchanged sentence

Supplemental Disclosures of Non-Cash Information:

Renewal of insurance contracts financed by notes payable

Right-of-use assets obtained in exchange for lease obligations

Right-of-use assets obtained in exchange for operating lease obligations

Right-of-use assets obtained in exchange for finance lease obligations

Settlement of lease obligations with accounts receivable due

Conversion of inventory to rental assets

Rental assets transferred to inventory

Sales-type lease

Conversion of prepaid expenses to rental assets

Paid-in-kind debt discount in connection with the three-year term note

Acquisition of treasury stock with accrueds

Operating lease modified to finance lease

Accounts payable negotiated in lease modification

Acquisition of treasury stock by incurring a liability

See accompanying notes to consolidated financial statements.

CAPSTONE GREEN ENERGY HOLDINGS, INC.

CAPSTONE ENERGY+, INC.

AND SUBSIDIARIES

1 unchanged sentence

Business and Organization

Capstone Green Energy Holdings, Inc., (f/k/a Capstone Turbine International, Inc.), along with its consolidated operating subsidiary Capstone Green Energy LLC (the “Operating Subsidiary”) is a provider of customized microgrid solutions, on-site resilient Energy-as-a-Service (“EaaS”) solutions, and on-site energy technology systems focused on helping customers around the globe solve the “Energy Trilemma” of resiliency, sustainability, and affordability.

These solutions include stationary distributed power generation applications and distribution networks, including cogeneration (combined heat and power (“CHP”), integrated combined heat and power (“ICHP”), and combined cooling, heat and power (“CCHP”), renewable energy, natural resources, and critical power supply.

The Company’s inverter-based technologies solve resiliency by being able to seamlessly connect to the electric grid or be the backbone of a localized microgrid.

The Company’s Energy Conversion Products business line is driven by the Company’s industry-leading, highly efficient, low-emission, resilient microturbine energy systems offering scalable solutions in addition to a broad range of customer-tailored solutions.

Through the EaaS business line the Company offers build, own, operate and maintain (“BOOM”) as well as energy rental solutions utilizing the Company’s microturbine energy systems.

The Company offers comprehensive factory protection plan service contracts that limit life-cycle costs, as well as providing aftermarket spare parts.

The Company’s emerging business line is Hydrogen Energy Solutions.

Through the Hydrogen Energy Solutions business line, the Company offers customers the ability to run on hydrogen blended fuel source.

Because this is still an emerging offering, Hydrogen Energy Solutions revenue has been immaterial to date.

Historically, the business described above was conducted by Capstone Green Energy Corporation, which was organized in 1988 and has been commercially producing its microturbine generators since 1998.

In connection with emergence from the Chapter 11 Bankruptcy (the “Chapter 11 Bankruptcy”) on December 7, 2023 (the “Effective Date”), Capstone Green Energy Corporation was reorganized (the “Reorganization”) and became a privately-held company (“Reorganized PrivateCo”).

Capstone Turbine International, Inc., a former wholly owned subsidiary of Capstone Green Energy Corporation, which was incorporated in Delaware on June 10, 2004, became a publicly-traded company and was renamed Capstone Green Energy Holdings, Inc.

The Operating Subsidiary was also formed as part of the Reorganization.

As a result of past delays in filing the Company’s periodic reports with the Securities Exchange Commission (the “SEC”) and the requirements relating to Market Value of Listed Securities (“MVLS”), the Company was unable to comply with the Nasdaq listing standards, and as a result, common stock was su spended from trading on the Nasdaq Capital Market effective October 5, 2023 and formally delisted effective October 23, 2023.

Post emergence from the Chapter 11 Bankruptcy, and affecting the Plan of Reorganization, the Company had completed filing of its Quarterly Report on Form 10-Q for the quarter ended June 30, 2024, on October 17, 2024, and with the filing, the Company became current with all of its periodic filings with the SEC.

On January 2, 2025, the Company’s common stock was approved for trading by Financial Industry Regulatory Authority on the over-the-counter (OTC) market.

All references in these footnotes to “the Company,” “we,” “us,” “our,” or “Capstone” are to Capstone Green Energy Corporation and its consolidated subsidiaries prior to the Effective Date and to Capstone Green Energy Holdings, Inc.

and its consolidated subsidiaries following the Effective Date.

Basis of Presentation, Significant Accounting Policies and Going Concern

Capstone Energy+, Inc.

(the “Company”), formerly known as Capstone Green Energy Holdings, Inc., the public successor to Capstone Green Energy Corporation, together with its consolidated operating subsidiary Capstone Green Energy LLC (the “Operating Subsidiary”) is a provider of behind-the-meter clean microturbine energy solutions for industrial and commercial operations, with solutions designed for the next generation of artificial intelligence ("AI") and data center applications.

The Company addresses the "Energy Trilemma" facing today's commercial, industrial, and utility customers:

the simultaneous need for resiliency, affordability, and sustainability.

Effective April 30, 2026, the Company changed its name from Capstone Green Energy Holdings, Inc.

to Capstone Energy+, Inc.

The Company’s offerings include stationary distributed power generation and energy distribution solutions, including cogeneration systems such as combined heat and power (“CHP”), integrated combined heat and power (“ICHP”), and combined cooling, heat and power (“CCHP”), as well as solutions for renewable energy, natural resources, and critical power supply applications.

The Company’s inverter-based technologies enable operation in parallel with the electric grid or in island mode within localized microgrids and serves as the stabilizing backbone for microgrid installations integrating renewables, battery energy storage, and other distributed energy resources.

The Company’s energy conversion products business line is driven by its industry-leading, highly efficient, low-emission and resilient microturbine energy systems, which offer scalable configurations and customer-tailored solutions ranging from 65 kilowatts to multiple megawatts.

The Company is also actively developing energy solutions purpose-built for AI and data center applications, including an 800-volt direct-current ("VDC") microturbine solution designed to interface directly with next-generation AI chip architectures, and its Energy Surplus Program ("ESP"), an integrated architecture purpose-built for the high-density, mission-critical power demands of modern AI workloads.

Through its EaaS business line, the Company provides Build, Own, Operate and Maintain (“BOOM”) and energy rental solutions, as well as power purchase agreements ("PPA") and lease-to-own structures, utilizing its microturbine energy systems.

The Company also offers long-term maintenance agreements ("LTMAs") covering planned and unplanned maintenance to protect customers' total cost of ownership and ensure maximum system availability, with access to Original Equipment Manufacturer ("OEM") parts.

As a result of past delays in filing the Company’s periodic reports with the Securities Exchange Commission (the “SEC”) and the requirements relating to Market Value of Listed Securities (“MVLS”), the Company was unable to comply with the Nasdaq listing standards, and as a result, the Company’s common stock was suspended from trading on the Nasdaq Capital Market effective October 5, 2023 and formally delisted effective October 23, 2023.

Following completion of the financial statement restatements for Fiscal 2022 and 2023 and completion of the filings for Fiscal 2024, the Company became current with all periodic filings with the SEC.

Effective January 2, 2025, the Company’s common stock began trading on the over-the-counter market (“OTC”).

On September 26, 2025, the Company’s common stock was approved for quotation on the OTCQX Best Market, under the symbol “CGEH.”

All references in these footnotes to “the Company,” “we,” “us,” “our,” or “Capstone” are to Capstone Energy+, Inc.

and its consolidated subsidiaries.

Basis of Presentation and Significant Accounting Policies

These Consolidated Financial Statements refer to the Company’s fiscal years ended March 31 as its “Fiscal” year.

Basis of Presentation The accompanying Consolidated Financial Statements are presented in United States (“U.S.”) dollars and have been prepared in conformity with accounting principles generally accepted in the United States of America (“U.S.

GAAP”) and pursuant to the rules and regulations of the Securities Exchange Commissions (“SEC”).

Basis for Consolidation The Consolidated Financial Statements included in this filing include the accounts of the Company, the Operating Subsidiary and Capstone Turbine Financial Services, LLC, its wholly owned subsidiary that was formed in October 2015, after elimination of inter-company transactions.

Noncontrolling Interests in Consolidated Operating Subsidiary Noncontrolling interests in the Company’s consolidated Operating Subsidiary represent the equity interests held by a related party.

The noncontrolling interests in the consolidated Operating Subsidiary are redeemable and are presented as temporary equity in the Company’s Consolidated Balance Sheet.

Refer to Note 10— Temporary Equity for details of the noncontrolling interests.

Basis of Presentation The accompanying Consolidated Financial Statements have been prepared in accordance with accounting principles generally accepted in the United States of America (“GAAP”) and the rules and regulations of the Securities and Exchange Commission (“SEC”).

The Consolidated Financial Statements include the accounts of the Company and its wholly owned subsidiaries.

All intercompany accounts and transactions have been eliminated in

consolidation.

The fiscal years presented herein are the years ended March 31, 2026, and March 31, 2025.

In the opinion of management, the Consolidated Financial Statements reflect all adjustments, consisting of normal recurring adjustments, necessary for a fair presentation of the Company’s financial position as of March 31, 2026 and 2025, and the results of its operations and its cash flows for the years then ended.

The preparation of Consolidated Financial Statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the Consolidated Financial Statements, as well as the reported amounts of revenues and expenses during the reporting periods.

Actual results could differ from those estimates.

Business Combinations The Company accounts for business combinations using the acquisition method in accordance with ASC Topic 805, Business Combinations .

Under this method, the total purchase consideration is measured at fair value on the acquisition date, and identifiable assets acquired and liabilities assumed are recognized at their estimated fair values as of that date.

The excess of purchase consideration over the fair value of net identifiable assets acquired is recorded as goodwill.

If the fair value of net identifiable assets acquired exceeds the purchase consideration, the resulting gain is recognized in earnings on the acquisition date.

Acquisition-related costs, including advisory, legal, and other professional fees, are expensed as incurred and recorded within selling, general and administrative expenses in the Consolidated Statements of Operations.

For transactions that do not meet the definition of a business under ASC 805, the Company applies asset acquisition accounting, under which the total purchase consideration, including assumed liabilities, is allocated to the assets acquired on a relative fair value basis.

No goodwill is recognized in an asset acquisition.

The operating results of acquired businesses are included in the Company's Consolidated Statements of Operations from the acquisition date.

The determination of fair values of assets acquired and liabilities assumed requires management to make significant estimates and assumptions, particularly with respect to intangible assets.

The Company may adjust the preliminary purchase price allocation during the measurement period, which may not exceed one year from the acquisition date, as additional information becomes available.

Refer to Note 20 – Business Combinations for information regarding the Company's acquisitions completed during Fiscal 2026.

Noncontrolling Interests in Consolidated Operating Subsidiary Noncontrolling interests in the Company’s consolidated operating subsidiary represented the equity interests held by a related party.

These interests were redeemable and were therefore presented as temporary equity in the Company’s Consolidated Balance Sheets.

See Note 13 – Temporary Equity and Note 12 – Commitments and Contingencies, Related Party Transactions for additional information.

The Company uses the hypothetical liquidation at book value (“HLBV”) method to attribute the earnings of the consolidated Operating Subsidiary between the controlling and noncontrolling interests.

Under the HLBV method, the amounts reported as noncontrolling interests in the consolidated Operating Subsidiary on the Consolidated Balance Sheets represent the amounts the noncontrolling interests would hypothetically receive at each balance sheet reporting date under the liquidation provisions of the governing agreements assuming the net assets of the consolidated Operating Subsidiary were liquidated at recorded amounts and distributed between the controlling and noncontrolling interests in accordance with the governing documents.

The net income attributable to noncontrolling interests in the Operating Subsidiary on the Consolidated Statements of Operations is associated with the increase or decrease in the noncontrolling interest holders’ contractual claims on the respective entities’ balance sheets assuming a hypothetical liquidation at the end of that reporting period when compared with their claims on the respective entities’ balance sheets assuming a hypothetical liquidation at the beginning of that reporting period, after removing the impact of any contributions or distributions.

The Company separately remeasures and adjusts the noncontrolling interest to reflect the change in redemption value of the Preferred Units, with an offsetting adjustment to retained earnings at the end of each period.

Refer to Note 10 — Temporary Equity for details on remeasuring the redemption value of the Preferred Units.

The Company had a net loss for the fiscal year ended March 31, 2025, so there was no allocation of earnings for the fiscal year ended March 31, 2025.

Prior to the emergence from bankruptcy, the Company recorded a gain on debt extinguishment, as detailed in Note 3— Chapter 11 Proceedings and Emergence, of $ 35.3 million, within Reorganization items, net on the Company’s Consolidated Statement of Operations, which resulted in net income of $ 7.4 million during the year ended March 31, 2024.

Therefore, the Company did not allocate earnings to the Operating Subsidiary as of March 31, 2024, as the Company incurred a net loss after the Effective Date and the noncontrolling interest owners hold a liquidation preference that protects the holder from absorbing losses.

Reclassification Certain items in prior financial statements have been reclassified to conform to the current presentation and provide comparability but have no effect on the reported financial statements.

Bankruptcy Accounting The Consolidated Financial Statements included herein have been prepared as if the Company were a going concern and in accordance with Financial Accounting Standards Board (“FASB”) Accounting Standards Codification (“ASC”) Topic No.

852— Reorganizations (“ASC 852”).

Refer to Note 3— Chapter 11 Proceedings and Emergence for further details regarding the bankruptcy.

At emergence from Chapter 11, the Company evaluated the criteria to apply fresh-start accounting under ASC 852 and determined that pre-petition shareholders maintained control of the Company following the restructuring transactions contemplated within the Company’s Plan (as defined below).

As the pre-petition shareholders did not lose control, fresh-start accounting did not apply and the existing carrying values and activities continued as the reporting entity did not change.

In addition, the Company has classified all income, expenses, gains or losses that were incurred or realized as a result of the proceedings since filing for Chapter 11 as Reorganization items, net in the Company’s Consolidated Statements of Operations.

Cash Equivalents The Company considers only those investments that are highly liquid and readily convertible to cash with original maturities of three months or less at the date of purchase as cash equivalents.

Under this method, amounts reported as noncontrolling interests in the consolidated Operating Subsidiary on the Consolidated Balance Sheets represent the amounts the noncontrolling interest holders would hypothetically receive at each balance sheet date under the liquidation provisions of the governing agreements, assuming net assets were liquidated at recorded amounts and distributed in accordance with the governing documents.

Net income attributable to noncontrolling interests reflected the change in the noncontrolling interest holders' contractual claims between the beginning and end of the reporting period, assuming hypothetical liquidation at each date, after removing the impact of any contributions or distributions.

The Company separately remeasured and adjusted the noncontrolling interest to reflect changes in the redemption value of the Preferred Units, with an offsetting adjustment to retained earnings at the end of each period.

Refer to Note 13 – Temporary Equity for further details.

For the fiscal year ended March 31, 2026, the Company reported a net gain;

accordingly, net income was allocated between the controlling and noncontrolling interests pursuant to the HLBV method based on the change in the respective holders' contractual claims on the net assets of the consolidated Operating Subsidiary.

The allocation reflected the contractual provisions of the governing agreements, including the liquidation preference of the noncontrolling interest

As a result, the amount of net income attributable to noncontrolling interests may differ from the noncontrolling interests' proportionate ownership percentage.

For the fiscal year ended March 31, 2025, the Company reported a net loss;

accordingly, no allocation of losses was made to the noncontrolling interests, as the holders' contractual liquidation preference protects them from absorbing losses.

Reclassification Certain prior period amounts have been reclassified to conform to the current year presentation for comparability purposes.

Such reclassifications had no effect on previously reported results of operations or financial position.

Cash, Cash Equivalents and Restricted Cash Cash and cash equivalents include cash on hand and highly liquid investments with original maturities of three months or less at the time of purchase.

The Company maintains cash balances at financial institutions which, at times, may exceed federally insured limits.

The following table provides a reconciliation of cash, cash equivalents and restricted cash reported within the Consolidated Balance Sheets to the total amounts presented in the Consolidated Statements of Cash Flows:

Cash and cash equivalents

Restricted cash

Total cash and cash equivalents

Restricted cash represents amounts deposited with the Registry of the Court in connection with ongoing litigation, which are held as security pending resolution of the matter and are not available for operational use.

See Note 12 - Commitments and Contingencies for more information on the ongoing litigation.

Fair Value of Financial Instruments The carrying value of certain financial instruments, including cash equivalents, accounts receivable, accounts payable, revolving credit facility and notes payable approximate fair market value based on their short-term nature.

Refer to Note 9 – Fair Value Measurements, for disclosure regarding the fair value of other financial instruments.

Trade Accounts Receivable and Allowance for Credit Loss Accounts receivables are presented on the Consolidated Balance Sheets, net of estimated credit losses.

Accounts Receivable and Allowance for Credit Losses A ccounts receivable are presented on the Consolidated Balance Sheets, net of estimated credit losses.

The Company applies the aging method by pooling receivables based on levels of delinquency and applying historical loss rates on what has been historically uncollectible by aging categories.

1 unchanged sentence

Additionally, the allowance for credit loss calculation includes subjective adjustments for qualitative risk factors that could likely cause estimated credit losses to differ from historical experience.

The factors include assessments of various economic conditions, significant events that occurred, geographic location, size and credit ratings of the customers.

The factors include assessments of various economic conditions, significant events that have or will occur, geographic location, size, and credit ratings of the customers.

The Company may also record a specific reserve for individual accounts when the Company becomes aware of specific customer circumstances, such as in the case of a bankruptcy filing or deterioration in the customer’s operating results or financial position.

Accounts deemed uncollectible are written off against the allowance for credit loss.

Changes in the allowance for expected credit loss for accounts receivable are as follows (in thousands):

Balance, April 1, 2023

Provision for credit losses

Balance, March 31, 2024

Provision for credit losses

Balance, March 31, 2025

Refer to Note 4 – Customer Concentrations and Accounts Receivable for disclosure regarding the change in allowance for expected credit loss.

Inventories The Company values inventories at the lower of cost (determined on a first in, first out (“FIFO”) basis) or net realizable value.

The composition of inventory is routinely evaluated to identify slow-moving, excess, obsolete or otherwise impaired inventories.

Inventories identified as impaired are evaluated to determine if write-downs are required.

Included in the assessment is a review for obsolescence as a result of engineering changes in the Company’s products.

All inventories expected to be used in more than one year are classified as long-term.

Depreciation and Amortization Depreciation and amortization are provided for using the straight-line method over the estimated useful lives of the related assets, ranging from two to ten years .

Leasehold improvements are amortized over the remaining lease term or the estimated useful lives of the assets, whichever is shorter .

Intangible assets that have finite useful lives are amortized over their estimated useful lives using the straight-line method.

Long-Lived Assets The Company reviews the recoverability of long-lived assets, including intangible assets with finite lives, whenever events or changes in circumstances indicate that the carrying value of such assets may not be recoverable.

The composition of inventory is routinely evaluated to identify slow-moving, excess, obsolete or otherwise impaired items, which are assessed for potential write-down, including consideration of engineering changes to the Company's products.

Inventories expected to be used beyond one year are classified as long-term.

Depreciation and Amortization Depreciation and amortization are recognized using the straight-line method over estimated useful lives ranging from two to ten years .

Leasehold improvements are amortized over the shorter of the remaining lease term or the estimated useful life of the asset .

Finite-lived intangible assets are amortized on a straight-line basis over their estimated useful lives.

Refer to Note 8 – Intangible Assets for amortization information.

If the expected future cash flows from the use of such assets (undiscounted and without interest charges) are less than the carrying value, the Company may be required to record a write-down, which is determined based on the difference between the carrying value of the assets and their estimated fair value.

Residual Assets The Company estimates the residual asset as the amount expected to be derived from the underlying asset following the end of the lease term.

In a sales-type lease, the Company recognizes the unguaranteed residual asset, measured on a discounted basis, upon lease commencement.

The Company evaluates residual values for impairment quarterly and recognizes impairments as incurred.

Deferred Revenue Deferred revenue consists of deferred product and service revenue and customer deposits.

Deferred revenue will be recognized when earned in accordance with the Company’s revenue recognition policy.

In a sales-type lease, the unguaranteed residual asset is recognized on a discounted basis upon lease commencement.

Residual values are evaluated for impairment quarterly, and impairments are recognized as incurred.

Deferred Revenue Deferred revenue consists of deferred product, service revenue and customer deposits, and is recognized when earned in accordance with the Company's revenue recognition policy.

The Company has the right to retain all or part of customer deposits under certain conditions.

Temporary Equity Where common or preferred shares are determined to be conditionally redeemable upon the occurrence of certain events that are not solely within the control of the Company, and upon such event, the shares would become redeemable at the option of the holders, they are classified as temporary equity (‘mezzanine equity’), outside permanent equity.

The purpose of this classification is to convey that such a security may not be permanently part of equity and could result in a demand for cash, securities or other assets of the entity in the future.

If the events are such that the shares are probable of becoming redeemable, then the Company will adjust the shares to reflect the maximum redemption value at the end of the reporting period.

Temporary Equity Common or preferred shares that are conditionally redeemable upon the occurrence of events not solely within the Company's control are classified outside of permanent equity as temporary equity ("mezzanine equity").

This classification conveys that such securities may not be permanently part of equity and could result in a future demand for cash or other assets.

Where redemption of such shares becomes probable, the Company adjusts the carrying value to reflect the maximum redemption value at the end of the reporting period.

Revenue The Company derives its revenues primarily from the sale of microturbine products, accessories, parts, equipment rentals, and services.

The Company determines revenue recognition through the following steps:

● Identification of the contract, or contracts, with a customer

Revenue is recognized in accordance with the following five-step model under ASC 606:

● Identification of the contract(s) with a customer

● Identification of the performance obligations in the contract

● Determination of the transaction price

● Allocation of the transaction price to the performance obligations in the contract

● Recognition of revenue when, or as, the Company satisfies a performance obligation

Microturbine Products The Company recognizes revenue when the performance obligation identified under the terms of the contract with its customer is satisfied, which generally occurs, for microturbine products, upon the transfer of control in accordance with the contractual terms and conditions of the sale.

The majority of the Company’s revenue associated with a microturbine product is recognized at a point in time when the microturbine product is shipped to the customer.

On occasion, the Company enters into bill-and-hold arrangements.

Each bill-and-hold arrangement is reviewed and revenue is recognized only when certain criteria have been met:

(i) the reason for the bill-and-hold arrangement is substantive;

(ii) the product is segregated from the Company’s other inventory items held for sale;

(iii) the product is ready for shipment to the customer;

and (iv) the Company does not have the ability to use the product or direct it to another customer.

Advanced payments in the form of Customer Deposits are taken on these contracts, typically providing for a substantial portion of the contract value to be paid prior to shipment.

Advance payments are not considered a significant financing component as they are typically received less than one year before the related performance obligations are satisfied.

Payment terms in Contracts with Customers typically are 30 or 60 days .

The Company extends payment terms past one year only on a limited basis, and thus any financing component is not considered material.

Accessories and Parts The Company recognizes revenue when performance obligations identified under the terms of contracts with its customers are satisfied, which generally occurs, for accessories, upon the transfer of control in accordance with the contractual terms and conditions of the sale.

The revenue associated with accessories is recognized at a point in time when the accessory is shipped to the customer.

Warranty Services Revenue from extended warranties is recognized when or as the obligations are satisfied.

There are two types of warranties:

standard (assurance) and extended warranties.

Standard warranties do not represent separate performance obligations but are reflected as a liability associated with the purchase of the product.

Extended warranties are separate offerings for 12 -, 24 - or 36 -month periods beyond the standard warranty that are separate performance obligations recognized as an over-time performance obligation based on the extended warranty period.

The Company records amounts billed to customers for reimbursement of shipping and handling costs within revenue.

Shipping and handling costs associated with outbound freight after control over a system has transferred to a customer are accounted for as fulfillment costs and are included in cost of goods sold.

Sales taxes and other usage-based taxes are excluded from revenue.

Factory Protection Plan and Service Cost Reimbursement In addition to the provision of standard warranties, the Company offers Factory Protection Plans (“FPP”) to minimize product downtime and control maintenance costs to ensure the microturbine system will operate when needed and perform as intended at the lowest cost of ownership.

Revenue related to the Company’s performance obligation to provide replacement parts as needed is recognized over the term of the FPP contract, in 30 -day intervals aligned to the monthly service period for that customer.

FPP contracts have an initial term period of one year , with automatic renewals with durations of 5 , 10 , 15 , or 20 years and may be cancelled at any time.

The related costs for FPP contracts become the Company’s obligation and are accrued at the time a customer submits a claim, and the claim’s compliance with the terms of the plan are confirmed.

The accrual reflects the Company’s best estimate of the probable liability under the replacement part obligation.

The provision is periodically adjusted to reflect actual experience.

FPP contracts typically go into effect once the standard warranty expires.

Comprehensive FPP service contracts require payment at the beginning of the contract period.

Advance payments are not considered a significant financing component as they are typically received less than one year before the related performance obligations are satisfied.

These payments are a contract liability and are classified as deferred revenue in the Consolidated Balance Sheets.

The performance obligation is fulfilled as the control passes to the customer through the passage of time and recognition of deferred revenue from the FPP contracts is recognized in the Consolidated Statement of Operations.

The deferred revenue relating to the annual maintenance service contracts is recognized in the Consolidated Statement of Operations on a straight-line basis over the expected term of the contract.

Some FPPs offer labor reimbursement on the labor performed on a microturbine system.

Due to the nature of the arrangement, labor reimbursements are accounted for under ASC 460 and are recognized as contra revenue as consideration paid to a customer under ASC 606.

An Authorized Service Provider (“ASP”) must perform the labor.

ASPs submit claims for labor reimbursements and are credited for the cost of labor if the repairs meet the Company’s prescribed standards.

The Company is unable to develop a reasonable estimate of the maximum potential payout under these arrangements because the FPP contracts do not contain a limit on the number of labor reimbursements that may be submitted.

However, given historical practice, the Company has priced the FPP to cover all costs incurred related to the labor reimbursement and is not exposed to significant losses over the FPP premium.

The labor reimbursement is separate and distinct from the parts offering;

therefore, the Company allocates a portion of the transaction price to the labor reimbursement based on SSP.

The Company applies judgment in determining the SSP as the labor reimbursement is not sold separately.

The Company will recognize a liability at the inception of the executed FPP agreement for the premium received in advance for the Labor offering.

Income will be recognized on a net, straight-line basis with labor reimbursement costs recognized when incurred.

Rentals The Company accounts for leases to customers in accordance with lessor accounting under ASC 842.

The Company utilizes a portfolio approach by grouping together many similar assets being leased to a single customer.

Leases are classified as either sales-type leases or operating leases.

The Company’s leases are classified as a sale-type lease if one of the five criteria are met.

Other leases are classified as operating leases.

For sales-type leases, the Company recognizes and presents, upon lease commencement, the present value of the lease payments is recognized, along with the residual asset discounted using the rate implicit in the lease.

Revenue is recognized in the amount of the lease receivable and the cost of sales in the amount of the carrying value of the underlying asset less the unguaranteed residual asset.

The Company presents sales-type leases on the Consolidated Statements of Operations as part of Product and Accessories Revenue and Cost of Goods Sold separately.

The Company believes this is more aligned to our current presentation of product sales, generally.

After the commencement date, the Company recognizes interest income as part of the net sales using the effective interest method.

For operating leases, the Company recognizes the underlying asset as rental lease assets.

The asset is depreciated on a straight-line basis to its estimated residual value over the estimated useful life.

The lease payments are recognized over the lease term on a straight-line basis as part of Rental Revenue.

Contracts with Multiple Performance Obligations

The Company enters into contracts with its customers that often include promises to transfer multiple products, parts, accessories, FPP and services.

A performance obligation is a promise in a contract with a customer to transfer products or services that are distinct.

Determining whether products and services are distinct performance obligations that should be accounted for separately or combined as one unit of accounting may require significant judgment.

Products, parts and accessories are generally considered distinct as such services are often sold separately.

In determining whether FPP and service contracts are distinct, the Company considers the following factors for each FPP and services agreement:

availability of the services from other vendors, the nature of the services, the timing of when the

services contract was signed in comparison to the product delivery date and the contractual dependence of the product on the customer’s satisfaction with the professional services work.

To date, the Company has concluded that all of the FPP and services contracts included in contracts with multiple performance obligations are distinct.

The Company allocates the transaction price to each performance obligation on a relative standalone selling price (“SSP”) basis.

The SSP is the price at which the Company would sell a promised product or service separately to a customer.

Judgment is required to determine the SSP for each distinct performance obligation.

The Company determines SSP by considering its overall pricing objectives and market conditions.

Significant pricing practices taken into consideration include the Company’s discounting practices, the size and volume of the Company’s transactions, the customer demographic, the geographic area where systems and services are sold, price lists, its go-to-market strategy, historical sales and contract prices.

The determination of SSP is made through consultation with and approval by the Company’s management, taking into consideration the go-to-market strategy.

As the Company’s go-to-market strategies evolve, the Company may modify its pricing practices in the future, which could result in changes to SSP.

In certain cases, the Company is able to establish SSP based on observable prices of products or services sold separately in comparable circumstances to similar customers.

The Company uses a single amount to estimate SSP when it has observable prices.

If SSP is not directly observable, for example when pricing is highly variable, the Company uses a range of SSP.

The Company determines the SSP range using information that may include market conditions or other observable inputs.

The Company typically has more than one SSP for individual products and services due to the stratification of those products and services by customer size and geography.

Practical Expedients

The Company applies a practical expedient to expense costs as incurred for costs to obtain a contract when the amortization period would have been one year or less.

Contracts are considered as the individual orders received from the distributors and less than one year in duration.

These costs are recorded within sales and marketing expenses in the accompanying Consolidated Statement of Operations.

Warranty The Company provides for the estimated costs of warranties at the time revenue is recognized.

The specific terms and conditions of those warranties vary depending upon the microturbine product sold and the geography of sale.

The Company’s product warranties generally start from the delivery date and continue for up to twenty-four months .

Factors that affect the Company’s warranty obligation include product failure rates, anticipated hours of product operations and costs of repair or replacement in correcting product failures.

These factors are estimates that may change based on new information that becomes available each period.

Similarly, the Company also accrues the estimated costs to address reliability repairs on products no longer in warranty when, in the Company’s judgment, and in accordance with a specific plan developed by the Company, it is prudent to provide such repairs.

The Company assesses the adequacy of recorded warranty liabilities quarterly and adjusts the liability as necessary.

When the Company has sufficient evidence that product changes are altering the historical failure occurrence rates, the impact of such changes is then taken into account in estimating future warranty liabilities.

● Allocation of the transaction price to the performance obligations

● Recognition of revenue when, or as, each performance obligation is satisfied.

Microturbine Products Revenue from microturbine product sales is recognized at the point in time when control transfers to the customer in accordance with contractual terms, which is generally upon shipment.

The Company occasionally enters into bill-and-hold arrangements, which are recognized as revenue only when all required criteria are met:

(i) the reason for the arrangement is substantive;

(ii) the product is segregated from other inventory;

(iii) the product is ready for shipment;

and (iv) the Company cannot redirect the product to another customer.

Customer deposits representing advance payments are typically received for a substantial portion of contract value prior to shipment and are not considered a significant financing component, as they are generally received less than one year before the related performance obligations are satisfied.

Standard payment terms are 0 to 60 days , with extensions beyond 60 days granted only on a limited basis .

Accessories and Parts Revenue from accessories and parts is recognized at the point in time when control transfers to the customer, generally upon shipment.

Warranty Services The Company provides standard (assurance) warranties which do not represent separate performance obligations and are reflected as product liability.

Shipping and handling costs billed to customers are included in revenue;

costs associated with outbound freight after control transfers are recorded as fulfillment costs in cost of goods sold.

Sales and usage-based taxes are excluded from revenue.

Factory Protection Plan (“FPP”), Long Term Maintenance Agreements (“LTMA”) and Service Cost Reimbursement The Company is transitioning from its Factory Protection Plan to Long-Term Maintenance Agreements.

Both programs are designed to minimize product downtime and provide predictable maintenance costs.

Revenue related to the obligation to provide replacement parts is recognized over the term of the contract aligned to monthly service periods.

LTMA contracts typically range from four to twelve years and are cancellable at any time.

Related costs are accrued when a customer submits a qualifying claim, based on the Company's best estimate of the probable obligation.

LTMA contracts cover critical components including engine, fuel, and electronic components, and include an annual escalator but exclude freight and labor reimbursement.

Advance payments received at contract inception are classified as deferred revenue and recognized on a straight-line basis over the contract term.

These advance payments are not considered a significant financing component.

Remaining FPP contracts may include labor reimbursements for work performed by Authorized Service Providers ("ASPs").

These reimbursements are accounted for under ASC 460 and recognized as contra revenue under ASC 606.

The labor reimbursement is treated as a distinct performance obligation, with a portion of the transaction price allocated based on relative standalone selling price ("SSP").

A liability is recognized at contract inception for the labor component, with income recognized on a straight-line basis and reimbursement costs expensed as incurred.

Rentals The Company accounts for customer leases under lessor accounting guidance in ASC 842, utilizing a portfolio approach for similar assets leased to a single customer.

Leases are classified as either sales-type or operating leases based on whether one of the five ASC 842 classification criteria are met.

For sales-type leases, the Company recognizes at commencement a lease receivable (equal to the present value of lease payments) and a residual asset, with revenue recognized in the amount of the lease receivable as part of Product and Accessories revenue, and cost of sales equal to the carrying value of the underlying asset less the unguaranteed residual asset.

Subsequent to commencement, interest income is recognized using the effective interest method.

For operating leases, the underlying asset is recorded as a rental lease asset and depreciated on a straight-line basis to its estimated residual value.

Lease payments are recognized as Rental Revenue on a straight-line basis over the lease term.

Contracts with Multiple Performance Obligations Contracts with customers often include promises to transfer multiple products, parts, accessories, and services.

The Company evaluates whether each promised good or service is distinct and should be accounted for as a separate performance obligation, which may require significant judgment.

Products, parts, and accessories are generally sold separately and are therefore considered distinct.

Service contracts, including FPP and LTMA agreements, are evaluated based on availability from other vendors, the nature of the services, timing relative to product delivery, and contractual dependencies.

To date, the Company has concluded that all service contracts within multiple-element arrangements are distinct.

The transaction price is allocated to each performance obligation based on relative SSP, which the Company determines by considering overall pricing objectives, market conditions, discounting practices, transaction size, customer demographics, geographic factors, price lists, and historical contract data.

SSP is established using observable prices where available;

otherwise, a range is used based on market conditions and other observable inputs.

The Company typically maintains more than one SSP for individual products and services due to stratification by customer size and geography.

Unsatisfied Performance Obligations The Company has elected the practical expedient to disclose unsatisfied performance obligations only for contracts with an original expected duration greater than one year.

The majority of product sales have lead times of less than one year and are therefore excluded.

Service contracts, while often exceeding one year in duration, are cancellable without significant penalty;

accordingly, their enforceable duration is considered one year or less, and they are also excluded from this disclosure.

Practical Expedients For contracts with a duration of one year or less, the Company expenses incremental costs to obtain a contract as incurred.

Such costs are recorded within sales and marketing expenses in the Consolidated Statements of Operations.

Warranty The Company accrues estimated warranty costs at the time revenue is recognized.

Warranty terms vary by product and geography and generally extend up to 24 months from the delivery date.

Key factors in the warranty estimate include product failure rates, anticipated operating hours, and estimated repair or replacement costs.

These estimates are updated each period as new information becomes available.

The Company may also accrue costs for reliability repairs on out-of-warranty products when, in management's judgment, a specific remediation plan makes such accrual prudent.

Warranty liabilities are assessed quarterly and adjusted as necessary, including when product improvements alter historical failure rates.

Research and Development (“R&D”) The Company accounts for grant distributions and development funding as offsets to R&D expenses and both are recorded as the related costs are incurred in the Company’s statement of operations.

5 unchanged sentences

Income tax positions must meet a more-likely-than-not recognition threshold to be recognized.

Income tax positions that previously failed to meet the more-likely-than-not

threshold are recognized in the first subsequent financial reporting period in which that threshold is met.

Income tax positions that previously failed to meet the more-likely-than-not threshold are recognized in the first subsequent financial reporting period in which that threshold is met.

Previously recognized tax positions that no longer meet the more-likely-than-not threshold are derecognized in the first subsequent financial reporting period in which that threshold is no longer met.

The Company’s policy is to recognize interest and penalties accrued on any unrecognized tax benefits as interest and other expense, net in the Consolidated Statements of Operations.

Contingencies The Company records an estimated loss from a loss contingency when information available prior to issuance of its financial statements indicates that it is probable that an asset has been impaired or a liability has been incurred at the date of the financial statements and the amount of the loss can be reasonably estimated.

Contingencies The Company records an estimated loss from a loss contingency when information available prior to issuance of its financial statements indicates that it is probable that an asset has been impaired or a liability has been incurred at the Balance Sheet date and the amount of the loss can be reasonably estimated.

Risk Concentrations Financial instruments that potentially subject the Company to concentrations of credit risk consist primarily of cash and accounts receivable.

4 unchanged sentences

The Company performs ongoing credit evaluations of its customers and maintains an allowance for potential credit losses.

Sales to E-Finity Distributed Generation (“E-Finity”), Lone Star Power Solutions (“Lone Star”) and Horizon Power Systems accounted for 13 %, 12 % and 11 %, respectively, of the Company’s revenue for Fiscal 2025.

Sales to Cal Microturbine and E-Finity accounted for 16 % and 13 %, respectively, of the Company’s revenue for Fiscal 2024.

Additionally Lone Star and Optimal Group Australia accounted for 18 % and 10 % of net accounts receivable as of March 31, 2025, respectively, and Supernova Energy Services and Capstone Engineered Solutions accounted for 14 % and 11 % of net accounts receivable as of March 31, 2024, respectively.

See Note 4 – Customer Concentrations and Accounts Receivable for further detail.

Certain components of the Company’s products are available from a limited number of suppliers.

4 unchanged sentences

Actual results could differ from those estimates.

Net Income (Loss) Per Common Share The Company has common and non-voting common stock outstanding.

The non-voting common stock has the same economic rights as the common stock; therefore, earnings per share is presented on a combined basis.

Basic income (loss) per share is computed using the weighted-average number of common shares and non-voting common shares outstanding for the period.

Diluted income (loss) per share is computed without consideration of potentially dilutive common stock equivalents such as stock options, restricted stock units and warrants as the effect would have been anti-dilutive if the Company incurred a loss.

In addition, the change in the carrying value of the redeemable noncontrolling interests are excluded from the calculation of diluted earnings per share.

As a result of the cancellations to these instruments on the Effective Date of the Plan, the Company did not have any outstanding stock options or warrants at March 31, 2025, and 2024.

There was no change in the carrying value of the redeemable noncontrolling interests for the years ended March 31, 2025, and 2024 as the carrying value equaled the fair value at issuance.

Net Income (Loss) Per Common Share The Company has both common stock and non-voting common stock outstanding.

The non-voting common stock has the same economic rights as the common stock;

accordingly, earnings per share (“EPS”) is presented on a combined basis.

Basic net income (loss) per share is computed using the weighted-average number of common and non-voting common shares outstanding during the period.

Diluted net income (loss) per share reflects the potential dilution from common stock equivalents, including stock options, restricted stock units, and warrants, as their inclusion would be anti-dilutive.

The carrying value adjustments related to the redeemable noncontrolling interests in the consolidated Operating Subsidiary, including remeasurement of the Preferred Units to their redemption value, are reflected in the calculation of net income (loss) attributable to common stockholders for purposes of computing earnings per share.

As a result, for the years ended March 31, 2026, and 2025 basic and diluted weighted-average shares outstanding were the same.

Stock-Based Compensation Stock-based awards exchanged for services are accounted for under the fair value method.

2 unchanged sentences

The Company has elected to treat awards with only service conditions and with graded vesting as one award.

Consequently, the total compensation expense is recognized straight-line over the entire vesting period, so long as the compensation cost recognized at any date at least equals the portion of the grant date fair value of the award that is vested at that date.

Consequently,

the total compensation expense is recognized straight-line over the entire vesting period, so long as the compensation cost recognized at any date at least equals the portion of the grant date fair value of the award that is vested at that date.

The Company has elected to account for forfeitures as they occur.

Leases Arrangements meeting the definition of a lease whereby the Company is the lessee are classified as operating or financing leases and are recorded on the Consolidated Balance Sheet as both a right-of-use asset and lease liability, calculated by discounting fixed lease payments over the lease term at the rate implicit in the lease or the Company’s incremental borrowing rate.

Lease liabilities are increased by interest and reduced by payments each period, and the right-of-use asset is amortized over the lease term or life of the asset based on the classification of the lease.

For operating leases, interest on the lease liability and the amortization of the right-of-use asset result in straight-line rent expense over the lease term.

In calculating the right-of-use asset and lease liability, the Company elected to combine lease and non-lease components and elected not to recognize right-of-use assets and lease liabilities for short-term leases having initial terms of twelve months or less and recognizes rent expense on a straight-line basis over the lease term.

Lessor financing receivables consist of the financing receivables from leases which are classified as sales-type leases.

Lease terms generally range from 1 to 8 years , with most terms ranging between 1 to 2 years .

The lease agreements may provide the lessee the option to purchase the underlying asset at the end of the lease term.

Occasionally, the leases provide the lessee a bargain purchase option.

Going Concern In connection with the preparation of these Consolidated Financial Statements for the fiscal year ended March 31, 2025, management evaluated whether there were conditions and events, considered in the aggregate, that raised substantial doubt about the Company’s ability to meet its obligations as they became due for the next twelve months from the date of issuance of its Fiscal 2025 Consolidated Financial Statements.

As of March 31, 2025, the Company had cash of $ 8.7 million and a working capital deficit of $ 16.5 million.

The Company incurred a loss from operations of $ 5.6 million and generated cash from operating activities of $ 7.7 million during Fiscal 2025.

Given the Company’s current cash position, lack of liquidity, limits to accessing capital and debt funding options, and current economic and market risks, there is substantial doubt regarding the Company’s ability to continue as a going concern and its ability to meet its financial obligations as they become due over the next twelve months from the date of issuance of the financial statements as of, and for the period ended March 31, 2025.

Segment Reporting The Company determines its reporting units in accordance with FASB ASC Topic No.

280, Segment Reporting (“ASC 280”) .

The Company evaluates a reporting segment by first identifying its operating segments under ASC 280.

Operating segments are defined as components of an enterprise about which separate financial information is evaluated regularly by the chief operating decision maker (“CODM”) to allocate resources and assess performance.

The Company defines its CODM to be the Chief Executive Officer.

The Company is considered to be a single reporting segment.

The business activities of this reporting segment are the development, manufacture and sale of turbine generator sets and their related parts and services, including rentals.

Leases As lessee, the Company classifies lease arrangements as operating or financing leases and records a right-of-use asset and corresponding lease liability on the Consolidated Balance Sheet, measured by discounting fixed lease payments over the lease term at the rate implicit in the lease or the Company's incremental borrowing rate.

For operating leases, interest on the lease liability and amortization of the right-of-use asset result in straight-line rent expense over the lease term.

The Company has elected to (i) combine lease and non-lease components and (ii) exclude short-term leases with initial terms of twelve months or less from balance sheet recognition, with rent expense recorded on a straight-line basis.

As lessor, financing receivables arising from sales-type leases are recorded separately on the Consolidated Balance Sheets.

Lease terms generally range from one to eight years , with most terms between one and two years .

Certain agreements provide the lessee with an option to purchase the underlying asset at end of term, including occasional bargain purchase options.

Segment Reporting The Company determines its reporting units in accordance with ASC Topic 280, Segment Reporting .

The Company's chief operating decision maker ("CODM") is the Chief Executive Officer.

Based on how the CODM evaluates performance and allocates resources, the Company is considered to operate as a single reportable segment, encompassing the development, manufacture, and sale of turbine generator sets and related parts, services, and rentals.

Impact of Recently Issued Accounting Standards

In November 2023, the FASB issued ASU No.

2023-07, Segment Reporting :

Improvements to Reportable Segment Disclosures (Topic 280).

This update applies to all reporting public entities.

The amendments in this update revise reportable segment disclosure requirements, primarily through enhanced disclosures about significant segment expenses.

The amendments in this update are effective for annual periods beginning after December 15, 2023, early adoption is permitted.

The amendments in this update do not change how a public entity identifies its operating segments, aggregates those operating segments, or applies quantitative thresholds to determine its reportable segments.

Upon adoption , the guidance was applied retrospectively to all prior periods presented in the financial statements.

For additional information, refer to Note 17 – Segment Information.

Not Yet Adopted

In December 2023, the FASB issued ASU No.

2023-09, Income Taxes:

Improvements to Income Tax Disclosures (Topic 740), which requires that an entity, on an annual basis, disclose additional income tax information, primarily related to the rate reconciliation and income taxes paid.

The amendment in the ASU is intended to enhance the transparency and decision usefulness of income tax disclosures.

The amendments in this update are effective for annual periods beginning

after December 15, 2024, early adoption is permitted.

The Company is in the process of evaluating the impact that the adoption of this ASU will have on the consolidated financial statements and related disclosures, which is expected to result in enhanced disclosures.

Improvements to Income Tax Disclosures (Topic 740).

The standard requires enhanced annual disclosures primarily related to the rate reconciliation and income taxes paid, intended to improve the transparency and decision usefulness of income tax disclosures.

The Company adopted this standard for the fiscal year ended March 31, 2026 , on a prospective basis .

The adoption resulted in enhanced disclosures within Note 18 – Income Taxes.

The adoption did not have an impact on the Company's consolidated financial position, results of operations, or cash flows.

Prior-period amounts were not recast and continue to be presented in accordance with the accounting standards in effect for those periods.

In March 2024, the FASB issued ASU No.

2024-01, Compensation—Stock Compensation (Topic 718):

Scope Application of Profits Interest and Similar Awards .

The amendments clarify the scope of Topic 718 as it relates to profits interest and similar awards.

The Company adopted this guidance for the fiscal year ended March 31, 2026 .

The Company evaluated the impact of this guidance on its stock-based compensation arrangements, including profit unit arrangements associated with noncontrolling interests, and determined that the adoption did not have a material impact on its consolidated financial statements.

Not Yet Adopted

In November 2024, the FASB issued ASU No.

2024-03, Income Statement—Reporting Comprehensive Income—Expense Disaggregation Disclosures (Subtopic 220-40):

Disaggregation of Income Statement Expenses (ASU 2024-03).

The guidance was further clarified for the effective date by ASU 2025-01.

The new guidance requires disaggregated information about certain income statement expense line items on an annual and interim basis.

This guidance will be effective for all public business entities for fiscal years beginning after December 15, 2026, and for interim within fiscal years beginning after December 15, 2027, early adoption is permitted.

We are evaluating the effect that this guidance will have on our consolidated financial statements and related disclosures.

Chapter 11 Proceedings and Emergence

Voluntary Filing under Chapter 11

Plan of Reorganization — On September 28, 2023 (the “Petition Date”), Capstone Green Energy Corporation and its wholly owned direct subsidiaries, Capstone Turbine International, Inc.

and Capstone Turbine Financial Services, LLC (the “Debtors”) filed voluntary petitions for relief under Chapter 11 of the United States Bankruptcy Code (the “Bankruptcy Code”) in the United States Bankruptcy Court for the District of Delaware (the “Bankruptcy Court”).

The Chapter 11 proceedings were jointly administered under the caption, In re Capstone Green Energy Corporation, Inc., et al.

23-11634 (the “Chapter 11 Cases”).

The Debtors continued to operate their business in accordance with the applicable provisions of the Bankruptcy Code and orders of the Bankruptcy Court.

At hearings before the Bankruptcy Court on September 29, 2023 , the Debtors obtained approval from the Bankruptcy Court of certain “first day” motions containing customary relief intended to assure the Debtors’ ability to continue their ordinary course operations during the Chapter 11 Cases.

As a result, from the Petition Date through December 7, 2023 (the “Effective Date” and “Emergence”), the Debtors operated as a debtor-in-possession (“DIP”) under the protection of the U.S.

Bankruptcy Court following filings by the Debtors of voluntary petitions for relief under Chapter 11 the Bankruptcy Code in the Bankruptcy Court.

Concurrent with the petition, the Debtors entered into the TSA with the pre-petition senior secured creditor, Broad Street Credit Holdings, LLC.

(“Broad Street”), and Goldman Sachs Specialty Lending Group, L.P.

(the “Collateral Agent”).

The TSA, among other things, provided that Broad Street and the Collateral Agent would support the Debtors’ restructuring efforts as set forth in, and subject to the terms and conditions of, the TSA.

The TSA contained customary conditions, representations, and warranties of the parties and is subject to a number of conditions, including, among others, the accuracy of the representations and warranties of the parties and compliance with the obligations set forth in the TSA.

The TSA also provided for termination by the parties upon the occurrence of certain events.

Overview of the Plan — On September 28, 2023 , Capstone Green Energy Corporation and its Debtor Affiliates (the “Debtors”) filed their Joint Prepackaged Chapter 11 Plan of Reorganization (the “Plan”) and Disclosure Statement.

Subsequent updates and supplements were filed, leading to a combined Court hearing on November 13, 2023, for approval of the Disclosure Statement and Plan.

The Plan was confirmed on November 14, 2023 , and became effective on December 7, 2023 , when the Company emerged from Chapter 11.

The following is a summary of certain provisions of the Plan that became effective on December 7, 2023 , and is not intended to be a complete description of the Plan.

The following summary is qualified in its entirety by reference to the full text of the Plans (including the Plan Supplement).

- All of the Capstone Green Energy Corporation’s assets and liabilities (other than the equity of Capstone Turbine International, Inc., the impaired pre-petition secured claim (the “Pre-Petition Secured Claim”) and DIP Notes issued pursuant to the DIP Note Purchase Agreement, dated as of October 2, 2023 (as has been amended, restated, modified, supplemented or replaced from time to time, the “DIP NPA”), and specific assets and liabilities directly related to the distributor support services activities (referred to in the Plan as “Retained Assets” and defined in Note 14— Commitments and Contingencies) and tax attributes were transferred to a new subsidiary called Capstone Green Energy LLC (the “Operating Subsidiary”);

- Capstone Turbine International, Inc.

contributed all assets to the Operating Subsidiary;

- The Operating Subsidiary issued the preferred units, representing 37.5 % equity ownership, and common units, representing 62.5 % equity ownership, to Capstone Green Energy Corporation;

- Capstone Green Energy Corporation contributed all common units of the Operating Subsidiary to Capstone Turbine International, Inc.

providing a 62.5 % equity ownership in the Operating Subsidiary;

- Capstone Turbine International, Inc.

became a public company and was renamed Capstone Green Energy Holdings, Inc.

and became the successor to Capstone Green Energy Corporation for purposes of Securities and Exchange Commission registration, and is the successor with respect to any claims against, or interest in, Capstone Green Energy Corporation and any Debtor subsidiary;

provided that, for the avoidance of doubt Capstone Turbine International, Inc.

is not the successor to Capstone Green Energy Corporation for United States federal, state or local income tax purposes, and is not the successor to Capstone with respect to the employment of the directors, officers, and employees of the Debtors or relating to any employment obligations;

- Capstone Green Energy Corporation became a private company (the “Reorganized PrivateCo”) that continued to own the Retained Assets and the preferred units of the Operating Subsidiary and has no liabilities relating to, arising under or in connection with any claims against, or interest in, any Debtor;

- The holder of the $ 57 million Pre-Petition Secured Claim and purchaser DIP Claim (defined term as described below), received one hundred percent ( 100 % ) of the equity interests in Reorganized PrivateCo in exchange for agreed-upon portions of such Claims;

- Existing shareholders of Capstone Green Energy Corporation received one hundred ( 100 % ) percent of the common stock of Capstone Green Energy Holdings, Inc., subject to any dilution from any stock issued pursuant to the employee incentive stock plan, including the shares of non-voting common stock issued to certain key employees and directors;

- Reorganized PrivateCo and the Operating Subsidiary entered into a Reorganized PrivateCo Services Agreement (the “Reorganized PrivateCo Services Agreement”) with respect to ongoing support for the Retained Assets of Reorganized PrivateCo.

DIP Note Purchase Agreement — On October 3, 2023, the Debtors entered into a super-priority senior secured debtor-in-possession note purchase agreement (the “DIP Note Purchase Agreement”) with Broad Street and the Collateral Agent.

Under this agreement, Broad Street provided a $ 30 million DIP Facility, consisting of $ 12 million in new money DIP notes and an $ 18 million roll-up of pre-petition debt.

The Debtors filed a motion on September 28, 2023, seeking the Bankruptcy Court’s approval for this DIP Facility.

On October 2, 2023, the Bankruptcy Court granted the DIP Motion and entered an interim order (the “Interim DIP Order”) approving the DIP Facility on an interim basis and providing the Debtors with the necessary liquidity to continue to operate in Chapter 11.

Upon entry of the Interim DIP Order and satisfaction of all applicable conditions precedent, as set forth in the DIP Note Purchase Agreement, the Debtors were authorized to make a single, initial draw of $ 9.0 million on the DIP Facility.

The remaining $ 3.0 million of the DIP Facility became available to be drawn by the Debtors on November 13, 2023, after the Bankruptcy Court entered the Final DIP Order (the “Final Order”).

The amount was drawn by the Debtors on October 24, 2023, after the entry of the Final Order and compliance with the terms, conditions, and covenants to be set forth in the DIP Note Purchase Agreement.

Substantially all of the Debtors’ assets were encumbered by first-priority liens of the purchaser under the DIP Note Purchase Agreement.

Pursuant to the terms of the Plan, on the Effective Date, the obligations of Reorganized PrivateCo to the DIP NPA, were cancelled and converted into an Exit Facility (the “Exit Note Purchase Agreement”).

Treatment of claims

- Secured Tax Claims, Other Secured Claims, Other Priority Claims were unimpaired, expected to be paid in full during the course of the bankruptcy proceedings, or reinstated to be paid in full after Emergence.

- General Unsecured Claims were unimpaired and received cash in the amount of such allowed claim as of the Effective Date or during the ordinary course of business following such date.

- Pre-Petition Secured Claim was impaired and received in full satisfaction and discharge of the holder’s claim the pro rata amount (pro rata along with the DIP Claims) of Reorganized PrivateCo equity and the indirect ownership of the Operating Subsidiary preferred units issued to Reorganized PrivateCo.

- DIP Claim received in full satisfaction, settlement, release and discharge of such claim the pro rata amount (pro rata along with Pre-Petition Secured Claim) of Reorganized PrivateCo equity and the indirect ownership

of the Operating Subsidiary preferred units issued to Reorganized PrivateCo, and exit financing roll-over notes issued at Emergence, which is referred to as part of the Exit Note Purchase Agreement detailed below.

- Equity Interests were impaired and deemed to reject the Plan.

Each shareholder in Capstone Green Energy Corporation received its pro rata share of 100 % of Capstone Green Energy Holdings, Inc., subject to dilution for the executive stock plans.

The shares in Capstone Green Energy Corporation, including any warrants, restricted stock or similar contractual equity rights thereto were cancelled and terminated and received no other distribution of value.

Nasdaq Delisting of Common Stock— Effective at the opening of the trading session on October 5, 2023, the Company’s common stock was suspended from trading on the Nasdaq Capital Market.

Effective October 23, 2023, the Company’s common stock was delisted from the Nasdaq Capital Market.

Upon emergence, new share capital was issued under the Plan.

Refer to the Statement of Stockholders’ Equity.

Basis of Presentation — Effective on the Petition Date, the Company applied accounting standards applicable to reorganizations, ASC 852, in preparing the accompanying Consolidated Financial Statements as of and for the year ended March 31, 2024, which requires the financial statements, for periods subsequent to the commencement of the Chapter 11 Cases, to distinguish transactions and events that are directly associated with the reorganization from the ongoing operations of the business.

Accordingly, certain charges related to the Chapter 11 Cases were recorded as Reorganization items, net, in the accompanying Consolidated Financial Statement of Operations.

All pre-petition obligations of the Debtors that were impacted by the Chapter 11 Cases that were previously classified as Liabilities Subject to Compromise (“LSTC”) were resolved at Emergence.

Gain on Extinguishment of Debt at Emergence — In accordance with ASC 470, Debt, on December 7, 2023, the Company recognized a gain on extinguishment of debt that was recorded in Reorganization items, net in the accompanying Consolidated Financial Statement of Operations.

The components of the gain for Fiscal 2024 were as follows (in thousands):

Pre-petition senior secured principal

Accrued interest and fees on pre-petition senior secured principal

Additional New Money DIP Notes

DIP commitment fee

DIP PIK interest (post-petition interest)

New Money Exit Notes

Fair value of Preferred Units of Operating Subsidiary exchanged

Fair value of Exit Notes and net retained assets

Total gain from debt extinguishment

The Net Operating Losses (the “NOLs”) that were provided through the transfer of ownership of Capstone Green Energy Corporation, which held all of the tax attributes, including the NOLs had a full valuation allowance against them and did not have any value to Capstone Green Energy Corporation immediately prior to the Effective Date.

Refer to Note 8— Income Taxes for additional information.

Fresh-Start Applicability — On December 7, 2023, the Company evaluated the criteria to apply fresh-start accounting under ASC 852 and determined the pre-petition shareholders maintained control of the Company during and after the reorganization and did not lose control as a result of the reorganization.

As pre-petition shareholders did not lose control, fresh-start did not apply and historical activities and balances remained at carrying value.

At Emergence, the restructured debt was treated as a debt extinguishment and the shareholders’ equity was revised to reflect the new common stock of Capstone Green Energy Holdings, Inc.

Reorganization Items — Reorganization items represent the direct and incremental costs related to the Company’s Chapter 11 cases, such as professional fees, pre-petition liability claim adjustments and losses that are probable and can be estimated, net of interest income earned on accumulated cash during the Chapter 11 process and net gains on the sale of assets or resulting from certain settlement agreements related to the Company’s restructuring activities.

The Company’s restructuring activities resulted in additional charges and other adjustments for expected allowed claims (including claims

that may be subsequently allowed by the U.S.

Bankruptcy Court) and other reorganization items that were material to the Company’s financial position or results of operations during the period.

The table below lists the components of reorganization items for Fiscal 2024 (in thousands):

Professional fees

Adjustment of debt to approved claim

DIP commitment fee

Gain on debt extinguishment

Total reorganization items, net

Interest Expense— Interest expense related to pre-petition LSTC was reported only to the extent that it was paid during the pendency of the Chapter 11 cases or was permitted by orders of the U.S.

Bankruptcy Court.

Contractual interest (at non-default rates) owed to unrelated parties on pre-petition LSTC not reflected on the Company’s Consolidated Financial Statements was $ 1.4 million incurred from the periods of October 1, 2023, through December 7, 2023.

Liabilities Subject to Compromise — Liabilities subject to compromise refers to pre-petition obligations which may be impacted by the Chapter 11 reorganization process.

At the Effective Date the Company no longer had amounts classified as LSTC, as the pre-petition liabilities the Company anticipated would be allowed as claims in the Chapter 11 Cases were resolved in connection with the Chapter 11 Cases.

As a result, the accompanying Consolidated Balance Sheet as of March 31, 2024, does not include amounts classified as LSTC.

Inventories are valued at the lower of cost (determined on a FIFO basis) or net realizable value and consisted of the following (in thousands):

Raw materials

Finished goods

non-current portion

Total inventory, net non-current portion

The non-current portion of inventories represents that portion of inventories in excess of amounts expected to be sold or used in the next twelve months.

The non-current inventories are primarily comprised of repair parts for older generation products that are still in operation but are not technologically compatible with current configurations.

The Company expects to use the non-current portion of the inventories on hand as of March 31, 2025 over the periods presented in the following table (in thousands):

Non-current Inventory

Balance Expected

Expected Period of Use

13 to 24 months

25 to 36 plus months

Property, Plant, Equipment and Rental Assets

Property, plant, equipment and rental assets consisted of the following (in thousands):

Machinery, equipment, automobiles and furniture

Leasehold improvements

Molds and tooling

Rental assets

accumulated depreciation

Total property, plant, equipment and rental assets, net

The Company regularly assesses the useful lives of property and equipment and retires assets no longer in service.

Depreciation expense for property, plant, equipment and rental assets was $ 3.9 million and $ 4.0 million for Fiscal 2025 and 2024, respectively.

There was no inventory converted to rental assets during Fiscal 2025.

Inventory converted to rental assets during Fiscal 2024 was $ 0.3 million.

Rental assets sold as product revenue and cost of goods sold in Fiscal 2025 had a net book value of $ 3.1 million.

There were no rental asset sales in Fiscal 2024.

The depreciation expense recorded to cost of sales during Fiscal 2025 and 2024, was $ 3.7 million and $ 3.8 million, respectively.

Accrued Warranty Reserve

The Company provides for the estimated costs of warranties at the time revenue is recognized.

The specific terms and conditions of those warranties vary depending upon the microturbine product sold and the geography of sale.

The Company’s product warranties generally start from the delivery date and continue for up to twenty-four months .

Factors that affect the Company’s warranty obligation include product failure rates, anticipated hours of product operations and costs of repair or replacement in correcting product failures.

These factors are estimates that may change based on new information that becomes available each period.

The Company assesses the adequacy of recorded warranty liabilities quarterly and adjusts the liability as necessary.

Changes in the accrued warranty reserve consisted of the following (in thousands):

Balance, beginning of the period

Standard warranty provision

Deductions for warranty claims

Balance, end of the period

2024-03, Income Statement (Subtopic 220-40):

Disaggregation of Income Statement Expenses , as subsequently clarified by ASU No.

The amendments require disaggregated disclosure of certain income statement expense line items.

The guidance is effective for fiscal years beginning after December 15, 2026, and interim periods beginning after December 15, 2027.

Early adoption is permitted.

The Company is currently evaluating the impact of this guidance on its consolidated financial statements and related disclosures.

In July 2025, the FASB issued ASU No.

2025-05, Financial Instruments—Credit Losses (Topic 326):

Measurement of Credit Losses for Accounts Receivable and Contract Assets .

The amendments provide an optional practical expedient for estimating expected credit losses on current accounts receivable and contract assets arising from revenue transactions.

The guidance is effective for fiscal years beginning after December 15, 2025.

Early adoption is permitted.

The Company is currently evaluating the impact of this guidance on its consolidated financial statements and related disclosures.

In 2025, the FASB issued ASU No.

2025-12, Codification Improvements .

The amendments include clarifications related to diluted earnings per share when a loss from continuing operations exists, disclosure requirements for lease receivables arising from sales-type or direct financing leases, and permissible methods for accounting for treasury stock retirements.

The guidance is effective for fiscal years beginning after December 15, 2026.

The Company is currently evaluating the impact of this guidance on its consolidated financial statements and related disclosures.

In April 2026, the FASB issued ASU 2026-01, Equity (Topic 505):

Initial Measurement of Paid-in-Kind Dividends on Equity-Classified Preferred Stock .

The new guidance requires an entity to initially measure paid-in-kind (“PIK”) dividends on equity-classified preferred stock based on the dividend rate stated in the underlying preferred stock agreement.

The Company has issued Redeemable Series A Convertible Preferred Stock that accrues PIK dividends.

The guidance will apply to the Company’s measurement of such dividends upon adoption.

The guidance is effective for the Company for annual reporting periods beginning after December 15, 2026, and interim periods within those annual periods.

Early adoption is permitted.

The Company is currently evaluating the impact that adoption of this guidance will have on its consolidated financial statements.

Revenue Recognition

16 unchanged sentences

Contract Balances

The Company’s deferred revenues consist of advance payments for microturbine products, parts, accessories and parts ordered under FPP contracts, but not yet delivered (contract liabilities), as well as advance payments on service obligations and extended warranties.

The current portion of deferred revenue is included in Deferred revenue and the non-current portion of deferred revenue is included in Deferred revenue, non-current in the Consolidated Balance Sheets.

The Company's contract liabilities consist of customer deposits and advance payments received for microturbine products, parts, accessories, and equipment ordered under sales contracts for which the related goods or services have not yet been delivered or performed.

Contract liabilities also include advance payments received for service obligations, Factory Protection Plan ("FPP") contracts, Long-Term Maintenance Agreements ("LTMAs"), and extended warranties.

Customer deposits are primarily non-refundable cash payments received from distributors for future orders.

The current and non-current portions of deferred revenue are presented within Current Liabilities and Long-Term Liabilities, respectively, on the Consolidated Balance Sheets.

Changes in deferred revenue consisted of the following (in thousands):

3 unchanged sentences

Amounts included in deferred revenue at the beginning of the year

Deferred revenue attributed to FPP contracts represents the unearned portion of the Company’s contracts.

FPP contracts are generally paid quarterly in advance with revenue recognized on a straight-line basis over the contract period.

As of March 31, 2025, approximately $ 5.3 million of revenue is expected to be recognized from remaining performance obligations for FPP contracts.

The Company expects to recognize revenue of approximately $ 4.7 million of

these remaining performance obligations over the next 12 months and the balance of $ 0.6 million will be recognized thereafter.

The Distributor Support System (the “DSS program”) provides additional support for distributor business development activities, customer lead generation, brand awareness and tailored marketing services for each of the Company’s major geographic and market verticals.

This program is funded by distributors and was developed to provide improved worldwide distributor training, sales efficiency, website development, company branding and funding for increased strategic marketing activities.

DSS program revenue is generally paid quarterly with revenue recognized on a straight-line basis over a calendar year period.

Deposits are primarily non-refundable cash payments from distributors for future orders.

Refer to Note 14 – Commitments and Contingencies — Related Party Transactions, in the Notes to Consolidated Financial Statements for information regarding Reorganized PrivateCo’s distributor services business transition connected to the Company’s emergence from the Chapter 11 Cases.

Income (loss) before provision for income taxes consisted of the following for the years ended March 31, 2025 and 2024 (in thousands):

Year Ended March 31,

United States

Income (loss) before provision for income taxes

Current income tax provision is the amount of income taxes reported or expected to be reported on our federal, state and foreign income tax return.

The Company has no deferred income tax due to the full valuation allowance recorded against its net deferred tax assets.

The components of the provision for income taxes are as follows the years ended March 31, 2025 and 2024 (in thousands):

Year Ended March 31,

Total income tax expense

Actual income tax expense differed from the amount computed by applying statutory corporate income tax rates to loss from operations before income taxes.

A reconciliation of income tax expense to the federal statutory rate follows (in thousands):

Year Ended March 31,

Federal income tax at the statutory rate

State taxes, net of federal effect

Redeemable noncontrolling interest

Impact of Reorganization, net

Change in Valuation Allowance

Research and Development Credits

Excess Business Interest Expense

True-up of prior year's estimates

Income tax expense

The Company’s deferred tax assets and liabilities consisted of the following at March 31, 2025 and 2024 (in thousands):

Year Ended March 31,

Deferred tax assets:

NOL carryforwards

Tax credit carryforwards

Investment in Partnership

Deferred tax assets

Valuation allowance for deferred tax assets

Deferred tax assets, net of valuation allowance

Deferred tax liabilities:

Investment in Partnership

Net deferred tax assets

As previously discussed, the Company emerged from bankruptcy on December 7, 2023 and effected a financial and organizational restructuring in accordance with the Plan.

The Company’s non-recurring restructuring activities resulted in a significant change in the components of the Company’s deferred tax assets and liabilities as of March 31, 2024.

Elements of the Plan provided that certain secured and unsecured debt that the Company held was exchanged for 18,540,877 shares of common stock of Capstone Green Energy Holdings, Inc., par value $ 0.001 per share (the “Common Stock”) and 10,449,863 Series A Redeemable Preferred Units (the “Preferred Units”).

Absent an exception, a debtor recognizes cancellation of indebtedness income (“CODI”) upon discharge of its outstanding indebtedness equal to the excess of the adjusted issue price of the cancelled debt over the amount of consideration received in satisfaction of such debt.

The Internal Revenue Code (“IRC”) of 1986, as amended, provides that a debtor in a Chapter 11 bankruptcy case may exclude CODI from taxable income but must reduce certain of its tax attributes by the amount of any CODI realized as a result of the consummation of a plan of reorganization.

The amount of CODI realized by a taxpayer is determined based on the fair market value of the consideration received by the creditors in settlement of outstanding indebtedness.

As a result of the market value of equity upon emergence from bankruptcy, the estimated amount of CODI is approximately $ 35.3 million, which reduced some of the value of the Company’s NOL carryover prior to reorganization.

Any remaining tax attributes after attribute reduction remained with Capstone Green Energy Corporation, the Reorganized Private Co, and are no longer a part of Capstone Green Energy Holdings, Inc.’s (the successor) tax attributes.

Due to the uncertainty surrounding the timing of realizing the benefits of favorable tax attributes in future income tax returns, the Company has placed a valuation allowance against its net deferred income tax assets.

The change in valuation allowance for fiscal years ended March 31, 2025, and 2024, was a $ 2.3 million decrease and a $ 153.1 million decrease, respectively.

The decrease at March 31, 2024, was primarily attributable to the impact of the Plan reorganization.

The Company’s NOL for federal and state income tax purposes at March 31, 2025, were as follows (in thousands):

IRC Section 382 (“Section 382”) limits the use of net operating loss (“NOL”) and tax credit carryforwards when changes occur in the capital stock ownership of the Company.

Any annual limitation may result in the expiration of NOL and credits before utilization.

Should the Company have an ownership change, utilization of the NOL and carryforwards could be significantly reduced.

The Company is not expected to utilize NOL and tax credit carryforwards in the near term, and this does not have a material impact on the Company’s financial statements due to the full valuation allowance.

ASC 740 clarifies the accounting for income taxes by prescribing a minimum recognition threshold that a tax position is required to meet before being recognized in the financial statements.

ASC 740 also provides guidance on derecognition, measurement, classification, interest and penalties, accounting interim periods, disclosure and transition.

Based on management’s evaluation, there were no research and development credits or interest or penalties related to unrecognized tax benefits as of March 31, 2025, and 2024.

As part of the reorganization, the research and development credits remained with Capstone Green Energy Corporation, the Reorganized PrivateCo.

As such, there are no remaining unrecognized tax benefits as of March 31, 2024.

A reconciliation of the beginning and ending amount of total gross unrecognized tax benefits is as follows (in thousands):

Balance at April 1, 2023

Gross decrease due to reorganization

Balance at March 31, 2024

Gross increase related to prior year tax positions

Lapse of statute of limitations

Balance at March 31, 2025

The Company does not expect a material change to its unrecognized tax benefits over the next twelve months.

The Company files income tax returns in the U.S.

federal jurisdiction and various state, local and foreign jurisdictions.

When applicable, the Company accounts for interest and penalties generated by tax contingencies as interest and other expense, net in the Consolidated Statement of Operations.

Stock Compensation

The following table summarizes, by Consolidated Statements of Operations line item, stock-based compensation expense (in thousands):

Year Ended March 31,

Cost of goods sold

Research and development

Selling, general and administrative

Stock-based compensation expense

2017 and 2023 Equity Incentive Plans

Capstone Green Energy Corporation 2017 Equity Incentive Plan

In June 2017, the Company’s Board of Directors (the “Board”) adopted the Capstone Green Energy Corporation 2017 Equity Incentive Plan, as amended (the “2017 Plan”), which was approved by the stockholders at the Company’s 2017 annual meeting of stockholders on August 31, 2017 (the “2017 Annual Meeting”).

The 2017 Plan provided for 3,400,000 aggregate number of shares of Common Stock authorized for issuance under the 2017 Plan.

Shares available for future grants and all outstanding unvested equity awards under the 2017 Plan were cancelled on the Effective Date in accordance with the Plan.

The Company recorded $ 2.1 million of stock-based compensation expense for the acceleration of cancelling the unvested forfeited awards during Fiscal 2024.

Capstone Green Energy Holdings, Inc.

2023 Equity Incentive Plan

In connection with the Emergence, on December 7, 2023, the Capstone Green Energy Holdings, Inc.

2023 Equity Incentive Plan (the “Incentive Plan”) was approved and adopted by the Capstone Green Energy Holdings, Inc.

The Incentive Plan is intended to, among other things, (i) attract and retain the types of employees, consultants and directors who will contribute the Company’s long-term success, (ii) provide incentives that align the interests of employees, consultants and directors with those of the stockholders of the Company, and (iii) promote the success of the Company’s business.

The Incentive Plan is administered by the Capstone Green Energy Holdings, Inc.

Compensation and Human Capital Committee or the Board.

No more than 3,000,000 shares of Common Stock are available for the grant of awards under the Incentive Plan.

The Company intends to issue equity awards to incentivize employees whose unvested equity awards were terminated in accordance with the Plan.

The aggregate value of awards granted during a single fiscal year to any non-employee director, together with any cash fees paid or to be paid to such non-employee director during the fiscal year and the value of awards granted to such non-employee director under any other equity compensation plan of the Company during the fiscal year, will not exceed a total value of $ 300,000 .

The Capstone Green Energy Holdings, Inc.

Board at any time, and from time to time, may amend or terminate the Incentive Plan.

However, (i) in some situations, no amendment shall be effective unless approved by the stockholders of the Company to the extent stockholder approval is necessary to satisfy any applicable laws, and (ii) rights under any award granted before an amendment shall not be impaired by any amendment without the grantee’s written.

Non-Voting Common Stock

Capstone Green Energy Corporation, as the sole stockholder of Capstone Turbine International, Inc., approved Capstone Turbine International, Inc.’s Amended and Restated Certificate of Incorporation (“COI”), which provided designation of a new class of non-voting common stock with a par value of $ 0.001 per share for Capstone Turbine International, Inc.

The non-voting common stock are to be issued to certain key employees and directors of the Company.

The intent of issuing the non-voting common share was to provide value to the employees and officers after the restructuring and substantial de-leveraging following the Company’s Chapter 11 Bankruptcy.

T he non-voting common stock do not have any voting rights on any matter on which stockholders of Capstone Green Energy Holdings, Inc.

are entitled to vote.

However, the non-voting common stock have the right to vote, separately or together with the common stock, on any amendments to the COI (including with respect to any changes to (i) the authorized number of shares of common stock or non-voting common stock or (ii) any preferences, rights or powers of the non-voting common stock).

The number of authorized shares of non-voting common stock or common stock may be increased or decreased (but not below the number of such shares of non-voting common stock or common stock then outstanding, as applicable) by the affirmative vote of the holders of a majority of the common stock.

All common stock and all non-voting common stock have the same rights and powers, rank equally (including upon any liquidation, dissolution or winding up of the Company), share ratably in any dividends and distributions, and are identical in all respects as to all other matters, other than as to voting rights.

The holders of non-voting common stock may not transfer any such shares of non-voting common stock

until the end of the period ending on the date that is twelve months immediately following the date of the COI (the “Lock-Up Period”), with certain exceptions as described in the COI.

Each share of non-voting common stock will automatically upon transfer, convert into a share of common stock on a 1 :1 basis.

Upon Emergence, a step-up in value was calculated as the maximum value the shares could have after considering a discount for lack of voting rights and the Lock-Up Period.

On the Effective Date, $ 0.5 million was recorded as a one-time compensation expense in the Company’s Consolidated Statement of Operations and within Additional paid-in capital (“APIC”) on the Company’s Consolidated Balance Sheet.

As of March 31, 2025 and 2024, 508,475 shares of fully vested non-voting common stock were outstanding.

Restricted Stock Units and Performance Restricted Stock Units

All outstanding unvested equity awards as of the Effective Date under the Capstone Green Energy Corporation 2017 Equity Incentive Plan were cancelled on the Effective Date in accordance with the Plan.

Through the new 2023 Plan, the Company intends to issue equity awards to incentivize employees whose unvested equity awards were terminated in accordance with the Plan.

The 2023 Plan authorizes the award of restricted stock units and performance restricted stock units.

Awards granted under the 2023 Plan generally vest over three years .

The following table summarizes restricted stock unit activity:

Average Grant

Restricted Stock Units

Non-vested restricted stock units outstanding at April 1, 2023

Vested and issued

Forfeited/cancelled

( 1,357,085 )

Non-vested restricted stock units outstanding at March 31, 2024

Vested and issued

Forfeited/cancelled

Non-vested restricted stock units outstanding at March 31, 2025

Restricted stock units expected to vest beyond March 31, 2025

The following table summarizes performance restricted stock unit (“PRSU”) activity:

Average Grant

Performance Restricted Stock Units

Non-vested restricted stock units outstanding at April 1, 2023

Vested and issued

Forfeited/cancelled

Non-vested restricted stock units outstanding at March 31, 2024

Vested and issued

Forfeited/cancelled

Non-vested restricted stock units outstanding at March 31, 2025

Restricted stock units expected to vest beyond March 31, 2025

As of March 31, 2025, there was $ 0.7 million of aggregate unrecognized compensation cost related to unvested restricted stock units (including PRSU) expected to be recognized in compensation expense in future periods with a weighted-average period of 1.98 years.

Stockholder Rights Plan

In connection with the Emergence and in accordance with the Plan, the NOL rights agreement was terminated and the obligations of the Company thereunder were discharged by order of the Bankruptcy Court.

The warrants outstanding as of the Effective Date to purchase up to 3,763,860 shares of Reorganized PrivateCo.

at various exercise prices for each series were cancelled on the Effective Date in accordance with the Plan.

Temporary Equity

Redeemable Preferred Units

Redeemable noncontrolling interests are reported on the Consolidated Balance Sheet as Temporary Equity.

During Fiscal 2024, in connection with the Reorganization, the Operating Subsidiary issued 10,449,863 Preferred Units that include a redemption feature.

The Preferred Units have an aggregate value representing 37.5 % equity ownership in the Operating Subsidiary (“Aggregate Purchase Price”).

At any time during the six-month period following the sixth anniversary of the Effective Date, the holders of the Preferred Units may elect to have all, but not less than all, of the then outstanding Preferred Units redeemed.

Therefore, the Preferred Units are probable of becoming redeemable and will be classified as temporary (‘mezzanine’) equity.

The Preferred Units also provide the holder with the option to convert all or less than all of the Preferred Units into Operating Subsidiary Common Units (“Common Units”) at any time and from time to time without the payment of additional consideration.

If the holder elects to convert the Preferred Units, the specified number of Preferred Units to be converted will be divided by the total number of Preferred Units then outstanding times 37.50 % of the Common Units deemed outstanding.

To the extent some, but not all of the Preferred Units are converted, the 37.50 % percentage will be proportionately reduced, and the same adjustment will apply for purposes of calculating other as-converted entitlements of the Preferred Units.

None of the Preferred Units had been converted into Common Units as of March 31, 2025.

Additionally, the Preferred Units provide the holder with a put option to sell the shares to the Operating Subsidiary and the Liquidation Preference provides the holder with the option to exchange the Preferred Units for cash.

The holder of the noncontrolling interest hold a liquidation preference that protects the holder from absorbing losses.

The Company incurred a net loss of $ 7.2 million and as of March 31, 2025, therefore, there were no earnings to allocate to Operating Subsidiary.

Therefore, the Company did not allocate earnings to the Operating Subsidiary as of March 31, 2024, as the Company incurred a net loss after the Effective Date.

Management’s initial valuation of the Preferred Units was made under ASC 480-10-S99-3A and is specifically determined by the ‘redemption value’ This initial value was established using a fair value methodology, to establish the initial redemption value per the terms of the Capstone Green Energy LLC Agreement, the fair value of $ 1.33 per Preferred Unit at the date below was determined through the use of an option-pricing method (“OPM”) that treats the common and preferred units as call options on the enterprise value of the Company with exercise prices based on the liquidation preference of the preferred units.

The OPM incorporated multiple thresholds that represent future change of control sale prices where the payout structure would differ based on the rights and preferences of each share class.

The OPM used was the Black-Scholes Metron (“BSM”) model to price the call option, which includes the below variables.

The enterprise

value utilized by the Company in the OPM represents the value agreed upon by the parties involved the restructuring as approved by the Chapter 11 Bankruptcy Court:

Year Ended March 31,

Fair value of common units

Dividend yield

Risk-free interest rate

Expected term

Subsequent measurement under ASC 480-10-S99-3A for the redemption value follows the definition of redemption value as per the Capstone Green Energy LLC Agreement, which has been defined as greater of 1) the share price of CGEH shares (if CGEH is publicly traded), with appropriate adjustments for customary and appropriate factors, or 2) the Aggregate Purchase Price plus declared but unpaid dividends, the ‘maximum redemption value’.

The subsequent measurement based on the redemption value method should not result in an amount that is less than the initial recorded value of $ 13.9 million.

For the year ended March 31, 2025, the Company’s Common Stock is publicly trading and the Preferred Units are not currently redeemable.

The Company will measure the maximum redemption value at the end of each accounting period, which is based on the Company’s Common Stock value at period end.

As of March 31, 2025, the closing value of CGEH stock was $ 0.75 .

At each reporting period, the Company remeasures the redemption value of the Preferred Units and adjusts the carrying value, if that value exceeds the initial fair value, to equal the maximum redemption value to retained earnings.

The initial fair value was $ 13.9 million.

Subsequent remeasurement of fair value has not exceeded the initial fair value;

therefore, no adjustments have been made prior to the current period.

The remeasurement as of March 31, 2025, did not exceed the initial fair value;

therefore, an adjustment to the carrying value was not recorded.

FPP and LTMA Contract Liabilities

Deferred revenue attributable to FPP and LTMA contracts represents the unearned portion of advance payments received under those agreements.

Payments are generally received quarterly in advance, with revenue recognized on a straight-line basis over the applicable contract period.

As of March 31, 2026, approximately $ 6.1 million is expected to be recognized from remaining FPP and LTMA contract liabilities.

The Company expects to recognize approximately $ 5.5 million of these remaining performance obligations over the next 12 months , with the remaining balance of $ 0.6 million to be recognized thereafter.

Distributor Support System ("DSS") Program

The Company’s DSS program provides support for business development activities, including customer lead generation, brand awareness, and tailored marketing services across the Company’s major geographic and vertical markets.

Prior to March 31, 2026, these activities were administered through third-party distributors and funded by participating distributors.

Effective March 31, 2026, in connection with the acquisition of CDSS (see Note 20 – Business Combinations), the Company internalized these activities and now performs such services directly.

DSS program fees are generally invoiced and paid quarterly, with revenue recognized on a straight-line basis over the applicable service period, which is typically one year.

As of March 31, 2026, approximately $ 2.0 million is expected to be recognized from remaining DSS contract liabilities.

The Company expects to recognize substantially all of these remaining performance obligations within the next 12 months.

Refer to Note 12 – Commitments and Contingencies for information regarding the transition of PrivateCo's distributor services business in connection with the Company's emergence from the Chapter 11 Cases.

Customer Concentrations and Accounts Receivable

The Company recorded credit loss expense of $ 0.5 million and $ 0.8 million for the fiscal years ended March 31, 2026 and 2025, respectively.

The following table presents the changes in the allowance for expected credit losses for the periods presented (in thousands):

Balance, April 1, 2024

Provision for credit losses

Balance, March 31, 2025

Provision for credit losses

Balance, March 31, 2026

Revenue Concentrations

The Company’s revenue is concentrated among a limited number of distributors.

For the year ended March 31, 2026, sales to E-Finity Distributed Generation (“E-Finity”), Cal Microturbine, DTC Soluciones SA de CV (“DTC”), and Lone Star Power Solutions, LLC (“Lone Star”) accounted for approximately 17 %, 16 %, 13 %, and 10 % of total revenue, respectively.

On August 13, 2025, the Company completed its acquisition of Cal Microturbine.

See Note 20 - Business Combination for additional information.

Cal Microturbine revenue for Fiscal 2026 reflects the period subsequent to acquisition.

For the year ended March 31, 2025, sales to E-Finity, Lone Star, and Horizon Power Systems accounted for approximately 13 %, 12 %, and 11 % of total revenue, respectively.

Accounts Receivable Concentrations

As of March 31, 2026, E-Finity, Lone Star and RSP Systems accounted for approximately 14 %, 14 % and 10 %, respectively, of total accounts receivable.

As of March 31, 2025, Lone Star and Optimal Group Australia accounted for approximately 18 % and 10 %, respectively, of total accounts receivable.

Inventories are valued at the lower of cost (determined on a FIFO basis) or net realizable value and consisted of the following (in thousands):

Raw materials

Work in process

Finished goods

non-current portion

Total inventory, net non-current portion

The non-current portion of inventories represents that portion of inventories in excess of amounts expected to be sold or used in the next twelve months and could include repair parts for older generation products that are still in operation but are not technologically compatible with current configurations.

The Company expects to use the non-current portion of the inventories on hand as of March 31, 2026, over the periods presented in the following table (in thousands):

Non-current Inventory

Balance Expected

Expected Period of Use

13 to 24 months

25 to 36 plus months

Accrued Warranty Reserve

The Company accrues the estimated costs of product warranties at the time the related revenue is recognized.

Warranty terms and conditions vary by product and geography;

however, the Company's standard product warranties generally commence on the delivery date and extend for up to twenty-four months .

The Company's warranty obligation is influenced by several key estimates, including product failure rates, anticipated hours of product operation, and the expected costs of repair or replacement necessary to correct product failures.

These estimates are reviewed and updated each reporting period as new information becomes available, including field performance data and engineering assessments.

When the Company has sufficient evidence that product modifications or design changes are materially affecting historical failure rates, those changes are incorporated prospectively into the warranty liability estimate.

In addition to standard warranty obligations, the Company may accrue estimated costs for reliability repairs on products that are no longer under warranty.

Such accruals are recorded when, in management's judgment, and in accordance with a specific remediation plan approved by the Company, it is prudent to provide such repairs.

The adequacy of all recorded warranty liabilities is assessed quarterly, and adjustments are made as warranted by updated estimates or actual claims experience.

Changes in the accrued warranty reserve consisted of the following (in thousands):

Balance, beginning of the period

Standard warranty provision

Deductions for warranty claims

Balance, end of the period

Property, Plant, Equipment and Rental Assets

Property, plant, equipment and rental assets consisted of the following (in thousands):

Machinery, equipment, automobiles and furniture

Leasehold improvements

Molds and tooling

Rental assets

Total property, plant, equipment and rental assets

accumulated depreciation

Total property, plant, equipment and rental assets, net

The Company regularly assesses the useful lives of property and equipment and retires assets no longer in service.

Depreciation expense for property, plant, equipment and rental assets was $ 3.9 million for Fiscal 2026 and 2025, respectively.

There was no inventory converted to rental assets during Fiscal 2026 and Fiscal 2025, respectively.

There were no direct sales of rental assets sold as product revenue and cost of goods sold in Fiscal 2026.

Direct sales of rental assets sold as product revenue and cost of goods sold in Fiscal 2025 had a net book value of $ 3.1 million.

The depreciation expense recorded to cost of sales during Fiscal 2026 and 2025, was $ 3.7 million, respectively.

Intangible Assets

During the year ended March 31, 2026, the Company recognized identifiable intangible assets in connection with two acquisitions:

Cal Microturbine which was accounted for as a business combination under ASC 805, and the acquisition of Capstone Distributor Support Services Corporation which was accounted for as an asset acquisition .

The acquired intangible assets consist of customer relationships and trademark, respectively.

The Company did no t have any intangible assets as of March 31, 2025.

The acquired intangible assets have finite useful lives and are being amortized on a straight-line basis over their estimated useful lives.

Amortization expense related to intangible assets was $ 0.4 million for the year ended March 31, 2026, and no amortization expense was recognized in the year ended March 31, 2025, due to the absence of such assets.

The recognition and measurement of intangible assets were determined as part of the allocation of the purchase price for each respective acquisition.

For the acquisition of Cal Microturbine, intangible assets were recognized and measured in accordance with ASC 805, Business Combinations.

For the acquisition of Capstone Distributor Support Services Corporation, intangible assets were recognized and measured in accordance with the asset acquisition framework under ASC 805-50.

Additional information regarding the acquisition is included in Note 20 - Business Combinations.

Intangible assets consisted of the following (in thousands):

March 31, 2026

Customer relationships

Trademark (1)

(1) The trademark asset was acquired on March 31, 2026 and, accordingly, no amortization was recognized during the year ended March 31, 2026.

Estimated future amortization expense for intangible assets as of March 31, 2026 is as follows (in thousands):

Year Ending March 31,

Fair Value Measurements

14 unchanged sentences

Basis for Valuation

The carrying values reported in the Consolidated Balance Sheets for cash, accounts receivable and accounts payable approximate their fair values because of the immediate or short-term maturities of these financial instruments.

Financial and nonfinancial assets and liabilities measured on a recurring basis are those that are adjusted to fair value at each reporting period and include the Company’s Preferred Units.

The Company used the BSM model (Level 3) with standard valuation inputs to value the Preferred Units for Fiscal 2024.

The Company considers the Fiscal 2025 measurement to be Level 2.

The primary input is the measurement of the Preferred Units using the value of publicly traded shares of CGEH, which trade in an actively traded public market (OTC market).

We consider the shares of CGEH to be similar to the Common Units of Operating Subsidiary into which the Preferred Units may convert, and for which the underlying value are the assets, liabilities and operations of the Operating Subsidiary.

CGEH is a holding company with no other business activity.

Refer to Note 10— Temporary Equity.

Exit Facility Agreement

The Company entered into an Exit Facility during Fiscal 2024 (the “Exit Note Purchase Agreement”), for an aggregated principal amount of $ 28.1 million, consisting of $ 21.1 million Exit Roll Up Notes, including accrued and unpaid interest, commitment fees and $ 7.0 million of Exit New Money Notes (together the “Exit Notes”) subject to the terms and conditions set forth in the Exit Note Purchase Agreement by and among the Operating Subsidiary, as the issuer, the Company and Capstone Financial Services, as the guarantors (the “Guarantors”), Broad Street Credit Holdings LLC (the “Purchaser”) and Goldman Sachs Specialty Lending Holding, Inc.

(the “Collateral Agent”).

The Exit Note Purchase Agreement also provides for a $ 10.0 million uncommitted incremental facility.

The proceeds from the fully drawn $ 7.0 million of Exit New Money Notes were used to fund restructuring expenses and for working capital, for general corporate purposes.

The Exit Notes bear interest at a rate equal to the Adjusted Term SOFR (as defined in the Exit Note Purchase Agreement) plus 7.00 % per annum.

A portion of the interest on the Exit Notes is paid-in-kind until the third year following December 7, 2023.

The Exit Roll Up Notes mature on December 7, 2026 , and the Exit New Money Notes mature on December 7, 2025 .

The scheduled maturities of the Company’s long-term debt are as follows as of March 31, 2025 (in thousands):

Year Ending March 31,

Total principal payments and debt maturities

Less unamortized issuance costs

Net principal payments and debt maturities

The Exit Notes issued pursuant to the Exit Note Purchase Agreement are secured by a lien on substantially all of the present and future property and assets of Operating Subsidiary and each Guarantor, subject to customary exceptions and exclusions.

The Exit Note Purchase Agreement also includes conditions precedent, representations and warranties, affirmative and negative covenants, events of default, and other customary provisions, including financial covenants with respect to minimum consolidated liquidity and minimum consolidated adjusted EBITDA.

On March 27, 2024, the Company obtained a waiver from the Purchaser and the Collateral Agent in anticipation of default on March 31, 2024.

The waiver granted was specific to the $ 1.0 million consolidated adjusted EBITDA covenant for the measurement date of March 31, 2024, and covered the period until June 30, 2024.

There can be no assurance that the Purchase and the Collateral Agent will waive any future defaults that may occur.

If future defaults occur, the Purchaser and the Collateral Agent can exercise their rights and remedies under the Exit Note Purchase Agreement (and other security related documents), including a right to accelerate the maturity of the Company’s repayment obligations under the Exit Notes.

The Company has the right to cure an event of default for a breach of the consolidated adjusted EBITDA covenant with a prepayment on the Exit Notes up to the amount that is required to achieve the minimum consolidated adjusted EBITDA covenant for the quarter.

In the event the Company does not cure the breach, the requisite Purchaser may cause the Collateral Agent to enforce any and all liens and security interests created pursuant to the Collateral Documents and may enforce any and all rights and remedies available.

The Company believes it is probable the minimum consolidated liquidity and minimum consolidated adjusted EBITDA financial covenants discussed below will be satisfied for all measurement dates in the upcoming 12 months.

On June 28, 2024, the Company entered into the First Amendment (the “First Amendment”) to the Exit Note Purchase Agreement.

The First Amendment provides for:

(i) the amendment of the minimum consolidated adjusted EBITDA financial covenant to (a) allow adjustment for costs related to the restatement of, or other adjustments to, the financial statements of the Company for the period beginning on the Closing Date (as defined in the Exit Note Purchase Agreement) and ending at the end of the 2025 Fiscal Year and (b) the minimum consolidated adjusted EBITDA financial covenant to be first tested at the quarter ended September 30, 2024, (ii) the amendment of the minimum consolidated liquidity financial covenant to (a) reduce the minimum consolidated liquidity to $ 1,000,000 from September 30, 2024 to March 30, 2025 and (b) defer the testing of the minimum consolidated liquidity financial covenant to September 30, 2024 and (iii) the extension of the deadline for the delivery of the Company’s audited financial statements for the fiscal year ended March 31, 2024 (the “fiscal 2024 financial statements”) to September 27, 2024 and the removal of the covenant that the fiscal 2024 financial statements be accompanied by a report and opinion of an independent certified public accountant which is not subject to any “going concern” or like qualification.

The minimum consolidated liquidity covenant will be tested at all times from and after September 30, 2024, and requires the Company and its subsidiaries to maintain a minimum average Consolidated Liquidity (as defined in the First Amendment) during any seven consecutive day period of no less than:

(i) from September 30, 2024 to March 30, 2025, $ 1,000,000 ;

(ii) from March 31, 2025 to July 30, 2025, $ 2,500,000 *;

(iii) from July 31, 2025 to September 29, 2025, $ 3,000,000 *;

(iv) from September 30, 2025 to March 30, 2026, $ 3,500,000 ;

(v) from March 31 2026 to December 7, 2026, $ 4,000,000 .

*On June 23, 2025 the Company received an additional waiver to defer the minimum liquidity increase from $ 2.5 million to $ 3.0 million from June 20, 2025 to July, 31, 2025.

The minimum consolidated adjusted EBITDA covenant will be tested on the last day of each fiscal quarter, commencing with September 30, 2024, and will require the Company and its subsidiaries to maintain a minimum consolidated adjusted EBITDA (as defined in the First Amendment) as at the end of any fiscal quarter (i) from the Closing Date until September 30, 2024, for the period of the fiscal quarters then ended in such calendar year and (ii) from October 1, 2024, for the four fiscal quarter period then ended, to be less than the correlative amount indicated below (with corresponding calendar quarters also included as reference):

Fiscal Quarter Ending

Consolidated Adjusted EBITDA

September 30, 2024

December 31, 2024

March 31, 2025

June 30, 2025

September 30, 2025

December 31, 2025

March 31, 2026

June 30, 2026

September 30, 2026

As of March 31, 2025, the Company has an outstanding Exit Notes balance of $ 32.2 million, comprised of $ 21.1 million of Exit Roll Up Notes, $ 7.0 million of the Exit New Money Notes, and $ 4.3 million of total PIK interest, less debt issuance costs of $ 0.2 million.

Debt issuance costs in relation to the Exit New Money Notes and Exit Roll Up Notes are being amortized over the term at an effective interest rate of 11.75 % as of March 31, 2025.

As of March 31, 2025, the Company was in compliance with all financial covenants.

Three-Year Term Note

On February 4, 2019 , the Company entered into a Note Purchase Agreement (as amended, the “Note Purchase Agreement”), by and among the Company, certain subsidiaries of the Company party thereto as guarantors, the Collateral Agent and any other purchasers party thereto from time to time (collectively, the “Purchaser”).

On October 1, 2020 , the Company entered into an Amended & Restated Note Purchase Agreement (the “A&R Note Purchase Agreement”).

As of March 31, 2023, the Company had borrowings under the Note Purchase Agreement of $ 51.0 million.

The A&R Note Purchase Agreement contained a covenant, among others requiring the Company to have at all times a minimum consolidated liquidity (the “Liquidity Covenant”) of at least $ 9.0 million.

On April 21, 2023, the Company breached the Liquidity Covenant when its total funds in accounts subject to account control agreements fell below $ 9.0 million.

On July 3, 2023, the Company failed to make an interest payment.

On July 6, 2023, the Company entered into a Fourth Amendment (the “Fourth Amendment”) to the A&R Note Purchase Agreement by and among the Company, certain subsidiaries of the Company, Goldman Sachs Specialty Lending Group, L.P.

(as successor in interest to Goldman Sachs Specialty Lending Holdings, Inc.), as Collateral Agent and the purchaser party thereto (the “Purchaser”).

The Fourth Amendment provides for (i) the waiver by the Purchaser and the Collateral Agent of the Company’s breach of the minimum consolidated liquidity covenant contained in the A&R Note Purchase Agreement, the failure to make the interest payment and certain other breaches specified therein;

(ii) the extension of the maturity of the $ 50 million aggregate principal amount of Notes outstanding pursuant to the A&R Note Purchase Agreement from October 1, 2023 to September 1, 2024;

(iii) an amendment fee payable by the Company at maturity equal to 1.00 % of the principal balance of the Notes on the effective date of the Fourth Amendment (the “Fourth Amendment Effective Date”);

(iv) a due date for the next interest payment on the date that is 30 days from the Fourth Amendment Effective Date, which interest payment was originally due on July 3, 2023;

(v) following the Company’s entry into a TSA, the payment-in-kind of the quarterly interest payments that are due following the next the interest payment;

(vi) a new minimum consolidated liquidity covenant requirement of $ 4.0 million, commencing on July 14, 2023, which amount will increase to $ 4.5 million on August 16, 2023 and to $ 6.0 million on August 31, 2023;

(vii) the replacement of the Adjusted LIBO Rate with a Term SOFR interest rate benchmark;

(viii) the ability for the Collateral Agent to either (A) force a

conversion of the interest rate benchmark to Base Rate or (B) impose default interest during an Event of Default;

(ix) the right for one designated Collateral Agent board observer to attend the meetings of the Company’s Board of Directors (and committees thereof) in a non-voting capacity, subject to certain customary exceptions;

and (x) the amendment to certain provisions of the A&R Note Purchase Agreement, including to add a number of new covenants.

Those new covenants include requirements that the Company (i) enter into a TSA within 30 days of the Fourth Amendment Effective Date;

(ii) subject to necessary stockholder approvals, execute and deliver, or reach agreement on substantially final versions of, the definitive documentation with respect of the transactions specified in the TSA in form and substance satisfactory to the Collateral Agent within 45 days after the Fourth Amendment Effective Date;

(iii) close the transactions specified by the TSA by September 15, 2023;

and (iv) provide a Section 382 analysis (i.e., an analysis relating to the potential limitation of the use of the Company’s net operating loss carryforwards due to ownership changes, which loss carryforwards the Company understands may be potentially valuable in one or more transaction structures) to the Collateral Agent on a quarterly basis.

The Fourth Amendment also imposes restrictions on the Company’s ability to (i) pay professional fees for 30 days in excess of $ 2,000,000 in the aggregate;

(ii) make certain other cash disbursements in excess of thresholds set forth in the Fourth Amendment;

and (iii) amend existing, or enter into new, employment agreements or pay or incur any bonus or severance payment.

On August 16, 2023, the Company entered into a Fifth Amendment (the “Fifth Amendment”) to the A&R Note Purchase Agreement by and among the Company, certain subsidiaries of the Company, the Collateral Agent and the Purchaser.

The Fifth Amendment provides for (i) the waiver by the Purchaser and the Collateral Agent of the Company’s breach of a covenant contained in the A&R Note Purchase Agreement to enter into a TSA with one or more lenders in form and substance mutually satisfactory to the Collateral Agent and the Company within 30 days of the Fourth Amendment Effective Date and the failure to make an interest payment within 30 days of the Fourth Amendment Effective Date;

(ii) a due date for the next interest payment on August 22, 2023 or such later date as is agreed to by the Collateral Agent in its sole discretion, which interest payment was originally due within 30 days Fourth Amendment Effective Date to the A&R Note Purchase Agreement;

(iii) a minimum consolidated liquidity covenant requirement of $ 3.5 million, commencing on July 14, 2023 and operative through September 1, 2024;

and (iv) the amendment of the milestones with respect of the TSA to require that the Company (A) agree to the terms and form of the TSA (which may include a structure including bankruptcy proceedings) with one or more lenders in form and substance mutually satisfactory to the Collateral Agent and the Company by August 22, 2023 or such later date as is agreed to by the Collateral Agent in its sole discretion,(B) subject to any necessary stockholder approvals, execute and deliver, or reach agreement on substantially final versions of, the definitive documentation with respect of the transactions specified in the TSA in form and substance satisfactory to the Collateral Agent by August 31, 2023 or such later date as is agreed to by the Collateral Agent in its sole discretion, and (C) that the Company shall have closed the transactions specified by the TSA by September 15, 2023 or such later date as is agreed by the Collateral Agent in its sole discretion.

On September 22, 2023, the Company entered into a Sixth Amendment (the “Sixth Amendment”) to the A&R Note Purchase Agreement among the Company, certain subsidiaries of the Company, the Collateral Agent and the purchaser.

Pursuant to the Sixth Amendment, the Company issued and the Purchaser purchased for $ 3,000,000 in cash additional senior secured notes on September 22, 2023 (the “Additional Notes”).

The Additional Notes bear interest at the SOFR Rate plus 8.75 % per annum, payable-in-kind on the last day of each interest period of one-, two-, three- or six-months (but, in the case of a six-month interest period, every three-months).

The entire principal amount of the Additional Notes is due and payable on September 1, 2024 (the “Maturity Date”).

The Additional Notes do not amortize and the entire principal balance is due in a single payment on the Maturity Date.

On the Petition Date, the principal balance of the A&R Note Purchase Agreement of $ 53.0 million, including accrued interest of $ 3.5 million and $ 0.5 million of issuance costs, were classified as LSTC on the Company’s Consolidated Balance Sheet.

The Company suspended accruing and paying interest and amortizing deferred financing costs, discounts and premiums, as applicable.

During Fiscal 2024, $ 18.0 million of the LSTC balance, including accrued interest of $ 1.3 million, was rolled up into the Debtor-in-Possession financing agreement and recorded within Exit New Money Notes, net, current on the Company’s Consolidated Balance Sheet as of March 31, 2024.

On June 23, 2025, the Company received an additional waiver from Goldman Sachs Specialty Lending Group, L.P.

(the Collateral Agent) to defer the minimum liquidity increase from $ 2.5 million to $ 3.0 million from June 30, 2025, to July 31, 2025.

Interest expense related to the term note payable during Fiscal 2025 and 2024 was $ 3.8 million and $ 3.3 million, respectively.

Gain on Extinguishment of Debt

The Company incurred a $ 35.3 million gain as a result of the debt amendment related to emerging from Chapter 11 Bankruptcy on December 7, 2023.

The gain was recorded within Reorganization items, net on the Company’s Consolidated Statement of Operations.

The Company rents microturbine equipment to its customers for terms ranging from a couple of months to up to ninety-six months with most of the leases generally with thirty-six months term with an extension option , which may impact the lease term.

The leases may provide the lessee with the option to purchase the underlying assets at the end of the lease term.

The carrying amounts reported in the Consolidated Balance Sheets for cash, accounts receivable, and accounts payable approximate fair value due to the short-term nature of these instruments.

Financial and nonfinancial assets and liabilities measured at fair value on a recurring basis represent those that are remeasured and reported at fair value at each balance sheet date.

The Company's Redeemable non-controlling interest was the only instrument measured at fair value on a recurring basis.

The fair value of the Redeemable non-controlling interest was estimated using the hypothetical liquidation at book value ("HLBV") method, which incorporates significant unobservable inputs.

Accordingly, the measurement is classified within Level 3 of the fair value hierarchy for both fiscal years ended March 31, 2026 and March 31, 2025.

Under the HLBV method, the fair value represented the amount the Redeemable non-controlling interest holders would hypothetically receive if the net assets of the consolidated Operating Subsidiary were liquidated at recorded amounts and distributed in accordance with the contractual provisions of the governing agreements, including the liquidation preference of the Redeemable non-controlling interest.

The primary input in the HLBV measurement was the underlying net asset value of the Operating Subsidiary, which reflects the assets, liabilities, and operations of the Operating Subsidiary.

The Company's publicly traded common stock (ticker:

CGEH, traded on the OTCQX Best Market) was considered in this assessment as the Common Units of the Operating Subsidiary into which the Redeemable non-controlling interest might have converted were economically similar to the shares of CGEH.

As CGEH is a holding company with no independent business operations, the value of its shares is derived entirely from the net assets and operations of the Operating Subsidiary.

Refer to Note 13 – Temporary Equity for additional information regarding the Redeemable non-controlling interest and its remeasurement.

The Redeemable non-controlling interest was fully redeemed on March 31, 2026 as described therein.

The Company rents microturbine equipment to customers under lease agreements with terms ranging from a few months to ninety-six months .

The majority of leases carry an initial term of thirty-six months and may include extension options, which are assessed at lease commencement to determine whether they are reasonably certain of exercise.

Certain lease agreements provide the lessee with an option to purchase the underlying asset at the end of the lease term.

Monthly rental payments are fixed.

however, the leases may include variable payments for fuel, excess labor, additional equipment, or technician labor and engineering support.

The leases are classified as either sales-type leases or operating leases, as appropriate.

As further described below, the Company rents certain microturbine equipment back from customers and subleases this equipment to end users as a part of its Energy-as-a-Service business.

At March 31, 2025, the Company’s minimum rental revenue to be received was as follows (in thousands):

Certain leases also include variable payment components for items such as fuel, excess labor, additional equipment, or technician labor and engineering support.

Variable payments are not included in the measurement of the lease receivable and are recognized as revenue in the period earned.

Leases are classified at commencement as either sales-type leases or operating leases in accordance with ASC 842.

In connection with its Energy-as-a-Service ("EaaS") business, the Company also enters into arrangements under which it rents certain microturbine equipment back from customers and subleases that equipment to end users, as further described in the Lessee section below.

Lessor – Operating Leases

At March 31, 2026, the Company's minimum rental revenue expected to be received under operating leases was as follows (in thousands):

Year Ending March 31,

1 unchanged sentence

Total minimum rental revenue

The profit recognized from sales-type leases at their commencement date were as follows (in thousands):

Lessor – Sales-Type Leases

The profit recognized from sales-type leases at their commencement date was as follows (in thousands):

Year Ended March 31,

Cost of sales

At March 31, 2025, the Company’s future scheduled minimum lease payments to be received from its sales-type lease was as follows (in thousands):

At March 31, 2026, the Company’s future scheduled minimum lease payments to be received from its sales-type leases were as follows (in thousands):

Year Ending March 31,

3 unchanged sentences

Present value of lease receivable

The Company recognized $ 0.2 million of interest income related to lease receivables in Fiscal 2025.

There was no interest income related to lease receivables in Fiscal 2024.

The Company recognized $ 0.2 million and $ 0.2 million of interest income related to lease receivables in Fiscal 2026 and Fiscal 2025, respectively.

Year Ended March 31,

1 unchanged sentence

Unguaranteed residual value

The Company leases facilities and equipment under various non-cancelable operating and finance leases expiring at various times through Fiscal 2037.

All of the leases require the Company to pay maintenance, insurance and property taxes.

The lease agreements for primary office and manufacturing facilities provide for rent escalation over the lease term and renewal options for five-year periods .

Lease expense is recognized on a straight-line basis over the term of the lease, which may include extension periods.

There were no new rental agreements in Fiscal 2025.

During Fiscal 2024, the Company entered into eight rental agreements to rent used microturbine equipment from customers where that equipment was not currently in use.

The existing rental agreements provide the Company an option to extend the lease, however, the Company is not likely to exercise these options and therefore not included in the determination of the lease term.

As of March 31, 2025, lease commitments totaled approximately 17.8 megawatts of microturbines and have an average term of 43 months and a total remaining commitment value of approximately $ 8.6 million.

The components of lease expense were as follows (in thousands):

The Company leases facilities and equipment under various non-cancellable operating and finance leases with expiration dates through fiscal 2037.

All leases require the Company to pay maintenance, insurance, and property taxes.

Lease agreements for the Company's primary office and manufacturing facilities include rent escalation provisions over the lease term and renewal options for successive five-year periods .

Lease expense is recognized on a straight-line basis over the lease term, including any extension periods that are reasonably certain of exercise.

EaaS Sublease Arrangements

As part of its EaaS business, the Company rents used microturbine equipment from customers where that equipment would otherwise not be in use, and subleases that equipment to end users.

During Fiscal 2026, the Company did no t enter into any new rental agreements under this program, though it modified four existing lease agreements during the year ended March 31, 2026.

The existing rental agreements provide the Company an option to extend the lease term;

however, as exercise of these options is not considered reasonably certain, they are excluded from the determination of the lease term.

There were no new rental agreements under this program in Fiscal 2025 either.

As of March 31, 2026, lease commitments under EaaS arrangements totaled approximately 18.4 megawatts of microturbine capacity, with an average remaining term of 37 months and a total remaining commitment value of approximately $ 8.5 million.

The components of total lease expense were as follows (in thousands):

Year Ended March 31,

1 unchanged sentence

Operating lease costs

Variable lease costs

Total lease costs

(1) Interest expense is included in finance lease costs.

Supplemental balance sheet information related to the leases was as follows (in thousands):

(1) Finance lease costs include both the amortization of the right-of-use asset and interest expense on the finance lease liability.

Supplemental Balance Sheet Information

Right-of-use assets and lease liabilities consisted of the following (in thousands):

March 31, 2026

14 unchanged sentences

Weighted average discount rate

Supplemental cash flow information related to the leases was as follows (in thousands):

Supplemental Cash Flow Information (in thousands):

Year Ended March 31,

3 unchanged sentences

Operating cash flows from operating leases

Right-of-use assets obtained in exchange for lease obligations

Change in Right-of-use assets obtained in exchange for lease obligations

Finance leases

Operating leases

Lease Maturity Analysis

At March 31, 2026, the Company’s minimum commitments under non-cancelable operating and finance leases were as follows (in thousands):

3 unchanged sentences

Present value of lease liabilities

Exit Facility Agreement

On December 7, 2023 , in connection with the Company's emergence from Chapter 11 bankruptcy, the Company entered into a Note Purchase Agreement (the "Exit Note Purchase Agreement") for an aggregate principal amount of $ 28.1 million, consisting of $ 21.1 million of Exit Roll Up Notes (including accrued and unpaid interest and commitment fees) and $ 7.0 million of Exit New Money Notes (together, the "Exit Notes").

The Exit Note Purchase Agreement was entered into by and among Capstone Green Energy LLC (the "Operating Subsidiary"), as issuer, the Company and Capstone Turbine Financial Services, LLC, as guarantors (the "Guarantors"), Capstone Distributor Support Services Corporation ("CDSS"), as Purchaser, and Goldman Sachs Specialty Lending Group, L.P.

("Goldman Sachs"), as Collateral Agent.

The Exit Notes bear interest at Adjusted Term SOFR plus 7.00 % per annum.

A portion of the interest accrues as paid-in-kind ("PIK") through the third year following the closing date of December 7, 2023 .

The Exit Note Purchase Agreement also provided for a $ 10.0 million uncommitted incremental facility, which remained undrawn as of March 31, 2026.

The Exit Notes are secured by a lien on substantially all of the present and future property and assets of the Operating Subsidiary and each Guarantor, subject to customary exceptions and exclusions.

The Exit Note Purchase Agreement includes customary representations and warranties, affirmative and negative covenants, events of default, and financial covenants with respect to minimum consolidated liquidity and minimum consolidated adjusted EBITDA, as described further below.

Amendments to the Exit Note Purchase Agreement

First Amendment – June 28, 2024

On June 28, 2024, the Company entered into the First Amendment to the Exit Note Purchase Agreement, which provided for:

(i) modifications to the minimum consolidated adjusted EBITDA covenant to permit adjustment for costs related to the restatement of financial statements, with initial testing deferred to the quarter ended September 30, 2024;

(ii) a reduction of the minimum consolidated liquidity covenant to $ 1.0 million from September 30, 2024 through March 30, 2025, with testing deferred to September 30, 2024;

and (iii) an extension of the deadline for delivery of the Company's audited fiscal 2024 financial statements to September 27, 2024, with removal of the requirement that such statements be unqualified as to going concern.

Second Amendment – August 13, 2025

On August 13, 2025, in connection with the Company's acquisition of Cal Microturbine (see Note 20 – Business Combinations), the Company entered into the Consent to Cal Micro Acquisition and Second Amendment to the Exit Note Purchase Agreement.

The Second Amendment provided for the Collateral Agent and Purchaser's consent to the Cal Microturbine acquisition and related amendments to accommodate the acquisition within the terms of the Exit Note Purchase Agreement.

Third Amendment – March 29, 2026

On March 29, 2026, the Company entered into the Consent and Third Amendment to the Exit Note Purchase Agreement in connection with the March 2026 PIPE (see Note 15).

The Third Amendment provided for the Collateral Agent and Purchaser's consent to the transactions contemplated by the Strategic Investment, including clarifying amendments confirming that the Preferred Stock Investor is a "Permitted Holder" and that the Preferred Stock Investment does not constitute a "Change of Control" under the Exit Note Purchase Agreement.

Financial Covenants

The Exit Note Purchase Agreement requires the Company to maintain minimum consolidated liquidity and minimum consolidated adjusted EBITDA, tested as described below.

Minimum Consolidated Liquidity

The minimum consolidated liquidity covenant requires the Company and its subsidiaries to maintain a minimum average consolidated liquidity during any seven consecutive day period of no less than:

Minimum Liquidity

September 30, 2024 – March 30, 2025

March 31, 2025 – July 30, 2025

July 31, 2025 – September 29, 2025

September 30, 2025 – March 30, 2026

March 31, 2026 – December 7, 2026

(1) On June 23, 2025 the Company received a waiver from Goldman Sachs to defer the increase in the minimum liquidity threshold from $ 2.5 million to $ 3.0 million from June 20, 2025 to July 31, 2025.

Minimum Consolidated Adjusted EBITDA

The minimum consolidated adjusted EBITDA covenant is tested on the last day of each fiscal quarter, commencing with September 30, 2024, and requires the Company to maintain a minimum trailing four-quarter consolidated adjusted EBITDA (as defined in the Exit Note Purchase Agreement) of no less than:

Fiscal Quarter Ending

Minimum Adjusted EBITDA

September 30, 2024

December 31, 2024

March 31, 2025

June 30, 2025

September 30, 2025

December 31, 2025

March 31, 2026

June 30, 2026

September 30, 2026

As of March 31, 2026, the Company was in compliance with all financial covenants under the Exit Note Purchase Agreement.

Outstanding Balance and Maturity

As of March 31, 2026, the outstanding Exit Notes balance was $ 25.3 million, consisting of Exit Roll Up Notes of $ 21.1 million and PIK interest of $ 4.3 million, net of unamortized debt issuance costs of $ 0.1 million.

The Exit New Money Notes matured and were repaid in full on December 7, 2025, using a portion of the net proceeds from the November 2025 PIPE (see Note 15).

The Exit Roll Up Notes mature on December 7, 2026.

Debt issuance costs are amortized over the term of the respective notes at an effective interest rate of 11.09 % as of March 31, 2026.

Interest expense related to the term note payable during Fiscal 2026 and 2025 was $ 3.5 million and $ 3.8 million, respectively.

The scheduled maturities of the Company’s long-term debt are as follows as of March 31, 2026 (in thousands):

Year Ending March 31,

Total principal payments and debt maturities

Less unamortized issuance costs

Net principal payments and debt maturities

Commitments and Contingencies

2 unchanged sentences

Certain inventory delivery dates and related payments are not scheduled;

therefore, amounts under these firm purchase commitments will be payable upon the receipt of the related inventories.

therefore, amounts under these firm purchase commitments will be payable upon the receipt of the related inventory.

Lease Commitments

1 unchanged sentence

Related Party Transactions

On the Effective Date, Reorganized PrivateCo continues to own assets consisting of (i) all of the Company’s right, title, and interest in and to certain trademarks of the Company and (ii) assets owned by the Company relating to distributor support services ((i) and (ii) together, the “Retained Assets”) and certain income tax attributes that remained with Reorganized PrivateCo.

Services Agreement between Reorganized PrivateCo and Operating Subsidiary

On the Effective Date, Operating Subsidiary entered into a Services Agreement by and among Reorganized PrivateCo and Operating Subsidiary (the “Reorganized PrivateCo Services Agreement”).

The Reorganized PrivateCo Services Agreement provides that, among other things, Operating Subsidiary will provide certain services to Reorganized PrivateCo, and Reorganized PrivateCo will provide the Operating Subsidiary’s distributors on a subcontracted basis and, where applicable, to Operating Subsidiary, certain ongoing services and transition services related to Reorganized PrivateCo’s distributor support services business.

Reorganized PrivateCo will pay to Operating Subsidiary a service fee (the “Reorganized PrivateCo Services Fee”) of an amount in cash equal to 90 % of Reorganized PrivateCo’s Income (as defined in the Reorganized PrivateCo Services Agreement) less itemized expenses incurred and actually paid in cash by Reorganized PrivateCo in direct support of Operating Subsidiary’s distributors and in Reorganized PrivateCo’s performance of the services (excluding the Reorganized PrivateCo Services Fees).

The Company reported $ 2.5 million and $ 0.7 million in other income for DSS service fees for Fiscal 2025 and Fiscal 2024, respectively.

On December 7, 2023 (the "Effective Date"), in connection with the Company's emergence from Chapter 11 bankruptcy, certain assets of the predecessor entity ("Reorganized PrivateCo”) including the Company's trademarks and distributor support services business were retained by Reorganized PrivateCo and held by Capstone Distributor Support Services Corporation ("CDSS"), an entity controlled by Goldman Sachs.

A series of agreements were entered into on the Effective Date governing the relationship between the Company and CDSS, as described below.

On March 31, 2026, in connection with the closing of the March 2026 PIPE (see Note 15) the Company completed a series of transactions that substantially unwound these related party arrangements, as further described below.

Reorganized PrivateCo Services Agreement

On the Effective Date, the Operating Subsidiary entered into a Services Agreement with Reorganized PrivateCo (the "Reorganized PrivateCo Services Agreement"), pursuant to which Reorganized PrivateCo provided the Operating Subsidiary's distributors, on a subcontracted basis, with certain ongoing and transition services related to Reorganized PrivateCo's distributor support services business.

In consideration for these services, Reorganized PrivateCo paid the Operating Subsidiary a service fee equal to 90 % of Reorganized PrivateCo's income (as defined in the Reorganized PrivateCo Services Agreement), less itemized expenses incurred and paid in direct support of the Operating Subsidiary's distributors.

The Company recognized $ 2.3 million and $ 2.5 million in other income for DSS service fees for Fiscal 2026 and Fiscal 2025, respectively.

In connection with the closing of the March 2026 PIPE, the Operating Subsidiary and the Company entered into an Asset Purchase Agreement with CDSS pursuant to which the Operating Subsidiary acquired the Distributor Support Services assets previously held by CDSS for a purchase price of $ 1.0 million (the "DSS Asset Acquisition").

As a result of the DSS Asset Acquisition, the Reorganized PrivateCo Services Agreement was terminated, and the distributor support services business is now fully owned and operated by the Operating Subsidiary.

Accordingly, the Reorganized PrivateCo Services Agreement is no longer in effect as of March 31, 2026.

Trademark License Agreement

On the Effective Date, the Company entered into a Trademark License Agreement (the “Trademark License Agreement”) by and between Reorganized PrivateCo, as licensor, and the Company, as licensee.

The Trademark License Agreement provides that, among other things, Reorganized PrivateCo grants the Company a non-exclusive, royalty-bearing, non-transferable, non-sublicensable (except to the Company’s affiliates), worldwide, perpetual (subject to the terms and conditions of the Trademark License Agreement), irrevocable (subject to the terms and conditions of the Trademark License Agreement), limited license, under all of its right, title and interest in and to the Capstone Trademarks (as defined in the Trademark License Agreement) to use the Capstone Trademarks solely in connection with the Business (as defined in the Trademark License Agreement).

In consideration for the license, the Company pays Reorganized PrivateCo an annual royalty of $ 100,000 .

Reorganized PrivateCo may not assign the Capstone Trademarks to any third party without the Company’s consent, not to be unreasonably withheld, delayed or conditioned (subject to the terms and conditions of the Trademark License Agreement).

If Reorganized PrivateCo does not use any of the Capstone Trademarks for six consecutive months, then the Capstone Trademarks will be assigned to the Company for no further consideration.

Services Agreement between the Company and Operating Subsidiary

On the Effective Date, the Company entered into a Services Agreement (the “Services Agreement”) by and among the Company and Operating Subsidiary.

The Services Agreement provides, among other things, that the Company will provide certain services to Operating Subsidiary, in its capacity as a majority equity holder of Operating Subsidiary, and in consideration for the services provided by the Company, Operating Subsidiary will reimburse the Company for its reasonable audit, board and executive compensation expenses incurred in connection with being a publicly traded company (the “New Capstone Services Fee”).

The New Capstone Services Fee will not exceed $ 2,500,000 , per fiscal year (the

“Services Fee Cap”), to be increased on April 1 of each year, beginning with April 1, 2024, by an amount equal to the greater of (a) 3.5000 % and (b) the Consumer Price Index, as set by the U.S.

Bureau of Labor Statistics and available on March 31 of each year;

provided however, that for the Fiscal Year ending March 31, 2024, such amount was prorated based on the number of days in such fiscal year following the execution of the Reorganized PublicCo Services Agreement;

provided, further, however, that such increase effective on April 1, 2024, was equal to 1.7500 %.

Service Agreement with CFGI

On January 12, 2024, the Company entered into a services agreement with CFGI, pursuant to which CFGI provides third party accounting consultancy services to the Company.

A related person who is the son of John Juric, our Chief Financial Officer, is a staff employee at CFGI.

We have been advised that, under the CFGI compensation policy, Mr.

Juric’s son is being paid a commission related to the fees paid by the Company during the first year of the engagement.

The Company incurred service fee expense of $ 1.3 million and $ 0.3 million for Fiscal 2025 and 2024, respectively.

The potential bonus to be earned by Mr.

Juric’s son is estimated to be $ 65,000 .

Other Commitments

The Company has agreements with certain of its distributors requiring that, if the Company renders parts obsolete in inventories the distributors own and hold in support of their obligations to serve fielded microturbines, then the Company is required to replace the affected stock at no cost to the distributors.

While the Company has never incurred costs or obligations for these types of replacements, it is possible that future changes in the Company’s product technology could result and yield costs to the Company if significant amounts of inventory are held at distributors.

As of March 31, 2025, no significant inventories of this nature were held at distributors.

Legal Matters

On the Effective Date, the Company entered into a Trademark License Agreement (the "Trademark License Agreement") with Reorganized PrivateCo, as licensor, pursuant to which Reorganized PrivateCo granted the Company a non-exclusive, royalty-bearing, non-transferable, non-sublicensable (except to affiliates), worldwide, perpetual and irrevocable (each subject to the terms of the Trademark License Agreement) license to use the Capstone trademarks solely in connection with the Company's business.

In consideration for this license, the Company paid Reorganized PrivateCo an annual royalty of $ 100,000 .

The Trademark License Agreement included a provision that if Reorganized PrivateCo did not use any of the Capstone trademarks for six consecutive months, those trademarks would be assigned to the Company for no further consideration.

Additionally, Reorganized PrivateCo was restricted from assigning the Capstone trademarks to any third party without the Company's prior consent, not to be unreasonably withheld.

In connection with the DSS Asset Acquisition and the related unwinding of the Reorganized PrivateCo structure, the Trademark License Agreement was superseded, and the Trademarks were acquired by the Company.

See Note 8 – Intangible Assets for additional information.

Services Agreement between the Company and the Operating Subsidiary

On the Effective Date, the Company entered into a Services Agreement with the Operating Subsidiary (the "New Capstone Services Agreement"), pursuant to which the Company provided certain services to the Operating Subsidiary in its capacity as majority equity holder, and in consideration, the Operating Subsidiary would reimburse the Company for its reasonable audit, board, and executive compensation expenses incurred in connection with being a publicly traded company (the "New Capstone Services Fee").

The New Capstone Services Fee was subject to an annual cap of $ 2,500,000 per fiscal year, increased on April 1 of each year by the greater of 3.5 % or the Consumer Price Index as published by the U.S.

Bureau of Labor Statistics as of March 31 of the prior year;

provided that the increase effective April 1, 2024 was equal to 1.75 %.

Following the closing of the March 2026 PIPE and the full redemption of the Preferred Units, Capstone Green Energy LLC became a wholly owned subsidiary of the Company.

Preferred Unit Redemption

On March 31, 2026, the Company redeemed all outstanding Preferred Units for $ 83.5 million.

See Note 13 for additional information regarding the redemption and Note 15 for information on funding.

Legal Proceedings

Capstone Turbine Corporation v.

8 unchanged sentences

The ability of Capstone to collect on the judgement is unclear, as the defendants are overseas or without U.S.-based assets, therefor we have no t recorded a receivable as of March 31, 2026.

SEC Investigation

In June 2023, prior to the issuance of the Company’s consolidated financial statements for the fiscal year ended March 31, 2023, the Audit Committee of the Company’s Board commenced an Investigation into certain accounting and internal control matters of the Company, principally focused on certain revenue recognition matters (the “Revenue Recognition Investigation”), and self-reported its findings to the Division of Enforcement of the SEC.

Following the self-report, the SEC Enforcement Division commenced an investigation into the circumstances surrounding the restatement of the Company’s quarterly and annual financial statements (the “SEC Investigation”).

The Audit Committee further self-reported its findings pursuant to an investigation into FPP related practices to the SEC.

The Company cooperated with the SEC in connection with its investigation.

On June 10, 2025, the SEC Division of Enforcement notified the Company that it closed its investigation with no action taken against the Company.

Cal Microturbine Arbitration

On March 13, 2024 , Cal Microturbine, a current distributor of the Company, filed a complaint before the American Arbitration Association, seeking approximately $ 24.5 million in damages and alleging that the Company

breached the Distributor Agreement between the parties and committed fraud by allowing another company, to sell, rent and service turbines in Cal Microturbine’s exclusive territory.

On August 18, 2024, Cal Microturbine amended its complaint and reduced its damages claim to $ 18.8 million.

On September 9, 2024, the Company filed a counterclaim against Cal Microturbine for $ 20.0 million, alleging various violations of the Distributor Agreement.

On September 27, 2024, Cal Microturbine provided the second amendment to its complaint and increased its damages to $ 25.0 million.

The parties have completed selection of a three-person arbitration panel and a hearing date is scheduled for September 2025.

The parties engaged in mediation in November and December 2024, and they are currently in settlement discussions.

Discovery was scheduled to begin in November 2024 but has been stayed due to ongoing settlement discussions.

On December 8, 2024, the Company issued a notice of intent to terminate the Distributor Agreement with Cal Microturbine due to the alleged violations by Cal Microturbine.

In February 2025, Cal Microturbine filed an action in California state court seeking a temporary restraining order (“TRO”) to preclude the Company from terminating the Distributor Agreement.

Due to ongoing settlement discussions and extensions of the termination date during those discussions, the court has refrained from scheduling a TRO hearing.

The Company has no t recorded a liability as of March 31, 2025, as a loss is neither probable nor estimable.

Flexon, Jamison, Juric, Robinson, and Hencken

On October 13, 2023 , a putative securities class action was filed in the U.S.

District Court for the Central District of California, captioned Spitzer v.

Flexon, et al., Case No.

2:23-cv-08659, naming certain of the Company’s current and former directors and officers as defendants.

The suit alleges various claims under Sections 10(b) and 20(a) of the Securities Exchange Act of 1934, and Rule 10b-5 based on allegedly false and misleading statements and allegedly inadequate disclosure regarding the Company’s business, operations and prospects and the circumstances leading up to the restatement of the Company’s quarterly and annual financial statements.

The suit is purportedly brought on behalf of persons and entities that purchased or otherwise acquired the Company’s securities between June 14, 2021, and September 22, 2023, and seeks to recover unspecified compensatory damages and other relief, including attorney’s fees.

The Company is not a named respondent in this matter and has not engaged legal counsel.

The parties reached agreement on a settlement amount and on April 4, 2025, the parties filed an unopposed motion for the court to approve settlement and notice procedures.

A preliminary hearing date was held on June 5, 2025, and a final settlement hearing date has been set for November 13, 2025.

Expenses up to the $ 1.3 million insurance deductible amount have either been incurred or accrued.

Mark Estrada and Ricardo Montalvo, vs.

Capstone Green Energy LLC and Erick Kim.

In August 2024, two filings were made by lawyers on behalf of current and former non-exempt Capstone employees against Capstone and one supervisory employee.

Both filings allege various pay violations.

The first action filed with the Superior Court of the State of California, requested that the Court certify the employees as a Class.

Capstone has arbitration agreements in place with those current and former employees, agreements which include a class action waiver.

Accordingly, Capstone moved that the Court compel arbitration, which Plaintiffs opposed.

At a hearing in January 2025, the Court determined that the arbitration agreements were enforceable.

Then in April 2025, the Court determined that the employees were not entitled to exemption from the enforcement of the arbitration agreements under the Federal Arbitration Act.

The second filing was made with the Labor Development Workforce Agency.

While Plaintiffs are positioned to pursue that claim privately under the Private Attorney General Act, they have not yet filed suit.

The Company has no t recorded a liability as of March 31, 2025, as a loss is neither probable nor estimable.

DV Energy, LLC vs Capstone Green Energy Holdings, Inc, Capstone Turbine Corporation, Capstone Green Energy Corporation, and Capstone Green Energy, LLC.

On August 26, 2024 , DV Energy, LLC (“DV Energy”), a Capstone distributor in Russia, filed a lawsuit in the Superior Court of California, County of Los Angeles to recover a $ 0.7 million parts deposit, along with interest and legal fees.

Among other things, DV Energy alleges breach of contract associated with a product order that Capstone was unable to deliver due to the imposition of U.S.

sanctions following Russia’s invasion of Ukraine.

The Company disputes DV Energy’s claim.

DV Energy is also an unsecured creditor in the Chapter 11 Cases of the Company’s predecessors but opted to file the complaint in the state court as well.

The Bankruptcy Court placed pre-conditions on closure of the Chapter 11 Cases.

In April 2025, the Company filed motions with the Bankruptcy Court to deposit funds with the Registry of the

Court pending the outcome of the state court litigation and to close the Chapter 11 Cases.

At a hearing on June 5, 2025, the Bankruptcy Court granted the Company’s motion to deposit funds with the Registry of the Court in the amount of $ 0.8 million as a security pending the outcome of the state court litigation.

The Company is in the process of depositing funds with the Registry of the Court, and on June 13, 2025, the Bankruptcy Court issued its Final Decree and Order Closing Debtors’ Chapter 11 Cases and Terminating Services of Kroll Restructuring Administration LLC as Claims and Noticing Agent which amount other things, closed the Chapter 11 Cases for the Debtors with immediate effect.

The value of the DV Energy deposit is recorded in the Company’s financial statements as a current liability as of March 31, 2025.

Temporary Equity

As of March 31, 2026, the Company's temporary equity consists solely of the Redeemable Series A Convertible Preferred Stock issued on March 31, 2026, in connection with the March 2026 PIPE.

The Operating Subsidiary's Redeemable Preferred Units, which had been classified as temporary equity in prior periods, were fully redeemed on March 31, 2026, as described below.

Part I — Redeemable Preferred Units (Extinguished March 31, 2026)

Issuance and Terms

In connection with the Company's emergence from Chapter 11 bankruptcy on December 7, 2023 (the "Effective Date"), the Operating Subsidiary issued 10,449,863 Preferred Units to Capstone Distributor Support Services Corporation ("CDSS"), an entity controlled by Goldman Sachs.

The Preferred Units represented an aggregate 37.5 % equity ownership interest in the Operating Subsidiary (the "Aggregate Purchase Price") and were classified as temporary equity due to their redeemable nature.

The Preferred Units provided CDSS with the following rights:

● Redemption right:

At any time during the six-month period following the sixth anniversary of the Effective Date, CDSS could elect to have all, but not less than all, of the then-outstanding Preferred Units redeemed by the Operating Subsidiary.

● Conversion right:

CDSS had the option to convert all or a portion of the Preferred Units into Operating Subsidiary Common Units at any time without payment of additional consideration, based on the proportion of Preferred Units converted multiplied by 37.5 % of the Common Units deemed outstanding, adjusted proportionately for partial conversions.

● Put option and liquidation preference:

The Preferred Units also provided CDSS with a put option to sell the units back to the Operating Subsidiary and a liquidation preference that protected the holder from absorbing losses.

None of the Preferred Units were converted into Common Units prior to their redemption.

Valuation and Measurement

The Preferred Units were initially measured at fair value upon issuance using an option-pricing method ("OPM") under ASC 480-10-S99-3A, which treats the common and preferred units as call options on the enterprise value of the Operating Subsidiary with exercise prices based on the liquidation preference of the Preferred Units.

The enterprise value used in the OPM was the value agreed upon by the parties in connection with the restructuring as approved by the U.S.

Bankruptcy Court.

The initial fair value was established at $ 13.9 million.

Subsequent remeasurement of the Preferred Units followed the HLBV method, with the maximum redemption value defined under the Capstone Green Energy LLC Agreement as the greater of (i) the share price of CGEH common stock (if publicly traded), with appropriate adjustments, or (ii) the Aggregate Purchase Price plus declared but unpaid dividends.

The carrying value of the Preferred Units was not reduced below the initial recorded value of $ 13.9 million, consistent with the guidance in ASC 480-10-S99.

For fiscal years ended March 31, 2026 and March 31, 2025, the Company's common stock was publicly traded on the OTCQX Best Market.

As of March 31, 2025, the closing price of CGEH common stock was $ 0.75 per share.

The maximum redemption value as of March 31, 2025 did not exceed the initial fair value of $ 13.9 million;

accordingly, no adjustment to the carrying value was recorded for Fiscal 2025.

Earnings Allocation

For the fiscal year ended March 31, 2026, the Company reported net income of $ 2.8 million, or $ 0.14 per basic share.

However, net loss attributable to common stockholders was $ 66.8 million, or $ 3.21 per basic and diluted share, after deducting a non-cash deemed dividend of $ 69.6 million representing the accretion of the Operating Subsidiary's Redeemable Preferred Units to their maximum redemption value immediately prior to their full redemption on March 31, 2026.

Accordingly, net income was allocated between controlling and noncontrolling interests pursuant to the HLBV method.

For the fiscal year ended March 31, 2025, the Company reported a net loss;

therefore, no allocation of losses was made to the noncontrolling interest, as the holder's contractual liquidation preference protected it from absorbing losses.

On March 29, 2026, the Operating Subsidiary and the Company entered into a Preferred Unit Redemption Agreement with CDSS, providing for the full redemption of all outstanding Preferred Units for a redemption price of $ 83.5 million.

The redemption closed on March 31, 2026, and was funded using a portion of the net proceeds from the March 2026 PIPE.

As a result of the redemption, CDSS no longer holds any equity interest in the Operating Subsidiary, and Capstone Green Energy LLC is now a wholly owned subsidiary of the Company.

The Preferred Units are no longer outstanding as of March 31, 2026.

See Note 15 for additional information.

The following table presents the activity in the Redeemable Preferred Units for the fiscal years presented (in thousands):

Year Ended March 31,

Balance, beginning of year

Accretion to maximum redemption value

Redemption of preferred units

Balance, end of year

Part II — Redeemable Series A Convertible Preferred Stock

On March 31, 2026, in connection with the March 2026 PIPE, the Company issued 80,000 shares of Redeemable Series A Convertible Preferred Stock (the "Redeemable Series A Preferred Stock") to funds managed by Monarch Alternative Capital LP ("Monarch") at a stated value of $ 1,000 per share, for an aggregate purchase price of $ 80.0 million.

The Certificate of Designation establishing the Redeemable Series A Preferred Stock was filed with the Secretary of State of the State of Delaware and became effective on March 31, 2026.

As redemption of the Redeemable Series A Preferred Stock is not solely within the Company's control, it is classified as temporary equity in accordance with ASC 480.

Holders of the Series A Preferred Stock are entitled to vote together with common stockholders on an as-converted basis, possess separate class voting rights over certain significant corporate actions, and have the right to designate directors to the Company’s board of directors, subject to certain ownership thresholds.

The Series A Preferred Stock is convertible at the option of the holder into shares of common stock at an initial conversion price of $ 5.00 per share, subject to certain anti-dilution adjustments.

The Redeemable Series A Preferred Stock accrues a cumulative paid-in-kind ("PIK") dividend at an initial rate of 5.00 % per annum on the original issue price, as increased by prior PIK dividends, compounding annually.

The PIK dividend accrues daily from the date of issuance and compounds on each anniversary thereof automatically, without any requirement for declaration by the Company.

Beginning on June 30, 2030, the Company may elect to pay accrued and unpaid dividends for any quarterly period in cash, provided the Company satisfies minimum earnings, leverage, and liquidity requirements (the "Minimum Financial Metrics").

The Redeemable Series A Preferred Stock also participates in any dividends or distributions paid on the common stock on an as-converted basis.

The dividend rate is subject to increase as follows:

● If the Company's common stock is not listed on a U.S.

national securities exchange within 18 months of the closing date (i.e., by approximately September 30, 2027), the dividend rate increases by 200 basis points per annum on that date, and by an additional 100 basis points on each anniversary thereafter.

● Additional rate increases may apply if the Minimum Financial Metrics are not satisfied.

● The dividend rate may increase up to a maximum of 13.0 % per annum.

The Series A Preferred Stock is initially recorded at its allocated purchase price, net of $ 6.0 million of issuance costs.

Subsequent measurement depends on whether the instrument is currently redeemable or probable of redemption.

If redemption becomes probable, or if the instrument becomes currently redeemable, the carrying amount is adjusted to its redemption value in accordance with applicable SEC guidance.

As of March 31, 2026, the Series A Preferred Stock is not currently redeemable or probable of redemption and, therefore, is not currently subject to remeasurement.

Cumulative dividends, which are paid-in-kind by increasing the accreted value of the shares, are recorded as an increase to the carrying amount of the redeemable preferred stock at a dividend rate of 5 % per annum.

Additionally, two features within the Series A Preferred Stock provide for potential cash payment upon the occurrence of certain events.

These features were identified as embedded derivatives requiring bifurcation.

The issuance-date fair values of these embedded derivatives were determined to be de minimis due to the likelihood of a triggering event occurring.

Optional Conversion:

Each share of Redeemable Series A Preferred Stock is convertible at the holder's election at any time into a number of shares of common stock equal to (x) the original issue price of such share, plus accrued PIK dividends, divided by (y) the then-applicable conversion price.

The initial conversion price is $ 5.00 per share, subject to customary anti-dilution adjustments.

Mandatory Conversion (Forced Conversion):

Following a listing of the Company's common stock on a U.S.

national securities exchange, the Company will have the right to require conversion of all outstanding Redeemable Series A Preferred Stock into common stock at the then-applicable conversion price if the volume-weighted average trading price of the common stock equals or exceeds $ 15.00 for at least 20 out of 30 consecutive trading days, subject to conditions including an effective resale registration statement, average daily trading volume of at least $ 5 million in value for at least 20 out of 30 consecutive trading days, and a publicly traded float of no less than $ 425 million.

As of March 31, 2026, 80,000 shares of Redeemable Series A Preferred Stock were outstanding, representing 16,000,000 shares of common stock on an as-converted basis at the initial conversion price of $ 5.00 per share.

The Redeemable Series A Preferred Stock is redeemable at the option of the holder upon certain breaches by the Company, subject to available funds and the restrictions of the Exit Note Purchase Agreement.

As redemption is contingent upon certain events not solely within the Company's control, Redeemable Series A Preferred Stock is classified as temporary equity rather than permanent equity.

Governance Rights

So long as Monarch holds at least 20 % of the Company's common stock on an as-converted basis, it has the right to appoint two independent directors to the Board.

Monarch retains the right to appoint one director while holding at least 10 % on an as-converted basis, and board observer rights at 5 % ownership.

Monarch also holds broad consent rights over major corporate actions while a substantial portion of the Redeemable Series A Preferred Stock remains outstanding, and a potential board reconstitution right if the accreted value of the preferred exceeds $ 45 million after five years.

Registration Rights

In connection with the issuance of the Redeemable Series A Preferred Stock, the Company entered into a registration rights agreement pursuant to which the Company agreed to file a resale registration statement with the SEC registering the resale of the shares of common stock underlying the Redeemable Series A Preferred Stock within 30 days of the closing date.

The following table presents the activity in the Redeemable Series A Convertible Preferred Stock since issuance (in thousands):

Year Ended March 31,

Balance, beginning of year

Issuance of Redeemable Series A Preferred Stock, net of issuance costs

PIK dividend accrual

Balance, end of year

Stock Compensation

The Company recognized $ 11 thousand of additional paid in capital related to stock compensation for Capstone Distributor Support Services Corporation (“CDSSC”) employees that was recorded directly to equity and not recognized in the Consolidated Statement of Operations.

As a result, this amount is not included in stock-based compensation reflected in the Consolidated Statement of Cash Flows, which results in a difference between the statements.

The following table summarizes stock-based compensation expense by line item in the Consolidated Statements of Operations (in thousands):

Year Ended March 31,

Cost of goods sold

Research and development

Selling, general and administrative

Stock-based compensation expense

2023 Equity Incentive Plans

Capstone Energy+, Inc .

2023 Equity Incentive Plan

On December 7, 2023, in connection with the Company's emergence from Chapter 11 bankruptcy, the Board adopted the Capstone Energy+, Inc.

2023 Equity Incentive Plan (the "2023 Plan").

The 2023 Plan is administered by the Compensation and Human Capital Committee of the Board, or the Board itself, and is intended to attract and retain employees, consultants, and directors, align their interests with those of stockholders, and promote the long-term success of the Company.

The 2023 Plan was originally adopted with a maximum of 3,000,000 shares authorized for issuance.

On August 12, 2025, during the Annual Meeting, the shareholders approved Amendment No.

1 to the 2023 Plan, increasing the share limit to 4,000,000 shares.

Awards under the 2023 Plan generally vest over three years .

The aggregate value of awards granted during any single fiscal year to any non-employee director, together with cash fees paid to such director and any awards granted under any other equity compensation plan of the Company, may not exceed $ 300,000 in total value.

As of March 31, 2026, 2,207,544 shares remained available for future grants under the 2023 Plan.

Non-Voting Common Stock

In connection with the Company's emergence from bankruptcy, Capstone Energy+, Inc.'s Amended and Restated Certificate of Incorporation designated a class of non-voting common stock with a par value of $ 0.001 per share.

The non-voting common stock was issued to certain key employees and directors as an incentive following the restructuring.

The non-voting common stock carries no voting rights on matters on which holders of common stock are generally entitled to vote, except that holders of non-voting common stock have the right to vote, separately or together with the common stock, on any amendments to the Certificate of Incorporation relating to (i) the authorized number of shares of common stock or non-voting common stock, or (ii) any preferences, rights, or powers of the non-voting common stock.

The authorized number of shares of each class may be increased or decreased (but not below the number then outstanding) by the affirmative vote of holders of a majority of the common stock.

The non-voting common stock ranks equally with the common stock in all respects, including upon any liquidation, dissolution, or winding up of the Company, and shares ratably in any dividends and distributions.

Each share of non-voting common stock automatically converts into one share of common stock upon transfer, subject to a twelve-month lock-up period following the date of the Certificate of Incorporation, with certain exceptions.

Upon emergence, the Company calculated a step-up in value for the non-voting common stock reflecting the maximum value of the shares after applying a discount for lack of voting rights and the lock-up restriction.

On the Effective

Date, $ 0.5 million was recorded as a one-time compensation expense in the Consolidated Statement of Operations, with a corresponding credit to Additional Paid-In Capital.

As of March 31, 2026 and 2025, 333,120 and 508,475 shares of fully vested non-voting common stock were outstanding, respectively.

Restricted Stock Units

The 2023 Plan authorizes the grant of restricted stock units ("RSUs") and performance-based restricted stock units ("PRSUs").

The following table summarizes RSU activity for the fiscal years presented:

Average Grant

Restricted Stock Units

Non-vested restricted stock units outstanding at April 1, 2024

Vested and issued

Forfeited/cancelled

Non-vested restricted stock units outstanding at March 31, 2025

Vested and issued

Forfeited/cancelled

Non-vested restricted stock units outstanding at March 31, 2026

Restricted stock units expected to vest beyond March 31, 2026

Performance Restricted Stock Units

The following table summarizes performance restricted stock unit (“PRSU”) activity:

Average Grant

Performance Restricted Stock Units

Non-vested restricted stock units outstanding at April 1, 2024

Vested and issued

Forfeited/cancelled

Non-vested restricted stock units outstanding at March 31, 2025

Vested and issued

Forfeited/cancelled

Non-vested restricted stock units outstanding at March 31, 2026

Restricted stock units expected to vest beyond March 31, 2026

Unrecognized Compensation Cost

As of March 31, 2026, there was approximately $ 1.1 million of aggregate unrecognized compensation cost related to unvested RSUs and PRSUs, which is expected to be recognized over a weighted-average remaining period of approximately 1.66 years.

No warrants are currently outstanding under the 2023 Equity Incentive Plan as of March 31, 2026.

Common Stock Issuance and Private Investment in Public Equity ("PIPE") Financing Transaction

November 2025 PIPE Financing Transaction

On November 24, 2025, the Company entered into a Securities Purchase Agreement with certain accredited investors pursuant to which the Company agreed to issue and sell (collectively, the “November 2025 PIPE”) (i) 3,980,000 shares of common stock at $ 2.00 per share and (ii) pre-funded warrants to purchase 3,520,000 shares of common stock at a purchase price equal to the common stock purchase price minus $ 0.001 , with an exercise price of $ 0.001 per share.

The transaction closed on November 25, 2025, generating gross proceeds of approximately $ 15.0 million before placement agent fees and offering costs.

Total offering costs were approximately $ 1.4 million, consisting of a placement agent cash fee of 7.0 % of gross proceeds received from investors who were not directors or executive officers, plus reimbursement of up to $ 100,000 of legal and out-of-pocket expenses.

Offering costs were recorded as a reduction of additional paid-in capital.

Net proceeds were approximately $ 13.6 million, of which approximately $ 8.3 million was used to repay the Exit New Money Notes maturing December 7, 2025 (see Note 11 – Debt), with the remainder available for working capital and general corporate purposes.

As of March 31, 2026, all 3,520,000 pre-funded warrants from this transaction remained outstanding and unexercised.

March 2026 Common Stock Issuance and PIPE Financing Transaction

In connection with the issuance of the Series A Preferred Stock on March 31, 2026, the Company also issued 3,333,334 shares of common stock to the Series A Preferred investor at a purchase price of $ 4.50 per share for aggregate gross proceeds of $ 15.0 million.

The issuance of common stock was part of the same securities purchase agreement and closed contemporaneously with the Series A Preferred Stock financing.

The Company evaluated the common stock and Series A Preferred Stock as separate freestanding financial instruments and concluded that the transaction price was representative of the relative fair value of the instruments at issuance.

Accordingly, no material reallocation of proceeds was required.

On March 31, 2026, the Company issued 3,588,889 shares of common stock of the Company, at a price of $ 4.50 per share as well as pre-funded warrants at a price of $ 4.499 to purchase up to 300,000 shares of common stock for aggregate gross proceeds of approximately $ 17.5 million (the “March 2026 PIPE”).

The shares of common stock issued in the PIPE Investment were offered in a private placement under the Securities Act of 1933, as amended (the “Securities Act”).

Upon closing, total offering costs of approximately $ 8.5 million were incurred, consisting primarily of a placement agent cash fee of 5.5 % of gross proceeds and reimbursement of legal and other out-of-pocket expenses.

offering costs were allocated to the Series A Preferred Stock, common stock, and pre-funded warrants on a relative fair value basis, resulting in approximately:

● $ 6.0 million allocated to the Series A Preferred Stock

● $ 2.4 million allocated to the common stock

● $ 0.1 million allocated to the pre-funded warrants

Offering costs allocated to the Series A Preferred Stock were presented as a direct reduction of the carrying amount of the preferred stock within temporary equity.

Offering costs allocated to the common stock and pre-funded warrants were recorded as a reduction of additional paid-in capital.

A portion of the net proceeds, together with the proceeds from the Series A Convertible Preferred Stock issuance, was used to fund the $ 83.5 million redemption of the Preferred Units (see Note 12 – Commitments and Contingencies and Note 13 – Temporary Equity), with the remainder available for working capital and growth initiatives.

Pre-Funded Warrants

The pre-funded warrants issued in both PIPE Financings have substantially similar terms.

Each warrant is exercisable at any time following issuance until exercised in full, subject to beneficial ownership limitations restricting exercise if the holder would beneficially own more than 4.99 % of the Company's outstanding common stock (or, at the holder's election upon 61 days ' prior notice, up to 9.99 %).

The warrants are exercisable into a fixed number of shares at a fixed exercise price and contain no cash settlement features outside the Company's control.

Accordingly, both series of pre-funded warrants are classified as equity in accordance with ASC 480 and ASC 815, with proceeds allocated to additional paid-in capital.

The following table summarizes pre-funded warrant activity for fiscal 2026:

November 2025 PIPE

March 2026 PIPE

Warrants issued

Warrants exercised

Warrants outstanding at March 31, 2026

Registration Rights

In connection with each transaction, the Company entered into Registration Rights Agreements requiring it to file a resale registration statement covering the shares issued and the shares underlying the pre-funded warrants.

Neither agreement imposes cash penalties for failure to meet filing or effectiveness deadlines;

accordingly, no liability has been recorded in connection with these obligations.

As of March 31, 2026, the registration statement related to the November 2025 PIPE had been filed with the SEC.

The registration statement related to the March 2026 PIPE was filed with the SEC on April 28, 2026, subsequent to the fiscal year end.

Employee Benefit Plans

The Company maintains a defined contribution 401(k) profit-sharing plan in which all employees are eligible to participate.

Employees may contribute up to Internal Revenue Service annual limits or, if less, 90 % of their eligible compensation.

Employees are fully vested in their contributions to the plan.

The plan also provides for both Company matching and discretionary contributions, which are determined by the Board.

The Company has been matching 50 cents on the dollar up to 6 % of the employee’s contributions since February 2019.

Prior to that date, the Company had been matching 50 cents on the dollar up to 4 % of the employee’s contributions since October 2006.

There were no Company contributions to the plan prior to October 2006.

The Company’s match vests 25 % a year over four years starting from the employee’s hire date.

The Company recorded expense of approximately $ 0.3 million for each of Fiscal 2025 and 2024.

The Company maintains a defined contribution 401(k) profit-sharing plan (the "Plan") in which all employees are eligible to participate.

Employees may contribute up to the lesser of 90 % of their eligible compensation or the applicable Internal Revenue Service annual contribution limits.

Employee contributions are fully vested at all times.

The Plan provides for both Company matching contributions and discretionary contributions, with discretionary contributions determined by the Board of Directors.

The Company makes matching contributions at a rate of 50 % of each employee's contributions, up to 6 % of eligible compensation, a matching formula that has been in place since February 2019.

Company matching contributions vest at a rate of 25 % per year over four years , measured from each employee's hire date.

The Company recorded matching contribution expense of approximately $ 0.3 million and $ 0.3 million for Fiscal 2026 and 2025, respectively.

Net Income (Loss) Per Common Share

The Company has common stock and non-voting common stock outstanding.

As both classes carry identical economic rights, earnings per share is presented on a combined basis.

Basic income (loss) per share is computed using the weighted average number of combined common and non-voting common shares outstanding during the period.

Diluted income (loss) per share excludes potentially dilutive instruments, including restricted stock units, pre-funded warrants, and shares issuable upon conversion of the Series A Convertible Preferred Stock, when their inclusion would be anti-dilutive.

For periods in which the Company reports a net loss available to common stockholders, all potentially dilutive instruments are excluded from the diluted share count as their inclusion would reduce the loss per share.

The accretion of the Preferred Units to their maximum redemption value is reflected as a reduction in net income (or increase in net loss) available to common and non-voting common stockholders in the computation of basic and diluted earnings per share, consistent with the two-class method requirements under ASC 260.

Refer to Note 13 – Temporary Equity for additional information regarding the accretion of the Preferred Units and the issuance of the Series A Convertible Preferred Stock.

The following table presents the computation of basic and diluted net income (loss) per share for the fiscal years presented (in thousands, except per share amounts):

Year Ended March 31,

Consolidated net income (loss)

Accretion to redemption value of Preferred Units

Net loss available to holders of common stock and non-voting common stock

Weighted average shares outstanding - common and non-voting common stock

Pre-funded warrants and other equivalents (1)

Weighted average shares outstanding - diluted

Net income (loss) per share - basic

Net income (loss) per share - diluted

(1) For fiscal years ended March 31, 2026 and 2025, all potentially dilutive instruments were excluded from the diluted share count as their inclusion would be anti-dilutive given the net loss available to common stockholders in each period.

The following table summarizes the potentially dilutive securities excluded from the diluted share calculation for each period presented:

Year Ended March 31,

Restricted stock units

Performance restricted stock units

Pre-funded warrants - November 2025 PIPE

Pre-funded warrants - March 2026 PIPE

Series A Convertible Preferred Stock (as-converted basis)

Total potentially dilutive securities excluded

Income (loss) before provision for income taxes consisted of the following for the years ended March 31, 2026 and 2025 (in thousands):

Year Ended March 31,

United States

Income (loss) before provision for income taxes

The current income tax provision represents income taxes reported or expected to be reported on the Company's federal, state, and foreign income tax returns for the respective periods.

The Company has recorded a full valuation allowance against its net deferred tax assets.

The components of the provision for income tax expense (benefit) are as follows for the years ended March 31, 2026 and 2025 (in thousands):

Year Ended March 31,

Total income tax expense (benefit)

Actual income tax expense differed from the amount computed by applying statutory corporate income tax rates to income from operations before income taxes.

A reconciliation of income tax expense (benefit) to the U.S.

federal statutory rate, presented in accordance with ASU 2023-09, follows (in thousands, except percentages):

Year Ended March 31, 2026

Federal income tax at the statutory rate

State and local taxes, net of federal income tax effect (1)

Foreign tax effects

United Kingdom

Statutory tax rate difference between United Kingdom and United States

Effect of cross-border tax laws

Research and development credits

Changes in valuation allowances

Nontaxable or nondeductible items

Sec 162(m) officers' compensation

Share-based payment awards (2)

Other adjustments

Redeemable noncontrolling interest (3)

Income tax expense (benefit)

(1) A majority (greater than 50%) of the tax effect in this category relates to state and local taxes in California and Pennsylvania .

(2) The Company classifies windfalls and shortfalls related to share-based compensation within the nondeductible/nontaxable category.

(3) Partnership income allocated to noncontrolling interest prior to redemption.

As previously disclosed for the year ended March 31, 2025, prior to the adoption of ASU 2023-09, the table below is a reconciliation of the components that caused the Company's income tax expense to differ from amounts computed by applying the U.S.

federal statutory rate (in thousands, except percentages):

Year Ended March 31, 2025

Federal income tax at the statutory rate

State taxes, net of federal effect

Redeemable noncontrolling interest

Change in valuation allowance

Research and development credits

Excess business interest expense

True-up of prior year's estimates

Income tax expense

Deferred Tax Assets and Liabilities

The Company’s deferred tax assets and liabilities consisted of the following at March 31, 2026 and 2025 (in thousands):

As of March 31,

Deferred tax assets:

NOL carryforwards

Investment in partnership

Lease liabilities

Intangible assets

Inventory reserve

Warranty reserve

Deferred revenue

Accrued expenses

Allowance for bad debts

Property, plant, and equipment

Deferred tax assets

Valuation allowance for deferred tax assets

Deferred tax assets, net of valuation allowance

Deferred tax liabilities:

Right-of-use assets

Net deferred tax assets

On March 29, 2026, the Operating Subsidiary and the Company entered into a Preferred Unit Redemption Agreement with CDSS, providing for the full redemption of all outstanding Preferred Units.

Following the redemption, as of March 31, 2026, the Operating Subsidiary, which was previously treated as a partnership, is treated as a disregarded entity for tax purposes as it is 100% owned by the Company.

Prior to the redemption, the Company recorded an outside basis difference related to its investment in the Operating Subsidiary.

Following the redemption, the Company directly owns the assets and liabilities of the Operating Subsidiary and is required to track the related inside book-to-tax basis differences.

The deferred tax assets and liabilities presented as of March 31, 2026 reflect these inside book-to-tax basis differences.

Valuation Allowance

Due to the uncertainty surrounding the timing and realization of the benefits of the Company's favorable tax attributes in future income tax returns, the Company has established a full valuation allowance against its net deferred tax assets.

The Company's return to profitability in Fiscal 2026, while a positive indicator, does not yet constitute sufficient positive evidence to overcome negative evidence considered in the valuation allowance assessment under ASC 740.

The Company will continue to evaluate the realizability of its deferred tax assets each reporting period and will reduce the valuation allowance when, in management's judgment, it is more likely than not that some or all of the deferred tax assets will be realized.

While the weight of positive evidence does not outweigh the negative evidence at the end of Fiscal 2026, the Company anticipates that a release of valuation allowance may be appropriate within the next 12 months.

The change in the valuation allowance was as follows (in thousands):

Year Ended March 31,

Balance, beginning of year

Change in valuation allowance recorded in continuing operations

Change in valuation allowance recorded in APIC

Balance, end of year

For fiscal 2025, the decrease in the valuation allowance of $ 153.1 million was primarily attributable to the impact of the Plan of Reorganization, which resulted in the elimination of pre-reorganization tax attributes, including NOL carryforwards that remained with Reorganized PrivateCo (CDSS).

For fiscal 2026, the increase in valuation allowance of $ 23.8 million primarily reflects 100% of the Operating Subsidiary's inside book and tax basis differences and tax basis step up resulting from the redemption of the Company’s Preferred Units, recorded through APIC.

Net Operating Loss Carryforwards

The Company’s NOL carryforwards for federal and state income tax purposes at March 31, 2026, were as follows (in thousands):

Federal NOL carryforwards generated after December 31, 2017 are carried forward indefinitely but are subject to an 80% limitation on taxable income in the year of utilization under the Tax Cuts and Jobs Act of 2017.

IRC Section 382 Limitations

Internal Revenue Code Section 382 (“Section 382”) limits the use of net operating loss (“NOL”) and tax credit carryforwards when changes occur in the capital stock ownership of the Company.

Any annual limitation may result in the expiration of NOL and credits before utilization.

If the Company experiences an ownership change, utilization of the NOL and carryforwards could be significantly reduced.

The Company does not expect to utilize NOL and tax credit carryforwards in the near term;

accordingly, any Section 382 limitation is not expected to have a material impact on the financial statements given the full valuation allowance currently in place.

Unrecognized Tax Benefits

ASC 740 clarifies the accounting for income taxes by prescribing a minimum recognition threshold that a tax position is required to meet before being recognized in the financial statements.

ASC 740 also provides guidance on derecognition, measurement, classification, interest and penalties, accounting for interim periods, disclosure and transition.

Based on management's evaluation, there were unrecognized tax benefits primarily related to research and development credits as of March 31, 2026 and March 31, 2025.

A reconciliation of the beginning and ending amount of total gross unrecognized tax benefits is as follows (in thousands):

Balance at April 1, 2024

Gross increase related to prior year tax positions

Gross increase related to current year tax positions

Gross decrease due to reorganization

Balance at March 31, 2025

Gross increase related to prior year tax positions

Gross increase related to current year tax positions

Lapse of statute of limitations

Balance at March 31, 2026

Tax Return Jurisdictions and Open Years

The Company files income tax returns in the U.S.

federal jurisdiction and various state, local, and foreign jurisdictions.

The Company is generally subject to examination by taxing authorities for fiscal years ended March 31, 2023 through the present period, subject to applicable statute of limitations periods.

Income taxes paid, net of refunds received for the fiscal year ended March 31, 2026, are as follows in accordance with ASU 2023-09 (in thousands):

Total payments made (net of refunds received)

Segment Information

Segment Structure

The Company operates as a single reportable segment encompassing the development, manufacture, sale, and rental of microturbine energy systems and their related parts and services.

This determination is consistent with how the Company's Chief Executive Officer (the "CODM") evaluates performance and allocates resources on a consolidated basis.

The CODM assesses segment performance using consolidated net income (loss) on a GAAP basis, consistent with the basis of presentation in these financial statements.

This measure is compared against prior periods and forecasted results to support operational decision-making, cost management, and business expansion initiatives.

The CODM does not evaluate the segment using asset or liability information, and there are no intersegment sales or transfers within the consolidated entity.

Segment Profit or Loss and Reconciliation to Consolidated Statements of Operations

The following table presents reported segment revenue, gross profit, significant segment expenses regularly provided to the CODM, and a reconciliation to consolidated net income (loss) (in thousands):

Year Ended March 31,

Revenue, net:

Cost of revenue

Research and development

Selling, general & administrative expenses

Non-recurring professional expenses

Other (income) expense items (1)

Consolidated net income (loss)

(1) Other segment items included in segment (income) expense include other income (expense), interest expense, interest income and income tax expense.

Significant Segment Expenses

In accordance with ASU 2023-07, Segment Reporting:

Improvements to Reportable Segment Disclosures (Topic 280) , the following describes the significant expense categories regularly provided to the CODM and included in the segment profit or loss measure:

Cost of Revenue includes direct materials, direct labor, manufacturing overhead, warranty costs, and the cost of services performed under FPP and LTMA agreements.

Research and Development includes salaries, materials, and overhead costs associated with the design, development, and improvement of the Company's microturbine technology.

Selling, General and Administrative includes salaries and benefits for sales, marketing, and administrative personnel, commissions, marketing expenses, occupancy costs, and other general corporate expenses.

Non-Recurring Professional Expenses includes costs that are separately identified and regularly presented to the CODM because they are not reflective of the Company's underlying operating performance.

These consist of restructuring costs, financing transaction fees, shareholder litigation expenses, non-recurring legal costs, financial statement restatement expenses, and costs related to the SEC investigation.

Measure of Segment Profitability

For Fiscal 2026, the CODM's primary measure of segment performance is consolidated net income, reflecting the Company's return to profitability.

For Fiscal 2025, this measure was consolidated net loss.

In both periods, the CODM evaluates performance against prior period results and internal forecasts to assess operational efficiency and progress against the Company's strategic objectives.

Business Combinations

Acquisition of Cal Microturbine, LLC

On August 13, 2025 , the Company entered into an Equity Purchase Agreement (the “Purchase Agreement”) to acquire 100 % of the equity interests of Cal Microturbine for total consideration of approximately $ 14.9 million, which was comprised of $ 6.0 million cash paid at closing, $ 3.4 million in deferred consideration, and the settlement of preexisting relationships of $ 5.5 million.

The acquisition expands the Company’s direct distribution and service capabilities in key markets and is expected to enhance operational efficiencies and customer reach.

The transaction closed on August 13, 2025 (“Closing Date”) and was funded using available cash on hand.

The table below summarizes the total consideration transferred at the Closing Date (in thousands):

As of the Closing Date

Cash paid at close

Deferred consideration (1)

Settlement of preexisting relationships (2)

Total consideration

(1) The deferred consideration reflects cash payments of $ 4.0 million which will be distributed over 24 monthly installments starting in January 2026.

These payments were discounted to their present value using an 11.45 % discount rate.

(2) The settlement of preexisting relationships reflects the resolution of outstanding accounts receivable and deferred revenue balances between Capstone and Cal Microturbine that existed as of the Closing Date.

In accordance with ASC 805-10-25-20, this settlement was accounted for separately from the business combination and is excluded from the measurement of consideration transferred for purposes of the purchase price allocation and the determination of goodwill.

At the time of acquisition, Capstone and Cal Microturbine were engaged in ongoing litigation and arbitration related to their distributor agreement.

As a result of the Purchase Agreement, these disputes were resolved, and mutual releases were executed.

Neither company had recorded any contingent assets nor liabilities related to these matters as of the Closing Date.

The Company incurred acquisition and integration-related costs of $ 1.6 million during the year ended March 31, 2026, which were recorded within “Selling, general and administrative” expenses on the Company’s Consolidated Statement of Operations.

The Company accounted for the acquisition using the acquisition method under ASC 805, Business Combinations , under which assets acquired and liabilities assumed are recorded at their estimated fair values as of the Closing Date.

The most significant judgment in the purchase price allocation relates to the valuation of Cal Microturbine's customer relationships, which were valued using the multi-period excess earnings method.

Key assumptions include projected revenue, customer attrition rates, operating expenses, selling and general administrative expenses, and a discount rate.

Because this valuation relies on company-specific forecasts and assumptions rather than observable market inputs, the customer relationship intangible asset is classified as a Level 3 measurement within the ASC 820 fair value hierarchy.

As of the date of this filing, the Company performed the preliminary analysis to assign fair value to all tangible and intangible assets acquired and liabilities assumed.

The preliminary purchase price allocation includes measurement period adjustments recognized based on information obtained subsequent to the Closing Date related to facts and circumstances that existed as of the acquisition date, primarily related to the identification of previously unrecorded sales tax payable and commissions payable, which resulted in corresponding adjustments to the estimated fair value of identifiable intangible assets.

The purchase price allocation remains preliminary and is subject to further refinement as additional information becomes available, which may result in changes to the estimated fair values of assets acquired and liabilities assumed.

The Company expects to finalize the fair value measurements as soon as practicable, but no later than 12 months from the Closing Date.

No goodwill has been recognized as its management estimate as of the date of this filing is that the fair value of the net assets and liabilities acquired approximate the purchase price.

However, upon finalizing its purchase price allocation, goodwill may result.

The following table summarizes the amounts of assets acquired and liabilities assumed at the acquisition date, valued at their estimated acquisition date fair value and subsequent adjustments made during the measurement period (in thousands):

Acquisition Date Fair Value

Measurement Period Adjustments

Updated Acquisition Date Fair Value

Assets acquired

Accounts receivable

Lease receivable, current

Prepaid expenses and other current assets

Property, plant, equipment and rental assets

Finance lease right-of-use assets

Operating lease right-of-use assets

Intangible assets (1)

Total assets acquired

Liabilities assumed

Accounts payable

Accrued expenses

Accrued salaries and wages

Deferred revenue, current

Finance lease liability, current

Operating lease liability, current

Finance lease liability, non-current

Operating lease liability, non-current

Total liabilities assumed

Net assets acquired

(1) The intangible asset relates to customer relationships and was determined to have a amortization period of six years , amortized on a straight-line basis.

Amortization expense from August 13, 2025, Closing Date, through March 31, 2026 is $ 0.4 million.

No goodwill was recognized as the estimated fair value of the net assets acquired approximates the total consideration transferred.

The post-closing operating results of Cal Microturbine have been included in our consolidated financial statements.

For the period from the Closing Date through March 31, 2026, the Company’s Consolidated Statements of Operations include Cal Microturbine revenue of $ 4.0 million and earnings of $ 1.2 million for the year ended March 31, 2026, respectively.

Pro Forma Financial Information (Unaudited)

The following unaudited pro forma consolidated results of operations present the estimated unaudited pro forma combined results of Capstone and Cal Microturbine for the year ended March 31, 2026 and 2025, as if the acquisition had occurred on April 1, 2024 and was prepared in accordance with ASC 805.

The pro forma information does not necessarily represent what the combined companies' revenue or results of operations would have been had the acquisition occurred on April 1, 2024, nor is it intended to be a projection of future operating results.

It does not reflect any operating efficiencies or potential cost savings from combining the two entities.

Cal Microturbine's fiscal year ends December 31;

accordingly, the pro forma financial information was prepared using comparable reporting periods, with Cal Microturbine's financial data derived from internally generated, unaudited reports and certain estimates applied to allocate revenues and expenses across periods.

Pro forma adjustments include the elimination of intercompany revenue and expenses, amortization of the customer relationship intangible asset, interest expense on deferred consideration, and reclassification of acquisition-related transaction costs.

Acquisition-related costs incurred by Capstone were excluded from the fiscal 2026 pro forma results and included in the fiscal 2025 pro forma results, consistent with ASC 805 requirements.

Combined Company Pro Forma

Year ended March 31,

Revenues, net

Net income (loss)

Asset Acquisition of Capstone Distributor Support Services (“CDSS”)

On March 31, 2026 , pursuant to an asset purchase agreement, the Company acquired a set of assets and assumed certain liabilities associated with its distributor support activities, including the Company’s right, title, and interest in and to certain trademarks of the Company from Capstone Distributor Support Services Corporation (the “Seller” or “CDSS”) (the “DSS Transaction”).

Total consideration transferred was $ 4.4 million, consisting of $ 1.0 million of cash paid at closing, $ 1.0 million attributable to the settlement of a pre-existing relationship between the Company and CDSS and the assumption of $ 2.4 million of liabilities.

The Company determined the Transaction constituted an asset acquisition because the acquired set did not include an assembled workforce with a substantive process and therefore did not meet the definition of a business under U.S.

Under asset acquisition accounting, the total purchase consideration was allocated to assets acquired and liabilities assumed on a relative fair value basis.

No goodwill was recognized.

The allocation of the purchase consideration to the assets acquired and liabilities assumed is summarized below (in thousands):

Purchase Price Allocation

Purchase consideration:

Cash paid at close

Settlement of preexisting relationships (1)

Assumed liabilities (2)

Total purchase consideration

Assets acquired:

Accounts receivable

Prepaid expenses and other current assets

Property, plant, equipment and rental assets

Intangible assets (3)

Net assets acquired

(1) The settlement of pre-existing relationships related to accounts receivable.

(2) The assumed liabilities include:

Accounts payable of $ 335 thousand, Accrued salaries and wages of $ 27 thousand, and Deferred revenue of approximately $ 2.0 million.

(3) The Company recognized an intangible asset related to the Company’s right, title, and interest in and to certain trademarks of $ 1.6 million with a 10 -year life which is amortized on a straight-line basis over its estimated useful life.

Supplemental Balance Sheet Information

Prepaid and Other Assets

As of March 31, 2025, the Company had $ 2.2 million of royalty-related assets remaining, recorded within the Prepaid and other current assets and other assets line items on the accompanying Consolidated Balance Sheets.

The asset is being amortized over a 15 -year period through September 2033 using an effective royalty rate.

A 15 -year amortization period is the minimum expected life cycle of the current generation of product.

The effective royalty rate is calculated as the prepaid royalty settlement divided by total projected microturbine system units over the 15 -year amortization period.

On a quarterly basis, the Company performs a re-forecast of microturbine system unit shipments to determine if an adjustment to the effective royalty rate is necessary and accordingly whether an impairment exists.

The Company determined an impairment did no t exist as of March 31, 2025 or 2024.

The current and long-term portions of prepaid royalties and prepaid and other assets were as follows (in thousands):

The following table presents the components of prepaid expenses, other current assets, and other long-term assets as of March 31, 2026 and 2025 (in thousands):

Other royalty-related current assets

9 unchanged sentences

Prepaid taxes

Other current assets

Total Prepaid expenses, other current assets and other assets

Segment Information

The Company has a single reportable segment:

microturbine systems and their related parts, rentals and services.

The Company is one line of business that provides for the development, manufacture, sale and rental of turbine generator sets and their related parts and services to customers.

The Company derives revenue primarily in North America and the Company’s Chief Operating Decision Maker (“CODM”) regularly reviews financial information presented on a consolidated basis for purposes of allocating resources and assessing performance.

The Company defines its CODM to be the Chief Executive Officer.

The CODM assesses performance for the single reportable segment under a GAAP basis of accounting, consistent with the basis of presentation in our financial statements and decides how to allocate resources based on consolidated net loss.

This measure is used to monitor performance which is compared to prior periods and forecasted results to support operational efficiencies and business expansion.

The CODM does not evaluate its reportable segment using asset or liability information.

There are no intra-equity sales or transfers between the reporting units within the consolidated entity.

The following table presents the Company’s information about reported segment revenue, segment gross profit, segment profit or loss and significant segment expenses that are regularly provided to the Company’s CODM as a single reporting segment and a reconciliation of the consolidated statement of operations:

Year Ended March 31,

Revenue, net:

Cost of revenue

Research and development

Selling, general & administrative expenses

Non-recurring professional expenses (1)

Reorganization items, net

Other (income) expense items (2)

Consolidated net income (loss)

(1) Non-recurring professional expenses include restructuring, financing, shareholder litigation, nonrecurring legal, restatement and SEC investigation.

(2) Other segment items included in segment (income) expense include other income (expense), interest expense, interest income and income tax expense.

Prepaid Royalties

The Company holds a prepaid royalty asset that is being amortized over a fifteen-year period through September 2033 using an effective royalty rate methodology.

The fifteen-year amortization period reflects the minimum expected life cycle of the current generation of microturbine products.

The effective royalty rate is calculated as the total prepaid royalty settlement divided by total projected microturbine system unit shipments over the amortization period.

On a quarterly basis, the Company re-forecasts projected microturbine unit shipments to determine whether an adjustment to the effective royalty rate is necessary and whether any impairment indicators exist.

No impairment was identified as of March 31, 2026 or March 31, 2025.

As of March 31, 2026, the remaining balance of the prepaid royalty asset was $ 2.0 million, of which $ 0.1 million is classified as current and $ 1.9 million is classified as non-current on the Consolidated Balance Sheets.

Subsequent Events

The Company has evaluated all subsequent events through the filing date of this Form 10-K with the SEC, to ensure that this filing includes appropriate disclosure of events both recognized in the financial statements as of March 31, 2025, and events which occurred subsequently but were not recognized in the financial statements.

There were no subsequent events, other than what has been described above, which required recognition, adjustment to or disclosure in the financial statements.

Subsequent to March 31, 2026, certain investors exercised warrants issued in connection with the Company’s March 2026 PIPE.

On May 8, 2026, an investor exercised warrants to purchase 2,019,812 shares of common stock pursuant to a cashless exercise feature.

On April 21, 2026, the Company’s Board of Directors approved Amendment No.

2 to the Capstone Energy+, Inc.

2023 Equity Incentive Plan (the “2023 Plan”), increasing the maximum number of shares authorized for issuance under the 2023 Plan from 4,000,000 to 7,000,000 shares.

This amendment was disclosed in the Company’s Current Report on Form 8-K filed on April 21, 2026.

The Company evaluated subsequent events through the date of issuance of these financial statements and determined that no events occurred that require recognition or disclosure, other than those described above.

Exhibit Index

7 unchanged sentences

and (III) Granting Related Relief, dated November 14, 2023 (k)

Equity Purchase Agreement, dated August 13, 2025, by and among Capstone Green Energy LLC, Cal Micro Holdco, Inc., and the other parties thereto (u)

Second Amended and Restated Certificate of Incorporation of Capstone Green Energy Holdings, Inc.

Amended and Restated Bylaws of Capstone Green Energy Holdings, Inc.

Certificate of Amendment to the Second Amended and Restated Certificate of Incorporation (x)

Second Amended and Restated Bylaws of Capstone Energy+, Inc.

Certificate of Designation of Series A Convertible Preferred Stock of Capstone Green Energy Holdings, Inc.

Exit Note Purchase Agreement, dated December 7, 2023, by and among Capstone Green Energy LLC, Capstone Green Energy Holdings, Inc., Capstone Financial Services, Broad Street Credit Holdings LLC, as Purchaser, and Goldman Sachs Specialty Lending Group, L.P., as Collateral Agent (l)

1 unchanged sentence

and the Purchaser party thereto (n)

Consent and Second Amendment to Note Purchase Agreement, dated as of August 13, 2025, by and among Capstone Green Energy Holdings, Inc., Capstone Green Energy LLC, Capstone Turbine Financial Services, LLC, Goldman Sachs Specialty Lending Group, L.P.

and the Purchaser party thereto.

Consent and Third Amendment to Note Purchase Agreement, dated March 29, 2026.

Description of the Registrant’s Securities Registered Pursuant to Section 12 of the Securities Exchange Act of 1934, as amended (o)

Form of 2025 Pre-Funded Warrant.

Form of 2026 Pre-Funded Warrant.

Amended and Restated Capstone Turbine Corporation Change of Control Severance Plan (a)

16 unchanged sentences

Severance Pay Plan of Capstone Green Energy Holdings, Inc.

2023 Equity Incentive Plan of Capstone Green Energy Holdings, Inc.

Capstone Energy+, Inc.

2023 Equity Incentive Plan, as amended.

Amended and Restated Limited Liability Company Agreement, dated December 7, 2023, of Capstone Green Energy LLC.

7 unchanged sentences

Exit Note Purchase Agreement Waiver Letter dated June 23, 2025 .

Capstone Green Energy Holdings, Inc.

Consulting Agreement, dated as of November 10, 2025, between Capstone Green Energy Holdings, Inc.

and BBR Financial Solutions, LLC.

Securities Purchase Agreement, dated as of November 24, 2025, by and among Capstone Green Energy Holdings, Inc.

and the purchasers party thereto.

Registration Rights Agreement, dated as of November 24, 2025, by and among Capstone Green Energy Holdings, Inc.

and the purchasers party thereto.

Placement Agency Agreement, dated November 24, 2025, by and between Capstone Green Energy Holdings, Inc.

and Craig-Hallum Capital Group LLC.

Securities Purchase Agreement with Preferred Stock Investor, dated March 29, 2026, by and among Capstone Green Energy Holdings, Inc.

and the purchasers party thereto.

Securities Purchase Agreement for PIPE, dated as of March 29, 2026, by and among Capstone Green Energy Holdings, Inc.

and the purchasers party thereto.

Registration Rights Agreement with Preferred Stock Investor, dated as of March 29, 2026, by and among Capstone Green Energy Holdings, Inc.

and the purchasers party thereto.

Registration Rights Agreement for PIPE, dated as of March 29, 2026, by and among Capstone Green Energy Holdings, Inc.

and the purchasers party thereto.

Placement Agency Agreement, dated March 29, 2026, by and between Capstone Green Energy Holdings, Inc.

and Craig-Hallum Capital Group LLC.

Preferred Unit Redemption Agreement, dated March 29, 2026.

Asset Purchase Agreement, dated March 29, 2026.

Insider Trading Policy.

List of Subsidiaries of Capstone Green Energy Holdings, Inc.

List of Subsidiaries.

Consent of CBIZ CPAs P.C.

Consent of Marcum llp

Power of Attorney (included on the signature page of this Form 10-K)

2 unchanged sentences

Certification of Chief Executive Officer and Chief Financial Officer pursuant to Section 906 of the Sarbanes–Oxley Act of 2002 (furnished herewith)

Capstone Green Energy Holdings, Inc.

Clawback Policy, effective October 2, 2023 (p)

Capstone Energy+, Inc.

Clawback Policy, effective October 2, 2023, amended June 1, 2026

XBRL Instance Document – the instance document does not appear in the Interactive Data File because its XBRL tags are embedded within the inline XBRL document

6 unchanged sentences

*Management contract or compensatory plan or arrangement

(a) Incorporated by reference to Capstone Turbine Corporation’s Quarterly Report on Form 10-Q for the quarterly period ended December 31, 2004 (File No.

(b) Incorporated by reference to Capstone Turbine Corporation’s Quarterly Report on Form 10-Q for the quarterly period ended September 30, 2007 (File No.

(c) Incorporated by reference to Capstone Turbine Corporation’s Current Report on Form 8-K filed on October 13, 2017 (File No.

(d) Incorporated by reference to Capstone Turbine Corporation’s Annual Report on Form 10-K for the fiscal year ended March 31, 2018 (File No.

(e) Incorporated by reference to Capstone Green Energy Corporation’s Current Report on Form 8-K filed on March 6, 2023 (File No.

(f) Incorporated by reference to Capstone Turbine Corporation’s Current Report on Form 8-K filed on June 5, 2018 (File No.

(g) Incorporated by reference to Capstone Green Energy Corporation’s Annual Report on Form 10-K for the fiscal year ended March 31, 2022 (File No.

(h) Incorporated by reference to Capstone Green Energy Corporation’s Quarterly Report on Form 10-Q for the quarterly period ended December 31, 2022 (File No.

(i) Incorporated by reference to Capstone Green Energy Corporation’s Current Report on Form 8-K filed on September 28, 2023 (File No.

(j) Incorporated by reference to Capstone Green Energy Corporation’s Current Report on Form 8-K filed on October 25, 2023 (File No.

(k) Incorporated by reference to Capstone Green Energy Corporation’s Current Report on Form 8-K filed on November 17, 2023 (File No.

(l) Incorporated by reference to Capstone Green Energy Holdings, Inc.’s Current Report on Form 8-K12G3 filed on December 11, 2023 (File No.

(m) Incorporated by reference to Capstone Green Energy Holdings, Inc.’s Current Report on Form 8-K filed on March 12, 2024 (File No.

(n) Incorporated by reference to Capstone Green Energy Holdings, Inc.’s Current Report on Form 8-K filed on June 28, 2024 (File No.

(o) Incorporated by reference to Capstone Green Energy Holdings, Inc.’s Annual Report on Form 10-K for the fiscal year ended March 31, 2023 (File No.

(p) Incorporated by reference to Capstone Green Energy Holdings, Inc.’s Annual Report on Form 10-K for the fiscal year ended March 31, 2024 (File No.

(a) Incorporated by reference to the Company’s Quarterly Report on Form 10-Q for the quarterly period ended December 31, 2004 (File No.

(b) Incorporated by reference to the Company’s Quarterly Report on Form 10-Q for the quarterly period ended September 30, 2007 (File No.

(d) Incorporated by reference to the Company’s Annual Report on Form 10-K for the fiscal year ended March 31, 2018 (File No.

(e) Incorporated by reference to the Company’s Current Report on Form 8-K filed on March 6, 2023 (File No.

(f) Incorporated by reference to the Company’s Current Report on Form 8-K filed on June 5, 2018 (File No.

(g) Incorporated by reference to the Company’s Annual Report on Form 10-K for the fiscal year ended March 31, 2022 (File No.

(h) Incorporated by reference to the Company’s Quarterly Report on Form 10-Q for the quarterly period ended December 31, 2022 (File No.

(i) Incorporated by reference to the Company’s Current Report on Form 8-K filed on September 28, 2023 (File No.

(j) Incorporated by reference to the Company’s Current Report on Form 8-K filed on October 25, 2023 (File No.

(k) Incorporated by reference to the Company’s Current Report on Form 8-K filed on November 17, 2023 (File No.

(l) Incorporated by reference to the Company’s Current Report on Form 8-K12G3 filed on December 11, 2023 (File No.

(m) Incorporated by reference to the Company’s Current Report on Form 8-K filed on March 12, 2024 (File No.

(n) Incorporated by reference to the Company’s Current Report on Form 8-K filed on June 28, 2024 (File No.

(o) Incorporated by reference to the Company’s Annual Report on Form 10-K for the fiscal year ended March 31, 2023 (File No.

(p) Incorporated by reference to the Company’s Annual Report on Form 10-K for the fiscal year ended March 31, 2024 (File No.

(q) Incorporated by reference to the Company’s Current Report on Form 8-K filed on March 30, 2026 (File No.

(r) Incorporated by reference to the Company’s Current Report on Form 8-K filed on November 24, 2025 (File No.

(s) Incorporated by reference to the Company’s Registration Statement on Form S-8 filed on May 6, 2026 (File No.

(t) Incorporated by reference to the Company’s Current Report on Form 8-K filed on November 14, 2025 (File No.

(u) Incorporated by reference to the Company’s Current Report on Form 8-K filed on August 14, 2025 (File No.

(v) Incorporated by reference to the Company’s Current Report on Form 8-K filed on August 14, 2025 (File No.

(w) Incorporated by reference to the Company’s Registration Statement on Form S-3 filed on April 28, 2026 (File No.

(x) Incorporated by reference to the Company’s Current Report on Form 8-K filed on April 30, 2026 (File No.

Pursuant to the requirements of Sections 13 or 15(d) of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.

CAPSTONE GREEN ENERGY HOLDINGS, INC.

CAPSTONE ENERGY+, INC.

June 25, 2026

Chief Financial Officer

(Principal Financial Officer)

KNOW ALL MEN BY THESE PRESENTS, that we, the undersigned officers and directors of Capstone Green Energy Holdings Inc., hereby severally constitute Vince Canino and John J.

Juric, and each of them singly, our true and lawful attorneys with full power to them, and each of them singly, to sign for us and in our names in the capacities indicated below, this Annual Report on Form 10-K and any and all amendments to said Form 10-K, and generally to do all such things in our names and in our capacities as officers and directors to enable Capstone Green Energy Holdings, Inc.

Interim Chief Financial Officer and Director (Principal Financial Officer)

KNOW ALL MEN BY THESE PRESENTS, that we, the undersigned officers and directors of Capstone Energy+, Inc., hereby severally constitute Vince Canino and John P.

Miller, and each of them singly, our true and lawful attorneys with full power to them, and each of them singly, to sign for us and in our names in the capacities indicated below, this Annual Report on Form 10-K and any and all amendments to said Form 10-K, and generally to do all such things in our names and in our capacities as officers and directors to enable Capstone Energy+, Inc.

to comply with the provisions of the Securities Exchange Act of 1934, and all requirements of the Securities and Exchange Commission, hereby ratifying and confirming our signatures as they may be signed by our said attorneys, or any of them, to said Form 10-K and any and all amendments thereto.

2 unchanged sentences

June 25, 2026

Chief Financial Officer (Principal Financial Officer)

June 26, 2025

/s/ Celia Fanning

Controller and Chief Accounting Officer (Principal Accounting Officer)

Interim Chief Financial Officer and Director (Principal Financial Officer)

June 25, 2026

Celia Fanning

/s/ Robert C.

Chair of the Board of Directors

/s/ Candice Graves

Chief Accounting Officer and Controller (Principal Accounting Officer)

June 25, 2026

Candice Graves

/s/ Robert F.

Interim Chair of the Board of Directors

June 25, 2026

3 unchanged sentences

June 25, 2026

/s/ John Miller

/s/ Christopher J.

June 25, 2026

Christopher J.

/s/ Robert F.

June 25, 2026

Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.

What changed 10-K

Item 9A. Controls and Procedures