−Removed: Capstone is a provider of customized microgrid solutions, on-site resilient green Energy-as-a-Service (“EaaS”) solutions and on-site energy technology systems focused on helping customers around the globe meet their environmental, energy savings and resiliency goals.
+Added: Capstone is a provider of customized microgrid solutions, on-site resilient green 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.
We offer customers a range of commercial, industrial and utility scale options tailored to their specific needs ranging from 65 kilowatts (“kW”) to multiple megawatts (“MW”).
Capstone’s product portfolio not only showcases our core microturbine technology but also includes flexible EaaS rental and service contracts.
−Removed: Through our EaaS business line, we offer long-term rental solutions utilizing our microturbine energy systems, comprehensive service contracts that cover planned and unplanned maintenance, and factory-certified aftermarket spare parts.
+Added: Through our EaaS business line, we offer build, own, operate and maintain (“BOOM”) solutions, as well as energy rental solutions utilizing its microturbine energy, comprehensive service contracts that cover planned and unplanned maintenance, and factory-certified aftermarket spare parts.
In our pursuit of cutting-edge solutions, we have forged strategic partnerships to extend our impact.
Through these collaborations, we offer biomass and heat recovery solutions that enhance the sustainability and efficiency of our clients’ operations, contributing to a cleaner and more responsible energy landscape.
−Removed: We develop, manufacture, market, sell and service microturbine-based technology solutions for use in stationary distributed power generation applications, including energy efficient cogeneration combined heat and power (“CHP”), integrated combined heat and power, and combined cooling, heat and power (“CCHP”), as well as renewable energy, natural resources, and critical power supply applications.
−Removed: Capstone microturbines allow customers to produce power on-site in parallel with the local electric grid or stand-alone when no local utility grid is available.
+Added: We develop, manufacture, market, sell and service microturbine-based technology solutions for use in 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”)), as well as renewable energy, natural resources, and critical power supply applications.
+Added: Capstone microturbines allow customers to produce power on-site in parallel with the local electric grid or stand-alone when no local electric grid is available.
Several technologies are used to provide “on-site power generation” (also called “distributed generation”) such as reciprocating industrial engines (also known as internal combustion engines), solar photovoltaic power (“PV”), wind turbines and fuel cells.
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Our microturbines are sold, installed and serviced primarily through our global distribution network.
−Removed: Together with our global distributors, we offer new and remanufactured parts as well as a comprehensive Capstone factory protection plans through long-term service agreements.
+Added: Together with our global distributors, we offer new and remanufactured parts as well as comprehensive Capstone factory protection plans through long-term service agreements.
We also offer our microturbines for rent through our long-term rental program (which forms a part of our EaaS business).
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This Annual Report on Form 10-K (this “Form 10-K”) refers to our fiscal years ending March 31 as “Fiscal” years.
−Removed: Post Fiscal 2023 Developments
−Removed: Please refer to “Management’s Discussion and Analysis of Financial Results—Post Fiscal 2023 Developments” for a summary of our voluntary filing under Chapter 11 of the Bankruptcy Code and our emergence therefrom, the Exit Facility, the Operating Subsidiary LLC Agreement and the delisting of our common stock from the Nasdaq.
Our microturbines are compact, lightweight and environmentally friendly generators of electricity and heat compared to competing technologies.
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Our natural gas fueled C65, C200, C600, C800 and C1000S series microturbines were certified by the California Air Resources Board (the “CARB”) as meeting its stringent 2007 emissions requirements—the same emissions standard used to certify fuel cells and the same emissions levels that a central power plant must satisfy.
−Removed: These low emission levels not only provide an environmentally friendly product, but also
−Removed: eliminate permitting requirements in several municipalities for continuously operated onsite power generation.
+Added: These low emission levels not only provide an environmentally friendly product, but also eliminate permitting requirements in several municipalities for continuously operated onsite power generation.
● Our patented air bearing system allows the microturbine’s single moving assembly to produce power without the need for typical petroleum-based lubrication.
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Our products can operate connected to the electric utility grid as a current source, on a stand-alone basis as a voltage source, multipacked to support larger loads as a “virtual single” unit and in dual mode, where the microturbine operates connected to the electric utility grid or operates independently.
−Removed: Our C65, as well as our C200 and C1000S Series grid connect and stand-alone microturbines are listed by Underwriters Laboratories (“UL”) as meeting the UL 2200 stationary engine generator standards and the UL 1741SA utility interconnection requirements.
+Added: Our 65 kW (“C65”), as well as our 200 kW (“C200”) and 400 kW, 600 kW, 800 kW and 1000 kW (“C1000S Series”) grid connect and stand-alone microturbines are listed by Underwriters Laboratories (“UL”) as meeting the UL 2200 stationary engine generator standards and the UL 1741SA utility interconnection requirements.
We are in the process of completing the certification for UL 1741SB.
−Removed: Our C65 microturbine is certified by the California Energy Commission (the “CEC”) and was the first product to comply with the requirements of the CEC’s “Rule 21” grid interconnection standard.
+Added: Our C65 microturbine is certified by the California Energy Commission (the “CEC”) to comply with the requirements of the CEC’s “Rule 21” grid interconnection standard.
This standard streamlines the process for connecting distributed generation systems to the grid in California.
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Power Generation Applications
−Removed: Our 65 kW (“C65”) microturbine can produce enough heat to provide hot water to a 100-room hotel while also providing about one third of its electrical requirements.
−Removed: Our 200 kW (“C200”) microturbine is well suited for larger hotels, offices, commercial and industrial buildings, and wastewater treatment plants, among others.
−Removed: By packaging the C200 microturbine power modules into single enclosures which are available in multiple sizes and are built in similar dimensions
−Removed: to a standard shipping container, we have created an upgradable family of microturbine offerings from 400 kW up to 1000 kW, or 1 MW, in a compact footprint engineered to function as a single source of power.
−Removed: Our 400 kW, 600 kW, 800 kW and 1000 kW (“C1000S Series”) microturbines are well suited for utility substations, larger commercial and industrial facilities and remote oil and gas applications.
+Added: Our C65 microturbine can produce enough heat to provide hot water to a 100-room hotel while also providing about one third of its electrical requirements.
+Added: Our C200 microturbine is well suited for larger hotels, offices, commercial and industrial buildings, and wastewater treatment plants, among others.
+Added: By packaging the C200 microturbine power modules into single enclosures which are available in multiple sizes and are built in similar dimensions to a standard shipping container, we have created an upgradable family of microturbine offerings from 400 kW up to 1000 kW, or 1 MW, in a compact footprint engineered to function as a single source of power.
+Added: Our C1000S Series microturbines are well suited for utility substations, larger commercial and industrial facilities and remote oil and gas applications.
Our 600 kW and 800 kW systems can be shipped in a five-bay configuration which allows the end-use customer to add one to two more 200 kW microturbines in the future to increase their total on-site power production from 600 kW to 1000 kW without any change to the existing site footprint, as the customer’s business power demands expand over time.
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However, a number of developments related primarily to the deregulation of the utility industry as well as significant technological advances have helped to broaden the range of power supply options available to interested parties.
−Removed: Our full line of microturbine energy solutions target multiple vertical markets worldwide, including energy efficiency, renewable energy, natural resources, critical power supply, microgrid and electric vehicle (“EV”) charging.
−Removed: Within these vertical markets, we focus on applications that we believe have the greatest near-term potential for the customer based on various different factors such as energy load demand, available fuels, economic payback and, for some, government incentives.
−Removed: The critical power supply and microgrid verticals do not currently generate significant revenues for us;
+Added: Our full line of microturbine energy solutions target multiple vertical markets worldwide, including energy efficiency, natural resources, renewable energy, critical power supply, microgrid and transportation products.
+Added: Within these vertical markets, we focus on applications that we believe have the greatest near-term potential for the customer based on various factors such as energy load demand, available fuels, economic payback and, for some, government incentives.
+Added: The critical power supply, microgrid and transportation product verticals do not currently generate significant revenues for us;
however, we have experienced continued development in these verticals and remain focused on the development of applications in these verticals.
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Energy efficiency refers to the proper utilization of both electrical and thermal energies in the power production process.
−Removed: In such applications, our microturbines are able to maximize the availability of usable energy which we believe provides a significant economic advantage to our customers while reducing their on-site emissions.
+Added: In such applications, our microturbines are able to maximize the availability of usable energy to provide a significant economic advantage to our customers while reducing their on-site emissions.
CHP and CCHP can improve site economics by capturing the waste heat created from a single combustion process to increase the efficiency of the total system, from approximately 30% to approximately 85% for hot water and chilled water to as much as 90% or more for some steam and direct drying applications.
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Organizations of all sizes have used the heat generated by our microturbines at the many different types of commercial and industrial applications they serve, including hotels and resorts, hospitals, and medical centers, as well as office buildings and large retail facilities.
−Removed: During Fiscal 2023, we continued to expand and develop our new hydrogen products with the release of a commercially available hydrogen-based CHP product, which can reliably run on a 30% hydrogen-70% natural gas mix.
+Added: During Fiscal 2024, we continued to develop our new hydrogen products.
We are continuing our research and development partnership with Argonne National Laboratory and utilizing their high-performance computing with AI technology and are optimizing higher hydrogen blend configurations, with the goal of creating a 100% hydrogen microturbine.
Argonne National Laboratory is a national science and technology research laboratory operated by the University of Chicago Argonne, LLC for the United States Department of Energy.
−Removed: Renewable Energy
−Removed: There is a growing transition to renewable energy sources and technologies on a global scale.
−Removed: Our microturbines run efficiently on renewable fuels such as methane and other biogases from landfills, wastewater treatment facilities and renewable natural gas.
−Removed: They also run efficiently on other small biogas applications like food processing plants, livestock farms and agricultural green waste operations.
−Removed: Microturbines can burn these renewable fuels with minimal emissions, thereby, and in some cases, avoiding the imposition of penalties incurred for pollution while simultaneously producing electricity from this “free” renewable fuel source for use at the site or in the surrounding areas.
−Removed: Our microturbines have demonstrated effectiveness in these smaller applications and may outperform conventional combustion engines in some situations, including when the gas contains a high amount of sulfur, as the sulfur can contaminate combustion engines’ lube oil leading to equipment breakdowns and higher lifecycle costs.
−Removed: We offer C65 and C200 stand-alone digester gas-fueled products to the renewable energy market segment.
−Removed: With these products, we can target many different types of renewable energy applications, including biogas producing facilities in third world countries and in remote locations that offer a valuable fuel source for the generation of electricity.
−Removed: The performance of our C65 digester gas system has been routinely evaluated to ensure that the combustion system is stable from zero to 100 percent power output.
−Removed: Minor controls changes have been implemented to increase stability at low power levels.
−Removed: The ability to convert this low BTU fuel to electricity, along with the high reliability and low maintenance features of this product, make it well suited for this market segment.
Natural Resources—Crude Oil, Natural Gas, Shale Gas & Mining
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There are numerous locations, on a global scale, where the drilling, production, compression and transportation of oil and gas and other extraction and production processes create fuel byproducts, which are traditionally burned or released into the atmosphere.
−Removed: Our microturbines can turn these fuel byproducts, flare gas or associated gas into a useable fuel to provide power to these remote oil and gas sites.
+Added: Our microturbines can turn these fuel byproducts, flare gas, or associated gas, into a useable fuel to provide prime power to these sites.
The addressable market for our microturbines in the United States shale reserves industry is significant.
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Oil and gas customers often prefer power generation systems that offer low maintenance and high reliability in order to ensure continued production.
+Added: Renewable Energy
+Added: There is a growing transition to renewable energy sources and technologies on a global scale.
+Added: Our microturbines run efficiently on renewable fuels such as methane and other biogases from landfills, wastewater treatment facilities and renewable natural gas.
+Added: They also run efficiently on other small biogas applications like food processing plants, livestock farms and agricultural green waste operations.
+Added: Microturbines can burn these renewable fuels with minimal emissions, thereby, and in some cases, avoiding the imposition of penalties incurred for pollution while simultaneously producing electricity from this “free” renewable fuel source for use at the site or in the surrounding areas.
+Added: Our microturbines have demonstrated effectiveness in these smaller applications and may outperform conventional combustion engines in some situations, including when the gas contains a high amount of sulfur, as the sulfur can contaminate combustion engines’ lube oil leading to equipment breakdowns and higher lifecycle costs.
+Added: We offer C65 and C200 stand-alone digester gas-fueled products to the renewable energy market segment.
+Added: With these products, we can target many different types of renewable energy applications, including biogas producing facilities in third world countries and in remote locations that offer a valuable fuel source for the generation of electricity.
+Added: The performance of our C65 digester gas system has been routinely evaluated to ensure that the combustion system is stable from zero to 100 percent power output.
+Added: Minor controls changes have been implemented to increase stability at low power levels.
+Added: The ability to convert this low BTU fuel to electricity, along with the high reliability and low maintenance features of this product, make it well suited for this market segment.
Critical Power Supply
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We offer an alternative solution where our microturbines can also be installed along with a rotary UPS to provide a complete line interactive continuous power solution.
−Removed: In this case, the microturbines remain in
−Removed: grid connect mode while the rotary UPS stabilizes the utility voltage and provides a seamless transfer from operation connected to the grid to operation isolated from the grid.
+Added: In this case, the microturbines remain in grid connect mode while the rotary UPS stabilizes the utility voltage and provides a seamless transfer from operation connected to the grid to operation isolated from the grid.
A microgrid is a group of interconnected loads and distributed energy resources that acts as a single controllable energy entity with respect to the grid.
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Microgrids can be connected to larger electricity grids;
−Removed: however, in the event of a widespread outage, the microgrid will disconnect from the main grid and continue to operate independently to maintain the electricity supply to the homes and businesses that are connected to the microgrid’s electricity network.
+Added: however, in the event of a widespread outage, the microgrid will disconnect from the main grid and continue to operate independently to maintain the electricity supply to the homes and businesses that are connected to the microgrid’s
+Added: electricity network.
Our microturbines have the ability to meet the needs of microgrid end-users by lowering their overall cost to operate and by providing a versatile dispatchable technology that is fuel flexible and scalable enough to fit a wide variety of applications.
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The use of microgrids to serve local loads helps to reduce energy losses in transmission and distribution, further increasing the efficiency of the microgrid.
−Removed: We have been a part of numerous successful microgrid installations worldwide ranging between a wind turbine manufacturer, ski resort, university, industrial farm, utility software company, brewery and electrical distribution utility.
+Added: We have been a part of numerous successful microgrid installations worldwide ranging from a wind turbine manufacturer, ski resort, university, industrial farm, utility software company, brewery and electrical distribution utility.
Our microturbines’ functionality is to ensure energy availability for advanced microgrids before and during disasters, such as hurricanes.
They may also help reduce electrical expenditures in the years following a disaster when electric utility rates may be increased to pay for the expenses for grid infrastructure repairs and improvements associated with these disasters.
+Added: Transportation
+Added: Our technology can also be used to support Electric Vehicle (“EV”) market by providing power solutions to charge vehicles.
+Added: Our products can fill a void in the EV market for vehicle charging capacity and charging convenience.
+Added: Our customers have applied our products in EV applications for fleets and remote location charging stations.
+Added: We are continuing to pursue global EV charging opportunities to fill the demand for power in this market segment.
Sales and Marketing
We primarily sell and market our microturbine products, parts, rentals and services through our global network of authorized Capstone distributors and OEMs.
−Removed: Our Sales and Marketing team operates as one organization focused on developing and managing our existing worldwide distribution channel, growing our long-term rental fleet and leading all marketing and advertising activities as we continue building our Company into a strong and recognizable worldwide brand.
+Added: Our Sales and Marketing team operates as one organization.
+Added: Our team is focused on developing and managing our existing worldwide distribution channel, growing our long-term rental fleet, and leading all marketing and advertising activities as we continue building our Company into a strong and recognizable worldwide brand.
We continue to fulfill rental contracts by renting unused equipment previously sold to our customers and then re-renting them to our customers and selling rental assets to build additional capital to continue to refresh and grow the rental fleet.
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Each of our distributors is a strategically placed independent partner that markets, sells, and provides applications engineering support for our products on our behalf.
−Removed: In addition, distributors provide remote monitoring services, warranty support, local spare parts support, and customer training and long-term service support.
+Added: In addition, distributors provide remote monitoring services, warranty support, local spare parts support, customer training and long-term service support.
Through our global distribution network, we offer a comprehensive FPP for a fixed fee to perform regularly scheduled and unscheduled maintenance as needed.
We provide factory and on-site training to certify all personnel that perform sales, applications, commissioning, and long-term service on our microturbines.
−Removed: Individuals who are certified are called Authorized Service Providers and must be employed by a distributor or an end user in order to perform work pursuant to a FPP.
−Removed: We offer to assist all customers by reviewing their installation designs in relation to the technical requirements for proper operation of our products, such as electrical interconnections, load requirements, fuel type and pressure, cooling air flow and turbine exhaust routing.
+Added: Individuals who are certified are called Authorized Service Providers and must be employed by a distributor or an end user in order to perform work pursuant to an FPP.
+Added: We offer to assist customers by reviewing their installation designs in relation to the technical requirements for proper operation of our products, such as electrical interconnections, load requirements, fuel type and pressure, cooling air flow and turbine exhaust routing.
As part of the microturbine commissioning process, we also receive a checklist to confirm that the final installation adheres to our technical requirements before we accept our standard manufacturer warranty obligations.
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We typically do not have customer acceptance provisions in our agreements.
−Removed: Our Distributor Support System (“DSS program”) provides additional support for distributor business development activities, customer lead generation, brand awareness and tailored marketing services for each of our major geographic and market verticals.
−Removed: This program is funded by our distributors and was developed to provide improved worldwide distributor training, access to online documentation and technical publications, paperless service software, sales efficiency, website development, company branding and funding for increased strategic business-to-business (B2B) marketing activities.
+Added: The Distributor Support System (“DSS program”) provides additional support for distributor business development activities, customer lead generation, brand awareness and tailored marketing services for each of our major geographic and market verticals.
+Added: This program is funded by the distributors and was developed to provide improved worldwide distributor training, access to online documentation and technical publications, paperless service software, sales
+Added: efficiency, website development, company branding and funding for increased strategic business-to-business (B2B) marketing activities.
+Added: The DSS program is owned and operated by Capstone Distributor Support Services Corporation (CDSSC), related party, for the Company under a Services Agreement.
Our Geographic Markets
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The costs and scheduling ramifications of these various approvals, in conjunction with normal bidding process requirements and construction delays, can be significant to the completion of an installation.
−Removed: Our goal is to work with the applicable regulating entities to establish compliant standards for the installation of our microturbines so that the costs and installation timelines are minimized for our customers.
+Added: Our goal is to work with the applicable regulating entities to establish compliant standards for the installation of our microturbines so that costs and installation timelines are minimized for our customers.
Latin America
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South America constitutes a diverse group of markets that vary greatly in potential capture for us based on several factors, including the availability of oil and gas production and transmission, energy pricing and political and investment climate.
−Removed: The success of existing solutions in Colombia and a more recent initial long-term rental solution in the developing natural resources market in Argentina has driven interest in our solutions in numerous regional markets where government and corporate leaders are seeking to reduce flaring, increase efficiency and lower costs.
+Added: The success of existing solutions in Colombia and a more recent initial long-term rental solution in the developing natural resources market in Argentina have driven interest in our solutions in numerous regional markets where government and corporate leaders are seeking to reduce flaring, increase efficiency and lower costs.
Asia and Australia
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Other areas in Asia and the Pacific Rim offer attractive opportunities as well.
−Removed: Industrial manufacturing growth in Southeast Asia serving European and North American markets must adapt to new carbon-based regulations such as the European Union’s (“EU”) Carbon Border Adjustment Mechanism and public company green procurement policies that drive demand for energy efficiency and renewable solutions.
+Added: Industrial manufacturing growth in Southeast Asia serving European and North American markets must adapt to new carbon-based regulations such as the EU’s Carbon Border Adjustment Mechanism and public company green procurement policies that drive demand for energy efficiency and renewable solutions.
Middle East and Africa
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This includes flare gas to power projects which are a particularly attractive market opportunity given the volume of gas being flared and the need for stable power in the region.
−Removed: Management has targeted distributors and customers involved in the capture and use of flare gas in the oil and gas market.
+Added: Management has targeted distributors and customers involved in the capture and use of flare gas in the oil
+Added: and gas market.
However, the geopolitical environment in parts of this region is still volatile, which can have an impact on our sales.
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We do, however, continue to evaluate customer orders and ensure that we are in compliance with all laws and regulations upon acceptance and before shipment.
−Removed: Due to the ongoing conflict between Russia and Ukraine, and the resulting economic impacts to the European and Russia region, revenue in the region was negatively impacted in Fiscal 2023 and Fiscal 2024.
−Removed: Sales to E-Finity Distributed Generation, LLC (“E-Finity”) and RSP Systems, two of our domestic distributors, accounted for 12% and 11%, respectively, of our revenue for Fiscal 2023.
−Removed: Sales to E-Finity accounted for 18% of our revenue for Fiscal 2022, as restated.
−Removed: Additionally, E-Finity accounted for 12% of our net accounts receivable as of March 31, 2023.
−Removed: E-Finity and Radian Oil & Gas Services Co.
−Removed: accounted for 28% and 14% of our net accounts receivable as of March 31, 2022, as restated, respectively.
−Removed: We recorded net bad debt expense of approximately $4.3 million during Fiscal 2023 and net bad debt expense of approximately $0.4 million during Fiscal 2022, as restated.
+Added: Due to the ongoing conflict between Russia and Ukraine, and the resulting economic impacts to the European and Russia region, revenue in the region was negatively impacted in Fiscal 2024.
+Added: Sales to Cal Microturbine and E-Finity Distributed Generation, LLC (“E-Finity”), two of our domestic distributors, accounted for 16% and 13%, respectively, of our revenue for Fiscal 2024.
+Added: Sales to E-Finity and RSP Systems accounted for 12% and 11%, respectively, of our revenue for Fiscal 2023.
+Added: Additionally, Supernova Energy Services SAS (“Supernova”), one of our international distributors, and Capstone Engineered Solutions (“CES”), one of our domestic distributors, accounted for 14% and 11%, respectively, of net accounts receivable as of March 31, 2024, respectively.
+Added: E-Finity accounted for 12% of net accounts receivable as of March 31, 2023.
+Added: We recorded net credit loss expense of approximately $0.4 million during Fiscal 2024 and $4.3 million during Fiscal 2023.
The market for our products is highly competitive.
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Because our microturbines can provide a reliable source of power, offer operational flexibility to meet varying load levels and can operate on multiple fuel sources, management believes we offer a level of flexibility not currently offered by other technologies such as reciprocating engines.
−Removed: Our reciprocating engine competitors have products and markets that are well developed and technologies that have been proven for some time.
+Added: Reciprocating engine competitors have products and markets that are well developed and technologies that have been proven for some time.
A reciprocating engine, also known as an internal combustion engine, is similar to those used in automotive applications.
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These technologies, which in many cases have a lower up front cost than microturbines, are currently produced by Caterpillar Inc., Cummins Inc.
−Removed: (which entered into a joint venture with Eaton), Innio (who bought the General Electric gas engine business, which now includes Waukesha and Jenbacher gas engines), MAN SE, 2G Energy AG and Tecogen, Inc.
+Added: (which entered into a joint venture with Eaton),
+Added: Innio (who bought the General Electric gas engine business, which now includes Waukesha and Jenbacher gas engines), MAN SE, 2G Energy AG and Tecogen, Inc.
(which now includes American DG Energy Inc.), among others.
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While these systems may be paired with battery energy storage systems to operate more flexibly, affordable long duration utility scale energy storage solutions have yet to emerge.
−Removed: Although the market is still developing, a number of fuel cell providers are also focused on markets similar to ours, including Ballard Power Systems Inc., Bloom Energy Corporation, Doosan Fuel Cell Co., Ltd., FuelCell Energy Inc., and Plug Power Inc.
+Added: Although the market is still developing, a number of fuel cell providers are also focused on markets similar to ours, including Ballard Power Systems Inc., Bloom Energy Corporation, Doosan Fuel Cell Co., Ltd.
+Added: FuelCell Energy Inc., and Plug Power Inc.
Fuel cells have slightly lower levels of NOx, CO, VOCs and other criteria pollutant emissions than our microturbines.
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We are affected not only by energy policies, laws, regulations and incentives of governments in the markets in which we sell, but also by rules, regulations and costs imposed by utilities.
−Removed: Utility companies or governmental entities may place barriers on the installation or interconnection of our product with the electric grid.
+Added: Utility companies or governmental entities may place barriers on the installation or interconnection of our products with the electric grid.
Further, utility companies may charge additional fees to customers that install on-site power generation, thereby reducing the electricity they take from the utility, or for having the capacity to use power from the grid for back-up or standby purposes.
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This could make our systems less economical for our customers, thereby adversely affecting our sales and ultimately our revenue and profitability.
−Removed: In addition, utility rate
−Removed: reductions can make our products less competitive which would have a material adverse effect on our operations.
+Added: In addition, utility rate reductions can make our products less competitive, which would have a material adverse effect on our operations.
These costs, incentives and rules are not always the same as those faced by technologies with which we compete.
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Our manufacturing designs include the use of conventional technology, which has been proven in high -volume automotive and turbocharger production for many years.
−Removed: Some components used in the manufacture of our products are readily fabricated from commonly available raw materials or off
−Removed: the shelf items available from multiple supply sources;
+Added: Some components used in the manufacture of our products are readily fabricated from commonly available raw materials or off the shelf items available from multiple supply sources;
however, many items are custom made to meet our specifications that require longer lead time.
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We continue to evaluate and implement new systems designed to provide improved quality, reliability, service, greater efficiency, and lower supply chain costs.
−Removed: Continuing into Fiscal 2024, we remained focused on mitigating supply chain issues, such as the costs of commodities and delayed lead times, related lingering issues from the COVID-19 pandemic and other macroeconomic conditions.
+Added: During Fiscal 2024, we remained focused on mitigating supply chain issues, such as the costs of commodities and delayed lead times, related to macroeconomic conditions.
Localization of our immediate supply chain within the Southwest US, located in close proximity to our manufacturing facility in Van Nuys, California, mitigated much of the global stressors associated with a typical geographically dispersed supply chain, as many of our suppliers were sharing similar experiences following the pandemic in the same magnitude we were experiencing in parallel.
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As the global markets stabilize, we are looking to low-cost countries for cost-saving opportunities.
−Removed: Global freight delays, tariffs and costs remain a concern from a logistics perspective, but in many cases the reduced price in addition to tariffs and shipping costs still produces cost savings.
+Added: Global freight delays, tariffs and costs remain a concern from a logistics perspective, but in many cases the reduced price, despite tariffs and shipping costs still produces cost savings.
Additionally, one of our primary raw material suppliers is significantly reducing their lead time as their capacity and availability has improved.
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These interruptions have since significantly improved.
−Removed: We plan to substantially increase our focus on process controls and validations, supplier controls, distribution controls and provide our operations teams with the training and tools necessary to drive continuous improvement in product quality in Fiscal 2025.
+Added: We have substantially increased our focus on process controls and validations, supplier controls, distribution controls and providing our operations teams with the training and tools necessary to drive continuous improvement in product quality in Fiscal 2025.
In addition, we remain focused on examining our operations and general business activities to identify cost improvement opportunities to enhance our operational effectiveness and use of lean manufacturing processes.
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Research and Development (“R&D”)
−Removed: Continuing into Fiscal 2024, we continued supporting business operational goals and enhancing our existing suite of products, focusing on alternative fuels and technologies, modernizing our key components, and continuing development in the global evolution of grid interconnection requirements.
+Added: In Fiscal 2024, we continued supporting business operational goals and enhancing our existing suite of products, focusing on alternative fuels and technologies, modernizing our key components, and continuing development in the global evolution of grid interconnection requirements.
We focus our engineering efforts on coordinating our product design and manufacturing processes to bring our products to market in a cost-effective, reliable and timely manner.
−Removed: For Fiscal 2023 and 2022, R&D expenses were $2.4 million and $3.4 million, respectively, representing 3% and 5% of total revenue, respectively, for these fiscal years.
+Added: For Fiscal 2024 and 2023, R&D expenses were $2.5 million and $2.4 million, representing approximately 3% of total revenue, respectively, for these fiscal years.
We own two patents related to fuel injection and emissions.
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The primary objective of this partnership is to optimize our engine design for minimizing NOx emissions while also maintaining high reliability during hydrogen operation.
+Added: We intend to perform demonstration tests on a C200 system during Fiscal 2025.
We continue support of UCI through its Advanced Power and Energy Program, which works to evaluate microturbine operation using hydrogen and other fuel blends.
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Results were successful and promising with remaining work focused on optimizing NOx emissions to ultra-low levels still to be done.
−Removed: UCI completed associated gas combustion analysis in catalog Capstone products.
+Added: UCI completed an associated gas combustion analysis in catalog Capstone products.
Associated gas is represented by higher hydrocarbons, which are more challenging to maintain in a gaseous state.
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Human Capital
−Removed: On February 16, 2021, our Board of Directors (the “Board”) adopted an amended charter governing our Compensation and Human Capital Committee, after discussing the rapid movement to expand the role of our then-Compensation Committee beyond traditional compensation-related matters.
−Removed: In accordance with its recently amended charter, our Compensation and Human Capital Committee is responsible for reviewing, monitoring, and providing recommendations to our Board on our workplace policies and practices, including corporate culture and employee engagement, talent management and leadership development, employee diversity and inclusion, ensuring a respectful workplace free of discrimination and harassment.
−Removed: In connection with Emergence, we updated the charter governing our Compensation and Human Capital Committee.
+Added: On December 13, 2023, in connection with Emergence, our Board of Directors (the “Board”) adopted an amended charter governing our Compensation and Human Capital Committee, after discussing the rapid movement to expand the role of our then Compensation and Human Capital Committee beyond traditional compensation related matters.
+Added: In accordance with its charter, our Compensation and Human Capital Committee is responsible for reviewing, monitoring, and providing recommendations to our Board on our workplace policies and practices, including corporate culture and employee engagement, talent management and leadership development, employee diversity and inclusion, ensuring a respectful workplace free of discrimination and harassment.
We are committed to maintaining, and continuing to foster, our diverse and inclusive work environment.
1 unchanged sentence
Workforce Statistics
−Removed: As of May 31, 2024, we had 101 full-time employees and three part-time employees.
−Removed: As of March 31, 2023, we had 117 full-time employees and one part-time employee.
+Added: As of March 31, 2024, we had 101 full-time employees and three part-time employees.
As of March 31, 2023, we had 117 full-time employees and one part-time employee.
1 unchanged sentence
We consider relations with our employees to be good.
−Removed: In May 2023 and March 2022, we implemented an expense reduction plan, which included furloughs, employment terminations and pay cuts.
+Added: In May 2023, we implemented an expense reduction plan to align our cost structure.
+Added: The cost reductions focused on non-operating, discretionary expenses and employee costs.
+Added: Beginning May 12, 2023, nine employees were furloughed for a period of 180 days, the Sales Solutions Team was abandoned, and the effort in Energy Storage Products business was discontinued.
+Added: Six out of nine furloughed employees were able to return to work in November 2023.
Corporate Information
−Removed: Capstone Green Energy Corporation was organized in 1988 in the State of California and was reincorporated as Capstone Turbine Corporation on June 22, 2000 in the State of Delaware.
−Removed: On April 21, 2021, Capstone Green Energy Corporation filed with the Secretary of State of the State of Delaware a Certificate of Amendment of the Second Amended and Restated Certificate of Incorporation of the Company for the sole purpose of changing the Company’s name to Capstone Green Energy Corporation effective as of 12:01 a.m.
+Added: The Company (a/k/a NoMac Energy Systems) was organized in 1988 in the State of California and was reincorporated as Capstone Turbine Corporation on June 22, 2000 in the State of Delaware.
+Added: On April 21, 2021, Capstone Turbine Corporation filed with the Secretary of State of the State of Delaware a Certificate of Amendment of the Second Amended and Restated Certificate of Incorporation of the Company for the sole purpose of changing the Company’s name to Capstone Green Energy Corporation effective as of 12:01 a.m.
Eastern Time on April 22, 2021 (the “Corporate Name Change”).
In addition, Capstone Green Energy Corporation amended and restated its Fourth Amended and Restated Bylaws, effective as of April 22, 2021, solely to reflect the Corporate Name Change.
−Removed: In connection with our emergence from the Chapter 11 Cases, Capstone Green Energy Corporation was reorganized pursuant to the TSA and became a private company that continues to own the Retained Assets (as defined below).
+Added: In connection with our emergence from the Chapter 11 Cases, Capstone Green Energy Corporation was reorganized pursuant to the TSA and became a private company that continues to own the Retained Assets and certain tax attributes.
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.
−Removed: See “Management’s Discussion and Analysis of Financial Condition and Results of Operations—Recent Development.”
+Added: In addition, Capstone Green Energy LLC was formed as a result of the Plan of Reorganization.
+Added: Bankruptcy, Receivership or Similar Proceeding
+Added: See the Explanatory Note to this Annual Report on Form 10-K for a summary of the Company’s Chapter 11 Cases and the Debtors’ emergence from the Chapter 11 Cases on December 7, 2023.
Available Information
−Removed: This Form 10-K, as well as our quarterly reports on Form 10-Q, current reports on Form 8-K and exhibits and amendments to those reports filed or furnished pursuant to section 13(a) or 15(d) of the Exchange Act are made available free of charge on our Internet website (http://www.capstonegreenenergy.com) as soon as reasonably practicable after such materials are electronically filed with or furnished to the Securities and Exchange Commission (“SEC”).
+Added: This Form 10-K, as well as our quarterly reports on Form 10-Q, current reports on Form 8-K and exhibits and amendments to those reports filed or furnished pursuant to section 13(a) or 15(d) of the Exchange Act are made available free of charge on our Internet website (http://www.capstonegreenenergy.com) as soon as reasonably practicable after such materials are electronically filed with or furnished to the SEC.
These filings are also available on the SEC’s website at www.sec.gov.
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.