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In assessing these risks, investors should also refer to the other information contained in this Form 10-K, our quarterly reports on Form 10-Q and other documents filed by us from time to time.
−Removed: References to impacts on the trading price of the New Common Stock (as defined below) assume that the New Common Stock will resume trading on an over-the-counter basis.
−Removed: As of the date of the filing of this Annual Report, no quote of the New Common Stock has been published.
−Removed: There can be no assurances as to when over-the-counter trading will resume.
−Removed: See “—There is currently no public trading market for our New Common Stock, and we cannot assure you that an active trading market will develop for the New Common Stock.”
Summary of Risk Factors
The following is a summary of the principal risks that could adversely affect our business, operations, and financial results.
−Removed: ● Risks Related to Our Emergence from Chapter 11, such as those associated with the impact of Emergence on our business relationships, our long-term liquidity requirements, our substantial indebtedness and the fact that there is currently no public trading market for the New Common Stock.
−Removed: ● Risks Related to Our Corporate Structure , such as those associated to the fact that we are a holding company with stockholders’ deficiency and the significant control that holders of our Preferred Units have over our Operating Subsidiary.
−Removed: ● Risks Related to Our Restatement, such as those related to the impact of the Restatement on investor confidence and our ability to raise capital in the future, stockholder litigation, the SEC investigation and the expenses incurred related to the remediation of material weaknesses identified by management.
−Removed: ● Risks Related to Our Business Operations and Financial Results , such as those associated with our ability to fund future operating requirements, that a sustainable market for microturbines may never develop, our lengthy sales cycle, changes to trade regulations, quotas, duties or tariffs, and sanctions, relationships with our OEMs and our distributors, customer concentration risk, product liability claims, our dependence upon the continuing service of management and key employees, and our vulnerability to interruption by fire, earthquake, riots, domestic and international instability, war, terrorism, geopolitical events and other events beyond our control.
−Removed: ● Risks Related to Our Product Offerings , such as those associated with our ability to successfully commercialize our products, our ability to produce our products as scheduled and budgeted;
−Removed: our dependence on our suppliers;
+Added: ● Risks Related to Our Emergence from Chapter 11 and Reorganization, such as those associated with the impact of emergence, our long-term liquidity requirements, our substantial indebtedness, comparable results, our current corporate structure and our business relationships.
+Added: ● Risks Related to Our Corporate Structure , such as those associated to the fact that we are a holding company and the significant control that holders of our Preferred Units have over our Operating Subsidiary.
+Added: ● Risks Related to Our Restatement, such as those related to the impact of the Restatement (as defined below) on investor confidence and our ability to raise capital in the future, stockholder litigation and the expenses incurred related to the remediation of material weaknesses identified by management.
+Added: ● Risks Related to Our Business Operations and Finance Results , such as those associated with our ability to fund future operating requirements, that a sustainable market for microturbines may never develop, our lengthy sales cycle, changes to trade regulations, quotas, duties or tariffs, and sanctions, relationships with our OEMs and our distributors, customer concentration risk, product liability claims, our dependence upon the continuing service of management and key employees, and our vulnerability to interruption by fire, earthquake, riots, domestic and international instability, war, terrorism, geopolitical events and other events beyond our control.
+Added: ● Risks Related to Our Product Offerings , such as those associated with our ability to successfully commercialize our products, our ability to produce our products as scheduled and budgeted, our dependence on our suppliers;
commodity market factors;
and our dependence in part on the oil and natural gas industry.
−Removed: ● Risks Related to Pending Litigation and Government Regulation , such as those associated with the highly regulated business environment in which we operate and the legal proceedings in which we and certain of our current and former directors and officers are involved.
+Added: ● Risks Related to Government Regulation and Pending Litigation , such as those associated with the highly regulated business environment in which we operate, export import controls, particularly with regard to China, Mexico and Canada and the legal proceedings in which we and certain of our current and former directors and officers are involved.
● Risks Related to Data, Security, and Intellectual Property , such as those associated with our ability to adequately protect our intellectual property rights and cybersecurity risks.
−Removed: ● Risks Related to Ownership of Our New Common Stock , such as those associated with the material weaknesses in internal control over financial reporting identified by management, and the likelihood that the market price of our New Common Stock will be highly volatile.
+Added: ● Risks Related to Ownership of Our Common Stock , such as those associated with the material weaknesses in internal control over financial reporting identified by management, and the likelihood that the market for the common stock will be limited and the price of our common stock will be highly volatile.
For a more complete discussion of the material risks facing our business, please see below.
Risks Related to Our Emergence from Chapter 11
−Removed: We emerged from bankruptcy in December 2023, which could adversely affect our business and business relationships.
−Removed: We emerged from bankruptcy on the Effective Date.
−Removed: It is possible that having recently emerged from the Chapter 11 Cases could adversely affect our business and relationships with vendors, suppliers, service providers, customers, employees, and other third parties.
−Removed: The risks we may face as a result of our recent Emergence include, but not are limited to, the following:
−Removed: ● vendors or other contract counterparties could terminate their relationship with us or require financial assurances or other enhanced performances;
−Removed: ● we may face challenges in renewing existing contracts and competing for new business;
−Removed: ● it may be more difficult to attract, motivate, and/or retain key executives and employees;
−Removed: ● employees may be distracted from the performance of their duties or more inclined to pursue other employment opportunities;
−Removed: ● competitors may take business away from us, and our ability to attract and retain customers may be negatively impacted.
−Removed: We cannot accurately predict or quantify the impacts or material adverse effects of the residual risk and uncertainties associated with our Emergence, or the occurrence of one or more of these risks could have on our results of operations, financial condition, business, and reputation.
−Removed: We cannot assure you that having recently been subject to bankruptcy protection will not adversely affect our future results of operations, financial condition, and business.
−Removed: Our long-term liquidity requirements and the adequacy of our capital resources are difficult to predict at this time.
−Removed: On March 31, 2024, we had cash of $2.1 million and working capital deficiency of $38.5 million.
−Removed: This compares to $12.8 million and $56.8 million, respectively, as of March 31, 2023.
−Removed: We face uncertainty regarding the adequacy of our long-term liquidity and capital resources.
−Removed: In addition to the cash requirements necessary to fund ongoing operations, we have incurred significant professional fees and other costs in connection with the preparation and administration of the Chapter 11 Cases.
−Removed: In addition, the Notes (as defined below) bear interest at a rate equal to the Adjusted Term SOFR (as defined in the Exit Note Purchase Agreement) plus 7.00% per annum.
−Removed: 100% of the interest payable under the Notes is payable in kind until December 7, 2024, after which we must start paying cash interest.
−Removed: We cannot assure you that cash on hand and cash flow from operating activities will be sufficient to continue to fund our operations or to pay cash interest on the Notes when due.
−Removed: Our liquidity, including our ability to meet our ongoing operational obligations, is dependent upon, among other things, our ability to:
−Removed: (i) comply with the terms and conditions of the Exit Note Purchase Agreement and associated agreements, (ii) maintain adequate cash on hand, and (iii) generate cash flow from operating activities.
−Removed: There are significant risks related to our substantial indebtedness.
−Removed: We are party to an Exit Note Purchase Agreement (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 Operating Subsidiary, as the issuer, the Guarantors, Purchaser and the Collateral Agent.
−Removed: The Exit Note Purchase Agreement provides for:
−Removed: (i) a roll up of the $12.6 million DIP New Money Notes (plus any accrued unpaid interest);
−Removed: (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”);
−Removed: (iii) an additional $7.0 million new money committed delayed draw term loan facility (the “Exit New Money Notes” and, together with the Exit Roll Up Notes, the “Notes”).
+Added: There are significant risks related to our substantial indebtedness and our long-term liquidity requirements following our emergence from Chapter 11 and reorganization and the adequacy of our capital resources is difficult to predict at this time.
+Added: Following our emergence from Chapter 11 and reorganization, we are party to an Exit Note Purchase Agreement (the “Exit Note Purchase Agreement”), for an aggregated principal amount of $28.1 million, consisting of $21.1 million Exit Roll Up Notes, including accrued and unpaid interest, commitment fees and $7.0 million of Exit New Money Notes (together the “Notes”) subject to the terms and conditions set forth in the Exit Note Purchase Agreement by and among the Operating Subsidiary, as the issuer, the Guarantors, Purchaser and the Collateral Agent.
The Exit Note Purchase Agreement also provides for a $10.0 million uncommitted incremental facility.
−Removed: As of March 31, 2024, we had $28.9 million in borrowings outstanding under the Notes, including accrued and unpaid interest.
+Added: As of March 31, 2025, we had $32.2 million in borrowings outstanding under the Notes, including accrued and unpaid interest, net of debt issuance costs.
The Exit Roll Up Notes mature on December 7, 2026, and the Exit New Money Notes mature on December 7, 2025.
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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.
−Removed: Refer to Note— 12 Debt in the Notes to Consolidated Financial Statements.
−Removed: On March 27, 2024, the Company obtained a waiver from the Purchaser and the Collateral Agent in anticipation of default on March 31, 2024.
−Removed: 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.
−Removed: There can be no assurance that the Purchaser and the Collateral Agent will waive any future defaults that may occur.
−Removed: 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 our repayment obligations under the Notes.
−Removed: We believe it is probable the consolidated liquidity and consolidated adjusted EBITDA financial covenants discussed below will not be satisfied on September 30, 2024.
−Removed: We are 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.
−Removed: We have the right to cure an event of default for a breach of the consolidated adjusted EBITDA covenant with a prepayment on the Notes up to the amount that is required to achieve the minimum consolidated adjusted EBITDA covenant for the quarter.
+Added: See Note 12 Debt in the Notes to Consolidated Financial Statements.
+Added: We believe there is a degree of risk that the consolidated liquidity and consolidated adjusted EBITDA financial covenants discussed below will not be satisfied as forecasted.
+Added: We have secured, and may need to secure additional waivers of the covenants or an amendment to the Exit Note Purchase Agreement with the senior lender, but no assurance can be given that additional waivers or an amendment will be obtained.
+Added: We have 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
+Added: 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.
−Removed: Consequently, the Exit new money notes, net of discount were reclassified to current on the Company’s Consolidated Balance Sheet as of March 31, 2024.
+Added: As of the date of this Annual Report on Form 10-K, the Exit Roll Up Notes, net of discount is classified as long term on the Company’s Consolidated Balance Sheet as of March 31, 2025, and the Exit New Money Notes are classified as current liabilities on our balance sheet.
Our obligations under the Exit Note Purchase Agreement have important consequences, including the following:
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A default leading to the Purchaser and the Collateral Agent accelerating the maturity of the indebtedness under the Notes would have a material adverse effect on our business and financial condition, and, if the Purchaser and the Collateral Agent exercise their rights and remedies, we could be forced to seek bankruptcy protection again.
−Removed: ● We are required to dedicate a substantial portion of our cash flow to the payment of principal and, beginning in December 2024, interest on the Notes, which reduces the amount of funds available for operations, capital expenditures and future acquisitions.
+Added: ● We were required to dedicate a portion of our cash flow to the payment of interest beginning in December 2024 on the Notes, which reduces the amount of funds available for operations, capital expenditures and future acquisitions.
+Added: ● We are exposed to floating interest rate risk under the Exit Note Purchase Agreement, which could cause our debt service obligations to increase significantly.
+Added: All outstanding Notes bear interest at the Adjusted Term secured overnight financing rate (SOFR)rate plus 7% per annum.
+Added: The Adjusted Term SOFR rate is a floating rate.
+Added: If we are unable to raise additional capital when required on acceptable terms, we may be required to file for bankruptcy protection again, go out of business, or suffer disruptions in our business.
+Added: Our independent registered public accounting firm’s report contains an explanatory paragraph that expresses substantial doubt about our ability to continue as a going concern.
+Added: In connection with preparing the consolidated financial statements for the fiscal year ended March 31, 2025, management evaluated whether there were conditions and events, considered in the aggregate, that raised substantial doubt about our ability to meet our obligations as they became due for the next twelve months from the date of issuance of our Fiscal 2025 consolidated financial statements.
+Added: Management assessed that there were such conditions and events, primarily our current cash position, lack of liquidity, limits to accessing capital and debt funding options.
+Added: Management concluded, and our auditors agreed, that these conditions raise substantial doubt about our ability to continue as a going concern for a period of one year from the date the financial statements are issued.
+Added: The substantial doubt about our ability to continue as a going concern may negatively impact relationships with third parties with whom we do business, including customers, vendors and lenders, may impact our ability to raise additional capital for our business plan, and may lead us to seek bankruptcy protection again.
+Added: If we are unable to continue as a going concern, holders of our securities might lose their entire investment.
Our actual financial results after emergence may not be comparable to our historical financial information or to our projections filed with the Bankruptcy Court.
−Removed: As a result of the implementation of the Plan and the transactions contemplated thereby, our future results of operations, financial condition, and business may not be comparable to the results of operations, financial condition, and business reflected in our historical financial statements.
−Removed: In connection with the disclosure statement, we filed with the Bankruptcy Court, and the hearing to consider confirmation of the Plan, we prepared projected financial information to demonstrate the feasibility of the Plan and our
−Removed: ability to continue operations upon our Emergence.
+Added: As a result of the implementation of the Plan of Reorganization and the transactions contemplated thereby, our future results of operations, financial condition, and business may not be comparable to the results of operations, financial condition, and business reflected in our historical financial statements.
+Added: In connection with the disclosure statement, we filed with the Bankruptcy Court, and the hearing to consider confirmation of the Plan, we prepared projected financial information to demonstrate the feasibility of the Plan of
+Added: Reorganization and our ability to continue operations upon our emergence from Chapter 11.
Those projections were prepared solely for the purpose of bankruptcy proceedings and have not been, and will not be, updated on an ongoing basis and should not be relied upon by investors.
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As a result, investors should not rely on these projections.
−Removed: It may be difficult for us to attract and retain employees, including members of our senior management, as a result of our Emergence.
−Removed: As a result of our Emergence, it may be difficult for us to attract and retain employees, including members of senior management.
+Added: It may be difficult for us to attract and retain employees, including members of our senior management, as a result of our emergence from Chapter 11.
+Added: As a result of our emergence from Chapter 11, it may be difficult for us to attract and retain employees, including members of senior management.
A loss of key personnel or material erosion of employee morale could adversely affect our business and results of operations.
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The loss of members of our senior management team could impair our ability to execute our strategy and implement operational initiatives, which would be likely to have a material adverse effect on our business, financial condition, and results of operations.
−Removed: There is currently no public trading market for our New Common Stock, and we cannot assure you that an active trading market will develop for the New Common Stock.
−Removed: As a result of the implementation of the Plan and the transactions contemplated thereby, the stockholders of Capstone Green Energy Corporation received their pro rata share of 18,540,877 shares of common stock of Capstone Green Energy Holdings, Inc., par value $0.001 per share (the “New Common Stock”).
−Removed: There is currently no public trading market for the New Common Stock because we have not been current in our annual and quarterly reports pursuant to Section 13 and 15(d) of the Exchange Act (the “Reporting Obligations”), we have been unable to obtain a ticker symbol for the New Common Stock or to obtain quotation on any OTC Markets Group, Inc.
−Removed: As such, the New Common Stock can only be traded between brokers and no quote is published.
−Removed: We will not be current on our Reporting Obligations until we file delinquent Quarterly Reports on Form 10-Q and will not become current in connection with the filing of this Annual Report.
−Removed: We cannot provide any assurance that over-the-counter trading will resume or that the trading volume or price will increase if over-the-counter trading does resume.
−Removed: Not being listed on an established securities exchange has an adverse effect on the liquidity of the New Common Stock, not only in terms of the number of shares that can be bought and sold at a given price, but also through delays in the timing of transactions and reduction in security analysts’ and the media’s coverage of our company.
−Removed: This may result in lower prices for the New Common Stock than might otherwise be obtained and could also result in a larger spread between the bid and asked prices for the New Common Stock.
+Added: There is currently limited public trading market for our common stock on the OTC market, and we cannot assure you that a more active trading market will develop for our common stock.
+Added: As a result of the implementation of the Plan of Reorganization and the transactions contemplated thereby, the stockholders of Capstone Green Energy Corporation received their pro rata share of 18,540,877 shares of common stock of Capstone Green Energy Holdings, Inc., par value $0.001 per share (the “Common Stock”).
+Added: As of this filing, the Company’s Common Stock trades on the Over the Counter (“OTC”) market under the ticker symbol CGEH, after becoming current in our annual and quarterly reports pursuant to Section 13 and 15(d) of the Exchange Act (the “Reporting Obligations”).
+Added: We cannot provide any assurance that the trading volume or price will increase with over-the-counter trading.
+Added: Being listed on a more limited marketplace such as OTC, may have an adverse effect on the liquidity of the Common Stock, not only in terms of the number of shares that can be bought and sold at a given price, but also through delays in the timing of transactions and reduction in security analysts’ and the media’s coverage of our company.
+Added: This may result in lower prices for the Common Stock than might otherwise be obtained and could also result in a larger spread between the bid and asked prices for the Common Stock.
Risks Related to our Corporate Structure
−Removed: We are a holding company with an stockholders’ deficiency and will depend on dividends and distributions from our Operating Subsidiary to pay any dividends.
−Removed: The Company is a holding company with stockholders’ deficiency.
−Removed: We do not have any material assets nor conduct any business operations other than our investment in the Operating Subsidiary.
+Added: We are a holding company and will depend on dividends and distributions from our Operating Subsidiary to pay any dividends.
+Added: The Company is a holding company with assets consisting primarily of our investment in the Operating Subsidiary, of which Goldman Sachs owns a 37.5% non-dilutable equity interest.
Our business operations are conducted primarily out of the Operating Subsidiary and certain of its subsidiaries.
−Removed: As a result, in addition to the restrictions on payment of dividends that apply under the terms of our existing indebtedness and the limited liability company agreement of Operating Subsidiary (the “Operating Subsidiary LLC Agreement”), our ability to pay dividends, if any, will be dependent upon cash dividends and distributions or other transfers from the Operating Subsidiary.
−Removed: Payments to us from the Operating Subsidiary will be contingent upon its earnings and subject to any limitations on the ability of such entity to make payments or other distributions to us, including limitations contained in the Operating Subsidiary LLC Agreement.
+Added: As a result, in addition to the restrictions on payment of dividends that apply under the terms of our existing indebtedness and the limited liability company agreement of Operating Subsidiary (the “Capstone Green Energy LLC Agreement”), our ability to pay dividends, if any, will be dependent upon cash dividends and distributions or other transfers from the Operating Subsidiary.
+Added: Payments to us from the Operating Subsidiary will be contingent upon its earnings and subject to any limitations on the ability of such entity to make payments or other distributions to us, including limitations contained in the Capstone Green Energy LLC Agreement.
Holders of the Preferred Units can exercise significant control over our Operating Subsidiary, which could limit our ability to influence the outcome of key corporate actions of our Operating Subsidiary.
−Removed: Pursuant to the Operating Subsidiary LLC Agreement, the Operating Subsidiary may not undertake certain actions without the prior written approval of Goldman Sachs.
−Removed: Subject to certain exceptions, the Operating Subsidiary must not, among other things:
−Removed: (1) alter or change the rights, preferences or privileges of the 10,449,863 Series A Redeemable Preferred Units (the “Preferred Units”) or amend any of the Operating Subsidiary’s governing documents;
−Removed: (2) make any change in corporate form, including conversion to a corporation;
−Removed: (3) increase the authorized number of Preferred Units;
−Removed: (4) issue any Common Units or equivalents to any person or group of persons (other than the Company), or approve the sale by the Company of Common Units or equivalents to any person or group of persons, such that after the issuance or sale, as applicable, such person or group of persons would own an aggregate number of Common Units in excess of 25% of the actually outstanding Common Units on the date of the Operating Subsidiary LLC Agreement;
−Removed: (5) create any new class of units with preference over, or parity with, the Preferred Units;
−Removed: (6) authorize, issue or reclassify any securities issued by Operating Subsidiary, its subsidiaries and controlled affiliates (the “Restricted Entities”), other than issuances of Common Units to the Company;
−Removed: (7) sell, issue, sponsor, create or distribute any digital tokens, cryptocurrency or other blockchain-based assets;
−Removed: (8) incur new third party indebtedness exceeding $5.0 million, other than (A) debt contemplated by the TSA, (B) lease or other obligations relating to the rental of equipment to customers or otherwise for energy-as-a-service (EaaS) business activity and (C) debt permitted under the Exit Note Purchase Agreement;
−Removed: (9) declare or pay distributions other than (A) for tax purposes and (B) distributions from the Operating Subsidiary’s subsidiaries or controlled affiliate to the Operating Subsidiary or its wholly owned subsidiaries;
−Removed: (10) effectuate any liquidation event;
−Removed: (11) acquire any business, ownership of any equity securities in any person other than a wholly owned subsidiary, or enter into a joint venture arrangement;
−Removed: (12) conduct any public offering or direct listing on a national securities exchange;
−Removed: (13) enter into any merger or other transaction resulting in the Operating Subsidiary’s equity interests being listed or quoted for trading on an exchange or otherwise subject to registration;
−Removed: (14) commence, settle, defend or make any material decisions with respect to any material settlement or litigation;
−Removed: (15) make any material change to the nature of the Operating Subsidiary’s Existing Business (as defined in the Operating Subsidiary LLC Agreement);
−Removed: or (16) enter into any affiliated party transaction except for (A) payments to holders of Common Units (including the Company) in accordance with the terms of the Services Agreement (as defined below) and (B) compensation arrangements.
−Removed: In addition, pursuant to the Operating Subsidiary LLC Agreement, the Company, its subsidiaries and controlled affiliates may not, without the consent of the holders of a majority of the Preferred Units held by the Preferred Members (which, on the effective date of the Operating Subsidiary LLC Agreement is solely Capstone Distributor Support Services, Inc.), engage in any business opportunities, make any investments or enter into any transactions, including any of the foregoing which are or would reasonably be expected to be within the scope of, or would reasonably be deemed to be beneficial to, the “Existing Business” (as defined in the Operating Subsidiary LLC Agreement) of Operating Subsidiary.
−Removed: Further, pursuant to the Operating Subsidiary LLC Agreement, at any time during the six-month period following the sixth anniversary of the effective date of the Operating Subsidiary LLC Agreement, the Preferred Requisite Members may elect to have all, but not less than all, of the then outstanding Preferred Units redeemed.
−Removed: In such event, Operating Subsidiary will redeem all, but not less than all, of the Preferred Units, except Operating Subsidiary may not make such payment if (a) such payment is prohibited by Delaware Law or (b) Operating Subsidiary is, or by such payment would be, insolvent.
+Added: Pursuant to the Capstone Green Energy LLC Agreement, the Operating Subsidiary may not undertake certain actions without the prior written approval of Goldman Sachs, such as among other things, incurring any new third-party indebtedness exceeding $5.0 million, declaring any distributions, conducting any public offering or acquiring any business.
+Added: In addition, pursuant to the Capstone Green Energy LLC Agreement, the Company, its subsidiaries and controlled affiliates may not, without the consent of the holders of a majority of the Preferred Units held by the Preferred Members (which, on the effective date of the Capstone Green Energy LLC Agreement is solely Capstone Distributor Support Services Corporation), engage in any business opportunities, make any investments or enter into any transactions, including any of the foregoing which are or would reasonably be expected to be within the scope of, or would reasonably be deemed to be beneficial to, the “Existing Business” (as defined in the Capstone Green Energy LLC Agreement) of the Operating Subsidiary.
+Added: Further, pursuant to the Capstone Green Energy LLC Agreement, at any time during the six-month period between December 7, 2029 and June 7, 2030, the Preferred Requisite Members may elect to have all, but not less than all, of the then outstanding Preferred Units redeemed.
+Added: In such event, Operating Subsidiary must redeem all, but not less than all, of the Preferred Units, except Operating Subsidiary may not make such payment if (a) such payment is prohibited by Delaware Law or (b) Operating Subsidiary is, or by such payment would be, insolvent.
The aggregate price for Preferred Units will be an amount equal to the greater of (i) the $10,449,863, plus declared but unpaid distributions, or (ii) the fair market value of the Preferred Units on an as-converted to Common Units basis at the time of such redemption.
The Preferred Member’s 37.5% equity interest in Operating Subsidiary is non-dilutable.
−Removed: See “Management’s Discussion and Analysis of Financial Condition—Operating Subsidiary LLC Agreement” for a more detailed description of the terms of the Operating Subsidiary LLC Agreement and the restrictions imposed on the Company and its subsidiaries pursuant to the Operating Subsidiary LLC Agreement.
Risks Related to Our Restatement
−Removed: We have restated our consolidated financial statements for prior annual and interim periods and have concluded two Audit Committee Investigations, has all of which have affected and may continue to affect investor confidence, our stock price, our ability to raise capital in the future, our reputation with our customers, and our ability to timely file our periodic reports with the SEC, and has resulted in stockholder litigation against certain of our current and former directors and executives and may result in additional litigation in the future.
−Removed: We have restated our Consolidated Financial Statements for prior annual and interim periods.
+Added: We have restated our consolidated financial statements for prior annual and interim periods and have concluded two Audit Committee Investigations, all of which have affected and may continue to affect investor confidence, our stock price, our ability to raise capital in the future, our reputation with our customers, and our ability to timely file our periodic reports with the SEC, and has resulted in stockholder litigation against certain of our current and former directors and executives and may result in additional litigation in the future.
+Added: The Consolidated Financial Statements of Capstone Green Energy Corporation, the predecessor to our Operating Subsidiary, for prior annual and interim periods were restated (the “Restatement”).
This Restatement was required to correct for the following:
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● has resulted in stockholder litigation against certain of our current and former directors and executives and may result in additional litigation;
−Removed: ● has resulted in an investigation by the SEC enforcement division;
● may make it more difficult, expensive, and time consuming for us to raise capital on acceptable terms, or at all;
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● may negatively impact our reputation with our customers.
−Removed: In addition, based on information learned as part of the Restatement process, the Audit Committee commenced an investigation (the “FPP Investigation” and, together with the Revenue Recognition Investigation, the “Audit Committee Investigations”) into FPP related practices.
+Added: In addition, based on information learned as part of the Restatement process, the Audit Committee commenced an investigation (the “FPP Investigation” and, together with the Revenue Recognition Investigation (as defined below), the “Audit Committee Investigations”) into FPP related practices.
The Audit Committee Investigations were conducted with the assistance of outside counsel retained by the Audit Committee.
−Removed: Through the FPP Investigation, the Audit Committee identified evidence that, at times during the fiscal years covered in this Annual Report, former senior executives delayed shipment of available parts under the FPP and delayed recording the associated expense on the Company’s financial statements.
−Removed: The Audit Committee Investigations found no evidence that either the Audit Committee, the full Board or current executive officers were aware of such activity.
+Added: Through the FPP Investigation, the Audit Committee identified evidence that, at times during the fiscal years covered in this Annual Report, former senior executives
+Added: delayed shipment of available parts under the FPP and delayed recording the associated expense on the Company’s financial statements.
The financial statement impact of such activity in prior reporting periods, if any, has been addressed through the Company’s Restatement.
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Refer to Note 14— Commitments and Contingencies in the Notes to Consolidated Financial Statements and to “Legal Proceedings” for information regarding legal proceedings in which we are involved.
−Removed: The SEC enforcement division is conducting an investigation into the circumstances surrounding the Restatement, the results of which may have a material adverse effect on our financial condition and business.
−Removed: Following the conclusion of each Audit Committee Investigation, the Audit Committee self-reported its findings to the Division of Enforcement of the SEC.
−Removed: Following the self-report, the SEC enforcement division has commenced an investigation relating to the circumstances surrounding the Restatement (the “SEC Investigation”).
−Removed: We are cooperating with the SEC in connection with its investigation.
−Removed: Investigations of this nature are inherently uncertain and their results cannot be predicted.
−Removed: Regardless of the outcome, the SEC Investigation has had and may continue to have an adverse impact on us because of legal costs, diversion of management resources, and other factors.
−Removed: The SEC Investigation could also result in reputational harm to us, which, among other things, may limit our ability to obtain new customers and enter into new agreements with our existing customers, or our ability to obtain financing, and have a material adverse effect on our current and future business, financial condition, results of operations and prospects.
−Removed: We cannot predict the duration or outcome of the SEC Investigation at this time.
−Removed: Further, as a result of the conclusions of the Revenue Recognition Investigation and the Restatement, certain of our current and former directors and officers are currently the subject of securities class action litigation.
−Removed: See Note 14— Commitments and Contingencies in the Notes to Consolidated Financial Statements and “Legal Proceedings” for information about the SEC Investigation and legal proceedings involving the Company’s directors and officers.
−Removed: The Restatement, as well as our reported material weaknesses in internal control over financial reporting (including the related disclosure of the Audit Committee Investigations made in this Annual Report on Form 10-K), may
−Removed: subject us to additional litigation or regulatory examinations, investigations, proceedings, or orders.
−Removed: Our management has devoted and may be required to devote significant time and attention to these matters.
−Removed: If any of these or potential future matters are resolved adversely against us, there may be a material adverse effect on our business, financial condition, and results of operations.
−Removed: Additionally, while we cannot estimate our potential exposure to these or any potential future matters at this time, we have already expended significant resources investigating the underlying claims and addressing these matters and expect to continue to need to expend significant resources.
−Removed: Our insurance coverage may not be sufficient to compensate for all potential liability.
−Removed: Although we maintain applicable insurance, we cannot be certain that our insurance coverage will be adequate for liabilities actually incurred or that insurance will continue to be available to us on economically reasonable terms, or at all.
We have incurred and expect to continue to incur significant expenses related to remediation of material weaknesses in our internal control over financial reporting and disclosure controls and procedures, and any resulting litigation .
−Removed: We have devoted substantial internal and external resources towards the Audit Committee Investigations and the Restatement and expect to continue to devote substantial such resources towards the implementation of enhanced procedures and controls over material weaknesses that resulted in the Restatement and the remediation of other deficiencies in our internal control over financial reporting.
−Removed: Because of these efforts, we have incurred and expect that we will continue to incur significant fees and expenses for legal, accounting, financial, and other consulting and professional services, as well as the implementation and maintenance of systems and processes that will need to be updated, supplemented, or replaced.
+Added: We have devoted substantial internal and external resources towards the Audit Committee Investigations and the Restatement and expect to continue to devote resources towards the implementation of enhanced procedures and controls over material weaknesses that resulted in the Restatement and the remediation of other deficiencies in our internal control over financial reporting.
+Added: Because of these efforts, we have incurred significant fees and expenses for legal, accounting, financial, and other consulting and professional services, as well as the implementation and maintenance of systems and processes that will need to be updated, supplemented, or replaced.
We have made a number of remediation efforts in response to the Audit Committee Investigations.
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The incurrence of significant additional expense or the requirement that management devotes substantial time that could reduce the time available to execute on our business strategies, could have a material adverse effect on our business, financial condition, and results of operations.
−Removed: Our failure to prepare and timely file our periodic reports with the SEC limits our access to the public markets to raise debt or equity capital.
−Removed: The Annual Report on Form 10-K for the year ended March 31, 2023 was filed nearly one year after its due date and our Quarterly Reports on Form 10-Q for the first three quarters of Fiscal 2024 and this Annual Report on Form 10-K were also not timely filed.
−Removed: Because these filings have not been made within the timeframes required by SEC rules, we have not remained current in our reporting requirements with the SEC, and we will not be eligible to use a registration statement on Form S-3 that would allow us to continuously incorporate by reference our SEC reports into the registration statement, or to use “shelf” registration statements to conduct offerings, until approximately one year from the date we regain and maintain status as a current filer.
+Added: Our access to the public markets to raise debt or equity capital depends on our ability to continue to timely file our periodic reports within the SEC limits.
+Added: The Annual Report on Form 10-K for the year ended March 31, 2023 was filed nearly one year after its due date, our Quarterly Reports on Form 10-Q for the first three quarters of Fiscal 2024 and the Annual Report on Form 10-K for the year ended March 31, 2024, and the first quarter of Fiscal 2025 were not timely filed.
+Added: Because these filings were not filed within the timeframes required by SEC rules, we will not be eligible to use a registration statement on Form S-3 that would allow us to continuously incorporate by reference our SEC reports into the registration statement, or to use “shelf” registration statements to conduct offerings, until approximately one year from the date we regain and maintain status as a current filer.
To pursue an offering now, we are required to conduct the offering on an exempt basis, such as in accordance with Rule 144A, or file a registration statement on Form S-1.
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Risks Related to Our Business Operations and Financial Results
−Removed: We are exposed to floating interest rate risk under the Exit Note Purchase Agreement, which could cause our debt service obligations to increase significantly.
−Removed: We are exposed to market risk from changes in interest rates.
−Removed: All outstanding Notes bear interest at the Adjusted Term SOFR rate plus 7.00% per annum.
−Removed: The Adjusted Term SOFR rate is a floating rate.
−Removed: The Federal Reserve has raised, and may in the future further raise, interest rates to combat the effects of recent high inflation.
−Removed: Any further increase in Adjusted Term SOFR will increase the Company’s debt service obligations, which could have a negative impact on the Company’s cash flow, financial position or operating results, including cash available for servicing the Company’s indebtedness, or result in increased borrowing costs in the future.
−Removed: Regional epidemics or global pandemics may materially and adversely affect our business, financial condition and results of operations.
−Removed: The occurrence of regional epidemics or a global pandemic may adversely affect our business, financial condition and results of operations.
−Removed: For example, the COVID-19 pandemic has and could continue to materially and adversely affect our business, financial condition and results of operations.
−Removed: The COVID-19 pandemic has also caused significant uncertainty and volatility in global financial markets.
−Removed: Our liquidity has been negatively impacted due, in part, to such effects.
−Removed: Further, our ability to raise additional capital has also been impacted by the COVID-19 pandemic and the resulting macroeconomic effects.
−Removed: Further adverse economic events resulting from the COVID-19 pandemic, including sustained economic downturn, supply chain disruptions, or increasing cost pressures, could materially and adversely affect our business, access to capital markets and the value of our common stock.
A sustainable market for microturbines may never develop or may take longer to develop than we anticipate, which would adversely affect our results of operations.
−Removed: Our products represent an alternative technology, and we do not know whether our targeted customers will accept our technology or will purchase our products in sufficient quantities to allow our business to grow.
+Added: Our products represent an alternative technology, and we do not know whether our targeted customers will accept our technology or will purchase our products in sufficient quantities or that our addressable market will grow sufficiently to allow our business to grow.
To succeed, demand for our products must increase significantly in existing markets, and there must be strong demand for products that we introduce in the future.
−Removed: In addition, as part of our business strategy, we are focusing our marketing efforts on expanding our Energy as a Service business and on the energy efficiency, renewable energy, and natural resources markets.
+Added: In addition, as part of our business strategy, we are focusing our marketing efforts on expanding our EaaS business and on the energy efficiency, renewable energy and natural resources markets.
We may be unable to grow our business in these target markets.
If a sustainable market fails to develop or develops more slowly than we anticipate, we may be unable to recover the losses we have incurred to develop our products, we may have further impairment of assets, and we may be unable to meet our operational expenses.
−Removed: The development of a sustainable market for our systems may be hindered by many factors, including some that are out of our control.
+Added: development of a sustainable market for our systems may be hindered by many factors, including some that are out of our control.
Examples include:
−Removed: ● consumer reluctance to try a new product;
+Added: ● consumer reluctance to try an alternative product;
● regulatory requirements;
+Added: ● reduced government investment in R&D of alternative power sources;
● the cost competitiveness of our microturbines;
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● growth of the hybrid electric vehicle market;
+Added: ● growth of the data center market and our ability to tailor our products to meet the unique demands of that market;
● decreases in domestic and international incentives.
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Book-to-bill ratio is the ratio of new orders we received to units shipped and billed during a period.
−Removed: However, because our backlog represents only the estimated amount of future product revenue to be recognized under negotiated contracts as shipments convert backlog to recognized revenue for accounting purposes, we may not be able to fully realize the revenue value reported in our backlog, and our backlog may not be indicative of future revenues.
−Removed: A portion of our backlog is concentrated in the international oil and gas market which may impact the overall timing of shipments or the conversion of backlog to revenue.
+Added: However, because our backlog represents only the estimated amount of future
+Added: product revenue to be recognized under negotiated contracts as shipments convert backlog to recognized revenue for accounting purposes, we may not be able to fully realize the revenue value reported in our backlog, and our backlog may not be indicative of future revenues.
The timing of the backlog is based on the requirement date indicated by our customers.
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The timing of shipments is subject to change based on several variables (including customer deposits, payments, availability of credit and customer delivery schedule changes), most of which are not in our control and can affect the timing of our revenue.
−Removed: As a result, management believes the book-to-bill ratio better demonstrates the current demand for our products in the given period.
If we do not effectively implement our sales, marketing, and service plans, our sales will not grow and our results of operations will suffer.
Our sales and marketing efforts may not achieve intended results and, therefore, may not generate the revenue we anticipate.
−Removed: As a result of our corporate strategies, we have decided to focus our resources on expanding our Energy as a Service business and further developing selected vertical markets.
+Added: As a result of our corporate strategies, we have decided to focus our resources on expanding our EaaS business and further developing selected vertical markets.
We may change our focus to other markets or applications in the future.
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and geopolitical environments or otherwise, may increase our costs or limit the amount of raw materials and products that we can import or may otherwise adversely impact our business.
−Removed: The former U.S.
−Removed: administration voiced strong concerns about imports from countries that it perceived as engaging in unfair trade practices.
−Removed: Any current or future U.S.
−Removed: administration may decide to impose import duties or other restrictions on products, components, or raw materials sourced from those countries, which may include China, Mexico, and other countries from which we import components or raw materials.
−Removed: Any such duties or restrictions could have a material adverse effect on our business, results of operations or financial condition.
+Added: While our production is located in the United States, a high percentage of our parts used in the production of our vehicles are sourced from China, Mexico and Canada.
+Added: Further, our products contain a number of commodity materials from metals, which include steel, special high temperature alloys, copper, nickel, and molybdenum, to computer components.
+Added: We import a significant volume of critical and limited source parts and raw materials which are subject to increasing tariffs.
+Added: While we believe this is the best strategic business model, it also is more subject to risks associated with international trade conflicts including between the United States and such countries, particularly with respect to export and import controls and laws.
+Added: For example, during the first quarter of 2025, the United States introduced trade policy actions that have increased import tariffs across a wide range of countries at various rates, including from certain jurisdictions from which we import parts.
+Added: Such tariffs, if continued, will affect shipments from such jurisdictions.
+Added: The timeline, structure, and scope of any potential regulatory policies are uncertain, making it difficult for us to plan for or mitigate these risks effectively.
+Added: In addition, we cannot predict what further action may be taken with respect to tariffs or trade relations between the U.S.
+Added: and other governments.
+Added: Any such changes could fundamentally alter the competitive and regulatory landscape in which we operate, and political tensions as a result of trade policies could reduce trade volume, investment, technological exchange, and other economic activities between major international economies, resulting in a material adverse effect on global economic conditions and the stability of global financial markets.
+Added: There is a great deal of uncertainty as to how long these tariffs may be in place and regarding any further changes in tariff rates.
+Added: We may not be able to have alternative sources for these materials, or the ability to pass these costs onto our customers, and our operating results may be negatively impacted.
Moreover, any new tariffs, or other changes in U.S.
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We do, however, continue to evaluate customer orders and ensure that we are in compliance with all laws and regulations upon acceptance and before shipment.
−Removed: If we are unable to conduct business with new or existing customers or pursue opportunities with sanctioned countries, including Russia, our business, including our revenue, profitability, and cash flows, could be materially adversely affected.
−Removed: The Israeli invasion of Gaza has caused division among world leaders.
−Removed: Actions could be imposed against the United States for its support of Israel.
−Removed: This could impact business activity and our ability to source parts and components and sell our products internationally.
+Added: If we are unable to conduct business with new or existing customers or pursue opportunities with sanctioned
+Added: countries, including Russia, our business, including our revenue, profitability, and cash flows, could be materially adversely affected.
We may not be able to retain or develop relationships with OEMs or distributors in our targeted markets, in which case our sales would not increase as expected.
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We believe that retaining or developing relationships with strong OEMs (which to date have typically resold our products under their own brands or packaged our products with other products as part of an integrated unit) or distributors in these targeted markets can improve the rate of adoption as well as reduce the direct financial burden of introducing a new technology and creating a new market.
−Removed: Our relationships with distributors have come under strain due to our efforts in Fiscal 2024 to collect on our accounts receivables and increase prices.
−Removed: Because of OEMs’ and distributors’ relationships in their respective markets, the loss of an OEM or distributor could adversely impact our ability to penetrate our target markets.
We offer our OEMs and distributors stated discounts from the list price of the products they purchase.
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At any given time, we may be in disputes with one or more distribution partners.
−Removed: See Note 14— Commitments and Contingencies in the Notes to Consolidated Financial Statements and “Legal Proceedings” for information about the Company’s legal proceedings with Cal Microturbine.
+Added: See “We and certain of our current and former directors and officers are subject to various legal proceedings” and “Legal Proceedings” for information about the Company’s legal proceedings with Cal Microturbine.
Any such dispute could result in lengthy and costly litigation, even if the outcome is ultimately in our favor.
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A contractual dispute with a distribution partner may result in our or our distribution partner seeking to terminate the related distribution agreement, even if such termination would be wrongful, which could harm our business or interfere with a previously agreed wind down of the relationship or transition of end user service agreements.
−Removed: Any prolonged disruptions of our distribution channels that results from the termination of one or more of our distributions or our failure to renew our
−Removed: distribution agreements with our desired distributors, could negatively affect our ability to effectively sell our products and would materially and adversely affect our business, financial condition, results of operations and prospects.
+Added: Any prolonged disruptions of our distribution channels that results from the termination of one or more of our distributions or our failure to renew our distribution agreements with our desired distributors, could negatively affect our ability to effectively sell our products.
Increased credit loss expense or delays in collecting accounts receivable could have a material adverse effect on our cash flows and results of operations.
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We recorded net credit loss expense of approximately $0.8 million and $0.4 million during Fiscal 2025 and 2024, respectively.
−Removed: No assurances can be given that future credit loss expense will not increase above current operating levels.
+Added: No assurances can be given that future days sales outstanding will not increase and credit loss expense will not increase above current operating levels.
Increased credit loss expense or delays in collecting accounts receivable could have a material adverse effect on results of operations and cash flows.
Loss of a significant customer could have a material adverse effect on our results of operations.
−Removed: Cal Microturbine and E-Finity accounted for approximately 16% and 13%, respectively, of our revenue for Fiscal 2024.
−Removed: Additionally, Supernova and CES accounted for 14% and 11%, respectively, of net accounts receivable as of March 31, 2024.
−Removed: The loss of Cal Microturbine, E-Finity, or any other significant customer could have a material adverse effect on our results of operations and financial condition.
+Added: E-Finity, Lone Star, and Horizon accounted for approximately 13%, 12% and 11%, respectively, of our revenue for Fiscal 2025.
+Added: Additionally, Lone Star and Optimal accounted for 18% and 10%, respectively, of net accounts receivable as of March 31, 2025.
+Added: The loss of any significant customer could have a material adverse effect on our results of operations and financial condition.
We may not achieve production cost reductions necessary to competitively price our products, which would adversely affect our sales.
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We cannot provide assurance that we will be able to achieve any such production cost reductions.
−Removed: In fact, we have implemented three price increases in the past eighteen months in reaction to increased costs.
−Removed: Our failure to achieve such cost reductions could have a material adverse effect on our business and results of operations.
+Added: In fact, we have implemented two price increases in the past twenty months in reaction to increased costs.
+Added: Our failure to achieve sufficient cost reductions could have a material adverse effect on our business and results of operations.
We may incur costs and liabilities as a result of product liability claims.
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Transitioning to outsourcing may cause certain of our affected employees to leave before the outsourcing is complete.
−Removed: This could result in a lack of the experienced in-house talent necessary to successfully implement the outsourcing.
+Added: This could result in a lack of the experienced in-house talent necessary to successfully implement the outsourcing effort.
Further, depending on the nature of operations outsourced and the structure of agreements we reach with suppliers to perform these functions, we may experience impairment in the value of manufacturing assets related to the outsourced functions or other unanticipated charges, which could have a material adverse effect on our operating results.
−Removed: We may not be able to manage our growth effectively, expand our production capabilities or improve our operational, financial and management information systems, which would impair our results of operations.
−Removed: If we are successful in executing our business plan, we will experience growth in our business that could place a significant strain on our business operations, management, and other resources.
−Removed: Our ability to manage our growth will require us to expand our production capabilities, continue to improve our operational, financial and management information systems, and to motivate and effectively manage our employees.
−Removed: We cannot provide assurance that our systems, procedures and controls, or financial resources will be adequate, or that our management will keep pace with this growth.
−Removed: We cannot provide assurance that our management will be able to manage this growth effectively.
−Removed: Our success depends in significant part upon the continuing service of management and key employees, and several key management and other employees have recently left Capstone.
+Added: Our success depends in significant part upon the continuing service of management, directors and other key personnel, and several key management and other employees have recently left Capstone.
Our success depends in significant part upon the continuing service of our executive officers, senior management, and sales and technical personnel.
The failure of our personnel to execute our strategy or our failure to retain management and personnel could have a material adverse effect on our business.
−Removed: In May 2023, we implemented an expense reduction plan, which included furloughs to employees.
−Removed: We also recently suffered departures of other key personnel, including in accounting/finance and information technology.
−Removed: In August 2023, Darren Jamison, our long time President and Chief Executive Officer, resigned from his positions with the Company.
−Removed: Robert Flexon, Chair of our Board, served as our Interim President and Chief Executive Officer from August 2023 until March 2024, when Vincent Canino succeeded him as President and Chief Executive Officer.
−Removed: Our Chief Financial Officer, John Juric, joined the Company in March 2023 following the departure of the Company’s Interim Chief Financial Officer, Scott Robinson.
+Added: We have suffered departures of directors, officers and other key personnel, including those in accounting/finance and information technology.
These departures have placed additional strain on our remaining personnel, and we do not expect to replace all of the departed employees, so the increased burdens on the remaining personnel are expected to continue for the foreseeable future.
−Removed: Accordingly, our recent losses of key employees could adversely impact our business, financial condition, and results of operations.
−Removed: In addition, if we are unable to successfully integrate the new members of management, including the new Chief Executive Officer, into our leadership team, our operations and financial condition may be adversely affected.
Our success, growth prospects, and ability to capitalize on market opportunities also depend to a significant extent on our ability to identify, hire, motivate, and retain qualified managerial personnel, including senior members of management.
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Our growth may be constrained by resource limitations as competitors and customers compete for increasingly scarce human capital resources.
−Removed: The demand for skilled workers is currently high.
+Added: The demand for skilled workers is
+Added: currently high.
We face an increasingly competitive labor market due to sustained labor shortages and are subject to inflationary pressures on employee wages and salaries which may increase labor costs.
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Our competitors may be able to offer a work environment with higher compensation or more opportunities than we can.
−Removed: If we are unable to attract and retain a sufficient number of skilled personnel, our ability to successfully implement our business plan, grow our Company and maintain or expand our product offerings may be adversely affected, and the costs of doing so may increase, which may adversely impact our business, financial condition, and results of operations.
+Added: If we are unable to attract and retain a sufficient number of skilled personnel, our ability to successfully implement our business plan, grow our Company and maintain or expand our product offerings may be adversely affected, and the costs of doing so may increase.
In addition, our internal control systems rely on employees trained in the execution of the controls, particularly within our financial and accounting function.
Loss of these employees or our inability to replace them with similarly skilled and trained individuals or new processes in a timely manner could adversely impact our internal control mechanisms further.
−Removed: See “— Our management has identified material weaknesses in its internal control over financial reporting and we determined that our disclosure controls and procedures were ineffective as of March 31, 2024.
−Removed: If we fail to remediate the material weaknesses or if we otherwise fail to establish and maintain effective control over financial reporting, our ability to accurately and timely report our financial results may be affected, and such failure may adversely affect investor confidence and business operations ” for a discussion of the material weaknesses in the Company’s internal control over financial reporting.
−Removed: Our operations are vulnerable to interruption by fire, earthquake, riots, domestic and international instability, war, terrorism, geopolitical events and other events beyond our control.
−Removed: Our operations are vulnerable to interruption by fire, earthquake, riots, domestic and international instability, war, terrorism, geopolitical events and other events beyond our control.
−Removed: Our executive offices, manufacturing facility, and
−Removed: auxiliary inventory storage facility are located in Southern California.
+Added: See “ Our management identified material weaknesses in its internal control over financial reporting and we determined that our disclosure controls and procedures were ineffective as of March 31, 2024, of which one material weakness remains unremediated as of March 31, 2025.
+Added: If we fail to remediate the material weakness or if we otherwise fail to establish and maintain effective control over financial reporting, our ability to accurately and timely report our financial results may be affected, and such failure may adversely affect investor confidence and business operations ” for a discussion of the material weaknesses in the Company’s internal control over financial reporting.
+Added: Our operations are vulnerable to interruption by fire, earthquake, riots, domestic and international instability, war, terrorism, geopolitical events, pandemics and other events beyond our control.
+Added: Our operations are vulnerable to interruption by fire, earthquake, riots, domestic and international instability, war, terrorism, geopolitical events, pandemics and other events beyond our control.
+Added: Our executive offices, manufacturing facility, and auxiliary inventory storage facility are located in Southern California.
Because the Southern California area is located in an earthquake-sensitive area and because we have no redundancy facility located within or outside of Southern California, we are particularly susceptible to the risk of damage to, or total destruction of, our facilities in Southern California and the surrounding transportation infrastructure, which could affect our ability to make and transport our products.
+Added: In addition, the greater Los Angeles area has experienced major fire danger and damage in the past five years, including most recently in January 2025, and may experience major fires in the future.
While we take steps to mitigate the impact of severe weather and environmental and natural disasters, the frequency and severity of which may be impacted by climate change and other natural and manmade events, such events could result in severe disruption to our business operations at these facilities.
The combination of high inflation, illegal immigration, the cost of living, and reduced spending on law enforcement in and around our location in Southern California poses an elevated risk of social disturbances and riots.
−Removed: If an earthquake, fire, or other man-made or natural disaster occurs at or near our facilities, our business, financial condition, operating results and cash flow could be materially adversely affected.
Domestic and international political and economic instability or volatility, geopolitical regional conflicts, terrorist activity, political unrest, civil strife, acts of war, public corruption, expropriation and other economic or political uncertainties could interrupt and negatively affect the performance of our services, sale of our products or other business operations.
See “ Changes to trade regulations, quotas, duties or tariffs, and sanctions caused by the changing U.S.
−Removed: and geopolitical environments or otherwise, may increase our costs or limit the amount of raw materials and products that we can import or may otherwise adversely impact our business ” for a discussion of the impact of Russia’s military invasion of Ukraine on our business and results of operations.
+Added: and geopolitical environments or otherwise, may increase our costs or limit the amount of raw materials and products that we can import or may otherwise adversely impact our business ” for a discussion of the impact of global trade policy and Russia’s military invasion of Ukraine on our business and results of operations.
A slowdown in economic growth in some emerging markets could result in long sales cycles, greater risk of uncollectible accounts and longer collection cycles.
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We may acquire other businesses in the future, and the success of these transactions will depend on, among other things, our ability to develop productive relationships with the corresponding distributors and to integrate assets and personnel, if any, acquired in these transactions and to apply our internal controls processes to these acquired businesses.
−Removed: Future acquisitions may require us to raise financing, including by issuing common stock that would dilute our current stockholders’ percentage ownership, assume or otherwise be subject to liabilities of an acquired company, record goodwill and non-amortizable intangible assets that will be subject to impairment testing on a regular basis and potential periodic impairment charges, incur amortization expenses related to certain intangible assets, incur large acquisition and integration costs, immediate write-offs, and restructuring and other related expenses, and become subject to litigation.
+Added: Future acquisitions may require us to raise financing, including by issuing common stock that would dilute our current stockholders’ percentage ownership, assume or otherwise be subject to liabilities of an acquired company, record goodwill and non-amortizable intangible assets that will be subject to impairment testing on a regular basis and potential periodic
+Added: impairment charges, incur amortization expenses related to certain intangible assets, incur large acquisition and integration costs, immediate write-offs, and restructuring and other related expenses, and become subject to litigation.
The benefits of an acquisition may also take considerable time to develop, and we cannot be certain that any particular acquisition will produce the intended benefits in a timely manner or to the extent anticipated, or at all.
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If we are unable to fully benefit from anticipated synergies, our business, financial condition, results of operations, and cash flows could be materially adversely affected.
−Removed: We may be adversely impacted by the effects of climate change and may incur increased costs and experience other impacts due to new or more stringent greenhouse gas regulations designed to address climate change.
−Removed: The scientific consensus indicates that emissions of greenhouse gases (“GHG”) continue to alter the composition of Earth’s atmosphere in ways that are affecting, and are expected to continue to affect, the global climate.
−Removed: The potential impacts of climate change on our customers, product offerings, operations, facilities, and suppliers are accelerating and uncertain, as they will be particular to local and customer-specific circumstances.
−Removed: These potential impacts may include,
−Removed: among other items, physical long-term changes in freshwater availability and the frequency and severity of weather events as well as customer product changes either through preference or regulation.
−Removed: Concerns regarding climate change may lead to additional international, national, regional and local legislative and regulatory responses.
−Removed: Various stakeholders, including legislators and regulators, shareholders, and non-governmental organizations, are continuing to look for ways to reduce GHG emissions.
−Removed: Increased input costs, such as fuel, utility, transportation, and compliance-related costs, could increase our operating costs.
−Removed: On October 7, 2023, California Governor Gavin Newsom signed three landmark climate disclosure bills that are more stringent than the recently enacted SEC rules.
−Removed: California’s group of new laws address (i) GHG emissions reporting in compliance with the Greenhouse Gas Protocol (GHG Protocol), (ii) climate-related financial risk reporting in accordance with the recommendations of the Task Force on Climate-Related Financial Disclosures (TCFD), and (iii) disclosure of information about certain emissions claims and the sale and use of carbon offsets.
−Removed: Although the SEC’s climate disclosure proposal includes GHG Protocol and TCFD requirements, unlike the SEC’s proposed rule, the California requirements apply to certain private and public companies with business activities in California.
−Removed: AB 1305 addresses voluntary carbon market disclosures.
−Removed: It applies to entities that (i) operate and make emissions claims within California;
−Removed: or (ii) buy or sell carbon offsets within California.
−Removed: SB 253 is the Climate Corporate Data Accountability Act.
−Removed: It applies only to business entities with annual revenue over $1 billion that do business in California.
−Removed: It requires disclosure of scope 1, scope 2, and scope 3 GHG emissions.
−Removed: Annual reporting of scope 1 and scope 2 GHC emissions will be required for covered entities beginning in 2026 (for the 2025 fiscal year).
−Removed: Annual reporting of scope 3 GHG emissions will be required beginning in 2027.
−Removed: SB 261 addresses climate-related financial risks of greenhouse gases.
−Removed: It applies to business entities that do business in California if their annual revenue exceeds $500 million.
−Removed: Disclosure will be required on or before January 1, 2026 and biennially thereafter.
−Removed: While we aim to position ourselves as a solution for climate change-related issues to our customers, there are other solutions in the market that may be cheaper or better suited to our customers’ needs, and we may not be able to capitalize on the move towards renewable energy.
−Removed: As the impact of any future GHG legislative or regulatory requirements on our global businesses and products is dependent on the timing, scope, and design of the mandates or standards, we are currently unable to predict their potential impact, which could have a material adverse effect on our results of operations, financial condition and cash flows.
Risks Related to Our Product Offerings
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There can be no assurance that we will successfully identify new product opportunities, develop and bring new or enhanced products to market in a timely manner, successfully lower costs and achieve market acceptance of our products, or that products and technologies developed by others will not render our products or technologies obsolete or uncompetitive.
−Removed: We continued to expand and develop our new hydrogen products during Fiscal 2024, which are commercially available running on a 30% hydrogen – 70% natural gas mix.
+Added: We continued to expand and develop our new hydrogen products, which are commercially available running on a 30% hydrogen / 70% natural gas mix.
Continued development towards a 100% hydrogen product will require a long-time horizon and a significant amount of financial resources.
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Failure to produce our products as scheduled and budgeted could materially and adversely affect our business and financial condition.
−Removed: We cannot be certain that we will deliver ordered products in a timely manner.
+Added: We cannot be certain that we will deliver products ordered in a timely manner.
We have limited production slots for our products.
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Our inability to meet volume commitments with suppliers could affect the availability or pricing of our parts and components.
−Removed: A reduction or interruption in supply, a significant increase in the price of one or more components, or a decrease in demand of our products could materially adversely affect our business and operations and could materially damage our customer relationships.
+Added: A reduction or interruption in supply, a significant increase in the price of one or more components, or a decrease in demand of our products could materially adversely affect our business and operations and could materially damage our customer
+Added: relationships.
Financial problems of suppliers on whom we rely could limit our supply of components or increase our costs.
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The pricing could impact the costs to manufacture our products.
−Removed: During Fiscal 2024 and 2023, we saw significant price increases in the cost of our commodity materials.
+Added: During Fiscal 2024, we saw significant price increases in the cost of our commodity materials, and may continue to see price increases due to tariffs.
If we are not able to acquire commodity materials at prices and on terms satisfactory to us or at all, our operating results may be materially adversely affected.
We operate in a highly competitive market among competitors that have significantly greater resources than we have, and we may not be able to compete effectively.
+Added: Overall, the market for our products is highly competitive.
We compete with several technologies, including reciprocating engines, fuel cells, and solar power.
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We believe that developing and maintaining a competitive advantage will require continued investment by us in product development and quality, as well as attention to product performance, our product prices, our conformance to industry standards, manufacturing capability, and sales and marketing.
−Removed: In addition, current and potential competitors have established or may in the future establish collaborative relationships among themselves or with third parties, including third parties with whom
−Removed: we have business relationships.
+Added: In addition, current and potential competitors have established or may in the future establish collaborative relationships among themselves or with third parties, including third parties with whom we have business relationships.
Accordingly, new competitors or alliances may emerge and rapidly acquire significant market share.
−Removed: Overall, the market for our products is highly competitive and changing rapidly.
−Removed: We believe that the primary competitive factors affecting the market for our products, including some that are outside of our control, include, but are not limited to:
−Removed: ● name recognition, historical performance and market power of our competitors;
−Removed: ● product quality and performance;
−Removed: ● operating efficiency;
−Removed: ● product price;
−Removed: ● availability, price and compatibility of fuel;
−Removed: ● development of new products and features;
−Removed: ● emissions levels.
−Removed: There is no assurance that we will be able to successfully compete against either current or potential competitors or that competition will not have a material adverse effect on our business, operating results, financial condition, and cash flow.
Our business and financial performance depends in part on the oil and natural gas industry, where a continued movement towards clean energy and away from fossil fuels, as well as fluctuations in prices for oil and natural gas, may have an adverse effect on our revenue, cash flows, profitability, and growth.
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In addition, we may be subject to a variety of other risks associated with international business, including import/export restrictions, fluctuations in currency exchange rates and economic or political instability.
−Removed: Our business in particular is also subject to risks relating to the uncertainties and effects of the implementation of the United Kingdom’s withdrawal of membership from the EU (referred to as “Brexit”), including financial, legal, tax, and trade implications.
In addition, doing business internationally subjects us to risks relating to political or social unrest, as well as corruption and government regulation, including laws such as the Foreign Corrupt Practices Act and the U.K.
Bribery Act, that impose stringent requirements on how we conduct our foreign operations.
−Removed: We may not be able to develop sufficiently trained applications engineering, installation, and service support to serve our targeted markets.
+Added: We may not be able to develop sufficiently trained applications engineering, installation, and service support resources to serve our targeted markets.
Our ability to identify and develop business relationships with companies that can provide quality, cost effective application engineering, installation, and service can significantly affect our success.
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Additionally, we need to reduce the total installed cost of our microturbines to enhance market opportunities.
−Removed: inability to improve the quality of applications, installation and service while reducing associated costs could affect the marketability of our products.
+Added: Our inability to improve the quality of applications, installation and service while reducing associated costs could affect the marketability of our products.
Changes in our product components may require us to replace parts held at distributors.
We have entered into agreements with some of our distributors requiring that if we render parts obsolete in inventories they own and hold in support of their obligations to serve fielded microturbines, we are required to replace the affected stock at no cost to the distributors.
−Removed: As a result, it is possible that future changes in our product technology could involve costs that have a material adverse effect on our results of operations, cash flow or financial position.
+Added: As a result, it is possible that future changes in our product technology could involve increased costs, that may have a material adverse effect on our results of operations, cash flow or financial position.
Utility companies or governmental entities could place barriers to our entry into the marketplace, and we may not be able to effectively sell our products.
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Non-compliance with applicable regulations could have a material adverse effect on our operating results.
−Removed: Furthermore, our potential utility customers must comply with numerous laws and regulations.
+Added: Furthermore, our potential utility customers must comply with numerous
+Added: laws and regulations.
The deregulation of the utility industry may also create challenges for our marketing efforts.
For example, as part of electric utility deregulation, federal, state, and local governmental authorities may impose transitional charges or exit fees, which would make it less economical for some potential customers to switch to our products.
−Removed: The market for electricity and generation products is heavily influenced by federal and state government regulations and policies.
−Removed: The deregulation and restructuring of the electric industry in the United States and elsewhere may cause rule changes that may reduce or eliminate some of the advantages of such deregulation and restructuring.
−Removed: We cannot determine how any deregulation or restructuring of the electric utility industry may ultimately affect the market for our microturbines.
−Removed: Changes in regulatory standards or policies could reduce the level of investment in the research and development of alternative power sources, including microturbines.
−Removed: Any reduction or termination of such programs could increase the cost to our potential customers, making our systems less desirable, and thereby adversely affect our revenue and other operating results.
−Removed: We and certain of our current and former directors and officers are subject to various legal proceedings.
−Removed: We are currently involved in the SEC Investigation and certain of our current and former directors and officers are involved in stockholder litigation related to our Restatement, and we and our directors and officers may be named as defendants in other types of legal proceedings in the future.
−Removed: See “— We are involved in an ongoing government investigation by the SEC, the results of which may have a material adverse effect on our financial condition and business .”
+Added: Concerns regarding climate change may lead to additional international, national, regional and local legislative and regulatory responses.
+Added: Various stakeholders, including legislators and regulators, shareholders, and non-governmental organizations, are continuing to look for ways to reduce GHG emissions.
+Added: Increased input costs, such as fuel, utility, transportation, and compliance-related costs, could increase our operating costs.
+Added: We and certain current and former directors and officers are subject to various legal proceedings.
+Added: We were previously involved in a SEC investigation and certain current and former directors and officers are currently involved in stockholder litigation related to our Restatement, and we and our directors and officers may be named as defendants in other types of legal proceedings in the future.
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.
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In addition, any significant judgment or settlement amount may require us to incur additional indebtedness, adversely affect our liquidity, and ability to service our indebtedness, or require us to restructure or amend the terms of our indebtedness.
−Removed: In addition, from time to time, we may face litigation relating to intellectual property, labor, product liability, stockholder, and other matters.
−Removed: An adverse judgment could negatively impact our financial position and results of operations, the trading price of our New Common Stock, and our ability to obtain future financing on favorable terms or at all.
−Removed: Whether or not resolved in a manner adverse to us, any litigation could be costly, divert management attention, or result in increased costs of doing business.
−Removed: Further, our insurance coverage is limited for these and other claims against us, and we may not have adequate insurance or financial resources to pay for our liabilities or losses from any such claims.
−Removed: See Note 14— Commitments and Contingencies in the Notes to Consolidated Financial Statements for information about legal proceedings involving the Company.
Risks Related to Data, Security, and Intellectual Property
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We seek to protect our intellectual property rights through a combination of patent, trademark, copyright, and trade secret laws, as well as licensing and confidentiality agreements.
−Removed: These protections may not be adequate to prevent third parties from using our intellectual property without our authorization, breaching any confidentiality agreements with us, copying or reverse engineering our products, or developing and marketing products that are substantially equivalent to or superior to our own.
+Added: These protections may not prove to be adequate to prevent third parties from using our intellectual property without our authorization, breaching any confidentiality agreements with us, copying or reverse engineering our products, or developing and marketing products that are substantially equivalent to or superior to our own.
The unauthorized use of our intellectual property by others could reduce our competitive advantage and harm our business.
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We cannot guarantee that any patents, issued or pending, will provide us with any competitive advantage or will not be challenged by third parties.
+Added: A number of our issued patents have less than ten years remaining life.
Moreover, the expiration of our patents may lead to increased competition with respect to certain products.
−Removed: 6 of our 16 active U.S.
−Removed: patents expired in 2024.
In addition, we cannot be certain that we do not or will not infringe third parties’ intellectual property rights.
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Given the nature of our business, we collect, process, and retain sensitive and confidential customer and associated data, in addition to proprietary business information.
−Removed: Our business, including our turbines and related energy assets, may be vulnerable to a data compromise, computer viruses, physical and electronic break-ins and manipulations and similar disruptions, which may not be prevented by our efforts to secure our computer systems and assets, which include
−Removed: vulnerability scans and patching, network firewalls, identity and access management, data encryption, intrusion detection and prevention devices.
+Added: Our business, including our turbines and related energy assets, may be vulnerable to a data compromise, computer viruses, physical and electronic break-ins and manipulations and similar disruptions, which may not be prevented by our efforts to secure our computer systems and assets, which include vulnerability scans and patching, network firewalls, identity and access management, data encryption, intrusion detection and prevention devices.
Our cybersecurity efforts may not be able to prevent rapidly evolving types of cyber-attacks, and a successful breach of our computer systems could result in the misappropriation of personal, payment or sensitive business information, as well as, among other things, unfavorable publicity, litigation by affected parties, damage to sources of competitive advantage, disruptions to our operations, loss of customers, financial obligations for damages related to the theft or misuse of such information, and costs to remediate such security vulnerabilities, any of which could have a substantial impact on our results of operations, financial condition or cash flows.
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Further, a greater number of our employees are working remotely, which could expose us to greater risks related to cybersecurity and our information technologies systems.
−Removed: Risks Related to Ownership of Our New Common Stock
−Removed: Our management has identified material weaknesses in its internal control over financial reporting and we determined that our disclosure controls and procedures were ineffective as of March 31, 2024.
−Removed: If we fail to remediate the material weaknesses or if we otherwise fail to establish and maintain effective control over financial reporting, our ability to accurately and timely report our financial results may be affected, and such failure may adversely affect investor confidence and business operations.
+Added: Risks Related to Ownership of Our Common Stock
+Added: Our management identified material weaknesses in its internal control over financial reporting and we determined that our disclosure controls and procedures were ineffective as of March 31, 2024, of which one material weakness remains unremediated as of March 31, 2025.
+Added: If we fail to remediate the material weakness or if we otherwise fail to establish and maintain effective control over financial reporting, our ability to accurately and timely report our financial results may be affected, and such failure may adversely affect investor confidence and business operations.
In connection with our review of our financial statements leading to the Restatement and in the course of preparing our financial statements for Fiscal 2024, we identified material weaknesses in our internal controls over financial reporting.
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 the annual or interim financial statements will not be prevented or detected on a timely basis.
−Removed: We have identified material weaknesses related to (i) an inappropriate tone at the top established by certain former senior executives, (ii) our lack of sufficient qualified professionals with an appropriate level of accounting and internal control knowledge, training and experience, (iii) our failure to perform a sufficient review of accounting policies to ensure ongoing adherence with U.S.
+Added: We identified material weaknesses related to (i) an inappropriate tone at the top established by certain former senior executives, (ii) our lack of sufficient qualified professionals with an appropriate level of accounting and internal control knowledge, training and experience, (iii) our failure to perform a sufficient review of accounting policies to ensure ongoing adherence with U.S.
GAAP, (iv) our failure to design and maintain effective internal control over financial reporting for systems, products, parts, and accessories sales subject to bill and hold arrangements with customers and (v) our failure to design and maintain effective internal control 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.
−Removed: To address our material weaknesses, we need to make changes to our program and controls as set forth in Part II, Item 9A “Controls and Procedures.” We will not be able to remediate these material weaknesses unless and until these steps have been completed and have been operating effectively for a sufficient period of time.
−Removed: We cannot assure you that the measures we plan to take will in fact be sufficient to remediate the control deficiencies that led to the material weaknesses in our internal control over financial reporting or that such measures will prevent or avoid potential future material weaknesses, and our current controls and any new controls that we develop may become inadequate because of changes in conditions in our business.
+Added: To address our material weaknesses, we made changes to our program and controls as set forth in Part II, Item 9A “Controls and Procedures.” We have been able to remediate all but one of the five original material weaknesses.
+Added: In the course of preparing our financial statements for Fiscal 2025, we identified the following material weakness in our internal controls over financial reporting:
+Added: our failure to design and maintain effective internal control over financial reporting relating to the proper accounting, presentation and disclosure for FPP service contracts, including the cost recognition of parts and labor associated with FPP service contracts.
+Added: We will not be able to remediate this final material weakness unless the proposed steps have been completed and have been operating effectively for a sufficient period of time.
+Added: We cannot assure you that the measures we plan to take will in fact be sufficient to remediate the control deficiencies that led to this material weakness in our internal control over financial reporting or that such measures will prevent or avoid potential future material weaknesses, and our current controls and any new controls that we develop may become inadequate because of changes in conditions in our business.
Further, additional weaknesses in our internal control over financial reporting may be discovered in the future.
−Removed: If we are unable to remediate our material weaknesses and otherwise implement and maintain effective internal control over financial reporting, our ability to record, process and report financial information accurately, and to prepare financial statements and satisfy our public reporting obligations within required time periods, could be adversely affected.
+Added: If we are unable to remediate this material weakness and otherwise implement and maintain effective internal control over financial reporting, our ability to record, process and report financial information accurately, and to prepare financial statements and satisfy our public reporting obligations within required time periods, could be adversely affected.
If we identify any new material weaknesses in the future, any such newly identified material weakness could limit our ability to prevent or detect a misstatement of our accounts or disclosures that could result in a material misstatement of our annual or interim financial statements.
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We cannot assure you that the measures we have taken to date, or any measures we may take in the future, will be sufficient to avoid potential future material weaknesses.
−Removed: Future issuances or sales of our New Common Stock or exercises by holders of any warrants we may issue could lower our stock price and dilute the interests of existing stockholders.
−Removed: We may issue additional shares of our New Common Stock in the future.
−Removed: The issuance of a substantial amount of New Common Stock could have the effect of substantially diluting the interests of our current stockholders.
−Removed: Further, the Preferred Units issued pursuant to the Operating Subsidiary LLC Agreement are non-dilutable, and therefore, any issuances of New Common Stock will have an even greater dilutive effect in respect of our current stockholders’ indirect equity interests in the Operating Subsidiary.
−Removed: The sale of a substantial number of shares of our New Common Stock, or anticipation of any such sales, could cause the trading price of our New Common Stock to decline or make it more difficult for us to sell equity or equity-related securities in the future at a time and at a price that we might otherwise desire.
−Removed: We cannot predict the effect, if any, that future sales of our New Common Stock or the availability of additional shares of our New Common Stock for sale will have on the market and trading price of our New Common Stock.
−Removed: If any of our stockholders sell substantial amounts of our New Common Stock in the public market, or if the public perceives that such sales could occur, this could have an adverse impact on the market and trading price of our securities, even if there is no relationship between such sales and the performance of our business.
−Removed: Once trading in the New Common Stock commences, the market price of our New Common Stock is likely to be highly volatile and you could lose all or part of your investment in our securities.
−Removed: There is no historical trading activity for our New Common Stock.
−Removed: See “— There is currently no public trading market for our New Common Stock .” An investment in our securities is risky, and stockholders could lose their investment in our securities or suffer significant losses and wide fluctuations in the market value of their investment.
−Removed: The commencement of trading in the New Common Stock depends on our ability to become current in our Reporting Obligations.
−Removed: Once trading in the New Common Stock commences, the market price of our New Common Stock is likely to be highly volatile.
−Removed: Given the continued uncertainty surrounding many variables that may affect our business, including the Emergence, and the industry in which we operate, our ability to foresee results for future periods is limited.
+Added: Future issuances or sales of our Common Stock or exercises by holders of any warrants we may issue could lower our stock price and dilute the interests of existing stockholders.
+Added: We may issue additional shares of our Common Stock in the future.
+Added: The issuance of a substantial amount of our Common Stock could have the effect of substantially diluting the interests of our current stockholders.
+Added: Further, the Preferred Units issued pursuant to the Capstone Green Energy LLC Agreement are non-dilutable, and therefore, any issuances of Common Stock will have an even greater dilutive effect in respect of our current stockholders’ indirect equity interests in the Operating Subsidiary.
+Added: The sale of a substantial number of shares of our Common Stock, or anticipation of any such sales, could cause the trading price of our Common Stock to decline or make it more difficult for us to sell equity or equity-related securities in the future at a time and at a price that we might otherwise desire.
+Added: We cannot predict the effect, if any, that future sales of our Common Stock or the availability of additional shares of our Common Stock for sale will have on the market and trading price of our Common Stock.
+Added: If any of our stockholders sell substantial amounts of our Common Stock in the public market, or if the public perceives that such sales could occur, this could have an adverse impact on the market and trading price of our securities, even if there is no relationship between such sales and the performance of our business.
+Added: The market price of our Common Stock is likely to be highly volatile and you could lose all or part of your investment in our securities.
+Added: There is limited trading activity for our Common Stock in the OTC market.
+Added: An investment in our securities is risky, and stockholders could lose their investment in our securities or suffer significant losses and wide fluctuations in the market value of their investment.
+Added: Even with the commencement of trading of our Common Stock on the OTC market, the market price of our Common Stock is likely to be highly volatile.
+Added: Given the continued uncertainty surrounding many variables that may affect our business, and the industry in which we operate, our ability to foresee results for future periods is limited.
This variability could affect our operating results and thereby adversely affect our stock price.
−Removed: Many factors that contribute to this volatility are beyond our control and may cause the market price of our New Common Stock to change, regardless of our operating performance.
+Added: Many factors that contribute to this volatility are beyond our control and may cause the market price of our Common Stock to change, regardless of our operating performance.
Factors that could cause fluctuation in our stock price may include, among other things:
● actual or anticipated variations in quarterly operating results;
−Removed: ● the limited market for our New Common Stock;
−Removed: ● our ability to become current in our Reporting Obligations and be quoted on the OTC Pink tier, or any other OTC tier or national securities exchange in the future;
+Added: ● the limited market for our Common Stock;
● market sentiment toward alternative energy stocks in general or toward us;
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● changes in the market valuations or earnings of our competitors or other technology companies;
−Removed: ● the trading of options on our New Common Stock;
● announcements by us or our competitors of significant acquisitions, strategic partnerships, divestitures, joint ventures, or other strategic initiatives;
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● additions or departures of key personnel;
−Removed: ● sales or purchases of our New Common Stock;
−Removed: ● the trading volume of our New Common Stock;
−Removed: ● developments relating to the SEC Investigation, litigation or other governmental investigations;
+Added: ● the trading volume of our Common Stock;
+Added: ● developments relating to litigation or governmental investigations;
● decreases in or continued low levels of oil, natural gas and electricity prices.
−Removed: Market conditions may result in volatility in the level of, and fluctuations in, market prices of stocks generally and, in turn, our New Common Stock.
+Added: Market conditions may result in volatility in the level of, and fluctuations in, market prices of stocks generally and, in turn, our Common Stock.
Global financial markets have experienced extreme disruption in recent years, including, among other things, extreme volatility in securities prices.
In the past, following periods of volatility in the market price of a company’s securities, securities class action litigation has often been instituted against the Company.
−Removed: This type of litigation, regardless of whether we prevail on the underlying claim, could result in substantial costs and a diversion of management’s attention and resources, which could materially harm our financial condition, results of operations and cash flow.
+Added: Certain of our current and former directors and officers are involved in stockholder litigation related to our Restatement, and we and our directors and officers may be named as defendants in other types of legal proceedings in the future.
+Added: Refer to “ Legal Proceedings ” This type of litigation, regardless of whether we prevail on the underlying claim, could result in substantial costs and a diversion of management’s attention and resources, which could materially harm our financial condition, results of operations and cash flow.
Provisions in our certificate of incorporation and bylaws, as well as Delaware law, may discourage, delay or prevent a merger or acquisition at a premium price.
Provisions of our amended and restated certificate of incorporation and amended and restated bylaws, as well as provisions of the General Corporation Law of the State of Delaware, could discourage, delay, or prevent unsolicited proposals to merge with or acquire us, even though such proposals may be at a premium price or otherwise beneficial to you.
−Removed: These provisions include our Board’s authorization to issue shares of preferred stock, on terms the Board determines in its discretion, without stockholder approval, and the following provisions of Delaware law that restrict many business combinations.
−Removed: We are subject to the provisions of Section 203 of the General Corporation Law of the State of Delaware, which could prevent us from engaging in a business combination with a 15% or greater stockholder for a period of three years from the date such stockholder acquired such status unless appropriate board or stockholder approvals are obtained.
+Added: These provisions include authorization by our Board of Directors (the “Board”) to issue shares of preferred stock, on terms the Board determines in its discretion, without stockholder approval, and the following provisions of Delaware law that restrict many business combinations.
+Added: Additionally, we are governed by Section 203 of the Delaware General Corporation Law, which may restrict mergers or combinations with significant stockholders (those owning 15% or more of voting stock) without prior Board approval for a specified period.
+Added: These provisions may discourage takeover attempts, reduce the appeal of our Common Stock to investors, and result in a lower market price for our shares than might otherwise occur.
We do not intend to pay cash dividends.
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We have not paid cash dividends on any of our capital stock to date and we currently intend to retain our future earnings, if any, to fund the development and growth of our business.
−Removed: In addition, our ability to distribute dividends is subject to restrictions that apply under the terms of our existing indebtedness and Operating Subsidiary LLC Agreement.
−Removed: See “— We are a holding company with nominal net worth and will depend on dividends and distributions from our Operating Subsidiary to pay any dividends .” As a result, capital appreciation, if any, of our New Common Stock will be your sole source of gain for the foreseeable future.
−Removed: Consequently, in the foreseeable future, you will likely only experience a gain from your investment in our securities if the price of our New Common Stock increases
+Added: In addition, our ability to distribute dividends is subject to restrictions that apply under the terms of our existing indebtedness and Capstone Green Energy LLC Agreement.
+Added: Refer to “ We are a holding company and will depend on dividends and distributions from our Operating Subsidiary to pay any dividends .” As a result, capital appreciation, if any, of our Common Stock will be your sole source of gain for the foreseeable future.
+Added: Consequently, in the foreseeable future, you will likely only experience a gain from your investment in our securities if the price of our Common Stock increases.
Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.