Capstone Energy Plus, Inc. 10-K

Item 9A. Controls and Procedures. Disclosure Controls and Procedures We maintain disclosure controls and procedures that are designed to ensure that the information required to be disclosed in our reports under the Exchange Act is recorded, processed, summarized, and reported within the time periods specified in the SEC’s rules and forms, and that such information is accumulated and communicated to management, including our Chief Executive Officer (“CEO”) and Chief Financial Officer (“CFO”), as appropriate, to allow timely decisions regarding required disclosure. In designing and evaluating the disclosure controls and procedures, management recognized that any controls and procedures, no matter how well designed and operated, can provide only reasonable assurance of achieving the desired control objectives. In connection with the preparation of this Form 10-K for the fiscal year ended March 31, 2024, an evaluation was performed under the supervision and with the participation of our management, including the CEO and CFO, of the effectiveness of the design and operation of our disclosure controls and procedures (as defined in and pursuant to Rules 13a-15(e) and 15d-15(e) under the Exchange Act). Based on this evaluation, our CEO and CFO have concluded that, as of March 31, 2023, due to the material weaknesses in our internal control over financial reporting described below, our disclosure controls and procedures were not effective. 52 Table of Contents 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. GAAP. ​ Management’s Report on Internal Control Over Financial Reporting Our management is responsible for establishing and maintaining adequate internal control over our financial reporting. Internal control over financial reporting is defined in Rules 13a-15(f) and 15d-15(f) under the Exchange Act as a process designed by, or under the supervision of, our CEO and CFO and effected by our board of directors, management and other personnel to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with U.S. GAAP and includes those policies and procedures that: ● Pertain to the maintenance of records that in reasonable detail accurately and fairly reflect the transactions and dispositions of our assets; ● Provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with U.S. GAAP, and that our receipts and expenditures are being made only in accordance with authorizations of our management and directors; and ● Provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use or disposition of our assets that could have a material effect on the financial statements. ​ We conducted an evaluation of the effectiveness of our internal control over financial reporting based on the framework in Internal Control—Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission (2013 framework). Based on this evaluation, management concluded that our internal control over financial reporting was not effective as of March 31, 2024 because of the material weaknesses described below. A material weakness is a deficiency, or combination of deficiencies, in internal control over financial reporting, such that there is a reasonable possibility that a material misstatement of a company’s annual and interim financial statements will not be detected or prevented on a timely basis. The following material weaknesses were identified: ● There was an inappropriate tone at the top established by certain former senior executives. For example, certain former senior executives delayed shipments of parts under the FPP service contracts, which because of our incorrect accounting for our FPP program resulted in delayed recording of the associated expense and liabilities on the Company’s financial statements. These business practices were also not properly communicated to our Board, Audit Committee, or independent registered public accounting firm. ● We lacked sufficient qualified professionals with an appropriate level of accounting and internal control knowledge, training and experience to (i) appropriately analyze, record and disclose accounting matters timely and accurately and (ii) design and maintain effective internal control over financial reporting. ● We did not perform a sufficient review of accounting policies to ensure ongoing adherence with U.S. GAAP. ● We did not design and maintain effective controls over financial reporting for systems, products, parts, and accessories sales subject to bill and hold arrangements with customers. ● We did not design and maintain effective controls over financial reporting related to the proper accounting, presentation and disclosure for FPP service contracts, including the cost recognition of parts and labor associated with FPP service contracts. Management’s Remediation Plan Management, with the direction and oversight of the Audit Committee and the Board of Directors, is engaged in remediation actions to address the material weaknesses described above. The Company’s remediation actions include, but are not limited to the following: ● The Company has reinforced and will continue to reinforce its tone at the top through enhanced communication of the Company’s values and expected business conduct to their personnel directly from the Company’s senior leadership. 53 Table of Contents ● Management is enhancing our quarterly disclosure committee meetings to require additional communication of business activities to the appropriate finance and accounting personnel and to our Board and Audit Committee as required. ● The Company has hired and continues to hire additional accounting and compliance personnel as is necessary to maintain an effective control environment commensurate with our financial reporting requirements. Management will continue to assess the composition of its resource needs, both internal and external, which may include hiring additional accounting and compliance resources, including engaging in third-party advisors when necessary. ● Management is implementing a formal process to periodically review and update accounting policies. ● Management has reviewed and refined the Company’s current accounting memorandums related to product, parts, and accessories sales and FPP service contracts to address the proper financial reporting considerations. Additionally, management is enhancing the design of and implementing controls over financial reporting for (i) systems, products, parts, and accessories sales subject to bill and hold arrangements with customers and (ii) FPP service contracts, including the cost recognition of parts and labor associated with FPP service contracts. We believe these measures will remediate the material weaknesses, but management is assessing the need for any additional steps to remediate the underlying causes that gave rise to these weaknesses. The material weaknesses will not be considered remediated until the applicable controls operate for a sufficient period of time and management has concluded, through testing, that these controls are operating effectively. There is no assurance that additional remediation steps will not be necessary. Except as described above, there were no changes in our internal control over financial reporting during the most recent fiscal quarter that were identified in connection with management’s evaluation required by paragraph (d) of Rules 13d-15 and 15d-15 under the Exchange Act that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting. Inherent limitations of the Effectiveness of Internal Control 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. 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. Item 9B. Other Information. Rule 10b5-1 Trading Plans 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.” Item 9C. Disclosure Regarding Foreign Jurisdictions that Prevent Inspections. Not applicable. 54 Table of Contents PART III Item 10. Directors, Executive Officers and Corporate Governance. Board of Directors; Leadership Structure Set forth below is certain information regarding the directors of the Company. 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. ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Directors Age Director Since ​ Board Class (1) ​ Audit Committee ​ Compensation & Human Capital Committee ​ Governance & Sustainability Committee Robert C. Flexon(2) ​ 66 ​ 2018 ​ II ​ ​ ​ ​ ​ ​ Vince J. Canino(3) 61 2024 ​ III ​ ​ ​ ​ ​ ​ Yon Y. Jorden 69 2017 ​ I ​ X ​ X ​ ​ Robert F. Powelson 55 2019 ​ II ​ ​ ​ ​ X ​ X Denise M. Wilson(4) 65 2019 ​ II ​ ​ ​ X ​ X Ping Fu 66 2021 ​ I ​ X ​ ​ ​ X John P. Miller(5) 66 2024 ​ III ​ X ​ ​ ​ X (1) The term of Class I directors expires at the first annual meeting following the initial classification in April 2024. The term of Class II directors expires at the second annual meeting following the initial classification. The term of Class III directors expires at the third annual meeting following the initial classification. (2) Chair of the Board (3) Mr. Canino joined the Board on March 11, 2024 in connection with his appointment as President and Chief Executive Officer (4) Lead Independent Director (5) Mr. Miller joined the Board on February 26, 2024 The principal occupations and business experience for at least the last five years for each director are set forth below. The biographies of each of the directors below contain information regarding the person’s service as a director, business experience, director positions held currently or at any time during the last five years, information regarding the experiences, qualifications, attributes or skills that caused the Governance and Sustainability Committee and the Board to determine that the person should serve as a director. Robert C. Flexon. Mr. Flexon has been a director since April 2018 and has served as Chair since January 2021. Mr. Flexon served as our Executive Chairman from August 9, 2023 until March 31, 2024 and as our Interim President and Chief Executive Officer from August 22, 2023 until March 10, 2024. Mr. Flexon has served as a director of PG&E Corporation (NYSE: PCG) since June 2020 and is currently the chair of the board. He has also served as a director for Charah Solutions, Inc. (NYSE: CHRA) from June 2018 to July 2023 and of the Electric Reliability Council of Texas (ERCOT) since 2021. Mr. Flexon was President and Chief Executive Officer and a director of Dynegy Inc. (NYSE: 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. In 2016, a subsidiary of Dynegy filed for bankruptcy under Chapter 11 of the bankruptcy code. Prior to joining Dynegy, Mr. Flexon served as the Chief Financial Officer of UGI Corporation (NYSE: UGI), a distributor and marketer of energy products and related services from February 2011 to July 2011. Mr. Flexon was the Chief Executive Officer of Foster Wheeler AG (Nasdaq: FWLT) from June to October 2010 and the President and Chief Executive Officer of Foster Wheeler USA from November 2009 to May 2010. Prior to joining Foster Wheeler, Mr. Flexon was Executive Vice President and Chief Financial Officer of NRG Energy, Inc. (NYSE: NRG) from February to November 2009. Mr. Flexon previously served as Executive Vice President and Chief Operating Officer of NRG Energy from March 2008 to February 2009 and as its Executive Vice President and Chief Financial Officer from 2004 to 2008. Prior to joining NRG Energy, Mr. Flexon held executive positions with Hercules, Inc. and various key positions, including General Auditor, with Atlantic Richfield Company. In addition, Mr. Flexon was a CPA with the former Coopers & Lybrand from 1980 to 1987. Mr. 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. from 2019 to 55 Table of Contents 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. He has served on the board of directors of Nexus, a privately held water utility company, since April 2024. Mr. Flexon holds a Bachelor of Science degree in Accounting from Villanova University. He became a Certified Public Accountant (inactive) in the State of Pennsylvania. Among his other skills and expertise, Mr. Flexon brings to the Board over a decade of experience in accounting and financial matters and has a breadth of executive management experience. In his years as an energy industry executive, he has developed a deep comprehension of wholesale power generation markets and customers. Vince J. Canino . See “Executive Officers” for information pertaining to Mr. Canino. Yon Y. Jorden . Ms. Jorden has been a director since April 2017. Ms. Jorden has also served as director and audit committee and nominating & governance committee member of Cohu, Inc. (Nasdaq: COHU) since May 2021, which is a global leader in back-end semiconductor equipment and services, delivering leading-edge solutions for the manufacturing of semiconductors. She has also served as director and audit committee member of Alignment Healthcare, Inc. (Nasdaq: ALHC), which is a tech-enabled Medicare Advantage plan company, since January 2022. Additionally, she serves as a director and finance committee member of Methodist Health System, a not-for-profit Texas-based hospital system since 2008. Prior to her current roles, Ms. Jorden served as director, chairperson of the compensation committee, a member of the audit committee and a member of the governance and nominating committee, the latter of which she previously served on as chairperson, for Maxwell Technologies (Nasdaq: MXWL), a leader in development and manufacturing of energy storage and power delivery solutions from 2008 to 2017. In addition, she also served as director and chairperson of the audit committee of Magnatek, Inc. (Nasdaq: MAG), a manufacturer of digital power control systems, U.S. Oncology, a privately-held oncology services company, and BioScrip, Inc. (Nasdaq: BIOS), a national provider of infusion and home care management solutions. During her business career, Ms. Jorden has served as chief financial officer of four publicly traded companies, including as Executive Vice President and Chief Financial Officer of AdvancePCS (Nasdaq: ADVP), a pharmacy benefits management company, from 2002 to 2004. Previously she was chief financial officer of Informix, a Nasdaq-listed technology company, Oxford Health Plans, a Nasdaq-listed provider of managed health care services, and WellPoint, Inc., a NYSE-listed managed care company. Ms. Jorden received her Bachelor of Science degree in Accounting from the California State University, Los Angeles. Earlier in her career, she was a senior auditor with Arthur Andersen & Co., where she became a Certified Public Accountant (inactive) in the State of California. Among her other skills and expertise, Ms. 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. Ms. Jorden is a board leadership fellow of the National Association of Corporate Directors, demonstrating her commitment and leadership as a board member. Robert F. Powelson . Mr. Powelson has been a director since June 2019. Mr. Powelson has served as the President and Chief Executive Officer of the National Association of Water Companies (“NAWC”) since June 2018. Prior to joining NAWC, Mr. Powelson was nominated to the Federal Energy Regulatory Commissioner (“FERC”) by President Donald J. Trump in May 2017, confirmed by the U.S. Senate in August 2017, and served as a member of FERC until August 2018. Prior to his appointment to FERC, Mr. Powelson served on the Pennsylvania Public Utility Commission (“PUC”) from June 2008 to August 2017, and served as the PUC’s chairman from February 2011 to May 2015. Mr. Powelson also served on Pennsylvania’s Marcellus Shale Advisory Commission from March 2011 to July 2011. Prior to joining the PUC, Mr. Powelson served as president of the Chester County Chamber of Business & Industry from February 1994 to July 2008. Mr. Powelson was also a past president of the National Association of Regulatory Utility Commissioners (“NARUC”), where he also was a member of the board of directors from March 2011 to July 2017. Mr. Powelson served as chairman of the NARUC Committee on Water and Power and represented the Water Committee on NARUC’s Task Force on Climate Policy. Mr. Powelson holds a Masters of Governmental Administration from the University of Pennsylvania and a Bachelor of Arts from St. Joseph’s University. 56 Table of Contents Among his other skills and expertise, Mr. Powelson brings to the Board extensive expertise in public utilities, the regulatory environment and public policy. Denise M. Wilson . Ms. Wilson has been a director since November 2019. Ms. Wilson served as Executive Vice President and President, Alternative Energy Businesses for NRG Energy, Inc. (NYSE: NRG), an independent power company with generation, energy retail business and cleantech ventures, from July 2011 through January 2016. Ms. Wilson served as Executive Vice President and Chief Administrative Officer of NRG from September 2008 through July 2011. Prior to September 2008, Ms. Wilson served as Executive Vice President, Human Resources for Nash-Finch Company, a national food distributor, and other various senior roles at NRG from 2000 through 2007. Prior to joining NRG, Ms. Wilson held various key positions as Vice President Human Resources with Metris Companies Inc. and Director, Human Resources with General Electric ITS. Ms. Wilson holds a Masters in Industrial Relations from the University of Minnesota. Ms. Wilson brings to the Board extensive experience as President of a Fortune 500 company that generates electricity and provides energy solutions and natural gas to more than 3.7 million residential, small business, and commercial and industrial customers. Ping Fu . Ms. Fu has been a director since August 2021. She currently serves on the board of directors of Live Nation Entertainment (NYSE: LYV), the world’s largest live entertainment company, as well as the boards of Long Now Foundation and Burning Man Project. In 1996, Ms. Fu co-founded Geomagic, a leader in 3D imaging and 3D printing technologies that has fundamentally changed the way products are designed and manufactured around the world, and she served as its CEO until 2013. Following the acquisition by 3D Systems (NYSE: DDD) of Geomagic in 2013, Ms. Fu served as Chief Strategy Officer and Chief Entrepreneur Officer at 3D Systems until 2016. She was also part of the team that created the NCSA Mosaic software and HTTP server software which were key in the early development of the Internet. Ms. Fu has received numerous awards for her leadership, including the Outstanding American by Choice award from the U.S. Citizenship and Immigration Services, the Ernst & Young Entrepreneur of the Year award and Inc. Magazine’s Entrepreneur of the Year award. Ms. Fu’s book, Bend Not Break: A Life in Two Worlds, was on the New York Times bestseller list. Ms. 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. Mr. Miller Mr. Miller has been a director since February 2024. 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. From 2017 to 2021, he served as Chief Executive Officer of Power Solutions International, Inc., a publicly traded company focusing on the design, engineering and manufacture of a broad range of advanced, emission-certified engines and power systems. From 2008 until 2016, Mr. 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. Mr. Miller received his Master of Business Administration from the University of Michigan and a Bachelor of Arts degree in economics from DePauw University. Mr. Miller brings to the Board extensive industry experience and expertise in financial management and strategic planning. Other than Mr. 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. The Board met thirty (30) times during the fiscal year ended March 31, 2024 (the “2024 Fiscal Year” or “Fiscal 2024”). The Board has established an Audit Committee, a Compensation and Human Capital Committee, and a Governance and Sustainability Committee. During Fiscal 2024, each director attended at least 75% of the aggregate of (1) 57 Table of Contents 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. 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. Risk Oversight The Board oversees an enterprise-wide approach to risk management designed to support the achievement of organizational objectives, including strategic objectives, to improve long-term organizational performance and to enhance stockholder value. A fundamental part of risk management is not only understanding the risks the Company faces and what steps management is taking to manage those risks, but also understanding what level of risk is appropriate for the Company. The involvement of the full Board in setting the Company’s business strategy is a key part of its assessment of management’s appetite for risk and also a determination of what constitutes an appropriate level of risk for the Company. The full Board participates in an annual enterprise risk management assessment. While the Board has the ultimate oversight responsibility for the risk management process, various committees of the Board also have responsibility for risk management. In particular, the Audit Committee focuses on financial risk, including internal controls, and receives an annual risk assessment report from the Company’s internal auditors. 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. Cybersecurity Governance ​ The Board is responsible for overseeing assessments of major risks facing the Company and for reviewing options to mitigate these risks. It has delegated oversight responsibility for information security matters is shared by the Audit Committee, CFO and our internal IT resources. 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. 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. 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 The Audit Committee currently consists of Ms. Jorden (Chair), Ms. Fu and Mr. Miller, which was also the composition as of March 31, 2024. Following his appointment as Executive Chairman in August 2023, Mr. Flexon resigned from the Audit Committee. Upon his appointment to the Board on February 26, 2024, Mr. Miller was appointed to the Audit Committee. The Audit committee is constituted to comply with Section 3(a)(58)(A) of the Exchange Act and is responsible, among other items, for: (i) overseeing the Company’s accounting and financial reporting practices; (ii) annually retaining the independent public accountants as auditors of the financial statements and accounts of the Company; (iii) monitoring the scope of audits made by the independent public accountants and the audit reports submitted by the independent public accountants; (iv) overseeing the systems of internal control which management and the Board have established; and (v) discussing with management and the independent and internal auditors the Company’s major financial risk exposure and the steps taken to monitor and control such exposure. In addition, the Audit Committee reviews and approves all related party transactions. The Audit Committee operates under a written charter adopted by the Board, a copy of which is available on the Company’s website at www.capstonegreenenergy.com. 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. During Fiscal 2024, the Audit Committee held twelve (12) meetings. The Board has determined that Ms. Jorden is an “audit committee financial expert,” as that term is defined by applicable rules adopted by the SEC. The Board has further determined that each member of the Audit Committee is independent and financially literate as defined by Nasdaq and SEC rules, as applicable. 58 Table of Contents Compensation and Human Capital Committee The Compensation and Human Capital Committee currently consists of Ms. Wilson (Chair), Mr. Powelson, and Ms. Jorden, which was also the composition as of March 31, 2024. The Compensation and Human Capital Committee is comprised solely of directors who qualify as independent for purposes of Nasdaq rules in conformance with the Compensation and Human Capital Committee’s charter, and are “non-employee directors,” as defined in Rule 16b-3 under the Exchange Act and “outside directors,” as defined under Section 162(m) of the Internal Revenue Code of 1986, amended (the “Code”). The functions of the Compensation and Human Capital Committee include: (i) annually reviewing and recommending to the Board the corporate goals and objectives relevant to the compensation of our Chief Executive Officer, (ii) evaluating the performance of our Chief Executive Officer in light of such corporate goals and objectives and, based on such evaluation, recommending to the Board the compensation of our Chief Executive Officer, (iii) determining the compensation of all executive officers other than the Chief Executive Officer, (iv) retaining, terminating and approving the compensation of any compensation advisors, (v) reviewing and approving our policies and procedures for the grant of equity based awards, (vi) reviewing and approving grants of awards under our incentive based compensation plans and equity based plans, (vii) reviewing and making recommendations to the Board with respect to director compensation, (viii) reviewing and overseeing the Company’s policies and practices relating to human capital management, (ix) reviewing, monitoring and providing recommendations to our Board on our workplace policies and practices, including corporate culture and employee engagement, talent management and leadership development, employee diversity and inclusion, and ensuring a respectful workplace free of discrimination and harassment, and (x) reviewing and evaluating, at least annually, the performance of our Compensation and Human Capital Committee and its members, and reporting to the Board on the results of such evaluation. The Compensation and Human Capital Committee operates under a written charter adopted by the Board, a copy of which is available on the Company’s website at www.capstonegreenenergy.com. 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. During Fiscal 2024, the Compensation and Human Capital Committee held four (4) meetings. Governance and Sustainability Committee The Governance and Sustainability Committee currently consisted of Mr. Powelson (Chair), Ms. Wilson, and Ms. Fu, which was also the composition as of March 31, 2024. Upon his appointment to the Board on February 26, 2024, Mr. Miller was appointed to the Governance and Sustainability Committee. The Governance and Sustainability Committee is comprised solely of “independent directors” as defined by Nasdaq rules in conformance with the Governance and Sustainability Committee’s charter. The Governance and Sustainability Committee is responsible for, among other things, (i) monitoring corporate governance matters; (ii) recommending to the full Board candidates for election to the Board and committees of the Board; (iii) coordinating the Board evaluation process; (iv) providing general oversight in respect of corporate governance, social responsibility, and sustainability matters; and (v) overseeing succession planning of the CEO and other key positions. The Governance and Sustainability Committee operates under a written charter adopted by the Board, a copy of which is available on the Company’s website at www.capstonegreenenergy.com . 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. During Fiscal 2024, the Governance and Sustainability Committee held one (1) meeting. Board of Directors and Committee Performance Evaluations 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. 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. 59 Table of Contents Director Recommendation and Nomination Process 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: Capstone Green Energy Holdings, Inc. 16640 Stagg Street Van Nuys, CA 91406 Attention: 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; 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. As discussed in the Company’s bylaws, the notice must set forth: (A) certain information as to each nominee such stockholder proposes to nominate at the meeting as set forth in the Company’s bylaws, including such person’s written consent to being named in the proxy statement, proxy card and ballot as a nominee and to serving as a director if elected, and (B) certain information as to, and certain representations and certifications from, the stockholder giving the notice and the beneficial owner, if any, on whose behalf the nomination is being made, as set forth in the Company’s bylaws. The above does not purport to provide in detail the requirements for a stockholder’s nomination of the director. A stockholder interested in nominating a director to our Board is encouraged to review our bylaws and the SEC’s proxy rules, as any stockholder nomination must comply with the applicable provisions of our bylaws and the SEC’s proxy rules and will be handled in accordance with our bylaws and applicable laws. The Governance and Sustainability Committee reviews the composition and size of the Board and determines the criteria for Board membership. In addition, the Governance and Sustainability Committee reviews the qualifications, qualities, skills and other expertise of prospective candidates to determine whether they will make good candidates for membership on the Company’s Board. 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. 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. The Governance and Sustainability Committee actively considers all relevant factors when considering nominees for directors, including the factors outlined above, when 60 Table of Contents 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. As of the date of this Annual Report on Form 10-K, we meet California state laws (that were recently ruled to be unconstitutional by California Superior Courts) to have (i) at least one director who self-identifies as a member of an underrepresented community (as defined by such law) and (ii) based on the current size of our Board, at least three female directors. The Governance and Sustainability Committee uses the following process to identify prospective candidates for the Board and to evaluate all candidates, including candidates recommended by stockholders in accordance with the Company’s policy regarding stockholder recommendations and the director nominations process. The Governance and Sustainability Committee: (i) reviews the composition and size of the Board and determines the criteria for Board membership; (ii) evaluates the Board for effectiveness and makes a verbal presentation of its findings to the Board; (iii) determines whether the current members of the Board who satisfy the criteria for Board membership are willing to continue in service; if the current members of the Board are willing to continue in service, the Governance and Sustainability Committee evaluates the performance of such board members and considers those current members for re-nomination, and if the current members of the Board are not willing to continue in service or if there will be an increase in the number of directors on the Board, the Governance and Sustainability Committee considers candidates who meet the criteria for Board membership; (iv) if necessary, engages a search firm to assist with the identification of potential candidates; (v) compiles a list of potential candidates; (vi) evaluates the prospective candidates, including candidates recommended by stockholders, to determine which of the prospective candidates, if any, will best represent the interests of all stockholders and determines whether any conflicts of interest exist; (vii) holds meetings to narrow the list of prospective candidates; (viii) along with the Chair of the Board and management, interviews a select group of prospective candidates; (ix) approves the candidate or candidates who are most likely to advance the best interests of the stockholders; and (x) recommends the selected candidate or candidates to the Board and the stockholders for approval. 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. 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. The Board does not believe that directors who retire from or change the primary occupation that they held when they were first elected to the Board should necessarily leave the Board in every instance. Stockholder Communications The Company has a policy whereby stockholders may communicate directly with the Company’s Board, or individual members of the Board, by writing to the Company at: Capstone Green Energy Holdings, Inc. 16640 Stagg Street Van Nuys, CA 91406 Attention: Secretary and indicating prominently on the outside of any envelope that the communication is intended for: (i) the Board; (ii) the Chair of the Board; (iii) a specific committee of the Board; (iv) the non-management directors; or (v) any director or subset of directors of the Board. 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. Directors may, at any time, review a log of all correspondence received by the Company in accordance with the policy and request copies of any such correspondence. 61 Table of Contents Executive Officers 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. 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: ​ ​ ​ ​ ​ ​ Name Age Position Vince J. Canino ​ 61 ​ President & Chief Executive Officer ​ John J. Juric ​ 63 ​ Chief Financial Officer ​ 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. The following is a biographical summary of the experience of the executive officers of the Company: Vince J. Canino . Mr. Canino was appointed as President and Chief Executive Officer and a member of the Board on March 11, 2024. Prior to joining the Company, Mr. Canino served as the Chief Operating Officer of ESS Tech, Inc. (NYSE: GWH), a developer of long-duration energy storage solutions, from September 2022 to March 2024. He previously spent approximately eight years with Smardt Chiller Group, Inc. (“Smardt”), a manufacturer of oil-free chillers, most recently serving as Smardt’s President and Chief Executive Officer. Mr. Canino also served in various roles with Trane Commercial Systems (“Trane”), a manufacturer of heating, ventilation and air conditioning systems, including as Trane’s Vice President, Enterprise Businesses and Renewable Energy. Mr. Canino’s career includes multiple leadership, management, operations and sales roles with publicly traded and privately held organizations. Mr. Canino serves as a board member of Western Washington University and holds a Master of Science in Engineering Mechanics from Pennsylvania State University and a Bachelor of Technology in Mechanical Engineering from the State University of New York at Binghamton. Among his other skills and expertise, Mr. Canino brings to the Board his unique perspective as President and Chief Executive Officer of the Company and substantial executive and industry experience. John J. Juric . Mr. Juric was appointed Chief Financial Officer in March 2023. Prior to joining the Company, Mr. Juric spent nearly two years providing management and financial consulting services to C-suite executives in multiple industries. Previously, Mr. Juric served as Vice President of Finance and Chief Financial Officer of USALCO, LLC, a chemical manufacturing and distribution company, for six years, and as President Americas & Asia Industrial Division and Americas Region Chief Financial Officer of Fiberweb, PLC., a global nonwoven products manufacturer and distributor, for nearly five years. Additionally, Mr. Juric’s career includes multiple leadership, finance, and accounting roles with publicly traded and privately held organizations. He also previously served as the Director of Finance at Hercules, Inc., a global specialty chemical manufacturing company. Mr. Juric is a Certified Public Accountant and holds an MBA and Bachelor of Science in Accounting degree from West Chester University. Code of Business Conduct and Code of Ethics The Company has adopted a Code of Business Conduct and Ethics that applies to all directors, officers and employees of the Company. All directors, officers and employees of the Company are expected to be committed to the highest standards of honest, ethical and legal behavior. The Board reviews the Code of Business Conduct and Ethics on an annual basis or more often, if necessary. The Company has also adopted a Code of Ethics for Principal and Senior Financial Officers. Each governance document is available on the Company’s website at www.capstonegreenenergy.com. 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 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 62 Table of Contents and reports of changes in ownership of the Company’s equity securities. The Company endeavors to assist officers and directors in making these filings. 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. Item 11. Executive Compensation. The Company is a “smaller reporting company” under Item 10 of Regulation S-K promulgated under the Exchange Act and has elected to comply with certain of the requirements applicable to smaller reporting companies in connection with this Annual Report on Form 10-K. Although the rules allow the Company to provide less detail about its executive compensation program, the Compensation and Human Capital Committee is committed to providing the information necessary to help stockholders understand its executive compensation-related decisions. The information below summarizes the executive compensation program and results for our named executive officers (“NEOs”) for Fiscal 2024. 2024 Summary Compensation Table The following table sets forth information regarding the compensation paid to or earned by the Company’s CEO and our other NEOs, for services rendered to the Company and its subsidiaries for the fiscal years indicated. ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Stock ​ Non-Equity Incentive ​ All Other ​ ​ ​ ​ ​ ​ ​ Salary ​ ​ Bonus ​ Awards ​ Plan Compensation ​ Compensation ​ Total Name and Principal Position ​ Year ​ ($) ​ ​ ($) ​ ($)(1) ​ ($)(3) ​ ($)(4) ​ ($) Vince J. Canino 2024 ​ ​ 21,154 ​ ​ — ​ ​ ​ 472,500 ​ ​ — ​ ​ — ​ ​ 493,654 President & Chief Executive Officer (5) ` 2023 ​ ​ — ​ ​ — ​ ​ ​ — ​ ​ — ​ ​ — ​ ​ — Robert C. Flexon 2024 ​ 390,715 (7) ​ — ​ ​ 35,869 ​ — ​ — ​ 426,584 Former Interim President, Chief Executive Officer & Executive Chairman (6) 2023 ​ ​ — ​ ​ — ​ ​ ​ — ​ ​ — ​ ​ — ​ ​ — Darren R. Jamison 2024 ​ 218,586 ​ ​ — ​ ​ 362,167 ​ — ​ 4,592 ​ 585,345 Former President & Chief Executive Officer (8) 2023 ​ ​ 557,180 ​ ​ — ​ ​ 362,170 ​ — ​ 7,389 ​ ​ 926,739 John J. Juric 2024 ​ 375,000 ​ ​ — ​ ​ 292,590 ​ 48,611 ​ 11,066 ​ 727,267 Chief Financial Officer (9) 2023 ​ ​ 21,635 ​ ​ 100,000 (2) ​ 220,000 ​ — ​ 666 ​ ​ 342,301 (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. 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. Juric. Mr. Jamison forfeited his PRSU award upon his termination of service. Mr. Canino joined the Company in March 2024 and did not receive a PRSU award for Fiscal 2024. (2) Mr. Juric earned a signing bonus of $100,000 upon joining the Company on March 6, 2023. (3) This column represents non-equity incentive plan compensation earned pursuant to the Capstone Executive Annual Incentive Plan (the “AIP”). (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. (5) Mr. Canino joined the Company on March 11, 2024. (6) Mr. 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. 63 Table of Contents Mr. 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. (7) Consists of $ 356,715 in base salary earned by Mr. 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. Flexon during the periods in Fiscal 2024 when he was not serving as Interim President and Chief Executive Officer. (8) Mr. Jamison departed the Company on August 22, 2023. (9) Mr. Juric joined the Company on March 6, 2023. 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. 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. It is based on the individual’s qualifications, experience with the Company, past performance, taking into account all relevant criteria, value to the Company, the Company’s ability to pay and relevant competitive market data. For Fiscal 2024, the Compensation and Human Capital Committee approved the following base salaries: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Base Salary at the end ​ Base Salary at the end ​ ​ Named Executive Officer ​ of 2024 Fiscal Year ​ of 2023 Fiscal Year ​ % Increase Vince J. Canino (1) ​ $ 550,000 ​ $ — ​ — Darren R. Jamison (2) ​ $ — ​ $ 557,180 ​ — John J. Juric (3) ​ $ 375,000 ​ $ 375,000 ​ 0% Robert C. Flexon (4) ​ $ 600,000 ​ $ — ​ — (1) Mr. Canino joined the Company on March 11, 2024. (2) Mr. Juric joined the Company on March 6, 2023. (3) Mr. Jamison departed the Company on August 22, 2023. (4) Mr. Flexon served as Interim President and CEO, from August 22, 2023 until March 10, 2024. In connection with Mr. 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. 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. 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. Mr. Juric’s target award opportunity for Fiscal 2024 was 60% of his base salary. Mr. Canino will begin participating in the AIP in Fiscal 2025, and his target award opportunity will be 100% of his base salary. All awards require compliance with the Exit Note Purchase Agreement covenants to be eligible for any incentive payout regardless of goal achievement(s). 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 Total ​ Adjusted ​ Operating Revenue ​ EBITDA ​ Activity ​ 30% ​ 40% ​ 30% ​ 64 Table of Contents The Fiscal 2024 AIP performance goals were structured to encourage growth (in millions): ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Performance Payout Level ​ ​ ​ Performance Metrics ​ Threshold (50%) Target (100%) ​ Maximum (150%) Actual Results ​ Revenue ​ $ 38.579 ​ $ 43.579 ​ $ ​ 54.500 ​ $ 32.184 ​ Adjusted EBITDA ​ $ 1.000 ​ $ 4.194 ​ $ ​ 6.000 ​ $ (0.160) (1) Cash flows from operating activities ​ $ (8.760) ​ $ (5.760) ​ $ ​ 3.000 ​ $ (7.439) (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. 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. 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. As such, the Compensation and Human Capital Committee authorized payments for Fiscal 2024 pursuant to the Post-emergence AIP. Mr. Canino was appointed at the end of the fiscal year and did not receive an award under this plan for Fiscal 2024. 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. The Compensation and Human Capital Committee determines the appropriate award to each NEO by assessing equity incentive awards made to officers of comparable companies. 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. 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 Information about outstanding equity awards held by our NEOs as of the end of Fiscal 2024 is set forth in the table below. ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Option Awards ​ Stock Awards ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Equity Incentive ​ Equity Incentive ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Plan Awards: ​ Plan Awards: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Number of ​ Market Value ​ Number of ​ Market or Payout ​ ​ Number of Securities ​ ​ ​ ​ ​ Shares or ​ of Shares or ​ Unearned Shares, ​ Value of Unearned ​ ​ Underlying ​ Option ​ Option ​ Units of Stock ​ Units of Stock ​ Units or Other ​ Shares, Units or ​ ​ Unexercised Options ​ Exercise ​ Expiration ​ That Have ​ That Have ​ Rights That Have ​ Other Rights That ​ ​ Exercisable ​ Unexercisable ​ Price ​ Date ​ Not Vested ​ Not Vested ​ Not Vested ​ Have Not Vested Name ​ (#)(1) ​ (#)(1) ​ ($) ​ (2) ​ (#) ($)(3) (#) ($)(3) Vince J. Canino — — ​ — — 450,000 (4) 472,500 ​ — ​ — (1) Options vested 25% on the first anniversary of the grant date and monthly thereafter on a pro rata basis over the next 36 months, conditioned on continued service to the Company. However, all grants were cancelled on the Effective Date in connection with Emergence. (2) All options terminate, if not sooner, at the expiration of ten years following the grant date. However, all grants were cancelled on the Effective Date in connection with Emergence. (3) Based on the fair value of our common stock of $1.05 as forth in the valuation report as of March 31, 2024. (4) These RSUs vest in three equal installments on each anniversary of March 11, 2025, conditioned on continued service to the Company. 65 Table of Contents 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. The Company offers group life, disability, medical, dental and vision insurance and an employee stock purchase program. The Company maintains a defined contribution 401(k) profit - sharing plan in which all employees are eligible to participate. The plan also provides for both Company matching and discretionary contributions, which are determined by the Board. The Company matches 50 cents on the dollar up to 6% of the employee’s compensation that is contributed. The Company’s match vests 25% a year over four years starting from the employee’s hire date. Executive Employment Contracts, Termination of Employment and Change in Control Arrangements In July 2018, the Company adopted the Capstone Turbine Corporation Amended and Restated Severance Pay Plan (the “Original Severance Plan”). 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). 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. The amendment also provides that, in the event that the Chief Executive Officer’s employment is terminated by the Company without Cause, the Chief Executive Officer will be entitled to receive, subject to the execution of a separation agreement containing a general release of claims, 18 months of base salary continuation and reimbursement of COBRA premiums for eighteen months. On the Effective Date, the Company adopted the Capstone Green Energy Holdings, Inc. Severance Pay Plan (the “New Severance Plan”), which contains terms substantially similar to those set forth in the Amended Original Severance Plan. 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”). 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; (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. Payments under the CIC Agreements are in lieu of payments under the Severance Plan. Our recently completed financial restructuring constituted a CIC under the CIC Agreements. 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. Prior to the Effective Date, the Company entered into Change in Control Agreements (“Pre-Emergence CIC Agreement”) with Mr. Juric for certain payments and benefits following a termination of Mr. Juric’s employment either by the Company without Cause (as defined in the Pre-Emergence CIC Agreement) (other than due to Mr. Juric’s death, Mr. Juric being Disabled (as defined in the Pre-Emergence CIC Agreement), or Mr. Juric becoming an employee of any 66 Table of Contents direct or indirect successor to the business or assets of the Company, rather than continuing as an employee of the Company) or by Mr. 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”). In the event of a Qualifying Termination, subject to Mr. 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. Juric will be eligible to receive (a) a lump sum severance payment equal to 1.5 times the sum of Mr. 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; (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. 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. Payments under the Pre-Emergence CIC Agreements are in lieu of payments under the Severance Plan. Our recently completed financial restructuring constituted a CIC under the Pre-Emergence CIC Agreements, but a Qualifying Termination of Mr. Juric has not occurred. If Mr. Juric experiences a Qualifying Termination within 24 months following such restructuring, Mr. 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. Canino as President and Chief Executive Officer, the Company entered into a CIC Agreement with Mr. Canino (the “Amended and Restated CIC Agreement” and together with the Pre-Emergence CIC Agreement, the “CIC Agreements”). 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). In the event of a Qualifying Termination, subject to Mr. 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: (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; (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. Canino if he had remained employed by the Company, for up to 30 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. 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. Canino and Juric, as if each situation occurred on March 31, 2024, under the Severance Plan or CIC Agreements discussed above. Mr. Canino ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Involuntary Termination ​ ​ Involuntary Termination ​ ​ Related to ​ Executive Benefits and Payments upon Termination ​ without Cause ​ Change in Control Cash Payments ​ $ 825,000 (1) $ 2,750,000 (2) Insurance Benefits ​ 37,578 (3) 62,630 (4) Total ​ $ 862,578 ​ $ 2,812,630 ​ (1) Reflects severance payments of Mr. Canino’s annual base salary as of March 31, 2024 over a period of 18 months, payable under the Severance Plan. 67 Table of Contents (2) Reflects a lump sum severance payment equal to two and one-half times the sum of Mr. Canino’s annual base salary as of March 31, 2024, and target annual incentive compensation, payable under the Change in Control Agreement with Mr. Canino. (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. Canino. Mr. Juric ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Involuntary Termination ​ ​ Involuntary Termination ​ ​ Related to ​ Executive Benefits and Payments upon Termination ​ without Cause ​ Change in Control Cash Payments ​ $ 375,000 (1) $ 900,000 (2) Insurance Benefits ​ 26,010 (3) 39,015 (4) Total ​ $ 405,365 ​ $ 939,015 ​ (1) Reflects severance payments of Mr. Juric’s annual base salary as of March 31, 2024 over a period of 52 weeks, payable under the Severance Plan. (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. Juric. (3) Reflects monthly payments of health benefit premiums over a period of 12 months, payable under the Severance Plan. (4) Reflects monthly payments of health benefit premiums over a period of 18 months, payable under the Change in Control Agreement with Mr. Juric. Director Compensation 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. The director cash retainer was $35,000, the Chair of the Board additional cash retainer was $25,000, and the director equity retainer was $50,000. The Audit Committee Chair retainer was $17,000, the Compensation and Human Capital Committee Chair retainer was $15,000, and the Governance and Sustainability Committee Chair retainer was $10,000. Each non-employee director who served on the Audit Committee received an $8,000 annual retainer. 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. 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. On the Effective Date, the Board adopted a new director compensation policy. Pursuant to the revised director compensation policy, each non-executive director will receive an annual base retainer of $75,000, payable in cash on a quarterly basis. 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. 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. 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 $10,000 of restricted stock units, commencing with the 2024 annual meeting of stockholders. On January 22, 2024, the Board approved a policy providing for the grant of 10,000 RSU’s to each new director appointed on or prior to December 7, 2024. Mr. Canino, the Company’s President and Chief Executive Officer did not receive compensation for serving as a member of the Board. Mr. Flexon is not included in the below table as he was an employee of the Company for a portion of Fiscal 2024. See “—2024 Summary Compensation Table” for information about the compensation earned by Mr. Flexon in Fiscal 2024 in his capacity as both a non-employee director and Executive Chairman and Interim Chief Executive Officer and President of the Company. The Company uses its fiscal year in reporting compensation rather than the term 68 Table of Contents of the Board. Compensation amounts may differ between the Company’s fiscal year and the term of the Company’s Board. Information about the compensation of the non-employee directors for the 2024 Fiscal Year is set forth in the table below. ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Fees Earned or Stock ​ ​ Name ​ Paid in Cash ($)(1) ​ Awards ($)(2) ​ Total ($) John P. Miller (4) ​ ​ 978 ​ ​ 10,500 ​ ​ 11,478 Yon Y. Jorden ​ ​ 68,000 ​ ​ 35,869 ​ ​ 103,869 Robert F. Powelson ​ ​ 61,000 ​ ​ 35,869 ​ ​ 96,869 Denise M. Wilson ​ 66,000 ​ 35,869 ​ 101,869 Ping Fu ​ 59,000 ​ 35,869 ​ 94,869 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. The award is calculated by dividing the amount of the fee by the fair market value of a share of common stock on the date the fee is payable. For the 2024 Fiscal Year, due to limited share pool availability, 100% of the amount of the aggregate directors’ fees was paid in cash. (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. For a discussion of valuation assumptions, see Note 9— Permanent Equity to the Notes to Consolidated Financial Statements. (3) Please see the 2024 Summary Compensation Table for disclosure regarding Mr. Flexon’s director compensation in the 2024 Fiscal Year. (4) Mr. Miller’s fees are prorated for services on the Board and Audit Committee. Mr. Miller received 10,000 RSUs. Non-GAAP Measures Reconciliation 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: ​ ​ ​ ​ ​ ​ ​ Period Ended ​ Reconciliation of Reported Net Loss to EBITDA and Adjusted EBITDA ​ March 31, ​ (In thousands) 2024 (1) Net income (loss) ​ $ (7,026) ​ Interest expense 1,147 Provision for income taxes ​ — ​ Depreciation and amortization ​ 1,336 ​ EBITDA ​ $ (4,543) ​ ​ ​ ​ ​ ​ Stock-based compensation and other expense ​ ​ 1,670 ​ Non-recurring legal/consulting ​ ​ 2,713 ​ Severance ​ ​ — ​ Executive bonus ​ ​ — ​ Adjusted EBITDA ​ $ (160) ​ (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. ​ 69 Table of Contents Item 12. Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters. 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; (2) all directors and executive officers as a group; 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. 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. The information provided in the table below is based on the Company’s records, information filed publicly with the SEC and other information provided to the Company. ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Common Stock Non-Voting Common Stock (3) % of Combined ​ Number % of ​ Number % of ​ Total Voting Name and Address of Beneficial Owner**(1) of Shares Shares ​ of Shares Shares ​ Power Stockholders Beneficially Owning More Than 5% ​ ​ ​ ​ ​ ​ ​ ​ Non-Management ​ ​ ​ ​ ​ ​ ​ ​ AIGH Capital Management, LLC(2) 1,800,000 9.7 % — * ​ 9.7 % Named Executive Officers and Directors ​ ​ ​ ​ ​ ​ ​ ​ Darren R. Jamison — * — * * ​ John J. Juric — * 114,560 22.5 % * Vince J. Canino — * — * * ​ Robert C. Flexon 61,798 0.3 % 60,795 12.0 % 0.3 % Yon Y. Jorden 74,197 0.4 % 60,795 12.0 % 0.4 % Robert F. Powelson 51,560 0.3 % 60,795 12.0 % 0.3 % Denise M. Wilson 48,928 0.3 % 60,795 12.0 % 0.3 % Ping Fu 30,372 0.2 % 60,795 12.0 % 0.2 % John P. Miller — * ​ — * ​ * ​ All directors, director nominees and executive officers as a group (8 persons) 266,855 1.4 % 418,535 82.3 % 1.4 % * Less than one percent. ** Unless otherwise indicated, the address of each person listed is c/o Capstone Green Energy Holdings, Inc., 16640 Stagg Street, Van Nuys, California 91406. (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. In addition, shares underlying RSUs that will vest within 60 days from September 24, 2024, are deemed outstanding. 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. AIGH reported having sole voting power and sole dispositive power over 1,800,000 shares of common stock. The business address of AIGH is 6006 Berkeley Avenue, Baltimore, MD 21209. (3) Excludes $0.4 million step-up expense for the respective individuals who received non-voting common stock. 70 Table of Contents 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: ​ ​ ​ ​ Chief Executive Officer 4 times annual base salary Executive Vice Presidents ​ 2 times annual base salary ​ Senior Vice Presidents and other NEOs ​ 1 times annual base salary ​ Non-employee members of the Board ​ 4 times annual retainer ​ 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. 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. “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: (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. 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. 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. ​ 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). 71 Table of Contents 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. The members of the Compensation and Human Capital Committee are all “independent directors,” as defined under Nasdaq rules. Equity incentive awards are granted by the Compensation and Human Capital Committee in a manner that is intended to satisfy Rule 16b-3 under the Exchange Act. Securities Authorized for Issuance Under Equity Compensation Plans ​ The following table sets forth information regarding securities authorized for issuance under equity compensation plans as of March 31, 2024: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Number of ​ ​ ​ Number of ​ ​ ​ ​ securities ​ ​ ​ securities to be ​ ​ ​ ​ remaining ​ ​ ​ issued upon exercise ​ ​ ​ ​ available for ​ ​ ​ of outstanding ​ Weighted-average ​ future issuance ​ ​ ​ options, warrants, ​ exercise price of ​ under equity ​ ​ ​ vesting of restricted ​ outstanding ​ compensation ​ Plan category ​ stock units & rights ​ options and rights ​ plans ​ Equity Compensation Plans Approved by Securityholders — $ — — ​ Equity Compensation Plans Not Approved by Securityholders ​ 460,000 ​ ​ — ​ 2,540,000 ​ Total 460,000 $ — (2) 2,540,000 (1) (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. Capstone Green Energy Holdings, Inc. 2023 Equity Incentive Plan In connection with the Emergence, on December 7, 2023, the Capstone Green Energy Holdings, Inc. 2023 Equity Incentive Plan (the “Incentive Plan”) was approved and adopted by the Capstone Green Energy Holdings, Inc. Board. 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. The Incentive Plan is administered by the Capstone Green Energy Holdings, Inc. Compensation and Human Capital Committee or the Board. No more than 3,000,000 shares of New Common Stock are available for the grant of awards under the Incentive Plan. The Company intends to issue equity awards to incentivize employees whose unvested equity awards were terminated in accordance with the Plan. The aggregate value of awards granted during a single fiscal year to any non-employee director, together with any cash fees paid or to be paid to such non-employee director during the fiscal year and the value of awards granted to such non-employee director under any other equity compensation plan of the Company during the fiscal year, will not exceed a total value of $300,000. The Capstone Green Energy Holdings, Inc. Board at any time, and from time to time, may amend or terminate the Incentive Plan. However, (i) in some situations, no amendment shall be effective unless approved by the stockholders of the Company to the extent stockholder approval is necessary to satisfy any applicable laws, and (ii) rights under any award granted before an amendment shall not be impaired by any amendment without the grantee’s written. 72 Table of Contents Item 13. Certain Relationships and Related Transactions, and Director Independence. Certain Relationships and Related Transactions The Audit Committee has adopted written policies and procedures regarding related party transactions. 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. 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. A “related person” is any person who is or was one of our executive officers, directors or director nominees or is a holder of more than 5% of our common stock, or their immediate family members or any entity owned or controlled by any of the foregoing persons. In determining whether to approve or ratify a related party transaction, the Audit Committee considers, among other factors, whether the related party transaction is on terms no more favorable than terms generally available to an unaffiliated third party under the same or similar circumstances, the extent of the related person’s interest in the transaction and, in the case of directors and officers, whether the provisions of Section 144 of the Delaware General Corporation Law have been met. 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. 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: • 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; and • 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. Capstone Distributor Support System 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. 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. Upon emerging from Chapter 11 bankruptcy, Capstone Green Energy Corporation legally became DSS; 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. As a result, DSS assumed the responsibility of providing the services, making DSS obligated to perform the distributor services. 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. 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 The Board is committed to having a sound governance structure that promotes the best interests of all of the Company’s stockholders. To that end, the Board has evaluated and actively continues to examine emerging corporate governance trends and best practices. Stockholder perspectives play an important role in that process. The following are the key aspects of the Company’s governance structure: ● The Board is predominantly independent. Of our seven directors, one (our President and Chief Executive Officer) is an employee of the Company. Further, the Board has affirmatively determined that all six of our other directors are independent under SEC and Nasdaq corporate governance rules, as applicable. 73 Table of Contents ● Our board committees are comprised exclusively of independent directors. ● Our independent directors meet in executive session at every regularly scheduled board and committee meeting. ● We have separated the roles of Chair of the Board and Chief Executive Officer. Our Chair focuses on board oversight responsibilities, strategic planning, setting board agendas and mentoring company officers, as well as facilitating communications between the Board and management. Mr. Flexon served as both Chairman and Interim President and Chief Executive Officer from August 22, 2023 until March 10, 2024, following the departure of our former President and Chief Executive Officer Darren Jamison and in order to lead the Company through its bankruptcy and financial restructuring. ● Our Board is very active and our directors are engaged. As noted above, each of our directors attended more than 75% of the 2024 Fiscal Year board meetings and meetings of the committees on which such director served. We believe our Board structure serves the interests of stockholders by balancing board continuity and the promotion of long-term thinking with the need for director accountability. Item 14. Principal Accounting Firm Fees and Services. The table below provides information concerning fees for services rendered by our current principal independent registered public accounting firm, Marcum, for the audit of our annual consolidated financial statements for the fiscal years ended March 31, 2024 and March 31, 2023. All fees described below were pre-approved by the Audit Committee. ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Amount of Fees Description of Fees ​ 2024 ​ 2023 Audit Fees $ 587,100 $ 1,312,735 ​ Audit-Related Fees ​ — ​ — ​ Tax Fees ​ — ​ — ​ All Other Fees ​ — ​ — ​ Total ​ $ 587,100 ​ $ 1,312,735 ​ 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. Pre-approval Policies and Procedures Our Audit Committee has adopted a procedure for pre-approval of all fees charged by our independent auditors. 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. 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. 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. 74 Table of Contents PART IV Item 15. Exhibits and Financial Statement Schedules. (a) 1. and 2. Financial statements and financial statement schedule The financial statements and notes are listed in the Index to Consolidated Financial Statements on page F-77 of this Form 10-K. Financial statement schedules not included in this Form 10-K have been omitted because they are not applicable or the required information is shown in the financial statements or notes thereto. 3. Exhibits The exhibits filed as part of this Form 10-K are set forth on the Exhibit Index immediately preceding the signatures of this Form 10-K. The Exhibit Index is incorporated herein by reference. Item 16. Form 10-K Summary. Not applicable. ​ ​ ​ 75 Table of Contents CAPSTONE GREEN ENERGY HOLDINGS, INC. INDEX TO CONSOLIDATED FINANCIAL STATEMENTS ​ Page Report of Independent Registered Public Accounting Firm (PCAOB 00 688 ); Marcum LLP, Los Angeles, CA ​ F-2 Consolidated Financial Statements: ​ ​ Consolidated Balance Sheets as of March 31, 2024 and 2023 ​ F-4 Years Ended March 31, 2024 and 2023: ​ ​ Consolidated Statements of Operations ​ F-5 Consolidated Statements of Changes in Temporary Equity and Stockholders’ Deficiency ​ F-6 Consolidated Statements of Cash Flows ​ F-7 Notes to Consolidated Financial Statements ​ F-8 ​ Financial statement schedules not included in this Form 10-K have been omitted because they are not applicable or the required information is shown in the financial statements or notes thereto. ​ F-1 Table of Contents REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM To the Stockholders and Board of Directors of Capstone Green Energy Holdings, Inc. ​ Opinion on the Financial Statements We have audited the accompanying consolidated balance sheets of Capstone Green Energy Holdings, Inc. 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. Explanatory Paragraph – Going Concern The accompanying consolidated financial statements have been prepared assuming that the Company will continue as a going concern. As more fully described in Note 2, the Company has a significant working capital deficiency, has incurred significant operating losses and needs to raise additional funds to meet its obligations and sustain its operations. These conditions raise substantial doubt about the Company's ability to continue as a going concern. Management's plans in regard to these matters are also described in Note 2. The consolidated financial statements do not include any adjustments that might result from the outcome of this uncertainty. Basis for Opinion These financial statements are the responsibility of the Company's management. Our responsibility is to express an opinion on the Company's financial statements based on our audits. We are a public accounting firm registered with the Public Company Accounting Oversight Board (United States) ("PCAOB") and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB. We conducted our audits in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audits to obtain reasonable assurance about whether the financial statements are free of material misstatement, whether due to error or fraud. The Company is not required to have, nor were we engaged to perform, an audit of its internal control over financial reporting. As part of our audits we are required to obtain an understanding of internal control over financial reporting but not for the purpose of expressing an opinion on the effectiveness of the Company's internal control over financial reporting. Accordingly, we express no such opinion. Our audits included performing procedures to assess the risks of material misstatement of the financial statements, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the financial statements. Our audits also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the financial statements. We believe that our audits provide a reasonable basis for our opinion. Critical Audit Matter The critical audit matter communicated below is a matter arising from the current period audit of the financial statements that was communicated or required to be communicated to the audit committee and that: (1) relate to accounts or disclosures that are material to the financial statements and (2) involved our especially challenging, subjective, or complex judgments. The communication of critical audit matters does not alter in any way our opinion on the financial statements, taken as a whole, and we are not, by communicating the critical audit matter below, providing separate opinions on the critical audit matter or on the accounts or disclosures to which it relates. F-2 Table of Contents Net Realizable Value of Inventories Description of the Matter The Company’s inventories totaled approximately $24.6 million as of March 31, 2024. In addition, approximately $3.9 million of inventories were classified as long-term on the Company’s consolidated balance sheet. As described in Note 2 to the consolidated financial statements, management values inventories at the lower of cost (determined on a first-in-first-out basis) or net realizable value. In determining this estimate, the Company will both (a) perform a monthly analysis to compare the previous 36-month usage of its inventories to the current quantities on hand and (b) judgmentally review their inventories for any non-recurring adjustments that may be necessary based on their knowledge of the business. Changes in the assumptions used could have a significant impact on the net realizable value of inventories. The principal considerations for our determination that performing procedures relating to the net realizable value of inventories is a critical audit matter are (i) the significant judgement required by management when determining the net realizable value; and (ii) a high degree of auditor judgment, subjectivity, and effort in performing procedures to evaluate management’s estimate and significant assumptions in determining the net realizable value. How We Addressed the Matter Addressing the matter involved performing procedures and evaluating audit evidence in connection with forming our overall opinion on the consolidated financial statements. These procedures included: ● Obtained an understanding of the Company’s financial reporting processes in place to estimate the net realizable value of inventories ● Compared the assumptions made by management in evaluating its-slow moving or obsolete goods to prior years to ensure such estimates and policies have remained consistent; ● Tested management’s calculation and significant assumptions made in determining its current year net realizable value of inventories, which included substantively testing the inventory usage and movement used in such calculations; ● Performed an independent sensitivity analysis to determine whether or not material differences in the net realizable value of inventories existed if management were to use a different look-back time period in their calculation; and ● 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 ​ Marcum llp ​ We have served as the Company’s auditor since 2017 ​ ​ Los Angeles, CA September 26, 2024 ​ F-3 Table of Contents CAPSTONE GREEN ENERGY HOLDINGS, INC. AND SUBSIDIARIES CONSOLIDATED BALANCE SHEETS (In thousands, except share amounts) ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ March 31, March 31, ​ 2024 2023 Assets ​ ​ ​ ​ ​ ​ Current Assets: ​ ​ ​ ​ ​ ​ ​ Cash ​ $ 2,085 ​ $ 12,839 ​ Accounts receivable, net of allowances of $ 3,287 at March 31, 2024 and $ 4,813 at March 31, 2023 ​ 6,552 ​ 7,102 ​ Inventories ​ 20,642 ​ 37,328 ​ Prepaid expenses and other current assets ​ 5,449 ​ 7,447 ​ Total current assets ​ 34,728 ​ 64,716 ​ Property, plant, equipment and rental assets, net ​ 25,854 ​ 24,275 ​ Finance lease right-of-use assets ​ ​ 4,391 ​ ​ 4,529 ​ Operating lease right-of-use assets ​ ​ 12,279 ​ ​ 8,808 ​ Non-current portion of inventories ​ 3,917 ​ 3,112 ​ Other assets ​ 3,037 ​ 2,591 ​ Total assets ​ $ 84,206 ​ $ 108,031 ​ Liabilities, Temporary Equity and Stockholders’ Deficiency ​ ​ ​ ​ ​ ​ ​ Current Liabilities: ​ ​ ​ ​ ​ ​ ​ Accounts payable and accrued expenses ​ $ 18,212 ​ $ 30,290 ​ Accrued salaries and wages ​ 1,220 ​ 1,223 ​ Accrued warranty reserve ​ 1,437 ​ 1,576 ​ Deferred revenue ​ 11,183 ​ 23,372 ​ Finance lease liability, current ​ ​ 964 ​ ​ 773 ​ Operating lease liability, current ​ ​ 4,041 ​ ​ 2,492 ​ Factory protection plan liability ​ ​ 7,259 ​ ​ 10,844 ​ Term note payable, current ​ ​ — ​ ​ 50,983 ​ Exit new money notes, net of discount, current ​ ​ 28,911 ​ ​ — ​ Total current liabilities ​ 73,227 ​ 121,553 ​ Deferred revenue, non-current ​ ​ 675 ​ ​ 817 ​ Finance lease liability, non-current ​ ​ 2,300 ​ ​ 2,903 ​ Operating lease liability, non-current ​ ​ 8,527 ​ ​ 6,588 ​ Other non-current liabilities ​ 264 ​ 265 ​ Total liabilities ​ 84,993 ​ 132,126 ​ Commitments and contingencies (Note 14) ​ ​ ​ ​ ​ ​ ​ Temporary equity: ​ ​ ​ ​ ​ ​ ​ Redeemable noncontrolling interests ​ ​ 13,859 ​ ​ — ​ Stockholders’ deficiency: ​ ​ ​ ​ ​ ​ ​ Preferred stock, $ .001 par value; 1,000,000 shares authorized; none issued ​ ​ — ​ ​ — ​ Common stock, $ .001 par value; 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 ​ 18 ​ 18 ​ Non-voting common stock, $ .001 par value; 600,000 shares authorized, 508,475 shares issued and outstanding at March 31, 2024; 0 shares issued and outstanding at March 31, 2023 ​ ​ 1 ​ ​ — ​ Additional paid-in capital ​ 955,145 ​ 955,228 ​ Accumulated deficit ​ ( 969,810 ) ​ ( 977,202 ) ​ Treasury stock, at cost; 0 shares at March 31, 2024 and 117,014 shares at March 31, 2023 ​ — ​ ( 2,139 ) ​ Total stockholders’ deficiency ​ ( 14,646 ) ​ ( 24,095 ) ​ Total liabilities, temporary equity and stockholders' deficiency ​ $ 84,206 ​ $ 108,031 ​ ​ See accompanying notes to consolidated financial statements. F-4 Table of Contents CAPSTONE GREEN ENERGY HOLDINGS, INC. AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF OPERATIONS (In thousands, except per share amounts) ​ ​ ​ ​ ​ ​ ​ ​ ​ Year Ended March 31, ​ 2024 ​ 2023 Revenue, net: ​ ​ ​ ​ ​ ​ Product and accessories ​ $ 49,107 $ 35,033 Parts, service and rentals ​ ​ 42,112 ​ ​ 38,849 Total revenue, net ​ ​ 91,219 ​ ​ 73,882 Cost of goods sold: ​ ​ ​ ​ ​ ​ Product and accessories ​ ​ 51,259 ​ ​ 39,938 Parts, service and rentals ​ ​ 25,676 ​ ​ 24,880 Total cost of goods sold ​ 76,935 ​ 64,818 Gross profit ​ 14,284 ​ 9,064 Operating expenses: ​ ​ ​ ​ ​ ​ Research and development ​ 2,463 ​ 2,376 Selling, general and administrative ​ 32,175 ​ 25,148 Total operating expenses ​ 34,638 ​ 27,524 Loss from operations ​ ( 20,354 ) ​ ( 18,460 ) Other income (expense) ​ 674 ​ ( 33 ) Interest income ​ 110 ​ 141 Reorganization items, net ​ ​ 32,505 ​ ​ — Interest expense ​ ( 5,529 ) ​ ( 6,163 ) Income (loss) before provision for income taxes ​ 7,406 ​ ( 24,515 ) Provision for income taxes ​ 14 ​ 7 Net income (loss) ​ ​ 7,392 ​ ​ ( 24,522 ) ​ ​ ​ ​ ​ ​ ​ Net income (loss) per share of common stock and non-voting common stock—basic and diluted ​ $ 0.39 ​ $ ( 1.43 ) Weighted average shares used to calculate basic and diluted net income (loss) per common stock and non-voting common stock ​ 18,753 ​ 17,206 ​ ​ See accompanying notes to consolidated financial statements. ​ F-5 Table of Contents CAPSTONE GREEN ENERGY HOLDINGS, INC. AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF TEMPORARY EQUITY AND STOCKHOLDERS’ DEFICIENCY (In thousands, except share amounts) ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Temporary Equity ​ Permanent Equity ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Redeemable ​ ​ ​ ​ ​ ​ Non-Voting ​ Additional ​ ​ ​ ​ ​ ​ ​ ​ ​ Total ​ ​ Noncontrolling Interest ​ Common Stock ​ Common Stock ​ Paid-in ​ Accumulated ​ Treasury Stock ​ Stockholders’ ​ Shares Amount Shares Amount Shares Amount Capital Deficit Shares Amount Deficiency Balance, March 31, 2022 ​ — ​ $ — ​ 15,398,368 ​ $ 15 ​ — ​ $ — ​ $ 946,969 ​ $ ( 952,583 ) 101,633 ​ $ ( 2,088 ) ​ $ ( 7,687 ) Vested restricted stock units ​ — ​ ​ — ​ 124,104 ​ ​ — ​ — ​ ​ — ​ ​ 52 ​ ​ — 15,381 ​ ( 51 ) ​ ​ 1 Issuance of common stock, net of issuance costs ​ — ​ ​ — ​ 2,934,498 ​ ​ 3 ​ — ​ ​ — ​ ​ 7,247 ​ ​ — ​ — ​ ​ — ​ ​ 7,250 Stock awards to Board of Directors ​ — ​ ​ — ​ 54,585 ​ ​ — ​ — ​ ​ — ​ ​ — ​ ​ — — ​ — ​ ​ — Deemed dividend on purchase warrant for common shares ​ — ​ ​ — ​ — ​ ​ — ​ — ​ ​ — ​ ​ 97 ​ ​ ( 97 ) ​ — ​ ​ — ​ ​ — Stock-based compensation ​ — ​ ​ — ​ — ​ ​ — ​ — ​ ​ — ​ ​ 863 ​ ​ — — ​ — ​ ​ 863 Net loss ​ — ​ ​ — ​ — ​ ​ — ​ — ​ ​ — ​ ​ — ​ ​ ( 24,522 ) — ​ — ​ ​ ( 24,522 ) Balance, March 31, 2023 ​ — ​ ​ — ​ 18,511,555 ​ ​ 18 ​ — ​ ​ — ​ ​ 955,228 ​ ​ ( 977,202 ) 117,014 ​ ​ ( 2,139 ) ​ ​ ( 24,095 ) Vested restricted stock units ​ — ​ ​ — ​ 61,474 ​ ​ — ​ — ​ ​ — ​ ​ 14 ​ ​ — 12,501 ​ ( 15 ) ​ ​ ( 1 ) Stock awards to Board of Directors ​ — ​ ​ — ​ 97,275 ​ ​ — ​ — ​ ​ — ​ ​ — ​ ​ — — ​ — ​ ​ — Cancellation of Capstone Green Energy Corporation stock ​ — ​ ​ — ​ ( 18,670,392 ) ​ ​ ( 18 ) ​ — ​ ​ — ​ ​ ( 2,154 ) ​ ​ — ​ ( 129,515 ) ​ ​ 2,154 ​ ​ ( 18 ) Issuance of Capstone Green Energy Holdings, Inc. stock ​ — ​ ​ — ​ 18,540,877 ​ ​ 18 ​ — ​ ​ — ​ ​ — ​ ​ — ​ — ​ ​ — ​ ​ 18 Issuance of non-voting stock ​ — ​ ​ — ​ — ​ ​ — ​ 508,475 ​ ​ 1 ​ ​ — ​ ​ — ​ — ​ ​ — ​ ​ 1 Redeemable noncontrolling interests ​ 10,449,863 ​ ​ 13,859 ​ — ​ ​ — ​ — ​ ​ — ​ ​ ​ ​ ​ — ​ — ​ ​ — Stock-based compensation ​ — ​ ​ — ​ — ​ ​ — ​ — ​ ​ — ​ ​ 2,057 ​ ​ — — ​ — ​ ​ 2,057 Net income ​ — ​ ​ — ​ — ​ ​ — ​ — ​ ​ — ​ ​ — ​ ​ 7,392 — ​ — ​ ​ 7,392 Balance, March 31, 2024 ​ 10,449,863 ​ $ 13,859 ​ 18,540,789 ​ $ 18 ​ 508,475 ​ $ 1 ​ $ 955,145 ​ $ ( 969,810 ) — ​ $ — ​ $ ( 14,646 ) ​ ​ See accompanying notes to consolidated financial statements. ​ F-6 Table of Contents CAPSTONE GREEN ENERGY HOLDINGS, INC. AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF CASH FLOWS (In thousands) ​ ​ ​ ​ ​ ​ ​ ​ ​ Year Ended March 31, ​ ​ 2024 ​ 2023 Cash Flows from Operating Activities: ​ ​ ​ ​ ​ ​ Net income (loss) ​ $ 7,392 ​ $ ( 24,522 ) Adjustments to reconcile net income (loss) to net cash used in operating activities: ​ ​ ​ ​ ​ ​ Depreciation and amortization ​ 3,988 ​ ​ 3,177 Amortization of financing costs and discounts ​ 53 ​ ​ 68 Paid-in-kind interest expense ​ ​ 1,957 ​ ​ — Non-cash lease expense ​ ​ 3,431 ​ ​ 1,330 Provision for credit loss expense ​ 439 ​ ​ 4,277 Inventory write-down ​ 779 ​ ​ 961 Provision for warranty expenses ​ 32 ​ ​ 592 Stock-based compensation ​ 2,057 ​ ​ 863 Non-cash reorganization items, net ​ ​ ( 35,255 ) ​ ​ — Changes in operating assets and liabilities: ​ ​ ​ ​ ​ ​ Accounts receivable ​ ( 571 ) ​ ​ 4,060 Inventories ​ 15,382 ​ ​ ( 11,521 ) Prepaid expenses, other current assets and other assets ​ 871 ​ ​ ( 1,210 ) Accounts payable and accrued expenses ​ ( 8,754 ) ​ ​ 5,660 Operating lease liability, net ​ ​ ( 3,413 ) ​ ​ ( 1,304 ) Accrued salaries and wages and long-term liabilities ​ 15 ​ ​ 77 Accrued warranty reserve ​ ( 171 ) ​ ​ ( 499 ) Deferred revenue ​ ( 12,305 ) ​ ​ 8,373 Factory protection plan liability ​ ​ ( 3,585 ) ​ ​ 1,674 Net cash used in operating activities ​ ( 27,658 ) ​ ( 7,944 ) Cash Flows from Investing Activities: ​ ​ ​ ​ ​ ​ Expenditures for property, plant, equipment and rental assets ​ ( 4,674 ) ​ ​ ( 8,222 ) Net cash used in investing activities ​ ( 4,674 ) ​ ( 8,222 ) Cash Flows from Financing Activities: ​ ​ ​ ​ ​ ​ Proceeds from debtors-in-process facility ​ 12,000 ​ ​ — Proceeds from three-year term note ​ ​ 3,000 ​ ​ — Proceeds from exit new money note ​ ​ 7,000 ​ ​ — Debt issuance costs ​ ​ ( 244 ) ​ ​ — Repayment of finance lease obligations ​ ( 178 ) ​ ​ ( 804 ) Net proceeds from issuance of common stock and warrants ​ — ​ ​ 7,250 Net cash provided by financing activities ​ 21,578 ​ 6,446 Net decrease in Cash ​ ( 10,754 ) ​ ( 9,720 ) Cash, Beginning of Period ​ 12,839 ​ 22,559 Cash, End of Period ​ $ 2,085 ​ $ 12,839 Supplemental Disclosures of Cash Flow Information: ​ ​ ​ ​ ​ ​ Cash paid during the period for: ​ ​ ​ ​ ​ ​ Interest ​ $ 1,620 ​ $ 5,701 Income taxes ​ $ 14 ​ $ 13 Supplemental Disclosures of Non-Cash Information: ​ ​ ​ ​ ​ ​ Acquisition of property and equipment through accounts payable ​ $ — ​ $ 29 Renewal of insurance contracts financed by notes payable ​ $ 648 ​ $ 665 Deemed dividend ​ $ — ​ $ 97 Right-of-use assets obtained in exchange for lease obligations ​ $ 7,348 ​ $ 8,170 Settlement of lease obligations with accounts receivable due ​ $ 502 ​ $ — Conversion of inventory to rental assets ​ $ 280 ​ $ — Conversion of prepaid expenses to rental assets ​ $ 623 ​ $ — Paid-in-kind debt discount in connection with the three-year term note ​ $ 500 ​ $ — ​ See accompanying notes to consolidated financial statements. F-7 Table of Contents CAPSTONE GREEN ENERGY HOLDINGS, INC. AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS 1. Business and Organization 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. The Company’s inverter-based technologies solve resiliency by being able to seamlessly connect to the electric grid or be the backbone of a localized microgrid. The Company’s Energy Conversion Products business line is driven by the Company’s industry-leading, highly efficient, low-emission, resilient microturbine energy systems offering scalable solutions in addition to a broad range of customer-tailored solutions. Through the EaaS business line the Company offers build, own, operate and maintain (“BOOM”) as well as energy rental solutions utilizing the Company’s microturbine energy systems. The Company offers comprehensive factory protection plan service contracts that limit life-cycle costs, as well as providing aftermarket spare parts. The Company’s emerging business line is Hydrogen Energy Solutions. Through the Hydrogen Energy Solutions business line, the Company offers customers the ability to run on hydrogen blended fuel source. Because these are still emerging offerings, Hydrogen Energy Solutions revenue has been immaterial to date. Historically, the business described above was conducted by Capstone Green Energy Corporation, which was organized in 1988 and has been commercially producing its microturbine generators since 1998. In connection with emergence from the Chapter 11 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. and Broad Street Credit Holdings LLC (the “TSA”) and became a privately-held company that continues to own the Retained Assets (as defined below). 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. In addition, Capstone Green Energy LLC (the “Operating Subsidiary”) was formed as a result of the Plan of Reorganization (the “Plan”). Refer to Note 3— Chapter 11 Proceedings and Emergence for more detail. ​ ​ 2. Basis of Presentation, Significant Accounting Policies and Going Concern These Consolidated Financial Statements refer to the Company’s fiscal years ended March 31 as its “Fiscal” year. Basis of Presentation The accompanying Consolidated Financial Statements are presented in United States (“U.S.”) dollars and have been prepared in conformity with accounting principles generally accepted in the United States of America (“U.S. GAAP”) and pursuant to the rules and regulations of the Securities Exchange Commissions (“SEC”). Basis for Consolidation The Consolidated Financial Statements included in this filing include the accounts of the Company, the Operating Subsidiary and Capstone Turbine Financial Services, LLC, its wholly owned subsidiary that was formed in October 2015, after elimination of inter-company transactions. Noncontrolling Interests in Consolidated Operating Subsidiary Noncontrolling interests in the Company’s consolidated Operating Subsidiary represent the equity interests held by a related party. Refer to Note 3— Chapter 11 Proceedings and Emergence for details on the formation of the Operating Subsidiary. The noncontrolling interests in the consolidated Operating Subsidiary are redeemable and are presented as temporary equity in the Company's Consolidated Balance Sheet. Refer to Note 10— Temporary Equity for details of the noncontrolling interests. The Company uses the hypothetical liquidation at book value (“HLBV”) method to attribute the earnings of the consolidated Operating Subsidiary between the controlling and noncontrolling interests. Under the HLBV method, the amounts reported as noncontrolling interests in the consolidated Operating Subsidiary on the Consolidated Balance Sheets represent the amounts the noncontrolling interests would hypothetically receive at each balance sheet reporting date under the liquidation provisions of the governing agreements assuming the net assets of the consolidated Operating Subsidiary were liquidated at recorded F-8 Table of Contents amounts and distributed between the controlling and noncontrolling interests in accordance with the governing documents. The net income attributable to noncontrolling interests in the Operating Subsidiary on the Consolidated Statements of Operations is associated with the increase or decrease in the noncontrolling interest holders’ contractual claims on the respective entities’ balance sheets assuming a hypothetical liquidation at the end of that reporting period when compared with their claims on the respective entities’ balance sheets assuming a hypothetical liquidation at the beginning of that reporting period, after removing the impact of any contributions or distributions. 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. Refer to Note 10 — Temporary Equity for details on remeasuring the redemption value of the Preferred Units. Prior to the emergence from bankruptcy, the Company recorded a gain on debt extinguishment, as detailed in Note 3— Chapter 11 Proceedings and Emergence, of $ 35.3 million, within Reorganization items, net on the Company’s Consolidated Statement of Operations, which resulted in net income of $ 7.4 million during the year ended March 31, 2024. Therefore, the Company did not allocate earnings to the Operating Subsidiary as of March 31, 2024, as the Company incurred a net loss after the Effective Date (as defined below) and the noncontrolling interest owners hold a liquidation preference that protects the holder from absorbing losses. Reclassification Certain items in prior financial statements have been reclassified to conform to the current presentation and provide comparability but have no effect on the reported results of operations. 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. 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. Bankruptcy Accounting The Consolidated Financial Statements included herein have been prepared as if the Company were a going concern and in accordance with Financial Accounting Standards Board (“FASB”) Accounting Standards Codification (“ASC”) Topic No. 852— Reorganizations (“ASC 852”). See Note 3— Chapter 11 Proceedings and Emergence for further details regarding the bankruptcy. At emergence from Chapter 11, the Company evaluated the criteria to apply fresh-start accounting under ASC 852 and determined that pre-petition shareholders maintained control of the Company following the restructuring transactions contemplated within the Company’s Plan. As the pre-petition shareholders did not lose control, fresh-start accounting did not apply and the existing carrying values and activities continued as the reporting entity did not change. In addition, the Company has classified all income, expenses, gains or losses that were incurred or realized as a result of the proceedings since filing for Chapter 11 as Reorganization items, net in the Company’s Consolidated Statements of Operations. Cash Equivalents The Company considers only those investments that are highly liquid and readily convertible to cash with original maturities of three months or less at the date of purchase as cash equivalents. 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. Trade Accounts Receivable and Allowance for Credit Loss On April 1, 2023, the Company adopted Accounting Standards Update (“ASU”) 2016-13, Topic No. 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”). The CECL model applies to financial assets measured at amortized cost, including accounts receivable. 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. 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. The historical loss rate is adjusted for current conditions and reasonable and supportable forecasts of future losses, as necessary. Additionally, the allowance for credit loss calculation includes subjective adjustments for qualitative risk factors that could likely cause estimated credit losses to differ from historical experience. The factors include assessments of various economic conditions, significant F-9 Table of Contents events that occurred, geographic location, size and credit ratings of the customers. The Company may also record a specific reserve for individual accounts when the Company becomes aware of specific customer circumstances, such as in the case of a bankruptcy filing or deterioration in the customer’s operating results or financial position. Accounts deemed uncollectible are written off against the allowance for credit loss . 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. Changes in the CECL allowance for accounts receivable are as follows (in thousands): ​ ​ ​ ​ ​ Balance, March 31, 2022 ​ $ 586 ​ Provision for credit losses ​ 4,277 ​ Write-offs ​ ( 50 ) ​ Balance, March 31, 2023 ​ $ 4,813 ​ Provision for credit losses ​ 439 ​ Write-offs ​ ( 1,965 ) ​ Balance, March 31, 2024 ​ $ 3,287 ​ ​ Inventories The Company values inventories at the lower of cost (determined on a first in, first out (“FIFO”) basis) or net realizable value. The composition of inventory is routinely evaluated to identify slow-moving, excess, obsolete or otherwise impaired inventories. Inventories identified as impaired are evaluated to determine if write-downs are required. Included in the assessment is a review for obsolescence as a result of engineering changes in the Company’s products. All inventories expected to be used in more than one year are classified as long-term. Depreciation and Amortization Depreciation and amortization are provided for using the straight-line method over the estimated useful lives of the related assets, ranging from two to ten years . Leasehold improvements are amortized over the remaining lease term or the estimated useful lives of the assets, whichever is shorter . Intangible assets that have finite useful lives are amortized over their estimated useful lives using the straight-line method. Long-Lived Assets The Company reviews the recoverability of long-lived assets, including intangible assets with finite lives, whenever events or changes in circumstances indicate that the carrying value of such assets may not be recoverable. 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. Deferred Revenue Deferred revenue consists of deferred product and service revenue and customer deposits. Deferred revenue will be recognized when earned in accordance with the Company’s revenue recognition policy. The Company has the right to retain all or part of customer deposits under certain conditions. Temporary Equity Where common or preferred shares are determined to be conditionally redeemable upon the occurrence of certain events that are not solely within the control of the Company, and upon such event, the shares would become redeemable at the option of the holders, they are classified as temporary equity (‘mezzanine equity’), outside permanent equity. The purpose of this classification is to convey that such a security may not be permanently part of equity and could result in a demand for cash, securities or other assets of the entity in the future. If the events are such that the shares are probable of becoming redeemable, then the Company will adjust the shares to reflect the maximum redemption value at the end of the reporting period. Revenue The Company derives its revenues primarily from the sale of microturbine products, accessories, parts, equipment rentals and services. The Company determines revenue recognition through the following steps: ● Identification of the contract, or contracts, with a customer ● Identification of the performance obligations in the contract F-10 Table of Contents ● Determination of the transaction price ● Allocation of the transaction price to the performance obligations in the contract ● Recognition of revenue when, or as, the Company satisfies a performance obligation Microturbine Products The Company recognizes revenue when the performance obligation identified under the terms of the contract with its customer is satisfied, which generally occurs, for microturbine products, upon the transfer of control in accordance with the contractual terms and conditions of the sale. The majority of the Company’s revenue associated with a microturbine product is recognized at a point in time when the microturbine product is shipped to the customer. On occasion, the Company enters into bill-and-hold arrangements. Each bill-and-hold arrangement is reviewed and revenue is recognized only when certain criteria have been met: (i) the reason for the bill-and-hold arrangement is substantive; (ii) the product is segregated from the Company’s other inventory items held for sale; (iii) the product is ready for shipment to the customer; and (iv) the Company does not have the ability to use the product or direct it to another customer. Accessories The Company recognizes revenue when performance obligations identified under the terms of contracts with its customers are satisfied, which generally occurs, for accessories, upon the transfer of control in accordance with the contractual terms and conditions of the sale. Parts and Services Revenue from extended warranties and post-shipment performance obligations is recognized when or as those obligations are satisfied. The Company primarily offers assurance-type standard warranties that do not represent separate performance obligations and will separately offer and price extended warranties that are separate performance obligations for which the associated revenue is recognized over-time based on the extended warranty period. The Company records amounts billed to customers for reimbursement of shipping and handling costs within revenue. Shipping and handling costs associated with outbound freight after control over a system has transferred to a customer are accounted for as fulfillment costs and are included in cost of goods sold. Sales taxes and other usage-based taxes are excluded from revenue. The Company extends payment terms past one year only on a limited basis, and thus any financing component is not considered material. Factory Protection Plan and Service Cost Reimbursement In addition to the provision of standard warranties, the Company offers Factory Protection Plans (“FPP”) to minimize product downtime and control maintenance costs to ensure the microturbine system will operate when needed and perform as intended at the lowest cost of ownership. Revenue related to the Company’s performance obligation to provide replacement parts as needed is recognized over the 30-day , FPP contract period with automatic renewals for 5 , 10 , 15 , or 20 years under ASC 606. 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. The provision is periodically adjusted to reflect actual experience. FPP contracts typically go into effect once the standard warranty expires. Comprehensive factory protection plan service contracts require payment at the beginning of the contract period. Advance payments are not considered a significant financing component as they are typically received less than one year before the related performance obligations are satisfied. These payments are treated as a contract liability and are classified in deferred revenue in the Consolidated Balance Sheets. 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. The F-11 Table of Contents deferred revenue relating to the annual maintenance service contracts is recognized in the Consolidated Statement of Operations on a straight-line basis over the expected term of the contract. Some FPPs offer labor reimbursement on the labor performed on a microturbine system. Due to the nature of the arrangement, labor reimbursements are accounted for under ASC 460. An Authorized Service Provider (ASP) must perform the labor. ASPs submit claims for labor reimbursements and are credited for the cost of labor if the repairs meet the Company’s prescribed standards. The Company is unable to develop a reasonable estimate of the maximum potential payout under these arrangements because the FPPs do not contain a limit on the number of labor reimbursements that may be submitted. However, given historical practice, the Company has priced the FPP to cover all costs incurred related to the labor reimbursement and is not exposed to significant losses over the FPP premium. The labor reimbursement is separate and distinct from the parts offering; therefore, the Company allocates a portion of the transaction price to the labor reimbursement based on SSP. The Company applies judgment in determining the SSP as the labor reimbursement is not sold separately. The Company will recognize a liability at the inception of the executed FPP agreement for the premium received in advance for the Labor offering. Income will be recognized on a net, straight-line basis with labor reimbursement costs recognized when incurred. 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. 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. In determining whether FPP and service contracts are distinct, the Company considers the following factors for each FPP and services agreement: availability of the services from other vendors, the nature of the services, the timing of when the services contract was signed in comparison to the product delivery date and the contractual dependence of the product on the customer’s satisfaction with the professional services work. To date, the Company has concluded that all of the FPP and services contracts included in contracts with multiple performance obligations are distinct. The Company allocates the transaction price to each performance obligation on a relative standalone selling price (“SSP”) basis. The SSP is the price at which the Company would sell a promised product or service separately to a customer. Judgment is required to determine the SSP for each distinct performance obligation. The Company determines SSP by considering its overall pricing objectives and market conditions. Significant pricing practices taken into consideration include the Company’s discounting practices, the size and volume of the Company’s transactions, the customer demographic, the geographic area where systems and services are sold, price lists, its go-to-market strategy, historical sales and contract prices. The determination of SSP is made through consultation with and approval by the Company’s management, taking into consideration the go-to-market strategy. As the Company’s go-to-market strategies evolve, the Company may modify its pricing practices in the future, which could result in changes to SSP. In certain cases, the Company is able to establish SSP based on observable prices of products or services sold separately in comparable circumstances to similar customers. The Company uses a single amount to estimate SSP when it has observable prices. If SSP is not directly observable, for example when pricing is highly variable, the Company uses a range of SSP. The Company determines the SSP range using information that may include market conditions or other observable inputs. The Company typically has more than one SSP for individual products and services due to the stratification of those products and services by customer size and geography. F-12 Table of Contents Practical Expedients The Company applies a practical expedient to expense costs as incurred for costs to obtain a contract when the amortization period would have been one year or less. These costs are recorded within sales and marketing expenses in the accompanying Consolidated Statement of Operations. Warranty The Company provides for the estimated costs of warranties at the time revenue is recognized. The specific terms and conditions of those warranties vary depending upon the microturbine product sold and the geography of sale. The Company’s product warranties generally start from the delivery date and continue for up to twenty-four months . Factors that affect the Company’s warranty obligation include product failure rates, anticipated hours of product operations and costs of repair or replacement in correcting product failures. These factors are estimates that may change based on new information that becomes available each period. Similarly, the Company also accrues the estimated costs to address reliability repairs on products no longer in warranty when, in the Company’s judgment, and in accordance with a specific plan developed by the Company, it is prudent to provide such repairs. The Company assesses the adequacy of recorded warranty liabilities quarterly and adjusts the liability as necessary. When the Company has sufficient evidence that product changes are altering the historical failure occurrence rates, the impact of such changes is then taken into account in estimating future warranty liabilities. 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. There were no offsets to R&D during Fiscal 2024 and 2023. Income Taxes Deferred income tax assets and liabilities are computed for differences between the consolidated financial statement and income tax basis of assets and liabilities. Such deferred income tax asset and liability computations are based on enacted tax laws and rates applicable to periods in which the differences are expected to reverse. Valuation allowances are established, when necessary, to reduce deferred income tax assets to the amounts expected to be realized. 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. GAAP. Income tax positions must meet a more-likely-than-not recognition threshold to be recognized. Income tax positions that previously failed to meet the more-likely-than-not threshold are recognized in the first subsequent financial reporting period in which that threshold is met. Previously recognized tax positions that no longer meet the more-likely-than-not threshold are derecognized in the first subsequent financial reporting period in which that threshold is no longer met. The Company’s policy is to recognize interest and penalties accrued on any unrecognized tax benefits as interest and other expense, net in the Consolidated Statements of Operations. Contingencies The Company records an estimated loss from a loss contingency when information available prior to issuance of its financial statements indicates that it is probable that an asset has been impaired or a liability has been incurred at the date of the financial statements and the amount of the loss can be reasonably estimated. 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. The accounts at these institutions are insured by the Federal Deposit Insurance Corporation up to certain limits. Balances that exceed the insurance coverage aggregate to approximately $ 1.4 million as of March 31, 2024. 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. 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. Sales to E-Finity and RSP Systems accounted for 12 % and 11 %, respectively, of the Company’s revenue for Fiscal 2023. 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. F-13 Table of Contents Estimates and Assumptions The preparation of financial statements in conformity with U.S. GAAP requires management to make certain estimates and assumptions that affect the amounts reported in the financial statements and accompanying notes. 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. Net Income (Loss) Per Common Share The Company has common and non-voting common stock outstanding. The non-voting common stock has the same economic rights as the common stock; therefore, earnings per share is presented on a combined basis. Basic income (loss) per share is computed using the weighted-average number of common shares and non-voting common shares outstanding for the period. Diluted income (loss) per share is computed without consideration of potentially dilutive common stock equivalents such as stock options, restricted stock units and warrants as the effect would have been anti-dilutive if the Company incurred a loss. In addition, the change in the carrying value of the redeemable controlling interests are excluded from the calculation of diluted earnings per share. As a result of the cancellations to these instruments on the Effective Date of the Plan, the Company did not have any outstanding stock options or warrants at March 31, 2024. 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. Stock-Based Compensation Stock-based awards exchanged for services are accounted for under the fair value method. Accordingly, stock-based compensation cost is measured at the grant date based on the estimated fair value of the award. The expense for awards is recognized over the requisite service period (generally the vesting period of the award). The Company has elected to treat awards with only service conditions and with graded vesting as one award. Consequently, the total compensation expense is recognized straight-line over the entire vesting period, so long as the compensation cost recognized at any date at least equals the portion of the grant date fair value of the award that is vested at that date. 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. Lease liabilities are increased by interest and reduced by payments each period, and the right-of-use asset is amortized over the lease term or life of the asset based on the classification of the lease. For operating leases, interest on the lease liability and the amortization of the right-of-use asset result in straight-line rent expense over the lease term. In calculating the right-of-use asset and lease liability, the Company elected to combine lease and non-lease components and elected not to recognize right-of-use assets and lease liabilities for short-term leases having initial terms of twelve months or less and recognizes rent expense on a straight-line basis over the lease term. 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. As of March 31, 2024, the Company had cash of $ 2.1 million and a working capital deficit of $ 38.5 million. 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. Chapter 11 Bankruptcy laws, as further discussed in Note 3— Chapter 11 Proceedings and Emergence in the Notes to Consolidated Financial Statements. The Company emerged from Bankruptcy on December 7, 2023 and effected a financial and organizational restructuring. 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. Segment Reporting The Company determines its reporting units in accordance with FASB ASC Topic No. 280, Segment Reporting (“ASC 280”) . The Company evaluates a reporting segment by first identifying its operating segments F-14 Table of Contents under ASC 280. Operating segments are defined as components of an enterprise about which separate financial information is evaluated regularly by the chief operating decision maker (“CODM”) to allocate resources and assess performance. The Company defines its CODM to be the Chief Executive Officer. The Company is considered to be a single reporting segment. The business activities of this reporting segment are the development, manufacture and sale of turbine generator sets and their related parts and services. Impact of Recently Issued Accounting Standards Adopted In June 2016, the FASB issued ASU No. 2016-13, Financial Instruments—Credit Losses : 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. The expected loss approach will require entities to incorporate considerations of historical information, current information and reasonable forecasts. 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. On April 1, 2023, the Company adopted Topic 326. 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. The adoption did not have a material impact on its financial statements and no adjustment was made to retained earnings. Not Yet Adopted In November 2023, the FASB issued ASU No. 2023-07, Segment Reporting : Improvements to Reportable Segment Disclosures (Topic 280). This update applies to all public entities that are required to report segment information in accordance with Topic 280. The amendments in this update revise reportable segment disclosure requirements, primarily through enhanced disclosures about significant segment expenses. 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. The new standard is effective for fiscal years beginning after December 15, 2023, and interim periods within fiscal years beginning after December 15, 2024. Early adoption is permitted. The standard should be applied retrospectively to all prior periods presented in the financial statements. The Company is in the process of assessing the effect adoption will have on its annual consolidated financial statement disclosure. In December 2023, the FASB issued ASU No. 2023-09, Income Taxes: Improvements to Income Tax Disclosures (Topic 740), which requires that an entity, on an annual basis, disclose additional income tax information, primarily related to the rate reconciliation and income taxes paid. The amendment in the ASU is intended to enhance the transparency and decision usefulness of income tax disclosures. The amendments in this update are effective for annual periods beginning after December 15, 2024. 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. 3. Chapter 11 Proceedings and Emergence Voluntary Filing under Chapter 11 Plan of Reorganization — On September 28, 2023 (the “Petition Date”), Capstone Green Energy Corporation and its wholly owned direct subsidiaries, Capstone Turbine International, Inc. and Capstone Turbine Financial Services, LLC (the “Debtors”) filed voluntary petitions for relief under Chapter 11 of the United States Bankruptcy Code (the “Bankruptcy Code”) in the United States Bankruptcy Court for the District of Delaware (the “Bankruptcy Court”). The Chapter 11 proceedings were jointly administered under the caption, In re Capstone Green Energy Corporation, Inc., et al. as Case No. 23-11634 (the “Chapter 11 Cases”). The Debtors continued to operate their business in accordance with the applicable provisions of the Bankruptcy Code and orders of the Bankruptcy Court. At hearings before the Bankruptcy Court on September 29, 2023, the Debtors obtained approval from the Bankruptcy Court of certain “first day” motions containing customary relief intended to assure the Debtors’ ability to continue their ordinary course operations during the Chapter 11 Cases. As a result, from the Petition Date through December 7, 2023 (the “Effective Date” and “Emergence”), the Debtors operated as a debtor-in-possession (“DIP”) under the protection of the U.S. Bankruptcy Court following filings by the Debtors of voluntary petitions for relief under Chapter 11 the Bankruptcy Code in the Bankruptcy Court. F-15 Table of Contents Concurrent with the petition, the Debtors entered into the TSA with the pre-petition senior secured creditor, Broad Street Credit Holdings, LLC. (“Broad Street”), and Goldman Sachs Specialty Lending Group, L.P. (the “Collateral Agent”). The TSA, among other things, provided that Broad Street and the Collateral Agent would support the Debtors’ restructuring efforts as set forth in, and subject to the terms and conditions of, the TSA. The TSA contained customary conditions, representations, and warranties of the parties and is subject to a number of conditions, including, among others, the accuracy of the representations and warranties of the parties and compliance with the obligations set forth in the TSA. The TSA also provided for termination by the parties upon the occurrence of certain events. Overview of the Plan — On September 28, 2023, Capstone Green Energy Corporation and its Debtor Affiliates (the "Debtors") filed their Joint Prepackaged Chapter 11 Plan of Reorganization (the "Plan") and Disclosure Statement. Subsequent updates and supplements were filed, leading to a combined Court hearing on November 13, 2023, for approval of the Disclosure Statement and Plan. The Plan was confirmed on November 14, 2023, and became effective on December 7, 2023, when the Company emerged from Chapter 11. The following is a summary of certain provisions of the Plan that became effective on December 7, 2023, and is not intended to be a complete description of the Plan. The following summary is qualified in its entirety by reference to the full text of the Plans (including the Plan Supplement). - All of the Capstone Green Energy Corporation’s assets and liabilities (other than the equity of Capstone Turbine International, Inc., the impaired pre-petition secured claim (the “Pre-Petition Secured Claim”) and DIP Notes issued pursuant to the DIP Note Purchase Agreement, dated as of October 2, 2023 (as has been amended, restated, modified, supplemented or replaced from time to time, the “DIP NPA”), and specific assets and liabilities directly related to the distributor support services activities (referred to in the Plan as “Retained Assets” and defined in Note 14­— Commitments and Contingencies) and tax attributes were transferred to a new subsidiary called Capstone Green Energy LLC (the “Operating Subsidiary”); - Capstone Turbine International, Inc. contributed all assets to the Operating Subsidiary; - The Operating Subsidiary issued the preferred units, representing 37.5 % equity ownership, and common units, representing 62.5 % equity ownership, to Capstone Green Energy Corporation; - Capstone Green Energy Corporation contributed all common units of the Operating Subsidiary to Capstone Turbine International, Inc. providing a 62.5 % equity ownership in the Operating Subsidiary; - Capstone Turbine International, Inc. became a public company and was renamed Capstone Green Energy Holdings, Inc. and became the successor to Capstone Green Energy Corporation for purposes of Securities and Exchange Commission registration, and is the successor with respect to any claims against, or interest in, Capstone Green Energy Corporation and any Debtor subsidiary; provided that, for the avoidance of doubt Capstone Turbine International, Inc. is not the successor to Capstone Green Energy Corporation for United States federal, state or local income tax purposes, and is not the successor to Capstone with respect to the employment of the directors, officers, and employees of the Debtors or relating to any employment obligations; - Capstone Green Energy Corporation became a private company (the “Reorganized PrivateCo”) that continued to own the Retained Assets and the preferred units of the Operating Subsidiary and has no liabilities relating to, arising under or in connection with any claims against, or interest in, any Debtor; - The holder of the $ 57 million Pre-Petition Secured Claim and purchaser DIP Claim (defined term as described below), received one hundred percent ( 100 % ) of the equity interests in Reorganized PrivateCo in exchange for agreed-upon portions of such Claims; - Existing shareholders of Capstone Green Energy Corporation received one hundred ( 100 % ) percent of the common stock of Capstone Green Energy Holdings, Inc., subject to any dilution from any stock issued pursuant to the employee incentive stock plan, including the shares of non-voting common stock issued to certain key employees and directors; - Reorganized PrivateCo and the Operating Subsidiary entered into a Reorganized PrivateCo Services Agreement (the “Reorganized PrivateCo Services Agreement”) with respect to ongoing support for the Retained Assets of Reorganized PrivateCo. DIP Note Purchase Agreement — On October 3, 2023, the Debtors entered into a super-priority senior secured debtor-in-possession note purchase agreement (the “DIP Note Purchase Agreement”) with Broad Street and the Collateral Agent. Under this agreement, Broad Street provided a $ 30 million DIP Facility, consisting of $ 12 million in new money F-16 Table of Contents DIP notes and an $ 18 million roll-up of pre-petition debt. The Debtors filed a motion on September 28, 2023, seeking the Bankruptcy Court's approval for this DIP Facility. On October 2, 2023, the Bankruptcy Court granted the DIP Motion and entered an interim order (the “Interim DIP Order”) approving the DIP Facility on an interim basis and providing the Debtors with the necessary liquidity to continue to operate in Chapter 11. Upon entry of the Interim DIP Order and satisfaction of all applicable conditions precedent, as set forth in the DIP Note Purchase Agreement, the Debtors were authorized to make a single, initial draw of $ 9.0 million on the DIP Facility (the “Initial Draw”). The remaining $ 3.0 million of the DIP Facility became available to be drawn by the Debtors on November 13, 2023, after the Bankruptcy Court entered the Final DIP Order (the “Final Order”). The amount was drawn by the Debtors on October 24, 2023, after the entry of the Final Order and compliance with the terms, conditions, and covenants to be set forth in the DIP Note Purchase Agreement. Substantially all of the Debtors’ assets were encumbered by first-priority liens of the purchaser under the DIP Note Purchase Agreement. Pursuant to the terms of the Plan, on the Effective Date, the obligations of Reorganized PrivateCo to the DIP NPA, were cancelled and converted into an Exit Facility (the “Exit Note Purchase Agreement”). Treatment of claims - Secured Tax Claims, Other Secured Claims, Other Priority Claims were unimpaired, expected to be paid in full during the course of the bankruptcy proceedings, or reinstated to be paid in full after Emergence. - General Unsecured Claims were unimpaired and received cash in the amount of such allowed claim as of the Effective Date or during the ordinary course of business following such date. - Pre-Petition Secured Claim was impaired and received in full satisfaction and discharge of the holder’s claim the pro rata amount (pro rata along with the DIP Claims) of Reorganized PrivateCo equity and the indirect ownership of the Operating Subsidiary preferred units issued to Reorganized PrivateCo. - DIP Claim received in full satisfaction, settlement, release and discharge of such claim the pro rata amount (pro rata along with Pre-Petition Secured Claim) of Reorganized PrivateCo equity and the indirect ownership of the Operating Subsidiary preferred units issued to Reorganized PrivateCo, and exit financing roll-over notes issued at Emergence, which is referred to as part of the Exit Note Purchase Agreement detailed below. - Equity Interests were impaired and deemed to reject the Plan. Each shareholder in Capstone Green Energy Corporation received its pro rata share of 100 % of Capstone Green Energy Holdings, Inc., subject to dilution for the executive stock plans. The shares in Capstone Green Energy Corporation, including any warrants, restricted stock or similar contractual equity rights thereto were cancelled and terminated and received no other distribution of value. Nasdaq Delisting of Common Stock— Effective at the opening of the trading session on October 5, 2023, the Company’s common stock was suspended from trading on the Nasdaq Capital Market. Effective October 23, 2023, the Company’s common stock was delisted from the Nasdaq Capital Market. Basis of Presentation — Effective on the Petition Date, the Company applied accounting standards applicable to reorganizations, ASC 852, in preparing the accompanying Consolidated Financial Statements as of and for the year ended March 31, 2024, which requires the financial statements, for periods subsequent to the commencement of the Chapter 11 Cases, to distinguish transactions and events that are directly associated with the reorganization from the ongoing operations of the business. Accordingly, certain charges related to the Chapter 11 Cases were recorded as Reorganization items, net in the accompanying Consolidated Financial Statement of Operations. All pre-petition obligations of the Debtors that were impacted by the Chapter 11 Cases that were previously classified as Liabilities Subject to Compromise (“LSTC”) were resolved at Emergence. F-17 Table of Contents Gain on Extinguishment of Debt at Emergence — In accordance with ASC 470, Debt, on December 7, 2023, the Company recognized a gain on extinguishment of debt that was recorded in Reorganization items, net in the accompanying Consolidated Financial Statement of Operations. The components of the gain were as follows (in thousands): ​ ​ ​ ​ Pre-petition senior secured principal $ 53,000 Accrued interest and fees on pre-petition senior secured principal ​ 3,953 Additional New Money DIP Notes 12,000 DIP commitment fee ​ 600 DIP PIK interest (post-petition interest) ​ 755 New Money Exit Notes ​ 3,000 Fair value of Preferred Units of Operating Subsidiary exchanged ​ ( 13,859 ) Fair value of Exit Notes and net retained assets ​ ( 24,106 ) Total gain from debt extinguishment $ 35,343 ​ The Net Operating Losses (the “NOLs”) that were provided through the transfer of ownership of Capstone Green Energy Corporation, which held all of the tax attributes, including the NOLs had a full valuation allowance against them and did not have any value to Capstone Green Energy Corporation immediately prior to the Effective Date. Refer to Note 8— Income Taxes for additional information. Fresh-Start Applicability — On December 7, 2023, the Company evaluated the criteria to apply fresh-start accounting under ASC 852 and determined the pre-petition shareholders maintained control of the Company during and after the reorganization and did not lose control as a result of the reorganization. As pre-petition shareholders did not lose control, fresh-start did not apply and historical activities and balances remained at carrying value. At Emergence, the restructured debt was treated as a debt extinguishment and the shareholders’ equity was revised to reflect the new common stock of Capstone Green Energy Holdings, Inc. Reorganization Items — Reorganization items represent the direct and incremental costs related to the Company’s Chapter 11 cases, such as professional fees, pre-petition liability claim adjustments and losses that are probable and can be estimated, net of interest income earned on accumulated cash during the Chapter 11 process and net gains on the sale of assets or resulting from certain settlement agreements related to the Company’s restructuring activities. The Company’s restructuring activities resulted in additional charges and other adjustments for expected allowed claims (including claims that may be subsequently allowed by the U.S. Bankruptcy Court) and other reorganization items that were material to the Company’s financial position or results of operations during the period. The table below lists the components of reorganization items for Fiscal 2024 (in thousands): ​ ​ ​ ​ Professional fees ​ $ ( 2,750 ) Adjustment of debt to approved claim ​ ​ 512 DIP commitment fee ​ ​ ( 600 ) Gain on debt extinguishment ​ ​ 35,343 Total reorganization items, net ​ $ 32,505 ​ Interest Expense— Interest expense related to pre-petition LSTC was reported only to the extent that it was paid during the pendency of the Chapter 11 cases or was permitted by orders of the U.S. Bankruptcy Court. Contractual interest (at non-default rates) owed to unrelated parties on pre-petition LSTC not reflected on the Company’s Consolidated Financial Statements was $ 1.4 million incurred from the periods of October 1, 2023, through December 7, 2023. Liabilities Subject to Compromise — Liabilities subject to compromise refers to pre-petition obligations which may be impacted by the Chapter 11 reorganization process. At the Effective Date the Company no longer had amounts classified as LSTC, as the pre-petition liabilities the Company anticipated would be allowed as claims in the Chapter 11 Cases were resolved in connection with the Chapter 11 Cases. As a result, the accompanying Consolidated Balance Sheet as of March 31, 2024, does not include amounts classified as LSTC. F-18 Table of Contents 4. Inventories Inventories are valued at the lower of cost (determined on a FIFO basis) or net realizable value and consisted of the following (in thousands): ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ March 31, ​ March 31, ​ ​ 2024 2023 Raw materials ​ $ 23,779 ​ $ 26,745 ​ Finished goods ​ ​ 780 ​ ​ 13,695 ​ Total ​ ​ 24,559 ​ ​ 40,440 ​ Less: non-current portion ​ ​ ( 3,917 ) ​ ​ ( 3,112 ) ​ Total inventory, net non-current portion ​ $ 20,642 ​ $ 37,328 ​ ​ The non-current portion of inventories represents that portion of inventories in excess of amounts expected to be sold or used in the next twelve months. The non-current inventories are primarily comprised of repair parts for older generation products that are still in operation but are not technologically compatible with current configurations. The Company expects to use the non-current portion of the inventories on hand as of March 31, 2024 over the periods presented in the following table (in thousands): ​ ​ ​ ​ ​ ​ ​ ​ ​ Non-current Inventory ​ ​ ​ Balance Expected ​ Expected Period of Use ​ to be Used 13 to 24 months ​ $ 2,106 ​ 25 to 36 months ​ 1,811 ​ Total ​ $ 3,917 ​ ​ 5. Property, Plant, Equipment and Rental Assets Property, plant, equipment and rental assets consisted of the following (in thousands): ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ March 31, ​ March 31, ​ ​ 2024 2023 Machinery, equipment, automobiles and furniture ​ $ 14,921 ​ $ 14,760 Leasehold improvements ​ 8,889 ​ 8,868 Molds and tooling ​ ​ 3,476 ​ ​ 3,516 ​ Rental assets ​ ​ 31,762 ​ ​ 26,868 ​ ​ ​ 59,048 ​ 54,012 ​ Less: accumulated depreciation ​ ( 33,194 ) ​ ( 29,737 ) ​ Total property, plant, equipment and rental assets, net ​ $ 25,854 ​ $ 24,275 ​ ​ 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. Inventory converted to rental assets during Fiscal 2024 was $ 0.3 million. Depreciation expense recorded to cost of sales during Fiscal 2024 and 2023, was $ 3.8 million and $ 3.1 million, respectively. F-19 Table of Contents 6. Accrued Warranty Reserve The Company provides for the estimated costs of warranties at the time revenue is recognized. The specific terms and conditions of those warranties vary depending upon the microturbine product sold and the geography of sale. The Company’s product warranties generally start from the delivery date and continue for up to twenty-four months . Factors that affect the Company’s warranty obligation include product failure rates, anticipated hours of product operations and costs of repair or replacement in correcting product failures. These factors are estimates that may change based on new information that becomes available each period. Similarly, the Company also accrues the estimated costs to address reliability repairs on products no longer in warranty when, in the Company’s judgment, and in accordance with a specific plan developed by the Company, it is prudent to provide such repairs. The Company assesses the adequacy of recorded warranty liabilities quarterly and adjusts the liability as necessary. When the Company has sufficient evidence that product changes are altering the historical failure occurrence rates, the impact of such changes is then taken into account in estimating future warranty liabilities. Changes in the accrued warranty reserve consisted of the following (in thousands): ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ March 31, March 31, ​ ​ 2024 ​ 2023 ​ Balance, beginning of the period ​ $ 1,576 ​ $ 1,483 ​ Standard warranty provision ​ 32 ​ 592 ​ Deductions for warranty claims ​ ( 171 ) ​ ( 499 ) ​ Balance, end of the period ​ $ 1,437 ​ $ 1,576 ​ ​ 7. Revenue Recognition The following table presents disaggregated revenue by business group (in thousands): ​ ​ ​ ​ ​ ​ ​ ​ ​ Year Ended March 31, ​ 2024 2023 Microturbine Products ​ $ 47,787 ​ $ 33,196 Accessories ​ ​ 1,320 ​ ​ 1,837 Total Product and Accessories ​ ​ 49,107 ​ ​ 35,033 ​ ​ ​ ​ ​ ​ ​ Parts and Service ​ ​ 30,681 ​ ​ 30,684 Rentals ​ 11,431 ​ 8,165 Total Revenue ​ $ 91,219 ​ $ 73,882 ​ The following table presents disaggregated revenue by geography based on the primary operating location of the Company’s customers (in thousands): ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Year Ended March 31, ​ 2024 2023 United States ​ $ 54,574 ​ $ 45,071 ​ Mexico ​ 5,070 ​ 2,990 ​ All other North America ​ 1,278 ​ 1,412 ​ Total North America ​ 60,922 ​ 49,473 ​ Russia ​ — ​ 3,045 ​ All other Europe ​ ​ 18,333 ​ ​ 11,553 ​ Total Europe ​ ​ 18,333 ​ ​ 14,598 ​ Asia ​ 3,137 ​ 3,251 ​ Australia ​ 4,746 ​ 2,840 ​ All other ​ 4,081 ​ 3,720 ​ Total Revenue ​ $ 91,219 ​ $ 73,882 ​ ​ Substantially all of the Company’s operating assets are in the United States. F-20 Table of Contents Contract Balances The Company’s deferred revenues consist of advance payments for microturbine products, parts, accessories and parts ordered under FPP contracts, but not yet delivered (contract liabilities), as well as advance payments on service obligations and extended warranties. The current portion of deferred revenue is included in Deferred revenue and the non-current portion of deferred revenue is included in Deferred revenue, non-current in the Consolidated Balance Sheets. Changes in deferred revenue consisted of the following (in thousands): ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ March 31, ​ March 31, ​ ​ 2024 ​ 2023 Opening balance, beginning of the year ​ $ 24,189 ​ $ 15,816 Closing balance, end of the year ​ $ 11,858 ​ $ 24,189 Revenue recognized during the year from: ​ ​ ​ ​ ​ ​ Amounts included in deferred revenue at the beginning of the year ​ $ 16,527 ​ $ 13,026 ​ Deferred revenue attributed to FPP contracts represents the unearned portion of the Company’s contracts. FPP contracts are generally paid quarterly in advance with revenue recognized on a straight-line basis over the contract period. As of March 31, 2024, approximately $ 4.7 million of revenue is expected to be recognized from remaining performance obligations for FPP contracts. 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. The Distributor Support System (the “DSS program”) provides additional support for distributor business development activities, customer lead generation, brand awareness and tailored marketing services for each of the Company’s major geographic and market verticals. This program is funded by 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. 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. 8. Income Taxes 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, ​ 2024 2023 United States ​ $ 7,357 ​ $ ( 24,560 ) ​ Foreign 49 45 ​ Income (loss) before provision for income taxes ​ $ 7,406 ​ $ ( 24,515 ) ​ ​ Current income tax provision is the amount of income taxes reported or expected to be reported on the Company’s income tax return. The provision for current income taxes was $ 14,000 and $ 7,000 for the years ended March 31, 2024 and 2023, respectively. The current income taxes were related to state income taxes. The Company did no t have current federal income taxes for the fiscal years ended March 31, 2024 and 2023. F-21 Table of Contents Actual income tax expense differed from the amount computed by applying statutory corporate income tax rates to loss from operations before income taxes. A reconciliation of income tax expense to the federal statutory rate follows (in thousands): ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Year Ended March 31, ​ 2024 2023 Federal income tax benefit at the statutory rate ​ $ 1,556 ​ $ ( 5,148 ) ​ State taxes, net of federal effect ( 609 ) ( 1,837 ) ​ Expiring NOLs and tax credits ​ ​ — ​ ​ 10,156 ​ Redeemable noncontrolling interest ​ ​ 973 ​ ​ — ​ Impact of Chapter 11 reorganization, net ​ ​ 147,838 ​ ​ — ​ Impact of state rate change ​ — ​ 107 ​ Valuation allowance ​ ( 153,075 ) ​ ( 3,532 ) ​ Shortfall in tax benefit—stock compensation ​ — ​ 262 ​ True-up ​ ​ 3,326 ​ ​ ( 5 ) ​ Other ​ 5 ​ 4 ​ Income tax expense ​ $ 14 ​ $ 7 ​ ​ The Company’s deferred tax assets and liabilities consisted of the following at March 31, 2024 and 2023 (in thousands): ​ ​ ​ ​ ​ ​ ​ ​ Year Ended March 31, ​ ​ 2024 2023 Deferred tax assets: ​ ​ ​ ​ ​ ​ Inventories ​ $ — ​ $ 3,456 Warranty reserve ​ — ​ 3,140 Bad debt reserve ​ ​ — ​ ​ 1,217 Deferred revenue ​ — ​ 2,385 NOL carryforwards ​ 144 ​ 126,180 Tax credit carryforwards ​ — ​ 12,686 Depreciation, amortization and impairment loss ​ — ​ 496 Lease liability ​ — ​ 2,113 Interest limitation ​ — ​ 6,330 Other ​ — ​ 1,279 Deferred tax assets ​ 144 ​ 159,282 Valuation allowance for deferred tax assets ​ ( 96 ) ​ ( 153,171 ) Deferred tax assets, net of valuation allowance ​ 48 ​ 6,111 Deferred tax liabilities: ​ ​ ​ ​ ​ ​ Investment in Partnership ​ ​ ( 48 ) ​ ​ — Depreciation, amortization and impairment loss ​ — ​ ( 3,998 ) Right-of-use assets ​ — ​ ( 2,113 ) Net deferred tax assets ​ $ — ​ $ — ​ As previously discussed, the Company emerged from bankruptcy on December 7, 2023 and effected a financial and organizational restructuring in accordance with the Plan. The Company's non-recurring restructuring activities resulted in a significant change in the components of the Company's deferred tax assets and liabilities as of March 31, 2024. Elements of the Plan provided that certain secured and unsecured debt that the Company held was exchanged for 18,540,877 shares of common stock of Capstone Green Energy Holdings, Inc., par value $ 0.001 per share (the “New Common Stock”) and 10,449,863 Series A Redeemable Preferred Units (the “Preferred Units”). Absent an exception, a debtor recognizes cancellation of indebtedness income ("CODI") upon discharge of its outstanding indebtedness equal to the excess of the adjusted issue price of the cancelled debt over the amount of consideration received in satisfaction of such debt. The Internal Revenue Code ("IRC") of 1986, as amended, provides that a debtor in a Chapter 11 bankruptcy case may exclude CODI from taxable income but must reduce certain of its tax attributes by the amount of any CODI realized as a result of the consummation of a plan of reorganization. The amount of CODI realized by a taxpayer is F-22 Table of Contents determined based on the fair market value of the consideration received by the creditors in settlement of outstanding indebtedness. As a result of the market value of equity upon emergence from bankruptcy, the estimated amount of CODI is approximately $ 35.3 million, which reduced some of the value of the Company's NOL carryover prior to reorganization. Any remaining tax attributes after attribute reduction remained with Capstone Green Energy Corporation, the Reorganized Private Co, and are no longer a part of Capstone Green Energy Holdings, Inc.'s (the successor) tax attributes. Due to the uncertainty surrounding the timing of realizing the benefits of favorable tax attributes in future income tax returns, the Company has placed a valuation allowance against its net deferred income tax assets. The change in valuation allowance for fiscal years ended March 31, 2024 and 2023 was $ 153.1 million and $ 3.5 million, respectively. The decrease was primarily attributable to the impact of the Plan reorganization. The Company’s NOL for federal and state income tax purposes at March 31, 2024 were as follows (in thousands): ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Expiration ​ ​ Amount Period Federal NOL ​ $ 595 Indefinite ​ State NOL ​ $ 151 2044 ​ ​ 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. Any annual limitation may result in the expiration of NOL and credits before utilization. Should the Company have an ownership change, utilization of the NOL and carryforwards could be significantly reduced. The Company is not expected to utilize NOL and tax credit carryforwards in the near term, and this does not have a material impact on the Company’s financial statements due to the full valuation allowance. ASC 740 clarifies the accounting for income taxes by prescribing a minimum recognition threshold that a tax position is required to meet before being recognized in the financial statements. ASC 740 also provides guidance on derecognition, measurement, classification, interest and penalties, accounting interim periods, disclosure and transition. Based on management's evaluation, 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. 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. 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. 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. As part of the reorganization, the research and development credits remained with Capstone Green Energy Corporation, the Reorganized Private Co. 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 ​ $ 1,898 ​ Lapse of statute of limitations ​ ( 42 ) ​ Balance at March 31, 2023 ​ $ 1,856 ​ Gross decrease due to Chapter 11 reorganization ​ ( 1,856 ) ​ Balance at March 31, 2024 ​ $ — ​ ​ The Company does not expect a material change to its unrecognized tax benefits over the next twelve months. The Company files income tax returns in the U.S. federal jurisdiction and various state, local and foreign jurisdictions. When applicable, the Company accounts for interest and penalties generated by tax contingencies as interest and other expense, net in the Consolidated Statement of Operations. F-23 Table of Contents 9. Permanent Equity The following table summarizes, by Consolidated Statements of Operations line item, stock-based compensation expense (in thousands): ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Year Ended March 31, ​ ​ 2024 2023 Cost of goods sold ​ $ 139 $ 37 ​ Research and development ​ 93 ​ 97 ​ Selling, general and administrative ​ 1,825 ​ 729 ​ Stock-based compensation expense ​ $ 2,057 ​ $ 863 ​ ​ 2017 and 2023 Equity Incentive Plans Capstone Green Energy Corporation 2017 Equity Incentive Plan In June 2017, the Company’s Board of Directors (the “Board”) adopted the Capstone Green Energy Corporation 2017 Equity Incentive Plan, as amended (the “2017 Plan”), which was approved by the stockholders at the Company’s 2017 annual meeting of stockholders on August 31, 2017 (the “2017 Annual Meeting”). The 2017 Plan provided for 3,400,000 aggregate number of shares of Common Stock authorized for issuance under the 2017 Plan. Shares available for future grants and all outstanding unvested equity awards under the 2017 Plan were cancelled on the Effective Date in accordance with the Plan. The Company recorded $ 2.1 million of stock-based compensation expense for the acceleration of cancelling the unvested forfeited awards. Capstone Green Energy Holdings, Inc. 2023 Equity Incentive Plan In connection with the Emergence, on December 7, 2023, the Capstone Green Energy Holdings, Inc. 2023 Equity Incentive Plan (the “Incentive Plan”) was approved and adopted by the Capstone Green Energy Holdings, Inc. Board. The Incentive Plan is intended to, among other things, (i) attract and retain the types of employees, consultants and directors who will contribute the Company’s long-term success, (ii) provide incentives that align the interests of employees, consultants and directors with those of the stockholders of the Company, and (iii) promote the success of the Company’s business. The Incentive Plan is administered by the Capstone Green Energy Holdings, Inc. Compensation and Human Capital Committee or the Board. No more than 3,000,000 shares of New Common Stock are available for the grant of awards under the Incentive Plan. The Company intends to issue equity awards to incentivize employees whose unvested equity awards were terminated in accordance with the Plan. The aggregate value of awards granted during a single fiscal year to any non-employee director, together with any cash fees paid or to be paid to such non-employee director during the fiscal year and the value of awards granted to such non-employee director under any other equity compensation plan of the Company during the fiscal year, will not exceed a total value of $ 300,000 . The Capstone Green Energy Holdings, Inc. Board at any time, and from time to time, may amend or terminate the Incentive Plan. However, (i) in some situations, no amendment shall be effective unless approved by the stockholders of the Company to the extent stockholder approval is necessary to satisfy any applicable laws, and (ii) rights under any award granted before an amendment shall not be impaired by any amendment without the grantee’s written. Non-Voting Common Stock Capstone Green Energy Corporation, as the sole stockholder of Capstone Turbine International, Inc., approved Capstone Turbine International, Inc.’s Amended and Restated Certificate of Incorporation (“COI”), which provided designation of a new class of non-voting common stock with a par value of $ 0.001 per share for Capstone Turbine International, Inc. The non-voting common stock are to be issued to certain key employees and directors of the Company. The intent of issuing the non-voting common share was to provide value to the employees and officers after the F-24 Table of Contents restructuring and substantial de-leveraging following the Company’s Chapter 11. T he non-voting common stock do not have any voting rights on any matter on which stockholders of Capstone Green Energy Holdings, Inc. are entitled to vote. However, the non-voting common stock have the right to vote, separately or together with the common stock, on any amendments to the COI (including with respect to any changes to (i) the authorized number of shares of common stock or non-voting common stock or (ii) any preferences, rights or powers of the non-voting common stock). The number of authorized shares of non-voting common stock or common stock may be increased or decreased (but not below the number of such shares of non-voting common stock or common stock then outstanding, as applicable) by the affirmative vote of the holders of a majority of the common stock. All common stock and all non-voting common stock have the same rights and powers, rank equally (including upon any liquidation, dissolution or winding up of the Company), share ratably in any dividends and distributions, and are identical in all respects as to all other matters, other than as to voting rights. The holders of non-voting common stock may not transfer any such shares of non-voting common stock until the end of the period ending on the date that is twelve months immediately following the date of the COI (the “Lock-Up Period”), with certain exceptions as described in the COI. Each share of non-voting common stock will automatically upon transfer, convert into a share of common stock on a 1 :1 basis. ​ Upon Emergence, a step-up in value was calculated as the maximum value the shares could have after considering a discount for lack of voting rights and the Lock-Up Period. On the Effective Date, $ 0.5 million was recorded as a one-time compensation expense in the Company’s Consolidated Statement of Operations and within Additional paid-in capital (“APIC”) on the Company’s Consolidated Balance Sheet. As of March 31, 2024, 508,475 shares of fully vested non-voting common stock were outstanding. Restricted Stock Units and Performance Restricted Stock Units All outstanding unvested equity awards as of the Effective Date under the Capstone Green Energy Corporation 2017 Equity Incentive Plan were cancelled on the Effective Date in accordance with the Plan. Through the new 2023 Plan, the Company intends to issue equity awards to incentivize employees whose unvested equity awards were terminated in accordance with the Plan. The following table summarizes restricted stock unit and performance restricted stock unit (“PRSU”) activity during Fiscal 2024: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Weighted ​ ​ ​ ​ ​ Average Grant ​ ​ ​ ​ ​ Date Fair ​ Restricted Stock Units and Performance Restricted Stock Units ​ Shares ​ Value Non-vested restricted stock units outstanding at March 31, 2023 842,631 ​ $ 3.13 ​ Granted 1,647,538 ​ ​ 1.20 ​ Vested and issued ( 673,084 ) ​ ​ 1.08 ​ Forfeited/cancelled ( 1,357,085 ) ​ ​ 0.71 ​ Non-vested restricted stock units outstanding at March 31, 2024 460,000 ​ ​ — ​ Restricted stock units expected to vest beyond March 31, 2024 460,000 ​ $ — ​ ​ ​ Stockholder Rights Plan In connection with the Emergence and in accordance with the Plan, the NOL Rights Agreement was terminated and the obligations of the Company thereunder were discharged by order of the Bankruptcy Court. Warrants The warrants outstanding as of the Effective Date to purchase up to 3,763,860 shares of Reorganized Private Co. at various exercise prices for each series were cancelled on the Effective Date in accordance with the Plan. F-25 Table of Contents 10. Temporary Equity Redeemable Preferred Units Redeemable noncontrolling interests are reported on the Consolidated Balance Sheet as Temporary Equity. 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. The Preferred Units have an aggregate value representing 37.5 % equity ownership in the Operating Subsidiary (“Aggregate Purchase Price”). At any time during the six-month period following the sixth anniversary of the Effective Date, the holders of the Preferred Units may elect to have all, but not less than all, of the then outstanding Preferred Units redeemed. Therefore, the Preferred Units are probable of becoming redeemable and will be classified as temporary (‘mezzanine’) equity. The Preferred Units also provide the holder with the option to convert all or less than all of the Preferred Units into common units at any time and from time to time without the payment of additional consideration. If the holder elects to convert the Preferred Units, the specified number of Preferred Units to be converted will be divided by the total number of Preferred Units then outstanding times 37.50 % of the common units deemed outstanding. To the extent some, but not all of the Preferred Units are converted, the 37.50 % percentage will be proportionately reduced, and the same adjustment will apply for purposes of calculating other as-converted entitlements of the Preferred Units. None of the Preferred Units had been converted into common units as of March 31, 2024. 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”). The Company recorded $ 13.9 million, the initial fair value, as Temporary Equity on the Consolidated Balance Sheet as of March 31, 2024. 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. The OPM incorporated multiple thresholds that represent future change of control sale prices where the payout structure would differ based on the rights and preferences of each share class. The OPM used was the Black-Scholes model to price the call option, which includes the below variables. The enterprise value utilized by the Company in the OPM represents the value agreed upon by the parties involved the Chapter 11 Proceedings and Emergence as approved by the Bankruptcy Court: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ As of ​ ​ March 31, 2024 ​ ​ December 7, 2023 ​ Fair value of common units ​ $ 1.15 ​ $ 1.15 ​ Dividend yield ​ ​ — % ​ — % Volatility ​ ​ 93.0 % ​ 92.5 % Risk-free interest rate ​ ​ 4.2 % ​ 4.1 % Expected term ​ ​ 6.2 years ​ ​ 6.5 years ​ 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. 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. 11. Fair Value Measurements 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. The hierarchy gives the highest priority to unadjusted quoted prices in active markets for identical assets or liabilities (level 1 measurements) and the lowest priority to unobservable inputs (level 3 measurements). The three levels of the fair value hierarchy are described as follows: F-26 Table of Contents Level 1. Inputs to the valuation methodology are unadjusted quoted prices for identical assets or liabilities in active markets. Level 2. Inputs to the valuation methodology include: ● Quoted prices for similar assets or liabilities in active markets ● Quoted prices for identical or similar assets or liabilities in inactive markets ● Inputs other than quoted prices that are observable for the asset or liability ● Inputs that are derived principally from or corroborated by observable market data by correlation or other means If the asset or liability has a specified (contractual) term, the level 2 input must be observable for substantially the full term of the asset or liability. Level 3. Inputs to the valuation methodology are unobservable and significant to the fair value measurement. 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. Valuation techniques used must maximize the use of observable inputs and minimize the use of unobservable inputs. Basis for Valuation The carrying values reported in the Consolidated Balance Sheets for cash, accounts receivable and accounts payable approximate their fair values because of the immediate or short-term maturities of these financial instruments. Financial and nonfinancial assets and liabilities measured on a recurring basis are those that are adjusted to fair value at each reporting period and include the Company’s Preferred Units. The Company used the BSM model (Level 3) with standard valuation inputs to value the Preferred Units as detailed in Note 10— Temporary Equity. 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. As of March 31, 2024, the carrying value of the Exit Notes approximates their fair value. 12. Debt Exit Facility Agreement 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). The Exit Note Purchase Agreement provides for: (i) a roll up of $ 12.6 million DIP New Money Notes (plus any accrued unpaid interest); (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”); and (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. The Exit Note Purchase Agreement also provides for a $ 10.0 million uncommitted incremental facility. 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). The Notes bear interest at a rate equal to the Adjusted Term SOFR (as F-27 Table of Contents defined in the Exit Note Purchase Agreement) plus 7.00 % per annum. A portion of the interest on the Notes is paid-in-kind until the third year following the Effective Date. The Exit Roll Up Notes mature on December 7, 2026 and the Exit New Money Notes mature on December 7, 2025. The scheduled maturities of the Company’s long-term debt are as follows as of March 31, 2024 (in thousands): ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Year Ending March 31, ​ 2025 ​ $ — ​ 2026 ​ ​ 7,151 ​ 2027 ​ ​ 21,760 ​ 2028 ​ ​ — ​ 2029 ​ ​ — ​ Thereafter ​ ​ — ​ Total expected future maturities ​ $ 28,911 ​ ​ 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. The Exit Note Purchase Agreement also includes conditions precedent, representations and warranties, affirmative and negative covenants, events of default, and other customary provisions, including financial covenants with respect to minimum consolidated liquidity and minimum consolidated adjusted EBITDA. On March 27, 2024, the Company obtained a waiver from the Purchaser and the Collateral Agent in anticipation of default on March 31, 2024. The waiver granted was specific to the $ 1.0 million consolidated adjusted EBITDA covenant for the measurement date of March 31, 2024, and covered the period until June 30, 2024. There can be no assurance that the Purchase and the Collateral Agent will waive any future defaults that may occur. If future defaults occur, the Purchaser and the Collateral Agent can exercise their rights and remedies under the Exit Note Purchase Agreement (and other security related documents), including a right to accelerate the maturity of the Company’s repayment obligations under the Notes. 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. 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. 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. 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. 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. On June 28, 2024, the Company entered into the First Amendment (the “First Amendment”) to the Exit Note Purchase Agreement. The First Amendment provides for: (i) the amendment of the minimum consolidated adjusted EBITDA financial covenant to (a) allow adjustment for costs related to the restatement of, or other adjustments to, the financial statements of the Company for the period beginning on the Closing Date (as defined in the Exit Note Purchase Agreement) and ending at the end of the 2025 Fiscal Year and (b) the minimum consolidated adjusted EBITDA financial covenant to be first tested at the quarter ended September 30, 2024, (ii) the amendment of the minimum consolidated liquidity financial covenant to (a) reduce the minimum consolidated liquidity to $ 1,000,000 from September 30, 2024 to March 30, 2025 and (b) defer the testing of the minimum consolidated liquidity financial covenant to September 30, 2024 and (iii) the extension of the deadline for the delivery of the Company’s audited financial statements for the fiscal year ended March 31, 2024 (the “fiscal 2024 financial statements”) to September 27, 2024 and the removal of the covenant that the fiscal 2024 financial statements be accompanied by a report and opinion of an independent certified public accountant which is not subject to any “going concern” or like qualification. The minimum consolidated liquidity covenant will be tested at all times from and after September 30, 2024, and requires the Company and its subsidiaries to maintain a minimum average Consolidated Liquidity (as defined in the First Amendment) during any seven consecutive day period of no less than: F-28 Table of Contents (i) from September 30, 2024 to March 30, 2025, $ 1,000,000 ; (ii) from March 31, 2025 to June 29, 2025, $ 2,500,000 ; (iii) from June 30, 2025 to September 29, 2025, $ 3,000,000 ; (iv) from September 30, 2025 to March 30, 2026, $ 3,500,000 ; and (v) from March 31 2026 to December 7, 2026, $ 4,000,000 . The minimum consolidated adjusted EBITDA covenant will be tested on the last day of each fiscal quarter, commencing with September 30, 2024, and will require the Company and its subsidiaries to maintain a minimum consolidated adjusted EBITDA (as defined in the First Amendment) as at the end of any fiscal quarter (i) from the Closing Date until September 30, 2024, for the period of the fiscal quarters then ended in such calendar year and (ii) from October 1, 2024, for the four fiscal quarter period then ended, to be less than the correlative amount indicated below (with corresponding calendar quarters also included as reference): ​ ​ ​ Fiscal Quarter Ending Consolidated Adjusted EBITDA September 30, 2024 $ 2,500,000 December 31, 2024 $ 4,000,000 March 31, 2025 $ 5,000,000 June 30, 2025 $ 5,500,000 September 30, 2025 $ 6,000,000 December 31, 2025 $ 6,500,000 March 31, 2026 $ 8,000,000 June 30, 2026 $ 8,000,000 September 30, 2026 $ 8,000,000 ​ 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. 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 On February 4, 2019 , the Company entered into a Note Purchase Agreement (as amended, the “Note Purchase Agreement”), by and among the Company, certain subsidiaries of the Company party thereto as guarantors, the Collateral Agent and any other purchasers party thereto from time to time (collectively, the “Purchaser”). On October 1, 2020 , the Company entered into an Amended & Restated Note Purchase Agreement (the “A&R Note Purchase Agreement”). As of March 31, 2023, the Company had borrowings under the Note Purchase Agreement of $ 51.0 million. The A&R Note Purchase Agreement contained a covenant, among others requiring the Company to have at all times a liquidity (the “Liquidity Covenant”) of at least $ 9.0 million. On April 21, 2023, the Company breached the Liquidity Covenant when its total funds in accounts subject to account control agreements fell below $ 9.0 million. On July 3, 2023, the Company failed to make an interest payment. On July 6, 2023, the Company entered into a Fourth Amendment (the “Fourth Amendment”) to the A&R Note Purchase Agreement by and among the Company, certain subsidiaries of the Company, Goldman Sachs Specialty Lending Group, L.P. (as successor in interest to Goldman Sachs Specialty Lending Holdings, Inc.), as Collateral Agent and the purchaser party thereto (the “Purchaser”). The Fourth Amendment provides for (i) the waiver by the Purchaser and the Collateral Agent of the Company’s breach of the minimum consolidated liquidity covenant contained in the A&R Note Purchase Agreement, the failure to make the interest payment and certain other breaches specified therein; (ii) the extension of the maturity of the $ 50 million aggregate principal amount of Notes outstanding pursuant to the A&R Note Purchase Agreement from October 1, 2023 to September 1, 2024; (iii) an amendment fee payable by the Company at maturity equal to 1.00 % of the principal balance of the Notes on the effective date of the Fourth Amendment (the “Fourth Amendment F-29 Table of Contents Effective Date”); (iv) a due date for the next interest payment on the date that is 30 days from the Fourth Amendment Effective Date, which interest payment was originally due on July 3, 2023; (v) following the Company’s entry into a TSA, the payment-in-kind of the quarterly interest payments that are due following the next the interest payment; (vi) a new minimum consolidated liquidity covenant requirement of $ 4.0 million, commencing on July 14, 2023, which amount will increase to $ 4.5 million on August 16, 2023 and to $ 6.0 million on August 31, 2023; (vii) the replacement of the Adjusted LIBO Rate with a Term SOFR interest rate benchmark; (viii) the ability for the Collateral Agent to either (A) force a conversion of the interest rate benchmark to Base Rate or (B) impose default interest during an Event of Default; (ix) the right for one designated Collateral Agent board observer to attend the meetings of the Company’s Board of Directors (and committees thereof) in a non-voting capacity, subject to certain customary exceptions; and (x) the amendment to certain provisions of the A&R Note Purchase Agreement, including to add a number of new covenants. Those new covenants include requirements that the Company (i) enter into a TSA within 30 days of the Fourth Amendment Effective Date; (ii) subject to necessary stockholder approvals, execute and deliver, or reach agreement on substantially final versions of, the definitive documentation with respect of the transactions specified in the TSA in form and substance satisfactory to the Collateral Agent within 45 days after the Fourth Amendment Effective Date; (iii) close the transactions specified by the TSA by September 15, 2023; and (iv) provide a Section 382 analysis (i.e., an analysis relating to the potential limitation of the use of the Company’s net operating loss carryforwards due to ownership changes, which loss carryforwards the Company understands may be potentially valuable in one or more transaction structures) to the Collateral Agent on a quarterly basis. The Fourth Amendment also imposes restrictions on the Company’s ability to (i) pay professional fees for 30 days in excess of $ 2,000,000 in the aggregate; (ii) make certain other cash disbursements in excess of thresholds set forth in the Fourth Amendment; and (iii) amend existing, or enter into new, employment agreements or pay or incur any bonus or severance payment. On August 16, 2023, the Company entered into a Fifth Amendment (the “Fifth Amendment”) to the A&R Note Purchase Agreement by and among the Company, certain subsidiaries of the Company, the Collateral Agent and the Purchaser. The Fifth Amendment provides for (i) the waiver by the Purchaser and the Collateral Agent of the Company’s breach of a covenant contained in the A&R Note Purchase Agreement to enter into a TSA with one or more lenders in form and substance mutually satisfactory to the Collateral Agent and the Company within 30 days of the Fourth Amendment Effective Date and the failure to make an interest payment within 30 days of the Fourth Amendment Effective Date; (ii) a due date for the next interest payment on August 22, 2023 or such later date as is agreed to by the Collateral Agent in its sole discretion, which interest payment was originally due within 30 days Fourth Amendment Effective Date to the A&R Note Purchase Agreement; (iii) a minimum consolidated liquidity covenant requirement of $ 3.5 million, commencing on July 14, 2023 and operative through September 1, 2024; and (iv) the amendment of the milestones with respect of the TSA to require that the Company (A) agree to the terms and form of the TSA (which may include a structure including bankruptcy proceedings) with one or more lenders in form and substance mutually satisfactory to the Collateral Agent and the Company by August 22, 2023 or such later date as is agreed to by the Collateral Agent in its sole discretion,(B) subject to any necessary stockholder approvals, execute and deliver, or reach agreement on substantially final versions of, the definitive documentation with respect of the transactions specified in the TSA in form and substance satisfactory to the Collateral Agent by August 31, 2023 or such later date as is agreed to by the Collateral Agent in its sole discretion, and (C) that the Company shall have closed the transactions specified by the TSA by September 15, 2023 or such later date as is agreed by the Collateral Agent in its sole discretion. On September 22, 2023, the Company entered into a Sixth Amendment (the “Sixth Amendment”) to the A&R Note Purchase Agreement among the Company, certain subsidiaries of the Company, the Collateral Agent and the purchaser. Pursuant to the Sixth Amendment, the Company issued and the Purchaser purchased for $ 3,000,000 in cash additional senior secured notes on September 22, 2023 (the “Additional Notes”). The Additional Notes bear interest at the SOFR Rate plus 8.75 % per annum, payable-in-kind on the last day of each interest period of one-, two-, three- or six-months (but, in the case of a six-month interest period, every three-months). The entire principal amount of the Additional Notes is due and payable on September 1, 2024 (the “Maturity Date”). The Additional Notes do not amortize and the entire principal balance is due in a single payment on the Maturity Date. On the Petition Date, the principal balance of the A&R Note Purchase Agreement of $ 53.0 million, including accrued interest of $ 3.5 million and $ 0.5 million of issuance costs, were classified as LSTC on the Company’s Consolidated Balance Sheet. The Company suspended accruing and paying interest and amortizing deferred financing costs, discounts and premiums, as applicable. During Fiscal 2024, $ 18.0 million of the LSTC balance, including accrued interest of $ 1.3 F-30 Table of Contents 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. Interest expense related to the Term note payable, current during Fiscal 2024 and 2023 was $ 3.3 million and $ 6.2 million, respectively. Gain on Extinguishment of Debt The Company incurred a $ 35.3 million gain as a result of the debt amendment related to emerging from Chapter 11 bankruptcy on December 7, 2023. The gain is recorded within Reorganization items, net on the Company’s Consolidated Statement of Operations. 13. Leases Lessor 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; however, the leases may include variable payments for fuel, excess labor, additional equipment, or technician labor and engineering support. As further described below, the Company rents certain microturbine equipment back from customers and subleases this equipment to end users as a part of its Energy-as-a-Service business. At March 31, 2024, the Company’s minimum rental revenue to be received was as follows (in thousands): ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Leased ​ Owned and ​ Year Ending March 31, Assets Financed Assets 2025 ​ $ 2,827 ​ $ 8,620 ​ 2026 ​ 1,345 ​ 3,998 ​ 2027 ​ — ​ 653 ​ 2028 ​ — ​ 533 ​ 2029 ​ — ​ 279 ​ Thereafter ​ ​ — ​ ​ 792 ​ Total minimum rental revenue ​ $ 4,172 ​ $ 14,875 ​ ​ Lessee The Company leases facilities and equipment under various non-cancelable operating and finance leases expiring at various times through Fiscal 2037. All of the leases require the Company to pay maintenance, insurance and property taxes. The lease agreements for primary office and manufacturing facilities provide for rent escalation over the lease term and renewal options for five-year periods . Lease expense is recognized on a straight-line basis over the term of the lease, which may include extension periods. During Fiscal 2024, the Company entered into eight rental agreements to rent used microturbine equipment from customers where that equipment was not currently in use. The existing rental agreements provide the Company an option to extend the lease, however, the Company is not likely to exercise these options and therefore not included in the determination of the lease term. As of March 31, 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): ​ ​ ​ ​ ​ ​ ​ ​ ​ Year Ended March 31, ​ 2024 2023 Finance lease costs (1) ​ $ 804 $ 697 Operating lease costs ​ ​ 4,948 ​ 2,291 Total lease costs ​ $ 5,752 $ 2,988 (1) Interest expense is included in finance lease costs. F-31 Table of Contents Supplemental balance sheet information related to the leases was as follows (in thousands): ​ ​ ​ ​ ​ ​ ​ March 31, 2024 ​ March 31, 2023 Finance lease right-of-use assets $ 4,391 ​ $ 4,529 Operating lease right-of-use assets ​ 12,279 ​ ​ 8,808 Total right-of-use assets $ 16,670 ​ $ 13,337 ​ ​ ​ ​ ​ ​ Finance lease liability, current $ 964 ​ $ 773 Operating lease liability, current ​ 4,041 ​ ​ 2,492 Finance lease liability, non-current ​ 2,300 ​ ​ 2,903 Operating lease liability, non-current 8,527 ​ 6,588 Total lease liabilities $ 15,832 ​ $ 12,756 ​ ​ ​ ​ ​ ​ Finance leases: ​ ​ ​ ​ ​ Weighted average remaining lease life 1.41 years ​ 2.27 years Weighted average discount rate ​ 13.00 % ​ ​ 13.00 % Operating leases: ​ ​ ​ ​ ​ Weighted average remaining lease life 4.48 years ​ 4.86 years Weighted average discount rate ​ 13.00 % ​ ​ 12.00 % Supplemental cash flow information related to the leases was as follows (in thousands): ​ ​ ​ ​ ​ ​ ​ Year Ended March 31, ​ 2024 ​ 2023 Cash paid for amounts included in the measurement of lease liabilities ​ ​ Finance cash flows from finance leases $ 173 ​ $ 803 Operating cash flows from finance leases $ 42 ​ $ 45 Operating cash flows from operating leases $ 4,930 ​ $ 2,258 Right-of-use assets obtained in exchange for lease obligations ​ ​ ​ ​ ​ Finance leases $ 447 ​ $ 3,991 Operating leases $ 6,901 ​ $ 4,179 ​ At March 31, 2024, the Company’s minimum commitments under non-cancelable operating and finance leases were as follows (in thousands): ​ ​ ​ ​ ​ ​ ​ ​ ​ Finance ​ Operating Year Ending March 31, Leases Leases 2025 ​ $ 1,108 ​ $ 5,380 2026 ​ ​ 2,059 ​ ​ 4,368 2027 ​ 252 ​ 1,747 2028 ​ — ​ 1,636 2029 ​ — ​ 1,337 Thereafter ​ ​ — ​ ​ 1,882 Total lease payments ​ $ 3,419 ​ $ 16,350 Less: imputed interest ​ ​ ( 155 ) ​ ​ ( 3,782 ) Present value of lease liabilities ​ $ 3,264 ​ $ 12,568 ​ ​ F-32 Table of Contents 14. Commitments and Contingencies Purchase Commitments As of March 31, 2024 the Company had firm commitments to purchase inventories of approximately $ 30.7 million through Fiscal 2026. Certain inventory delivery dates and related payments are not scheduled; therefore, amounts under these firm purchase commitments will be payable upon the receipt of the related inventories. Lease Commitments See Note 13 – Leases. Related Party Transactions 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. Services Agreement between Reorganized PrivateCo and Operating Subsidiary On the Effective Date, Operating Subsidiary entered into the Reorganized PrivateCo Services Agreement by and among Reorganized PrivateCo and Operating Subsidiary. 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. Reorganized PrivateCo will pay to Operating Subsidiary a service fee (the “Reorganized PrivateCo Services Fee”) of an amount in cash equal to 90 % of Reorganized PrivateCo’s Income (as defined in the Reorganized PrivateCo Services Agreement) less itemized expenses incurred and actually paid in cash by Reorganized PrivateCo in direct support of Operating Subsidiary’s distributors and in Reorganized PrivateCo’s performance of the services (excluding the Reorganized PrivateCo Services Fees). The Company reported $ 0.7 million in other income for DSS service fees for Fiscal 2024. Trademark License Agreement On the Effective Date, the Company entered into a Trademark License Agreement (the “Trademark License Agreement”) by and between Reorganized PrivateCo, as licensor, and the Company, as licensee. The Trademark License Agreement provides that, among other things, Reorganized PrivateCo grants the Company a non-exclusive, royalty-bearing, non-transferable, non-sublicensable (except to the Company’s affiliates), worldwide, perpetual (subject to the terms and conditions of the Trademark License Agreement), irrevocable (subject to the terms and conditions of the Trademark License Agreement), limited license, under all of its right, title and interest in and to the Capstone Trademarks (as defined in the Trademark License Agreement) to use the Capstone Trademarks solely in connection with the Business (as defined in the Trademark License Agreement). In consideration for the license, the Company pays to Reorganized PrivateCo an annual royalty of $ 100,000 . Reorganized PrivateCo may not assign the Capstone Trademarks to any third party without the Company’s consent, not to be unreasonably withheld, delayed or conditioned (subject to the terms and conditions of the Trademark License Agreement). If Reorganized PrivateCo does not use any of the Capstone Trademarks for six consecutive months, then the Capstone Trademarks will be assigned to the Company for no further consideration. ​ Services Agreement between the Company and Operating Subsidiary 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. The Services Agreement provides, among other things, that the Company will provide certain services to Operating Subsidiary, in its capacity as a majority equity holder of Operating Subsidiary, and in consideration for the services provided by the Company, Operating Subsidiary will reimburse the Company for its reasonable audit, board and executive compensation expenses incurred in connection with being a publicly traded company (the “New Capstone Services Fee”). The New F-33 Table of Contents 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. 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. Bureau of Labor Statistics and available on March 31 of each year; provided that such increase effective on April 1, 2024, shall be equal to 1.7500 %. Other Commitments The Company has agreements with certain of its distributors requiring that, if the Company renders parts obsolete in inventories the distributors own and hold in support of their obligations to serve fielded microturbines, then the Company is required to replace the affected stock at no cost to the distributors. While the Company has never incurred costs or obligations for these types of replacements, it is possible that future changes in the Company’s product technology could result and yield costs to the Company if significant amounts of inventory are held at distributors. As of March 31, 2024, no significant inventories of this nature were held at distributors. Legal Matters Capstone Turbine Corporation v. Turbine International, LLC. On February 3, 2020, Capstone Turbine Corporation filed suit against its former distributor, Turbine International, LLC (“Turbine Intl.”), in the Superior Court of California for the County of Los Angeles under the following caption: Capstone Turbine Corporation v. Turbine International, LLC; Case No. 20STCV04372 (“Capstone-Turbine Intl. Litigation”). The Company has alleged claims against Turbine Intl. 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. 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. filed its answer and cross-claims in the Capstone-Turbine Intl. In its cross-claims, Turbine Intl. asserted claims against Capstone, and individually against Mr. 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. is seeking compensatory, consequential, and punitive damages along with attorney’s fees, interest, and costs. Capstone answered the cross-claims on May 7, 2020. 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. That motion was granted on August 19, 2020, and the First Amended Complaint (“FAC”) was filed. 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. On May 17, 2024, the trial was set for July 29, 2024; and the court ordered the parties to mediate the matter by June 19, 2024. On July 2, 2024, Turbine Intl. petitioned the court for a continuance and to reopen discovery. The court granted the continuance and set the trial date for December 2, 2024 and rejected the request to reopen discovery. Mediation remains court ordered. 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 In June 2023, prior to the issuance of the Company’s consolidated financial statements for the fiscal year ended March 31, 2023, the Audit Committee of the Company’s Board commenced an Investigation into certain accounting and internal control matters of the Company, principally focused on certain revenue recognition matters (the “Revenue Recognition Investigation”), and self-reported its findings to the Division of Enforcement of the SEC. Following the self-report, the SEC Enforcement Division commenced an investigation into the circumstances surrounding the restatement of F-34 Table of Contents the Company’s quarterly and annual financial statements (the “SEC Investigation”). The Audit Committee further self-reported its findings pursuant to an investigation into FPP related practices to the SEC. The Company 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. 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. The parties have completed selection of an arbitration panel; and the arbitration panel has provided two possible dates in June and October 2025 for a hearing date. On August 18, 2024, Cal Microturbine amended its complaint and reduced its damage claim to $ 18.8 million. 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. Spitzer v. Flexon, Jamison, Juric, Robinson, and Hencken On October 13, 2023, a putative securities class action was filed in the U.S. District Court for the Central District of California, captioned Spitzer v. Flexon, et al., Case No. 2:23-cv-08659, naming certain of the Company’s current and former directors and officers as defendants. The suit alleges claims under Sections 10(b) and 20(a) of the Securities Exchange Act of 1934, as amended, and Rule 10b-5 promulgated thereunder based on allegedly false and misleading statements regarding, and allegedly inadequate disclosure surrounding, the Company’s business, operations and prospects and the circumstances leading up to the restatement of the Company’s quarterly and annual financial statements. The suit is purportedly brought on behalf of persons and entities that purchased or otherwise acquired the Company’s securities between June 14, 2021 and September 22, 2023 and seeks to recover unspecified compensatory damages and other relief, including attorney’s fees. The Company 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. 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 . The Company incurred legal fees of $ 0.1 million as of March 31, 2024. Rouse v. Capstone Green Energy Corporation 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. 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. The complaint seeks damages, medical expenses, attorneys’ fees, interest and costs related to the termination of Mr. Rouse’s employment and alleged non-payment of sales commissions in excess of $ 300,000 . The Company resolved the dispute entering into a settlement agreement on September 15, 2024 for a non-material amount. Mark Estrada and Ricardo Montalvo, vs. Capstone Green Energy LLC and Erick Kim. ​ 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. 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. The Court has not ruled to certify the Class. 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. The Company intends to fight the claims vigorously. F-35 Table of Contents DV Energy, LLC vs Capstone Green Energy Holdings, Inc, Capstone Turbine Corporation, Capstone Green Energy Corporation, and Capstone Green Energy, LLC. On August 26, 2024, DV Energy, LLC (“DV Energy”), a 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. DV Energy has asserted $ 715,552 in damages plus interest, attorney’s fees and costs. The complaint relates to a deposit for product order that the Company is restricted from delivering due to U.S. sanctions laws. The Company intends to meet its obligation to deliver the product once it can do so in accordance with U.S. Sanctions laws. The Company’s Distributor Agreement defines deposits as non-refundable. The value of the DV Energy deposit is recorded in the Company’s financial statements as current liability. The Company is unable to estimate the possible loss or range of possible loss and intends to fight the claims vigorously. 15. Employee Benefit Plans The Company maintains a defined contribution 401(k) profit-sharing plan in which all employees are eligible to participate. Employees may contribute up to Internal Revenue Service annual limits or, if less, 90 % of their eligible compensation. Employees are fully vested in their contributions to the plan. The plan also provides for both Company matching and discretionary contributions, which are determined by the Board. The Company has been matching 50 cents on the dollar up to 6 % of the employee’s contributions since February 2019. Prior to that date, the Company had been matching 50 cents on the dollar up to 4 % of the employee’s contributions since October 2006. There were no Company contributions to the plan prior to October 2006. The Company’s match vests 25 % a year over four years starting from the employee’s hire date. The Company recorded expense of approximately $ 0.3 million and $ 0.2 million for each of Fiscal 2024 and 2023, respectively. 16. Supplemental Balance Sheet Information Prepaid and Other Assets 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. 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. 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. The Company determined an impairment did not exist as of March 31, 2024 or 2023. The current and long-term portions of prepaid royalties and prepaid and other assets were as follows (in thousands): ​ ​ ​ ​ ​ ​ ​ ​ ​ March 31, ​ March 31, ​ 2024 2023 Other royalty-related current assets ​ $ 124 ​ $ 124 Other royalty-related noncurrent assets ​ ​ 2,239 ​ 2,381 Total royalty-related assets ​ $ 2,363 ​ $ 2,505 Prepaid vendor inventory ​ ​ 3,417 ​ ​ 3,536 Prepaid Insurance ​ ​ 908 ​ ​ 16 Deposits ​ ​ 366 ​ ​ 330 Prepaid taxes ​ ​ 397 ​ ​ 2,248 Other Assets ​ ​ 1,035 ​ ​ 1,403 Total Prepaid expenses, other current assets and other assets ​ $ 8,486 ​ $ 10,038 ​ ​ ​ F-36 Table of Contents Accounts Payable and Accrued Expenses Accounts payable and accrued expenses consisted of (in thousands): ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ March 31, ​ March 31, ​ ​ ​ 2024 ​ 2023 ​ Trade payables ​ $ 15,095 ​ $ 27,491 ​ Accrued interest ​ ​ — ​ ​ 1,620 ​ Accrued professional fees ​ ​ 2,827 ​ ​ 596 ​ Accrued commissions ​ ​ 148 ​ ​ 604 ​ Accrued service claims ​ ​ 278 ​ ​ 171 ​ Other ​ ​ ( 136 ) ​ ​ ( 192 ) ​ ​ ​ $ 18,212 ​ $ 30,290 ​ ​ ​ ​ 17. Subsequent Events The Company has evaluated all subsequent events through the filing date of this Form 10-K with the SEC, to ensure that this filing includes appropriate disclosure of events both recognized in the financial statements as of March 31, 2024, and events which occurred subsequently but were not recognized in the financial statements. There were no subsequent events, other than what has been described above, which required recognition, adjustment to or disclosure in the financial statements. ​ ​ F-37 Table of Contents Exhibit Index ​ Exhibit Number ​ Description 2.1 ​ Joint Prepackaged Chapter 11 Plan of Reorganization of Capstone Green Energy Corporation and its Debtor Affiliates (incorporated by reference to Exhibit A of Findings of Fact, Conclusions of Law, and Order (I) Approving the Disclosure Statement; (II) Confirming the Joint Prepackaged Chapter 11 Plan of Reorganization of Capstone Green Energy Corporation and Its Debtor Affiliates; and (III) Granting Related Relief, dated November 14, 2023) (l) 2.2 ​ Plan Supplement to Joint Prepackaged Chapter 11 Plan of Reorganization of Capstone Green Energy Corporation and its Debtor Affiliates, dated as of October 24, 2023 (k) 2.3 ​ Notice of Filing of Additional Exhibits to Plan Supplement, dated as of November 9, 2023 (l) 2.4 ​ Findings of Fact, Conclusions of Law, and Order (I) Approving the Disclosure Statement; (II) Confirming the Joint Prepackaged Chapter 11 Plan of Reorganization of Capstone Green Energy Corporation and Its Debtor Affiliates; and (III) Granting Related Relief, dated November 14, 2023 (l) 3.1 ​ Second Amended and Restated Certificate of Incorporation of Capstone Green Energy Holdings, Inc. (m) 3.2 ​ Amended and Restated Bylaws of Capstone Green Energy Holdings, Inc. (m) 4.1 ​ Super-Priority Senior Secured Debtor-In-Possession Note Purchase Agreement, dated as of October 2, 2023, among Capstone Green Energy Corporation, as a Chapter 11 Debtor and Debtor-in-Possession, the other debtors party thereto from time to time, each as a Chapter 11 Debtor and Debtor-in-Possession and as a Guarantor, Broad Street Credit Holdings LLC, as Purchaser, and Goldman Sachs Specialty Lending Group, L.P., as Collateral Agent (j) 4.2 ​ First Amendment to Super-Priority Senior Secured Debtor-In-Possession Note Purchase Agreement, dated as of November 15, 2023, among Capstone Green Energy Corporation, as a Chapter 11 Debtor and Debtor-in-Possession, the other debtors party thereto from time to time, each as a Chapter 11 Debtor and Debtor-in-Possession and as a Guarantor, Broad Street Credit Holdings LLC, as Purchaser, and Goldman Sachs Specialty Lending Group, L.P., as Collateral Agent (l) 4.3 ​ 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) 4.4 ​ 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. and the Purchaser party thereto (o) 4.5 ​ Description of the Registrant’s Securities Registered Pursuant to Section 12 of the Securities Exchange Act of 1934, as amended (p) 10.1 * Amended and Restated Capstone Turbine Corporation Change of Control Severance Plan (a) 10.2 ​ Development and License Agreement between Capstone Turbine Corporation and Carrier Corporation, successor-in-interest to UTC Power Corporation, dated September 4, 2007 (b) 10.3 ​ Promissory Note between Capstone Turbine Corporation and Turbine International, LLC, dated October 13, 2017 (c) 10.4 ​ Guaranty between Capstone Turbine Corporation and Hispania Petroleum, S.A., dated October 13, 2017 (c) 10.5 ​ First Amendment to the Accounts Receivable Assignment Agreement and Promissory Note between Capstone Turbine Corporation and Turbine International, LLC, dated June 5, 2018 (d) 10.6 * Capstone Green Energy Corporation Amended and Restated Severance Pay Plan and Summary Plan Description, dated July 3, 2018, as amended March 2023 (e) 10.7 * Form of Capstone Green Energy Corporation Change in Control Agreement (f) 10.8 ​ Consulting Agreement between Capstone Green Energy Corporation and Capstone Engineered Solutions, dated May 22, 2022 (g) ​ Table of Contents ​ Exhibit Number ​ Description 10.9 ​ National Account Agreement between Capstone Green Energy Corporation and Capstone Engineered Solutions, dated May 20, 2022 (g) 10.10 ​ Installation Agreement between Capstone Green Energy Corporation and Capstone Engineered Solutions Corporation (g) 10.11 ​ Lease Agreement between Capstone Green Energy Corporation and Prologis, L.P., dated January 25, 2023 (h) 10.12 ​ Transaction Support Agreement, dated September 28, 2023, by and among Capstone Green Energy Corporation and certain of its subsidiaries, Goldman Sachs Specialty Lending Group, L.P., and Broad Street Credit Holdings LLC (i) 10.13 ​ Reorganized PublicCo Services Agreement, dated December 7, 2023, by and among Capstone Green Energy Holdings, Inc. and Capstone Green Energy LLC (m) 10.14 ​ Trademark License Agreement, dated December 7, 2023, by and among Capstone Distributor Support Services Corporation and Capstone Green Energy Holdings, Inc. (m) 10.15 * Capstone Green Energy Holdings, Inc. Form of Indemnity Agreement (m) 10.16 * Severance Pay Plan of Capstone Green Energy Holdings, Inc. (m) 10.17 * 2023 Equity Incentive Plan of Capstone Green Energy Holdings, Inc. (m) 10.18 ​ Amended and Restated Limited Liability Company Agreement, dated December 7, 2023, of Capstone Green Energy LLC. (m) 10.19 ​ Reorganized PrivateCo Services Agreement, dated December 7, 2023, by and among Capstone Distributor Support Services Corporation and Capstone Green Energy LLC (m) 10.20 ​ Registration Rights Agreement, dated December 7, 2023, by and among Capstone Green Energy LLC and Capstone Distributor Support Services Corporation (m) 10.21 * Employment Offer Letter for Vincent J. Canino, dated February 22, 2024 (n) 10.22 * Capstone Green Energy Holdings, Inc. Form of Amended and Restated Change in Control Agreement (n) 10.23 * Form of Restricted Stock Unit Agreement (p) 24 ​ Power of Attorney (included on the signature page of this Form 10-K) 31.1 ​ Certification of Chief Executive Officer pursuant to Section 302 of the Sarbanes­–Oxley Act of 2002 31.2 ​ Certification of Chief Financial Officer pursuant to Section 302 of the Sarbanes­–Oxley Act of 2002 32 ​ Certification of Chief Executive Officer and Chief Financial Officer pursuant to Section 906 of the Sarbanes–Oxley Act of 2002 (furnished herewith) 97.1 ​ Capstone Green Energy Holdings, Inc. Clawback Policy, effective October 2, 2023 101.INS ​ 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 101.SCH ​ XBRL Schema Document 101.CAL ​ XBRL Calculation Linkbase Document 101.LAB ​ XBRL Label Linkbase Document 101.PRE ​ XBRL Presentation Linkbase Document 101.DEF ​ XBRL Definition Linkbase Document 104 ​ The cover page from Capstone Green Energy Corporation’s Annual Report on Form 10-K for the fiscal year ended March 31, 2024, formatted in Inline XBRL and contained in Exhibit 101 *Management contract or compensatory plan or arrangement (a) Incorporated by reference to Capstone Turbine Corporation’s Quarterly Report on Form 10-Q for the quarterly period ended December 31, 2004 (File No. 001-15957). ​ Table of Contents (b) Incorporated by reference to Capstone Turbine Corporation’s Quarterly Report on Form 10-Q for the quarterly period ended September 30, 2007 (File No. 001-15957). (c) Incorporated by reference to Capstone Turbine Corporation’s Current Report on Form 8-K filed on October 13, 2017 (File No. 001-15957). (d) Incorporated by reference to Capstone Turbine Corporation’s Annual Report on Form 10-K for the fiscal year ended March 31, 2018 (File No. 001-15957). (e) Incorporated by reference to Capstone Green Energy Corporation’s Current Report on Form 8-K filed on March 6, 2023 (File No. 001-15957). (f) Incorporated by reference to Capstone Turbine Corporation’s Current Report on Form 8-K filed on June 5, 2018 (File No. 001-15957). (g) Incorporated by reference to Capstone Green Energy Corporation’s Annual Report on Form 10-K for the fiscal year ended March 31, 2022 (File No. 001-15957). (h) Incorporated by reference to Capstone Green Energy Corporation’s Quarterly Report on Form 10-Q for the quarterly period ended December 31, 2022 (File No. 001-15957). (i) Incorporated by reference to Capstone Green Energy Corporation’s Current Report on Form 8-K filed on September 28, 2023 (File No. 001-15957). (j) Incorporated by reference to Capstone Green Energy Corporation’s Current Report on Form 8-K filed on October 3, 2023 (File No. 001-15957). (k) Incorporated by reference to Capstone Green Energy Corporation’s Current Report on Form 8-K filed on October 25, 2023 (File No. 001-15957). (l) Incorporated by reference to Capstone Green Energy Corporation’s Current Report on Form 8-K filed on November 17, 2023 (File No. 001-15957). (m) Incorporated by reference to Capstone Green Energy Holdings, Inc.’s Current Report on Form 8-K12G3 filed on December 11, 2023 (File No. 001-15957). (n) Incorporated by reference to Capstone Green Energy Holdings, Inc.’s Current Report on Form 8-K filed on March 12, 2024 (File No. 001-15957). (o) Incorporated by reference to Capstone Green Energy Holdings, Inc.’s Current Report on Form 8-K filed on June 28, 2024 (File No. 001-15957). ​ (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. 001-15957). ​ ​ ​ Table of Contents SIGNATURES 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. ​ ​ ​ ​ ​ Date: September 26, 2024 ​ By: ​ /s/ John J. Juric ​ ​ John J. Juric Chief Financial Officer (Principal Financial Officer) ​ KNOW ALL MEN BY THESE PRESENTS, that we, the undersigned officers and directors of Capstone Green Energy Holdings Inc., hereby severally constitute Vince Canino and John J. Juric, and each of them singly, our true and lawful attorneys with full power to them, and each of them singly, to sign for us and in our names in the capacities indicated below, this Annual Report on Form 10-K and any and all amendments to said Form 10-K, and generally to do all such things in our names and in our capacities as officers and directors to enable Capstone Green Energy Holdings, Inc. 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. Signature Title Date ​ ​ ​ /s/ Vince J. Canino ​ President, Chief Executive Officer and Director (Principal Executive Officer) ​ September 26, 2024 Vince J. Canino ​ ​ ​ ​ ​ /s/ John J. Juric ​ Chief Financial Officer (Principal Financial Officer) ​ September 26, 2024 John J. Juric ​ ​ ​ ​ ​ ​ ​ ​ ​ /s/ Celia fanning ​ Controller and Chief Accounting Officer ​ ​ Celia Fanning ​ (Principal Accounting Officer) ​ September 26, 2024 ​ ​ ​ ​ ​ /s/ Robert C. Flexon ​ Chair of the Board of Directors ​ September 26, 2024 Robert C. Flexon ​ ​ ​ ​ ​ /s/ Yon Y. Jorden ​ Director ​ September 26, 2024 Yon Y. Jorden ​ ​ ​ ​ ​ /s/ Robert F. Powelson ​ Director ​ September 26, 2024 Robert F. Powelson ​ ​ ​ ​ ​ /s/ Denise Wilson ​ Director ​ September 26, 2024 Denise Wilson ​ ​ ​ ​ ​ /s/ Ping Fu ​ Director ​ September 26, 2024 Ping Fu ​ ​ ​ ​ ​ ​ ​ ​ ​ /s/ John Miller ​ Director ​ September 26, 2024 John Miller ​ ​ ​ ​ ​ ​ ​ ​