6 unchanged sentences
Notwithstanding the identified material weaknesses, 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, 2024 and March 31, 2023, and our financial condition as of each such date and have been prepared in conformity with U.S.
−Removed: Management’s Annual Report on Internal Control Over Financial Reporting
+Added: Management’s Report on Internal Control Over Financial Reporting
Our management is responsible for establishing and maintaining adequate internal control over our financial reporting.
29 unchanged sentences
There is no assurance that additional remediation steps will not be necessary.
−Removed: Inherent Limitations of the Effectiveness of Internal Control
−Removed: Management recognizes that a control system, no matter how well conceived and operated, can provide only reasonable, not absolute, assurance that the objectives of the control system are met.
−Removed: Because of its inherent limitations, internal control over financial reporting may not prevent or detect errors or misstatements in our consolidated financial statements.
−Removed: Also, projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree or compliance with the policies or procedures may deteriorate.
−Removed: 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.
+Added: Inherent limitations of the Effectiveness of Internal Control
+Added: 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.
+Added: Because of the inherent limitations of any internal control system, no evaluation of controls can provide absolute assurance that all control issues, if any, within a company have been detected.
Other Information.
−Removed: Not applicable.
+Added: Rule 10b5-1 Trading Plans
+Added: During the quarter ended March 31, 2024, 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.”
Disclosure Regarding Foreign Jurisdictions that Prevent Inspections.
4 unchanged sentences
Set forth below is certain information regarding the directors of the Company.
−Removed: The ages of and biographical information regarding the directors is based on information furnished to the Company by each director and is as of May 31, 2024.
+Added: The ages of and biographical information regarding the Board is based on information furnished to the Company by each director and is as of September 24, 2024.
+Added: Board Class (1)
Audit Committee
1 unchanged sentence
Governance & Sustainability Committee
+Added: (1) The term of Class I directors expires at the first annual meeting following the initial classification in April 2024.
+Added: The term of Class II directors expires at the second annual meeting following the initial classification.
+Added: The term of Class III directors expires at the third annual meeting following the initial classification.
(2) Chair of the Board
12 unchanged sentences
DYN), a power-generating company that owns and operates a number of natural gas-fueled or coal-fueled power stations in the U.S, from July 2011 to April 2018.
+Added: In 2016, a subsidiary of Dynegy filed for bankruptcy under Chapter 11 of the bankruptcy code.
Prior to joining Dynegy, Mr.
13 unchanged sentences
Flexon served on the public board of directors of Foster Wheeler from 2006 until 2009 and from May to October 2010, of Westmoreland Coal Company from 2017 to 2019 and of TransAlta Corp.
−Removed: from 2019 to 2020.
He served on the board of directors for Genesys Works-Houston, an organization that transforms the lives of disadvantaged high school students through meaningful work experience, from 2016 to 2021.
He also served on the board of directors of Baker Ripley, a Texas non-profit organization that connects low-income people to opportunities, from 2014 to 2016.
+Added: He has served on the board of directors of Nexus, a privately held water utility company, since April 2024.
Flexon holds a Bachelor of Science degree in Accounting from Villanova University.
25 unchanged sentences
Jorden brings to the Board decades of extensive experience as both a chief financial officer as well as a board member in all areas of corporate governance and finance, including mergers and acquisitions, structuring IPOs, restructurings, and managing public debt and equity offerings.
−Removed: Jorden is a board
−Removed: leadership fellow of the National Association of Corporate Directors, demonstrating her commitment and leadership as a board member.
+Added: Jorden is a board leadership fellow of the National Association of Corporate Directors, demonstrating her commitment and leadership as a board member.
Powelson has been a director since June 2019.
40 unchanged sentences
Fu brings to the Board extensive experience in senior executive and leadership positions, global business experience and expertise in technology trends, social change and policy making.
−Removed: Miller has over 40 years of broad-based executive management experience in the manufacturing, distribution and transportation industries and has served in senior finance and leadership roles at public and private companies across a range of industry categories.
+Added: Miller has been a director since February 2024.
+Added: He has over 40 years of broad-based executive management experience in the manufacturing, distribution and transportation industries and has served in senior finance and leadership roles at public and private companies across a range of industry categories.
He has served on the board of directors of Spruce Power Holding Corporation, an owner and operator of distributed solar energy assets, since 2022.
1 unchanged sentence
From 2008 until 2016, Mr.
−Removed: Miller served in operational and financial management positions of increasing responsibility at Navistar International
−Removed: Corporation, a global vehicle manufacturer and solutions provider, including as senior vice president of operations and corporate finance.
+Added: Miller served in operational and financial management positions of increasing responsibility at Navistar International Corporation, a global vehicle manufacturer and solutions provider, including as senior vice president of operations and corporate finance.
Prior to such roles, he served in the role of Chief Financial Officer of Laidlaw International, Inc., a provider of public transportation services, Chicago Metallic Corporation, a global manufacturer of suspended ceiling and metal products, Fleetpride, Inc., a distributor of heavy duty truck parts, and Peapod, an online grocery delivery company.
2 unchanged sentences
Other than Mr.
+Added: Flexon in respect of the bankruptcy filing of Dynegy’s subsidiary and Mr.
Flexon and Mr.
Juric in respect of the Chapter 11 Cases, no director or officer has been involved in any legal proceedings required to be disclosed under Item 401(f) of Regulation SK.
−Removed: The Board met ten (10) times during the fiscal year ended March 31, 2023 (the “2023 Fiscal Year” or “Fiscal 2023”).
−Removed: The Board has established an Audit Committee (the “Audit Committee”), a Compensation and Human Capital Committee (the “Compensation and Human Capital Committee”), and a Governance and Sustainability Committee (the “Governance and Sustainability Committee”).
−Removed: During Fiscal 2023, each director attended at least 75% of the aggregate of (1) the total number of meetings of the Board (held during the period for which he or she was a director) and (2) the total number of meetings of all committees of the Board of the Company on which the director served (during the periods that he or she served).
+Added: The Board met thirty (30) times during the fiscal year ended March 31, 2024 (the “2024 Fiscal Year” or “Fiscal 2024”).
+Added: The Board has established an Audit Committee, a Compensation and Human Capital Committee, and a Governance and Sustainability Committee.
+Added: During Fiscal 2024, each director attended at least 75% of the aggregate of (1)
+Added: the total number of meetings of the Board (held during the period for which he or she was a director) and (2) the total number of meetings of all committees of the Board of the Company on which the director served (during the periods that he or she served).
The Company strongly encourages each member of the Board to attend each annual meeting of stockholders.
−Removed: All of the directors serving on the Board at the time attended the 2022 Annual Meeting.
The Company’s independent directors met in executive session, without members of the Company’s management present, at all of the regularly scheduled meetings of the Board in Fiscal 2024.
7 unchanged sentences
In setting compensation, the Compensation and Human Capital Committee strives to create incentives that encourage a level of risk-taking behavior consistent with the Company’s business strategy and is responsible for oversight with respect to compensation and succession planning risks.
+Added: Cybersecurity Governance
+Added: The Board is responsible for overseeing assessments of major risks facing the Company and for reviewing options to mitigate these risks.
+Added: It has delegated oversight responsibility for information security matters is shared by the Audit Committee, CFO and our internal IT resources.
+Added: Our CFO oversees our cybersecurity risk management, including appropriate risk mitigation strategies, systems, processes, and controls, and receives quarterly updates from IT and our third-party IT service provider on cybersecurity and information security matters.
+Added: The CFO communicates regularly with the Audit Committee and Board on the state of our cybersecurity risk management, current and evolving threats, and recommendations for changes.
+Added: We have also implemented a cyber incident response plan that provides a protocol to report certain incidents to the CFO with the goal of timely assessment of such incidents, determining applicable disclosure requirements and communicating with the Audit Committee and Board for timely and accurate reporting of any material cybersecurity incident.
Audit Committee
1 unchanged sentence
Jorden (Chair), Ms.
−Removed: The Audit Committee consisted of Ms.
−Removed: Jorden (Chair), Mr.
−Removed: Flexon, and Ms.
−Removed: Fu as of March 31, 2023.
+Added: Miller, which was also the composition as of March 31, 2024.
Following his appointment as Executive Chairman in August 2023, Mr.
11 unchanged sentences
Pursuant to its written charter, the Audit Committee reviews its charter on an annual basis for compliance, best practices and any other needed updates or changes.
−Removed: During Fiscal 2023, the Audit Committee held six meetings.
+Added: During Fiscal 2024, the Audit Committee held twelve (12) meetings.
The Board has determined that Ms.
11 unchanged sentences
Pursuant to its written charter, the Compensation and Human Capital Committee reviews its charter on an annual basis for compliance, best practices and any other needed updates or changes.
−Removed: During Fiscal 2023, the Compensation and Human Capital Committee held six meetings.
−Removed: Processes and procedures for determining executive and director compensation, including authority and delegation, and the role of executive officers, if any, are discussed in the section titled “Compensation of Officers and Directors.”
+Added: During Fiscal 2024, the Compensation and Human Capital Committee held four (4) meetings.
Governance and Sustainability Committee
−Removed: The Governance and Sustainability Committee consisted of Mr.
+Added: The Governance and Sustainability Committee currently consisted of Mr.
Powelson (Chair), Ms.
Wilson, and Ms.
−Removed: Fu as of March 31, 2023.
+Added: Fu, which was also the composition as of March 31, 2024.
Upon his appointment to the Board on February 26, 2024, Mr.
8 unchanged sentences
Pursuant to its written charter, the Governance and Sustainability Committee reviews its charter on an annual basis for compliance, best practices and any other needed updates or changes.
−Removed: During Fiscal 2023, the Governance and Sustainability Committee held four meetings.
−Removed: The Governance and Sustainability Committee met subsequent to the end of Fiscal 2023 to recommend to the full Board each of the nominees for election to the Board as presented herein.
+Added: During Fiscal 2024, the Governance and Sustainability Committee held one (1) meeting.
Board of Directors and Committee Performance Evaluations
−Removed: The charter of each of the Audit Committee, the Compensation and Human Capital Committee and the Governance and Sustainability Committee requires an annual performance evaluation, and the Company’s Corporate
−Removed: Governance Principles also mandate an annual evaluation of the Board.
+Added: The charter of each of the Audit Committee, the Compensation and Human Capital Committee and the Governance and Sustainability Committee requires an annual performance evaluation, and the Company’s Corporate Governance Principles also mandate an annual evaluation of the Board.
Such performance evaluations are designed to assess whether the Board and its committee’s function effectively and make valuable contributions to the Company.
In June 2024, the Governance and Sustainability Committee conducted an assessment of the performance of the Board, as well as an assessment of each member’s skill sets and experience and how such skill sets and experience align with the needs of the Company in reaching the Company’s strategic objectives.
−Removed: In June 2023, the Governance and Sustainability Committee and the Board discussed the results of the assessments and put a follow-up process in place to conduct the annual performance evaluation of the Audit Committee, the Compensation and Human Capital Committee and the Governance and Sustainability Committee as well as the Board.
+Added: In July 2024, the Governance and Sustainability Committee and the Board discussed the results of the assessments and put a follow-up process in place to conduct the annual performance evaluation of the Audit Committee, the Compensation and Human Capital Committee and the Governance and Sustainability Committee as well as the Board.
Director Recommendation and Nomination Process
−Removed: Nominations of persons for election to our Board by the stockholders may be made at an annual meeting of stockholders by any stockholder who (i) was a stockholder of record entitled to vote in the election of directors at the time of giving of notice provided for below and at the time of the annual meeting, and (ii) complies with the notice procedures set forth below and as further described in our bylaws as to such nomination.
+Added: Nominations of persons for election to our Board by the stockholders may be made at an annual meeting of stockholders by any stockholder who (i) was a stockholder of record entitled to vote in the election of directors at the time of giving of notice provided for below on the record date for the determination of stockholders entitled to vote at such annual meeting, and (ii) complies with the notice procedures set forth below and as further described in our bylaws as to such nomination.
Without qualification, for nominations, the stockholder must have given timely notice thereof in writing to the secretary of the corporation at:
2 unchanged sentences
Van Nuys, CA 91406
−Removed: Mark Funaki, Secretary
To be timely, a stockholder’s notice shall be delivered to the Secretary at the principal executive offices of the corporation not earlier than the close of business on the 150th calendar day and not later than the close of business on the 120th calendar day prior to the first anniversary of the date of the immediately preceding annual meeting of stockholders;
−Removed: provided, however, that if no annual meeting was held in the previous year or the date of the annual meeting is advanced by more than thirty (30) calendar days prior to such anniversary date or delayed more than seventy (70) calendar days after such anniversary date, a proposal shall be received by the corporation not earlier than the close of business on the 150th day before the meeting and not later than the later of (a) the close of business on the 120th day before the meeting or (b) the close of business on the tenth day following the day on which public announcement of the date of the annual meeting is first made by the corporation.
+Added: provided, however, that the date of the annual meeting is advanced by more than thirty (30) calendar days prior to such anniversary date or delayed more than seventy (70) calendar days after such anniversary date, a proposal shall be received by the corporation not earlier than the close of business on the 150th day before the meeting and not later than the later of (a) the close of business on the 120th day before the meeting or (b) the close of business on the tenth day following the day on which public announcement of the date of the annual meeting is first made by the corporation.
In no event shall the public announcement of an adjournment of an annual meeting commence a new time period for the giving of a stockholder’s notice as described above.
6 unchanged sentences
This consideration includes, at a minimum, a review of each prospective candidate’s character, judgment, experience, expertise, age, diverse characteristics, independence under applicable law and freedom from other conflicts, as well as other factors that the Governance and Sustainability Committee deems relevant in light of the needs of the Board and the Company and/or that are in the best interests of the Company, including the ability to dedicate sufficient time, energy and attention to performance of Board duties, among other things.
−Removed: The Governance and Sustainability Committee selects qualified candidates and recommends those candidates to the Board, and the Board then
−Removed: decides if it will invite the candidates to be nominees for election to the Board.
+Added: The Governance and Sustainability Committee selects qualified candidates and recommends those candidates to the Board, and the Board then decides if it will invite the candidates to be nominees for election to the Board.
The Governance and Sustainability Committee also considers legal requirements, including stock exchange requirements and applicable laws and regulations.
The Governance and Sustainability Committee also considers issues of diversity, such as diversity of education and professional experience and differences in viewpoints, skills and backgrounds, including gender, race and ethnicity differences, as well as other differentiating characteristics.
−Removed: The Governance and Sustainability Committee actively considers all relevant factors when considering nominees for directors, including the factors outlined above, when evaluating potential nominees to the Board.
+Added: The Governance and Sustainability Committee actively considers all relevant factors when considering nominees for directors, including the factors outlined above, when
+Added: evaluating potential nominees to the Board.
The Board and the Governance and Sustainability Committee believe that it is essential that members of the Board represent diverse viewpoints.
14 unchanged sentences
The Governance and Sustainability Committee, which may request the assistance of members of the Board who are not on the Governance and Sustainability Committee in the execution of its duties, carefully documents the selection and evaluation process.
−Removed: Pursuant to our Corporate Governance Guidelines, management directors are required to offer to resign from the Board upon their termination as an officer of the Company (other than as a result of normal retirement), which resignation may be accepted by the Board in its sole discretion.
+Added: Pursuant to our Corporate Governance Guidelines, management directors are required to offer to resign from the Board upon their termination as an employee of the Company (other than as a result of normal retirement), which resignation may be accepted by the Board in its sole discretion.
A non-employee director must inform, and offer his or her resignation to, the Board in the event of any principal occupation or business association change, including retirement.
5 unchanged sentences
Van Nuys, CA 91406
−Removed: Mark Funaki, Secretary
and indicating prominently on the outside of any envelope that the communication is intended for:
4 unchanged sentences
or (v) any director or subset of directors of the Board.
−Removed: The Secretary of the Board reviews all correspondence and regularly forwards to the appropriate director, directors or the Board, copies of all communications that, in the opinion of the Secretary, deal with the functions
−Removed: of or otherwise require the attention of individual directors, the Board or committees or subsets thereof.
+Added: The Secretary reviews all correspondence and regularly forwards to the appropriate director, directors or the Board, copies of all communications that, in the opinion of the Secretary, deal with the functions of or otherwise require the attention of individual directors, the Board or committees or subsets thereof.
Unless, in the opinion of the Secretary, a communication is improper or irrelevant, a communication will not be withheld from its intended recipient(s) without the approval of the Chair of the Board, the Chair of the appropriate committee or the director who presides during non-management executive sessions.
2 unchanged sentences
The names and ages of all executive officers of the Company and the principal occupation and business experience for at least the last five years for each are set forth below.
−Removed: The age of and biographical information regarding each executive officer is based on information furnished to the Company by each executive officer and is as of May 31, 2024.
+Added: The age of and biographical information regarding each executive officer is based on information furnished to the Company by each executive officer and is as of September 24, 2024.
The following list identifies the name, age and position(s) of the executive officers of the Company:
1 unchanged sentence
Chief Financial Officer
−Removed: General Counsel
The term of each executive officer runs until his or her successor is elected and qualified, or until his or her earlier death, resignation or removal.
−Removed: The following is a biographical summary of the experience of the executive officers of the Company who are not members of the Company’s Board of Directors:
+Added: The following is a biographical summary of the experience of the executive officers of the Company:
Canino was appointed as President and Chief Executive Officer and a member of the Board on March 11, 2024.
18 unchanged sentences
Juric is a Certified Public Accountant and holds an MBA and Bachelor of Science in Accounting degree from West Chester University.
−Removed: Mark Funaki .
−Removed: Funaki was appointed General Counsel in April 2024.
−Removed: Funaki has extensive experience as a senior legal officer operating in complex legal environments, with a focus on transactional and compliance matters.
−Removed: He has served as a member of the board of directors of Vorwerk (US) Inc., a distributor of kitchen appliances, since 2016 and as a consultant for Vorwerk & Co.
−Removed: Interholding GmbH, an international conglomerate with home and kitchen appliance distribution, financial services and venture capital operations, since 2022.
−Removed: Previously, Mr.
−Removed: Funaki spent approximately 21 years in the legal department of Jafra Cosmetics International, Inc., a privately held cosmetics company, most recently serving as Senior Vice President, General Counsel from 2018-2022.
−Removed: Funaki began his career as an associate at Cades
−Removed: Schutte LLP and holds a law degree from the Vanderbilt University Law School and a Bachelor of Arts degree in Public Policy from Duke University.
Code of Business Conduct and Code of Ethics
2 unchanged sentences
The Board reviews the Code of Business Conduct and Ethics on an annual basis or more often, if necessary.
−Removed: The Code of Business Conduct and Ethics is available on the Company’s website at www.capstonegreenenergy.com .
−Removed: The Company has also adopted a Code of Ethics for Principal and Senior Financial Officers, which is also available on the Company’s website at www.capstonegreenenergy.com.
+Added: The Company has also adopted a Code of Ethics for Principal and Senior Financial Officers.
+Added: Each governance document is available on the Company’s website at www.capstonegreenenergy.com.
+Added: We intend to post on our website all disclosures that are required by law concerning any amendments to, or waivers from, any provision of the Code of Business Conduct and Ethics and Code of Ethics for Principal and Senior Financial Officers.
Delinquent Section 16(a) Reports
−Removed: Section 16(a) of the Exchange Act requires the Company’s directors and executive officers and persons who own more than 10% of a registered class of the Company’s equity securities to file with the SEC initial reports of ownership and reports of changes in ownership of the Company’s equity securities.
+Added: Section 16(a) of the Exchange Act requires the Company’s directors and executive officers and persons who own more than 10% of a registered class of the Company’s equity securities to file with the SEC initial reports of ownership
+Added: and reports of changes in ownership of the Company’s equity securities.
The Company endeavors to assist officers and directors in making these filings.
−Removed: Based solely on its review of the reports filed with the SEC during the Company’s fiscal year ended March 31, 2023, the Company believes that all reporting requirements under Section 16(a) for the fiscal year ended March 31, 2023 were met in a timely manner by its directors, executive officers, and greater than 10% beneficial owners, except for the following late filings:
−Removed: (1) filing made by Frederick S.
−Removed: Hencken III in connection with the withholding of 1,730 shares to cover the tax liability resulting from the vesting of restricted stock units, the information for which was filed on Form 4 on May 17, 2022;
−Removed: (2) filing made by Mr.
−Removed: Jamison in connection with the withholding of 2,356 shares to cover the tax liability resulting from the vesting of restricted stock units, the information for which was filed on Form 4 on May 17, 2022;
−Removed: (3) filing made by Mr.
−Removed: Crouse in connection with the withholding of 1,342 shares to cover the tax liability resulting from the vesting of restricted stock units, the information for which was filed on Form 4 on May 17, 2022;
−Removed: and (4) filing made by Mr.
−Removed: Jamison in connection with the withholding of 6,085 shares to cover the tax liability resulting from the vesting of restricted stock units, the information for which was filed on Form 4 on August 31, 2022.
+Added: Based solely on its review of the reports filed with the SEC during the Company’s fiscal year ended March 31, 2024, the Company believes that all reporting requirements under Section 16(a) for the fiscal year ended March 31, 2024 were met in a timely manner by its directors, executive officers, and greater than 10% beneficial owners, except for one filing made by Celia Fanning in connection with the acquisition of 15,000 shares of common stock underlying restricted stock units, the information for which was filed on Form 4 on April 13, 2023.
Executive Compensation.
8 unchanged sentences
President & Chief Executive Officer (5)
+Added: Former Interim President, Chief Executive Officer & Executive Chairman (6)
+Added: Former President & Chief Executive Officer (8)
Chief Financial Officer (9)
−Removed: Former Chief Financial Officer (7)
(1) This column represents the aggregate grant date fair value of restricted stock units (“RSUs”) and performance restricted stock units (“PRSUs”) granted in the years presented in accordance with Financial Accounting Standards Board (“FASB”) Accounting Standards Codification (“ASC”) Topic 718, excluding the estimated impact of forfeitures related to service-based vesting conditions.
Grant date fair value is calculated using the closing price of Capstone’s common stock on the date of grant.
−Removed: For a discussion of the valuation assumptions, see Note 9 in the Notes to Consolidated Financial Statements.
+Added: For a discussion of the valuation assumptions, see Note 9— Permanent Equity in the Notes to Consolidated Financial Statements.
For PRSUs granted in Fiscal 2024, the amount reported in the table above represents the grant date fair value of such award assuming the probable outcome of the performance conditions.
The value of such award, assuming the maximum achievement of the performance conditions, is $56,250 for Mr.
−Removed: Hencken forfeited his PRSU award upon his termination of service.
−Removed: Juric joined the Company in March 2023 and did not receive a PRSU award for Fiscal 2023.
+Added: Jamison forfeited his PRSU award upon his termination of service.
+Added: Canino joined the Company in March 2024 and did not receive a PRSU award for Fiscal 2024.
Juric earned a signing bonus of $100,000 upon joining the Company on March 6, 2023.
1 unchanged sentence
(4) Amounts reported in this column include Company vacation payouts, Company contributions to the 401(k) plan and premiums paid by the Company for life insurance.
+Added: Canino joined the Company on March 11, 2024.
+Added: Flexon served as Non-Executive Chairman of the Board until his appointment as Executive Chairman on August 9, 2023 and served as our Interim President and Chief Executive Officer from August 22, 2023 until March 10, 2024.
+Added: Flexon remained Executive Chairman until March 31, 2024, upon which time he transitioned back to the role of Non-Executive Chairman of the Board effective April 1, 2024.
+Added: (7) Consists of $ 356,715 in base salary earned by Mr.
+Added: Flexon in connection with his service as Interim President and Chief Executive Officer from August 22, 2023 until March 10, 2024 and $34,000 in director compensation received by Mr.
+Added: Flexon during the periods in Fiscal 2024 when he was not serving as Interim President and Chief Executive Officer.
Jamison departed the Company on August 22, 2023.
Juric joined the Company on March 6, 2023.
−Removed: Hencken departed the Company on July 15, 2022.
Components and Results of the Fiscal 2023 Executive Compensation Program
The primary components of the compensation program for our NEOs are base salary, annual incentive compensation and long-term incentives and awards.
−Removed: Our NEOs are also eligible for employee benefits consistent with those offered to other employees of the Company and for severance and change in control benefits.
+Added: Our NEOs are also eligible for employee benefits consistent with those offered to other employees of the Company and for severance and change in control (“CIC”) benefits.
Base Salary Base salary is intended to provide a level of assured cash compensation that is competitive in the marketplace to our executive officers.
6 unchanged sentences
of 2023 Fiscal Year
−Removed: Hencken III (3)
−Removed: Jamison departed the Company on August 22, 2023.
+Added: Canino joined the Company on March 11, 2024.
Juric joined the Company on March 6, 2023.
−Removed: Hencken departed the Company on July 15, 2022.
+Added: Jamison departed the Company on August 22, 2023.
+Added: Flexon served as Interim President and CEO, from August 22, 2023 until March 10, 2024.
+Added: In connection with Mr.
+Added: Flexon’s appointment as Interim President and Chief Executive Officer, the Board approved this base salary, which as pro-rated based on his total tenure as Interim President and Chief Executive Officer.
Annual Incentive Compensation, Targets and Results The AIP for Fiscal 2024 was designed to focus our NEOs on driving future growth and profitability.
−Removed: Specifically, this plan was designed to reward our NEOs and other senior executives if the Company were to achieve pre-determined total revenue, adjusted EBITDA, and cash provided by working capital targets, subject to the Company’s standard clawback provisions.
+Added: The AIP established for Fiscal 2024 was cancelled upon Emergence and a new Post-emergence AIP Plan was approved for the period from Emergence to March 31, 2024.
+Added: Specifically, this plan was designed to reward our NEOs and other senior executives if the Company were to achieve pre-determined total revenue, adjusted EBITDA, and cash flow from operating activities, subject to the Company’s standard clawback provisions.
Target annual incentive opportunities are expressed as a percentage of base salary and were established based on each NEO’s level of responsibility and ability to impact overall results.
The Compensation and Human Capital Committee also considers market data in setting target award amounts.
−Removed: Jamison’s target award opportunity for Fiscal 2023 was 100% of his base salary.
−Removed: Hencken’s target award opportunity for Fiscal 2023 was 45% of his base salary.
−Removed: Juric will begin participating in the AIP in Fiscal 2024, and his target award opportunity will be 60% of his base salary.
−Removed: All awards require compliance with the $50.0 million 3-year term note covenants to be eligible for any incentive payout regardless of goal achievement(s).
−Removed: The Compensation and Human Capital Committee also has the discretion to determine if any amendments to the note covenants that have a financial impact on the Company could result in the performance gate/trigger to not have been met.
+Added: Juric’s target award opportunity for Fiscal 2024 was 60% of his base salary.
+Added: Canino will begin participating in the AIP in Fiscal 2025, and his target award opportunity will be 100% of his base salary.
+Added: All awards require compliance with the Exit Note Purchase Agreement covenants to be eligible for any incentive payout regardless of goal achievement(s).
+Added: The Compensation and Human Capital Committee also has the discretion to determine if any amendments to the Exit Note Purchase Agreement covenants that have a financial impact on the Company could result in the performance gate/trigger to not have been met.
The weightings for the performance measures for Fiscal 2024 are set forth in the table below:
Cash Provided by
−Removed: The Fiscal 2023 AIP performance goals were structured to encourage growth:
+Added: The Fiscal 2024 AIP performance goals were structured to encourage growth (in millions):
Performance Payout Level
4 unchanged sentences
Actual Results
−Removed: Revenue (in millions)
−Removed: Adjusted EBITDA (in millions)
−Removed: Cash provided by working capital (in millions)
−Removed: (1) Adjusted EBITDA for purposes of the AIP is defined as EBITDA before loss on debt extinguishment, stock-based compensation and other expense, non-recurring legal settlement, reliability repair accrual, and non-recurring legal costs related to settlement and other items determined at the discretion of the Compensation and Human Capital Committee.
+Added: Adjusted EBITDA
+Added: Cash flows from operating activities
+Added: (1) Adjusted EBITDA for purposes of the AIP is defined as EBITDA before gain on debt extinguishment, stock-based compensation and other expense, non-recurring legal and consulting expenses and other items determined at the discretion of the Compensation and Human Capital Committee.
Refer to page 69 for a reconciliation of Net Loss, as reported to adjusted EBITDA.
−Removed: (2) Cash provided by the changes in operating assets and operating liabilities of the Company’s working capital accounts for Fiscal 2023 was $3.3 million.
−Removed: (3) Actual results as presented herein do not reflect the impact of the Restatement.
−Removed: On June 13, 2023, the Compensation and Human Capital Committee met to determine if certain performance targets were met under the terms of awards granted for the 2023 Fiscal Year pursuant to the AIP.
−Removed: The Compensation and Human Capital Committee determined that the Company reached slightly above the target level of achievement for the revenue performance criteria and slightly less than the maximum payment for working capital performance criteria, but the performance gate/trigger requiring compliance with the $50.0 million 3-year term note covenants was not met.
−Removed: As such, the Compensation and Human Capital Committee did not authorize non-equity incentive plan compensation payments for Fiscal 2023 pursuant to the AIP.
−Removed: Juric was appointed at the end of the fiscal year and did not receive an award under this plan for Fiscal 2023.
−Removed: Long-Term Incentive Targets and Awards In discharging its responsibility for administering the Company’s stock-based compensation programs, the Compensation and Human Capital Committee regularly monitors and evaluates the total cost of such programs, based on information provided annually by, and in consultation with, Pearl Meyer, the Company’s independent compensation consultant.
+Added: On July 8, 2024, the Compensation and Human Capital Committee met to determine if certain performance targets were met under the terms of awards granted for the 2024 Fiscal Year pursuant to the Post-emergence AIP.
+Added: The Compensation and Human Capital Committee determined that the Company reached above the threshold level of achievement for c ash flows from operating activities performance criteria.
+Added: As such, the Compensation and Human Capital Committee authorized payments for Fiscal 2024 pursuant to the Post-emergence AIP.
+Added: Canino was appointed at the end of the fiscal year and did not receive an award under this plan for Fiscal 2024.
+Added: Long-Term Incentive Targets and Awards In discharging its responsibility for administering the Company’s stock-based compensation programs, the Compensation and Human Capital Committee regularly monitors and evaluates the total cost of such programs, based on information provided annually by, and in consultation with the Company’s independent compensation consultant.
This information includes share utilization and annual grant levels.
1 unchanged sentence
Long-term incentive awards are designed to have senior executives focused on the execution of longer-term financial and strategic growth goals that drive stockholder value creation, strengthen our financial position, and support the Company’s leadership retention strategy.
−Removed: At the beginning of Fiscal 2023, Mr.
−Removed: Jamison’s target long-term incentive opportunity was set at 65% of his base salary.
−Removed: Juric’s target long-term incentive opportunity was set at 60% of his base salary for Fiscal 2024.
−Removed: Hencken’s target long-term incentive opportunity was set at 50% of his base salary.
−Removed: Value of Target
−Removed: Value of Target
−Removed: Executive Officer
−Removed: RSUs Granted(1)
−Removed: PRSUs Granted(1)
−Removed: Hencken III (3)
−Removed: (1) Award amounts for RSUs and PRSUs were determined based on the closing price of our common stock on the Nasdaq Capital Market on the date of grant, which was April 7, 2022.
−Removed: The closing price of the common stock on April 7, 2022 was $3.80.
−Removed: (2) In connection with his appointment as Chief Financial Officer, Mr.
−Removed: Juric received 125,000 RSUs, which will vest on March 6, 2025, provided that Mr.
−Removed: Juric remains employed as Chief Financial Officer on such date.
−Removed: The closing price of the common stock on March 6, 2023 was $1.76.
−Removed: (3) All unvested grants were forfeited by Mr.
−Removed: Jamison and Mr.
−Removed: Hencken upon their respective departures.
+Added: All awards granted prior to Emergence were cancelled on the Effective Date in accordance with the Plan.
Outstanding Equity Awards at 2024 Fiscal Year-End
20 unchanged sentences
However, all grants were cancelled on the Effective Date in connection with Emergence.
−Removed: (3) Based on the closing price of our common stock of $1.33 on the Nasdaq Capital Market on March 31, 2023, the last trading day of Fiscal 2023.
−Removed: (4) These RSUs vest in three equal installments on each anniversary of April 7, 2022, conditioned on continued service to the Company.
−Removed: However, all grants were cancelled on the Effective Date in connection with Emergence.
−Removed: (5) These RSUs vest in three equal installments on each anniversary of April 13, 2021, conditioned on continued service to the Company.
−Removed: However, all grants were cancelled on the Effective Date in connection with Emergence.
−Removed: (6) These RSUs vest in three equal installments on each anniversary of August 27, 2020, conditioned on continued service to the Company.
−Removed: However, all grants were cancelled on the Effective Date in connection with Emergence.
−Removed: (7) These RSUs vest in one installment on March 6, 2025, conditioned on continued service to the Company.
−Removed: However, all grants were cancelled on the Effective Date in connection with Emergence.
−Removed: (8) These PRSUs are earned based on the achievement of pre-determined Free Cash Flow and Aftermarket Sales Absorption goals measured in the third year of a three-year performance period (2022-2024).
−Removed: However, all grants were cancelled on the Effective Date in connection with Emergence.
−Removed: (9) These PRSUs are earned based on the achievement of pre-determined Free Cash Flow and Aftermarket Sales Absorption goals measured in the third year of a three-year performance period (2021-2023).
−Removed: However, all grants were cancelled on the Effective Date in connection with Emergence.
−Removed: Jamison departed the Company on August 22, 2023 and unvested shares were forfeited upon his departure.
+Added: (3) Based on the fair value of our common stock of $1.05 as forth in the valuation report as of March 31, 2024.
+Added: (4) These RSUs vest in three equal installments on each anniversary of March 11, 2025, conditioned on continued service to the Company.
Employee Benefits Executive officers are generally entitled only to health, welfare and retirement benefits that are consistent with those offered to other employees of the Company.
7 unchanged sentences
The Original Severance Plan provided that, in the event that a NEO’s employment is terminated by the Company without Cause (as defined in the Original Severance Plan), the NEO would be entitled to receive, subject to the execution of a separation agreement containing a general release of claims, 26 weeks (or 52 weeks in the case of the Chief Executive Officer) of base salary continuation and reimbursement of COBRA premiums for six months (or twelve months in the case of the Chief Executive Officer).
−Removed: In connection with the termination of employment of Mr.
−Removed: Crouse, effective on April 15, 2022, the Company executed a separation agreement with Mr.
−Removed: Crouse providing for twelve months of reimbursement of COBRA premiums.
On March 2, 2023, the Company amended the Original Severance Plan (the “Amended Original Severance Plan”) to provide that, in the event that the Chief Financial Officer’s employment is terminated by the Company without Cause, the Chief Financial Officer will be entitled to receive, subject to the execution of a separation agreement containing a general release of claims, 52 weeks of base salary continuation and reimbursement of COBRA premiums for twelve months.
2 unchanged sentences
Severance Pay Plan (the “New Severance Plan”), which contains terms substantially similar to those set forth in the Amended Original Severance Plan.
−Removed: Prior to the Effective Date, the Company entered into Change in Control Agreements with each of our NEOs that provide for certain payments and benefits following a termination of the NEO’s employment either by the Company without Cause (as defined in the Change in Control Agreements) (other than due to the NEO’s death, the NEO being Disabled (as defined in the Change in Control Agreements), or the NEO becoming an employee of any direct or indirect successor to the business or assets of the Company, rather than continuing as an employee of the Company) or by the NEO for Good Reason (as defined in the Change in Control Agreements), in either case within six months prior to or 24 months following a Change in Control (as defined in the Change in Control Agreements and such a termination, a “Qualifying Termination”).
−Removed: In the event of a Qualifying Termination, subject to the NEO signing and not revoking a separation agreement containing a general release of claims and a non-disparagement covenant (the “Separation Agreement”), compliance with his or her obligations under the Separation Agreement and compliance with any other continuing obligations to the Company or its successor, the NEO will be eligible to receive (a) a lump sum severance payment equal to 1.0 times (or 1.5 times in the case of Mr.
−Removed: Juric and 2.0 times, in the case of Mr.
−Removed: Jamison) the sum of the NEO’s (i) annual base salary for the calendar year in which the Qualifying Termination occurs (or annual base salary in effect immediately prior to the Change in Control, if higher) and (ii) target annual incentive compensation for the calendar year in which the Qualifying Termination occurs, but pro-rated for the portion of such calendar year that falls prior to the Qualifying Termination;
−Removed: (b) a monthly cash payment in an amount equal to the monthly employer contribution that the Company
−Removed: would have made to provide health insurance to the NEO if he or she had remained employed by the Company for up to 18 months;
+Added: Prior to the Effective Date, the Company entered into Change in Control Agreements (“CIC Agreements”) with each of our NEOs that provide for certain payments and benefits following a termination of the NEO’s employment either by the Company without Cause (as defined in the CIC Agreements) (other than due to the NEO’s death, the NEO being Disabled (as defined in the CIC Agreements), or the NEO becoming an employee of any direct or indirect successor to the business or assets of the Company, rather than continuing as an employee of the Company) or by the NEO for Good Reason (as defined in the CIC Agreements), in either case within six months prior to or 24 months following a CIC (as defined in the CIC Agreements and such a termination, a “Qualifying Termination”).
+Added: In the event of a Qualifying Termination, subject to the NEO signing and not revoking a separation agreement containing a general release of claims and a non-disparagement covenant (the “Separation Agreement”), compliance with his or her obligations under the Separation Agreement and compliance with any other continuing obligations to the Company or its successor, the NEO will be eligible to receive (a) a lump sum severance payment equal to 1.0 times the sum of the NEO’s (i) annual base salary for the calendar year in which the Qualifying Termination occurs (or annual base salary in effect immediately prior to the CIC, if higher) and (ii) target annual incentive compensation for the calendar year in which the Qualifying Termination occurs, but pro-rated for the portion of such calendar year that falls prior to the Qualifying Termination;
+Added: (b) a monthly cash payment in an amount equal to the monthly employer contribution that the Company would have made to provide health insurance to the NEO if he or she had remained employed by the Company for up to 18 months;
and (c) acceleration of any unvested equity awards outstanding on the date of the Qualifying Termination, assuming achievement of performance criteria at target and without reduction for any shortened performance period in the case of performance-based equity awards.
−Removed: Payments under the Change in Control Agreements are in lieu of payments under the Severance Plan.
−Removed: Our recently completed financial restructuring constituted a Change in Control under the Change in Control Agreements.
−Removed: If a NEO experiences a Qualifying Termination within 24 months following such restructuring, such NEO would be eligible to the receive the foregoing severance payments and benefits, as applicable, pursuant to such NEO’s Change in Control Agreement.
−Removed: On the Effective Date, the Company entered into a Change in Control Agreement with Mr.
−Removed: Juric (the “Effective Date Change in Control Agreement”).
−Removed: The Effective Change in Control Agreement provides for certain payments and benefits following a Qualifying Termination (as defined in the Effective Date Change in Control Agreement).
−Removed: In the event of a Qualifying Termination, subject to such officer’s execution and non-revocation of a Separation Agreement, compliance with such officer’s obligations under the Separation Agreement and compliance with any other continuing obligations to the Company or its successor, such officer will be eligible to receive:
−Removed: (a) a severance payment equal to 1.5 times the sum of such officer’s (i) annual base salary for the calendar year in which the Qualifying Termination occurs (or annual base salary in effect immediately prior to the Change in Control, if higher) and (ii) target annual incentive compensation for the calendar year in which the Qualifying Termination occurs, but pro-rated for the portion of such calendar year that falls prior to the Qualifying Termination;
−Removed: (b) a monthly cash payment in an amount equal to the monthly employer contribution that the Company would have made to provide health insurance to such officer if he or she had remained employed by the Company, for up to 18 months;
+Added: Payments under the CIC Agreements are in lieu of payments under the Severance Plan.
+Added: Our recently completed financial restructuring constituted a CIC under the CIC Agreements.
+Added: If a NEO experiences a Qualifying Termination within 24 months following such restructuring, such NEO would be eligible to receive the foregoing severance payments and benefits, as applicable, pursuant to such NEO’s CIC Agreement.
+Added: Prior to the Effective Date, the Company entered into Change in Control Agreements (“Pre-Emergence CIC Agreement”) with Mr.
+Added: Juric for certain payments and benefits following a termination of Mr.
+Added: Juric’s employment either by the Company without Cause (as defined in the Pre-Emergence CIC Agreement) (other than due to Mr.
+Added: Juric’s death, Mr.
+Added: Juric being Disabled (as defined in the Pre-Emergence CIC Agreement), or Mr.
+Added: Juric becoming an employee of any
+Added: direct or indirect successor to the business or assets of the Company, rather than continuing as an employee of the Company) or by Mr.
+Added: Juric for Good Reason (as defined in the Pre-Emergence CIC Agreement), in either case within six months prior to or 24 months following a CIC (as defined in the Pre-Emergence CIC Agreement and such a termination, a “Qualifying Termination”).
+Added: In the event of a Qualifying Termination, subject to Mr.
+Added: Juric signing and not revoking a separation agreement containing a general release of claims and a non-disparagement covenant (the “Separation Agreement”), compliance with his obligations under the Separation Agreement and compliance with any other continuing obligations to the Company or its successor, Mr.
+Added: Juric will be eligible to receive (a) a lump sum severance payment equal to 1.5 times the sum of Mr.
+Added: Juric’s (i) annual base salary for the calendar year in which the Qualifying Termination occurs (or annual base salary in effect immediately prior to the CIC, if higher) and (ii) target annual incentive compensation for the calendar year in which the Qualifying Termination occurs, but pro-rated for the portion of such calendar year that falls prior to the Qualifying Termination;
+Added: (b) a monthly cash payment in an amount equal to the monthly employer contribution that the Company would have made to provide health insurance to Mr.
+Added: Juric if he had remained employed by the Company for up to 18 months;
and (c) acceleration of any unvested equity awards outstanding on the date of the Qualifying Termination, assuming achievement of performance criteria at target and without reduction for any shortened performance period in the case of performance-based equity awards.
−Removed: Payments under the Effective Date Change in Control Agreements are in lieu of payments under the Severance Plan.
+Added: Payments under the Pre-Emergence CIC Agreements are in lieu of payments under the Severance Plan.
+Added: Our recently completed financial restructuring constituted a CIC under the Pre-Emergence CIC Agreements, but a Qualifying Termination of Mr.
+Added: Juric has not occurred.
+Added: Juric experiences a Qualifying Termination within 24 months following such restructuring, Mr.
+Added: Juric would be eligible to receive the foregoing severance payments and benefits, as applicable, pursuant to his CIC Agreement.
In connection with the appointment of Mr.
−Removed: Canino as President and Chief Executive Officer, the Company amended and restated its form Effective Date Change in Control Agreement (the “Amended and Restated Change in Control Agreement”) to revise the definition of “Severance Pay” that will be paid in the event of a Qualifying Termination within the CIC Window (each such term, as defined in the Amended and Restated Change in Control Agreement) to mean an amount equal to a multiple of the sum of the employee’s:
−Removed: (i) annual base salary for the calendar year in which the Date of Termination (as defined in the Amended and Restated Change in Control Agreement) occurs (or the employee’s annual base salary in effect immediately prior to the change in control, if higher);
+Added: Canino as President and Chief Executive Officer, the Company entered into a CIC Agreement with Mr.
+Added: Canino (the “Amended and Restated CIC Agreement” and together with the Pre-Emergence CIC Agreement, the “CIC Agreements”).
+Added: The Amended and Restated CIC Agreement provides for certain payments and benefits following a Qualifying Termination (as defined in the Amended and Restated CIC Agreement).
+Added: In the event of a Qualifying Termination, subject to Mr.
+Added: Canino’s execution and non-revocation of a Separation Agreement, compliance with his obligations under the Separation Agreement and compliance with any other continuing obligations to the Company or its successor, he will be eligible to receive (a) two and one-half (2.5) times the sum of his:
+Added: (i) annual base salary for the calendar year in which the Date of Termination (as defined in the Amended and Restated CIC Agreement) occurs (or the employee’s annual base salary in effect immediately prior to the CIC, if higher);
and (ii) target annual incentive compensation for the calendar year in which the Date of Termination occurs;
−Removed: For calculating Mr.
−Removed: Canino’s Severance Pay, the Compensation and Human Capital Committee of the Board approved a multiple of two and one-half (2.5).
+Added: (b) a monthly cash payment in an amount equal to the monthly employer contribution that the Company would have made to provide health insurance to Mr.
+Added: Canino if he had remained employed by the Company, for up to 30 months;
+Added: and (c) acceleration of any unvested equity awards outstanding on the date of the Qualifying Termination, assuming achievement of performance criteria at target and without reduction for any shortened performance period in the case of performance-based equity awards.
+Added: Payments under the Amended and Restated CIC Agreements are in lieu of payments under the Severance Plan.
The Company has entered into indemnification agreements with its officers and directors containing provisions which may require the Company, among other things, to indemnify its officers and directors against certain liabilities that may arise by reason of their status or service as officers or directors (other than liabilities arising from willful misconduct of a culpable nature) and to advance their expenses incurred as a result of any proceeding against them as to which they could be indemnified.
The tables below set forth the amount of compensation payable to each of Messrs.
−Removed: Jamison and Juric, as if each situation occurred on March 31, 2023, under the Severance Plan or Change in Control Agreements discussed above.
−Removed: Jamison departed the Company on August 22, 2023.
+Added: Canino and Juric, as if each situation occurred on March 31, 2024, under the Severance Plan or CIC Agreements discussed above.
Involuntary Termination
4 unchanged sentences
Cash Payments
−Removed: RSUs (unvested)
Insurance Benefits
(1) Reflects severance payments of Mr.
−Removed: Jamison’s annual base salary as of March 31, 2023 over a period of 52 weeks, payable under the Severance Plan.
−Removed: (2) Reflects a lump sum severance payment equal to two times the sum of Mr.
−Removed: Jamison’s annual base salary as of March 31, 2023 and target annual incentive compensation, payable under the Change in Control Agreement with Mr.
−Removed: (3) Reflects the value of unvested RSUs and PRSUs that become vested upon a Qualifying Termination, pursuant to the Change in Control Agreement with Mr.
−Removed: Jamison, based on the market value of $1.33 per share on March 31, 2023, the last trading day of Fiscal 2023.
−Removed: In the event of a Qualifying Termination, unvested equity awards outstanding on the date of the Qualifying Termination accelerate and vest in full, assuming achievement of performance criteria at target and without reduction for any shortened performance period in the case of performance-based equity awards.
−Removed: Full vesting is also triggered if the acquirer of the Company does not assume the awards issued under the Capstone Green Energy Corporation 2017 Equity Incentive Plan (the “2017 Plan”).
+Added: Canino’s annual base salary as of March 31, 2024 over a period of 18 months, payable under the Severance Plan.
+Added: (2) Reflects a lump sum severance payment equal to two and one-half times the sum of Mr.
+Added: Canino’s annual base salary as of March 31, 2024, and target annual incentive compensation, payable under the Change in Control Agreement with Mr.
(3) Reflects monthly payments of health benefit premiums over a period of 18 months, payable under the Severance Plan.
(4) Reflects monthly payments of health benefit premiums over a period of 30 months, payable under the Change in Control Agreement with Mr.
−Removed: Jamison departed the Company on August 22, 2023.
Involuntary Termination
4 unchanged sentences
Cash Payments
−Removed: RSUs (unvested)
Insurance Benefits
1 unchanged sentence
Juric’s annual base salary as of March 31, 2024 over a period of 52 weeks, payable under the Severance Plan.
−Removed: (2) Reflects a lump sum severance payment equal to two times the sum of Mr.
+Added: (2) Reflects a lump sum severance payment equal to one and one-half times the sum of Mr.
Juric’s annual base salary as of March 31, 2024, and target annual incentive compensation, payable under the Change in Control Agreement with Mr.
−Removed: (3) Reflects the value of unvested RSUs and PRSUs that become vested upon a Qualifying Termination, pursuant to the Change in Control Agreement with Mr.
−Removed: Juric, based on the market value of $1.33 per share on March 31, 2023, the last trading day of Fiscal 2023.
−Removed: In the event of a Qualifying Termination, unvested equity awards outstanding on the date of the Qualifying Termination accelerate and vest in full, assuming achievement of performance criteria at target and without reduction for any shortened performance period in the case of performance-based equity awards.
−Removed: Full vesting is also triggered if the acquirer of the Company does not assume the awards issued under the 2017 Plan.
(3) Reflects monthly payments of health benefit premiums over a period of 12 months, payable under the Severance Plan.
1 unchanged sentence
Director Compensation
−Removed: On August 24, 2022, each non-employee director received an annual grant of RSUs with a grant date fair value of approximately $50,000, calculated using the closing price of our common stock on the date of grant.
−Removed: These RSUs will become vested upon completion of the annual term of the Board that includes the date of grant.
+Added: The non-employee director’s RSUs were cancelled on the Effective Date in connection with Emergence.
The director fee schedule for the 2024 Fiscal Year remained unchanged from the previous fiscal year.
2 unchanged sentences
Each non-employee director who served on the Audit Committee received an $8,000 annual retainer.
−Removed: Each non-employee director who served on the Compensation and the Governance and Sustainability Committees received a $5,000 annual retainer.
+Added: Each non-employee director who served on the Compensation and Human Capital and the Governance and Sustainability Committees received a $5,000 annual retainer.
Non-employee directors may elect to receive shares of Common Stock in lieu of any cash retainer, based on the fair market value of Common Stock on the date that cash would have otherwise been paid.
−Removed: All payments are paid quarterly
+Added: All payments are paid quarterly in arrears.
If requested, all director expenses incurred in attending the Board or committee meetings are reimbursed by the Company.
2 unchanged sentences
The Audit Committee chair will receive an additional annual retainer of $17,000 and each other Audit Committee member will receive an additional annual retainer of $8,000.
−Removed: The Compensation and Human Capital Committee chair will receive an annual retainer of $15,000 and each other Compensation and Human Capital Committee chair will receive an additional annual retainer of $6,000.
−Removed: The Governance and Sustainability Committee chair will receive an additional annual retainer of $10,000 and each other Governance and Sustainability Committee Chair will receive an additional annual retainer of $6,000.
+Added: The Compensation and Human Capital Committee chair will receive an annual retainer of $15,000 and each other Compensation and Human Capital Committee member will receive an additional annual retainer of $6,000.
+Added: The Governance and Sustainability Committee chair will receive an additional annual retainer of $10,000 and each other Governance and Sustainability Committee member will receive an additional annual retainer of $6,000.
Non-executive directors will also receive an annual grant of $10,000 of restricted stock units, commencing with the 2024 annual meeting of stockholders.
On January 22, 2024, the Board approved a policy providing for the grant of 10,000 RSU’s to each new director appointed on or prior to December 7, 2024.
−Removed: Jamison, the Company’s former President and Chief Executive Officer, did not receive compensation for serving as a member of the Board.
−Removed: The Company uses its fiscal year in reporting compensation rather than the term of the Board.
+Added: Canino, the Company’s President and Chief Executive Officer did not receive compensation for serving as a member of the Board.
+Added: Flexon is not included in the below table as he was an employee of the Company for a portion of Fiscal 2024.
+Added: See “—2024 Summary Compensation Table” for information about the compensation earned by Mr.
+Added: Flexon in Fiscal 2024 in his capacity as both a non-employee director and Executive Chairman and Interim Chief Executive Officer and President of the Company.
+Added: The Company uses its fiscal year in reporting compensation rather than the term
+Added: of the Board.
Compensation amounts may differ between the Company’s fiscal year and the term of the Company’s Board.
3 unchanged sentences
Awards ($)(2)
−Removed: Paul DeWeese (3)
+Added: Robert Flexon(3)
(1) For each term of the Board (beginning on the date of an annual meeting of stockholders and ending on the date immediately preceding the next annual meeting of stockholders), a non-employee director may elect to receive a stock award in lieu of all or any portion of his or her annual retainer or committee fee cash payment.
2 unchanged sentences
(2) This column represents the aggregate grant date fair value of stock awards granted during the 2024 Fiscal Year calculated in accordance with FASB ASC Topic 718, excluding the estimated impact of forfeitures related to service-based vesting conditions.
−Removed: For a discussion of valuation assumptions, see Note 9 to the Notes to Consolidated Financial Statements.
−Removed: Deweese resigned as a Director in March 2022.
+Added: For a discussion of valuation assumptions, see Note 9— Permanent Equity to the Notes to Consolidated Financial Statements.
+Added: (3) Please see the 2024 Summary Compensation Table for disclosure regarding Mr.
+Added: Flexon’s director compensation in the 2024 Fiscal Year.
+Added: Miller’s fees are prorated for services on the Board and Audit Committee.
+Added: Miller received 10,000 RSUs.
Non-GAAP Measures Reconciliation
−Removed: Because we disclose Adjusted EBITDA in connection with the disclosure regarding the AIP targets, we have provided the below reconciliation of net loss to Adjusted EBITDA:
+Added: Because we disclose Adjusted EBITDA in connection with the disclosure regarding the AIP targets, we have provided the below reconciliation of net income (loss) to Adjusted EBITDA:
Reconciliation of Reported Net Loss to EBITDA and Adjusted EBITDA
(In thousands)
−Removed: Net loss, as reported
+Added: Net income (loss)
Interest expense
1 unchanged sentence
Depreciation and amortization
−Removed: Loss (gain) on debt extinguishment
Stock-based compensation and other expense
Non-recurring legal/consulting
−Removed: Stock to vendors
Executive bonus
Adjusted EBITDA
+Added: (1) Adjusted EBITDA calculation for purposes of the Post-emergence AIP Plan was for the period from Emergence, December 7, 2023 to March 31, 2024.
Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters.
−Removed: The table below sets forth certain information as of May 31, 2024 (unless otherwise indicated) regarding beneficial ownership of our common stock and non-voting common stock by:
+Added: The table below sets forth certain information as of September 24, 2024 (unless otherwise indicated) regarding beneficial ownership of our common stock and non-voting common stock by:
(1) each director, nominee for director and NEO of the Company;
1 unchanged sentence
and (3) each person known by the Company to be the beneficial owner of more than 5% of the outstanding common stock of the Company.
−Removed: As of June 10, 2024, there were 18,546,649 shares of common stock and 508,475 shares of non-voting common stock outstanding.
+Added: As of September 24, 2024, there were 18,540,789 shares of common stock and 508,475 shares of non-voting common stock outstanding.
Except as otherwise indicated, the beneficial owners listed below have sole voting and investment power with respect to all shares owned by them, except to the extent such power is shared by a spouse under applicable law.
10 unchanged sentences
Unless otherwise indicated, the address of each person listed is c/o Capstone Green Energy Holdings, Inc., 16640 Stagg Street, Van Nuys, California 91406.
−Removed: (1) In computing the number of shares beneficially owned by an individual and the percentage ownership of that individual, shares of common stock, shares of non-voting common stock and shares underlying options held by that individual that are currently exercisable, or will become exercisable within 60 days from May 31, 2024, are deemed outstanding.
−Removed: In addition, shares underlying RSUs that will vest within 60 days from May 31, 2024 are deemed outstanding.
−Removed: Percentage of combined total voting power excludes our non-voting common stock, any shares of non-voting common stock underlying options held by that individual that are currently exercisable, or will become exercisable within 60 days from May 31, 2024, or any shares of non-voting common stock underlying RSUs that will vest within 60 days from May 31, 2024 , as our non-voting common stock is non-voting.
+Added: (1) In computing the number of shares beneficially owned by an individual and the percentage ownership of that individual, shares of common stock and shares of non-voting common stock held by that individual that are currently exercisable, or will become exercisable within 60 days from September 24, 2024, are deemed outstanding.
+Added: In addition, shares underlying RSUs that will vest within 60 days from September 24, 2024, are deemed outstanding.
+Added: Percentage of combined total voting power excludes our non-voting common stock, any shares of non-voting common stock underlying options held by that individual that are currently exercisable, or will become exercisable within 60 days from September 24, 2024, or any shares of non-voting common stock underlying RSUs that will vest within 60 days from September 24, 2024 , as our non-voting common stock is non-voting.
(2) AIGH Capital Management, LLC (“AIGH”) filed a Schedule 13G on September 29, 2023 reporting beneficial ownership, as of September 28, 2023, of the number of shares reflected in the above table.
1 unchanged sentence
The business address of AIGH is 6006 Berkeley Avenue, Baltimore, MD 21209.
−Removed: Stock Ownership Guidelines In 2012, the Board established stock ownership guidelines applicable to senior executives (including the NEOs) and non-employee directors in order to further align the interests of executives and directors with the interests of stockholders.
+Added: (3) Excludes $0.4 million step-up expense for the respective individuals who received non-voting common stock.
+Added: Stock Ownership Guidelines The Board has established stock ownership guidelines applicable to senior executives (including the NEOs) and non-employee directors in order to further align the interests of executives and directors with the interests of stockholders.
These ownership guidelines provide that the subject persons should own common stock equal in value to a multiple of their annual salary (or, in the case of directors, their annual retainer) as follows:
7 unchanged sentences
4 times annual retainer
−Removed: Covered persons are expected to hold the specified amount of stock within five years from the later of June 6, 2012 or the date they become subject to the ownership guidelines.
−Removed: Although, the Board has extended the amount of time in which covered persons will be expected to hold the specified amount of stock based on the recent low price of the Company’s stock, the Board is committed to increasing the stock ownership of the executive team and the non-employee members of the Board within the next several years.
+Added: Covered persons are expected to hold the specified amount of stock within five years from the later of the date of Emergence or the date they become subject to the ownership guidelines.
The Board will continue to monitor progress towards the achievement of the ownership guidelines.
−Removed: Clawbacks Prior to the Effective Date, it was the policy of the Company, to the extent determined to be appropriate by the Board, in their sole discretion, based on relevant facts and circumstances, in connection with any material restatement of any financial statements included in a filing by the Company with the SEC, because of noncompliance with financial reporting requirement under federal securities laws, to require its executive officers to repay to the Company, upon demand, any excess proceeds from any incentive compensation received by the executive officer.
−Removed: Alternatively, the Board could in their sole discretion may reduce the amount of future compensation, in accordance with applicable law, including, without limitation, any future salary, bonus or severance, or the future grant or vesting of any equity award, payable to any executive officer by an amount equal to the excess proceeds from incentive compensation received by the executive officer.
−Removed: Any repayment or reduction in future compensation pursuant to this policy is in addition to, and not in lieu of, any other relief available to the Company.
−Removed: On the Effective Date, the Company adopted the Executive Officer Incentive Compensation Recoupment (Clawback) Policy in accordance with Rule 10D-1 of the Exchange Act (the “Clawback Policy”).
+Added: Clawbacks On the Effective Date, the Company adopted the Executive Officer Incentive Compensation Recoupment (Clawback) Policy in accordance with Rule 10D-1 of the Exchange Act (the “Clawback Policy”).
The Clawback Policy applies to incentive-based compensation that is granted, earned or vested based wholly or in part upon the attainment of a financial reporting measure and requires the Company to recover Erroneously Awarded Compensation (as defined below) from covered executive officers in the event that the Company is required to prepare an Accounting Restatement (as defined below) (except in certain limited circumstances).
Current and former covered executive officers of the Company are subject to the Clawback Policy regardless of whether such covered executive officers engaged in misconduct or otherwise caused or contributed to the requirement for an Accounting Restatement.
−Removed: “Erroneously Awarded Compensation” means, in the event of an accounting restatement, the amount of incentive-based compensation previously received by covered executive officers that exceeds the amount of incentive-based compensation that otherwise would have been received had it been determined based on the restated amounts in such accounting restatement, and must be computed without regard to any taxes paid by the relevant covered executive officer.
+Added: “Erroneously Awarded Compensation” means, in the event of an accounting restatement, the amount of incentive-based compensation previously received by covered executive officers that exceeds the amount of incentive-based compensation that otherwise would have been received had it been determined based on the restated amounts in such accounting restatement, and must be computed without regard to any taxes paid by the relevant covered executive officer, provided, however, that for Incentive-Based Compensation based on stock price or total stockholder return, where the amount of Erroneously Awarded Compensation is not subject to mathematical recalculation directly from the information in an Accounting Restatement:
+Added: (i) the amount of Erroneously Awarded Compensation must be based on a reasonable estimate of the effect of the Accounting Restatement on the stock price or total stockholder return upon which the Incentive-Based Compensation was received, and (ii) the Company must maintain documentation of the determination of that reasonable estimate and, if the Company’s common stock is then listed on a national securities exchange, provide such documentation to such national securities exchange.
“Accounting Restatement” means an accounting restatement of the Company’s financial statements due to the Company’s material noncompliance with any financial reporting requirement under U.S.
federal securities laws, including any required accounting restatement to correct an error in previously issued financial statements that is material to the previously issued financial statements, or to correct an error that is not material to the previously issued financial statements, but that would result in a material misstatement if the error were corrected or left uncorrected in the current period.
−Removed: In connection with the Restatement, the Board expects to seek a recoupment of certain incentive compensation paid to certain former executive officers of the Company.
−Removed: Anti-Hedging Policy The Company’s insider trading policy prohibits officers and directors and employees designated by the Company’s executive officers as more likely to have access to material, nonpublic information (and their family members, including spouses, minor children, or any other family members living in the same household) from engaging in short sales of the Company’s common stock prohibited by Section 16 of the Exchange Act, i.e., sales of shares which the insider does not own at the time of sale, or sales of common stock against which the insider does not deliver the shares within 20 days after the sale involving the Company’s securities, including the Company’s common stock, options or warrants.
−Removed: The insider trading policy further directs officers, directors and employees designated by the Company’s executive officers as more likely to have access to material, nonpublic information (and their family members, including spouses, minor children, or any other family members living in the same household) to obtain clearance from the Company’s Audit Committee prior to buying or selling puts, calls, other derivative securities of the Company or any derivative securities that that provide the economic equivalent of ownership of any of the Company’s securities or an opportunity, direct or indirect, to profit from any change in the value of the Company’s securities or engage in any other hedging transaction with respect to the Company’s securities.
−Removed: Any request for approval of such a pledge by an insider must be submitted to the Audit Committee in writing at least two (2) weeks prior to the proposed execution of documents evidencing the proposed transaction.
−Removed: Any such request submitted by an insider will be considered by the Audit Committee on a case-by-case basis and, if permitted, shall be subject to all of the other restrictions set forth in the Company’s trading policy.
−Removed: Anti-Pledging Policy The Company’s insider trading policy also states that no insider may pledge Company securities as collateral for a loan (or modify an existing pledge) unless the pledge has been approved by the Audit Committee of the Board.
−Removed: Any request for approval of such a pledge by an insider must be submitted to the Audit Committee in writing at least two (2) weeks prior to the proposed execution of documents evidencing the proposed pledge.
−Removed: Any such request submitted by an insider will be considered by the Audit Committee on a case-by-case basis and, if permitted, shall be subject to all of the other restrictions set forth in the Company’s trading policy.
+Added: Anti-Hedging Policy The Company’s insider trading policy prohibits directors, officers, employees, contractors and consultants (and their family members, including spouses, minor children or any other family members living in the same household) from engaging in short sales of the Company’s common stock prohibited by Section 16 of the Exchange Act, i.e., sales of shares which the insider does not own at the time of sale, or sales of common stock against which the insider does not deliver the shares within 20 days after the sale involving the Company’s securities, including the Company’s common stock, options or warrants.
+Added: The insider trading policy further prohibits the buying or selling puts, calls, other derivative securities of the Company or any derivative securities that that provide the economic equivalent of ownership of any of the Company’s securities or an opportunity, direct or indirect, to profit from any change in the value of the Company’s securities or engage in any other hedging transaction with respect to the Company’s securities.
+Added: Anti-Pledging Policy The Company’s insider trading policy also states that no covered person may pledge Company securities as collateral for a loan (or modify an existing pledge).
Compliance The responsibilities and authority of the Compensation and Human Capital Committee are set forth in its charter, which is intended to set forth best practices for compensation.
3 unchanged sentences
The following table sets forth information regarding securities authorized for issuance under equity compensation plans as of March 31, 2024:
−Removed: securities to
+Added: securities to be
+Added: issued upon exercise
available for
−Removed: upon exercise
+Added: of outstanding
Weighted-average
future issuance
−Removed: of outstanding
+Added: options, warrants,
exercise price of
+Added: vesting of restricted
Plan category
+Added: stock units & rights
options and rights
1 unchanged sentence
Equity Compensation Plans Not Approved by Securityholders
−Removed: (1) These shares available for stock options, restricted stock, RSUs, PRSUs and other awards under the 2017 Plan.
+Added: (1) These shares are available for stock options, restricted stock, RSUs, PRSUs and other awards under the 2023 Plan.
(2) The weighted-average exercise price does not take into account RSUs and PRSUs as there is no exercise price associated with RSUs and PRSUs.
1 unchanged sentence
2023 Equity Incentive Plan
−Removed: In connection with Emergence, on November 30, 2023, the Capstone Green Energy Holdings, Inc.
−Removed: 2023 Equity Incentive Plan (the “Incentive Plan”) was approved and adopted by the Board.
+Added: In connection with the Emergence, on December 7, 2023, the Capstone Green Energy Holdings, Inc.
+Added: 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 was not approved by the Company’s stockholders.
−Removed: All outstanding unvested equity awards outstanding under the Capstone Green Energy Corporation 2017 Equity Incentive Plan were cancelled on the Effective Date in accordance with the Plan.
−Removed: The Incentive Plan is administered by the Compensation and Human Capital Committee or the Board.
+Added: The Incentive Plan is administered by the Capstone Green Energy Holdings, Inc.
+Added: Compensation and Human Capital Committee or the Board.
No more than 3,000,000 shares of New Common Stock are available for the grant of awards under the Incentive Plan.
1 unchanged sentence
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.
−Removed: The Board at any time, and from time to time, may amend or terminate the Incentive Plan.
−Removed: 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 consent.
+Added: The Capstone Green Energy Holdings, Inc.
+Added: Board at any time, and from time to time, may amend or terminate the Incentive Plan.
+Added: 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.
Certain Relationships and Related Transactions, and Director Independence.
1 unchanged sentence
The Audit Committee has adopted written policies and procedures regarding related party transactions.
−Removed: The policies and procedures require that the Audit Committee, whose members are all independent directors, review and approve all related party transactions.
+Added: The policies and procedures require that the Audit Committee, whose members are all independent directors, review and approve all related party transactions where the amount involved is in excess of $120,000.
+Added: Any proposed related party transaction where the amount involved is $120,000 or less may be approved by the Chair of the Audit Committee or, in applicable situations, the Chief Compliance Officer.
This review covers any material transaction, arrangement or relationship, or any series of similar transactions, arrangements or relationships, in which we were or are to be a participant, and a related person had or will have a direct or indirect material interest, including, purchases of goods or services by or from the related person or entities in which the related person has a material interest, indebtedness, guarantees of indebtedness and employment by us of a related person.
2 unchanged sentences
Any director who is a related person with respect to a transaction under review may not participate in the discussion or approval of the transaction.
−Removed: On May 20, 2022, the Company entered into a National Account Agreement (the “National Account Agreement”) with Capstone Engineered Solutions (“CES”), a corporation wholly owned by our former Chief Revenue Officer, Mr.
−Removed: Under the terms of the National Account Agreement, CES is authorized to market, actively promote, and sell the Company’s products, parts, and services.
−Removed: The dollar value of this contract will depend on the amount of sales generated by CES.
−Removed: On May 20, 2022, the Company also entered into a Consulting Agreement with CES, whereby CES will provide certain engineering services to the Company on an as needed basis at a rate of $150 per hour.
−Removed: Additionally on May 10, 2022, the Company entered into an agreement with CES, whereby CES will provide general contract and installation services for one of the Company’s Energy as a Service projects for approximately $0.2 million.
−Removed: The aggregate amount paid to CES in Fiscal 2023 was $0.3 million.
+Added: We describe below the transactions and series of similar transactions, since April 1, 2022, to which we were a party or will be a party, in which:
+Added: • the amounts involved exceeded or will exceed the lesser of $120,000 or one percent of the average of our total assets at year-end for the last two completed fiscal years;
+Added: • any of our directors, executive officers, holders of more than 5% of our capital stock or any member of their immediate family had or will have a direct or indirect material interest, other than equity and other compensation, termination, change in control, and other arrangements with directors and executive officers.
+Added: Capstone Distributor Support System
+Added: 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 Capstone’s major geographic and market verticals.
+Added: This program is funded by Capstone’s distributors and was developed to provide improved worldwide distributor training, sales efficiency, website development, company branding and funding for increased strategic marketing activities.
+Added: Upon emerging from Chapter 11 bankruptcy, Capstone Green Energy Corporation legally became DSS;
+Added: all contracts were novated to Capstone Green Energy LLC along with the transfer of operating assets, except for the distributor services as those assets remained with DSS.
+Added: As a result, DSS assumed the responsibility of providing the services, making DSS obligated to perform the distributor services.
+Added: DSS is responsible for making available regularly scheduled Authorized Service Provider (“ASP”), applications, and/or sales training and support for the distributor’s business development activities.
+Added: The agreement includes the fee, which is the greater of 5% of distributor’s prior calendar year revenue or $20,000.
Director Independence and Board Structure
21 unchanged sentences
All Other Fees
−Removed: Audit Fees These fees were primarily for professional services rendered by Marcum in connection with the audit of the Company’s consolidated annual financial statements and reviews of the interim condensed consolidated financial statements included in the Company’s quarterly reports on Form 10-Q for the first three fiscal quarters of the 2023 Fiscal Year and the 2022 Fiscal Year, respectively.
+Added: Audit Fees These fees were primarily for professional services rendered by Marcum in connection with the audit of the Company’s Consolidated Annual Financial Statements and reviews of the interim Consolidated Financial Statements included in the Company’s quarterly reports on Form 10-Q for the first three fiscal quarters of the 2024 Fiscal Year and the 2023 Fiscal Year, respectively.
The fees also relate to Marcum’s comfort letters and consents related to SEC filings.
Finally, of the total amount for Fiscal 2023 $406,850 pertained to fees incurred in connection with the restatement of our March 31, 2022 and 2021 consolidated annual financial statements.
+Added: Pre-approval Policies and Procedures
+Added: Our Audit Committee has adopted a procedure for pre-approval of all fees charged by our independent auditors.
+Added: Under the procedure, the Audit Committee pre-approves all auditing services and the terms thereof and non-audit services (other than non-audit services prohibited under Section 10A(g) of the Exchange Act or the applicable rules of the SEC or the Public Company Accounting Oversight Board) to be provided to the Company by the independent auditors.
+Added: Such pre-approval requirement is waived with respect to the provision of non-audit services for the Company if the “de minimis” provisions of Section 10A(i)(1)(B) of the Exchange Act are satisfied.
+Added: This authority to pre-approve non-audit services may be delegated to one or more members of the Audit Committee, who must present any decision to pre-approve an activity to the full Audit Committee at its first meeting following such decision.
Exhibits and Financial Statement Schedules.
6 unchanged sentences
Not applicable.
−Removed: CAPSTONE GREEN ENERGY CORPORATION AND SUBSIDIARIES
+Added: CAPSTONE GREEN ENERGY HOLDINGS, INC.
INDEX TO CONSOLIDATED FINANCIAL STATEMENTS
3 unchanged sentences
Consolidated Balance Sheets as of March 31, 2024 and 2023
−Removed: For the years ended March 31, 2023 and 2022:
+Added: Years Ended March 31, 2024 and 2023:
Consolidated Statements of Operations
−Removed: Consolidated Statements of Stockholders’ (Deficiency) Equity
+Added: Consolidated Statements of Changes in Temporary Equity and Stockholders’ Deficiency
Consolidated Statements of Cash Flows
3 unchanged sentences
To the Stockholders and Board of Directors of
−Removed: Capstone Green Energy Corporation
+Added: Capstone Green Energy Holdings, Inc.
Opinion on the Financial Statements
−Removed: We have audited the accompanying consolidated balance sheets of Capstone Green Energy Corporation (the “Company”) as of March 31, 2023 and 2022, the related consolidated statements of operations, stockholders’ equity (deficiency) and cash flows for each of the two years in the period ended March 31, 2023, and the related notes (collectively referred to as the “financial statements”).
+Added: We have audited the accompanying consolidated balance sheets of Capstone Green Energy Holdings, Inc.
+Added: and Subsidiaries (the “Company”) as of March 31, 2024 and 2023, the related consolidated statements of operations, temporary equity and stockholders’ deficiency and cash flows for each of the two years in the period 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 2023, and the results of its operations and its cash flows for each of the two years in the period ended March 31, 2024, in conformity with accounting principles generally accepted in the United States of America.
1 unchanged sentence
The accompanying consolidated financial statements have been prepared assuming that the Company will continue as a going concern.
−Removed: As more fully described in Note 2, the Company has incurred significant losses and needs to raise additional funds to meet its obligations and sustain its operations.
+Added: 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.
15 unchanged sentences
We believe that our audits provide a reasonable basis for our opinion.
−Removed: Critical Audit Matters
−Removed: Critical audit matters 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:
−Removed: (1) relate to accounts or disclosures that are material to the financial statements and (2) involved our especially challenging, subjective, or complex judgments.
+Added: 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:
−Removed: (1) relates to accounts or disclosures that are material to the financial statements and (2) involved our especially challenging, subjective, or complex judgments.
−Removed: The communication of the critical audit matter 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 a separate opinion on the critical audit matter or on the accounts or disclosures to which it relates.
−Removed: Inventory Reserves
−Removed: Description of Matter
−Removed: The Company’s gross inventory and inventory reserve totaled approximately $42.9 million and $2.5 million as of March 31, 2023, respectively.
−Removed: In addition, approximately $3.1 million of inventory was classified as long-term on the Company’s consolidated balance sheet.
−Removed: 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 and estimates a potential reserve for obsolete or slow-moving goods.
−Removed: In determining this estimate, the Company will both (a) perform a monthly analysis to compare the previous 36-month usage of its inventory to the current quantities on hand and (b) judgmentally review their reserve estimate for any non-recurring adjustments that may be necessary based on their knowledge of the business.
−Removed: Changes in the assumptions used could have a significant impact on the valuation of inventory.
−Removed: The principal considerations for our determination that performing procedures relating to the inventory reserve is a critical audit matter are (i) the significant judgement required by management when determining the estimate for the inventory reserve;
−Removed: and (ii) a high degree of auditor judgment, subjectivity, and effort in performing procedures to evaluate management’s estimate and significant assumptions related to the inventory reserve.
+Added: (1) relate to accounts or disclosures that are material to the financial statements and (2) involved our especially challenging, subjective, or complex judgments.
+Added: 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 it relates.
+Added: Net Realizable Value of Inventories
+Added: Description of the Matter
+Added: The Company’s inventories totaled approximately $24.6 million as of March 31, 2024.
+Added: In addition, approximately $3.9 million of inventories were classified as long-term on the Company’s consolidated balance sheet.
+Added: 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.
+Added: 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.
+Added: Changes in the assumptions used could have a significant impact on the net realizable value of inventories.
+Added: 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;
+Added: 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
1 unchanged sentence
These procedures included:
−Removed: ● Evaluated the design and implementation of the Company’s information technology (“IT”) general controls pertaining to relevant applications used by the Company in reviewing its inventory usage and determining an appropriate inventory reserve;
−Removed: ● Obtained an understanding of the Company’s financial reporting processes in place in order to estimate the inventory reserve;
+Added: ● 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;
−Removed: ● Tested management’s calculation and significant assumptions made in determining its current year inventory reserve, which included substantively testing the inventory usage and movement used in such calculations;
−Removed: ● Performed an independent sensitivity analysis to determine whether or not material differences in the reserve existed if management was to use a different look-back time period in their reserve calculation;
−Removed: ● Performed a retrospective analysis of the Company’s reserve by comparing the Company’s unreserved quantities in prior periods to the actual current period usage and movement.
−Removed: Revenue Recognition – Bill and Hold Transactions
−Removed: Description of Matter
−Removed: The Company’s revenues totaled approximately $73.9 million for the year ended March 31, 2023.
−Removed: During the year ended March 31, 2023, the Company utilized third-party warehouses in the normal course of business to store customer-ordered equipment for various periods of time until such customers we ready to take delivery of the equipment.
−Removed: Such transactions, which are commonly referred to as Bill-and-Hold transactions, required the Company to evaluate whether or not revenue is properly recognized in connection with the ASC 606.
−Removed: The Company has historically failed to properly identify and apply the appropriate guidance under ASC 606 to such transactions, which has resulted in the identification of material weaknesses in internal controls over financial reporting.
−Removed: The principal consideration for our determination that performing procedures related to bill and hold transactions was a critical audit matter was the high degree of effort in performing the audit procedures to test such transactions.
−Removed: How We Addressed the Matter
−Removed: Addressing the matter involved performing procedures and evaluating audit evidence in connection with forming our overall opinion on the consolidated financial statements.
−Removed: These procedures included the following:
−Removed: ● Evaluated management’s revised technical accounting analysis in applying the provisions of ASC 606 as it pertains to bill and hold transactions.
−Removed: ● Performed an analysis comparing invoice and custodial information from the third-party warehouses to the Company’s records to ensure accuracy and completeness of the population of bill and hold transactions;
−Removed: ● Confirmed directly with the customers the periods for which they had taken delivery of the goods;
−Removed: ● Selected a sample of sales transactions to substantively test whether or not the revenue was properly recognized in the appropriate period;
−Removed: ● For transactions where a third-party warehouse was used to hold product, we examined evidence between the Company and customer to determine if the bill-and-hold revenue recognition was properly applied.
−Removed: Factory Protection Plan Liability
−Removed: Description of Matter
−Removed: The Company’s factory protection plan (“FPP”) liability as of March 31, 2023 was $10.8 million.
−Removed: The Company accounts for the costs of such factory protection plans at the time the customer orders the spare part.
−Removed: The Company has historically failed to properly identify and apply the appropriate accounting guidance to such transactions, which has resulted in the identification of material weaknesses in internal controls over financial reporting.
−Removed: The principal consideration for our determination that performing procedures related to the FPP liability was a critical audit matter was the high degree of effort in performing the audit procedures to test such transactions.
−Removed: How We Addressed the Matter
−Removed: Addressing the matter involved performing procedures and evaluating audit evidence in connection with forming our overall opinion on the consolidated financial statements.
−Removed: These procedures included the following:
−Removed: ● Evaluated management’s revised technical accounting analysis in applying the provisions of ASC 606 as it pertains to FPP transactions;
−Removed: ● Performed a substantive test of details and cutoff testing procedures over such transaction to ensure (i) costs associated with the FPP contracts were recorded in the appropriate period and (ii) accuracy and completeness of the population of such transactions.
+Added: ● 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;
+Added: ● 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;
+Added: ● 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
1 unchanged sentence
Los Angeles, CA
−Removed: June 12, 2024
−Removed: CAPSTONE GREEN ENERGY CORPORATION AND SUBSIDIARIES
+Added: September 26, 2024
+Added: CAPSTONE GREEN ENERGY HOLDINGS, INC.
+Added: AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
1 unchanged sentence
Current Assets:
−Removed: Cash and cash equivalents
Accounts receivable, net of allowances of $ 3,287 at March 31, 2024 and $ 4,813 at March 31, 2023
−Removed: Inventories, net
Prepaid expenses and other current assets
4 unchanged sentences
Non-current portion of inventories
−Removed: Liabilities and Stockholders’ (Deficiency) Equity
+Added: Liabilities, Temporary Equity and Stockholders’ Deficiency
Current Liabilities:
6 unchanged sentences
Factory protection plan liability
−Removed: Term note payable
+Added: Term note payable, current
+Added: Exit new money notes, net of discount, current
Total current liabilities
5 unchanged sentences
Commitments and contingencies (Note 14)
−Removed: Stockholders’ (Deficiency) Equity:
+Added: Temporary equity:
+Added: Redeemable noncontrolling interests
+Added: Stockholders’ deficiency:
Preferred stock, $ .001 par value;
1 unchanged sentence
Common stock, $ .001 par value;
+Added: 59,400,000 shares authorized, 18,540,789 shares issued and outstanding at March 31, 2024;
51,500,000 shares authorized, 18,511,555 shares issued and 18,394,541 shares outstanding at March 31, 2023
−Removed: 15,398,368 shares issued and 15,296,735 shares outstanding at March 31, 2022
+Added: Non-voting common stock, $ .001 par value;
+Added: 600,000 shares authorized, 508,475 shares issued and outstanding at March 31, 2024;
+Added: 0 shares issued and outstanding at March 31, 2023
Additional paid-in capital
2 unchanged sentences
0 shares at March 31, 2024 and 117,014 shares at March 31, 2023
−Removed: Total stockholders’ (deficiency) equity
−Removed: Total liabilities and stockholders' (deficiency) equity
+Added: Total stockholders’ deficiency
+Added: Total liabilities, temporary equity and stockholders' deficiency
See accompanying notes to consolidated financial statements.
−Removed: CAPSTONE GREEN ENERGY CORPORATION AND SUBSIDIARIES
+Added: CAPSTONE GREEN ENERGY HOLDINGS, INC.
+Added: AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS
16 unchanged sentences
Interest income
+Added: Reorganization items, net
Interest expense
−Removed: Gain on debt extinguishment
−Removed: Loss before provision for income taxes
+Added: Income (loss) before provision for income taxes
Provision for income taxes
−Removed: Deemed dividend on purchase warrant for common shares
−Removed: Net loss attributable to common stockholders
−Removed: Net loss per common share attributable to common stockholders—basic and diluted
−Removed: Weighted average shares used to calculate basic and diluted net loss per common share attributable to common stockholders
+Added: Net income (loss)
+Added: Net income (loss) per share of common stock and non-voting common stock—basic and diluted
+Added: 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.
−Removed: CAPSTONE GREEN ENERGY CORPORATION AND SUBSIDIARIES
−Removed: CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ (DEFICIENCY) EQUITY
+Added: CAPSTONE GREEN ENERGY HOLDINGS, INC.
+Added: AND SUBSIDIARIES
+Added: CONSOLIDATED STATEMENTS OF TEMPORARY EQUITY AND STOCKHOLDERS’ DEFICIENCY
(In thousands, except share amounts)
+Added: Temporary Equity
+Added: Permanent Equity
+Added: Noncontrolling Interest
Treasury Stock
Stockholders’
−Removed: Equity (Deficiency)
−Removed: Balance, April 1, 2021
−Removed: Purchase of treasury stock
−Removed: Vested restricted stock awards
−Removed: Stock-based compensation
−Removed: Stock awards to Board of Directors
−Removed: Issuance of common stock, net of issuance costs
Balance, March 31, 2022
−Removed: Purchase of treasury stock
−Removed: Vested restricted stock awards
−Removed: Stock-based compensation
−Removed: Stock awards to Board of Directors
+Added: Vested restricted stock units
Issuance of common stock, net of issuance costs
+Added: Stock awards to Board of Directors
Deemed dividend on purchase warrant for common shares
+Added: Stock-based compensation
Balance, March 31, 2023
+Added: Vested restricted stock units
+Added: Stock awards to Board of Directors
+Added: Cancellation of Capstone Green Energy Corporation stock
+Added: ( 18,670,392 )
+Added: Issuance of Capstone Green Energy Holdings, Inc.
+Added: Issuance of non-voting stock
+Added: Redeemable noncontrolling interests
+Added: Stock-based compensation
+Added: Balance, March 31, 2024
See accompanying notes to consolidated financial statements.
−Removed: CAPSTONE GREEN ENERGY CORPORATION AND SUBSIDIARIES
+Added: CAPSTONE GREEN ENERGY HOLDINGS, INC.
+Added: AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
2 unchanged sentences
Cash Flows from Operating Activities:
−Removed: Adjustments to reconcile net loss to net cash used in operating activities:
+Added: Net income (loss)
+Added: Adjustments to reconcile net income (loss) to net cash used in operating activities:
Depreciation and amortization
Amortization of financing costs and discounts
−Removed: Amortization of right-of-use assets
−Removed: (Gain) loss on debt extinguishment
−Removed: Bad debt expense (recovery)
−Removed: Inventory provision
+Added: Paid-in-kind interest expense
+Added: Non-cash lease expense
+Added: Provision for credit loss expense
+Added: Inventory write-down
Provision for warranty expenses
Stock-based compensation
+Added: Non-cash reorganization items, net
Changes in operating assets and liabilities:
2 unchanged sentences
Accounts payable and accrued expenses
−Removed: Operating lease liability
+Added: Operating lease liability, net
Accrued salaries and wages and long-term liabilities
7 unchanged sentences
Cash Flows from Financing Activities:
−Removed: Repayment of notes payable and lease obligations
−Removed: Cash used in employee stock-based transactions
+Added: Proceeds from debtors-in-process facility
+Added: Proceeds from three-year term note
+Added: Proceeds from exit new money note
+Added: Debt issuance costs
+Added: Repayment of finance lease obligations
Net proceeds from issuance of common stock and warrants
Net cash provided by financing activities
−Removed: Net (decrease) in Cash and Cash Equivalents
−Removed: Cash and Cash Equivalents, Beginning of Period
−Removed: Cash and Cash Equivalents, End of Period
+Added: Net decrease in Cash
+Added: Cash, Beginning of Period
+Added: Cash, End of Period
Supplemental Disclosures of Cash Flow Information:
3 unchanged sentences
Renewal of insurance contracts financed by notes payable
−Removed: Issuance of common stock for services to be received
Deemed dividend
Right-of-use assets obtained in exchange for lease obligations
−Removed: Rental assets capitalized from inventory
+Added: Settlement of lease obligations with accounts receivable due
+Added: Conversion of inventory to rental assets
+Added: Conversion of prepaid expenses to rental assets
+Added: Paid-in-kind debt discount in connection with the three-year term note
See accompanying notes to consolidated financial statements.
−Removed: CAPSTONE GREEN ENERGY CORPORATION AND SUBSIDIARIES
+Added: CAPSTONE GREEN ENERGY HOLDINGS, INC.
+Added: AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
−Removed: Description of the Company and Basis of Presentation
−Removed: Capstone Green Energy Corporation (“Capstone”, “We” or the “Company”) 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: Business and Organization
+Added: Capstone Green Energy Holdings, Inc., along with its consolidated operating subsidiary Capstone Green Energy LLC (“Capstone,” “We” or the “Company”) (f/k/a Capstone Turbine International, Inc.) 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.
−Removed: In April 2021, we added additional products to our portfolio and shifted our focus to four key business lines.
−Removed: Our Energy Conversion Products business lines 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, including hybrid energy systems and larger frame industrial turbines.
−Removed: Through our Energy-as-a-Service business line, we offer rental solutions utilizing our microturbine energy systems and battery storage systems, comprehensive factory protection plan service contracts that guarantee life-cycle costs, as well as aftermarket spare parts.
−Removed: Our two emerging business lines are Energy Storage Products and Hydrogen Energy Solutions.
−Removed: Our Energy Storage Products business line designs and installs microgrid storage systems, creating customized solutions using a combination of battery technologies and monitoring software.
−Removed: Through our Hydrogen Energy Solutions business line, we offer customers a variety of hydrogen products, including the Company’s microturbine energy systems.
−Removed: Because these are new offerings, Energy Storage Products and Hydrogen Energy Solutions revenue has been immaterial to date.
−Removed: The Company was organized in 1988 and has been commercially producing its microturbine generators since 1998.
−Removed: This Annual Report on Form 10-K (this “Form 10-K”) refers to the Company’s fiscal years ended March 31 as its “Fiscal” years.
−Removed: The consolidated financial statements include the accounts of the Company, Capstone Turbine International, Inc., its wholly owned subsidiary that was formed in June 2004, and Capstone Turbine Financial Services, LLC, its wholly owned subsidiary that was formed in October 2015, after elimination of inter-company transactions.
−Removed: Summary of Significant Accounting Policies
−Removed: 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 date of purchase as cash equivalents.
+Added: 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.
+Added: 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.
+Added: 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.
+Added: The Company offers comprehensive factory protection plan service contracts that limit life-cycle costs, as well as providing aftermarket spare parts.
+Added: The Company’s emerging business line is Hydrogen Energy Solutions.
+Added: Through the Hydrogen Energy Solutions business line, the Company offers customers the ability to run on hydrogen blended fuel source.
+Added: Because these are still emerging offerings, Hydrogen Energy Solutions revenue has been immaterial to date.
+Added: 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.
+Added: In connection with emergence from the Chapter 11 Cases (as defined below), Capstone Green Energy Corporation was reorganized pursuant to the T ransaction Support Agreement dated September 28, 2023 by and among the Debtors (as defined below), Goldman Sachs Specialty Lending Group, L.P.
+Added: and Broad Street Credit Holdings LLC (the “TSA”) and became a privately-held company that continues to own the Retained Assets (as defined below).
+Added: 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.
+Added: In addition, Capstone Green Energy LLC (the “Operating Subsidiary”) was formed as a result of the Plan of Reorganization (the “Plan”).
+Added: Refer to Note 3— Chapter 11 Proceedings and Emergence for more detail.
+Added: Basis of Presentation, Significant Accounting Policies and Going Concern
+Added: These Consolidated Financial Statements refer to the Company’s fiscal years ended March 31 as its “Fiscal” year.
+Added: 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.
+Added: GAAP”) and pursuant to the rules and regulations of the Securities Exchange Commissions (“SEC”).
+Added: 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.
+Added: Noncontrolling Interests in Consolidated Operating Subsidiary Noncontrolling interests in the Company’s consolidated Operating Subsidiary represent the equity interests held by a related party.
+Added: Refer to Note 3— Chapter 11 Proceedings and Emergence for details on the formation of the Operating Subsidiary.
+Added: The noncontrolling interests in the consolidated Operating Subsidiary are redeemable and are presented as temporary equity in the Company's Consolidated Balance Sheet.
+Added: Refer to Note 10— Temporary Equity for details of the noncontrolling interests.
+Added: 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.
+Added: 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
+Added: amounts and distributed between the controlling and noncontrolling interests in accordance with the governing documents.
+Added: 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.
+Added: Separately, the Company will also determine whether an adjustment should be recorded to remeasure the redemption feature attached to the Preferred Units to their maximum redemption value through retained earnings.
+Added: Refer to Note 10 — Temporary Equity for details on remeasuring the redemption value of the Preferred Units.
+Added: 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.
+Added: 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 (as defined below) and the noncontrolling interest owners hold a liquidation preference that protects the holder from absorbing losses.
+Added: 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 results of operations.
+Added: The Company reclassified certain revenue stream and cost of goods sold on the Consolidated Statements of Operations for the year ended March 31, 2023 to conform to the presentation of the current year.
+Added: The reclassification has not materially impacted the Company’s financial statements and did not result in a change in total revenue, net income or cash flows from operations for the years presented.
+Added: 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.
+Added: 852— Reorganizations (“ASC 852”).
+Added: See Note 3— Chapter 11 Proceedings and Emergence for further details regarding the bankruptcy.
+Added: 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.
+Added: 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.
+Added: 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.
+Added: 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.
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.
See Note 11— Fair Value Measurements, for disclosure regarding the fair value of other financial instruments.
−Removed: CAPSTONE GREEN ENERGY CORPORATION AND SUBSIDIARIES
−Removed: NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
−Removed: Accounts Receivable Trade accounts receivable are recorded at the invoiced amount and are typically non-interest bearing.
−Removed: The Company maintains allowances for estimated losses resulting from the inability of customers to make required payments and other accounts receivable allowances.
−Removed: We evaluate all accounts aged over 60 days past payment terms.
−Removed: If the financial condition of our customers deteriorates or if other conditions arise that result in an impairment of their ability or intention to make payments, additional allowances may be required.
−Removed: Accounts receivable that is expected to be received past 12 months are recorded as non-current accounts receivable.
−Removed: The Company has determined any financing component of non-current receivables to be immaterial.
−Removed: Changes in the accounts receivable allowances are as follows (in thousands):
+Added: Trade Accounts Receivable and Allowance for Credit Loss On April 1, 2023, the Company adopted Accounting Standards Update (“ASU”) 2016-13, Topic No.
+Added: 326— Credit Loss, Measurement of Credit Losses on Financial Instruments , which replaces the incurred loss methodology with an expected loss methodology referred to as the current expected credit loss (“CECL”).
+Added: The CECL model applies to financial assets measured at amortized cost, including accounts receivable.
+Added: Under the CECL model, the Company identifies allowances for credit losses based on future expected losses when accounts receivable are created rather than when losses are probable.
+Added: 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.
+Added: The historical loss rate is adjusted for current conditions and reasonable and supportable forecasts of future losses, as necessary.
+Added: 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.
+Added: The factors include assessments of various economic conditions, significant
+Added: events that occurred, geographic location, size and credit ratings of the customers.
+Added: 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.
+Added: Accounts deemed uncollectible are written off against the allowance for credit loss .
+Added: On a quarterly basis, in accordance with ASC 326, the Company evaluates the collectability of outstanding accounts receivable balances to determine an allowance for credit loss that reflects its best estimate of the lifetime expected credit losses.
+Added: Changes in the CECL allowance for accounts receivable are as follows (in thousands):
Balance, March 31, 2022
−Removed: Additions charged to expenses
−Removed: Bad debt write-off
+Added: Provision for credit losses
Balance, March 31, 2023
−Removed: Additions charged to expenses
−Removed: Bad debt write-off
+Added: Provision for credit losses
Balance, March 31, 2024
5 unchanged sentences
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 .
−Removed: Leasehold improvements are amortized over the lease term or the estimated useful lives of the assets, whichever is shorter .
+Added: 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.
1 unchanged sentence
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.
−Removed: The Company performed an analysis as of March 31, 2023 and determined that no impairment was necessary.
−Removed: See Note 5—Intangible Assets.
Deferred Revenue Deferred revenue consists of deferred product and service revenue and customer deposits.
1 unchanged sentence
The Company has the right to retain all or part of customer deposits under certain conditions.
+Added: 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.
+Added: 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.
+Added: 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.
Revenue The Company derives its revenues primarily from the sale of microturbine products, accessories, parts, equipment rentals and services.
5 unchanged sentences
● Recognition of revenue when, or as, the Company satisfies a performance obligation
−Removed: CAPSTONE GREEN ENERGY CORPORATION AND SUBSIDIARIES
−Removed: NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
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.
13 unchanged sentences
The Company extends payment terms past one year only on a limited basis, and thus any financing component is not considered material.
−Removed: Factory Protection Plan In addition to the provision of standard warranties, the Company offers comprehensive Factory Protection Plans (“FPP”) to minimize product downtime and guarantee maintenance costs to ensure the microturbine system will operate when needed and perform as intended at the lowest cost of ownership.
−Removed: Revenue related to the Company’s performance obligation to provide replacement parts as needed is recognized over the 30-day , noncancellable FPP contract period with automatic renewals for 5 , 10 , 15 , or 20 years under ASC 606.
−Removed: The related costs are accrued at the time a customer submits an order for a replacement part to reflect the Company’s obligation.
+Added: 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.
+Added: Revenue related to the Company’s performance obligation to provide replacement parts as needed is recognized over the 30-day , FPP contract period with automatic renewals for 5 , 10 , 15 , or 20 years under ASC 606.
+Added: The related costs are accrued at the time a customer submits an order, and the order’s compliance with the terms of the plan are confirmed, for a replacement part to reflect the Company’s obligation.
The accrual reflects the Company’s best estimate of the probable liability under the replacement part obligation.
1 unchanged sentence
FPP contracts typically go into effect once the standard warranty expires.
−Removed: The current carrying amount of the liability is $ 10.8 million.
−Removed: Some FPPs offer a labor reimbursement on the labor performed on a microturbine system.
−Removed: Due to the nature of the arrangement, labor reimbursements are accounted for under ASC 460.
−Removed: See below for additional information on the labor reimbursement within the FPP offering.
Comprehensive factory protection plan service contracts require payment at the beginning of the contract period.
2 unchanged sentences
Once control transfers to the customer and the Company meets the revenue recognition criteria, the deferred revenue is recognized in the Consolidated Statement of Operations.
−Removed: 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.
+Added: 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.
+Added: Some FPPs offer labor reimbursement on the labor performed on a microturbine system.
+Added: Due to the nature of the arrangement, labor reimbursements are accounted for under ASC 460.
+Added: An Authorized Service Provider (ASP) must perform the labor.
+Added: ASPs submit claims for labor reimbursements and are credited for the cost of labor if the repairs meet the Company’s prescribed standards.
+Added: The Company is unable to develop a reasonable estimate of the maximum potential payout under these arrangements because the FPPs do not contain a limit on the number of labor reimbursements that may be submitted.
+Added: 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.
+Added: The labor reimbursement is separate and distinct from the parts offering;
+Added: therefore, the Company allocates a portion of the transaction price to the labor reimbursement based on SSP.
+Added: The Company applies judgment in determining the SSP as the labor reimbursement is not sold separately.
+Added: The Company will recognize a liability at the inception of the executed FPP agreement for the premium received in advance for the Labor offering.
+Added: Income will be recognized on a net, straight-line basis with labor reimbursement costs recognized when incurred.
Significant Judgments - 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.
−Removed: A performance obligation is a promise in a contract with a customer to transfer
−Removed: CAPSTONE GREEN ENERGY CORPORATION AND SUBSIDIARIES
−Removed: NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
−Removed: products or services that are distinct.
+Added: 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 distinct as such services are often sold separately.
−Removed: In determining whether FPP and other service contracts are distinct, the Company considers the following factors for each FPP and services agreement:
+Added: 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.
−Removed: The Company allocates the transaction price to each performance obligation on a relative stand-alone selling price (“SSP”) basis.
+Added: 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.
10 unchanged sentences
Practical Expedients
−Removed: We apply 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.
−Removed: These costs are recorded within sales and marketing expenses.
+Added: 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.
+Added: 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.
−Removed: The specific terms and conditions of those warranties vary depending upon the product sold and geography of sale.
+Added: 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 .
4 unchanged sentences
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.
−Removed: CAPSTONE GREEN ENERGY CORPORATION AND SUBSIDIARIES
−Removed: NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
−Removed: Factory Protection Plan Service Cost Reimbursement
−Removed: Each FPP is a 30-day contract period with automatic renewals for 5 , 10 , 15 , or 20 years .
−Removed: As previously noted, some FPPs offer a labor reimbursement on the labor performed on a product.
−Removed: An Authorized Service Provider (ASP) must perform the labor.
−Removed: ASPs submit claims for labor reimbursements and are credited for the cost of labor if the repairs meet the Company’s prescribed standards.
−Removed: The Company is unable to develop a reasonable estimate of the maximum potential payout under these arrangements because the FPPs do not contain a limit on the number of labor reimbursements that may be submitted.
−Removed: 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.
−Removed: The labor reimbursement is separate and distinct from the parts offering;
−Removed: therefore the Company allocates a portion of the transaction price to the labor reimbursement based on SSP.
−Removed: The Company applies judgment in determining the SSP as the labor reimbursement is not sold separately.
−Removed: The Company will recognize a liability at the inception of the executed FPP agreement for the premium received in advance for the Labor offering.
−Removed: Income will be recognized on a net, straight-line basis with labor reimbursement costs recognized when incurred.
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.
3 unchanged sentences
Valuation allowances are established, when necessary, to reduce deferred income tax assets to the amounts expected to be realized.
−Removed: ASC Topic 740-10, Income Taxes , clarifies the accounting for uncertainty in income taxes recognized in our financial statements in accordance with accounting principles generally accepted in the United States of America, or GAAP.
+Added: ASC Topic 740-10, Income Taxes (“ASC 740”), clarifies the accounting for uncertainty in income taxes recognized in the financial statements in accordance with U.S.
Income tax positions must meet a more-likely-than-not recognition threshold to be recognized.
1 unchanged sentence
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.
−Removed: Our policy is to recognize interest and penalties accrued on any unrecognized tax benefits as interest and other expense, net in the statements of operations.
+Added: 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.
−Removed: Risk Concentrations Financial instruments that potentially subject the Company to concentrations of credit risk consist primarily of cash and cash equivalents and accounts receivable.
+Added: Risk Concentrations Financial instruments that potentially subject the Company to concentrations of credit risk consist primarily of cash and accounts receivable.
At March 31, 2024, the majority of our cash balances were held at financial institutions located in California.
1 unchanged sentence
Balances that exceed the insurance coverage aggregate to approximately $ 1.4 million as of March 31, 2024.
−Removed: The Company places its cash and cash equivalents with high credit quality institutions.
+Added: The Company places its cash with high credit quality institutions.
The Company performs ongoing credit evaluations of its customers and maintains an allowance for potential credit losses.
−Removed: Sales to E-Finity Distributed Generation, LLC (“E-Finity”) and RSP Systems accounted for 12 % and 11 %, respectively, of the Company’s revenue for Fiscal 2023.
−Removed: Sales to E-Finity accounted for 18 % of the Company’s revenue for Fiscal 2022.
−Removed: Additionally, E-Finity accounted for 12 % of net accounts receivable as of March 31, 2023, and E-Finity and Radian Oil & Gas Services Co.
−Removed: accounted for 28 % and 14 % of net accounts receivable as of March 31, 2022, respectively.
−Removed: CAPSTONE GREEN ENERGY CORPORATION AND SUBSIDIARIES
−Removed: NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
+Added: Sales to Cal Microturbine and E-Finity Distributed Generation (“E-Finity”) accounted for 16 % and 13 %, respectively, of the Company’s revenue for Fiscal 2024.
+Added: Sales to E-Finity and RSP Systems accounted for 12 % and 11 %, respectively, of the Company’s revenue for Fiscal 2023.
+Added: Additionally, Supernova and CES accounted for 14 % and 11 % of net accounts receivable as of March 31, 2024, respectively, and E-Finity accounted for 12 % of net accounts receivable as of March 31, 2023.
Certain components of the Company’s products are available from a limited number of suppliers.
An interruption in supply could cause a delay in manufacturing, which would affect operating results adversely.
−Removed: Estimates and Assumptions The preparation of financial statements in conformity with accounting principles generally accepted in the United States of America requires management to make certain estimates and assumptions that affect the amounts reported in the financial statements and accompanying notes.
−Removed: Significant estimates include accounting for accounts receivable allowances, stock-based compensation, inventory write-downs, valuation of long-lived assets including intangible assets with finite lives, product warranties, income taxes and other contingencies.
+Added: Estimates and Assumptions The preparation of financial statements in conformity with U.S.
+Added: GAAP requires management to make certain estimates and assumptions that affect the amounts reported in the financial statements and accompanying notes.
+Added: Significant estimates include accounting for accounts receivable allowances for credit losses, stock-based compensation, inventory write-downs, valuation of equity and long-lived assets including intangible assets with finite lives, product warranties, income taxes and other contingencies.
Actual results could differ from those estimates.
−Removed: Net Loss Per Common Share Basic loss per common share is computed using the weighted-average number of common shares outstanding for the period.
−Removed: Diluted loss per share is also computed without consideration to potentially dilutive instruments because the Company incurred losses which would make such instruments antidilutive.
−Removed: Outstanding stock options and restricted stock units at March 31, 2023 and 2022 were 0.8 million and 0.6 million, respectively.
−Removed: As of March 31, 2023 and 2022, the number of warrants excluded from diluted net loss per common share computations was approximately 3.8 million and 0.8 million, respectively.
−Removed: Stock-Based Compensation Options or stock awards are recorded at their estimated fair value at the measurement date.
−Removed: The Company recognizes compensation cost for options and stock awards that have a graded vesting schedule on a straight-line basis over the requisite service period for the entire award.
+Added: Net Income (Loss) Per Common Share The Company has common and non-voting common stock outstanding.
+Added: The non-voting common stock has the same economic rights as the common stock; therefore, earnings per share is presented on a combined basis.
+Added: Basic income (loss) per share is computed using the weighted-average number of common shares and non-voting common shares outstanding for the period.
+Added: 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.
+Added: In addition, the change in the carrying value of the redeemable controlling interests are excluded from the calculation of diluted earnings per share.
+Added: 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, 2024.
+Added: There was no change in the carrying value of the redeemable controlling interests for the year ended March 31, 2024 as the carrying value equaled the fair value at issuance.
+Added: Stock-Based Compensation Stock-based awards exchanged for services are accounted for under the fair value method.
+Added: Accordingly, stock-based compensation cost is measured at the grant date based on the estimated fair value of the award.
+Added: The expense for awards is recognized over the requisite service period (generally the vesting period of the award).
+Added: The Company has elected to treat awards with only service conditions and with graded vesting as one award.
+Added: 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.
+Added: The Company has elected to account for forfeitures as they occur.
Leases Arrangements meeting the definition of a lease 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.
1 unchanged sentence
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.
−Removed: In calculating the right of use asset and lease liability, the Company elects to combine lease and non-lease components.
−Removed: The Company excludes short-term leases having initial terms of twelve months or less from the new guidance as an accounting policy election and recognizes rent expense on a straight-line basis over the lease term.
−Removed: Going Concern In connection with preparing the consolidated financial statements for the fiscal year ended March 31, 2023, 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 our Fiscal 2023 consolidated financial statements.
−Removed: The Company incurred a net loss of $ 24.5 million and used cash from operating activities of $ 7.9 million during Fiscal 2023.
−Removed: As of March 31, 2023, the Company had cash and cash equivalents of $ 12.8 million, and outstanding debt of $ 51.0 million at fair value.
−Removed: We reduced our outstanding debt via proceedings in U.S.
−Removed: Chapter 11 Bankruptcy Court.
+Added: 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.
+Added: Going Concern In connection with the preparation of these Consolidated Financial Statements for the fiscal year ended March 31, 2024, 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 2024 Consolidated Financial Statements.
+Added: As of March 31, 2024, the Company had cash of $ 2.1 million and a working capital deficit of $ 38.5 million.
+Added: The Company incurred a loss from operations of $ 20.4 million and used cash from operating activities of $ 27.7 million during Fiscal 2024.
On September 28, 2023, the Company filed for a prepackaged financial restructuring with its Senior Lender, Goldman Sachs under the U.S.
−Removed: Chapter 11 Bankruptcy laws, as further discussed in Note 17–Subsequent Events in the Notes to Consolidated Financial Statements.
−Removed: The Company emerged from Bankruptcy on December 7, 2023, and affected the financial and organizational restructuring.
−Removed: Given our current cash position, lack of liquidity, limits to accessing capital and debt funding options, the economic and market risk of the forecast, there is substantial doubt regarding the Company’s ability to continue as a going concern and our ability to meet our financial obligations as they become due over the next twelve months from the date of issuance of our Fiscal 2023 financial statements.
−Removed: CAPSTONE GREEN ENERGY CORPORATION AND SUBSIDIARIES
−Removed: NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
−Removed: Segment Reporting The Company is considered to be a single reporting segment.
−Removed: The business activities of this reporting segment are the development, manufacture and sale of turbine generator sets and their related parts and service.
−Removed: Following is the geographic revenue information based on the primary operating location of the Company’s customers (in thousands):
−Removed: Year Ended March 31,
−Removed: United States
−Removed: All other North America
−Removed: Total North America
−Removed: All other Europe
−Removed: Total Revenue
−Removed: The following table summarizes the Company’s revenue by product (in thousands):
−Removed: Year Ended March 31,
−Removed: Microturbine Products
−Removed: Total Product and Accessories
−Removed: Parts and Service
−Removed: Total Revenue
−Removed: Substantially all of the Company’s operating assets are in the United States.
+Added: Chapter 11 Bankruptcy laws, as further discussed in Note 3— Chapter 11 Proceedings and Emergence in the Notes to Consolidated Financial Statements.
+Added: The Company emerged from Bankruptcy on December 7, 2023 and effected a financial and organizational restructuring.
+Added: However, given its 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, 2024.
+Added: Segment Reporting The Company determines its reporting units in accordance with FASB ASC Topic No.
+Added: 280, Segment Reporting (“ASC 280”) .
+Added: The Company evaluates a reporting segment by first identifying its operating segments
+Added: under ASC 280.
+Added: 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.
+Added: The Company defines its CODM to be the Chief Executive Officer.
+Added: The Company is considered to be a single reporting segment.
+Added: The business activities of this reporting segment are the development, manufacture and sale of turbine generator sets and their related parts and services.
Impact of Recently Issued Accounting Standards
In June 2016, the FASB issued ASU No.
−Removed: 2016-13, Financial Instruments—Credit Losses (Topic 326):
−Removed: Measurement of Credit Losses on Financial Instruments.
+Added: 2016-13, Financial Instruments—Credit Losses :
+Added: Measurement of Credit Losses on Financial Instruments (Topic 326).
The amendments in this ASU provide guidance for estimating credit losses on certain types of financial instruments, including trade receivables, by introducing an approach based on expected losses.
1 unchanged sentence
With certain exceptions, the transition to the new guidance will be through a cumulative effect adjustment to opening accumulated deficit as of the beginning of the first reporting period in which the guidance is adopted.
−Removed: In November 2019, the FASB issued ASU 2019-10, Financial Instruments - Credit Losses (Topic 326), Derivatives and Hedging (Topic 815), and Leases (Topic 842) (“ASU 2019-10”), which defers the adoption of ASU
−Removed: CAPSTONE GREEN ENERGY CORPORATION AND SUBSIDIARIES
−Removed: NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
−Removed: 2016-13 for Smaller Reporting Companies (“SRCs”) as defined by the SEC for fiscal years beginning after December 15, 2022, including interim periods within those fiscal years.
−Removed: On April 1, 2023 , the Company adopted Financial Instruments—Credit Losses (Topic 326).
−Removed: The standard will require entities to record a cumulative-effect adjustment to the balance sheet as of the beginning of the first reporting period in which the guidance is effective.
−Removed: The adoption did not have a material impact on its financial statements.
−Removed: Management considers the applicability and impact of all Accounting Standards Updates (“ASUs”).
−Removed: The ASUs not listed were assessed and determined by management to be either not applicable or are expected to have minimal impact on our consolidated financial position and/or results of operations.
+Added: On April 1, 2023, the Company adopted Topic 326.
+Added: The standard required entities to record a cumulative-effect adjustment to the balance sheet as of the beginning of the first reporting period in which the guidance is effective.
+Added: The adoption did not have a material impact on its financial statements and no adjustment was made to retained earnings.
+Added: Not Yet Adopted
+Added: In November 2023, the FASB issued ASU No.
+Added: 2023-07, Segment Reporting :
+Added: Improvements to Reportable Segment Disclosures (Topic 280).
+Added: This update applies to all public entities that are required to report segment information in accordance with Topic 280.
+Added: The amendments in this update revise reportable segment disclosure requirements, primarily through enhanced disclosures about significant segment expenses.
+Added: The amendments in this update do not change how a public entity identifies its operating segments, aggregates those operating segments, or applies the quantitative thresholds to determine its reportable segments.
+Added: The new standard is effective for fiscal years beginning after December 15, 2023, and interim periods within fiscal years beginning after December 15, 2024.
+Added: Early adoption is permitted.
+Added: The standard should be applied retrospectively to all prior periods presented in the financial statements.
+Added: The Company is in the process of assessing the effect adoption will have on its annual consolidated financial statement disclosure.
+Added: In December 2023, the FASB issued ASU No.
+Added: 2023-09, Income Taxes:
+Added: 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.
+Added: The amendment in the ASU is intended to enhance the transparency and decision usefulness of income tax disclosures.
+Added: The amendments in this update are effective for annual periods beginning after December 15, 2024.
+Added: 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.
+Added: Chapter 11 Proceedings and Emergence
+Added: Voluntary Filing under Chapter 11
+Added: Plan of Reorganization — On September 28, 2023 (the “Petition Date”), Capstone Green Energy Corporation and its wholly owned direct subsidiaries, Capstone Turbine International, Inc.
+Added: 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”).
+Added: The Chapter 11 proceedings were jointly administered under the caption, In re Capstone Green Energy Corporation, Inc., et al.
+Added: 23-11634 (the “Chapter 11 Cases”).
+Added: The Debtors continued to operate their business in accordance with the applicable provisions of the Bankruptcy Code and orders of the Bankruptcy Court.
+Added: 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.
+Added: 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.
+Added: Bankruptcy Court following filings by the Debtors of voluntary petitions for relief under Chapter 11 the Bankruptcy Code in the Bankruptcy Court.
+Added: Concurrent with the petition, the Debtors entered into the TSA with the pre-petition senior secured creditor, Broad Street Credit Holdings, LLC.
+Added: (“Broad Street”), and Goldman Sachs Specialty Lending Group, L.P.
+Added: (the “Collateral Agent”).
+Added: 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.
+Added: 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.
+Added: The TSA also provided for termination by the parties upon the occurrence of certain events.
+Added: 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.
+Added: Subsequent updates and supplements were filed, leading to a combined Court hearing on November 13, 2023, for approval of the Disclosure Statement and Plan.
+Added: The Plan was confirmed on November 14, 2023, and became effective on December 7, 2023, when the Company emerged from Chapter 11.
+Added: 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.
+Added: The following summary is qualified in its entirety by reference to the full text of the Plans (including the Plan Supplement).
+Added: - 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”);
+Added: - Capstone Turbine International, Inc.
+Added: contributed all assets to the Operating Subsidiary;
+Added: - 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;
+Added: - Capstone Green Energy Corporation contributed all common units of the Operating Subsidiary to Capstone Turbine International, Inc.
+Added: providing a 62.5 % equity ownership in the Operating Subsidiary;
+Added: - Capstone Turbine International, Inc.
+Added: became a public company and was renamed Capstone Green Energy Holdings, Inc.
+Added: 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;
+Added: provided that, for the avoidance of doubt Capstone Turbine International, Inc.
+Added: 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;
+Added: - 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;
+Added: - 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;
+Added: - 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;
+Added: - 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.
+Added: 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.
+Added: Under this agreement, Broad Street provided a $ 30 million DIP Facility, consisting of $ 12 million in new money
+Added: DIP notes and an $ 18 million roll-up of pre-petition debt.
+Added: The Debtors filed a motion on September 28, 2023, seeking the Bankruptcy Court's approval for this DIP Facility.
+Added: 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.
+Added: 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 “Initial Draw”).
+Added: 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”).
+Added: 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.
+Added: Substantially all of the Debtors’ assets were encumbered by first-priority liens of the purchaser under the DIP Note Purchase Agreement.
+Added: 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”).
+Added: Treatment of claims
+Added: - 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.
+Added: - 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.
+Added: - 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.
+Added: - 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.
+Added: - Equity Interests were impaired and deemed to reject the Plan.
+Added: 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.
+Added: 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.
+Added: 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.
+Added: Effective October 23, 2023, the Company’s common stock was delisted from the Nasdaq Capital Market.
+Added: 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.
+Added: Accordingly, certain charges related to the Chapter 11 Cases were recorded as Reorganization items, net in the accompanying Consolidated Financial Statement of Operations.
+Added: 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.
+Added: 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.
+Added: The components of the gain were as follows (in thousands):
+Added: Pre-petition senior secured principal
+Added: Accrued interest and fees on pre-petition senior secured principal
+Added: Additional New Money DIP Notes
+Added: DIP commitment fee
+Added: DIP PIK interest (post-petition interest)
+Added: New Money Exit Notes
+Added: Fair value of Preferred Units of Operating Subsidiary exchanged
+Added: Fair value of Exit Notes and net retained assets
+Added: Total gain from debt extinguishment
+Added: 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.
+Added: Refer to Note 8— Income Taxes for additional information.
+Added: 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.
+Added: As pre-petition shareholders did not lose control, fresh-start did not apply and historical activities and balances remained at carrying value.
+Added: 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.
+Added: 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.
+Added: 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.
+Added: Bankruptcy Court) and other reorganization items that were material to the Company’s financial position or results of operations during the period.
+Added: The table below lists the components of reorganization items for Fiscal 2024 (in thousands):
+Added: Professional fees
+Added: Adjustment of debt to approved claim
+Added: DIP commitment fee
+Added: Gain on debt extinguishment
+Added: Total reorganization items, net
+Added: 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.
+Added: Bankruptcy Court.
+Added: 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.
+Added: Liabilities Subject to Compromise — Liabilities subject to compromise refers to pre-petition obligations which may be impacted by the Chapter 11 reorganization process.
+Added: 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.
+Added: 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):
1 unchanged sentence
Finished goods
−Removed: inventory reserve
non-current portion
−Removed: Total inventory, net-current portion
−Removed: The non-current portion of inventories represents that portion of the inventories in excess of amounts expected to be used in the next twelve months.
+Added: Total inventory, net non-current portion
+Added: 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.
−Removed: The weighted average age of the non-current portion of inventories on hand as of March 31, 2023 and 2022 were 0.9 years and 1.2 years, respectively.
The Company expects to use the non-current portion of the inventories on hand as of March 31, 2024 over the periods presented in the following table (in thousands):
4 unchanged sentences
25 to 36 months
−Removed: Property, Plant and Equipment
+Added: Property, Plant, Equipment and Rental Assets
Property, plant, equipment and rental assets consisted of the following (in thousands):
5 unchanged sentences
Total property, plant, equipment and rental assets, net
−Removed: CAPSTONE GREEN ENERGY CORPORATION AND SUBSIDIARIES
−Removed: NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
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 $ 4.0 million and $ 3.2 million for Fiscal 2024 and 2023, respectively.
−Removed: Intangible Assets
−Removed: Intangible assets, net of amortization include intellectual property such as manufacturing licenses providing the Company with the ability to manufacture recuperator cores previously purchased from Solar Turbines Incorporated (“Solar”) and were fully amortized as of March 31, 2023 and March 31, 2022.
−Removed: The Company is required to pay a per-unit royalty fee over a seventeen-year period for cores manufactured and sold by the Company using the technology.
−Removed: Royalties of approximately $ 23,100 and $ 22,600 were earned by Solar for Fiscal 2023 and 2022, respectively.
−Removed: Earned royalties of approximately $ 99,500 and $ 76,400 were unpaid as of March 31, 2023 and 2022, respectively, and are included in accrued expenses in the accompanying consolidated balance sheets.
−Removed: Amortization expense for the intangible assets was zero and $ 0.1 million for Fiscal 2023 and 2022, respectively.
+Added: Inventory converted to rental assets during Fiscal 2024 was $ 0.3 million.
+Added: Depreciation expense recorded to cost of sales during Fiscal 2024 and 2023, was $ 3.8 million and $ 3.1 million, respectively.
Accrued Warranty Reserve
12 unchanged sentences
Balance, end of the period
−Removed: During the fourth quarter of Fiscal 2021, the Company recorded a specific $ 4.9 million accrual related to a reliability repair program to account for the replacement of remaining high-risk failure parts in some of the Company’s fielded units due to a supplier defect.
−Removed: As of March 31, 2023, the accrual related to this reliability repair program was zero as the Company has determined it replaced a sufficient quantity of high-risk failure parts in its fielded units under this reliability repair program and that it should be terminated.
−Removed: CAPSTONE GREEN ENERGY CORPORATION AND SUBSIDIARIES
−Removed: NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
Revenue Recognition
5 unchanged sentences
Total Revenue
−Removed: (1) $ 0.4 million and $ 0.3 million of parts and service revenue reported were non-ASC-606 revenue related to the labor reimbursement of FPP contracts as of March 31, 2023 and 2022, respectively.
+Added: The following table presents disaggregated revenue by geography based on the primary operating location of the Company’s customers (in thousands):
+Added: Year Ended March 31,
+Added: United States
+Added: All other North America
+Added: Total North America
+Added: All other Europe
+Added: Total Revenue
+Added: Substantially all of the Company’s operating assets are in the United States.
Contract Balances
−Removed: The Company’s deferred revenues consist of advance payments for microturbine products, parts, accessories, and parts ordered under an FPP plan, but not yet delivered (contract liabilities), as well as advanced payments on service obligations and extended warranties.
+Added: 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.
−Removed: As of March 31, 2023, the balance of deferred revenue was approximately $ 24.2 million compared to $ 15.8 million as of March 31, 2022.
−Removed: This overall increase in the balance of deferred revenue of $ 8.4 million during Fiscal 2023 was comprised of increases in deferred revenue attributable to deposits of $ 8.4 million and FPP contracts of $ 0.3 million, offset by a decrease in deferred revenue attributable to Distributor Support System (“DSS program”) of $ 0.3 million.
−Removed: Changes in deferred revenue are as follows (in thousands):
−Removed: Opening balance, beginning of the period
−Removed: Closing balance, end of the period
−Removed: Revenue recognized in the period from:
−Removed: Amounts included in contract liability at the beginning of the period
−Removed: Deferred revenue attributed to FPP contracts represents the unearned portion of the Company’s agreements.
−Removed: FPP agreements are generally paid quarterly in advance with revenue recognized on a straight-line basis over the contract period.
−Removed: 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 geography and market vertical.
−Removed: This program is funded by the Company’s distributors and was developed to provide improved worldwide distributor training, sales efficiency, website development, company branding and provide funding for increased strategic marketing activities.
+Added: Changes in deferred revenue consisted of the following (in thousands):
+Added: Opening balance, beginning of the year
+Added: Closing balance, end of the year
+Added: Revenue recognized during the year from:
+Added: Amounts included in deferred revenue at the beginning of the year
+Added: Deferred revenue attributed to FPP contracts represents the unearned portion of the Company’s contracts.
+Added: FPP contracts are generally paid quarterly in advance with revenue recognized on a straight-line basis over the contract period.
+Added: As of March 31, 2024, approximately $ 4.7 million of revenue is expected to be recognized from remaining performance obligations for FPP contracts.
+Added: The Company expects to recognize revenue on approximately $ 4.0 million of these remaining performance obligations over the next 12 months and the balance of $ 0.7 million will be recognized thereafter.
+Added: 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.
+Added: This program is funded by the 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.
−Removed: As of March 31, 2023, approximately $ 4.9 million of revenue is expected to be recognized from remaining performance obligations for FPP service contracts.
−Removed: The Company expects to recognize revenue on approximately $ 4.1 million of these remaining performance obligations over the next 12 months and the balance of $ 0.8 million will be recognized thereafter.
−Removed: CAPSTONE GREEN ENERGY CORPORATION AND SUBSIDIARIES
−Removed: NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
−Removed: Loss before provision for income taxes consisted of the following for the years ended March 31, 2023 and 2022 (in thousands):
+Added: 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.
+Added: Income (loss) before provision for income taxes consisted of the following for the years ended March 31, 2024 and 2023 (in thousands):
Year Ended March 31,
United States
−Removed: Loss before provision for income taxes
−Removed: Current income tax provision is the amount of income taxes reported or expected to be reported on our income tax return.
−Removed: The provision for current income taxes was $ 7,000 and $ 19,000 for the years ended March 31, 2023 and March 31, 2022, respectively.
−Removed: The current income taxes were related to state income and foreign taxes.
−Removed: The Company did no t have current federal income taxes for the fiscal years ended March 31, 2023 and March 31, 2022.
+Added: Income (loss) before provision for income taxes
+Added: Current income tax provision is the amount of income taxes reported or expected to be reported on the Company’s income tax return.
+Added: The provision for current income taxes was $ 14,000 and $ 7,000 for the years ended March 31, 2024 and 2023, respectively.
+Added: The current income taxes were related to state income taxes.
+Added: The Company did no t have current federal income taxes for the fiscal years ended March 31, 2024 and 2023.
Actual income tax expense differed from the amount computed by applying statutory corporate income tax rates to loss from operations before income taxes.
−Removed: A reconciliation of income tax (benefit) expense to the federal statutory rate follows (in thousands):
+Added: A reconciliation of income tax expense to the federal statutory rate follows (in thousands):
Year Ended March 31,
1 unchanged sentence
State taxes, net of federal effect
−Removed: Foreign taxes
Expiring NOLs and tax credits
+Added: Redeemable noncontrolling interest
+Added: Impact of Chapter 11 reorganization, net
Impact of state rate change
2 unchanged sentences
Income tax expense
−Removed: CAPSTONE GREEN ENERGY CORPORATION AND SUBSIDIARIES
−Removed: NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
The Company’s deferred tax assets and liabilities consisted of the following at March 31, 2024 and 2023 (in thousands):
4 unchanged sentences
Deferred revenue
−Removed: Net operating loss (“NOL”) carryforwards
+Added: NOL carryforwards
Tax credit carryforwards
6 unchanged sentences
Deferred tax liabilities:
+Added: Investment in Partnership
Depreciation, amortization and impairment loss
1 unchanged sentence
Net deferred tax assets
−Removed: Because of 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.
+Added: As previously discussed, the Company emerged from bankruptcy on December 7, 2023 and effected a financial and organizational restructuring in accordance with the Plan.
+Added: 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.
+Added: 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 “New Common Stock”) and 10,449,863 Series A Redeemable Preferred Units (the “Preferred Units”).
+Added: 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.
+Added: 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.
+Added: The amount of CODI realized by a taxpayer is
+Added: determined based on the fair market value of the consideration received by the creditors in settlement of outstanding indebtedness.
+Added: 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.
+Added: 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.
+Added: 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, 2024 and 2023 was $ 153.1 million and $ 3.5 million, respectively.
−Removed: The Company’s NOL and tax credit carryforwards for federal and state income tax purposes at March 31, 2023 were as follows (in thousands):
−Removed: Federal NOL generated before April 1, 2018
−Removed: Federal NOL generated after March 31, 2018
−Removed: Federal tax credit carryforwards
−Removed: State tax credit carryforwards
−Removed: The NOLs and federal and state tax credits can be carried forward to offset future taxable income, if any.
−Removed: Utilization of the NOLs and tax credits are subject to an annual limitation of approximately $ 57.3 million due to the ownership change limitations provided by the Internal Revenue Code of 1986 and similar state provisions.
−Removed: The federal tax credit carryforward is a research and development credit, which may be carried forward.
−Removed: The state tax credits consist of a research and development credit can be carried forward indefinitely.
−Removed: Accounting Standards Codification (“ASC”) 740, Income Taxes 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.
−Removed: ASC 740 also provides guidance on derecognition, measurement, classification, interest and penalties, accounting in interim periods, disclosure and transition.
−Removed: Based on management’s evaluation, the total amount of unrecognized tax benefits related to research and development credits as of March 31, 2023 and 2022 was $ 1.9 million.
+Added: The decrease was primarily attributable to the impact of the Plan reorganization.
+Added: The Company’s NOL for federal and state income tax purposes at March 31, 2024 were as follows (in thousands):
+Added: IRC Section 382 (“Section 382”) limits the use of NOL and tax credit carryforwards when changes occur in the capital stock ownership of the Company.
+Added: Any annual limitation may result in the expiration of NOL and credits before utilization.
+Added: Should the Company have an ownership change, utilization of the NOL and carryforwards could be significantly reduced.
+Added: 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.
+Added: 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.
+Added: ASC 740 also provides guidance on derecognition, measurement, classification, interest and penalties, accounting interim periods, disclosure and transition.
+Added: Based on management's evaluation, the total amount of unrecognized tax benefits related to research and development credits as of March 31, 2024 and 2023 was zero and $ 1.9 million, respectively.
There were no interest or penalties related to unrecognized tax benefits as of March 31, 2024 or March 31, 2023.
−Removed: The amount of unrecognized tax benefits that, if recognized, would affect the effective tax rate as of March 31, 2023 and 2022 was $ 1.9 million.
−Removed: However, this impact would be offset by an equal increase in the deferred tax valuation allowance as the
−Removed: CAPSTONE GREEN ENERGY CORPORATION AND SUBSIDIARIES
−Removed: NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
−Removed: Company has recorded a full valuation allowance against its deferred tax assets because of uncertainty as to future realization.
−Removed: The fully reserved recognized federal and state deferred tax assets related to research and development credits balance as of March 31, 2023 and 2022 was $ 5.0 million and $ 9.7 million, and $ 5.7 million and $ 9.7 million, respectively.
+Added: The amount of unrecognized tax benefits that, if recognized, would affect the effective tax rate as of March 31, 2024 and March 31, 2023 was zero and $ 1.9 million, respectively.
+Added: However, this impact would be offset by an equal increase in the deferred tax valuation allowance as the Company has recorded a full valuation allowance against its deferred tax assets due to the uncertainty of future realization.
+Added: The fully reserved recognized federal and state deferred tax assets related to research and development credits balance as of March 31, 2024 and 2023 was zero and $ 5.0 million, and zero and $ 5.7 million, respectively.
+Added: As part of the reorganization, the research and development credits remained with Capstone Green Energy Corporation, the Reorganized Private Co.
+Added: 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 March 31, 2022
−Removed: Gross increase related to prior year tax positions
−Removed: Gross increase related to current year tax positions
Lapse of statute of limitations
Balance at March 31, 2023
−Removed: Gross increase related to prior year tax positions
−Removed: Gross increase related to current year tax positions
−Removed: Lapse of statute of limitations
+Added: Gross decrease due to Chapter 11 reorganization
Balance at March 31, 2024
2 unchanged sentences
federal jurisdiction and various state, local and foreign jurisdictions.
−Removed: With few exceptions, the Company is no longer subject to U.S.
−Removed: federal, state, local or non-U.S.
−Removed: income tax examinations by tax authorities for the years before 2017.
−Removed: However, net operating loss carryforwards remain subject to examination to the extent they are carried forward and impact a year that is open to examination by tax authorities.
−Removed: The Company's evaluation was performed for the tax years which remain subject to examination by major tax jurisdictions as of March 31, 2023.
−Removed: When applicable, the Company accounts for interest and penalties generated by tax contingencies as interest and other expense, net in the statements of operations.
−Removed: Stockholders’ Equity (Deficiency)
+Added: 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.
+Added: Permanent Equity
The following table summarizes, by Consolidated Statements of Operations line item, stock-based compensation expense (in thousands):
+Added: Year Ended March 31,
Cost of goods sold
3 unchanged sentences
2017 and 2023 Equity Incentive Plans
−Removed: In June 2017, the Company’s Board of Directors (the “Board”) adopted the Capstone Green Energy Corporation 2017 Equity Incentive Plan (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”).
−Removed: The 2017 Plan initially provided for awards of up to 300,000 shares of Common Stock.
−Removed: The 2017 Plan is administered by the Compensation and Human Capital Committee designated by the Board (the “Compensation Committee”).
−Removed: The Compensation Committee’s authority includes determining the number of incentive awards and vesting provisions.
−Removed: On June 5, 2018, the Board adopted an amendment to the 2017 Plan to increase the aggregate number of shares of Common Stock authorized for issuance under the 2017 Plan by 300,000 shares of Common Stock.
−Removed: The amendment of the 2017 Plan was approved by the Company’s stockholders at the 2018 annual meeting of stockholders on August 30, 2018.
−Removed: Since this time, the Company’s stockholders have approved amendments to increase the aggregate number of shares authorized for issuance under the 2017 Plan by an additional 2,200,000 shares of Common Stock, including, most recently, on June 7, 2022, the Board adopted Amendment No.
−Removed: CAPSTONE GREEN ENERGY CORPORATION AND SUBSIDIARIES
−Removed: NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
−Removed: “Plan Amendment”) of the 2017 Plan to increase the aggregate number of shares of Common Stock authorized for issuance under the 2017 Plan by 600,000 shares of Common Stock.
−Removed: The Plan amendment was approved by the Company’s stockholders at the 2022 annual meeting of stockholders on September 12, 2022.
−Removed: As of March 31, 2023, there were 984,411 shares available for future grants under the 2017 Plan.
+Added: Capstone Green Energy Corporation 2017 Equity Incentive Plan
+Added: 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”).
+Added: The 2017 Plan provided for 3,400,000 aggregate number of shares of Common Stock authorized for issuance under the 2017 Plan.
+Added: 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.
+Added: The Company recorded $ 2.1 million of stock-based compensation expense for the acceleration of cancelling the unvested forfeited awards.
+Added: Capstone Green Energy Holdings, Inc.
+Added: 2023 Equity Incentive Plan
+Added: In connection with the Emergence, on December 7, 2023, the Capstone Green Energy Holdings, Inc.
+Added: 2023 Equity Incentive Plan (the “Incentive Plan”) was approved and adopted by the Capstone Green Energy Holdings, Inc.
+Added: 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.
+Added: The Incentive Plan is administered by the Capstone Green Energy Holdings, Inc.
+Added: Compensation and Human Capital Committee or the Board.
+Added: No more than 3,000,000 shares of New Common Stock are available for the grant of awards under the Incentive Plan.
+Added: The Company intends to issue equity awards to incentivize employees whose unvested equity awards were terminated in accordance with the Plan.
+Added: 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 .
+Added: The Capstone Green Energy Holdings, Inc.
+Added: Board at any time, and from time to time, may amend or terminate the Incentive Plan.
+Added: 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.
+Added: Non-Voting Common Stock
+Added: 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.
+Added: The non-voting common stock are to be issued to certain key employees and directors of the Company.
+Added: The intent of issuing the non-voting common share was to provide value to the employees and officers after the
+Added: restructuring and substantial de-leveraging following the Company’s Chapter 11.
+Added: T he non-voting common stock do not have any voting rights on any matter on which stockholders of Capstone Green Energy Holdings, Inc.
+Added: are entitled to vote.
+Added: 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).
+Added: 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.
+Added: 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.
+Added: 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.
+Added: Each share of non-voting common stock will automatically upon transfer, convert into a share of common stock on a 1 :1 basis.
+Added: 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.
+Added: 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.
+Added: As of March 31, 2024, 508,475 shares of fully vested non-voting common stock were outstanding.
Restricted Stock Units and Performance Restricted Stock Units
−Removed: The Company issued restricted stock units under the Company’s 2000 Equity Incentive Plan, as well as issued (and may in the future issue) restricted stock units under the 2017 Plan, to employees, non-employee directors and consultants.
−Removed: The restricted stock units are valued based on the closing price of the Company’s Common Stock on the date of issuance, and compensation cost is recorded on a straight-line basis over the vesting period.
−Removed: The restricted stock units issued to employees vest over a period of two , three or four years .
−Removed: For restricted stock units with two year vesting, 100 % vests on the second year anniversary.
−Removed: For restricted stock units with three year vesting, one -third vest annually beginning one year after the issuance date.
−Removed: For restricted stock units with four year vesting, one -fourth vest annually beginning one year after the issuance date.
−Removed: The restricted stock units issued to non-employee directors vest one year after the issuance date.
+Added: 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.
+Added: 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 following table summarizes restricted stock unit and performance restricted stock unit (“PRSU”) activity during Fiscal 2024:
3 unchanged sentences
Vested and issued
+Added: Forfeited/cancelled
+Added: ( 1,357,085 )
Non-vested restricted stock units outstanding at March 31, 2024
Restricted stock units expected to vest beyond March 31, 2024
−Removed: The following table provides additional information on restricted stock units and performance restricted stock units:
−Removed: Year Ended March 31,
−Removed: Restricted stock compensation expense (in thousands)
−Removed: Aggregate fair value of restricted stock units vested and issued (in thousands)
−Removed: Weighted average grant date fair value of restricted stock units granted during the period
−Removed: As of March 31, 2023, there was approximately $ 1.6 million of total compensation cost related to unvested restricted stock units that is expected to be recognized as expense over a weighted average period of 2.1 years.
−Removed: The Company’s PRSU activity is included in the above restricted stock unit tables.
−Removed: The PRSU program has a three-year performance measurement period.
−Removed: The performance measurement occurs in the third year (for a three-year grant) following the grant date.
−Removed: The program is intended to have overlapping performance measurement periods (e.g., a new three-year cycle begins each year on April 1), subject to Compensation Committee approval.
−Removed: The overall performance at the end of the three-year period will be defined as the average of the yearly goals to determine the payout.
−Removed: Overall performance and payout at the end of the three-year period will be defined as the average of the three annual goals achievement.
−Removed: At the end of each performance measurement period, the Compensation Committee will determine the achievement against the performance objectives.
−Removed: During Fiscal 2023, the Company granted 72,412 PRSUs with a three-year performance measurement and the criteria measured by the Company’s aftermarket sales absorption.
−Removed: During Fiscal 2022, the Company granted 35,986 PRSUs
−Removed: CAPSTONE GREEN ENERGY CORPORATION AND SUBSIDIARIES
−Removed: NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
−Removed: with a third-year performance measurement and the criteria measured by the Company’s cash flow from operations and aftermarket sales absorption.
−Removed: The target PRSU awards for each participant, will be paid upon achievement of the target level of performance for cash flow from operations and aftermarket sale absorption, taking into account the applicable weighing for the individual metric.
−Removed: Achievement of a performance goal at the threshold level will result in a payment that is 50 % of the target PRSU award.
−Removed: Achievement of a performance goal at the maximum level will result in a payment that is 150 % of the target PRSU award.
−Removed: The Compensation Committee will use an interpolation table that weighs performance between levels for determining the portion of the Target PRSU that is earned.
−Removed: The weighted average per share grant date fair value of PRSUs granted during Fiscal 2023 and 2022 was $ 3.80 and $ 8.39 , respectively.
−Removed: Based on the Company’s assessment as of March 31, 2023, the Company will not meet the threshold of the performance measurements, and as a result, no compensation expense was recorded during Fiscal 2023 and 2022.
−Removed: Compensation expense is recognized over the corresponding requisite service period and will be adjusted in subsequent reporting periods if the Company’s assessment of the probable level of achievement of the performance goals change.
−Removed: The Company will continue to assess the likelihood of the PRSU threshold being met until the end of the applicable performance period.
Stockholder Rights Plan
−Removed: On May 6, 2019, the Board declared a dividend of one right (a “New Right”) for each of the Company’s issued and outstanding shares of Common Stock.
−Removed: The dividend was paid to the stockholders of record at the close of business on May 16, 2019 (the “Record Date”).
−Removed: Each New Right entitles the registered holder, subject to the terms of the NOL Rights Agreement (as defined below), to purchase from the Company one one -thousandth of a share of the Company’s Series B Junior Participating Preferred Stock (the “Preferred Stock”) at a price of $ 5.22 (the “Exercise Price”), subject to certain adjustments.
−Removed: The description and terms of the New Rights are set forth in the Rights Agreement dated as of May 6, 2019 (the “NOL Rights Agreement”) between the Company and Broadridge Financial Solutions, Inc., as Rights Agent (the “Rights Agent”).
−Removed: The NOL Rights Agreement replaced the Company’s Rights Agreement, dated May 6, 2016, by and between the Company and Broadridge Financial Solutions, Inc., as successor-in-interest to Computershare Inc., as rights agent (the “Original Rights Agreement”).
−Removed: The Original Rights Agreement, and the rights thereunder to purchase fractional shares of Preferred Stock, expired at 5:00 p.m., New York City time, on May 6, 2019 and the NOL Rights Agreement was entered into immediately thereafter.
−Removed: The purpose of the NOL Rights Agreement is to diminish the risk that the Company’s ability to use its net operating losses and certain other tax assets (collectively, “Tax Benefits”) to reduce potential future federal income tax obligations would become subject to limitations by reason of the Company’s experiencing an “ownership change,” as defined in Section 382 of the Internal Revenue Code of 1986, as amended (the “Tax Code”).
−Removed: A company generally experiences such an ownership change if the percentage of its stock owned by its “5-percent shareholders,” as defined in Section 382 of the Tax Code, increases by more than 50 percentage points over a rolling three-year period.
−Removed: The NOL Rights Agreement is designed to reduce the likelihood that the Company will experience an ownership change under Section 382 of the Tax Code by (i) discouraging any person or group from becoming a 4.9 % or greater shareholder and (ii) discouraging any existing 4.9 % or greater shareholder from acquiring additional shares of the Company’s stock.
−Removed: The New Rights will not be exercisable until the earlier to occur of (i) the close of business on the tenth business day after a public announcement or filing that a person has, or group of affiliated or associated persons have, become an “Acquiring Person,” which is defined as a person or group of affiliated or associated persons who, at any time after the date of the NOL Rights Agreement, have acquired, or obtained the right to acquire, beneficial ownership of 4.9 % or more of the Company’s outstanding shares of Common Stock, subject to certain exceptions or (ii) the close of business on the tenth business day after the commencement of, or announcement of an intention to commence, a tender offer or exchange offer the consummation of which would result in any person becoming an Acquiring Person (the earlier of such dates being called the “Distribution Date”).
−Removed: Certain synthetic interests in securities created by derivative positions, whether or not such
−Removed: CAPSTONE GREEN ENERGY CORPORATION AND SUBSIDIARIES
−Removed: NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
−Removed: interests are considered to be ownership of the underlying Common Stock or are reportable for purposes of Regulation 13D of the Exchange Act, are treated as beneficial ownership of the number of shares of Common Stock equivalent to the economic exposure created by the derivative position, to the extent actual shares of the Common Stock are directly or indirectly held by counterparties to the derivatives contracts.
−Removed: With respect to certificates representing shares of Common Stock outstanding as of the Record Date, until the Distribution Date, the New Rights will be evidenced by such certificates for shares of Common Stock registered in the names of the holders thereof, and not by separate Rights Certificates, as described further below.
−Removed: With respect to book entry shares of Common Stock outstanding as of the Record Date, until the Distribution Date, the New Rights will be evidenced by the balances indicated in the book entry account system of the transfer agent for the Common Stock.
−Removed: Until the earlier of the Distribution Date and the Expiration Date, as described below, the transfer of any shares of Common Stock outstanding on the Record Date will also constitute the transfer of the New Rights associated with such shares of Common Stock.
−Removed: As soon as practicable after the Distribution Date, separate certificates evidencing the New Rights (“Right Certificates”) will be mailed to holders of record of the Common Stock as of the close of business on the Distribution Date, and such Right Certificates alone will evidence the New Rights.
−Removed: The New Rights, which are not exercisable until the Distribution Date, will expire prior to the earliest of (i) May 6, 2022 or such later day as may be established by the Board prior to the expiration of the New Rights, provided that the extension is submitted to the Company’s stockholders for ratification at the next annual meeting of stockholders of the Company succeeding such extension;
−Removed: (ii) the time at which the New Rights are redeemed pursuant to the NOL Rights Agreement;
−Removed: (iii) the time at which the New Rights are exchanged pursuant to the NOL Rights Agreement;
−Removed: (iv) the time at which the New Rights are terminated upon the occurrence of certain transactions;
−Removed: (v) the close of business on the first day after the Company’s 2019 annual meeting of stockholders, if approval by the stockholders of the Company of the NOL Rights Agreement has not been obtained on or prior to the close of business on the first day after the Company’s 2019 annual meeting of stockholders;
−Removed: (vi) the close of business on the effective date of the repeal of Section 382 of the Tax Code, if the Board determines that the NOL Rights Agreement is no longer necessary or desirable for the preservation of Tax Benefits;
−Removed: and (vii) the close of business on the first day of a taxable year of the Company to which the Board determines that no Tax Benefits are available to be carried forward, (the earliest of (i), (ii), (iii), (iv), (v), (vi) and (vii) is referred to as the “Expiration Date”).
−Removed: Each share of Preferred Stock will be entitled, when, as and if declared, to a preferential per share quarterly dividend payment equal to the greater of (i) $ 1.00 per share or (ii) an amount equal to 1,000 times the aggregate quarterly dividend declared per share of Common Stock since the immediately preceding quarterly dividend payment date for the Common Stock (or, with respect to the first quarterly dividend payment on the Common Stock, since the first issuance of the Preferred Stock).
−Removed: Each share of Preferred Stock will entitle the holder thereof to 1,000 votes on all matters submitted to a vote of the stockholders of the Company.
−Removed: In the event of any merger, consolidation or other transaction in which shares of Common Stock are converted or exchanged, each share of Preferred Stock will be entitled to receive 1,000 times the amount received per one share of Common Stock.
−Removed: On April 7, 2022, the Board approved an extension of the NOL Rights Agreement from May 6, 2022 to May 6, 2025.
−Removed: This extension was approved by the stockholders at the 2022 annual meeting of stockholders held on September 12, 2022.
−Removed: Offerings of Common Stock and Warrants
−Removed: Common Stock Offerings
−Removed: On June 17, 2021, the Company entered into an amended and restated underwriting agreement (the “Wainwright Underwriting Agreement”) with H.C.
−Removed: Wainwright & Co., LLC (”Wainwright”) whereby the Company agreed to sell to Wainwright, and Wainwright agreed to purchase, in a firm commitment underwritten public offering 1,904,763 shares (the “Wainwright Shares”) of the Company’s Common Stock, $ 0.001 par value per share (the “Wainwright Offering”).
−Removed: CAPSTONE GREEN ENERGY CORPORATION AND SUBSIDIARIES
−Removed: NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
−Removed: offering price to the public in the Offering was $ 5.25 per share of Common Stock, and the Underwriter agreed to purchase the Wainwright Shares from the Company pursuant to the Wainwright Underwriting Agreement at a price of $ 4.91 per share, representing an underwriting discount of 6.5 % .
−Removed: Pursuant to the Wainwright Underwriting Agreement, the Company also granted Wainwright an option to purchase, for a period of 30 days from the date of the Underwriting Agreement, up to an additional 285,714 shares of Common Stock (the “Option Shares”).
−Removed: On June 21, 2021, Wainwright exercised the option in full.
−Removed: The Wainwright Offering of the Wainwright Shares was registered pursuant to a shelf registration statement (No.
−Removed: 333-254290) on Form S-3 filed by the Company with the Securities and Exchange Commission on March 22, 2021, and declared effective on April 14, 2021 (the “Registration Statement”), and made pursuant to a prospectus supplement, dated June 17, 2021, and accompanying prospectus that form a part of the Registration Statement relating to the Offering.
−Removed: The Offering closed on June 22, 2021, and the Company received net proceeds of $ 10.5 million after deducting $ 1.0 million in underwriting discounts, commissions and offering expenses paid by the Company.
−Removed: On August 18, 2022, the Company entered into an underwriting agreement (the “Lake Street Underwriting Agreement”) with Lake Street Capital Markets, LLC and Joseph Gunnar and Company, LLC (the “Underwriters”) whereby the Company agreed to sell to the Underwriters, and the Underwriters agreed to purchase, in a firm commitment underwritten public offering 2,934,498 (the “Lake Street Shares”) of the Company’s Common Stock, $ 0.001 par value per share (the “Lake Street Offering”) and accompanying warrants to purchase up to 2,934,498 shares of common stock.
−Removed: The offering price to the public in the Offering was $ 2.75 per share of Common Stock and accompanying warrant, and the Underwriter agreed to purchase the shares and accompanying warrants from the Company pursuant to the Underwriting Agreement at a price of $ 2.585 per share and accompanying warrant, representing an underwriting discount of 6.0 %.
−Removed: The Lake Street Offering of the Lake Street Shares was registered pursuant to the Registration Statement, and made pursuant to a prospectus supplement, dated August 22, 2022, and accompanying prospectus that form a part of the Registration Statement relating to the Lake Street Offering.
−Removed: The Lake Street Offering closed on August 24, 2022, and the Company received net proceeds of $ 7.3 million after deducting $ 0.8 million in underwriting discounts, commissions and offering expenses paid by the Company.
−Removed: Goldman Warrant
−Removed: On February 4, 2019, the Company sold to Goldman Sachs & Co.
−Removed: LLC (the “Holder”), a Purchase Warrant for Common Shares (the “Warrant”) pursuant to which the Holder may purchase shares of the Company’s Common Stock in an aggregate amount of up to 404,634 shares (the “Warrant Shares”).
−Removed: The Warrant was sold to the Holder at a purchase price of $ 150,000 , in a private placement exempt from registration under the Securities Act.
−Removed: The Warrant may be exercised by the Holder at any time after August 4, 2019 at an exercise price equal to $ 8.86 and expired on February 4, 2024 .
−Removed: The Warrant contains standard adjustment provisions in the event of additional stock issuances below the exercise price of the warrant, stock splits, combinations, rights offerings and similar transactions.
−Removed: The value of the Warrant was $ 2.3 million, and has been classified as an equity instrument in additional paid in capital in the Company’s condensed consolidated balance sheets.
−Removed: As of March 31, 2023, the Holder may purchase shares of the Company’s Common Stock in an aggregate amount of up to 463,067 shares.
−Removed: On December 9, 2019, the Company entered into an Amendment No.
−Removed: 1 to the Purchase Warrant for Common Shares (the “Amendment No.
−Removed: 1”) with Special Situations Investing Group II, LLC (as successor in interest to Goldman Sachs & Co.
−Removed: LLC) (the “Warrant Holder”) that amends the Warrant.
−Removed: The Amendment No.
−Removed: 1 amended the Warrant to increase the number of Warrant Shares issuable under the Warrant (on a post-reverse split basis) and to decrease the exercise price from $ 8.86 per share (on a post-reverse split basis) to $ 3.80 per share (the “Per Share Warrant Exercise Price”).
−Removed: The Amendment No.
−Removed: 1 also amends the Warrant such that the Per Share Anti-Dilution Price is equal to the Per Share Warrant Exercise Price.
−Removed: As a result of the decrease in exercise price, the Company recorded the change in valuation
−Removed: CAPSTONE GREEN ENERGY CORPORATION AND SUBSIDIARIES
−Removed: NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
−Removed: of $ 0.3 million as additional debt discount with a corresponding entry to additional paid-in capital in the condensed consolidated balance sheets and statements of stockholders equity.
−Removed: On June 16, 2020, the Company entered into an Amendment No.
−Removed: 2 to the Purchase Warrant for Common Shares (“Amendment No.
−Removed: 2”) with the Warrant Holder to increase the number of Warrant Shares (as defined therein) issuable under the Warrant and to decrease the exercise price from $ 3.80 per share to $ 2.61 per share (the “Per Share Warrant Exercise Price”).
−Removed: The Company would receive aggregate gross proceeds of $ 1,186,313 if the outstanding Warrant is exercised at the new Per Share Warrant Exercise Price.
−Removed: Amendment No.
−Removed: 2 also amends the Warrant such that the Per Share Anti-Dilution Price (as defined therein) is equal to the Per Share Warrant Exercise Price as provided in the Amendment No.
−Removed: 2 to the Warrant.
−Removed: As a result of the decrease in exercise price, the Company recorded the change in valuation of $ 0.1 million as additional debt discount with a corresponding entry to additional paid in capital in the condensed consolidated balance sheets and statements of stockholders equity.
−Removed: All other terms and provisions in the Warrant remain in effect.
−Removed: Goldman “2020 Warrant”
−Removed: On October 1, 2020, the Company entered into an Amendment No.
−Removed: 3 to the Purchase Warrant for Common Shares (the “Amendment No.
−Removed: 3”) with Special Situations Investing Group II, LLC (as successor in interest to Goldman Sachs & Co.
−Removed: LLC) (the “Warrant Holder”) that amends that certain Purchase Warrant for Common Shares originally issued by the Company to Goldman Sachs & Co.
−Removed: LLC, dated February 4, 2019, as amended (the “Original Warrant”).
−Removed: Amendment No.
−Removed: 3 amends the Original Warrant to amend Section 2.1, Section 2.2(c) and Section 18.1 of the Warrant to, among other things, make certain changes necessitated by the issuance of a second Warrant (the “2020 Warrant”) to the Warrant Holder pursuant to the Company’s entry into the Amended & Restated (“A&R”) Note Purchase Agreement (See Note 11 – Term Note Payable).
−Removed: On October 1, 2020, and pursuant to the Company’s entry into the A&R Note Purchase Agreement, the Company sold to the Warrant Holder the 2020 Warrant to purchase up to 291,295 shares (the “2020 Warrant Shares”) of the Company’s Common Stock.
−Removed: The 2020 Warrant was sold to the Warrant Holder at a purchase price of $ 10,000 , in a private placement exempt from registration under the Securities Act.
−Removed: The 2020 Warrant may be exercised by the Warrant Holder at any time after October 1, 2020 at an exercise price equal to $ 4.76 and expired on February 4, 2024 .
−Removed: The Warrant contains standard adjustment provisions in the event of additional stock issuances below the exercise price of the warrant, stock splits, combinations, rights offerings and similar transactions.
−Removed: The value of the Warrant was $ 0.8 million, and has been classified as an equity instrument in additional paid in capital in the Company’s consolidated balance sheets.
−Removed: The value of the Warrant was determined using the Black-Scholes Option Pricing model using the following assumptions:
+Added: 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.
+Added: The warrants outstanding as of the Effective Date to purchase up to 3,763,860 shares of Reorganized Private Co.
+Added: at various exercise prices for each series were cancelled on the Effective Date in accordance with the Plan.
+Added: Temporary Equity
+Added: Redeemable Preferred Units
+Added: Redeemable noncontrolling interests are reported on the Consolidated Balance Sheet as Temporary Equity.
+Added: In connection with the bankruptcy proceedings, the TSA provided for the issuance of 10,449,863 Series A Redeemable Preferred Units of the newly formed subsidiary, the Operating Subsidiary that include a redemption feature.
+Added: The Preferred Units have an aggregate value representing 37.5 % equity ownership in the Operating Subsidiary (“Aggregate Purchase Price”).
+Added: 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.
+Added: Therefore, the Preferred Units are probable of becoming redeemable and will be classified as temporary (‘mezzanine’) equity.
+Added: The Preferred Units also provide the holder with the option to convert all or less than all of the Preferred Units into common units at any time and from time to time without the payment of additional consideration.
+Added: 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.
+Added: 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.
+Added: None of the Preferred Units had been converted into common units as of March 31, 2024.
+Added: 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 (together, the “Features”).
+Added: The Company recorded $ 13.9 million, the initial fair value, as Temporary Equity on the Consolidated Balance Sheet as of March 31, 2024.
+Added: The fair value of $ 1.33 per Preferred Unit at the respective dates 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.
+Added: 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.
+Added: The OPM used was the Black-Scholes model to price the call option, which includes the below variables.
+Added: The enterprise value utilized by the Company in the OPM represents the value agreed upon by the parties involved the Chapter 11 Proceedings and Emergence as approved by the Bankruptcy Court:
+Added: March 31, 2024
+Added: December 7, 2023
+Added: Fair value of common units
+Added: Dividend yield
Risk-free interest rate
−Removed: Contractual term
−Removed: Expected volatility
−Removed: Amendment No.
−Removed: 2 also amends the Warrant such that the Per Share Anti-Dilution Price (as defined therein) is equal to the Per Share Warrant Exercise Price as provided in the Amendment No.
−Removed: 2 to the Warrant.
−Removed: As a result of the decrease in exercise price, the Company recorded the change in valuation of $ 0.1 million as additional debt discount with a corresponding entry to additional paid in capital in the condensed consolidated balance sheets and statements of stockholders equity.
−Removed: All other terms and provisions in the Warrant remain in effect.
−Removed: CAPSTONE GREEN ENERGY CORPORATION AND SUBSIDIARIES
−Removed: NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
−Removed: September 2019 Pre-Funded and Series D Warrants
−Removed: On September 4, 2019, the Company entered into a Securities Purchase Agreement (the “Securities Purchase Agreement”) with certain institutional and accredited investors pursuant to which the Company agreed to issue and sell in a registered direct offering (the “Registered Direct Offering”) an aggregate of 580,000 shares of Common Stock, at a negotiated purchase price of $ 5.00 per share, and pre-funded warrants to purchase up to an aggregate of 440,000 shares of Common Stock at a negotiated purchase price of $ 5.00 per Pre-Funded Warrant, for aggregate gross proceeds of approximately $ 5.1 million ( 580,000 shares of Common Stock plus 440,000 pre-funded warrants at a $ 5.00 per share purchase price), before deducting placement agent fees and other offering expenses.
−Removed: Net proceeds from the offering were $ 4.6 million.
−Removed: The offering closed on September 9, 2019.
−Removed: On October 24, 2019, a warrant holder exercised its rights to the warrant agreement to exercise on a cash basis 440,000 pre-funded warrants at an exercise price of $ 0.001 per share under the warrant agreement.
−Removed: In a concurrent private placement, the Company issued to the purchasers warrants to purchase 765,000 shares of Common Stock, which represent 75 % of the number of shares of Common Stock and shares underlying the Pre-Funded Warrants purchased in the Registered Direct Offering, pursuant to the Securities Purchase Agreement.
−Removed: The Common Warrants will be exercisable for shares of Common Stock at an initial exercise price of $ 6.12 per share for a period of five years , starting on April 2, 2020 and expiring on April 2, 2025 .
−Removed: In January 2021, three warrant holders exercised their rights to the warrant agreement to exercise on a cashless basis 690,000 Series D warrants at an exercise price of $ 6.12 per share under the warrant agreement.
−Removed: In accordance with terms of the warrant agreement, after taking into account the shares withheld to satisfy the cashless exercise option, the Company issued 352,279 shares of Common Stock.
−Removed: As of March 31, 2023, there were 75,000 Series D warrants outstanding.
−Removed: August 2022 Warrants
−Removed: On August 24, 2022, the Company issued 2,934,498 of common stock warrants with an exercise price of $ 2.75 in conjunction with the Lake Street Offering.
−Removed: Stock to Vendors
−Removed: From time to time, the Company may enter into agreements with vendors for sponsorship, marketing or investor relation services whereby it may agree to compensate the vendor in cash and unregistered shares of Common Stock of the Company.
−Removed: The value of the unregistered shares of Common Stock is recorded as prepaid marketing cost and included in prepaid expenses and other current assets and stockholder’s equity in the Condensed Consolidated Balance Sheets and is amortized in proportion to the terms of their respective agreements.
−Removed: On February 17, 2021 and April 1, 2021, the Company issued 105,933 and 9,541 shares of the Company’s Common Stock, under a sponsorship agreement and an investor relations consulting agreement, respectively to vendors.
−Removed: The prepaid marketing cost amortization associated with the Common Stock issued were $ 1.0 million during Fiscal 2022, and were included in selling, general and administrative expense in the Consolidated Statements of Operations.
−Removed: As of March 31, 2023, there are no amounts remaining in prepaid marketing cost, prepaid expenses and other current assets in the Consolidated Balance Sheets related to the value of shares issued under the sponsorship agreement and investor relations consulting agreement.
+Added: Expected term
+Added: At each reporting period, the Company remeasures the redemption value of the Preferred Units and adjusts the carrying value to equal the maximum redemption value to retained earnings.
+Added: There was no change in the carrying value of the convertible preferred stock units for the year ended March 31, 2024 as the carrying value equaled the redemption value.
Fair Value Measurements
−Removed: The FASB has established a framework for measuring fair value in generally accepted accounting principles.
+Added: The FASB has established a framework for measuring fair value using generally accepted accounting principles.
That framework provides a fair value hierarchy that prioritizes the inputs to valuation techniques used to measure fair value.
1 unchanged sentence
The three levels of the fair value hierarchy are described as follows:
−Removed: CAPSTONE GREEN ENERGY CORPORATION AND SUBSIDIARIES
−Removed: NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
Inputs to the valuation methodology are unadjusted quoted prices for identical assets or liabilities in active markets.
7 unchanged sentences
The asset or liability’s fair value measurement level within the fair value hierarchy is based on the lowest level of any input that is significant to the fair value measurement.
−Removed: Valuation techniques used need to maximize the use of observable inputs and minimize the use of unobservable inputs.
+Added: Valuation techniques used must maximize the use of observable inputs and minimize the use of unobservable inputs.
Basis for Valuation
−Removed: The carrying values reported in the condensed consolidated balance sheets for cash and cash equivalents, accounts receivable and accounts payable approximate their fair values because of the immediate or short-term maturities of these financial instruments.
−Removed: The term note payable has been recorded net of a discount based on the fair value of the associated warrant and capitalized debt issuance costs and as of March 31, 2022 includes both the Three-Year Term Note and the SBA Paycheck Protection Program (“PPP”) Loan as discussed in Note 11–Term Note Payable.
−Removed: The carrying values and estimated fair values of these obligations are as follows (in thousands):
+Added: 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.
+Added: 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.
+Added: The Company used the BSM model (Level 3) with standard valuation inputs to value the Preferred Units as detailed in Note 10— Temporary Equity.
+Added: The fair value of the Company’s Exit Notes on the date of issuance approximated their carrying value based on a comparable market yield analysis completed by the Company.
+Added: As of March 31, 2024, the carrying value of the Exit Notes approximates their fair value.
+Added: Exit Facility Agreement
+Added: In connection with the emergence from the Chapter 11 Cases, on the Effective Date, the DIP Facility converted to the Exit Note Purchase Agreement for an aggregated principal amount of $ 28.0 million, including accrued and unpaid interest subject to the terms and conditions set forth in the Exit Note Purchase Agreement by and among the Operating Subsidiary, as the issuer, the Guarantors, Purchaser and the Collateral Agent (each as defined in the Exit Note Purchase Agreement).
+Added: The Exit Note Purchase Agreement provides for:
+Added: (i) a roll up of $ 12.6 million DIP New Money Notes (plus any accrued unpaid interest);
+Added: (ii) a roll up of $ 8.0 million of DIP Roll Up Notes (plus any accrued unpaid interest) (collectively with the roll up of the $ 12.6 million DIP New Money Notes, the “Exit Roll Up Notes”);
+Added: (iii) an additional $ 7.0 million of Exit New Money Notes and together with the Exit Roll Up Notes, the “Notes”, of which $ 7.0 million was drawn, less $ 0.2 million of debt issuance costs, as of March 31, 2024.
+Added: The Exit Note Purchase Agreement also provides for a $ 10.0 million uncommitted incremental facility.
+Added: The proceeds of the $ 7.0 million of Exit New Money Notes were used to fund restructuring expenses and for working capital, for general corporate purposes and to pay interest, premiums, fees and expenses payable under the other Note Documents (as defined in the Exit Note Purchase Agreement).
+Added: The Notes bear interest at a rate equal to the Adjusted Term SOFR (as
+Added: defined in the Exit Note Purchase Agreement) plus 7.00 % per annum.
+Added: A portion of the interest on the Notes is paid-in-kind until the third year following the Effective Date.
+Added: The Exit Roll Up Notes mature on December 7, 2026 and the Exit New Money Notes mature on December 7, 2025.
+Added: The scheduled maturities of the Company’s long-term debt are as follows as of March 31, 2024 (in thousands):
+Added: Year Ending March 31,
+Added: Total expected future maturities
+Added: The 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.
+Added: 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.
+Added: On March 27, 2024, the Company obtained a waiver from the Purchaser and the Collateral Agent in anticipation of default on March 31, 2024.
+Added: 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.
+Added: There can be no assurance that the Purchase and the Collateral Agent will waive any future defaults that may occur.
+Added: 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 Notes.
+Added: The Company believes it is probable the consolidated liquidity and consolidated adjusted EBITDA financial covenants discussed below will not be satisfied on September 30, 2024.
+Added: The Company is working to secure a waiver of the covenants or an amendment to the Exit Note Purchase Agreement with the senior lender, but no assurance can be given that such a waiver or amendment will be obtained.
+Added: 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 Notes up to the amount that is required to achieve the minimum consolidated adjusted EBITDA covenant for the quarter.
+Added: 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.
+Added: Consequently, the Exit new money notes, net of discount were reclassified to current on the Company’s Consolidated Balance Sheet as of March 31, 2024.
+Added: On June 28, 2024, the Company entered into the First Amendment (the “First Amendment”) to the Exit Note Purchase Agreement.
+Added: The First Amendment provides for:
+Added: (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.
+Added: 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:
+Added: (i) from September 30, 2024 to March 30, 2025, $ 1,000,000 ;
+Added: (ii) from March 31, 2025 to June 29, 2025, $ 2,500,000 ;
+Added: (iii) from June 30, 2025 to September 29, 2025, $ 3,000,000 ;
+Added: (iv) from September 30, 2025 to March 30, 2026, $ 3,500,000 ;
+Added: (v) from March 31 2026 to December 7, 2026, $ 4,000,000 .
+Added: 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):
+Added: Fiscal Quarter Ending
+Added: Consolidated Adjusted EBITDA
+Added: September 30, 2024
+Added: December 31, 2024
March 31, 2025
+Added: June 30, 2025
+Added: September 30, 2025
+Added: December 31, 2025
March 31, 2026
−Removed: Term note payable
−Removed: Term Note Payable
+Added: June 30, 2026
+Added: September 30, 2026
+Added: As of March 31, 2024, the Company has outstanding debt of $ 28.9 million, which includes the fully drawn $ 7.0 million of the Exit New Money Notes, $ 21.1 million of the DIP Claim (including the accrued interest of $ 1.1 million) and $ 1.0 million of total PIK interest, less debt issuance costs of $ 0.2 million.
+Added: Debt issuance costs in relation to the Exit New Money Notes and DIP Claim are being amortized over the term at an effective interest rate of 12.93 % and 12.69 %, respectively, as of March 31, 2024.
Three-Year Term Note
−Removed: 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, Goldman Sachs Specialty Lending Holdings, Inc.
−Removed: and any other purchasers party thereto from time to time (collectively, the “Purchaser”).
−Removed: Under the Note Purchase Agreement, the Company sold to the Purchaser $ 30.0 million aggregate principal amount of senior secured notes (the “Notes”), bearing interest at a rate of 13.0 % per annum and payable quarterly on March 31, June 30, September 30 and December 31 of each year until maturity.
+Added: 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”).
−Removed: The A&R Note Purchase Agreement amends and restates that certain Note Purchase Agreement, as amended, dated February 4, 2019, by and among the Company, certain of its subsidiaries as guarantors, the Collateral Agent and various purchasers party thereto.
−Removed: Under the A&R Note Purchase Agreement, the Company issued an
−Removed: CAPSTONE GREEN ENERGY CORPORATION AND SUBSIDIARIES
−Removed: NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
−Removed: additional $ 20 million in Notes, increasing total borrowings to $ 50.0 million.
−Removed: Following entry into the A&R Note Purchase Agreement, all outstanding Notes bear interest at the Adjusted (London Interbank Offer) LIBO Rate (as defined in the A&R Note Purchase Agreement) plus 8.75 % per annum, payable 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).
−Removed: The Notes do not amortize and the entire principal balance is due in a single payment on the maturity date, September 1, 2024.
−Removed: As of March 31, 2023, $ 51.0 million in borrowings were outstanding under the Notes, which includes the accrual for an exit fee to be paid at maturity or upon pre-payment.
−Removed: Obligations under the A&R Note Purchase Agreement are secured by all of the Company’s assets, including intellectual property and general intangibles.
−Removed: The A&R Note Purchase Agreement contains customary covenants, including, among others, covenants that restrict the Company’s ability to incur debt, grant liens, make certain investments and acquisitions, pay dividends, repurchase equity interests, repay certain debt, amend certain contracts, enter into affiliate transactions and asset sales or make certain equity issuances (including equity issuances that would cause an ownership change within the meaning of Section 382 of the Internal Revenue Code), and covenants that require the Company to, among other things, provide annual, quarterly and monthly financial statements, together with related compliance certificates, maintain its property in good condition, maintain insurance and comply with applicable laws.
−Removed: The financial covenants of the A&R Note Purchase Agreement require the Company not to exceed specified levels of Adjusted EBITDA losses relative to its financial model, beginning with the fiscal quarter ending September 30, 2021.
−Removed: Additionally, the Company shall not permit the Company’s minimum consolidated liquidity, which consists of its cash and cash equivalents, to be less than $ 9.0 million.
−Removed: Furthermore, the covenants require the Company to expand its Rental Fleet (as defined in the A&R Note Purchase Agreement) by (i) at least 6.25 MW by the 9-month anniversary of the Closing Date, and (ii) at least 12.50 MW by the 18-month anniversary of the Closing Date.
−Removed: On May 12, 2021, the Company and the collateral agent, entered into a First Amendment (the “Amendment”), to the A&R Note Purchase Agreement.
−Removed: The Amendment amends certain provisions of the A&R Note Purchase Agreement, including to (a) require the Company to expand its Rental Fleet (as defined in the A&R Note Purchase Agreement) by (i) at least 2.00 MW by the 9-month anniversary of the Closing Date (instead of 6.25 MW as provided in the A&R Note Purchase Agreement prior to the Amendment), and (ii) at least 12.50 MW by the 18-month anniversary of the Closing Date (which is unchanged from the covenant set forth in in the A&R Note Purchase Agreement prior to the Amendment), and (b) increase the Company’s minimum consolidated liquidity requirement from $ 9.0 million to $ 12.2 million for the period from May 12, 2021 to March 31, 2022, and $ 9.0 million thereafter.
−Removed: The financial covenants of the A&R Note Purchase Agreement require the Company not to exceed specified levels of Adjusted EBITDA losses relative to its financial model, beginning with the fiscal quarter ending September 30, 2021.
−Removed: As of March 31, 2022, the Company was not in compliance with the Adjusted EBITDA covenant contained in the A&R Note Purchase Agreement and did not cure such non-compliance by prepaying the Notes.
−Removed: As a result, the Company was in breach of the Adjusted EBITDA covenant as of May 27, 2022.
−Removed: On July 13, 2022 the Company entered into the A&R NPA Second Amendment with the Purchaser and the Collateral Agent, pursuant to which (i) the Purchaser and the Collateral Agent waived our breach of the Adjusted EBITDA covenant and (ii) the A&R Note Purchase Agreement has been amended to, among other things, add certain new covenants, including requirements that the Company uses its commercially reasonable best efforts to raise at least $ 10 million through a sale of its common stock by September 14, 2022 and refinance the Notes by October 1, 2022.
−Removed: On March 13, 2023, the Company transferred $ 9 million of funds from Bridge Bank, Affiliate of Western Alliance Bank, to Wells Fargo Bank.
−Removed: The Wells Fargo Bank account did not have an account control agreement in place, resulted in a breach of the covenant requiring the Company to have at all times a liquidity (i.e., cash in accounts covered by account control agreements) (the “Liquidity Covenant”) of at least $ 9 million.
−Removed: The Company transferred the $ 9 million back to its Bridge Bank account on April 5, 2023.
−Removed: On April 21, 2023, the Company again breached the Liquidity Covenant when its total funds in accounts subject to account control agreements fell below $ 9 million.
−Removed: On July 3, 2023, the Company failed to make the interest payment for the most recently ended quarter.
−Removed: On July 6, 2023, the Company entered into the A&R NPA Fourth Amendment with the Purchase and the Collateral Agent.
−Removed: CAPSTONE GREEN ENERGY CORPORATION AND SUBSIDIARIES
−Removed: NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
−Removed: As a result of the Company’s restated earnings, we were not in compliance with the Adjusted EBITDA covenant contained in the A&R Note Purchase Agreement.
−Removed: The breach required a change in classification of the term note payable to a current liability on our consolidated balance sheet resulting in a liquidity issue for the Company (see Note 17–Subsequent Events in the Notes to the Consolidated Financial Statements for further discussion of the outstanding debt and the post emergence financing).
−Removed: The Notes have been recorded net of a discount based on the debt issuance costs totaling $ 0.1 million.
−Removed: Amortization of the debt discount and debt issuance costs was $ 34,000 for both Fiscal 2023 and 2022, based on an effective interest rate, and has been recorded as interest expense in the consolidated statements of operations.
−Removed: Interest expense related to the Notes payable during Fiscal 2023 and 2022 was $ 6.2 million and $ 5.0 million, respectively, and includes $ 34,000 in amortization of debt issuance costs in both periods.
−Removed: SBA Paycheck Protection Program Loan
−Removed: On April 15, 2020, the Company submitted an application to its banking partner Western Alliance Bank, an Arizona corporation (“Western Alliance”) under the Small Business Administration (the “SBA”) Paycheck Protection Program (“PPP”) enabled by the Coronavirus Aid, Relief and Economic Security Act of 2020 (the “CARES Act”).
−Removed: Western Alliance entered into a note on April 24, 2020 with the Company and agreed to make available to the Company a loan in the amount of $ 2,610,200 (the “PPP Loan”).
−Removed: The Company received the full amount of the PPP Loan on April 24, 2020 (the “Initial Disbursement Date) and has used the proceeds to support fixed costs such as payroll costs, rent and utilities in accordance with the relevant terms and conditions of the CARES Act.
−Removed: The advance under the Loan bears interest at a rate per annum of 1 % .
−Removed: The term of the PPP Loan is two years , ending April 24, 2022 .
−Removed: On May 13, 2020, the Company repaid $ 660,200 of the PPP Loan in accordance with the Fourth Amendment to the Note Purchase Agreement between the Company and Goldman Sachs Specialty Lending Group, L.P.
−Removed: In February 2021, the Company applied for forgiveness of the PPP Loan, and the loan was forgiven in full on June 30, 2021 (see “Gain and Loss on Extinguishment of Debt” below).
−Removed: Gain and Loss on Extinguishment of Debt In June 2021, the Company received notification from Western Alliance that the SBA approved forgiveness of the PPP loan in its entirety.
−Removed: The Company accounted for forgiveness on the PPP Loan in accordance with ASC 470 and recognized a gain on debt extinguishment of $ 1.9 million on its Consolidated Statements of Operations and Consolidated Statements of Cash Flows during Fiscal 2022.
−Removed: In June 2021, the Company also received a refund of the $ 660,200 previously repaid in accordance with the Fourth Amendment to the Note Purchase Agreement between the Company and Goldman Sachs Specialty Lending Group, L.P.
−Removed: and recorded these amounts within other income on the Company’s Consolidated Statements of Operations.
−Removed: The Company rents microturbine equipment to our customer for twelve to thirty six months with an extension option , which may impact the lease term.
+Added: As of March 31, 2023, the Company had borrowings under the Note Purchase Agreement of $ 51.0 million.
+Added: The A&R Note Purchase Agreement contained a covenant, among others requiring the Company to have at all times a liquidity (the “Liquidity Covenant”) of at least $ 9.0 million.
+Added: 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.
+Added: On July 3, 2023, the Company failed to make an interest payment.
+Added: 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.
+Added: (as successor in interest to Goldman Sachs Specialty Lending Holdings, Inc.), as Collateral Agent and the purchaser party thereto (the “Purchaser”).
+Added: 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;
+Added: (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;
+Added: (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
+Added: Effective Date”);
+Added: (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;
+Added: (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;
+Added: (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;
+Added: (vii) the replacement of the Adjusted LIBO Rate with a Term SOFR interest rate benchmark;
+Added: (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;
+Added: (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;
+Added: and (x) the amendment to certain provisions of the A&R Note Purchase Agreement, including to add a number of new covenants.
+Added: Those new covenants include requirements that the Company (i) enter into a TSA within 30 days of the Fourth Amendment Effective Date;
+Added: (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;
+Added: (iii) close the transactions specified by the TSA by September 15, 2023;
+Added: 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.
+Added: 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;
+Added: (ii) make certain other cash disbursements in excess of thresholds set forth in the Fourth Amendment;
+Added: and (iii) amend existing, or enter into new, employment agreements or pay or incur any bonus or severance payment.
+Added: 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.
+Added: 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;
+Added: (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;
+Added: (iii) a minimum consolidated liquidity covenant requirement of $ 3.5 million, commencing on July 14, 2023 and operative through September 1, 2024;
+Added: 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.
+Added: 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.
+Added: 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”).
+Added: 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).
+Added: The entire principal amount of the Additional Notes is due and payable on September 1, 2024 (the “Maturity Date”).
+Added: The Additional Notes do not amortize and the entire principal balance is due in a single payment on the Maturity Date.
+Added: 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.
+Added: The Company suspended accruing and paying interest and amortizing deferred financing costs, discounts and premiums, as applicable.
+Added: During Fiscal 2024, $ 18.0 million of the LSTC balance, including accrued interest of $ 1.3
+Added: 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.
+Added: Interest expense related to the Term note payable, current during Fiscal 2024 and 2023 was $ 3.3 million and $ 6.2 million, respectively.
+Added: Gain on Extinguishment of Debt
+Added: 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.
+Added: The gain is recorded within Reorganization items, net on the Company’s Consolidated Statement of Operations.
+Added: The Company rents microturbine equipment to its customers for terms up to thirty-six months with an extension option , which may impact the lease term.
Monthly rental payments are fixed;
1 unchanged sentence
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.
−Removed: CAPSTONE GREEN ENERGY CORPORATION AND SUBSIDIARIES
−Removed: NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
−Removed: At March 31, 2023, the Company’s minimum rental revenue to be received under operating leases were as follows (in thousands):
+Added: At March 31, 2024, the Company’s minimum rental revenue to be received was as follows (in thousands):
Year Ending March 31,
+Added: Financed Assets
Total minimum rental revenue
3 unchanged sentences
Lease expense is recognized on a straight-line basis over the term of the lease, which may include extension periods.
−Removed: During Fiscal 2023, the Company entered into several rental agreements to rent used microturbine equipment from customers where that equipment was not currently in use.
−Removed: These rental agreements provide the Company an option to extend the lease, however, the Company is not likely to exercise these options and they are therefore not included in the determination of the lease term.
−Removed: These agreements totaled approximately 9.8 MW of microturbines and have an average term of 36 months , and a total commitment value of approximately $ 8.9 million.
+Added: 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.
+Added: 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.
+Added: As of March 31, 2024, lease commitments totaled approximately 18.4 MW of microturbines and have an average term of 36 months and a total commitment value of approximately $ 18.7 million.
The components of lease expense were as follows (in thousands):
4 unchanged sentences
(1) Interest expense is included in finance lease costs.
−Removed: CAPSTONE GREEN ENERGY CORPORATION AND SUBSIDIARIES
−Removed: NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
Supplemental balance sheet information related to the leases was as follows (in thousands):
18 unchanged sentences
Cash paid for amounts included in the measurement of lease liabilities
−Removed: Financing cash flows from finance leases
+Added: Finance cash flows from finance leases
Operating cash flows from finance leases
3 unchanged sentences
Operating leases
−Removed: Other supplemental operating lease information consists of the following:
At March 31, 2024, 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
−Removed: CAPSTONE GREEN ENERGY CORPORATION AND SUBSIDIARIES
−Removed: NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
Commitments and Contingencies
3 unchanged sentences
therefore, amounts under these firm purchase commitments will be payable upon the receipt of the related inventories.
+Added: Lease Commitments
+Added: See Note 13 – Leases.
+Added: Related Party Transactions
+Added: In connection with the emergence from the Chapter 11 Cases, on December 7, 2023, 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.
+Added: Services Agreement between Reorganized PrivateCo and Operating Subsidiary
+Added: On the Effective Date, Operating Subsidiary entered into the Reorganized PrivateCo Services Agreement by and among Reorganized PrivateCo and Operating Subsidiary.
+Added: The Reorganized PrivateCo Services Agreement provides that, among other things, Operating Subsidiary will provide certain services to Reorganized PrivateCo, and Reorganized PrivateCo will provide to 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.
+Added: 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).
+Added: The Company reported $ 0.7 million in other income for DSS service fees for Fiscal 2024.
+Added: Trademark License Agreement
+Added: 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.
+Added: 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).
+Added: In consideration for the license, the Company pays to Reorganized PrivateCo an annual royalty of $ 100,000 .
+Added: 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).
+Added: 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.
+Added: Services Agreement between the Company and Operating Subsidiary
+Added: In connection with the emergence from the Chapter 11 Cases, on the Effective Date, the Company entered into a Services Agreement (the “Services Agreement”) by and among the Company and Operating Subsidiary.
+Added: 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”).
+Added: Capstone Services Fee for the Company’s fiscal year 2023 will not exceed $ 2,500,000 , in the aggregate (the “Services Fee Cap”), which amount will be prorated based on the number of days in such fiscal year following execution of the Services Agreement.
+Added: Effective as of April 1 of each year, beginning with April 1, 2024, the Services Fee Cap will increase for each fiscal year by an amount equal to the greater of (a) 3.5000 % and (b) the Consumer Price Index, as set by the U.S.
+Added: Bureau of Labor Statistics and available on March 31 of each year;
+Added: provided that such increase effective on April 1, 2024, shall be equal to 1.7500 %.
Other Commitments
1 unchanged sentence
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.
−Removed: As of March 31, 2023, no significant inventories were held at distributors.
+Added: As of March 31, 2024, no significant inventories of this nature were held at distributors.
Legal Matters
8 unchanged sentences
for breach of contract and for injunctive relief relating to the parties’ prior distributor relationship, which terminated at the end of March 2018, and Turbine Intl.’s failure to satisfy its payment obligations under certain financial agreements, namely an accounts receivable agreement and promissory note in favor of Capstone.
−Removed: As remedies for these claims, the Company is seeking compensatory, consequential, along with injunctive relief and attorney’s fees, interest, and costs.
+Added: As remedies for these claims, the Company is seeking compensatory and consequential damages, along with injunctive relief and attorney’s fees, interest, and costs.
On March 18, 2020, Turbine Intl.
2 unchanged sentences
asserted claims against Capstone, and individually against Mr.
−Removed: James Crouse, Capstone’s Chief Revenue Officer, for breach of contract under the distributor agreement, accounts receivable agreement and promissory note, fraud, breach of the covenant of good faith and fair dealing, unjust enrichment and constructive trust, negligent misrepresentation, violation of the California unfair practices act, violation of racketeer influenced corrupt organizations act, and conspiracy to commit fraud.
+Added: James Crouse, Capstone’s Chief Revenue Officer, for breach of contract under the distributor agreement, accounts receivable agreement and promissory note, fraud, breach of the covenant of good faith and fair dealing, unjust enrichment and constructive trust, negligent misrepresentation, violation of the California unfair practices act, violation of the racketeer influenced corrupt organizations act, and conspiracy to commit fraud.
As remedies for these alleged claims, Turbine Intl.
−Removed: are seeking compensatory, consequential, and punitive damages along with attorney’s fees, interest, and costs.
+Added: is seeking compensatory, consequential, and punitive damages along with attorney’s fees, interest, and costs.
Capstone answered the cross-claims on May 7, 2020.
−Removed: On June 29, 2020, Capstone filed a motion to file a First Amended Complaint that would add, among other things, a claim for enforcement of a guaranty signed by an entity related to Turbine Intl., Hispania Petroleum, S.A., and personal claims against the principals of Turbine Intl.
+Added: On June 29, 2020, Capstone filed a motion to file a First Amended Complaint to add, among other things, a claim for enforcement of a guaranty signed by an entity related to Turbine Intl., Hispania Petroleum, S.A., and personal claims against the principals of Turbine Intl.
and Hispania.
−Removed: That motion was granted on August 19, 2020, and the First Amended Complaint (“FAC”) is now on file.
−Removed: All of the new defendants have been served and have filed answers.
−Removed: The Company has not recorded any liability as of March 31, 2023 as the matter is too early to estimate.
+Added: That motion was granted on August 19, 2020, and the First Amended Complaint (“FAC”) was filed.
+Added: All of the additional defendants were served and have filed answers.
As of March 31, 2024, discovery had been served and answered on both sides.
1 unchanged sentence
and the court ordered the parties to mediate the matter by June 19, 2024.
+Added: On July 2, 2024, Turbine Intl.
+Added: petitioned the court for a continuance and to reopen discovery.
+Added: The court granted the continuance and set the trial date for December 2, 2024 and rejected the request to reopen discovery.
+Added: Mediation remains court ordered.
+Added: The Company has not recorded a liability as of March 31, 2024, as the Company is unable to estimate the possible loss or range of possible loss.
SEC Investigation
−Removed: 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 the Revenue Recognition Investigation into
−Removed: CAPSTONE GREEN ENERGY CORPORATION AND SUBSIDIARIES
−Removed: NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
−Removed: certain accounting and internal control matters of the Company, principally focused on certain revenue recognition matters, and self-reported its findings to the Division of Enforcement of the Securities and Exchange Commission (the “SEC”) upon the conclusion of the Revenue Recognition Investigation.
−Removed: Following the self-report, The SEC Enforcement Division has commenced an investigation into the circumstances surrounding the Restatement (the “SEC Investigation”).
−Removed: The Audit Committee further self-reported its findings pursuant to the FPP Investigation to the SEC.
+Added: 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.
+Added: Following the self-report, the SEC Enforcement Division commenced an investigation into the circumstances surrounding the restatement of
+Added: the Company’s quarterly and annual financial statements (the “SEC Investigation”).
+Added: The Audit Committee further self-reported its findings pursuant to an investigation into FPP related practices to the SEC.
The Company is cooperating with the SEC in connection with its investigation.
Investigations of this nature may be costly and require management to devote significant time and attention away from the ongoing operation of the business.
−Removed: The Company cannot predict the duration or outcome of this matter.
+Added: The Company has not recorded a liability as of March 31, 2024, as a loss cannot be reasonably estimated .
Cal Microturbine Arbitration
On March 13, 2024, Cal Microturbine, a distributor of the Company, submitted a demand for arbitration before the American Arbitration Association seeking, among other things, approximately $ 24.5 million in damages and alleging that the Company breached its distributor agreement with Cal Microturbine and committed fraud in allowing another company, Capstone Engineered Solutions, to sell, rent and service turbines in Cal Microturbine’s exclusive territory under the distribution agreement.
−Removed: The parties are in the process of selecting the arbitration panel.
−Removed: The matter is in its preliminary stages with no hearing date set as of the date hereof.
−Removed: The Company cannot estimate the outcome and will fight this claim vigorously.
+Added: The parties have completed selection of an arbitration panel;
+Added: and the arbitration panel has provided two possible dates in June and October 2025 for a hearing date.
+Added: On August 18, 2024, Cal Microturbine amended its complaint and reduced its damage claim to $ 18.8 million.
+Added: The Company has not recorded a liability as of March 31, 2024, as the Company is unable to estimate the possible loss or range of possible loss.
Flexon, Jamison, Juric, Robinson, and Hencken
6 unchanged sentences
The Company may incur significant legal expenses in defending the legal matters described above during the pendency of these matters, and in connection with any other potential legal matters, including expenses for the potential reimbursement of legal fees of officers and directors under indemnification obligations.
−Removed: The Company anticipates these legal fees to not exceed the insurance deductible of $ 1.2 million.
+Added: The Company anticipates these legal fees to not exceed the insurance deductible of $ 1.2 million and has not recorded a liability as of March 31, 2024, as a loss cannot be reasonably estimated and the outcome of this matter is uncertain .
+Added: The Company incurred legal fees of $ 0.1 million as of March 31, 2024.
+Added: Capstone Green Energy Corporation
+Added: On June 18, 2024, a complaint for damages was filed in the Superior Court of the State of California, County of Los Angeles captioned Mark Rouse v.
+Added: Capstone Green Energy Corporation alleging violations of the California labor code, breach of contract, conversion, breach of covenant of good faith and fair dealing and wrongful termination.
+Added: The complaint seeks damages, medical expenses, attorneys’ fees, interest and costs related to the termination of Mr.
+Added: Rouse’s employment and alleged non-payment of sales commissions in excess of $ 300,000 .
+Added: The Company resolved the dispute entering into a settlement agreement on September 15, 2024 for a non-material amount.
+Added: Mark Estrada and Ricardo Montalvo, vs.
+Added: Capstone Green Energy LLC and Erick Kim.
+Added: August 19, 2024, a Class Action, pursuant to Code of Civil Procedure section 382 was filed in the Superior Court of the State of California for the County of Los Angeles, Case No.
+Added: 24STCV21118, on behalf of Plaintiffs and all other current and former non-exempt California employees employed by or formerly employed by Defendants claiming failure to pay overtime wages, failure to pay minimum wages, failure to provide meal periods, failure to provide rest periods, waiting time penalties, wage statement violations, failure to timely pay wages, failure to indemnify, violation of Labor Code 227.3, and unfair competition.
+Added: The Court has not ruled to certify the Class.
+Added: The Company has not recorded a liability as of March 31, 2024, as the Company is unable to estimate the possible loss or range of possible loss.
+Added: The Company intends to fight the claims vigorously.
+Added: DV Energy, LLC vs Capstone Green Energy Holdings, Inc, Capstone Turbine Corporation, Capstone Green Energy Corporation, and Capstone Green Energy, LLC.
+Added: On August 26, 2024, DV Energy, LLC (“DV Energy”), a distributor of the Company, filed a lawsuit in the Superior Court of California, County of Los Angeles claiming breach of contract, restitution, breach of implied covenant of good faith and fair dealing, account stated, money had and received, open book account, unfair business practices, accounting, and conversion, all related to DV Energy’s deposit for parts ordered.
+Added: DV Energy has asserted $ 715,552 in damages plus interest, attorney’s fees and costs.
+Added: The complaint relates to a deposit for product order that the Company is restricted from delivering due to U.S.
+Added: sanctions laws.
+Added: The Company intends to meet its obligation to deliver the product once it can do so in accordance with U.S.
+Added: Sanctions laws.
+Added: The Company’s Distributor Agreement defines deposits as non-refundable.
+Added: The value of the DV Energy deposit is recorded in the Company’s financial statements as current liability.
+Added: The Company is unable to estimate the possible loss or range of possible loss and intends to fight the claims vigorously.
Employee Benefit Plans
7 unchanged sentences
The Company’s match vests 25 % a year over four years starting from the employee’s hire date.
−Removed: The Company recorded expense of approximately $ 0.2 million and $ 0.3 million for Fiscal 2023 and 2022, respectively.
−Removed: The Company was a party to a Development and License Agreement with Carrier Corporation (“Carrier”) regarding the payment of royalties on the sale of each of the Company’s 200 kilowatt (“C200”) microturbines.
−Removed: In 2013, the Company reached its repayment threshold level and the fixed rate royalty was reduced by 50 %.
−Removed: On July 25, 2018, the
−Removed: CAPSTONE GREEN ENERGY CORPORATION AND SUBSIDIARIES
−Removed: NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
−Removed: Company and Carrier entered into a Second Amendment to the Development and License Agreement (“Second Amendment”) whereby the Company agreed to pay Carrier approximately $ 3.0 million to conclude the Company’s current royalty obligation under the Development and License Agreement, dated as of September 4, 2007, as amended (“Development Agreement”) and release the Company from any future royalty payment obligations.
−Removed: The Second Amendment also removed non-compete provisions from the Development Agreement, allowing the Company to design market or sell its C200 System in conjunction with any energy system and compete with Carrier products in the CCHP market.
−Removed: On September 19, 2018, the Company paid in full the negotiated royalty settlement of $ 3.0 million to Carrier, and as such, there is no further royalty obligation to Carrier.
−Removed: The prepaid royalty of $ 3.0 million has been recorded under the captions “Prepaid expenses and other current assets” and “Other assets” in the accompanying consolidated balance sheets and will be amortized in the accompanying consolidated statements of operations over a 15-year amortization period through September 2033 using an effective royalty rate.
+Added: The Company recorded expense of approximately $ 0.3 million and $ 0.2 million for each of Fiscal 2024 and 2023, respectively.
+Added: Supplemental Balance Sheet Information
+Added: Prepaid and Other Assets
+Added: As of March 31, 2024, the Company had $ 2.4 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.
+Added: 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 C200 System units over the 15-year amortization period.
−Removed: On a quarterly basis, the Company will perform a re-forecast of C200 System unit shipments, to determine if an adjustment to the effective royalty rate is necessary.
−Removed: Accordingly, if the Company’s future projections change, its effective royalty rates would change, which could affect the amount and timing of royalty expense the Company recognizes.
−Removed: If impairment exists, then the prepaid royalty asset could be written down to fair value.
−Removed: Prepaid royalties are classified as current assets to the extent that such amounts will be recognized in the Company’s consolidated statements of operations within the next twelve months.
−Removed: The current and long-term portions of prepaid royalties, included in other current assets and other assets, respectively, consisted of (in thousands):
−Removed: Other current assets
−Removed: Royalty-related assets
−Removed: Restatement of Consolidated Financial Statements
−Removed: As previously disclosed in the Current Report on Form 8-K filed by the Company on September 22, 2023 with the SEC, the Company’s previously issued financial statements included in its Annual Reports on Form 10-K for the fiscal year ended March 31, 2022, and each of the interim financial statements for the quarterly periods in 2023, 2022, and 2021 included in its Quarterly Reports on Form 10-Q (collectively, the “Restated Periods”), should no longer be relied upon and a restatement is required for these previously issued consolidated financial statements.
−Removed: In accordance with ASC Topic 250, Accounting Changes and Error Corrections, the Company has restated herein the unaudited financial information for the quarterly periods ended June 30, 2022, September 30, 2022, and December 31, 2022.
−Removed: The categories of misstatements and their impact on the Company’s previously issued consolidated financial statements are described in more detail below.
−Removed: Restatement of Previously Issued Consolidated Financial Statements
−Removed: In connection with the restatement, the Company restated the consolidated financial statements as of and for the years ended March 31, 2022 and March 31, 2021, as well as the relevant unaudited quarterly financial information for the quarterly periods ended June 30, 2021, September 30, 2021, December 31, 2021, June 30, 2020, September 30, 2020, and December 31, 2020 in its 2022 Annual Report, as amended, on Form 10-K/A, filed with the SEC on June 12, 2024.
−Removed: CAPSTONE GREEN ENERGY CORPORATION AND SUBSIDIARIES
−Removed: NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
−Removed: Description of Misstatements
−Removed: The following includes descriptions of the significant adjustments to the Company’s financial position and results of operations from previously reported consolidated financial statements.
−Removed: Revenue Recognition of Bill-and-Hold Arrangements (“Bill and Hold”) The Company previously recognized revenue related to the sale of products, parts, and accessories at the point of shipment.
−Removed: In certain circumstances, the Company recognized revenue when the order is shipped to an in-transit warehouse where it is held until it is shipped to the customer.
−Removed: Under ASC 606, Revenue from Contracts with Customers (“ASC 606”), revenue recognized under bill-and-hold arrangements is required to meet specific criteria including:
−Removed: (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.
−Removed: As the Company’s previous revenue recognition policy did not correctly apply the required criteria to recognize revenue related to bill-and-hold arrangements, the Company concluded certain revenue related to bill-and-hold arrangements was prematurely recognized.
−Removed: The Company has since revised the revenue recognition policy, and related internal controls, to properly consider the required bill-and-hold criteria.
−Removed: Some of previously recognized revenue that did not meet the bill-and-hold criteria, related to products, parts, and accessories that were subsequently returned to the Company.
−Removed: In the third quarter of fiscal year 2023, the Company began recording a sales return allowance for returned systems.
−Removed: Under the revised revenue recognition policy, the sales return allowance is no longer required .
−Removed: To correct this error, (i) the revenue and cost of goods sold were reversed in the period in which the accounting errors took place, (ii) the revenue and cost of goods sold was recognized in subsequent periods when all of the revenue recognition criteria had been met, and (iii) the bad debt expense relating to prematurely recognized revenue was reversed in the periods prior to achieving the revenue recognition criteria and recognized in subsequent periods consistent with the Company’s policy, and (iv) the sales return allowance was reversed in the period in which it was originally recorded.
−Removed: Additionally, the related adjustments to accounts receivable, inventory, accrued expenses, and deferred revenue were made in the consolidated financial statements for the relevant Restated Periods.
−Removed: In correcting for the bill-and-hold error, sales were identified where revenue was prematurely recognized, and the Company had entered into a subsequent agreement to lease the system from the customer to re-rent the system to others as part of the Company’s rental fleet (“Re-rent Agreement”).
−Removed: The Re-rent Agreements were recorded as finance leases under ASC 842, Leases.
−Removed: The related lease payments to the customer were recorded as a reduction to the customer’s outstanding accounts receivable balance from the initial recognition of the sale and no cash was exchanged.
−Removed: As the initial sale of the system to the customer did not satisfy the requirements for revenue recognition and the Re-rent Agreement lacked economic substance, the Company concluded the Re-rent Agreements were improperly accounted for as finance leases.
−Removed: Additionally, resulting from mandatory buyout clauses contained in certain Re-rent Agreements, the amounts owed to the customer as stated in the Re-rent Agreement exceeded the accounts receivable associated with the prematurely recognized sale.
−Removed: The Company concluded this payment reflected consideration payable to a customer under ASC 606.
−Removed: To correct this error (i) the finance lease right-of-use asset and lease liability were removed and the related system was recognized as a rental asset in the period the Re-rent Agreements were executed, (ii) the finance lease costs, including interest expense, and right-of-use asset amortization were reversed in the period the Re-rent Agreements were executed and subsequent periods, and (iii) consideration payable to a customer was recognized in the period the Re-rent Agreements were executed .
−Removed: Recognition of Costs Associated with Factory Protection Plan Contracts (“FPP Contracts”) The Company offers a comprehensive factory protection plan to microturbine system customers guaranteeing service in the form of labor and spare parts to maintain product performance.
−Removed: For a fixed fee, the customer can purchase a FPP for either spare parts only or spare parts and labor reimbursement.
−Removed: The Company previously recognized the FPP revenue on a straight-line basis
−Removed: CAPSTONE GREEN ENERGY CORPORATION AND SUBSIDIARIES
−Removed: NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
−Removed: for the term of the contract, typically 5, 10, 15, or 20 years, and recorded the costs when the replacement parts shipped and when the labor reimbursement request was received.
−Removed: In addition, FPP revenues and costs were presented on a gross basis in the Consolidated Statements of Operations.
−Removed: As part of the restatement efforts, the Company reviewed the previous accounting conclusions related to FPP recognition, including a separate analysis of the spare parts and labor reimbursement offerings and the general terms of the contract.
−Removed: For FPP Contract revenue, under both the spare parts and labor reimbursement offerings, the Company concluded revenue was properly recognized.
−Removed: As it relates to the accounting for spare parts (“FPP Parts”), the Company concluded the timing of cost recognition was delayed and the cost should be recognized when the customer orders the spare parts.
−Removed: As it relates to the accounting for labor reimbursement (“FPP Labor”), the income, based on the respective standalone selling price, and related costs should be presented on a net basis in the Consolidated Statements of Operations.
−Removed: In addition, the Company concluded the FPP Contract term is 30 days, as the customer has the right to cancel with a 30-day notice.
−Removed: The Company has since revised its policy, and related internal controls, to properly consider the recognize FPP Contracts.
−Removed: To correct this error, as it relates to FPP Parts, the cost of goods sold was recognized at the time the spare parts order was received and a liability was recognized for any orders that had not been shipped to the customers in the period the accounting error took place.
−Removed: As it relates to FPP Labor, the labor reimbursement cost was reversed out of cost of goods sold and reclassified to revenue, net.
−Removed: The Company also revised the FPP contract disclosure included in Note 2 – Summary of Significant Accounting Policies to reflect the revised classification of the contract term.
−Removed: The Company also corrected for revenue improperly recognized relating to a cancelled FPP contract.
−Removed: Note Classification As a result of the restated earnings, the Company was in breach of its Consolidated Adjusted EBITDA Financial Covenant to the Note Purchase Agreement dated as of December 9, 2019, and later amended for the quarter ended June 30, 2021.
−Removed: The breach required a reclassification of the term note payable to a current liability on the Consolidated Balance Sheets as of June 30, 2022 and September 30, 2022.
−Removed: For further discussion on the Company’s ability to continue as a going concern see Note 3 – Summary of Significant Accounting Policies.
−Removed: Reclassifications Certain reclassifications have been made to the Company’s previously issued Consolidated Statements of Operations to enhance comparability with the current year’s financial statements.
−Removed: As a result, certain amounts relating to revenues and cost of goods sold for the sale of parts, previously reflected in Product, accessories and parts have been reclassified to Parts and service.
−Removed: These reclassifications had no impact on previously reported net income, cash flows, or shareholders’ equity.
−Removed: Reclassifications Certain reclassifications have been made to the Company’s previously issued Consolidated Balance Sheets to enhance comparability with the current year’s financial statements.
−Removed: As a result, certain amounts relating to finance and operating leases have been reclassified, as noted below.
−Removed: • Finance and operating lease right-of-use assets, previously presented in Property, plant, equipment and rental assets, net and Other assets, respectively, have been reclassified to Finance lease right-of-use assets and Operating lease right-of-use assets, respectively.
−Removed: • Current finance and operating lease liabilities, both previously presented in Current portion of notes payable and lease obligations, have been reclassified to Finance lease liability, current and Operating lease liability, current, respectively.
−Removed: • Long-term finance and operating lease liabilities, both previously presented in Long-term portion of notes payable and lease obligations, have been reclassified to Finance lease liability, non-current and Operating lease liability, non-current, respectively.
−Removed: CAPSTONE GREEN ENERGY CORPORATION AND SUBSIDIARIES
−Removed: NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
−Removed: Description of Quarterly Restatement Tables
−Removed: The following tables present the impact of the restatement on the previously reported Consolidated Balance Sheets, Consolidated Statements of Operations, and Statements of Cash Flows for quarterly periods ended June 30, 2022, September 30, 2022, and December 31, 2022.
−Removed: Changes to the Consolidated Statements of Stockholders’ Equity (Deficiency) for the quarterly periods ended June 30, 2022, September 30, 2022, and December 31, 2022 as a result of the restatement are due to the changes in net income.
−Removed: The values as previously reported for the quarterly periods ended June 30, 2022, September 30, 2022, and December 31, 2022 were derived from our Quarterly Reports on Form 10-Q filed on August 11, 2022, November 14, 2022, and February 14, 2023, respectively.
−Removed: CAPSTONE GREEN ENERGY CORPORATION AND SUBSIDIARIES
−Removed: NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
−Removed: As of June 30, 2022
−Removed: (in thousands)
−Removed: Reclassifications
−Removed: Bill and Hold
−Removed: Classification
−Removed: Current Assets:
−Removed: Cash and cash equivalents
−Removed: Accounts receivable, net of allowances
−Removed: Inventories, net
−Removed: Prepaid expenses and other current assets
−Removed: Total current assets
−Removed: Property, plant, equipment and rental assets, net
−Removed: Finance lease right-of-use assets
−Removed: Operating lease right-of-use assets
−Removed: Non-current portion of accounts receivable
−Removed: Non-current portion of inventories
−Removed: Liabilities and Stockholders’ (Deficiency) Equity
−Removed: Current Liabilities:
−Removed: Accounts payable and accrued expenses
−Removed: Accrued salaries and wages
−Removed: Accrued warranty reserve
−Removed: Deferred revenue
−Removed: Current portion of notes payable and lease obligations
−Removed: Finance lease liability, current
−Removed: Operating lease liability, current
−Removed: Factory protection plan liability
−Removed: Term note payable
−Removed: Total current liabilities
−Removed: Deferred revenue, non-current
−Removed: Long-term portion of notes payable and lease obligations
−Removed: Finance lease liability, non-current
−Removed: Operating lease liability, non-current
−Removed: Term note payable, non-current
−Removed: Other long-term liabilities
−Removed: Total liabilities
−Removed: Stockholders’ (Deficiency) Equity:
−Removed: Additional paid-in capital
−Removed: Accumulated deficit
−Removed: Treasury stock
−Removed: Total stockholders’ (deficiency) equity
−Removed: Total liabilities and stockholders' (deficiency) equity
−Removed: CAPSTONE GREEN ENERGY CORPORATION AND SUBSIDIARIES
−Removed: NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
−Removed: As of September 30, 2022
−Removed: (in thousands)
−Removed: Reclassifications
−Removed: Bill and Hold
−Removed: Classification
−Removed: Current Assets:
−Removed: Cash and cash equivalents
−Removed: Accounts receivable, net of allowances
−Removed: Inventories, net
−Removed: Prepaid expenses and other current assets
−Removed: Total current assets
−Removed: Property, plant, equipment and rental assets, net
−Removed: Finance lease right-of-use assets
−Removed: Operating lease right-of-use assets
−Removed: Non-current portion of accounts receivable
−Removed: Non-current portion of inventories
−Removed: Liabilities and Stockholders’ (Deficiency) Equity
−Removed: Current Liabilities:
−Removed: Accounts payable and accrued expenses
−Removed: Accrued salaries and wages
−Removed: Accrued warranty reserve
−Removed: Deferred revenue
−Removed: Current portion of notes payable and lease obligations
−Removed: Finance lease liability, current
−Removed: Operating lease liability, current
−Removed: Factory protection plan liability
−Removed: Term note payable
−Removed: Total current liabilities
−Removed: Deferred revenue, non-current
−Removed: Long-term portion of notes payable and lease obligations
−Removed: Finance lease liability, non-current
−Removed: Operating lease liability, non-current
−Removed: Term note payable, non-current
−Removed: Other long-term liabilities
−Removed: Total liabilities
−Removed: Stockholders’ (Deficiency) Equity:
−Removed: Additional paid-in capital
−Removed: Accumulated deficit
−Removed: Treasury stock
−Removed: Total stockholders’ (deficiency) equity
−Removed: Total liabilities and stockholders' (deficiency) equity
−Removed: CAPSTONE GREEN ENERGY CORPORATION AND SUBSIDIARIES
−Removed: NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
−Removed: As of December 31, 2022
−Removed: (in thousands)
−Removed: Reclassifications
−Removed: Bill and Hold
−Removed: Current Assets:
−Removed: Cash and cash equivalents
−Removed: Accounts receivable, net of allowances
−Removed: Inventories, net
−Removed: Prepaid expenses and other current assets
−Removed: Total current assets
−Removed: Property, plant, equipment and rental assets, net
−Removed: Finance lease right-of-use assets
−Removed: Operating lease right-of-use assets
−Removed: Non-current portion of accounts receivable
−Removed: Non-current portion of inventories
−Removed: Liabilities and Stockholders’ (Deficiency) Equity
−Removed: Current Liabilities:
−Removed: Accounts payable and accrued expenses
−Removed: Accrued salaries and wages
−Removed: Accrued warranty reserve
−Removed: Deferred revenue
−Removed: Current portion of notes payable and lease obligations
−Removed: Finance lease liability, current
−Removed: Operating lease liability, current
−Removed: Factory protection plan liability
−Removed: Term note payable
−Removed: Total current liabilities
−Removed: Deferred revenue, non-current
−Removed: Long-term portion of notes payable and lease obligations
−Removed: Finance lease liability, non-current
−Removed: Operating lease liability, non-current
−Removed: Term note payable, non-current
−Removed: Other long-term liabilities
−Removed: Total liabilities
−Removed: Stockholders’ (Deficiency) Equity:
−Removed: Additional paid-in capital
−Removed: Accumulated deficit
−Removed: Treasury stock
−Removed: Total stockholders’ (deficiency) equity
−Removed: Total liabilities and stockholders' (deficiency) equity
−Removed: CAPSTONE GREEN ENERGY CORPORATION AND SUBSIDIARIES
−Removed: NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
−Removed: Three Months Ended June 30, 2022
−Removed: (in thousands)
−Removed: Bill and Hold
−Removed: Revenue, net:
−Removed: Product and accessories
−Removed: Parts, service and rentals
−Removed: Total revenue, net
−Removed: Cost of goods sold:
−Removed: Product and accessories
−Removed: Parts, service and rentals
−Removed: Total cost of goods sold
−Removed: Operating expenses:
−Removed: Research and development
−Removed: Selling, general and administrative
−Removed: Total operating expenses
−Removed: Loss from operations
−Removed: Other income (expense)
−Removed: Interest income
−Removed: Interest expense
−Removed: Gain (loss) on debt extinguishment
−Removed: Loss before provision for income taxes
−Removed: Provision for income taxes
−Removed: Deemed dividend on purchase warrant for common shares
−Removed: Net loss attributable to common stockholders
−Removed: Net loss per share—basic and diluted
−Removed: Weighted average shares outstanding
−Removed: CAPSTONE GREEN ENERGY CORPORATION AND SUBSIDIARIES
−Removed: NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
−Removed: Three Months Ended September 30, 2022
−Removed: (in thousands)
−Removed: Bill and Hold
−Removed: Revenue, net:
−Removed: Product and accessories
−Removed: Parts, service and rentals
−Removed: Total revenue, net
−Removed: Cost of goods sold:
−Removed: Product and accessories
−Removed: Parts, service and rentals
−Removed: Total cost of goods sold
−Removed: Operating expenses:
−Removed: Research and development
−Removed: Selling, general and administrative
−Removed: Total operating expenses
−Removed: Loss from operations
−Removed: Other income (expense)
−Removed: Interest income
−Removed: Interest expense
−Removed: Gain (loss) on debt extinguishment
−Removed: Loss before provision for income taxes
−Removed: Provision for income taxes
−Removed: Deemed dividend on purchase warrant for common shares
−Removed: Net loss attributable to common stockholders
−Removed: Net loss per share—basic and diluted
−Removed: Weighted average shares outstanding
−Removed: CAPSTONE GREEN ENERGY CORPORATION AND SUBSIDIARIES
−Removed: NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
−Removed: Six Months Ended September 30, 2022
−Removed: (in thousands)
−Removed: Bill and Hold
−Removed: Revenue, net:
−Removed: Product and accessories
−Removed: Parts, service and rentals
−Removed: Total revenue, net
−Removed: Cost of goods sold:
−Removed: Product and accessories
−Removed: Parts, service and rentals
−Removed: Total cost of goods sold
−Removed: Operating expenses:
−Removed: Research and development
−Removed: Selling, general and administrative
−Removed: Total operating expenses
−Removed: Loss from operations
−Removed: Other income (expense)
−Removed: Interest income
−Removed: Interest expense
−Removed: Gain (loss) on debt extinguishment
−Removed: Loss before provision for income taxes
−Removed: Provision for income taxes
−Removed: Deemed dividend on purchase warrant for common shares
−Removed: Net loss attributable to common stockholders
−Removed: Net loss per share—basic and diluted
−Removed: Weighted average shares outstanding
−Removed: CAPSTONE GREEN ENERGY CORPORATION AND SUBSIDIARIES
−Removed: NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
−Removed: Three Months Ended December 31, 2022
−Removed: (in thousands)
−Removed: Bill and Hold
−Removed: Revenue, net:
−Removed: Product and accessories
−Removed: Parts, service and rentals
−Removed: Total revenue, net
−Removed: Cost of goods sold:
−Removed: Product and accessories
−Removed: Parts, service and rentals
−Removed: Total cost of goods sold
−Removed: Operating expenses:
−Removed: Research and development
−Removed: Selling, general and administrative
−Removed: Total operating expenses
−Removed: Loss from operations
−Removed: Other income (expense)
−Removed: Interest income
−Removed: Interest expense
−Removed: Gain (loss) on debt extinguishment
−Removed: Loss before provision for income taxes
−Removed: Provision for income taxes
−Removed: Deemed dividend on purchase warrant for common shares
−Removed: Net loss attributable to common stockholders
−Removed: Net loss per share—basic and diluted
−Removed: Weighted average shares outstanding
−Removed: CAPSTONE GREEN ENERGY CORPORATION AND SUBSIDIARIES
−Removed: NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
−Removed: Nine Months Ended December 31, 2022
−Removed: (in thousands)
−Removed: Bill and Hold
−Removed: Revenue, net:
−Removed: Product and accessories
−Removed: Parts, service and rentals
−Removed: Total revenue, net
−Removed: Cost of goods sold:
−Removed: Product and accessories
−Removed: Parts, service and rentals
−Removed: Total cost of goods sold
−Removed: Operating expenses:
−Removed: Research and development
−Removed: Selling, general and administrative
−Removed: Total operating expenses
−Removed: Loss from operations
−Removed: Other income (expense)
−Removed: Interest income
−Removed: Interest expense
−Removed: Gain (loss) on debt extinguishment
−Removed: Loss before provision for income taxes
−Removed: Provision for income taxes
−Removed: Deemed dividend on purchase warrant for common shares
−Removed: Net loss attributable to common stockholders
−Removed: Net loss per share—basic and diluted
−Removed: Weighted average shares outstanding
−Removed: CAPSTONE GREEN ENERGY CORPORATION AND SUBSIDIARIES
−Removed: NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
−Removed: Three Months Ended June 30, 2022
−Removed: (in thousands)
−Removed: Reclassifications
−Removed: Bill and Hold
−Removed: Cash Flows from Operating Activities:
−Removed: Adjustments to reconcile net loss to net cash used in operating activities:
−Removed: Depreciation and amortization
−Removed: Amortization of financing costs and discounts
−Removed: Amortization of right-of-use assets
−Removed: Inventory provision
−Removed: Provision for warranty expenses
−Removed: Stock-based compensation
−Removed: Changes in operating assets and liabilities:
−Removed: Accounts receivable
−Removed: Prepaid expenses, other current assets and other assets
−Removed: Accounts payable and accrued expenses
−Removed: Operating lease liability
−Removed: Accrued salaries and wages and long-term liabilities
−Removed: Accrued warranty reserve
−Removed: Deferred revenue
−Removed: Factory protection plan liability
−Removed: Net cash used in operating activities
−Removed: Cash Flows from Investing Activities:
−Removed: Expenditures for property, plant, equipment and rental assets
−Removed: Net cash used in investing activities
−Removed: Cash Flows from Financing Activities:
−Removed: Repayment of notes payable and lease obligations
−Removed: Cash used in employee stock-based transactions
−Removed: Net proceeds from issuance of common stock and warrants
−Removed: Net cash used in financing activities
−Removed: Net increase (decrease) increase in Cash and Cash Equivalents
−Removed: Cash and Cash Equivalents, Beginning of Period
−Removed: Cash and Cash Equivalents, End of Period
−Removed: CAPSTONE GREEN ENERGY CORPORATION AND SUBSIDIARIES
−Removed: NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
−Removed: Six Months Ended September 30, 2022
−Removed: (in thousands)
−Removed: Reclassifications
−Removed: Bill and Hold
−Removed: Cash Flows from Operating Activities:
−Removed: Adjustments to reconcile net loss to net cash used in operating activities:
−Removed: Depreciation and amortization
−Removed: Amortization of financing costs and discounts
−Removed: Amortization of right-of-use assets
−Removed: Bad debt expense (recovery)
−Removed: Inventory provision
−Removed: Provision for warranty expenses
−Removed: (Gain) loss on disposal of equipment
−Removed: Stock-based compensation
−Removed: Changes in operating assets and liabilities:
−Removed: Accounts receivable
−Removed: Prepaid expenses, other current assets and other assets
−Removed: Accounts payable and accrued expenses
−Removed: Operating lease liability
−Removed: Accrued salaries and wages and long-term liabilities
−Removed: Accrued warranty reserve
−Removed: Deferred revenue
−Removed: Factory protection plan liability
−Removed: Net cash used in operating activities
−Removed: Cash Flows from Investing Activities:
−Removed: Expenditures for property, plant, equipment and rental assets
−Removed: Net cash used in investing activities
−Removed: Cash Flows from Financing Activities:
−Removed: Repayment of notes payable and lease obligations
−Removed: Cash used in employee stock-based transactions
−Removed: Net proceeds from issuance of common stock and warrants
−Removed: Net cash provided by financing activities
−Removed: Net increase (decrease) increase in Cash and Cash Equivalents
−Removed: Cash and Cash Equivalents, Beginning of Period
−Removed: Cash and Cash Equivalents, End of Period
−Removed: CAPSTONE GREEN ENERGY CORPORATION AND SUBSIDIARIES
−Removed: NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
−Removed: Nine Months Ended December 31, 2022
−Removed: (in thousands)
−Removed: Reclassifications
−Removed: Bill and Hold
−Removed: Cash Flows from Operating Activities:
−Removed: Adjustments to reconcile net loss to net cash used in operating activities:
−Removed: Depreciation and amortization
−Removed: Amortization of financing costs and discounts
−Removed: Amortization of right-of-use assets
−Removed: Bad debt expense (recovery)
−Removed: Inventory provision
−Removed: Provision for warranty expenses
−Removed: Provision for sales returns, net
−Removed: Stock-based compensation
−Removed: Changes in operating assets and liabilities:
−Removed: Accounts receivable
−Removed: Prepaid expenses, other current assets and other assets
+Added: On a quarterly basis, the Company performs a re-forecast of C200 System unit shipments to determine if an adjustment to the effective royalty rate is necessary and accordingly whether an impairment exists.
+Added: The Company determined an impairment did not exist as of March 31, 2024 or 2023.
+Added: The current and long-term portions of prepaid royalties and prepaid and other assets were as follows (in thousands):
+Added: Other royalty-related current assets
+Added: Other royalty-related noncurrent assets
+Added: Total royalty-related assets
+Added: Prepaid vendor inventory
+Added: Prepaid Insurance
+Added: Prepaid taxes
+Added: Total Prepaid expenses, other current assets and other assets
Accounts Payable and Accrued Expenses
−Removed: Operating lease liability
−Removed: Accrued salaries and wages and long-term liabilities
−Removed: Accrued warranty reserve
−Removed: Deferred revenue
−Removed: Factory protection plan liability
−Removed: Net cash used in operating activities
−Removed: Cash Flows from Investing Activities:
−Removed: Expenditures for property, plant, equipment and rental assets
−Removed: Net cash used in investing activities
−Removed: Cash Flows from Financing Activities:
−Removed: Repayment of notes payable and lease obligations
−Removed: Cash used in employee stock-based transactions
−Removed: Net proceeds from issuance of common stock and warrants
−Removed: Net cash provided by financing activities
−Removed: Net increase (decrease) increase in Cash and Cash Equivalents
−Removed: Cash and Cash Equivalents, Beginning of Period
−Removed: Cash and Cash Equivalents, End of Period
−Removed: CAPSTONE GREEN ENERGY CORPORATION AND SUBSIDIARIES
−Removed: NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
+Added: Accounts payable and accrued expenses consisted of (in thousands):
+Added: Trade payables
+Added: Accrued interest
+Added: Accrued professional fees
+Added: Accrued commissions
+Added: Accrued service claims
Subsequent Events
−Removed: On July 6, 2023, the Company entered into a Fourth Amendment (the “Fourth Amendment”) to the A&R Note Purchase Agreement among the Company, certain subsidiaries of the Company, Goldman and the purchaser party thereto (the “Purchaser”).
−Removed: 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 for the most recently ended quarter and certain other breaches specified therein;
−Removed: (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;
−Removed: (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;
−Removed: (iv) a due date for the next interest payment on the date that is 30 days from the Effective Date, which interest payment was originally due on July 3, 2023;
−Removed: (v) following the Company’s entry into a Transaction Support Agreement (as defined below), the payment-in-kind of the quarterly interest payments that are due following the next the interest payment;
−Removed: (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;
−Removed: (vii) the replacement of the Adjusted LIBO Rate with a Term SOFR interest rate benchmark;
−Removed: (viii) the ability for Goldman to either (A) force a conversion of the interest rate benchmark to Base Rate or (B) impose default interest during an Event of Default;
−Removed: (ix) the right for one designated Goldman 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;
−Removed: and (x) the amendment to certain provisions of the A&R Note Purchase Agreement, including to add a number of new covenants.
−Removed: Those new covenants include requirements that the Company (i) enter into a transaction support agreement with one or more lenders in form and substance mutually satisfactory to Goldman and the Company (the “Transaction Support Agreement”) within 30 days of the Effective Date;
−Removed: (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 Transaction Support Agreement in form and substance satisfactory to the Collateral Agent within 45 days after the Effective Date;
−Removed: (iii) close the transactions specified by the Transaction Support Agreement by September 15, 2023;
−Removed: 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 Goldman on a quarterly basis.
−Removed: The Fourth Amendment also imposes restrictions on the Company’s ability to (i) pay professional fees for the next 30 days in excess of $ 2,000,000 in the aggregate;
−Removed: (ii) make certain other cash disbursements in excess of thresholds set forth in the Fourth Amendment;
−Removed: and (iii) amend existing, or enter into new, employment agreements or pay or incur any bonus or severance payment.
−Removed: On August 16, 2023, the Company entered into a Fifth Amendment (the “Fifth Amendment”) to the A&R Note Purchase Agreement among the Company, certain subsidiaries of the Company, Goldman and the purchaser.
−Removed: 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 transaction support agreement with one or more lenders in form and substance mutually satisfactory to the Collateral Agent and the Company (the “Transaction Support Agreement”) 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;
−Removed: (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 of the effective date of the Fourth Amendment to the A&R Note Purchase Agreement;
−Removed: (iii) a minimum Consolidated Liquidity covenant requirement of $ 3.5 million, commencing on July 14, 2023 and operative through September 1, 2024;
−Removed: and (iv) the amendment of the milestones with respect of the Transaction Support Agreement to require that the Company (A) agree to the terms and form of the Transaction Support Agreement (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 Transaction Support Agreement 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
−Removed: CAPSTONE GREEN ENERGY CORPORATION AND SUBSIDIARIES
−Removed: NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
−Removed: in its sole discretion, and (C) that the Company shall have closed the transactions specified by the Transaction Support Agreement by September 15, 2023 or such later date as is agreed by the Collateral Agent in its sole discretion.
−Removed: On September 22, 2023, the Company entered into a Sixth Amendment (the “Sixth Amendment”) to the Amended and Restated Note Purchase Agreement among the Company, certain subsidiaries of the Company, Goldman Sachs Specialty Lending Group, L.P.
−Removed: and the purchaser.
−Removed: 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”).
−Removed: 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).
−Removed: The entire principal amount of the Additional Notes is due and payable on September 1, 2024 (the “Maturity Date”).
−Removed: The Additional Notes do not amortize and the entire principal balance is due in a single payment on the Maturity Date.
−Removed: Voluntary Filing under Chapter 11
−Removed: On September 28, 2023, the Company and its wholly owned direct subsidiaries, Capstone Turbine International, Inc.
−Removed: (“Capstone Turbine International”) and Capstone Turbine Financial Services, LLC.
−Removed: (together with the Company, the “Debtors”), commenced voluntary proceedings 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”).
−Removed: The Chapter 11 proceedings were jointly administered under the caption In re Capstone Green Energy Corporation, Inc., et al.
−Removed: (the “Chapter 11 Cases”).
−Removed: The Debtors continued to operate their business in accordance with the applicable provisions of the Bankruptcy Code and orders of the Bankruptcy Court.
−Removed: 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.
−Removed: Concurrent with the petition, the Debtors entered into the Transaction Support Agreement with the pre-petition senior secured creditor, Broad Street Credit Holdings, LLC.
−Removed: (“Broad Street”), and Goldman Sachs Specialty Lending Group, L.P.
−Removed: (the “Collateral Agent”).
−Removed: The Transaction Support Agreement, among other things, provides that Broad Street and the Collateral Agent will support the Debtors’ restructuring efforts as set forth in, and subject to the terms and conditions of, the Transaction Support Agreement.
−Removed: The Transaction Support Agreement contains 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 Transaction Support Agreement.
−Removed: The Transaction Support Agreement also provides for termination by the parties upon the occurrence of certain events.
−Removed: DIP Note Purchase Agreement
−Removed: 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.
−Removed: Broad Street provided the Debtors with a credit facility (the “DIP Facility”) in an aggregate principal amount of $ 30.0 million, consisting of (1) $ 12.0 million new money DIP notes, and (2) a roll-up of secured obligations under the existing pre-petition debt with Broad Street in the amount of $ 18.0 million, subject to the terms and conditions set forth in the DIP Note Purchase Agreement.
−Removed: On September 28, 2023, the Debtors filed the Motion of Debtors for Interim and Final Orders (I) Authorizing the Debtors to Obtain Senior Secured Postpetition Financing, (II) Granting Liens and Superpriority Administrative Expense Status, (III) Authorizing the Use of Cash Collateral, (IV) Granting Adequate Protection to Pre-Petition Secured Parties, (V) Scheduling a Final Hearing, and (VI) Granting Related Relief (the “DIP Motion”) seeking the Bankruptcy Court’s approval of the DIP Facility and certain related relief.
−Removed: A copy of the DIP Note Purchase Agreement was attached to the joint prepackaged Chapter 11 plan of reorganization (as amended, restated, supplemented or otherwise modified from time to time, the “Plan”) filed as part of the voluntary petition.
−Removed: 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
−Removed: CAPSTONE GREEN ENERGY CORPORATION AND SUBSIDIARIES
−Removed: NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
−Removed: continue to operate in Chapter 11.
−Removed: 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 “Initial Draw”).
−Removed: 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”).
−Removed: 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 Documents.
−Removed: Substantially all of the Debtors’ assets were encumbered by first-priority liens of the Purchaser.
−Removed: The Bankruptcy Court originally set a final hearing date on November 7, 2023, in accordance with the requirements of the Transaction Support Agreement.
−Removed: On November 3, 2023, the final hearing was cancelled and rescheduled to November 13, 2023, with the permission of the Bankruptcy Court.
−Removed: Emergence from Voluntary Chapter 11 Proceedings
−Removed: The Bankruptcy Court confirmed the Plan on November 14, 2023, and the Debtors satisfied all conditions required for Plan effectiveness and emerged from the Chapter 11 Cases ("Emergence") on December 7, 2023.
−Removed: On or following the emergence date and pursuant to the terms of the Plan, the following occurred or became effective:
−Removed: ▪Restructuring:
−Removed: The Company was reorganized pursuant to the Transaction Support Agreement and became a private company that 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.
−Removed: Capstone Turbine International became a publicly traded company and was renamed Capstone Green Energy Holdings, Inc.
−Removed: This entity is the successor entity for purposes of Securities and Exchange Commission registration.
−Removed: Pre-petition equity holders received 100 % of the common equity in this public entity, subject to dilution for any equity incentive plans implemented as part of the reorganization.
−Removed: All equity of the predecessor entity was cancelled, and the predecessor entity became a reorganized private company.
−Removed: The reorganized private company equity is owned 100 % by the pre-petition senior secured lender in exchange for the satisfaction of $ 35.0 million of its pre-petition claims, and $ 10.0 million of its DIP claim.
−Removed: A new subsidiary to the public entity was created, issuing 100 % of its common equity to the public entity, and 100 % of its preferred equity to the reorganized private entity.
−Removed: Such new subsidiary conducts all of the Capstone business (other than in respect of the Retained Assets).
−Removed: The preferred equity is convertible at the option of the holder at any time to 37.5 % of the common equity deemed outstanding, making the common equity of the new subsidiary subject to dilution to 62.5 % ownership.
−Removed: ▪Exit Financing:
−Removed: The DIP Facility converted into an exit facility (as defined herein) for an aggregate principal amount of $ 27.0 million, consisting of (1) $ 7.0 million new money notes, (2) a roll-up of secured obligations under the pre-petition debt in the amount of $ 8.0 million, and (3) a roll-up of the DIP new money notes of $ 12.0 million, subject to the terms and conditions set forth in the Exit Note Purchase Agreement by and among Capstone Green Energy LLC, as the issuer, Capstone Green Energy Holdings, Inc.
−Removed: and Capstone Turbine Financial Services, LLC, as the guarantors, Broad Street and the Collateral Agent.
−Removed: The new money notes mature two years from the Effective Date, and the roll-up debts mature three years from the emergence date.
−Removed: Interest is calculated using a SOFR rate plus an applicable margin, and a portion is paid-in-kind until the third year following emergence.
−Removed: In the original Plan, the exit facility was to be for an aggregate principal amount of $ 25.0 million, with only $ 5.0 million in new money notes.
−Removed: The final approved Plan increased the new money notes to $ 7.0 million upon the confirmation of the Plan by Bankruptcy Court.
−Removed: CAPSTONE GREEN ENERGY CORPORATION AND SUBSIDIARIES
−Removed: NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
−Removed: Nasdaq Delisting of Common Stock
−Removed: 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.
−Removed: Effective October 23, 2023, the Company’s common stock was delisted from the Nasdaq Capital Market.
−Removed: Capstone Green Energy Holdings, Inc.
−Removed: 2023 Equity Incentive Plan
−Removed: In connection with the Emergence, on November 30, 2023, the Capstone Green Energy Holdings, Inc.
−Removed: 2023 Equity Incentive Plan (the “Incentive Plan”) was approved and adopted by the Board.
−Removed: 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.
−Removed: The Incentive Plan was not approved by the Company’s stockholders.
−Removed: All outstanding unvested equity awards outstanding under the Capstone Green Energy Corporation 2017 Equity Incentive Plan were cancelled on the Effective Date in accordance with the Plan.
−Removed: The Incentive Plan is administered by the Compensation and Human Capital Committee or the Board.
−Removed: No more than 3,000,000 shares of New Common Stock are available for the grant of awards under the Incentive Plan.
−Removed: The Company intends to issue equity awards to incentivize employees whose unvested equity awards were terminated in accordance with the Plan.
−Removed: 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 .
−Removed: The Board at any time, and from time to time, may amend or terminate the Incentive Plan.
−Removed: 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.
+Added: 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, 2024, and events which occurred subsequently but were not recognized in the financial statements.
+Added: There were no subsequent events, other than what has been described above, which required recognition, adjustment to or disclosure in the financial statements.
Exhibit Index
4 unchanged sentences
Notice of Filing of Additional Exhibits to Plan Supplement, dated as of November 9, 2023 (l)
+Added: Findings of Fact, Conclusions of Law, and Order (I) Approving the Disclosure Statement;
+Added: (II) Confirming the Joint Prepackaged Chapter 11 Plan of Reorganization of Capstone Green Energy Corporation and Its Debtor Affiliates;
+Added: and (III) Granting Related Relief, dated November 14, 2023 (l)
Second Amended and Restated Certificate of Incorporation of Capstone Green Energy Holdings, Inc.
3 unchanged sentences
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 (m)
−Removed: Description of the Registrant’s Securities Registered Pursuant to Section 12 of the Securities Exchange Act of 1934, as amended
+Added: First Amendment to Note Purchase Agreement, dated as of June 28, 2024, by and among Capstone Green Energy Holdings, Inc., Capstone Green Energy LLC, Capstone Turbine Financial Services, LLC, Goldman Sachs Specialty Lending Group, L.P.
+Added: and the Purchaser party thereto (o)
+Added: Description of the Registrant’s Securities Registered Pursuant to Section 12 of the Securities Exchange Act of 1934, as amended (p)
Amended and Restated Capstone Turbine Corporation Change of Control Severance Plan (a)
24 unchanged sentences
Form of Amended and Restated Change in Control Agreement (n)
−Removed: Form of Restricted Stock Unit Agreement
+Added: Form of Restricted Stock Unit Agreement (p)
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)
+Added: Capstone Green Energy Holdings, Inc.
+Added: Clawback Policy, effective October 2, 2023
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
20 unchanged sentences
(n) Incorporated by reference to Capstone Green Energy Holdings, Inc.’s Current Report on Form 8-K filed on March 12, 2024 (File No.
+Added: (o) Incorporated by reference to Capstone Green Energy Holdings, Inc.’s Current Report on Form 8-K filed on June 28, 2024 (File No.
+Added: (p) 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.
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.
−Removed: June 12, 2024
+Added: September 26, 2024
Chief Financial Officer
1 unchanged sentence
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.
−Removed: 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 Corporation 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.
+Added: 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.
+Added: 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.
Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed below by the following persons on behalf of the Registrant and in the capacities and on the dates indicated.
−Removed: /s/ Vince Canino
President, Chief Executive Officer and Director (Principal Executive Officer)
−Removed: June 12, 2024
+Added: September 26, 2024
Chief Financial Officer (Principal Financial Officer)
−Removed: June 12, 2024
+Added: September 26, 2024
/s/ Celia fanning
2 unchanged sentences
(Principal Accounting Officer)
−Removed: June 12, 2024
+Added: September 26, 2024
/s/ Robert C.
Chair of the Board of Directors
−Removed: June 12, 2024
−Removed: June 12, 2024
+Added: September 26, 2024
+Added: September 26, 2024
/s/ Robert F.
−Removed: June 12, 2024
+Added: September 26, 2024
/s/ Denise Wilson
−Removed: June 12, 2024
+Added: September 26, 2024
Denise Wilson
−Removed: June 12, 2024
+Added: September 26, 2024
/s/ John Miller
−Removed: June 12, 2024
+Added: September 26, 2024
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.